International Securities Exchange First Quarter 2006 ... - Ise.com

International Securities Exchange
First Quarter 2006 Earnings
April 27, 2006

Forward Looking Statements
Certain matters discussed in this presentation are “forward
looking statements” intended to qualify for the safe harbor from
liability established by the Private Securities Litigation Reform
Act of 1995. These statements relate to future events or our
future financial performance, and involve known and unknown
risks, uncertainties and other factors that may cause our actual
results, levels of activity, performance or achievements, to be
materially different from those contemplated by the forward
looking statements. We undertake no ongoing obligation, other
than that imposed by law, to update these statements. Factors
that could affect our results, levels of activity, performance or
achievements and cause them to materially differ from those
contained in the forward looking statements can be found in our
filings with the Securities and Exchange Commission, including
our annual report on Form 10-K, current reports on Form 8-K
and quarterly reports on Form 10-Q, as amended.

First Quarter 2006 Highlights
• Record quarterly results: record volume, record
revenues, record net income
• Record daily trading volume of 4.6 million equity
and index contracts on January 20, 2006
• Announced launch of new market data offering
of comprehensive historical market data
• Declared initial quarterly dividend of $0.05

Summary Quarterly Financials
(in millions)
3.0
2.5
2.0
1.5
Average Daily Volume
1.7
+ 37.6%
2.4
$45
$40
$35
Net Revenues
(Gross Margin)
$33.3
+ 25.0%
$41.6
1.0
Q1 05 Q1 06
$30
Q1 05 Q1 06
$15
Net Income
$12.4
$12
$9
$8.9
40.1%
$6
Q1 05 Q1 06
Record financial results; Pre-Tax Margin of 53.3%

Premium Products
Average Daily Volume of Premium Products
(in thousands)
250
225
200
175
150
125
100
75
50
25
0
209.3
199.4
137.1
12.7
50.9
11.6
53.8
121.8
89.2
40.5
5.6 *
36.9
24.3
111.7
116.2
62.9
72.1
59.5
5.4
18.4
22.5
24.1
27.7
Q1 05 Q2 05 Q3 05 Q4 05 Q1 06
Indexes Other ETFs** SPDRS Diamonds
Growth in Premium Products
®
®
* Listed on 9/1/05 ** For comparison purposes, prior periods are adjusted to include volume for all current premium priced ETF’s

Institutional Opportunities
500,000
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
Incremental Trading Volume from ISE Functionalities
Special Functionality ADV
% of Total ADV
January 2002 – March 2006
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0
Jan
2002
Jan
2003
Jan
2004
Jan
2005
Jan
2006
0%
Growing Institutional Investor Interest
• Liquid markets
• Better prices
• Lower costs
• Risk management opportunities
• Enhanced returns

Summary Financial Performance
($MM)
Q1 06
Q1 05
Change
Total Revenues
$ 47.5
$ 36.9
28.9%
Total Cost of Revenues
6.0
3.6
64.3%
Net Revenues (Gross Margin)
$ 41.6
$ 33.3
25.0%
Total Expenses
21.0
17.2
22.6%
Operating Income
$ 20.5
$ 16.1
27.7%
Interest and investment income
1.6
0.3
400.3%
Income before provision for income taxes
$ 22.2
$ 16.4
35.0%
Provision for income taxes
9.7
7.6
28.9%
Net Income
$ 12.4
$ 8.9
40.1%
EPS (Fully Diluted)
$ 0.32
$ 0.25
28.0%
Pre-Tax Margin
53.3%
49.4%
3.9 pts
• Net Income up 40.1%
• Pre-Tax Margin of 53.3%

Trading Volume (Equity and Index)
(MM)
Q1 06
Q1 05
Change
Average Daily Volume
2.4
1.7
37.6%
Trading Volume Mix
Customer
43.1%
41.4%
1.7 pts
Firm Proprietary
10.9%
8.6%
2.3 pts
Market Maker
46.0%
50.0%
(4.0) pts
Average net transaction fee per side
$ 0.105
$ 0.109
(3.7)%
Average fee per revenue side
$ 0.176
$ 0.180
(2.2)%
Average number of issues traded
854
705
21.1%
• Record average daily volume; up 37.6%
• Record number of issues traded; up 21.1%

Net Revenues
Revenues ($MM)
Q1 06
Q1 05
Change
Net Transaction Fees
$ 30.9
$ 23.1
33.9%
Other Members Fees
5.6
5.5
1.4%
Market Data
5.1
4.6
9.3%
Net Revenues
41.6
33.3
25.0%
• Strong top line growth:
• Net transaction fees +33.9%
• Net Revenues +25.0%

