NASDAQ OMX Group (NDAQ)

Operating Expenses

Total operating expenses decreased $25 million, or 11%, to $197 million from $222 million in the prior year quarter and decreased $2 million, or 1%, from $199 million in the second quarter of 2009. The decrease in expenses from the third quarter of 2008 was realized through a reduction in compensation expense, lower marketing and advertising expense, reduced expenses for computer operations and data transmission, and lower general, administrative and other expense. These reductions were driven by successful integration efforts associated with NASDAQ’s business combination with OMX and the acquisition of the Philadelphia Stock Exchange. Also contributing to the decline were changes in the exchange rates of various currencies as compared to the U.S. dollar. The decrease in expenses when compared to the second quarter of 2009 is driven by lower compensation expense, offset somewhat by increased expenses in various other line items due primarily to changes in the exchange rates of various currencies as compared to the U.S. dollar.

Operating Expenses

Total operating expenses decreased $52 million, or 21%, to $199 million from $251 million in the prior year quarter but increased $5 million, or 3%, from $194 million in the first quarter of 2009. The decrease in expenses from the second quarter of 2008 was realized through a reduction in compensation expense, lower professional and contract services expense, reduced expenses for computer operations and data transmission, and lower general, administrative and other expense. These reductions were driven by successful

integration efforts associated with NASDAQ’s business combination with OMX and the acquisition of the Philadelphia Stock Exchange. Also contributing to the decline were changes in the exchange rates of various currencies as compared to the U.S. dollar. The increase in expenses when compared to the first quarter of 2009 is driven by higher compensation expense and changes in the exchange rates of various currencies as compared to the U.S. dollar.

Operating Expenses

The following table shows our operating expenses:

Total operating expenses increased in the first quarter of 2009 compared with the same period in 2008. The increase primarily reflects OMX’s results of operations for the full three-month period in 2009 compared with one month in 2008 and the inclusion of NASDAQ OMX PHLX’s result of operations. See below for further discussion. The increase in operating expenses was partially offset by currency fluctuations which had a favorable impact of 20%.

Compensation and benefits expense increased in the first quarter of 2009 compared with the same period in 2008. The increase was primarily due to an increase of $15 million in OMX’s compensation expense reflecting OMX’s results of operations for the full three-month period in 2009 compared with one month in 2008, inclusion of NASDAQ OMX PHLX’s compensation and benefits expense of $6 million in the first quarter of 2009, and increased compensation and stock based compensation as a result of other recent acquisitions. Headcount increased to 2,572 employees at March 31, 2009 compared with 2,382 employees at March 31, 2008 due to additional headcount as a result of recent acquisitions.

Depreciation and amortization expense increased in the first quarter of 2009 compared with the same period in 2008. The increase was primarily due to an increase of $6 million in OMX’s depreciation expense reflecting OMX’s results of operations for the full three-month period in 2009 compared with one month in 2008 and the inclusion of NASDAQ OMX PHLX’s depreciation and amortization expense of $3 million in the first quarter of 2009.

Professional and contract services expense increased in the first quarter of 2009 compared with the same period in 2008. The increase was primarily due to an increase of $3 million in OMX’s professional and contract services expense reflecting OMX’s results of operations for the full three-month period in 2009 compared with one month in 2008.

Computer operations and data communications expense increased in the first quarter of 2009 compared with the same period in 2008. The increase was primarily due to an increase of $6 million in OMX’s computer operations and data communications expense reflecting OMX’s results of operations for the full three-month period in 2009 compared with one month in 2008 and the inclusion of NASDAQ OMX PHLX’s computer operations and data communications expense of $1 million in the first quarter of 2009.

Occupancy expense increased in the first quarter of 2009 compared with the same period in 2008. The increase was primarily due to an increase of $3 million in OMX’s occupancy expense reflecting OMX’s results of operations for the full three-month period in 2009 compared with one month in 2008 and the inclusion of the occupancy expense of NASDAQ OMX PHLX and other recently acquired businesses of $2 million in the first quarter of 2009.

Regulatory expense increased in the first quarter of 2009 compared with the same period in 2008. The increase was primarily due to new regulatory fees. FINRA provides regulatory services to The NASDAQ Stock Market, The NASDAQ Options Market and, as of March 2009, the markets operated or regulated by NASDAQ OMX BX, including the regulation of trading activity and surveillance and investigative functions.

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Merger expenses were $8 million in the first quarter of 2009 compared with $1 million for the same period in 2008. These costs are directly attributable to the business combination with OMX AB and the acquisition of PHLX, but do not qualify as purchase accounting adjustments. The costs primarily include consulting and legal costs related to our integration of OMX AB and PHLX.

General, administrative and other expense increased in the first quarter of 2009 compared with the same period in 2008. The increase was primarily due to an increase of $5 million in OMX’s general, administrative and other expense reflecting OMX’s results of operations for the full three-month period in 2009 compared with one month in 2008 and the inclusion of NASDAQ OMX PHLX’s general, administrative and other expense of $1 million in the first quarter of 2009, partially offset by a $4 million pre-tax gain on the early extinguishment of debt, net of debt issuance and other costs. See “Early Extinguishment of Debt,” of Note 8, “Debt Obligations,” to the condensed consolidated financial statements for further discussion of the early extinguishment of debt.

Operating Expenses

Total operating expenses decreased $55 million, or 22%, to $194 million from $249 million in the prior year quarter and $19 million, or 9%, from $213 million in the fourth quarter of 2008. The decrease in expenses was realized through a reduction in compensation expense, lower depreciation expense, reduced expenses for computer operations and data transmission, and lower general, administrative and other expense. The decline in expenses is driven by successful integration efforts associated with NASDAQ’s business combination with OMX and the acquisition of the Philadelphia Stock Exchange.

Operating Expenses

Total operating expenses decreased $47.5 million, or 18.2%, to $213.1 million from $260.6 million in the prior year quarter and $8.9 million, or 4.0%, from $222.0 million in the third quarter of 2008. The decrease in expenses was driven primarily by lower compensation expenses, declines in marketing and advertising expense, lower depreciation expense, and reduced expenses for computer operations and data transmission.

Operating Expenses

When presented on a pro forma non-GAAP basis, total operating expenses decreased $4.7 million, or 2.1%, to $222.0 million from $226.7 million in the prior year quarter and $30.4 million, or 12.0%, from $252.4 million in the prior quarter. The decrease in expenses was driven primarily by lower compensation expenses, declines in professional and contract services, and reduced general and administrative expenses. Somewhat offsetting these declines are higher marketing and occupancy expenses and spending on new initiatives.

Operating Expenses

Total operating expenses increased 9.6%, or $19.7 million, to $225.4 million from $205.7 million in the prior year quarter and 4.3%, or $9.3 million from $216.1 million in the prior quarter. Higher expenses were driven primarily by higher compensation expenses due to increases in accrued incentive compensation and higher amortized expenses associated with equity grants made to former OMX employees. Also contributing to higher costs in the current period were additional merger expenses. Somewhat offsetting these increases were declines in depreciation and amortization, reduced spending for professional and contract services and general and administrative expenses.

Operating Expenses

Total operating expenses increased 5.1% to $229.4 million from $218.3 million in the prior year quarter and declined 2.0% from $234.1 million in the prior quarter. Higher expenses when compared to the first quarter of 2007 are driven primarily by higher compensation expenses resulting from a larger employee base and increased retention expenses. Also contributing to higher expenses are lower exchange rates for the U.S. dollar as compared to the Swedish Krona. Declining expenses when compared to the fourth quarter of 2007 are driven by lower marketing expenses, as the fourth quarter is typically a strong period for advertising.