x | ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
For the fiscal year ended December 31, | |||
or | |||
o | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
For the transition period from________to |
Delaware | 20-3717839 | ||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of Each Class | Name of Each Exchange on Which Registered | ||
Common Stock — $.001 par value per share | NASDAQ Global Select Market |
Large accelerated filer | Accelerated filer o | Non-accelerated filer | Smaller reporting company o |
(Do not check if a smaller reporting company) |
Item 1.Business |
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Item 1A.Risk Factors |
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Item 5. | Market for Registrant’s Common Equity, Related StockholderMatters and Issuer Purchases of Equity Securities |
2010 | High | Low | ||||||
Fourth Quarter (beginning November 18, 2010) | 37.22 | 31.50 |
High | Low | ||||||
2011 | |||||||
First Quarter | $ | 35.99 | $ | 32.15 | |||
Second Quarter | 36.95 | 33.15 | |||||
Third Quarter | 34.65 | 24.47 | |||||
Fourth Quarter | 30.54 | 25.10 | |||||
2010 | |||||||
Fourth Quarter (beginning November 18, 2010) | $ | 37.22 | $ | 31.50 |
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Number of Securities | Number of Securities | |||||||||||
to be Issued | Weighted Average | Remaining Available | ||||||||||
upon Exercise of | Exercise Price of | for Future | ||||||||||
Outstanding Options, | Outstanding Options, | Issuance under Equity | ||||||||||
Plan category | Warrants and Rights | Warrants and Rights | Compensation Plans | |||||||||
Equity compensation plans approved by security holders | 10,253,843 | $ | 18.09 | 10,315,678 | (1) | |||||||
Equity compensation plans not approved by security holders | 2,859,647 | 0.28 | — | (2) | ||||||||
Total | 13,113,490 | $ | 14.21 | 10,315,678 | ||||||||
Plan category | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans | |||||||||
Equity compensation plans approved by security holders | 9,025,055 | $ | 21.74 | 9,367,444 | (1) | |||||||
Equity compensation plans not approved by security holders | 2,857,279 | 0.27 | — | (2) | ||||||||
Total | 11,882,334 | $ | 16.58 | 9,367,444 |
(1) | Includes shares available for future issuance under our 2010 Omnibus Equity Incentive Plan. Following our IPO, grants |
(2) |
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Number of | ||||||||
Shares | Aggregate | |||||||
Offered in the | Offering Price | |||||||
IPO | (In thousands) | |||||||
Common stock offered by selling stockholders | 15,657,482 | $ | 469,724 | |||||
Common stock sold by Company pursuant to the over-allotment option granted to the underwriters | 1,465,748 | 43,972 | ||||||
Common stock sold by stockholder pursuant to over-allotment option granted to the underwriters | 100,000 | 3,000 | ||||||
Over-allotment option granted to the underwriters | 1,565,748 | 46,972 | ||||||
Total shares offered in the IPO | 17,223,230 | $ | 516,696 | |||||
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For the Year Ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006(1) | ||||||||||||||||
Consolidated statements of operations data: | ||||||||||||||||||||
Net revenues | $ | 3,113,486 | $ | 2,749,505 | $ | 3,116,349 | $ | 2,716,574 | $ | 1,739,635 | ||||||||||
Total expenses | 3,202,335 | 2,676,938 | 3,023,584 | 2,608,741 | 1,684,769 | |||||||||||||||
(Loss) Income from operations before (benefit from) provision for income taxes | (88,849 | ) | 72,567 | 92,765 | 107,833 | 54,866 | ||||||||||||||
(Benefit from) Provision for income taxes | (31,987 | ) | 25,047 | 47,269 | 46,764 | 21,224 | ||||||||||||||
Net (loss) income | (56,862 | ) | 47,520 | 45,496 | 61,069 | 33,642 | ||||||||||||||
Per share data: | ||||||||||||||||||||
(Loss) Earnings per basic share | $ | (0.64 | ) | $ | 0.54 | $ | 0.53 | $ | 0.72 | $ | 0.41 | |||||||||
(Loss) Earnings per diluted share | $ | (0.64 | ) | $ | 0.47 | $ | 0.45 | $ | 0.62 | $ | 0.35 |
As of December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006(1) | ||||||||||||||||
Consolidated statements of financial condition data: | ||||||||||||||||||||
Cash and cash equivalents | $ | 419,208 | $ | 378,594 | $ | 219,239 | $ | 188,003 | $ | 245,163 | ||||||||||
Total assets | 3,646,167 | 3,336,936 | 3,381,779 | 3,287,349 | 2,797,544 | |||||||||||||||
Total debt(2) | 1,386,639 | 1,369,223 | 1,467,647 | 1,451,071 | 1,344,375 |
As of and for the Year Ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006(1) | ||||||||||||||||
Other financial and operating data: | ||||||||||||||||||||
Adjusted EBITDA (in thousands)(3) | $ | 413,113 | $ | 356,068 | $ | 350,171 | $ | 329,079 | $ | 247,912 | ||||||||||
Adjusted Earnings (in thousands)(3) | $ | 172,720 | $ | 129,556 | $ | 108,863 | $ | 107,404 | $ | 65,372 | ||||||||||
Adjusted Earnings per share(3) | $ | 1.71 | $ | 1.32 | $ | 1.09 | $ | 1.08 | $ | 0.68 | ||||||||||
Gross margin (in thousands)(4) | $ | 937,933 | $ | 844,926 | $ | 953,301 | $ | 781,102 | $ | 508,530 | ||||||||||
Gross margin as a % of net revenue(4) | 30.1 | % | 30.7 | % | 30.6 | % | 28.8 | % | 29.2 | % | ||||||||||
Number of advisors(5) | 12,444 | 11,950 | 11,920 | 11,089 | 7,006 | |||||||||||||||
Advisory and brokerage assets (in billions)(6) | $ | 315.6 | $ | 279.4 | $ | 233.9 | $ | 283.2 | $ | 164.7 | ||||||||||
Advisory assets under management (in billions)(7) | $ | 93.0 | $ | 77.2 | $ | 59.6 | $ | 73.9 | $ | 51.1 | ||||||||||
Insured cash account balances (in billions)(7) | $ | 12.2 | $ | 11.6 | $ | 11.2 | $ | 8.6 | $ | 5.8 | ||||||||||
Money market account balances (in billions)(7) | $ | 6.9 | $ | 7.0 | $ | 11.2 | $ | 7.4 | $ | 3.5 |
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For the Year Ended December 31, | |||||||||||||||||||
2011 | 2010 | 2009 | 2008 | 2007 | |||||||||||||||
(In thousands, except per share data) | |||||||||||||||||||
Consolidated statements of operations data: | |||||||||||||||||||
Net revenues | $ | 3,479,375 | $ | 3,113,486 | $ | 2,749,505 | $ | 3,116,349 | $ | 2,716,574 | |||||||||
Total expenses | 3,196,690 | 3,202,335 | 2,676,938 | 3,023,584 | 2,608,741 | ||||||||||||||
Income (loss) from operations before provision for (benefit from) income taxes | 282,685 | (88,849 | ) | 72,567 | 92,765 | 107,833 | |||||||||||||
Provision for (benefit from) income taxes | 112,303 | (31,987 | ) | 25,047 | 47,269 | 46,764 | |||||||||||||
Net income (loss) | 170,382 | (56,862 | ) | 47,520 | 45,496 | 61,069 | |||||||||||||
Per share data: | |||||||||||||||||||
Earnings (loss) per basic share | $ | 1.55 | $ | (0.64 | ) | $ | 0.54 | $ | 0.53 | $ | 0.72 | ||||||||
Earnings (loss) per diluted share | $ | 1.50 | $ | (0.64 | ) | $ | 0.47 | $ | 0.45 | $ | 0.62 |
As of December 31, | |||||||||||||||||||
2011 | 2010 | 2009 | 2008 | 2007 | |||||||||||||||
(In thousands) | |||||||||||||||||||
Consolidated statements of financial condition data: | |||||||||||||||||||
Cash and cash equivalents | $ | 720,772 | $ | 419,208 | $ | 378,594 | $ | 219,239 | $ | 188,003 | |||||||||
Total assets | 3,816,326 | 3,646,167 | 3,336,936 | 3,381,779 | 3,287,349 | ||||||||||||||
Total debt(1) | 1,332,668 | 1,386,639 | 1,369,223 | 1,467,647 | 1,451,071 |
As of and for the Year Ended December 31, | |||||||||||||||||||
2011 | 2010 | 2009 | 2008 | 2007 | |||||||||||||||
Other financial and operating data: | |||||||||||||||||||
Adjusted EBITDA (in thousands)(2) | $ | 459,720 | $ | 413,113 | $ | 356,068 | $ | 350,171 | $ | 329,079 | |||||||||
Adjusted Earnings (in thousands)(2) | $ | 218,585 | $ | 172,720 | $ | 129,556 | $ | 108,863 | $ | 107,404 | |||||||||
Adjusted Earnings per share(2) | $ | 1.95 | $ | 1.71 | $ | 1.32 | $ | 1.09 | $ | 1.08 | |||||||||
Gross Margin (in thousands)(3) | $ | 1,030,951 | $ | 937,933 | $ | 844,926 | $ | 953,301 | $ | 781,102 | |||||||||
Gross Margin as a % of net revenue(3) | 29.6 | % | 30.1 | % | 30.7 | % | 30.6 | % | 28.8 | % | |||||||||
Number of advisors(4) | 12,847 | 12,444 | 11,950 | 11,920 | 11,089 | ||||||||||||||
Advisory and brokerage assets (in billions)(5) | $ | 330.3 | $ | 315.6 | $ | 279.4 | $ | 233.9 | $ | 283.2 | |||||||||
Advisory assets under management (in billions)(6) | $ | 101.6 | $ | 93.0 | $ | 77.2 | $ | 59.6 | $ | 73.9 | |||||||||
Insured cash account balances (in billions)(6) | $ | 14.4 | $ | 12.2 | $ | 11.6 | $ | 11.2 | $ | 8.6 | |||||||||
Money market account balances (in billions)(6) | $ | 8.0 | $ | 6.9 | $ | 7.0 | $ | 11.2 | $ | 7.4 |
(1) | ||
Total debt consists of our senior secured credit facilities, senior unsecured subordinated notes, revolving line of credit facility and bank loans payable. |
(2) | See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — How We Evaluate Growth” for an explanation of non-GAAP measures Adjusted EBITDA, Adjusted Earnings and Adjusted Earnings per share. |
(3) | Gross |
(4) | Number of advisors is defined as those investment professionals who are licensed to do business with our broker-dealer subsidiaries. In 2011, we consolidated the operations of UVEST with LPL Financial which resulted, as expected, in attrition of 146 advisors. Excluding attrition from the integration of the UVEST platform, we added 549 net new advisors during the year ended December 31, 2011. In 2009, we attracted record levels of new advisors due to the dislocation in the marketplace that impacted many of our competitors. This record recruitment was offset by attrition related to the consolidation of the operations of the Affiliated |
(5) | Advisory and brokerage assets are comprised of assets that are custodied, networked andnon-networked and reflect market movement in addition to new assets, inclusive of new business development and net of attrition. Such totals do not include the market value of client assets held in retirement plans administered by us and trust assets supported by Concord Wealth Management. |
(6) | Advisory assets under management, insured cash account balances and money market balances are components of advisory and brokerage assets. |
For the Year Ended December 31, 2011 | |||||
Sources of revenue | Primary Drivers | Total (millions) | % of Total Net Revenue | % Recurring | |
Advisor-driven revenue with ~85%-90% payout ratio | Commissions | - Transactions - Brokerage asset levels | $1,754 | 51% | 35% |
Advisory Fees | - Advisory asset levels | $1,027 | 30% | 99% | |
Attachment revenue retained by us | Asset-Based Fees - Cash Sweep Fees - Sponsorship Fees - Record Keeping | - Cash balances - Interest rates - Number of accounts - Client asset levels | $360 | 10% | 100% |
Transaction and Other Fees - Transactions - Client (Investor) Accounts - Advisor Seat and Technology | - Client activity - Number of clients - Number of advisors - Number of accounts - Premium technology subscribers | $292 | 8% | 57% | |
Interest and Other Revenue | - Margin accounts - Marketing re-allowances fees | $46 | 1% | 48% | |
Total Net Revenue | $3,479 | 100% | 63% | ||
Total Recurring Revenue | $2,180 | 63% |
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As of and for the Year Ended | ||||||||||||
December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Business Metrics | ||||||||||||
Advisors(1) | 12,444 | 11,950 | 11,920 | |||||||||
Advisory and brokerage assets (in billions)(2) | $ | 315.6 | $ | 279.4 | $ | 233.9 | ||||||
Advisory assets under management (in billions)(3) | $ | 93.0 | $ | 77.2 | $ | 59.6 | ||||||
Net new advisory assets (in billions)(3)(4) | $ | 8.5 | $ | 7.0 | N/A | |||||||
Insured cash account balances (in billions)(3) | $ | 12.2 | $ | 11.6 | $ | 11.2 | ||||||
Money market account balances (in billions)(3) | $ | 6.9 | $ | 7.0 | $ | 11.2 | ||||||
Financial Metrics | ||||||||||||
Revenue growth (decline) from prior year | 13.2 | % | (11.8 | )% | 14.7 | % | ||||||
Recurring revenue as a % of net revenue(5) | 60.7 | % | 57.3 | % | 58.5 | % | ||||||
Gross margin (in millions)(6) | $ | 937.9 | $ | 844.9 | $ | 953.3 | ||||||
Gross margin as a % of net revenue(6) | 30.1 | % | 30.7 | % | 30.6 | % | ||||||
Net (loss) income (in millions) | $ | (56.9 | ) | $ | 47.5 | $ | 45.5 | |||||
Adjusted EBITDA (in millions) | $ | 413.1 | $ | 356.1 | $ | 350.2 | ||||||
Adjusted Earnings (in millions) | $ | 172.7 | $ | 129.6 | $ | 108.9 | ||||||
(Loss) Earnings Per Share (diluted) | $ | (0.64 | ) | $ | 0.47 | $ | 0.45 | |||||
Adjusted Earnings per Share (diluted) | $ | 1.71 | $ | 1.32 | $ | 1.09 |
As of and for the Year Ended December 31, | |||||||||||
2011 | 2010 | 2009 | |||||||||
Business Metrics | |||||||||||
Advisors(1) | 12,847 | 12,444 | 11,950 | ||||||||
Advisory and brokerage assets (in billions)(2) | $ | 330.3 | $ | 315.6 | $ | 279.4 | |||||
Advisory assets under management (in billions)(3) | $ | 101.6 | $ | 93.0 | $ | 77.2 | |||||
Net new advisory assets (in billions)(3)(4) | $ | 10.8 | $ | 8.5 | $ | 7.0 | |||||
Insured cash account balances (in billions)(3) | $ | 14.4 | $ | 12.2 | $ | 11.6 | |||||
Money market account balances (in billions)(3) | $ | 8.0 | $ | 6.9 | $ | 7.0 | |||||
Financial Metrics | |||||||||||
Revenue growth (decline) from prior year | 11.8 | % | 13.2 | % | (11.8 | )% | |||||
Recurring revenue as a % of net revenue(5) | 62.7 | % | 60.7 | % | 57.3 | % | |||||
Net income (loss) (in millions) | $ | 170.4 | $ | (56.9 | ) | $ | 47.5 | ||||
Earnings (loss) per share (diluted) | $ | 1.50 | $ | (0.64 | ) | $ | 0.47 | ||||
Non-GAAP Measures: | |||||||||||
Gross margin (in millions)(6) | $ | 1,031.0 | $ | 937.9 | $ | 844.9 | |||||
Gross margin as a % of net revenue(6) | 29.6 | % | 30.1 | % | 30.7 | % | |||||
Adjusted EBITDA (in millions) | $ | 459.7 | $ | 413.1 | $ | 356.1 | |||||
Adjusted EBITDA as a % of net revenue | 13.2 | % | 13.3 | % | 13.0 | % | |||||
Adjusted EBITDA as a % of gross margin(6) | 44.6 | % | 44.0 | % | 42.1 | % | |||||
Adjusted Earnings (in millions) | $ | 218.6 | $ | 172.7 | $ | 129.6 | |||||
Adjusted Earnings per share (diluted) | $ | 1.95 | $ | 1.71 | $ | 1.32 |
(1) | Advisors are defined as those investment professionals who are licensed to do business with our broker-dealer subsidiaries. In |
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(2) | Advisory and brokerage assets are comprised of assets that are custodied, networked andnon-networked |
(3) | Advisory assets under management, insured cash account balances and money market account balances |
(4) | Represents net new advisory assets consisting of funds from new accounts and additional funds deposited into existing advisory accounts that are custodied in |
(5) | Recurring revenue, a characterization of net revenue and a statistical measure, is derived from sources such as advisory fees, asset-based fees, trailing commission fees, fees related to our cash sweep programs, interest earned on margin accounts and technology and service |
(6) | Gross margin is calculated as net revenues less production expenses. Production expenses consist of the following expense categories from our consolidated statements of operations: (i) commissions and advisory fees and (ii) brokerage, clearing and exchange. All other expense categories, including depreciation and amortization, are considered general and administrative in nature. Because our gross margin amounts do not include any depreciation and amortization expense, we consider our gross margin amounts to be non-GAAP measures that may not be comparable to those of others in our industry. In 2010, upon closing our IPO in the fourth quarter, the restriction on approximately 7.4 million shares of common stock issued to our advisors under the Fifth Amended and Restated 2000 Stock Bonus Plan was released. Accordingly, we recorded a share-based compensation charge of $222.0 million in the fourth quarter of 2010, representing the offering price of $30.00 per share multiplied by 7.4 million shares. This charge has been classified as production expense in 2010. |
