NYX Nyse Euronext

NYSE Euronext (NYX) today reported net income of $125 million, or $0.49 per diluted share, for the second quarter of 2012, compared to net income of $154 million, or $0.59 per diluted share, for the second quarter of 2011. Results for the second quarter of 2012 and 2011 include $12 million and $18 million, respectively, of pre-tax merger expenses and exit costs. Second quarter 2012 results also include a net $2 million loss from disposal activities related to the previously announced wind down of NYSE Blue. Excluding merger expenses, exit costs, disposal activities and discrete tax items, net income in the second quarter of 2012 was $128 million, or $0.51 per diluted share, compared to $160 million, or $0.61 per diluted share, in the second quarter of 2011.

“We made good progress in executing against our strategy to unlock the inherent value of our community,” said Duncan L. Niederauer, CEO, NYSE Euronext. “We have realigned our client facing and product teams to create a generalist sales force that brings to bear our full-suite of solutions for our clients. We have given notice that we will fully insource clearing and launch NYSE Clearing in June 2013, which will provide us with cost savings and ultimately provide new revenue and better position the Company for the OTC opportunity. Lastly, we made significant headway with our NYSE Liffe U.S. platform with the launch of our GCF repo futures product which fills the increasing market need for a reliable and transparent benchmark for bank funding costs.”

The table below summarizes the financial results1 for the second quarter of 2012:

                % Δ 2Q12   Year-to-Date % Δ YTD '12 ($ in millions, except EPS)   2Q12   1Q12   2Q11   vs. 2Q11

 

  2012       2011     vs. YTD '11 Total Revenues 2 $ 986   $ 952   $ 1,092   (10 %) $ 1,938     $ 2,240   (13 %)

Total Revenues, Less Transaction-Based Expenses3

602 601 661 (9 %) 1,203 1,340 (10 %) Other Operating Expenses 4   396     405     419   (5 %)   801     834   (4 %) Operating Income 4 $ 206 $ 196 $ 242 (15 %) $ 402 $ 506 (21 %) Net Income 4 $ 128 $ 121 $ 160 (20 %) $ 249 $ 337 (26 %) Diluted Earnings Per Share 4   $ 0.51     $ 0.47     $ 0.61     (16 %)  

 

$ 0.97     $ 1.28     (24 %) Operating Margin 34 % 33 % 37 % (3 ppts) 33 % 38 % (5 ppts) Adjusted EBITDA Margin     45 %     44 %     47 %   (2 ppts)   44 %     48 %   (4 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.

“We are making excellent progress on the efficiency and capital deployment streams of Project 14,” commented Michael S. Geltzeiler, Group Executive Vice President and CFO, NYSE Euronext. “Year-to-date, excluding investments and foreign exchange fluctuations, we have reduced operating costs by $35 million, or 4% which puts us on track to exceed our year-one cost savings commitments. On the capital front, we spent $304 million of the $552 million share repurchase authorization, purchasing 11 million shares year-to-date. Ongoing strategic initiatives, combined with our cost reduction plan and lower share count from stock repurchases, should position the Company for a return to earnings growth in 2013 and beyond.”

SECOND QUARTER 2012 CONSOLIDATED RESULTS

Total revenues, less transaction-based expenses, which include Section 31 fees, liquidity payments and routing and clearing fees (net revenue), were $602 million in the second quarter of 2012, down $59 million, or 9% compared to the second quarter of 2011 and included a $22 million negative impact from foreign currency fluctuations. The $37 million decrease in net revenue, on a constant currency basis, compared to the second quarter of 2011 was primarily driven by lower average daily volumes (“ADV”), mostly attributable to the derivatives business.

Other operating expenses, excluding merger expenses and exit costs, were $396 million in the second quarter of 2012, down $23 million, or 5% compared to the second quarter of 2011. Excluding the impact of new business initiatives and an $11 million positive impact attributable to foreign currency fluctuations, other operating expenses were also down $23 million, or 5%, compared to the second quarter of 2011.

Operating income, excluding merger expenses and exit costs, was $206 million, down $36 million, or 15% compared to the second quarter of 2011 and included an $11 million negative impact attributable to foreign currency fluctuations.

Adjusted EBITDA, excluding merger expenses and exit costs was $272 million, down $40 million, or 13% compared to the second quarter of 2011. Adjusted EBITDA margin was 45% in the second quarter of 2012, compared to 47% in the second quarter of 2011.

Non-operating results for the second quarter of 2012 and 2011 includes the impact of New York Portfolio Clearing (loss from associates), NYSE Liffe U.S. (net loss attributable to non-controlling interest) and NYSE Amex Options (net profit attributable to non-controlling interest). The loss attributable to the non-controlling interest related to NYSE Liffe U.S. was $2 million in the second quarter of 2012, based on the partners’ 42% stake in the business. At the end of the second quarter of 2012, NYSE Liffe U.S. sold a 7% equity stake in the business to the existing partner group, raising the partner groups’ collective stake in the business to 49%. The profit attributable to the non-controlling interest related to NYSE Amex Options was $8 million in the second quarter of 2012, based on the partners’ 47.8% stake in the business.

