EXHIBIT 99.1
| At the Company | ||
| Kim Hillyer | Jeff Goeser | |
| Director, Communications | Director, Investor Relations and Finance | |
| (402) 574-6523 | (402) 597-8464 | |
| kim.hillyer@tdameritrade.com | jeffrey.goeser@tdameritrade.com |
TD Ameritrade Delivers 5th Consecutive Year of Double-Digit
Net New Client Asset Growth Rate
Record Net New Client Assets of $50B, 10% Annualized Growth Rate
Diluted Earnings per Share of $1.22, up 15% Year-Over-Year
Quarterly Dividend increased to $0.12/share, up 33% Year-Over-Year
Special Dividend Declared of $0.50/share
OMAHA, Neb., October 29, 2013 – TD Ameritrade Holding Corporation (NYSE: AMTD) has released results for fiscal 2013. The Company gathered approximately $50 billion of net new client assets, maintaining its industry-leading, double-digit net new client asset growth rate for the 5th consecutive year.
The Company’s results for the fiscal year ended Sept. 30, 2013 include the following: (1)
| • | Net income of $675 million, or $1.22 per diluted share |
| • | Record net new client assets of approximately $50 billion, an annualized growth rate of 10 percent |
| • | Average client trades per day of approximately 374,000, an activity rate of 6.3 percent |
| • | Record net revenues of $2.76 billion, 55 percent of which were asset-based |
| • | Investment product fee revenue of $250 million, up 28 percent year-over-year |
| • | Pre-tax income of $1.09 billion, or 39 percent of net revenues |
| • | EBITDA(2) of $1.29 billion, or 47 percent of net revenues |
| • | Record interest rate sensitive assets(3) of $96 billion, up 16 percent year-over-year |
| • | Record client assets of approximately $556 billion, up 18 percent year-over-year |
“TD Ameritrade had another strong year, as we maintained our industry-leading, double-digit growth in asset gathering,” said Fred Tomczyk, president and chief executive officer. “In 2013 we delivered record net new client assets and interest rate sensitive assets and continued to build on our leadership in trading. Each of these accomplishments contributed to the highest net revenues we’ve earned in our history. As we go forward, we’ll remain focused on growth and investing in the future. Our strategy is working, and our momentum is strong going into 2014.”
“TD Ameritrade has once again shown that we can keep expenses in check, invest in the business, and grow. We have held expenses at the same level in each of the last three years, and yet we’ve continued to invest in the business and deliver record growth,” said Bill Gerber, executive vice president and chief financial officer. “In 2013 we effectively returned 107 percent of earnings via cash dividends and debt repayments, and when you combine dividends and stock appreciation over the last year, our shareholders have received a total return of more than 75 percent. Moving forward we intend to continue building our long-term earnings power and return capital to further enhance shareholder value.”
Fourth Quarter 2013 Results
In addition, the Company has released its results for the quarter ended Sept. 30, 2013, which include the following: (1)
| • | Net income of $200 million, or $0.36 per diluted share |
| • | Net new client assets of approximately $10 billion, an annualized growth rate of 8 percent |
| • | Average client trades per day of approximately 382,000, an activity rate of 6.4 percent |
| • | Net revenues of $709 million, 55 percent of which were asset-based |
| • | Investment product fee revenue of $67 million, up 29 percent year-over-year |
| • | Pre-tax income of $322 million, or 45 percent of net revenues |
| • | EBITDA(2) of $374 million, or 53 percent of net revenues |
Capital Deployment
The Company has declared a $0.12 per share quarterly cash dividend, an increase of 33 percent year-over-year, payable on Nov. 19, 2013 to all holders of record of common stock as of Nov. 7, 2013.
The Company has also declared a special cash dividend of $0.50 per share, which will be its second in a 12 month period, payable on Dec. 17, 2013 to all holders of record of common stock as of Dec. 3, 2013.
“Our unique business model enables us to deliver strong free cash flow,” Tomczyk continued. “We initiated our quarterly dividend in fiscal 2011 and have increased it each year since then, including a 33 percent increase for 2014. In addition, we are paying a special dividend of $0.50 per share for the second time in a 12-month period. We expect to continue generating significant free cash flow, which we will either invest in growth or return to our shareholders.”
