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TD Ameritrade Delivers 4th Consecutive Year Of Double-Digit Net New Client Asset Growth Rate

1 Please see the Glossary of Terms, located in “Investor” section of www.amtd.com for more information on how these metrics are calculated.

2 Funded account activity rate (AR%). Average client trades per day during the period divided by the average number of total funded accounts during the period.

3 See attached reconciliation of non-GAAP financial measures.

4 Interest rate-sensitive assets consist of spread-based assets and money market mutual funds. Ending balances as of September 30, 2012.

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, 2012 June 30, 2012 Sept. 30, 2011 Sept. 30, 2012 Sept. 30, 2011
Revenues:
Transaction-based revenues:
Commissions and transaction fees $ 256 $ 266 $ 315 $ 1,087 $ 1,228
 
Asset-based revenues:
Interest revenue 117 120 125 456 497
Brokerage interest expense   (1 )   (2 )   (1 )   (6 )   (5 )
Net interest revenue 116 118 124 450 492
 
Insured deposit account fees 207 206 200 828 763
Investment product fees   52     54     41     196     166  
Total asset-based revenues 375 378 365 1,474 1,421
 
Other revenues   16     23     24     80     114  
 
Net revenues   647     667     704     2,641     2,763  
 
Operating expenses:
Employee compensation and benefits 167 176 174 690 675
Clearing and execution costs 23 22 28 89 100
Communications 28 29 25 111 107
Occupancy and equipment costs 38 36 38 150 142
Depreciation and amortization 19 18 17 72 67
Amortization of acquired intangible assets 23 23 24 92 97
Professional services 39 40 47 168 170
Advertising 58 50 49 248 253
Other   20     19     33     87     104  
Total operating expenses   415     413     435     1,707     1,715  
 
Operating income 232 254 269 934 1,048
 
Other expense (income):
Interest on borrowings 7 7 7 28 32
Loss on debt refinancing - - - - 1
Gain on sale of investments   -     -     (2 )   -     (2 )
Total other expense (income)   7     7     5     28     31  
 
Pre-tax income 225 247 264 906 1,017
 
Provision for income taxes   82     93     100     320     379  
 
Net income $ 143   $ 154   $ 164   $ 586   $ 638  
 
Earnings per share - basic $ 0.26 $ 0.28 $ 0.29 $ 1.07 $ 1.12
Earnings per share - diluted $ 0.26 $ 0.28 $ 0.29 $ 1.06 $ 1.11
 
Weighted average shares outstanding - basic 546 548 562 548 570
Weighted average shares outstanding - diluted 551 553 568 554 576
 
Dividends declared per share $ 0.06 $ 0.06 $ 0.05 $ 0.24 $ 0.20
 
 
TD AMERITRADE HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
In millions
(Unaudited)
       
Sept. 30, 2012 Sept. 30, 2011
Assets:
Cash and cash equivalents $ 915 $ 1,032
Short-term investments 154 4
Segregated cash and investments 4,030 2,519
Broker/dealer receivables 1,110 834
Client receivables, net 8,647 8,059
Goodwill and intangible assets 3,399 3,491
Other   1,258   1,187
Total assets $ 19,513 $ 17,126
 
Liabilities and stockholders' equity:
 
Liabilities:
Broker/dealer payables $ 1,992 $ 1,710
Client payables 10,728 8,979
Long-term debt 1,345 1,337
Other   1,023   984
Total liabilities 15,088 13,010
 
Stockholders' equity   4,425   4,116
 
Total liabilities and stockholders' equity $ 19,513 $ 17,126
 
 
TD AMERITRADE HOLDING CORPORATION
SELECTED OPERATING DATA
(Unaudited)
                   
Quarter Ended Fiscal Year Ended
Sept. 30, 2012 June 30, 2012 Sept. 30, 2011 Sept. 30, 2012 Sept. 30, 2011

Key Metrics:

Net new assets (in billions) $10.1 $9.7 $12.4 $40.8 $41.5
Net new asset growth rate (annualized) 9% 9% 12% 11% 12%
Average client trades per day 328,280 355,449 415,739 359,631 398,986
 

Profitability Metrics:

Operating margin 35.9% 38.1% 38.1% 35.4% 37.9%
Pre-tax margin 34.9% 37.0% 37.5% 34.3% 36.8%
Return on client assets (annualized) 0.20% 0.22% 0.26% 0.21% 0.26%
Return on average stockholders' equity (annualized) 13.1% 14.3% 15.7% 13.8% 15.7%
EBITDA (1) as a percentage of net revenues 42.5% 44.3% 44.3% 41.6% 43.9%
 

Debt and Liquidity Metrics:

