NYSE Euronext (NYSE Euronext: NYX) today reported net income of $258 million, or $0.97 per diluted share, for the three months ended September 30, 2007, a 279% increase as compared to net income of $68 million, or $0.43 per diluted share, for the three months ended September 30, 2006. These results are presented in accordance with U.S. Generally Accepted Accounting Principles (GAAP). Third quarter 2007 GAAP results include the operations of NYSE Group and Euronext N.V. for the full quarter. The comparative results for 2006 reflect the operations of NYSE Group only.
"During the third quarter, we delivered record financial results through strong growth across our business lines, driven largely by record trading volumes in the U.S. and Europe and ongoing expense control," said Nelson Chai, Executive Vice President and Chief Financial Officer. "These results reflect the tremendous benefits we derive from operating a globally diversified company, with a business model that will continue to serve us well as we make further progress towards realizing the synergies related to the NYSE Euronext merger."
Included in the results for the three months ended September 30, 2007 are (i) $22 million in merger expenses incurred in connection with both the acquisition of Archipelago Holdings on March 7, 2006 and the combination with Euronext N.V. on April 4, 2007, and exit costs, (ii) a $32 million gain on the sale of the member firm regulatory functions of NYSE Regulation to FINRA, and (iii) a $55 million deferred tax benefit related to an enacted reduction of the UK corporate tax rate from 30% to 28%.
Giving effect to the Archipelago and Euronext transactions as if they had occurred at the beginning of the earliest period presented, but excluding merger expenses, exit costs and other non-recurring items, NYSE Euronext's net income on a non-GAAP basis for the three months ended September 30, 2007 would have been $202 million, or $0.76 per diluted share, a $85 million or 73% increase as compared to net income of $117 million, or $0.44 per diluted share, for the three months ended September 30, 2006. In addition, on a non-GAAP basis, operating income grew 68% to $320 million for the third quarter of 2007 from $190 million in the year-ago period. A full reconciliation of these non-GAAP results is included in the attached tables.
At constant USD/Euro exchange rates, neutralizing the impact of acquisitions and dispositions of businesses and equity investments for the period, and on a non-GAAP basis, NYSE Euronext's revenues, net of activity assessment fees, for the three months ended September 30, 2007 increased 34%, while fixed operating expenses (defined as operating expenses, net of Section 31 fees, merger expenses, exit costs, liquidity payments, routing and clearing fees) decreased 8% compared to the three months ended September 30, 2006.
Other Third Quarter Financial Highlights
-- Excluding the effect of activity assessment fees and Section 31 fees, and on a non-GAAP basis:
-- NYSE Euronext derived 25% of its third quarter 2007 net
revenues (defined as total revenues, net of liquidity
payments, routing and clearing fees) from derivatives
trading, 18% from European cash trading, 12% from U.S. cash
trading, 13% from market data, and 12% from listings; and
-- NYSE Euronext's operating margin increased to 31% of total
revenues for the three months ended September 30, 2007 as
compared to 26% for the same period a year ago.
-- After distributing $133 million of dividends to shareholders and repaying $1.1 billion of debt since the consummation of the NYSE Euronext combination on April 4, NYSE Euronext had $1.4 billion of cash, cash equivalents and short-term financial investments (net of Section 31 fees payable to the SEC) as of September 30, 2007.
Third Quarter Business Highlights
-- NYSE Euronext's derivative markets, Liffe and NYSE Arca Options, continue to deliver strong growth and superior market quality.
-- With 272.2 million contracts traded during the three months
ended September 30, 2007, Liffe set a record for trading
activity, an increase of 54.4% compared to the same period a
year ago. Average daily volume across Liffe's product
categories increased compared to the three months ended
September 30, 2006: interest rate contracts grew 51.3%,
equity products (single stocks and indices) grew 62.4% and
commodities grew 23.6%. During the first nine months of 2007,
trading activity on Liffe reached 724.4 million contracts
traded, a 28.7% increase compared to the nine months ended
September 30, 2006. This year-over-year growth included
strong gains of 32.3% for total equity products, 26.7% for
commodity products and 26.0% for total interest rate
products.
-- Bclear, Liffe's wholesale clearing service for OTC trades,
processed 24.3 million contracts for the three months ended
September 30, 2007 compared to 9.1 million contracts for the
comparable period a year ago, up 167.9%. The growth of
business is mainly attributable to the Universal Stock
Futures in which Liffe has gained the leadership role in
Europe. During the first nine months of 2007, Bclear
processed 89.8 million contracts compared to 42.5 million
contracts for the comparable period a year ago, an increase
of 111%.
