NASDAQ OMX Reports Record Fourth Quarter 2013 Results
* Fourth quarter 2013 net revenues(1 )were a record $520 million, up 23% from
the prior year quarter. On an organic basis, assuming constant currency and
excluding acquisitions, net revenues increased 5% year-over-year.
* Achieved record fourth quarter non-GAAP diluted EPS of $0.69, which was 8%
higher year-over-year. Fourth quarter 2013 GAAP diluted EPS was $0.81.
* Achieved organic revenue growth year-over-year in all three non-trading
business segments, Information Services, Technology Solutions, and Listing
Services.
* Non-transaction based revenues were 73% of our total fourth quarter 2013 net
revenues, and increased 27% from the prior year quarter.
* Both recent acquisitions of eSpeed and the IR, PR, and Multimedia businesses
of Thomson Reuters are contributing earnings accretion and progress
continues on delivering the synergy potential of both transactions.
* The company paid down $98 million in debt in the period, and the
deleveraging plan is on schedule to return NASDAQ OMX to its long-term
leverage target by the end of the second quarter of 2014.
NEW YORK, Feb. 5, 2014 (GLOBE NEWSWIRE) -- The NASDAQ OMX Group, Inc.
(Nasdaq:NDAQ) today reported results for the fourth quarter of 2013. Fourth
quarter net revenues were $520 million, up from $422 million in the prior year
period, driven by both acquisitions and organic growth in Technology Solutions,
Information Services, and Listing Services. On an organic basis fourth quarter
net revenues increased 5% year-over-year.
"I am encouraged by the performance of our business and further validation of
the strategic approach we've taken to more broadly service the financial
community while effectively balancing our mix of revenue and earnings streams,"
said Bob Greifeld, CEO, NASDAQ OMX. "With nearly three quarters of our revenue
derived from recurring sources, derivatives and fixed income contributing more
than 60 percent of our transaction revenues, and nearly all of our revenues
coming from products where we enjoy #1 or #2 competitive positions, our business
model puts this company on very strong footing."
Mr. Greifeld continued, "What is especially satisfying about this quarter is our
record results were delivered while we continue to invest heavily in our future,
through promising internal initiatives and initial investments into our acquired
businesses. As we look at 2014, we are optimistic that our business model is
well positioned for any potential improvement to the global business environment
while the diversity of offerings provides the opportunity to more broadly
service our customers across the investment community."
On a non-GAAP basis, fourth quarter 2013 operating expenses were $313 million,
up 33% as compared to the prior year quarter, primarily due to the inclusion of
expenses associated with the acquisitions of the Thomson Reuters IR, PR and
Multimedia businesses and the eSpeed electronic fixed income platform. On an
organic basis (constant currency and excluding acquisitions), fourth quarter
non-GAAP operating expenses were up 6%. Â GAAP operating expenses were $282
million in the fourth quarter of 2013, compared to $247 million in the prior
year quarter.
Fourth quarter 2013 non-GAAP diluted earnings per share was $0.69, compared to
$0.64 in the prior year quarter. Â Please refer to our reconciliation of GAAP to
non-GAAP net income, diluted earnings per share, operating income, net exchange
revenues and operating expenses included in the attached schedules.
On a GAAP basis, net income attributable to NASDAQ OMX for the fourth quarter of
2013 was $141 million, or $0.81 per diluted share, compared with $85 million, or
$0.50 per diluted share, in the prior year quarter.
"2013 finished with healthy momentum in terms of both organic growth in the vast
majority of our business units, and our progress integrating two transformative
acquisitions," said Lee Shavel, EVP and CFO, NASDAQ OMX. "As we begin 2014, we
will be working to continue to realize the growth and synergy opportunities each
acquisition brings for shareholders."
Mr. Shavel continued, "On the capital front, we continue our strong pace of
deleveraging, paying down $98 million in debt, reducing the gross debt/EBITDA
leverage ratio. We remain on track to return to our longer-term leverage target
in the mid-2x gross debt to EBITDA range by the end of the second quarter of
2014."
