Form 8-K Intercontinental Exchang For: Feb 04

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT PURSUANT TO SECTION 13 or 15(d) of THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported):  February 4, 2016  

 

Intercontinental Exchange, Inc.

(Exact Name of Registrant as Specified in Charter)

 

Delaware	001-36198	46-2286804
(State or other jurisdiction of incorporation)	(Commission File No.)	(I.R.S. Employer Identification Number)

 

5660 New Northside Drive, Third Floor, 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 registrants under any of the following provisions (see General Instruction A.2. below):

 

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨

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 February 4, 2016, Intercontinental Exchange, Inc. issued a press release announcing its financial results for the fiscal quarter and year ended December 31, 2015. A copy of the 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.

 

Intercontinental Exchange makes references to non-GAAP financial information in the attached press release. A description of the non-GAAP financial information and a reconciliation of the non-GAAP financial information to the comparable GAAP financial measures are contained in the attached press release and Intercontinental Exchange’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

 

Item 8.01. Other Events.

 

ICE announced that Chairman and Chief Executive Officer, Jeffrey C. Sprecher, and Continental Power Exchange, Inc. (“CPEX”), adopted a pre-arranged stock trading plan pursuant to guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934.  Mr. Sprecher owns 100% of the equity interest in CPEX and CPEX has no operations and no assets other than its equity interest in ICE.

 

The pre-arranged trading plan enables Mr. Sprecher to implement certain tax planning measures, diversify his personal investment portfolio, further his charitable giving and pay income taxes incurred in connection with equity awards. The total sales under the trading plans represent less than 5% of Mr. Sprecher’s combined holdings of ICE stock, restricted stock and stock options (directly or indirectly through CPEX). Under the ICE Stock Ownership Policy, Mr. Sprecher is required to hold ten times his base salary in ICE securities.  As of the date of ICE’s Notice of 2015 Annual Meeting and Proxy Statement, Mr. Sprecher held 250 times his base salary in ICE securities and after the sales contemplated by the trading plans, Mr. Sprecher will continue to hold ICE securities in an amount well in excess of ten times his base salary.

 

The trading plan was adopted during an authorized trading period and will expire in December 2016. Under Rule 10b5-1 trading plans, trades may be executed at times when an officer is in possession of material non-public information provided the trade is executed based on the application of a formula or binding instructions determined at the time the trading plan was arranged and the trading plan was entered into at a time when the officer was not in possession of material non-public information. Any stock sales that occur under the trading plan will be publicly disclosed in accordance with U.S. securities laws.

 

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

99.1	Press Release dated February 4, 2016.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized.

  

	INTERCONTINENTAL EXCHANGE, INC.
	/s/ Scott A. Hill
	Scott A. Hill
	Chief Financial Officer

 

Date:  February 4, 2016

 

 

INDEX TO EXHIBITS

 

Exhibit Number		Description
99.1		Press Release dated February 4, 2016

 

 

 

Exhibit 99.1

 

 

Intercontinental Exchange Reports Record Fourth Quarter 2015 Adjusted EPS of $3.27, +26% year-over-year; Record Full Year 2015 Adjusted EPS of $12.15, +26% year-over-year

 

ATLANTA & NEW YORK, February 4, 2016 - Intercontinental Exchange, Inc. (NYSE: ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, today reported financial results for the fourth quarter and full year 2015. For the quarter ended December 31, 2015, consolidated net income attributable to ICE was $370 million on $875 million of consolidated revenues less transaction-based expenses. On a GAAP basis, diluted earnings per share (EPS) in the fourth quarter were $3.29 and for the full year 2015 were $11.39.

 

ICE's operating results include amortization of acquisition-related intangibles, acquisition and integration-related expenses and other adjustments that are not reflective of ICE's cash operations or core business performance. Excluding these items, net of tax, fourth quarter 2015 adjusted net income from continuing operations was $369 million and adjusted diluted EPS from continuing operations were $3.27, an increase of 26% over the prior fourth quarter. Please refer to the reconciliation of non-GAAP financial measures included in this press release for more information on adjusted net income from continuing operations and adjusted diluted EPS from continuing operations.

 

"Our record performance in 2015 was driven by strong demand for risk management, trading, data and listings,” said Jeffrey C. Sprecher, ICE Chairman and CEO. "We achieved our double-digit earnings growth target by focusing on our customers, innovating amid a dynamic market environment and with strong financial discipline. All of this has enabled us to again increase our quarterly dividend while investing in growth opportunities. Our acquisition of Interactive Data, together with many other strategic initiatives, positions us well to deliver strong earnings growth again in 2016.”