Fiscal 2014 Outlook
The Company has also released an updated Outlook Statement which reflects expected earnings of $1.20 to $1.40 per diluted share for its 2014 fiscal year.
More information on the fiscal 2014 forecast is available through the Company’sOutlook Statement, located in the “Investor Relations” section of its web site,www.amtd.com.
Company Hosts Conference Call
TD Ameritrade will host its September Quarter conference call this morning, October 29, 2013, at 8:30 a.m. EDT (7:30 a.m. CDT). Participants may listen to the conference call by dialing 866-250-8117. The Company will webcast the conference call throughwww.amtd.com, via the “Presentations & Events” page of the web site. A replay of the phone call will be available by dialing 877-344-7529 and entering the Conference ID 10035122 beginning at 11:30 a.m. EDT (10:30 a.m. CDT) on Oct. 29, 2013. The replay will be available until 9:00 a.m. EDT (8:00 a.m. CDT) on Nov. 5, 2013. A transcript of the call will be available on the Company’s corporate web site,www.amtd.com, via either the “Investor Relations” page or the “Presentations & Events” page beginning Wednesday, Oct. 30, 2013.
Interested parties can visit or subscribe to newsfeeds atwww.amtd.com for the most up-to-date corporate financial information, presentation announcements, transcripts and archives. The company also communicates this information via Twitter,@TDAmeritradePR. Web site links, corporate titles and telephone numbers provided in this release, although correct when published, may change in the future.
About TD Ameritrade Holding Corporation
Millions of investors and independent registered investment advisors (RIAs) have turned to TD Ameritrade’s (NYSE: AMTD)technology,people andeducation to help make investing and trading easier to understand and do. Online or over the phone. In a branch or with an independent RIA. First-timer or sophisticated trader. Our clients want to take control, and we help them decide how – bringing Wall Street to Main Street for nearly 38 years. Anofficial sponsor of the 2014 and 2016 U.S. Olympic and Paralympic Teams, TD Ameritrade has time and again beenrecognized as a leader in investment services. Please visit TD Ameritrade’snewsroom orwww.amtd.com, or follow@TDAmeritradePR for more information.
Safe Harbor
This document contains forward-looking statements within the meaning of the federal securities laws. We intend these forward-looking statements to be covered by the safe harbor provisions of the federal securities laws. In particular, any projections regarding our future revenues, expenses, earnings, capital expenditures, effective tax rates, client trading activity, accounts or stock price, as well as the assumptions on which such expectations are based, are forward-looking statements. These statements reflect only our current expectations and are not guarantees of future performance or results. These statements involve risks, uncertainties and assumptions that could cause actual results or performance to differ materially from those contained in the forward-looking statements. These risks, uncertainties and assumptions include, but are not limited to: general economic and political conditions and other securities industry risks, fluctuations in interest rates, stock market fluctuations and changes in client trading activity, credit risk with clients and counterparties, increased competition, systems failures, delays and capacity constraints, network security risks, liquidity risks, new laws and regulations affecting our business, regulatory and legal matters and uncertainties and other risk factors described in our latest Annual Report, as amended, on Form 10-K/A, filed with the SEC on Feb. 4, 2013 and our latest Quarterly Report on Form 10-Q filed thereafter. These forward-looking statements speak only as of the date on which the statements were made. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by the federal securities laws.
| 1 | Please see the Glossary of Terms, located in “Investor Relations” section of www.amtd.com for more information on how these metrics are calculated. |
| 2 | See attached reconciliation of non-GAAP financial measures. |
| 3 | Interest rate-sensitive assets consist of spread-based assets and money market mutual funds. Ending balances as of September 30, 2013. |
Brokerage services provided by TD Ameritrade, Inc., member FINRA (www.FINRA.org) /SIPC (www.SIPC.org) /NFA (www.nfa.futures.org).
