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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

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FORM 8-K

 

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Current Report

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 19, 2006

 

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CBOT HOLDINGS, INC.

(Exact name of Registrant as specified in its charter)

 

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Delaware		001-32650		36-4468986
(State or other jurisdiction of incorporation or organization)		(Commission File Number)		(I.R.S. Employer Identification No.)

141 West Jackson Blvd.

Chicago, Illinois 60604

(Address, including zip code, of principal executive offices)

Registrant’s telephone number, including area code: (312) 435-3500

 

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

 

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Item 2.02 Results of Operations and Financial Condition

On April 19, 2006, the Registrant issued a press release announcing its results for its first quarter ended March 31, 2006. A copy of the press release is attached hereto as Exhibit 99.1.

This information is being furnished pursuant to Item 2.02 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities under that section and shall not be deemed to be incorporated by reference into filings under the Securities Act of 1933.

Item 9.01 Financial Statements and Exhibits

 

(c)

Exhibits:

 

99.1

Press Release dated April 19, 2006

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

		CBOT HOLDINGS, INC.
Date: April 19, 2006		By:		/s/ Bernard W. Dan
		Name:		Bernard W. Dan
		Title:		President and Chief Executive Officer

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EXHIBIT INDEX

 

Exhibit No.		Description of Exhibit
99.1		Press Release dated April 19, 2006

Exhibit 99.1

For Immediate Release

 

Investor Contact:				Media Contact:
Tami Kamarauskas				Melissa Jarmel
(312) 789-8532				(312) 435-7137
investorrelations@cbot.com				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.

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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 2006				Mar 31 2005				Dec 31 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

CBOT First Quarter 2006 Operational Highlights

 

•

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.

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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 2006		4Q 2005		3Q 2005		2Q 2005		1Q 2005		4Q 2004
Trading Days		62		63		64		64		61		64
AVERAGE RATE PER CONTRACT
		1Q 2006		4Q 2005		3Q 2005		2Q 2005		1Q 2005		4Q 2004
PRODUCT:
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

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AVERAGE DAILY VOLUME (Round Turns, in thousands)

 

		1Q 2006			4Q 2005			3Q 2005			2Q 2005			1Q 2005			4Q 2004
PRODUCT:
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 2006			4Q 2005			3Q 2005			2Q 2005			1Q 2005			4Q 2004
PRODUCT:
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.

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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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CBOT Holdings, Inc. and Subsidiaries

Consolidated Statements of Financial Condition

(unaudited, in thousands)

 

		03/31/05			06/30/05			09/30/05			12/31/05			03/31/06
ASSETS
Current assets:
Cash and cash equivalents:
Unrestricted		$	86,619		$	101,868		$	73,436		$	99,575		$	99,882
Held under deposit and membership transfers			16,439			2,050			862			1,746			4,966
Total cash and cash equivalents			103,058			103,918			74,298			101,321			104,848
Restricted cash			4,025			22,102			17,254			14,031			29,203
Short term investments			14,836			24,700			64,199			239,888			253,979
Accounts receivable - net of allowance			47,775			40,761			38,310			33,671			50,962
Deferred income taxes			2,591			2,573			2,974			1,962			1,921
Prepaid expenses			24,388			21,065			21,114			18,410			23,233
Total current assets			196,673			215,119			218,149			409,283			464,146
Property and equipment:
Land			34,234			34,234			34,234			34,234			34,234
Buildings and equipment			322,363			325,161			328,992			333,014			335,415
Furnishings and fixtures			189,825			196,344			197,054			198,083			189,188
Computer software and systems			81,492			84,091			84,112			93,636			93,719
Construction in progress			6,196			8,287			11,440			5,577			4,469
Total property and equipment			634,110			648,117			655,832			664,544			657,025
Less accumulated depreciation and amortization			373,708			387,137			400,110			409,789			412,108
Property and equipment - net			260,402			260,980			255,722			254,755			244,917
Other assets - net			19,162			19,387			19,252			21,829			21,229
Total assets		$	476,237		$	495,486		$	493,123		$	685,867		$	730,292
LIABILITIES AND MEMBERS’ / STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	12,837		$	14,098		$	14,960		$	20,455		$	12,965
Accrued clearing services			13,516			15,003			12,630			11,286			15,023
Accrued real estate taxes			5,994			7,995			9,595			7,730			6,078
Accrued payroll costs			2,882			3,986			5,568			6,351			2,966
Accrued exchange fee rebates			1,527			1,770			2,278			1,200			659
Accrued employee termination			322			273			302			3,063			1,755
Accrued liabilities			9,116			8,566			7,625			7,395			7,241
Funds held for deposit and membership transfers			16,439			24,123			17,230			14,821			33,220
Current portion of long-term debt			20,229			19,726			19,588			19,366			19,455
Income tax payable			12,012			2,135			1,764			5,751			24,425
Other current liabilities			4,733			4,700			322			5,183			432
Total current liabilities			99,607			102,375			91,862			102,601			124,219
Long-term liabilities:
Deferred income tax liabilities			27,225			25,588			23,468			17,204			14,872
Long-term debt			20,231			19,728			11,810			10,716			—
Other liabilities			14,671			15,048			13,412			13,584			13,837
Total long-term liabilities			62,127			60,364			48,690			41,504			28,709
Total liabilities			161,734			162,739			140,552			144,105			152,928
Members’ / Stockholders’ equity:
Common stock, $0.001 par value, 52,787 shares issued and outstanding			—			49			49			53			53
Additional paid-in capital			—			315,500			315,500			486,990			487,404
Retained earnings			—			17,198			37,022			54,719			89,821
Members’ equity			314,503			—			—			—			—
Accumulated other comprehensive income			—			—			—			—			86
Total members’ / stockholders’ equity			314,503			332,747			352,571			541,762			577,364
Total liabilities and members’ / stockholders’ equity		$	476,237		$	495,486		$	493,123		$	685,867		$	730,292

