The NASDAQ OMX Group, Inc. ("NASDAQ OMX(r)") (Nasdaq:NDAQ) today reported net income of $94 million, or $0.44 per diluted share, for the first quarter of 2009 compared with net income of $121 million, or $0.69 per diluted share, in the first quarter of 2008, and with net income of $35 million, or $0.17 per diluted share, in the fourth quarter of 2008.
For comparison purposes, results for the first quarter of 2009 and the fourth quarter of 2008 are presented on a non-GAAP basis and exclude merger expenses and certain other non-recurring items. Results for the first quarter of 2008 are presented on a pro forma non-GAAP basis that reflect the financial results of NASDAQ, OMX, and the Philadelphia Stock Exchange as if they were a combined company for the periods presented and exclude merger expenses, net gains from foreign currency contracts and certain other non-recurring items. A complete reconciliation of GAAP results to non-GAAP and to pro forma non-GAAP results is provided as an attachment.
For the first quarter of 2009, net income on a non-GAAP basis was $102 million, or $0.48 per diluted share, an increase of 10% when compared to pro forma non-GAAP net income of $93 million, or $0.44 per diluted share, for the first quarter of 2008, and a decrease of 7% when compared to non-GAAP net income of $110 million, or $0.52 per diluted share, for the fourth quarter of 2008.
Items excluded from first quarter 2009 non-GAAP results are:
* $8 million in pre-tax merger-related expenses;
* $4 million in pre-tax gains related to the early extinguishment
of debt;
* $3 million in pre-tax expenses primarily associated with workforce
reductions; and
* $2 million related to a loss on the sale of the Iceland Broker
Services business.
"We are particularly proud of the results we delivered during the quarter," commented Bob Greifeld, NASDAQ OMX's Chief Executive Officer. "Despite a challenging environment we were able to achieve year-over-year profitability growth through the strength of our diversified business model and continued focus on operational efficiency. Our objective is to drive growth through investments in new opportunities and through innovation and technology advances in our core businesses."
Recent Highlights
* Reached new market share highs in the trading of U.S. equity options contracts. The combined market share of NASDAQ OMX PHLX and The NASDAQ Options Market averaged 20% during the first quarter of 2009, up from 15% in the first quarter of 2008. Total volume traded on these markets grew 26% in the first quarter of 2009 when compared to the same period last year. * Launched NASDAQ Basic, a data product that provides customers essential real-time quote and trading information for all U.S. exchange-listed securities in a flexible manner that can significantly lower data costs. NASDAQ Basic, which can be used as a low cost alternative to Level 1, is based on trading on The NASDAQ Stock Market, the most liquid market for U.S.-listed equity securities. Global Data Products also launched Pathfinders, an innovative analytical product unique to NASDAQ OMX that tracks and provides indications of collective trading behavior by leading market participants in liquid U.S. equities. * Expanded the trade offering of NASDAQ OMX Nordic to include equities listed in Norway. This new offering is designed to provide lower trading costs and other benefits for customers seeking to trade all Nordic equities on one platform. * Captured a total of 20 new listings during the first quarter of 2009, including 16 on The NASDAQ Stock Market and four on the exchanges that comprise NASDAQ OMX Nordic and NASDAQ OMX Baltic. Included in new listings are four companies that switched their listing to NASDAQ from NYSE Euronext. * Announced that NASDAQ OMX is expanding its popular suite of listed company services through a partnership with Rivel Research Group, a leading investment research group. NASDAQ OMX and Rivel plan to launch Waypoint, a product designed to give companies immediate and cumulative perception on investment community sentiment. * Announced that TOCOM, Japan's largest commodity futures exchange, is the first Japanese customer to go live with a new trading system from NASDAQ OMX. With more than 80 percent market share, TOCOM lists futures and options contracts for a wide range of commodities including metals, oil and rubber.
"The ability to grow operating margins in a difficult market speaks to our strength as proven integrators," said David Warren, NASDAQ OMX's Chief Financial Officer. "Due to our strong performance we were able to generate the cash flow necessary to reduce our debt obligations while investing in new initiatives to drive future growth. Looking forward, we are reducing our full year 2009 total operating expense guidance to be in the range of $830.0 million to $850.0 million, including approximately $30.0 million in merger-related costs."
