UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
_________________________________________________________
FORM 8-K
 
_________________________________________________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) October 29, 2015
 
 _________________________________________________________
CME GROUP INC.
(Exact Name of Registrant as Specified in Charter)
 
_________________________________________________________
 
 
 
 
 
 
Delaware
 
001-31553
 
36-4459170
(State or Other Jurisdiction
of Incorporation)
 
(Commission
File No.)
 
(IRS Employer
Identification No.)
 
 
 
 
20 South Wacker Drive Chicago, Illinois
 
60606
(Address of Principal Executive Offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (312) 930-1000
N/A
(Former Name or Former Address, if Changed Since Last Report)
 
_________________________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))







Item 2.02.
Results of Operations and Financial Condition.
The information set forth under “Item 2.02. Results Of Operations and Financial Condition,” including the Exhibit attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
Attached and incorporated herein by reference as Exhibit 99.1 is a copy of a press release of CME Group Inc. dated October 29, 2015, reporting CME Group Inc.’s financial results for the quarter ended September 30, 2015.
To supplement CME Group’s financial statements on a GAAP basis, the attached press release includes financial measures that are not in accordance with GAAP, consisting of non-GAAP net income and earnings per share. Management believes that the presentation of non-GAAP net income and earnings per share provide important supplemental information to management and investors about financial and business trends relating to CME Group Inc.’s financial condition and results of operations. Management believes that the use of these non-GAAP financial measures provide a better measure of comparability with the Company’s prior financial reports. Management acknowledges that non-GAAP adjustments may include recurring items. These non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. Pursuant to the requirements of Regulation G, CME Group Inc. has included a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures in the press release.
 
Item 9.01
Financial Statements and Exhibits.
A copy of the press release is attached hereto as Exhibit 99.1.







SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
 
CME Group Inc.
 
 
Registrant
 
 
 
Date: October 29, 2015
 
By:
 
/s/ Kathleen M. Cronin
 
 
Name:
 
Kathleen M. Cronin
 
 
Title:
 
Senior Managing Director, General Counsel and Corporate Secretary










EXHIBIT INDEX
 
 
 
Exhibit
Number
  
Description
 
 
99.1

  
Press Release, dated October 29, 2015.









Exhibit 99.1
 
 
 
Media contact
Investor contact
 
Anita Liskey, 312.466.4613
John Peschier, 312.930.8491
 
William Parke, 312.930.3467
CME-G
 
news@cmegroup.com
 
 
www.cmegroup.mediaroom.com
 

FOR IMMEDIATE RELEASE
CME Group Inc. Reports Strong Third-Quarter 2015 Financial Results
Third-quarter 2015 revenues rose 12 percent to $850 million
Third-quarter 2015 adjusted net income of $344 million and adjusted diluted earnings per share of $1.02 both grew more than 20 percent1 

CHICAGO, October 29, 2015 - CME Group Inc. (NASDAQ: CME) today reported revenues of $850 million and operating income of $516 million for the third quarter of 2015. Net income was $360 million and diluted earnings per share were $1.06. Excluding the items noted in the reconciliation, adjusted net income would have been $344 million and adjusted diluted earnings per share would have been $1.021.
“We delivered balanced organic revenue growth in the third quarter,” said CME Group Executive Chairman and President Terry Duffy.  “Commodity products revenue grew by 14 percent, financial products were up 10 percent, and market data revenue rose 13 percent.  This top-line performance, coupled with solid expense discipline, resulted in earnings growth above 20 percent, similar to the level of growth produced during the first half of the year.  In addition, we generated a substantial amount of cash flow during the quarter, positioning us well to return a meaningful amount of capital to our shareholders in the coming months.”   
“Our focused growth initiatives are significantly increasing our global activity,” said CME Group Chief Executive Officer Phupinder Gill.  “For the third quarter, electronic trading revenue from customers outside the United States reached a record 32 percent.  Additionally, we have made system enhancements, launched new products and heavily engaged with customers to continue to drive our expanding options business.  During the quarter, we reached record levels of options volume and the highest percentage of volume traded electronically. In addition, we have been very active over the last few months partnering with global exchanges and index providers to further drive long-term growth.”
1. A reconciliation of the non-GAAP financial results mentioned to the respective GAAP figures can be found within the Reconciliation of GAAP to non-GAAP Measures chart at the end of the financial statements.


