Exhibit 99.01
[LOGO OF KNIGHT TRIMARK GROUP, INC.]
KNIGHT
Robert Turner
Executive Vice President, Chief Financial Officer and Treasurer
201-557-6845
Margaret Wyrwas
Vice President, Corporate Communications & Investor Relations
201-557-6954 or [email protected]
Chuck Dohrenwend
Manager, Corporate Communications
201-356-1753 or [email protected]
FOR IMMEDIATE RELEASE: July 19, 2000
KNIGHT TRADING GROUP REPORTS 16% GROWTH IN QUARTERLY EARNINGS AND
23% GROWTH IN QUARTERLY REVENUES OVER SECOND QUARTER 1999
SECOND QUARTER RESULTS OF $0.53 PER SHARE REPRESENT
SECOND BEST QUARTER IN THE COMPANY'S HISTORY
JERSEY CITY, New Jersey (July 19, 2000) - Knight Trading Group, Inc.
(Nasdaq: NITE) today reported results for the second quarter ended June 30,
2000. Knight Trading Group is the leading market maker in equity securities
listed on Nasdaq, the OTCBB of the National Association of Securities
Dealers (NASD), and the over-the-counter market for New York Stock Exchange
(NYSE) and American Stock Exchange (AMEX)-listed securities. Knight also is
a leading market maker in options on individual equities, equity indices,
fixed income instruments and certain commodities in the U.S. and Europe.
The firm also maintains an asset management business for institutional
investors and high net worth individuals through its Deephaven subsidiary.
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SECOND QUARTER 2000 VS. SECOND QUARTER 1999
o 23% growth in revenues o 55% growth in equity trades executed
o 16% growth in pro forma net income o 1% growth in equity shares traded
YTD 2000 VS. YTD 1999
o 81% growth in revenues o 93% growth in equity trades executed
103% growth in pro forma net income o 75% growth in equity shares traded
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<CAPTION>
SECOND QUARTER SECOND QUARTER YTD YTD
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Revenues ($) 313,517,756 254,172,478 828,282,022 457,612,643
Pro forma net income 67,218,795 58,031,726 202,840,400 99,974,918
Pro forma diluted EPS .53 .46 1.60 .80
Equity trades executed 33,285,417 21,448,630 77,354,858 40,139,998
Average daily trades 528,340 340,454 613,927 323,710
Equity shares traded 21,516,920,838 21,319,768,752 65,333,712,218 37,262,921,041
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Revenues for the second quarter of 2000 rose 23% to $313.5 million,
compared to $254.2 million for the second quarter of 1999. Net income for
the second quarter of 2000 totaled $67.2 million, or $.53 per share on a
diluted basis, a 16% increase from $58.0 million, or $0.46 per share on a
diluted basis for the pro forma period a year ago. The Company achieved
pre-tax margins of 34.7% in the second quarter of 2000. Return on equity
for the second quarter of 2000, stated on an annualized basis, was 39.7%.
Revenues and net income for the second quarter of 2000 decreased 39% and
50%, respectively, from the pro forma first quarter of 2000. Equity trades
executed and equity shares traded for the second quarter of 2000 decreased
24% and 51%, respectively, from the first quarter of 2000, primarily due to
decreased retail trading volume in the latter half of the second quarter.
The Company's options market-making business generated total net trading
revenue of approximately $37.8 million, versus $20.6 million during the
second quarter of 1999. Additionally, the Company's asset management
business generated $10.9 million in asset management fees during the second
quarter of 2000, up 71% from the same period a year ago.
"Knight focused its efforts during the second quarter on achieving its
stated business objectives," said Kenneth D. Pasternak, the Chief Executive
Officer and President of Knight Trading Group. "We made significant strides
toward growing our client base, expanding our systems capacity and
processing power, enhancing our execution standards, and building our
business model in international markets. Indicative of our success during
the past quarter is what we accomplished in the options industry. In less
than six months since entering the business, we now are a major player in
options trading. We have a presence on all five of the major U.S. options
exchanges, and can handle options orders in more than 250 companies."
"On the international front, we made significant progress during the second
quarter toward building our business model in Europe and Japan," continued
Mr. Pasternak. "We have established our joint venture with Nikko Securities
to provide wholesale market-making services in Japanese equity securities.
