<PAGE> 1
222,222 Shares
AMERITRADE HOLDING CORPORATION
[AMERITRADE HOLDING CORPORATION LOGO]
Class A Common Stock
----------------------
The selling stockholder identified in this Prospectus is offering shares of
Class A common stock of Ameritrade Holding Corporation. Holding will not receive
any of the proceeds from the sale of the shares by the selling stockholder.
The Class A common stock is quoted on The Nasdaq National Market under the
symbol "AMTD". The last reported bid price of the Class A common stock on
September 1, 1999 was $20.25 per share.
The Class B common stock, which is not being offered, is entitled to elect
a majority of Holding's board of directors. The Class A common stock is entitled
to elect the remaining directors. See "Description of Capital Stock".
See "Risk Factors" beginning on page 7 to read about factors you should
consider before buying shares of the Class A common stock.
----------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
----------------------
<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- -------------
<S> <C> <C>
Offering price.............................................. $20.25 $4,499,995.50
Proceeds, before expenses, to the selling stockholder....... $20.25 $4,499,995.50
</TABLE>
----------------------
Prospectus dated September 1, 1999.
<PAGE> 2
SUMMARY
The following summary highlights selected information from this prospectus
and the documents incorporated by reference in this prospectus. It does not
contain all of the information that is important to you. You should carefully
read this entire prospectus and the documents incorporated by reference in this
prospectus before making an investment in the Class A common stock. The terms
"we" and "us" as used in this prospectus refer to Ameritrade Holding Corporation
("Holding") and its operating subsidiaries Ameritrade (Inc.) ("Ameritrade"),
Accutrade, Inc. ("Accutrade"), Advanced Clearing, Inc. ("Advanced Clearing"),
AmeriVest, Inc. ("AmeriVest") and OnMoney Financial Services Corporation
("OnMoney"), collectively. Our fiscal year ends on the last Friday of each
September. Unless otherwise indicated, dollar amounts have been rounded to the
nearest one hundred thousand.
OUR COMPANY
We are a leading provider of online discount brokerage services. We provide
technology-based brokerage services to retail investors through a variety of
mediums, primarily through the Internet. Our services appeal to a broad market
of self-directed retail investors who are value conscious. We use our low-cost
platform to offer brokerage services to investors at prices that are
significantly lower than prices offered by our major competitors. Our goal is to
provide the best execution using the best information at the best value.
We are an innovator in electronic brokerage services. We were the first
brokerage firm to offer touch-tone trading in 1988 and the first to offer
trading over the Internet in 1994. In 1997, we embarked upon an aggressive
marketing campaign to build awareness of the Ameritrade brand and to attract
investors to online trading. At the same time, we introduced our "8 bucks a
trade" program and set a price standard among major online discount brokerage
firms that remains in place today.
BUSINESS OPERATIONS
Following is a summary of our operating subsidiaries:
- AMERITRADE, our principal operating subsidiary, provides retail brokerage
services targeted at value conscious investors who trade primarily
through the Internet. Ameritrade offers a full range of trading services
and focuses on providing a compelling price point and value to retail
customers. In addition to the Internet, Ameritrade provides access to its
services through automated touch-tone telephone systems, personal digital
assistants and registered representatives. Ameritrade customers can
invest in common and preferred stocks, mutual funds, options, corporate
and municipal bonds, treasury obligations and other securities.
Ameritrade also offers a wide range of informational services and
educational tools to its customers.
- ACCUTRADE also offers retail brokerage services, targeting investors who
desire a higher degree of personalized customer service.
- ADVANCED CLEARING provides clearing and execution services to Ameritrade
and Accutrade, as well as to independent broker-dealers and other
correspondents.
- AMERIVEST provides wholesale discount brokerage services to depository
institutions, including banks, savings and loans and credit unions.
In addition, we are developing an Internet-based personal financial
management system for individual investors through our OnMoney subsidiary.
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BUSINESS STRATEGY
Our business strategy is to capitalize on the growth of the online
brokerage industry. The key elements of our business strategy are as follows:
- Establish Ameritrade as the dominant brand in online trading;
- Focus on online discount brokerage services;
- Expand our capacity and infrastructure to meet expected increases in
trading volume;
- Continue to offer innovative technologies and service enhancements to our
customers;
- Be the lowest cost provider of quality brokerage services; and
- Expand our access to international customers.
Our principal executive offices are located at 4211 South 102nd Street,
Omaha, Nebraska 68127, and our telephone number is (402) 331-7856.
RECENT DEVELOPMENTS
On August 4, 1999, we sold $200,000,000 principal amount of 5.75%
Convertible Subordinated Notes due August 1, 2004 (the "Notes") to qualified
institutional investors in a private placement pursuant to Rule 144A of the
Securities Act of 1933 (the "Securities Act"). The Notes are convertible into a
total of 6,142,470 shares of Class A common stock at approximately $32.56 per
share. We used a portion of the proceeds from the sale of the Notes to repay all
outstanding indebtedness under our revolving credit agreement.
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<PAGE> 4
THE OFFERING
Class A common stock offered by the
selling stockholder:.................. 222,222 shares
Common stock to be outstanding after the
offering:
Class A common stock................ 158,103,480 shares
Class B common stock................ 16,372,800 shares
-----------
Total....................... 174,476,280 shares
===========
Voting Rights........................... Except as otherwise required by law
and with respect to the election of
directors, the holders of Class A
common stock and the holders of
Class B common stock have one vote
per share and vote as a single
class with respect to all matters
submitted to a vote of the holders
of common stock. The Class B common
stock is not being offered in the
offerings. The Class B common stock
is entitled to elect a majority of
our directors. The Class A common
stock is entitled to elect the
remainder of our directors. We
currently have nine directors.
