CHICAGO, Feb. 3, 2011 /PRNewswire/ -- CME Group Inc.
(Nasdaq: CME) today reported that fourth-quarter revenues increased
14 percent to $763 million and
operating income increased 14 percent to $458 million from the year-ago period.
Fourth-quarter 2010 operating margin was 60 percent, in line
with fourth-quarter 2009. Operating margin is defined as
operating income as a percentage of total revenues.
Fourth-quarter net income was $196
million and diluted earnings per share were $2.93. Fourth-quarter 2010 results included
a $51.3 million charge within tax
expense to record the impact of combined state and local tax rates
on the company's existing deferred tax liabilities due to revised
state apportionment estimates resulting from annual state tax
filings. Results also included an $8.6
million charge to non-operating expense accelerated by
termination of an interest rate swap associated with early payoff
of a term loan. Excluding these items, fourth-quarter net
income would have been $253 million
and diluted earnings per share would have been $3.77.*
"CME Group finished the year with a strong fourth quarter, which
grew 17 percent based on volume increases across all asset
classes," said CME Group Executive Chairman Terry Duffy. "This reflects the strength
of our customer base and the unique trading and hedging
opportunities we provide through our diverse product base. We
also saw 33 percent growth in trading activity outside U.S. trading
hours, which reached 16 percent of total CME Globex volume,
the highest percent yet achieved. This highlights the early
stage success of our global growth efforts."
"In 2010, we continued to build for the future by extending our
capabilities through accomplishments such as the addition of Dow
Jones Indexes, the launch of our over-the-counter cleared interest
rate swaps platform and the expansion of our relationship with
BM&FBOVESPA, among many other strategic initiatives," said CME
Chief Executive Officer Craig
Donohue. "Additionally, we are very proud of our work
to support appropriate and balanced financial regulation.
With ongoing economic recovery, advancement of the regulatory
process and continued investment in products and services to meet
customer needs, we believe CME Group has established a strong
position for future growth."
*A reconciliation of the non-GAAP net income and non-GAAP EPS
mentioned to the respective GAAP figures can be found within the
Reconciliation of GAAP to Non-GAAP Measures chart at the end of the
financial statements.
CME Group Inc. Fourth-Quarter and Full Year 2010 Financial
Highlights
|
|
($s in millions, except per
share)
|
Q4
FY10
|
Q4
FY09
|
Y/Y
|
FY10
|
FY09
|
Y/Y
|
|
Revenues
|
$ 763
|
$ 667
|
14%
|
$3,004
|
$2,613
|
15%
|
|
Expenses
|
$ 305
|
$ 265
|
15%
|
$1,173
|
$1,024
|
15%
|
|
Operating Income
|
$ 458
|
$ 402
|
14%
|
$1,831
|
$1,589
|
15%
|
|
Operating Margin
%
|
60.1%
|
60.3%
|
|
61.0%
|
60.8%
|
|
|
Net Income Attributable to CME
Group
|
$ 196
|
$ 203
|
-3%
|
$ 951
|
$ 826
|
15%
|
|
Diluted EPS
|
$2.93
|
$3.04
|
-4%
|
$14.31
|
$12.41
|
15%
|
|
|
|
|
|
|
|
|
|
|
Fourth-quarter 2010 average daily volume was 12.0 million
contracts, up 17 percent compared with fourth-quarter 2009.
Clearing and transaction fee revenue was $625 million, up 12 percent from $557 million in fourth-quarter 2009. The
total average rate per contract for CME Group was 81 cents, down 4 percent from fourth-quarter
2009, and up slightly from third-quarter 2010.
Fourth-quarter 2010 operating expense was $305 million, up 15 percent compared with
fourth-quarter 2009. Full year 2010 operating expense was
$1.17 billion, including a
$20.5 million write down in
second-quarter 2010, up from $1.02
billion in 2009. Within this variance, expenses
related to the core business grew at approximately 8 percent, while
non-core expenses were driven by the addition of the Dow Jones
business in 2010, over-the-counter initiatives, regulatory efforts,
and the building of a new multi asset class platform.
