CME Group Inc. Reports Strong Fourth-Quarter 2015 And Full-Year 2015 Financial Results

Total average daily volume reached a record 14.0 million contracts in 2015, achieving annual records in energy, agricultural commodities, total options and electronic options
Annual revenue increased 7 percent compared with 2014, while adjusted operating expenses declined 1 percent

CME Group Inc. (NASDAQ: CME) today reported revenue of $814 million and operating income of $470 million for the fourth quarter of 2015. Net income was $292 million and diluted earnings per share were $0.86. Adjusted for non-recurring items, net income would have been $311 million and diluted earnings per share would have been $0.921.>

Total revenue for full-year 2015 was $3.3 billion and operating income was $2.0 billion. Net income was $1.25 billion and diluted earnings per share were $3.69. Adjusted for non-recurring items, 7 percent year-over-year growth in revenue coupled with operating expenses down 1 percent drove net income of $1.3 billion, up 15 percent compared with 2014, and diluted earnings per share of $3.861, up 14 percent.

"In 2015, we reached record levels of volume and revenue as we enabled our increasing number of customers around the world to manage risk," said CME Group Executive Chairman and President Terry Duffy. "We saw year-over-year revenue growth in five of our six product lines, with particular strength in energy and agricultural products as well as our overall options business. Continuing this momentum, we had record monthly volume inJanuary 2016, with more than 18 million contracts per day traded, up 16 percent. Given the underlying strength of our business, we announced a 20 percent increase in our next regular quarterly dividend to 60 cents per share. In each of the prior four years, our total dividend yield has exceeded five percent."

"We were pleased to deliver an increase of 7 percent in revenue and 15 percent in adjusted net income during 2015, a year that many considered a challenging environment for financial services companies," said CME GroupChief Executive Officer Phupinder Gill. "We were very active during 2015 in terms of new product innovation and expanding our global partnerships, including securing the long-term rights to the FTSE Russell indexes. Looking at new products, one standout within our interest rate franchise is our recently launched Ultra 10-year treasury product, which has been the most successful start of a new contract in our long history. During the year, we increased our operating margin by reducing costs from the prior year, driving efficiency and improving our agility in serving customers globally."

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.

Fourth-quarter 2015 average daily volume was 13.2 million contracts, down 11 percent from fourth-quarter 2014. Clearing and transaction fee revenue were $679 million, down 5 percent compared with fourth-quarter 2014. Fourth-quarter 2015 total average rate per contract was 78.9 cents, up from 75.9 cents in third-quarter 2015, driven primarily by an increased proportion of the volume from higher paying non-members during the quarter, as well as strong energy volume. Market data revenue was $99 million, up 11 percent compared with the fourth quarter last year.

Full-year 2015 record average daily volume was 14.0 million contracts, up 2 percent from 2014, and included annual records for energy, agricultural commodities, total options and electronic options. Clearing and transaction fee revenue was $2.8 billion, up 6 percent compared with 2014. The end of the year rate per contract in 2015 was $0.769, up 4 percent from $0.743 at the end of 2014. Market data revenue was $399 million, up 12 percent compared with the prior year.

As of December 31, 2015, the company had $1.8 billion of cash and marketable securities and $2.2 billion of long-term debt. The company declared dividends during 2015 of $1.6 billion, including the annual variable dividend for 2015 of $977 million, which was paid in January 2016. The company has returned more than $5.6 billion to shareholders in the form of dividends since the implementation of the variable dividend policy in early 2012.

CME Group will hold a conference call to discuss fourth-quarter 2015 results at 8:30 a.m. Eastern Timetoday. 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.

CME Group Inc. and Subsidiaries Consolidated Balance Sheets (in millions)

	December 31, 2015		December 31, 2014
ASSETS
Current Assets:
Cash and cash equivalents	$	1,692.6	$	1,366.1
Marketable securities	72.5		74.7
Accounts receivable, net of allowance	357.8		341.2
Other current assets (includes $32.0 and $37.0 in restricted cash)	228.6		196.5
Performance bonds and guaranty fund contributions	35,553.0		40,566.8
Total current assets	37,904.5		42,545.3
Property, net of accumulated depreciation and amortization	491.7		508.9
Intangible assets—trading products	17,175.3		17,175.3
Intangible assets—other, net	2,537.9		2,637.4
Goodwill	7,569.0		7,569.0
Other assets (includes $70.5 and $72.4 in restricted cash)	1,693.1		1,805.6
Total Assets	$	67,371.5	$	72,241.5
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable	$	28.7	$	36.9
Other current liabilities	1,242.8		927.5
Performance bonds and guaranty fund contributions	35,553.0		40,566.8
Total current liabilities	36,824.5		41,531.2
Long-term debt	2,241.4		2,107.9
Deferred income tax liabilities, net	7,358.3		7,302.7
Other liabilities	395.5		376.2
Total Liabilities	46,819.7		51,318.0
Shareholders' equity	20,551.8		20,923.5
Total Liabilities and Equity	$	67,371.5	$	72,241.5

CME Group Inc. and Subsidiaries Consolidated Statements of Income (dollars in millions, except per share amounts; shares in thousands)