Financial Review
Revenues
Revenues less liquidity rebates, brokerage, clearance and exchange fees ("net exchange revenues") were $369 million for the first quarter of 2009, a decrease of $50 million, or 12%, from first quarter 2008 results, and a decrease of $34 million, or 8%, from fourth quarter 2008 results.
Market Services
Market Services net exchange revenues decreased to $258 million, down 13% from the prior year quarter, and down 8% from the fourth quarter of 2008.
Transaction Services
Net exchange revenues from Transaction Services were $167 million for the first quarter of 2009, a decrease of $27 million, or 14%, when compared to the first quarter of 2008, and a decrease of $13 million, or 7%, from the fourth quarter of 2008.
* Cash Equity Trading net exchange revenues were $80 million for the
first quarter of 2009, down $26 million from the prior year
quarter and down $14 million from the fourth quarter of 2008.
o Net U.S. cash equity trading revenues decreased when compared
to the prior year quarter due primarily to a decline in the
average net fee per share matched on NASDAQ's trading system.
The decline in net exchange revenues when compared to the
fourth quarter of 2008 is due primarily to a decline in the
number of shares matched by NASDAQ.
o European cash equity trading revenues declined when compared
to the prior year quarter and from the fourth quarter of 2008
due to a decline in value traded and fewer trades executed on
the market. Value traded in the first quarter of 2009 was
EUR135 billion, down 54% and 21% from the first quarter of
2008 and the fourth quarter of 2008, respectively. During the
quarter, trade volume declined 9% from the prior year quarter
and 14% from the fourth quarter of 2008. Also contributing to
the decline in European cash equity trading revenues when
compared to the first quarter of 2008 are changes in the
exchange rates of various currencies as compared to the U.S.
dollar.
o Included in U.S. cash equity trading revenues in the first
quarter of 2009 are $25 million in SEC Section 31 fees,
compared with $91 million in the first quarter of 2008 and
$37 million in the fourth quarter of 2008. Corresponding cost
of revenues, reflecting the reimbursement of these fees to the
SEC, is included in brokerage, clearance and exchange fees.
* Derivative trading net exchange revenues were $55 million for the
first quarter of 2009, a decrease of $2 million from the prior
year quarter but an increase of $1 million when compared to the
fourth quarter of 2008.
o The decrease when compared to the prior year quarter is
primarily due to lower Nordic derivative trading volumes,
which were down 34% from the first quarter of 2008. Also
contributing to the decline in European derivative trading
revenues from the year-ago period are changes in the exchange
rates of various currencies as compared to the U.S. dollar.
Partially offsetting these declines is the inclusion of
NASDAQ OMX Commodities revenues following the October 21, 2008
closing of NASDAQ OMX's acquisition of Nord Pool ASA's
clearing, international derivatives and consulting
subsidiaries.
o The increase in revenues when compared to the fourth quarter
of 2008 is primarily due to the inclusion of NASDAQ OMX
Commodities revenues noted above. Partially offsetting this
increase are lower revenues due to a 13% decline in Nordic
derivative trading volumes.
Market Data
Market Data revenues were $81 million for the first quarter of 2009, down $3 million, or 4%, when compared to the first quarter of 2008 and down $4 million, or 5% from the fourth quarter of 2008.
* Net U.S. Tape Plans revenues were $34 million in the first quarter
of 2009, down $1 million when compared to the prior year quarter
and down $3 million from the fourth quarter of 2008.
o U.S. Tape Plans revenues reflect revenues generated by members
of joint industry plans that distribute the national best bid
and offer and last sale information for U.S. equities. Plan
members, such as The NASDAQ Stock Market, share revenue
collected from disseminating this information. The
distribution of revenue to each plan member is determined
using a formula, required by Regulation NMS, that calculates
each participant's share of trading and quoting activity.
o The decline in U.S. Tape Plans revenues, net of revenue
sharing plans, in the first quarter of 2009 when compared to
the first quarter of 2008 is primarily due to the decline in
NASDAQ's trading and quoting market share of NASDAQ-listed
securities and a reduction in the size of shareable tape plan
revenue pools. The decline in revenue in the first quarter of
2009 when compared to the fourth quarter of 2008 is primarily
due to reductions in NASDAQ's share of trading and quoting
activity in U.S. equities and a reduction in the size of
shareable tape plan revenue pools.