Interest on borrowings (in millions) $7 $7 $7 $28 $32
Average debt outstanding (in billions) $1.3 $1.3 $1.3 $1.3 $1.3
Leverage ratio (average debt/annualized EBITDA (1)) 1.1 1.1 1.0 1.1 1.0
Interest coverage ratio (EBITDA (1)/interest on borrowings) 40.0 41.8 45.9 38.9 37.9
Liquid assets - management target (1) (in billions) $1.1 $1.0 $0.9 $1.1 $0.9
Liquid assets - regulatory threshold (1) (in billions) $1.6 $1.6 $1.4 $1.6 $1.4
Cash and cash equivalents (in billions) $0.9 $0.9 $1.0 $0.9 $1.0
 

Transaction-Based Revenue Metrics:

Total trades (in millions) 20.5 22.4 26.6 89.9 100.7
Average commissions and transaction fees per trade (2) $12.47 $11.88 $11.85 $12.09 $12.18
Average client trades per funded account (annualized) 14.3 15.5 18.7 15.8 18.2
Activity rate - funded accounts 5.7% 6.2% 7.4% 6.3% 7.2%
Trading days 62.5 63.0 64.0 250.0 252.5
 

Spread-Based Asset Metrics:

Average interest-earning assets (in billions) $14.8 $15.2 $13.5 $14.9 $13.8
Average insured deposit account balances (in billions) 61.4 59.0 54.0 59.4 48.5
Average spread-based balance (in billions) $76.2 $74.2 $67.5 $74.3 $62.3
 
Net interest revenue (in millions) $116 $118 $124 $450 $492
Insured deposit account fee revenue (in millions) 207 206 200 828 763
Spread-based revenue (in millions) $323 $324 $324 $1,278 $1,255
 
Avg. annualized yield - interest-earning assets 3.06% 3.08% 3.57% 2.97% 3.52%
Avg. annualized yield - insured deposit account fees 1.32% 1.38% 1.45% 1.37% 1.55%
Net interest margin (NIM) 1.66% 1.73% 1.87% 1.69% 1.99%
 
Interest days 92 91 92 366 365
 

Fee-Based Investment Metrics:

Money market mutual fund fees:

Average balance (in billions) $4.9 $4.9 $8.5 $5.1 $8.7
Average annualized yield 0.05% 0.09% 0.06% 0.07% 0.10%
Fee revenue (in millions) $1 $1 $1 $3 $8
 

Market fee-based investment balances:

Average balance (in billions) $88.7 $83.3 $71.7 $81.0 $69.6
Average annualized yield 0.23% 0.25% 0.22% 0.23% 0.22%
Fee revenue (in millions) $51 $53 $40 $193 $158
 
Average fee-based investment balances (in billions) $93.6 $88.2 $80.1 $86.1 $78.3
Average annualized yield 0.22% 0.24% 0.20% 0.22% 0.21%
Investment product fee revenue (in millions) $52 $54 $41 $196 $166
 

Client Account and Client Asset Metrics:

New accounts opened 190,000 171,000 150,000 684,000 645,000
 
Funded accounts (beginning of period) 5,736,000 5,703,000 5,592,000 5,617,000 5,455,000
Funded accounts (end of period) 5,764,000 5,736,000 5,617,000 5,764,000 5,617,000
Percentage change during period 0% 1% 0% 3% 3%
 
Client assets (beginning of period, in billions) $445.0 $452.4 $413.7 $378.7 $354.8
Client assets (end of period, in billions) $472.3 $445.0 $378.7 $472.3 $378.7
Percentage change during period 6% (2%) (8%) 25% 7%
 
(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, 2012 June 30, 2012   Sept. 30, 2011 Sept. 30, 2012 Sept. 30, 2011

Net Interest Revenue:

Segregated cash:

Average balance (in billions) $3.7 $4.0 $2.9 $4.4 $3.0
Average annualized yield 0.14% 0.10% 0.01% 0.08% 0.07%
Interest revenue (in millions) $1 $1 $0 $4 $2
 

Client margin balances:

Average balance (in billions) $8.4 $8.7 $8.5 $8.2 $8.8
Average annualized yield 4.04% 4.13% 4.35% 4.13% 4.39%
Interest revenue (in millions) $87 $91 $94 $345 $390
 

Securities borrowing/lending

Average securities borrowing balance (in billions) $1.0 $0.9 $0.6 $0.8 $0.8
Average securities lending balance (in billions) $2.0 $2.3 $1.8 $2.0 $1.9
 
Interest revenue (in millions) $29 $28 $30 $106 $104
Interest expense (in millions) (1) (2) (1) (5) (3)
Net interest revenue - securities borrowing/lending (in millions) $28 $26 $29 $101 $101
 

Other cash and interest-earning investments:

Average balance (in billions) $1.7 $1.6 $1.5 $1.5 $1.2
Average annualized yield 0.07% 0.06% 0.10% 0.09% 0.10%
Interest revenue - net (in millions) $0 $0 $1 $1 $1
 

Client credit balances:

Average balance (in billions) $8.7 $9.1 $8.3 $9.2 $8.4
Average annualized cost 0.01% 0.01% 0.02% 0.01% 0.02%
Interest expense (in millions) ($0) ($0) ($0) ($1) ($2)
 
