CHICAGO, July 26, 2011 (GLOBE NEWSWIRE) -- optionsXpress Holdings, Inc. (Nasdaq:OXPS) today reported results for the three months ended June 30, 2011.
Highlights from the second quarter 2011 included:
- Revenues of $59.2 million, a 10% decrease year-over-year
- Net income of $8.8 million, or $0.15 per diluted share
- Retail daily average revenue trades (DARTs) of 32,200, a 2% decrease year-over-year
- Net new account growth of 8,100 during the quarter, resulting in 397,400 customer accounts, a 9% increase year-over-year
- Ending customer assets of $8.4 billion, a 20% increase year-over-year
"While we did see trading activity slow somewhat in the short-term, primarily in the back half of the second quarter, customer accounts grew at an annualized rate of 8% and customer assets were flat while the S&P 500, NASDAQ and Russell 2000 indices all declined," commented David Fisher, Chief Executive Officer of optionsXpress. "We are encouraged that our customer growth continues to demonstrate the long-term value of our product for derivatives traders."
For the second quarter, Retail DARTs were 32,200, 2% lower than the second quarter of 2010, and down 12% from the first quarter of 2011. Total net revenues decreased 10% from the second quarter of 2010 and were down 10% when compared to the first quarter of 2011. Resulting net income was $8.8 million, or $0.15 per diluted share, a 43% decrease from the $15.6 million reported in the second quarter of 2010.
Second quarter results included approximately $2.6 million in one-time legal costs related to an agreement to settle a customer matter. Second quarter results also included approximately $1.6 million in expenses related to the merger with The Charles Schwab Corporation that was previously announced on March 21, 2011. Finally, the Company recognized non-cash gains related to prior acquisitions of approximately $1.9 million in the quarter. All of these items together in the second quarter reduced income before taxes by approximately $2.3 million and reduced net income by approximately $2.0 million.
Proposed Merger by Schwab
On March 21, 2011, optionsXpress Holdings, Inc. and The Charles Schwab Corporation announced that they had entered into a definitive agreement under which Schwab will acquire optionsXpress. Under the terms of the agreement, optionsXpress stockholders will receive 1.02 shares of Schwab stock for each share of optionsXpress stock. Based on Schwab's closing stock price as of March 18, 2011, the transaction values each optionsXpress share at $17.91, resulting in a total transaction value of approximately $1.0 billion.
On April 22, 2011, the Federal Trade Commission granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, relating to The Charles Schwab Corporation's pending acquisition of optionsXpress Holdings, Inc.
This transaction is expected to close as soon as we receive the necessary regulatory and shareholder approvals, which we anticipate will be in the third quarter of 2011. Until the transaction is completed, optionsXpress and Schwab will continue to act as separate businesses.
About optionsXpress Holdings, Inc.
optionsXpress Holdings, Inc., a pioneer in equity options and futures trading, offers an innovative suite of online brokerage services for investor education, strategy evaluation and trade execution. optionsXpress Holdings subsidiaries include optionsXpress, Inc., a retail online brokerage specializing in options and futures, brokersXpress, LLC, an online trading and reporting platform for independent investment professionals, Open E Cry, LLC, an innovative futures broker offering direct access futures trading for high volume commodities and futures traders through its proprietary software platform, and Optionetics, Inc, a leading provider of investment education services, including live seminars, proprietary software analytics, online and offline educational products and individual coaching.
More information can be found in the Investor Relations section of optionsXpress' website at http://www.optionsxpress.com/investor.
