NASDAQ OMX Reports Fourth Quarter And Full Year 2012 Results

BY GlobeNewswire | 01/31/13 - 07:00 AM EST

Stock quotes in this article: NDAQ

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The non-GAAP information is not prepared in accordance with GAAP and may not be comparable to non-GAAP information used by other companies. The non-GAAP information should not be viewed as a substitute for, or superior to, other data prepared in accordance with GAAP.

Cautionary Note Regarding Forward-Looking Statements

Information set forth in this communication contains forward-looking statements that involve a number of risks and uncertainties. NASDAQ OMX cautions readers that any forward-looking information is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking information. Such forward-looking statements include, but are not limited to (i) projections about our future financial results, growth, trading volumes, taxes and achievement of synergy targets, (ii) statements about the closing or implementation dates and benefits of certain strategic and capital return initiatives, (iii) statements about our integrations of our recent acquisitions and (iv) other statements that are not historical facts. Forward-looking statements involve a number of risks, uncertainties or other factors beyond NASDAQ OMX's control. These factors include, but are not limited to, NASDAQ OMX's ability to implement its strategic initiatives, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors detailed in NASDAQ OMX's filings with the U.S. Securities and Exchange Commission, including its annual reports on Form 10-K and quarterly reports on Form 10-Q which are available on NASDAQ OMX's website at http://www.nasdaqomx.com and the SEC's website at www.sec.gov . NASDAQ OMX undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

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

NDAQF



The NASDAQ OMX Group, Inc.
Consolidated Statements of Income
(in millions, except per share amounts)


	Three Months Ended			Year Ended
	December 31,	September 30,	December 31,	December 31,	December 31,
	2012	2012	2011	2012	2011
Revenues:	(unaudited)	(unaudited)	(unaudited)	(unaudited)
Market Services	$ 603	$ 603	$ 698	$ 2,560	$ 2,886
Cost of revenues:
Transaction rebates	(249)	(250)	(324)	(1,104)	(1,344)
Brokerage, clearance and exchange fees	(84)	(84)	(93)	(352)	(404)
Total cost of revenues	(333)	(334)	(417)	(1,456)	(1,748)
Total Market Services revenues less transaction rebates, brokerage, clearance and exchange fees	270	269	281	1,104	1,138

Issuer Services	101	93	91	375	361
Market Technology	48	47	48	184	183

Revenues less transaction rebates, brokerage, clearance and exchange fees	419	409	420	1,663	1,682
Operating Expenses:
Compensation and benefits	116	113	113	454	458
Marketing and advertising	7	6	9	26	24
Depreciation and amortization	27	26	28	104	109
Professional and contract services	26	24	23	96	83
Computer operations and data communications	10	18	15	60	65
Occupancy	25	22	22	93	91
Regulatory	7	8	9	34	35
Merger and strategic initiatives	4	(3)	1	4	38
Restructuring charges	8	10	--	44	--
General, administrative and other	14	15	39	58	83
Total operating expenses	244	239	259	973	986

Operating income	175	170	161	690	696

Interest income	3	2	3	10	11
Interest expense	(25)	(24)	(26)	(97)	(119)
Asset impairment charges	--	--	(18)	(40)	(18)
Dividend and investment income	--	--	--	--	1
Loss on divestiture of business	--	(14)	--	(14)	--
Income (loss) from unconsolidated investees, net	--	--	1	(1)	2

Income before income taxes	153	134	121	548	573
Income tax provision	69	45	40	199	190
Net income	84	89	81	349	383

Net loss attributable to noncontrolling interests	1	--	1	3	4
Net income attributable to NASDAQ OMX	$ 85	$ 89	$ 82	$ 352	$ 387

Basic and diluted earnings per share:
Basic earnings per share	$ 0.52	$ 0.53	$ 0.46	$ 2.09	$ 2.20
Diluted earnings per share	$ 0.50	$ 0.52	$ 0.45	$ 2.04	$ 2.15
Cash dividends declared per common share	$ 0.13	$ 0.13	$ --	$ 0.39	$ --

