UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) 07/31/2007 (07/31/2007)
NYMEX Holdings, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 333-30332 | 13-4098266 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
| One North End Avenue, World Financial Center, New York, NY |
10282-1101 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (212) 299-2000
(Former name or former address, if changed since last report.)
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 (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
The information in this Item is furnished to, but not filed with, the Securities and Exchange Commission solely under Item 2.02 of Form 8-K, “Results of Operations and Financial Condition.”
On July 31, 2007, NYMEX Holdings, Inc. issued a press release announcing financial results for the quarter ended June 30, 2007. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits
| 99.1 | Press release, dated July 31, 2007 |
2
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 hereunto duly authorized.
| NYMEX Holdings, Inc. | ||
| By: | /s/ RICHARD D. KERSCHNER | |
| Name: | Richard D. Kerschner | |
| Title: | SVP – Corporate Governance and Strategic Initiatives | |
Date: July 31, 2007
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EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Press release, dated July 31, 2007 |
4
Exhibit 99.1
FOR IMMEDIATE RELEASE
| Investor Contact: | Keil Decker | |
| (212) 299-2209 | ||
| Media Contact: | Anu Ahluwalia | |
| (212) 299-2439 | ||
NYMEX HOLDINGS, INC. REPORTS SECOND QUARTER AND SIX MONTH 2007 RESULTS
| • | Second Quarter Operating Revenues Rise 34% to $163.6 Million |
| • | First Half Operating Revenues Increase 40% to Record $327.8 Million |
| • | Takes One-Time Charge of $26.0 Million Related to Optionable Investment |
| • | Diluted EPS of $0.44; Excluding One-Time, Pretax Charge, Diluted EPS of $0.60 |
New York, N.Y., July 31, 2007 — NYMEX Holdings, Inc. (NYSE: NMX), parent company of the New York Mercantile Exchange, Inc. (NYMEX), today reported that total operating revenues for the second quarter ended June 30, 2007 rose 34% to $163.6 million compared to $122.5 million for the second quarter 2006. Net income for the second quarter 2007 increased 9% to $41.7 million compared to $38.1 million for the second quarter 2006, including a one-time, pretax charge of $26.0 million related to an impairment of the NYMEX investment in energy derivatives broker Optionable, Inc. Diluted earnings per share for the second quarter 2007 were $0.44, based on 94.8 million shares outstanding, compared to $0.44, based on 81.6 million shares outstanding for the second quarter 2006.
In connection with NYMEX’s acquisition of a 19% stake in energy derivatives broker Optionable, Inc. completed on April 10, 2007, we have determined that the value of our investment has been impaired and have thus recorded a one-time, pretax charge to earnings in the second quarter of $26.0 million, or $0.16 per share. Excluding the one time charge, net income increased 48% to $56.4 million, and diluted earnings per share was $0.60 for the second quarter.
1
For the six months ended June 30, 2007, NYMEX reported record total operating revenues of $327.8 million, a 40 % increase from $234.2 million for the first half of 2006. Net income rose 37% to $98.0 million, versus $71.8 million in the first half of 2006. Diluted earnings per share for the 2007 first half was $1.03 versus $0.88 per diluted share in the 2006 period, based on 94.8 million and 78.4 million shares outstanding, respectively. Excluding the one-time charge, net income increased 57% to $112.6 million and diluted earnings per share was $1.19 for the 2007 six month period.
“We are pleased to deliver another quarter of solid operating performance as we continue to deliver on our strategic goals,” commented NYMEX Chairman, Richard Schaeffer. “We have continued to achieve volume or open interest records in a number of our benchmark futures and options contracts, including crude oil, RBOB gasoline, heating oil and gold. Our long term strategic initiative in Dubai was furthered by the launch of our Dubai Mercantile Exchange, representing a significant achievement in offering another benchmark to global risk managers and users of sour crude, and demonstrates our expertise in launching products and developing new marketplaces globally. We continue our efforts to implement our growth initiatives to expand global distribution.”
