KCG ANNOUNCES FOURTH QUARTER 2015 RESULTS


KCG ANNOUNCES CONSOLIDATED LOSS OF $0.05 PER DILUTED SHARE FOR THE FOURTH QUARTER OF 2015

KCG reports consolidated revenues of $262.7 million
and pre-tax loss of $7.1 million for the quarter

KCG increases tangible book value to $14.89 per share
and book value to $16.00 per share

JERSEY CITY, New Jersey - January 29, 2016 - KCG Holdings, Inc. KCG today reported a consolidated loss of $4.6 million, or $0.05 per diluted share, for the fourth quarter of 2015. The fourth quarter consolidated loss includes a net tax benefit of approximately $1.3 million or $0.01 per diluted share primarily related to federal tax credits.

KCG also reported a pre-tax loss of $7.1 million. Included in this pre-tax loss are $19.8 million of gains on the sales of investments, $17.4 million of writedowns primarily related to assets of businesses held for sale and $3.2 million of writedowns of investments. Excluding these items, on a non-GAAP basis, fourth quarter 2015 pre-tax loss was $6.2 million. A reconciliation of GAAP to non-GAAP results is included in Exhibit 4.

Select Financial Results ($ in thousands, except EPS)
From Continuing Operations 4Q15   3Q15   4Q14
GAAP Revenues 262,661   377,036   346,139
Non-GAAP revenues* 246,134   377,036   344,023
  Trading revenues, net 145,959   277,677   221,415
  Commissions and fees 94,315   95,027   117,326
GAAP pre-tax (loss) income (7,096)   35,419   26,531
GAAP EPS (0.05)   0.24   0.23
Non-GAAP pre-tax (loss) income* (6,220)   69,448   30,532

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

Fourth Quarter Highlights

  • KCG Electronic Trading increased average daily U.S. equity share volume from the 25 largest U.S. asset managers 37 percent year over year
  • KCG Acknowledge FI set a new quarterly record for average daily U.S. Treasury notional volume with a 51 percent rise year over year
  • KCG BondPoint set a new quarterly record for average daily fixed income par value traded with a 15 percent increase year over year
  • KCG completed the sales of investments including Aperture Group, the corporate parent of OptionsHouse
  • KCG repurchased 2.3 million shares of KCG Class A Common Stock for $29.4 million and 2.6 million warrants for $4.4 million

Daniel Coleman, Chief Executive Officer of KCG, said, "KCG's financial results for the fourth quarter of 2015 reflect a more difficult operating environment for market making due largely to macro market events as well as competitive pressures in U.S. equity wholesaling. In the fourth quarter, we made progress in growing KCG Electronic Trading among the largest U.S. asset managers. In addition, we continued to execute on our program of returning excess capital to our stockholders when conditions warrant."

Full Year 2015
In 2015, KCG continued to build an intermediary firm capable of directly addressing the urgent need for liquidity across the global securities markets through principal and agency-based trading. A renewed focus on strategic clients contributed to a market share gain in retail U.S. equity order flow from brokers as well as increased algorithmic U.S. equity share volume from asset managers year over year. In terms of cost control, KCG reduced non-GAAP, non-transaction-based expenses by $60.2 million or 7.6 percent from a year ago (Exhibit 4). Following a strategic review of assets, the firm sold KCG Hotspot in the first quarter of 2015. The firm allocated a significant portion of available free cash toward capital return, repurchasing 27.0 million shares of KCG Class A Common Stock for $371.7 million, equivalent to approximately 23 percent of all shares outstanding at the beginning of 2015. For the year, KCG increased tangible book value by $3.17 to $14.89 per share and book value by $2.97 to $16.00 per share.

Mr. Coleman commented, "As the year came to a close, KCG initiated a more fundamental reengineering of operations. Preparations are underway to achieve greater efficiencies from the front to the back office. In addition, we're consolidating corporate headquarters in lower Manhattan to facilitate greater collaboration across teams. In the coming year, we'll focus on that which we can control in terms of reducing costs, adding scale and continuing the capital return program as we work to achieve a double-digit return on equity in 2017."

