Attached files
| file | filename |
|---|---|
| 8-K - 8-K - TD AMERITRADE HOLDING CORP | d275582d8k.htm |
Exhibit 99.1
At the Company
| For Media: | For Stockholders and Analysts: | |
| Kim Hillyer | Jeff Goeser | |
| Director, Communications & Public Affairs | Director, Investor Relations & Finance | |
| TD Ameritrade | TD Ameritrade | |
| 402-574-6523 | 402-597-8464 | |
| kim.hillyer@tdameritrade.com | jeffrey.goeser@tdameritrade.com | |
| @TDAmeritradePR | ||
TD Ameritrade Reports Record 2016 Earnings
Record Diluted Earnings per Share of $1.58, up 6% Year-Over-Year
Record Net Revenues of $3.3B, up 2% Year-Over-Year
Net New Client Assets of $60B, 9% Annualized Growth Rate
OMAHA, Neb., October 24, 2016 – TD Ameritrade Holding Corporation (Nasdaq: AMTD) has released results for fiscal year 2016. The Company generated record earnings and a record $1.58 per diluted share, driven by strong organic growth.
The Company’s results for the fiscal year ended Sept. 30, 2016 include the following: (1)
| • | Record $1.58 in earnings per diluted share, on net income of $842 million |
| • | Net new client assets of approximately $60 billion, a growth rate of 9 percent |
| • | Average client trades per day of approximately 463,000, up slightly year over year |
| • | Record net revenues of $3.3 billion, 57 percent of which were asset-based |
| • | Investment product fee revenue of $374 million, up 12 percent year over year |
| • | Pre-tax income of $1.3 billion, or 38 percent of net revenues |
| • | EBITDA(2) of $1.5 billion, or 45 percent of net revenues |
| • | Interest rate-sensitive assets(3) of $119 billion, up 10 percent year over year |
| • | Record client assets of approximately $774 billion, up 16 percent year over year |
“We’re pleased to report another year of strong growth across all our businesses,” said Tim Hockey, TD Ameritrade president and chief executive officer. “Strong asset-gathering and growth in investment products helped us deliver higher earnings despite a challenging rate environment. We averaged 463,000 trades per day and gathered $60 billion in net new client assets, a 9 percent growth rate. We end 2016 with strong momentum and plans firmly in place to continue building long-term earnings power.”
“We have a solid competitive position and a strong, healthy culture. Our organic growth strategy will not change, but how we execute that strategy will continue to evolve,” Hockey continued. “Over the next 12
months we will continue driving greater organizational efficiency and invest in initiatives that will help us deliver a superior client experience that address the needs of today’s investor — and tomorrow’s. An intensified commitment to agility and increasing our speed to market will be paramount to our success and a key focus for our management team going forward.”
“Fiscal 2016 was a good year with record earnings of $1.58 per diluted share, despite the persistence of near-zero interest rates, and our capital-light model allowed us to return more than $700 million to our shareholders through dividends and share buybacks. Building our long-term earnings power remains our primary focus, and with interest rate-sensitive assets up 10 percent to $119 billion, we remain well-positioned for a rising-rate environment,” said Steve Boyle, executive vice president and chief financial officer. “Looking ahead, we expect trading and organic growth to drive fiscal 2017 results, and we’ll remain disciplined on managing expenses while generating savings that can be invested in initiatives to fuel future growth.”
Fourth Quarter 2016 Results
TD Ameritrade also released its results for the quarter ended Sept. 30, 2016, which include the following: (1)
| • | Net income of $185 million, or $0.35 per diluted share, down 13 percent year over year |
| • | Net new client assets of approximately $15 billion |
| • | Average client trades per day of approximately 444,000, down 7 percent year over year |
| • | Net revenues of $829 million, 58 percent of which were asset-based |
| • | Investment product fee revenue of $98 million, up 20 percent year over year |
| • | Pre-tax income of $270 million, or 33 percent of net revenues |
| • | EBITDA(2) of $327 million, or 39 percent of net revenues |
| • | Return on average stockholders’ equity (annualized) of 15 percent |
Capital Management
During the 2016 fiscal year, the Company paid $362 million, in cash dividends, which included four quarterly dividends of $0.17 per share. The Company also repurchased approximately 12 million shares of its common stock.
