Nasdaq, Inc.
Aug 6, 2003

NASDAQ Second Quarter 2003 Results

NASDAQ Second Quarter 2003 Financials

New York, N.Y.-The Nasdaq Stock Market, Inc. ("NASDAQ"; OTCBB: NDAQ), today reported a net loss of $49.0 million for the second quarter ended June 30, 2003. Excluding the impact of NASDAQ's strategic review, which includes costs associated with the elimination of non-core product lines, initiatives and severance, the net loss was $3.3 million for the period calculated on a Non-GAAP basis. The net loss applicable to common shareholders was $51.5 million or $(0.66) per basic and diluted share.1 Excluding the impact of NASDAQ's strategic review the Non-GAAP net loss applicable to common shareholders was $5.8 million or $(0.07) per basic and diluted share. Total revenue for the second quarter 2003 was $151.4 million.

Key quarterly events included:

"As we move into the second half of 2003, NASDAQ is directing its energies toward becoming the dominant U.S. equity market," noted Bob Greifeld, President and Chief Executive Officer of NASDAQ. "After a comprehensive review of the business portfolio, we are executing a plan designed to leverage our brand and technology platform that best serves the interests of investors, traders, listed companies and that drives shareholder value."

NASDAQ outlined its key strategic imperatives, which include:

In order to support these objectives, NASDAQ is taking aggressive steps toward enhancing its customer-facing sales and marketing efforts. Noted Mr. Greifeld, "We will demonstrate to current and potential customers the initiatives underway which will further increase the value of NASDAQ's products and services."

Financial Results

Total revenue declined 26.2% to $151.4 million in the second quarter 2003 from $205.1 million in the second quarter 2002 and 8.7% from $165.9 million when compared with the first quarter 2003.

NASDAQ continued to take decisive action to effectively reduce the cost and infrastructure required to operate its business.

Included in the quarter's results are:

NASDAQ currently expects to continue to recognize additional costs throughout the balance of the year in the range of $12 million to $15 million related to the wind-down of these eliminated products.

NASDAQ's Chief Financial Officer, David Warren, noted: "NASDAQ continues to drive costs out of the business. Through a combination of measures, we eliminated more than $12 million in recurring total expenses since the second quarter 2002. We are continuing our assault on expenses and believe we are taking strong measures to make NASDAQ an efficient, for-profit, publicly owned entity."


Mr. Greifeld concluded: "NASDAQ is taking decisive action, focusing on value-enhancing products, services and processes for our customers, investors and ultimately, for our shareholders. We are assembling the talent and will continue to allocate resources toward initiatives that further our drive toward becoming the dominant U.S. equity market. We will not commit resources or pursue initiatives that do not meet this mission."

With over 3,400 companies, NASDAQ lists more companies and, on average, trades more shares per day than any other U.S. market. It is home to category-defining companies that are leaders across all areas of business including technology, retail, communications, financial services, media and biotechnology industries.

For more information about NASDAQ, visit the NASDAQ Web site at or the NASDAQ NewsroomSM at

Non-GAAP Information

In addition to disclosing results determined in accordance with generally accepted accounting principles ("GAAP"), NASDAQ also discloses certain non-GAAP results of operation that exclude items associated with the strategic review. Management believes that the Non-GAAP information provides investors with additional information to access NASDAQ's operating performance by excluding the costs, which are non-operational items. The Non-GAAP information may not be comparable to other companies and should not be viewed as a substitute for or superior to net loss or other data prepared in accordance with GAAP. A reconciliation table is provided at the end of this release.

Cautionary Note Regarding Forward-Looking Statements

The matters described herein may contain forward-looking statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve a number of risks, uncertainties or other factors beyond the control of The Nasdaq Stock Market, Inc. (the "Company"), which could cause actual results to differ materially from historical results, performance or other expectations and from any opinions or statements expressed or implied with respect to future periods. These factors include, but are not limited to, the Company's ability to implement its strategic initiatives, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors detailed in the Company's annual report on Form 10-K, and periodic reports filed with the U.S. Securities and Exchange Commission. We undertake no obligation to release any revisions to any forward-looking statements.

1Dividends payable to the National Association of Securities Dealers Inc. ("NASD") as the holder of NASDAQ's Series A Preferred Stock began accruing in March 2003. The Series A Preferred Stock carries a 7.6% dividend rate for the year commencing March 2003 and 10.6% in all subsequent years. NASDAQ is obligated to pay this dividend to the extent of its capital surplus. The dividend for the second quarter, and subsequent quarters in 2003, is approximately $2.5 million.


The Nasdaq Stock Market, Inc.
Condensed Consolidated Statements of Income
(in millions, except per share amounts)

The Nasdaq Stock Market, Inc.
Key Drivers


The Nasdaq Stock Market, Inc
Condensed Consolidated Balance Sheets
(in millions)

The Nasdaq Stock Market, Inc
Condensed Consolidated Balance Sheets
(in millions)

The Nasdaq Stock Market, Inc.
Reconciliation of GAAP Financial Statements
(in millions, except per share amounts)

Media Contacts:
Bethany Sherman

Melissa Fox

Investor Contacts:
Paul Warburg

O'Hara Macken