TD Ameritrade Holding Corporation (NYSE: AMTD) has released results for fiscal 2014. The Company gathered approximately $53 billion in net new client assets, maintaining its industry-leading double-digit net new client asset growth rate for the sixth consecutive year.
The Company’s results for the fiscal year ended Sept. 30, 2014 include the following: (1)
- Record $1.42 earnings per diluted share on net income of $787 million
- Record net new client assets of approximately $53 billion, an annualized growth rate of 10 percent
- Record average client trades per day of approximately 427,000, an activity rate of 6.9 percent
- Record net revenues of $3.1 billion, 55 percent of which were asset-based
- Record investment product fee revenue of $309 million, up 24 percent year-over-year
- Record pre-tax income of $1.3 billion, or 41 percent of net revenues
- Record EBITDA(2) of $1.5 billion, or 47 percent of net revenues
- Record interest rate sensitive assets(3) of $100 billion, up 5 percent year-over-year
- Record client assets of approximately $653 billion, up 17 percent year-over-year
“With improved investor sentiment, retail investors returned to the markets in 2014, increasing engagement across our platforms and boosting trading volumes. Asset gathering remained strong, as we gathered a record $53 billion of net new client assets, our sixth consecutive year of double-digit growth. In fact, over the last five years, we have gathered a total of $219 billion of net new client assets, one-third of our total client assets,” said Fred Tomczyk, president and chief executive officer. “We had a strong year and have good momentum as we start 2015. We will continue to adapt and evolve as an organization by optimizing newer technologies like big data, social media and mobile, in order to enhance our clients’ investing and trading experience and drive continued strong organic growth.”
“We have worked through significant interest rate compression over the past five years, and yet we continue to strengthen our earning power,” said Bill Gerber, executive vice president and chief financial officer. “Interest rate-sensitive assets have grown to a record $100 billion, mitigating the impact of the macroeconomic environment and giving us the flexibility to invest in and grow the business. As a result, fiscal 2014 earnings were a record $1.42 per diluted share, client assets are at an all-time high of $653 billion, and we effectively returned more than 90 percent of our net income to shareholders in the form of cash dividends and share repurchases. Our proven growth strategy, combined with prudent investments in our future, will help us continue delivering growth and value for our stakeholders in 2015 and beyond.”
Fourth Quarter 2014 Results
In addition, the Company has
released its results for the quarter ended Sept. 30, 2014, which include
the following: (1)
- Net income of $211 million, or $0.38 per diluted share, up 6 percent year-over-year
- Net new client assets of approximately $13 billion, an annualized growth rate of 8 percent
- Average client trades per day of approximately 403,000, an activity rate of 6.4 percent
- Net revenues of $795 million, 57 percent of which were asset-based
- Investment product fee revenue of $83 million, up 24 percent year-over-year
- Pre-tax income of $342 million, or 43 percent of net revenues
- EBITDA(2)of $394 million, or 50 percent of net revenues
Capital Management
During the 2014 fiscal year, the Company
paid $540 million, or $0.98 per share, in cash dividends, which included
four quarterly dividends of $0.12 per share, and a special dividend of
$0.50 per share, paid in December 2013. The Company also repurchased
approximately 6 million shares of its common stock at a weighted average
share price of $31.37 per share.
The Company has declared a $0.15 per share quarterly cash dividend, an increase of 25 percent year-over-year, payable on Nov. 20, 2014 to all holders of record of common stock as of Nov. 6, 2014.
Additionally, on Oct. 22, 2014, the Company issued $500 million in senior notes, bearing an interest rate of 3.625 percent, that will mature on Apr. 1, 2025. The Company will use the net proceeds from the sale of the notes, together with cash on hand, to repay the $500 million aggregate principal amount of its 4.150 percent senior notes that mature on Dec. 1, 2014.
Fiscal 2015 Outlook
The Company has also released an updated
Outlook Statement which reflects expected earnings of $1.45 to $1.70 per
diluted share for its 2015 fiscal year.
