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KCG Announces Second Quarter 2015 Results
KCG reports GAAP net loss of $19.2 million; Pre-tax loss from continuing operations of $57.1 million includes charges of $60.2 million from items unrelated to core operations
During the quarter, KCG repurchased 23.6 million shares for $330 million as a result of its "modified Dutch auction" tender offer
KCG's tangible book value rose to $14.05 per share, book value increased to $15.58 per share
KCG announces planned relocation of global headquarters to New York City

JERSEY CITY, N.J., July 31, 2015 /PRNewswire/ -- KCG Holdings, Inc. (NYSE: KCG) today reported a GAAP net loss of $19.2 million, or $0.18 per share, for the second quarter of 2015. Included in the $57.1 million pre-tax loss is an accelerated compensation expense of $28.8 million as a result of stockholder-approved changes made to the vesting provisions of outstanding annual equity awards; debt extinguishment charges comprising a debt "make-whole" premium and  a writedown of capitalized debt costs of $16.5 million and $8.5 million, respectively, as a result of the early redemption of the $305 million 8.25% Senior Secured Notes; and other real estate related charges of $6.3 million. Excluding these items, on a non-GAAP basis, second quarter 2015 pre-tax income from continuing operations was $3.1 million. A reconciliation of GAAP to non-GAAP results is included in Exhibit 4.

Select Financial Results

($ in thousands, except EPS)

From Continuing Operations

2Q15


1Q15


2Q14

GAAP Revenues

261,882


696,156


314,133

Non-GAAP revenues*

261,882


311,130


314,133

   Trading revenues, net

170,750


208,795


206,780

   Commissions and fees

87,370


99,961


104,776

GAAP pre-tax (loss) income

(57,114)


406,128


14,507

GAAP EPS

(0.18)


2.19


0.08

Non-GAAP pre-tax income*

3,068


32,427


21,512

* See Exhibit 4 for a reconciliation of GAAP to non-GAAP results.

Second Quarter Highlights

  • KCG market making's share of retail SEC Rule 605 U.S. equity share volume increased more than one full percentage point from first quarter 2015
  • The percentage of algorithmic trading and order routing net revenue attributable to institutional clients grew for the third straight quarter
  • Repurchased 23.6 million shares of KCG Class A Common Stock for $330 million through a "modified Dutch auction" tender offer
  • Completed the refinancing of the $305 million 8.25% Senior Secured Notes due in 2018
  • Subsequent to the quarter, KCG entered into an agreement to relocate its global headquarters to New York City

Daniel Coleman, Chief Executive Officer of KCG, said, "During the second quarter, KCG continued to focus on strategic clients, completed a tender offer for 22 percent of shares outstanding, excluding restricted stock units, and developed plans to consolidate global headquarters in New York City. The financial results, however, were negatively affected by the deterioration in market-wide volumes and volatility in U.S. equities from the first quarter, heightened competition for retail order flow, and several non-operating items. While we believe KCG is steadily developing into a major multi-asset class liquidity provider, the results do not meet our expectations. As a firm, we cannot assume that the market environment will improve. To generate the right returns for our shareholders, we will continuously review, adjust, and improve how we run our business."

Market Making
The Market Making segment encompasses direct-to-client and non-client, exchange-based market making across multiple asset classes and is an active participant in all major cash, options and futures markets in the U.S., Europe and Asia. During the second quarter of 2015, the segment generated total revenues of $192.3 million and pre-tax income of $4.4 million. Excluding expenses related to accelerated stock-based compensation of $19.8 million, the segment generated pre-tax income of $24.2 million.

During the second quarter of 2015, consolidated U.S. equity share and dollar volume continued to decline quarter over quarter along with realized volatility for the S&P 500. In particular, retail trading activity declined approximately 10 percent market-wide amid continued strong competition and a narrowing of spreads. KCG's results were augmented by solid contributions from Asian equities, U.S. commodities and European fixed income, partially offset by U.S. fixed income.

