Total first-quarter GAAP revenues of CME Group Inc. increased 4% to USD647 million, and GAAP operating income decreased 3% to USD386 million.
Net income for the first quarter was USD199 million and diluted earnings per share on a GAAP basis were USD3.00. The 2009 GAAP results reflect the operations of Chicago Mercantile Exchange (CME), Board of Trade of the City of Chicago (CBOT), and New York Mercantile Exchange (NYMEX), and include a reduction in net income of USD13.4 million for merger-related items. The GAAP results for first-quarter 2008 reflect the operations of CME and CBOT only.
First-quarter pro forma non-GAAP diluted earnings per share were USD3.20, down 30% compared with the prior year period. All pro forma results reflect the operations of both CME Group Inc. and NYMEX, as if they were combined for all periods reported, and first-quarter 2009 pro forma non-GAAP results exclude the USD13.4 million of merger-related items mentioned above.
Total revenues decreased 21% to USD647 million, and the combined average rate per contract increased 12% to 83 cents, up from 74 cents in first-quarter 2008, due to a shift in product mix. Pro forma total operating expenses decreased 9% to USD252 million, compared with the same period last year, due to ongoing expense discipline during the quarter. First-quarter pro forma operating income was USD395 million, a decrease of 27% from USD540 million for the year-ago period.
Despite challenging market conditions, the company maintained a strong pro forma operating margin of 61%, compared with a record 66% for first-quarter 2008. Operating margin is defined as operating income as a percentage of total revenues. Pro forma net income decreased 30% to USD213 million for first-quarter 2009.
Pro forma measures do not replace and are not a substitute for GAAP financial results. They are provided to improve overall understanding of current financial performance and to provide a meaningful comparison with prior periods. A full reconciliation of these first-quarter 2009 pro forma results is included with the attached financial statements.
“Extraordinarily challenging economic conditions characterized the first quarter, as heightened uncertainty led to a crisis of confidence among investors across the globe,” says Terry Duffy, executive chairman, CME Group. “Our markets continued to perform flawlessly throughout the quarter – once again proving their effectiveness in all environments.
“CME Group maintained solid profitability levels, while generating significant free cash flow. Looking ahead, we can expect continued short-term choppiness, but we are encouraged by initial signs of stabilization in the financial marketplace. Long-term, we remain optimistic about our opportunities to extend our renowned clearing services to new customers and markets, expand our technology and sales efforts globally, and cross-sell our diverse product set.”
“We continued to focus intensely on expense discipline throughout our organization during the first quarter, including delivering synergies from the NYMEX integration, while also continuing to invest in meaningful future growth areas,” says Craig Donohue, chief executive officer, CME Group. “Our record OTC revenue generated through CME ClearPort, for example, is a testament both to strong customer demand and to our clearing capability.”
“The critical function performed by central counterparty clearing has been highlighted during the past year, and we are actively engaged in multiple initiatives to bring the safety and soundness of centralized clearing to the over-the-counter markets. In addition, we continue to meet customer needs through innovative product offerings such as three-year treasuries, FX e-minis, and our suite of MSCI equity index offerings, all of which gained traction during the first quarter.”
L.D.