Cboe Global Markets (CBOE) Q4 2002 earnings summary

Executive summary

• FY02 trading activity and market share fell amid weaker markets and rising electronic competition; net results shifted to a $5.6m loss.

• Strategic focus centered on a hybrid floor-and-screen trading model, with implementation targeted for early FY03.

Financial highlights

• Total revenue declined 6% YoY, or $9.0m, mainly from lower transaction fees ($6.7m) and OPRA income ($2.7m).

• Net loss was $5.620m in FY02 vs net income of $7.136m in FY01; total expenses rose $6.3m to $152.251m.

• Expense increases included $5.1m in depreciation and amortization, $4.3m in severance, $2.2m in trading-floor systems, and $1.6m in index royalty fees.

Outlook and guidance

• Hybrid trading model completion was expected early in 2003, combining screen speed with floor liquidity, complex-strategy execution, and price-improvement opportunities.

• Market linkage was expected in two phases: automatic-execution-eligible orders early in 2003, followed shortly by other orders.

• OneChicago single-stock futures were expected to launch in Q4 2002, using CBOE direct as the trading engine.