Ameritrade Has Record Fourth Quarter and Fiscal Year; Second Consecutive Quarter Exceeds Any Previous Total Year Company Increases Guidance for Fiscal Year 2004.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)--Oct. 21, 2003 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 the quarter and fiscal year ended September September: see month. 26, 2003, which demonstrate the force of its scale-on-demand technology and operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. . Fourth Quarter Highlights -- Record net income of $55 million, or $0.13 per share -- Record pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta income of $92 million, or 47 percent -- Record operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: (1) of $107 million, or 54 percent -- Record 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 (1) of $101 million, or 51 percent -- 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. (1) of $335 million; cash and cash equivalents of $249 million -- Average trades per day of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 158,000 -- 76,000 new accounts at an average cost per account of $195; 41,000 net new accounts -- Signed a purchase agreement to acquire approximately 11,500 BrokerageAmerica client accounts 2003 Fiscal Year Results -- Record net income of $137 million, or $0.32 per share -- Record pre-tax income of $227 million, or 32 percent -- Record operating margin(1) of $313 million, or 44 percent -- Record EBITDA(1) of $264 million, or 37 percent -- 330,000 new accounts at an average cost per account of $274; 172,000 net new accounts -- Record net revenues of $713 million -- Record client assets of $55 billion, an increase of 57 percent from end of FY 2002 (1) See attached reconciliation of financial measures. "2003 was a fantastic year. Liquid assets and client assets are at historical highs, we bought back almost 17 million shares of our stock, and net income for each of the last two quarters surpassed that of any previous year in our history. Our 47 percent pre-tax margin this quarter significantly exceeds any of our publicly traded peers' published results in 2003 to date," 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. "Lastly, our percentage of growth in shareholder value far outpaced the entire AMEX AMEX See: American Stock Exchange Securities Broker/Dealer Index." Convertible Note Redemption The liberation of an estate in real property from a mortgage. Redemption is the process by which land that has been mortgaged or pledged is bought back or reclaimed. It is accomplished through a payment of the debt owed or a fulfillment of the other conditions. On October October: see month. 23, 2003, the Company will redeem redeem v. to buy back, as when an owner who had mortgaged his/her real property pays off the debt. The term also refers to paying the amount due and all charges after a foreclosure (due to failure to make payments when due) has begun. all of the approximately $46.3 million of its convertible subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. notes. After the redemption, the Company will have no outstanding bank debt or convertible debt. Stock Repurchases Stock repurchase A firm's repurchase of outstanding shares of its common stock. During the quarter, Ameritrade utilized approximately 45 percent of net income, or $25 million, in repurchasing its stock. Through September 26, 2003 the Company has invested about $90 million in repurchasing almost 17 million shares of stock at an average of $5.45 per share. Merger Success Ameritrade has achieved approximately $188 million in pre-tax synergies since closing the Datek merger, for a run-rate of $245 million in annual pre-tax merger synergies. Outlook Ameritrade has increased its current projections for the fiscal year 2004 to $0.31- $0.57 per share in the "Outlook Statement" section of its corporate Web site located at www.amtd.com. About Ameritrade Holding Corporation Ameritrade Holding Corporation has a 28-year history of servicing 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 investors. Ameritrade develops and provides innovative brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. products and services tailored to meet the varying investing and portfolio management needs of individual investors and institutional distribution partners. With 3 million client accounts, Ameritrade, Inc.(1), a subsidiary of Ameritrade Holding Corporation, is a leader in the online brokerage business, recently receiving Forbes Forbes , B(ertie) C(harles) 1880-1954. American publisher and businessman who founded and edited (1916-1954) Forbes magazine. His son Malcolm Stevenson Forbes "Best of Web" honors as well as an overall four-star four-star adj. Of superlative quality: a four-star restaurant. rating, and a top rating for "Ease of Use" and "Research Amenities" on the Barron's 2003 Online Broker Survey. For more information, please visit www.amtd.com. 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 projections regarding this planned redemption, our future revenues, expenses, synergies, 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 completion of the redemption of the outstanding convertible notes, 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. (1) Ameritrade, Inc., member NASD/SIPC
AMERITRADE HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
In thousands, except per share data
(Unaudited)
Quarter Ended Fiscal Year Ended
------------------- -------------------
Sept. 26, Sept. 27, Sept. 26, Sept. 27,
2003 2002 2003 2002
--------- --------- --------- ---------
Revenues:
Commissions and clearing
fees $134,861 $66,284 $472,760 $252,526
Interest revenue 46,029 30,973 168,794 116,345
Other 18,056 22,359 89,511 74,182
--------- --------- --------- ---------
Total revenues 198,946 119,616 731,065 443,053
