Nasdaq Reports Strong First Quarter 2015 Financial Results
(Thomson Reuters ONE) -
* First quarter 2015 non-GAAP diluted EPS of $0.80, the company's second-
highest non-GAAP: operating income, net income and diluted EPS. First
quarter 2015 GAAP diluted EPS was $0.05.
* The Board has authorized a 67% increase in the quarterly dividend, to $0.25
per share from $0.15.
* First quarter 2015 net revenues(1)were $507 million, down 4% year-over-year.
On an organic basis, excluding the impact of foreign exchange rates and
acquisitions, non-trading segment organic growth was 3%.
* A restructuring effort eliminated $17-$19 million in annualized expenses.
The company will incur related charges of $63 million, of which $31 million
was realized in the first quarter of 2015. In addition, restructuring
charges included a non-cash charge of $119 million related to our global
rebranding initiative.
* Non-GAAP operating expenses were $272 million in the first quarter of 2015,
down 8% year-over-year. On an organic basis, excluding the impact of foreign
exchange rates, non-GAAP operating expenses fell 2%.
* Non-GAAP operating margin was 46% in the first quarter of 2015, up from 44%
in the prior year period.
* The company repurchased $30 million of our common stock in the first quarter
of 2015, bringing total repurchases to $208 million during the last four
quarters.
* The 2015 non-GAAP expense forecast was lowered to $1,085 - $1,110 million,
due to the impact of both restructuring actions and changes in foreign
exchange rates.
NEW YORK, April 23, 2015 (GLOBE NEWSWIRE) -- The NASDAQ OMX Group, Inc.
(Nasdaq:NDAQ) today reported results for the first quarter of 2015. First
quarter net revenues were $507 million, down 4% from $529 million in the prior
year period, driven primarily by a $29 million negative impact from foreign
exchange rates. On an organic basis, excluding the impact of foreign exchange
rates and acquisitions, first quarter net revenues were unchanged, as 3% organic
growth in the non-trading segments was offset by declines in Market Services,
largely due to lower volumes.
"Nasdaq has delivered strong results in what remains a challenging and
competitive operating environment," said Bob Greifeld, CEO, Nasdaq. "The
diversity of our business, coupled with a balanced approach to investment and
capital return, bolsters confidence in the flexibility of our model to continue
to deliver for our clients and our shareholders."
Mr. Greifeld continued, "We had a tremendous start to 2015 including the
acquisition of Dorsey, Wright and Associates, the announcement of a new energy
futures platform, continued leadership in IPOs, new market structure initiatives
and a range of product introductions across our businesses. We remain focused on
executing on the company's opportunity set by deepening our client relationships
through our broad product and service offerings, enhancing our competitive
position by efficiently leveraging our technology and increasing the yield on
recent investments to enhance returns for our shareholders."
On a non-GAAP basis, first quarter 2015 operating expenses were $272 million,
down 8% as compared to the prior year quarter, due to the impact of changes in
foreign exchange rates and the result of expense reduction initiatives. On an
organic basis, first quarter 2015 non-GAAP operating expenses were down 2%
compared to the prior year period.
(1) Represents revenues less transaction-based expenses.
In response to certain revenue and profit headwinds, including an unfavorable
impact from changes in foreign exchange rates, a restructuring effort was
initiated during the first quarter of 2015 to improve efficiency, eliminating
$17-$19 million in annualized costs, through a combination of reducing
compensation, real estate and technology expenses. The company recognized $31
million in charges due to this restructuring in the first quarter of 2015, and
expects to recognize a total of $32 million in additional charges through the
second quarter of 2016. In addition, restructuring charges in the first quarter
of 2015 included a non-cash charge of $119 million related to our global
rebranding initiative.
"Continued organic growth in the non-transactional businesses and ongoing
application of Nasdaq's hallmark expense discipline offset foreign exchange
headwinds and helped deliver near-record non-GAAP earnings for our
shareholders," said Lee Shavel, EVP and CFO, Nasdaq. "The stable nature of our
financial model produces strong cash flows and supports our decision to
substantially increase Nasdaq's dividend, emphasizing a significant income
dimension to shareholders while still allowing sufficient financial flexibility
to reinvest cash flow when opportunities emerge to generate attractive returns."
