UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 21, 2014
TD Ameritrade Holding Corporation
(Exact name of registrant as specified in its charter)
Delaware | 1-35509 | 82-0543156 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) | ||
200 South 108th Avenue Omaha, Nebraska |
68154 | |||
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: (402) 331-7856
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition |
On January 21, 2014, the Registrant released its financial results for its first fiscal quarter ended December 31, 2013. A copy of the news release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 9.01 | Financial Statements and Exhibits |
(d) | Exhibits |
99.1 | News Release issued by the Registrant on January 21, 2014 |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: January 21, 2014 | TD AMERITRADE HOLDING CORPORATION | |||||
By: | /s/ WILLIAM J. GERBER | |||||
William J. Gerber Executive Vice President, Chief Financial Officer |
3
EXHIBIT 99.1
At the Company Kim Hillyer Director, Communications (402) 574-6523 kim.hillyer@tdameritrade.com |
Jeff Goeser Director, Investor Relations and Finance (402) 597-8464 jeffrey.goeser@tdameritrade.com |
TD Ameritrade Delivers a Strong Quarter as Investors Re-engage
Net New Client Assets of $14.5B, 10% Annualized Growth Rate
Record Net Revenues of $752M, up 16% Year-Over-Year
Diluted Earnings per Share of $0.35, up 30% Year-Over-Year
Average Client Trades Per Day of 414,000
OMAHA, Neb., January 21, 2014 TD Ameritrade Holding Corporation (NYSE: AMTD) has released operating results for the first quarter of fiscal 2014. The Company had a strong start to the fiscal year, benefiting from the improved retail trading environment and maintaining its industry-leading, double-digit net new client asset growth rate.
The Companys results for the quarter ended Dec. 31, 2013 include the following:(1)
| Net income of $192 million, or $0.35 per diluted share |
| Net new client assets of approximately $14.5 billion, an annualized growth rate of 10 percent |
| Average client trades per day of approximately 414,000, an activity rate of 6.9 percent |
| Record net revenues of $752 million, 54 percent of which were asset-based |
| Investment product fee revenues of $72 million, up 29 percent year-over-year |
| Pre-tax income of $301 million, or 40 percent of net revenues |
| EBITDA(2) of $354 million, or 47 percent of net revenues |
| Record interest rate sensitive assets(3) of $97 billion, up 8 percent year-over-year |
| Record client assets of approximately $596 billion, up 24 percent year-over-year |
TD Ameritrade had a strong quarter across the board, with continued strong asset gathering, an improved trading environment and strength in investment product fee revenues, said Fred Tomczyk, president and chief executive officer. We maintained our industry-leading growth rate by gathering $14.5 billion in net new client assets, an annualized growth rate of 10 percent. Additionally, client engagement has trended upward following continued improvement in the macroeconomic environment and retail investor sentiment. Were seeing more clients logging into accounts, interacting with trading platforms, and adopting mobile technology. Trading activity was at its highest level in more than two years. The trading and investing environment has definitely improved, and we are off to a good start to fiscal 2014.
TD Ameritrade delivered record net revenues this quarter of $752 million, up 16 percent year-over-year, said Bill Gerber, executive vice president and chief financial officer. We had the second best asset gathering quarter in our history, and both fee-based investment balances and interest rate sensitive assets are at record levels. In addition, we benefited from the improved trading environment that has continued into January. Our strategy is paying off, and we will focus on maintaining that momentum as we move forward.
Capital Deployment
The Company has declared a $0.12 per share quarterly cash dividend, payable on Feb. 19, 2014 to all holders of record of common stock as of Feb. 5, 2014.
