On an organic basis second quarter net revenues increased 1% year-over-year.

"Our strategy is focused on becoming an entrenched provider of corporate, trading, technology, and information products and services that allow our customers to more effectively navigate today's global capital markets," said Bob Greifeld, CEO, NASDAQ OMX. "Essential to that strategy has been the expansion of the depth and breadth of asset classes, products and markets we offer as well as extending our presence in adjacent businesses that are relevant to the communities where we operate to facilitate a deepening of our client relationships."

Mr. Greifeld continued, "We took significant strategic steps forward this quarter – closing on two transformative acquisitions, launching a revolutionary interest rate market, and delivering record revenues. The acquisitions of Thomson Reuters' IR, PR, and Multimedia businesses, and eSpeed, establish NASDAQ OMX as the leader in corporate solutions and a leading force in the expanding electronic fixed income business. Both are on track to meet or exceed the targets we've set for delivering value to shareholders. Today, across our expanded portfolio of businesses, we are now a #1 or #2 player in business segments that collectively comprise 96% of our revenues. Our position continues to validate the strategic direction of the organization and relentless focus on our clients."

Operating expenses were $292 million in the second quarter of 2013, compared to $252 million in the prior year quarter. On a non-GAAP basis, second quarter 2013 operating expenses were $267 million, up 15% as compared to the prior year quarter, primarily due to the inclusion of expenses associated with the acquisition of Thomson Reuters' IR, PR and Multimedia businesses, as well as several smaller acquisitions. On an organic basis (constant currency and excluding acquisitions), second quarter non-GAAP operating expenses were unchanged year-over-year, a , a net 1% decline in core expenses offset by higher internal investment (GIFT) spending.

Second quarter 2013 non-GAAP diluted earnings per share were $0.62, versus $0.64 in the prior year quarter. Non-GAAP diluted earnings per share in the second quarter of 2013 excludes $25 million of pre-tax merger-related expenses, while non-GAAP diluted earnings per share in the second quarter of 2012 excludes $37 million of net pre-tax charges primarily relating to income from open positions relating to the operations of the exchange, asset impairment charges and restructuring charges, and $6 million of significant tax adjustments.

On a GAAP basis, net income attributable to NASDAQ OMX for the second quarter of 2013 was $88 million, or $0.52 per diluted share, compared with $93 million, or $0.53 per diluted share, in the prior year quarter.

"While we are pleased with the broad-based performance across many of our businesses, we experienced unique variances in our cost structure, including financing costs of approximately $2.5 million associated with pre-funding the eSpeed acquisition nearly a month prior to closing, and our organic investments, where several launches of GIFT initiatives added an additional $5 million to our expenses versus the prior year," said Lee Shavel, EVP and CFO, NASDAQ OMX. "The earnings impact from GIFT initiatives is expected to moderate over time, either from improved profitability, and/or from reduced investment, as these initiatives mature."

Mr. Shavel continued, "On the capital front, our investment grade ratings were affirmed and we raised a €600 million, 8-year Euro bond offering, with an attractive, 3.9% effective yield. This offering was instrumental in financing our acquisitions, diversified our funding sources by accessing a new market and reduced our foreign exchange exposure. We continue to have a near-term focus on de-leveraging, and we remain confident in our ability to return to an approximately 2.5x long-term leverage target in the next three to four quarters, at which point we will have more flexibility to consider capital return and deployment options."

At June 30, 2013, the company had cash and cash equivalents of $379 million and total debt of $2,785 million, resulting in net debt of $2,406 million. This compares to net debt of $1,479 million at December 31, 2012.

1 Represents revenues less transaction rebates, brokerage, clearance and exchange fees.

BUSINESS HIGHLIGHTS

Market Services (42% of total net revenues) - Net revenues were $190 million in the second quarter of 2013, up $2 million when compared to non-GAAP net revenues of $188 million in the second quarter of 2012, which excludes $11 million in gains related to open positions resulting from operations of the exchange.

Derivatives (17% of total net revenues) – Total net derivative trading and clearing revenues were $76 million in the second quarter of 2013, up $6 million compared to the second quarter of 2012. Net U.S. derivative trading and clearing revenues increased 9% year-over-year due to higher industry volumes and market share, partially offset by lower average pricing. European derivative trading and clearing revenues increased $2 million, primarily due to higher energy commodity volumes and favorable foreign exchange impact.

Cash Equities (11% of total net revenues) – Total net cash equity trading revenues were $51 million in the second quarter of 2013, down $1 million compared to non-GAAP revenues in the second quarter of 2012. Lower net U.S. equities revenues, primarily due to lower market share, were partially offset by higher European equities revenue, driven primarily by higher average pricing, higher volumes and share, and a favorable impact from foreign exchange.

