Attached files
| file | filename |
|---|---|
| 8-K - 8-K - TD AMERITRADE HOLDING CORP | a8k_20160719.htm |
EXHIBIT 99.1
At the Company | |
Kim Hillyer | Jeff Goeser |
Director, Communications | Director, Investor Relations and Finance |
(402) 574-6523 | (402) 597-8464 |
kim.hillyer@tdameritrade.com | jeffrey.goeser@tdameritrade.com |
TD Ameritrade Delivers Continued Strength in Asset Gathering and Trading
Net New Client Assets of $14B
Record Diluted Earnings per Share of $0.45(1)
Net Revenues of $838M
OMAHA, Neb., July 19, 2016 – TD Ameritrade Holding Corporation (Nasdaq: AMTD) has released results for the third quarter of fiscal 2016. The Company gathered approximately $14 billion in net new client assets, and reported 462,000 client trades per day, on average, resulting in growth for each of its core revenue streams.
The Company’s results for the quarter ended June 30, 2016 include the following: (2)
• | Record $0.45 in earnings per diluted share, on net income of $240 million, up 25 percent year over year and inclusive of a favorable $33 million, or $0.06 per share, tax liability adjustment(1) |
• | Net new client assets of approximately $14 billion, an annualized growth rate of 8 percent |
• | Average client trades per day of approximately 462,000, an activity rate of 6.8 percent |
• | Net revenues of $838 million, 56 percent of which were asset-based |
• | Record investment product fee revenue of $96 million, up 13 percent year over year |
• | Pre-tax income of $334 million, or 40 percent of net revenues |
• | EBITDA(3) of $393 million, or 47 percent of net revenues |
• | Record interest rate-sensitive assets(4) of $113 billion, up 10 percent year over year |
• | Record client assets of $736 billion, up 5 percent year over year |
“During the quarter we remained focused on what we could control and delivered strong organic growth,” said Fred Tomczyk, chief executive officer. “Net new client assets were up 16 percent year over year at $14 billion, client trading remained strong at an average of 462,000 trades per day, and investment product fees from guidance and advice products were a record $96 million. As we enter our final quarter of fiscal 2016, our focus will be on finishing the year strongly, completing our CEO transition and positioning ourselves for 2017.”
“Results this quarter reflected mixed investor sentiment. Long-term investors expressed some reticence to move new money, while traders increased their equity exposure. Both segments were opportunistic, using events like the historic Brexit vote, to lean into the market decline,” said Tim Hockey, president. “We expect these bouts of volatility to continue, underscoring the importance of our client value proposition. So, we must continue to innovate and provide our clients with powerful tools, a variety of products and mobility through cutting-edge apps to help them respond to potential opportunities.”
“We are reporting a record $0.45 in earnings per share for the quarter, which is reflective of solid organic growth and includes a $0.06 benefit we realized as the result of a tax liability adjustment,” said Steve Boyle, executive vice president and chief financial officer. “Interest rate-sensitive assets, now at $113 billion, continue to rise, we remain disciplined on expenses, and we returned nearly $140 million in capital to our shareholders through cash dividends and share repurchases. It was a good quarter, and our core business remains well-positioned for the future.”
Capital Management
The Company paid $90 million in its third fiscal quarter, or $0.17 per share, in cash dividends. The Company also repurchased approximately 1.7 million shares of its common stock.
The Company has declared a $0.17 per share quarterly cash dividend, payable on Aug. 18, 2016 to all holders of record of common stock as of Aug. 4, 2016.
Company Hosts Conference Call
TD Ameritrade will host its June Quarter conference call this morning, July 19, 2016, at 8:30 a.m. EDT (7:30 a.m. CDT). Participants may listen to the conference call by dialing 877-648-7976. The Company will webcast the conference call through www.amtd.com, via the “Presentations & Events” page of the web site. A replay of the phone call will be available by dialing 855-859-2056 and entering the Conference ID 38225239 beginning at 11:30 a.m. EDT (10:30 a.m. CDT) on July 19, 2016. The replay will be available until 11:59 p.m. EDT (10:59 p.m. CDT) on July 27, 2016. A transcript of the call will be available on the Company’s corporate web site, www.amtd.com, via either the “Investor Relations” page or the “Presentations & Events” page beginning Wednesday, July 20, 2016.
