Attached files
| file | filename |
|---|---|
| 8-K - 8-K - TD AMERITRADE HOLDING CORP | a8k_20170718.htm |
Exhibit 99.1
At the Company | |
Kim Hillyer | Jeff Goeser |
Director, Communications | Director, Investor Relations |
(402) 574-6523 | (402) 597-8464 |
kim.hillyer@tdameritrade.com | jeffrey.goeser@tdameritrade.com |
TD Ameritrade Reports Record Net New Client Assets
Record Net New Client Assets of $22.0B
Average Client Trades per Day of 510,000
Record Net Revenues Top $931M
OMAHA, Neb., July 18, 2017 – TD Ameritrade Holding Corporation (Nasdaq: AMTD) has released results for the third quarter of fiscal 2017. The Company gathered a record $22.0 billion in net new client assets for the quarter and reported approximately 510,000 client trades per day, on average.
The Company’s results for the quarter ended June 30, 2017 include the following:(1)
• | Record net new client assets of approximately $22.0 billion, an annualized growth rate of 10 percent |
• | Average client trades per day of approximately 510,000, up 10 percent year over year |
• | Record net revenues of $931 million, 62 percent of which were asset-based |
• | Client assets of $882 billion, up 20 percent year over year |
• | $0.44 in earnings per diluted share, down 2 percent year over year, on net income of $231 million |
• | Pre-tax income of $373 million, or 40 percent of net revenues |
• | Interest rate-sensitive assets(2) of $120 billion, up 6 percent year over year |
“We’re pleased to report another quarter of strong growth across all of our businesses,” said Tim Hockey, TD Ameritrade president and chief executive officer. “Investors remained broadly engaged, with strong trading volumes despite persistent low market volatility. We’re seeing healthy trends in new account growth and asset inflows from both new and existing clients, and our institutional channel continues to break records for asset gathering. Our technology pipelines are full of enhancements that address client irritants and introduce new, cutting edge solutions. We have a lot to feel good about, but as we plan for the close of the Scottrade acquisition on the horizon, we have much more yet to do.”
“It was another eventful quarter as major indices hit all-time highs and the Fed raised interest rates for the third time in the fiscal year,” said Steve Boyle, executive vice president and chief financial officer. “These factors accelerated our organic growth and provided revenue tailwinds, as anticipated. While this is certainly good news and provides us with even more strategic flexibility in fiscal 2018, we remain committed to thoughtful expense management, balancing new investments with the needs of our clients, employees and shareholders.”
Capital Management
The Company paid $95 million in its third fiscal quarter, or $0.18 per share, in cash dividends.
The Company has declared an $0.18 per share quarterly cash dividend, payable on Aug. 15, 2017 to all holders of record of common stock as of Aug. 1, 2017.
Company Hosts Conference Call
TD Ameritrade will host its June Quarter conference call this morning, July 18, 2017, 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 37772509 beginning at 11:30 a.m. EDT (10:30 a.m. CDT) on July 18, 2017. The replay will be available until 11:59 p.m. EDT (10:59 p.m. CDT) on July 25, 2017. 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 19, 2017.
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. 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 Fresh Accounts.
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, stock price or any projections or expectations regarding the proposed business combination transaction between us and Scottrade Financial Services, Inc., 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, the ability to obtain regulatory approvals and meet other closing conditions to the proposed transaction, including the completion of the merger between
Scottrade Bank and TD Bank, N.A., on the expected terms and schedule; delay in closing the transaction; difficulties and delays in integrating the TD Ameritrade and Scottrade businesses or fully realizing cost savings and other benefits; business disruption following the proposed transaction; changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer borrowing, repayment, investment and deposit practices; customer disintermediation; the introduction, withdrawal, success and timing of business initiatives; competitive conditions; TD Ameritrade’s and Scottrade’s businesses experiencing disruptions due to transaction-related uncertainty or other factors making it more difficult to maintain relationships with employees, customers, other business partners or governmental entities; the inability to realize synergies or to implement integration plans and other consequences associated with mergers, acquisitions and uncertainties and other risk factors described in our latest Annual Report on Form 10-K, filed with the SEC on Nov. 18, 2016 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 Interest rate-sensitive assets consist of spread-based assets and money market mutual funds. Ending balances as of June 30, 2017.