* U.S. market data products revenues were $28 million in the first
quarter of 2009, an increase of $3 million when compared to the
year ago quarter, and up $1 million when compared to the fourth
quarter of 2008. U.S. market data products revenues reflect
revenues generated from the sale of NASDAQ OMX proprietary data
products. Revenue growth when compared to prior periods is driven
primarily by the introduction of new products such as NASDAQ Last
Sale and the NASDAQ Global Index Data Service, as well as growth
of other proprietary data products.
* European market data products revenues were $19 million in the
first quarter of 2009, a decrease of $5 million when compared to
the prior year quarter and $2 million when compared to the fourth
quarter of 2008. The decrease when compared to the first quarter
of 2008 is primarily due to changes in the exchange rate of the
Euro as compared to the U.S. dollar and to declines in subscriber
populations. Declines in revenue when compared to the fourth
quarter of 2008 are due primarily to declines in subscriber
populations.
Issuer Services
During the first quarter of 2009, Issuer Services revenues declined $10 million, or 11%, to $79 million from the first quarter of 2008 and declined $6 million, or 7%, from the prior quarter.
Global Listing Services
Global Listing Services revenues were $70 million for the first quarter of 2009, down $8 million when compared to the first quarter of 2008 and down $5 million from the fourth quarter of 2008. Decreases in revenues from prior periods are due primarily to lower U.S. annual renewal fees resulting from fewer listed companies, and to lower market capitalization values for European listed equities, which in turn result in lower European listing fees. Also contributing to the decline in revenues from the first quarter of 2008 are changes in the exchange rates of various currencies as compared to the U.S. dollar. Contributing to the decline in revenues when compared to the fourth quarter of 2008 are seasonally lower corporate services revenues.
Global Index Group
Global Index Group revenues were $9 million for the first quarter of 2009, down $2 million when compared to the first quarter of 2008 and $1 million when compared to the fourth quarter of 2008. Driving the decline in revenues are lower license fees associated with NASDAQ OMX-licensed products, including lower volumes and declines in assets under management in ETFs and structured products.
Market Technology
Market Technology revenues were $29 million for the first quarter of 2009, down $4 million, or 12%, when compared to the first quarter of 2008, and down $6 million, or 17%, when compared to the fourth quarter of 2008. The revenue decline when compared to the prior year quarter is primarily due to changes in exchange rates of various currencies as compared to the U.S. dollar. Also contributing to the decline is the loss of contract revenues following NASDAQ OMX's acquisition of Nord Pool ASA's clearing, international derivatives and consulting subsidiaries, noted above. Nord Pool ASA was previously a customer of NASDAQ OMX Market Technology. The decline in revenues when compared to the fourth quarter of 2008 is primarily due to seasonally higher revenues for the prior period, the partial loss of contract revenues from the Nord Pool ASA transaction noted above, and to changes in exchange rates of various currencies as compared to the U.S. dollar.
Operating Expenses
Total operating expenses decreased $55 million, or 22%, to $194 million from $249 million in the prior year quarter and $19 million, or 9%, from $213 million in the fourth quarter of 2008. The decrease in expenses was realized through a reduction in compensation expense, lower depreciation expense, reduced expenses for computer operations and data transmission, and lower general, administrative and other expense. The decline in expenses is driven by successful integration efforts associated with NASDAQ's business combination with OMX and the acquisition of the Philadelphia Stock Exchange.
Net Interest Expense
Net interest expense was $22 million for the first quarter of 2009, compared with $29 million for the first quarter of 2008 and $28 million for the fourth quarter of 2008. The decline in net interest expense when compared to the prior periods is primarily due to lower interest rates on outstanding debt obligations.
