Document and Entity Information
6 Months Ended
Jun. 30, 2011
Jul. 31, 2011
Entity Information [Line Items]
Entity Registrant Name
CBOE Holdings, Inc.
Entity Central Index Key
0001374310
Current Fiscal Year End Date
--12-31
Entity Filer Category
Non-accelerated Filer
Document Type
10-Q
Document Period End Date
Jun. 30, 2011
Document Fiscal Year Focus
2011
Document Fiscal Period Focus
Q2
Amendment Flag
FALSE
Entity Common Stock, Shares Outstanding
90,520,527
Entity Current Reporting Status
Yes
Condensed Consolidated Statement of Income(USD $)
In Thousands, except Per Share data
3 Months Ended
Jun.30,		 6 Months Ended
Jun.30,
2011
2010
2011
2010
Operating Revenues:
Transaction fees
$86,240
$94,082
$176,179
$177,493
Access fees
17,041
2,298
34,646
4,502
Exchange services and other fees
4,276
4,482
8,966
8,843
Market data fees
4,836
5,627
9,938
11,375
Regulatory fees
4,770
4,192
9,728
8,021
Other revenue
3,127
1,937
4,875
3,465
Total Operating Revenues
120,290
112,618
244,332
213,699
Operating Expenses:
Employee costs
24,504
22,640
50,240
45,777
Depreciation and amortization
8,996
7,301
17,692
14,602
Data processing
4,905
5,155
9,333
10,237
Outside services
7,190
10,041
13,769
18,164
Royalty fees
10,373
11,519
21,519
22,417
Trading volume incentives
2,515
7,339
8,274
11,035
Travel and promotional expenses
2,368
3,209
4,053
5,195
Facilities costs
1,400
1,315
2,892
2,699
Other expenses
1,587
2,273
2,573
3,018
Total Operating Expenses
63,838
70,792
130,345
133,144
Operating Income
56,452
41,826
113,987
80,555
Other Income/(Expense):
Investment income
61
135
103
235
Net loss from investment in affiliates
0
(169)
(460)
(374)
Interest and other borrowing costs
(223)
(224)
(448)
(446)
Total Other Income/(Expense)
(162)
(258)
(805)
(585)
Income Before Income Taxes
56,290
41,568
113,182
79,970
Income tax provision
22,889
16,678
46,910
32,404
Net Income
33,401
24,890
66,272
47,566
Net Income Allocated to Participating Securities
(792)
(111)
(1,571)
(105)
Net Income Allocated to Common Stockholders
$32,609
$24,779
$64,701
$47,461
Net income per share (Note 4):
Basic
$0.36
$0.27
$0.72
$0.52
Diluted
$0.36
$0.27
$0.72
$0.52
Weighted average shares used in computing income per share:
Basic
90,164
92,233
90,124
91,487
Diluted
90,164
92,233
90,124
91,487
Condensed Consolidated Balance Sheets(USD $)
In Thousands
Jun. 30, 2011
Dec. 31, 2010
Current Assets:
Cash and cash equivalents
$106,545
$53,789
Accounts receivablenet allowances of $133 and $108
45,801
37,746
Marketing fee receivable
7,251
7,815
Income taxes receivable
9,436
5,537
Other prepaid expenses
7,959
4,510
Other current assets
558
537
Total Current Assets
177,550
109,934
Investments in Affiliates
12,156
12,615
Land
4,914
4,914
Property and Equipment:
Construction in progress
18
1,729
Building
60,917
60,917
Furniture and equipment
250,435
240,711
Less accumulated depreciation and amortization
(229,881)
(221,273)
Total Property and EquipmentNet
81,489
82,084
Other Assets:
Software development work in progress
5,404
1,131
Data processing software and other assets (less accumulated amortization2011, $114,563; 2010, $107,770)
37,909
43,434
Total Other AssetsNet
43,313
44,565
Total
319,422
254,112
Current Liabilities:
Accounts payable and accrued expenses
32,615
40,084
Marketing fee payable
7,765
8,349
Deferred revenue
20,489
280
Post-retirement medical benefits
52
103
Total Current Liabilities
60,921
48,816
Long-term Liabilities:
Post-retirement medical benefits
1,832
1,782
Income taxes payable
3,736
3,165
Other long-term liabilities
3,957
3,993
Deferred income taxes
21,682
20,482
Total Long-term Liabilities
31,207
29,422
Commitments and Contingencies
Total Liabilities
92,128
78,238
Stockholders Equity:
Preferred stock, $0.01 par value: 20,000,000 shares authorized, no shares issued and outstanding at June 30, 2011 and December 31, 2010
0
0
Additional paid-in-capital
49,485
42,858
Retained earnings
180,903
133,087
Treasury stock at cost 129,375 shares at June 30, 2011 and no shares at December 31, 2010
(3,075)
0
Accumulated other comprehensive loss
(925)
(972)
Total Stockholders Equity
227,294
175,874
Liabilities and Stockholders Equity
319,422
254,112
Unrestricted Common Stock
Stockholders Equity:
Common Stock, Value, Issued
906
518
Common Class A2
Stockholders Equity:
Common Stock, Value, Issued
$0
$383
Condensed Consolidated Balance Sheets Parenthetical(USD $)
