First quarter 2006 GAAP results include the operations of the New York Stock Exchange, Inc. (NYSE, Inc.) for the full quarter and the operations of NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange) since the March 7, 2006 merger between NYSE, Inc. and Archipelago Holdings, Inc. Included in the first quarter 2006 GAAP results are a $37.7 million charge related primarily to a one-time compensation award granted to NYSE employees at the time of the merger as well as a $20.9 million gain on the sale of an equity investment. Fiscal 2005 results only included the operations of NYSE Inc., the predecessor of NYSE Group.
Giving effect to the merger as if it occurred on January 1, 2006, but excluding the compensation charges and gain on sale of an investment described above, the net income of NYSE Group for the three months ended March 31, 2006 was $52.7 million, or $0.34 per diluted share, a $15.4 million or 41% increase compared to net income of $37.3 million, or $0.23 per diluted share, for the same period a year ago. A full reconciliation of these non-GAAP results is included in the attached tables entitled “Condensed consolidated statements of income including non-GAAP financial measures for the three months ended March 31, 2006”, “Condensed consolidated statements of income including non-GAAP financial measures for the three months ended March 31, 2006 and 2005” and “Reconciliation of non-GAAP financial measures to GAAP measures.”
“A year ago when we announced the merger of NYSE and Archipelago Holdings, we laid out integration targets for annualized cost savings of $100 million by the end of 2006 with additional savings of $100 million by the end of 2007,” said Nelson Chai, Chief Financial Officer and Executive Vice President, NYSE Group, Inc. “Our first quarter results reflect our continued focus on integrating our businesses and achieving those cost savings.”
Other Financial Highlights
- As part of the merger, NYSE Group made a $506.2 million cash distribution to its former members.
- In January 2006, NYSE completed its inaugural “SEATS” (Stock Exchange Auction Trading System) auction, which produced 1,274 successful bids for annual trading licenses at a price of $49,290 each.
- In March 2006, NYSE Group realized a $20.9 million gain in connection with the sale of common shares of The Depository Trust and Clearing Corporation (DTCC).
- As of March 31, 2006, NYSE Group had $866.9 million of cash, cash equivalents, investment and other securities (including $183.3 million related to Section 31 fees collected from market participants and due to the Securities and Exchange Commission) and no debt obligation.
- As of March 31, 2006, the stockholders’ equity of NYSE Group was $1.4 billion.
First Quarter Business Highlights
- On March 7, 2006, NYSE Group successfully completed the merger between NYSE, Inc. and Archipelago Holdings, creating the world’s largest publicly held stock exchange.
- The total number of NYSE-listed issuers at March 31, 2006 rose to 2,682 compared to 2,672 at December 31, 2005 and 2,630 at March 31, 2005.
- For the three months ended March 31, 2006, the NYSE added 29 new issuer listings representing 83.5% of new qualified domestic proceeds and 79.1% of new qualified international proceeds.
- For the three months ended March 31, 2006, NYSE Group handled 115.7 billion shares of NYSE listed issues, or 76.7% of the trading in NYSE listed issues, versus 112.0 billion shares and 102.5 billion shares for the three months ended December 31, 2005 and March 31, 2005, respectively.
- NYSE Group’s share of trading in NYSE Arca and Amex listed issues was 33.2% for the three months ended March 31, 2006, a decrease from 34.7% for the three months ended December 31, 2005 and an increase from 27.5% for the three months ended March 31, 2005.
- NYSE Group’s share of trading in Nasdaq listed issues was 23.0% for the three months ended March 31, 2006, an increase from 22.1% for the three months ended December 31, 2005 and a decrease from 23.6% for the three months ended March 31, 2005.
- NYSE Group’s share of trading in exchange-traded funds (ETF) increased to 42.8% for the three months ended March 31, 2006 compared to 40.5% for the three months ended December 31, 2005 and 32.9% for the three months ended March 31, 2005.
- For the three months ended March 31, 2006, NYSE Group’s share of trading in equity options contracts decreased to 10.9% from 11.5% for both the three months ended December 31, 2005 and March 31, 2005.
- On March 22, 2006, NYSE Group received approval from the Securities and Exchange Commission to begin full implementation of the NYSE Hybrid MarketSM initiative, and on April 5, 2006, NYSE Group announced the completion of the first phase of the NYSE Hybrid Market implementation program. Designed to offer customers greater choice in order-execution services, the NYSE Hybrid Market expands customer ability to trade instantaneously with certainty and anonymity while preserving the price improvement and market quality of the floor-based NYSE auction.
- On April 4, 2006, NYSE Group received approval from the Securities and Exchange Commission to introduce NYSE OpenBook Real-Time®, a new information tool for investors and market professionals designed to offer customers immediate access to market information, increase the transparency of the NYSE market, and support the implementation of the NYSE Hybrid Market.
To supplement NYSE Group’s consolidated financial statements prepared in accordance with GAAP and to better reflect period-over-period comparisons, NYSE Group uses non-GAAP financial measures of operating performance. A non-GAAP financial measure is a numerical measure of performance, financial position, or cash flows that either excludes or includes 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 compensation expense and gains on sale of businesses and other investments and (ii) to improve overall understanding of NYSE Group’s current financial performance and its prospects for the future. Specifically, NYSE Group 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.
About NYSE Group, Inc.
NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services.
The NYSE is the world’s largest and most liquid cash equities exchange. The NYSE provides a reliable, orderly, liquid and efficient marketplace where investors buy and sell listed companies’ common stock and other securities. Our listed operating companies represent a total global market capitalization of over $22.9 trillion. For the period from January 2006 through March 2006, on an average trading day, over 1.7 billion shares, valued at over $65 billion, were traded on the NYSE.
NYSE Arca is an open, all-electronic stock exchange in the United States and has a leading position in trading exchange-traded funds and exchange-listed securities. NYSE Arca is also an exchange for trading equity options. NYSE Arca’s trading platform links traders to multiple U.S. market centers and provides customers with fast electronic execution and open, direct and anonymous market access.
NYSE Regulation, an independent, not-for-profit subsidiary, regulates member organizations through the enforcement of marketplace rules and federal securities laws.
NYSE Regulation also ensures that companies listed on the NYSE and NYSE Arca meet their financial and corporate governance listing standards.
For more information on NYSE Group, go to: www.nyse.com.
Cautionary Note Regarding Forward-Looking Statements
Certain statements in this press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on NYSE Group’s current expectations and involve risks and uncertainties that could cause NYSE Group’s actual results to differ materially from those set forth in the statements. There can be no assurance that such expectations will prove to be correct. Actual results may differ materially from those expressed or implied in the forward-looking statements. Factors that could cause NYSE Group’s results to differ materially from current expectations include, but are not limited to: NYSE Group’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 Group’s Annual Report on Form 10-K and other periodic reports filed with the U.S. Securities and Exchange Commission. 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 Group that the projections will prove to be correct. We undertake no obligation to release any revisions to any forward-looking statements.