On a GAAP basis, operating expenses were $480 million in the first quarter of
2015, compared to $345 million in the prior year quarter, and includes $208
million of charges not reflected in non-GAAP operating expenses: including $150
million of charges due to the 2015 restructuring program, $31 million of special
legal expenses and $15 million of amortization expense from acquired intangible
assets.
First quarter 2015 non-GAAP diluted earnings per share was $0.80, up $0.02
compared to $0.78 in the first quarter of 2014. Non-GAAP diluted earnings per
share for the first quarter of 2015 excluded $195 million of pre-tax
adjustments.
On a GAAP basis, net income attributable to Nasdaq for the first quarter of
2015 was $9 million, or $0.05 per diluted share, compared with $103 million, or
$0.59 per diluted share, in the prior year quarter.
Please refer to our reconciliation of GAAP to non-GAAP net income, diluted
earnings per share, operating income and operating expenses included in the
attached schedules.
The company repurchased 0.6 million shares, or $30 million of our common stock,
in the first quarter of 2015 at an average price of $50.08.
On March 31, 2015, the company had cash and cash equivalents of $328 million and
total debt of $2,306 million, resulting in net debt of $1,978 million. This
compares to net debt of $2,130 million at March 31, 2014.
BUSINESS HIGHLIGHTS
Market Services (37% of total net revenues) - Net revenues were $188 million in
the first quarter of 2015, down $20 million when compared to $208 million in the
first quarter of 2014.
Equity Derivatives (9% of total net revenues) - Net equity derivative
trading and clearing revenues were $46 million in the first quarter of
2015, down $10 million compared to the first quarter of 2014. The decline in
equity derivatives revenue was driven by lower average net capture and
industry volumes in U.S. options, while changes in foreign exchange rates
more than offset the impact of higher volumes in European products.
Cash Equities (11% of total net revenues) - Net cash equity trading revenues
were $59 million in the first quarter of 2015, up $2 million compared to the
first quarter of 2014. The increase in cash equity trading revenue resulted
primarily from higher U.S. cash equity average capture and European industry
volumes, partially offset by the impact of changes in foreign exchange
rates.
Fixed Income, Currency and Commodities (5% of total net revenues) - Net FICC
trading and clearing revenues were $24 million in the first quarter of
2015, down $11 million from the first quarter of 2014, due to the impact of
changes in foreign exchange rates, volume declines across most FICC
products, and a scheduled end in licensing revenues from an eSpeed
technology customer.
Access and Broker Services (12% of total net revenues)(2) - Access and
broker services revenues totaled $59 million in the first quarter of 2015, a
decline of $1 million compared to the first quarter of 2014, as organic
revenue increases were offset by the impact of changes in foreign exchange
rates.
Information Services (25% of total net revenues) - Revenues were $125 million in
the first quarter of 2015, up $2 million from the first quarter of 2014.
Data Products (20% of total net revenues) - Data products revenues were $100
million in the first quarter of 2015, unchanged compared to the first
quarter of 2014, as increased revenue from Nasdaq Basic and the inclusion of
revenue associated with the Dorsey Wright acquisition were offset by lower
audit collections, and the impact of changes in foreign exchange rates.
Index Licensing and Services (5% of total net revenues) - Index licensing
and services revenues were $25 million in the first quarter of 2015, up $2
million from the first quarter of 2014. The revenue growth was driven by the
inclusion of revenue associated with the Dorsey Wright acquisition, and
higher revenues from licensing certain structured products. Index revenue
derived from exchange traded products licensed to Nasdaq indices was
unchanged, as increases in AUMs in listed products were offset by pricing
mix changes.
Technology Solutions (26% of total net revenues) - Revenues were $130 million in
the first quarter of 2015, down $10 million from the first quarter of 2014.
Corporate Solutions (15% of total net revenues) - Corporate solutions
revenues were $75 million in the first quarter of 2015, down $7 million from
the first quarter of 2014. The corporate solutions revenue decline was due
primarily to declines in investor relations products, the impact of changes
in foreign exchange rates, partially offset by organic growth in governance
products.
