27. SEGMENT AND GEOGRAPHIC INFORMATION

Segment Information

The Company operates within three business segments: Capital Markets, Asset Management, and Principal Investing. See note 1.

The accounting policies of the three segments are the same as those described in note 3.

The Company’s business segment information for the years ended December 31, 2012, 2011, and 2010 was prepared using the following methodologies and generally represents the information that was relied upon by management in its decision making processes:

(a) Revenues and expenses directly associated with each business segment are included in determining net income / (loss) by business segment.

(b) Indirect expenses (such as general and administrative expenses including executive and indirect overhead costs) not directly associated with specific business segments are not allocated to the business segments’ statements of operations. Accordingly, the Company presents business segment information consistent with internal management reporting. See note (1) in the table below for more detail on unallocated items. The following tables present the financial information for the Company’s business segments for the periods indicated.

During 2012, the Company reclassified the investment in certain equity method affiliates as well as the income / (loss) from these equity method affiliates from the Principal Investing business segment to the Asset Management business segment. Relevant prior period amounts have been reclassified to conform to the current period presentation.


As of and for the year ended December 31, 2012	Capital Markets			Asset Management		Principal Investing			Segment Total			Unallocated (1)			Total
Summary statement of operations
Net trading	$	69,486		$	—	$	—		$	69,486		$	—		$	69,486
Asset management		—			23,172		—			23,172			—			23,172
New issue and advisory		6,021			—		—			6,021			(1,000	)		5,021
Principal transactions and other income		166			894		(3,499	)		(2,439	)		—			(2,439	)

Total revenues		75,673			24,066		(3,499	)		96,240			(1,000	)		95,240
Total operating expenses		74,595			8,690		347			83,632			11,313			94,945

Operating income / (loss)		1,078			15,376		(3,846	)		12,608			(12,313	)		295
Income / (loss) from equity method affiliates		—			3,309		1,743			5,052			—			5,052
Other non operating income / (expense)		(3,554	)		—		—			(3,554	)		(4,449	)		(8,003	)

Income / (loss) before income taxes		(2,476	)		18,685		(2,103	)		14,106			(16,762	)		(2,656	)
Income tax expense / (benefit)		49			—		—			49			(664	)		(615	)

Net income / (loss)		(2,525	)		18,685		(2,103	)		14,057			(16,098	)		(2,041	)
Less: Net income / (loss) attributable to the non-controlling interest		(216	)		—		—			(216	)		(857	)		(1,073	)

Net income / (loss) attributable to IFMI	$	(2,309	)	$	18,685	$	(2,103	)	$	14,273		$	(15,241	)	$	(968	)

Other statement of operations data:
Depreciation and amortization (included in total operating expense)	$	859		$	17	$	—		$	876		$	429		$	1,305

Balance sheet data:
Total assets (2) (3)	$	279,863		$	7,257	$	39,741		$	326,861		$	14,140		$	341,001

Investment in equity method affiliates (included in total assets)	$	—		$	493	$	1,417		$	1,910		$	—		$	1,910


As of and for the year ended December 31, 2011	Capital Markets			Asset Management		Principal Investing			Segment Total			Unallocated (1)			Total
Summary statement of operations
Net trading	$	73,167		$	—	$	—		$	73,167		$	—		$	73,167
Asset management		—			21,698		—			21,698			—			21,698
New issue and advisory		3,585			—		—			3,585			—			3,585
Principal transactions and other income		199			1,316		366			1,881			—			1,881

Total revenues		76,951			23,014		366			100,331			—			100,331
Total operating expenses		79,986			6,017		690			86,693			31,803			118,496

Operating income / (loss)		(3,035	)		16,997		(324	)		13,638			(31,803	)		(18,165	)
Income / (loss) from equity method affiliates		(204	)		5,329		1,107			6,232			—			6,232
Other non operating income / (expense)		386			—		—			386			(6,329	)		(5,943	)

Income / (loss) before income taxes		(2,853	)		22,326		783			20,256			(38,132	)		(17,876	)
Income tax expense / (benefit)		—			—		—			—			(1,149	)		(1,149	)

Net income / (loss)		(2,853	)		22,326		783			20,256			(36,983	)		(16,727	)
Less: Net income / (loss) attributable to the non-controlling interest		(1,768	)		—		—			(1,768	)		(5,571	)		(7,339	)

Net income / (loss) attributable to IFMI	$	(1,085	)	$	22,326	$	783		$	22,024		$	(31,412	)	$	(9,388	)

Other statement of operations data:
Depreciation and amortization (included in total operating expense)	$	596		$	15	$	—		$	611		$	1,627		$	2,238