Except with respect to the ability
to elect directors and the
conversion rights discussed below,
the Class A common stock and the
Class B common stock are identical
in all respects. If all shares of
Class B common stock are converted
into Class A common stock or if no
shares of Class B common stock are
otherwise outstanding, the holders
of Class A common stock will be
entitled to elect all of our
directors, subject to any rights of
the holders of preferred stock. See
"Description of Capital
Stock -- Common Stock -- Voting
Rights".
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Conversion of Class B Common Stock...... Each share of Class B common stock
is convertible into one share of
Class A common stock at any time at
the election of the holder of the
share of Class B common stock. Each
share of Class B common stock
automatically converts into one
share of Class A common stock in
the event of a transfer of the
share of Class B common stock to
any person other than J. Joe
Ricketts, Marlene M. Ricketts, the
lineal descendants of J. Joe
Ricketts and Marlene M. Ricketts
and their spouses or any trust or
other person or entity that holds
common stock for the benefit of any
of those members of the Ricketts
family (the "Control Group"). In
addition, each share of Class B
common stock automatically converts
into one share of Class A common
stock if the number of shares of
outstanding common stock held by
the Control Group falls below 20%
of the number of shares of
outstanding common stock. See
"Description of Capital
Stock -- Conversion Rights".
Use of Proceeds......................... We will not receive any of the
proceeds from the sale of shares by
the selling stockholder.
Dividends............................... We have never declared or paid any
cash dividends on our capital stock
and do not anticipate paying any
cash dividends to our stockholders
in the foreseeable future. See
"Dividend Policy".
Listing................................. The Class A common stock is quoted
on The Nasdaq National Market.
Nasdaq National Market Symbol........... AMTD
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SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
The information in the following table is based on historical financial
information contained in this prospectus and contained in our prior filings with
the Securities and Exchange Commission ("SEC"), including our report on Form
10-Q for the period ended June 25, 1999. The following summary financial
information should be read in conjunction with this historical financial
information, including the notes that accompany such financial information. Per
share amounts have been adjusted to reflect a three-for-one stock split
effective on July 2, 1999.
<TABLE>
<CAPTION>
NINE MONTHS
FISCAL YEAR ENDED ENDED
---------------------------------------------------------- -----------------------
SEPT. 30, SEPT. 29, SEPT. 27, SEPT. 26, SEPT. 25, JUNE 26, JUNE 25,
1994 1995 1996 1997 1998 1998 1999
--------- --------- --------- --------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
INCOME DATA:
Revenues:
Commissions and clearing
fees....................... $ 20,386 $ 23,977 $ 36,470 $ 51,937 $ 85,644 $ 59,249 $ 139,630
Interest revenue............. 9,856 16,297 22,518 36,623 66,716 46,759 78,924
Investment income and other.. 1,119 2,608 6,391 7,107 11,834 10,044 7,482
-------- -------- -------- -------- ---------- ---------- ----------
Total revenues......... 31,361 42,882 65,379 95,667 164,194 116,052 226,036
Interest expense............. 3,912 7,862 11,040 18,429 29,279 20,693 32,163
-------- -------- -------- -------- ---------- ---------- ----------
Net revenues........... 27,449 35,020 54,339 77,238 134,915 95,359 193,873
Pre-advertising operating
expense...................... 14,012 19,348 28,385 41,842 90,770 64,155 126,560
Advertising expense............ 5,987 4,842 7,537 13,971 43,614 39,757 34,902
-------- -------- -------- -------- ---------- ---------- ----------
Total expenses
excluding interest... 19,999 24,190 35,922 55,813 134,384 103,912 161,462
Income (loss) before provision
for income taxes............. 7,450 10,830 18,417 21,425 531 (8,553) 32,411
Provision (benefit) for income
taxes........................ 2,619 3,799 7,259 7,603 321 (2,973) 11,674
-------- -------- -------- -------- ---------- ---------- ----------
Net income (loss)...... $ 4,831 $ 7,031 11,158 13,822 $ 210 $ (5,580) $ 20,737
======== ======== ======== ======== ========== ========== ==========
Basic earnings (loss) per
share........................ $ 0.03 $ 0.05 $ 0.07 $ 0.08 $ 0.00 $ (0.03) $ 0.12
Diluted earnings (loss) per
share........................ $ 0.03 $ 0.05 $ 0.07 $ 0.08 $ 0.00 (0.03) 0.12
Weighted average shares
outstanding -- basic......... 154,271 153,766 153,766 165,227 174,188 174,206 174,310
Weighted average shares
outstanding -- diluted....... 154,271 153,766 153,766 165,233 174,465 174,343 175,689
OPERATING DATA:
Average customer trades per
day.......................... 1,519 2,055 3,670 6,571 18,407 16,423 48,033
Total assets in customer
accounts (in billions)....... $ 1.7 $ 2.4 $ 4.0 $ 7.3 $ 11.4 $ 11.3 $ 22.6
Number of core accounts(1)..... 18,000 38,000 52,000 98,000 306,000 267,000 505,000
Net revenue per trade.......... $ 70.31 $ 67.09 $ 58.76 $ 46.65 $ 29.20 $ 30.88 $ 21.47
Pre-advertising operating
expense per trade............ $ 35.89 $ 37.07 $ 30.69 $ 25.27 $ 19.65 $ 20.78 $ 14.02
Operating margin(2)............ 27% 31% 34% 28% 0% (9%) 17%
Pre-advertising operating
margin(3).................... 49% 45% 48% 46% 33% 33% 35%
Return on average equity(4).... 49% 47% 44% 28% 0% (9%) 15%
</TABLE>
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<TABLE>
<CAPTION>
SEPT. 30, SEPT. 29, SEPT. 27, SEPT. 26, SEPT. 25, JUNE 26, JUNE 25,
1994 1995 1996 1997 1998 1998 1999
--------- --------- --------- --------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET
DATA:
Cash and segregated
investments.................. $101,352 $125,456 $191,436 $373,286 $ 527,982 $ 477,643 $ 624,827
Receivable from customers and
correspondents, net.......... 99,627 130,187 166,075 325,407 647,122 609,805 1,471,594
Total assets................... 216,991 287,105 401,679 757,357 1,290,402 1,157,059 2,651,784
Payable to customers and
correspondents............... 198,539 251,862 356,943 666,279 1,136,082 1,048,431 1,820,477
Total long-term debt........... -- 7,097 4,853 -- 11,000 6,500 58,000
Stockholders' equity........... 12,473 19,504 30,662 66,989 84,572 61,252 338,809
</TABLE>
- ---------------
(1) Core accounts consist of open accounts in our discount brokerage
subsidiaries.
