CHICAGO, April 28, 2011 /PRNewswire/ -- CME Group Inc.
(NASDAQ: CME) today reported that first-quarter revenues increased
20 percent to $832 million and
operating income increased 26 percent to $524 million from the year-ago period.
First-quarter 2011 operating margin was 63 percent, up from
60 percent in first-quarter 2010. Operating margin is defined
as operating income as a percentage of total revenues.
First-quarter net income attributable to CME Group was
$457 million and diluted earnings per
share were $6.81. First-quarter
2011 results included a $164 million
benefit within tax expense associated with a change in our expected
effective tax rate and its impact on our deferred tax expense and
the release of reserves related to a foreign investment.
Excluding this benefit, first-quarter net income attributable
to CME Group would have been $292
million and diluted earnings per share would have been
$4.36. (1)
"CME Group delivered record revenue during the first quarter,
demonstrating strength across the entire business while continuing
to invest in future growth," said CME Group Executive Chairman
Terry Duffy. "Both supply and
demand dynamics, as well as geopolitical change, lifted
commodities, with both exchange-traded and OTC agricultural, energy
and metals products all surpassing previous quarterly revenue
highs, while financial products also grew significantly. We
continued to expand our global reach and deliver excellent
performance during non-U.S. trading hours, with average daily
volume growing 27 percent to 1.75 million contracts during the
quarter, an indication of the deepening liquidity in our globally
relevant products. Further, performance metrics related to
our partnerships with exchanges in Brazil, Malaysia and Korea were also strong for the
quarter, in part due to the expanded distribution we were able to
provide. In addition, we launched south-to-north order
routing with our exchange partner in Mexico in April."
"Record first-quarter revenues reflected an overall volume
increase of nearly 20 percent, which led to strong bottom-line
results," said CME Group Chief Executive Officer Craig Donohue. "In today's market, risk
management is at the forefront of the new economic paradigm and it
is clear that CME Group's focus on delivering the most
comprehensive offering possible to our clients is the right
strategy. We continue to innovate by successfully extending
our product suite, strengthening our technology advantage through
co-location and other upgrades, and expanding our clearing services
through over-the-counter initiatives. Next week, we will
begin clearing 150 OTC energy and commodity products at CME
Clearing Europe, providing our European clients with expanded
flexibility and choice. We are optimistic that our organic
growth strategy is gaining momentum, and we believe ongoing
macroeconomic changes will be positive for our core business."
CME Group Inc. First-Quarter
GAAP Highlights
|
|
($s in millions, except per
share)
|
Q1
FY11
|
Q1
FY10
|
Y/Y
|
|
Revenues
|
$ 832
|
$ 693
|
20%
|
|
Expenses
|
$ 307
|
$ 279
|
10%
|
|
Operating Income
|
$ 524
|
$ 415
|
26%
|
|
Operating Margin
%
|
63.0%
|
59.8%
|
|
|
Net Income Attributable to CME
Group
|
$ 457
|
$ 240
|
90%
|
|
Diluted EPS
|
$6.81
|
$3.62
|
88%
|
|
Non-GAAP
|
|
|
|
|
Net Income Attributable to CME
Group(1)
|
$ 292
|
$ 240
|
22%
|
|
Diluted
EPS(1)
|
$4.36
|
$3.62
|
20%
|
|
|
|
|
|
First-quarter 2011 average daily volume was 13.8 million
contracts, up 19 percent compared with first-quarter 2010,
representing the second highest quarterly volume ever.
Clearing and transaction fee revenue of $691 million was the second highest ever and up
20 percent from $578 million in
first-quarter 2010, driven by higher interest rate volume and
record revenue across agricultural commodities, energy and metals
product lines.
Despite near record volume, the first quarter total average rate
per contract was 80.8 cents, down
only two percent from first-quarter 2010, and down only one percent
from fourth-quarter 2010. Although record volumes resulted in
larger discounts, the relative stability in the rate per contract
can be attributed to the strength of the product mix with strong
growth coming from energy and agricultural products.
