NASDAQ OMX Group (NDAQ)

22. Cost Reduction Program and INET Integration

Charges associated with our cost reduction program ceased during the second quarter of 2007 and charges associated with our integration of INET ceased during the first quarter of 2007. We incurred charges of approximately $4.1 million in 2007 and $40.9 million in 2006 in connection with actions we took to improve our operational efficiency as well as to integrate INET. The following table summarizes these charges which are included in the Consolidated Statements of Income:

22. Cost Reduction Program and INET Integration

5. Cost Reduction Program and INET Integration

Charges associated with our cost reduction program ceased during the second quarter of 2007 and charges associated with our integration of INET ceased during the first quarter of 2007. We incurred charges of approximately $4.1 million in 2007 and $40.9 million in 2006 in connection with actions we took to improve our operational efficiency as well as to integrate INET. We incurred charges of approximately $20.0 million in 2005 in connection with actions we took to improve our operational efficiency. The following table summarizes these charges which are included in the Consolidated Statements of Income:

5.
Cost Reduction Program and INET Integration

Charges
associated with our cost reduction program ceased during the second quarter of 2007 and charges associated with our integration of INET ceased during the first quarter of 2007. We incurred charges of approximately $4.1 million in 2007 and $40.9
million in 2006 in connection with actions we took to improve our operational efficiency as well as to integrate INET. We incurred charges of approximately $20.0 million in 2005 in connection with actions we took to improve our operational
efficiency. The following table summarizes these charges which are included in the Consolidated Statements of Income:

3. Cost Reduction Program and INET Integration

Charges associated with our cost reduction program ceased during the second quarter of 2007 and charges associated with our integration of INET ceased during the first quarter of 2007. We incurred charges of approximately $4.1 million in the first nine months ended September 30, 2007 in connection with actions we took to improve our operational efficiency as well as to integrate INET. We incurred similar charges of approximately $4.8 million in the third quarter of 2006 and $36.3 million in the nine months ended September 30, 2006. The following table summarizes these charges which are included in the Condensed Consolidated Statements of Income:

3. Cost Reduction Program and INET Integration

We incurred charges of approximately $2.0 million in the second quarter of 2007 and $4.1 million in the six months ended June 30, 2007 in connection with actions we took to improve our operational efficiency as well as to integrate INET. We incurred similar charges of approximately $17.9 million in the second quarter of 2006 and $31.5 million in the six months ended June 30, 2006. Charges associated with our cost reduction program have ceased during the second quarter of 2007. Charges associated with our integration of INET ceased during the first quarter of 2007. The following table summarizes these charges which are included in the Condensed Consolidated Statements of Income:

3. Cost Reduction Program and INET Integration

We incurred charges of approximately $2.1 million in the first quarter of 2007 and $13.6 million in the first quarter of 2006 in connection with actions we took to improve our operational efficiency as well as to integrate INET. Charges associated with our cost reduction program are expected to cease during the second quarter of 2007. Charges associated with our integration of INET ceased during the first quarter of 2007. The following table summarizes these charges which are included in the Condensed Consolidated Statements of Income:

Cost Reduction Program and INET Integration

We incurred charges of approximately $40.9 million in 2006 in connection with actions we took to improve our operational efficiency as well as to integrate INET. We incurred charges of approximately $20.0 million in 2005 and $62.6 million in 2004 in connection with actions we took to improve our operational efficiency. Charges associated with our cost reduction program and INET integration are expected to cease during the second quarter of 2007. The following table summarizes these charges which are included in the Consolidated Statements of Income:

Cost Reduction Program and INET Integration

We incurred charges of approximately $4.8 million in the third quarter of 2006 and approximately $36.3 million in the nine months ended September 30, 2006 in connection with actions we took to improve our operational efficiency as well as

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to integrate INET. We incurred charges of approximately $4.5 million in the third quarter of 2005 and approximately $17.9 million in the nine months ended September 30, 2005 in connection with actions we took to improve our operational efficiency. The following table summarizes these charges which are included in the Condensed Consolidated Statements of Income:

Real Estate Consolidation

During 2004, our management re-evaluated all of our owned and leased real estate and determined that we would consolidate staff into fewer locations and save significant costs. As part of our real estate consolidation plans, in the second quarter of 2006, we decided to sell our building and related assets located in Trumbull, Connecticut. As a result of this decision, the carrying value of the building and related assets was adjusted to its fair market value less costs to sell amounting to $30.8 million, which was determined based on a quoted market price from an independent third party. This resulted in a $5.4 million charge recorded in April 2006. In July 2006, we completed the sale of this building and related assets for approximately $30.3 million and an additional $0.5 million charge was recorded in the third quarter of 2006 for a total charge of $5.9 million for the nine months ended September 30, 2006. These charges were included in general and administrative expense in the Condensed Consolidated Statements of Income.

In 2005, we changed the estimated useful life of certain data center and other assets and recorded charges for accelerated depreciation of $4.4 million for the nine months ended September 30, 2005. We included these charges in depreciation and amortization expense in the Condensed Consolidated Statements of Income.

