Summary
Interactive Brokers Group, Inc. (IBKR) has announced that its previously issued financial statements for the year ended December 31, 2011, and the quarter ended March 31, 2012, can no longer be relied upon. This non-reliance stems from an accounting error related to the classification of noncontrolling interests in IBG LLC attributable to IBG Holdings LLC. The Audit Committee, following an investigation and discussions with management and Deloitte & Touche LLP, determined these interests should have been treated as temporary equity (redeemable noncontrolling interests) prior to a June 6, 2012 amendment to an Exchange Agreement. The company will restate its financial statements to correct this classification, treating these interests at their redemption value based on common stock fair value. While the error did not impact reported net income or cash flows, it is expected to affect reported earnings per share for certain prior periods. For periods after the June 6, 2012 amendment, the noncontrolling interests will be reported as permanent equity, and earnings per share will be presented consistently with historical methods.
Key Highlights
- 1Previously issued financial statements for FY2011 and Q1 2012 are unreliable and will be restated.
- 2The restatement is due to an accounting error in the classification of noncontrolling interests in IBG LLC.
- 3Noncontrolling interests were incorrectly classified as permanent equity instead of temporary (redeemable) equity prior to a June 6, 2012 amendment.
- 4The error impacted the accounting treatment of interests attributable to IBG Holdings LLC.
- 5The company will account for these redeemable interests at their redemption value based on common stock fair value for affected periods.
- 6Reported net income and cash flows were not affected by the error.
- 7Earnings per share for certain prior periods will be impacted by the restatement.