NYSE Euronext Announces Third Quarter 2013 Financial Results

05/11/2013

Financial and Operating Highlights1, 2

  • Diluted non-GAAP EPS of $0.53, up 21% compared to 3Q12
  • Net revenue of $574 million up 3% compared to 3Q12
  • Fixed operating expenses of $372 million, down 5% on constant dollar / portfolio basis vs. 3Q12
  • Operating income of $202 million, up 18% compared to 3Q12
  • Debt-to-EBITDA ratio 2.1 times, down from 2.5 times at end of 2012

1 All comparisons versus 3Q12 unless otherwise stated. Excludes merger expenses, exit costs, charge for fair value adjustment to RSU awards, disposal activities and discrete tax items.

2 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.

 

NEW YORK--(BUSINESS WIRE)--Nov. 5, 2013-- NYSE Euronext (NYX) today reported net income of $178 million, or $0.73 per diluted share on a GAAP basis, for the third quarter of 2013, compared to net income of $108 million, or $0.44 per diluted share, for the third quarter of 2012. Results for the third quarter of 2013 and 2012 included $24 million and $18 million, respectively, of pre-tax merger expenses and exit costs. Third quarter 2013 results included a $5 million pre-tax gain on the sale of our 12% stake in the Qatar Exchange. Our third quarter 2013 and 2012 GAAP effective tax rate both included a discrete net deferred tax benefit, principally related to the enacted reduction in the corporate tax rate in the United Kingdom. Excluding merger expenses, exit costs, disposal activity and discrete tax items, net income in the third quarter of 2013 was $131 million, or $0.53 per diluted share on a non-GAAP basis, compared to $108 million, or $0.44 per diluted share on a non-GAAP basis, in the third quarter of 2012.

“I would like to thank all of our clients, shareholders and employees for their support while we worked through our transformative deal with IntercontinentalExchange,” said Duncan L. Niederauer, CEO, NYSE Euronext. “Throughout the process, we continued to execute against our business plan by transitioning our clearing operation, building substantial momentum in our Listings business, achieving our cost saving commitments for 2013 early and managing our capital in a disciplined way for our shareholders. We are especially pleased that Twitter recently announced they will list on the NYSE. What we accomplished has set an excellent foundation for the combination of our two great companies.”

The table below summarizes the financial results1 for the third quarter of 2013:

 
      % Δ 3Q13     Year-to-Date     % Δ YTD '13
($ in millions, except EPS)         3Q13     2Q13     3Q12     vs. 3Q12     2013       2012         vs. YTD '12
Total Revenues2         $890       $995         $902         (1 %)       $2,848       $2,840         0 %
Total Revenues, Less Transaction-Based Expenses3         574       611         559         3 %       1,785       1,762         1 %
Other Operating Expenses 4         372       382         388         (4 %)       1,134       1,189         (5 %)
Operating Income 4         $202       $229         $171         18 %       $651       $573         14 %
Net Income5         $131       $153         $108         21 %       $423       $357         18 %
Diluted Earnings Per Share5         $0.53       $0.63         $0.44         22 %       $1.73       $1.41         23 %
Operating Margin         35 %     37 %       31 %       4 ppts       36 %     33 %       3 ppts
Adjusted EBITDA Margin         46 %     48 %       42 %       4 ppts       47 %     44 %       3 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 and charge for fair value adjustment to RSU awards.
5   Excludes merger expenses, exit costs, charge for fair value adjustment to RSU awards, disposal activities and discrete tax items.
 

THIRD QUARTER 2013 CONSOLIDATED RESULTS

Total revenues, less transaction-based expenses, which include Section 31 fees, liquidity payments and routing and clearing fees (net revenue), were $574 million in the third quarter of 2013, up 3% from the third quarter of 2012 and included a $5 million positive impact from foreign currency fluctuations.

Other operating expenses, excluding merger expenses and exit costs, were $372 million in the third quarter of 2013, down $16 million, or 4% compared to the third quarter of 2012. Excluding the impact of new business initiatives and a $1 million negative impact attributable to foreign currency fluctuations, other operating expenses were down $19 million, or 5%, compared to the third quarter of 2012.

Realized Project 14 savings through the third quarter of 2013 were $175 million, which represented 70% of the total $250 million expected to be saved by the end of 2014.

Operating income, excluding merger expenses and exit costs, was $202 million, up $31 million, or 18% compared to the third quarter of 2012 and included a $4 million positive impact from foreign currency fluctuations.

Adjusted EBITDA, excluding merger expenses and exit costs, was $266 million, up $31 million, or 13% compared to the third quarter of 2012. Adjusted EBITDA margin was 46% in the third quarter of 2013, compared to 42% in the third quarter of 2012.

The decline in net interest and investment loss compared to the second quarter of 2013 was driven by the retirement of the remaining $414 million of the $750 million 4.80% notes in the second quarter of 2013.

Loss from associates is primarily related to New York Portfolio Clearing. Net (income) loss attributable to non-controlling interest consists primarily of net income attributable to NYSE Amex Options, which was partially offset by the net loss attributable to NYSE Liffe U.S.

The effective tax rate for the third quarter of 2013, excluding merger expenses, exit costs and discrete tax items, was 24% compared to approximately 21% for the third quarter of 2012.

The weighted average diluted shares outstanding in the third quarter of 2013 was 245 million, down from 247 million in third quarter of 2012.

