TD AMERITRADE Achieves Fifth Record Year

TD AMERITRADE Holding Corporation (NASDAQ:AMTD) has released results for fiscal 2007, a record year that included the largest client account integration in the Company’s history and the launch of the next phase of its asset gathering strategy. 2007 Fiscal Year Highlights(2) Record earnings of $1.06 per diluted share Record net income of $646 million Record pre-tax income of $1.0 billion, or 48 percent of net revenues Record EBITDA of $1.2 billion, or 57 percent Record net revenues of $2.2 billion Return on average equity of 34 percent Average client trades per day of approximately 253,000 554,000 new accounts, up 30 percent from fiscal 2006, at an average cost per account of $263 "In 2007 we successfully completed the largest client integration in the history of our industry and continued the implementation of our client segmentation strategy. Over 80 percent of our revenue growth this year was asset-based, and we plan to take that momentum into 2008,” said Joe Moglia, chief executive officer. September Quarter Highlights(2) Record earnings of $0.33 per diluted share, up 65 percent year over year Record net income of $200 million Record pre-tax income of $311 million, or 54 percent of net revenues Record EBITDA of $359 million, or 62 percent Record net revenues of $575 million Record average client trades per day of approximately 278,000 Record client assets of approximately $302.7 billion, including $44.5 billion of client cash and money market funds Liquid assets of $593 million; cash and cash equivalents of $414 million 127,000 new accounts at an average cost per account of $241; 6,380,000 Total Accounts; 3,272,000 Qualified Accounts(3) Average client margin balances of approximately $7.8 billion. On Sept. 30, 2007, client margin balances were approximately $7.7 billion. "Market volatility led to increased client activity, including our largest trading day ever with 505,000 trades,” Moglia continued. "While this certainly helped fuel our record results for the quarter, we were still able to earn approximately 60 percent of our net revenues from asset-based sources and achieve 54 percent pre-tax margins.” Fiscal 2008 Outlook The Company has also released its guidance for fiscal 2008 and expects to earn between $1.15 and $1.39 per share, with a midpoint of $1.27. More information is available through the Company’s revised "Outlook Statement,” located in the "Investor” section of its corporate Web site at www.amtd.com. Stock Buy-back Program Since the stock buyback program was initiated, through Sept. 30, 2007, the Company has invested approximately $325 million in repurchasing 19 million of the 32 million shares authorized for the program at a weighted average price of $17.10 per share. Other Corporate Matters The Company has named Dave Kelley as its chief information officer. Kelley served in a number of technology leadership roles with Merrill Lynch before joining TD AMERITRADE in 2006. Company Hosts Conference Call TD AMERITRADE will host its September Quarter conference call this morning, Oct. 23, 2007, at 7:30 a.m. CT. Participants may listen to the call by dialing 800-819-9193 or 913-981-4911 for international participants. The Company will Webcast the call live at www.amtd.com. As the Company will be discussing a number of financial metrics, participants are encouraged to download the slides associated with the presentation from the Web site before the start of the call. A podcast and an archived version of the presentation, including the materials discussed, will be available following the call. AMTD-E About TD AMERITRADE Holding Corporation TD AMERITRADE Holding Corporation, through its brokerage subsidiaries(4) provides a dynamic balance of investment products and services that further the Independent Spirit of individual investors. Listed by Barron’s as the #1 Web browser-based online broker and Forbes as one of America's best big companies, the Company’s full spectrum of services include a leading active trader program and long-term investor solutions, including a national branch system, as well as relationships with one of the largest networks of independent registered investment advisors.(5) The Company’s common stock trades under the ticker symbol AMTD. For more information, please visit www.amtd.com. 