NYMEX President and Chief Executive Officer James E. Newsome stated, “In our Dubai strategic venture, we are pleased by the consistent progress our Dubai Mercantile Exchange venture has achieved through launch and continued growth in volume and open interest. We continue to believe the Oman crude contract will become the sour crude contract of choice for global risk managers and users. As the energy and metals industry leader and innovator, we remain focused on satisfying evolving customer demand by bringing to market new contracts, such as a new last day Brent contract, as well as diesel, ethanol and our recently announced steel futures. We also launched energy and metals options on CME Globex®, as well as on our NYMEX ClearPort® clearing platform, which is part of our strategy to provide multiple venues for our users to trade and clear contracts. We continue our efforts to realize improvements in profitability.”
2
Second Quarter Results
Clearing and transaction fees rose 33% for the second quarter 2007 to $137.4 million compared to $103.3 million for the year ago period. An increased fee schedule which applied to NYMEX Division member rates became effective May 1, and was in effect for two months of the second quarter. Market data fees increased 47% for the second quarter 2007, to $23.4 million versus $15.9 million for the second quarter 2006.
Average daily volume was 1.396 million contracts during the second quarter 2007, a 23% increase over the second quarter of 2006. NYMEX electronic volume on CME Globex was an average of 608,000 contracts per day and represented a 443% increase over second quarter 2006 electronic volume. NYMEX floor-traded energy futures and options averaged 257,000 contracts a day for the second quarter of 2007, versus 537,000 contracts per day for the same period of 2006. COMEX electronic volume on CME Globex averaged 101,000 contracts per day, an increase of 494% over second quarter 2006 electronic volume. COMEX metals open outcry average daily volume was 42,000 contracts for the second quarter of 2007, versus 128,000 contracts per day for the same period of 2006. Average daily volume on NYMEX ClearPort increased 12% in the second quarter of 2007 to 309,000 contracts, from 276,000 contracts in the comparable period of 2006. The remaining volume of 79,000 trades per day consisted of other transactions which includes position transfers and exchanges.
Total operating expenses, excluding direct transaction costs of $24.3 million, were $41.8 million for the second quarter of 2007. This represents an 8% decrease from $45.3 million for the same period in 2006, driven primarily by the Company’s cost cutting initiatives.
Income before provision for income taxes was $74.0 million for the second quarter 2007, compared to $69.3 million for the second quarter 2006. Excluding the one-time charge, income before provision for income taxes was $100.0 million. Pretax margin, defined as income before provision for income taxes divided by operating revenues, investment income and interest income from securities lending (net of interest expense/fees from securities lending and direct transaction costs), was 51% in the second quarter 2007, compared to 59% in second quarter 2006. Excluding the one-time charge, pretax margin was 68%.
3
Six Month Results
Clearing and transaction fees rose 41% for the six months ended June 30, 2007 to $275.6 million, compared to $195.8 million for the year ago period. Market data fees were $46.5 million for the six month period, versus $31.3 million for the six months of 2006, an increase of 49%.
Average daily volume for the first six months of 2007 was 1.454 million contracts, a 31% increase over the first six months of 2006. NYMEX electronic volume on CME Globex was an average of 603,000 contracts per day and represented a 464% increase over the six month period of 2006 electronic volume. NYMEX floor-traded energy futures and options averaged 293,000 contracts a day for the first six months of 2007. COMEX electronic volume on CME Globex averaged 96,000 contracts per day, an increase of 586% over the first six months of 2006 electronic volume. COMEX metals open outcry average daily volume was 49,000 contracts a day for the first half of 2007. Average daily volume on NYMEX ClearPort increased 31% in the first half of 2007 to 340,000 contracts, from 259,000 contracts in the comparable period of 2006. The remaining volume of 73,000 trades per day consisted of other transactions which includes position transfers and exchanges.
Total operating expenses for the first half of 2007, excluding direct transaction costs of $48.4 million, were $86.2 million. This represents a 3% decrease from $88.5 million for the same period in 2006, driven primarily by the Company’s cost cutting initiatives.
Income before provision for income taxes was $173.7 million for the first six months of 2007, compared to $131.1 million for the same period of 2006. Excluding the one-time charge, income before provision for income taxes was $199.7 million for the first six months of 2007. Pretax margin, defined as income before provision for income taxes divided by operating revenues, investment income and interest income from securities lending (net of interest expense/fees from securities lending and direct transaction costs), was 59% in the first half of 2007 and 2006. Excluding the one-time charge, pretax margin was 68% for the first six months of 2007.
