EXHIBIT 99.1
NATIONAL DISCOUNT BROKERS CORPORATION
CONDENSED BALANCE SHEETS
(UNAUDITED)
June 30, December 31,
2001 2000
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Assets
Cash $ 1,147,866 $ 208,070
Receivables:
Clearing broker 23,553,817 31,331,848
Other 1,761,360 3,347,509
Securities owned, at market value 14,280 31,330
Prepaid expenses and other assets 979,513 2,180,588
Property and equipment, net 21,763,774 25,453,832
Deferred tax asset 2,769,609 2,134,920
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Total assets $ 51,990,219 $ 64,688,097
============ ============
Liabilities and Stockholder's Equity
Liabilities:
Accounts payable and accrued expenses $ 10,966,987 $ 14,194,613
Securities sold, not yet purchased, at market value 3,531 20,233
Payable to affiliates, net 2,268,374 1,916
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Total liabilities 13,238,892 14,216,762
Subordinated borrowings 6,000,000 6,000,000
Commitments and contingencies
Stockholder's equity:
Common stock -- --
Additional paid-in capital 72,897,077 72,897,077
Accumulated deficit (40,145,750) (28,425,742)
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Total stockholder's equity 32,751,327 44,471,335
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Total liabilities and stockholder's equity $ 51,990,219 $ 64,688,097
============ ============
See notes to condensed financial statements.
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NATIONAL DISCOUNT BROKERS CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Six Months Ended June 30,
----------------------------
2001 2000
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Revenues:
Commissions $ 21,630,449 $ 41,727,943
Interest income 4,277,163 7,715,647
Fee income 3,114,331 3,236,545
Firm securities transactions, net (9,219) 3,969,871
Other income 121,342 118,835
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Total revenues 29,134,066 56,768,841
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Expenses:
Compensation and benefits 17,920,972 14,504,336
Clearance and related brokerage charges 5,226,817 8,989,225
Communications 4,279,702 6,386,055
Selling and marketing 7,714,522 17,144,686
Technology related:
Depreciation and amortization 4,831,183 9,008,949
Equipment rental 1,555,196 1,078,825
Technology consulting fees 452,832 1,020,385
Repairs and maintenance 1,640,207 1,782,826
Professional fees 483,453 424,107
Occupancy costs 2,092,973 1,599,250
Affiliate administrative allocations 1,127,983 --
Other 1,606,376 3,761,546
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Total expenses 48,932,216 65,700,190
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Loss before income tax benefit (19,798,150) (8,931,349)
Income tax benefit (8,078,142) (3,267,339)
------------ ------------
Net loss $(11,720,008) $ (5,664,010)
============ ============
See notes to condensed financial statements.
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NATIONAL DISCOUNT BROKERS CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<Table>
<Caption>
Six Months Ended June 30,
----------------------------
2001 2000
------------ ------------
Cash flows from operating activities:
Net loss $(11,720,008) $ (5,664,010)
Noncash items included in net loss:
Depreciation and amortization 4,831,183 9,008,949
Deferred income taxes (634,689) (884,890)
Changes in operating assets and liabilities:
Receivables 9,364,180 3,153,917
Prepaid expenses and other assets 1,201,075 (5,218,395)
Securities owned 17,050 320,312
Accounts payable and accrued expenses (3,227,626) 3,129,410
Securities sold, not yet purchased (16,702) (37,294)
Payable to affiliates 2,266,458 (1,295,996)
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Net cash provided by operating activities 2,080,921 2,512,003
Cash flows from investing activities:
Purchases of property and equipment (1,141,125) (22,624,359)
------------ ------------
Net cash used in investing activities (1,141,125) (22,624,359)
Cash flows from financing activities:
Capital contribution by Parent -- 20,000,000
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Net cash provided by financing activities -- 20,000,000
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Net increase (decrease) in cash 939,796 (112,356)
Cash at beginning of period 208,070 347,922
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Cash at end of period $ 1,147,866 $ 235,566
============ ============
Supplemental disclosures of cash flow information:
Cash paid for income taxes $ -- $ --
============ ============
Cash paid for interest $ 204,613 $ 231,250
============ ============
</Table>
Supplemental disclosure of non-cash investing and financing activities:
During February 2000, the Parent contributed $320,000 of additional paid-in
capital in the form of marketable securities.
