ESPD Espeed (MM)

eSpeed, Inc. (NASDAQ: ESPD), a leading developer of electronic marketplaces and related trading technology for the global capital markets, today reported results for the third quarter ended September 30, 2005. Earnings eSpeed reported net income of $1.9 million, or $0.04 per diluted share, for the third quarter 2005 on a Generally Accepted Accounting Principles (GAAP) basis. To reflect earnings generated from the Company's operations, eSpeed also reports non-GAAP net operating income. For the same period, the Company reported non-GAAP net operating income of $2.0 million, or $0.04 per diluted share. The difference between non-GAAP net operating income and GAAP net income for the third quarter 2005 is a $0.3 million charitable contribution to the Cantor Fitzgerald Relief Fund, $0.5 million for patent litigation costs, a non-cash charge of $0.03 million related to business partner securities, and $0.6 million gain on investment, all net of tax. For comparative purposes, eSpeed reported non-GAAP net operating income of $6.0 million, or $0.11 per diluted share, in the third quarter 2004. See "Non-GAAP Financial Measures" below for a detailed description of eSpeed's non-GAAP net operating income. Revenues eSpeed's total revenues for the third quarter 2005 were $38.8 million on a GAAP basis. For the same period, eSpeed also reported non-GAAP revenues of $37.8 million. The difference between GAAP and non-GAAP revenues for the third quarter of 2005 is a $1.0 million gain on the sale of an investment. For comparative purposes, eSpeed reported GAAP and non-GAAP total revenues of $39.8 million for the third quarter 2004. Third quarter 2005 fully electronic revenues were $18.9 million compared to $25.5 million for the third quarter 2004. Revenues from Software Solutions in the third quarter 2005 were $9.9 million versus $8.0 million in the third quarter 2004. Third quarter 2005 pre-tax operating margin was 7.5 percent. Volume & Transactions Fully electronic volume was $8.0 trillion for the third quarter 2005, an increase of 12.7 percent compared to $7.1 trillion reported by the Company for the second quarter 2005. This growth compares favorably to a 6 percent decrease in overall US Treasury volume as reported by the Federal Reserve over the same period. Market-wide average daily Federal Reserve US Treasury volume was $540 billion for the third quarter 2005. eSpeed's voice-assisted volume for the third quarter 2005 was $8.6 trillion, an increase of 15.9 percent, compared to $7.4 trillion for the second quarter 2005. Fully electronic notional volume for new products, which eSpeed defines as mortgage-backed securities, foreign exchange, interest rate swaps, futures and repos, was $376 billion for the third quarter 2005, compared to $506 billion in the second quarter 2005, a decrease of 25.7 percent. Volume for the eSpeed Equities direct access product was 154 million shares for the third quarter 2005, compared with 178 million shares for the second quarter 2005. Free Cash Flow & Cash The Company generated free cash flow, defined as cash from operations less net cash used in investing activities, of $11.5 million for the third quarter 2005. Excluding related party receivables and payables, free cash flow for the third quarter 2005 was $11.7 million. As of September 30, 2005, eSpeed's cash and cash equivalents were approximately $184 million. During the third quarter 2005, eSpeed repurchased approximately 1.2 million shares of the Company's stock for approximately $9.5 million in cash, at an average price per share of $7.93. Outlook For the fourth quarter 2005, eSpeed expects to generate revenues of approximately $36 million and expects non-GAAP net operating income to be in the range of $0.00 to $0.01 per diluted share. This is based on the Company's expectations that the average daily Federal Reserve US Treasury volume will be between $520 and $530 billion for the fourth quarter 2005. For the full year 2005, the Company expects to generate revenues of approximately $150 million, operating expenses to be approximately $139 million and non-GAAP net operating income to be in the range of $0.13 to $0.14 per diluted share. Howard W. Lutnick, Chairman and CEO of eSpeed, Inc. commented, "Despite seasonal weakness in trading volumes for the quarter, the results reflect our