Knight Capital Group Announces Earnings From Continuing Operations Of $0.03 Per Diluted Share For The First Quarter 2013

PR Newswire/Les Echos/ 
Knight Capital Group Announces Earnings From Continuing Operations Of $0.03 
              Per Diluted Share For The First Quarter 2013 
Continuing operations generated first quarter 2013 revenues of $285.2 million 
                and pre-tax earnings of $17.9 million 
Results from continuing operations included $9.3 million in professional fees
related to the announced merger and August 1st technology issue as well as $8.9
million in compensation expenses related to a reduction in workforce 
JERSEY CITY, N.J., May 1, 2013 -- Knight Capital Group, Inc. (NYSE Euronext:
KCG) today reported a GAAP consolidated loss of $9.4 million, or $0.03 per
diluted share, for the first quarter of 2013. 
The first quarter 2013 GAAP net loss includes net income from continuing
operations of $11.0 million, or $0.03 per diluted share, as well as a net loss
from discontinued operations of $20.4 million, or a loss of $0.06 per diluted
share. Included in the net income from continuing operations are professional
fees related to the announced merger and August 1st technology issue and
compensation expenses related to a reduction in workforce. Excluding these
expenses, on a non-GAAP basis, the first quarter 2013 net income from continuing
operations was $22.3 million, or $0.06 per diluted share. A reconciliation of
GAAP to non-GAAP results is included below. 
For the first quarter of 2012, the company reported GAAP consolidated earnings
of $33.1 million, or $0.36 per diluted share. 
Revenues from continuing operations for the first quarter of 2013 were $285.2
million, compared to $302.5 million for the first quarter of 2012. 
At March 31, 2013, the company had $439.2 million in cash and cash equivalents.
The company had $1.5 billion in stockholders' equity as of March 31, 2013,
equivalent to a book value of $3.96 per share. The company had $1.5 billion in
stockholders' equity as of December 31, 2012, equivalent to a book value of
$4.07 per share (which included preferred shares on an as-converted basis).
Tangible book value as of March 31, 2013 was $3.25 per share as compared to
$3.30 at December 31, 2012 (which included preferred shares on an as-converted
basis). 
"In the first quarter of 2013, Knight's teams proved determined and our core
competencies resilient," said Thomas M. Joyce, Chairman and Chief Executive
Officer, Knight Capital Group. "Knight's comeback from the August 1st technology
issue remains impressive. During the first quarter, revenues from continuing
operations were strong despite a decline in consolidated U.S. equity volume year
over year and the lowest quarterly market volatility in more than five years.
Knight combined the full service and electronic institutional equities sales
teams, announced the sale of institutional fixed income, and merged the
Institutional Sales and Trading and Electronic Execution Services reporting
segments. At the same time, the firm was engaged in planning for the announced
merger with GETCO." 
In the first quarter of 2013, to better reflect the company's client offering,
changes in senior management, the combination of the institutional equities
sales teams and how the businesses are managed, the company changed its
reporting segments from (i) Market Making, (ii) Institutional Sales and Trading,
(iii) Electronic Execution Services, and (iv) Corporate and Other to (i) Market
Making, (ii) Global Execution Services and (iii) Corporate and Other. Market
Making consists of all global market making including Knight Link and the
company's activities as a Designated Market Maker at the NYSE. Global Execution
Services includes Knight Direct, equity sales and trading, Knight Hotspot FX,
Knight BondPoint, futures, reverse mortgage origination and securitization and
asset management. Corporate and Other includes strategic investments primarily
in financial services-related ventures, clearing and settlement activity,
corporate overhead expenses and all other expenses that are not attributable to
the other reporting segments. 
During the first quarter of 2013, the company agreed to sell institutional fixed
income sales and trading to Stifel, Nicolaus & Company, Inc. As a result, these
businesses are considered to be held for sale and the results of operations have
been reported as discontinued operations. Discontinued operations also include
the company's correspondent clearing business, which the company announced that
it was closing in the first quarter of 2013. 