-- With total volume for all contracts in the U.S. options
penny pilot up over 55% year-to-date, NYSE Arca Options'
unique pricing model and advanced systems architecture
solidified its status as an industry leader in options
trading. In the third quarter of 2007, NYSE Arca Options'
market share was 11.8%, an increase of 1.5% from the same
period last year. During the three months ended September 30,
2007, market share in the 13 penny pilot issues was 13.5%, up
1.8% from the previous quarter.
-- NYSE Euronext's cash markets, which trade more shares than any other equities marketplace in the world and represent the largest pools of liquidity in their respective markets, realized record trading volumes and message traffic during the three months ended September 30, 2007.
-- NYSE Euronext's European cash markets had their best
quarter ever with an average of 1.34 million trades per day,
an increase of 85.5% compared to the three months ended
September 30, 2006. Year-over-year, the average daily number
of trades increased in every product category traded on
Euronext during the third quarter of 2007: cash equities grew
86.6%, ETFs grew 244.2%, structured products (warrants and
certificates) grew 61.7% and bonds grew 9.4%.
-- During the first nine months of 2007, 235.9 million trades
on cash products have been executed on NSC, NYSE Euronext's
European cash trading platform, up 44.5% compared to the same
period in 2006, representing more volume in that period than
executed in all of 2006.
-- NYSE Euronext's U.S. cash markets comprised the largest
liquidity pool in NYSE-listed cash trading with 59.5% of
matched trading volume for the three months ended September
30, 2007. Total NYSE Group volume for the three months ended
September 30, 2007 reached a new all-time record with over
195.4 billion shares handled, including new all-time volume
records for the most active day, week and month. Year-over-
year, handled volume on NYSE Euronext's U.S. exchanges grew
substantially during the third quarter with increases of
28.4% in NYSE-listed equities, 111.6% in NYSE Arca and Amex
listed equities, and 105.6% in ETFs, while volumes in Nasdaq
listed equities decreased 13.9%.
-- With over 41% of listings and 67% of the total assets under
management for all ETFs in the U.S., NYSE Arca continues to
be the largest single displayed liquidity pool for ETF
trading in the U.S. with 41.1% of handled trading volume for
the three months ended September 30, 2007.
-- Nearly 3,900 issuers are listed on NYSE Euronext markets, with operating companies representing $29 trillion in total global market capitalization, greater than the next four largest equities marketplaces combined.
-- The 88 new listings on NYSE Euronext's U.S. markets for the
three months ended September 30, 2007 included 15 IPOs by
operating companies. Total IPO proceeds raised by operating
companies in connection with listings during the three months
ended September 30, 2007 were $8.4 billion, compared to $3.3
billion during the three months ended September 30, 2006.
-- For the nine months ended September 30, 2007, NYSE
Euronext's U.S. markets produced a total of 199 listings,
including 7 transfers from Nasdaq, 8 transfers from the
American Stock Exchange and other markets, and 51 IPOs by
operating companies, which raised total proceeds of $24.4
billion in connection with listing.
-- Year-to-date, U.S. domestic IPOs listing on NYSE Euronext's
U.S. markets raised more than 90% of qualified IPO proceeds,
while non-US offerings on NYSE Euronext's U.S. markets
represented 100% of qualified proceeds raised.
-- Year-to-date, NYSE Euronext's U.S. markets listed 82 ETFs
compared to 42 new ETF listings during the same period a year
ago. Also during the quarter, 13 ETFs listed in Europe on
NextTrack bringing the total number of ETFs listed through
the first nine months of 2007 to 57.
-- For the three months ended September 30, 2007, NYSE
Euronext's European markets listed 37 new issuers compared to
26 during the third quarter of 2006. Capital raised in
connection with listings during the three months ended
September 30, 2007 amounted to EUR 2.7 billion. Of those new
listings, NYSE Alternext added 9 IPOs for a total of 109
listings at the end of September.
-- For the nine months ended September 30, 2007, NYSE
Euronext's European markets, including NYSE Alternext,
attracted 107 new listings with EUR 5.9 billion raised.
-- During the third quarter of 2007, NYSE Euronext's exchanges achieved a number of significant volume and message capacity records with uninterrupted systems performance. Additionally, the NYSE plans to upgrade message capacity to 64,000 messages per second by year-end, up from 25,000 at the beginning of 2007 and its current capacity of 38,000.
-- On October 24, NYSE Euronext was included in the S&P 500 and S&P 100 benchmark indices; NYSE Euronext is the only exchange group included in the S&P 100.