Jun. 30, 2011
Dec. 31, 2010
Current Assets:
Accounts receivable, allowances (in dollars)
$133,000
$108,000
Other Assets:
Data processing software and other assets, accumulated amortization (in dollars)
$114,563,000
$107,770,000
Shareholders' Equity:
Preferred stock, par value
$0.01
$0.01
Preferred stock, shares authorized
20,000,000
20,000,000
Preferred stock, shares issued
0
0
Preferred stock, shares outstanding
0
0
Unrestricted Common Stock
Shareholders' Equity:
Common stock, par value (in dollars per share)
$0.01
$0.01
Common stock, shares authorized
325,000,000
325,000,000
Common stock, shares issued
90,649,902
51,786,717
Common stock, shares outstanding
90,520,527
51,786,717
Common Class A2
Shareholders' Equity:
Common stock, par value (in dollars per share)
$0.01
$0.01
Common stock, shares authorized
45,366,690
45,366,690
Common stock, shares issued
0
38,297,994
Common stock, shares outstanding
0
38,297,994
Condensed Consolidated Statements of Stockholders Equity(USD $)
In Thousands
Total
Preferred Stock
Unrestricted Common Stock
Common Class A2
Additional Paid-in Capital
Retained Earnings
Treasury Stock
Accumulated Other Comprehensive Income (Loss)
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest Beginning of Period at Dec. 31, 2010
$175,874
$0
$518
$383
$42,858
$133,087
$0
$(972)
Automatic Conversion Of Shares In Unrestricted Common Stock And Sale Of That In IPO
0
383
(383)
Dividends, Common Stock, Cash
(18,456)
(18,456)
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition
6,632
6,632
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures
0
5
(5)
Purchase Of Restricted Stock From Employees
(3,075)
(3,075)
Net income
66,272
66,272
Post-retirement benefit obligation adjustments- net of tax expense of $11
47
47
Comprehensive Income
66,319
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest End of Period at Jun. 30, 2011
$227,294
$0
$906
$0
$49,485
$180,903
$(3,075)
$(925)
Condensed Consolidated Statements of Stockholders Equity Parenthetical(USD $)
In Thousands, except Per Share data
6 Months Ended
Jun. 30, 2011
Cash dividends on common stock (in dollars per share)
$100
Post-retirement benefit obligation adjustment, tax expense
$11,000
Condensed Consolidated Statements of Cash Flows(USD $)
In Thousands
6 Months Ended
Jun.30,
2011
2010
Cash Flows from Operating Activities:
Net income
$66,272
$47,566
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization
17,692
14,602
Other amortization
45
34
Provision for deferred income taxes
1,202
(4,462)
Stock-based compensation
6,632
636
Loss on disposition of property
729
139
Equity in loss of affiliates
0
374
Impairment of investment in affiliate
460
0
Changes in assets and liabilities:
Accounts receivable
(8,055)
(3,464)
Marketing fee receivable
564
1,471
Income taxes receivable
(3,899)
(3,655)
Prepaid expenses
(3,218)
(1,410)
Other receivable
0
2,086
Other current assets
(21)
(111)
Accounts payable and accrued expenses
(5,997)
876
Marketing fee payable
(584)
(1,666)
Deferred revenue
20,173
23,175
Post-retirement benefit obligations
(2)
(5)
Income taxes payable
571
781
Settlement with appellants
0
(3,000)
Access fees subject to fee-based payment
0
(2,688)
Net Cash Flows provided by Operating Activities
92,564
71,279
Cash Flows from Investing Activities:
Capital and other assets expenditures
(18,334)
(10,772)
Investment in Signal Trading Systems, LLC
0
(7,989)
Other
57
0
Net Cash Flows used in Investing Activities
(18,277)
(18,761)
Cash Flows from Financing Activities:
Payments for debt issuance costs
0
(3)
Payment of quarterly dividends
(18,456)
0
Purchase of restricted stock from employees
(3,075)
0
Exercise right privilege payable
0
(300,000)
Net proceeds from issuance of unrestricted common stock
0
301,238
Payment of special dividend
0
(113,417)
Net Cash Flows used in Financing Activities
(21,531)
(112,182)
Net Increase (Decrease) in Cash and Cash Equivalents
52,756
(59,664)
Cash and Cash Equivalents at Beginning of Period
53,789
383,730
Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes
49,037
41,228
Non-cash activities:
Change in post-retirement benefit obligation
(45)
(34)
Unpaid liability to acquire equipment and software
$1,114
$1,131
Description of Business
Description Of Business Conversion Dividend Payment And Initial Public Offering Disclosure [Text Block]
DESCRIPTION OF BUSINESS