Market Technology (11% of total net revenues)(2) - Market technology
revenues were $55 million in the first quarter of 2015, down $3 million from
the first quarter of 2014. Declines were driven entirely by an unfavorable
impact from changes in foreign exchange rates, partially offset by organic
growth, in particular from expansion of SMARTS surveillance and BWise
enterprise risk management solutions. New order intake was $40 million for
the first quarter of 2015, down after a record new order intake in the prior
quarter, but the $728 million backlog at March 31, 2015 establishes a new
record high.
Listing Services (12% of total net revenues) - Revenues were $64 million in the
first quarter of 2015, up $6 million compared to the first quarter of 2014 due
to certain pricing actions and increases in the number of both U.S. and European
listed companies, partially offset by a lower number of initial public offerings
(IPOs) and the impact of changes in foreign exchange rates.
(2) Certain pre-trade risk product revenues previously included in Access and
Broker Services revenues have been recast as Market Technology revenues, with
prior periods restated.
Reducing 2015 non-GAAP expense guidance - Due to the impact of our 2015
restructuring program, as well as the impact of changes in foreign currency
rates, the company has reduced its 2015 non-GAAP operating expense guidance to
$1,085-$1,110, from $1,120-$1,150 million. Included in this non-GAAP operating
expense guidance is an expected $30-$40 million in R&D spending, unchanged from
prior guidance.
CORPORATE HIGHLIGHTS
* Strong growth in assets tracking Nasdaq indices, particularly in smart beta
indices.Overall assets benchmarked to all Nasdaq Indexes grew 6% to $105
billion, as of March 31, 2015, with a portion of the growth coming from our
acquisition of Dorsey, Wright & Associates (DWA), a market leader in data
analytics, passive indexing and smart beta strategies. In the first two
months with Nasdaq, assets tracking DWA indices grew an impressive 37%. The
acquisition further strengthened Nasdaq's position as a leading smart beta
index provider with $45 billion in assets benchmarked to its family of Smart
Beta indexes. Additionally, we successfully migrated over 10,000 DWA
analytics tools and services subscribers to our next-generation, cloud-based
platform.
* NASDAQ Led U.S. Exchanges for IPOs in 1Q15, continued momentum at Nasdaq
Private Market. The Nasdaq Stock Market (NASDAQ) welcomed 43 new listings,
including 27 IPOs in the first quarter of 2015. Approximately 66 percent of
all US IPOs listed with NASDAQ, including 8 of the top 10 best performing
IPOs, 80 percent of venture capital-backed IPOs and 88 percent of
international IPOs listed on U.S. markets. During the quarter, NASDAQ also
welcomed transferring listings Advanced Micro Devices (AMD) and Towers
Watson (TW)(3). At Nasdaq Private Market, more than 75 companies are now
using its equity management services including the first quarter 2015
addition of London-based Shazam Entertainment, which joins a diverse
customer group including Magic Leap, Tango, Hipmunk, Health Catalyst and
Motley Fool.
* Nasdaq's Market Services business materially expanding its Fixed Income,
Currency and Commodity (FICC) offerings. In the first quarter of 2015,
Nasdaq announced the expansion of its commodities business into the U.S.
energy market with the pending NFX futures exchange, in partnership with the
OCC. NFX has secured support from a significant number of leading market
participants, including leading broker/dealers, futures commission
merchants, ISVs and end-users, and is expected to launch in mid-
2015. Building on the successful 2014 introduction of electronic Treasury
Bills trading, in the first quarter of 2015 eSpeed introduced trading in
"Short Shorts" (short-dated Treasury bonds), and has announced and is
preparing 2015 launches of electronic trading in both a U.S. Treasury Coupon
Roll offering as well as Off-the-Run Treasury bonds.