The effective tax rate for the second quarter of 2012, excluding merger expenses, exit costs and discrete tax items, was approximately 25% compared to approximately 26% for the second quarter of 2011.

The weighted average diluted shares outstanding in the second quarter of 2012 was 253 million, down from 263 million in second quarter of 2011. During the second quarter of 2012, a total of 6.9 million shares were repurchased at an average price of $25.60 per share. The current $552 million stock repurchase authorization has $248 million remaining as of June 30, 2012.

At June 30, 2012, total debt was $2.3 billion. Cash, cash equivalents and short term financial investments (including $153 million related to Section 31 fees collected from market participants and due to the SEC) were $0.4 billion and net debt was $1.9 billion at the end of the second quarter of 2012. The ratio of debt-to-EBITDA at the end of the second quarter of 2012 was 2.1X.

NYSE Euronext entered into a $1 billion senior unsecured credit facility agreement with a three-year maturity. The financing replaces NYSE Euronext’s existing $1.2 billion credit facility, which was entered into in 2007 and was scheduled to mature on July 31, 2012. The new revolving bank facility is available for general corporate purposes and will mature on June 15, 2015.

Total capital expenditures were $41 million in the second quarter of 2012 and $84 million year-to-date. This is in-line with our full-year 2012 capital expenditures guidance.

Headcount as of June 30, 2012 of 3,062 was 17 below first quarter 2012 levels despite the addition of 99 employees from the acquisition of Corpedia in June of 2012. The reduction was due to the wind down of NYSE Blue (66 headcount) and the ongoing staff rationalization program.

The Board of Directors declared a cash dividend of $0.30 per share for the third quarter of 2012. The third quarter 2012 dividend is payable on September 28, 2012 to shareholders of record as of the close of business on September 14, 2012. The anticipated ex-date will be September 12, 2012.

SECOND QUARTER 2012 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 2Q12 $ 182 $ 85 $ 95 $ 300 $ 127 $ 170 $ 119 $ 27 $ 40 1Q12 $ 176 $ 79 $ 89 $ 304 $ 119 $ 161 $ 121 $ 28 $ 42 2Q11 $ 213     $ 112     $ 126 $ 327     $ 128     $ 174 $ 122   $ 36     $ 46 YTD 2012 $ 358 $ 164 $ 184 $ 604 $ 246 $ 331 $ 240 $ 55 $ 82 YTD 2011 $ 449     $ 258     $ 287 $ 655     $ 253     $ 345 $ 238   $ 64     $ 83

1 Net revenue defined as total revenues 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 $182 million in the second quarter of 2012 decreased $31 million, or 15% compared to the second quarter of 2011 and included a $6 million negative impact from foreign currency fluctuations. The $25 million decrease in derivatives net revenue, on a constant currency basis, compared to the second quarter of 2011, was driven by lower trading volumes.

• Global derivatives ADV in the second quarter of 2012 of 8.6 million contracts decreased 8% compared to the second quarter of 2011, but increased 14% compared to first quarter of 2012 levels.
• NYSE Euronext European derivatives products ADV of 4.7 million contracts in the second quarter of 2012 decreased 12% compared to the second quarter of 2011, but increased 40% from first quarter of 2012 levels. Excluding Bclear, European derivatives products ADV in the second quarter of 2012 decreased 8% compared to the second quarter of 2011, but increased 9% from the first quarter of 2012.

• On June 29, 2012, NYSE Euronext gave formal notice of termination with respect to the services currently received from LCH.Clearnet Ltd under the Clearing Relationship Agreement to support NYSE Liffe Clearing, NYX’s London-based derivatives clearing service. Subject to regulatory approval, NYSE Liffe intends to expand NYSE Liffe Clearing to commence functioning as a fully integrated Central Counterparty, NYSE Clearing, from the end of June 2013. NYSE Clearing will assume responsibility for default management arrangements, risk management, collateral and treasury activities as well as banking and payment systems.
• U.S. equity options ADV in the second quarter of 2012 decreased 3% to 3.9 million contracts compared to the second quarter of 2011 and decreased 5% from the first quarter of 2012. U.S. consolidated equity options ADV of 14.9 million contracts decreased 5% compared to the second quarter of 2011 and decreased 6% from the first quarter of 2012. NYSE Euronext’s U.S. equity options exchanges accounted for 26.3% of total consolidated U.S. equity options trading in the second quarter of 2012, up from 25.7% in the second quarter of 2011 and up from 26.0% in the first quarter of 2012. NYSE Amex Options had record quarterly market share in the second quarter of 2012 of 15.7%.
• NYSE Liffe U.S. ADV in the second quarter of 2012 was approximately 73,400 contracts compared to 93,400 contracts in the second quarter of 2011 and 96,300 contracts in the first quarter of 2012. At the end of the second quarter 2012, NYSE Liffe U.S. celebrated the one-year anniversary as the sole U.S. futures exchange trading contracts based on MSCI indices. The indices have registered strong growth in volume and open interest over the past year, particularly in the contracts based on the benchmark MSCI Emerging Markets and MSCI EAFE indices. Nearly 190,000 lots of mini MSCI Index futures open interest are currently established on NYSE Liffe U.S., representing a notional value of over $10 billion. Open interest in the mini MSCI Emerging Markets contracts and mini MSCI EAFE contracts have increased 204% to 117,529 and 108% to 67,828, respectively since the migration from the CME in June 2011.
• NYSE Liffe U.S. continued to expand the product breadth of the platform with the launch of futures on the DTCC GCF Repo Index. Additionally, in June 2012 NYSE Liffe U.S. sold a 7% equity stake in the business to the existing partner group, raising the partner groups’ collective stake in the business to 49%.