Mr. Coleman commented, "Although direct-to-client market making in U.S. equities increased market share and our models performed well, the current competitive environment remains a challenge in terms of revenue realization. We are committed to improving returns irrespective of an improvement in the competitive or macro environment. Outside of U.S. equities, we continued to diversify in select asset classes, add strategies and build scale."

In the first quarter of 2015, the segment generated total revenues of $224.5 million and pre-tax income of $39.3 million. In the second quarter of 2014, the segment generated total revenues of $218.4 million and pre-tax income of $36.0 million.

 

Select Trade Statistics: U.S. Equity Market Making


2Q15


1Q15


2Q14

Average daily dollar volume traded ($ millions)

27,883


31,025


25,143

Average daily trades (thousands)

3,550


3,947


3,620

Average daily shares traded (millions)

5,785


5,048


10,820

   NYSE and NASDAQ shares traded

885


933


758

   OTC Bulletin Board and OTC Market shares traded

4,900


4,115


10,061

Average revenue capture per U.S. equity dollar value traded (bps)

0.80


0.92


1.07

 

Global Execution Services
The Global Execution Services segment comprises agency execution services and trading venues. During the second quarter of 2015, the segment generated total revenues of $63.5 million and a pre-tax loss of $9.9 million. Excluding expenses related to accelerated stock-based compensation of $8.2 million, the segment generated a pre-tax loss of $1.7 million.

During the second quarter of 2015, in addition to the decline in consolidated U.S. equity share volume quarter over quarter, ETF trading activity decreased approximately 13 percent market-wide. Also, during the quarter, institutional investors in the U.S. experienced an acceleration in domestic mutual fund outflows. All periods prior to the second quarter include the results of KCG Hotspot up through the date of its sale on March 13, 2015.

Mr. Coleman commented, "Despite the market-wide decline in U.S. equity trading activity quarter over quarter, KCG's algorithmic trading and sales and trading teams were little affected. During the second quarter, 18 asset managers began using KCG algorithms and we onboarded an additional 10 new asset management clients. The results in ETFs, however, were affected by the market-wide decline in trading activity."

In the first quarter of 2015, excluding the gain on the sale of KCG Hotspot FX and related professional and compensation expenses, the segment generated total revenues of $79.2 million and pre-tax income of $7.2 million. In the second quarter of 2014, the segment generated total revenues of $85.9 million and pre-tax income of $0.7 million. Excluding $1.9 million in compensation related to a reduction in workforce, pre-tax income was $2.6 million.

 

Select Trade Statistics: Agency Execution and Trading Venues


2Q15


1Q15


2Q14

Average daily KCG algorithmic trading and order routing

U.S. equities shares traded (millions)

287.0


299.0


265.3

Average daily KCG BondPoint fixed income par value

traded ($ millions)

138.3


145.8


133.7

 

Corporate and Other
The Corporate and Other segment includes strategic investments and corporate overhead expenses. During the second quarter of 2015, the segment generated total revenues of $6.0 million and a pre-tax loss of $51.6 million. Excluding expenses related to accelerated stock-based compensation of $0.8 million, a debt make-whole premium of $16.5 million, writedown of capitalized debt costs of $8.5 million, and other real estate related charges of $6.3 million, the segment generated a pre-tax loss of $19.4 million.

In the first quarter of 2015, the segment generated total revenues of $7.3 million and a pre-tax loss of $14.3 million. In the second quarter of 2014, the segment generated total revenues of $9.8 million and a pre-tax loss of $22.2 million. Excluding a $2.0 million writedown of capitalized debt costs related to the principal repayment of debt, $0.8 million in compensation related to a reduction in workforce, and a lease loss accrual of $1.5 million, the pre-tax loss was $17.9 million.

During the second quarter of 2015 KCG effected a change in tax status of one of its subsidiaries and as a result reversed a valuation allowance on certain state tax net operating losses and other deferred tax assets. This resulted in a one-time deferred tax benefit of $16.2 million and a corresponding increase to KCG's deferred tax asset.