More information on the fiscal 2015 forecast is available through the Company’s Outlook Statement, located in the “Financials & reports” section of its corporate web site, www.amtd.com.
Company Hosts Conference Call
TD Ameritrade will host its
September Quarter conference call this morning, Oct. 28, 2014, at 8:30
a.m. EDT (7:30 a.m. CDT). Participants may listen to the conference call
by dialing 866-270-1533. The Company will webcast the conference call
through www.amtd.com,
via the “Presentations
& Events” page of the web site. A replay of the phone call will
be available beginning at 10:30 a.m. EDT (9:30 a.m. CDT) on Oct. 28,
2014 by dialing 877-344-7529 and entering the Conference ID 10052174.
The replay will be available until 9:00 a.m. EDT (8:00 a.m. CDT) on Nov.
5, 2014. A transcript of the call will be available on the Company’s
corporate web site, www.amtd.com,
via either the “Investor Relations” page or the “Presentations & Events”
page beginning Wednesday, Oct. 29, 2014.
Information about the Company’s corporate events, including earnings conference calls and webcasts, can be found by visiting www.amtd.com and clicking on “Investor Relations” and “Presentations & Events.” Click on the date of the event to access all pertinent links and resources. A high speed Internet connection is required in order to view the webcast.
The Company asks that interested parties visit or subscribe to newsfeeds at www.amtd.com for the most up-to-date corporate financial information, presentation announcements, transcripts and archives. The Company also communicates this information via Twitter, @TDAmeritradePR. Web site links, corporate titles and telephone numbers provided in this release, although correct when published, may change in the future.
About TD Ameritrade Holding Corporation
Millions of
investors and independent registered investment advisors (RIAs) have
turned to TD Ameritrade’s (NYSE: AMTD) technology,
people
and education
to help make investing and trading easier to understand and do. Online
or over the phone. In a branch or with an independent RIA. First-timer
or sophisticated trader. Our clients want to take control, and we help
them decide how - bringing Wall Street to Main Street for more than 39
years. An official
sponsor of the 2016 U.S. Olympic and Paralympic Teams, as well as an official
sponsor of the National Football League, TD Ameritrade has time and
again been recognized
as a leader in investment services. Please visit TD Ameritrade's newsroom
or www.amtd.com
for more information, or read our stories at http://freshaccounts.amtd.com.
Source: TD Ameritrade Holding Corporation
Safe Harbor
This document contains forward-looking
statements within the meaning of the federal securities laws. We intend
these forward-looking statements to be covered by the safe harbor
provisions of the federal securities laws. In particular, any
projections regarding our future revenues, expenses, earnings, capital
expenditures, effective tax rates, client trading activity, accounts or
stock price, as well as the assumptions on which such expectations are
based, are forward-looking statements. These statements reflect only our
current expectations and are not guarantees of future performance or
results. These statements involve risks, uncertainties and assumptions
that could cause actual results or performance to differ materially from
those contained in the forward-looking statements. These risks,
uncertainties and assumptions include, but are not limited to: general
economic and political conditions and other securities industry risks,
fluctuations in interest rates, stock market fluctuations and changes in
client trading activity, credit risk with clients and counterparties,
increased competition, systems failures, delays and capacity
constraints, network security risks, liquidity risks, new laws and
regulations affecting our business, regulatory and legal matters and
uncertainties and other risk factors described in our latest Annual
Report on Form 10-K, filed with the SEC on Nov. 22, 2013 and our latest
Quarterly Report on Form 10-Q filed thereafter. These forward-looking
statements speak only as of the date on which the statements were made.
We undertake no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise, except to the extent required by the federal
securities laws.
1 Please see the Glossary of Terms, located in “Investor” section of www.amtd.com for more information on how these metrics are calculated.
2 See attached reconciliation of non-GAAP financial measures.
3 Interest rate-sensitive assets consist of spread-based assets and money market mutual funds. Ending balances as of Sept. 30, 2014.
