Nasdaq Q4 income jumps

Net income for the fourth quarter 2007 declined when compared to $365.0 million, or $2.41 per diluted share, reported in the third quarter 2007. Net income for the full year 2007 increased to $518.4 million, or $3.46 per diluted share, when compared to net income applicable to common stockholders of $127.2 million, or $0.95 per diluted share, for the full year 2006. Included in third quarter and full year 2007 results are pre-tax gains of $431.4 million associated with NASDAQ's sale of its share capital of the London Stock Exchange Group plc, which had the impact of increasing diluted earnings per share by $1.95 for both periods.

Fourth quarter 2007 results include pre-tax gains of $18.2 million related to foreign currency option contracts, as well as pre-tax charges of $1.1 million related to the early extinguishment of debt and $0.6 million in workforce reduction expenses. When excluding these items net income on a non-GAAP basis was $69.1 million, or $0.46 per diluted share. This represents an increase when compared to non-GAAP net income of $32.5 million, or $0.23 per diluted share for the fourth quarter of 2006, and $62.1 million, or $0.42 per diluted share for the third quarter of 2007.

Revenues less liquidity rebates, brokerage, clearance and exchange fees ("net exchange revenues") were $211.6 million in the fourth quarter of 2007, an increase of 15.6% from $183.1 million in the year-ago period, and up $1.6 million from $210.0 million reported in the third quarter of 2007.

"Our fourth quarter results cap off a truly defining year for NASDAQ," commented Bob Greifeld, NASDAQ's President and Chief Executive Officer. "During 2007 we were able to dramatically improve our financial and operational performance, leaving us stronger and better positioned for future success. We solidified our global footprint with the agreement to combine with OMX and invest strategically into the emerging markets of the Middle East. Additionally, we took steps to diversify ouour business into derivatives, clearing and other new products through the planned acquisitions of both the Philadelphia and Boston Stock Exchanges and through OMX's announced acquisition of NordPool. As we enter 2008, we are even more excited about the opportunities in front of us as we execute our plans for geographic expansion and product diversification."

Recent Highlights

• NASDAQ expanded its leadership position as the largest single pool of liquidity in which to trade U.S. listed equities, matching a record high of 29.7% of all volume for the fourth quarter of 2007. NASDAQ also achieved new market share highs in the trading of NYSE- and Amex-listed securities, matching 18.8% and 35.2% of volume, respectively, during the quarter.
• Announced the proposed acquisition of the Philadelphia Stock Exchange, the third largest options market in the U.S. and the nation's oldest stock exchange. This transaction significantly diversifies NASDAQ's product portfolio by providing NASDAQ with one of the premier options trading platforms in the U.S.
• Received the necessary regulatory and shareholder approvals to allow NASDAQ to proceed with plans to combine with OMX and invest in DIFX. NASDAQ expects to complete this transaction in the first quarter of 2008.
• Expanded the Select Market Maker Program to NYSE-listed companies. The program is designed to bring NYSE-listed companies and the NASDAQ market making community together, while providing companies access to utilize NASDAQ's Market Intelligence Desk(r) (MID) and proprietary NASDAQ Online(r) (NOL) at no cost. The Select Market Maker Program is focused on providing issuers with direct access to market information from market participants.
• In partnership with a group of leading securities firms, NASDAQ announced its intention to form The PORTAL Alliance, an industry standard facility designed to serve the market for 144A equity securities. The PORTAL Alliance will work with third-party service providers to create an open, industry-standard facility for the private offering, trading, shareholder tracking and settlement of unregistered equity securities sold to qualified institutional buyers ("QIBs").

"NASDAQ's financial performance continued to be strong during the quarter," commented NASDAQ's Chief Financial Officer, David Warren. "Net exchange revenues, which have grown for thirteen consecutive quarters, were up 15.6% over last year's fourth quarter, while operating income increased nearly 50%. Our ability to increase our operating leverage afforded us the flexibility to invest in key growth initiatives, while at the same time delivering exceptional results. We plan to utilize this same operating philosophy as we complete our previously announced transactions with OMX, the Philadelphia Stock Exchange, and the Boston Stock Exchange, to ensure that we continue to achieve all of our strategic and financial goals."

2008 Guidance

NASDAQ has decided to forgo providing guidance as a standalone entity at this time given the transactions that are expected to close during the first half of 2008 and the contributions that each will have on the financial results of the consolidated organization.

Financial Review

Net exchange revenues increased 15.6% in the fourth quarter to $211.6 million, up from $183.1 million in the prior year quarter, and up $1.6 million from $210.0 million reported in the third quarter of 2007.

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