Interested parties can visit or subscribe to newsfeeds at www.amtd.com for the most up-to-date corporate financial information, presentation announcements, transcripts and archives. The company also communicates this information via Twitter, @TDAmeritradePR. Web site links, corporate titles and telephone numbers provided in this release, although correct when published, may change in the future.
Source: TD Ameritrade Holding Corporation
About TD Ameritrade Holding Corporation
Millions of investors and independent registered investment advisors (RIAs) have turned to TD Ameritrade’s (Nasdaq: AMTD) technology, people and education to help make investing and trading easier to understand and do. Online or over the phone. In a branch or with an independent RIA. First-timer or sophisticated trader. Our clients want to take control, and we help them decide how - bringing Wall Street to Main Street for more than 40 years. An official sponsor of the 2016 U.S. Olympic Team, as well as an official sponsor of the National Football League, TD Ameritrade has time and again been recognized as a leader in investment services. Please visit TD Ameritrade's newsroom or www.amtd.com for more information, or read our stories at http://freshaccounts.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, accounts or stock price, as well as the assumptions on which such expectations are based, are forward-looking statements. These statements reflect only our current expectations and are not guarantees of future performance or results. These statements involve risks, uncertainties and assumptions that could cause actual results or performance to differ materially from those contained in the forward-looking statements. These risks, uncertainties and assumptions include, but are not limited to: general economic and political conditions and other securities industry risks, fluctuations in interest
rates, stock market fluctuations and changes in client trading activity, credit risk with clients and counterparties, increased competition, systems failures, delays and capacity constraints, network security risks, liquidity risks, new laws and regulations affecting our business, regulatory and legal matters and uncertainties and other risk factors described in our latest Annual Report on Form 10-K, filed with the SEC on Nov. 20, 2015 and our latest Quarterly Report on Form 10-Q filed thereafter. These forward-looking statements speak only as of the date on which the statements were made. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by the federal securities laws.
1 Diluted earnings per share for the third quarter ended June 30, 2016 includes a favorable $33 million tax liability remeasurement, or a $0.06 per share impact. Accounting rules for uncertain tax positions require that any change in measurement of a tax position taken in a prior year be recognized as a discrete event in the period in which the change occurs. These measurement changes may cause some volatility in our effective income tax rate and affect the comparability of our results of operations from period to period.
2 Please see the Glossary of Terms, located in “Investor” section of www.amtd.com for more information on how these metrics are calculated.
3 See attached reconciliation of non-GAAP financial measures.
4 Interest rate-sensitive assets consist of spread-based assets and money market mutual funds. Ending balances as of June 30, 2016.
Brokerage services provided by TD Ameritrade, Inc., member FINRA (www.FINRA.org) /SIPC (www.SIPC.org).
