NYSE Euronext (NYX) today reported net income of $195 million, or $0.73 per diluted share, for the quarter ended June 30, 2008, a $34 million or 21% increase as compared to net income of $161 million, or $0.62 per diluted share, for the quarter ended June 30, 2007. These results are presented in accordance with U.S. generally accepted accounting principles (GAAP).
"Building on a record first quarter, we continued to experience strong customer demand across our core businesses and to execute well against our corporate strategy," said Duncan L. Niederauer, Chief Executive Officer, NYSE Euronext. "Our results reflect the strength and earnings potential of our highly diverse business model and our ability to post gains even in the most challenging times. While maintaining our focus on expense management, we have strengthened our trading infrastructure and competitive position with investments in new technology. We have also made strategic investments to extend our global footprint, including the 25% stake in Qatar's Doha Securities Market, and have laid the groundwork for our U.S. futures businesses."
On a pro forma non-GAAP basis, excluding merger expenses, exit costs and other non-recurring items, net income of NYSE Euronext for the quarter ended June 30, 2008 would have been $200 million, or $0.75 per diluted share, a $29 million or 17% increase versus non-GAAP net income of $171 million, or $0.64 per diluted share, for the quarter ended June 30, 2007. A full reconciliation of these non-GAAP results is included in the attached tables.
Taking pro forma non-GAAP results and excluding the impact of exchange rates, as well as acquisitions and dispositions of businesses and equity investments for the period, NYSE Euronext's revenues, net of activity assessment fees, for the quarter ended June 30, 2008 increased $114 million, or 12%, compared to the quarter ended June 30, 2007. On the same basis, NYSE Euronext's operating income increased $28 million, or 10%. Fixed operating expenses (defined as operating expenses, net of Section 31 fees, merger expenses, exit costs, liquidity payments, routing and clearing fees, and excluding regulatory fine income) decreased $19 million, or 4%, compared to the quarter ended June 30, 2007. Please refer to the table entitled "Normalized operating income including non-GAAP financial measures."
"NYSE Euronext remains on track to achieve technology and non-technology savings' targets related to the NYSE-Euronext merger, and we expect to realize future synergy opportunities from the pending AEMS and American Stock Exchange transactions," said Michael S. Geltzeiler, Group Executive Vice President and Chief Financial Officer, NYSE Euronext. "Beyond the cost saves, we are also committed to investing in growth, which includes broadening our product and service portfolio in both core businesses and new ventures. Our capital allocation will be appropriately balanced between investing in our future and returning capital to our shareholders, as evidenced by our $1 billion stock repurchase program."
Other Financial Highlights
-- Included in the GAAP results for the quarter ended June 30, 2008 were $38 million of pre-tax merger expenses and exit costs (primarily severance charges incurred in connection with a voluntary resignation incentive program), as compared to $16 million in the comparable period a year ago. In addition, the GAAP results for the quarter ended June 30, 2008 were favorably impacted by the reversal of a $36 million accrual relating to certain litigation between a former Chairman & CEO and the NYSE, which was finally terminated on July 31, 2008.
-- On a non-GAAP basis, net transaction revenues (defined as cash and derivatives trading revenues net of liquidity payments and routing and clearing expenses) increased $60 million or 17% for the three months ended June 30, 2008 versus the year ago period and are up 28% on a year-to-date basis.
-- In May, NYSE Euronext completed the statutory buy-out of the remaining minority Euronext shareholders who held approximately 2% of the shares of Euronext N.V. for an aggregate consideration of EUR 252 million ($389 million). As a result of this buy-out, Euronext N.V. and its subsidiaries are now wholly-owned by NYSE Euronext.
-- As a result of the Euronext transaction, and following the reorganization of certain of our businesses, the effective tax rate of NYSE Euronext on a non-GAAP basis was 27% for the three months ended June 30, 2008 as compared to 32% for the same period a year ago. For the balance of the year, NYSE Euronext anticipates providing income taxes at an effective tax rate of 29%.
-- As of June 30, 2008, NYSE Euronext had a strong financial position with $1.3 billion of cash, cash equivalents, investment and other securities (including $155 million related to Section 31 fees collected from market participants and due to the SEC) and $3.0 billion in debt obligations.
-- On April 11 and May 21, NYSE Euronext successfully launched a 7-year EUR 750 million ($1,181 million) bond issue in the Euro market and priced a 5-year $750 million underwritten public offering of senior notes in the U.S., respectively. These offerings enabled NYSE Euronext to lengthen the maturity profile of its debt and to fix approximately 65% of its total debt at a weighted average interest rate of 5.1%. This compares to NYSE Euronext's average variable borrowing rate of 3.7% on commercial paper for the quarter.
-- American Stock Exchange (Amex) members overwhelmingly approved the proposed merger with NYSE Euronext. The transaction is expected to close in the third quarter of 2008 following SEC approval. While we anticipate Amex to generate operating losses for the balance of this year, we expect the transaction to produce $100 million in run-rate savings and to be accretive by the end of 2009.
-- Following the close of the Amex transaction, NYSE Euronext intends to implement the previously announced $1 billion stock repurchase program, in accordance with SEC rules and subject to strategic and credit considerations.
-- On July 31, 2008, the NYSE Euronext Board of Directors approved a resolution to remove the transfer restrictions on approximately 42 million common shares issued in connection with the merger of NYSE and Archipelago, effective upon closing of the Amex transaction. The restrictions on these shares, which represent approximately 16% of the 266 million total common shares outstanding as of June 30, 2008, were originally scheduled to lapse on March 7, 2009.
-- NYSE Euronext will make a $0.30 quarterly dividend payment on September 30, 2008 to shareholders of record as of September 15, 2008.
Key Business Highlights
-- The SEC published NYSE's proposal to provide customers with a competitive trading experience and the highest level of market quality that is currently available in U.S. markets. The next generation NYSE will offer a balanced combination of high-tech for fast, automated and anonymous order execution, and high-touch for discovering and improving prices, dampening volatility, adding liquidity and enhancing value to customers.
