NYSE Euronext (NYX) today reported net income of $125 million, or $0.48 per diluted share, for the third quarter of 2009, compared to net income of $174 million, or $0.66 per diluted share for the third quarter of 2008. Third quarter 2009 GAAP results include the impact from merger expenses and exit costs, the impact of the disposition of Hugin Group B.V., the sale of our investment in BM&F Bovespa and a fair value adjustment to our investment in BIDS Holdings, L.P. Pro forma non-GAAP diluted earnings per share excluding these items was $0.53 in the third quarter of 2009, compared to $0.72 in the third quarter of 2008.

“We continue to see stabilization in our core businesses and significant progress on our new initiatives,” said Duncan L. Niederauer, CEO, NYSE Euronext. "We have successfully maintained market share in our U.S. (NYSE) and European cash markets and have grown market share in U.S. equity options. We have seen a strong increase in new issuances, where we lead the U.S. in both IPOs and secondaries. We significantly enhanced our global derivatives franchise with today’s announced semi-mutualization of our U.S. futures exchange. In addition, we announced a similar semi-mutualization of our NYSE Amex equity options business, launched NYSE Liffe Clearing in Europe and established New York Portfolio Clearing, a joint venture with DTCC. Lastly, our announced acquisition of NYFIX will greatly expand our NYSE Technologies product offering and client base.”

The table below summarizes our pro forma non-GAAP results:

Michael S. Geltzeiler, Group Executive Vice President and Chief Financial Officer, NYSE Euronext, commented, “Despite lower overall trading volumes, the contribution of NYSE Liffe Clearing revenue during the quarter drove higher net revenues and earnings per share compared to the second quarter. Additionally, we continue to focus on initiatives to reduce our fixed cost base. Underlying fixed operating expenses through the third quarter, excluding the impact of M&A, foreign exchange fluctuations and investments in new businesses, were down $121 million, or 10% compared to the same period last year. With the anniversary of the Amex acquisition, we expect our fourth quarter fixed operating expenses to be considerably below prior year levels and will end the year below our full-year 2009 fixed cost guidance of $1,728 million.”

Pro forma non-GAAP net income for the third quarter of 2009 was $138 million, or $0.53 per diluted share, compared to net income of $192 million, or $0.72 per diluted share, for the third quarter of 2008. Pro forma non-GAAP results for the third quarter of 2009 exclude $8 million in merger expenses and exit costs. The results also exclude the impact of the disposition of Hugin Group B.V., the sale of our investment in BM&F Bovespa and a fair value adjustment to our investment in BIDS Holdings, L.P. Pro forma non-GAAP results for the third quarter of 2008 exclude $30 million in pre-tax merger expenses and exit costs, primarily severance. In addition, pro forma non-GAAP results also exclude activity assessment and Section 31 fees¹. A full reconciliation of our pro forma non-GAAP results is included in the attached tables.

Financial highlights on a pro forma non-GAAP basis include:

• Gross revenues, excluding activity assessment fees, were $1,048 million in the third quarter of 2009, a 10% decrease compared to the third quarter of 2008 and a 7% decrease compared to the second quarter of 2009. Third quarter 2009 gross revenues compared to both the third quarter of 2008 and the second quarter of 2009 were negatively impacted by a decline in global cash equities volumes and pricing changes across our European and U.S. cash businesses.
• Net revenues, defined as gross revenues less direct transaction costs consisting of Section 31 fees, liquidity payments and routing and clearing fees, were $624 million, down 14% compared to $724 million in the third quarter of 2008, but up 2% compared to the $611 million in the second quarter of 2009. Third quarter 2009 net revenues compared to the third quarter of 2008 include a $30 million negative impact attributable to foreign currency fluctuations. NYSE Euronext net revenues from its primary business activities are represented below as a percentage of total net revenues for the third quarter:
  
  
  