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 statements regarding financial guidance and future operations are forward-looking statements. These statements reflect only our current expectations or plans and are not guarantees of future performance, results or operations. 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, regulatory and legal matters and uncertainties and other risk factors described in our latest Quarterly Report on Form 10-Q and our latest Annual Report on Form 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) The 65 percent increase is EPS is based on EPS excluding investment gains/losses. The corresponding GAAP increase in EPS is 57 percent. See the attached reconciliation of non-GAAP financial measures. (2) See attached reconciliation of non-GAAP financial measures. (3) Total accounts include all open client accounts (funded and unfunded), except clearing accounts. Qualified accounts include all open client accounts with a total liquidation value greater than or equal to $2,000, except clearing accounts. See Glossary of Terms on the Company’s web site at www.amtd.com for additional information. (4) TD AMERITRADE, Inc., member FINRA (www.finra.org) /SIPC (www.SIPC.org), receives clearing and custodial services from TD AMERITRADE Clearing, Inc., member FINRA/SIPC. TD AMERITRADE and TD AMERITRADE Clearing, Inc. are subsidiaries of TD AMERITRADE Holding Corporation. (5) "The Best Web Browser-Based Online Broker” by Barron's, 3/5/2007 based on Trade Experience, Trading Technology, Usability, Range of Offerings, Research Amenities, Portfolio Analysis & Reports, Customer Service & Access, and Costs. Barron's is a registered trademark of Dow Jones, L.P. More info on the Forbes award is available at www.forbes.com/platinum. TD AMERITRADE HOLDING CORPORATION CONSOLIDATED STATEMENTS OF INCOME In thousands, except per share amounts (Unaudited)           Quarter Ended Fiscal Year Ended Sept. 30, 2007 June 30, 2007 Sept. 29, 2006 Sept. 30, 2007 Sept. 29, 2006 Revenues: Transaction-based revenues: Commissions and transaction fees $ 225,803 $ 199,096 $ 164,724 $ 813,786 $ 738,380   Asset-based revenues: Interest revenue 260,713 259,254 302,620 1,013,600 1,031,971 Brokerage interest expense   (117,108 )   (120,352 )   (106,838 )   (455,467 )   (335,820 ) Net interest revenue 143,605 138,902 195,782 558,133 696,151   Money market deposit account fees 135,680 134,646 70,664 535,381 185,014 Investment product fees   62,375     60,650     50,377     232,177     140,699   Total asset-based revenues 341,660 334,198 316,823 1,325,691 1,021,864   Other revenues   7,738     8,513     7,154     37,469     43,287     Net revenues   575,201     541,807     488,701     2,176,946     1,803,531     Expenses: Employee compensation and benefits 108,395 114,681 103,050 429,820 350,079 Fair value adjustments of compensation-related derivative instruments (1,442 ) (1,274 ) (2,963 ) (3,193 ) (1,715 ) Clearing and execution costs 13,166 23,620 22,290 79,681 73,049 Communications 17,680 17,738 18,923 82,173 65,445 Occupancy and equipment costs 19,674 22,247 20,181 84,294 74,638 Depreciation and amortization 7,006 6,068 6,364 26,237 21,199 Amortization of acquired intangible assets 13,625 13,574 13,823 54,469 42,286 Professional services 20,014 17,247 22,079 83,995 87,521 Interest on borrowings 27,396 29,627 33,630 118,173 93,988 Other 8,222 10,717 17,502 46,809 45,383 Advertising 30,558 33,031 34,688 145,666 164,072 Fair value adjustments of investment-related derivative instruments   -       -       -       -       11,703   Total expenses   264,294     287,276     289,567     1,148,124     1,027,648     Income before other income and income taxes 310,907 254,531 199,134 1,028,822 775,883   Other income: Gain on sale of investments   165     -       2,582     5,881     81,422     Pre-tax income 311,072 254,531 201,716 1,034,703 857,305   Provision for income taxes   110,641     95,833     73,606     388,803     330,546   Net income $ 200,431   $ 158,698   $ 128,110   $ 645,900   $ 526,759     Basic earnings per share $ 0.34 $ 0.27 $ 0.21 $ 1.08 $ 0.97 Diluted earnings per share $ 0.33 $ 0.26 $ 0.21 $ 1.06 $ 0.95   Weighted average shares outstanding - basic 595,516 596,575 609,995 598,503 544,307 Weighted average shares outstanding - diluted 605,283 606,131 619,757 608,263 555,465   Note: Certain revenue reclassifications have been made to prior periods to conform to the current presentation. TD AMERITRADE