TD AMERITRADE EPS Up 35 Percent
* Reuters is not responsible for the content in this press release.
Strong Balance Sheet, Client Engagement and Asset Gathering
Traction Drive Results
Fiscal 2008 Outlook Reaffirmed
Net New Assets Up 156 Percent
OMAHA, Neb.--(Business Wire)--
In a market environment where some of the major market indices
have fallen six percent or more in the last 12 months, TD AMERITRADE
Holding Corporation (NASDAQ: AMTD) continues to deliver solid
financial results. The Company today announced the results of its
second fiscal quarter, which closed Mar. 31, 2008 and includes
earnings per diluted share of $0.31, up 35 percent over the same
period a year ago.
The Company measures growth in the following ways:
Growth Indicators (year-over-year comparisons): (1)
-- Spread-based asset balances of approximately $31 billion, an
increase of seven percent
-- Record fee-based balances of approximately $71 billion, an
increase of 47 percent
-- Average client trades per day of approximately 312,000, an
increase of 23 percent
-- Net new assets of approximately $7 billion, an increase of 156
percent, and $16 billion fiscal year-to-date
"We are pleased to see continued client engagement and traction in
client asset growth, given the difficult market environment," said Joe
Moglia, chief executive officer. "The investments we have made over
the last year are enhancing our asset gathering capabilities and
producing results. We're helping more of our clients become
diversified and disciplined with the tools, guidance and service they
need to make educated investment decisions in these markets."
Financial Indicators:(1)
-- Net revenues of $623 million, 60 percent of which were
asset-based
-- Pre-tax income of $300 million, or 48 percent of net revenues
-- Net income of $187 million, or $0.31 per diluted share
-- EBITDA of $344 million, or 55 percent(2)
-- Annualized return on average stockholders' equity of 30
percent for the quarter
-- Client assets of approximately $306 billion, including $50
billion in client cash and money market funds
"We continue to deliver solid growth and profitability, evidenced
by the strength we've demonstrated in each of our key financial
performance areas," said Bill Gerber, chief financial officer. "Our
balance sheet and cash generation abilities position us well for this
type of environment. Continued conservative fiscal management and
prudent internal investment decisions will help our growth continue in
the second half of 2008."
Guidance Reaffirmed
The Company is reaffirming its 2008 Outlook with an earnings per
share midpoint forecast of $1.32. More information is available via
the Company's Outlook Statement, which is posted on www.amtd.com.
Business Highlights
TD AMERITRADE clients continue to ask for more objective guidance
and easy-to-use investment tools to help them navigate complex,
dynamic markets. Following are just a few of the Company's latest
additions:
For Retail Clients:
-- Bond Ladder - a complement to the Company's Bond Wizard tool.
As more investors turn to fixed income instruments to
diversify their portfolios and mitigate risk during volatile
market conditions, a bond ladder, containing an assortment of
bonds that mature at regular intervals, can help provide
protection against interest rate changes and potentially help
provide a reliable income stream. Clients can build their own
ladder by searching for and selecting individual bonds and CDs
using Bond Wizard, or they can select from a list of
pre-packaged ladders.(3)
-- The "Easy IRA" - a three-step process that combines the
personalized analysis of WealthRulerTM with the objective
guidance of third-party research to help investors open a
maintenance fee-free IRA account in 15 minutes or less.
-- The "Seminar Series" - a free educational opportunity for
investors and traders of all experience levels to gain
professional insight and develop investment strategies has
expanded its line-up from 50 to 200 stops across the United
States this year. The next events are scheduled for Monday,
April 21, 2008, in San Diego, CA, and Troy, MI.
For Institutional Clients:
-- TD AMERITRADE Institutional became one of the first custodians
to formally commit to supporting the RIA industry, helping to
publicize the fiduciary standard to which advisors are held.
-- iRebal - Advisor rebalancing software provided by TD
AMERITRADE, has a new tiered pricing structure that makes
sophisticated across-account rebalancing even more accessible
for high-end RIAs and their clients.(4)
-- FundQuest - a new alliance that expands TD AMERITRADE's
managed account offering, enabling advisors to develop
client-specific recommendations for individual investors.
