Ameritrade Produces Break-Even Third Quarter While Reducing Debt by $178.5 Million over the Last Nine Months.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)--July 24, 2001 Stronger Bottom Line Demonstrates Ameritrade's Positive Financial Leverage; Brand Shows Resilience resilience (r  ·zilˑ·yens),n as Year-Over-Year Account Growth Rises 33% Ameritrade Holding Corporation (Nasdaq:AMTD AMTD Arithmetic Mean Temperature Difference AMTD Automatic Magnetic Tape Distribution AMTD Affordability and Manufacturing Technology Demonstration ) demonstrated its ability to manage for profitability against continued market weakness by reporting break-even results for the Company's fiscal third quarter ended June June: see month. 29, 2001. Third Quarter Highlights -- Net income of $70,000, or $0.00 per share, compared to a loss of $0.09 per share, excluding one-time debt conversion expenses, in the previous quarter; -- $26 million in debt reduction in the third quarter and $26.4 million in additional debt reduction to date in the fourth quarter. Ameritrade has eliminated 74% of its debt since the beginning of the fiscal year in a move to strengthen the balance sheet and grow long-term shareholder value; -- Net revenues of $112.6 million, a decrease of 5% from the previous quarter; -- $13.27 operating cost per trade, retaining the industry's lowest expense structure; -- $21.2 million in operating margin compared to $15.6 million in the previous quarter. The Company's 19% operating margin (which now includes OnMoney but excludes advertising) reflects additional efficiencies extracted from its high-margin, low-cost infrastructure; -- 92,000 new accounts opened and funded at a cost per account of $203, underscoring the strength of the Ameritrade brand; -- 33% increase to 1,545,000 total accounts from 1,164,000 accounts for the same quarter last year; -- Trades per day of 109,000, a decrease of only 3% sequentially; -- 4.6 trades per account during the quarter; -- 5.49 seconds average transaction time, best among leading online brokers;(a) (a) as defined and rated by Keynote keynote /key·note/ (ke´not) in homeopathy, the characteristic property of a drug that indicates its use in treating a similar symptom of disease. .com, a leading independent assessor of online performance, between April 4 and June 29, 2001 "Ameritrade met its commitment to being cash-flow positive for the quarter despite worse than expected top line pressure across the industry," 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 Holding Corporation. "We achieved positive financial leverage by growing our bottom line even as our top line declined. Along with our recent reorganization The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent. , our proactive, aggressive steps to control costs, eliminate debt and remain cash-flow positive in a downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. will further strengthen our competitive and financial position as market conditions improve." Moglia continued: "We firmly believe that 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 investing is a strong growth business experiencing a cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. downturn. We see it as encouraging for our shareholders that our client base continues to grow on the strength of our brand and remains active relative to our competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. ." Client Experience Highlights The Company introduced significant enhancements to the client experience. The quarter's client experience highlights included: -- Pre-Market Pre-Market Trading done before the regular market opens. Notes: Participation by market makers and ECNs is voluntary, so in pre-market there may be less liquidity than during normal hours of trading. Trading - enabling clients to trade over 13,000 Nasdaq and NYSE NYSE See: New York Stock Exchange listed securities Listed Security Securities that have been accepted for trading purposes by a recognized and regulated exchange. Notes: Listed securities have the advantage of higher liquidity within a regulated environment. during the extended AM trading hours. -- Portfolio Management - creating up to 10 different portfolios with multiple views and sorting features, allowing clients to manage their investments from one convenient location. -- Fastest loading consumer home page for a record 70 weeks.(b) (b) as defined and rated by Keynote.com, a leading independent assessor of online performance, as of July July: see month. 14, 2001 Corporate Reorganization Announced on June 27, the new corporate structure is designed to focus on intelligently delivering the products and services essential to Ameritrade's different client segments while capturing synergies and eliminating redundancies. The Company's restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). introduced two core business units - a Private Client division and an Institutional Client division - as well as a new eight-member Executive Management Team. The team will devote additional resources to strategic planning Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. , long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. vision and corporate governance Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. . The reorganization will grow and diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. the Company's revenue base by shifting the mix of retail and institutional sales. Specific client segments will receive tailored levels of service and pricing, including expanded subscription services. Client acquisition cost savings should be realized over the long-term by selling institutional products through a sales force rather than through advertising and marketing. Outlook Ameritrade has updated its current projections for the Company's main business drivers for the fourth quarter of fiscal year 2001 in the "Outlook" section of its corporate website located at www.amtd.com. About Ameritrade Ameritrade Holding Corporation (www.amtd.com) is a pioneer in the online brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. industry with a 26-year history of providing clients a self-directed approach to investment services. The award-winning Adj. 1. award-winning - having received awards; "this award-winning bridge spans a distance of five miles" 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 self-directed individual investors, financial institutions and corporations. 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. regarding future events or the future performance of the Company. Various factors could cause actual results to differ materially from those anticipated. Readers of this document are advised to check the documents filed by the Company with the U.S. Securities & Exchange Commission, including Forms 10-K and 10-Q for descriptions of risks and uncertainties related to forward-looking statements.
