-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M8m3H6gqOMPD6cdFPIHjq5b2Xqosot4LCwy8UJ1ElEal+J07Y5Z01Asj3poXIPWb iQgB5mEEUnQVCevltKZmAw== 0001193125-08-244486.txt : 20081126 0001193125-08-244486.hdr.sgml : 20081126 20081126151939 ACCESSION NUMBER: 0001193125-08-244486 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20081126 ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20081126 DATE AS OF CHANGE: 20081126 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NYSE Euronext CENTRAL INDEX KEY: 0001368007 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES [6200] IRS NUMBER: 205110848 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-33392 FILM NUMBER: 081217695 BUSINESS ADDRESS: STREET 1: 11 WALL STREET CITY: NEW YORK STATE: NY ZIP: 10005 BUSINESS PHONE: 212-656-3000 MAIL ADDRESS: STREET 1: 11 WALL STREET CITY: NEW YORK STATE: NY ZIP: 10005 FORMER COMPANY: FORMER CONFORMED NAME: NYSE Euronext, Inc. DATE OF NAME CHANGE: 20060628 8-K 1 d8k.htm FORM 8-K Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT PURSUANT TO SECTION 13 or 15(d) of THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): November 26, 2008

 

 

NYSE Euronext

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware   001-33392   20-5110848

(State or other jurisdiction

of incorporation)

   (Commission File No.)  

(I.R.S. Employer

Identification Number)

11 Wall Street, New York, NY 10005

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (212) 656-3000

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrants under any of the following provisions (see General Instruction A.2. below):

 

q Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

q Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

q Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

q Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

Item 8.01 Other Events

Attached as Exhibit 100 to this Current Report on Form 8-K are the following materials from NYSE Euronext’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008, filed on November 13, 2008, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations, (ii) the Condensed Consolidated Balance Sheets, and (iii) the Condensed Consolidated Statements of Cash Flows. Users of this data are advised pursuant to Rule 401 of Regulation S-T that the financial information contained in the XBRL documents is unaudited and these are not the official publicly filed financial statements of NYSE Euronext. The purpose of submitting these XBRL formatted documents is to test the related format and technology and, as a result, investors should continue to rely on the official filed version of the furnished documents and not rely on this information in making investment decisions.

In accordance with Rule 402 of Regulation S-T, the information in this Current Report on Form 8-K, including Exhibit 100, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

Item 9.01 Financial Statements and Exhibits

 

(d) Exhibits

 

Exhibit No.

   

Description

EX-100.INS    XBRL Report Instance Document
EX-100.SCH    XBRL Taxonomy Extension Schema Document
EX-100.PRE    XBRL Taxonomy Presentation Linkbase Document
EX-100.CAL    XBRL Taxonomy Calculation Linkbase Document
EX-100.LAB    XBRL Taxonomy Label Linkbase Document

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.

 

NYSE Euronext

By:  

/s/ Janet M. Kissane

Name:  

Janet M. Kissane

Title:  

