CME Group Announces New Capital Structure Initiatives

by Chicago Mercantile Exchange 23 Jun 13:17

News Release Issued: June 23, 2008 8:00 AM EDT
Authorizes $1.1 Billion Share Buyback Program
Announces Intent to Pay a Special Dividend of Approximately $350 Million

CHICAGO, June 23 /PRNewswire-FirstCall/ — CME Group (NYSE: CME)(NASDAQ:
CME) today announced that its board of directors has authorized new
initiatives to return capital to shareholders while continuing to
aggressively execute its global growth strategy. The initiatives include a
share buyback program of up to $1.1 billion of CME Group Class A common
stock, subject to market conditions. The buyback program will take place
over a period of up to 18 months. The board’s authorization permits the
repurchase of shares through the open market, an accelerated program, a
tender offer or privately negotiated transactions.

In addition, CME Group intends to declare a special dividend of $5.00 per
common share, following the resolution of the company’s pending NYMEX
transaction.

“The board’s authorization to institute a share buyback program represents an
efficient use of our capital and demonstrates continued confidence in CME
Group’s strategy and growth potential,” said CME Group Executive Chairman
Terry Duffy. “We recognize that our successful merger with the Chicago Board
of Trade and our continued growth and success will result in significant free
cash flow generation that will exceed what we need to have on hand in order
to continue our aggressive global growth strategy. The combination of a
flexible share buyback program and a special dividend addresses the different
interests and preferences of our diverse shareholder base.”

“With the completion of the merger with CBOT and the pending acquisition of
NYMEX, our need to significantly build cash balances has changed,” said CME
Group Chief Executive Officer Craig Donohue. “Today’s initiatives positively
address the interests of our shareholders, while allowing us to successfully
complete our pending acquisition of NYMEX in a highly disciplined fashion.
CME Group will continue to take advantage of the many growth opportunities we
are pursuing globally through product innovation, increased distribution,
over- the-counter initiatives, and additional strategic partnerships such as
our agreement with BM&F Bovespa.”

“We believe our new capital structure initiatives reflect the high operating
efficiency and relatively low capital requirements inherent in our business
model,” said CME Group Chief Financial Officer Jamie Parisi. “We will incur
up to $4 billion of debt initially to execute both the NYMEX transaction and
this return of capital. We are balancing the shareholder benefits of
incurring some debt with the critical role CME Group plays in global capital
markets and we are, therefore, targeting a very strong investment grade
credit rating.”

Under SEC rules, CME Group will not be able to repurchase shares during
certain restricted time periods. The share repurchase plan does not obligate
CME Group to repurchase any specific dollar amount or number of shares of its
Class A common stock. CME Group intends to conduct any such repurchases in
compliance with the applicable provisions of Rules 10b-5 and 10b-18 and
Regulation M of the Securities Exchange Act of 1934, as amended, and any
other applicable laws and regulations.

About CME Group

CME Group (http://www.cmegroup.com/) is the world’s largest and most diverse
derivatives exchange. Formed by the 2007 merger of the Chicago Mercantile
Exchange (CME) and the Chicago Board of Trade (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.”

Forward-Looking Statements

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 Group and NYMEX 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. The share repurchase authorization does not require
CME Group to purchase a specific number of shares and it may be modified,
suspended or terminated at any time. The timing and number of shares
repurchased, if any, pursuant to the authorization will be subject to a
number of factors, including current market conditions, legal constraints and
available cash or other sources of funding. CME Group is in discussion with
lenders to provide financing for transactions pursuant to the authorization,
but there can be no assurance that CME Group will be able to secure financing
in the amount that it desires or at terms acceptable to CME Group. The
availability and terms of additional financing are subject to a number of
factors, some of which are beyond the control of CME Group, including general
economic conditions. 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.

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.
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/.

CME-G

SOURCE: CME Group

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

Web site: http://www.cme.com/
http://www.cmegroup.mediaroom.com/