01—Abstract
Summary
Summary of the 10-K filed February 26, 2010. Cited figures are marked; the original filing is the authoritative source.
CME Group Inc. (CME) reported solid financial performance for the year ended December 31, 2009, navigating a challenging economic environment.
Total revenues reached $2.61 billiona, a slight increase from the prior year, driven by strong performance in quotation data fees and stable clearing and transaction fees, despite a notable decline in trading volume, particularly in interest rate products. The company successfully integrated the NYMEX acquisition, contributing to its diverse product portfolio. CME Group demonstrated resilience by maintaining its market leadership and investing in technology, including enhancements to its Globex platform and expansion into over-the-counter markets with services like CME ClearPort.
Despite the economic headwinds, the company maintained a strong balance sheet and generated substantial operating cash flow. The focus on growing its core business, globalizing its operations, and serving the over-the-counter markets remains central to its strategy.
While the company faced challenges such as increased regulatory scrutiny and market volatility, its robust financial safeguards and clearing operations protected customers from counterparty failures. CME Group ended the year with a healthy liquidity position and continued its commitment to shareholder returns through a consistent quarterly dividend.
02—Key points
Key Highlights
- Total revenues for 2009 were $2.61 billion, a 2% increase year-over-year, reflecting the company's ability to generate revenue across its diverse product lines.
- Clearing and transaction fees remained the primary revenue driver, totaling $2.16 billion, showing resilience despite an overall decline in trading volume.
- Quotation data fees saw a significant increase of 18% to $331.1 million, demonstrating the growing value of the company's market data services.
- The company continued to expand its over-the-counter services by clearing credit default swaps and growing its CME ClearPort offerings, indicating a strategic move into new markets.
- Despite a 20% decrease in average daily trading volume compared to 2008, the company's open interest grew by 24%, suggesting sustained market participation and liquidity.
- CME Group maintained a strong financial position with $5.98 billion in cash performance bonds and security deposits, underscoring its robust financial safeguards.
- The company announced plans for a joint venture to own Dow Jones Indexes, aiming to diversify revenue streams and expand its index business.
- A regular quarterly dividend of $1.15 per share was maintained, reflecting the company's commitment to shareholder returns.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2009filed February 26, 2010Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $2.61B$2.56B | +2.0% |
| Operating Expenses | $1.02B$978.80M | +4.6% |
| Operating Income | $1.59B$1.58B | +0.4% |
| Net Income | $825.80M$715.50M | +15.4% |
| EPS (Basic) | $2.49$2.44 | +2.1% |
| EPS (Diluted) | $2.48$2.43 | +2.3% |
| Shares Outstanding (Basic) | 331.83M293.69M | +13.0% |
| Shares Outstanding (Diluted) | 332.74M294.83M | +12.9% |
05—Questions
Frequently Asked Questions
How did the company perform financially in 2009, considering the economic climate?
CME Group Inc. reported total revenues of $2.61 billion for 2009, a slight increase from 2008, driven by growth in quotation data fees and stable clearing and transaction fees. Despite a 20% decrease in average daily trading volume, largely due to market volatility and reduced risk appetite from customers, the company maintained strong operating income and a healthy liquidity position.
What are the company's key growth strategies outlined for the future?
CME Group's growth strategy focuses on three key areas: growing the core business through product diversification and customer base expansion; globalizing the business by targeting international customers through strategic investments; and serving the over-the-counter markets by developing new products and services and exploring acquisitions and alliances.
How did the integration of the NYMEX acquisition impact the company's results?
The acquisition of NYMEX Holdings in August 2008 contributed to a significant increase in revenues and a broader product portfolio, particularly in energy and metals. While the integration involved restructuring costs, it enhanced CME Group's market position and offering, contributing to the company's overall financial performance in 2009.
What is the company's approach to managing counterparty risk, especially in light of the financial crisis?
CME Group emphasizes strong financial safeguards, including its integrated clearing house (CME Clearing), which acts as the counterparty to all trades. The company requires clearing firms to maintain performance bonds and security deposits, marks positions to market at least twice daily, and has a multi-billion dollar safeguard package. Notably, the report states that no customers incurred financial loss due to a counterparty failure during the crisis period.
06—Continue