CME Group Inc. Reports Third-Quarter 2012 Financial Results
Third-quarter 2012 results included a non-recurring
"Given the dynamic and changing global environment, we continue to advocate on behalf of our customers, businesses and the futures industry as new regulations are being implemented," said
"During the quarter, we continued to expand our industry-leading portfolio of diverse products as part of growing our global footprint," said
Third-quarter 2012 average daily volume was 10.8 million contracts, down 26 percent from an exceptionally strong third-quarter 2011 which included the all-time record
Third-quarter 2012 operating expense was
During the third quarter, the effective tax rate was 40.7 percent1, excluding the non-recurring item discussed earlier. As of
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 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 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.
| ||||||||
Consolidated Balance Sheets | ||||||||
(in millions) | ||||||||
September 30, 2012 |
| |||||||
ASSETS |
||||||||
Current Assets: |
||||||||
Cash and cash equivalents |
$ |
2,016.9 |
$ |
1,042.3 |
||||
Marketable securities |
62.0 |
47.6 |
||||||
Accounts receivable, net of allowance |
296.9 |
289.4 |
||||||
Other current assets (includes |
245.7 |
232.6 |
||||||
Cash performance bonds and guaranty fund contributions |
7,395.3 |
9,333.9 |
||||||
Total current assets |
10,016.8 |
10,945.8 |
||||||
Property, net of accumulated depreciation and amortization |
705.4 |
821.9 |
||||||
Intangible assets—trading products |
17,040.5 |
17,040.5 |
||||||
Intangible assets—other, net |
2,879.5 |
3,312.8 |
||||||
Goodwill |
7,538.3 |
7,984.0 |
||||||
Other assets (includes |
1,677.5 |
653.7 |
||||||
Total Assets |
$ |
39,858.0 |
$ |
40,758.7 |
||||
LIABILITIES AND SHAREHOLDERS' EQUITY |
||||||||
Current Liabilities: |
||||||||
Accounts payable |
$ |
44.5 |
$ |
31.1 |
||||
Short-term debt |
749.6 |
— |
||||||
Other current liabilities |
200.1 |
250.2 |
||||||
Cash performance bonds and guaranty fund contributions |
7,395.3 |
9,333.9 |
||||||
Total current liabilities |
8,389.5 |
9,615.2 |
||||||
Long-term debt |
2,106.4 |
2,106.8 |
||||||
Deferred income tax liabilities, net |
7,319.8 |
7,226.8 |
||||||
Other liabilities |
254.1 |
187.6 |
||||||
Total Liabilities |
18,069.8 |
19,136.4 |
||||||
Redeemable non-controlling interest |
79.4 |
70.3 |
||||||
Shareholders' equity |
21,708.8 |
21,552.0 |
||||||
Total Liabilities and Shareholders' Equity |
$ |
39,858.0 |
$ |
40,758.7 |
||||
| ||||||||||||||||
Consolidated Statements of Income | ||||||||||||||||
(dollars in millions, except per share amounts; shares in thousands) | ||||||||||||||||
Quarter Ended |
Nine Months Ended | |||||||||||||||
|
September 30, | |||||||||||||||
2012 |
2011 |
2012 |
2011 | |||||||||||||
Revenues |
||||||||||||||||
Clearing and transaction fees |
$ |
562.2 |
$ |
732.7 |
1,826.9 |
$ |
2,111.8 |
|||||||||
Market data and information services |
82.8 |
107.0 |
307.8 |
321.9 |
||||||||||||
Access and communication fees |
23.2 |
12.0 |
65.5 |
34.8 |
