Summary of the segment financial information |
A summary of the segment financial information is as follows (dollars in thousands):
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U.S.
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Canadian
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European
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Asia Pacific
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Operations
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Operations
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Operations
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Operations
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Corporate
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Consolidated
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2016
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Total revenues
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$
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229,655
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$
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61,822
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$
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125,945
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$
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47,919
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$
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3,711
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$
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469,052
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(Loss) income before income tax (benefit) expense (1) (3) (4) (5) (6) (8)
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(11,133)
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11,564
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25,470
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1,553
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(70,694)
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(43,240)
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Identifiable assets
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396,419
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80,943
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236,071
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61,852
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—
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775,285
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Capital purchases
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15,547
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2,549
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1,886
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1,333
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—
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21,315
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Depreciation and amortization
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32,896
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2,402
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6,741
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1,484
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—
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43,523
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Non-cash share-based compensation
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10,642
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2,383
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5,948
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925
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5,722
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25,620
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2015
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Total revenues
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$
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285,230
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$
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63,028
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$
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129,729
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$
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48,179
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$
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108,637
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$
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634,803
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Income before income tax expense (2) (7) (9)
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16,000
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10,643
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28,244
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1,620
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64,719
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121,226
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Identifiable assets
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1,304,995
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76,561
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262,095
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65,371
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—
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1,709,022
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Capital purchases
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7,748
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2,175
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1,334
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648
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—
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11,905
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Depreciation and amortization
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33,971
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2,247
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6,560
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1,373
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—
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44,151
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Non-cash share-based compensation
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10,725
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1,466
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4,505
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866
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(895)
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16,667
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2014
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Total revenues
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$
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306,540
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$
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77,633
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$
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127,410
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$
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46,926
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$
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1,305
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$
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559,814
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Income (loss) before income tax expense (benefit)
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35,803
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17,259
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34,081
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(1,690)
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(20,466)
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64,987
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Identifiable assets
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929,062
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105,898
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249,702
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66,187
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—
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1,350,849
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Capital purchases
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10,645
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1,656
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1,114
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383
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—
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13,798
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Depreciation and amortization
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38,659
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3,153
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6,422
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1,150
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—
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49,384
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Non-cash share-based compensation
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10,107
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695
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2,891
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979
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687
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15,359
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(1)
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In the second quarter of 2016, the Company received insurance proceeds of $2.4 million from its corporate insurance carrier to settle a claim for lost profits arising from an August 2015 outage in its outsourced primary data center in the U.S. Additionally, the Company generated a nominal gain on the completion of the sale of its investment research operations in May 2016. |
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(2)
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In December 2015, the Company completed the sale of the subsidiaries conducting its energy research operations to an affiliate of Warburg Pincus, a global private equity firm, for $120.5 million. The pre-tax gain of $107.7 million is net of a working capital adjustment on the closing balance sheet, direct costs related to the sale and the carrying value of the net assets disposed. |
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(3)
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In the second half of 2016, the Company incurred $24.5 million for a settlement with the SEC with respect to an inquiry involving pre-released ADRs and incurred legal and other related costs associated with this matter of $2.9 million. |
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(4)
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During the second quarter of 2016, the Company incurred restructuring charges of $4.3 million related to (a) the reduction in its high-touch trading and sales organizations and (b) the closing of its U.S. matched-book securities lending operations and its Canadian arbitrage trading desk. In the fourth quarter of 2016, the Company incurred additional restructuring charges of $5.3 million related to management delayering and the elimination of certain positions. |
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(5)
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The Company’s current Chief Executive Officer was granted cash and stock awards upon the commencement of his employment in January 2016, a significant portion of which replaced awards he forfeited at his former employer. Due to U.S. tax regulations, only a small portion of the amount expensed for these awards was eligible for a tax deduction. |
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(6)
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In the first half of 2016, the Company incurred a charge of $4.8 million, net of an insurance recovery of $0.5 million, to settle an arbitration case with its former CEO and incurred legal fees of $2.7 million. In the third quarter of 2016, the Company recorded a reimbursement of $0.9 million of these legal fees from its insurance carrier. |
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(7)
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In the third quarter of 2015, the Company reached a final settlement with the SEC to pay an aggregate amount of $20.3 million in connection with the SEC’s investigation into a proprietary trading pilot operated during 2010 and 2011. During 2015, the Company incurred $4.9 million in legal and other related costs associated with this matter. |
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(8)
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In the third quarter of 2016, the Company substantially completed the liquidation of its investment in its Israel entity that ceased operations in December 2013. During the Company’s period of ownership and through December 2013, the Company had accumulated foreign exchange translation gains as a component of equity, which have been reclassified as a gain that reduced other general and administrative expenses in the Consolidated Statement of Operations. |
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(9)
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In December 2015, the Company amended the capital structure of its holding company outside North America to provide continued flexibility for the movement of capital. This amendment accelerated the U.S. taxation of amounts earned outside of North America, resulting in a tax charge of $6.5 million. |
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Schedule of total revenues for the products and services provided by our geographic segments |
The table below details the total revenues for the categories of products and services provided by the Company for the years ended December 31, 2016, 2015 and 2014 (dollars in thousands):
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2016
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2015
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2014
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Revenues:
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Execution Services (1)
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$
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328,252
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$
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386,158
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$
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416,571
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Workflow Technology (2)
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92,891
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94,117
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95,926
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Analytics
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44,198
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45,891
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46,012
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Corporate (non-product)
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3,711
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108,637
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1,305
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Total Revenues
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$
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469,052
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$
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634,803
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$
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559,814
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Notes:
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(1)
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In December 2015, the Company sold its energy research operations and in May 2016 the Company sold its remaining investment research operations, both of which were within the Research Sales and Trading (RS&T) product group. Beginning in the second quarter 2016, the remaining portfolio trading and high-touch execution offerings, previously grouped within RS&T, were combined with the electronic execution and liquidity solutions, previously grouped with the Electronic Brokerage (EB) product group, to form the new Execution Services product group to create an optimal alignment for cross-selling synergies. The entire historic activity of EB and RS&T, including the divested investment research operations, has been reclassified to the Execution Services product group to conform to the current presentation. |
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(2)
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Previously known as Platforms. |
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Schedule of long-lived assets, classified by the geographic region |
Long‑lived assets, classified by the geographic region in which the Company operates, are as follows (dollars in thousands):
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2016
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2015
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2014
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Long-lived Assets at December 31,
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United States
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$
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92,509
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$
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97,226
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$
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107,746
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Canada
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6,972
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6,357
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7,070
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Europe
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22,883
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27,226
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29,531
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Asia Pacific
|
|
|
3,726
|
|
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3,162
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|
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2,377
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Total
|
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$
|
126,090
|
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$
|
133,971
|
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$
|
146,724
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