Fourth-quarter 2010 non-operating expense was $31 million, driven primarily by interest expense
and borrowing costs of $35 million,
offset by $14 million of investment
income.
As of December 31, the company had
$905 million of cash and marketable
securities and $2.5 billion of debt.
The company's Board of Directors recently approved an
increase in its dividend payout policy to approximately 35 percent
of prior year's cash earnings from approximately 30 percent.
Based on 2010 cash earnings results, this would result in an
increase of the regular quarterly dividend by more than 20
percent. Future dividends remain subject to actual approval
and declaration by the Board.
CME Group will hold a conference call to discuss
fourth-quarter 2010 results at 9:00 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
largest central counterparty clearing services in the world, which
provides clearing and settlement services for exchange-traded
contracts, as well as for over-the-counter derivatives transactions
through CME ClearPort®. These products and services
ensure that businesses everywhere can substantially mitigate
counterparty credit risk in both listed and over-the-counter
derivatives markets.
The Globe logo, CME, Chicago Mercantile Exchange, CME Group,
Globex, E-mini and CME ClearPort are trademarks of Chicago
Mercantile Exchange Inc. CBOT and Chicago Board of Trade are trademarks of the
Board of Trade of the City of Chicago. NYMEX and New York
Mercantile Exchange are trademarks of New York Mercantile Exchange,
Inc. COMEX is a trademark of Commodity Exchange, 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. 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; 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 over-the-counter market; our ability to adjust our
fixed costs and expenses if our revenues decline; our ability
to generate revenues from our processing services; 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 government policy, including policies
relating to common or directed clearing and changes resulting from
the adoption and implementation of the Dodd-Frank Act and any
changes in the regulation of our industry with respect to
speculative trading in commodity interests and derivative
contracts; the costs associated with protecting our intellectual
property rights and our ability to operate our business without
violating the intellectual property rights of others; our ability
to generate revenue from our market data that may be reduced or
eliminated by the growth of electronic trading, the state of the
overall economy or declines in subscriptions; 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; changes in price levels and
volatility in the derivatives markets and in underlying fixed
income, 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
current economic conditions on the trading activity of our current
and potential customers stemming from the financial crisis that
began in 2008; our ability to accommodate increases in trading
volume and order transaction traffic without failure or degradation
of 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 acquisition, investment and alliance strategy; 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 on futures and options on
