NYSE Euronext (NYX) today reported net income of $230 million, or $0.87 per diluted share, for the quarter ended Mar. 31, 2008, a $162 million or 238% increase as compared to net income of $68 million, or $0.43 per diluted share, for the quarter ended Mar. 31, 2007.
These results are presented in accordance with U.S. Generally Accepted Accounting Principles (GAAP). The comparative results for 2007 reflect the operations of NYSE Group only.
"Our strong performance in the first quarter of 2008 highlights the growing demand for our broad array of products and services across all of our business units and the inherent operating leverage in NYSE Euronext's diverse business model," said Duncan L. Niederauer, CEO, NYSE Euronext. "We are very pleased with the growth in our transaction-related revenues, which underscores our leadership position in an increasingly competitive environment. We remain focused on executing our global growth strategy, operating with the utmost efficiency, strengthening our competitive position, and providing exceptional customer and shareholder value."
Joost van der Does de Willebois, Acting CFO, NYSE Euronext, added, "In addition to producing strong revenue growth, we are well on target to achieve our annual $250 million in technology-run rate savings. In the first quarter, we achieved $70 million in annual IT run-rate savings, which exceeds our previously announced $50 million goal."
On a non-GAAP basis, giving effect to the Euronext transaction as if it occurred at the beginning of the earliest period presented, and excluding merger expenses and exit costs, the net income of NYSE Euronext for the quarter ended Mar. 31, 2008 would have been $241 million, or $0.91 per diluted share, an $83 million or 53% increase versus non-GAAP net income of $158 million, or $0.60 per diluted share, for the quarter ended Mar. 31, 2007. A full reconciliation of these non-GAAP results is included in the attached tables.
At constant US$/EUR and US$/GBP exchange rates, neutralizing the impact of acquisitions and dispositions of businesses and equity investments for the period, and on a non-GAAP basis, NYSE Euronext's revenues, net of activity assessment fees, for the quarter ended Mar. 31, 2008 increased $236 million, or 25%, while operating income increased $99 million, or 38%, compared to the quarter ended Mar. 31, 2007. In addition, on a normalized basis, revenues increased $129 million, or 12%, while operating income increased $93 million, or 34%, compared to the quarter ended Dec. 31, 2007. Please refer to the table entitled "Normalized operating income including non-GAAP financial measures."
During the first quarter of 2008, NYSE Euronext announced plans to acquire the American Stock Exchange, introduced NYSE Euronext Advanced Trading Solutions in connection with our acquisition of Wombat Financial Software, agreed to purchase a 5% stake in India's Multi Commodity Exchange, and entered the U.S. futures market through our acquisition of the CME Group precious metals complex.
Other Financial Highlights
- On a non-GAAP basis, net transaction revenues, defined as cash and derivatives trading revenues net of liquidity payments and routing and clearing expenses, increased $138 million or 39% for the three months ended Mar. 31, 2008 versus the year ago period.
- As a result of the NYSE Euronext merger, and following the reorganization of certain of our businesses, the effective tax rate of NYSE Euronext on a non-GAAP basis was 30.0% for the three months ended Mar. 31, 2008 as compared to 35.0% for the same period a year ago and 32.5% for the three months ended Dec. 31, 2007.
- As of Mar. 31, 2008, NYSE Euronext had a strong financial position with $1,674 million of cash, cash equivalents, investment and other securities (including $124 million related to Section 31 fees collected from market participants and due to the U.S. Securities and Exchange Commission) and $3,034 million in debt obligations.
- On Apr. 23, 2008, NYSE Euronext completed its offering of EUR 750 million in aggregate principal amount of 5.375% Notes due 2015 pursuant to Regulation S under the Securities Act of 1933.
- On Mar. 11, 2008, NYSE Euronext announced a 20% increase in its annual dividend to $1.20 per common share; the first $0.30 quarterly dividend payment will be made on Jun. 30, 2008 to shareholders of record as of Jun. 16, 2008. NYSE Euronext's newly adopted policy is to grow the dividend to its shareholders, with a target payout ratio of 35% to 45 % of net income, while maintaining high investment grade credit ratings.
