CHICAGO, July 31, 2014 /PRNewswire/ -- CME Group Inc.
(NASDAQ: CME) today reported revenues of $732 million and operating income of $412 million for the second quarter of 2014. Net
income attributable to CME Group was $264
million and diluted earnings per share were $0.79. Excluding the items noted in the
reconciliation, adjusted earnings per share would have been
$0.771.
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"Historically low levels of volatility impacted the overall
market during the second quarter, although the effect on CME was
lessened by the diversity of our product lines," said CME Group
Executive Chairman and President Terry
Duffy. "Though total volumes were nearly flat year-to-
date through the second quarter, our interest rate complex was up 7
percent, a strong outperformance compared with the rest of the
market. We continue to see positive economic signs that could
potentially lead to a more traditional Federal Reserve monetary
policy. This would affect the Fed Funds rate and likely
accelerate market activity as firms shift back into growth
mode. Already we are nearing historic levels of open interest
as we approach 100 million contracts, up 18 percent
year-to-date."
"We continue to strengthen our global footprint with a record 24
percent of our electronic volume coming from outside the United States during the second quarter,
mainly driven by activity coming from European customers," said CME
Group Chief Executive Officer Phupinder Gill. "Also, we
announced plans to acquire Trayport and FENICS, pending regulatory
approval. Trayport will give us deepened access to commercial
customers in the rapidly evolving European energy markets, while
FENICS' strong client base, particularly in Asia, will further complement our foreign
exchange (FX) product distribution. In addition, we are
encouraged that trading volumes in our recently launched European
exchange are beginning to gain early traction."
Second-quarter 2014 average daily volume was 12.6 million
contracts, down 12 percent from second-quarter 2013 and impacted by
low volatility across all asset classes. Clearing and
transaction fee revenues were $609
million, also down 12 percent compared with the strong
second-quarter 2013, when market participants reacted to the
Federal Reserve chairman's comments about potential tapering of
quantitative easing. Second-quarter 2014 total average rate
per contract was 74.9 cents, down
from 76.7 cents in first-quarter
2014, driven primarily by a higher proportion of total volume
coming from interest rate products, which have lower average
fees.
As of June 30, 2014, the company
had $1.1 billion of cash and
marketable securities and $2.1
billion of long-term debt.
1 A reconciliation of the non-GAAP financial
results mentioned to the respective GAAP figures can be found
within the Reconciliation of GAAP to Non-GAAP Measures chart at the
end of the financial statements.
CME Group will hold a conference call to discuss
second-quarter 2014 results at 8:30 a.m.
Eastern Time today. A live audio Webcast of the call will be
available on the Investor Relations section of CME Group's Web site
at www.cmegroup.com. An archived recording will be available for up
to two months after the call.
As the world's leading and most diverse derivatives marketplace,
CME Group (www.cmegroup.com) is where the world comes to manage
risk. CME Group exchanges offer the widest range of global
benchmark products across all major asset classes, including
futures and options based on interest rates, equity indexes,
foreign exchange, energy, agricultural commodities, metals, weather
and real estate. CME Group brings buyers and sellers
together through its CME Globex® electronic trading
platform and its trading facilities in New York and Chicago. CME Group also
operates CME Clearing, one of the world's leading central
counterparty clearing providers, which offers clearing and
settlement services across asset classes for exchange-traded
contracts and over-the-counter derivatives transactions. These
products and services ensure that businesses everywhere can
substantially mitigate counterparty credit risk.
CME Group is a trademark of CME Group Inc. The Globe Logo, CME,
Globex and Chicago Mercantile Exchange are trademarks of Chicago
Mercantile Exchange Inc. CBOT and the Chicago Board of Trade are trademarks of the
Board of Trade of the City of
Chicago, Inc. NYMEX, New York Mercantile Exchange and
ClearPort are registered trademarks of New York Mercantile
Exchange, Inc. COMEX is a trademark of Commodity Exchange,
Inc. KCBOT, KCBT and Kansas
City Board of Trade are trademarks of The Board of Trade of
Kansas City, Missouri, Inc.
All other trademarks are the property of their respective owners.
Further information about CME Group (NASDAQ: CME) and its products
can be found at www.cmegroup.com.
Statements in this press release that are not historical
facts are forward-looking statements. These statements are not
guarantees of future performance and involve risks, uncertainties
and assumptions that are difficult to predict. Therefore, actual
outcomes and results may differ materially from what is expressed
or implied in any forward-looking statements. We want to caution
you not to place undue reliance on any forward-looking statements.