Weighted-average common shares outstanding for earnings per share:
Basic	164.5	166.2	175.4	168.3	176.3
Diluted	169.1	170.5	179.5	172.6	180.0



The NASDAQ OMX Group, Inc.
Revenue Detail
(in millions)

	Three Months Ended			Year Ended
	December 31,	September 30,	December 31,	December 31,	December 31,
	2012	2012	2011	2012	2011
	(unaudited)	(unaudited)	(unaudited)	(unaudited)
MARKET SERVICES
Transaction Services
Cash Equity Trading Revenues:
U.S. cash equity trading	$ 283	$ 297	$ 385	$ 1,294	$ 1,617
Cost of revenues:
Transaction rebates	(180)	(193)	(261)	(854)	(1,087)
Brokerage, clearance and exchange fees	(74)	(75)	(87)	(318)	(375)
Total U.S. cash equity cost of revenues	(254)	(268)	(348)	(1,172)	(1,462)
Net U.S. cash equity trading revenues	29	29	37	122	155
European cash equity trading	18	18	22	78	93
Total net cash equity trading revenues	47	47	59	200	248

Derivative Trading and Clearing Revenues:
U.S. derivative trading and clearing	124	110	110	458	471
Cost of revenues:
Transaction rebates	(69)	(57)	(63)	(250)	(257)
Brokerage, clearance and exchange fees	(10)	(9)	(6)	(34)	(29)
Total U.S. derivative trading and clearing cost of revenues	(79)	(66)	(69)	(284)	(286)
Net U.S. derivative trading and clearing revenues	45	44	41	174	185
European derivative trading and clearing	30	28	32	116	128
Total net derivative trading and clearing revenues	75	72	73	290	313

Access Services Revenues	60	61	56	238	223

Total Transaction Services revenues less transaction rebates, brokerage, clearance and exchange fees	182	180	188	728	784

Market Data Revenues:
Net U.S. tape plans	26	28	29	117	115
U.S. market data products	39	38	37	150	135
European market data products	18	18	21	77	83

Total Market Data revenues	83	84	87	344	333

Broker Services Revenues	5	5	5	19	19

Other Market Services Revenues	--	--	1	13	2
Total Market Services revenues less transaction rebates, brokerage, clearance and exchange fees	270	269	281	1,104	1,138

ISSUER SERVICES
Global Listing Services Revenues:
Annual renewal	28	28	30	112	117
Listing of additional shares	10	10	10	39	40
Initial listing	5	5	5	20	21
Total U.S. listing services	43	43	45	171	178
European listing fees	13	12	13	50	55
Corporate Solutions	31	24	20	97	76
Total Global Listing Services revenues	87	79	78	318	309

Global Index Group Revenues	14	14	13	57	52
Total Issuer Services revenues	101	93	91	375	361

MARKET TECHNOLOGY
License, support and facility management	27	27	29	110	115
Delivery project	6	7	6	27	24
Change request, advisory and broker surveillance	15	13	13	47	44
Total Market Technology revenues	48	47	48	184	183

Total revenues less transaction rebates, brokerage, clearance and exchange fees	$ 419	$ 409	$ 420	$ 1,663	$ 1,682



The NASDAQ OMX Group, Inc.
Consolidated Balance Sheets
(in millions)

	December 31,	December 31,
	2012	2011
Assets	(unaudited)
Current assets:
Cash and cash equivalents	$ 497	$ 506
Restricted cash	85	34
Financial investments, at fair value	223	279
Receivables, net	333	308
Deferred tax assets	33	16
Default funds and margin deposits	209	17
Open clearing contracts:
Derivative positions, at fair value	--	1,566
Resale agreements, at contract value	--	3,745
Other current assets	112	110
Total current assets	1,492	6,581
Non-current restricted cash	25	97
Property and equipment, net	211	193
Non-current deferred tax assets	294	392
Goodwill	5,335	5,061
Intangible assets, net	1,650	1,648
Other non-current assets	125	119
Total assets	$ 9,132	$ 14,091

