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TD Ameritrade Reports Second Quarter Fiscal 2020 Results

April 22, 2020

GAAP Diluted EPS $0.82; Non-GAAP Diluted EPS $0.86 (1)

Record Net New Client Assets of $45 Billion

Record Daily Average Revenue Trades of 2.1 Million

Schwab Deal Close Remains on Track for Second Half of 2020

OMAHA, Neb.--(BUSINESS WIRE)-- TD Ameritrade Holding Corporation (Nasdaq: AMTD) has released results for the second quarter of fiscal 2020.

Financial results for the quarter ended March 31, 2020 include the following:(2)

  • Record net new client assets of $45 billion, split 58 percent retail and 42 percent institutional, an annualized growth rate of 13 percent
  • Record gross new funded retail accounts of 608,000
  • Record daily average revenue trades, DARTs, of 2.1 million
  • Total client assets of $1.2 trillion
  • Net revenues of $1.5 billion
  • Pre-tax GAAP income of $599 million, or 40 percent of net revenues
  • $0.82 in GAAP earnings per diluted share, on net income of $446 million
  • $0.86 in Non-GAAP earnings per diluted share(1)

Steve Boyle, interim president and chief executive officer, commented, “Net new client assets, or NNA, were a record $45 billion, a 13 percent annualized growth rate, split 58 percent retail and 42 percent institutional. Retail NNA this quarter surpassed any fiscal year total retail has delivered in our firm’s history. Inflows were robust as new and existing clients brought over new funds to capitalize on various trading opportunities when market concerns started to dominate the news cycle. New funded accounts were particularly strong at 608,000 in the quarter, up 249 percent from last year, and up 230 percent from last quarter. In the month of March alone, new and existing retail clients opened 426,000 funded accounts. Client retention was strong, with attrition levels normalizing after peaking in December as expected. Institutional NNA also remained strong primarily due to resiliency from existing independent registered investment advisors (RIAs), as advisors tend to pause efforts to break away or change custodians amid bear market volatility. Given current market conditions, we expect positive firmwide NNA trends to continue into the third quarter, though likely not to the same degree as the exceptional engagement levels this quarter.”

Boyle added, “There is no question that these are unprecedented times. We are not unique in our need to carefully balance the health and safety of our employees, the directives of public health officials and local governments, and the needs of our clients and business amid record market volatility. I am, however, extremely proud of the way we have executed given these challenging circumstances. We successfully navigated incredible market conditions with second quarter DARTs up 144 percent versus last year and March DARTs up 236 percent year over year. At the height of the volatility, we regularly averaged more than 3 million DARTs, including an astounding 3.7 million DARTs on March 25. This is exceptional, considering it took our firm 40 years to reach 1 million DARTs, another 4.5 years to achieve 2 million, and just 10 days more to hit 3 million. Trading remains strong in April, averaging 3 million DARTs through April 20. In addition, we saw clients turn to mobile trading during this highly volatile time with mobile DARTs of 690,000 in the quarter and one day in March topping 1 million mobile DARTs for the first time.”

Boyle continued, “It goes without saying that an environment such as this has resulted in heightened client engagement. As we’ve seen before in times of market uncertainty, clients increasingly turned to our educational resources. Education usage set a new all-time record in each month of the quarter, with March seeing more than three times the number of users compared to March 2019. The TD Ameritrade Network also had historical viewership this quarter, up 90 percent from last year as investors sought consistent coverage and context on market conditions. With our digital-first service model, clients also increasingly made use of enhanced online self-service options, including new features like mobile co-browsing, a simplified account transfer process, and increased mobile check deposit limits, to efficiently meet their needs. While record volumes resulted in longer than normal hold times in our service queues, client trades were processed as usual, and our platforms remained available for clients. We were able to deliver this level of service in the midst of a herculean effort to transition our entire workforce to a work-from-home program. A task force comprised of experts from our risk, technology, health and safety, human resources, marketing and communications, and retail and institutional teams worked around the clock to deliver the capabilities required to facilitate this transition. Within the span of 10 days, we moved from 15 percent to nearly 100 percent of our employees working from home – without any disruption to client service, and fully compliant with regulatory expectations. This would not have been possible without the investments we’ve made in technology and organizational speed over the last few years. We are adjusting quickly to our new normal, and our employees have responded with a willingness to support one another and embrace flexibility despite the uncertainty of the COVID-19 pandemic impacting every aspect of our lives. In recognition of these challenges, we awarded special $1,000 stipends to every employee at the director level and below, to address the residual impacts of working from home. We are leveraging a number of communication channels to keep everyone informed of the latest developments and how they impact our work at TD Ameritrade.”

