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For the year ended December 31, 2007, CBOE's net income nearly doubled, climbing to $83.2 million, from $42.1 million in 2006. Total revenues grew 37 percent to a record $352.3 million for the full-year 2007, compared with $258.0 million in the prior year.
"As we begin the 35th anniversary year of the creation of CBOE and the entire options industry, we are pleased to report that our business has never been stronger. After successfully transitioning to a for-profit operation in 2006, CBOE continued to post new records in trading volume, total revenues and earnings in 2007," said CBOE Chairman and CEO William J. Brodsky. "CBOE's growth in 2007 was fueled in part by product innovations, such as VIX Options and Futures, and by the broad appeal of the CBOE Hybrid Trading System. It was a remarkable year that leaves CBOE well positioned to further leverage our multi-asset trading platform and to solidify our leadership position in the options industry."
|
|
Quarter Ended |
Quarter Ended |
Year-Ended |
Year-Ended |
|---|---|---|---|---|
|
(In thousands) |
12/31/07 |
12/31/06 |
12/31/07 |
12/31/06 |
|
Total Revenues |
$93,048 |
$64,901 |
$352,300 |
$257,986 |
|
Operating Expenses |
$56,717 |
$41,188 |
$212,295 |
$185,959 |
|
Income Before Taxes |
$36,331 |
$23,713 |
$140,005 |
$72,027 |
|
Net Income |
$24,260 |
$13,785 |
$83,226 |
$42,108 |
The growth in total revenues for the quarter and the year was primarily driven by higher transaction fees, fueled by robust trading volume. For the fourth quarter of 2007, transaction fees rose 54 percent to $72.0 million from $46.7 million in last year's fourth quarter. Total contracts traded for the quarter were up 47 percent to 258.5 million from 176.1 million in last year's fourth quarter.
CBOE's average daily volume of options contracts traded was 4.0 million contracts for the final quarter of 2007, a 45 percent increase compared with last year's comparable average of 2.8 million contracts.
Transaction fees for the year were up $84.7 million, or 45 percent, compared with full-year 2006. The record trading volume reached in 2007 exceeded 2006's volume by 40 percent. The average daily volume of contracts traded for the year also increased 40 percent to 3.8 million contracts compared with 2.7 million in 2006. Additionally, the transaction fee per contract increased to $0.287 for the year, up from $0.276 in 2006.
During the fourth quarter, CBOE continued to focus on maintaining strong expense controls, evidenced by its operating margin expansion. CBOE's operating margin, representing income before taxes divided by total revenues, increased to 39.0 percent for the quarter compared with 36.5 percent for the same period last year. For the full-year 2007, CBOE's operating margin increased to 39.7 percent, nearly 12 percentage points higher than the comparable prior year period, demonstrating the flexibility of the company's operating model and its ability to gain economies of scale.
Working capital (current assets minus current liabilities) increased by $23.9 million to $174.0 million while cash and investments increased by $29.4 million to $185.7 million during the fourth quarter of 2007. These increases are attributable the growth in revenues net of cash expenses and capital expenditures.
A more detailed report is available at: IC08-15 and on: http://www.cboe.org/Legal/crclInfo.aspx.
During the fourth quarter of 2007, CBOE made the following announcements:
- 2007 was the busiest year in CBOE's 34-year history as trading volume totaled 944.5 million contracts, an increase of 40% over 2006's volume of 674.7 million contracts. Average daily volume for the year reached a new all-time high of 3.8 million contracts.
- Volume growth was fueled by strong increases across all product lines, with index options volume up 56% to over 443.5 million contracts, compared to 2006's record-setting 285 million contracts, and equity options volume up 28% to 500.9 million contracts, compared to 2006's record 391 million contracts.
- Eighteen of the twenty busiest single trading days in CBOE's 34-year history occurred during 2007, including the all-time busiest single day - 9,244,732 contracts traded on August 16, 2007.
- In 2007, CBOE handled approximately one-third of all industry volume, more than any other U.S. options exchange. CBOE remains the largest U.S. options exchange.
- CBOE memberships, or seats, continued to increase in value with a record high price for the year of $3.150 million paid on December 11, 2007. During the fourth quarter, 25 seats changed hands, ranging in price from $2.65 million to $3.150 million. The final seat sale of the year was on December 24, 2007 for a price of $3.125 million. The most recent seat sale was on January 25, 2008 at $3.125 million.
- CBOE published three new benchmark indexes in November: the CBOE S&P 500 3-Month Volatility Index (VXV), the CBOE VIX Premium Strategy Index (VPD), and the CBOE Capped VIX Premium Strategy Index (VPN) and re-launched a new version of its CBOE S&P 500 VARB-X Strategy Benchmark (VTY).
- CBOE launched a new electronic system in November for trading index and equity FLexible EXchange (FLEX) options. The new system, CFLEX, is the first Internet-based, fully automated electronic trading system in the U.S. marketplace for the trading of FLEX options and offers the benefits of a hybrid-trading environment.
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.
