Exhibit 3.2
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CONSOLIDATED BALANCE SHEET
(in thousands of dollars)
(unaudited)
September 30, | December 31, | |||||||
2007 | 2006 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 83,937 | $ | 22,919 | ||||
Temporary investments | 34,649 | 36,639 | ||||||
Restricted cash | 1,690 | 2,700 | ||||||
Receivables | 7,576 | 7,889 | ||||||
Daily settlements due from clearing members | 29,312 | 6,951 | ||||||
Clearing members’ cash margin deposits | 8,638 | 2,312 | ||||||
Clearing fund cash deposits | 22,769 | 14,807 | ||||||
Prepaid expenses | 1,191 | 1,690 | ||||||
189,762 | 95,907 | |||||||
Long-term investment | 9,991 | 9,302 | ||||||
Capital assets | 14,082 | 12,319 | ||||||
Future income taxes | 2,499 | 2,523 | ||||||
Other assets | 1,946 | 2,643 | ||||||
$ | 218,280 | $ | 122,694 | |||||
Liabilities and Shareholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable and accruals | $ | 10,350 | $ | 13,057 | ||||
Dividends payable | — | 13,910 | ||||||
Daily settlements due to clearing members | 29,312 | 6,951 | ||||||
Clearing members’ cash margin deposits | 8,638 | 2,312 | ||||||
Clearing fund cash deposits | 22,769 | 14,807 | ||||||
Income taxes payable | 996 | 3,343 | ||||||
Debts due within one year and current portion of obligations under capital leases | 169 | 1,072 | ||||||
72,234 | 55,452 | |||||||
Future income taxes | 1,055 | 812 | ||||||
Accrued employee benefits liability | 941 | 713 | ||||||
Shareholders’ equity: | ||||||||
Capital stock (Note 5) | 139,633 | 49,258 | ||||||
Contributed surplus | 581 | 434 | ||||||
Retained earnings | 6,261 | 16,991 | ||||||
Accumulated other comprehensive loss | (2,425 | ) | (966 | ) | ||||
144,050 | 65,717 | |||||||
Contingencies (Note 6) | ||||||||
Subsequent event (note 8) | $ | 218,280 | $ | 122,694 | ||||
See accompanying Notes to the Interim Consolidated Financial Statements.
MONTRÉAL EXCHANGE INC. THIRD QUARTER REPORT SEPTEMBER 30, 2007 1
CONSOLIDATED STATEMENT OF EARNINGS
(in thousands of dollars, except per share amounts and number of shares)
(unaudited)
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Revenues: | ||||||||||||||||
Transactions | $ | 9,305 | $ | 8,980 | $ | 30,119 | $ | 27,212 | ||||||||
Clearing and option exercise | 3,262 | 3,156 | 10,798 | 9,669 | ||||||||||||
Information systems services | 3,752 | 3,949 | 11,280 | 12,032 | ||||||||||||
Market data | 2,848 | 2,872 | 8,201 | 7,860 | ||||||||||||
Participants | 850 | 808 | 2,666 | 2,409 | ||||||||||||
Other | 123 | 159 | 424 | 533 | ||||||||||||
20,140 | 19,924 | 63,488 | 59,715 | |||||||||||||
Expenses: | ||||||||||||||||
Compensation and benefits (Note 4) | 6,050 | 5,544 | 18,422 | 16,768 | ||||||||||||
Occupancy | 858 | 654 | 2,331 | 1,999 | ||||||||||||
Computer licences and maintenance | 2,764 | 1,565 | 5,743 | 4,838 | ||||||||||||
Amortization of capital assets and other assets | 865 | 1,922 | 2,489 | 5,529 | ||||||||||||
General and administrative | 1,960 | 1,848 | 9,586 | 6,989 | ||||||||||||
Telecommunications | 695 | 659 | 2,066 | 1,867 | ||||||||||||
Public affairs | 391 | 425 | 1,265 | 1,511 | ||||||||||||
Interest on obligations under capital leases and debts due within one year | 4 | 32 | 25 | 135 | ||||||||||||
13,587 | 12,649 | 41,927 | 39,636 | |||||||||||||
Earnings before investment income, other items and income taxes | 6,553 | 7,275 | 21,561 | 20,079 | ||||||||||||