CBOE Holdings is the holding company of registered securities exchanges, subject to oversight by the Securities and Exchange Commission (the “SEC”), and of a designated contract market subject to the oversight of the Commodity Futures Trading Commission (“CFTC”).
 
The primary business of the Company is the operation of markets for the trading of listed options contracts for three broad product categories: the stocks of individual corporations (equity options), various market indexes (index options) and options on exchange-traded funds (ETFs) and exchange-traded notes (ETNs). We offer trading access for listed options through a single system that integrates electronic trading and open outcry trading on our trading floor in Chicago. This integration of electronic trading and traditional open outcry trading into a single market is offered through our Hybrid trading model operating on a proprietary technology platform known as CBOEdirect. CBOEdirect is the technology platform for all of our exchanges and is configured to implement different market models. Through CFE, we offer futures and options on futures on the Volatility S&P 500 option (“VIX”).
 
The Company reports the results of its operations in one reporting segment comprised of CBOE, C2 and CFE.
 
Demutualization and Initial Public Offering
 
On June 18, 2010, after receiving required approvals, CBOE converted from a non-stock corporation owned by its Members into a stock corporation that is a wholly-owned subsidiary of CBOE Holdings. In the restructuring transaction, each exchange seat owned by a CBOE Member on June 18, 2010 converted into 80,000 shares of Class A common stock of the Company. Exchange seat owners received a total of 74,400,000 shares of Class A common stock of the Company in the restructuring transaction. In addition, certain persons who satisfied the qualification requirements set forth in the Settlement Agreement received a total of 16,333,380 shares of Class B common stock of the Company.
 
Immediately following the issuance of the Class A and Class B common stock, the Board of Directors of the Company declared and paid a special dividend of $1.25 per outstanding share of Class A and Class B common stock, or $113.4 million in the aggregate.
 
The Company’s initial public offering of 13,455,000 shares of unrestricted common stock, including 2,085,774 shares of unrestricted common stock sold by the selling stockholders, for a price of $29.00 per share, was completed on June 18, 2010. Net proceeds to the Company after deducting underwriter’s fees and commissions and other related expenses were $301.2 million. Costs directly associated with the Company’s initial public offering were recorded as a reduction of the gross proceeds received in arriving at the amount recorded in additional paid-in capital.
 
Upon consummation of the initial public offering, shares of Class A and Class B common stock not converted into unrestricted common and sold in the initial public offering automatically converted into 44,323,803 shares of Class A-1 common stock and 44,323,803 shares of Class A-2 common stock.
 
Following the restructuring transaction, access to CBOE was made available through trading permits rather than through memberships.
 