In short, we are delivering - faster than many thought we would - on our
promises to carve out a dominant role in options trading and to transport
our business model to international markets."
"We also were successful in attracting order flow from a more diverse
client base during the past quarter," said Mr. Pasternak. "Institutional
order flow, for example, accounted for 44% of our equity trading revenues,
versus 19% in the second quarter of 1999. We also implemented a new trading
service in Nasdaq stocks that enhances our execution capabilities in the
OTC market by offering more opportunities for price improvement through
executions requiring no dealer intervention. The viability of the Nasdaq
InterMarket, in which we are the largest trading firm, was reaffirmed when
three electronic communications networks (ECNs) agreed to forge links to
that market. All of these developments indicate that Knight is well
positioned to become the liquidity center best equipped to provide superior
order executions in OTC and listed securities transactions."
Knight plans to file promptly an SEC Registration Statement on Form S-3
covering 2.5 million shares of Knight Trading Group Class A Common Stock.
The sellers on the Registration Statement consist of the five former
members of Arbitrade Holdings. The Company makes this filing pursuant to
the resale registration rights agreed to in the Agreement and Plan of
Merger between the parties dated November 17, 1999, as filed with the SEC
on a Current Report on Form 8-K on January 12, 2000. Knight intends to keep
the Form S-3 effective through January 12, 2001, the first anniversary of
the Company's Arbitrade acquisition.
Knight Trading Group, Inc., headquartered in Jersey City, NJ, is a
liquidity center that seeks to empower investors by providing them with
opportunities for price improvement, immediacy and enhanced liquidity in
over-the-counter (OTC) and listed securities transactions. It has the power
to commit capital for market orders, and it also maintains the largest
limit order book in the OTC market. Knight traded 81 billion shares in
1999, a volume behind only those posted by Nasdaq and the New York Stock
Exchange (NYSE). It also is one of the largest execution destinations for
securities transactions placed via the Internet. Knight is a charter member
of Fortune magazine's "e-50 Stock Index," an elite collection of companies
that are shaping the new Internet-ba sed economy. In addition, Knight,
which has been in operations for fewer than five years, is ranked by Forbes
magazine as one of the 500 most profitable public companies in the U.S.
Ultimately, Knight plans to enable the global trading village to trade all
types of equity securities and options at anytime, from anywhere in the
world. More information about Knight can be obtained at
www.knighttradinggroup.com or at www.knight-sec.com.
Copies of this earnings release and other information on the Company can be
obtained via the Internet at www.knighttradinggroup.com or at
www.knight-sec.com, or via the Company's toll-free investor information
line at 1-877-INFO-NITE.
The matters described herein contain forward-looking statements that are
made pursuant to the Safe Harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements involve a number
of risks, uncertainties or other factors beyond the Company's control,
which could cause actual results to differ materially from historical
results, performance or other expectations and from any opinions or
statements expressed with respect to future periods. These factors include,
but are not limited to, the Company's ability to implement its growth
strategies, economic, political and market conditions and fluctuations,
government and industry regulation, interest rate risk, intellectual
property rights, and other factors detailed in the Company's registration
statement and periodic reports filed with the Securities & Exchange
Commission.