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, 2017 | Mar. 31, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||||||
Revenues: | |||||||||||||||||||
Transaction-based revenues: | |||||||||||||||||||
Commissions and transaction fees | $ | 335 | $ | 365 | $ | 347 | $ | 1,054 | $ | 1,035 | |||||||||
Asset-based revenues: | |||||||||||||||||||
Insured deposit account fees | 286 | 269 | 234 | 800 | 696 | ||||||||||||||
Net interest revenue | 175 | 154 | 143 | 480 | 444 | ||||||||||||||
Investment product fees | 112 | 103 | 96 | 309 | 276 | ||||||||||||||
Total asset-based revenues | 573 | 526 | 473 | 1,589 | 1,416 | ||||||||||||||
Other revenues | 23 | 13 | 18 | 50 | 46 | ||||||||||||||
Net revenues | 931 | 904 | 838 | 2,693 | 2,497 | ||||||||||||||
Operating expenses: | |||||||||||||||||||
Employee compensation and benefits | 234 | 229 | 209 | 677 | 617 | ||||||||||||||
Clearing and execution costs | 38 | 37 | 35 | 111 | 102 | ||||||||||||||
Communications | 34 | 29 | 33 | 98 | 99 | ||||||||||||||
Occupancy and equipment costs | 44 | 45 | 43 | 133 | 128 | ||||||||||||||
Depreciation and amortization | 25 | 25 | 23 | 74 | 67 | ||||||||||||||
Amortization of acquired intangible assets | 19 | 19 | 22 | 57 | 66 | ||||||||||||||
Professional services | 67 | 59 | 47 | 178 | 121 | ||||||||||||||
Advertising | 58 | 80 | 58 | 195 | 202 | ||||||||||||||
Other | 18 | 23 | 20 | 65 | 61 | ||||||||||||||
Total operating expenses | 537 | 546 | 490 | 1,588 | 1,463 | ||||||||||||||
Operating income | 394 | 358 | 348 | 1,105 | 1,034 | ||||||||||||||
Other expense: | |||||||||||||||||||
Interest on borrowings | 20 | 14 | 14 | 48 | 39 | ||||||||||||||
Loss on debt refinancing | 1 | — | — | 1 | — | ||||||||||||||
Total other expense | 21 | 14 | 14 | 49 | 39 | ||||||||||||||
Pre-tax income | 373 | 344 | 334 | 1,056 | 995 | ||||||||||||||
Provision for income taxes | 142 | 130 | 94 | 395 | 338 | ||||||||||||||
Net income | $ | 231 | $ | 214 | $ | 240 | $ | 661 | $ | 657 | |||||||||
Earnings per share - basic | $ | 0.44 | $ | 0.41 | $ | 0.45 | $ | 1.25 | $ | 1.23 | |||||||||
Earnings per share - diluted | $ | 0.44 | $ | 0.40 | $ | 0.45 | $ | 1.25 | $ | 1.23 | |||||||||
Weighted average shares outstanding - basic | 528 | 528 | 529 | 528 | 533 | ||||||||||||||
Weighted average shares outstanding - diluted | 530 | 530 | 531 | 530 | 536 | ||||||||||||||
Dividends declared per share | $ | 0.18 | $ | 0.18 | $ | 0.17 | $ | 0.54 | $ | 0.51 | |||||||||
TD AMERITRADE HOLDING CORPORATION | |||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
In millions | |||||||||
(Unaudited) | |||||||||
June 30, 2017 | Sept. 30, 2016 | ||||||||
Assets: | |||||||||
Cash and cash equivalents | $ | 2,880 | $ | 1,855 | |||||
Segregated cash and investments | 7,328 | 8,729 | |||||||
Broker/dealer receivables | 1,239 | 1,190 | |||||||
Client receivables, net | 13,504 | 11,941 | |||||||
Investments available-for-sale, at fair value | 747 | 757 | |||||||
Goodwill and intangible assets | 2,985 | 3,042 | |||||||
Other | 1,427 | 1,304 | |||||||
Total assets | $ | 30,110 | $ | 28,818 | |||||
Liabilities and stockholders' equity: | |||||||||
Liabilities: | |||||||||
Broker/dealer payables | $ | 2,366 | $ | 2,040 | |||||
Client payables | 18,928 | 19,055 | |||||||
Long-term debt | 2,561 | 1,817 | |||||||
Other | 795 | 855 | |||||||
Total liabilities | 24,650 | 23,767 | |||||||
Stockholders' equity | 5,460 | 5,051 | |||||||
Total liabilities and stockholders' equity | $ | 30,110 | $ | 28,818 | |||||
TD AMERITRADE HOLDING CORPORATION | |||||||||||||||||||
SELECTED OPERATING DATA | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Quarter Ended | Nine Months Ended | ||||||||||||||||||
