CHICAGO, Aug. 1, 2014
/PRNewswire/ -- CBOE Holdings, Inc. (NASDAQ: CBOE) today reported
net income allocated to common stockholders of $42.6 million, or $0.50 per diluted share, for the second quarter
of 2014, compared with $45.5 million,
or $0.52 per diluted share, in the
second quarter of 2013. On an adjusted basis, net income
allocated to common stockholders was $42.6
million, or $0.50 per diluted
share, compared with $47.0 million,
or $0.54 per diluted share, in the
same period last year. Operating revenue for the quarter was
$143.9 million, down 5 percent
compared with $150.8 million in the
second quarter of 2013.
There were no non-GAAP adjustments for the second quarter of
2014. Financial results presented on an adjusted basis for
the second quarter of 2013 exclude certain items, including
accelerated stock-based compensation and certain other expenses,
which are detailed in the reconciliation of non-GAAP results.
"While second-quarter results reflected lackluster trading
volume industry-wide and muted market volatility, CBOE posted solid
financial results and continued to deliver long-term value, both to
our shareholders and market participants," said Edward T. Tilly, CBOE Holdings Chief Executive
Officer. "We were pleased to increase our quarterly dividend
as well as our share repurchase authorization and are very
encouraged with the response to our extended trading hours for VIX
futures, which now trade nearly 24 hours a day, five days a
week. Moreover, we continued to advance our strategic growth
initiatives so that CBOE is well positioned to benefit in more
favorable market conditions."
"During the second quarter, we generated $33 million in cash flow from operations and
returned $73 million in cash to
shareholders through dividends and share repurchases. This
brings our cumulative return of capital to nearly $975 million since 2010," said Alan J. Dean, CBOE Holdings Executive Vice
President and Chief Financial Officer. "We remain focused on
creating value for our shareholders and are pleased that our strong
cash flow generation allows us to both invest in our business and
increase cash returned to shareholders."
(1)
|
A full reconciliation
of our non-GAAP results to our GAAP results for the 2014 and 2013
reporting periods is included in the attached tables. See "Non-GAAP
Information" in the accompanying financial tables.
|
Key Statistics and Financial Highlights
The table below highlights CBOE Holdings' operating results on a
GAAP basis and an adjusted basis for the comparative quarters ended
June 30, 2014 and 2013. Financial results presented on
an adjusted basis provide supplemental information to facilitate
period-over-period comparisons by adjusting for certain items that
management believes are not indicative of the company's core
operating performance.
(in millions,
except per share, revenue per contract and trading
days)
|
2Q
2014
|
2Q
2013
|
Y/Y
Change
|
YTD
2014
|
YTD
2013
|
Y/Y
Change
|
Key
Statistics:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Trading
Days
|
63
|
64
|
|
|
124
|
124
|
|
Average Daily Volume
(options and futures)
|
4.83
|
4.96
|
(3%)
|
5.22
|
4.67
|
12%
|
Total Trading Volume
(options and futures)
|
304.4
|
317.4
|
(4%)
|
647.2
|
579.3
|
12%
|
Average Revenue Per
Contract
|
$
|
0.322
|
$
|
0.334
|
(4%)
|
$
|
0.326
|
$
|
0.354
|
(8%)
|
GAAP Financial
Highlights:
|
|
|
|
|
|
|
|
|
|
Total Operating
Revenues
|
$
|
143.9
|
$
|
150.8
|
(5%)
|
$
|
301.8
|
$
|
293.5
|
3%
|
Total Operating
Expenses
|
74.2
|
75.4
|
(2%)
|
150.1
|
148.7
|
1%
|
Operating
Income
|
69.7
|
75.4
|
(8%)
|
151.7
|
144.8
|
5%
|
Operating Margin
%
|
48.4%
|
50.0%
|
(160) bps
|
50.3%
|
49.3%
|
100 bps
|
Net Income
|
$
|
43.0
|
$
|
46.2
|
(7%)
|
$
|
92.0
|
$
|
88.5
|
4%
|
Net Income Allocated
to Common Stockholders
|
$
|
42.6
|
$
|
45.5
|
(6%)
|
$
|
91.1
|
$
|
87.3
|
4%
|
Diluted
EPS
|
$
|
0.50
|
$
|
0.52
|
(4%)
|
$
|
1.06
|
$
|
1.00
|
6%
|
Weighted Average
Shares Outstanding
|
85.8
|
87.3
|
(2%)
|
86.1
|
87.3
|
(1%)
|
Adjusted Financial
Highlights (1)
|
|
|
|
|
|
|
|
|
|
Total Operating
Expenses
|
$
|
74.2
|
$
|
73.6
|
1%
|
$
|
147.5
|
$
|
143.7
|
3%
|
Operating
Income
|
69.7
|
77.2
|
(10%)
|
154.3
|
149.8
|
3%
|
Operating Margin
%
|
48.4%
|
51.2%
|
(280) bps
|
51.1%
|
51.0%
|
10 bps
|
Net Income
|
$
|
43.0
|
$
|
47.7
|
(10%)
|
$
|
93.5
|
$
|
92.1
|
2%
|
Net Income Allocated
to Common Stockholders
|
$
|
42.6
|
$
|
47.0
|
(9%)
|
$
|
92.6
|
$
|
90.8
|
2%
|
Diluted
EPS
|
$
|
0.50
|
$
|
0.54
|
(7%)
|
$
|
1.08
|
$
|
1.04
|
4%
|
|
|
(1)
|
A full reconciliation
of our non-GAAP results to our GAAP results for the 2014 and 2013
reporting periods is included in the attached tables. See "Non-GAAP
Information" in the accompanying financial tables.
