Interactive brokers group announces 2010 results
Greenwich, conn.--(business wire)--interactive brokers group, inc. (nasdaq gs: ibkr) an automated global electronic market maker and broker, today reported a diluted loss per share of $(0.22) for the year ended december 31, 2010, compared to diluted earnings per share of $0.87 in 2009. reported results include the effects of a special dividend to shareholders paid in december 2010. reported results also reflect the gaap convention that shifted currency hedging results from reportable earnings to other comprehensive income, which is reported in the statement of financial condition. the company considers these items to be non-operating in nature. excluding the effects of the dividend and the currency reporting convention together, the company estimates, on a non-gaap basis, diluted earnings per share of $0.73 for 2010 ($1.04 for 2009). net revenues were $922 million and income before income taxes was $341 million for the year, compared to net revenues of $1,100 million and income before income taxes of $545 million in 2009. adjusted for the dividend and currency reporting convention described above, on a non-gaap basis, 2010 net revenues were $1,070 million ($1,205 million in 2009) and 2010 income before income taxes was $499 million ($649 million in 2009). business highlights 37% pre-tax profit margin for 2010 (47% on a non-gaap basis). 50% electronic brokerage pre-tax margin for 2010. customer equity increased 45% from 2009 to $22.1 billion and customer accounts increased 18%. cleared darts increased 9% from 2009 to 343,000. market making pre-tax income decreased 73% from 2009 (decreased 45% on a non-gaap basis). 24% market making pre-tax profit margin for 2010 (45% on a non-gaap basis). "2010 was the year in which our rapidly growing, global brokerage business surpassed our market making business," said thomas peterffy, our ceo. “we look forward to continuing this momentum into the coming year." segment overview electronic brokerage electronic brokerage segment income before income taxes grew 19% in 2010. customer accounts grew 18% from the prior year and customer equity increased 45% during 2010. commissions and execution fees increased by 10% and net interest income grew by 78% from prior year. pre-tax profit margin was 50% for 2010. total darts(1) for cleared and execution-only customers increased 9% to 379,000 in 2010, compared to 347,000 during 2009. cleared darts were 343,000 in 2010, 9% higher than in 2009. market making market making segment income before income taxes decreased 73% (decreased 45% on a non-gaap basis) in 2010 and pre-tax profit margin narrowed to 24% (45% on a non-gaap basis) in 2010 from 53% (60% on a non-gaap basis) in 2009. low market volatility, compressed bid/offer spreads in options and heightened competition from high-frequency traders reduced trading opportunities for our automated market making system. our currency hedging program performed well in a volatile foreign exchange rate environment. the net change in the u.s. dollar value of the global basket of currencies in which we hold our equity was less than $15 million on $4.9 billion average equity for the year. as described above, gaap reporting convention shifted currency gains from reported earnings to other comprehensive income, which is reported as a direct increase to shareholders’ equity in our balance sheet. market making options contract volume increased by 1% and futures volume increased by 2% in 2010. effects of non-gaap measures non-gaap measures are used to isolate items that the company’s management views as non-operating in nature, which is intended to give a clearer presentation of operating results. given their material impact on our reported financial results, the following two non-gaap measures are presented for 2010: in december 2010, the company effected a series of dividend payments, including a dividend of $1.79 per share, which was paid to holders of the company’s common stock. on a consolidated reporting basis, the dividends had no effect on the company’s reported income. however, the u.s. federal income tax liability triggered by one of the dividends is reported as income tax expense in the statement of income. this income tax liability was funded by reserving a portion of the dividend received by interactive brokers group, inc. from ibg llc, the holding company for the group’s operating companies. the remaining amount was paid to the company’s public shareholders. the purpose of this non-gaap measure is to separate the effects of the special dividend from the company’s regular operating results. in connection with our currency hedging strategy, we have determined to base our net worth in globals, a basket of major currencies in which we hold our equity. pursuant to gaap convention, a portion of our currency translation gains and losses is reported as other comprehensive income in the statement of financial condition. this income is, in effect, shifted from the reported earnings to the statement of financial condition. the purpose of this non-gaap measure is to report all currency translation gains and losses as if they were included in the statement of income. this analysis contains certain assumptions about tax rates and should, therefore, be considered an estimate. management believes that it is appropriate to adjust these non-operating items in the statement of income in order to achieve a proper representation of the company’s financial performance. please see the tables on pages 9-11 for the reconciliation of our gaap to non-gaap results. (1) daily average revenue trades (darts) are based on customer orders. _____________________ conference call information: interactive brokers group will hold a conference call with investors today, january 20, 2011, at 4:30 p.m. et to discuss its 2010 results. investors who would like to listen to the conference call live should dial 877-324-1965 (u.s. domestic) and 631-291-4512 (international). the number should be dialed approximately ten minutes prior to the start of the conference call. ask for the “interactive brokers conference call.” the conference call will also be accessible