Segment Reporting

9 Months Ended

Sep. 30, 2013

Segment Reporting

Segment Reporting

(14) Segment Reporting

The Company is organized into four geographic operating segments through which the Company’s chief operating decision maker manages the Company’s business. The U.S., Canadian, European and Asia Pacific Operations segments provide products and services from each of the following product groups:

· Electronic Brokerage — includes self-directed trading using algorithms, smart routing and matching through POSIT in cash equities (including single stocks and portfolio lists), futures and options

· Research Sales and Trading — includes (a) unbiased, data-driven equity research through the use of innovative data mining and analysis, as well as detailed analysis of energy asset plays, and (b) portfolio trading and high-touch trading desks providing execution expertise and trading ideas based on ITG Investment Research

· Platforms — includes trade order and execution management software applications in addition to network connectivity

· Analytics — includes tools enabling portfolio managers and traders to improve pre-trade and real-time execution performance, portfolio construction and optimization decisions and securities valuation.

The accounting policies of the reportable segments are the same as those described in Note 2, Summary of Significant Accounting Policies, in our Annual Report on Form 10-K for the year ended December 31, 2012.  The Company allocates resources to, and evaluates the performance of, its reportable segments based on income or loss before income tax expense. Consistent with the Company’s resource allocation and operating performance evaluation approach, the effects of inter-segment activities are eliminated except in limited circumstances where certain technology related costs are allocated to a segment to support that segment’s revenue producing activities. Commissions and fees revenue for trade executions and commission share revenues are principally attributed to each segment based upon the location of execution of the related transaction. Recurring revenues are principally attributed based upon the location of the client using the respective service.

A summary of the segment financial information is as follows (dollars in thousands):

	U.S. Operations			Canadian Operations		European Operations			Asia Pacific Operations			Consolidated
Three Months Ended September 30, 2013
Total revenues	$	76,843		$	17,575	$	22,663		$	10,477		$	127,558
Income (loss) before income tax expense (benefit)	4,478			2,749		4,115			(652		)	10,690
Identifiable assets	1,377,616			137,389		1,128,133			514,172			3,157,310
Three Months Ended September 30, 2012
Total revenues	$	77,801		$	17,727	$	14,793		$	9,296		$	119,617
(Loss) income before income tax (benefit) expense	841			1,637		(286		)	(2,011		)	181
Identifiable assets	1,101,085			98,082		567,527			617,902			2,384,596
Nine Months Ended September 30, 2013 (1)(2)
Total revenues	$	242,687		$	56,224	$	65,407		$	34,583		$	398,901
Income (loss) before income tax expense (benefit)	14,779			9,120		10,436			(1,923		)	32,412
Nine Months Ended September 30, 2012 (3)
Total revenues	$	244,305		$	58,877	$	50,412		$	29,308		$	382,902
(Loss) income before income tax (benefit) expense	(239,715		)	9,020		(25,524		)	(5,666		)	(261,885		)

(1) Income before income tax expense for the nine months ended September 30, 2013 for the U.S. Operations includes the impact of $2.6 million in duplicate rent charges for the Company’s new U.S. headquarters in lower Manhattan, while it still occupied its midtown Manhattan office through June 2013 and a one-time charge of $3.9 million upon completion of the move, including a reserve for the remaining lease obligation at the previous headquarters.

(2) In the second quarter of 2013, the European Operations incurred a charge of $1.6 million related to a plan to close the technology research and development facility in Israel and outsource that function to a third party service provider model effective January 1, 2014.  This plan is primarily focused on reducing costs by limiting the Company’s geographic footprint while maintaining the necessary technological expertise via a consulting agreement. The Company also reduced previously-recorded 2012 and 2011 restructuring accruals of $1.3 million for its U.S. Operations and $0.3 million for its Canadian Operations to reflect the sub-lease of previously-vacated office space and certain legal and other employee related charges deemed unnecessary.

(3) Loss before income tax benefits for the nine months ended September 30, 2012 includes the impact of goodwill impairment charges of $245.1 million, $28.5 million and $0.7 million for the U.S., European and Asia Pacific Operations, respectively.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Revenues by Product Group:
Electronic Brokerage	$	66,234	$	57,654	$	210,597	$	192,539
Research Sales and Trading	26,683		25,792		80,236		79,023
Platforms	23,151		24,188		72,845		75,672
Analytics	11,177		11,696		34,447		34,651
Corporate (non-product)	313		287		776		1,017
Total Revenues	$	127,558	$	119,617	$	398,901	$	382,902