fourth quarter earnings conference call february 9,...

Fourth Quarter Earnings Conference Call

February 9, 2012

CBOE Holdings, Inc.

Agenda

Strategic Review William BrodskyChairman and CEO

Financial Review Alan DeanExecutive Vice PresidentExecutive Vice PresidentCFO and Treasurer

Willi B d kQuestions and Answers William Brodsky

Alan Dean

Edward TillyEdward TillyPresident and Chief Operating Officer

Edward ProvostExecutive Vice PresidentChi f B i D l t Offi

CBOE Holdings, Inc.p. 2p. 2

Chief Business Development Officer

p. 2

Forward Looking Statements

► This presentation 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 i l b f i k d t i ti Th t t t l di ti b dinvolve 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: legislative or regulatory changes; changes in law or government policy; increasing competition; loss of our exclusive licenses; decrease in t di l i bilit t i t d titi d t d itrading volumes; an inability to introduce competitive new products and services; competitive pressures on our existing products, services and trading access fees; changes in price levels and volatility in the derivatives and equity markets; economic, political and market conditions; increases in our fixed costs and expenses; loss of existing customers; difficulty developing strategic relationships and attracting new customers; increased costs related to or the loss of intellect al propert rapid technological de elopments increasesrelated to, or the loss of, intellectual property; rapid technological developments; increases in trading volume and order transaction traffic that we cannot accommodate; our ability to maintain our growth effectively; damage to our reputation and brand name; loss of market data revenue; detrimental changes to our fee structure; failure to effectively monitor and manage our risks; customer consolidation; and changes to the tax treatment for options tradingtrading.

► 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, 2010 and other filings made from time to time with the SEC.

CBOE Holdings, Inc.p. 3p. 3p. 3

Strategic Review

William BrodskyChairman and CEO


A Banner Year – Record Results

Total ADV (thousands) Adjusted Operating Revenues ($mm)¹

Adjusted Diluted EPS¹Adjusted Operating Margin¹

CBOE Holdings, Inc.p. 5p. 5¹Adjusted to reflect the impact of certain items. See “Non-GAAP Information.”

Achieved Fourth Quarter Highs

Adjusted Operating Revenues¹ ($mm)

+ 6% + 19%

CBOE Holdings, Inc.p. 6

¹Adjusted to reflect the impact of certain items. See “Non-GAAP Information.”

Mission and Strategy

Develop New Products

Create value for stockholders by offering a diversified portfolio of risk management

Optimize Revenue and

Market Share in

portfolio of risk management products and services which generate industry leading profit margins and growth rates while Commoditized

Productsmargins and growth rates while maintaining the highest standards of market regulation

Broaden Customer

Base


Leader in Product Innovation

Focus on developing exclusive products that generate premium fees

► S&P 500 complex• Flagship SPX contract• SPX Weeklys• SPXpm

► VIX product line

• Sector ETFs and single-stock VIXSector ETFs and single stock VIX products

► New futures products on CFE

CBOE Holdings, Inc. p. 8

SPX Drives Strong Index Volume

► SPX most actively traded cash index• 13% increase in 2011 versus 2010

SPX W kl i t t t f SPX l► SPX Weeklys important component of SPX complex• 283% increase in 2011 versus 2010


SPXpm Broadens Customer Reach

► Convenience of screen trading on all-electronic C2 Options ExchangeOptions Exchange

► Lower cost method of accessing a p.m.-settled S&P contract

► Ten times larger than SPY options

► Cash settlement eliminates need for physical delivery► Cash settlement eliminates need for physical delivery

► European exercise eliminates risk of early assignment

SPXpm Provides Greater Efficiency, More Control and Lower Costs

CBOE Holdings, Inc.

p y

p. 10

Increasing Awareness and Understanding

Ads present differences between SPXpm and other S&P 500 contracts


Strong Growth in Volatility Trading

► See strong future growth potentialpotential

► Education key to growth

► More than 24 VIX benchmarks and strategies

► Adding new VIX benchmarks and tradable products p


CBOE Volatility Benchmark Indexes

CBOE Equity Index Volatility Indexes CBOE VIX Indexes on Individual Equities• CBOE Volatility Index (VIX)

• CBOE DJIA Volatility Index (VXD)

• CBOE Nasdaq-100 Volatility Index (VXN)

• CBOE S&P 100 Volatility Index (RVX)

• Apple (VXAPL)

• Amazon (VXAZN)

• Goldman Sachs (VXGS)

• Google (VXGOG)

CBOE ETF VIX Indexes• CBOE Crude Oil ETF Volatility Index (OVX)

• CBOE EuroCurrency ETF Volatility Index (EVZ)

• IBM (VXIBM)

Other CBOE Volatility-Related Indexes• CBOE Tail Hedge Strategy Index (VXTH)

• CBOE Emerging Markets ETF Volatility Index (VXEEM)*

• CBOE Silver ETF Volatility Index (VXSLV)

• CBOE China ETF Volatility Index (VXFXI)

• CBOE Gold Miners ETF Volatility Index (VXGDX)

• CBOE S&P 500 SKEW Index (SKEW)