 

		141 W. Jackson Blvd. Chicago, Illinois 60604-2994 TEL: 312 435 3500 FAX: 312 341 3027 www.cbot.com

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CBOT Holdings, Inc. and Subsidiaries

Consolidated Statements of Income

(unaudited, in thousands, except per share data)

 

		QUARTER ENDED
		06/30/05				09/30/05				12/31/05				03/31/06				03/31/05
Revenues:
Exchange fees		$	69,657			$	62,696			$	68,086			$	83,120			$	66,518
Clearing fees			22,559				20,027				18,274				23,231				21,277
Market data			18,306				18,289				18,765				23,643				18,522
Building			5,479				5,595				5,479				5,505				5,608
Services			3,623				4,230				3,852				4,236				3,591
Interest			701				1,073				2,612				3,483				714
Other			262				258				293				351				227
Total revenues			120,587				112,168				117,361				143,569				116,457
Expenses:
Clearing services			17,378				15,630				14,286				18,023				16,516
Contracted license fees			1,780				1,718				1,733				1,738				1,625
Salaries and benefits			17,902				18,127				20,488				19,102				18,633
Depreciation and amortization			14,231				13,144				13,732				14,086				13,814
Professional services			4,558				4,979				6,424				3,939				4,592
General and administrative expenses			5,167				5,427				6,059				5,076				4,922
Building operating costs			6,514				6,542				6,006				6,603				6,638
Information technology services			11,392				10,660				11,870				12,230				10,677
Programs			3,089				2,306				3,104				2,627				2,016
Interest			796				633				607				585				922
Litigation			4,000				—				—				—				—
Severance and related costs			50				113				3,032				1,036				114
Operating expenses			86,857				79,279				87,341				85,045				80,469
Income from operations			33,730				32,889				30,020				58,524				35,988
Income taxes
Current			17,002				15,586				17,481				25,466				16,577
Deferred			(1,618	)			(2,521	)			(5,252	)			(2,291	)			(1,632	)
Total income taxes			15,384				13,065				12,229				23,175				14,945
Income before equity in unconsolidated subsidiary and minority interest in consolidated subsidiary			18,346				19,824				17,791				35,349				21,043
Equity in loss of unconsolidated subsidiary - net of tax			(112	)			—				(94	)			(246	)			(255	)
Net income		$	18,234			$	19,824			$	17,697			$	35,103			$	20,788
Earnings per share: (1)
Basic		$	0.35			$	0.40			$	0.34			$	0.66
Diluted		$	0.35			$	0.40			$	0.34			$	0.66
Weighted average number of common stock shares: (2)(3)
Basic			49,360				49,360				52,079				52,787
Diluted			49,360				49,360				52,116				52,840

 

(1)

Income used in the calculation of earnings per share, only includes earnings allocated to each reported period after April 22, 2005, the date the CBOT demutualized and became a stock, for-profit company. The amount of income allocated to the period before April 22, 2005 and not included in the calculation of earnings per share was $1,036 for the quarter ended June 30, 2005.

 

(2)

CBOT members received an aggregate of 49,360 shares of Class A common stock of CBOT Holdings as a result of the demutualization. Weighted average number of shares used in the calculation is based on the average number of shares outstanding after April 22, 2005 rather than the entire reporting period.

