NYX Nyse Euronext

NYSE Euronext (NYX) today reported net income of $154 million, or $0.59 per diluted share, for the second quarter of 2011, compared to net income of $184 million, or $0.70 per diluted share, for the second quarter of 2010. Results for the second quarter of 2011 and 2010 include $18 million and $32 million, respectively, of pre-tax merger expenses and exit costs. The $18 million in merger expenses and exit costs in the second quarter of 2011 included $12 million related to the proposed merger with Deutsche Boerse. Second quarter of 2010 results also included a net $54 million pre-tax gain from disposal activities. Excluding merger expenses, exit costs, disposal activities and discrete tax items, net income in the second quarter of 2011 was $160 million, or $0.61 per diluted share, compared to $167 million, or $0.64 per diluted share, in the second quarter of 2010.

“Our solid results in the second quarter reflect our focus on revenue diversification, disciplined cost management and balance sheet strength as we continue to execute against our long-term strategy in an extremely challenging environment,” said Duncan L. Niederauer, CEO, NYSE Euronext. “NYSE Liffe U.S. continues to gain traction with the launch of Eurodollar and U.S. treasury futures, we closed the sale of stakes in NYSE Amex Options and we were the global leader in IPOs for the second consecutive quarter, with a growing share of technology IPOs selecting NYSE. Lastly, our technology services business, which grew revenue 14% year-over-year, launched the first cloud computing platform in financial services.

“I would like to thank the shareholders of both NYSE Euronext and Deutsche Boerse for their overwhelming support of our pending combination. Integration planning is on schedule and we continue to cooperate with all our regulators as we prepare for a closing by end of 2011.”

The table below summarizes the financial results1 for the second quarter of 2011:

                % Δ 2Q11 Year-to-Date % Δ YTD 11 ($ in millions, except EPS)     2Q11   1Q11   2Q10   vs. 2Q10   2011   2010   vs. YTD 10 Total Revenues2 $1,092 $1,148 $1,247 (12%) $2,240 $2,330 (4%) Total Revenues, Less Transaction-Based Expenses3 661 679 654 1% 1,340 1,299 3% Other Operating Expenses4 419 415 407 3% 834 834 - Operating Income4 $242 $264 $247 (2%) $506 $465 9% Net Income4 $160 $177 $167 (4%) $337 $307 10% Diluted Earnings Per Share4     $0.61   $0.68   $0.64   (5%)   $1.28   $1.18   9% Operating Margin 37% 39% 38% (1 ppts) 38% 36% 2 ppts EBITDA Margin     47%   49%   48%   (1 ppts)   48%   46%   2 ppts

1 A full reconciliation of our non-GAAP results to our GAAP results is included in the attached tables. See also our statement on non-GAAP financial measures at the end of this earnings release.

2 Includes activity assessment fees.

3 Transaction-based expenses include Section 31 fees, liquidity payments and routing & clearing fees.

4 Excludes merger expenses, exit costs, disposal activities and discrete tax items.

Michael S. Geltzeiler, Group Executive Vice President and CFO, NYSE Euronext commented, “In the second quarter, we continued to deliver on our commitments to shareholders. Revenues year-to-date are running 3% above prior year levels and fixed operating expenses on a constant dollar/portfolio basis are running 4% below prior year, despite increased costs accompanying higher technology revenues. As a result of our strong free cash flow generation and lower capital expenditures, we retired our outstanding commercial paper which lowered our debt-to-EBITDA ratio to 1.7 times in the second quarter. Our financial position continues to strengthen as we move forward with the final phase of our combination with Deutsche Boerse.”

SECOND QUARTER 2011 CONSOLIDATED RESULTS

Total revenues, less transaction-based expenses, which include Section 31 fees, liquidity payments and routing and clearing fees (net revenue), was $661 million in the second quarter of 2011, up $7 million, or 1% compared to the second quarter of 2010 and included a $33 million positive impact from currency fluctuations. The $7 million increase in net revenue compared to the second quarter of 2010 was driven by a $30 million increase in non-trading revenue which more than offset a $23 million decrease in net trading revenues, driven primarily by declines in European derivatives and U.S. cash equity average daily trading volume (“ADV”). Second quarter of 2010 ADV across all venues was marked by unseasonally strong trading volumes due to heightened market volatility driven by the advent of the sovereign debt crisis in Europe and the flash crash in the United States.

Other operating expenses, which exclude merger expenses and exit costs, were $419 million in the second quarter of 2011, up $12 million, or 3% compared to the second quarter of 2010. Excluding the impact of acquisitions, new initiatives and a $17 million negative impact attributable to foreign currency fluctuations, fixed operating expenses were down $14 million, or 3%, compared to the second quarter of 2010.

Operating income, excluding merger expenses and exit costs, was $242 million, down $5 million, or 2% compared to the second quarter of 2010 and included a $16 million positive impact attributable to foreign currency fluctuations.

Adjusted EBITDA, which excludes merger expenses and exit costs, was $312 million, in-line with the second quarter of 2010. Adjusted EBITDA margin was 47% in the second quarter of 2011, compared to 48% in the second quarter of 2010.

Non-operating income for the second quarter of 2011 and 2010 includes the impact of the New York Portfolio Clearing (loss/income from associates) and NYSE Liffe U.S. (net loss/income attributable to non-controlling interest) initiatives which are currently in a loss position, but are moving toward profitability as trading volumes and open interest continue to grow. Non-operating income in the second quarter of 2010 includes a net pre-tax gain of $54 million related to disposal activities, primarily in connection with the sale of our 5% stake in the National Stock Exchange of India (other income). With the closing of the sale of stakes in the NYSE Amex Options business, beginning with the third quarter of 2011, profits generated by NYSE Amex Options will be shared with our partners (net loss/income attributable to non-controlling interest). Had the sale closed on April 1, 2011, diluted earnings per share would have decreased by $0.02 in the second quarter of 2011.