HOLDING CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS In thousands (Unaudited)     Sept. 30, 2007 Sept. 29, 2006 Assets: Cash and cash equivalents $ 413,787 $ 363,650 Short-term investments 76,800 65,275 Segregated cash and investments -   1,561,910 Broker/dealer receivables 6,811,876 4,566,525 Client receivables 7,740,579 6,970,834 Goodwill and intangible assets 2,771,297 2,788,617 Other   339,094   241,658 Total assets $ 18,153,433 $ 16,558,469   Liabilities and stockholders' equity: Liabilities: Broker/dealer payables $ 8,448,094 $ 7,022,601 Client payables 5,313,576 5,412,981 Long-term debt 1,478,375 1,703,375 Other   758,467   689,278 Total liabilities 15,998,512 14,828,235   Stockholders' equity   2,154,921   1,730,234   Total liabilities and stockholders' equity $ 18,153,433 $ 16,558,469 TD AMERITRADE HOLDING CORPORATION SELECTED OPERATING DATA           Quarter Ended Fiscal Year Ended Sept. 30, 2007 June 30, 2007 Sept. 29, 2006 Sept. 30, 2007 Sept. 29, 2006   Trading Activity Metrics: Total trades (in millions) 17.4 15.4 12.8 63.1 54.2 Average commissions and transaction fees per trade $ 13.00 $ 12.91 $ 12.89 $ 12.90 $ 13.61 Average client trades per day 277,852 244,823 204,480 253,440 216,970 Average client trades per account (annualized) 10.9 9.7 8.3 10.0 10.1 Activity rate 4.4 % 3.9 % 3.3 % 4.0 % 4.0 % Trading days 62.5 63.0 62.5 249.0 250.0   Net Interest Margin: Average interest-earning assets (in billions) $ 14.8 $ 15.4 $ 18.6 $ 14.6 $ 17.5 Average money market deposit account balances (in billions)   15.2     15.3       8.1     14.9     5.7   Average investable assets (in billions) $ 30.0   $ 30.7   $ 26.7   $ 29.5   $ 23.2     Net interest revenue (in millions) $ 143.6 $ 138.9 $ 195.8 $ 558.1 $ 696.2 Money market deposit account fee revenue (in millions)   135.7     134.6     70.7     535.4     185.0   Net revenue earned on investable assets (in millions) $ 279.3   $ 273.5   $ 266.5   $ 1,093.5   $ 881.2     Net interest margin (NIM) 3.64 % 3.53 % 3.95 % 3.65 % 3.74 %   Net Interest Revenue: Segregated cash: Average balance (in billions) $ 0.3 $ 0.7 $ 6.8 $ 0.6 $ 7.2 Average annualized yield   5.10 %   5.08 %   5.16 %   5.14 %   4.44 % Interest revenue (in millions) $ 4.3   $ 8.8   $ 88.6   $ 31.2   $ 324.9     Client margin balances: Average balance (in billions) $ 7.8 $ 7.4 $ 7.2 $ 7.5 $ 6.4 Average annualized yield   8.09 %   8.04 %   8.14 %   8.07 %   7.74 % Interest revenue (in millions) $ 160.6   $ 151.2   $ 148.8   $ 615.3   $ 500.8     Securities borrowing: Average balance (in billions) $ 6.2 $ 6.8 $ 3.9 $ 6.0 $ 3.4 Average annualized yield   5.54 %   5.39 %   5.67 %   5.58 %   5.15 % Interest revenue (in millions) $ 88.5   $ 92.7   $ 55.8   $ 340.4   $ 178.9     Other free cash and short-term investments Average balance (in billions) $ 0.5 $ 0.5 $ 0.7 $ 0.5 $ 0.5 Average annualized yield   5.47 %   4.91 %   5.46 %   5.15 %   5.26 % Interest revenue - net (in millions) $ 6.4   $ 6.2   $ 8.9   $ 24.6   $ 25.3     Client credit balances: Average balance (in billions) $ 3.5 $ 3.5 $ 9.6 $ 3.5 $ 9.8 Average annualized cost   1.54 %   1.52 %   1.12 %   1.53 %   1.00 % Interest expense (in millions)   ($13.8 )   ($13.5 )   ($27.0 )   ($53.9 )   ($98.9 )   Securities lending: Average balance (in billions) $ 8.9 $ 9.2 $ 6.6 $ 8.4 $ 5.7 Average annualized cost   4.50 %   4.60 %   4.74 %   4.66 %   4.05 % Interest expense (in millions)   ($102.4 )   ($106.5 )   ($79.3 )   ($399.5 )   ($234.8 )   Net interest revenue - total (in millions) $ 143.6   $ 138.9   $ 195.8   $ 558.1     $ 696.2     Other Asset-Based Revenue Metrics: Money market deposit account fees: Average balance (in billions) $ 15.2 $ 15.3 $ 8.1 $ 14.9 $ 5.7 Average annualized yield 3.50 % 3.49 % 3.45 % 3.53 % 3.19 % Fee revenue (in millions) $ 135.7 $ 134.6 $ 70.7 $ 535.4 $ 185.0   Investment product fees: Average balance (in billions) $ 54.7 $ 51.0 $ 41.3 $ 49.7 $ 29.4 Average annualized yield 0.45 % 0.47 % 0.48 % 0.46 % 0.47 % Fee revenue (in millions) $ 62.4 $ 60.7 $ 50.4 $ 232.2 $ 140.7     Client Account and Client Asset Metrics: Qualified accounts (beginning of period) 3,276,000 3,262,000 3,260,000 3,242,000 1,735,000 Qualified accounts (end of period) 3,272,000 3,276,000 3,242,000 3,272,000 3,242,000 Percentage increase (decrease) during period (0 %) 0 % (1 %) 1 % 87 %   Total accounts (beginning of period) 6,321,000 6,230,000 6,139,000 6,191,000 