Yahoo’s second-quarter earnings are out now amid muted expectations. Its profit rose to $141 million, or 10 cents a share, from $131 million, or 9 cents a share a year ago. Net revenues fell to $1.14 billion from $1.35 billion a year ago, and gross revenues were down 13% to $1.57 billion. Yahoo was expected to report a profit of 8 cents a share on exactly that revenue level.
So here’s the upshot: Yahoo beat forecasts on profit by a couple of pennies, thanks to cost-cutting, on sales that precisely met expectations. Just a few minutes into after-hours trading, however, its stock is down 2% 4% after closing down 1.5%, to $16.75 a share, before the report. Despite the higher-than-expected net profit, investors, who have driven shares up about 30% since the start of the year, likely were disappointed with operating earnings, which came in below analysts’ forecasts. Operating profit for the quarter fell 25% from a year ago, to $101 million.
Worse yet, display ad revenues on Yahoo’s own sites fell 14% from a year ago, a little worse than the 13% drop in the first quarter—no sign of a turnaround there. And search ad revenues fell 15%, far worse than Google’s 3% growth. That won’t help Yahoo in its negotiations with Microsoft over a search deal.
What’s more, Yahoo’s outlook for the third quarter came in somewhat below what Wall Street had hoped: $1.45 billion to $1.55 billion in revenues, operating income of $55 million to $65 million, and operating income before depreciation, amortization, and stock-based compensation of $330 million to $370 million. The Street had been betting on about $425 million in EBITDA on revenues of about $1.55 billion.
Here’s the full release, with the liveblog of the analyst call to begin shortly, after the jump:
And the call begins with CEO Carol Bartz introducing new Chief Financial Officer Tim Morse.
Considering the economy, I'm pleased with our results. Our teams did a good job of containing our costs.
Overall we're seeing less fear in the marketplace and advertisers are making plans.... But it's just too early to call (a turnaround).
Three themes in the quarter:
1) great leadership team in place.
2) continue to define audience priorities, like home page, mail, and media properties, as well as advertising.
3) focused on external and internal business properties.
Now Morse makes his debut. GE taught him a lot about organizing and streamlining, which he will apply at Yahoo.
Now to the results: The economic environment continues to be challenging. Despite revenue decline, user engagement strong, with overall page view up 7%.
On topline results: ahead of our guidance midpoint. Only a 6% decline after currency and special items last year.
Search query volume rose 9% but revenue per search fell. Broad softness across all sectors persists.
On display, which was down 14% on Yahoo properties. U.S. down 11%, a little better than in first quarter, international down 20% but down 5% after currency.
Telecom, consumer products rose slightly over first quarter, but down from a year ago. Automotive stabilizing.
We're confident that when the economy does recover, we'll be one of the first places advertisers will come.
Traffic acquisition costs were 28% of revenue, expect 26% in Q3.
Listings revenue down 21% to $106 million but only 6% before last year's Kelkoo sale. Fees revenue down 8%.
$95 million in capital spending.
Will need to invest in business in branding and other areas. "We need these investments now" to be ready for an upturn.
$9 billion in value for overseas businesses, including Alibaba in China, which equals $6 a share.
We're continuing to see mixed signals in the advertising market. Will be making changes that might affect revenue; Carol will talk more about that later.
Morse now talks about what his priorities are and what he will do. Fair number of buzzwords and marketing-speak ("looking forward to operationalizing these priorities"). One thing that stands out is an intention to keep streamlining, no surprise.
Now back to Bartz: Our vision, quite simply, is to strive to be the center of people's online lives. (Critics have been saying they're not sure anyone can be the center in a splintering online media landscape.) One of every 2 Internet users come to one of Yahoo's sites per month. First in news, sports, and finance visitors.
Our home page continues to be the big dog. But we're not satisfied. Trying to listen to users better. Says new home page is now available in the U.S. Best example yet of Yahoo's open strategy: Facebook, MySpace, eBay, and other outside apps.
We are Internet kingmakers at the center of the Internet ecosystem. a two-hour link from Yahoo to the New York Times sent 9 million page views to the paper's site, breaking records.
We also need to focus on the ad experience. It's no secret that many of our users are put off by a few irritating ads that run over and over. They know the difference between annoying ads and good ones. She implies these are on the way out (bye-bye, dancing office workers?).
Aiming to reposition Yahoo's brand, and will spend heavily on that. Also will spend $75 million on improved ad platforms. Also expect efforts to improve ads to take $75 million out of revenue line related to getting rid of those annoying ads.
Just did deal with AT&T for the telecom company's 13,000-person sales force to sell Yahoo ads.
I'm excited by the foundation we've laid for the company. We're uniquely positioned to win our game. We know what we are, and more importantly, we know what we have to do to win.
Now to the Q&A:
Q: Any impact from Bing yet? Bartz: I think actually Bing's a good product. But too soon to tell how it will do long-term.
Q: Where will best return be on spending--display or search ads? Bartz: Search business declining quarter over quarter not a meaningful trend. It was more revenue per search pressure. Some of it was purposeful--advertisers chose less keywords and so forth. On investment priorities: will be on user. If we can increase our audience, which we know we can, we're going to drive both display and search revenue. What we really need to provide to our advertising partners is an engaged audience.
Q: Why is revenue per search down so much in U.S.? Morse: If you look at all the cost per clicks, they're not all that different (from Google). (Not sure he answered that question.)
Q: What contributed to increases in listings and fees? Morse: Sequentially only up slightly (listings) or down slightly (fees). So nothing really drove that.
Q: Do you get any money for links to Facebook and MySpace in the new home page? Bartz: No. It really is about making sure we improve the whole relevance of Yahoo back to being the center of their online life.
Q: Where will additional spending be? Bartz: Adding people back into products and engineering. Salespeople too. Morse: Yahoo has drained buckets that needed draining (managers and executives, presumably) and now needs to fill selected buckets (engineers, products, sales).
Q: How should we think of the cost basis of the company if revenue stays flat? Morse: Not sure how to define it because of the uncertain economy. Over the long term, we're gonna drive margin expansion. Bartz: Ad spending will shift online, so we have that factor going for us. The revenue will not stay flat forever. (Not sure when, though.) The investments we're making will actually make us more efficient. That's the reason we have the guts to make the investments now.
Q: How much of the $75 million incremental spending in the third quarter will be transient, like on new salespeople? Bartz: Most of it is really people. The branding and the whole campaign of advertising is just starting, but will go on for at least a year. So right now, consider that a cost within the system.
Q: What changed that made traffic acquisition costs higher than expected? Morse: Affiliate business higher, and they involve more cost.
Q: APT, Yahoo's newish display ad system: How inefficient is the buying process today, and what's the goal? Bartz: APT is certainly part of the process of making the buying easier. Two existing ad platforms need to move onto APT. It was sort of overpromised. Great architecture, just needs to move through more releases. On efficiencies: We have to throw a lot of bodies at these things, because the processes are inefficient. Over time, a year or more, can take many of those bodies out.
Q: Any change in the types of advertisers buying guaranteed (premium) ad space vs. nonguaranteed (remnant, like Yahoo Mail) now? Bartz: Some advertisers trying non-guaranteed ads that were only doing guaranteed ads before.
Q: Yahoo search advertising vs. affiliate search sites--why former get so much worse and the latter better? Bartz: I don't think there's a trend here. A couple of affiliates just had a good quarter. We're just not that far off.
Q: Philosophy on distribution deals: Bartz: It really is profitability. If it makes sense, it makes sense.
Q: Planning more acquisitions? Morse: Who knows what events bring? No answer, in other words.
Q: On search, what caused lower revenue per search? Does scale matter, in relation to recent talks (first and very veiled reference to Microsoft search talks)? Bartz: Of course, scale matters in search.
Q: Why was the new home page launched today, ahead of schedule? And what are monetization opportunities? Bartz: Held up the launch a bit. Talked about launching next week awhile ago. Decided to do it near earnings. We feel really good about the opportunity to monetize Metro, the new home page. It's opt-in for the user, so it could take a little time to get a volume of people on it. There's a lot of opportunity to do new things with users, experiment with advertisers. Could take time, though.
Q: What levers can you pull to improve revenue per search? And how will new home page affect search? Bartz: Trying to target ads better and match them to the right people. Very prominent position for search on the new home page.