The optionsXpress Holdings, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6907
Safe Harbor
This communication contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include statements that refer to expectations, projections or other characterizations of future events or circumstances and are identified by words such as "believe," "anticipate," "expect," "estimate," "intend," "plan," "will," "may," "aim," "target," "could," "should," "continue," "build," "improve," "growth," "increase," and other similar expressions. These forward-looking statements relate to the business combination transaction involving The Charles Schwab Corporation ("Schwab") and optionsXpress Holdings, Inc. ("optionsXpress"), including expected synergies; timing of closing; client and stockholder benefits; management; accretion; growth; client retention; and merger-related charges which reflect management's beliefs, objectives and expectations as of the date hereof. Achievement of the expressed beliefs, objectives and expectations is subject to risks and uncertainties that could cause actual results to differ materially from those beliefs, objectives or expectations. Important transaction-related factors that may cause such differences include, but are not limited to, the risk that expected revenue, expense and other synergies from the transaction may not be fully realized or may take longer to realize than expected; the parties are unable to successfully implement their integration strategies; failure of the parties to satisfy the closing conditions in the merger agreement in a timely manner or at all, including regulatory approvals; failure of the optionsXpress stockholders to approve the merger; and disruptions to the parties' businesses as a result of the announcement and pendency of the merger. Other important factors include general market conditions, including the level of interest rates, equity valuations and trading activity; the parties' ability to attract and retain clients and grow client assets/relationships; competitive pressures on rates and fees; the level of client assets, including cash balances; the impact of changes in market conditions on money market fund fee waivers, revenues, expenses and pre-tax margins; capital needs; the parties' ability to develop and launch new products, services and capabilities in a timely and successful manner; the effect of adverse developments in litigation or regulatory matters; any adverse impact of financial reform legislation and related regulations; and other factors set forth in Schwab's and optionsXpress' Annual Reports on Form 10-K for the fiscal year ended December 31, 2010. Schwab and optionsXpress disclaim any obligation and do not intend to update or revise any forward-looking statements.
In connection with the proposed transaction, Schwab filed with the Securities and Exchange Commission ("SEC") a registration statement on Form S-4 on April 21, 2011, as amended on July 22, 2011, that included a proxy statement/prospectus for the stockholders of optionsXpress. optionsXpress will mail the final proxy statement/prospectus to its stockholders after the foregoing registration statement is declared effective by the SEC. Investors and security holders are urged to read the proxy statement/prospectus regarding the proposed transaction and other relevant documents filed with the SEC when they become available because they will contain important information. Copies of all documents filed with the SEC regarding the proposed transaction may be obtained, free of charge, at the SEC's website (http://www.sec.gov). These documents, when available, may also be obtained, free of charge, from Schwab's website, www.aboutschwab.com/investor, under the tab "Financials and SEC Filings" or from optionsXpress' website, www.optionsXpress.com/investor, under the item "SEC Filings."
Participants in this transaction
