News Release

Chicago Mercantile Exchange Holdings Inc. Reports Strong Revenues and a 30 Percent Increase in Net Income for Third-Quarter 2005; Diluted Earnings Per Share Rose 29 Percent to $2.22

Tue Oct 25 2005

CHICAGO, Oct. 25 /PRNewswire-FirstCall/ -- Chicago Mercantile Exchange Holdings Inc. (NYSE: CME)(NASDAQ: CME) today reported strong revenues and profits, with a 22 percent increase in net revenues and a 30 percent increase in net income for third-quarter 2005 compared with third-quarter 2004. These results were driven by significantly increased trading volume in each major product line. Net revenues climbed 22 percent to $234 million, income before income taxes grew 28 percent to $128 million, and net income rose 30 percent to $77 million. Diluted earnings per share rose 29 percent to $2.22 from $1.72. Yesterday, the company declared a fourth-quarter dividend of 46 cents per share, payable on December 27, 2005 to shareholders of record on December 9, 2005.

Average daily volume was 4.2 million contracts for third-quarter 2005, a 30 percent increase from third-quarter 2004. Trading on the CME® Globex® electronic trading platform grew 45 percent to 2.9 million contracts per day and represented 69 percent of total CME volume in the quarter, compared with 61 percent in the same period last year.

"CME's strong volume trends in both futures and options underscore the effectiveness of our ongoing strategy to grow our business in existing and new markets," said CME Chairman Terry Duffy. "We posted another solid quarter, fueled by significant volume growth in our foreign exchange, interest rate and equity products. We achieved record monthly volume in September and are seeing sizable volume growth in our equity products in October. Our customer initiatives in Europe and Asia, along with our expanding network of telecommunications hubs, have positioned CME to continue building momentum outside the United States where the potential for growth in exchange-traded derivatives is significant."

"We continue to add new products and expand electronic trading of options to meet the evolving needs of our customers globally," said CME CEO Craig Donohue. "In recent months we have added significant new functionality for trading options on the CME Globex electronic trading platform that has doubled our average daily volume in electronic options to nearly 90,000 contracts. We also extended to 2016 CME's exclusive agreement with Standard & Poor's for futures and options on all of the S&P indexes. This durable franchise benefits our customers and shareholders by strengthening our equity product line on a long-term basis. In addition, we continue to launch innovative new products that further leverage our nearly 24-hour trading day, including derivatives contracts based on the Eurozone HICP inflation index, S&P Asia 50 index, NASDAQ Biotechnology Index and our Economic Derivatives Auctions."

Revenue from clearing and transaction fees from CME products increased 19 percent to $176 million, up from $148 million for third-quarter 2004. Clearing and transaction services revenue rose 23 percent to $18 million and quotation data fees were up 26 percent to $19 million. While net revenues increased 22 percent, expenses increased 15 percent to $106 million, primarily driven by technology spending related to improved functionality and capacity.

Third-quarter income before income taxes was $128 million, an increase of 28 percent from $100 million for the year-ago period. The company's operating margin, defined as income before income taxes expressed as a percentage of net revenues, was 55 percent for the quarter, compared with 52 percent for the same period last year.

Capital expenditures, including capitalized software development costs, were $19 million in third-quarter 2005.

CME's working capital increased by $74 million during the third quarter, to $883 million at September 30, 2005.

Nine-Month Results

For the first nine months of 2005, net revenues increased 26 percent to $688 million from $546 million for the first nine months of 2004. Revenue from clearing and transaction fees improved 26 percent to $520 million from $414 million a year ago, benefiting from higher trading volume. Total operating expenses were $305 million for the first nine months of 2005, versus $272 million for the comparable period of 2004, up 12 percent.

Capital expenditures and capitalized software development costs were $62 million for the first nine months of 2005.

Income before taxes was $383 million for the first nine months of 2005, up 40 percent versus the same period a year ago. The operating margin was 56 percent for the first nine months of 2005, compared with 50 percent for the year-earlier period.

The company reported record net income of $231 million, or $6.63 per diluted share, for the first nine months of this year, compared with $163 million, or $4.74 per diluted share, for the first nine months of 2004. During the first nine months of the year, the company paid dividends totaling $1.38 per common share.

CME will hold a conference call to discuss third-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's Web site at . An archived recording will be available for up to two months after the call.

Chicago Mercantile Exchange Holdings Inc. became the first publicly traded U.S. financial exchange on Dec. 6, 2002. The company was added to the Russell 1000® Index on July 1, 2003. It is the parent company of Chicago Mercantile Exchange Inc. ( ), the largest futures exchange in the United States. As an international marketplace, CME brings together buyers and sellers on its CME Globex electronic trading platform and on its trading floors. CME offers futures and options on futures primarily in interest rates, equities, foreign exchange and commodities. The exchange moved about $1.4 billion per day in settlement payments in the first three quarters of 2005 and managed $43.8 billion in collateral deposits at September 30, 2005, including $3.8 billion in deposits for non-CME products.