 

Scott A. Hill, ICE CFO, said: “We finished the year with a strong fourth quarter, delivering record earnings growth and executing on our strategic and operational objectives. We expanded operating margins again in 2015 by driving revenue growth and reducing expenses. And we generated solid cash flow, which enabled us to return nearly $1 billion to shareholders through dividends and share repurchases while investing for long-term growth."

 

Fourth Quarter 2015 Results

 

Fourth quarter 2015 consolidated revenues, less transaction-based expenses, increased 9% to $875 million compared to the same period in 2014. Included in this amount are $470 million of transaction and clearing revenues, less transaction-based expenses.

 

Consolidated data services revenues for the fourth quarter of 2015 were a record $257 million, up 35% year-over-year and listings revenues were a record $102 million, up 8% compared to the prior fourth quarter. Consolidated other revenues were $46 million.

 

Consolidated operating expenses were $457 million for the fourth quarter of 2015, including $52 million in Interactive Data acquisition-related costs, NYSE integration costs, and other deal-related success fees. Consolidated operating income for the fourth quarter was $418 million and operating margin was 48%. The effective tax rate for the fourth quarter was 5%, driven lower primarily by the deferred tax benefit associated with future UK income tax rate reductions that were enacted in the fourth quarter.

 

 

 

Full Year 2015 Results

 

Consolidated revenues, less transaction-based expenses, for the year ended December 31, 2015 increased 8% to $3.3 billion compared to the same period in 2014. Included in this amount are $1.9 billion of transaction and clearing revenues, less transaction-based expenses.

 

Consolidated data services revenues for the year ended December 31, 2015 were a record $871 million, up 26% year-over-year and listings revenues were a record $405 million, up 10% compared to the prior period. Consolidated other revenues were $178 million.

 

Consolidated 2015 net income from continuing operations was $1.3 billion and diluted EPS from continuing operations were $11.39. Adjusted net income from continuing operations was $1.4 billion and adjusted diluted EPS from continuing operations were $12.15 for the year, representing a 26% increase year over year. Please refer to the reconciliation of non-GAAP financial measures included in this press release.

 

Consolidated operating expenses were $1.6 billion for the year ended December 31, 2015, including $83 million in Interactive Data acquisition-related costs, NYSE integration costs, and other deal related success fees. Consolidated operating margin was 52%. The effective tax rate for the year ended December 31, 2015 was 22%.

 

Consolidated cash flows from operations were $1.3 billion for the year ended December 31, 2015. Operational capital expenditures were $109 million and capitalized software development costs totaled $87 million. Dividends paid during 2015 were $331 million and share repurchases totaled $660 million.

 

Unrestricted cash was $627 million and outstanding debt was $7.3 billion as of December 31, 2015, including $2.6 billion in commercial paper.

 

Financial Guidance for 2016

 

•

ICE expects first quarter and full year 2016 adjusted operating expenses, excluding amortization of acquisition-related intangibles, in the range of $490 million to $500 million and $2.000 billion to $2.030 billion, respectively. Full year operating expense guidance includes ~$50MM in NYSE and ~$25MM in Interactive Data expense synergies as well as ~$45MM largely related to additional compensation and ~$30MM in product and technology investments.

 

•

ICE expects quarterly interest expense for the first quarter of 2016 to be approximately $45 million. For the remainder of the year, ICE expects interest expense to be in the range of $44 million to $45 million per quarter.

 

•

ICE expects full year 2016 operational capital expenditures in the range of $280 million to $300 million. ICE expects full year 2016 real estate capital expenditures in the range of $45 million to $55 million.

 

•

ICE expects full year 2016 consolidated effective tax rate in the range of 28% to 31%.

 

•

ICE's diluted share count for the first quarter 2016 is expected to be in the range of 118 million to 121 million weighted average shares outstanding. Full year 2016 diluted share count is expected to be in the range of 118 million to 122 million weighted average shares outstanding.

 

•

ICE expects to provide combined 2015 unaudited quarterly pro-forma GAAP and non-GAAP income statement information for Interactive Data Corporation and Trayport by the end of February 2016 in the Investor Relations section of ICE’s website.

 

 

 

Earnings Conference Call Information

 

ICE will hold a conference call today, February 4, at 8:30 a.m. ET to review its fourth quarter and full year 2015 financial results. A live audio webcast of the earnings call will be available on the company's website at www.theice.com in the investor relations section. Participants may also listen via telephone by dialing 888-317-6003 from the United States, 866-284-3684 from Canada or 412-317-6061 from outside of the United States and Canada. Telephone participants are required to provide the participant entry number 1051306 and are recommended to call 10 minutes prior to the start of the call. The call will be archived on the company's website for replay.