Company Hosts Conference Call
TD Ameritrade will host its December Quarter conference call this morning, Jan. 21, 2014, at 8:30 a.m. EST (7:30 a.m. CST). Participants may listen to the conference call by dialing 866-270-1533. 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 877-344-7529 and entering the Conference ID 10038872 beginning at 10:30 a.m. EST (9:30 a.m. CST) on Jan. 21, 2014. The replay will be available until 9:00 a.m. EST (8:00 a.m. CST) on Jan. 29, 2014. A transcript of the call will be available on the Companys corporate web site, www.amtd.com, via either the Investor Relations page or the Presentations & Events page beginning Wednesday, Jan. 22, 2014.
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 Ameritrades (NYSE: 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 38 years. An official sponsor of the 2014 and 2016 U.S. Olympic and Paralympic Teams, TD Ameritrade has time and again been recognized as a leader in investment services. Please visit TD Ameritrades newsroom or www.amtd.com, or follow @TDAmeritradePR for more information.
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. 22, 2013. 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.
2See 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 December 31, 2013.
Brokerage services provided by TD Ameritrade, Inc., member FINRA (www.FINRA.org) /SIPC (www.SIPC.org) /NFA (www.nfa.futures.org).
TD AMERITRADE HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
In millions, except per share amounts
(Unaudited)
Quarter Ended | ||||||||||||
Dec. 31, 2013 | Sept. 30, 2013 | Dec. 31, 2012 | ||||||||||
Revenues: |
||||||||||||
Transaction-based revenues: |
||||||||||||
Commissions and transaction fees |
$ | 328 | $ | 306 | $ | 257 | ||||||
Asset-based revenues: |
||||||||||||
Interest revenue |
128 | 120 | 118 | |||||||||
Brokerage interest expense |
(1 | ) | (1 | ) | (2 | ) | ||||||
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|||||||
Net interest revenue |
127 | 119 | 116 | |||||||||
Insured deposit account fees |
208 | 201 | 205 | |||||||||
Investment product fees |
72 | 67 | 56 | |||||||||
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|
|||||||
Total asset-based revenues |
407 | 387 | 377 | |||||||||
Other revenues |
17 | 16 | 17 | |||||||||
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|||||||
Net revenues |
752 | 709 | 651 | |||||||||
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Operating expenses: |
||||||||||||
Employee compensation and benefits |
183 | 170 | 168 | |||||||||
Clearing and execution costs |
30 | 29 | 24 | |||||||||
Communications |
28 | 27 | 28 | |||||||||
Occupancy and equipment costs |
37 | 40 | 39 | |||||||||
Depreciation and amortization |
24 | 23 | 20 | |||||||||
Amortization of acquired intangible assets |
23 | 23 | 23 | |||||||||
Professional services |
38 | 41 | 34 | |||||||||
Advertising |
63 | 55 | 52 | |||||||||
Other |
19 | 22 | 22 | |||||||||
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Total operating expenses |
445 | 430 | 410 | |||||||||
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Operating income |
307 | 279 | 241 | |||||||||
Other expense (income): |
||||||||||||
Interest on borrowings |
6 | 6 | 6 | |||||||||
Gain on investments, net |
| (49 | ) | (2 | ) | |||||||
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Total other expense (income) |
6 | (43 | ) | 4 | ||||||||
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Pre-tax income |
301 | 322 | 237 | |||||||||
Provision for income taxes |
109 | 122 | 90 | |||||||||
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Net income |
$ | 192 | $ | 200 | $ | 147 | ||||||
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Earnings per sharebasic |
$ | 0.35 | $ | 0.36 | $ | 0.27 | ||||||
Earnings per sharediluted |
$ | 0.35 | $ | 0.36 | $ | 0.27 | ||||||
