Nasdaq, Inc.
Jul 20, 2006

NASDAQ Announces Second Quarter 2006 Results

Gross Margin Increases for Seventh Consecutive Quarter

NEW YORK, Jul 20, 2006 (PRIMEZONE via COMTEX News Network) -- The Nasdaq Stock Market, Inc. ("NASDAQ(r)") (Nasdaq:NDAQ), today reported second quarter 2006 net income of $16.6 million, or $0.13 per diluted share versus $14.0 million or $0.13 per diluted share in the second quarter of 2005, and $18.0 million or $0.16 per diluted share in the first quarter of 2006.

Second quarter 2006 results include the following pre-tax items:



 -- $20.9 million in charges related to the early extinguishment of
    debt and the refinancing of a credit facility, both realized in
    connection with NASDAQ's investment in the London Stock Exchange.
 -- $17.9 million in charges associated with NASDAQ's cost reduction
    program and INET integration.
 -- An $8.2 million foreign currency gain associated with NASDAQ's
    investment in the London Stock Exchange.
 -- $9.2 million of dividend income related to the payment of an
    ordinary dividend by the London Stock Exchange.  NASDAQ's
    investment in the London Stock Exchange is accounted for in
    accordance with Financial Accounting Standard No. 115, Accounting
    for Certain Investments in Debt and Equity Securities ("FAS 115").

The impact of these items on net income was $13.0 million or $0.09 per diluted share.

Gross margin, representing total revenues less cost of revenues, was $171.1 million in the second quarter of 2006, an increase of 31.2% from $130.4 million in the year-ago period, and an increase of 5.6% from $162.0 million in the first quarter of 2006. Second quarter 2006 represents the seventh consecutive quarter of gross margin growth.

NASDAQ's Chief Executive Officer, Robert Greifeld commented, "Solid execution of our growth strategy throughout the organization drove NASDAQ's strong top line performance. During the quarter our trading systems continued to handle more market share and we further increased our potential for future growth through the introduction of new products and services such as the Global Select Market, the IPO Cross, and NASDAQ Market Velocity. This continued progress enhances our already strong competitive position. Looking into the second half of 2006, we are maintaining our consistent focus on innovation and execution that anticipates and responds to the needs of our customers."

Recent Highlights



 -- Recently achieved a new single day high in trading NYSE-listed
    stocks, with 11.8% matched market share on July 19, 2006.  Matched
    market share for NYSE-listed stocks increased in the second
    quarter 2006 to 8.3%, up from 7.0% in the first quarter 2006.
    Matched market share for AMEX-listed stocks increased to 24.8% in
    the second quarter 2006, up from 22.3% in the prior quarter.
 -- Made an investment in the London Stock Exchange resulting in the
    ownership of 25.3% of outstanding shares.
 -- Received SEC approval of NASDAQ's phased approach to Exchange
    Operation. NASDAQ plans to become operational as an exchange in
    NASDAQ-listed securities on August 1, 2006, and in other
    exchange-listed securities after September 1, 2006.
 -- Launched the NASDAQ Global Select Market, a new listing tier with
    the highest initial listing standards in the world; and launched a
    corresponding index to track the new tier.
 -- Recorded a record in the Closing Cross on June 30th through the
    calculation of the entire family of Russell indexes during its
    annual reconstitution.  Approximately 690.8 million shares
    representing $10.5 billion were executed in 5.1 seconds.
 -- Launched the IPO Cross, an automated trading facility designed to
    provide a fair and transparent executions process to trade IPOs
    based on supply and demand.
 -- Unveiled NASDAQ Market Velocity, a proprietary, real-time data
    product that detects "noise" in NASDAQ stocks and alerts traders
    to events before they affect price and volume information.  NASDAQ
    Market Velocity is part of NASDAQ Market Analytix(tm), a package
    of data products that provides new levels of transparency to
    trading activity in NASDAQ systems.
 -- Agreed to acquire PrimeZone Media Network, a privately held press
    release newswire and multimedia services firm, enhancing NASDAQ's
    investor relations and corporate communications suite.