At September 30, 2013, total debt was $2.3 billion. Cash, cash equivalents and short term financial investments (including $21 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. The cash balance as of September 30, 2013 included $120 million received from our sale of the 12% stake in the Qatar Exchange.

The ratio of debt-to-EBITDA at the end of the third quarter of 2013 was 2.1x, down from 2.5x at the end of 2012.

Total capital expenditures were $38 million in the third quarter of 2013, down from $41 million in the third quarter of 2012. Year-to-date capital expenditures of $97 million were well below the $125 million recorded for the same period in 2012, and trending below full-year 2013 guidance of $150 million.

SUBSEQUENT EVENT

On October 14, 2013 NYSE Euronext and LCH.Clearnet SA signed a new five-year agreement to clear NYSE Euronext’s continental listed derivatives, which included governance changes that will take effect immediately and new commercial terms beginning in April 2014. Starting April 1, 2014, NYSE Euronext will begin recognizing revenues as a result of this new agreement and will compensate LCH.Clearnet SA for certain clearing and risk management services.

THIRD QUARTER 2013 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
3Q13         $166       $85       $94     $295       $118       $160     $113       $25       $38
2Q13         $195       $103       $111     $302       $128       $169     $114       $25       $38
3Q12         $164       $68       $78     $282       $104       $145     $113       $23       $36
YTD 2013         $562       $292       $318     $884       $360       $483     $339       $75       $114
YTD 2012         $522       $232       $262     $886       $350       $476     $353       $78       $118
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 $166 million in the third quarter of 2013 increased $2 million, or 1% compared to the third quarter of 2012 and included a $1 million negative impact from foreign currency fluctuations. The $3 million increase in derivatives net revenue, on a constant currency basis, compared to the third quarter of 2012, was driven by slightly higher average daily trading volumes (“ADV”) in European interest rate derivatives products, which increased 14%. The successful clearing transition for the London-based derivatives market of NYSE Liffe to ICE Clear Europe in the third quarter of 2013 resulted in a reduction in costs of approximately $8 million in the quarter. Highlights for the third quarter of 2013 included:

  • Global derivatives ADV, excluding Bclear, in the third quarter of 2013 of 6.7 million contracts decreased 4% compared to the third quarter of 2012 and decreased 21% compared to second quarter of 2013 levels.
  • NYSE Euronext European derivatives products ADV of 3.1 million contracts in the third quarter of 2013 decreased 8% compared to the third quarter of 2012 and decreased 23% from second quarter of 2013 levels. Excluding Bclear, European derivatives products ADV in the third quarter of 2013 increased 5% compared to the third quarter of 2012, but decreased 19% from the second quarter of 2013.
  • U.S. equity options ADV in the third quarter of 2013 decreased 1% to 3.5 million contracts compared to the third quarter of 2012 and decreased 20% from the second quarter of 2013. U.S. consolidated equity options ADV of 13.6 million contracts decreased 1% compared to the third quarter of 2012 and decreased 14% from the second quarter of 2013. NYSE Euronext’s U.S. equity options exchanges accounted for 26% of total consolidated U.S. equity options trading in the third quarter of 2013, in-line with the third quarter of 2012, and down from 28% in the second quarter of 2013.
  • NYSE Liffe has introduced Universal Stock Futures on Canadian and South African stocks on Bclear, the Exchange’s trade administration and clearing service. The geographical expansion of the Bclear product range will enhance the diversity of the underlyings available to the Exchange’s customers, with the possibility to trade futures on over 1,250 large and mid-cap stocks denominated in 12 currencies. In Europe, NYSE Liffe is the only exchange offering futures on Canadian and South African stocks in their respective domestic currencies.
  • NYSE Liffe U.S. announced the listing of a new futures contract based on the widely followed NYSE Arca Gold Miners Index (“GDF futures”), pending regulatory approval. These innovative new futures will complement the existing market for the Market Vectors®Gold Miners ETP (GDX®) listed on NYSE Arca as well as options on GDX® traded on the NYSE Arca and NYSE Amex options platforms.

CASH TRADING AND LISTINGS

Cash Trading and Listings net revenue of $295 million in the third quarter of 2013 increased $13 million, or 5% compared to the third quarter of 2012 and included a $5 million positive impact from foreign currency fluctuations. The $8 million increase in Cash Trading and Listings net revenue, on a constant currency basis, compared to the third quarter of 2012, was driven by higher non-trading revenues. Highlights for the third quarter of 2013 included:

  • European cash ADV of 1.3 million transactions in the third quarter of 2013 increased 2% from the third quarter of 2012, but decreased 9% from second quarter of 2013 levels. European cash market share (value traded) in NYSE Euronext’s four core markets was 66% in the third quarter of 2013, down from 68% in the third quarter of 2012 and down from 67% in the second quarter of 2013.
  • In the U.S., cash trading ADV in the third quarter of 2013 decreased 11% to 1.4 billion shares from 1.6 billion shares in the third quarter of 2012 and decreased 13% from the second quarter of 2013. Tape A matched market share was 31% in the third quarter of 2013, down from the 32% recorded in the third quarter of 2012, but in-line with the second quarter of 2013. Trading off-exchange, as reported by Trade Reporting Facilities (“TRF”), increased to 37% of overall consolidated average daily volume in the third quarter of 2013, up from 32% in the third quarter of 2012 and up from 35% in the second quarter of 2013.
  • NYSE Euronext ranked #1 globally in initial public offerings (IPOs) and follow-ons globally through the third quarter of 2013. NYSE Euronext raised $36.5 billion in total global proceeds on 104 IPOs and $131.1 billion in total global proceeds on 397 follow-ons. In the U.S., NYSE Euronext led the market with 74 IPOs raising $21.9 billion in proceeds (excluding closed-end funds) and has steadily captured share in technology-based IPOs. Twitter’s announcement that they will list on NYSE is an examples of this trend. NYSE Euronext has listed 53% of the technology IPOs in the U.S., including Violin Memory, RingCentral, MiX Telematics, Cvent, and YuMe in the third quarter of 2013.
  • NYSE was the leader in transfers – 7 companies with $160.9 billion in total market capitalization transferred to the NYSE through the third quarter of 2013. Oracle Corp. (ORCL) began trading on the NYSE on 7/15/2013. ORCL is the largest transfer in history with $148.2 billion in market capitalization. Since 2010, five Nasdaq-100 Index members have transferred to the NYSE, including two in 2013 (Oracle Corp. and Perrigo Co.). Since 2000, 230 companies have transferred to the NYSE with a total market capitalization of $698.7 billion.
  • In the third quarter of 2013, NYSE Euronext listing activity on its European markets continued a positive trend with 5 new listings, bringing the total to 23 in 2013. IPO activity in Belgium reopened with the listing of Cardio3 BioSciences, while NYSE Euronext London welcomed its third listing with Norbert Dentressangle, a leading European logistics company.
  • NYSE Euronext announced a strategic partnership with ACE, a leading transaction management platform for private placements of equity, debt and other securities. NYSE Euronext and ACE will establish an independent technology backbone for new issuances of private securities, with the goal of bringing greater transparency and efficiencies to the private market, just as NYSE Euronext has brought to the public market.

INFORMATION SERVICES AND TECHNOLOGY SOLUTIONS

Information Services and Technology Solutions revenue was $113 million in the third quarter of 2013, in-line with the third quarter of 2012 and included a $1 million positive impact from foreign currency fluctuations. Highlights for the third quarter of 2013 included:

  • Russell Indexes, a leading global index provider and NYSE Euronext, one of the world's premier exchange operators and technology innovators, announced new enhancements to RussellTick™, an index feed for real-time, intra-day values for the Russell family of global indexes. These enhancements represent an additional step in the growing global alliance between Russell Indexes and NYSE Euronext.
  • NYSE Technologies welcomed Banco Carregosa, a private bank based in Porto, as its first Portuguese SuperFeed™ customer. SuperFeed™ provides customers with consolidated access to market data from major US, European and Asian markets, in a single normalized format over NYSE Technologies’ Secure Financial Transaction Infrastructure (SFTI) network.
  • First Derivatives, a leading provider of software and consulting services to the capital markets industry, and NYSE Technologies are working together to create a new suite of historical data solutions. Combining NYSE Technologies’ historical and real-time data expertise covering cash, options, futures and corporate actions with First Derivatives’ products and market expertise, the “Tick as a Service” offering will build into a suite of innovative market services for clients to gain efficient access to large data stores for analytical back testing and compliance.
  • NYSE Technologies has obtained approval from the Chinese State Council Information Office (SCIO) to distribute market data in China. With the license from the SCIO, NYSE Technologies will disseminate financial information including NYSE Euronext’s real-time and historical market data, as well as SuperFeed services to market participants in mainland China.
  • NYSE Technologies and KOSCOM, the technology firm created by the Korean Ministry of Finance and Korea Exchange, have signed a Global Trading Hub Connectivity Agreement. The agreement will empower local traders and strengthen the Memorandum of Understanding (MOU) signed by both organizations in March 2012. In partnership with KOSCOM, NYSE Technologies has agreed to cross-connect its 1,300 member MarketplaceTM trading community to KOSCOM’s STP Hub of 130 key Korean firms.
  • ASX and NYSE Technologies, the commercial technology business of NYSE Euronext announced that they have connected their respective global networks. The linking of ASX Net Global and NYSE Technologies’ SFTI will initially provide customers of NYSE Technologies cost-effective access to ASX markets and market data services.

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

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, the BlueNext tax settlement, charge for fair value adjustment to RSU awards 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 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. For more information, please visit: http://www.nyx.com.

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CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

This written communication contains “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by words such as “may,” “hope,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” “continue,” “could,” “future” or the negative of those terms or other words of similar meaning. You should carefully read forward-looking statements, including statements that contain these words, because they discuss our future expectations or state other “forward-looking” information. Forward-looking statements are subject to numerous assumptions, risks and uncertainties which change over time. ICE Group, ICE and NYSE Euronext caution readers that any forward-looking statement is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statement.