  
  • Global derivatives trading accounts for 30%
  • European cash trading accounts for 13%
  • U.S. cash trading accounts for 9%
  • Global market data accounts for 16%
  • Global listings accounts for 16%
  • Software and technology services accounts for 8%
  • Other accounts for 8%
• Fixed operating expenses, defined as operating expenses less merger expenses and exit costs, direct transaction costs, and excluding regulatory fine income, were $431 million, compared to $428 million in the third quarter of 2008 and $398 million in the second quarter of 2009. Excluding the impact of mergers and acquisitions, foreign exchange rates and investment in new businesses, underlying fixed expenses were down $31 million, or 7% compared to the third quarter of 2008. Fixed costs increased $33 million compared to the second quarter of 2009, primarily due to a benefits’ curtailment gain of $10 million in the second quarter of 2009 and a combined $20 million in NYSE Liffe Clearing expenses and foreign currency fluctuations. Underlying fixed expenses through the first nine months of 2009 were down $121 million or 10% compared to the prior year period.
• Operating income was $197 million, down $100 million compared to the third quarter of 2008 and down $17 million compared to the second quarter of 2009. Third quarter 2009 operating income compared to the third quarter of 2008 includes a $20 million negative impact attributable to foreign currency fluctuations.
• At September 30, 2009, net debt was $2.4 billion. Cash, cash equivalents, investments and other securities (including $115 million related to Section 31 fees collected from market participants and due to the SEC) was $0.5 billion and total debt was $2.9 billion. Total debt of $2.9 billion, consists of $2.2 billion in long-term debt and $0.7 billion in short-term debt. The increase in short-term debt from the second quarter of 2009 was due to the issuance of commercial paper associated with the $355 million termination payment made to LCH.Clearnet to facilitate the in-sourcing of clearing activities for NYSE Liffe Clearing.
• Pro-forma non-GAAP third quarter results include the favorable impact of an effective tax rate true-up for fiscal 2009 from 29% to 27% as a result of the mix of profits from our global subsidiaries, which added $0.03 to third quarter 2009 diluted earnings per share.
• Headcount as of September 30, 2009 was 3,399, down 4% from June 30, 2009 and down 10% from December 31, 2008.

Market and Business Summary

Global Derivatives Markets

• Global Derivatives net revenue, which includes our European and U.S. derivatives businesses, was $184 million in the third quarter of 2009, up 4% from $177 million in the third quarter of 2008 and up 17% from $157 million recorded in the second quarter of 2009. The increase in net revenue in the third quarter of 2009 compared to the third quarter of 2008 was driven by the addition of NYSE Liffe Clearing, which launched July 30, 2009 and NYSE Amex options, which was acquired on October 1, 2008. The increase compared to the second quarter of 2009 was driven by the addition of NYSE Liffe Clearing.

European Derivatives

• European Derivatives net revenue of $152 million in the third quarter of 2009 decreased 2% from the $155 million in the third quarter of 2008, but was up $28 million, or 23% from the $124 million posted in the second quarter of 2009. The increase in net revenue from the second quarter of 2009 was driven by the addition of clearing fees from NYSE Liffe Clearing for two months.
• For the third quarter of 2009, European derivatives products average daily volume (“ADV”) was 3.8 million contracts, 1.4% above the 3.8 million contracts recorded in the third quarter of 2008. The 3.8 million in futures and options contracts ADV in the third quarter of 2009 consisted of 2.9 million contracts executed through our full-service LIFFE CONNECT trading platform and a total of 0.9 million contracts processed through Bclear, NYSE Liffe's trade administration and clearing service for OTC products. This compares to 3.1 million contracts executed through LIFFE CONNECT and 0.6 million contracts processed through Bclear in the third quarter of 2008. Fees related to Bclear are significantly lower than our other European derivatives products traded through our full-service offering, LIFFE CONNECT, and include fee caps. Year-to-date European derivatives products ADV of 4.1 million contracts was 2.1% below prior year levels.
• Total interest rate products ADV for the third quarter of 2009 of 1.9 million contracts was down 0.7% compared to the third quarter of 2008. Year-to-date, total interest rate products ADV decreased 12.8% compared to the prior year period.
• Total equity products (including Bclear) ADV of 1.9 million contracts in the third quarter of 2009 was 3.8% above the third quarter of 2008. Year-to-date, total equity products ADV increased 11.3% compared to the prior year period.

