August 1, 2014

CBOE Holdings Reports Second Quarter Results

Second Quarter 2014 Financial Highlights
- 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.

CBOE Holdings, Inc. logo.

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

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SOURCE CBOE Holdings, Inc.

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