"CBOE began the process of converting to a for-profit organization at the beginning of 2006, and we now have a 12-month track record about which we are very pleased," said CBOE Chairman and CEO William J. Brodsky. "CBOE's after-tax profit of $42.3 million is attributable to a combination of increased volume and a streamlined 2006 operating budget. CBOE's record volume outpaced the options industry overall, and CBOE maintained the lead position in a crowded field due to the success of the CBOE Hybrid Trading System and through product innovations such as Weeklys and options on the CBOE Volatility Index (VIX)."
During the fourth quarter of 2006, CBOE recorded a pre-tax profit of $24.2 million on volume of 2.8 million contracts per day.During the same quarter last year, CBOE recorded a pre-tax profit of $5.7 million on volume of 2.1 million contracts per day. Included in fourth-quarter 2006 results is one-time income of $7.1 million, related to settlement of prior litigation.
|
|
Quarter Ended |
Year-Ended |
||
|---|---|---|---|---|
|
(In thousands) |
12/31/06 |
12/31/05 |
12/31/06 |
12/31/05 |
|
Total Revenues |
$64,710 |
$54,251 |
$257,795 |
$203,055 |
|
Operating Expenses |
$47,411 |
$48,739 |
$188,129 |
$182,691 |
|
Income Before Taxes |
$24,229 |
$5,702 |
$72,543 |
$19,893 |
|
After-Tax Profit |
$13,970 |
$294 |
$42,293 |
$10,895 |
Gross revenue totaled $64.7 million for the fourth quarter of 2006 compared to $54.3 million one year ago. The $10.4 million increase (19% over 2005) occurred because of increased trading volumes that are reflected in a $7.2 million increase in transaction fees. Revenue from the Options Price Reporting Authority (OPRA) increased by $1.1 million while other revenue increased by $1.4 million. These increases reflect the higher trading activity and market share at CBOE.Investments income increased by $0.7 million because of higher interest rates and additional cash-on-hand.
Excluding severance costs and net loss from investment in affiliates, expenses totaled $47.4 million compared to $48.7 million one year ago. Significant changes occurred in outside services (decrease of $1.2 million), impairment of assets (decrease of $0.9 million) and other expenses (increase of $0.7 million). Outside services decreased overall as a result of decreased contract programming costs ($2.0 million) offset by increased legal fees ($0.7 million) compared to the fourth quarter in 2005. Impairment of assets decreased by $0.9 million in the fourth quarter of 2006 compared to the fourth quarter of 2005 because CBOE now accounts for its investment in the National Stock Exchange using the cost method, eliminating the current recognition of any new revenue or new impairment of our investment. Other expenses increased by $0.7 million as a result of increased reimbursement of costs for DPM linkage accounts.
Working capital (current assets minus current liabilities) increased by $9.1 million to $94.6 million while cash and investments increased by $10.0 million to $102.8 million during the fourth quarter of 2006.These increases are attributable to revenue exceeding cash expenses less capital expenditures because of high volume during the quarter.
A more detailed report is available at: IC07-16 on http://www.cboe.org/Legal/crclInfo.aspx.
During the fourth quarter of 2006, CBOE made the following announcements:
CBOE, the largest U.S. options marketplace and the creator of listed options, is regulated by the Securities and Exchange Commission (SEC). For additional information about the CBOE and its products, visit the CBOE website at: www.cboe.com.
Contacts:
Lynne Howard-Reed
(312) 786-7123
howardl@cboe.com
Gary Compton
(312) 786-7612
comptong@cboe.com
CBOE® and Chicago Board Options Exchange® are registered trademarks of Chicago Board Options Exchange, Incorporated.
This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state or jurisdiction in which an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
In connection with the proposed restructuring transaction, CBOE Holdings, Inc. ("CBOE Holdings") has filed certain relevant materials with the United States Securities and Exchange Commission (SEC), including a registration statement on Form S-4. Members are encouraged to read the registration statement, including the proxy statement/prospectus that are a part of the registration statement, because it contains important information about the proposed transaction. Members are able to obtain a free copy of the proxy statement/prospectus, as well as the other filings containing information about CBOE Holdings and the Chicago Board Options Exchange, Incorporated ("CBOE"), without charge, at the SEC's Web site, http://www.sec.gov/, and the companies' website, http://www.CBOE.com. In addition, CBOE members may obtain free copies of the proxy statement/prospectus and other documents filed by CBOE Holdings or the CBOE from CBOE Holdings by directing a request to the Office of the Secretary, CBOE Holdings, Inc., 400 South LaSalle Street, Chicago, Illinois 60605.
CBOE Holdings, the CBOE and their respective directors, executive officers and other employees may be deemed to be participants in the solicitation of proxies in connection with the proposed transaction. Information about the directors and executive officers of CBOE Holdings and of the CBOE will be available in the prospectus/proxy statement when it becomes available.
