News Release

CME Group Inc. Reports Record First-Quarter Revenues and Earnings

Tue Apr 22 2008

CHICAGO, April 22 /PRNewswire-FirstCall/ -- CME Group Inc. (NYSE: CME)(NASDAQ: CME) today reported total revenues increased 88 percent to $625 million and net income increased 118 percent to $284 million for first-quarter 2008 compared with first-quarter 2007. Diluted earnings per share rose 42 percent to $5.25. These GAAP results reflect the operations of both Chicago Mercantile Exchange (CME) and Board of Trade of the City of Chicago (CBOT) and include: $8.7 million of CBOT merger-related operating expenses consisting of restructuring charges, integration and legal costs, and the acceleration of depreciation related to CBOT data centers; $8.4 million of transaction costs related to the definitive cross-equity agreement with the Brazilian Mercantile & Futures Exchange (BM&F); $3.8 million related to the acquisition of Credit Market Analysis Limited (CMA), which was closed during the first quarter; and an $8.4 million reduction to non-operating expenses associated with the guarantee for holders of the Chicago Board Options Exchange (CBOE) exercise right privilege (ERP). In addition, the GAAP and pro forma non-GAAP results include a tax benefit of $38.6 million due to a change in Illinois state tax treatment for apportionment of revenues sourced within the state. The GAAP results for 2007 reflect the operations of CME only.

Pro forma non-GAAP diluted earnings per share in the first quarter were $5.39, a 60 percent increase versus first-quarter 2007. Excluding the tax benefit mentioned above, pro forma diluted EPS would have been $4.67, a 39 percent increase versus first-quarter 2007. Pro forma results for first-quarter 2008 exclude the items listed above related to the CBOT merger, BM&F and CMA transactions, and the CBOE ERP guarantee. Pro forma non-GAAP revenues increased 25 percent to $625 million and net income increased 57 percent to $291 million for first-quarter 2008 compared with first-quarter 2007. The pro forma comparative results for 2007 reflect the operating results of both CME and CBOT as if they were combined. 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 pro forma results is included in the attached tables.

"During what was a challenging environment for many financial services companies, CME Group achieved volume growth of 32 percent in the first quarter, reflecting strength from all product areas," said CME Group Executive Chairman Terry Duffy. "This performance illustrates the benefits of the exchange model for managing risks in diverse global markets. We saw healthy trading activity from algorithmic oriented firms, hedge funds, and proprietary trading desks of investment banks, and from both members and non-member customers of CME Group. These users are attracted to the significant liquidity provided by all our product segments, coupled with the safety and soundness of our marketplace."

"In addition to seeing strong first-quarter activity in our core business, we also laid the groundwork for future growth opportunities," said CME Chief Executive Officer Craig Donohue. "We are on track to deliver the synergies projected from the CME/CBOT merger, which will enable us to operate more efficiently and effectively. We integrated e-CBOT interest rate, equity and agricultural products onto the CME Globex electronic platform, and implemented significant speed improvements that cut processing times in half. Further, as part of our global growth strategy, we completed our first-ever equity swap and strategic partnership with BM&F, the world's fourth largest futures exchange, to enhance our long-term growth opportunities in Latin America, and signed a definitive agreement to purchase NYMEX to provide new trading opportunities for customers around the world."

  CME Group Inc. First-Quarter 2008 Results

  Financial Highlights:

  GAAP

  ($s in millions, except per share)         Q1 FY08      Q1 FY07      Y/Y
  Revenues                                     $625         $332       88%
  Expenses                                     $226         $132       72%
  Operating Income                             $399         $201       99%
  Operating Margin %                           63.8%        60.4%
  Net Income                                   $284         $130      118%
  Diluted EPS                                 $5.25        $3.69       42%



  Pro Forma Non-GAAP

  ($s in millions, except per share)         Q1 FY08      Q1 FY07      Y/Y
  Revenues                                     $625         $498       25%
  Expenses                                     $214         $210        2%
  Operating Income                             $411         $288       43%
  Operating Margin %                           65.8%        57.9%
  Net Income                                   $291         $185       57%
  Diluted EPS                                 $5.39        $3.37       60%

  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.

CME Group processing services revenue for the combined company increased 35 percent to $17 million for first-quarter 2008 from $13 million for first-quarter 2007. NYMEX volume on CME Globex has increased every quarter since the NYMEX products began trading on CME Globex in June 2006. Additionally, first-quarter 2008 quotation data fees were up 13 percent to $57 million.

First-quarter operating income on a pro forma basis was $411 million, an increase of 43 percent from $288 million for the year-ago period. The company's operating margin was a record 66 percent compared with 58 percent for the same period last year. Operating margin is defined as operating income as a percentage of total revenues.