Charges Associated with NASDAQ's Cost Reduction Program and INET Integration

As mentioned above, included in total expenses for the second quarter 2006 are pre-tax charges of $17.9 million relating to NASDAQ's continuing efforts to reduce operating expenses and improve the efficiency of its operations, as well as to integrate the INET ECN. These charges include:



 -- Technology Review -- NASDAQ recorded expenses of $9.9 million
    in the quarter associated with its technology review, in which
    it changed the estimated useful life of some assets as it
    migrates to lower cost operating platforms and processes.
 -- Workforce Reductions -- NASDAQ recorded charges of $2.6 million
    in the quarter for severance and outplacement costs.
 -- Real Estate -- NASDAQ recorded charges of $5.4 million in the
    quarter as part of its real estate consolidation plans.

2006 Outlook

NASDAQ is raising guidance for the full-year 2006:



 -- Net income in the range of $68.0 million to $78.0 million for the
    year, including the impact of charges associated with NASDAQ's
    cost reduction program, INET integration, and losses on
    extinguishment of debt noted below.
 -- Gross margin in the range of $645.0 million to $655.0 million.
 -- Total expenses in the range of $475.0 million to $485.0 million.

2006 total expense projections include approximately $60.0 million to $70.0 million of pre-tax charges associated with NASDAQ's continuing cost reduction efforts and INET integration. Also included are charges realized in the second quarter related to our investment in the London Stock Exchange. These charges include:



 -- Approximately $36.0 million to $42.0 million in charges primarily
    related to NASDAQ's decision to migrate to less expensive
    technology operating platforms.
 -- Approximately $5.0 million to $7.0 million in non-cash charges
    related to NASDAQ's plans to exit certain real estate facilities.
 -- Approximately $6.0 million to $8.0 million in severance expenses
    associated with NASDAQ's plans for workforce reductions.
 -- The previously mentioned $20.9 million charge and $8.2 million
    foreign currency gain related to our investment in the London
    Stock Exchange.

NASDAQ's Chief Financial Officer, David Warren, commented, "As this quarter's results clearly demonstrate, our business fundamentals remain strong as we grew revenue while driving down core operating expenses. As a result our operating income has improved when compared to both prior year and the first quarter. Excluding non-recurring charges, NASDAQ's operating income improved 21% from the first quarter 2006 and 69% when compared to second quarter 2005. The INET integration and our systems migration to a single book remain on schedule and we remain confident of achieving all of our milestones. Our execution to date and our confidence leads us to increase our 2006 outlook for both gross margin and net income."

Q2 Financial Review

Total Revenues and Gross Margin-Gross margin increased 31.2% in the second quarter to $171.1 million, up from $130.4 million in the year-ago quarter, and increased 5.6% from $162.0 million in the first quarter of 2006.

Market Services

Market Services gross margin increased to $107.7 million or 45.0% from prior year.



                            Three Months Ended      % Variance from
                         -------------------------  ----------------
                         June 30  Mar. 31  June 30   Prior    Prior
                           2006     2006     2005   quarter   year
                         -------  -------  -------  -------  -------
                               (in millions)
 NASDAQ Market Center
  Execution and trade
   reporting revenues    $ 291.4  $ 286.1  $ 116.2    1.9 %    NM
  Access services
   revenues                 13.1     12.3     20.3    6.5 %  (35.5)%
  Tape fee revenue
   sharing                  (5.3)    (5.3)    (2.4)     --     NM
  NASDAQ General Revenue
   Sharing Program          (0.1)    (0.1)    (0.1)     --     --
                         -------  -------  -------
   Total NASDAQ Market
    Center revenues        299.1    293.0    134.0    2.1 %    NM
 Cost of revenues
  Liquidity rebates       (170.6)  (167.2)   (69.2)   2.0 %    NM
  Brokerage, clearance
   and exchange fees       (69.3)   (67.0)   (20.1)   3.4 %    NM
                         -------  -------  -------
   Total cost of revenues (239.9)  (234.2)   (89.3)   2.4 %    NM
                         -------  -------  -------
   Gross margin from
    NASDAQ Market Center    59.2     58.8     44.7    0.7 %   32.4 %