Boyle concluded, “We remain committed to the proposed transaction with Schwab and are fully engaged in planning for the integration. While our top priority at the moment is managing our company through the challenges presented by the pandemic, teams remain focused on the most critical work needed for deal close, which we expect will happen in the second half of 2020.”

Interim chief financial officer Jon Peterson commented, “Despite the industry move to zero commission pricing on equities and ETFs last October, results were strong for the quarter driven by unprecedented client engagement with record trading levels and client cash rising to $209 billion, up 43 percent year over year. As of April 20, client cash is holding steady at $209 billion. We expect this increase in client cash levels to help boost future earnings power in more favorable interest rate environments. Expenses increased sequentially due to extreme volumes, as well as some notable items. Notable items in the quarter included $27 million of mark-to-market benefits impacting other revenue, and $16 million of employment expense, primarily related to the final impacts of the CEO transition, as well as the special stipends noted above, and $8 million of deal-related costs impacting professional services.”

Peterson added, “Even with the Federal Reserve’s decision to lower rates in mid-March and the global pandemic impact, we are maintaining our full-year fiscal 2020 guidance ranges for all metrics, except operating expense. A plausible revenue scenario using the forward curve as of late March and DARTs of 1.7 million for the remainder of the year results in full-year revenue above our original midpoint scenario, reflecting the diversity of our revenue streams. Due to higher client engagement and notable items, we are updating our full-year fiscal 2020 GAAP operating expense guidance slightly to a range of $3.0 billion to $3.1 billion. Further, our capital and liquidity remain strong.”

Peterson concluded, “As we have demonstrated in the past, we will navigate the low interest rate environment and market uncertainty, delivering value to our clients and shareholders while taking care of our employees.”

$0 commission applies to online U.S. exchange-listed stocks, ETFs, and option trades. $0.65 per options contract fee applies to options trades, with no exercise or assignment fees. A $6.95 commission applies to online trades of over-the-counter (OTC) stocks which includes stocks not listed on a U.S. exchange.

Capital Management

The company paid $168 million in cash dividends during its second fiscal quarter, or $0.31 per share.

The company has declared a $0.31 per share quarterly cash dividend, payable on May 20, 2020 to all holders of record of common stock as of May 6, 2020.

More information about TD Ameritrade’s upcoming corporate events is available via the company’s Calendar which is located on the "Investor Relations" page of www.amtd.com.

Interested parties should visit or subscribe to newsfeeds at www.amtd.com for the most up-to-date information on corporate financial reports, press releases, SEC filings and events. The company also communicates this information via Twitter, @TDAmeritradePR. Website links, corporate titles and telephone numbers provided in this release, although correct when published, may change in the future.

Source: TD Ameritrade Holding Corporation

About TD Ameritrade Holding Corporation

TD Ameritrade provides investing services and education to approximately 12 million client accounts totaling approximately $1.2 trillion in assets, and custodial services to more than 7,000 registered investment advisors. We are a leader in U.S. retail trading, executing approximately 2 million daily average revenue trades per day for our clients, nearly one-third of which come from mobile devices. We have a proud history of innovation, dating back to our start in 1975, and today our team of nearly 10,000-strong is committed to carrying it forward. Together, we are leveraging the latest in cutting edge technologies and one-on-one client care to transform lives, and investing, for the better. Learn more by visiting TD Ameritrade’s newsroom at www.amtd.com, or read our stories at Fresh Accounts.