Investment income | 1,773 | 732 | 2,991 | 1,854 | ||||||||||||
Equity in results of a company subject to significant influence | 1,089 | 112 | 2,148 | 1,259 | ||||||||||||
Gain on dilution and (loss) from the realization of the cumulative translation adjustment | — | (231 | ) | — | (231 | ) | ||||||||||
Earnings before income taxes | 9,415 | 7,888 | 26,700 | 22,961 | ||||||||||||
Income taxes | ||||||||||||||||
Current | 2,590 | 1,992 | 6,831 | 5,603 | ||||||||||||
Future | (99 | ) | (33 | ) | 454 | 33 | ||||||||||
$ | 2,491 | $ | 1,959 | $ | 7,285 | $ | 5,636 | |||||||||
Net earnings | $ | 6,924 | $ | 5,929 | $ | 19,415 | $ | 17,325 | ||||||||
Basic earnings per share | $ | 0.23 | $ | 0.23 | $ | 0.65 | $ | 0.67 | ||||||||
Diluted earnings per share | $ | 0.23 | $ | 0.22 | $ | 0.65 | $ | 0.64 | ||||||||
Weighted average number of shares outstanding — basic | 30,691,022 | 26,208,123 | 29,806,416 | 25,978,911 | ||||||||||||
Weighted average number of shares outstanding — diluted | 30,785,829 | 27,357,696 | 30,104,050 | 27,128,484 | ||||||||||||
See accompanying Notes to the Interim Consolidated Financial Statements.
MONTRÉAL EXCHANGE INC. THIRD QUARTER REPORT SEPTEMBER 30, 2007 2
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(in thousands of dollars)
(unaudited)
Three months ended | Nine months ended | |||||||
September 30, | September 30, | |||||||
2007 | 2007 | |||||||
Net earnings | $ | 6,924 | $ | 19,415 | ||||
Other comprehensive income (loss) | ||||||||
Unrealized loss on translating financial statements of a self-sustaining foreign operation | (637 | ) | (1,459 | ) | ||||
Comprehensive income | $ | 6,287 | $ | 17,956 | ||||
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
(in thousands of dollars)
(unaudited)
June 30, | June 30, | |||||||
2007 | 2006 | |||||||
Common shares at beginning of period | $ | 49,258 | $ | 45,405 | ||||
Issuance of common shares | ||||||||
New issuance of common shares (Note 5) | 90,866 | — | ||||||
Transaction fees related to common shares issuance, net of income taxes of $391 | (1,199 | ) | — | |||||
Repurchase of shares (Note 5) | (1,768 | ) | — | |||||
Stock Option Plan (Note 5) | 217 | 4,026 | ||||||
Variation of shares held in guarantee (Note 5) | 2,259 | (347 | ) | |||||
Common shares at end of period | 139,633 | 49,084 | ||||||
Contributed surplus at beginning of period | 434 | 825 | ||||||
Stock option expense | 170 | 76 | ||||||
Employee share purchase plan expense | 68 | 57 | ||||||
Stock options and share purchase plan reimbursed | (91 | ) | (524 | ) | ||||
Contributed surplus at end of period | 581 | 434 | ||||||
Retained earnings at beginning of period | 16,991 | 16,532 | ||||||
Net earnings | 19,415 | 17,325 | ||||||
Impact of initial adoption of new accounting standard (Note 3) | 571 | — | ||||||
Dividend | (20,127 | ) | (10,462 | ) | ||||
Premium paid on shares repurchased (Note 5) | (10,589 | ) | — | |||||
Retained earnings, end of period | 6,261 | 23,395 | ||||||
Accumulated other comprehensive income (loss), beginning of period | (966 | ) | (1,790 | ) | ||||
Unrealized gain or loss on translating financial statements of a self-sustaining foreign operation | (1,459 | ) | (150 | ) | ||||
Accumulated other comprehensive income (loss), end of period | (2,425 | ) | (1,940 | ) | ||||
Shareholders’ equity, end of period | $ | 144,050 | $ | 70,973 | ||||
See accompanying Notes to the Interim Consolidated Financial Statements.