We undertake no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events
or otherwise. Among the factors that might affect our performance
are increasing competition by foreign and domestic entities,
including increased competition from new entrants into our markets
and consolidation of existing entities; our ability to keep pace
with rapid technological developments, including our ability to
complete the development, implementation and maintenance of the
enhanced functionality required by our customers while maintaining
reliability and ensuring that such technology is not vulnerable to
security risks; our ability to continue introducing competitive new
products and services on a timely, cost-effective basis, including
through our electronic trading capabilities, and our ability to
maintain the competitiveness of our existing products and services,
including our ability to provide effective services to the swaps
market; our ability to adjust our fixed costs and expenses if our
revenues decline; our ability to maintain existing customers,
develop strategic relationships and attract new customers; our
ability to expand and offer our products outside the United States; changes in domestic and
non-U.S. regulations, including the impact of any changes in
domestic and foreign laws or government policy with respect to our
industry, such as any changes to regulations and policies that
require increased financial and operational resources from us or
our customers; the costs associated with protecting our
intellectual property rights and our ability to operate our
business without violating the intellectual property rights of
others; decreases in revenue from our market data as a result of
decreased demand; changes in our rate per contract due to shifts in
the mix of the products traded, the trading venue and the mix of
customers (whether the customer receives member or non-member fees
or participates in one of our various incentive programs) and the
impact of our tiered pricing structure; the ability of our
financial safeguards package to adequately protect us from the
credit risks of clearing members; the ability of our compliance and
risk management methods to effectively monitor and manage our
risks, including our ability to prevent errors and misconduct and
protect our infrastructure against security breaches and
misappropriation of our intellectual property assets; changes in
price levels and volatility in the derivatives markets and in
underlying equity, foreign exchange, interest rate and commodities
markets; economic, political and market conditions, including the
volatility of the capital and credit markets and the impact of
economic conditions on the trading activity of our current and
potential customers; our ability to accommodate increases in
contract volume and order transaction traffic and to implement
enhancements without failure or degradation of the performance of
our trading and clearing systems; our ability to execute our growth
strategy and maintain our growth effectively; our ability to manage
the risks and control the costs associated with our strategy for
acquisitions, investments and alliances; our ability to
continue to generate funds and/or manage our indebtedness to allow
us to continue to invest in our business; industry and customer
consolidation; decreases in trading and clearing activity; the
imposition of a transaction tax or user fee on futures and options
on futures transactions and/or repeal of the 60/40 tax treatment of
such transactions; the unfavorable resolution of material legal
proceedings; and the seasonality of the futures business. For
a detailed discussion of these and other factors that might affect
our performance, see our filings with the Securities and Exchange
Commission, including our most recent periodic reports filed on
