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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended SEPTEMBER 30, 2005
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT
OF 1934
For the transition period from ____ to ____
Commission file number 333-126780
NYSE GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 20-2786071
------------------------------------------------- ----------------------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
C/O NEW YORK STOCK EXCHANGE, INC.
11 WALL STREET, NEW YORK, NY 10005
------------------------------------------------- ----------------------------------------------
(Address of principal executive offices) (Zip Code)
(212) 656-3000
----------------------------------------------------
(Registrant's telephone number, incLuding area code)
NA
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes |_| No |X|
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X|
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes |X| No |_|
There were 0 shares of common stock with a par value of $0.01 per share
outstanding as of December 18, 2005.
-------------------------------------------------
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements
Condensed Consolidated Statement of Financial Condition as of
September 30, 2005.................................................. 3
Condensed Consolidated Statements of Operations for the three months
ended September 30, 2005 and the period from May 2, 2005 (date of
incorporation) to September 30, 2005............................... 4
Condensed Consolidated Statements of Cash Flows for the period from
May 2, 2005 (date of incorporation) to September 30, 2005.......... 5
Notes to Condensed Consolidated Financial Statements................ 6
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................... 7
Item 3 Quantitative and Qualitative Disclosures About Market Risk.......... 7
Item 4 Controls and Procedures............................................. 7
PART II - OTHER INFORMATION
Item 6 Exhibits............................................................ 8
Signatures.................................................................... 9
FORWARD-LOOKING STATEMENTS
In addition to historical information, this Quarterly Report
on Form 10-Q contains forward-looking statements regarding NYSE Group, Inc. and
its subsidiaries (collectively "NYSE Group" or the "Company"). These statements
relate to future events or our financial performance and may include information
relating to pending transactions involving NYSE Group (including the benefits of
the transactions and future plans and expectations following the consummation of
transactions) and are intended to be covered by the safe harbor for
"forward-looking statements" provided by the Private Securities Litigation
Reform Act of 1995. Forward-looking statements are based on the current belief
of management and involve unknown risks, uncertainties and other factors that
may cause our actual results, levels of activity, performance or achievements,
to be materially different from those expressed or implied in this Report. In
some cases, you can identify forward-looking statements with terminology such as
"may," "will," "should," "expects," "intends," "plans," "anticipates,"
"believes," "estimates," "predicts," "potential," "continue," "pending" or the
negative of these terms or other comparable terminology. These statements are
only predictions. You should not place undue reliance on forward-looking
statements which speak only as of the date of this report. Actual events or
results may differ materially and we undertake no ongoing obligation, other than
that imposed by law, to update these statements. You should, however, consider
any further disclosures of a forward-looking nature NYSE Group may make in our
other reports and registration statements filed with the Securities and Exchange
Commission (the "SEC").
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. These forward-looking
statements are subject to numerous risks and uncertainties, including, but not
limited to: general economic conditions; our future operating results; market
penetration and financial condition; industry trading activity and fluctuations;
regulatory changes and competition; the ability to obtain governmental approval
of any pending transaction on the proposed terms and schedule; the failure to
obtain stockholder approval for any pending transaction; the inability to
integrate businesses successfully following the consummation of any pending
transaction; the risk that any expected cost savings and any revenue synergies
resulting from any pending transaction may not be fully realized or may take
longer to realize than expected; the risk that disruption from any pending
transaction may make it more difficult to maintain relationships with clients,
employees or suppliers; as well as the risks and uncertainties described below
under the section heading "Quantitative and Qualitative Disclosure About Market
Risk," and the risks and uncertainties described under the section heading "Risk
Factors" in the registration statement on Form S-4 (File No. 333-126780), as
amended, filed by NYSE Group with the SEC, which was declared effective on
November 3, 2005 (the "S-4"). You are urged to carefully consider these factors.
All forward-looking statements attributable to us are expressly qualified in
their entirety by the foregoing cautionary statements.
The risks included here are not exhaustive. We operate in a
rapidly changing and competitive environment. New risk factors emerge from time
to time, and it is not possible for management to predict all such risk factors.
Further, it is not possible to assess the impact of all risk factors on our
business or the extent to which any factor, or combination of factors, may cause
actual results to differ materially from those contained in any forward-looking
statements.