improved market position. The continued improvement of our market position in our core U.S. Treasury business reflects the growing recognition of eSpeed's commitment to client service and product innovation. Moreover, we remain focused on enhancing our service offering to clients, through both customized pricing and technology solutions." Non-GAAP Financial Measures To supplement eSpeed's consolidated financial statements presented in accordance with GAAP and to better reflect the Company's quarter-over-quarter and comparative year-over-year operating performance, eSpeed uses non-GAAP financial measures of revenues, net income and earnings per share, which are adjusted to exclude certain expenses and gains. In addition, the Company provides a computation of free cash flow. These non-GAAP financial measurements do not replace the presentation of eSpeed's GAAP financial results but are provided to improve overall understanding of the Company's current financial performance and its prospects for the future. Specifically, eSpeed believes the non-GAAP financial results provide useful information to both management and investors regarding certain additional financial and business trends relating to the Company's financial condition and results from operations. In addition, eSpeed's management uses these measures for reviewing the Company's financial results and evaluating eSpeed's financial performance. For the third quarter 2005, the difference between GAAP net income and non-GAAP net operating income was ($0.1) million, net of tax. eSpeed considers "non-GAAP net operating income" to be after-tax income generated from the Company's continuing operations excluding certain non-recurring or non-core items such as, but not limited to, asset impairments, litigation judgments, costs or settlements, restructuring charges, costs related to potential acquisitions, charitable contributions, insurance proceeds, business partner securities, gains or losses on investments and similar events. The amortization of patent costs and associated licensing fees (including those made in settlement of litigation) from such patents are generally treated as operating items. Material judgments or settlement amounts paid or received and impairments to all or a portion of such assets are generally treated as non-operating items. Management does not provide guidance of GAAP net income because certain items identified as excluded from non-GAAP net operating income are difficult to forecast. About eSpeed, Inc. eSpeed, Inc. (NASDAQ: ESPD) is a leader in developing and deploying electronic marketplaces and related trading technology that offers traders access to the most liquid, efficient and neutral financial markets in the world. eSpeed operates multiple buyer, multiple seller real-time electronic marketplaces for the global capital markets, including the world's largest government bond markets and other fixed income and equities marketplaces. eSpeed's suite of marketplace tools provides end-to-end transaction solutions for the purchase and sale of financial products over eSpeed's global private network or via the Internet. eSpeed's neutral platform, reliable network, straight-through processing and superior products make it the trusted source for electronic trading at the world's largest fixed income and foreign exchange trading firms and major exchanges. To learn more, please visit www.espeed.com. The information in this press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are based upon current expectations that involve risks and uncertainties. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Our actual results and the timing of certain events may differ significantly from the results discussed in the forward-looking statements. Factors that might cause or contribute to such a discrepancy include, but are not limited to, the costs and expenses of developing, maintaining and protecting our intellectual property, including judgments or settlements paid or received and their related costs, the possibility of future losses and negative cash flow from operations, the effect of market conditions, including trading volume and volatility, our pricing strategy and that of our competitors, our ability to develop new products and services, to enter new markets, to secure and maintain market share, to