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Investor Conference Call / Webcast Details
NYMEX will hold a conference call to discuss 2007 second quarter and six month results today, July 31, 2007 at 8:00 AM Eastern Time. Those wishing to participate in the conference call can dial (800) 299-7928 (U.S. and Canada) or (617) 614-3926 (International), using the confirmation code 98223409. A live audio webcast of the call will also be available on the Investor Relations section of the NYMEX website at http://investor.nymex.com. Additionally, an archived version of the conference call will also be available within approximately 90 minutes of the conclusion of the call.
About NYMEX Holdings, Inc.
NYMEX Holdings, Inc. (NYSE:NMX) is the parent company of the New York Mercantile Exchange, Inc. (NYMEX), the world’s largest physical commodity futures and options exchange. NYMEX offers futures and options trading in energy, metals and soft commodities contracts and clearing services for more than 320 off-exchange energy contracts. Through a hybrid model of open outcry floor trading and electronic trading on CME Globex® and NYMEX ClearPort®, NYMEX offers crude oil, petroleum products, natural gas, coal, electricity, gold, silver, copper, aluminum, platinum group metals, and soft commodities contracts for trading and clearing virtually 24 hours a day. Further information about NYMEX Holdings, Inc. and the New York Mercantile Exchange, Inc. is available on the NYMEX website at http://www.nymex.com.
###
Forward Looking and Cautionary Statements
This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to our future performance, operating results, strategy, and other future events. Such statements generally include words such as could, can, anticipate, believe, expect, seek, pursue, and similar words and terms, in connection with any discussion of future results. Forward-looking statements involve a number of assumptions, risks, and uncertainties, any of which may cause actual results to differ materially from the anticipated, estimated, or projected results referenced in forward-looking statements. In particular, the forward-looking statements of NYMEX Holdings, Inc., and its subsidiaries are subject to the following risks and uncertainties: the success and timing of new futures contracts and products; changes in political, economic, or industry conditions; the unfavorable resolution of material legal proceedings; the impact and timing of technological changes and the adequacy of intellectual property protection; the impact of legislative and regulatory actions, including without limitation, actions by the Commodity Futures Trading Commission; and terrorist activities and international hostilities, which may affect the general economy as well as oil and other commodity markets. We assume no obligation to update or supplement our forward-looking statements.
(Tables Follow)
5
NYMEX HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in thousands, except for share data)
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
| Operating Revenues |
||||||||||||||||
| Clearing and transaction fees |
$ | 137,390 | $ | 103,346 | $ | 275,567 | $ | 195,766 | ||||||||
| Market data fees |
23,363 | 15,912 | 46,500 | 31,294 | ||||||||||||
| Other, net |
2,844 | 3,257 | 5,756 | 7,125 | ||||||||||||
| Total operating revenues |
163,597 | 122,515 | 327,823 | 234,185 | ||||||||||||
| Operating Expenses |
||||||||||||||||
| Direct transaction costs |
24,318 | 8,054 | 48,420 | 14,937 | ||||||||||||
| Salaries and employee benefits |
20,482 | 19,172 | 41,520 | 37,486 | ||||||||||||
| Occupancy and equipment |
5,604 | 5,793 | 11,547 | 14,038 | ||||||||||||
| Depreciation and amortization, net of deferred credit amortization |
3,614 | 4,914 | 7,145 | 8,248 | ||||||||||||
| General and administrative |
