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As Of Filer Filing For·On·As Docs:Size Issuer Agent 9/10/07 Knight Capital Group, Inc. 8-K:7,9 9/10/07 2:1.3M RR Donnelley/FA |
Document/Exhibit Description Pages Size 1: 8-K Current Report HTML 22K 2: EX-99.1 Slide Presentation for Analysts Conference on HTML 247K September 10, 2007.
Slide Presentation for Analysts Conference on September 10, 2007. |
Lehman Brothers Financial Services Conference New York City Thomas M. Joyce Chairman and CEO Knight Capital Group, Inc. * * * Exhibit 99.1 |
1 Safe Harbor Certain statements contained in this presentation, including without limitation, those containing the words “believes,” “intends,” “expects,” “anticipates” and words of similar import, may constitute forward-looking statements
as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not historical facts and are based on current expectations, estimates and projections about the Company’s industry, management’s beliefs and
certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, viewers 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. Since such statements involve risks and uncertainties, the actual results and performance of the Company may turn out to be materially different
from the results expressed or implied by such forward- looking statements. Given these uncertainties, viewers are cautioned not to place undue reliance on such forward-looking statements. Unless otherwise required by law, the Company also
disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made in this presentation. Viewers should carefully review the
risks and uncertainties detailed in the Company's Annual Report on Form 10-K and in other reports or documents the Company files from time to time with the Securities and Exchange Commission, including, without limitation, under
such headings as “Risk Factors” and “Certain Factors Affecting Results of Operations” in the Company's Annual Report on Form 10-K for the year-ended 31, 2006 and in the Company’s Quarterly Report on
Form 10-Q for the three months ended 30, 2007 and in other reports or documents the Company files from time to time with the Securities and Exchange Commission. Other risk factors include those
associated with the determination made by the Company, at its sole discretion, that if a Deephaven fund with a six-month performance period incurs losses in the performance period ending 31, 2007, Deephaven
will return all or a portion of the incentive allocation fees collected from investors in that fund for the six-month performance period ended 30, 2007, and the potential adverse impact on the Company's
results of operations. This presentation should also be analyzed in conjunction with the Company’s Consolidated Financial Statements and the Notes thereto contained in the Company’s Annual Report on Form 10-K and in other reports
or documents the Company files from time to time with the Securities and Exchange Commission. Regulation G In an effort to provide investors with additional information regarding the Company's results as determined by generally accepted
accounting principles (GAAP), the Company also discloses certain non-GAAP information which management believes provides useful information to investors. Within this presentation, the Company has disclosed its pre-tax operating income (loss) amounts for certain
reporting periods before certain non-cash expenses, charges, writedowns, lease loss accruals and discontinued operations to assist the viewer in understanding the impact of these certain non-cash expenses, charges, writedowns, lease loss accruals and
discontinued operations on the Company's financial results, which management believes will facilitate more useful period-to-period comparisons of the Company's businesses. Safe Harbor and Regulation G |
2 Knight Capital Group, Inc. (KCG) At Knight, trading is not a commodity. It is a science. • KCG is a leading financial services firm that provides access to the capital markets across multiple asset classes for buy-side, sell-side and
corporate clients, and asset management for institutions and private clients. – Our Global Markets segment offers superior execution quality through natural liquidity, capital facilitation and trading technology, with comprehensive products and services that support the capital formation process. – Our Asset Management segment, Deephaven Capital Management, is a global multi-strategy alternative investment
manager focused on delivering attractive risk-adjusted returns with low correlation to the broader markets. – Our Corporate segment covers strategic investments in complementary ventures, returns on investments in the Deephaven funds and corporate overhead expenses. |
