CHICAGO, July 28, 2011 /PRNewswire/ -- CME Group Inc.
(NASDAQ: CME) today reported that second-quarter revenues increased
3 percent to a record $838 million
and operating income increased 4 percent to $534 million from a year ago.
Second-quarter 2011 operating margin was 64 percent, up from
63 percent in the second quarter of 2010. Operating margin is
defined as operating income as a percentage of total revenues.
Second-quarter net income attributable to CME Group was
$294 million, up 8 percent compared
with the second quarter of 2010. Diluted earnings per share
were $4.38, up 7 percent compared
with the same period last year.
"CME Group delivered record revenue during the second quarter,
driven by strong performance across interest rates, metals and
agricultural commodities," said CME Group Executive Chairman
Terry Duffy. "Volume
accelerated during the period and we reached record open interest
of more than 100 million contracts in June. These results
show that CME Group is uniquely positioned to provide the solutions
customers need in today's challenging economic and geopolitical
environment, and the company will continue to take a leadership
role in contributing to the resolution of legislative and
regulatory issues so important to markets worldwide."
"We are extremely pleased with both our top- and bottom-line
results, which highlight the operating leverage inherent in our
business model," said CME Group Chief Executive Officer
Craig Donohue. "We plan to
build on these results, with a heightened focus on expenses, and we
are reducing our second-half 2011 operating and capital expense
guidance. Going forward, we intend to continue to
successfully execute our global growth strategy by ensuring that we
have the products, technology, clearing capabilities and global
distribution systems to benefit from the opportunities created by
changing market dynamics. We remain confident about our
growth prospects and our ability to deliver shareholder value."
Second-quarter 2011 average daily volume was 13.5 million
contracts, in line with the second quarter of 2010, which included
May 2010 record monthly average daily
volume of 16.8 million contracts. Clearing and transaction
fee revenue of $688 million was up 1
percent from $684 million in
second-quarter 2010.
Second-quarter total average rate per contract was 80.7 cents, up 2 percent from second-quarter
2010. Although total volume contained a higher proportion of
lower-priced interest rates volume relative to the first quarter of
2011, the second quarter average rate per contract was in line with
first-quarter 2011 due to lower volume discounts and a favorable
venue mix.
Second-quarter 2011 operating expense was $304 million, down $4
million from first quarter this year. Second-quarter
2011 non-operating expense was $25
million, driven primarily by interest expense and borrowing
costs of $29 million, offset by
$5 million of investment income.
As of June 30, the company had
$749 million of cash and marketable
securities and $2.1 billion of debt.
Following the Board authorization of a $750 million share buyback program on
May 9, 2011, the company purchased
220,000 shares with an approximate aggregate value of $65 million.
Updated Guidance
- The company expects 2011 total operating expense of
$1.235 billion, down from
$1.26 billion.
- The company expects 2011 total capital expenditures of
$165 million, down from $180 million.
- For the second half of 2011, the company estimates an effective
tax rate of approximately 42.5 percent, down from 43 percent.
CME Group will hold a conference call to discuss
second-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. 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 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.
CME Group
Inc. and Subsidiaries
|
|
Consolidated
Balance Sheets
|
|
(in
millions)
|
|
|
|
|
|
|
|
June 30,
2011
|
|
December 31,
2010
|
|
ASSETS
|
|
|
|
|
Current Assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
693.6
|
|
$
855.2
|
|
Marketable
securities
|
55.0
|
|
50.2
|
|
Accounts
receivable, net of allowance
|
385.8
|
|
297.5
|
|
Other current