In addition, Tom Bradley, president of TD AMERITRADE
Institutional, was named "Visionary of the Year" by Texas Tech
University for his work in support of publicizing the fiduciary duty
of RIAs to act in the best interest of their clients, as compared to
broker obligations, and the continued need for disclosure of conflicts
of interest.
Company Hosts Conference Call
TD AMERITRADE will host its March Quarter conference call this
morning, Apr. 17, 2008, at 7:30 a.m. CT. Participants may listen to
the call by dialing 877-397-0298. The Company will Webcast the call at
www.amtd.com, and a replay of the call will be available by dialing
888-203-1112 and the passcode, 5743466. A podcast and an archived
version of the presentation, including the materials discussed, will
also be available following the call at www.amtd.com.
AMTD-E
About TD AMERITRADE Holding Corporation
TD AMERITRADE Holding Corporation, through its brokerage
subsidiaries,(5) provides a dynamic balance of investment products and
services that make it the investment firm of choice for millions of
retail investor and independent registered investment advisor (RIA)
clients. Listed by Forbes as one of America's best big companies, the
Company offers a full spectrum of investment services, including a
leading active trader program, intuitive long-term investment
solutions and a national branch system, as well as relationships with
one of the largest independent RIA networks.(6) 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 projections
regarding our future revenues, expenses, earnings, capital
expenditures, effective tax rates, client trading activity, accounts
or stock price, 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, 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 Nov. 26, 2007 and the
latest Quarterly Report on Form 10-Q, filed with the SEC on Feb. 8,
2008. 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) Results include assets acquired through the Company's purchase
of a portion of Fiserv, Inc.'s investment support services business on
Feb. 4, 2008, which added approximately $25 billion in total client
assets, $1.2 billion of which were spread-based assets and $17.2
billion of which were fee-based investment balances. Spread-based
asset balances include revenues earned from client margin balances,
segregated cash, the TD Bank USA, N.A. Money Market Deposit Account
(FDIC-Insured) balances, deposits paid on securities borrowing and
other free cash and short-term investment balances. Fee-based assets
include revenues earned from money market funds, mutual funds,
Amerivest and AdvisorDirect. Net new assets consists of total client
asset inflows, less total client asset outflows. Client asset inflows
include interest and dividend payments and exclude changes in client
assets due to market fluctuations. Net new assets are measured based
on the market value of the assets as of the date of the inflows and
outflows.
(2) See attached reconciliation of non-GAAP financial measures.
(3) Investments in fixed income products are subject to liquidity
(or market) risk, interest rate risk (bonds ordinarily decline in
price when interest rates rise and rise in price when interest rates
fall), financial (or credit) risk, inflation (or purchasing power)
risk and special tax liabilities.
(4) iRebal products and services are property of ThinkTech, Inc.,
an affiliate of TD AMERITRADE, Inc.
(5) 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 Bank USA, N.A. and TD
AMERITRADE are affiliated through their parent companies. Amerivest is
an investment advisory service of Amerivest Investment Management,
LLC, an SEC registered investment advisor. TD AMERITRADE, Inc., TD
AMERITRADE Clearing, Inc. and Amerivest Investment Management, LLC are
subsidiaries of TD AMERITRADE Holding Corporation. AdvisorDirect
connects a prospective client with an independent financial advisor.
(6) More info on the Forbes award is available at
www.forbes.com/platinum.
