CBOE Holdings Reports Record Results For Third Quarter

Third-Quarter 2015 Financial Highlights

-- Trading Volume Increases 6 Percent, With Record Trading Volume in Index Options and Futures

-- Operating Revenue Increases 26 Percent to $187.0 Million

-- GAAP Net Income Allocated to Common Stockholders Increases 40 Percent to $67.2 Million; Diluted EPS of $0.81, Up 42 Percent

-- Adjusted Net Income Allocated to Common Stockholders Rose 31 Percent to $63.0 Million; Adjusted Diluted EPS of $0.76, Up 33 Percent(1)

-- GAAP Operating Margin of 54.1 Percent Compared With 50.4 Percent, Up 370 Basis Points

Oct 30, 2015, 07:30 ET from CBOE Holdings, Inc.

CHICAGO, Oct. 30, 2015 /PRNewswire/ -- CBOE Holdings, Inc. (NASDAQ: CBOE) today reported net income allocated to common stockholders of $67.2 million, or $0.81 per diluted share, for the third quarter of 2015, compared with $48.1 million, or $0.57 per diluted share, in the third quarter of 2014. On an adjusted basis, net income allocated to common stockholders was $63.0 million, or $0.76 per share, up 31 percent and 33 percent, respectively, over the third quarter of last year.  Operating revenue for the quarter was $187.0 million, up 26 percent compared with $148.9 million in the third quarter of 2014.

Financial results presented on an adjusted basis for the third quarter of 2015 exclude the recognition of a tax benefit, which is detailed in the reconciliation of non-GAAP results.

"The record financial results we delivered this quarter highlight the utility of our proprietary products, S&P 500 Index (SPX) options, Russell 2000 Index (RUT) options and CBOE Volatility Index (VIX) futures and options.  Throughout the third quarter, we also advanced key growth initiatives in developing new products, increasing access to our marketplace, and growing our customer base in order to pave the way for continued success this year and beyond,"  said Edward T. Tilly, CBOE Holdings' Chief Executive Officer. "As a result, we remain optimistic about our ability to deliver sustainable long-term value to our customers and our shareholders."

"We are very pleased with our results for the third quarter as we achieved new highs across a number of financial measures, including operating revenue, operating margin and earnings per share.  Our operating margin hit a new high of 54.1 percent, underscoring the operating leverage inherent in our business model and the potential for further gains as we invest in our strategic growth initiatives while prudently managing expenses," said Alan J. Dean, CBOE Holdings' Executive Vice President and Chief Financial Officer.

(1) A full reconciliation of our non-GAAP results to our GAAP results for the 2015 and 2014 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 and nine-month periods ended September 30, 2015 and 2014.  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)

3Q 2015

3Q 2014

Y/Y Change

YTD 2015

YTD 2014

Y/Y Change

Key Statistics:

Total Trading Days

64

64

188

188

Average Daily Volume (options and futures)

5.25

4.95

6%

4.80

5.13

(6%)

Total Trading Volume (options and futures)

335.7

316.9

6%

902.3

964.2

(6%)

Average Revenue Per Contract

$

0.431

$

0.329

31%

$

0.383

$

0.327

17%

GAAP Financial Highlights:

Total Operating Revenues

$

187.0

$

148.9

26%

$

478.6

$

450.7

6%

Total Operating Expenses

85.9

73.8

16%

234.6

223.9

5%

Operating Income

101.1

75.1

35%

244.0

226.8

8%

Operating Margin %

54.1%

50.4%

370 bps

51.0%

50.3%

70 bps

Net Income

$

67.5

$

48.4

39%

$

154.6

$

140.4

10%

Net Income Allocated to Common Stockholders

$

67.2

$

48.1

40%

$

153.9

$

139.3

10%

Diluted EPS

$

0.81

$

0.57

42%

$

1.85

$

1.62

14%

Weighted Average Shares Outstanding

82.8

85.1

(3%)

83.3

85.8

(3%)

Adjusted Financial Highlights (1)

Total Operating Expenses

$

85.9

$

73.8

16%

$

234.6

$

221.4

6%

Operating Income

101.1

75.1

35%

244.0

229.4

6%

Operating Margin %

54.1%

50.4%

370 bps

51.0%

50.9%

10 bps

Net Income

$

63.2

$

48.4

31%

$

150.6

$

141.9

6%

Net Income Allocated to Common Stockholders

$

63.0

$

48.1

31%

$

149.9

$

140.8

6%

Diluted EPS

$

0.76

$

0.57

33%

$

1.80

$

1.64

10%

(1) A full reconciliation of our non-GAAP results to our GAAP results for the 2015 and 2014 reporting periods is included in the attached tables. See "Non-GAAP Information" in the accompanying financial tables.