(2) Operating margin is computed by dividing income before provision for income
taxes by net revenues.
(3) Pre-advertising operating margin is computed by dividing income before
provision for income taxes plus advertising expenses by net revenues.
(4) Return on average equity is computed by dividing net income by average
stockholders' equity on a quarterly basis. Nine month results are not
annualized.
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RISK FACTORS
You should carefully consider the risks described below before making an
investment in the Class A common stock.
OUR BUSINESS COULD BE HARMED BY MARKET FLUCTUATIONS AND OTHER SECURITIES
INDUSTRY RISKS
Substantially all of our revenues are derived from discount securities
brokerage and clearing and execution services. Like other brokerage businesses,
we are directly affected by economic and political conditions, broad trends in
business and finance and changes in volume and price levels of securities
transactions. We are particularly affected by volatility in technology and
Internet-related stocks because a significant portion of our customers invest in
these types of stocks. In recent months, the U.S. securities markets have
fluctuated considerably. Severe market fluctuations in the future could have a
material adverse effect on our business, financial condition and operating
results. Reduced trading volumes and prices have historically resulted in
reduced transaction revenues. In addition, when trading volume is low, our
profitability may be adversely affected because our overhead is substantially
fixed.
THE MARKET PRICE OF THE CLASS A COMMON STOCK WILL FLUCTUATE AND COULD FLUCTUATE
SIGNIFICANTLY
The Class A common stock has experienced significant price fluctuations in
recent months. The stock market in general also has experienced substantial
price and volume fluctuations. The market prices of securities of
Internet-related companies, in particular, have been especially volatile. The
price of the Class A common stock could decrease substantially following the
offering. In addition, because the market price of our Class A common stock
tends to fluctuate significantly, we may become the object of securities class
action litigation. Securities class action litigation may result in substantial
costs and a diversion of management's attention and resources.
SYSTEMS FAILURES AND DELAYS COULD HARM OUR BUSINESS
We receive and process trade orders through a variety of electronic
mediums, including the Internet, personal digital assistants and automated
touch-tone telephone systems. These methods of trading are heavily dependent on
the integrity of the electronic systems supporting them. Our systems and
operations are vulnerable to damage or interruption from human error, natural
disasters, power loss, computer viruses, intentional acts of vandalism and
similar events. Extraordinary trading volumes could cause our computer systems
to operate at an unacceptably low speed or even fail. We have experienced
periods of extremely high trading volume that has caused individual system
components or processes to fail, resulting in the temporary unavailability of
our Web site for online trading and delays in our telephone systems. On some
other occasions, high trading volume has caused significant delays in executing
trading orders, resulting in some customers' orders being executed at prices
they did not anticipate. In September 1998, we became subject to a putative
class action lawsuit resulting from systems failures and delays. In addition,
from time to time, we reimburse our customers for losses incurred in connection
with systems failures and delays. During the quarter ended December 31, 1998, we
paid $3.1 million to customers for execution price adjustments as a result of
systems failures and delays. Systems failures and delays may occur again in the
future and could cause:
- unanticipated disruptions in service;
- slower response times;
- decreased customer service and customer satisfaction; and
- harm to our reputation;
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which could result in:
- loss of customers;
- increased operating expenses;
- financial losses;
- additional litigation or other customer claims; and
- regulatory sanctions.
CAPACITY CONSTRAINTS OF OUR SYSTEMS COULD HARM OUR BUSINESS
As our business grows, we will need to expand and upgrade our transaction
processing systems, network infrastructure and other aspects of our technology.
Many of our systems are designed to accommodate additional growth without
redesign or replacement; however, we will need to make significant investments
in additional hardware and software to accommodate growth. We may not be able to
project accurately the rate or timing of growth in our business, or the cost to
expand and upgrade our systems and infrastructure to accommodate any growth in a
timely manner. Failure to make necessary expansions and upgrades to our systems
and infrastructure could lead to failures and delays, which could have a
material adverse effect on our business, financial condition and results of
operations.
SUBSTANTIAL COMPETITION COULD REDUCE OUR MARKET SHARE AND HARM OUR FINANCIAL
PERFORMANCE
The market for discount brokerage services, particularly electronic
brokerage services, is new, rapidly evolving and competitive. We expect the
competitive environment to continue in the future. We may not be able to compete
effectively with current or future competitors, which could have a material
adverse effect on our business, financial condition and results of operations.
