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Filed by Board of Trade of the City of Chicago (CBOT)
Subject Company - Board of Trade of the City of Chicago
Pursuant to Rule 425 under the Securities Act of 1933
File No. 132-01854
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The following presentation was delivered to CBOT members and membership interest
jolders on August 16, 2000
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Chicago Board of Trade
[LOGO APPEARS HERE]
Floor Meeting
August 16, 2000
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Agenda
SPEAKER TOPIC
.David P. Brennan
Chairman of the Board
.Dennis A. Dutterer Exchange Operations Update
Interim President & CEO
.Glen M. Johnson Exchange Financial Update
Senior Vice President & CFO
.Charles P. Carey Finance Committee Update
First Vice Chairman of the Board
.James P. Amaral A/C/E Update
Senior Vice President & CIO
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Chicago Board of Trade
[LOGO APPEARS HERE]
Page 3
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CBOT Average Daily Volume
[GRAPH APPEARS HERE]
Jan-99 1,070,987
Feb-99 1,347,332
Mar-99 1,017,435
Apr-99 889,563
May-99 1,227,079
Jun-99 1,082,018
Jul-99 1,020,424
Aug-99 1,130,159
Sep-99 874,564
Oct-99 899,090
Nov-99 943,729
Dec-99 633,560
Jan-00 1,141,041
Feb-00 1,268,451
Mar-00 892,121
Apr-00 1,008,165
May-00 1,055,514
Jun-00 889,654
Jul-00 727,965
Page 4
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Finance Committee Actions
Annual Revenues
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1 - Dues $9 Million
2 - Exchange Fee Increase $20 Million
(200,000,000 Contracts)
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Daily Volume Requirements
<TABLE>
<S> <C>
Annual Cash Requirements $200,000,000
Revenue Sources:
Quotation Fees $(56,000,000)
Building Revenue $(24,000,000)
Service and Other Revenue $(20,000,000)
Dues $ (9,000,000)
Amount Remaining $ 91,000,000
Amount Required per Day $ 358,268
Average Daily Volume Required 895,669
</TABLE>
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CBOT Debt
As of August 16, 2000
<TABLE>
<S> <C>
Bank One Credit Agreement $ 7.3
Privately Placed Notes 75.0
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$ 82.3
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</TABLE>
In Millions
Page 7
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CBOT Fee Changes
Dues
Full $300 Per Month
AM/GIM $200 Per Month
IDEM/COM $100 Per Month
Members Fees
$.015 per side to $.05 per side
Delegate Fees
$.10/$.15 per side to $.20 per side
Cap Raised from $10,000 to $25,000
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CBOT Electronic Trading Fees
on CBOT/Eurex Alliance
(Round Turn Basis)
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Agriculture,
Category Financial Metal, Indexes
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Member $0.50 $0.50
Delegate $0.90 $1.50
Nonmember $1.60 $3.00
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Chicago Board of Trade
[LOGO APPEARS HERE]
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1. RATIONALE
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[_] Supports CBT strategy: we can't do it alone
[_] Distribution/volume
[_] Global
[_] Market acceptance
PRIORITIZED: Time to Market
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2. HISTORY
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6/99 - Membership Vote (right arrow) Alliance
10/99 - CBOT & Eurex (right arrow) Alliance Agreement
1/00 - SW Development Agreement
Time to market/gaps/4.0
- Operations outsource to DBS
- Volume assumptions/sizing
3/00 - Management turnover/losses
5/00 - Market Supervision outsource to Eurex
7/00 - Contracts with DBS & Eurex
8/00 - Simulation
8/00 - Launch on time, on budget with 86 members
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3. SYSTEM OVERVIEW
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.Roles:
- DBS - Operations (Net, Hosts, CS)
- Eurex - Market Supervision (w/CBT Staff)
- BOTCC - Clearing Interface
- CBT - Interfaces (Price Reporting, Accounting, Surveillance)
.Internet Access:
-Through PCMs
-e-openoutcry.com
-cbt.direct
.Batch Window
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4. MOVING AHEAD
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[_] Flexibility to Add
-Contracts
-Users
[_] Future Releases
-1.1
-2.0
-1 major release/year
-Minor/maintenance releases
-New products
[_] Project A
-Decommissoned
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5. COSTS
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[_] Inaccurate $'s #'s in press
[_] Components:
A. Project $50M -On time, under budget
B. Operations $1.9M/mo. -Budgeted & offset internally
-Host
-Net
-CS
C. Mrkt Supv $200K/mo. -Offset internally
D. Enhancements
Release 4.0 $6.7M
Release 4.2 $9.1M
Net of analysis: one time and under budget
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Chicago Board of Trade
[CHICAGO BOARD OF TRADE LOGO]
Page 16
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The CBOT urges its members and membership interest holders to read the
Registration Statement(s) on Form S-4, including the proxy statement/prospectus
contained within the Registraton Statement(s), regarding the CBOT restructuring
referred to herein or in connection herewith, when it becomes available, as well
as the other documents that the CBOT has filed or will file with the Securities
and Exchange Commission, because they contain or will contain important
information. CBOT members and membership interest holders may obtain a free copy
of the proxy statement/prospectus, when it becomes available, and other
documents filed by the CBOT at the Commission's web site at www.sec.gov, or from
the CBOT by directing such request in writing or by telephone to: Board of Trade
of the City of Chicago, 141 W. Jackson Blvd., Chicago, Illinois 60604-2994,
Attention: Office of the Secretary, Telephone: (312) 435-3605, Facsimile:
(312) 347-3827. The communication shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of securities in
any state in which offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such state. No
offering of securities shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as amended.