The Company has declared an $0.18 per share quarterly cash dividend, an increase of 6 percent year-over-year, payable on Nov. 22, 2016 to all holders of record of common stock as of Nov. 8, 2016.
Fiscal 2017 Outlook
The Company has also released its outlook for the 2017 fiscal year, which reflects expected earnings of $1.50 to $1.80 per diluted share for its 2017 fiscal year.
More information on the fiscal 2017 forecast is available through the Company’s Outlook Statement, located in the “Financials & reports” section of its corporate web site, www.amtd.com.
Company Hosts Conference Call
TD Ameritrade will host a conference call this morning, Oct. 24, 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 beginning at 12:00 p.m. EDT (11:00 a.m. CDT) on Oct. 24, 2016 by dialing 855-859-2056 and entering the Conference ID 69450485. The replay will be available until 11:59 p.m. EDT (10:59 p.m. CDT) on Oct. 31, 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 Tuesday, Oct. 25, 2016.
Information about the Company’s corporate events, including earnings conference calls and webcasts, can be found by visiting www.amtd.com and clicking on “Investor Relations” and “Presentations & Events.” Click on the date of the event to access all pertinent links and resources. A high speed Internet connection is required in order to view the webcast.
The Company asks that interested parties 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.
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 and Paralympic Teams, 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.
Source: TD Ameritrade Holding Corporation
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 | Please see the Glossary of Terms, located in “Investor” section of www.amtd.com for more information on how these metrics are calculated. |
| 2 | See attached reconciliation of non-GAAP financial measures. |
| 3 | Interest rate-sensitive assets consist of spread-based assets and money market mutual funds. Ending balances as of Sept. 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 | Fiscal Year Ended | |||||||||||||||||||
| Sept. 30, 2016 | June 30, 2016 | Sept. 30, 2015 | Sept. 30, 2016 | Sept. 30, 2015 | ||||||||||||||||
| Revenues: |
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| Transaction-based revenues: |
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| Commissions and transaction fees |
$ | 336 | $ | 347 | $ | 364 | $ | 1,372 | $ | 1,401 | ||||||||||
| Asset-based revenues: |
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| Insured deposit account fees |
230 | 234 | 218 | 926 | 839 | |||||||||||||||
| Net interest revenue |
151 | 143 | 155 | 595 | 622 | |||||||||||||||
| Investment product fees |
98 | 96 | 82 | 374 | 334 | |||||||||||||||
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| Total asset-based revenues |
479 | 473 | 455 | 1,895 | 1,795 | |||||||||||||||
| Other revenues |
14 | 18 | 12 | 60 | 51 | |||||||||||||||
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| Net revenues |
829 | 838 | 831 | 3,327 | 3,247 | |||||||||||||||
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| Operating expenses: |
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| Employee compensation and benefits |
222 | 209 | 199 | 839 | 807 | |||||||||||||||
| Clearing and execution costs |
34 | 35 | 39 | 136 | 148 | |||||||||||||||
| Communications |
38 | 33 | 32 | 137 | 125 | |||||||||||||||
| Occupancy and equipment costs |
43 | 43 | 42 | 171 | 163 | |||||||||||||||
| Depreciation and amortization |
24 | 23 | 22 | 92 | 91 | |||||||||||||||
| Amortization of acquired intangible assets |
20 | 22 | 23 | 86 | 90 | |||||||||||||||
| Professional services |
57 | 47 | 39 | 178 | 159 | |||||||||||||||
| Advertising |
59 | 58 | 49 | 260 | 248 | |||||||||||||||
| Other |
49 | 20 | 26 | 110 | 91 | |||||||||||||||