U.S. Derivatives

• U.S. Derivatives net revenue of $32 million in the third quarter of 2009, increased $10 million from the third quarter of 2008, but decreased $1 million from the second quarter of 2009. The increase in net revenue when compared to the third quarter of 2008 was driven primarily by the addition of the former Amex options business which closed on October 1, 2008.
• In the third quarter of 2009, U.S. equity options ADV was 2.6 million contracts, a 46.3% increase compared to the third quarter of 2008, which did not include trading activity from the former Amex options business acquired in the fourth quarter of 2008. U.S. equity options market share in the third quarter of 2009 was 19.5%, up from 12.3% in the third quarter of 2008 and up from 18.2% in the second quarter of 2009. Overall U.S. equity options industry ADV decreased 8.1% compared to the third quarter of 2008 and was down slightly from the second quarter of 2009. Year-to-date, NYSE Group U.S. equity options ADV of 2.5 million contracts was 43.1% above the prior year period.
• NYSE Euronext agreed in principle on a framework with leading liquidity providers and market making firms BofA Merrill Lynch, Barclays Capital, Citadel Securities, Citi, Goldman Sachs, TD AMERITRADE and UBS, to sell a significant equity interest in NYSE Amex options, one of the company’s two U.S. options exchanges. Under the new framework, NYSE Euronext will remain the largest shareholder in the entity, which aims to enhance the competitive position of NYSE Amex options, while bringing competitive and operational benefits to the marketplace. The contemplated transaction calls for NYSE Euronext to continue to manage the day-to-day operations of NYSE Amex options, which would operate under the supervision of a separate board of directors and a dedicated chief executive officer. NYSE Euronext will continue to consolidate the financial reporting of this entity.
• Effective July 1, 2009 NYSE Arca options and NYSE Amex options eliminated Firm Facilitation Fees to firms who facilitate their customer order flow. The Firm Facilitation Fee applies to any transaction involving a firm’s proprietary trading account, which has a customer of that same firm on the contra side of the transaction. Both exchanges also lowered the Broker Dealer/Firm Manual Fee. The resulting incremental increase in order flow and market share for NYSE Amex options offset this pricing reduction.
• NYSE Liffe U.S. futures and futures options ADV in the third quarter of 2009 was 15 thousand contracts, for a total of 950 thousand contracts traded during the quarter. Year-to-date, a total of 3.1 million contracts have been traded. Beginning September 8, 2009 NYSE Liffe U.S. futures and futures options ADV includes equity index futures trading based on the MSCI U.S., EM and EAFE indexes. Market share for the MSCI indexes in the first month of trading was 19.0%.
• NYSE Euronext announced the signing of a binding agreement with several leading global banks and liquidity providers -- Citadel Securities, GETCO, Goldman Sachs, Morgan Stanley and UBS -- on transaction terms to sell a significant equity interest in NYSE Liffe U.S. NYSE Euronext will remain the largest shareholder in the entity, which will bring substantial competitive and operational benefits to the marketplace. NYSE Euronext will continue to manage the day-to-day operations of NYSE Liffe U.S., which will operate under the supervision of a separate Board of Directors, chaired by Jim McNulty, and Chief Executive Officer Thomas F. Callahan. The transaction is expected to close shortly subject to regulatory review.
• NYSE Euronext and The Depository Trust & Clearing Corporation (DTCC) finalized their formal agreement to create their innovative new joint venture, New York Portfolio Clearing (NYPC). NYPC expects to be operational in the second quarter of 2010, pending CFTC and SEC approval.

