The NASDAQ OMX Group, Inc. ("NASDAQ OMX®") (Nasdaq:NDAQ) reported strong results for the fourth quarter of 2011. Net income attributable to NASDAQ OMX for the fourth quarter of 2011 was $82 million, or $0.45 per diluted share, compared with $110 million, or $0.61 per diluted share, in the third quarter of 2011, and $137 million, or $0.69 per diluted share, in the fourth quarter of 2010. For the full year of 2011, net income attributable to NASDAQ OMX was $387 million, or $2.15 per diluted share.
Included in the fourth quarter of 2011 results are $44 million of pre-tax expenses associated with debt refinancing, the impairment of an available-for-sale investment security and merger and strategic initiatives.
Financial Highlights:
- Net exchange revenues were $422 million in Q411, up from $400 million in Q410, and were $1,690 million in FY 2011, up 11% when compared to FY 2010.
- Non-GAAP operating income was $187 million in Q411, up from $184 million in Q410, and was $769 million in FY 2011, an increase of 10% from FY 2010.
- Non-GAAP net income was $113 million in Q411, up from $110 million in Q410, and reached $455 million in FY 2011, up 11% when compared to FY 2010.
- Non-GAAP diluted EPS increased to $0.63 in Q411, up 15% over prior year results. For FY 2011, non-GAAP diluted EPS increased to $2.53, up 27% from FY 2010.
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Summary of Non-GAAP Results1 |
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($ millions, except EPS) |
Q411 |
Q311 |
Q410 |
FY 2011 |
FY 2010 |
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Net Exchange Revenues2 |
$ 422 |
$ 438 |
$ 400 |
$ 1,690 |
$ 1,522 |
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Total Operating Expenses |
235 |
234 |
216 |
921 |
826 |
|
Operating Income |
187 |
204 |
184 |
769 |
696 |
|
Net Income |
113 |
121 |
110 |
455 |
411 |
|
Diluted Earnings Per Share |
$0.63 |
$0.67 |
$0.55 |
$2.53 |
$1.99 |
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1. A complete reconciliation of GAAP to non-GAAP results is included in the attached tables. |
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2. Represents revenues less transaction rebates, brokerage, clearance and exchange fees. |
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Bob Greifeld, Chief Executive Officer and President, NASDAQ OMX said:
"In 2011, our strategic decision-making continued to pay off as we achieved double digit growth in revenues and earnings. Investments in new initiatives, contributions from acquisitions, and capital deployment decisions all contributed to our success despite the backdrop of a difficult macroeconomic environment. As we enter 2012, we remain committed to our strategic plan to ensure that we're well positioned for continued growth."
Fourth Quarter 2011 Highlights
- Announced the approval of a share repurchase program, authorizing NASDAQ OMX to repurchase in the aggregate up to $300 million of its outstanding common stock. During the fourth quarter of 2011, NASDAQ OMX repurchased 3.98 million shares of common stock at an average price of $25.10 and an aggregate principal value of $100 million.
Market Services
- Launched Genium Risk, a new risk management platform for the Nordic clearing house, NASDAQ OMX Clearing. Genium Risk, a state of the art risk system, provides the clearing house with a real-time risk management solution, including new tools for improved risk monitoring and handling of incidents for derivatives clearing.
- Announced intentions to introduce competitive central counterparty (CCP) clearing, in cooperation with EMCF, EuroCCP and SIX x-clear, by the end of April 2012. Interoperability will allow members of NASDAQ OMX's Nordic exchanges to choose between multiple clearing houses to clear and settle their trades. The introduction of competitive CCP is conditional on the necessary regulatory consents or approvals.
- Membership at N2EX, the U.K. power market jointly operated by NASDAQ OMX and Nord Pool Spot, continued to grow on the back of increasing liquidity. N2EX ended the year with 34 members and 15 companies trading U.K. power futures. Recently, Scottish Power became the third of the six large U.K. utilities to commit to bidding arrangements in N2EX's day-ahead auction, following earlier commitments by E.ON and SSE. During the fourth quarter of 2011, total cleared volumes reached 20.3 TWh, up from 9.3 TWh in the prior-year period, while futures volumes increased to 1.9 TWh.
- Acquired the business of a leading provider of machine-readable economic news to trading firms and financial institutions. This acquisition allows NASDAQ OMX to provide a new service, Event Driven Analytics, which delivers U.S. government and other economic news directly from the source to customers interested in receiving information in an electronic feed. This service distributes dozens of U.S. government and other economic indicators to a variety of market participants, giving them instant access to events that are incorporated into algorithmic trading systems.
Issuer Services
- The NASDAQ Stock Market attracted significant listing transfers during the fourth quarter of 2011, announcing that companies with more than $80 billion in market capitalization intended to switch their listing to NASDAQ. Blue chip companies Texas Instruments and Viacom led a variety of companies representing diverse industries that announced transfers of their listing. Notable transfers during the quarter include Icahn Enterprises, Sallie Mae, Frontier Communications and Wendy's.
- NASDAQ OMX welcomed 56 new listings during the quarter, including 16 initial public offerings. Among the largest IPOs this quarter were Groupon, Ubiquiti Networks, Jive Software, and Zynga.
- Acquired Glide Technologies Limited, a leading London-based software-as-a-service (SaaS) provider specializing in corporate communications and reputation management solutions. Combining Glide Technologies with NASDAQ OMX's Corporate Solutions has created the first and only fully-integrated workflow solution for investor relations and public relations professionals.