Financial Condition
As of June 30, 2015, KCG had $541.3 million in cash and cash equivalents. Total outstanding debt was $495.1 million. The Company had $1.47 billion in stockholders' equity, equivalent to a book value of $15.58 per share and tangible book value of $14.05 per share based on total shares outstanding of 94.4 million, including restricted stock units.

KCG's headcount was 1,045 full-time employees at June 30, 2015 compared to 1,038 full-time employees at March 31, 2015.

During the second quarter of 2015, KCG completed a "modified Dutch auction" tender offer and repurchased 23.6 million shares of KCG's Class A Common Stock at a purchase price of $14.00 per share, for a cost of $330 million, excluding expenses related to the tender offer. The repurchased shares represented approximately 22% of KCG's Class A Common Stock outstanding excluding restricted stock units as of May 7, 2015.

Relocation of Global Headquarters
Subsequent to the second quarter, KCG entered into an agreement to relocate its global headquarters from Jersey City, NJ to New York City. Under a plan authorized by the Board of Directors, KCG will reduce occupied space and consolidate legacy metro area offices in Jersey City, NJ and New York, NY. KCG's new headquarters will encompass 169,000 square feet at 300 Vesey Street, in lower Manhattan. The relocation is expected to be substantially completed at the end of 2016.

As a result of the planned relocation and consolidation of metro New York area offices and a reduction of occupied space in Chicago, KCG expects to incur additional expenses through fiscal year 2016. KCG will record non-recurring, real estate charges of $25 to $30 million in the 3rd quarter of 2015 related to the early termination of leases at 545 Washington Boulevard in Jersey City, NJ and 165 Broadway in New York, NY as well as a consolidation of space at 350 N. Orleans Street in Chicago, IL. Further, the Company will record added depreciation and amortization expenses of approximately $4.5 to $5.0 million per quarter beginning in the 3rd quarter of 2015 and running through the 4th quarter of 2016 as well as added occupancy costs of approximately $1.5 million per quarter beginning in the 4th quarter of 2015 and running through the 4th quarter of 2016.

Conference Call
KCG will hold a conference call to discuss second quarter 2015 financial results starting at 9:00 a.m. Eastern Time today, July 31, 2015. To access the call, dial 800-401-3551 (domestic) or 913-312-0726 (international) and enter passcode 3586698. In addition, the call will be webcast at http://investors.kcg.com/phoenix.zhtml?p=irol-eventDetails&c=105070&eventID=5196957. Following the conclusion of the call, a replay will be available by selecting a number based on country of origin from a list posted at: https://replaynumbers.conferencinghub.com/index.aspx?confid=7898269&passcode=7898269 and entering passcode 3586698.

Additional information for investors, including a presentation of the second quarter financial results, can be found at http://investors.kcg.com.

Non-GAAP Financial Presentations
KCG believes that certain non-GAAP financial presentations, when taken into consideration with the corresponding GAAP financial presentations, are important in understanding operating results. Selected financial information is included in the non-GAAP financial presentations for the three months ended June 30, 2015, March 31, 2015 and June 30, 2014 and for the six months ended June 30, 2015 and June 30, 2014. KCG believes the presentations provide a meaningful summary of revenues and results of operations for each of the three and six month periods. Reconciliations of GAAP to non-GAAP results are included in the schedules in Exhibit 4.

About KCG
KCG is a leading independent securities firm offering investors and clients a range of services designed to address trading needs across asset classes, product types and time zones. The firm combines advanced technology with exceptional client service across market making, agency execution and venues. KCG has multiple access points to trade global equities, fixed income, currencies and commodities via voice or automated execution. www.kcg.com

