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Segment Reporting
3 Months Ended
Mar. 31, 2018
Segment Reporting  
Segment Reporting

(16) 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 single stock sales 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, 2017. 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.

 

In the first quarter of 2018, the Company changed the way it measures the profitability of its regional segments to reflect the global nature of its business operations. Certain costs for senior management, product management, marketing, management information systems and infrastructure that are incurred in the U.S. on behalf of the entire Company are now being allocated to the international segments. For comparability purposes, the Company has restated previously reported segment results for the first quarter of 2017 to reflect these changes.

 

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, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

48,486

 

$

18,047

 

$

44,830

 

$

19,607

 

$

514

 

$

131,484

 

Income (loss) before income tax expense (benefit) (1)

 

 

(1,366)

 

 

3,829

 

 

11,909

 

 

4,680

 

 

(13,155)

 

 

5,897

 

Identifiable assets

 

 

338,020

 

 

78,553

 

 

321,069

 

 

63,026

 

 

 —

 

 

800,668

 

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)  (2)

 

 

(3,943)

 

 

2,831

 

 

9,938

 

 

1,114

 

 

(6,129)

 

 

3,811

 

Identifiable assets

 

 

412,323

 

 

90,276

 

 

330,309

 

 

51,748

 

 

 —

 

 

884,656

 


Notes:

 

(1)

During the three months ended March 31, 2018, the Company incurred restructuring charges of $7.2 million related to the elimination of certain positions in the U.S.

(2)

The Company has restated segment results for the three months ended March 31, 2017, resulting in a decrease in U.S. expenses of $2.7 million and increases in expenses in Canada, Europe and Asia Pacific of $0.7 million, $1.3 million and $0.7 million, respectively.

 

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, 

 

 

 

2018

    

2017

    

Revenues:

    

 

    

    

 

    

 

Execution Services

 

$

94,356

 

$

86,287

 

Workflow Technology

 

 

26,575

 

 

23,100

 

Analytics

 

 

10,039

 

 

11,143

 

Corporate (non-product)

 

 

514

 

 

305

 

Total Revenues

 

$

131,484

 

$

120,835

 

 

The product group revenues noted above are consistent with the revenues recognized under ASC 606, except that the table includes $0.5 million of revenue in Analytics for functionality that is not a separate performance obligation from products and services provided by Workflow Technology and Execution Services.