CME Q2 income soars

Source: CME Group

CME Group (NASDAQ:CME) today reported total revenues increased 71 percent to $563 million and net income increased 60 percent to $201 million for second-quarter 2008 compared with second-quarter 2007.

Diluted earnings per share rose 3 percent to $3.67. The 2008 GAAP results reflect the operations of both Chicago Mercantile Exchange (CME) and Board of Trade of the City of Chicago (CBOT) and include: $6.7 million of CBOT merger-related operating expenses consisting of restructuring charges, integration and legal costs, and the acceleration of depreciation related to CBOT data centers; $13.2 million of costs related primarily to changes in the fair value of the company's FX hedge associated with its investment in BM&FBOVESPA SA; and a $3.6 million increase to non-operating expenses associated with the guarantee for holders of the Chicago Board Options Exchange (CBOE) exercise right privilege (ERP). The GAAP results for 2007 reflect the operations of CME only.

Pro forma non-GAAP diluted earnings per share in the second quarter were $3.93, a 12 percent increase versus second-quarter 2007. Pro forma results for second-quarter 2008 exclude the items listed above related to the CBOT merger, BM&FBOVESPA SA and the CBOE ERP guarantee. Pro forma non-GAAP revenues increased 10 percent to $563 million and net income increased 11 percent to $215 million for second-quarter 2008 compared with second-quarter 2007. The pro forma comparative results for 2007 reflect the operating results of both CME and CBOT as if they were combined. 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 these pro forma results is included in the attached tables.

"CME Group's product diversity helps customers mitigate risks across a wide array of asset classes, which is especially important in a challenging economy," said CME Group Executive Chairman Terry Duffy. "We have seen record quarterly volumes in our foreign exchange and commodities product lines, and view current marw current market conditions for interest rates as a cyclical slowdown rather than a long-term issue. We have a number of new interest rate and treasury products in the pipeline -- including cleared swaps and inter-commodity spreads -- and continue to innovate within all our product lines as we extend distribution and enhance speed and functionality. We also continue to expand globally, and are on schedule to launch order routing from CME Group to BM&FBOVESPA, the largest exchange in Latin America, in September."

"The increased revenues and earnings posted by CME Group reflect the strength and stability of our business model and the continued success of our global growth plan," said CME Chief Executive Officer Craig Donohue.

"We serve our expanding base of customers through the growth of new products that build on our core business and also through multiple non-core initiatives that strengthen our position in the exchange space. Going forward, for example, our proposed NYMEX transaction will enable us to diversify into energy and metals markets as well as expand into over-the-counter markets. In addition to new trading opportunities, our customers will benefit from the potential for significant cost savings and streamlined operations. We are confident in the value this transaction represents for shareholders of both companies and in the opportunity it provides for capitalizing on the global growth trend in derivatives."

All references to volume and rate per contract information in the text of this document exclude our non-traditional TRAKRS products, for which CME Group receives significantly lower clearing fees than other CME Group products, CME Group Auction Markets products, which were available to trade prior to July 2007, and Swapstream products.

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