TD AMERITRADE HOLDING CORPORATION | |||||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||||
In millions, except per share amounts | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Quarter Ended | Nine Months Ended | ||||||||||||||||||
June 30, 2016 | Mar. 31, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | |||||||||||||||
Revenues: | |||||||||||||||||||
Transaction-based revenues: | |||||||||||||||||||
Commissions and transaction fees | $ | 347 | $ | 360 | $ | 328 | $ | 1,035 | $ | 1,036 | |||||||||
Asset-based revenues: | |||||||||||||||||||
Insured deposit account fees | 234 | 235 | 209 | 696 | 620 | ||||||||||||||
Net interest revenue | 143 | 147 | 156 | 444 | 467 | ||||||||||||||
Investment product fees | 96 | 88 | 85 | 276 | 253 | ||||||||||||||
Total asset-based revenues | 473 | 470 | 450 | 1,416 | 1,340 | ||||||||||||||
Other revenues | 18 | 16 | 16 | 46 | 39 | ||||||||||||||
Net revenues | 838 | 846 | 794 | 2,497 | 2,415 | ||||||||||||||
Operating expenses: | |||||||||||||||||||
Employee compensation and benefits | 209 | 208 | 202 | 617 | 608 | ||||||||||||||
Clearing and execution costs | 35 | 37 | 36 | 102 | 108 | ||||||||||||||
Communications | 33 | 33 | 31 | 99 | 92 | ||||||||||||||
Occupancy and equipment costs | 43 | 43 | 40 | 128 | 121 | ||||||||||||||
Depreciation and amortization | 23 | 22 | 23 | 67 | 69 | ||||||||||||||
Amortization of acquired intangible assets | 22 | 22 | 22 | 66 | 67 | ||||||||||||||
Professional services | 47 | 37 | 43 | 121 | 120 | ||||||||||||||
Advertising | 58 | 81 | 54 | 202 | 199 | ||||||||||||||
Other | 20 | 20 | 18 | 61 | 66 | ||||||||||||||
Total operating expenses | 490 | 503 | 469 | 1,463 | 1,450 | ||||||||||||||
Operating income | 348 | 343 | 325 | 1,034 | 965 | ||||||||||||||
Other expense (income): | |||||||||||||||||||
Interest on borrowings | 14 | 13 | 13 | 39 | 30 | ||||||||||||||
Gain on sale of investments | — | — | (7 | ) | — | (7 | ) | ||||||||||||
Other | — | — | — | — | 1 | ||||||||||||||
Total other expense (income) | 14 | 13 | 6 | 39 | 24 | ||||||||||||||
Pre-tax income | 334 | 330 | 319 | 995 | 941 | ||||||||||||||
Provision for income taxes | 94 | 125 | 122 | 338 | 344 | ||||||||||||||
Net income | $ | 240 | $ | 205 | $ | 197 | $ | 657 | $ | 597 | |||||||||
Earnings per share - basic | $ | 0.45 | $ | 0.38 | $ | 0.36 | $ | 1.23 | $ | 1.10 | |||||||||
Earnings per share - diluted | $ | 0.45 | $ | 0.38 | $ | 0.36 | $ | 1.23 | $ | 1.09 | |||||||||
Weighted average shares outstanding - basic | 529 | 533 | 544 | 533 | 544 | ||||||||||||||
Weighted average shares outstanding - diluted | 531 | 535 | 547 | 536 | 547 | ||||||||||||||
Dividends declared per share | $ | 0.17 | $ | 0.17 | $ | 0.15 | $ | 0.51 | $ | 0.45 | |||||||||
TD AMERITRADE HOLDING CORPORATION | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
In millions | |||||||||
(Unaudited) | |||||||||
June 30, 2016 | Sept. 30, 2015 | ||||||||
Assets: | |||||||||
Cash and cash equivalents | $ | 1,917 | $ | 1,978 | |||||
Short-term investments | 404 | 4 | |||||||
Segregated cash and investments | 7,064 | 6,305 | |||||||
Broker/dealer receivables | 1,293 | 862 | |||||||
Client receivables, net | 12,162 | 12,770 | |||||||
Goodwill and intangible assets | 3,062 | 3,128 | |||||||
Other | 1,205 | 1,328 | |||||||