At December 31, 2013, the company had cash and cash equivalents of $425 million
and total debt of $2,634 million, resulting in net debt of $2,209 million. Â This
compares to net debt of $1,479 million at December 31, 2012.
BUSINESS HIGHLIGHTS
Market Services (39% of total net revenues) - Net revenues were $204 million in
the fourth quarter of 2013, up $17 million when compared to $187 million in the
fourth quarter of 2012.
Derivatives (14% of total net revenues) - Total net derivative trading and
clearing revenues were $72 million in the fourth quarter of 2013, down $3
million compared to the fourth quarter of 2012. Net U.S. derivative trading
and clearing revenues declined $3 million year-over-year due to modestly
lower market share and capture. European derivative trading and clearing
revenues were unchanged.
Cash Equities (10% of total net revenues) - Total net cash equity trading
revenues were $51 million in the fourth quarter of 2013, up $4 million
compared to the fourth quarter of 2012. Net U.S. cash equity trading
revenues were unchanged, on relatively stable industry volumes, market
share, and capture, while European cash equity trading rose $4 million year-
over-year, on higher market volumes and capture. Consolidated U.S. cash
equity market share was the highest since the third quarter of 2012.
Fixed Income (3% of total net revenues) - Total net fixed income trading
revenues associated with eSpeed were $17 million.
Access and Broker Services (12% of total net revenues) - Access and broker
services revenues totaled $64 million in the fourth quarter of 2013, down $1
million compared to the fourth quarter of 2012. Â Co-location and ports saw
modestly lower demand in the fourth quarter of 2013 compared to the fourth
quarter of 2012, partially offset by the addition of eSpeed hosting
revenues, and revenue growth in newer products, such as microwave and other
new low-latency connectivity methods.
Information Services (21% of total net revenues) - Revenues were $109 million in
the fourth quarter of 2013, up $10 million from the fourth quarter of 2012.
Market Data (17% of total net revenues) - Total market data revenues were
$89 million in the fourth quarter of 2013, up $6 million compared to the
fourth quarter of 2012, primarily due to the inclusion of market data
revenues associated with eSpeed, growth in products such as NASDAQ Basic,
and the impact of select pricing initiatives. This increase was partially
offset by a $2 million decrease in audit collections compared to the prior
year period.
Index Licensing and Services (4% of total net revenues) - Index licensing
and services revenues were $20 million in the fourth quarter of 2013, up $4
million from the fourth quarter of 2012. The revenue growth was a function
of materially higher assets under management and number of licensed exchange
traded products, including the impact of the acquisition of the index
business of Mergent, Inc.
Technology Solutions (29% of total net revenues) - Revenues were $149 million in
the fourth quarter of 2013, up $70 million from the fourth quarter of 2012.
Corporate Solutions (16% of total net revenues) - Corporate solutions
revenues were $83 million in the fourth quarter of 2013, up $58 million from
the fourth quarter of 2012. Corporate solutions revenue growth was primarily
due to the inclusion of the Thomson Reuters IR, PR, and Multimedia
businesses, as well as organic growth, in particular the continued growth of
Directors Desk.
Market Technology (13% of total net revenues) - Market technology revenues
were $66 million in the fourth quarter of 2013, up $12 million from the
fourth quarter of 2012. The revenue increase is primarily due to an increase
in software, license and support revenues as well as an increase in
software-as-a-service revenues due to organic growth, in particular at BWise
and SMARTS Broker. Also in the fourth quarter of 2013, we recognized higher
revenues at BWise due to the recognition of previously deferred license
revenues.
Listing Services (11% of total net revenues) - Revenues were $58 million in the
fourth quarter of 2013, up $1 million compared to the fourth quarter of
2012. U.S. listing revenues were unchanged. European listing revenues rose by $1
million, due to higher market capitalization and a favorable change in exchange
rates.
NON-GAAP OPERATING EXPENSE AND EFFECTIVE TAX RATE GUIDANCE - The company has
initiated 2014 non-GAAP operating expense guidance of $1,250-$1,285 million,
including $1,215-$1,235 million of core expenses, and $35-$50 million of GIFT
new initiative expenses. Â The company expects an effective tax rate in the range
of 33%-35% in 2014.
