For comparison purposes net income and dilutive earnings per share for the fourth quarter of 2008 are presented on a non-GAAP basis and exclude losses from foreign currency contracts, asset impairment charges and merger expenses. Net income and dilutive earnings per share for earlier periods are presented on a pro forma non-GAAP basis that reflects the financial results of NASDAQ, OMX, and the Philadelphia Stock Exchange as if they were a combined company for the periods presented and excludes merger expenses, gains (losses) from foreign currency contracts and certain other non-recurring items.

For the fourth quarter of 2008, net income on a non-GAAP basis was $112.1 million, or $0.53 per diluted share, an increase of 35.2% when compared to pro forma non-GAAP net income of $82.9 million, or $0.38 per diluted share, for the fourth quarter of 2007, and an increase of 2.2% when compared to pro forma non-GAAP net income of $109.7 million, or $0.52 per diluted share, for the third quarter of 2008.

Items excluded from fourth quarter 2008 non-GAAP results are:

• A $47.4 million non-cash pre-tax loss primarily related to a forward contract to hedge the Norwegian Krone cash payment for the acquisition of Nord Pool's clearing, international derivatives and consulting subsidiaries;
  
• A $34.9 million non-cash pre-tax other-than-temporary impairment charge on a long-term available for sale investment security in Oslo Bors VPS Holding ASA; and
  
• $9.5 million in pre-tax merger-related expenses.

Total revenues were $1.0 billion in the fourth quarter of 2008. Revenues less liquidity rebates, brokerage, clearance and exchange fees ("net exchange revenues") were $402.6 million for the fourth quarter of 2008, a decrease of $7.0 million, or 1.7%, from pro forma fourth quarter 2007 results, and a decrease of $8.0 million, or 1.9%, from pro forma third quarter 2008 results.

"2008 was a very eventful year for NASDAQ OMX, one in which we completed five acquisitions and announced four strategic investments," commented Bob Greifeld, NASDAQ OMX's Chief Executive Officer. "In the process we've transformed our company and created an organization with operations spanning the globe. The steps taken to leverage our core technology, integrate our acquisitions, and diversify our product offering have yielded immediate benefits as operating income reached new highs."

Recent Highlights

• Reached new market share highs in the trading of U.S. equity options contracts. The combined market share of NASDAQ OMX PHLX and The NASDAQ Options Market averaged 18.6% during the fourth quarter of 2008, up from 16.0% in the fourth quarter of 2007, while reaching a high of 19.8% during the month of December. Total volume traded on these markets grew 15.5% in the fourth quarter of 2008 when compared to the same period last year.
• The NASDAQ Stock Market matched 29.2% of all U.S. traded cash equity volume in the fourth quarter of 2008, an increase of 59.3% from the prior year quarter while matched average daily volume reached a record high of 3.1 billion shares. As a result, The NASDAQ Stock Market maintained its leading position as the largest single pool of liquidity in which to trade U.S.-listed equities.
  
• Recently launched NASDAQ OMX BX (BX), a new venue for trading U.S. cash equities that utilizes NASDAQ OMX's existing technology platform. While providing a second quote for U.S. equities, BX also offers customers greater flexibility and an alternate trading fee schedule.
  
• During the fourth quarter of 2008, average daily trading volume for cash equities reached a record 250,497 trades on the exchanges comprising NASDAQ OMX Nordic and NASDAQ OMX Baltic. Total trades grew 16.7% from the prior year quarter and 19.6% from the third quarter of 2008.
  
• Completed an 80% investment in the International Derivatives Clearing Group (IDCG) furthering NASDAQ OMX's entrance into the derivatives market while leveraging assets from the OMX business combination and the PHLX acquisition. By partnering with IDCG, a highly efficient market is being created to trade, clear, and settle U.S. dollar interest rate swap futures contracts and other fixed income derivative contracts.
  
• Acquired a 22% stake in the European Multilateral Clearing Facility N.V. (EMCF), a leading European clearing house, and signed an agreement with EMCF to use its central counterparty services for all transactions executed on the NASDAQ OMX Nordic exchanges. The strategic investment in EMCF and the introduction of central counterparty services in the Nordic markets is part of a broader commitment to reduce clearing and settlement costs for customers in Europe.
  
• Completed an additional investment in Agora-X, LLC, resulting in our ownership of a 20% equity interest in the company, following the launch of Agora-X's electronic communications network for institutional trading in over the counter commodity contracts. The platform provides a more liquid and transparent marketplace for price discovery and negotiation for agricultural swaps and swaptions, as well as swaps and options on ethanol.
  