futures transactions and/or the repeal of the 60/40 tax treatment
of such transactions; the unfavorable resolution of material legal
proceedings and the seasonality of the futures business. More
detailed information about factors that may affect our performance
may be found in our filings with the Securities and Exchange
Commission, including our most recent periodic reports filed on
Form 10-K and Form 10-Q, which are available in the Investor
Relations section of the CME Group Web site. We undertake no
obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or
otherwise.
CME-E
CME Group
Inc. and Subsidiaries
|
|
Consolidated
Balance Sheets
|
|
(in
millions)
|
|
|
|
|
|
|
|
December 31,
2010
|
|
December 31,
2009
|
|
ASSETS
|
|
|
|
|
Current Assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
855.2
|
|
$
260.6
|
|
Marketable
securities
|
50.2
|
|
42.6
|
|
Accounts
receivable, net of allowance
|
297.5
|
|
248.3
|
|
Other current
assets
|
146.1
|
|
165.6
|
|
Cash performance
bonds and guaranty fund contributions
|
4,038.5
|
|
5,981.9
|
|
Total current assets
|
5,387.5
|
|
6,699.0
|
|
Property, net of accumulated
depreciation and amortization
|
786.7
|
|
738.5
|
|
Intangible assets - trading
products
|
17,040.5
|
|
16,982.0
|
|
Intangible assets - other, net
of accumulated amortization
|
3,453.3
|
|
3,246.5
|
|
Goodwill
|
7,983.6
|
|
7,549.2
|
|
Other assets
|
393.3
|
|
435.8
|
|
Total Assets
|
$
35,044.9
|
|
$
35,651.0
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
Accounts
payable
|
$
51.8
|
|
$
46.7
|
|
Short-term
debt
|
420.5
|
|
299.8
|
|
Other current
liabilities
|
270.4
|
|
195.2
|
|
Cash performance
bonds and guaranty fund contributions
|
4,038.5
|
|
5,981.9
|
|
Total current
liabilities
|
4,781.2
|
|
6,523.6
|
|
Long-term debt
|
2,104.8
|
|
2,014.7
|
|
Deferred tax liabilities,
net
|
7,840.4
|
|
7,645.9
|
|
Other liabilities
|
191.5
|
|
165.8
|
|
Total Liabilities
|
14,917.9
|
|
16,350.0
|
|
Redeemable non-controlling
interest
|
68.1
|
|
-
|
|
Shareholders' equity
|
20,058.9
|
|
19,301.0
|
|
Total Liabilities and
Shareholders' Equity
|
$
35,044.9
|
|
$
35,651.0
|
|
|
|
|
|
CME Group
Inc. and Subsidiaries
|
|
Consolidated
Statements of Income
|
|
(dollars in
millions, except per share amounts; shares in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
Year
Ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
Revenues
|
|
|
|
|
|
|
|
|
Clearing and
transaction fees
|
$ 625.4
|
|
$ 556.7
|
|
$ 2,486.3
|
|
$ 2,161.9
|
|
Market data and
information services
|
104.1
|
|
82.1
|
|
395.1
|
|
331.1
|
|
Access and
communication fees
|
12.0
|
|
11.1
|
|
45.4
|
|
45.6
|
|
Other
|
21.7
|
|
17.6
|
|
76.9
|
|
74.2
|
|
Total
Revenues
|
763.2
|
|
667.5
|
|
3,003.7
|
|
2,612.8
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
Compensation and
benefits
|
119.8
|
|
89.0
|
|
432.1
|
|
351.0
|
|
Communications
|
9.8
|
|
11.5
|
|
40.6
|
|
47.0
|
|
Technology support
services
|
13.1
|
|
11.5
|
|
50.5
|
|
46.2
|
|
Professional fees
and outside services
|
35.0
|
|
23.2
|
|
117.5
|
|
85.1
|
|
Amortization of
purchased intangibles
|
32.6
|
|
30.6
|
|
128.1
|
|
125.1
|
|
Depreciation and
amortization
|
31.8
|
|