CORPORATE HIGHLIGHTS
* Market Technology finishes record year for new order intake. In 2013, Market
Technology had its best-ever year for new order intake, with $322 million in
total contract value, including a record $138 million in the fourth quarter
of 2013. The backlog ended the year at a record $655 million.
* U.S. Derivatives continues industry leadership. For the fourth consecutive
year, NASDAQ OMX led all exchange operators in consolidated U.S. equity
options market share, at 27.9% (18.2% for NASDAQ OMX PHLX, 8.7% for NASDAQ
Options Market, and 1.0% for NASDAQ OMX BX), and set an all-time best annual
mark.
* Listing Services finishes 2013 with strong momentum. NASDAQ OMX led all U.S.
exchanges with 126 IPOs in 2013, a 75% increase vs. the prior year, and
welcomed a total of 239 new listings. NASDAQ OMX also won 31 listing venue
switches, and hosted 57% of the top 100 best performing IPOs in 2013.
* NASDAQ OMX clears first European buy-side client interest rate swap. On
December 23(rd), NASDAQ OMX Clearing announced its first buy-side client
cleared interest rate swap (IRS). The start to buy-side clearing follows
strong overall volume growth for NASDAQ OMX Clearing, with over 230 billion
SEK in cleared IRS volumes to date, making NASDAQ OMX Clearing second in
Europe in total cleared IRS volumes.
* Global Indexes continues push into institutional channels. On November
6, 2013, the Oklahoma Firefighters Pension and Retirement System adopted the
NASDAQ Global Index Family to serve as preferred benchmarks for its equity
investments, requiring their 20 investment managers to reconsider their
current benchmarks in preference to NASDAQ's offering.
About NASDAQ OMX Group
NASDAQ OMX (Nasdaq:NDAQ) is a leading provider of trading, exchange technology,
information and public company services across six continents. Through its
diverse portfolio of solutions, NASDAQ OMX enables customers to plan, optimize
and execute their business vision with confidence, using proven technologies
that provide transparency and insight for navigating today's global capital
markets. As the creator of the world's first electronic stock market, its
technology powers more than 80 marketplaces in 50 countries, and approximately
1 in 10 of the world's securities transactions. NASDAQ OMX is home to more than
3,300 listed companies with a market value of over $8 trillion and more than
10,000 corporate clients. To learn more, visit www.nasdaqomx.com.
Non-GAAP Information
In addition to disclosing results determined in accordance with GAAP, NASDAQ OMX
also discloses certain non-GAAP and pro forma non-GAAP results of operations,
including, but not limited to, net income attributable to NASDAQ OMX, diluted
earnings per share, net exchange revenues, operating income, and operating
expenses, that make certain adjustments or exclude certain charges and gains
that are described in the reconciliation table of GAAP to non-GAAP and pro forma
non-GAAP information provided at the end of this release. Management believes
that this non-GAAP and pro forma non-GAAP information provides investors with
additional information to assess NASDAQ OMX's operating performance by making
certain adjustments or excluding costs or gains and assists investors in
comparing our operating performance to prior periods. Management uses this non-
GAAP and pro forma non-GAAP information, along with GAAP information, in
evaluating its historical operating performance.
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,
technology, de-leveraging 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.
NDAQF
 The NASDAQ OMX Group, Inc.