|
Revenues
Operating revenue was $143.9
million in the second quarter of 2014, down $6.9 million, or 5 percent, from $150.8 million in the second quarter of
2013. The decrease primarily reflects lower revenue of
$8.2 million in transaction fees and
$0.7 million in regulatory fees,
offset somewhat by an increase of $2.1
million in market data fees.
Transaction fees decreased 8 percent in the quarter driven by a
4 percent decrease in trading volume and a 4 percent decrease in
the average revenue per contract (RPC) compared with the second
quarter of 2013. Additionally, this year's second quarter had
one less trading day versus last year's second quarter. Total
trading volume in the second quarter was 304.4 million contracts,
or 4.83 million contracts per day, compared with volume of 317.4
million contracts, or 4.96 million contracts per day, in last
year's second quarter. RPC was $0.322 compared with $0.334 in the second quarter of 2013.
The decrease in RPC primarily resulted from a shift in the mix
of products traded and higher volume-based incentives in the second
quarter of 2014 for certain multiply-listed options (options on
equities and exchange-traded products). Lower-margin,
multiply-listed options accounted for 66.1 percent of trading
volume in the second quarter of 2014 compared to 65.3 percent in
the second quarter of 2013. Higher margin, index options and
futures contracts accounted for 33.9 percent of trading volume in
the quarter compared with 34.7 percent in the second quarter of
2013.
The average revenue per contract represents total transaction
fee revenue divided by total reported trading volume for
Chicago Board Options Exchange
(CBOE), C2 Options Exchange (C2) and CBOE Futures Exchange
(CFE®).
Adjusted Operating Expenses
Adjusted operating expenses were $74.2
million for the quarter, up $0.6
million, or 1 percent, compared with $73.6 million in the second quarter of
2013. There were no adjustments in the second quarter of
2014. For the second quarter of 2013, adjusted operating
expenses exclude $0.8 million of
accelerated stock-based compensation and $1.0 million of additional expense for the final
resolution of an SEC investigation.
The company's core operating expenses, which include total
operating expenses less volume-based expenses, depreciation and
amortization, accelerated stock-based compensation expense and
unusual or one-time expenses, were $48.5
million for the second quarter of 2014, down $1.1 million, or 2 percent, compared with last
year's second quarter. The decline in core operating expenses
primarily reflects a $1.7 million
decrease in outside services, offset somewhat by increases of
$0.3 million and $0.4 million in facilities costs and other
expenses, respectively.
Volume-based expenses, which include royalty fees and trading
volume incentives, were $15.8 million
in the second quarter of 2014, an increase of $0.4 million, or 3 percent, compared with the
same period last year. This increase resulted from royalty
fees and trading volume incentives each increasing by $0.2 million. The increase in royalty fees
primarily resulted from higher expenses for fees linked to order
flow for certain multiply-listed options and fees related to market
data sales.
Operating Margin
The company reported an adjusted operating margin of 48.4
percent for the second quarter of 2014 compared with 51.2 percent
for the second quarter of 2013. Margins declined by 280 basis
points this quarter, primarily due to lower operating
revenue.
Effective Tax Rate
The company reported an effective tax rate of 38.1 percent for
the quarter versus 38.4 percent in last year's second
quarter. Year to date, the company's effective tax rate is
39.0 percent, in line with its guidance range for the full-year
2014 of 38.5 percent to 39.5 percent.
Operational Highlights and Recent Developments
- On July 10, CFE reported record
trading volume in VIX futures during non-U.S. trading hours, when
59,650 contracts traded from Wednesday afternoon to Thursday
morning.
- On July 7, CBOE introduced
PM-settled, End-of-Month options series (EOM) -- with expiration
dates falling on the last business day of the month -- for its
S&P 500® Index
(SPXSM) options.
- On June 22, CFE further expanded
its trading hours for CBOE Volatility Index® (VIX® index) futures to
nearly 24 hours a day, five days a week to accommodate Asian market
hours and to provide a growing worldwide user base even greater
access and flexibility in trading VIX futures.
- On April 10, CBOE began trading
CBOE Short-Term Volatility IndexSM
(VXSTSM Index or "Short-Term VIX
Index") options with weekly expirations.
