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Chiicago Board Optiions Exchange Annuall Report 2003 - page 16 / 28





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CBOE Financials FY 2003

Although equities options market share and overall membership profitability continued to decline, the Exchange experienced a successful financial year. Net income for the year amounted to $7.4 million versus a loss of $5.6 million in the prior year.

Total options daily volume averaged 1,071,300 contracts per day, down approximately 2% from the prior year’s average of 1,097,000 contracts per day. The current year volume level was 16% higher than budgeted volume of 925,000 contracts per day.

Significant growth in index volume was the main reason current year revenues were $15.0 million higher than the prior year. Average contracts per day increases versus the prior year included Dow Jones indexes (112%), S&P 100 (51%), and S&P 500 (45%).

Expenses were $1.8 million less than the prior year, mainly due to non- recurring severance expenses of $4.5 million incurred in FY02. Expense increases in FY03 were mainly in royalty fees ($2.0 million) related to higher indexes trading volume and our share of losses incurred by OneChicago ($2.7 million). The loss incurred by OneChicago in FY03 was higher than FY02 due to higher operating and marketing costs related to the November 2002 launch of trading single stock futures.

Capital spending in FY03 amounted to approximately $25.0 million. Investments were primarily in the Systems Division related to the Hybrid Trading System and other trading floor enhancements. In addition, the Exchange contributed approximately $3.4 million in capital to OneChicago in FY03.

Retained earnings increased to $111.1 million and total members’ equity at June 30, 2003 was $132.0 million. At year’s end, the Exchange was debt- free with working capital of $30.1 million.

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