Forward-looking statements include, but are not limited to, statements about the benefits of the proposed merger involving ICE Group, ICE and NYSE Euronext, including future financial results, ICE’s and NYSE Euronext’s plans, objectives, expectations and intentions, the expected timing of completion of the transaction and other statements that are not historical facts. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are set forth in ICE’s and NYSE Euronext’s filings with the U.S. Securities and Exchange Commission (the “SEC”). These risks and uncertainties include, without limitation, the following: the inability to close the merger in a timely manner; the failure to satisfy other conditions to completion of the merger, including receipt of required regulatory and other approvals; the failure of the proposed transaction to close for any other reason; the possibility that any of the anticipated benefits of the proposed transaction will not be realized; the risk that integration of NYSE Euronext’s operations with those of ICE will be materially delayed or will be more costly or difficult than expected; the challenges of integrating and retaining key employees; the effect of the announcement of the transaction on ICE’s, NYSE Euronext’s or the combined company’s respective business relationships, operating results and business generally; the possibility that the anticipated synergies and cost savings of the merger will not be realized, or will not be realized within the expected time period; the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; diversion of management’s attention from ongoing business operations and opportunities; general competitive, economic, political and market conditions and fluctuations; actions taken or conditions imposed by the United States and foreign governments or regulatory authorities; and adverse outcomes of pending or threatened litigation or government investigations. In addition, you should carefully consider the risks and uncertainties and other factors that may affect future results of the combined company, as are described in the section entitled “Risk Factors” in the joint proxy statement/prospectus filed by ICE Group with the SEC, and as described in ICE’s and NYSE Euronext’s respective filings with the SEC that are available on the SEC’s web site located at www.sec.gov, including the sections entitled “Risk Factors” in ICE’s Form 10-K for the fiscal year ended December 31, 2012, as filed with the SEC on February 6, 2013, and “Risk Factors” in NYSE Euronext’s Form 10-K for the fiscal year ended December 31, 2012, as filed with the SEC on February 26, 2013. You should not place undue reliance on forward-looking statements, which speak only as of the date of this written communication. Except for any obligations to disclose material information under the Federal securities laws, ICE Group, ICE and NYSE Euronext undertake no obligation to publicly update any forward-looking statements to reflect events or circumstances after the date of this written communication.

 
NYSE Euronext
Condensed consolidated statements of income (unaudited)
(in millions, except per share data)
                   
          Three months ended       Nine months ended
          Sept. 30, 2013     June 30, 2013       Sept. 30, 2012       Sept. 30, 2013       Sept. 30, 2012
                                           
                                           
Revenues                                          
Transaction and clearing fees         $ 554         $ 657         $ 570         $ 1,845         $ 1,828  
Market data           91           91           85           265           263  
Listing           113           111           112           334           334  
Technology services           74           77           81           231           254  
Other revenues           58           59           54           173           161  
Total revenues           890           995           902           2,848           2,840  
Transaction-based expenses:                                          
Section 31 fees           61           78           74           214           226  
Liquidity payments, routing and clearing           255           306           269           849           852  
Total revenues, less transaction-based expenses           574           611           559           1,785           1,762  
Other operating expenses                                          
Compensation           150           154           145           465           457  
Depreciation and amortization           64           62           64           188           196  
Systems and communications           40           42           44           125           133  
Professional services           63           67           76           199           218  
Selling, general and administrative           55           57           59           167           185  
Merger expenses and exit costs           24           22           18           54           61  
Total other operating expenses           396           404           406           1,198           1,250  
                                           
Operating income           178           207           153           587           512  
Net interest and investment income (loss)           (23 )         (25 )         (28 )         (75 )         (84 )
Loss from associates           (2 )         (3 )         (2 )         (7 )         (5 )
Net gain (loss) on disposal activities           5           10           -           15           (2 )
Other income (loss)           -           6           1           5           4  
Income before income taxes           158           195           124           525           425  
Income tax benefit (provision)           24           (17 )         (12 )         (34 )         (91 )
Net income           182           178           112           491           334  
Net (income) loss attributable to noncontrolling interest           (4 )         (5 )         (4 )         (14 )         (14 )
Net income attributable to NYSE Euronext         $ 178         $ 173         $ 108         $ 477         $ 320  
                                           
Basic earnings per share attributable to NYSE Euronext         $ 0.73         $ 0.71         $ 0.44         $ 1.96         $ 1.27  
                                           
Diluted earnings per share attributable to NYSE Euronext         $ 0.73         $ 0.71         $ 0.44         $ 1.95         $ 1.26  
                                           
Basic weighted average shares outstanding           243           243           246           243           252  
Diluted weighted average shares outstanding           245           244           247           245           253  
 

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       Nine months ended

Non-GAAP Reconciliation

        Sept. 30, 2013     June 30, 2013       Sept. 30, 2012       Sept. 30, 2013       Sept. 30, 2012
                                           
Income (loss) before income taxes - GAAP         $ 158         $ 195         $ 124         $ 525         $ 425  
Excluding:                                          
Merger expenses and exit costs           24           22           18           54           61  
Net (gain) loss on disposal activities           (5 )         (10 )         -           (15 )         2  
Fair value adjustment to RSU awards           -           -           -           10           -  
Income before income taxes - as adjusted           177           207           142           574           488  
Income tax provision           (42 )         (49 )         (30 )         (137 )         (117 )
Net income - as adjusted           135           158           112           437           371  
Net (income) loss attributable to noncontrolling interest           (4 )         (5 )         (4 )         (14 )         (14 )
Net income attributable to NYSE Euronext - as adjusted         $ 131         $ 153         $ 108         $ 423         $ 357  
                                           
Diluted earnings per share attributable to NYSE Euronext         $ 0.53         $ 0.63         $ 0.44         $ 1.73         $ 1.41  
 
NYSE Euronext
Segment Results (unaudited)
(in millions)
             