CASH TRADING AND LISTINGS

Cash Trading and Listings net revenue of $300 million in the second quarter of 2012 decreased $27 million, or 8% compared to the second quarter of 2011 and included an $11 million negative impact from foreign currency fluctuations. The $16 million decrease in net revenue, on a constant currency basis, compared to the second quarter of 2011 was primarily driven by lower average net revenue capture for European cash trading.

• European cash ADV of 1.7 million transactions in the second quarter of 2012 increased 11% from 1.5 million transactions in the second quarter of 2011 and increased 8% from first quarter of 2012 levels. European cash market share (value traded) in NYSE Euronext’s four core markets was 66% in the second quarter of 2012, down from 71% in the second quarter of 2011, but up from 65% in the first quarter of 2012.
• In the U.S., cash trading ADV in the second quarter of 2012 decreased 12% to 1.8 billion shares traded from 2.1 billion in the second quarter of 2011, but increased 2% from the first quarter of 2012. Tape A matched market share was 32% in the second quarter of 2012, down from 35% in the second quarter of 2011, but up from 31% in the first quarter of 2012.
• NYSE Euronext received approval from the U.S. Securities and Exchange Commission to establish a first-of-its-kind Retail Liquidity Program (“RLP”), a market innovation that produces cost savings for individual investors through price improvement on retail equities trading order flow for New York Stock Exchange (NYSE) and NYSE MKT listed and NASDAQ UTP-traded equity securities. The RLP is complementary to existing marketplace offerings for retail investors and is intended for use by retail brokerage firms directly and market intermediaries that service retail order flow providers.
• In the first half of 2012, NYSE Euronext raised $17.1 billion in total global proceeds on 66 Initial Public Offerings (IPOs). In the U.S., NYSE Euronext listed 62% of all IPOs, bringing 56 IPOs to the U.S. market. NYSE Euronext has steadily captured share in technology-based IPOs. In the first half of 2012, NYSE Euronext listed 52% of the technology IPOs in the U.S., including the recent IPO of ServiceNow, Inc. Technology-based listings on NYSE in the first half of 2012 included Demandware Inc., Exact Target Inc., Guidewire Software Inc., Infoblox Inc., Millennial Media Inc. and Yelp Inc. For the second half of 2012, the pipeline of technology deals is strong.
• In the first half of 2012, eight companies transferred to the NYSE with three departures from the NYSE and one from NYSE MKT. Of the eight companies that moved to the NYSE in 2012, two were among the top 100 market capitalization companies listed on NASDAQ - Teva Pharmaceutical Industries Ltd., which was part of the NASDAQ 100 Index and TD Ameritrade Holding Corporation. Since 2010, a total of 38 companies have transferred to NYSE and 14 have transferred to another U.S. exchange giving NYSE Euronext a win rate of approximately 3:1.
• In Europe, Groupe Eurotunnel was the first company to be admitted to NYSE Euronext London and began trading on July 19, 2012. BTG Pactual, Brazil's largest investment bank, listed on NYSE Alternext Amsterdam and Solvay, a leading global player in chemicals completed a secondary listing on NYSE Euronext in Paris. In the U.S., global industry leaders such as AVG Technologies NV from Czech Republic, Cementos Pacasmayo from Peru and Cencosud S.A. from Chile, all listed on NYSE.
• NYSE Euronext acquired Corpedia Corporation, a leading global provider of ethics and compliance e-learning and consultative services. With its corporate governance, risk and compliance (GRC) assets, Corpedia will further expand NYSE Euronext’s extensive range of global services available to companies. The transaction closed in June 2012.

INFORMATION SERVICES AND TECHNOLOGY SOLUTIONS

Information Services and Technology Solutions revenue was $119 million in the second quarter of 2012, a decrease of $3 million, or 2% compared to the second quarter of 2011 and included a $5 million negative impact from foreign currency fluctuations. The $2 million increase in revenue, on a constant currency basis, compared to the second quarter of 2011, was driven by higher connectivity revenue. The slower growth in revenue year-over-year is the result of the challenging environment for financial services technology sales which has delayed client decisions on purchases of software and connectivity services.