enter into marketing and strategic alliances, to hire new personnel, to expand the use of our electronic system, to induce clients to use our marketplaces and services and to effectively manage any growth we achieve, the effects of the attacks on the World Trade Center on September 11, 2001, and other factors that are discussed under "Risk Factors" in eSpeed's Annual Report on Form 10-K filed with the Securities and Exchange Commission. We believe that all forward-looking statements are based upon reasonable assumptions when made; however, we caution that it is impossible to predict actual results or outcomes or the effects of risks, uncertainties or other factors on anticipated results or outcomes and that, accordingly, you should not place undue reliance on these statements. Forward-looking statements speak only as of the date when made, and we undertake no obligation to update these statements in light of subsequent events or developments. Actual results and outcomes may differ materially from anticipated results or outcomes discussed in forward-looking statements. -0- *T eSpeed, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME (unaudited) (In thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, ---------------- ----------------- 2005 2004 2005 2004 -------- ------- -------- -------- Revenues: Transaction revenues with related parties Fully electronic transactions $ 18,933 $25,489 $ 58,174 $ 85,170 Voice-assisted brokerage transactions 6,190 5,233 19,128 16,449 Screen-assisted open outcry transactions 1,121 225 1,931 614 -------- ------- -------- -------- Total transaction revenues with related parties 26,244 30,947 79,233 102,233 Software Solutions fees from related parties 6,099 4,681 18,860 13,268 Software Solutions and licensing fees from unrelated parties 3,770 3,278 11,712 9,383 Interest income 1,644 865 4,311 2,370 -------- ------- -------- -------- Total revenues 37,757 39,771 114,116 127,254 -------- ------- -------- -------- Expenses: Compensation and employee benefits 13,048 10,499 38,989 29,582 Amortization of software development costs and other intangibles 5,206 4,109 14,376 11,643 Occupancy and equipment 7,712 6,322 22,657 18,622 Professional and consulting fees 1,314 1,663 3,366 3,461 Communications and client networks 1,931 1,684 5,569 4,892 Marketing 390 319 1,252 1,084 Administrative fees to related parties 3,216 3,435 10,515 9,604 Other 2,113 1,846 7,467 5,479 -------- ------- -------- -------- Total operating expenses 34,930 29,877 104,191 84,367 -------- ------- -------- -------- Income before income taxes 2,827 9,894 9,925 42,887 Income tax provision 827 3,869 3,379 16,768 ---------------------------------- Net operating income $ 2,000 $ 6,025 $ 6,546 $ 26,119 ======== ======= ======== ======== Non-operating income (loss): Charitable contribution Re: 9/11, net of tax (262) (207) (262) (207) Amortization of business partner and non-employee securities, net of tax (34) (83) (200) (441) Litigation costs, net of tax (450) - (2,351) - Acquisition related costs, net of tax - - (2,598) - Gain on sale of investments, net of tax 619 - 619 - -------- ------- -------- -------- Total non-operating income (loss) (127) (290) (4,792) (648) -------- ------- -------- -------- --------------------------------- GAAP net income $ 1,873 $ 5,735 $ 1,754 $ 25,471 ======== ======= ======== ======== Per share data: Basic pre-tax operating income per share $ 0.06 $ 0.18 $ 0.19 $ 0.77 Basic tax provision per share $ (0.02)$ (0.07)$ (0.07)$ (0.30) -------- ------- -------- -------- Basic net operating income per share $ 0.04 $ 0.11 $ 0.12 $ 0.47 Basic non-operating (loss) per share $ (0.00)$ (0.01)$ (0.09)$ (0.01) -------- ------- -------- -------- Basic GAAP earnings (loss) per share $ 0.04 $ 0.11 $ 0.03 $ 0.46 ======== ======= ======== ======== Diluted pre-tax operating income per share $ 0.06 $ 0.18 $ 0.19 $ 0.75 Diluted tax provision per share $ (0.02)$ (0.07)$ (0.07)$ (0.29) -------- ------- -------- -------- Diluted net operating income per share $ 0.04 $ 0.11 $ 0.12 $ 0.46 Diluted non-operating (loss) per share $ (0.00)$ (0.01)$ (0.09)$ (0.01) -------- ------- -------- -------- Diluted GAAP earnings (loss) per share $ 0.04 $ 0.10 $ 0.03 $ 0.45 ======== ======= ======== ======== Basic weighted average shares of common stock outstanding 50,998 54,398 