Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2014 | Apr. 30, 2014 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'GFI Group Inc. | ' |
Entity Central Index Key | '0001292426 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 31-Mar-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 126,098,210 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Assets | ' | ' |
Cash and cash equivalents | $149,044 | $174,606 |
Cash and securities segregated under federal and other regulations | 63,068 | 62,863 |
Accounts receivable, net of allowance for doubtful accounts of $1,931 and $1,958 at March 31, 2014 and December 31, 2013, respectively | 109,154 | 87,502 |
Receivables from brokers, dealers and clearing organizations | 851,781 | 295,727 |
Property, equipment and leasehold improvements, net of depreciation and amortization of $192,149 and $188,196 at March 31, 2014 and December 31, 2013, respectively | 61,823 | 61,396 |
Goodwill | 256,120 | 255,920 |
Intangible assets, net | 43,431 | 45,684 |
Other assets | 167,787 | 177,844 |
TOTAL ASSETS | 1,702,208 | 1,161,542 |
LIABILITIES | ' | ' |
Accrued compensation | 65,947 | 77,841 |
Accounts payable and accrued expenses | 45,221 | 37,409 |
Payables to brokers, dealers and clearing organizations | 640,421 | 126,900 |
Payables to clearing services customers | 199,974 | 177,523 |
Short-term borrowings | 10,000 | 10,000 |
Long-term debt | 240,000 | 240,000 |
Other liabilities | 90,647 | 83,071 |
Total Liabilities | 1,292,210 | 752,744 |
Commitments and contingencies (Note 10) | ' | ' |
STOCKHOLDERS' EQUITY | ' | ' |
Preferred stock, $0.01 par value; 5,000,000 shares authorized, none outstanding at March 31, 2014 and December 31, 2013 | ' | ' |
Common stock, $0.01 par value; 400,000,000 shares authorized; 143,047,788 and 140,599,626 shares issued at March 31, 2014 and December 31, 2013, respectively | 1,431 | 1,405 |
Additional paid in capital | 395,631 | 393,965 |
Retained earnings | 80,995 | 83,180 |
Treasury stock, 17,261,480 and 17,312,957 shares of common stock at cost, at March 31, 2014 and December 31, 2013, respectively | -74,894 | -75,018 |
Accumulated other comprehensive income | 4,910 | 3,744 |
Total Stockholders' Equity | 408,073 | 407,276 |
Non-controlling interests | 1,925 | 1,522 |
Total Equity | 409,998 | 408,798 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $1,702,208 | $1,161,542 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED) (Parenthetical) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED) | ' | ' |
Accounts receivable, allowance for doubtful accounts | $1,931 | $1,958 |
Property, equipment and leasehold improvements, depreciation and amortization | $192,149 | $188,196 |
Preferred stock, par value (in dollars per share) | $0.01 | $0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized | 400,000,000 | 400,000,000 |
Common stock, shares issued | 143,047,788 | 140,599,626 |
Treasury stock, common shares at cost | 17,261,480 | 17,312,957 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Revenues | ' | ' |
Agency commissions | $121,415 | $126,572 |
Principal transactions | 51,689 | 50,065 |
Total brokerage revenues | 173,104 | 176,637 |
Clearing services revenues | 34,164 | 38,064 |
Interest income from clearing services | 528 | 737 |
Equity in net earnings of unconsolidated businesses | 2,554 | 3,059 |
Software, analytics and market data | 25,765 | 22,158 |
Other income, net | 4,624 | 3,737 |
Total revenues | 240,739 | 244,392 |
Interest and transaction-based expenses | ' | ' |
Transaction fees on clearing services | 32,640 | 36,908 |
Transaction fees on brokerage services | 5,503 | 5,807 |
Interest expense from clearing services | 169 | 160 |
Total interest and transaction-based expenses | 38,312 | 42,875 |
Revenues, net of interest and transaction-based expenses | 202,427 | 201,517 |
Expenses | ' | ' |
Compensation and employee benefits | 137,697 | 137,015 |
Communications and market data | 13,347 | 13,587 |
Travel and promotion | 7,779 | 8,061 |
Rent and occupancy | 8,086 | 7,212 |
Depreciation and amortization | 8,596 | 8,308 |
Professional fees | 6,171 | 6,727 |
Interest on borrowings | 7,784 | 7,688 |
Other expenses | 7,464 | 12,824 |
Total other expenses | 196,924 | 201,422 |
Income before provision for (benefit from) income taxes | 5,503 | 95 |
Provision for (benefit from) income taxes | 1,094 | -4,859 |
Net income before attribution to non-controlling stockholders | 4,409 | 4,954 |
Less: Net income attributable to non-controlling interests | 406 | 280 |
GFI's net income | $4,003 | $4,674 |
Earnings per share available to common stockholders | ' | ' |
Basic (in dollars per share) | $0.03 | $0.04 |
Diluted (in dollars per share) | $0.03 | $0.04 |
Weighted average shares outstanding | ' | ' |
Basic (in shares) | 122,362,839 | 115,384,022 |
Diluted (in shares) | 131,430,701 | 125,552,041 |
Dividends declared per share of common stock (in dollars per share) | $0.05 | $0 |
CONDENSED_CONSOLIDATED_STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | ||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) | ' | ' | ||
Net income before attribution to non-controlling stockholders | $4,409 | $4,954 | ||
Other comprehensive income (loss): | ' | ' | ||
Foreign currency translation adjustment | 2,241 | -10,051 | ||
Unrealized (loss) gain on available-for-sale securities, net of tax(1) | -1,069 | [1] | 249 | [1] |
Total other comprehensive income (loss) | 1,172 | -9,802 | ||
Comprehensive income (loss) including non-controlling stockholders | 5,581 | -4,848 | ||
Comprehensive income attributable to non-controlling stockholders | 412 | 152 | ||
GFI's comprehensive income (loss) | $5,169 | ($5,000) | ||
[1] | Amounts are net of benefit from (provision for) income taxes of $341 and $(75) for the three months ended March 31, 2014 and 2013, respectively. |
CONDENSED_CONSOLIDATED_STATEME4
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (Parenthetical) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) | ' | ' |
Unrealized (loss) gain on available-for-sale securities, benefit from (provision for) income taxes | $341 | ($75) |
CONDENSED_CONSOLIDATED_STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net income before attribution to non-controlling stockholders | $4,409 | $4,954 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ' | ' |
Depreciation and amortization | 8,596 | 8,308 |
Share-based compensation | 7,346 | 8,150 |
Tax expense related to share-based compensation | 812 | 378 |
Amortization of prepaid bonuses and forgivable loans | 6,720 | 6,348 |
Benefit from deferred taxes | -3,936 | -7,826 |
(Gains) losses on foreign exchange derivative contracts, net | -202 | 79 |
Earnings from equity method investments, net | -663 | -895 |
Amortization of deferred financing fees | 454 | 809 |
Mark-to-market of future purchase commitment | ' | -744 |
Impairment charges | 611 | ' |
Other non-cash charges, net | -382 | -793 |
(Increase) decrease in operating assets: | ' | ' |
Cash and securities segregated under federal and other regulations | -205 | -10,558 |
Accounts receivable | -21,562 | -18,810 |
Receivables from brokers, dealers and clearing organizations | -556,054 | -102,828 |
Other assets | -6,268 | 21,585 |
Increase (decrease) in operating liabilities: | ' | ' |
Accrued compensation | -11,894 | 1,489 |
Accounts payable and accrued expenses | 7,812 | 2,693 |
Payables to brokers, dealers and clearing organizations | 513,521 | 87,183 |
Payables to clearing services customers | 22,451 | -6,875 |
Other liabilities | 7,449 | 8,177 |
Cash (used in) provided by operating activities | -20,985 | 824 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Proceeds from equity method investments | 6,457 | 3,205 |
Proceeds from sales of available-for-sale investments | 5,882 | ' |
Purchases of equity method investments | -92 | -21 |
Purchases of property, equipment and leasehold improvements | -2,628 | -1,601 |
Capitalization of internally developed software | -2,752 | -2,796 |
Proceeds on foreign exchange derivative contracts | 271 | 1,019 |
Payments on foreign exchange derivative contracts | -338 | -208 |
Other, net | 257 | ' |
Cash provided by (used in) investing activities | 7,057 | -402 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Proceeds from short-term borrowings | 47,000 | 36,000 |
Repayment of short-term borrowings | -47,000 | -26,000 |
Repurchase and retirement of a portion of long-term debt | ' | -9,385 |
Cash dividends paid to common stockholders | -6,188 | ' |
Shares withheld for taxes on vested restricted stock units | -5,174 | -5,911 |
Tax expense related to share-based compensation | -812 | -378 |
Other, net | 456 | -822 |
Cash used in financing activities | -11,718 | -6,496 |
Effects of exchange rate changes on cash and cash equivalents | 84 | -5,223 |
DECREASE IN CASH AND CASH EQUIVALENTS | -25,562 | -11,297 |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 174,606 | 227,441 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 149,044 | 216,144 |
SUPPLEMENTAL DISCLOSURE: | ' | ' |
Cash paid for interest | 13,635 | 12,009 |
Cash paid for income taxes | 2,718 | 4,351 |
Cash received from income tax refunds | $675 | $729 |
CONDENSED_CONSOLIDATED_STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) (USD $) | Total | Total Stockholders' Equity | Common Stock | Additional Paid In Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Income | Non-Controlling Interests | |
In Thousands, unless otherwise specified | |||||||||
Balance at Dec. 31, 2013 | $408,798 | $407,276 | $1,405 | $393,965 | ($75,018) | $83,180 | $3,744 | $1,522 | |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' | ' | ' | ' | |
Issuance of treasury stock | ' | ' | ' | -124 | 124 | ' | ' | ' | |
Issuance of common stock for exercise of stock options and vesting of restricted stock units | 456 | 456 | 26 | 430 | ' | ' | ' | ' | |
Withholding of restricted stock units in satisfaction of tax requirements | -5,174 | -5,174 | ' | -5,174 | ' | ' | ' | ' | |
Tax expense associated with share-based awards | -812 | -812 | ' | -812 | ' | ' | ' | ' | |
Foreign currency translation adjustment | 2,241 | 2,235 | ' | ' | ' | ' | 2,235 | 6 | |
Unrealized loss on available-for-sale securities, net of tax | -1,069 | [1] | -1,069 | ' | ' | ' | ' | -1,069 | ' |
Dividends to stockholders | -6,188 | -6,188 | ' | ' | ' | -6,188 | ' | ' | |
Share-based compensation | 7,346 | 7,346 | ' | 7,346 | ' | ' | ' | ' | |
Other capital adjustments | -9 | ' | ' | ' | ' | ' | ' | -9 | |
Net income | 4,409 | 4,003 | ' | ' | ' | 4,003 | ' | 406 | |
Balance at Mar. 31, 2014 | $409,998 | $408,073 | $1,431 | $395,631 | ($74,894) | $80,995 | $4,910 | $1,925 | |
[1] | Amounts are net of benefit from (provision for) income taxes of $341 and $(75) for the three months ended March 31, 2014 and 2013, respectively. |
ORGANIZATION_AND_BUSINESS
ORGANIZATION AND BUSINESS | 3 Months Ended |
Mar. 31, 2014 | |
ORGANIZATION AND BUSINESS | ' |
ORGANIZATION AND BUSINESS | ' |
1. ORGANIZATION AND BUSINESS | |
The Condensed Consolidated Financial Statements include the accounts of GFI Group Inc. and its subsidiaries (collectively, “GFI” or the “Company”). The Company, through its subsidiaries, provides wholesale brokerage and trade execution services, clearing services and trading system software products to institutional clients in markets for a range of fixed income, financial, equity and commodity instruments. The Company complements its brokerage and trade execution capabilities with value-added services, such as market data and analytical software products for trader and back-office support, which it licenses primarily to companies in the financial services industry. As of March 31, 2014, Jersey Partners, Inc. (“JPI”) owned approximately 37% of the Company’s outstanding shares of common stock. The Company’s executive chairman, Michael Gooch, is the controlling shareholder of JPI. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2014 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation— The Company’s Condensed Consolidated Financial Statements (Unaudited) are prepared in accordance with accounting principles generally accepted in the United States of America, which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingencies in the Condensed Consolidated Financial Statements. Certain estimates and assumptions relate to the accounting for acquired goodwill and intangible assets, fair value measurements, compensation accruals, tax liabilities and the potential outcome of litigation matters. Management believes that the estimates utilized in the preparation of the Condensed Consolidated Financial Statements are reasonable and prudent. Actual results could differ materially from these estimates. | |
Certain amounts in the Condensed Consolidated Statements of Cash Flows have been reclassified to conform to the current year presentation. | |
These Condensed Consolidated Financial Statements are unaudited and should be read in conjunction with the audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 (the “2013 Form 10-K”). The condensed consolidated financial information as of December 31, 2013 presented in this Form 10-Q has been derived from audited Consolidated Financial Statements not included herein. | |
These unaudited Condensed Consolidated Financial Statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. These adjustments are of a normal, recurring nature. Interim period operating results may not be indicative of the operating results for a full year. | |
Consolidation Policies | |
General— The Condensed Consolidated Financial Statements include the accounts of the Company, its wholly-owned subsidiaries and subsidiaries that are treated as such and other entities in which the Company has a controlling financial interest. For consolidated subsidiaries that are less than wholly-owned, equity interests that are not owned by the Company are referred to as non-controlling interests. The portion of net income attributable to non-controlling interests for such subsidiaries is presented as Net income attributable to non-controlling interests on the Condensed Consolidated Statements of Operations, and the portion of the stockholders’ equity of such subsidiaries is presented as Non-controlling interests in the Condensed Consolidated Statements of Financial Condition and Condensed Consolidated Statement of Changes in Stockholders’ Equity. All intercompany transactions and balances have been eliminated. | |
Variable Interest Entities—The Company determines whether it holds any interests in entities deemed to be a variable interest entity (“VIE”). A VIE is an entity that lacks one or more of the following characteristics (i) the total equity investment at risk is sufficient to enable the entity to finance its activities independently and (ii) the equity holders have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the losses of the entity and the right to receive the residual returns of the entity. The Company has a controlling financial interest and will consolidate a VIE if it is the primary beneficiary. | |
The primary beneficiary is the party that has both (i) the power to direct the activities of the VIE that most significantly impact the economic performance of the entity and (ii) the obligation to absorb losses of the entity that could be potentially significant to the VIE or the right to receive benefits from the entity that could be potentially significant. | |
As of March 31, 2014, the company holds interests in certain VIEs. One of these VIEs is consolidated because it was determined that the Company is the primary beneficiary of this VIE because (1) the Company provided the majority of the VIE’s start-up capital and (2) the Company has consent rights regarding those activities that the Company believes would most significantly impact the economic performance of the entity. The remaining VIEs are not consolidated as it was determined that the Company is not the primary beneficiary due to the level of equity ownership and voting power. The Company reassesses its evaluation of whether an entity is a VIE when certain events occur, such as changes in economic ownership and voting power. The Company reassesses its determination of whether it is the primary beneficiary of a VIE on an ongoing basis based on current facts and circumstances. See Note 14 for disclosures on Variable Interest Entities. | |
Cash and Cash Equivalents— Cash and cash equivalents consist of cash and highly liquid investments purchased with an original maturity of three months or less. | |
Cash and Securities Segregated Under Federal and Other Regulations—The Company holds cash and securities representing funds received in connection with customer trading activities. The Company’s subsidiaries are required to satisfy regulations mandated by their primary regulators to segregate or set aside cash or equivalent securities to satisfy regulations, promulgated to protect customer assets. | |
Accounts Receivable —Accounts receivable largely represents commissions due from brokers, dealers, banks and other financial and nonfinancial institutions for the execution of securities, commodities, foreign exchange and other derivative brokerage transactions. Also, included within Accounts receivable are the billed portion of existing contracts from customers related to the licensing, support and maintenance of software, analytics and market data, as well as any unbilled but earned portion of any services provided to such customers. In estimating the allowance for doubtful accounts, management considers the length of time receivables are past due and historical experience. In addition, if the Company is aware of a client’s inability to meet its financial obligations, a specific provision for doubtful accounts is recorded in the amount of the estimated losses that will result from the inability of that client to meet its financial obligation. | |
Receivables from and Payables to Brokers, Dealers and Clearing Organizations—Receivables from and payables to brokers, dealers and clearing organizations primarily represent: (i) principal transactions for which the stated settlement dates have not yet been reached, (ii) principal transactions which have not settled as of their stated settlement dates, (iii) cash, including deposits, held at clearing organizations and exchanges in support of the Company’s clearing business and to facilitate settlement and clearance of matched principal transactions and (iv) the spread on matched principal transactions that have not yet been remitted from/to clearing organizations and exchanges. | |
Property, Equipment and Leasehold Improvements—Property, equipment and leasehold improvements are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method, generally over three to seven years. Property and equipment are depreciated over their estimated useful lives. Leasehold improvements are amortized over the shorter of the remaining term of the respective lease to which they relate or the remaining useful life of the leasehold improvement. Internal and external costs incurred in developing or obtaining computer software for internal use are capitalized in accordance with Accounting Standards Codification (“ASC”) 350 Intangibles—Goodwill and Other (“ASC 350”), and are amortized on a straight-line basis over the estimated useful life of the software, generally three years. General and administrative costs related to developing or obtaining such software are expensed as incurred. | |
Goodwill and Intangible Assets—Goodwill represents the excess of the purchase price allocation over the fair value of tangible and identifiable intangible net assets acquired. The goodwill associated with each business combination is allocated to the related reporting units, which are determined based on how the Company’s businesses are managed and how they are reviewed by the Company’s chief operating decision maker. Other intangible assets are recorded at their fair value upon completion of a business combination or certain other transactions. Substantially all of the firm’s identifiable intangible assets are considered to have definite lives and are amortized on a straight-line basis over their estimated useful lives. | |
In accordance with ASC 350, goodwill is not amortized, but instead is periodically tested for impairment. The Company reviews goodwill for impairment on an annual basis as of November 1 of each fiscal year or whenever an event occurs or circumstances change that could reduce the fair value of a reporting unit below its carrying amount. See Note 4 for further information. | |
Prepaid Bonuses and Forgivable Employee Loans—Prepaid bonuses and forgivable loans to employees are stated at historical value net of amortization when the agreement between the Company and the employee provides for the return of proportionate amounts of the bonus or loan outstanding if employment is terminated in certain circumstances prior to the end of the term of the agreement. Amortization is calculated using the straight-line method over the term of the contract, which is generally two to four years, and is recorded in Compensation and employee benefits. The Company generally expects to recover the unamortized portion of prepaid bonuses and forgivable loans when employees voluntarily terminate their employment or if their employment is terminated for cause prior to the end of the term of the agreement. The prepaid bonuses and forgivable loans are included in Other assets in the Condensed Consolidated Statements of Financial Condition. At March 31, 2014 and December 31, 2013, the Company had prepaid bonuses of $22,699 and $23,499, respectively. At March 31, 2014 and December 31, 2013, the Company had forgivable employee loans and advances to employees of $22,448 and $24,109, respectively. Amortization of prepaid bonuses and forgivable employee loans for the three months ended March 31, 2014 and 2013 was $6,720 and $6,348, respectively and is included within Compensation and employee benefits. | |
Investments—When the Company does not have a controlling financial interest in an entity but can exert significant influence over the entity’s operating and financial policies, the investment is accounted for under the equity method of accounting in accordance with ASC 323-10, Investments—Equity Method and Joint Ventures (“ASC 323-10”). Significant influence generally exists when the Company owns 20% to 50% of the entity’s common stock or in-substance common stock. The Company initially records the investment at cost and adjusts the carrying amount each period to recognize its share of the earnings and losses of the investee based on the percentage of ownership. At March 31, 2014 and December 31, 2013, the Company had equity method investments with a carrying value of $31,358 and $36,976, respectively, included within Other assets. The Company also provides clearing and other administrative services to certain of these equity method investees. | |
Investments for which the Company does not have the ability to exert significant influence over operating and financial policies are generally accounted for using the cost method of accounting in accordance with ASC 325-10, Investments—Other (“ASC 325-10”). At March 31, 2014 and December 31, 2013, the Company had cost method investments of $4,614 and $5,087, respectively, included within Other assets. The fair value of the Company’s cost method investments are not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value. The Company monitors its equity and cost method investments for indicators of impairment each reporting period. | |
The Company accounts for its marketable equity securities and its debt securities in accordance with ASC 320-10, Investments—Debt and Equity Securities (“ASC 323-10”). Investments that are owned by the Company’s broker-dealer subsidiaries are recorded at fair value with realized and unrealized gains and losses reported in net income. Investments designated as available-for-sale that are owned by the Company’s non broker-dealer subsidiaries are recorded at fair value with unrealized gains or losses reported as a separate component of other comprehensive income (loss), net of tax. The fair value of the Company’s available-for-sale securities was $0 and $5,465 as of March 31, 2014 and December 31, 2013, respectively, and is included within Other assets. | |
