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NOTE 19: BUSINESS SEGMENTS
The Company has two reportable business segments: wholesale securities market-making
and asset management. Domestic securities market-making primarily represents
market-making in U.S. equity securities listed on Nasdaq, on the OTCBB of
the NASD, in the over-thecounter market for NYSE- and AMEX-listed securities
and in U.S. options on individual equities, equity indices, fixed income
futures instruments and certain commodities. International securities market-making
includes market-making in equities in Europe and Japan and in options in
Europe. The asset management segment consists of investment management and
sponsorship for a private investment fund.
The Company’s net revenues, income before income taxes and minority
interest and assets by segment are summarized below:
| (1) |
The year ended December 31,
2001 includes $20.5 million in pre-tax non-operating charges, which
consists of a loss of $6.8 million on the writedown of fixed assets
and other capital costs related to excess real-estate capacity, $1.4
million related to estimated losses on the disposal of excess real
estate, a $10.7 million non-recurring charge relating to impaired
investments in non-public e-commerce companies and $1.6 million related
to a writedown of certain exchange seats. |
| (2) |
International market-making
includes costs incurred in the U.S. that are related to international
market-making businesses. In 2000 and 1999, KSIL was working under
a business model that provided for revenues to be earned from its
domestic affiliate (i.e., intra-segment revenues) based on a formula
derived from costs incurred. In 2001, KSIL’s business model was
modified, such that reported revenues were based on actual results. |
| (3) |
The years ended December 31,
2001, 2000 and 1999, include $5.5 million, $4.7 million and $2.3 million,
respectively, which primarily consists of revenues generated from
the Company’s investment in a private investment fund for which
Deephaven is the investment manager and sponsor. |
| (4) |
Intersegment balances primarily
represents asset management fees paid to Deephaven by certain of the
Company’s domestic market-making subsidiaries for management
services. |
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