Revenues

Operating revenue was $187.0 million in the third quarter of 2015, up $38.1 million, or 26 percent, from $148.9 million in the third quarter of 2014.  This was largely driven by a $40.5 million increase in transaction fees, partially offset by a $1.6 million decrease in access fees.

Transaction fees rose 39 percent in the quarter due to a 31 percent increase in the average revenue per contract (RPC) and a 6 percent increase in trading volume compared with the third quarter of 2014.  Total trading volume in the third quarter was 335.7 million contracts, or 5.25 million contracts per day, compared with volume of 316.9 million contracts, or 4.95 million contracts per day, in last year's third quarter. Trading volume in the third quarter included record volume for index options and futures. The RPC was $0.431 compared with $0.329 in the third quarter of 2014. 

The higher RPC primarily reflects a favorable shift in the mix of products traded with a higher proportion of volume coming from index options and futures contracts, which generate the highest RPC.  These product categories accounted for 44.6 percent of trading volume in the third quarter of 2015 compared with 33.8 percent in the third quarter of 2014.  Additionally, the RPC increased across each product category due to fee adjustments and lower volume discounts and incentives.

The average revenue per contract represents total transaction fee revenue divided by total reported trading volume for Chicago Board Options Exchange® (CBOE®), C2 Options ExchangeSM (C2SM) and CBOE Futures ExchangeSM (CFE®).

Operating Expenses

Total operating expenses were $85.9 million for the third quarter of 2015, up $12.1 million or 16 percent, compared with $73.8 million for the same period in 2014, primarily due to higher costs for professional fees and outside services, royalty fees and depreciation and amortization.

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 $51.1 million for the third quarter of 2015, up $4.8 million, or 10 percent, compared with last year's third quarter.  The increase in core operating expenses primarily reflects increases of $4.4 million in professional fees and outside services and $0.9 million in compensation and benefits. The increase in professional fees and outside services is primarily attributed to the company's outsourcing of certain regulatory services to FINRA, which occurred in December 2014. The increase in compensation and benefits was largely due to higher expenses for stock-based compensation and incentive compensation, driven by the company's stronger financial performance.

Volume-based expenses, which include royalty fees and order-routing fees, were $22.4 million in the third quarter of 2015, an increase of $5.2 million or 30 percent, compared with the same period last year.  This increase includes higher royalty fees of $5.6 million, partially offset by lower order-routing fees of $0.4 million.  The increase in royalty fees was driven by higher trading volume in licensed index products, which rose 40.7 percent over last year's third quarter.

Operating Margin

The company's operating margin reached a record high of 54.1 percent for the third quarter of 2015, an increase of 370 basis points compared with 50.4 percent for the third quarter of 2014.  The margin increase reflects the positive operating leverage generated from the company's higher revenue base.

Effective Tax Rate

On a GAAP basis, the company reported an effective tax rate of 33.4 percent for the current quarter compared with 35.4 percent in last year's third quarter.  The effective tax rate for the third quarter of this year included the benefit of the release of uncertain tax positions.  Excluding a non-GAAP adjustment of $4.3 million, the effective tax rate for the current quarter was 37.7 percent. 

Year to date, the company's adjusted effective tax rate of 38.5 percent is in line with its guidance range for the full-year 2015 of 38.5 percent to 39.5 percent.