The results of operations of Euronext N.V. for the three and nine months ended September 30, 2007 are reported under U.S. GAAP under the caption "European Operations" in the accompanying tables. Questions regarding Euronext N.V.'s third quarter results should be directed to Investor Relations (contact details provided above).
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, a holding company created by the combination of NYSE Group, Inc. and Euronext N.V., commenced trading on April 4, 2007. NYSE Euronext (NYSE Euronext: NYX) operates the world's largest and most liquid exchange group and offers the most diverse array of financial products and services. NYSE Euronext, which brings together six cash equities exchanges in five countries and six derivatives exchanges in six countries, is a world leader for listings, trading in cash equities, equity and interest rate derivatives, bonds and the distribution of market data. Representing a combined $30.3 trillion/EUR 21.3 trillion total market capitalization of listed companies and average daily trading value of approximately $139 billion/EUR 103 billion (as of September 30, 2007), NYSE Euronext seeks to provide the highest standards of market quality and integrity, innovative products and services to investors, issuers, and all users of its markets.
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 2006 ("document de reference") filed with the French Autorite des Marches Financiers (Registered on June 6, 2007 under No. R.07-0089), 2006 Annual Report on Form 10-K, as amended, 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 Nine months
ended ended
September 30, September 30,
-------------- ---------------
2007 2006 2007 2006
------- ------ ------- -------
Revenues
Activity assessment $ 131 $ 163 $ 432 $ 492
Cash trading 466 171 1,103 432
Derivatives trading 243 9 441 22
Listing 96 89 285 266
Market data 101 57 270 166
Software and technology services 96 28 213 109
Regulatory 29 50 135 136
Other 36 35 100 94
------- ------ ------- -------
Total revenues 1,198 602 2,979 1,717
Section 31 fees (131) (163) (432) (492)
Merger expenses and exit costs (22) (8) (49) (20)
Compensation (202) (130) (515) (437)
Liquidity payments (211) (66) (510) (160)
Routing and clearing (64) (20) (164) (49)
Systems and communications (89) (30) (198) (90)
Professional services (30) (28) (84) (86)
Depreciation and amortization (71) (35) (177) (99)
Occupancy (35) (23) (90) (63)
Marketing and other (55) (24) (127) (72)
Regulatory fine income 10 11 19 34
------- ------ ------- -------
Operating income 298 86 652 183
Net interest and investment income
(loss) (21) 12 (34) 31
Gain on sale of equity investment 32 - 34 21
Income from associates 6 - 9 -
Other income 5 17 18 32
------- ------ ------- -------
Income before income tax provision
and
minority interest 320 115 679 267
Income tax provision (52) (46) (177) (105)
Minority interest (10) (1) (16) (3)
------- ------ ------- -------
Net income $ 258 $ 68 $ 486 $ 159
======= ====== ======= =======
Basic earnings per share $ 0.97 $0.43 $ 2.14 $ 1.09
Diluted earnings per share $ 0.97 $0.43 $ 2.13 $ 1.08
Basic weighted average shares
outstanding 265 156 227 147 (a)
Diluted weighted average shares
outstanding 266 157 228 148 (a)
(a)Adjusted to reflect the merger with Archipelago on March 7, 2006
giving retroactive effect to the issuance of shares to former
NYSE members.
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 Nine months ended
September 30, (a) September 30, (a)
--------------------- ----------------------
2007 2006 2007 2006
--------- --------- --------- ----------
Pro Forma Pro Forma Pro Forma Pro Forma
Combined Combined Combined Combined
--------- --------- --------- ----------
Revenues
Cash trading $ 466 $ 254 $1,224 $ 788
Derivatives trading 243 152 625 465
Listing 96 95 290 285
Market data 101 92 314 279
Software and technology
services 96 85 274 277
Regulatory 29 50 136 137
Other 36 49 110 137
-------- ------ -------- -------
Total revenues 1,067 777 2,973 2,368
Compensation (202) (214) (606) (653)(b)
Liquidity payments (211) (88) (538) (266)
Routing and clearing (64) (20) (166) (64)
Systems and communications (89) (88) (252) (260)
Professional services (30) (39) (96) (128)
Depreciation and
amortization (71) (c) (70)(c) (214) (c) (205)(c)
Occupancy (35) (36) (106) (106)
Marketing and other (55) (43) (147) (135)
Regulatory fine income 10 11 19 34
-------- ------ -------- -------
Operating income 320 190 867 585
Net interest and
investment loss (21) (d) (12)(d) (69) (d) (49)(d)
Income from associates 6 4 (e) 13 13 (e)
Other income 5 10 21 28
-------- ------ -------- -------
Income before income tax
provision and
minority interest 310 192 832 577
Income tax provision (100) (f) (70)(f) (274) (f) (202)(f)
Minority interest (8) (5) (24) (17)
-------- ------ -------- -------
Net income $ 202 $ 117 $ 534 $ 358
======== ====== ======== =======
Basic earnings per share $ 0.76 $0.45 $ 2.02 $ 1.36
Diluted earnings per share $ 0.76 $0.44 $ 2.01 $ 1.35
Basic weighted average
shares outstanding 265 262 265 262 (g)
Diluted weighted average
shares outstanding 266 264 266 265 (g)
--------------------- ----------------------
(a) The results of operations on NYSE Euronext are presented as if the
following transactions had been completed at the beginning of the
earliest period presented:
1. The acquisition of PCX Holdings and subsidiaries by
Archipelago,
2. The disposition of Wave Securities by Archipelago,
3. The merger of Archipelago and NYSE, and
4. The merger of NYSE Group and Euronext.
Merger expenses and exit costs of $22 million and $24 million have
been eliminated from the results of operations for the three
months ended September 30, 2007 and 2006, respectively, and $141
million and $60 million for the nine months ended September 30,
2007 and 2006, respectively, as they represent nonrecurring
charges directly attributable to either the merger of the NYSE
and Archipelago or the merger of NYSE Group and Euronext N.V.
In addition, gains on sale of equity investments and other income
of $32 million and $22 million have been eliminated from the
results of operations for the three months ended September 30,
2007 and 2006, respectively, and $34 million and $105 million for
the nine months ended September 30, 2007 and 2006, respectively,
as they represent nonrecurring items.
Activity assessment fees and Section 31 fees have not been
presented as they have no impact on operating income or net
income.
(b) One-time compensation charges of $38 million recorded by NYSE
Group at the time of the merger with Archipelago and $2 million
acceleration of certain Archipelago stock options immediately
prior to the merger with NYSE Group were eliminated.
(c) Includes amortization expense of $25 million related to the fair
value of the identifiable intangible assets of Euronext for each
of the three months ended September 30, 2007 and 2006, and $75
million for the each of the nine months ended September 30, 2007
and 2006.
(d) Includes interest expense of $36 million and $31 million on the
NYSE Euronext debt incurred as part of the merger with Euronext
for the three months ended September 30, 2007 and 2006,
respectively, and $105 million and $86 million for the nine
months ended September 30, 2007 and 2006, respectively.
(e) Following the fair value adjustment recorded at the Euronext
acquisition date, and in connection with the July 2007 redemption
of the LCH Clearnet convertible preferred shares and LCH
Clearnet's repurchase of 20 million ordinary shares previously
owned by Euronext, NYSE Euronext no longer accounts for its share
in LCH Clearnet's results of operations. As a result, the $14
million and $31 million income from associates related to LCH
Clearnet for the three and nine months ended September 30, 2006,
respectively, has been eliminated.
(f) A nonrecurring $55 million tax benefit has been eliminated from
both the three and the nine months ended September 30, 2007 in
connection with the enacted reduction of the UK corporate tax
rate from 30% to 28% effective April 1, 2008. Additionally, a
nonrecurring tax benefit of $3 and $14 million has been
eliminated from the three and nine months ended September 30,
2006, respectively, which corresponds to a change in tax rate on
deferred capital gains recorded by Euronext, including gains
related to LCH Euronext.
(g) Adjusted to reflect the merger with Archipelago on March 7, 2006
giving retroactive effect to the issuance of shares to former
NYSE members.
