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NYSE Euronext Announces Third Quarter 2012 Financial Results

NYSE Euronext (NYX) today reported net income of $108 million, or $0.44 per diluted share, for the third quarter of 2012, compared to net income of $200 million, or $0.76 per diluted share, for the third quarter of 2011. Results for the third quarter of 2012 and 2011 include $18 million and $29 million, respectively, of pre-tax merger expenses and exit costs. In the third quarter of 2012, our GAAP effective tax rate included a discrete net deferred tax benefit of approximately $12 million, principally related to the enacted reduction in the corporate tax rate from 25% to 23% in the United Kingdom. Excluding merger expenses, exit costs and discrete tax items, net income in the third quarter of 2012 was $108 million, or $0.44 per diluted share, compared to $186 million, or $0.71 per diluted share, in the third quarter of 2011.

“In the third quarter, we continued to execute against our strategy and deliver on our multi-year growth commitments, known as Project 14, which we believe will drive a step-up in the underlying earnings power of the company in the coming years, even if trading volumes remain lackluster,” said Duncan L. Niederauer, CEO, NYSE Euronext. “We are investing in future growth drivers like NYSE Clearing and this quarter we launched new futures contracts based on MSCI global indices and the Russell Europe SMID 300 Index. Additionally, we are moving into adjacencies in the governance and compliance segment with our acquisition of Corpedia. Turning to the efficiency stream of Project 14, we are diligently pulling costs out of the platform with expenses running solidly below prior year levels. Lastly, we are continuing to return capital to our investors through dividends and share repurchases.”

The table below summarizes the financial results 1 for the third quarter of 2012:
% Δ 3Q12 Year-to-Date % Δ YTD '12
($ in millions, except EPS)     3Q12     2Q12     3Q11     vs. 3Q11 2012     2011     vs. YTD '11
Total Revenues 2 $902 $986 $1,258 (28%) $2,840 $3,498 (19%)
Total Revenues, Less Transaction-Based Expenses 3 559 602 704 (21%) 1,762 2,044 (14%)
Other Operating Expenses 4 388 396 416 (7%) 1,189 1,251 (5%)
Operating Income 4 $171 $206 $288 (41%) $573 $793 (28%)
Net Income 4 $108 $128 $186 (42%) $357 $522 (32%)
Diluted Earnings Per Share 4     $0.44     $0.51     $0.71     (38%) $1.41     $1.98     (29%)
Operating Margin 31% 34% 41% (10 ppts) 33% 39% (6 ppts)
Adjusted EBITDA Margin     42%     45%     51%     (9 ppts) 44%     49%     (5 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, disposal activities and discrete tax items.

“Our results for the quarter reflect the traction that we are gaining with our efficiency efforts. Against our Project 14 goals, we have taken $82 million out of our expense base year-to-date, which exceeds our 2012 objective of saving 25% of the total $250 million cost reduction plan. This puts us ahead of our full-year 2012 cost guidance,” commented Michael S. Geltzeiler, Group Executive Vice President and CFO, NYSE Euronext. “Turning to the capital front, we restructured our investment in Qatar, avoiding $80 million in future payments, we repurchased 16 million shares year-to-date and we refinanced a portion of our outstanding debt at very attractive levels. The latter will result in annual run-rate interest expense savings of approximately $15 million and $24 million in 2013 and 2014, respectively. All of these actions are repositioning the company for an anticipated return to growth.”

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