MONTRÉAL EXCHANGE INC. THIRD QUARTER REPORT SEPTEMBER 30, 2007 3
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands of dollars)
(unaudited)
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Cash flows from (used in) operating activities: | ||||||||||||||||
Net earnings | $ | 6,924 | $ | 5,929 | $ | 19,415 | $ | 17,325 | ||||||||
Adjustments for: | ||||||||||||||||
Amortization of capital assets and other assets | 865 | 1,922 | 2,489 | 5,529 | ||||||||||||
Equity in results of a company subject to significant influence | (1,089 | ) | (112 | ) | (2,148 | ) | (1,259 | ) | ||||||||
(Gain) on dilution and loss from the realization of the cumulative translation adjustment | — | 231 | — | 231 | ||||||||||||
Amortization of premium on investments | (131 | ) | (1 | ) | (225 | ) | 35 | |||||||||
Interest income on discount investments | (135 | ) | (122 | ) | (320 | ) | (247 | ) | ||||||||
Future income taxes | (99 | ) | (33 | ) | 63 | 33 | ||||||||||
Cost of stock option plan and employee share purchase plan | 122 | 19 | 238 | 133 | ||||||||||||
Change in fair value of derivative financial instruments | (89 | ) | — | 915 | — | |||||||||||
Net change in non-cash operating assets and liabilities: | ||||||||||||||||
Receivables | 1,034 | 1,486 | 313 | (1,143 | ) | |||||||||||
Prepaid expenses | 1,196 | 741 | 499 | 340 | ||||||||||||
Accounts payable, accruals and income taxes payable | 641 | 1,450 | (5,054 | ) | (841 | ) | ||||||||||
Increase in the accrued employee benefits liability | 38 | 86 | 228 | 198 | ||||||||||||
9,277 | 11,596 | 16,413 | 20,334 | |||||||||||||
Cash flows from (used in) investing activities: | ||||||||||||||||
Purchase of capital assets | (1,741 | ) | (869 | ) | (3,954 | ) | (3,717 | ) | ||||||||
Decrease (increase) in other assets | 48 | (362 | ) | 373 | (1,219 | ) | ||||||||||
Purchase of investments | (156,008 | ) | (68,187 | ) | (683,523 | ) | (206,036 | ) | ||||||||
Sale of investments | 157,753 | 61,012 | 685,944 | 202,445 | ||||||||||||
Distribution from a company subject to significant influence | — | 1,049 | — | 1,049 | ||||||||||||
52 | (7,357 | ) | (1,160 | ) | (7,478 | ) | ||||||||||
Cash flows from (used in) financing activities: | ||||||||||||||||
Restricted cash | 44 | (201 | ) | 1,010 | — | |||||||||||
Decrease in obligations under capital leases and debts | (172 | ) | (861 | ) | (903 | ) | (2,681 | ) | ||||||||
Share issuance | 89 | 803 | 92,052 | 3,155 | ||||||||||||
Repurchase of shares | (9,124 | ) | — | (12,357 | ) | — | ||||||||||
Dividends | (10,834 | ) | (9,273 | ) | (34,037 | ) | (23,183 | ) | ||||||||
(19,997 | ) | (9,532 | ) | 45,765 | (22,709 | ) | ||||||||||
Net increase (decrease) in cash and cash equivalents | (10,668 | ) | (5,293 | ) | 61,018 | (9,853 | ) | |||||||||
Cash and cash equivalents, beginning of period | 94,605 | 21,363 | 22,919 | 25,923 | ||||||||||||
Cash and cash equivalents, end of period | 83,937 | 16,070 | 83,937 | 16,070 | ||||||||||||
Temporary investments, end of period | 34,649 | — | 34,649 | — | ||||||||||||
Cash and cash equivalents, and temporary investments, end of period | $ | 118,586 | $ | 16,070 | $ | 118,586 | $ | 16,070 | ||||||||
Supplemental cash flow information: | ||||||||||||||||
Interest paid | $ | 4 | $ | 32 | $ | 25 | $ | 135 | ||||||||
Income taxes paid | 2,459 | 874 | 9,145 | 6,504 | ||||||||||||
See accompanying Notes to the Interim Consolidated Financial Statements.