3,717,000 Total accounts (end of period) 6,380,000 6,321,000 6,191,000 6,380,000 6,191,000 Percentage increase (decrease) during period 1 % 1 % 1 % 3 % 67 %   Client assets (beginning of period, in billions) $ 297.2 $ 282.2 $ 255.3 $ 261.7 $ 83.3 Client assets (end of period, in billions) $ 302.7 $ 297.2 $ 261.7 $ 302.7 $ 261.7 Percentage increase (decrease) during period 2 % 5 % 3 % 16 % 214 %   NOTE: See Glossary of Terms on the Company's web site at www.amtd.com for definitions of the above metrics. TD AMERITRADE HOLDING CORPORATION RECONCILIATION OF FINANCIAL MEASURES In thousands, except percentages and per share amounts (Unaudited)             Quarter Ended Fiscal Year Ended Sept. 30, 2007 June 30, 2007 Sept. 29, 2006 Sept. 30, 2007   Sept. 29, 2006 Net Income Excluding Investment Gains/Losses (1) Net income, as reported $ 200,431 $ 158,698 $ 128,110 $ 645,900 $ 526,759 Adjustments: Gain on sale of investments (165 ) -   (2,582 ) (5,881 ) (81,422 ) Fair value adjustments of investment-related derivative instruments -   -   -   -   11,703 Income tax effect of above adjustments   61     -     968     2,176     26,145   Net income excluding investment gains/losses $ 200,327   $ 158,698 $ 126,496   $ 642,195   $ 483,185     EPS Excluding Investment Gains/Losses (1) Diluted earnings per share, as reported $ 0.33 $ 0.26 $ 0.21 $ 1.06 $ 0.95 Adjustments on a per share basis, net of income tax effect: Gain on sale of investments -   -   (0.01 ) -   (0.09 ) Fair value adjustments of investment-related derivative instruments   -       -     -       -       0.01   EPS excluding investment gains/losses $ 0.33   $ 0.26 $ 0.20   $ 1.06   $ 0.87       Quarter Ended   Fiscal Year Ended Sept. 30, 2007   June 30, 2007   Sept. 29, 2006 Sept. 30, 2007   Sept. 29, 2006 $   % of Rev. $   % of Rev.   $   % of Rev. $   % of Rev. $   % of Rev. EBITDA and EBITDA Excluding Investment Gains (2) EBITDA excluding investment gains $ 358,934 62.4 % $ 303,800 56.1 % $ 252,951 51.8 % $ 1,227,701 56.4 % $ 933,356 51.8 % Plus: Gain on sale of investments   165   0.0 %   -   -   2,582   0.5 %   5,881   0.3 %   81,422   4.5 % EBITDA 359,099 62.4 % 303,800 56.1 % 255,533 52.3 % 1,233,582 56.7 % 1,014,778 56.3 % Less: Depreciation and amortization (7,006 ) (1.2 %) (6,068 ) (1.1 %) (6,364 ) (1.3 %) (26,237 ) (1.2 %) (21,199 ) (1.2 %) Amortization of acquired intangible assets (13,625 ) (2.4 %) (13,574 ) (2.5 %) (13,823 ) (2.8 %) (54,469 ) (2.5 %) (42,286 ) (2.3 %) Interest on borrowings   (27,396 ) (4.8 %)   (29,627 ) (5.5 %)   (33,630 ) (6.9 %)   (118,173 ) (5.4 %)   (93,988 ) (5.2 %) Pre-tax income $ 311,072   54.1 % $ 254,531   47.0 % $ 201,716   41.3 % $ 1,034,703   47.5 % $ 857,305   47.5 %     As of Sept. 30,   June 30,   Mar. 31,   Dec. 31,   Sept. 29, 2007 2007 2007 2006 2006 Liquid Assets (3) Liquid assets $ 592,770 $ 430,693 $ 543,211 $ 498,764 $ 499,385 Plus: Broker-dealer cash and cash equivalents 183,103 235,670 506,400 350,070 263,054 Less: Non broker-dealer short-term investments (76,800 ) (50,000 ) (37,600 ) (38,725 ) (65,275 ) Excess broker-dealer regulatory net capital   (285,286 )   (320,512 )   (464,241 )   (369,524 )   (333,514 ) Cash and cash equivalents $ 413,787   $ 295,851   $ 547,770   $ 440,585   $ 363,650     Note: The term "GAAP" in the following explanations refers to generally accepted accounting principles in the United States. (1) Net income and earnings per share (EPS) excluding investment gains/losses are Non-GAAP financial measures as defined by SEC Regulation G. We define net income excluding investment gains/losses as net income adjusted to remove the after-tax effect of non-brokerage investment-related gains/losses. We consider net income and EPS excluding investment gains/losses important measures of our financial performance. Gains/losses on non-brokerage investments and investment-related derivatives are excluded because we believe they are not likely to be indicative of the ongoing operations of our business. Net income and EPS excluding investment gains/losses should be considered in addition to, rather than as a substitute for, GAAP net income and EPS. (2) 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 non-brokerage investment-related gains and losses 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. (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) 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.