We face direct competition from numerous discount brokerage firms, many of which
provide online services. We also encounter competition from the broker-dealer
affiliates of established full-commission brokerage firms as well as from
financial institutions, mutual fund sponsors and other organizations, some of
which provide or have announced that they intend to provide online discount
brokerage services. Some of our competitors have greater financial, technical,
marketing and other resources than we do. Some of our competitors offer a wider
range of services and financial products than we do and have greater name
recognition and a more extensive customer base than we do. We believe that the
general financial success of companies within the online securities industry
will continue to attract new competitors to the industry, such as banks,
software development companies, insurance companies, providers of online
financial information and others. These companies may provide a more
comprehensive suite of services than we do. In addition, our clearing operations
compete with numerous firms that provide clearing and execution services to the
securities industry.
WE MAY BE UNABLE TO MANAGE OUR RAPID GROWTH EFFECTIVELY
We have rapidly and significantly expanded our operations and anticipate
that continued expansion will be required to realize our growth strategy. Our
rapid growth has placed significant demands on our management and other
resources and these demands are likely to continue. If we are unable to
effectively manage our future growth, we may not be able to achieve the rate of
growth that we have experienced in the past. To manage our future growth, we
will need to attract, hire and retain highly skilled and motivated officers and
employees. In particular, we currently need to hire a significant number of
technical personnel and customer service representatives. Most of our
competitors face similar staffing shortages, which makes the competition for
qualified employees particularly intense. We also will need to improve existing
systems and/or implement new systems for operational and financial management
and training, integrating and managing our growing employee base.
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OUR FUTURE OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY
We may experience significant variation in our future quarterly results of
operations. These fluctuations may result from:
- the timing and size of advertising campaigns;
- introductions of or enhancements to online investing services by us or
our competitors;
- changes in trading volume in securities markets;
- changes in pricing policies by us or our competitors;
- disruptions or problems in our services to customers;
- changes in our business strategy;
- changes in the level of operating expenses needed to support projected
growth;
- actions taken by us that negatively affect short-term results but may
benefit long-term results; and
- general economic conditions.
Due to these factors, quarterly revenues and operating results are difficult to
forecast. We believe that period-to-period comparisons of our operating results
will not necessarily be meaningful, and you should not rely on them as an
indication of our future performance. In addition, our future quarterly
operating results may not consistently meet the expectations of securities
analysts or investors, which could have a material adverse effect on the market
price of the Class A common stock.
REGULATORY AND LEGAL UNCERTAINTIES COULD HARM OUR BUSINESS
The securities industry in the United States is subject to extensive
regulation under both federal and state laws. Broker-dealers are subject to
regulations covering all aspects of the securities business. Our operations and
profitability may be directly affected by:
- additional legislation;
- changes in rules promulgated by the SEC, the National Association of
Securities Dealers, Inc. ("NASD"), the Board of Governors of the Federal
Reserve System, the various stock exchanges and other self-regulatory
organizations; or
- changes in the interpretation or enforcement of existing laws and rules.
The SEC, the NASD and other self-regulatory organizations and state
securities commissions can censure, fine, issue cease-and-desist orders to,
suspend or expel a broker-dealer or any of its officers or employees. Our
ability to comply with applicable laws and rules is largely dependent on our
internal system to ensure compliance, as well as our ability to attract and
retain qualified compliance personnel. We could be subject to disciplinary or
other actions in the future due to claimed noncompliance, which could have a
material adverse effect on our business, financial condition and results of
operations.
Recently, various regulatory and enforcement agencies have been reviewing
systems capacity, customer access, best execution practices, other service
issues and advertising claims as they relate to the discount and online
brokerage industry. These reviews could result in enforcement actions or new
regulations, either of which could have a material adverse effect on our
business, financial condition and results of operations.
Securities industry regulators are currently reviewing the extent to which
clearing firms, such as Advanced Clearing, will be held accountable for the
improper activities of introducing brokers
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for which they provide clearing services. Our procedures may not be sufficient
to protect us from liability for the acts of introducing brokers under current
or future laws and regulations.
In addition, we use the Internet as a major distribution channel to provide
services to our customers. Due to the increasing popularity of the Internet, it
is possible that new laws and regulations may be adopted dealing with issues
such as user privacy and the pricing, content and quality of products and
services. These laws and regulations might increase our cost of using, or limit
our ability to use, the Internet as a distribution channel. As a result, the
adoption of these laws and regulations could have a material adverse effect on
our business, financial condition and results of operations.
We intend to expand our business in U.S. securities to other countries. We
will need to comply with the relevant regulations of each country in which we
conduct business. Our international expansion may be limited by the compliance
requirements of these jurisdictions.
THE SUCCESS OF OUR BUSINESS WILL DEPEND ON CONTINUED GROWTH OF INTERNET COMMERCE
The market for online discount brokerage services is at an early stage of
development and is rapidly evolving. Consequently, demand and market acceptance
for recently introduced services and products are subject to a high level of
uncertainty. A significant portion of our growth is related to acceptance of the
Internet as a method of commerce. The failure of commerce on the Internet to
grow at projected rates could have a material adverse effect on our business,
financial condition and results of operations.