Total assets | $ | 27,107 | $ | 26,375 | |||||
Liabilities and stockholders' equity: | |||||||||
Liabilities: | |||||||||
Broker/dealer payables | $ | 1,932 | $ | 2,707 | |||||
Client payables | 17,504 | 16,035 | |||||||
Long-term debt | 1,828 | 1,800 | |||||||
Other | 871 | 930 | |||||||
Total liabilities | 22,135 | 21,472 | |||||||
Stockholders' equity | 4,972 | 4,903 | |||||||
Total liabilities and stockholders' equity | $ | 27,107 | $ | 26,375 | |||||
TD AMERITRADE HOLDING CORPORATION | |||||||||||||||||||
SELECTED OPERATING DATA | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Quarter Ended | Nine Months Ended | ||||||||||||||||||
June 30, 2016 | Mar. 31, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | |||||||||||||||
Key Metrics: | |||||||||||||||||||
Net new assets (in billions) | $ | 13.6 | $ | 14.1 | $ | 11.7 | $ | 45.2 | $ | 46.8 | |||||||||
Net new asset growth rate (annualized) | 8 | % | 8 | % | 7 | % | 9 | % | 10 | % | |||||||||
Average client trades per day | 461,941 | 509,120 | 433,759 | 469,262 | 455,642 | ||||||||||||||
Profitability Metrics: | |||||||||||||||||||
Operating margin | 41.5 | % | 40.5 | % | 40.9 | % | 41.4 | % | 40.0 | % | |||||||||
Pre-tax margin | 39.9 | % | 39.0 | % | 40.2 | % | 39.8 | % | 39.0 | % | |||||||||
Return on average stockholders' equity (annualized) | 19.5 | % | 16.6 | % | 15.9 | % | 17.7 | % | 16.5 | % | |||||||||
Net profit margin | 28.6 | % | 24.2 | % | 24.8 | % | 26.3 | % | 24.7 | % | |||||||||
EBITDA(1) as a percentage of net revenues | 46.9 | % | 45.7 | % | 47.5 | % | 46.7 | % | 45.8 | % | |||||||||
Liquidity Metrics: | |||||||||||||||||||
Interest on borrowings (in millions) | $ | 14 | $ | 13 | $ | 13 | $ | 39 | $ | 30 | |||||||||
Interest coverage ratio (EBITDA(1)/interest on borrowings) | 28.1 | 29.8 | 29.0 | 29.9 | 36.9 | ||||||||||||||
Cash and cash equivalents (in billions) | $ | 1.9 | $ | 2.5 | $ | 2.2 | $ | 1.9 | $ | 2.2 | |||||||||
Liquid assets available for corporate investing and financing activities(1) (in billions) | $ | 0.7 | $ | 0.7 | $ | 0.6 | $ | 0.7 | $ | 0.6 | |||||||||
Transaction-Based Revenue Metrics: | |||||||||||||||||||
Total trades (in millions) | 29.6 | 31.1 | 27.3 | 88.2 | 85.2 | ||||||||||||||
Average commissions and transaction fees per trade | $ | 11.72 | $ | 11.60 | $ | 11.99 | $ | 11.74 | $ | 12.16 | |||||||||
Average client trades per funded account (annualized) | 17.0 | 19.1 | 16.7 | 17.6 | 17.8 | ||||||||||||||
Activity rate - funded accounts | 6.8 | % | 7.6 | % | 6.7 | % | 7.0 | % | 7.1 | % | |||||||||
Trading days | 64.0 | 61.0 | 63.0 | 188.0 | 187.0 | ||||||||||||||
Order routing revenue (in millions) | $ | 77 | $ | 76 | $ | 71 | $ | 223 | $ | 223 | |||||||||
Spread-Based Asset Metrics: | |||||||||||||||||||
Average insured deposit account balances (in billions) | $ | 83.4 | $ | 84.0 | $ | 74.8 | $ | 82.6 | $ | 74.9 | |||||||||
Average interest-earning assets (in billions) | 22.7 | 21.8 | 20.5 | 22.2 | 19.8 | ||||||||||||||
Average spread-based balance (in billions) | $ | 106.1 | $ | 105.8 | $ | 95.3 | $ | 104.8 | $ | 94.7 | |||||||||
Insured deposit account fee revenue (in millions) | $ | 234 | $ | 235 | $ | 209 | $ | 696 | $ | 620 | |||||||||
Net interest revenue (in millions) | 143 | 147 | 156 | 444 | 467 | ||||||||||||||