 Consolidated Statements of Income
 (in millions, except per share amounts)
  Three Months Ended  Year Ended
----------------------------------------------------------
 December  September  December  December  December
 31, 30, 31, 31, 31,
  2013  2013  2012  2013  2012
----------------------------------------------------------
Revenues:Â (unaudited) (unaudited) (unaudited) (unaudited)
Market Services  $ 533  $ 499  $ 520  $ 2,092  $ 2,206
Cost of revenues:
Transaction rebates  (254)  (231)  (249)  (1,002)  (1,104)
Brokerage, clearance
and exchange fees  (75)  (68)  (84)  (314)  (342)
----------------------------------------------------------
Total cost of
revenues  (329)  (299)  (333)  (1,316)  (1,446)
----------------------------------------------------------
Total Market
Services revenues
less transaction
rebates, brokerage,
clearance and
exchange fees  204  200  187  776  760
Listing Services  58  57  57  228  224
Information
Services  109  118  99  442  406
Technology
Solutions  149  131  79  449  284
----------------------------------------------------------
Revenues less
transaction rebates,
brokerage, clearance
and exchange fees  520  506  422  1,895  1,674
----------------------------------------------------------
Operating Expenses:
Compensation and
benefits  146  150  116  539  454
Marketing and
advertising  8  7  7  30  26
Depreciation and
amortization  34  33  27  122  104
Professional and
contract services  45  41  29  151  107
Computer operations
and data
communications  25  22  10  82  60
Occupancy  27  26  25  98  93
Regulatory  7  8  7  30  34
Merger and strategic
initiatives  (11)  --  4  22  4
Restructuring
charges  --  --  8  9  44
General,
administrative and
other  19  17  14  80  58
Voluntary
accommodation
program  (18)  --  --  44  --
----------------------------------------------------------
Total operating
expenses  282  304  247  1,207  984
----------------------------------------------------------
Operating income  238  202  175  688  690
Interest income  2  2  3  9  10
Interest expense  (30)  (32)  (25)  (111)  (97)
Gain on sale of
investment security  30  --  --  30  --
Asset impairment
charges  (5)  --  --  (14)  (40)
Loss on divestiture
of business  --  --  --  --  (14)
Loss from
unconsolidated
investees, net  --  (1)  --  (2)  (1)
----------------------------------------------------------
Income before income
taxes  235  171  153  600  548
Income tax
provision  94  58  69  216  199
----------------------------------------------------------
Net income  141  113  84  384  349
Net loss
attributable to
noncontrolling
interests  --  --  1  1  3
----------------------------------------------------------
Net income
attributable to
NASDAQ OMXÂ Â $Â 141 Â $Â 113 Â $Â 85 Â $Â 385 Â $Â 352
----------------------------------------------------------
Per share
information:
Basic earnings per
share  $ 0.84  $ 0.68  $ 0.52  $ 2.30  $ 2.09
----------------------------------------------------------
Diluted earnings per
share  $ 0.81  $ 0.66  $ 0.50  $ 2.25  $ 2.04
----------------------------------------------------------
Cash dividends
declared per common
share  $ 0.13  $ 0.13  $ 0.13  $ 0.52  $ 0.39
----------------------------------------------------------
Weighted-average
common shares
outstanding for
earnings per share:
Basic  168.3  167.3  164.5  166.9  168.3
Diluted  173.1  172.1  169.1  171.3  172.6
The NASDAQ OMX Group, Inc.
Revenue Detail
(in millions)
  Three Months Ended Year Ended
----------------------------------------------------------
 December  September  December  December  December
 31, 30, 31, 31, 31,
  2013  2013  2012  2013  2012
----------------------------------------------------------
 (unaudited) (unaudited) (unaudited) (unaudited)
MARKET SERVICES
Derivative Trading
and Clearing
Revenues:
U.S. derivative
trading and
clearing  $ 120  $ 106  $ 124  $ 467  $ 458
Cost of revenues:
Transaction rebates  (71)  (58)  (69)  (259)  (250)
Brokerage, clearance
and exchange fees  (7)  (6)  (10)  (33)  (34)
----------------------------------------------------------
Total U.S.