Global Cash Markets

• Global cash markets net revenue, which includes our U.S. and European cash equities businesses, was $135 million in the third quarter of 2009, down 46% from the third quarter of 2008 and down 11% from the second quarter of 2009. The decrease in net revenue compared to the third quarter of 2008 and second quarter of 2009 was driven primarily by declines in global cash trading volumes and net pricing reductions.

U.S. Cash Equities

• U.S. cash equities net revenue of $54 million in the third quarter of 2009, decreased $35 million from the third quarter of 2008 and decreased $14 million from the second quarter of 2009. The decrease in net revenue for both periods was driven primarily by declines in trading volumes and net pricing reductions.
• In the third quarter of 2009, NYSE Group handled ADV of 2.9 billion shares across all U.S. equity markets was 19.2% below the third quarter of 2008, and 19.7% below the second quarter of 2009. Year-to-date, NYSE Group handled ADV of 3.5 billion shares was 5.2% above the same period last year. NYSE Group matched share of all U.S. equity markets volume in the third quarter was 27.9%, compared to 22.0% for our next largest competitor. NYSE-listed (Tape A) matched market share in the third quarter of 2009 was 35.4%, compared to 39.3% in the second quarter of 2009. NYSE Tape A matched market share in September 2009 was 25.0%, above the 24.1% matched market share recorded in September 2008. NYSE-listed (Tape A) matched market share for our next largest competitor in the third quarter of 2009 was 17.1%. The decline in market share in the third quarter of 2009 was driven in part by a significant increase in the top-10 most actively traded stocks which represented approximately 32% of Tape A consolidated activity during the quarter, up from approximately 26% in the second quarter of 2009.
• The organic liquidity of NYSE was significantly enhanced in the third quarter of 2009 with the addition of several Supplemental Liquidity Providers (“SLPs”). There are now a total of seven SLPs on NYSE, including Citadel Derivatives Group, LLC, Goldman Sachs & Co., Knight Equity Markets L.P., Merrill Lynch Pierce Fenner & Smith, OCTEG, LLC and Spear, Leeds & Kellogg Specialists, LLC. With the expansion of the SLP group, SLP participation has increased from 7.5% in June 2009 to 9.5% in September 2009.

European Cash Equities

• European cash equities net revenue of $81 million in the third quarter of 2009, decreased $80 million from the third quarter of 2008 and decreased $3 million from the second quarter of 2009. The decrease in net revenue compared to the third quarter of 2008 was driven by a 15% drop in trading volumes as well as a decline in pricing. The decrease in net revenue versus the second quarter of 2009 was due to lower trading volumes and a pricing change effective September 1, 2009.
• In the third quarter of 2009, ADV of 1.3 million transactions was 15.0% below the third quarter of 2008 and 9.4% below the second quarter of 2009. Year-to-date ADV of 1.4 million transactions was 9.5% below the same period last year.
• Market share in terms of value traded for our regulated markets increased slightly to 77% in the third quarter of 2009.

Exchange Traded Products and Global Indexes

• In the third quarter of 2009, NYSE Group matched exchange-traded funds (“ETF”) ADV (included in U.S. cash equities trading volumes above) of 335 million shares decreased 29.3%, compared to the third quarter of 2008, and decreased 35.9% compared to the second quarter of 2009. In the third quarter, NYSE Group matched volume for ETFs represented 13% of all matched volumes traded by NYSE Group. Year-to-date, matched ETF ADV was 27.2% above the prior year period. The third quarter of 2008 did not include the former Amex ETF business.
• In the third quarter of 2009, consolidated Exchange Traded Products U.S. dollar volume traded represented approximately 29% of all consolidated U.S. dollar volume traded.
• As of the third quarter of 2009, NYSE Euronext had over 740 index licenses outstanding for various exchange traded index tracking products, compared to approximately 567 index licenses outstanding as of the third quarter of 2008.

