CHICAGO, Oct. 28 /PRNewswire-FirstCall/ -- CBOT Holdings, Inc.
(NYSE: BOT), holding company for the Chicago Board of Trade (CBOT(R)),
announced today that revenue in the third quarter of 2005 rose 20 percent from
revenue in the same period during 2004, with increased trading volume and a
higher average rate per contract contributing to these results. Net income in
the third quarter climbed 63 percent to $19.8 million, compared with $12.2
million in the third quarter of 2004.
Third quarter revenue was $112.2 million, up from $93.6 million in the
third quarter of 2004. Exchange and clearing fee revenue in the third quarter
grew 21 percent to $82.7 million compared with $68.3 million in the third
quarter of 2004. Third quarter operating income was $32.9 million, rising 66
percent from $19.8 million in the same period during the prior year.
CBOT Holdings President and CEO Bernard W. Dan said, "We added significant
trading platform enhancements over the past year, which contributed to the
recent growth in reported trading volume. Global market participants have
benefited from more effective risk management via increased use of reduced
tick spreads and enhanced trading and matching algorithms. In addition, on
October 9, 2005, we implemented an additional major upgrade to our electronic
trading platform, and concurrently expanded the number of trading hours from
21 hours per day to 22, which are collectively intended to drive additional
volume in our products."
Third quarter trading volume rose nine percent over the same period during
the prior year to 165.2 million contracts. Average daily volume in the third
quarter of 2005 increased to 2.6 million contracts, also up nine percent from
the third quarter of 2004. In addition, average daily volume on the CBOT's
electronic trading platform, e-cbot powered by LIFFE CONNECT(R), during the
third quarter rose 20 percent from the same period last year.
Third quarter earnings benefited from trading volume growth along with an
increase in the average rate per contract, which rose 11 percent above last
year's third quarter level. The average rate per contract represents total
exchange and clearing fee revenue divided by total reported trading volume.
Separately, on Monday, October 24, 2005, CBOT Holdings closed the initial
public offering of 3,191,489 shares of its Class A common stock, which
included 2,940,486 shares offered by CBOT Holdings and 251,003 shares offered
by selling stockholders. The initial public offering price was $54.00 per
share. CBOT Holdings also sold an additional 478,723 shares of Class A common
stock pursuant to the exercise in full by the underwriters of their over-
allotment option.
Key Financial Metrics (in millions, except rate per contract)
Quarter Ended Sept. 30 Sept. 30 June 30
2005 2004 2005
Average Daily Volume 2.6 2.4 2.9
Reported Trading Volume 165.2 151.5 184.9
Average Rate per Contract $0.501 $0.451 $0.499
Revenue $112.2 $ 93.6 $120.6
Operating Income $32.9 $ 19.8 $33.7
Operating Margin 29% 21% 28%
Net Income $19.8 $12.2 $18.2
Depreciation & Amortization $13.1 $11.5 $14.2
Capital Expenditures $7.8 $17.0 $14.7
CBOT Third Quarter Operational Highlights
-- CBOT announced upgrades to e-cbot, along with increases in exchange fee
rates for certain transactions on e-cbot, effective October 1, 2005.
New functionality on e-cbot includes order book management, stop orders
at the host level that expand order type access via e-cbot, nine
inter-commodity spread strategies for financial products and an
expansion of trading hours per day from 21 to 22.
-- CBOT and Singapore Exchange announced an effort to jointly explore the
establishment of a commodity derivatives exchange in Singapore.
Outlook
Given current market conditions and what is known today, the CBOT
currently expects the following for the fourth quarter 2005:
-- Baseline expenses, which equals total operating expenses less volume
based expenses, of about $66 million to $69 million, including
$1.8 million to $2.0 million of non-cash stock compensation expense.
-- Volume based expenses, which include clearing costs and contracted
license fees, of about $0.105 per reported contract.
-- The exchange fee rate increase implemented October 1, 2005 is currently
expected to raise the overall rate per contract in the fourth quarter
of 2005 about seven to ten percent from the rate during the third
quarter of 2005.
The company does not provide an outlook for trading volume or revenue, but
does report the trading volume daily on its website at
http://www.cbot.com/cbot/pub/page/0,3181,541,00.html .