See notes to condensed financial statements.
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NATIONAL DISCOUNT BROKERS CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The unaudited condensed financial statements include the accounts of National
Discount Brokers Corporation (the "Company"), a wholly-owned subsidiary of
National Discount Brokers Group, Inc. (the "Parent"). On November 21, 2000, the
Parent was acquired by Deutsche Acquisition Corp., an indirect wholly-owned
subsidiary of Deutsche Bank AG ("DB").
These financial statements, in the opinion of management, reflect all
adjustments, which are all of a normal recurring nature, necessary to present
fairly the financial position, results of operations and cash flows for the
periods presented in conformity with accounting principles generally accepted in
the United States of America. These financial statements, including the related
notes, should be read in conjunction with the audited historical financial
statements and related notes of the Company for the seven months ended December
31, 2000 and the year ended May 31, 2000.
2. NET CAPITAL REQUIREMENTS
The Company is subject to the Securities and Exchange Commission Uniform Net
Capital Rule 15c3-1, which requires the maintenance of minimum net capital, as
defined. The Company computes its net capital requirement pursuant to the
alternative method, which requires that the Company maintain minimum net capital
equal to the greater of $250,000 or 2% of aggregate debit items arising from
customer transactions. At June 30, 2001 and December 31, 2000, the Company had
net capital of $10,625,900 and $17,387,217, respectively, which exceeded its
required net capital by $10,375,900 and $17,137,217, respectively. The Company's
required net capital was $250,000 at June 30, 2001 and December 31, 2000.
3. AFFILIATE ADMINISTRATIVE ALLOCATIONS
Beginning in April 2001, the Company has been allocated costs from certain DB
affiliates for administrative services and corporate overhead. These allocations
totaled $1,127,983 for the six months ended June 30, 2001.
4. CONTINGENCIES
The Company has been named as a defendant in lawsuits and arbitration
proceedings and is involved in investigations that relate to, among other
things, possible violations of Federal and state securities laws and
regulations, and other laws. The ultimate outcome of these legal proceedings and
claims pending against the Company cannot be determined at this time, and the
results of these legal proceedings and claims cannot be predicted with
certainty. There can be no assurance that these legal proceedings or claims will
not have a material adverse effect on the Company's results of operations in any
future period, depending partly on the results for the period, and a substantial
judgment could have a material adverse impact on the Company's financial
condition and results of operations. However, it is the opinion of management,
after consultation with outside legal counsel, that the ultimate outcome of
these legal proceedings will not have a material adverse impact on the financial
condition or operating results of the Company.
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5. OFF-BALANCE SHEET RISK AND CONCENTRATION OF CREDIT RISK
In the normal course of business, the Company clears securities transactions
through an unaffiliated clearing broker on a fully disclosed basis. Pursuant to
the terms of the agreement between the Company and its clearing broker, the
clearing broker has the right to recover losses resulting from a counterparty's
failure to fulfill its contractual obligations. The Company seeks to control the
risk associated with its customer activities by making credit inquiries when
establishing customer relationships and by monitoring customer trading activity.
Credit exposure also may result in the event that the Company's clearing broker
is unable to fulfill its contractual obligations. The subsequent settlement of
open positions at June 30, 2001 had no material adverse effect on the financial
position of the Company.
During the normal course of business, the Company may sell securities which have
not yet been purchased, which represent obligations of the Company to deliver
the specified security at a later date, thereby creating a liability to purchase
the security in the market at prevailing prices. Such transactions result in
off-balance sheet market risk as the Company's ultimate obligation to satisfy
the sale of securities sold, but not yet purchased, may exceed the amount
recorded on the balance sheet. The Company seeks to control such market risk
through the use of internal monitoring guidelines.
Receivable from clearing broker, securities owned and securities sold, not yet
purchased, on the balance sheet are held at one major clearing broker.
Substantially all the cash on the balance sheet is held at two major financial
institutions.
The Company does not engage in any derivative activities.
6. SUBSEQUENT EVENTS
On September 6, 2001, Ameritrade Holding Corporation ("Ameritrade") acquired all
of the common stock of the Company, and the Parent's receivable related to the
Subordinated Borrowings, from the Parent.
On September 13, 2001, the Company's name was changed to Nebraska Hudson
Company, Inc.
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