(25) Supplementary Financial Information (unaudited)

The following tables set forth certain unaudited financial data for the Company’s quarterly operations in 2018 and 2017. The following information has been prepared on the same basis as the annual information presented elsewhere in this report and, in the opinion of management, includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the information for the quarterly periods presented. The operating results for any quarter are not necessarily indicative of results for any future period.


	(Unaudited) December 31, 2018								(Unaudited) December 31, 2017
$ in thousands, expect per share	Fourth		Third		Second		First		Fourth		Third		Second		First
amounts	Quarter		Quarter		Quarter		Quarter		Quarter		Quarter		Quarter		Quarter
Total revenues	$	128,746	$	120,769		128,477		131,484	$	126,747	$	114,531	$	121,581	$	120,835
Expenses:
Compensation and employee benefits		47,787		45,244		45,099		45,787		45,283		46,755		45,994		46,684
Transaction processing		25,931		23,293		25,969		27,080		26,981		23,428		25,482		24,856
Occupancy and equipment		15,073		15,926		15,055		14,775		23,316		14,945		14,680		15,622
Telecommunications and data processing services		13,263		12,653		12,988		12,603		12,132		12,189		12,129		12,027
Restructuring charges		1		3,436		—		7,165		—		—		—		—
Other general and administrative		24,507		16,969		29,132		17,691		18,957		18,670		17,699		17,315
Interest expense		487		489		488		486		496		499		510		520
Total expenses		127,049		118,010		128,731		125,587		127,165		116,486		116,494		117,024
Income (loss) before income tax expense (benefit)		1,697		2,759		(254)		5,897		(418)		(1,955)		5,087		3,811
Income tax expense (benefit)		2,577		2,530		2,781		1,520		2,000		45,012		444		(1,491)
Net (loss) income	$	(880)	$	229	$	(3,035)	$	4,377	$	(2,418)	$	(46,967)	$	4,643	$	5,302
Basic (loss) income per share	$	(0.03)	$	0.01		(0.09)		0.13	$	(0.07)	$	(1.42)	$	0.14	$	0.16
Diluted (loss) income per share	$	(0.03)	$	0.01		(0.09)		0.13	$	(0.07)	$	(1.42)	$	0.14	$	0.16
Basic weighted average number of common shares outstanding		33,003		33,002		33,035		32,890		32,855		33,105		33,125		32,949
Diluted weighted average number of common shares outstanding		33,003		34,421		33,035		33,993		32,855		33,105		34,222		34,130

Earnings per share for quarterly periods are based on the weighted average common shares outstanding in individual quarters; thus, the sum of earnings per share of the quarters may not equal the amounts reported for the full year.


	(Unaudited) December 31, 2018								(Unaudited) December 31, 2017
As a percentage	Fourth		Third		Second		First		Fourth		Third		Second		First
of Total Revenues	Quarter (a)(b)(c)		Quarter (b)(c)(d)		Quarter (c)		Quarter (d)		Quarter (e)(f)(g)		Quarter (g)(h)		Quarter		Quarter
Total revenues	100	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Expenses:
Compensation and employee benefits	37.1		37.5		35.1		34.8		35.7		40.8		37.8		38.6
Transaction processing	20.1		19.3		20.2		20.6		21.3		20.5		21.0		20.6
Occupancy and equipment	11.7		13.2		11.7		11.2		18.4		13.0		12.1		12.9
Telecommunications and data processing services	10.3		10.5		10.1		9.6		9.6		10.6		10.0		10.0
Restructuring charges	0.0		2.8		—		5.4		—		—		—		—
Other general and administrative	19.0		14.1		22.7		13.5		15.0		16.3		14.6		14.3
Interest expense	0.4		0.4		0.4		0.4		0.4		0.4		0.4		0.4
Total expenses	98.7		97.7		100.2		95.5		100.4		101.6		95.9		96.8
Income (loss) before income tax expense (benefit)	1.3		2.3		(0.2)		4.5		(0.4)		(1.6)		4.1		3.2
Income tax expense (benefit)	2.0		2.1		2.2		1.2		1.6		39.3		0.4		(1.2)
Net (loss) income	(0.7)	%	0.2	%	(2.4)	%	3.3	%	(2.0)	%	(40.9)	%	3.7	%	4.4	%

(a)

In the fourth quarter of 2018, the Company incurred costs of $8.0 million related to the acquisition of the Company by Virtu.

(b)

In the third quarter of 2018, the Company increased its accrual for the consolidation of ITG’s New York office space by $0.9 million and then reduced the accrual by $0.5 million in the fourth quarter of 2018.

(c)

In the second quarter of 2018 the Company incurred a charge to establish an accrual of $12.0 million for a potential settlement with the SEC, which was finalized in the fourth quarter of 2018, related to an investigation into the operational features of U.S. POSIT and access to U.S. POSIT data, together with certain related disclosures. The Company incurred legal fees related to this matter of $0.1 million, $0.9 million and $0.2 million in the fourth quarter of 2018, the third quarter of 2018 and the second quarter of 2018, respectively.

(d)

In the third quarter of 2018, the Company incurred a restructuring charge $3.4 million to eliminate certain positions and reduce its office space in Los Angeles. In the first quarter of 2018, the Company incurred a restructuring charge of $7.2 million to eliminate certain positions.

(e)

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.

(f)

In the fourth quarter of 2017, the Company reduced the amount recorded for a deferred tax liability in the U.S. due to the passing of the Tax Cuts and Jobs Act, which lowered the U.S. corporate income tax rate from 35% to 21%.

(g)

In the third quarter of 2017, the Company determined that it was appropriate to establish a full valuation allowance on its U.S. deferred tax assets, of which $42.3 million related to periods prior to the third quarter of 2017. In the fourth quarter of 2017, the Company reduced the valuation allowance by $0.9 million as a portion of these U.S. deferred tax assets were realized following a tax method change.

(h)

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 formation of the Matrix derivatives venture of $0.8 million.