For the second quarter of 2011, the effective tax rate, excluding merger expenses, exit costs, disposal activities and discrete tax items, was approximately 26% compared to 27% in the second quarter of 2010.

The weighted average diluted shares outstanding in the second quarter of 2011 was 263 million, up from 261 million shares in the second quarter of 2010. Approximately 0.3 million shares were issued in the second quarter of 2011 to former Amex members in connection with the sale of the former American Stock Exchange headquarters.

At June 30, 2011, total debt of $2.2 billion was $0.2 million below December 31, 2010 levels driven by the elimination of $0.2 billion in commercial paper during the second quarter of 2011. Cash, cash equivalents, investments and other securities (including $172 million related to Section 31 fees collected from market participants and due to the SEC) was $0.4 billion and net debt was $1.8 billion at the end of the second quarter 2011.

The ratio of debt-to-EBITDA in the second quarter of 2011 declined to 1.7 times, the lowest level since the establishment of NYSE Euronext in April 2007.

Total capital expenditures in the second quarter of 2011 were $31 million, compared to $70 million in the second quarter of 2010. Through the first-half of 2011, capital expenditures were $67 million consistent with full-year 2011 guidance of capital expenditures of less than $200 million.

Headcount as of June 30, 2011 was 2,988, down 1% from March 31, 2011 and down slightly from June 30, 2010 levels despite several acquisitions.

The Board of Directors declared a cash dividend of $0.30 per share for the third quarter of 2011. The third quarter 2011 dividend is payable September 30, 2011 to shareholders of record as of the close of business on September 15, 2011. The anticipated ex-date will be September 13, 2011.

SECOND QUARTER 2011 SEGMENT RESULTS

Below is a summary of business segment results:

      Derivatives   Cash Trading & Listings   Info. Svcs. & Tech. Solutions ($ in millions)     Net   Operating   Adjusted   Net   Operating   Adjusted     Operating   Adjusted      

Revenue1

 

Income2

 

EBITDA2

 

Revenue1

 

Income2

 

EBITDA2

  Revenue  

Income2

 

EBITDA2

2Q11 $213 $112 $126 $327 $128 $174 $122 $36 $46 1Q11 $236 $146 $161 $328 $125 $171 $116 $28 $37 2Q10     $226   $140   $153   $321   $126   $171   $107   $20   $28

1 Net revenue defined as total revenue less transaction-based expenses including Section 31 fees, liquidity payments and routing & clearing fees.

2 Excludes merger expenses and exit costs.

DERIVATIVES

Derivatives net revenue of $213 million in the second quarter of 2011 decreased $13 million, or 6% compared to the second quarter of 2010 and included a $15 million positive impact from currency fluctuations. The $13 million decrease in Derivatives net revenue compared to the second quarter of 2010, was driven by a $13 million, or 8% decrease in European derivatives net trading revenue on a 20% decline in ADV.

• Global Derivatives ADV in the second quarter of 2011 was 9.4 million contracts, a decrease of 12% compared to the second quarter of 2010 which benefited from heightened market volatility driven by the advent of the sovereign debt crisis in Europe.
• NYSE Euronext European derivatives products ADV in the second quarter of 2011 of 5.3 million contracts decreased 20% compared to the second quarter of 2010, but increased 14% from first quarter 2011 levels.
• NYSE Liffe U.S., the U.S. futures exchange of NYSE Euronext, reached several key milestones in customer participation with total open interest surpassing 750,000 contracts and approaching 800,000. In the four months since the launch Eurodollar and U.S. Treasury futures on the exchange, open interest in these two new products is just under 675,000 with more than 6 million total contracts traded. The level of volume, open interest and liquidity is evidence of the rapid acceptance of NYSE Liffe U.S. by customers. Also during the second quarter, NYSE Liffe U.S. successfully migrated futures contracts based on the international flagship MSCI Emerging Markets and MSCI EAFE indices from the Chicago Mercantile Exchange.
• NYSE Euronext completed the sale of a 52.8% equity interest in NYSE Amex Options to seven leading order flow providers and market making firms: Bank of America Merrill Lynch, Barclays Capital, Citadel Securities, Citi, Goldman Sachs, TD Ameritrade and UBS AG. NYSE Euronext will remain the largest single shareholder in the entity which will be supervised by a separate board of directors.
• NYSE Euronext’s U.S. equity options exchanges accounted for 26% of total consolidated U.S. equity options trading in the second quarter of 2011, in-line with the second quarter of 2010.

CASH TRADING AND LISTINGS

Cash Trading and Listings net revenue of $327 million in the second quarter of 2011 increased $6 million, or 2% compared to the second quarter of 2010 and included a $13 million positive impact from currency fluctuations. The $6 million increase in net revenue compared to the second quarter of 2010, was primarily driven by a $14 million increase in non-trading related revenue, principally listings and other revenue which more than offset a decline in net trading revenue. The decline in net trading revenue was primarily driven by a 36% decrease in U.S. cash equities ADV, partially offset by a 32% increase in average net revenue per 100 shares handled due to higher fees and favorable business mix.