Schwab, optionsXpress and their respective directors, executive officers and certain other members of management and employees may be deemed to be participants in the solicitation of proxies from the optionsXpress stockholders in respect of the proposed transaction. Information regarding the persons who may, under the rules of the SEC, be deemed to be participants in the solicitation of the stockholders of optionsXpress in connection with the proposed transaction will be set forth in the proxy statement/prospectus when it is filed with the SEC. Information about Schwab's executive officers and directors is available in Schwab's Annual Report on Form 10-K filed with the SEC on February 25, 2011 and Schwab's definitive proxy statement filed with the SEC on March 30, 2011. Information about optionsXpress' executive officers and directors is available in optionsXpress' 10-K/A filed with the SEC on April 27, 2011. You can obtain free copies of these documents from Schwab and optionsXpress using the contact information above.
| optionsXpress Holdings, Inc. | ||||
| Consolidated Statements of Operations | ||||
| In thousands, except per share data | ||||
| (Unaudited) | ||||
| Three Months Ended | ||||
| June | June | Change | ||
| 30, 2011 | 30, 2010 | $ | % | |
| Revenues: | ||||
| Commissions | $41,764 | $44,713 | ($2,949) | (7%) |
| Other brokerage-related revenue | 4,730 | 5,243 | (513) | (10%) |
| Interest revenue and fees | 3,857 | 4,826 | (969) | (20%) |
| Interest expense | (58) | (56) | (2) | 4% |
| Net interest revenue and fees | 3,799 | 4,770 | (971) | (20%) |
| Education revenues | 5,524 | 7,707 | (2,183) | (28%) |
| Other income | 3,374 | 3,067 | 307 | 10% |
| Net revenues | $59,191 | $65,500 | ($6,309) | (10%) |
| Expenses: | ||||
| Compensation and benefits | $12,046 | $11,854 | $192 | 2% |
| Brokerage, clearing and other related expenses | 10,407 | 10,250 | 157 | 2% |
| Brokerage advertising | 4,600 | 5,747 | (1,147) | (20%) |
| Education marketing and fulfillment | 3,849 | 4,986 | (1,137) | (23%) |
| Depreciation and amortization | 2,180 | 2,277 | (97) | (4%) |
| Loan interest and fees | 1,001 | -- | 1,001 | n/a |
| Other general and administrative | 10,133 | 5,794 | 4,339 | 75% |
| Total expenses | $44,216 | $40,908 | $3,308 | 8% |
| Income before income taxes | 14,975 | 24,592 | (9,617) | (39%) |
| Income taxes | 6,133 | 9,005 | (2,872) | (32%) |
| Net income | $8,842 | $15,587 | ($6,745) | (43%) |
| Basic earnings per share | $0.15 | $0.27 | ($0.12) | (44%) |
| Diluted earnings per share | $0.15 | $0.27 | ($0.12) | (44%) |
| Weighted average shares | ||||
| outstanding - basic | 57,497 | 57,403 | 94 | 0% |
| Weighted average shares | ||||
| outstanding - diluted | 57,861 | 57,611 | 250 | 0% |
| Six Months Ended | ||||
| June | June | Change | ||
| 30, 2011 | 30, 2010 | $ | % | |
| Revenues: | ||||
| Commissions | $87,160 | $84,311 | $2,849 | 3% |
| Other brokerage-related revenue | 10,581 | 9,741 | 840 | 9% |
| Interest revenue and fees | 8,140 | 9,593 | (1,453) | (15%) |
| Interest expense | (128) | (107) | (21) | 20% |
| Net interest revenue and fees | 8,012 | 9,486 | (1,474) | (16%) |
| Education revenues | 10,907 | 15,237 | (4,330) | (28%) |
| Other income | 8,428 | 3,756 | 4,672 | 124% |
| Net revenues | $125,088 | $122,531 | $2,557 | 2% |
| Expenses: | ||||
| Compensation and benefits | $24,367 | $23,502 | $865 | 4% |
| Brokerage, clearing and other related expenses | 20,151 | 19,268 | 883 | 5% |
| Brokerage advertising | 9,983 | 10,116 | (133) | (1%) |
| Education marketing and fulfillment | 6,892 | 10,281 | (3,389) | (33%) |
| Depreciation and amortization | 4,346 | 4,568 | (222) | (5%) |
| Loan interest and fees | 2,014 | -- | 2,014 | n/a |
| Other general and administrative | 20,139 | 11,370 | 8,769 | 77% |
| Total expenses | $87,892 | $79,105 | $8,787 | 11% |
| Income before income taxes | 37,196 | 43,426 | (6,230) | (14%) |
| Income taxes | 14,126 | 15,951 | (1,825) | (11%) |
| Net income | $23,070 | $27,475 | ($4,405) | (16%) |
| Basic earnings per share | $0.40 | $0.48 | ($0.08) | (17%) |
| Diluted earnings per share | $0.40 | $0.48 | ($0.08) | (17%) |
| Weighted average shares | ||||
| outstanding - basic | 57,477 | 57,434 | 43 | 0% |
| Weighted average shares | ||||
| outstanding - diluted | 57,845 | 57,643 | 202 | 0% |
| optionsXpress Holdings, Inc. | |||||
| Consolidated Balance Sheets | |||||
| In thousands | |||||
| (Unaudited) | |||||
| Period Ended | |||||
| June 30, | December 31, | Change | |||
| 2011 | 2010 | $ | % | ||
| Assets: | |||||
| Cash and cash equivalents | $50,153 | $100,875 | ($50,722) | (50%) | |
| Cash and investments segregated | |||||