                                                           Q1 2013     Q1 2012

Revenues ($ thousands)                                      285,156    302,472
Income from continuing operations, net of tax 
($ thousands)                                                11,014     31,220
(Loss) income from discontinued operations, net of tax 
($ thousands)                                               (20,371)     1,886
Net (loss) income ($ thousands)                              (9,357)    33,106
Diluted EPS from continuing operations - GAAP basis ($)        0.03       0.34
Diluted EPS from discontinued operations - GAAP basis ($)     (0.06)      0.02
Diluted EPS - GAAP basis($)                                   (0.03)      0.36
Diluted EPS from continuing operations - Non-GAAP basis($)*    0.06       0.34
U.S. equity Market Making statistics:                       
Average daily dollar value traded ($ billions)                 22.2       21.9
Average daily trades (thousands)                            2,973.3    3,334.6
Nasdaq and Listed shares traded (billions)                     43.0       47.3
FINRA OTC Bulletin Board and Other shares traded (billions)   183.1      171.2
Average revenue capture per U.S. equity dollar value 
traded (bps)                                                   1.00       0.99
Average daily Knight Direct equity shares (millions) 
(U.S. exchange listed shares)                                 184.6      182.7
Average daily Knight Hotspot FX notional dollar value 
traded ($ billions)**                                          27.8       27.8

* A reconcilation of GAAP to non-GAAP results is included below
** In the second quarter of 2012, Knight modified the reporting of Knight
Hotspot FX notional dollar value traded volume to count one side of the
transaction. The company previously counted total client volume to include both
sides of the transaction. The company posts Knight Hotspot FX volume statistics
each month to its web site, which has been updated to show one-sided volume
statistics dating back to the beginning of 2011.

Market Making
During the first quarter of 2013, the Market Making segment generated total
revenues of $150.7 million and pre-tax income of $36.6 million. In the first
quarter of 2012, Market Making reported total revenues of $152.2 million and
pre-tax income of $45.1 million. Market Making had pre-tax margins of 24 percent
in the first quarter of 2013 compared to pre-tax margins of 30 percent in the
first quarter of 2012. The results were impacted by a decrease in our volumes,
increases in payments for order flow, as well as the 26% decrease in volatility
as measured by the VIX.

"In the Market Making segment, Knight continued to execute," said Mr. Joyce.
"Knight maintained a decisive lead in market share of retail U.S. equity volume,
which helped offset a year-over-year decline in retail trading activity. In
aggregate, Knight's average daily U.S. equity dollar value traded and market
share of consolidated U.S. equity notional value traded increased slightly
compared to a year ago. Nevertheless, financial results were impacted by the
subdued volatility and trading expenses."

Global Execution Services

During the first quarter of 2013, the Global Execution Services segment
generated total revenues of $122.4 million and pre-tax income of $10.7 million.
In the first quarter of 2012, Global Execution Services generated total revenues
of $140.3 million and pre-tax income of $23.8 million. Global Execution Services
had pre-tax margins of 9 percent in the first quarter of 2013 compared to
pre-tax margins of 17 percent in the first quarter of 2012. The results were
impacted by a decline in client volumes as compared to the first quarter of 2012
as well as $4.4 million in additional compensation expense related to workforce
reductions associated with the combination of the full service and electronic
institutional equities sales teams. These decreases were partially offset by
increased earnings from Urban.

"In the Global Execution Services segment, Knight performed well amid the
reconfiguring of assets and resources," said Mr. Joyce. "Knight received diverse
contributions from the electronic trading products and sales and trading teams.
Urban made a strong contribution from origination and securitization activities.
Financial results from continuing operations for the segment, it's worth noting,
included additional expenses primarily related to the consolidation of
institutional equities sales."

Corporate and Other
During the first quarter of 2013, the Corporate and Other segment reported a
pre-tax loss of $29.4 million, which included $9.3 million in professional fees
related to the announced merger and the August 1st technology issue as well as
$4.3 million in additional compensation costs related to the workforce
reductions. In the first quarter of 2012, the Corporate and Other segment
reported a pre-tax loss of $17.9 million.