• NYSE Technologies announced a market data partnership with the Warsaw Stock Exchange (WSE). Customers will now have access to the WSE’s market data services via NYSE Technologies’ innovative suite of market data products and services. NYSE Euronext and the WSE continue their strategic collaboration (initially formed in 2010) working on a series of projects including the ongoing implementation of the NYSE Technologies Universal Trading Platform and the continuing development of a range of technology cooperation for the WSE.
• NYSE Technologies announced the global expansion of its successful Capital Markets Community Platform into Europe. Operating from NYSE Euronext’s European liquidity center in Basildon, the cloud based Community Platform was designed and developed in partnership with leading computing experts EMC and VMware. NYSE Technologies’ Capital Markets Community Platform was designed to increase business agility, simplify market access and reduce trading friction by utilizing rapid on-demand computing resources. Originally launched on July 1, 2011 from NYSE Euronext’s U.S. liquidity center in Mahwah, this is the first cloud based capital markets community platform developed exclusively for the financial services industry.
• NYSE Euronext announced that its U.S. liquidity center in Mahwah, New Jersey has enhanced its data center community, managed by NYSE Technologies, by revising a number of policies aimed at reducing customer costs, increasing platform flexibility and broadening access to the facility. For the first time, the financial services vendor community has the opportunity to acquire data center space and offer their services within NYSE Technologies’ state-of-the-art liquidity center.
• NYSE Technologies and Xignite Inc., a provider of web-based market data services, announced their agreement to launch a new service providing access to real-time, historical and reference market data for all NYSE Euronext markets via the Internet.

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

Analyst/Investor/Media Call: August 3, 2012 at 8:00 a.m. (NY/ET) / 2:00 p.m. (Paris/CEST)

A presentation and live audio webcast of the Second quarter 2012 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: 800.901.5241International: 617.786.2963Passcode: 71048755

Replay Dial-in Information:United States: 888.286.8010International: 617.801.6888Passcode: 97290929

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, the BlueNext tax settlement, 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.

NYSE Euronext Earnings News Release with Tables and Operating Data

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 MKT, 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. For more information, please visit: http://www.nyx.com.

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Disclaimer and 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 2011 Annual Report on Form 10-K and other periodic reports filed with the U.S. Securities and Exchange Commission or the French Autorité des Marchés 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 (unaudited) (in millions, except per share data)                         Three months ended,

Six months ended June

June 30, 2012 March 31, 2012 June 30, 2011   2012     2011       Revenues Transaction and clearing fees $ 649 $ 609 $ 742 $ 1,258 $ 1,557 Market data 87 91 92 178 188 Listing 112 110 112 222 221 Technology services 87 86 89 173 171 Other revenues   51     56     57     107     103   Total revenues 986 952 1,092 1,938 2,240 Transaction-based expenses: Section 31 fees 86 66 89 152 178 Liquidity payments, routing and clearing   298     285     342     583     722   Total revenues, less transaction-based expenses   602     601     661     1,203     1,340   Other operating expenses Compensation 152 160 158 312 319 Depreciation and amortization 66 66 70 132 140 Systems and communications 44 45 45 89 97 Professional services 69 73 73 142 142 Selling, general and administrative 65 61 73 126 136 Merger expenses and exit costs   12     31     18     43     39   Total other operating expenses   408     436     437     844     873     Operating income 194 165 224 359 467 Net interest and investment income (loss) (28 ) (28 ) (30 ) (56 ) (59 ) Loss from associates (2 ) (1 ) (2 ) (3 ) (3 ) Net loss on disposal activities (2 ) - - (2 ) - Other income   3     -     1     3     1   Income before income taxes 165 136 193 301 406 Income tax provision   (34 )   (45 )   (43 )   (79 )   (105 ) Net income 131 91 150 222 301 Net (income) loss attributable to noncontrolling interest   (6 )   (4 )   4     (10 )   8   Net income attributable to NYSE Euronext $ 125   $ 87   $ 154   $ 212   $ 309     Basic earnings per share attributable to NYSE Euronext $ 0.50 $ 0.34 $ 0.59 $ 0.83 $ 1.18   Diluted earnings per share attributable to NYSE Euronext $ 0.49 $ 0.34 $ 0.59 $ 0.83 $ 1.17   Basic weighted average shares outstanding 252 258 262 255 262 Diluted weighted average shares outstanding   253       259       263     256       263       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

Non-GAAP Reconciliation

June 30, 2012 March 31, 2012 June 30, 2011   2012     2011     Income (loss) before income taxes - GAAP $ 165 $ 136 $ 193 $ 301 $ 406 Excluding: Merger expenses and exit costs 12 31 18 43 39 Net loss on disposal activities   2     -     -     2     -   Income before income taxes - as adjusted 179 167 211 346 445 Income tax provision   (45 )   (42 )   (55 )   (87 )   (116 ) Net income - as adjusted 134 125 156 259 329 Net (income) loss attributable to noncontrolling interest   (6 )   (4 )   4     (10 )   8   Net income attributable to NYSE Euronext - as adjusted $ 128   $ 121   $ 160   $ 249   $ 337     Diluted earnings per share attributable to NYSE Euronext $ 0.51   $ 0.47   $ 0.61   $ 0.97   $ 1.28                   NYSE Euronext Segment Results (unaudited) (in millions)                                         Three months ended Three months ended June 30, 2012 June 30, 2011 Derivatives