Fair Value of Financial Instruments—In accordance with ASC 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”), the Company estimates fair values of financial instruments using relevant market information and other assumptions. Fair value estimates involve uncertainties and matters of significant judgment in interpreting market data and, accordingly, changes in assumptions or in market conditions could adversely affect the estimates. The Company also discloses the fair value of its financial instruments in accordance with the fair value hierarchy as set forth by ASC 820-10. See Note 12 for further information. | |
Derivative Financial Instruments—The Company enters into derivative transactions for a variety of reasons, including managing its exposure to risk arising from changes in foreign currency, facilitating customer trading activities and, in certain instances, to engage in principal trading for the Company’s own account. Derivative assets and liabilities are carried on the Condensed Consolidated Statements of Financial Condition at fair value, with changes in the fair value recognized in the Condensed Consolidated Statements of Operations. Contracts entered into to manage risk arising from changes in foreign currency are recognized in Other income and contracts entered into to facilitate customer transactions and principal trading are recognized in Principal transactions. Derivatives are reported on a net-by-counterparty basis when management believes that a legal and enforceable right of offset exists under these agreements. See Note 13 for further information. | |
Payables to Clearing Services Customers—Payables to clearing services customers include amounts due on cash and margin transactions, including futures contracts transacted on behalf of customers. | |
Revenue Recognition | |
Brokerage Transactions—The Company provides brokerage services to its clients in the form of either agency or principal transactions. In agency transactions, the Company charges commissions for executing transactions between buyers and sellers. Agency commission revenues and related expenses are recognized on a trade date basis. These revenues are presented in “Agency Commissions”. Principal transactions revenue is primarily derived from matched principal and principal trading transactions. Principal transactions revenues and related expenses are recognized on a trade date basis. The Company earns revenue from principal transactions on the spread between the buy and sell price of the security that is brokered. In matched principal transactions, the Company simultaneously agrees to buy instruments from one customer and sell them to another customer. These revenues are presented in “Principal Transactions”. In the normal course of its matched principal and principal trading businesses, the Company may hold security positions overnight. These positions are marked to market on a daily basis. | |
Clearing Services Revenues—The Company charges fees to customers for clearing services provided for cash and derivative transactions. Clearing services revenues are recorded on a trade date basis as customer transactions occur and are presented net of any customer negotiated rebates. | |
Software, Analytics and Market Data Revenue Recognition— Software revenue consists primarily of fees charged for Trayport electronic trading software, which are typically billed on a subscription basis and are recognized ratably over the term of the subscription period, which ranges from one to five years. Analytics revenue consists primarily of software license fees for Fenics pricing tools which are typically billed on a subscription basis, and is recognized ratably over the term of the subscription period, which is generally three years. Market data revenue primarily consists of subscription fees and fees from customized one-time sales. Market data subscription fees are recognized on a straight-line basis over the term of the subscription period, which ranges from one to two years. Market data revenue from customized one-time sales is recognized upon delivery of the data. The Company markets its software, analytics and market data products through its direct sales force and, in some cases, indirectly through resellers. In general, the Company’s license agreements for such products do not provide for a right of return. | |
Other Income, net—Included within Other income, net on the Company’s Condensed Consolidated Statements of Operations are revaluations of foreign currency derivative contracts, realized and unrealized transaction gains and losses on certain foreign currency denominated items, and gains and losses on certain investments, and interest income earned on short-term investments. | |
Compensation and Employee Benefits—The Company’s compensation and employee benefits have both a fixed and variable component. Base salaries and benefit costs are primarily fixed for all employees while bonuses constitute the variable portion of compensation and employee benefits. The Company may pay certain performance bonuses in restricted stock units (“RSUs”). The Company also may grant sign-on and retention bonuses for certain newly-hired or existing employees who agree to long-term employment agreements. | |
Share-Based Compensation—The Company’s share-based compensation consists of RSUs. The Company accounts for share-based compensation in accordance with ASC 718 Compensation— Stock Compensation (“ASC 718”). This accounting guidance requires measurement of compensation expense for equity-based awards at fair value and recognition of compensation expense over the service period, net of estimated forfeitures. In all periods presented, the only share-based compensation expense recognized by the Company has been RSUs. The Company determines the fair value of RSUs based on the number of units granted and the grant date fair value of the Company’s common stock, measured as of the closing price on the date of grant. See Note 9 for further information. | |
Income Taxes— In accordance with ASC 740, Income Taxes (“ASC 740”), the Company provides for income taxes using the asset and liability method under which deferred income taxes are recognized for the estimated future tax effects attributable to temporary differences and carryforwards that result from events that have been recognized either in the financial statements or the income tax returns, but not both. The measurement of current and deferred income tax assets and liabilities is based on provisions of enacted tax laws. Valuation allowances are recognized if, based on the weight of available evidence, it is more likely than not that some portion of the deferred tax assets will not be realized. Management applies the more likely than not criteria prior to recognizing a financial statement benefit for a tax position taken (or expected to be taken) in a tax return. The Company recognizes interest and/or penalties related to income tax matters in interest expense and other expense, respectively. | |
For the three months ended March 31, 2014 the Company recorded income tax expense of $1.1 million. The expense yields an effective rate lower than the federal statutory rate of 35% due to the geographical mix of pre-tax income. | |
For the three months ended March 31, 2013 the Company recorded a benefit from income taxes of $4.9 million. The benefit was primarily due to: (i) a tax benefit under the American Taxpayer Relief Act of 2012 related to taxes previously provided for, (ii) a tax benefit arising from a change in our view about the deductibility of a reserve previously deemed nondeductible, as a result of new information received in the first quarter of 2013 and (iii) the release of a tax liability in a foreign subsidiary where the statute of limitations has now expired. | |
Treasury Stock—The Company accounts for Treasury stock using the cost method. Treasury stock held by the Company may be reissued with respect to vested RSUs in qualified jurisdictions. The Company’s policy is to account for these shares as a reduction of Treasury stock on a first-in, first-out basis. | |
Foreign Currency Translation Adjustments and Transactions— Assets and liabilities of foreign subsidiaries having non-U.S. dollar functional currencies are translated at the period end rates of exchange, and revenue and expenses are translated at the average rates of exchange for the period. Gains or losses resulting from translating foreign currency financial statements are reflected in foreign currency translation adjustments and are reported as a separate component of comprehensive income (loss) and included in accumulated other comprehensive income in the Condensed Consolidated Statement of Changes in Stockholders’ Equity. Net losses resulting from remeasurement of foreign currency transactions and balances were $92 and $273 for the three months ended March 31, 2014 and 2013, respectively, and are included in Other income, net in the Condensed Consolidated Statements of Operations. | |
Recent Accounting Pronouncements—In March 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-05, “Foreign Currency Matters” (“ASU 2013-05”), which clarifies the accounting for the cumulative translation adjustment when a parent either sells or transfers a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a foreign subsidiary or group of assets. ASU 2013-05 provides that the parent should release cumulative translation adjustment into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. This guidance was effective for the Company’s fiscal year beginning January 1, 2014, and is being applied prospectively. The adoption of ASU 2013-05 does not have a material impact on the Company’s condensed consolidated financial statements. | |
In July 2013, the FASB issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”). ASU 2013-11 requires an entity to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or tax credit carryforward, unless such tax loss or credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes resulting from the disallowance of a tax position. In the event that the tax position is disallowed or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit shall be presented in the financial statements as a liability and shall not be combined with deferred tax assets. The guidance was effective for the Company’s fiscal year beginning January 1, 2014, and is being applied prospectively. The adoption of ASU 2013-11 does not have a material impact on the Company’s condensed consolidated financial statements. |
RECEIVABLES_FROM_AND_PAYABLES_
RECEIVABLES FROM AND PAYABLES TO BROKERS, DEALERS AND CLEARING ORGANIZATIONS | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
RECEIVABLES FROM AND PAYABLES TO BROKERS, DEALERS AND CLEARING ORGANIZATIONS | ' | |||||||
RECEIVABLES FROM AND PAYABLES TO BROKERS, DEALERS AND CLEARING ORGANIZATIONS | ' | |||||||
3. RECEIVABLES FROM AND PAYABLES TO BROKERS, DEALERS AND CLEARING ORGANIZATIONS | ||||||||
Amounts receivable from and payable to brokers, dealers and clearing organizations consisted of the following: | ||||||||
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
Receivables from brokers, dealers and clearing organizations: | ||||||||
Contract value of fails to deliver | $ | 635,431 | $ | 123,470 | ||||
Receivables from and deposits with clearing organizations and financial institutions | 216,350 | 172,257 | ||||||
Total | $ | 851,781 | $ | 295,727 | ||||
Payables to brokers, dealers and clearing organizations: | ||||||||
Contract value of fails to receive | $ | 614,194 | $ | 123,393 | ||||
Payables to clearing organizations and financial institutions | 21,963 | 3,052 | ||||||
Net pending trades | 4,264 | 455 | ||||||
Total | $ | 640,421 | $ | 126,900 | ||||
Substantially all fail to deliver and fail to receive balances as of March 31, 2014 and December 31, 2013 have subsequently settled at the contracted amounts. | ||||||||
In addition to the balances above, the Company had Payables to clearing services customers of $199,974 and $177,523 at March 31, 2014 and December 31, 2013, respectively. These amounts represent cash payable to the Company’s clearing customers that is held at the Company’s third-party general clearing members and are included within Cash and securities segregated under federal and other regulations or Receivables from brokers, dealers and clearing organizations as follows: | ||||||||
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
Cash segregated under federal and other regulations | 62,895 | 62,684 | ||||||
Receivables from brokers, dealers, and clearing organizations | 137,079 | 114,839 | ||||||
Total | $ | 199,974 | $ | 177,523 | ||||
GOODWILL_AND_INTANGIBLE_ASSETS
GOODWILL AND INTANGIBLE ASSETS | 3 Months Ended | |||||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||||
GOODWILL AND INTANGIBLE ASSETS | ' | |||||||||||||||||||
GOODWILL AND INTANGIBLE ASSETS | ' | |||||||||||||||||||
4. GOODWILL AND INTANGIBLE ASSETS | ||||||||||||||||||||
Goodwill—Changes in the carrying amount of the Company’s goodwill for the three months ended March 31, 2014 were as follows: | ||||||||||||||||||||
December 31, | Goodwill | Adjustments | Foreign currency | March 31, | ||||||||||||||||
2013 | acquired | translation | 2014 | |||||||||||||||||
Goodwill | ||||||||||||||||||||
Americas Brokerage | $ | 83,289 | $ | — | $ | — | $ | — | $ | 83,289 | ||||||||||
EMEA Brokerage | 14,637 | — | — | 83 | 14,720 | |||||||||||||||
Clearing and Backed Trading | 23,259 | — | — | 150 | 23,409 | |||||||||||||||
All Other | 134,735 | — | (60 | ) | 27 | 134,702 | ||||||||||||||
$ | 255,920 | $ | — | $ | (60 | ) | $ | 260 | $ | 256,120 | ||||||||||
Goodwill is required to be tested for impairment at least annually and more frequently when indicators of impairment exist. All of the Company’s goodwill is allocated to its reporting units and the goodwill impairment tests are performed at the reporting unit level. The Company determined its reporting units to be Americas Brokerage; Europe, Middle East and Africa (“EMEA”) Brokerage; Asia Brokerage; Clearing and Backed Trading; Trayport; and Fenics. No events or changes in circumstances which would indicate goodwill impairment occurred in the three months ended March 31, 2014. | ||||||||||||||||||||
Intangible Assets—Intangible assets consisted of the following: | ||||||||||||||||||||
March 31, 2014 | December 31, 2013 | |||||||||||||||||||
Gross | Accumulated | Net | Gross | Accumulated | Net | |||||||||||||||
amount | amortization | carrying | amount | amortization | carrying | |||||||||||||||
and foreign | value | and foreign | value | |||||||||||||||||
currency | currency | |||||||||||||||||||
translation | translation | |||||||||||||||||||
Amortized intangible assets: | ||||||||||||||||||||
Customer relationships | $ | 77,196 | $ | 44,000 | $ | 33,196 | $ | 77,196 | $ | 42,151 | $ | 35,045 | ||||||||
Trade names | 8,951 | 6,797 | 2,154 | 8,951 | 6,674 | 2,277 | ||||||||||||||
Core technology | 11,950 | 6,411 | 5,539 | 11,950 | 6,285 | 5,665 | ||||||||||||||
Non-compete agreements | 3,865 | 3,491 | 374 | 3,865 | 3,478 | 387 | ||||||||||||||
Favorable lease agreements | 620 | 600 | 20 | 620 | 580 | 40 | ||||||||||||||
Patents | 3,131 | 1,346 | 1,785 | 3,131 | 1,221 | 1,910 | ||||||||||||||
Other | 647 | 284 | 363 | 647 | 287 | 360 | ||||||||||||||
Total | $ | 106,360 | $ | 62,929 | $ | 43,431 | $ | 106,360 | $ | 60,676 | $ | 45,684 | ||||||||
Intangible amortization expense for three months ended March 31, 2014 and 2013 was $2,469 and $2,498, respectively. | ||||||||||||||||||||
At March 31, 2014, expected amortization expense for the definite lived intangible assets is as follows: | ||||||||||||||||||||
2014 (remaining nine months) | $ | 7,277 | ||||||||||||||||||
2015 | 9,609 | |||||||||||||||||||
2016 | 7,693 | |||||||||||||||||||
2017 | 4,333 | |||||||||||||||||||
2018 | 3,510 | |||||||||||||||||||
Thereafter | 11,009 | |||||||||||||||||||
Total | $ | 43,431 |
OTHER_ASSETS_AND_OTHER_LIABILI
OTHER ASSETS AND OTHER LIABILITIES | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
OTHER ASSETS AND OTHER LIABILITIES | ' | |||||||
OTHER ASSETS AND OTHER LIABILITIES | ' | |||||||
5. OTHER ASSETS AND OTHER LIABILITIES | ||||||||
Other assets consisted of the following: | ||||||||
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
Deferred tax assets | $ | 48,779 | $ | 45,694 | ||||
Investments accounted for under the cost method and equity method | 35,972 | 42,063 | ||||||
Prepaid bonuses | 22,699 | 23,499 | ||||||
Forgivable employee loans and advances to employees | 22,448 | 24,109 | ||||||
Deferred financing fees | 6,332 | 6,786 | ||||||
Software inventory, net | 4,422 | 4,749 | ||||||
Financial instruments owned | 951 | 1,416 | ||||||
Other | 26,184 | 29,528 | ||||||
Total Other assets | $ | 167,787 | $ | 177,844 | ||||
Other liabilities consisted of the following: | ||||||||
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
Payroll related liabilities | $ | 31,007 | $ | 15,896 | ||||
Deferred revenues | 10,483 | 9,199 | ||||||
Unrecognized tax benefits | 8,676 | 8,676 | ||||||
Deferred tax liabilities | 6,440 | 6,835 | ||||||
Contingent consideration liabilities | 4,372 | 4,317 | ||||||
Financial instruments sold, not yet purchased | 675 | 993 | ||||||
Other | 28,994 | 37,155 | ||||||
Total Other liabilities | $ | 90,647 | $ | 83,071 |
SHORTTERM_BORROWINGS_AND_LONGT
SHORT-TERM BORROWINGS AND LONG-TERM DEBT | 3 Months Ended | |||||||||||||
Mar. 31, 2014 | ||||||||||||||
SHORT-TERM BORROWINGS AND LONG-TERM DEBT | ' | |||||||||||||
SHORT-TERM BORROWINGS AND LONG-TERM DEBT | ' | |||||||||||||
6. SHORT-TERM BORROWINGS AND LONG-TERM DEBT | ||||||||||||||
The Company’s outstanding debt obligations consisted of the following: | ||||||||||||||
March 31, | December 31, | |||||||||||||
2014 | 2013 | |||||||||||||
8.375% Senior Notes due 2018 | $ | 240,000 | $ | 240,000 | ||||||||||
Loans pursuant to Credit Agreement | 10,000 | 10,000 | ||||||||||||
Total | $ | 250,000 | $ | 250,000 | ||||||||||
The Company’s debt obligations are carried at historical amounts. The fair value of the Company’s Long-term debt obligations, categorized within Level 2 of the fair value hierarchy, is measured primarily using pricing service data from external providers. The carrying amounts and estimated fair values of the Company’s Long-term debt obligations are as follows: | ||||||||||||||
March 31, 2014 | December 31, 2013 | |||||||||||||
Carrying | Fair Value | Carrying | Fair Value | |||||||||||
Amount | Amount | |||||||||||||
8.375% Senior Notes | $ | 240,000 | $ | 257,400 | $ | 240,000 | $ | 251,100 | ||||||
8.375% Senior Notes | ||||||||||||||
In July 2011, the Company issued $250,000 in aggregate principal amount of 8.375% Senior Notes (the “8.375% Senior Notes”) due 2018 in a private offering (the “Offering”) to qualified institutional buyers pursuant to Rule 144A and to certain persons in offshore transactions pursuant to Regulation S, each under the Securities Act of 1933, as amended (the “Securities Act”). The notes were priced to investors at 100% of their principal amount, and mature in July 2018. Interest on these notes is payable, semi-annually in arrears on the 19th of January and July. Transaction costs of approximately $9,100 related to the 8.375% Senior Notes were deferred and are being amortized over the term of the notes. On December 21, 2011, the Company completed an exchange offer for the 8.375% Senior Notes whereby it exchanged $250,000 in aggregate principal amount of the 8.375% Senior Notes for 8.375% Senior Notes that are registered under the Securities Act. | ||||||||||||||
In March 2013, the Company repurchased $10,000 principal amount of its 8.375% Senior Notes on the open market for an aggregate purchase price of $9,602, including accrued interest and sales commissions. The Company funded the repurchase of these notes with borrowings under its Credit Agreement. | ||||||||||||||
On January 18, 2013, Moody’s Investor Services lowered its credit rating on the Company’s 8.375% Senior Notes two notches to B1, which increased the Company’s applicable per annum interest, effective January 19, 2013, by an additional 50 basis points. On April 19, 2013, Fitch Ratings, Inc. (“Fitch”) further lowered its credit rating on the Company’s 8.375% Senior Notes two notches to BB and revised its outlook from Stable to Negative. This credit rating downgrade by Fitch increased our applicable per annum interest by an additional 50 basis points, effective July 19, 2013. On June 26, 2013, Standard & Poor’s (“S&P”) further lowered its credit rating on the Company’s 8.375% Senior Notes one notch to B+ and revised its outlook from Negative to Stable. This credit rating downgrade by S&P increased the Company’s applicable per annum interest by an additional 25 basis points, effective July 19, 2013. | ||||||||||||||
The cumulative effect of all such downgrades to the Company’s credit rating by the various rating agencies subsequent to the issuance of our 8.375% Senior Notes resulted in 200 basis points penalty interest, which is the maximum increase permitted under the indenture. The additional 200 basis points of interest equates to $4,800 in additional interest expense per annum, based on the aggregate amount of outstanding principal as of March 31, 2014. | ||||||||||||||
At March 31, 2014 and December 31, 2013, unamortized deferred financing fees related to the 8.375% Senior Notes of $5,357 and $5,669, respectively, were recorded within Other assets and the Company was in compliance with all applicable covenants. | ||||||||||||||
Credit Agreement | ||||||||||||||
In March 2013, the Company entered into an amendment to its second amended and restated credit agreement (as amended, the “Credit Agreement”) with Bank of America, N.A. and certain other lenders. The Credit Agreement provided for maximum revolving loans of up to $75,000 until December 2013, at which time $18,750 of the lender commitments were due to mature and the remaining $56,250 of lender commitments were due to mature in December 2015. | ||||||||||||||
On December 9, 2013, the various lenders under the Credit Agreement executed an assignment and assumption agreement pursuant to which the extending lenders under the Credit Agreement assumed the lender commitments of the non-extending lender and the Company consented to the assignment. As a result, the borrowing capacity will remain at $75,000 until the Credit Agreement matures in December 2015. The Credit Agreement provides for up to $50,000 for letters of credit. | ||||||||||||||
Revolving loans may be either base rate loans or Eurocurrency rate loans. Eurocurrency rate loans bear interest at the annualized rate of one-month LIBOR plus the application margin and base rate loans bear interest at a rate per annum equal to a prime rate plus the applicable margin. Letter of credit fees per annum are equal to the applicable margin times the outstanding amount drawn under such letter of credit. As long as no default has occurred under the Credit Agreement, the applicable margin for base rate and Eurocurrency rate loans and letters of credit is based on a matrix that varies with a ratio of outstanding debt to EBITDA, as defined in the Credit Agreement. | ||||||||||||||
The weighted average interest rate of the outstanding loans under the Credit Agreement was 3.41% at March 31, 2014. At March 31, 2014 and December 31, 2013, unamortized deferred financing fees related to the Credit Agreement of $975 and $1,117, respectively, were recorded within Other assets. | ||||||||||||||
The Credit Agreement contains certain financial and other covenants. The Company was in compliance with all applicable covenants at March 31, 2014 and December 31, 2013. |
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2014 | |
STOCKHOLDERS' EQUITY | ' |
STOCKHOLDERS' EQUITY | ' |
7. STOCKHOLDERS’ EQUITY | |