 NASDAQ Market Services
  Subscriptions
   Revenues                 48.7     52.1     46.0   (6.5)%    5.9 %
   NASDAQ General
    Revenue Sharing
    Program                 (2.6)    (2.9)    (1.2) (10.3)%    NM
   UTP Plan revenue
    sharing                 (6.2)   (13.7)   (19.6) (54.7)%  (68.4)%
                         -------  -------  -------
     Total NASDAQ Market
      Services
      Subscription
      revenues              39.9     35.5     25.2   12.4 %   58.3 %
                         -------  -------  -------
   Other Market Services
    revenues                 8.6      8.6      4.4      --    95.5 %
                         -------  -------  -------
 Gross Margin from
  Market Services        $ 107.7  $ 102.9  $  74.3    4.7 %   45.0 %
                         =======  =======  =======

NM -- Not meaningful. Denotes variances equal to or greater than 100%



 -- NASDAQ Market Center gross margin increased from prior year
    primarily due to the inclusion of INET results, increases in
    average daily trading volume, and increases in trade execution
    market share for NYSE- and AMEX-listed equities.  Access services
    revenue declined from prior year due to the retirement of legacy
    products in December 2005.
 -- Market Services Subscriptions revenues increased from prior year
    as less data revenue was shared under the UTP Plan.  NASDAQ's UTP
    market share increased primarily due to the INET acquisition which
    resulted in INET trades being reported to NASDAQ.  Also
    contributing to the decrease in UTP shared revenue was the removal
    of NQDS from the UTP Plan, which was approved in the second
    quarter of 2006 but became effective February 7, 2006.  NASDAQ
    reclaimed shared revenues from the effective date through March
    31, 2006 and recorded an adjustment of approximately $1.3 million
    in the second quarter of 2006. Increases in sales of proprietary
    data products also contributed to improvements of Market Services
    Subscriptions revenue for the quarter.
 -- Other Market Services revenues increased from the prior year due
    primarily to payments made under a contract between NASD and
    NASDAQ for the operations of the Over-the-Counter Bulletin Board
    (OTCBB), which took effect on October 1, 2005.

Issuer Services

During the quarter Issuer Services revenues increased 13.0% to $63.4 million from prior year.



                              Three Months Ended     % Variance from
                          -------------------------- -----------------
                          June 30  Mar. 31  June 30   Prior    Prior
                            2006     2006     2005   quarter   year
                          -------  -------  -------  -------  -------
                                (in millions)
 Corporate Client Group
  Annual renewal fees     $  26.9  $  25.8  $  26.7    4.3 %    0.7 %
  Listing of additional
   shares fees                9.2      8.9      9.5    3.4 %   (3.2)%
  Initial listing fees        6.0      6.4      7.5   (6.3)%  (20.0)%
  Corporate Client
   services                  10.2      7.6      2.3   34.2 %    NM
                          -------  -------  -------
   Total Corporate Client
    Group revenues           52.3     48.7     46.0    7.4 %   13.7 %
                          -------  -------  -------

 NASDAQ Financial Products
  Licensing revenues          9.7      9.0      9.1    7.8 %    6.6 %
  Other revenues              1.4      1.2      1.0   16.7 %   40.0 %
                          -------  -------  -------
   Total NASDAQ Financial
    Products revenues        11.1     10.2     10.1    8.8 %    9.9 %
                          -------  -------  -------
 Total Issuer Services
  revenues                $  63.4  $  58.9  $  56.1    7.6 %   13.0 %
                          =======  =======  =======

NM -- Not meaningful. Denotes variances equal to or greater than 100%



 -- Corporate Client Group revenue increased from prior year driven by
    revenues generated from recent acquisitions including Carpenter
    Moore and Shareholder.com.
 -- NASDAQ Financial Products licensing revenue increased from the
    prior year due to higher volume activity for both derivative and
    third party products as well as increases in third party assets
    under management.