      Three months ended     Three months ended
      September 30, 2013     September 30, 2012
      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         $ 217     $ 337       $ -       $ -       $ 554       $ 198     $ 372       $ -       $ -       $ 570  
Market data           10       42         39         -         91         11       42         32         -         85  
Listing           -       113         -         -         113         -       112         -         -         112  
Technology services           -       -         74         -         74         -       -         81         -         81  
Other revenues           9       49         -         -         58         11       43         -         -         54  
Total revenues           236       541         113         -         890         220       569         113         -         902  
Transaction-based expenses:                                                            
Section 31 fees           -       61         -         -         61         -       74         -         -         74  
Liquidity payments, routing and clearing           70       185         -         -         255         56       213         -         -         269  
Total revenues, less transaction-based expenses           166       295         113         -         574         164       282         113         -         559  
Depreciation and amortization   [a]       9       42         13         -         64         10       41         13         -         64  
Merger expenses and exit costs (M&E)   [b]       1       3         2         18         24         13       2         2         1         18  
Other operating expenses           72       135         75         26         308         86       137         77         24         324  
Operating income - GAAP   [c]     $ 84     $ 115       $ 23       $ (44 )     $ 178       $ 55     $ 102       $ 21       $ (25 )     $ 153  
Operating income excluding M&E  

[c] + [b]

    $ 85     $ 118       $ 25       $ (26 )     $ 202       $ 68     $ 104       $ 23         (24 )     $ 171  
Adjusted EBITDA  

[c] + [b] + [a]

    $ 94     $ 160       $ 38       $ (26 )     $ 266       $ 78     $ 145       $ 36         (24 )     $ 235  
Operating margin excluding M&E           51 %     40 %       22 %       N/M         35 %       41 %     37 %       20 %       N/M         31 %
Adjusted EBITDA margin           57 %     54 %       34 %       N/M         46 %       48 %     51 %       32 %       N/M         42 %
 
       
             
      Nine months ended     Nine months ended
      September 30, 2013     September 30, 2012
      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         $ 750     $ 1,095       $ -       $ -       $ 1,845       $ 623     $ 1,205       $ -       $ -       $ 1,828  
Market data           30       127         108         -         265         33       131         99         -         263  
Listing           -       334         -         -         334         -       334         -         -         334  
Technology services           -       -         231         -         231         -       -         254         -         254  
Other revenues           34       139         -         -         173         33       127         -         1         161  
Total revenues           814       1,695         339         -         2,848         689       1,797         353         1         2,840  
Transaction-based expenses:                                                            
Section 31 fees           -       214         -         -         214         -       226         -         -         226  
Liquidity payments, routing and clearing           252       597         -         -         849         167       685         -         -         852  
Total revenues, less transaction-based expenses           562       884         339         -         1,785         522       886         353         1         1,762  
Depreciation and amortization   [a]       26       123         39         -         188         30       126         40         -         196  
Merger expenses and exit costs (M&E)   [b]       6       10         6         32         54         21       15         12         13         61  
Fair value adjustment to RSU awards   [c]       -       -         -         10         10         -       -         -         -         -  
Other operating expenses           244       401         225         76         946         260       410         235         88         993  
Operating income - GAAP   [d]     $ 286     $ 350       $ 69       $ (118 )     $ 587       $ 211     $ 335       $ 66       $ (100 )     $ 512  

Operating income excluding M&E and fair

value adjustment to RSU awards

 

  [d] + [c] + [b]     $ 292     $ 360       $ 75       $ (76 )     $ 651       $ 232     $ 350       $ 78       $ (87 )     $ 573  

Adjusted EBITDA

  [d] + [c] + [b] + [a]     $ 318     $ 483       $ 114       $ (76 )     $ 839       $ 262     $ 476       $ 118       $ (87 )     $ 769  

Operating margin excluding M&E and fair

value adjustment to RSU awards

          52 %     41 %       22 %       N/M         36 %       44 %     40 %       22 %       N/M         33 %
Adjusted EBITDA margin           57 %     55 %       34 %       N/M         47 %       50 %     54 %       33 %       N/M         44 %
   

 

             

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

N/M = Not meaningful             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)
 

Expense Base Development on a Constant $ / Constant Portfolio Basis

             
               
Fixed operating expenses for the three months ended September 30, 2013 - GAAP         $ 396    
Less:              
Merger expenses and exit costs           (24)    
          $ 372    
Excluding the impact of:              
Currency translation           (1)    
New business initiatives           (2)    
               
Fixed operating expenses for the three months ended September 30, 2013 - as adjusted         $ 369   [a]
               
Fixed operating expenses for the three months ended September 30, 2012 - GAAP         $ 406    
Less:              
Merger expenses and exit costs           (18)    
Fixed operating expenses for the three months ended September 30, 2012 - as adjusted         $ 388   [b]
               
Variance ($)         $ (19)   [a] - [b] = [c]
Variance (%)           -5%   [c] / [b]
               
Fixed operating expenses for the nine months ended September 30, 2013 - GAAP         $ 1,198    
Less:              
Fair value adjustment to RSU awards         $ (10)    
Merger expenses and exit costs           (54)    
          $ 1,134    
Excluding the impact of:              
Currency translation           2    
New business initiatives           (19)    
               
Fixed operating expenses for the nine months ended September 30, 2013 - as adjusted         $ 1,117   [a]
               