TD AMERITRADE HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
In millions, except per share amounts
(Unaudited)
| Quarter Ended | Fiscal Year Ended | |||||||||||||||||||
| Sept. 30, 2013 | June 30, 2013 | Sept. 30, 2012 | Sept. 30, 2013 | Sept. 30, 2012 | ||||||||||||||||
Revenues: | ||||||||||||||||||||
Transaction-based revenues: | ||||||||||||||||||||
Commissions and transaction fees | $ | 306 | $ | 321 | $ | 256 | $ | 1,171 | $ | 1,087 | ||||||||||
Asset-based revenues: | ||||||||||||||||||||
Interest revenue | 120 | 122 | 117 | 476 | 456 | |||||||||||||||
Brokerage interest expense | (1 | ) | (2 | ) | (1 | ) | (7 | ) | (6 | ) | ||||||||||
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Net interest revenue | 119 | 120 | 116 | 469 | 450 | |||||||||||||||
Insured deposit account fees | 201 | 199 | 207 | 804 | 828 | |||||||||||||||
Investment product fees | 67 | 65 | 52 | 250 | 196 | |||||||||||||||
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Total asset-based revenues | 387 | 384 | 375 | 1,523 | 1,474 | |||||||||||||||
Other revenues | 16 | 20 | 16 | 70 | 80 | |||||||||||||||
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Net revenues | 709 | 725 | 647 | 2,764 | 2,641 | |||||||||||||||
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Operating expenses: | ||||||||||||||||||||
Employee compensation and benefits | 170 | 176 | 167 | 692 | 690 | |||||||||||||||
Clearing and execution costs | 29 | 30 | 23 | 109 | 89 | |||||||||||||||
Communications | 27 | 28 | 28 | 113 | 111 | |||||||||||||||
Occupancy and equipment costs | 40 | 42 | 38 | 160 | 150 | |||||||||||||||
Depreciation and amortization | 23 | 22 | 19 | 86 | 72 | |||||||||||||||
Amortization of acquired intangible assets | 23 | 23 | 23 | 91 | 92 | |||||||||||||||
Professional services | 41 | 36 | 39 | 145 | 168 | |||||||||||||||
Advertising | 55 | 56 | 58 | 239 | 248 | |||||||||||||||
Other | 22 | 14 | 20 | 73 | 87 | |||||||||||||||
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Total operating expenses | 430 | 427 | 415 | 1,708 | 1,707 | |||||||||||||||
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Operating income | 279 | 298 | 232 | 1,056 | 934 | |||||||||||||||
Other expense (income): | ||||||||||||||||||||
Interest on borrowings | 6 | 6 | 7 | 25 | 28 | |||||||||||||||
Gain on investments, net | (49 | ) | (6 | ) | — | (57 | ) | — | ||||||||||||
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Total other expense (income) | (43 | ) | — | 7 | (32 | ) | 28 | |||||||||||||
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Pre-tax income | 322 | 298 | 225 | 1,088 | 906 | |||||||||||||||
Provision for income taxes | 122 | 114 | 82 | 413 | 320 | |||||||||||||||
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Net income | $ | 200 | $ | 184 | $ | 143 | $ | 675 | $ | 586 | ||||||||||
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Earnings per share—basic | $ | 0.36 | $ | 0.33 | $ | 0.26 | $ | 1.23 | $ | 1.07 | ||||||||||
Earnings per share—diluted | $ | 0.36 | $ | 0.33 | $ | 0.26 | $ | 1.22 | $ | 1.06 | ||||||||||
Weighted average shares outstanding—basic | 550 | 550 | 546 | 549 | 548 | |||||||||||||||
Weighted average shares outstanding—diluted | 555 | 554 | 551 | 554 | 554 | |||||||||||||||
Dividends declared per share | $ | 0.09 | $ | 0.09 | $ | 0.06 | $ | 0.86 | $ | 0.24 | ||||||||||