For the Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Net (loss) income | $ | (56,862 | ) | $ | 47,520 | $ | 45,496 | |||||
Interest expense | 90,407 | 100,922 | 115,558 | |||||||||
Income tax (benefit) expense | (31,987 | ) | 25,047 | 47,269 | ||||||||
Amortization of purchased intangible assets and software(1) | 43,658 | 59,577 | 61,702 | |||||||||
Depreciation and amortization of all other fixed assets | 42,379 | 48,719 | 38,760 | |||||||||
EBITDA | 87,595 | 281,785 | 309,785 | |||||||||
EBITDA Adjustments: | ||||||||||||
Share-based compensation expense(2) | 10,429 | 6,437 | 4,160 | |||||||||
Acquisition and integration related expenses(3) | 12,569 | 3,037 | 18,326 | |||||||||
Restructuring and conversion costs(4) | 22,835 | 64,078 | 15,122 | |||||||||
Debt amendment and extinguishment costs(5) | 38,633 | — | — | |||||||||
Equity issuance and IPO related costs(6) | 240,902 | 580 | — | |||||||||
Other(7) | 150 | 151 | 3,778 | |||||||||
Total EBITDA Adjustments | 325,518 | (8) | 74,283 | 41,386 | ||||||||
Adjusted EBITDA | $ | 413,113 | $ | 356,068 | $ | 350,171 | ||||||
For the Year Ended December 31, | |||||||||||
2011 | 2010 | 2009 | |||||||||
Net income (loss) | $ | 170,382 | $ | (56,862 | ) | $ | 47,520 | ||||
Interest expense | 68,764 | 90,407 | 100,922 | ||||||||
Income tax expense (benefit) | 112,303 | (31,987 | ) | 25,047 | |||||||
Amortization of purchased intangible assets and software(1) | 38,981 | 43,658 | 59,577 | ||||||||
Depreciation and amortization of all other fixed assets | 33,760 | 42,379 | 48,719 | ||||||||
EBITDA | 424,190 | 87,595 | 281,785 | ||||||||
EBITDA Adjustments: | |||||||||||
Share-based compensation expense(2) | 14,978 | 10,429 | 6,437 | ||||||||
Acquisition and integration related expenses(3) | (3,815 | ) | 12,569 | 3,037 | |||||||
Restructuring and conversion costs(4) | 22,052 | 22,835 | 64,078 | ||||||||
Debt amendment and extinguishment costs(5) | — | 38,633 | — | ||||||||
Equity issuance and related offering costs(6) | 2,062 | 240,902 | 580 | ||||||||
Other(7) | 253 | 150 | 151 | ||||||||
Total EBITDA Adjustments | 35,530 | 325,518 | 74,283 | ||||||||
Adjusted EBITDA | $ | 459,720 | $ | 413,113 | $ | 356,068 |
(1) | Represents amortization of intangible assets and software as a result of our purchase accounting adjustments from our merger transaction in 2005 |
(2) | Represents share-based compensation expense related to |
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(3) | Represents acquisition and integration costs |
(4) | Represents organizational restructuring charges |
(5) | Represents debt amendment costs incurred in 2010 for amending and restating our senior secured credit agreement to establish a new term loan tranche and to extend the maturity of an existing tranche on our senior credit |
(6) | Represents equity issuance and related costs for our IPO, which was completed in the fourth quarter of 2010. For 2009, $0.6 million of costs that were previously classified as restructuring and conversion have been reclassified to equity issuance and IPO related costs to conform to the current period presentation. Upon closing of the offering, the restriction on approximately 7.4 million shares of common stock issued to advisors under our Fifth Amended and Restated 2000 Stock Bonus Plan was released. Accordingly, the Company recorded a share-based compensation charge of $222.0 million, representing the offering price of $30.00 per share multiplied by 7.4 million shares. |
(7) | Represents | |
Year Ended December 31, 2010 | ||||||||
GAAP | Adjustments | |||||||
Revenues | ||||||||
Commissions | $ | 1,620,811 | $ | — | ||||
Advisory fees | 860,227 | — | ||||||
Asset-based fees | 317,505 | — | ||||||
Transaction and other fees | 274,148 | 1,317 | ||||||
Other | 40,795 | 5 | ||||||
Net revenues | 3,113,486 | 1,322 | ||||||
Expenses | ||||||||
Production | 2,397,535 | (222,028 | ) | |||||
Compensation and benefits | 308,656 | (20,760 | ) | |||||
General and administrative | 233,015 | (7,511 | ) | |||||
Depreciation and amortization | 86,037 | — | ||||||
Restructuring charges | 13,922 | (13,922 | ) | |||||
Other | 34,826 | (21,996 | ) | |||||
Total operating expenses | 3,073,991 | (286,217 | ) | |||||
Non-operating interest expense | 90,407 | — | ||||||
Loss on extinguishment of debt | 37,979 | (37,979 | ) | |||||
Gain on equity method investment | (42 | ) | — | |||||
Total expenses | 3,202,335 | (324,196 | ) | |||||
(Loss) income before (benefit from) provision for income taxes | $ | (88,849 | ) | $ | 325,518 | |||
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For the Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In thousands, except per share data) | ||||||||||||
Net (loss) income | $ | (56,862 | ) | $ | 47,520 | $ | 45,496 | |||||
After-Tax: | ||||||||||||
EBITDA Adjustments(1) | ||||||||||||
Share-based compensation expense(2) | 8,400 | 5,146 | 3,553 | |||||||||
Acquisition and integration related expenses | 7,638 | 1,833 | 11,080 | |||||||||
Restructuring and conversion costs | 13,877 | 38,669 | 9,143 | |||||||||
Debt amendment and extinguishment costs | 23,477 | — | — | |||||||||
Equity issuance and IPO related costs(3) | 149,568 | 350 | — | |||||||||
Other | 91 | 91 | 2,269 | |||||||||
Total EBITDA Adjustments | 203,051 | 46,089 | 26,045 | |||||||||
Amortization of purchased intangible assets and software(1) | 26,531 | 35,947 | 37,322 | |||||||||
Adjusted Earnings(4) | $ | 172,720 | $ | 129,556 | $ | 108,863 | ||||||
Adjusted Earnings per share(4)(5) | $ | 1.71 | $ | 1.32 | $ | 1.09 | ||||||
Weighted average shares outstanding — diluted | 100,933 | 98,494 | 100,334 |
For the Year Ended December 31, | |||||||||||
2011 | 2010 | 2009 | |||||||||
(unaudited) | |||||||||||
Net income (loss) | $ | 170,382 | $ | (56,862 | ) | $ | 47,520 | ||||
After-Tax: | |||||||||||
EBITDA Adjustments(1) | |||||||||||
Share-based compensation expense(2) | 11,472 | 8,400 | 5,146 | ||||||||
Acquisition and integration related expenses | (2,354 | ) | 7,638 | 1,833 | |||||||
Restructuring and conversion costs | 13,606 | 13,877 | 38,669 | ||||||||
Debt amendment and extinguishment costs | — | 23,477 | — | ||||||||
Equity issuance and related offering costs(3) | 1,272 | 149,568 | 350 | ||||||||
Other | 156 | 91 | 91 | ||||||||
Total EBITDA Adjustments | 24,152 | 203,051 | 46,089 | ||||||||
Amortization of purchased intangible assets and software(1) | 24,051 | 26,531 | 35,947 | ||||||||
Adjusted Earnings | $ | 218,585 | $ | 172,720 | $ | 129,556 | |||||
Adjusted Earnings per share(4) | $ | 1.95 | $ | 1.71 | $ | 1.32 | |||||
Weighted average shares outstanding — diluted(5) | 112,119 | 100,933 | 98,494 |
(1) | EBITDA Adjustments and amortization of purchased intangible assets and software have been tax effected using a federal rate of 35.0% and the applicable effective state rate which ranged from |
(2) | Represents the after-tax expense of non-qualified stock options in which we receive a tax deduction upon |
(3) | Represents the after-tax expense of equity issuance and |
(4) |
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For the Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(Loss) earnings per share — diluted | $ | (0.64 | ) | $ | 0.47 | $ | 0.45 | |||||
Adjustment to include dilutive shares, not included in GAAP loss per share | 0.08 | — | — | |||||||||
Adjustment for allocation of undistributed earnings to stock units | — | 0.01 | — | |||||||||
After-Tax: | ||||||||||||
EBITDA Adjustments per share | 2.01 | 0.47 | 0.26 | |||||||||
Amortization of purchased intangible assets and software per share | 0.26 | 0.37 | 0.38 | |||||||||
Adjusted Earnings per share | $ | 1.71 | $ | 1.32 | $ | 1.09 | ||||||
For the Year Ended December 31, | |||||||||||
2011 | 2010 | 2009 | |||||||||
(unaudited) | |||||||||||
Earnings (loss) per share — diluted | $ | 1.50 | $ | (0.64 | ) | $ | 0.47 | ||||
Adjustment to include dilutive shares, not included in GAAP earnings (loss) per share | — | 0.08 | — | ||||||||
Adjustment for allocation of undistributed earnings to stock units | 0.02 | — | 0.01 | ||||||||
After-Tax: | |||||||||||
EBITDA Adjustments per share | 0.22 | 2.01 | 0.47 | ||||||||
Amortization of purchased intangible assets and software per share | 0.21 | 0.26 | 0.37 | ||||||||
Adjusted Earnings per share | $ | 1.95 | $ | 1.71 | $ | 1.32 |
(5) | Weighted average shares outstanding on a fully diluted basis increased from 100.9 million shares for the year ended December 31, 2010 to 112.1 million shares for the year ended December 31, 2011, due primarily to the successful completion of our IPO in the fourth quarter of 2010. The increase is attributed to the release of the restriction of approximately 7.4 million shares of common stock upon closing of our IPO in the fourth quarter of 2010, the issuance of approximately 1.5 million shares of common stock by the Company pursuant to the over-allotment option granted to the underwriters in connection with the IPO, and shares that were issued upon exercise of options by selling stockholders in connection with the IPO, net of any shares retired to satisfy the exercise price in a cashless exercise. |
For the Year Ended December 31, | ||||||||||
2011 | 2010 | % Change | ||||||||
(unaudited) | ||||||||||
Adjusted Earnings | $ | 218,585 | $ | 172,720 | ||||||
Weighted average shares outstanding — diluted as of December 31, 2011 | 112,119 | 112,119 | ||||||||
Pro-forma Adjusted Earnings per share | $ | 1.95 | $ | 1.54 | 26.6 | % |
45
Year Ended December 31, | Percentage Change | |||||||||||||||||||
2010 | 2009 | 2008 | ‘10 vs. ‘09 | ‘09 vs. ‘08 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Revenues | ||||||||||||||||||||
Commissions | $ | 1,620,811 | $ | 1,477,655 | $ | 1,640,218 | 9.7 | % | (9.9 | )% | ||||||||||
Advisory fees | 860,227 | 704,139 | 830,555 | 22.2 | % | (15.2 | )% | |||||||||||||
Asset-based fees | 317,505 | 272,893 | 352,293 | 16.3 | % | (22.5 | )% | |||||||||||||
Transaction and other fees | 274,148 | 255,574 | 240,486 | 7.3 | % | 6.3 | % | |||||||||||||
Other | 40,795 | 39,244 | 52,797 | 4.0 | % | (25.7 | )% | |||||||||||||
Net revenues | 3,113,486 | 2,749,505 | 3,116,349 | 13.2 | % | (11.8 | )% | |||||||||||||
Expenses | ||||||||||||||||||||
Production | 2,397,535 | 1,904,579 | 2,163,048 | 25.9 | % | (11.9 | )% | |||||||||||||
Compensation and benefits | 308,656 | 270,436 | 343,171 | 14.1 | % | (21.2 | )% | |||||||||||||
General and administrative | 233,015 | 218,416 | 266,447 | 6.7 | % | (18.0 | )% | |||||||||||||
Depreciation and amortization | 86,037 | 108,296 | 100,462 | (20.6 | )% | 7.8 | % | |||||||||||||
Restructuring charges | 13,922 | 58,695 | 14,966 | (76.3 | )% | 292.2 | % | |||||||||||||
Other | 34,826 | 15,294 | 17,558 | 127.7 | % | (12.9 | )% | |||||||||||||
Total operating expenses | 3,073,991 | 2,575,716 | 2,905,652 | 19.3 | % | (11.4 | )% | |||||||||||||
Non-operating interest expense | 90,407 | 100,922 | 115,558 | (10.4 | )% | (12.7 | )% | |||||||||||||
Loss on extinguishment of debt | 37,979 | — | — | * | * | |||||||||||||||
(Gain) loss on equity method investment | (42 | ) | 300 | 2,374 | * | (87.4 | )% | |||||||||||||
Total expenses | 3,202,335 | 2,676,938 | 3,023,584 | 19.6 | % | (11.5 | )% | |||||||||||||
(Loss) income before (benefit from) provision for income taxes | (88,849 | ) | 72,567 | 92,765 | * | (21.8 | )% | |||||||||||||
(Benefit from) provision for income taxes | (31,987 | ) | 25,047 | 47,269 | * | (47.0 | )% | |||||||||||||
Net (loss) income | $ | (56,862 | ) | $ | 47,520 | $ | 45,496 | * | 4.4 | % | ||||||||||
Year Ended December 31, | Percentage Change | ||||||||||||||||
2011 | 2010 | 2009 | ‘11 vs. ‘10 | ‘10 vs. ‘09 | |||||||||||||
(In thousands) | |||||||||||||||||
Revenues | |||||||||||||||||
Commissions | $ | 1,754,435 | $ | 1,620,811 | $ | 1,477,655 | 8.2 | % | 9.7 | % | |||||||
Advisory fees | 1,027,473 | 860,227 | 704,139 | 19.4 | % | 22.2 | % | ||||||||||
Asset-based fees | 359,724 | 317,505 | 272,893 | 13.3 | % | 16.3 | % | ||||||||||
Transaction and other fees | 292,207 | 274,148 | 255,574 | 6.6 | % | 7.3 | % | ||||||||||
Other | 45,536 | 40,795 | 39,244 | 11.6 | % | 4.0 | % | ||||||||||
Net revenues | 3,479,375 | 3,113,486 | 2,749,505 | 11.8 | % | 13.2 | % | ||||||||||
Expenses | |||||||||||||||||
Production | 2,448,424 | 2,397,535 | 1,904,579 | 2.1 | % | 25.9 | % | ||||||||||
Compensation and benefits | 322,126 | 308,656 | 270,436 | 4.4 | % | 14.1 | % | ||||||||||
General and administrative | 263,228 | 267,799 | 234,010 | (1.7 | )% | 14.4 | % | ||||||||||
Depreciation and amortization | 72,741 | 86,037 | 108,296 | (15.5 | )% | (20.6 | )% | ||||||||||
Restructuring charges | 21,407 | 13,922 | 58,695 | 53.8 | % | (76.3 | )% | ||||||||||
Total operating expenses | 3,127,926 | 3,073,949 | 2,576,016 | 1.8 | % | 19.3 | % | ||||||||||
Non-operating interest expense | 68,764 | 90,407 | 100,922 | (23.9 | )% | (10.4 | )% | ||||||||||
Loss on extinguishment of debt | — | 37,979 | — | * | * | ||||||||||||
Total expenses | 3,196,690 | 3,202,335 | 2,676,938 | (0.2 | )% | 19.6 | % | ||||||||||
Income (loss) before provision for (benefit from) income taxes | 282,685 | (88,849 | ) | 72,567 | * | * | |||||||||||
Provision for (benefit from) income taxes | 112,303 | (31,987 | ) | 25,047 | * | * | |||||||||||
Net income (loss) | $ | 170,382 | $ | (56,862 | ) | $ | 47,520 | * | * |
Years Ended December 31, | ||||||||||||||||||||||||
2010 | % Total | 2009 | % Total | 2008 | % Total | |||||||||||||||||||
Variable annuities | $ | 672,369 | 41.5 | % | $ | 551,345 | 37.3 | % | $ | 627,021 | 38.2 | % | ||||||||||||
Mutual funds | 457,947 | 28.2 | % | 389,458 | 26.4 | % | 474,948 | 28.9 | % | |||||||||||||||
Fixed annuities | 138,753 | 8.6 | % | 225,342 | 15.3 | % | 179,743 | 11.0 | % | |||||||||||||||
Alternative investments | 97,606 | 6.0 | % | 77,079 | 5.2 | % | 112,706 | 6.9 | % | |||||||||||||||
Equities | 93,961 | 5.8 | % | 86,606 | 5.8 | % | 85,586 | 5.2 | % | |||||||||||||||
Fixed income | 85,250 | 5.2 | % | 75,210 | 5.1 | % | 65,309 | 4.0 | % | |||||||||||||||
Insurance | 72,297 | 4.5 | % | 69,907 | 4.7 | % | 91,327 | 5.6 | % | |||||||||||||||
Other | 2,628 | 0.2 | % | 2,708 | 0.2 | % | 3,578 | 0.2 | % | |||||||||||||||
Total commission revenue | $ | 1,620,811 | 100.0 | % | $ | 1,477,655 | 100.0 | % | $ | 1,640,218 | 100.0 | % | ||||||||||||
Years Ended December 31, | ||||||||||||||||||||
2011 | % Total | 2010 | % Total | 2009 | % Total | |||||||||||||||
Variable annuities | $ | 777,349 | 44.3 | % | $ | 672,369 | 41.5 | % | $ | 551,345 | 37.3 | % | ||||||||
Mutual funds | 472,466 | 26.9 | % | 457,947 | 28.2 | % | 389,458 | 26.4 | % | |||||||||||
Fixed annuities | 136,020 | 7.8 | % | 138,753 | 8.6 | % | 225,342 | 15.3 | % | |||||||||||
Alternative investments | 113,589 | 6.5 | % | 97,606 | 6.0 | % | 77,079 | 5.2 | % | |||||||||||
Equities | 97,882 | 5.6 | % | 93,961 | 5.8 | % | 86,606 | 5.8 | % | |||||||||||
Fixed income | 84,568 | 4.8 | % | 85,250 | 5.2 | % | 75,210 | 5.1 | % | |||||||||||
Insurance | 70,060 | 4.0 | % | 72,297 | 4.5 | % | 69,907 | 4.7 | % | |||||||||||
Other | 2,501 | 0.1 | % | 2,628 | 0.2 | % | 2,708 | 0.2 | % | |||||||||||
Total commission revenue | $ | 1,754,435 | 100.0 | % | $ | 1,620,811 | 100.0 | % | $ | 1,477,655 | 100.0 | % |
2010 | 2009 | |||||||
Beginning balance at January 1 | $ | 77.2 | $ | 59.6 | ||||
Net new advisory assets | 8.5 | 7.0 | ||||||
Market impacts | 7.3 | 10.6 | ||||||
Ending balance at December 31 | $ | 93.0 | $ | 77.2 | ||||
2011 | 2010 | 2009 | |||||||||
Beginning balance at January 1 | $ | 93.0 | $ | 77.2 | $ | 59.6 | |||||