• European cash ADV of 1.5 million transactions in the second quarter of 2011 decreased 11% from 1.7 million transactions in the second quarter of 2010. European cash market share (value traded) in NYSE Euronext’s four core markets was 71% in the second quarter of 2011, down from 74% in the second quarter of 2010, but up from 70% in the first quarter of 2011. In the U.S., cash trading ADV declined 36% to 2.1 billion shares traded from 3.2 billion in the second quarter of 2010. Tape A matched market share was 35% in the second quarter of 2011, down from 37% in the second quarter of 2010, but up slightly from first quarter of 2011 levels.
• NYSE Euronext led the global market for listing initial public offerings (IPOs) in the first half of 2011 with $25.4 billion in total capital raised on its European and U.S. markets, more than any exchange group in the world. During the most recent quarter, the New York Stock Exchange (NYSE) led the U.S. IPO market, with 35 IPOs raising $10.6 billion, or 73% of total proceeds raised from IPOs in the U.S.
• NYSE has steadily captured share in technology-based IPOs with its commitment to partner with growth companies. NYSE has listed 17 out of 31, or 55% of the tech IPOs YTD, up from 44% in 2010. LinkedIn, Active Network, Fusion-io and Pandora’s offerings came amid a recent fervor for high-profile tech IPOs.
• The NYSE has welcomed 6 transfers from Nasdaq with total market capitalization of $6.3 billion thus far in 2011, and lost none. SuccessFactors Inc. was the most recent transfer from Nasdaq to the NYSE and cross-listed on the European markets of NYSE Euronext. This follows the recent trend for transfers, with 40 companies having transferred to the NYSE from Nasdaq since 2007.

INFORMATION SERVICES AND TECHNOLOGY SOLUTIONS

Information Services and Technology Solutions revenue was $122 million in the second quarter of 2011, an increase of $15 million, or 14% compared to the second quarter of 2010 and included a $5 million positive impact from currency fluctuations. The $15 million increase in revenue compared to the second quarter of 2010, was primarily driven by an increase in infrastructure revenue, principally SFTI and data center fees.

• The Information Services and Technology Solutions segment achieved its highest level of quarterly revenue generation with an operating margin of 30% as the sales pipeline continues to build.
• NYSE Technologies launched the financial services industry’s first cloud platform, the Capital Markets Community Platform. Designed to increase business agility, simplify market access and reduce trading friction by utilizing rapid on-demand computing resources, this enterprise-level platform was developed in partnership with cloud computing experts VMware (NYSE: VMW) and EMC (NYSE: EMC) to address the unique performance and security requirements of financial services firms. The Capital Markets Community Platform will offer a range of cloud-based services that enable customers to easily purchase the computing power required at a given time so they can focus on their core business strategy rather than complex IT infrastructure design and maintenance.
• NYSE Technologies was named the “Best Data Provider” among global securities exchanges by Inside Market Data. This recognition was awarded at the 2011 Inside Market Data and Inside Reference Data Awards ceremony recently in New York. The acknowledgement of NYSE Technologies as a leading innovator and comprehensive data provider was determined by an online poll of buy-side and sell-side professionals as well as investors at financial institutions and securities firms globally.

The accompanying tables include information integral to assessing the Company’s financial performance.

Analyst/Investor/Media Call: August 2, 2011 at 8:00 a.m. (NY/EDT)/2:00 p.m. (Paris/CEST)

A presentation and live audio webcast of the second quarter 2011 earnings 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 ten minutes before the call begins. An audio replay 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 or by dial-in beginning approximately two hours following the conclusion of the live call.

Live Dial-in Information:

United States: 866.713.8310

International: 617.597.5308

Passcode: 62542406

 

Replay Dial-in Information:

United States: 888.286.8010

International: 617.801.6888

Passcode: 16712451

Non-GAAP Financial Measures

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, exit costs, disposal activities and discrete tax items, and (ii) 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) is a leading global operator of financial markets and provider of innovative trading technologies. The company's exchanges in Europe and the United States trade equities, futures, options, fixed-income and exchange-traded products. With approximately 8,000 listed issues (excluding European Structured Products), NYSE Euronext's equities markets – the New York Stock Exchange, NYSE Euronext, NYSE Amex, NYSE Alternext and NYSE Arca – represent one-third of the world's equities trading, the most liquidity of any global exchange group. NYSE Euronext also operates NYSE Liffe, one of the leading European derivatives businesses and the world's second-largest derivatives business by value of trading. The company offers comprehensive commercial technology, connectivity and market data products and services through NYSE Technologies. NYSE Euronext is in the S&P 500 index, and is the only exchange operator in the Fortune 500. For more information, please visit: http://www.nyx.com.

Safe Harbour Statement

In connection with the proposed business combination transaction between NYSE Euronext and Deutsche Boerse AG, Alpha Beta Netherlands Holding N.V. (“Holding”), a newly formed holding company, filed, and the SEC declared effective on May 3, 2011, a Registration Statement on Form F-4 with the U.S. Securities and Exchange Commission (“SEC”) that includes (1) a proxy statement of NYSE Euronext that also constitutes a prospectus for Holding used in connection with NYSE Euronext special meeting of stockholders held on July 7, 2011 and (2) an offering prospectus used in connection with Holding’s offer to acquire Deutsche Boerse AG shares held by U.S. holders. Holding has also filed an offer document with the German Federal Financial Supervisory Authority (Bundesanstalt fuer Finanzdienstleistungsaufsicht) (“BaFin”), which was approved by the BaFin for publication pursuant to the German Takeover Act (Wertpapiererwerbs-und Übernahmegesetz), and was published on May 4, 2011.