Earnings Per Share
On a non-GAAP basis, first quarter 2009 earnings per diluted share were $0.48 as compared to pro forma non-GAAP earnings per diluted share of $0.44 in the prior year quarter, and non-GAAP earnings per diluted share of $0.52 in the fourth quarter of 2008. NASDAQ OMX's weighted average shares outstanding used to calculate diluted earnings per share were 214.3 million in the first quarter of 2009 versus 214.1 million for both the year-ago quarter and the fourth quarter of 2008.
About NASDAQ OMX
The NASDAQ OMX Group, Inc. is the world's largest exchange company. It delivers trading, exchange technology and public company services across six continents, with approximately 3,800 listed companies. NASDAQ OMX offers multiple capital raising solutions to companies around the globe, including its U.S. listings market, NASDAQ OMX Nordic, NASDAQ OMX Baltic, NASDAQ OMX First North, and the U.S. 144A sector. The company offers trading across multiple asset classes including equities, derivatives, debt, commodities, structured products and exchange-traded funds. NASDAQ OMX technology supports the operations of over 70 exchanges, clearing organizations and central securities depositories in more than 50 countries. NASDAQ OMX Nordic and NASDAQ OMX Baltic are not legal entities but describe the common offering from NASDAQ OMX exchanges in Helsinki, Copenhagen, Stockholm, Iceland, Tallinn, Riga, and Vilnius. For more information about NASDAQ OMX, visit http://www.nasdaqomx.com.
Non-GAAP Information
In addition to disclosing results determined in accordance with GAAP, NASDAQ OMX also discloses certain non-GAAP and pro forma non-GAAP results of operations, including net income, diluted earnings per share, and operating expenses that make certain adjustments or exclude certain charges and gains that are described in the reconciliation table of GAAP to pro forma non-GAAP information provided at the end of this release. Management believes that this non-GAAP and pro forma non-GAAP information provides investors with additional information to assess NASDAQ OMX's operating performance by making certain adjustments or excluding costs or gains and assists investors in comparing our operating performance to prior periods. Management uses this non-GAAP and pro forma non-GAAP information, along with GAAP information, in evaluating its historical operating performance.
The non-GAAP information is not prepared in accordance with GAAP and may not be comparable to non-GAAP information used by other companies. The non-GAAP information should not be viewed as a substitute for, or superior to, other data prepared in accordance with GAAP.
Cautionary Note Regarding Forward-Looking Statements
Information set forth in this communication contains forward-looking statements that involve a number of risks and uncertainties. NASDAQ OMX cautions readers that any forward-looking information is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking information. Such forward-looking statements include, but are not limited to (i) projections about our future financial results, growth and achievement of synergy targets, (ii) statements about the implementation dates and benefits of certain strategic initiatives, (iii) statements about our integrations of OMX, the Philadelphia Stock Exchange and certain subsidiaries of Nord Pool, and (iv) other statements that are not historical facts. Forward-looking statements involve a number of risks, uncertainties or other factors beyond NASDAQ OMX's control. These factors include, but are not limited to, NASDAQ OMX's ability to implement its strategic initiatives, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors detailed in NASDAQ OMX's filings with the U.S. Securities Exchange Commission, including its annual reports on Form 10-K and quarterly reports on Form 10-Q which are available on NASDAQ OMX's website at http://www.nasdaqomx.com and the SEC's website at www.sec.gov. NASDAQ OMX undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.
NDAQF
The NASDAQ OMX Group, Inc.