THE SUCCESS OF OUR BUSINESS WILL DEPEND ON CONTINUED DEVELOPMENT AND MAINTENANCE
OF THE INTERNET INFRASTRUCTURE
The Internet has experienced, and is expected to continue to experience,
significant growth in the number of users and amount of traffic. Our success
will depend upon the development and maintenance of the Internet's
infrastructure to cope with this increased traffic. The failure to develop and
maintain the Internet's infrastructure could have a material adverse effect on
our business, financial condition and results of operations. The Internet has
experienced a variety of outages and other delays as a result of damage to
portions of its infrastructure and could face similar outages and delays in the
future. Outages and delays are likely to affect the level of Internet usage and
the processing of transactions on our Web site. In addition, the Internet could
lose its viability due to delays in the development or adoption of new standards
to handle increased levels of activity.
WE ARE HIGHLY DEPENDENT ON OUR KEY PERSONNEL
We are highly dependent on a small number of key executive officers. We
have entered into employment agreements with our key executive officers but do
not maintain "key person" life insurance policies on any of our officers. Our
success has been, and will be, dependent to a large degree on our ability to
retain the services of our existing key executive officers and to attract and
retain additional qualified personnel in the future. Competition for these
personnel is intense. The loss of the services of any of our key executive
officers or the inability to identify, hire and retain other highly qualified
technical and managerial personnel in the future could have a material adverse
effect on our business, financial condition and results of operations.
THE RICKETTS FAMILY CONTROLS ALL FUNDAMENTAL MATTERS AFFECTING US
Following the offering, J. Joe Ricketts, our Chairman and Co-Chief
Executive Officer, his family members and trusts held for their benefit
(collectively, the "Ricketts Family") will own approximately 58.3% of the Class
A common stock and all of the Class B common stock, which
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<PAGE> 12
will constitute approximately 62.2% of the common stock. As a result, the
Ricketts Family will retain the ability to control all fundamental matters
affecting us, including:
- the election of the majority of our directors;
- the sale of substantially all of our assets;
- the merger of Holding with another entity;
- an amendment to our certificate of incorporation;
- the future issuance of common stock or other securities; and
- the declaration of any dividend payable on the common stock.
In addition, the Ricketts Family could convert a portion of its Class B common
stock into Class A common stock and subsequently dispose of such shares, thereby
substantially reducing its economic interest in Holding while retaining the
ability to elect the majority of our directors.
WE WILL NEED TO INTRODUCE NEW PRODUCTS AND SERVICES TO REMAIN COMPETITIVE
Our future success depends in part on our ability to develop and enhance
our products and services. There are significant technical and financial risks
in the development of new or enhanced products and services, including the risk
that we will be unable to:
- effectively use new technologies;
- adapt our products and services to emerging industry standards; or
- develop, introduce and market new or enhanced products and services.
If we are unable to develop and introduce enhanced or new products and services
quickly enough to respond to market or customer requirements, or if our products
and services fail to achieve market acceptance, our business, financial
condition and results of operations could be materially adversely affected.
WE MAY NOT BE ABLE TO KEEP UP WITH RAPID TECHNOLOGICAL AND OTHER CHANGES
The markets in which we compete are characterized by rapidly changing
technology, evolving industry standards, frequent new product and service
announcements, introductions and enhancements and changing consumer demands. We
may not be able to keep up with these rapid changes. In addition, the widespread
adoption of new Internet, networking or telecommunications technologies or other
technological changes could require us to incur substantial expenditures to
modify or adapt our services or infrastructure.
CHANGES IN PAYMENTS FOR ROUTING OUR CUSTOMERS' ORDERS COULD ADVERSELY AFFECT OUR
BUSINESS
We have arrangements with several execution agents to receive cash payments
in exchange for routing trade orders to these firms for execution. We expect
these payments to continue to decrease on a per trade basis, which could have a
material adverse effect on our business, financial condition and results of
operations. Receiving payments for routing customers' orders may not continue to
be permitted by the SEC, the NASD or other governmental and regulatory agencies
and courts. Furthermore, competition between execution agents and the
implementation by the SEC of order handling rules in January 1997 has made it
less profitable for execution agents to offer order flow payments to
broker-dealers.
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OUR NETWORKS MAY BE VULNERABLE TO SECURITY RISKS
The secure transmission of confidential information over public networks is
a critical element of our operations. We have not in the past experienced
network security problems. However, our networks may be vulnerable to
unauthorized access, computer viruses and other security problems. Persons who
circumvent security measures could wrongfully use our confidential information
or our customers' confidential information or cause interruptions or
malfunctions in our operations. We may be required to expend significant
additional resources to protect against the threat of security breaches or to
alleviate problems caused by any breaches. We may not be able to implement
security measures that will protect against all security risks.
YEAR 2000 RISKS MAY HARM OUR BUSINESS
Many computer systems were not designed to handle dates beyond the year
1999. These systems, if not modified or replaced, could fail or create erroneous
results by or at the Year 2000. We have implemented a plan to address Year 2000
problems with our own systems. However, if we are unable to make our systems
Year 2000 compliant on a timely basis or if the costs associated with addressing
Year 2000 issues are greater than planned, our business, financial condition and
results of operations could be materially adversely affected. In addition, our
operations rely heavily on the integrity of computer systems of third parties,
such as broker-dealers, clearinghouses, stock exchanges and online and Internet
service providers. A systems failure affecting any of these parties due to Year
2000 issues would interfere with the trading process and, as a result, could
have a material adverse effect on our business, financial condition and results
of operations.
