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1 TD AMERITRADE, Inc., member NASD/SIPC. TD AMERITRADE is a trademark jointly owned by TD AMERITRADE IP Company, Inc. and The Toronto-Dominion Bank. © 2007 TD AMERITRADE IP Company, Inc. All rights reserved. Used with permission. CSFB Conference February 7, 2007

CSFB Conference FINAL · CSFB Conference February 7, 2007. 2 Safe Harbor This document contains forward-looking statements within the meaning of the federal securities laws. We intend

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Page 1: CSFB Conference FINAL · CSFB Conference February 7, 2007. 2 Safe Harbor This document contains forward-looking statements within the meaning of the federal securities laws. We intend

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TD AMERITRADE, Inc., member NASD/SIPC. TD AMERITRADE is a trademark jointly owned by TD AMERITRADE IP Company, Inc. and The Toronto-Dominion Bank. © 2007 TD AMERITRADE IP Company, Inc. All rights reserved. Used with permission.

CSFB Conference

February 7, 2007

Page 2: CSFB Conference FINAL · CSFB Conference February 7, 2007. 2 Safe Harbor This document contains forward-looking statements within the meaning of the federal securities laws. We intend

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Safe HarborThis 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 anticipated benefits of the TD Waterhouse transaction, as well as the assumptions on which such expectations are based, and future operations 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 general economic and political conditions, interest rates, market fluctuations and changes in client trading activity, increased competition, systems failures and capacity constraints, ability to service debt obligations, integration associated with the TD Waterhouse transaction, realization of synergies from the TD Waterhouse transaction, 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 Dec. 7, 2006 and our latest Quarterly Report on Form 10-Q filed thereafter. These forward-lookingstatements 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.

Page 3: CSFB Conference FINAL · CSFB Conference February 7, 2007. 2 Safe Harbor This document contains forward-looking statements within the meaning of the federal securities laws. We intend

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Our FocusThree Priorities: Clients – Shareholders – Associates

Three Client Segments: Active – Long-Term – RIA

Three Objectives: Growth – Retention – Yield

Page 4: CSFB Conference FINAL · CSFB Conference February 7, 2007. 2 Safe Harbor This document contains forward-looking statements within the meaning of the federal securities laws. We intend

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What We Are Trying To DoW

ealth

Geography (US)

WHO – TDA Target Clients

Mass Affluent

• Underserved• Fragmented• Growing• Base we have - (organic

and acquired)

HOW• Scale through Technology• Intuitive, Simple, High Value• No conflicts, Transparent • Independence

Leverage Trading into Asset Gathering

7.9 5.7 2.4 6.8

Trading & Investing

Retirement Assets

Deposits

Credit & Other

(1) Source: VIP Forum; Forrester

WHAT – Client Wallet ($Trillion) (1)

US Mass Affluent Wallet

Page 5: CSFB Conference FINAL · CSFB Conference February 7, 2007. 2 Safe Harbor This document contains forward-looking statements within the meaning of the federal securities laws. We intend

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BrokerageIndustry

Consolidation

GenerationalWealth

Transfer

Pension & Soc. Sec.

Privatization

Mutual Fund

Displacement

• Tremendous wealth to more computer literate and self-directed generation

• Core asset management vehicle will be exchange traded funds

• Guidance and advice will be a key requirement

• Ability to consolidate and integrate will continue to drive value

Beneficial Macro Trends

TD AMERITRADE uniquely positioned to capture disproportionate share

Page 6: CSFB Conference FINAL · CSFB Conference February 7, 2007. 2 Safe Harbor This document contains forward-looking statements within the meaning of the federal securities laws. We intend

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Priorities

1. Complete Integration

2. Grow the Business

3. Capital/Financial Management

Page 7: CSFB Conference FINAL · CSFB Conference February 7, 2007. 2 Safe Harbor This document contains forward-looking statements within the meaning of the federal securities laws. We intend

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Integration UpdateExpenses, Excluding Advertising (1)

(1) See reconciliation of financial measures.