-- Within an increasingly competitive European landscape, Euronext has launched a new pricing package, which enables its high frequency traders to save up to 30% of trading fees and introduced co-location service, internalization service within the central orderbook and sub-cent trading.
-- The Universal Trading Platform (UTP), planned for introduction later this year for European cash equities trading, will be one of the newest and most advanced trading platforms in the industry and provide scalability, greater capacity, very low latency and higher speed trading for customers.
-- In the third quarter, Euronext - together with BNP Paribas and HSBC - will launch "SmartPool." The New York Block Exchange, NYSE Euronext's joint venture with BIDS Trading, is expected to launch in the fourth quarter. These ventures are both designed to improve execution quality and access to liquidity in block trading on NYSE Euronext's markets.
-- The State of Qatar and NYSE Euronext entered a strategic partnership to build a new, internationally integrated cash and derivatives exchange in Doha, providing NYSE Euronext with a valuable presence in the Middle East. As part of the agreement, projected to close in the fourth quarter of 2008, NYSE Euronext will purchase a 25% stake in the Doha Securities Market (DSM) for $250 million and will provide the technology platform and management services for both the DSM's equities and derivatives markets on agreed upon commercial terms.
-- In August 2008, NYSE Euronext expects to close the acquisition of the remaining 50% stake in Atos Euronext Market Solutions (AEMS) owned by Atos Origin, effectively completing the insourcing of its European technology operations and enabling the integration of AEMS into NYSE Euronext Advanced Trading Solutions.
-- NYSE Euronext Advanced Trading Solutions, which also includes TransactTools, Wombat and SFTI, announced agreements to build and implement exchange technology for Bursa Malaysia, Tokyo Stock Exchange, and the Philippine Stock Exchange.
-- Following the purchase of CME Group's precious metals business, NYSE Euronext hired Thomas Callahan to head its US futures business, NYSE Liffe. NYSE Euronext is further advancing the growth of this platform by meeting with current and prospective customers and committing to a significant investment to establish the business. The CFTC is expected to approve NYSE Liffe as a Designated Contract Market (DCM) in the third quarter.
-- The SEC approved a NYSE plan for a new data product, NYSE Realtime Reference Prices, which allows media and Internet organizations to buy real-time, last-sale market data and provide it broadly and free of charge to the public. CNBC, Google Finance and nyse.com are now displaying NYSE Realtime stock prices on their respective websites.
-- Liffe, the international derivatives business of NYSE Euronext, announced plans to launch Credit Default Swap (CDS) contracts on BClear in the fourth quarter of 2008, which will allow OTC transactions to be negotiated and booked into a secure exchange and clearing house environment, thereby reducing counter-party risk.
NYSE Euronext Market Summary
Global Cash Equities: NYSE Euronext's cash markets trade more shares than any other equities marketplace in the world, representing over one-third of all cash equities trading globally.
-- During the second quarter of 2008, NYSE Euronext's European cash
markets experienced record trading volume of 88 million trades,
and a total volume growth of 17% over the same period a year ago.
-- Year-to-date, our European exchanges experienced an increase of
28% in total trade volume supported by cash equities up 29%,
ETFs up 47% and structured products (warrants and
certificates) up 3%, compared to the same period a year ago.
-- During the second quarter of 2008, NYSE Euronext's U.S. cash
markets experienced total volume growth of 7% over the same
period a year ago.
-- Market share of matched transactions for NYSE-listed securities
was 47%, compared to Nasdaq at 22% during the second quarter
of 2008. Market share of matched transactions for NYSE-listed
securities was 52% for the first quarter of 2008.
-- NYSE Euronext's U.S. cash markets also produced a year-to-date
handled volume increase of 20% in overall equities trading,
which included increases of 16% in NYSE listed securities,
114% in NYSE Arca & Amex listed securities and 68% in ETFs.
-- In June 2008, NYSE Euronext's U.S. cash markets traded more
volume than any other U.S. exchange, including Nasdaq, in
99.4% of the individual NYSE-listed issues.
Global Derivatives: Liffe and NYSE Arca Options had exceptional growth in the second quarter and first half of 2008.
-- In the second quarter of 2008, total Liffe transaction volume increased 22% compared to the same period a year ago. Year-to-date, Liffe continued its strong performance with new trading records, increasing total contracts traded by 25% compared to the year ago period. Volumes in interest rate products rose 33%, equity products (single stocks and indices) up 16% and commodities grew 20%.
-- In the second quarter of 2008, NYSE Arca Options experienced total volume growth of 38% compared to the second quarter of 2007. Year-to-date, NYSE Arca continues to outpace broader industry volumes with a volume growth of 54% over the same period last year compared to total consolidated volume growth of 41%.
Global Listings: Through first half of 2008, NYSE Euronext remained by far the world's leading exchange group with nearly 4,100 listed issuers representing approximately $26.7 / EUR 17.1 trillion in total global market capitalization.
-- Year-to-date, NYSE Euronext is the global leader in IPO proceeds with capital raised on our markets totaling $26.4 billion/EUR 16.7 billion, more than any exchange group in the world. In the second quarter of 2008, IPOs by operating companies raised a total of $6.7 billion//EUR 4.3 billion on NYSE Euronext markets.
-- NYSE Euronext added 196 new listings and IPOs during the first half of 2008, including Visa (V), the largest IPO in U.S. history and EDP Renovaveis (EDPR), the largest European IPO in terms of funds raised during the first half of 2008.
Analyst/Investor/Media Call: Friday, August 1, 2008, 8:00am (NY/EDT)/2:00pm (Paris, CET)
A live audio webcast of the conference call will be available on the Investor Relations section of NYSE Euronext's website, http://www.nyseeuronext.com/ir. Those wishing to listen to the live conference via telephone should dial-in at least 10 minutes before the call begins.