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TD AMERITRADE HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
In thousands, except per share amounts
(Unaudited)
Quarter Ended
-------------------------------
Mar. 31, Dec. 31, Mar. 31,
2008 2007 2007
--------- ---------- ----------
Revenues:
Transaction-based revenues:
Commissions and transaction fees $244,887 $ 260,269 $ 195,257
Asset-based revenues:
Interest revenue 210,833 250,210 250,783
Brokerage interest expense (72,956) (101,119) (113,720)
--------- ---------- ----------
Net interest revenue 137,877 149,091 137,063
Money market deposit account fees 156,085 155,840 129,774
Investment product fees 77,685 68,005 55,825
--------- ---------- ----------
Total asset-based revenues 371,647 372,936 322,662
Other revenues 6,353 8,411 6,843
--------- ---------- ----------
Net revenues 622,887 641,616 524,762
--------- ---------- ----------
Expenses:
Employee compensation and benefits 132,113 106,015 108,615
Fair value adjustments of
compensation-related derivative
instruments - 764 136
Clearing and execution costs 9,372 12,066 22,058
Communications 17,429 17,524 24,686
Occupancy and equipment costs 25,220 25,008 17,521
Depreciation and amortization 8,887 7,695 6,132
Amortization of acquired intangible
assets 14,749 13,723 13,446
Professional services 28,580 19,282 21,642
Interest on borrowings 20,604 25,726 30,033
Other 18,669 12,370 13,065
Advertising 47,310 45,456 42,800
--------- ---------- ----------
Total expenses 322,933 285,629 300,134
--------- ---------- ----------
Income before other income and income
taxes 299,954 355,987 224,628
Other income:
Gain on sale of investments - 644 5,102
--------- ---------- ----------
Pre-tax income 299,954 356,631 229,730
Provision for income taxes 113,238 115,792 88,591
--------- ---------- ----------
Net income $186,716 $ 240,839 $ 141,139
========= ========== ==========
Basic earnings per share $ 0.31 $ 0.40 $ 0.24
Diluted earnings per share $ 0.31 $ 0.40 $ 0.23
Weighted average shares outstanding -
basic 594,339 594,915 598,828
Weighted average shares outstanding -
diluted 603,470 604,388 608,743
Six Months Ended
-----------------------
Mar. 31, Mar. 31,
2008 2007
----------- -----------
Revenues:
Transaction-based revenues:
Commissions and transaction fees $ 505,156 $ 388,887
Asset-based revenues:
Interest revenue 461,043 493,632
Brokerage interest expense (174,075) (218,006)
----------- -----------
Net interest revenue 286,968 275,626
Money market deposit account fees 311,925 265,055
Investment product fees 145,690 109,152
----------- -----------
Total asset-based revenues 744,583 649,833
Other revenues 14,764 21,218
----------- -----------
Net revenues 1,264,503 1,059,938
----------- -----------
Expenses:
Employee compensation and benefits 238,128 206,745
Fair value adjustments of compensation-
related derivative instruments 764 (478)
Clearing and execution costs 21,438 42,894
Communications 34,953 46,755
Occupancy and equipment costs 50,228 42,372
Depreciation and amortization 16,582 13,163
Amortization of acquired intangible assets 28,472 27,270
Professional services 47,862 46,734
Interest on borrowings 46,330 61,150
Other 31,039 27,873
Advertising 92,766 82,076
----------- -----------
Total expenses 608,562 596,554
----------- -----------
Income before other income and income taxes 655,941 463,384
Other income:
Gain on sale of investments 644 5,716
----------- -----------
Pre-tax income 656,585 469,100
Provision for income taxes 229,030 182,329
----------- -----------
Net income $ 427,555 $ 286,771
=========== ===========
Basic earnings per share $ 0.72 $ 0.48
Diluted earnings per share $ 0.71 $ 0.47
Weighted average shares outstanding - basic 594,629 600,963
Weighted average shares outstanding - diluted 603,932 610,950
Note: Certain revenue reclassifications have been made to prior
periods to conform to the current presentation.