Net new advisory assets | 10.8 | 8.5 | 7.0 | ||||||||
Market impact and other | (2.2 | ) | 7.3 | 10.6 | |||||||
Ending balance at December 31 | $ | 101.6 | $ | 93.0 | $ | 77.2 |
2011 | 2010 | 2009 | ||||||
Base payout rate | 84.15 | % | 83.86 | % | 83.92 | % | ||
Production based bonuses | 2.37 | % | 2.19 | % | 1.71 | % | ||
Other(1) | 0.12 | % | 9.19 | % | 0.19 | % | ||
Total Payout Ratio | 86.64 | % | 95.24 | % | 85.82 | % | ||
IPO related share-based compensation charge(2) | — | (8.95 | )% | — | ||||
Adjusted Payout Ratio | 86.64 | % | 86.29 | % | 85.82 | % |
(1) | Includes the recognition of advisor share-based compensation expense from stock options and warrants granted to advisors and financial institutions based on the fair value of the awards, and amounts designated by advisors as deferred commissions in a non-qualified deferred compensation plan that are marked to market. |
(2) | Upon closing of our IPO in the fourth quarter of 2010, the restriction on approximately 7.4 million shares of common stock issued to advisors under the Fifth Amended and Restated 2000 Stock Bonus Plan was released. Accordingly, we recorded a share-based compensation charge of $222.0 million in 2010, representing the offering price of $30.00 per share multiplied by 7.4 million shares. This charge has been excluded for 2010 for consistency and comparability to other periods presented because this charge related to equity awards granted in prior periods. |
49
December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Net cash flows (used in) provided by: | ||||||||||||
Operating activities | $ | (22,914 | ) | $ | 271,157 | $ | 89,277 | |||||
Investing activities | (39,192 | ) | (13,724 | ) | (76,202 | ) | ||||||
Financing activities | 102,720 | (98,078 | ) | 18,161 | ||||||||
Net increase in cash and cash equivalents | 40,614 | 159,355 | 31,236 | |||||||||
Cash and cash equivalents — beginning of year | 378,594 | 219,239 | 188,003 | |||||||||
Cash and cash equivalents — end of year | $ | 419,208 | $ | 378,594 | $ | 219,239 | ||||||
For the Year Ended December 31, | |||||||||||
2011 | 2010 | 2009 | |||||||||
(In thousands) | |||||||||||
Net cash flows provided by (used in): | |||||||||||
Operating activities | $ | 442,378 | $ | (22,914 | ) | $ | 271,157 | ||||
Investing activities | (65,558 | ) | (39,192 | ) | (13,724 | ) | |||||
Financing activities | (75,256 | ) | 102,720 | (98,078 | ) | ||||||
Net increase in cash and cash equivalents | 301,564 | 40,614 | 159,355 | ||||||||
Cash and cash equivalents — beginning of year | 419,208 | 378,594 | 219,239 | ||||||||
Cash and cash equivalents — end of year | $ | 720,772 | $ | 419,208 | $ | 378,594 |
52
Stock | ||||||||||||
Release on the | Option | |||||||||||
Restriction of | and | |||||||||||
Shares of | Warrant | |||||||||||
Common Stock | Exercises | Total | ||||||||||
Tax deduction available | $ | 221,982 | $ | 382,990 | $ | 604,972 | ||||||
Tax benefit expected to be realized | $ | 87,072 | $ | 150,228 | $ | 237,300 | ||||||
Tax benefit recorded in 2010 as income tax receivables on the consolidated statements of financial condition | $ | (87,072 | ) | $ | (57,474 | ) | $ | (144,546 | )(1) | |||
Tax benefit utilized in the fourth quarter of 2010 by not making a quarterly payment | — | $ | (37,534 | ) | $ | (37,534 | ) | |||||
Tax benefit expected to be utilized in future periods through the use of NOLs from tax deductions resulting from the IPO | — | $ | (55,220 | ) | $ | (55,220 | ) |
53
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December 31, | |||||||
2011 | 2010 | ||||||
Financial Ratio | Covenant Requirement | Actual Ratio | Covenant Requirement | Actual Ratio | |||
Leverage Test (Maximum) | 3.00 | 1.77 | 3.70 | 2.64 | |||
Interest Coverage (Minimum) | 3.00 | 7.10 | 2.60 | 4.81 |
December 31, 2010 | ||||||||
Covenant | Actual | |||||||
Financial Ratio | Requirement | Ratio | ||||||
Leverage Test (Maximum) | 3.70 | 2.64 | ||||||
Interest Coverage (Minimum) | 2.60 | 4.81 |
57
For the Year Ended December 31, | ||||||||
2010 | 2009 | |||||||
Net (loss) income | $ | (56,862 | ) | $ | 47,520 | |||
Interest expense | 90,407 | 100,922 | ||||||
Income tax (benefit) expense | (31,987 | ) | 25,047 | |||||
Amortization of purchased intangible assets and software(1) | 43,658 | 59,577 | ||||||
Depreciation and amortization of all other fixed assets | 42,379 | 48,719 | ||||||
EBITDA | 87,595 | 281,785 | ||||||
EBITDA Adjustments: | ||||||||
Share-based compensation expense(2) | 10,429 | 6,437 | ||||||
Acquisition and integration related expenses(3) | 12,569 | 3,037 | ||||||
Restructuring and conversion costs(4) | 22,835 | 64,078 | ||||||
Debt amendment and extinguishment costs(5) | 38,633 | — | ||||||
Equity issuance and IPO related costs(6) | 240,902 | 580 | ||||||
Other(7) | 150 | 151 | ||||||
Total EBITDA Adjustments | 325,518 | 74,283 | ||||||
Adjusted EBITDA | 413,113 | 356,068 | ||||||
Pro-forma adjustments(8) | — | — | ||||||
Credit Agreement Adjusted EBITDA | $ | 413,113 | $ | 356,068 | ||||
For the Year Ended December 31, | |||||||
2011 | 2010 | ||||||
Net income (loss) | $ | 170,382 | $ | (56,862 | ) | ||
Interest expense | 68,764 | 90,407 | |||||
Income tax expense (benefit) | 112,303 | (31,987 | ) | ||||
Amortization of purchased intangible assets and software(1) | 38,981 | 43,658 | |||||
Depreciation and amortization of all other fixed assets | 33,760 | 42,379 | |||||
EBITDA | 424,190 | 87,595 | |||||
EBITDA Adjustments: | |||||||
Share-based compensation expense(2) | 14,978 | 10,429 | |||||
Acquisition and integration related expenses(3) | (3,815 | ) | 12,569 | ||||
Restructuring and conversion costs(4) | 22,052 | 22,835 | |||||
Debt amendment and extinguishment costs(5) | — | 38,633 | |||||
Equity issuance and IPO related costs(6) | 2,062 | 240,902 | |||||
Other(7) | 253 | 150 | |||||
Total EBITDA Adjustments | 35,530 | 325,518 | |||||
Adjusted EBITDA | 459,720 | 413,113 | |||||
Pro-forma adjustments(8) | — | — | |||||
Credit Agreement Adjusted EBITDA | $ | 459,720 | $ | 413,113 |
(1) | Represents amortization of intangible assets and software as a result of our purchase accounting adjustments from our merger transaction in 2005 |
(2) | Represents share-based compensation expense |
(3) | Represents acquisition and integration costs |
(4) | Represents organizational restructuring charges |
(5) | Represents debt amendment costs incurred in 2010 for amending and restating our |
(6) | Represents equity issuance and offering costs related |
(7) | Represents excise and other taxes. |
58
(8) | Credit Agreement Adjusted EBITDA excludes pro-forma general and administrative expenditures from acquisitions, as defined under the terms of our senior secured credit agreement. There were no such adjustments for the years ended December 31, |
Payments Due by Period | ||||||||||||||||||||
Total | < 1 Year | 1-3 Years | 4-5 Years | > 5 Years | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Leases and other obligations(1) | $ | 97,225 | $ | 31,380 | $ | 41,380 | $ | 16,557 | $ | 7,908 | ||||||||||
Senior secured term loan facilities(2) | 1,386,639 | 13,971 | 333,168 | 492,850 | 546,650 | |||||||||||||||
Commitment fee on revolving line of credit(3) | 3,086 | 1,364 | 1,722 | — | — | |||||||||||||||
Variable interest payments:(4) | ||||||||||||||||||||
2013 Loan Hedged | 3,520 | 2,849 | 671 | — | — | |||||||||||||||
2013 Loan Unhedged | 12,615 | 3,665 | 8,950 | — | — | |||||||||||||||
2015 Loan Unhedged | 93,856 | 21,302 | 42,015 | 30,539 | — | |||||||||||||||
2017 Loan Unhedged | 192,779 | 30,525 | 60,205 | 58,889 | 43,160 | |||||||||||||||
Interest rate swap agreements(5) | 7,791 | 6,296 | 1,495 | — | — | |||||||||||||||
Total contractual cash obligations | $ | 1,797,511 | $ | 111,352 | $ | 489,606 | $ | 598,835 | $ | 597,718 | ||||||||||
59
Payments Due by Period | |||||||||||||||||||
Total | < 1 Year | 1-3 Years | 4-5 Years | > 5 Years | |||||||||||||||
(In thousands) | |||||||||||||||||||
Leases and other obligations(1) | $ | 139,553 | $ | 29,448 | $ | 39,486 | $ | 23,149 | $ | 47,470 | |||||||||
Senior secured term loan facilities(2) | 1,332,668 | 13,971 | 320,918 | 473,535 | 524,244 | ||||||||||||||
Commitment fee on revolving line of credit(3) | 1,719 | 1,154 | 565 | — | — | ||||||||||||||
Variable interest payments(4): | |||||||||||||||||||
2013 Loan (Hedged) | 757 | 757 | — | — | — | ||||||||||||||
2013 Loan (Unhedged) | 8,627 | 5,603 | 3,024 | — | — | ||||||||||||||
2015 Loan (Unhedged) | 70,348 | 20,525 | 40,292 | 9,531 | — | ||||||||||||||
2017 Loan (Unhedged) | 157,315 | 29,411 | 57,736 | 56,579 | 13,589 | ||||||||||||||
Interest rate swap agreement(5) | 1,397 | 1,397 | — | — | — | ||||||||||||||
Total contractual cash obligations | $ | 1,712,384 | $ | 102,266 | $ | 462,021 | $ | 562,794 | $ | 585,303 |
(1) | Minimum payments have not been reduced by minimum sublease rental income of |
(2) | Represents principal payments on our senior secured term loan facilities. See Note 12 of our consolidated financial statements for further detail. |
(3) | Represents commitment fees for unused borrowings on our senior secured revolving line of credit facility. See Note 12 of our consolidated financial statements for further detail. |
(4) | Our senior secured term loan facilities bear interest at floating rates. Variable interest payments are shown assuming the applicable LIBOR rates at December 31, |
(5) | Represents fixed interest payments net of variable interest received on our interest rate swap |
60
61
62
December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Expected life (in years) | 6.50 | 7.13 | 6.52 | |||||||||
Expected stock price volatility | 49.22 | % | 51.35 | % | 33.78 | % | ||||||
Expected dividend yield | — | — | — | |||||||||
Annualized forfeiture rate | 3.00 | % | 4.35 | % | 1.51 | % | ||||||
Fair value of options | $ | 17.43 | $ | 12.30 | $ | 9.96 | ||||||
Risk-free interest rate | 2.70 | % | 2.93 | % | 2.73 | % |
Employees | Advisors and Financial Institutions | ||||||||||||||||||||||
2011 | 2010 | 2009 | 2011 | 2010 | 2009 | ||||||||||||||||||
Expected life (in years) | 6.50 | 6.50 | 6.50 | 9.71 | 9.20 | 9.32 | |||||||||||||||||
Expected stock price volatility | 48.82 | % | 49.22 | % | 50.41 | % | 48.49 | % | 49.46 | % | 54.66 | % | |||||||||||
Expected dividend yield | — | % | — | % | — | % | — | % | — | % | — | % | |||||||||||
Fair value of options | $ | 15.99 | $ | 17.42 | $ | 11.32 | $ | 16.59 | $ | 25.62 | $ | 15.72 | |||||||||||
Risk-free interest rate | 2.20 | % | 2.70 | % | 2.70 | % | 1.95 | % | 3.35 | % | 3.75 | % |
Item 7A. | Quantitative and Qualitative Disclosures About |
64
Outstanding at | Annual Impact of an Interest Rate Increase of | |||||||||||||||||||
Variable Interest | 10 Basis | 25 Basis | 50 Basis | 100 Basis | ||||||||||||||||
Senior Secured Term Loans | Rates | Points | Points | Points | Points | |||||||||||||||
2013 Term Loan (Hedged)(1) | $ | 210,000 | $ | — | $ | — | $ | — | $ | — | ||||||||||
2013 Term Loan (Unhedged)(2) | 104,739 | 104 | 259 | 518 | 1,035 | |||||||||||||||
2015 Term Loan (Unhedged)(3) | 496,250 | — | — | — | — | |||||||||||||||
2017 Term Loan (Unhedged)(3) | 575,650 | — | — | — | — | |||||||||||||||
Variable Rate Debt Outstanding | $ | 1,386,639 | $ | 104 | $ | 259 | $ | 518 | $ | 1,035 | ||||||||||
3-month LIBOR(4) | 0.30 | % | 0.40 | % | 0.55 | % | 0.80 | % | 1.30 | % |
Outstanding at | Annual Impact of an Interest Rate Increase of | |||||||||||||||||||
Variable Interest | 10 Basis | 25 Basis | 50 Basis | 100 Basis | ||||||||||||||||
Senior Secured Term Loans | Rates | Points | Points | Points | Points | |||||||||||||||
(In thousands) | ||||||||||||||||||||
2013 Term Loan (Hedged)(1) | $ | 65,000 | $ | — | $ | — | $ | — | $ | — | ||||||||||
2013 Term Loan (Unhedged)(2) | 237,489 | 236 | 591 | 1,181 | 2,363 | |||||||||||||||
2015 Term Loan (Unhedged)(3) | 476,935 | — | — | — | 376 | |||||||||||||||
2017 Term Loan (Unhedged)(3) | 553,244 | — | — | — | 437 | |||||||||||||||
Variable Rate Debt Outstanding | $ | 1,332,668 | $ | 236 | $ | 591 | $ | 1,181 | $ | 3,176 |
(1) | Represents the portion of our 2013 Term Loan that is hedged by interest rate swap agreements, which have been designated as cash flow hedges against specific payments due on the 2013 |
65
Term Loan. Accordingly, any interest rate differential is reflected in an adjustment to interest expense over the term of the interest rate swap |
(2) | Represents the unhedged portion of our 2013 Term Loan outstanding at December 31, |
(3) | The variable interest rate for our 2015 Term Loan and our 2017 Term Loan is based on the greater of the | |
Federal Reserve Effective Federal Funds Rate | Annualized Increase or Decrease in Asset-Based Fees per One Basis Point Change | ||||
(Dollars in thousands) | |||||
0.00% - 0.25% | $ | 1,442 | |||
0.26% - 1.25% | 721 | ||||
1.26% - 2.50% | 334 | ||||
> 2.50% | $ | — |
69
Name | Age | Position | ||||||
Mark S. Casady | 51 | Chief Executive Officer and Chairman ofthe Board | ||||||
Esther M. Stearns | 51 | President and Chief Operating Officer | ||||||
Robert J. Moore | 50 | Chief Financial Officer and Treasurer | ||||||
William E. Dwyer | 54 | Managing Director, President —National Sales and Marketing | ||||||
Dan H. Arnold | 47 | Managing Director, | ||||||
Stephanie L. Brown | 59 | Managing Director, General Counsel andSecretary | ||||||
Jonathan G. Eaton | 53 | Managing Director, Custom ClearingServices | ||||||
Christopher F. Feeney | 56 | Managing Director, Chief InformationOfficer | ||||||
Mark R. Helliker | 48 | Managing Director, Broker-Dealer SupportServices | ||||||
John J. McDermott | 55 | Managing Director, Chief | ||||||
71
Item 15.Exhibits and Financial Statement Schedules |
Exhibit No. | Description of Exhibit | |||
3 | .1 | Amended and Restated Certificate of Incorporation of LPL Investment Holdings Inc., dated November 23, 2010. (1) | ||
3 | .2 | Second Amended and Restated Bylaws of LPL Investment Holdings Inc. (2) | ||
4 | .1 | Stockholders’ Agreement, dated as of December 28, 2005, among LPL Investment Holdings Inc., LPL Holdings, Inc. and other stockholders party thereto. (3) | ||
4 | .2 | First Amendment to Stockholders’ Agreement dated December 28, 2005, among LPL Investment Holdings Inc., LPL Holdings, Inc. and other stockholders party thereto, dated November 23, 2010.* | ||
4 | .3 | Stockholders’ Agreement among the Company and Hellman & Friedman Capital Partners IV, L.Pl, Hellman & Friedman Capital Partners V (Parallel), L.P., Hellman & Friedman Capital Associates V, L.P. and TPG Partners IV, L.P., dated November 23, 2010.* | ||
4 | .4 | Fifth Amended and Restated LPL Investment Holdings Inc. 2000 Stock Bonus Plan. (4) | ||
4 | .5 | Management Stockholders’ Agreement among the Company, Stephanie L. Brown, Mark S. Casady, William E. Dwyer III, Robert J. Moore, and Esther M. Stearns, dated November 23, 2010.* | ||
10 | .1 | 2005 Stock Option Plan for Incentive Stock Options. (5) | ||
10 | .2 | 2005 Stock Option Plan for Non-Qualified Stock Options. (5) | ||
10 | .3 | Amended and Restated Executive Employment Agreement among Mark S. Casady, the Company, LPL Holdings, Inc. and LPL Financial Corporation, dated July 23, 2010. (2) | ||
10 | .4 | Amended and Restated Executive Employment Agreement among Esther M. Stearns, the Company, LPL Holdings, Inc. and LPL Financial Corporation, dated July 23, 2010. (2) | ||
10 | .5 | Amended and Restated Executive Employment Agreement among William E. Dwyer III, the Company, LPL Holdings, Inc. and LPL Financial Corporation, dated July 23, 2010. (2) | ||
10 | .6 | Executive Employment Agreement between Dan H. Arnold and UVEST Financial Services Group Inc. dated January 2, 2007. (6) | ||