• NASDAQ OMX attracted 40 new listings in the fourth quarter of 2008, including 11 switches from exchanges operated by NYSE Euronext. Notable switches during the quarter included News Corporation (NASDAQ:NWSA & NWS); Automatic Data Processing (NASDAQ:ADP); Mylan Laboratories (NASDAQ:MYL); and Jack in the Box (NASDAQ:JACK). During the full-year 2008 NASDAQ OMX attracted 208 new listings, including 61 switches from exchanges operated by NYSE Euronext.
• The Egyptian Exchange (EGX), a NASDAQ OMX Market Technology customer, announced the successful launch of a newly designed trading engine that is expected to create a more efficient marketplace and trading experience for EGX members. The fully integrated trading platform is intended to provide a much larger capacity, reduced cost and ease of operation. The system is capable of handling equities, debt, ETFs, futures, options, swaps and derivatives on a single platform.
  
• Launched the NASDAQ OMX Government Relief IndexSM (Nasdaq:QGRI), enabling investors to track the performance of U.S.-listed securities that are participating in U.S. government sponsored relief programs such as the Troubled Asset Relief Program or other direct government investments. NASDAQ OMX also introduced the OMX GES Sustainability Index, a benchmark index which comprises the 50 leading Nordic listed companies in terms of sustainability.
  
• NASDAQ OMX Commodities and Nord Pool ASA, our third party partner, were chosen by the Futures & Options Association (FOA) in the United Kingdom (UK) to establish a spot and cash-settled derivatives power market with a full range of clearing services. FOA chose the consortium of NASDAQ OMX Commodities and Nord Pool ASA for the delivery of market and clearing services for the UK Wholesale Power Market. The parties plan to establish the market in the second quarter of 2009.

"Our integration efforts continue to be successful," said David Warren, NASDAQ OMX's Chief Financial Officer. "I'm pleased to report that during the fourth quarter of 2008 we achieved the targeted $100 million in expense synergies resulting from the combination with OMX, fourteen months ahead of our original schedule. And as we enter this year it is our expectation that we'll realize additional benefits from our integration efforts as we consolidate Nordic cash equities and PHLX trading activity onto our core matching engine. For the full year 2009 we are targeting total operating expenses to be in the range of $840.0 million to $860.0 million, including approximately $30.0 million in merger-related costs."

Financial Review
Results for the fourth quarter of 2008 are presented on a non-GAAP basis. Results for earlier periods are presented on a pro forma non-GAAP basis that reflects the financial results of NASDAQ, OMX, and the Philadelphia Stock Exchange as if they were a combined company for the periods presented and excludes merger expenses, gains (losses) from foreign currency contracts and certain other non-recurring items.

Market Services
Market Services net exchange revenues increased to $286.6 million, up 2.4% from the prior year quarter, and down 4.3% from the third quarter of 2008.

Transaction Services
Net exchange revenues from Transaction Services were $177.3 million for the fourth quarter of 2008, an increase of $7.7 million, or 4.5%, when compared to the fourth quarter of 2007. Net exchange revenues decreased $6.4 million, or 3.5%, from the third quarter of 2008.

Cash Equity Trading net exchange revenues declined from the prior year quarter and from the third quarter of 2008.

• Net U.S. cash equity trading revenues increased when compared to the prior year quarter due to higher trading volumes for U.S.-listed equities. Volume matched on NASDAQ systems increased to 196.6 billion shares in the fourth quarter of 2008, up 59.3% from 123.4 billion shares in the fourth quarter of 2007. The decline in net exchange revenues when compared to the third quarter of 2008 is primarily due to trading a higher mix of lower margin products in the fourth quarter of 2008.
• Offsetting the increases in U.S. cash equity trading revenues are declines in European cash equity trading revenues. The decline in revenues when compared to the fourth quarter of 2007 is driven by a 45.3% reduction in value traded on the exchanges that comprise NASDAQ OMX Nordic and Baltic, offset slightly by a 16.7% increase in trade volume. When compared to the third quarter of 2008, value traded declined 21.7% while trade volume increased 19.6%. Also contributing to the decline in European cash equity trading revenues in the fourth quarter of 2008 are changes in the exchange rate of the Swedish Krona as compared to the U.S. dollar.
• Included in U.S. cash equity trading revenues in the fourth quarter of 2008 are $36.5 million in SEC Section 31 fees, compared with $99.3 million in the fourth quarter of 2007 and $42.4 million in the third quarter of 2008. Corresponding cost of revenues, reflecting the reimbursement of these fees to the SEC, is included in brokerage, clearance and exchange fees.

Derivative trading net exchange revenues increased from the prior year quarter but declined when compared to the third quarter of 2008.

• The increase when compared to the prior year quarter is primarily due to higher trading volumes for U.S. options contracts. Total combined equity options volume traded by NASDAQ OMX PHLX and The NASDAQ Options Market increased 15.5% from the fourth quarter of 2007 and increased 21.4% from the third quarter of 2008. Also contributing to the increase is the inclusion of NASDAQ OMX Commodities revenues following the October 21, 2008 closing of NASDAQ OMX's acquisition of Nord Pool ASA's clearing, international derivatives and consulting subsidiaries.
• The decline in revenues when compared to the third quarter of 2008 is primarily due to lower trading volume for U.S. options contracts, which declined 13.8% in the fourth quarter. Somewhat offsetting declines in U.S. derivative trading revenues are increases in European derivative trading revenues due to the inclusion of NASDAQ OMX Commodities revenues noted above.