Cash Trading and Listings

Information Services and Technology Solutions

Corporate and Eliminations

Consolidated Derivatives

Cash Trading and Listings

Information Services and Technology Solutions

Corporate and Eliminations

Consolidated   Revenues Transaction and clearing fees $ 219 $ 430 $ - $ - $ 649 $ 251 $ 491 $ - $ - $ 742 Market data 11 44 32 - 87 12 48 32 - 92 Listing - 112 - - 112 - 112 - - 112 Technology services - - 87 - 87 - - 90 (1 ) 89 Other revenues   10     40     -     1     51     13     44     -     -     57   Total revenues 240 626 119 1 986 276 695 122 (1 ) 1,092 Transaction-based expenses: Section 31 fees - 86 - - 86 - 89 - - 89 Liquidity payments, routing and clearing   58     240     -     -     298     63     279     -     -     342   Total revenues, less transaction-based expenses 182 300 119 1 602 213 327 122 (1 ) 661 Depreciation and amortization [a] 10 43 13 - 66 14 46 10 - 70 Merger expenses and exit costs (M&E) [b] 7 7 4 (6 ) 12 1 2 1 14 18 Other operating expenses   87     130     79     34     330     87     153     76     33     349   Operating income - GAAP [c] $ 78   $ 120   $ 23   $ (27 ) $ 194   $ 111   $ 126   $ 35   $ (48 ) $ 224   Operating income excluding M&E [c] + [b] $ 85   $ 127   $ 27   $ (33 ) $ 206   $ 112   $ 128   $ 36   $ (34 ) $ 242   Adjusted EBITDA [c] + [a] + [b] $ 95     $ 170     $ 40     $ (33 )   $ 272   $ 126     $ 174     $ 46     $ (34 )   $ 312     Operating margin excluding M&E 47 % 42 % 23 % N/M 34 % 53 % 39 % 30 % N/M 37 % Adjusted EBITDA margin 52 % 57 % 34 % N/M 45 % 59 % 53 % 38 % N/M 47 %                                       Six months ended Six months ended June 30, 2012     June 30, 2011 Derivatives

Cash Trading and Listings

Information Services and Technology Solutions

Corporate and Eliminations

Consolidated Derivatives

Cash Trading and Listings

Information Services and Technology Solutions

Corporate and Eliminations

Consolidated   Revenues Transaction and clearing fees $ 425 $ 833 $ - $ - $ 1,258 $ 537 $ 1,020 $ - $ - $ 1,557 Market data 22 89 67 - 178 24 98 66 - 188 Listing - 222 - - 222 - 221 - - 221 Technology services - - 173 - 173 - - 172 (1 ) 171 Other revenues   22     84     -     1     107     22     82     -     (1 )   103   Total revenues 469 1,228 240 1 1,938 583 1,421 238 (2 ) 2,240 Transaction-based expenses: Section 31 fees - 152 - - 152 - 178 - # - 178 Liquidity payments, routing and clearing   111     472     -     -     583     134     588     -     -     722   Total revenues, less transaction-based expenses 358 604 240 1 1,203 449 655 238 (2 ) 1,340 Depreciation and amortization [a] 20 85 27 - 132 29 92 19 - 140 Merger expenses and exit costs (M&E) [b] 8 13 10 12 43 2 5 2 30 39 Other operating expenses   174     273     158     64     669     162     310     155     67     694   Operating income - GAAP [c] $ 156   $ 233   $ 45   $ (75 ) $ 359   $ 256   $ 248   $ 62   $ (99 ) $ 467   Operating income excluding M&E [c] + [b] $ 164   $ 246   $ 55   $ (63 ) $ 402   $ 258   $ 253   $ 64   $ (69 ) $ 506   Adjusted EBITDA [c] + [a] + [b] $ 184     $ 331     $ 82     $ (63 )   $ 534   $ 287     $ 345     $ 83     $ (69 )   $ 646     Operating margin excluding M&E 46 % 41 % 23 % N/M 33 % 57 % 39 % 27 % N/M 38 % Adjusted EBITDA margin 51 % 55 % 34 % N/M 44 % 64 % 53 % 35 % N/M 48 %    

 

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, 2012 - GAAP $ 408 Less: Merger expenses and exit costs   (12 ) $ 396

Excluding the impact of:

Currency translation 11 New business initiatives (11 )   Fixed operating expenses for the three months ended June 30, 2012 - as adjusted $ 396   [a]   Fixed operating expenses for the three months ended June 30, 2011 - GAAP $ 437 Less: Merger expenses and exit costs   (18 ) $ 419   [b]   Variance ($) $ (23 ) [a] - [b] = [c] Variance (%)   -5 % [c] / [b]     Fixed operating expenses for the six months ended June 30, 2012 - GAAP $ 844 Less: Merger expenses and exit costs   (43 ) $ 801 Excluding the impact of: Currency translation 16 New business initiatives (18 )   Fixed operating expenses for the six months ended June 30, 2012 - as adjusted $ 799   [a]   Fixed operating expenses for the six months ended June 30, 2011 - GAAP $ 873 Less: Merger expenses and exit costs   (39 ) $ 834   [b]   Variance ($) $ (35 ) [a] - [b] = [c] Variance (%)   -4 % [c] / [b]    