Total Expenses -- Total expenses increased 29.5% to $134.8 million from $104.1 million in the year-ago quarter and increased 12.1% from $120.2 million in the prior quarter. Second quarter 2006 expenses increased as a result of $30.6 million of pre-tax items noted above, including the early extinguishment of debt, the refinancing of a credit facility, the foreign currency gain, and costs associated with the continuing INET integration and cost reduction activities. Similar charges relating to the INET integration and cost reduction activities were included in previous quarters, including $5.9 million in the second quarter of 2005 and $13.6 million in the first quarter of 2006.

Earnings Per Share

As stated above, second quarter earnings per diluted share were $0.13 versus $0.16 in the first quarter of 2006 and $0.13 per diluted share in the year-ago quarter. During the second quarter NASDAQ completed a common stock offering in which it sold 18.5 million shares and used the proceeds to pay down debt incurred to purchase a stake in the London Stock Exchange. NASDAQ's weighted average shares outstanding used to calculate diluted earnings per share was 145.2 million in the quarter versus 109.9 million in the year ago quarter and 128.0 million in the first quarter 2006. The increase from last year is due primarily to the full quarter dilutive impact of the convertible notes and related warrants issued in April 2005 as part of the acquisition of INET ECN, and to the shares issued in NASDAQ's 2006 equity offerings.

NASDAQ(r) is the largest electronic equity securities market in the United States. With approximately 3,200 companies, it 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, transportation, media and biotechnology industries. For more information about NASDAQ, visit the NASDAQ Web site at www.nasdaq.com or the NASDAQ Newsroom(sm) at www.nasdaqnews.com.

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. The NASDAQ Stock Market, Inc. cautions that these statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements. These forward-looking statements include projections which have not been reviewed by independent auditors of NASDAQ. Forward-looking statements involve a number of risks, uncertainties or other factors beyond NASDAQ's control. These factors include, but are not limited to, NASDAQ'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 NASDAQ's annual report on Form 10-K, and periodic reports filed with the U.S. Securities and Exchange Commission. In addition, these statements are based on a number of assumptions that are subject to change. Accordingly, actual results may be materially higher or lower than those projected. The inclusion of such projections herein should not be regarded as a representation by NASDAQ that the projections will prove to be correct. We undertake no obligation to release any revisions to any forward-looking statements.

NDAQF



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

                          Three Months Ended        Six Months Ended
                     ----------------------------  ------------------
                     June 30,  March 31, June 30,  June 30,  June 30,
                       2006      2006      2005      2006      2005
                     --------  --------  --------  --------  --------

 Revenues
  Market Services    $  347.6  $  337.1  $  163.6  $  684.9  $  288.7
  Issuer Services        63.4      58.9      56.1     122.3     110.9
  Other                    --       0.2        --       0.2       0.2
                     --------  --------  --------  --------  --------
    Total revenues      411.0     396.2     219.7     807.4     399.8
  Cost of revenues
  Liquidity rebates    (170.6)   (167.2)    (69.2)   (337.8)   (104.5)
  Brokerage,
   clearance and
   exchange fees        (69.3)    (67.0)    (20.1)   (136.5)    (38.6)
                     --------  --------  --------  --------  --------
    Total cost of
     revenues          (239.9)   (234.2)    (89.3)   (474.3)   (143.1)
                     --------  --------  --------  --------  --------
  Gross margin          171.1     162.0     130.4     333.1     256.7
                     --------  --------  --------  --------  --------