And that's it for the call.
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Friday, July 31, 2009
Thursday, July 30, 2009
E*Trade second-quarter earnings preview
It's no secret: E*Trade Financial Corp.'s (NASDAQ:ETFC) grand experiment of trying to transform itself into a player in the mortgage market has been a complete failure. The online broker tried to diversify its revenue stream with an experimental foray into toxic mortgages, which only left the company deep in debt. How deep the current status of the trouble is will be seen when E*Trade's second-quarter earnings are announced Wednesday after market close at 5 p.m. ET.
Analysts expect the company to post its eighth-consecutive quarterly loss at 38 cents per share. That number is in the ballpark of the 41 cents per share, or $232.7 million, loss in the first quarter that E*Trade registered. The company got some breathing room in the second quarter when it exchanged $1.7 billion of its interest-bearing senior unsecured bonds for convertibles notes due 10 years from now. Additionally, the company raised additional capital from a $600 million stock offering. But is this enough for E*Trade? For now, possibly yes, but investors aren't expecting to see a profit in 2009 and possibly in 2010 as well, an outlook that'll likely continue to weigh down the stock, which closed at $1.29 on Tuesday.
E*Trade may see a brighter future with a sale or at least a major divestment to a competitor. Why? The online trading sector seems to be a mature sector with new customers hard to come by, especially with the downturn of the equities market. The experiment of expanding into mortgages was an abysmal failure, and there's not many other sectors that E*Trade can grow in, except possibly by entertaining a deal with a peer or an established bank looking for an online broker play. - Gerald Magpily
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Analysts expect the company to post its eighth-consecutive quarterly loss at 38 cents per share. That number is in the ballpark of the 41 cents per share, or $232.7 million, loss in the first quarter that E*Trade registered. The company got some breathing room in the second quarter when it exchanged $1.7 billion of its interest-bearing senior unsecured bonds for convertibles notes due 10 years from now. Additionally, the company raised additional capital from a $600 million stock offering. But is this enough for E*Trade? For now, possibly yes, but investors aren't expecting to see a profit in 2009 and possibly in 2010 as well, an outlook that'll likely continue to weigh down the stock, which closed at $1.29 on Tuesday.
E*Trade may see a brighter future with a sale or at least a major divestment to a competitor. Why? The online trading sector seems to be a mature sector with new customers hard to come by, especially with the downturn of the equities market. The experiment of expanding into mortgages was an abysmal failure, and there's not many other sectors that E*Trade can grow in, except possibly by entertaining a deal with a peer or an established bank looking for an online broker play. - Gerald Magpily
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Wednesday, July 29, 2009
State Construction Seeks Up to $7.3 Billion in IPO (Update3)
China’s largest housing contractor will sell as many as 12 billion shares at 3.96 yuan to 4.18 yuan each, according to a filing to the Shanghai Stock Exchange yesterday. The sale of a 40 percent stake values State Construction at as much as 125.5 billion yuan.
State Construction’s IPO is almost 28 times larger than the second-biggest sale in mainland China this year, testing a rally that’s pushed the benchmark Shanghai Composite 80 percent higher since Dec. 31. The company, led by Chairman Sun Wenjie, plans to use proceeds to expand in residential construction, as a surge in bank lending drives a pickup in the housing market.
“The market won’t have any problem holding up the State Construction sale,” Yu Yang, a Guangzhou-based strategist at Guotai Junan Securities Co., said before the filing. “There’s so much money around after the relatively loose monetary policy.”
State Construction’s Sun, speaking to investors in an online presentation today, said the IPO won’t change the “upward trend” in China’s stock market.
The IPO values State Construction at as much as 51.3 times 2008 profit, the company said. Companies in the China SE Shang’s Industrial Index trade at an average 59 times earnings, according to data compiled by Bloomberg. For the Standard & Poor’s 500 Index, the ratio is 15.
Home Prices
“The management of State Construction has set the IPO price at a reasonable and relatively low level,” Sun said. “The stocks’ resistance to declines will be very strong.”
He expects the stock to start trading on July 29.
State Construction’s profit fell 44 percent in 2008 to 4.92 billion yuan because of the slowing property market, rising raw material prices and higher tax payments. The company and its advisers are predicting a recovery this year, as the government’s 4 trillion yuan stimulus package begins to revive the world’s third-largest economy.
New home prices in 36 medium-sized and large Chinese cities rose 6.3 percent in June from a year earlier, the National Development and Reform Commission said today. Nationwide property sales jumped 53 percent last month from a year earlier by value, and investment in real estate development increased 9.9 percent, the statistics bureau said July 10.
Benchmark Index
“Earnings will remain strong as China’s economic growth picks up,” said Luo Guo, a Shanghai-based analyst at Orient Securities Co. “Their construction business is linked to the real estate sector, so investors are pretty positive.”
For China’s securities regulator, which began approving IPOs last month after halting sales in September last year following a stock market rout, State Construction will provide a test of investors’ ability to digest new equity.
State Construction’s offering is the biggest in China since PetroChina Co. raised 66.8 billion yuan in October 2007. Worldwide, it is the largest IPO since Visa Inc. collected more than $19 billion in March last year.
Underpinning the return of IPOs in China, the Shanghai Composite closed yesterday at a 13-month high. The gauge is the world’s second-best performing benchmark this year, according to Bloomberg data.
Investment Plan
State Construction is the fifth company to get final approval to sell shares since the IPO moratorium ended last month, following Guilin Sanjin Pharmaceutical Co., Zhejiang Wanma Cable Co., Your-Mart Co., and Sichuan Expressway Co. Sanjin, Wanma and Your-Mart surged on their debuts; Sichuan Expressway hasn’t yet begun trading.
The company owns about 34.3 million square meters of land reserves and plans to use them to expand in real estate development, according to its prospectus. State Construction plans to use as much as 8 billion yuan of the IPO proceeds for 24 commercial housing projects requiring a total investment of 15.8 billion yuan.
State Construction is building the headquarters for state- run China Central Television in Beijing. It expects to complete the project in December, according to the share sale document.
For Related News and Information: Top Stories: TOP
Last Updated: July 21, 2009 04:12 EDT
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Tuesday, July 28, 2009
E TRADE Financial Corporation (NASDAQ:ETFC) Is Today’s Top Stock To watch
Dallas, TX - Penny Stock Pick Alert is a penny stock newsletter that is pleased to alert investors of top stocks on the move.
E TRADE Financial Corporation (NASDAQ:ETFC) is expected to report 2Q2009 financial results on July 22, 2009, after the market closes today. The Company will host a conference call to discuss the results beginning at 5:00 p.m. (EDT). The company is projected to post fiscal 2Q2009 losses of $0.31 a share. In the last trading session, the stock closed at $1.29.
Logitech International SA (USA) (NASDAQ:LOGI) on July 22, 2009, will announce its fiscal 1Q2010 financial results today. The company is expected to report 1Q2010 losses of $0.19 a share. On July 20, 2009, Logitech announced a significant extension to its line of multimedia speakers, delivering four new systems with 360-Degree Sound - including the Logitech Speaker System Z320, Logitech Speaker System Z323, Logitech Speaker System Z520 and the Logitech Speaker System Z523. The stock closed at $16.56 yesterday.
eBay Inc. (NASDAQ:EBAY) will release fiscal 2Q2009 earnings on Wednesday, July 22, 2009. Analysts polled by Thomson Reuters have been expecting adjusted earnings of $0.36 per share on $1.99 billion in revenue. In April, eBay forecasted 2Q2009 earnings of $0.23 to $0.26 per share, or $0.34 to $0.36 per share when excluding certain items. EBay also predicted $1.85 billion to $2.05 billion in revenue. On July 14, 2009, Skype, an eBay company, announced the availability of its global Skype Online Shop to users in Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela. Yesterday, the stock closed at $18.93.