TD AMERITRADE HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
In millions
(Unaudited)
| Sept. 30, 2013 | Sept. 30, 2012 | |||||||
Assets: | ||||||||
Cash and cash equivalents | $ | 1,062 | $ | 915 | ||||
Short-term investments | 4 | 154 | ||||||
Segregated cash and investments | 5,894 | 4,030 | ||||||
Broker/dealer receivables | 1,348 | 1,110 | ||||||
Client receivables, net | 8,984 | 8,647 | ||||||
Goodwill and intangible assets | 3,308 | 3,399 | ||||||
Other | 1,236 | 1,258 | ||||||
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Total assets | $ | 21,836 | $ | 19,513 | ||||
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Liabilities and stockholders’ equity: | ||||||||
Liabilities: | ||||||||
Broker/dealer payables | $ | 1,973 | $ | 1,992 | ||||
Client payables | 13,183 | 10,728 | ||||||
Long-term debt | 1,052 | 1,345 | ||||||
Other | 952 | 1,023 | ||||||
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Total liabilities | 17,160 | 15,088 | ||||||
Stockholders’ equity | 4,676 | 4,425 | ||||||
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Total liabilities and stockholders’ equity | $ | 21,836 | $ | 19,513 | ||||
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TD AMERITRADE HOLDING CORPORATION
SELECTED OPERATING DATA
(Unaudited)
| Quarter Ended | Fiscal Year Ended | |||||||||||||||||||
| Sept. 30, 2013 | June 30, 2013 | Sept. 30, 2012 | Sept. 30, 2013 | Sept. 30, 2012 | ||||||||||||||||
| Key Metrics: | ||||||||||||||||||||
Net new assets (in billions) | $ | 10.1 | $ | 10.8 | $ | 10.1 | $ | 49.5 | $ | 40.8 | ||||||||||
Net new asset growth rate (annualized) | 8 | % | 8 | % | 9 | % | 10 | % | 11 | % | ||||||||||
Average client trades per day | 381,657 | 399,216 | 328,280 | 373,630 | 359,631 | |||||||||||||||
| Profitability Metrics: | ||||||||||||||||||||
Operating margin | 39.4 | % | 41.1 | % | 35.9 | % | 38.2 | % | 35.4 | % | ||||||||||
Pre-tax margin | 45.4 | % | 41.1 | % | 34.8 | % | 39.4 | % | 34.3 | % | ||||||||||
Return on average stockholders’ equity (annualized) | 17.3 | % | 16.4 | % | 13.1 | % | 15.1 | % | 13.8 | % | ||||||||||
EBITDA(1) as a percentage of net revenues | 52.8 | % | 48.1 | % | 42.3 | % | 46.7 | % | 41.6 | % | ||||||||||
| Liquidity Metrics: | ||||||||||||||||||||
Interest on borrowings (in millions) | $ | 6 | $ | 6 | $ | 7 | $ | 25 | $ | 28 | ||||||||||
Interest coverage ratio (EBITDA(1)/interest on borrowings) | 62.3 | 58.2 | 39.1 | 51.6 | 39.2 | |||||||||||||||
Liquid assets—management target(1) (in billions) | $ | 0.9 | $ | 0.7 | $ | 1.1 | $ | 0.9 | $ | 1.1 | ||||||||||
Cash and cash equivalents (in billions) | $ | 1.1 | $ | 1.0 | $ | 0.9 | $ | 1.1 | $ | 0.9 | ||||||||||
| Transaction-Based Revenue Metrics: | ||||||||||||||||||||
Total trades (in millions) | 24.2 | 25.5 | 20.5 | 92.8 | 89.9 | |||||||||||||||
Average commissions and transaction fees per | $ | 12.61 | $ | 12.57 | $ | 12.47 | $ | 12.61 | $ | 12.09 | ||||||||||
Average client trades per funded account (annualized) | 15.9 | 16.8 | 14.3 | 15.8 | 15.8 | |||||||||||||||
Activity rate—funded accounts | 6.4 | % | 6.7 | % | 5.7 | % | 6.3 | % | 6.3 | % | ||||||||||
Trading days | 63.5 | 64.0 | 62.5 | 248.5 | 250.0 | |||||||||||||||
| Spread-Based Asset Metrics: | ||||||||||||||||||||
Average interest-earning assets (in billions) | $ | 16.8 | $ | 16.1 | $ | 14.8 | $ | 15.8 | $ | 14.9 | ||||||||||
