Ameritrade Announces Continued Profitability and Merger Synergies Ahead of Target.Business Editors OMAHA Omaha, city, United States Omaha (ō`məhä, –hô), city (1990 pop. 335,795), seat of Douglas co., E Nebr., on the west bank of the Missouri River; inc. 1857. , Neb.--(BUSINESS WIRE)--April 22, 2003 Clearing conversion completed; Definitive agreement signed for Mydiscountbroker accounts Ameritrade Holding Corporation (Nasdaq:AMTD AMTD Arithmetic Mean Temperature Difference AMTD Automatic Magnetic Tape Distribution AMTD Affordability and Manufacturing Technology Demonstration ) today announced results for its second fiscal quarter ended March 28, 2003. The Company executed executed 1) adj. to have been completed. (Example: "it is an executed contract") 2) v. to have completed or fully performed. (Example: "he executed all the promises made in the contract") 3) v. on its commitment to deliver profitability and positive cash flow despite the challenging environment. Second Quarter Highlights -- Net income of $9.6 million, or $0.02 per share -- Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: (a) of $38.1 million, or 26 percent -- Pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta income of $16.7 million, or 11 percent -- EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (a) of $25.4 million -- Reached $100 million of annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. synergies -- Repurchased 8.2 million shares of Company stock -- Liquid assets Cash, or property immediately convertible to cash, such as Securities, notes, life insurance policies with cash surrender values, U.S. savings bonds, or an account receivable. (a) of $187 million -- 83,000 new accounts opened and funded at an average cost per account of $325 -- Average trades per day of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 116,000 (a) See attached reconciliation of financial measures. "We delivered on the next milestone “Milemarker” redirects here. For the American indie rock band, see Milemarker (band). A milestone or kilometre sign is one of a series of numbered markers placed along a road at regular intervals, typically at the side of the road or in a median. in our Datek integration, the clearing conversion. Further, we attained at·tain v. at·tained, at·tain·ing, at·tains v.tr. 1. To gain as an objective; achieve: attain a diploma by hard work. 2. the targeted merger synergy The enhanced result of two or more people, groups or organizations working together. In other words, one and one equals three! It comes from the Greek "synergia," which means joint work and cooperative action. run-rate of $100 million after tax and expect additional synergies to be realized from the clearing and Web site conversions over the next two quarters. We remain committed to grow our business and achieve profitability regardless of market conditions," said Joe Moglia Joe Moglia is the current CEO of TD Ameritrade, the largest online discount brokerage firm in the world. Born in Queens, New York, Moglia was a football coach for 16 years, finishing as a Dartmouth College assistant from 1981-1983. , chief executive officer of Ameritrade. Stock Repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. and Knight knight, in ancient and medieval history, a noble who did military service as a mounted warrior. The Knight in Ancient History In ancient history, as in Athens and Rome, the knight was a noble of the second class who in military service had to Transaction In February February: see month. , the Company entered into a prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. variable forward
agreement on 5.2 million shares of its ownership in Knight Trading
Group, Inc. ("Knight"), generating cash of approximately $21
million.The Company used the proceeds of the Knight transaction to partially fund the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of over 8 million shares of its common stock during the quarter at $4.77 per share. To date, the Company has bought back over 13 million shares at an average price of $4.41 per share. Mydiscountbroker.com Acquisition The Company today also announced it has signed a definitive agreement with SWS SWS Slow Wave Sleep SWS Short Wavelength Spectrometer SWS Sturge-Weber Syndrome (birthmark) SWS Stadtwerke Speyer GmbH (Germany) SWS Social Work Services (US Army) Group, Inc. (NYSE NYSE See: New York Stock Exchange :SWS), to purchase the nearly 20,000 online retail accounts of its Mydiscountbroker.com subsidiary. The purchase price is expected to range from $3 million to $5 million based on account characteristics and number of accounts transferred. The parties intend to close as soon as possible. Outlook Ameritrade has updated its current projections for the remaining quarters of fiscal year 2003 in the "Outlook Statement" section of its corporate Web site located at www.amtd.com. About Ameritrade Holding Corporation Ameritrade Holding Corporation (www.amtd.com) has a 27-year brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. history of providing a self-directed self-di·rect·ed adj. Directed or guided by oneself, especially as an independent agent: the self-directed study of a language. self approach to investment services. The Company, through its Private Client and Institutional Client divisions, provides tiered tier 1 n. 1. One of a series of rows placed one above another: a stadium with four tiers of seats. 2. A rank or class. tr. & intr.v. levels of brokerage products and services tailored to meet the varying investing, trading and execution needs of individual investors, financial institutions and corporations. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. This document contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 expectations of additional synergies to be realized from the merger of Ameritrade and Datek and any projections regarding our future revenues, expenses, earnings, capital expenditures or activity rates 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 the successful integration of the operations of Ameritrade and Datek, operational cost savings resulting from the merger of Ameritrade and Datek, market fluctuations and changes in client trading activity, general economic conditions, increased competition, regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. and legal matters and uncertainties and other risk factors described in our latest Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. . 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.
