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 2006 | 2005 | 2004 | 2003 Archipelago Announces Conference Call and First Quarter 2005 Results
Conference Call at 4:30 P.M. Eastern Time CHICAGO, April 20 /PRNewswire-FirstCall/ -- Archipelago Holdings, Inc. (PCX: AX), owner and operator of the Archipelago Exchange(SM) (ArcaEx(R)), the nation's first totally open, all-electronic stock exchange, will hold a conference call today at 4:30pm (ET). The dial-in information for the call is 866-320-4707 and the pass code is 779799. A webcast will also be available at http://investor.archipelago.com/phoenix.zhtml?c=140290&p=irol-irhome. Today, Archipelago Holdings, Inc. also reported net income of $13.2 million, or $0.28 per diluted share, for the first quarter of 2005 as compared to $12.5 million, or $0.26 per diluted share, for the fourth quarter of 2004. Archipelago reported pre-tax income of $21.9 million for the first quarter of 2005 which was substantially equivalent to the $22.0 million net income, or $0.55 per diluted share, reported for the first quarter of 2004 when the Company operated as a limited liability company and was not required to pay taxes at the corporate level. Jerry Putnam, Chairman and CEO of Archipelago commented, "Our first quarter 2005 results were solid as we continued to deliver on our goal of providing fast, fair and efficient trading services to investors. We continued to roll out new products for traders, made progress in our efforts to attract corporate issuers, with three new listings in the quarter, in addition to focusing on the required approvals and integration planning for our pending acquisition of PCX Holdings, Inc."
First Quarter Financial Information
* Total revenues for the first quarter of 2005 were $133.7 million as
compared to $146.9 million for the first quarter of 2004.
* Cost of revenues declined $14.0 million, or 15.0%, to $78.4 million for
the first quarter of 2005 from $92.4 million for the same period in
2004.
* Gross margins increased to $55.3 million for the first quarter of 2005
from $54.5 million for the first quarter of 2004. As a percentage of
total revenues, gross margin increased to 41.3% for the first quarter
of 2005 from 37.1% for the first quarter of 2004.
* Liquidity payments decreased slightly to $51.9 million, or 38.9% of
total revenues, in the first quarter of 2005 from $53.2 million, or
36.2% of total revenues in the first quarter of 2004.
* Clearance, brokerage and other transaction expenses declined to
$7.7 million or 5.7% of total revenues in the first quarter of 2005
from $12.7 million, or 8.6% of total revenues in the first quarter of
2004.
* Total indirect expenses were $34.2 million in the first quarter of
2005, a 5.0% increase from the $32.6 million reported for the same
period in 2004.
* As of March 31, 2005, Archipelago had $193.2 million of cash and cash
equivalents and no outstanding long-term debt obligations.
First Quarter Volume Information
* Total U.S. market volumes were down to 262.8 billion shares for the
first quarter of 2005 from 269.4 billion shares for the same period in
2004. Clients executed 35.8 billion shares or 13.6% of total U.S.
equity securities on ArcaEx during the first quarter of 2005 compared
to 37.8 billion shares or 14.0% for the same period in 2004.
* ArcaEx market share was 23.5% in Nasdaq-listed stocks down slightly
from 23.7% in the fourth quarter of 2004 and 25.5% from the first
quarter in 2004.
* ArcaEx market share increased to 2.5% in NYSE-listed stocks from 2.3%
in the fourth quarter of 2004 and 1.6% from the first quarter in 2004.
* ArcaEx market share was 25.5% in AMEX-listed stocks, in line with 25.6%
in the fourth quarter of 2004 and up from 17.6% in the first quarter of
2004.
* The internal match rate rose to 88.4% on ArcaEx compared to an internal
match rate of 87.4% in the fourth quarter of 2004 and 85.5% in the
first quarter in 2004.