||||||||||||
Other |
15.0 |
22.5 |
53.5 |
75.6 |
||||||||||||
Total Revenues |
683.2 |
874.2 |
2,253.7 |
2,544.1 |
||||||||||||
Expenses |
||||||||||||||||
Compensation and benefits |
117.5 |
119.9 |
383.7 |
359.7 |
||||||||||||
Communications |
9.8 |
11.0 |
30.8 |
31.7 |
||||||||||||
Technology support services |
11.8 |
13.3 |
36.7 |
38.7 |
||||||||||||
Professional fees and outside services |
26.7 |
29.0 |
99.2 |
90.4 |
||||||||||||
Amortization of purchased intangibles |
26.2 |
33.0 |
90.3 |
99.2 |
||||||||||||
Depreciation and amortization |
34.5 |
32.4 |
103.0 |
95.1 |
||||||||||||
Occupancy and building operations |
18.8 |
18.5 |
57.8 |
56.9 |
||||||||||||
Licensing and other fee agreements |
19.2 |
22.6 |
63.2 |
64.7 |
||||||||||||
Other |
22.7 |
22.4 |
72.6 |
77.0 |
||||||||||||
Total Expenses |
287.2 |
302.1 |
937.3 |
913.4 |
||||||||||||
Operating Income |
396.0 |
572.1 |
1,316.4 |
1,630.7 |
||||||||||||
Non-Operating Income (Expense) |
||||||||||||||||
Investment income |
13.1 |
3.7 |
31.3 |
27.1 |
||||||||||||
Gains (losses) on derivative investments |
— |
— |
— |
(0.1) |
||||||||||||
Interest and other borrowing costs |
(30.2) |
(29.0) |
(88.2) |
(87.8) |
||||||||||||
Equity in net gains (losses) of unconsolidated subsidiaries |
16.5 |
(0.9) |
14.8 |
(3.1) |
||||||||||||
Other non-operating income (expense) |
0.4 |
— |
65.6 |
— |
||||||||||||
Total Non-Operating |
(0.2) |
(26.2) |
23.5 |
(63.9) |
||||||||||||
Income before Income Taxes |
395.8 |
545.9 |
1,339.9 |
1,566.8 |
||||||||||||
Income tax provision |
176.9 |
230.9 |
601.3 |
499.1 |
||||||||||||
Net Income |
218.9 |
315.0 |
738.6 |
1,067.7 |
||||||||||||
Less: net income (loss) attributable to redeemable non-controlling interest |
0.9 |
(1.1) |
9.1 |
1.3 |
||||||||||||
Net Income Attributable to |
$ |
218.0 |
$ |
316.1 |
$ |
729.5 |
$ |
1,066.4 |
||||||||
Earnings per Common Share Attributable to |
||||||||||||||||
Basic |
$ |
0.66 |
$ |
0.95 |
$ |
2.20 |
$ |
3.20 |
||||||||
Diluted |
0.66 |
0.95 |
2.20 |
3.19 |
||||||||||||
Weighted Average Number of Common Shares: |
||||||||||||||||
Basic |
331,377 |
332,289 |
331,091 |
333,449 |
||||||||||||
Diluted |
332,458 |
333,337 |
332,147 |
334,507 |
||||||||||||
| |||||||||||||||||||
Quarterly Operating Statistics | |||||||||||||||||||
3Q 2011 |
4Q 2011 |
1Q 2012 |
2Q 2012 |
3Q 2012 | |||||||||||||||
Trading Days |
64 |
63 |
62 |
64 |
63 |
||||||||||||||
Quarterly Average Daily Volume (ADV) | |||||||||||||||||||
CME Group ADV (in thousands) | |||||||||||||||||||
Product Line |
3Q 2011 |
4Q 2011 |
1Q 2012 |
2Q 2012 |
3Q 2012 | ||||||||||||||
Interest rates |
6,518 |
4,729 |
5,613 |
5,136 |
4,514 |
||||||||||||||
Equities |
4,040 |
3,147 |
2,390 |
2,919 |
2,391 |
||||||||||||||
Foreign exchange |
988 |
820 |
846 |
920 |
846 |
||||||||||||||
Energy |
1,670 |
1,704 |
1,952 |
1,741 |
1,590 |
||||||||||||||
Agricultural commodities |
1,032 |
1,004 |
1,122 |
1,288 |
1,171 |
||||||||||||||
Metals |
454 |
315 |
385 |
372 |
327 |
||||||||||||||
Total |
14,702 |
11,719 |
12,308 |
12,376 |
10,839 |
||||||||||||||
Venue |
|||||||||||||||||||