Penny Stock Pick Alert alerts its members on stocks that could generate higher than average returns. These include stocks with huge volume, penny stocks that are moving to the upside quickly, hot penny stocks with buy signals and companies with news. Our penny stock newsletter is well known for producing incredible results in a short amount of time and our members have made outstanding profits of over 100%. We encourage investors to join our FREE e-mail alerts by visiting Penny Stock Pick Alert
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Investors who are interested in hot stocks on the move and making money in the stock market can receive FREE Alerts by visiting Penny Stock Pick Alert PennyStockPickAlert.com is a leading stock web site that provides free stock alerts on stocks that are poised to make big gains. PennyStockPickAlert.com also tracks small cap penny stocks that could be on the brink of a massive breakout. To feature a company on our web site please contact us at info@PennyStockPickAlert.com
Penny Stock Pick Alert is an independent electronic publication that provides information on selected publicly traded companies. Penny Stock Pick Alert is not a registered investment advisor or broker-dealer. Penny Stock Pick Alert affiliates, officers, directors and employees may buy and sell additional shares in any company mentioned herein and may profit in the event those shares rise in value. Please do your own Due Diligence before investing in any of the stocks mentioned above.
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E TRADE Financial Corporation (NASDAQ:ETFC) is expected to report 2Q2009 financial results on July 22, 2009, after the market closes today. The Company will host a conference call to discuss the results beginning at 5:00 p.m. (EDT). The company is projected to post fiscal 2Q2009 losses of $0.31 a share. In the last trading session, the stock closed at $1.29.
Logitech International SA (USA) (NASDAQ:LOGI) on July 22, 2009, will announce its fiscal 1Q2010 financial results today. The company is expected to report 1Q2010 losses of $0.19 a share. On July 20, 2009, Logitech announced a significant extension to its line of multimedia speakers, delivering four new systems with 360-Degree Sound - including the Logitech Speaker System Z320, Logitech Speaker System Z323, Logitech Speaker System Z520 and the Logitech Speaker System Z523. The stock closed at $16.56 yesterday.
eBay Inc. (NASDAQ:EBAY) will release fiscal 2Q2009 earnings on Wednesday, July 22, 2009. Analysts polled by Thomson Reuters have been expecting adjusted earnings of $0.36 per share on $1.99 billion in revenue. In April, eBay forecasted 2Q2009 earnings of $0.23 to $0.26 per share, or $0.34 to $0.36 per share when excluding certain items. EBay also predicted $1.85 billion to $2.05 billion in revenue. On July 14, 2009, Skype, an eBay company, announced the availability of its global Skype Online Shop to users in Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela. Yesterday, the stock closed at $18.93.
Penny Stock Pick Alert alerts its members on stocks that could generate higher than average returns. These include stocks with huge volume, penny stocks that are moving to the upside quickly, hot penny stocks with buy signals and companies with news. Our penny stock newsletter is well known for producing incredible results in a short amount of time and our members have made outstanding profits of over 100%. We encourage investors to join our FREE e-mail alerts by visiting Penny Stock Pick Alert
ABOUT Penny Stock Pick Alert
Investors who are interested in hot stocks on the move and making money in the stock market can receive FREE Alerts by visiting Penny Stock Pick Alert PennyStockPickAlert.com is a leading stock web site that provides free stock alerts on stocks that are poised to make big gains. PennyStockPickAlert.com also tracks small cap penny stocks that could be on the brink of a massive breakout. To feature a company on our web site please contact us at info@PennyStockPickAlert.com
Penny Stock Pick Alert is an independent electronic publication that provides information on selected publicly traded companies. Penny Stock Pick Alert is not a registered investment advisor or broker-dealer. Penny Stock Pick Alert affiliates, officers, directors and employees may buy and sell additional shares in any company mentioned herein and may profit in the event those shares rise in value. Please do your own Due Diligence before investing in any of the stocks mentioned above.
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Monday, July 27, 2009
TD AMERITRADE Delivers Strong Third Quarter
OMAHA, Neb., Jul 21, 2009 (BUSINESS WIRE) -- AMTD | Quote | Chart | News | PowerRating -- --Record Trading Levels and Strong Asset Gathering Results Continue
TD AMERITRADE Holding Corporation (NASDAQ:AMTD) has released results for its third quarter of fiscal 2009, reporting continued strong business fundamentals and solid organic growth. The Company's business model continues to perform in the current environment with record trading activity and strong net new assets and new account growth.
The Company's results for the quarter ended June 30, 2009, which include the impact of the acquisition of thinkorswim Group Inc. from the closing of the transaction on June 11, 2009, are as follows (year-over-year comparisons): (1)
-- Net income of $171 million, or $0.30 per diluted share ($0.33 excluding unusual items(4))
-- Record average client trades per day of approximately 392,000, an increase of 36 percent(2)
-- Net new assets of approximately $7 billion, or an annualized growth rate of 12 percent on client assets at the beginning of the quarter
-- Spread-based balances of approximately $32 billion, an increase of 25 percent(3)
-- Fee-based balances of approximately $59 billion, a decrease of 25 percent
-- Net revenues of $614 million, 43 percent of which were asset-based
-- Pre-tax income of $280 million, or 46 percent of net revenues
-- EBITDA of $317 million, or 52 percent of net revenues(4)
-- Liquid assets of $1.1 billion(4)
-- Client assets of approximately $265 billion, including $53 billion in client cash and money market funds
"Our business model continues to deliver strong organic growth and earnings in the face of a difficult economic environment," said Fred Tomczyk, president and chief executive officer. "Looking back over the last nine months we have much to be proud of - record trading volume, our strongest new account growth in nine years and we continue to gather net new assets at a rate that is on par with leading asset gatherers. Our focus on managing for the other side of the cycle and leveraging our strong financial position to take advantage of growth opportunities, as demonstrated by our acquisition of thinkorswim, has positioned us well for the future."
"Despite pressure from the near-zero interest rate environment we remain well-positioned," said Bill Gerber, executive vice president and chief financial officer. "We are making progress on the implementation of our cash management strategy, which helps mitigate the impact of the current interest rate environment and positions us for when interest rates rise."
Auction Rate Securities Settlement
As was previously announced, the Company has committed to offer to purchase eligible auction rate securities from certain retail clients. As a result of this offer, which is expected to begin no later than Aug. 10, 2009, TD AMERITRADE expects to record a charge to earnings of approximately $0.05 to $0.10 per share during the quarter ending Sept. 30, 2009. No fine was imposed.
"Given our financial strength and the ongoing illiquidity in the auction rate securities market, initiating a buy-back program of this nature is the right thing to do for our clients," Tomczyk said. "While our role in the market for these securities was significantly different from that of other financial institutions that have previously announced similar programs, we believe this is the best way for us to help clients who have been unable to find liquidity in the current market environment."
"As the issuers refinance or redeem these securities, we expect our ultimate loss on these positions to be immaterial," Gerber concluded.
Company Hosts Conference Call
TD AMERITRADE will host its June Quarter conference call this morning, July 21, 2009, at 7:30 a.m. CDT. Participants may listen to the call by dialing 877.... Interested parties may listen to a replay of the call by dialing 888-203-1112 and the passcode 1451474. The Company will Webcast the conference call live at www.amtd.com and will make all accompanying materials available for participants to print prior to the call.
AMTD-E
About TD AMERITRADE Holding Corporation
TD AMERITRADE Holding Corporation, through its brokerage subsidiaries,(5) combines innovative trading technology, easy-to-use and understand investment tools and services, investor education and superior client service to create a market-leading financial services experience. Now home to the award-winning thinkorswim trading platform(6) and the Investools investor education program, TD AMERITRADE provides millions of retail investors, traders and independent registered investment advisors (RIAs) with the tools, service and support they need to help build confidence in today's rapidly-changing market environment. The Company's common stock trades under the ticker symbol AMTD. For more information, please visit www.amtd.com.
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, benefits of the thinkorswim acquisition, 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 general economic and political conditions, interest rates, market fluctuations and changes in client trading activity, increased competition, systems failures and capacity constraints, ability to service debt obligations, ability to realize the expected benefits from the thinkorswim acquisition, regulatory and legal matters and uncertainties and other risk factors described in our latest Annual Report on Form 10-K, filed with the SEC on Nov. 26, 2008 and amended on May 6, 2009, 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. This material shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state or jurisdiction in which an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
(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) Beginning with fiscal 2009, Average Trades Per Day were adjusted to exclude non-revenue-generating mutual fund trades. For comparability purposes, metrics for all periods in fiscal 2008 have been adjusted to account for this change. More information is available on www.amtd.com.