AMERITRADE HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
In thousands, except per share data
(Unaudited)
Quarter Ended Six Months Ended
------------- ----------------
Mar. 28, Mar. 29, Mar. 28, Mar. 29,
2003 2002 2003 2002
-------- -------- --------- ---------
Revenues:
Commissions and clearing fees $92,696 $63,789 $208,880 $129,448
Interest revenue 37,704 27,647 79,501 56,773
Other 21,889 17,873 50,233 34,373
-------- -------- --------- ---------
Total revenues 152,289 109,309 338,614 220,594
Client interest expense 4,655 2,573 10,453 5,668
-------- -------- --------- ---------
Net revenues 147,634 106,736 328,161 214,926
-------- -------- --------- ---------
Expenses:
Employee compensation and
benefits 53,721 33,659 99,471 66,584
Communications 11,942 8,902 25,071 18,862
Occupancy and equipment costs 16,047 14,733 32,223 28,298
Depreciation and amortization 7,629 7,054 16,354 13,791
Professional services 8,293 6,721 19,614 11,519
Interest on borrowings 1,118 1,065 2,306 2,891
(Gain)/loss on disposal of
property (5,527) 23 (5,118) 216
Other 10,762 6,318 25,764 12,191
Advertising 26,990 24,833 59,018 41,905
-------- -------- --------- ---------
Total expenses 130,975 103,308 274,703 196,257
-------- -------- --------- ---------
Pre-tax income 16,659 3,428 53,458 18,669
Provision for income taxes 7,042 1,481 21,799 7,719
-------- -------- --------- ---------
Net income $9,617 $1,947 $31,659 $10,950
======== ======== ========= =========
Basic earnings per share $0.02 $0.01 $0.07 $0.05
Diluted earnings per share $0.02 $0.01 $0.07 $0.05
Weighted average shares
outstanding - basic 427,765 215,917 428,834 215,722
Weighted average shares
outstanding - diluted 430,557 216,890 431,297 216,631
AMERITRADE HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands
(Unaudited)
Mar. 28, 2003 Sept. 27, 2002
-------------- --------------
Assets:
Cash and cash equivalents $151,385 $198,398
Segregated cash and investments 6,902,554 5,665,109
Broker/dealer receivables 1,660,628 1,397,862
Client receivables 1,350,949 1,414,598
Goodwill and intangible assets 960,085 964,979
Other 137,255 159,895
-------------- --------------
Total assets $11,162,856 $9,800,841
============== ==============
Liabilities and stockholders' equity:
Liabilities:
Broker/dealer payables $1,721,920 $1,917,482
Client payables 8,031,538 6,374,644
Notes payable 67,688 47,645
Other 244,531 362,671
-------------- --------------
Total liabilities 10,065,677 8,702,442
Stockholders' equity 1,097,179 1,098,399
-------------- --------------
Total liabilities and stockholders'
equity $11,162,856 $9,800,841
============== ==============
Note: Certain items in the prior year condensed consolidated balance
sheet have been reclassified to conform to the current presentation.
AMERITRADE HOLDING CORPORATION
RECONCILIATION OF FINANCIAL MEASURES
In thousands, except percentages
(Unaudited)
Quarter Ended
----------------------------------------
March 28, 2003 March 29, 2002
------------------- --------------------
$ % of Rev. $ % of Rev.