MONTRÉAL EXCHANGE INC. THIRD QUARTER REPORT SEPTEMBER 30, 2007 4
Notes to the Interim Consolidated Financial Statements
For the nine months ended September 30, 2007
(in thousand of dollars, except per share amounts and number of shares)
(unaudited)
On March 27, 2007, the MX listed its shares on the Toronto Stock Exchange (“TSX”) through a non-offering listing. The MX’s shares are now publicly traded under the symbol MXX.
1. | Presentation |
These unaudited interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (GAAP), using the same accounting policies as outlined in Note 1 to the audited consolidated financial statements for the year ended December 31, 2006, with the exception of the changes in accounting policies presented in Note 3 below. The MX’s unaudited interim consolidated financial statements do not include all disclosures required by Canadian GAAP for annual financial statements and accordingly, should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2006 which are included in the 2006 Annual Report.
2. | Joint venture |
On March 13, 2007, the MX concluded an agreement with NYMEX Holdings, Inc. (« NYMEX ») to create the Canadian Resources Exchange Inc. (« CAREX »), a joint venture over which the two partners exercise joint control and share equally in the profits. CAREX will provide the Canadian market with trading and clearing services for over-the-counter and on-exchange products relating to energy (including natural gas, heavy crude oil and electricity), metals and soft commodities. Under the terms of this agreement, on March 23, 2007, the MX and NYMEX each invested $2,000 in the new joint venture in order to fund initial working capital requirements. The MX uses the proportionate consolidation method to account for its 50% interest in the assets, liabilities, revenue, expenses and cash flows of the joint venture.
3. | Changes in accounting policies |
On January 1st, 2007, the MX adopted the recommendations of the Canadian Institute of Chartered Accountants (“CICA”) Handbook: Section 1530,Comprehensive Income, Section 3251,Equity, Section 3855,Financial Instruments — Recognition and Measurement and Section 3861,Financial Instruments — Disclosure and Presentation. These new Handbook Sections, which apply to fiscal years beginning on or after October 1, 2006, provide comprehensive requirements for the recognition and measurement of financial instruments, as well as standards on when and how hedge accounting may be applied. Section 1530 also establishes standards for reporting and displaying comprehensive income. Comprehensive income is defined as the change in equity from transactions and other events from non-owner sources. Other comprehensive income refers to items recognized in comprehensive income, but that are excluded from net income calculated in accordance with generally accepted accounting principles.
Under Section 3855, all financial instruments are classified into one of the following five categories:held-for-trading,held-to-maturity investments, loans and receivables,available-for-sale financial assets or other financial liabilities. All financial instruments, including derivatives, are included in the consolidated balance sheet and are measured at fair value with the exception of loans and receivables, investmentsheld-to-maturity and other financial liabilities, which are measured at amortized cost. Subsequent measurement and recognition of changes in fair value of financial instruments depend on their initial classification.Held-for-trading financial investments are measured at fair value and all gains and losses are included in net income in the period in which they arise.Available-for-sale financial instruments are measured at fair value with revaluation gains and losses included in other comprehensive income until the asset is removed from the balance sheet.