First-quarter 2008 pro forma non-operating income decreased 58 percent from first-quarter 2007 due primarily to lower interest rates earned on investment balances and the impact of a foreign currency hedge that the company instituted related to the BM&F transaction.

CME Group will hold a conference call to discuss first-quarter 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 http://www.cmegroup.com/. An archived recording will be available for up to two months after the call.

CME Group (http://www.cmegroup.com/) is the world's largest and most diverse derivatives exchange. Formed by the 2007 merger of Chicago Mercantile Exchange Holdings Inc. (CME) and CBOT Holdings, Inc. (CBOT), CME Group serves the risk management needs of customers around the globe. As an international marketplace, CME Group brings buyers and sellers together on the CME Globex electronic trading platform and on its trading floors. CME Group offers the widest range of benchmark products available across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, agricultural commodities, and alternative investment products such as weather and real estate. CME Group is traded on the New York Stock Exchange and NASDAQ under the symbol "CME".

The Globe logo, CME, Chicago Mercantile Exchange, CME Group, Globex and E-mini, are trademarks of Chicago Mercantile Exchange Inc. CBOT and Chicago Board of Trade are trademarks of the Board of Trade of the City of Chicago, Inc. TRAKRS and Total Return Asset Contracts are trademarks of Merrill Lynch & Co., Inc. These trademarks are used herein under license. All other trademarks are the property of their respective owners. Further information about CME Group and its products can be found at http://www.cmegroup.com/.

All references to volume and rate per contract information in the text of this document exclude our non-traditional TRAKRS products, for which CME Group receives significantly lower clearing fees than other CME Group products, CME Group Auction Markets products, which were available to trade prior to July 2007, and Swapstream products.

Statements in this news 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. Among the factors that might affect our performance are: our ability to obtain the required approvals and to satisfy the closing conditions for our proposed merger with NYMEX Holdings, Inc. and our ability to realize the benefits and control the costs of the proposed transaction; our ability to successfully integrate the businesses of CME Holdings and CBOT Holdings, including the fact that such integration may be more difficult, time consuming or costly than expected and revenues following the merger may be lower than expected; 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 and implementation of the enhanced functionality required by our customers; 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; our ability to adjust our fixed costs and expenses if our revenues decline; our ability to continue to generate revenues from our processing services; our ability to maintain existing customers and attract new ones; our ability to expand and offer our products in foreign jurisdictions; changes in domestic and foreign regulations; changes in government policy, including policies relating to common or directed clearing or as a result of a combination with the Securities and Exchange Commission and the Commodity Futures Trading Commission; the costs associated with protecting our intellectual property rights and our ability to operate our business without violating the intellectual property rights of others; our ability to generate revenue from our market data that may be reduced or eliminated by decreased demand or the growth of electronic trading; 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; changes in price levels and volatility in the derivatives markets and in underlying fixed income, equity, foreign exchange and commodities markets; economic, political, geopolitical and market conditions; natural disasters and other catastrophes, our ability to accommodate increases in trading volume and order transaction traffic without failure or degradation of performance of our 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 acquisition, investment and alliance strategy; 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 on futures and options on futures transactions; and the seasonality of the futures business. More detailed information about factors that may affect our performance may be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, which is available in the Investor Relations section of the CME Group Web site. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

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

                                            March 31, 2008 December 31, 2007
  ASSETS
  Current Assets:
    Cash and cash equivalents                  $1,066,356        $845,312
    Collateral from securities lending                  -       2,862,026
    Marketable securities, including pledged
     securities                                   155,373         203,308
    Accounts receivable, net of allowance         251,981         187,487
    Other current assets                           98,394          55,900
    Cash performance bonds and security
     deposits                                   1,610,025         833,022
  Total current assets                          3,182,129       4,987,055
  Property, net of accumulated depreciation
   and amortization                               379,269         377,452
  Intangible assets - trading products          7,987,000       7,987,000
  Intangible assets - other, net of
   accumulated amortization                     1,824,926       1,796,789
  Goodwill                                      5,090,250       5,049,211
  Other assets                                    774,329         108,690
  Total Assets                                $19,237,903     $20,306,197

  LIABILITIES AND SHAREHOLDERS' EQUITY
  Current Liabilities:
    Accounts payable                              $51,804         $58,965
    Payable under securities lending agreements         -       2,862,026
    Short-term debt                               164,952         164,435
    Other current liabilities                     358,447         157,615
    Cash performance bonds and security
     deposits                                   1,610,025         833,022
  Total current liabilities                     2,185,228       4,076,063
  Deferred tax liabilities                      3,805,598       3,848,240
  Other liabilities                                70,247          76,257
  Total Liabilities                             6,061,073       8,000,560
  Shareholders' equity                         13,176,830      12,305,637
  Total Liabilities and Shareholders' Equity  $19,237,903     $20,306,197