$0

$50

$100

$150

$200

$250

$300

Dec Q '06 Mar Q '07 Jun Q '07 Sept Q '07

Run-Rate Expenses Redundant Expenses

$257M $251M

Actual Outlook Midpoint

$242M

$194M

Clearing Conversion

• 25% or $63M Reduction

• $0.25 AnnualEPS impact

Page 8: CSFB Conference FINAL · CSFB Conference February 7, 2007. 2 Safe Harbor This document contains forward-looking statements within the meaning of the federal securities laws. We intend

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Growing the BusinessThree Core Segments

• Build out Platform: •Deeper Profiling•Cash Management•Retirement Solutions

• Sales/Branch Network

• New Tools• StrategyDeskTM,

QuoteTracker

• Quality Order Execution

• #3 Player, Fastest, Growing Segment

• Advocacy Position

• Investment in Business• iRebal• Gail Weiss/ICTC/

Custody Assets

Active TraderActive Trader Long-Term InvestorLong-Term Investor RIARIA

Measures of Success: Growth – Retention – Yield

Page 9: CSFB Conference FINAL · CSFB Conference February 7, 2007. 2 Safe Harbor This document contains forward-looking statements within the meaning of the federal securities laws. We intend

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Financial Strengths

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

FY03 FY04 FY05 FY06 FY070%

10%

20%

30%

40%

50%

60%

70%PREPRE--TAX MARGINS %TAX MARGINS %

Sep QSep QAnnualizedAnnualized

$.32

$.64 $.81

$.87 $1

.10

$1.2

8

37%35%30%25%22%12%ROE %

63%60%57%42%29%23%Asset Based Revenue %

Earnings are per diluted share

(2) Excludes Investment gains/losses.. The corresponding GAAP EPS amounts including investment gains/losses are as follows: FY03 EPS = $0.25, FY04 EPS = $0.66, FY05 EPS = $0.82, FY06 EPS = $0.95. See reconciliation of financial measures.

Annualized return on average stockholders’ equity. Fiscal years 2003 thru 2006 are based on net income excluding investment gains/losses. See reconciliation of financial measures.

EARNINGS PER SHAREEARNINGS PER SHARE

(2)Actual Outlook Midpoint

(3)

(3)

(1)

(1)

Page 10: CSFB Conference FINAL · CSFB Conference February 7, 2007. 2 Safe Harbor This document contains forward-looking statements within the meaning of the federal securities laws. We intend

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0

100

200

300

400

500

600

700

800

Strong Capital Management($M)

$364

$$590

$$749

$$77

$497

$67

$286

$455

FY05 FY06 FY07

Actual Outlook Midpoint

NI + D + A

Debt Repayment

Stock Repurchase

(1)

(1) Net Income plus depreciation and amortization plus amortization of acquired intangible assets

Page 11: CSFB Conference FINAL · CSFB Conference February 7, 2007. 2 Safe Harbor This document contains forward-looking statements within the meaning of the federal securities laws. We intend

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• Three Priorities:1. Complete Integration2. Grow the Business3. Capital/Financial Management

• Sep Q 07 Annualized - $1.28

Key Takeaways

Page 12: CSFB Conference FINAL · CSFB Conference February 7, 2007. 2 Safe Harbor This document contains forward-looking statements within the meaning of the federal securities laws. We intend

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Appendix

Page 13: CSFB Conference FINAL · CSFB Conference February 7, 2007. 2 Safe Harbor This document contains forward-looking statements within the meaning of the federal securities laws. We intend

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(1) See attached reconciliation of financial measures. (2) Annualized return on average stockholders' equity.(3) All records referenced exclude a one-time gain realized on the sale of the Company’s investment in Knight Capital Group, Inc. when comparing to the second

fiscal quarter of 2006.

Dec Q ‘06 Record Quarter

Denotes Records(3)

$0.24$0.28$146M$535M$239M 45%$291M 54%34%

• EPS• Non-GAAP EPS (1)

• Net Income• Net Revenues• Pre-Tax Income• EBITDA(1)

• ROE(2)

**

***

*

Page 14: CSFB Conference FINAL · CSFB Conference February 7, 2007. 2 Safe Harbor This document contains forward-looking statements within the meaning of the federal securities laws. We intend

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Operating Metrics - Dec Q ‘06

(1) Net Interest Margin is defined as Net Interest Revenue + MMDA.(2) Qualified accounts include all open client accounts with a total liquidation value greater than or equal to $2,000, except clearing accounts.