Live Dial-in Information: United States: 866-700-0133 International: 617-213-8831 Passcode: 10961945
Audio replays of the conference call will be available approximately one hour after the call on the Investor Relations section of NYSE Euronext's website, http://www.nyseeuronext.com/ir and by dial-in beginning approximately two hours following the conclusion of the live call.
Replay Dial-in Information: United States: 888-286-8010 International: 617-801-6888 Passcode: 41477832
The results of operations of Euronext N.V. for the three months ended June 30, 2008 are reported under U.S. GAAP under the caption "European Operations" in the accompanying tables. Questions regarding Euronext N.V.'s results should be directed to Investor Relations (contact details provided above).
Note:
Based on second quarter 2008 non-GAAP net revenues (excluding activity assessment fees, and liquidity payments, routing and clearing fees), NYSE Euronext revenues from its primary business activities are represented below as a percentage of total net revenues:
-- Derivatives trading accounts for 22% -- European cash trading accounts for 20% -- U.S. cash trading accounts for 11% -- Market data accounts for 13% -- Listing accounts for 12% -- Software and technology services accounts for 15%
To supplement NYSE Euronext's consolidated financial statements prepared in accordance with GAAP and to better reflect period-over-period comparisons, NYSE Euronext uses non-GAAP financial measures of performance, financial position, or cash flows that either exclude or include amounts that are not normally excluded or included in the most directly comparable measure, calculated and presented in accordance with GAAP. Non-GAAP financial measures do not replace and are not superior to the presentation of GAAP financial results, but are provided to (i) present the effects of certain merger expenses and exit costs, and other non-recurring items, and (ii) to improve overall understanding of NYSE Euronext's current financial performance and its prospects for the future. Specifically, NYSE Euronext believes the non-GAAP financial results provide useful information to both management and investors regarding certain additional financial and business trends relating to financial condition and operating results. In addition, management uses these measures for reviewing financial results and evaluating financial performance. The non-GAAP adjustments for all periods presented are based upon information and assumptions available as of the date of this release.
About NYSE Euronext
NYSE Euronext (NYX) operates the world's leading and most liquid exchange group, and seeks to provide the highest levels of quality, customer choice and innovation. Its family of exchanges, located in six countries, includes the New York Stock Exchange, the world's largest cash equities market; Euronext, the Eurozone's largest cash equities market; Liffe, Europe's leading derivatives exchange by value of trading; and NYSE Arca Options, one of the fastest growing U.S. options trading platforms. NYSE Euronext offers a diverse array of financial products and services for issuers, investors and financial institutions in cash equities, options and derivatives, ETFs, bonds, market data, and commercial technology solutions. As the world's largest exchange group by number of listings and market capitalization, NYSE Euronext is home to nearly 4,100 listed companies representing a combined $26.7 / 17.1EUR trillion (as of June 30, 2008) in total global market capitalization, more than four times that of any other exchange group. NYSE Euronext's equity exchanges transact an average daily trading value of approximately $157.0 /102.7EUR billion (as of June 30, 2008), which represents more than one-third of the world's cash equities trading. NYSE Euronext is part of the S&P 500 index and the only exchange operator in the S&P 100 index. For more information and free real-time stock prices for all NYSE-listed securities, please visit www.nyx.com.
Cautionary Note Regarding Forward-Looking Statements
This press release may contain forward-looking statements, including forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements concerning NYSE Euronext's plans, objectives, expectations and intentions and other statements that are not historical or current facts. Forward-looking statements are based on NYSE Euronext's current expectations and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such forward-looking statements. Factors that could cause NYSE Euronext's results to differ materially from current expectations include, but are not limited to: NYSE Euronext's ability to implement its strategic initiatives, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk and U.S. and global competition, and other factors detailed in NYSE Euronext's reference document for 2007 ("document de reference") filed with the French Autorite des Marches Financiers (Registered on May 15, 2008 under No. R. 08-054), 2007 Annual Report on Form 10-K and other periodic reports filed with the U.S. Securities and Exchange Commission or the French Autorite des Marches Financiers. In addition, these statements are based on a number of assumptions that are subject to change. Accordingly, actual results may be materially higher or lower than those projected. The inclusion of such projections herein should not be regarded as a representation by NYSE Euronext that the projections will prove to be correct. This press release speaks only as of this date. NYSE Euronext disclaims any duty to update the information herein.
NYSE Euronext
Condensed consolidated statements of income in accordance with U.S.