In the condensed consolidated statement of income of CBOE Holdings for the three and six months ended June 30, 2010, net income per share allocated to common stockholders is calculated by dividing historical net income for the period by the weighted average number of common shares as if the restructuring transaction were consummated at the beginning of the period.
 
Tender Offers
 
On November 29, 2010, the Company completed two concurrent tender offers for 5,983,713 shares of Class A-1 common stock and 5,983,713 shares of Class A-2 common stock at a purchase price of $25.00 per share. The purpose of the tender offers was to allow our Class A-1 and A-2 stockholders to obtain liquidity for a certain portion of their shares. The net proceeds received from our initial public offering were used to purchase the shares of Class A-1 and A-2 common stock in the tender offers.
 
Automatic Conversion of Class A-1 and Class A-2 Common Stock
 
On December 15, 2010, each of the 38,340,090 issued and outstanding shares of Class A-1 common stock automatically converted into one share of Unrestricted Common Stock.


On June 13, 2011, each of the 38,297,994 issued and outstanding shares of Class A-2 common stock automatically converted into one share of Unrestricted Common Stock.


Basis of Presentation
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]
BASIS OF PRESENTATION


These interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.
 
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of operating revenues and expenses. On an ongoing basis, the Company evaluates its estimates, including those related to matters that require a significant level of judgment or are otherwise subject to an inherent degree of uncertainty. These estimates are based on management’s knowledge and judgments, historical experience and observance of trends in particular matters. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of financial position, results of operations and cash flows at the dates and for the periods presented have been included. The results of operations for interim periods are not necessarily indicative of the results of operations for the full year.


Access Fees
Access Fees Disclosure [Text Block]
ACCESS FEES


On July 1, 2010, the Company implemented a new trading access fee program. Access fees under the new structure are assessed to all Trading Permit Holders. Prior to July 1, 2010, the Company only charged access fees to temporary members and participants in the interim trading permit program.
 


Net Income per Common Share
Earnings Per Share [Text Block]
NET INCOME PER COMMON SHARE


To calculate net income per common share, we applied the guidance under ASC 260, Earnings Per Share (“ASC 260”). The guidance states that unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities and shall be included in the computation of net income per common share pursuant to the two-class method. We have determined our restricted stock awards granted to officers, directors and employees on June 15, 2010 qualify as participating securities.
 
We compute net income per common share using the two-class method, which is an allocation formula that determines the net income for common shares and participating securities. Under the authoritative guidance, the presentation of basic and diluted earnings per share is required for each class of common stock and not for participating securities. As such, the Company presents basic and diluted net income per share for its common stock as a single class.
 
The computation of basic net income allocated to common stockholders is calculated by reducing net income for the period by dividends paid or declared and undistributed net income for the period that are allocated to the participating securities to arrive at net income allocated to common stockholders. Net income allocated to common stockholders is divided by the weighted average number of common shares outstanding during the period to determine basic net income per common share.


The dilutive effect of participating securities is calculated using the more dilutive of the treasury stock or the two-class method. Diluted net income per common share is calculated by dividing net income allocated to common stockholders by the sum of the weighted average number of common shares outstanding plus all additional common shares that would have been outstanding if the potentially dilutive common shares had been issued.
 
The weighted average number of common shares outstanding for both basic and dilutive for the three and six months ended June 30, 2010 was calculated as if the restructuring transaction were consummated at the beginning of the respective period.


The following table reconciles net income applicable to common stockholders and the number of shares used to calculate the basic and diluted net income per common share for the three and six months ended June 30, 2011 and 2010:


 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(in thousands, except per share amounts)
 
2011
 
2010
 
2011
 
2010
Basic EPS Numerator:
 
 
 
 
 
 
 
 
Net Income
 
$
33,401


 
$
24,890


 
$
66,272


 
$
47,566


Less: Earnings allocated to participating securities
 
(792
)
 
(111
)
 
(1,571
)
 
(105
)
Net Income allocated to common stockholders
 
$
32,609


 
$
24,779


 
$
64,701


 
$
47,461


Basic EPS Denominator:
 
 
 
 
 
 
 