SVP, Legal and Corporate Secretary

Date: November 26, 2008

EX-100.INS 2 nyx-20080930.xml XBRL INSTANCE DOCUMENT 16693000000 47000000 0 3000000 -228000000 2258000000 827000000 8326000000 787000000 139000000 407000000 2352000000 235000000 351000000 85000000 471000000 5212000000 6805000000 9000000 7633000000 16693000000 201000000 114000000 2752000000 1800000000 470000000 16000000 188000000 760000000 40000000 318000000 677000000 1010000000 1000000 1402000000 9044000000 67000000 40000000 682000000 0.66 0.66 66000000 65000000 171000000 0.65 0.65 3000000 0.01 0.01 70000000 42000000 11000000 168000000 48000000 0 174000000 37000000 267000000 31000000 6000000 44000000 1205000000 47000000 112000000 8000000 46000000 634000000 30000000 358000000 77000000 1000000 46000000 -1000000 0 241000000 229000000 98000000 -13000000 -28000000 32000000 -252000000 -11000000 191000000 14000000 2000000 -28000000 315000000 149000000 19000000 176000000 383000000 -1041000000 401000000 1000000 -7000000 1000000 227000000 532000000 2203000000 243000000 17000000 226000000 -1551000000 144000000 1929000000 2164000000 5000000 0 38000000 -60000000 12000000 0 395000000 2.26 2.26 237000000 181000000 595000000 2.24 2.24 5000000 0.02 0.02 244000000 114000000 42000000 480000000 133000000 5000000 600000000 96000000 886000000 102000000 28000000 106000000 3486000000 107000000 321000000 36000000 189000000 1708000000 83000000 887000000 211000000 3000000 189000000 0 2000000 844000000 729000000 294000000 16618000000 53000000 0 3000000 492000000 2295000000 761000000 8319000000 489000000 118000000 441000000 2278000000 124000000 349000000 111000000 384000000 4687000000 7180000000 337000000 7058000000 16618000000 191000000 119000000 3462000000 494000000 557000000 176000000 60000000 792000000 27000000 312000000 519000000 637000000 9000000 2164000000 9384000000 67000000 169000000 934000000 728000000 0.97 0.97 77000000 66000000 257000000 0.97 0.97 1000000 0.00 0.00 50000000 46000000 25000000 166000000 50000000 6000000 258000000 31000000 291000000 36000000 5000000 27000000 1126000000 24000000 101000000 29000000 131000000 466000000 22000000 211000000 64000000 10000000 131000000 6000000 32000000 313000000 243000000 96000000 -10000000 -23000000 16000000 450000000 -62000000 184000000 50000000 34000000 -370000000 -46000000 174000000 -12000000 -13000000 1780000000 -1768000000 405000000 22000000 -1000000 1000000 132000000 144000000 6072000000 120000000 19000000 0 1994000000 727000000 15000000 6671000000 6000000 119000000 24000000 -66000000 29000000 6644000000 2850000000 2.14 2.13 180000000 168000000 486000000 2.13 2.12 1000000 0.01 0.01 172000000 91000000 57000000 443000000 117000000 8000000 487000000 83000000 639000000 100000000 18000000 75000000 2841000000 74000000 270000000 136000000 432000000 1103000000 49000000 510000000 164000000 19000000 432000000 9000000 34000000 666000000 441000000 285000000 278000000 Note 1-Organization and Basis of Presentation Organization NYSE Euronext is a holding company that, through its subsidiaries, operates the following securities exchanges: the NYSE, NYSE Arca, Inc. and NYSE Alternext in the United States and the five European-based exchanges that comprise Euronext-the Paris, Amsterdam, Brussels and Lisbon stock exchanges, as well as the Liffe derivatives markets in London, Paris, Amsterdam, Brussels and Lisbon. NYSE Euronext is a global provider of securities listing, trading, market data products, and software and technology services. NYSE Euronext was formed in connection with the April 4, 2007 combination of NYSE Group and Euronext. NYSE Euronext common stock is dually listed on the NYSE and Euronext Paris under the symbol "NYX." As of December 31, 2006 and up until April 4, 2007, NYSE Euronext had no significant assets and had not conducted any material activities other than those incidental to its formation. However, on April 4, 2007, upon the consummation of the combination of NYSE Group and Euronext, NYSE Euronext became the parent company of NYSE Group and Euronext and each of their respective subsidiaries. Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of NYSE Euronext and its subsidiaries. The business combination transaction between NYSE Group and Euronext has been treated as a purchase business combination for accounting purposes, with NYSE Group determined to be the business and accounting acquirer. As a result, the results of NYSE Group are the historical results of NYSE Euronext, prior to the business combination. The accompanying condensed unaudited consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S. and reflect all adjustments, consisting of only normal recurring adjustments, that are, in the opinion of management, necessary for a fair statement of the results for the period. All material intercompany accounts and transactions have been eliminated in consolidation. Certain information and footnote disclosures normally required in financial statements under accounting principles generally accepted in the U.S., have been condensed or omitted; however, management believes that the disclosures are adequate to make the information presented not misleading. The preparation of these unaudited condensed consolidated financial statements, in conformity with accounting principles generally accepted in the U.S., requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could be materially different from these estimates. Certain prior period amounts have been reclassified to conform to the current period's presentation. The condensed consolidated financial statements are unaudited and should be read in conjunction with the audited financial statements of NYSE Euronext as of and for the year ended