GAAP (unaudited)
(in millions, except per share data)
Three months Six months
ended June 30, ended June 30,
--------------- ---------------
2008 2007 2008 2007
------- ------- ------- -------
Revenues
Activity assessment $ 41 $ 115 $ 143 $ 301
Cash trading 511 386 1,074 636
Derivatives trading 230 185 500 197
Listing 98 99 196 189
Market data 105 106 209 169
Software and technology services 119 92 226 117
Regulatory 14 57 28 107
Other 35 37 72 64
------- ------- ------- -------
Total revenues 1,153 1,077 2,448 1,780
Section 31 fees (41) (115) (143) (301)
Merger expenses and exit costs (38) (16) (55) (27)
Compensation (182) (207) (394) (313)
Liquidity payments (255) (163) (529) (299)
Routing and clearing (65) (54) (134) (98)
Systems and communications (98) (82) (194) (109)
Professional services (34) (32) (71) (53)
Depreciation and amortization (65) (71) (126) (106)
Occupancy (32) (34) (68) (55)
Marketing and other (50) (52) (95) (73)
Regulatory fine income - 4 2 9
------- ------- ------- -------
Operating income 293 255 641 355
Net interest and investment loss (24) (23) (43) (14)
Gain on sale of equity investment - 2 2 2
Income from associates - 2 1 3
Other income 9 9 19 13
------- ------- ------- -------
Income before income tax provision and
minority interest 278 245 620 359
Income tax provision (78) (78) (180) (124)
Minority interest (5) (6) (14) (6)
------- ------- ------- -------
Net income $ 195 $ 161 $ 426 $ 229
======= ======= ======= =======
Basic earnings per share $ 0.73 $ 0.62 $ 1.60 $ 1.10
Diluted earnings per share $ 0.73 $ 0.62 $ 1.60 $ 1.09
Basic weighted average shares
outstanding 266 259 266 208
Diluted weighted average shares
outstanding 266 260 266 209
NYSE Euronext
Condensed combined statements of income including non-GAAP financial
measures (unaudited)
(in millions, except per share data)
We use non-GAAP financial measures of operating performance. Non-GAAP
measures do not replace and are not superior the presentation of our
GAAP financial results but are provided to improve overall
understanding of our current financial performance and our prospects
for the future. Please refer to the table entitled "Reconciliation of
non-GAAP Financial Measures to GAAP Measures (unaudited)"
Three months ended Six months ended
June 30, (a) June 30, (a)
-------------------- --------------------
2008 2007 2008 2007
-------- -------- -------- --------
Pro Pro Pro Pro
Forma Forma Forma Forma
Combined Combined Combined Combined
-------- -------- -------- --------
Revenues
Cash trading $ 511 $ 390 $ 1,074 $ 756
Derivatives trading 230 190 500 382
Listing 98 99 196 194
Market data 105 108 209 213
Software and
technology services 119 94 226 178
Regulatory 14 57 28 107
Other 35 37 72 74
-------- -------- -------- --------
Total revenues 1,112 975 2,305 1,904
Compensation (218) (b) (211) (430) (b) (406)(c)
Liquidity payments (255) (165) (529) (328)
Routing and clearing (65) (54) (134) (98)
Systems and
communications (98) (86) (194) (166)
Professional services (34) (33) (71) (65)
Depreciation and (d)
amortization (65) (72) (126) (143)
Occupancy (32) (35) (68) (72)
Marketing and other (50) (48) (95) (87)
Regulatory fine
income - 4 2 9
-------- -------- -------- --------
Operating income 295 275 660 548
Net interest and (e)
investment loss (24) (22) (43) (48)
Income from associates - - 1 4
Other income 9 9 19 16
-------- -------- -------- --------
Income before income tax
provision and minority
interest 280 262 637 520
Income tax provision (75) (85) (182) (174)
Minority interest (5) (6) (14) (16)
-------- -------- -------- --------
Net income $ 200 $ 171 $ 441 $ 330
======== ======== ======== ========
Basic earnings per share $ 0.75 $ 0.65 $ 1.66 $ 1.25
Diluted earnings per
share $ 0.75 $ 0.64 $ 1.66 $ 1.24
Basic weighted average
shares outstanding 266 265 266 265
Diluted weighted average
shares outstanding 266 266 266 266
(a) The results of operations on NYSE Euronext are presented as if the
merger with NYSE Group and Euronext N.V. had been completed at
the beginning of the earliest period presented.
Merger expenses and exit costs of $38 million and $16 million have
been eliminated from the results of operations for the three
months ended June 30, 2008 and 2007, respectively, and $55
million and $27 million for the six months ended June 30, 2008
and 2007, respectively, as they represent nonrecurring charges
directly attributable to business combinations and other cost
reduction initiatives.
Activity assessment fees and Section 31 fees have not been
presented as they have no impact on operating income or net
income.
In addition, gains on sale of businesses and equity investments of
$2 million have been eliminated from the results of operations
for the three months ended June 30, 2007, and $2 million and $2
million for the six months ended June 30, 2008 and 2007,
respectively, as they represent nonrecurring items.
(b) Excludes $36 million of income from the reversal of an accrual
relating to certain litigation between a former Chairman & CEO
and the NYSE, which was finally terminated on July 31, 2008.
(c) Includes a $13 million net curtailment gain in connection with the
elimination of certain components of our postretirement plans in
the U.S.
(d) Includes amortization expense of $25 million related to the fair
value of the identifiable intangible assets prior to the April 4,
2007 merger with Euronext.
(e) Includes interest expense of $35 million on the NYSE Euronext debt
incurred as part of the merger with Euronext for the period prior
to the April 4, 2007 merger with Euronext.
NYSE Euronext
Condensed combined statements of income including non-GAAP financial
measures (unaudited)
(in millions, except per share data)
We use non-GAAP financial measures of operating performance. Non-GAAP
measures do not replace and are not superior the presentation of our
GAAP financial results but are provided to improve overall
understanding of our current financial performance and our prospects
for the future.
Three months ended
June 30, 2008 (a)
---------------------------------------------------
Corporate
US European Items Pro Forma
Operations Operations (b) Combined
----------- ----------- --------- ---------
Revenues
Cash trading $ 356 $ 155 $ - $ 511
Derivatives
trading 31 199 - 230
Listing 90 8 - 98
Market data 50 55 - 105
Other revenues 69 99 - 168
----------- ----------- --------- ---------
Total revenues 596 516 - 1,112
Liquidity
payments,
routing and
clearing (281) (39) - (320)
Other operating
expenses, net (221)(c),(d) (265) (11) (497)
----------- ----------- --------- ---------
Operating income $ 94 $ 212 $ (11) $ 295
Six months ended
June 30, 2008 (a)
---------------------------------------------------
Corporate
US European Items Pro Forma
Operations Operations (b) Combined
----------- ----------- --------- ---------
Revenues
Cash trading $ 749 $ 325 $ - $ 1,074
Derivatives
trading 69 431 - 500
Listing 179 17 - 196
Market data 104 105 - 209
Other revenues 128 198 - 326
----------- ----------- --------- ---------
Total revenues 1,229 1,076 - 2,305
Liquidity
payments,
routing and
clearing (577) (86) - (663)
Other operating
expenses, net (438)(c),(d) (517) (27) (982)
----------- ----------- --------- ---------
Operating income $ 214 $ 473 $ (27) $ 660
Three months ended
June 30, 2007 (a)
---------------------------------------------------
Corporate
US European Items Pro Forma
Operations Operations (b) Combined
----------- ----------- --------- ---------
Revenues
Cash trading $ 268 $ 122 $ - $ 390
Derivatives
trading 16 174 - 190
Listing 90 9 - 99
Market data 58 50 - 108
Other revenues 108 80 - 188
----------- ----------- --------- ---------
Total revenues 540 435 - 975
Liquidity
payments,
routing and
clearing (191) (28) - (219)
Other operating
expenses, net (238)(c) (235) (8) (481)
----------- ----------- --------- ---------
Operating income $ 111 $ 172 $ (8) $ 275
Six months ended
June 30, 2007 (a)
---------------------------------------------------
Corporate
US European Items Pro Forma
Operations Operations (b) Combined
----------- ----------- --------- ---------
Revenues
Cash trading $ 517 $ 239 $ - $ 756
Derivatives
trading 28 354 - 382
Listing 180 14 - 194
Market data 121 92 - 213
Other revenues 210 149 - 359
----------- ----------- --------- ---------
Total revenues 1,056 848 - 1,904
Liquidity
payments,
routing and
clearing (370) (56) - (426)
Other operating
expenses, net (460)(c) (454) (16) (930)
----------- ----------- --------- ---------
Operating income $ 226 $ 338 $ (16) $ 548
(a) The results of operations of NYSE Euronext are presented as if the
merger with NYSE Group and Euronext had been completed at the
beginning of the earliest period presented.