 
Weighted average shares outstanding
 
90,164


 
92,233


 
90,124


 
91,487


Basic net income per common share
 
$
0.36


 
$
0.27


 
$
0.72


 
$
0.52


 
 
 
 
 
 
 
 
 
Diluted EPS Numerator:
 
 
 
 
 
 
 
 
Net Income
 
$
33,401


 
$
24,890


 
$
66,272


 
$
47,566


Less: Earnings allocated to participating securities
 
(792
)
 
(111
)
 
(1,571
)
 
(105
)
Net Income allocated to common stockholders
 
$
32,609


 
$
24,779


 
$
64,701


 
$
47,461


Diluted EPS Denominator:
 
 
 
 
 
 
 
 
Weighted average shares outstanding
 
90,164


 
92,233


 
90,124


 
91,487


Dilutive common shares issued under restricted stock program
 
—


 
—


 
—


 
—


Diluted net income per common share
 
$
0.36


 
$
0.27


 
$
0.72


 
$
0.52


Stock-Based Compensation
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]
STOCK-BASED COMPENSATION


The Company accounts for stock-based compensation in accordance with ASC 718, Compensation—Stock Compensation, as interpreted by SEC Staff Accounting Bulletins No. 107 and No. 110. Under ASC 718, stock-based compensation is based on the fair value of the award on the date of grant, which is recognized over the related service period, net of estimated forfeitures. The service period is the period over which the related service is performed, which is generally the same as the vesting period.
 
For the three and six months ended June 30, 2011 and 2010, the Company recognized $3.2 million and $6.6 million and $0.6 million and $0.6 million of stock-based compensation expense, respectively. Stock-based compensation expense for the three and six months ended June 30, 2011, includes $0.1 million and $0.5 million of accelerated stock-based compensation, respectively, for three members of the Company’s Board of Directors that left the board in May 2011. Stock-based compensation expense is included in employee costs in the condensed consolidated statements of income.
 
As of June 30, 2011, the Company had unrecognized stock-based compensation of $36.1 million related to outstanding restricted stock.  The remaining unrecognized stock-based compensation is expected to be recognized over the next 35.5 months. The Company is projecting a forfeiture rate of 5%.


The activity in the Company’s restricted stock for the six months ended June 30, 2011 was as follows:


 
 
 
Number of Shares

of Restricted

Stock
 
Weighted Average

Grant-Date Fair

Value
 
Unvested restricted stock at January 1, 2011
 
1,712,780


 
$
29.00


 
Granted
 
—


 
—


 
Vested
 
(443,781
)
 
29.00


 
Forfeited
 
(8,673
)
 
29.00


 
Unvested restricted stock at June 30, 2011
 
1,260,326


 
$
29.00


Investment in Affiliates
Investments in and Advances to Affiliates, Schedule of Investments [Text Block]
INVESTMENT IN AFFILIATES


At June 30, 2011 and December 31, 2010, the investment in affiliates was comprised of the following (in thousands):


 
 
 
June 30,

2011
 
December 31,

2010
 
Investment in OCC
 
$
333


 
$
333


 
Investment in Signal Trading
 
11,823


 
11,822


 
Investment in NSX
 
—


 
460


 
Investment in Affiliates
 
$
12,156


 
$
12,615


 
In March 2011, we recorded an impairment of $0.5 million representing the carrying value of our investment in NSX Holdings, Inc.


Accounts Payable and Accured Liabilities
Accounts Payable and Accrued Liabilities Disclosure [Text Block]
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES


At June 30, 2011 and December 31, 2010, accounts payable and accrued liabilities consisted of the following (in thousands):


 
 
 
June 30,

2011
 
December 31,

2010
 
Compensation and benefit-related liabilities
 
$
10,971


 
$
15,455


 
Royalties
 
9,445


 
8,198


 
Data processing related liabilities
 
1,026


 
1,255


 
Facilities
 
2,140


 
2,150


 
Legal
 
1,367


 
1,017


 
Accounts payable
 
2,074


 
5,000


 
Capital and other assets
 
419


 
556


 
Linkage
 
1,438


 
2,310


 
Other
 
3,735


 
4,143


 
Total
 
$
32,615


 
$
40,084




Marketing Fee
Marketing Fees [Text Block]
MARKETING FEE


CBOE facilitates the collection and payment of marketing fees assessed on certain trades taking place at the Exchange. Funds resulting from the marketing fees are made available to Designated Primary Market Makers and Preferred Market Makers as an economic inducement to route orders to CBOE. Pursuant to ASC 605-45, Revenue Recognition—Principal Agent Considerations, the Company reflects the assessments and payments on a net basis, with no impact on revenues or expenses.