In August 2007, the Company’s Board of Directors authorized the Company to implement a stock repurchase program to repurchase a limited number of shares of the Company’s common stock. Under the repurchase plan, the Board of Directors authorized the Company to repurchase shares of the Company’s common stock on the open market in such amounts as determined by the Company’s management, provided, however, such amounts are not to exceed, during any calendar year, the number of shares issued upon the exercise of stock options plus the number of shares underlying grants of RSUs that are granted or which management reasonably anticipates will be granted in such calendar year. During the three months ended March 31, 2014, and March 31, 2013 the Company did not repurchase any shares of its common stock. | |
On March 28, 2014 the Company paid a cash dividend of $0.05 per share, which, based on the number of shares outstanding on the record date for such dividends, totaled $6,188. In December 2012, the Company’s Board of Directors declared a dividend for the fourth quarter of 2012 on an accelerated basis. The dividend was declared and paid in December 2012 and the Company, therefore, did not pay a cash dividend during the first quarter of 2013. |
EARNINGS_PER_SHARE
EARNINGS PER SHARE | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
EARNINGS PER SHARE | ' | |||||||
EARNINGS PER SHARE | ' | |||||||
8. EARNINGS PER SHARE | ||||||||
Basic earnings per share for common stock is calculated by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is calculated by dividing net income by the sum of: (i) the weighted average number of shares outstanding, (ii) outstanding stock options and RSUs (using the “treasury stock” method when the impact of such options and RSUs would be dilutive), and (iii) any contingently issuable shares when dilutive. | ||||||||
Basic and diluted earnings per share for the three months ended March 31, 2014 and 2013 were as follows: | ||||||||
Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
Basic earnings per share | ||||||||
GFI’s net income | $ | 4,003 | $ | 4,674 | ||||
Weighted average common shares outstanding | 122,362,839 | 115,384,022 | ||||||
Basic earnings per share | $ | 0.03 | $ | 0.04 | ||||
Diluted earnings per share | ||||||||
GFI’s net income | $ | 4,003 | $ | 4,674 | ||||
Weighted average common shares outstanding | 122,362,839 | 115,384,022 | ||||||
Effect of dilutive options, RSUs, and other contingently issuable shares | 9,067,862 | 10,168,019 | ||||||
Weighted average shares outstanding and common stock equivalents | 131,430,701 | 125,552,041 | ||||||
Diluted earnings per share | $ | 0.03 | $ | 0.04 | ||||
Excluded from the computation of diluted earnings per share because their effect would be anti-dilutive were the following: | ||||||||
Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
Stock options | 16,844 | 69,476 | ||||||
RSUs | 286,014 | 6,135,867 | ||||||
Included in the computation of diluted earnings per share, but not in the computation of basic earnings per share as the conditions for issuance were not satisfied as of the respective reporting period were 1,171,879 and 3,682,916 contingently issuable shares for the three months ended March 31, 2014 and 2013, respectively. |
SHAREBASED_COMPENSATION
SHARE-BASED COMPENSATION | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
SHARE-BASED COMPENSATION | ' | |||||||
SHARE-BASED COMPENSATION | ' | |||||||
9. SHARE-BASED COMPENSATION | ||||||||
The Company’s Amended and Restated GFI Group Inc. 2008 Equity Incentive Plan, which was approved by the Company’s stockholders on June 6, 2013 (as amended and restated, the “2008 Equity Incentive Plan”) permits the grant of non-qualified stock options, incentive stock options, stock appreciation rights, shares of restricted stock, restricted stock units and performance units to employees, non-employee directors or consultants. The Company issues shares from authorized but unissued shares and authorized and issued shares reacquired and held as treasury shares, which are reserved for issuance upon the vesting of RSUs granted pursuant to the 2008 Equity Incentive Plan. As of March 31, 2014, there were 7,272,045 shares of common stock available for future grants of awards under the 2008 Equity Incentive Plan. | ||||||||
As of March 31, 2014, the Company had stock options outstanding under the GFI Group 2002 Stock Option Plan (the “GFI Group 2002 Plan”). No additional grants will be made under this option plan. | ||||||||
Restricted Stock Units | ||||||||
The fair value of RSUs is based on the closing price of the Company’s common stock on the date of grant and is recorded as compensation expense over the service period, net of estimated forfeitures. The following is a summary of RSU transactions under both the 2008 Equity Incentive Plan and the 2004 Equity Incentive Plan: | ||||||||
RSUs | Weighted- | |||||||
Average | ||||||||
Grant Date | ||||||||
Fair Value | ||||||||
Outstanding December 31, 2013 | 18,483,001 | $ | 4.01 | |||||
Granted | 2,908,418 | 3.56 | ||||||
Vested | (3,908,980 | ) | 4.11 | |||||
Cancelled | (224,874 | ) | 3.62 | |||||
Outstanding March 31, 2014 | 17,257,565 | $ | 3.92 | |||||
The weighted average grant-date fair value of RSUs granted for the three months ended March 31, 2014 was $3.56 per unit, compared with $3.35 per unit for the same period in the prior year. Total compensation expense and related income tax benefits recognized in relation to RSUs are as follows: | ||||||||
Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
Compensation expense | $ | 7,356 | $ | 8,142 | ||||
Income tax benefits | $ | 2,099 | $ | 2,488 | ||||
At March 31, 2014, total unrecognized compensation cost related to the RSUs prior to the consideration of expected forfeitures was approximately $51,663 and is expected to be recognized over a weighted-average period of 1.79 years. The total fair value of RSUs vested during the three months ended March 31, 2014 and 2013 was $16,057 and $20,472, respectively. | ||||||||
Stock Options | ||||||||
The following is a summary of stock options outstanding under the GFI Group 2002 Plan as of March 31, 2014: | ||||||||
Options | Weighted | |||||||
Average | ||||||||
Exercise | ||||||||
Price | ||||||||
Outstanding December 31, 2013 | 139,164 | $ | 4.16 | |||||
Exercised | (20,212 | ) | 2.97 | |||||
Cancelled | — | — | ||||||
Expired | (94,740 | ) | 4.24 | |||||
Outstanding March 31, 2014 | 24,212 | $ | 4.56 | |||||
As of March 31, 2014 and 2013, there was no unrecognized compensation cost related to stock options. |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2014 | |
COMMITMENTS AND CONTINGENCIES | ' |
COMMITMENTS AND CONTINGENCIES | ' |
10. COMMITMENTS AND CONTINGENCIES | |
Purchase Obligations— The Company has various unconditional purchase obligations. These obligations are for the purchase of market data from a number of information service providers during the normal course of business. As of March 31, 2014, the Company had total purchase commitments for market data of approximately $26,603, with $18,807 due within the next twelve months and $7,796 due between one to three years. Additionally, the Company had $8,515 of other purchase commitments including $7,500 primarily related to network upgrades in the U.S. and U.K., and $1,015 for hosting and software license agreements. Of these other purchase commitments, approximately $4,493 is due within the next twelve months. | |
Contingencies—In the normal course of business, the Company and certain subsidiaries included in the condensed consolidated financial statements are, and have been in the past, involved in various lawsuits and proceedings and are, and have been in the past, involved in certain regulatory examinations. These legal proceedings are at varying stages of adjudication, arbitration or investigation and involve a wide variety of claims. In view of the inherent difficulty of predicting the outcome of such litigation and regulatory matters, particularly where the claimants seek very large or indeterminate damages or where the matters present novel legal theories, the Company generally cannot predict what the eventual outcome of the pending matters will be, what the timing of the ultimate resolution of these matters will be, or what the eventual loss, fines or penalties, if any, relating to each matter may be. | |
The Company is subject to the possibility of losses from these various contingencies. Considerable judgment is necessary to estimate the probability and amount of any loss from such contingencies. In accordance with applicable accounting guidelines, an accrual is made when it is probable that a liability has been incurred or an asset has been impaired and the amount of loss can be reasonably estimated. Where a loss contingency is not both probable and estimable, the Company does not establish an accrued liability. | |
The Company is subject to regular examinations by various tax authorities in jurisdictions in which the Company has significant business operations. The Company regularly assesses the likelihood of additional tax assessments that may result from these examinations in each of the tax jurisdictions. A tax accrual has been established, which the Company believes to be adequate in relation to the potential for additional tax assessments. Once established, the accrual may be adjusted based on new information or events. The imposition of additional tax assessments, penalties or fines by a tax authority could have a material impact on the Company’s effective tax rate. | |
Additionally, the Company has recorded reserves for certain contingencies to which it may have exposure, such as contingencies related to the employer portion of National Insurance Contributions in the U.K. | |
Based on currently available information, the outcome of the Company’s outstanding legal proceedings are not expected to have a material adverse impact on the Company’s financial position. However, the outcome of any such matters may be material to the Company’s results of operations or cash flows in a given period. It is not presently possible to determine the Company’s ultimate exposure to these matters and there is no assurance that the resolution of the Company’s outstanding matters will not significantly exceed any reserves accrued by the Company. | |
The purchase price paid in connection with the acquisition of Contigo Limited, included contingent consideration with an estimated net present value, at the time of the acquisition, of £2,458 (or approximately $3,942). Subsequent changes in the estimated fair value of the contingent consideration, which is to be settled in 2015, will be recorded in Other income, net in the Condensed Consolidated Statements of Operations and the estimated fair value of the contingent consideration as of March 31, 2013 is included within Other liabilities in the Condensed Consolidated Statements of Financial Condition. See Note 12 for further information. | |
Risks and Uncertainties— The Company primarily generates its revenues by executing and facilitating transactions for counterparties. Revenues for these services are transaction based. As a result, the Company’s revenues will likely vary based upon the trading volumes of the various securities, commodities, foreign exchange and other cash and derivative markets in which the Company provides its services. | |
Guarantees— The Company, through its subsidiaries, is a member of certain exchanges and clearing houses. Under the membership agreements, members are generally required to guarantee certain obligations. To mitigate the performance risks of its members, the exchanges and clearing houses may, from time to time, require members to post collateral, as well as meet certain minimum financial standards. The Company’s maximum potential liability under these arrangements cannot be quantified. However, management believes that the potential for the Company to be required to make payments under these arrangements is unlikely. Accordingly, no contingent liability is recorded in the Condensed Consolidated Statements of Financial Condition for these arrangements. |
MARKET_AND_CREDIT_RISKS
MARKET AND CREDIT RISKS | 3 Months Ended |
Mar. 31, 2014 | |
MARKET AND CREDIT RISKS | ' |
MARKET AND CREDIT RISKS | ' |
11. MARKET AND CREDIT RISKS | |
Disclosure regarding the Company’s financial instruments with market and credit risks are described in “Note 15—Market and Credit Risks” of the Notes to the Consolidated Financial Statements contained in the Company’s 2013 Form 10-K. There have been no material changes to these risks during the three months ended March 31, 2014. |
FAIR_VALUE_OF_FINANCIAL_INSTRU
FAIR VALUE OF FINANCIAL INSTRUMENTS | 3 Months Ended | ||||||||||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ' | ||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ' | ||||||||||||||||||||||||||||
12. FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||||||||||||||||||||||||
Certain of the Company’s financial assets and liabilities are carried at fair value, and are measured at fair value on a recurring basis. Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). Financial instruments owned and Financial instruments sold, not yet purchased are recorded at fair value, and included in Other assets and Other liabilities, respectively. Contingent consideration, if any, is also recorded at fair value, and included in Other liabilities. The Company’s investments that are accounted for under the cost and equity methods are investments in companies that are not publicly traded and for which no established market for their securities exists. The fair value of these investments is only estimated if there are identified events or changes in circumstances that may have a significant adverse effect on the carrying value of the investment. | |||||||||||||||||||||||||||||
The Company’s financial assets and liabilities recorded at fair value have been categorized based upon a fair value hierarchy in accordance with ASC 820-10. In accordance with ASC 820-10, the Company has categorized its financial assets and liabilities, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy as set forth below. | |||||||||||||||||||||||||||||
Level 1—Financial assets and liabilities whose values are based on unadjusted quoted prices for identifiable assets or liabilities in an active market that the company has the ability to access at the measurement date (examples include active exchange-traded equity securities, listed derivatives, and most U.S. Government and agency securities). | |||||||||||||||||||||||||||||
Level 2—Financial assets and liabilities whose values are based on quoted prices in markets where trading occurs infrequently or whose values are based on quoted prices of instruments with similar attributes in active markets. Level 2 inputs include the following: | |||||||||||||||||||||||||||||
· Quoted prices for identifiable or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds which trade infrequently); and | |||||||||||||||||||||||||||||
· Inputs other than quoted prices that are observable for substantially the full term of the asset or liability (examples include interest rate and currency swaps). | |||||||||||||||||||||||||||||
Level 3—Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability. | |||||||||||||||||||||||||||||
Valuation Techniques | |||||||||||||||||||||||||||||
A description of the valuation techniques applied to the Company’s major categories of assets and liabilities measured at fair value on a recurring basis are as follows: | |||||||||||||||||||||||||||||
U.S. Treasury Securities - U.S. Treasury securities are valued using quoted market prices. Valuation adjustments are not applied. Accordingly, U.S. Treasury securities are generally categorized in Level 1 of the fair value hierarchy. | |||||||||||||||||||||||||||||
Equity Securities - Equity securities include mostly exchange-traded securities and are valued based on quoted market prices. Accordingly, exchange-traded equity securities are generally categorized in Level 1 of the fair value hierarchy. Non-exchange traded equity securities are measured primarily using broker quotations, pricing service data from external providers and prices observed for recently executed market transactions. Non-exchange traded equity securities are generally categorized within Level 2 of the fair value hierarchy. | |||||||||||||||||||||||||||||
Corporate Bonds — Corporate bonds are measured primarily using broker quotations, pricing service data from external providers and prices observed for recently executed market transactions. Corporate bonds are generally categorized in Level 2 of the fair value hierarchy. | |||||||||||||||||||||||||||||
Foreign government bonds — Foreign government bonds are mostly valued using quoted market prices. Accordingly, foreign government bonds are generally categorized in Level 1 of the fair value hierarchy. | |||||||||||||||||||||||||||||
Derivative Contracts — Derivative contracts include instruments such as foreign exchange, commodity, fixed income and equity derivative contracts. | |||||||||||||||||||||||||||||
Listed Derivative Contracts - Listed derivatives that are actively traded are valued based on quoted prices from the exchange and are categorized in Level 1 of the fair value hierarchy. | |||||||||||||||||||||||||||||
OTC Derivative Contracts — Over-the-counter (“OTC”) derivative contracts include forwards, swaps, and options contracts related to foreign currencies. Depending on the product and the terms of the transaction, the fair value of OTC derivative products can be either observed or modeled using a series of techniques and model inputs from comparable benchmarks, including closed-form analytic formulas, such as the Black-Scholes option-pricing model, and simulation models or a combination thereof. Many pricing models do not entail material subjectivity because the methodologies employed do not necessitate significant judgment, and the pricing inputs are observed from actively quoted markets. In the case of more established derivative products, the pricing models used by the Company are widely accepted by the financial services industry. OTC derivative products valued by the Company using pricing models generally fall into this category and are categorized in Level 2 of the fair value hierarchy. | |||||||||||||||||||||||||||||
Equity warrants - Non-exchange traded equity warrants are classified within Level 3 of the fair value hierarchy and are measured using the Black-Scholes model with key inputs impacting the valuation including the underlying security price, implied volatility, dividend yield, interest rate curve, strike price and maturity date. | |||||||||||||||||||||||||||||
Contingent Consideration — The category consists primarily of contingent consideration related to one of the Company’s acquisitions. | |||||||||||||||||||||||||||||
On November 14, 2013, the Company completed the acquisition of Contigo Limited, a provider of trading, portfolio risk management and logistics software for the energy industry. This contingent liability, which will be settled in a combination of cash and up to 50% of the Company’s common stock at the Company’s discretion, will be remeasured at fair value and is principally based on the acquired business’ future financial performance, including revenues and operating margins, from May 1, 2014 through April 30, 2015. The payment of the contingent consideration, if expected financial results are met by Contigo Limited, would not significantly impact the Company’s financial position, results of operations or cash flows. | |||||||||||||||||||||||||||||
The inputs used in estimating the fair value of these contingent considerations are both unobservable and significant to the overall fair value measurement of this liability, therefore the liability is categorized in Level 3 of the fair value hierarchy. | |||||||||||||||||||||||||||||
In the three months ended March 31, 2014 and 2013, the Company did not have any material transfers among Level 1, Level 2, and Level 3. | |||||||||||||||||||||||||||||
Financial Assets and Liabilities measured at fair value on a recurring basis as of March 31, 2014 are as follows: | |||||||||||||||||||||||||||||
Quoted Prices in | Significant Other | Significant | Balance at | ||||||||||||||||||||||||||
Active Markets for | Observable | Unobservable | March 31, | ||||||||||||||||||||||||||
Identical Assets | Inputs | Inputs | 2014 | ||||||||||||||||||||||||||
(Level 1) | (Level 2) | (Level 3) | |||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
Other assets: Financial instruments owned: | |||||||||||||||||||||||||||||
Equity securities | $ | 7 | $ | 186 | $ | — | $ | 193 | |||||||||||||||||||||
Derivative contracts: | |||||||||||||||||||||||||||||
Foreign exchange derivative contracts | $ | 112 | $ | 630 | $ | — | $ | 742 | |||||||||||||||||||||
Fixed income derivative contracts | 247 | — | — | 247 | |||||||||||||||||||||||||
Equity derivative contracts | — | — | — | — | |||||||||||||||||||||||||
Netting (1) | (231 | ) | — | — | (231 | ) | |||||||||||||||||||||||
Total derivative contracts | $ | 128 | $ | 630 | $ | — | $ | 758 | |||||||||||||||||||||
Total financial instruments owned | $ | 135 | $ | 816 | $ | — | $ | 951 | |||||||||||||||||||||
Total | $ | 135 | $ | 816 | $ | — | $ | 951 | |||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Other liabilities: Financial instruments sold, not yet purchased: | |||||||||||||||||||||||||||||
Derivative contracts: | |||||||||||||||||||||||||||||
Foreign exchange derivative contracts | $ | 4 | $ | 675 | $ | — | $ | 679 | |||||||||||||||||||||
Fixed income derivative contracts | 227 | — | — | 227 | |||||||||||||||||||||||||
Netting (1) | (231 | ) | — | — | (231 | ) | |||||||||||||||||||||||
Total derivative contracts | $ | — | $ | 675 | $ | — | $ | 675 | |||||||||||||||||||||
Total financial instruments sold, not yet purchased | $ | — | $ | 675 | $ | — | $ | 675 | |||||||||||||||||||||
Other liabilities: Contingent consideration | $ | — | $ | — | $ | 4,372 | $ | 4,372 | |||||||||||||||||||||
Total | $ | — | $ | 675 | $ | 4,372 | $ | 5,047 | |||||||||||||||||||||
(1) Represents the impact of netting on a net-by-counterparty basis. | |||||||||||||||||||||||||||||
Excluded from the table above is variation margin on net long derivative contracts related to exchange traded futures in the amount of $324 included within Receivables from brokers, dealers and clearing organizations. | |||||||||||||||||||||||||||||
Financial Assets and Liabilities measured at fair value on a recurring basis as of December 31, 2013 are as follows: | |||||||||||||||||||||||||||||
Quoted Prices in | Significant Other | Significant | Balance at | ||||||||||||||||||||||||||
Active Markets for | Observable | Unobservable | December 31, | ||||||||||||||||||||||||||
Identical Assets | Inputs | Inputs | 2013 | ||||||||||||||||||||||||||
(Level 1) | (Level 2) | (Level 3) | |||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
Other assets: Financial instruments owned: | |||||||||||||||||||||||||||||
Equity securities | $ | 546 | $ | 177 | $ | — | $ | 723 | |||||||||||||||||||||
Derivative contracts: | |||||||||||||||||||||||||||||
Foreign exchange derivative contracts | $ | — | $ | 679 | $ | — | $ | 679 | |||||||||||||||||||||
Equity derivative contracts | — | — | 14 | 14 | |||||||||||||||||||||||||
Total derivative contracts | $ | — | $ | 679 | $ | 14 | $ | 693 | |||||||||||||||||||||
Total financial instruments owned | $ | 546 | $ | 856 | $ | 14 | $ | 1,416 | |||||||||||||||||||||
Other assets: Other: | |||||||||||||||||||||||||||||
Equity security, available-for-sale | $ | 5,465 | $ | — | $ | — | $ | 5,465 | |||||||||||||||||||||
Total | $ | 6,011 | $ | 856 | $ | 14 | $ | 6,881 | |||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Other liabilities: Financial instruments sold, not yet purchased: | |||||||||||||||||||||||||||||
Derivative contracts: | |||||||||||||||||||||||||||||
Foreign exchange derivative contracts | $ | — | $ | 993 | $ | — | $ | 993 | |||||||||||||||||||||
Total financial instruments sold, not yet purchased | $ | — | $ | 993 | $ | — | $ | 993 | |||||||||||||||||||||
Other liabilities: Contingent consideration | $ | — | $ | — | $ | 4,317 | $ | 4,317 | |||||||||||||||||||||
Total | $ | — | $ | 993 | $ | 4,317 | $ | 5,310 | |||||||||||||||||||||
Excluded from the table above is variation margin on net long derivative contracts related to exchange traded futures in the amount of $388 included within Receivables from brokers, dealers and clearing organizations. Also excluded from the table above is variation margin on net short derivative contracts related to exchange traded futures in the amount of $596 included within Payables to brokers, dealers and clearing organizations. | |||||||||||||||||||||||||||||