Certain statements contained herein may constitute "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words such as "believe," "expect," "anticipate," "intend," "target," "estimate," "continue," "positions," "prospects" or "potential," by future conditional verbs such as "will," "would," "should," "could" or "may," or by variations of such words or by similar expressions. These "forward-looking statements" are not historical facts and are based on current expectations, estimates and projections about KCG's industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Any forward-looking statement contained herein speaks only as of the date on which it is made. Accordingly, readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict including, without limitation, risks associated with: (i) the strategic business combination (the "Mergers") of Knight Capital Group, Inc. ("Knight") and GETCO Holding Company, LLC ("GETCO"); (ii) difficulties and delays in fully realizing cost savings and other benefits of the Mergers and the inability to manage revenue capture and sustain revenue and earnings growth; (iii) the sale of KCG Hotspot; (iv) changes in market structure, legislative, regulatory or financial reporting rules, including the increased focus by regulators, the New York Attorney General, Congress and the media on market structure issues, and in particular, the scrutiny of high frequency trading, alternative trading systems, market fragmentation, colocation, access to market data feeds, and remuneration arrangements such as payment for order flow and exchange fee structures; (v) past or future changes to KCG's organizational structure and management; (vi) KCG's ability to develop competitive new products and services in a timely manner and the acceptance of such products and services by KCG's customers and potential customers; (vii) KCG's ability to keep up with technological changes; (viii) KCG's ability to effectively identify and manage market risk, operational and technology risk (such as the events that affected Knight on August 1, 2012), legal risk, liquidity risk, reputational risk, counterparty and credit risk, international risk, regulatory risk, and compliance risk; (ix) the cost and other effects of material contingencies, including litigation contingencies, and any adverse judicial, administrative or arbitral rulings or proceedings; (x) the effects of increased competition and KCG's ability to maintain and expand market share; and (xi) the announced plan to relocate KCG's global headquarters from Jersey City, NJ to New York, NY. The list above is not exhaustive. Readers should carefully review the risks and uncertainties disclosed in KCG's reports with the SEC, including, without limitation, those detailed under "Risk Factors" in KCG's Annual Report on Form 10-K for the year-ended December 31, 2014, Quarterly Report on Form 10-Q for the quarter-ended March 31, 2015, and other reports or documents KCG files with, or furnishes to, the SEC from time to time.

 

KCG HOLDINGS, INC.








Exhibit 1 

CONSOLIDATED STATEMENTS OF OPERATIONS








(Unaudited)












For the three months ended 





June 30, 2015



March 31, 2015



June 30, 2014







(In thousands, except per share amounts)












Revenues










Trading revenues, net

$

170,750


$

208,795


$

206,780


Commissions and fees


87,370



99,961



104,776


Interest, net


(596)



(23)



(289)


Investment income and other, net


4,358



387,423



2,866



Total revenues


261,882



696,156



314,133












Expenses










Employee compensation and benefits


109,471



106,718



103,430


Execution and clearance fees


62,598



68,473



73,242


Communications and data processing


34,240



33,764



38,279


Depreciation and amortization


20,726



20,615



19,823


Payments for order flow


14,935



15,221



18,076


Debt interest expense 


9,989



8,463



7,497


Collateralized financing interest 


8,859



8,456



6,395


Occupancy and equipment rentals


7,474



7,340



8,235


Professional fees


5,694



11,181



7,337


Business development


3,025



1,857



2,609


Debt extinguishment charges


25,006



-



1,995


Other real estate related charges


6,327



132



1,941


Other


10,652



7,808



10,767



Total expenses


318,996



290,028



299,626












(Loss) Income from continuing operations before income taxes


(57,114)



406,128



14,507

Income tax (benefit) expense


(37,952)



156,827



5,520

(Loss) Income from continuing operations, net of tax


(19,162)



249,301



8,987

Loss from discontinued operations, net of tax


-



-



(67)












Net (Loss) Income

$

(19,162)


$

249,301


$

8,920























Basic (loss) earnings per share from continuing operations

$

(0.18)


$

2.25


$

0.08












Diluted (loss) earnings per share from continuing operations

$

(0.18)


$

2.19


$

0.08












Basic loss per share from discontinued operations

$

-


$

-


$

-












Diluted loss per share from discontinued operations

$

-


$

-


$

-












Basic (loss) earnings per share

$

(0.18)


$

2.25


$

0.08












Diluted (loss) earnings per share

$

(0.18)


$

2.19


$

0.08












Shares used in computation of basic (loss) earnings per share


108,588



110,782



114,859












Shares used in computation of diluted (loss) earnings per share


108,588



113,615



117,601

 

 

KCG HOLDINGS, INC.