(3) Effective with the September 2008 quarter, spread-based assets excludes securities borrowing conduit-based assets. For comparability purposes, metrics for all periods in fiscal 2008 have been adjusted to account for this change.
(4) See attached reconciliation of non-GAAP financial measures.
(5) TD AMERITRADE, Inc., member FINRA (www.FINRA.org) /SIPC (www.SIPC.org), TD AMERITRADE Clearing, Inc., member FINRA/SIPC, and thinkorswim, Inc., member FINRA(www.FINRA.org) /SIPC (www.SIPC.org) /NFA (www.nfa.futures.org).
(6) thinkorswim was rated #1 overall online broker, "best for frequent traders," and "best for options traders" in Barron's ranking of online brokers, 3/16/2009. thinkorswim was evaluated versus others in eight total categories, including trade experience/execution, trading technology, usability, range of offerings, research amenities, portfolio analysis & reporting, customer service & access and costs. thinkorswim topped the list in 2009 with the highest weighted-average score. Barron's is a registered trademark of Dow Jones & Company (C)2009.
TD AMERITRADE HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
In thousands, except per share amounts
(Unaudited)
Quarter Ended Nine Months Ended
June 30, 2009 Mar. 31, 2009 June 30, 2008 June 30, 2009 June 30, 2008
Revenues:
Transaction-based revenues:
Commissions and transaction fees $ 338,450 $ 265,442 $ 248,861 $ 891,005 $ 754,017
Asset-based revenues:
Interest revenue 101,204 70,242 174,940 263,960 635,983
Brokerage interest expense (2,564 ) (2,837 ) (43,008 ) (13,076 ) (217,084 )
Net interest revenue 98,640 67,405 131,932 250,884 418,899
Money market deposit account fees 125,124 136,537 155,708 424,891 467,634
Investment product fees 39,079 48,096 77,552 156,341 223,242
Total asset-based revenues 262,843 252,038 365,192 832,116 1,109,775
Other revenues 12,475 8,019 9,551 26,875 24,315
Net revenues 613,768 525,499 623,604 1,749,996 1,888,107
Expenses:
Employee compensation and benefits 141,216 120,808 129,039 379,413 367,167
Fair value adjustments of compensation-related derivative - - - - 764
instruments
Clearing and execution costs 16,141 15,077 11,110 46,846 32,548
Communications 20,795 17,853 17,898 57,392 52,851
Occupancy and equipment costs 29,951 29,536 24,030 89,614 74,257
Depreciation and amortization 11,162 10,635 9,841 33,299 26,423
Amortization of acquired intangible assets 17,551 15,200 15,337 48,289 43,809
Professional services 32,923 22,069 28,964 82,332 76,826
Interest on borrowings 8,365 8,244 16,344 32,246 62,674
Other 14,513 8,720 6,421 34,798 37,460
Advertising 39,402 53,097 36,724 139,196 129,490
Total expenses 332,019 301,239 295,708 943,425 904,269
Income before other income (expense) and income taxes 281,749 224,260 327,896 806,571 983,838
Other income (expense):
Gain (loss) on sale of investments (2,003 ) - 284 (2,003 ) 928
Pre-tax income 279,746 224,260 328,180 804,568 984,766
Provision for income taxes 109,209 92,230 123,818 317,603 352,848
Net income $ 170,537 $ 132,030 $ 204,362 $ 486,965 $ 631,918
Earnings per share - basic $ 0.30 $ 0.23 $ 0.34 $ 0.84 $ 1.06
Earnings per share - diluted $ 0.30 $ 0.23 $ 0.34 $ 0.83 $ 1.05
Weighted average shares outstanding - basic 563,792 573,519 592,948 576,420 594,071
Weighted average shares outstanding - diluted 571,772 581,284 602,336 584,623 603,402
TD AMERITRADE HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands
(Unaudited)
June 30, 2009 Sept. 30, 2008
Assets:
Cash and cash equivalents $ 1,119,824 $ 674,135
Short-term investments 52,071 369,133
Segregated cash and investments 5,251,563 260,000
Broker/dealer receivables 1,540,165 4,177,149
Client receivables 5,012,819 6,933,926
Goodwill and intangible assets 3,715,977 2,960,781
Other 527,215 576,398
Total assets $ 17,219,634 $ 15,951,522
Liabilities and stockholders' equity:
Liabilities:
Broker/dealer payables $ 2,268,745 $ 5,769,676
Client payables 9,188,183 5,070,671
Long-term debt 1,424,275 1,444,000
Other 960,865 742,137
Total liabilities 13,842,068 13,026,484
Stockholders' equity 3,377,566 2,925,038
Total liabilities and stockholders' equity $ 17,219,634 $ 15,951,522
TD AMERITRADE HOLDING CORPORATION
SELECTED OPERATING DATA
Quarter Ended Nine Months Ended
June 30, 2009 Mar. 31, 2009 June 30, 2008 June 30, 2009 June 30, 2008
Key Metrics:
Net new assets (in billions) $ 6.9 $ 6.4 $ 4.0 $ 21.2 $ 20.0
Average client trades per day(1) 391,506 324,837 287,349 358,232 299,845
Profitability Metrics:
Pre-tax income as a percentage of net revenues 45.6 % 42.7 % 52.6 % 46.0 % 52.2 %
Return on client assets (annualized) 0.45 % 0.40 % 0.42 % 0.45 % 0.43 %
Return on average stockholder's equity (annualized) 22.8 % 18.0 % 30.8 % 21.7 % 34.2 %
EBITDA as a percentage of net revenues 51.6 % 49.2 % 59.3 % 52.5 % 59.2 %
Debt Metrics:
Interest on borrowings (in millions) $ 8.4 $ 8.2 $ 16.3 $ 32.2 $ 62.7
Average debt outstanding (in billions) $ 1.4 $ 1.4 $ 1.5 $ 1.4 $ 1.5
Leverage ratio (average debt/annualized EBITDA) 1.1 1.4 1.0 1.2 1.0
Interest coverage ratio (EBITDA/interest on borrowings) 37.9 31.3 22.6 28.5 17.8
Transaction-Based Revenue Metrics(1):
Total trades (in millions) 24.7 19.8 18.4 67.0 56.4
Average commissions and transaction fees per trade(2) $ 13.66 $ 13.40 $ 13.53 $ 13.28 $ 13.38
Average client trades per account (annualized) 13.5 11.5 10.7 12.6 11.4
Activity rate - total accounts 5.4 % 4.6 % 4.2 % 5.0 % 4.5 %
Activity rate - funded accounts 7.6 % 6.4 % 5.9 % 7.1 % 6.3 %
Trading days 63.0 61.0 64.0 187.0 188.0
Spread-Based Asset Metrics:
Average interest-earning assets (excluding conduit business) (in $ 10.0 $ 7.3 $ 10.4 $ 8.3 $ 9.9
billions)
Average money market deposit account balances (in billions) $ 22.5 $ 19.3 $ 15.6 $ 19.9 $ 15.5
Average spread-based balance (in billions) $ 32.5 $ 26.6 $ 26.0 $ 28.2 $ 25.4
Net interest revenue (excluding conduit business) (in millions) $ 98.2 $ 66.7 $ 129.1 $ 247.1 $ 409.9
Money market deposit account fee revenue (in millions) 125.1 136.5 155.7 424.9 467.6
Spread-based revenue (in millions) $ 223.3 $ 203.2 $ 284.8 $ 672.0 $ 877.5
Avg. annualized yield - interest-earning assets (excluding conduit 3.88 % 3.63 % 4.95 % 3.93 % 5.43 %
business)
Avg. annualized yield - money market deposit account fees 2.20 % 2.83 % 3.94 % 2.82 % 3.97 %
Net interest margin (NIM) 2.72 % 3.05 % 4.34 % 3.15 % 4.54 %
Interest days 91 90 91 273 274
Fee-Based Investment Metrics:
Average balance (in billions) $ 59.0 $ 58.9 $ 78.3 $ 60.2 $ 69.2
Investment product fee revenue (in millions) $ 39.1 $ 48.1 $ 77.6 $ 156.3 $ 223.2
Average annualized yield 0.26 % 0.33 % 0.39 % 0.34 % 0.42 %
Client Account and Client Asset
Metrics:
Total accounts (beginning of period) 7,195,000 7,052,000 6,731,000 6,895,000 6,380,000
New accounts opened 176,000 194,000 148,000 586,000 511,000
Accounts purchased 197,000 - - 197,000 102,000
Accounts closed (77,000 ) (51,000 ) (69,000 ) (187,000 ) (183,000 )
Total accounts (end of period) 7,491,000 7,195,000 6,810,000 7,491,000 6,810,000
Percentage change during period 4 % 2 % 1 % 9 % 7 %
Funded accounts (beginning of period) 5,105,000 5,013,000 4,814,000 4,918,000 4,597,000
Funded accounts (end of period) 5,291,000 5,105,000 4,868,000 5,291,000 4,868,000
Percentage change during period 4 % 2 % 1 % 8 % 6 %
Client assets (beginning of period, in billions) $ 224.9 $ 233.8 $ 306.1 $ 278.0 $ 302.7
Client assets (end of period, in billions) $ 265.0 $ 224.9 $ 309.2 $ 265.0 $ 309.2
Percentage change during period 18 % (4 %) 1 % (5 %) 2 %
(1) Effective in October 2007, total trades have been
adjusted to exclude non-revenue generating mutual fund trades.