Average insured deposit account balances (in billions) | 72.0 | 68.6 | 61.4 | 68.0 | 59.4 | |||||||||||||||
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Average spread-based balance (in billions) | $ | 88.8 | $ | 84.7 | $ | 76.2 | $ | 83.8 | $ | 74.3 | ||||||||||
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Net interest revenue (in millions) | $ | 119 | $ | 120 | $ | 116 | $ | 469 | $ | 450 | ||||||||||
Insured deposit account fee revenue (in millions) | 201 | 199 | 207 | 804 | 828 | |||||||||||||||
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Spread-based revenue (in millions) | $ | 320 | $ | 319 | $ | 323 | $ | 1,273 | $ | 1,278 | ||||||||||
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Avg. annualized yield—interest-earning assets | 2.77 | % | 2.95 | % | 3.06 | % | 2.92 | % | 2.97 | % | ||||||||||
Avg. annualized yield—insured deposit account fees | 1.09 | % | 1.15 | % | 1.32 | % | 1.17 | % | 1.37 | % | ||||||||||
Net interest margin (NIM) | 1.41 | % | 1.49 | % | 1.66 | % | 1.50 | % | 1.69 | % | ||||||||||
Interest days | 92 | 91 | 92 | 365 | 366 | |||||||||||||||
| Fee-Based Investment Metrics: | ||||||||||||||||||||
Money market mutual fund fees: | ||||||||||||||||||||
Average balance (in billions) | $ | 5.3 | $ | 5.1 | $ | 4.9 | $ | 5.1 | $ | 5.1 | ||||||||||
Average annualized yield | 0.00 | % | 0.00 | % | 0.05 | % | 0.02 | % | 0.07 | % | ||||||||||
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Fee revenue (in millions) | $ | 0 | $ | 0 | $ | 1 | $ | 1 | $ | 3 | ||||||||||
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Market fee-based investment balances: | ||||||||||||||||||||
Average balance (in billions) | $ | 117.0 | $ | 113.0 | $ | 88.7 | $ | 107.7 | $ | 81.0 | ||||||||||
Average annualized yield | 0.22 | % | 0.23 | % | 0.23 | % | 0.23 | % | 0.23 | % | ||||||||||
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Fee revenue (in millions) | $ | 67 | $ | 65 | $ | 51 | $ | 249 | $ | 193 | ||||||||||
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Average fee-based investment balances (in billions) | $ | 122.3 | $ | 118.1 | $ | 93.6 | $ | 112.8 | $ | 86.1 | ||||||||||
Average annualized yield | 0.21 | % | 0.22 | % | 0.22 | % | 0.22 | % | 0.22 | % | ||||||||||
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Investment product fee revenue (in millions) | $ | 67 | $ | 65 | $ | 52 | $ | 250 | $ | 196 | ||||||||||
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| Client Account and Client Asset Metrics: | ||||||||||||||||||||
Funded accounts (beginning of period) | 5,943,000 | 5,880,000 | 5,736,000 | 5,764,000 | 5,617,000 | |||||||||||||||
Funded accounts (end of period) | 5,993,000 | 5,943,000 | 5,764,000 | 5,993,000 | 5,764,000 | |||||||||||||||
Percentage change during period | 1 | % | 1 | % | 0 | % | 4 | % | 3 | % | ||||||||||
Client assets (beginning of period, in billions) | $ | 523.5 | $ | 516.8 | $ | 445.0 | $ | 472.3 | $ | 378.7 | ||||||||||
Client assets (end of period, in billions) | $ | 555.9 | $ | 523.5 | $ | 472.3 | $ | 555.9 | $ | 472.3 | ||||||||||
Percentage change during period | 6 | % | 1 | % | 6 | % | 18 | % | 25 | % | ||||||||||
| (1) | See attached reconciliation of non-GAAP financial measures. |
| (2) | Average commissions and transaction fees per trade excludes TD Waterhouse UK business. |
NOTE: See Glossary of Terms on the Company’s web site at www.amtd.com for definitions of the above metrics.
