Business Context and Reporting Period
Interactive Brokers Group, Inc. filed this Form 8-K on April 2, 2008, to disclose a non-reliance on previously issued financial statements. The filing addresses errors discovered during the preparation of the Annual Report on Form 10-K for the year ended December 31, 2007, specifically affecting the unaudited condensed consolidated financial statements for the period ended September 30, 2007.
Key Financial Metrics and Adjustments
The filing details restatements to the cash flow statement and balance sheet for the period ended September 30, 2007. The total net change in cash and results of operations were unaffected by these changes.
| Financial Item | Adjustment Amount | Restated Value |
|---|---|---|
| Cash provided by operating activities (9 months ended Sept 30, 2007) | Increased by ~$81 million | $205.5 million |
| Cash used in investing activities (9 months ended Sept 30, 2007) | Increased by ~$12 million | $1.20 billion |
| Cash provided by financing activities (9 months ended Sept 30, 2007) | Decreased by ~$69 million | $798.0 million |
| Deferred tax asset (as of Sept 30, 2007) | Increased by ~$132 million | $373.9 million |
| Payable to IBG Holdings LLC (as of Sept 30, 2007) | Increased by ~$113 million | $323.7 million |
| Additional paid-in capital (as of Sept 30, 2007) | Increased by ~$20 million | $57.1 million |
Material Changes Versus Prior Period
The material changes involve the reclassification of cash flows related to the company's holding company structure and the correction of an understatement in shareholders' equity. Specifically, the prior Form 10-Q understated the deferred tax asset and the related payable to IBG Holdings LLC arising from the initial public offering in May 2007. Consequently, additional paid-in capital and total stockholders' equity were understated by approximately $20 million in the original filing.
Guidance, Outlook, and Management Commentary
Management has discussed the matter with the Audit Committee and the independent registered public accounting firm, Deloitte & Touche LLP. The company intends to file an amended Form 10-Q for the interim period ended September 30, 2007, as soon as practicable. Until the amended report is filed, investors are advised not to rely on the previously issued Form 10-Q. There is no effect on the company's results of operations.
Important Facts for Investor Verification
- The previously filed Form 10-Q for the period ended September 30, 2007, should not be relied upon until an amended version is filed.
- Stockholders' equity was understated by approximately $20 million in the original report.
- Cash flow classifications were corrected, increasing operating cash flow by $81 million and investing cash outflows by $12 million, while decreasing financing cash inflows by $69 million.
- The net change in cash and net income for the period remain unchanged.
- The errors stemmed from the company's holding company structure and the accounting of the May 2007 IPO.