Changes in Level 3 Financial Assets and Liabilities measured at fair value on a recurring basis for the three months ended March 31, 2014 are as follows: | |||||||||||||||||||||||||||||
Opening | Total realized | Unrealized gains | Purchases | Issues | Sales | Settlements | Closing | Unrealized | |||||||||||||||||||||
Balance | and unrealized | included | Balance at | gains | |||||||||||||||||||||||||
gains (losses) | in Other | March 31, | (losses) for Level | ||||||||||||||||||||||||||
included in | comprehensive | 2014 | 3 Assets / | ||||||||||||||||||||||||||
Net income (1) | (income) loss | Liabilities | |||||||||||||||||||||||||||
Outstanding at | |||||||||||||||||||||||||||||
March 31, | |||||||||||||||||||||||||||||
2014 | |||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
Other assets: | |||||||||||||||||||||||||||||
Financial instruments owned: | |||||||||||||||||||||||||||||
Equity derivative contracts | $ | 14 | $ | (14 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (14 | ) | |||||||||
Liabilities | |||||||||||||||||||||||||||||
Other liabilities: | |||||||||||||||||||||||||||||
Contingent consideration: | $ | 4,317 | $ | 28 | $ | 27 | $ | — | $ | — | $ | — | $ | — | $ | 4,372 | $ | 28 | |||||||||||
(1) Realized and unrealized gains (losses) are reported in Other income, net in the Condensed Consolidated Statements of Operations. | |||||||||||||||||||||||||||||
Changes in Level 3 Financial Assets and Liabilities measured at fair value on a recurring basis for the three months ended March 31, 2013 are as follows: | |||||||||||||||||||||||||||||
Opening | Total realized | Unrealized gains | Purchases | Issues | Sales | Settlements | Closing | Unrealized gains | |||||||||||||||||||||
Balance | and unrealized | included | Balance at | (losses) for Level | |||||||||||||||||||||||||
gains (losses) | in Other | March 31, | 3 Assets / | ||||||||||||||||||||||||||
included in | comprehensive | 2013 | Liabilities | ||||||||||||||||||||||||||
Income (1) | (income) loss | Outstanding at | |||||||||||||||||||||||||||
March 31, | |||||||||||||||||||||||||||||
2013 | |||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
Other assets: | |||||||||||||||||||||||||||||
Financial instruments owned: | |||||||||||||||||||||||||||||
Equity derivative contracts | $ | 28 | $ | (22 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 6 | $ | (22 | ) | |||||||||
Liabilities | |||||||||||||||||||||||||||||
Other liabilities: | |||||||||||||||||||||||||||||
Future purchase commitment: | $ | 3,209 | $ | 744 | $ | 208 | $ | — | $ | — | $ | — | $ | — | $ | 2,257 | $ | 744 | |||||||||||
Other liabilities: | |||||||||||||||||||||||||||||
Contingent consideration | $ | 518 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (156 | ) | $ | 362 | $ | — | ||||||||||
(1) Realized and unrealized gains (losses) are reported in Other income, net in the Condensed Consolidated Statements of Operations. | |||||||||||||||||||||||||||||
The following tables present quantitative information about the significant unobservable inputs utilized by the Company in the fair value measurement of Level 3 Assets and Liabilities measured at fair value on a recurring basis, as of March 31, 2014 and December 31, 2013, respectively: | |||||||||||||||||||||||||||||
Fair Value as of | Valuation | Unobservable Input(s) | Range (Weighted | ||||||||||||||||||||||||||
March 31, | Technique(s) | Average) (a) | |||||||||||||||||||||||||||
2014 | |||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
Equity derivative contracts | $ | — | Black-Scholes Merton Model | Expected volatility | 30 | % | |||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Contingent consideration | $ | 4,372 | Present value of expected payments | Discount rate | 17 | % | |||||||||||||||||||||||
Forecasted financial information | (b) | ||||||||||||||||||||||||||||
Fair Value as of | Valuation | Unobservable Input(s) | Range (Weighted | ||||||||||||||||||||||||||
December 31, | Technique(s) | Average) (a) | |||||||||||||||||||||||||||
2013 | |||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
Equity derivative contracts | $ | 14 | Black-Scholes Merton Model | Expected volatility | 30 | % | |||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Contingent consideration | $ | 4,317 | Present value of expected payments | Discount rate | 17 | % | |||||||||||||||||||||||
Forecasted financial information | (b) | ||||||||||||||||||||||||||||
(a) As of March 31, 2014 and December 31, 2013, each asset and liability type consists of one security. | |||||||||||||||||||||||||||||
(b) The Company’s estimate of contingent consideration as of March 31, 2014 and December 31, 2013, respectively, was principally based on the acquired business’ projected future financial performance, including revenues and operating margins from May 1, 2014 through April 30, 2015. | |||||||||||||||||||||||||||||
Valuation Processes—Level 3 Measurements—Depending on the instrument, the Company utilizes a valuation technique, including discounted cash flow methods, option pricing methods and present value methods, as indicated above. Valuations are generally conducted by the Company, with consultation of a third-party valuation expert to develop the valuation model when the asset or liability is initially recorded. Each reporting period, the Company updates unobservable inputs utilizing relevant published information, where applicable. The Company has a formal process to review changes in fair value for satisfactory explanation. | |||||||||||||||||||||||||||||
Sensitivity Analysis—Level 3 Measurements | |||||||||||||||||||||||||||||
Equity derivative contracts - The significant unobservable inputs used in the fair value of the Company’s equity derivative contracts are the expected volatility and an estimated share price. Significant increases (decreases) in expected volatility or estimated share price would result in a higher (lower) fair value measurement. | |||||||||||||||||||||||||||||
Contingent consideration — The significant unobservable inputs used in the fair value in the Company’s contingent consideration are the discount rate and forecasted financial information. Significant increases (decreases) in the discount rate would have resulted in a lower (higher) fair value measurement. Significant increases (decreases) in the forecasted financial information would have resulted in a higher (lower) fair value measurement. | |||||||||||||||||||||||||||||
For all significant unobservable inputs used in the fair value measurement of all Level 3 assets and liabilities, a change in one of the inputs would not necessarily result in a directionally similar change in the other. |
DERIVATIVE_FINANCIAL_INSTRUMEN
DERIVATIVE FINANCIAL INSTRUMENTS | 3 Months Ended | |||||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS | ' | |||||||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS | ' | |||||||||||||||||||
13. DERIVATIVE FINANCIAL INSTRUMENTS | ||||||||||||||||||||
The Company uses foreign exchange derivative contracts, including forward contracts and foreign currency swaps, to reduce the effects of fluctuations in certain assets and liabilities denominated in foreign currencies. The Company also hedges a portion of its foreign currency exposures on anticipated foreign currency denominated revenues and expenses by entering into forward foreign exchange contracts. As of March 31, 2014 and December 31, 2013, none of these contracts were designated as foreign currency cash flow hedges under ASC 815-10, Derivatives and Hedging (“ASC 815-10”). | ||||||||||||||||||||
The Company provides brokerage services to its customers for exchange-traded and over-the-counter derivative products, which include futures, forwards and options contracts. The Company may enter into principal transactions for exchange-traded and over-the-counter derivative products to facilitate customer trading activities or to engage in principal trading for the Company’s own account. | ||||||||||||||||||||
The Company monitors market risk exposure from its matched principal business and principal trading business by regularly monitoring both (i) its concentration of market risk to financial instruments, countries or counterparties and (ii) trades that have not settled within prescribed settlement periods or volume thresholds. Additionally, market risks are monitored and mitigated by the use of the Company’s proprietary, electronic risk monitoring system, which provides daily credit reports in each of the Company’s geographic regions that analyze credit concentration and facilitates the regular monitoring of transactions against key risk indicators. | ||||||||||||||||||||
For certain derivative contracts, the Company has entered into agreements with counterparties that allow for the netting of positions. The Company reports these derivative contracts on a net-by-counterparty basis when management believes that a legal and enforceable right of offset exists under these agreements. | ||||||||||||||||||||
Fair values of derivative contracts on a gross and net basis as of March 31, 2014 and December 31, 2013 are as follows: | ||||||||||||||||||||
March 31, 2014 | December 31, 2013 | |||||||||||||||||||
Derivatives not designated as hedging | Derivative | Derivative | Derivative | Derivative | ||||||||||||||||
instruments under ASC 815-10 | Assets(1) | Liabilities(2) | Assets(1) | Liabilities(2) | ||||||||||||||||
Foreign exchange derivative contracts | $ | 986 | $ | 867 | $ | 679 | $ | 993 | ||||||||||||
Commodity derivative contracts | 29,974 | 29,886 | 17,604 | 17,216 | ||||||||||||||||
Fixed income derivative contracts | 7,882 | 7,679 | 15,824 | 16,415 | ||||||||||||||||
Equity derivative contracts | 22 | 25 | 24 | 15 | ||||||||||||||||
Total fair value of derivative contracts | $ | 38,864 | $ | 38,457 | $ | 34,131 | $ | 34,639 | ||||||||||||
Counterparty netting | (37,782 | ) | (37,782 | ) | (33,050 | ) | (33,050 | ) | ||||||||||||
Total fair value | $ | 1,082 | $ | 675 | $ | 1,081 | $ | 1,589 | ||||||||||||
(1) Reflects futures and options on futures contracts within Receivables from brokers, dealers and clearing organizations and options and forwards contracts within Other assets. | ||||||||||||||||||||
(2) Reflects futures and options on futures contracts within Payables to brokers, dealers and clearing organizations and options and forwards contracts within Other liabilities. | ||||||||||||||||||||
As of March 31, 2014 and December 31, 2013, the Company had outstanding forward foreign exchange hedge contracts with a combined notional value of $91,537 and $86,170, respectively. Approximately $33,432 and $27,659 of these forward foreign exchange contracts represents a hedge of Euro, British pound and Swiss franc-denominated balance sheet positions at March 31, 2014 and December 31, 2013, respectively. The remaining outstanding forward foreign exchange contracts are hedges of anticipated future cash flows. | ||||||||||||||||||||
In addition to the Company’s outstanding forward foreign exchange hedge contracts, the following table includes the outstanding long and short notional amounts on a gross basis of derivative financial instruments as of March 31, 2014 and December 31, 2013: | ||||||||||||||||||||
March 31, 2014 | December 31, 2013 | |||||||||||||||||||
Long | Short | Long | Short | |||||||||||||||||
Foreign exchange derivative contracts | $ | 286 | $ | 148,055 | $ | — | $ | — | ||||||||||||
Commodity derivative contracts | 950,241 | 938,030 | 349,004 | 342,573 | ||||||||||||||||
Fixed income derivative contracts | 9,890,091 | 10,191,069 | 9,415,546 | 10,047,771 | ||||||||||||||||
Equity derivative contracts | 1,181 | 1,174 | 5,731 | 220 | ||||||||||||||||
The following is a summary of the effect of derivative contracts on the Condensed Consolidated Statements of Operations for the three months ended March 31, 2014 and 2013: | ||||||||||||||||||||
Location of Gain (Loss) | Amount of Gain (Loss) Recognized in Income on | |||||||||||||||||||
Derivatives | ||||||||||||||||||||
Derivatives not designated as hedging | Recognized in Income on | For the Three Months | For the Three Months Ended | |||||||||||||||||
instruments under ASC 815-10 | Derivatives | Ended March 31, 2014 | March 31, 2013 | |||||||||||||||||
Foreign exchange derivative contracts | -1 | $ | 295 | $ | (791 | ) | ||||||||||||||
Commodity derivative contracts | Principal transactions | 1,753 | 2,499 | |||||||||||||||||
Fixed income derivative contracts | Principal transactions | 3,130 | 2,992 | |||||||||||||||||
Equity derivative contracts | -2 | 7 | (297 | ) | ||||||||||||||||
(1) For the three months ended March 31, 2014, approximately $202 of gains on foreign exchange derivative contracts were included within Other income, net and approximately $93 of gains on foreign currency options were included within Principal transactions. For the three months ended March 31, 2013, approximately $80 of losses on foreign exchange derivative contracts were included within Other income, net and approximately $711 of losses on foreign currency options were included within Principal transactions. | ||||||||||||||||||||
(2) For the three months ended March 31, 2014, approximately $14 of losses on equity derivative contracts were included within Other income, net and approximately $21 of gains on equity derivative contracts were included within Principal transactions. For the three months ended March 31, 2013, approximately $22 of losses on equity derivative contracts were included within Other income, net and approximately $275 of losses on equity derivative contracts were included within Principal transactions. | ||||||||||||||||||||
The following is a summary of derivative contracts, by counterparty, including the gross amounts offset in the Condensed Consolidated Statements of Financial Position as of March 31, 2014: | ||||||||||||||||||||
Net Amounts of | ||||||||||||||||||||
Gross Amount | Assets Offset in the | Gross Amounts Not Offset in the | ||||||||||||||||||
Offset in the | Condensed | Condensed Consolidated Statements | ||||||||||||||||||
Gross | Condensed | Consolidated | of Financial Condition | |||||||||||||||||
Amounts of | Consolidated | Statements of | Cash Collateral | |||||||||||||||||
Recognized | Statements of | Financial Position | Received/ | |||||||||||||||||
Counterparties | Assets | Financial Position | -1 | Derivatives (2) | (Pledged) | Net Amount | ||||||||||||||
Derivative Assets: | ||||||||||||||||||||
Counterparty A | $ | 114 | $ | — | $ | 114 | $ | — | $ | — | $ | 114 | ||||||||
Counterparty B | 29,973 | 29,886 | 87 | — | — | 87 | ||||||||||||||
Counterparty C | 8,261 | 7,896 | 365 | — | — | 365 | ||||||||||||||
Counterparty E | 516 | — | 516 | — | — | 516 | ||||||||||||||
Total | $ | 38,864 | $ | 37,782 | $ | 1,082 | $ | — | $ | — | $ | 1,082 | ||||||||
Derivative Liabilities: | ||||||||||||||||||||
Counterparty A | $ | 540 | $ | — | $ | 540 | $ | — | $ | — | $ | 540 | ||||||||
Counterparty B | 29,886 | 29,886 | — | — | — | — | ||||||||||||||
Counterparty C | 7,896 | 7,896 | — | — | — | — | ||||||||||||||
Counterparty E | 135 | — | 135 | — | — | 135 | ||||||||||||||
Total | $ | 38,457 | $ | 37,782 | $ | 675 | $ | — | $ | — | $ | 675 | ||||||||
(1) The total reconciles to the aggregate of total derivative contracts in the fair value measurements table and the variation margin on exchange traded futures for the respective periods; both reflected in Note 12. Derivative assets and derivative liabilities are reflected within Other assets and Other Liabilities, respectively, with the exception of futures and options on futures contracts. Futures and options on futures contracts are included within Receivables from and Payables to brokers, dealers, and clearing organizations, as applicable. | ||||||||||||||||||||
(2) As of March 31, 2014, the Company does not have any derivative positions under a master netting agreement that are not netted. | ||||||||||||||||||||
The following is a summary of derivative contracts, by counterparty, including the gross amounts offset in the Consolidated Statements of Financial Position as of December 31, 2013: | ||||||||||||||||||||
Net Amounts of | ||||||||||||||||||||
Gross Amounts | Assets Offset in the | Gross Amounts Not Offset in the | ||||||||||||||||||
Offset in the | Condensed | Condensed Consolidated Statements | ||||||||||||||||||
Condensed | Consolidated | of Financial Condition | ||||||||||||||||||
Gross Amounts of | Consolidated | Statements of | Cash Collateral | |||||||||||||||||
Recognized | Statements of | Financial Position | Received/ | |||||||||||||||||
Counterparties | Assets | Financial Position | -1 | Derivatives (2) | (Pledged) | Net Amount | ||||||||||||||
Derivative Assets: | ||||||||||||||||||||
Counterparty A | $ | 268 | $ | — | $ | 268 | $ | — | $ | — | $ | 268 | ||||||||
Counterparty B | 17,604 | 17,216 | 388 | — | — | 388 | ||||||||||||||
Counterparty C | 15,834 | 15,834 | — | — | — | — | ||||||||||||||
Counterparty D | 14 | — | 14 | — | — | 14 | ||||||||||||||
Counterparty E | 411 | — | 411 | — | — | 411 | ||||||||||||||
Total | $ | 34,131 | $ | 33,050 | $ | 1,081 | $ | — | $ | — | $ | 1,081 | ||||||||
Derivative Liabilities: | ||||||||||||||||||||
Counterparty A | $ | 834 | $ | — | $ | 834 | $ | — | $ | — | $ | 834 | ||||||||
Counterparty B | 17,216 | 17,216 | — | — | — | — | ||||||||||||||
Counterparty C | 16,430 | 15,834 | 596 | — | — | 596 | ||||||||||||||
Counterparty E | 159 | — | 159 | — | — | 159 | ||||||||||||||
Total | $ | 34,639 | $ | 33,050 | $ | 1,589 | $ | — | $ | — | $ | 1,589 | ||||||||
(1) The total reconciles to the aggregate of total derivative contracts in the fair value measurements table and the variation margin on exchange traded futures for the respective periods; both reflected in Note 12. Derivative assets and derivative liabilities are reflected within Other assets and Other Liabilities, respectively, with the exception of futures and options on futures contracts. Futures and options on futures contracts are included within Receivables from and Payables to brokers, dealers, and clearing organizations, as applicable. | ||||||||||||||||||||
(2) As of December 31, 2013, the Company does not have any derivative positions under a master netting agreement that are not netted. |
VARIABLE_INTEREST_ENTITIES
VARIABLE INTEREST ENTITIES | 3 Months Ended |
Mar. 31, 2014 | |
VARIABLE INTEREST ENTITIES | ' |
VARIABLE INTEREST ENTITIES | ' |
14. VARIABLE INTEREST ENTITIES | |
Non-consolidated VIEs | |
The Company holds interests in certain VIEs that it does not consolidate. The Company has determined that it is not the primary beneficiary, mostly due to a lack of significant economic interest, voting power and/or power to direct the activities that would most significantly impact the economic performance of the VIE. | |
As of March 31, 2014 and December 31, 2013, the Company had certain variable interests in non-consolidated VIEs in the form of direct equity interests, a convertible note and a non-recourse loan. The carrying amount of these VIEs was $3,654 as of March 31, 2014 and $3,954 as of December 31, 2013, and was recorded within Other assets. These VIEs include a technology provider with a proprietary financial application, trading entities in which the Company has provided initial capital to fund trading activities, investment fund managers and a commodity pool operator. The Company also provides clearing and other administrative services to certain of these non-consolidated VIEs. The maximum exposure to loss on these VIEs was $4,823 as of March 31, 2014 and $4,592 as of December 31, 2013, respectively. | |
As of March 31, 2014 and December 31, 2013, the Company had certain variable interests in non-consolidated VIEs in the form of trading margin accounts in which the Company had an economic interest in profits and losses and has provided initial capital to fund trading activities. The Company also provides clearing and other administrative services to these non-consolidated VIEs. The carrying amount of these VIEs was $1,538 as of March 31, 2014 and $1,653 as of December 31, 2013, and was recorded within Receivables from brokers, dealers and clearing organizations. The maximum exposure to loss of these VIEs was $1,538 as of March 31, 2014 and $1,653 as of December 31, 2013. | |
The Company has not recorded any liabilities with respect to non-consolidated VIEs. | |
Consolidated VIEs | |
In December 2010, Kyte invested in a limited company that is focused on developing a proprietary trading business. The limited company is a VIE and it was determined that the Company is the primary beneficiary of this VIE because the Company, through Kyte, was the provider of the majority of this VIE’s start-up capital and has the power to direct the activities of this VIE that most significantly impact its economic performance, primarily through its voting percentage and consent rights on the activities that would most significantly influence the entity. The consolidated VIE had total assets of $10,413 at March 31, 2014 and $8,953 as of December 31, 2013, which primarily consisted of clearing margin. There were no material restrictions on the consolidated VIE’s assets. The consolidated VIE had total liabilities of $3,289 at March 31, 2014 and $2,652 at December 31, 2013. |
REGULATORY_REQUIREMENTS
REGULATORY REQUIREMENTS | 3 Months Ended | ||||||||||
Mar. 31, 2014 | |||||||||||
REGULATORY REQUIREMENTS | ' | ||||||||||
REGULATORY REQUIREMENTS | ' | ||||||||||
15. REGULATORY REQUIREMENTS | |||||||||||
Many of the Company’s material operating subsidiaries are subject to regulatory restrictions and minimum capital requirements, which may restrict the Company’s ability to withdraw capital from its subsidiaries. | |||||||||||
Certain domestic subsidiaries of the Company are registered as a broker-dealer, swap execution facility (“SEF”) or introducing broker and therefore are subject to the applicable rules and regulations of the Securities Exchange Commission (“SEC”) and the Commodity Futures Trading Commission (“CFTC”). Certain foreign subsidiaries are also registered as introducing brokers with the CFTC. These rules contain uniform minimum net capital requirements, as defined, and also require a significant part of the registrants’ assets be kept in relatively liquid form. As of March 31, 2014, each of the Company’s subsidiaries that are subject to these regulations had net capital in excess of their minimum capital requirements. | |||||||||||
Certain of the Company’s European subsidiaries are regulated by the Financial Conduct Authority (“FCA”) and must maintain financial resources (as defined by the FCA) in excess of FCA’s total financial resources requirement. As of March 31, 2014, each of these European subsidiaries had financial resources in excess of their requirements. | |||||||||||
Certain other subsidiaries of the Company are subject to similar regulatory and other requirements in the jurisdictions in which they operate and, as of March 31, 2014, each of these subsidiaries was in compliance with its regulatory capital requirements. | |||||||||||
The regulatory requirements referred to above may restrict the Company’s ability to withdraw capital from its regulated subsidiaries. As of March 31, 2014, the Company had the following aggregate regulatory capital, in individually regulated entities, in each of its operating regions: | |||||||||||
Americas | EMEA | Asia | |||||||||
Regulatory capital | $ | 26,367 | $ | 144,528 | $ | 31,620 | |||||
Minimum regulatory capital required | 7,645 | 113,526 | 9,199 | ||||||||
Excess regulatory capital | $ | 18,722 | $ | 31,002 | $ | 22,421 | |||||
The regulatory requirements set forth in the table above include aggregated amounts held in individually regulated entities in each of the Company’s operating regions, calculated by entity, to comply with the requirements of various regulators for capital requirements in each of those entities. In situations where the Company is subject to the requirements of multiple regulators, the Company has included the more onerous capital requirement in the table above. |
SEGMENT_AND_GEOGRAPHIC_INFORMA