(3) Previously dual-listed, Towers Watson voluntarily single-listed on NASDAQ in
March 2015
ABOUT NASDAQ
Nasdaq (Nasdaq:NDAQ) is a leading provider of trading, clearing, exchange
technology, listing, information and public company services across six
continents. Through its diverse portfolio of solutions, Nasdaq 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 70 marketplaces in 50 countries, and 1
in 10 of the world's securities transactions. Nasdaq is home to more than 3,500
listed companies with a market value of over $9.5 trillion and more than 10,000
corporate clients. To learn more, visit www.nasdaq.com/ambition or
www.nasdaqomx.com.
NON-GAAP INFORMATION
In addition to disclosing results determined in accordance with GAAP, Nasdaq
also discloses certain non-GAAP results of operations, including, but not
limited to, net income attributable to Nasdaq, diluted earnings per share,
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 information provided at the end of this release. Management
believes that this non-GAAP information provides investors with additional
information to assess Nasdaq'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
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 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, products and services, taxes and achievement of synergy targets, (ii)
statements about the closing or implementation dates and benefits of certain
strategic, restructuring, technology, de-leveraging and capital return
initiatives, (iii) statements about our integrations of our recent acquisitions,
(iv) statements relating to any litigation or regulatory or government
investigation or action to which we are or could become a party, and (v) other
statements that are not historical facts. Forward-looking statements involve a
number of risks, uncertainties or other factors beyond Nasdaq's control. These
factors include, but are not limited to, Nasdaq'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'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's investor
relations website at http://ir.nasdaq.com and the SEC's website at
www.sec.gov. Nasdaq 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.
Condensed Consolidated Statements of Income
(in millions, except per share amounts)
Three Months Ended
March 31, December 31, March 31,
2015 2014 2014
(unaudited) (unaudited) (unaudited)
Revenues:
Market Services $ 539 $ 603 $ 577
Transaction-based expenses:
Transaction rebates (261) (294) (285)
Brokerage, clearance and exchange (90) (108) (84)
fees
Total Market Services revenues 188 201 208
less transaction-based expenses
Listing Services 64 61 58
Information Services 125 113 123
Technology Solutions 130 142 140
Revenues less transaction-based 507 517 529
expenses
Operating Expenses:
Compensation and benefits 147 149 158
Marketing and advertising 7 8 8
Depreciation and amortization 34 33 35
Professional and contract 33 40 39
services
Computer operations and data 35 24 22
communications
Occupancy 21 34 25
Regulatory 7 6 7
Merger and strategic initiatives -- 35 28
General, administrative and other 46 15 23
Restructuring charges 150 -- --
Total operating expenses 480 344 345
Operating income 27 173 184
Interest income 1 2 2
Interest expense (28) (28) (30)
Net income from unconsolidated 14 -- --
investees
Asset impairment charges -- (49) --
Income before income taxes 14 98 156
Income tax provision 5 11 53
Net income attributable to Nasdaq $ 9 $ 87 $ 103
Per share information:
Basic earnings per share $ 0.05 $ 0.52 $ 0.61
Diluted earnings per share $ 0.05 $ 0.50 $ 0.59
Cash dividends declared per common $ 0.15 $ 0.15 $ 0.28
share
Weighted-average common shares
outstanding for earnings per
share:
Basic 169.0 168.2 169.6
Diluted 172.7 172.5 173.7
The NASDAQ OMX Group, Inc.
Revenue Detail
(in millions)
Three Months Ended
March 31, December 31, March 31,
2015 2014 2014
(unaudited) (unaudited) (unaudited)
MARKET SERVICES
Equity Derivative Trading and Clearing $ 116 $ 135 $ 138
Revenues
Transaction-based expenses:
Transaction rebates (64) (73) (75)
Brokerage, clearance and exchange fees (6) (9) (7)
Total net equity derivative trading and 46 53 56
clearing revenues
Cash Equity Trading Revenues 339 378 343
Transaction-based expenses:
Transaction rebates (197) (221) (210)
Brokerage, clearance and exchange fees (83) (98) (76)
Total net cash equity trading revenues 59 59 57
Fixed Income, Currency and Commodities 25 30 36
Trading and Clearing Revenues
Transaction-based expenses:
Brokerage, clearance and exchange fees (1) (1) (1)
Total net fixed income, currency and
commodities trading and clearing 24 29 35
revenues
Access and Broker Services Revenues 59 60 60
Total Net Market Services revenues 188 201 208
LISTING SERVICES REVENUES 64 61 58
INFORMATION SERVICES
Data Products revenues 100 91 100
Index Licensing and Services revenues 25 22 23
Total Information Services revenues 125 113 123
TECHNOLOGY SOLUTIONS
Corporate Solutions revenues 75 78 82
Market Technology revenues 55 64 58
Total Technology Solutions revenues 130 142 140
Total revenues less transaction-based $ 507 $ 517 $ 529
expenses
The NASDAQ OMX Group, Inc.