As a result of the adoption of these new standards, the MX has classified its cash and cash equivalents, and temporary investments asheld-for-trading. Receivables are classified as loans and receivables. The MX’s long-term investment consists of an equity investment and is accounted for under the equity method and thus excluded from the recommendations of this standard. Accounts payable and accruals and short-term debt, including interest payable, are classified as other liabilities, all of which are measured at amortized cost. The MX has measured all derivatives at fair value.
The adoption of these new standards resulted in an increase in retained earnings as at January 1, 2007 of $571, net of income taxes, resulting mainly from the unrealized appreciation of temporary investments. Furthermore, the unrealized loss on translating financial statements of a self-sustaining foreign operation as at December 31, 2006 of $966, previously presented under Cumulative translation adjustment, has been reclassified to accumulated other comprehensive loss in the consolidated balance sheet.
4. | Employee future benefits |
For the quarter ended September 30, 2007, the total retirement benefit cost was $96 ($86 in 2006). For the first nine months of 2007, this cost was $286 ($256 in 2006).
5. | Capital stock |
On February 13, 2007, the Board of Directors of the MX (the « Board ») approved athree-for-one stock split of the MX’s common shares, effective March 15, 2007. All numbers of shares below are presented on a split basis.
MONTRÉAL EXCHANGE INC. THIRD QUARTER REPORT SEPTEMBER 30, 2007 5
September 30, | December 31, | |||||||
2007 | 2006 | |||||||
Authorized: | ||||||||
An unlimited number of shares, without face value: | ||||||||
Common, voting and participating Preferred, non-voting, dividend to be determined upon issuance | ||||||||
Total issued, including in guarantee: | ||||||||
30,655,683 common shares (27,819,465 as at December 31, 2006) | $ | 139,796 | $ | 51,589 | ||||
Held in guarantee for loans under employee share purchase plan: | ||||||||
48 528 common shares (256,173 as at December 31, 2006) | (163 | ) | (800 | ) | ||||
Held in guarantee for loans under stock option plan: | ||||||||
nil common shares (894,954 as at December 31, 2006) | — | (1,531 | ) | |||||
Issued and paid: | ||||||||
30,607,155 common shares (26,668,338 as at December 31, 2006) | $ | 139,633 | $ | 49,258 | ||||
On March 13, 2007, the MX and NYMEX entered into an agreement whereby NYMEX purchased, on March 23, 2007, 3,097,718 newly-issued MX common shares for $291/3 per common share totalling net proceeds of $89,667 (net of transaction fees).
On March 13, 2007, the MX concluded a second agreement with NYMEX whereby the MX granted NYMEX a pre-emptive right allowing it, subject to regulatory approval and certain conditions, to maintain its proportionate ownership in MX shares should there be an issuance of MX shares.
MX used a portion of the proceeds from the NYMEX Investment to fund the payment of a special dividend of $0.331/3 per common share of an aggregate dividend amount of $9,293. This dividend was paid on April 12, 2007 to shareholders of record on March 22, 2007. In addition to general corporate purposes, the proceeds will also be used under a normal course issuer bid to purchase in the normal course of its activities, which started on March 23, 2007 and ending on March 22, 2008, up to 2,412,143 MX common shares. The purchases will be made at market prices through the facilities of TSX in accordance with its rules and policies. The common shares thereby purchased will be cancelled. Under the normal course issuer bid, during the third quarter of 2007, MX repurchased and cancelled 306,500 common shares (387,500 for the first nine months of 2007) at an average price of $29.77 ($31.89 for the first nine months of 2007) for a total consideration of $9,124 ($12,357 for the first nine months of 2007). Premiums paid above the average carrying value of the common shares were charged to retained earnings. The common share capital was reduced by $1,399 ($1,768 for the first nine months of 2007) and retained earnings by $7,725 ($10,589 for the first nine months of 2007).
a) | Employee Share Purchase Plan |
On February 13, 2007, the Board agreed to terminate the existing employee share purchase plan and approved the creation of a new employee share purchase plan. Under the terms of this plan, the eligible employees may contribute up to 10% of their annual base salary. The MX contributes an amount equal to 50% of the eligible employee’s contribution, up to a maximum of $2.5 per year. This plan took effect on March 23, 2007, the date that the receipt in respect to the final non-offering prospectus was issued by the securities regulatory authorities, and employee and employer contributions started in the second quarter of 2007.