simultaneously, and through replays, as an audio webcast through the investor relations section of the interactive brokers web site, www.interactivebrokers.com/ir. about interactive brokers group, inc.: interactive brokers group, inc., together with its subsidiaries, is an automated global electronic market maker and broker specializing in routing orders and executing and processing trades in securities, futures, foreign exchange instruments, bonds and funds on more than 80 electronic exchanges and trading venues around the world. as a market maker, we provide liquidity at these marketplaces and, as a broker, we provide professional traders and investors with electronic access to stocks, options, futures, forex, bonds and mutual funds from a single ib universal accountsm. employing proprietary software on a global communications network, interactive brokers is continuously integrating its software with a growing number of exchanges and trading venues into one automatically functioning, computerized platform that requires minimal human intervention. cautionary note regarding forward-looking statements: the foregoing information contains certain forward-looking statements that reflect the company's current views with respect to certain current and future events and financial performance. these forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the company's operations and business environment which may cause the company's actual results to be materially different from any future results, expressed or implied, in these forward-looking statements. any forward-looking statements in this release are based upon information available to the company on the date of this release. the company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any statements expressed or implied therein will not be realized. additional information on risk factors that could potentially affect the company's financial results may be found in the company's filings with the securities and exchange commission. interactive brokers group, inc. and subsidiaries operating data period trades change trades change trades change trades change trading day period (contracts) change (contracts) change (shares) change period (contracts) change (contracts) change (shares) change period (contracts) change (contracts) change (shares) change brokerage cleared period (contracts) change (contracts) change (shares) change interactive brokers group, inc. and subsidiaries segment financial information (unaudited) (in millions) $ (23.8 $ (3.5 $ (3.9 $ (4.4 $ (0.5 $ (9.0 $ (5.9 $ (23.5 $ (17.5 * corporate includes corporate related activities as well as inter-segment eliminations. interactive brokers group, inc. and subsidiaries consolidated statements of income (unaudited) $ (28.1 $ (9.3 $ (0.67 $ (0.22 $ (0.66 $ (0.22 interactive brokers group, inc. and subsidiaries condensed consolidated balance sheets (unaudited) december 31, december 31, 2010 2009 interactive brokers group, inc. and subsidiaries gaap to non-gaap performance measures reconciliation (unaudited) (in thousands, except for shares or per share amounts) non-gaap financial non-gaap non-gaap performance as reported adjustments as reported adjustments measures $ 148,338 (a) reporting the effect of currency rate changes on the company's financial statements directly through equity as a component of other comprehensive income is a u.s. gaap reporting convention. management measures the company's performance by including such currency effects in trading gains, a component of net revenues, and in income, net of the effective tax rates paid by foreign subsidiaries and net of u.s. corporate taxes on the company's share of such income. the combined effective tax rate for foreign subsidiaries was 16.5% and the company's effective u.s. corporate tax rate was 36.8%. (b) holders of unvested class a shares of the company's common stock were paid $1.79 per share in lieu of the cash dividend paid on outstanding shares on december 23, 2010. the company's share of these payments was $1.0 million, on which it realized a tax benefit of $0.4 million. (c) on december 21, 2010, timber hill europe ag ("the ag") paid its sole shareholder, ibg llc, a dividend of $990.3 million. the ag's pretax earnings had not previously been subject to taxation in the united states. u.s. federal income taxes on the company's share of this dividend were $40.8 million. in addition, the company incurred $5.3 million in non-refundable taxes withheld by the swiss government. (d) the provision for income taxes is reported net of available foreign tax credits of $16.6 million. interactive brokers group, inc. and subsidiaries gaap to non-gaap performance measures reconciliation (unaudited) (in thousands, except for shares or per share amounts) non-gaap non-gaap as reported adjustments as reported adjustments $ $ $ $ other comprehensive income $ $ (a) reporting the effect of currency rate changes on the company's financial statements directly through equity as a component of other comprehensive income is a u.s. gaap reporting convention. management measures the company's performance by including such currency effects in trading gains, a component of net revenues, and in income, net of the effective tax rates paid by foreign subsidiaries and net of u.s. corporate taxes on the company's share of such income. the combined effective tax rate for foreign subsidiaries was 24.9% in 2009 and the company's effective u.s. corporate tax rate was 36.8%. interactive brokers group, inc., market making segment gaap to non-gaap performance measures reconciliation (unaudited) (in thousands, except for shares or per share amounts) non-gaap non-gaap as reported adjustments as reported adjustments other comprehensive income $ 62,362 $ 148,338 4q2009 2009 full year $ 6,899 $ 104,767 (a) reporting the effect of currency rate changes on the company's financial statements directly through equity as a component of other comprehensive income is a u.s. gaap reporting convention. management measures the market making segment's performance by including such currency effects in trading gains, a component of net revenues, and in income before taxes.