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TD AMERITRADE HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands
(Unaudited)
Mar. 31, 2008 Sept. 30, 2007
------------- --------------
Assets:
Cash and cash equivalents $ 1,769,383 $ 413,787
Short-term investments - 76,800
Broker/dealer receivables 5,033,380 6,749,588
Client receivables 7,529,312 7,727,969
Goodwill and intangible assets 2,987,572 2,771,297
Other 414,988 352,886
------------- --------------
Total assets $17,734,635 $18,092,327
============= ==============
Liabilities and stockholders' equity:
Liabilities:
Broker/dealer payables $ 6,644,044 $ 8,386,988
Client payables 6,331,727 5,313,576
Long-term debt 1,462,750 1,478,375
Other 743,502 758,467
------------- --------------
Total liabilities 15,182,023 15,937,406
Stockholders' equity 2,552,612 2,154,921
------------- --------------
Total liabilities and stockholders'
equity $17,734,635 $18,092,327
============= ==============
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TD AMERITRADE HOLDING CORPORATION
SELECTED OPERATING DATA
Quarter Ended
-----------------------------------------
Mar. 31, 2008 Dec. 31, 2007 Mar. 31, 2007
-----------------------------------------
Trading Activity Metrics:
----------------------------
Total trades (in millions) 19.0 20.3 15.5
Average commissions and
transaction fees per trade $ 12.86 $ 12.84 $ 12.62
Average client trades per
day 312,234 321,736 253,631
Average client trades per
account (annualized) 11.9 12.6 10.1
Activity rate 4.7% 5.0% 4.0%
Trading days 61.0 63.0 61.0
Net Interest Margin:
----------------------------
Average interest-earning
assets (in billions) $ 15.7 $ 15.6 $ 14.4
Average money market deposit
account balances (in
billions) 15.5 15.3 14.8
------------- ---------------------------
Average spread-based
balance (in billions) $ 31.2 $ 30.9 $ 29.2
============= ============= =============
Net interest revenue (in
millions) $ 137.9 $ 149.1 $ 137.1
Money market deposit account
fee revenue (in millions) 156.1 155.8 129.8
------------- ------------- -------------
Spread-based revenue (in
millions) $ 294.0 $ 304.9 $ 266.9
============= ============= =============
Net interest margin (NIM) 3.73% 3.86% 3.66%
Net Interest Revenue:
----------------------------
Segregated cash:
----------------------------
Average balance (in
billions) $ 0.0 $ 0.0 $ 0.4
Average annualized yield 3.73% 4.23% 5.21%
------------- ------------- -------------
Interest revenue (in
millions) $ 0.2 $ 0.0 $ 5.7
------------- ------------- -------------
Client margin balances:
----------------------------
Average balance (in
billions) $ 8.1 $ 8.5 $ 7.6
Average annualized yield 6.61% 7.43% 8.08%
------------- ------------- -------------
Interest revenue (in
millions) $ 135.8 $ 162.1 $ 152.4
------------- ------------- -------------
Securities borrowing:
----------------------------
Average balance (in
billions) $ 6.2 $ 6.6 $ 5.9
Average annualized yield 3.85% 4.82% 5.81%
------------- ------------- -------------
Interest revenue (in
millions) $ 59.9 $ 80.9 $ 85.5
------------- ------------- -------------
Other free cash and short-
term investments
----------------------------
Average balance (in
billions) $ 1.4 $ 0.5 $ 0.5
Average annualized yield 3.07% 4.55% 4.88%
------------- ------------- -------------
Interest revenue - net (in
millions) $ 10.4 $ 6.8 $ 6.8
------------- ------------- -------------
Client credit balances:
----------------------------
Average balance (in
billions) $ 4.4 $ 3.6 $ 3.3
Average annualized cost 0.68% 1.04% 1.52%
------------- ------------- -------------
Interest expense (in
millions) ($7.5) ($9.6) ($12.7)
------------- ------------- -------------
Securities lending:
----------------------------
Average balance (in
billions) $ 9.1 $ 9.6 $ 8.4
Average annualized cost 2.66% 3.71% 4.82%
------------- ------------- -------------
Interest expense (in
millions) ($60.9) ($91.1) ($100.6)