December 31, 2007. Operating results for the three and nine months ended September 30, 2008 are not necessarily indicative of the results that may be expected for the year ending December 31, 2008. The operations of GL Trade are reflected as discontinued (See Note 4). Note 2-Business Combinations, Other Acquisitions and Dispositions Euronext On April 4, 2007, NYSE Group and Euronext combined their businesses under NYSE Euronext, a holding company formed for that purpose. On that date, NYSE Group became a wholly-owned subsidiary of NYSE Euronext. Also on April 4, 2007, NYSE Euronext acquired 91.4% of the share capital and 92.2% of the voting rights of Euronext through an exchange offer in which NYSE Euronext, through its indirect wholly owned subsidiary NYSE Euronext (Holding) N.V. ("NYSE Euronext (Holding)"), offered to acquire all of the outstanding shares of Euronext for C21.32 in cash and 0.98 of a share of NYSE Euronext common stock. On April 2, 2007, NYSE Euronext commenced a second offer period to acquire Euronext shares that were not tendered during the initial exchange offer period. On April 27, 2007, the second offer period closed, resulting in NYSE Euronext's holding, through NYSE Euronext (Holding), 97.0% of the share capital and 97.7% of the voting rights of Euronext. In May 2008, NYSE Euronext completed the statutory buy-out of the remaining Euronext shareholders who held approximately 2.3% of the shares of Euronext N.V. for an aggregate consideration of C252 million ($395 million). As a result of this buy-out, Euronext N.V. and its subsidiaries are now wholly-owned by NYSE Euronext. Shares of Euronext N.V were delisted from Euronext Paris in connection with the completion of the statutory buy-out. Under the purchase method of accounting, total merger consideration paid to Euronext shareholders in the exchange offer for outstanding shares of Euronext was approximately $10.2 billion. The results of Euronext have been included in the consolidated results of operations since April 4, 2007. The following is a summary of the purchase price in the Euronext combination (in millions, except per share data): Euronext shares tendered 109 shares Times 0.98 (a) Times $ 61.70 (b) Equity component $ 6,600 plus: Euronext shares tendered 109 shares Times $ 28.54 (a) Cash component for shares tendered $ 3,115 Cash component for 2.3% Euronext N.V. shares $ 395 Acquisition costs $ 74 Fair value of stock, equity awards and other instruments $ 58 Total purchase price $ 10,242 (a) Each tendered Euronext share was exchanged into 0.98 of a share of NYSE Euronext common stock and C21.32 ($28.54) in cash. (b) Corresponding to the average closing stock price of NYSE Group common stock for the five-day period beginning two days before and ending after June 1, 2006 (the date the combination was agreed to and announced). The purchase price was allocated to the assets acquired and liabilities assumed based on the estimated fair value of Euronext net assets as of the combination date as follows (in millions): Historical equity of Euronext $ 2,263 Elimination of Euronext's historical goodwill and intangibles (1,066 ) Fair value of identifiable intangible assets: National securities exchange registrations 5,377 Customer relationships 805 Trade names and other intangibles 185 Fair value adjustment of property and equipment 108 Fair value adjustment of equity method investments and investment in affiliates 136 Deferred tax impact of purchase accounting adjustments (1,983 ) Minority interest 37 Goodwill 4,380 Total purchase price $ 10,242 NYSE Euronext entered into a C2.5 billion bridge facility to fund the cash portion of the consideration paid to Euronext shareholders in April 2007 in connection with the exchange offer. The bridge facility was subsequently redeemed using proceeds from the $3.0 billion global commercial paper program launched by NYSE Euronext in April 2007. NYSE Euronext also entered into a $3.0 billion syndicated revolving facility primarily used as a backstop for the global commercial paper program. This facility is also available for general corporate purposes and included a $1.0 billion 364-day tranche that matured on April 2, 2008 and a $2.0 billion 5-year tranche maturing on April 4, 2012. On April 2, 2008, the $1.0 billion tranche was refinanced by a $1.0 billion 364-day facility maturing on April 1, 2009. On September 15, 2008, the amount of commitments readily available to NYSE Euronext under the $2.0 billion April 2012 facility decreased from $2.0 billion to $1,833 million as a result of the bankruptcy filing of Lehman Brothers Holdings Inc., which had provided a $167 million commitment under this facility. The commercial paper program and the credit facilities include terms and conditions customary for agreements of this type, which may restrict NYSE Euronext's ability to engage in additional transactions or incur additional indebtedness. In the second quarter of 2008, NYSE Euronext issued $750 million of fixed rate bonds due in June 2013 and C750 million ($1,181 million) of fixed rate bonds due in June 2015 in order to, among other things, refinance outstanding commercial paper and lengthen the maturity profile of its debt. These bonds bear interest at a rate per annum of 4.8% and 5.375%, respectively. The terms of the bonds do not contain any financial covenants. The bonds may be redeemed by NYSE Euronext or the bond holders under certain customary circumstances, including change of control. The terms of the bonds also provide for customary events of default and a negative pledge covenant. Pro Forma Results The following table provides pro forma results of operations as if the