2014 Fiscal Year Financial Guidance
The company announced that, in light of the subdued trading
volumes, it is taking steps to reduce expenses. Based on
these actions and year-to-date results, the company is lowering its
guidance for core operating expenses for the 2014 fiscal
year. The company now expects core expenses to be in the
range of $186.0 million to $190.0
million, down from its previous guidance of $191.0 million to $196.0 million.
The company reaffirmed its financial guidance for the 2014
fiscal year for the following:
- Continuing stock-based compensation expense included in core
expenses is expected to be approximately $13.0 million for the full year.
- Capital expenditures are expected to be in the range of
$47.0 million to $50.0 million.
- Depreciation and amortization expense is expected to be in the
range of $38.0 million to $40.0
million.
- Adjusted effective tax rate for the full-year 2014 is expected
to be in the range of 38.5 percent to 39.5 percent. The most
significant differences in the adjusted effective rate and the
statutory rate are state income taxes and discrete items relating
to the current period. Significant changes in trading volume,
expenses, state and local tax rates and other items, including
ongoing state and federal tax audits, could materially impact this
expectation.
Return of Capital to Stockholders
As announced on July 30, 2014,
CBOE Holdings' Board of Directors increased the company's quarterly
dividend by 17 percent to $0.21 per
share and authorized an additional $100
million for its share repurchase program. This new
authorization will be in addition to any unused amount remaining
under the company's existing share repurchase authorizations.
The dividend increase is effective with the third quarter
dividend, payable September 19, 2014,
to stockholders of record as of August
29, 2014.
During the second quarter of 2014, the company repurchased
1,011,178 shares of its common stock under its share repurchase
program at an average price of $50.57
per share, for a total of $51.1
million. Year to date, the company has repurchased
1,712,046 shares of its common stock under its share repurchase
program at an average price of $51.56
per share, for a total of $88.3
million.
Since the inception of its share repurchase program in 2011
through June 30, 2014, the company has repurchased 6,351,870
shares of its common stock at an average price of $36.26 per share, for a total of $230.3 million.
At July 30, 2014, the company had
approximately $150.2 million of
availability remaining under its existing share repurchase
authorizations.
Earnings Conference Call
Executives of CBOE Holdings will host a conference call to
review its second quarter financial results today, August 1,
2014, at 8:30 a.m. ET/7:30 a.m. CT. The conference call and any
accompanying slides will be publicly available via live webcast
from the Investor Relations section of the company's website at
www.cboe.com under Events & Presentations. Participants
may also listen via telephone by dialing (877) 372-0876 from
the United States or Canada, or (253) 237-1167 for international
callers. Telephone participants should place calls 10 minutes
prior to the start of the call. The webcast will be archived
on the company's website for replay. A telephone replay of
the earnings call also will be available from approximately
11:00 a.m. CT, August 1, 2014,
through 11:00 p.m. CT, August 8, 2014, by calling (855) 859-2056 within
the U.S. and Canada, or (404)
537-3406 for international callers, using replay code 68813605.
About CBOE Holdings
CBOE Holdings, Inc. (NASDAQ: CBOE) is the holding company for
Chicago Board Options Exchange
(CBOE), CBOE Futures Exchange (CFE) and other subsidiaries.
CBOE, the largest U.S. options exchange and creator of listed
options, continues to set the bar for options and volatility
trading through product innovation, trading technology and investor
education. CBOE Holdings offers equity, index and ETP options,
including proprietary products, such as S&P 500 options (SPX),
the most active U.S. index option, and options and futures on the
CBOE Volatility Index (the VIX Index). Other products engineered by
CBOE include equity options, security index options, Weeklys
options, LEAPS options, FLEX options, and benchmark products such
as the CBOE S&P BuyWrite Index (BXM). CBOE Holdings is home to
the world-renowned Options Institute and www.cboe.com, the go-to
place for options and volatility trading resources.
Forward-Looking Statements
This press release may contain forward-looking statements,
within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements are those statements that
reflect our expectations, assumptions or projections about the
future and involve a number of risks and uncertainties. These
statements are only predictions based on our current expectations
and projections about future events. There are important factors
that could cause actual results to differ materially from that
expressed or implied by the forward-looking statements, including:
the loss of our right to exclusively list certain index options and
futures products; increasing price competition in our industry;
compliance with legal and regulatory obligations and obligations
under agreements with regulatory agencies; decreases in the amount
of trading volumes or a shift in the mix of products traded on our
exchanges; our ability to operate our business, monitor and
maintain our systems or program them so that they operate
correctly, including in response to increases in trading volume and
order transaction traffic; legislative or regulatory changes;
increasing competition by foreign and domestic entities; our
ability to operate our business without violating the intellectual
property rights of others and the costs associated with protecting
our intellectual property rights; our ability to maintain access
fee revenues; our ability to protect our systems and communication
networks from security risks, including cyber-attacks; economic,
political and market conditions; our ability to attract and retain
skilled management and other personnel; our ability to maintain our
growth effectively; our dependence on third party service
providers; and the ability of our compliance and risk management
methods to effectively monitor and manage our
risks.