Access and Broker Services (14% of total net revenues) – Access and broker services revenues totaled $63 million in the second quarter of 2013, down $3 million compared to the second quarter of 2012. Connectivity and co-location saw modestly lower demand in the second quarter of 2013 compared to the second quarter of 2012, but newer products, such as microwave connectivity and FinQloud, are seeing increased demand.

Information Services (24% of total net revenues) – Revenues were $108 million in the second quarter of 2013, up $2 million from the second quarter of 2012.

Market Data (20% of total net revenues) – Total market data revenues were $90 million in the second quarter of 2013, flat compared to the second quarter of 2012. The second quarter of 2013 saw a $2 million decrease in audit collections, offset by growth in products such as NASDAQ Basic, and select pricing initiatives.

Index Licensing and Services (4% of total net revenues) – Index licensing and services revenues were $18 million in the second quarter of 2013, up $2 million from the second quarter of 2012. The revenue growth was a function of materially higher assets and number of licensed exchange traded products, including the impact of the acquisition of the index business of Mergent, Inc.

Technology Solutions (21% of total net revenues) - Revenues were $95 million in the second quarter of 2013, up $28 million from the second quarter of 2012.

Corporate Solutions (10% of total net revenues) – Corporate solutions revenues were $44 million in the second quarter of 2013, up $22 million from the second quarter of 2012. Corporate solutions revenue growth was primarily due to the inclusion of one month of results from the acquisition of the Thomson Reuters' IR, PR, and Multimedia businesses, as well as organic growth, in particular the growth of Directors Desk, IR Suite, and PR distribution.

Market Technology (11% of total net revenues) – Market technology revenues were $51 million in the second quarter of 2013, up $6 million from the second quarter of 2012. The revenue increase is due to the acquisition of BWise in the second quarter of 2012, as well as growth in SMARTS Broker and a favorable impact from foreign exchange. Order intake in the second quarter of 2013 decreased, from $82 million in the second quarter of 2012 to $44 million in the second quarter of 2013, and a material amount of deliveries reduced the backlog to $507 million, compared to $538 million in the prior year period.

Listing Services (13% of total net revenues) – Revenues were $58 million in the second quarter of 2013, up $3 million compared to the second quarter of 2012. The increase was primarily driven by higher European listing revenues, due to higher market capitalization, and a higher number of IPOs in the U.S.

COST GUIDANCE – The Thomson Reuters' IR/PR/MM businesses and eSpeed acquisitions have been incorporated into the expense forecast and are expected to add between $145 million and $160 million to our 2013 expenses. The company has also narrowed the core expense guidance excluding acquisitions to between $925 million and $940 million, bringing core expense guidance with the acquisitions to between $1,070 million and $1,100 million. New Initiatives or "GIFT" expense guidance is unchanged at $50 million to $60 million, and total expenses are now expected to be between $1,120 million and $1,160 million.

CORPORATE HIGHLIGHTS

Closed acquisition of IR, PR & Multimedia businesses of Thomson Reuters. On May 31, 2013, NASDAQ OMX closed the acquisition of the Investor Relations, Public Relations, and Multimedia businesses of Thomson Reuters, which are now incorporated into the Corporate Solutions business, where they are being integrated with NASDAQ OMX's legacy corporate solutions products.

Closed acquisition of eSpeed. On June 28, 2013, NASDAQ OMX closed the acquisition of the eSpeed platform for trading U.S. Treasuries. NASDAQ OMX intends to leverage its strong technology experience and leading distribution capabilities to further develop eSpeed's leading marketplace, while enjoying the structural tailwinds of a growing U.S. Treasury market.
Launched NLX futures exchange. On May 31, 2013, NASDAQ OMX launched NLX, a new London-based market offering a range of both short-term and long-term interest rate derivative products, with the support of a wide range of founding participants including banks, clearing, brokerage and trading firms.

Launched WorkSpace. WorkSpace is a new cloud computing platform that will expand the company's Corporate Solutions client base and enter the burgeoning virtual data room (VDR) market. The technology provides a paperless VDR for secure and effective document sharing typically used for mergers and acquisitions, pre-IPO due diligence review, bankruptcy and restructuring, and other applications.

Investment-grade debt rating affirmed by S&P and Moody's and successful Euro-denominated bond offering. After reviewing NASDAQ OMX's debt rating following the announcement of the eSpeed acquisition, both S&P & Moody's affirmed investment-grade credit ratings. NASDAQ OMX issued and sold €600 million aggregate principal amount of bonds with an 8-year tenor and a 3.9% effective yield, with proceeds used primarily to fund the eSpeed acquisition.