TD AMERITRADE HOLDING CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1

Attached files

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8-K - CURRENT REPORT - TD AMERITRADE HOLDING CORP	d333134d8k.htm
EX-99.2 - EXHIBIT 99.2 - TD AMERITRADE HOLDING CORP	d333134dex992.htm

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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’s Strong Asset Gathering Momentum Continues

Net New Assets of $10.8 billion, 11% annualized growth rate

Record Client Assets of $452 billion

Diluted Earnings per Share of $0.25

OMAHA, Neb., April 17, 2012 – TD Ameritrade Holding Corporation (NASDAQ: AMTD) has released results for the second quarter of fiscal 2012. The Company once again gathered assets at an industry-leading, double-digit growth rate and total client assets grew to a new record.

The Company’s results for the quarter ended Mar. 31, 2012 include the following (year-over-year comparisons):⁽¹⁾

•

Net income of $137 million, or $0.25 per diluted share

•

Net new client assets of $10.8 billion, an annualized growth rate of 11 percent of beginning client assets

•

Average client trades per day of approximately 388,000

•

Net revenues of $673 million, 54 percent of which were asset-based

•

Operating income of $219 million, or 33 percent of net revenues

•

Pre-tax income of $212 million, or 31 percent of net revenues

•

EBITDA⁽²⁾ of $260 million, or 39 percent of net revenues

•

Record interest rate sensitive assets⁽³⁾ of $79 billion, an increase of 13 percent

•

Record client assets of approximately $452 billion, an increase of 10 percent

“TD Ameritrade continued to distinguish itself from its peers by again delivering double-digit asset gathering growth,” said Fred Tomczyk, president and chief executive officer. “Net new client assets of $10.8 billion bring client assets to a record $452 billion - double what they were just three years ago. We are now half-way through what we hope will be our fourth consecutive year of double digit asset gathering. This continued strong organic growth, combined with our robust return of capital strategy, has worked well for us during this difficult environment, and positions TD Ameritrade well to deliver enhanced shareholder value over the longer term.”

“TD Ameritrade had a solid quarter, growing net revenues sequentially despite a difficult operating environment that included continued near zero interest rates and low intraday volatility,” said Bill Gerber, executive vice president and chief financial officer. “Our net interest margin stabilized during the quarter

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and we remain focused on diligently managing our expense levels. And, our strong financial position and unique business model have earned the Company its third credit rating upgrade from Standard & Poor’s since the beginning of the financial crisis. During that time, we have received rating increases covering six notches, or grade levels - more than any financial firm in the S&P 500.”

Stock Repurchases

During the second quarter of fiscal 2012, TD Ameritrade repurchased 775,000 shares of its common stock at an average price of $19.02 per share, for approximately $14.7 million. Year to date, the Company has repurchased 7.5 million shares at an average price of $16.23 per share.

As of Mar. 31, 2012, the Company had 29.2 million shares remaining on its existing stock repurchase authorization.

Quarterly Dividend

The Company has declared a $0.06 per share quarterly cash dividend, payable on May 15, 2012 to all holders of record of common stock as of May 1, 2012.

Credit Rating Upgrade

During the second quarter of fiscal 2012, Standard & Poor’s upgraded TD Ameritrade’s credit rating to “A”. This was the Company’s third S&P credit rating increase since the financial crisis began three and a half years ago.

Company Hosts Conference Call

TD Ameritrade will host its March Quarter conference call this morning, April 17, 2012, at 8:30 a.m. EDT (7:30 a.m. CDT). Participants may listen to the call by dialing 877-881-2595. Interested parties may listen to a replay of the call by dialing 800-642-1687 and the passcode 64265381. The Company will Webcast the conference live at www.amtd.com and will make all accompanying materials available to participants prior to the call.

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. You can also follow the Company on Twitter, @TDAmeritradePR. Web site links, corporate titles and telephone numbers provided in this release, although correct when published, may change in the future.

