01—Abstract
Summary
Summary of the 10-Q filed August 5, 2011. Cited figures are marked; the original filing is the authoritative source.
CME Group Inc. reported solid financial results for the second quarter and first six months of 2011, demonstrating resilience despite a challenging economic environment.
Total revenues increased by 3%a for the quarter and 11% year-to-date, driven by strong performance in clearing and transaction fees, as well as growth in market data and information services. The company saw a notable increase in interest rate and agricultural commodity products volume, reflecting market volatility and changing supply dynamics. Expenses also rose, largely due to higher compensation and benefits, but operating income and net income attributable to CME Group shareholders showed positive growth.
The company's effective tax rate saw a significant decrease, particularly in the six-month period, due to favorable tax adjustments. CME Group maintained a strong liquidity position, with substantial operating cash flows.
The company also continues to manage its debt effectively and has access to significant credit facilities. Despite ongoing market uncertainties related to the U.S. budget deficit and the European debt crisis, CME Group remains focused on operational efficiency and strategic initiatives to drive future growth.
02—Key points
Key Highlights
- Total revenues increased by 3% to $838.3 million for the quarter ended June 30, 2011, and by 11% to $1,669.9 million for the six months ended June 30, 2011, compared to the prior year periods.
- Net income attributable to CME Group increased by 8% to $293.7 million for the quarter and by 47% to $750.3 million for the six months, compared to the prior year periods.
- Diluted earnings per common share increased to $4.38 for the quarter and $11.20 for the six months, up from $4.11 and $7.73, respectively, in the prior year.
- Clearing and transaction fees, the company's primary revenue source, saw a modest 1% increase for the quarter but a significant 9% increase for the six months, driven by increased volumes in interest rate and agricultural commodity products.
- The effective tax rate decreased significantly to 42.0% for the quarter and 26.3% for the six months, from 43.5% and 41.8%, respectively, due to favorable tax adjustments including a change in state tax apportionment.
- Cash flows from operating activities were $576.1 million for the six months ended June 30, 2011, a decrease of 11% from the prior year, primarily due to an increase in restricted cash and accounts receivable.
- The company has access to significant liquidity through a $1.0 billion multi-currency revolving senior credit facility and a $1.0 billion 364-day secured revolving credit facility for its clearing house.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2011filed August 5, 2011Financial Statements
Q2 FY2011 against Q2 FY2010
| Line item | Q2 FY2011Q2 FY2010 | Change |
|---|---|---|
| Revenue | $838.30M$813.90M | +3.0% |
| Operating Expenses | $303.80M$298.80M | +1.7% |
| Operating Income | $534.50M$515.10M | +3.8% |
| Net Income | $293.70M$270.70M | +8.5% |
| EPS (Basic) | $0.88$0.83 | +6.5% |
| EPS (Diluted) | $0.88$0.82 | +7.1% |
| Shares Outstanding (Basic) | 333.79M327.91M | +1.8% |
| Shares Outstanding (Diluted) | 333.34M328.92M | +1.3% |
05—Questions
Frequently Asked Questions
How did CME Group's revenue perform in the second quarter and first half of 2011?
CME Group reported total revenues of $838.3 million for the second quarter of 2011, a 3% increase compared to $813.9 million in the same period of 2010. For the first six months of 2011, total revenues were $1,669.9 million, an 11% increase from $1,507.1 million in the first six months of 2010. This growth was primarily driven by increases in clearing and transaction fees and market data and information services.
What was the impact of market volatility and economic conditions on CME Group's trading volumes?
The report indicates that market volatility, influenced by factors such as the U.S. budget deficit and the European debt crisis, had mixed impacts on trading volumes. While interest rate and agricultural commodity product volumes increased due to market uncertainty and supply changes, equity and foreign exchange volumes saw decreases attributed to lower overall volatility or specific market events. Despite these fluctuations, overall contract volume for the six months increased by 9%.
What is CME Group's current debt situation and liquidity position?
As of June 30, 2011, CME Group had $2,105.8 million in long-term debt, primarily consisting of fixed-rate notes. The company has a strong liquidity position with $693.6 million in cash and cash equivalents. It also has access to a $1.0 billion multi-currency revolving senior credit facility and a $1.0 billion 364-day secured revolving credit facility for its clearing house, with no current borrowings under the senior credit facility.
How did the company's tax rate change, and what were the primary drivers?
CME Group experienced a significant decrease in its effective tax rate. For the first six months of 2011, the rate was 26.3%, down from 41.8% in the same period of 2010. This reduction was primarily due to a $118.1 million tax benefit from a change in state tax apportionment and a $48.8 million reduction in valuation allowances on unrealized capital losses, partly related to marking its investment in BM&FBOVESPA to market.
06—Continue