- Operating Revenue of $143.9 Million Compared With $150.8 Million, Down 5 Percent
- GAAP Net Income Allocated to Common Stockholders of $42.6 Million Compared With $45.5 Million; Diluted EPS of $0.50 Versus $0.52, Down 4 Percent
- Adjusted Net Income Allocated to Common Stockholders of $42.6 Million Compared With $47.0 Million(1); Adjusted Diluted EPS of $0.50 Versus $0.54, Down 7 Percent
- Board Increases Quarterly Dividend by 17 Percent to $0.21; Increases Share Repurchase Authorization by $100 Million
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 |
(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 | ||
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, | 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 | $ |
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 |
SOURCE CBOE Holdings, Inc.
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