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 fourth quarter of 2015, the segment generated total revenues of $168.2 million and a pre-tax loss of $6.4 million. Excluding charges related to asset writedowns of $15.5 million, the segment generated non-GAAP pre-tax income of $9.1 million.

During the fourth quarter of 2015, average daily consolidated U.S. equity dollar volume along with U.S. equity futures and options contracts declined year over year. In addition, market-wide gross retail U.S. equity dollar volume decreased an estimated 21.8 percent from a year ago, which negatively affected KCG direct-to-client market making. Despite the operating environment, KCG gained market share of retail order flow from leading U.S. brokers year over year amid continued strong competition. The results for the segment were also affected by the deterioration in market volumes of U.S. Treasuries and foreign exchange from a year ago as well as macro events affecting Asian equities.

Mr. Coleman commented, "The decline in consolidated U.S. equity market volumes and volatility was exacerbated by continuing strong competition, tight spreads and the weakest quarterly gross retail dollar volume in a year and a half. Retail investors pulled money from the U.S. equity market in December and we saw evidence of institutional-size portfolio liquidations late in the quarter. In fixed income market making, KCG Acknowledge FI set a new quarterly record for average daily U.S. Treasury notional volume with a 51 percent rise year over year despite a decline in market volumes."

In the third quarter of 2015, the segment generated total revenues of $299.8 million and pre-tax income of $85.4 million. Excluding expenses related to asset writedowns of $4.4 million, the segment generated non-GAAP pre-tax income of $89.8 million.

In the fourth quarter of 2014, the segment generated total revenues of $238.7 million and pre-tax income of $42.7 million.

Select Trade Statistics: U.S. Equity Market Making

  4Q15   3Q15   4Q14
Average daily dollar volume traded ($ millions) 28,842   31,517   31,621
Average daily trades (thousands) 3,667   4,025   4,036
Average daily shares traded (millions) 4,698   4,823   5,241
  NYSE and NASDAQ shares traded 922   985   933
  OTC Bulletin Board and OTC Market shares traded 3,775   3,838   4,308
Average revenue capture per U.S. equity dollar value traded (bps) 0.77   1.27   0.93

Global Execution Services
The Global Execution Services segment comprises agency execution services and trading venues. During the fourth quarter of 2015, the segment generated total revenues of $70.2 million and pre-tax loss of $1.1 million. Excluding a writedown of goodwill of $0.9 million, the segment generated a non-GAAP pre-tax loss of $0.2 million.

During the fourth quarter of 2015, institutional trading activity in U.S. equities and ETFs declined year over year given the uncertain market outlook. The sustained domestic equity mutual fund outflows during the course of the year presaged to an extent the change in investment sentiment. Despite the environment, KCG grew average daily algorithmic U.S. equity share volume from the 25 largest U.S. asset managers 37 percent from a year ago. In addition, KCG BondPoint grew average daily fixed income par value traded 15.1 percent from a year ago.

Mr. Coleman commented, "During the quarter, we continued to deepen relationships with the leading U.S. asset managers, which account for a disproportionate amount of institutional trading activity. KCG Electronic Trading offers algorithms that leverage the firm's exceptional intellectual capital, trading models, technology and data to generate alpha on behalf of clients. During the quarter, KCG BondPoint produced a new quarterly record for fixed income trade volume by continually providing the leading U.S. brokers with effective price discovery, centralized liquidity, cost-efficient trade execution and best execution for the retail investor."

In the third quarter of 2015, the segment generated total revenues of $69.7 million and a pre-tax loss of $1.1 million.

In the fourth quarter of 2014, which included the results of KCG Hotspot which was sold in the first quarter of 2015, the segment generated total revenues of $93.4 million and pre-tax income of $10.0 million. Excluding a gain of $2.1 million related to the completion of the sale of the FCM, the segment generated non-GAAP pre-tax income of $7.9 million.