4,945 | 5,332 | 9,642 | 10,630 | ||||||||||||
| Professional services |
3,922 | 4,207 | 8,108 | 7,533 | ||||||||||||
| Telecommunications |
1,417 | 1,813 | 2,840 | 3,491 | ||||||||||||
| Marketing |
1,626 | 1,826 | 3,559 | 2,739 | ||||||||||||
| Other expenses |
182 | 2,200 | 1,843 | 4,350 | ||||||||||||
| Total operating expenses |
66,110 | 53,311 | 134,624 | 103,452 | ||||||||||||
| Operating income |
97,487 | 69,204 | 193,199 | 130,733 | ||||||||||||
| Non-Operating Income and Expenses |
||||||||||||||||
| Investment income |
6,133 | 1,354 | 12,840 | 2,814 | ||||||||||||
| Interest income from securities lending |
31,087 | 33,275 | 60,493 | 60,517 | ||||||||||||
| Interest expense/fees from securities lending |
(30,136 | ) | (32,444 | ) | (59,025 | ) | (58,900 | ) | ||||||||
| Interest expense |
(1,612 | ) | (1,666 | ) | (3,224 | ) | (3,334 | ) | ||||||||
| Losses from unconsolidated investments |
(28,944 | ) | (382 | ) | (30,587 | ) | (776 | ) | ||||||||
| Total non-operating income and expenses |
(23,472 | ) | 137 | (19,503 | ) | 321 | ||||||||||
| Income before provision for income taxes |
74,015 | 69,341 | 173,696 | 131,054 | ||||||||||||
| Provision for income taxes |
32,270 | 31,208 | 75,731 | 59,288 | ||||||||||||
| Net income |
$ | 41,745 | $ | 38,133 | $ | 97,965 | $ | 71,766 | ||||||||
| Proforma weighted average common shares outstanding and earnings per share retroactively adjusted to reflect the 90,000-for-1 recapitalization on March 14, 2006: |
||||||||||||||||
| Earnings per Share |
||||||||||||||||
| Basic |
$ | 0.44 | $ | 0.44 | $ | 1.04 | $ | 0.88 | ||||||||
| Diluted |
$ | 0.44 | $ | 0.44 | $ | 1.03 | $ | 0.88 | ||||||||
| Weighted Average Number of Common Shares Outstanding |
||||||||||||||||
| Basic |
94,450,000 | 81,600,000 | 94,450,000 | 78,354,000 | ||||||||||||
| Diluted |
94,798,000 | 81,600,000 | 94,784,000 | 78,354,000 | ||||||||||||
6
NYMEX HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
| (Unaudited) | ||||||
| June 30, 2007 |
December 31, 2006 | |||||
| Assets |
||||||
| Cash and cash equivalents |
$ | 17,112 | $ | 18,631 | ||
| Collateral from securities lending program |
2,331,507 | 2,547,312 | ||||
| Marketable securities, at market value |
455,740 | 485,581 | ||||
| Clearing and transaction fees receivable, net of allowance for member credits |
47,780 | 32,853 | ||||
| Prepaid expenses |
7,234 | 7,009 | ||||
| Margin deposits and guaranty funds |
8,418 | 17,052 | ||||
| Other current assets |
43,691 | 10,238 | ||||
| Total current assets |
2,911,482 | 3,118,676 | ||||
| Property and equipment, net |
178,532 | 183,193 | ||||
| Goodwill and indefinite-lived intangible asset |
307,125 | 307,125 | ||||
| Long-term investments |
118,422 | 3,008 | ||||
| Other assets |
9,499 | 11,929 | ||||
| Total assets |
$ | 3,525,060 | $ | 3,623,931 | ||
| Liabilities and Stockholders’ Equity |
||||||
| Accounts payable and accrued liabilities |
$ | 16,670 | $ | 14,854 | ||
| Accrued salaries and related liabilities |
12,563 | 13,688 | ||||
| Payable under securities lending program |
2,331,507 | 2,547,312 | ||||
| Margin deposits and guaranty funds |
8,418 | 17,052 | ||||
| Income tax payable |
7,586 | 4,984 | ||||
| Other current liabilities |
32,852 | 35,019 | ||||
| Total current liabilities |
2,409,596 | 2,632,909 | ||||
| Grant for building construction deferred credit |
105,093 | 106,166 | ||||
| Long-term debt |
80,281 | 80,281 | ||||
| Retirement obligation |
11,966 | 12,367 | ||||
| Other liabilities |
29,824 | 17,286 | ||||
| Total liabilities |
2,636,760 | 2,849,009 | ||||
| Total stockholders’ equity |
888,300 | 774,922 | ||||
| Total liabilities and stockholders’ equity |
$ | 3,525,060 | $ | 3,623,931 | ||
7
Non-GAAP Reconciliation
The following table reconciles net income to adjusted net income and calculates adjusted earnings per common share on adjusted income.