Condensed Consolidated Statements of Income
(in millions, except per share amounts)
(unaudited)
Three Months Ended
-----------------------------
Mar. 31, Dec. 31, Mar. 31,
2009 2008 2008
------- ------- -------
Revenues
Market Services revenues $ 784 $ 901 $ 722
Cost of revenues:
Liquidity rebates (455) (528) (385)
Brokerage, clearance and exchange fees (71) (94) (151)
------- ------- -------
Total cost of revenues (526) (622) (536)
------- ------- -------
Total Market Services revenues less
liquidity rebates, brokerage,
clearance and exchange fees 258 279 186
Issuer Services revenues 79 85 77
Market Technology revenues 29 35 13
Other revenues 3 4 2
------- ------- -------
Total revenues less liquidity rebates,
brokerage, clearance and exchange fees 369 403 278
------- ------- -------
Operating Expenses
Compensation and benefits 97 106 73
Marketing and advertising 2 6 2
Depreciation and amortization 24 27 16
Professional and contract services 18 19 14
Computer operations and data
communications 15 13 8
Occupancy 17 17 12
Regulatory 9 7 8
Merger expenses 8 10 1
General, administrative and other 13 18 11
------- ------- -------
Total operating expenses 203 223 145
------- ------- -------
Operating income 166 180 133
------- ------- -------
Interest income 5 7 10
Interest expense (27) (35) (10)
Dividend and investment income -- 3 --
Income (loss) from unconsolidated
investees, net (2) -- 27
Gain (loss) on foreign currency
contracts -- (47) 35
Asset impairment charge -- (35) --
------- ------- -------
Income before income taxes 142 73 195
Income tax provision 48 38 74
------- ------- -------
Net income $ 94 $ 35 $ 121
======= ======= =======
Net (income) expense attributable
to noncontrolling interests -- -- --
------- ------- -------
Net income attributable to NASDAQ OMX $ 94 $ 35 $ 121
======= ======= =======
Basic and diluted earnings per share:
Basic $ 0.47 $ 0.17 $ 0.75
======= ======= =======
Diluted $ 0.44 $ 0.17 $ 0.69
======= ======= =======
Weighted-average common shares
outstanding for earnings per share:
Basic 202 201 161
Diluted 214 214 176
The NASDAQ OMX Group, Inc.
Revenue Detail
(in millions)
(unaudited)
Three Months Ended
-----------------------------
Mar. 31, Dec. 31, Mar. 31,
2009 2008 2008
------- ------- -------
MARKET SERVICES
Transaction Services
Cash Equity Trading Revenues:
U.S. cash equity trading $ 563 $ 675 $ 598
Cost of revenues:
Liquidity rebates (438) (516) (385)
Brokerage, clearance and exchange
fees (70) (93) (151)
------- ------- -------
Total U.S. cash equity cost of
revenues (508) (609) (536)
------- ------- -------
Net U.S. cash equity trading
revenues 55 66 62
European cash equity trading 25 28 13
------- ------- -------
Total cash equity trading revenues 80 94 75
------- ------- -------
Derivative Trading Revenues:
U.S. derivative trading 52 48 --
Cost of revenues:
Liquidity rebates (17) (12) --
Brokerage, clearance and exchange
fees (1) (1) --
------- ------- -------
Total U.S. derivative cost of
revenues (18) (13) --
------- ------- -------
Net U.S. derivative trading
revenues 34 35 --
European derivative trading 21 19 8
------- ------- -------
Total derivative trading revenues 55 54 8
Access Services Revenues 32 32 24
------- ------- -------
Total Transaction Services revenues
less liquidity rebates, brokerage,
clearance and exchange fees 167 180 107
------- ------- -------
Market Data
Net U.S. tape plans 34 37 35
U.S. market data products 28 27 25
European market data products 19 21 9
------- ------- -------
Total Market Data revenues 81 85 69
------- ------- -------
Broker Services 8 11 7
------- ------- -------
Other Market Services 2 3 3
------- ------- -------
Total Market Services revenues less
liquidity rebates, brokerage,
clearance and exchange fees 258 279 186
------- ------- -------
ISSUER SERVICES
Global Listing Services:
Annual renewal fees 29 31 31
Listing of additional shares fees 10 10 10
Initial listing fees 5 5 6
------- ------- -------
Total U.S. listing fees 44 46 47
European listing fees 11 12 5
Corporate services 15 17 14
------- ------- -------
Total Global Listing Services 70 75 66
Global Index Group 9 10 11
------- ------- -------
Total Issuer Services revenues 79 85 77
------- ------- -------
MARKET TECHNOLOGY
License, support and project revenues 21 22 9
Facility management services 6 9 3
Other revenues 2 4 1
------- ------- -------
Total Market Technology revenues 29 35 13
------- ------- -------
Other 3 4 2
------- ------- -------
Total revenues less liquidity rebates,
brokerage, clearance and exchange
fees $ 369 $ 403 $ 278
======= ======= =======
The NASDAQ OMX Group, Inc.