First-quarter 2011 operating expense was $307 million, up 10 percent compared with
first-quarter 2010. First-quarter 2011 non-operating expense
was $13 million, driven primarily by
interest expense and borrowing costs of $30
million, offset by $19 million
of investment income.CME Group will hold a conference call to
discuss first-quarter 2011 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 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.
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. All other trademarks are the property of their
respective owners.
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 domestic and non-U.S. regulations;
changes in government policy, including policies relating to common
or directed clearing and changes as a result of legislation
stemming from the implementation of the Dodd-Frank Act; 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 economic conditions on the trading
activity of our current and potential customers stemming from the
financial crisis that began in 2008 and any other future crises;
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 or user fee 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.
1. 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-E
CME Group
Inc. and Subsidiaries
|
|
Consolidated
Balance Sheets
|
|
(in
millions)
|
|
|
|
|
March 31,
2011
|
|
December 31,
2010
|
|
ASSETS
|
|
|
|
|
Current Assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
664.7
|
|
$
855.2
|
|
Marketable
securities
|
54.6
|
|
50.2
|
|
Accounts
receivable, net of allowance
|
394.0
|
|
297.5
|
|
Other current
assets (includes $40.0 and $-- in restricted cash)
|
150.4
|
|
146.1
|
|
Cash performance
bonds and guaranty fund contributions
|
3,323.9
|
|
4,038.5
|
|
Total current assets
|
4,587.6
|
|
5,387.5
|
|
Property, net of accumulated
depreciation and amortization
|
797.0
|
|
786.8
|
|
Intangible assets - trading
products
|
17,040.5
|
|
17,040.5
|
|
Intangible assets - other, net
of accumulated amortization
|
3,420.2
|
|
3,453.3
|
|
Goodwill
|
7,985.4
|
|
7,983.6
|
|
Other assets (includes $20.0 and
$-- in restricted cash)
|
878.3
|
|
394.4
|
|
Total Assets
|
$
34,709.0
|
|
$
35,046.1
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
Accounts
payable
|
$
58.4
|
|
$
51.8
|
|
Short-term
debt
|
-
|
|
420.5
|
|
Other current
liabilities
|
361.8
|
|
270.4
|
|
Cash performance
bonds and guaranty fund contributions
|
3,323.9
|
|
4,038.5
|
|
Total current
liabilities
|
3,744.1
|
|
4,781.2
|
|
Long-term debt
|
2,105.3
|
|
2,104.8
|
|
Deferred tax liabilities,
net
|
7,811.1
|
|
7,840.4
|
|
Other liabilities
|
192.4
|
|
191.5
|
|
Total Liabilities
|
13,852.9
|
|
14,917.9
|
|
Redeemable non-controlling
interest
|
68.6
|
|
68.1
|
|
Shareholders' equity
|
20,787.5
|
|
20,060.1
|
|
Total Liabilities and
Shareholders' Equity
|
$
34,709.0
|
|
$
35,046.1
|
|
|
|
|
|