SEGMENT AND GEOGRAPHIC INFORMATION | 3 Months Ended | |||||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||||
SEGMENT AND GEOGRAPHIC INFORMATION | ' | |||||||||||||||||||
SEGMENT AND GEOGRAPHIC INFORMATION | ' | |||||||||||||||||||
16. SEGMENT AND GEOGRAPHIC INFORMATION | ||||||||||||||||||||
In accordance with ASC 280-10, Segment Reporting (“ASC 280-10”) and based on the nature of the Company’s operations, products and services in each geographic region, the Company determined that it has four reportable segments: (i) Americas Brokerage, (ii) EMEA Brokerage, (iii) Asia Brokerage and (iv) Clearing and Backed Trading. The Company’s brokerage operations provide brokerage services in four broad product categories: fixed income, financial, equity and commodity. The Clearing and Backed Trading segment encompasses the Company’s clearing, risk management, settlement and other back-office services, as well as the capital we provide to start-up trading groups, small hedge funds, market-makers and individual traders. Information about other business activities is disclosed in an “All Other” category. All Other includes the results of the Company’s software, analytics and market data operations. All Other also includes revenues and expenses that are not directly assignable to one of the Company’s reportable segments, primarily consisting of indirect costs related to the Company’s brokerage segments as well as all of the Company’s corporate business activities. | ||||||||||||||||||||
The accounting policies of the segments are the same as those described above in Note 2—Summary of Significant Accounting Policies. The Company evaluates performance of the operating segments based on income (loss) before income taxes, which it defines as revenues less direct expenses. | ||||||||||||||||||||
Revenues within each brokerage segment include revenues that are directly related to providing brokerage services along with interest and other income (loss) directly attributable to the operating segment. Revenues within the Clearing and Backed Trading segment primarily include revenues that are directly related to providing clearing services along with the Company’s share of profit (loss) on trading activity from capital investments. The Company’s Clearing and Backed Trading segment incurs exchange fees on behalf of its clients, which are reflected within Interest and transaction-based expenses. The reimbursement of these fees from the Company’s clients is reflected within Total Revenues. Therefore, the Company evaluates the top-line performance of its Clearing and Backed Trading segment using Revenues, net of interest and transaction-based expenses. | ||||||||||||||||||||
Direct expenses of the operating segments are those expenses that are directly related to providing the brokerage or clearing services and trading activities of the operating segments and include compensation expense related to the segment management and staff, communication and market data, travel and promotion, and certain professional fees and other expenses that are directly incurred by the operating segments. However, the Company does not allocate to its brokerage operating segments certain expenses that it manages separately at the corporate level. The unallocated costs include rent and occupancy, depreciation and amortization, professional fees, interest on borrowings and other expenses and are included in the All Other operating segment. Management generally does not consider the unallocated costs in its performance measurement of its reportable segments. | ||||||||||||||||||||
Selected financial information for the Company’s reportable segments is presented below for periods indicated: | ||||||||||||||||||||
Three Months Ended March 31, 2014 | ||||||||||||||||||||
Americas | EMEA | Asia | Clearing | All Other | Total | |||||||||||||||
Brokerage | Brokerage | Brokerage | and Backed | |||||||||||||||||
Trading | ||||||||||||||||||||
Total revenues | $ | 61,698 | $ | 89,300 | $ | 19,223 | $ | 44,293 | $ | 26,225 | $ | 240,739 | ||||||||
Revenues, net of interest and transaction-based expenses | 58,752 | 86,427 | 19,103 | 11,140 | 27,005 | 202,427 | ||||||||||||||
Income (loss) before income taxes | 14,342 | 28,704 | 5,632 | 931 | (44,106 | ) | 5,503 | |||||||||||||
Three Months Ended March 31, 2013 | ||||||||||||||||||||
Americas | EMEA | Asia | Clearing | All Other | Total | |||||||||||||||
Brokerage | Brokerage | Brokerage | and Backed | |||||||||||||||||
Trading | ||||||||||||||||||||
Total revenues | $ | 69,258 | $ | 87,668 | $ | 18,359 | $ | 47,610 | $ | 21,497 | $ | 244,392 | ||||||||
Revenues, net of interest and transaction-based expenses | 66,148 | 84,993 | 18,249 | 10,339 | 21,788 | 201,517 | ||||||||||||||
Income (loss) before income taxes | 19,394 | 26,037 | 4,822 | 610 | (50,768 | ) | 95 | |||||||||||||
In addition, with the exception for goodwill, the Company does not identify or allocate assets by operating segment, nor does its chief operating decision maker evaluate operating segments using discrete asset information. See Note 4 for goodwill by reportable segment. | ||||||||||||||||||||
For the three months ended March 31, 2014 and 2013, the U.K. is the only individual foreign country that accounts for 10% or more of the Company’s total revenues and total long-lived assets. Information regarding revenue for the three months ended March 31, 2014 and 2013, and information regarding long-lived assets (defined as property, equipment, leasehold improvements and software inventory) in geographic areas as of March 31, 2014 and December 31, 2013, are as follows: | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
March 31, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Revenues: | ||||||||||||||||||||
United States | $ | 63,213 | $ | 69,175 | ||||||||||||||||
United Kingdom | 124,305 | 125,486 | ||||||||||||||||||
Other | 53,221 | 49,731 | ||||||||||||||||||
Total | $ | 240,739 | $ | 244,392 | ||||||||||||||||
Three Months Ended | ||||||||||||||||||||
March 31, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Revenues, net of interest and transaction-based expenses: | ||||||||||||||||||||
United States | $ | 62,096 | $ | 67,431 | ||||||||||||||||
United Kingdom | 89,819 | 87,187 | ||||||||||||||||||
Other | 50,512 | 46,899 | ||||||||||||||||||
Total | $ | 202,427 | $ | 201,517 | ||||||||||||||||
March 31, | December 31, | |||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Long-lived Assets, as defined: | ||||||||||||||||||||
United States | $ | 50,544 | $ | 49,987 | ||||||||||||||||
United Kingdom | 11,379 | 11,762 | ||||||||||||||||||
Other | 4,322 | 4,396 | ||||||||||||||||||
Total | $ | 66,245 | $ | 66,145 | ||||||||||||||||
Revenues are attributed to geographic areas based on the location of the particular subsidiary of the Company which generated the revenues. |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2014 | |
SUBSEQUENT EVENTS | ' |
SUBSEQUENT EVENTS | ' |
17. SUBSEQUENT EVENTS | |
In April 2014, the Board of Directors declared a quarterly cash dividend of $0.05 per share payable on May 30, 2014 to stockholders of record on May 16, 2014. | |
Subsequent events have been evaluated for recording and disclosure in the notes to the Condensed Consolidated Financial Statements through the filing date of this Form 10-Q. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2014 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' |
Basis of Presentation | ' |
Basis of Presentation— The Company’s Condensed Consolidated Financial Statements (Unaudited) are prepared in accordance with accounting principles generally accepted in the United States of America, which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingencies in the Condensed Consolidated Financial Statements. Certain estimates and assumptions relate to the accounting for acquired goodwill and intangible assets, fair value measurements, compensation accruals, tax liabilities and the potential outcome of litigation matters. Management believes that the estimates utilized in the preparation of the Condensed Consolidated Financial Statements are reasonable and prudent. Actual results could differ materially from these estimates. | |
Certain amounts in the Condensed Consolidated Statements of Cash Flows have been reclassified to conform to the current year presentation. | |
These Condensed Consolidated Financial Statements are unaudited and should be read in conjunction with the audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 (the “2013 Form 10-K”). The condensed consolidated financial information as of December 31, 2013 presented in this Form 10-Q has been derived from audited Consolidated Financial Statements not included herein. | |
These unaudited Condensed Consolidated Financial Statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. These adjustments are of a normal, recurring nature. Interim period operating results may not be indicative of the operating results for a full year. | |
Consolidation Policies | ' |
Consolidation Policies | |
General— The Condensed Consolidated Financial Statements include the accounts of the Company, its wholly-owned subsidiaries and subsidiaries that are treated as such and other entities in which the Company has a controlling financial interest. For consolidated subsidiaries that are less than wholly-owned, equity interests that are not owned by the Company are referred to as non-controlling interests. The portion of net income attributable to non-controlling interests for such subsidiaries is presented as Net income attributable to non-controlling interests on the Condensed Consolidated Statements of Operations, and the portion of the stockholders’ equity of such subsidiaries is presented as Non-controlling interests in the Condensed Consolidated Statements of Financial Condition and Condensed Consolidated Statement of Changes in Stockholders’ Equity. All intercompany transactions and balances have been eliminated. | |
Variable Interest Entities | ' |
Variable Interest Entities—The Company determines whether it holds any interests in entities deemed to be a variable interest entity (“VIE”). A VIE is an entity that lacks one or more of the following characteristics (i) the total equity investment at risk is sufficient to enable the entity to finance its activities independently and (ii) the equity holders have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the losses of the entity and the right to receive the residual returns of the entity. The Company has a controlling financial interest and will consolidate a VIE if it is the primary beneficiary. | |
The primary beneficiary is the party that has both (i) the power to direct the activities of the VIE that most significantly impact the economic performance of the entity and (ii) the obligation to absorb losses of the entity that could be potentially significant to the VIE or the right to receive benefits from the entity that could be potentially significant. | |
As of March 31, 2014, the company holds interests in certain VIEs. One of these VIEs is consolidated because it was determined that the Company is the primary beneficiary of this VIE because (1) the Company provided the majority of the VIE’s start-up capital and (2) the Company has consent rights regarding those activities that the Company believes would most significantly impact the economic performance of the entity. The remaining VIEs are not consolidated as it was determined that the Company is not the primary beneficiary due to the level of equity ownership and voting power. The Company reassesses its evaluation of whether an entity is a VIE when certain events occur, such as changes in economic ownership and voting power. The Company reassesses its determination of whether it is the primary beneficiary of a VIE on an ongoing basis based on current facts and circumstances. See Note 14 for disclosures on Variable Interest Entities. | |
Cash and Cash Equivalents | ' |
Cash and Cash Equivalents— Cash and cash equivalents consist of cash and highly liquid investments purchased with an original maturity of three months or less. | |
Cash and Securities Segregated Under Federal and Other Regulations | ' |
Cash and Securities Segregated Under Federal and Other Regulations—The Company holds cash and securities representing funds received in connection with customer trading activities. The Company’s subsidiaries are required to satisfy regulations mandated by their primary regulators to segregate or set aside cash or equivalent securities to satisfy regulations, promulgated to protect customer assets. | |
Accounts Receivable | ' |
Accounts Receivable —Accounts receivable largely represents commissions due from brokers, dealers, banks and other financial and nonfinancial institutions for the execution of securities, commodities, foreign exchange and other derivative brokerage transactions. Also, included within Accounts receivable are the billed portion of existing contracts from customers related to the licensing, support and maintenance of software, analytics and market data, as well as any unbilled but earned portion of any services provided to such customers. In estimating the allowance for doubtful accounts, management considers the length of time receivables are past due and historical experience. In addition, if the Company is aware of a client’s inability to meet its financial obligations, a specific provision for doubtful accounts is recorded in the amount of the estimated losses that will result from the inability of that client to meet its financial obligation. | |
Receivables from and Payables to Brokers, Dealers and Clearing Organizations | ' |
Receivables from and Payables to Brokers, Dealers and Clearing Organizations—Receivables from and payables to brokers, dealers and clearing organizations primarily represent: (i) principal transactions for which the stated settlement dates have not yet been reached, (ii) principal transactions which have not settled as of their stated settlement dates, (iii) cash, including deposits, held at clearing organizations and exchanges in support of the Company’s clearing business and to facilitate settlement and clearance of matched principal transactions and (iv) the spread on matched principal transactions that have not yet been remitted from/to clearing organizations and exchanges. | |
Property, Equipment and Leasehold Improvements | ' |
Property, Equipment and Leasehold Improvements—Property, equipment and leasehold improvements are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method, generally over three to seven years. Property and equipment are depreciated over their estimated useful lives. Leasehold improvements are amortized over the shorter of the remaining term of the respective lease to which they relate or the remaining useful life of the leasehold improvement. Internal and external costs incurred in developing or obtaining computer software for internal use are capitalized in accordance with Accounting Standards Codification (“ASC”) 350 Intangibles—Goodwill and Other (“ASC 350”), and are amortized on a straight-line basis over the estimated useful life of the software, generally three years. General and administrative costs related to developing or obtaining such software are expensed as incurred. | |
Goodwill and Intangible Assets | ' |
Goodwill and Intangible Assets—Goodwill represents the excess of the purchase price allocation over the fair value of tangible and identifiable intangible net assets acquired. The goodwill associated with each business combination is allocated to the related reporting units, which are determined based on how the Company’s businesses are managed and how they are reviewed by the Company’s chief operating decision maker. Other intangible assets are recorded at their fair value upon completion of a business combination or certain other transactions. Substantially all of the firm’s identifiable intangible assets are considered to have definite lives and are amortized on a straight-line basis over their estimated useful lives. | |
In accordance with ASC 350, goodwill is not amortized, but instead is periodically tested for impairment. The Company reviews goodwill for impairment on an annual basis as of November 1 of each fiscal year or whenever an event occurs or circumstances change that could reduce the fair value of a reporting unit below its carrying amount. See Note 4 for further information. | |
Prepaid Bonuses and Forgivable Employee Loans | ' |
Prepaid Bonuses and Forgivable Employee Loans—Prepaid bonuses and forgivable loans to employees are stated at historical value net of amortization when the agreement between the Company and the employee provides for the return of proportionate amounts of the bonus or loan outstanding if employment is terminated in certain circumstances prior to the end of the term of the agreement. Amortization is calculated using the straight-line method over the term of the contract, which is generally two to four years, and is recorded in Compensation and employee benefits. The Company generally expects to recover the unamortized portion of prepaid bonuses and forgivable loans when employees voluntarily terminate their employment or if their employment is terminated for cause prior to the end of the term of the agreement. The prepaid bonuses and forgivable loans are included in Other assets in the Condensed Consolidated Statements of Financial Condition. At March 31, 2014 and December 31, 2013, the Company had prepaid bonuses of $22,699 and $23,499, respectively. At March 31, 2014 and December 31, 2013, the Company had forgivable employee loans and advances to employees of $22,448 and $24,109, respectively. Amortization of prepaid bonuses and forgivable employee loans for the three months ended March 31, 2014 and 2013 was $6,720 and $6,348, respectively and is included within Compensation and employee benefits. | |
Investments | ' |
Investments—When the Company does not have a controlling financial interest in an entity but can exert significant influence over the entity’s operating and financial policies, the investment is accounted for under the equity method of accounting in accordance with ASC 323-10, Investments—Equity Method and Joint Ventures (“ASC 323-10”). Significant influence generally exists when the Company owns 20% to 50% of the entity’s common stock or in-substance common stock. The Company initially records the investment at cost and adjusts the carrying amount each period to recognize its share of the earnings and losses of the investee based on the percentage of ownership. At March 31, 2014 and December 31, 2013, the Company had equity method investments with a carrying value of $31,358 and $36,976, respectively, included within Other assets. The Company also provides clearing and other administrative services to certain of these equity method investees. | |
Investments for which the Company does not have the ability to exert significant influence over operating and financial policies are generally accounted for using the cost method of accounting in accordance with ASC 325-10, Investments—Other (“ASC 325-10”). At March 31, 2014 and December 31, 2013, the Company had cost method investments of $4,614 and $5,087, respectively, included within Other assets. The fair value of the Company’s cost method investments are not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value. The Company monitors its equity and cost method investments for indicators of impairment each reporting period. | |
The Company accounts for its marketable equity securities and its debt securities in accordance with ASC 320-10, Investments—Debt and Equity Securities (“ASC 323-10”). Investments that are owned by the Company’s broker-dealer subsidiaries are recorded at fair value with realized and unrealized gains and losses reported in net income. Investments designated as available-for-sale that are owned by the Company’s non broker-dealer subsidiaries are recorded at fair value with unrealized gains or losses reported as a separate component of other comprehensive income (loss), net of tax. The fair value of the Company’s available-for-sale securities was $0 and $5,465 as of March 31, 2014 and December 31, 2013, respectively, and is included within Other assets. | |
Fair Value of Financial Instruments | ' |
Fair Value of Financial Instruments—In accordance with ASC 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”), the Company estimates fair values of financial instruments using relevant market information and other assumptions. Fair value estimates involve uncertainties and matters of significant judgment in interpreting market data and, accordingly, changes in assumptions or in market conditions could adversely affect the estimates. The Company also discloses the fair value of its financial instruments in accordance with the fair value hierarchy as set forth by ASC 820-10. See Note 12 for further information. | |
Derivative Financial Instruments | ' |
Derivative Financial Instruments—The Company enters into derivative transactions for a variety of reasons, including managing its exposure to risk arising from changes in foreign currency, facilitating customer trading activities and, in certain instances, to engage in principal trading for the Company’s own account. Derivative assets and liabilities are carried on the Condensed Consolidated Statements of Financial Condition at fair value, with changes in the fair value recognized in the Condensed Consolidated Statements of Operations. Contracts entered into to manage risk arising from changes in foreign currency are recognized in Other income and contracts entered into to facilitate customer transactions and principal trading are recognized in Principal transactions. Derivatives are reported on a net-by-counterparty basis when management believes that a legal and enforceable right of offset exists under these agreements. See Note 13 for further information. | |
Payables to Clearing Services Customers | ' |
Payables to Clearing Services Customers—Payables to clearing services customers include amounts due on cash and margin transactions, including futures contracts transacted on behalf of customers. | |
Revenue Recognition | ' |
Revenue Recognition | |
Brokerage Transactions—The Company provides brokerage services to its clients in the form of either agency or principal transactions. In agency transactions, the Company charges commissions for executing transactions between buyers and sellers. Agency commission revenues and related expenses are recognized on a trade date basis. These revenues are presented in “Agency Commissions”. Principal transactions revenue is primarily derived from matched principal and principal trading transactions. Principal transactions revenues and related expenses are recognized on a trade date basis. The Company earns revenue from principal transactions on the spread between the buy and sell price of the security that is brokered. In matched principal transactions, the Company simultaneously agrees to buy instruments from one customer and sell them to another customer. These revenues are presented in “Principal Transactions”. In the normal course of its matched principal and principal trading businesses, the Company may hold security positions overnight. These positions are marked to market on a daily basis. | |
Clearing Services Revenues—The Company charges fees to customers for clearing services provided for cash and derivative transactions. Clearing services revenues are recorded on a trade date basis as customer transactions occur and are presented net of any customer negotiated rebates. | |
Software, Analytics and Market Data Revenue Recognition— Software revenue consists primarily of fees charged for Trayport electronic trading software, which are typically billed on a subscription basis and are recognized ratably over the term of the subscription period, which ranges from one to five years. Analytics revenue consists primarily of software license fees for Fenics pricing tools which are typically billed on a subscription basis, and is recognized ratably over the term of the subscription period, which is generally three years. Market data revenue primarily consists of subscription fees and fees from customized one-time sales. Market data subscription fees are recognized on a straight-line basis over the term of the subscription period, which ranges from one to two years. Market data revenue from customized one-time sales is recognized upon delivery of the data. The Company markets its software, analytics and market data products through its direct sales force and, in some cases, indirectly through resellers. In general, the Company’s license agreements for such products do not provide for a right of return. | |