business combination transaction between NYSE Group and Euronext had been completed on January 1, 2007 (in millions, except per share data): Nine months ended September 30, 2007 Total revenues $ 3,203 Net income $ 529 Basic earnings per share $ 2.00 Diluted earnings per share $ 1.99 In 2008, NYSE Group initiated a voluntary resignation incentive plan ("VRIP") and voluntary retirement plan which 235 employees accepted during the nine months ended September 30, 2008. NYSE Euronext incurred a charge of $9 million and $29 million for the three and nine months ended September 30, 2008, respectively, related to the VRIP and voluntary retirement plan. Additionally, as part of the business combination transaction between NYSE Group and Euronext, NYSE Euronext has undertaken efforts to eliminate employee positions. The following is a summary of the severance charges recognized in connection with these plans, utilization of the accrual through September 30, 2008 and the remaining accrual as of September 30, 2008 (in millions): US European Operations Operations Balance as of December 31, 2007 $ 3 $ 11 Employee severance and related benefits 43 20 Severance and benefit payments (12 ) (20 ) Balance as of September 30, 2008 $ 34 $ 11 Based on current severance dates and the accrued severance at September 30, 2008, NYSE Euronext expects to pay these amounts through December 31, 2009. Based on the scheduled departure dates of employees in the VRIP, NYSE Euronext anticipates incurring additional severance charges of approximately $7 million for the remainder of fiscal 2008 and approximately $9 million in fiscal 2009. Amex (now known as NYSE Alternext) On October 1, 2008, NYSE Euronext completed its acquisition of The Amex Membership Corporation ("MC"). NYSE Euronext acquired the business of MC, including its subsidiary Amex (now known as NYSE Alternext) and as a result of the completion of the transaction, (1) each holder of a regular membership of MC became entitled to receive approximately 8,100 shares of NYSE Euronext common stock and (2) each holder of an options principal membership of MC became entitled to receive approximately 7,200 shares of NYSE Euronext common stock, in each case, with any fractional shares to be paid in cash. A total of approximately 6.8 million shares of NYSE Euronext common stock were issued in the merger for $260 million. In addition, each holder of a regular or options principal membership of MC will be entitled to receive additional consideration calculated by reference to the net proceeds, if any, from the sale of the NYSE Alternext headquarters in lower Manhattan, if such sale occurs within a specified period of time and certain conditions are satisfied. The transaction enhances NYSE Euronext's scale in U.S. options, exchange traded funds, closed-end funds, structured products and cash equities. In December 2008, it is anticipated that NYSE Alternext's equities trading platform will transition to NYSE Euronext technology and NYSE Alternext systems will be retired. In addition, NYSE Euronext plans to relocate NYSE Alternext's options trading floor operations to the NYSE options trading floor during the first quarter of 2009, and to transition from the NYSE Alternext-supported technology to NYSE Euronext-supported technology for electronic options trading. The migration to NYSE Euronext systems is expected to significantly improve the functionality and the customer experience across all NYSE Alternext offerings. The results of operation and financial condition of NYSE Alternext will be consolidated within our statement of income and statement of financial condition commencing October 1, 2008. NYSE LIFFE NYSE Liffe, LLC, the new U.S. futures exchange of NYSE Euronext received Designated Contract Market or DCM status on August 21, 2008 and began trading of full and e-mini gold and silver futures and options on futures contracts on September 9, 2008. On October 14, 2008, NYSE Liffe selected The Options Clearing Corporation to provide clearing services. The precious metals contracts provide a point of entry for us into the U.S. futures market and complement our existing commodities franchise at Liffe. AEMS On August 5, 2008, NYSE Euronext completed the acquisition of the 50% stake in Atos Euronext Market Solutions (AEMS) previously owned by Atos Origin. Through the transaction, NYSE Euronext acquired (i) the NSC cash trading and LIFFE CONNECT ? derivatives trading platform technology, and all of the management and development services surrounding these platforms, (ii) AEMS's third-party exchange technology business, and (iii) TRS/CPS, clearing software. The purchase price in the transaction was approximately C162 million ($255 million), net of approximately C120 million ($189 million) of cash acquired, and is subject to certain post-closing adjustments. The results of operations and financial condition of AEMS have been consolidated within our statement of income and statement of financial results subsequent to the August 5, 2008, acquisition. Following the transaction, the third-party exchange technology business became part of our Advanced Trading Solutions business while the remaining businesses acquired have been renamed to NYSE Euronext Technology (NYXT). FINRA On July 30, 2007 NYSE Group and NYSE Regulation, Inc. ("NYSE Regulation"), each wholly owned subsidiaries of NYSE Euronext, entered into and completed an asset purchase agreement with National Association of Securities Dealers, Inc. ("NASD") pursuant to which the member firm regulatory functions of NYSE Regulation, including related enforcement activities, risk assessment and the arbitration service (collectively, the "Transferred Operations"), were consolidated with those of the NASD. The consolidated organization is known as Financial Industry Regulation Authority, Inc. ("FINRA"). The transaction involved the transfer to FINRA of the assets and liabilities associated with the Transferred Operations (including related expenses and revenues and approximately 427 employees), the sublease to FINRA of office space at 20 Broad Street and 14 Wall Street in New York City, and the provision by NYSE Group of certain security and facilities services to the FINRA locations at 20 Broad Street and 14 Wall Street for a five-year period. NYSE Group received total consideration of $41 million at closing and realized a $32 million gain. Qatar On June 24, 2008, NYSE Euronext and the State of Qatar announced that pursuant to the terms of a shareholders agreement between NYSE Euronext and the Qatar Investment Authority (QIA), NYSE Euronext has agreed to acquire 25% ownership interest of Doha Securities Market or its successor (DSM) for $250 million. The State of Qatar will retain the remaining 75% ownership of DSM through the QIA. Under the terms of the shareholders agreement, NYSE Euronext will be responsible for providing management services and technology in accordance with terms to be negotiated by the parties and set forth in definitive documentation. The closing of the transaction is expected to take place during the fourth quarter of 2008, subject to the completion of documentation and regulatory approvals. Note 3-Segment Reporting Subsequent to the business combination transaction between NYSE Group and Euronext, NYSE Euronext operates under two reportable segments: U.S. Operations and European Operations. NYSE Euronext evaluates segment performance primarily based on operating income. The U.S. Operations consist of (i) obtaining new listings and servicing existing listings; (ii) providing access to trade execution in cash equities, options and futures; (iii) selling market and related information and distributing market information to data subscribers; (iv) issuing trading licenses; (v) providing data processing operations; (vi) providing regulatory services in the U.S. markets and (vii) providing trading technology, software and connectivity to end-users. European Operations consist of (i) the management of trading in all cash products as well as a wide range of derivatives products and bonds and repos; (ii) listing of cash instruments; (iii) the sale of market data and related information; (iv) settlement of transactions and the safe-custody of physical securities in the European markets and (v) providing electronic trading solutions as well as software and connectivity to end-users. As NYSE Euronext progresses towards the integration of its NYSE Group and Euronext businesses, management will continue to assess its segment reporting structure and may, if and when appropriate, decide to revise its segment reporting upon completion of certain integration milestones. Summarized financial data concerning reportable segments is as follows (in millions): European Corporate items Three months ended September 30, U.S. Operations Operations and eliminations Consolidated 2008 Revenues $ 764 $ 441 $ - $ 1,205 Operating income (loss) from continuing operations 79 196 (8 ) 267 2007 Revenues $ 695 $ 431 $ - $ 1,126 Operating income (loss) from continuing operations 96 204 (9 ) 291 European Corporate items Nine months ended September 30, U.S. Operations Operations and eliminations Consolidated 2008 Revenues $ 2,136 $ 1,350 $ - $ 3,486 Operating income (loss) from continuing operations 283 638 (35 ) 886 2007 Revenues $ 2,053 $ 788 $ - $ 2,841 Operating income (loss) from continuing operations 301 360 (22 ) 639 Note 4-Discontinued Operations On August 1, 2008, SunGard and GL Trade announced SunGard's intention to acquire a majority stake in GL Trade. Under the terms of the offer, SunGard acquired approximately 64.5% of GL Trade from Euronext Paris S.A., a wholly-owned subsidiary of NYSE Euronext, and other significant shareholders at a price of C41.70 per share. As a result, the operations of GL Trade are reflected as discontinued. In October 2008, NYSE Euronext received C161.6 million ($227.5 million) from the sale of its 40% ownership stake in GL Trade to SunGard. GL Trade earned revenue mainly from annual subscriptions to its software and technology offerings. Operating results of GL Trade, which were formerly included in European Operations, are summarized as follows: Three months ended Nine months ended September 30, September 30, 2008 2007 2008 2007 Revenues $ 82 $ 72 $ 248 $ 138 Income before income tax provision and minority interest $ 12 $ 7 $ 31 $ 14 Income tax provision (2 ) (2 ) (10 ) (5 ) Minority interests (7 ) (4 ) (16 ) (8 ) Income from discontinued operations $ 3 $ 1 $ 5 $ 1 The following table summarizes the assets and liabilities of GL Trade: September 30, December 31, 2008 2007 Cash and equivalents $ 58 $ 30 Accounts receivable, net 81 77 Goodwill 294 365 Other intangible assets, net 41 46 Other assets 72 41 Total assets $ 546 $ 559 Accounts payable and accrued expenses $ 86 $ 82 Deferred revenue 75 81 Short term debt 40 28 Long term debt 16 27 Deferred income taxes 31 37 Minority interests 67 55 Total liabilities $ 315 $ 310 Note 5-Earnings and Dividends Per Share The following is a reconciliation of the basic and diluted earnings per share computations (in millions except per share data): Three months ended Nine months ended September 30, September 30, 2008 2007 2008 2007 Net income Continuing operations $ 171 $ 257 $ 595 $ 486 Discontinued operations 3 1 5 1 Net income $ 174 $ 258 $ 600 $ 487 Shares of