Brokerage services provided by TD Ameritrade, Inc., member FINRA (www.FINRA.org) / SIPC (www.SIPC.org)

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. These statements reflect only our current expectations and are not guarantees of future performance or results. There are risks, uncertainties and assumptions that could cause our actual results or performance to differ materially from those contained in our forward-looking statements. Among the risks, uncertainties and assumptions that could cause our actual results or performance to differ materially from those contained in our forward-looking statements are risks related to the pending acquisition of TD Ameritrade by Schwab as disclosed under Part II, Item 1A, Risk Factors, in our quarterly report on Form 10-Q for the quarterly period ended December 31, 2019, including, among others: the risk that anticipated benefits and cost savings from the transaction may not be realized fully or at all or may take longer to realize than expected; the risk that the parties will be unable to successfully implement their integration strategies; the possible failure of the parties to satisfy the closing conditions in the merger agreement (including stockholder and regulatory approvals) in a timely manner or at all; disruptions to the parties’ businesses as a result of the announcement and pendency of the transaction; and the risk that failure to complete the transaction for any reason could negatively impact our stock price and our future business and financial results. We are also subject to risks, uncertainties and assumptions relating to the spread of the 2019 novel coronavirus and the resulting market volatility and related disruption to local, regional and global economic activity, including actual and potential adverse impacts on our business, clients, workforce, operating results and financial condition, as well as other risks, uncertainties and assumptions disclosed under Part I, Item 1A , Risk Factors in our annual report on Form 10-K for the fiscal year ended September 30, 2019, including, among others, economic, social and political conditions and other securities industry risks; interest rate risks; liquidity risks; client and counterparty credit risks; our ability to introduce new products and services and update or enhance existing products and services to remain competitive; clearing function risks; systemic risk; aggressive competition; information system risks, network security risks; investment advisory services risks; merger and acquisition risks; external service provider risks; employee misconduct risks; LIBOR phase-out risks; new laws, rules, regulations and regulatory guidance affecting our business; net capital requirements; extensive regulation and regulatory uncertainties; and litigation, investigations and proceedings involving our business, as well as the risk that our risk management practices may leave us exposed to unidentified or unanticipated risks.

Our forward-looking statements speak only as of the date on which they were made. We undertake no obligation to publicly update or revise such statements, whether as a result of new information, future events or otherwise, except to the extent required by the federal securities laws.

1See attached reconciliation of non-GAAP financial measures.

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

Brokerage services provided by TD Ameritrade, Inc., member FINRA ( www.FINRA.org ) / SIPC ( www.SIPC.org ).

Advisory services are provided by TD Ameritrade Investment Management, LLC (“TD Ameritrade Investment Management”), a registered investment advisor. Brokerage services provided by TD Ameritrade, Inc. TD Ameritrade Investment Management provides discretionary advisory services for a fee. Risks applicable to any portfolio are those associated with its underlying securities. For more information, please see the Disclosure Brochure (Form ADV Part 2A) http://www.tdameritrade.com/forms/TDA4855.pdf

TD Ameritrade Network is brought to you by TD Ameritrade Media Productions Company, a wholly-owned subsidiary of TD Ameritrade Holding Corporation. TD Ameritrade Media Productions Company is not a financial adviser, registered investment advisor, or broker-dealer.

TD AMERITRADE HOLDING CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

In millions, except per share amounts

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Six Months Ended

 

 

Mar. 31, 2020

 

Dec. 31, 2019

 

Mar. 31, 2019

 

Mar. 31, 2020

 

Mar. 31, 2019

Revenues:
Asset-based revenues:
Bank deposit account fees

$

444

$

454

 

$

430

$

899

 

$

858

 

Net interest revenue

 

332

 

359

 

 

362

 

690

 

 

737

 

Investment product fees

 

144

 

145

 

 

137

 

290

 

 

280

 

Total asset-based revenues

 

920

 

958

 

 

929

 

1,879

 

 

1,875

 

Transaction-based revenues:
Transaction fees and commissions

 

481

 