238K (Jan. to date 271K)

$28B*3.78%$278B*/$40B*109K 69K

3,255K

• Avg Trades Per Day• Avg Investable Assets• Net Interest Margin(1)

• Client Assets/Cash+MMF • New Accts• Net New Accts• Qualified Accts(2)

Denotes Records*

Page 15: CSFB Conference FINAL · CSFB Conference February 7, 2007. 2 Safe Harbor This document contains forward-looking statements within the meaning of the federal securities laws. We intend

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Integration Progress

• Client Segmentation Strategy:

• Suze Orman

• New Guidance Solutions Team

• New Web Experience

• Investment Tools

• Clearing Conversion

• ‘07 Outlook

• Expense Synergies on Track

• Sep Q Run-Rate on Track

Page 16: CSFB Conference FINAL · CSFB Conference February 7, 2007. 2 Safe Harbor This document contains forward-looking statements within the meaning of the federal securities laws. We intend

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Corporate Matters

• Expanded Share Repurchase Program

• New Board Members

• $6 Dividend - Taxability

Page 17: CSFB Conference FINAL · CSFB Conference February 7, 2007. 2 Safe Harbor This document contains forward-looking statements within the meaning of the federal securities laws. We intend

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Record EPS(1)

Dec Q Highlights

Dec Q ‘06

Sep Q ‘06

0

5

10

15

20

25

21¢

24¢

• Increase of 33K TPD

• Asset-based revenue up $10M due to higher balances

• Other revenue up $8M primarily due to re-org fees

• Total expenses up $7M primarily due to advertising

• Bought back 7.7M shares

(1) All records referenced exclude a one-time gain realized on the sale of the Company’s investment in Knight Capital Group, Inc. when comparing to the secondfiscal quarter of 2006

14%

Page 18: CSFB Conference FINAL · CSFB Conference February 7, 2007. 2 Safe Harbor This document contains forward-looking statements within the meaning of the federal securities laws. We intend

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Dec Q Vs. Guidance

(1) See reconciliation of financial measures(2) Significant one time items include: ($5M) compensation and benefits, ($1M) clearing and execution, partially offset by $2M occupancy and equipment, $1M other

expense.

($ Millions, except where otherwise indicated)

TPDComm

per trade $ Amt. TPDComm

per trade $ Amt. TPDComm

per trade $ Amt.Transaction Based:

Trades per Day 238K 248K (10K)Activity Rate 3.8% 4.0% -0.2%

Transaction Based Revenues $12.92 $192 $13.10 $203 ($0.18) ($11)

Bal $B Rate $ Amt. Bal $B Rate $ Amt. Bal $B Rate $ Amt.Asset Based:Investable Assets/Net Int. Margin $28.0 3.78% $274 $27.3 3.71% $262 $0.7 0.07% $12Money Market and Mutual Fund Fees: $56.5 0.36% $53 $53.6 0.38% $53 $2.9 -0.02% ($0)Asset Based Revenues $84.5 1.49% $326 $80.9 1.51% $315 $3.6 -0.02% $12

Other Revenues $17 $9 $8Net Revenues $535 $527 $8

$ Amt. $ Amt. $ Amt.Expenses, excluding Advertising $257 $258 ($1)Advertising $39 $39 $0Total Expenses $296 $297 ($1)

Variance toOutlook Midpoint

ActualDec Q '06

Outlook MidpointDec Q '06

(1) (2)

Page 19: CSFB Conference FINAL · CSFB Conference February 7, 2007. 2 Safe Harbor This document contains forward-looking statements within the meaning of the federal securities laws. We intend

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FY ‘07 $1.10 Midpoint Reaffirmed

$1.10

$1.28

$1.10

$1.00

$1.05

$1.10

$1.15

$1.20

$1.25

$1.30

Oct OutlookMidpoint

Dec Outlook Midpoint

Sep Q '07 Annualized

$0.02$0.02$0.01 $0.01

Dec Q Act Clearing Conversion Repurchase

/OtherInterest Expense

Page 20: CSFB Conference FINAL · CSFB Conference February 7, 2007. 2 Safe Harbor This document contains forward-looking statements within the meaning of the federal securities laws. We intend

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200

400

600

$146M

$499M

$21M $31M$6M

Net Income

Dep & Amor. Regulatory Cap/Cap Ex/Other

Mandatory Debt

Payments

$130M

Stock Repurchase

$499M

Liquid Assets(1)

Sep Q '06Liquid Assets(1)

Dec Q '06

Strong Cash Generator

(1) See reconciliation of financial measures.