AMTD-E

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 36 years. An official sponsor of the 2012 U.S. Olympic Team, TD Ameritrade has time and again been recognized as a leader in investment services. Please visit the TD Ameritrade newsroom or www.amtd.com for more information.

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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. 18, 2011 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 March 31, 2012.

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

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TD AMERITRADE HOLDING CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

In thousands, except per share amounts

(Unaudited)


	Quarter Ended									Six Months Ended
	Mar. 31, 2012			Dec. 31, 2011			Mar. 31, 2011			Mar. 31, 2012			Mar. 31, 2011
Revenues:
Transaction-based revenues:
Commissions and transaction fees	$	292,054		$	273,383		$	338,320		$	565,437		$	631,016

Asset-based revenues:
Interest revenue		108,139			110,754			122,804			218,894			239,624
Brokerage interest expense		(1,445	)		(1,406	)		(1,237	)		(2,852	)		(2,528	)

Net interest revenue		106,694			109,348			121,567			216,042			237,096

Insured deposit account fees		209,209			205,042			187,471			414,251			365,942
Investment product fees		46,232			43,487			40,440			89,719			81,137

Total asset-based revenues		362,135			357,877			349,478			720,012			684,175

Other revenues		18,953			22,132			30,430			41,084			59,228

Net revenues		673,142			653,392			718,228			1,326,533			1,374,419

Operating expenses:
Employee compensation and benefits		174,222			172,766			169,662			346,987			332,069
Clearing and execution costs		24,132			20,041			25,119			44,173			48,918
Communications		26,727			28,134			27,811			54,862			54,725
Occupancy and equipment costs		37,122			37,853			33,153			74,975			68,344
Depreciation and amortization		17,696			16,986			16,579			34,682			32,715
Amortization of acquired intangible assets		23,042			23,295			24,073			46,337			48,664
Professional services		44,175			45,010			40,059			89,185			80,376
Advertising		83,543			56,628			81,400			140,171			155,983
Other		23,361			24,168			17,456			47,529			35,623

Total operating expenses		454,020			424,881			435,312			878,901			857,417


Operating income		219,122			228,511			282,916			447,632			517,002
Other expense:
Interest on borrowings		7,274			7,045			7,486			14,318			18,310

Pre-tax income		211,848			221,466			275,430			433,314			498,692

Provision for income taxes		75,150			69,506			103,762			144,656			181,985

Net income	$	136,698		$	151,960		$	171,668		$	288,658		$	316,707

Earnings per share - basic	$	0.25		$	0.28		$	0.30		$	0.53		$	0.55
Earnings per share - diluted	$	0.25		$	0.27		$	0.30		$	0.52		$	0.55

Weighted average shares outstanding - basic		548,578			549,746			573,305			549,165			574,407
Weighted average shares outstanding - diluted		554,366			555,292			579,459			554,832			580,360

Dividends declared per share	$	0.06		$	0.06		$	0.05		$	0.12		$	0.10

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TD AMERITRADE HOLDING CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

In thousands

(Unaudited)


	Mar. 31, 2012		Sept. 30, 2011
Assets:
Cash and cash equivalents	$	1,026,478	$	1,031,963
Short-term investments		53,897		3,557
Segregated cash and investments		5,475,006		2,519,249
Broker/dealer receivables		1,375,053		834,469
Client receivables, net		8,576,935		8,059,410
Goodwill and intangible assets		3,444,991		3,491,330
Other		1,126,279		1,185,784

Total assets	$	21,078,639	$	17,125,762

Liabilities and stockholders' equity:

Liabilities:
Broker/dealer payables	$	2,345,353	$	1,709,572
Client payables		12,162,853		8,979,327
Long-term debt		1,326,680		1,336,789
Other		996,675		984,257

Total liabilities		16,831,561		13,009,945
Stockholders' equity		4,247,078		4,115,817

Total liabilities and stockholders' equity	$	21,078,639	$	17,125,762

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TD AMERITRADE HOLDING CORPORATION

SELECTED OPERATING DATA

(Unaudited)