June 30, 2017 | Mar. 31, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||||||
Key Metrics: | |||||||||||||||||||
Net new assets (in billions) | $ | 22.0 | $ | 19.5 | $ | 13.6 | $ | 60.2 | $ | 45.2 | |||||||||
Net new asset growth rate (annualized) | 10 | % | 10 | % | 8 | % | 10 | % | 9 | % | |||||||||
Average client trades per day | 510,358 | 516,994 | 461,941 | 504,700 | 469,262 | ||||||||||||||
Profitability Metrics: | |||||||||||||||||||
Operating margin | 42.3 | % | 39.6 | % | 41.5 | % | 41.0 | % | 41.4 | % | |||||||||
Pre-tax margin | 40.1 | % | 38.1 | % | 39.9 | % | 39.2 | % | 39.8 | % | |||||||||
Return on average stockholders' equity (annualized) | 17.2 | % | 16.3 | % | 19.5 | % | 16.8 | % | 17.7 | % | |||||||||
Net profit margin | 24.8 | % | 23.7 | % | 28.6 | % | 24.5 | % | 26.3 | % | |||||||||
EBITDA(1) as a percentage of net revenues | 46.9 | % | 44.5 | % | 46.9 | % | 45.9 | % | 46.7 | % | |||||||||
Liquidity Metrics: | |||||||||||||||||||
Interest on borrowings (in millions) | $ | 20 | $ | 14 | $ | 14 | $ | 48 | $ | 39 | |||||||||
Interest coverage ratio (EBITDA(1)/interest on borrowings) | 21.9 | 28.7 | 28.1 | 25.7 | 29.9 | ||||||||||||||
Cash and cash equivalents (in billions) | $ | 2.9 | $ | 2.2 | $ | 1.9 | $ | 2.9 | $ | 1.9 | |||||||||
Liquid assets available for corporate investing and financing activities(1) (2) (in billions) | $ | 1.8 | $ | 1.0 | $ | 0.5 | $ | 1.8 | $ | 0.5 | |||||||||
Transaction-Based Revenue Metrics: | |||||||||||||||||||
Total trades (in millions) | 32.2 | 32.1 | 29.6 | 94.6 | 88.2 | ||||||||||||||
Average commissions and transaction fees per trade | $ | 10.42 | $ | 11.38 | $ | 11.72 | $ | 11.14 | $ | 11.74 | |||||||||
Trading days | 63.0 | 62.0 | 64.0 | 187.5 | 188.0 | ||||||||||||||
Order routing revenue (in millions) | $ | 83 | $ | 83 | $ | 77 | $ | 245 | $ | 223 | |||||||||
Spread-Based Asset Metrics: | |||||||||||||||||||
Average insured deposit account balances (in billions) | $ | 92.3 | $ | 95.1 | $ | 83.4 | $ | 93.5 | $ | 82.6 | |||||||||
Average interest-earning assets (in billions) | 25.5 | 24.6 | 22.7 | 24.9 | 22.2 | ||||||||||||||
Average spread-based balance (in billions) | $ | 117.8 | $ | 119.7 | $ | 106.1 | $ | 118.4 | $ | 104.8 | |||||||||
Insured deposit account fee revenue (in millions) | $ | 286 | $ | 269 | $ | 234 | $ | 800 | $ | 696 | |||||||||
Net interest revenue (in millions) | 175 | 154 | 143 | 480 | 444 | ||||||||||||||
Spread-based revenue (in millions) | $ | 461 | $ | 423 | $ | 377 | $ | 1,280 | $ | 1,140 | |||||||||
Avg. annualized yield - insured deposit account fees | 1.23 | % | 1.13 | % | 1.11 | % | 1.13 | % | 1.11 | % | |||||||||
Avg. annualized yield - interest-earning assets | 2.71 | % | 2.50 | % | 2.50 | % | 2.55 | % | 2.62 | % | |||||||||
Net interest margin (NIM) | 1.55 | % | 1.41 | % | 1.41 | % | 1.43 | % | 1.43 | % | |||||||||
Fee-Based Investment Metrics: | |||||||||||||||||||
Money market mutual fund fees: | |||||||||||||||||||
Average balance (in billions) | $ | 3.6 | $ | 3.5 | $ | 5.8 | $ | 3.6 | $ | 5.8 | |||||||||
Average annualized yield | 0.43 | % | 0.44 | % | 0.26 | % | 0.42 | % | 0.16 | % | |||||||||
Fee revenue (in millions) | $ | 4 | $ | 4 | $ | 4 | $ | 12 | $ | 7 | |||||||||
Market fee-based investment balances: | |||||||||||||||||||
Average balance (in billions) | $ | 186.1 | $ | 176.9 | $ | 156.3 | $ | 176.6 | $ | 152.2 | |||||||||
Average annualized yield | 0.23 | % | 0.22 | % | 0.23 | % | 0.22 | % | 0.23 | % | |||||||||
Fee revenue (in millions) | $ | 108 | $ | 99 | $ | 92 | $ | 297 | $ | 269 | |||||||||
Average fee-based investment balances (in billions) | $ | 189.7 | $ | 180.4 | $ | 162.1 | $ | 180.2 | $ | 158.0 | |||||||||
Average annualized yield | 0.23 | % | 0.23 | % | 0.23 | % | 0.23 | % | 0.23 | % | |||||||||