Market Technology
- Signed a strategic alliance with Bolsa Electronica de Chile (BEC) to provide BEC with the NASDAQ OMX market technology, X-stream Trading, and advisory services for product development and global visibility. BEC and its members benefit from significant enhancements in performance, latency and throughput capacity by shifting to NASDAQ OMX's proven exchange technology.
- The SMARTS Broker Compliance business continued to demonstrate strong growth during the quarter, winning contracts with two global brokerage firms, each operating in 28 markets. And in parallel with Chi-X Australia commencing operations, SMARTS launched Broker Compliance in support of the new market while securing nearly a dozen new clients for the service.
Operating Highlights
U.S. Cash Equities
- Total matched market share of U.S. cash equities was 21.3% in the fourth quarter of 2011, with NASDAQ matching 17.9%, NASDAQ OMX BX ("BX") matching 2.4% and NASDAQ OMX PSX ("PSX") matching 1.0%. Total matched market share was 22.4% in the third quarter of 2011 (NASDAQ: 18.9%; BX: 2.4%; PSX 1.1%) and 19.6% in the fourth quarter of 2010 (NASDAQ: 16.8%; BX: 2.3%; PSX 0.5%). Total matched share volume was 100.0 billion shares in the fourth quarter of 2011, compared with 125.0 billion shares in the third quarter of 2011 and 93.1 billion shares in the fourth quarter of 2010.
European Cash Equities
- Total average daily volume was 394 thousand trades in the fourth quarter of 2011, compared with 423 thousand in the third quarter of 2011 and 275 thousand in the fourth quarter of 2010. Total average daily value traded was $3.0 billion in the fourth quarter of 2011, compared with $3.7 billion in the third quarter of 2011 and $3.2 billion in the fourth quarter of 2010.
U.S. Options
- Total matched market share of U.S. equity options was 27.2% in the fourth quarter of 2011, with NASDAQ OMX PHLX ("PHLX") matching 22.7% and The NASDAQ Options Market ("NOM") matching 4.5%. Total market share of U.S. equity options was 26.4% in the third quarter of 2011 (PHLX: 22.3%; NOM: 4.1%) and 31.4% in the fourth quarter of 2010 (PHLX: 26.5%; NOM: 4.9%). Total industry average daily volume was 15.5 million contracts in the fourth quarter of 2011, compared with 18.5 million contracts in the third quarter of 2011 and 15.1 million contracts in the fourth quarter of 2010.
European Derivatives
- In the fourth quarter of 2011, the average daily volume of options, futures and fixed-income contracts was 455 thousand (Q311: 492 thousand; Q410: 436 thousand). Within NASDAQ OMX Commodities, cleared power contracts during the fourth quarter of 2011 totaled 494 terawatt hours ("TWh") (Q311: 416 TWh; Q410: 532 TWh).
Global Listings
- New listings totaled 56 in the fourth quarter of 2011 compared with 38 in the third quarter of 2011 and 63 in the fourth quarter of 2010. New listings for the fourth quarter of 2011 included 16 initial public offerings, compared with 18 in the third quarter of 2011 and 37 in the fourth quarter of 2010.
Market Technology
- Total order intake, which represents the value of orders signed, was $36 million during the fourth quarter of 2011, compared with $35 million in the third quarter of 2011 and $71 million in the fourth quarter of 2010. At the end of the fourth quarter of 2011, total order value, which represents the total contract value of orders signed that are yet to be recognized as revenue, was $458 million, compared with $473 million at the end of the third quarter of 2011 and $495 million at the end of the fourth quarter of 2010.
Lee Shavel, Chief Financial Officer, said:
"2011 was a successful year across the board. Not only did we grow earnings by 27%, we also increased cash reserves, reduced outstanding debt obligations, lowered borrowing costs, and continued to return capital to shareholders. In the coming year, we plan to leverage our diversified business model and the strong cash flows it generates to invest in growth opportunities while continuing to generate strong returns for shareholders."
Expense Guidance
For the full year of 2012 total core operating expenses are expected to be in the range of $915 million to $935 million, plus an additional $40 million to $50 million in incremental new initiative spending, resulting in total operating expenses in the range of $955 million to $985 million.
Financial Review
Revenues
Revenues less transaction rebates, brokerage, clearance and exchange fees ("net exchange revenues") were $422 million for the fourth quarter of 2011, a decrease of $16 million, or 4%, from the third quarter of 2011 but an increase of $22 million, or 6%, from the fourth quarter of 2010. Changes in the exchange rates of various currencies as compared to the U.S. dollar had the impact of decreasing revenues in the fourth quarter of 2011 by $6 million when compared to the third quarter of 2011, and increasing revenues by $1 million when compared to the fourth quarter of 2010.
Market Services
Market Services net exchange revenues were $281 million for the fourth quarter of 2011, down 6% when compared to the third quarter of 2011 but up 6% when compared to the fourth quarter of 2010.
Transaction Services
Net exchange revenues from Transaction Services were $188 million for the fourth quarter of 2011, a decrease of $23 million, or 11%, when compared to the third quarter of 2011, but an increase of $6 million, or 3%, when compared to the fourth quarter of 2010.