AMERITRADE HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
In thousands, except per share data
Quarter ended Nine months ended
---------------- -------------------
June 29, June 30, June 29, June 30,
2001 2000 2001 2000
------- -------- -------- --------
Revenues:
Commissions and clearing fees $64,902 $101,805 $223,360 $305,365
Interest revenue 42,410 64,931 156,072 176,358
Other 12,660 5,601 22,791 15,937
------- -------- -------- --------
Total revenues 119,972 172,337 402,223 497,660
Client interest expense 7,385 18,955 39,728 55,235
------- -------- -------- --------
Net revenues 112,587 153,382 362,495 442,425
------- -------- -------- --------
Operating expenses:
Employee compensation and
benefits 35,035 38,668 116,702 110,906
Communications 10,515 9,681 30,208 26,923
Occupancy and equipment costs 22,415 15,841 67,821 43,225
Professional services 12,289 18,052 45,716 55,808
Interest on borrowings 2,028 4,332 9,565 12,163
Other 9,148 11,371 29,394 35,119
------- -------- -------- --------
Total operating expenses 91,430 97,945 299,406 284,144
------- -------- -------- --------
Operating margin 21,157 55,437 63,089 158,281
Advertising 18,688 47,844 126,520 178,831
Debt conversion expense 0 0 62,082 0
------- -------- -------- --------
Income (loss) before income taxes 2,469 7,593 (125,513) (20,550)
Provision (benefit) for income
taxes 2,399 2,995 (48,360) (6,638)
------- -------- -------- --------
Net income (loss) $70 $4,598 $(77,153) $(13,912)
======= ======== ======== ========
Basic earnings (loss) per share $0.00 $0.03 $(0.42) $(0.08)
Diluted earnings (loss) per share $0.00 $0.03 $(0.42) $(0.08)
Weighted average shares
outstanding - basic 188,746 174,789 181,615 174,651
Weighted average shares
outstanding - diluted 189,599 175,867 181,615 174,651
AMERITRADE HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands
June 29, Sept. 29,
2001 2000
----------- ----------
Assets:
Cash and cash equivalents $ 31,701 $ 122,351
Segregated cash and investments 1,765,399 215,956
Client receivables 1,294,762 2,926,981
Other 620,980 532,948
----------- ----------
Total assets $3,712,842 $3,798,236
=========== ==========
Liabilities and Stockholders' Equity
Liabilities:
Client payables $2,759,033 $2,618,157
Notes payable 96,545 275,000
Other 611,351 640,911
----------- ----------
Total liabilities 3,466,929 3,534,068
Stockholders' equity 245,913 264,168
----------- ----------
Total liabilities and stockholders' equity $3,712,842 $3,798,236
=========== ==========
AMERITRADE HOLDING CORPORATION
SELECTED OPERATING DATA
Quarter ended
-----------------------------
June 29, Mar. 30, Dec. 31,
2001 2001 2000
--------- --------- ---------
Trading days 63 62 63
Average client trades per day 109,337 113,164 110,734
Assets in client accounts (in billions) $26.2 $23.5 $27.9
Core discount brokerage open accounts(c) 1,545,000 1,478,000 1,356,000
(c) This relates to the core discount brokerage account base only.
Total client base including core accounts and non-core accounts
(primarily clearing accounts and bank referral accounts) total
1,713,000 at 6/29/01.
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