IntercontinentalExchange 2Q profit falls 15%

IntercontinentalExchange Inc. reported today its second-quarter profit slipped 15 percent as it recorded a special charge on an investment in an Indian exchange and costs tied to acquisition last year of credit-derivatives processor Creditex. Net income for the quarter ended June 30 fell to $72.1 million, or 97 cents per share, from $84.9 million, or $1.19 per share, last year. Excluding a special impairment charge related to an investment in the National Commodity and Derivatives Exchange of India, ICE earned $83.1 million, or $1.12 per share. Analysts polled by Thomson Reuters, on average, forecast earnings of $1.13 per share on revenue of $242.9 million. Analysts do not always include special charges in their estimates. Revenue increased 27 percent to $250.4 million from $197.2 million a year earlier. Revenue jumped because of a 34 percent increase in transaction and clearing revenues. ICE generated $223 million in transaction and clearing revenues as it introduced new products and volume remained strong in its futures segment. The launch of ICE Clear Europe in November and acquisition of Creditex in August also helped results. While the Creditex acquisition helped boost revenue, it also led to sharply higher expenses during the quarter that helped reduce net income. Expenses jumped 79 percent to $115.5 million, primarily because of $35 million related to the Creditex business, which ICE acquired during the third quarter in 2008. The Creditex costs included amortization of intangibles and non-cash compensation expenses. ICE also took a non-cash impairment charge on its investment in the Indian derivatives exchange. New rules require foreign companies to reduce their holdings in Indian exchanges to no more than 5 percent by the end of September. ICE had owned an 8 percent stake in the National Commodity and Derivatives Exchange of India. ICE has lined up a buyer for a portion of its stake in the exchange. However, the purchase resulted in ICE taking a $9 million pretax charge on the sale. Shares of IntercontinentalExchange shed 7 cents to $96 in premarket trading Tuesday.