Exhibit 1 

CONSOLIDATED STATEMENTS OF OPERATIONS




   (Continued)

(Unaudited)









For the six months ended 





June 30, 2015



June 30, 2014





(In thousands, except per share amounts)

















Revenues







Trading revenues, net

$

379,545


$

465,077


Commissions and fees


187,331



217,033


Interest, net


(619)



659


Investment income and other, net


391,781



15,021



Total revenues


958,038



697,790









Expenses







Employee compensation and benefits


216,189



225,749


Execution and clearance fees


131,071



148,743


Communications and data processing


68,004



75,075


Depreciation and amortization


41,341



39,926


Payments for order flow


30,156



40,108


Debt interest expense 


18,452



17,021


Collateralized financing interest 


17,315



12,557


Occupancy and equipment rentals


14,814



16,520


Professional fees


16,875



12,739


Business development


4,882



4,292


Debt extinguishment charges


25,006



9,552


Other real estate related charges


6,459



2,207


Other


18,460



19,410



Total expenses


609,024



623,899









(Loss) Income from continuing operations before income taxes


349,014



73,891

Income tax (benefit) expense


118,875



27,987

(Loss) Income from continuing operations, net of tax


230,139



45,904

Loss from discontinued operations, net of tax


-



(1,320)









Net (Loss) Income

$

230,139


$

44,584

















Basic (loss) earnings per share from continuing operations

$

2.08


$

0.40









Diluted (loss) earnings per share from continuing operations

$

2.02


$

0.39









Basic loss per share from discontinued operations

$

-


$

(0.01)









Diluted loss per share from discontinued operations

$

-


$

(0.01)









Basic (loss) earnings per share

$

2.08


$

0.39









Diluted (loss) earnings per share

$

2.02


$

0.38









Shares used in computation of basic (loss) earnings per share


110,890



115,282









Shares used in computation of diluted (loss) earnings per share


113,809



118,170

 

 

KCG HOLDINGS, INC.



Exhibit 2

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION




(In thousands)







(Unaudited)





















June 30, 2015



December 31, 2014








ASSETS








Cash and cash equivalents


$

541,292


$

578,768


Cash and cash equivalents segregated under federal and other regulations



3,600



3,361


Financial instruments owned, at fair value:








Equities




2,391,499



2,479,910


Listed options




117,934



144,586


Debt securities




185,938



82,815


Other financial instruments




355



60


Total financial instruments owned, at fair value



2,695,726



2,707,371


Collateralized agreements:








     Securities borrowed




1,871,312



1,632,062


Receivable from brokers, dealers and clearing organizations



690,291



1,188,833


Fixed assets and leasehold improvements,








less accumulated depreciation and amortization



116,849



134,051


Investments



107,348



100,726


Goodwill and Intangible assets, less accumulated amortization



144,798



152,594


Deferred tax asset, net



180,673



154,759


Assets of business held for sale



-



40,484


Other assets



234,459



137,645










Total assets


$

6,586,348


$

6,830,654










LIABILITIES & EQUITY 







Liabilities








Financial instruments sold, not yet purchased, at fair value:








Equities



$

1,785,493


$

2,069,342


Listed options




93,113



115,362


Debt securities




159,551



101,003


Total financial instruments sold, not yet purchased, at fair value



2,038,157



2,285,707


       Collateralized financings:








Securities loaned




741,732



707,744


                  Financial instruments sold under agreements to repurchase




995,667



933,576


Total collateralized financings 



1,737,399



1,641,320











Payable to brokers, dealers and clearing organizations



529,748



676,089


Payable to customers



38,282



22,110


Accrued compensation expense



64,040



114,559


Accrued expenses and other liabilities



144,390



136,977


Income taxes payable



64,107



-


Capital lease obligations 




3,877



6,700


Liabilities of business held for sale 



-



2,356


Debt



495,113



422,259










Total liabilities



5,115,113



5,308,077










Equity








Class A Common Stock




1,059



1,275


Additional paid-in capital




1,429,368



1,369,298


Retained earnings




173,155



272,780


Treasury stock, at cost




(133,562)



(122,909)


Accumulated other comprehensive income




1,214



2,133

Total equity



1,471,234



1,522,577










Total liabilities and equity


$

6,586,348


$

6,830,654

 

 

KCG HOLDINGS, INC.