32.9
|
|
129.9
|
|
126.3
|
|
Occupancy and
building operations
|
17.2
|
|
19.0
|
|
74.9
|
|
76.3
|
|
Licensing and
other fee agreements
|
19.8
|
|
21.7
|
|
82.6
|
|
89.2
|
|
Restructuring
|
(0.1)
|
|
0.1
|
|
(0.6)
|
|
5.3
|
|
Other
|
25.8
|
|
25.5
|
|
117.0
|
|
72.2
|
|
Total
Expenses
|
304.8
|
|
265.0
|
|
1,172.6
|
|
1,023.7
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
458.4
|
|
402.5
|
|
1,831.1
|
|
1,589.1
|
|
|
|
|
|
|
|
|
|
|
Non-Operating Income
(Expense)
|
|
|
|
|
|
|
|
|
Investment
income
|
14.2
|
|
6.1
|
|
42.3
|
|
28.5
|
|
Impairment of
long-term investment
|
(2.2)
|
|
(23.6)
|
|
(2.2)
|
|
(46.0)
|
|
Gains (losses) on
derivative investments
|
(8.6)
|
|
-
|
|
(2.6)
|
|
-
|
|
Securities lending
interest income
|
-
|
|
-
|
|
-
|
|
2.8
|
|
Securities lending
interest and other costs
|
-
|
|
-
|
|
-
|
|
(0.1)
|
|
Interest and other
borrowing costs
|
(35.1)
|
|
(30.7)
|
|
(140.3)
|
|
(133.9)
|
|
Guarantee of
exercise right privileges
|
-
|
|
4.3
|
|
-
|
|
4.3
|
|
Equity in losses
of unconsolidated subsidiaries
|
0.5
|
|
(2.3)
|
|
(6.4)
|
|
(6.8)
|
|
Other income
(expense)
|
-
|
|
-
|
|
-
|
|
(0.4)
|
|
Total
Non-Operating
|
(31.2)
|
|
(46.2)
|
|
(109.2)
|
|
(151.6)
|
|
|
|
|
|
|
|
|
|
|
Income Before Income
Taxes
|
427.2
|
|
356.3
|
|
1,721.9
|
|
1,437.5
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
(230.8)
|
|
(153.7)
|
|
(769.8)
|
|
(611.7)
|
|
Net Income
|
196.4
|
|
202.6
|
|
952.1
|
|
825.8
|
|
Less: Net income attributable to
redeemable non-controlling interest
|
0.2
|
|
-
|
|
0.7
|
|
-
|
|
Net Income Attributable to CME
Group
|
$ 196.2
|
|
$ 202.6
|
|
$ 951.4
|
|
$ 825.8
|
|
|
|
|
|
|
|
|
|
|
Earnings per Common Share
Attributable to CME Group:
|
|
|
|
|
|
|
|
|
Basic
|
$ 2.94
|
|
$ 3.05
|
|
$ 14.35
|
|
$ 12.44
|
|
Diluted
|
2.93
|
|
3.04
|
|
14.31
|
|
12.41
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of
Common Shares:
|
|
|
|
|
|
|
|
|
Basic
|
66,813
|
|
66,446
|
|
66,299
|
|
66,366
|
|
Diluted
|
67,011
|
|
66,645
|
|
66,495
|
|
66,548
|
|
|
|
|
|
|
|
|
|
CME Group
Inc.
|
|
Quarterly
Operating Statistics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4Q
2009
|
|
1Q
2010
|
|
2Q
2010
|
|
3Q
2010
|
|
4Q
2010
|
|
Trading Days
|
64
|
|
61
|
|
64
|
|
64
|
|
64
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly
Average Daily Volume (ADV)
|
|
|
|
|
|
|
|
|
|
|
|
|
CME Group
ADV (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Product Line
|
4Q
2009
|
|
1Q
2010
|
|
2Q
2010
|
|
3Q
2010
|
|
4Q
2010
|
|
Interest rates
|
4,368
|
|
5,120
|
|
6,074
|
|
5,020
|
|
5,566
|
|
Equities
|
2,514
|
|
2,815
|
|
3,455
|
|
2,809
|
|
2,545
|
|
Foreign exchange
|
754
|
|
887
|
|
1,035
|
|
866
|
|
887
|
|
Energy
|
1,564
|
|
1,609
|
|
1,798
|
|
1,657
|
|
1,581
|
|
Agricultural
commodities
|
750
|
|
786
|
|
855
|
|
941
|
|
1,067
|
|
Metals
|
292
|
|
327
|
|
308
|
|
257
|
|
372
|
|
Total
|
10,243
|
|
11,544
|
|
13,525
|
|
11,550
|
|
12,018
|
|
|
|
|
|
|
|
|
|
|
|
|
Venue
|
|
|
|
|
|
|
|
|
|
|
Electronic
|
8,399
|
|
9,562
|
|
11,340
|
|
9,574
|
|
9,978
|
|
Open outcry
|
1,210
|
|
1,318
|
|
1,539
|
|
1,327
|
|
1,418
|
|
Privately negotiated
|
170
|
|
190
|
|
198
|
|
181
|
|
222
|
|
Exchange-traded
Total
|
9,779
|
|
11,070
|
|
13,077
|
|
11,082