 

Historical futures, options and cash ADV, rate per contract, open interest data and CDS cleared information can be found at: http://ir.theice.com/investors-and-media/supplemental-volume-info/default.aspx

 

 

 

Consolidated Statements of Income

 

(In millions, except per share amounts)

(Unaudited)

 

										Three Months Ended
		Year Ended December 31,								December 31,
		2015				2014				2015				2014
Revenues:
Transaction and clearing fees, net		$	3,228			$	3,144			$	814			$	844
Data services fees			871				691				257				189
Listing fees			405				367				102				95
Other revenues			178				150				46				37
Total revenues			4,682				4,352				1,219				1,165
Transaction-based expenses:
Section 31 fees			349				359				86				107
Cash liquidity payments, routing and clearing			995				901				258				258
Total revenues, less transaction-based expenses			3,338				3,092				875				800
Operating expenses:
Compensation and benefits			611				592				166				144
Technology and communication			203				188				56				53
Professional services			139				181				37				31
Rent and occupancy			57				78				12				17
Acquisition-related transaction and integration costs			88				129				54				27
Selling, general and administrative			116				143				34				39
Depreciation and amortization			374				333				98				89
Total operating expenses			1,588				1,644				457				400
Operating income			1,750				1,448				418				400
Other income (expense):
Interest expense			(97	)			(96	)			(30	)			(23	)
Other income, net			—				55				3				35
Other expense, net			(97	)			(41	)			(27	)			12
Income from continuing operations before income tax expense			1,653				1,407				391				412
Income tax expense			358				402				18				118
Income from continuing operations			1,295				1,005				373				294
Income from discontinued operations, net of tax			—				11				—				—
Net income		$	1,295			$	1,016			$	373			$	294
Net income from continuing operations attributable to non-controlling interest			(21	)			(35	)			(3	)			(6	)
Net income attributable to Intercontinental Exchange, Inc.		$	1,274			$	981			$	370			$	288
Basic earnings per share attributable to Intercontinental Exchange, Inc. common shareholders:
Continuing operations		$	11.45			$	8.50			$	3.31			$	2.56
Discontinued operations			—				0.10				—				—
Basic earnings per share		$	11.45			$	8.60			$	3.31			$	2.56
Basic weighted average common shares outstanding			111				114				112				112
Diluted earnings per share attributable to Intercontinental Exchange, Inc. common shareholders:
Continuing operations		$	11.39			$	8.46			$	3.29			$	2.54
Discontinued operations			—				0.09				—				—
Diluted earnings per share		$	11.39			$	8.55			$	3.29			$	2.54
Diluted weighted average common shares outstanding			112				115				112				113
Dividend per share		$	2.90			$	2.60			$	0.75			$	0.65

 

 

 

Consolidated Balance Sheets

(In millions)

 

		As of December 31,
		2015				2014
Assets:
Current assets:
Cash and cash equivalents		$	627			$	652
Short-term investments			29				1,200
Short-term restricted cash and investments			657				329
Customer accounts receivable			700				508
Margin deposits and guaranty funds			51,169				47,458
Prepaid expenses and other current assets			131				85
Total current assets			53,313				50,232
Property and equipment, net			1,037				874
Other non-current assets:
Goodwill			12,079				8,535
Other intangible assets, net			10,758				7,780
Long-term restricted cash and investments			263				297
Long-term investments			299				379
Other non-current assets			238				157
Total other non-current assets			23,637				17,148
Total assets		$	77,987			$	68,254
Liabilities and Equity:
Current liabilities:
Accounts payable and accrued liabilities		$	398			$	409
Section 31 fees payable			116				137
Accrued salaries and benefits			215				205
Deferred revenue			98				69
Short-term debt			2,591				2,042
Margin deposits and guaranty funds			51,169				47,458
Other current liabilities			156				116
Total current liabilities			54,743				50,436
Non-current liabilities:
Non-current deferred tax liability, net			2,837				2,028
Long-term debt			4,717				2,235
Accrued employee benefits			478				516
Other non-current liabilities			337				482
Total non-current liabilities			8,369				5,261
Total liabilities			63,112				55,697
Commitments and contingencies
Redeemable non-controlling interest			35				165
Equity:
Intercontinental Exchange, Inc. shareholders’ equity:
Common stock			1				1
Treasury stock			(1,448	)			(743	)
Additional paid-in capital			12,295				9,938
Retained earnings			4,148				3,210