------------- ------------- -------------
Net interest revenue - total
(in millions) $ 137.9 $ 149.1 $ 137.1
============= ============= =============
Other Asset-Based Revenue
Metrics:
----------------------------
Money market deposit account
fees:
----------------------------
Average balance (in
billions) $ 15.5 $ 15.3 $ 14.8
Average annualized yield 3.98% 4.00% 3.52%
Money market deposit
account fee revenue (in
millions) $ 156.1 $ 155.8 $ 129.8
Fee-based investment
balances:
----------------------------
Average balance (in
billions) $ 70.8 $ 58.6 $ 48.3
Average annualized yield 0.43% 0.45% 0.46%
Investment product fee
revenue (in millions) $ 77.7 $ 68.0 $ 55.8
Client Account and Client
Asset Metrics:
----------------------------
Total accounts (beginning of
period) 6,475,000 6,380,000 6,260,000
New accounts opened 214,000 149,000 166,000
Accounts purchased 102,000 - -
Accounts closed (60,000) (54,000) (196,000)
------------- ------------- -------------
Total accounts (end of
period) 6,731,000 6,475,000 6,230,000
============= ============= =============
Percentage increase
(decrease) during period 4% 1% (0%)
Qualified accounts
(beginning of period) 3,249,000 3,272,000 3,255,000
Qualified accounts (end of
period) 3,316,000 3,249,000 3,262,000
Percentage increase
(decrease) during period 2% (1%) 0%
Client assets (beginning of
period, in billions) $ 300.4 $ 302.7 $ 278.2
Client assets (end of
period, in billions) $ 306.1 $ 300.4 $ 282.2
Percentage increase
(decrease) during period 2% (1%) 1%
Net new assets (in billions) $ 6.9 $ 9.1 $ 2.7
Six Months Ended
---------------------------
Mar. 31, 2008 Mar. 31, 2007
----------------------------
Trading Activity Metrics:
------------------------------------------
Total trades (in millions) 39.3 30.3
Average commissions and transaction fees
per trade $ 12.85 $ 12.83
Average client trades per day 317,062 245,481
Average client trades per account
(annualized) 12.2 9.8
Activity rate 4.9% 3.9%
Trading days 124.0 123.5
Net Interest Margin:
------------------------------------------
Average interest-earning assets (in
billions) $ 15.6 $ 14.0
Average money market deposit account
balances (in billions) 15.4 14.6
------------- -------------
Average spread-based balance (in
billions) $ 31.0 $ 28.6
============= =============
Net interest revenue (in millions) $ 287.0 $ 275.6
Money market deposit account fee revenue
(in millions) 311.9 265.1
------------- -------------
Spread-based revenue (in millions) $ 598.9 $ 540.7
============= =============
Net interest margin (NIM) 3.80% 3.72%
Net Interest Revenue:
------------------------------------------
Segregated cash:
------------------------------------------
Average balance (in billions) $ 0.0 $ 0.7
Average annualized yield 3.76% 5.18%
------------- -------------
Interest revenue (in millions) $ 0.2 $ 18.1
------------- -------------
Client margin balances:
------------------------------------------
Average balance (in billions) $ 8.3 $ 7.4
Average annualized yield 7.03% 8.07%
------------- -------------
Interest revenue (in millions) $ 297.9 $ 303.4
------------- -------------
Securities borrowing:
------------------------------------------
Average balance (in billions) $ 6.4 $ 5.5
Average annualized yield 4.35% 5.72%
------------- -------------
Interest revenue (in millions) $ 140.7 $ 159.3
------------- -------------
Other free cash and short-term investments
------------------------------------------
Average balance (in billions) $ 0.9 $ 0.4
Average annualized yield 3.53% 5.13%
------------- -------------
Interest revenue - net (in millions) $ 17.2 $ 12.0
------------- -------------
Client credit balances:
------------------------------------------
Average balance (in billions) $ 4.0 $ 3.4
Average annualized cost 0.85% 1.54%
------------- -------------
Interest expense (in millions) ($17.1) ($26.6)
------------- -------------
Securities lending:
------------------------------------------