Balance sheet data:
Total assets (2) (3)	$	352,817		$	7,972	$	47,696		$	408,485		$	12,105		$	420,590

Investment in equity method affiliates (included in total assets)	$	—		$	1,150	$	4,926		$	6,076		$	—		$	6,076


As of and for the year ended December 31, 2010	Capital Markets			Asset Management		Principal Investing		Segment Total		Unallocated (1)			Total
Summary statement of operations
Net trading	$	70,809		$	—	$	—	$	70,809	$	—		$	70,809
Asset management		—			25,281		—		25,281		—			25,281
New issue and advisory		3,778			—		—		3,778		—			3,778
Principal transactions and other income		(125	)		475		25,334		25,684		—			25,684

Total revenues		74,462			25,756		25,334		125,552		—			125,552
Total operating expenses		56,313			20,711		2,261		79,285		37,525			116,810

Operating income / (loss)		18,149			5,045		23,073		46,267		(37,525	)		8,742
Income / (loss) from equity method affiliates		—			5,621		263		5,884		—			5,884
Other non operating income / (expense)		—			970		—		970		(5,130	)		(4,160	)

Income / (loss) before income taxes		18,149			11,636		23,336		53,121		(42,655	)		10,466
Income tax expense / (benefit)		—			—		—		—		(749	)		(749	)

Net income / (loss)		18,149			11,636		23,336		53,121		(41,906	)		11,215
Less: Net income / (loss) attributable to the non-controlling interest		—			—		—		—		3,620			3,620

Net income / (loss) attributable to IFMI.	$	18,149		$	11,636	$	23,336	$	53,121	$	(45,526	)	$	7,595

Other statement of operations data:
Depreciation and amortization (included in total operating expense)	$	—		$	600	$	—	$	600	$	1,756		$	2,356

Balance sheet data:
Total assets (2)	$	200,207		$	26,069	$	43,481	$	269,757	$	36,990		$	306,747

Investment in equity method affiliates (included in total assets)	$	—		$	502	$	1,604	$	2,106	$	—		$	2,106

(1)

Unallocated includes certain expenses incurred by indirect overhead and support departments (such as the executive, finance, legal, information technology, human resources, risk, compliance, and other similar overhead and support departments). Some of the items not allocated include: (1) operating expenses (such as cash compensation and benefits, equity-based compensation expense, professional fees, travel and entertainment, consulting fees, and rent) related to support departments excluding certain departments that directly support the Capital Markets business segment; (2) interest expense on debt; and (3) income taxes. Management does not consider these items necessary for an understanding of the operating results of these business segments and such amounts are excluded in business segment reporting to the Chief Operating Decision Maker. During the third quarter of 2012, PrinceRidge (Capital Markets business segment) entered into an intercompany engagement with CCFL (Asset Management business segment). This intercompany transaction was eliminated in the unallocated segment.

(2)

Unallocated assets primarily include (1) amounts due from related parties; (2) furniture and equipment, net; and (3) other assets that are not considered necessary for an understanding of business segment assets and such amounts are excluded in business segment reporting to the Chief Operating Decision Maker.

(3)	Goodwill and intangible assets as of December 31, 2012 and 2011 are allocated to the Capital Markets and Asset Management business segments as indicated in the table listed below.

As of December 31, 2012:


	Capital Markets		Asset Management		Principal Investing		Segment Total		Unallocated		Total
Goodwill	$	7,937	$	3,176	$	—	$	11,113		—	$	11,113
Intangible assets (included in other assets)	$	332		—		—	$	332		—	$	332

As of December 31, 2011:


	Capital Markets		Asset Management		Principal Investing		Segment Total		Unallocated		Total
Goodwill	$	8,030	$	3,176	$	—	$	11,206		—	$	11,206
Intangible assets (included in other assets)	$	538		—		—	$	538		—	$	538

Asset management total operating expenses included an impairment charge of $0, $0, and $5,607 for the years ended December 31, 2012, 2011, and 2010, respectively, related to the impairment of goodwill allocated to the Cira SCM reporting unit. See note 12.

Geographic Information

The Company conducts its business activities through offices in the following locations: (1) United States, and (2) United Kingdom and other. Total revenues by geographic area are summarized as follows:

GEOGRAPHIC INFORMATION

(Dollars in Thousands)


	Year ended December 31,
	2012		2011		2010
Total Revenues:
United States	$	78,597	$	90,475	$	111,067
United Kingdom & Other		16,643		9,856		14,485

	$	95,240	$	100,331	$	125,552

Long-lived assets attributable to an individual country, other than the United States, are not material.