TD AMERITRADE HOLDING CORPORATION
SELECTED OPERATING DATA
(Unaudited)
| Quarter Ended | Fiscal Year Ended | |||||||||||||||||||
| Sept. 30, 2013 | June 30, 2013 | Sept. 30, 2012 | Sept. 30, 2013 | Sept. 30, 2012 | ||||||||||||||||
| Net Interest Revenue: | ||||||||||||||||||||
Segregated cash: | ||||||||||||||||||||
Average balance (in billions) | $ | 5.5 | $ | 4.7 | $ | 3.7 | $ | 4.6 | $ | 4.4 | ||||||||||
Average annualized yield | 0.09 | % | 0.11 | % | 0.14 | % | 0.12 | % | 0.08 | % | ||||||||||
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Interest revenue (in millions) | $ | 1 | $ | 1 | $ | 1 | $ | 6 | $ | 4 | ||||||||||
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Client margin balances: | ||||||||||||||||||||
Average balance (in billions) | $ | 8.5 | $ | 8.6 | $ | 8.4 | $ | 8.6 | $ | 8.2 | ||||||||||
Average annualized yield | 3.95 | % | 3.91 | % | 4.04 | % | 3.97 | % | 4.13 | % | ||||||||||
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Interest revenue (in millions) | $ | 86 | $ | 85 | $ | 87 | $ | 345 | $ | 345 | ||||||||||
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Securities borrowing/lending | ||||||||||||||||||||
Average securities borrowing balance (in billions) | $ | 1.1 | $ | 1.2 | $ | 1.0 | $ | 1.0 | $ | 0.8 | ||||||||||
Average securities lending balance (in billions) | $ | 2.2 | $ | 2.3 | $ | 2.0 | $ | 2.1 | $ | 2.0 | ||||||||||
Interest revenue (in millions) | $ | 32 | $ | 35 | $ | 29 | $ | 124 | $ | 106 | ||||||||||
Interest expense (in millions) | (1 | ) | (1 | ) | (1 | ) | (6 | ) | (5 | ) | ||||||||||
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Net interest revenue—securities borrowing/lending (in millions) | $ | 31 | $ | 34 | $ | 28 | $ | 118 | $ | 101 | ||||||||||
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Other cash and interest-earning investments: | ||||||||||||||||||||
Average balance (in billions) | $ | 1.7 | $ | 1.6 | $ | 1.7 | $ | 1.6 | $ | 1.5 | ||||||||||
Average annualized yield | 0.09 | % | 0.11 | % | 0.07 | % | 0.08 | % | 0.09 | % | ||||||||||
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Interest revenue—net (in millions) | $ | 1 | $ | 0 | $ | 0 | $ | 1 | $ | 1 | ||||||||||
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Client credit balances: | ||||||||||||||||||||
Average balance (in billions) | $ | 10.1 | $ | 9.4 | $ | 8.7 | $ | 9.5 | $ | 9.2 | ||||||||||
Average annualized cost | 0.01 | % | 0.01 | % | 0.01 | % | 0.01 | % | 0.01 | % | ||||||||||
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Interest expense (in millions) | ($0) | ($0) | ($0) | ($1) | ($1) | |||||||||||||||
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Average interest-earning assets (in billions) | $ | 16.8 | $ | 16.1 | $ | 14.8 | $ | 15.8 | $ | 14.9 | ||||||||||
Average annualized yield | 2.77 | % | 2.95 | % | 3.06 | % | 2.92 | % | 2.97 | % | ||||||||||
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Net interest revenue (in millions) | $ | 119 | �� | $ | 120 | $ | 116 | $ | 469 | $ | 450 | |||||||||
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NOTE: See Glossary of Terms on the Company’s web site at www.amtd.com for definitions of the above metrics.
TD AMERITRADE HOLDING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Dollars in millions
(Unaudited)
| Quarter Ended | Fiscal Year Ended | |||||||||||||||||||||||||||||||||||||||
| Sept. 30, 2013 | June 30, 2013 | Sept. 30, 2012 | Sept. 30, 2013 | Sept. 30, 2012 | ||||||||||||||||||||||||||||||||||||
| $ | % of Net Rev. | $ | % of Net Rev. | $ | % of Net Rev. | $ | % of Net Rev. | $ | % of Net Rev. | |||||||||||||||||||||||||||||||
| EBITDA (1) | ||||||||||||||||||||||||||||||||||||||||
EBITDA | $ | 374 | 52.8 | % | $ | 349 | 48.1 | % | $ | 274 | 42.3 | % | $ | 1,290 | 46.7 | % | $ | 1,098 | 41.6 | % | ||||||||||||||||||||
Less: | ||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | (23 | ) | (3.2 | %) | (22 | ) | (3.0 | %) | (19 | ) | (2.9 | %) | (86 | ) | (3.1 | %) | (72 | ) | (2.7 | %) | ||||||||||||||||||||
Amortization of acquired intangible assets | (23 | ) | (3.2 | %) | (23 | ) | (3.2 | %) | (23 | ) | (3.6 | %) | (91 | ) | (3.3 | %) | (92 | ) | (3.5 | %) | ||||||||||||||||||||
Interest on borrowings | (6 | ) | (0.8 | %) | (6 | ) | (0.8 | %) | (7 | ) | (1.1 | %) | (25 | ) | (0.9 | %) | (28 | ) | (1.1 | %) | ||||||||||||||||||||