common stock and common stock equivalents: Weighted average shares used in basic computation 266 265 266 227 Dilutive effect of: Employee stock options and restricted stock units - 1 - 1 Weighted average shares used in diluted computation 266 266 266 228 Basic earnings per share: Continuing operations $ 0.65 $ 0.97 $ 2.24 $ 2.13 Discontinued operations 0.01 - 0.02 0.01 Basic earnings per share $ 0.66 $ 0.97 $ 2.26 $ 2.14 Diluted earnings per share: Continuing operations $ 0.65 $ 0.97 $ 2.24 $ 2.12 Discontinued operations 0.01 - 0.02 0.01 Diluted earnings per share $ 0.66 $ 0.97 $ 2.26 $ 2.13 Dividends per common share $ 0.30 $ 0.25 $ 0.85 $ 0.50 As of September 30, 2008 and 2007, 2.9 million and 2.3 million restricted stock units, respectively, and options to purchase 0.7 million and 1.6 million shares of common stock, respectively, were outstanding. For the three and nine months ended September 30, 2008, 1.5 million and 0.9 million awards, respectively, were excluded from the diluted earnings per share computation because their effect would have been anti-dilutive. For the three and nine months ended September 30, 2007, 0.3 million awards were excluded from the diluted earnings per share computation because their inclusion would have been anti-dilutive. Note 6-Pension and Other Benefit Programs The components of net periodic (benefit) expense are set forth below (in millions): Postretirement Pension Plans SERP Plans Benefit Plans Three months ended September 30, 2008 2007 2008 2007 2008 2007 Service cost $ 1 $ 1 $ - $ - $ 1 $ 1 Interest cost 11 11 1 1 3 3 Expected return on assets (16 ) (15 ) - - - - Recognized net actuarial loss - - - - (1 ) - Plan amendment - 4 - - - - Curtailment - (1 ) - - - - Net periodic (benefit) cost $ (4 ) $ - $ 1 $ 1 $ 3 $ 4 Postretirement Pension Plans SERP Plans Benefit Plans Nine months ended September 30, 2008 2007 2008 2007 2008 2007 Service cost $ 3 $ 2 $ - $ 1 $ 3 $ 3 Interest cost 33 30 3 3 9 9 Expected return on assets (48 ) (43 ) - - - 2 Recognized net actuarial loss - 4 - - (3 ) - Curtailment - (1 ) 1 - 7 (13 ) Net periodic (benefit) cost $ (12 ) $ (8 ) $ 4 $ 4 $ 16 $ 1 During the three and nine months ended September 30, 2008, NYSE Euronext contributed $3.5 million to its pension plans. Based on current actuarial assumptions, NYSE Euronext anticipates funding an additional $1.5 million to the pension plans for the remainder of fiscal 2008. Curtailment to the Plans For the nine months ended September 30, 2008, NYSE Euronext recorded a $7 million curtailment loss as a result of various employee actions, including the VRIP, on its US benefit plans. For the nine months ended September 30, 2007, NYSE Euronext recorded a $13 million curtailment gain as a result of the elimination of certain components of the OPEB plans. Note 7-Fair Value of Financial Instruments NYSE Euronext accounts for certain financial instruments at fair value, including available-for-sale instruments, derivatives instruments and certain debt instruments. NYSE Euronext adopted the provisions of FAS 157, "Fair Value Measurements", in the first quarter of 2008. FAS 157 defines fair value, establishes a fair value hierarchy on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value measurements. The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of financial instruments is determined using various techniques that involve some level of estimation and judgment, the degree of which is dependent on the price transparency and the complexity of the instruments. In accordance with FAS 157, NYSE Euronext has categorized its financial instruments measured at fair value into the following three-level fair value hierarchy based upon the level of judgment associated with the inputs used to measure the fair value: * Level 1: Inputs are unadjusted quoted prices for identical assets or liabilities in an active market that NYSE Euronext has the ability to access. Generally, equity and other securities listed in active markets and investments in publicly traded mutual funds with quoted market prices are reported in this category. * Level 2: Inputs are either directly or indirectly observable for substantially the full term of the assets or liabilities. Generally, municipal bonds, certificates of deposits, corporate bonds, mortgage securities, asset backed securities and certain derivatives are reported in this category. The valuation of these instruments is based on quoted prices or broker quotes for similar instruments in active markets. * Level 3: Some inputs are both unobservable and significant to the overall fair value measurement and reflect management's best estimate of what market participants would use in pricing the asset or liability. Generally, assets and liabilities carried at fair value and included in this category are certain structured investments, derivatives, commitments and guarantees that are neither eligible for Level 1 or Level 2 due to the valuation techniques used to measure their fair value. The inputs used to value these instruments are both observable and unobservable and may include NYSE Euronext's own projections. If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. A review of the fair value hierarchy classifications is conducted on a quarterly basis. Changes in the valuation inputs may result in a reclassification for certain financial assets or liabilities. The following table presents NYSE Euronext's fair value hierarchy of those assets and liabilities measured at fair value on a recurring basis as of September 30, 2008 (in millions): Assets & liabilities measured at fair value as of September 30, 2008 Level 1 Level 2 Level 3 Total Assets Investments $ 99 $ 