During the third quarter of 2007, the compensation cost related to the employee share purchase plan totalled $64 ($105 for the first nine months of 2007).
b) | Stock Option Plan |
On February 13, 2007, the Board agreed to terminate the existing stock option plan, but to maintain the options still outstanding and unexercised.
At the same time, the Board approved the creation of a new stock option plan for officers and key employees of the MX and its wholly-owned subsidiary, CDCC. This plan, for a total duration varying between 7 to 10 years, foresees a total reserve of 1,800,000 common shares. A block of fifty percent (50%) of options granted will be vested upon achieving performance criteria, as determined annually, while the second block of 50% is only subject to the passage of time. The stock options will be vested evenly over a four-year period. The exercise price of a stock option shall not be less than the weighted average price of the shares on the TSX during the five trading days immediately preceding the day on which the stock option was granted. The Board has full latitude on all aspects of the plan.
The following table summarizes information on outstanding as at September 30, 2007:
MONTRÉAL EXCHANGE INC. THIRD QUARTER REPORT SEPTEMBER 30, 2007 6
Nine months ended | Twelve months ended | |||||||||||||||
September 30, 2007 | December 31, 2006 | |||||||||||||||
Number of | Weighted average | Number of | Weighted average | |||||||||||||
options | exercise price | options | exercise price | |||||||||||||
Options outstanding, beginning of period | 129,000 | $ | 1.72 | 2,505,000 | $ | 1.70 | ||||||||||
Granted | 128,880 | 41.59 | — | — | ||||||||||||
Cancelled | (16,680 | ) | 42.42 | — | — | |||||||||||
Exercised | (126,000 | ) | 1.72 | (2,376,000 | ) | 1.69 | ||||||||||
Options, end of period | 115,200 | $ | 40.43 | 129,000 | $ | 1.72 | ||||||||||
During the quarter, the MX recorded a compensation cost of $100 (nil in 2006) related to the stock option plans and for the first nine months of 2007 a cost of $170 ($76 in 2006). The following weighted average assumptions were used:
2007 | ||||
Weighted average fair value of options at grant date | $ | 8.53 | ||
Risk-free interest rate | 4.62% | |||
Dividend yield | 2.00% | |||
Expected volatility | 25.00% | |||
Expected life | 3.66 years |
As at September 30, 2007, 3,000 of the outstanding options were exercisable at the weighted average price of $1.72.
6. | Contingencies |
The MX is a party to legal actions for damages in connection with the closing of the trading floor. During the quarter ended September 30, 2007 and for the first nine months of 2007, no legal actions have been settled. As at September 30, 2007, there was a total of $27,269 remaining in unsettled legal actions against which the MX defended itself vigorously. A court decision is expected in the coming months. Even though the court decision cannot be determined with certainty as at September 30, 2007, management of the MX believes that the decision will not have a material adverse impact on the MX’s operating results or financial position.
7. | Segmented information |
The MX operates in two industry segments. The commercial activities of these segments are undertaken in Canada and are defined as follows:
Exchange (Bourse):
This segment acts as the only standardized financial derivatives exchange in Canada, providing a complete range of equity, index and interest rate derivatives.
Clearing house (Canadian Derivatives Clearing Corporation): This segment acts as a clearing house and guarantor for derivative instruments traded at the MX and certain other derivative instruments from the over-the-counter market (OTC).
These segments are managed and evaluated separately based on revenues and net earnings.