| in compliance with federal regulations | 1,127,398 | 945,870 | 181,528 | 19% | |
| Receivables from brokerage customers, net | 252,241 | 235,589 | 16,652 | 7% | |
| Receivables from brokers, dealers and | |||||
| clearing organizations | 13,441 | 25,686 | (12,245) | (48%) | |
| Investments in securities | 10,562 | 11,442 | (880) | (8%) | |
| Deposits with clearing organizations | 20,712 | 20,480 | 232 | 1% | |
| Fixed assets, net | 11,062 | 11,345 | (283) | (2%) | |
| Goodwill | 87,489 | 85,360 | 2,129 | 2% | |
| Other intangible assets, net | 3,691 | 4,837 | (1,146) | (24%) | |
| Other assets | 39,968 | 31,434 | 8,534 | 27% | |
| Total assets | $1,616,717 | $1,472,918 | $143,799 | 10% | |
| Liabilities and stockholders' equity: | |||||
| Liabilities | |||||
| Payables to brokerage customers | $1,322,206 | $1,193,479 | $128,727 | 11% | |
| Payables to brokers, dealers and clearing | |||||
| organizations | 4,551 | 1,711 | 2,840 | 166% | |
| Accrued liabilities and accounts payable | 23,907 | 19,471 | 4,436 | 23% | |
| Current and deferred income taxes | 562 | 651 | (89) | (14%) | |
| Other liabilities | 25,812 | 32,521 | (6,709) | (21%) | |
| Long-term debt | 110,400 | 120,000 | (9,600) | (8%) | |
| Total liabilities | 1,487,438 | 1,367,833 | 119,605 | 9% | |
| Stockholders' equity | 129,279 | 105,085 | 24,194 | 23% | |
| Total liabilities and stockholders' | |||||
| equity | $1,616,717 | $1,472,918 | $143,799 | 10% | |
| optionsXpress Holdings, Inc. | ||||
| Statistical Operating Data | ||||
| Three Months Ended | ||||
| June 30, | June 30, | Change | ||
| 2011 | 2010 | $ or # | % | |
| Number of customer accounts | ||||
| (at period end)(1) | 397,400 | 365,500 | 31,900 | 9% |
| Daily average revenue trades (''DARTs'') (2) | ||||
| Retail DARTs | 32,200 | 32,700 | (500) | (2%) |
| Institutional DARTs | 15,300 | 17,100 | (1,800) | (11%) |
| Total DARTs | 47,500 | 49,800 | (2,300) | (5%) |
| Customer trades per account (3) | 30 | 35 | (5) | (14%) |
| Average commission per trade | $13.94 | $14.26 | ($0.32) | (2%) |
| Option trades as a % of total trades | 43% | 40% | 3% | |
| Brokerage advertising expense per net new | ||||
| customer account (4) | $568 | $737 | ($169) | (23%) |
| Total client assets (000s) | $8,403,112 | $7,030,199 | $1,372,913 | 20% |
| Client margin balances (000s) | $227,595 | $204,194 | $23,401 | 11% |
| Six Months Ended | ||||
| June 30, | June 30, | Change | ||
| 2011 | 2010 | $ or # | % | |
| Number of customer accounts | ||||
| (at period end)(1) | 397,400 | 365,500 | 31,900 | 9% |
| Daily average revenue trades (''DARTs'') (2) | ||||
| Retail DARTs | 34,400 | 31,500 | 2,900 | 9% |
| Institutional DARTs | 14,700 | 15,700 | (1,000) | (6%) |
| Total DARTs | 49,100 | 47,200 | 1,900 | 4% |
| Customer trades per account (3) | 32 | 33 | (1) | (3%) |
| Average commission per trade | $14.23 | $14.40 | ($0.17) | (1%) |
| Option trades as a % of total trades | 44% | 41% | 3% | |
| Brokerage advertising expense per net new | ||||
| customer account (4) | $556 | $707 | ($151) | (21%) |
| Total client assets (000s) | $8,403,112 | $7,030,199 | $1,372,913 | 20% |
| Client margin balances (000s) | $227,595 | $204,194 | $23,401 | 11% |
| (1) Customer accounts are open, numbered accounts. | ||||
| (2) DARTs are total revenue-generating trades for a period divided by the number of trading days in that period | ||||
| (3) Customer trades per account are total trades divided by the average number of total customer accounts during the period. Customer trades are annualized. | ||||
| (4) Calculated based on total net new customer accounts opened during the period. | ||||
| optionsXpress Holdings, Inc. | ||||
| Segment Information | ||||
| In thousands | ||||
| Three Months Ended | Six Months Ended | |||
| June 30, | June 30, | June 30, | June 30, | |
| 2011 | 2010 | 2011 | 2010 | |
| Revenue | ||||
| Brokerage services | $53,859 | $57,797 | $114,550 | $107,288 |
| Education services | 6,003 | 8,186 | 11,867 | 16,200 |
| Eliminations | (671) | (483) | (1,329) | (957) |
| Revenue | $59,191 | $65,500 | $125,088 | $122,531 |
| Income/(loss) before income taxes | ||||
| Brokerage services | $16,776 | $25,637 | $40,352 | $45,973 |
| Education services | (1,801) | (1,045) | (3,156) | (2,547) |
| Income before income taxes | $14,975 | $24,592 | $37,196 | $43,426 |