Brokerage services provided by TD Ameritrade, Inc., member FINRA (www.FINRA.org) /SIPC (www.SIPC.org).
TD AMERITRADE HOLDING CORPORATION | ||||||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||||
In millions, except per share amounts | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Quarter Ended | Fiscal Year Ended | |||||||||||||||||||
Sept. 30, 2014 | June 30, 2014 | Sept. 30, 2013 | Sept. 30, 2014 | Sept. 30, 2013 | ||||||||||||||||
Revenues: | ||||||||||||||||||||
Transaction-based revenues: | ||||||||||||||||||||
Commissions and transaction fees | $ | 332 | $ | 317 | $ | 306 | $ | 1,351 | $ | 1,171 | ||||||||||
Asset-based revenues: | ||||||||||||||||||||
Interest revenue | 161 | 150 | 120 | 587 | 476 | |||||||||||||||
Brokerage interest expense | (2 | ) | (1 | ) | (1 | ) | (6 | ) | (7 | ) | ||||||||||
Net interest revenue | 159 | 149 | 119 | 581 | 469 | |||||||||||||||
Insured deposit account fees | 208 | 202 | 201 | 820 | 804 | |||||||||||||||
Investment product fees | 83 | 79 | 67 | 309 | 250 | |||||||||||||||
Total asset-based revenues | 450 | 430 | 387 | 1,710 | 1,523 | |||||||||||||||
Other revenues | 13 | 16 | 16 | 62 | 70 | |||||||||||||||
Net revenues | 795 | 763 | 709 | 3,123 | 2,764 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||
Employee compensation and benefits | 195 | 189 | 170 | 760 | 692 | |||||||||||||||
Clearing and execution costs | 36 | 35 | 29 | 134 | 109 | |||||||||||||||
Communications | 31 | 29 | 27 | 116 | 113 | |||||||||||||||
Occupancy and equipment costs | 41 | 39 | 40 | 156 | 160 | |||||||||||||||
Depreciation and amortization | 23 | 24 | 23 | 95 | 86 | |||||||||||||||
Amortization of acquired intangible assets | 23 | 22 | 23 | 90 | 91 | |||||||||||||||
Professional services | 38 | 42 | 41 | 155 | 145 | |||||||||||||||
Advertising | 45 | 48 | 55 | 250 | 239 | |||||||||||||||
Other | 25 | 19 | 22 | 82 | 73 | |||||||||||||||
Total operating expenses | 457 | 447 | 430 | 1,838 | 1,708 | |||||||||||||||
Operating income | 338 | 316 | 279 | 1,285 | 1,056 | |||||||||||||||
Other expense (income): | ||||||||||||||||||||
Interest on borrowings | 6 | 6 | 6 | 25 | 25 | |||||||||||||||
Gain on investments, net | (10 | ) | - | (49 | ) | (10 | ) | (57 | ) | |||||||||||
Total other expense (income) | (4 | ) | 6 | (43 | ) | 15 | (32 | ) | ||||||||||||
Pre-tax income | 342 | 310 | 322 | 1,270 | 1,088 | |||||||||||||||
Provision for income taxes | 131 | 120 | 122 | 483 | 413 | |||||||||||||||
Net income | $ | 211 | $ | 190 | $ | 200 | $ | 787 | $ | 675 | ||||||||||
Earnings per share - basic | $ | 0.39 | $ | 0.34 | $ | 0.36 | $ | 1.43 | $ | 1.23 | ||||||||||
Earnings per share - diluted | $ | 0.38 | $ | 0.34 | $ | 0.36 | $ | 1.42 | $ | 1.22 | ||||||||||
Weighted average shares outstanding - basic | 547 | 551 | 550 | 550 | 549 | |||||||||||||||
Weighted average shares outstanding - diluted | 551 | 555 | 555 | 554 | 554 | |||||||||||||||
Dividends declared per share | $ | 0.12 | $ | 0.12 | $ | 0.09 | $ | 0.98 | $ | 0.86 | ||||||||||
TD AMERITRADE HOLDING CORPORATION | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
In millions | ||||||||
(Unaudited) | ||||||||