Weighted average shares outstandingbasic |
551 | 550 | 546 | |||||||||
Weighted average shares outstandingdiluted |
555 | 555 | 551 | |||||||||
Dividends declared per share |
$ | 0.62 | $ | 0.09 | $ | 0.59 |
TD AMERITRADE HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
In millions
(Unaudited)
Dec. 31, 2013 | Sept. 30, 2013 | |||||||
Assets: |
||||||||
Cash and cash equivalents |
$ | 1,309 | $ | 1,062 | ||||
Segregated cash and investments |
5,339 | 5,894 | ||||||
Broker/dealer receivables |
1,202 | 1,348 | ||||||
Client receivables, net |
9,834 | 8,984 | ||||||
Goodwill and intangible assets |
3,285 | 3,308 | ||||||
Other |
1,267 | 1,240 | ||||||
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Total assets |
$ | 22,236 | $ | 21,836 | ||||
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Liabilities and stockholders equity: |
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Liabilities: |
||||||||
Broker/dealer payables |
$ | 2,239 | $ | 1,973 | ||||
Client payables |
13,379 | 13,183 | ||||||
Notes payable |
155 | | ||||||
Long-term debt |
1,041 | 1,052 | ||||||
Other |
894 | 952 | ||||||
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Total liabilities |
17,708 | 17,160 | ||||||
Stockholders equity |
4,528 | 4,676 | ||||||
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Total liabilities and stockholders equity |
$ | 22,236 | $ | 21,836 | ||||
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TD AMERITRADE HOLDING CORPORATION
SELECTED OPERATING DATA
(Unaudited)
Quarter Ended | ||||||||||||
Dec. 31, 2013 | Sept. 30, 2013 | Dec. 31, 2012 | ||||||||||
Key Metrics: |
||||||||||||
Net new assets (in billions) |
$ | 14.5 | $ | 10.1 | $ | 15.6 | ||||||
Net new asset growth rate (annualized) |
10 | % | 8 | % | 13 | % | ||||||
Average client trades per day |
413,743 | 381,657 | 334,035 | |||||||||
Profitability Metrics: |
||||||||||||
Operating margin |
40.8 | % | 39.4 | % | 37.0 | % | ||||||
Pre-tax margin |
40.0 | % | 45.4 | % | 36.4 | % | ||||||
Return on average stockholders equity (annualized) |
16.3 | % | 17.3 | % | 13.3 | % | ||||||
EBITDA(1) as a percentage of net revenues |
47.1 | % | 52.8 | % | 43.9 | % | ||||||
Liquidity Metrics: |
||||||||||||
Interest on borrowings (in millions) |
$ | 6 | $ | 6 | $ | 6 | ||||||
Interest coverage ratio (EBITDA(1)/interest on borrowings) |
59.0 | 62.3 | 47.7 | |||||||||
Liquid assetsmanagement target(1) (in billions) |
$ | 0.7 | $ | 0.9 | $ | 0.8 | ||||||
Cash and cash equivalents (in billions) |
$ | 1.3 | $ | 1.1 | $ | 1.9 | ||||||
Transaction-Based Revenue Metrics: |
||||||||||||
Total trades (in millions) |
26.1 | 24.2 | 20.4 | |||||||||
Average commissions and transaction fees per trade(2) |
$ | 12.56 | $ | 12.61 | $ | 12.62 | ||||||
Average client trades per funded account (annualized) |
17.2 | 15.9 | 14.3 | |||||||||
Activity ratefunded accounts |
6.9 | % | 6.4 | % | 5.8 | % | ||||||
Trading days |
63.0 | 63.5 | 61.0 | |||||||||
Spread-Based Asset Metrics: |
||||||||||||
Average interest-earning assets (in billions) |
$ | 17.6 | $ | 16.8 | $ | 15.1 | ||||||
Average insured deposit account balances (in billions) |
72.7 | 72.0 | 64.2 | |||||||||
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Average spread-based balance (in billions) |
$ | 90.3 | $ | 88.8 | $ | 79.3 | ||||||
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Net interest revenue (in millions) |
$ | 127 | $ | 119 | $ | 116 | ||||||
Insured deposit account fee revenue (in millions) |
208 | 201 | 205 | |||||||||
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Spread-based revenue (in millions) |
$ | 335 | $ | 320 | $ | 321 | ||||||
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Avg. annualized yieldinterest-earning assets |
2.81 | % | 2.77 | % | 3.02 | % | ||||||
Avg. annualized yieldinsured deposit account fees |
