News Release

CBOT Holdings First Quarter 2006 Revenue Up 23 Percent

Wed Apr 19 2006

For Immediate Release

Investor Contact:
Tami Kamarauskas
(312) 789-8532
investorrelations@cbot.com

Media Contact:
Melissa Jarmel
(312) 435-7137
news@cbot.com

CBOT HOLDINGS FIRST QUARTER 2006 REVENUE UP 23 PERCENT
OPERATING MARGIN EXPANDS TO 41 PERCENT

CHICAGO, April 19, 2006 – CBOT Holdings, Inc., holding company for the Chicago Board of Trade (CBOT®), announced today that first quarter 2006 revenue rose 23 percent to $143.6 million compared with $116.5 million in the 2005 first quarter.  Net income in the 2006 first quarter increased $14.3 million to $35.1 million, up 69 percent compared with $20.8 million in the first quarter of 2005.  First quarter 2006 earnings per diluted share were $0.66.

First quarter exchange and clearing revenue was $106.4 million, up 21 percent from $87.8 million in the 2005 first quarter.  Market data revenue grew 28 percent to $23.6 million in the 2006 first quarter, up from $18.5 million in the 2005 first quarter.  First quarter operating income was $58.5 million, up 63 percent from $36.0 million in the same period during the prior year.    

CBOT Holdings President and CEO Bernard W. Dan said, “Each product group contributed to the successful financial results this quarter and the Interest Rate, Agriculture, and Metals product groups all reached average daily volume records.  The expansion of our operating margin to 41 percent from 31 percent in the comparable quarter last year highlights the effectiveness of our overall business model and strategy.  Over the past twelve months we added to our growth opportunities with expanded products, partnerships and distribution capabilities and at the same time controlled costs and significantly expanded our profitability.”

Revenue and earnings in the 2006 first quarter benefited from a January 1, 2006 market data price increase and from an increase in the average rate per contract, which rose 9 percent compared with the same quarter a year ago.  The average rate per contract represents total exchange and clearing fee revenue divided by total reported trading volume. 

First quarter trading volume was 192.7 million contracts, up 11 percent compared with 173.1 million contracts traded during the prior year’s first quarter.  Average daily volume (ADV) in the 2006 first quarter was 3.1 million contracts, up 10 percent compared with the 2005 first quarter ADV.  In addition, ADV on the CBOT’s electronic trading platform, e-cbot® powered by LIFFE CONNECT®, during the first quarter rose to 69 percent of total exchange ADV, up from 62 percent in the first quarter of 2005.

First quarter operating expense of $85.0 million includes $19.8 million of volume-based expenses and $65.3 million of non-volume-based expenses.  Compared with the prior year’s first quarter, total operating expense grew 6 percent.  Baseline and other costs grew only 5 percent during the same time period, a notably slower pace than revenue growth and a major reason for the higher 2006 first quarter operating margin.

Key Financial Metrics (in millions, except rate per contract)

Quarter Ended Mar 31 Mar 31 Dec 31
  2006 2005 2005
Average Daily Volume 3.1 2.8 2.4
Reported Trading Volume 192.7 173.1 151.4
Average Rate per Contract $ 0.552 $0.507 $0.570
Revenue $ 143.6 $ 116.5 $117.4
Operating Income $ 58.5 $ 36.0 $ 30.0
Operating Margin 41% 31% 26%
Net Income $ 35.1 $ 20.8 $ 17.7
Depreciation & Amortization $ 14.1 $ 13.8 $ 13.7
Non-Cash Stock Compensation $ 0.4 $ -0- $ 1.8
Capital Expenditures $4.2 $ 4.9 $ 12.8

 

  • Member vote on March 8, 2006 granted Board of Directors authority to allow daytime electronic trading in Agriculture contracts.
  • CBOT and the Singapore Exchange announced the appointment of the Board of Directors and Mr. Chong Kim Seng as Managing Director for their joint venture company, Joint Asian Derivatives Exchange (JADE).
  • CBOT’s average market share of all listed gold futures traded in North America climbed to 19 percent, up from 4 percent in March 2005.
  • CBOT launched three new products — Full-sized Gold options, the $25 Big DowSM Futures, and Soybean Crush options.
  • Financial options electronic volume rose to 13 percent of total product volume from 5 percent and electronic volume during Asian and European trading hours increased 23 percent in the 2006 first quarter compared with the 2005 first quarter. 