First Quarter Business Highlights
* Archipelago announced that it had entered into a definitive agreement
to acquire PCX Holdings, Inc., the parent company of the Pacific
Exchange (PCX) and PCX Equities, Inc. The Company expects that, ArcaEx
will be the first exchange to bring together the all-electronic trading
of equity securities and options products upon the closing of this
pending acquisition, thereby expanding and diversifying Archipelago's
business lines.
* During the first quarter of 2005, American International Group, Inc.
(AIG), optionsXpress (OXPS) and Metropolitan Health Networks (MDF)
dually listed on ArcaEx, a facility of the Pacific Exchange.
* Sun Microsystems, Inc. and Archipelago Holdings, Inc. announced the
companies plan to build the world's first online compute exchange.
* Matthew Gelber joined Archipelago in the position of Executive Managing
Director, Options, and will be responsible for coordinating
Archipelago's options business and managing the Company's integration
of the PCX options exchange.
* Margaret Lauderback joined Archipelago as Managing Director, Government
Affairs. In this newly created position, Ms. Lauderback will be
responsible for representing the interests of Archipelago before
members of Congress, the White House, other government entities, and
think tanks, along with maintaining an office in Washington DC.
* The Company implemented the changes necessary to open ArcaEx for
trading at 4 AM Eastern Time for all U.S. listed and OTC stocks upon
receipt of the Securities and Exchange Commission's approval. Trading
commenced at 4 AM Eastern Time on April 8, 2005.
About Archipelago
Archipelago Holdings, Inc. (PCX: AX) owns and operates the Archipelago Exchange (ArcaEx). ArcaEx is the first totally open all-electronic stock market in the United States. Through its alliance with the Pacific Exchange, Inc., Archipelago operates ArcaEx as the exclusive equities trading facility of PCX Equities, Inc. Through ArcaEx, Archipelago customers can trade over 8,000 equity securities, including securities listed on the New York Stock Exchange(R), Nasdaq(R), American Stock Exchange(R) and Pacific Exchange(R). ArcaEx is regulated by the Pacific Exchange. The Archipelago ECN, a precursor to ArcaEx, was one of the four original ECNs, formed in December 1996 with Townsend Analytics. Certain statements in this press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on Archipelago's current expectations and involve risks and uncertainties that could cause Archipelago's actual results to differ materially from those set forth in the statements. There can be no assurance that such expectations will prove to be correct. Factors that could cause Archipelago's results to differ materially from current expectations include: general economic and business conditions, industry trends, competitive conditions, regulatory developments as well as other risks or factors identified in the Company's filings with the Securities Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2004 which is available on the Company's website at http://www.archipelago.com . You should not place undue reliance on forward-looking statements, which speak only as of the date of this press release. Except for any obligation to disclose material information under the Federal securities laws, Archipelago undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of this press release.
Archipelago Holdings, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
Three months ended
March 31, December 31, March 31,
2005 2004 2004
Revenues
Transaction fees $118,726 $120,554 $135,001
Market data fees 14,850 18,141 11,724
Listing fees 118 121 89
Total revenues 133,694 138,816 146,814
Cost of revenues
Liquidity payments 51,938 51,696 53,204
Routing charges 18,841 21,563 26,480
Clearance, brokerage and
other transaction expenses 7,666 6,828 12,666
Total cost of revenues 78,445 80,087 92,350
Gross margin 55,249 58,729 54,464
Gross margin as a % of total revenues 41.3% 42.3% 37.1%
Indirect expenses
Employee compensation and benefits 12,504 11,041 10,333
Depreciation and amortization 5,423 5,452 10,732
Communications 5,509 5,380 4,529
Marketing and promotion 3,075 7,979 1,746
Legal and professional 3,133 2,908 2,303
Occupancy 1,444 1,412 977
General and administrative 3,086 4,795 1,934
Total indirect expenses 34,174 38,967 32,554
Operating income 21,075 19,762 21,910
Interest and other, net 866 1,034 68
Income before income tax provision 21,941 20,796 21,978
Income tax provision 8,776 8,271 -
Net income $13,165 $12,525 $21,978
Per share data:
Basic earnings before income tax
expense per share $0.47 $0.44 $0.61
Basic income tax provision per share (0.19) (0.18) -
Basic earnings per share, GAAP $0.28 $0.27 $0.61
Diluted earnings before income tax
expense per share $0.46 $0.44 $0.55
Diluted income tax provision per share (0.18) (0.17) -
Diluted earnings per share, GAAP $0.28 $0.26 $0.55
Basic weighted average shares
outstanding 47,142 47,137 36,169 (a)
Diluted weighted average shares
outstanding 47,799 47,635 40,163 (a)
(a) Adjusted to reflect our reorganization from a Delaware limited
liability company to a Delaware corporation on August 11, 2004.