Select Trade Statistics: Agency Execution and Trading Venues

  4Q15   3Q15   4Q14
Average daily KCG algorithmic trading and order routing
U.S. equities shares traded (millions)
311.7   316.8   334.3
Average daily KCG BondPoint fixed income par value
traded ($ millions)
150.7   130.5   130.8

Corporate and Other
The Corporate and Other segment includes strategic investments and corporate overhead expenses. During the fourth quarter of 2015, the segment generated total revenues of $24.2 million and pre-tax income of $0.4 million. Excluding gains on sales and writedowns of investments of $19.8 million and $3.2 million, respectively and a $1.0 million writedown of an intangible asset, the segment generated a non-GAAP pre-tax loss of $15.1 million.

In the third quarter of 2015, the segment generated total revenues of $7.6 million and a pre-tax loss of $49.0 million. Excluding the writedown of assets and other real estate related charges of $29.7 million, the segment generated a non-GAAP pre-tax loss of $19.3 million in the third quarter.

In the fourth quarter of 2014, the segment generated total revenues of $14.0 million and a pre-tax loss of $26.1 million. Excluding lease loss expenses of $6.1 million, the segment generated a non-GAAP pre-tax loss of $20.0 million.

Financial Condition
As of December 31, 2015, KCG had $581.3 million in cash and cash equivalents. Total outstanding debt was $495.6 million. KCG had $1.44 billion in stockholders' equity, equivalent to a book value of $16.00 per share and tangible book value, which includes the value of its assets of businesses held for sale, of $14.89 per share based on total shares outstanding of 90.2 million, including restricted stock units.

KCG's headcount was 1,006 full-time employees at December 31, 2015 compared to 1,033 at September 30, 2015.

During the fourth quarter of 2015, KCG repurchased 2.3 million shares for approximately $29.4 million and 2.6 million warrants for $4.4 million under the Company's stock repurchase program.

Management from time to time conducts a strategic review of its businesses and evaluates their potential value in the marketplace relative to their current and expected returns.  As a result of such a review, KCG determined that certain of its businesses are no longer considered core to its strategy, and KCG is currently seeking the opportunity to exit or divest of these businesses.  KCG believes that this current course of action does not represent a strategic shift that will have a major effect on its operations and financial results, but does meet the requirements to be considered held-for-sale at December 31, 2015.  As part of this review, KCG determined that the carrying value of certain assets that are considered held for sale exceeded their fair value, and, as a result, recorded a charge totaling $16.3 million as it relates to such held-for-sale businesses.  The fair value of such assets, of $24.7 million, are included within assets of businesses held-for-sale on the December 31, 2015 Statement of Financial Condition. In aggregate, these businesses accounted for less than 1.5% of consolidated revenues in 2015.

Conference Call
KCG will hold a conference call to discuss fourth quarter 2015 financial results starting at 9:00 a.m. Eastern Time today, January 29, 2016. To access the call, dial 800-967-0627 (domestic) or 913-312-0689 (international) and enter passcode 749088. In addition, the call will be webcast at http://edge.media-server.com/m/p/xge9rvfo. 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=749088&passcode=749088 and entering passcode 749088.

Additional information for investors, including a presentation of the fourth 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 December 31, 2015, September 30, 2015 and December 31, 2014 and for the years ended December 31, 2015 and December 31, 2014. KCG believes the presentations provide a meaningful summary of revenues and results of operations for each of the three and twelve 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 inability to manage trading strategy performance and sustain revenue and earnings growth; (ii) the sale of KCG Hotspot; (iii) changes in market structure, legislative, regulatory or financial reporting rules, including the increased focus by Congress, federal and state regulators, the SRO's 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; (iv) past or future changes to KCG's organizational structure and management; (v) 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; (vi) KCG's ability to keep up with technological changes; (vii) KCG's ability to effectively identify and manage market risk, operational and technology risk, cybersecurity risk, legal risk, liquidity risk, reputational risk, counterparty and credit risk, international risk, regulatory risk, and compliance risk; (viii) the cost and other effects of material contingencies, including litigation contingencies, and any adverse judicial, administrative or arbitral rulings or proceedings; (ix) the effects of increased competition and KCG's ability to maintain and expand market share; (x) the announced plan to relocate KCG's global headquarters from Jersey City, NJ to New York, NY; and (xi) KCG's ability to complete the sale or disposition of any or all of the assets or businesses that are classified as held for sale. The list above is not exhaustive. Because forward looking statements involve risks and uncertainties, the actual results and performance of KCG may materially differ from the results expressed or implied by such statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Unless otherwise required by law, KCG also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made herein. Readers should carefully review the risks and uncertainties disclosed in KCG's reports with the U.S. Securities and Exchange Commission ("SEC"), including those detailed under "Certain Factors Affecting Results of Operations" in the MD&A and in "Risk Factors" in Part I, Item 1A of KCG 's Annual Report on Form 10-K for the year ended December 31, 2014, and in Part II, Item 1A of the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, and in other reports or documents KCG files with, or furnishes to, the SEC from time to time. This information should be read in conjunction with KCG's Consolidated Financial Statements and the Notes thereto contained in the Quarterly Report on Form 10-Q for the quarter-ended September 30, 2015, and in other reports or documents KCG files with, or furnishes to, the SEC from time to time.

