Year-Over-Year Financial Highlights
Revenues for the first-quarter 2005, excluding activity assessment fees and the SEC activity remittance[i], were $287.6 million, up $19.5 million or 7.3% versus the first quarter of 2004. Listing fee revenue was $85.1 million, an increase of $4.8 million or 5.9%, and market-information fees rose $3.4 million or 8.4% to $44.2 million. Declines in data-processing fees[ii] were a result of decreased third-party usage of services provided by SIAC. Investment and other income was $31.8 million, an increase of $24.2 million versus the year-ago quarter. The increase was primarily due to a $19 million regulatory fine collected during the first quarter, as well as other non-recurring revenues.
Expenses were $245.8 million, down slightly from the first-quarter 2004. Depreciation and amortization expenses increased by $4.3 million or 26.3% to $20.9 million. The increase was due to the acceleration of certain useful lives following a fourth-quarter 2004 review of depreciation policies.
Quarter-Over-Quarter Financial Highlights
Compared to the fourth quarter of 2004, first-quarter revenues, excluding activity assessment fees and the SEC activity remittance, increased 6.4% or $17.2 million. Listing fees improved by $3.9 million or 4.8% over the fourth quarter of 2004. Market data fees in the first quarter of 2005 were up modestly by $1.5 million.
Expense reductions of $9.0 million, or 3.5% quarter-over-quarter, resulted from the initial phases of efficiency programs implemented last year. The decreases were led by reduced spending in general and administrative expenses, down $6.8 million or 31.2% to $15.0 million for the quarter. In addition, depreciation and amortization expenses were down $4.6 million or 17.9% from the previous quarter due to the inclusion of one-time expenses in the fourth-quarter of 2004 necessary to adopt the new depreciation policies. Systems and related support costs also declined during the quarter compared to the fourth-quarter of 2004. Expense savings were partially offset by increases in professional services fees, although legal fees returned to a more normalized level.
Income Taxes
The effective income tax rate for the first quarter of 2005 was 42.7%, up from 30.6% for fiscal year 2004 and relatively flat from 42.6% for the first-quarter 2004. Non-taxable insurance recoveries drove the lower effective rate for fiscal year 2004.
Capital
As of March 31, 2005, total members' equity was $1,005.3 million and equity per member having distributive rights equaled $736,000.
About the NYSE
The New York Stock Exchange is the world’s leading and most liquid equities market and home to 2,774 companies whose total global market capitalization is $20 trillion, including $6.9 trillion for 459 non-U.S. companies from 47 countries. Buyers and sellers meet directly in a fair, open and orderly market to realize the best possible price through the interplay of supply and demand. On an average day, 1.63 billion shares, valued at $56 billion, are traded on the NYSE. The NYSE provided the most competitive quotes in its listed stocks creating the National Best Bid and Offer more than 89% of the time.
NYSE Consolidated Statement of Net Income
- NYSE revenues and expenses include the results of its two thirds- owned subsidiary, Securities Industry Automation Corp.
- Certain prior period amounts have been reclassified to conform with current period presentation.
[i] Please refer to Note 2(g) of the 2004 annual report for full description of activity assessment fees and SEC activity remittance. The NYSE pays SEC fees pursuant to Section 31 of the Securities and Exchange Act of 1934. These fees are designed to recover the costs to the government for the supervision and regulation of securities markets and securities professionals. In 2004, the SEC adopted new rules under Section 31 and provided updated guidance as to how the SEC charges the SROs, including the NYSE, for these fees, which affected how the NYSE receives the assessment from its members. Historically, member firms self-reported the amount owed. In turn, the Exchange served as a pass-through vehicle, recording a liability to the SEC for amounts collected from members and paying these amounts to the SEC, with no impact on the statement of income of the Exchange. Under the amended rules, the Exchange bills and collects Activity Fees from members and pays an Activity Remittance to the SEC based on fee schedules determined by the SEC. In light of the SEC action, the NYSE has adopted a change in its method of accounting for these fees. The NYSE now records activity assessment revenue and SEC activity remittance expense on its income statement while maintaining similar treatment within the balance sheet. The effect of this change had no impact on consolidated net income.
[ii]SIAC operates on a cost-recovery model driven by its customers' demands. Under this model, any increases or decreases in SIAC's expenses result in a corresponding change in their revenue.