|
|
11,618
|
|
CME ClearPort
|
464
|
|
474
|
|
448
|
|
468
|
|
400
|
|
Total
|
10,243
|
|
11,544
|
|
13,525
|
|
11,550
|
|
12,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Rate
Per Contract (RPC)
|
|
|
|
|
|
|
|
|
|
|
|
|
CME Group
RPC
|
|
|
|
|
|
|
|
|
|
|
|
|
Product Line
|
4Q
2009
|
|
1Q
2010
|
|
2Q
2010
|
|
3Q
2010
|
|
4Q
2010
|
|
Interest rates
|
$ 0.509
|
|
$ 0.503
|
|
$ 0.481
|
|
$ 0.495
|
|
$
0.496
|
|
Equities
|
0.733
|
|
0.713
|
|
0.713
|
|
0.708
|
|
0.702
|
|
Foreign exchange
|
0.816
|
|
0.803
|
|
0.798
|
|
0.795
|
|
0.804
|
|
Energy
|
1.606
|
|
1.636
|
|
1.581
|
|
1.540
|
|
1.631
|
|
Agricultural
commodities
|
1.278
|
|
1.244
|
|
1.282
|
|
1.256
|
|
1.219
|
|
Metals
|
1.872
|
|
1.734
|
|
1.749
|
|
1.791
|
|
1.708
|
|
Average
RPC
|
$ 0.849
|
|
$ 0.821
|
|
$ 0.790
|
|
$ 0.810
|
|
$
0.813
|
|
|
|
|
|
|
|
|
|
|
|
|
Venue
|
|
|
|
|
|
|
|
|
|
|
Exchange-traded
|
$ 0.783
|
|
$ 0.754
|
|
$ 0.732
|
|
$ 0.747
|
|
$
0.748
|
|
CME ClearPort
|
2.236
|
|
2.392
|
|
2.489
|
|
2.292
|
|
2.704
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Average daily volume
and rate per contract figures for prior periods have been revised
due to standardizing NYMEX reporting conventions to
follow CME Group's treatment of
post-trade transactions such as exercises, assignments and
deliveries.
|
|
|
|
|
|
|
|
|
|
|
|
CME Group
Inc. and Subsidiaries
|
|
Reconciliation of GAAP to
Non-GAAP Measures
|
|
(in
millions)
|
|
|
|
|
|
Quarter
Ended
|
|
|
December
31,
|
|
|
2010
|
|
GAAP Results
|
|
|
Revenues
|
$
763.2
|
|
Expenses
|
304.8
|
|
Operating income
|
458.4
|
|
|
|
|
Operating margin
|
60.1%
|
|
|
|
|
Non-Operating income
(expense)
|
(31.2)
|
|
Income before income
taxes
|
427.2
|
|
|
|
|
Income tax provision
|
(230.8)
|
|
|
|
|
Effective tax rate
|
54.0%
|
|
|
|
|
Net
income
|
$
196.4
|
|
Less: Net income attributable to
redeemable non-controlling interest
|
0.2
|
|
Net Income Attributable to CME
Group
|
$
196.2
|
|
|
|
|
Earnings per Common Share
Attributable to CME Group:
|
|
|
Basic
|
$
2.94
|
|
Diluted
|
2.93
|
|
|
|
|
Adjustments
|
|
|
|
|
|
Adjustment to Non-Operating
income (expense)
|
8.6
|
|
|
|
|
Adjustment to income
taxes(1)
|
47.9
|
|
|
|
|
Adjustment to net
income
|
$
56.5
|
|
|
|
|
Non-GAAP results, excluding
adjustments
|
|
|
Revenues
|
$
763.2
|
|
Expenses
|
304.8
|
|
Operating income
|
458.4
|
|
|
|
|
Operating margin
|
60.1%
|
|
|
|
|
Non-Operating income
(expense)
|
(22.6)
|
|
Income before income
taxes
|
435.8
|
|
|
|
|
Income tax provision
|
(182.9)
|
|
|
|
|
Effective tax rate
|
42.0%
|
|
|
|
|
Net
income
|
$
252.9
|
|
Less: Net income attributable to
redeemable non-controlling interest
|
0.2
|
|
Net Income Attributable to CME
Group
|
$
252.7
|
|
|
|
|
Adjusted earnings per Common
Share Attributable to CME Group:
|
|
|
Basic
|
$
3.78
|
|
Diluted
|
3.77
|
|
|
|
|
Weighted Average Number of
Common Shares:
|
|
|
Basic
|
66,813
|
|
Diluted
|
67,011
|
|
|
|
|
1) Tax adjustment reflects
a tax expense of $51.3 million for deferred taxes due to revised
state apportionment estimates. This is
offset by the tax impact of the $8.6 million acceleration of
non-operating expense due to the early termination of an interest
rate swap.
|
|
|
|
SOURCE CME Group Inc.