CONTACTS

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

KCG HOLDINGS, INC.                   Exhibit 1
CONSOLIDATED STATEMENTS OF OPERATIONS                    
(Unaudited)                    
  For the three months ended
  December 31, 2015     September 30, 2015     December 31, 2014
  (In thousands, except per share amounts)
Revenues                    
Trading revenues, net  $ 145,959      $ 277,677      $ 221,415
Commissions and fees   94,315       95,027       117,326
Interest, net   (429)       (1,080)       (177)
Investment income and other, net   22,816       5,412       7,575
Total revenues   262,661       377,036       346,139
Expenses                    
Employee compensation and benefits   67,823       121,597       116,214
Execution and clearance fees   66,613       67,502       82,377
Communications and data processing   36,003       35,256       36,945
Depreciation and amortization   25,077       23,813       21,224
Payments for order flow   14,464       17,121       14,698
Debt interest expense   9,186       9,117       7,721
Collateralized financing interest   8,746       8,617       7,973
Occupancy and equipment rentals   7,842       7,472       8,514
Professional fees   5,774       4,406       5,695
Business development   1,751       1,846       2,308
Writedown of assets and other real estate related charges   17,404       34,029       6,117
Other   9,074       10,841       9,822
Total expenses   269,757       341,617       319,608
(Loss) income from continuing operations before income taxes   (7,096)       35,419       26,531
Income tax (benefit) expense   (2,500)       13,482       562
(Loss) income from continuing operations, net of tax   (4,596)       21,937       25,969
Loss from discontinued operations, net of tax     -          -        165
Net (loss) income  $ (4,596)      $ 21,937      $ 26,134
Basic (loss) earnings per share from continuing operations  $ (0.05)      $ 0.24      $ 0.24
Diluted (loss) earnings per share from continuing operations  $ (0.05)      $ 0.24      $ 0.23
Basic loss per share from discontinued operations  $   -       $   -       $   - 
Diluted loss per share from discontinued operations  $   -       $   -       $   - 
Basic (loss) earnings per share  $ (0.05)      $ 0.24      $ 0.24
Diluted (loss) earnings per share  $ (0.05)      $ 0.24      $ 0.23
Shares used in computation of basic earnings (loss) per share   89,184       91,134       109,654
Shares used in computation of diluted earnings (loss) per share   89,184       92,079       112,224