Liabilities
Current liabilities:
Accounts payable and accrued expenses	$ 172	$ 164
Section 31 fees payable to SEC	97	106
Accrued personnel costs	111	132
Deferred revenue	139	124
Other current liabilities	119	112
Deferred tax liabilities	35	27
Default funds and margin deposits	209	17
Open clearing contracts:
Derivative positions, at fair value	--	1,566
Repurchase agreements, at contract value	--	3,745
Current portion of debt obligations	45	45
Total current liabilities	927	6,038
Debt obligations	1,931	2,072
Non-current deferred tax liabilities	713	670
Non-current deferred revenue	156	154
Other non-current liabilities	196	171
Total liabilities	3,923	9,105

Commitments and contingencies
Equity
NASDAQ OMX stockholders' equity:
Common stock	2	2
Additional paid-in capital	3,771	3,793
Common stock in treasury, at cost	(1,058)	(860)
Accumulated other comprehensive loss	(185)	(350)
Retained earnings	2,678	2,391
Total NASDAQ OMX stockholders' equity	5,208	4,976
Noncontrolling interests	1	10
Total equity	5,209	4,986
Total liabilities and equity	$ 9,132	$ 14,091



The NASDAQ OMX Group, Inc.
Reconciliation of GAAP Net Income, Diluted Earnings Per Share, Operating Income, Net Exchange Revenues ⁽³⁾ and Operating Expenses
to Non-GAAP Net Income, Diluted Earnings Per Share, Operating Income, Net Exchange Revenues ⁽³⁾ and Operating Expenses
(in millions, except per share amounts)
(unaudited)

	Three Months Ended			Year Ended
	December 31,	September 30,	December 31,	December 31,	December 31,
	2012	2012	2011	2012	2011
GAAP net income attributable to NASDAQ OMX:	$ 85	$ 89	$ 82	$ 352	$ 387

Non-GAAP adjustments:

Income from open positions relating to the operations of the Exchange	--	--	--	(11)	--
Merger and strategic initiatives	4	(3)	1	4	38
Restructuring charges	8	10	--	44	--
Asset impairment charges	--	--	18	40	18
Loss on divestiture of business	--	14	--	14	--
Special legal expenses	2	4	--	7	--
Extinguishment of debt	--	--	25	--	31
Sublease reserve	3	--	--	3	--
Value added tax refund	(7)	--	--	(7)	--
Other	1	--	--	4	4
Total non-GAAP adjustments	11	25	44	98	91

Adjustment to the income tax provision to reflect non-GAAP adjustments ⁽¹⁾	(5)	(10)	(13)	(32)	(28)
Significant tax adjustments, net	17	1	--	14	5
Total non-GAAP adjustments, net of tax	23	16	31	80	68

Non-GAAP net income attributable to NASDAQ OMX:	$ 108	$ 105	$ 113	$ 432	$ 455


GAAP diluted earnings per share:	$ 0.50	$ 0.52	$ 0.45	$ 2.04	$ 2.15
Total adjustments from non-GAAP net income above	0.14	0.10	0.18	0.46	0.38

Non-GAAP diluted earnings per share:	$ 0.64	$ 0.62	$ 0.63	$ 2.50	$ 2.53


	Three Months Ended			Year Ended
	December 31,	September 30,	December 31,	December 31,	December 31,
	2012	2012	2011	2012	2011

GAAP operating income:	$ 175	$ 170	$ 161	$ 690	$ 696

Non-GAAP adjustments:

Income from open positions relating to the operations of the Exchange	--	--	--	(11)	--
Merger and strategic initiatives	4	(3)	1	4	38
Restructuring charges	8	10	--	44	--
Extinguishment of debt	--	--	25	--	31
Special legal expenses	2	4	--	7	--
Sublease reserve	3	--	--	3	--
Value added tax refund	(7)	--	--	(7)	--
Other	1	--	--	4	4
Total non-GAAP adjustments	11	11	26	44	73

