filings.toolsItem 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
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Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
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Documents filed as part of this report
1. Consolidated Financial Statements
The consolidated financial statements required to be filed in the Annual Report on Form 10-K are listed on page 73 hereof and in Part II, Item 8 hereof.
2. Financial Statement Schedule
The financial statement schedule required in the Annual Report on Form 10-K is listed on page 124 hereof. The required schedule appears on pages 124 through F-5 hereof.
3. Exhibits
| **Exhibit **Number | Description |
|---|---|
| 3.1 | Amended and Restated Certificate of Incorporation of Interactive Brokers Group, Inc. (filed as Exhibit 3.1 to Amendment No. 2 to the Registration Statement on Form S-1 filed by the Company on April 4, 2007).** |
| 3.2 | Amended bylaws of Interactive Brokers Group, Inc. (filed as Exhibit 3.1 to the Form 8-K filed by the Company on February 24, 2016).** |
| 10.1 | Amended and Restated Operating Agreement of IBG LLC (filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q for the Quarterly Period Ended March 31, 2007 filed by the Company on June 15, 2007).** |
| 10.2 | Form of Limited Liability Company Operating Agreement of IBG Holdings LLC (filed as Exhibit 10.5 to Amendment No. 1 to the Registration Statement on Form S-1 filed by the Company on February 12, 2007).** |
| 10.3 | Exchange Agreement by and among Interactive Brokers Group, Inc., IBG Holdings LLC, IBG LLC and the Members of IBG LLC (filed as Exhibit 10.3 to the Quarterly Report on Form 10-Q for the Quarterly Period Ended September 30, 2009 filed by the Company on November 11, 2009).** |
| 10.4 | Tax Receivable Agreement by and between Interactive Brokers Group, Inc. and IBG Holdings LLC (filed as Exhibit 10.3 to the Quarterly Report on Form 10-Q for the Quarterly Period Ended March 31, 2007 filed by the Company on June 15, 2007).** |
| 10.5 | Amended Interactive Brokers Group, Inc. 2007 Stock Incentive Plan. (filed as Exhibit 10.5 to Form 10-K for the Year Ended December 31, 2014 filed by the Company on March 2, 2015)**+ |
| 10.6 | Interactive Brokers Group, Inc. 2007 ROI Unit Stock Plan. (filed as Exhibit 10.9 to Amendment No. 2 to the Registration Statement on Form S-1 filed by the Company on April 4, 2007).**+ |
| 10.7 | Interactive Brokers Group, Inc. Amendment to the Exchange Agreement (filed as Exhibit 10.1 to the Form 8-K filed by the Company on June 6, 2012).**+ |
| 10.8 | Second Amendment to Exchange Agreement by and among Interactive Brokers Group, Inc., IBG Holdings LLC, IBG (filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q for the Quarterly Period Ended September 31, 2015 filed by the Company on November 9, 2015).** |
| 10.9 | First Amendment to Limited Liability Company Agreement of IBG Holdings LLC (filed as Exhibit 10.2 to the Quarterly Report on Form 10-Q for the Quarterly Period Ended September 31, 2015 filed by the Company on November 9, 2015).** |
| 21.1 | Subsidiaries of the registrant. |
| 23.1 | Consent of Independent Registered Public Accounting Firm. |
| 31.1 | Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 31.2 | Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32.1 | Certification of Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 32.2 | Certification of Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 101.INS | XBRL Instance Document* |
| 101.SCH | XBRL Extension Schema* |
| 101.CAL | XBRL Extension Calculation Linkbase* |
| 101.DEF | XBRL Extension Definition Linkbase* |
| 101.LAB | XBRL Extension Label Linkbase* |
| 101.PRE | XBRL Extension Presentation Linkbase* |
| ** | Previously filed; incorporated herein by reference. |
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| † | These exhibits relate to management contracts or compensatory plans or arrangements. |
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| * | Attached as Exhibit 101 to this Annual Report on Form 10-K for the annual period ended December 31, 2018, are the following materials formatted in XBRL (Extensible Business Reporting Language) (i) the Consolidated Statements of Financial Condition, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Statements of Cash Flows, (iv) the Consolidated Statement of Changes in Stockholders’ Equity and (v) Notes to the Consolidated Financial Statements tagged in detail levels 1-4. |
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ITEMS. 15 (a)(1) and 15 (a)(2) INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
Financial Statement Schedule
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of Interactive Brokers Group, Inc. Greenwich, CT
Opinion on the Financial Statement Schedules
We have audited the consolidated financial statements of Interactive Brokers Group, Inc. and subsidiaries (the “Company”) as of December 31, 2018 and 2017, and for each of the three years in the period ended December 31, 2018, and the Company’s internal control over financial reporting as of December 31, 2018, and have issued our reports thereon dated February 28, 2019; such reports are included elsewhere in this Form 10-K. Our audits also included the financial statement schedules of the Company listed in the Index at Item 15. These condensed financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statement schedules based on our audits. In our opinion, such condensed financial statement schedules, when considered in relation to the consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
/s/ Deloitte & Touche LLP New York, New York February 28, 2019
We have served as the Company’s auditor since 1990.