Merger expenses and exit costs of $38 million and $16 million for
the three months ended June 30, 2008 and 2007, respectively, and
$55 million and $27 million for the six months ended
June 30, 2008 and 2007, respectively, have been eliminated as they
represent nonrecurring charges.
Activity assessment fees and Section 31 fees have not been
presented as they have no impact on operating income or net
income.
(b) Includes intercompany eliminations of charges between U.S. and
Europe.
(c) Includes regulatory fine income of $0 million and $4 million for
the three months ended June 30, 2008 and 2007, respectively, and
$2 million and $9 million for the six months ended June 30, 2008
and 2007, respectively.
(d) Excludes $36 million of income from the reversal of an accrual
relating to certain litigation between a former Chairman & CEO
and the NYSE, which was finally terminated on July 31, 2008.
NYSE Euronext
Normalized operating income including non-GAAP financial measures
(unaudited)
(in millions)
We use non-GAAP financial measures of operating performance. Non-GAAP
measures do not replace and are not superior the presentation of our
GAAP financial results but are provided to improve overall
understanding of our current financial performance and our prospects
for the future.
Three months ended
June 30, 2008 (a)
--------------------------------------------
Neutralizing the impact
of
------------------------
Acquisitions
Pro & Currency
Forma Dispositions Translation Normalized
Combined (b) (c) Results
-------- ------------ ----------- ----------
Revenues
Cash trading $ 511 $(1) $(21) $ 489
Derivatives trading 230 - (3) 227
Listing 98 - (1) 97
Market data 105 - (5) 100
Other revenues 168 22 (14) 176
-------- ------------ ----------- ----------
Total revenues 1,112 21 (44) 1,089
Liquidity payments (255) - - (255)
Routing and clearing (65) - - (65)
Fixed operating
expenses (497) 4 27 (466)
Regulatory fine income - - - -
-------- ------------ ----------- ----------
Operating income $ 295 $25 $(17) $ 303
======== ============ =========== ==========
Operating margin 26.5% 27.8%
Six months ended
June 30, 2008 (a)
--------------------------------------------
Neutralizing the impact
of
------------------------
Acquisitions
Pro & Currency
Forma Dispositions Translation Normalized
Combined (b) (c) Results
-------- ------------ ----------- ----------
Revenues
Cash trading $1,074 $(1) $(43) $1,030
Derivatives trading 500 - (10) 490
Listing 196 - (2) 194
Market data 209 - (10) 199
Other revenues 326 43 (25) 344
-------- ------------ ----------- ----------
Total revenues 2,305 42 (90) 2,257
Liquidity payments (529) - 1 (528)
Routing and clearing (134) - - (134)
Fixed operating
expenses (984) (3) 51 (936)
Regulatory fine income 2 - - 2
-------- ------------ ----------- ----------
Operating income $ 660 $39 $(38) $ 661
======== ============ =========== ==========
Operating margin 28.6% 29.3%
Three months ended
June 30, 2007 Variance %
------------------ ----------
Revenues
Cash trading $ 390
Derivatives trading 190
Listing 99
Market data 108
Other revenues 188
Total revenues 975 12%
Liquidity payments (165)
Routing and clearing (54)
Fixed operating expenses (485)
Regulatory fine income 4
Operating income $ 275 10%
Operating margin 28.2%
Six months ended
June 30, 2007 Variance %
------------------ ----------
Revenues
Cash trading $ 756
Derivatives trading 382
Listing 194
Market data 213
Other revenues 359
Total revenues 1,904 19%
Liquidity payments (328)
Routing and clearing (98)
Fixed operating expenses (952)(d)
Regulatory fine income 9
Operating income $ 535 24%
Operating margin 28.1%
(a) The pro forma combined results of operations of NYSE Euronext for
the three and six months ended June 30, 2008 are presented to
exclude the impact of (i) acquisitions and dispositions of
businesses and equity investments and (ii) foreign exchange rates
for the respective periods.
(b) Includes the impact of the Wombat and several GL Trade
acquisitions, and the transfer of certain NYSE Regulation
operations to FINRA.
(c) The pro forma combined results of operations of NYSE Euronext for
the three and six months ended June 30, 2008 are presented using
constant US$/EUR and US$/GBP exchange rates.
(d) Excludes a $13 million net curtailment gain recorded in connection
with the elimination of certain components of our postretirement
plans in the U.S.
NYSE Euronext
Reconciliation of non-GAAP financial measures to GAAP measures
(unaudited)
(in millions)
We use non-GAAP financial measures of operating performance. Non-GAAP
measures do not replace and are not superior the presentation of our
GAAP financial results but are provided to improve overall
understanding of our current financial performance and our prospects
for the future.
