UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
FORM 8-K
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CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): November 4, 2014
INTERCONTINENTAL EXCHANGE, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware | 001-36198 | 46-2286804 |
(State or other jurisdiction | (Commission | (I.R.S. Employer |
of incorporation) | File Number) | Identification Number) |
2100 RiverEdge Parkway, Suite 500, Atlanta, Georgia 30328
(Address of Principal Executive Offices)(Zip Code)
Registrant's telephone number, including area code (770) 857-4700
_________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On November 4, 2014, Intercontinental Exchange, Inc. (“ICE”) announced its financial results for the fiscal quarter ended September 30, 2014. A copy of ICE’s press release announcing such financial results is attached as Exhibit 99.1 to this Current Report on Form 8-K.
The information contained herein, including the attached press release, is furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934 except as may be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits | ||
99.1 | Press Release dated November 4, 2014. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
INTERCONTINENTAL EXCHANGE, INC. | |||
Date: November 4, 2014 | /s/ Scott A. Hill | ||
Scott A. Hill Chief Financial Officer |
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ICE declared a quarterly cash dividend of $0.65 per share for the fourth quarter of 2014 with a record date of December 16, 2014 and a payment date of December 31, 2014. The ex-dividend date is December 12, 2014.
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ICE has reduced its bonus accrual for 2014 based on the expectation that full-year results will be slightly below target. The full year reduction to compensation expense is $5 million, of which three quarters is reflected in the third quarter of 2014 with the remaining amount to be reflected in the fourth quarter of 2014.
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ICE expects fourth quarter and full year 2014 operating expenses, including amortization of acquisition-related intangibles in the range of $375 million to $380 million and $1.52 billion to $1.53 billion, respectively. ICE expects fourth quarter and full year 2014 operating expenses, excluding amortization of acquisition-related intangibles in the range of $344 million to $349 million and $1.39 billion to $1.40 billion, respectively. ICE expects fourth quarter and full year 2014 D&A, excluding amortization of acquisition-related intangibles in the range of $49 million to $54 million and $195 million to $200 million, respectively. ICE believes that excluding amortization of acquisition-related intangibles from its results better demonstrates the ICE’s operating performance and cash generation.
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ICE expects SuperDerivatives fourth quarter 2014 revenue in the range of $15 million to $16 million and expenses in the range of $12 million to $13 million.
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ICE expects fourth quarter and full year 2014 operational capital expenditures in the range of $43 million to $53 million and $165 million to $175 million, respectively. ICE expects fourth quarter and full year 2014 real estate capital expenditures in the range of $36 million to $46 million and $75 million to $85 million, respectively.
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ICE’s diluted share count for the fourth quarter 2014 is expected to be in the range of 113 million to 114 million weighted average shares outstanding. Full year 2014 diluted share count is expected to be in the range of 114.5 million to 115.5 million weighted average shares outstanding, in each case reflecting share repurchases through October but excluding any share repurchases that may occur during the remainder of 2014.
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Three Months Ended
September 30,
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Nine Months Ended
September 30,
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Revenues:
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2014
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2013
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2014
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2013
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Transaction and clearing fees, net
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$ | 708 | $ | 280 | $ | 2,190 | $ | 899 | ||||||||
Market data fees
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105 | 40 | 304 | 121 | ||||||||||||
Listing fees
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86 | — | 251 | — | ||||||||||||
Other revenues
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107 | 18 | 332 | 42 | ||||||||||||
Total revenues
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1,006 | 338 | 3,077 | 1,062 | ||||||||||||
Transaction-based expenses:
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Section 31 fees
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86 | — | 240 | — | ||||||||||||
Cash liquidity payments, routing and clearing
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175 | — | 545 | — | ||||||||||||
Total revenues, less transaction-based expenses
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745 | 338 | 2,292 | 1,062 | ||||||||||||
Operating expenses:
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Compensation and benefits
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144 | 60 | 448 | 193 | ||||||||||||
Technology and communication
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46 | 13 | 136 | 36 | ||||||||||||
Professional services
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52 | 7 | 161 | 23 | ||||||||||||
Rent and occupancy
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19 | 5 | 61 | 23 | ||||||||||||
Acquisition-related transaction and integration costs
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40 | 6 | 102 | 32 | ||||||||||||
Selling, general and administrative
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31 | 10 | 92 | 28 | ||||||||||||
Depreciation and amortization
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83 | 35 | 244 | 100 | ||||||||||||
Total operating expenses
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415 | 136 | 1,244 | 435 | ||||||||||||
Operating income
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330 | 202 | 1,048 | 627 | ||||||||||||
Other income (expense):
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Interest expense
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(22 | ) | (9 | ) | (73 | ) | (29 | ) | ||||||||
Other income, net
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5 | — | 20 | 3 | ||||||||||||
Other expense, net
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(17 | ) | (9 | ) | (53 | ) | (26 | ) | ||||||||
Income from continuing operations before income tax expense
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313 | 193 | 995 | 601 | ||||||||||||
Income tax expense
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90 | 48 | 284 | 161 | ||||||||||||
Income from continuing operations
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223 | 145 | 711 | 440 | ||||||||||||
Income (loss) from discontinued operations, net of tax
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(10 | ) | — | 11 | — | |||||||||||
Net income
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$ | 213 | $ | 145 | $ | 722 | $ | 440 | ||||||||
Net income attributable to non-controlling interest
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(7 | ) | (4 | ) | (29 | ) | (10 | ) | ||||||||
Net income attributable to Intercontinental Exchange, Inc.