More detailed information about factors that may affect our
performance may be found in our filings with the SEC, including in
our Annual Report on Form 10-K for the year ended December 31, 2013 and other filings made from
time to time with the SEC.
The condensed consolidated statements of income, balance sheets
and statements of cash flows are unaudited and subject to
reclassification.
CBOE-F
Trademarks:
CBOE®, Chicago Board
Options Exchange®, CBOE Volatility Index®,
CFE®, Execute Success®, FLEX®,
LEAPS® and VIX® are registered trademarks and
BuyWriteSM, BXMSM, CBOE Futures
ExchangeSM, CBOE Short-Term Volatility
IndexSM, SPXSM, The Options
InstituteSM, VXSTSM and WeeklysSM
are service marks of Chicago Board
Options Exchange, Incorporated (CBOE). C2SM and C2
Options ExchangeSM are service marks of C2 Options
Exchange, Incorporated (C2). Standard &
Poor's®, S&P® and S&P 500®
are registered trademarks of Standard & Poor's Financial
Services LLC and have been licensed for use by CBOE, C2 and
CFE.
|
|
|
|
|
|
CBOE Holdings,
Inc.
Selected Quarterly
Operating Statistics
|
|
|
|
|
|
|
Average Daily
Volume by Product (in thousands)
|
|
|
|
|
|
|
|
2Q 2014
|
1Q 2014
|
4Q 2013
|
3Q 2013
|
2Q 2013
|
PRODUCT:
|
|
|
|
|
|
Equities
|
1,806
|
2,165
|
1,912
|
1,767
|
1,595
|
Indexes
|
1,472
|
1,749
|
1,494
|
1,378
|
1,543
|
Exchange-traded
products
|
1,389
|
1,503
|
1,328
|
1,322
|
1,641
|
Total Options Average
Daily Volume
|
4,667
|
5,417
|
4,734
|
4,467
|
4,779
|
Futures
|
166
|
203
|
156
|
148
|
180
|
Total Average Daily
Volume
|
4,833
|
5,620
|
4,890
|
4,615
|
4,959
|
|
|
|
|
|
|
Mix of Trading
Volume by Product
|
|
|
|
|
|
|
|
|
2Q 2014
|
1Q 2014
|
4Q 2013
|
3Q 2013
|
2Q 2013
|
PRODUCT:
|
|
|
|
|
|
|
|
|
|
Equities
|
37.4%
|
38.5%
|
39.1%
|
38.3%
|
32.2%
|
Indexes
|
30.5%
|
31.1%
|
30.6%
|
29.9%
|
31.1%
|
Exchange-traded
products
|
28.7%
|
26.8%
|
27.1%
|
28.6%
|
33.1%
|
Futures
|
3.4%
|
3.6%
|
3.2%
|
3.2%
|
3.6%
|
Total
|
100.0%
|
100.0%
|
100.0%
|
100.0%
|
100.0%
|
|
|
|
|
|
|
Average Revenue
Per Contract by Product
|
|
|
|
|
|
|
|
|
2Q 2014
|
1Q 2014
|
4Q 2013
|
3Q 2013
|
2Q 2013
|
Trading
Days
|
63
|
61
|
64
|
64
|
64
|
PRODUCT:
|
|
|
|
|
|
Equities
|
$0.079
|
$0.081
|
$0.075
|
$0.077
|
$0.090
|
Indexes
|
0.670
|
0.669
|
0.666
|
0.669
|
0.675
|
Exchange-traded
products
|
0.111
|
0.117
|
0.125
|
0.123
|
0.119
|
Total Options Average
Revenue Per Contract
|
0.275
|
0.281
|
0.275
|
0.273
|
0.289
|
Futures
|
1.639
|
1.617
|
1.566
|
1.559
|
1.544
|
Total Average
Revenue Per Contract
|
$0.322
|
$0.329
|
$0.316
|
$0.315
|
$0.334
|
|
|
|
|
|
|
Transaction Fees
by Product (in thousands)
|
|
|
|
|
|
|
|
|
2Q 2014
|
1Q 2014
|
4Q 2013
|
3Q 2013
|
2Q 2013
|
PRODUCT:
|
|
|
|
|
|
Equities
|
$
|
8,974
|
$
|
10,696
|
$
|
9,162
|
$
|
8,741
|
$
|
9,213
|
Indexes
|
62,152
|
71,320
|
63,667
|
59,047
|
66,654
|
Exchange-traded
products
|
9,707
|
10,741
|
10,592
|
10,401
|
12,458
|
Total Options
Transaction Fees
|
$
|
80,833
|
$
|
92,757
|
$
|
83,421
|
$
|
78,189
|
$
|
88,325
|
Futures
|
17,099
|
20,033
|
15,605
|
14,765
|
17,769
|
Total Transaction
Fees
|
$
|
97,932
|
$
|
112,790
|
$
|
99,026
|
$
|
92,954
|
$
|
106,094
|
Non-GAAP Information
In addition to disclosing results determined in accordance with
GAAP, CBOE Holdings has disclosed certain non-GAAP measures of
operating performance. These measures are not in accordance
with, or a substitute for, GAAP, and may be different from or
inconsistent with non-GAAP financial measures used by other
companies. The non-GAAP measures provided in this press
release include core operating expenses, adjusted operating
expenses, adjusted operating income, adjusted operating margin,
adjusted net income, adjusted net income allocated to common
stockholders and adjusted diluted earnings per share.