Operational Highlights and Recent Developments

  • On October 20, CBOE started trading options on three FTSE Russell indexes: the Russell 1000® Index, the Russell 1000 Value Index and the Russell 1000 Growth Index.
  • On October 16, the company announced a minority investment in CurveGlobal, a new interest rate derivatives venture of the London Stock Exchange Group (LSEG) and a number of major dealer banks.
  • On October 1, the company added SPXPM index options to its 2:00 a.m. to 8:00 a.m. CT extended trading session.
  • On September 10, the company announced its plans to work with Environmental Financial Products, LLC (EFP) to provide a new interbank lending exchange, the American Financial Exchange (AFX), and to launch a new interest rate benchmark (Ameribor).  The company has a minority equity interest in AFX.
  • In August, several trading records were set at CBOE Holdings, including new single-day volume highs for CBOE, C2, total index options and S&P 500® Index (SPX) options, and new monthly average daily volume (ADV) records in CBOE Volatility Index® (VIX® Index) options and S&P 500 Index (SPX) options.
  • On August 7, the company finalized its acquisition of the market data services and trading analytics platforms of Livevol, Inc., a leading provider of equity and index options technology and market data services to professional and retail traders.
  • On July 23, CFE introduced the trading of futures with weekly expirations on the VIX Index and on October 8, CBOE started trading VIX Weeklys options.

2015 Fiscal Year Financial Guidance

The company updated its guidance for core expenses for the 2015 fiscal year primarily as a result of higher performance-driven compensation tied to the company's improved financial performance. 

  • Core expenses for the 2015 fiscal year are now expected to be in the range of $194.0 million to $196.0 million.  The previous guidance range was $190.0 million to $194.0 million.  The increase primarily reflects higher incentive-based compensation, which is aligned with the company's financial performance.

The company also reaffirmed guidance for the 2015 fiscal year as follows:

  • Continuing stock-based compensation expense included in core expenses is expected to be approximately $12.0 million for the full year.
  • Capital expenditures are expected to be in the range of $37.0 million to $40.0 million.
  • Depreciation and amortization expense is expected to be in the range of $46.0 million to $48.0 million.
  • The adjusted effective tax rate for the full-year 2015 is expected to be in the range of 38.5 percent to 39.5 percent.  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 October 28, 2015, CBOE Holdings' Board of Directors declared a fourth-quarter dividend of $0.23 per share, payable December 18, 2015, to stockholders of record as of December 4, 2015. 

During the third quarter of 2015, the company repurchased 297,394 shares of its common stock under its share repurchase program at an average price of $63.12 per share, for an aggregate purchase price of $18.8 million. Year to date, the company has repurchased 1,627,901 shares at an average price of $59.83 per share, for an aggregate purchase price of $97.4 million.

Since the inception of its share repurchase program in 2011 through September 30, 2015, the company has repurchased 9,482,971 shares of its common stock at an average price of $43.00 per share, for a total of $407.8 million.

As of September 30, 2015, the company had approximately $92.2 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 third-quarter financial results today, October 30, 2015, 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 (866) 807-9684 from the United States, (866) 450-4696 from Canada or (412) 317-5415 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, October 30, 2015, through 11:00 p.m. CT, November 6, 2015, by calling (877) 344-7529 from the U.S., (855) 669-9658 from Canada or (412) 317-0088 for international callers, using replay code 10072818.

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  options and futures on the CBOE Volatility Index (VIX Index) and S&P 500 options (SPX), the most active U.S. index option. Other products engineered by CBOE include equity options, security index options, Weeklys options, FLEX options, and benchmark products such as the CBOE S&P 500 BuyWrite Index (BXM). CBOE Holdings is home to the world-renowned Options Institute, Livevol options analytics and data tools, 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; the accuracy of our estimates and expectations; legislative or regulatory changes; increasing competition by foreign and domestic entities; our index providers ability to perform under our agreements; 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, 2014 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®, Livevol®, FLEX®, LEAPS® and VIX® are registered trademarks and BuyWriteSM, BXMSM, CBOE Futures ExchangeSM, The Options InstituteSM, 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.  Russell®, Russell 1000® and Russell 2000® are registered trademarks of Frank Russell Company, used under license. All other trademarks and service marks are the property of their respective owners.

CBOE Holdings, Inc.