10 | .7 | Amendment dated September 28, 2009 to the Executive Employment Agreement between Dan H. Arnold and UVEST Financial Services Group Inc. dated January 2, 2007. (6) | ||
10 | .8 | Amended and Restated Executive Employment Agreement among Stephanie L. Brown, the Company, LPL Holdings, Inc. and LPL Financial Corporation dated July 23, 2010. (2) | ||
10 | .9 | Executive Employment Agreement between Jonathan G. Eaton and LPL Holdings Inc., dated December 28, 2005. (5) | ||
10 | .10 | Executive Employment Agreement among Robert J. Moore, the Company, LPL Holdings, Inc. and LPL Financial Corporation, dated July 23, 2010. (2) | ||
10 | .11 | Form of Indemnification Agreement. (1) | ||
10 | .12 | LPL Investment Holdings Inc. 2008 Stock Option Plan. (7) | ||
10 | .13 | Form of LPL Investment Holdings Inc. Stock Option Agreement. (6) | ||
10 | .14 | LPL Investment Holdings Inc. 2008 Nonqualified Deferred Compensation Plan. (8) | ||
10 | .15 | LPL Investment Holdings Inc. Advisor Incentive Plan. (9) | ||
10 | .16 | LPL Investment Holdings Inc. Financial Institution Incentive Plan. (6) | ||
10 | .17 | LPL Investment Holdings Inc. and Affiliates Corporate Executive Bonus Plan. (10) |
73
Exhibit No. | Description of Exhibit | |||
10 | .18 | Thomson Transaction Services Master Subscription Agreement dated as of January 5, 2009 between LPL Financial Corporation and Thomson Financial LLC. (11)† | ||
10 | .19 | Third Amended and Restated Credit Agreement, dated as of May 24, 2010, by and among LPL Investment Holdings, Inc., LPL Holdings, Inc., the several lenders from time to time party thereto, Morgan Stanley Senior Funding, Inc., as Administrative Agent and Morgan Stanley & Co., as Collateral Agent. (12) | ||
10 | .20 | LPL Investment Holdings Inc. 2010 Omnibus Equity Incentive Plan. (1) | ||
10 | .21 | Form of Senior Executive Stock Option Award granted under the LPL Investment Holdings Inc. 2010 Omnibus Equity Incentive Plan. (13) | ||
10 | .22 | Form of Senior Management Stock Option Award granted under the LPL Investment Holdings Inc. 2010 Omnibus Equity Incentive Plan. (13) | ||
10 | .23 | LPL Financial LLC Executive Severance Plan, effective as of November 23, 2010.* | ||
10 | .24 | Relocation Bonus Agreement between Mark R. Helliker and LPL Financial LLC, dated January 25, 2011.* | ||
21 | .1 | List of Subsidiaries of LPL Investment Holdings Inc.* | ||
23 | .1 | Consent of Deloitte & Touche LLP, independent registered public accounting firm.* | ||
31 | .1 | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a).* | ||
31 | .2 | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a).* | ||
32 | .1 | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* | ||
32 | .2 | Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* |
Exhibit No. | Description of Exhibit |
3.1 | Amended and Restated Certificate ofIncorporation of LPL Investment HoldingsInc., dated November 23, 2010. (1) |
3.2 | Second Amended and Restated Bylaws ofLPL Investment Holdings Inc. (2) |
4.1 | Stockholders’ Agreement, dated as ofDecember 28, 2005, among LPL InvestmentHoldings Inc., LPL Holdings, Inc. andother stockholders party thereto. (3) |
4.2 | First Amendment to Stockholders’Agreement dated December 28, 2005, amongLPL Investment Holdings Inc., LPLHoldings, Inc. and other stockholdersparty thereto, dated November 23, 2010. (14) |
4.3 | Stockholders’ Agreement among theCompany and Hellman & Friedman CapitalPartners IV, L.Pl, Hellman & FriedmanCapital Partners V (Parallel), L.P.,Hellman & Friedman CapitalAssociates V, L.P. and TPG PartnersIV, L.P., dated November 23, 2010.* |
4.4 | Fifth Amended and Restated LPLInvestment Holdings Inc. 2000 StockBonus Plan. (4) |
4.5 | Management Stockholders’ Agreement amongthe Company, Stephanie L. Brown,Mark S. Casady, William E. DwyerIII, Robert J. Moore, and Esther M.Stearns, dated November 23, 2010. (14) |
10.1 | 2005 Stock Option Plan for IncentiveStock Options. (5) |
10.2 | 2005 Stock Option Plan for Non-QualifiedStock Options. (5) |
10.3 | Amended and Restated ExecutiveEmployment Agreement among Mark S.Casady, the Company, LPL Holdings, Inc.and LPL Financial Corporation, datedJuly 23, 2010. (2) |
10.4 | Amended and Restated ExecutiveEmployment Agreement among Esther M.Stearns, the Company, LPL Holdings, Inc.and LPL Financial Corporation, datedJuly 23, 2010. (2) |
10.5 | Amended and Restated ExecutiveEmployment Agreement among William E.Dwyer III, the Company, LPL Holdings,Inc. and LPL Financial Corporation,dated July 23, 2010. (2) |
10.6 | Executive Employment Agreement betweenDan H. Arnold and UVEST FinancialServices Group Inc. dated January 2,2007. (6) |
10.7 | Amendment dated September 28, 2009 tothe Executive Employment Agreementbetween Dan H. Arnold and UVESTFinancial Services Group Inc. datedJanuary 2, 2007. (6) |
10.8 | Amended and Restated ExecutiveEmployment Agreement among Stephanie L.Brown, the Company, LPL Holdings, Inc.and LPL Financial Corporation dated July23, 2010. (2) |
10.9 | Executive Employment Agreement betweenJonathan G. Eaton and LPL Holdings Inc.,dated December 28, 2005. (5) |
10.10 | Executive Employment Agreement amongRobert J. Moore, the Company, LPLHoldings, Inc. and LPL FinancialCorporation, dated July 23, 2010. (2) |
10.11 | Form of Indemnification Agreement. (1) |
10.12 | LPL Investment Holdings Inc. 2008 StockOption Plan. (7) |
10.13 | Form of LPL Investment Holdings Inc.Stock Option Agreement. (6) |
10.14 | LPL Investment Holdings Inc. 2008Nonqualified Deferred Compensation Plan.(8) |
10.15 | LPL Investment Holdings Inc. AdvisorIncentive Plan. (9) |
10.16 | LPL Investment Holdings Inc. FinancialInstitution Incentive Plan. (6) |
10.17 | LPL Investment Holdings Inc. andAffiliates Corporate Executive BonusPlan. (10) |
10.18 | Thomson Transaction Services MasterSubscription Agreement dated as ofJanuary 5, 2009 between LPL FinancialCorporation and Thomson Financial LLC.(11)† |
Exhibit No. | Description of Exhibit |
10.19 | Third Amended and Restated CreditAgreement, dated as of May 24, 2010, byand among LPL Investment Holdings, Inc.,LPL Holdings, Inc., the several lendersfrom time to time party thereto, MorganStanley Senior Funding, Inc., asAdministrative Agent and Morgan Stanley& Co., as Collateral Agent. (12) |
10.20 | LPL Investment Holdings Inc. 2010Omnibus Equity Incentive Plan. (1) |
10.21 | Form of Senior Executive Stock OptionAward granted under the LPL InvestmentHoldings Inc. 2010 Omnibus EquityIncentive Plan. (13) |
10.22 | Form of Senior Management Stock OptionAward granted under the LPL InvestmentHoldings Inc. 2010 Omnibus EquityIncentive Plan. (13) |
10.23 | LPL Financial LLC Executive SeverancePlan, effective as of November 23,2010. (14) |
10.24 | Relocation Bonus Agreement between MarkR. Helliker and LPL Financial LLC, datedJanuary 25, 2011. (14) |
10.25 | Amendment to the LPL Investment Holdings Inc. 2008 Nonqualified Deferred Compensation Plan, dated December 1, 2011.* |
21.1 | List of Subsidiaries of LPL InvestmentHoldings Inc.* |
23.1 | Consent of Deloitte & Touche LLP,independent registered public accountingfirm.* |
31.1 | Certification of the Chief ExecutiveOfficer pursuant to Rule 13a-14(a).* |
31.2 | Certification of the Chief FinancialOfficer pursuant to Rule 13a-14(a).* |
32.1 | Certification of the Chief ExecutiveOfficer pursuant to 18 U.S.C.Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of2002.* |
32.2 | Certification of the Chief FinancialOfficer pursuant to 18 U.S.C.Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of2002.* |
101.INS | XBRL Instance Document* |
101.SCH | XBRL Taxonomy Extension Schema* |
101.CAL | XBRL Taxonomy Extension Calculation* |
101.DEF | XBRL Taxonomy Extension Definition* |
101.LAB | XBRL Taxonomy Extension Label* |
101.PRE | XBRL Taxonomy Extension Presentation* |
* | Filed herewith. | |
† | Confidential treatment requested as to certain portions, which portions have been omitted and filed separately with the Securities and Exchange Commission. | |
) | Incorporated by reference to the Amendment No. 2 to the Registration Statement onForm S-1 filed on July 9, 2010. | |
) | Incorporated by reference to current report onForm 8-K filed on July 23, 2010. | |
) | Incorporated by reference to Amendment No. 1 to the Registration Statement on Form 10 filed on July 10, 2007. | |
) | Incorporated by reference to theForm 8-K filed on December 18, 2008. | |
) | Incorporated by reference to the Registration Statement on Form 10 filed on April 30, 2007. | |
) | Incorporated by reference to the Registration Statement onForm S-1 filed on June 4, 2010. | |
) | Incorporated by reference to theForm 8-K filed on February 21, 2008. | |
) | Incorporated by reference to theForm 8-K filed on November 25, 2008. | |
) | Incorporated by reference to theForm S-8 on June 5, 2008. | |
) | Incorporated by reference to the Schedule 14A filed on April 27, 2010. | |
) | Incorporated by reference to Amendment No. 2 to the Registration Statement onForm S-1 filed on June 22, 2010. | |
) | Incorporated by reference to theForm 8-K filed on May 28, 2010. | |
) | Incorporated by reference to Amendment No. 4 to the Registration Statement onForm S-1 filed on November 3, 2010. | |
(14 | ) | Incorporated by reference to the Form 10-K filed on March 9, 2011. |
74
By: /s/ Mark S. Casady |
Signature | Title | Date | ||||
Mark S. Casady | Chief Executive Officer and Chairman | |||||
/s/ Robert J. Moore | Chief | |||||
/s/ Thomas D. Lux | Chief | |||||
/s/ Richard W. Boyce | Director | |||||
/s/ John J. Brennan | Director | |||||
/s/ James S. Putnam | Director | |||||
/s/ Jeffrey A. Goldstein | Director | |||||
/s/ James S. Riepe | Director | |||||
/s/ Richard P. Schifter | Director | |||||
/s/ Jeffrey E. Stiefler | Director |
75
/s/ | ||||||
Allen R. Thorpe | Director |
76
Exhibit No. | Description of Exhibit | |||
3 | .1 | Amended and Restated Certificate of Incorporation of LPL Investment Holdings Inc., dated November 23, 2010. (1) | ||
3 | .2 | Second Amended and Restated Bylaws of LPL Investment Holdings Inc. (2) | ||
4 | .1 | Stockholders’ Agreement, dated as of December 28, 2005, among LPL Investment Holdings Inc., LPL Holdings, Inc. and other stockholders party thereto. (3) | ||
4 | .2 | First Amendment to Stockholders’ Agreement dated December 28, 2005, among LPL Investment Holdings Inc., LPL Holdings, Inc. and other stockholders party thereto, dated November 23, 2010.* | ||
4 | .3 | Stockholders’ Agreement among the Company and Hellman & Friedman Capital Partners IV, L.Pl, Hellman & Friedman Capital Partners V (Parallel), L.P., Hellman & Friedman Capital Associates V, L.P. and TPG Partners IV, L.P., dated November 23, 2010.* | ||
4 | .4 | Fifth Amended and Restated LPL Investment Holdings Inc. 2000 Stock Bonus Plan. (4) | ||
4 | .5 | Management Stockholders’ Agreement among the Company, Stephanie L. Brown, Mark S. Casady, William E. Dwyer III, Robert J. Moore, and Esther M. Stearns, dated November 23, 2010.* | ||
10 | .1 | 2005 Stock Option Plan for Incentive Stock Options. (5) | ||
10 | .2 | 2005 Stock Option Plan for Non-Qualified Stock Options. (5) | ||
10 | .3 | Amended and Restated Executive Employment Agreement among Mark S. Casady, the Company, LPL Holdings, Inc. and LPL Financial Corporation, dated July 23, 2010. (2) | ||
10 | .4 | Amended and Restated Executive Employment Agreement among Esther M. Stearns, the Company, LPL Holdings, Inc. and LPL Financial Corporation, dated July 23, 2010. (2) | ||
10 | .5 | Amended and Restated Executive Employment Agreement among William E. Dwyer III, the Company, LPL Holdings, Inc. and LPL Financial Corporation, dated July 23, 2010. (2) | ||
10 | .6 | Executive Employment Agreement between Dan H. Arnold and UVEST Financial Services Group Inc. dated January 2, 2007. (6) | ||
10 | .7 | Amendment dated September 28, 2009 to the Executive Employment Agreement between Dan H. Arnold and UVEST Financial Services Group Inc. dated January 2, 2007. (6) | ||
10 | .8 | Amended and Restated Executive Employment Agreement among Stephanie L. Brown, the Company, LPL Holdings, Inc. and LPL Financial Corporation dated July 23, 2010. (2) | ||
10 | .9 | Executive Employment Agreement between Jonathan G. Eaton and LPL Holdings Inc., dated December 28, 2005. (5) | ||
10 | .10 | Executive Employment Agreement among Robert J. Moore, the Company, LPL Holdings, Inc. and LPL Financial Corporation, dated July 23, 2010. (2) | ||
10 | .11 | Form of Indemnification Agreement. (1) | ||
10 | .12 | LPL Investment Holdings Inc. 2008 Stock Option Plan. (7) | ||
10 | .13 | Form of LPL Investment Holdings Inc. Stock Option Agreement. (6) | ||
10 | .14 | LPL Investment Holdings Inc. 2008 Nonqualified Deferred Compensation Plan. (8) | ||
10 | .15 | LPL Investment Holdings Inc. Advisor Incentive Plan. (9) | ||
10 | .16 | LPL Investment Holdings Inc. Financial Institution Incentive Plan. (6) | ||
10 | .17 | LPL Investment Holdings Inc. and Affiliates Corporate Executive Bonus Plan. (10) | ||
10 | .18 | Thomson Transaction Services Master Subscription Agreement dated as of January 5, 2009 between LPL Financial Corporation and Thomson Financial LLC. (11)† | ||
10 | .19 | Third Amended and Restated Credit Agreement, dated as of May 24, 2010, by and among LPL Investment Holdings, Inc., LPL Holdings, Inc., the several lenders from time to time party thereto, Morgan Stanley Senior Funding, Inc., as Administrative Agent and Morgan Stanley & Co., as Collateral Agent. (12) | ||
10 | .20 | LPL Investment Holdings Inc. 2010 Omnibus Equity Incentive Plan. (1) | ||
10 | .21 | Form of Senior Executive Stock Option Award granted under the LPL Investment Holdings Inc. 2010 Omnibus Equity Incentive Plan. (13) |
77
Exhibit No. | Description of Exhibit | |||
10 | .22 | Form of Senior Management Stock Option Award granted under the LPL Investment Holdings Inc. 2010 Omnibus Equity Incentive Plan. (13) | ||
10 | .23 | LPL Financial LLC Executive Severance Plan, effective as of November 23, 2010.* | ||
10 | .24 | Relocation Bonus Agreement between Mark R. Helliker and LPL Financial LLC, dated January 25, 2011.* | ||
21 | .1 | List of Subsidiaries of LPL Investment Holdings Inc.* | ||
23 | .1 | Consent of Deloitte & Touche LLP, independent registered public accounting firm.* | ||
31 | .1 | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a).* | ||
31 | .2 | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a).* | ||
32 | .1 | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* | ||
32 | .2 | Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* |
78
Page | |||||
Consolidated Financial Statements | |||||
2010 | 2009 | 2008 | ||||||||||||||
REVENUES: | ||||||||||||||||
Commissions | $ | 1,620,811 | $ | 1,477,655 | $ | 1,640,218 | ||||||||||
Advisory fees | 860,227 | 704,139 | 830,555 | |||||||||||||
Asset-based fees | 317,505 | 272,893 | 352,293 | |||||||||||||
Transaction and other fees | 274,148 | 255,574 | 240,486 | |||||||||||||
Interest income, net of interest expense | 19,807 | 20,545 | 33,684 | |||||||||||||
Other | 20,988 | 18,699 | 19,113 | |||||||||||||
Total net revenues | 3,113,486 | 2,749,505 | 3,116,349 | |||||||||||||
EXPENSES: | ||||||||||||||||
Commissions and advisory fees | 2,362,910 | 1,872,478 | 2,132,050 | |||||||||||||
Compensation and benefits | 308,656 | 270,436 | 343,171 | |||||||||||||
Depreciation and amortization | 86,037 | 108,296 | 100,462 | |||||||||||||
Promotional | 69,191 | 61,451 | 99,707 | |||||||||||||
Occupancy and equipment | 50,159 | 50,475 | 58,752 | |||||||||||||
Professional services | 39,521 | 38,071 | 31,492 | |||||||||||||
Brokerage, clearing and exchange | 34,625 | 32,101 | 30,998 | |||||||||||||
Communications and data processing | 34,372 | 36,194 | 39,967 | |||||||||||||