assets (includes $40.0 and $0 in restricted cash)
|
178.9
|
|
146.1
|
|
Cash performance
bonds and guaranty fund contributions
|
4,241.8
|
|
4,038.5
|
|
Total current assets
|
5,555.1
|
|
5,387.5
|
|
Property, net of accumulated
depreciation and amortization
|
812.8
|
|
786.8
|
|
Intangible assets - trading
products
|
17,040.5
|
|
17,040.5
|
|
Intangible assets - other, net
of accumulated amortization
|
3,379.1
|
|
3,453.3
|
|
Goodwill
|
7,985.4
|
|
7,983.6
|
|
Other assets (includes $20.0 and
$0 in restricted cash)
|
816.3
|
|
394.4
|
|
Total Assets
|
$
35,589.2
|
|
$
35,046.1
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
Accounts
payable
|
$
39.7
|
|
$
51.8
|
|
Short-term
debt
|
-
|
|
420.5
|
|
Other current
liabilities
|
241.2
|
|
270.4
|
|
Cash performance
bonds and guaranty fund contributions
|
4,241.8
|
|
4,038.5
|
|
Total current
liabilities
|
4,522.7
|
|
4,781.2
|
|
Long-term debt
|
2,105.8
|
|
2,104.8
|
|
Deferred tax liabilities,
net
|
7,786.5
|
|
7,840.4
|
|
Other liabilities
|
201.1
|
|
191.5
|
|
Total Liabilities
|
14,616.1
|
|
14,917.9
|
|
Redeemable non-controlling
interest
|
70.6
|
|
68.1
|
|
Shareholders' equity
|
20,902.5
|
|
20,060.1
|
|
Total Liabilities and
Shareholders' Equity
|
$
35,589.2
|
|
$
35,046.1
|
|
|
|
|
|
CME Group
Inc. and Subsidiaries
|
|
Consolidated
Statements of Income
|
|
(dollars in
millions, except per share amounts; shares in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
Six Months
Ended
|
|
|
June
30,
|
|
June
30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Revenues
|
|
|
|
|
|
|
|
|
Clearing and
transaction fees
|
$ 687.8
|
|
$ 684.2
|
|
$ 1,379.1
|
|
$ 1,262.2
|
|
Market data and
information services
|
107.9
|
|
102.0
|
|
214.9
|
|
189.6
|
|
Access and
communication fees
|
11.3
|
|
11.2
|
|
22.8
|
|
22.1
|
|
Other
|
31.3
|
|
16.5
|
|
53.1
|
|
33.2
|
|
Total
Revenues
|
838.3
|
|
813.9
|
|
1,669.9
|
|
1,507.1
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
Compensation and
benefits
|
117.5
|
|
103.1
|
|
239.8
|
|
201.9
|
|
Communications
|
10.8
|
|
10.9
|
|
20.7
|
|
21.0
|
|
Technology support
services
|
13.4
|
|
12.7
|
|
25.4
|
|
24.9
|
|
Professional fees
and outside services
|
30.7
|
|
25.2
|
|
61.4
|
|
56.4
|
|
Amortization of
purchased intangibles
|
33.0
|
|
32.3
|
|
66.2
|
|
63.1
|
|
Depreciation and
amortization
|
31.7
|
|
32.8
|
|
62.7
|
|
65.0
|
|
Occupancy and
building operations
|
19.0
|
|
20.2
|
|
38.4
|
|
40.7
|
|
Licensing and
other fee agreements
|
18.6
|
|
21.2
|
|
42.1
|
|
42.3
|
|
Other
|
29.1
|
|
40.4
|
|
54.6
|
|
62.0
|
|
Total
Expenses
|
303.8
|
|
298.8
|
|
611.3
|
|
577.3
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
534.5
|
|
515.1
|
|
1,058.6
|
|
929.8
|
|
|
|
|
|
|
|
|
|
|
Non-Operating Income
(Expense)
|
|
|
|
|
|
|
|
|
Investment
income
|
4.6
|
|
4.4
|
|
23.4
|
|
15.5
|
|
Gains (losses) on
derivative investments
|
-
|
|
-
|
|
(0.1)
|
|
6.0
|
|
Interest and other
borrowing costs
|
(28.7)
|
|
(37.9)
|
|
(58.8)
|
|
(69.3)
|
|
Equity in net
losses of unconsolidated subsidiaries
|
(1.1)
|
|
(1.5)
|
|
(2.2)
|
|
(3.0)
|
|
Total
Non-Operating
|
(25.2)
|
|
(35.0)
|
|
(37.7)
|
|
(50.8)
|
|
|
|
|
|
|
|
|
|
|
Income Before Income
Taxes
|
509.3
|
|
480.1
|
|
1,020.9
|
|
879.0
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
(213.7)
|
|
(208.9)
|
|
(268.2)
|
|
(367.6)
|
|
Net Income
|
295.6
|
|
271.2
|
|
752.7
|
|
511.4
|
|
Less: Net income attributable to
redeemable non-controlling interest
|
1.9
|
|
0.5
|
|
2.4
|
|
0.5
|
|
Net Income Attributable to CME
Group
|
$ 293.7
|
|
$ 270.7
|
|
$ 750.3
|
|
$ 510.9
|
|
|
|
|
|
|
|
|
|
|
Earnings per Common Share
Attributable to CME Group:
|
|
|
|
|
|
|
|
|
Basic
|
$ 4.40
|
|
$ 4.13
|
|
$ 11.23
|
|
$
7.75
|
|
Diluted
|
4.38
|
|
4.11
|
|
11.20
|
|
7.73
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of
Common Shares:
|
|
|
|
|
|
|
|
|
Basic
|
66,759
|
|
65,582
|
|
66,808
|
|
65,906
|
|
Diluted
|
66,974
|
|
65,784
|
|
67,018
|
|
66,104
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
|
Second-quarter 2010 results
included a $20.5 million write down of goodwill of the company's
subsidiary, Credit Market Analysis Limited (CMA).