Average interest-earning assets (in billions) $14.8 $15.2 $13.5 $14.9 $13.8
Average annualized yield 3.06% 3.08% 3.57% 2.97% 3.52%
Net interest revenue (in millions) $116 $118 $124 $450 $492
 
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
In millions, except percentages
(Unaudited)
                                       
Quarter Ended Fiscal Year Ended
Sept. 30, 2012 June 30, 2012 Sept. 30, 2011 Sept. 30, 2012 Sept. 30, 2011
$ % of Net Rev.   $ % of Net Rev. $ % of Net Rev. $ % of Net Rev. $ % of Net Rev.

EBITDA (1)

EBITDA $ 274 42.5 % $ 295 44.3 % $ 312 44.3 % $ 1,098 41.6 % $ 1,213 43.9 %
Less:
Depreciation and amortization (19 ) (3.0 %) (18 ) (2.7 %) (17 ) (2.4 %) (72 ) (2.7 %) (67 ) (2.4 %)
Amortization of acquired intangible assets (23 ) (3.5 %) (23 ) (3.4 %) (24 ) (3.5 %) (92 ) (3.5 %) (97 ) (3.5 %)
Interest on borrowings (7 ) (1.1 %) (7 ) (1.1 %) (7 ) (1.0 %) (28 ) (1.1 %) (32 ) (1.2 %)
Provision for income taxes   (82 ) (12.7 %)   (93 ) (14.0 %)   (100 ) (14.2 %)   (320 ) (12.1 %)   (379 ) (13.7 %)
Net income $ 143   22.2 % $ 154   23.1 % $ 164   23.3 % $ 586   22.2 % $ 638   23.1 %
 
As of
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2012 2012 2012 2011 2011

Liquid Assets - Management Target (2)

Liquid assets - management target $ 1,054 $ 993 $ 917 $ 918 $ 852
Plus: Broker-dealer cash and cash equivalents 406 387 507 444 656
Trust company cash and cash equivalents 95 74 75 62 109
Investment advisory cash and cash equivalents 11 25 18 11 7
 
Less: Corporate short-term investments (150 ) (126 ) (50 ) - -
Excess broker-dealer regulatory net capital   (501 )   (443 )   (441 )   (517 )   (592 )
Cash and cash equivalents $ 915   $ 910   $ 1,026   $ 918   $ 1,032  
 
As of
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2012 2012 2012 2011 2011

Liquid Assets - Regulatory Threshold (2)

Liquid assets - regulatory threshold $ 1,611 $ 1,554 $ 1,485 $ 1,422 $ 1,408
Plus: Broker-dealer cash and cash equivalents 406 387 507 444 656
Trust company cash and cash equivalents 95 74 75 62 109
Investment advisory cash and cash equivalents 11 25 18 11 7
 
Less: Corporate short-term investments (150 ) (126 ) (50 ) - -
Excess trust company Tier 1 capital (10 ) (10 ) (10 ) (9 ) (9 )
Excess broker-dealer regulatory net capital   (1,048 )   (994 )   (999 )   (1,012 )   (1,139 )
Cash and cash equivalents $ 915   $ 910   $ 1,026   $ 918   $ 1,032  
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) Our liquid assets metrics are considered non-GAAP financial measures as defined by SEC Regulation G. We include the excess capital of our broker-dealer and trust company subsidiaries in the calculation of our liquid assets metrics, rather than simply including broker-dealer and trust company cash and cash equivalents, because capital requirements may limit the amount of cash available for dividend from the broker-dealer and trust company subsidiaries to the parent company. Excess capital, as defined below, is generally available for dividend from the broker-dealer and trust company subsidiaries to the parent company. We consider our liquid assets metrics to be important measures of our liquidity and of our ability to fund corporate investing and financing activities. The liquid assets metrics should be considered as supplemental measures of liquidity, rather than as substitutes 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 “liquid assets – regulatory threshold” (defined below) because we prefer to maintain significantly more conservative levels of net capital at the broker-dealer subsidiaries than the regulatory thresholds require. We consider "liquid assets - management target" to be a measure that reflects our liquidity that would be readily available for corporate investing or financing activities under normal operating circumstances.
 
We define "liquid assets - regulatory threshold" as the sum of (a) corporate cash and cash equivalents, (b) corporate short-term investments, (c) regulatory net capital of (i) our clearing broker-dealer subsidiary in excess of 5% of aggregate debit items and (ii) our introducing broker-dealer subsidiaries in excess of the applicable "early warning" net capital requirement and (d) Tier 1 capital of our trust company in excess of the minimum dollar requirement. We consider "liquid assets - regulatory threshold" to be a measure that reflects our liquidity that would be available for corporate investing or financing activities under unusual operating circumstances, such as the need to provide funding for significant strategic business transactions.




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