derivative trading
and clearing cost of
revenues  (78)  (64)  (79)  (292)  (284)
----------------------------------------------------------
Net U.S. derivative
trading and clearing
revenues  42  42  45  175  174
European derivative
trading and
clearing  30  29  30  118  117
----------------------------------------------------------
Total net derivative
trading and clearing
revenues  72  71  75  293  291
----------------------------------------------------------
Cash Equity Trading
Revenues:
U.S. cash equity
trading  279  259  283  1,129  1,294
Cost of revenues:
Transaction rebates  (183)  (173)  (180)  (743)  (854)
Brokerage, clearance
and exchange fees  (67)  (61)  (74)  (279)  (308)
----------------------------------------------------------
Total U.S. cash
equity cost of
revenues  (250)  (234)  (254)  (1,022)  (1,162)
----------------------------------------------------------
Net U.S. cash equity
trading revenues  29  25  29  107  132
European cash equity
trading  22  21  18  86  80
----------------------------------------------------------
Total net cash
equity trading
revenues  51  46  47  193  212
----------------------------------------------------------
Fixed Income Trading
Revenues:
Fixed Income
Trading  18  19  --  37  --
Cost of Revenue:
Brokerage, clearance
and exchange fees  (1)  (1)  --  (2)  --
----------------------------------------------------------
Total net fixed
income trading
revenues  17  18  --  35  --
----------------------------------------------------------
Access and Broker
Services Revenues  64  65  65  255  257
----------------------------------------------------------
Total Market
Services revenues
less
transaction rebates,
brokerage, clearance
and exchange fees  204  200  187  776  760
----------------------------------------------------------
LISTING SERVICES
U.S. listing
services  44  43  44  173  174
European listing
services  14  14  13  55  50
----------------------------------------------------------
Total Listing
Services revenues  58  57  57  228  224
----------------------------------------------------------
INFORMATION
SERVICES
Market Data Products
Revenues:
U.S. market data
products  65  73  60  264  244
European market data
products  17  20  17  77  74
Index data products  7  7  6  27  25
----------------------------------------------------------
Total Market Data
Products revenues  89  100  83  368  343
Index Licensing and
Services Revenues  20  18  16  74  63
----------------------------------------------------------
Total Information
Services revenues  109  118  99  442  406
----------------------------------------------------------
TECHNOLOGY
SOLUTIONS
Corporate Solutions
Revenues:
Governance  4  4  3  15  10
Investor relations  47  47  11  130  40
Multimedia
solutions  18  15  4  43  14
Public relations  14  12  7  42  25
----------------------------------------------------------
Total Corporate
Solutions revenues  83  78  25  230  89
----------------------------------------------------------
Market Technology
Revenues:
Software, license
and support  43  36  36  152  143
Change request and
advisory  13  9  12  38  29
Software as a
service 10  8  6  29  23
----------------------------------------------------------
Total Market
Technology revenues  66  53  54  219  195
----------------------------------------------------------
Total Technology
Solutions revenues 149  131  79  449  284
----------------------------------------------------------
Total revenues less
transaction rebates,
brokerage, clearance
and exchange fees $ 520  $ 506  $ 422  $ 1,895  $ 1,674
----------------------------------------------------------
The NASDAQ OMX Group, Inc.
Consolidated Balance Sheets
(in millions)
 December 31, December 31,
 2013 2012
------------------------------
Assets (unaudited)
Current assets:
Cash and cash equivalents  $ 425  $ 497
Restricted cash  84  85
Financial investments, at fair value  162  223
Receivables, net  393  333
Deferred tax assets  12  33
Default funds and margin deposits  1,961  209
Other current assets  126  112
------------------------------
Total current assets  3,163  1,492
Non-current restricted cash  --  25
Property and equipment, net  268  211
Non-current deferred tax assets  404  294
Goodwill 6,186 5,335
Intangible assets, net  2,386  1,650
Other non-current assets  170  125