(2) Average commissions and transaction fees per trade
excludes thinkorswim active trader 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
Quarter Ended Nine Months Ended
June 30, 2009 Mar. 31, 2009 June 30, 2008 June 30, 2009 June 30, 2008
Net Interest Revenue (excluding
Conduit Business):
Segregated cash:
Average balance (in billions) $ 4.2 $ 2.0 $ 0.0 $ 2.6 $ 0.0
Average annualized yield 0.14 % 0.14 % 2.03 % 0.19 % 3.23 %
Interest revenue (in millions) $ 1.5 $ 0.7 $ 0.0 $ 3.8 $ 0.2
Client margin balances:
Average balance (in billions) $ 4.3 $ 3.9 $ 8.2 $ 4.2 $ 8.3
Average annualized yield 4.99 % 5.13 % 5.66 % 5.26 % 6.58 %
Interest revenue (in millions) $ 54.7 $ 49.7 $ 117.3 $ 169.2 $ 415.2
Securities borrowing/lending
(excluding conduit business):
Average securities borrowing balance (in billions) $ 0.6 $ 0.3 $ 0.5 $ 0.4 $ 0.4
Average securities lending balance (in billions) $ 1.3 $ 0.9 $ 3.2 $ 1.2 $ 3.3
Interest revenue (in millions) $ 42.9 $ 16.1 $ 16.7 $ 76.3 $ 38.1
Interest expense (in millions) (0.6 ) (0.3 ) (9.5 ) (2.5 ) (48.4 )
Net interest revenue (expense) - securities borrowing/lending $ 42.3 $ 15.8 $ 7.2 $ 73.8 ($10.3 )
(excluding conduit business) (in millions)
Other cash and interest earning
investments:
Average balance (in billions) $ 0.9 $ 1.1 $ 1.7 $ 1.1 $ 1.2
Average annualized yield 0.17 % 0.36 % 2.25 % 0.40 % 2.94 %
Interest revenue - net (in millions) $ 0.4 $ 1.1 $ 9.4 $ 3.3 $ 26.7
Client credit balances:
Average balance (in billions) $ 6.1 $ 4.2 $ 4.7 $ 4.8 $ 4.2
Average annualized cost 0.05 % 0.06 % 0.40 % 0.08 % 0.68 %
Interest expense (in millions) ($0.7 ) ($0.6 ) ($4.8 ) ($3.0 ) ($21.9 )
Average interest-earning assets (excluding conduit business) (in $ 10.0 $ 7.3 $ 10.4 $ 8.3 $ 9.9
billions)
Average annualized yield (excluding conduit business) 3.88 % 3.63 % 4.95 % 3.93 % 5.43 %
Net interest revenue (excluding conduit business) (in millions) $ 98.2 $ 66.7 $ 129.1 $ 247.1 $ 409.9
Conduit Business:
Average balance (in billions) $ 1.2 $ 1.4 $ 5.4 $ 1.4 $ 5.8
Securities borrowing - conduit
business:
Average annualized yield 0.52 % 0.62 % 2.13 % 0.96 % 3.38 %
Interest revenue (in millions) $ 1.5 $ 2.2 $ 29.4 $ 10.1 $ 148.7
Securities lending - conduit
business:
Average annualized cost 0.36 % 0.42 % 1.93 % 0.59 % 3.18 %
Interest expense (in millions) ($1.1 ) ($1.5 ) ($26.6 ) ($6.3 ) ($139.7 )
Average interest-earning assets - conduit business (in billions) $ 1.2 $ 1.4 $ 5.4 $ 1.4 $ 5.8
Average annualized yield - conduit business 0.15 % 0.20 % 0.21 % 0.36 % 0.20 %
Net interest revenue - conduit business (in millions) $ 0.4 $ 0.7 $ 2.8 $ 3.8 $ 9.0
Net Interest Revenue (total):
Average interest-earning assets (excluding conduit business) (in $ 10.0 $ 7.3 $ 10.4 $ 8.3 $ 9.9
billions)
Average interest-earning assets - conduit business (in billions) 1.2 1.4 5.4 1.4 5.8
Average interest-earning assets - total (in billions) $ 11.2 $ 8.7 $ 15.8 $ 9.7 $ 15.7
Average annualized yield - total 3.49 % 3.07 % 3.31 % 3.41 % 3.51 %
Net interest revenue (excluding conduit business) (in millions) $ 98.2 $ 66.7 $ 129.1 $ 247.1 $ 409.9
Net interest revenue - conduit business (in millions) 0.4 0.7 2.8 3.8 9.0
Net interest revenue - total (in millions) $ 98.6 $ 67.4 $ 131.9 $ 250.9 $ 418.9
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 FINANCIAL MEASURES
In thousands, except percentages and per share amounts
(Unaudited)
Quarter
Ended
June 30, 2009
EPS From Ongoing Operations (1)
Diluted earnings per share, as reported $ 0.30
Adjustments on a per share basis, net of income tax effect:
FDIC special regulatory assessment 0.01
Earnout payment on acquisition 0.01
Write-off of software development costs 0.01
Loss on sale of investments 0.00
EPS from ongoing operations $ 0.33
Quarter Ended Nine Months Ended
June 30, 2009 Mar. 31, 2009 June 30, 2008 June 30, 2009 June 30, 2008
$ % of Rev. $ % of Rev. $ % of Rev. $ % of Rev. $ % of Rev.
EBITDA (2)
EBITDA $ 316,824 51.6 % $ 258,339 49.2 % $ 369,702 59.3 % $ 918,402 52.5 % $ 1,117,672 59.2 %
Less:
Depreciation and amortization (11,162 ) (1.8 %) (10,635 ) (2.0 %) (9,841 ) (1.6 %) (33,299 ) (1.9 %) (26,423 ) (1.4 %)
Amortization of acquired intangible assets (17,551 ) (2.9 %) (15,200 ) (2.9 %) (15,337 ) (2.5 %) (48,289 ) (2.8 %) (43,809 ) (2.3 %)
Interest on borrowings (8,365 ) (1.4 %) (8,244 ) (1.6 %) (16,344 ) (2.6 %) (32,246 ) (1.8 %) (62,674 ) (3.3 %)
Pre-tax income $ 279,746 45.6 % $ 224,260 42.7 % $ 328,180 52.6 % $ 804,568 46.0 % $ 984,766 52.2 %
As of
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
2009 2009 2008 2008 2008
Liquid Assets (3)
Liquid assets $ 1,053,587 $ 1,151,346 $ 1,308,015 $ 788,175 $ 660,427
Plus: Broker-dealer cash and cash equivalents 858,350 565,493 838,061 418,626 417,559
Trust company cash and cash equivalents 65,805 38,203 99,173 61,430 1,388,021
Investment advisory cash and cash equivalents 15,989 14,273 13,038 9,447 10,429
Less: Corporate short-term investments (49,496 ) (75,392 ) (83,560 ) (14,491 ) -
Excess trust Tier 1 capital (6,213 ) (7,637 ) (101,253 ) (102,427 ) -
Excess broker-dealer regulatory net capital (818,198 ) (613,644 ) (919,319 ) (486,625 ) (547,679 )
Cash and cash equivalents $ 1,119,824 $ 1,072,642 $ 1,154,155 $ 674,135 $ 1,928,757
Note: The term "GAAP" in the following explanation refers to
generally accepted accounting principles in the United States.