U.S.
GAAP Pro Forma Pro Forma
Results Adjustments Combined
-------- ----------- ---------
Three months ended June 30, 2008
---------------------------------
Revenues $ 1,153 $ (41) (a) $ 1,112
Operating expenses, net (860) 43 (a),(b) (817)
-------- ----------- ---------
Operating income 293 2 295
Net interest and investment loss (24) - (24)
Gain on sale of equity investment - - -
Income from associates - - -
Other income 9 - 9
-------- ----------- ---------
Income before income tax
provision and minority interest 278 2 280
Income tax provision (78) 3 (75)
Minority interest (5) - (5)
-------- ----------- ---------
Net income $ 195 $ 5 $ 200
======== =========== =========
Six months ended June 30, 2008
---------------------------------
Revenues $ 2,448 $ (143) (a) $ 2,305
Operating expenses, net (1,807) 162 (a),(b) (1,645)
-------- ----------- ---------
Operating income 641 19 660
Net interest and investment loss (43) - (43)
Gain on sale of equity investment 2 (2) (c) -
Income from associates 1 - 1
Other income 19 - 19
-------- ----------- ---------
Income before income tax
provision and minority interest 620 17 637
Income tax provision (180) (2) (182)
Minority interest (14) - (14)
-------- ----------- ---------
Net income $ 426 $ 15 $ 441
======== =========== =========
(a) Includes Activity assessment fees / Section 31 fees.
(b) Includes merger expenses, exit costs and income from the reversal
of an accrual relating to certain litigation between a former
Chairman & CEO and the NYSE, which was finally terminated on July
31, 2008.
(c) Includes gains on sale of equity investments.
NYSE Euronext
Condensed consolidated statements of financial condition (unaudited)
(in millions)
June 30, 2008 December 31, 2007
------------- -----------------
Assets
Current assets:
Cash, cash equivalents,
investment and other securities $ 1,339 $ 1,532
Accounts receivable, net 604 566
Deferred income taxes 102 111
Other current assets 220 69
------------- -----------------
Total current assets 2,265 2,278
Property and equipment, net 676 576
Goodwill 5,565 5,014
Other intangible assets, net 7,555 7,226
Investment in associates 318 337
Deferred income taxes 395 390
Other assets 866 797
------------- -----------------
Total assets $ 17,640 $ 16,618
============= =================
Liabilities and stockholders' equity
Accounts payable and accrued
expenses $ 997 $ 1,012
Deferred revenue 381 205
Short term debt 1,066 2,192
Deferred income taxes 44 52
------------- -----------------
Total current liabilities 2,488 3,461
Accrued employee benefits 322 312
Deferred revenue 347 349
Long term debt 1,944 521
Deferred income taxes 2,432 2,333
Other liabilities 25 27
------------- -----------------
Total liabilities 7,558 7,003
Minority interest 77 231
Stockholders' equity 10,005 9,384
------------- -----------------
Total liabilities and stockholders'
equity $ 17,640 $ 16,618
============= =================
NYSE Euronext
Selected Statistical Data:
----------------------------------------------------------------------
Volume Summary - Cash Products
----------------------------------------------------------------------
Average Daily Total Volume
Volume
------------------- -----------------------
Q2 Q2
(Unaudited) '08 '07 % Chg Q2 '08 Q2 '07 % Chg
----- ----- ------- ------- ------- -------
Number of Trading Days -
European Markets 64 62 - 64 62 -
Number of Trading Days -
U.S. Markets 64 63 - 64 63 -
European Cash Products
(trades in thousands) 1,371 1,206 13.7% 87,772 74,797 17.3%
Equities 1,325 1,156 14.6% 84,807 71,689 18.3%
Exchange-Traded Funds 6 5 23.6% 408 320 27.6%
Structured Products 35 38 -9.0% 2,213 2,356 -6.1%
Bonds 5 7 -23.0% 344 432 -20.5%
U.S. Cash Products (shares
in millions) 2,916 2,771 5.2% 186,600 174,585 6.9%
NYSE Listed Issues (1)
NYSE Group Handled
Volume (2) 2,173 2,159 0.6% 139,052 136,002 2.2%
NYSE Group Matched
Volume (3) 1,949 2,011 -3.1% 124,762 126,695 -1.5%
NYSE Group TRF Volume
(4) 253 17 1402.3% 16,178 1,060 1426.2%
Total NYSE Listed
Consolidated Volume 4,169 3,155 32.1% 266,804 198,744 34.2%
NYSE Group Share of
Total Consolidated
Volume
Handled Volume (2) 52.1% 68.4% -16.3% 52.1% 68.4% -16.3%
Matched Volume (3) 46.8% 63.7% -16.9% 46.8% 63.7% -16.9%
TRF Volume (4) 6.1% 0.5% 5.5% 6.1% 0.5% 5.5%
NYSE Arca & Amex Listed
Issues
NYSE Group Handled
Volume (2) 316 174 81.7% 20,222 10,955 84.6%
NYSE Group Matched
Volume (3) 272 149 82.6% 17,403 9,382 85.5%
NYSE Group TRF Volume
(4) 115 10 1040.3% 7,391 638 1058.4%
Total NYSE Arca & Amex
Listed Consolidated
Volume 988 475 108.1% 63,209 29,902 111.4%
NYSE Group Share of
Total Consolidated
Volume
Handled Volume (2) 32.0% 36.6% -4.6% 32.0% 36.6% -4.6%
Matched Volume (3) 27.5% 31.4% -3.9% 27.5% 31.4% -3.9%
TRF Volume (4) 11.7% 2.1% 9.6% 11.7% 2.1% 9.6%
Nasdaq Listed Issues
NYSE Group Handled
Volume (2) 427 439 -2.6% 27,326 27,628 -1.1%
NYSE Group Matched
Volume (3) 356 356 0.1% 22,804 22,430 1.7%
NYSE Group TRF Volume
(4) 198 96 105.5% 12,690 6,078 108.8%
Total Nasdaq Listed
Consolidated Volume 2,099 2,141 -2.0% 134,315 134,889 -0.4%
NYSE Group Share of
Total Consolidated
Volume
Handled Volume (2) 20.3% 20.5% -0.2% 20.3% 20.5% -0.2%
Matched Volume (3) 17.0% 16.6% 0.4% 17.0% 16.6% 0.4%
TRF Volume (4) 9.4% 4.5% 4.9% 9.4% 4.5% 4.9%
Exchange-Traded Funds
(1,5)
NYSE Group Handled
Volume (2) 334 233 43.1% 21,346 14,682 45.4%
NYSE Group Matched
Volume (3) 290 207 39.9% 18,561 13,057 42.2%
NYSE Group TRF Volume
(4) 125 16 673.0% 8,008 1,020 685.2%
Total ETF Consolidated
Volume 1,020 551 85.0% 65,272 34,736 87.9%
NYSE Group Share of
Total Consolidated
Volume
Handled Volume (2) 32.7% 42.3% -9.6% 32.7% 42.3% -9.6%
Matched Volume (3) 28.4% 37.6% -9.2% 28.4% 37.6% -9.2%
TRF Volume (4) 12.3% 2.9% 9.4% 12.3% 2.9% 9.4%
Total Volume
-------------------------------------------
% Chg vs.