Investors and security holders are urged to read the definitive proxy statement/prospectus, the offering prospectus, the offer document, as amended, and published additional accompanying information in connection with the exchange offer regarding the proposed business combination transaction because they contain important information. You may obtain a free copy of the definitive proxy statement/prospectus, the offering prospectus and other related documents filed by NYSE Euronext and Holding with the SEC on the SEC’s website at www.sec.gov. The definitive proxy statement/prospectus and other documents relating thereto may also be obtained for free by accessing NYSE Euronext’s website at www.nyse.com. The offer document, as amended, and published additional accompanying information in connection with the exchange offer are available at Holding’s website at www.global-exchange-operator.com.

This document is neither an offer to purchase nor a solicitation of an offer to sell shares of Holding, Deutsche Boerse AG or NYSE Euronext. The final terms and further provisions regarding the public offer are disclosed in the offer document that has been approved by the BaFin and in documents that have been filed with the SEC.

No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended, and applicable European regulations. The exchange offer and the exchange offer document as amended, shall not constitute an issuance, publication or public advertising of an offer pursuant to laws and regulations of jurisdictions other than those of Germany, United Kingdom of Great Britain and Northern Ireland and the United States of America. The relevant final terms of the proposed business combination transaction will be disclosed in the information documents reviewed by the competent European market authorities.

Subject to certain exceptions, in particular with respect to qualified institutional investors (tekikaku kikan toshika) as defined in Article 2 para. 3 (i) of the Financial Instruments and Exchange Act of Japan (Law No. 25 of 1948, as amended), the exchange offer will not be made directly or indirectly in or into Japan, or by use of the mails or by any means or instrumentality (including without limitation, facsimile transmission, telephone and the internet) of interstate or foreign commerce or any facility of a national securities exchange of Japan. Accordingly, copies of this announcement or any accompanying documents may not be, directly or indirectly, mailed or otherwise distributed, forwarded or transmitted in, into or from Japan.

The shares of Holding have not been, and will not be, registered under the applicable securities laws of Japan. Accordingly, subject to certain exceptions, in particular with respect to qualified institutional investors (tekikaku kikan toshika) as defined in Article 2 para. 3 (i) of the Financial Instruments and Exchange Act of Japan (Law No. 25 of 1948, as amended), the shares of Holding may not be offered or sold within Japan, or to or for the account or benefit of any person in Japan.

Forward-Looking Statements

This document includes forward-looking statements about NYSE Euronext, Deutsche Boerse AG, Holding, the enlarged group and other persons, which may include statements about the proposed business combination, the likelihood that such transaction could be consummated, the effects of any transaction on the businesses of NYSE Euronext or Deutsche Boerse AG, and other statements that are not historical facts. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance and actual results of operations, financial condition and liquidity, and the development of the industries in which NYSE Euronext and Deutsche Boerse AG operate may differ materially from those made in or suggested by the forward-looking statements contained in this document. Any forward-looking statements speak only as at the date of this document. Except as required by applicable law, none of NYSE Euronext, Deutsche Boerse AG or Holding undertakes any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise.

NYSE Euronext Condensed consolidated statements of income (unaudited) (in millions, except per share data)                       Three months ended Six months ended June 30, June 30, 2011   March 31, 2011   June 30, 2010 2011   2010     Revenues Transaction and clearing fees $ 742 $ 815 $ 927 $ 1,557 $ 1,689 Market data 92 96 93 188 184 Listing 112 109 105 221 210 Technology services 89 82 75 171 154 Other revenues   57     46     47     103     93   Total revenues 1,092 1,148 1,247 2,240 2,330 Transaction-based expenses: Section 31 fees 89 89 99 178 162 Liquidity payments, routing and clearing   342     380     494     722     869   Total revenues, less transaction-based expenses   661     679     654     1,340     1,299   Other operating expenses Compensation 158 161 160 319 332 Depreciation and amortization 70 70 66 140 132 Systems and communications 45 52 47 97 99 Professional services 73 69 66 142 124 Selling, general and administrative 73 63 68 136 147 Merger expenses and exit costs   18     21     32     39     45   Total other operating expenses   437     436     439     873     879     Operating income 224 243 215 467 420 Net interest and investment income (loss) (30 ) (29 ) (25 ) (59 ) (52 ) Loss from associates (2 ) (1 ) (1 ) (3 ) (3 ) Other income   1     -     56     1     53   Income before income taxes 193 213 245 406 418 Income tax provision   (43 )   (62 )   (66 )   (105 )   (114 ) Net income 150 151 179 301 304 Net loss attributable to noncontrolling interest   4     4     5     8     10   Net income attributable to NYSE Euronext $ 154   $ 155   $ 184   $ 309   $ 314     Basic earnings per share attributable to NYSE Euronext $ 0.59 $ 0.59 $ 0.70 $ 1.18 $ 1.20   Diluted earnings per share attributable to NYSE Euronext $ 0.59 $ 0.59 $ 0.70 $ 1.17 $ 1.20   Basic weighted average shares outstanding 262 261 261 262 261 Diluted weighted average shares outstanding   263       262       261     263       261  

We use non-GAAP financial measures of operating performance.  Non-GAAP measures do not replace and are not superior to 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   Six months ended June 30,