• CBOE VIX Premium Strategy Index (VPD)

• CBOE Capped VIX Premium Strategy Index (VPN)

• CBOE S&P 500 Implied Correlation Indexes

• CBOE Brazil ETF Volatility Index (VXEWZ)

• CBOE Energy Sector ETF Volatility Index (VXXLE)

• CBOE Gold ETF Volatility Index (GVZ) **

*VXEM f t b t di J 9 2012 VXEEM ti

(KCJ, ICJ, JCJ)


*VXEM futures began trading January 9, 2012; VXEEM options began trading January 31, 2012**Futures and options began trading in 2011

Optimizing Revenue and Market Share inCommoditized Products

► Launched C2 to provide all-electronic, maker-taker model

• Complements Hybrid model• Achieved target of 1% to 2% market share in first year • Adjusted fees on Nov. 1 to maximize market depth and liquidity


Optimizing Revenue and Market Share inCommoditized Products

► Modified fee schedule Jan. 3

• Increase market share in multi-listed products

• Ensure optimal returns in pproprietary products

► Implemented volume incentive program “VIP”g

• Provides credits to firms for certain types and levels of business

Strong Initial Response to VIP


Strong Initial Response to VIP

Expanding User Base

► Focus on customer segments with t t t ti l

FLEX Index Options ADVgreatest potential

• Users of OTC market

• Institutional investors

• Volatility traders

► OTC-type trades migrating to CBOECBOE

• 21% growth in FLEX index products in 2011


Equity Derivatives: OTC Versus Exchange-Traded

In equity-linked options, the OTC markets’ notional value outstanding has declined in comparison to the listed markets

CBOE Holdings, Inc.17

Source: Bank of International Settlements (BIS)

Notional amounts outstanding in billions of US dollars

Expand European Customer Base

28th Annual Risk Management ConferenceMarch 2012

First CBOE European Risk Management Conference

March 2012


Management Conference September 2012

ETNs & ETFs Pegged to CBOE VIX Index

Ticker Issuer Net Assets ($MM)* Benchmark Ticker Issuer

Net Assets ($MM)*

Benchmark

VXX US Barclays iPath ETNs/USA 875 14 S&P 500 VIX Short-Term Futures IVOP US Barclays iPath ETNs/USA 10 79 S&P 500 VIX Short-Term Futures

42 Structured Products with $2.8 Billion in Assets Under Management

VXX US Barclays iPath ETNs/USA 875.14 S&P 500 VIX Short Term Futures IVOP US Barclays iPath ETNs/USA 10.79 S&P 500 VIX Short Term Futures

VXZ US Barclays iPath ETNs/USA 436.57 S&P 500 VIX Mid-Term Futures VXCC US E-TRACS ETNs/USA 10.70 SPX VIX Futures 3-month

XIV US Credit Suisse 386.68 S&P 500 VIX Short-Term Futures VXEE US E-TRACS ETNs/USA 10.36 S&P 500 VIX Mid-Term Futures

TVIX US Credit Suisse 170.83 S&P 500 VIX Short-Term Futures VXDD US E-TRACS ETNs/USA 10.30 SPX VIX Futures 4-month

VOLT LN Nomura 166.92 S&P 500 VIX Mid-Term Futures VXBB US E-TRACS ETNs/USA 10.28 SPX VIX Futures 2-month

VSXX LN Barclays iPath 98.44 VSTOXX Short Term Fut TR VXFF US E-TRACS ETNs/USA 10.22 SPX VIX Futures 6-month

XVZ US iPath ETNs/USA 68.00 S&P 500 Dynamic VIX Futures VXAA US E-TRACS ETNs/USA 10.12 S&P 500 VIX Short-Term Futures

LYMJ GS Lyxor 60.22 S&P 500 VIX Futures Enhanced Roll FFVX US E-TRACS ETNs/USA 9.14 S&P 500 VIX Futures 6-month

1552 JP Kokusai 53.32 S&P 500 VIX Short-Term Futures DDVX US E-TRACS ETNs/USA 8.92 SPX VIX Futures 4-month

VSXY LN Barclays iPath 48.62 VSTOXX Mid Term Fut TR EEVX US E-TRACS ETNs/USA 8.78 S&P 500 VIX Mid-Term Futures

XVIX US UBS 44.56 S&P 500 VIX Futures Term-Structure VIIZ US Credit Suisse 8.78 S&P 500 VIX Mid-Term Futures

VIIX US Credit Suisse 39.98 S&P 500 VIX Short-Term Futures VSXX IM Barclays iPath/Germany 8.58 VSTOXX Short Term Fut TR

VIXY US ProShares ETFs 37.00 S&P 500 VIX Short-Term Futures CCVX US E-TRACS ETNs/USA 8.37 SPX VIX Futures 3-month

HVU CN BetaPro 26.06 S&P 500 VIX Short-Term Futures BBVX US E-TRACS ETNs/USA 8.23 SPX VIX Futures 2-month

XXV US iPath ETNs/USA 19.10 S&P 500 VIX Short-Term Futures AAVX US E-TRACS ETNs/USA 7.29 S&P 500 VIX Short-Term Futures