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Page 2

Third-quarter 2015 average daily volume was 14.4 million contracts, up 7 percent from third-quarter 2014, and included record quarterly options average daily volume as well as double digit growth across all commodities product lines. Clearing and transaction fee revenues were $715 million, up 11 percent compared with third-quarter 2014. Market data revenue was $100 million, up 13 percent compared with the third quarter last year. Third-quarter 2015 total average rate per contract was 75.9 cents, down from 77.7 cents in second-quarter 2015, driven primarily by higher volume discounts as well as a sequential product mix shift from commodities to equity index products which capture lower fees.
As of September 30, 2015, the company had $1.5 billion of cash and marketable securities and $2.2 billion of long-term debt.   In September, the company paid out $168 million in its regular quarterly dividend of 50 cents per share.         

CME Group will hold a conference call to discuss third-quarter 2015 results at 8:30 a.m. Eastern Time today. A live audio Webcast of the call will be available on the Investor Relations section of CME Group’s Web site at www.cmegroup.com. An archived recording will be available for up to two months after the call.

As the world’s leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) is where the world comes to manage risk. CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. CME Group brings buyers and sellers together through its CME Globex® electronic trading platform, its trading facilities in New York and Chicago, and through its London-based CME Europe derivatives exchange.  CME Group also operates one of the world’s leading central counterparty clearing providers through CME Clearing and CME Clearing Europe, which offer clearing and settlement services across asset classes for exchange-traded contracts and over-the-counter derivatives transactions.  These products and services ensure that businesses everywhere can substantially mitigate counterparty credit risk.
    
CME Group is a trademark of CME Group Inc. The Globe Logo, CME, Globex and Chicago Mercantile Exchange are trademarks of Chicago Mercantile Exchange Inc. CBOT and the Chicago Board of Trade are trademarks of the Board of Trade of the City of Chicago, Inc. NYMEX, New York Mercantile Exchange and ClearPort are registered trademarks of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. KCBOT, KCBT and Kansas City Board of Trade are trademarks of The Board of Trade of Kansas City, Missouri, Inc. All other trademarks are the property of their respective owners. Further information about CME Group (NASDAQ: CME) and its products can be found at www.cmegroup.com.









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Page 3

Statements in this press release that are not historical facts are forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statements. We want to caution you not to place undue reliance on any forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Among the factors that might affect our performance are increasing
competition by foreign and domestic entities, including increased competition from new entrants into our markets and consolidation of existing entities; our ability to keep pace with rapid technological developments, including our ability to complete the development, implementation and maintenance of the enhanced functionality required by our
customers while maintaining reliability and ensuring that such technology is not vulnerable to security risks; our ability to continue introducing competitive new products and services on a timely, cost-effective basis, including through our electronic trading capabilities, and our ability to maintain the competitiveness of our existing products and services, including our ability to provide effective services to the swaps market; our ability to adjust our fixed costs and expenses if our revenues decline; our ability to maintain existing customers, develop strategic relationships and attract new customers; our ability to expand and offer our products outside the United States; changes in domestic and non-U.S. regulations, including the impact of any changes in domestic and foreign laws or government policy with respect to our industry, such as any changes to regulations and policies that require increased financial and operational resources from us or our customers; the costs associated with protecting our intellectual property rights and our ability to operate our business without violating the intellectual property rights of others; decreases in revenue from our market data as a result of decreased demand; changes in our rate per contract due to shifts in the mix of the products traded, the trading venue and the mix of customers (whether the customer receives member or non-member fees or participates in one of our various incentive programs) and the impact of our tiered pricing structure; the ability of our financial safeguards package to adequately protect us from the credit risks of clearing members; the ability of our compliance and risk management methods to effectively monitor and manage our risks, including our ability to prevent errors and misconduct and protect our infrastructure against security breaches and misappropriation of our intellectual property assets; changes in price levels and volatility in the derivatives markets and in underlying equity, foreign exchange, interest rate and commodities markets; economic, political and market conditions, including the volatility of the capital and credit markets and the impact of economic conditions on the trading activity of our current and potential customers; our ability to accommodate increases in contract volume and order transaction traffic and to implement enhancements without failure or degradation of the performance of our trading and clearing systems; our ability to execute our growth strategy and maintain our growth effectively; our ability to manage the risks and control the costs associated with our strategy for acquisitions, investments and alliances; our ability to continue to generate funds and/or manage our indebtedness to allow us to continue to invest in our business; industry and customer consolidation; decreases in trading and clearing activity; the imposition of a transaction tax or user fee on futures and options on futures transactions and/or repeal of the 60/40 tax treatment of such transactions; the unfavorable resolution of material legal proceedings; and the seasonality of the futures business. For a detailed discussion of these and other factors that might affect our performance, see our filings with the Securities and Exchange Commission, including our most recent periodic reports filed on Form 10-K and Form 10-Q.
    