  Expenses
  Compensation and
   benefits              48.0      48.9      36.9      96.9      74.2
  Marketing and
   advertising            3.8       5.0       2.0       8.9       3.4
  Depreciation and
   amortization          21.5      24.5      14.9      46.0      33.1
  Professional and
   contract services      7.3       8.9       7.0      16.2      14.0
  Computer operations
   and data
   communications        10.3      10.0      15.9      20.2      32.1
  Provision for bad
   debts                  1.8        --      (0.7)      1.9      (0.2)
  Occupancy               8.2       8.0       7.1      16.2      14.2
  General and
   administrative        24.8       6.8      10.6      31.5      16.0
                     --------  --------  --------  --------  --------
   Total direct
    expenses            125.7     112.1      93.7     237.8     186.8
  Support costs from
   related parties,
   net                    9.1       8.1      10.4      17.2      20.8
                     --------  --------  --------  --------  --------
   Total expenses       134.8     120.2     104.1     255.0     207.6
                     --------  --------  --------  --------  --------
  Operating income       36.3      41.8      26.3      78.1      49.1
  Interest income         6.3       4.5       3.1      10.8       4.5
  Interest expense      (24.4)    (16.4)     (4.6)    (40.9)     (7.5)
  Dividend income         9.2        --        --       9.2        --
  Minority interest       0.3       0.1        --       0.5        --
                     --------  --------  --------  --------  --------
  Income before
   income taxes          27.7      30.0      24.8      57.7      46.1
  Income tax provision   11.1      12.0      10.8      23.1      19.4
                     --------  --------  --------  --------  --------
  Net income         $   16.6  $   18.0  $   14.0  $   34.6  $   26.7
                     ========  ========  ========  ========  ========

  Net income
   applicable to
   common
   stockholders:

    Net income       $   16.6  $   18.0  $   14.0  $   36.4  $   26.7
    Preferred stock:
     Dividends
      declared             --      (0.4)     (0.8)     (0.4)     (1.8)
     Accretion of
      preferred stock      --      (0.3)     (1.5)     (0.3)     (2.3)
                     --------  --------  --------  --------  --------
  Net income
   applicable to
   common
   stockholders      $   16.6  $   17.3  $   11.7  $   33.9  $   22.6
                     ========  ========  ========  ========  ========

  Basic and diluted
   earnings per share:
   Basic             $   0.16  $   0.20  $   0.15  $   0.35  $   0.28
                     ========  ========  ========  ========  ========
   Diluted           $   0.13  $   0.16  $   0.13  $   0.28  $   0.26
                     ========  ========  ========  ========  ========

  Weighted average
   common shares
   outstanding for
   earnings per share:
    Basic               105.2      87.9      79.4      96.6      79.2
    Diluted             145.2     128.0     109.9     137.0     101.0

 Other Drivers

  Average daily share
   volume in
   NASDAQ-listed
   securities (in
   millions)            2,142     2,122     1,781     2,132     1,890

  Percentage of share
   volume of
   NASDAQ-listed
   securities
   reported to The
   NASDAQ Market
   Center               77.8%     74.5%     55.7%     78.9%     55.3%

  Percentage of share
   volume of
   NYSE-listed
   securities
   reported to The
   NASDAQ Market
   Center               22.7%     21.3%     15.6%     22.4%     15.3%

  Percentage of share
   volume of
   AMEX-listed
   securities
   reported to The
   NASDAQ Market
   Center               46.1%     42.1%     32.4%     45.1%     31.9%

  Initial Public
   Offerings               35        30        25        65        45
  Secondary Offerings      54        69        50       123        95
  Number of listed
   companies            3,205     3,191     3,241     3,205     3,241


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

                                          June 30,    December 31,
                                            2006          2005
                                         ----------    ----------
                                         (unaudited)
 Assets
 Current assets:
  Cash and cash equivalents              $    488.8    $    165.2
  Available-for-sale investments, at
   fair value                               1,215.5         179.4
  Receivables, net                            234.5         207.6
  Deferred tax assets                          14.3          10.0
  Other current assets                         35.5          34.8
                                         ----------    ----------
 Total current assets                       1,988.6         597.0
 Property and equipment:
  Assets held-for-sale                         30.7            --
  Land, buildings and improvements              0.9          60.9
  Data processing equipment and software      180.6         180.0
  Furniture, equipment and leasehold
   improvements                               105.0         115.6
                                         ----------    ----------
                                              317.2         356.5
  Less accumulated depreciation and
   amortization                              (222.9)       (233.9)
                                         ----------    ----------
 Total property and equipment, net             94.3         122.6
 Non-current deferred tax assets              124.3         133.3
 Goodwill                                     988.3         961.9
 Intangible assets, net                       207.3         215.5
 Other assets                                  12.4          16.5
                                         ----------    ----------
 Total assets                            $  3,415.2    $  2,046.8
                                         ==========    ==========

