Included in the third quarter results are $7.7 million in merger expenses consisting of lease termination, severance and related exit costs ($5.1 million), and other professional fees incurred in connection with both the integration of the Archipelago businesses and the contemplated merger with Euronext N.V. ($2.6 million). Also included in the third quarter results is a $7.2 million gain for a one-time payment received from the National Securities Clearing Corporation and Fixed Income Clearing Corporation in connection with the previously announced phase out of their service agreement with SIAC, a subsidiary of NYSE Group.
On a non-GAAP basis, giving effect to the Archipelago transaction as if it occurred at the beginning of the earliest period presented, and excluding the above merger expenses, exit costs and one-time gain, the net income of NYSE Group for the three months ended September 30, 2006 would have been $68.2 million, or $0.43 per diluted share, a $38.6 million or 130% increase as compared to net income, on a non-GAAP basis, of $29.6 million, or $0.18 per diluted share, for the three months ended September 30, 2005. A full reconciliation of these non-GAAP results is included in the attached tables.
“NYSE Group’s financial results reflect our continued focus on expanding our operating margins, and delivering sustained revenue and overall business growth,” said Nelson Chai, NYSE Group Executive Vice President and Chief Financial Officer. “We remain focused on reducing costs, increasing efficiencies and driving towards the completion of the merger with Euronext. These directives are clearly reflected in our quarterly financial results and business highlights.”
“This quarter’s introduction of NYSE Arca Options coupled with our double-digit growth in trading volumes in all product areas, strategic pricing initiatives and comprehensive order execution platforms, such as the recently-implemented Hybrid MarketSM, ensure that NYSE Group is well positioned to maintain its standing as a leading global market and a significant competitive force in the marketplace.”
Other Financial Highlights
-Excluding the effect of activity assessment fees and Section 31 fees, the pre-tax margin of NYSE Group on a non-GAAP basis was 26.2% of total revenues for the three months ended September 30, 2006 as compared to 13.2% of total revenues for the three months ended September 30, 2005 .
-As of September 30, 2006 , NYSE Group had $842.3 million of cash, cash equivalents, investment and other securities (including $64.6 million related to Section 31 fees collected from market participants and due to the Securities and Exchange Commission) and no debt obligation.
Third Quarter Business Highlights
-The total number of NYSE listed issuers at September 30, 2006 rose to 2,704 compared to 2,697 at June 30, 2006 and 2,639 at September 30, 2005.
-For the nine months ended September 30, 2006 , the NYSE added 127 new issuer listings (72 operating companies, 13 closed-end funds, and 42 exchange-traded funds or ETFs), 19 of which were non-U.S. listings. Trading in non-U.S. companies represented 11.6% of the overall NYSE volume, up from 9.9% in the same period a year ago.
-For the three months ended September 30, 2006 compared to the same period a year ago, NYSE Group has recorded increased average daily volumes across all categories of securities, including handled volume increases of 11% in NYSE listed issues, 37% in NYSE Arca and Amex listed issues, 27% in Nasdaq listed issues, 61% in ETFs, and 40% in equity options contracts.
-For the three months ended September 30, 2006 , NYSE Group handled 111.6 billion shares of NYSE listed issues, or 72.4% of the trading in NYSE listed issues, versus 124.0 billion shares, or 76.3%, and 102.5 billion shares, or 80.0%, for the three months ended June 30, 2006 and September 30, 2005 , respectively.
-NYSE Group’s share of trading in NYSE Arca and Amex listed issues increased to 38.4% for the three months ended September 30, 2006 compared to 34.4% for the three months ended June 30, 2006 and 32.7% for the three months ended September 30, 2005 .
-NYSE Group’s share of trading in Nasdaq listed issues increased to 25.5% for the three months ended September 30, 2006 compared to 25.2% for the three months ended June 30, 2006 and 22.8% for the three months ended September 30, 2005 .
-NYSE Group’s share of trading in ETFs increased to 43.5% for the three months ended September 30, 2006 compared to 42.9% for the three months ended June 30, 2006 and 38.4% for the three months ended September 30, 2005 .
-NYSE Group’s share of trading in equity options contracts increased to 10.3% for the three months ended September 30, 2006 compared to 9.4% for the three months ended June 30, 2006 and 9.6% for the three months ended September 30, 2005 .
-August 7, 2006 marked the launch of NYSE Arca Options, a new automated trading system for equity options offering immediate, cost-effective electronic order execution in nearly 2,000 options.
-The NYSE began full Phase III implementation of the Hybrid MarketSMon October 6, 2006 in two stocks: American Express (AX) and Equity Office Properties Trust (EOP). Currently, Phase III incorporates 91 listed securities with complete rollout of all NYSE listed securities anticipated to conclude in December 2006.
-As a significant step towards completion of the merger with Euronext, NYSE Euronext, Inc. filed with the Securities and Exchange Commission a Form S-4 Registration Statement on September 21, 2006 related to the proposed merger of NYSE Group, Inc. and Euronext N.V.
-In the third quarter of 2006, NYSE Group added to the suite of trading services for its customers with the acquisition of MatchPoint Trading, a financial services technology company specializing in call market portfolio trading and technologies, and the purchase of a stake in Marco Polo Network, a leading electronic platform allowing global investors to trade equities and derivatives listed on emerging market exchanges.
-In the first nine months of 2006, NYSE Group continued its success in listings with a number of sizeable IPOs, such as Mastercard, J. Crew, New Oriental Education, Mindray Medical and WNS Holdings, and 15 transfers from other markets year-to-date. The NYSE also welcomed its 143rd Nasdaq domestic transfer to the NYSE since 2000.
-On September 29, 2006 , NYSE Arca celebrated its newest listings with the transfers of Evergreen Energy Inc. (EEE) and BFC Financial Group (BFF) from Amex and Nasdaq, respectively.
-In the third quarter of 2006, NYSE Group listed 6 ETFs and NYSE Arca announced the October 20th listing of its first primary ETFs, 15 iShares® transfers from Amex. Including these listings, the NYSE Group currently has 131 primary ETF listings.
-In addition to the August 1, 2006 implementation of new fees for trading NYSE-listed shares on the NYSE, NYSE Group announced several additional fee changes for trading NYSE-listed securities in the third quarter of 2006.
-The NYSE Composite Index (NYA) continued to outperform other broad based indexes through the first nine months of 2006, up 8.5% as compared to 8.2% for the DJIA, 6.6% for the S&P 500, and 2.4% for the Nasdaq Composite.