KCG HOLDINGS, INC.         Exhibit 1
CONSOLIDATED STATEMENTS OF OPERATIONS         (Continued)
(Unaudited)          
  For the years ended
  December 31, 2015   December 31, 2014
  (In thousands, except per share amounts)
Revenues          
Trading revenues, net  $ 803,181     837,357
Commissions and fees   376,673     437,022
Interest, net   (2,128)     621
Investment income and other, net   420,009     41,232
Total revenues   1,597,735     1,316,232
Expenses          
Employee compensation and benefits   405,609     437,269
Execution and clearance fees   265,186     305,177
Communications and data processing   139,263     150,595
Depreciation and amortization   90,231     81,448
Payments for order flow   61,741     70,183
Debt interest expense   36,755     32,456
Collateralized financing interest   34,678     27,860
Occupancy and equipment rentals   30,128     32,707
Professional fees   27,055     25,596
Business development   8,479     9,763
Debt extinguishment charges   25,006     9,552
Writedown of assets and other real estate related charges   57,892     8,625
Other   38,375     39,814
Total expenses   1,220,398     1,231,045
Income from continuing operations before income taxes   377,337     85,187
Income tax expense   129,857     22,753
Income from continuing operations, net of tax   247,480     62,434
Loss from discontinued operations, net of tax     -      (1,332)
Net Income  $ 247,480    $ 61,102
Basic earnings per share from continuing operations  $   2.46    $   0.55
Diluted earnings per share from continuing operations  $   2.40    $   0.54
Basic loss per share from discontinued operations  $   -     $   (0.01)
Diluted loss per share from discontinued operations  $   -     $   (0.01)
Basic earnings per share  $   2.46    $   0.54
Diluted earnings per share  $   2.40    $   0.52
Shares used in computation of basic earnings (loss) per share   100,437     112,854
Shares used in computation of diluted earnings (loss) per share   102,922     116,534

KCG HOLDINGS, INC.     Exhibit 2
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION      
(In thousands)          
(Unaudited)          
  December 31, 2015   December 31, 2014
ASSETS          
Cash and cash equivalents  $ 581,313    $ 578,768
Cash and cash equivalents segregated under federal and other regulations   3,000     3,361
Financial instruments owned, at fair value:          
Equities   2,129,208     2,479,910
Listed options   178,360     144,586
Debt securities   136,387     82,815
Other financial instruments   445     60
Total financial instruments owned, at fair value   2,444,400     2,707,371
Collateralized agreements:          
Securities borrowed   1,636,284     1,632,062
Receivable from brokers, dealers and clearing organizations   681,211     1,188,833
  Fixed assets and leasehold improvements, less          
accumulated depreciation and amortization   94,858     134,051
Investments   98,943     100,726
Goodwill and Intangible assets, less accumulated amortization   100,471     152,594
Deferred tax asset, net   151,703     154,759
Income taxes receivable   18,054       17,771
Assets of businesses held for sale     24,749     40,484
Other assets   215,943     119,874
Total assets  $ 6,050,929    $ 6,830,654
LIABILITIES & EQUITY          
Liabilities          
Financial instruments sold, not yet purchased, at fair value:          
Equities  $ 1,856,171    $ 2,069,342
Listed options   151,893     115,362
Debt securities   105,340     101,003
Total financial instruments sold, not yet purchased, at fair value   2,113,404     2,285,707
Collateralized financings:          
Securities loaned    463,377     707,744
Financial instruments sold under agreements to repurchase   954,902     933,576
Total collateralized financings   1,418,279     1,641,320
Payable to brokers, dealers and clearing organizations   273,805     676,089
Payable to customers   17,387     22,110
Accrued compensation expense   154,547     114,559
Accrued expenses and other liabilities   135,401     143,677
Liabilities of businesses held for sale     -      2,356
Debt   495,632     422,259
Total liabilities   4,608,455     5,308,077
Equity          
Class A Common Stock   1,060     1,275
Additional paid-in capital   1,436,671     1,369,298
Retained earnings   190,496     272,780
Treasury stock, at cost   (186,103)     (122,909)
Accumulated other comprehensive income   350     2,133
Total equity   1,442,474     1,522,577
Total liabilities and equity  $ 6,050,929    $ 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 
    December 31, 2015   September 30, 2015   December 31, 2014
Market Making                  
Revenues   $ 168,227   $ 299,755    $ 238,740
Expenses     174,609     214,336     196,030
Pre-tax earnings (loss)     (6,382)     85,419     42,710
                   
Global Execution Services                  
Revenues     70,221     69,713     93,369
Expenses     71,336     70,763     83,400
Pre-tax earnings (loss)     (1,115)     (1,050)     9,969
                   
Corporate and Other                  
Revenues     24,213     7,568     14,030
Expenses     23,812     56,519     40,178
Pre-tax earnings (loss)     401     (48,951)     (26,148)
                   
Consolidated                  
Revenues     262,661     377,036     346,139
Expenses     269,757     341,617     319,608
Pre-tax earnings (loss)   $ (7,096)   $ 35,419    $ 26,531
                   
* Totals may not add due to rounding.                  