Client interest expense 2,364 4,012 17,811 12,260
--------- --------- --------- ---------
Net revenues 196,582 115,604 713,254 430,793
--------- --------- --------- ---------
Expenses:
Employee compensation and
benefits 42,314 35,529 181,564 133,897
Communications 8,625 8,619 46,250 36,091
Occupancy and equipment
costs 11,987 13,821 55,771 55,294
Depreciation and
amortization 7,087 7,423 31,708 27,945
Professional services 4,518 8,386 31,398 25,088
Interest on borrowings 1,464 1,132 5,076 5,110
Loss/(gain) on disposal of
property 41 166 (5,093) 403
Other 13,598 10,585 48,829 29,605
Advertising 14,852 13,785 90,394 72,471
Restructuring and asset
impairment charges 0 63,406 0 63,406
--------- --------- --------- ---------
Total expenses 104,486 162,852 485,897 449,310
--------- --------- --------- ---------
Pre-tax income (loss) 92,096 (47,248) 227,357 (18,517)
Provision for (benefit from)
income taxes 36,983 (1,560) 90,715 10,446
--------- --------- --------- ---------
Net income (loss) $55,113 $(45,688) $136,642 $(28,963)
========= ========= ========= =========
Basic earnings (loss) per share $0.13 $(0.17) $0.32 $(0.13)
Diluted earnings (loss) per
share $0.13 $(0.17) $0.32 $(0.13)
Weighted average shares
outstanding - basic 427,142 261,549 427,376 227,327
Weighted average shares
outstanding - diluted 436,781 261,549 432,480 227,327
AMERITRADE HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands
(Unaudited)
Sept. 26, 2003 Sept. 27, 2002
-------------- --------------
Assets:
Cash and cash equivalents $248,623 $198,398
Segregated cash and investments 7,878,421 5,665,109
Broker/dealer receivables 2,921,732 1,397,862
Client receivables 2,202,170 1,419,469
Goodwill and intangible assets 971,550 964,979
Other 180,272 155,024
-------------- --------------
Total assets $14,402,768 $9,800,841
============== ==============
Liabilities and stockholders' equity:
Liabilities:
Broker/dealer payables $3,142,435 $1,917,482
Client payables 9,611,243 6,374,644
Prepaid variable forward contract
obligation 36,194 -
Convertible subordinated notes 46,295 47,645
Other 328,988 362,671
-------------- --------------
Total liabilities 13,165,155 8,702,442
Stockholders' equity 1,237,613 1,098,399
-------------- --------------
Total liabilities and stockholders'
equity $14,402,768 $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
SELECTED OPERATING DATA
Quarter ended
-------------------------------------------
Sept. 26, June 27, Mar. 28, Dec. 31,
2003 2003 2003 2002
---------- ---------- ---------- ----------
Trading days 63 63 60 65
Average client trades per
day 158,016 154,294 116,246 140,700
Total trades (in millions) 10.0 9.7 7.0 9.1
Assets in client accounts
(in billions) $54.8 $48.0 $39.1 $37.1
Core brokerage open
accounts(a) 3,014,000 2,973,000 2,907,000 2,872,000
(a) 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 3,357,000 at 9/26/03.
AMERITRADE HOLDING CORPORATION
RECONCILIATION OF FINANCIAL MEASURES
In thousands, except percentages
(Unaudited)
Quarter Ended
---------------------------------------
Sept. 26, 2003 Sept. 27, 2002
------------------- -------------------
$ % of Rev. $ % of Rev.
--------- --------- --------- ---------
Operating Margin (1)
--------------------
Operating margin $106,989 54.4% $30,109 26.0%
Less:
Advertising (14,852) -7.6% (13,785) -11.9%
Gain/(loss) on disposal of
property (41) 0.0% (166) -0.1%
Restructuring and asset
impairment charges 0 0.0% (63,406) -54.8%
--------- ---------
Pre-tax income (loss) $92,096 46.8% $(47,248) -40.9%
========= =========
EBITDA (2)
----------
EBITDA $100,647 51.2% $24,713 21.4%
Less:
Depreciation and amortization (7,087) -3.6% (7,423) -6.4%
Interest on borrowings (1,464) -0.7% (1,132) -1.0%
Restructuring and asset
impairment charges 0 0.0% (63,406) -54.8%
--------- ---------
Pre-tax income (loss) $92,096 46.8% $(47,248) -40.9%
========= =========
Fiscal Year Ended
---------------------------------------
Sept. 26, 2003 Sept. 27, 2002
------------------- -------------------
$ % of Rev. $ % of Rev.
--------- --------- --------- ---------
Operating Margin (1)
--------------------
Operating margin $312,658 43.8% $117,763 27.3%
Less:
Advertising (90,394) -12.7% (72,471) -16.8%
Gain/(loss) on disposal of
property 5,093 0.7% (403) -0.1%
Restructuring and asset
impairment charges 0 0.0% (63,406) -14.7%
--------- ---------
Pre-tax income (loss) $227,357 31.9% $(18,517) -4.3%
========= =========
EBITDA (2)
----------
EBITDA $264,141 37.0% $77,944 18.1%
Less:
Depreciation and amortization (31,708) -4.4% (27,945) -6.5%
Interest on borrowings (5,076) -0.7% (5,110) -1.2%
Restructuring and asset
impairment charges 0 0.0% (63,406) -14.7%
--------- ---------
Pre-tax income (loss) $227,357 31.9% $(18,517) -4.3%
========= =========
As of
-------------------------------------------------
Sept. 26, June 27, March 28, Dec. 31, Sept. 27,
2003 2003 2003 2002 2002
--------- --------- --------- --------- ---------
Liquid Assets (3)
-----------------
Liquid assets $335,294 $259,764 $187,016 $246,800 $229,447
Plus: Broker-dealer
cash and cash
equivalents 55,634 84,210 114,078 61,745 91,566
Less:
Investment in NITE,
net of tax - - (6,546) (23,017) (19,411)
Excess broker-dealer
regulatory net
capital (142,305) (114,415) (143,163) (121,287) (103,204)
--------- --------- --------- --------- ---------
Cash and cash
equivalents $248,623 $229,559 $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 because it is largely
at the discretion of the Company, varies significantly from period
to period based on 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 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, as well as any non-cash gains or
charges. 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 and cash equivalents, 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.
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