"Despite all the activities in the first quarter, Knight's attention never
wavered from our clients," said Mr. Joyce. "The pending merger with GETCO is
continuing on track. Upon the close, the combined firm will enjoy a leading
position in the U.S. equities market as well as a decided edge in understanding
the potential for all securities markets to better serve participants."

Headcount at March 31, 2013 was 1,269 full-time employees, which excludes
employees affected by the announced sale of institutional fixed income, compared
to 1,418 full-time employees at March 31, 2012. The decrease in headcount year
over year is primarily due to a reduction in workforce completed during the
first quarter.

During the first quarter of 2013, the company did not repurchase any shares
under the company's existing stock repurchase program. To date, the company has
repurchased 76.7 million share s for $879.1 million. The company has
approximately $120.9 million of availability to repurchase shares under the
program. The company cautions that there are no assurances that any further
repurchases may actually occur.

Non-GAAP Financial Presentations
The company believes that certain non-GAAP financial presentations, when taken
into consideration with the corresponding GAAP financial presentations, are
important in understanding the company's operating results. Selected financial
information is included in the company's nonGAAP financial presentations for the
three months ended March 31, 2013. The adjustments incorporate the effects of
professional fees related to the announced merger with GETCO and the August 1 st
technology issue and compensation expenses related to a reduction in workforce.
We believe this presentation provides meaningful information to stockholders and
investors as it provides comparability for our results of operations for the
three months ended March 31, 2013 with the results for the three months ended
March 31, 2012. See schedules below for a full reconciliation of GAAP to
non-GAAP financial presentations.

Copies of this earnings release and other company information can be obtained on
Knight's website, http://www.knight.com. In addition, historical volume
statistics are available at http://www.knight.com/ourfirm/volumestats.asp. Due
to the announced merger with GETCO LLC, Knight will not host a conference call
on the first quarter of 2013.

About Knight
Knight Capital Group (NYSE Euronext: KCG) is a global financial services firm
that provides access to the capital markets across multiple asset classes to a
broad network of clients, including broker-dealers, institutions and
corporations. Knight is headquartered in Jersey City, N.J. with a global
presence across the Americas, Europe, and the Asia Pacific regions. For further
information about Knight, please visit www.knight.com.

Certain statements contained herein may constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are typically identified by words such as "believe,"
"expect," "anticipate," "intend," "target," "estimate," "continue," "positions,"
"prospects" or "potential, " by future conditional verbs such as "will,"
"would," "should," "could" or "may", or by variations of such words or by
similar expressions. These "forward-looking statements" are not historical facts
and are based on current expectations, estimates and projections about the
parties' industry, management beliefs and certain assumptions made by
management, many of which, by their nature, are inherently uncertain and beyond
our control. Accordingly, readers are cautioned that any such forward-looking
statements are not guarantees of future performance and are subject to certain
risks, uncertainties and assumptions that are difficult to predict including,
without limitation, risks associated with the August 1, 2012 technology issue at
Knight that resulted in Knight sending numerous erroneous orders in NYSE-listed
and NYSE Arca securities into the market and the impact to Knight's capital
structure and business as well as actions taken in response thereto and
consequences thereof, costs and risks associated with the Company's sale of its
institutional fixed income sales and trading business , risks associated with
Knight's ability to recover all or a portion of the damages that are
attributable to the manner in which NASDAQ OMX handled the Facebook IPO, risks
associated with changes in market structure, legislative, regulatory or
financial reporting rules, risks associated with past or future changes to
organizational structure and management and the costs, integration, performance
and operation of businesses previously acquired or developed organically, or
that may be acquired or developed organically in the future. Readers should
carefully review the risks and uncertainties disclosed in Knight's reports with
the SEC, including, without limitation, those detailed under "Certain Factors
Affecting Results of Operations" and "Risk Factors" in the Company's Annual
Report on Form 10-K/A for the year-ended December 31, 2012 and in the other
reports or documents Knight or the new Knight/GETCO holding company files with,
or furnishes to, the SEC from time to time.