Selected Quarterly Operating Statistics

Average Daily Volume by Product (in thousands)

3Q 2015

2Q 2015

1Q 2015

4Q 2014

3Q 2014

PRODUCT:

 Equities

1,476

1,530

1,808

1,940

1,852

 Indexes

2,076

1,445

1,399

1,759

1,476

 Exchange-traded products

1,432

1,221

1,371

1,709

1,426

    Total Options Average Daily Volume

4,984

4,196

4,578

5,408

4,754

Futures

261

183

187

236

198

   Total Average Daily Volume

5,245

4,379

4,765

5,644

4,952

 

Mix of Trading Volume by Product

3Q 2015

2Q 2015

1Q 2015

4Q 2014

3Q 2014

PRODUCT:

 Equities

28.1 %

34.9 %

37.9 %

34.4 %

37.4 %

 Indexes

39.6 %

33.0 %

29.4 %

31.1 %

29.8 %

 Exchange-traded products

27.3 %

27.9 %

28.8 %

30.3 %

28.8 %

 Futures

5.0 %

4.2 %

3.9 %

4.2 %

4.0 %

   Total

100.0 %

100.0 %

100.0 %

100.0 %

100.0 %

 

 

Average Revenue Per Contract by Product

3Q 2015

2Q 2015

1Q 2015

4Q 2014

3Q 2014

Trading Days

64

63

61

64

64

PRODUCT:

 Equities

$0.106

$0.093

$0.077

$0.068

$0.077

 Indexes

0.709

0.697

0.712

0.696

0.680

 Exchange-traded products

0.143

0.117

0.118

0.105

0.115

   Total Options Average Revenue Per Contract

0.368

0.308

0.284

0.284

0.275

Futures

1.647

1.758

1.705

1.616

1.625

   Total Average Revenue Per Contract

$0.431

$0.368

$0.340

$0.340

$0.329

 

Transaction Fees by Product (in thousands)

3Q 2015

2Q 2015

1Q 2015

4Q 2014

3Q 2014

PRODUCT:

 Equities

$

10,036

$

8,942

$

8,541

$

8,429

$

9,075

 Indexes

94,192

63,441

60,807

78,359

64,205

 Exchange-traded products

13,089

8,966

9,893

11,508

10,451

    Total Options Transaction Fees

$

117,317

$

81,349

$

79,241

$

98,296

$

83,731

Futures

27,506

20,268

19,482

24,435

20,580

   Total Transaction Fees

$

144,823

$

101,617

$

98,723

$

122,731

$

104,311

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 September 30,

Nine Months Ended September 30,

(in thousands)

2015

2014

2015

2014

Total Operating Expenses

$

85,925

$

73,826

$

234,565

$

223,898

Less:

Depreciation and amortization

12,394

10,361

34,071

28,860

   Accelerated stock-based compensation expense

2,530

Volume-based expenses:

Royalty fees

21,840

16,235

52,744

46,844

Order routing

581

961

1,994

3,207

Core Operating Expenses (non-GAAP):

$

51,110

$

46,269

$

145,756

$

142,457

Less: Continuing stock-based compensation expense

3,185

2,109

8,987

10,950

Core Operating Expenses Excluding Continuing Stock-Based Compensation (non-GAAP)

$

47,925

$

44,160

$

136,769

$

131,507

Detail of Core Operating Expenses (non-GAAP)

Compensation and benefits

$

29,583

$

28,698

$

79,158

$

89,848

Technology support services

5,342

4,769

15,480

14,273

Professional fees and outside services

12,619

8,204

37,163

23,437

Travel and promotional expenses

1,407

1,885

6,434

6,319

Facilities costs

874

1,373

3,552

4,275

Other expenses

1,285

1,340

3,969

4,305

        Total

$

51,110

$

46,269

$

145,756

$

142,457

The tables below show 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.  In the third quarter of 2014, there were no non-GAAP financial measures.

(in thousands, except per share amounts)

Three Months Ended September 30, 2015

Items Impacting Results

Reported (GAAP)

Income tax provision 1

After Considering Items (non-GAAP)

Total Operating Revenues

$

187,035

$

187,035

Total Operating Expenses

85,925

85,925

Operating Income

101,110

101,110

Operating Margin

54.1 %

54.1 %

Total Other Income/(Expense)

341

341

Income Before Income Taxes

101,451

101,451

Income tax provision

33,935

4,286

38,221

Effective Income Tax Rate

33.4 %

37.7 %

Net Income

$

67,516

$

(4,286)

$

63,230

Net Income Allocated to Participating Securities

(297)

19

(278)