Non-GAAP Reconciliation

June 30, 2011   March 31, 2011   June 30, 2010 2011   2010   Income before income taxes - GAAP $ 193 $ 213 $ 245 $ 406 $ 418 Excluding: Net gain on disposal activities - - (54 ) - (54 ) Merger expenses and exit costs   18     21     32     39     45   Income before income taxes - as adjusted 211 234 223 445 409 Income tax provision   (55 )   (61 )   (61 )   (116 )   (112 ) Net income - as adjusted 156 173 162 329 297 Net loss attributable to noncontrolling interest   4     4     5     8     10   Net income attributable to NYSE Euronext - as adjusted $ 160   $ 177   $ 167   $ 337   $ 307     Diluted earnings per share attributable to NYSE Euronext - as adjusted $ 0.61   $ 0.68   $ 0.64   $ 1.28   $ 1.18     NYSE Euronext Segment Results (unaudited) (in millions)                                             Three months ended Three months ended June 30, 2011 June 30, 2010 Derivatives  

Cash Tradingand Listings

 

InformationServices andTechnologySolutions

 

CorporateandEliminations

  Consolidated Derivatives  

Cash Tradingand Listings

 

InformationServices andTechnologySolutions

 

CorporateandEliminations

  Consolidated   Revenues Transaction and clearing fees $ 251 $ 491 $ - $ - $ 742 $ 282 $ 645 $ - $ - $ 927 Market data 12 48 32 - 92 12 49 32 - 93 Listing - 112 - - 112 - 105 - - 105 Technology services - - 90 (1 ) 89 - - 75 - 75 Other revenues   13     44     -     -     57     11     36     -     -     47   Total revenues 276 695 122 (1 ) 1,092 305 835 107 - 1,247 Transaction-based expenses: Section 31 fees - 89 - - 89 - 99 -

 

- 99 Liquidity payments, routing and clearing   63     279     -     -     342     79     415     -     -     494   Total revenues, less transaction-based expenses 213 327 122 (1 ) 661 226 321 107 - 654 Depreciation and amortization [a] 14 46 10 - 70 13 45 8 - 66 Merger expenses and exit costs (M&E) [b] 1 2 1 14 18 5 19 8 - 32 Other operating expenses   87     153     76     33     349     73     150     79     39     341   Operating income - GAAP [c] $ 111   $ 126   $ 35   $ (48 ) $ 224   $ 135   $ 107   $ 12   $ (39 ) $ 215   Operating income excluding M&E [c] + [b] $ 112   $ 128   $ 36   $ (34 ) $ 242   $ 140   $ 126   $ 20   $ (39 ) $ 247   Adjusted EBITDA [c] + [a] + [b] $ 126     $ 174     $ 46     $ (34 )   $ 312   $ 153     $ 171     $ 28     $ (39 )   $ 313     Operating margin excluding M&E 53 % 39 % 30 % N/M 37 % 62 % 39 % 19 % N/M 38 % Adjusted EBITDA margin 59 % 53 % 38 % N/M 47 % 68 % 53 % 26 % N/M 48 %                                       Six months ended Six months ended June 30, 2011 June 30, 2010 Derivatives

Cash Tradingand Listings

InformationServices andTechnologySolutions

CorporateandEliminations

Consolidated Derivatives

Cash Tradingand Listings

InformationServices andTechnologySolutions

Corporate andEliminations

Consolidated   Revenues Transaction and clearing fees $ 537 $ 1,020 $ - $ - $ 1,557 $ 560 $ 1,129 $ - $ - $ 1,689 Market data 24 98 66 - 188 24 97 63 - 184 Listing - 221 - - 221 - 210 - - 210 Technology services - - 172 (1 ) 171 - - 154 - 154 Other revenues   22     82     -     (1 )   103     19     75     -     (1 )   93   Total revenues 583 1,421 238 (2 ) 2,240 603 1,511 217 (1 ) 2,330

Transaction-based expenses:

Section 31 fees - 178 - - 178 - 162 -

 

- 162 Liquidity payments, routing and clearing   134     588     -     -     722     153     716     -     -     869   Total revenues, less transaction-based expenses 449 655 238 (2 ) 1,340 450 633 217 (1 ) 1,299 Depreciation and amortization [a] 29 92 19 - 140 28 88 16 - 132 Merger expenses and exit costs (M&E) [b] 2 5 2 30 39 8 26 10 1 45 Other operating expenses   162     310     155     67     694     152     313     164     73     702   Operating income - GAAP [c] $ 256   $ 248   $ 62   $ (99 ) $ 467   $ 262   $ 206   $ 27   $ (75 ) $ 420   Operating income excluding M&E [c] + [b] $ 258   $ 253   $ 64   $ (69 ) $ 506   $ 270   $ 232   $ 37   $ (74 ) $ 465   Adjusted EBITDA [c] + [a] + [b] $ 287     $ 345     $ 83     $ (69 )   $ 646   $ 298     $ 320     $ 53     $ (74 )   $ 597     Operating margin excluding M&E 57 % 39 % 27 % N/M 38 % 60 % 37 % 17 % N/M 36 % Adjusted EBITDA margin 64 % 53 % 35 % N/M 48 % 66 % 51 % 24 % N/M 46 % N/M = Not meaningful   We use non-GAAP financial measures of operating performance. Non-GAAP measures do not replace and are not superior to 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.   NYSE Euronext Fixed operating expenses (unaudited) (in millions)     Fixed operating expenses for the three months ended June 30, 2011 - GAAP $ 437 Less: Merger expenses and exit costs   (18 ) $ 419 Excluding the impact of: Currency translation (17 ) Acquisitions and new business initiatives (9 ) *   Fixed operating expenses for the three months ended June 30, 2011 - as adjusted $ 393   [a]   Fixed operating expenses for the three months ended June 30, 2010 - GAAP $ 439 Less: Merger expenses and exit costs   (32 ) $ 407   [b]   Variance ($) $ (14 ) [a] - [b] = [c] Variance (%)   -3 % [c] / [b]   Fixed operating expenses for the six months ended June 30, 2011 - GAAP $ 873 Less: Merger expenses and exit costs   (39 ) $ 834 Excluding the impact of: Currency translation (19 ) Acquisitions and new business initiatives (13 ) *   Fixed operating expenses for the six months ended June 30, 2011 - as adjusted $ 802   [a]   Fixed operating expenses for the six months ended June 30, 2010 - GAAP $ 879 Less: Merger expenses and exit costs   (45 ) $ 834   [b]   Variance ($) $ (32 ) [a] - [b] = [c] Variance (%)   -4 % [c] / [b] *   Includes the contribution of APX, Corporate Board Member and new business initiatives.  