Expenses
($MM)
Q1 06
Q1 05
Change
Compensation and benefits
$ 11.4
$ 8.2
38.2%
Technology and communications
3.5
3.4
4.0%
Occupancy
1.3
1.1
19.3%
Professional fees
1.6
1.5
9.5%
Marketing and business development
0.6
0.6
6.1%
Depreciation and amortization
1.5
1.5
1.3%
Other
1.0
0.8
34.3%
Total direct expenses
$ 21.0
$ 17.1
23.2%
Reorganization
0.0
0.1
(76.5)%
Total expenses
$ 21.0
$ 17.2
22.6%
ISE Stock Exchange, LLC Expenses
$ 0.9
$ 0.1
N/M
Expenses less ISE Stock Exchange, LLC
$ 20.1
$ 17.0
18.1%
Tax rate
44.0%
46.0%
(2.0) pts
• Q1 06 reflects full quarter of stock based compensation

Summary Cash Flow
($MM)
Net Income
Net cash provided by other operating activities
Net cash provided by/(used in) investing activities
Net cash provided by/(used in) financing activities
Increase in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
3/31/2006
$ 12.4
(5.9)
2.1
(0.3)
8.4
170.9
$ 179.3
3/31/2005
$ 8.9
15.5
(0.3)
58.9
83.0
44.8
$ 127.9
Continued strong cash flow performance

Summary Balance Sheet
($MM)
Cash and Cash Equivalents
Total Assets
Total Liabilities
Stockholders’ Equity
3/31/2006
$ 179.3
289.1
87.0
$ 199.2
12/31/2005
$ 170.9
280.5
95.5
$ 185.0
Highly liquid, debt-free balance sheet

Summary
• Delivered strong financial performance with
double-digit growth in all key metrics, excellent
cash flow and operating leverage
• Continued success in new growth initiatives in
core business
• Progress in executing multi-faceted growth
strategy
Strong performance in core business;
solid progress on strategic initiatives

Appendix
1. DIAMONDS® is a registered trademark of Dow Jones & Company, Inc. ("Dow Jones") for
securities issued by the Diamonds® Trust, Series 1 and has been licensed for use for certain
purposes by Dow Jones to PDR Services Corporation ("PDR") and the American Stock
Exchange LLC ("Amex") pursuant to a license agreement with Dow Jones. DIAMONDS and
options which have DIAMONDS as their sole underlying interest ("DIAMONDS Options") are
not sponsored, endorsed, sold or promoted by Dow Jones. Dow Jones, PDR, and Amex have
not licensed or authorized ISE to (i) engage in the creation, listing, provision of a market for
trading, marketing, and promotion of DIAMONDS Options or (ii) to use and refer to the
DIAMONDS® trademark in connection with the listing, provision of a market for trading,
marketing, and promotion of DIAMONDS Options or with making disclosures concerning
DIAMONDS Options under any applicable federal or state laws, rules or regulations, and do
not sponsor, endorse, or promote such activity by ISE. ISE is not affiliated in any manner with
Dow Jones, PDR or Amex.
2. The International Securities Exchange analyzes its performance using non-GAAP results
that exclude certain non-operating charges that were incurred in connection with the
Company’s plan to reorganize into a holding company structure as well as expenses related to
its secondary offering. These non-GAAP measures should be considered in context with
GAAP results. A reconciliation of GAAP results to non-GAAP results can be found in the
Company’s earnings release dated April 27, 2006.

GAAP to Non-GAAP Reconciliation
Three Months Ended
March 31, March 31,
2006 2005
GAAP Transaction fees, as reported $ 36,867 $ 26,714
Less activity remittance fees 4,345 2,702
Less license fees 1,625 931
Net transaction fees, as adjusted 30,897 23,081
GAAP Total expenses, as reported $ 21,028 $ 17,157
Less ISE Stock Exchange direct expenses 900 117
Total expenses excluding ISE Stock Exchange expenses 20,128 17,040
GAAP Income before provision for income taxes, as reported 22,157 16,417
Less ISE Stock Exchange direct expenses 900 117
Income before provision for income taxes excluding ISE Stock Exchange expenses 23,057 16,534
GAAP Net income, as reported $ 12,418 $ 8,861
Less ISE Stock Exchange direct expenses, net of tax 495 64
Net income excluding ISE Stock Exchange expenses 12,913 8,925
GAAP Diluted earnings per share, as reported $ 0.32 $ 0.25
Less ISE Stock Exchange direct expenses, net of tax 0.01 0.01
Diluted earnings per share excluding ISE Stock Exchange expenses $ 0.33 $ 0.26
Gross Margin 41,574 33,252
GAAP pre-tax margins, as reported 53.3% 49.4%
Pre-tax margins excluding ISE Stock Exchange expenses 55.5% 49.7%