SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 for the Quarterly Period Ended June 30, 2009
 OR
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 for the transition period from                 to
 Commission file number: 001-32419
 optionsXpress Holdings, Inc.
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    20-1444525
(I.R.S. Employer
Identification Number)
 311 W. Monroe, Suite 1000, Chicago, Illinois
60606
 (312) 630-3300
 þ o
 o o
  Large accelerated filer þAccelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o o þ




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##### 



Part I  FINANCIAL INFORMATION
    
    
    3Item 1.  Condensed Consolidated Financial Statements
    
    
    3Condensed Consolidated Statements of Financial Condition
    
    
    3Condensed Consolidated Statements of Operations
    
    
    4Condensed Consolidated Statements of Cash Flows
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2.  Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3.  Quantitative and Qualitative Disclosures about Market Risk
    
    
    21Item 4.  Controls and Procedures
    
    
    22Part II  OTHER INFORMATION
    
    
    22Item 1.  Legal Proceedings
    
    
    22Item 1A  Risk Factors
    
    
    22Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    23Item 4.
 Submission of Matters to a Vote of Security Holders
    
    
    25Item 6.  Exhibits
    
    
    25Signatures
    
    
    26
 2




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##### 



Part I  FINANCIAL INFORMATION
 Item 1.  Condensed Consolidated Financial Statements
 optionsXpress Holdings, Inc.
Condensed Consolidated Statements of Financial Condition
(Unaudited)
 June 30,
    
    
    December 31,2009
    
    
    2008ASSETSCash and cash equivalents
    
    $
    118,434
    
    
    $
    114,450Cash and investments segregated in compliance with federal regulations
    
    
    642,476
    
    
    
    427,669Receivables from brokerage customers, net
    
    
    126,585
    
    
    
    137,502Receivables from brokers, dealers and clearing organizations
    
    
    24,111
    
    
    
    15,621Investments in securities
    
    
    88,138
    
    
    
    89,937Deposits with clearing organizations
    
    
    72,189
    
    
    
    108,409Fixed assets, net
    
    
    13,970
    
    
    
    12,979Goodwill
    
    
    81,722
    
    
    
    44,234Other intangible assets, net
    
    
    8,544
    
    
    
    4,569Other assets
    
    
    19,053
    
    
    
    16,963Total assets
    
    $
    1,195,222
    
    
    $
    972,333LIABILITIES AND STOCKHOLDERS EQUITYLiabilitiesPayables to brokerage customers
    
    $
    855,232
    
    
    $
    675,872Payables to brokers, dealers and clearing organizations
    
    
    168
    
    
    
    293Accounts payable and accrued liabilities
    
    
    49,469
    
    
    
    27,848Deferred revenue
    
    
    8,480
    
    
    
    Current and deferred income taxes
    
    
    285
    
    
    
    25Total liabilities
    
    
    913,634
    
    
    
    704,038Stockholders equityCommon stock, $0.0001 par value (250,000 shares authorized; 57,733 and
58,780 shares issued and outstanding at June 30, 2009 and December 31,
2008, respectively)
    
    
    6
    
    
    
    6Preferred stock, $0.0001 par value (75,000 shares authorized; none issued)
    
    
    
    
    
    
    Additional paid-in capital
    
    
    16,793
    
    
    
    28,555Accumulated other comprehensive loss
    
    
    (951
    )
    
    
    (1,340
    )Non-controlling interests
    
    
    80
    
    
    
    405Retained earnings
    
    
    265,660
    
    
    
    240,669Total stockholders equity
    
    
    281,588
    
    
    
    268,295Total liabilities and stockholders equity
    
    $
    1,195,222
    
    
    $
    972,333
 See accompanying notes
 3




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##### 



optionsXpress Holdings, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues:Commissions
    
    $
    42,008
    
    
    $
    40,959
    
    
    $
    80,097
    
    
    $
    79,888Other brokerage-related revenue
    
    
    7,108
    
    
    
    8,214
    
    
    
    13,405
    
    
    
    15,692Interest revenue and fees
    
    
    4,489
    
    
    
    11,905
    
    
    
    8,869
    
    
    
    26,278Interest expense
    
    
    (61
    )
    
    
    (382
    )
    
    
    (123
    )
    