- Total net cash equity trading revenues were $59 million for the fourth quarter of 2011, down $8 million, or 12%, from the third quarter of 2011, and $1 million, or 2%, from the prior year quarter.
- Net U.S. cash equity trading revenues declined $6 million when compared to the third quarter of 2011 but were equal to revenues in the fourth quarter of 2010. The decline in revenues when compared to the third quarter of 2011 is primarily due to reductions in industry trading volumes, partially offset by increases in the average net fee per share matched on NASDAQ's trading system.
- Included in U.S. cash equity trading revenues in the fourth quarter of 2011 are $73 million in SEC Section 31 fees, compared with $92 million in the third quarter of 2011 and $57 million in the fourth quarter of 2010. Corresponding cost of revenues, reflecting the reimbursement of these fees to the SEC, is included in brokerage, clearance and exchange fees.
- European cash equity trading revenues were down $2 million, or 8%, from the third quarter of 2011 and $1 million, or 4%, from the prior year quarter. The decreases when compared to both periods are due primarily to declines in value traded. Also contributing to the decrease when compared to the third quarter of 2011 are changes in the exchange rates of various currencies as compared to the U.S. dollar.
- Total net derivative trading and clearing revenues were $73 million for the fourth quarter of 2011, down $11 million, or 13%, from the third quarter of 2011, and $1 million, or 1%, from the prior year quarter.
- Net U.S. derivative trading and clearing revenues decreased $10 million when compared to the third quarter of 2011 and $1 million when compared to the fourth quarter of 2010. The decrease when compared to the third quarter of 2011 is due primarily to lower industry trading volumes, while the decrease from the prior year quarter is due primarily to a decline in market share.
- European derivative trading and clearing revenues decreased $1 million from the third quarter of 2011 but were equal to revenues in the fourth quarter of 2010. Lower revenues when compared to the third quarter of 2011 are primarily due to changes in the exchange rates of various currencies as compared to the U.S. dollar.
- Access Services revenues were $56 million for the fourth quarter of 2011. When compared to the fourth quarter of 2010 revenues increased $8 million, or 17%, primarily due to the acquisition of FTEN, which was completed in December 2010. When compared to the third quarter of 2011, an audit adjustment in the third quarter of 2011 resulted in higher than normal revenues for that period.
Market Data
Market Data revenues were $87 million for the fourth quarter of 2011, up $4 million, or 5%, when compared to the third quarter of 2011, and up $8 million, or 10%, when compared to the fourth quarter of 2010.
- Net U.S. tape plans revenues were $29 million in the fourth quarter of 2011, down $1 million when compared to the third quarter of 2011, but up $1 million when compared to the prior year quarter. The decline in revenues when compared to the third quarter of 2011 is due to a decrease in the amount of shareable revenues available in the various tape plans. The increase when compared to the fourth quarter of 2010 is due to higher trading and quoting market share, as calculated under the SEC-mandated market data revenue quoting and trading formula.
- U.S. market data products revenues were $37 million in the fourth quarter of 2011, up $4 million when compared to the third quarter of 2011 and $5 million when compared to the prior year quarter. The increase in revenues when compared to both periods is due to higher customer demand for proprietary data products. Also contributing to the increase in revenue are higher audit fees in the fourth quarter of 2011.
- European market data products revenues were $21 million in the fourth quarter of 2011, an increase of $1 million when compared to the third quarter of 2011, and an increase of $2 million when compared to the prior year quarter. The increase when compared to the third quarter of 2011 is primarily due to increased demand for data products and higher audit fees, offset somewhat by changes in the exchange rates of various currencies as compared to the U.S. dollar. The increase when compared to the fourth quarter of 2010 is primarily due to modified fees for market data products, increased demand for data products, and higher audit fees.
Issuer Services
Issuer Services revenues were $93 million for the fourth quarter of 2011, an increase of $1 million, or 1%, when compared to the third quarter of 2011, and an increase of $4 million, or 4%, when compared to the fourth quarter of 2010.
Global Listing Services
Global Listing Services revenues were $80 million for the fourth quarter of 2011, up $1 million, or 1%, when compared to the third quarter of 2011, and up $3 million, or 4%, when compared to the fourth quarter of 2010. Revenue growth when compared to both periods is primarily due to increases in Corporate Solutions revenues resulting from higher demand for services from customers. Also contributing to the increase when compared to the fourth quarter of 2010 are higher European listing revenues.
Global Index Group
Global Index Group revenues were $13 million for the fourth quarter of 2011, equal to revenues in the third quarter of 2011, and up $1 million, or 8%, when compared to the fourth quarter of 2010. Higher revenues when compared to the prior year period are primarily due to increases in asset sizes of licensed ETFs, as well as additional demand for new licensed ETFs and other financial products.
Market Technology
Market Technology revenues were $48 million for the fourth quarter of 2011, up $2 million, or 4%, when compared to both the third quarter of 2011 and the fourth quarter of 2010. Contributing to increases when compared to both periods are revenues associated with recently delivered projects. Somewhat offsetting the increase when compared to the third quarter of 2011 are changes in the exchange rates of various currencies as compared to the U.S. dollar.