VIXS LN Source Markets Plc/Ireland 17.05 S&P 500 VIX Short-Term Futures VZZB US iPath ETNs/USA 7.27 S&P 500 VIX Mid-Term Futures

TVIZ US Credit Suisse 14.77 S&P 500 VIX Mid-Term Futures SVXY US ProShares ETFs 6.92 S&P 500 VIX Short-Term Futures

VXIS GR Barclays iPath/Germany 13.39 S&P 500 VIX Short-Term Futures UVXY US ProShares ETFs 6.53 S&P 500 VIX Short-Term Futures


CVOL US Citigroup Funding Inc. 13.23 Citi Volatility Index Total Return ZIV US Credit Suisse 6.44 S&P 500 VIX Mid-Term Futures

VIXM US ProShares ETFs 12.28 S&P 500 VIX Mid-Term Futures HUV CN BetaPro 2.24 S&P 500 VIX Short-Term Futures

VXIM GR Barclays iPath/Germany 12.06 S&P 500 VIX Mid-Term Futures

*($2.784B as of Dec. 12, 2011)Issued in 2011

Expanding VIX Futures Trading

• VIX futures offer CTAs and hedge funds diversification and a source of non-correlated returns

• Tremendous VIX futures liquidity has increased interest and usage

• CTA/hedge fund penetration in U.S. and Europe is expanding

f• Potential exists for expansion in Asia and Australia


Ongoing Value Proposition

Develop New Products

Maintain the highest

standards of market

Continue to drive

margins and

Capitalize on operating

leverage inherent in

Reinvest capital to

drive growth and return

excess cash

Optimize Revenue and

Market Share in Commoditized market

regulationg

cash flow inherent in the business

excess cash to

stockholders

Commoditized Products

B dBroaden Customer

Base


Financial Review

Alan DeanExecutive Vice President CFO and TreasurerCFO and Treasurer


4Q11 Financial Overview

Adjusted Basis1

($s in millions, except for EPS) 4Q11 4Q10 $ Chg. % Chg.g gAdjusted Operating Revenues $120.2 $113.0 $ 7.2 6%Adjusted Operating Expenses 63.8 63.5 (0.3) -Adjusted Operating Income $ 56 4 $ 49 5 $ 6 9 14%Adjusted Operating Income $ 56.4 $ 49.5 $ 6.9 14%

Adjusted Operating Margin % 46.9% 43.8% 310 bpsAdjusted Net Income Allocated to Common Stockholders $ 33 2 $ 30 2 $ 3 0 10%Common Stockholders $ 33.2 $ 30.2 $ 3.0 10%Adjusted Diluted EPS $ 0.37 $ 0.31 $0.06 19%

Total Contracts per Day² 4.30 4.26 1%Rate per Contract $0.321 $0.293 $0.028 10%¹Adjusted to reflect the impact of certain items. See Appendix for “Non-GAAP Information.”


²Trading days in fourth quarter 2011 and 2010 totaled 63 and 64, respectively.

Adjusted Operating Revenues up 6%

Key Drivers:

T ti FOperating Revenues (in millions) 4Q11 4Q10 $ CHG % CHG

► Transaction Fees

• 10% increase in RPC to $0.321

• 1% decrease in trading volume

Transaction fees $ 87.1 $ 79.9 $ 7.2 9%

Access fees 17.1 18.4 (1.3) -7%► Access Fees

• Reflects implementation of sliding fee scale for market maker trading

Access fees 17.1 18.4 (1.3) 7%

Exchange services and other fees 4.7 4.0 0.7 18%

Market data fees 5.1 5.1 - 0% fee scale for market maker trading permits

► Exchange Services

F i f t i

Market data fees 5.1 5.1 0%

Regulatory fees 4.2 3.9 0.3 8%

Other revenue 2.0 1.7 0.3 18% • Fee increases for certain user services

Other revenue 18%

Total Operating Revenues $ 120.2 $ 113.0 $ 7.2 6%


Transaction Fees Driven by Volumeand Rate Per Contract

Overall Transaction Fee per Contract (RPC)Overall Transaction Fee per Contract (RPC)

Thousands

RPC up versus 4Q11 due to higher mix of index options and futures and lower volume discounts

5,000 $0.320

Thousands RPC

3,000

4,000

$0.280

$0.300

1 000

2,000$0.240

$0.260

0

1,000

$0.200

$0.220

ADV (000s) 4,479 4,715 4,488 4,350 4,555 5,310 3,725 4,262 5,081 4,447 5,481 4,301

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11


ADV (000s) 4,479 4,715 4,488 4,350 4,555 5,310 3,725 4,262 5,081 4,447 5,481 4,301