    
    (1,166
    )Net interest revenue and fees
    
    
    4,428
    
    
    
    11,523
    
    
    
    8,746
    
    
    
    25,112Education revenue
    
    
    7,234
    
    
    
    
    
    
    
    7,234
    
    
    
    Other income
    
    
    937
    
    
    
    928
    
    
    
    1,527
    
    
    
    1,697Net revenues
    
    
    61,715
    
    
    
    61,624
    
    
    
    111,009
    
    
    
    122,389Expenses:Compensation and benefits
    
    
    10,434
    
    
    
    7,073
    
    
    
    18,808
    
    
    
    13,732Brokerage, clearing and other related expenses
    
    
    8,047
    
    
    
    5,685
    
    
    
    15,237
    
    
    
    10,703Brokerage advertising
    
    
    5,005
    
    
    
    5,031
    
    
    
    10,794
    
    
    
    9,905Education marketing and fulfillment
    
    
    4,792
    
    
    
    
    
    
    
    4,792
    
    
    
    Depreciation and amortization
    
    
    2,298
    
    
    
    1,767
    
    
    
    4,290
    
    
    
    3,445Other general and administrative
    
    
    5,883
    
    
    
    4,997
    
    
    
    10,625
    
    
    
    9,980Total expenses
    
    
    36,459
    
    
    
    24,553
    
    
    
    64,546
    
    
    
    47,765Income before income taxes of consolidated companies
    
    
    25,256
    
    
    
    37,071
    
    
    
    46,463
    
    
    
    74,624Income taxes
    
    
    9,165
    
    
    
    13,654
    
    
    
    16,804
    
    
    
    27,364Net income of consolidated companies
    
    
    16,091
    
    
    
    23,417
    
    
    
    29,659
    
    
    
    47,260Net income attributable to non-controlling interests
    
    
    18
    
    
    
    69
    
    
    
    30
    
    
    
    123Net income
    
    $
    16,073
    
    
    $
    23,348
    
    
    $
    29,629
    
    
    $
    47,137Earnings per common share:Basic
    
    $
    0.28
    
    
    $
    0.39
    
    
    $
    0.51
    
    
    $
    0.77Diluted
    
    $
    0.28
    
    
    $
    0.39
    
    
    $
    0.51
    
    
    $
    0.77Weighted-average number of common shares:Basic
    
    
    57,832
    
    
    
    60,025
    
    
    
    58,146
    
    
    
    61,303Diluted
    
    
    57,988
    
    
    
    60,175
    
    
    
    58,266
    
    
    
    61,476Dividends declared per share
    
    
    
    
    
    $
    0.0800
    
    
    $
    0.0800
    
    
    $
    0.1600
 See accompanying notes.
 4




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##### 



optionsXpress Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008Operating activitiesNet income
    
    $
    29,629
    
    
    $
    47,137Adjustments to reconcile net income to cash provided by operating activities:Depreciation and amortization
    
    
    4,290
    
    
    
    3,445Stock-based compensation
    
    
    1,811
    
    
    
    1,178Deferred income taxes
    
    
    311
    
    
    
    42Loss (gain) on investment in non-consolidated affiliate
    
    
    35
    
    
    
    (102
    )Excess tax benefit for stock-based compensation
    
    
    290
    
    
    
    (253
    )Unrealized loss (gain), deferred rent and other
    
    
    5
    
    
    
    24Changes in operating assets and liabilities:(Increase) decrease in:Cash and investments segregated in compliance with federal regulations
    
    
    (214,807
    )
    
    
    33,408Receivables from brokerage customers, net
    
    
    10,917
    
    
    
    (21,793
    )Receivables from brokers, dealers and clearing organizations
    
    
    (8,490
    )
    
    
    15,080Investments in securities
    
    
    1,500
    
    
    
    Deposits with clearing organizations
    
    
    36,220
    
    
    
    4,339Other assets
    
    
    (1,035
    )
    
    
    (14,811
    )Increase (decrease) in:Payables to brokerage customers
    
    
    179,360
    
    
    
    (13,138
    )Payables to brokers, dealers and clearing organizations
    
    
    (125
    )
    
    
    (5,152
    )Accounts payable and accrued liabilities
    
    
    (1,671
    )
    
    
    11,228Deferred revenue
    
    
    184
    
    
    