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| Total operating expenses |
546 | 490 | 471 | 2,009 | 1,922 | |||||||||||||||
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| Operating income |
283 | 348 | 360 | 1,318 | 1,325 | |||||||||||||||
| Other expense (income): |
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| Interest on borrowings |
13 | 14 | 13 | 53 | 43 | |||||||||||||||
| Gain on sale of investments |
— | — | — | — | (7 | ) | ||||||||||||||
| Other |
— | — | — | — | 1 | |||||||||||||||
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| Total other expense (income) |
13 | 14 | 13 | 53 | 37 | |||||||||||||||
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| Pre-tax income |
270 | 334 | 347 | 1,265 | 1,288 | |||||||||||||||
| Provision for income taxes |
85 | 94 | 131 | 423 | 475 | |||||||||||||||
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| Net income |
$ | 185 | $ | 240 | $ | 216 | $ | 842 | $ | 813 | ||||||||||
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| Earnings per share - basic |
$ | 0.35 | $ | 0.45 | $ | 0.40 | $ | 1.59 | $ | 1.50 | ||||||||||
| Earnings per share - diluted |
$ | 0.35 | $ | 0.45 | $ | 0.40 | $ | 1.58 | $ | 1.49 | ||||||||||
| Weighted average shares outstanding - basic |
526 | 529 | 541 | 531 | 543 | |||||||||||||||
| Weighted average shares outstanding - diluted |
529 | 531 | 545 | 534 | 547 | |||||||||||||||
| Dividends declared per share |
$ | 0.17 | $ | 0.17 | $ | 0.15 | $ | 0.68 | $ | 0.60 | ||||||||||
TD AMERITRADE HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
In millions
(Unaudited)
| Sept. 30, 2016 | Sept. 30, 2015 | |||||||
| Assets: |
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| Cash and cash equivalents |
$ | 1,855 | $ | 1,978 | ||||
| Segregated cash and investments |
8,729 | 6,305 | ||||||
| Broker/dealer receivables |
1,190 | 862 | ||||||
| Client receivables, net |
11,941 | 12,770 | ||||||
| Investments available-for-sale, at fair value |
761 | 4 | ||||||
| Goodwill and intangible assets |
3,042 | 3,128 | ||||||
| Other |
1,300 | 1,328 | ||||||
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| Total assets |
$ | 28,818 | $ | 26,375 | ||||
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| Liabilities and stockholders’ equity: |
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| Liabilities: |
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| Broker/dealer payables |
$ | 2,040 | $ | 2,707 | ||||
| Client payables |
19,055 | 16,035 | ||||||
| Long-term debt |
1,817 | 1,800 | ||||||
| Other |
855 | 930 | ||||||
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| Total liabilities |
23,767 | 21,472 | ||||||
| Stockholders’ equity |
5,051 | 4,903 | ||||||
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| Total liabilities and stockholders’ equity |
$ | 28,818 | $ | 26,375 | ||||
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TD AMERITRADE HOLDING CORPORATION
SELECTED OPERATING DATA
(Unaudited)
| Quarter Ended | Fiscal Year Ended | |||||||||||||||||||
| Sept. 30, 2016 | June 30, 2016 | Sept. 30, 2015 | Sept. 30, 2016 | Sept. 30, 2015 | ||||||||||||||||
| Key Metrics: | ||||||||||||||||||||
| Net new assets (in billions) |
$ | 15.1 | $ | 13.6 | $ | 16.2 | $ | 60.3 | $ | 63.0 | ||||||||||
| Net new asset growth rate (annualized) |
8 | % | 8 | % | 9 | % | 9 | % | 10 | % | ||||||||||
| Average client trades per day |
444,281 | 461,941 | 478,776 | 462,918 | 461,541 | |||||||||||||||
| Profitability Metrics: | ||||||||||||||||||||
| Operating margin |
34.1 | % | 41.5 | % | 43.3 | % | 39.6 | % | 40.8 | % | ||||||||||
| Pre-tax margin |
32.6 | % | 39.9 | % | 41.8 | % | 38.0 | % | 39.7 | % | ||||||||||
| Return on average stockholders’ equity (annualized) |
14.7 | % | 19.5 | % | 17.4 | % | 17.0 | % | 16.7 | % | ||||||||||
| Net profit margin |
22.3 | % | 28.6 | % | 26.0 | % | 25.3 | % | 25.0 | % | ||||||||||