Fixed operating expenses for the nine months ended September 30, 2012 - GAAP         $ 1,250    
Less:              
Merger expenses and exit costs           (61)    
Fixed operating expenses for the nine months ended September 30, 2012 - as adjusted         $ 1,189   [b]
               
Variance ($)         $ (72)   [a] - [b] = [c]
Variance (%)           -6%   [c] / [b]
               
               

Expense Base Development Versus Project 14 Cost Savings Plan

             
               
Fixed operating expenses for the nine months ended September 30, 2013 - GAAP         $ 1,198    
Fixed operating expenses for the three months ended December 31, 2012 - GAAP           465    
Fixed operating expenses for the trailing twelve months ended September 30, 2013 - GAAP         $ 1,663    
Less:              
Fair value adjustment to RSU awards         $ (13)    
Merger expenses and exit costs           (127)    
          $ 1,523    
Excluding the impact of:              
New business initiatives           (48)    
Currency translation(1)           16    
Fixed operating expenses for the the trailing twelve months ended September 30, 2013 - as adjusted         $ 1,491   [a]
               
Fixed operating expenses for the year ended December 31, 2011 - base year         $ 1,666   [b]
               
               
Project 14 Cost Savings         $ 175   [b]-[a] = [c]
               
Cumulative Project 14 Cost Savings to date as % of total $250 million plan           70%   [c] / $250
 

(1) We measure the Project 14 cost savings utilizing constant currency rates of $1.35 for the Euro and $1.60 for the Pound Sterling.

 
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)
 
          Sept. 30,     Dec. 31,
          2013     2012
                 
Assets                
Current assets:                
Cash, cash equivalents, and short term financial investments         $ 437     $ 380
Accounts receivable, net           399       405
Deferred income taxes           65       67
Other current assets           111       156
Total current assets           1,012       1,008
                 
Property and equipment, net           893       948
Goodwill           4,191       4,163
Other intangible assets, net           5,803       5,783
Deferred income taxes           67       74
Other assets           432       580
Total assets         $ 12,398     $ 12,556
                 
Liabilities and equity                
Accounts payable and accrued expenses         $ 639     $ 824
Deferred revenue           225       138
Short term debt           213       454
Total current liabilities           1,077       1,416
                 
Long term debt           2,088       2,055
Deferred income taxes           1,362       1,435
Accrued employee benefits           560       602
Deferred revenue           384       378
Other liabilities           22       27
Total liabilities           5,493       5,913
                 
Redeemable noncontrolling interest           273       274
                 
Equity           6,632       6,369
                 
Total liabilities and equity         $ 12,398     $ 12,556
 
 

NYSE Euronext

Selected Statistical Data:

Volume Summary

 
          Average Daily Volume     Total Volume     Total Volume
(Unaudited)         3Q13     2Q13     % ∆ 3Q13 vs. 2Q13     3Q12     % ∆ 3Q13 vs. 3Q12     3Q13     2Q13     % ∆ 3Q13 vs. 2Q13     3Q12     % ∆ 3Q13 vs. 3Q12     YTD 2013     YTD 2012     % ∆
                                                                                       
Number of Trading Days - European Cash           66         63               65                 66         63               65               191       192        
Number of Trading Days - European Derivatives           66         64               65                 66         64               65               192       193        
Number of Trading Days - U.S. Markets           64         64               63                 64         64               63               188       188        
                                                                                       
European Derivatives Products (contracts in thousands)           3,127         4,048       -22.8 %       3,383       -7.6 %         206,355         259,087       -20.4 %       219,866       -6.1 %       745,379       729,643       2.2 %
of which Bclear           446         749       -40.4 %       829       -46.2 %         29,432         47,918       -38.6 %       53,856       -45.3 %       132,099       207,412       -36.3 %
Avg. Net Revenue Per Contract (ex. Bclear)         $ 0.622       $ 0.610       2.0 %     $ 0.657       -5.3 %       $ 0.622       $ 0.610       2.0 %     $ 0.657       -5.3 %                    
Avg. Net Revenue Per Contract (ex. Bclear) - Currency Neutral         $ 0.622       $ 0.614       1.3 %     $ 0.644       -3.4 %       $ 0.622       $ 0.614       1.3 %     $ 0.644       -3.4 %                    
                                                                                       
Total Interest Rate Products1           1,967         2,463       -20.2 %       1,731       13.6 %         129,808         157,654       -17.7 %       112,531       15.4 %       457,895       350,918       30.5 %
                                                                                       
Short Term Interest Rate Products           1,810         2,276       -20.5 %       1,583       14.3 %         119,441         145,688       -18.0 %       102,912       16.1 %       423,839       321,829       31.7 %
Medium and Long Term Interest Rate Products           157         187       -16.0 %       148       6.1 %         10,367         11,965       -13.4 %       9,619       7.8 %       34,056       29,089       17.1 %
                                                                                       
Total Equity Products2           1,065         1,496       -28.8 %       1,551       -31.3 %         70,311         95,732       -26.6 %       100,803       -30.2 %       269,845       361,965       -25.4 %
                                                                                       
