Business Context and Reporting Period
Company: Chicago Mercantile Exchange Holdings Inc. (CME Holdings)
Filing Type: Form 8-K (Current Report)
Date of Report: October 15, 2004
Event Date: October 7, 2004 (Effective date of amendment)
Context: CME Holdings, through its wholly owned subsidiary Chicago Mercantile Exchange Inc. (CME), reported the entry into a material definitive agreement regarding its primary trading floor lease.
Key Financial Metrics
This filing does not contain standard financial performance metrics such as revenue, profit, cash flow, margins, debt, or liquidity. The report focuses exclusively on a specific contractual amendment.
- Termination Fee: $171,000 (payable if the second extended lease term is not exercised).
- Lease Space: 70,000 square feet at 20 South Wacker Drive, Chicago, Illinois.
Material Changes Versus Prior Period
The filing details a material change to the existing lease agreement between CME and the Chicago Mercantile Exchange Trust (CME Trust):
- Initial Term Extension: The initial lease term was extended from October 31, 2005, to October 31, 2009.
- Second Extended Term: The second extended term is now scheduled to begin on November 1, 2009, and end on October 31, 2012.
- Termination Obligation: A new provision requires CME to pay a $171,000 termination fee to the CME Trust if it does not exercise its option for the second extended term.
Guidance, Outlook, and Risks
Management Commentary: The filing provides no forward-looking financial guidance or strategic outlook beyond the lease extension.
Risks and Contingencies:
- Lease Commitment: CME is now contractually committed to the premises through 2012, subject to the termination fee if the final option is declined.
- CME Trust Context: The filing notes the CME Trust was established to provide discretionary financial assistance to customers of insolvent clearing firms. Trustees (who are also CME/CME Holdings Board members) have discretion to use Trust funds for customer losses related to CME contracts. No outside parties, including CME, hold a residual interest in the Trust.
Important Facts for Investor Verification
- Verify the total lease cost implications of the extension through 2012, as specific rent amounts are not disclosed in this summary.
- Confirm the status of the CME Trust's assets and any potential liabilities related to clearing firm insolvencies, given the Trust's role in covering customer losses.
- Review the full text of Exhibit 99.1 (Second Amendment to Lease) for detailed terms regarding rent escalations or other covenants not summarized here.