Global Listings

• Total global listings revenue in the third quarter of 2009 was $100 million, compared to $98 million in the third quarter of 2008 and $101 million in the second quarter of 2009.
• In the third quarter of 2009, a total of 11 IPOs listed on NYSE Euronext markets for total proceeds of $3.5 billion. Among the IPOs were 2 closed-end funds, 5 REITs and 3 operating companies including Emdeon, Inc., Artio Global Investors, Inc. and Select Medical Holdings Corporation, as well as 1 IPO on NYSE Euronext’s European markets.
• Through September 30, 2009, there were a total of 353 global IPOs that raised $55.7 billion, down from 801 IPOs that raised $109.4 billion globally in the same period last year. According to Dealogic, year-to-date through October 28, NYSE Euronext raised the second most capital through 37 IPOs for a total of $16.3 billion, behind the Hong Kong Stock Exchange which raised a total of $16.8 billion, but ahead of the Shanghai Exchange that raised $14.5 billion, and Nasdaq OMX which raised $7.4 billion through 23 IPOs.
• Juniper Networks, Inc., the leader in high-performance networking, transferred its listing from NASDAQ to the NYSE and began trading on October 29, 2009, retaining its symbol “JNPR”.
• Banco Santander (Brasil) S.A., one of Brazil’s leading banks, began trading on the NYSE under the ticker symbol “BSBR” after its successful initial public offering in which it raised $7.0 billion (excluding over-allotments). The Banco Santander (Brasil) IPO, which listed simultaneously in Brazil and the U.S., is the largest initial public offering ever conducted by a Brazilian company.
• Red Hat, Inc. became the newest NYSE-listed component of the S&P 500. A total of 411 NYSE-listed companies represent over 82% of the S&P 500. As of September 30, 2009, the total global market capitalization of NYSE-listed technology, media and telecommunications companies was $2.5 trillion.
• NYSE Euronext closed its transaction with Thomson Reuters to sell Hugin Group B.V. on October 14. As part of the agreement, Thomson Reuters and NYSE Euronext will expand their strategic partnership in offering value-added services to the issuer community.

Technology Services

• NYSE Euronext entered into a definitive agreement to acquire NYFIX, Inc., a leading provider of innovative solutions that optimize trading efficiency for $144 million, including preferred stock consideration. The transaction is expected to close in the fourth quarter of 2009 and to be accretive to NYSE Euronext 2010 earnings, excluding one-time deal and restructuring costs. The NYFIX Marketplace is one of the industry’s broadest and deepest FIX-based communities where more than 1,000 global trading counterparties connect to one another via more than 9,000 fully managed FIX-based messaging channels.
• Tokyo Stock Exchange, Inc. successfully launched its “Tdex+ System,” a new trading platform for options contracts. Tdex+ System is the advanced electronic trading system based on LIFFE CONNECT®, used by NYSE Liffe.
• NYSE Technologies plans to expand the services of its Secure Financial Transaction Infrastructure® (SFTI®) to Asia providing market participants with improved connectivity to NYSE Liffe. SFTI® provides a single point of connectivity with lowest-latency access to multiple markets. It is one of the industry’s most secure and resilient platforms, specifically built for electronic trading and market data traffic. SFTI® reduces the cost and risk associated with connecting and managing multiple third-party networks. It enables firms to reduce their time-to-market, improve their performance and significantly lower the cost of their trading infrastructure.
• NYSE Technologies will collaborate with Standard Chartered PLC, a banking leader in Asia, Africa and the Middle East, to develop sophisticated FX trading analysis capabilities using the OneTick^TM tick capture and time-series analysis application.
• AboveNet, Inc., a leading provider of high-bandwidth connectivity solutions, announced that it is working with NYSE Euronext to build fiber optic networks connecting NYSE Euronext’s new data centers being built in the greater New York and London metropolitan areas.