Three months ended September 30 | ||||||||||||||||||||||||
Bourse | CDCC | Consolidated | ||||||||||||||||||||||
2007 | 2006 | 2007 | 2006 | 2007 | 2006 | |||||||||||||||||||
Revenues from exchange and clearing | $ | 13,059 | $ | 12,754 | $ | 3,329 | $ | 3,221 | $ | 16,388 | $ | 15,975 | ||||||||||||
Revenues from information systems services | 3,752 | 3,949 | — | — | 3,752 | 3,949 | ||||||||||||||||||
Investment income | 1,386 | 429 | 387 | 303 | 1,773 | 732 | ||||||||||||||||||
Amortization of capital assets and other assets | 837 | 1,899 | 28 | 23 | 865 | 1,922 | ||||||||||||||||||
Equity in results of company subject to significant influence | 1,089 | 112 | — | — | 1,089 | 112 | ||||||||||||||||||
Net earnings | 5,087 | 4,234 | 1,837 | 1,695 | 6,924 | 5,929 | ||||||||||||||||||
Purchase of capital assets | 1,733 | 1,207 | 8 | 24 | 1,741 | 1,231 | ||||||||||||||||||
Assets | 141,852 | 71,139 | 76,428 | 57,587 | 218,280 | 128,726 |
MONTRÉAL EXCHANGE INC. THIRD QUARTER REPORT SEPTEMBER 30, 2007 7
Nine months ended September 30 | ||||||||||||||||||||||||
Bourse | CDCC | Consolidated | ||||||||||||||||||||||
2007 | 2006 | 2007 | 2006 | 2007 | 2006 | |||||||||||||||||||
Revenues from exchange and clearing | $ | 41,215 | $ | 37,822 | $ | 10,993 | $ | 9,861 | $ | 52,208 | $ | 47,683 | ||||||||||||
Revenues from information systems services | 11,280 | 12,032 | — | — | 11,280 | 12,032 | ||||||||||||||||||
Investment income | 2,367 | 1,097 | 624 | 757 | 2,991 | 1,854 | ||||||||||||||||||
Amortization of capital assets and other assets | 2,410 | 5,462 | 79 | 67 | 2,489 | 5,529 | ||||||||||||||||||
Equity in results of company subject to significant influence | 2,148 | 1,259 | — | — | 2,148 | 1,259 | ||||||||||||||||||
Net earnings | 13,839 | 12,191 | 5,576 | 5,134 | 19,415 | 17,325 | ||||||||||||||||||
Purchase of capital assets | 3,876 | 4,887 | 78 | 49 | 3,954 | 4,936 | ||||||||||||||||||
Assets | 141,852 | 71,139 | 76,428 | 57,587 | 218,280 | 128,726 |
Regulatory Division:
Pursuant to a decision rendered by the AMF on November 24, 2000, the MX created a separate regulatory division, responsible for approved participants and market regulation and operating on a cost recovery basis.
For the third quarter ended September 30, 2007, the Regulatory Division generated gross revenues of $739 ($754 in 2006) and incurred direct expenses of $369 ($322 in 2006) and indirect expenses of $248 ($231 in 2006). To date, revenues total $2,529 ($2,436 in 2006), direct expenses total $1,132 ($1,026 in 2006) and indirect expenses total $786 ($614 in 2006).The surplus of the Regulatory Division at September 30, 2007 totals $1,512 ($1,728 at December 31, 2006) and is presented in accounts payable and accruals and an equivalent amount is included in restricted cash.
8. | Subsequent event |
On October 2, 2007, MX announced that it is engaged in negotiations aimed at increasing its ownership position in BOX from 31.4% to a maximum of 53.2%. The current intention is to acquire the entire 21.9% partnership interest in BOX held directly and indirectly by the Boston Stock Exchange (“BSE”). This acquisition is subject to the prior approval of the United States Securities and Exchange Commission (“SEC”) as well as customary closing conditions. MX had previously intended to increase its participation in BOX to 44.7%, following an agreement to purchase a 13.3% stake signed in August 2006 with the BSE. We intend to finance this transaction with our existing cash resources.
9. | Comparative figures |
Certain comparative figures have been reclassified to conform to the current period’s presentation.
MONTRÉAL EXCHANGE INC. THIRD QUARTER REPORT SEPTEMBER 30, 2007 8
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