3Q 2Q 1Q 4Q 3Q 2Q 1Q
2005 2005 2005 2004 2004 2004 2004
Trading Days 64 64 61 64 64 63 62
AVERAGE RATE PER CONTRACT
3Q 2Q 1Q 4Q 3Q 2Q 1Q
PRODUCT: 2005 2005 2005 2004 2004 2004 2004
Interest
Rate 0.469 0.467 0.482 0.386 0.417 0.408 0.484
Agri-
culture 0.631 0.643 0.641 0.640 0.637 0.673 0.678
Equity
Index 0.672 0.630 0.578 0.560 0.564 0.550 0.525
Metals,
Energy &
Other 1.360 1.312 0.855 0.654 0.848 0.870 0.851
Overall
average
rate per
contract 0.501 0.499 0.507 0.424 0.451 0.455 0.519
VENUE:
Open-
Auction 0.485 0.483 0.491 0.441 0.490 0.506 0.525
Electronic 0.411 0.397 0.400 0.315 0.330 0.319 0.429
Off-
Exchange 2.117 2.404 2.131 1.786 1.880 1.668 1.597
Overall
average
rate per
contract 0.501 0.499 0.507 0.424 0.451 0.455 0.519
AVERAGE DAILY VOLUME (Round Turns, in thousands)
3Q 2Q 1Q 4Q 3Q 2Q 1Q
PRODUCT: 2005 2005 2005 2004 2004 2004 2004
Interest
Rate 2,123 2,368 2,356 2,006 1,974 2,028 1,735
Agri-
culture 350 404 373 287 295 391 375
Equity
Index 103 115 105 99 96 94 90
Metals,
Energy &
Other 5 3 4 5 2 2 2
Total 2,582 2,889 2,838 2,398 2,367 2,516 2,203
VENUE:
Open-
Auction 773 940 940 780 843 1,007 913
Electronic 1,707 1,843 1,772 1,507 1,426 1,395 1,194
Off-
Exchange 102 106 126 110 97 115 96
Total 2,582 2,889 2,838 2,398 2,367 2,516 2,203
TRANSACTION FEES (in thousands)
3Q 2Q 1Q 4Q 3Q 2Q 1Q
PRODUCT: 2005 2005 2005 2004 2004 2004 2004
Interest
Rate $63,741 $70,733 $69,327 $49,524 $52,666 $52,199 $52,092
Agri-
culture 14,150 16,604 14,598 11,761 12,037 16,558 15,777
Equity
Index 4,439 4,627 3,687 3,562 3,453 3,270 2,942
Metals,
Energy &
Other 393 252 184 202 127 135 130
Total $82,722 $92,216 $87,796 $65,050 $68,284 $72,163 $70,940
VENUE:
Open-
Auction $23,979 $29,085 $28,185 $22,038 $26,458 $32,067 $29,742
Electronic 44,872 46,883 43,285 30,413 30,123 28,011 31,726
Off-
Exchange 13,871 16,247 16,325 12,598 11,702 12,084 9,473
Total $82,722 $92,216 $87,796 $65,050 $68,284 $72,163 $70,940
Quarterly Conference Call
Executives of CBOT Holdings Inc. will host a conference call to review its
third quarter results today, October 28, at 8:00 am ET 7:00 am CT. The
conference call and any accompanying slides will be publicly available via
live web cast from the investor relations section of the CBOT Holdings web
site at http://www.cbot.com . The web cast will be available for replay at the
same address approximately two hours following its conclusion. Those wishing
to listen to the live conference via telephone should dial 866.362.5158 (U.S.
callers) and 617.597.5397 (International callers) at least 10 minutes before
the call begins.
About the CBOT
As one of the leading global derivative exchanges, the Chicago Board of
Trade provides a diverse mix of financial, equity, and commodity futures and
options-on-futures products. Building on its 157-year history, the CBOT
continues to advance into the future using the strength of deep liquidity,
market integrity and member-trader expertise. Using superior trading
technology in both electronic and open-auction trading platforms, the CBOT
provides premier customer service to risk managers and investors worldwide.
For more information visit our web site at http://www.cbot.com .