	Quarter Ended									Six Months Ended
	Mar. 31, 2012			Dec. 31, 2011			Mar. 31, 2011			Mar. 31, 2012			Mar. 31, 2011
Key Metrics:
Net new assets (in billions)	$	10.8		$	10.2		$	11.5		$	21.0		$	21.2
Net new asset growth rate (annualized)		11	%		11	%		12	%		11	%		12	%
Average client trades per day		387,571			367,479			439,158			377,485			405,135

Profitability Metrics:
Operating margin		32.6	%		35.0	%		39.4	%		33.7	%		37.6	%
Pre-tax margin		31.5	%		33.9	%		38.3	%		32.7	%		36.3	%
Return on client assets (annualized)		0.20	%		0.22	%		0.28	%		0.21	%		0.26	%
Return on average stockholders' equity (annualized)		13.0	%		14.8	%		16.8	%		13.9	%		16.0	%
EBITDA⁽¹⁾ as a percentage of net revenues		38.6	%		41.1	%		45.1	%		39.9	%		43.5	%

Debt and Liquidity Metrics:
Interest on borrowings (in millions)	$	7.3		$	7.0		$	7.5		$	14.3		$	18.3
Average debt outstanding (in billions)	$	1.3		$	1.3		$	1.3		$	1.3		$	1.3
Leverage ratio (average debt/annualized EBITDA⁽¹⁾)		1.2			1.2			1.0			1.2			1.1
Interest coverage ratio (EBITDA⁽¹⁾/interest on borrowings)		35.7			38.2			43.2			36.9			32.7
Liquid assets - management target⁽¹⁾ (in billions)	$	0.9		$	0.9		$	0.8		$	0.9		$	0.8
Liquid assets - regulatory threshold⁽¹⁾ (in billions)	$	1.5		$	1.4		$	1.3		$	1.5		$	1.3
Cash and cash equivalents (in billions)	$	1.0		$	0.9		$	1.1		$	1.0		$	1.1

Transaction-Based Revenue Metrics:
Total trades (in millions)		24.0			23.0			27.2			47.0			50.8
Average commissions and transaction fees per trade⁽²⁾	$	12.15		$	11.90		$	12.42		$	12.03		$	12.41
Average client trades per funded account (annualized)		17.1			16.3			20.1			16.7			18.6
Activity rate - funded accounts		6.8	%		6.5	%		8.0	%		6.7	%		7.4	%
Trading days		62.0			62.5			62.0			124.5			125.5

Spread-Based Asset Metrics:
Average interest-earning assets (excluding conduit business) (in billions)	$	15.5		$	13.6		$	13.6		$	14.5		$	13.3
Average insured deposit account balances (in billions)		58.4			58.8			46.8			58.6			45.8

Average spread-based balance (in billions)	$	73.9		$	72.4		$	60.4		$	73.1		$	59.1

Net interest revenue (excluding conduit business) (in millions)	$	106.6		$	109.3		$	121.5		$	215.9		$	236.9
Insured deposit account fee revenue (in millions)		209.2			205.0			187.5			414.3			365.9

Spread-based revenue (in millions)	$	315.8		$	314.3		$	309.0		$	630.2		$	602.8

Avg. annualized yield - interest-earning assets (excluding conduit business)		2.73	%		3.13	%		3.56	%		2.92	%		3.52	%
Avg. annualized yield - insured deposit account fees		1.42	%		1.37	%		1.60	%		1.39	%		1.58	%
Net interest margin (NIM)		1.69	%		1.70	%		2.04	%		1.70	%		2.02	%
Interest days		91			92			90			183			182

Fee-Based Investment Metrics:
Money market mutual fund fees:
Average balance (in billions)	$	5.0		$	5.7		$	8.8		$	5.4		$	8.8
Average annualized yield		0.04	%		0.08	%		0.10	%		0.06	%		0.13	%

