NYSE Euronext’s strong performance in 2007 reflects the company’s significantly increased global presence, customer base, and product and service offerings following the successful merger of NYSE Group and Euronext N.V. on April 4, 2007, as well as ongoing expense management and record transaction volume growth across virtually all of the company’s business lines in both Europe and the United States.
“By offering customers the highest quality and broadest array of global products and services, NYSE Euronext produced record financial results in 2007,” said Duncan L. Niederauer, CEO, NYSE Euronext. “We reached new levels in trading volume, message traffic and global IPO proceeds, underscoring the value of our strong technology, compelling business model and unparalleled global presence.”
“We have a clear vision of the future and are focused on delivering the promised synergies to our shareholders. We will grow organically and through acquisitions that fit strategically and create value for our shareholders, as evidenced by our recently announced acquisitions of the American Stock Exchange and Wombat Financial Software. Additionally, our strategic decision to in-source our European trading and information technology operations through the AEMS transaction, which was announced in December, will give us control over all of our core technology platforms and greatly enhance our global exchange technology business.”
Joost van der Does de Willebois, Acting CFO, NYSE Euronext, added, “We are in the process of delivering the $100 million in revenue synergies and $275 million in cost savings we identified in connection with the NYSE-Euronext merger. As a result of the recently announced AEMS transaction, we now anticipate realizing over $200 million in annual run-rate technology cost savings by the first quarter of 2010, and by year-end 2010 we expect to realize the full $250 million of merger-related annual run-rate technology savings. Also, highlighting our ongoing focus on effective cost management, we remain confident that we will exceed our $25 million annual run-rate non-technology related savings target by the end of the first quarter of 2008.”
On a non-GAAP basis, giving effect to the Euronext transaction as if it occurred at the beginning of the earliest period presented, and excluding merger expenses, exit costs and other non-recurring items, the net income of NYSE Euronext for the year ended Dec. 31, 2007 would have been $705 million, or $2.65 per diluted share, a $221 million or 46% increase versus non-GAAP net income of $484 million, or $1.83 per diluted share, for the year ended Dec. 31, 2006. For the three months ended Dec. 31, 2007, NYSE Euronext’s net income on a non-GAAP basis would have been $175 million, or $0.66 per diluted share, a $49 million or 39% increase as compared to net income, on a non-GAAP basis, of $126 million, or $0.47 per diluted share, for the three months ended Dec. 31, 2006. A full reconciliation of these non-GAAP results is included in the attached tables.
At constant US$/€ and US$/£ exchange rates, neutralizing the impact of acquisitions and dispositions of businesses and equity investments for the period, and on a non-GAAP basis, NYSE Euronext’s revenues, net of activity assessment fees, for the year ended Dec. 31, 2007 increased $689 million, or 21%, while fixed operating expenses (defined as operating expenses, net of Section 31 fees, merger expenses, exit costs, liquidity payments, routing and clearing fees, and excluding regulatory fine income) decreased $135 million, or 7%, compared to the year ended Dec. 31, 2006. Please refer to the table entitled "Normalized revenues and fixed operating expenses including non-GAAP financial measures.”
Other Financial Highlights
On a non-GAAP basis, revenues for the full year 2007, net of activity assessment fees, liquidity payments, and routing and clearing fees, were $3,049 million, up 11.7% versus full year 2006.
Excluding the effect of activity assessment fees and Section 31 fees, the pre-tax margin of NYSE Euronext on a non-GAAP basis reached 27.3% of total revenues for the year ended Dec. 31, 2007 as compared to 23.5% of total revenues for the year ended Dec. 31, 2006.
As of Dec. 31, 2007, NYSE Euronext had a strong financial position with $1,532 million of cash, cash equivalents, investment and other securities (including $169 million related to Section 31 fees collected from market participants and due to the U.S. Securities and Exchange Commission) and $2,713 million in debt obligations.
NYSE Euronext will make a $0.25 quarterly dividend payment on Mar. 31, 2008 to shareholders of record as of Mar. 14, 2008.