F-1
**INTERACTIVE BROKERS GROUP, INC. ****(Parent Company Only) **CONDENSED STATEMENTS OF FINANCIAL CONDITION
| December 31, | ||||||
|---|---|---|---|---|---|---|
| (in millions, except share amounts) | 2018 | 2017 | ||||
| **Assets ** | ||||||
| Cash and cash equivalents | $ | 1 | $ | — | ||
| Investments in subsidiaries, equity basis | 1,302 | 1,122 | ||||
| Other assets | 152 | 156 | ||||
| Total assets | $ | 1,455 | $ | 1,278 | ||
| **Liabilities and Equity ** | ||||||
| Liabilities: | ||||||
| Payable to affiliates | $ | 171 | $ | 187 | ||
| Accrued expenses and other liabilities | 2 | 1 | ||||
| 173 | 188 | |||||
| Stockholders’ equity: | ||||||
| Common stock, $0.01 par value per share: | ||||||
| Class A – Authorized − 1,000,000,000, Issued − 75,230,400 and 71,609,049 shares, Outstanding – 75,100,952 and 71,475,755 shares as of December 31, 2018 and 2017 | 1 | 1 | ||||
| Class B – Authorized, Issued and Outstanding – 100 shares as of December 31, 2018 and 2017 | — | — | ||||
| Additional paid-in capital | 898 | 832 | ||||
| Retained earnings | 390 | 251 | ||||
| Accumulated other comprehensive income, net of income taxes of $0 and $1 as of December 31, 2018 and 2017 | (4 | ) | 9 | |||
| Treasury stock, at cost, 129,448 and 133,294 shares as of December 31, 2018 and 2017 | (3 | ) | (3 | ) | ||
| Total equity | 1,282 | 1,090 | ||||
| Total liabilities and equity | $ | 1,455 | $ | 1,278 |
See accompanying notes to the condensed financial statements.
F-2
**INTERACTIVE BROKERS GROUP, INC. ****(Parent Company Only) **CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
| Year-Ended December 31, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| (in millions) | 2018 | 2017 | 2016 | ||||||
| Income (loss) before income from subsidiaries | $ | 2 | $ | 92 | $ | (1 | ) | ||
| Undistributed gains of subsidiaries, net | 206 | 147 | 117 | ||||||
| Income tax expense | 39 | 163 | 32 | ||||||
| Net income | $ | 169 | $ | 76 | $ | 84 | |||
| Net income available for common stockholders | $ | 169 | $ | 76 | $ | 84 | |||
| Cumulative translation adjustment, net of tax | (13 | ) | 11 | (4 | ) | ||||
| Comprehensive income available for common stockholders | $ | 156 | $ | 87 | $ | 80 |
See accompanying notes to the condensed financial statements.