# # #




























CME Group Inc. and Subsidiaries
Consolidated Balance Sheets
(in millions)
 
 
 
September 30, 2015
 
December 31, 2014
ASSETS
 
 
 
 
Current Assets:
 
 
 
 
Cash and cash equivalents
 
$
1,434.3

 
$
1,366.1

Marketable securities
 
72.4

 
74.7

Accounts receivable, net of allowance
 
363.8

 
341.2

Other current assets (includes $32.0 and $37.0 in restricted cash)
 
267.1

 
196.5

Performance bonds and guaranty fund contributions
 
49,321.2

 
40,566.8

Total current assets
 
51,458.8

 
42,545.3

Property, net of accumulated depreciation and amortization
 
496.1

 
508.9

Intangible assets—trading products
 
17,175.3

 
17,175.3

Intangible assets—other, net
 
2,562.7

 
2,637.4

Goodwill
 
7,569.0

 
7,569.0

Other assets (includes $71.6 and $72.4 in restricted cash)
 
1,687.7

 
1,805.6

Total Assets
 
$
80,949.6

 
$
72,241.5

LIABILITIES AND EQUITY
 
 
 
 
Current Liabilities:
 
 
 
 
Accounts payable
 
$
38.1

 
$
36.9

Other current liabilities
 
239.5

 
927.5

Performance bonds and guaranty fund contributions
 
49,321.2

 
40,566.8

Total current liabilities
 
49,598.8

 
41,531.2

Long-term debt
 
2,241.2

 
2,107.9

Deferred income tax liabilities, net
 
7,341.5

 
7,302.7

Other liabilities
 
391.3

 
376.2

Total Liabilities
 
59,572.8

 
51,318.0

Shareholders’ equity
 
21,376.8

 
20,923.5

Total Liabilities and Equity
 
$
80,949.6

 
$
72,241.5
























CME Group Inc. and Subsidiaries
Consolidated Statements of Income
(dollars in millions, except per share amounts; shares in thousands)
 
 
Quarter Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2015
 
2014
 
2015
 
2014
Revenues
 
 
 
 
 
 
 
 
Clearing and transaction fees
 
$
715.0

 
$
641.8

 
$
2,105.0

 
$
1,903.3

Market data and information services
 
99.5

 
87.7

 
300.3

 
266.7

Access and communication fees
 
21.6

 
20.8

 
64.4

 
61.6

Other
 
14.2

 
12.1

 
43.3

 
39.8

Total Revenues
 
850.3

 
762.4

 
2,513.0

 
2,271.4

Expenses
 

 
 
 
 
 
 
Compensation and benefits
 
136.4

 
132.1

 
419.2

 
407.3

Communications
 
7.1

 
7.8

 
21.3

 
24.3

Technology support services
 
15.4

 
13.8

 
47.1

 
42.3

Professional fees and outside services
 
33.8

 
32.2

 
90.6

 
99.3

Amortization of purchased intangibles
 
24.9

 
25.3

 
74.8

 
75.7

Depreciation and amortization
 
32.4

 
32.7

 
97.5

 
101.1

Occupancy and building operations
 
23.1

 
24.7

 
69.4

 
71.1

Licensing and other fee agreements
 
33.1

 
25.5

 
92.5

 
80.2

Other
 
27.7

 
37.9

 
81.8

 
73.2

Total Expenses
 
333.9

 
332.0

 
994.2

 
974.5

Operating Income
 
516.4

 
430.4

 
1,518.8

 
1,296.9

Non-Operating Income (Expense)
 
 
 
 
 
 
 
 
Investment income
 
2.5

 
7.4

 
26.7

 
25.7

Gains (losses) on derivative investments
 

 

 
(1.8
)
 

Interest and other borrowing costs
 
(28.3
)
 
(28.7
)
 
(88.5
)
 
(90.7
)
Equity in net earnings (losses) of unconsolidated subsidiaries
 
26.6

 
20.0

 
75.1

 
63.9

Other non-operating income (expense)
 
(0.8
)
 

 
(42.0
)
 
1.8

Total Non-Operating
 

 
(1.3
)
 
(30.5
)
 
0.7

Income before Income Taxes
 
516.4

 
429.1

 
1,488.3

 
1,297.6

Income tax provision
 
156.5

 
139.1

 
533.0

 
477.2

Net Income
 
359.9

 
290.0

 
955.3

 
820.4

Less: net income (loss) attributable to non-controlling interests
 

 

 

 
(0.2
)
Net Income Attributable to CME Group
 
$
359.9

 
$
290.0

 
$
955.3

 
$
820.6

Earnings per Common Share Attributable to CME Group:
 