51,805 55,538 ======== ======= ======== ======== Diluted weighted average shares of common stock outstanding 51,697 55,289 52,586 57,065 ======== ======= ======== ======== Pre-tax operating margin 7.5% 24.9% 8.7% 33.7% *T -0- *T eSpeed, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME IN ACCORDANCE WITH GAAP (unaudited) (In thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, ---------------- ------------------ 2005 2004 2005 2004 ------- ------- -------- -------- Revenues: Transaction revenues with related parties Fully electronic transactions $18,933 $25,489 $ 58,174 $ 85,170 Voice-assisted brokerage transactions 6,190 5,233 19,128 16,449 Screen-assisted open outcry transactions 1,121 225 1,931 614 ------- ------- -------- -------- Total transaction revenues with related parties 26,244 30,947 79,233 102,233 Software Solutions fees from related parties 6,099 4,681 18,860 13,268 Software Solutions and licensing fees from unrelated parties 3,770 3,278 11,712 9,383 Gain on sale of investments 1,015 - 1,015 - Interest income 1,644 865 4,311 2,370 ------- ------- -------- -------- Total revenues 38,772 39,771 115,131 127,254 ------- ------- -------- -------- Expenses: Compensation and employee benefits 13,048 10,499 38,989 29,582 Amortization of software development costs and other intangibles 5,206 4,109 14,376 11,643 Occupancy and equipment 7,712 6,322 22,657 18,622 Professional and consulting fees 2,018 1,663 7,088 3,461 Communications and client networks 1,931 1,684 5,569 4,892 Marketing 390 319 1,252 1,084 Administrative fees to related parties 3,216 3,435 10,515 9,604 Amortization of business partner and non-employee securities 50 136 310 722 Acquisition related costs - - 4,124 - Other 2,491 2,186 7,845 5,819 ------- ------- -------- -------- Total operating expenses 36,062 30,353 112,725 85,429 ------- ------- -------- -------- Income before income taxes 2,710 9,418 2,406 41,825 Income tax provision 837 3,683 652 16,354 -------- -------- -------- -------- Net income $ 1,873 $ 5,735 $ 1,754 $ 25,471 ======= ======= ======== ======== Per share data: Basic GAAP earnings per share $ 0.04 $ 0.11 $ 0.03 $ 0.46 ======= ======= ======== ======== Diluted GAAP earnings per share $ 0.04 $ 0.10 $ 0.03 $ 0.45 ======= ======= ======== ======== Basic weighted average shares of common stock outstanding 50,998 54,398 51,805 55,538 ======= ======= ======== ======== Diluted weighted average shares of common stock outstanding 51,697 55,289 52,586 57,065 ======= ======= ======== ======== *T -0- *T eSpeed, Inc. and Subsidiaries RECONCILIATION of NON-GAAP FINANCIAL MEASURES TO GAAP (unaudited) (in thousands) Three Months Ended Nine Months Ended September 30, September 30, ----------------- ------------------- 2005 2004 2005 2004 ------- ------- -------- -------- Revenues $37,757 $39,771 $114,116 $127,254 Gain on sale of investments (a) 1,015 - 1,015 - ------- ------- -------- -------- GAAP revenues $38,772 $39,771 $115,131 $127,254 ------- ------- -------- -------- Operating expenses $34,930 $29,877 $104,191 $ 84,367 Amortization of business partner and non-employee securities (b) 49 136 310 722 Litigation costs (c) 705 - 3,722 - Acquisition related fees (d) - - 4,124 - Charitable contribution Re: 9/11 (e) 378 340 378 340 ------- ------- -------- -------- GAAP expenses $36,062 $30,353 $112,725 $ 85,429 ------- ------- -------- -------- Pre-tax operating income $ 2,827 $ 9,894 $ 9,925 $ 42,887 Sum of reconciling items = (a) - (b) - (c) - (d) - (e) (117) (476) (7,519) (1,062) ------- ------- -------- -------- GAAP income before income tax provision $ 2,710 $ 9,418 $ 2,406 $ 41,825 ------- ------- -------- -------- Income tax provision $ 827 $ 3,869 $ 3,379 $ 16,768 Income tax benefit on non- operating loss (f) 10 (186) (2,727) (414) ------- ------- -------- -------- GAAP income tax provision $ 837 $ 3,683 $ 652 $ 16,354 ------- ------- -------- -------- Net operating income $ 2,000 $ 6,025 $ 6,546 $ 26,119 Sum of reconciling items = (a) - (b) - (c) - (d) - (e) - (f) (127) (290) (4,792) (648) ------- ------- -------- -------- GAAP net income $ 1,873 $ 5,735 $ 1,754 $ 25,471 ------- ------- -------- -------- *T -0- *T eSpeed, Inc and Subsidiaries CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (in thousands, except share data) September December 30, 2005 31, 2004 ----------- --------- (Unaudited) Assets Cash and cash equivalents $ 12,291 $ 19,884 Reverse repurchase agreements with related parties 172,020 189,804 ---------- -------- Total cash and cash equivalents 184,311 209,688 Fixed assets, net 60,469 50,605 Investments 7,747 12,709 Goodwill 11,968 11,949 Intangible assets, net 13,017 16,097 Receivable from related parties 7,817 1,630 Other assets 6,965 7,455 ---------- -------- Total assets $ 292,294 $310,133 ========== ======== Liabilities and Stockholders' Equity Current liabilities: Payable to related parties $ 6,057 $ 7,113 Accounts payable and accrued liabilities 32,865 24,795 ---------- -------- Total current liabilities 38,922 31,908 Deferred income 7,698 8,011 ---------- -------- Total liabilities 46,620 39,919 ---------- -------- Stockholders' Equity: Preferred stock, par value $0.01 per share; 50,000,000 shares authorized, none outstanding at September 30, 2005 and December 31, 2004 - - Class A common stock, par value $.01 per share; 200,000,000 shares authorized; 34,375,135 and 34,289,773 shares issued at September 30, 2005 and December 31, 2004, respectively 344 343 Class B common stock, par value $.01 per share; 100,000,000 shares authorized; 22,139,270 shares outstanding at September 30, 2005 and December 31, 2004 221 221 Additional paid-in capital 294,843 294,115 Unearned stock based compensation (1,162) (3,080) Treasury stock, at cost; 6,539,090 and 3,082,815 shares of Class A common stock at September 30, 2005 and December 31, 2004, respectively (62,913) (33,972) Retained earnings 14,341 12,587 ---------- -------- Total stockholders' equity 245,674 270,214 ---------- -------- Total liabilities and stockholders' equity $ 292,294 $310,133 ========== ======== *T -0- *T eSpeed, Inc. & Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands) Three Months Ended Nine Months Ended September 30, September 30, ------------------ ------------------ 2005 2004 2005 2004 -------- -------- -------- -------- Cash flows from operating activities: Net income $ 1,873 $ 5,735 $ 1,754 $ 25,471 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 7,880 6,140 22,050 17,271 Amortization of business partner and non-employee securities 49 136 310 722 Amortization of employee stock based compensation 536 - 1,608 - Equity in net loss (income) of unconsolidated investments (10) 32 5 42 Gain on sale of investments (1,015) - (1,015) - Deferred income tax expense 741 414 298 1,022 Tax benefit from employee stock options and warrant exercises 25 23 109 958 Issuance of securities under employee benefit plan 61 30 186 90 Changes in operating assets and liabilities: Receivable from related parties (1,757) (93) (6,187) 300 Other assets 988 32 490 (1,447) Payable to related parties 1,611 (141) (1,056) (2,907) Accounts payable and accrued expenses 5,146 9,514 7,469 9,632 Deferred income (104) - (313) - -------- -------- -------- -------- Net cash provided by operating activities 16,024 21,822 25,708 51,154 -------- -------- -------- -------- Cash flows from investing activities: Purchase of fixed assets (3,864) (1,941) (11,330) (11,271) Capitalization of software development costs (5,876) (5,200) (15,399) (13,647) Capitalization of patents and related defense costs (589) (1,641) (1,688) (4,441) Proceeds from sale of investments 5,840 - 5,840 - Purchase of investment - - - (360) -------- -------- -------- -------- Net cash used in investing activities (4,489) (8,782) (22,577) (29,719) -------- -------- -------- -------- Cash flows from financing activities: Purchase of Class A common stock (9,504) (29,752) (28,941) (29,752) Proceeds from exercises of stock options and warrants 121 58 433 1,811 Receivable from broker on stock option exercises - 123 - 1,073 -------- -------- -------- -------- Net cash used in financing activities (9,383) (29,571) (28,508) (26,868) -------- -------- -------- -------- Net increase (decrease) in cash and cash equivalents 2,152 (16,531) (25,377) (5,433) -------- -------- -------- -------- Cash and cash equivalents at beginning of period 20,567 34,115 19,884 55,318 Reverse repurchase agreements with related parties at beginning of period 161,592 205,483 189,804 173,182 -------- -------- -------- -------- Total cash and cash equivalents at beginning of period 182,159 239,598 209,688 228,500 -------- -------- -------- -------- Cash