305

 

 

487

 

785

 

 

1,024

 

Other revenues

 

79

 

28

 

 

35

 

108

 

 

68

 

Net revenues

 

1,480

 

1,291

 

 

1,451

 

2,772

 

 

2,967

 

Operating expenses:
Employee compensation and benefits

 

377

 

331

 

 

340

 

707

 

 

657

 

Clearing and execution costs

 

75

 

50

 

 

53

 

125

 

 

102

 

Communications

 

38

 

38

 

 

38

 

76

 

 

80

 

Occupancy and equipment costs

 

65

 

65

 

 

65

 

131

 

 

133

 

Depreciation and amortization

 

43

 

42

 

 

36

 

84

 

 

71

 

Amortization of acquired intangible assets

 

30

 

30

 

 

31

 

60

 

 

62

 

Professional services

 

69

 

97

 

 

74

 

167

 

 

147

 

Advertising

 

87

 

80

 

 

74

 

168

 

 

132

 

Other

 

65

 

37

 

 

35

 

102

 

 

81

 

Total operating expenses

 

849

 

770

 

 

746

 

1,620

 

 

1,465

 

Operating income

 

631

 

521

 

 

705

 

1,152

 

 

1,502

 

Other expense (income):
Interest on borrowings

 

31

 

32

 

 

37

 

63

 

 

70

 

Other expense (income), net

 

1

 

(2

)

 

-

 

(1

)

 

(14

)

Total other expense, net

 

32

 

30

 

 

37

 

62

 

 

56

 

Pre-tax income

 

599

 

491

 

 

668

 

1,090

 

 

1,446

 

Provision for income taxes

 

153

 

112

 

 

169

 

266

 

 

343

 

Net income

$

446

$

379

 

$

499

$

824

 

$

1,103

 

Earnings per share - basic

$

0.82

$

0.70

 

$

0.89

$

1.52

 

$

1.97

 

Earnings per share - diluted

$

0.82

$

0.70

 

$

0.89

$

1.52

 

$

1.96

 

Weighted average shares outstanding - basic

 

541

 

541

 

 

560

 

541

 

 

561

 

Weighted average shares outstanding - diluted

 

543

 

543

 

 

562

 

543

 

 

563

 

Dividends declared per share

$

0.31

$

0.31

 

$

0.30

$

0.62

 

$

0.60

 

TD AMERITRADE HOLDING CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

In millions

(Unaudited)

 

Mar. 31, 2020

Sept. 30, 2019

Assets:
Cash and cash equivalents

$

3,729

$

2,852

Segregated cash and investments

 

19,501

 

8,684

Broker/dealer receivables

 

1,526

 

2,439

Client receivables, net

 

16,608

 

20,618

Investments available-for-sale, at fair value

 

1,796

 

1,668

Goodwill and intangible assets

 

5,371

 

5,431

Other

 

2,474

 

2,094

Total assets

$

51,005

$

43,786

Liabilities and stockholders' equity:
Liabilities:
Broker/dealer payables

$

1,946

$

3,308

Client payables

 

33,257

 

27,067

Long-term debt and other borrowings

 

4,944

 

3,594

Other

 

1,705

 

1,117

Total liabilities

 

41,852

 

35,086

Stockholders' equity

 

9,153

 

8,700

Total liabilities and stockholders' equity

$

51,005

$

43,786

TD AMERITRADE HOLDING CORPORATION

SELECTED OPERATING DATA

(Unaudited)

Quarter Ended

Six Months Ended

Mar. 31, 2020

Dec. 31, 2019

Mar. 31, 2019

Mar. 31, 2020

Mar. 31, 2019

Key Metrics:
Net new assets (in billions)

$45.4

$28.7

$19.6

$74.1

$51.5

Net new asset growth rate (annualized)

13%

9%

7%

11%

8%

Average client trades per day

2,101,804

1,028,239

860,359

1,560,727

894,378

Profitability Metrics:
Operating margin

42.6%

40.4%

48.6%

41.6%

50.6%

Pre-tax margin

40.5%

38.0%

46.0%

39.3%

48.7%

Return on average stockholders' equity (annualized)