Regulatory fees and expenses | 26,143 | 23,217 | 21,747 | |||||||||||||
Restructuring charges | 13,922 | 58,695 | 14,966 | |||||||||||||
Travel and entertainment | 13,629 | 9,008 | 14,782 | |||||||||||||
Other | 34,826 | 15,294 | 17,558 | |||||||||||||
Total operating expenses | 3,073,991 | 2,575,716 | 2,905,652 | |||||||||||||
Interest expense from senior credit facilities, subordinated notes and revolving line of credit | 90,407 | 100,922 | 115,558 | |||||||||||||
Loss on extinguishment of debt | 37,979 | — | — | |||||||||||||
(Gain) loss on equity method investment | (42 | ) | 300 | 2,374 | ||||||||||||
Total expenses | 3,202,335 | 2,676,938 | 3,023,584 | |||||||||||||
(LOSS) INCOME BEFORE (BENEFIT FROM) PROVISION FOR INCOME TAXES | (88,849 | ) | 72,567 | 92,765 | ||||||||||||
(BENEFIT FROM) PROVISION FOR INCOME TAXES | (31,987 | ) | 25,047 | 47,269 | ||||||||||||
NET (LOSS) INCOME | $ | (56,862 | ) | $ | 47,520 | $ | 45,496 | |||||||||
(LOSS) EARNINGS PER SHARE (Note 16): | ||||||||||||||||
Basic | $ | (0.64 | ) | $ | 0.54 | $ | 0.53 | |||||||||
Diluted | $ | (0.64 | ) | $ | 0.47 | $ | 0.45 |
2011 | 2010 | 2009 | ||||||||||
REVENUES: | ||||||||||||
Commissions | $ | 1,754,435 | $ | 1,620,811 | $ | 1,477,655 | ||||||
Advisory fees | 1,027,473 | 860,227 | 704,139 | |||||||||
Asset-based fees | 359,724 | 317,505 | 272,893 | |||||||||
Transaction and other fees | 292,207 | 274,148 | 255,574 | |||||||||
Interest income, net of interest expense | 20,065 | 19,807 | 20,545 | |||||||||
Other | 25,471 | 20,988 | 18,699 | |||||||||
Total net revenues | 3,479,375 | 3,113,486 | 2,749,505 | |||||||||
EXPENSES: | ||||||||||||
Commissions and advisory fees | 2,410,337 | 2,362,910 | 1,872,478 | |||||||||
Compensation and benefits | 322,126 | 308,656 | 270,436 | |||||||||
Promotional | 82,885 | 69,191 | 61,451 | |||||||||
Depreciation and amortization | 72,741 | 86,037 | 108,296 | |||||||||
Occupancy and equipment | 55,470 | 50,159 | 50,475 | |||||||||
Professional services | 41,590 | 39,521 | 38,071 | |||||||||
Brokerage, clearing and exchange | 38,087 | 34,625 | 32,101 | |||||||||
Communications and data processing | 36,696 | 34,372 | 36,194 | |||||||||
Regulatory fees and expenses | 26,116 | 26,143 | 23,217 | |||||||||
Restructuring charges | 21,407 | 13,922 | 58,695 | |||||||||
Other | 20,471 | 48,413 | 24,602 | |||||||||
Total operating expenses | 3,127,926 | 3,073,949 | 2,576,016 | |||||||||
Interest expense from senior credit facilities, subordinated notes and revolving line of credit | 68,764 | 90,407 | 100,922 | |||||||||
Loss on extinguishment of debt | — | 37,979 | — | |||||||||
Total expenses | 3,196,690 | 3,202,335 | 2,676,938 | |||||||||
INCOME (LOSS) BEFORE PROVISION FOR (BENEFIT (FROM) INCOME TAXES | 282,685 | (88,849 | ) | 72,567 | ||||||||
PROVISION FOR (BENEFIT FROM) INCOME TAXES | 112,303 | (31,987 | ) | 25,047 | ||||||||
NET INCOME (LOSS) | $ | 170,382 | $ | (56,862 | ) | $ | 47,520 | |||||
EARNINGS (LOSS) PER SHARE (Note 16): | ||||||||||||
Basic | $ | 1.55 | $ | (0.64 | ) | $ | 0.54 | |||||
Diluted | $ | 1.50 | $ | (0.64 | ) | $ | 0.47 |
F-3
2010 | 2009 | |||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 419,208 | $ | 378,594 | ||||
Cash and securities segregated under federal and other regulations | 373,634 | 288,608 | ||||||
Receivables from: | ||||||||
Clients, net of allowance of $655 at December 31, 2010 and $792 at December 31, 2009 | 271,051 | 257,529 | ||||||
Product sponsors, broker-dealers and clearing organizations | 203,332 | 171,900 | ||||||
Others, net of allowances of $6,796 at December 31, 2010 and $6,159 at December 31, 2009 | 169,391 | 139,317 | ||||||
Securities owned: | ||||||||
Trading | 9,259 | 15,361 | ||||||
Held-to-maturity | 9,563 | 10,454 | ||||||
Securities borrowed | 8,391 | 4,950 | ||||||
Income taxes receivable | 144,041 | — | ||||||
Fixed assets, net of accumulated depreciation and amortization of $276,501 at December 31, 2010 and $239,868 at December 31, 2009 | 78,671 | 101,584 | ||||||
Debt issuance costs, net of accumulated amortization of $14,106 at December 31, 2010 and $15,724 at December 31, 2009 | 23,711 | 16,542 | ||||||
Goodwill | 1,293,366 | 1,293,366 | ||||||
Intangible assets, net of accumulated amortization of $172,726 at December 31, 2010 and $136,177 at December 31, 2009 | 560,077 | 597,083 | ||||||
Other assets | 82,472 | 61,648 | ||||||
Total assets | $ | 3,646,167 | $ | 3,336,936 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
LIABILITIES: | ||||||||
Drafts payable | $ | 182,489 | $ | 125,767 | ||||
Payables to clients | 383,289 | 493,943 | ||||||
Payables to broker-dealers and clearing organizations | 39,070 | 18,217 | ||||||
Accrued commissions and advisory fees payable | 130,408 | 110,040 | ||||||
Accounts payable and accrued liabilities | 154,586 | 129,898 | ||||||
Income taxes payable | — | 24,226 | ||||||
Unearned revenue | 53,618 | 45,844 | ||||||
Interest rate swaps | 7,281 | 17,292 | ||||||
Securities sold but not yet purchased — at fair value | 4,821 | 4,003 | ||||||
Senior credit facilities and subordinated notes | 1,386,639 | 1,369,223 | ||||||
Deferred income taxes — net | 130,211 | 147,608 | ||||||
Total liabilities | 2,472,412 | 2,486,061 | ||||||
STOCKHOLDERS’ EQUITY: | ||||||||
Common stock, $.001 par value; 600,000,000 shares authorized; 108,714,757 shares issued and outstanding at December 31, 2010, and 94,214,762 shares issued and outstanding at December 31, 2009 of which 7,423,973 are restricted | 109 | 87 | ||||||
Additional paid-in capital | 1,051,722 | 679,277 | ||||||
Stockholder loans | — | (499 | ) | |||||
Accumulated other comprehensive loss | (4,496 | ) | (11,272 | ) | ||||
Retained earnings | 126,420 | 183,282 | ||||||
Total stockholders’ equity | 1,173,755 | 850,875 | ||||||
Total liabilities and stockholders’ equity | $ | 3,646,167 | $ | 3,336,936 | ||||
2011 | 2010 | |||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 720,772 | $ | 419,208 | ||||
Cash and securities segregated under federal and other regulations | 382,905 | 373,634 | ||||||
Receivables from: | ||||||||
Clients, net of allowance of $716 at December 31, 2011 and $655 at December 31, 2010 | 301,292 | 271,051 | ||||||
Product sponsors, broker-dealers and clearing organizations | 143,493 | 203,332 | ||||||
Others, net of allowance of $8,833 at December 31, 2011 and $6,796 at December 31, 2010 | 187,408 | 169,391 | ||||||
Securities owned: | ||||||||
Trading — at fair value | 6,290 | 9,259 | ||||||
Held-to-maturity | 11,167 | 9,563 | ||||||
Securities borrowed | 7,890 | 8,391 | ||||||
Income taxes receivable | — | 144,041 | ||||||
Fixed assets, net of accumulated depreciation and amortization of $305,143 at December 31, 2011 and $276,501 at December 31, 2010 | 91,317 | 78,671 | ||||||
Debt issuance costs, net of accumulated amortization of $19,197 at December 31, 2011 and $14,106 at December 31, 2010 | 18,620 | 23,711 | ||||||
Goodwill | 1,334,086 | 1,293,366 | ||||||
Intangible assets, net of accumulated amortization of $198,139 at December 31, 2011 and $172,726 at December 31, 2010 | 537,670 | 560,077 | ||||||
Other assets | 73,416 | 82,472 | ||||||
Total assets | $ | 3,816,326 | $ | 3,646,167 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
LIABILITIES: | ||||||||
Drafts payable | $ | 187,575 | $ | 182,489 | ||||
Payables to clients | 456,719 | 383,289 | ||||||
Payables to broker-dealers and clearing organizations | 34,755 | 39,070 | ||||||
Accrued commissions and advisory fees payable | 109,715 | 130,408 | ||||||
Accounts payable and accrued liabilities | 160,399 | 154,586 | ||||||
Income taxes payable | 906 | — | ||||||
Unearned revenue | 59,537 | 53,618 | ||||||
Interest rate swaps | 1,377 | 7,281 | ||||||
Securities sold but not yet purchased — at fair value | 161 | 4,821 | ||||||
Senior credit facilities | 1,332,668 | 1,386,639 | ||||||
Deferred income taxes — net | 127,766 | 130,211 | ||||||
Total liabilities | 2,471,578 | 2,472,412 | ||||||
STOCKHOLDERS’ EQUITY: | ||||||||
Common stock, $.001 par value; 600,000,000 shares authorized; 110,531,939 shares issued at December 31, 2011 and 108,714,757 shares issued at December 31, 2010 | 110 | 109 | ||||||
Additional paid-in capital | 1,137,723 | 1,051,722 | ||||||
Treasury stock, at cost — 2,617,629 shares at December 31, 2011 and 0 shares at December 31, 2010 | (89,037 | ) | — | |||||
Accumulated other comprehensive loss | (850 | ) | (4,496 | ) | ||||
Retained earnings | 296,802 | 126,420 | ||||||
Total stockholders’ equity | 1,344,748 | 1,173,755 | ||||||
Total liabilities and stockholders’ equity | $ | 3,816,326 | $ | 3,646,167 |
F-4
Accumulated | ||||||||||||||||||||||||||||
Additional | Other | Total | ||||||||||||||||||||||||||
Common Stock | Paid-In | Stockholder | Comprehensive | Retained | Stockholders’ | |||||||||||||||||||||||
Shares | Amount | Capital | Loans | Loss | Earnings | Equity | ||||||||||||||||||||||
BALANCE — December 31, 2007 | 86,250 | $ | 86 | $ | 664,568 | $ | (1,242 | ) | $ | (6,512 | ) | $ | 90,266 | $ | 747,166 | |||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||
Net income | 45,496 | 45,496 | ||||||||||||||||||||||||||
Unrealized loss on interest rate swaps, net of tax benefit of $5,596 | (8,986 | ) | (8,986 | ) | ||||||||||||||||||||||||
Total comprehensive income | 36,510 | |||||||||||||||||||||||||||
Stockholder loans | 306 | 306 | ||||||||||||||||||||||||||
Excess tax benefits from stock options exercised | 668 | 668 | ||||||||||||||||||||||||||
Exercise of stock options | 286 | 1 | 585 | 586 | ||||||||||||||||||||||||
Share-based compensation | 4,859 | 4,859 | ||||||||||||||||||||||||||
Issuance of restricted stock awards | 7,424 | |||||||||||||||||||||||||||
Issuance of common stock | 144 | 4,000 | 4,000 | |||||||||||||||||||||||||
Repurchase of common stock | (136 | ) | (3,783 | ) | (3,783 | ) | ||||||||||||||||||||||
BALANCE — December 31, 2008 | 93,968 | $ | 87 | $ | 670,897 | $ | (936 | ) | $ | (15,498 | ) | $ | 135,762 | $ | 790,312 | |||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||
Net income | 47,520 | 47,520 | ||||||||||||||||||||||||||
Unrealized gain on interest rate swaps, net of tax expense of $3,899 | 4,226 | 4,226 | ||||||||||||||||||||||||||
Total comprehensive income | 51,746 | |||||||||||||||||||||||||||
Stockholder loans | 437 | 437 | ||||||||||||||||||||||||||
Exercise of stock options | 257 | 290 | 290 | |||||||||||||||||||||||||
Excess tax benefits from stock options exercised | 147 | 147 | ||||||||||||||||||||||||||
Share-based compensation | 8,124 | 8,124 | ||||||||||||||||||||||||||
Repurchase of common stock | (10 | ) | (181 | ) | (181 | ) | ||||||||||||||||||||||
BALANCE — December 31, 2009 | 94,215 | $ | 87 | $ | 679,277 | $ | (499 | ) | $ | (11,272 | ) | $ | 183,282 | $ | 850,875 | |||||||||||||
Comprehensive loss: | ||||||||||||||||||||||||||||
Net loss | (56,862 | ) | (56,862 | ) | ||||||||||||||||||||||||
Unrealized gain on interest rate swaps, net of tax expense of $3,235 | 6,776 | 6,776 | ||||||||||||||||||||||||||
Total comprehensive loss | (50,086 | ) | ||||||||||||||||||||||||||
Stockholder loans | 499 | 499 | ||||||||||||||||||||||||||
Revocation of restricted stock awards | (25 | ) | ||||||||||||||||||||||||||
Exercise of stock options and warrants | 13,039 | 13 | 88 | 101 | ||||||||||||||||||||||||
Release on the restriction of stock awards | 7 | 221,975 | 221,982 | |||||||||||||||||||||||||
Excess tax benefits from share-based compensation | 93,445 | 93,445 | ||||||||||||||||||||||||||
Share-based compensation | 15,137 | 15,137 | ||||||||||||||||||||||||||
Issuance of common stock | 1,486 | 2 | 41,800 | 41,802 | ||||||||||||||||||||||||
BALANCE — December 31, 2010 | 108,715 | $ | 109 | $ | 1,051,722 | $ | — | $ | (4,496 | ) | $ | 126,420 | $ | 1,173,755 | ||||||||||||||
Additional Paid-In Capital | Stockholder Loans | Accumulated Comprehensive Loss | Retained Earnings | Total Stockholders' Equity | |||||||||||||||||||||||||||||
Common Stock | Treasury Stock | ||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||
BALANCE — December 31, 2008 | 93,968 | $ | 87 | $ | 670,897 | — | $ | — | $ | (936 | ) | $ | (15,498 | ) | $ | 135,762 | $ | 790,312 | |||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||||||
Net income | 47,520 | 47,520 | |||||||||||||||||||||||||||||||
Unrealized gain on interest rate swaps, net of tax expense of $3,899 | 4,226 | 4,226 | |||||||||||||||||||||||||||||||
Other comprehensive income | 51,746 | ||||||||||||||||||||||||||||||||
Stockholder loans | 437 | 437 | |||||||||||||||||||||||||||||||
Exercise of stock options | 257 | 290 | 290 | ||||||||||||||||||||||||||||||
Excess tax benefits from stock options exercised | 147 | 147 | |||||||||||||||||||||||||||||||
Share-based compensation | 8,124 | 8,124 | |||||||||||||||||||||||||||||||
Repurchase of common stock | (10 | ) | (181 | ) | (181 | ) | |||||||||||||||||||||||||||
BALANCE — December 31, 2009 | 94,215 | $ | 87 | $ | 679,277 | — | $ | — | $ | (499 | ) | $ | (11,272 | ) | $ | 183,282 | $ | 850,875 | |||||||||||||||
Comprehensive loss: | |||||||||||||||||||||||||||||||||
Net loss | (56,862 | ) | (56,862 | ) | |||||||||||||||||||||||||||||
Unrealized gain on interest rate swaps, net of tax expense of $3,235 | 6,776 | 6,776 | |||||||||||||||||||||||||||||||
Other comprehensive loss | (50,086 | ) | |||||||||||||||||||||||||||||||
Stockholder loans | 499 | 499 | |||||||||||||||||||||||||||||||
Revocation of restricted stock awards | (25 | ) | |||||||||||||||||||||||||||||||
Exercise of stock options and warrants | 13,039 | 13 | 88 | 101 | |||||||||||||||||||||||||||||
Release on the restriction of stock awards | 7 | 221,975 | 221,982 | ||||||||||||||||||||||||||||||
Excess tax benefits from share-based compensation | 93,445 | 93,445 | |||||||||||||||||||||||||||||||
Share-based compensation | 15,137 | 15,137 | |||||||||||||||||||||||||||||||
Issuance of common stock | 1,486 | 2 | 41,800 | 41,802 | |||||||||||||||||||||||||||||
BALANCE — December 31, 2010 | 108,715 | $ | 109 | $ | 1,051,722 | — | $ | ��� | $ | — | $ | (4,496 | ) | $ | 126,420 | $ | 1,173,755 | ||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||||||
Net income | 170,382 | 170,382 | |||||||||||||||||||||||||||||||
Unrealized gain on interest rate swaps, net of tax expense of $2,258 | 3,646 | 3,646 | |||||||||||||||||||||||||||||||
Total comprehensive income | 174,028 | ||||||||||||||||||||||||||||||||
Treasury stock purchases | 2,618 | (89,037 | ) | (89,037 | ) | ||||||||||||||||||||||||||||
Exercise of stock options and warrants | 1,817 | 1 | 10,161 | 10,162 | |||||||||||||||||||||||||||||
Excess tax benefits from share-based compensation | 57,590 | 57,590 | |||||||||||||||||||||||||||||||
Share-based compensation | 18,250 | 18,250 | |||||||||||||||||||||||||||||||
BALANCE — December 31, 2011 | 110,532 | $ | 110 | $ | 1,137,723 | 2,618 | $ | (89,037 | ) | $ | — | $ | (850 | ) | $ | 296,802 | $ | 1,344,748 |
F-5
2010 | 2009 | 2008 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
Net (loss) income | $ | (56,862 | ) | $ | 47,520 | $ | 45,496 | |||||
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||||||||||||
Noncash items: | ||||||||||||
Benefits received from retention plans | — | — | 4,347 | |||||||||
Depreciation and amortization | 86,037 | 108,296 | 100,462 | |||||||||
Amortization of debt issuance costs | 4,896 | 3,757 | 3,742 | |||||||||
Impairment of fixed assets | 840 | 1,288 | — | |||||||||
Loss on disposal of fixed assets | 160 | 329 | 47 | |||||||||
Share-based compensation | 237,119 | 8,124 | 4,859 | |||||||||
Excess tax benefits related to share-based compensation | (93,445 | ) | (147 | ) | (668 | ) | ||||||