In addition to factors previously disclosed in Knight's reports filed with the
SEC and those identified elsewhere in this filing, the following factors among
others, could cause actual results to differ materially from forward-looking
statements or historical performance: ability to obtain regulatory approvals and
meet other closing conditions to the mergers, including appro val by Knight and
GETCO stockholders, on the expected terms and schedule; delay in closing the
mergers; difficulties and delays in integrating the Knight and GETCO businesses
or fully realizing cost savings and other benefits; business disruption
following the mergers; the inability to sustain revenue and earnings growth;
customer and client actions; and the inability to realize cost savings or
revenues or to implement integration plans and other consequences associated
with mergers, acquisitions and divestitures.

KNIGHT CAPITAL GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
                                                          For the three months
                                                             ended March 31, 
                                                          2013            2012
                                                         (In thousands, except
                                                           per share amounts)

Revenues
Commissions and fees                                 $ 125,225      $ 141,295
Net trading revenue                                    148,838        153,134
Interest, net                                            6,390          5,611
Investment income and other, net                         4,703          2,432
Total revenues                                         285,156        302,472

Expenses      
Employee compensation and benefits                     107,823        112,269
Execution and clearance fees                            50,450         52,330
Payments for order flow                                 35,093         21,688
Communications and data processing                      22,225         20,284
Interest                                                13,052         13,154
Professional fees                                       13,030          4,948
Depreciation and amortization                            9,709         11,577
Occupancy and equipment rentals                          5,398          5,388
Business development                                     3,973          4,214
Other                                                    6,499          5,522
Total expenses                                         267,252        251,374

Income from continuing operations 
before income taxes                                     17,904         51,098
Income tax expense                                       6,890         19,878
Income from continuing operations, net of tax           11,014         31,220
(Loss) income from discontinued operations, 
net of tax                                             (20,371)         1,886
Net (loss) income                                     $ (9,357)      $ 33,106
Basic earnings per share from continuing operations     $ 0.04         $ 0.35
Diluted earnings per share from continuing 
operations                                              $ 0.03         $ 0.34
Basic (loss) earnings per share from discontinued 
operations                                             $ (0.08)        $ 0.02
Diluted (loss) earnings per share from discontinued 
operations                                             $ (0.06)        $ 0.02
Basic (loss) earnings per share                        $ (0.04)        $ 0.37
Diluted (loss) earnings per share                      $ (0.03)        $ 0.36
Shares used in computation of basic (loss) 
earnings per share                                     253,007         89,764
Shares used in computation of diluted (loss) 
earnings per share                                     361,053         92,175

KNIGHT CAPITAL GROUP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
                                                     March 31,    December 31,
                                                         2013            2012 


                                                        (In thousands)
ASSETS 
Cash and cash equivalents                           $ 439,182      $ 413,926
Cash and securities segregated under 
federal and other regulations                         172,962        166,992
Financial instruments owned, at fair value:
Equities                                           1,538,856       1,463,916
Debt securities                                      146,518         111,157
Listed equity options                                231,044         202,091
Loan inventory                                       152,349         191,712
Other financial instruments                            3,778             237
Securitized HECM loan inventory                    4,792,350       4,054,905
Total financial instruments owned, at fair value   6,864,895       6,024,018
Collateralized agreements:                  
Securities borrowed                                 1,414,794      1,008,720
Receivable from brokers, dealers and clearing 
organizations                                       1,107,202        868,805
Fixed assets and leasehold improvements,
at cost, less accumulated depreciation and 
amortization                                           92,277         94,226
Investments                                            79,052         78,348
Goodwill                                              213,900        213,900
Intangible assets, less accumulated amortization       53,234         55,654
Income taxes receivable                               122,980        152,576
Assets of business held for sale                      145,674        449,509
Other assets                                          206,628        251,773 
Total assets                                     $ 10,912,780    $ 9,778,447 
LIABILITIES, CONVERTIBLE PREFERRED STOCK & EQUITY 
Liabilities
Financial
instruments sold, not yet purchased, 
at fair value:
Equities                                          $ 1,490,972    $ 1,164,999
Debt securities                                        56,478        118,991
Listed equity options                                 179,404        155,942
Other financial instruments                                 -          5,505
Total financial instruments sold, not yet 
purchased, at fair value                            1,726,854      1,445,437
Collateralized financings: 
Securities loaned                                    687,012         504,082
Financial instruments sold under agreements
to repurchase                                         555,000        355,000
Other secured financings                              104,461        146,330
Liability to GNMA trusts, at fair value             4,742,776      4,002,704
Total collateralized financings                     6,089,249      5,008,116
Payable to brokers, dealers and clearing 
organizations                                         403,998        378,724
Payable to customers                                  462,028        388,676
Accrued compensation expense                           64,891        141,794
Accrued expenses and other liabilities                201,663        186,746
Liabilities of business held for sale                  85,618        357,661
Long-term debt                                        392,470        388,753 
Total liabilities                                   9,426,771       8,295,907 
Convertible Preferred Stock                                 -         229,857 
Equity 
Class A common stock                                    4,493          2,748
Additional paid-in capital                          1,647,895      1,400,317
Retained earnings                                     701,264        710,621
Treasury stock, at cost                              (864,437)      (858,907)
Accumulated other comprehensive loss                   (3,206)        (2,096)
Total equity                                        1,486,009      1,252,683
Total liabilities, convertible preferred 
stock and equity                                 $ 10,912,780    $ 9,778,447 
KNIGHT CAPITAL GROUP, INC.
PRE-TAX EARNINGS FROM CONTINUING OPERATIONS BY BUSINESS SEGMENT* 
(In thousands)
(Unaudited) 
Market Making 