Reductions in Force

We eliminated 10 positions in the third quarter of 2006 and six positions in the third quarter of 2005 and recorded charges of $0.9 million in the third quarter of 2006 and $0.3 million in the third quarter of 2005 for severance and outplacement costs. We eliminated 74 positions in the nine months ended September 30, 2006 and 35 positions in the nine months ended September 30, 2005 and recorded charges of $5.2 million in the nine months ended September 30, 2006 and $1.9 million in the nine months ended September 30, 2005 for similar costs. These charges were included in compensation and benefits expense in the Condensed Consolidated Statements of Income. We paid approximately $1.3 million during the quarter ended September 30, 2006 and $0.5 million during the quarter ended September 30, 2005 and $2.1 million during the nine months ended September 30, 2006 and $0.8 million during the nine months ended September 30, 2005 for these severance and outplacement costs. We expect to pay the remainder of the severance and outplacement costs through the fourth quarter of 2007.

Technology Migration

As a result of a continued review of our technology infrastructure, we previously shortened the estimated useful life of certain assets and changed the lease terms on certain operating leases associated with our quoting platform and our trading and quoting network as we continue to migrate our technology operations to fewer, scalable, less expensive platforms, which resulted in incremental depreciation and amortization expense. The INET integration has accelerated our migration to a low-cost trading platform. As a result, the charges associated with these assets were $3.4 million for the third quarter of 2006 and $25.2 million for the nine months ended September 30, 2006. Of these amounts, $3.4 million for the third quarter of 2006 and $24.7 million for the nine months ended September 30, 2006 were included in depreciation and amortization expense and for the nine months ended September 30, 2006, $0.5 million was included in computer operations and data communications expense in the Condensed Consolidated Statements of Income. The charges associated with these assets were $4.2 million for the third quarter of 2005 and $11.6 million in the nine months ended September 30, 2005 and were included in depreciation and amortization expense in the Condensed Consolidated Statements of Income.

Cost Reduction Program and INET Integration

We incurred charges of approximately $17.9 million in the second quarter of 2006 and approximately $31.5 million in the six months ended June 30, 2006 in connection with actions we took to improve our operational efficiency as well as to integrate INET. We incurred charges of approximately $5.9 million in the second quarter of 2005 and approximately $13.4 million in the six months ended June 30, 2005 in connection with actions we took to improve our operational efficiency. The following table summarizes these charges which are included in the Condensed Consolidated Statements of Income:

Real Estate Consolidation

During 2004, our management re-evaluated all of our owned and leased real estate and determined that we would consolidate staff into fewer locations and save significant costs. As part of our real estate consolidation plans, in the second quarter of 2006, we decided to sell our building and related assets located in Trumbull, Connecticut. As a result of this decision, the carrying value of the building and related assets was adjusted to its fair market value less costs to sell amounting to $30.8 million, which was determined based on a quoted market price from an independent third party. The resulting $5.4 million charge recorded in April 2006 was included in general and administrative expense in the Condensed Consolidated Statements of Income. On July 28, 2006, we completed the sale of this building and related assets for approximately $30.4 million. See Note 16, “Subsequent Events,” for further discussion.

In 2005, we changed the estimated useful life of certain data center and other assets and recorded charges for accelerated depreciation of $1.1 million in the second quarter of 2005 and $4.4 million for the six months ended June 30, 2005. We included these charges in depreciation and amortization expense in the Condensed Consolidated Statements of Income.

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The Nasdaq Stock Market, Inc.

Notes to Condensed Consolidated Financial Statements—(Continued)

Reductions in Force

We eliminated 42 positions in the second quarter of 2006 and 23 positions in the second quarter of 2005 and recorded charges of $2.6 million in the second quarter of 2006 and $1.2 million in the second quarter of 2005 for severance and outplacement costs. We eliminated 64 positions in the six months ended June 30, 2006 and 29 positions in the six months ended June 30, 2005 and recorded charges of $4.3 million in the six months ended June 30, 2006 and $1.6 million in the six months ended June 30, 2005 for similar costs. These charges were included in compensation and benefits expense in the Condensed Consolidated Statements of Income. We paid approximately $1.6 million during the quarter ended June 30, 2006 and $0.2 million during the quarter ended June 30, 2005 and $2.7 million during the six months ended June 30, 2006 and $0.3 million during the six months ended June 30, 2005 for these severance and outplacement costs. We expect to pay the remainder of the severance and outplacement costs by the end of the third quarter of 2007. Total headcount increased from 768 employees at June 30, 2005 to 887 employees at June 30, 2006 as a result of employees acquired in the Shareholder.com acquisition in 2006 and the INET and Carpenter Moore acquisitions in 2005, partially offset by staff reductions.

Technology Migration

As a result of a continued review of our technology infrastructure, we shortened the estimated useful life of certain assets and changed the lease terms on certain operating leases associated with our quoting platform and our trading and quoting network as we continue to migrate our technology operations to fewer, scalable, less expensive platforms, which resulted in incremental depreciation and amortization expense. The INET integration has accelerated our migration to a low-cost trading platform. As a result, the charges associated with these assets were $9.9 million for the second quarter of 2006 and $21.8 million in the six months ended June 30, 2006. Of these amounts, $9.4 million for the second quarter of 2006 and $21.3 million in the six months ended June 30, 2006 were included in depreciation and amortization expense and for both periods $0.5 million was included in computer operations and data communications expense in the Condensed Consolidated Statements of Income. The charges associated with these assets were $3.6 million for the second quarter of 2005 and $7.4 million in the six months ended June 30, 2005 and were included in depreciation and amortization expense in the Condensed Consolidated Statements of Income.