Forward Looking Statements
In this release, our use of the words "may," "will," "should," "could,"
"expects," "plans," "anticipates," "believes," "estimates," "predicts,"
"potential" or "continue" or other comparable terminology is intended to
identify forward-looking statements. These statements are not guarantees of
future performance and involve risks, uncertainties and assumptions that are
difficult to predict. Therefore, actual outcomes and results may differ
materially from what is expressed or implied in any forward-looking
statements. More detailed information about factors that may affect our
performance may be found in filings made by CBOT Holdings, Inc. with the
Securities and Exchange Commission, which can be obtained at its web site at
http://www.sec.gov . Except for any obligation to disclose material
information under Federal securities laws, we undertake no obligation to
publicly update any forward-looking statements, whether as a result of new
information, future events or otherwise.
CBOT Holdings, Inc. and Subsidiaries
Consolidated Statements of Financial Condition
(unaudited, in thousands)
12/31/04 03/31/05 06/30/05 09/30/05
ASSETS
Current assets:
Cash and cash equivalents:
Unrestricted $91,165 $101,455 $101,868 $73,436
Held under deposit and
membership transfers 14,262 16,439 2,050 862
Total cash and cash equivalents 105,427 117,894 103,918 74,298
Restricted cash 7,661 4,025 22,102 17,254
Short term investments - - 24,700 64,199
Accounts receivable - net of
allowance 34,556 47,775 40,761 38,310
Income tax receivable 1,557 - - -
Deferred income taxes 2,219 2,591 2,573 2,974
Prepaid expenses 20,542 24,388 21,065 21,114
Total current assets 171,962 196,673 215,119 218,149
Property and equipment:
Land 34,234 34,234 34,234 34,234
Buildings and equipment 320,295 322,363 325,161 328,992
Furnishings and fixtures 188,316 189,825 196,344 197,054
Computer software and systems 72,662 81,492 84,091 84,112
Construction in progress 13,702 6,196 8,287 11,440
Total property and equipment 629,209 634,110 648,117 655,832
Less accumulated depreciation and
amortization 360,038 373,708 387,137 400,110
Property and equipment - net 269,171 260,402 260,980 255,722
Other assets - net 19,283 19,162 19,387 19,252
Total assets $460,416 $476,237 $495,486 $493,123
LIABILITIES AND MEMBERS' /
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $20,545 $12,837 $14,098 $14,960
Accrued clearing services 11,591 13,516 15,003 12,630
Accrued real estate taxes 7,623 5,994 7,995 9,595
Accrued payroll costs 6,031 2,882 3,986 5,568
Accrued exchange fee rebates 2,301 1,587 1,955 2,555
Accrued employee termination 403 322 273 302
Accrued liabilities 9,524 9,056 8,381 7,348
Funds held for deposit and
membership transfers 14,262 16,439 24,123 17,230
Current portion of long-term
debt 20,359 20,229 19,726 19,588
Income tax payable - 12,012 2,135 1,764
Other current liabilities 249 4,733 4,700 322
Total current liabilities 92,888 99,607 102,375 91,862
Long-term liabilities:
Deferred income tax liabilities 28,484 27,225 25,588 23,468
Long-term debt 31,074 20,231 19,728 11,810
Other liabilities 14,379 14,671 15,048 13,412
Total long-term liabilities 73,937 62,127 60,364 48,690
Total liabilities 166,825 161,734 162,739 140,552
Members' / Stockholders' equity:
Common stock - - 49 49
Additional paid-in capital - - 315,500 315,500
Retained earnings - - 17,198 37,022
Members' equity 293,591 314,503 - -
Total members' / stockholders'
equity 293,591 314,503 332,747 352,571
Total liabilities and members' /
stockholders' equity $460,416 $476,237 $495,486 $493,123
CBOT Holdings, Inc. and Subsidiaries
Consolidated Statements of Income
(unaudited, in thousands, except per share data)
QUARTER ENDED YTD
03/31/ 06/30/ 09/30/ 09/30/ 09/30/ 09/30/
05 05 05 04 05 04
Revenues:
Exchange fees 66,518 69,657 62,696 49,675 198,871 156,555
Clearing fees 21,277 22,559 20,027 18,609 63,863 54,832
Market data 18,522 18,306 18,289 16,119 55,117 48,118