 

We use non-GAAP financial measures of operating performance. Non-GAAP measures do not replace and are not superior to 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.

      NYSE Euronext Condensed consolidated statements of financial condition (unaudited) (in millions)  

June 30,2011

December31, 2010

  Assets Current assets: Cash, cash equivalents and short term financial investments $ 385 $ 379 Accounts receivable, net 532 526 Deferred income taxes 74 120 Other current assets   212   149 Total current assets 1,203 1,174   Property and equipment, net 998 1,021 Goodwill 4,232 4,050 Other intangible assets, net 6,139 5,837 Deferred income taxes 582 633 Other assets   662   663 Total assets $ 13,816 $ 13,378   Liabilities and equity Accounts payable and accrued expenses $ 821 $ 910 Deferred revenue 346 176 Short term debt - 366 Deferred income taxes   24   2 Total current liabilities 1,191 1,454   Long term debt 2,189 2,074 Deferred income taxes 2,033 2,007 Accrued employee benefits 453 499 Deferred revenue 387 366 Other liabilities   63   134 Total liabilities   6,316   6,534   Redeemable noncontrolling interest   272   -   Equity 7,228 6,844     Total liabilities and equity $ 13,816 $ 13,378  

NYSE Euronext

Selected Statistical Data:

Volume Summary

                            Average Daily Volume Total Volume Total Volume (Unaudited) 2Q11 1Q11

% ∆ 2Q11vs. 1Q11

2Q10

% ∆ 2Q11vs. 2Q10

2Q11 1Q11

% ∆ 2Q11vs. 1Q11

2Q10

% ∆ 2Q11vs. 2Q10

YTD 2011 YTD 2010 % ∆   Number of Trading Days - European Markets 63 64 63 63 64 63 127 126 Number of Trading Days - U.S. Markets 63 62 63 63 62 63 125 124   European Derivatives Products (contracts in thousands) 5,294 4,633 14.3 % 6,628 -20.1 % 333,522 296,529 12.5 % 417,597 -20.1 % 630,051 723,205 -12.9 % of which Bclear 2,125 771 175.7 % 2,651 -19.8 % 133,874 49,335 171.4 % 167,029 -19.8 % 183,210 228,263 -19.7 % Avg. Net Rate Per Contract (ex. Bclear) $ 0.741 $ 0.692 7.1 % $ 0.643 15.2 % $ 0.741 $ 0.692 7.1 % $ 0.643 15.2 % Avg. Net Rate Per Contract (ex. Bclear) - Currency Neutral $ 0.741 $ 0.705 5.1 % $ 0.703 5.4 % $ 0.741 $ 0.705 5.1 % $ 0.703 5.4 %   Total Interest Rate Products1 2,147 2,700 -20.5 % 2,668 -19.5 % 135,231 172,792 -21.7 % 168,095 -19.6 % 308,023 338,916 -9.1 %   Short Term Interest Rate Products 2,006 2,568 -21.9 % 2,546 -21.2 % 126,347 164,371 -23.1 % 160,423 -21.2 % 290,718 323,841 -10.2 % Medium and Long Term Interest Rate Products 141 132 7.2 % 122 15.8 % 8,884 8,421 5.5 % 7,672 15.8 % 17,305 15,075 14.8 %   Total Equity Products2 3,063 1,845 66.0 % 3,905 -21.6 % 192,980 118,110 63.4 % 246,021 -21.6 % 311,090 377,535 -17.6 %   Individual Equity Products 2,535 1,266 100.3 % 3,197 -20.7 % 159,703 81,011 97.1 % 201,434 -20.7 % 240,714 293,777 -18.1 % Futures 1,984 575 245.2 % 2,402 -17.4 % 124,971 36,777 239.8 % 151,304 -17.4 % 161,748 197,016 -17.9 % Options 551 691 -20.2 % 796 -30.7 % 34,731 44,234 -21.5 % 50,130 -30.7 % 78,965 96,760 -18.4 % Equity Index Products 528 580 -8.9 % 708 -25.4 % 33,277 37,100 -10.3 % 44,587 -25.4 % 70,376 83,758 -16.0 %   of which Bclear 2,125 771 175.7 % 2,651 -19.8 % 133,874 49,335 171.4 % 167,029 -19.8 % 183,210 228,263 -19.7 % Individual Equity Products 2,053 690 197.6 % 2,551 -19.5 % 129,324 44,152 192.9 % 160,737 -19.5 % 173,476 214,371 -19.1 % Futures 1,959 569 244.1 % 2,400 -18.4 % 123,429 36,437 238.7 % 151,223 -18.4 % 159,866 196,877 -18.8 % Options 94 121 -22.4 % 151 -38.0 % 5,895 7,715 -23.6 % 9,514 -38.0 % 13,610 17,495 -22.2 % Equity Index Products 72 81 -10.8 % 100 -27.7 % 4,551 5,183 -12.2 % 6,292 -27.7 % 9,734 13,892 -29.9 %   Commodity Products 84 88 -4.1 % 55 52.6 % 5,312 5,627 -5.6 % 3,481 52.6 % 10,938 6,754 62.0 %   U.S. Derivatives Products - Equity Options 3 (contracts in thousands)   Options Contracts 4,052 4,410 -8.1 % 4,077 -0.6 % 255,306 273,432 -6.6 % 256,820 -0.6 % 528,738 483,310 9.4 % Avg. Net Rate Per Contract $ 0.165 $ 0.165 0.0 % $ 0.164 0.6 % $ 0.165 $ 0.165 0.0 % $ 0.164 0.6 % Total Consolidated Options Contracts 15,759 17,306 -8.9 % 15,722 0.2 % 992,810 1,072,961 -7.5 % 990,509 0.2 % 2,065,771 1,843,013 12.1 %   Share of Total Consolidated Options Contracts 25.7 % 25.5 % 25.9 % 25.7 % 25.5 % 25.9 % 25.6 % 26.2 %   NYSE Liffe U.S.   