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
September 30, 2007 (a)
---------------------------------------------
US European Corporate Pro Forma
Operations Operations Items Combined
----------- ----------- --------- ---------
Revenues
Cash trading $ 323 $ 143 $ - $ 466
Derivatives trading 21 222 - 243
Listing 91 5 - 96
Market data 52 49 - 101
Other revenues 77 84 - 161
----------- -------- ------ ---------
Total revenues 564 503 - 1,067
Liquidity payments (166) (45) - (211)
Routing and clearing (64) - - (64)
Other operating
expenses, net (220)(b) (243)(c) (9) (472)
----------- -------- ------ ---------
Operating income 114 215 (9) 320
Net interest and
investment income
(loss) (21)(d) (21)
Income from associates 6 6
Other income 5 5
---------
Income before income tax
provision and minority
interest 310
Income tax provision (100)
Minority interest (8)
---------
Net income $ 202
=========
Basic earnings per share $ 0.76
Diluted earnings per
share $ 0.76
Basic weighted average
shares outstanding 265
Diluted weighted average
shares outstanding 266
---------------------------------------------
---------------------------------------------
Three months ended
September 30, 2006 (a)
---------------------------------------------
US European Corporate Pro Forma
Operations Operations Items Combined
----------- ----------- --------- ---------
Revenues
Cash trading $ 171 $ 83 $ - $ 254
Derivatives trading 9 143 - 152
Listing 89 6 - 95
Market data 57 35 - 92
Other revenues 113 71 - 184
----------- -------- ------ ---------
Total revenues 439 338 - 777
Liquidity payments (66) (22) - (88)
Routing and clearing (20) - - (20)
Other operating
expenses, net (256)(b) (217)(c) (6) (479)
----------- -------- ------ ---------
Operating income 97 99 (6) 190
Net interest and
investment income
(loss) (12)(d) (12)
Income from associates 4 4
Other income 10 10
---------
Income before income
tax provision and
minority interest 192
Income tax provision (70)
Minority interest (5)
---------
Net income $ 117
=========
Basic earnings per
share $ 0.45
Diluted earnings per
share $ 0.44
Basic weighted average
shares outstanding 262
Diluted weighted
average shares
outstanding 264
---------------------------------------------
(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 $22 million and $24 million for the three months
ended September 30, 2007 and September 30, 2006, respectively,
have been eliminated as they represent nonrecurring charges
attributable to business combinations. In addition, gains on sale
of equity investment and other income of $32 million and $22
million have been eliminated from the results of operations for
the three months ended September 30, 2007 and 2006, respectively,
as they represent nonrecurring items. Activity assessment fees
and Section 31 fees have not been presented as they have no
impact on operating income or net income.
(b) Includes regulatory fine income of $10 million and $11 million for
the three months ended September 30, 2007 and 2006, respectively.
(c) Includes amortization expense of $25 million related to the fair
value of the identifiable intangible assets of Euronext for both
the three months ended September 30, 2007 and the three months
ended September 30, 2006.
(d) Includes interest expense of $36 million and $31 million on the
NYSE Euronext debt incurred as part of the merger with Euronext
for the three months ended September 30, 2007 and 2006,
respectively.
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.
-------------------------------------------
Nine months ended
September 30, 2007 (a)
-------------------------------------------
US European Corporate Pro Forma
Operations Operations Items Combined
----------- ----------- --------- ---------
Revenues
Cash trading $ 841 $ 383 $ - $ 1,224
Derivatives trading 50 575 - 625
Listing 271 19 - 290
Market data 173 141 - 314
Other revenues 286 234 - 520
-------- -------- ------ --------
Total revenues 1,621 1,352 - 2,973
Liquidity payments (438) (100) - (538)
Routing and clearing (166) - - (166)
Other operating expenses,
net (699)(b) (682)(c) (21) (1,402)
-------- -------- ------ --------
Operating income 318 570 (21) 867
Net interest and
investment income (loss) (69)(d) (69)
Income from associates 13 13
Other income 21 21
--------
Income before income tax
provision and
minority interest 832
Income tax provision (274)
Minority interest (24)
--------
Net income $ 534
========
Basic earnings per share $ 2.02
Diluted earnings per share $ 2.01
Basic weighted average
shares outstanding 265
Diluted weighted average
shares outstanding 266
------------------------------------------
---------------------------------------------
Nine months ended
September 30, 2006 (a)
---------------------------------------------
US European Corporate Pro Forma
Operations Operations Items Combined
----------- ----------- --------- ---------
Revenues
Cash trading $ 521 $ 267 $ - $ 788
Derivatives trading 30 435 - 465
Listing 266 19 - 285
Market data 179 100 - 279
Other revenues 342 209 - 551
----------- -------- ------ ---------
Total revenues 1,338 1,030 - 2,368
Liquidity payments (204) (62) - (266)
Routing and clearing (64) - - (64)
Other operating
expenses, net (793)(b) (631)(c) (29) (1,453)
----------- -------- ------ ---------
Operating income 277 337 (29) 585
Net interest and
investment income
(loss) (49)(d) (49)
Income from associates 13 13
Other income 28 28
---------
Income before income
tax provision and
minority interest 577
Income tax provision (202)
Minority interest (17)
---------
Net income $ 358
=========
Basic earnings per
share $ 1.36
Diluted earnings per
share $ 1.35
Basic weighted average
shares outstanding 262
Diluted weighted average
shares outstanding 265
---------------------------------------------
(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 $141 million and $60 million for the nine
months ended September 30, 2007 and September 30, 2006,
respectively, have been eliminated as they represent
nonrecurring charges attributable to business combinations. In
addition, gains on sale of equity investment and other income of
$34 million and $105 million have been eliminated from the
results of operations for the nine months ended September 30,
2007 and 2006, respectively, as they represent nonrecurring
items. Activity assessment fees and Section 31 fees have not
been presented as they have no impact on operating income or net
income.