Analyst/Investor/Media Call: October 30, 2009 at 8:00 a.m. (NY/EDT)/1:00 p.m. (Paris/CET)

A presentation and live audio webcast of the third quarter 2009 earnings conference call will be available on the Investor Relations section of NYSE Euronext’s website, http://www.nyseeuronext.com/ir. Those wishing to listen to the live conference via telephone should dial-in at least ten minutes before the call begins. An audio replay of the conference call will be available approximately one hour after the call on the Investor Relations section of NYSE Euronext’s website, http://www.nyseeuronext.com/ir or by dial-in beginning approximately two hours following the conclusion of the live call.

To supplement NYSE Euronext’s consolidated financial statements prepared in accordance with GAAP and to better reflect period-over-period comparisons, NYSE Euronext uses non-GAAP financial measures of performance, financial position, or cash flows that either exclude or include amounts that are not normally excluded or included in the most directly comparable measure, calculated and presented in accordance with GAAP. Non-GAAP financial measures do not replace and are not superior to the presentation of GAAP financial results, but are provided to (i) present the effects of certain merger expenses, exit costs and other non-recurring items, and (ii) improve overall understanding of NYSE Euronext’s current financial performance and its prospects for the future. Specifically, NYSE Euronext believes the non-GAAP financial results provide useful information to both management and investors regarding certain additional financial and business trends relating to financial condition and operating results. In addition, management uses these measures for reviewing financial results and evaluating financial performance. The non-GAAP adjustments for all periods presented are based upon information and assumptions available as of the date of this release.

NYSE Euronext Earnings News Release with Tables and Operating Data

About NYSE Euronext

NYSE Euronext (NYX) is a leading global operator of financial markets and provider of innovative trading technologies. The company's exchanges in Europe and the United States trade equities, futures, options, fixed-income and exchange-traded products. With more than 8,000 listed issues, NYSE Euronext's equities markets -- the New York Stock Exchange, NYSE Euronext, NYSE Amex and NYSE Alternext as well as NYSE Arca – represent nearly 40 percent of the world's equities trading, the most liquidity of any global exchange group. NYSE Euronext also operates NYSE Liffe, the leading European derivatives business and the world's second-largest derivatives business by value of trading. The company offers comprehensive commercial technology, connectivity and market data products and services through NYSE Technologies. NYSE Euronext is in the S&P 500 index, and is the only exchange operator in the S&P 100 index and Fortune 500. For more information, please visit: http://www.nyx.com

Cautionary Note Regarding Forward-Looking Statements

This press release may contain forward-looking statements, including forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements concerning NYSE Euronext’s plans, objectives, expectations and intentions and other statements that are not historical or current facts. Forward-looking statements are based on NYSE Euronext’s current expectations and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such forward-looking statements. Factors that could cause NYSE Euronext’s results to differ materially from current expectations include, but are not limited to: NYSE Euronext’s ability to implement its strategic initiatives, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk and U.S. and global competition, and other factors detailed in NYSE Euronext’s reference document for 2008 ("document de référence") filed with the French Autorité des Marchés Financiers (Registered on April 28, 2009 under No. R. 09-031), 2008 Annual Report on Form 10-K and other periodic reports filed with the U.S. Securities and Exchange Commission or the French Autorité des Marchés Financiers. In addition, these statements are based on a number of assumptions that are subject to change. Accordingly, actual results may be materially higher or lower than those projected. The inclusion of such projections herein should not be regarded as a representation by NYSE Euronext that the projections will prove to be correct. This press release speaks only as of this date. NYSE Euronext disclaims any duty to update the information herein.

¹ Section 31 of the Securities Exchange Act of 1934 requires each Self-Regulatory Organization to pay the SEC twice annually a fee based on the aggregate dollar amount of certain sales of securities such that the SEC can recover the costs to the government of supervision and regulation of securities markets and securities professionals.