(Unaudited) YTD 2008 YTD 2007
-------------------- ----------------------
Number of Trading Days -
European Markets 126 -
Number of Trading Days -
U.S. Markets 125 -
European Cash Products
(trades in thousands) 190,815 28.3%
Equities 184,104 29.4%
Exchange-Traded Funds 970 47.3%
Structured Products 5,038 2.9%
Bonds 702 -20.0%
U.S. Cash Products (shares
in millions) 401,033 16.1%
NYSE Listed Issues (1)
NYSE Group Handled
Volume (2) 299,138 12.1%
NYSE Group Matched
Volume (3) 270,044 7.8%
NYSE Group TRF Volume
(4) 29,388 2672.4%
Total NYSE Listed
Consolidated Volume 545,144 41.0%
NYSE Group Share of
Total Consolidated
Volume
Handled Volume (2) 54.9% -14.1%
Matched Volume (3) 49.5% -15.3%
TRF Volume (4) 5.4% 5.1%
NYSE Arca & Amex Listed
Issues
NYSE Group Handled
Volume (2) 45,339 113.9%
NYSE Group Matched
Volume (3) 39,172 114.3%
NYSE Group TRF Volume
(4) 12,895 1921.1%
Total NYSE Arca & Amex
Listed Consolidated
Volume 134,735 141.6%
NYSE Group Share of
Total Consolidated
Volume
Handled Volume (2) 33.7% -4.4%
Matched Volume (3) 29.1% -3.7%
TRF Volume (4) 9.6% 8.4%
Nasdaq Listed Issues
NYSE Group Handled
Volume (2) 56,555 -1.6%
NYSE Group Matched
Volume (3) 47,026 0.1%
NYSE Group TRF Volume
(4) 25,598 321.1%
Total Nasdaq Listed
Consolidated Volume 283,534 5.5%
NYSE Group Share of
Total Consolidated
Volume
Handled Volume (2) 19.9% -1.5%
Matched Volume (3) 16.6% -0.9%
TRF Volume (4) 9.0% 6.8%
Exchange-Traded Funds
(1,5)
NYSE Group Handled
Volume (2) 48,287 67.9%
NYSE Group Matched
Volume (3) 42,053 63.5%
NYSE Group TRF Volume
(4) 14,363 1308.4%
Total ETF Consolidated
Volume 141,406 113.6%
NYSE Group Share of
Total Consolidated
Volume
Handled Volume (2) 34.1% -9.3%
Matched Volume (3) 29.7% -9.1%
TRF Volume (4) 10.2% 8.6%
Please refer to footnotes on the following page.
NYSE Euronext
----------------------------------------------------------------------
Selected Statistical Data:
----------------------------------------------------------------------
Volume Summary - Derivatives Products
----------------------------------------------------------------------
Average Daily
Volume Total Volume
------------------- ----------------------
(Unaudited; contracts in Q2
thousands) Q2 '08 '07 % Chg Q2 '08 Q2 '07 % Chg
------ ----- ------ ------- ------- ------
Number of Trading Days -
European Markets 64 62 - 64 62 -
Number of Trading Days -
U.S. Markets 64 63 - 64 63 -
European Derivatives
Products 4,430 3,752 18.1% 283,513 232,641 21.9%
Total Interest Rate
Products 2,274 1,878 21.1% 145,552 116,439 25.0%
Short Term Interest Rate
Products 2,178 1,759 23.8% 139,399 109,065 27.8%
Medium and Long Term
Interest Rate Products 96 119 -19.2% 6,153 7,374 -16.6%
Total Equity Products (6) 2,108 1,820 15.9% 134,921 112,820 19.6%
Total Individual Equity
Products 1,540 1,244 23.7% 98,550 77,154 27.7%
Total Equity Index
Products 568 575 -1.2% 36,371 35,666 2.0%
of which Bclear 1,098 707 55.4% 70,259 43,804 60.4%
Individual Equity
Products 999 629 58.7% 63,917 39,020 63.8%
Equity Index Products 99 77 28.4% 6,342 4,785 32.5%
Commodity Products 46 53 -12.2% 2,963 3,269 -9.4%
Currency Products 1 2 -32.6% 78 112 -30.4%
U.S. Derivatives Products -
Equity Options (7)
NYSE Arca Options
Contracts 1,512 1,115 58.9% 96,783 70,227 58.9%
Total Consolidated
Options Contracts 12,301 9,309 32.1% 787,288 586,471 34.2%
NYSE Group Share of Total 12.3% 12.0% 0.3% 12.3% 12.0% 0.3%
Total Volume
------------------------------------------
(Unaudited; contracts in % Chg vs.