Sept. 30, 2014 | Sept. 30, 2013 | |||||||
Assets: | ||||||||
Cash and cash equivalents | $ | 1,460 | $ | 1,062 | ||||
Segregated cash and investments | 5,116 | 5,894 | ||||||
Broker/dealer receivables | 1,108 | 1,348 | ||||||
Client receivables, net | 11,639 | 8,984 | ||||||
Goodwill and intangible assets | 3,218 | 3,308 | ||||||
Other | 1,290 | 1,240 | ||||||
Total assets | $ | 23,831 | $ | 21,836 | ||||
Liabilities and stockholders' equity: | ||||||||
Liabilities: | ||||||||
Broker/dealer payables | $ | 2,421 | $ | 1,973 | ||||
Client payables | 14,497 | 13,183 | ||||||
Notes payable | 150 | - | ||||||
Long-term debt | 1,101 | 1,052 | ||||||
Other | 914 | 952 | ||||||
Total liabilities | 19,083 | 17,160 | ||||||
Stockholders' equity | 4,748 | 4,676 | ||||||
Total liabilities and stockholders' equity | $ | 23,831 | $ | 21,836 | ||||
TD AMERITRADE HOLDING CORPORATION | ||||||||||
SELECTED OPERATING DATA | ||||||||||
(Unaudited) | ||||||||||
Quarter Ended | Fiscal Year Ended | |||||||||
Sept. 30, 2014 | June 30, 2014 | Sept. 30, 2013 | Sept. 30, 2014 | Sept. 30, 2013 | ||||||
Key Metrics: | ||||||||||
Net new assets (in billions) | $13.4 | $13.4 | $10.1 | $53.4 | $49.5 | |||||
Net new asset growth rate (annualized) | 8% | 9% | 8% | 10% | 10% | |||||
Average client trades per day | 402,638 | 401,468 | 381,657 | 426,888 | 373,630 | |||||
Profitability Metrics: | ||||||||||
Operating margin | 42.5% | 41.4% | 39.4% | 41.1% | 38.2% | |||||
Pre-tax margin | 43.0% | 40.6% | 45.4% | 40.7% | 39.4% | |||||
Return on average stockholders' equity (annualized) | 17.8% | 16.2% | 17.3% | 16.8% | 15.1% | |||||
EBITDA(1) as a percentage of net revenues | 49.6% | 47.4% | 52.8% | 47.4% | 46.7% | |||||
Liquidity Metrics: | ||||||||||
Interest on borrowings (in millions) | $6 | $6 | $6 | $25 | $25 | |||||
Interest coverage ratio (EBITDA(1)/interest on borrowings) | 65.7 | 60.3 | 62.3 | 59.2 | 51.6 | |||||
Liquid assets - management target(1) (in billions) | $0.8 | $0.8 | $0.9 | $0.8 | $0.9 | |||||
Cash and cash equivalents (in billions) | $1.5 | $1.3 | $1.1 | $1.5 | $1.1 | |||||
Transaction-Based Revenue Metrics: | ||||||||||
Total trades (in millions) | 25.6 | 25.3 | 24.2 | 106.9 | 92.8 | |||||
Average commissions and transaction fees per trade(2) | $12.97 | $12.52 | $12.61 | $12.62 | $12.61 | |||||
Average client trades per funded account (annualized) | 16.1 | 16.2 | 15.9 | 17.4 | 15.8 | |||||
Activity rate - funded accounts | 6.4% | 6.5% | 6.4% | 6.9% | 6.3% | |||||
Trading days | 63.5 | 63.0 | 63.5 | 250.5 | 248.5 | |||||
Order routing revenue (in millions) | $77 | $72 | $62 | $304 | $236 | |||||
Spread-Based Asset Metrics: | ||||||||||
Average interest-earning assets (in billions) | $19.3 | $18.8 | $16.8 | $18.6 | $15.8 | |||||
Average insured deposit account balances (in billions) | 73.6 | 72.4 | 72.0 | 72.9 | 68.0 | |||||
Average spread-based balance (in billions) | $92.9 | $91.2 | $88.8 | $91.5 | $83.8 | |||||
Net interest revenue (in millions) | $159 | $149 | $119 | $581 | $469 | |||||
Insured deposit account fee revenue (in millions) | 208 | 202 | 201 | 820 | 804 | |||||
Spread-based revenue (in millions) | $367 | $351 | $320 | $1,401 | $1,273 | |||||
