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NYSE Euronext Announces Fourth Quarter And Full-Year 2012 Financial Results

At December 31, 2012, total debt was $2.5 billion. Total debt includes $0.4 billion remaining from the 4.8% June 2013 notes which we expect to retire in the second quarter of 2013. Cash, cash equivalents and short term financial investments (including $99 million related to Section 31 fees collected from market participants and due to the SEC) were $0.4 billion and net debt was $2.1 billion at the end of the fourth quarter of 2012. The ratio of debt-to-EBITDA at the end of the fourth quarter of 2012 was 2.5.

On October 5, 2012, NYSE Euronext closed on its public offering of $850 million 2.00% notes due in October 2017. The proceeds from this offering were used to fund the tender of $336 million of our outstanding $750 million 4.80% notes due in June 2013 and €80 million of our €1 billion 5.375% notes due in June 2015 and for other general corporate purposes, including the reduction in outstanding commercial paper. As a result of the refinancing, recurring interest expense declined by approximately $1 million in the fourth quarter of 2012.

Total capital expenditures were $66 million in the fourth quarter of 2012 and $191 million for the full-year 2012.

Headcount as of December 31, 2012 of 3,079 was slightly above year-end 2011 with the addition of 99 employees from the acquisition of Corpedia in June of 2012 and increased staff for the UK derivatives clearing initiative.

The Board of Directors declared a cash dividend of $0.30 per share for the first quarter of 2013. The first quarter 2013 dividend is payable on March 28, 2013 to shareholders of record as of the close of business on March 14, 2013. The anticipated ex-date will be March 12, 2013.

FULL-YEAR 2013 GUIDANCE (NON-GAAP)

For the full-year 2013, management is providing the following guidance:

  • We are guiding total operating expenses to decline to approximately $1,525 million on a reported basis at constant currency rates. When compared to Project 14 goals and the 2011 expense base of $1,666 million, we expect core operating expenses, on a constant currency basis and excluding discrete investments, to be approximately $1,465 million, which is about $200 million below the 2011 base.
  • The debt refinancing in the fourth quarter of 2012, is expected to save an annualized $15 million and $24 million in interest expense in 2013 and 2014, respectively.
  • The anticipated effective tax rate is expected to be between 24% and 25%.
  • The ratio of debt-to-EBITDA is expected to be at, or below 2.0X in 2013, declining from 2.5X in 2012.
  • Total capital expenditures are expected to be approximately $150 million.

FOURTH QUARTER & FULL-YEAR 2012 SEGMENT RESULTS

Below is a summary of business segment results:

  Derivatives   Cash Trading & Listings   Info. Svcs. & Tech. Solutions
($ in millions) Net   Operating   Adjusted Net   Operating   Adjusted   Operating   Adjusted
  Revenue 1   Income 2   EBITDA 2 Revenue 1   Income 2   EBITDA 2 Revenue   Income 2   EBITDA 2
4Q12 $160 $63 $72 $282 $100 $141 $120 $35 $49
3Q12 $164 $68 $78 $282 $104 $145 $113 $23 $36
4Q11 $186   $86   $96 $315   $125   $168 $127   $31   $46
FY 2012 $682 $295 $334 $1,168 $450 $617 $473 $113 $167
FY 2011 $861   $473   $523 $1,323   $533   $715 $490   $126   $174
1   Net revenue defined as total revenues less transaction-based expenses including Section 31 fees, liquidity payments and routing & clearing fees.
2 Excludes merger expenses, exit costs and the BlueNext tax settlement.
 

DERIVATIVES

Derivatives net revenue of $160 million in the fourth quarter of 2012 decreased $26 million, or 14% compared to the fourth quarter of 2011 and included a $1 million positive impact from foreign currency fluctuations. The $27 million decrease in derivatives net revenue, on a constant currency basis, compared to the fourth quarter of 2011, was driven by lower ADV. For the full-year 2012, Derivatives net revenue of $682 million decreased $179 million, or 21%, and included a $12 million negative impact from foreign currency fluctuations. The $167 million decrease in net revenue, on a constant currency basis, compared to full-year 2011 was driven by a decline in ADV.