Investment product fee revenue (in millions) | $ | 112 | $ | 103 | $ | 96 | $ | 309 | $ | 276 | |||||||||
(1) See attached reconciliation of non-GAAP financial measures. | |||||||||||||||||||
(2) Effective in March 2017, the liquid assets available for corporate investing and financing activities metric was revised. Prior periods have been updated to conform to the current presentation. | |||||||||||||||||||
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, 2017 | Mar. 31, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | |||||||||||||||
Client Account and Client Asset Metrics: | |||||||||||||||||||
Funded accounts (beginning of period) | 7,189,000 | 7,046,000 | 6,777,000 | 6,950,000 | 6,621,000 | ||||||||||||||
Funded accounts (end of period) | 7,279,000 | 7,189,000 | 6,872,000 | 7,279,000 | 6,872,000 | ||||||||||||||
Percentage change during period | 1 | % | 2 | % | 1 | % | 5 | % | 4 | % | |||||||||
Client assets (beginning of period, in billions) | $ | 846.7 | $ | 797.0 | $ | 711.2 | $ | 773.8 | $ | 667.4 | |||||||||
Client assets (end of period, in billions) | $ | 882.4 | $ | 846.7 | $ | 736.3 | $ | 882.4 | $ | 736.3 | |||||||||
Percentage change during period | 4 | % | 6 | % | 4 | % | 14 | % | 10 | % | |||||||||
Net Interest Revenue: | |||||||||||||||||||
Segregated cash: | |||||||||||||||||||
Average balance (in billions) | $ | 8.0 | $ | 8.7 | $ | 7.4 | $ | 8.5 | $ | 6.7 | |||||||||
Average annualized yield | 0.67 | % | 0.46 | % | 0.25 | % | 0.47 | % | 0.18 | % | |||||||||
Interest revenue (in millions) | $ | 14 | $ | 10 | $ | 5 | $ | 30 | $ | 9 | |||||||||
Client margin balances: | |||||||||||||||||||
Average balance (in billions) | $ | 12.6 | $ | 11.9 | $ | 11.5 | $ | 12.1 | $ | 11.8 | |||||||||
Average annualized yield | 3.81 | % | 3.67 | % | 3.69 | % | 3.68 | % | 3.67 | % | |||||||||
Interest revenue (in millions) | $ | 121 | $ | 109 | $ | 107 | $ | 338 | $ | 329 | |||||||||
Securities borrowing/lending: | |||||||||||||||||||
Average securities borrowing balance (in billions) | $ | 1.0 | $ | 0.9 | $ | 1.0 | $ | 1.0 | $ | 0.8 | |||||||||
Average securities lending balance (in billions) | $ | 2.1 | $ | 1.7 | $ | 2.1 | $ | 1.9 | $ | 2.1 | |||||||||
Net interest revenue - securities borrowing/lending (in millions) | $ | 34 | $ | 31 | $ | 30 | $ | 99 | $ | 104 | |||||||||
Other cash and interest-earning investments: | |||||||||||||||||||
Average balance (in billions) | $ | 3.9 | $ | 3.1 | $ | 2.8 | $ | 3.3 | $ | 2.9 | |||||||||
Average annualized yield | 0.67 | % | 0.54 | % | 0.21 | % | 0.56 | % | 0.14 | % | |||||||||
Interest revenue - net (in millions) | $ | 6 | $ | 4 | $ | 1 | $ | 14 | $ | 3 | |||||||||
Client credit balances: | |||||||||||||||||||
Average balance (in billions) | $ | 15.9 | $ | 16.1 | $ | 14.7 | $ | 16.0 | $ | 14.4 | |||||||||
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) | $ | 25.5 | $ | 24.6 | $ | 22.7 | $ | 24.9 | $ | 22.2 | |||||||||
Average annualized yield | 2.71 | % | 2.50 | % | 2.50 | % | 2.55 | % | 2.62 | % | |||||||||
Net interest revenue (in millions) | $ | 175 | $ | 154 | $ | 143 | $ | 480 | $ | 444 | |||||||||
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, 2017 | Mar. 31, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | ||||||||||||||||||||||||||||||
$ | % of Net Rev. | $ | % of Net Rev. | $ | % of Net Rev. | $ | % of Net Rev. | $ | % of Net Rev. | |||||||||||||||||||||||||
EBITDA (1) | ||||||||||||||||||||||||||||||||||
Net Income - GAAP | $ | 231 | 24.8 | % | $ | 214 | 23.7 | % | $ | 240 | 28.6 | % | $ | 661 | 24.5 | % | $ | 657 | 26.3 | % | ||||||||||||||
Add: | ||||||||||||||||||||||||||||||||||