19.9%

17.4%

23.7%

18.6%

26.6%

Net profit margin

30.1%

29.4%

34.4%

29.7%

37.2%

EBITDA(1) as a percentage of net revenues

47.5%

46.1%

53.2%

46.8%

55.6%

Liquidity Metrics:
Interest on borrowings (in millions)

$31

$32

$37

$63

$70

Interest coverage ratio (EBITDA(1)/interest on borrowings)

22.7

18.6

20.9

20.6

23.6

Cash and cash equivalents (in billions)

$3.7

$2.6

$2.7

$3.7

$2.7

Liquid assets(1) (in billions)

$3.7

$2.8

$2.6

$3.7

$2.6

Transaction-Based Revenue Metrics:
Total trades (in millions)

130.3

64.8

52.5

195.1

110.0

Average commissions per trade

$2.00

$2.61

$7.01

$2.21

$7.05

Trading days

62.0

63.0

61.0

125.0

123.0

Order routing revenue (in millions)

$220

$135

$119

$355

$248

Spread-Based Asset Metrics:
Average bank deposit account balances (in billions)

$126.3

$115.9

$114.7

$121.1

$114.5

Average interest-earning assets (in billions)

36.8

35.9

31.0

36.3

30.5

Average spread-based balances (in billions)

$163.1

$151.8

$145.7

$157.4

$145.0

Bank deposit account fee revenue (in millions)

$444

$454

$430

$899

$858

Net interest revenue (in millions)

332

359

362

690

737

Spread-based revenue (in millions)

$776

$813

$792

$1,589

$1,595

Avg. annualized yield - bank deposit account fees

1.39%

1.53%

1.50%

1.46%

1.48%

Avg. annualized yield - interest-earning assets

3.56%

3.91%

4.66%

3.74%

4.78%

Net interest margin (NIM)

1.88%

2.10%

2.17%

1.99%

2.18%

 
(1) See attached reconciliation of non-GAAP financial measures.
NOTE: See Glossary of Terms on the Company's website at www.amtd.com for definitions of the above metrics.

TD AMERITRADE HOLDING CORPORATION

SELECTED OPERATING DATA

(Unaudited)

 

 

Quarter Ended

 

Six Months Ended

 

 

Mar. 31, 2020

 

Dec. 31, 2019

 

Mar. 31, 2019

 

Mar. 31, 2020

 

Mar. 31, 2019

Client Account and Client Asset Metrics:
Funded accounts (beginning of period)

12,109,000

11,971,000

11,630,000

11,971,000

11,514,000

Funded accounts (end of period)

12,671,000

12,109,000

11,763,000

12,671,000

11,763,000

Percentage change during period

5%

1%

1%

6%

2%

Client assets (beginning of period, in billions)

$1,430.2

$1,327.7

$1,161.6

$1,327.7

$1,297.5

Client assets (end of period, in billions)

$1,231.8

$1,430.2

$1,297.1

$1,231.8

$1,297.1

Percentage change during period

(14%)

8%

12%

(7%)

(0%)

Net Interest Revenue:
Segregated cash:
Average balance (in billions)

$9.3

$8.5

$5.8

$8.9

$4.3

Average annualized yield

1.22%

1.77%

2.26%

1.49%

2.18%

Interest revenue (in millions)

$29

$39

$33

$67

$48

Client margin balances:
Average balance (in billions)

$20.4

$20.4

$19.4

$20.4

$20.8

Average annualized yield

4.18%

4.37%

5.28%

4.28%

5.19%

Interest revenue (in millions)

$216

$228

$257

$444

$545

Securities borrowing/lending:
Average securities borrowing balance (in billions)

$0.7

$1.8

$0.9

$1.2

$0.8

Average securities lending balance (in billions)

$2.5

$2.7

$2.3

$2.6

$2.5

Net interest revenue - securities borrowing/lending (in millions)

$67

$76

$49

$143

$103

Other cash and interest-earning investments:
Average balance (in billions)

