United states securities and exchange commission
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- Bu səhifədəki naviqasiya:
- Market Services Corporate Services Information Services Market Technology Corporate
- December 31, 2016 2015 2014 (in millions)
- Total Revenues Property and Equipment, Net (in millions) 2016
- 2015: United States $ 2,408 $ 217 All other countries 995 106 Total $ 3,403 $ 323 2014
- Corporate Services and Market Technology Segments - Summary Financial Information
- Corporate Services 2016 2015 Revenues Operating Income Revenues Operating Income
- Market Technology 2016 2015 Revenues Operating Income Revenues Operating Income
- 20. Subsequent Events Chief Executive Officer
F-43 nature of the proceedings, and particularly the fact that the complaints have been dismissed, we are unable to estimate what, if any, liability may result from this litigation. However, we believe (as the district court concluded) that the claims are without merit and will continue to litigate vigorously. In addition, we were named as one of many exchange defendants in Lanier v. BATS Exchange Inc., et al., 14 Civ. 3745 (S.D.N.Y.), Lanier v. BATS Exchange Inc., et al., 14 Civ. 3865 (S.D.N.Y.), and Lanier v. Bats Exchange Inc., 14 Civ. 3866 (S.D.N.Y.), which were filed between May 23, 2014 and May 30, 2014 in the United States District Court for the Southern District of New York. The plaintiff is the same in each of these cases, and the three complaints contain substantially similar allegations. On behalf of a putative class of subscribers for market data provided by national exchanges, the plaintiff alleges that the exchanges provided data more quickly to certain market participants than to others, supposedly in breach of the exchanges’ plans for dissemination of market data and subscriber agreements executed under those plans. The complaint asserts contractual theories under state law based on these alleged breaches. On September 29, 2014, we filed a motion to dismiss the complaints. On April 28, 2015, the district court entered an order dismissing the complaints in their entirety with prejudice, concluding that they are foreclosed by the Exchange Act and in any event do not state a claim under the contracts. The plaintiff appealed the judgment of dismissal to the United States Court of Appeals for the Second Circuit. On September 23, 2016, the Second Circuit issued an opinion affirming the district court’s dismissal of all three complaints, concluding that many of plaintiff’s claims were preempted, that plaintiff failed to state a claim for breach of contract, and that, insofar as plaintiff alleged that the exchanges’ implementation or operation of certain plans under Regulation NMS violates the Exchange Act, plaintiff was required to exhaust his administrative remedies before the SEC. Plaintiff filed a petition for panel or en banc rehearing before the Second Circuit on October 7, 2016, in one of the three appeals. The Second Circuit denied the petition on November 4, 2016. Plaintiff did not file a petition for certiorari with the United States Supreme Court by the February 2, 2017 deadline. Except as disclosed above and in prior reports filed under the Exchange Act, we are not currently a party to any litigation or proceeding that we believe could have a material adverse effect on our business, consolidated financial condition, or operating results. However, from time to time, we have been threatened with, or named as a defendant in, lawsuits or involved in regulatory proceedings. Tax Audits We are engaged in ongoing discussions and audits with taxing authorities on various tax matters, the resolutions of which are uncertain. Currently, there are matters that may lead to assessments, some of which may not be resolved for several years. Based on currently available information, we believe we have adequately provided for any assessments that could result from those proceedings where it is more likely than not that we will be assessed. We review our positions on these matters as they progress. 