Avg. annualized yield - interest-earning assets | 3.23% | 3.13% | 2.77% | 3.09% | 2.92% | |||||
Avg. annualized yield - insured deposit account fees | 1.11% | 1.10% | 1.09% | 1.11% | 1.17% | |||||
Net interest margin (NIM) | 1.55% | 1.52% | 1.41% | 1.51% | 1.50% | |||||
Fee-Based Investment Metrics: | ||||||||||
Money market mutual fund fees: | ||||||||||
Average balance (in billions) | $5.5 | $5.2 | $5.3 | $5.3 | $5.1 | |||||
Average annualized yield | 0.00% | 0.00% | 0.00% | 0.00% | 0.02% | |||||
Fee revenue (in millions) | $0 | $0 | $0 | $0 | $1 | |||||
Market fee-based investment balances: | ||||||||||
Average balance (in billions) | $138.5 | $133.3 | $117.0 | $131.4 | $107.7 | |||||
Average annualized yield | 0.23% | 0.24% | 0.22% | 0.23% | 0.23% | |||||
Fee revenue (in millions) | $83 | $79 | $67 | $309 | $249 | |||||
Average fee-based investment balances (in billions) | $144.0 | $138.5 | $122.3 | $136.7 | $112.8 | |||||
Average annualized yield | 0.23% | 0.23% | 0.21% | 0.22% | 0.22% | |||||
Investment product fee revenue (in millions) | $83 | $79 | $67 | $309 | $250 | |||||
(1) See attached reconciliation of non-GAAP financial measures. | ||||||||||
(2) Average commissions and transaction fees per trade excludes TD Waterhouse UK business. | ||||||||||
NOTE: See Glossary of Terms on the Company's web site at www.amtd.com for definitions of the above metrics. | ||||||||||
TD AMERITRADE HOLDING CORPORATION | ||||||||||
SELECTED OPERATING DATA | ||||||||||
(Unaudited) | ||||||||||
Quarter Ended | Fiscal Year Ended | |||||||||
Sept. 30, 2014 | June 30, 2014 | Sept. 30, 2013 | Sept. 30, 2014 | Sept. 30, 2013 | ||||||
Client Account and Client Asset Metrics: | ||||||||||
Funded accounts (beginning of period) | 6,237,000 | 6,146,000 | 5,943,000 | 5,993,000 | 5,764,000 | |||||
Funded accounts (end of period) | 6,301,000 | 6,237,000 | 5,993,000 | 6,301,000 | 5,993,000 | |||||
Percentage change during period | 1% | 1% | 1% | 5% | 4% | |||||
Client assets (beginning of period, in billions) | $650.2 | $617.1 | $523.5 | $555.9 | $472.3 | |||||
Client assets (end of period, in billions) | $653.1 | $650.2 | $555.9 | $653.1 | $555.9 | |||||
Percentage change during period | 0% | 5% | 6% | 17% | 18% | |||||
Net Interest Revenue: | ||||||||||
Segregated cash: | ||||||||||
Average balance (in billions) | $5.3 | $5.2 | $5.5 | $5.3 | $4.6 | |||||
Average annualized yield | 0.13% | 0.14% | 0.09% | 0.13% | 0.12% | |||||
Interest revenue (in millions) | $2 | $2 | $1 | $7 | $6 | |||||
Client margin balances: | ||||||||||
Average balance (in billions) | $11.2 | $11.0 | $8.5 | $10.5 | $8.6 | |||||
Average annualized yield | 3.69% | 3.79% | 3.95% | 3.81% | 3.97% | |||||
Interest revenue (in millions) | $105 | $105 | $86 | $405 | $345 | |||||
Securities borrowing/lending: | ||||||||||
Average securities borrowing balance (in billions) | $1.1 | $1.0 | $1.1 | $1.1 | $1.0 | |||||
Average securities lending balance (in billions) | $2.4 | $2.6 | $2.2 | $2.5 | $2.1 | |||||
Net interest revenue - securities borrowing/lending (in millions) | $52 | $42 | $31 | $169 | $118 | |||||
Other cash and interest-earning investments: | ||||||||||