Form 10-K and Form 10-Q.
CME Group Inc. and
Subsidiaries
|
Consolidated
Balance Sheets
|
(in
millions)
|
|
|
|
June 30,
2014
|
|
December 31,
2013
|
ASSETS
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
1,037.3
|
|
|
$
|
2,469.7
|
|
Marketable
securities
|
|
72.9
|
|
|
68.4
|
|
Accounts receivable,
net of allowance
|
|
334.9
|
|
|
302.7
|
|
Other current assets
(includes $37.0 and $40.0 in restricted cash)
|
|
196.2
|
|
|
209.7
|
|
Performance bonds and
guaranty fund contributions
|
|
20,089.9
|
|
|
21,355.1
|
|
Total current
assets
|
|
21,731.2
|
|
|
24,405.6
|
|
Property, net of
accumulated depreciation and amortization
|
|
503.4
|
|
|
513.4
|
|
Intangible
assets—trading products
|
|
17,175.3
|
|
|
17,175.3
|
|
Intangible
assets—other, net
|
|
2,690.9
|
|
|
2,741.2
|
|
Goodwill
|
|
7,569.0
|
|
|
7,569.0
|
|
Other assets
(includes $77.2 and $74.0 in restricted cash)
|
|
1,941.5
|
|
|
1,873.3
|
|
Total
Assets
|
|
$
|
51,611.3
|
|
|
$
|
54,277.8
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
32.1
|
|
|
$
|
36.2
|
|
Short-term
debt
|
|
—
|
|
|
749.9
|
|
Other current
liabilities
|
|
254.7
|
|
|
1,169.8
|
|
Performance bonds and
guaranty fund contributions
|
|
20,089.9
|
|
|
21,355.1
|
|
Total current
liabilities
|
|
20,376.7
|
|
|
23,311.0
|
|
Long-term
debt
|
|
2,107.5
|
|
|
2,107.2
|
|
Deferred income tax
liabilities, net
|
|
7,271.9
|
|
|
7,249.7
|
|
Other
liabilities
|
|
389.8
|
|
|
449.4
|
|
Total
Liabilities
|
|
30,145.9
|
|
|
33,117.3
|
|
CME Group
shareholders' equity
|
|
21,465.4
|
|
|
21,154.8
|
|
Non-controlling
interest
|
|
—
|
|
|
5.7
|
|
Total
Equity
|
|
21,465.4
|
|
|
21,160.5
|
|
Total Liabilities and
Equity
|
|
$
|
51,611.3
|
|
|
$
|
54,277.8
|
|
CME Group Inc. and
Subsidiaries
|
Consolidated
Statements of Income
|
(dollars in millions,
except per share amounts; shares in thousands)
|
|
|
|
Quarter Ended
June 30,
|
|
Six Months
Ended
June
30,
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Clearing and
transaction fees
|
|
$
|
609.3
|
|
|
$
|
692.5
|
|
|
$
|
1,261.5
|
|
|
$
|
1,285.7
|
|
Market data and
information services
|
|
89.6
|
|
|
79.4
|
|
|
179.0
|
|
|
160.3
|
|
Access and
communication fees
|
|
20.4
|
|
|
20.6
|
|
|
40.8
|
|
|
42.1
|
|
Other
|
|
12.3
|
|
|
23.6
|
|
|
27.7
|
|
|
46.6
|
|
Total
Revenues
|
|
731.6
|
|
|
816.1
|
|
|
1,509.0
|
|
|
1,534.7
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
benefits
|
|
139.7
|
|
|
128.9
|
|
|
275.2
|
|
|
258.3
|
|
Communications
|
|
8.3
|
|
|
8.6
|
|
|
16.5
|
|
|
17.5
|
|
Technology support
services
|
|
14.6
|
|
|
13.8
|
|
|
28.5
|
|
|
26.2
|
|
Professional fees and
outside services
|
|
37.5
|
|
|
27.9
|
|
|
67.1
|
|
|
49.8
|
|
Amortization of
purchased intangibles
|
|
25.2
|
|
|
25.9
|
|
|
50.4
|
|
|
51.8
|
|
Depreciation and
amortization
|
|
34.3
|
|
|
33.2
|
|
|
68.4
|
|
|
65.8
|
|
Occupancy and
building operations
|
|
23.2
|
|
|
19.0
|
|
|
46.4
|
|
|
37.5
|
|
Licensing and other
fee agreements
|
|
25.7
|
|
|
26.9
|
|
|
54.7
|
|
|
48.1
|
|
Other
|
|
11.1
|
|
|
24.1
|
|
|
35.3
|
|
|
66.4
|
|
Total
Expenses
|
|
319.6
|
|
|
308.3
|
|
|
642.5
|
|
|
621.4
|
|
Operating
Income
|
|
412.0
|
|
|
507.8
|
|
|
866.5
|
|
|
913.3
|
|
Non-Operating
Income (Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
income
|
|
15.1
|
|
|
18.7
|
|
|
18.3
|
|
|
22.3
|
|
Interest and other
borrowing costs
|
|
(28.3)
|
|
|
(39.2)
|
|
|
(62.0)
|
|
|
(78.2)
|
|
Equity in net gains
(losses) of unconsolidated subsidiaries
|
|
21.5
|
|
|
20.2
|
|
|
43.9
|
|
|
37.7
|
|
Other non-operating
income (expense)
|
|
1.8
|
|
|
—
|
|
|
1.8
|
|
|
—
|
|
Total
Non-Operating
|
|
10.1
|
|
|
(0.3)
|
|
|
2.0
|
|
|
(18.2)
|
|
Income before
Income Taxes
|
|
422.1
|
|
|
507.5
|
|
|
868.5
|
|
|
895.1
|
|
Income tax
provision
|
|
158.3
|
|
|
196.2
|
|
|
338.1
|
|
|
346.4
|
|
Net
Income
|
|
263.8
|