Net Income Allocated to Common Stockholders

$

67,219

$

(4,267)

$

62,952

Diluted Net Income per Share Allocated to Common Stockholders

$

0.81

$

(0.05)

$

0.76

 

(in thousands, except per share amounts)

Nine months ended September 30, 2015

Nine months ended September 30, 2014

Items Impacting Results

Items Impacting Results

Reported (GAAP)

Other Income/(Expense) 2

Other Income/(Expense)3

Income tax provision 1

After Considering Items (non-GAAP)

Reported (GAAP)

Operating Expenses4

After Considering Items (non-GAAP)

Total Operating Revenues

$

478,599

$

478,599

$

450,737

$

450,737

Total Operating Expenses

234,565

234,565

223,898

(2,530)

221,368

Operating Income

244,034

244,034

226,839

2,530

229,369

Operating Margin

51.0 %

51.0 %

50.3 %

50.9 %

Total Other Income/(Expense)

326

246

118

690

(1,088)

(1,088)

Income Before Income Taxes

244,360

246

118

244,724

225,751

2,530

228,281

Income Tax Provision

89,739

95

45

4,286

94,165

85,379

1,009

86,388

Effective Income Tax Rate

36.7 %

38.5 %

37.8 %

37.8 %

Net Income

$

154,621

$

151

$

73

$

(4,286)

$

150,559

$

140,372

$

1,521

$

141,893

Net Income Allocated to Participating Securities

(676)

(1)

(1)

19

(659)

(1,099)

(15)

(1,114)

Net Income Allocated to Common Stockholders

$

153,945

$

150

$

72

$

(4,267)

$

149,900

$

139,273

$

1,506

$

140,779

Diluted Net Income per Share Allocated to Common Stockholders

$

1.85

$

$

$

(0.05)

$

1.80

$

1.62

$

0.02

$

1.64

NOTES:  Amounts may not foot due to rounding.

1)

In the third quarter of 2015, the company recorded a benefit from the release of an uncertain tax position related to research and development credits, which was effectively settled.

2)

In the first quarter of 2015, the company recorded an impairment of an advance to an affiliate.

3)

In the first quarter of 2015, the company recorded an impairment for an investment in an affiliate.

4)

In the first quarter of 2014, the company accelerated the vesting of certain stock awards.

 

CBOE Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Income (Unaudited)

Nine Months Ended September 30, 2015 and 2014

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands, except per share amounts)

2015

2014

2015

2014

Operating Revenues:

Transaction fees

$

144,823

$

104,311

$

345,162

$

315,033

Access fees

13,062

14,695

40,119

44,802

Exchange services and other fees

10,978

9,485

30,443

28,652

Market data fees

7,133

7,764

22,702

22,737

Regulatory fees

8,204

8,923

25,332

28,524

Other revenue

2,835

3,732

14,841

10,989

Total Operating Revenues

187,035

148,910

478,599

450,737

Operating Expenses:

Compensation and benefits

29,583

28,698

79,158

92,378

Depreciation and amortization

12,394

10,361

34,071

28,860

Technology support services

5,342

4,769

15,480

14,273

Professional fees and outside services

12,619

8,204

37,163

23,437

Royalty fees

21,840

16,235

52,744

46,844

Order routing

581

961

1,994

3,207

Travel and promotional expenses

1,407

1,885

6,434

6,319

Facilities costs

874

1,373

3,552

4,275

Other expenses

1,285

1,340

3,969

4,305

Total Operating Expenses

85,925

73,826

234,565

223,898

Operating Income

101,110

75,084

244,034

226,839

Other Income/(Expense):

Investment income

68

47

177

73

Net income (loss) from investment in affiliates

289

(318)

165

(1,161)

Interest expense

(16)

(16)

Total Other Income/(Expense)

341

(271)

326

(1,088)

Income Before Income Taxes

101,451

74,813

244,360

225,751

Income tax provision

33,935

26,447

89,739

85,379

Net Income

67,516

48,366

154,621

140,372

Net Income Allocated to Participating Securities

(297)

(220)

(676)

(1,099)

Net Income Allocated to Common Stockholders

$

67,219

$

48,146

$

153,945

$

139,273

Net Income Per Share Allocated to Common Stockholders:

Basic

$

0.81

$

0.57

$

1.85

$

1.62

Diluted

0.81

0.57

1.85

1.62

Weighted average shares used in computing income per share:

Basic

82,755

85,051

83,329

85,773

Diluted

82,755

85,051

83,329

85,773

 

CBOE Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

September 30, 2015 and December 31, 2014

(in thousands, except share amounts)

September 30, 2015

December 31, 2014

Assets

Current Assets:

Cash and cash equivalents

$

121,678

$

147,927

Accounts receivable - net of allowances

65,863

58,386

Marketing fee receivable

6,755

10,697

Income taxes receivable

19,381

21,503

Other prepaid expenses

8,035

4,622

Other current assets

988

972

Total Current Assets

222,700

244,107

Investments in Affiliates

43,680

12,351

Land

4,914

4,914

Total Property and Equipment—Net

58,222

66,856

Goodwill

7,655

Total Other Assets—Net

60,248

55,673

Total

$

397,419

$

383,901

Liabilities and Stockholders' Equity

Current Liabilities:

Accounts payable and accrued liabilities

$

61,307

$

58,566

Marketing fee payable

7,210

11,236

Deferred revenue and other liabilities

7,488

1,988

Post-retirement benefit obligation - current

24

101

Income tax payable

2,634

1,774

Total Current Liabilities

78,663

73,665

Total Long-term Liabilities

58,939

60,169

Total Liabilities

137,602

133,834

Stockholders' Equity:

Preferred stock, $0.01 par value: 20,000,000 shares authorized, no shares issued and outstanding at September 30, 2015 or December 31, 2014

Unrestricted common stock, $0.01 par value: 325,000,000 shares authorized; 92,738,803 issued and 82,605,193 outstanding at September 30, 2015; 92,569,189 issued and 84,114,475 outstanding at December 31, 2014

927

926

Additional paid-in-capital

120,383

110,112

Retained earnings

572,213

472,005

Treasury stock at cost – 10,133,610 shares at September 30, 2015 and 8,454,714 shares at December 31, 2014

(432,868)

(332,287)

Accumulated other comprehensive loss

(838)

(689)

Total Stockholders' Equity

259,817

250,067

Total

$

397,419

$

383,901

 

CBOE Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

Nine Months Ended September 30, 2015 and 2014

Nine Months Ended September 30,

(in thousands)

2015

2014

Cash Flows from Operating Activities:

Net income

$

154,621

$

140,372

Adjustments to reconcile net income to net cash flows from operating activities:

Depreciation and amortization

34,071

28,860

Other amortization

59

60

Provision for deferred income taxes

(1,718)

(1,192)

Stock-based compensation

8,987

13,480

Loss on disposition of property

617

599

(Gain)/Loss on investment in affiliate

(528)

1,161

Impairment of investment in affiliate

118

  Net change in assets and liabilities

(2,090)

726

Net Cash Flows provided by Operating Activities

194,137

184,066

Cash Flows from Investing Activities:

Capital and other assets expenditures

(26,931)

(39,974)

Acquisition of a business

(2,960)

Investment in affiliates

(30,919)

(1,499)

Other

(1,827)

3

Net Cash Flows used in Investing Activities

(62,637)

(41,470)

Cash Flows from Financing Activities:

Payment of quarterly dividends

(54,413)

(49,221)

Payment of special dividend

(43,831)

Purchase of unrestricted common stock from employees

(3,178)

(8,319)

Payment of outstanding debt in conjunction with acquisition of a business

(4,040)

Excess tax benefit from stock-based compensation

1,285

3,554

Purchase of unrestricted common stock under announced program

(97,403)

(139,601)

Net Cash Flows used in Financing Activities

(157,749)

(237,418)

Net Decrease in Cash and Cash Equivalents

(26,249)

(94,822)

Cash and Cash Equivalents at Beginning of Period

147,927

221,341

Cash and Cash Equivalents at End of Period

$

121,678

$

126,519

Supplemental Disclosure of Cash Flow Information

Cash paid for income taxes

$

89,140

$

78,336

Non-cash activities:

Unpaid liability to acquire equipment and software

$

1,697

$

3,831

Contingent consideration

$

3,336

$

 

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SOURCE CBOE Holdings, Inc.



RELATED LINKS

http://www.cboe.com