Condensed Consolidated Balance Sheets
(in millions)
March 31, December 31,
2015 2014
Assets (unaudited)
Current assets:
Cash and cash equivalents $ 328 $ 427
Restricted cash 19 49
Financial investments, at fair value 194 174
Receivables, net 344 389
Deferred tax assets 23 16
Default funds and margin deposits 2,635 2,194
Other current assets 145 151
Total current assets 3,688 3,400
Property and equipment, net 281 292
Non-current deferred tax assets 652 536
Goodwill 5,350 5,538
Intangible assets, net 1,995 2,077
Other non-current assets 276 244
Total assets $ 12,242 $ 12,087
Liabilities
Current liabilities:
Accounts payable and accrued expenses $ 207 $ 189
Section 31 fees payable to SEC 82 124
Accrued personnel costs 71 143
Deferred revenue 282 177
Other current liabilities 133 116
Deferred tax liabilities 30 37
Default funds and margin deposits 2,635 2,194
Total current liabilities 3,440 2,980
Debt obligations 2,306 2,313
Non-current deferred tax liabilities 587 626
Non-current deferred revenue 210 215
Other non-current liabilities 154 159
Total liabilities 6,697 6,293
Commitments and contingencies
Equity
Nasdaq stockholders' equity:
Common stock 2 2
Additional paid-in capital 3,243 3,222
Common stock in treasury, at cost (94) (41)
Accumulated other comprehensive loss (883) (682)
Retained earnings 3,276 3,292
Total Nasdaq stockholders' equity 5,544 5,793
Noncontrolling interests 1 1
Total equity 5,545 5,794
Total liabilities and equity $ 12,242 $ 12,087
The NASDAQ OMX Group, Inc.
Reconciliation of GAAP Net Income, Diluted Earnings Per Share, Operating
Income and
Operating Expenses to Non-GAAP Net Income, Diluted Earnings Per Share,
Operating Income, and Operating Expenses
(in millions, except per share amounts)
(unaudited)
Three Months Ended
March 31, December 31, March 31,
2015 2014 2014
GAAP net income attributable $ 9 $ 87 $ 103
to Nasdaq
Non-GAAP adjustments:
Other income from OCC equity (13) -- --
investment ((1))
Restructuring charges ((2)) 150 -- --
Special legal expenses ((3)) 31 -- 1
Amortization of acquired 15 16 18
intangible assets ((4))
Reversal of value added tax 12 -- --
refund ((5))
Asset impairment charges -- 49 --
((6))
Merger and strategic -- 35 28
initiatives ((7))
Sublease loss reserves -- 11 --
Extinguishment of debt -- 2 --
Other -- -- 1
Total non-GAAP adjustments 195 113 48
Adjustment to the income tax
provision to reflect non-GAAP (66) (61) (15)
adjustments ((8))
Total non-GAAP adjustments, 129 52 33
net of tax
Non-GAAP net income $ 138 $ 139 $ 136
attributable to Nasdaq
GAAP diluted earnings per $ 0.05 $ 0.50 $ 0.59
share
Total adjustments from non- 0.75 0.30 0.19
GAAP net income above
Non-GAAP diluted earnings per $ 0.80 $ 0.81 $ 0.78
share
Three Months Ended
March 31, December 31, March 31,
2015 2014 2014
GAAP operating income $ 27 $ 173 $ 184
Non-GAAP adjustments:
Restructuring charges ((2)) 150 -- --
Special legal expenses ((3)) 31 -- 1
Amortization of acquired 15 16 18
intangible assets ((4))
Reversal of value added tax 12 -- --
refund ((5))
Merger and strategic -- 35 28
initiatives ((7))
Sublease loss reserves -- 11 --
Extinguishment of debt -- 2 --
Other -- -- 1
Total non-GAAP adjustments 208 64 48
Non-GAAP operating income $ 235 $ 237 $ 232
Revenues less transaction- $ 507 $ 517 $ 529
based expenses
Non-GAAP operating margin( 46% 46% 44%
(9))
(1) We record our investment in The Options Clearing Corporation, or OCC, as
an equity method investment. Under the equity method of accounting, we
recognize our share of earnings or losses of an equity method investee based
on our ownership percentage. As a result of a new capital plan implemented by
OCC, we were not able to determine what our share of OCC's income was for the
year ended December 31, 2014 until the first quarter of 2015, when OCC
financial statements were made available to us. Therefore, we recorded other
income of $13 million in the first quarter of 2015 relating to our share of
OCC's income for the year ended December 31, 2014.