--------- --------- --------- ----------
Operating Margin (1)
--------------------
Operating margin $38,122 25.8% $28,284 26.5%
Less:
Advertising (26,990) -18.3% (24,833) -23.3%
Gain/(loss) on disposal of
property 5,527 3.7% (23) 0.0%
--------- ---------
Pre-tax income $16,659 11.3% $3,428 3.2%
========= =========
EBITDA (2)
----------
EBITDA $25,406 17.2% $11,547 10.8%
Less:
Depreciation and amortization (7,629) -5.2% (7,054) -6.6%
Interest on borrowings (1,118) -0.8% (1,065) -1.0%
--------- ---------
Pre-tax income 16,659 11.3% 3,428 3.2%
Provision for income taxes (7,042) -4.8% (1,481) -1.4%
--------- ---------
Net income $9,617 6.5% $1,947 1.8%
========= =========
Six Months Ended
----------------------------------------
March 28, 2003 March 29, 2002
------------------- --------------------
$ % of Rev. $ % of Rev.
--------- --------- --------- ----------
Operating Margin (1)
--------------------
Operating margin $107,358 32.7% $60,790 28.3%
Less:
Advertising (59,018) -18.0% (41,905) -19.5%
Gain/(loss) on disposal of
property 5,118 1.6% (216) -0.1%
--------- ---------
Pre-tax income $53,458 16.3% $18,669 8.7%
========= =========
EBITDA (2)
----------
EBITDA $72,118 22.0% $35,351 16.4%
Less:
Depreciation and amortization (16,354) -5.0% (13,791) -6.4%
Interest on borrowings (2,306) -0.7% (2,891) -1.3%
--------- ---------
Pre-tax income 53,458 16.3% 18,669 8.7%
Provision for income taxes (21,799) -6.6% (7,719) -3.6%
--------- ---------
Net income $31,659 9.6% $10,950 5.1%
========= =========
As of
-----------------------------
March 28, Dec. 31, Sept. 27,
2003 2002 2002
--------- --------- ---------
Liquid Assets (3)
-----------------
Liquid assets $187,016 $246,800 $229,447
Plus: Broker-dealer cash and
cash equivalents 114,078 61,745 91,566
Less:
Investment in NITE, net of
tax (6,546) (23,017) (19,411)
Excess broker-dealer
regulatory net capital (143,163) (121,287) (103,204)
--------- --------- ---------
Cash and cash equivalents $151,385 $164,241 $198,398
========= ========= =========
Note: The term "GAAP" in the following explanations refers to
generally accepted accounting principles in the United States.
(1) Operating margin is considered a Non-GAAP financial measure as
defined by SEC Regulation G. We define operating margin as pre-tax
income, adjusted to remove advertising expense and any unusual
gains or charges. We believe operating margin provides an
important measure of the financial performance of our ongoing
business. Advertising spending is excluded from operating margin
because it is largely at the discretion of the Company, varies
significantly from period to period based on current market
conditions and relates to the acquisition of future revenues
through new accounts rather than current revenues from existing
accounts. Unusual gains and charges are excluded from operating
margin because we believe they are not likely to be indicative of
the ongoing operations of our business. Operating margin should be
considered in addition to, rather than as a substitute for,
pre-tax income and net income.
(2) 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
eliminates the non-cash effect of tangible asset depreciation 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.
(3) Liquid assets is considered a Non-GAAP financial measure as
defined by SEC Regulation G. We define liquid assets as the sum of
a) non broker-dealer cash, b) the market value, net of tax, of our
investment in Knight Trading Group, Inc. that is not subject to a
prepaid variable forward contract for future sale and c)
regulatory net capital of our broker-dealer subsidiaries in excess
of 5% of aggregate debit items. We consider liquid assets an
important measure of our liquidity and of our ability to fund
corporate investing and financing activities. Liquid assets should
be considered in addition to, rather than as a substitute for,
cash and cash equivalents.
AMERITRADE HOLDING CORPORATION
SELECTED OPERATING DATA
Quarter ended
-------------------------------------------
Mar. 28, Dec. 31, Sept. 27, June 28,
2003 2002 2002 2002
---------- ---------- ---------- ----------
Trading days 60 65 63 64
Average client trades per
day 116,246 140,700 87,278 73,506
Assets in client accounts
(in billions) $39.1 $37.1 $33.9 $27.5
Core brokerage open
accounts(b) 2,907,000 2,872,000 2,842,000 1,917,000
(b) This relates to the core brokerage account base only. Total client
base, including core accounts and non-core accounts (primarily
clearing accounts, stock option administration accounts and bank
referral accounts), was 3,251,000 at 3/28/03.
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