Building 5,608 5,479 5,595 5,328 16,682 16,089
Services 3,591 3,623 4,230 3,133 11,444 9,465
Dues - - - - - 9,315
Other 941 963 1,331 711 3,235 2,182
Total revenues 116,457 120,587 112,168 93,575 349,212 296,556
Expenses:
Clearing services 16,516 17,378 15,630 14,080 49,524 40,162
Contracted license
fees 1,625 1,780 1,718 1,575 5,123 4,586
Salaries and
benefits 18,633 17,902 18,127 16,923 54,662 52,820
Depreciation and
amortization 13,814 14,231 13,144 11,507 41,189 33,757
Professional
services 4,592 4,558 4,979 6,389 14,129 19,115
General and
administrative
expenses 4,922 5,167 5,427 5,511 15,516 14,638
Building operating
costs 6,638 6,514 6,542 5,899 19,694 17,813
Information
technology
services 10,677 11,392 10,660 8,905 32,729 26,378
Programs 2,016 3,089 2,306 1,902 7,411 8,053
Interest 922 796 633 1,114 2,351 3,654
Litigation 4,000 4,000
Severance and
related costs 114 50 113 (31) 277 387
Operating
expenses 80,469 86,857 79,279 73,774 246,605 221,363
Income from
operations 35,988 33,730 32,889 19,801 102,607 75,193
Income taxes
Current 16,577 17,002 15,586 9,957 49,165 26,793
Deferred (1,632) (1,618) (2,521) (2,120) (5,771) 4,421
Total income
taxes 14,945 15,384 13,065 7,837 43,394 31,214
Income before equity
in unconsolidated
subsidiary and
minority interest
in consolidated
subsidiary 21,043 18,346 19,824 11,964 59,213 43,979
Equity in loss of
unconsolidated
subsidiary - net of
tax (255) (112) - (121) (367) (373)
Minority interest in
loss of consolidated
subsidiary - - - 323 - 1,100
Net income 20,788 18,234 19,824 12,166 58,846 44,706
Earnings per share: (1)
Basic $0.35 $0.40 $0.75
Diluted $0.35 $0.40 $0.75
Weighted average
number of common
stock shares: (2)(3)
Basic 49,360 49,360 49,360
Diluted 49,360 49,360 49,360
(1) Income used in the calculation of earnings per share, only includes
earnings allocated to each reported period after April 22, 2005, the
date the CBOT demutualized and became a stock, for-profit company. The
amount of income allocated to the period before April 22, 2005 and not
included in the calculation of earnings per share was $1,036 for the
quarter ended June 30, 2005 and $21,824 for the nine months ended
September 30, 2005.
(2) CBOT members received an aggregate of 49,360 shares of Class A common
stock of CBOT Holdings as a result of the demutualization. Weighted
average number of shares used in the calculation is based on the
average number of shares outstanding after April 22, 2005 rather than
the entire reporting period.
(3) On October 24, 2005, CBOT Holdings closed an initial public offering
of its Class A common stock. The number of shares of Class A common
stock outstanding immediately after this offering was 52,807 shares.
Operating expense makeup:
Volume-based 18,141 19,158 17,348 15,655 54,647 44,748
Baseline 62,214 63,649 61,818 58,150 187,681 176,228
Other 114 4,050 113 (31) 4,277 387
Total 80,469 86,857 79,279 73,774 246,605 221,363
CBOT Holdings, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(unaudited, in thousands)
QUARTER ENDED
03/31/05 06/30/05 09/30/05 09/30/04
Cash flows from operating
activities:
Net income $20,788 $18,234 $19,824 $12,166
Adjustments to reconcile net
income to net cash flows from
operating activities:
Depreciation and amortization 13,814 14,231 13,144 11,507
Change in allowance for doubtful
accounts 230 61 78 (5)
Gain / loss on foreign currency
transaction (260) (1,006) (316) (153)
Gain / loss on sale or retirement
of fixed assets - (4) 8 (21)
Deferred income taxes (benefit) (1,632) (1,618) (2,521) (2,120)
Minority interest in loss of
subsidiary - - - (323)
Equity in loss of unconsolidated
subsidiary 425 188 - 201
Amortization of short term
investment discounts - (26) (111) -
Changes in assets and liabilities:
Accounts receivable (13,449) 6,953 2,373 337
Income tax receivable /
payable 13,569 (9,877) (371) (498)
Prepaid expenses (3,846) 3,323 (49) (1,752)
Other assets (410) (335) 19 446