183 $ - $ 282 Other assets 44 - - 44 Liabilities Derivatives - 3 - 3 The difference between the total financial assets and liabilities as of September 30, 2008 presented in the table above and the related amounts in the condensed consolidated statement of financial condition is primarily due to investments recorded at cost or adjusted cost such as non-quoted equity securities, bank deposits and other interest rate investments, and to debt instruments recorded at amortized cost. Note 8-Goodwill and Other Intangible Assets The following table presents the details of the acquired intangible assets and goodwill by reportable segments as of September 30, 2008 (in millions): U.S. Operations European Operations Estimated Accumulated Useful Life Estimated Accumulated Useful Life fair value Amortization (in years) fair value Amortization (in years) National securities exchange registrations $ 527 $ - Indefinite $ 5,326 $ - Indefinite Customer relationships 54 6 10 to 20 789 59 7 to 20 Trade names and other 49 6 20 177 45 2 to 20 Other intangibles $ 630 $ 12 $ 6,291 $ 104 Goodwill $ 756 $ 4,456 For the three and nine months ended September 30, 2008, amortization expense for the intangible assets was approximately $16 million and $47 million, respectively. Change in goodwill primarily reflects foreign currency fluctuations and current business combinations (see Note 2). The estimated future amortization expense (excluding the impact of future foreign exchange rate changes) of acquired purchased intangible assets as of September 30, 2008 was as follows (in millions): Year ending December 31, Remainder of 2008 (from October 1st through December 31st) $ 13 2009 53 2010 53 2011 53 2012 53 Thereafter 728 Total $ 953 Note 9-Commitments and Contingencies On June 25, 2008, the New York Court of Appeals entered an order affirming the May 2007 order of the Appellate Division of the New York Supreme Court ("Appellate Division") dismissing four of the six claims asserted against Mr. Grasso by the New York Attorney General ("NYAG"). Both the Appellate Division and Court of Appeals concluded that those four claims were not expressly authorized under the New York Not-for-Profit Corporation Law ("N-PCL"), and thus the NYAG lacked authority to assert them. On July 1, 2008, the Appellate Division entered an order relating to various rulings made by the lower court in October 2006. In relevant part, the Appellate Division reversed the lower court's granting of partial summary judgment for the NYAG against Mr. Grasso, ruling that the lower court erred in determining that Mr. Grasso had breached his fiduciary duties to the NYSE. The Appellate Division also ruled that the lower court erred in holding that the NYAG had authority to continue to pursue its N-PCL claims against Messrs. Grasso and Langone after the NYSE converted in 2006 into a for-profit entity. Accordingly, the Appellate Division directed that the N-PCL claims against Messrs. Grasso and Langone be dismissed. The Appellate Division also affirmed the lower court's ruling that granted summary judgment to the NYSE and John Reed on Mr. Grasso's cross-claims for breach of contract and defamation. On July 16, 2008, the lower court, pursuant to a stipulation filed by the NYAG and the NYSE, dismissed with prejudice the NYAG's remaining claim against NYSE (which had sought declaratory relief only). On July 31, 2008, a stipulation was filed with the Supreme Court of New York in which the NYAG, Mr. Grasso and the NYSE agreed that no party would appeal the Appellate Division's July 1, 2008 decision which, among other things, had affirmed the dismissal of Mr. Grasso's contract claims and defamation claims against NYSE. At December 31, 2003, the NYSE accrued compensation expense amounting to $36.0 million related to Mr. Grasso. Based upon the final termination of any claims by Mr. Grasso against the NYSE, no additional payments were or will be made, and the above-referenced accrual was reversed and included in compensation in the condensed consolidated statements of income for the nine months ended September 30, 2008. On August 20, 2008, the plaintiffs in the Sea Carriers matter (a matter related to In re NYSE Specialists Securities Litigation) voluntarily dismissed without prejudice that class action complaint, which asserted violations of federal antitrust and securities laws and common law in connection with the placing of market orders through NYSE's SuperDOT order routing system. In addition to the matters described above and in the prior disclosures incorporated herein by reference, NYSE Euronext is from time to time involved in various legal proceedings that arise in the ordinary course of its business. NYSE Euronext does not believe, based on currently available information, that the results of any of these various proceedings will have a material adverse effect on its operating results or financial condition. Note 10-Income taxes For the three and nine months ended September 30, 2008, NYSE Euronext's effective tax rate is lower than statutory rate primarily due to foreign operations and the reorganization of certain of our businesses. The applicable tax rate was 29% for both the three and nine months ended September 30, 2008. For the three and nine months ended September 30, 2007, NYSE Euronext effective tax rate included a $55 million discrete deferred tax benefit related to an enacted reduction in corporate tax rate from 30% to 28% in the United Kingdom. The applicable tax rate for the three and nine months ended September 30, 2007 was 16% and 26%, respectively, due to this change. Note 11-Related Party Transactions AEMS On August 5, 2008, NYSE Euronext completed