  • IntercontinentalExchange and NYSE Euronext announced that ICE Clear Europe Limited and LIFFE Administration and Management have entered into a clearing services agreement pursuant to which ICE Clear Europe will provide clearing services to the London market of NYSE Liffe.
  • İstanbul Menkul Kıymetler Borsası (IMKB) and NYSE Liffe, announced the launch of futures and options contracts based on some of the constituents of the IMKB 30 Index.
  • NYSE Liffe announced the expansion of Bclear, NYSE Liffe’s trade confirmation, administration and clearing service, with the introduction of Fixed Income products. The new contracts available through Bclear will be Three Month Euro (Euribor) Futures, Three Month Sterling (Short Sterling) Futures and Long Gilt Futures.
  • In 2012, NYSE Amex Options and NYSE Arca Options reached their highest combined market share of 28.5% in October, retaining the #1 or #2 position in U.S. equity options.
  • The new NYSE Liffe U.S. futures contracts based on the DTCC GCF Repo Index® were named ‘New Contract of the Year’ in Interest Rates by Futures and Options Week (FOW) Magazine at the 2012 FOW International Awards in London. Since launch in mid-July 2012, NYSE Liffe U.S. has traded more than 375,000 total contracts valued at nearly $2 trillion as of December 17. Momentum continues to grow for GCF Repo futures with a new daily volume record set on January 18 th of 17,556 lots traded.

CASH TRADING AND LISTINGS

Cash Trading and Listings net revenue of $282 million in the fourth quarter of 2012 decreased $33 million, or 10% compared to the fourth quarter of 2011 and included a $3 million negative impact from foreign currency fluctuations. The $30 million decrease in net revenue, on a constant currency basis, compared to the fourth quarter of 2011 was primarily driven by lower ADV. For the full-year 2012, Cash Trading and Listings net revenue of $1,168 million decreased $155 million, or 12%, and included a $29 million negative impact from foreign currency fluctuations. The $126 million decrease in net revenue, on a constant currency basis, compared to full-year 2011 was driven primarily by a decline in ADV.

  • NYSE Euronext was ranked #1 in initial public offerings (IPOs) globally for the second consecutive year. NYSE Euronext raised $37 billion in total global proceeds on 120 IPOs. In the U.S., NYSE Euronext led the market with 79 IPOs and 17 transfers. NYSE Euronext has steadily captured share in technology-based IPOs. NYSE Euronext listed 53% of the technology IPOs in the U.S., including Exact Target Inc. (NYSE: ET), Millennial Media Inc. (NYSE: MM), Palo Alto Networks (NYSE:PANW), Service Now Inc (NYSE: NOW), Workday (NYSE: WDAY) and Yelp Inc. (NYSE: YELP).
  • In 2012, 17 companies moved or announced transfer to NYSE Euronext’s U.S. markets (15 to NYSE, 2 to NYSE MKT) with six departures from the NYSE and three from NYSE MKT. Of the 15 companies that moved or announced transfer to the NYSE in 2012, three were among the top 100 largest companies by market capitalization listed on Nasdaq - Infosys Ltd. (NYSE: INFY), TD Ameritrade Holding Corporation (NYSE: AMTD) and Teva Pharmaceutical Industries Ltd. (NYSE: TEVA). Both Teva and Infosys were previously in the Nasdaq-100 Index.
  • In 2012, NYSE Euronext welcomed 25 listings in Europe from a variety of sectors including healthcare, consumer goods, technology and telecommunications, raising total IPO proceeds of €2.7 billion ($3.5 billion) and representing an aggregate market capitalization of €22.8 billion ($30 billion). Key listings on NYSE Euronext's European platforms included: Ziggo (Euronext: ZIGGO), the Dutch cable operator launched NYSE Euronext's largest European IPO in 2012 on NYSE Euronext in Amsterdam, D.E. Masterblenders 1753 (Euronext: DE), the spin-off from ex-Sara Lee Corp, also listed on NYSE Euronext in Amsterdam; Groupe Eurotunnel (Euronext: GET), the first company to be admitted to trading on NYSE Euronext in London and BTG Pactual (Alternext: BTGP), Brazil's largest investment bank listed on NYSE Alternext in Amsterdam.
  • LCH.Clearnet SA, the Paris-based clearing house of LCH.Clearnet Group, and NYSE Euronext jointly announced an agreement on the main terms and conditions of a six year clearing contract with respect to NYSE Euronext’s continental cash equities markets. The new agreement commenced on January 1, 2013 and will run through 2018. Under the new contract, LCH.Clearnet SA has further reduced clearing fees for clearing members by 20%.
  • European cash market share (value traded) in NYSE Euronext’s four core markets was 66% in the fourth quarter of 2012, in-line with the fourth quarter of 2011, but down from 68% in the third quarter of 2012.