As of June 30, 2011 and December 31, 2010, amounts assessed by the Company on behalf of others included in current assets totaled $7.3 million and $7.8 million, respectively, and payments due to others included in current liabilities totaled $7.8 million and $8.3 million, respectively.


Deferred Revenue
Deferred Revenue Disclosure [Text Block]
DEFERRED REVENUE


The following table summarizes the activity in deferred revenue for the six months ended June 30, 2011 (in thousands):


 
 
Balance at 

December 31, 

2010
 
Cash 

Additions
 
Revenue 

Recognition
 
Balance at 

June 30, 2011
Other – net
 
$
280


 
$
1,868


 
$
(1,669
)
 
$
479


Liquidity provider sliding scale (1)
 
—


 
39,042


 
(19,032
)
 
20,010


Total deferred revenue
 
$
280


 
$
40,910


 
$
(20,701
)
 
$
20,489


(1)  Liquidity providers are required to prepay an entire year of transaction fees for the first two levels of the sliding scale in order to be eligible to participate in reduced fees assessed to contract volume above 1.4 million per month. The prepayment of the 2011 transaction fees totaled $39.0 million. This amount is amortized and recorded as transaction fees over the calendar year.


Employee Benefits
Postemployment Benefits Disclosure [Text Block]
EMPLOYEE BENEFITS


Employees are eligible to participate in the Chicago Board Options Exchange SMART Plan (“SMART Plan”). The SMART Plan is a defined contribution plan, which is qualified under Internal Revenue Code Section 401(k). The Company contributed $1.9 million and $2.1 million for the six months ended June 30, 2011 and 2010, respectively.


Eligible employees may participate in the Supplemental Employee Retirement Plan (“SERP”), Executive Retirement Plan (“ERP”) and Deferred Compensation Plan. The SERP, ERP and Deferred Compensation Plan are defined contribution plans that are nonqualified by Internal Revenue Code regulations. The Company contributed $0.6 million and $0.9 million to the above plans for the six months ended June 30, 2011 and 2010, respectively.


The Company has a postretirement medical plan for certain current and former members of senior management. The Company recorded immaterial postretirement benefits expense for the three and six months ended June 30, 2011 and 2010.


Income Taxes
Income Tax Disclosure [Text Block]
INCOME TAXES


For the three and six months ended June 30, 2011 and 2010, the Company recorded income tax provisions of $22.9 million and $46.9 million and $16.7 million and $32.4 million, respectively. The effective tax rate for the six months ended June 30, 2011 and 2010 was 41.4% and 40.5%, respectively.


As of June 30, 2011 and December 31, 2010, the Company had $3.3 million and $2.5 million, respectively, of uncertain tax positions, which, if recognized in the future, would affect the annual effective income tax rate. Reductions to uncertain tax positions primarily from the lapse of the applicable statutes of limitations during the next twelve months are estimated to be approximately $0.4 million, not including any potential new additions.


Estimated interest costs and penalties, which are classified as part of the provision for income taxes in the Company’s condensed consolidated statements of income, were $(0.3) million and $(0.2) million and $0.1 million and $0.2 million for the three and six months ended June 30, 2011 and 2010, respectively. Interest costs and penalties, for the three and six months ended June 30, 2011, were favorable for the Company due to the reversal of an uncertain tax position. Accrued interest and penalties were $0.5 million and $0.7 million as of June 30, 2011 and December 31, 2010, respectively.


The Company is subject to U.S. federal tax, Illinois, New Jersey, New York state taxes and Washington D.C. taxes, as well as other local jurisdictions. The Company’s tax returns have been examined by the Internal Revenue Service through 2009 and the Illinois Department of Revenue through December 31, 2008. For New Jersey, New York and Washington D.C., the open years are 2007 and forward. The Company has been notified by the State of New York that the 2007-2009 tax years will be audited.