Fee revenue (in millions)	$	0.5		$	1.1		$	2.3		$	1.6		$	5.9

Other fee-based investment balances:
Average balance (in billions)	$	79.9		$	72.2		$	69.5		$	76.0		$	66.7
Average annualized yield		0.23	%		0.23	%		0.22	%		0.23	%		0.22	%

Fee revenue (in millions)	$	45.7		$	42.4		$	38.1		$	88.1		$	75.2

Average fee-based investment balances (in billions)	$	84.9		$	77.9		$	78.3		$	81.4		$	75.5
Average annualized yield		0.22	%		0.22	%		0.21	%		0.22	%		0.21	%

Investment product fee revenue (in millions)	$	46.2		$	43.5		$	40.4		$	89.7		$	81.1


Client Account and Client Asset Metrics:
New accounts opened		183,000			140,000			176,000			323,000			340,000

Funded accounts (beginning of period)		5,645,000			5,617,000			5,491,000			5,617,000			5,455,000
Funded accounts (end of period)		5,703,000			5,645,000			5,547,000			5,703,000			5,547,000
Percentage change during period		1	%		0	%		1	%		2	%		2	%

Client assets (beginning of period, in billions)	$	406.3		$	378.7		$	386.4		$	378.7		$	354.8
Client assets (end of period, in billions)	$	452.4		$	406.3		$	412.3		$	452.4		$	412.3
Percentage change during period		11	%		7	%		7	%		19	%		16	%

⁽¹⁾	See attached reconciliation of non-GAAP financial measures.

⁽²⁾	Average commissions and transaction fees per trade excludes TD Waterhouse UK business.

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

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TD AMERITRADE HOLDING CORPORATION

SELECTED OPERATING DATA

(Unaudited)


	Quarter Ended									Six Months Ended
	Mar. 31, 2012			Dec. 31, 2011			Mar. 31, 2011			Mar. 31, 2012			Mar. 31, 2011
Net Interest Revenue (excluding Conduit Business):
Segregated cash:
Average balance (in billions)	$	5.6		$	4.1		$	3.0		$	4.8		$	3.1
Average annualized yield		0.07	%		0.04	%		0.10	%		0.06	%		0.11	%

Interest revenue (in millions)	$	1.0		$	0.4		$	0.7		$	1.4		$	1.8

Client margin balances:
Average balance (in billions)	$	7.9		$	7.7		$	8.9		$	7.8		$	8.6
Average annualized yield		4.06	%		4.31	%		4.42	%		4.19	%		4.44	%

Interest revenue (in millions)	$	81.2		$	85.1		$	99.1		$	166.3		$	191.8

Securities borrowing/lending (excluding conduit business):
Average securities borrowing balance (in billions)	$	0.6		$	0.4		$	0.5		$	0.5		$	0.5
Average securities lending balance (in billions)	$	1.6		$	1.5		$	1.6		$	1.6		$	1.6
Interest revenue (in millions)	$	25.5		$	24.8		$	22.6		$	50.2		$	44.9
Interest expense (in millions)		(1.1	)		(0.9	)		(0.8	)		(2.0	)		(1.4	)

Net interest revenue - securities borrowing/lending (excluding conduit business) (in millions)	$	24.4		$	23.9		$	21.8		$	48.2		$	43.5

Other cash and interest-earning investments:
Average balance (in billions)	$	1.4		$	1.4		$	1.2		$	1.4		$	1.1
Average annualized yield		0.09	%		0.12	%		0.09	%		0.11	%		0.12	%

Interest revenue - net (in millions)	$	0.3		$	0.4		$	0.3		$	0.8		$	0.7

Client credit balances:
Average balance (in billions)	$	10.1		$	8.8		$	8.5		$	9.4		$	8.2
Average annualized cost		0.01	%		0.02	%		0.02	%		0.02	%		0.02	%

Interest expense (in millions)	($	0.3	)	($	0.5	)	($	0.4	)	($	0.8	)	($	0.9	)