(2) During the first quarter of 2015, we performed a comprehensive review of
our processes, businesses and systems in a company-wide effort to improve
performance, cut costs, and reduce spending. We currently estimate that we
will recognize pre-tax restructuring charges of $182 million, consisting of
the rebranding of our trade name, severance, asset impairments, facility-
related costs, and other costs. During the three months ended March 31, 2015,
we recognized restructuring charges of $150 million, with the remaining amount
to be recognized through June 2016. Restructuring charges are recorded on
restructuring plans that have been committed to by management and are, in
part, based upon management's best estimates of future events. Changes to the
estimates may require future adjustments to the restructuring liabilities.
(3) Nasdaq has established a loss reserve of $31 million for litigation
arising from the Facebook IPO in May 2012. The reserve is intended to cover
the estimated amount of a settlement of class-action litigation initiated on
behalf of investors in Facebook common stock on the date of its IPO. The
reserve would also cover the anticipated cost of re-opening Nasdaq's voluntary
accommodation program to allow any Nasdaq member that did not file for
compensation in 2013 to submit a claim during the second quarter of 2015,
subject to the conditions and limitations that were applicable to claims filed
in 2013. Nasdaq expects that the reopening of the accommodation program will
fully resolve claims by UBS Securities against Nasdaq. Nasdaq further
anticipates that some or all of amounts paid from the loss reserve will be
reimbursed by applicable insurance coverage.
(4) Amortization expense related to intangible assets results primarily from
business combinations. These non-cash expenses are fixed in connection with an
acquisition, are then amortized over a number of years after the acquisition
and generally cannot be changed or influenced by management after the
acquisition. Management does not consider these expenses for the purpose of
evaluating the performance of the business or its managers or when making
decisions to allocate resources. Therefore, such expenses are shown as a non-
GAAP adjustment.
(5) We previously recorded receivables for expected VAT refunds based on an
approach that had been accepted by the tax authorities in prior years. The tax
authorities have since challenged our approach, and the revised position of
the tax authorities was upheld in court during the first quarter of 2015. As a
result, in the first quarter of 2015, we recorded a charge of $12 million for
previously recorded receivables based on the court decision.
(6) For the three months ended December 31, 2014, asset impairment charges of
$49 million related to certain acquired intangible assets associated with
customer relationships ($38 million) and certain technology assets ($11
million).
(7) For the three months ended December 31, 2014, merger and strategic
initiatives expense primarily related to our acquisitions of the TR Corporate
businesses and eSpeed and a charge of $23 million related to the reversal of a
receivable under a tax sharing agreement with an unrelated party. The $23
million charge is offset by a tax benefit as described in note (8) below.
(8) For the three months ended December 31, 2014, includes $23 million
associated with the recognition of a previously unrecognized tax benefit. This
amount is offset by the reversal of the receivable described in note (7)
above.
(9) Non-GAAP operating margin equals non-GAAP operating income divided by
total revenues less transaction-based expenses.
The NASDAQ OMX Group, Inc.