Depreciation and amortization | 25 | 2.7 | % | 25 | 2.8 | % | 23 | 2.7 | % | 74 | 2.7 | % | 67 | 2.7 | % | |||||||||||||||||||
Amortization of acquired intangible assets | 19 | 2.0 | % | 19 | 2.1 | % | 22 | 2.6 | % | 57 | 2.1 | % | 66 | 2.6 | % | |||||||||||||||||||
Interest on borrowings | 20 | 2.1 | % | 14 | 1.5 | % | 14 | 1.7 | % | 48 | 1.8 | % | 39 | 1.6 | % | |||||||||||||||||||
Provision for income taxes | 142 | 15.3 | % | 130 | 14.4 | % | 94 | 11.2 | % | 395 | 14.7 | % | 338 | 13.5 | % | |||||||||||||||||||
EBITDA - non-GAAP | $ | 437 | 46.9 | % | $ | 402 | 44.5 | % | $ | 393 | 46.9 | % | $ | 1,235 | 45.9 | % | $ | 1,167 | 46.7 | % | ||||||||||||||
As of | |||||||||||||||||||
June 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sept. 30, 2016 | June 30, 2016 | |||||||||||||||
Liquid Assets Available for Corporate Investing and Financing Activities (2) | |||||||||||||||||||
Cash and cash equivalents - GAAP | $ | 2,880 | $ | 2,231 | $ | 1,662 | $ | 1,855 | $ | 1,917 | |||||||||
Less: Non-corporate cash and cash equivalents | (973 | ) | (1,286 | ) | (1,203 | ) | (1,363 | ) | (1,067 | ) | |||||||||
Corporate cash and cash equivalents | 1,907 | 945 | 459 | 492 | 850 | ||||||||||||||
Corporate investments | 747 | 747 | 747 | 757 | 400 | ||||||||||||||
Less: Corporate liquidity maintained for operational contingencies | (723 | ) | (723 | ) | (773 | ) | (773 | ) | (764 | ) | |||||||||
Amounts maintained for corporate working capital | (87 | ) | (87 | ) | (87 | ) | (87 | ) | (87 | ) | |||||||||
Amounts held as collateral for derivative contracts | (34 | ) | (40 | ) | (32 | ) | (93 | ) | (94 | ) | |||||||||
Excess corporate cash and cash equivalents and investments | 1,810 | 842 | 314 | 296 | 305 | ||||||||||||||
Excess regulatory net capital over management targets | 8 | 122 | 478 | 357 | 242 | ||||||||||||||
Liquid assets available for corporate investing and financing activities - non-GAAP | $ | 1,818 | $ | 964 | $ | 792 | $ | 653 | $ | 547 | |||||||||
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, GAAP 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 regulated subsidiaries in the calculation of liquid assets available for corporate investing and financing activities, rather than simply including the regulated subsidiaries' cash and cash equivalents, because capital requirements may limit the amount of cash available for dividend from the regulated subsidiaries to the parent company. Excess capital, as defined below, is generally available for dividend from the regulated subsidiaries to the parent company. Liquid assets available for corporate investing and financing activities should be considered as a supplemental measure of liquidity, rather than as a substitute for GAAP cash and cash equivalents. |
We define liquid assets available for corporate investing and financing activities as the sum of (a) excess corporate cash and cash equivalents and investments and (b) our regulated subsidiaries net capital in excess of minimum operational targets established by management. Excess corporate cash and cash equivalents and investments includes cash and cash equivalents from our investment advisory subsidiaries and excludes (i) amounts being maintained to provide liquidity for operational contingencies, including lending to our broker-dealer and FCM/FDM subsidiaries under intercompany credit agreements, (ii) amounts maintained for corporate working capital and (iii) amounts held as collateral for derivative contracts. Liquid assets available for corporate investing and financing activities is based on more conservative measures of net capital than regulatory requirements because we generally manage to higher levels of net capital at our regulated subsidiaries than the regulatory thresholds require. | |