Exhibit 3

PRE-TAX EARNINGS (LOSS) FROM CONTINUING OPERATIONS BY BUSINESS SEGMENT*

(In thousands)










(Unaudited)






















For the three months ended  




June 30, 2015



March 31, 2015



June 30, 2014

Market Making










Revenues


$

192,328


$

224,548


$

218,446

Expenses



187,926



185,208



182,442

Pre-tax earnings



4,402



39,340



36,004











Global Execution Services










Revenues



63,522



464,266



85,903

Expenses



73,459



83,208



85,167

Pre-tax (loss) earnings



(9,937)



381,058



736











Corporate and Other










Revenues



6,032



7,342



9,784

Expenses



57,611



21,612



32,017

Pre-tax loss



(51,579)



(14,270)



(22,233)











Consolidated










Revenues



261,882



696,156



314,133

Expenses



318,996



290,028



299,626

Pre-tax (loss) earnings


$

(57,114)


$

406,128


$

14,507











* Totals may not add due to rounding.










 


 

KCG HOLDINGS, INC.









Exhibit 3

PRE-TAX EARNINGS (LOSS) FROM CONTINUING OPERATIONS BY BUSINESS SEGMENT*

   (Continued)

(In thousands)










(Unaudited)






















For the six months ended  







June 30, 2015



June 30, 2014




Market Making










Revenues


$

416,876


$

495,792




Expenses



373,134



383,756




Pre-tax earnings



43,742



112,036














Global Execution Services










Revenues



527,788



173,123




Expenses



156,667



170,371




Pre-tax earnings



371,121



2,752














Corporate and Other










Revenues



13,374



28,875




Expenses



79,223



69,772




Pre-tax loss



(65,849)



(40,897)














Consolidated










Revenues



958,038



697,790




Expenses



609,024



623,899




Pre-tax earnings


$

349,014


$

73,891
























* Totals may not add due to rounding.










 

KCG HOLDINGS, INC.








Exhibit 4

Regulation G Reconciliation of Non-GAAP financial measures (Continuing operations)*





(in thousands)









(Unaudited)


















Three months ended June 30, 2015


Market Making


Global
Execution Services


Corporate and
Other


Consolidated

Reconciliation of GAAP Pre-Tax to Non-GAAP Pre-Tax:           









GAAP Income (loss) from continuing operations before income taxes


$                4,402


$              (9,937)


$            (51,579)


$            (57,114)

Accelerated stock-based compensation


19,844


8,202


803


28,849

Debt make-whole premium


-


-


16,500


16,500

Writedown of capitalized debt costs


-


-


8,506


8,506

Other real estate related charges


-


-


6,327


6,327

Non-GAAP Income (loss) from continuing operations before income taxes


$              24,246


$              (1,735)


$            (19,443)


$                3,068










Three months ended March 31, 2015


Market Making


Global Execution
Services


Corporate and
Other


Consolidated

Reconciliation of GAAP Revenues  to Non-GAAP Revenues:           









GAAP Revenues 


$            224,548


$            464,266


$                7,342


$            696,156

Gain on sale of KCG Hotspot


-


(385,026)


-


(385,026)

Non- GAAP Revenues 


$            224,548


$              79,240


$                7,342


$            311,130










Three months ended March 31, 2015


Market Making


Global Execution Services


Corporate and Other


Consolidated

Reconciliation of GAAP Pre-Tax to Non-GAAP Pre-Tax:           









GAAP Income (loss) from continuing operations before income taxes


$              39,340


$            381,058


$            (14,270)


$            406,128

Gain on sale of KCG Hotspot


-


(385,026)


-


(385,026)

