Net revenues for the second quarter of 2002 rose 14 percent to $107.5 million from $94.7 million for the same period of 2001. Revenues from clearing and transaction fees climbed 23 percent to $84.3 million from $68.3 million for the second quarter of 2001. Net revenues benefited from a 41 percent increase in trading volume to 138.7 million contracts for the second quarter of 2002 versus the same period of 2001.
"Recent market volatility has created additional demand for our equity, interest rate and foreign exchange products," said Chairman Terry Duffy. "On June 26, our total volume was nearly 4.3 million contracts, a first in CME's history. Also on June 26, our open outcry auction markets traded more than 3 million contracts for the first time. In the second quarter, our GLOBEX ÆÊ electronic trading platform repeatedly achieved record daily trading volumes."
"Average daily volume was nearly 2.2 million contracts in the second quarter of 2002, up 8 percent from the previous quarter," said President and Chief Executive Officer Jim McNulty. "Average daily volume in all our electronically traded E-mini stock index products increased 33 percent to about 600,000 contracts a day, compared with 450,000 contracts a day in the first quarter. Our key financial results in the second quarter - revenues, operating income, net income and earnings per share - were the highest quarterly numbers in our history."
For the second quarter of 2002, the company's total operating expenses were $71.9 million, about level with $71.2 million for the year-earlier period. Non-cash stock-based compensation expense, which varies based on changes in the value of the trading rights associated with the company's Class B shares, was a negative $186,000 for the quarter, compared to $12.0 million for the second quarter of 2001. Excluding this category, expenses would have been $72.1 million for the second quarter of 2002, compared with $59.2 million for the year-earlier period. The operating margin would have been 33.0 percent for the 2002 quarter, versus 37.5 percent for the 2001 quarter. Second quarter 2002 net income would have been $21.6 million, or 73 cents per diluted share, compared with $21.5 million, or 73 cents per diluted share, for the same period a year ago.
Six-Month Results
For the first six months of 2002, net revenues increased 12 percent to $208.6 million from $186.9 million for the first half of 2001. Clearing and transaction fees improved 16 percent to $162.2 million from $139.2 million a year ago, benefiting from a 36 percent increase in trading volume to 259.2 million contracts for the first half of 2002 versus the same period of 2001.
Total operating expenses were $144.4 million for the first half of 2002, an increase of 11 percent from $130.0 million for the comparable period of 2001. Stock-based compensation expense was $3.9 million for the first half of 2002, compared with $12.0 million for the same period of 2001. Excluding this category, expenses would have been $140.4 million for the first six months of 2002, versus $118.0 million for the same period of last year. The operating margin would have been 32.7 percent for the 2002 period, compared with 36.9 percent for the first six months of 2001.
The company reported net income of $38.8 million, or $1.31 per diluted share, for the first six months of this year, an increase of 13 percent from $34.2 million, or $1.18 per diluted share, for the first half of 2001. Excluding the impact of stock-based compensation, net income for the first half of 2002 would have been $41.2 million, or $1.39 per diluted share, versus $41.5 million or $1.42 per diluted share for the first six months of last year.
The company's working capital was $153.4 million at June 30, 2002, compared with $144.3 million at year-end 2001. During the second quarter of 2002, the company paid a special non-recurring cash dividend of $17.3 million.
Chicago Mercantile Exchange Holdings Inc. is the parent company of Chicago Mercantile Exchange Inc. (www.cme.com), the largest futures exchange in the United States based on notional value, trading volume and open interest. As an international marketplace, CME brings together buyers and sellers on its trading floors and GLOBEX around-the-clock electronic trading platform. CME offers futures contracts and options on futures primarily in four product areas: interest rates, stock indexes, foreign exchange and commodities. The exchange moves about $1.6 billion per day in settlement payments and manages $27.4 billion in collateral deposits.