WE MUST COMPLY WITH NET CAPITAL REQUIREMENTS
The SEC, the NASD and various other regulatory agencies have stringent
rules with respect to the maintenance of specific levels of net capital by
securities broker-dealers. Net capital is an SEC-defined measure of a
broker-dealer's readily available liquid assets, reduced by its total
liabilities other than approved subordinated debt. All of our broker-dealer
subsidiaries are required to comply with the net capital requirements. If we
fail to maintain the required net capital, the SEC could suspend or revoke our
registration, or the NASD could expel us from membership, which could ultimately
lead to our liquidation. If the net capital rules are changed or expanded, or if
there is an unusually large charge against net capital, operations that require
the intensive use of capital would be limited. A large operating loss or charge
against net capital could adversely affect our ability to expand or even
maintain our present levels of business, which could have a material adverse
effect on our business, financial condition and results of operations.
OUR CLEARING OPERATIONS EXPOSE US TO LIABILITY FOR ERRORS IN CLEARING FUNCTIONS
Advanced Clearing provides clearing and execution services to each of our
discount brokerage businesses, as well as to independent broker-dealers,
depository institutions, registered investment advisors and financial planners.
Clearing services include the confirmation, receipt, settlement and delivery
functions involved in securities transactions. As a clearing broker, Advanced
Clearing also assumes direct responsibility for the possession and control of
customer securities and other assets and the clearance of customer securities
transactions. Self-clearing securities firms are subject to substantially more
regulatory control and examination than brokers that rely on others to perform
those functions, such as many of our competitors. Errors in performing clearing
functions, including clerical and other errors related to the handling of funds
and securities held by us on behalf of customers and introducing brokers, could
lead to civil penalties imposed by applicable authorities as well as losses and
liability in related lawsuits brought by customers and others.
12
<PAGE> 14
WE ARE EXPOSED TO CREDIT RISK
We make margin loans to customers collateralized by customer securities and
periodically borrow securities to cover trades. By permitting customers to
purchase securities on margin, we are subject to risks inherent in extending
credit, especially during periods of rapidly declining markets in which the
value of the collateral held by us could fall below the amount of a customer's
indebtedness. The inability of customers to repay their margin loans could
result in material losses to us. A significant portion of our net revenues is
derived from interest on margin loans. To the extent that these margin loans
exceed customer cash balances maintained with us, we generally must obtain
financing from third parties. We may not be able to obtain such financing on
favorable terms or in sufficient amounts.
WE MUST PROTECT OUR INTELLECTUAL PROPERTY
Our success and ability to compete are dependent to a significant degree on
fully protecting our intellectual property, which includes our proprietary
technology, trade identity and customer base. We rely on all modes of
intellectual property protection to protect our intellectual property, including
copyright, trade secret, trademark, domain name, patent and contract law.
Notwithstanding the precautions taken by us to protect our intellectual
property, it is possible that third parties may misappropriate, obtain, copy or
use without authorization, or otherwise infringe upon, our intellectual
property. It is also possible that third parties may independently develop
intellectual property similar to ours. Policing unauthorized use of our
intellectual property may be difficult because of difficulties in controlling
the ultimate destination or security of information transmitted over the
Internet. In addition, the laws of foreign countries may afford different, and
possibly inadequate, protection of our intellectual property.
ACQUISITIONS AND STRATEGIC RELATIONSHIPS INVOLVE RISKS
We intend to pursue strategic acquisitions of businesses and technologies.
Acquisitions may entail numerous risks, including:
- difficulties in assessing values for acquired businesses and
technologies;
- difficulties in the assimilation of acquired operations and products;
- diversion of management's attention from other business concerns;
- assumption of unknown material liabilities of acquired companies;
- amortization of acquired intangible assets, which could reduce future
reported earnings; and
- potential loss of customers or key employees of acquired companies.
We may not be able to integrate successfully any operations, personnel, services
or products that we acquire in the future. In addition, we have established a
number of strategic relationships with online service providers and information
service providers. These relationships and others we may enter into in the
future are and will be important to our business and growth prospects. We may
not be able to maintain these relationships or develop new strategic alliances.
WE MAY NOT SUCCEED IN INTERNATIONAL MARKETS
We have limited experience in providing brokerage services internationally.
We may not succeed in marketing our services in international markets. In
addition, there are risks inherent in doing business in some international
markets that may include:
- less developed technological infrastructures;
- lower customer acceptance of, or access to, electronic channels;
13
<PAGE> 15
- regulatory requirements, tariffs and other trade barriers;
- reduced protection for intellectual property rights;
- difficulties in staffing and managing foreign operations;
- less developed automation in exchanges, depositories and clearing
systems;
- fluctuations in currency exchange rates; and
- potentially adverse tax consequences.
Any of the factors described above could have a material adverse effect on our
future international operations.
CERTAIN PROVISIONS OF OUR CHARTER DOCUMENTS AND DELAWARE LAW COULD MAKE A
TAKEOVER MORE DIFFICULT
Our certificate of incorporation, bylaws and Delaware corporate law contain
provisions that might make it more difficult for someone to acquire control of
us in a transaction not approved by our board of directors. These provisions
could also discourage proxy contests and make it more difficult for you and
other stockholders to elect directors other than the candidates nominated by our
board of directors. The existence of these provisions could adversely affect the
market price of the Class A common stock. In addition, these provisions could
have the effect of depriving stockholders of an opportunity to sell their shares
at a premium over prevailing market prices. For a description of these
provisions, see "Description of Capital Stock".
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the information incorporated by reference in it include
"forward-looking statements" within the meaning of Section 27A of the Securities
Act and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act").
We intend that the forward-looking statements be covered by the safe harbor
provisions for forward-looking statements in these sections. In some cases, you
can identify these statements by our use of forward-looking words such as "may",
"will", "should", "anticipate", "estimate", "expect", "plan", "believe",
"predict", "potential" or "intend". You should be aware that these statements
only reflect our expectations. Actual events or results may differ substantially
from our expectations. Important factors that could cause our actual results to
be materially different from our expectations include those discussed in this
prospectus under the caption "Risk Factors". We undertake no obligation to
update or revise publicly any forward-looking statements, whether as a result of
new information, future events or otherwise.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of shares by the
selling stockholder.