and cash equivalents at end of period 12,291 37,116 12,291 37,116 Reverse repurchase agreements with related parties at end of period 172,020 185,951 172,020 185,951 -------- -------- -------- -------- Total cash and cash equivalents at end of period $184,311 $223,067 $184,311 $223,067 ======== ======== ======== ======== *T -0- *T eSpeed, Inc. & Subsidiaries CONSOLIDATED STATEMENTS OF FREE CASH FLOWS (unaudited) (in thousands) Three Months Ended Nine Months Ended September 30, September 30, ---------------- ------------------ 2005 2004 2005 2004 ------- ------- -------- -------- Pre-tax operating income $ 2,827 $ 9,894 $ 9,925 $ 42,887 Depreciation and amortization 7,880 6,140 22,050 17,271 Other non-cash and non- operating items (496) 62 (6,425) 132 ------- ------- -------- -------- Pre-tax operating income adjusted for depreciation, amortization and other 10,211 16,096 25,550 60,290 ------- ------- -------- -------- Income tax (provision) benefit on operating income (827) (3,869) (3,379) (16,768) Income tax benefit on non- operating loss 367 186 3,105 414 Deferred income tax expense 741 414 298 1,022 Tax benefit from stock option and warrant exercises 25 23 109 958 Income taxes paid - 1,665 - 12,851 ------- ------- -------- -------- (Increase) decrease in current income tax payable 306 (1,581) 133 (1,523) Changes in related party receivable and payable, net (145) (234) (7,243) (2,607) Changes in other operating assets and liabilities, net 6,030 7,881 7,646 (4,666) Charitable contribution Re: 9/11 (378) (340) (378) (340) ------- ------- -------- -------- Net cash provided by operating activities 16,024 21,822 25,708 51,154 ------- ------- -------- -------- Purchases of fixed assets (3,864) (1,941) (11,330) (11,271) Capitalization of software development costs (5,876) (5,200) (15,399) (13,647) Capitalization of patents and related defense costs (589) (1,641) (1,688) (4,441) Purchase of investment - - - (360) Proceeds from sale of investment 5,840 - 5,840 - ------- ------- -------- -------- Free cash flows 11,535 13,040 3,131 21,435 ------- ------- -------- -------- Related party receivable and payable, net 145 234 7,243 2,607 ------- ------- -------- -------- Free cash flows, net of related party activity 11,680 $13,274 10,374 $ 24,042 ======= ======= ======== ======== *T -0- *T eSpeed, Inc. and Subsidiaries Quarterly Market Activity Report ----------------------------------------------- 3Q04 4Q04 1Q05 2Q05 ----------------------------------------------- Volume (in billions) -------------------- Fully Electronic Volume - Excluding New Products 6,520 5,669 6,384 7,111 Fully Electronic Volume - New Products* 376 497 436 506 Voice-Assisted Volume 3,491 3,688 4,726 7,401 ----------------------------------------------- Total Electronic Volume 10,388 9,854 11,546 15,018 =============================================== Electronic Transaction Count ----------------------- Fully Electronic Transactions - Excluding New Products 1,127,444 998,215 1,055,479 1,304,403 Fully Electronic Transactions - New Products* 73,457 92,903 71,309 91,408 Voice-Assisted Transactions 157,134 152,883 189,129 215,229 ----------------------------------------------- Total Transactions 1,358,035 1,244,001 1,315,917 1,611,040 =============================================== ----------------------------------------------- eSpeed Equities Direct Access (Number of Shares Traded In Millions) 105 123 168 178 =============================================== Trading Days 64 62 61 64 Global Interest Rate Futures Volume (1) CBOT - US Treasury Contracts 97,875,096 102,886,955 113,756,640 120,086,840 CME-Euro $ Contracts 82,256,775 75,602,802 90,815,456 117,034,054 EUREX-Bund Contracts 55,998,582 64,362,839 83,539,303 80,150,635 Fed UST Volume (in billions) (2) UST Volume 31,080 31,086 34,570 36,749 Average Daily UST Volume 486 501 567 574 NYSE - Volume (shares traded) - in millions (3) 84,905 95,990 99,372 100,439 Transaction Value - in millions 2,632,744 3,133,420 3,416,701 3,456,359 NASDAQ - Volume (shares traded) - in millions (4) 99,636 119,651 121,179 112,473 Transaction Value - in millions 1,896,115 2,398,921 2,585,334 2,467,331 ---------------------------------------------------------------------- Fiscal Year 2004 Jan'04 Feb'04 Mar'04 Apr'04 Volume Data (in billions) Fully Electronic 2,982 2,464 2,897 2,912 