Condensed Consolidated Balance Sheets
(in millions)
Mar. 31, Dec. 31,
2009 2008
------- -------
Assets (unaudited)
Current assets:
Cash and cash equivalents $ 333 $ 374
Restricted cash 139 141
Financial investments, at fair value 224 227
Receivables, net 355 339
Deferred tax assets 33 27
Market value, outstanding derivative positions 4,048 4,122
Other current assets 170 198
------- -------
Total current assets 5,302 5,428
Non-current restricted cash 50 50
Property and equipment, net 165 183
Non-current deferred tax assets 720 659
Goodwill 4,381 4,492
Intangible assets, net 1,536 1,583
Other assets 299 357
------- -------
Total assets $12,453 $12,752
======= =======
Liabilities and equity
Current liabilities:
Accounts payable and accrued expenses $ 242 $ 242
Section 31 fees payable to SEC 24 49
Accrued personnel costs 83 157
Deferred revenue 189 98
Other accrued liabilities 129 165
Deferred tax liabilities 20 19
Market value, outstanding derivative positions 4,048 4,122
Current portion of debt obligations 225 225
------- -------
Total current liabilities 4,960 5,077
Debt obligations 2,229 2,299
Non-current deferred tax liabilities 675 696
Non-current deferred revenue 157 155
Other liabilities 175 222
------- -------
Total liabilities 8,196 8,449
Equity
NASDAQ OMX stockholders' equity:
Common stock 2 2
Preferred stock -- --
Additional paid-in capital 3,578 3,569
Common stock in treasury, at cost (11) (10)
Accumulated other comprehensive loss (766) (619)
Retained earnings 1,438 1,344
------- -------
Total NASDAQ OMX stockholders' equity 4,241 4,286
------- -------
Noncontrolling interests 16 17
Total equity 4,257 4,303
------- -------
Total liabilities and equity $12,453 $12,752
======= =======
The NASDAQ OMX Group, Inc.
Pro Forma Condensed Consolidated Statements of Income
(in millions, except per share amounts)
(unaudited)
Three Months Ended
-----------------------------
Mar. 31,(1) Dec. 31,(1) Mar. 31,
2009 2008 2008
------- ------- -------
Revenues
Market Services $ 784 $ 901 $ 835
Cost of revenues:
Liquidity rebates (455) (528) (388)
Brokerage, clearance and exchange fees (71) (94) (152)
------- ------- -------
Total cost of revenues (526) (622) (540)
------- ------- -------
Total Market Services revenues less
liquidity rebates, brokerage,
clearance and exchange fees 258 279 295
Issuer Services revenues 79 85 90
Market Technology revenues 29 35 32
Other revenues 3 4 2
------- ------- -------
Total revenues less liquidity rebates,
brokerage, clearance and exchange fees 369 403 419
------- ------- -------
Expenses
Compensation and benefits 97 106 122
Marketing and advertising 2 6 4
Depreciation and amortization 24 27 31
Professional and contract services 18 19 26
Computer operations and data
communications 15 13 19
Occupancy 17 17 19
Regulatory 9 7 7
Merger expenses 8 10 1
General, administrative and other 13 18 21
------- ------- -------
Total operating expenses 203 223 250
------- ------- -------
Operating income 166 180 169
------- ------- -------
Interest income 5 7 5
Interest expense (27) (35) (34)
Dividend and investment income -- 3 2
Income (loss) from unconsolidated
investees, net (2) -- --
Gain (loss) on foreign currency
contracts -- (47) 35
Asset impairment charge -- (35) --
------- ------- -------
Income before income taxes 142 73 177
Income tax provision 48 38 63
------- ------- -------
Net income $ 94 $ 35 $ 114
======= ======= =======
Net (income) expense attributable to
noncontrolling interests -- -- --
------- ------- -------
Net income attributable to NASDAQ OMX $ 94 $ 35 $ 114
======= ======= =======
Basic and diluted earnings per share:
Basic $ 0.47 $ 0.17 $ 0.57
======= ======= =======
Diluted $ 0.44 $ 0.17 $ 0.54
======= ======= =======
Weighted-average common shares
outstanding for earnings per share:
Basic 202 201 199
Diluted 214 214 214
(1) March 31, 2009 and December 31, 2008 quarter results do not
include pro forma adjustments as all recent material
acquisitions were included in the full quarter results.