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, 2012 December 31, 2011   Assets Current assets: Cash, cash equivalents, and short term financial investments $ 416 $ 432 Accounts receivable, net 495 497 Deferred income taxes 68 108 Other current assets   172   152 Total current assets 1,151 1,189   Property and equipment, net 943 963 Goodwill 4,082 4,027 Other intangible assets, net 5,617 5,697 Deferred income taxes 548 594 Other assets   636   637 Total assets $ 12,977 $ 13,107   Liabilities and equity Accounts payable and accrued expenses $ 877 $ 992 Deferred revenue 313 130 Short term debt 270 39 Deferred income taxes   21   23 Total current liabilities 1,481 1,184   Long term debt 2,007 2,036 Deferred income taxes 1,885 1,900 Accrued employee benefits 565 620 Deferred revenue 369 371 Other liabilities   24   63 Total liabilities   6,331   6,174   Redeemable noncontrolling interest   294   295   Equity 6,352 6,638     Total liabilities and equity $ 12,977 $ 13,107                            

NYSE Euronext

Selected Statistical Data:

Volume Summary

  Average Daily Volume Total Volume Total Volume (Unaudited)

2Q12

1Q12 % ∆ 2Q12 vs. 1Q12 2Q11 % ∆ 2Q12 vs. 2Q11   2Q12 1Q12 % ∆ 2Q12 vs. 1Q12 2Q11 % ∆ 2Q12 vs. 2Q11  