| (in thousands, except share amounts) | ||||||
| Three Months Ended June 30, 2007 |
Six Months Ended June 30, 2007 | |||||
| Net income |
$ | 41,745 | $ | 97,965 | ||
| Add: Impairment loss on investment in Optionable |
25,962 | 25,962 | ||||
| Less: Effective tax rate benefit of impairment loss on investment in Optionable |
11,319 | 11,319 | ||||
| Adjusted net income |
$ | 56,388 | $ | 112,608 | ||
| Earnings per common share on net income: |
||||||
| Basic |
$ | 0.44 | $ | 1.04 | ||
| Diluted |
$ | 0.44 | $ | 1.03 | ||
| Adjusted earnings per common share on adjusted net income: |
||||||
| Adjusted basic |
$ | 0.60 | $ | 1.19 | ||
| Adjusted diluted |
$ | 0.60 | $ | 1.19 | ||
| Weighted average common shares outstanding: |
||||||
| Basic |
94,450,000 | 94,450,000 | ||||
| Diluted |
94,798,000 | 94,784,000 | ||||
8
| Q2 2007 | Q1 2007 | Q4 2006 | Q3 2006 | Q2 2006 | |||||||||||
| Trading Days |
63 | 61 | 62 | 62 | 63 | ||||||||||
| Average Daily Volume (round turns, in thousands, difference is due to rounding) | |||||||||||||||
| Q2 2007 | Q1 2007 | Q4 2006 | Q3 2006 | Q2 2006 | |||||||||||
| NYMEX Floor |
257 | 330 | 362 | 528 | 537 | ||||||||||
| NYMEX Electronic |
608 | 597 | 368 | 197 | 112 | ||||||||||
| COMEX Floor |
42 | 56 | 76 | 88 | 128 | ||||||||||
| COMEX Electronic |
101 | 90 | 16 | 8 | 17 | ||||||||||
| NYMEX ClearPort |
309 | 373 | 302 | 436 | 276 | ||||||||||
| Other |
79 | 68 | 75 | 65 | 64 | ||||||||||
| Total |
1,396 | 1,513 | 1,199 | 1,324 | 1,132 | ||||||||||
| Gross Clearing and Transaction Revenue (in thousands) | |||||||||||||||
| Q2 2007 | Q1 2007 | Q4 2006 | Q3 2006 | Q2 2006 | |||||||||||
| NYMEX Floor |
$ | 19,966 | $ | 23,664 | $ | 24,497 | $ | 36,097 | $ | 37,453 | |||||
| NYMEX Electronic |
50,520 | 43,271 | 24,953 | 18,260 | 13,035 | ||||||||||
| COMEX Floor |
3,249 | 4,244 | 5,795 | 6,711 | 10,136 | ||||||||||
| COMEX Electronic |
9,791 | 8,253 | 2,000 | 1,736 | 3,508 | ||||||||||
| NYMEX ClearPort |
44,281 | 49,609 | 38,837 | 48,326 | 32,029 | ||||||||||
| Other |
9,583 | 9,136 | 8,683 | 8,069 | 7,185 | ||||||||||
| Total |
$ | 137,390 | $ | 138,177 | $ | 104,765 | $ | 119,200 | $ | 103,346 | |||||
| Net Rates Per Contract | |||||||||||||||
| Q2 2007 | Q1 2007 | Q4 2006 | Q3 2006 | Q2 2006 | |||||||||||
| NYMEX Floor |
$ | 1.23 | $ | 1.18 | $ | 1.10 | $ | 1.10 | $ | 1.11 | |||||
| NYMEX Electronic |
1.02 | 0.89 | 0.70 | 1.07 | 1.85 | ||||||||||
| COMEX Floor |
1.24 | 1.25 | 1.23 | 1.22 | 1.26 | ||||||||||
| COMEX Electronic |
1.19 | 1.20 | 1.99 | 3.35 | 3.36 | ||||||||||
| NYMEX ClearPort |
1.72 | 1.66 | 1.58 | 1.36 | 1.42 | ||||||||||
| Other |
1.92 | 2.19 | 1.88 | 2.00 | 1.81 | ||||||||||
| Total Net RPC |
1.29 | 1.24 | 1.17 | 1.25 | 1.33 | ||||||||||
| Direct Cost |
0.28 | 0.26 | 0.24 | 0.20 | 0.12 | ||||||||||
| Gross RPC |
$ | 1.56 | $ | 1.50 | $ | 1.41 | $ | 1.45 | $ | 1.45 | |||||
9