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

                                                         Quarter Ended
                                                            March 31,
                                                      2008            2007
  Revenues
    Clearing and transaction fees                  $525,067        $258,241
    Quotation data fees                              56,765          25,016
    Processing services                              17,482          34,759
    Access and communication fees                    10,539           7,663
    Other                                            15,257           6,652
    Total Revenues                                  625,110         332,331

  Expenses
    Compensation and benefits                        73,289          56,400
    Communications                                   14,772           9,079
    Technology support services                      16,994           8,892
    Professional fees and outside services           14,751           9,172
    Amortization of purchased intangibles            16,210             306
    Depreciation and amortization                    34,315          19,683
    Occupancy and building operations                16,733           8,827
    Licensing and other fee agreements               13,490           7,035
    Restructuring                                     1,780               -
    Other                                            24,115          12,330
    Total Expenses                                  226,449         131,724

  Operating Income                                  398,661         200,607

  Non-Operating Income and Expense
    Investment income                                 9,177          17,305
    Securities lending interest income               23,644          32,890
    Securities lending interest expense             (18,219)        (32,425)
    Interest expense                                 (2,104)              -
    Guarantee of exercise right privileges            8,397               -
    Equity in losses of unconsolidated subsidiaries  (3,929)         (3,020)
    Other non-operating expense                      (8,390)              -
    Total Non-Operating                               8,576          14,750

  Income Before Income Taxes                        407,237         215,357

  Income tax provision                             (123,689)        (85,329)
  Net Income                                       $283,548        $130,028

  Earnings per Common Share:
    Basic                                             $5.28           $3.73
    Diluted                                           $5.25           $3.69

  Weighted Average Number of Common Shares:
    Basic                                            53,751          34,851
    Diluted                                          54,028          35,229



                       CME Group Inc. and Subsidiaries
            Pro Forma Non-GAAP Consolidated Statements of Income
                  (in thousands, except per share amounts)

                                                         Quarter Ended
                                                            March 31,
                                                       2008           2007
  Revenues
    Clearing and transaction fees                   $525,067       $409,894
    Quotation data fees                               56,765         50,098
    Processing services                               17,482         12,963
    Access and communication fees                     10,539          9,114
    Other                                             15,257         16,203
    Total Revenues                                   625,110        498,272

  Expenses
    Compensation and benefits                         73,289         78,096
    Communications                                    14,772         12,946
    Technology support services                       16,994         16,797
    Professional fees and outside services            12,308         10,769
    Amortization of purchased intangibles             16,210         17,125
    Depreciation and amortization                     30,315         31,143
    Occupancy and building operations                 16,733         14,020
    Licensing and other fee agreements                13,490         10,403
    Other                                             19,854         18,550
    Total Expenses                                   213,965        209,849

  Operating Income                                   411,145        288,423

  Non-Operating Income and Expense
    Investment income                                  9,177         23,682
    Securities lending interest income                23,644         32,890
    Securities lending interest expense              (18,219)       (32,425)
    Interest expense                                  (2,104)          (215)
    Equity in losses of unconsolidated subsidiaries   (3,929)        (3,439)
    Total Non-Operating                                8,569         20,493

  Income Before Income Taxes                         419,714        308,916

  Income tax provision                              (128,634)      (123,566)
  Net Income                                        $291,080       $185,350

  Earnings per Diluted Common Share                    $5.39          $3.37

  Weighted Average Number of Diluted Common Shares*   54,028         55,067

  Note:  Pro Forma Non-GAAP results exclude merger-related costs.  The pro
  forma results for 2007 reflect both the operating results for CME and CBOT
  as if they were combined.  See CME Group Inc. Reconciliation of GAAP to
  Pro Forma Non-GAAP Measures for detail on the adjustments made to reach
  the pro forma results.

  * Weighted average number of diluted common shares includes CBOT
    sharecount for the entire period reported.



