CME Group Inc. reports solid fourth-quarter 2009 financial results

CME Group Inc. reports solid fourth-quarter 2009 financial results

04/02/10

CME Group Inc. (Nasdaq: CME) today reported that fourth-quarter GAAP total revenues were $667 million and GAAP operating income was $402 million. Fourth-quarter net income on a GAAP basis was $203 million and diluted earnings per share on a GAAP basis were $3.04.

The 2009 GAAP results reflect the operations of Chicago Mercantile Exchange (CME), Board of Trade of the City of Chicago (CBOT) and New York Mercantile Exchange (NYMEX) and include reductions in net income of $22 million, consisting of an impairment charge of $24 million on our investment in the Dubai Mercantile Exchange (DME) and net favorable impacts to net income of $2 million related to the ERP settlement. The 2008 GAAP results reflect the operations of both CME and CBOT, as well as the results of NYMEX after August 22, 2008, when the acquisition closed.

Fourth-quarter pro forma non-GAAP diluted earnings per share were $3.37, down 6 percent compared with the prior-year period. All pro forma results reflect the operations of both CME Group and NYMEX as if they were combined for all periods reported, and fourth-quarter 2009 pro forma non-GAAP results exclude the impairment charge, ERP adjustment and other merger-related items. Despite challenging market conditions that persisted throughout 2009, fourth-quarter represented the company's best quarterly revenue of the year. Total pro forma revenues decreased 4 percent from the prior year to $667 million, but increased $17 million from third-quarter 2009 revenues. Pro forma operating expenses decreased 2 percent to $258 million, compared with the same period last year.

Fourth-quarter pro forma results also included the highest quarterly operating income and net income of the year. Fourth-quarter operating income of $409 million decreased 5 percent from $430 million for the year-ago period, but increased $3 million from third-quarter 2009. Fourth-quarter 2009 operating margin was 61 percent, down slightly from the same period last year. Operating margin is defined as operating income as a percentage of total revenues. Fourth-quarter 2009 net income decreased 6 percent to $225 million, compared with fourth-quarter 2008, but increased $2 million from third-quarter 2009.

All references to volume and rate per contract information in the text of this document exclude our non-traditional TRAKRSproducts, for which CME Group receives significantly lower clearing fees than other CME Group products, HuRLO products and credit default swap clearing.

Pro forma measures do not replace and are not a substitute for GAAP financial results. They are provided to improve overall understanding of current financial performance and to provide a meaningful comparison with prior periods. A full reconciliation of fourth-quarter and full-year 2009 pro forma results to GAAP results is included with the attached financial statements.

"Despite lingering market stress and a cyclical year-end slowdown, CME Group finished the fourth quarter with the strongest quarterly performance all year," said CME Group Executive Chairman Terry Duffy. "We achieved the highest quarterly revenue, operating income and net income as some of our major markets began to rebound. For example, we saw more than 55 percent growth in FX and metals, and approximately 20 percent growth in interest rates and energy. Additionally, 2010 is off to a great start, reflected in January volume - our second highest volume month since the credit crisis began - and accompanied by a 21 percent rise in open interest versus this time last year."

"The past year was marked by tremendous progress in spite of great challenges," said CME Chief Executive Officer Craig Donohue. "We completed the NYMEX integration, continued providing best-in-class technology through the launch of a new data center, added personnel to serve customers in key markets globally, and expanded the range of our offerings worldwide - all while exercising strong expense discipline. As part of our efforts to grow internationally, we initiated relationships with Korea Exchange and Bursa Malaysia and strengthened our relationship with BM&FBOVESPA. We also launched credit default swap clearing in December that will further expand our clearing capabilities into the over-the-counter markets. Overall, we have built a strong foundation for growth as the economy continues to stabilize."

 
 
    CME Group Inc. Fourth-Quarter and Full-Year 2009 Results
 
    Financial Highlights:
 
    GAAP
 
    ($s in millions, except
     per share)               Q4 FY09  Q4 FY08  Y/Y    FY09   FY08   Y/Y
                              -------  -------  ---    ----   ----   ---
    Revenues                    $667     $692    -4% $2,613 $2,561    2%
    Expenses                    $265     $274    -3% $1,024   $979    5%
    Operating Income            $402     $418    -4% $1,589 $1,582    0%
    Operating Margin %          60.3%    60.4%         60.8%  61.8%
    Net Income                  $203      $62   226%   $826   $715   15%
    Diluted EPS                $3.04    $0.93   227% $12.41 $12.13    2%
 
 
    Pro Forma Non-GAAP
 
    ($s in millions, except
     per share)               Q4 FY09  Q4 FY08  Y/Y    FY09   FY08   Y/Y
                              -------  -------  ---    ----   ----   ---
    Revenues                    $667     $692    -4% $2,613 $3,052  -14%
    Expenses                    $258     $262    -2%   $998 $1,090   -8%
    Operating Income            $409     $430    -5% $1,615 $1,962  -18%
    Operating Margin %          61.3%    62.1%         61.8%  64.3%
    Net Income                  $225     $239    -6%   $885 $1,083  -18%
    Diluted EPS                $3.37    $3.58    -6% $13.29 $16.16  -18%
 
    NOTE: See the CME Group Inc. Reconciliation of GAAP to Pro Forma Non-GAAP
    Measures for detail related to the adjustments made to reach the pro forma
    results.

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