(b) Includes regulatory fine income of $19 million and $34 million
for the nine months ended September 30, 2007 and 2006,
respectively.
(c) Includes amortization expense of $75 million related to the fair
value of the identifiable intangible assets of Euronext for both
the nine months ended September 30, 2007 and 2006.
(d) Includes interest expense of $105 million and $86 million on the
NYSE Euronext debt incurred as part of the merger with Euronext
for the nine months ended September 30, 2007 and 2006,
respectively.
NYSE Euronext
Reconciliation of non-GAAP financial measures to GAAP measures
(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. Other Pro
GAAP Euronext Forma Pro Forma
Results (a) Adjustments Combined
-------- -------- ------------ ---------
Three months September 30,
2007
-----------------------------
Revenues $ 1,198 $ - $ (131)(b) $ 1,067
Operating expenses, net (b),
(900) - 153 (c) (747)
-------- -------- ------- ---------
Operating income 298 - 22 320
Net interest and investment
loss (21) - - (21)
Gain on sale of equity
investment 32 - (32) -
Income from associates 6 - - 6
Other income 5 - - 5
-------- -------- ------- ---------
Income before income tax
provision and minority
interest 320 - (10) 310
Income tax provision (52) - (48)(d) (100)
Minority interest (10) - 2 (8)
-------- -------- ------- ---------
Net income $ 258 $ - $ (56) $ 202
======== ======== ======= =========
Nine months ended September
30, 2007
-----------------------------
Revenues $ 2,979 $ 426 $ (432)(b) $ 2,973
Operating expenses, net (b),
(c),
(2,327) (328) 549 (e) (2,106)
-------- -------- ------- ---------
Operating income 652 98 117 867
Net interest and investment
loss (34) - (35)(f) (69)
Gain on sale of equity
investment 34 - (34) -
Income from associates 9 4 - 13
Other income 18 3 - 21
-------- -------- ------- ---------
Income before income tax
provision and minority
interest 679 105 48 832
Income tax provision (177) (34) (63)(d) (274)
Minority interest (16) (8) - (24)
-------- -------- ------- ---------
Net income $ 486 $ 63 $ (15) $ 534
======== ======== ======= =========
(a) Corresponding to the results of operations of Euronext for the
period which preceded the April 4, 2007 merger with NYSE Group.
(b) Includes Activity assessment fees / Section 31 fees.
(c) Includes merger expenses and exit costs.
(d) Includes the income tax benefit recorded in connection with the
enacted reduction of the UK corporate tax rate.
(e) Includes the amortization expense related to the fair value of the
identifiable intangible assets of Euronext.
(f) Includes the interest expense on the NYSE Euronext debt incurred
as part of the merger with Euronext.
NYSE Euronext
Condensed consolidated statements of financial condition
(in millions)
September 30, December 31,
2007 2006
------------- ------------
(unaudited)
Assets
Current assets:
Cash, cash equivalents, investment and
other securities $ 1,489 $ 979
Accounts receivable, net 570 335
Deferred income taxes 102 108
Other current assets 75 21
------------- ------------
Total current assets 2,236 1,443
Property and equipment, net 575 378
Goodwill 4,986 536
Other intangible assets, net 7,239 584
Investment in associates 214 -
Deferred income taxes 398 366
Other assets 626 159
------------- ------------
Total assets $ 16,274 $ 3,466
============= ============
Liabilities and stockholders' equity
Accounts payable and accrued expenses $ 852 $ 650
Deferred revenue 280 114
Short term debt 2,169 -
Deferred income taxes 68 68
------------- ------------
Total current liabilities 3,369 832
Accrued employee benefits 347 355
Deferred revenue 336 322
Long term debt 531 -
Deferred income taxes 2,313 265
Other liabilities 29 23
------------- ------------
Total liabilities 6,925 1,797
Minority interest 200 -
Stockholders' equity 9,149 1,669
------------- ------------
Total liabilities and stockholders' equity $ 16,274 $ 3,466
============= ============
NYSE Euronext
----------------------------------------------------------------------
Selected Statistical Data:
----------------------------------------------------------------------
Volume Summary - Cash Products
----------------------------------------------------------------------
Average Daily
Volume Total Volume Total Volume
------------------ ---------------------- --------------
% Chg
vs.
Q3 Q3 YTD YTD
(Unaudited) '07 '06 % Chg Q3 '07 Q3 '06 % Chg 2007 2006
----- ----- ------ ------- ------- ------ ------- ------
Number of
Trading Days
- European
Markets 65 65 - 65 65 - 191 -
Number of
Trading Days
- U.S.