RPC ($) $0.292 $0.273 $0.266 $0.278 $0.300 $0.281 $0.306 $0.293 $0.285 $0.308 $0.313 $0.321

p. 25p. 25

Trading Volume Mix 4Q11 vs 4Q10

Futures Futures

RPC Increased due to Shift to Higher-Margin Index Options and Futures

Futures 0.7%

Futures0.9%

4Q11 RPC $0.321

$0.167Equities

4Q10 RPC $0.293

$0.177Equities

$0.631

$0.212

Index

ETFS

$0.590

$0.224

Index

ETFS


$1.329Futures$1.679Futures

Trading Permits Holding Steady

► Implemented sliding fee scale for market maker trading permits on Jan 1 2011Jan. 1, 2011

► Trading permits holding steady

► Market makers continue to take advantage of sliding fee scale


Adjusted Operating Expenses¹

Key Drivers:Adjusted Operating Expenses (in millions) 4Q11 4Q10 $ CHG % CHG

► Royalty Fees• Higher volume in licensed index

options

j p g p $

Employee Costs $ 24.6 $ 23.8 $ 0.8 3%

Depreciation and Amortization 7.5 8.2 (0.7) -9%

►Trading Volume Incentives• Down due to changes in program

criteria

Data Processing 4.3 5.0 (0.7) -14%

Outside Services 6.7 6.8 (0.1) -1%

Royalty Fees 12.3 9.7 2.6 27%

►Travel and Promotional Expenses• Higher advertising to support

launch of SPXpm

y y

Trading Volume Incentives 2.4 5.6 (3.2) -57%

Travel and Promotional Expenses 3.3 1.6 1.7 106%

► Employee Costs• Increase in costs for employee

benefits

Facilities Costs 1.4 1.7 (0.3) -18%

Other Expenses 1.3 1.1 0.2 18%

Total Adjusted Operating Expenses $ 63.8 $ 63.5 $ 0.3 0%


¹Adjusted to reflect the impact of certain items. See Appendix for “Non-GAAP Information.”

p. 28

4Q11 Core Operating Expenses

(in thousands) 4Q11 4Q10 $ CHG % CHGTotal Operating Expenses $ 67,529 $ 65,537 $ 1,992 3%Less: Depreciation and amortization 7,506 8,190 (684) -8% Accelerated stock-based compensation expense - 2,004 (2,004) NM Severance expense pursuant to executive employment agreement 3,709 - 3,709 NM Volume-based expenses: Royalty fees 12,346 9,710 2,636 27%y y Trading volume incentives 2,440 5,665 (3,225) -57%Core Operating Expenses (non-GAAP): $ 41,528 $ 39,968 $ 1,560 4%

Detail of Core Operating Expenses (non-GAAP)E l t $ 24 560 $ 23 819 $ 741 3% Employee costs $ 24,560 $ 23,819 $ 741 3%

Data processing 4,263 4,960 (697) -14% Outside services 6,657 6,788 (131) -2% Travel and promotional expenses 3,345 1,672 1,673 100% Facilities costs 1,426 1,662 (236) -14% Other expenses 1,277 1,067 210 20%

T t l $ 41 528 $ 39 968 $ 1 560 4% Total $ 41,528 $ 39,968 $ 1,560 4%


NM = not meaningful

p. 29

Volume-based Expenses

(in millions) 4Q11 4Q10 $ CHG % CHG

R lt f $ 12 346 $ 9 710 $ 2 636 27%

Volume-based expenses:

Royalty fees $ 12,346 $ 9,710 $ 2,636 27% Trading volume incentives 2,440 5,665 (3,225) -57% Total $ 14,786 $ 15,375 $ (589) -4%

► Royalty fees increased due to higher trading volume in licensed index products

► Trading volume incentives decreased due to changes in incentive program and lower trading volume in equity and ETF options combined

• Equity and ETF options down 6% in 4Q11 versus 4Q10


Sixth Consecutive Quarter ofYear-Over-Year Margin Improvement

Quarterly Adjusted Operating Income and Margin¹($ in millions)

g pIncrease

55.0%$80.0

50.0%$60.0

$70.0

45.0%

$40.0

$50.0

35.0%

40.0%

$20.0

$30.0

30.0%$0.0

$10.0

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11

CBOE Holdings, Inc.

¹Adjusted to reflect the impact of certain items. See Appendix for “Non-GAAP Information.”

Operating Income Margin

p. 31

Fourth Quarter Tax Rate

► 4Q11 increase reflects Illinois tax rate increase on 1/1/2011, net of tax benefits recognized

► Adjusted tax rate excludes $322 thousand in tax credits related to prior years

4Q11 4Q10 Change 2011 2010 Change4Q11 4Q10 Change 2011 2010 Change

GAAP 39.2% 37.2% +200 bps 41.9% 39.6% +230 bps

Adj t d 39 8% 37 2% +260 b 40 3% 39 6% +70 bAdjusted 39.8% 37.2% +260 bps 40.3% 39.6% +70 bps


Strong Debt-Free Balance Sheet

Cash and Cash Equivalents(in millions)

Strong cash flow

Debt-free balance sheet


Strong Cash Flow Generation

► Generated $203.1 million in operating cash flow in 2011, up 51%

► Returned $91.7 million to stockholders via dividends and share repurchases

► $100 million share repurchase program authorized on August 2, 2011

• Used $47 million to purchase 1.8 million shares at average price of $25 59 per share$25.59 per share

• $53 million remaining under plan at 12/31/11

R t d th $525 illi i h► Returned more than $525 million in cash to stockholders since IPO

CBOE Holdings, Inc.