(1) EPS from ongoing operations is considered a non-GAAP financial
measure as defined by SEC Regulation G. We define EPS from ongoing
operations as earnings (loss) per share, adjusted to remove any
significant unusual gains or charges. We consider EPS from ongoing
operations an important measure of the financial performance of our
ongoing business. Unusual gains and charges are excluded because we
believe they are not likely to be indicative of the ongoing
operations of our business. EPS from ongoing operations should be
considered in addition to, rather than as a substitute for, GAAP
earnings per share.
(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 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 our
senior credit facilities. The consolidated leverage ratio determines
the interest rate margin charged on the senior credit facilities.
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.
(3) Liquid assets is considered a Non-GAAP financial measure as
defined by SEC Regulation G. We define liquid assets 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
120% of the minimum dollar net capital requirement or in excess of
6 2/3% of aggregate indebtedness and (d) Tier 1 capital of our
trust company in excess of the minimum dollar requirement. We
include the excess capital of our broker-dealer and trust company
subsidiaries in liquid assets, rather than simply including
broker-dealer and trust cash and cash equivalents, because capital
requirements may limit the amount of cash available for dividend
from the broker-dealer and trust subsidiaries to the parent
company. Excess capital, as defined under clauses (c) and (d)
above, is generally available for dividend from the broker-dealer
and trust subsidiaries to the parent company.We consider liquid
assets an important measure of our liquidity and of our ability to
fund corporate investing and financing activities.Liquid assets
should be considered as a supplemental measure of liquidity,
rather than as a substitute for cash and cash equivalents.
Source
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TD AMERITRADE Holding Corporation (NASDAQ:AMTD) has released results for its third quarter of fiscal 2009, reporting continued strong business fundamentals and solid organic growth. The Company's business model continues to perform in the current environment with record trading activity and strong net new assets and new account growth.
The Company's results for the quarter ended June 30, 2009, which include the impact of the acquisition of thinkorswim Group Inc. from the closing of the transaction on June 11, 2009, are as follows (year-over-year comparisons): (1)
-- Net income of $171 million, or $0.30 per diluted share ($0.33 excluding unusual items(4))
-- Record average client trades per day of approximately 392,000, an increase of 36 percent(2)
-- Net new assets of approximately $7 billion, or an annualized growth rate of 12 percent on client assets at the beginning of the quarter
-- Spread-based balances of approximately $32 billion, an increase of 25 percent(3)
-- Fee-based balances of approximately $59 billion, a decrease of 25 percent
-- Net revenues of $614 million, 43 percent of which were asset-based
-- Pre-tax income of $280 million, or 46 percent of net revenues
-- EBITDA of $317 million, or 52 percent of net revenues(4)
-- Liquid assets of $1.1 billion(4)
-- Client assets of approximately $265 billion, including $53 billion in client cash and money market funds
"Our business model continues to deliver strong organic growth and earnings in the face of a difficult economic environment," said Fred Tomczyk, president and chief executive officer. "Looking back over the last nine months we have much to be proud of - record trading volume, our strongest new account growth in nine years and we continue to gather net new assets at a rate that is on par with leading asset gatherers. Our focus on managing for the other side of the cycle and leveraging our strong financial position to take advantage of growth opportunities, as demonstrated by our acquisition of thinkorswim, has positioned us well for the future."
"Despite pressure from the near-zero interest rate environment we remain well-positioned," said Bill Gerber, executive vice president and chief financial officer. "We are making progress on the implementation of our cash management strategy, which helps mitigate the impact of the current interest rate environment and positions us for when interest rates rise."
Auction Rate Securities Settlement
As was previously announced, the Company has committed to offer to purchase eligible auction rate securities from certain retail clients. As a result of this offer, which is expected to begin no later than Aug. 10, 2009, TD AMERITRADE expects to record a charge to earnings of approximately $0.05 to $0.10 per share during the quarter ending Sept. 30, 2009. No fine was imposed.
"Given our financial strength and the ongoing illiquidity in the auction rate securities market, initiating a buy-back program of this nature is the right thing to do for our clients," Tomczyk said. "While our role in the market for these securities was significantly different from that of other financial institutions that have previously announced similar programs, we believe this is the best way for us to help clients who have been unable to find liquidity in the current market environment."
"As the issuers refinance or redeem these securities, we expect our ultimate loss on these positions to be immaterial," Gerber concluded.
Company Hosts Conference Call
TD AMERITRADE will host its June Quarter conference call this morning, July 21, 2009, at 7:30 a.m. CDT. Participants may listen to the call by dialing 877.... Interested parties may listen to a replay of the call by dialing 888-203-1112 and the passcode 1451474. The Company will Webcast the conference call live at www.amtd.com and will make all accompanying materials available for participants to print prior to the call.
AMTD-E
About TD AMERITRADE Holding Corporation
TD AMERITRADE Holding Corporation, through its brokerage subsidiaries,(5) combines innovative trading technology, easy-to-use and understand investment tools and services, investor education and superior client service to create a market-leading financial services experience. Now home to the award-winning thinkorswim trading platform(6) and the Investools investor education program, TD AMERITRADE provides millions of retail investors, traders and independent registered investment advisors (RIAs) with the tools, service and support they need to help build confidence in today's rapidly-changing market environment. The Company's common stock trades under the ticker symbol AMTD. For more information, please visit www.amtd.com.
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, benefits of the thinkorswim acquisition, 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 general economic and political conditions, interest rates, market fluctuations and changes in client trading activity, increased competition, systems failures and capacity constraints, ability to service debt obligations, ability to realize the expected benefits from the thinkorswim acquisition, regulatory and legal matters and uncertainties and other risk factors described in our latest Annual Report on Form 10-K, filed with the SEC on Nov. 26, 2008 and amended on May 6, 2009, 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. This material shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state or jurisdiction in which an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
(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) Beginning with fiscal 2009, Average Trades Per Day were adjusted to exclude non-revenue-generating mutual fund trades. For comparability purposes, metrics for all periods in fiscal 2008 have been adjusted to account for this change. More information is available on www.amtd.com.
(3) Effective with the September 2008 quarter, spread-based assets excludes securities borrowing conduit-based assets. For comparability purposes, metrics for all periods in fiscal 2008 have been adjusted to account for this change.
(4) See attached reconciliation of non-GAAP financial measures.
(5) TD AMERITRADE, Inc., member FINRA (www.FINRA.org) /SIPC (www.SIPC.org), TD AMERITRADE Clearing, Inc., member FINRA/SIPC, and thinkorswim, Inc., member FINRA(www.FINRA.org) /SIPC (www.SIPC.org) /NFA (www.nfa.futures.org).
(6) thinkorswim was rated #1 overall online broker, "best for frequent traders," and "best for options traders" in Barron's ranking of online brokers, 3/16/2009. thinkorswim was evaluated versus others in eight total categories, including trade experience/execution, trading technology, usability, range of offerings, research amenities, portfolio analysis & reporting, customer service & access and costs. thinkorswim topped the list in 2009 with the highest weighted-average score. Barron's is a registered trademark of Dow Jones & Company (C)2009.