Markets 63 63 - 63 63 - 187 -
European Cash
Products
(trades in
thousands) 1,341 723 85.5% 87,177 46,986 85.5% 235,890 44.5%
Equities 1,287 690 86.6% 83,652 44,836 86.6% 225,932 45.0%
Exchange-
Traded Funds 7 2 244.2% 431 125 244.2% 1,090 121.3%
Structured
Products 42 26 61.7% 2,715 1,679 61.7% 7,613 32.3%
Bonds 6 5 9.4% 378 345 9.4% 1,255 1.7%
U.S. Cash Products
(shares in millions)
NYSE Listed Issues (1)
NYSE Group
Handled
Volume (2) 2,420 1,771 36.6% 152,451 111,584 36.6% 419,216 19.3%
NYSE Group
Matched
Volume (3) 2,219 1,727 28.4% 139,784 108,826 28.4% 390,245 13.4%
NYSE Group
TRF Volume
(4) 90 - - 5,693 - - 6,753 -
Total NYSE
Listed
Consolidated
Volume 3,729 2,447 52.4% 234,927 154,162 52.4% 621,506 33.0%
NYSE Group Share of Total
Consolidated Volume
Handled
Volume (2) 64.9% 72.4% 64.9% 72.4% 67.5%
Matched
Volume (3) 59.5% 70.6% 59.5% 70.6% 62.8%
TRF Volume
(4) 2.4% - 2.4% - 1.1%
NYSE Arca & Amex Listed
Issues
NYSE Group
Handled
Volume (2) 267 126 111.5% 16,790 7,939 111.5% 37,986 58.8%
NYSE Group
Matched
Volume (3) 231 109 111.6% 14,542 6,873 111.6% 32,821 58.3%
NYSE Group
TRF Volume
(4) 32 - - 2,046 - - 2,684 -
Total NYSE
Arca & Amex
Listed
Consolidated
Volume 704 328 114.8% 44,381 20,663 114.8% 100,152 47.5%
NYSE Group Share of Total
Consolidated Volume
Handled
Volume (2) 37.8% 38.4% 37.8% 38.4% 37.9%
Matched
Volume (3) 32.8% 33.3% 32.8% 33.3% 32.8%
TRF Volume
(4) 4.6% - 4.6% - 2.7%
Nasdaq Listed Issues
NYSE Group
Handled
Volume (2) 415 477 -13.0% 26,117 30,022 -13.0% 83,601 -11.1%
NYSE Group
Matched
Volume (3) 338 392 -13.9% 21,270 24,700 -13.9% 68,259 -11.1%
NYSE Group
TRF Volume
(4) 155 - - 9,755 - - 15,834 -
Total Nasdaq
Listed
Consolidated
Volume 2,183 1,870 16.8% 137,525 117,785 16.8% 406,186 5.9%
NYSE Group Share of Total
Consolidated Volume
Handled
Volume (2) 19.0% 25.5% 19.0% 25.5% 20.6%
Matched
Volume (3) 15.5% 21.0% 15.5% 21.0% 16.8%
TRF Volume
(4) 7.1% - 7.1% - 3.9%
Exchange-Traded Funds
(1,5)
NYSE Group
Handled
Volume (2) 354 171 106.6% 22,302 10,794 106.6% 51,066 56.6%
NYSE Group
Matched
Volume (3) 315 153 105.6% 19,866 9,663 105.6% 45,582 55.6%
NYSE Group
TRF Volume
(4) 45 - - 2,854 - - 3,873 -
Total ETF
Consolidated
Volume 862 394 118.7% 54,277 24,819 118.7% 120,485 59.0%
NYSE Group
Share of
Total
Consolidated
Volume
Handled
Volume (2)41.1% 43.5% 41.1% 43.5% 42.4%
Matched
Volume (3)36.6% 38.9% 36.6% 38.9% 37.8%
TRF Volume
(4) 5.3% - 5.3% - 3.2%
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 thousands) Q3 '07 Q3 '06 % Chg Q3 '07 Q3 '06 % Chg
------- ------ ------ -------- -------- ------
Number of Trading Days
- European Markets 65 65 - 65 65 -
Number of Trading Days
- U.S. Markets 63 63 - 63 63 -
European Derivatives
Products 4,187 2,712 54.4% 272,185 176,283 54.4%
Total Interest Rate
Products 2,469 1,641 50.4% 160,499 106,686 50.4%
Short Term Interest
Rate Products 2,357 1,557 51.3% 153,187 101,217 51.3%
Medium and Long Term
Interest Rate
Products 112 84 33.7% 7,312 5,469 33.7%
Total Equity Products
(6) 1,665 1,025 62.4% 108,196 66,642 62.4%
Total Individual
Equity Products 1,008 578 74.3% 65,520 37,590 74.3%
Total Equity Index
Products 657 447 46.9% 42,676 29,052 46.9%
of which Bclear 374 140 167.9% 24,330 9,081 167.9%
Individual Equity
Products 298 93 220.9% 19,350 6,030 220.9%
Equity Index
Products 77 47 63.2% 4,979 3,051 63.2%
Commodity Products 52 42 23.6% 3,375 2,731 23.6%
Currency Products 2 3 -49.1% 114 225 -49.1%
U.S. Derivatives
Products - Equity
Options (7)
NYSE Arca Options
Contracts 1,281 699 83.3% 80,733 44,048 83.3%
Total Consolidated
Options Contracts 10,872 6,815 59.5% 684,924 429,351 59.5%
NYSE Group Share of
Total 11.8% 10.3% 11.8% 10.3%
Total Volume
----------------------
(Unaudited; contracts % Chg vs.