Reconciliation of GAAP Net Income, Diluted Earnings Per Share, Operating
Income and
Operating Expenses to Non-GAAP Net Income, Diluted Earnings Per Share,
Operating Income, and Operating Expenses
(in millions)
(unaudited)
Three Months Ended
March 31, December 31, March 31,
2015 2014 2014
GAAP operating expenses $ 480 $ 344 $ 345
Non-GAAP adjustments:
Restructuring charges ((1)) (150) -- --
Special legal expenses ((2)) (31) -- (1)
Amortization of acquired (15) (16) (18)
intangible assets ((3))
Reversal of value added tax (12) -- --
refund ((4))
Merger and strategic -- (35) (28)
initiatives ((5))
Sublease loss reserves -- (11) --
Extinguishment of debt -- (2) --
Other -- -- (1)
Total non-GAAP adjustments (208) (64) (48)
Non-GAAP operating expenses $ 272 $ 280 $ 297
(1) During the first quarter of 2015, we performed a comprehensive review of
our processes, businesses and systems in a company-wide effort to improve
performance, cut costs, and reduce spending. We currently estimate that we
will recognize pre-tax restructuring charges of $182 million, consisting of
the rebranding of our trade name, severance, asset impairments, facility-
related costs, and other costs. During the three months ended March 31, 2015,
we recognized restructuring charges of $150 million, with the remaining amount
to be recognized through June 2016. Restructuring charges are recorded on
restructuring plans that have been committed to by management and are, in
part, based upon management's best estimates of future events. Changes to the
estimates may require future adjustments to the restructuring liabilities.
(2) Nasdaq has established a loss reserve of $31 million for litigation
arising from the Facebook IPO in May 2012. The reserve is intended to cover
the estimated amount of a settlement of class-action litigation initiated on
behalf of investors in Facebook common stock on the date of its IPO. The
reserve would also cover the anticipated cost of re-opening Nasdaq's voluntary
accommodation program to allow any Nasdaq member that did not file for
compensation in 2013 to submit a claim during the second quarter of 2015,
subject to the conditions and limitations that were applicable to claims filed
in 2013. Nasdaq expects that the reopening of the accommodation program will
fully resolve claims by UBS Securities against Nasdaq. Nasdaq further
anticipates that some or all of amounts paid from the loss reserve will be
reimbursed by applicable insurance coverage.
(3) Amortization expense related to intangible assets results primarily from
business combinations. These non-cash expenses are fixed in connection with an
acquisition, are then amortized over a number of years after the acquisition
and generally cannot be changed or influenced by management after the
acquisition. Management does not consider these expenses for the purpose of
evaluating the performance of the business or its managers or when making
decisions to allocate resources. Therefore, such expenses are shown as a non-
GAAP adjustment.
(4) We previously recorded receivables for expected VAT refunds based on an
approach that had been accepted by the tax authorities in prior years. The tax
authorities have since challenged our approach, and the revised position of
the tax authorities was upheld in court during the first quarter of 2015. As a
result, in the first quarter of 2015, we recorded a charge of $12 million for
previously recorded receivables based on the court decision.
(5) For the three months ended December 31, 2014, merger and strategic
initiatives expense primarily related to our acquisitions of the TR Corporate
businesses and eSpeed and a charge of $23 million related to the reversal of a
receivable under a tax sharing agreement with an unrelated party.
The NASDAQ OMX Group, Inc.
