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Segment Reporting (Tables)
 12 Months Ended
Dec. 31, 2017
Segment Reporting  
Summary of the segment financial information

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

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

204,990

 

$

63,294

 

$

151,472

 

$

62,218

 

$

1,720

 

$

483,694

 

(Loss) income before income tax (benefit) expense (1) (2)

 

 

(24,473)

 

 

10,608

 

 

41,103

 

 

11,680

 

 

(32,393)

 

 

6,525

 

Identifiable assets

 

 

342,487

 

 

108,457

 

 

274,836

 

 

59,076

 

 

 —

 

 

784,856

 

Capital purchases

 

 

13,278

 

 

1,183

 

 

3,289

 

 

1,652

 

 

 —

 

 

19,402

 

Depreciation and amortization

 

 

33,307

 

 

2,420

 

 

6,094

 

 

1,994

 

 

1,338

 

 

45,153

 

Non-cash share-based compensation

 

 

9,543

 

 

2,390

 

 

5,267

 

 

959

 

 

2,079

 

 

20,238

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

229,655

 

$

61,822

 

$

125,945

 

$

47,919

 

$

3,711

 

$

469,052

 

(Loss) income before income tax expense (benefit) (3) (4) (5) (6) (7) (8)

 

 

(11,133)

 

 

11,564

 

 

25,470

 

 

1,553

 

 

(70,694)

 

 

(43,240)

 

Identifiable assets

 

 

396,419

 

 

80,943

 

 

236,071

 

 

61,852

 

 

 —

 

 

775,285

 

Capital purchases

 

 

15,547

 

 

2,549

 

 

1,886

 

 

1,333

 

 

 —

 

 

21,315

 

Depreciation and amortization

 

 

32,896

 

 

2,402

 

 

6,741

 

 

1,484

 

 

 —

 

 

43,523

 

Non-cash share-based compensation

 

 

10,642

 

 

2,383

 

 

5,948

 

 

925

 

 

5,722

 

 

25,620

 

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

285,230

 

$

63,028

 

$

129,729

 

$

48,179

 

$

108,637

 

$

634,803

 

Income before income tax expense (9) (10) (11)

 

 

16,000

 

 

10,643

 

 

28,244

 

 

1,620

 

 

64,719

 

 

121,226

 

Identifiable assets

 

 

1,304,995

 

 

76,561

 

 

262,095

 

 

65,371

 

 

 —

 

 

1,709,022

 

Capital purchases

 

 

7,748

 

 

2,175

 

 

1,334

 

 

648

 

 

 —

 

 

11,905

 

Depreciation and amortization

 

 

33,971

 

 

2,247

 

 

6,560

 

 

1,373

 

 

 —

 

 

44,151

 

Non-cash share-based compensation

 

 

10,725

 

 

1,466

 

 

4,505

 

 

866

 

 

(895)

 

 

16,667

 

(1)

In the fourth quarter of 2017, the Company incurred an $8.1 million charge for the write-off of fixed assets and other costs associated with the consolidation of ITG’s New York office space.

 

(2)

In the third quarter of 2017, the Company deemed the remaining value of a customer intangible asset recorded in ITG Derivatives of $0.3 million fully impaired and incurred legal fees related to the planned formation of the Matrix derivatives venture of $0.8 million.

 

(3)

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.

 

(4)

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.

 

(5)

During the second quarter of 2016, the Company incurred restructuring charges of $4.3 million related to (a) the reduction in its single stock sales 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.

 

(6)

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.

 

(7)

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.

 

 

(8)

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.

 

(9)

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.

 

(10)

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.

 

(11)

In December 2015, the Company completed changes to the internal 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.

 

Schedule of total revenues for the products and services provided by the company

The table below details the total revenues for the categories of products and services provided by the Company for the years ended December 31, 2017, 2016 and 2015 (dollars in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 

 

 

 

2017

    

2016

    

2015

 

Revenues:

 

 

    

    

 

    

 

 

 

 

Execution Services

 

$

344,192

 

$

328,252

 

$

386,158

 

Workflow Technology

 

 

92,533

 

 

92,891

 

 

94,117

 

Analytics

 

 

45,249

 

 

44,198

 

 

45,891

 

Corporate (non-product)

 

 

1,720

 

 

3,711

 

 

108,637

 

Total Revenues

 

$

483,694

 

$

469,052

 

$

634,803

 

 

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):

 

 

 

 

 

 

 

 

 

 

 

 

    

2017

    

2016

    

2015

 

Long-lived Assets at December 31,

 

 

 

 

 

 

 

 

 

 

United States

 

$

86,345

 

$

92,509

 

$

97,226

 

Canada

 

 

3,841

 

 

6,972

 

 

6,357

 

Europe

 

 

26,130

 

 

22,883

 

 

27,226

 

Asia Pacific

 

 

4,060

 

 

3,726

 

 

3,162

 

Total

 

$

120,376

 

$

126,090

 

$

133,971