 

 

 

Accumulated other comprehensive loss			(188	)			(46	)
Total Intercontinental Exchange, Inc. shareholders’ equity			14,808				12,360
Non-controlling interest in consolidated subsidiaries			32				32
Total equity			14,840				12,392
Total liabilities and equity		$	77,987			$	68,254

 

Non-GAAP Financial Measures and Reconciliation

 

We use non-GAAP measures internally to evaluate our performance and in making financial and operational decisions. When viewed in conjunction with U.S. generally accepted accounting principles, or GAAP, results and the accompanying reconciliation, we believe that our presentation of these measures provides investors with greater transparency and supplemental data relating to our financial condition and results of operations. We strongly recommend that investors review the U.S. GAAP financial measures included in this press release and in our Annual Report on Form 10-K, including our consolidated financial statements and related notes.

 

Adjusted income from continuing operations for the periods presented below are calculated by adding income from continuing operations, the adjustments described below, which are not reflective of our cash operations and core business performance, and the related income tax effect. The following table reconciles income from continuing operations to adjusted net income from continuing operations and calculates adjusted earnings per share from continuing operations for the period presented below (in millions except per share amounts):

 

										Three Months Ended
		Year Ended December 31,								December 31,
		2015				2014				2015				2014
Income from continuing operations		$	1,295			$	1,005			$	373			$	294
Add: NYSE and Interactive Data transaction and integration costs and acquisition related success fees			83				124				52				27
Add: Amortization of acquisition-related intangibles			140				131				41				33
Add: Early interest expense on debt issued for Interactive Data acquisition			5				—				5				—
Add: Litigation settlements and accruals, net			15				—				—				—
Less: Net gain on the sale of 6% remaining ownership in Euronext			—				(4	)			—				(4	)
Less: Other income from OCC equity investment			—				(26	)			—				(26	)
Less: Income tax effect related to the items above			(83	)			(89	)			(31	)			(19	)
Less: Deferred tax adjustments on acquisition-related intangibles			(82	)			(14	)			(68	)			(8	)
Add: Other tax adjustments			7				12				—				3
Less: Net income from continuing operations attributable to non-controlling interest			(21	)			(35	)			(3	)			(6	)
Adjusted income from continuing operations		$	1,359			$	1,104			$	369			$	294
Earnings per share from continuing operations:
Basic		$	11.45			$	8.50			$	3.31			$	2.56
Diluted		$	11.39			$	8.46			$	3.29			$	2.54
Adjusted earnings per share from continuing operations:
Adjusted basic		$	12.21			$	9.67			$	3.30			$	2.60
Adjusted diluted		$	12.15			$	9.63			$	3.27			$	2.59
Weighted average common shares outstanding:
Basic			111				114				112				112
Diluted			112				115				112				113

 

 

 

About Intercontinental Exchange

 

Intercontinental Exchange (NYSE: ICE) operates the leading network of global futures and equity exchanges and provides world class clearing, data and listing services across many markets. The New York Stock Exchange is the world leader in capital raising and equities trading.

 

Trademarks of ICE and/or its affiliates include Intercontinental Exchange, ICE, ICE block design, NYSE and New York Stock Exchange, Interactive Data and Trayport. Information regarding additional trademarks and intellectual property rights of Intercontinental Exchange, Inc. and/or its affiliates is located at www.intercontinentalexchange.com/terms-of-use

 

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 — Statements in this press release regarding ICE's business that are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see ICE's Securities and Exchange Commission (SEC) filings, including, but not limited to, the risk factors in ICE's Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the SEC on February 4, 2016.

 

SOURCE: Intercontinental Exchange

 

ICE-CORP

 

Media Contact:

 

Carol Schumacher, VP, Corporate Affairs

+1 678 589 1834

[email protected]

 

Investor Contact:

 

Kelly Loeffler, SVP Investor Relations & Corp. Communications

+1 770 857 4726

[email protected]

 

Isabel Janci, Senior Director, Investor Relations

+1 770 857 0363

[email protected]

 

 

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• ICE Climate, Property and Loan-Level Datasets Provide Holistic Visibility into Broad-Based Housing Sector Risk
• Global clinical development on Dengue antiviral candidate will start, Hyundai Bioscience strives to win emergency use authorization
• Cumulus Media Announces Amendment and Extension of Withdrawal Deadline and Expiration Time for Exchange Offer and Consent Solicitation