Quarterly Key Drivers Detail
(unaudited)
Three Months Ended
March 31, December 31, March 31,
2015 2014 2014
Market Services
Equity Derivative Trading and Clearing
U.S. Equity Options
Total industry average daily 14.8 16.1 16.1
volume (in millions)
Nasdaq PHLX matched market 17.6% 16.2% 16.0%
share
The NASDAQ Options Market 9.5% 9.7% 10.3%
matched market share
Nasdaq BX Options Market 0.7% 0.7% 1.0%
matched market share
Total matched market share
executed on Nasdaq's 27.8% 26.6% 27.3%
exchanges
Nasdaq Nordic and Nasdaq Baltic Options and Futures
Total average daily volume
options and futures 402,421 379,604 385,032
contracts((1))
Cash Equity Trading
Total U.S.-listed Securities
Total average daily share 6.92 7.00 6.94
volume (in billions)
Matched share volume (in 83.1 90.8 87.2
billions)
Matched market share executed 16.9% 17.6% 17.2%
on NASDAQ
Matched market share executed 1.8% 2.0% 2.9%
on Nasdaq BX
Matched market share executed 1.0% 0.7% 0.5%
on Nasdaq PSX
Total matched market share
executed on Nasdaq's 19.7% 20.3% 20.6%
exchanges
Market share reported to the
FINRA/NASDAQ Trade Reporting 31.4% 30.2% 32.3%
Facility
Total market share((2)) 51.1% 50.5% 52.9%
Nasdaq Nordic and Nasdaq Baltic
Securities
Average daily number of 439,938 390,302 383,448
equity trades
Total average daily value of $ 5.5 $ 4.8 $ 5.9
shares traded (in billions)
Total market share executed 68.8% 69.6% 69.2%
on Nasdaq's exchanges
Fixed Income, Currency and
Commodities Trading and
Clearing
U.S. Fixed Income
Nasdaq average daily volume
On the Run U.S. Treasury 8.40 8.6 9.9
contracts (in billions)
Nasdaq Nordic and Nasdaq Baltic Fixed Income
Total average daily volume 107,031 98,284 117,527
fixed income contracts
Nasdaq Commodities
Power contracts cleared 363 413 429
(TWh)((3))
Listing Services
Initial public offerings
NASDAQ 27 49 47
Exchanges that comprise
Nasdaq Nordic and Nasdaq 17 20 5
Baltic
New listings
NASDAQ((4)) 43 95 77
Exchanges that comprise
Nasdaq Nordic and Nasdaq 18 23 9
Baltic((5))
Number of listed companies
NASDAQ((6)) 2,779 2,782 2,667
Exchanges that comprise
Nasdaq Nordic and Nasdaq 804 792 755
Baltic((7))
Information Services
Indexes Nasdaq calculates and 42 39 39
distributes (in thousands)
Assets under management (in $ 105 $ 99 $ 94
billions)((8))
Technology Solutions
Market Technology
Order intake (in $ 40 $ 194 $ 66
millions)((9))
Total order value (in $ 728 $ 716 $ 675
millions)((10))
1) Includes Finnish option contracts traded on EUREX Group.
(2) Includes transactions executed on NASDAQ's, Nasdaq BX's and Nasdaq PSX's
systems plus trades reported through the FINRA/NASDAQ Trade Reporting
Facility.
(3) Primarily includes transactions executed on Nord Pool and reported for
clearing to Nasdaq Commodities measured by Terawatt hours (TWh).
(4) 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).
(5) New listings include IPOs and represent companies listed on the Nasdaq
Nordic and Nasdaq Baltic exchanges and companies on the alternative markets of
Nasdaq First North.
(6) Number of listed companies for NASDAQ at period end, including separately
listed ETFs.
(7) Represents companies listed on the Nasdaq Nordic and Nasdaq Baltic
exchanges and companies on the alternative markets of Nasdaq First North at
period end.
(8) Represents assets under management in exchange traded products.
(9) Total contract value of orders signed during the period.
(10) Represents total contract value of orders signed that are yet to be
recognized as revenue.
CONTACT: MEDIA RELATIONS CONTACT:
Joseph Christinat
+1.646.441.5121
joseph.christinat(at)nasdaq.com
INVESTOR RELATIONS CONTACT:
Ed Ditmire, CFA
+1.212.401.8737
ed.ditmire(at)nasdaq.com
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(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#1913929]
Unternehmensinformation / Kurzprofil:
Datum: 23.04.2015 - 13:01 Uhr
Sprache: Deutsch
News-ID 388108
Anzahl Zeichen: 49805
contact information:
Town:
New York
Kategorie:
Business News
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Die Pressemitteilung mit dem Titel:
"Nasdaq Reports Strong First Quarter 2015 Financial Results"
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