Senior Revolving Credit Facility
Debt Disclosure [Text Block]
SENIOR REVOLVING CREDIT FACILITY


On December 23, 2008, the Company entered into an unsecured senior revolving credit facility with three financial institutions. The credit agreement is a three-year revolving credit facility of up to $150 million and expires on December 23, 2011. As of June 30, 2011 and December 31, 2010 and during the six months ended June 30, 2011, there were no borrowings against the credit facility.
 
Under the terms of the senior revolving credit facility, there are two financial covenants with which the Company must comply. The consolidated leverage ratio at any time during any period of four fiscal quarters must not be greater than 1.5 to 1.0 and the consolidated interest coverage ratio as of the end of any fiscal quarter must not be less than 5.0 to 1.0. The Company is in compliance with all covenants as of June 30, 2011 and December 31, 2010.
 
The Company pays a commitment fee on the unused portion of the facility. The commitment fee rate was 0.375% for the three and six months ended June 30, 2011 and 2010. The commitment fee and interest rate have two pricing levels based on the company’s consolidated leverage ratio. At its option, the Company may borrow under the facility at either (1) LIBOR plus an applicable margin of 1.5% or 2.0% as determined in accordance with a leverage-based threshold or (2) a base rate, defined as the highest of (a) the Bank of America prime rate, (b) the federal funds rate plus 0.50% or (c) the one-month LIBOR rate plus 0.50%, plus the applicable margin rate. In accordance with the leverage-based threshold, the commitment fee increases to 0.50% if the Company’s consolidated leverage ratio exceeds 1.0.


Fair Value Measurements
Fair Value Disclosures [Text Block]
FAIR VALUE MEASUREMENTS


Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the Company’s own credit risk.
 
The Company applied Accounting Standards Board ASC 820, Fair Value Measurements and Disclosures (formerly, Financial Accounting Standards Board (FASB) Statement No. 157, Fair Value Measurements), which provides guidance for using fair value to measure assets and liabilities by defining fair value and establishing the framework for measuring fair value. ASC 820 applies to financial and nonfinancial instruments that are measured and reported on a fair value basis. The three-level hierarchy of fair value measurements is based on whether the inputs to those measurements are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. The fair-value hierarchy requires the use of observable market data when available and consists of the following levels:
 
•
  Level 1—Unadjusted inputs based on quoted markets for identical assets or liabilities.
 
•
Level 2—Observable inputs, either direct or indirect, not including Level 1, corroborated by market data or based upon quoted prices in non-active markets.


•
Level 3—Unobservable inputs that reflect management’s best assumptions of what market participants would use in valuing the asset or liability.
 
The Company has included a tabular disclosure for financial assets that are measured at fair value on a recurring basis in the consolidated balance sheet as of June 30, 2011. The Company holds no financial liabilities that are measured at fair value on a recurring basis.
(amounts in millions)
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets at fair value:
 
 


 
 


 
 


 
 


Money market funds
 
$
105


 
$
—


 
$
—


 
$
105


Total assets at fair value at June 30, 2011
 
$
105


 
$
—


 
$
—


 
$
105


 
In March 2011, the Company revalued its investment in NSX Holdings, Inc. as a result of an other-than-temporary impairment. The investment is classified as level 3 as the fair value was based on both observable and unobservable inputs, resulting in a full impairment totaling $0.5 million, which represented the carrying value of the investment.


Subsequent Events
Subsequent Events [Text Block]
SUBSEQUENT EVENTS


On August 2, 2011, the Company announced that its Board of Directors approved a share repurchase program that authorizes the Company to purchase up to $100.0 million of its unrestricted common stock. The program permits the Company to purchase shares through a variety of methods, including in the open market or through privately negotiated transactions, in accordance with applicable securities laws. It does not obligate the Company to make any repurchases at any specific time or situation.


On August 2, 2011, the Company's Board of Directors declared a quarterly cash dividend of $0.12 cents per share. The dividend is payable September 23, 2011, to shareholders of record at the close of business on September 2, 2011.