------------------------------
Total assets  $ 12,577  $ 9,132
------------------------------
Liabilities
Current liabilities:
Accounts payable and accrued expenses  $ 228  $ 172
Section 31 fees payable to SEC Â 82 Â 97
Accrued personnel costs  154  111
Deferred revenue  151  139
Other current liabilities  141  119
Deferred tax liabilities  38  35
Default funds and margin deposits  1,961  209
Current portion of debt obligations  45  136
------------------------------
Total current liabilities  2,800  1,018
Debt obligations  2,589  1,840
Non-current deferred tax liabilities  708  713
Non-current deferred revenue  143  156
Other non-current liabilities  153  196
------------------------------
Total liabilities  6,393  3,923
Commitments and contingencies
Equity
NASDAQ OMX stockholders' equity:
Common stock  2  2
Additional paid-in capital  4,278  3,771
Common stock in treasury, at cost  (1,005)  (1,058)
Accumulated other comprehensive loss  (67)  (185)
Retained earnings  2,976  2,678
------------------------------
Total NASDAQ OMX stockholders' equity  6,184  5,208
Noncontrolling interests  --  1
------------------------------
Total equity  6,184  5,209
------------------------------
Total liabilities and equity  $ 12,577  $ 9,132
------------------------------
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, except per share amounts)
(unaudited)
  Three Months Ended  Year Ended
------------------------------------------------------------
 December  September  December  December  December
 31, 30, 31, 31, 31,
 2013 2013 2012 2013 2012
------------------------------------------------------------
GAAP net income
attributable to
NASDAQ OMX: $141 $113 $85 $385 $352
Non-GAAP
adjustments:
Income from open
positions relating
to the operations
of the Exchange --Â Â --Â Â --Â Â --Â (11)
Gain on sale of
investment
security (30) --Â Â --Â (30) --
Voluntary
accommodation
program (18) --Â Â --Â 44 Â --
Merger and
strategic
initiatives((2)) (11) --Â 4 22 4
Asset impairment
charges 5 Â --Â Â --Â 14 40
Special legal
expenses 1 Â --Â 2 3 7
Securities and
Exchange
Commission matter --Â Â --Â Â --Â 10 Â --
Restructuring
charges --Â Â --Â 8 9 44
Loss on
divestiture of
business --Â Â --Â Â --Â Â --Â 14
Other (3) --Â (3) (3) --
------------------------------------------------------------
Total non-GAAP
adjustments (56) --Â 11 69 98
Adjustment to the
income tax
provision to
reflect non-GAAP
adjustments((3)) 29 (3) (5) (17) (32)
Significant tax
adjustments, net 5 3 17 8 14
------------------------------------------------------------
Total non-GAAP
adjustments, net
of tax (22) --Â 23 60 80
Non-GAAP net
income
attributable to
NASDAQ OMX: $119 $113 $108 $445 $432
------------------------------------------------------------
GAAP diluted
earnings per
share: $0.81 $0.66 $0.50 $2.25 $2.04
Total adjustments
from non-GAAP net
income above (0.12) --Â 0.14 0.35 0.46
------------------------------------------------------------
Non-GAAP diluted
earnings per
share: $0.69 $0.66 $0.64 $2.60 $2.50
------------------------------------------------------------
  Three Months Ended  Year Ended
------------------------------------------------------------
 December  September  December  December  December
 31, 30, 31, 31, 31,
 2013 2013 2012 2013 2012
------------------------------------------------------------
GAAP operating
income: $238 $202 $175 $688 $690
Non-GAAP
adjustments:
Income from open
positions relating
to the operations
of the Exchange --Â Â --Â Â --Â Â --Â (11)
Voluntary
accommodation
program (18) --Â Â --Â 44 Â --
Merger and
strategic
initiatives((2)) (11) --Â 4 22 4
Special legal
expenses 1 Â --Â 2 3 7
Securities and
Exchange
Commission matter --Â Â --Â Â --Â 10 Â --
Restructuring
charges --Â Â --Â 8 9 44
Other (3) --Â (3) (3) --
------------------------------------------------------------
Total non-GAAP
adjustments (31) --Â 11 85 44
------------------------------------------------------------
Non-GAAP operating
income $207 $202 $186 $773 $734
------------------------------------------------------------
Total Non-GAAP
revenues less
transaction
rebates,
brokerage,
clearance and
exchange fees $520 $506 $422 $1,895 $1,663
Non-GAAP operating
margin((4)) 40% 40% 44% 41% 44%
(1) Represents revenues less transaction rebates, brokerage, clearance and
exchange fees.