|
|
311.3
|
|
|
530.4
|
|
|
548.7
|
|
Less: net income
(loss) attributable to non-controlling interests
|
|
—
|
|
|
0.1
|
|
|
(0.2)
|
|
|
1.7
|
|
Net Income
Attributable to CME Group
|
|
$
|
263.8
|
|
|
$
|
311.2
|
|
|
$
|
530.6
|
|
|
$
|
547.0
|
|
Earnings per
Common Share Attributable to CME Group:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.79
|
|
|
$
|
0.94
|
|
|
$
|
1.59
|
|
|
$
|
1.65
|
|
Diluted
|
|
0.79
|
|
|
0.93
|
|
|
1.58
|
|
|
1.64
|
|
Weighted Average
Number of Common Shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
334,097
|
|
|
332,341
|
|
|
334,002
|
|
|
332,148
|
|
Diluted
|
|
335,800
|
|
|
334,073
|
|
|
335,705
|
|
|
333,739
|
|
CME Group Inc. and
Subsidiaries
|
Quarterly
Operating Statistics
|
|
|
|
2Q
2013
|
|
3Q
2013
|
|
4Q
2013
|
|
1Q
2014
|
|
2Q
2014
|
Trading
Days
|
|
64
|
|
64
|
|
64
|
|
61
|
|
63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly Average
Daily Volume (ADV)
|
CME Group ADV (in
thousands)
|
|
Product
Line
|
|
2Q
2013
|
|
3Q
2013
|
|
4Q
2013
|
|
1Q
2014
|
|
2Q
2014
|
Interest
rate
|
|
6,828
|
|
5,839
|
|
5,274
|
|
6,725
|
|
6,668
|
Equity
|
|
3,079
|
|
2,408
|
|
2,471
|
|
2,890
|
|
2,465
|
Foreign
exchange
|
|
1,042
|
|
792
|
|
705
|
|
817
|
|
638
|
Energy
|
|
1,796
|
|
1,609
|
|
1,571
|
|
1,705
|
|
1,457
|
Agricultural
commodity
|
|
1,106
|
|
1,009
|
|
992
|
|
1,168
|
|
1,084
|
Metal
|
|
471
|
|
360
|
|
317
|
|
355
|
|
323
|
Total
|
|
14,323
|
|
12,018
|
|
11,331
|
|
13,659
|
|
12,636
|
Venue
|
|
|
|
|
|
|
|
|
|
|
Electronic
|
|
12,457
|
|
10,199
|
|
9,723
|
|
11,703
|
|
10,888
|
Open
outcry
|
|
1,134
|
|
1,173
|
|
957
|
|
1,179
|
|
1,100
|
Privately
negotiated*
|
|
731
|
|
646
|
|
651
|
|
778
|
|
647
|
Total
|
|
14,323
|
|
12,018
|
|
11,331
|
|
13,659
|
|
12,636
|
|
|
Average Rate Per
Contract (RPC)
|
CME Group
RPC
|
|
Product
Line
|
|
2Q
2013
|
|
3Q
2013
|
|
4Q
2013
|
|
1Q
2014
|
|
2Q
2014
|
Interest
rate
|
|
$
|
0.455
|
|
$
|
0.484
|
|
$
|
0.504
|
|
$
|
0.481
|
|
$
|
0.473
|
Equity
|
|
0.714
|
|
0.695
|
|
0.702
|
|
0.712
|
|
0.714
|
Foreign
exchange
|
|
0.826
|
|
0.819
|
|
0.835
|
|
0.804
|
|
0.861
|
Energy
|
|
1.260
|
|
1.300
|
|
1.279
|
|
1.364
|
|
1.298
|
Agricultural
commodity
|
|
1.378
|
|
1.323
|
|
1.327
|
|
1.369
|
|
1.430
|
Metal
|
|
1.613
|
|
1.626
|
|
1.682
|
|
1.707
|
|
1.715
|
Average
RPC
|
|
$
|
0.748
|
|
$
|
0.762
|
|
$
|
0.780
|
|
$
|
0.767
|
|
$
|
0.749
|
|
*The privately
negotiated venue average daily volume includes both traditional
block trades as well as what was historically categorized as CME
ClearPort. Going forward there will no longer be a break out
for CME ClearPort.
|
CME Group Inc. and
Subsidiaries
|
Reconciliation of
GAAP to Non-GAAP Measures
|
(dollars in millions,
except per share amounts; shares in thousands)
|
|
|
|
|
|
|
Quarter
Ended
|
|
|
June 30,
2014
|
GAAP Net Income
Attributable to CME Group
|
|
$
|
263.8
|
|
|
|
|
|
Less: MF Global
bankruptcy claim
|
|
(14.5)
|
|
|
|
|
|
Less: Foreign
exchange transaction gains1
|
|
(5.5)
|
|
|
|
|
|
Add: Voluntary exit
incentive plan
|
|
5.8
|
|
|
|
|
|
Add:
Acquisition-related costs
|
|
4.7
|
|
|
|
|
|
Add: Income tax
effect related to above
|
|
3.6
|
|
|
|
|
|
Adjusted Net
Income Attributable to CME Group
|
|
$
|
257.9
|
|
|
|
|
|
GAAP Earnings per
Common Share Attributable to CME Group:
|
|
|
|
Basic
|
|
$
|
0.79
|
|
Diluted
|
|
0.79
|
|
|
|
|
|
Adjusted earnings
per Common Share Attributable to CME Group:
|
|
|
|
Basic
|
|
$
|
0.77
|
|
Diluted
|
|
0.77
|
|
|
|
|
|
Weighted Average
Number of Common Shares:
|
|
|
|
Basic
|
|
334,097
|
|
Diluted
|
|
335,800
|
|
1.
Second-quarter 2014 results included a $5.5 million foreign
exchange transaction gain during the quarter principally related to
cash held in British pounds within foreign entities whose
functional currency is the U.S. dollar.
|
CME-G
SOURCE CME Group Inc.