Spread-based revenue (in millions) | $ | 377 | $ | 382 | $ | 365 | $ | 1,140 | $ | 1,087 | |||||||||
Avg. annualized yield - insured deposit account fees | 1.11 | % | 1.11 | % | 1.10 | % | 1.11 | % | 1.09 | % | |||||||||
Avg. annualized yield - interest-earning assets | 2.50 | % | 2.66 | % | 3.02 | % | 2.62 | % | 3.11 | % | |||||||||
Net interest margin (NIM) | 1.41 | % | 1.43 | % | 1.51 | % | 1.43 | % | 1.51 | % | |||||||||
Fee-Based Investment Metrics: | |||||||||||||||||||
Money market mutual fund fees: | |||||||||||||||||||
Average balance (in billions) | $ | 5.8 | $ | 5.8 | $ | 5.6 | $ | 5.8 | $ | 5.6 | |||||||||
Average annualized yield | 0.26 | % | 0.18 | % | 0.00 | % | 0.16 | % | 0.00 | % | |||||||||
Fee revenue (in millions) | $ | 4 | $ | 2 | $ | 0 | $ | 7 | $ | 0 | |||||||||
Market fee-based investment balances: | |||||||||||||||||||
Average balance (in billions) | $ | 156.3 | $ | 147.3 | $ | 155.7 | $ | 152.2 | $ | 150.1 | |||||||||
Average annualized yield | 0.23 | % | 0.23 | % | 0.22 | % | 0.23 | % | 0.22 | % | |||||||||
Fee revenue (in millions) | $ | 92 | $ | 86 | $ | 85 | $ | 269 | $ | 253 | |||||||||
Average fee-based investment balances (in billions) | $ | 162.1 | $ | 153.1 | $ | 161.3 | $ | 158.0 | $ | 155.7 | |||||||||
Average annualized yield | 0.23 | % | 0.23 | % | 0.21 | % | 0.23 | % | 0.21 | % | |||||||||
Investment product fee revenue (in millions) | $ | 96 | $ | 88 | $ | 85 | $ | 276 | $ | 253 | |||||||||
(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 | Nine Months Ended | ||||||||||||||||||
June 30, 2016 | Mar. 31, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | |||||||||||||||
Client Account and Client Asset Metrics: | |||||||||||||||||||
Funded accounts (beginning of period) | 6,777,000 | 6,686,000 | 6,467,000 | 6,621,000 | 6,301,000 | ||||||||||||||
Funded accounts (end of period) | 6,872,000 | 6,777,000 | 6,551,000 | 6,872,000 | 6,551,000 | ||||||||||||||
Percentage change during period | 1 | % | 1 | % | 1 | % | 4 | % | 4 | % | |||||||||
Client assets (beginning of period, in billions) | $ | 711.2 | $ | 695.3 | $ | 695.3 | $ | 667.4 | $ | 653.1 | |||||||||
Client assets (end of period, in billions) | $ | 736.3 | $ | 711.2 | $ | 702.3 | $ | 736.3 | $ | 702.3 | |||||||||
Percentage change during period | 4 | % | 2 | % | 1 | % | 10 | % | 8 | % | |||||||||
Net Interest Revenue: | |||||||||||||||||||
Segregated cash: | |||||||||||||||||||
Average balance (in billions) | $ | 7.4 | $ | 6.5 | $ | 4.0 | $ | 6.7 | $ | 4.6 | |||||||||
Average annualized yield | 0.25 | % | 0.19 | % | 0.11 | % | 0.18 | % | 0.13 | % | |||||||||
Interest revenue (in millions) | $ | 5 | $ | 3 | $ | 1 | $ | 9 | $ | 4 | |||||||||
Client margin balances: | |||||||||||||||||||
Average balance (in billions) | $ | 11.5 | $ | 11.6 | $ | 12.5 | $ | 11.8 | $ | 12.0 | |||||||||
Average annualized yield | 3.69 | % | 3.79 | % | 3.56 | % | 3.67 | % | 3.62 | % | |||||||||
Interest revenue (in millions) | $ | 107 | $ | 111 | $ | 112 | $ | 329 | $ | 328 | |||||||||
Securities borrowing/lending: | |||||||||||||||||||
Average securities borrowing balance (in billions) | $ | 1.0 | $ | 0.7 | $ | 1.0 | $ | 0.8 | $ | 0.9 | |||||||||
Average securities lending balance (in billions) | $ | 2.1 | $ | 1.9 | $ | 2.2 | $ | 2.1 | $ | 2.2 | |||||||||