Financial Flexibility

Page 21: CSFB Conference FINAL · CSFB Conference February 7, 2007. 2 Safe Harbor This document contains forward-looking statements within the meaning of the federal securities laws. We intend

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Reconciliation of Financial Measures

Page 22: CSFB Conference FINAL · CSFB Conference February 7, 2007. 2 Safe Harbor This document contains forward-looking statements within the meaning of the federal securities laws. We intend

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Reconciliation of Financial Measures

Sept. 29, 2006 Sept. 30, 2005 Sept. 24, 2004 Sept. 26, 2003

Pre-tax income, as reported 857,305$ 553,492$ 459,087$ 180,689$ Adjustments:

Gain on disposal of investments (81,422) - - - Fair value adjustments of investment-related derivative instruments 11,703 (8,315) (17,930) 46,668

Pre-tax income excluding investment gains/losses 787,586$ 545,177$ 441,157$ 227,357$

Net income, as reported 526,759$ 339,753$ 282,818$ 108,641$ Adjustments:

Gain on disposal of investments (81,422) - - - Fair value adjustments of investment-related derivative instruments 11,703 (8,315) (17,930) 46,668 Income tax effect of above adjustments 26,145 3,345 7,459 (18,667)

Net income excluding investment gains/losses 483,185$ 334,783$ 272,347$ 136,642$

Diluted earnings per share, as reported 0.95$ 0.82$ 0.66$ 0.25$ Adjustments on a per share basis, net of income tax effect:

Gain on disposal of investments (0.09) - - - Fair value adjustments of investment-related derivative instruments 0.01 (0.01) (0.02) 0.07

EPS excluding investment gains/losses 0.87$ 0.81$ 0.64$ 0.32$

TD AMERITRADE HOLDING CORPORATIONRECONCILIATION OF FINANCIAL MEASURES

In thousands, except percentages and per share amounts(Unaudited)

Fiscal Year Ended

Pre-tax Income Excluding Investment Gains/Losses (1)

Net Income Excluding Investment Gains/Losses (1)

EPS Excluding Investment Gains/Losses (1)

Page 23: CSFB Conference FINAL · CSFB Conference February 7, 2007. 2 Safe Harbor This document contains forward-looking statements within the meaning of the federal securities laws. We intend

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Reconciliation of Financial Measures

Dec. 31, 2006 Sept. 29, 2006 Dec. 31, 2005

Net income, as reported 145,633$ 128,110$ 85,997$ Adjustments:

Amortization of acquired intangible assets 13,824 13,823 3,509 Interest on borrowings 31,117 33,630 648 Gain on sale of investments (614) (2,582) - Fair value adjustments of investment-related derivative instruments - - 11,703 Income tax effect of above adjustments (16,968) (17,172) (6,106)

Non-GAAP net income 172,992$ 155,809$ 95,751$

Diluted earnings per share, as reported 0.24$ 0.21$ 0.21$ Adjustments on a per share basis, net of income tax effect:

Amortization of acquired intangible assets 0.01 0.01 0.01 Interest on borrowings 0.03 0.04 - Gain on sale of investments - (0.01) - Fair value adjustments of investment-related derivative instruments - - 0.01

Non-GAAP earnings per share 0.28$ 0.25$ 0.23$

Quarter Ended

Non-GAAP EPS (2)

Non-GAAP Net Income (2)

Page 24: CSFB Conference FINAL · CSFB Conference February 7, 2007. 2 Safe Harbor This document contains forward-looking statements within the meaning of the federal securities laws. We intend

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Reconciliation of Financial Measures$ % of Rev. $ % of Rev. $ % of Rev.

EBITDA excluding investment gains 290,729$ 54.3% 252,951$ 51.8% 147,940$ 53.4%Plus: Gain on sale of investments 614 0.1% 2,582 0.5% - 0.0%EBITDA 291,343 54.4% 255,533 52.3% 147,940 53.4%Less:

Depreciation and amortization (7,031) (1.3%) (6,364) (1.3%) (3,483) (1.3%)Amortization of acquired intangible assets (13,824) (2.6%) (13,823) (2.8%) (3,509) (1.3%)Interest on borrowings (31,117) (5.8%) (33,630) (6.9%) (648) (0.2%)

Pre-tax income 239,371$ 44.7% 201,716$ 41.3% 140,300$ 50.6%

Quarter EndedDec. 31, 2006 Mar. 30, 2007 June 29, 2007 Sept. 28, 2007

Expenses Excluding Advertising (4)Expenses excluding advertising 257,143$ 251,400$ 242,100$ 193,500$ Plus: Advertising 39,276 42,600 33,000 31,400Total expenses 296,419$ 294,000$ 275,100$ 224,900$