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NYSE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
(unaudited)
SEPTEMBER 30,
2005
-------------
Assets
Current assets:
Total current assets
$ -
-------------
Total assets $ -
=============
Liabilities and Stockholders' Equity
Total current liabilities $ -
-------------
Total liabilities -
-------------
Commitments and contingencies
Stockholders' equity
Common stock, $0.01 par value, 100 shares authorized, 0 shares issued and outstanding -
Additional paid-in capital 200
Subscriptions receivable (200)
Retained earnings -
-------------
Total stockholders' equity -
-------------
Total liabilities and stockholders' equity $ -
=============
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
NYSE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
MAY 2
THREE (DATE OF
MONTHS INCORPORATION)
ENDED TO
SEPTEMBER SEPTEMBER
30 30
----------- -----------
2005
--------------------------
Revenues
Total revenues $ - $ -
----------- -----------
Expenses
- -
----------- -----------
Total expenses
- -
----------- -----------
Income before income tax provision - -
Income tax provision - -
----------- -----------
Net income $ - $ -
=========== ===========
Basic earnings per share $ - $ -
=========== ===========
Diluted earnings per share $ - $ -
=========== ===========
Basic weighted average shares outstanding - -
=========== ===========
Diluted weighted average shares outstanding - -
=========== ===========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
NYSE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
MAY 2 (DATE OF
INCORPORATION) TO
SEPTEMBER 30,
2005
----------------------
Cash flows from operating activities:
Net income $ -
Adjustments to reconcile net income to net cash provided by
operating activities: -
Changes in operating assets and liabilities: -
Net cash provided by operating activities -
----------------------
Cash flows from investing activities:
Net cash provided by investing activities -
----------------------
Cash flows from financing activities:
Net cash provided by financing activities -
----------------------
Net increase in cash and cash equivalents -
Cash and cash equivalents at beginning of period -
----------------------
Cash and cash equivalents at end of period $ -
======================
The accompanying notes are an integral part of these condensed consolidated
financial statements
5
NYSE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 2005
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
ORGANIZATION
NYSE Group, Inc. ("NYSE Group" or the "Company"), a Delaware
corporation, was organized on May 2, 2005. Upon the consummation of the
transactions described in the S-4, NYSE Group will be the parent company of New
York Stock Exchange LLC ("NYSE LLC"), a New York limited liability company
(which will be the successor to New York Stock Exchange, Inc. (the "NYSE")), and
Archipelago Holdings, Inc. ("Arca"), a Delaware corporation. To date, NYSE Group
has not conducted any material activities other than those incident to its
formation.
The NYSE is the world's largest cash equities market, both in terms of
average daily trading volume and in the market capitalization of its listed
companies.
Arca operates the Archipelago Exchange, or ArcaEx ("ArcaEx"), the
first open all-electronic stock market in the United States for trading in
NYSE-, Nasdaq-, American Stock Exchange- and Pacific Exchange-listed stocks. On
September 26, 2005, Arca acquired PCX Holdings, Inc. ("PCXH"), and its
subsidiaries, including the Pacific Exchange, Inc. ("PCX") and PCX Equities,
Inc. ("PCX Equities").
BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements are
prepared in accordance with accounting principles generally accepted in the
United States of America and include the accounts of the Company and its wholly
owned subsidiaries. Management has made estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities as of the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Management believes that the estimates utilized in preparing its financial
statements are reasonable and prudent. Actual results could differ from these
estimates.
The interim financial data as of September 30, 2005 for the three-
month period ended September 30, 2005 and from May 2, 2005 (date of
incorporation) to September 30, 2005 is unaudited; however, in the opinion of
the Company, the interim data includes all adjustments, consisting only of
normal recurring adjustments, necessary for a fair statement of the results for
the interim period. Certain information and footnote disclosures normally
included in financial statements have been condensed or omitted; however,
management believes that the disclosures are adequate to make the information
presented not misleading.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
You should read the following discussions together with the condensed
consolidated financial statements and related notes, as well as the
forward-looking statements included elsewhere in this report.
To date, NYSE Group has not conducted any material activities
other than those incident to its formation.
LIQUIDITY AND CAPITAL RESOURCES
The board of directors of NYSE Group has authorized NYSE Group to
accept the offers of the NYSE and Arca, respectively, to each purchase and
subscribe for one share of common stock, par value $0.01 per share, at the price
of $100 per share. These purchases will be effected in the fourth quarter of
2005.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
During the period covered by this report, NYSE Group did not conduct
any material activities other than those incident to its formation and therefore
did not incur significant risk. Further information regarding market and other
risk is incorporated by reference to the section entitled "Risk Factors" in the
S-4, which section is filed as Exhibit 99.1 hereto. This section should be read
in conjunction with the subsequent SEC filings of NYSE Group as well as the
current reports on Form 8-K filed by Arca on November 17, 2005, November 25,
2005 and December 6, 2005 (two current reports on Form 8-K were filed on this
date).