* * * *
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the following remarks were made CBOT members and member ship interest holders on
August 16, 2000.
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FINAL VERSION - PREPARATION MATERIALS
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AUGUST 16, 2000
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CBOT FLOOR MEETING
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REMARKS - GLEN JOHNSON
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The most important impact on the finances is volume and particularly, the
recent shortfall. I told the directors at the beginning of the year that we
needed to maintain, on average, a 1 million contracts per day average. That
level was to just get by, it did not do anything to improve our overall
financial health. We were on target through the end of June, Although in the
month of June we averaged fewer than 900,000. Then came July and we averaged
less than 700,000 for the month. As of Monday, August was averaging fewer than
700,000. Our average for the year through last Monday was 970,000 per day but
the trend is evident.
The financial statements of the Board of Trade are complicated to follow,
primarily because some of the annual cash requirements are in the Board of Trade
and some are in Ceres. On top of that, some costs, for accounting purposes, are
treated as expenses and some are treated as capital expenditures. At the end of
the day however, the question is how much money is required to operate
everything regardless of its categorization on the financial statements? The
answer is about $200 million. This includes debt service, the cost of the
building, electronic trading, open outcry, order routing...everything. As this
slide shows, there are revenue sources other than the volume related exchange
fees that can be used to offset this amount. The includes revenue from quotation
fees, rent from the building, revenue from services like telephone, booth space,
member services.
And, with the new fees in place we are still at a burn rate, if you will,
of just under 900,000 contracts per day. With our current trend, we still may be
short, let alone, have the ability to improve the overall financial health. The
work is not done. Further reductions will be required and other fees may have to
be looked at.
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As of today, the debt on the Board of Trade stands at $82.3 million; $7.3
owed to Bank One and due by May 1, 2001. $75 million is owed to privately placed
note holders. The first of seven annual payments of $10.7 million is due next
March. It is our intent to continue paying down the Bank One debt on a monthly
basis so we do not faced with the balloon payment in May. Remember that the new
trading facility cost $167 million, we put $62 million of equity into the
project and borrowed $105 million. Since the floor opened in 1997, we have paid
off $22.7 million on that debt.
Seeing this trend, and desiring to improve our financial health, the
Finance Committee and The Board took some actions. Dues were instituted on June
1st. The membership is going to vote, as required by rule, on the increase in
exchange fees and the cap on individual trades on August 30th.
The Board also instituted new fees for the Alliance system that greatly
simplifies the fee structure. No longer will electronic trades be charged by CTI
code. Rather, they will be billed by membership category, either member,
delegate or customer.
I would like to turn this presentation over to Charlie Carey who, as First
Vice Chairman, serves as Chairman of the Finance Committee.
* * * *
The CBOT urges its members and membership interest holders to read the
Registration Statement(s) on Form S-4, including the proxy statement/prospectus
contained within the Registration Statement(s), regarding the CBOT restructuring
referred to herein or in connection herewith, when it becomes available, as well
as the other documents that the CBOT has filed or will file with the Securities
and Exchange Commission, because they contain or will contain important
information. CBOT members and membership interest holders may obtain a free copy
of the proxy statement/prospectus, when it becomes available, and other
documents filed by the CBOT at the Commission's web site at www.sec.gov, or from
the CBOT by directing such request in writing or by telephone to: Board of Trade
of the City of Chicago, 141 W. Jackson Blvd., Chicago, Illinois 60604-2994,
Attention: Office of the Secretary, Telephone: (312) 435-3605, Facsimile: (312)
347-3827. This communication shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of securities in
any state in which offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such state. No
offering of securities shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as amended.