                       CME Group Inc. and Subsidiaries
            Reconciliation of GAAP to Pro Forma Non-GAAP Measures
                               (in thousands)

                                                         Quarter Ended
                                                           March 31,
                                                      2008           2007
  GAAP Results
  Revenues                                         $625,110        $332,331
  Expenses                                          226,449         131,724
  Operating income                                  398,661         200,607

  Non-operating income and expense                    8,576          14,750
  Income before income taxes                        407,237         215,357
  Income tax provision                             (123,689)        (85,329)
    Net Income                                     $283,548        $130,028


  Pro Forma Adjustments
  Revenues:
  CBOT pre-merger revenue                                $-        $187,737
  Common clearing service elimination (1)                 -         (21,796)
  Total Pro Forma Revenue Adjustment                      -         165,941

  Expenses:
  CBOT pre-merger expense                                 -          98,219
  Common clearing service elimination (1)                 -         (21,796)
  Amortization of intangibles (2)                         -          16,357
  Other (3)                                         (12,484)        (14,655)
  Total Pro Forma Expense Adjustment                (12,484)         78,125

  Adjustment to operating income                     12,484          87,816

  Non-operating income and expense:
  CBOT pre-merger non-operating income                    -           5,743
  ERP guarantee (4)                                  (8,397)              -
  BM&F (5)                                            8,390               -
  Total Pro Forma Non-Operating Income and
   Expense Adjustment                                    (7)          5,743
  Adjustment to income before income taxes           12,477          93,559
  Adjustment to income tax provision                 (4,945)        (38,237)
    Adjustment to net income                         $7,532         $55,322


  Pro Forma Non-GAAP Results
  Revenues                                         $625,110        $498,272
  Expenses                                          213,965         209,849
  Operating income                                  411,145         288,423

  Non-operating income and expense                    8,569          20,493
  Income before income taxes                        419,714         308,916
  Income tax provision(6)                          (128,634)       (123,566)
    Net Income                                     $291,080        $185,350

  Notes:
  (1) Eliminate clearing services provided to CBOT prior to the merger.
  (2) Add amortization of intangible assets recorded in purchase of CBOT.
  (3) Reverse effect of restructuring, accelerated depreciation, integraton
      and legal expenses related to the merger with CBOT.  Also removes CBOT
      merger-related transaction costs that were expensed and transaction costs
      related to the acquisition of CMA.
  (4) Reverse impact of exercise right guarantee associated with CBOT
      merger.
  (5) Transaction costs related to establishing the investment in BM&F
      during the first quarter.
  (6) Includes tax benefit of $38.6 million due to a change in Illinois
      state tax treatment for apportionment of revenues sourced within the
      state.



                                CME Group Inc.
                        Quarterly Operating Statistics
                   (Pro forma for periods prior to 4Q 2007)

                                     1Q 2007 2Q 2007 3Q 2007 4Q 2007 1Q 2008
  Trading Days                            62      64      63      64      61

                        Average Daily Volume (ADV)
     (in thousands, average daily volumes combined for entire period)

  Product Line                       1Q 2007 2Q 2007 3Q 2007 4Q 2007 1Q 2008
  Interest rates                       6,671   6,670   8,060   6,290   8,251
  Equity E-mini                        2,107   2,127   3,057   2,817   3,628
  Equity standard-size                   197     180     202     166     201
  Foreign exchange                       555     527     635     561     640
  Commodities & alternative investments  789     818     716     740     949
    Total                             10,320  10,322  12,670  10,574  13,669

  Venue
  Open outcry                          2,312   2,297   2,652   1,876   2,336
  Electronic (excluding TRAKRS)        7,846   7,838   9,806   8,528  11,097
  Privately negotiated                   162     188     212     169     236
    Total                             10,320  10,322  12,670  10,574  13,669

Average Rate Per Contract (RPC) (in thousands, rate per contract generated from combined average daily volumes

                            for entire period)

  Product Line                       1Q 2007 2Q 2007 3Q 2007 4Q 2007 1Q 2008
  Interest rates                      $0.519  $0.516  $0.519  $0.530  $0.505
  Equity E-mini                        0.712   0.700   0.673   0.687   0.684
  Equity standard-size                 1.387   1.334   1.451   1.427   1.506
  Foreign exchange                     1.106   1.090   0.951   0.985   0.927
  Commodities & alternative
   investments                         0.952   1.034   1.032   1.074   1.119
    Average RPC (excluding TRAKRS)    $0.640  $0.639  $0.622  $0.648  $0.630

  Venue
  Open outcry                         $0.498  $0.492  $0.473  $0.517  $0.553
  Electronic (excluding TRAKRS)        0.630   0.626   0.613   0.629   0.609
  Privately negotiated                 3.130   2.948   2.878   3.057   2.345

  Note:  All volume and rate per contract data prior to 4Q 2007 is based
  upon pro forma results.  All data excludes our non-traditional TRAKRS
  products, for which CME Group receives significantly lower clearing fees
  than other CME Group products.  Additionally, all data excludes Swapstream
  products and CME Group Auction Markets products while the CME Group
  Auction Market products were available prior to July 2007.

CME-E

SOURCE: CME Group Inc.

CONTACT: Media, Anita Liskey, +1-312-466-4613, or William Parke,
+1-312-930-3467, news@cmegroup.com, or investors, John Peschier,
+1-312-930-8491, all of CME Group Inc.

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