    Current income taxes
    
    
    (304
    )
    
    
    (3,466
    )Net cash provided by operating activities
    
    
    38,120
    
    
    
    57,166Investing activitiesPurchases of investments in securities
    
    
    
    
    
    
    (20,600
    )Proceeds from sales and maturities of investments in securities
    
    
    1,200
    
    
    
    75,550Purchases and development of computer software
    
    
    (1,464
    )
    
    
    (2,082
    )Purchases of fixed assets
    
    
    (343
    )
    
    
    (1,208
    )Loans to non-affiliates
    
    
    
    
    
    
    (1,000
    )Cash used in acquisition (net of cash received of $3,761)
    
    
    (14,697
    )
    
    
    Net cash (used in) provided by investing activities
    
    
    (15,304
    )
    
    
    50,660Financing activitiesExercise of stock options
    
    
    28
    
    
    
    125Excess tax benefit for stock-based compensation
    
    
    (290
    )
    
    
    253Purchases through employee stock purchase plan
    
    
    19
    
    
    
    19Purchase of non-controlling equity interest
    
    
    (1,021
    )
    
    
    Stock repurchases
    
    
    (12,664
    )
    
    
    (70,796
    )Dividends paid
    
    
    (4,638
    )
    
    
    (9,703
    )Net cash used in financing activities
    
    
    (18,566
    )
    
    
    (80,102
    )Effect of exchange rates on cash and cash equivalents
    
    
    (266
    )
    
    
    Net increase in cash and cash equivalents
    
    
    3,984
    
    
    
    27,724Cash and cash equivalents, beginning of period
    
    
    114,450
    
    
    
    70,492Cash and cash equivalents, end of period
    
    $
    118,434
    
    
    $
    98,216
 5




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##### 



Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008Supplemental cash flow information:Income taxes paid
    
    $
    16,866
    
    
    $
    30,811Interest paid
    
    
    123
    
    
    
    1,166Supplemental disclosure of non-cash activity:Non-cash foreign currency translation gain (loss)
    
    
    (94
    )
    
    
    56Intangible assets acquired in lieu of debt repayment
    
    
    2,500
    
    
    
    Non-cash change in unrealized gain on available for sale investments in securities
    
    
    901
    
    
    
    
 See accompanying notes.
 6




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##### 



optionsXpress Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
 1. Basis of Presentation and Nature of Operations
 Basis of Presentation
    Nature of Operations
    2. Summary of Significant Accounting Policies
  Education Services Segment
   7




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##### 



Product
    
    Recognition policySeminars
    
    Deferred and recognized as the seminar is provided or certificate expires.Website subscription services
    
    Deferred and recognized on a straight-line basis over the subscription period.Home study products
    
    Recognized upon delivery of home study materials to the customer.
 Deferred Revenue 
 Reclassification

 Education marketing and fulfillment 
 Foreign Currency Translation
 Business Combinations Business Combinations
 Fair Value of Financial Instruments  Fair Value Measurements
 Determining Fair Value when the
Volume and Activity for the Asset or Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly Recognition and Presentation of Other-Than-Temporary Impairments Interim Disclosures about
Fair Value and Financial Statements
 Non-controlling Interests  Non-controlling Interests in Consolidated Financial Statements, an amendment of Accounting Research
Bulletin No. 51
 8




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##### 



Derivative Instruments  Disclosures
about Derivative Instruments and Hedging Activities  an amendment of FASB Statement 133
 Subsequent Events  Subsequent Events  AU Section 560
 3. Recent Accounting Pronouncements
 The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principle
 4. Business Acquisition
   The following table summarizes the estimated fair values of the assets acquired and the liabilities
assumed.
 Fixed assets, net
    
    $
    2,195Other intangible assets, net
    
    
    2,200Other assets
    
    
    4,005Total identifiable assets acquired:
    
    
    8,400Accounts payable and accrued liabilities
    
    
    4,149Deferred revenue
    
    
    8,296Current and deferred income taxes
    
    
    163Net identifiable assets acquired:
    
    
    (4,208
    )Goodwill
    
    
    33,881Net assets acquired:
    
    $
    29,673
 9




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##### 



5. Goodwill
  Balance, January 1, 2009
    
    $
    44,234Goodwill adjustment recorded for Open E Cry, LLC for contingent consideration
    