Average balance (in billions) | $1.7 | $1.6 | $1.7 | $1.7 | $1.6 | |||||
Average annualized yield | 0.05% | 0.06% | 0.09% | 0.07% | 0.08% | |||||
Interest revenue - net (in millions) | $0 | $0 | $1 | $1 | $1 | |||||
Client credit balances: | ||||||||||
Average balance (in billions) | $11.8 | $11.5 | $10.1 | $11.2 | $9.5 | |||||
Average annualized cost | 0.01% | 0.01% | 0.01% | 0.01% | 0.01% | |||||
Interest expense (in millions) | ($0) | ($0) | ($0) | ($1) | ($1) | |||||
Average interest-earning assets (in billions) | $19.3 | $18.8 | $16.8 | $18.6 | $15.8 | |||||
Average annualized yield | 3.23% | 3.13% | 2.77% | 3.09% | 2.92% | |||||
Net interest revenue (in millions) | $159 | $149 | $119 | $581 | $469 | |||||
NOTE: See Glossary of Terms on the Company's web site at www.amtd.com for definitions of the above metrics. | ||||||||||
TD AMERITRADE HOLDING CORPORATION | ||||||||||||||||||||||||||||||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||||||||||||||||||||||||||||||||
Dollars in millions | ||||||||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||||||
Quarter Ended | Fiscal Year Ended | |||||||||||||||||||||||||||||||||||||
Sept. 30, 2014 | June 30, 2014 | Sept. 30, 2013 | Sept. 30, 2014 | Sept. 30, 2013 | ||||||||||||||||||||||||||||||||||
$ | % of Net Rev. | $ | % of Net Rev. | $ | % of Net Rev. | $ | % of Net Rev. | $ | % of Net Rev. | |||||||||||||||||||||||||||||
EBITDA (1) | ||||||||||||||||||||||||||||||||||||||
EBITDA | $ | 394 | 49.6 | % | $ | 362 | 47.4 | % | $ | 374 | 52.8 | % | $ | 1,480 | 47.4 | % | $ | 1,290 | 46.7 | % | ||||||||||||||||||
Less: | ||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | (23 | ) | (2.9 | %) | (24 | ) | (3.1 | %) | (23 | ) | (3.2 | %) | (95 | ) | (3.0 | %) | (86 | ) | (3.1 | %) | ||||||||||||||||||
Amortization of acquired intangible assets | (23 | ) | (2.9 | %) | (22 | ) | (2.9 | %) | (23 | ) | (3.2 | %) | (90 | ) | (2.9 | %) | (91 | ) | (3.3 | %) | ||||||||||||||||||
Interest on borrowings | (6 | ) | (0.8 | %) | (6 | ) | (0.8 | %) | (6 | ) | (0.8 | %) | (25 | ) | (0.8 | %) | (25 | ) | (0.9 | %) | ||||||||||||||||||
Provision for income taxes | (131 | ) | (16.5 | %) | (120 | ) | (15.7 | %) | (122 | ) | (17.2 | %) | (483 | ) | (15.5 | %) | (413 | ) | (14.9 | %) | ||||||||||||||||||
Net income | $ | 211 | 26.5 | % | $ | 190 | 24.9 | % | $ | 200 | 28.2 | % | $ | 787 | 25.2 | % | $ | 675 | 24.4 | % | ||||||||||||||||||
As of | ||||||||||||||||||||||||||||||||||||||
Sept. 30 | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | ||||||||||||||||||||||||||||||||||
2014 | 2014 | 2014 | 2013 | 2013 | ||||||||||||||||||||||||||||||||||
Liquid Assets - Management Target (2) | ||||||||||||||||||||||||||||||||||||||
Liquid assets - management target | $ | 762 | $ | 767 | $ | 706 | $ | 707 | $ | 874 | ||||||||||||||||||||||||||||
Plus: | Broker-dealer cash and cash equivalents | 1,090 | 871 | 508 | 926 | 540 | ||||||||||||||||||||||||||||||||
Trust company cash and cash equivalents | 53 | 54 | 64 | 60 | 74 | |||||||||||||||||||||||||||||||||
Investment advisory cash and cash equivalents | 19 | 9 | 14 | 25 | 19 | |||||||||||||||||||||||||||||||||