Operating Expenses
Total non-GAAP operating expenses increased $1 million to $235 million in the fourth quarter of 2011 from $234 million in the third quarter of 2011, and increased $19 million, or 9%, from $216 million in the prior year quarter. The increase when compared to the third quarter of 2011 is primarily driven by higher marketing and advertising expenses, and incremental spending for professional and contract services. Somewhat offsetting these increases are lower compensation expenses and a favorable effect from changes in the exchange rates of various currencies as compared to the U.S. dollar. When compared to the fourth quarter of 2010, the increase is primarily due to higher expenses associated with FTEN (acquired in December 2010), and Zoomvision Mamato (acquired in December 2010). Also contributing to the increase were higher compensation expenses and incremental spending for professional and contract services.
Items Excluded from Non-GAAP Results
Included in the fourth quarter of 2011 results are $44 million of pre-tax expenses associated with debt refinancing, the impairment of an available-for-sale investment security, and merger and strategic initiatives. These expenses have been excluded from non-GAAP results.
- $25 million in pre-tax charges were recorded following NASDAQ OMX's tender offer to purchase 2.5% convertible notes. Included were $22 million of a write-off associated with an unamortized debt discount, $2 million of debt issuance costs, and $1 million of other expenses.
- A non-cash, other-than-temporary charge of $18 million related to an available-for-sale investment security in Dubai Financial Market. As of December 31, 2011, the cost basis of this investment security was $36 million and the fair value was $18 million. It was determined that the decline in value of this security below its carrying amount was other than temporary.
- $1 million in expenses related to merger and strategic initiatives.
Net Interest Expense
Net interest expense was $23 million for the fourth quarter of 2011, compared with $27 million for the third quarter of 2011 and $24 million for the fourth quarter of 2010. The decrease in net interest expense when compared to both periods is primarily due to the refinancing of a prior credit facility and the purchase of 2.5% convertible notes. Interest income for the fourth quarter and third quarter of 2011 was $3 million and was $2 million for the fourth quarter of 2010.
Earnings Per Share
On a non-GAAP basis, fourth quarter 2011 earnings per diluted share were $0.63 as compared to non-GAAP earnings per diluted share of $0.67 in the third quarter of 2011 and non-GAAP earnings per diluted share of $0.55 in the prior year quarter. NASDAQ OMX's weighted average shares outstanding used to calculate diluted earnings per share were 180 million for the fourth quarter of 2011, 181 million for the third quarter of 2011, and 200 million for the fourth quarter of 2010.
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The NASDAQ OMX Group, Inc. |
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Consolidated Statements of Income |
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(in millions, except per share amounts) |
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Three Months Ended |
Year Ended |
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December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
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|
2011 |
2011 |
2010 |
2011 |
2010 |
|
Revenues: |
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
|
|
Market Services |
$ 698 |
$ 808 |
$ 648 |
$ 2,886 |
$ 2,700 |
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Cost of revenues: |
|
|
|
|
|
|
Transaction rebates |
(324) |
(390) |
(299) |
(1,344) |
(1,312) |
|
Brokerage, clearance and exchange fees |
(93) |
(118) |
(84) |
(404) |
(363) |
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Total cost of revenues |
(417) |
(508) |
(383) |
(1,748) |
(1,675) |
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Total Market Services revenues less transaction rebates, brokerage, clearance and exchange fees |
281 |
300 |
265 |
1,138 |
1,025 |
|
|
|
|
|
|
|
|
Issuer Services |
93 |
92 |
89 |
369 |
344 |
|
Market Technology |
48 |
46 |
46 |
183 |
152 |
|
Other |
-- |
-- |
-- |
-- |
1 |
|
|
|
|
|
|
|
|
Revenues less transaction rebates, brokerage, clearance and exchange fees |
422 |
438 |
400 |
1,690 |
1,522 |