F-3
**INTERACTIVE BROKERS GROUP, INC. ****(Parent Company Only) **CONDENSED STATEMENTS OF CASH FLOWS
| Year-Ended December 31, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| (in millions) | 2018 | 2017 | 2016 | ||||||
| Cash flows from operating activities | |||||||||
| Net income | $ | 169 | $ | 76 | $ | 84 | |||
| Adjustments to reconcile net income to net cash provided by operating activities | |||||||||
| Undistributed gains of subsidiaries, net | (206 | ) | (147 | ) | (117 | ) | |||
| Deferred income taxes | 23 | 149 | 30 | ||||||
| Gain on remeasurement of Tax Receivable Agreement liability | (3 | ) | (93 | ) | — | ||||
| Changes in operating assets and liabilities | 15 | (9 | ) | 9 | |||||
| Net cash (used in) provided by operating activities | (2 | ) | (24 | ) | 6 | ||||
| Cash flows provided by investing activities | 74 | 56 | 42 | ||||||
| Cash flows used in financing activities | (58 | ) | (43 | ) | (44 | ) | |||
| Effect of exchange rate changes on cash and cash equivalents | (13 | ) | 11 | (5 | ) | ||||
| Net increase (decrease) in cash and cash equivalents | 1 | — | (1 | ) | |||||
| Cash and cash equivalents at beginning of period | — | — | 1 | ||||||
| Cash and cash equivalents at end of period | $ | 1 | $ | — | $ | — | |||
| Supplemental disclosures of cash flow information | |||||||||
| Cash paid for interest | $ | 1 | $ | — | $ | — | |||
| Cash paid for taxes, net | $ | 14 | $ | 13 | $ | (1 | ) | ||
| Non-cash investing activities: | |||||||||
| Non-cash distributions from subsidiaries | $ | 2 | $ | — | $ | 1 |
See accompanying notes to the condensed financial statements.
F-4
**INTERACTIVE BROKERS GROUP, INC. ****(Parent Company Only) **NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying condensed financial statements (the “Parent Company Financial Statements”) of Interactive Brokers Group, Inc. (“IBG, Inc.”), a Delaware holding company, including the notes thereto, should be read in conjunction with the consolidated financial statements of IBG, Inc. and its subsidiaries (the “Company”) and the notes thereto. IBG, Inc.’s primary asset is its ownership interest in IBG LLC, an automated global electronic broker and market maker specializing in executing and clearing trades in securities, futures, foreign exchange instruments, bonds and mutual funds on more than 120 electronic exchanges and market centers around the world and offering custody, prime brokerage, securities and margin lending services to customers.
The preparation of the Parent Company Financial Statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts and disclosures in the condensed financial statements and accompanying notes.
Income Taxes
Refer to Note 2 to the consolidated financial statements.
2. Related Party Transactions
As of December 31, 2018, there were no receivables from affiliates. Dividends received from IBG LLC for the three years ended December 31, 2018, 2017, and 2016, were $76 million, $56 million, and $43 million, respectively.
As of December 31, 2018 and 2017, respectively, payable to affiliates of $171 million and $187 million consisted primarily of amounts payable to Holdings under the Tax Receivable Agreement.
3. Stockholders’ Equity
Refer to Note 4 to the consolidated financial statements.
4. Employee Incentive Plans
Refer to Note 10 to the consolidated financial statements.
5. Commitments, Contingencies and Guarantees
Refer to Note 13 to the consolidated financial statements.
6. Subsequent Events
As required by FASB ASC Topic, “Subsequent Events,” IBG, Inc. has evaluated subsequent events for adjustment to or disclosure in its condensed financial statements through the date the condensed financial statements were issued.
Except as disclosed in Note 4 and Note 13 to the consolidated financial statements, no other recordable or disclosable events occurred.
F-5
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| INTERACTIVE BROKERS GROUP, INC. | ||
| /s/ PAUL J. BRODY | ||
| Name: | Paul J. Brody | |
| Title: | Chief Financial Officer, Treasurer and Secretary | |
| (Signing both in his capacity as a duly authorized officer and as principal financial officer of the registrant) |
Date: February 28, 2019
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
| Signature | Title | Date |
|---|---|---|
| /s/ THOMAS PETERFFY | Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer) | February 28, 2019 |
| Thomas Peterffy | ||
| /s/ DENIS MENDONCA | Chief Accounting Officer (Principal Accounting Officer) | February 28, 2019 |
| Denis Mendonca | ||
| /s/ LAWRENCE E. HARRIS | Director | February 28, 2019 |
| Lawrence E. Harris | ||
| /s/ GARY KATZ | Director | February 28, 2019 |
| Gary Katz | ||
| /s/ RICHARD GATES | Director | February 28, 2019 |
| Richard Gates |
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