Less: | Excess broker-dealer regulatory net capital | (464 | ) | (441 | ) | (359 | ) | (409 | ) | (445 | ) | |||||||||||||||||||||||||||
Cash and cash equivalents | $ | 1,460 | $ | 1,260 | $ | 933 | $ | 1,309 | $ | 1,062 | ||||||||||||||||||||||||||||
Note: The term "GAAP" in the following explanation refers to generally accepted accounting principles in the United States. | ||
(1) | EBITDA (earnings before interest, taxes, depreciation and amortization) is considered a non-GAAP financial measure as defined by SEC Regulation G. We consider EBITDA an important measure of our financial performance and of our ability to generate cash flows to service debt, fund capital expenditures and fund other corporate investing and financing activities. EBITDA is used as the denominator in the consolidated leverage ratio calculation for covenant purposes under our holding company's senior revolving credit facility. EBITDA eliminates the non-cash effect of tangible asset depreciation and amortization and intangible asset amortization. EBITDA should be considered in addition to, rather than as a substitute for, pre-tax income, net income and cash flows from operating activities. | |
(2) | Liquid assets - management target is considered a non-GAAP financial measure as defined by SEC Regulation G. We include the excess capital of our broker-dealer subsidiaries in the calculation of liquid assets - management target, rather than simply including broker-dealer cash and cash equivalents, because capital requirements may limit the amount of cash available for dividend from the broker-dealer subsidiaries to the parent company. Excess capital, as defined below, is generally available for dividend from the broker-dealer subsidiaries to the parent company. We consider liquid assets - management target to be an important measure of our liquidity and of our ability to fund corporate investing and financing activities. Liquid assets - management target should be considered a supplemental measure of liquidity, rather than a substitute for cash and cash equivalents. | |
We define liquid assets - management target as the sum of (a) corporate cash and cash equivalents, (b) corporate short-term investments and (c) regulatory net capital of (i) our clearing broker-dealer subsidiary in excess of 10% of aggregate debit items and (ii) our introducing broker-dealer subsidiaries in excess of a minimum operational target established by management ($50 million in the case of our primary introducing broker-dealer, TD Ameritrade, Inc.). Liquid assets - management target is based on more conservative measures of broker-dealer net capital than regulatory thresholds require because we prefer to maintain significantly more conservative levels of net capital at the broker-dealer subsidiaries. We consider liquid assets - management target to be a measure that reflects our liquidity that would be readily available for corporate investing and financing activities under normal operating circumstances. |
Contacts:
Kim Hillyer, 402-574-6523
Director,
Communications
kim.hillyer@tdameritrade.com
or
Jeff
Goeser, 402-597-8464
Director, Investor Relations and Finance
jeffrey.goeser@tdameritrade.com