The NASDAQ OMX Group, Inc.
Pro Forma Quarterly Revenue Detail
(in millions)
(unaudited)
Three Months Ended
-----------------------------
Mar. 31,(1) Dec. 31,(1) Mar. 31,
2009 2008 2008
------- ------- -------
MARKET SERVICES
Transaction Services
Cash Equity Trading Revenues:
U.S. cash equity trading $ 563 $ 675 $ 599
Cost of revenues:
Liquidity rebates (438) (516) (385)
Brokerage, clearance and exchange
fees (70) (93) (152)
------- ------- -------
Total U.S. cash equity cost of
revenues (508) (609) (537)
------- ------- -------
Net U.S. cash equity trading
revenues 55 66 62
European cash equity trading 25 28 44
------- ------- -------
Total cash equity trading revenues 80 94 106
------- ------- -------
Derivative Trading Revenues:
U.S. derivative trading 52 48 36
Cost of revenues:
Liquidity rebates (17) (12) (3)
Brokerage, clearance and exchange
fees (1) (1) --
------- ------- -------
Total U.S. derivative cost of
revenues (18) (13) (3)
------- ------- -------
Net U.S. derivative trading
revenues 34 35 33
European derivative trading 21 19 24
------- ------- -------
Total derivative trading revenues 55 54 57
Access Services Revenues 32 32 31
------- ------- -------
Total Transaction Services revenues
less liquidity rebates, brokerage,
clearance and exchange fees 167 180 194
------- ------- -------
Market Data
Net U.S. tape plans 34 37 35
U.S. market data products 28 27 25
European market data products 19 21 24
------- ------- -------
Total Market Data revenues 81 85 84
------- ------- -------
Broker Services 8 11 17
------- ------- -------
Other Market Services 2 3 --
------- ------- -------
Total Market Services revenues less
liquidity rebates, brokerage,
clearance and exchange fees 258 279 295
------- ------- -------
ISSUER SERVICES
Global Listing Services:
Annual renewal fees 29 31 31
Listing of additional shares fees 10 10 10
Initial listing fees 5 5 6
------- ------- -------
Total U.S. listing fees 44 46 47
European listing fees 11 12 16
Corporate services 15 17 15
------- ------- -------
Total Global Listing Services 70 75 78
Global Index Group 9 10 11
------- ------- -------
Total Issuer Services revenues 79 85 89
------- ------- -------
MARKET TECHNOLOGY
License, support and project revenues 21 22 26
Facility management services 6 9 5
Other revenues 2 4 2
------- ------- -------
Total Market Technology revenues 29 35 33
------- ------- -------
Other 3 4 2
------- ------- -------
Total revenues less liquidity rebates,
brokerage, clearance and exchange
fees $ 369 $ 403 $ 419
======= ======= =======
(1) March 31, 2009 and December 31, 2008 quarter results do not
include pro forma adjustments as all recent material
acquisitions were included in the full quarter results.
The NASDAQ OMX Group, Inc.