    
    3,607Goodwill recorded in purchase of Optionetics, Inc. (Note 4)
    
    
    33,881Balance, June 30, 2009
    
    $
    81,722
  6. Other Intangible Assets, Net
  Gross
    
    
    
    
    
    
    NetCarrying
    
    
    Accumulated
    
    
    CarryingAmount
    
    
    Amortization
    
    
    AmountCustomer relationships
    
    $
    9,000
    
    
    $
    (2,578
    )
    
    $
    6,422Customer list
    
    
    800
    
    
    
    (45
    )
    
    
    755Trade names
    
    
    690
    
    
    
    
    
    
    
    690Education course content
    
    
    700
    
    
    
    (23
    )
    
    
    677$
    11,190
    
    
    $
    (2,646
    )
    
    $
    8,544
   7. Stock-Based Compensation
   8. Derivative Instruments
  10




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##### 



June
    
    
    December30,
    
    
    31,2009
    
    
    2008Derivative instruments owned, at fair value:UBS put right included in investments in securities
    
    $
    2,300
    
    
    $
    4,447Equity options included in other assets
    
    
    4,911
    
    
    
    5,166$
    7,211
    
    
    $
    9,613Derivative instruments sold but not yet purchased, at fair value:Equity options included in accounts payable and accrued liabilities
    
    $
    3,566
    
    
    $
    4,864$
    3,566
    
    
    $
    4,864
  9. Fair Value Measurements
  Level 1
 Level 2
 Level 3
  Non-Financial Assets
   Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    ImpairmentNon-financial assetsGoodwill
    
    $
    
    
    
    $
    
    
    
    $
    81,722
    
    
    $
    Customer relationships included in other intangible assets
    
    
    
    
    
    
    
    
    
    
    6,422
    
    
    
    Customer lists included in other intangible assets
    
    
    
    
    
    
    
    
    
    
    755
    
    
    
    Trade names included in other intangible assets
    
    
    
    
    
    
    
    
    
    
    690
    
    
    
    Education course content included in other intangible assets
    
    
    
    
    
    
    
    
    
    
    677
    
    
    
    $
    
    
    
    $
    
    
    
    $
    90,266
    
    
    $
    
 11




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##### 



Financial Assets and Liabilities
 Level 1(1)
    
    
    Level 2
    
    
    Level 3(2)
    
    
    TotalFinancial instruments owned, at fair value:Money market funds included in cash and cash equivalents
    
    $
    55,093
    
    
    $
    
    
    
    $
    
    
    
    $
    55,093U.S. treasury securities included in cash and investments
segregated in compliance with federal regulations
    
    
    11,998
    
    
    
    
    
    
    
    
    
    
    
    11,998Investments in securities
    
    
    
    
    
    
    
    
    
    
    88,138
    
    
    
    88,138U.S. treasury securities included in deposits with
clearing organizations
    
    
    10,249
    
    
    
    
    
    
    
    
    
    
    
    10,249Money market funds included in deposits with clearing
organizations
    
    
    50,000
    
    
    
    
    
    
    
    
    
    
    
    50,000Corporate equities and derivatives included in other assets
    
    
    9,395
    
    
    
    
    
    
    
    
    
    
    
    9,395$
    136,735
    
    
    $
    
    
    
    $
    88,138
    
    
    $
    224,873Financial instruments sold but not yet purchased, at fair
value:Corporate equities and derivatives included in accounts
payables and accrued liabilities
    
    $
    8,755
    
    
    $
    
    
    
    $
    
    
    
    $
    8,755$
    8,755
    
    
    $
    
    
    
    $
    
    
    
    $
    8,755
 
 (1)
    
    All of the Companys assets and liabilities included in Level 1 of the fair
value hierarchy are exchange traded securities or have quoted market prices
in active markets for identical assets or liabilities.(2)
    
    Level 3 assets represent 39.2% of all financial assets measured at fair value.  InvestmentsinSecurities AssetsBalance, January 1, 2009
    
    $
    89,937Total gains/(losses), realized and unrealized
    
    
    901Purchases, issuances, sales and settlements
    
    
    (2,700
    )Balance, June 30, 2009
    
    $
    88,138
   12




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##### 



10. Contingencies and Guarantees
 General Contingencies
     Legal Contingencies
  Guarantees
   13




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##### 



11. Capitalization
 Common Stock
   Dividends
  12. Regulatory Requirements
    13. Earnings Per Share
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income
    