Individual Equity Products           638         966       -33.9 %       1,100       -42.0 %         42,134         61,801       -31.8 %       71,513       -41.1 %       174,114       267,841       -35.0 %
Futures           285         606       -53.0 %       696       -59.1 %         18,803         38,806       -51.5 %       45,265       -58.5 %       98,557       179,402       -45.1 %
Options           353         359       -1.6 %       404       -12.5 %         23,331         22,995       1.5 %       26,248       -11.1 %       75,557       88,439       -14.6 %
Equity Index Products           427         530       -19.5 %       451       -5.3 %         28,177         33,931       -17.0 %       29,290       -3.8 %       95,731       94,124       1.7 %
                                                                                       
of which Bclear           444         748       -40.6 %       829       -46.4 %         29,432         47,918       -38.6 %       53,856       -45.3 %       132,099       207,412       -36.3 %
Individual Equity Products           366         650       -43.7 %       754       -51.5 %         24,159         41,625       -42.0 %       49,014       -50.7 %       112,792       193,037       -41.6 %
Futures           283         579       -51.0 %       670       -57.7 %         18,702         37,032       -49.5 %       43,560       -57.1 %       96,001       174,532       -45.0 %
Options           83         72       15.2 %       84       -1.5 %         5,457         4,593       18.8 %       5,454       0.1 %       16,791       18,505       -9.3 %
Equity Index Products           78         98       -20.1 %       74       5.0 %         5,162         6,262       -17.6 %       4,842       6.6 %       19,054       14,375       32.5 %
                                                                                       
Commodity Products           94         89       6.1 %       100       -6.0 %         6,236         5,701       9.4 %       6,532       -4.5 %       17,639       16,761       5.2 %
                                                                                       
U.S. Derivatives Products (contracts in thousands)                                                                                      
Avg. Net Revenue Per Contract (ex. Liffe U.S. volumes)         $ 0.165       $ 0.156       5.8 %       0.144       14.6 %       $ 0.165       $ 0.156       5.8 %       0.144       14.6 %                    
                                                                                       
Equity Options Contracts3           3,513         4,376       -19.7 %       3,533       -0.6 %         224,809         280,070       -19.7 %       222,578       1.0 %       758,723       725,134       4.6 %
Total Consolidated Options Contracts           13,627         15,879       -14.2 %       13,812       -1.3 %         872,105         1,016,261       -14.2 %       870,150       0.2 %       2,787,252       2,794,081       51.2 %
                                                                                       
Share of Total Consolidated Options Contracts           25.8 %       27.6 %             25.6 %               25.8 %       27.6 %             25.6 %             27.2 %     26.0 %      
                                                                                       
NYSE Liffe U.S.                                                                                      
                                                                                       
Futures and Futures Options Volume*           46.1         63.3       -27.1 %       66.4       -30.5 %         3,043.2         4,111.7       -26.0 %       4,247.6       -28.4 %       10,796.0       15,178.2       -28.9 %
                                                                                       
European Cash Products (trades in thousands)           1,339         1,470       -8.9 %       1,318       1.5 %         88,352         92,600       -4.6 %       85,695       3.1 %       266,371       294,556       -9.6 %
Avg. Net Revenue Per Transaction         $ 0.543       $ 0.562       -3.4 %     $ 0.537       1.1 %       $ 0.543       $ 0.562       -3.4 %     $ 0.537       1.1 %                    
Avg. Net Revenue Per Transaction - Currency Neutral         $ 0.543       $ 0.570       -4.7 %     $ 0.537       1.1 %       $ 0.543       $ 0.570       -4.7 %     $ 0.570       -4.7 %                    
                                                                                       
Equities           1,295         1,418       -8.7 %       1,272       1.8 %         85,484         89,352       -4.3 %       82,698       3.4 %       257,036       284,805       -9.8 %
Exchange-Traded Funds           13         15       -14.4 %       13       0.5 %         835         932       -10.4 %       819       2.0 %       2,616       2,650       -1.3 %
Structured Products           27         32       -15.5 %       28       -4.2 %         1,781         2,011       -11.5 %       1,831       -2.7 %       5,810       6,125       -5.1 %
Bonds           4         5       -21.4 %       5       -28.8 %         251         305       -17.7 %       348       -27.7 %       910       976       -6.7 %
                                                                                       
U.S. Cash Products (shares in millions)           1,413         1,626       -13.1 %       1,583       -10.8 %         90,413         104,043       -13.1 %       99,758       -9.4 %       287,177       325,180       -11.7 %
Avg. Net Revenue Per 100 Shares Handled         $ 0.0490       $ 0.0473       3.6 %     $ 0.0401       22.2 %       $ 0.0490       $ 0.0473       3.6 %     $ 0.0401       22.2 %                    
                                                                                       
NYSE Listed (Tape A) Issues 4                                                                                      
                                                                                       
Handled Volume 5           1,004         1,154       -13.0 %       1,134       -11.5 %         64,233         73,870       -13.0 %       71,463       -10.1 %       205,310       232,644       -11.7 %
Matched Volume 6           970         1,113       -12.9 %       1,078       -10.0 %         62,092         71,262       -12.9 %       67,921       -8.6 %       197,956       220,535       -10.2 %
Total NYSE Listed Consolidated Volume           3,143         3,608       -12.9 %       3,412       -7.9 %         201,139         230,911       -12.9 %       214,981       -6.4 %       647,161       703,537       -8.0 %
                                                                                       
Share of Total Consolidated Volume                                                                                      
Handled Volume 5           31.9 %       32.0 %             33.2 %               31.9 %       32.0 %             33.2 %             31.7 %     33.1 %      
Matched Volume 6           30.9 %       30.9 %             31.6 %               30.9 %       30.9 %             31.6 %             30.6 %     31.3 %      
                                                                                       