Focused on Driving Increased Stockholder Valuep. 34

Highlights of Fee ChangesImplemented Jan. 3 on CBOE

► Revised liquidity provider sliding scale to exclude proprietary and exclusive products

I l t d l i ti (VIP)► Implemented a new volume incentive program (VIP)

• VIP pays credits to permit holders for executing certain customer orders on multiply-listed options at CBOE in excess of defined thresholds

• Modified the firm fee cap criteria on multiply-listed options, limiting applicable trades

► Increased fees for certain exchange services, including connectivity charges, registration fees and co-location fees

► Reduced monthly fee for market maker trading permits to $5,500 from $6,000

• Lowered the sliding fee scale for market maker trading permits for multiply-listed productsproducts

• Increased fees for other permits and appointments


Drive incremental volume, leverage proprietary products, ensure competitive pricing

2012 Full-Year Guidance

($ in millions) 2011 Actual 2012 Guidance

Exchange services and other fees $18.2 $24 to $26

Access fees $68.7 $64 to $67

Core operating expenses¹ $166.2 $173 to $178²

Tax rate 41.9% 41.2% to 41.7%

Depreciation and amortization $34.1 $33 to $35

Capital expenditures $29 1 $30 to $35Capital expenditures $29.1 $30 to $35

(1) The company expects core expenses to be at the low end of the guidance range if volume in 2012 is flat to up 4 percent and at the high end of the range if volume growth is 5 percent or higher.

(2) Continuing stock-based compensation expense, included in core expenses, is expected to be in the range of $12.2 to $12.7 million, i l d d i l t 2011 i l d d ti i t k b d ti f $12 2 illi

CBOE Holdings, Inc.

included in employee costs; 2011 core expenses included continuing stock based compensation of $12.2 million.

p. 36

Ongoing Value Proposition

ReinvestMaintain the highest

standards of market

regulation

Continue to drive margins and cash flow

Capitalize on operating leverage

inherent in the business

Reinvest capital to drive

growth and return excess

cash to stockholdersstockholders


Questions & Answers


Appendix Materials


Options ADV Up 1% in 4Q11 vs 4Q10

CBOE Holdings Quarterly Options ADV (contracts in millions)

Includes May 6 “Flash Crash”


Quarterly Core Operating Expenses¹

4Q 2011 % rev 3Q 2011 % rev 2Q 2011 % rev 1Q 2011 % rev 4Q 2010 % rev

($ in thousands)

4Q 2011 % rev 3Q 2011 % rev 2Q 2011 % rev 1Q 2011 % rev 4Q 2010 % revTotal Operating Expenses $67,529 56% $68,638 48% $63,838 53% $66,507 54% $65,537 62%Less: Depreciation and Amortization 7,506 6% 8,897 6% 8,996 8% 8,696 7% 8,190 8% Accelerated stock-based compensation - - - - 113 - 340 - 2,004 2%

Severance expense pursuant to executive employment agreement 3,709 3% -

--

--

--

-

Volume-based Expense:R lt F 12 346 10% 13 956 10% 10 373 9% 11 146 9% 9 710 9% Royalty Fees 12,346 10% 13,956 10% 10,373 9% 11,146 9% 9,710 9%

Trading Volume Incentives 2,440 2% 3,525 2% 2,515 2% 5,759 5% 5,665 5%Core Operating Expenses (non-GAAP)¹: $41,528 35% $42,260 29% $41,841 35% $40,566 33% $39,968 38%Less: Continuing stock-based compensation (3,010) -3% (2,976) -2% (3,106) -3% (3,073) -3% (3,233) -3%

Core Operating Expenses excluding continuing stock-based compensation (non-GAAP)¹: $38,518 32% $39,284 27% $38,735 32% $37,493 30% $36,735 35%

Expense Detail:p Employee Costs $21,550 18% $22,969 16% $21,285 18% $22,323 18% $20,586 19% Data Processing 4,263 4% 4,337 3% 4,905 4% 4,428 4% 4,960 5% Outside Services 6,657 6% 6,881 5% 7,190 6% 6,579 5% 6,788 6% Travel and Promotion Expenses 3,345 3% 2,416 2% 2,368 2% 1,685 1% 1,672 2% Facilities Costs 1,426 1% 1,081 1% 1,400 1% 1,492 1% 1,662 2% Other Expenses 1,277 1% 1,600 1% 1,587 1% 986 1% 1,067 1%

Number of Full Time Employees 596 591 588 582 581p y

¹Please see our disclaimer regarding Non-GAAP financial measures.