    $
    16,073
    
    
    $
    23,348
    
    
    $
    29,629
    
    
    $
    47,137Weighted-average number of common shares outstanding  basic
    
    
    57,832
    
    
    
    60,025
    
    
    
    58,146
    
    
    
    61,303Effect of dilutive securities
    
    
    156
    
    
    
    150
    
    
    
    120
    
    
    
    173Weighted-average number of common shares outstanding 
diluted
    
    
    57,988
    
    
    
    60,175
    
    
    
    58,266
    
    
    
    61,476Basic EPS
    
    $
    0.28
    
    
    $
    0.39
    
    
    $
    0.51
    
    
    $
    0.77Diluted EPS
    
    $
    0.28
    
    
    $
    0.39
    
    
    $
    0.51
    
    
    $
    0.77
 14. Segment Reporting
  14




---



##### 



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,Revenue
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Brokerage Services
    
    $
    54,477
    
    
    $
    61,624
    
    
    $
    103,771
    
    
    $
    122,389Education Services
    
    
    7,304
    
    
    
    
    
    
    
    7,304
    
    
    
    Eliminations
    
    
    (66
    )
    
    
    
    
    
    
    (66
    )
    
    
    Total
    
    $
    61,715
    
    
    $
    61,624
    
    
    $
    111,009
    
    
    $
    122,389
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,Income (Loss) from Operations
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Brokerage Services
    
    $
    25,514
    
    
    $
    37,002
    
    
    $
    46,709
    
    
    $
    74,501Education Services
    
    
    (276
    )
    
    
    
    
    
    
    (276
    )
    
    
    Non-controlling interests
    
    
    18
    
    
    
    69
    
    
    
    30
    
    
    
    123Total
    
    $
    25,256
    
    
    $
    37,071
    
    
    $
    46,463
    
    
    $
    74,624
 As of
    
    
    As ofJune 30,
    
    
    December 31,Identifiable Assets
    
    2009
    
    
    2008Brokerage Services
    
    $
    1,183,522
    
    
    $
    972,333Education Services
    
    
    13,099
    
    
    
    Eliminations
    
    
    (1,399
    )
    
    
    Total
    
    $
    1,195,222
    
    
    $
    972,333
 15. Subsequent Events
  Item 2.  Managements Discussion and Analysis of Financial Condition and Results of Operations
 FORWARD-LOOKING STATEMENTS
   15




---



##### 




    
    the statements about our intention to pay dividends;
    
    the statements about future growth in online brokerage accounts, options trading, futures trading, online options trading, and
online futures trading;
    
    the statement that, on a per trade basis, brokerage, clearing and other related expenses generally decrease as the number of
customer trades increase;
    
    the statements about continuing to expand our product offering and our customer base and the costs associated with such expansion;
    
    the statements concerning future growth of our futures business, international operations, brokersXpress and our institutional
business;
    
    the statements about the impact of changes in interest rates on our earnings;
    
    the statements concerning continued financing options;
    
    the statements regarding scalability of our systems and the cost of capacity increases;
    
    the statements concerning uncertainties and deteriorations in the credit and capital markets and the credit quality of our
Auction Rate Securities; and.
    
    the statements concerning the number of students receiving education services.
 Results of Operations
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008Results of OperationsNet revenues (in thousands)
    
    $
    61,715
    
    
    $
    61,624
    
    
    $
    111,009
    
    
    $
    122,389Compensation and benefits
    
    
    16.9
    %
    
    
    11.5
    %
    
    
    16.9
    %
    
    
    11.2
    %Brokerage, clearing, and other related expenses
    
    
    13.0
    
    
    
    9.2
    
    
    
    13.8
    
    
    
    8.7Brokerage advertising
    
    
    8.1
    
    
    
    8.2
    
    
    
    9.7
    
    
    
    8.1Education marketing and fulfillment
    
    
    7.8
    
    
    
    
    
    
    
    4.3
    
    
    
    Depreciation and amortization
    
    
    3.7
    
    
    
    2.9
    
    
    
    3.9
    
    
    