Dec. 31, Sept. 29,2006 2006

Liquid assets 498,764$ 499,385$ Plus: Broker-dealer cash and cash equivalents 350,070 263,054 Less:

Non broker-dealer short-term investments (38,725) (65,275) Excess broker-dealer regulatory net capital (369,524) (333,514)

Cash and cash equivalents 440,585$ 363,650$

Quarter Ended

EBITDA and EBITDA Excluding Investment Gains (3)

Liquid Assets (5)

Outlook Midpoint - Quarters Ending*

As of

Dec. 31, 2006 Sept. 29, 2006 Dec. 31, 2005

Page 25: CSFB Conference FINAL · CSFB Conference February 7, 2007. 2 Safe Harbor This document contains forward-looking statements within the meaning of the federal securities laws. We intend

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Reconciliation of Financial MeasuresNote: The term "GAAP" in the following explanations refers to generally accepted accounting principles in the United States.

*

(1)

(2)

(3)

(4)

(5)

Non-GAAP net income and Non-GAAP earnings per share (EPS) are Non-GAAP financial measures as defined by SEC Regulation G. We define Non-GAAP net income as net income, adjusted to remove the after-tax effect of amortization of acquired intangible assets, interest on borrowings, fair value adjustments of investment-related derivative instruments and any unusual gains or charges. We consider Non-GAAP net income and Non-GAAP EPS important measures 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. Amortization of acquired intangible assets and fair value adjustments of investment-related derivative instruments are excluded because they are non-cash expenses that do not require further cash investment. Interest on borrowings is excluded because we use these measures as an indicator of the earnings available to service debt. Unusual gains and charges are excluded because we believe they are not likely to be indicative of the ongoing operations of our business. Non-GAAP net income and EPS should be considered in addition to, rather than as a substitute for, GAAP net income and EPS.

Pre-tax income, net income and earnings per share (EPS) excluding investment gains/losses are Non-GAAP financial measures as defined by SEC Regulation G. We define pre-tax income and net income excluding investment gains/losses as pre-tax income and net income, respectively, adjusted to remove the pre-tax and after-tax effect, respectively, of non-brokerage investment-related gains and losses. We consider pre-tax income, net income and EPS excluding investment gains/losses important measures of our financial performance. Gains/losses on investments and investment-related derivatives are excluded because we believe they are not likely to be indicative of the ongoing operations of our business. Pre-tax income, net income and EPS excluding investment gains/losses should be considered in addition to, rather than as a substitute for, GAAP pre-tax income, net income and EPS.

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) non broker-dealer short-term investments and c) regulatory net capital of (i) our clearing broker-dealer subsidiaries in excess of 5% of aggregate debit items and (ii) our introducing broker-dealer subsidiary in excess of 8 1/3% of aggregate indebtedness. 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 as a supplemental measure of liquidity, rather than as a substitute for cash and cash equivalents.

Outlook Midpoint is from the January 16, 2007 Outlook Statement.

Expenses excluding advertising is considered a Non-GAAP financial measure as defined by SEC Regulation G. Expenses excluding advertising consists of total expenses, adjusted to remove advertising expense. We consider expenses excluding advertising 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 generally relates to the acquisition of future revenues through new accounts rather than current revenues from existing accounts. Expenses excluding advertising should be considered in addition to, rather than as a substitute for, total expenses.

EBITDA (earnings before interest, taxes, depreciation and amortization) and EBITDA excluding investment gains are considered Non-GAAP financial measures as defined by SEC Regulation G. We consider EBITDA and EBITDA excluding investment gains important measures 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 our senior credit facilities. EBITDA eliminates the non-cash effect of tangible asset depreciation and amortization and intangible asset amortization. EBITDA excluding investment gains also eliminates the effect of unusual gains that are not likely to be indicative of the ongoing operations of our business. EBITDA and EBITDA excluding investment gains should be considered in addition to, rather than as a substitute for, pre-tax income, net income and cash flows from operating activities.

Page 26: CSFB Conference FINAL · CSFB Conference February 7, 2007. 2 Safe Harbor This document contains forward-looking statements within the meaning of the federal securities laws. We intend

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TD AMERITRADE, Inc., member NASD/SIPC. TD AMERITRADE is a trademark jointly owned by TD AMERITRADE IP Company, Inc. and The Toronto-Dominion Bank. © 2007 TD AMERITRADE IP Company, Inc. All rights reserved. Used with permission.

CSFB Conference

February 7, 2007