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Operating Expenses: |
|
|
|
|
|
|
Compensation and benefits |
113 |
118 |
110 |
458 |
412 |
|
Marketing and advertising |
9 |
4 |
6 |
24 |
20 |
|
Depreciation and amortization |
28 |
28 |
27 |
109 |
103 |
|
Professional and contract services |
25 |
23 |
21 |
90 |
78 |
|
Computer operations and data communications |
15 |
17 |
15 |
65 |
58 |
|
Occupancy |
22 |
23 |
22 |
91 |
88 |
|
Regulatory |
9 |
9 |
9 |
35 |
35 |
|
Merger and strategic initiatives |
1 |
3 |
2 |
38 |
4 |
|
General, administrative and other |
39 |
18 |
13 |
84 |
93 |
|
Total operating expenses |
261 |
243 |
225 |
994 |
891 |
|
|
|
|
|
|
|
|
Operating income |
161 |
195 |
175 |
696 |
631 |
|
|
|
|
|
|
|
|
Interest income |
3 |
3 |
2 |
11 |
9 |
|
Interest expense |
(26) |
(30) |
(26) |
(119) |
(102) |
|
Asset impairment charges |
(18) |
-- |
-- |
(18) |
-- |
|
Dividend and investment income |
-- |
1 |
(3) |
1 |
(3) |
|
Loss on divestiture of businesses |
-- |
-- |
-- |
-- |
(11) |
|
Income from unconsolidated investees, net |
1 |
1 |
-- |
2 |
2 |
|
Income before income taxes |
121 |
170 |
148 |
573 |
526 |
|
Income tax provision |
40 |
61 |
13 |
190 |
137 |
|
Net income |
81 |
109 |
135 |
383 |
389 |
|
|
|
|
|
|
|
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Net loss attributable to noncontrolling interests |
1 |
1 |
2 |
4 |
6 |
|
Net income attributable to NASDAQ OMX |
$ 82 |
$ 110 |
$ 137 |
$ 387 |
$ 395 |
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Basic and diluted earnings per share: |
|
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Basic earnings per share |
$ 0.46 |
$ 0.62 |
$ 0.70 |
$ 2.20 |
$ 1.94 |
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Diluted earnings per share |
$ 0.45 |
$ 0.61 |
$ 0.69 |
$ 2.15 |
$ 1.91 |
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|
|
|
|
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Weighted-average common shares outstanding for earnings per share: |
|
|
|
|
|
|
Basic |
175 |
177 |
195 |
176 |
203 |
|
Diluted |
180 |
181 |
200 |
180 |
207 |
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The NASDAQ OMX Group, Inc. |
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Revenue Detail |
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(in millions) |
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Three Months Ended |
Year Ended |
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December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
|
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2011 |
2011 |
2010 |
2011 |
2010 |
|
|
(unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
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MARKET SERVICES |
|
|
|
|
|
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Transaction Services |
|
|
|
|
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Cash Equity Trading Revenues: |
|
|
|
|
|
|
U.S. cash equity trading |
$ 385 |
$ 481 |
$ 331 |
$ 1,617 |
$ 1,600 |
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Cost of revenues: |
|
|
|
|
|
|
Transaction rebates |
(261) |
(327) |
(219) |
(1,087) |
(1,094) |
|
Brokerage, clearance and exchange fees |
(87) |
(111) |
(75) |
(375) |
(341) |
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Total U.S. cash equity cost of revenues |
(348) |
(438) |
(294) |
(1,462) |
(1,435) |
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Net U.S. cash equity trading revenues |
37 |
43 |
37 |
155 |
165 |
|
European cash equity trading |
22 |
24 |
23 |
93 |
90 |
|
Total net cash equity trading revenues |
59 |
67 |
60 |
248 |
255 |
|
|
|
|
|
|
|
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Derivative Trading and Clearing Revenues: |
|
|
|
|
|
|
U.S. derivative trading and clearing |
110 |
121 |
131 |
471 |
390 |
|
Cost of revenues: |
|
|
|
|
|
|
Transaction rebates |
(63) |
(63) |
(80) |
(257) |
(218) |
|
Brokerage, clearance and exchange fees |
(6) |
(7) |
(9) |
(29) |
(22) |
|
Total U.S. derivative trading and clearing cost of revenues |
(69) |
(70) |
(89) |
(286) |
(240) |
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Net U.S. derivative trading and clearing revenues |
41 |
51 |
42 |
185 |
150 |
|
European derivative trading and clearing |
32 |
33 |
32 |
128 |
115 |
|
Total net derivative trading and clearing revenues |
73 |
84 |
74 |
313 |
265 |
|
|
|
|
|
|
|
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Access Services Revenues |
56 |
60 |
48 |
223 |
173 |
|
|
|
|
|
|
|