Archipelago Holdings, Inc.
Consolidated Statements of Financial Condition
(In thousands)
March 31, December 31,
2005 2004
(unaudited)
Assets
Current assets:
Cash and cash equivalents $193,184 $177,878
Accounts receivable, net 65,900 73,126
Total current assets 259,084 251,004
Fixed assets, net 47,808 49,495
Goodwill 131,865 131,865
Other intangible assets, net 91,763 92,169
Deferred tax asset, net 1,107 1,839
Other assets 10,932 8,076
Total assets $542,559 $534,448
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable and accrued
expenses $66,978 $72,030
Capital lease obligations 1,039 1,545
Total liabilities 68,017 73,575
Stockholders' equity
Common stock 471 471
Additional paid-in capital 456,989 451,625
Unearned stock-based
compensation (4,879) (19)
Retained earnings 21,961 8,796
Total stockholders'
equity 474,542 460,873
Total liabilities and stockholders'
equity $542,559 $534,448
Archipelago Holdings, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
Three months ended
March 31, December 31, March 31,
2005 2004 2004
Cash flows from operating activities
Net income $13,165 $12,525 $21,978
Adjustments to reconcile net income
to net cash provided
by operating activities:
Depreciation and amortization 5,015 5,046 10,325
Amortization of other intangible
assets 406 406 407
Provision for doubtful accounts - (400) -
Deferred taxes 732 1,441 -
Stock-based compensation 414 37 38
Tax benefit from stock option
exercises 37 18 -
Changes in operating assets and
liabilities:
Accounts receivable 7,226 (2,589) (11,796)
Other assets (2,857) 1,781 (2,517)
Accounts payable and accrued
expenses (5,052) (7,398) 2,155
Net cash provided by operating
activities 19,086 10,867 20,590
Cash flows from investing activities
Additions to fixed assets (3,328) (5,364) (6,286)
Net cash used in investing
activities (3,328) (5,364) (6,286)
Cash flows from financing activities
Principal payments under capital
lease obligations (506) (497) (626)
Proceeds from exercises of stock
options 54 16 -
Direct costs of initial public
offering - - (3,144)
Net cash used in financing
activities (452) (481) (3,770)
Net increase in cash and cash
equivalents 15,306 5,022 10,534
Cash and cash equivalents at
beginning of period 177,878 172,856 111,815
Cash and cash equivalents at end of
period $193,184 $177,878 $122,349
Archipelago Holdings, Inc.