DIVIDEND POLICY
We have not declared or paid cash dividends on any of our common stock. We
currently intend to retain all of our earnings, if any, for use in our business
and do not anticipate paying any cash dividends in the foreseeable future. Our
revolving credit agreement prohibits the payment of cash dividends. The payment
of any future dividends will be at the discretion of our board of directors in
accordance with the provisions of the revolving credit agreement and will depend
upon a number of factors, including future results of operations, financial
condition, capital requirements, general business conditions and other factors
that our board of directors may deem relevant.
14
<PAGE> 16
MARKET PRICE OF CLASS A COMMON STOCK
Our Class A common stock is quoted on The Nasdaq National Market under the
symbol "AMTD". The following table shows for the periods indicated the high and
low bid prices per share of our Class A common stock as reported by The Nasdaq
National Market. These prices reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not necessarily represent actual
transactions. These prices reflect the two-for-one stock splits effective on
August 18, 1998 and February 22, 1999 and the three-for-one stock split
effective on July 2, 1999.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
FISCAL 1997
Second Quarter (beginning March 4, 1997).................... $ 1.88 $ 1.35
Third Quarter............................................... $ 1.53 $ 0.98
Fourth Quarter.............................................. $ 2.24 $ 1.22
FISCAL 1998
First Quarter............................................... $ 3.25 $ 1.50
Second Quarter.............................................. $ 2.59 $ 1.86
Third Quarter............................................... $ 2.74 $ 1.91
Fourth Quarter.............................................. $ 4.47 $ 2.16
FISCAL 1999
First Quarter............................................... $ 6.50 $ 1.88
Second Quarter.............................................. $22.50 $ 5.00
Third Quarter............................................... $62.79 $19.54
Fourth Quarter (through September 1, 1999).................. $43.50 $18.00
</TABLE>
On September 1, 1999, the last reported bid price of our Class A common
stock on The Nasdaq National Market was $20.25 per share and there were 488
holders of record, including The Depository Trust Company, which holds shares of
Class A common stock on behalf of an indeterminate number of beneficial owners.
15
<PAGE> 17
CAPITALIZATION
The following table sets forth, as of June 25, 1999, (1) our actual
capitalization as adjusted to give effect to the three-for-one stock split
effective on July 2, 1999 and (2) our capitalization as further adjusted to give
effect to the sale of the Notes on August 4, 1999. You should read this table in
conjunction with our historical financial information, including the notes that
accompany such financial information, incorporated by reference in this
prospectus.
<TABLE>
<CAPTION>
JUNE 25, 1999
---------------------------
ACTUAL AS ADJUSTED
------------ ------------
<S> <C> <C>
Long-term debt:
Revolving credit agreement................................ $ 58,000,000 $ --
5.75% Convertible Subordinated Notes due August 1, 2004... -- 200,000,000
============ ============
Total long-term debt.............................. $ 58,000,000 $200,000,000
Stockholders' equity:
Preferred stock, $1 par value; authorized 3,000,000
shares, none issued.................................... -- --
Class A common stock, $.01 par value, 270,000,000 shares
authorized, 158,063,640 shares issued.................. 1,580,636 1,580,636
Class B common stock, convertible, $.01 par value,
18,000,000 shares authorized, 16,372,800 issued and
outstanding............................................ 163,728 163,728
Additional paid-in capital................................ 24,072,189 24,072,189
Retained earnings......................................... 64,493,988 64,493,988
Treasury stock (39,840 shares of Class A common stock).... (93,285) (93,285)
Accumulated other comprehensive income.................... 248,591,593 248,591,593
------------ ------------
Total stockholders' equity........................ 338,808,849 338,808,849
------------ ------------
Total capitalization............................ $396,808,849 $538,808,849
============ ============
</TABLE>
16
<PAGE> 18
SELLING STOCKHOLDER
The following table sets forth the beneficial ownership of our common stock
by the selling stockholder.
Under the Exchange Act, a person will be deemed to be a "beneficial owner"
of shares of our Class A common stock if he or she has or shares the power to
vote or direct the voting of such shares or the power to dispose or direct the
disposition of such shares. Unless otherwise indicated in the footnotes to the
table, the selling stockholder has sole voting and dispositive power with
respect to the shares of our Class A common stock shown as beneficially owned.
<TABLE>
<CAPTION>
PRIOR TO THE OFFERING
----------------------------------- AFTER THE OFFERING
NUMBER OF -----------------------
NUMBER OF PERCENT OF SHARES NUMBER OF PERCENT OF
NAME SHARES(1) SHARES OFFERED SHARES SHARES
- ---- ---------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
J. Joe Ricketts(2), Director,
Chairman and Co-Chief Executive
Officer of Holding............... 52,552,660 30.1% 222,222 52,330,438 30.0%
</TABLE>
- ---------------
(1) Amounts of shares of common stock beneficially owned assumes that all of
the Class B common stock has been converted into Class A common stock.
(2) Shares of Class A common stock beneficially owned by Mr. Ricketts consist
of 34,611,312 shares held by Mr. Ricketts individually, 4,500,000 shares
held jointly with Marlene M. Ricketts, his spouse, 332,352 shares held in
the J. Ricketts IRA, 4,626,033 shares in Mr. Ricketts' 401(k) account, and
296,802 shares issuable upon the exercise of options exercisable within 60
days from September 1, 1999. Shares of Class B common stock beneficially
owned by Mr. Ricketts consist of 8,186,112 shares held by the Marlene M.
