This excerpt taken from the NDAQ 10-Q filed May 9, 2008.
Other Income (Expense), net
The following table presents the components of other income (expense), net:
Net Interest Income (Expense)
Net interest income was $1.5 million for the quarter ended March 31, 2008, compared with net interest expense of $18.0 million for the quarter ended March 31, 2007, an increase of $19.5 million. The increase was primarily due to a decrease in interest expense due to a lower outstanding debt balance prior to February 27, 2008, when we incurred new debt for the business combination with OMX. The lower debt balance prior to February 27, 2008 was primarily due to the repayment in full of our outstanding debt obligations in September 2007 from the proceeds of the sale of our share capital of the LSE. In addition, $324.9 million of the principal amount of the 3.75% convertible notes that were outstanding in the first quarter of 2007 were converted primarily in the fourth quarter of 2007, which reduced the principal amount outstanding. Further contributing to the increase was additional interest income on higher cash balances due to the cash proceeds received from the sale of the share capital of the LSE.
Investment income was $0.4 million for the quarter ended March 31, 2008 and primarily relates to our trading portfolio comprised of Swedish government debt securities. See Note 6, Financial Investments, at Fair Value, to the condensed consolidated financial statements for further discussion.
Gain from Unconsolidated Investees, net
Gain from unconsolidated investees, net was $26.3 million for the quarter ended March 31, 2008. In connection with the DIFX transaction, we contributed intangible assets and $50.0 million in cash to DIFX in exchange for a 33 1/3% equity ownership in DIFX. One of the intangible assets contributed was the Nasdaq trade name, which had a zero carrying value on Nasdaqs books and records prior to the transfer. As a result, we recognized a $26.0 million gain for the difference between Nasdaqs carrying value and the fair value of the contributed asset on this non-monetary exchange. Also included in this line item are the gains and losses from our ownership in unconsolidated equity method investees. See Equity Investment in DIFX in Note 3, Business Combinations, to the condensed consolidated financial statements for further discussion.
Gain (Loss) on Foreign Currency Contracts
The gain on foreign currency contracts was $35.3 million for the quarter ended March 31, 2008, compared with a loss of $7.8 million for the quarter ended March 31, 2007, an increase of $43.1 million. The first quarter 2008 gain related to our business combination with OMX ($27.0 million) and our proposed acquisition of certain businesses of Nord Pool ($8.3 million), while the loss in the first quarter of 2007 related to our acquisition bid for the LSE. See Note 13, Derivative Financial Instruments and Hedging Activities, to the condensed consolidated financial statements for further discussion.
Strategic Initiative Costs
Strategic initiatives costs were $24.9 million for the quarter ended March 31, 2007. We incurred these costs in connection with our strategic initiatives related to the LSE, including our acquisition bid. In conjunction with the lapse of our final offers for the LSE in February 2007, these costs were charged to expense. See Note 6, Financial Investments, at Fair Value, to the condensed consolidated financial statements for further discussion.