ITEM 4. CONTROLS AND PROCEDURES
As of the end of the period covered by this report, an evaluation (as
required by paragraph (b) of Rule 13a-15 or Rule 15d-15 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) was carried out under the
supervision and with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the disclosure controls and procedures (as defined in
Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act) of the Company and its
subsidiaries. Based upon that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that the design and operation of the disclosure
controls and procedures of the Company and its subsidiaries were effective as of
the end of the period covered by this report. During the period covered by this
report, there has been no change in the Company's internal control over
financial reporting identified in connection with the evaluation required by
paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange Act that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.
7
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS
3.1 Certificate of Incorporation of NYSE Group, Inc., dated as of May 2,
2005 (1)
3.2 By-laws of NYSE Group, Inc. (2)
10 Registration Rights Agreement, dated as of October 20, 2005, by and
among General Atlantic Partners 77, L.P., GAP-W Holdings, L.P.,
GapStar, LLC, GAP Coinvestment Partners II, L.P., GAPCO GmbH & Co. KG,
NYSE Group, Inc., and New York Stock Exchange, Inc. (filed as Exhibit
10.15 to the registration statement on Form S-4 (File No. 333-126780),
as amended, filed by NYSE Group with the SEC, which was declared
effective on November 3, 2005)
31.1 Certification of the principal executive officer pursuant to Rule
13a-14(a) or Rule 15d-14(a) of the Exchange Act
31.2 Certification of the principal financial officer pursuant to Rule
13a-14(a) or Rule 15d-14(a) of the Exchange Act
32 Certification of the principal executive officer and the principal
financial officer pursuant to 18 U.S.C. Section 1350
99.1 "Risk Factors" section (pages 23-44) from the S-4
--------
(1) Note that, as discussed in the S-4, upon completion of the mergers through
which the NYSE and Arca will combine their businesses and become wholly-owned
subsidiaries of NYSE Group, the Certificate of Incorporation of NYSE Group, Inc.
will be amended and restated. A form of the Amended and Restated Certificate of
Incorporation was filed as Annex G to the S-4.
(2) Note that, as discussed in the S-4, upon completion of the mergers through
which the NYSE and Arca will combine their businesses and become wholly-owned
subsidiaries of NYSE Group, the By-laws of NYSE Group, Inc. will be amended and
restated. A form of the Amended and Restated By-laws was filed as Annex H to the
S-4.
8
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized:
NYSE GROUP, INC.
Date: December 19, 2005 By: /s/ John A. Thain
---------------------
John A. Thain
Chief Executive Officer and Director
(Principal Executive Officer)
NYSE Group, Inc.
Date: December 19, 2005 By: /s/ Nelson Chai
---------------------
Nelson Chai
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
NYSE Group, Inc.
9
EXHIBIT INDEX
Exhibit
NUMBER DESCRIPTION
------ -----------
3.1 Certificate of Incorporation of NYSE Group, Inc., dated as of May 2, 2005
(1)
3.2 By-laws of NYSE Group, Inc. (2)
10 Registration Rights Agreement, dated as of October 20, 2005, by and
among General Atlantic Partners 77, L.P., GAP-W Holdings, L.P., GapStar,
LLC, GAP Coinvestment Partners II, L.P., GAPCO GmbH & Co. KG, NYSE Group,
Inc., and New York Stock Exchange, Inc. (filed as Exhibit 10.15 to the
registration statement on Form S-4 (File No. 333-126780), as amended, filed
by NYSE Group with the SEC, which was declared effective on November 3,
2005)
31.1 Certification of the principal executive officer pursuant to Rule
13a-14(a) or Rule 15d-14(a) of the Exchange Act
31.2 Certification of the principal financial officer pursuant to Rule
13a-14(a) or Rule 15d-14(a) of the Exchange Act
32 Certification of the principal executive officer and the principal
financial officer pursuant to 18 U.S.C. Section 1350
99.1 "Risk Factors" section (pages 23-44) from the S-4
--------
(1) Note that, as discussed in the S-4, upon completion of the mergers through
which the NYSE and Arca will combine their businesses and become wholly-owned
subsidiaries of NYSE Group, the Certificate of Incorporation of NYSE Group, Inc.
will be amended and restated. A form of the Amended and Restated Certificate of
Incorporation was filed as Annex G to the S-4.
(2) Note that, as discussed in the S-4, upon completion of the mergers through
which the NYSE and Arca will combine their businesses and become wholly-owned
subsidiaries of NYSE Group, the By-laws of NYSE Group, Inc. will be amended and
restated. A form of the Amended and Restated By-laws was filed as Annex H to the
S-4.