Average daily volume was 2.4 million contracts for the first quarter of 2003, a 20 percent increase from the first quarter of last year. In March 2003, average daily volume achieved a monthly record of nearly 2.8 million contracts a day. At 1.1 million average contracts a day, trading on CME’s GLOBEX® electronic trading platform grew 109 percent in the first quarter of 2003 versus 2002 and represented 44 percent of total volume, compared with 25 percent for the same period a year ago.
“In recent months, CME products again demonstrated their ability to meet customer needs in a volatile global climate,” said Chairman Terry Duffy. “We benefit from a diverse product line that allows market participants to hedge against financial risks and obtain 23-hour-a-day investment and asset allocation opportunities in interest rates, equities, foreign exchange and commodities. Total volume in all four of our major product areas grew in the first quarter of 2003 from the fourth quarter of last year, even though we had three fewer trading days.”
“For the first time this past quarter, our GLOBEX electronic trading platform was the largest contributor to transaction fee revenue, at 48 percent,” said President and Chief Executive Officer Jim McNulty. “Also this quarter, we continued to attract new customers worldwide through GLOBEX, which contributed to a new monthly record in foreign exchange futures of more than 3.1 million contracts in March. While open outcry and privately negotiated transactions were strong, much of our foreign exchange growth has been coming from GLOBEX, which handled about 36 percent of our total foreign exchange volume in the first quarter, compared with 23 percent in the first quarter of last year.”
For the first quarter of 2003, revenue from clearing and transaction fees increased 31 percent to $102.4 million from $77.9 million for the same period of 2002. The category represented 81 percent of net revenues in the 2003 quarter. Quotation data fees were $11.8 million for the 2003 period, versus $12.5 million for the 2002 quarter, due to a decline in the number of CME data subscribers that occurred because of contraction in the financial services industry. Expenses of approximately $5.1 million for a brand advertising campaign contributed to operating expenses of $82.3 million for the quarter. For the first quarter of 2002, operating expenses were $69.9 million. Income before income taxes was $43.8 million for the current quarter, an increase of 40 percent from $31.2 million for the year-earlier period. The company’s operating margin, defined as income before income taxes expressed as a percentage of net revenues, was 34.7 percent for the first quarter of 2003, compared with 30.8 percent for the same period a year ago. Operating margin is presented because it provides an indication of profitability that is not influenced by the size of an organization or the effect of income taxes, which may vary by geographical location and corporate structure.
In the first quarter of 2003, CME introduced CME$INDEX™ futures and options. This geometric index of seven foreign currencies is weighted to reflect the relative competitiveness of U.S. goods in foreign markets, and is traded both on CME’s Chicago-based trading floors and on GLOBEX. Also during the quarter, CME and Frank Russell Company announced that on April 28, the exchange will launch futures contracts based on the Russell 1000® Index. The Russell 1000 is composed of stocks of the top 1,000 U.S. corporations based on market capitalization. In combination with CME’s Russell 2000® and E-mini Russell 2000 futures and options, the new contract will offer exposure to the Russell 3000® universe of stocks, representing 98 percent of the investable U.S. equity market.
While CME continues to engage in securities lending activities, there were no balances invested at March 31, 2003, as market conditions and the securities available for lending would not have resulted in a favorable return.
CME’s working capital was $347.6 million at March 31, 2003, compared with $325.6 million at Dec. 31, 2002. The company paid a dividend of 14 cents per common share, which totaled $4.6 million in March 2003.
CME will hold a conference call to discuss first quarter results at 8:30 a.m. Eastern time today. A live audio Webcast of the conference call will be available on the Investor Relations section of CME’s Web site. Following the conference call, an archived recording will be available at the same site.
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. On Dec. 6, 2002, CME Holdings became the first publicly traded U.S. financial exchange. 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 areas: interest rates, stock indexes, foreign exchange and commodities. The exchange moved about $1.5 billion per day in settlement payments in the first quarter of 2003 and managed $28.5 billion in collateral deposits at March 31, 2002.
Please click here for full details of the consolidated balance sheets and consolidated statements of income.
Statements in this news release that are not historical facts are 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. Among the factors that might affect our performance are: increasing competition by foreign and domestic competitors, including new entrants into our markets; our ability to keep pace with rapid technological developments; our ability to continue introducing competitive new products and services on a timely, cost-effective basis, including through our electronic trading capabilities; our ability to maintain the competitiveness of our existing products and services; our ability to efficiently and simultaneously operate both open outcry trading and electronic trade execution facilities; our ability to adjust our fixed costs and expenses if our revenues decline; changes in domestic and foreign regulations; changes in government policy, including interest rate policy; the costs associated with protecting our intellectual property rights and our ability to operate our business without violating the intellectual property rights of others; the ability of our joint venture, OneChicago, to obtain market acceptance of its products and achieve sufficient trading volume to operate profitably; and the continued availability of financial resources in the amounts and on the terms required to support our future business. In addition, our performance could be affected by our ability to realize the benefits or efficiencies we expect from our for-profit initiatives, such as fee increases, volume and member discounts and new access rules to our markets; our ability to recover market data fees that may be reduced or eliminated by the growth of electronic trading; changes in the level of trading activity, price levels and volatility in the derivatives markets and in underlying fixed income, equity, foreign exchange and commodities markets; economic, political and market conditions; our ability to accommodate increases in trading volume without failure or degradation of performance of our trading systems; our ability to manage the risks associated with our acquisition, investment and alliance strategy; industry and customer consolidation; decreases in member trading and clearing activity and seasonality of the futures business. More detailed information about factors that may affect our performance may be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, which is available in the Investor Information section of the CME Web site. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
GLOBEX is a registered trademark of Chicago Mercantile Exchange Inc. E-mini is a trademark of CME. Further information about Chicago Mercantile Exchange Holdings Inc. and Chicago Mercantile Exchange Inc. is available on the CME Web site at www.cme.com.
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Chicago Mercantile Exchange Holdings Inc. Reports Record Revenues
Date 22/04/2003
Chicago Mercantile Exchange Holdings Inc. (NYSE: CME) today reported record revenues and a 40 percent increase in net income for the first quarter of 2003, primarily due to higher trading volume. Net revenues climbed 25 percent to a record $126.0 million for the first quarter of this year, compared with $101.1 million for the same period of 2002. Net income was $26.1 million, versus $18.7 million for the first quarter last year. Earnings per diluted share rose 22 percent to 77 cents from 63 cents per diluted share for the year-earlier period.