YTD 2012

YTD 2011

% ∆

  Number of Trading Days - European Cash 62 65 63 62 65 63 127 127 Number of Trading Days - European Derivatives 63 65 63 63 65 63 128 127 Number of Trading Days - U.S. Markets 63 62 63 63 62 63 125 125   European Derivatives Products (contracts in thousands) 4,654 3,332 39.7 % 5,294 -12.1 % 293,182 216,595 35.4 % 333,522 -12.1 % 509,777 630,051 -19.1 % of which Bclear 1,743 673 159.1 % 2,125 -18.0 % 109,827 43,730 151.1 % 133,874 -18.0 % 153,556 183,210 -16.2 % Avg. Net Revenue Per Contract (ex. Bclear) $ 0.671 $ 0.659 1.8 % $ 0.741 -9.4 % $ 0.671 $ 0.659 1.8 % $ 0.741 -9.4 % Avg. Net Revenue Per Contract (ex. Bclear) - Currency Neutral $ 0.671 $ 0.664 1.1 % $ 0.719 -6.7 % $ 0.671 $ 0.664 1.1 % $ 0.719 -6.7 %   Total Interest Rate Products1 1,953 1,774 10.1 % 2,147 -9.0 % 123,059 115,327 6.7 % 135,231 -9.0 % 238,387 308,023 -22.6 %   Short Term Interest Rate Products 1,801 1,622 11.0 % 2,006 -10.2 % 113,479 105,438 7.6 % 126,347 -10.2 % 218,917 290,718 -24.7 % Medium and Long Term Interest Rate Products 152 152 -0.1 % 141 7.8 % 9,580 9,889 -3.1 % 8,884 7.8 % 19,469 17,305 12.5 %   Total Equity Products2 2,622 1,477 77.6 % 3,063 -14.4 % 165,188 95,974 72.1 % 192,980 -14.4 % 261,162 311,090 -16.0 %   Individual Equity Products 2,065 1,019 102.6 % 2,535 -18.5 % 130,086 66,242 96.4 % 159,703 -18.5 % 196,328 240,714 -18.4 % Futures 1,603 510 214.0 % 1,984 -19.2 % 100,962 33,175 204.3 % 124,971 -19.2 % 134,137 161,748 -17.1 % Options 462 509 -9.1 % 551 -16.1 % 29,124 33,068 -11.9 % 34,731 -16.1 % 62,191 78,965 -21.2 % Equity Index Products 557 457 21.8 % 528 5.5 % 35,102 29,732 18.1 % 33,277 5.5 % 64,834 70,377 -7.9 %   of which Bclear 1,743 673 159.1 % 2,125 -18.0 % 109,827 43,730 151.1 % 133,874 -18.0 % 153,556 183,210 -16.2 % Individual Equity Products 1,667 600 177.9 % 2,053 -18.8 % 105,025 38,998 169.3 % 129,324 -18.8 % 144,023 173,476 -17.0 % Futures 1,561 502 210.6 % 1,959 -20.3 % 98,312 32,660 201.0 % 123,429 -20.3 % 130,972 159,866 -18.1 % Options 107 98 9.3 % 94 13.9 % 6,713 6,339 5.9 % 5,895 13.9 % 13,051 13,610 -4.1 % Equity Index Products 76 73 4.7 % 72 5.5 % 4,801 4,731 1.5 % 4,551 5.5 % 9,533 9,734 -2.1 %   Commodity Products 78 81 -3.8 % 84 -7.1 % 4,935 5,293 -6.8 % 5,312 -7.1 % 10,228 10,938 -6.5 %   U.S. Derivatives Products (contracts in thousands) Avg. Net Revenue Per Contract (ex. Liffe U.S. volumes) $ 0.150 $ 0.148 1.4 % $ 0.165 -9.1 % $ 0.150 $ 0.148 1.4 % $ 0.165 -9.1 %   Equity Options Contracts3 3,915 4,128 -5.2 % 4,052 -3.4 % 246,634 255,922 -3.6 % 255,306 -3.4 % 502556 528738.2 -5.0 % Total Consolidated Options Contracts 14,911 15,879 -6.1 % 15,759 -5.4 % 939,423 984,508 -4.6 % 992,810 -5.4 % 1,923,930 2,065,771 4.4 %   Share of Total Consolidated Options Contracts 26.3 % 26.0 % 25.7 % 26.3 % 26.0 % 25.7 % 26.1 % 25.6 % 0.5 %   NYSE Liffe U.S.   Futures and Futures Options Volume 73.4 96.3 -23.8 % 93.4 -21.5 % 4,769.3 6,161.3 -22.6 % 5,980.7 -20.3 % 10,930.6 7,325.2 49.2 %   European Cash Products (trades in thousands) 1,709 1,583 7.9 % 1,540 11.0 % 105,934 102,927 2.9 % 96,999 9.2 % 208,861 212,376 -1.7 % Avg. Net Revenue Per Transaction $ 0.519 $ 0.573 -9.4 % $ 0.742 -30.1 % $ 0.519 $ 0.573 -9.4 % $ 0.742 -30.1 % Avg. Net Revenue Per Transaction - Currency Neutral $ 0.519 $ 0.561 -7.5 % $ 0.662 -21.6 % $ 0.519 $ 0.561 -7.5 % $ 0.662 -21.6 %   Equities 1,656 1,530 8.2 % 1,482 11.8 % 102,668 99,439 3.2 % 93,350 10.0 % 202,107 204,191 -1.0 % Exchange-Traded Funds 14 14 -1.0 % 16 -12.4 % 890 942 -5.5 % 1,032 -13.8 % 1,831 2,348 -22.0 % Structured Products 33 34 -3.4 % 36 -8.9 % 2,059 2,235 -7.9 % 2,298 -10.4 % 4,294 5,171 -16.9 % Bonds 5 5 6.9 % 5 0.8 % 317 311 2.0 % 319 -0.8 % 628 667 -5.9 %   U.S. Cash Products (shares in millions) 1,818 1,783 2.0 % 2,075 -12.4 % 114,541 110,557 3.6 % 130,722 -12.4 % 225,100 273,905 -17.8 % Avg. Net Revenue Per 100 Shares Handled $ 0.0428 $ 0.0425 0.7 % $ 0.0390 9.7 % $ 0.0428 $ 0.0425 0.7 % $ 0.0390 9.7 %   NYSE Listed (Tape A) Issues 4   Handled Volume 5 1,300 1,275 2.0 % 1,461 -11.0 % 81,899 79,023 3.6 % 92,072 -11.0 % 160,922 195,469 -17.7 % Matched Volume 6 1,235 1,202 2.8 % 1,384 -10.8 % 77,823 74,532 4.4 % 87,216 -10.8 % 152,355 185,021 -17.7 % Total NYSE Listed Consolidated Volume 3,881 3,932 -1.3 % 3,935 -1.4 % 244,497 243,800 0.3 % 247,909 -1.4 % 488,298 531,121 -8.1 %   Share of Total Consolidated Volume Handled Volume 5 33.5 % 32.4 % 1.1 % 37.1 % -3.6 % 33.5 % 32.4 % 1.1 % 37.1 % -3.6 % 33.0 % 36.8 % -3.8 % Matched Volume 6 31.8 % 30.6 % 1.2 % 35.2 % -3.4 % 31.8 % 30.6 % 1.2 % 35.2 % -3.4 % 31.2 % 34.8 % -3.6 %   NYSE Arca, MKT and Regional (Tape B) Listed Issues   Handled Volume 5 278 265 4.9 % 335 -16.9 % 17,519 16,441 6.6 % 21,085 -16.9 % 33,960 42,575 -20.2 % Matched Volume 6 250 237 5.7 % 301 -16.9 % 15,763 14,670 7.4 % 18,976 -16.9 % 30,433 38,246 -20.4 % Total NYSE Arca & NYSE MKT Listed Consolidated Volume 1,187 1,123 5.7 % 1,287 -7.8 % 74,780 69,623 7.4 % 81,111 -7.8 % 144,402 164,862 -12.4 %   Share of Total NYSE Arca & NYSE MKT Listed Consolidated Volume Handled Volume 5 23.4 % 23.6 % 85.3 % 26.0 % -2.6 % 23.4 % 23.6 % -0.2 % 26.0 % -2.6 % 23.5 % 25.8 % -2.3 % Matched Volume 6 21.1 % 21.1 % 100.7 % 23.4 % -2.3 % 21.1 % 21.1 % 0.0 % 23.4 % -2.3 % 21.1 % 23.2 % -2.1 %   Nasdaq Listed Issues (Tape C)   Handled Volume 5 240 243 -1.4 % 279 -14.1 % 15,123 15,095 0.2 % 17,597 -14.1 % 30,218 35,892 -15.8 % Matched Volume 6 206 206 -0.3 % 237 -13.2 % 12,950 12,776 1.4 % 14,924 -13.2 % 25,726 30,495 -15.6 % Total Nasdaq Listed Consolidated Volume 1,802 1,796 0.4 % 1,996 -9.7 % 113,554 111,330 2.0 % 125,745 -9.7 % 224,885 252,911 -11.1 %   Share of Total Nasdaq Listed Consolidated Volume Handled Volume 5 13.3 % 13.6 % -0.3 % 14.0 % -0.7 % 13.3 % 13.6 % -0.3 % 14.0 % -0.7 % 13.4 % 14.2 % -0.8 % Matched Volume 6 11.4 % 11.5 % -0.1 % 11.9 % -0.5 % 11.4 % 11.5 % -0.1 % 11.9 % -0.5 % 11.4 % 12.1 % -0.7 %   Exchange-Traded Funds 5,7   Handled Volume 5 265 248 6.6 % 309 -14.2 % 16,693 15,407 8.3 % 19,446 -14.2 % 32,100 39,003 -17.7 % Matched Volume 6 238 221 7.6 % 277 -14.2 % 14,995 13,718 9.3 % 17,468 -14.2 % 28,714 35,010 -18.0 % Total ETF Consolidated Volume 1,167 1,084 7.6 % 1,210 -3.6 % 73,495 67,197 9.4 % 76,252 -3.6 % 140,693 153,464 -8.3 %   Share of Total ETF Consolidated Volume Handled Volume 5 22.7 % 22.9 % -0.2 % 25.5 % -2.8 % 22.7 % 22.9 % -0.2 % 25.5 % -2.8 % 22.8 % 25.4 % -2.6 % Matched Volume 6 20.4 % 20.4 % 0.0 % 22.9 % -2.5 % 20.4 % 20.4 % 0.0 % 22.9 % -2.5 % 20.4 % 22.8 % -2.4 %    