3 KCG: Revenues By Segment 0 100 200 300 400 500 600 700 800 900 1,000 2002 2003 2004 2005 2006 YTD 6/30/07 Global Markets Asset Management Corporate |
4 KCG: Pre-Tax Operating Earnings & Margins -50 0 50 100 150 200 250 300 2002 2003 2004 2005 2006 YTD 6/30/07 -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% Pre-tax Operating Earnings Pre-tax Operating Margins |
5 • Market-making or trading in nearly every U.S. equity – Greater share volume than any U.S. exchange – Additional asset classes including international equities, foreign exchange, futures, options and fixed income • Customized connectivity for more than 2,000 market participants covering the sell-side and buy-side – Broker-dealers, institutions and issuers • Suite of complementary products and services to support the capital formation process – Client
solutions include commission management, private placement, capital placement and portfolio financing • Superior client service – One of the largest client service desks serving broker-dealers – One of the top voice businesses on Wall Street with 80+ sales traders serving institutional clients Global Markets Segment: Overview |
7 Global Markets Segment: Growth in Avg Daily Volume 0 1 2 3 4 5 6 7 8 9 10 2002 2003 2004 2005 2006 YTD 6/30/07 Average Daily Volume Statistics Trades (millions) Shares (millions) U.S. Equity Dollar Value (in $ billions) |
8 Global Markets Segment: Exchange-Like Footprint 0 1 2 3 4 5 6 2002 2003 2004 2005 2006 YTD 6/30/07 Average Daily Shares Traded (in billions) vs. NYSE, NASDAQ Knight NYSE NASDAQ Source: SIFMA |
9 Global Markets Segment: Revenue Capture Vs. Operating Margins 1.5 1.7 1.9 2.1 2.3 2.5 2.7 2.9 2002 2003 2004 2005 2006 YTD 6/30/07 -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% Revenue Capture (bps) Pre-Tax Operating Margins |
10 Global Markets Segment: Electronic Products Revenue Contribution 2.8% 6.8% 11.5% 18.7% 28.8% 41.5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 2002 2003 2004 2005 2006 YTD 6/30/07 Electronic Revenues as a % of Global Markets Revenues |
11 • Alternative investment manager serving qualified institutions and private clients • A total of six multi- and single-strategy funds – Blended returns competitive with the market neutral average – The Deephaven Global Multi-Strategy Fund was founded in 1994 and has a long track record of solid performance • AUM of $4.0 billion as of
30, 2007, up from $1.2 billion as of • Experienced management team • No direct exposure to the sub-prime market Asset Management Segment: Deephaven Capital Management |
12 Asset Management Segment: Deephaven Growth & Expansion 3,067.4 1,476.6 1,598.0 1,693.3 333.3 1,025.3 2,103.8 1,556.1 542.0 367.1 210.5 739.9 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 Global Multi-Strategy Fund Event Fund
Standalone Strategy Funds 2004 2005 2006 6/30/07 Diversified Offering: Global Multi-Strategy Global Event-Driven European Credit-Driven European Event-Driven Global Value Partners International Volatility Blended Returns: • 2004: 6.5% • 2005: 7.2% • 2006: 22.8% • 2007: 4.9% (as of 6/30/07) |
13 • Knight filed a Form 8-K on August 27 th , specifying that if a Deephaven fund with a six-month performance period incurs losses in the performance period ending December 31, 2007, Deephaven will return all or a portion of the incentive allocation fees collected from investors in that
fund for the six-month performance period ended 30, 2007. • On August 28 th , Knight issued a media statement in response to significant inaccuracies contained in press reports on the performance of Deephaven funds. – To clarify, Deephaven recently
notified its investors in the funds below of the following preliminary unaudited fund return estimates as of close of business on Friday, August 24, 2007: • Deephaven's flagship Global Multi-Strategy Fund LLC and Global Multi-Strategy
Fund Ltd. were down an estimated 2.24% and 2.23%, respectively, for August month-to-date. • Deephaven's Event Fund LLC and Event Fund Ltd. were down an estimated 4.16% and 4.18%, respectively, for August month-to-date. – Additionally,
Deephaven recently notified its investors in the funds below of the following preliminary unaudited fund return estimates as of the close of business of 31, 2007: • The Global Multi-Strategy Fund LLC and Global Multi-Strategy Fund Ltd. were up
6.80% and 6.68%, respectively, on a year-to-date basis. • The Event Fund LLC and Event Fund Ltd. were up 3.58% and 2.99%, respectively, on a
year-to-date basis. Asset Management Segment: Deephaven Fund Performance The above information does not constitute an offer or solicitation.