Net interest revenue - securities borrowing/lending (in millions) | $ | 30 | $ | 32 | $ | 43 | $ | 104 | $ | 135 | |||||||||
Other cash and interest-earning investments: | |||||||||||||||||||
Average balance (in billions) | $ | 2.8 | $ | 3.0 | $ | 3.0 | $ | 2.9 | $ | 2.3 | |||||||||
Average annualized yield | 0.21 | % | 0.17 | % | 0.03 | % | 0.14 | % | 0.04 | % | |||||||||
Interest revenue - net (in millions) | $ | 1 | $ | 1 | $ | 0 | $ | 3 | $ | 1 | |||||||||
Client credit balances: | |||||||||||||||||||
Average balance (in billions) | $ | 14.7 | $ | 14.4 | $ | 12.2 | $ | 14.4 | $ | 12.1 | |||||||||
Average annualized cost | 0.01 | % | 0.01 | % | 0.01 | % | 0.01 | % | 0.01 | % | |||||||||
Interest expense (in millions) | $ | (0 | ) | $ | (0 | ) | $ | (0 | ) | $ | (1 | ) | $ | (1 | ) | ||||
Average interest-earning assets (in billions) | $ | 22.7 | $ | 21.8 | $ | 20.5 | $ | 22.2 | $ | 19.8 | |||||||||
Average annualized yield | 2.50 | % | 2.66 | % | 3.02 | % | 2.62 | % | 3.11 | % | |||||||||
Net interest revenue (in millions) | $ | 143 | $ | 147 | $ | 156 | $ | 444 | $ | 467 | |||||||||
NOTE: See Glossary of Terms on the Company's web site at www.amtd.com for definitions of the above metrics. | |||||||||||||||||||
TD AMERITRADE HOLDING CORPORATION | ||||||||||||||||||||||||||||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||||||||||||||||||||||||||||
Dollars in millions | ||||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||
Quarter Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||
June 30, 2016 | Mar. 31, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | ||||||||||||||||||||||||||||||
$ | % of Net Rev. | $ | % of Net Rev. | $ | % of Net Rev. | $ | % of Net Rev. | $ | % of Net Rev. | |||||||||||||||||||||||||
EBITDA (1) | ||||||||||||||||||||||||||||||||||
EBITDA | $ | 393 | 46.9 | % | $ | 387 | 45.7 | % | $ | 377 | 47.5 | % | $ | 1,167 | 46.7 | % | $ | 1,107 | 45.8 | % | ||||||||||||||
Less: | ||||||||||||||||||||||||||||||||||
Depreciation and amortization | (23 | ) | (2.7 | )% | (22 | ) | (2.6 | )% | (23 | ) | (2.9 | )% | (67 | ) | (2.7 | )% | (69 | ) | (2.9 | )% | ||||||||||||||
Amortization of acquired intangible assets | (22 | ) | (2.6 | )% | (22 | ) | (2.6 | )% | (22 | ) | (2.8 | )% | (66 | ) | (2.6 | )% | (67 | ) | (2.8 | )% | ||||||||||||||
Interest on borrowings | (14 | ) | (1.7 | )% | (13 | ) | (1.5 | )% | (13 | ) | (1.6 | )% | (39 | ) | (1.6 | )% | (30 | ) | (1.2 | )% | ||||||||||||||
Provision for income taxes | (94 | ) | (11.2 | )% | (125 | ) | (14.8 | )% | (122 | ) | (15.4 | )% | (338 | ) | (13.5 | )% | (344 | ) | (14.2 | )% | ||||||||||||||
Net income | $ | 240 | 28.6 | % | $ | 205 | 24.2 | % | $ | 197 | 24.8 | % | $ | 657 | 26.3 | % | $ | 597 | 24.7 | % | ||||||||||||||
As of | |||||||||||||||||||
June 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sept. 30, 2015 | June 30, 2015 | |||||||||||||||
Liquid Assets Available for Corporate Investing and Financing Activities (2) | |||||||||||||||||||
Liquid assets available for corporate investing and financing activities | $ | 728 | $ | 713 | $ | 584 | $ | 530 | $ | 581 | |||||||||
Plus: Non-corporate cash and cash equivalents | 1,088 | 1,430 | 934 | 909 | 1,116 | ||||||||||||||
Corporate liquidity maintained for operational contingencies | 764 | 764 | 764 | 750 | 750 | ||||||||||||||