                                                          For the three months
                                                             ended March 31,
                                                           2013      2012 (1)

Revenues                                               $ 150,729    $ 152,166
Expenses                                                 114,178      107,035
Pre-tax earnings                                          36,551       45,131

Global Execution Services                              
Revenues                                                 122,373      140,270
Expenses                                                 111,656      116,425
Pre-tax earnings                                          10,717       23,845

Corporate and Other                   
Revenues                                                  12,054       10,036
Expenses                                                  41,417       27,914
Pre-tax loss                                             (29,363)     (17,878)

Consolidated                         
Revenues                                                 285,156      302,472
Expenses                                                 267,252      251,374
Pre-tax earnings                                        $ 17,904     $ 51,098

* Totals may not add due to rounding.

(1) - Prior period amounts have been recast to conform with current period 
      segment presentation.

KNIGHT CAPITAL GROUP, INC.

Regulation G Reconciliation of Non-GAAP financial measures (Continuing
operations)
(in thousands)


                                         Global
Three months                                Execution  Corporate
ended March 31, 2013         Market Making  Services   and Other  Consolidated 
Reconciliation of GAAP 
Pre-Tax to Non-GAAP Pre-Tax: 
GAAP Income (Loss) from 
continuing operations 
before income taxes            $ 36,551     $ 10,717  $ (29,363)    $ 17,904 
Prof essional fees related
to merger and August 1st 
technology issue                  -             -       9,252        9,252 
Compensation expenses 
related to reduction in 
workforce                        230          4,410     4,277        8,917 
Non GAAP Income (Loss) from
continuing operations before 
income taxes                   $ 36,781     $ 15,127  $ (15,834)   $ 36,073 


                                                          Three Months Ended
                                                            March 31, 2013
     
                                                       $   Diluted EPS

Reconciliation of GAAP Net Loss to Non - 
GAAP Net Income :
Net loss - GAAP                                       $ (9,357)      $ (0.03)
Add back: 


Loss from discontinued operations, net of tax           20,371          0.06

Prof essional fees related to merger and 
August 1st technology issue, net of tax                  5,736          0.02

Compensation expenses related to reduction 
in workforce, net of tax                                 5,529          0.02

Net income - Non-GAAP                                 $ 22,279        $ 0.06
Shares used in computation of diluted 
earnings per share                                                   361,053

* Totals may not add due to rounding



SOURCE Knight Capital Group, Inc. 
CONTACT: Jonathan Mairs, Managing Director, 201-356-1529, jmairs@knight.com 
                  
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-0- May/02/2013 10:20 GMT