Outlook

Given current market conditions and what is known today, CBOT Holdings currently expects the following for: 

 
2006 Full Year
2006 June Quarter
 
(in millions, except per contract data)
Baseline and other expenses, which equal total
operating expenses less volume-based expenses
$265- $275
$68- $70
     
Non-cash stock compensation expense
included in baseline expenses
$ 2.5 - $3.0
$1.2-$1.4
 
2006 Full Year
and June Quarter
Volume-based expenses, which include clearing costs
and contracted license fees, per reported contract
$0.103 - $0.107
     
An overall rate per contract of about 
$0.552

 

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.

 

 

1Q

4Q

3Q

2Q

1Q

4Q

 

2006

2005

2005

2005

2005

2004

Trading Days

62

63

64

64

61

64

AVERAGE RATE PER CONTRACT

 

 

1Q

4Q

3Q

2Q

1Q

4Q

PRODUCT:

2006

2005

2005

2005

2005

2004

 Interest Rate

0.517

0.537

0.469

0.467

0.482

0.386

 Agriculture

0.673

0.666

0.631

0.643

0.641

0.640

 Equity Index

0.760

0.789

0.672

0.630

0.578

0.560

 Metals, Energy & Other

1.312

1.559

1.360

1.312

0.855

0.654

   Overall average rate per contract

0.552

0.570

0.501

0.499

0.507

0.424

VENUE:

 

 

 

 

 

 

 Open-Auction

0.515

0.507

0.485

0.483

0.491

0.441

 Electronic

0.495

0.506

0.411

0.397

0.400

0.315

 Off-Exchange

2.296

2.299

2.117

2.404

2.131

1.786

   Overall average rate per contract

0.552

0.570

0.501

0.499

0.507

0.424

AVERAGE DAILY VOLUME (Round Turns, in thousands)

 

 

1Q

4Q

3Q

2Q

1Q

4Q

PRODUCT:

2006

2005

2005

2005

2005

2004

 Interest Rate

2,561

1,951

2,123

2,368

2,356

2,006

 Agriculture

412

331

350

404

373

287

 Equity Index

113

112

103

115

105

99

 Metals, Energy & Other

22

9

5

3

4

5

   Total

3,108

2,404

2,582

2,889

2,838

2,398

VENUE:

 

 

 

 

 

 

 Open-Auction

887

685

773

940

940

780

 Electronic

2,132

1,633

1,707

1,843

1,772

1,507

 Off-Exchange

88

86

102

106

126

110

   Total

3,108

2,404

2,582

2,889

2,838

2,398

TRANSACTION FEES (in thousands)

 

 

1Q

4Q

3Q

2Q

1Q

4Q

PRODUCT:

2006

2005

2005

2005

2005

2004

 Interest Rate

$82,032

$65,994

$63,741

$70,733

$69,327

$49,524

 Agriculture

17,176

13,869

14,150

16,604

14,598

11,761

 Equity Index

5,337

5,588

4,439

4,627

3,687

3,562

 Metals, Energy & Other

1,805

908

393

252

184

202

   Total

$106,351

$86,360

$82,722

$92,216

$87,796

$65,050

VENUE:

 

 

 

 

 

 

 Open-Auction

$28,356

$21,885

$23,979

$29,085

$28,185

$22,038

 Electronic

65,442

52,013

44,872

46,883

43,285

30,413

 Off-Exchange

12,552

12,462

13,871

16,247

16,325

12,598

   Total

$106,351

$86,360

$82,722

$92,216

$87,796

$65,050

Quarterly Conference Call

Executives of CBOT Holdings, Inc. will host a conference call to review its first quarter results today, April 19, 2006, at 8:00 am ET / 7:00 am CT. The conference call and any accompanying slides will be publicly available via live webcast from the investor relations section of the CBOT Holdings website at http://www.cbot.com.  The webcast 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 800.901.5248 (U.S. callers) and 617.786.4512.  (International callers) at least 10 minutes before the call begins.   The verbal passcode for the call is "CBOT Holdings."  To listen to an archived recording after the call, please dial 888.286.8010 (U.S. callers) and 617.801.6888 (International callers).  The passcode for the replay is 78792037. 

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 158-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 website at www.cbot.com.

Forward Looking Statements

In this release, our use of the words “may,” “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 website at www.sec.gov.  We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

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