NYSE Euronext, Inc. Q3 2008 Earnings Call Transcript

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NYSE Euronext, Inc. (NYX)

Q3 2008 Earnings Call

October 31, 2008 08:00 am ET

Executives

Stephen Davidson - Head of IR

Duncan Niederauer - CEO

Michael Geltzeiler - Group EVP and CFO

Analysts

Rich Repetto - Sandler O'Neill

Rob Rutschow - Deutsche Bank

Roger Freeman - Barclays Capital

Daniel Harris - Goldman Sachs

Niamh Alexander – KBW

Don Fandetti - Citigroup

Bob Napoli - Piper Jaffray

Howard Chen - Credit Suisse

Brian Bedell - Merrill Lynch

Ken Worthington - J.P. Morgan

Presentation

Operator

Good day ladies and gentlemen and welcome to the third quarter 2008 NYSE Euronext Earnings Call. My name is [March] and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be conducting a question-and-answer session towards the end of this conference. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the presentation over to your host for today's call, Mr. Stephen Davidson Head of Investor Relations. Please proceed.

Stephen Davidson

Good morning and welcome to the NYSE Euronext third quarter 2008 earnings conference call. Before I introduce today's speakers, let me remind you that comments on the call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act.

These statements are based on NYSE Euronext’s current expectations and involve risks and uncertainties that could cause NYSE Euronext actual results to differ materially from those in the statements. These forward-looking statements speak as of today and you should not rely on them as representing our views in the future. Please refer to our SEC filings for a full discussion of the risk factors that may affect any forward-looking statements.

Except for any obligation to disclose material information under the federal securities laws, NYSE Euronext undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after this conference call. Please note that the results of operations of Euronext for the third quarter of 2008 are reported under US GAAP and are incorporated in today's earnings press release under the caption European Operations accounting tables.

We will discuss non-GAAP financial measures during the call. These non-GAAP measures are fully reconciled in the tables attached to the text of the release. We believe that these tables provide investors useful information about our business trends. However, our non-GAAP measures do not replace and are not superior to GAAP measures.

On the call today, Duncan Niederauer, Chief Executive Officer, who will review our core areas of focus, address competitive challenges in our selected markets and update you on our growth drivers. Michael Geltzeiler, Group Executive Vice President and Chief Financial Officer will review the financial results for the quarter and provide an update on key strategic initiatives including our integration efforts. We will then go back to Duncan for closing comments, before we take your questions.

Also on the call today for the Q&A session are Larry Leibowitz, Group Executive Vice President, Head of U.S. Market and Global Technology, John Halvey, Group Executive Vice President and General Counsel and Stephane Biehler, Chief Accounting Officer and Corporate Controller and Jean-François Théodore, Group Executive Vice President and Deputy and CEO.

Please note as part of our ongoing efforts to provide more transparency around our results, we are incorporating slides for the call today, which are available on our website. Duncan and Mike will refer to slides during the remarks.

I would now like to turn the call over to Duncan.

Duncan Niederauer

Thanks Stephen and we welcome Stephen to the company. This is his first but certainly not his last earnings call with us. So, we are going to be going through the slide presentation. Bear with us this is the first time we are trying this. We would love to get feedback from all of you after this call whether this is a step in the right direction or not.

I will be starting my remarks on slide three, which is entitled third quarter update. I am pleased to share our third quarter 2008 results with you characterized by robust volume across all our U.S and European exchanges, A, revenue generation from our cash equities businesses, on a fixed cost base, on a normalized basis to decline 9% year-over-year.

Pro forma earnings per share from continuing operations, which excludes GL Trade was $0.72 for the third quarter versus $0.75 in the prior year period. Discontinued operations for the quarter represented $0.01 per share in EPS.

Our results for the third quarter were generated against the backdrop of unprecedented market volatility, as a result of the crisis in global finance and the collapse of several major financial institutions. We are bolstered by concerted government initiatives to confront the crisis in the U.S., Europe and Asia.

Throughout the crisis, we have been in close contact with our regulators, issuers and the global trading community. We are committed to doing everything in our power to provide stable, orderly and liquid markets and we have done well so far.

Despite the volatility and spikes in volume, our systems handled the order flow and message traffic without interruption and the strength of our market models played a critical role in ensuring high quality markets orderly opens and closes and best execution for investors in the most transparent fashion.

Please also be aware that we have been very engaged in the dialogue surrounding the CDS market and are preparing for the launch of European CDS index contract and Bclear later this quarter.

Turning to slide four, we provide a summary of our key areas of focus for the company. The longer term implications for the global economy are now being assessed, and we are continuing to execute our growth strategy with a focus on several key areas against which they gauge our performance, maintain or improve our competitive position, and create value for shareholders and customers.

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