Operating Data
(unaudited)
Three months ended
March 31, December 31, March 31,
2005 2004 2004
Trading Days 61 64 62
Total U.S. market volume (millions of
shares)(1) 262,846 260,045 269,448
Our total U.S. market volume
(millions of shares)(1) 35,830 36,168 37,750
Our share of total U.S. market
volume(1)(2) 13.63% 13.91% 14.01%
% of handled shares matched
internally(3) 10.84% 10.84% 10.50%
% of handled shares routed out(3) 2.79% 3.07% 3.51%
Total volume of Nasdaq-listed
securities (millions of shares) 122,238 121,008 126,314
Our total volume of Nasdaq-listed
securities (millions of shares) 28,768 28,682 32,239
Our share of total volume of Nasdaq-
listed securities(2) 23.53% 23.70% 25.52%
% of handled shares matched
internally(3) 18.68% 18.26% 19.16%
% of handled shares routed out(3) 4.85% 5.44% 6.36%
Total volume of NYSE-listed
securities (millions of shares) 125,194 120,810 123,068
Our volume in NYSE-listed securities
(millions of shares) 3,126 2,828 1,972
Our share of total volume of NYSE-
listed securities(2) 2.50% 2.34% 1.60%
% of handled shares matched
internally(3) 1.82% 1.69% 0.95%
% of handled shares routed out(3) 0.68% 0.65% 0.65%
Total volume of AMEX-listed
securities (millions of shares) 15,415 18,227 20,066
Our volume in AMEX-listed securities
(millions of shares) 3,936 4,658 3,539
Our share of total volume on AMEX-
listed securities(2) 25.53% 25.56% 17.64%
% of handled shares matched
internally(3) 21.98% 22.28% 14.50%
% of handled shares routed out(3) 3.55% 3.28% 3.14%
Our ETF volume (millions of shares) 4,943 4,618 3,046
Our U.S. equity transaction volume
(thousands of transactions) 115,746 112,255 101,274
Our average U.S. equity transaction
size (shares per transaction) 310 322 373
Our average U.S. equity transactions
per day (thousands of transactions) 1,897 1,754 1,633
Our average transaction-related
revenue (per share)(4) $0.0033 $0.0033 $0.0036
Our average transaction-related cost
of revenue (per share)(5) $0.0020 $0.0020 $0.0021
Our average transaction-related gross
margin (per share)(6) $0.0013 $0.0013 $0.0015
% of customer order volume matched
internally(7) 88.4% 87.4% 85.5%
% of customer order volume routed
out(7) 11.6% 12.6% 14.5%
(1) U.S. market volume is calculated based on the number of shares of
equity securities traded on the NYSE, AMEX and Nasdaq, including
exchange-traded funds, as reported in the consolidated tape. The
"consolidated tape" is the system that continuously provides the last
sale price and volume of securities transactions in listed securities
to the public.
(2) Our market share is calculated based on the number of shares handled
on the Archipelago system as a percentage of total volume. For
example, if a customer's 10,000 share buy order is matched with
another customer's 10,000 share sell order in our internal liquidity
pool, our handled volume will be 10,000 shares. If the buy or sell
order were routed out, our handled volume would still be 10,000
shares.
(3) Represents our share of the total volume of such securities handled on
ArcaEx that was either matched internally on ArcaEx or routed out to
an external market center.
(4) The per share amount is calculated based on our total revenues derived
from transaction fees of $118.7 million, $120.5 million and $135.0
million for the three months ended March 31, 2005, December 31, 2004
and March 31, 2004, respectively.
(5) The per share amount is calculated based on our cost of revenues
derived from transaction fees, which consist of routing charges and
liquidity payments, of $70.8 million, $73.3 million and $79.7 million
for the three months ended March 31, 2005, December 31, 2004 and March
31, 2004, respectively. The cost of revenue from transaction fees used
in the per share computation does not include clearance, brokerage and
other transaction expenses.
(6) The per share amount is calculated based on our net revenues received
from transaction fees, and our total U.S. market volume for the
relevant period.
(7) The percentage of customer order volume matched internally is
calculated by dividing the volume of customer orders executed within
our internal liquidity pool (including the volume of both buy orders
and sell orders) by the total volume of customer orders (again
including the volume of both buy orders and sell orders when such
orders are matched internally). The percentage of customer orders
routed out is calculated by dividing the volume of customer orders
routed to other market centers by the total volume of customer orders.
Contacts:Archipelago Holdings, Inc. Margaret Nagle, 312-442-7083 (Press) Patrick Murphy, 312-442-7005 (Investor Relations)
SOURCE Archipelago Holdings, Inc. "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Archipelago Holdings, Inc.'s business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year. |
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