Provision for income taxes | (122 | ) | (17.2 | %) | (114 | ) | (15.7 | %) | (82 | ) | (12.7 | %) | (413 | ) | (14.9 | %) | (320 | ) | (12.1 | %) | ||||||||||||||||||||
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Net income | $ | 200 | 28.2 | % | $ | 184 | 25.4 | % | $ | 143 | 22.1 | % | $ | 675 | 24.4 | % | $ | 586 | 22.2 | % | ||||||||||||||||||||
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| As of | ||||||||||||||||||||||||||||||||||||||||
| Sept. 30 | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | ||||||||||||||||||||||||||||||||||||
| 2013 | 2013 | 2013 | 2012 | 2012 | �� | |||||||||||||||||||||||||||||||||||
Liquid Assets—Management Target (2) | ||||||||||||||||||||||||||||||||||||||||
Liquid assets—management target | $ | 874 | $ | 728 | $ | 706 | $ | 774 | $ | 1,054 | ||||||||||||||||||||||||||||||
Plus: Broker-dealer cash and cash equivalents | 540 | 555 | 719 | 841 | 406 | |||||||||||||||||||||||||||||||||||
Trust company cash and cash equivalents | 74 | 39 | 84 | 556 | 95 | |||||||||||||||||||||||||||||||||||
Investment advisory cash and cash equivalents | 19 | 28 | 24 | 15 | 11 | |||||||||||||||||||||||||||||||||||
Less: Corporate short-term investments | — | — | — | — | (150 | ) | ||||||||||||||||||||||||||||||||||
Excess broker-dealer regulatory net capital | (445 | ) | (387 | ) | (315 | ) | (334 | ) | (501 | ) | ||||||||||||||||||||||||||||||
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Cash and cash equivalents | $ | 1,062 | $ | 963 | $ | 1,218 | $ | 1,852 | $ | 915 | ||||||||||||||||||||||||||||||
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Note: The term “GAAP” in the following explanation refers to generally accepted accounting principles in the United States.
| (1) | EBITDA (earnings before interest, taxes, depreciation and amortization) is considered a non-GAAP financial measure as defined by SEC Regulation G. We consider EBITDA an important measure of our financial performance and of our ability to generate cash flows to service debt, fund capital expenditures and fund other corporate investing and financing activities. EBITDA is used as the denominator in the consolidated leverage ratio calculation for covenant purposes under our holding company’s senior revolving credit facility. EBITDA eliminates the non-cash effect of tangible asset depreciation and amortization and intangible asset amortization. EBITDA should be considered in addition to, rather than as a substitute for, pre-tax income, net income and cash flows from operating activities. |
| (2) | Liquid assets—management target is considered a non-GAAP financial measure as defined by SEC Regulation G. We include the excess capital of our broker-dealer subsidiaries in the calculation of liquid assets—management target, rather than simply including broker-dealer cash and cash equivalents, because capital requirements may limit the amount of cash available for dividend from the broker-dealer subsidiaries to the parent company. Excess capital, as defined below, is generally available for dividend from the broker-dealer subsidiaries to the parent company. We consider liquid assets—management target to be an important measure of our liquidity and of our ability to fund corporate investing and financing activities. Liquid assets—management target should be considered a supplemental measure of liquidity, rather than a substitute for cash and cash equivalents. |
We define liquid assets—management target as the sum of (a) corporate cash and cash equivalents, (b) corporate short-term investments and (c) regulatory net capital of (i) our clearing broker-dealer subsidiary in excess of 10% of aggregate debit items and (ii) our introducing broker-dealer subsidiaries in excess of a minimum operational target established by management ($50 million in the case of our primary introducing broker-dealer, TD Ameritrade, Inc.). Liquid assets—management target is based on more conservative measures of broker-dealer net capital than regulatory thresholds require because we prefer to maintain significantly more conservative levels of net capital at the broker-dealer subsidiaries. We consider liquid assets—management target to be a measure that reflects our liquidity that would be readily available for corporate investing and financing activities under normal operating circumstances.