Management believes that the non-GAAP financial measures
presented in this press release, including adjusted net income and
core operating expenses, provide useful and comparative information
to assess trends in our core operations and a means to evaluate
period-to-period comparisons. Non-GAAP financial measures
disclosed by management, including adjusted diluted EPS, are
provided as additional information to investors in order to provide
them with an alternative method for assessing our financial
condition and operating results.
The table below shows core operating expenses, which is the
company's operating expenses after excluding (i) volume-based
expenses, (ii) depreciation and amortization expense, (iii)
accelerated stock-based compensation expense and (iv) other unusual
or one-time expenses.
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands)
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
Total Operating
Expenses
|
|
$
|
74,226
|
|
|
$
|
75,414
|
|
|
$
|
150,073
|
|
|
$
|
148,689
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
9,895
|
|
|
8,622
|
|
|
18,499
|
|
|
16,904
|
Accelerated stock-based compensation expense
|
|
—
|
|
|
816
|
|
|
2,530
|
|
|
3,996
|
Additional expense related to SEC investigation (in Other
expenses)
|
|
—
|
|
|
1,000
|
|
|
—
|
|
|
1,000
|
Volume-based expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Royalty
fees
|
|
14,707
|
|
|
14,518
|
|
|
30,609
|
|
|
27,687
|
Trading
volume incentives
|
|
1,120
|
|
|
908
|
|
|
2,246
|
|
|
1,921
|
Core Operating
Expenses (non-GAAP):
|
|
$
|
48,504
|
|
|
$
|
49,550
|
|
|
$
|
96,189
|
|
|
$
|
97,181
|
Less: Continuing
stock-based compensation expense
|
|
4,457
|
|
|
5,394
|
|
|
8,840
|
|
|
8,953
|
Core Operating
Expenses Excluding Continuing Stock-Based Compensation
(non-GAAP)
|
|
$
|
44,047
|
|
|
$
|
44,156
|
|
|
$
|
87,349
|
|
|
$
|
88,228
|
|
|
|
|
|
|
|
|
|
|
|
|
Detail of Core
Operating Expenses (non-GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
Employee
costs
|
|
$
|
30,306
|
|
|
$
|
30,421
|
|
|
$
|
61,150
|
|
|
$
|
58,078
|
Data
processing
|
|
4,783
|
|
|
4,545
|
|
|
9,504
|
|
|
9,061
|
Outside
services
|
|
7,855
|
|
|
9,633
|
|
|
15,233
|
|
|
20,668
|
Travel
and promotional expenses
|
|
2,446
|
|
|
2,594
|
|
|
4,433
|
|
|
4,658
|
Facilities costs
|
|
1,590
|
|
|
1,247
|
|
|
2,903
|
|
|
2,500
|
Other
expenses
|
|
1,524
|
|
|
1,110
|
|
|
2,966
|
|
|
2,216
|
Total
|
|
$
|
48,504
|
|
|
$
|
49,550
|
|
|
$
|
96,189
|
|
|
$
|
97,181
|
The table below shows the reconciliation of each financial
measure from GAAP to non-GAAP. The non-GAAP financial
measures exclude the impact of those items detailed in the
footnotes below and are referred to as adjusted financial
measures. There were no non-GAAP financial measures in the
second quarter of 2014.
