10-KPeriod: FY2011

CME GROUP INC. Annual Report, Year Ended Dec 31, 2011

Filed February 28, 2012For Securities:CME

Summary

CME Group Inc.'s 2011 Form 10-K details a year of robust growth and strategic expansion, marked by a significant increase in total revenues to $3.28 billion, up 9% from 2010. This growth was primarily driven by a 9% rise in clearing and transaction fees, reflecting a 10% increase in overall contract volume, largely from electronic trading platforms. The company also saw an 8% increase in market data and information services revenue, bolstered by its joint venture in index services. Strategically, CME Group continued its global expansion, launching CME Clearing Europe and focusing on emerging markets. The company also invested in technology and services, including a new co-location business, to enhance its offerings. Despite ongoing regulatory scrutiny and the significant impact of the MF Global bankruptcy, which necessitated financial guarantees and incurred related expenses, CME Group demonstrated resilience, maintaining strong operational performance and a commitment to shareholder returns through dividends and share repurchases. The report highlights a solid financial position and a clear strategy for future growth across asset classes and geographies.

Financial Highlights

49 data points
Beta

Revenue

$3.28B

Net Income

$1.81B

55.2% Net Margin

EPS (Diluted)

$5.43

Total Assets

$40.76B

Cash & Equivalents

$1.04B

Free Cash Flow

$1.17B

Financial Statements
Beta
Revenue$3.28B
Operating Expenses$1.26B
Operating Income$2.02B
Net Income$1.81B
EPS (Basic)$5.45
EPS (Diluted)$5.43
Shares Outstanding (Basic)332.74M
Shares Outstanding (Diluted)333.81M

Key Highlights

  • 1Total revenues reached $3.28 billion in 2011, a 9% increase from 2010, driven by strong clearing and transaction fee growth.
  • 2Average daily contract volume increased by 10% to 13,439 thousand contracts, with 84% executed electronically.
  • 3The company expanded its global reach with the launch of CME Clearing Europe.
  • 4Market data and information services revenue grew by 8%, supported by the Index Services joint venture.
  • 5CME Group announced a shift in its dividend policy, increasing the target payout from 35% to 50% of prior year cash earnings.
  • 6The company provided a $550 million financial guarantee related to the MF Global bankruptcy trustee to facilitate customer fund returns.
  • 7Significant strategic investments were made in technology, including the launch of co-location services.

Frequently Asked Questions

In 2011, CME Group reported total revenues of $3.28 billion, an increase of 9% compared to $3.00 billion in 2010. This growth was primarily driven by a 9% increase in clearing and transaction fees, reflecting higher trading volumes, and an 8% increase in market data and information services revenue.

The MF Global bankruptcy significantly impacted CME Group, leading to write-offs of accounts receivable, legal fees, and losses on collateral posted by its subsidiary GFX. CME Group also provided a $550 million financial guarantee to the MF Global bankruptcy trustee to aid in the return of customer funds. The incident also brought increased scrutiny on the futures industry's self-regulatory model and segregation regime, potentially leading to higher compliance costs.

CME Group's strategy focuses on several key areas: growing its core business by launching new products and enhancing customer relations, globalizing its business by expanding its worldwide customer base, particularly in emerging markets, providing superior customer service, offering a comprehensive multi-asset class clearing solution for the over-the-counter market, and establishing itself as a leading provider of information products and index services.

As of December 31, 2011, CME Group had approximately $2.1 billion in total debt. The company relies on internally generated funds and has credit facilities in place for liquidity. They also announced a policy change to increase their annual dividend payout to 50% of prior year cash earnings, indicating confidence in their financial position and cash flow generation.