Cboe Global Markets (CBOE) Q4 2004 earnings summary

Executive summary

• Record FY04 trading volume of 329.9 million contracts, up 22% YoY; average daily volume reached 1.308 million contracts.

• Net income was $1.7 million versus $7.4 million in FY03, as fee competition and higher operating expenses offset volume-driven revenue growth.

• Fiscal year-end working capital was $36.8 million, and the Exchange was debt-free.

Financial highlights

• Revenue rose to $173.7 million from $163.8 million; transaction fees were $116.3 million versus $104.8 million.

• Total expenses increased to $171.1 million from $150.4 million; major increases included employee costs, royalty fees, outside services, travel and promotion, and impairment.

• Fee reductions and caps totaled $9.2 million, up from $5.2 million in FY03.

• Income before taxes was $2.7 million versus $13.4 million; net income was $1.7 million versus $7.4 million.

Outlook and guidance

• All equity classes were expected to transition to Hybrid by year-end 2004; regulatory approval for the Remote Market Maker program was sought by year-end.

• FY05 was expected to bring substantial regulatory and legislative activity, with continued advocacy for an open and efficient options market.

• Further volatility and variance products were planned for the futures exchange; management expected participation and liquidity growth to continue as investors learned the products.