Average interest-earning assets (excluding conduit business) (in billions)	$	15.5		$	13.6		$	13.6		$	14.5		$	13.3
Average annualized yield (excluding conduit business)		2.73	%		3.13	%		3.56	%		2.92	%		3.52	%

Net interest revenue (excluding conduit business) (in millions)	$	106.6		$	109.3		$	121.5		$	215.9		$	236.9

Conduit Business:
Average balance (in billions)	$	0.2		$	0.2		$	0.3		$	0.2		$	0.3

Securities borrowing - conduit business:
Average annualized yield		0.21	%		0.17	%		0.24	%		0.19	%		0.26	%

Interest revenue (in millions)	$	0.1		$	0.1		$	0.2		$	0.2		$	0.4

Securities lending - conduit business:
Average annualized cost		0.09	%		0.08	%		0.16	%		0.09	%		0.14	%

Interest expense (in millions)	$	0.0		($	0.1	)	($	0.1	)	($	0.1	)	($	0.2	)

Average interest-earning assets - conduit business (in billions)	$	0.2		$	0.2		$	0.3		$	0.2		$	0.3
Average annualized yield - conduit business		0.12	%		0.09	%		0.08	%		0.10	%		0.12	%

Net interest revenue - conduit business (in millions)	$	0.1		$	0.0		$	0.1		$	0.1		$	0.2

Net Interest Revenue (total):
Average interest-earning assets (excluding conduit business) (in billions)	$	15.5		$	13.6		$	13.6		$	14.5		$	13.3
Average interest-earning assets - conduit business (in billions)		0.2			0.2			0.3			0.2			0.3

Average interest-earning assets - total (in billions)	$	15.7		$	13.8		$	13.9		$	14.7		$	13.6


Average annualized yield - total		2.69	%		3.09	%		3.49	%		2.88	%		3.44	%

Net interest revenue (excluding conduit business) (in millions)	$	106.6		$	109.3		$	121.5		$	215.9		$	236.9
Net interest revenue - conduit business (in millions)		0.1			—			0.1			0.1			0.2

Net interest revenue - total (in millions)	$	106.7		$	109.3		$	121.6		$	216.0		$	237.1

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

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TD AMERITRADE HOLDING CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

In thousands, except percentages

(Unaudited)


	Quarter Ended															Six Months Ended
	Mar. 31, 2012					Dec. 31, 2011					Mar. 31, 2011					Mar. 31, 2012					Mar. 31, 2011
	$			% of Net Rev.		$			% of Net Rev.		$			% of Net Rev.		$			% of Net Rev.		$			% of Net Rev.
EBITDA (1)
EBITDA	$	259,860			38.6%	$	268,792			41.1%	$	323,568			45.1%	$	528,651			39.9%	$	598,381			43.5%
Less:
Depreciation and amortization		(17,696	)		(2.6%)		(16,986	)		(2.6%)		(16,579	)		(2.3%)		(34,682	)		(2.6%)		(32,715	)		(2.4%)
Amortization of acquired intangible assets		(23,042	)		(3.4%)		(23,295	)		(3.6%)		(24,073	)		(3.4%)		(46,337	)		(3.5%)		(48,664	)		(3.5%)
Interest on borrowings		(7,274	)		(1.1%)		(7,045	)		(1.1%)		(7,486	)		(1.0%)		(14,318	)		(1.1%)		(18,310	)		(1.3%)
Provision for income taxes		(75,150	)		(11.2%)		(69,506	)		(10.6%)		(103,762	)		(14.4%)		(144,656	)		(10.9%)		(181,985	)		(13.2%)

Net income	$	136,698			20.3%	$	151,960			23.3%	$	171,668			23.9%	$	288,658			21.8%	$	316,707			23.0%


	As of
	Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
	2012			2011			2011			2011			2011
Liquid Assets - Management Target (2)
Liquid assets - management target	$	917,528		$	917,975		$	851,888		$	801,535		$	750,552
Plus: Broker-dealer cash and cash equivalents		507,740			443,679			656,206			982,768			626,725
Trust company cash and cash equivalents		74,881			61,857			108,587			38,887			70,701
Investment advisory cash and cash equivalents		17,868			11,283			7,184			41,184			36,964
Less: Corporate short-term investments		(50,377	)		—			—			—			—
Excess broker-dealer regulatory net capital		(441,162	)		(516,532	)		(591,902	)		(540,728	)		(403,804	)