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Total Transaction Services revenues less transaction rebates, brokerage, clearance and exchange fees |
188 |
211 |
182 |
784 |
693 |
|
|
|
|
|
|
|
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Market Data Revenues: |
|
|
|
|
|
|
Net U.S. tape plans |
29 |
30 |
28 |
115 |
117 |
|
U.S. market data products |
37 |
33 |
32 |
135 |
126 |
|
European market data products |
21 |
20 |
19 |
83 |
70 |
|
|
|
|
|
|
|
|
Total Market Data revenues |
87 |
83 |
79 |
333 |
313 |
|
|
|
|
|
|
|
|
Broker Services Revenues |
5 |
5 |
4 |
19 |
15 |
|
|
|
|
|
|
|
|
Other Market Services Revenues |
1 |
1 |
-- |
2 |
4 |
|
Total Market Services revenues less transaction rebates, brokerage, clearance and exchange fees |
281 |
300 |
265 |
1,138 |
1,025 |
|
|
|
|
|
|
|
|
ISSUER SERVICES |
|
|
|
|
|
|
Global Listing Services Revenues: |
|
|
|
|
|
|
Annual renewal |
29 |
30 |
29 |
118 |
113 |
|
Listing of additional shares |
10 |
10 |
10 |
39 |
39 |
|
Initial listing |
4 |
4 |
4 |
16 |
18 |
|
Total U.S. listing services |
43 |
44 |
43 |
173 |
170 |
|
European listing fees |
13 |
13 |
12 |
54 |
49 |
|
Corporate Solutions |
24 |
22 |
22 |
90 |
78 |
|
Total Global Listing Services revenues |
80 |
79 |
77 |
317 |
297 |
|
|
|
|
|
|
|
|
Global Index Group Revenues |
13 |
13 |
12 |
52 |
47 |
|
Total Issuer Services revenues |
93 |
92 |
89 |
369 |
344 |
|
|
|
|
|
|
|
|
MARKET TECHNOLOGY |
|
|
|
|
|
|
License, support and facility management |
29 |
28 |
27 |
115 |
103 |
|
Delivery project |
6 |
6 |
5 |
24 |
17 |
|
Change request, advisory and broker surveillance |
13 |
12 |
14 |
44 |
32 |
|
Total Market Technology revenues |
48 |
46 |
46 |
183 |
152 |
|
|
|
|
|
|
|
|
Other |
-- |
-- |
-- |
-- |
1 |
|
|
|
|
|
|
|
|
Total revenues less transaction rebates, brokerage, clearance and exchange fees |
$ 422 |
$ 438 |
$ 400 |
$ 1,690 |
$ 1,522 |
|
|
||
|
|
||
|
The NASDAQ OMX Group, Inc. |
||
|
Consolidated Balance Sheets |
||
|
(in millions) |
||
|
|
|
|
|
|
December 31, |
December 31, |
|
|
2011 |
2010 |
|
Assets |
(unaudited) |
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ 506 |
$ 315 |
|
Restricted cash |
43 |
60 |
|
Financial investments, at fair value |
279 |
253 |
|
Receivables, net |
308 |
298 |
|
Deferred tax assets |
16 |
13 |
|
Open clearing contracts: |
|
|
|
Derivative positions, at fair value |
1,566 |
4,037 |
|
Resale agreements, at contract value |
3,745 |
3,441 |
|
Other current assets |
110 |
93 |
|
Total current assets |
6,573 |
8,510 |
|
Non-current restricted cash |
105 |
105 |
|
Property and equipment, net |
193 |
164 |
|
Non-current deferred tax assets |
392 |
433 |
|
Goodwill |
5,061 |
5,127 |
|
Intangible assets, net |
1,648 |
1,719 |
|
Other non-current assets |
119 |
149 |
|
Total assets |
$ 14,091 |
$ 16,207 |
|
|
|
|
|
Liabilities |
|
|
|
Current liabilities: |
|
|
|
Accounts payable and accrued expenses |
$ 164 |
$ 142 |
|
Section 31 fees payable to SEC |
106 |
82 |
|
Accrued personnel costs |
132 |
122 |
|
Deferred revenue |
124 |
122 |
|
Other current liabilities |
121 |
119 |
|
Deferred tax liabilities |
27 |
26 |
|
Open clearing contracts: |
|
|
|
Derivative positions, at fair value |
1,566 |
4,037 |
|
Repurchase agreements, at contract value |
3,745 |
3,441 |
|
Current portion of debt obligations |
45 |
140 |
|
Total current liabilities |
6,030 |
8,231 |
|
Debt obligations |
2,072 |
2,181 |
|
Non-current deferred tax liabilities |
670 |
698 |
|
Non-current deferred revenue |
154 |
170 |
|
Other non-current liabilities |
179 |
198 |
|
Total liabilities |
9,105 |
11,478 |
|
|
|
|
|
Commitments and contingencies |
|
|
|
Equity |
|
|
|
NASDAQ OMX stockholders' equity: |
|
|
|
Common stock |
2 |
2 |
|
Additional paid-in capital |
3,793 |
3,780 |
|
Common stock in treasury, at cost |
(860) |
(796) |
|
Accumulated other comprehensive loss |
(350) |
(272) |
|
Retained earnings |
2,391 |
2,004 |
|
Total NASDAQ OMX stockholders' equity |
4,976 |
4,718 |
|
Noncontrolling interests |
10 |
11 |
|
Total equity |
4,986 |
4,729 |
|
Total liabilities and equity |
$ 14,091 |
$ 16,207 |
|
|
|||||||
|
|
|||||||
|
The NASDAQ OMX Group, Inc. |
|||||||
|
Reconciliation of GAAP Net Income, Diluted Earnings Per Share, Operating Income and Operating Expenses |
|||||||
|
to Non-GAAP Net Income, Diluted Earnings Per Share, Operating Income and Operating Expenses |
|||||||
|
(in millions, except per share amounts) |
|||||||
|
(unaudited) |
|||||||
|
|
|
|
|
|
|
||
|
|
Three Months Ended |
Year Ended |