NYSE Euronext, which is comprised of six cash equities exchanges in five countries and six derivatives exchanges in six countries, is a world leader for listings, trading in cash equities, equity and interest rate derivatives, and the distribution of market data. NYSE Euronext represents a $27.3 / EUR 17.3 trillion total market capitalization of listed companies and average daily trading value of $169.6 / EUR 113.2 billion (as of Mar. 31, 2008). NYSE Euronext's cash equity exchanges in Europe and the U.S. achieved new all-time quarterly volume records for the quarter ended Mar. 31, 2008 with 103 million transactions and 191 billion shares traded, respectively.
- NYSE Euronext's European derivatives trading platform, Liffe, continued its strong 2007 performance with new all-time record quarter for the three months ended March 31, 2008. Total trading volume on Liffe was up 29% in the first quarter of 2008 compared to the same period in 2007, with volumes in commodities products up 56%, in total interest rate products up 41%, and BClear trading up 53%.
- Liffe, following approval from the board of LCH.Clearnet Group Ltd, announced that it is to negotiate a new contract with LCH.Clearnet. These negotiations are ongoing.
NYSE Arca Options
- As the U.S. options industry's fastest growing exchange, NYSE Arca Options experienced volume growth of 70% during the first quarter of 2008 compared to the first quarter of 2007. NYSE Arca Options share of trading in equity option contracts increased 1.8 percentage points to 14.5% during the first quarter of 2008 compared to the same period a year ago.
- NYSE Arca Options continues to be a leader in the trading of issues in the SEC Penny Pilot with a 17.6% share of trading through March 2008, including an industry-leading 8.3 percentage point increase in share of trading since the first quarter of 2007. In March 2008, the SEC expanded the options Penny Pilot program to include 63 total issues representing approximately 58% of industry-wide options volume.
European Cash Markets
- During the first quarter of 2008, NYSE Euronext's European equities markets registered a 39% increase in total volume led by strong gains of 66% and 41% in ETFs and core equities trading, respectively.
- Euronext also reached a new record high in quarterly transaction activity for the three months ended Mar. 31, 2008, with record activity of 1.6 million transactions per day on average.
U.S. Cash Markets
- NYSE Group, NYSE Euronext's U.S. trading operations, achieved a new record average daily volume of 3.6 billion shares traded per day. Our U.S. cash markets also produced a substantial quarterly handled volume increase of 26% in overall equities trading, which included increases of 22% in NYSE listed securities, 145% in NYSE Arca & Amex listed securities and 91% in ETFs.
- NYSE Group markets also established several new trading records with new all-time quarterly volume in the first quarter of 2008, which included the second and sixth most active days in history.
- On Mar. 31, NYSE Arca announced transaction pricing changes designed to deliver the most competitive rates, including the highest rebate and lowest "take" fee, among major U.S. equity markets for trading all NYSE-listed (Tape A) and Nasdaq-listed (Tape C) securities. Also, NYSE Arca Options reduced the liquidity "take" rate for all market participants in penny pilot issues and will provide a higher rebate for active liquidity providers.
- NYSE Euronext maintained its ETF leadership position with 548 ETFs listed in the U.S. and Europe combined. No other exchange group lists more products or trades more shares around the world than NYSE Euronext.
- On Mar. 19, 2008, Visa Inc., the world's largest retail electronic payment network, began trading on the NYSE under the ticker symbol "V" after its historic initial public offering in which it raised $17.86 billion. Visa's IPO is the largest domestic initial public offering in U.S. history and the third largest initial public offering worldwide.
- In the first three months of 2008, the number of NYSE (Tape A) professional subscribers grew 6.0% to reach 456,752 as of Mar. 31, 2008, while the number of Euronext terminals grew 7.0% versus the same period in 2007 to reach 222,630 as of Mar. 31, 2008.