Non-GAAP operating income	$ 186	$ 181	$ 187	$ 734	$ 769




Total Non-GAAP revenues less transaction rebates, brokerage, clearance and exchange fees	$ 419	$ 409	$ 420	$ 1,652	$ 1,682

Non-GAAP operating margin ⁽²⁾	44%	44%	45%	44%	46%


(1) We determine the tax effect of each item based on the tax rules in the respective jurisdiction where the transaction occurred.
(2) Non-GAAP operating margin equals non-GAAP operating income divided by Non-GAAP revenues less transaction rebates, brokerage, clearance and exchange fees.
(3) Represents revenues less transaction rebates, brokerage, clearance and exchange fees.



The NASDAQ OMX Group, Inc.
Reconciliation of GAAP Net Income, Diluted Earnings Per Share, Operating Income, Net Exchange Revenues ⁽¹⁾ and Operating Expenses
to Non-GAAP Net Income, Diluted Earnings Per Share, Operating Income, Net Exchange Revenues ⁽¹⁾ and Operating Expenses
(in millions)
(unaudited)

	Three Months Ended			Year Ended
	December 31,	September 30,	December 31,	December 31,	December 31,
	2012	2012	2011	2012	2011

GAAP revenues less transaction rebates, brokerage, clearance and exchange fees:	$ 419	$ 409	$ 420	$ 1,663	$ 1,682

Non-GAAP adjustments:

Income from open positions relating to the operations of the Exchange	--	--	--	(11)	--
Total non-GAAP adjustments	--	--	--	(11)	--

Non-GAAP revenues less transaction rebates, brokerage, clearance and exchange fees:	$ 419	$ 409	$ 420	$ 1,652	$ 1,682


	Three Months Ended			Year Ended
	December 31,	September 30,	December 31,	December 31,	December 31,
	2012	2012	2011	2012	2011

GAAP operating expenses:	$ 244	$ 239	$ 259	$ 973	$ 986

Non-GAAP adjustments:

Merger and strategic initiatives	(4)	3	(1)	(4)	(38)
Restructuring charges	(8)	(10)	--	(44)	--
Extinguishment of debt	--	--	(25)	--	(31)
Special legal expenses	(2)	(4)	--	(7)	--
Sublease reserve	(3)	--	--	(3)	--
Value added tax refund	7	--	--	7	--
Other	(1)	--	--	(4)	(4)
Total non-GAAP adjustments	(11)	(11)	(26)	(55)	(73)

Non-GAAP operating expenses	$ 233	$ 228	$ 233	$ 918	$ 913

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



The NASDAQ OMX Group, Inc.
Quarterly Key Drivers Detail
(unaudited)

	Three Months Ended
	December 31,	September 30,	December 31,
	2012	2012	2011
Market Services
Cash Equity Trading
NASDAQ securities
Total average daily share volume (in billions)	1.74	1.66	1.85
Matched market share executed on NASDAQ	23.6%	25.2%	27.2%
Matched market share executed on NASDAQ OMX BX	2.6%	2.7%	2.5%
Matched market share executed on NASDAQ OMX PSX	1.3%	1.2%	1.1%
Market share reported to the FINRA/NASDAQ
Trade Reporting Facility	33.2%	31.5%	30.2%
Total market share ⁽¹⁾	60.6%	60.6%	61.0%

New York Stock Exchange, or NYSE securities
Total average daily share volume (in billions)	3.39	3.39	4.14
Matched market share executed on NASDAQ	11.5%	12.8%	13.3%
Matched market share executed on NASDAQ OMX BX	2.5%	2.5%	2.5%
Matched market share executed on NASDAQ OMX PSX	0.7%	0.6%	0.6%
Market share reported to the FINRA/NASDAQ
Trade Reporting Facility	30.0%	28.6%	27.5%
Total market share ⁽¹⁾	44.7%	44.6%	44.0%