Futures and Futures Options Volume* 93.4 21.0 344.8 % 18.6 403.2 % 5,980.7 1,344.5 344.8 % 1,170.0 411.2 % 7,325.2 2,437.7 200.5 %   European Cash Products (trades in thousands) 1,540 1,803 -14.6 % 1,722 -10.6 % 96,999 115,377 -15.9 % 108,485 -10.6 % 212,376 194,709 9.1 % Avg. Net Revenue Per Transaction $ 0.742 $ 0.667 11.2 % $ 0.654 13.5 % $ 0.742 $ 0.667 11.2 % $ 0.654 13.5 % Avg. Net Revenue Per Transaction - Currency Neutral $ 0.742 $ 0.702 5.7 % $ 0.742 0.0 % $ 0.742 $ 0.702 5.7 % $ 0.742 0.0 %   Equities 1,482 1,732 -14.4 % 1,654 -10.4 % 93,350 110,841 -15.8 % 104,207 -10.4 % 204,191 186,904 9.2 % Exchange-Traded Funds 16 21 -20.4 % 22 -25.6 % 1,032 1,316 -21.6 % 1,361 -24.2 % 2,348 2,373 -1.1 % Structured Products 36 45 -18.8 % 40 -8.8 % 2,298 2,873 -20.0 % 2,532 -9.3 % 5,171 4,647 11.3 % Bonds 5 5 -6.6 % 6 -15.5 % 319 347 -8.1 % 385 -17.0 % 667 785 -15.0 %   U.S. Cash Products (shares in millions) 2,075 2,309 -10.2 % 3,220 -35.6 % 130,722 143,183 -8.7 % 202,510 -35.4 % 273,905 357,865 -23.5 % Avg. Net Fee Per 100 Shares Handled $ 0.0390 $ 0.0370 5.4 % $ 0.0296 31.8 % $ 0.0390 $ 0.0370 5.4 % $ 0.0296 31.8 %   NYSE Listed (Tape A) Issues 4   Handled Volume 5 1,461 1,668 -12.4 % 2,372 -38.4 % 92,068 103,397 -11.0 % 149,467 -38.4 % 195,465 260,716 -25.0 % Matched Volume 6 1,384 1,578 -12.2 % 2,225 -37.8 % 87,216 97,806 -10.8 % 140,160 -37.8 % 185,021 243,355 -24.0 % Total NYSE Listed Consolidated Volume 3,935 4,568 -13.9 % 6,025 -34.7 % 247,909 283,211 -12.5 % 379,565 -34.7 % 531,121 676,383 -21.5 %   Share of Total Consolidated Volume Handled Volume 5 37.1 % 36.5 % 0.6 % 39.4 % -2.3 % 37.1 % 36.5 % 0.6 % 39.4 % -2.3 % 36.8 % 38.5 % -1.7 % Matched Volume 6 35.2 % 34.5 % 0.7 % 36.9 % -1.7 % 35.2 % 34.5 % 0.7 % 36.9 % -1.7 % 34.8 % 36.0 % -1.1 %   NYSE Arca & Amex (Tape B) Listed Issues   Handled Volume 5 334 347 -3.6 % 483 -30.9 % 21,061 21,491 -2.0 % 30,460 -30.9 % 42,552 53,720 -20.8 % Matched Volume 6 301 311 -3.1 % 434 -30.6 % 18,976 19,270 -1.5 % 27,327 -30.6 % 38,246 47,906 -20.2 % Total NYSE Arca & Amex Listed Consolidated Volume 1,287 1,351 -4.7 % 1,842 -30.1 % 81,111 83,751 -3.2 % 116,057 -30.1 % 164,862 205,709 -19.9 %   Share of Total NYSE Arca & NYSE Amex Listed Consolidated Volume Handled Volume 5 26.0 % 25.7 % 75.8 % 26.2 % -0.2 % 26.0 % 25.7 % 0.3 % 26.2 % -0.2 % 25.8 % 26.1 % -0.3 % Matched Volume 6 23.4 % 23.0 % 65.8 % 23.5 % -0.1 % 23.4 % 23.0 % 0.4 % 23.5 % -0.1 % 23.2 % 23.3 % -0.1 %   Nasdaq Listed Issues (Tape C)   Handled Volume 5 279 295 -5.4 % 364 -23.3 % 17,593 18,295 -3.8 % 22,945 -23.3 % 35,888 43,428 -17.4 % Matched Volume 6 237 251 -5.7 % 307 -22.8 % 14,924 15,572 -4.2 % 19,337 -22.8 % 30,495 36,088 -15.5 % Total Nasdaq Listed Consolidated Volume 1,996 2,051 -2.7 % 2,529 -21.1 % 125,745 127,166 -1.1 % 159,309 -21.1 % 252,911 301,991 -16.3 %   Share of Total Nasdaq Listed Consolidated Volume Handled Volume 5 14.0 % 14.4 % -0.4 % 14.4 % -0.4 % 14.0 % 14.4 % -0.4 % 14.4 % -0.4 % 14.2 % 14.4 % -0.2 % Matched Volume 6 11.9 % 12.2 % -0.3 % 12.1 % -0.2 % 11.9 % 12.2 % -0.3 % 12.1 % -0.2 % 12.1 % 11.9 % 0.2 %   Exchange-Traded Funds 5,7   Handled Volume 5 308 315 -2.5 % 465 -33.9 % 19,377 19,557 -0.9 % 29,317 -33.9 % 38,935 51,573 -24.5 % Matched Volume 6 276 283 -2.4 % 418 -34.0 % 17,406 17,543 -0.8 % 26,361 -34.0 % 34,948 46,135 -24.2 % Total ETF Consolidated Volume 1,206 1,245 -3.2 % 1,826 -34.0 % 75,959 77,213 -1.6 % 115,020 -34.0 % 153,172 203,037 -24.6 %   Share of Total ETF Consolidated Volume Handled Volume 5 25.5 % 25.3 % 0.2 % 25.5 % 0.0 % 25.5 % 25.3 % 0.2 % 25.5 % 0.0 % 25.4 % 25.4 % 0.0 % Matched Volume 6 22.9 % 22.7 % 0.2 % 22.9 % 0.0 % 22.9 % 22.7 % 0.2 % 22.9 % 0.0 % 22.8 % 22.7 % 0.1 % 1   Data includes currency products.