in thousands) YTD 2007 YTD 2006
------------ ---------
Number of Trading Days
- European Markets 191
Number of Trading Days
- U.S. Markets 187
European Derivatives
Products 724,428 28.7%
Total Interest Rate
Products 398,665 26.0%
Short Term Interest
Rate Products 376,768 25.9%
Medium and Long Term
Interest Rate
Products 21,898 28.0%
Total Equity Products
(6) 316,092 32.3%
Total Individual
Equity Products 199,464 36.1%
Total Equity Index
Products 116,627 26.3%
of which Bclear 89,780 111.0%
Individual Equity
Products 75,360 135.9%
Equity Index
Products 14,420 36.1%
Commodity Products 9,315 26.7%
Currency Products 355 -11.9%
U.S. Derivatives
Products - Equity
Options (7)
NYSE Arca Options
Contracts 220,458 61.3%
Total Consolidated
Options Contracts 1,822,393 35.4%
NYSE Group Share of
Total 12.1% 1.9%
(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) September 30, June 30, September 30,
2007 2007 2006
------------- -------- -------------
NYSE Euronext Listed Issuers
NYSE Listed Issuers
NYSE listed issuers(1) 2,706 2,730 2,704
Number of new issuer listings(1) 54 70 35
Capital raised in connection with
new listings ($mm)(2) $8,393 $12,835 $3,259
Euronext Listed Issuers
Euronext listed issuers(1) 1,186 1,197 1,209
Number of new issuer listings(3) 37 45 26
Capital raised in connection with
new listings ($mm)(2) $2,709 $4,482 $3,208
NYSE Euronext Market Data(4)
NYSE Market Data
Share of Tape A revenues (%) 63.3% 69.5% 82.0%
Share of Tape B revenues (%) 32.7% 32.2% 35.2%
Share of Tape C revenues (%) 20.3% 21.7% 24.5%
Professional subscribers (Tape A) 445,606 434,100 417,642
Euronext Market Data
Number of terminals 216,654 212,374 206,534
NYSE Euronext Operating Expenses
NYSE Euronext employee
headcount(5)
NYSE Euronext headcount excluding
GL Trade 3,146 3,644 3,958
GL Trade headcount 1,409 1,323 1,139
NYSE Euronext Financial Statistics
NYSE Euronext foreign exchange rate (EUR /US$)
Average EUR /US$ exchange rate for
the quarter $1.375 $1.348 $1.274
(1)Figures for NYSE listed issuers include listed operating companies,
closed-end funds, and ETFs, and do not include NYSE Arca, Inc. or
structured products listed on the NYSE. There were 48 ETFs and 14
operating companies exclusively listed on NYSE Arca, Inc. as of
September 30, 2007. There were 490 structured products listed on
the NYSE as of September 30, 2007. Figures for Euronext present
the operating companies listed on Eurolist, Alternext, and Free
Market, and do not include closed-end funds, ETFs and structured
product (warrants and certificates). At the end of September 2007,
109 companies were listed on Alternext and 216 ETFs were listed on
NextTrack.
(2)Euronext figures show capital raised in millions of euros by
operating companies listed on Eurolist and do not include
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.
(5)Headcount figures are presented as of quarter end. 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. Effective July 30, 2007,
approximately 427 NYSE Euronext employees were transferred to
Financial Industry Regulatory Authority (FINRA) and are no longer
employees of NYSE Euronext.
Source: NYSE Euronext