(2) For the three and twelve months ended December 31, 2013, merger and
strategic initiatives expense includes a credit of $23 million associated with
a receivable under a tax sharing agreement with an unrelated party. This
amount is offset in note (3) below. Merger and strategic initiatives expense
also includes costs related to our acquisitions of eSpeed and the
TR  Corporate Solutions businesses. For the three months ended September
30, 2013, merger and strategic initiatives expense included $8 million of
costs primarily related to the acquisitions of eSpeed and the TR Corporate
Solutions businesses. This amount was offset by the remeasurement of a
contingent purchase price liability related to the BWise acquisition due to
changes in the anticipated performance of BWise.
(3) For the three and twelve months ended December 31, 2013, includes $23
million associated with the derecognition of a previously recognized tax
benefit. This amount is offset by  the receivable described in note (2)
above. For the three months ended September 30, 2013, relates to the $8
million merger and strategic initiatives expense described in note (2) above.
(4) Non-GAAP operating margin equals non-GAAP operating income divided by Non-
GAAP 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  September  December  December  December
 31, 30, 31, 31, 31,
 2013 2013 2012 2013 2012
--------------------------------------------------------
GAAP revenues less
transaction rebates,
brokerage, clearance
and exchange fees: $520 $506 $422 $1,895 $1,674
Non-GAAP adjustments:
Income from open
positions relating to
the operations of the
Exchange --Â Â --Â Â --Â Â --Â (11)
--------------------------------------------------------
Total non-GAAP
adjustments --Â Â --Â Â --Â Â --Â (11)
--------------------------------------------------------
Non-GAAP revenues less
transaction rebates,
brokerage, clearance
and exchange fees: $520 $506 $422 $1,895 $1,663
--------------------------------------------------------
  Three Months Ended  Year Ended
--------------------------------------------------------
 December  September  December  December  December
 31, 30, 31, 31, 31,
 2013 2013 2012 2013 2012
--------------------------------------------------------
GAAP operating
expenses: $282 $304 $247 $1,207 $984
Non-GAAP adjustments:
Voluntary
accommodation program 18 Â --Â Â --Â (44) --
Merger and strategic
initiatives ((2)) 11 Â --Â (4) (22) (4)
Special legal expenses (1) --Â (2) (3) (7)
Securities and
Exchange Commission
matter --Â Â --Â Â --Â (10) --
Restructuring charges --Â Â --Â (8) (9) (44)
Other 3 Â --Â 3 3 Â --
--------------------------------------------------------
Total non-GAAP
adjustments 31 Â --Â (11) (85) (55)
--------------------------------------------------------
Non-GAAP operating
expenses $313 $304 $236 $1,122 $929
--------------------------------------------------------
(1) Represents revenues less transaction rebates, brokerage, clearance and
exchange fees.
(2) For the three and twelve months ended December 31, 2013, merger and
strategic initiatives expense includes a credit of $23 million associated with
a receivable under a tax sharing agreement with an unrelated party. Merger and
strategic initiatives expense also includes costs related to our acquisitions
of eSpeed and the TR Corporate Solutions businesses. For the three months
ended September 30, 2013, merger and strategic initiatives expense included $8
million of costs primarily related to the acquisitions of eSpeed and the TR
Corporate Solutions businesses. This amount was offset by the remeasurement of
a contingent purchase price liability related to the BWise acquisition due to
changes in the anticipated performance of BWise.
The NASDAQ OMX Group, Inc.
