CME Group Inc. Reports 26 Percent Increase in First-Quarter Operating Income Driven By Highest Quarterly Revenue Ever
First-quarter net income attributable to
"
"Record first-quarter revenues reflected an overall volume increase of nearly 20 percent, which led to strong bottom-line results," said
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
Despite near record volume, the first quarter total average rate per contract was
First-quarter 2011 operating expense was
As the world's leading and most diverse derivatives marketplace,
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
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
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