Segment Reporting

9 Months Ended

Sep. 30, 2014

Segment Reporting

Segment Reporting

(15) 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 the following categories of products and services:

· 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) differentiated, unbiased, data-driven equity research through the use of innovative data mining and analysis, as well as detailed analysis of energy plays, and (b) portfolio trading and high-touch trading desks providing execution expertise and trading ideas based on 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 (as amended) for the year ended December 31, 2013. 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, 2014
Total revenues	$	72,540	$	17,946	$	31,677	$	12,610		$	134,773
Income before income tax expense	1,049		3,203		7,518		308			12,078
Identifiable assets	978,246		110,224		2,262,568		673,956			4,024,994
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
Nine Months Ended September, 2014
Total revenues	$	225,531	$	55,194	$	95,605	$	34,518		$	410,848
Income (loss) before income tax expense (benefit)	10,542		11,306		26,968		(1,630		)	47,186
Nine Months Ended September 30, 2013
Total revenues	$	242,687	$	56,224	$	65,407	$	34,583		$	398,901
Income (loss) before income tax expense (benefit) (1)(2)(3)	14,779		9,120		10,436		(1,923		)	32,412

(1) In the second quarter of 2013, the Company incurred $1.6 million to implement a restructuring plan to close its technology research and development facility in Israel and migrate that function to an outsourced service provider model effective January 1, 2014.  This plan primarily focused on reducing costs by limiting ITG’s geographic footprint while maintaining the necessary technological expertise via a consulting arrangement. The Company also reduced previously-recorded 2012 and 2011 restructuring accruals of $1.6 million to reflect the sub-lease of previously-vacated office space and certain legal and other employee-related charges deemed unnecessary.

(2) During the fourth quarter of 2012, ITG began its build out of its new lower Manhattan headquarters while continuing to occupy its then-existing headquarters in midtown Manhattan.  As a result, ITG incurred duplicate rent charges of $2.6 million during the first half of 2013.

(3) In the second quarter of 2013, ITG moved into its new headquarters and incurred a one-time charge of $3.9 million, which includes a reserve for the remaining lease obligation at the previous midtown Manhattan headquarters.

The table below details the total revenues for the categories of products and services provided by the Company (dollars in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Revenues by Product Group:
Electronic Brokerage	$	68,663	$	66,234	$	214,740	$	210,597
Research, Sales and Trading	30,470		26,683		90,026		80,236
Platforms	23,570		23,151		70,636		72,845
Analytics	11,612		11,177		34,413		34,447
Corporate (non-product)	458		313		1,033		776
Total Revenues	$	134,773	$	127,558	$	410,848	$	398,901