    2.8Other general and administrative
    
    
    9.6
    
    
    
    8.2
    
    
    
    9.6
    
    
    
    8.3Income before income taxes
    
    
    40.9
    
    
    
    60.0
    
    
    
    41.8
    
    
    
    60.9Income taxes
    
    
    14.9
    
    
    
    22.1
    
    
    
    15.1
    
    
    
    22.4Net income
    
    
    26.0
    
    
    
    37.9
    
    
    
    26.7
    
    
    
    38.5
 Statistical Data
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008Statistical DataNumber of customer accounts (at
period end) (1)
    
    
    337,300
    
    
    
    291,500
    
    
    
    337,300
    
    
    
    291,500Daily average revenue trades
(DARTs) (2) Retail DARTs
    
    
    33,200
    
    
    
    37,200
    
    
    
    32,500
    
    
    
    37,600Institutional DARTs (3)
    
    
    11,900
    
    
    
    n/a
    
    
    
    13,500
    
    
    
    n/aTotal DARTs
    
    
    45,100
    
    
    
    37,200
    
    
    
    46,000
    
    
    
    37,600Customer trades per account (4)
    
    
    34
    
    
    
    34
    
    
    
    34
    
    
    
    34Average commission per trade
    
    $
    14.78
    
    
    $
    17.20
    
    
    $
    14.06
    
    
    $
    17.01Option trades as a % of total trades
    
    
    42
    %
    
    
    66
    %
    
    
    40
    %
    
    
    65
    %
 16




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##### 



Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008Brokerage
advertising expense per net new customer account (5)
    
    $
    556
    
    
    $
    349
    
    
    $
    577
    
    
    $
    340Total client assets (000s)
    
    $
    5,749,031
    
    
    $
    5,705,209
    
    
    $
    5,749,031
    
    
    $
    5,705,209Client margin balances (000s)
    
    $
    122,770
    
    
    $
    236,192
    
    
    $
    122,770
    
    
    $
    236,192
 
 (1)
    
    Customer accounts are open, numbered accounts.(2)
    
    DARTs are total revenue-generating trades for a period divided by the number of trading days in that period.(3)
    
    Includes all OEC and other institutional revenue-generating trades beginning in July 2008.(4)
    
    Customer trades per account are total trades divided by the average number of total customer accounts during the period. Customer trades are
annualized.(5)
    
    Calculated based on total net new customer accounts opened during the period. Three Months Ended June 30, 2009 versus Three Months Ended June 30, 2008
 Overview
  
    
    total customer accounts increased by 45,800 to 337,300, or 15.7%;
    
    total trades increased by 460,300 to 2,841,600, or 19.3% and
    
    average commission per trade decreased by
$2.42 to $14.78, or 14.1%.
 Commissions
  Other brokerage-related revenue
  Net interest revenue and fees
  Education revenues
  Other income
  Compensation and benefits
  17




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##### 



Brokerage, clearing, and other related expenses
  Brokerage advertising
  Education marketing and fulfillment
  Depreciation and amortization
  Other general and administrative
  Income taxes
  Net income
  Segment information
 Brokerage Services
  Education Services
  Six Months Ended June 30, 2009 versus Six Months Ended June 30, 2008
 Overview
  
    
    total customer accounts increased by 45,800 to 337,300, or 15.7%;
    
    total trades increased by 1,000,800 to 5,697,400, or 21.3%; and
    
    average commission per trade decreased by
$2.95 to $14.06, or 17.3%.
 18




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##### 



Commissions
  Other brokerage-related revenue
  Net interest revenue and fees
  Education revenue
  Other income
  Compensation and benefits
  Brokerage, clearing, and other related expenses
  Brokerage advertising
  Education marketing and fulfillment
  Depreciation and amortization
  Other general and administrative
  19




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##### 



Income taxes
  Net income
  Segment information
 Brokerage Services
  Education Services
  Liquidity and Capital Resources
        20




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##### 



Credit Facility
    Cash Flow
    Capital Expenditures
  Item 3.  Quantitative and Qualitative Disclosures about Market Risk
    21




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##### 



Item 4.  Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  Part II  OTHER INFORMATION
 Item 1.  Legal Proceedings
  Item 1A  Risk Factors
 Risk
Factors.
 If we fail to attract brokerage customers and education students in a cost-effective manner, our
profitability and growth may be impaired.
  Acquisitions involve risks that could adversely affect our business.
  