|||||
|
|
December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
||
|
|
2011 |
2011 |
2010 |
2011 |
2010 |
||
|
GAAP net income attributable to NASDAQ OMX: |
$ 82 |
$ 110 |
$ 137 |
$ 387 |
$ 395 |
||
|
|
|
|
|
|
|
||
|
Non-GAAP adjustments: |
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
Merger and strategic initiatives |
1 |
3 |
2 |
38 |
4 |
||
|
Extinguishment of debt |
25 |
6 |
-- |
31 |
40 |
||
|
Asset impairment charges |
18 |
-- |
-- |
18 |
-- |
||
|
Sublease reserves |
-- |
-- |
1 |
-- |
5 |
||
|
Asset retirements |
-- |
-- |
-- |
-- |
2 |
||
|
Workforce reductions |
-- |
-- |
2 |
-- |
9 |
||
|
Loss on divestiture of businesses |
-- |
-- |
-- |
-- |
11 |
||
|
Other |
-- |
-- |
4 |
4 |
5 |
||
|
Total non-GAAP adjustments |
44 |
9 |
9 |
91 |
76 |
||
|
Adjustment to the income tax provision to reflect non-GAAP adjustments(1) |
(13) |
(3) |
(3) |
(28) |
(28) |
||
|
Significant tax adjustments, net |
-- |
5 |
(33) |
5 |
(32) |
||
|
Total non-GAAP adjustments, net of tax |
31 |
11 |
(27) |
68 |
16 |
||
|
|
|
|
|
|
|
||
|
Non-GAAP net income attributable to NASDAQ OMX: |
$ 113 |
$ 121 |
$ 110 |
$ 455 |
$ 411 |
||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
GAAP diluted earnings per common share: |
$ 0.45 |
$ 0.61 |
$ 0.69 |
$ 2.15 |
$ 1.91 |
||
|
Total adjustments from non-GAAP net income above |
0.18 |
0.06 |
(0.14) |
0.38 |
0.08 |
||
|
|
|
|
|
|
|
||
|
Non-GAAP diluted earnings per common share: |
$ 0.63 |
$ 0.67 |
$ 0.55 |
$ 2.53 |
$ 1.99 |
||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
|
Three Months Ended |
Year Ended |
|||||
|
|
December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
||
|
|
2011 |
2011 |
2010 |
2011 |
2010 |
||
|
|
|
|
|
|
|
||
|
GAAP operating income: |
$ 161 |
$ 195 |
$ 175 |
$ 696 |
$ 631 |
||
|
|
|
|
|
|
|
||
|
Non-GAAP adjustments: |
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
Merger and strategic initiatives |
1 |
3 |
2 |
38 |
4 |
||
|
Extinguishment of debt |
25 |
6 |
-- |
31 |
40 |
||
|
Sublease reserves |
-- |
-- |
1 |
-- |
5 |
||
|
Asset retirements |
-- |
-- |
-- |
-- |
2 |
||
|
Workforce reductions |
-- |
-- |
2 |
-- |
9 |
||
|
Other |
-- |
-- |
4 |
4 |
5 |
||
|
Total non-GAAP adjustments |
26 |
9 |
9 |
73 |
65 |
||
|
|
|
|
|
|
|
||
|
Non-GAAP operating income |
$ 187 |
$ 204 |
$ 184 |
$ 769 |
$ 696 |
||
|
|
|
|
|
|
|
||
|
|
|
||||||
|
|
|||||||
|
Total revenues less transaction rebates, brokerage, clearance and exchange fees |
$ 422 |
$ 438 |
$ 400 |
$ 1,690 |
$ 1,522 |
||
|
|
|
|
|
|
|
||
|
Non-GAAP operating margin (2) |
44% |
47% |
46% |
46% |
46% |
||
|
|
|
||||||
|
|
|
|
|
|
|
||
|
(1) We determine the tax effect of each item based on the tax rules in the respective jurisdiction where the transaction occurred. |
|||||||
|
(2) Non-GAAP operating margin equals non-GAAP operating income divided by total revenues less transaction rebates, brokerage, clearance and exchange fees. |
|||||||
|
|
|||||
|
|
|||||
|
The NASDAQ OMX Group, Inc. |
|||||
|
Reconciliation of GAAP Net Income, Diluted Earnings Per Share, Operating Income and Operating Expenses |
|||||
|
to Non-GAAP Net Income, Diluted Earnings Per Share, Operating Income and Operating Expenses |
|||||
|
(in millions) |
|||||
|
(unaudited) |
|||||
|
|
|
|
|
|
|
|
|
Three Months Ended |
Year Ended |
|||
|
|
December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
|
|
2011 |
2011 |
2010 |
2011 |
2010 |
|
|
|
|
|
|
|
|
GAAP operating expenses: |
$ 261 |
$ 243 |
$ 225 |
$ 994 |
$ 891 |
|
|
|
|
|
|
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger and strategic initiatives |
(1) |
(3) |
(2) |
(38) |
(4) |
|
Extinguishment of debt |
(25) |
(6) |
-- |
(31) |
(40) |
|
Sublease reserve |
-- |
-- |
(1) |
-- |
(5) |
|
Asset retirements |
-- |
-- |
-- |
-- |
(2) |
|
Workforce reductions |
-- |
-- |
(2) |
-- |
(9) |
|
Other |
-- |
-- |
(4) |
(4) |
(5) |
|
Total non-GAAP adjustments |
(26) |
(9) |
(9) |
(73) |
(65) |
|
|
|
|
|
|
|
|
Non-GAAP operating expenses |
$ 235 |
$ 234 |
$ 216 |
$ 921 |
$ 826 |
|
|
|||
|
|
|||
|
The NASDAQ OMX Group, Inc. |
|||
|
Quarterly Key Drivers Detail |
|||
|
(unaudited) |
|||
|
|
|
|
|
|
|
Three Months Ended |
||
|
|
December 31, |
September 30, |
December 31, |
|
|
2011 |
2011 |
2010 |
|
Market Services |
|
|
|
|
Cash Equity Trading |
|
|
|
|
NASDAQ securities |
|
|
|
|
Average daily share volume (in billions) |
1.85 |
2.18 |
1.89 |
|
Matched market share executed on NASDAQ |
27.2% |
28.0% |
27.5% |
|
Matched market share executed on NASDAQ OMX BX |