1.12 | % | 1.09 | % | 1.25 | % | ||||||
Net interest margin (NIM) |
1.45 | % | 1.41 | % | 1.58 | % | ||||||
Fee-Based Investment Metrics: |
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Money market mutual fund fees: |
||||||||||||
Average balance (in billions) |
$ | 5.3 | $ | 5.3 | $ | 5.1 | ||||||
Average annualized yield |
0.00 | % | 0.00 | % | 0.05 | % | ||||||
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Fee revenue (in millions) |
$ | 0 | $ | 0 | $ | 1 | ||||||
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Market fee-based investment balances: |
||||||||||||
Average balance (in billions) |
$ | 125.2 | $ | 117.0 | $ | 94.9 | ||||||
Average annualized yield |
0.22 | % | 0.22 | % | 0.23 | % | ||||||
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Fee revenue (in millions) |
$ | 72 | $ | 67 | $ | 55 | ||||||
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Average fee-based investment balances (in billions) |
$ | 130.5 | $ | 122.3 | $ | 100.0 | ||||||
Average annualized yield |
0.22 | % | 0.21 | % | 0.22 | % | ||||||
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Investment product fee revenue (in millions) |
$ | 72 | $ | 67 | $ | 56 | ||||||
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(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 Companys web site at www.amtd.com for definitions of the above metrics.
TD AMERITRADE HOLDING CORPORATION
SELECTED OPERATING DATA
(Unaudited)
Quarter Ended | ||||||||||||
Dec. 31, 2013 | Sept. 30, 2013 | Dec. 31, 2012 | ||||||||||
Client Account and Client Asset Metrics: |
||||||||||||
Funded accounts (beginning of period) |
5,993,000 | 5,943,000 | 5,764,000 | |||||||||
Funded accounts (end of period) |
6,048,000 | 5,993,000 | 5,836,000 | |||||||||
Percentage change during period |
1 | % | 1 | % | 1 | % | ||||||
Client assets (beginning of period, in billions) |
$ | 555.9 | $ | 523.5 | $ | 472.3 | ||||||
Client assets (end of period, in billions) |
$ | 596.5 | $ | 555.9 | $ | 480.8 | ||||||
Percentage change during period |
7 | % | 6 | % | 2 | % | ||||||
Net Interest Revenue: |
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Segregated cash: |
||||||||||||
Average balance (in billions) |
$ | 5.4 | $ | 5.5 | $ | 3.8 | ||||||
Average annualized yield |
0.11 | % | 0.09 | % | 0.17 | % | ||||||
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Interest revenue (in millions) |
$ | 2 | $ | 1 | $ | 2 | ||||||
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Client margin balances: |
||||||||||||
Average balance (in billions) |
$ | 9.3 | $ | 8.5 | $ | 8.7 | ||||||
Average annualized yield |
3.92 | % | 3.95 | % | 4.02 | % | ||||||
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Interest revenue (in millions) |
$ | 93 | $ | 86 | $ | 89 | ||||||
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Securities borrowing/lending |
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Average securities borrowing balance (in billions) |
$ | 1.2 | $ | 1.1 | $ | 0.9 | ||||||
Average securities lending balance (in billions) |
$ | 2.2 | $ | 2.2 | $ | 1.9 | ||||||
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Net interest revenuesecurities borrowing/lending (in millions) |
$ | 32 | $ | 31 | $ | 25 | ||||||
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Other cash and interest-earning investments: |
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Average balance (in billions) |
$ | 1.7 | $ | 1.7 | $ | 1.7 | ||||||
Average annualized yield |
0.07 | % | 0.09 | % | 0.07 | % | ||||||
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Interest revenuenet (in millions) |
$ | 0 | $ | 1 | $ | 0 | ||||||
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Client credit balances: |
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Average balance (in billions) |
$ | 10.7 | $ | 10.1 | $ | 9.2 | ||||||