|
|
Year-to-date 2011 results
include the Q1 2011 tax adjustment reflecting 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.
|
|
|
|
|
|
|
|
|
|
|
CME Group
Inc.
|
|
Quarterly
Operating Statistics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2Q
2010
|
|
3Q
2010
|
|
4Q
2010
|
|
1Q
2011
|
|
2Q
2011
|
|
Trading Days
|
64
|
|
64
|
|
64
|
|
62
|
|
63
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly
Average Daily Volume (ADV)
|
|
|
|
|
|
|
|
|
|
|
|
|
CME Group
ADV (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Product Line
|
2Q
2010
|
|
3Q
2010
|
|
4Q
2010
|
|
1Q
2011
|
|
2Q
2011
|
|
Interest rates
|
6,074
|
|
5,020
|
|
5,566
|
|
6,424
|
|
6,449
|
|
Equities
|
3,455
|
|
2,809
|
|
2,545
|
|
2,906
|
|
2,842
|
|
Foreign exchange
|
1,035
|
|
866
|
|
887
|
|
961
|
|
918
|
|
Energy
|
1,798
|
|
1,657
|
|
1,581
|
|
1,973
|
|
1,757
|
|
Agricultural
commodities
|
855
|
|
941
|
|
1,067
|
|
1,154
|
|
1,159
|
|
Metals
|
308
|
|
257
|
|
372
|
|
376
|
|
403
|
|
Total
|
13,525
|
|
11,550
|
|
12,018
|
|
13,794
|
|
13,528
|
|
|
|
|
|
|
|
|
|
|
|
|
Venue
|
|
|
|
|
|
|
|
|
|
|
Electronic
|
11,340
|
|
9,574
|
|
9,978
|
|
11,605
|
|
11,454
|
|
Open outcry
|
1,539
|
|
1,327
|
|
1,418
|
|
1,467
|
|
1,393
|
|
Privately negotiated
|
198
|
|
181
|
|
222
|
|
224
|
|
242
|
|
Exchange-traded
Total
|
13,077
|
|
11,082
|
|
11,618
|
|
13,296
|
|
13,090
|
|
CME ClearPort
|
448
|
|
468
|
|
400
|
|
498
|
|
438
|
|
Total
|
13,525
|
|
11,550
|
|
12,018
|
|
13,794
|
|
13,528
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Rate
Per Contract (RPC)
|
|
|
|
|
|
|
|
|
|
|
|
|
CME Group
RPC
|
|
|
|
|
|
|
|
|
|
|
|
|
Product Line
|
2Q
2010
|
|
3Q
2010
|
|
4Q
2010
|
|
1Q
2011
|
|
2Q
2011
|
|
Interest rates
|
$ 0.481
|
|
$ 0.495
|
|
$ 0.496
|
|
$ 0.481
|
|
$ 0.486
|
|
Equities
|
0.713
|
|
0.708
|
|
0.702
|
|
0.705
|
|
0.709
|
|
Foreign exchange
|
0.798
|
|
0.795
|
|
0.804
|
|
0.823
|
|
0.868
|
|
Energy
|
1.581
|
|
1.540
|
|
1.631
|
|
1.573
|
|
1.595
|
|
Agricultural
commodities
|
1.282
|
|
1.256
|
|
1.219
|
|
1.271
|
|
1.303
|
|
Metals
|
1.749
|
|
1.791
|
|
1.708
|
|
1.732
|
|
1.636
|
|
Average
RPC
|
$ 0.790
|
|
$ 0.810
|
|
$ 0.813
|
|
$ 0.808
|
|
$ 0.807
|
|
|
|
|
|
|
|
|
|
|
|
|
Venue
|
|
|
|
|
|
|
|
|
|
|
Exchange-traded
|
$ 0.732
|
|
$ 0.747
|
|
$ 0.748
|
|
$ 0.740
|
|
$ 0.745
|
|
CME ClearPort
|
2.489
|
|
2.292
|
|
2.704
|
|
2.630
|
|
2.665
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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-E
SOURCE CME Group Inc.