Accounts payable (7,708) 1,261 862 1,026
Accrued clearing services 1,925 1,487 (2,373) 191
Accrued real estate tax (1,629) 2,001 1,600 1,305
Accrued payroll costs (3,149) 1,104 1,582 1,441
Accrued exchange fee rebates (714) 368 600 105
Accrued employee termination (81) (49) 29 (474)
Accrued liabilities (468) (675) (1,033) (451)
Funds held for deposit and
membership transfers 2,177 7,684 (6,893) (6,110)
Other current liabilities 4,484 (33) (4,378) 3,721
Other long-term liabilities 292 377 (1,636) (1,362)
Net cash flows from
operating activities 24,358 43,649 20,438 19,177
Cash flows from investing activities:
Acquisition of property and
equipment (4,932) (14,702) (7,777) (17,031)
Purchase of short term investments - (24,674) (49,285) -
Proceeds from short term
investments - - 9,897 -
Restricted cash 3,636 (18,077) 4,848 (5)
Proceeds from sale of property and
equipment - 9 - 227
Investment in joint ventures (6) (191) (1) (50)
Net cash flows used in investing
activities (1,302) (57,635) (42,318) (16,859)
Cash flows from financing activities:
Repayments of borrowings (10,713) - (7,740) (7,939)
Capital contributions from members 124 10 - 81
Distribution to partners - - - -
Net cash flows used in financing
activities (10,589) 10 (7,740) (7,858)
Net increase (decrease) in cash
and cash equivalents 12,467 (13,976) (29,620) (5,540)
Cash and cash equivalents -
beginning of period 105,427 117,894 103,918 116,597
Cash and cash equivalents - end of
period $117,894 $103,918 $74,298 $111,057
Cash paid for:
Interest $1,089 $297 $1,000 $1,600
Income taxes (net of refunds) 2,837 26,841 15,959 10,375
YTD
09/30/05 09/30/04
Cash flows from operating
activities:
Net income $58,846 $44,706
Adjustments to reconcile net income
to net cash flows from operating
activities:
Depreciation and amortization 41,189 33,757
Change in allowance for doubtful
accounts 369 (234)
Gain / loss on foreign currency
transaction (1,582) 361
Gain / loss on sale or retirement of
fixed assets 4 13
Deferred income taxes (benefit) (5,771) 4,420
Minority interest in loss of
subsidiary - (1,100)
Equity in loss of unconsolidated
subsidiary 613 621
Amortization of short term
investment discounts (137) -
Changes in assets and liabilities:
Accounts receivable (4,123) 1,046
Income tax receivable / payable 3,321 12,926
Prepaid expenses (572) (7,852)
Other assets (726) 707
Accounts payable (5,585) (14,071)
Accrued clearing services 1,039 10,257
Accrued real estate taxes 1,972 870
Accrued payroll costs (463) (31)
Accrued exchange fee rebates 254 (1,812)
Accrued employee termination (101) (1,970)
Accrued liabilities (2,176) (3,723)
Funds held for deposit and
membership transfers 2,968 993
Other current liabilities 73 3,695
Other long-term liabilities (967) (1,006)
Net cash flows from
operating activities 88,445 82,573
Cash flows from investing activities:
Acquisition of property and equipment (27,411) (28,608)
Purchase of short term investments (73,959) -
Proceeds from short term investments 9,897 -
Restricted cash (9,593) (6,803)
Proceeds from sale of property and equipment 9 229
Investment in joint ventures (198) (323)
Net cash flows used in investing
activities (101,255) (35,505)
Cash flows from financing activities:
Repayments of borrowings (18,453) (18,652)
Capital contributions from members 134 275
Distribution to partners - (60,300)
Net cash flows used in financing
activities (18,319) (78,677)
Net increase (decrease) in cash and
cash equivalents (31,129) (31,609)
Cash and cash equivalents -
beginning of period 105,427 142,666
Cash and cash equivalents - end of
period $74,298 $111,057
Cash paid for:
Interest $2,386 $3,346
Income taxes (net of refunds) 45,637 13,619
SOURCE CBOT Holdings, Inc.
 back to top
Related links:
http://www.cbot.com
CONTACT:
Maria Gemskie, +1-312-435-3620, news@cbot.com
, or Investor Contact, Tami Kamarauskas, +1-312-213-2558,
InvestorRelations@cbot.com , both of CBOT Holdings, Inc.
|