INFORMATION SERVICES AND TECHNOLOGY SOLUTIONS

Information Services and Technology Solutions revenue was $120 million in the fourth quarter of 2012, a decrease of $7 million, or 6% compared to the fourth quarter of 2011 and included a $2 million negative impact from foreign currency fluctuations. Revenue in the fourth quarter of 2012, however, increased $7 million, or 7% compared to the third quarter of 2012 which included a $2 million positive impact from foreign currency fluctuations. Operating margin for the fourth quarter of 2012 returned to 29% from 20% in the third quarter of 2012 and 24% in the fourth quarter of 2011. For the full-year 2012, Information Services and Technology Solutions revenue of $473 million decreased $17 million, or 3%, and included a $14 million negative impact from foreign currency fluctuations. The $3 million decrease in revenue, on a constant currency basis, compared to full-year 2011 was driven by the challenging environment for financial services technology sales which has delayed client decisions on purchases of software and connectivity services. Highlights for the fourth quarter of 2012 included:

  • Russell Indexes, a leading global index provider and NYSE Euronext, one of the world's premier exchange operators and technology innovators, announced a global alliance which includes the transition of RussellTick, an index feed for real-time, intra-day values for the Russell family of indexes in the U.S. and globally, to NYSE Technologies' Global Index Feed (GIF) protocol and extensive global distribution. The migration of RussellTick to NYSE Technologies' GIF protocol makes Russell the first major index family distributed through the global Secure Financial Transaction Infrastructure® (SFTI®) network. The alliance also includes a commitment to develop additional joint global services and products, such as new index-based options. Approximately $3.9 trillion in assets are currently benchmarked to the Russell Indexes globally.
  • Americas Trading Group (ATG) announced the formation of a new company that will develop a liquidity center targeting the Brazilian exchange market called Americas Trading System Brasil, or ATS Brasil. Utilizing trading solutions developed by NYSE Technologies, the technology unit of NYSE Euronext, ATS Brasil will offer customers a new equities matching platform in Latin America. ATG will maintain the controlling interest as well as operational management of the company with NYSE Technologies as a minority shareholder and the core technology provider.
  • NYSE Technologies announced the continued expansion of its Secure Financial Transaction Infrastructure (SFTI) in Asia with the introduction of two access centers located in Hong Kong. Customers now, for the first time, have direct access to the SFTI network, allowing them to connect to the NYSE Euronext capital markets community and all other major international trading venues.
  • NYSE Technologies announced the launch of the OpenMAMA Enterprise Edition as a part of its Open Platform. The OpenMAMA Enterprise Edition is a commercial offering that is a fully supported, tested and certified distribution of the industry standard Open Source Middleware Agnostic Messaging API (OpenMAMA1). It provides an open, vendor-neutral integration layer for a variety of middleware systems, including NYSE Technologies Data FabricSM.
  • NYSE Technologies announced the addition of the Appia Business Center, a management interface that allows front-end users to configure FIX infrastructure without special coding, to its FIX capabilities. With the new Appia Business Center, business users can build, maintain, and monitor their FIX infrastructure without the help of specialists to on-board new clients, communicate with new matching engines, or implement new rules.

The accompanying tables include information integral to assessing the Company’s financial performance.

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