Electronic |
12,463 |
9,864 |
10,177 |
10,595 |
9,293 |
||||||||||||||
Open outcry |
1,557 |
1,173 |
1,348 |
1,109 |
979 |
||||||||||||||
Privately negotiated |
257 |
204 |
229 |
238 |
208 |
||||||||||||||
Exchange-traded Total |
14,276 |
11,240 |
11,754 |
11,942 |
10,481 |
||||||||||||||
CME ClearPort |
426 |
479 |
554 |
434 |
358 |
||||||||||||||
Total |
14,702 |
11,719 |
12,308 |
12,376 |
10,839 |
||||||||||||||
Average Rate Per Contract (RPC) | |||||||||||||||||||
CME Group RPC | |||||||||||||||||||
Product Line |
3Q 2011 |
4Q 2011 |
1Q 2012 |
2Q 2012 |
3Q 2012 | ||||||||||||||
Interest rates |
$ |
0.479 |
$ |
0.480 |
$ |
0.475 |
$ |
0.485 |
$ |
0.481 |
|||||||||
Equities |
0.703 |
0.705 |
0.692 |
0.674 |
0.685 |
||||||||||||||
Foreign exchange |
0.801 |
0.828 |
0.841 |
0.807 |
0.808 |
||||||||||||||
Energy |
1.580 |
1.507 |
1.517 |
1.496 |
1.473 |
||||||||||||||
Agricultural commodities |
1.264 |
1.230 |
1.216 |
1.264 |
1.301 |
||||||||||||||
Metals |
1.649 |
1.706 |
1.647 |
1.649 |
1.693 |
||||||||||||||
Average RPC |
$ |
0.779 |
$ |
0.811 |
$ |
0.811 |
$ |
0.812 |
$ |
0.822 |
|||||||||
Venue |
|||||||||||||||||||
Exchange-traded |
$ |
0.724 |
$ |
0.748 |
$ |
0.737 |
$ |
0.750 |
$ |
0.757 |
|||||||||
CME ClearPort |
2.621 |
2.290 |
2.388 |
2.510 |
2.719 |
||||||||||||||
| |||||
Reconciliation of GAAP to Non-GAAP Measures | |||||
(dollars in millions, except per share amounts; shares in thousands) | |||||
Quarter Ended |
|||||
|
|||||
GAAP Results |
|||||
Revenues |
$ |
683.2 |
|||
Expenses |
287.2 |
||||
Operating income |
396.0 |
||||
Operating margin |
58.0% |
||||
Non-Operating income (expense) |
(0.2) |
||||
Income before income taxes |
395.8 |
||||
Income tax provision (benefit) |
176.9 |
||||
Effective tax rate |
44.7% |
||||
Net income |
218.9 |
||||
Less: Net income attributable to redeemable non-controlling interest |
0.9 |
||||
Net Income Attributable to |
$ |
218.0 |
|||
Earnings per Common Share Attributable to |
|||||
Basic |
$ |
0.66 |
|||
Diluted |
0.66 |
||||
Adjustments |
|||||
Reduction to income tax provision1 |
(15.7) |
||||
Addition to net income |
15.7 |
||||
Non-GAAP results, excluding adjustments |
|||||
Revenues |
$ |
683.2 |
|||
Expenses |
287.2 |
||||
Operating income |
396.0 |
||||
Operating margin |
58.0% |
||||
Non-Operating income (expense) |
(0.2) |
||||
Income before income taxes |
395.8 |
||||
Income tax provision (benefit) |
161.2 |
||||
Effective tax rate |
40.7% |
||||
Net income |
234.6 |
||||
Less: Net income attributable to redeemable non-controlling interest |
0.9 |
||||
Net Income Attributable to |
$ |
233.7 |
|||
Adjusted earnings per Common Share Attributable to |
|||||
Basic |
$ |
0.71 |
|||
Diluted |
0.70 |
||||
Weighted Average Number of Common Shares: |
|||||
Basic |
331,377 |
||||
Diluted |
332,458 |
||||
1) Adjustment to tax expense relates to increases in deferred income tax liabilities on S&P Dow Jones Indices due to tax filings as well as increases in deferred tax liabilities related to the acquisition of Pivot, Inc. | |||||
CME-E
SOURCE
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