|
|
|
|
|
|
|
|
|
(in thousands, except
per share amounts)
|
|
Three months ended
June 30, 2013
|
|
|
|
Items Impacting
Results
|
|
|
|
Reported
(GAAP)
|
Operating
Expenses1
|
Operating
Expenses2
|
After Considering
Items (non-GAAP)
|
Total Operating
Revenues
|
|
$
|
150,772
|
|
|
|
$
|
150,772
|
Total Operating
Expenses
|
|
75,414
|
(816)
|
(1,000)
|
73,598
|
Operating
Income
|
|
75,358
|
816
|
1,000
|
77,174
|
Operating
Margin
|
|
50.0%
|
|
|
|
|
51.2%
|
Total Other
Income/(Expense)
|
|
(473)
|
|
|
|
|
(473)
|
Income Before Income
Taxes
|
|
74,885
|
816
|
1,000
|
76,701
|
Income Tax
Provision
|
|
28,724
|
313
|
—
|
29,037
|
Effective Income Tax
Rate
|
|
38.4%
|
|
|
|
|
37.9%
|
Net Income
|
|
$
|
46,161
|
$
|
503
|
$
|
1,000
|
$
|
47,664
|
Net Income Allocated
to Participating Securities
|
|
(684)
|
(7)
|
(15)
|
(706)
|
Net Income Allocated
to Common Stockholders
|
|
$
|
45,477
|
$
|
496
|
$
|
985
|
$
|
46,958
|
Diluted Net Income
per Share Allocated to Common Stockholders
|
|
$
|
0.52
|
$
|
0.01
|
$
|
0.01
|
$
|
0.54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except
per share amounts)
|
|
Six months ended June
30, 2014
|
|
Six months ended June
30, 2013
|
|
|
|
Items Impacting
Results
|
|
|
|
Items Impacting
Results
|
|
|
|
|
Reported
(GAAP)
|
Operating
Expenses1
|
After Considering
Items (non-GAAP)
|
|
Reported
(GAAP)
|
Operating
Expenses1
|
Operating
Expenses2
|
Impairment
charge3
|
After Considering
Items (non-GAAP)
|
Total Operating
Revenues
|
|
$
|
301,827
|
|
$
|
301,827
|
|
$
|
293,477
|
|
|
|
|
|
|
$
|
293,477
|
Total Operating
Expenses
|
|
150,073
|
(2,530)
|
147,543
|
|
148,689
|
(3,996)
|
(1,000)
|
|
|
143,693
|
Operating
Income
|
|
151,754
|
2,530
|
154,284
|
|
144,788
|
3,996
|
1,000
|
|
|
149,784
|
Operating
Margin
|
|
50.3%
|
|
|
51.1%
|
|
49.3%
|
|
|
|
|
|
|
51.0%
|
Total Other
Income/(Expense)
|
|
(816)
|
|
|
(816)
|
|
(1,195)
|
|
|
|
|
245
|
(950)
|
Income Before Income
Taxes
|
|
150,938
|
2,530
|
153,468
|
|
143,593
|
3,996
|
1,000
|
245
|
148,834
|
Income Tax
Provision
|
|
58,933
|
1,009
|
59,942
|
|
55,060
|
1,533
|
—
|
92
|
56,685
|
Effective Income Tax
Rate
|
|
39.0%
|
|
|
39.1%
|
|
38.3%
|
|
|
|
|
|
|
38.1%
|
Net Income
|
|
$
|
92,005
|
$
|
1,521
|
$
|
93,526
|
|
$
|
88,533
|
$
|
2,463
|
$
|
1,000
|
$
|
153
|
$
|
92,149
|
Net Income Allocated
to Participating Securities
|
|
(879)
|
(15)
|
(894)
|
|
(1,268)
|
(35)
|
(14)
|
(2)
|
(1,319)
|
Net Income Allocated
to Common Stockholders
|
|
$
|
91,126
|
$
|
1,506
|
$
|
92,632
|
|
$
|
87,265
|
$
|
2,428
|
$
|
986
|
$
|
151
|
$
|
90,830
|
Diluted Net Income
per Share Allocated to Common Stockholders
|
|
$
|
1.06
|
$
|
0.02
|
$
|
1.08
|
|
$
|
1.00
|
$
|
0.03
|
$
|
0.01
|
$
|
—
|
$
|
1.04
|
|
|
NOTES: Amounts
may not foot due to rounding.
|
1)
|
In the first quarter
of 2014 and the first and second quarters of 2013, the company
accelerated the vesting of certain stock awards.
|
2)
|
In the second quarter
of 2013, the company recognized additional expense for the final
resolution of an SEC investigation.
|
3)
|
In the first quarter
of 2013, the company recorded an impairment for an investment in
affiliate.
