CME Group (CME)

NOTE: See the CME Group Inc. Reconciliation of Pro Forma Non-GAAP to GAAP Measures for detail related to the adjustments made to reach the pro forma results.

Pro Forma Non-GAAP First-Quarter 2008 Financial Results

First-quarter 2008 volume averaged a record 13.7 million contracts per day, up 32 percent versus the same period in 2007. This strong volume drove $525 million in clearing and transaction fee revenue, an increase of 28 percent from $410 million on a pro forma basis in first-quarter 2007, assuming CME and CBOT were combined during that time. The average rate per contract was $0.630 for the quarter, down 2 percent compared with the pro forma average rate per contract of $0.640 in first-quarter 2007.

NOTE: See the CME Group Inc. Reconciliation of Pro Forma Non-GAAP to GAAP Measures for detail related to the adjustments made to reach the pro forma results.

Pro Forma Non-GAAP Financial Results Detail

Third-quarter 2007 volume averaged a record 12.7 million contracts per day, up 49 percent, assuming combined CME/CBOT volumes for the entire quarter. Total quarterly volume exceeded 798 million contracts, of which 77 percent traded electronically. This strong volume drove $496 million of CME Group clearing and transaction fee revenue, an increase of 46 percent from $340 million in third-quarter 2006, assuming the CME and CBOT were combined at that time. The pro forma average rate per contract was $0.622 for the quarter compared with $0.632 in the third quarter of 2006. This 2 percent rate decrease was primarily driven by volume discounts due to significantly higher volumes.

Keeping in mind that the historical CME clearing business revenue and related CBOT expense are excluded from the pro-forma non-GAAP results, CME Group processing services revenue for the combined company tripled from $5 million to $15 million. The third quarter was the fifth consecutive record quarter of NYMEX volume on CME Globex. Additionally, quotation data fees were up 12 percent to $49 million.

Total pro forma expenses increased 7 percent to $211 million. The majority of this increase was driven by an increase in volume-related expenses including license fees and the bonus component of compensation, which is tied to performance.

Third-quarter operating income on a combined pro forma basis was $375 million, an increase of 73 percent from $216 million for the year-ago period. The company’s operating margin was 64 percent compared with 52 percent for the same period last year. Operating margin is defined as operating income as a percentage of total revenues.