	Quarter Ended December 31,				Year Ended December 31,
	2015		2014		2015		2014
Revenues
Clearing and transaction fees	$	678.9	$	713.0	$	2,783.9	$	2,616.3
Market data and information services	99.1		89.6		399.4		356.3
Access and communication fees	21.7		21.1		86.1		82.7
Other	14.1		17.4		57.4		57.2
Total Revenues	813.8		841.1		3,326.8		3,112.5
Expenses
Compensation and benefits	134.5		144.8		553.7		552.1
Communications	6.5		7.7		27.8		32.0
Technology support services	17.4		15.9		64.5		58.2
Professional fees and outside services	32.2		29.7		122.8		129.0
Amortization of purchased intangibles	24.6		24.9		99.4		100.6
Depreciation and amortization	31.7		31.5		129.2		132.6
Occupancy and building operations	23.1		25.7		92.5		96.8
Licensing and other fee agreements	31.3		34.0		123.8		114.2
Other	42.6		55.4		124.4		128.6
Total Expenses	343.9		369.6		1,338.1		1,344.1
Operating Income	469.9		471.5		1,988.7		1,768.4
Non-Operating Income (Expense)
Investment income	3.4		10.1		30.1		35.8
Gains (losses) on derivative investments	—		—		(1.8)		—
Interest and other borrowing costs	(28.9)		(28.7)		(117.4)		(119.4)
Equity in net earnings (losses) of unconsolidated subsidiaries	24.9		20.9		100.0		84.8
Other non-operating income (expense)	(0.8)		—		(42.8)		1.8
Total Non-Operating	(1.4)		2.3		(31.9)		3.0
Income before Income Taxes	468.5		473.8		1,956.8		1,771.4
Income tax provision	176.8		167.3		709.8		644.5
Net Income	291.7		306.5		1,247.0		1,126.9
Less: net income (loss) attributable to non-controlling interests	—		—		—		(0.2)
Net Income Attributable to CME Group	$	291.7	$	306.5	$	1,247.0	$	1,127.1
Earnings per Common Share Attributable to CME Group:
Basic	$	0.87	$	0.91	$	3.71	$	3.37
Diluted	0.86		0.91		3.69		3.35
Weighted Average Number of Common Shares:
Basic	336,844		335,197		336,224		334,409
Diluted	338,253		336,630		337,894		336,063

CME Group Inc. and Subsidiaries Quarterly Operating Statistics

	4Q 2014		1Q 2015		2Q 2015		3Q 2015		4Q 2015
Trading Days	64		61		64		64			64


Quarterly Average Daily Volume (ADV) CME Group ADV (in thousands)

Product Line	4Q 2014		1Q 2015		2Q 2015		3Q 2015			4Q 2015
Interest rate	7,445		7,564		6,599		6,658			6,097
Equity	3,114		2,772		2,364		3,287			2,743
Foreign exchange	959		954		903		855			779
Energy	1,797		2,142		1,749		1,965			2,032
Agricultural commodity	1,173		1,189		1,400		1,267			1,200
Metal	361		369		331		353			326
Total	14,848		14,990		13,347		14,384			13,178
Venue
Electronic	12,982		13,034		11,705		12,620			11,420
Open outcry	1,218		1,291		1,108		1,110			1,055
Privately negotiated	648		665		534		653			704
Total	14,848		14,990		13,347		14,384			13,178


Average Rate Per Contract (RPC) CME Group RPC

Product Line	4Q 2014		1Q 2015		2Q 2015		3Q 2015			4Q 2015
Interest rate	$	0.472	$	0.480	$	0.502	$	0.506		$	0.517
Equity	0.697		0.721		0.725		0.708			0.718
Foreign exchange	0.760		0.831		0.816		0.785			0.813
Energy	1.279		1.250		1.277		1.197			1.232
Agricultural commodity	1.321		1.324		1.311		1.290			1.339
Metal	1.664		1.662		1.634		1.600			1.644
Average RPC	$	0.731	$	0.753	$	0.777	$	0.759		$	0.789

CME Group Inc. and Subsidiaries
Reconciliation of GAAP to non-GAAP Measures
(dollars in millions, except per share amounts; shares in thousands)

	Quarter Ended December 31,				Year Ended December 31,
	2015		2014		2015		2014
Net Income Attributable to CME Group	$	291.7	$	306.5	$	1,247.0	$	1,127.1

Restructuring and severance	—		12.4		21.0		18.2

Acquisition-related costs	—		2.0		0.9		9.4

Data center lease termination fee	—		2.1		—		2.1

Real estate taxes and fees	—		—		10.0		—

Foreign exchange transaction losses1	5.2		11.2		11.3		15.4

MF Global bankruptcy claim	—		—		—		(14.5)

Loss on sale of BM&FBOVESPA shares	11.9		—		8.5		—

Debt prepayment costs, debt costs for refinancing and loss on derivative	—		—		64.1		—

GFI termination fee - net of the portion paid to outside advisers	—		—		(22.5)		—

Income tax effect related to above	(3.0)		(6.1)		(27.9)		(7.2)

Other income tax items2	5.6		(9.2)		(7.6)		(15.2)

Adjusted Net Income	$	311.4	$	318.9	$	1,304.8	$	1,135.3

GAAP Earnings per Common Share:
Basic	$	0.87	$	0.91	$	3.71	$	3.37
Diluted	0.86		0.91		3.69		3.35

Adjusted Earnings per Common Share:
Basic	$	0.92	$	0.95	$	3.88	$	3.39
Diluted	0.92		0.95		3.86		3.38

Weighted Average Number of Common Shares:
Basic	336,844		335,197		336,224		334,409
Diluted	338,253		336,630		337,894		336,063

1. 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 and settlement of various tax audits.