Cash and cash equivalents	$	1,026,478		$	918,262		$	1,031,963		$	1,323,646		$	1,081,138


	As of
	Mar. 31,			Dec. 31,			Sept. 30,			June 30,			Mar. 31,
	2012			2011			2011			2011			2011
Liquid Assets - Regulatory Threshold (2)
Liquid assets - regulatory threshold	$	1,484,684		$	1,422,160		$	1,407,513		$	1,350,737		$	1,336,533
Plus: Broker-dealer cash and cash equivalents		507,740			443,679			656,206			982,768			626,725
Trust company cash and cash equivalents		74,881			61,857			108,587			38,887			70,701
Investment advisory cash and cash equivalents		17,868			11,283			7,184			41,184			36,964
Less: Corporate short-term investments		(50,377	)		—			—			—			—
Excess trust company Tier 1 capital		(9,381	)		(9,025	)		(8,555	)		(8,410	)		(9,379	)
Excess broker-dealer regulatory net capital		(998,937	)		(1,011,692	)		(1,138,972	)		(1,081,520	)		(980,406	)

Cash and cash equivalents	$	1,026,478		$	918,262		$	1,031,963		$	1,323,646		$	1,081,138

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

(1)

EBITDA (earnings before interest, taxes, depreciation and amortization) is considered a non-GAAP financial measure as defined by SEC Regulation G. We consider EBITDA an important measure of our financial performance and of our ability to generate cash flows to service debt, fund capital expenditures and fund other corporate investing and financing activities. EBITDA is used as the denominator in the consolidated leverage ratio calculation for covenant purposes under our holding company's senior revolving credit facility. EBITDA eliminates the non-cash effect of tangible asset depreciation and amortization and intangible asset amortization. EBITDA should be considered in addition to, rather than as a substitute for, pre-tax income, net income and cash flows from operating activities.

(2)

Our liquid assets metrics are considered non-GAAP financial measures as defined by SEC Regulation G. We include the excess capital of our broker-dealer and trust company subsidiaries in the calculation of our liquid assets metrics, rather than simply including broker-dealer and trust company cash and cash equivalents, because capital requirements may limit the amount of cash available for dividend from the broker-dealer and trust company subsidiaries to the parent company. Excess capital, as defined below, is generally available for dividend from the broker-dealer and trust company subsidiaries to the parent company. We consider our liquid assets metrics to be important measures of our liquidity and of our ability to fund corporate investing and financing activities. The liquid assets metrics should be considered as supplemental measures of liquidity, rather than as substitutes for cash and cash equivalents.

We define liquid assets - management target as the sum of (a) corporate cash and cash equivalents, (b) corporate short-term investments and (c) regulatory net capital of (i) our clearing broker-dealer subsidiary in excess of 10% of aggregate debit items and (ii) our introducing broker-dealer subsidiaries in excess of a minimum operational target established by management ($50 million in the case of our primary introducing broker-dealer, TD Ameritrade, Inc.). We consider liquid assets - management target to be a measure that reflects our liquidity that would be readily available for corporate investing or financing activities under normal operating circumstances.

We define liquid assets - regulatory threshold as the sum of (a) corporate cash and cash equivalents, (b) corporate short-term investments, (c) regulatory net capital of (i) our clearing broker-dealer subsidiary in excess of 5% of aggregate debit items and (ii) our introducing broker-dealer subsidiaries in excess of the applicable early warning net capital requirement and (d) Tier 1 capital of our trust company in excess of the minimum dollar requirement. We consider liquid assets - regulatory threshold to be a measure that reflects our liquidity that would be available for corporate investing or financing activities under unusual operating circumstances.

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