 Liabilities
 Current liabilities:
  Accounts payable and accrued expenses  $    112.1    $    118.9
  Accrued personnel costs                      36.2          55.3
  Deferred revenue                            114.9          53.6
  Other accrued liabilities                    56.5          61.8
  Current portion of debt obligations          11.8           7.5
  Payables to related parties                   9.8          28.2
                                         ----------    ----------
 Total current liabilities                    341.3         325.3
 Debt obligations                           1,612.6       1,184.9
 Accrued pension costs                         24.6          25.8
 Non-current deferred tax liabilities          89.2          95.2
 Non-current deferred revenue                  98.6          92.0
 Other liabilities                             69.6          69.6
                                         ----------    ----------
 Total liabilities                          2,235.9       1,792.8

 Minority interest                              0.5           1.0

 Stockholders' equity
 Common stock                                   1.3           1.3
 Preferred stock, Series D at June 30,
  2006 and December 31, 2005 and
  Series C at December 31, 2005                  --          95.0
 Additional paid-in capital                 1,039.3         383.7
 Common stock in treasury, at cost           (249.6)       (613.4)
 Accumulated other comprehensive loss         (31.9)         (1.3)
 Deferred stock compensation                     --          (4.9)
 Common stock issuable                           --           6.8
 Retained earnings                            419.7         385.8
                                         ----------    ----------
 Total stockholders' equity                 1,178.8         253.0
                                         ----------    ----------
 Total liabilities, minority interest
  and stockholders' equity               $  3,415.2    $  2,046.8
                                         ==========    ==========


                       The Nasdaq Stock Market, Inc.
                 Non-GAAP Calculation of Operating Income
                             (in millions)
                              (unaudited)

                                              Three Months Ended
                                         ----------------------------
                                         June 30,  March 31, June 30,
                                           2006      2006      2005
                                         --------  --------  --------
 GAAP Operating Income:                  $   36.3  $   41.8  $   26.3
 Adjustments:
  Loss on early extinguishment of debt
   and the refinancing of a credit
   facility                                  20.9        --       7.4
  Cost reduction program and INET
   integration charges                       17.9      13.6       5.9
  Foreign currency gain associated
   with investment in London Stock
   Exchange                                  (8.2)       --        --
                                         --------  --------  --------
 Total Adjustments                           30.6      13.6      13.3
                                         --------  --------  --------
 Non-GAAP Operating Income               $   66.9  $   55.4  $   39.6
                                         ========  ========  ========


 In addition to disclosing results in accordance with GAAP, NASDAQ
 has also disclosed a Non-GAAP measure of operating income.
 Management believes this Non-GAAP measure of operating income is
 useful to investors because it shows a truer picture of our actual
 operating performance this quarter.

 The Non-GAAP information may not be comparable to other companies
 and should not be viewed as a substitute for or superior to
 operating income or other data prepared in accordance with GAAP.

This news release was distributed by PrimeZone, www.primezone.com

SOURCE: The Nasdaq Stock Market, Inc.

The Nasdaq Stock Market, Inc. 
          Media Contact:
          Bethany Sherman 
            (212) 401-8714
          Investor Contact: 
          Vincent Palmiere
            (212) 401-8742

          Lippert/Heilshorn & Associates 
          Jody Burfening/Carolyn Capaccio
          (212) 838-3777

(C) 2006 PRIMEZONE, All rights reserved.

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