$6.4

$5.2

$4.9

$5.8

$4.6

Average annualized yield

1.31%

1.64%

2.03%

1.46%

1.94%

Interest revenue - net (in millions)

$21

$22

$25

$43

$45

Client credit balances:
Average balance (in billions)

$23.9

$20.8

$19.2

$22.3

$19.3

Average annualized cost

0.02%

0.11%

0.05%

0.06%

0.04%

Interest expense (in millions)

($1)

($6)

($2)

($7)

($4)

Average interest-earning assets (in billions)

$36.8

$35.9

$31.0

$36.3

$30.5

Average annualized yield

3.56%

3.91%

4.66%

3.74%

4.78%

Net interest revenue (in millions)

$332

$359

$362

$690

$737

Investment Product Fee Revenue:
Fee-based investment balances:
Average balance (in billions)

$176.8

$179.5

$273.7

$178.8

$268.6

Average annualized yield

0.32%

0.32%

0.20%

0.32%

0.21%

Investment product fee revenue (in millions)

$144

$145

$137

$290

$280

 
 
 
NOTE: See Glossary of Terms on the Company's website at www.amtd.com for definitions of the above metrics.

TD AMERITRADE HOLDING CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Dollars in millions, except per share amounts

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Six Months Ended

 

 

Mar. 31, 2020

 

Dec. 31, 2019

 

Mar. 31, 2019

 

Mar. 31, 2020

 

Mar. 31, 2019

Non-GAAP Net Income and Non-GAAP Diluted EPS (1)

 

Amount

 

Diluted EPS

 

Amount

 

Diluted EPS

 

Amount

 

Diluted EPS

 

Amount

 

Diluted EPS

 

Amount

 

Diluted EPS

 
Net income and diluted EPS - (GAAP)

$

446

 

$

0.82

 

$

379

 

$

0.70

 

$

499

 

$

0.89

 

$

824

 

$

1.52

 

$

1,103

 

$

1.96

 

Non-GAAP adjustments:
Amortization of acquired intangible assets

 

30

 

 

0.06

 

 

30

 

 

0.06

 

 

31

 

 

0.06

 

 

60

 

 

0.11

 

 

62

 

 

0.11

 

Income tax effect of above adjustments

 

(8

)

 

(0.02

)

 

(8

)

 

(0.02

)

 

(8

)

 

(0.02

)

 

(15

)

 

(0.03

)

 

(16

)

 

(0.03

)

Non-GAAP net income and non-GAAP diluted EPS

$

468

 

$

0.86

 

$

401

 

$

0.74

 

$

522

 

$

0.93

 

$

869

 

$

1.60

 

$

1,149

 

$

2.04

 

 
 

Quarter Ended

 

Six Months Ended

Mar. 31, 2020

 

Dec. 31, 2019

 

Mar. 31, 2019

 

Mar. 31, 2020

 

Mar. 31, 2019

$

 

% of Net Rev.

 

$

 

% of Net Rev.

 

$

 

% of Net Rev.

 

$

 

% of Net Rev.

 

$

 

% of Net Rev.

EBITDA (2)
Net income - (GAAP)

$

446

 

 

30.1

%

$

379

 

 

29.4

%

$

499

 

 

34.4

%

$

824

 

 

29.7

%

$

1,103

 

 

37.2

%

Add:
Depreciation and amortization

 

43

 

 

2.9

%

 

42

 

 

3.3

%

 

36

 

 

2.5

%

 

84

 

 

3.0

%

 

71

 

 

2.4

%

Amortization of acquired intangible assets

 

30

 

 

2.0

%

 

30

 

 

2.3

%

 

31

 

 

2.1

%

 

60

 

 

2.2

%

 

62

 

 

2.1

%

Interest on borrowings

 

31

 

 

2.1

%

 

32

 

 

2.5

%

 

37

 

 

2.5

%

 

63

 

 

2.3

%

 

70

 

 

2.4

%

Provision for income taxes

 

153

 

 

10.3

%

 

112

 