 

 

1 Data includes currency products.

 

 

2 Includes trading activities for Bclear, NYSE Liffe's service for Equity OTC derivatives.

 

 

3 Includes trading in U.S. equity options contracts, not equity-index options.

 

 

4 Includes all volume executed in NYSE Euronext's U.S. crossing sessions.

 

 

5 Represents the total number of shares of equity securities and ETFs internally matched on the NYSE Euronext's U.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 Euronext's U.S. exchanges.

 

 

7Data included in previously identified categories.

 

* 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, 2012 Mar. 31, 2012 June 30, 2011   NYSE Euronext Listed Issuers   NYSE Listed Issuers   Issuers listed on U.S. Markets1 2,968 2,960 2,956 Number of new issuer listings1 75 106 155 Capital raised in connection with new listings ($millions)2 $ 5,086 $ 4,492 $ 11,709   Euronext Listed Issuers   Issuers listed on Euronext1 923 926 964 Number of new issuer listings3 10 10 20 Capital raised in connection with new listings ($millions)2 $ 1,912 $ 1,461 $ 72     NYSE Euronext Market Data   NYSE Market Data4   Share of Tape A revenues (%) 41.4 % 40.2 % 45.8 % Share of Tape B revenues (%) 27.0 % 27.0 % 30.2 % Share of Tape C revenues (%) 15.1 % 15.6 % 18.4 % Professional subscribers (Tape A) 360,121 362,617 383,606   Euronext Market Data   Number of terminals 216,752 221,906 231,544     NYSE Euronext Operating Expenses   NYSE Euronext employee headcount   NYSE Euronext headcount5 3,062 3,079 2,988     NYSE Euronext Financial Statistics   NYSE Euronext foreign exchange rate   Average €/US$ exchange rate $ 1.254 $ 1.311 $ 1.439 Average £/US$ exchange rate $ 1.583 $ 1.571 $ 1.631  

 

 

1 Figures for NYSE listed issuers include listed operating companies, special-purpose acquisition companies and closed-end funds listed on the NYSE and NYSE MKT and do not include NYSE Arca or structured products listed on the NYSE. There were 1,407 ETPs exclusively listed on NYSE Arca as of June 30, 2012. There were 439 corporate structured products listed on the NYSE as of June 30, 2012.

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 MKT 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, 2012, 182 companies were listed on NYSE Alternext, 264 on Free Market and 686 ETPs 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 MKT 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.

 

 

5 Headcount for June 30, 2012 includes 99 employees in connection with the recent acquisitions of Corpedia.

Source: NYSE Euronext, Options Clearing Corporation and Consolidated Tape as reported for equity securities.