KCG HOLDINGS, INC.                 Exhibit 3 (Continued)
PRE-TAX EARNINGS (LOSS) FROM CONTINUING OPERATIONS BY BUSINESS SEGMENT*
(In thousands)                  
(Unaudited)                  
    For the years ended       
    December 31, 2015   December 31, 2014      
Market Making                  
Revenues   $ 884,858    $ 901,152      
Expenses     762,080     754,439      
Pre-tax earnings     122,778     146,713      
                   
Global Execution Services                  
Revenues     667,723     345,710      
Expenses     298,766     334,654      
Pre-tax earnings     368,957     11,056      
                   
Corporate and Other                  
Revenues     45,154     69,369      
Expenses     159,552     141,951      
Pre-tax loss     (114,398)     (72,582)      
                   
Consolidated                  
Revenues     1,597,735     1,316,232      
Expenses     1,220,398     1,231,045      
Pre-tax earnings   $ 377,337    $ 85,187      
                   
* 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 December 31, 2015   Market Making   Global Execution Services   Corporate and Other   Consolidated
Reconciliation of GAAP Revenues  to Non-GAAP Revenues:                         
GAAP Revenues   $   168,227    $   70,221    $   24,213    $   262,661
Gain on sales of investments       -       -       (19,751)       (19,751)
Writedowns of investments       -       -       3,224       3,224
Non- GAAP Revenues   $   168,227    $   70,221    $   7,686    $   246,134
                         
Three months ended December 31, 2015   Market Making   Global Execution Services   Corporate and Other   Consolidated
Reconciliation of GAAP Pre-Tax to Non-GAAP Pre-Tax:                         
GAAP (Loss) income from continuing operations before income taxes   $   (6,382)   $   (1,115)   $   401   $   (7,096)
Gain on sales of investments       -       -       (19,751)       (19,751)
Writedowns of investments       -       -       3,224       3,224
Writedown of goodwill and intangible assets       15,266       907       1,014       17,187
Writedown of assets       216       -       -       216
Non GAAP Income (loss) from continuing operations before income taxes   $   9,100   $   (208)   $   (15,112)   $   (6,220)
                         
Three months ended September 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   $ 85,419   $ (1,050)   $ (48,951)   $ 35,419
Other real estate related charges       -       -     28,825     28,825
Writedown of assets     4,379       -     825     5,204
Non-GAAP Income (loss) from continuing operations before income taxes   $ 89,798   $ (1,050)   $ (19,301)   $ 69,448
                         
Three months ended December 31, 2014   Market Making   Global Execution Services   Corporate and Other   Consolidated
Reconciliation of GAAP Revenues  to Non-GAAP Revenues:                         
GAAP Revenues   $ 238,740   $ 93,369   $ 14,030   $ 346,139
Gain on sale of FCM       -       (2,116)       -     (2,116)
Non- GAAP Revenues   $ 238,740   $ 91,253   $ 14,030   $ 344,023
                         
Three months ended December 31, 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   $ 42,710   $ 9,969   $ (26,148)   $ 26,531
Gain on sale of FCM       -       (2,116)       -       (2,116)
Writedown of assets and lease loss accrual, net       -       -     6,117     6,117
Non-GAAP Income (loss) from continuing operations before income taxes   $ 42,710   $ 7,853   $ (20,031)   $ 30,532
                         
Year ended December 31, 2015   Market Making   Global Execution Services   Corporate and Other   Consolidated
Reconciliation of GAAP Revenues  to Non-GAAP Revenues:                         
GAAP Revenues   $   884,858   $   667,723   $   45,154   $   1,597,735
Gain on sale of KCG Hotspot       -       (385,026)       -       (385,026)
Gain on sales of investments       -       -       (19,751)       (19,751)
Writedowns of investments       -       -       3,224       3,224
Non- GAAP Revenues   $   884,858   $   282,697   $   28,627   $   1,196,182
                         