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$ | 206 | $ | 141 | $ | 693 | $ | 430 | ||||||||
Basic earnings (loss) per share attributable to Intercontinental Exchange, Inc. common shareholders:
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Continuing operations
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$ | 1.90 | $ | 1.94 | $ | 5.96 | $ | 5.91 | ||||||||
Discontinued operations
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(0.09 | ) | — | 0.09 | — | |||||||||||
Basic earnings per share
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$ | 1.81 | $ | 1.94 | $ | 6.05 | $ | 5.91 | ||||||||
Diluted earnings (loss) per share attributable to Intercontinental Exchange, Inc. common shareholders:
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Continuing operations
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$ | 1.89 | $ | 1.92 | $ | 5.93 | $ | 5.86 | ||||||||
Discontinued operations
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(0.09 | ) | — | 0.09 | — | |||||||||||
Diluted earnings per share
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$ | 1.80 | $ | 1.92 | $ | 6.02 | $ | 5.86 | ||||||||
Weighted average common shares outstanding:
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Basic
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114 | 73 | 115 | 73 | ||||||||||||
Diluted
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114 | 74 | 115 | 73 | ||||||||||||
Dividend per share
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$ | 0.65 | — | $ | 1.95 | — |
September 30, 2014
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December 31, 2013
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Assets:
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Current assets:
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Cash and cash equivalents
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$ | 638 | $ | 961 | ||||
Short-term investments
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1,241 | 74 | ||||||
Short-term restricted cash and investments
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314 | 277 | ||||||
Customer accounts receivable, net
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446 | 482 | ||||||
Margin deposits and guaranty funds
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46,527 | 42,216 | ||||||
Prepaid expenses and other current assets
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212 | 249 | ||||||
Total current assets
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49,378 | 44,259 | ||||||
Property and equipment, net
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839 | 891 | ||||||
Other non-current assets:
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Goodwill
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8,471 | 9,501 | ||||||
Other intangible assets, net
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7,754 | 9,404 | ||||||
Long-term restricted cash and investments
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230 | 161 | ||||||
Long-term investments
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496 | 324 | ||||||
Other non-current assets
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118 | 278 | ||||||
Total other non-current assets
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17,069 | 19,668 | ||||||
Total assets
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$ | 67,286 | $ | 64,818 | ||||
Liabilities and Equity:
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Current liabilities:
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Accounts payable and accrued liabilities
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$ | 282 | $ | 343 | ||||
Accrued salaries and benefits
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185 | 301 | ||||||
Deferred revenue
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139 | 48 | ||||||
Short-term debt
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1,889 | 1,135 | ||||||
Margin deposits and guaranty funds
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46,527 | 42,216 | ||||||
Other current liabilities
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315 | 299 | ||||||
Total current liabilities
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49,337 | 44,342 | ||||||
Non-current liabilities:
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Non-current deferred tax liability, net
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2,137 | 2,771 | ||||||
Long-term debt
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2,247 | 3,923 | ||||||
Accrued employee benefits
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320 | 412 | ||||||
Other non-current liabilities
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458 | 433 | ||||||
Total non-current liabilities
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5,162 | 7,539 | ||||||
Total liabilities
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54,499 | 51,881 | ||||||
Redeemable non-controlling interest
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144 | 322 | ||||||
Equity:
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ICE shareholders’ equity:
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Preferred Stock
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— | — | ||||||
Common Stock
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1 | 1 | ||||||
Treasury stock, at cost
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(540 | ) | (53 | ) | ||||
Additional paid-in capital
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9,909 | 9,794 | ||||||
Retained earnings
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3,000 | 2,482 | ||||||
Accumulated other comprehensive income
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244 | 359 | ||||||
Total ICE shareholders’ equity
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12,614 | 12,583 | ||||||
Non-controlling interest in consolidated subsidiaries
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29 | 32 | ||||||
Total equity
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12,643 | 12,615 | ||||||
Total liabilities and equity
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$ | 67,286 | $ | 64,818 |
Three Months Ended
September 30, 2014
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Income from continuing operations
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$ | 223 | ||
Add: NYSE integration costs
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38 | |||
Less: Income tax effect related to the NYSE integration costs
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(9 | ) | ||
Less: Net income from continuing operations attributable to non-controlling interest
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(7 | ) | ||
Adjusted net income from continuing operations:
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$ | 245 | ||
Earnings per share from continuing operations:
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Basic
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$ | 1.90 | ||
Diluted
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$ | 1.89 | ||
Adjusted earnings per share from continuing operations:
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Adjusted basic
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$ | 2.16 | ||
Adjusted diluted
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$ | 2.15 | ||
Weighted average common shares outstanding:
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Basic
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114 | |||
Diluted
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114 |