Chicago Mercantile Exchange, CME and Globex are registered trademarks of Chicago Mercantile Exchange Inc. E-mini is a trademark of CME. TRAKRS, Total Return Asset Contracts and other trade names, service marks, trademarks and registered trademarks that are not proprietary to Chicago Mercantile Exchange Inc. are the property of their respective owners, and are used herein under license. Further information about CME and its products is available on the CME Web site at .

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: increasing competition by foreign and domestic competitors, including new entrants into our markets; 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 successfully implement our competitive initiatives; our ability to efficiently and simultaneously operate both open outcry trading and electronic trade execution facilities; our ability to adjust our fixed costs and expenses if our revenues decline; our ability to continue to realize the benefits of our transaction processing agreement with the Chicago Board of Trade; our ability to maintain existing customers and attract new ones; changes in domestic and foreign regulations; changes in government policy, including interest rate policy and policies relating to common or directed clearing; 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 recover market data fees that may be reduced or eliminated by the growth of electronic trading; changes in the level of trading activity; changes in our rate per contract due to shifts in the mix at the products traded, the trading venue and the mix of customers, and whether the customer receives member or non-member fees or participates in one of our various incentive programs; changes in price levels and volatility in the derivatives markets and in underlying fixed income, equity, foreign exchange and commodities markets; the ability of our joint venture, OneChicago, LLC, to obtain market acceptance of its products and achieve sufficient trading volume to operate profitably; economic, political and market conditions; our ability to accommodate increases in trading volume 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; industry and customer consolidation; decreases in trading and clearing activity; and 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 Quarterly Report on Form 10-Q, which is available in the Investor Information section of the CME Web site. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

All references to volume and rate per contract information in the text of this document exclude our non-traditional TRAKRS™ products, for which CME receives significantly lower clearing fees than other CME products.


        Chicago Mercantile Exchange Holdings Inc. and Subsidiaries
                       Consolidated Balance Sheets
                          (dollars in thousands)

                                              Sep. 30, 2005  Dec. 31, 2004
  Current Assets:
    Cash and cash equivalents                     $585,665       $357,562
    Collateral from securities lending           1,222,688      1,582,985
    Short-term investments of interest earning
     facilities                                     59,480         87,521
    Marketable securities                          242,146        302,429
    Accounts receivable                            107,188         78,825
    Other current assets                            21,024         18,959
    Cash performance bonds and security deposits   536,568        269,919
  Total current assets                           2,774,759      2,698,200
  Property, net of accumulated depreciation
   and amortization                                144,865        131,361
  Other assets                                      30,317         27,905
  TOTAL ASSETS                                  $2,949,941     $2,857,466

  Current Liabilities:
    Accounts payable                               $17,555        $23,045
    Payable under securities lending agreements  1,222,688      1,582,985
    Payable to participants in interest earning
     facilities                                     59,480         87,521
    Other current liabilities                       55,240         62,153
    Cash performance bonds and security deposits   536,568        269,919
  Total current liabilities                      1,891,531      2,025,623
  Other liabilities                                 19,339         19,246
  Total liabilities                              1,910,870      2,044,869
  Shareholders' Equity                           1,039,071        812,597

Balance Sheet Items Excluding Cash Performance Bonds and Security Deposits,

          Securities Lending and Interest Earning Facilities(1)

                                               Sep. 30, 2005  Dec. 31, 2004

  Current assets                                  $956,023       $757,775
  Total assets                                   1,131,205        917,041
  Current liabilities                               72,795         85,198
  Total liabilities                                 92,134        104,444

  (1) Securities lending, cash performance bonds and security deposits, and
      interest earnings facilities are excluded from this presentation, as
      these current assets have equal and offsetting current liabilities.
      This presentation results in a more meaningful indication to investors
      of the assets owned and related obligations of the company.  Clearing
      firms are subject to performance bond requirements pursuant to the
      rules of the exchange.  The clearing firm can elect to satisfy these
      requirements in cash, which is reflected on the consolidated balance
      sheets, or by depositing securities, which are not reflected on the
      consolidated balance sheets.  The balance of cash performance bonds
      and security deposits that are deposited by clearing firms may change
      daily as a result of changes in the clearing firms' open positions and
      how clearing firms elect to satisfy their performance bond
      requirements.  Securities lending transactions utilize a portion of
      the securities that clearing firms have deposited to satisfy their
      proprietary performance bond requirements.  Deposits received from
      clearing firms in the first interest earning facilities are included
      on the consolidated financial statements of CME Holdings.  These
      interest earning facilities are invested on a short-term basis, are
      payable to the clearing firm participants on demand and will fluctuate

        Chicago Mercantile Exchange Holdings Inc. and Subsidiaries
                    Consolidated Statements of Income
                 (in thousands, except per share amounts)

                                     Three Months Ended   Nine Months Ended
                                        September 30,       September 30,
                                       2005      2004      2005      2004