19. Business Segments We manage, operate and provide our products and services in four business segments: Market Services, Corporate Services, Information Services and Market Technology. See Note 1, “Organization and Nature of Operations,” for further discussion of our reportable segments. Our management allocates resources, assesses performance and manages these businesses as four separate segments. We evaluate the performance of our segments based on several factors, of which the primary financial measure is operating income. Results of individual businesses are presented based on our management accounting practices and structure. F-44 The following table presents certain information regarding our operating segments for the years ended December 31, 2016, 2015 and 2014: Market Services Corporate Services Information Services Market Technology Corporate Items Consolidated (in millions) 2016 Total revenues $ 2,255 $ 635 $ 540 $ 275 $ — $ 3,705 Transaction-based expenses (1,428) — — — — (1,428) Revenues less transaction-based expenses 827 635 540 275 — 2,277 Depreciation and amortization 87 47 18 18 — 170 Operating income (loss) 450 158 383 69 (221) 839 Total assets 8,626 1,263 2,439 559 1,263 14,150 Purchase of property and equipment 62 37 8 27 — 134 2015 Total revenues $ 2,084 $ 562 $ 512 $ 245 $ — $ 3,403 Transaction-based expenses (1,313) — — — — (1,313) Revenues less transaction-based expenses 771 562 512 245 — 2,090 Depreciation and amortization 64 42 14 18 — 138 Operating income (loss) 413 140 365 58 (256) 720 Total assets 6,906 576 2,456 752 1,171 11,861 Purchase of property and equipment 53 38 11 31 — 133 2014 Total revenues $ 2,229 $ 552 $ 473 $ 246 $ — $ 3,500 Transaction-based expenses (1,433) — — — — (1,433) Revenues less transaction-based expenses 796 552 473 246 — 2,067 Depreciation and amortization 80 25 13 19 — 137 Operating income (loss) 413 121 348 49 (177) 754 Total assets 7,437 747 2,296 599 992 12,071 Purchase of property and equipment 50 43 12 35 — 140 Certain amounts are allocated to corporate items in our management reports based on the decision that those activities should not be used to evaluate the segment’s ongoing operating performance. The following items are allocated to corporate items for segment reporting purposes: Amortization expense of acquired intangible assets: We amortize intangible assets acquired in connection with various acquisitions. Intangible asset amortization expense can vary from period to period due to episodic acquisitions completed, rather than from our ongoing business operations. As such, if intangible asset amortization is included in performance measures, it is more difficult to assess the day-to-day operating performance of the segments, and the relative operating performance of the segments between periods. Management does not consider intangible asset amortization expense for the purpose of evaluating the performance of our segments or their managers or when making decisions to allocate resources. Therefore, we believe performance measures excluding intangible asset amortization expense provide management with a more useful representation of our segment’s ongoing activity in each period. Restructuring charges: Restructuring charges are associated with our 2015 restructuring plan to improve performance, cut costs and reduce spending and are primarily related to (i) the rebranding of our company name from The NASDAQ OMX Group, Inc. to Nasdaq, Inc., (ii) severance and other termination benefits, (iii) costs to vacate duplicate facilities, and (iv) asset impairment charges. We do not allocate these restructuring costs because they do not contribute to a meaningful evaluation of a particular segment’s ongoing operating performance. Merger and strategic initiatives expense: We have pursued various strategic initiatives and completed a number of acquisitions in recent years which have resulted in expenses which would not have otherwise been incurred. These expenses include integration costs, as well as legal, due diligence and other third party transaction costs. The frequency and the amount of such expenses vary significantly based on the size, timing and complexity of the transaction. Accordingly, we do not allocate these costs for purposes of disclosing segment results because they do not contribute to a meaningful evaluation of a particular segment’s ongoing operating performance. F-45 Other significant items: We have excluded certain other charges or gains that are the result of other non-comparable events to measure operating performance. For 2016, other significant items primarily included costs associated with the acceleration of previously granted equity awards due to the retirement of our former CEO, a regulatory fine received by our exchange in Stockholm and Nasdaq Clearing, and the release of a sublease loss reserve due to the early exit of a facility. For 2015, other significant items included the reversal of a VAT refund and for 2014 other significant items included loss on extinguishment of debt. We believe the exclusion of such amounts allows management and investors to better understand