TD AMERITRADE HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
In thousands, except per share amounts
(Unaudited)
Quarter Ended Nine Months Ended
June 30, 2009 Mar. 31, 2009 June 30, 2008 June 30, 2009 June 30, 2008
Revenues:
Transaction-based revenues:
Commissions and transaction fees $ 338,450 $ 265,442 $ 248,861 $ 891,005 $ 754,017
Asset-based revenues:
Interest revenue 101,204 70,242 174,940 263,960 635,983
Brokerage interest expense (2,564 ) (2,837 ) (43,008 ) (13,076 ) (217,084 )
Net interest revenue 98,640 67,405 131,932 250,884 418,899
Money market deposit account fees 125,124 136,537 155,708 424,891 467,634
Investment product fees 39,079 48,096 77,552 156,341 223,242
Total asset-based revenues 262,843 252,038 365,192 832,116 1,109,775
Other revenues 12,475 8,019 9,551 26,875 24,315
Net revenues 613,768 525,499 623,604 1,749,996 1,888,107
Expenses:
Employee compensation and benefits 141,216 120,808 129,039 379,413 367,167
Fair value adjustments of compensation-related derivative - - - - 764
instruments
Clearing and execution costs 16,141 15,077 11,110 46,846 32,548
Communications 20,795 17,853 17,898 57,392 52,851
Occupancy and equipment costs 29,951 29,536 24,030 89,614 74,257
Depreciation and amortization 11,162 10,635 9,841 33,299 26,423
Amortization of acquired intangible assets 17,551 15,200 15,337 48,289 43,809
Professional services 32,923 22,069 28,964 82,332 76,826
Interest on borrowings 8,365 8,244 16,344 32,246 62,674
Other 14,513 8,720 6,421 34,798 37,460
Advertising 39,402 53,097 36,724 139,196 129,490
Total expenses 332,019 301,239 295,708 943,425 904,269
Income before other income (expense) and income taxes 281,749 224,260 327,896 806,571 983,838
Other income (expense):
Gain (loss) on sale of investments (2,003 ) - 284 (2,003 ) 928
Pre-tax income 279,746 224,260 328,180 804,568 984,766
Provision for income taxes 109,209 92,230 123,818 317,603 352,848
Net income $ 170,537 $ 132,030 $ 204,362 $ 486,965 $ 631,918
Earnings per share - basic $ 0.30 $ 0.23 $ 0.34 $ 0.84 $ 1.06
Earnings per share - diluted $ 0.30 $ 0.23 $ 0.34 $ 0.83 $ 1.05
Weighted average shares outstanding - basic 563,792 573,519 592,948 576,420 594,071
Weighted average shares outstanding - diluted 571,772 581,284 602,336 584,623 603,402
TD AMERITRADE HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands
(Unaudited)
June 30, 2009 Sept. 30, 2008
Assets:
Cash and cash equivalents $ 1,119,824 $ 674,135
Short-term investments 52,071 369,133
Segregated cash and investments 5,251,563 260,000
Broker/dealer receivables 1,540,165 4,177,149
Client receivables 5,012,819 6,933,926
Goodwill and intangible assets 3,715,977 2,960,781
Other 527,215 576,398
Total assets $ 17,219,634 $ 15,951,522
Liabilities and stockholders' equity:
Liabilities:
Broker/dealer payables $ 2,268,745 $ 5,769,676
Client payables 9,188,183 5,070,671
Long-term debt 1,424,275 1,444,000
Other 960,865 742,137
Total liabilities 13,842,068 13,026,484
Stockholders' equity 3,377,566 2,925,038
Total liabilities and stockholders' equity $ 17,219,634 $ 15,951,522
TD AMERITRADE HOLDING CORPORATION
SELECTED OPERATING DATA
Quarter Ended Nine Months Ended
June 30, 2009 Mar. 31, 2009 June 30, 2008 June 30, 2009 June 30, 2008
Key Metrics:
Net new assets (in billions) $ 6.9 $ 6.4 $ 4.0 $ 21.2 $ 20.0
Average client trades per day(1) 391,506 324,837 287,349 358,232 299,845
Profitability Metrics:
Pre-tax income as a percentage of net revenues 45.6 % 42.7 % 52.6 % 46.0 % 52.2 %
Return on client assets (annualized) 0.45 % 0.40 % 0.42 % 0.45 % 0.43 %
Return on average stockholder's equity (annualized) 22.8 % 18.0 % 30.8 % 21.7 % 34.2 %
EBITDA as a percentage of net revenues 51.6 % 49.2 % 59.3 % 52.5 % 59.2 %
Debt Metrics:
Interest on borrowings (in millions) $ 8.4 $ 8.2 $ 16.3 $ 32.2 $ 62.7
Average debt outstanding (in billions) $ 1.4 $ 1.4 $ 1.5 $ 1.4 $ 1.5
Leverage ratio (average debt/annualized EBITDA) 1.1 1.4 1.0 1.2 1.0
Interest coverage ratio (EBITDA/interest on borrowings) 37.9 31.3 22.6 28.5 17.8
Transaction-Based Revenue Metrics(1):
Total trades (in millions) 24.7 19.8 18.4 67.0 56.4
Average commissions and transaction fees per trade(2) $ 13.66 $ 13.40 $ 13.53 $ 13.28 $ 13.38
Average client trades per account (annualized) 13.5 11.5 10.7 12.6 11.4
Activity rate - total accounts 5.4 % 4.6 % 4.2 % 5.0 % 4.5 %
Activity rate - funded accounts 7.6 % 6.4 % 5.9 % 7.1 % 6.3 %
Trading days 63.0 61.0 64.0 187.0 188.0
Spread-Based Asset Metrics:
Average interest-earning assets (excluding conduit business) (in $ 10.0 $ 7.3 $ 10.4 $ 8.3 $ 9.9
billions)
Average money market deposit account balances (in billions) $ 22.5 $ 19.3 $ 15.6 $ 19.9 $ 15.5
Average spread-based balance (in billions) $ 32.5 $ 26.6 $ 26.0 $ 28.2 $ 25.4
Net interest revenue (excluding conduit business) (in millions) $ 98.2 $ 66.7 $ 129.1 $ 247.1 $ 409.9
Money market deposit account fee revenue (in millions) 125.1 136.5 155.7 424.9 467.6
Spread-based revenue (in millions) $ 223.3 $ 203.2 $ 284.8 $ 672.0 $ 877.5
Avg. annualized yield - interest-earning assets (excluding conduit 3.88 % 3.63 % 4.95 % 3.93 % 5.43 %
business)
Avg. annualized yield - money market deposit account fees 2.20 % 2.83 % 3.94 % 2.82 % 3.97 %
Net interest margin (NIM) 2.72 % 3.05 % 4.34 % 3.15 % 4.54 %
Interest days 91 90 91 273 274
Fee-Based Investment Metrics:
Average balance (in billions) $ 59.0 $ 58.9 $ 78.3 $ 60.2 $ 69.2
Investment product fee revenue (in millions) $ 39.1 $ 48.1 $ 77.6 $ 156.3 $ 223.2
Average annualized yield 0.26 % 0.33 % 0.39 % 0.34 % 0.42 %
Client Account and Client Asset
Metrics:
Total accounts (beginning of period) 7,195,000 7,052,000 6,731,000 6,895,000 6,380,000
New accounts opened 176,000 194,000 148,000 586,000 511,000
Accounts purchased 197,000 - - 197,000 102,000
Accounts closed (77,000 ) (51,000 ) (69,000 ) (187,000 ) (183,000 )
Total accounts (end of period) 7,491,000 7,195,000 6,810,000 7,491,000 6,810,000
Percentage change during period 4 % 2 % 1 % 9 % 7 %
Funded accounts (beginning of period) 5,105,000 5,013,000 4,814,000 4,918,000 4,597,000
Funded accounts (end of period) 5,291,000 5,105,000 4,868,000 5,291,000 4,868,000
Percentage change during period 4 % 2 % 1 % 8 % 6 %
Client assets (beginning of period, in billions) $ 224.9 $ 233.8 $ 306.1 $ 278.0 $ 302.7
Client assets (end of period, in billions) $ 265.0 $ 224.9 $ 309.2 $ 265.0 $ 309.2
Percentage change during period 18 % (4 %) 1 % (5 %) 2 %
(1) Effective in October 2007, total trades have been
adjusted to exclude non-revenue generating mutual fund trades.