Other Income, net—Included within Other income, net on the Company’s Condensed Consolidated Statements of Operations are revaluations of foreign currency derivative contracts, realized and unrealized transaction gains and losses on certain foreign currency denominated items, and gains and losses on certain investments, and interest income earned on short-term investments. | |
Compensation and Employee Benefits | ' |
Compensation and Employee Benefits—The Company’s compensation and employee benefits have both a fixed and variable component. Base salaries and benefit costs are primarily fixed for all employees while bonuses constitute the variable portion of compensation and employee benefits. The Company may pay certain performance bonuses in restricted stock units (“RSUs”). The Company also may grant sign-on and retention bonuses for certain newly-hired or existing employees who agree to long-term employment agreements. | |
Share-Based Compensation | ' |
Share-Based Compensation—The Company’s share-based compensation consists of RSUs. The Company accounts for share-based compensation in accordance with ASC 718 Compensation— Stock Compensation (“ASC 718”). This accounting guidance requires measurement of compensation expense for equity-based awards at fair value and recognition of compensation expense over the service period, net of estimated forfeitures. In all periods presented, the only share-based compensation expense recognized by the Company has been RSUs. The Company determines the fair value of RSUs based on the number of units granted and the grant date fair value of the Company’s common stock, measured as of the closing price on the date of grant. See Note 9 for further information. | |
Income Taxes | ' |
Income Taxes— In accordance with ASC 740, Income Taxes (“ASC 740”), the Company provides for income taxes using the asset and liability method under which deferred income taxes are recognized for the estimated future tax effects attributable to temporary differences and carryforwards that result from events that have been recognized either in the financial statements or the income tax returns, but not both. The measurement of current and deferred income tax assets and liabilities is based on provisions of enacted tax laws. Valuation allowances are recognized if, based on the weight of available evidence, it is more likely than not that some portion of the deferred tax assets will not be realized. Management applies the more likely than not criteria prior to recognizing a financial statement benefit for a tax position taken (or expected to be taken) in a tax return. The Company recognizes interest and/or penalties related to income tax matters in interest expense and other expense, respectively. | |
For the three months ended March 31, 2014 the Company recorded income tax expense of $1.1 million. The expense yields an effective rate lower than the federal statutory rate of 35% due to the geographical mix of pre-tax income. | |
For the three months ended March 31, 2013 the Company recorded a benefit from income taxes of $4.9 million. The benefit was primarily due to: (i) a tax benefit under the American Taxpayer Relief Act of 2012 related to taxes previously provided for, (ii) a tax benefit arising from a change in our view about the deductibility of a reserve previously deemed nondeductible, as a result of new information received in the first quarter of 2013 and (iii) the release of a tax liability in a foreign subsidiary where the statute of limitations has now expired. | |
Treasury Stock | ' |
Treasury Stock—The Company accounts for Treasury stock using the cost method. Treasury stock held by the Company may be reissued with respect to vested RSUs in qualified jurisdictions. The Company’s policy is to account for these shares as a reduction of Treasury stock on a first-in, first-out basis. | |
Foreign Currency Translation Adjustments and Transactions | ' |
Foreign Currency Translation Adjustments and Transactions— Assets and liabilities of foreign subsidiaries having non-U.S. dollar functional currencies are translated at the period end rates of exchange, and revenue and expenses are translated at the average rates of exchange for the period. Gains or losses resulting from translating foreign currency financial statements are reflected in foreign currency translation adjustments and are reported as a separate component of comprehensive income (loss) and included in accumulated other comprehensive income in the Condensed Consolidated Statement of Changes in Stockholders’ Equity. Net losses resulting from remeasurement of foreign currency transactions and balances were $92 and $273 for the three months ended March 31, 2014 and 2013, respectively, and are included in Other income, net in the Condensed Consolidated Statements of Operations. | |
Recent Accounting Pronouncements | ' |
Recent Accounting Pronouncements—In March 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-05, “Foreign Currency Matters” (“ASU 2013-05”), which clarifies the accounting for the cumulative translation adjustment when a parent either sells or transfers a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a foreign subsidiary or group of assets. ASU 2013-05 provides that the parent should release cumulative translation adjustment into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. This guidance was effective for the Company’s fiscal year beginning January 1, 2014, and is being applied prospectively. The adoption of ASU 2013-05 does not have a material impact on the Company’s condensed consolidated financial statements. | |
In July 2013, the FASB issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”). ASU 2013-11 requires an entity to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or tax credit carryforward, unless such tax loss or credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes resulting from the disallowance of a tax position. In the event that the tax position is disallowed or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit shall be presented in the financial statements as a liability and shall not be combined with deferred tax assets. The guidance was effective for the Company’s fiscal year beginning January 1, 2014, and is being applied prospectively. The adoption of ASU 2013-11 does not have a material impact on the Company’s condensed consolidated financial statements. |
RECEIVABLES_FROM_AND_PAYABLES_1
RECEIVABLES FROM AND PAYABLES TO BROKERS, DEALERS AND CLEARING ORGANIZATIONS (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
RECEIVABLES FROM AND PAYABLES TO BROKERS, DEALERS AND CLEARING ORGANIZATIONS | ' | |||||||
Schedule of amounts receivable from and payable to brokers, dealers and clearing organizations | ' | |||||||
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
Receivables from brokers, dealers and clearing organizations: | ||||||||
Contract value of fails to deliver | $ | 635,431 | $ | 123,470 | ||||
Receivables from and deposits with clearing organizations and financial institutions | 216,350 | 172,257 | ||||||
Total | $ | 851,781 | $ | 295,727 | ||||
Payables to brokers, dealers and clearing organizations: | ||||||||
Contract value of fails to receive | $ | 614,194 | $ | 123,393 | ||||
Payables to clearing organizations and financial institutions | 21,963 | 3,052 | ||||||
Net pending trades | 4,264 | 455 | ||||||
Total | $ | 640,421 | $ | 126,900 | ||||
Schedule of cash and securities segregated under federal and other regulations or Receivables from brokers, dealers and clearing organizations | ' | |||||||
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
Cash segregated under federal and other regulations | 62,895 | 62,684 | ||||||
Receivables from brokers, dealers, and clearing organizations | 137,079 | 114,839 | ||||||
Total | $ | 199,974 | $ | 177,523 |
GOODWILL_AND_INTANGIBLE_ASSETS1
GOODWILL AND INTANGIBLE ASSETS (Tables) | 3 Months Ended | |||||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||||
GOODWILL AND INTANGIBLE ASSETS | ' | |||||||||||||||||||
Schedule of changes in the carrying amount of the Company's goodwill | ' | |||||||||||||||||||
December 31, | Goodwill | Adjustments | Foreign currency | March 31, | ||||||||||||||||
2013 | acquired | translation | 2014 | |||||||||||||||||
Goodwill | ||||||||||||||||||||
Americas Brokerage | $ | 83,289 | $ | — | $ | — | $ | — | $ | 83,289 | ||||||||||
EMEA Brokerage | 14,637 | — | — | 83 | 14,720 | |||||||||||||||
Clearing and Backed Trading | 23,259 | — | — | 150 | 23,409 | |||||||||||||||
All Other | 134,735 | — | (60 | ) | 27 | 134,702 | ||||||||||||||
$ | 255,920 | $ | — | $ | (60 | ) | $ | 260 | $ | 256,120 | ||||||||||
Schedule of intangible assets | ' | |||||||||||||||||||
March 31, 2014 | December 31, 2013 | |||||||||||||||||||
Gross | Accumulated | Net | Gross | Accumulated | Net | |||||||||||||||
amount | amortization | carrying | amount | amortization | carrying | |||||||||||||||
and foreign | value | and foreign | value | |||||||||||||||||
currency | currency | |||||||||||||||||||
translation | translation | |||||||||||||||||||
Amortized intangible assets: | ||||||||||||||||||||
Customer relationships | $ | 77,196 | $ | 44,000 | $ | 33,196 | $ | 77,196 | $ | 42,151 | $ | 35,045 | ||||||||
Trade names | 8,951 | 6,797 | 2,154 | 8,951 | 6,674 | 2,277 | ||||||||||||||
Core technology | 11,950 | 6,411 | 5,539 | 11,950 | 6,285 | 5,665 | ||||||||||||||
Non-compete agreements | 3,865 | 3,491 | 374 | 3,865 | 3,478 | 387 | ||||||||||||||
Favorable lease agreements | 620 | 600 | 20 | 620 | 580 | 40 | ||||||||||||||
Patents | 3,131 | 1,346 | 1,785 | 3,131 | 1,221 | 1,910 | ||||||||||||||
Other | 647 | 284 | 363 | 647 | 287 | 360 | ||||||||||||||
Total | $ | 106,360 | $ | 62,929 | $ | 43,431 | $ | 106,360 | $ | 60,676 | $ | 45,684 | ||||||||
Schedule of expected amortization expense for the definite lived intangible assets | ' | |||||||||||||||||||
2014 (remaining nine months) | $ | 7,277 | ||||||||||||||||||
2015 | 9,609 | |||||||||||||||||||
2016 | 7,693 | |||||||||||||||||||
2017 | 4,333 | |||||||||||||||||||
2018 | 3,510 | |||||||||||||||||||
Thereafter | 11,009 | |||||||||||||||||||
Total | $ | 43,431 |
OTHER_ASSETS_AND_OTHER_LIABILI1
OTHER ASSETS AND OTHER LIABILITIES (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
OTHER ASSETS AND OTHER LIABILITIES | ' | |||||||
Schedule of other assets | ' | |||||||
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
Deferred tax assets | $ | 48,779 | $ | 45,694 | ||||
Investments accounted for under the cost method and equity method | 35,972 | 42,063 | ||||||
Prepaid bonuses | 22,699 | 23,499 | ||||||
Forgivable employee loans and advances to employees | 22,448 | 24,109 | ||||||
Deferred financing fees | 6,332 | 6,786 | ||||||
Software inventory, net | 4,422 | 4,749 | ||||||
Financial instruments owned | 951 | 1,416 | ||||||
Other | 26,184 | 29,528 | ||||||
Total Other assets | $ | 167,787 | $ | 177,844 | ||||
Schedule of other liabilities | ' | |||||||
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
Payroll related liabilities | $ | 31,007 | $ | 15,896 | ||||
Deferred revenues | 10,483 | 9,199 | ||||||
Unrecognized tax benefits | 8,676 | 8,676 | ||||||
Deferred tax liabilities | 6,440 | 6,835 | ||||||
Contingent consideration liabilities | 4,372 | 4,317 | ||||||
Financial instruments sold, not yet purchased | 675 | 993 | ||||||
Other | 28,994 | 37,155 | ||||||
Total Other liabilities | $ | 90,647 | $ | 83,071 |
SHORTTERM_BORROWINGS_AND_LONGT1
SHORT-TERM BORROWINGS AND LONG-TERM DEBT (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2014 | ||||||||||||||
SHORT-TERM BORROWINGS AND LONG-TERM DEBT | ' | |||||||||||||
Schedule of outstanding debt obligations | ' | |||||||||||||
March 31, | December 31, | |||||||||||||
2014 | 2013 | |||||||||||||
8.375% Senior Notes due 2018 | $ | 240,000 | $ | 240,000 | ||||||||||
Loans pursuant to Credit Agreement | 10,000 | 10,000 | ||||||||||||
Total | $ | 250,000 | $ | 250,000 | ||||||||||
Schedule of the carrying amounts and estimated fair values of the Company's Long-term debt | ' | |||||||||||||
March 31, 2014 | December 31, 2013 | |||||||||||||
Carrying | Fair Value | Carrying | Fair Value | |||||||||||
Amount | Amount | |||||||||||||
8.375% Senior Notes | $ | 240,000 | $ | 257,400 | $ | 240,000 | $ | 251,100 | ||||||
EARNINGS_PER_SHARE_Tables
EARNINGS PER SHARE (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
EARNINGS PER SHARE | ' | |||||||
Schedule of basic and diluted earnings per share | ' | |||||||
Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
Basic earnings per share | ||||||||
GFI’s net income | $ | 4,003 | $ | 4,674 | ||||
Weighted average common shares outstanding | 122,362,839 | 115,384,022 | ||||||
Basic earnings per share | $ | 0.03 | $ | 0.04 | ||||
Diluted earnings per share | ||||||||
GFI’s net income | $ | 4,003 | $ | 4,674 | ||||
Weighted average common shares outstanding | 122,362,839 | 115,384,022 | ||||||
Effect of dilutive options, RSUs, and other contingently issuable shares | 9,067,862 | 10,168,019 | ||||||
Weighted average shares outstanding and common stock equivalents | 131,430,701 | 125,552,041 | ||||||
Diluted earnings per share | $ | 0.03 | $ | 0.04 | ||||
Schedule of securities excluded from the computation of diluted earnings per share because their effect would be anti-dilutive | ' | |||||||
Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
Stock options | 16,844 | 69,476 | ||||||
RSUs | 286,014 | 6,135,867 |
SHAREBASED_COMPENSATION_Tables
SHARE-BASED COMPENSATION (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
SHARE-BASED COMPENSATION | ' | |||||||
Summary of RSU transactions | ' | |||||||
RSUs | Weighted- | |||||||
Average | ||||||||
Grant Date | ||||||||
Fair Value | ||||||||
Outstanding December 31, 2013 | 18,483,001 | $ | 4.01 | |||||
Granted | 2,908,418 | 3.56 | ||||||
Vested | (3,908,980 | ) | 4.11 | |||||
Cancelled | (224,874 | ) | 3.62 | |||||
Outstanding March 31, 2014 | 17,257,565 | $ | 3.92 | |||||
Schedule of total compensation expense and related income tax benefits recognized in relation to RSUs | ' | |||||||
Three Months Ended March 31, | ||||||||
2014 | 2013 | |||||||
Compensation expense | $ | 7,356 | $ | 8,142 | ||||
Income tax benefits | $ | 2,099 | $ | 2,488 | ||||
Stock options outstanding under the GFI Group 2002 Plan | ' | |||||||
Options | Weighted | |||||||
Average | ||||||||
Exercise | ||||||||
Price | ||||||||
Outstanding December 31, 2013 | 139,164 | $ | 4.16 | |||||
Exercised | (20,212 | ) | 2.97 | |||||
Cancelled | — | — | ||||||
Expired | (94,740 | ) | 4.24 | |||||
Outstanding March 31, 2014 | 24,212 | $ | 4.56 |
FAIR_VALUE_OF_FINANCIAL_INSTRU1
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 3 Months Ended | ||||||||||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ' | ||||||||||||||||||||||||||||
Schedule of financial assets and liabilities measured at fair value on a recurring basis | ' | ||||||||||||||||||||||||||||
Quoted Prices in | Significant Other | Significant | Balance at | ||||||||||||||||||||||||||
Active Markets for | Observable | Unobservable | March 31, | ||||||||||||||||||||||||||
Identical Assets | Inputs | Inputs | 2014 | ||||||||||||||||||||||||||
(Level 1) | (Level 2) | (Level 3) | |||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
Other assets: Financial instruments owned: | |||||||||||||||||||||||||||||
Equity securities | $ | 7 | $ | 186 | $ | — | $ | 193 | |||||||||||||||||||||
Derivative contracts: | |||||||||||||||||||||||||||||
Foreign exchange derivative contracts | $ | 112 | $ | 630 | $ | — | $ | 742 | |||||||||||||||||||||
Fixed income derivative contracts | 247 | — | — | 247 | |||||||||||||||||||||||||
Equity derivative contracts | — | — | — | — | |||||||||||||||||||||||||
Netting (1) | (231 | ) | — | — | (231 | ) | |||||||||||||||||||||||
Total derivative contracts | $ | 128 | $ | 630 | $ | — | $ | 758 | |||||||||||||||||||||
Total financial instruments owned | $ | 135 | $ | 816 | $ | — | $ | 951 | |||||||||||||||||||||
Total | $ | 135 | $ | 816 | $ | — | $ | 951 | |||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Other liabilities: Financial instruments sold, not yet purchased: | |||||||||||||||||||||||||||||
Derivative contracts: | |||||||||||||||||||||||||||||
Foreign exchange derivative contracts | $ | 4 | $ | 675 | $ | — | $ | 679 | |||||||||||||||||||||
Fixed income derivative contracts | 227 | — | — | 227 | |||||||||||||||||||||||||
Netting (1) | (231 | ) | — | — | (231 | ) | |||||||||||||||||||||||
Total derivative contracts | $ | — | $ | 675 | $ | — | $ | 675 | |||||||||||||||||||||
Total financial instruments sold, not yet purchased | $ | — | $ | 675 | $ | — | $ | 675 | |||||||||||||||||||||
Other liabilities: Contingent consideration | $ | — | $ | — | $ | 4,372 | $ | 4,372 | |||||||||||||||||||||
Total | $ | — | $ | 675 | $ | 4,372 | $ | 5,047 | |||||||||||||||||||||
(1) Represents the impact of netting on a net-by-counterparty basis. | |||||||||||||||||||||||||||||
Quoted Prices in | Significant Other | Significant | Balance at | ||||||||||||||||||||||||||
Active Markets for | Observable | Unobservable | December 31, | ||||||||||||||||||||||||||
Identical Assets | Inputs | Inputs | 2013 | ||||||||||||||||||||||||||
(Level 1) | (Level 2) | (Level 3) | |||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
Other assets: Financial instruments owned: | |||||||||||||||||||||||||||||
Equity securities | $ | 546 | $ | 177 | $ | — | $ | 723 | |||||||||||||||||||||
Derivative contracts: | |||||||||||||||||||||||||||||
Foreign exchange derivative contracts | $ | — | $ | 679 | $ | — | $ | 679 | |||||||||||||||||||||
Equity derivative contracts | — | — | 14 | 14 | |||||||||||||||||||||||||
Total derivative contracts | $ | — | $ | 679 | $ | 14 | $ | 693 | |||||||||||||||||||||
Total financial instruments owned | $ | 546 | $ | 856 | $ | 14 | $ | 1,416 | |||||||||||||||||||||
Other assets: Other: | |||||||||||||||||||||||||||||
Equity security, available-for-sale | $ | 5,465 | $ | — | $ | — | $ | 5,465 | |||||||||||||||||||||
Total | $ | 6,011 | $ | 856 | $ | 14 | $ | 6,881 | |||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Other liabilities: Financial instruments sold, not yet purchased: | |||||||||||||||||||||||||||||
Derivative contracts: | |||||||||||||||||||||||||||||
Foreign exchange derivative contracts | $ | — | $ | 993 | $ | — | $ | 993 | |||||||||||||||||||||
Total financial instruments sold, not yet purchased | $ | — | $ | 993 | $ | — | $ | 993 | |||||||||||||||||||||
Other liabilities: Contingent consideration | $ | — | $ | — | $ | 4,317 | $ | 4,317 | |||||||||||||||||||||
Total | $ | — | $ | 993 | $ | 4,317 | $ | 5,310 | |||||||||||||||||||||
Schedule of changes in Level 3 financial assets and liabilities measured at fair value on a recurring basis | ' | ||||||||||||||||||||||||||||
Opening | Total realized | Unrealized gains | Purchases | Issues | Sales | Settlements | Closing | Unrealized | |||||||||||||||||||||
Balance | and unrealized | included | Balance at | gains | |||||||||||||||||||||||||
gains (losses) | in Other | March 31, | (losses) for Level | ||||||||||||||||||||||||||
included in | comprehensive | 2014 | 3 Assets / | ||||||||||||||||||||||||||
Net income (1) | (income) loss | Liabilities | |||||||||||||||||||||||||||
Outstanding at | |||||||||||||||||||||||||||||
March 31, | |||||||||||||||||||||||||||||
2014 | |||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
Other assets: | |||||||||||||||||||||||||||||
Financial instruments owned: | |||||||||||||||||||||||||||||
Equity derivative contracts | $ | 14 | $ | (14 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (14 | ) | |||||||||
Liabilities | |||||||||||||||||||||||||||||
Other liabilities: | |||||||||||||||||||||||||||||
Contingent consideration: | $ | 4,317 | $ | 28 | $ | 27 | $ | — | $ | — | $ | — | $ | — | $ | 4,372 | $ | 28 | |||||||||||
(1) Realized and unrealized gains (losses) are reported in Other income, net in the Condensed Consolidated Statements of Operations. | |||||||||||||||||||||||||||||
Opening | Total realized | Unrealized gains | Purchases | Issues | Sales | Settlements | Closing | Unrealized gains | |||||||||||||||||||||
Balance | and unrealized | included | Balance at | (losses) for Level | |||||||||||||||||||||||||
gains (losses) | in Other | March 31, | 3 Assets / | ||||||||||||||||||||||||||
included in | comprehensive | 2013 | Liabilities | ||||||||||||||||||||||||||
Income (1) | (income) loss | Outstanding at | |||||||||||||||||||||||||||
March 31, | |||||||||||||||||||||||||||||
2013 | |||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
Other assets: | |||||||||||||||||||||||||||||
Financial instruments owned: | |||||||||||||||||||||||||||||
Equity derivative contracts | $ | 28 | $ | (22 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 6 | $ | (22 | ) | |||||||||
Liabilities | |||||||||||||||||||||||||||||
Other liabilities: | |||||||||||||||||||||||||||||
Future purchase commitment: | $ | 3,209 | $ | 744 | $ | 208 | $ | — | $ | — | $ | — | $ | — | $ | 2,257 | $ | 744 | |||||||||||
Other liabilities: | |||||||||||||||||||||||||||||
Contingent consideration | $ | 518 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (156 | ) | $ | 362 | $ | — | ||||||||||
(1) Realized and unrealized gains (losses) are reported in Other income, net in the Condensed Consolidated Statements of Operations. | |||||||||||||||||||||||||||||
Schedule of significant unobservable inputs utilized by the company in the fair value measurement of Level 3 assets and liabilities measured at fair value on a recurring basis | ' | ||||||||||||||||||||||||||||
Fair Value as of | Valuation | Unobservable Input(s) | Range (Weighted | ||||||||||||||||||||||||||
March 31, | Technique(s) | Average) (a) | |||||||||||||||||||||||||||
2014 | |||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
Equity derivative contracts | $ | — | Black-Scholes Merton Model | Expected volatility | 30 | % | |||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Contingent consideration | $ | 4,372 | Present value of expected payments | Discount rate | 17 | % | |||||||||||||||||||||||
Forecasted financial information | (b) | ||||||||||||||||||||||||||||
Fair Value as of | Valuation | Unobservable Input(s) | Range (Weighted | ||||||||||||||||||||||||||
December 31, | Technique(s) | Average) (a) | |||||||||||||||||||||||||||
2013 | |||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
Equity derivative contracts | $ | 14 | Black-Scholes Merton Model | Expected volatility | 30 | % | |||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Contingent consideration | $ | 4,317 | Present value of expected payments | Discount rate | 17 | % | |||||||||||||||||||||||
Forecasted financial information | (b) | ||||||||||||||||||||||||||||
(a) As of March 31, 2014 and December 31, 2013, each asset and liability type consists of one security. | |||||||||||||||||||||||||||||
(b) The Company’s estimate of contingent consideration as of March 31, 2014 and December 31, 2013, respectively, was principally based on the acquired business’ projected future financial performance, including revenues and operating margins from May 1, 2014 through April 30, 2015. |
DERIVATIVE_FINANCIAL_INSTRUMEN1
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 3 Months Ended | |||||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS | ' | |||||||||||||||||||
Schedule of fair values of derivative contracts on a gross and net basis | ' | |||||||||||||||||||
March 31, 2014 | December 31, 2013 | |||||||||||||||||||
Derivatives not designated as hedging | Derivative | Derivative | Derivative | Derivative | ||||||||||||||||
instruments under ASC 815-10 | Assets(1) | Liabilities(2) | Assets(1) | Liabilities(2) | ||||||||||||||||
Foreign exchange derivative contracts | $ | 986 | $ | 867 | $ | 679 | $ | 993 | ||||||||||||