[FINANCIAL TABLES FOLLOW]
# # #
KNIGHT TRADING GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
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THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
2000 1999 2000 1999
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REVENUES
Net trading revenue $283,041,696 $237,046,452 $770,086,203 $430,309,416
Asset management fees 10,900,200 6,373,299 20,328,694 9,796,084
Interest and dividends 12,142,855 5,093,387 22,494,593 8,728,374
Commissions and fees 5,481,872 4,438,874 10,176,577 6,966,056
Investment income and other 1,951,133 1,220,466 5,195,955 1,812,713
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Total revenues 313,517,756 254,172,478 828,282,022 457,612,643
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EXPENSES
Employee compensation and benefits 102,275,294 77,141,196 277,415,954 139,355,694
Payments for order flow 38,319,274 35,354,189 97,636,834 67,782,017
Execution and clearance fees 27,646,413 22,027,402 57,403,931 41,742,573
Interest 7,991,811 1,880,570 14,863,967 4,585,160
Communications and data processing 7,103,218 4,225,659 14,235,689 8,356,358
Professional fees 6,232,897 2,393,126 10,764,570 3,692,392
Depreciation and amortization 5,495,985 2,765,027 9,697,134 4,905,124
Occupancy and equipment rentals 4,305,870 2,575,176 7,380,002 4,498,557
Business development 2,886,158 1,567,608 8,120,385 2,335,149
Other 2,345,618 2,208,884 4,908,813 4,002,997
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Total expenses 204,602,538 152,138,837 502,427,279 281,256,021
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Income before income taxes 108,915,218 102,033,641 325,854,743 176,356,622
Income tax expense 41,696,423 35,506,010 122,103,947 62,823,564
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Net income $ 67,218,795 $ 66,527,631 $203,750,796 $113,533,058
========================================================
Basic earnings per share $0.55 $0.55 $1.67 $0.95
========================================================
Diluted earnings per share $0.53 $0.53 $1.60 $0.91
========================================================
Pro forma adjustments:*
Income before income taxes $102,033,641 $325,854,743 $176,356,622
Adjustment for pro forma employee (2,713,499) (267,109) (4,419,564)
compensation and benefits
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Pro forma income before income 99,320,142 325,587,634 $171,937,058
taxes
Pro forma income tax expense 41,288,416 122,747,234 71,962,140
------------------------------------------
Pro forma net income $58,031,726 $202,840,400 $99,974,918
==========================================
Pro forma basic earnings per share $0.48 $1.66 $0.83
==========================================
Pro forma diluted earnings per shares $0.46 $1.60 $0.80
==========================================
Shares used in the computation of 122,234,246 121,421,678
basic earnings per share * 122,192,533 119,774,228
======================================================
Shares used in the computation of 126,795,238 126,672,844
diluted earnings per share * 127,007,447 124,647,369
======================================================
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* On January 12, 2000, Knight Trading Group, Inc. (the "Company") completed
its merger with Arbitrade Holdings LLC ("Arbitrade"). The transaction was
accounted for as a pooling of interests, and, as such, the historical
financial statements have been restated to account for the merger on a
retroactive basis. Pro forma adjustments for compensation and income taxes
have been made to the historical financial statements of Arbitrade to
adjust for partners' compensation paid as distributions of capital and
income taxes, which were previously borne by the individual partners. The
foregoing description of the Arbitrade transaction is a brief summary and
is qualified in its entirety by reference to the Merger Agreement, a copy
of which was filed as an exhibit to the Company's 8-K filed with the SEC on
January 12, 2000. See also the Company's Report on Form 10-K for the year
ended December 31, 1999.
KNIGHT TRADING GROUP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
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JUNE 30, DECEMBER 31,
2000 1999
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(UNAUDITED)
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ASSETS
Cash and cash equivalents $ 383,703,422 $ 304,053,554
Securities owned, at market value 1,428,211,228 910,232,916
Receivable from clearing brokers 317,772,210 215,423,208
Fixed assets and leasehold improvements at cost, 50,201,063 26,820,045
Goodwill, less accumulated amortization 39,083,425 24,899,982
Investments 57,866,551 40,408,554
Other assets 34,740,195 18,447,547
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TOTAL ASSETS $2,311,578,094 $1,540,285,806
==============================
LIABILITIES & STOCKHOLDERS' EQUITY
Liabilities
Securities sold, not yet purchased, at market value $1,354,476,921 $ 720,919,013
Securities sold under agreements to repurchase - 10,409,736
Payable to clearing brokers 128,237,588 159,943,018
Accrued compensation expense 64,749,345 57,234,608
Accrued execution and clearance fees 9,187,248 8,371,056
Accrued payments for order flow 10,021,939 13,978,854
Accounts payable, accrued expenses and other 19,298,383 54,205,482
Income taxes payable 19,513,907 15,992,937
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TOTAL LIABILITIES 1,605,485,331 1,041,054,704
==============================
Stockholders' equity
Class A Common Shares 1,222,740 1,221,215
Additional paid-in capital 303,464,434 300,355,094
Retained earnings 401,405,589 197,654,793
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TOTAL STOCKHOLDERS' EQUITY 706,092,763 499,231,102
==============================
$2,311,578,094 $1,540,285,806
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ==============================
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