NYSE MKT and regional securities
Total average daily share volume (in billions)	0.97	0.94	1.45
Matched market share executed on NASDAQ	14.1%	16.1%	19.2%
Matched market share executed on NASDAQ OMX BX	2.9%	3.0%	1.9%
Matched market share executed on NASDAQ OMX PSX	1.6%	1.5%	1.9%
Market share reported to the FINRA/NASDAQ
Trade Reporting Facility	30.6%	29.5%	27.2%
Total market share ⁽¹⁾	49.3%	50.1%	50.2%

Total U.S.-listed securities
Total average daily share volume (in billions)	6.09	5.99	7.45
Matched share volume (in billions)	71.6	76.6	100.0
Matched market share executed on NASDAQ	15.4%	16.8%	17.9%
Matched market share executed on NASDAQ OMX BX	2.6%	2.7%	2.4%
Matched market share executed on NASDAQ OMX PSX	1.0%	0.9%	1.0%

NASDAQ OMX Nordic and NASDAQ OMX Baltic Securities
Average daily number of equity trades	273,330	284,764	394,290
Total average daily value of shares traded (in billions)	$ 3.4	$ 3.2	$ 4.2
Total market share	68.2%	68.5%	71.9%

Derivative Trading and Clearing
U.S. Equity Options
Total industry average daily volume (in millions)	14.3	13.8	15.5
NASDAQ OMX PHLX matched market share	21.9%	21.4%	22.7%
The NASDAQ Options Market matched market share	6.2%	5.2%	4.5%
NASDAQ OMX BX Options matched market share	1.0%	0.7%	--

NASDAQ OMX Nordic and NASDAQ OMX Baltic
Average daily volume:
Options, futures and fixed-income contracts	379,905	371,230	455,341
Finnish option contracts traded on Eurex	107,373	70,211	46,557

NASDAQ OMX Commodities
Clearing Turnover:
Power contracts (TWh) ⁽²⁾	453	384	494
Carbon contracts (1000 tCO2) ⁽²⁾	7,503	5,009	29,908

Issuer Services
Initial public offerings
NASDAQ	19	17	15
Exchanges that comprise NASDAQ OMX Nordic and NASDAQ OMX Baltic	4	1	1

New listings
NASDAQ ⁽³⁾	46	40	44
Exchanges that comprise NASDAQ OMX Nordic and NASDAQ OMX Baltic ⁽⁴⁾	9	4	12

Number of listed companies
NASDAQ ⁽⁵⁾	2,577	2,610	2,680
Exchanges that comprise NASDAQ OMX Nordic and NASDAQ OMX Baltic ⁽⁶⁾	754	754	776

Market Technology
Order intake (in millions) ⁽⁷⁾	$ 95	$ 31	$ 36
Total order value (in millions) ⁽⁸⁾	$ 546	$ 523	$ 458

(1) Includes transactions executed on NASDAQ's, NASDAQ OMX BX's and NASDAQ OMX PSX's systems plus trades reported through the FINRA/NASDAQ Trade Reporting Facility.
(2) Primarily transactions executed on Nord Pool ASA and reported for clearing to NASDAQ OMX Commodities measured by Terawatt hours (TWh) and one thousand metric tons of carbon dioxide (1000 tCO2).
(3) New listings include IPOs, including those completed on a best efforts basis, issuers that switched from other listing venues, closed-end funds and separately listed ETFs.
(4) New listings include IPOs and represent companies listed on the exchanges that comprise NASDAQ OMX Nordic and NASDAQ OMX Baltic and companies on the alternative markets of NASDAQ OMX First North.
(5) Number of listed companies for NASDAQ at period end, including separately listed ETFs.
(6) Represents companies listed on the exchanges that comprise NASDAQ OMX Nordic and NASDAQ OMX Baltic and companies on the alternative markets of NASDAQ OMX First North at period end.
(7) Total contract value of orders signed during the period.
(8) Represents total contract value of orders signed that are yet to be recognized as revenue.

CONTACT: Media Relations:
         Joseph Christinat +1.646.441.5121
         Joseph.Christinat@NASDAQOMX.Com

         Investor Relations:
         John Sweeney +1.212.401.8737
         John.Sweeney@NASDAQOMX.Com

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