Commodity derivative contracts | 29,974 | 29,886 | 17,604 | 17,216 | ||||||||||||||||
Fixed income derivative contracts | 7,882 | 7,679 | 15,824 | 16,415 | ||||||||||||||||
Equity derivative contracts | 22 | 25 | 24 | 15 | ||||||||||||||||
Total fair value of derivative contracts | $ | 38,864 | $ | 38,457 | $ | 34,131 | $ | 34,639 | ||||||||||||
Counterparty netting | (37,782 | ) | (37,782 | ) | (33,050 | ) | (33,050 | ) | ||||||||||||
Total fair value | $ | 1,082 | $ | 675 | $ | 1,081 | $ | 1,589 | ||||||||||||
(1) Reflects futures and options on futures contracts within Receivables from brokers, dealers and clearing organizations and options and forwards contracts within Other assets. | ||||||||||||||||||||
(2) Reflects futures and options on futures contracts within Payables to brokers, dealers and clearing organizations and options and forwards contracts within Other liabilities. | ||||||||||||||||||||
Schedule of outstanding long and short notional amounts on a gross basis of derivative financial instruments | ' | |||||||||||||||||||
March 31, 2014 | December 31, 2013 | |||||||||||||||||||
Long | Short | Long | Short | |||||||||||||||||
Foreign exchange derivative contracts | $ | 286 | $ | 148,055 | $ | — | $ | — | ||||||||||||
Commodity derivative contracts | 950,241 | 938,030 | 349,004 | 342,573 | ||||||||||||||||
Fixed income derivative contracts | 9,890,091 | 10,191,069 | 9,415,546 | 10,047,771 | ||||||||||||||||
Equity derivative contracts | 1,181 | 1,174 | 5,731 | 220 | ||||||||||||||||
Summary of the effect of derivative contracts on the Consolidated Statements of Operations | ' | |||||||||||||||||||
Location of Gain (Loss) | Amount of Gain (Loss) Recognized in Income on | |||||||||||||||||||
Derivatives | ||||||||||||||||||||
Derivatives not designated as hedging | Recognized in Income on | For the Three Months | For the Three Months Ended | |||||||||||||||||
instruments under ASC 815-10 | Derivatives | Ended March 31, 2014 | March 31, 2013 | |||||||||||||||||
Foreign exchange derivative contracts | -1 | $ | 295 | $ | (791 | ) | ||||||||||||||
Commodity derivative contracts | Principal transactions | 1,753 | 2,499 | |||||||||||||||||
Fixed income derivative contracts | Principal transactions | 3,130 | 2,992 | |||||||||||||||||
Equity derivative contracts | -2 | 7 | (297 | ) | ||||||||||||||||
(1) For the three months ended March 31, 2014, approximately $202 of gains on foreign exchange derivative contracts were included within Other income, net and approximately $93 of gains on foreign currency options were included within Principal transactions. For the three months ended March 31, 2013, approximately $80 of losses on foreign exchange derivative contracts were included within Other income, net and approximately $711 of losses on foreign currency options were included within Principal transactions. | ||||||||||||||||||||
(2) For the three months ended March 31, 2014, approximately $14 of losses on equity derivative contracts were included within Other income, net and approximately $21 of gains on equity derivative contracts were included within Principal transactions. For the three months ended March 31, 2013, approximately $22 of losses on equity derivative contracts were included within Other income, net and approximately $275 of losses on equity derivative contracts were included within Principal transactions. | ||||||||||||||||||||
Summary of derivative contracts, by counterparty, including the gross amounts offset in the Condensed Consolidated Statements of Financial Position | ' | |||||||||||||||||||
The following is a summary of derivative contracts, by counterparty, including the gross amounts offset in the Condensed Consolidated Statements of Financial Position as of March 31, 2014: | ||||||||||||||||||||
Net Amounts of | ||||||||||||||||||||
Gross Amount | Assets Offset in the | Gross Amounts Not Offset in the | ||||||||||||||||||
Offset in the | Condensed | Condensed Consolidated Statements | ||||||||||||||||||
Gross | Condensed | Consolidated | of Financial Condition | |||||||||||||||||
Amounts of | Consolidated | Statements of | Cash Collateral | |||||||||||||||||
Recognized | Statements of | Financial Position | Received/ | |||||||||||||||||
Counterparties | Assets | Financial Position | -1 | Derivatives (2) | (Pledged) | Net Amount | ||||||||||||||
Derivative Assets: | ||||||||||||||||||||
Counterparty A | $ | 114 | $ | — | $ | 114 | $ | — | $ | — | $ | 114 | ||||||||
Counterparty B | 29,973 | 29,886 | 87 | — | — | 87 | ||||||||||||||
Counterparty C | 8,261 | 7,896 | 365 | — | — | 365 | ||||||||||||||
Counterparty E | 516 | — | 516 | — | — | 516 | ||||||||||||||
Total | $ | 38,864 | $ | 37,782 | $ | 1,082 | $ | — | $ | — | $ | 1,082 | ||||||||
Derivative Liabilities: | ||||||||||||||||||||
Counterparty A | $ | 540 | $ | — | $ | 540 | $ | — | $ | — | $ | 540 | ||||||||
Counterparty B | 29,886 | 29,886 | — | — | — | — | ||||||||||||||
Counterparty C | 7,896 | 7,896 | — | — | — | — | ||||||||||||||
Counterparty E | 135 | — | 135 | — | — | 135 | ||||||||||||||
Total | $ | 38,457 | $ | 37,782 | $ | 675 | $ | — | $ | — | $ | 675 | ||||||||
(1) The total reconciles to the aggregate of total derivative contracts in the fair value measurements table and the variation margin on exchange traded futures for the respective periods; both reflected in Note 12. Derivative assets and derivative liabilities are reflected within Other assets and Other Liabilities, respectively, with the exception of futures and options on futures contracts. Futures and options on futures contracts are included within Receivables from and Payables to brokers, dealers, and clearing organizations, as applicable. | ||||||||||||||||||||
(2) As of March 31, 2014, the Company does not have any derivative positions under a master netting agreement that are not netted. | ||||||||||||||||||||
The following is a summary of derivative contracts, by counterparty, including the gross amounts offset in the Consolidated Statements of Financial Position as of December 31, 2013: | ||||||||||||||||||||
Net Amounts of | ||||||||||||||||||||
Gross Amounts | Assets Offset in the | Gross Amounts Not Offset in the | ||||||||||||||||||
Offset in the | Condensed | Condensed Consolidated Statements | ||||||||||||||||||
Condensed | Consolidated | of Financial Condition | ||||||||||||||||||
Gross Amounts of | Consolidated | Statements of | Cash Collateral | |||||||||||||||||
Recognized | Statements of | Financial Position | Received/ | |||||||||||||||||
Counterparties | Assets | Financial Position | -1 | Derivatives (2) | (Pledged) | Net Amount | ||||||||||||||
Derivative Assets: | ||||||||||||||||||||
Counterparty A | $ | 268 | $ | — | $ | 268 | $ | — | $ | — | $ | 268 | ||||||||
Counterparty B | 17,604 | 17,216 | 388 | — | — | 388 | ||||||||||||||
Counterparty C | 15,834 | 15,834 | — | — | — | — | ||||||||||||||
Counterparty D | 14 | — | 14 | — | — | 14 | ||||||||||||||
Counterparty E | 411 | — | 411 | — | — | 411 | ||||||||||||||
Total | $ | 34,131 | $ | 33,050 | $ | 1,081 | $ | — | $ | — | $ | 1,081 | ||||||||
Derivative Liabilities: | ||||||||||||||||||||
Counterparty A | $ | 834 | $ | — | $ | 834 | $ | — | $ | — | $ | 834 | ||||||||
Counterparty B | 17,216 | 17,216 | — | — | — | — | ||||||||||||||
Counterparty C | 16,430 | 15,834 | 596 | — | — | 596 | ||||||||||||||
Counterparty E | 159 | — | 159 | — | — | 159 | ||||||||||||||
Total | $ | 34,639 | $ | 33,050 | $ | 1,589 | $ | — | $ | — | $ | 1,589 | ||||||||
(1) The total reconciles to the aggregate of total derivative contracts in the fair value measurements table and the variation margin on exchange traded futures for the respective periods; both reflected in Note 12. Derivative assets and derivative liabilities are reflected within Other assets and Other Liabilities, respectively, with the exception of futures and options on futures contracts. Futures and options on futures contracts are included within Receivables from and Payables to brokers, dealers, and clearing organizations, as applicable. | ||||||||||||||||||||
(2) As of December 31, 2013, the Company does not have any derivative positions under a master netting agreement that are not netted. |
REGULATORY_REQUIREMENTS_Tables
REGULATORY REQUIREMENTS (Tables) | 3 Months Ended | ||||||||||
Mar. 31, 2014 | |||||||||||
REGULATORY REQUIREMENTS | ' | ||||||||||
Schedule of aggregate regulatory capital in individually regulated entities in its operating regions | ' | ||||||||||
As of March 31, 2014, the Company had the following aggregate regulatory capital, in individually regulated entities, in each of its operating regions: | |||||||||||
Americas | EMEA | Asia | |||||||||
Regulatory capital | $ | 26,367 | $ | 144,528 | $ | 31,620 | |||||
Minimum regulatory capital required | 7,645 | 113,526 | 9,199 | ||||||||
Excess regulatory capital | $ | 18,722 | $ | 31,002 | $ | 22,421 |
SEGMENT_AND_GEOGRAPHIC_INFORMA1
SEGMENT AND GEOGRAPHIC INFORMATION (Tables) | 3 Months Ended | |||||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||||
SEGMENT AND GEOGRAPHIC INFORMATION | ' | |||||||||||||||||||
Schedule of financial information for the Company's reportable segments | ' | |||||||||||||||||||
Three Months Ended March 31, 2014 | ||||||||||||||||||||
Americas | EMEA | Asia | Clearing | All Other | Total | |||||||||||||||
Brokerage | Brokerage | Brokerage | and Backed | |||||||||||||||||
Trading | ||||||||||||||||||||
Total revenues | $ | 61,698 | $ | 89,300 | $ | 19,223 | $ | 44,293 | $ | 26,225 | $ | 240,739 | ||||||||
Revenues, net of interest and transaction-based expenses | 58,752 | 86,427 | 19,103 | 11,140 | 27,005 | 202,427 | ||||||||||||||
Income (loss) before income taxes | 14,342 | 28,704 | 5,632 | 931 | (44,106 | ) | 5,503 | |||||||||||||
Three Months Ended March 31, 2013 | ||||||||||||||||||||
Americas | EMEA | Asia | Clearing | All Other | Total | |||||||||||||||
Brokerage | Brokerage | Brokerage | and Backed | |||||||||||||||||
Trading | ||||||||||||||||||||
Total revenues | $ | 69,258 | $ | 87,668 | $ | 18,359 | $ | 47,610 | $ | 21,497 | $ | 244,392 | ||||||||
Revenues, net of interest and transaction-based expenses | 66,148 | 84,993 | 18,249 | 10,339 | 21,788 | 201,517 | ||||||||||||||
Income (loss) before income taxes | 19,394 | 26,037 | 4,822 | 610 | (50,768 | ) | 95 | |||||||||||||
Schedule of geographic information regarding revenues and long-lived assets | ' | |||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
March 31, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Revenues: | ||||||||||||||||||||
United States | $ | 63,213 | $ | 69,175 | ||||||||||||||||
United Kingdom | 124,305 | 125,486 | ||||||||||||||||||
Other | 53,221 | 49,731 | ||||||||||||||||||
Total | $ | 240,739 | $ | 244,392 | ||||||||||||||||
Three Months Ended | ||||||||||||||||||||
March 31, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Revenues, net of interest and transaction-based expenses: | ||||||||||||||||||||
United States | $ | 62,096 | $ | 67,431 | ||||||||||||||||
United Kingdom | 89,819 | 87,187 | ||||||||||||||||||
Other | 50,512 | 46,899 | ||||||||||||||||||
Total | $ | 202,427 | $ | 201,517 | ||||||||||||||||
March 31, | December 31, | |||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Long-lived Assets, as defined: | ||||||||||||||||||||
United States | $ | 50,544 | $ | 49,987 | ||||||||||||||||
United Kingdom | 11,379 | 11,762 | ||||||||||||||||||
Other | 4,322 | 4,396 | ||||||||||||||||||
Total | $ | 66,245 | $ | 66,145 |
ORGANIZATION_AND_BUSINESS_Deta
ORGANIZATION AND BUSINESS (Details) (JPI) | Mar. 31, 2014 |
JPI | ' |
Organization and Business | ' |
Ownership by Jersey Partners, Inc. (as a percent) | 37.00% |
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 |
item | |||
Significant accounting policies | ' | ' | ' |
Number of VIEs in which the company is the primary beneficiary | 1 | ' | ' |
Prepaid bonuses | $22,699 | ' | $23,499 |
Forgivable employee loans and advances to employees | 22,448 | ' | 24,109 |
Amortization of prepaid bonuses and forgivable employee loans | 6,720 | 6,348 | ' |
Carrying amount of equity method investments | 31,358 | ' | 36,976 |
Carrying amount of cost-method investments | 4,614 | ' | 5,087 |
Fair value of available-for-sale securities | 0 | ' | 5,465 |
Net losses resulting from remeasurement of foreign currency transactions and balances | 92 | 273 | ' |
Income tax expense (benefit) | $1,094 | ($4,859) | ' |
Federal statutory rate (as a percent) | 35.00% | ' | ' |
Minimum | ' | ' | ' |
Significant accounting policies | ' | ' | ' |
Amortization period of prepaid bonuses and forgivable loans | '2 years | ' | ' |
Maximum | ' | ' | ' |
Significant accounting policies | ' | ' | ' |
Amortization period of prepaid bonuses and forgivable loans | '4 years | ' | ' |
Software revenue | Minimum | ' | ' | ' |
Significant accounting policies | ' | ' | ' |
Period for recognition of deferred revenue | '1 year | ' | ' |
Software revenue | Maximum | ' | ' | ' |
Significant accounting policies | ' | ' | ' |
Period for recognition of deferred revenue | '5 years | ' | ' |
Analytics revenue | ' | ' | ' |
Significant accounting policies | ' | ' | ' |
Period for recognition of deferred revenue | '3 years | ' | ' |
Market data subscription revenue | Minimum | ' | ' | ' |
Significant accounting policies | ' | ' | ' |
Period for recognition of deferred revenue | '1 year | ' | ' |
Market data subscription revenue | Maximum | ' | ' | ' |
Significant accounting policies | ' | ' | ' |
Period for recognition of deferred revenue | '2 years | ' | ' |
Property, equipment and leasehold improvements | Minimum | ' | ' | ' |
Significant accounting policies | ' | ' | ' |
Useful life | '3 years | ' | ' |
Property, equipment and leasehold improvements | Maximum | ' | ' | ' |
Significant accounting policies | ' | ' | ' |
Useful life | '7 years | ' | ' |
Computer software | ' | ' | ' |
Significant accounting policies | ' | ' | ' |
Useful life | '3 years | ' | ' |
RECEIVABLES_FROM_AND_PAYABLES_2
RECEIVABLES FROM AND PAYABLES TO BROKERS, DEALERS AND CLEARING ORGANIZATIONS (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Receivables from brokers, dealers and clearing organizations: | ' | ' |
Contract value of fails to deliver | $635,431 | $123,470 |
Receivables from and deposits with clearing organizations and financial institutions | 216,350 | 172,257 |
Total | 851,781 | 295,727 |
Payables to brokers, dealers and clearing organizations: | ' | ' |
Contract value of fails to receive | 614,194 | 123,393 |
Payables to clearing organizations and financial institutions | 21,963 | 3,052 |
Net pending trades | 4,264 | 455 |
Total | $640,421 | $126,900 |
RECEIVABLES_FROM_AND_PAYABLES_3
RECEIVABLES FROM AND PAYABLES TO BROKERS, DEALERS AND CLEARING ORGANIZATIONS (Details 2) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Cash payable to clearing customers | ' | ' |
Payables to clearing services customers | $199,974 | $177,523 |
Cash segregated under federal and other regulations | ' | ' |
Cash payable to clearing customers | ' | ' |
Payables to clearing services customers | 62,895 | 62,684 |
Receivables from brokers, dealers, and clearing organizations | ' | ' |
Cash payable to clearing customers | ' | ' |
Payables to clearing services customers | $137,079 | $114,839 |
GOODWILL_AND_INTANGIBLE_ASSETS2
GOODWILL AND INTANGIBLE ASSETS (Details) (USD $) | 3 Months Ended | 3 Months Ended | ||||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 |
Reportable segment | Reportable segment | Reportable segment | Reportable segment | All other | ||
Americas Brokerage | Americas Brokerage | EMEA Brokerage | Clearing and Backed Trading | |||
Goodwill | ' | ' | ' | ' | ' | ' |
Goodwill at the beginning of the period | $255,920 | $83,289 | $83,289 | $14,637 | $23,259 | $134,735 |
Adjustments | -60 | ' | ' | ' | ' | -60 |
Foreign currency translation | 260 | ' | ' | 83 | 150 | 27 |
Goodwill at the end of the period | $256,120 | $83,289 | $83,289 | $14,720 | $23,409 | $134,702 |
GOODWILL_AND_INTANGIBLE_ASSETS3
GOODWILL AND INTANGIBLE ASSETS (Details 2) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 |
Intangible Assets | ' | ' | ' |
Gross amount | $106,360 | ' | $106,360 |
Accumulated amortization and foreign currency translation | 62,929 | ' | 60,676 |
Net carrying value | 43,431 | ' | 45,684 |
Intangible amortization expense | 2,469 | 2,498 | ' |
Expected amortization expense for the definite lived intangible assets | ' | ' | ' |
2014 (remaining nine months) | 7,277 | ' | ' |
2015 | 9,609 | ' | ' |
2016 | 7,693 | ' | ' |
2017 | 4,333 | ' | ' |
2018 | 3,510 | ' | ' |
Thereafter | 11,009 | ' | ' |
Customer relationships | ' | ' | ' |
Intangible Assets | ' | ' | ' |
Gross amount | 77,196 | ' | 77,196 |
Accumulated amortization and foreign currency translation | 44,000 | ' | 42,151 |
Net carrying value | 33,196 | ' | 35,045 |
Trade names | ' | ' | ' |
Intangible Assets | ' | ' | ' |
Gross amount | 8,951 | ' | 8,951 |
Accumulated amortization and foreign currency translation | 6,797 | ' | 6,674 |
Net carrying value | 2,154 | ' | 2,277 |
Core technology | ' | ' | ' |
Intangible Assets | ' | ' | ' |
Gross amount | 11,950 | ' | 11,950 |
Accumulated amortization and foreign currency translation | 6,411 | ' | 6,285 |
Net carrying value | 5,539 | ' | 5,665 |
Non-compete agreements | ' | ' | ' |
Intangible Assets | ' | ' | ' |
Gross amount | 3,865 | ' | 3,865 |
Accumulated amortization and foreign currency translation | 3,491 | ' | 3,478 |
Net carrying value | 374 | ' | 387 |
Favorable lease agreements | ' | ' | ' |
Intangible Assets | ' | ' | ' |
Gross amount | 620 | ' | 620 |
Accumulated amortization and foreign currency translation | 600 | ' | 580 |
Net carrying value | 20 | ' | 40 |
Patents | ' | ' | ' |
Intangible Assets | ' | ' | ' |
Gross amount | 3,131 | ' | 3,131 |
Accumulated amortization and foreign currency translation | 1,346 | ' | 1,221 |
Net carrying value | 1,785 | ' | 1,910 |
Other | ' | ' | ' |
Intangible Assets | ' | ' | ' |
Gross amount | 647 | ' | 647 |
Accumulated amortization and foreign currency translation | 284 | ' | 287 |
Net carrying value | $363 | ' | $360 |
OTHER_ASSETS_AND_OTHER_LIABILI2
OTHER ASSETS AND OTHER LIABILITIES (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Other assets | ' | ' |
Deferred tax assets | $48,779 | $45,694 |
Investments accounted for under the cost method and equity method | 35,972 | 42,063 |
Prepaid bonuses | 22,699 | 23,499 |
Forgivable employee loans and advances to employees | 22,448 | 24,109 |
Deferred financing fees | 6,332 | 6,786 |
Software inventory, net | 4,422 | 4,749 |
Financial instruments owned | 951 | 1,416 |
Other | 26,184 | 29,528 |
Total Other assets | $167,787 | $177,844 |
OTHER_ASSETS_AND_OTHER_LIABILI3
OTHER ASSETS AND OTHER LIABILITIES (Details 2) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Other liabilities | ' | ' |
Payroll related liabilities | $31,007 | $15,896 |
Deferred revenues | 10,483 | 9,199 |
Unrecognized tax benefits | 8,676 | 8,676 |
Deferred tax liabilities | 6,440 | 6,835 |
Contingent consideration liabilities | 4,372 | 4,317 |
Financial instruments sold, not yet purchased | 675 | 993 |
Other | 28,994 | 37,155 |
Total Other liabilities | $90,647 | $83,071 |
SHORTTERM_BORROWINGS_AND_LONGT2
SHORT-TERM BORROWINGS AND LONG-TERM DEBT (Details) (USD $) | 0 Months Ended | 1 Months Ended | 3 Months Ended | |||||
In Thousands, unless otherwise specified | Jun. 26, 2013 | Apr. 19, 2013 | Jan. 18, 2013 | Jul. 31, 2011 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 | Dec. 21, 2011 |
SHORT-TERM BORROWINGS AND LONG-TERM DEBT | ' | ' | ' | ' | ' | ' | ' | ' |
Long-term debt | ' | ' | ' | ' | $240,000 | $240,000 | ' | ' |
Loans pursuant to Credit Agreement | ' | ' | ' | ' | 10,000 | 10,000 | ' | ' |
Total | ' | ' | ' | ' | 250,000 | 250,000 | ' | ' |
Unamortized deferred financing fees | ' | ' | ' | ' | 6,332 | 6,786 | ' | ' |
8.375% Senior Notes due 2018 | ' | ' | ' | ' | ' | ' | ' | ' |
SHORT-TERM BORROWINGS AND LONG-TERM DEBT | ' | ' | ' | ' | ' | ' | ' | ' |
Long-term debt | ' | ' | ' | ' | 240,000 | 240,000 | ' | ' |
Carrying Amount | ' | ' | ' | ' | 240,000 | 240,000 | ' | ' |
Fair Value | ' | ' | ' | ' | 257,400 | 251,100 | ' | ' |
Interest rate (as a percent) | ' | ' | ' | 8.38% | 8.38% | ' | ' | ' |
Aggregate principal amount | ' | ' | ' | 250,000 | ' | ' | ' | ' |
Price of notes as percentage of principal amount | ' | ' | ' | 100.00% | ' | ' | ' | ' |
Transaction costs | ' | ' | ' | 9,100 | ' | ' | ' | ' |
Aggregate principal amount of notes exchanged for notes registered under the Securities Act | ' | ' | ' | ' | ' | ' | ' | 250,000 |
Principal amount | ' | ' | ' | ' | ' | ' | 10,000 | ' |
Aggregate purchase price | ' | ' | ' | ' | ' | ' | 9,602 | ' |
Increase in per annum interest rate (as a percent) | 0.25% | 0.50% | 0.50% | ' | 2.00% | ' | ' | ' |
Additional interest per annum | ' | ' | ' | ' | 4,800 | ' | ' | ' |
Unamortized deferred financing fees | ' | ' | ' | ' | 5,357 | 5,669 | ' | ' |
Credit Agreement | ' | ' | ' | ' | ' | ' | ' | ' |
SHORT-TERM BORROWINGS AND LONG-TERM DEBT | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum borrowings | ' | ' | ' | ' | 75,000 | ' | 75,000 | ' |
Weighted average interest rate (as a percent) | ' | ' | ' | ' | 3.41% | ' | ' | ' |
Unamortized deferred financing fees | ' | ' | ' | ' | 975 | 1,117 | ' | ' |
Credit Agreement | Maturity by December 2013 | ' | ' | ' | ' | ' | ' | ' | ' |
SHORT-TERM BORROWINGS AND LONG-TERM DEBT | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum borrowings | ' | ' | ' | ' | ' | ' | 18,750 | ' |
Credit Agreement | Maturity by December 2015 | ' | ' | ' | ' | ' | ' | ' | ' |
SHORT-TERM BORROWINGS AND LONG-TERM DEBT | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum borrowings | ' | ' | ' | ' | ' | ' | 56,250 | ' |
Letters of credit | ' | ' | ' | ' | ' | ' | ' | ' |
SHORT-TERM BORROWINGS AND LONG-TERM DEBT | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum borrowings | ' | ' | ' | ' | $50,000 | ' | ' | ' |
STOCKHOLDERS_EQUITY_Details
STOCKHOLDERS' EQUITY (Details) (USD $) | 0 Months Ended | 3 Months Ended |
In Thousands, except Per Share data, unless otherwise specified | Mar. 28, 2014 | Mar. 31, 2014 |
Cash dividend paid (in dollars per share) | $0.05 | ' |
Total cash dividend paid | $6,188 | $6,188 |
EARNINGS_PER_SHARE_Details
EARNINGS PER SHARE (Details) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Basic earnings per share | ' | ' |
GFI's net income | $4,003 | $4,674 |
Weighted average common shares outstanding | 122,362,839 | 115,384,022 |
Basic earnings per share (in dollars per share) | $0.03 | $0.04 |
Diluted earnings per share | ' | ' |
GFI's net income | $4,003 | $4,674 |
Weighted average common shares outstanding | 122,362,839 | 115,384,022 |
Effect of dilutive options, RSUs and other contingently issuable shares | 9,067,862 | 10,168,019 |
Weighted average shares outstanding and common stock equivalents | 131,430,701 | 125,552,041 |
Diluted earnings per share (in dollars per share) | $0.03 | $0.04 |
LOSS PER SHARE | ' | ' |
Contingently issuable shares excluded from computation of diluted loss per share as a result of net loss | 1,171,879 | 3,682,916 |
RSUs | ' | ' |
LOSS PER SHARE | ' | ' |
Securities excluded from computation of diluted loss per share as a result of net loss (in shares) | 286,014 | 6,135,867 |
Stock options | ' | ' |
LOSS PER SHARE | ' | ' |
Securities excluded from computation of diluted loss per share as a result of net loss (in shares) | 16,844 | 69,476 |
SHAREBASED_COMPENSATION_Detail
SHARE-BASED COMPENSATION (Details) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Stock Options | ' | ' |
Additional disclosures | ' | ' |
Unrecognized compensation cost | $0 | $0 |
2008 Equity Incentive Plan | ' | ' |
SHARE-BASED COMPENSATION | ' | ' |
Shares of common stock available for future grants of awards | 7,272,045 | ' |
2008 Equity Incentive Plan and 2004 Equity Incentive Plan | Restricted Stock Units | ' | ' |
Restricted Stock Units | ' | ' |
Outstanding at the beginning of the period (in shares) | 18,483,001 | ' |
Granted (in shares) | 2,908,418 | ' |
Vested (in shares) | -3,908,980 | ' |
Cancelled (in shares) | -224,874 | ' |
Outstanding at the end of the period (in shares) | 17,257,565 | ' |
Weighted-Average Grant Date Fair Value | ' | ' |