Less: Corporate short-term investments | (400 | ) | — | (201 | ) | — | — | ||||||||||||
Excess broker-dealer regulatory net capital | (263 | ) | (431 | ) | (346 | ) | (211 | ) | (214 | ) | |||||||||
Cash and cash equivalents | $ | 1,917 | $ | 2,476 | $ | 1,735 | $ | 1,978 | $ | 2,233 | |||||||||
Note: The term "GAAP" in the following explanation refers to generally accepted accounting principles in the United States.
(1) | EBITDA (earnings before interest, taxes, depreciation and amortization) is considered a non-GAAP financial measure as defined by SEC Regulation G. We consider EBITDA an important measure of our financial performance and of our ability to generate cash flows to service debt, fund capital expenditures and fund other corporate investing and financing activities. EBITDA is used as the denominator in the consolidated leverage ratio calculation for covenant purposes under our holding company's senior revolving credit facility. EBITDA eliminates the non-cash effect of tangible asset depreciation and amortization and intangible asset amortization. EBITDA should be considered in addition to, rather than as a substitute for, pre-tax income, net income and cash flows from operating activities. |
(2) | Liquid assets available for corporate investing and financing activities is considered a non-GAAP financial measure as defined by SEC Regulation G. We consider "liquid assets available for corporate investing and financing activities" to be an important measure of our liquidity. We include the excess capital of our broker-dealer subsidiaries in the calculation of liquid assets available for corporate investing and financing activities, rather than simply including broker-dealer cash and cash equivalents, because capital requirements may limit the amount of cash available for dividend from the broker-dealer subsidiaries to the parent company. Excess capital, as defined below, is generally available for dividend from the broker-dealer subsidiaries to the parent company. Liquid assets available for corporate investing and financing activities should be considered as a supplemental measure of liquidity, rather than as a substitute for cash and cash equivalents. |
We define liquid assets available for corporate investing and financing activities as the sum of (a) corporate cash and cash equivalents and short-term investments, excluding an amount that is being maintained to provide liquidity for operational contingencies, including lending to our broker-dealer, futures commission merchant and forex dealer member subsidiaries under intercompany credit agreements and (b) regulatory net capital of (i) our clearing broker-dealer subsidiary in excess of 10% of aggregate debit items and (ii) our introducing broker-dealer subsidiaries in excess of a minimum operational target established by management ($50 million in the case of our primary introducing broker-dealer, TD Ameritrade, Inc.). Liquid assets available for corporate investing and financing activities is based on more conservative measures of broker-dealer net capital than regulatory requirements because we generally manage to higher levels of net capital at the broker-dealer subsidiaries than the regulatory thresholds require. | |