Reconciliation of GAAP to Pro Forma Non-GAAP Earnings and
Reconciliation of GAAP to Pro Forma Non-GAAP Operating Expenses
(in millions, except per share amounts)
Three Months Ended
-----------------------------
Mar. 31,(1) Dec. 31,(1) Mar. 31,
2009 2008 2008
------- ------- -------
GAAP Net Income: $ 94 $ 35 $ 121
----------------
Pro Forma Adjustments:
OMX results -- -- 23
PHLX results -- -- 4
Amortization of intangibles -- -- (2)
Interest expense, net adjustments -- -- (15)
Gain from unconsolidated investees,
net -- -- (17)
------- ------- -------
Total Adjustments -- -- (7)
------- ------- -------
Pro Forma Net Income $ 94 $ 35 $ 114
Other Adjustments:
Gain on debt extinguishment (2) -- --
Loss on sale of Iceland Broker
Services business 2 -- --
Workforce reductions 2 -- --
Merger expenses 6 6 1
Asset impairment charge -- 35 --
(Gain) loss on foreign currency
contracts -- 34 (22)
------- ------- -------
Total Adjustments 8 75 (21)
------- ------- -------
Pro Forma Non-GAAP Net Income $ 102 $ 110 $ 93
======= ======= =======
GAAP Earnings per Common Share:
-------------------------------
Diluted Earnings per Common Share $ 0.44 $ 0.17 $ 0.69
Pro Forma Adjustments:
Total Adj. from GAAP Net Income
Above: -- -- (0.15)
------- ------- -------
Pro Forma Diluted Earnings per
Common Share 0.44 0.17 0.54
Total Adj. from Pro Forma Net
Income Above: 0.04 0.35 (0.10)
------- ------- -------
Pro Forma Non-GAAP Diluted Earnings
per Common Share $ 0.48 $ 0.52 $ 0.44
======= ======= =======
Three Months Ended
-----------------------------
Mar. 31,(1) Dec. 31,(1) Mar. 31,
2009 2008 2008
------- ------- -------
GAAP Operating Expenses: $ 203 $ 223 $ 145
------------------------
Pro Forma Adjustments:
OMX operating expenses -- -- 70
PHLX operating expenses -- -- 31
Amortization of intangibles -- -- 4
------- ------- -------
Total Adjustments -- -- 105
------- ------- -------
Pro Forma Operating Expenses $ 203 $ 223 $ 250
Other Adjustments:
Gain on debt extinguishment 4 -- --
Loss on sale of Iceland Broker
Services business (2) -- --
Workforce reductions (3) -- --
Merger expenses (8) (10) (1)
------- ------- -------
Total Adjustments (9) (10) (1)
------- ------- -------
Pro Forma Non-GAAP Operating Expenses $ 194 $ 213 $ 249
======= ======= =======
The NASDAQ OMX Group, Inc.
Reconciliation of GAAP to Pro Forma Non-GAAP Operating Income
(in millions, except per share amounts)
(unaudited)
Three Months Ended
-----------------------------
Mar. 31,(1) Dec. 31,(1) Mar. 31,
2009 2008 2008
------- ------- -------
GAAP Operating Income: $ 166 $ 180 $ 133
----------------------
Pro Forma Adjustments:
OMX operating income -- -- 33
PHLX operating income -- -- 7
Amortization of intangibles -- -- (4)
------- ------- -------
Total Adjustments -- -- 36
------- ------- -------
Pro Forma Operating Income $ 166 $ 180 $ 169
Other Adjustments:
Gain on debt extinguishment (4) -- --
Loss on sale of Iceland Broker
Services business 2 -- --
Workforce reductions 3 -- --
Merger expenses 8 10 1
------- ------- -------
Total Adjustments 9 10 1
------- ------- -------
Pro Forma Non-GAAP Operating Income $ 175 $ 190 $ 170
======= ======= =======
--------------------------------------------------------------------
Pro Forma total revenues less
liquidity rebates, brokerage,
clearance and exchange fees 369 403 419
Pro Forma Non-GAAP Operating Margin (2) 47% 47% 41%
--------------------------------------------------------------------
(1) March 31, 2009 and December 31, 2008 quarter results do not
include pro forma adjustments as all recent material
acquisitions were included in the full quarter results.
(2) Pro Forma Non-GAAP Operating Margin equals Pro Forma Non-GAAP
Operating Income divided by Pro Forma total revenues less
liquidity rebates, brokerage, clearance, and exchange fees.