(2) Average commissions and transaction fees per trade
excludes thinkorswim active trader 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
Quarter Ended Nine Months Ended
June 30, 2009 Mar. 31, 2009 June 30, 2008 June 30, 2009 June 30, 2008
Net Interest Revenue (excluding
Conduit Business):
Segregated cash:
Average balance (in billions) $ 4.2 $ 2.0 $ 0.0 $ 2.6 $ 0.0
Average annualized yield 0.14 % 0.14 % 2.03 % 0.19 % 3.23 %
Interest revenue (in millions) $ 1.5 $ 0.7 $ 0.0 $ 3.8 $ 0.2
Client margin balances:
Average balance (in billions) $ 4.3 $ 3.9 $ 8.2 $ 4.2 $ 8.3
Average annualized yield 4.99 % 5.13 % 5.66 % 5.26 % 6.58 %
Interest revenue (in millions) $ 54.7 $ 49.7 $ 117.3 $ 169.2 $ 415.2
Securities borrowing/lending
(excluding conduit business):
Average securities borrowing balance (in billions) $ 0.6 $ 0.3 $ 0.5 $ 0.4 $ 0.4
Average securities lending balance (in billions) $ 1.3 $ 0.9 $ 3.2 $ 1.2 $ 3.3
Interest revenue (in millions) $ 42.9 $ 16.1 $ 16.7 $ 76.3 $ 38.1
Interest expense (in millions) (0.6 ) (0.3 ) (9.5 ) (2.5 ) (48.4 )
Net interest revenue (expense) - securities borrowing/lending $ 42.3 $ 15.8 $ 7.2 $ 73.8 ($10.3 )
(excluding conduit business) (in millions)
Other cash and interest earning
investments:
Average balance (in billions) $ 0.9 $ 1.1 $ 1.7 $ 1.1 $ 1.2
Average annualized yield 0.17 % 0.36 % 2.25 % 0.40 % 2.94 %
Interest revenue - net (in millions) $ 0.4 $ 1.1 $ 9.4 $ 3.3 $ 26.7
Client credit balances:
Average balance (in billions) $ 6.1 $ 4.2 $ 4.7 $ 4.8 $ 4.2
Average annualized cost 0.05 % 0.06 % 0.40 % 0.08 % 0.68 %
Interest expense (in millions) ($0.7 ) ($0.6 ) ($4.8 ) ($3.0 ) ($21.9 )
Average interest-earning assets (excluding conduit business) (in $ 10.0 $ 7.3 $ 10.4 $ 8.3 $ 9.9
billions)
Average annualized yield (excluding conduit business) 3.88 % 3.63 % 4.95 % 3.93 % 5.43 %
Net interest revenue (excluding conduit business) (in millions) $ 98.2 $ 66.7 $ 129.1 $ 247.1 $ 409.9
Conduit Business:
Average balance (in billions) $ 1.2 $ 1.4 $ 5.4 $ 1.4 $ 5.8
Securities borrowing - conduit
business:
Average annualized yield 0.52 % 0.62 % 2.13 % 0.96 % 3.38 %
Interest revenue (in millions) $ 1.5 $ 2.2 $ 29.4 $ 10.1 $ 148.7
Securities lending - conduit
business:
Average annualized cost 0.36 % 0.42 % 1.93 % 0.59 % 3.18 %
Interest expense (in millions) ($1.1 ) ($1.5 ) ($26.6 ) ($6.3 ) ($139.7 )
Average interest-earning assets - conduit business (in billions) $ 1.2 $ 1.4 $ 5.4 $ 1.4 $ 5.8
Average annualized yield - conduit business 0.15 % 0.20 % 0.21 % 0.36 % 0.20 %
Net interest revenue - conduit business (in millions) $ 0.4 $ 0.7 $ 2.8 $ 3.8 $ 9.0
Net Interest Revenue (total):
Average interest-earning assets (excluding conduit business) (in $ 10.0 $ 7.3 $ 10.4 $ 8.3 $ 9.9
billions)
Average interest-earning assets - conduit business (in billions) 1.2 1.4 5.4 1.4 5.8
Average interest-earning assets - total (in billions) $ 11.2 $ 8.7 $ 15.8 $ 9.7 $ 15.7
Average annualized yield - total 3.49 % 3.07 % 3.31 % 3.41 % 3.51 %
Net interest revenue (excluding conduit business) (in millions) $ 98.2 $ 66.7 $ 129.1 $ 247.1 $ 409.9
Net interest revenue - conduit business (in millions) 0.4 0.7 2.8 3.8 9.0
Net interest revenue - total (in millions) $ 98.6 $ 67.4 $ 131.9 $ 250.9 $ 418.9
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 FINANCIAL MEASURES
In thousands, except percentages and per share amounts
(Unaudited)
Quarter
Ended
June 30, 2009
EPS From Ongoing Operations (1)
Diluted earnings per share, as reported $ 0.30
Adjustments on a per share basis, net of income tax effect:
FDIC special regulatory assessment 0.01
Earnout payment on acquisition 0.01
Write-off of software development costs 0.01
Loss on sale of investments 0.00
EPS from ongoing operations $ 0.33
Quarter Ended Nine Months Ended
June 30, 2009 Mar. 31, 2009 June 30, 2008 June 30, 2009 June 30, 2008
$ % of Rev. $ % of Rev. $ % of Rev. $ % of Rev. $ % of Rev.
EBITDA (2)
EBITDA $ 316,824 51.6 % $ 258,339 49.2 % $ 369,702 59.3 % $ 918,402 52.5 % $ 1,117,672 59.2 %
Less:
Depreciation and amortization (11,162 ) (1.8 %) (10,635 ) (2.0 %) (9,841 ) (1.6 %) (33,299 ) (1.9 %) (26,423 ) (1.4 %)
Amortization of acquired intangible assets (17,551 ) (2.9 %) (15,200 ) (2.9 %) (15,337 ) (2.5 %) (48,289 ) (2.8 %) (43,809 ) (2.3 %)
Interest on borrowings (8,365 ) (1.4 %) (8,244 ) (1.6 %) (16,344 ) (2.6 %) (32,246 ) (1.8 %) (62,674 ) (3.3 %)
Pre-tax income $ 279,746 45.6 % $ 224,260 42.7 % $ 328,180 52.6 % $ 804,568 46.0 % $ 984,766 52.2 %
As of
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
2009 2009 2008 2008 2008
Liquid Assets (3)
Liquid assets $ 1,053,587 $ 1,151,346 $ 1,308,015 $ 788,175 $ 660,427
Plus: Broker-dealer cash and cash equivalents 858,350 565,493 838,061 418,626 417,559
Trust company cash and cash equivalents 65,805 38,203 99,173 61,430 1,388,021
Investment advisory cash and cash equivalents 15,989 14,273 13,038 9,447 10,429
Less: Corporate short-term investments (49,496 ) (75,392 ) (83,560 ) (14,491 ) -
Excess trust Tier 1 capital (6,213 ) (7,637 ) (101,253 ) (102,427 ) -
Excess broker-dealer regulatory net capital (818,198 ) (613,644 ) (919,319 ) (486,625 ) (547,679 )
Cash and cash equivalents $ 1,119,824 $ 1,072,642 $ 1,154,155 $ 674,135 $ 1,928,757
Note: The term "GAAP" in the following explanation refers to
generally accepted accounting principles in the United States.
(1) EPS from ongoing operations is considered a non-GAAP financial
measure as defined by SEC Regulation G. We define EPS from ongoing
operations as earnings (loss) per share, adjusted to remove any
significant unusual gains or charges. We consider EPS from ongoing
operations an important measure of the financial performance of our
ongoing business. Unusual gains and charges are excluded because we
believe they are not likely to be indicative of the ongoing
operations of our business. EPS from ongoing operations should be
considered in addition to, rather than as a substitute for, GAAP
earnings per share.
(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 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 our
senior credit facilities. The consolidated leverage ratio determines
the interest rate margin charged on the senior credit facilities.
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.
(3) Liquid assets is considered a Non-GAAP financial measure as
defined by SEC Regulation G. We define liquid assets 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
120% of the minimum dollar net capital requirement or in excess of
6 2/3% of aggregate indebtedness and (d) Tier 1 capital of our
trust company in excess of the minimum dollar requirement. We
include the excess capital of our broker-dealer and trust company
subsidiaries in liquid assets, rather than simply including
broker-dealer and trust cash and cash equivalents, because capital
requirements may limit the amount of cash available for dividend
from the broker-dealer and trust subsidiaries to the parent
company. Excess capital, as defined under clauses (c) and (d)
above, is generally available for dividend from the broker-dealer
and trust subsidiaries to the parent company.We consider liquid
assets an important measure of our liquidity and of our ability to
fund corporate investing and financing activities.Liquid assets
should be considered as a supplemental measure of liquidity,
rather than as a substitute for cash and cash equivalents.
Source
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