Average balance (in billions) $ 9.3 $ 7.9
Average annualized cost 3.20% 4.77%
------------- -------------
Interest expense (in millions) ($151.9) ($190.6)
------------- -------------
Net interest revenue - total (in millions) $ 287.0 $ 275.6
===========================
Other Asset-Based Revenue Metrics:
------------------------------------------
Money market deposit account fees:
------------------------------------------
Average balance (in billions) $ 15.4 $ 14.6
Average annualized yield 3.99% 3.58%
Money market deposit account fee revenue
(in millions) $ 311.9 $ 265.1
Fee-based investment balances:
------------------------------------------
Average balance (in billions) $ 64.7 $ 46.5
Average annualized yield 0.44% 0.46%
Investment product fee revenue (in
millions) $ 145.7 $ 109.2
Client Account and Client Asset Metrics:
------------------------------------------
Total accounts (beginning of period) 6,380,000 6,191,000
New accounts opened 363,000 275,000
Accounts purchased 102,000 -
Accounts closed (114,000) (236,000)
------------- -------------
Total accounts (end of period) 6,731,000 6,230,000
============= =============
Percentage increase (decrease) during
period 6% 1%
Qualified accounts (beginning of period) 3,272,000 3,242,000
Qualified accounts (end of period) 3,316,000 3,262,000
Percentage increase (decrease) during
period 1% 1%
Client assets (beginning of period, in
billions) $ 302.7 $ 261.7
Client assets (end of period, in billions) $ 306.1 $ 282.2
Percentage increase (decrease) during
period 1% 8%
Net new assets (in billions) $ 16.0 $ 7.8
NOTE: See Glossary of Terms on the Company's web site at www.amtd.com
for definitions of the above metrics.
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TD AMERITRADE HOLDING CORPORATION
RECONCILIATION OF FINANCIAL MEASURES
In thousands, except percentages
(Unaudited)
Quarter Ended
--------------------------------------------------
Mar. 31, 2008 Dec. 31, 2007 Mar. 31, 2007
---------------- ---------------- ----------------
% of % of % of
$ Rev. $ Rev. $ Rev.
--------- ------ --------- ------ --------- ------
EBITDA (1)
-------------------
EBITDA $344,194 55.3% $403,775 62.9% $279,341 53.2%
Less:
Depreciation and
amortization (8,887) (1.4%) (7,695) (1.2%) (6,132) (1.2%)
Amortization of
acquired
intangible
assets (14,749) (2.4%) (13,723) (2.1%) (13,446) (2.6%)
Interest on
borrowings (20,604) (3.3%) (25,726) (4.0%) (30,033) (5.7%)
--------- --------- ---------
Pre-tax income $299,954 48.2% $356,631 55.6% $229,730 43.8%
========= ========= =========
Six Months Ended
---------------------------------
Mar. 31, 2008 Mar. 31, 2007
---------------- ----------------
% of % of
$ Rev. $ Rev.
--------- ------ --------- ------
EBITDA (1)
------------------------------------
EBITDA $747,969 59.2% $570,683 53.8%
Less:
Depreciation and amortization (16,582) (1.3%) (13,163) (1.2%)
Amortization of acquired
intangible assets (28,472) (2.3%) (27,270) (2.6%)
Interest on borrowings (46,330) (3.7%) (61,150) (5.8%)
--------- ---------
Pre-tax income $656,585 51.9% $469,100 44.3%
========= =========
Note: The term "GAAP" in the following explanation refers to generally
accepted accounting principles in the United States.
*T
(1) 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 is used as the denominator
in the consolidated leverage ratio calculation for our senior credit
facilities. The consolidated leverage ratio determines the interest
rate margin charged on the senior credit facilities. EBITDA eliminates
the non-cash effect of tangible asset depreciation and amortization
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.
TD AMERITRADE
For Media:
Kim Hillyer, 402-827-8654
Manager, Communications
kim.hillyer@tdameritrade.com
or
For Investors:
Tim Nowell, 402-597-8440
Director, Investor Relations
timothy.nowell@tdameritrade.com
Copyright Business Wire 2008
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