CME Group Inc. Reports Third-Quarter 2014 Financial Results
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"Our core business performed very well during the third quarter, with our record overall options volume and record volume from outside
"During the third quarter, we streamlined our organizational structure to better meet the needs of our global client base and accelerate future earnings growth and cash flow," said
Third-quarter 2014 average daily volume was 13.5 million contracts, up 12 percent from third-quarter 2013. Clearing and transaction fee revenues were
As of
Guidance
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. We want to caution you not to place undue reliance on any forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. 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 while maintaining reliability and ensuring that such technology is not vulnerable to security risks; 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 swaps 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. |
CME-G
Consolidated Balance Sheets (in millions) | ||||||
|
| |||||
ASSETS |
||||||
Current Assets: |
||||||
Cash and cash equivalents |
$ |
1,087.9 |
$ |
2,469.7 | ||
Marketable securities |
72.8 |
68.4 | ||||
Accounts receivable, net of allowance |
344.8 |
302.7 | ||||
Other current assets (includes |
275.6 |
209.7 | ||||
Performance bonds and guaranty fund contributions |
32,385.3 |
21,355.1 | ||||
Total current assets |
34,166.4 |
24,405.6 | ||||
Property, net of accumulated depreciation and amortization |
498.7 |
513.4 | ||||
Intangible assets—trading products |
17,175.3 |
17,175.3 | ||||
Intangible assets—other, net |
2,662.3 |
2,741.2 | ||||
Goodwill |
7,569.0 |
7,569.0 | ||||
Other assets (includes |
1,898.6 |
1,873.3 | ||||
Total Assets |
$ |
63,970.3 |
$ |
54,277.8 | ||
LIABILITIES AND EQUITY |
||||||
Current Liabilities: |
||||||
Accounts payable |
$ |
35.0 |
$ |
36.2 | ||
Short-term debt |
— |
749.9 | ||||
Other current liabilities |
207.6 |
1,169.8 | ||||
Performance bonds and guaranty fund contributions |
32,385.3 |
21,355.1 | ||||
Total current liabilities |
32,627.9 |
23,311.0 | ||||
Long-term debt |
2,107.7 |
2,107.2 | ||||
Deferred income tax liabilities, net |
7,308.4 |
7,249.7 | ||||
Other liabilities |
389.2 |
449.4 | ||||
Total Liabilities |
42,433.2 |
33,117.3 | ||||
|
21,537.1 |
21,154.8 | ||||
Non-controlling interest |
— |
5.7 | ||||
Total Equity |
21,537.1 |
21,160.5 | ||||
Total Liabilities and Equity |
$ |
63,970.3 |
$ |
54,277.8 |
Consolidated Statements of Income (dollars in millions, except per share amounts; shares in thousands) | ||||||||||||
Quarter Ended |
Nine Months Ended | |||||||||||
2014 |
2013 |
2014 |
2013 | |||||||||
Revenues |
||||||||||||
Clearing and transaction fees |
$ |
641.8 |
$ |
597.9 |
$ |
1,903.3 |
$ |
1,883.6 | ||||
Market data and information services |
87.7 |
78.6 |
266.7 |
238.9 | ||||||||
Access and communication fees |
20.8 |
20.3 |
61.6 |
62.4 | ||||||||
Other |
12.1 |
17.8 |
39.8 |
64.4 | ||||||||
Total Revenues |
762.4 |
714.6 |
2,271.4 |
2,249.3 | ||||||||
Expenses |
||||||||||||
Compensation and benefits |
132.1 |
134.0 |
407.3 |
392.3 | ||||||||
Communications |
7.8 |
9.2 |
24.3 |
26.7 | ||||||||
Technology support services |
13.8 |
13.4 |
42.3 |
39.6 | ||||||||
Professional fees and outside services |
32.2 |
35.6 |
99.3 |
85.4 | ||||||||
Amortization of purchased intangibles |
25.3 |
25.6 |
75.7 |
77.4 | ||||||||
Depreciation and amortization |
32.7 |
35.0 |
101.1 |
100.8 | ||||||||
Occupancy and building operations |
24.7 |
19.2 |
71.1 |
56.7 | ||||||||
Licensing and other fee agreements |
25.5 |
25.7 |
80.2 |
73.8 | ||||||||
Other |
37.9 |
16.4 |
73.2 |
82.8 | ||||||||
Total Expenses |
332.0 |
314.1 |
974.5 |
935.5 | ||||||||
Operating Income |
430.4 |
400.5 |
1,296.9 |
1,313.8 | ||||||||
Non-Operating Income (Expense) |
||||||||||||
Investment income |
7.4 |
12.6 |
25.7 |
34.9 | ||||||||
Interest and other borrowing costs |
(28.7) |