Calculation of Weighted Average Shares

Shares Days

Outstanding Total Days Weighted Avg Shares

Days Outstanding

Total Days Weighted Avg

4Q 2011 Year 2011

Unrestricted common stock 90,084,711 92 92 90,084,711 90,084,711 365 365 90,084,711 Vesting of participating securities (restricted stock) on 5/17/11 22,641 92 92 22,641 22,641 228 365 14,143 Vesting of participating securities (restricted stock) on 6/15/11 413,175 92 92 413,175 413,175 199 365 225,265 Vesting of participating securities (various dates) 84,358 various 92 29,378 84,358 various 365 7,405 Treasury share purchases (various dates) (1,236,100) various (1,152,648) (1,836,000) various (337,527)

Total weighted average shares - basic and diluted 89,397,257 89,993,997

P ti i ti iti f t d 1 485 331 1 485 331 1 485 331 1 485 331Participating securities as of quarter end 1,485,331 1,485,331 1,485,331 1,485,331

Weighted average shares including participating securities 90,882,588 91,479,328 Percentage of net income allocated to participating securities 1.63% 1.62%

Net income allocated to common stockholders equals net income less the percentage of net income allocated to participating securities.

GAAP EPS is calculated by dividing net income allocated to common stockholders by the total weighted average shares outstanding during the period for basic and diluted.


CBOE Rolling 3-Month RPC

CBOE Rolling Three-Month Average Transaction Fee Per Contract2011 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Equities $0.170 $0.164 $0.160 $0.163 $0.168 $0.169 $0.171 $0.159 $0.159 $0.155 $0.163 $0.167Indexes 0.592 0.601 0.604 0.615 0.618 0.627 0.624 0.606 0.605 0.605 0.621 0.631Exchange-traded funds 0.223 0.215 0.207 0.207 0.208 0.202 0.197 0.187 0.192 0.194 0.205 0.212 Total options average 0.276 0.272 0.275 0.282 0.289 0.295 0.303 0.300 0.301 0.300 0.308 0.312Futures 1.657 1.591 1.507 1.493 1.514 1.477 1.437 1.376 1.371 1.348 1.328 1.329 Total average transaction fee per contract $0.286 $0.282 $0.285 $0.293 $0.301 $0.308 $0.316 $0.313 $0.313 $0.311 $0.317 $0.321

2010 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecEquities $0 177 $0 180 $0 184 $0 172 $0 163 $0 162 $0 170 $0 180 $0 182 $0 180 $0 179 $0 177Equities $0.177 $0.180 $0.184 $0.172 $0.163 $0.162 $0.170 $0.180 $0.182 $0.180 $0.179 $0.177Indexes 0.576 0.590 0.597 0.584 0.578 0.580 0.590 0.597 0.598 0.592 0.592 0.590Exchange-traded funds 0.234 0.237 0.236 0.225 0.215 0.217 0.222 0.233 0.236 0.228 0.228 0.224 Total options average 0.282 0.290 0.297 0.282 0.274 0.277 0.288 0.296 0.300 0.296 0.292 0.284Futures 2.092 2.004 1.952 1.879 1.832 1.717 1.694 1.600 1.661 1.669 1.674 1.679 Total average transaction fee per contract $0.286 $0.294 $0.300 $0.286 $0.279 $0.281 $0.293 $0.301 $0.306 $0.302 $0.300 $0.293

2009 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecEquities $0.179 $0.188 $0.195 $0.188 $0.183 $0.188 $0.187 $0.181 $0.171 $0.168 $0.172 $0.172Indexes 0.583 0.573 0.569 0.563 0.565 0.565 0.570 0.567 0.574 0.578 0.574 0.563Exchange-traded funds 0.259 0.267 0.285 0.285 0.272 0.263 0.247 0.245 0.237 0.235 0.234 0.233 Total options average 0.287 0.287 0.292 0.282 0.273 0.272 0.272 0.270 0.264 0.266 0.273 0.274Futures 1.728 1.696 1.689 1.657 1.670 1.738 1.819 1.927 1.938 2.077 2.106 2.186 Total average transaction fee per contract $0.288 $0.288 $0.292 $0.283 $0.274 $0.273 $0.273 $0.272 $0.266 $0.268 $0.277 $0.278

2008 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecEquities $0.174 $0.183 $0.187 $0.187 $0.182 $0.176 $0.174 $0.179 $0.175 $0.178 $0.171 $0.169Indexes 0.550 0.567 0.581 0.582 0.580 0.575 0.573 0.571 0.577 0.579 0.585 0.582Exchange-traded funds 0.244 0.254 0.258 0.271 0.268 0.260 0.259 0.263 0.267 0.260 0.257 0.244

Total options average 0 277 0 284 0 290 0 292 0 285 0 277 0 275 0 280 0 287 0 298 0 297 0 290


Total options average 0.277 0.284 0.290 0.292 0.285 0.277 0.275 0.280 0.287 0.298 0.297 0.290Futures 1.937 2.085 1.835 1.842 1.926 1.919 1.874 1.851 1.898 1.904 1.855 1.763 Total average transaction fee per contract $0.279 $0.286 $0.292 $0.293 $0.287 $0.279 $0.276 $0.282 $0.289 $0.299 $0.298 $0.291

GAAP to Non-GAAP Reconciliation

CBOE Holdings, Inc. and SubsidiariesReconciliation of GAAP to Non-GAAP Financial MeasuresFor the Three and Twelve Months Ended December 31, 2011