| EBITDA(1) as a percentage of net revenues |
39.4 | % | 46.9 | % | 48.7 | % | 45.0 | % | 46.6 | % | ||||||||||
| Liquidity Metrics: | ||||||||||||||||||||
| Interest on borrowings (in millions) |
$ | 13 | $ | 14 | $ | 13 | $ | 53 | $ | 43 | ||||||||||
| Interest coverage ratio (EBITDA(1)/interest on borrowings) |
25.2 | 28.1 | 31.2 | 28.2 | 35.2 | |||||||||||||||
| Cash and cash equivalents (in billions) |
$ | 1.9 | $ | 1.9 | $ | 2.0 | $ | 1.9 | $ | 2.0 | ||||||||||
| Liquid assets available for corporate investing and financing activities(1) (in billions) |
$ | 0.8 | $ | 0.7 | $ | 0.5 | $ | 0.8 | $ | 0.5 | ||||||||||
| Transaction-Based Revenue Metrics: | ||||||||||||||||||||
| Total trades (in millions) |
28.4 | 29.6 | 30.6 | 116.7 | 115.8 | |||||||||||||||
| Average commissions and transaction fees per trade |
$ | 11.82 | $ | 11.72 | $ | 11.89 | $ | 11.76 | $ | 12.09 | ||||||||||
| Trading days |
64.0 | 64.0 | 64.0 | 252.0 | 251.0 | |||||||||||||||
| Order routing revenue (in millions) |
$ | 75 | $ | 77 | $ | 76 | $ | 299 | $ | 299 | ||||||||||
| Spread-Based Asset Metrics: | ||||||||||||||||||||
| Average insured deposit account balances (in billions) |
$ | 87.1 | $ | 83.4 | $ | 78.2 | $ | 83.7 | $ | 75.7 | ||||||||||
| Average interest-earning assets (in billions) |
23.8 | 22.7 | 21.6 | 22.7 | 20.2 | |||||||||||||||
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| Average spread-based balances (in billions) |
$ | 110.9 | $ | 106.1 | $ | 99.8 | $ | 106.4 | $ | 95.9 | ||||||||||
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| Insured deposit account fee revenue (in millions) |
$ | 230 | $ | 234 | $ | 218 | $ | 926 | $ | 839 | ||||||||||
| Net interest revenue (in millions) |
151 | 143 | 155 | 595 | 622 | |||||||||||||||
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| Spread-based revenue (in millions) |
$ | 381 | $ | 377 | $ | 373 | $ | 1,521 | $ | 1,461 | ||||||||||
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| Avg. annualized yield - insured deposit account fees |
1.03 | % | 1.11 | % | 1.09 | % | 1.09 | % | 1.09 | % | ||||||||||
| Avg. annualized yield - interest-earning assets |
2.48 | % | 2.50 | % | 2.81 | % | 2.59 | % | 3.03 | % | ||||||||||
| Net interest margin (NIM) |
1.35 | % | 1.41 | % | 1.46 | % | 1.41 | % | 1.50 | % | ||||||||||
| Fee-Based Investment Metrics: | ||||||||||||||||||||
| Money market mutual fund fees: |
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| Average balance (in billions) |
$ | 5.3 | $ | 5.8 | $ | 5.7 | $ | 5.7 | $ | 5.6 | ||||||||||
| Average annualized yield |
0.28 | % | 0.26 | % | 0.02 | % | 0.19 | % | 0.01 | % | ||||||||||
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| Fee revenue (in millions) |
$ | 4 | $ | 4 | $ | 0 | $ | 11 | $ | 0 | ||||||||||
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| Market fee-based investment balances: |
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| Average balance (in billions) |
$ | 163.7 | $ | 156.3 | $ | 151.4 | $ | 155.0 | $ | 150.5 | ||||||||||
| Average annualized yield |
0.22 | % | 0.23 | % | 0.21 | % | 0.23 | % | 0.22 | % | ||||||||||
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| Fee revenue (in millions) |
$ | 94 | $ | 92 | $ | 82 | $ | 363 | $ | 334 | ||||||||||
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| Average fee-based investment balances (in billions) |
$ | 169.0 | $ | 162.1 | $ | 157.1 | $ | 160.7 | $ | 156.1 | ||||||||||
| Average annualized yield |
0.23 | % | 0.23 | % | 0.20 | % | 0.23 | % | 0.21 | % | ||||||||||
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| Investment product fee revenue (in millions) |
$ | 98 | $ | 96 | $ | 82 | $ | 374 | $ | 334 | ||||||||||
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| (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 | Fiscal Year Ended | |||||||||||||||||||