Outstanding at the beginning of the period (in dollars per share) | $4.01 | ' |
Granted (in dollars per share) | $3.56 | $3.35 |
Vested (in dollars per share) | $4.11 | ' |
Cancelled (in dollars per share) | $3.62 | ' |
Outstanding at the end of the period (in dollars per share) | $3.92 | ' |
Total compensation expense and related income tax benefits | ' | ' |
Compensation expense | 7,356 | 8,142 |
Income tax benefits | 2,099 | 2,488 |
Total unrecognized compensation cost | 51,663 | ' |
Weighted average period over which unrecognized compensation cost is expected to be recognized | '1 year 9 months 14 days | ' |
Total fair value of shares vested | $16,057 | $20,472 |
GFI Group 2002 Plan | Stock Options | ' | ' |
Stock Options | ' | ' |
Outstanding at the beginning of the period (in shares) | 139,164 | ' |
Exercised (in shares) | -20,212 | ' |
Expired (in shares) | -94,740 | ' |
Outstanding at the end of the period (in shares) | 24,212 | ' |
Weighted Average Exercise Price | ' | ' |
Outstanding at the beginning of the period (in dollars per share) | $4.16 | ' |
Exercised (in dollars per share) | $2.97 | ' |
Expired (in dollars per share) | $4.24 | ' |
Outstanding at the end of the period (in dollars per share) | $4.56 | ' |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Details) (USD $) | Mar. 31, 2014 |
In Thousands, unless otherwise specified | |
Purchase Obligations | ' |
Other purchase commitments | $8,515 |
Other purchase commitments due within the next twelve months | 4,493 |
Market data | ' |
Purchase Obligations | ' |
Total purchase commitments | 26,603 |
Purchase commitments due within the next twelve months | 18,807 |
Purchase commitments due between one to three years | 7,796 |
Network upgrades | ' |
Purchase Obligations | ' |
Other purchase commitments | 7,500 |
Hosting and software license agreements | ' |
Purchase Obligations | ' |
Other purchase commitments | $1,015 |
COMMITMENTS_AND_CONTINGENCIES_1
COMMITMENTS AND CONTINGENCIES (Details 2) | Mar. 31, 2014 | Dec. 31, 2013 | Nov. 14, 2013 | Nov. 14, 2013 |
In Thousands, unless otherwise specified | USD ($) | USD ($) | Contigo Limited | Contigo Limited |
USD ($) | GBP (£) | |||
Contingencies | ' | ' | ' | ' |
Contingent consideration | $4,372 | $4,317 | $3,942 | £ 2,458 |
FAIR_VALUE_OF_FINANCIAL_INSTRU2
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) | Mar. 31, 2014 | Nov. 14, 2013 |
item | Contigo Limited | |
Valuation Techniques | ' | ' |
Number of acquisitions with contingent consideration | 1 | ' |
Percentage of common stock | ' | 50.00% |
FAIR_VALUE_OF_FINANCIAL_INSTRU3
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 2) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Assets | ' | ' |
Other assets: Financial instruments owned | $951 | $1,416 |
Liabilities | ' | ' |
Other liabilities: Financial instruments sold, not yet purchased | 675 | 993 |
Other liabilities: Contingent consideration | 4,372 | 4,317 |
Excluded portion | ' | ' |
Liabilities | ' | ' |
Margin on net long derivative contracts related to exchange traded futures included within receivables from brokers, dealers and clearing organizations | 324 | 388 |
Margin on net short derivative contracts related to exchange traded futures included within payables to brokers, dealers and clearing organizations | ' | 596 |
Fair value measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | ' | ' |
Assets | ' | ' |
Other assets: Financial instruments owned | 135 | 546 |
Other assets: Other: | ' | ' |
Equity security, available-for-sale | ' | 5,465 |
Total | 135 | 6,011 |
Fair value measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Equity securities | ' | ' |
Assets | ' | ' |
Other assets: Financial instruments owned | 7 | 546 |
Fair value measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Derivative contracts | ' | ' |
Assets | ' | ' |
Other assets: Financial instruments owned | 128 | ' |
Netting | -231 | ' |
Liabilities | ' | ' |
Netting | -231 | ' |
Fair value measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Foreign exchange derivative contracts | ' | ' |
Assets | ' | ' |
Other assets: Financial instruments owned | 112 | ' |
Liabilities | ' | ' |
Other liabilities: Financial instruments sold, not yet purchased | 4 | ' |
Fair value measured on a recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Fixed income derivative contracts | ' | ' |
Assets | ' | ' |
Other assets: Financial instruments owned | 247 | ' |
Liabilities | ' | ' |
Other liabilities: Financial instruments sold, not yet purchased | 227 | ' |
Fair value measured on a recurring basis | Significant Other Observable Inputs (Level 2) | ' | ' |
Assets | ' | ' |
Other assets: Financial instruments owned | 816 | 856 |
Other assets: Other: | ' | ' |
Total | 816 | 856 |
Liabilities | ' | ' |
Other liabilities: Financial instruments sold, not yet purchased | 675 | 993 |
Total | 675 | 993 |
Fair value measured on a recurring basis | Significant Other Observable Inputs (Level 2) | Equity securities | ' | ' |
Assets | ' | ' |
Other assets: Financial instruments owned | 186 | 177 |
Fair value measured on a recurring basis | Significant Other Observable Inputs (Level 2) | Derivative contracts | ' | ' |
Assets | ' | ' |
Other assets: Financial instruments owned | 630 | 679 |
Liabilities | ' | ' |
Other liabilities: Financial instruments sold, not yet purchased | 675 | ' |
Fair value measured on a recurring basis | Significant Other Observable Inputs (Level 2) | Foreign exchange derivative contracts | ' | ' |
Assets | ' | ' |
Other assets: Financial instruments owned | 630 | 679 |
Liabilities | ' | ' |
Other liabilities: Financial instruments sold, not yet purchased | 675 | 993 |
Fair value measured on a recurring basis | Significant Unobservable Inputs (Level 3) | ' | ' |
Assets | ' | ' |
Other assets: Financial instruments owned | ' | 14 |
Other assets: Other: | ' | ' |
Total | ' | 14 |
Liabilities | ' | ' |
Other liabilities: Contingent consideration | 4,372 | 4,317 |
Total | 4,372 | 4,317 |
Fair value measured on a recurring basis | Significant Unobservable Inputs (Level 3) | Derivative contracts | ' | ' |
Assets | ' | ' |
Other assets: Financial instruments owned | ' | 14 |
Fair value measured on a recurring basis | Significant Unobservable Inputs (Level 3) | Equity derivative contracts | ' | ' |
Assets | ' | ' |
Other assets: Financial instruments owned | ' | 14 |
Other assets: Other: | ' | ' |
Total | ' | 14 |
Fair value measured on a recurring basis | Total | ' | ' |
Assets | ' | ' |
Other assets: Financial instruments owned | 951 | 1,416 |
Other assets: Other: | ' | ' |
Equity security, available-for-sale | ' | 5,465 |
Total | 951 | 6,881 |
Liabilities | ' | ' |
Other liabilities: Financial instruments sold, not yet purchased | 675 | 993 |
Other liabilities: Contingent consideration | 4,372 | 4,317 |
Total | 5,047 | 5,310 |
Fair value measured on a recurring basis | Total | Equity securities | ' | ' |
Assets | ' | ' |
Other assets: Financial instruments owned | 193 | 723 |
Fair value measured on a recurring basis | Total | Derivative contracts | ' | ' |
Assets | ' | ' |
Other assets: Financial instruments owned | 758 | 693 |
Netting | -231 | ' |
Liabilities | ' | ' |
Other liabilities: Financial instruments sold, not yet purchased | 675 | ' |
Netting | -231 | ' |
Fair value measured on a recurring basis | Total | Foreign exchange derivative contracts | ' | ' |
Assets | ' | ' |
Other assets: Financial instruments owned | 742 | 679 |
Liabilities | ' | ' |
Other liabilities: Financial instruments sold, not yet purchased | 679 | 993 |
Fair value measured on a recurring basis | Total | Fixed income derivative contracts | ' | ' |
Assets | ' | ' |
Other assets: Financial instruments owned | 247 | ' |
Liabilities | ' | ' |
Other liabilities: Financial instruments sold, not yet purchased | 227 | ' |
Fair value measured on a recurring basis | Total | Equity derivative contracts | ' | ' |
Assets | ' | ' |
Other assets: Financial instruments owned | ' | $14 |
FAIR_VALUE_OF_FINANCIAL_INSTRU4
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 3) (Equity derivative contracts, Recurring basis, USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Equity derivative contracts | Recurring basis | ' | ' |
Changes in Level 3 Financial Assets measured at fair value | ' | ' |
Opening Balance | $14 | $28 |
Total realized and unrealized gains (losses) included in Net income | -14 | -22 |
Closing Balance | ' | 6 |
Unrealized gains (losses) for Level 3 Assets outstanding at end of the period | ($14) | ($22) |
FAIR_VALUE_OF_FINANCIAL_INSTRU5
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 4) (Recurring basis, USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Future purchase commitment | ' | ' |
Changes in Level 3 Financial Liabilities measured at fair value | ' | ' |
Opening Balance | ' | $3,209 |
Total realized and unrealized gains (losses) included in Net income | ' | 744 |
Unrealized gains included in Other Comprehensive (income) loss | ' | 208 |
Closing Balance | ' | 2,257 |
Unrealized gains (losses) for Level 3 Liabilities outstanding at end of the period | ' | 744 |
Contingent consideration | ' | ' |
Changes in Level 3 Financial Liabilities measured at fair value | ' | ' |
Opening Balance | 4,317 | 518 |
Total realized and unrealized gains (losses) included in Net income | 28 | ' |
Unrealized gains included in Other Comprehensive (income) loss | 27 | ' |
Settlements | ' | -156 |
Closing Balance | 4,372 | 362 |
Unrealized gains (losses) for Level 3 Liabilities outstanding at end of the period | $28 | ' |
FAIR_VALUE_OF_FINANCIAL_INSTRU6
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 5) (Fair value measured on a recurring basis, Significant Unobservable Inputs (Level 3), USD $) | 3 Months Ended | 12 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Dec. 31, 2013 |
Fair value, Unobservable Input | ' | ' |
Fair Value, Assets | ' | 14 |
Fair Value, Liabilities | 4,372 | 4,317 |
Contingent consideration | ' | ' |
Fair value, Unobservable Input | ' | ' |
Fair Value, Liabilities | 4,372 | 4,317 |
Contingent consideration | Present value of expected payments | ' | ' |
Unobservable Input(s) | ' | ' |
Discount rate (as a percent) | 17.00% | 17.00% |
Equity derivative contracts | ' | ' |
Fair value, Unobservable Input | ' | ' |
Fair Value, Assets | ' | 14 |
Equity derivative contracts | Black-Scholes-Merton Model | ' | ' |
Unobservable Input(s) | ' | ' |
Expected volatility (as a percent) | 30.00% | 30.00% |
DERIVATIVE_FINANCIAL_INSTRUMEN2
DERIVATIVE FINANCIAL INSTRUMENTS (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Derivative Assets | ' | ' |
Total fair value of derivative contracts | $38,864 | $34,131 |
Counterparty netting | -37,782 | -33,050 |
Total fair value | 1,082 | 1,081 |
Derivative Liabilities | ' | ' |
Total fair value of derivative contracts | 38,457 | 34,639 |
Counterparty netting | -37,782 | -33,050 |
Total fair value | 675 | 1,589 |
Derivatives not designated as hedging instruments | ' | ' |
Derivative Assets | ' | ' |
Total fair value of derivative contracts | 38,864 | 34,131 |
Counterparty netting | -37,782 | -33,050 |
Total fair value | 1,082 | 1,081 |
Derivative Liabilities | ' | ' |
Total fair value of derivative contracts | 38,457 | 34,639 |
Counterparty netting | -37,782 | -33,050 |
Total fair value | 675 | 1,589 |
Foreign exchange derivative contracts | Derivatives not designated as hedging instruments | ' | ' |
Derivative Assets | ' | ' |
Total fair value of derivative contracts | 986 | 679 |
Derivative Liabilities | ' | ' |
Total fair value of derivative contracts | 867 | 993 |
Foreign exchange derivative contracts | Derivatives designated as hedging instruments | ' | ' |
Derivative Liabilities | ' | ' |
Notional value of derivative | 91,537 | 86,170 |
Euro-denominated and Swiss franc-denominated balance sheet positions | Derivatives designated as hedging instruments | ' | ' |
Derivative Liabilities | ' | ' |
Notional value of derivative | 33,432 | 27,659 |
Commodity derivative contracts | Derivatives not designated as hedging instruments | ' | ' |
Derivative Assets | ' | ' |
Total fair value of derivative contracts | 29,974 | 17,604 |
Derivative Liabilities | ' | ' |
Total fair value of derivative contracts | 29,886 | 17,216 |
Fixed income derivative contracts | Derivatives not designated as hedging instruments | ' | ' |
Derivative Assets | ' | ' |
Total fair value of derivative contracts | 7,882 | 15,824 |
Derivative Liabilities | ' | ' |
Total fair value of derivative contracts | 7,679 | 16,415 |
Equity derivative contracts | Derivatives not designated as hedging instruments | ' | ' |
Derivative Assets | ' | ' |
Total fair value of derivative contracts | 22 | 24 |
Derivative Liabilities | ' | ' |
Total fair value of derivative contracts | $25 | $15 |
DERIVATIVE_FINANCIAL_INSTRUMEN3
DERIVATIVE FINANCIAL INSTRUMENTS (Details 2) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Foreign exchange derivative contracts | Long | ' | ' |
Notional amount of derivatives | ' | ' |
Notional amount | $286 | ' |
Foreign exchange derivative contracts | Short | ' | ' |
Notional amount of derivatives | ' | ' |
Notional amount | 148,055 | ' |
Commodity derivative contracts | Long | ' | ' |
Notional amount of derivatives | ' | ' |
Notional amount | 950,241 | 349,004 |
Commodity derivative contracts | Short | ' | ' |
Notional amount of derivatives | ' | ' |
Notional amount | 938,030 | 342,573 |
Fixed income derivative contracts | Long | ' | ' |
Notional amount of derivatives | ' | ' |
Notional amount | 9,890,091 | 9,415,546 |
Fixed income derivative contracts | Short | ' | ' |
Notional amount of derivatives | ' | ' |
Notional amount | 10,191,069 | 10,047,771 |
Equity derivative contracts | Long | ' | ' |
Notional amount of derivatives | ' | ' |
Notional amount | 1,181 | 5,731 |
Equity derivative contracts | Short | ' | ' |
Notional amount of derivatives | ' | ' |
Notional amount | $1,174 | $220 |
DERIVATIVE_FINANCIAL_INSTRUMEN4
DERIVATIVE FINANCIAL INSTRUMENTS (Details 3) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Foreign exchange derivative contracts | Principal transactions | ' | ' |
Effect of derivative contracts on the Condensed Consolidated Statements | ' | ' |
Amount of Gain (Loss) Recognized in Income on Derivatives | $93 | ($711) |
Foreign exchange derivative contracts | Other income, net | ' | ' |
Effect of derivative contracts on the Condensed Consolidated Statements | ' | ' |
Amount of Gain (Loss) Recognized in Income on Derivatives | 202 | -80 |
Foreign exchange derivative contracts | Derivatives not designated as hedging instruments | ' | ' |
Effect of derivative contracts on the Condensed Consolidated Statements | ' | ' |
Amount of Gain (Loss) Recognized in Income on Derivatives | 295 | -791 |
Commodity derivative contracts | Derivatives not designated as hedging instruments | Principal transactions | ' | ' |
Effect of derivative contracts on the Condensed Consolidated Statements | ' | ' |
Amount of Gain (Loss) Recognized in Income on Derivatives | 1,753 | 2,499 |
Fixed income derivative contracts | Derivatives not designated as hedging instruments | Principal transactions | ' | ' |
Effect of derivative contracts on the Condensed Consolidated Statements | ' | ' |
Amount of Gain (Loss) Recognized in Income on Derivatives | 3,130 | 2,992 |
Equity derivative contracts | Principal transactions | ' | ' |
Effect of derivative contracts on the Condensed Consolidated Statements | ' | ' |
Amount of Gain (Loss) Recognized in Income on Derivatives | 21 | -275 |
Equity derivative contracts | Other income, net | ' | ' |
Effect of derivative contracts on the Condensed Consolidated Statements | ' | ' |
Amount of Gain (Loss) Recognized in Income on Derivatives | -14 | -22 |
Equity derivative contracts | Derivatives not designated as hedging instruments | ' | ' |
Effect of derivative contracts on the Condensed Consolidated Statements | ' | ' |
Amount of Gain (Loss) Recognized in Income on Derivatives | $7 | ($297) |
DERIVATIVE_FINANCIAL_INSTRUMEN5
DERIVATIVE FINANCIAL INSTRUMENTS (Details 4) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Derivative Assets: | ' | ' |
Gross Amounts of Recognized Assets | $38,864 | $34,131 |
Gross Amounts Offset in the Condensed Consolidated Statements of Financial Position | 37,782 | 33,050 |
Net Amounts of Assets Offset in the Condensed Consolidated Statements of Financial Position | 1,082 | 1,081 |
Gross Amounts Not Offset in the Condensed Consolidated Statements of Financial Condition | 1,082 | 1,081 |
Derivative Liabilities: | ' | ' |
Gross Amounts of Recognized Liabilities | 38,457 | 34,639 |
Gross Amounts Offset in the Condensed Consolidated Statements of Financial Position | 37,782 | 33,050 |
Net Amounts of Liabilities Offset in the Condensed Consolidated Statements of Financial Position | 675 | 1,589 |
Gross Amounts Not Offset in the Condensed Consolidated Statements of Financial Condition | 675 | 1,589 |
Counterparty A | ' | ' |
Derivative Assets: | ' | ' |
Gross Amounts of Recognized Assets | 114 | 268 |
Net Amounts of Assets Offset in the Condensed Consolidated Statements of Financial Position | 114 | 268 |
Gross Amounts Not Offset in the Condensed Consolidated Statements of Financial Condition | 114 | 268 |
Derivative Liabilities: | ' | ' |
Gross Amounts of Recognized Liabilities | 540 | 834 |
Net Amounts of Liabilities Offset in the Condensed Consolidated Statements of Financial Position | 540 | 834 |
Gross Amounts Not Offset in the Condensed Consolidated Statements of Financial Condition | 540 | 834 |
Counterparty B | ' | ' |
Derivative Assets: | ' | ' |
Gross Amounts of Recognized Assets | 29,973 | 17,604 |
Gross Amounts Offset in the Condensed Consolidated Statements of Financial Position | 29,886 | 17,216 |
Net Amounts of Assets Offset in the Condensed Consolidated Statements of Financial Position | 87 | 388 |
Gross Amounts Not Offset in the Condensed Consolidated Statements of Financial Condition | 87 | 388 |
Derivative Liabilities: | ' | ' |
Gross Amounts of Recognized Liabilities | 29,886 | 17,216 |
Gross Amounts Offset in the Condensed Consolidated Statements of Financial Position | 29,886 | 17,216 |
Counterparty C | ' | ' |
Derivative Assets: | ' | ' |
Gross Amounts of Recognized Assets | 8,261 | 15,834 |
Gross Amounts Offset in the Condensed Consolidated Statements of Financial Position | 7,896 | 15,834 |
Net Amounts of Assets Offset in the Condensed Consolidated Statements of Financial Position | 365 | ' |
Gross Amounts Not Offset in the Condensed Consolidated Statements of Financial Condition | 365 | ' |
Derivative Liabilities: | ' | ' |
Gross Amounts of Recognized Liabilities | 7,896 | 16,430 |
Gross Amounts Offset in the Condensed Consolidated Statements of Financial Position | 7,896 | 15,834 |
Net Amounts of Liabilities Offset in the Condensed Consolidated Statements of Financial Position | ' | 596 |
Gross Amounts Not Offset in the Condensed Consolidated Statements of Financial Condition | ' | 596 |
Counterparty D | ' | ' |
Derivative Assets: | ' | ' |
Gross Amounts of Recognized Assets | ' | 14 |
Net Amounts of Assets Offset in the Condensed Consolidated Statements of Financial Position | ' | 14 |
Gross Amounts Not Offset in the Condensed Consolidated Statements of Financial Condition | ' | 14 |
Counterparty E | ' | ' |
Derivative Assets: | ' | ' |
Gross Amounts of Recognized Assets | 516 | 411 |
Net Amounts of Assets Offset in the Condensed Consolidated Statements of Financial Position | 516 | 411 |
Gross Amounts Not Offset in the Condensed Consolidated Statements of Financial Condition | 516 | 411 |
Derivative Liabilities: | ' | ' |
Gross Amounts of Recognized Liabilities | 135 | 159 |
Net Amounts of Liabilities Offset in the Condensed Consolidated Statements of Financial Position | 135 | 159 |
Gross Amounts Not Offset in the Condensed Consolidated Statements of Financial Condition | $135 | $159 |
VARIABLE_INTEREST_ENTITIES_Det
VARIABLE INTEREST ENTITIES (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Non-consolidated Variable Interest Entities | VIEs in the form of direct equity interests, a convertible note and a non-recourse loan | ' | ' |
VARIABLE INTEREST ENTITIES | ' | ' |
Carrying Amount of Assets | $3,654 | $3,954 |
Maximum exposure to loss | 4,823 | 4,592 |
Non-consolidated Variable Interest Entities | VIEs in the form of trading margin accounts | ' | ' |
VARIABLE INTEREST ENTITIES | ' | ' |
Carrying Amount of Assets | 1,538 | 1,653 |
Maximum exposure to loss | 1,538 | 1,653 |
Consolidated Variable Interest Entities | ' | ' |
VARIABLE INTEREST ENTITIES | ' | ' |
Total assets of consolidated VIE | 10,413 | 8,953 |
Total liabilities of consolidated VIE | $3,289 | $2,652 |
REGULATORY_REQUIREMENTS_Detail
REGULATORY REQUIREMENTS (Details) (USD $) | Mar. 31, 2014 |
In Thousands, unless otherwise specified | |
Americas | ' |
REGULATORY REQUIREMENTS | ' |
Regulatory capital | $26,367 |
Minimum regulatory capital required | 7,645 |
Excess regulatory capital | 18,722 |
EMEA | ' |
REGULATORY REQUIREMENTS | ' |
Regulatory capital | 144,528 |
Minimum regulatory capital required | 113,526 |
Excess regulatory capital | 31,002 |
Asia | ' |
REGULATORY REQUIREMENTS | ' |
Regulatory capital | 31,620 |
Minimum regulatory capital required | 9,199 |
Excess regulatory capital | $22,421 |
SEGMENT_AND_GEOGRAPHIC_INFORMA2
SEGMENT AND GEOGRAPHIC INFORMATION (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
item | ||
SEGMENT AND GEOGRAPHIC INFORMATION | ' | ' |
Number of reportable segments | 4 | ' |
Number of broad product categories | 4 | ' |
SEGMENT AND GEOGRAPHIC INFORMATION | ' | ' |
Total revenues | $240,739 | $244,392 |
Revenues, net of interest and transaction-based expenses | 202,427 | 201,517 |
Income (loss) before income taxes | 5,503 | 95 |
Reportable segment | Americas Brokerage | ' | ' |
SEGMENT AND GEOGRAPHIC INFORMATION | ' | ' |
Total revenues | 61,698 | 69,258 |
Revenues, net of interest and transaction-based expenses | 58,752 | 66,148 |
Income (loss) before income taxes | 14,342 | 19,394 |
Reportable segment | EMEA Brokerage | ' | ' |
SEGMENT AND GEOGRAPHIC INFORMATION | ' | ' |
Total revenues | 89,300 | 87,668 |
Revenues, net of interest and transaction-based expenses | 86,427 | 84,993 |
Income (loss) before income taxes | 28,704 | 26,037 |
Reportable segment | Asia Brokerage | ' | ' |
SEGMENT AND GEOGRAPHIC INFORMATION | ' | ' |
Total revenues | 19,223 | 18,359 |
Revenues, net of interest and transaction-based expenses | 19,103 | 18,249 |
Income (loss) before income taxes | 5,632 | 4,822 |
Reportable segment | Clearing and Backed Trading | ' | ' |
SEGMENT AND GEOGRAPHIC INFORMATION | ' | ' |
Total revenues | 44,293 | 47,610 |
Revenues, net of interest and transaction-based expenses | 11,140 | 10,339 |
Income (loss) before income taxes | 931 | 610 |
All other | ' | ' |
SEGMENT AND GEOGRAPHIC INFORMATION | ' | ' |
Total revenues | 26,225 | 21,497 |
Revenues, net of interest and transaction-based expenses | 27,005 | 21,788 |
Income (loss) before income taxes | ($44,106) | ($50,768) |
SEGMENT_AND_GEOGRAPHIC_INFORMA3
SEGMENT AND GEOGRAPHIC INFORMATION (Details 2) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 |
SEGMENT AND GEOGRAPHIC INFORMATION | ' | ' | ' |
Revenues: | $240,739 | $244,392 | ' |
Revenues, net of interest and transaction-based expenses: | 202,427 | 201,517 | ' |
Long-lived Assets, as defined: | 66,245 | ' | 66,145 |
United States | ' | ' | ' |
SEGMENT AND GEOGRAPHIC INFORMATION | ' | ' | ' |
Revenues: | 63,213 | 69,175 | ' |
Revenues, net of interest and transaction-based expenses: | 62,096 | 67,431 | ' |
Long-lived Assets, as defined: | 50,544 | ' | 49,987 |
United Kingdom | ' | ' | ' |
SEGMENT AND GEOGRAPHIC INFORMATION | ' | ' | ' |
Revenues: | 124,305 | 125,486 | ' |
Revenues, net of interest and transaction-based expenses: | 89,819 | 87,187 | ' |
Long-lived Assets, as defined: | 11,379 | ' | 11,762 |
Other | ' | ' | ' |
SEGMENT AND GEOGRAPHIC INFORMATION | ' | ' | ' |
Revenues: | 53,221 | 49,731 | ' |
Revenues, net of interest and transaction-based expenses: | 50,512 | 46,899 | ' |
Long-lived Assets, as defined: | $4,322 | ' | $4,396 |
SUBSEQUENT_EVENTS_Details
SUBSEQUENT EVENTS (Details) (Subsequent event, Dividend declared, USD $) | Apr. 30, 2014 |
Subsequent event | Dividend declared | ' |
SUBSEQUENT EVENTS | ' |
Cash dividend declared (in dollars per share) | $0.05 |