(in thousands, except per share amounts) Three months ended December 31, 2011 Twelve months ended December 31, 2011

Items Impacting Results Items Impacting Results

Reported (GAAP)

Other Expense

Income Tax Expense

After Considering Items (non-

GAAP)Reported (GAAP)

Operating expenses

Income tax expense

Other expense

After Considering Items (non-GAAP)

Total Operating Revenues $ 120,208 $ 120,208 $ 508,144 $ 508,144

Total Operating Expenses 67,529 (3,709) 63,820 266,512 (4,162) 262,350

Operating Income 52 679 3 709 56 388 241 632 4 162 245 794Operating Income 52,679 3,709 56,388 241,632 4,162 245,794

Operating Margin 43.8 % 46.9 % 47.6 % 48.4 %

Total Other Income /(Expense) (343) (343) (1,548) 460 (1,088)

Income Before Income Taxes 52,336 3,709 56,045 240,084 4,162 460 244,706

Income Tax Provision 20,529 1,478 322 22,329 100,678 1,677 (3,901) 185 98,639

Effective Income tax rate 39.2 % 0.6% 39.8 % 41.9 % (1.6)% 40.3 %

N t I $ 31 807 $ 2 231 $ (322) $ 33 716 $ 139 406 $ 2 485 $ 3 901 $ 275 $ 146 067Net Income $ 31,807 $ 2,231 $ (322) $ 33,716 $ 139,406 $ 2,485 $ 3,901 $ 275 $ 146,067

Net Income Allocated to Participating Securities (520) (37) 5 (552) (2,263) (40) (63) (6) (2,372)

Net Income Allocated to Common Stockholders $ 31,287 $ 2,194 $ (317) $ 33,164 $ 137,143 $ 2,445 $ 3,838 $ 269 $ 143,695

Diluted Net Income per Share Allocated to Common Stockholders $ 0.35 $ 0.02 $ - $ 0.37 $ 1.52 $ 0.03 $ 0.04 $ - $ 1.60

CBOE Holdings, Inc.

NOTE: May not foot due to rounding

p. 44


CBOE Holdings, Inc. and SubsidiariesReconciliation of GAAP to Non-GAAP Financial MeasuresFor the Three and Nine Months Ended September 30, 2011

(in thousands, ex cept per share amounts)

Items Impacting Results

After After

Three months ended Septebmber 30, 2011 Nine months ended September 30, 2011


Reported (GAAP)

Income tax reserve adjustment

Considering Items (non-GAAP)

Reported (GAAP)

Income tax reserve adjustment

Accelerated stock-based compensation

Impairment charge

Considering Items (non-GAAP)

Total Operating Revenues $143,604 143,604$ $387,935 $387,935

Total Operating Expenses 68,638 68,638 198,984 (453) 198,531

Operating Income 74 966 74 966 188 951 453 189 404 Operating Income 74,966 74,966 188,951 453 189,404

Operating Margin 52.2% 52.2% 48.7% 48.8%

Total Other Income /(Expense) (401) (401) (1,204) 460 (744)

Income Before Income Taxes 74,565 74,565 187,747 453 460 188,660

Income Tax Provision 33,238 (4,223) 29,015 80,148 (4,223) 188 191 76,304

Effective Income Tax Rate 44.6% 38.9% 42.7% 40.4%

Net Income $41,327 $4,223 45,550$ $107,599 $4,223 $265 $269 $112,356

Net Income Allocated to Participating Securities (730) (75) (805) (2,294) (90) (6) (6) (2,396)

Net Income Allocated to Common Stockholders $40,597 $4,148 44,745$ $105,305 $4,133 $259 $263 $109,960

Diluted Net Income per Share Allocated to Common Stockholders $0.45 $0.05 0.50$ $1.17 $0.05 $0.00 $0.00 $1.22

CBOE Holdings, Inc.


p. 45


CBOE Holdings, Inc. and SubsidiariesReconciliation of GAAP to Non-GAAP Financial MeasuresFor the Three Months Ended March 31 and June 30, 2011



Three months ended June 30, 2011Three months ended March 31, 2011


Reported (GAAP)


Impairment charge


Reported (GAAP)



Total Operating Revenues 124,042$ 124,042$ 120,290$ 120,290$

Total Operating Expenses 66 507 (340) 66 167 63 838 (113) 63 725 Total Operating Expenses 66,507 (340) 66,167 63,838 (113) 63,725

Operating Income 57,535 340 57,875 56,452 113 56,565


Total Other Income /(Expense) (643) 459 (184) (162) (162)

Income Before Income Taxes 56,892 340 459 57,691 56,290 113 56,403

Income Tax Provision 24,021 143 194 24,358 22,889 46 22,935

Net Income 32,871$ 197$ 265$ 33,333$ 33,401$ 67$ 33,468$

Net Income Allocated to Participating Securities (782) (5) (6) (793) (792) (2) (794)

Net Income Allocated to Common Stockholders 32,089$ 192$ 259$ 32,540$ 32,609$ 65$ 32,674$