Quarterly Key Drivers Detail
(unaudited)
 Three Months Ended
-------------------------------------------------
 December 31 September 30 December 31,
 2013 2013 2012
-------------------------------------------------
Market Services
Derivative Trading and
Clearing
U.S. Equity Options
Total industry average daily
volume (in millions) 14.7 13.6 Â 14.3
NASDAQ OMX PHLX matched
market share 17.6% 16.7% 21.9%
The NASDAQ Options Market
matched market share 9.1% 9.0% 6.2%
NASDAQ OMX BX Options matched
market share 0.8% 1.0% 1.0%
-------------------------------------------------
Total market share 27.5% 26.7% 29.1%
NASDAQ OMX Nordic and NASDAQ
OMX Baltic
Average daily volume:
Options, futures and fixed-
income contracts 407,816 346,940 Â 379,905
Finnish option contracts
traded on Eurex 77,703 116,583 Â 107,373
NASDAQ OMX Commodities
Clearing Turnover:
Power contracts (TWh)((1)) 436 Â 363 Â 453
Cash Equity Trading
NASDAQ securities
Total average daily share
volume (in billions) 1.82 1.63 1.74
Matched market share executed
on NASDAQ 25.2% 24.3% 23.6%
Matched market share executed
on NASDAQ OMX BX 2.5% 2.3% 2.6%
Matched market share executed
on NASDAQ OMX PSX 0.5% 0.7% 1.3%
Market share reported to the
FINRA/NASDAQ
Trade Reporting Facility 36.1% 37.7% 33.2%
-------------------------------------------------
Total market share( (2)) 64.2% 65.0% 60.7%
New York Stock Exchange, or
NYSE securities
Total average daily share
volume (in billions) 3.22 3.12 Â 3.39
Matched market share executed
on NASDAQ 12.1% 11.3% 11.5%
Matched market share executed
on NASDAQ OMX BX 2.5% 2.3% 2.5%
Matched market share executed
on NASDAQ OMX PSX 0.3% 0.5% 0.7%
Market share reported to the
FINRA/NASDAQ
Trade Reporting Facility 32.3% 33.6% 30.0%
-------------------------------------------------
Total market share( (2)) 47.3% 47.7% 44.7%
NYSE MKT and regional
securities
Total average daily share
volume (in billions) 0.98 1.02 Â 0.97
Matched market share executed
on NASDAQ 12.5% 13.0% 14.1%
Matched market share executed
on NASDAQ OMX BX 3.1% 3.1% 2.9%
Matched market share executed
on NASDAQ OMX PSX 1.1% 1.4% 1.6%
Market share reported to the
FINRA/NASDAQ
Trade Reporting Facility 30.4% 32.4% 30.6%
-------------------------------------------------
Total market share( (2)) 47.1% 49.9% 49.2%
Total U.S.-listed securities
Total average daily share
volume (in billions) Â 6.01 Â 5.77 Â 6.09
Matched share volume (in
billions) Â 74.1 Â 67.9 Â 71.6
Matched market share executed
on NASDAQ 16.1% 15.3% 15.4%
Matched market share executed
on NASDAQ OMX BX 2.6% 2.4% 2.6%
Matched market share executed
on NASDAQ OMX PSX 0.5% 0.7% 1.0%
-------------------------------------------------
Total market share 19.2% 18.4% 19.0%
NASDAQ OMX Nordic and NASDAQ
OMX Baltic Securities
Average daily number of
equity trades 309,756 285,404 Â 273,330
Total average daily value of
shares traded (in billions) Â $ 4.4 Â $ 4.0 Â $ 3.4
Total market share 68.3% 67.3% 68.2%
 Listing Services
Initial public offerings
NASDAQ 35 38 19
Exchanges that comprise
NASDAQ OMX Nordic and NASDAQ
OMX Baltic 8 0 4
New listings
NASDAQ ((3)) 80 59 46
Exchanges that comprise
NASDAQ OMX Nordic and NASDAQ
OMX Baltic ((4)) 14 5 9
Number of listed companies
NASDAQ ((5)) Â 2,637 Â 2,602 Â 2,577
Exchanges that comprise
NASDAQ OMX Nordic and NASDAQ
OMX Baltic ((6)) Â 758 Â 752 Â 754
Technology Solutions
Market Technology
Order intake (in
millions)((7)) Â $ 138 Â $ 119 Â $ 98
Total order value (in
millions)((8)) Â $ 655 Â $ 579 Â $ 559
(1) 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).
(2) 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.
(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 exchange traded funds (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: Contact Media Relations:
Joseph Christinat +1.646.441.5121
Joseph.Christinat@NASDAQOMX.Com
Contact Investor Relations:
Ed Ditmire +1.212.401.8737
Ed.Ditmire@NASDAQOMX.Com
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(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: The NASDAQ OMX Group, Inc. via GlobeNewswire
[HUG#1759271]