CME Group
Inc. and Subsidiaries
|
|
Consolidated
Statements of Income
|
|
(dollars in
millions, except per share amounts; shares in thousands)
|
|
|
|
|
Quarter
Ended
|
|
|
March
31,
|
|
|
2011
|
|
2010
|
|
Revenues
|
|
|
|
|
Clearing and
transaction fees
|
$ 691.3
|
|
$ 578.0
|
|
Market data and
information services
|
107.0
|
|
87.6
|
|
Access and
communication fees
|
11.5
|
|
10.9
|
|
Other
|
21.8
|
|
16.7
|
|
Total
Revenues
|
831.6
|
|
693.2
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
Compensation and
benefits
|
122.3
|
|
98.8
|
|
Communications
|
9.9
|
|
10.1
|
|
Technology support
services
|
12.0
|
|
12.2
|
|
Professional fees
and outside services
|
30.7
|
|
31.2
|
|
Amortization of
purchased intangibles
|
33.2
|
|
30.8
|
|
Depreciation and
amortization
|
31.0
|
|
32.2
|
|
Occupancy and
building operations
|
19.4
|
|
20.5
|
|
Licensing and
other fee agreements
|
23.5
|
|
21.1
|
|
Other
|
25.5
|
|
21.6
|
|
Total
Expenses
|
307.5
|
|
278.5
|
|
|
|
|
|
|
Operating Income
|
524.1
|
|
414.7
|
|
|
|
|
|
|
Non-Operating Income
(Expense)
|
|
|
|
|
Investment
income
|
18.8
|
|
11.1
|
|
Gains (losses) on
derivative investments
|
(0.1)
|
|
6.0
|
|
Interest and other
borrowing costs
|
(30.1)
|
|
(31.4)
|
|
Equity in net
losses of unconsolidated subsidiaries
|
(1.1)
|
|
(1.5)
|
|
Total
Non-Operating
|
(12.5)
|
|
(15.8)
|
|
|
|
|
|
|
Income Before Income
Taxes
|
511.6
|
|
398.9
|
|
|
|
|
|
|
Income tax provision
|
(54.5)
|
|
(158.7)
|
|
Net Income
|
457.1
|
|
240.2
|
|
Less: Net income attributable to
redeemable non-controlling interest
|
0.5
|
|
-
|
|
Net Income Attributable to CME
Group
|
$ 456.6
|
|
$ 240.2
|
|
|
|
|
|
|
Earnings per Common Share
Attributable to CME Group:
|
|
|
|
|
Basic
|
$ 6.83
|
|
$ 3.63
|
|
Diluted
|
6.81
|
|
3.62
|
|
|
|
|
|
|
Weighted Average Number of
Common Shares:
|
|
|
|
|
Basic
|
66,857
|
|
66,234
|
|
Diluted
|
67,062
|
|
66,428
|
|
|
|
|
|
CME Group
Inc.
|
|
Quarterly
Operating Statistics
|
|
|
|
|
1Q
2010
|
|
2Q
2010
|
|
3Q
2010
|
|
4Q
2010
|
|
1Q
2011
|
|
Trading Days
|
61
|
|
64
|
|
64
|
|
64
|
|
62
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly
Average Daily Volume (ADV)
|
|
|
|
|
|
|
|
|
|
|
|
|
CME Group
ADV (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Product Line
|
1Q
2010
|
|
2Q
2010
|
|
3Q
2010
|
|
4Q
2010
|
|
1Q
2011
|
|
Interest rates
|
5,120
|
|
6,074
|
|
5,020
|
|
5,566
|
|
6,424
|
|
Equities
|
2,815
|
|
3,455
|
|
2,809
|
|
2,545
|
|
2,906
|
|
Foreign exchange
|
887
|
|
1,035
|
|
866
|
|
887
|
|
961
|
|
Energy
|
1,609
|
|
1,798
|
|
1,657
|
|
1,581
|
|
1,973
|
|
Agricultural
commodities
|
786
|
|
855
|
|
941
|
|
1,067
|
|
1,154
|
|
Metals
|
327
|
|
308
|
|
257
|
|
372
|
|
376
|
|
Total
|
11,544
|
|
13,525
|
|
11,550
|
|
12,018
|
|
13,794
|
|
|
|
|
|
|
|
|
|
|
|
|
Venue
|
|
|
|
|
|
|
|
|
|
|
Electronic
|
9,562
|
|
11,340
|
|
9,574
|
|
9,978
|
|
11,605
|
|