Dil t d N t I Sh All t d t C St kh ld 0 36$ 0 00$ 0 00$ 0 36$ 0 36$ 0 00$ 0 36$



Diluted Net Income per Share Allocated to Common Stockholders 0.36$ 0.00$ 0.00$ 0.36$ 0.36$ 0.00$ 0.36$

p. 46


CBOE Holdings, Inc. and SubsidiariesReconciliation of GAAP to Non-GAAP Financial MeasuresFor the Three Months and Year Ended December 31, 2010 and 2009


Items Impacting Results Items Impacting ResultsAfter After

Three months ended September 30, 2010 Three months ended December 31, 2010

Reported (GAAP)



Reported (GAAP)

Recognition of prior-period revenue


Impairment charge


Total Operating Revenues 106,015$ -$ 106,015$ 117,391$ (4,406)$ 112,985$


Operating Income 34,933 10,965 45,898 51,854 (4,406) 2,004 49,452


Total Other Income /(Expense) (235) (235) (1 898) 1 620 (278) Total Other Income /(Expense) (235) (235) (1,898) 1,620 (278)

Income Before Income Taxes 34,698 10,965 45,663 49,956 (4,406) 2,004 1,620 49,174

Income Tax Provision 14,244 4,461 18,705 18,579 (1,638) 745 602 18,288

Net Income 20,454$ 6,504$ 26,958$ 31,377$ (2,768)$ 1,259$ 1,018$ 30,886$

Net income allocated to Participating Securities (434)$ (144)$ (578)$ (690)$ 61$ (28)$ (22)$ (679)$

Net Income Allocated to Common Stockholders 20,020$ 6,360$ 26,380$ 30,687$ (2,707)$ 1,231$ 995$ 30,206$

Diluted Net Income Per Share Allocated to Common Stockholders 0.20$ 0.06$ 0.26$ 0.31$ (0.03)$ 0.01$ 0.01$ 0.31$

Diluted Net Income Per Share for all Stockholders 0.20$ 0.06$ 0.26$ 0.32$ (0.03)$ 0.01$ 0.01$ 0.32$

(in thousands, ex cept per share amounts) Year ended December 31, 2009Items Impacting Results

Reported (GAAP)

Recognition of prior-period revenue


Impairment charge


Reported (GAAP)

Recognition of deferred access fee revenue

Exercise right appeal settlement


Total Operating Revenues 437,104$ (4,406)$ 432,698$ 426,082$ (24,086)$ 401,996$

Items Impacting ResultsYear ended December 31, 2010


Operating Income 167,341 (4,406) 12,968 175,903 177,584 (24,086) 2,086 155,584


Total Other Income /(Expense) (2,718) 1,620 (1,098) (355) (355)

Income Before Income Taxes 164,623 (4,406) 12,968 1,620 174,805 177,229 (24,086) 2,086 155,229

Income Tax Provision 65,227 (1,746) 5,138 642 69,261 70,778 (9,619) 833 61,992

Net Income 99,396$ (2,660)$ 7,830$ 978$ 105,544$ 106,451$ (14,467)$ 1,253$ 93,237$

Net income allocated to Participating Securities (1 229)$ 33$ (97)$ (12)$ (1 305)$ $ $ $ $


Net income allocated to Participating Securities (1,229)$ 33$ (97)$ (12)$ (1,305)$ -$ -$ -$ -$

Net Income Allocated to Common Stockholders 98,167$ (2,627)$ 7,733$ 966$ 104,239$ 106,451$ (14,467)$ 1,253$ 93,237$

Diluted Net Income Per Share Allocated to Common Stockholders 1.03$ (0.03)$ 0.08$ 0.01$ 1.09$ 1.17$ ($0.16) $0.01 1.03$ Diluted Net Income Per Share for all Stockholders 1.04$ (0.03)$ 0.08$ 0.01$ 1.10$ 1.17$ ($0.16) $0.01 1.03$

NOTE: May not foot due to rounding p. 47

Non-GAAP Information

► In addition to disclosing results determined in accordance with GAAP, CBOE Holdings has disclosed certain non-GAAP measures of operating performance. The non-GAAP measures provided in this presentation include core operating expenses adjusted operating revenue adjusted operatingcore operating expenses, adjusted operating revenue, adjusted operating expenses, adjusted operating income, adjusted operating margin, adjusted effective tax rate, adjusted net income, adjusted net income allocated to common stockholders and adjusted diluted earnings per share.M t b li th t th GAAP fi i l t d i► Management believes that the non-GAAP financial measures presented in this presentation, 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 adjustedNon 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. These measures are not in accordance with, or a substitute for, GAAP, and may be different from or inconsistent with non-GAAP fi i l d b th iGAAP financial measures used by other companies.

► Core operating expenses 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


p , ( ) p p ( )unusual or one-time expenses.

p. 48

CBOE Holdings, Inc.400 South LaSalle Street400 South LaSalle StreetChicago, IL 60605

Debbie KoopmanDirector, Investor Relationskoopman@cboe [email protected]


fourth quarter earnings conference call february 9,...

Documents