Provision for bad debts | 1,621 | 3,319 | 3,471 | |||||||||
Deferred income tax provision | (21,619 | ) | (41,460 | ) | (26,138 | ) | ||||||
Loss on extinguishment of debt | 37,979 | — | — | |||||||||
(Gain) loss on equity method investment | (42 | ) | 300 | 2,374 | ||||||||
Impairment of intangible assets | — | 18,636 | — | |||||||||
Lease abandonment | 5,383 | 6,612 | — | |||||||||
Loan forgiveness | 4,359 | 2,072 | — | |||||||||
Other | (118 | ) | (647 | ) | 1,815 | |||||||
Changes in operating assets and liabilities: | ||||||||||||
Cash and securities segregated under federal and other regulations | (85,026 | ) | 52,967 | (145,764 | ) | |||||||
Receivables from clients | (13,522 | ) | 38,268 | 114,833 | ||||||||
Receivables from product sponsors, broker-dealers and clearing organizations | (31,432 | ) | 59,500 | (71,247 | ) | |||||||
Receivables from others | (35,546 | ) | (50,937 | ) | 423 | |||||||
Securities owned | 6,297 | (3,832 | ) | 2,542 | ||||||||
Securities borrowed | (3,441 | ) | (4,346 | ) | 8,434 | |||||||
Other assets | (3,877 | ) | (8,061 | ) | (6,687 | ) | ||||||
Drafts payable | 56,722 | (28,664 | ) | 27,287 | ||||||||
Payables to clients | (110,654 | ) | 30,932 | 56,334 | ||||||||
Payables to broker-dealers and clearing organizations | 20,853 | (3,517 | ) | (26,191 | ) | |||||||
Accrued commissions and advisory fees payable | 20,368 | 9,713 | (26,257 | ) | ||||||||
Accounts payable and accrued liabilities | 15,279 | (236 | ) | 26,628 | ||||||||
Income taxes receivable/payable | (73,835 | ) | 12,092 | 2,301 | ||||||||
Unearned revenue | 7,774 | 9,186 | (4,239 | ) | ||||||||
Securities sold but not yet purchased | 818 | 93 | (8,927 | ) | ||||||||
Net cash (used in) provided by operating activities | (22,914 | ) | 271,157 | 89,277 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
Capital expenditures | (23,095 | ) | (8,313 | ) | (62,812 | ) | ||||||
Proceeds from disposal of fixed assets | — | 200 | — | |||||||||
Purchase of securities classified asheld-to-maturity | (5,392 | ) | (3,746 | ) | (7,732 | ) |
2011 | 2010 | 2009 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
Net income (loss) | $ | 170,382 | $ | (56,862 | ) | $ | 47,520 | |||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||
Noncash items: | ||||||||||||
Depreciation and amortization | 72,741 | 86,037 | 108,296 | |||||||||
Amortization of debt issuance costs | 5,091 | 4,896 | 3,757 | |||||||||
Impairment of fixed assets | — | 840 | 1,288 | |||||||||
Loss on disposal of fixed assets | 112 | 160 | 329 | |||||||||
Share-based compensation | 18,250 | 237,119 | 8,124 | |||||||||
Excess tax benefits related to share-based compensation | (57,590 | ) | (93,445 | ) | (147 | ) | ||||||
Provision for bad debts | 3,833 | 1,621 | 3,319 | |||||||||
Deferred income tax provision | (8,432 | ) | (21,619 | ) | (41,460 | ) | ||||||
Loss on extinguishment of debt | — | 37,979 | — | |||||||||
Impairment of intangible assets | 2,776 | — | 18,636 | |||||||||
Lease abandonment | 1,054 | 5,383 | 6,612 | |||||||||
Loan forgiveness | 1,530 | 4,359 | 2,072 | |||||||||
Other | 1,511 | (160 | ) | (347 | ) | |||||||
Changes in operating assets and liabilities: | ||||||||||||
Cash and securities segregated under federal and other regulations | (9,271 | ) | (85,026 | ) | 52,967 | |||||||
Receivables from clients | (30,302 | ) | (13,522 | ) | 38,268 | |||||||
Receivables from product sponsors, broker-dealers and clearing organizations | 59,839 | (31,432 | ) | 59,500 | ||||||||
Receivables from others | (22,549 | ) | (35,546 | ) | (50,937 | ) | ||||||
Securities owned | 3,158 | 6,297 | (3,832 | ) | ||||||||
Securities borrowed | 501 | (3,441 | ) | (4,346 | ) | |||||||
Other assets | (7,806 | ) | (3,877 | ) | (8,061 | ) | ||||||
Drafts payable | 5,086 | 56,722 | (28,664 | ) | ||||||||
Payables to clients | 73,430 | (110,654 | ) | 30,932 | ||||||||
Payables to broker-dealers and clearing organizations | (4,315 | ) | 20,853 | (3,517 | ) | |||||||
Accrued commissions and advisory fees payable | (20,693 | ) | 20,368 | 9,713 | ||||||||
Accounts payable and accrued liabilities | (19,754 | ) | 15,279 | (236 | ) | |||||||
Income taxes receivable/payable | 202,537 | (73,835 | ) | 12,092 | ||||||||
Unearned revenue | 5,919 | 7,774 | 9,186 | |||||||||
Securities sold but not yet purchased | (4,660 | ) | 818 | 93 | ||||||||
Net cash provided by (used in) operating activities | 442,378 | (22,914 | ) | 271,157 |
2010 | 2009 | 2008 | ||||||||||
Proceeds from maturity of securities classified asheld-to-maturity | 6,200 | 3,700 | 7,600 | |||||||||
Proceeds from the sale of equity investment | — | 31 | — | |||||||||
Deposits of restricted cash | (24,121 | ) | (12,759 | ) | — | |||||||
Release of restricted cash | 7,216 | 7,163 | — | |||||||||
Acquisitions, net of existing cash balance | — | — | (13,258 | ) | ||||||||
Net cash used in investing activities | (39,192 | ) | (13,724 | ) | (76,202 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
Net (repayment of) proceeds from revolving line of credit | — | (90,000 | ) | 25,000 | ||||||||
Repayment of senior credit facilities | (12,584 | ) | (8,424 | ) | (8,424 | ) | ||||||
Proceeds from senior credit facilities | 566,700 | — | — | |||||||||
Redemption of subordinated notes | (579,563 | ) | — | — | ||||||||
Payment of debt amendment costs | (7,181 | ) | (372 | ) | — | |||||||
Excess tax benefits related to share-based compensation | 93,445 | 147 | 668 | |||||||||
Repayment of stockholder loans | — | 462 | 114 | |||||||||
Proceeds from stock options and warrants exercised | 101 | 290 | 586 | |||||||||
Issuance of common stock | 41,802 | — | 4,000 | |||||||||
Repurchase of common stock | — | (181 | ) | (3,783 | ) | |||||||
Net cash provided by (used in) financing activities | 102,720 | (98,078 | ) | 18,161 | ||||||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 40,614 | 159,355 | 31,236 | |||||||||
CASH AND CASH EQUIVALENTS — Beginning of year | 378,594 | 219,239 | 188,003 | |||||||||
CASH AND CASH EQUIVALENTS — End of year | $ | 419,208 | $ | 378,594 | $ | 219,239 | ||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||||||
Interest paid | $ | 92,888 | $ | 101,128 | $ | 116,581 | ||||||
Income taxes paid | $ | 63,387 | $ | 54,919 | $ | 71,487 | ||||||
NONCASH DISCLOSURES: | ||||||||||||
Capital expenditures purchased through short-term credit | $ | 4,023 | $ | 2,640 | $ | 1,294 | ||||||
Increase (decrease) in unrealized gain (loss) on interest rate swaps, net of tax expense (benefit) | $ | 6,776 | $ | 4,226 | $ | (8,986 | ) | |||||
Discount on proceeds from senior credit facilities recorded as debt issuance costs | $ | 13,300 | $ | — | $ | — | ||||||
Acquisitions: | ||||||||||||
Fair value of assets acquired | $ | 17,556 | ||||||||||
Cash paid for common stock acquired | — | |||||||||||
Additional consideration for post-closing payments | (13,258 | ) | ||||||||||
Common stock issued for acquisitions | — | |||||||||||
Liabilities assumed | $ | 4,298 | ||||||||||
2011 | 2010 | 2009 | ||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
Capital expenditures | (36,347 | ) | (23,095 | ) | (8,313 | ) | ||||||
Proceeds from disposal of fixed assets | — | — | 200 | |||||||||
Purchase of securities classified as held-to-maturity | (7,685 | ) | (5,392 | ) | (3,746 | ) | ||||||
Proceeds from maturity of securities classified as held-to-maturity | 6,000 | 6,200 | 3,700 | |||||||||
Proceeds from the sale of equity investment | — | — | 31 | |||||||||
Deposits of restricted cash | (7,794 | ) | (24,121 | ) | (12,759 | ) | ||||||
Release of restricted cash | 22,245 | 7,216 | 7,163 | |||||||||
Acquisitions (Note 3) | (41,977 | ) | — | — | ||||||||
Net cash used in investing activities | (65,558 | ) | (39,192 | ) | (13,724 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
Repayment of revolving line of credit | — | — | (90,000 | ) | ||||||||
Repayment of senior credit facilities | (53,971 | ) | (12,584 | ) | (8,424 | ) | ||||||
Proceeds from senior credit facilities | — | 566,700 | — | |||||||||
Redemption of subordinated notes | — | (579,563 | ) | — | ||||||||
Payment of debt amendment costs | — | (7,181 | ) | (372 | ) | |||||||
Repurchase of common stock | (89,037 | ) | — | (181 | ) | |||||||
Excess tax benefits related to share-based compensation | 57,590 | 93,445 | 147 | |||||||||
Repayment of stockholder loans | — | — | 462 | |||||||||
Proceeds from stock options and warrants exercised | 10,162 | 101 | 290 | |||||||||
Issuance of common stock | — | 41,802 | — | |||||||||
Net cash (used in) provided by financing activities | (75,256 | ) | 102,720 | (98,078 | ) | |||||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 301,564 | 40,614 | 159,355 | |||||||||
CASH AND CASH EQUIVALENTS — Beginning of year | 419,208 | 378,594 | 219,239 | |||||||||
CASH AND CASH EQUIVALENTS — End of year | $ | 720,772 | $ | 419,208 | $ | 378,594 | ||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||||||
Interest paid | $ | 68,669 | $ | 92,888 | $ | 101,128 | ||||||
Income taxes paid | $ | 60,651 | $ | 63,387 | $ | 54,919 | ||||||
NONCASH DISCLOSURES: | ||||||||||||
Capital expenditures purchased through short-term credit | $ | 6,226 | $ | 4,023 | $ | 2,640 | ||||||
Increase in unrealized gain on interest rate swaps, net of tax expense | $ | 3,646 | $ | 6,776 | $ | 4,226 | ||||||
Discount on proceeds from senior credit facilities recorded as debt issuance costs | $ | — | $ | 13,300 | $ | — |
F-8
F-9
F-10
2010 | 2009 | |||||||
Beginning balance — January 1 | $ | 792 | $ | 972 | ||||
Charge-offs — net of recoveries | (137 | ) | (180 | ) | ||||
Ending balance — December 31 | $ | 655 | $ | 792 | ||||
F-11
2011 | 2010 | |||||||
Beginning balance — January 1 | $ | 655 | $ | 792 | ||||
Provision for bad debts | 61 | — | ||||||
Charge-offs — net of recoveries | — | (137 | ) | |||||
Ending balance — December 31 | $ | 716 | $ | 655 |
2010 | 2009 | |||||||
Beginning balance — January 1 | $ | 6,159 | $ | 4,076 | ||||
Provision for bad debts(1) | 1,621 | 3,319 | ||||||
Charge-offs — net of recoveries | (984 | ) | (1,236 | ) | ||||
Ending balance — December 31 | $ | 6,796 | $ | 6,159 | ||||
2011 | 2010 | |||||||
Beginning balance — January 1 | $ | 6,796 | $ | 6,159 | ||||
Provision for bad debts | 3,772 | 1,621 | ||||||
Charge-offs — net of recoveries | (1,735 | ) | (984 | ) | ||||
Ending balance — December 31 | $ | 8,833 | $ | 6,796 |
2011 | 2010 | ||||||||||||||
Contract Value | Collateral Market Value | Contract Value | Collateral Market Value | ||||||||||||
Securities borrowed | $ | 7,890 | $ | 7,653 | $ | 8,391 | $ | 8,176 | |||||||
Securities loaned | $ | 14,302 | $ | 14,302 | $ | 8,113 | $ | 8,113 |
F-13
F-14
F-15
Accrued | Accrued | Cumulative | ||||||||||||||||||||||
Balance at | Balance at | Costs | ||||||||||||||||||||||
December 31, | Costs | December 31, | Incurred | |||||||||||||||||||||
2009 | Incurred(1) | Payments | Non-cash | 2010 | to Date(2) | |||||||||||||||||||
Severance and benefits | $ | 1,996 | $ | 43 | $ | (1,442 | ) | $ | — | $ | 597 | $ | 14,548 | |||||||||||
NRP | CCP | Total | |||||||||
Goodwill | $ | 13,698 | $ | 27,022 | $ | 40,720 | |||||
Accounts receivable | — | 770 | 770 | ||||||||
Other assets | — | 190 | 190 | ||||||||
Intangibles | 11,800 | 7,550 | 19,350 | ||||||||
Fixed assets(1) | — | 3,950 | 3,950 | ||||||||
Accounts payable and accrued liabilities | (190 | ) | (5,721 | ) | (5,911 | ) | |||||
Net assets acquired | $ | 25,308 | $ | 33,761 | $ | 59,069 |
(1) | Fixed assets acquired from CCP relate primarily to | |
NRP | CCP | Total | |||||||||
Cash payments, net of cash acquired | $ | 22,008 | $ | 19,969 | $ | 41,977 | |||||
Cash held in escrow | — | 2,250 | 2,250 | ||||||||
Contingent consideration | 3,300 | 11,542 | 14,842 | ||||||||
Total purchase price | $ | 25,308 | $ | 33,761 | $ | 59,069 |
Amortization Period (in years) | Amount Assigned | ||||
NRP | |||||
Client relationships | 11.0 | $ | 4,730 | ||
Advisor relationships | 9.0 | 4,080 | |||
Product sponsor relationships | 4.0 | 2,990 | |||
Total intangible assets acquired from NRP | $ | 11,800 | |||
CCP | |||||
Client relationships | 15.0 | $ | 7,550 |
F-16
Accrued | Accrued | Cumulative | Total | |||||||||||||||||||||||||
Balance at | Balance at | Costs | Expected | |||||||||||||||||||||||||
December 31, | Costs | December 31, | Incurred | Restructuring | ||||||||||||||||||||||||
2009 | Incurred | Payments | Non-cash | 2010 | to Date | Costs | ||||||||||||||||||||||
Severance and benefits | $ | 2,759 | $ | 2,034 | $ | (3,717 | ) | $ | (456 | ) | $ | 620 | $ | 11,470 | $ | 11,470 | ||||||||||||
Lease and contract termination fees | 7,458 | 5,340 | (4,071 | ) | 224 | 8,951 | 21,259 | 21,359 | ||||||||||||||||||||
Asset impairments | — | 840 | — | (840 | ) | — | 20,764 | 20,764 | ||||||||||||||||||||
Conversion and transfer costs | 304 | 5,665 | (1,963 | ) | (3,797 | ) | 209 | 19,548 | 23,662 | |||||||||||||||||||
Total | $ | 10,521 | $ | 13,879 | $ | (9,751 | ) | $ | (4,869 | ) | $ | 9,780 | $ | 73,041 | $ | 77,255 | ||||||||||||
Accrued Balance at December 31, 2010 | Costs Incurred(1) | Payments | Non-cash | Accrued Balance at December 31, 2011 | Total Expected Restructuring Costs(2) | ||||||||||||||||||
Conversion and transfer costs(2) | $ | — | $ | 9,178 | $ | (8,102 | ) | $ | — | $ | 1,076 | $ | 14,690 | ||||||||||
Contract penalties | — | 8,642 | 190 | — | 8,832 | 8,642 | |||||||||||||||||
Advisor retention and related benefits | — | 789 | (472 | ) | (67 | ) | 250 | 5,513 | |||||||||||||||
Asset impairments | — | 2,776 | — | (2,776 | ) | — | 2,776 | ||||||||||||||||
Total | $ | — | $ | 21,385 | $ | (8,384 | ) | $ | (2,843 | ) | $ | 10,158 | $ | 31,621 |
F-17
F-18
Quoted | ||||||||||||||||
Prices in | ||||||||||||||||
Active | Significant | |||||||||||||||
Markets for | Other | Significant | ||||||||||||||
Identical | Observable | Unobservable | ||||||||||||||
Assets | Inputs | Inputs | Fair Value | |||||||||||||
(Level 1) | (Level 2) | (Level 3) | Measurements | |||||||||||||
At December 31, 2010: | ||||||||||||||||
Assets | ||||||||||||||||
Cash equivalents | $ | 279,048 | $ | — | $ | — | $ | 279,048 | ||||||||
Securities owned — trading: | ||||||||||||||||
Money market funds | 316 | — | — | 316 | ||||||||||||
Mutual funds | 7,300 | — | — | 7,300 | ||||||||||||
Equity securities | 17 | — | — | 17 | ||||||||||||
Debt securities | — | 516 | — | 516 | ||||||||||||
U.S. treasury obligations | 1,010 | — | — | 1,010 | ||||||||||||
Certificates of deposit | — | 100 | — | 100 | ||||||||||||
Total securities owned — trading | 8,643 | 616 | — | 9,259 | ||||||||||||
Other assets | 17,175 | — | — | 17,175 | ||||||||||||
Total assets at fair value | $ | 304,866 | $ | 616 | $ | — | $ | 305,482 | ||||||||
Liabilities | ||||||||||||||||
Securities sold but not yet purchased: | ||||||||||||||||
Mutual funds | $ | 4,563 | $ | — | $ | — | $ | 4,563 | ||||||||
Equity securities | 204 | — | — | 204 | ||||||||||||
Debt securities | — | 54 | — | 54 | ||||||||||||
Total securities sold but not yet purchased | 4,767 | 54 | — | 4,821 | ||||||||||||
Interest rate swaps | — | 7,281 | — | 7,281 | ||||||||||||
Total liabilities at fair value | $ | 4,767 | $ | 7,335 | $ | — | $ | 12,102 | ||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Fair Value Measurements | ||||||||||||
At December 31, 2011: | |||||||||||||||
Assets | |||||||||||||||
Cash equivalents | $ | 575,243 | $ | — | $ | — | $ | 575,243 | |||||||
Securities owned — trading: | |||||||||||||||
Money market funds | 262 | — | — | 262 | |||||||||||
Mutual funds | 4,966 | — | — | 4,966 | |||||||||||
Equity securities | 47 | — | — | 47 | |||||||||||
Debt securities | — | 115 | — | 115 | |||||||||||
Certificates of deposit | 900 | — | — | 900 | |||||||||||