    Clearing and transaction fees   $176,330  $147,937  $519,744  $413,763
    Clearing and transaction
     services                         17,593    14,354    53,168    41,005
    Quotation data fees               18,811    14,913    54,371    45,198
    Access fees                        4,637     3,924    14,123    11,893
    Communication fees                 2,232     2,523     6,824     7,579
    Investment income                  8,830     3,229    21,189     9,094
    Securities lending interest
     income                           15,714     4,492    39,537    11,892
    Other                              5,495     5,328    16,778    16,355
      TOTAL REVENUES                 249,642   196,700   725,734   556,779
    Securities lending interest
     expense                         (15,331)   (4,311)  (38,112)  (11,017)
      NET REVENUES                   234,311   192,389   687,622   545,762

    Compensation and benefits         45,229    40,939   134,125   122,150
    Occupancy                          7,272     7,033    21,321    20,561
    Professional fees, outside
     services and licenses            11,519    10,020    31,857    26,950
    Communications and computer and
     software maintenance             14,791    12,008    42,190    36,923
    Depreciation and amortization     17,256    13,555    48,118    39,466
    Marketing, advertising and public
     relations                         3,961     2,878     9,511     7,859
    Other operating expense            5,992     6,077    17,863    18,288
      TOTAL EXPENSES                 106,020    92,510   304,985   272,197

  Income before income taxes         128,291    99,879   382,637   273,565
  Income tax provision               (50,825)  (40,451) (152,060) (110,794)
  NET INCOME                         $77,466   $59,428  $230,577  $162,771

    Basic                              $2.25     $1.75     $6.73     $4.88
    Diluted                            $2.22     $1.72     $6.63     $4.74

  Weighted average number of
   common shares:
    Basic                             34,370    33,935    34,262    33,374
    Diluted                           34,891    34,496    34,793    34,330

                      3Q          4Q           1Q          2Q          3Q
                    2004        2004         2005        2005        2005
  Trading Days        64          64           61          64          64

             Average Daily Volume (Round Turns, in Thousands)

                      3Q          4Q           1Q          2Q          3Q
                    2004        2004         2005        2005        2005

  Interest rates   1,854       1,654        2,235       2,577       2,489
  Equity E-mini    1,025       1,026        1,237       1,301       1,181
   standard-size     111         119          129         124         124
  Foreign exchange   193         252          294         332         336
  Commodities         40          42           51          46          50
    Subtotal       3,223       3,093        3,946       4,380       4,180
  TRAKRS              32          73           30          21          27
    Total          3,255       3,166        3,976       4,401       4,207
  Open outcry      1,191         965        1,276       1,210       1,263
   TRAKRS)         2,013       2,155        2,648       3,144       2,897
   negotiated         51          46           52          47          47
    Total          3,255       3,166        3,976       4,401       4,207

                     Transaction Fees (in Thousands)

                      3Q          4Q           1Q          2Q          3Q
                    2004        2004         2005        2005        2005

  Interest rates $69,750     $56,556      $71,003     $83,429     $79,955
  Equity E-mini   45,930      44,586       50,048      57,185      53,255
   standard-size   9,090      10,071       10,319      10,552      11,125
   exchange       20,721      25,404       26,621      28,796      29,079
  Commodities      2,401       2,510        2,832       2,589       2,896
    Subtotal     147,892     139,127      160,823     182,551     176,310
  TRAKRS              45          64           23          17          20
    Total       $147,937    $139,191     $160,846    $182,568    $176,330
  Open outcry    $43,162     $34,665      $36,987     $36,190     $37,438
  TRAKRS)         92,924      93,407      112,416     135,429     127,812
   negotiated     11,851      11,119       11,443      10,949      11,080
    Total       $147,937    $139,191     $160,846    $182,568    $176,330

                     Average Rate Per Contract (RPC)

                      3Q          4Q           1Q          2Q          3Q
                    2004        2004         2005        2005        2005
  Interest rates  $0.588      $0.534       $0.521      $0.506      $0.502
  Equity E-mini    0.700       0.679        0.663       0.687       0.705
   standard-size   1.284       1.317        1.315       1.330       1.400
  Foreign exchange 1.676       1.577        1.483       1.357       1.353
  Commodities      0.925       0.932        0.904       0.870       0.904
     TRAKRS)      $0.717      $0.703       $0.668      $0.651      $0.659

  TRAKRS           0.022       0.014        0.012       0.012       0.011
     average RPC  $0.710      $0.687       $0.663      $0.648      $0.655
  Open outcry     $0.566      $0.562       $0.475      $0.467      $0.463
    TRAKRS)        0.721       0.677        0.696       0.673       0.690
    TRAKRS)        0.732       0.701        0.704       0.678       0.696
   negotiated      3.649       3.671        3.611       3.615       3.674
      average RPC $0.710      $0.687       $0.663      $0.648      $0.655

SOURCE: Chicago Mercantile Exchange Holdings Inc.

CONTACT: Media, Anita Liskey, +1-312-466-4613, Bill Parke,
+1-312-930-3467, , or Investor Contact, John Peschier,
+1-312-930-8491, all of Chicago Mercantile Exchange Holdings

Web site:

Corporate Communications

+1 312 930 3434