Segment Reporting

3 Months Ended

Mar. 31, 2017

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 the following categories of products and services:

· Execution Services — includes (a) liquidity matching through POSIT, (b) self-directed trading using algorithms (including single stocks and portfolio lists) and smart routing, (c) portfolio trading and high-touch trading desks providing execution expertise and (d) futures and options trading

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

· Analytics — includes (a) tools enabling portfolio managers and traders to improve pre-trade, real-time and post-trade execution performance, (b) portfolio construction and optimization decisions and (c) securities valuation

The accounting policies of the reportable segments are the same as those described in Note 2, Summary of Significant Accounting Policies, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. The Company allocates resources to, and evaluates the performance of, its reportable segments based on income or loss before income tax expense (benefit). 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 except that commissions and fees for trade executions by Canadian clients in the U.S. market are attributed to the Canadian Operations instead of the U.S. Operations. Recurring revenues are principally attributed based upon the location of the client using the respective service.

Regional segment results exclude the impact of Corporate activity, which is presented separately and includes investment income from treasury activity, certain non-operating revenues and other gains as well as costs not associated with operating the businesses within the Company’s regional segments.  These costs include, among others, (a) the costs of being a public company, such as certain staff costs, a portion of external audit fees, and reporting, filing and listing costs, (b) intangible asset amortization, (c) interest expense, (d) professional fees associated with the Company's global transfer pricing structure, (e) foreign exchange gains or losses and (f) certain non-operating expenses.

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

	U.S.		Canadian		European		Asia Pacific
	Operations		Operations		Operations		Operations		Corporate		Consolidated
Three Months Ended March 31, 2017
Total revenues	$	53,393	$	16,482	$	36,712	$	13,943	$	305	$	120,835
Income (loss) before income tax expense (benefit)		(6,604)		3,498		11,201		1,845		(6,129)		3,811
Identifiable assets		412,323		90,276		330,309		51,748		—		884,656
Three Months Ended March 31, 2016
Total revenues	$	66,329	$	16,096	$	31,139	$	10,757	$	347	$	124,668
(Loss) income before income tax (benefit) expense (1) (2)		2,105		3,338		5,679		(600)		(14,160)		(3,638)
Identifiable assets		1,196,340		100,599		253,135		67,149		—		1,617,223

The following notes relate to Corporate activity:

(1) During the three months ended March 31, 2016, the Company expensed $2.8 million for cash and stock awards granted to its current Chief Executive Officer 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.

(2) During the three months ended March 31, 2016, the Company established a reserve of $2.5 million in accordance with ASC 450, Contingencies, for the pending arbitration case with its former Chief Executive Officer and incurred legal fees related to this matter of $0.3 million.

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

	Three Months Ended
	March 31,
	2017		2016
Revenues:
Execution Services	$	86,287	$	89,793
Workflow Technology		23,100		23,593
Analytics		11,143		10,935
Corporate (non-product)		305		347
Total Revenues	$	120,835	$	124,668