Year-Over-Year Financial Highlights
Revenues, less SEC activity remittance, for second-quarter 2005 were $276.3 million, up $4.3 million or 1.6% versus the second-quarter of 2004. Listing fee revenue was $85.5 million, an increase of $3.6 million or 4.4%, regulatory fees increased $3.4 million or 11.7% to $32.2 million and market information fees rose $4.2 million or 10.0% to $46.3 million. Regulatory fees increased as NYSE Member Firms reported higher Gross Focus Revenues for the period. Market information fees increased due to growth in NYSE’s proprietary data products, professional subscribers and non-recurring revenues from previously uncollected charges. Declines in data-processing fees of $5.7 million or 10.7% were the result of decreased third-party usage of services provided by SIAC [1] . Investment and other income was $13.8 million, an increase of $1.0 million versus the year-ago quarter. The increase in investment and other income was the result of a portfolio restructuring in December 2004 combined with a higher interest rate environment. These increases were somewhat reduced by non-recurring insurance claims received during second-quarter 2004.
Expenses were $254.7 million, down 5.0% from second-quarter 2004. The decreases were led by reduced spending in general and administrative expenses, down $4.5 million or 20%. In addition, professional services decreased by $5.4 million or 13.2% due to reduced legal expenses as compared to second quarter 2004. Depreciation and amortization expenses increased by $4.2 million, a 19.2% increase, to $26.4 million 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 first quarter of 2005, second quarter revenues, less SEC activity remittance, decreased 4.2% or $12.2 million. Regulatory fees increased by $3.1 million or 10.8%, data processing fees increased $2.8 million or 6.3% and market information fees in the second quarter of 2005 were up by $2.1 million or 4.8%. Declines in investments and other income of $17.9 million or 56.4%, were largely due to the collection of a $19.0 million regulatory fine and other non-recurring revenues during the first quarter of 2005.
Expenses increased by $10.1 million or 4.1% quarter over quarter. Professional services and general and administrative costs were the main drivers of the increase. Professional services increased by $7.6 million or 27.1% due to continuing initiatives across the organization, including those related to regulation and trading systems, as well as additional legal expenses incurred in the quarter. General and administrative expenses increased by $2.9 million or 19.1% during the second quarter 2005 as compared to the first quarter.
Income Taxes
The effective income tax rate for the second quarter of 2005 was 34.3%, down from 42.8% for first-quarter 2005. The reduction in our effective tax rate for the second quarter is due to the increased impact of the tax-exempt interest on NYSE’s income before taxes. For the second quarter of 2004, the NYSE had a tax benefit of $1.2 million, a result of the receipt of non-taxable insurance recoveries.
Capital
As of June 30, 2005, total members' equity was $802.9 million and equity per member having distributive rights equaled $588,000.
About the NYSE
The New York Stock Exchange is the world’s leading equities market and home to 2,780 companies whose total global market capitalization is $19.9 trillion, including $6.9 trillion for 449 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, 1.60 billion shares, valued at $55.0 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. For more information please visit http://www.nyse.com .
[1] 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 its revenue.
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Condensed Consolidated Statement of Financial Condition (pdf) |
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Year-Over-Year Financial Highlights (pdf) |
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Operating data (pdf) |
Important Acquisition Information with Respect to the Merger
In connection with the proposed merger of the New York Stock Exchange, Inc. (“NYSE”) and Archipelago Holdings, Inc. (“Archipelago”), NYSE Group, Inc. filed a registration statement on Form S-4 with the Securities and Exchange Commission (“SEC”) on July 21, 2005, containing a preliminary joint proxy statement/prospectus regarding the proposed transaction. The Registration Statement has not yet become effective. The parties will file other relevant documents concerning the proposed transaction with the SEC.
Such final documents, however, are not currently available. NYSE MEMBERS AND ARCHIPELAGO STOCKHOLDERS ARE URGED TO READ THE FINAL JOINT PROXY STATEMENT/ PROSPECTUS REGARDING THE PROPOSED TRANSACTION WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. NYSE members and Archipelago stockholders can obtain a free copy of the final joint proxy statement/ prospectus, as well as other filings containing information about the NYSE and Archipelago without charge, at the SEC’s website (http://www.sec.gov). Copies of the final joint proxy statement/ prospectus can also be obtained, without charge, once they are filed with the SEC, by directing a request to the Office of the Corporate Secretary, NYSE, 11 Wall Street, New York 10005, 212-656-2061 or to Archipelago, Attention: Investor Relations, at 100 S. Wacker Drive, Suite 1800, Chicago, Illinois 60606 or calling (888) 514-7284. The NYSE, Archipelago and their respective directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from Archipelago stockholders in respect of the proposed transaction. Information regarding Archipelago’s directors and executive officers is available in Archipelago’s proxy statement for its 2005 annual meeting of stockholders, dated March 31, 2005.
Additional information regarding the interests of such potential participants will be included in the joint proxy statement/prospectus and the other relevant documents filed with the SEC when they become available. This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Forward-Looking Statements
Certain statements in this press release may contain forward-looking information regarding the NYSE and Archipelago and the combined company after the completion of the transactions that are intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, the benefits of the business combination transaction involving the NYSE and Archipelago, including future financial and operating results, the new company’s plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of NYSE’s and Archipelago’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements.
The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: the ability to obtain governmental approvals of the transaction on the proposed terms and schedule; the failure of NYSE members or Archipelago shareholders to approve the transaction; the risk that the businesses will not be integrated successfully; the risk that the cost savings and any other synergies from the transaction may not be fully realized or may take longer to realize than expected; disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers; competition and its effect on pricing, spending, third party relationships and revenues; social and political conditions such as war, political unrest or terrorism; general economic conditions and normal business uncertainty. Additional risks and factors are identified in Archipelago’s filings with the Securities Exchange Commission, including its Report on Form 10-K for the fiscal year ending December 31, 2004 which is available on Archipelago’s website at http://www.Archipelago.com, and the Registration Statement on Form S-4 filed by NYSE Group, Inc. with the SEC on July 21, 2005.
You should not place undue reliance on forward-looking statements, which speak only as of the date of this press release. Except for any obligation to disclose material information under the Federal securities laws, none of the NYSE, Archipelago or the combined company after the completion of the transactions undertake any obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of this press release.
The NYSE, Archipelago and their respective directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from Archipelago stockholders in respect of the proposed transaction. Information regarding Archipelago’s directors and executive officers is available in Archipelago’s proxy statement for its 2005 annual meeting of stockholders, dated March 31, 2005. Additional information regarding the interests of such potential participants will be included in the joint proxy statement/prospectus and the other relevant documents filed with the SEC when they become available.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