 
 
 
 
 
 
 
Basic
 
$
1.07

 
$
0.87

 
$
2.84

 
$
2.46

Diluted
 
1.06

 
0.86

 
2.83

 
2.44

Weighted Average Number of Common Shares:
 
 
 
 
 
 
 
 
Basic
 
336,323

 
334,424

 
336,015

 
334,144

Diluted
 
338,139

 
336,172

 
337,804

 
335,820











CME Group Inc. and Subsidiaries
Quarterly Operating Statistics
 
 
 
3Q 2014
 
4Q 2014
 
1Q 2015
 
2Q 2015
 
3Q 2015
Trading Days
 
64

 
64

 
61

 
64

 
64

Quarterly Average Daily Volume (ADV)
CME Group ADV (in thousands)
 
Product Line
 
3Q 2014
 
4Q 2014
 
1Q 2015
 
2Q 2015
 
3Q 2015
Interest rate
 
7,181

 
7,445

 
7,564

 
6,599

 
6,658

Equity
 
2,586

 
3,114

 
2,772

 
2,364

 
3,287

Foreign exchange
 
797

 
959

 
954

 
903

 
855

Energy
 
1,562

 
1,797

 
2,142

 
1,749

 
1,965

Agricultural commodity
 
1,058

 
1,173

 
1,189

 
1,400

 
1,267

Metal
 
308

 
361

 
369

 
331

 
353

Total
 
13,493

 
14,848

 
14,990

 
13,347

 
14,384

Venue
 
 
 
 
 
 
 
 
 
 
Electronic
 
11,627

 
12,982

 
13,034

 
11,705

 
12,620

Open outcry
 
1,208

 
1,218

 
1,291

 
1,108

 
1,110

Privately negotiated
 
657

 
648

 
665

 
534

 
653

Total
 
13,493

 
14,848

 
14,990

 
13,347

 
14,384

Average Rate Per Contract (RPC)
CME Group RPC
 
Product Line
 
3Q 2014
 
4Q 2014
 
1Q 2015
 
2Q 2015
 
3Q 2015
Interest rate
 
$
0.473

 
$
0.472

 
$
0.480

 
$
0.502

 
$
0.506

Equity
 
0.687

 
0.697

 
0.721

 
0.725

 
0.708

Foreign exchange
 
0.788

 
0.760

 
0.831

 
0.816

 
0.785

Energy
 
1.291

 
1.279

 
1.250

 
1.277

 
1.197

Agricultural commodity
 
1.362

 
1.321

 
1.324

 
1.311

 
1.290

Metal
 
1.707

 
1.664

 
1.662

 
1.634

 
1.600

Average RPC
 
$
0.725

 
$
0.731

 
$
0.753

 
$
0.777

 
$
0.759




















CME Group Inc. and Subsidiaries
Reconciliation of GAAP to non-GAAP Measures
(dollars in millions, except per share amounts; shares in thousands)
 
 
 
 
 
 
 
Quarter Ended
 
Quarter Ended
 
 
September 30, 2015
 
September 30, 2014
GAAP Net Income
 
$
359.9

 
$
290.0

 
 
 
 
 
Restructuring and severance
 
13.6

 

 
 
 
 
 
Foreign exchange transaction losses1
 
7.2

 
12.8

 
 
 
 
 
Acquisition-related costs
 

 
2.7

 
 
 
 
 
Loss on sale of BM&FBOVESPA shares
 
2.5

 

 
 
 
 
 
Income tax effect related to above
 
(7.9
)
 
(5.8
)
 
 
 
 
 
Other income tax items2
 
(31.4
)
 
(18.9
)
 
 
 
 
 
Adjusted Net Income
 
$
343.9

 
$
280.8

 
 
 
 
 
GAAP Earnings per Common Share:
 
 
 
 
     Basic
 
$
1.07

 
$
0.87

     Diluted
 
1.06

 
0.86

 
 
 
 
 
Adjusted Earnings per Common Share:
 
 
 
 
     Basic
 
$
1.02

 
$
0.84

     Diluted
 
1.02

 
0.84

 
 
 
 
 
Weighted Average Number of Common Shares:
 
 
 
 
     Basic
 
336,323

 
334,424

     Diluted
 
338,139

 
336,172

 
 
 
 
 
 
 
 
 
 
1. Third-quarter 2014 and 2015 results included foreign exchange transaction net losses principally related to cash held in British pounds within foreign entities whose functional currency is the U.S. dollar.
2. Other income tax items include the impact of deferred tax benefit recognized for remeasurement of state and local deferred income tax benefits.














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