2.5% |
2.5% |
1.8% |
|
Matched market share executed on NASDAQ OMX PSX |
1.1% |
1.2% |
0.5% |
|
Market share reported to the FINRA/NASDAQ |
|
|
|
|
Trade Reporting Facility |
30.2% |
28.6% |
32.5% |
|
Total market share (1) |
61.0% |
60.2% |
62.3% |
|
|
|
|
|
|
New York Stock Exchange, or NYSE securities |
|
|
|
|
Average daily share volume (in billions) |
4.14 |
4.78 |
4.31 |
|
Matched market share executed on NASDAQ |
13.3% |
14.3% |
11.9% |
|
Matched market share executed on NASDAQ OMX BX |
2.5% |
2.5% |
2.2% |
|
Matched market share executed on NASDAQ OMX PSX |
0.6% |
0.6% |
0.5% |
|
Market share reported to the FINRA/NASDAQ |
|
|
|
|
Trade Reporting Facility |
27.5% |
25.6% |
30.0% |
|
Total market share (1) |
44.0% |
43.0% |
44.6% |
|
|
|
|
|
|
NYSE Amex and regional securities |
|
|
|
|
Average daily share volume (in billions) |
1.45 |
1.80 |
1.22 |
|
Matched market share executed on NASDAQ |
19.2% |
19.9% |
17.7% |
|
Matched market share executed on NASDAQ OMX BX |
1.9% |
2.1% |
3.2% |
|
Matched market share executed on NASDAQ OMX PSX |
1.9% |
2.0% |
0.6% |
|
Market share reported to the FINRA/NASDAQ |
|
|
|
|
Trade Reporting Facility |
27.2% |
24.2% |
26.5% |
|
Total market share (1) |
50.2% |
48.2% |
48.0% |
|
|
|
|
|
|
Total U.S.-listed securities |
|
|
|
|
Average daily share volume (in billions) |
7.45 |
8.76 |
7.42 |
|
Matched share volume (in billions) |
100.0 |
125.0 |
93.1 |
|
Matched market share executed on NASDAQ |
17.9% |
18.9% |
16.8% |
|
Matched market share executed on NASDAQ OMX BX |
2.4% |
2.4% |
2.3% |
|
Matched market share executed on NASDAQ OMX PSX |
1.0% |
1.1% |
0.5% |
|
|
|
|
|
|
NASDAQ OMX Nordic and NASDAQ OMX Baltic Securities |
|
|
|
|
Average daily number of equity trades |
394,290 |
422,658 |
274,776 |
|
Average daily value of shares traded (in billions) |
$ 3.0 |
$ 3.7 |
$ 3.2 |
|
|
|
|
|
|
Derivative Trading and Clearing |
|
|
|
|
U.S. Equity Options |
|
|
|
|
Total industry average daily volume (in millions) |
15.5 |
18.5 |
15.1 |
|
NASDAQ OMX PHLX matched market share |
22.7% |
22.3% |
26.5% |
|
The NASDAQ Options Market matched market share |
4.5% |
4.1% |
4.9% |
|
|
|
|
|
|
NASDAQ OMX Nordic and NASDAQ OMX Baltic |
|
|
|
|
Average daily volume: |
|
|
|
|
Options, futures and fixed-income contracts |
455,341 |
491,968 |
436,253 |
|
Finnish option contracts traded on Eurex |
46,557 |
65,716 |
99,716 |
|
|
|
|
|
|
NASDAQ OMX Commodities |
|
|
|
|
Clearing Turnover: |
|
|
|
|
Power contracts (TWh)(2) |
494 |
416 |
532 |
|
Carbon contracts (1000 tCO2)(2) |
29,908 |
15,511 |
5,582 |
|
|
|
|
|
|
Issuer Services |
|
|
|
|
Initial public offerings |
|
|
|
|
NASDAQ |
15 |
16 |
34 |
|
Exchanges that comprise NASDAQ OMX Nordic and NASDAQ OMX Baltic |
1 |
2 |
3 |
|
|
|
|
|
|
New listings |
|
|
|
|
NASDAQ (3) |
44 |
33 |
54 |
|
Exchanges that comprise NASDAQ OMX Nordic and NASDAQ OMX Baltic (4) |
12 |
5 |
9 |
|
|
|
|
|
|
Number of listed companies |
|
|
|
|
NASDAQ (5) |
2,680 |
2,717 |
2,778 |
|
Exchanges that comprise NASDAQ OMX Nordic and NASDAQ OMX Baltic (6) |
776 |
771 |
780 |
|
|
|
|
|
|
Market Technology |
|
|
|
|
Order intake (in millions)(7) |
$ 36 |
$ 35 |
$ 71 |
|
Total order value (in millions)(8) |
$ 458 |
$ 473 |
$ 495 |
|
|
|
|
|
|
(1) Includes transactions executed on NASDAQ's, NASDAQ OMX BX's and NASDAQ OMX PSX's systems plus trades reported through the FINRA/NASDAQ Trade Reporting Facility. |
|||
|
(2) Primarily transactions executed on Nord Pool ASA and reported for clearing to NASDAQ OMX Commodities measured by Terawatt hours (TWh) and one thousand metric tons of carbon dioxide (1000 tCO2). |
|||
|
(3) New listings include IPOs, including those completed on a best efforts basis, issuers that switched from other listing venues, closed-end funds and separately listed ETFs. |
|||
|
(4) New listings include IPOs and represent companies listed on the exchanges that comprise NASDAQ OMX Nordic and NASDAQ OMX Baltic and companies on the alternative markets of NASDAQ OMX First North. |
|||
|
(5) Number of listed companies for NASDAQ at period end, including separately listed ETFs. |
|||
|
(6) Represents companies listed on the exchanges that comprise NASDAQ OMX Nordic and NASDAQ OMX Baltic and companies on the alternative markets of NASDAQ OMX First North at period end. |
|||
|
(7) Total contract value of orders signed during the period. |
|||
|
(8) Represents total contract value of orders signed that are yet to be recognized as revenue. |
|||
