10-KPeriod: FY2010

CME GROUP INC. Annual Report, Year Ended Dec 31, 2010

Filed February 28, 2011For Securities:CME

Summary

CME Group Inc. (CME) reported robust financial performance for the fiscal year ending December 31, 2010. The company experienced a significant increase in total revenues, driven primarily by a rise in clearing and transaction fees, bolstered by higher trading volumes across key product lines like interest rate and energy futures. This growth was also supported by an expansion in market data and information services, partly due to strategic initiatives like the joint venture with Dow Jones. Strategically, CME Group continued its expansion by acquiring Elysian Systems Ltd. and establishing CME Clearing Europe, aiming to broaden its global reach and diversify its service offerings, particularly in the over-the-counter (OTC) derivatives market. The company's integrated business model, which combines trading execution, clearing, and settlement services, remained a core strength. Despite facing a dynamic and competitive regulatory environment, notably the ongoing implementation of the Dodd-Frank Act, CME Group demonstrated resilience and strategic foresight in navigating these changes. For investors, the report highlights steady revenue growth, a diversified product portfolio, and strategic investments in technology and global expansion. The company maintained its commitment to shareholder returns through consistent dividend payments and share repurchases. While acknowledging the inherent risks in the financial industry and the evolving regulatory landscape, CME Group's financial results and strategic initiatives position it favorably for continued operations and growth.

Financial Highlights

49 data points
Beta

Revenue

$3.00B

Net Income

$951.40M

31.7% Net Margin

EPS (Diluted)

$2.86

Total Assets

$35.05B

Cash & Equivalents

$855.20M

Free Cash Flow

$1.20B

Financial Statements
Beta
Revenue$3.00B
Operating Expenses$1.17B
Operating Income$1.83B
Net Income$951.40M
EPS (Basic)$2.87
EPS (Diluted)$2.86
Shares Outstanding (Basic)331.49M
Shares Outstanding (Diluted)332.48M

Key Highlights

  • 1Total revenues increased by 15% in 2010 compared to 2009, reaching $3,003.7 million, primarily driven by a 15% increase in clearing and transaction fees.
  • 2The company successfully expanded its global footprint and service offerings through strategic acquisitions (Elysian Systems Ltd.) and the establishment of CME Clearing Europe.
  • 3Electronic trading continued to be the dominant venue, accounting for 83% of total trading volume in 2010, up from 81% in 2009.
  • 4Net income attributable to CME Group increased by 15% year-over-year, reaching $951.4 million, with diluted earnings per share rising to $14.31.
  • 5The company continued its focus on product diversification, launching over 200 new products in 2010, including expansions in Treasury futures and options.
  • 6CME Group increased its dividend policy target to approximately 35% of the prior year's cash earnings.
  • 7The company reported strong operating income of $1,831.1 million, maintaining a healthy operating margin of 61%.

Frequently Asked Questions

The primary driver of CME Group's revenue growth in 2010 was the increase in clearing and transaction fees, which rose by 15% due to higher trading volumes across various product lines, including interest rate, equity, energy, and agricultural commodities. Market data and information services also contributed significantly with a 19% increase.

CME Group's strategic initiatives, such as the formation of the CME Group Index Services joint venture with Dow Jones and the acquisition of Elysian Systems Ltd., aimed to diversify revenue streams and expand market reach. The establishment of CME Clearing Europe in London was a key step in globalizing its operations and offering OTC clearing services internationally.

Key risks highlighted include the company's dependence on trading volumes, which are influenced by volatile market and economic conditions. Intense competition from other exchanges and alternative trading platforms is also a significant concern. Furthermore, the evolving regulatory landscape, particularly the implementation of the Dodd-Frank Act, presents uncertainties and potential impacts on business operations and profitability.

CME Group maintained a manageable debt level. The company reported total debt of approximately $2.5 billion as of December 31, 2010, with ample borrowing capacity. It refinanced its senior credit facility in January 2011, demonstrating proactive capital management. The company also continued to return capital to shareholders through dividends and share repurchases.