Open outcry
|
1,318
|
|
1,539
|
|
1,327
|
|
1,418
|
|
1,467
|
|
Privately negotiated
|
190
|
|
198
|
|
181
|
|
222
|
|
224
|
|
Exchange-traded
Total
|
11,070
|
|
13,077
|
|
11,082
|
|
11,618
|
|
13,296
|
|
CME ClearPort
|
474
|
|
448
|
|
468
|
|
400
|
|
498
|
|
Total
|
11,544
|
|
13,525
|
|
11,550
|
|
12,018
|
|
13,794
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Rate
Per Contract (RPC)
|
|
|
|
|
|
|
|
|
|
|
|
|
CME Group
RPC
|
|
|
|
|
|
|
|
|
|
|
|
|
Product Line
|
1Q
2010
|
|
2Q
2010
|
|
3Q
2010
|
|
4Q
2010
|
|
1Q
2011
|
|
Interest rates
|
$ 0.503
|
|
$ 0.481
|
|
$ 0.495
|
|
$ 0.496
|
|
$ 0.481
|
|
Equities
|
0.713
|
|
0.713
|
|
0.708
|
|
0.702
|
|
0.705
|
|
Foreign exchange
|
0.803
|
|
0.798
|
|
0.795
|
|
0.804
|
|
0.823
|
|
Energy
|
1.636
|
|
1.581
|
|
1.540
|
|
1.631
|
|
1.573
|
|
Agricultural
commodities
|
1.244
|
|
1.282
|
|
1.256
|
|
1.219
|
|
1.271
|
|
Metals
|
1.734
|
|
1.749
|
|
1.791
|
|
1.708
|
|
1.732
|
|
Average
RPC
|
$ 0.821
|
|
$ 0.790
|
|
$ 0.810
|
|
$ 0.813
|
|
$ 0.808
|
|
|
|
|
|
|
|
|
|
|
|
|
Venue
|
|
|
|
|
|
|
|
|
|
|
Exchange-traded
|
$ 0.754
|
|
$ 0.732
|
|
$ 0.747
|
|
$ 0.748
|
|
$ 0.740
|
|
CME ClearPort
|
2.392
|
|
2.489
|
|
2.292
|
|
2.704
|
|
2.630
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
March
31,
|
|
|
2011
|
|
GAAP Results
|
|
|
Revenues
|
$
831.6
|
|
Expenses
|
307.5
|
|
Operating income
|
524.1
|
|
|
|
|
Operating margin
|
63.0%
|
|
|
|
|
Non-Operating income
(expense)
|
(12.5)
|
|
Income before income
taxes
|
511.6
|
|
|
|
|
Income tax provision
|
(54.5)
|
|
|
|
|
Effective tax rate
|
10.7%
|
|
|
|
|
Net
income
|
$
457.1
|
|
Less: Net income attributable to
redeemable non-controlling interest
|
0.5
|
|
Net Income Attributable to CME
Group
|
$
456.6
|
|
|
|
|
Earnings per Common Share
Attributable to CME Group:
|
|
|
Basic
|
$
6.83
|
|
Diluted
|
6.81
|
|
|
|
|
Adjustments
|
|
|
|
|
|
Adjustment to income
taxes(1)
|
(164.4)
|
|
|
|
|
|
|
|
Non-GAAP results, excluding
adjustments
|
|
|
Revenues
|
$
831.6
|
|
Expenses
|
307.5
|
|
Operating income
|
524.1
|
|
|
|
|
Operating margin
|
63.0%
|
|
|
|
|
Non-Operating income
(expense)
|
(12.5)
|
|
Income before income
taxes
|
511.6
|
|
|
|
|
Income tax provision
|
(218.9)
|
|
|
|
|
Effective tax rate
|
42.8%
|
|
|
|
|
Net
income
|
$
292.7
|
|
Less: Net income attributable to
redeemable non-controlling interest
|
0.5
|
|
Net Income Attributable to CME
Group
|
$
292.2
|
|
|
|
|
Adjusted earnings per Common
Share Attributable to CME Group:
|
|
|
Basic
|
$ 4.37
|
|
Diluted
|
4.36
|
|
|
|
|
Weighted Average Number of
Common Shares:
|
|
|
Basic
|
66,857
|
|
Diluted
|
67,062
|
|
|
|
|
1) Tax adjustment reflects
$164 million benefit within tax expense associated with a change in
our expected effective tax rate and its impact on our deferred tax
expense and the release of reserves related to a foreign
investment.
|
|
|
|
SOURCE CME Group