2

Includes all trading activities for Bclear, NYSE Liffe's clearing service for wholesale derivatives. 3 Includes trading in U.S. equity options contracts, not equity-index options. 4 Includes all volume executed in NYSE Group crossing sessions. 5 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. 6 Represents the total number of shares of equity securities and ETFs executed on the NYSE Group's exchanges. 7 Data included in previously identified categories. * Includes trading from Interest rate futures over NYSE Liffe U.S. for 9 trading days in 1Q11. ADVs calculated with the appropriate number of NYSE Liffe U.S. trading days. 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 30, 2011 March 31, 2011 June 30, 2010   NYSE Euronext Listed Issuers   NYSE Listed Issuers   Issuers listed on U.S. Markets1 2,956 2,952 2,934 Number of new issuer listings1 155 104 76 Capital raised in connection with new listings ($millions)2 $ 11,709 $ 12,446 $ 3,575   Euronext Listed Issuers   Issuers listed on Euronext1 964 974 1,013 Number of new issuer listings3 20 10 21 Capital raised in connection with new listings ($millions)2 $ 72 $ 29 $ 81     NYSE Euronext Market Data   NYSE Market Data4   Share of Tape A revenues (%) 45.8 % 47.6 % 47.7 % Share of Tape B revenues (%) 30.2 % 31.1 % 33.4 % Share of Tape C revenues (%) 18.4 % 19.7 % 18.8 % Professional subscribers (Tape A) 383,606 374,285 382,133   Euronext Market Data   Number of terminals 231,544 233,289 239,919     NYSE Euronext Operating Expenses   NYSE Euronext employee headcount   NYSE Euronext headcount 2,988 3,028 2,993     NYSE Euronext Financial Statistics   NYSE Euronext foreign exchange rate   Average €/US$ exchange rate $ 1.439 $ 1.368 $ 1.274 Average £/US$ exchange rate $ 1.631 $ 1.602 $ 1.492 1   Figures for NYSE listed issuers include listed operating companies, special-purpose acquisition companies and closed-end funds listed on the NYSE and NYSE Amex and do not include NYSE Arca or structured products listed on the NYSE. There were 1,291 ETFs and 2 operating companies exclusively listed on NYSE Arca as of June 30, 2011. There were 471 corporate structured products listed on the NYSE as of June 30, 2011.

Figures for new issuer listings include NYSE new listings (including new operating companies, special-purpose acquisition companies and closed-end funds listing on NYSE) and new ETP listings on NYSE Arca (NYSE Amex is excluded). Figures for Euronext present the operating companies were listed on Euronext and do not include NYSE Alternext, Free Market, closed-end funds, ETFs and structured product (warrants and certificates). As of June 30, 2011, 169 companies were listed on NYSE Alternext, 269 on Free Market and 661 ETFs were listed on NextTrack.

  2 Euronext figures show capital raised in millions of dollars by operating companies listed on Euronext, NYSE Alternext and Free Market and do not include closed-end funds, ETFs and structured products (warrants and certificates). NYSE figures show capital raised in millions of dollars by operating companies listed on NYSE and NYSE Arca and do not include closed-end funds, ETFs and structured products.   3 Euronext figures include operating companies listed on Euronext, NYSE 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 NYSE Amex listed securities, and "Tape C" represents Nasdaq listed securities. Per 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 Tape A and B was derived based on number 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 and dissemination of market data that multiple markets make available on a consolidated basis. Share figures exclude transactions reported to the FINRA/NYSE Trade Reporting Facility.   Source: NYSE Euronext, Options Clearing Corporation and Consolidated Tape as reported for equity securities.