|
14 KCG: Revenue Diversification Accomplishment 9% 3% 19% 68% Commissions and fees Net trading revenue Asset management fees Interest, net Investment income and other 2002 YTD 6/30/07 2% 4% 20% 26% 48% Commissions and fees Net trading revenue Asset management fees Interest, net Investment income and other |
15 • Global Markets – Broker-dealer strong performance contribution continues following 2005 restructuring, successful order flow profitability analysis and expanded use of
algorithms – Institutional growth driven by voice relationship team, expanded electronic products offering and cross-selling – Increased order flow from alternative liquidity providers – New revenue sources from asset class diversification in electronic products • Asset Management – Ongoing fund diversification – Long-term secured
with Deephaven management – Expanded operations in London and Hong Kong • Corporate – Sale of minority equity stake in Direct Edge ECN to Citadel – Pending sale of minority equity stake in Direct Edge ECN to Goldman Sachs KCG: Recent Accomplishments |
16 • Consolidated YTD pre-tax margins of 21% as of June 30, 2007 • Balance sheet as of June 30, 2007: – $126 million in cash – Over $300 million in available capital – Stockholder’s equity of $965 million – Debt-free balance sheet – Book value per share of $9.41 • Stock repurchase program as of August 9, 2007
– Repurchased 50.8 million shares for $511 million since inception – $489 million remaining under the current program • Acquisitions – Five deals totaling just over $200 million since 2002 – Diversified into new asset classes KCG: Strong Financial Condition |
17 • Diversify and expand Global Markets offering • Leverage automation efforts • Increase cross-selling • Grow assets under management • Pursue strategic acquisitions • Continue stock repurchase program KCG: 2007 Key Initiatives |
20 Reconciliation of GAAP Income to Non-GAAP Operating Income $ 265 $ 31 $ 75
$ 159 Pre-Tax Operating Income 9 - - 9 Writedown of assets and lease loss accrual $ 257 $ 31 $ 75
$ 150 Income from continuing operations before income taxes Consolidated Corporate Asset Management Global Markets 2006 $ 93
$ 1
$
25 $ 67
Pre-Tax Operating Income (2) - - (2) Writedown of assets and lease loss accrual $ 95
$ 1
$
25 $ 69
Income from continuing operations before income taxes Consolidated Corporate Asset Management Global Markets 6 Months ending June 30, 2007 |
21 Reconciliation of GAAP Income to Non-GAAP Operating Income $ 83
$ (17)
$ 30
$ 70
Pre-Tax Operating Income (Loss) 79 - - 79 Regulatory charges and related matters 4 4 Writedown of assets and lease loss accrual $
(0) $ (17)
$ 30
$ (13)
(Loss) income from continuing operations before income taxes Consolidated Corporate Asset Management Global Markets 2004 $ 121 $ 49 $ 27
$ 45 Pre-Tax Operating Income 6 - 6 - Regulatory charges and related matters 10 - - 10 Writedown of assets and lease loss accrual $ 105 $ 49 $ 21
$ 35 Income from continuing operations before income taxes Consolidated Corporate Asset Management Global Markets 2005 |
22 Reconciliation of GAAP Income to Non-GAAP Operating Income $ (17)
$ (27) $ 16
$ (7) Pre-Tax Operating Income (Loss) 47 3 - 44 Writedown of assets and lease loss accrual $ (64)
$ (29) $ 16
$ (50) Income (loss) from continuing operations before income taxes Consolidated Corporate Asset Management Global Markets 2002 $ 100 $ (1)
$ 30
$ 72
Pre-Tax Operating Income (Loss) 17 - - 17 Writedown of assets and lease loss accrual $ 84
$
(1) $ 30
$ 55 Income (loss) from continuing operations before income taxes Consolidated Corporate Asset Management Global Markets 2003 |
This ‘8-K’ Filing | Date | Other Filings | ||
---|---|---|---|---|
12/31/07 | 10-K | |||
Filed on / For Period End: | 9/10/07 | |||
8/24/07 | ||||
8/9/07 | 10-Q | |||
7/31/07 | ||||
6/30/07 | 10-Q | |||
12/31/06 | 10-K | |||
12/31/02 | 10-K | |||
List all Filings |