 

8.7

%

 

169

 

 

11.6

%

 

266

 

 

9.6

%

 

343

 

 

11.6

%

EBITDA - (non-GAAP)

$

703

 

 

47.5

%

$

595

 

 

46.1

%

$

772

 

 

53.2

%

$

1,297

 

 

46.8

%

$

1,649

 

 

55.6

%

 
 

As of

Mar. 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

Mar. 31,

2020

 

2019

 

2019

 

2019

 

2019

Liquid Assets (3)
Cash and cash equivalents - (GAAP)

$

3,729

 

$

2,551

 

$

2,852

 

$

2,953

 

$

2,674

 

Less: Non-corporate cash and cash equivalents

 

(2,019

)

 

(2,257

)

 

(2,478

)

 

(2,004

)

 

(2,020

)

Corporate cash and cash equivalents

 

1,710

 

 

294

 

 

374

 

 

949

 

 

654

 

Corporate investments

 

574

 

 

1,636

 

 

1,668

 

 

1,129

 

 

894

 

Excess regulatory net capital over management targets

 

1,432

 

 

891

 

 

859

 

 

689

 

 

1,061

 

Liquid assets - (non-GAAP)

$

3,716

 

$

2,821

 

$

2,901

 

$

2,767

 

$

2,609

 

Note: The term "GAAP" in the following explanation refers to generally accepted accounting principles in the United States.
 

(1)

Non-GAAP net income and non-GAAP diluted earnings per share (EPS) are non-GAAP financial measures as defined by SEC Regulation G. We define non-GAAP net income as net income adjusted to remove the after-tax effect of: (1) amortization of acquired intangible assets and (2) acquisition-related expenses associated with the Company's business acquisitions. We consider non-GAAP net income and non-GAAP diluted EPS as important measures of our financial performance because they exclude certain items that may not be indicative of our core operating results and business outlook and may be useful in evaluating the operating performance of the business and facilitating a meaningful comparison of our results in the current period to those in prior and future periods. Amortization of acquired intangible assets is excluded because management does not believe it is indicative of our underlying business performance. Acquisition-related expenses are excluded as these costs are not representative of the costs of running the Company’s on-going business. Non-GAAP net income and non-GAAP diluted EPS should be considered in addition to, rather than as a substitute for, GAAP net income and GAAP diluted EPS.
 

(2)

EBITDA (earnings before interest, taxes, depreciation and amortization) is considered a non-GAAP financial measure as defined by SEC Regulation G. We consider EBITDA to be 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 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, GAAP pre-tax income, net income and cash flows from operating activities.
 

(3)

Liquid assets is considered a non-GAAP financial measure as defined by SEC Regulation G. Liquid assets represents available capital, including any capital from our regulated subsidiaries in excess of established management operational targets. We include the excess capital of our regulated subsidiaries in the calculation of liquid assets, rather than simply including regulated subsidiaries' cash and cash equivalents, because capital requirements may limit the amount of cash available for dividend from the regulated subsidiaries to the parent company. Excess capital, as defined below, is generally available for dividend from the regulated subsidiaries to the parent company. Liquid assets should be considered as a supplemental measure of liquidity, rather than as a substitute for GAAP cash and cash equivalents.
 
Liquid assets may be utilized for general corporate purposes and is defined as the sum of (1) corporate cash and cash equivalents, (2) corporate investments, less securities sold under agreements to repurchase and (3) our regulated subsidiaries' net capital in excess of minimum operational targets established by management. Corporate cash and cash equivalents includes cash and cash equivalents from our investment advisory subsidiaries. Liquid assets is based on more conservative measures of net capital than regulatory requirements because we generally manage to higher levels of net capital at our regulated subsidiaries than the regulatory thresholds require.

 

Becky Niiya
Director, Corporate Communications
(402) 574-6652
rebecca.niiya@tdameritrade.com

Jeff Goeser
Managing Director, Investor Relations
(402) 597-8464
jeffrey.goeser@tdameritrade.com

Source: TD Ameritrade Holding Corporation

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