 

(3)	On October 24, 2005, CBOT Holdings closed an initial public offering of its Class A common stock. The number of shares of Class A common stock outstanding immediately after this offering was 52,787 shares.

 

Operating expense makeup:
Volume-based		19,158		17,348		16,019		19,761		18,141
Baseline		63,649		61,818		68,290		64,248		62,214
Other		4,050		113		3,032		1,036		114
Total		86,857		79,279		87,341		85,045		80,469

 

		141 W. Jackson Blvd. Chicago, Illinois 60604-2994 TEL: 312 435 3500 FAX: 312 341 3027 www.cbot.com

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CBOT Holdings, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(unaudited, in thousands)

 

		QUARTER ENDED
		06/30/05				09/30/05				12/31/05				03/31/06				03/31/05
Cash flows from operating activities:
Net income		$	18,234			$	19,824			$	17,697			$	35,103			$	20,788
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization			14,231				13,144				13,732				14,086				13,814
Deferred income taxes (benefit)			(1,618	)			(2,521	)			(5,252	)			(2,291	)			(1,632	)
Stock-based compensation			—				—				1,774				413				—
Change in allowance for doubtful accounts			61				78				(118	)			—				230
Gain / loss on foreign currency transaction			(172	)			(46	)			(23	)			(2	)			(149	)
Gain / loss on sale or retirement of fixed assets			(4	)			8				185				7				—
Equity in loss of unconsolidated subsidiary			188				—				155				411				425
Amortization of short term investment discounts			(26	)			(111	)			(1,074	)			(1,094	)			—
Changes in assets and liabilities:
Accounts receivable			4,136				1,596				3,546				(16,654	)			(13,993	)
Income tax receivable / payable			(9,877	)			(371	)			3,987				18,674				13,569
Prepaid expenses			3,323				(49	)			2,704				(4,823	)			(3,846	)
Other assets			(335	)			19				149				376				(410	)
Accounts payable			1,261				862				5,495				(8,038	)			(7,708	)
Accrued clearing services			1,487				(2,373	)			(1,344	)			3,737				1,925
Accrued real estate taxes			2,001				1,600				(1,865	)			(1,652	)			(1,629	)
Accrued payroll costs			1,104				1,582				783				(3,385	)			(3,149	)
Accrued exchange fee rebates			243				508				(1,078	)			(541	)			(714	)
Accrued employee termination			(49	)			29				2,761				(1,308	)			(81	)
Accrued liabilities			1,433				(434	)			769				(154	)			(35	)
Funds held for deposit and membership transfers			7,684				(6,893	)			(2,409	)			18,399				2,177
Other current liabilities			(33	)			(4,378	)			4,861				(4,751	)			4,484
Other long-term liabilities			377				(1,636	)			172				253				292
Net cash flows from operating activities			43,649				20,438				45,607				46,766				24,358
Cash flows from investing activities:
Acquisition of property and equipment			(14,702	)			(7,777	)			(12,825	)			(4,195	)			(4,932	)
Purchase of short term investments			(24,674	)			(49,285	)			(221,038	)			(124,483	)			—
Proceeds from short term investments			14,836				9,897				46,423				111,486				—
Restricted cash			(18,077	)			4,848				3,223				(15,172	)			3,636
Proceeds from sale of property and equipment			9				—				1				93				—
Investment in joint ventures			(191	)			(1	)			(3,006	)			(254	)			(6	)
Net cash flows used in investing activities			(42,799	)			(42,318	)			(187,222	)			(32,525	)			(1,302	)
Cash flows from financing activities:
Repayments of borrowings			—				(7,740	)			(1,082	)			(10,714	)			(10,713	)
Net proceeds from initial public offering			—				—				169,498				—				—
Excess tax benefit of stock compensation			—				—				222				—				—
Capital contributions from members			10				—				—				—				124
Net cash flows used in financing activities			10				(7,740	)			168,638				(10,714	)			(10,589	)
Net increase (decrease) in cash and cash equivalents			860				(29,620	)			27,023				3,527				12,467
Cash and cash equivalents - beginning of period			103,058				103,918				74,298				101,321				90,591
Cash and cash equivalents - end of period		$	103,918			$	74,298			$	101,321			$	104,848			$	103,058
Cash paid for:
Interest		$	297			$	1,000			$	41			$	736			$	1,089
Income taxes (net of refunds)		$	26,841			$	15,959			$	13,394			$	6,627			$	2,837

 

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