NYSE Arca, MKT and Regional (Tape B) Listed Issues                                                                                      
                                                                                       
Handled Volume 5           241         286       -15.7 %       222       8.5 %         15,430         18,298       -15.7 %       14,005       10.2 %       47,194       48,029       -1.7 %
Matched Volume 6           223         263       -15.3 %       202       10.1 %         14,256         16,823       -15.3 %       12,741       11.9 %       43,514       43,238       0.6 %
Total NYSE Arca & NYSE MKT Listed Consolidated Volume           1,026         1,248       -17.7 %       939       9.2 %         65,684         79,841       -17.7 %       59,184       11.0 %       205,192       203,650       0.8 %
                                                                                       
Share of Total NYSE Arca & NYSE MKT Listed Consolidated Volume                                                                          
Handled Volume 5           23.5 %       22.9 %             23.7 %               23.5 %       22.9 %             23.7 %             23.0 %     23.6 %      
Matched Volume 6           21.7 %       21.1 %             21.5 %               21.7 %       21.1 %             21.5 %             21.2 %     21.2 %      
                                                                                       
Nasdaq Listed Issues (Tape C)                                                                                      
                                                                                       
Handled Volume 5           168         186       -9.5 %       227       -25.9 %         10,750         11,875       -9.5 %       14,289       -24.8 %       34,673       44,507       -22.1 %
Matched Volume 6           150         166       -9.7 %       196       -23.6 %         9,578         10,610       -9.7 %       12,342       -22.4 %       30,946       38,067       -18.7 %
Total Nasdaq Listed Consolidated Volume           1,631         1,781       -8.4 %       1,661       -1.8 %         104,370         113,979       -8.4 %       104,663       -0.3 %       327,665       329,548       -0.6 %
                                                                                       
Share of Total Nasdaq Listed Consolidated Volume                                                                                      
Handled Volume 5           10.3 %       10.4 %             13.7 %               10.3 %       10.4 %             13.7 %             10.6 %     13.5 %      
Matched Volume 6           9.2 %       9.3 %             11.8 %               9.2 %       9.3 %             11.8 %             9.4 %     11.6 %      
                                                                                       
Exchange-Traded Funds 5,7                                                                                      
                                                                                       
Handled Volume 5           223         267       -16.5 %       205       8.8 %         14,266         17,094       -16.5 %       12,903       10.6 %       44,093       45,002       -2.0 %
Matched Volume 6           206         245       -16.0 %       186       10.6 %         13,190         15,694       -16.0 %       11,739       12.4 %       40,645       40,453       0.5 %
Total ETF Consolidated Volume           964         1,203       -19.9 %       890       8.4 %         61,715         77,019       -19.9 %       56,048       10.1 %       196,288       196,741       -0.2 %
                                                                                       
Share of Total ETF Consolidated Volume                                                                                      
Handled Volume 5           23.1 %       22.2 %             23.0 %               23.1 %       22.2 %             23.0 %             22.5 %     22.9 %      
Matched Volume 6           21.4 %       20.4 %             20.9 %               21.4 %       20.4 %             20.9 %             20.7 %     20.6 %      
 
     
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.
7   Data 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)         Sept. 30, 2013     June 30, 2013     Sept. 30, 2012
                       
NYSE Euronext Listed Issuers                      
                       
NYSE Listed Issuers                      
                       
Issuers listed on U.S. Markets1           2,957         2,942         2,951  
Number of new issuer listings1           61         88         44  
Capital raised in connection with new listings ($millions)2         $ 7,149       $ 8,982       $ 5,865  
                       
Euronext Listed Issuers                      
                       
Issuers listed on Euronext1           880         884         906  
Number of new issuer listings3           5         14         6  
Capital raised in connection with new listings ($millions)2         $ 60       $ 1,207       $ 3  
                       
                       
NYSE Euronext Market Data                      
                       
NYSE Market Data4                      
                       
Share of Tape A revenues (%)           39.5 %       40.3 %       41.4 %
Share of Tape B revenues (%)           27.3 %       26.7 %       27.2 %
Share of Tape C revenues (%)           13.5 %       13.5 %       15.4 %
Professional subscribers (Tape A)           313,426         331,241         349,445  
                       
Euronext Market Data                      
                       
Number of terminals           195,914         202,389         211,850  
                       
                       
NYSE Euronext Operating Expenses                      
                       
NYSE Euronext employee headcount                      
                       
NYSE Euronext headcount5           3,142         3,154         3,061  
                       
                       
NYSE Euronext Financial Statistics                      
                       
NYSE Euronext foreign exchange rate                      
                       
Average €/US$ exchange rate         $ 1.325       $ 1.306       $ 1.252  
Average £/US$ exchange rate         $ 1.551       $ 1.536       $ 1.581  
 
 
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 1,406 ETPs exclusively listed on NYSE Arca as of September 30, 2013. There were 360 corporate structured products listed on the NYSE as of September 30, 2013. 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 September 30, 2013, 181 companies were listed on NYSE Alternext, 242 on Free Market and 655 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 as of March 31, 2013 included 120 employees from the insourcing of offshore resources as part of the January 2013 creation of NYSE Philippines.
     
    Source: NYSE Euronext, Options Clearing Corporation and Consolidated Tape as reported for equity securities.