the financial results of Nasdaq. * * * * * * A summary of our corporate items are as follows: December 31, 2016 2015 2014 (in millions) Amortization expense of acquired intangible assets $ 82 $ 62 $ 69 Restructuring charges 41 172 — Merger and strategic initiatives expense 76 10 81 Executive compensation 12 — — Regulatory matter 6 — — Sublease loss reserve (1) — 11 Reversal of VAT refund receivables — 12 — Loss on extinguishment of debt — — 11 Other charges 5 — 5 Total $ 221 $ 256 $ 177 The change in total assets as shown in the table above at December 31, 2016 compared with 2015 and 2015 compared with 2014 is as follows: Total assets increased $2,289 million at December 31, 2016 compared with December 31, 2015 primarily due to new regulatory rules in 2016 that require all collateral pledged by members of our Nasdaq Clearing business to be recorded on the balance sheet and an increase in goodwill associated with our 2016 acquisitions, partially offset by a pre-tax, non-cash intangible asset impairment charge of $578 million to write off the full value of the eSpeed trade name. For further discussion of the impairment charge, see “Intangible Asset Impairment Charges,” of Note 5, “Goodwill and Acquired Intangible Assets.” Total assets decreased $210 million at December 31, 2015 compared with December 31, 2014 primarily due to a decrease in goodwill and intangible assets, net reflecting the impact of changes in foreign exchange rates and amortization. In addition, as discussed in “Intangible Asset Impairment Charges,” of Note 5, “Goodwill and Acquired Intangible Assets,” the decrease is also due to a $119 million pre-tax, non-cash indefinite-lived intangible asset impairment charge recorded in 2015. These decreases were partially offset by an increase in non-current deferred tax assets primarily due to the income tax benefits of net foreign currency translation losses which are recorded in accumulated other comprehensive loss within stockholders’ equity in the Consolidated Balance Sheets. For further discussion of our segments’ results, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Segment Operating Results.” Geographic Data The following table presents total revenues and property and equipment, net by geographic area for 2016, 2015 and 2014. Revenues are classified based upon the location of the customer. Property and equipment information is based on the physical location of the assets. Total Revenues Property and Equipment, Net (in millions) 2016: United States $ 2,659 $ 244 All other countries 1,046 118 Total $ 3,705 $ 362 2015: United States $ 2,408 $ 217 All other countries 995 106 Total $ 3,403 $ 323 2014: United States $ 2,524 $ 198 All other countries 976 94 Total $ 3,500 $ 292 F-46 Our property and equipment, net for all other countries primarily includes assets held in Sweden. No single customer accounted for 10.0% or more of our revenues in 2016, 2015 and 2014. Corporate Services and Market Technology Segments - Summary Financial Information Due to changes in our executive leadership and to better reflect how our chief operating decision maker views the businesses, Nasdaq realigned its segment reporting, as first applied in 2016, to integrate the Listing Services and Corporate Solutions businesses into a single Corporate Services segment. Market Technology is now a separate reportable segment. The table below presents certain recast historical financial information for these segments for the past eight quarters: Corporate Services 2016 2015 Revenues Operating Income Revenues Operating Income (in millions) First quarter $ 143 $ 34 $ 139 $ 32 Second quarter 162 41 142 37 Third quarter 162 42 138 36 Fourth quarter 167 41 143 36 Market Technology 2016 2015 Revenues Operating Income Revenues Operating Income (in millions) First quarter $ 57 $ 10 $ 55 $ 10 Second quarter 69 17 59 11 Third quarter 73 19 59 12 Fourth quarter 77 23 71 23 20. Subsequent Events Chief Executive Officer Effective January 1, 2017, Adena T. Friedman became the President and Chief Executive Officer of Nasdaq. Asset Impairment On January 30, 2017, Nasdaq’s board of directors approved a pre-tax, non-cash intangible asset impairment charge of $578 million related to the full write-off of the eSpeed trade name. See “Intangible Asset Impairment Charges,” of Note 5, “Goodwill and Acquired Intangible Assets,” for further discussion. Nasdaq NLX On January 30, 2017, Nasdaq’s board of directors approved the decision to wind down Nasdaq NLX, our London-based multilateral trading venue. Document Outline
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