thousands) YTD 2008 YTD 2007
-------------------- ---------------------
Number of Trading Days -
European Markets 126 -
Number of Trading Days -
U.S. Markets 125 -
European Derivatives
Products 565,757 25.1%
Total Interest Rate
Products 316,842 33.0%
Short Term Interest Rate
Products 303,506 35.7%
Medium and Long Term
Interest Rate Products 13,336 -8.6%
Total Equity Products (6) 241,605 16.2%
Total Individual Equity
Products 160,774 20.0%
Total Equity Index
Products 80,830 9.3%
of which Bclear 103,194 57.7%
Individual Equity
Products 90,639 61.8%
Equity Index Products 12,555 33.0%
Commodity Products 7,137 20.2%
Currency Products 174 -27.9%
U.S. Derivatives Products -
Equity Options (7)
NYSE Arca Options
Contracts 215,457 54.2%
Total Consolidated
Options Contracts 1,600,310 40.7%
NYSE Group Share of Total 13.5% 1.2%
(1) Includes all volume executed in NYSE Group crossing sessions.
(2) Represents the total number of shares of equity securities and
ETFs internally matched on the NYSE Group's exchanges or routed
to and executed at an external market center. NYSE Arca routing
includes odd-lots.
(3) Represents the total number of shares of equity securities and
ETFs executed on the NYSE Group's exchanges.
(4) Represents NYSE's volume in FINRA/NYSE Trade Reporting Facility
(TRF).
(5) Data included in previously identified categories.
(6) Includes all trading activities for Bclear, Liffe's clearing
service for wholesale equity derivatives.
(7) Includes trading in U.S. equity options contracts, not equity-
index options.
Source: NYSE Euronext, Options Clearing Corporation and
Consolidated Tape as reported for equity securities.
All trading activity is single-counted, except European cash
trading which is double counted to include both buys and sells.
NYSE Euronext
Selected Statistical Data:
----------------------------------------------------------------------
Other Operating Statistics
----------------------------------------------------------------------
Three Months Ended
-----------------------
(Unaudited) June March June
30, 31, 30,
2008 2008 2007
------- ------- -------
NYSE Euronext Listed Issuers
NYSE Listed Issuers
NYSE listed issuers(1) 2,517 2,509 2,730
Number of new issuer listings(1) 94 37 73
Capital raised in connection with new
listings ($mm)(2) $4,171 $18,708 $12,835
Euronext Listed Issuers
Euronext listed issuers(1) 1,133 1,141 1,197
Number of new issuer listings(3) 20 18 45
Capital raised in connection with new
listings ($mm)(2) $2,540 $932 $4,482
NYSE Euronext Market Data(4)
NYSE Market Data
Share of Tape A revenues (%) 51.6% 57.0% 69.5%
Share of Tape B revenues (%) 32.4% 33.9% 32.2%
Share of Tape C revenues (%) 20.2% 19.3% 23.7%
Professional subscribers (Tape A) 454,536 456,752 434,100
Euronext Market Data
Number of terminals 221,326 222,920 211,573
NYSE Euronext Operating Expenses
NYSE Euronext employee headcount(5)
NYSE Euronext headcount excluding GL Trade 3,088 3,183 3,315
GL Trade headcount 1,426 1,395 1,323
NYSE Euronext Financial Statistics
NYSE Euronext foreign exchange rate (EUR /US$)
Average EUR /US$ exchange rate for the
quarter $1.563 $1.499 $1.348
(1) Figures for NYSE listed issuers include listed operating
companies, closed-end funds, and do not include NYSE Arca, Inc.
or structured products listed on the NYSE. There were 351 ETFs
and 16 operating companies exclusively listed on NYSE Arca, Inc.
as of June 30, 2008. There were 533 structured products listed on
the NYSE as of June 30, 2008. Figures for Euronext present the
operating companies listed on Eurolist, and do not include
closed-end funds, ETFs and structured product (warrants and
certificates). At the end of June 30, 125 companies were listed
on Alternext and 324 ETFs were listed on NextTrack.
(2) Euronext figures show capital raised in millions of dollars by
operating companies listed on Eurolist, Alternext, Free Market
and close-end funds, ETFs and structured products (warrants and
certificates). NYSE figures show capital raised in millions of
USD by operating companies listed on NYSE and Arca exchanges and
do not include closed-end funds, ETFs and structured products.
(3) Euronext figures include operating companies listed on Eurolist,
Alternext and Free Market and do not include closed-end funds,
ETFs and structured products (warrants and certificates).
(4) "Tape A" represents NYSE listed securities, "Tape B" represents
NYSE Arca and Amex listed securities, and "Tape C" represents
Nasdaq listed securities. Per the SEC's Regulation NMS, as of
April 1, 2007, share of revenues is derived through a formula
based on 25% share of trading, 25% share of value traded, and 50%
share of quoting, as reported to the consolidated tape. Prior to
April 1, 2007, share of revenues for Tapes A and B was derived
based on share of trades reported to the consolidated tape, and
share of revenue for Tape C was derived based on an average of
share of trades and share of volume reported to the consolidated
tape. The consolidated tape refers to the collection of market
data that multiple markets make available on a consolidated
basis. Share figures exclude transactions reported to the
FINRA/NYSE Trade Reporting Facility.
(5) NYSE Euronext owns approximately 40% of the common equity of GL
Trade, which is listed separately on Eurolist by Euronext in
Paris. NYSE Euronext consolidates the results of GL Trade. NYSE
Euronext headcount, as of June 30, 2007 excludes approximately
427 employees that, effective July 30, 2007, were transferred to
Financial Industry Regulatory Authority (FINRA) and are no longer
employees of NYSE Euronext. NYSE Euronext headcount includes the
employees of Wombat for all periods presented. NYSE Euronext
headcount, as of June 30, 2008, excludes 75 employees who left
June 30 as part of the voluntary resignation program initiated
during 2008.
Source: NYSE Euronext