the acquisition of the 50% stake in AEMS previously owned by Atos Origin (see Note 2). Prior to the acquisition, NYSE Euronext outsourced the information technology requirements of its European Operations, such as development and maintenance of information technology applications and use of resources and software to AEMS. AEMS provided information technology services to NYSE Euronext pursuant to a services agreement, dated July 2005, between it, Euronext and Atos Origin, which was entered into at the time of the formation of AEMS. Under separate service level agreements, NYSE Euronext also invoiced AEMS for the use of resources of NYSE Euronext. FINRA As part of the July 30, 2007 asset purchase agreement with FINRA, FINRA and NYSE Group have entered into service agreements with FINRA and its affiliates. Based on these service agreements, FINRA provides certain regulatory services to NYSE Group and its affiliates (see Note 2). LCH.Clearnet As of September 30, 2008, NYSE Euronext used the services of LCH.Clearnet for clearing transactions executed on its European cash markets and Liffe, and the services of Euroclear for settling transactions on its cash markets (except in Portugal). On July 27, 2007, LCH.Clearnet redeemed all of the outstanding LCH.Clearnet redeemable convertible preference shares held by NYSE Euronext, and repurchased a portion of LCH.Clearnet ordinary shares held by NYSE Euronext for C399 million ($548 million). On June 11, 2008, LCH.Clearnet purchased an additional 6 million ordinary shares from NYSE Euronext for C62 million ($97 million). As of September 30, 2008, NYSE Euronext retains a 5% stake in LCH.Clearnet's outstanding share capital and the right to appoint one director to LCH.Clearnet's board of directors (see Note 13 regarding the LiffeClear arrangements). The following table presents income and expenses derived or incurred from these related parties (in millions): Three months ended Nine months ended Income (expenses) September 30, September 30, 2008 2007 2008 2007 AEMS(1) $ (10 ) $ (45 ) $ (91 ) $ (95 ) FINRA 5 4 16 4 LCH.Clearnet 1 19 4 39 (1) Through August 5, 2008. Note 12-Other Comprehensive Income The following outlines the components of other comprehensive income (in millions): Three months ended Nine months ended Income (expenses) September 30, September 30, 2008 2007 2008 2007 Net income $ 174 $ 258 $ 600 $ 487 Change in market value adjustments of available-for-sale securities (40 ) (2 ) (91 ) (2 ) Employee benefit plan adjustments (4 ) - (11 ) 1 Foreign currency translation adjustments (1,028 ) 294 (617 ) 394 Total comprehensive (loss) income $ (898 ) $ 550 $ (119 ) $ 880 Note 13-Subsequent Events Subsequent to its October 1, 2008 acquisition of Amex (see Note 2), NYSE Euronext commenced its repurchase of up to $1 billion of its common stock. The plan was announced on March 18, 2008. NYSE Euronext plans to continue to repurchase stock from time to time at the discretion of management in open market or privately negotiated transactions or otherwise, subject to applicable United States and European laws, regulations and approvals, strategic considerations, market conditions and other factors. As of November 10, 2008, NYSE Euronext had repurchased 7.7 million shares at an average price of $29.11 per share. Also as previously disclosed on July 31, 2008, effective upon the Amex acquisition, the board of directors of NYSE Euronext approved the removal of the transfer restrictions on the remaining 41.8 million shares issued as part of the business combination transaction between New York Stock Exchange, Inc. and Archipelago Holdings, Inc., which was completed on March 7, 2006. Accordingly, on October 1, 2008, the transfer restrictions on these shares were released. These shares were previously restricted until March 2009. In October 2008, NYSE Euronext received C161.6 million ($227.5 million) from the sale of its 40% ownership stake in GL Trade to SunGard (see Note 4). On October 31, 2008, NYSE Euronext announced that its derivatives subsidiary, LIFFE Administration & Management ("LIFFE"), is to take full responsibility for clearing activities in its London market, subject to regulatory approval, with the target of beginning operations in the first quarter of 2009. To achieve this, LIFFE will become a self-clearing Recognised Investment Exchange and will outsource certain clearing functions to LCH.Clearnet Ltd. ("LCH.Clearnet"). LIFFE has entered into binding agreements with LCH.Clearnet to terminate its current clearing arrangements and to establish the new arrangements, known as "LiffeClear". As part of the termination of its current clearing arrangements with LCH.Clearnet, NYSE Euronext will make a one-time C260 million (approximately $326 million) payment to LCH.Clearnet. It is expected that the transaction will have a positive impact on earnings from 2009. 0001368007 2008-01-01 2008-09-30 0001368007 2006-12-31 0001368007 2007-01-01 2007-09-30 0001368007 2007-01-01 2007-09-30 0001368007 2007-07-01 2007-09-30 0001368007 2007-09-30 0001368007 2007-12-31 0001368007 2007-12-31 0001368007 2008-01-01 2008-09-30 0001368007 2008-01-01 2008-09-30 0001368007 2008-07-01 2008-09-30 0001368007 2008-09-30 0001368007 2008-09-30 iso4217:USD iso4217:USD shares EX-100.SCH 3 nyx-20080930.xsd XBRL TAXONOMY EXTENSION SCHEMA Notes to Financial Statements link:calculationLink link:presentationLink EX-100.CAL 4 nyx-20080930_cal.xml XBRL TAXONOMY EXTENSION CALCULATION LINKBASE EX-100.LAB 5 nyx-20080930_lab.xml XBRL TAXONOMY EXTENSION LABEL LINKBASE EX-100.PRE 6 nyx-20080930_pre.xml XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE -----END PRIVACY-ENHANCED MESSAGE-----