| Sept. 30, 2016 | June 30, 2016 | Sept. 30, 2015 | Sept. 30, 2016 | Sept. 30, 2015 | ||||||||||||||||
| Client Account and Client Asset Metrics: | ||||||||||||||||||||
| Funded accounts (beginning of period) |
6,872,000 | 6,777,000 | 6,551,000 | 6,621,000 | 6,301,000 | |||||||||||||||
| Funded accounts (end of period) |
6,950,000 | 6,872,000 | 6,621,000 | 6,950,000 | 6,621,000 | |||||||||||||||
| Percentage change during period |
1 | % | 1 | % | 1 | % | 5 | % | 5 | % | ||||||||||
| Client assets (beginning of period, in billions) |
$ | 736.3 | $ | 711.2 | $ | 702.3 | $ | 667.4 | $ | 653.1 | ||||||||||
| Client assets (end of period, in billions) |
$ | 773.8 | $ | 736.3 | $ | 667.4 | $ | 773.8 | $ | 667.4 | ||||||||||
| Percentage change during period |
5 | % | 4 | % | (5 | %) | 16 | % | 2 | % | ||||||||||
| Net Interest Revenue: | ||||||||||||||||||||
| Segregated cash: |
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| Average balance (in billions) |
$ | 8.0 | $ | 7.4 | $ | 5.1 | $ | 7.0 | $ | 4.7 | ||||||||||
| Average annualized yield |
0.27 | % | 0.25 | % | 0.08 | % | 0.21 | % | 0.11 | % | ||||||||||
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| Interest revenue (in millions) |
$ | 5 | $ | 5 | $ | 1 | $ | 15 | $ | 5 | ||||||||||
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| Client margin balances: |
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| Average balance (in billions) |
$ | 11.7 | $ | 11.5 | $ | 12.6 | $ | 11.8 | $ | 12.1 | ||||||||||
| Average annualized yield |
3.60 | % | 3.69 | % | 3.57 | % | 3.65 | % | 3.60 | % | ||||||||||
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| Interest revenue (in millions) |
$ | 107 | $ | 107 | $ | 115 | $ | 436 | $ | 443 | ||||||||||
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| Securities borrowing/lending: |
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| Average securities borrowing balance (in billions) |
$ | 1.2 | $ | 1.0 | $ | 0.9 | $ | 0.9 | $ | 0.9 | ||||||||||
| Average securities lending balance (in billions) |
$ | 1.9 | $ | 2.1 | $ | 2.4 | $ | 2.1 | $ | 2.3 | ||||||||||
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| Net interest revenue - securities borrowing/lending (in millions) |
$ | 37 | $ | 30 | $ | 39 | $ | 141 | $ | 174 | ||||||||||
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| Other cash and interest-earning investments: |
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| Average balance (in billions) |
$ | 2.9 | $ | 2.8 | $ | 3.0 | $ | 3.0 | $ | 2.5 | ||||||||||
| Average annualized yield |
0.28 | % | 0.21 | % | 0.03 | % | 0.18 | % | 0.04 | % | ||||||||||
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| Interest revenue - net (in millions) |
$ | 2 | $ | 1 | $ | 0 | $ | 5 | $ | 1 | ||||||||||
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| Client credit balances: |
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| Average balance (in billions) |
$ | 15.5 | $ | 14.7 | $ | 13.3 | $ | 14.7 | $ | 12.4 | ||||||||||
| Average annualized cost |
0.01 | % | 0.01 | % | 0.01 | % | 0.01 | % | 0.01 | % | ||||||||||
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| Interest expense (in millions) |
($ | 0 | ) | ($ | 0 | ) | ($ | 0 | ) | ($ | 2 | ) | ($ | 1 | ) | |||||
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| Average interest-earning assets (in billions) |
$ | 23.8 | $ | 22.7 | $ | 21.6 | $ | 22.7 | $ | 20.2 | ||||||||||
| Average annualized yield |
2.48 | % | 2.50 | % | 2.81 | % | 2.59 | % | 3.03 | % | ||||||||||
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| Net interest revenue (in millions) |
$ | 151 | $ | 143 | $ | 155 | $ | 595 | $ | 622 | ||||||||||
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NOTE: See Glossary of Terms on the Company’s website at www.amtd.com for definitions of the above metrics.