Total securities owned — trading | 6,175 | 115 | — | 6,290 | |||||||||||
Other assets | 21,400 | — | — | 21,400 | |||||||||||
Total assets at fair value | $ | 602,818 | $ | 115 | $ | — | $ | 602,933 | |||||||
Liabilities | |||||||||||||||
Securities sold but not yet purchased: | |||||||||||||||
Equity securities | $ | 134 | $ | — | $ | — | $ | 134 | |||||||
Debt securities | — | 2 | — | 2 | |||||||||||
Certificates of deposit | — | 25 | — | 25 | |||||||||||
Total securities sold but not yet purchased | 134 | 27 | — | 161 | |||||||||||
Interest rate swap | — | 1,377 | — | 1,377 | |||||||||||
Accounts payable and accrued liabilities | — | — | 16,104 | 16,104 | |||||||||||
Total liabilities at fair value | $ | 134 | $ | 1,404 | $ | 16,104 | $ | 17,642 |
Twelve Months Ended December 31, 2011 (in thousands): | |||
Fair value at December 31, 2010 | $ | — | |
Issuances of contingent consideration | 16,842 | ||
Total unrealized losses included in earnings (1) | 1,262 | ||
Payments | (2,000 | ) | |
Fair value at December 31, 2011 | $ | 16,104 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Fair Value Measurements | ||||||||||||
At December 31, 2010: | |||||||||||||||
Assets | |||||||||||||||
Cash equivalents | $ | 279,048 | $ | — | $ | — | $ | 279,048 | |||||||
Securities owned — trading: | |||||||||||||||
Money market funds | 316 | — | — | 316 | |||||||||||
Mutual funds | 7,300 | — | — | 7,300 | |||||||||||
Equity securities | 17 | — | — | 17 | |||||||||||
Debt securities | — | 516 | — | 516 | |||||||||||
U.S. treasury obligations | 1,010 | — | — | 1,010 | |||||||||||
Certificates of deposit | — | 100 | — | 100 | |||||||||||
Total securities owned — trading | 8,643 | 616 | — | 9,259 | |||||||||||
Other assets | 17,175 | — | — | 17,175 | |||||||||||
Total assets at fair value | $ | 304,866 | $ | 616 | $ | — | $ | 305,482 | |||||||
Liabilities | |||||||||||||||
Securities sold but not yet purchased: | |||||||||||||||
Mutual funds | $ | 4,563 | $ | — | $ | — | $ | 4,563 | |||||||
Equity securities | 204 | — | — | 204 | |||||||||||
Debt securities | — | 54 | — | 54 | |||||||||||
Total securities sold but not yet purchased | 4,767 | 54 | — | 4,821 | |||||||||||
Interest rate swaps | — | 7,281 | — | 7,281 | |||||||||||
Total liabilities at fair value | $ | 4,767 | $ | 7,335 | $ | — | $ | 12,102 |
F-19
Quoted | ||||||||||||||||
Prices in | ||||||||||||||||
Active | Significant | |||||||||||||||
Markets for | Other | Significant | ||||||||||||||
Identical | Observable | Unobservable | ||||||||||||||
Assets | Inputs | Inputs | Fair Value | |||||||||||||
(Level 1) | (Level 2) | (Level 3) | Measurements | |||||||||||||
At December 31, 2009: | ||||||||||||||||
Assets | ||||||||||||||||
Cash equivalents | $ | 223,665 | $ | — | $ | — | $ | 223,665 | ||||||||
Securities segregated under federal and other regulations | 279,579 | — | — | 279,579 | ||||||||||||
Securities owned — trading: | ||||||||||||||||
Money market funds | 181 | — | — | 181 | ||||||||||||
Mutual funds | 6,694 | — | — | 6,694 | ||||||||||||
Equity securities | 11 | — | — | 11 | ||||||||||||
Debt securities | — | 425 | — | 425 | ||||||||||||
U.S. treasury obligations | 7,797 | — | — | 7,797 | ||||||||||||
Certificates of deposit | — | 253 | — | 253 | ||||||||||||
Total securities owned — trading | 14,683 | 678 | — | 15,361 | ||||||||||||
Other assets | 12,739 | — | — | 12,739 | ||||||||||||
Total assets at fair value | $ | 530,666 | $ | 678 | $ | — | $ | 531,344 | ||||||||
Liabilities | ||||||||||||||||
Securities sold but not yet purchased: | ||||||||||||||||
Mutual funds | $ | 3,773 | $ | — | $ | — | $ | 3,773 | ||||||||
U.S. treasury obligations | 5 | — | — | 5 | ||||||||||||
Equity securities | 7 | — | — | 7 | ||||||||||||
Certificates of deposit | — | 123 | — | 123 | ||||||||||||
Debt securities | — | 95 | — | 95 | ||||||||||||
Total securities sold but not yet purchased | 3,785 | 218 | — | 4,003 | ||||||||||||
Interest rate swaps | — | 17,292 | — | 17,292 | ||||||||||||
Total liabilities at fair value | $ | 3,785 | $ | 17,510 | $ | — | $ | 21,295 | ||||||||
F-20
Gross | ||||||||||||
Amortized | Unrealized | Fair | ||||||||||
Cost | Gains | Value | ||||||||||
At December 31, 2010: | ||||||||||||
U.S. government notes | $ | 9,563 | $ | 69 | $ | 9,632 | ||||||
At December 31, 2009: | ||||||||||||
U.S. government notes | $ | 10,354 | $ | 49 | $ | 10,403 | ||||||
Certificate of deposit | 100 | — | 100 | |||||||||
Total | $ | 10,454 | $ | 49 | $ | 10,503 | ||||||
Amortized Cost | Gross Unrealized Gains | Fair Value | |||||||||
At December 31, 2011: | |||||||||||
U.S. government notes | $ | 11,167 | $ | 27 | $ | 11,194 | |||||
At December 31, 2010: | |||||||||||
U.S. government notes | $ | 9,563 | $ | 69 | $ | 9,632 |
Within 1 Year | 1-2 Years | Total | ||||||||||
U.S. government notes — at amortized cost | $ | 6,049 | $ | 3,514 | $ | 9,563 | ||||||
U.S. government notes- at fair value | $ | 6,075 | $ | 3,557 | $ | 9,632 |
Within 1 Year | 1-3 Years | Total | ||||||||||
U.S. government notes — at amortized cost | $ | 8,120 | — | $ | 3,047 | $ | 11,167 | |||||
U.S. government notes — at fair value | $ | 8,147 | $ | 3,047 | $ | 11,194 |
7. | Receivables from Product Sponsors, Broker-Dealers and ClearingOrganizations and Payables to Broker-Dealers and Clearing Organizations |
December 31, | ||||||||
2010 | 2009 | |||||||
Receivables: | ||||||||
Commissions receivable from product sponsors and others | $ | 114,829 | $ | 102,920 | ||||
Receivable from clearing organizations | 65,501 | 49,793 | ||||||
Receivable from broker-dealers | 12,507 | 12,195 | ||||||
Securitiesfailed-to-deliver | 10,495 | 6,992 | ||||||
Total receivables | $ | 203,332 | $ | 171,900 | ||||
Payables: | ||||||||
Securities loaned | $ | 8,113 | $ | 7,239 | ||||
Securitiesfailed-to-receive | 11,425 | 5,495 | ||||||
Payable to broker-dealers | 1,023 | 2,787 | ||||||
Payable to clearing organizations | 18,509 | 2,696 | ||||||
Total payables | $ | 39,070 | $ | 18,217 | ||||
F-21
December 31, | ||||||||
2011 | 2010 | |||||||
Receivables: | ||||||||
Commissions receivable from product sponsors and others | $ | 85,486 | $ | 114,829 | ||||
Receivable from clearing organizations | 47,039 | 65,501 | ||||||
Securities failed-to-deliver | 6,052 | 10,495 | ||||||
Receivable from broker-dealers | 4,916 | 12,507 | ||||||
Total receivables | $ | 143,493 | $ | 203,332 | ||||
Payables: | ||||||||
Securities loaned | $ | 14,302 | $ | 8,113 | ||||
Payable to clearing organizations | 13,454 | 18,509 | ||||||
Securities failed-to-receive | 5,885 | 11,425 | ||||||
Payable to broker-dealers | 1,114 | 1,023 | ||||||
Total payables | $ | 34,755 | $ | 39,070 |
December 31, | ||||||||
2010 | 2009 | |||||||
Internally developed software | $ | 206,002 | $ | 193,682 | ||||
Computers and software | 84,241 | 82,459 | ||||||
Leasehold improvements | 41,772 | 41,559 | ||||||
Furniture and equipment | 16,585 | 17,180 | ||||||
Property | 6,572 | 6,572 | ||||||
Total fixed assets | 355,172 | 341,452 | ||||||
Accumulated depreciation and amortization | (276,501 | ) | (239,868 | ) | ||||
Fixed assets — net | $ | 78,671 | $ | 101,584 | ||||
December 31, | ||||||||
2011 | 2010 | |||||||
Internally developed software | $ | 239,219 | $ | 206,002 | ||||
Computers and software | 87,798 | 84,241 | ||||||
Leasehold improvements | 46,939 | 41,772 | ||||||
Furniture and equipment | 15,932 | 16,585 | ||||||
Property | 6,572 | 6,572 | ||||||
Total fixed assets | 396,460 | 355,172 | ||||||
Accumulated depreciation and amortization | (305,143 | ) | (276,501 | ) | ||||
Fixed assets — net | $ | 91,317 | $ | 78,671 |
Balance at December 31, 2010 | $ | 1,293,366 | |
Acquisition of NRP | 13,698 | ||
Acquisition of CCP | 27,022 | ||
Balance at December 31, 2011 | $ | 1,334,086 |
Gross | Net | ||||||||||||||||||||||||
Carrying | Accumulated | Carrying | Weighted Average Life Remaining (in years) | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | |||||||||||||||||||
Value | Amortization | Value | |||||||||||||||||||||||
At December 31, 2011: | |||||||||||||||||||||||||
Definite-lived intangible assets: | |||||||||||||||||||||||||
Advisor and financial institution relationships | 13.7 | $ | 450,164 | $ | (132,503 | ) | $ | 317,661 | |||||||||||||||||
Product sponsor relationships | 14.0 | 230,916 | (63,710 | ) | 167,206 | ||||||||||||||||||||
Client relationships | 12.9 | 14,910 | (1,926 | ) | 12,984 | ||||||||||||||||||||
Total definite-lived intangible assets | $ | 695,990 | $ | (198,139 | ) | $ | 497,851 | ||||||||||||||||||
Indefinite-lived intangible assets: | |||||||||||||||||||||||||
Trademark and trade name | 39,819 | ||||||||||||||||||||||||
Total intangible assets | $ | 537,670 | |||||||||||||||||||||||
At December 31, 2010: | |||||||||||||||||||||||||
Definite-lived intangible assets: | |||||||||||||||||||||||||
Advisor and financial institution relationships | $ | 458,424 | $ | (116,687 | ) | $ | 341,737 | 14.7 | $ | 458,424 | $ | (116,687 | ) | $ | 341,737 | ||||||||||
Product sponsor relationships | 231,930 | (55,255 | ) | 176,675 | 15.2 | 231,930 | (55,255 | ) | 176,675 | ||||||||||||||||
Trust client relationships | 2,630 | (784 | ) | 1,846 | |||||||||||||||||||||
Client relationships | 14.2 | 2,630 | (784 | ) | 1,846 | ||||||||||||||||||||
Total definite-lived intangible assets | $ | 692,984 | $ | (172,726 | ) | $ | 520,258 | $ | 692,984 | $ | (172,726 | ) | $ | 520,258 | |||||||||||
Indefinite-lived intangible assets: | |||||||||||||||||||||||||
Trademark and trade name | 39,819 | 39,819 | |||||||||||||||||||||||
Total intangible assets | $ | 560,077 | $ | 560,077 | |||||||||||||||||||||
At December 31, 2009: | |||||||||||||||||||||||||
Definite-lived intangible assets: | |||||||||||||||||||||||||
Advisor and financial institution relationships | $ | 458,424 | $ | (91,586 | ) | $ | 366,838 | ||||||||||||||||||
Product sponsor relationships | 231,930 | (43,482 | ) | 188,448 | |||||||||||||||||||||
Trust client relationships | 2,630 | (652 | ) | 1,978 | |||||||||||||||||||||
Trademarks and trade names | 457 | (457 | ) | — | |||||||||||||||||||||
Total definite-lived intangible assets | $ | 693,441 | $ | (136,177 | ) | $ | 557,264 | ||||||||||||||||||
Indefinite-lived intangible assets: | |||||||||||||||||||||||||
Trademark and trade name | 39,819 | ||||||||||||||||||||||||
Total intangible assets | $ | 597,083 | |||||||||||||||||||||||
2011 | $ | 36,840 | ||
2012 | 36,548 | |||
2013 | 35,927 | |||
2014 | 35,927 | |||
2015 | 35,927 | |||
Thereafter | 339,089 | |||
Total | $ | 520,258 | ||
2012 | $ | 39,050 | |
2013 | 38,268 | ||
2014 | 37,991 | ||
2015 | 37,111 | ||
2016 | 37,004 | ||
Thereafter | 308,427 | ||
Total | $ | 497,851 |
December 31, | ||||||||
2010 | 2009 | |||||||
Accounts payable accruals | $ | 56,377 | $ | 47,145 | ||||
Accrued net payroll | 44,401 | 36,203 | ||||||
Legal accrual | 17,602 | 13,715 | ||||||
Advisor deferred compensation plan liability | 16,542 | 12,305 | ||||||
Deferred rent | 11,391 | 14,121 | ||||||
Other accrued liabilities | 8,273 | 6,409 | ||||||
Total payables | $ | 154,586 | $ | 129,898 | ||||
December 31, | |||||||
2011 | 2010 | ||||||
Accounts payable accruals | $ | 51,173 | $ | 56,377 | |||
Accrued net payroll | 42,559 | 44,401 | |||||
Other accrued liabilities | 24,515 | 8,273 | |||||
Advisor deferred compensation plan liability | 20,166 | 16,542 | |||||
Legal accrual | 13,221 | 17,602 | |||||
Deferred rent | 8,765 | 11,391 | |||||
Total payables | $ | 160,399 | $ | 154,586 |
2010 | 2009 | 2008 | ||||||||||
Current (benefit) provision: | ||||||||||||
Federal | $ | (6,316 | ) | $ | 53,757 | $ | 61,498 | |||||
State | (4,052 | ) | 12,750 | 11,909 | ||||||||
Total current (benefit) provision | (10,368 | ) | 66,507 | 73,407 | ||||||||
Deferred benefit: | ||||||||||||
Federal | (17,877 | ) | (24,360 | ) | (25,385 | ) | ||||||
State | (3,742 | ) | (17,100 | ) | (753 | ) | ||||||
Total deferred benefit | (21,619 | ) | (41,460 | ) | (26,138 | ) | ||||||
(Benefit from) Provision for income taxes | $ | (31,987 | ) | $ | 25,047 | $ | 47,269 | |||||
2011 | 2010 | 2009 | |||||||||
Current provision (benefit): | |||||||||||
Federal | $ | 105,176 | $ | (6,316 | ) | $ | 53,757 | ||||
State | 15,559 | (4,052 | ) | 12,750 | |||||||
Total current provision (benefit) | 120,735 | (10,368 | ) | 66,507 | |||||||
Deferred benefit: | |||||||||||
Federal | (6,781 | ) | (17,877 | ) | (24,360 | ) | |||||
State | (1,651 | ) | (3,742 | ) | (17,100 | ) | |||||
Total deferred benefit | (8,432 | ) | (21,619 | ) | (41,460 | ) | |||||
Provision for (Benefit from) income taxes | $ | 112,303 | $ | (31,987 | ) | $ | 25,047 |
2010 | 2009 | 2008 | ||||||||||
Federal statutory income tax rates | (35.0 | )% | 35.0 | % | 35.0 | % | ||||||
State income taxes — net of federal benefit | (5.7 | ) | (3.9 | ) | 7.8 | |||||||
Share-based compensation | 1.5 | 1.5 | 1.0 | |||||||||
Uncertain tax positions | (0.1 | ) | 1.8 | 3.6 | ||||||||
Non-deductible expenses | 0.7 | 0.6 | 1.6 | |||||||||
Change in valuation allowance | — | 0.1 | 1.2 | |||||||||
Transaction costs | 3.2 | — | — | |||||||||
Research and development credits | (1.2 | ) | — | (0.5 | ) | |||||||
Other | 0.6 | (0.6 | ) | 1.3 | ||||||||
Effective income tax rates | (36.0 | )% | 34.5 | % | 51.0 | % | ||||||
2011 | 2010 | 2009 | ||||||
Federal statutory income tax rates | 35.0 | % | (35.0 | )% | 35.0 | % | ||
State income taxes — net of federal benefit | 3.2 | (5.7 | ) | (3.9 | ) | |||
Share-based compensation | 0.6 | 1.5 | 1.5 | |||||
Uncertain tax positions | 0.1 | (0.1 | ) | 1.8 | ||||
Non-deductible expenses | 0.4 | 0.7 | 0.6 | |||||
Change in valuation allowance | — | — | 0.1 | |||||
Transaction costs | 0.2 | 3.2 | — | |||||
Research and development credits | (0.2 | ) | (1.2 | ) | — | |||
Other | 0.4 | 0.6 | (0.6 | ) | ||||
Effective income tax rates | 39.7 | % | (36.0 | )% | 34.5 | % |
F-24
December 31, | ||||||||
2010 | 2009 | |||||||
Deferred tax assets: | ||||||||
State taxes | $ | 10,507 | $ | 15,019 | ||||
Reserves for litigation, vacation, and bonuses | 26,539 | 24,030 | ||||||
Unrealized gain on interest rate swaps | 2,786 | 5,675 | ||||||
Deferred rent | 4,557 | 5,649 | ||||||
Share-based compensation | 8,091 | 6,905 | ||||||
Provision for bad debts | 7,495 | 2,849 | ||||||
Net operating losses | 107 | 172 | ||||||
Other | 1,625 | 1,841 | ||||||
Subtotal | 61,707 | 62,140 | ||||||
Valuation allowance | (1,323 | ) | (1,340 | ) | ||||
Total deferred tax assets | 60,384 | 60,800 | ||||||
Deferred tax liabilities: | ||||||||
Amortization of intangible assets and trademarks and trade names | (179,590 | ) | (191,108 | ) | ||||
Depreciation of fixed assets | (11,005 | ) | (17,300 | ) | ||||
Other | — | — | ||||||
Total deferred tax liabilities | (190,595 | ) | (208,408 | ) | ||||
Deferred income taxes — net | $ | (130,211 | ) | $ | (147,608 | ) | ||
December 31, | |||||||
2011 | 2010 | ||||||
Deferred tax assets: | |||||||
State taxes | $ | 11,005 | $ | 10,507 | |||
Reserves for litigation, vacation, and bonuses | 24,374 | 26,539 | |||||
Unrealized gain on interest rate swaps | 528 | 2,786 | |||||
Deferred rent | 3,506 | 4,557 | |||||
Share-based compensation | 12,377 | 8,091 | |||||
Provision for bad debts | 3,689 | 7,495 | |||||
Net operating losses | 712 | 107 | |||||
Other | 2,323 | 1,625 | |||||
Subtotal | 58,514 | 61,707 | |||||
Valuation allowance | (1,438 | ) | (1,323 | ) | |||
Total deferred tax assets | 57,076 | 60,384 | |||||
Deferred tax liabilities: | |||||||
Amortization of intangible assets and trademarks and trade names | (173,602 | ) | (179,590 | ) | |||
Depreciation of fixed assets | (11,240 | ) | (11,005 | ) | |||
Total deferred tax liabilities | (184,842 | ) | (190,595 | ) | |||