Market Data

Market Data revenues were $84.9 million for the fourth quarter of 2008, up $0.4 million, or 0.5%, when compared to the fourth quarter of 2007, but down $2.6 million, or 3.0%, from the third quarter of 2008.

Net U.S. Tape Plans revenues in the fourth quarter of 2008 were down $0.9 million, or 2.4%, when compared to the prior year quarter and down $1.6 million, or 4.2%, from the third quarter of 2008.

• U.S. Tape Plans revenues reflect revenues generated by members of joint industry plans that distribute the national best bid and offer and last sale information for U.S. equities. Plan members, such as The NASDAQ Stock Market, share revenue collected from disseminating this information. The distribution of revenue to each plan member is determined using a formula, required by Regulation NMS, that calculates each participant's share of trading and quoting activity.
• The decline in U.S. Tape Plans revenues, net of revenue sharing plans, in the fourth quarter of 2008 when compared to the fourth quarter of 2007 is primarily due to changes in the revenue sharing program for internalized trades reported to the FINRA/NASDAQ Trade Reporting Facility. The decline in revenue in the fourth quarter of 2008 when compared to the third quarter of 2008 is primarily due to reductions in The NASDAQ Stock Market's share of trading and quoting activity in U.S. equities.

U.S. market data products revenues were $27.3 million in the fourth quarter of 2008, an increase of $2.6 million, or 10.5%, when compared to the year ago quarter, and up $0.2 million when compared to the third quarter of 2008. U.S. market data products revenues reflect revenues generated from the sale of NASDAQ OMX proprietary data products. Revenue growth when compared to the prior year quarter is driven by the launch of NASDAQ Last Sale, and growth of other proprietary products including TotalView.

European market data products revenues were $21.1 million in the fourth quarter of 2008, a decrease of $1.3 million when compared to the prior year quarter and $1.2 million when compared to the third quarter of 2008. The decreases when compared to prior periods are due primarily to changes in the exchange rate of the Euro as compared to the U.S. dollar.

Issuer Services
During the fourth quarter of 2008, Issuer Services revenues declined $10.0 million, or 10.8%, to $82.3 million from the fourth quarter of 2007 and declined $2.8 million, or 3.3%, from the prior quarter.

Global Listing Services
Global Listing Services revenues were $72.1 million for the fourth quarter of 2008, down $8.5 million, or 10.5%, when compared to the fourth quarter of 2007 and down $0.3 million, or 0.4%, from the third quarter of 2008. Decreases in revenues from prior periods are driven primarily by lower market capitalization values for European listed equities, which in turn result in lower European annual listing fees. Also contributing to the decline in revenues in the quarter are changes in the exchange rate of the Swedish Krona as compared to the U.S. dollar.

Global Index Group
Global Index Group revenues were $10.2 million for the fourth quarter of 2008, down 12.8% when compared to the fourth quarter of 2007, and down 19.7% when compared to the third quarter of 2008. Driving the decline in revenues are lower license fees associated with NASDAQ OMX-licensed products resulting from declines in the assets under management in ETFs and structured products.

Market Technology
Market Technology revenues were $31.5 million for the fourth quarter of 2008, down $5.5 million, or 14.9%, when compared to the fourth quarter of 2007, but up $6.6 million, or 26.5%, when compared to the third quarter of 2008. The revenue decline when compared to the prior year quarter is due to higher than normal activity recognized in the earlier period. Revenue increases when compared to the third quarter of 2008 are due to seasonally lower demand for licensed products, technology support and facilities management services during the prior quarter.

Operating Expenses
Total operating expenses decreased $47.5 million, or 18.2%, to $213.1 million from $260.6 million in the prior year quarter and $8.9 million, or 4.0%, from $222.0 million in the third quarter of 2008. The decrease in expenses was driven primarily by lower compensation expenses, declines in marketing and advertising expense, lower depreciation expense, and reduced expenses for computer operations and data transmission.

Net Interest Expense

Net interest expense was $24.3 million for the fourth quarter of 2008, compared with $29.3 million for the fourth quarter of 2007 and $19.0 million for the third quarter of 2008. The decline in net interest expense when compared to the fourth quarter of 2007 is primarily due to lower interest rates. The increase in net interest expense when compared to the third quarter of 2008 is primarily due to the full quarter impact of borrowing costs associated with the acquisition of Nord Pool ASA's clearing, international derivatives and consulting subsidiaries.

Earnings Per Share

On a non-GAAP basis, fourth quarter 2008 earnings per diluted share were $0.53 as compared to pro forma non-GAAP earnings per diluted share of $0.38 in the prior year quarter, and $0.52 in the third quarter of 2008. NASDAQ OMX's weighted average shares outstanding used to calculate diluted earnings per share were 214.1 million in the fourth quarter of 2008 versus 214.5 million in the year-ago quarter and 214.2 million in the third quarter of 2008.