    
    difficulties in the integration of acquired operations, services and products;
    
    failure to achieve expected synergies;
    
    diversion of managements attention from other business concerns;
    
    assumption of unknown material liabilities of acquired companies;
    
    amortization of acquired intangible assets, which could reduce future reported earnings;
    
    potential loss of clients or key employees of acquired companies;
 22




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##### 




    
    increased litigation risk with transaction parties; and
    
    dilution to existing stockholders.
  We are subject to litigation and legal compliance risks.
   Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
 (c) Purchases of Equity Securities by the Issuer
  TotalNumber of
    
    
    ApproximateShares
    
    
    Dollar Value ofPurchased
    
    
    Shares thatas Part of
    
    
    May Yet BeTotal
    
    
    Average
    
    
    Publicly
    
    
    PurchasedNumber of
    
    
    Price
    
    
    Announced
    
    
    Under the PlansShares
    
    
    Paid per
    
    
    Plans
    
    
    or ProgramsPeriod
    
    Purchased
    
    
    Share
    
    
    or Programs
    
    
    (2)(3)(4)April 1, 2009 through April 30, 2009
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    28,026,022May 1, 2009 through May 31, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,026,022June 1, 2009 through June 30, 2009
    
    
    135,950
    
    
    
    16.39
    
    
    
    135,950
    
    
    
    25,797,801135,950
    (1)
    
    $
    16.39
    
    
    
    135,950
    
    
    $
    25,797,801
 
 (1)
    
    Represents repurchased shares which were retired to authorized, but unissued.(2)
    
    Does not include shares that may be repurchased from Ned. W. Bennett, our Executive Vice
Chairman and founder, pursuant to a stock purchase
agreement we entered into with him on February 14, 2008 (the Bennett Stock
Purchase Agreement). The Bennett Stock Purchase Agreement does not have an
expiration date and does not create an obligation for us to buy, or Mr.
Bennett to sell to us, any of his shares of our common stock. The number of
shares we may purchase under the Bennett Stock Purchase Agreement is limited
to 200,000 shares per year, but the total number of shares is limited only
by the number of shares of our common stock that Mr. Bennett may hold from
time to time.(3)
    
    Includes shares that may yet be repurchased by us pursuant to a stock
repurchase program approved by our Board of Directors on February 13, 2008
that authorizes us to repurchase up to $100 million of our outstanding
common stock (the Repurchase Program). The Repurchase Program has no
expiration date and may be terminated at any time by the Board of Directors. 23




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##### 



(4)
    
    Includes shares that may yet be repurchased by us pursuant to a stock
repurchase program approved by our Board of Directors on February 24, 2009
that authorizes us to repurchase up to $20 million of our outstanding common
stock (the Repurchase Program). The Repurchase Program has no expiration
date and may be terminated at any time by the Board of Directors. 24




---



##### 



Item 4.  Submission of Matters to a Vote of Security Holders
  Name of Nominee
    
    FOR
    
    WITHHELDHoward L. Draft
    
    53,643,592
    
    968,459Bruce R. Evans
    
    53,635,259
    
    976,792
  ABSTENTIONSAND BROKERFOR
    
    AGAINST
    
    NON-VOTES54,517,468
    
    69,287
    
    25,296
 Item 6.  Exhibits
 Exhibit
    
    Description13.1
    
    Consolidated Financial Statements as set forth in the Companys Annual Report on Form 10-K for the fiscal year ended
December 31, 2008(1)31.1
    
    Certification of David A. Fisher, Principal Executive Officer, as required pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    Certification of Adam J. DeWitt, Principal Financial Officer, as required pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232.1
    
    Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 (1)
    
    Incorporated by reference to the Companys Annual Report on Form 10-K
for the fiscal year ended December 31, 2008 filed March 2, 2009. 25




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##### 



Signatures
  Dated: August 10, 2009
    optionsXpress Holdings, Inc.
(Registrant)By:
    /s/ DAVID A. FISHERDavid A. FisherChief Executive Officer (Principal Executive Officer)By:
    /s/ ADAM J. DEWITTAdam J. DeWittChief Financial Officer (Principal Financial and
Accounting Officer) 26