Deferred income taxes — net | $ | (127,766 | ) | $ | (130,211 | ) |
F-25
2010 | 2009 | 2008 | ||||||||||
Balance — Beginning of year | $ | 21,958 | $ | 20,258 | $ | 15,139 | ||||||
Increases related to acquired tax positions | 111 | 142 | 969 | |||||||||
Increases related to current year tax positions | 4,076 | 4,066 | 6,480 | |||||||||
Reductions as a result of a lapse of the applicable statute of limitations related to acquired tax positions | (858 | ) | (627 | ) | (596 | ) | ||||||
Reductions as a result of a lapse of the applicable statute of limitations related to prior period tax positions | (4,230 | ) | (1,881 | ) | (1,734 | ) | ||||||
Balance — End of year | $ | 21,057 | $ | 21,958 | $ | 20,258 | ||||||
2011 | 2010 | 2009 | |||||||||
Balance — Beginning of year | $ | 21,057 | $ | 21,958 | $ | 20,258 | |||||
Increases related to acquired tax positions | 69 | 111 | 142 | ||||||||
Increases related to current year tax positions | 3,245 | 4,076 | 4,066 | ||||||||
Reductions as a result of a lapse of the applicable statute of limitations related to acquired tax positions | (1,377 | ) | (858 | ) | (627 | ) | |||||
Reductions as a result of a lapse of the applicable statute of limitations related to prior period tax positions | (2,874 | ) | (4,230 | ) | (1,881 | ) | |||||
Balance — End of year | $ | 20,120 | $ | 21,057 | $ | 21,958 |
12. | Indebtedness |
F-26
F-27
December 31, 2010 | December 31, 2009 | |||||||||||||||||||
Interest | Interest | |||||||||||||||||||
Maturity | Balance | Rate | Balance | Rate | ||||||||||||||||
Senior secured term loan: | ||||||||||||||||||||
Hedged with interest rate swaps | 6/28/2013 | $ | 210,000 | 2.05% | (1) | $ | 400,000 | 2.00% | (6) | |||||||||||
Unhedged: | ||||||||||||||||||||
2013 Term Loans | 6/28/2013 | 104,739 | 2.01% | (2) | 419,223 | 2.00% | (7) | |||||||||||||
2015 Term Loans | 6/25/2015 | 496,250 | 4.25% | (3) | — | |||||||||||||||
2017 Term Loans | 6/28/2017 | 575,650 | 5.25% | (4) | — | |||||||||||||||
Senior unsecured subordinated notes | (5 | ) | — | 550,000 | 10.75% | |||||||||||||||
Total borrowings | 1,386,639 | 1,369,223 | ||||||||||||||||||
Less current borrowings (maturities within 12 months) | 13,971 | 8,424 | ||||||||||||||||||
Long-term borrowings — net of current portion | $ | 1,372,668 | $ | 1,360,799 | ||||||||||||||||
December 31, 2011 | December 31, 2010 | ||||||||||||||||
Maturity | Balance | Interest Rate | Balance | Interest Rate | |||||||||||||
Senior secured term loan: | |||||||||||||||||
Hedged with interest rate swaps | 6/28/2013 | $ | 65,000 | 2.33 | % | (1) | $ | 210,000 | 2.05 | % | (5) | ||||||
Unhedged: | |||||||||||||||||
2013 Term Loans | 6/28/2013 | 237,489 | 2.05 | % | (2) | 104,739 | 2.01 | % | (6) | ||||||||
2015 Term Loans | 6/25/2015 | 476,935 | 4.25 | % | (3) | 496,250 | 4.25 | % | (7) | ||||||||
2017 Term Loans | 6/28/2017 | 553,244 | 5.25 | % | (4) | 575,650 | 5.25 | % | (8) | ||||||||
Total borrowings | 1,332,668 | 1,386,639 | |||||||||||||||
Less current borrowings (maturities within 12 months) | 13,971 | 13,971 | |||||||||||||||
Long-term borrowings — net of current portion | $ | 1,318,697 | $ | 1,372,668 |
(1) | As of December 31, |
(2) | As of December 31, |
(3) | As of December 31, |
(4) | As of December 31, |
(5) | ||
As of December 31, |
As of December 31, |
(7) | As of December 31, 2010, the variable interest rate for the unhedged portion of the 2015 Term Loans is based on the greater of the one-month LIBOR of 0.26% or 1.50%, plus the applicable interest rate margin of 2.75%. |
(8) | As of December 31, 2010, the variable interest rate for the unhedged portion of the 2017 Term Loans is based on the greater of the one-month LIBOR of 0.26% or 1.50%, plus the applicable interest rate margin of 3.75%. |
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Average balance outstanding | $ | 2,074 | $ | 56,472 | $ | 48,725 | ||||||
Weighted-average interest rate | 1.16 | % | 2.41 | % | 4.74 | % |
F-28
Year Ended December 31, | |||||||||||
2011 | 2010 | 2009 | |||||||||
Average balance outstanding | $ | 104 | $ | 2,074 | $ | 56,472 | |||||
Weighted-average interest rate | 1.00 | % | 1.16 | % | 2.41 | % |
2011 | $ | 13,971 | ||
2012 | 13,971 | |||
2013 | 319,197 | |||
2014 | 10,800 | |||
2015 | 482,050 | |||
Thereafter | 546,650 | |||
Total | $ | 1,386,639 | ||
2012 | $ | 13,971 | |
2013 | 310,117 | ||
2014 | 10,800 | ||
2015 | 467,735 | ||
2016 | 5,800 | ||
Thereafter | 524,245 | ||
Total | $ | 1,332,668 |
Variable | ||||||||||||||||||
Notional | Fixed | Receive | Fair | Maturity | ||||||||||||||
Balance | Pay Rate | Rate(1) | Value | Date | ||||||||||||||
$145,000 | 4.83% | 0.30% | $(3,235) | June 30, 2011 | ||||||||||||||
65,000 | 4.85% | 0.30% | (4,046) | June 30, 2012 | ||||||||||||||
$210,000 | $(7,281) | |||||||||||||||||
F-29
Leases |
2011 | $ | 31,380 | ||
2012 | 25,235 | |||
2013 | 16,145 | |||
2014 | 9,400 | |||
2015 | 7,157 | |||
Thereafter | 7,908 | |||
Total(1) | $ | 97,225 | ||
2012 | $ | 27,507 | |
2013 | 23,938 | ||
2014 | 15,548 | ||
2015 | 11,836 | ||
2016 | 11,313 | ||
Thereafter | 47,470 | ||
Total(1) | $ | 137,612 |
(1) | Minimum payments have not been reduced by minimum sublease rental income of |
F-30
F-31
15. | Share-Based Compensation |
2010 | 2009 | 2008 | ||||||||||
Expected life (in years) | 6.50 | 7.13 | 6.52 | |||||||||
Expected stock price volatility | 49.22 | % | 51.35 | % | 33.78 | % | ||||||
Expected dividend yield | — | — | — | |||||||||
Annualized forfeiture rate | 3.00 | % | 4.35 | % | 1.51 | % | ||||||
Fair value of options | $ | 17.43 | $ | 12.30 | $ | 9.96 | ||||||
Risk-free interest rate | 2.70 | % | 2.93 | % | 2.73 | % |
Employees | Advisors and Financial Institutions | |||||||||||||||||||||||
2011 | 2010 | 2009 | 2011 | 2010 | 2009 | |||||||||||||||||||
Expected life (in years) | 6.50 | 6.50 | 6.50 | 9.71 | 9.20 | 9.32 | ||||||||||||||||||
Expected stock price volatility | 48.82 | % | 49.22 | % | 50.41 | % | 48.49 | % | 49.46 | % | 54.66 | % | ||||||||||||
Expected dividend yield | — | % | — | % | — | % | — | % | — | % | — | % | ||||||||||||
Fair value of options | $ | 15.99 | $ | 17.42 | $ | 11.32 | $ | 16.59 | $ | 25.62 | $ | 15.72 | ||||||||||||
Risk-free interest rate | 2.20 | % | 2.70 | % | 2.70 | % | 1.95 | % | 3.35 | % | 3.75 | % |
F-32
Weighted- | ||||||||||||||||
Average | ||||||||||||||||
Remaining | Aggregate | |||||||||||||||
Weighted- | Contractual | Intrinsic | ||||||||||||||
Number of | Average | Term | Value | |||||||||||||
Shares | Exercise Price | (Years) | (In thousands) | |||||||||||||
Outstanding — December 31, 2007 | 21,748,080 | 2.46 | ||||||||||||||
Granted | 1,936,206 | 27.55 | ||||||||||||||
Exercised | (286,968 | ) | 2.04 | |||||||||||||
Forfeited | (3,319,035 | ) | 2.59 | |||||||||||||
Outstanding — December 31, 2008 | 20,078,283 | 4.87 | ||||||||||||||
Granted | 3,209,361 | 21.32 | ||||||||||||||
Exercised | (256,795 | ) | 1.13 | |||||||||||||
Forfeited | (328,380 | ) | 21.83 | |||||||||||||
Outstanding — December 31, 2009 | 22,702,469 | 6.99 | ||||||||||||||
Granted | 1,804,759 | 33.79 | ||||||||||||||
Exercised | (13,883,847 | ) | 1.85 | |||||||||||||
Forfeited | (344,329 | ) | 22.36 | |||||||||||||
Outstanding — December 31, 2010 | 10,279,052 | $ | 18.12 | 6.66 | $ | 187,568 | ||||||||||
Exercisable — December 31, 2010 | 4,954,868 | $ | 8.95 | 4.43 | $ | 135,886 | ||||||||||
F-33
Number of Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value (In thousands) | |||||||||||
Outstanding — December 31, 2008 | 20,078,283 | $ | 4.87 | |||||||||||
Granted | 3,209,361 | 21.32 | ||||||||||||
Exercised | (256,795 | ) | 1.13 | |||||||||||
Forfeited | (328,380 | ) | 21.83 | |||||||||||
Outstanding — December 31, 2009 | 22,702,469 | 6.99 | ||||||||||||
Granted | 1,804,759 | 33.79 | ||||||||||||
Exercised | (13,883,847 | ) | 1.85 | |||||||||||
Forfeited | (344,329 | ) | 22.36 | |||||||||||
Outstanding — December 31, 2010 | 10,279,052 | 18.12 | ||||||||||||
Granted | 1,151,082 | 31.90 | ||||||||||||
Exercised | (1,807,746 | ) | 5.42 | |||||||||||
Forfeited | (599,638 | ) | 27.01 | |||||||||||
Outstanding — December 31, 2011 | 9,022,750 | $ | 21.83 | 6.63 | $ | 78,546 | ||||||||
Exercisable — December 31, 2011 | 4,323,410 | $ | 15.16 | 4.91 | $ | 66,495 |
Outstanding | Exercisable | |||||||||||||||||||
Weighted- | ||||||||||||||||||||
Average | Weighted- | Weighted- | ||||||||||||||||||
Total | Remaining | Average | Average | |||||||||||||||||
Number of | Life | Exercise | Number of | Exercise | ||||||||||||||||
Range of Exercise Prices | Shares | (Years) | Price | Shares | Price | |||||||||||||||
At December 31, 2010: | ||||||||||||||||||||
$1.35 — $2.38 | 3,350,900 | 2.96 | $ | 1.69 | 3,350,900 | $ | 1.69 | |||||||||||||
$10.30 — $19.74 | 896,294 | 7.92 | 18.38 | 198,992 | 16.91 | |||||||||||||||
$21.60 — $22.08 | 2,053,100 | 8.42 | 22.02 | 519,040 | 21.94 | |||||||||||||||
$23.02 — $27.80 | 2,242,775 | 7.52 | 26.55 | 885,936 | 26.99 | |||||||||||||||
$30.00 — $34.61 | 1,735,983 | 9.98 | 34.21 | — | — | |||||||||||||||
10,279,052 | 6.66 | $ | 18.12 | 4,954,868 | $ | 8.95 | ||||||||||||||
Outstanding | Exercisable | ||||||||||||||||
Range of Exercise Prices | Total Number of Shares | Weighted- Average Remaining Life (Years) | Weighted- Average Exercise Price | Number of Shares | Weighted- Average Exercise Price | ||||||||||||
At December 31, 2011: | |||||||||||||||||
$1.35 — $2.38 | 1,843,059 | 2.12 | $ | 1.66 | 1,843,059 | $ | 1.66 | ||||||||||
$10.30 — $19.74 | 787,770 | 6.95 | 18.46 | 262,532 | 17.53 | ||||||||||||
$21.60 — $22.08 | 1,821,025 | 7.41 | 22.02 | 805,195 | 21.97 | ||||||||||||
$23.02 — $29.99 | 2,438,814 | 7.28 | 27.20 | 1,097,969 | 26.79 | ||||||||||||
$30.00 — $34.79 | 2,132,082 | 9.02 | 34.22 | 314,655 | 34.24 | ||||||||||||
9,022,750 | 6.63 | $ | 21.83 | 4,323,410 | $ | 15.16 |
F-34
Weighted-Average | ||||||||||||
Number of | Grant-Date | |||||||||||
Shares | Fair Value | |||||||||||
Nonvested at January 1, 2010 | — | $ | — | |||||||||
Granted | 10,692 | 28.30 | ||||||||||
Vested | — | — | ||||||||||
Forfeited | — | — | ||||||||||
Nonvested at December 31, 2010 | 10,692 | $ | 28.30 | |||||||||
Number of Shares | Weighted-Average Grant-Date Fair Value | ||||||
Nonvested at December 31, 2009 | — | $ | — | ||||
Granted | 10,692 | 28.30 | |||||
Vested | — | — | |||||
Forfeited | — | — | |||||
Nonvested at December 31, 2010 | 10,692 | $ | 28.30 | ||||
Granted | 25,440 | 31.45 | |||||
Vested | — | — | |||||
Forfeited | — | — | |||||
Nonvested at December 31, 2011 | 36,132 | $ | 30.51 |
16. | Earnings per Share |
F-35
For the Year Ended | ||||||||||||
December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In thousands) | ||||||||||||
Basic earnings per share: | ||||||||||||
Net (loss) income, as reported | $ | (56,862 | ) | $ | 47,520 | $ | 45,496 | |||||
Less: allocation of undistributed earnings to stock units | — | (919 | ) | (4 | ) | |||||||
Net (loss) income, for computing basic earnings per share | $ | (56,862 | ) | $ | 46,601 | $ | 45,492 | |||||
Diluted earnings per share: | ||||||||||||
Net (loss) income, as reported | $ | (56,862 | ) | $ | 47,520 | $ | 45,496 | |||||
Less: allocation of undistributed earnings to stock units | — | (810 | ) | (3 | ) | |||||||
Net (loss) income, for computing diluted earnings per share | $ | (56,862 | ) | $ | 46,710 | $ | 45,493 | |||||
For the Year Ended December 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
(In thousands) | ||||||||||||
Basic earnings per share: | ||||||||||||
Net income (loss), as reported | $ | 170,382 | $ | (56,862 | ) | $ | 47,520 | |||||
Allocation of undistributed earnings to stock units | (2,176 | ) | — | (919 | ) | |||||||
Net income (loss), for computing basic earnings per share | $ | 168,206 | $ | (56,862 | ) | $ | 46,601 | |||||
Diluted earnings per share: | ||||||||||||
Net income (loss), as reported | $ | 170,382 | $ | (56,862 | ) | $ | 47,520 | |||||
Allocation of undistributed earnings to stock units | (2,104 | ) | — | (810 | ) | |||||||
Net income (loss), for computing diluted earnings per share | $ | 168,278 | $ | (56,862 | ) | $ | 46,710 |
For the Year Ended | ||||||||||||
December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In thousands) | ||||||||||||
Basic weighted average number of shares outstanding | 89,441 | 86,649 | 86,447 | |||||||||
Dilutive common share equivalents | — | 11,845 | 13,887 | |||||||||
Diluted weighted average number of shares outstanding | 89,441 | 98,494 | 100,334 | |||||||||
For the Year Ended December 31, | |||||||||
2011 | 2010 | 2009 | |||||||
(In thousands) | |||||||||
Basic weighted average number of shares outstanding | 108,374 | 89,441 | 86,649 | ||||||
Dilutive common share equivalents | 3,745 | — | 11,845 | ||||||
Diluted weighted average number of shares outstanding | 112,119 | 89,441 | 98,494 |
For the Year Ended | ||||||||||||
December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Basic (loss) earnings per share | $ | (0.64 | ) | $ | 0.54 | $ | 0.53 | |||||
Diluted (loss) earnings per share | $ | (0.64 | ) | $ | 0.47 | $ | 0.45 |
For the Year Ended December 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Basic earnings (loss) per share | $ | 1.55 | $ | (0.64 | ) | $ | 0.54 | |||||
Diluted earnings (loss) per share | $ | 1.50 | $ | (0.64 | ) | $ | 0.47 |
18. | Related Party Transactions |
F-37
December 31, 2010 | ||||||||||||
Minimum | ||||||||||||
Net | Net Capital | Excess Net | ||||||||||
Capital | Required | Capital | ||||||||||
LPL Financial LLC | $ | 95,362 | $ | 6,416 | $ | 88,946 | ||||||
UVEST Financial Services Group, Inc. | 7,884 | 1,451 | 6,433 | |||||||||
Total | $ | 103,246 | $ | 7,867 | $ | 95,379 | ||||||
Net Capital | Minimum Net Capital Required | Excess Net Capital | |||||||||
LPL Financial LLC | $ | 100,944 | $ | 7,028 | $ | 93,916 | |||||
UVEST Financial Services Group, Inc. | $ | 15,031 | $ | 937 | $ | 14,094 |
20. | Financial Instruments with Off-Balance-Sheet Credit Risk and Concentrations of Credit Risk |
F-39
2011 | |||||||||||||||
(In thousands) | |||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||
Net revenues | $ | 873,869 | $ | 893,996 | $ | 882,857 | $ | 828,653 | |||||||
Net income | $ | 48,999 | $ | 45,507 | $ | 36,428 | $ | 39,448 | |||||||
Basic earnings per share | $ | 0.44 | $ | 0.41 | $ | 0.33 | $ | 0.36 | |||||||
Diluted earnings per share | $ | 0.43 | $ | 0.40 | $ | 0.32 | $ | 0.35 |
2010 | |||||||||||||||
(In thousands) | |||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||
Net revenues | $ | 743,406 | $ | 790,161 | $ | 759,964 | $ | 819,955 | |||||||
Net income (loss) | $ | 25,554 | $ | 8,000 | $ | 26,144 | $ | (116,560 | ) | ||||||
Basic earnings (loss) per share | $ | 0.29 | $ | 0.09 | $ | 0.30 | $ | (1.20 | ) | ||||||
Diluted earnings (loss) per share | $ | 0.25 | $ | 0.08 | $ | 0.26 | $ | (1.20 | ) |
2010 | ||||||||||||||||
(In thousands) | ||||||||||||||||
First | Second | Third | Fourth | |||||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||||
Revenues | $ | 743,452 | $ | 790,185 | $ | 759,988 | $ | 819,972 | ||||||||
Net revenues | 743,406 | 790,161 | 759,964 | 819,955 | ||||||||||||
Gross margin(1)(2) | 230,204 | 233,623 | 234,336 | 239,770 | ||||||||||||
Net income (loss) | $ | 25,554 | $ | 8,000 | $ | 26,144 | $ | (116,560 | ) |
2009 | ||||||||||||||||
(In thousands) | ||||||||||||||||
First | Second | Third | Fourth | |||||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||||
Revenues | $ | 643,040 | $ | 669,366 | $ | 702,378 | $ | 734,906 | ||||||||
Net revenues | 642,978 | 669,317 | 702,326 | 734,884 | ||||||||||||
Gross margin(1) | 200,447 | 205,329 | 221,144 | 218,006 | ||||||||||||
Net income (loss) | $ | 14,797 | $ | 15,581 | $ | (1,456 | ) | $ | 18,598 |
F-40
F-41