Year ended December 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   $   122,778   $   368,957   $   (114,398)   $   377,337
Gain on sale of KCG Hotspot       -     (385,026)       -     (385,026)
Gain on sales of investments       -       -       (19,751)     (19,751)
Writedowns of investments       -       -       3,224     3,224
Other real estate related charges       -       -     35,284     35,284
Accelerated stock-based compensation     19,844     8,202     803     28,849
Writedown of goodwill and intangible assets       15,266       907       1,014     17,187
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
Writedown of assets       4,595       -     825     5,420
Compensation expense related to the sale of KCG Hotspot       -       4,457       -     4,457
Non-GAAP Income (loss) from continuing operations before income taxes   $ 162,483   $ 4,233   $ (67,993)   $ 98,723
                         
Year ended December 31, 2014   Market Making   Global Execution Services   Corporate and Other   Consolidated
Reconciliation of GAAP Revenues  to Non-GAAP Revenues:                         
GAAP Revenues   $ 901,152   $ 345,710   $ 69,369   $ 1,316,232
Net gain related to tradeMONSTER combination with OptionsHouse       -       -     (15,105)     (15,105)
Income resulting from the merger of BATS and Direct Edge, net       -       -     (9,644)     (9,644)
Gain on sale of FCM       -       (2,116)       -     (2,116)
Non- GAAP Revenues   $ 901,152   $ 343,594   $ 44,620   $ 1,289,367
                         
Year ended December 31, 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   $ 146,713   $ 11,056   $ (72,582)   $ 85,187
Net gain related to tradeMONSTER combination with OptionsHouse       -       -     (15,105)     (15,105)
Income resulting from the merger of BATS and Direct Edge, net       -       -     (9,644)     (9,644)
Gain on sale of FCM       -       (2,116)       -     (2,116)
Compensation related to reduction in workforce and other employee separations     3,169     5,463     4,958     13,590
Writedown of capitalized debt costs       -       -     9,552     9,552
Writedown of assets and lease loss accrual, net     811       -     7,814     8,625
Non GAAP Income (Loss) from continuing operations before income taxes   $ 150,693   $ 14,403   $ (75,007)   $ 90,089

            Adjustments for      
Year ended December 31, 2015     GAAP     non-GAAP presentation     Non-GAAP expenses
Reconciliation of GAAP non transactional based expenses                  
to Non GAAP non transactional based expenses**                  
Employee compensation and benefits   $ 405,609   $   33,306   $ 372,303
Communications and data processing     139,263       -     139,263
Depreciation and amortization     90,231       -     90,231
Debt interest expense     36,755       -     36,755
Occupancy and equipment rentals     30,128       -     30,128
Professional fees     27,055       6,736     20,319
Business development     8,479       -     8,479
Debt extinguishment charges     25,006       25,006       -
Writedown of assets and other real estate related charges     57,892       57,892       -
Other     38,375       -     38,375
Total non-GAAP Expense   $   858,793   $   122,940   $   735,853
                  
                  
            Adjustments for      
Year ended December 31, 2014    GAAP     non-GAAP presentation     Non-GAAP expenses
Reconciliation of GAAP non transactional based expenses                  
to Non GAAP non transactional based expenses**                  
Employee compensation and benefits   $ 437,269   $   13,590   $   423,679
Communications and data processing     150,595       -       150,595
Depreciation and amortization     81,448       -       81,448
Occupancy and equipment rentals     32,707       -       32,707
Debt interest expense     32,456       -       32,456
Professional fees     25,596       -       25,596
Business development     9,763       -       9,763
Debt extinguishment charges     9,552       9,552       -
Writedown of assets and other real estate related charges     8,625       8,625       -
Other     39,814       -       39,814
Total non-GAAP Expense   $   827,825   $   31,767   $   796,058
                  
** Transactional based expenses refer to Execution and clearance fees, Payments for order flow and Collateralized financing interest      
* Totals may not add due to rounding                  




This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: KCG Holdings, Inc. via Globenewswire

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