CME Group’s (CME) first quarter earnings of $3.59 per share were only a penny short of the Zacks Consensus Estimate of $3.60. Earnings for the reported quarter exclude $6 million in non-operating income for the recovery of a bankruptcy claim and a $6 million reduction in certain tax reserves, offset primarily by professional fees of $10 million related to the joint venture with Dow Jones.

GAAP earnings came in at $240.2 million or $3.62 per share, compared to $199.1 million or $3.00 in the year-ago quarter.

Total revenues for the reported quarter increased 7.1% year-over-year to $693.2 million. The increase in revenues was due primarily to a 9.5% increase in clearing and transaction fees to $578 million.

Total expenses increased by 6.8% year-over-year to $278.5 million. The increase was due primarily to higher compensation and benefits, and increased professional fees. Non-operating expenses were $15.8 million, driven primarily by interest expense and borrowing costs of $31.4 million, which was offset by $11.1 million in investment income. Non-operating expenses were down 56.0% from the year-ago quarter.

CME Group’s average daily volume was 11.5 million contracts, up 12.0% from the year-ago quarter. Total average rate per contract decreased 2.0% from the year-ago quarter to 82 cents due to a larger volume coming from the interest rate product area, which has the lowest average rate per contract. Quotation data fees were up 2.0% year-over-year to $88 million in the reported quarter.

As of Mar 31, 2010, CME Group had $490.5 million of cash and marketable securities and $2.8 billion in long-term debt.

In an attempt to expand its presence in the emerging markets, CME Group partnered with India’s National Stock Exchange (NSE) in Mar 2010 for a cross-listing pact that includes license agreements covering benchmark indexes for the U.S. and Indian equities.

We believe that the signs of gradual economic recovery are expected to exert positive influences on CME Group’s volume. Moreover, the company’s internal efforts to promote, expand and cross-sell its core exchange-traded business through meaningful acquisitions, a diverse and strong portfolio along with its global presence will generate decent growth in the longer term.
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