Voice 1,144 1,146 1,296 1,058 Total 4,126 3,610 4,192 3,970 Transaction Count Fully Electronic 449,197 379,084 460,327 460,211 Voice 57,178 54,485 63,373 56,948 Total 506,375 433,569 523,700 517,159 Trading Days 20 19 23 21 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Fiscal Year 2005 Jan'05 Feb'05 Mar'05 Apr'05 Volume Data (in billions) Fully Electronic 2,027 2,229 2,565 2,524 Voice 1,550 1,628 1,548 1,922 Total 3,577 3,857 4,113 4,445 Transaction Count Fully Electronic 341,336 362,482 422,970 440,972 Voice 64,431 59,901 64,797 64,006 Total 405,767 422,383 487,767 504,978 Trading Days 20 19 22 21 ---------------------------------------------------------------------- % Change % Change ----------- ------------- ------------ 3Q05 3Q05 vs 2Q05 3Q05 vs 3Q04 ----------- Volume (in billions) -------------------- Fully Electronic Volume - Excluding New Products 8,014 12.7% 22.9% Fully Electronic Volume - New Products* 376 (25.7%) (0.1%) Voice-Assisted Volume 8,576 15.9% 145.7% ----------- ------------- ------------ Total Electronic Volume 16,966 13.0% 63.3% =========== ============= ============ Electronic Transaction Count -------------------------------- Fully Electronic Transactions - Excluding New Products 1,642,579 25.9% 45.7% Fully Electronic Transactions - New Products* 115,483 26.3% 57.2% Voice-Assisted Transactions 224,291 4.2% 42.7% ----------- ------------- ------------ Total Transactions 1,982,353 23.0% 46.0% =========== ============= ============ ----------- ------------- ------------ eSpeed Equities Direct Access (Number of Shares Traded In Millions) 154 (13.3%) 47.2% =========== ============= ============ Trading Days 64 * New Products defined as Mortgage-Backed Securities, Foreign Exchange, Interest Rate Swaps, Repos and Futures. CBOT Futures volume calculated based on per contract notional value of $200,000 for the two year contract and $100,000 for all others. Global Interest Rate Futures Volume (1) CBOT - US Treasury Contracts 109,470,625 (8.8%) 11.8% CME - Euro $ Contracts 105,199,005 (10.1%) 27.9% EUREX - Bund Contracts 66,780,116 (16.7%) 19.3% Fed UST Volume (in billions) (2) UST Volume 34,554 (6.0%) 11.2% Average Daily UST Volume 540 (6.0%) 11.2% NYSE - Volume (shares traded) - in millions (3) 98,074 (2.4%) 15.5% Transaction Value - in millions 3,513,352 1.6% 33.4% NASDAQ - Volume (shares traded) - in millions (4) 104,927 (6.7%) 5.3% Transaction Value - in millions 2,353,027 (4.6%) 24.1% Sources: (1) Futures Industry Association - Monthly Volume Report - (www.cbot.com, www.cme.com, www.eurexchange.com) (2) www.ny.frb.org/pihome/statistics/dealer - Federal Reserve Bank (3) NYSE - www.nyse.com (4) NASDAQ - www.marketdata.nasdaq.com ---------------------------------------------------------------------- Fiscal Year 2004 May'04 Jun'04 Jul'04 Aug'04 Volume Data (in billions) Fully Electronic 2,550 2,528 2,151 2,134 Voice 1,019 994 1,180 1,023 Total 3,569 3,522 3,331 3,157 Transaction Count Fully Electronic 417,503 413,309 361,945 376,279 Voice 55,533 53,425 51,941 46,242 Total 473,036 466,734 413,886 422,521 Trading Days 20 21 21 22 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Fiscal Year 2005 May'05 Jun'05 Jul'05 Aug'05 Volume Data (in billions) Fully Electronic 2,499 2,595 2,251 2,722 Voice 2,116 3,363 2,568 2,820 Total 4,614 5,959 4,819 5,543 Transaction Count Fully Electronic 452,148 502,691 472,307 553,028 Voice 67,051 84,172 67,245 72,763 Total 519,199 586,863 539,552 625,791 Trading Days 21 22 20 23 ---------------------------------------------------------------------- ---------------------------------------- Fiscal Year 2004 Sep'04 Volume Data (in billions) Fully Electronic 2,612 Voice 1,288 Total 3,900 Transaction Count Fully Electronic 462,677 Voice 58,951 Total 521,628 Trading Days 21 ---------------------------------------- ---------------------------------------- Fiscal Year Sep'05 2005 Volume Data (in billions) Fully Electronic 3,416 Voice 3,188 Total 6,604 Transaction Count Fully Electronic 732,727 Voice 84,283 Total 817,010 Trading Days 21 ---------------------------------------- ------------------------------------ Trading Days ------------------------------------ 2006 ---- Q1 Q2 Q3 Q4 ---- ---- ---- ---- 62 63 63 62 2005 ---- Q1 Q2 Q3 Q4 ---- ---- ---- ---- 61 64 64 61 2004 ---- Q1 Q2 Q3 Q4 ---- ---- ---- ---- 62 62 64 62 *T