Other Highlights for the First Quarter 2008
- Jan. 7 - The Securities and Exchange Commission approved the rules for NYSE MatchPoint, a new, portfolio-based, point-in-time electronic facility of the NYSE that matches aggregated orders at predetermined sessions throughout regular hours and after hours of the Exchange.
- Jan. 17 - NYSE Euronext announced its intent to acquire the American Stock Exchange for $260 million in stock and additional stock based on the net proceeds of the sale of the Amex headquarters in a strategic transaction that strengthens the company's U.S. options, ETF and cash product offerings.
- Jan. 22 - NYSE Euronext, in a joint venture with Caisse des Depots, launched BlueNext, the international exchange for the environment, operating markets in carbon emission allowances and credits.
- Jan. 23 - Satyam Computer Services (NYSE: SAY/Euronext: SAYE/NSE: SATY), a leading global information technology solutions provider headquartered in Hyderabad, India, became the first NYSE-listed company to cross-list on NYSE Euronext in Europe and the U.S., using the convenient, cost-effective fast-path process, which relies on existing U.S. registration documents for its European listing. Phillip Morris International (PM) also cross-listed on March 31.
- Jan. 28 & 29 - NYSE Euronext continued its product and service expansion in Asia by adding resources and personnel in the Singapore and Tokyo offices.
- Jan. 31 - Liffe announced a major expansion of its Bclear wholesale service with the listing of flexible Universal Stock Futures (USFs) on an additional 112 underlyings and flexible Individual Equity Options on an additional 41 underlyings, bringing the total number of underlyings on which futures and options contracts are available on Bclear to 970, offering Liffe customers more single stock futures on the Dow Jones STOXX(R) 600 constituents than any other exchange.
- Feb. 6 - The largest European IPO of the quarter took place on NYSE Euronext's European market when Liberty International raised EUR 600 million.
- Feb. 15 - NYSE Euronext announced its intention to purchase, subject to regulatory approvals, a 5% stake in India's Multi Commodity Exchange (MCX), the country's leading commodity marketplace.
- Feb. 19 - NYSE Euronext announced the launch of Prime Source NYSE Euronext, a new independent comprehensive valuation service. This innovative solution is designed to meet professional buy-side market participants' needs for valuation of large, global portfolios of complex structured products and illiquid securities. Customers' valuation needs will be facilitated by efficient and sophisticated processes supported by Prime Source's unique, web-based technical infrastructure.
- Mar. 7 - Upon the completion of the Wombat Financial Software acquisition, NYSE Euronext introduced a new commercial technology business unit, NYSE Euronext Advanced Trading Solutions, a combination of NYSE TransactTools, Wombat and SFTI.
- Mar. 12 -NYSE Arca launched a first-of-its-kind routing and price improvement service offering clients access to non-displayed liquidity through the addition of routing to participating broker-dealers and Alternative Trading Systems (ATSs).
- Mar. 14 - NYSE Euronext acquired the CME Group Precious Metals Complex, giving NYSE Euronext a point of entry in the U.S. futures business.
- Mar. 18 - NYSE Euronext and the Abu Dhabi Securities Market (ADSM) entered into a cooperation agreement to jointly develop and explore new opportunities in trading systems and other related technology, investor and issuer services, and investment products.
- Mar. 18 - The NYSE Euronext board of directors authorized the repurchase of up to $1 billion of NYSE Euronext's common stock, subject to U.S. and European regulations, strategic considerations, market conditions and other factors, and a 20% increase in its annual dividend as part of a dividend policy to grow the dividend, achieve a target payout ratio of 35-45% of net income while maintaining high investment grade ratings.
- Mar. 19 - Visa Inc., the largest domestic initial public offering in U.S. history, began trading on the NYSE under the ticker symbol "V".
- Mar. 25 - NYSE Euronext's Alternext welcomed its first Chinese company with the initial listing in Paris of China Corn Oil, the largest specialist producer and exporter of edible corn oil in China. Huacheng Real Estate followed as the second Chinese company to list on its Alternext in April.
- Mar. 25 - Liffe announced that it would negotiate a new contract with LCH.Clearnet.
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