Professional fees related to the sale of KCG Hotspot


-


6,736


-


6,736

Compensation expense related to the sale of KCG Hotspot


-


4,457


-


4,457

Other real estate related charges


-


-


132


132

Non-GAAP Income (loss) from continuing operations before income taxes


$              39,340


$                7,225


$            (14,138)


$              32,427










Three months ended June 30, 2014


Market Making


Global Execution Services


Corporate and Other


Consolidated

Reconciliation of GAAP Pre-Tax to Non-GAAP Pre-Tax:           









GAAP Income (loss) from continuing operations before income taxes


$              36,004


$                   736


$            (22,233)


$              14,507

Compensation related to reduction in workforce


383


1,886


800


3,069

Writedown of capitalized debt costs


-


-


1,995


1,995

Other real estate related charges


452


-


1,489


1,941

Non-GAAP Income (loss) from continuing operations before income taxes


$              36,839


$                2,622


$            (17,949)


$              21,512










* Totals may not add due to rounding









 


 

KCG HOLDINGS, INC.








Exhibit 4

Regulation G Reconciliation of Non-GAAP financial measures (Continuing operations)*




(Continued)

(in thousands)


















Six months ended June 30, 2015


Market Making


Global Execution
Services


Corporate and
Other


Consolidated

Reconciliation of GAAP Revenues  to Non-GAAP Revenues:           









GAAP Revenues 


$            416,876


$            527,788


$              13,374


$            958,038

Gain on sale of KCG Hotspot


-


(385,026)


-


(385,026)

Non- GAAP Revenues 


$            416,876


$            142,762


$              13,374


$            573,012










Six months ended June 30, 2015


Market Making


Global Execution Services


Corporate and Other


Consolidated

Reconciliation of GAAP Pre-Tax to Non-GAAP Pre-Tax:           









GAAP Income (loss) from continuing operations before income taxes


$              43,742


$            371,121


$            (65,849)


$            349,014

Gain on sale of KCG Hotspot


-


(385,026)


-


(385,026)

Accelerated stock-based compensation


19,844


8,202


803


28,849

Debt make-whole premium


-


-


16,500


16,500

Writedown of capitalized debt costs


-


-


8,506


8,506

Professional fees related to the sale of KCG Hotspot


-


6,736


-


6,736

Other real estate related charges


-


-


6,459


6,459

Compensation expense related to the sale of KCG Hotspot


-


4,457


-


4,457

Non-GAAP Income (loss) from continuing operations before income taxes


$              63,586


$                5,490


$            (33,581)


$              35,495




























Six months ended June 30, 2014


Market Making


Global Execution Services


Corporate and Other


Consolidated

Reconciliation of GAAP Revenues  to Non-GAAP Revenues:           









GAAP Revenues 


$            495,792


$            173,123


$              28,875


$            697,790

Income resulting from the merger of BATS and Direct Edge, net


-


-


(9,644)


(9,644)

Non- GAAP Revenues 


$            495,792


$            173,123


$              19,231


$            688,146










Six months ended June 30, 2014


Market Making


Global Execution Services


Corporate and Other


Consolidated

Reconciliation of GAAP Pre-Tax to Non-GAAP Pre-Tax:           









GAAP Income (loss) from continuing operations before income taxes


$            112,036


$                2,752


$            (40,897)


$              73,891

Writedown of capitalized debt costs


-


-


9,552


9,552

Income resulting from the merger of BATS and Direct Edge, net


-


-


(9,644)


(9,644)

Compensation related to reduction in workforce


383


1,886


800


3,069

Other real estate related charges


811


-


1,396


2,207

Non-GAAP Income (loss) from continuing operations before income taxes


$            113,230


$                4,638


$            (38,793)


$              79,075



















* Totals may not add due to rounding









 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/kcg-announces-second-quarter-2015-results-300121768.html

SOURCE KCG Holdings, Inc.

Sophie Sohn, Communications & Marketing, 312-931-2299, media@kcg.com, Jonathan Mairs, Investor Relations, 201-356-1529, jmairs@kcg.com

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