Average annualized cost |
0.01 | % | 0.01 | % | 0.01 | % | ||||||
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Interest expense (in millions) |
($ | 0 | ) | ($ | 0 | ) | ($ | 0 | ) | |||
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Average interest-earning assets (in billions) |
$ | 17.6 | $ | 16.8 | $ | 15.1 | ||||||
Average annualized yield |
2.81 | % | 2.77 | % | 3.02 | % | ||||||
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Net interest revenue (in millions) |
$ | 127 | $ | 119 | $ | 116 | ||||||
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NOTE: See Glossary of Terms on the Companys 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 | ||||||||||||||||||||||||||
Dec. 31, 2013 | Sept. 30, 2013 | Dec. 31, 2012 | ||||||||||||||||||||||||
$ | % of Net Rev. | $ | % of Net Rev. | $ | % of Net Rev. | |||||||||||||||||||||
EBITDA (1) | ||||||||||||||||||||||||||
EBITDA |
$ | 354 | 47.1 | % | $ | 374 | 52.8 | % | $ | 286 | 43.9 | % | ||||||||||||||
Less: |
||||||||||||||||||||||||||
Depreciation and amortization |
(24 | ) | (3.2 | %) | (23 | ) | (3.2 | %) | (20 | ) | (3.1 | %) | ||||||||||||||
Amortization of acquired intangible assets |
(23 | ) | (3.1 | %) | (23 | ) | (3.2 | %) | (23 | ) | (3.5 | %) | ||||||||||||||
Interest on borrowings |
(6 | ) | (0.8 | %) | (6 | ) | (0.8 | %) | (6 | ) | (0.9 | %) | ||||||||||||||
Provision for income taxes |
(109 | ) | (14.5 | %) | (122 | ) | (17.2 | %) | (90 | ) | (13.8 | %) | ||||||||||||||
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Net income |
$ | 192 | 25.5 | % | $ | 200 | 28.2 | % | $ | 147 | 22.6 | % | ||||||||||||||
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As of | ||||||||||||||||||||||
Dec. 31, 2013 |
Sept.
30, 2013 |
June 30, 2013 |
Mar.
31, 2013 |
Dec. 31, 2012 |
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Liquid AssetsManagement Target (2) | ||||||||||||||||||||||
Liquid assetsmanagement target |
$ | 707 | $ | 874 | $ | 728 | $ | 706 | $ | 774 | ||||||||||||
Plus: |
Broker-dealer cash and cash equivalents | 926 | 540 | 555 | 719 | 841 | ||||||||||||||||
Trust company cash and cash equivalents |
60 | 74 | 39 | 84 | 556 | |||||||||||||||||
Investment advisory cash and cash equivalents |
25 | 19 | 28 | 24 | 15 | |||||||||||||||||
Less: |
Excess broker-dealer regulatory net capital | (409 | ) | (445 | ) | (387 | ) | (315 | ) | (334 | ) | |||||||||||
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Cash and cash equivalents |
$ | 1,309 | $ | 1,062 | $ | 963 | $ | 1,218 | $ | 1,852 | ||||||||||||
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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 holding companys 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 assetsmanagement target is considered a non-GAAP financial measure as defined by SEC Regulation G. We include the excess capital of our broker-dealer subsidiaries in the calculation of liquid assetsmanagement target, 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. We consider liquid assetsmanagement target to be an important measure of our liquidity and of our ability to fund corporate investing and financing activities. Liquid assetsmanagement target should be considered a supplemental measure of liquidity, rather than a substitute for cash and cash equivalents. |
We define liquid assetsmanagement 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.). Liquid assetsmanagement target is based on more conservative measures of broker-dealer net capital than regulatory thresholds require because we prefer to maintain significantly more conservative levels of net capital at the broker-dealer subsidiaries. We consider liquid assetsmanagement target to be a measure that reflects our liquidity that would be readily available for corporate investing and financing activities under normal operating circumstances.