(34.6) |
(90.7) |
(112.8) | ||||||||
Equity in net gains (losses) of unconsolidated subsidiaries |
20.0 |
20.4 |
63.9 |
58.1 | ||||||||
Other non-operating income (expense) |
— |
— |
1.8 |
— | ||||||||
Total Non-Operating |
(1.3) |
(1.6) |
0.7 |
(19.8) | ||||||||
Income before Income Taxes |
429.1 |
398.9 |
1,297.6 |
1,294.0 | ||||||||
Income tax provision |
139.1 |
162.6 |
477.2 |
509.0 | ||||||||
Net Income |
290.0 |
236.3 |
820.4 |
785.0 | ||||||||
Less: net income (loss) attributable to non-controlling interests |
— |
(0.4) |
(0.2) |
1.3 | ||||||||
Net Income Attributable to |
$ |
290.0 |
$ |
236.7 |
$ |
820.6 |
$ |
783.7 | ||||
Earnings per Common Share Attributable to |
||||||||||||
Basic |
$ |
0.87 |
$ |
0.71 |
$ |
2.46 |
$ |
2.36 | ||||
Diluted |
0.86 |
0.71 |
2.44 |
2.35 | ||||||||
Weighted Average Number of Common Shares: |
||||||||||||
Basic |
334,424 |
332,763 |
334,144 |
332,355 | ||||||||
Diluted |
336,172 |
334,674 |
335,820 |
334,055 |
Quarterly Operating Statistics | |||||||||||||||
3Q 2013 |
4Q 2013 |
1Q 2014 |
2Q 2014 |
3Q 2014 | |||||||||||
Trading Days |
64 |
64 |
61 |
63 |
64 | ||||||||||
Quarterly Average Daily Volume (ADV) CME Group ADV (in thousands) | |||||||||||||||
Product Line |
3Q 2013 |
4Q 2013 |
1Q 2014 |
2Q 2014 |
3Q 2014 | ||||||||||
Interest rate |
5,839 |
5,274 |
6,725 |
6,668 |
7,181 | ||||||||||
Equity |
2,408 |
2,471 |
2,890 |
2,465 |
2,586 | ||||||||||
Foreign exchange |
792 |
705 |
817 |
638 |
797 | ||||||||||
Energy |
1,609 |
1,571 |
1,705 |
1,457 |
1,562 | ||||||||||
Agricultural commodity |
1,009 |
992 |
1,168 |
1,084 |
1,058 | ||||||||||
Metal |
360 |
317 |
355 |
323 |
308 | ||||||||||
Total |
12,018 |
11,331 |
13,659 |
12,636 |
13,493 | ||||||||||
Venue |
|||||||||||||||
Electronic |
10,199 |
9,723 |
11,703 |
10,888 |
11,627 | ||||||||||
Open outcry |
1,173 |
957 |
1,179 |
1,100 |
1,208 | ||||||||||
Privately negotiated* |
646 |
651 |
778 |
647 |
657 | ||||||||||
Total |
12,018 |
11,331 |
13,659 |
12,636 |
13,493 | ||||||||||
Average Rate Per Contract (RPC) CME Group RPC | |||||||||||||||
Product Line |
3Q 2013 |
4Q 2013 |
1Q 2014 |
2Q 2014 |
3Q 2014 | ||||||||||
Interest rate |
$ |
0.484 |
$ |
0.504 |
$ |
0.481 |
$ |
0.473 |
$ |
0.473 | |||||
Equity |
0.695 |
0.702 |
0.712 |
0.714 |
0.687 | ||||||||||
Foreign exchange |
0.819 |
0.835 |
0.804 |
0.861 |
0.788 | ||||||||||
Energy |
1.300 |
1.279 |
1.364 |
1.298 |
1.291 | ||||||||||
Agricultural commodity |
1.323 |
1.327 |
1.369 |
1.430 |
1.362 | ||||||||||
Metal |
1.626 |
1.682 |
1.707 |
1.715 |
1.707 | ||||||||||
Average RPC |
$ |
0.762 |
$ |
0.780 |
$ |
0.767 |
$ |
0.749 |
$ |
0.725 |
*The privately negotiated venue average daily volume includes both traditional block trades as well as what was historically categorized as CME ClearPort. Going forward there will no longer be a break out for CME ClearPort. |
| |||
Reconciliation of GAAP to Non-GAAP Measures | |||
(dollars in millions, except per share amounts; shares in thousands) | |||
Quarter Ended | |||
| |||
GAAP Net Income Attributable to |
$ |
290.0 | |
Foreign exchange transaction losses1 |
12.8 | ||
Acquisition-related costs |
2.7 | ||
Income tax effect related to above |
(5.8) | ||
Other income tax items2 |
(18.9) | ||
Adjusted Net Income Attributable to |
$ |
280.8 | |
GAAP Earnings per Common Share Attributable to |
|||
Basic |
$ |
0.87 | |
Diluted |
0.86 | ||
Adjusted earnings per Common Share Attributable to |
|||
Basic |
$ |
0.84 | |
Diluted |
0.84 | ||
Weighted Average Number of Common Shares: |
|||
Basic |
334,424 | ||
Diluted |
336,172 |
1. Third-quarter 2014 results included foreign exchange transaction net losses principally related to cash held in British pounds within foreign entities whose functional currency is the U.S. dollar. |
2. Other income tax items include the impact of a change in state and local tax apportionment factors and a favorable settlement of various tax audits. |
SOURCE CME Group Inc.
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