This summary is based on the second quarter fiscal 2008 earnings call conducted by NYSE Euronext (NYX) on August 1, 2008.
Management:
CEO: Duncan Niederauer
Group EVP and CFO: Mike Geltzeiler
IR: Effie Epstein
Key Investor Issues:
- Quarter-to-quarter EPS increased from 62 cents to 73 cents.
- Quarterly dividend of 30 cents will be paid on September 30, 2008 to shareholders of record as of September 15, 2008.
- Q2 operating income was $293 million, an increase of $38 million versus $255 million in the year ago quarter.
Second-Quarter Financial Highlights:
On a pro forma non-GAAP basis, excluding merger expenses, exit costs and other non-recurring items, net income for the quarter would have been $200 million, or 75 cents per share.
- This reflects an increase of $29 million or 17% versus non-GAAP net income of $171 million or 64 cents per share in the year ago quarter.
Taking pro forma non-GAAP results and excluding the impact of exchange rates, as well as acquisitions and dispositions of businesses and equity investments for the quarter, the revenues net of activity assessment fees rose $114 million or 12% versus the year ago quarter.
- On the same basis, the company’s operating income firmed $28 million or 10%.
- The fixed operating expenses decreased $19 million or 4% versus the same quarter in 2007.
The management advised that included in the GAAP quarterly results were $38 million of pre-tax merger expenses and exit costs.
- This compares with $16 million in the comparable period last year.
- The GAAP results for the quarter were favorably impacted by the reversal of a $36 million accrual relating to certain litigation between a former Chairman & CEO and the company.
- The litigation was terminated on July 31, 2008.
On a non-GAAP basis, net transaction revenues grew $60 million or 17% during the quarter versus the year ago period.
- On a year-on-year basis, the increase was 28%.
In May, the company completed the statutory buy-out of the remaining minority Euronext shareholders.
- These shareholders held approximately 2% of the shares of Euronext N.V.
- The relevant aggregate consideration was €252 million ($389 million).
- Resultantly, all subsidiaries are now wholly owned by NYSE Euronext.
- As a result of the transaction and following the re-organization of certain businesses, the effective tax rate on a non-GAAP basis was 27% for the quarter.
- This is in comparison with 32% for the same period last year.
- The management anticipates providing income taxes at an effective tax rate of 29% for the balance of the year.
As of June 30, 2008, the company had a strong financial position.
- The cash, cash equivalents, investments and other securities were $1.3 billion.
- This is inclusive of $155 million related to fees collected from market participants and due to SEC.
- The total debt obligations were $3 billion.
On April 11 and May 21, the company successfully launched a 7-year €750 million ($1,181 million) bond issue in the Euro market and priced a 5-year €750 million underwritten public offering of senior notes in the U.S. respectively.