|
CBOE Holdings,
Inc. and Subsidiaries
|
Condensed
Consolidated Statements of Income (Unaudited)
|
Three and Six
Months Ended June 30, 2014 and 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended June
30,
|
(in thousands, except
per share amounts)
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction
fees
|
|
|
$
|
97,932
|
|
|
$
|
106,094
|
|
|
$
|
210,722
|
|
|
$
|
205,239
|
Access
fees
|
|
|
14,875
|
|
|
15,026
|
|
|
30,107
|
|
|
30,680
|
Exchange services and
other fees
|
|
|
9,676
|
|
|
9,315
|
|
|
19,168
|
|
|
18,403
|
Market data
fees
|
|
|
7,815
|
|
|
5,729
|
|
|
14,973
|
|
|
11,266
|
Regulatory
fees
|
|
|
9,744
|
|
|
10,439
|
|
|
19,601
|
|
|
20,139
|
Other
revenue
|
|
|
3,900
|
|
|
4,169
|
|
|
7,256
|
|
|
7,750
|
Total Operating
Revenues
|
|
|
143,942
|
|
|
150,772
|
|
|
301,827
|
|
|
293,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee
costs
|
|
|
30,306
|
|
|
31,237
|
|
|
63,680
|
|
|
62,074
|
Depreciation and
amortization
|
|
|
9,895
|
|
|
8,622
|
|
|
18,499
|
|
|
16,904
|
Data
processing
|
|
|
4,783
|
|
|
4,545
|
|
|
9,504
|
|
|
9,061
|
Outside
services
|
|
|
7,855
|
|
|
9,633
|
|
|
15,233
|
|
|
20,668
|
Royalty
fees
|
|
|
14,707
|
|
|
14,518
|
|
|
30,609
|
|
|
27,687
|
Trading volume
incentives
|
|
|
1,120
|
|
|
908
|
|
|
2,246
|
|
|
1,921
|
Travel and
promotional expenses
|
|
|
2,446
|
|
|
2,594
|
|
|
4,433
|
|
|
4,658
|
Facilities
costs
|
|
|
1,590
|
|
|
1,247
|
|
|
2,903
|
|
|
2,500
|
Other
expenses
|
|
|
1,524
|
|
|
2,110
|
|
|
2,966
|
|
|
3,216
|
Total Operating
Expenses
|
|
|
74,226
|
|
|
75,414
|
|
|
150,073
|
|
|
148,689
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
|
|
69,716
|
|
|
75,358
|
|
|
151,754
|
|
|
144,788
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income /
(Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
income
|
|
|
12
|
|
|
18
|
|
|
26
|
|
|
22
|
Net loss from
investment in affiliates
|
|
|
(333)
|
|
|
(491)
|
|
|
(842)
|
|
|
(1,217)
|
Total Other
Expense
|
|
|
(321)
|
|
|
(473)
|
|
|
(816)
|
|
|
(1,195)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before
Income Taxes
|
|
|
69,395
|
|
|
74,885
|
|
|
150,938
|
|
|
143,593
|
Income tax
provision
|
|
|
26,414
|
|
|
28,724
|
|
|
58,933
|
|
|
55,060
|
Net
Income
|
|
|
42,981
|
|
|
46,161
|
|
|
92,005
|
|
|
88,533
|
Net income allocated
to participating securities
|
|
|
(383)
|
|
|
(684)
|
|
|
(879)
|
|
|
(1,268)
|
Net Income
Allocated to Common Stockholders
|
|
|
$
|
42,598
|
|
|
$
|
45,477
|
|
|
$
|
91,126
|
|
|
$
|
87,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Per
Share Allocated to Common Stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.50
|
|
|
$
|
0.52
|
|
|
$
|
1.06
|
|
|
$
|
1.00
|
Diluted
|
|
|
0.50
|
|
|
0.52
|
|
|
1.06
|
|
|
1.00
|
Weighted average
shares used in computing income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
85,831
|
|
|
87,341
|
|
|
86,140
|
|
|
87,307
|
Diluted
|
|
|
85,831
|
|
|
87,341
|
|
|
86,140
|
|
|
87,307
|
CBOE Holdings,
Inc. and Subsidiaries
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
June 30, 2014 and
December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except
share amounts)
|
|
June 30,
2014
|
December 31,
2013
|
Assets
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
145,111
|
|
$
|
221,341
|
Accounts
receivable—net allowances of $291 and $266
|
|
55,474
|
|
49,888
|
Marketing fee
receivable
|
|
8,977
|
|
8,869
|
Income taxes
receivable
|
|
23,261
|
|
22,039
|
Other prepaid
expenses
|
|
9,611
|
|
4,007
|
Other current
assets
|
|
1,501
|
|
2,717
|
Total Current
Assets
|
|
243,935
|
|
308,861
|
Investments in
Affiliates
|
|
14,711
|
|
14,581
|
Land
|
|
4,914
|
|
4,914
|
Property and
Equipment:
|
|
|
|
|
Construction in
progress
|
|
—
|
|
23
|
Building
|
|
67,896
|
|
65,448
|
Furniture and
equipment
|
|
279,628
|
|
271,437
|
Less accumulated
depreciation and amortization
|
|
(277,296)
|
|
(269,614)
|
Total Property and
Equipment—Net
|
|
70,228
|
|
67,294
|
Other
Assets:
|
|
|
|
|
Software development
work in progress
|
|
13,101
|
|
7,853
|
Data processing
software and other assets (less accumulated amortization—2014,
$155,017; 2013, $147,322)
|
|
38,892
|
|
38,086
|
Total Other
Assets—Net
|
|
51,993
|
|
45,939
|
Total
|
|
$
|
385,781
|
|
$
|
441,589
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
47,809
|
|
$
|
52,958
|
Dividend
payable
|
|
—
|
|
43,831
|
Marketing fee
payable
|
|
9,455
|
|
9,442
|
Deferred
revenue
|
|
11,712
|
|
1,100
|
Post-retirement
medical benefits
|
|
53
|
|
127
|
Total Current
Liabilities
|
|
69,029
|
|
107,458
|
|
|
|
|
|
Long-term
Liabilities:
|
|
|
|
|
Post-retirement
medical benefits
|
|
1,674
|
|
2,110
|
Income taxes
liability
|
|
33,718
|
|
29,903
|
Other long-term
liabilities
|
|
3,967
|
|
3,856
|
Deferred income
taxes
|
|
13,502
|
|
13,745
|
Total Long-term
Liabilities
|
|
52,861
|
|
49,614
|
Total
Liabilities
|
|
121,890
|
|
157,072
|
Commitments and
Contingencies
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
Preferred stock,
$0.01 par value: 20,000,000 shares authorized, no shares
issued and outstanding at June 30, 2014 or December 31,
2013
|
|
—
|
|
—
|
Unrestricted common
stock, $0.01 par value: 325,000,000 shares authorized;
92,565,682 issued and 85,614,964 outstanding at June 30, 2014;
91,845,492 issued and 86,770,737 outstanding at December 31,
2013
|
|
926
|
|
919
|
Additional
paid-in-capital
|
|
105,879
|
|
90,985
|
Retained
Earnings
|
|
409,988
|
|
349,290
|
Treasury stock at
cost – 6,950,718 shares at June 30, 2014 and 5,074,755 shares at
December 31, 2013
|
|
(252,190)
|
|
(155,627)
|
Accumulated other
comprehensive loss
|
|
(712)
|
|
(1,050)
|
Total
Stockholders' Equity
|
|
263,891
|
|
284,517
|
|
|
|
|
|
Total
|
|
$
|
385,781
|
|
$
|
441,589
|
CBOE Holdings,
Inc. and Subsidiaries
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
Six months ended
June 30, 2014 and 2013
|
|
|
|
|
|
|
|
Six Months Ended June
30,
|
(in
thousands)
|
|
2014
|
|
2013
|
Cash Flows from
Operating Activities:
|
|
|
|
|
Net Income
|
|
$
|
92,005
|
|
$
|
88,533
|
Adjustments to
reconcile net income to
|
|
|
|
|
net cash flows
from operating activities:
|
|
|
|
|
Depreciation and
amortization
|
|
18,499
|
|
16,904
|
Other
amortization
|
|
49
|
|
58
|
Provision for deferred
income taxes
|
|
(451)
|
|
(1,506)
|
Stock-based
compensation
|
|
11,370
|
|
12,949
|
Loss on disposition of
property
|
|
533
|
|
—
|
Loss on investment in
affiliates
|
|
842
|
|
972
|
Impairment of investment in
affiliates and other assets
|
|
—
|
|
245
|
Net change in assets and
liabilities
|
|
(1,611)
|
|
(1,295)
|
Net Cash Flows
provided by Operating Activities
|
|
121,236
|
|
116,860
|
Cash Flows from
Investing Activities:
|
|
|
|
|
Capital and other
asset expenditures
|
|
(28,326)
|
|
(13,072)
|
Investment in
affiliates
|
|
(973)
|
|
(1,120)
|
Other
|
|
3
|
|
8
|
Net Cash Flows
used in Investing Activities
|
|
(29,296)
|
|
(14,184)
|
Cash Flows from
Financing Activities:
|
|
|
|
|
Payment of quarterly
dividends
|
|
(31,307)
|
|
(26,604)
|
Payment of special
dividend
|
|
(43,831)
|
|
—
|
Purchase of
unrestricted stock from employees
|
|
(8,291)
|
|
(6,109)
|
Excess tax benefit
from stock-based compensation
|
|
3,531
|
|
2,206
|
Purchase of
unrestricted stock under repurchase program
|
|
(88,272)
|
|
—
|
Net Cash Flows
used in Financing Activities
|
|
(168,170)
|
|
(30,507)
|
|
|
|
|
|
Net Increase
(Decrease) in Cash and Cash Equivalents
|
|
(76,230)
|
|
72,169
|
|
|
|
|
|
Cash and Cash
Equivalents at Beginning of Period
|
|
221,341
|
|
135,597
|
Cash and Cash
Equivalents at End of Period
|
|
$
|
145,111
|
|
$
|
207,766
|
|
|
|
|
|
Supplemental
Disclosure of Cash Flow Information
|
|
|
|
|
Cash paid for income
taxes
|
|
$
|
53,530
|
|
$
|
54,730
|
Non-cash
activities:
|
|
|
|
|
Unpaid liability
to acquire equipment and software
|
|
$
|
2,745
|
|
$
|
1,929
|
Logo -
http://photos.prnewswire.com/prnh/20121022/MM97794LOGO-a
SOURCE CBOE Holdings, Inc.