TD AMERITRADE HOLDING CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Dollars in millions
(Unaudited)
| Quarter Ended | Fiscal Year Ended | |||||||||||||||||||||||||||||||||||||||
| Sept. 30, 2016 | June 30, 2016 | Sept. 30, 2015 | Sept. 30, 2016 | Sept. 30, 2015 | ||||||||||||||||||||||||||||||||||||
| $ | % of Net Rev. | $ | % of Net Rev. | $ | % of Net Rev. | $ | % of Net Rev. | $ | % of Net Rev. | |||||||||||||||||||||||||||||||
| EBITDA (1) | ||||||||||||||||||||||||||||||||||||||||
| Net income |
$ | 185 | 22.3 | % | $ | 240 | 28.6 | % | $ | 216 | 26.0 | % | $ | 842 | 25.3 | % | $ | 813 | 25.0 | % | ||||||||||||||||||||
| Add: |
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| Depreciation and amortization |
24 | 2.9 | % | 23 | 2.7 | % | 22 | 2.6 | % | 92 | 2.8 | % | 91 | 2.8 | % | |||||||||||||||||||||||||
| Amortization of acquired intangible assets |
20 | 2.4 | % | 22 | 2.6 | % | 23 | 2.8 | % | 86 | 2.6 | % | 90 | 2.8 | % | |||||||||||||||||||||||||
| Interest on borrowings |
13 | 1.6 | % | 14 | 1.7 | % | 13 | 1.6 | % | 53 | 1.6 | % | 43 | 1.3 | % | |||||||||||||||||||||||||
| Provision for income taxes |
85 | 10.3 | % | 94 | 11.2 | % | 131 | 15.8 | % | 423 | 12.7 | % | 475 | 14.6 | % | |||||||||||||||||||||||||
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| EBITDA |
$ | 327 | 39.4 | % | $ | 393 | 46.9 | % | $ | 405 | 48.7 | % | $ | 1,496 | 45.0 | % | $ | 1,512 | 46.6 | % | ||||||||||||||||||||
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| As of | ||||||||||||||||||||||||||||||||||||||||
| Sept. 30, | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | ||||||||||||||||||||||||||||||||||||
| 2016 | 2016 | 2016 | 2015 | 2015 | ||||||||||||||||||||||||||||||||||||
| Liquid Assets Available for Corporate Investing and Financing Activities (2) | ||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents |
$ | 1,855 | $ | 1,917 | $ | 2,476 | $ | 1,735 | $ | 1,978 | ||||||||||||||||||||||||||||||
| Less: Non-corporate cash and cash equivalents |
(1,395 | ) | (1,088 | ) | (1,430 | ) | (934 | ) | (909 | ) | ||||||||||||||||||||||||||||||
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| Corporate cash and cash equivalents |
460 | 829 | 1,046 | 801 | 1,069 | |||||||||||||||||||||||||||||||||||
| Corporate investments |
757 | 400 | — | 201 | — | |||||||||||||||||||||||||||||||||||
| Less: Corporate liquidity maintained for operational contingencies |
(773 | ) | (764 | ) | (764 | ) | (764 | ) | (750 | ) | ||||||||||||||||||||||||||||||
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| Excess corporate cash and cash equivalents and investments |
444 | 465 | 282 | 238 | 319 | |||||||||||||||||||||||||||||||||||
| Excess broker-dealer regulatory net capital |
369 | 263 | 431 | 346 | 211 | |||||||||||||||||||||||||||||||||||
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| Liquid assets available for corporate investing and financing activities |
$ | 813 | $ | 728 | $ | 713 | $ | 584 | $ | 530 | ||||||||||||||||||||||||||||||
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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 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 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.