Ricketts 1994 Dynasty Trust, over which Mr. Ricketts has sole voting and
dispositive power. Mr. Ricketts' address is c/o Ameritrade Holding
Corporation, 4211 South 102nd Street, Omaha, Nebraska 68127.
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<PAGE> 19
DESCRIPTION OF CAPITAL STOCK
The following summary description of our capital stock is based on the
provisions of our certificate of incorporation and bylaws and the applicable
provisions of the Delaware General Corporation Law. For information on how to
obtain copies of our certificate of incorporation and bylaws, see "Where You Can
Find More Information".
AUTHORIZED AND OUTSTANDING CAPITAL STOCK
We currently have authority to issue 291,000,000 shares of capital stock,
consisting of 270,000,000 shares of Class A common stock, $.01 par value,
18,000,000 shares of Class B common stock, $.01 par value, and 3,000,000 shares
of preferred stock, $1.00 par value. As of September 1, 1999, 158,103,480 shares
of our Class A common stock, 16,372,800 shares of our Class B common stock and
no shares of our preferred stock were issued and outstanding.
The authorized and unissued shares of common stock and preferred stock may
be utilized for a variety of corporate purposes, including future public
offerings and corporate acquisitions, and could be utilized, under certain
circumstances, to delay, prevent or make more difficult a takeover or change in
control of Holding.
The rights of the holders of our Class A common stock and our Class B
common stock discussed below are subject to such rights as our board of
directors may from time to time confer on holders of our preferred stock that
may be issued in the future. Such rights may adversely affect the rights of
holders of our Class A common stock or our Class B common stock, or both.
COMMON STOCK
VOTING RIGHTS. Except for the election of directors and as otherwise
required by the law, the holders of our Class A common stock and our Class B
common stock have one vote per share and vote as a single class on any matter
submitted to a stockholder vote. Under the Delaware General Corporation Law, the
holders of Class A common stock must vote separately as a class to approve any
proposal to amend the certificate of incorporation to change the rights,
preferences and limitations of Class A common stock. Our board of directors
determines by resolution the number of directors we will have but, in any case,
by our bylaws, we may not have less than three. We currently have nine
directors.
The holders of our Class B common stock are entitled to elect a majority
(five) of our board of directors. The holders of Class A common stock are
entitled to elect the remaining (four) directors. Only the holders of the class
of common stock that have elected a director or that have filled the vacancy of
a director previously may remove or fill the vacancy of that director. If all of
the shares of Class B common stock are converted into Class A common stock or
are no longer outstanding, the holders of Class A common stock will be entitled
to elect all of the directors, subject to any rights of the holders of preferred
stock. The shares of Class A common stock and Class B common stock do not have
cumulative voting rights.
In general, the holders of our Class B common stock will be able to defeat
any attempt to acquire control of us even if more than a majority of the holders
of the outstanding shares of common stock favor a change of control. This could
preclude holders of shares of our common stock from receiving any premium above
market price for their shares that may be offered in an attempt to acquire
control of us. By their ability to control the board of directors, the holders
of our Class B common stock also will generally have the power to prevent
certain fundamental corporate changes, like a sale of substantially all of our
assets, a merger of our company or an amendment to our certificate of
incorporation.
DIVIDEND RIGHTS. Dividends may be paid on our Class A common stock and our
Class B common stock when and as declared by our board of directors. Any
dividend declared and
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<PAGE> 20
payable in cash, capital stock (other than our Class A common stock or our Class
B common stock) or other property must be paid equally on a share-for-share
basis on Class A common stock and Class B common stock. Dividends and
distributions payable in shares of Class A common stock may be paid only on
shares of Class A common stock, and dividends and distributions payable in
shares of Class B common stock may be paid only on shares of Class B common
stock. If a dividend or distribution payable in Class A common stock is made on
Class A common stock, the same dividend or distribution in Class B common stock
has to be made on Class B common stock. Similarly, if a dividend or distribution
payable in Class B common stock is made on Class B common stock, the same
dividend or distribution in Class A common stock must be made on Class A common
stock.
LIQUIDATION RIGHTS. If there is a liquidation, distribution or winding up
of Holding, the holders of our Class A common stock and the holders of our Class
B common stock will be entitled to participate equally on a share-for-share
basis in all distributions to the holders of common stock.
CONVERSION RIGHTS. Our Class A common stock is not convertible. Each share
of Class B common stock is convertible into one share of Class A common stock at
any time at the option of and without any cost to the holder of the shares. Each
share of Class B common stock automatically converts into one share of Class A
common stock if that share of Class B common stock is sold or transferred to any
person other than a member of the Control Group. In addition, each share of
Class B common stock automatically converts into one share of Class A common
stock if the number of shares of outstanding common stock held by the Control
Group falls below 20 percent of the total number of shares of outstanding common
stock.
PREEMPTIVE RIGHTS. Neither the holders of Class A common stock nor the
holders of Class B common stock have preemptive rights to purchase shares of
Class A or Class B common stock or shares of stock of any other class that we
may issue.
PREFERRED STOCK
Our board of directors are authorized to issue, by resolution and without
any action by stockholders, up to 3,000,000 shares of our preferred stock and
may establish the designations, dividend rights, dividend rate, conversion
rights, voting rights, terms of redemption, liquidation preference, sinking fund
terms and all other preferences and rights of any series of preferred stock,
including rights that could adversely affect the voting power of the holders of
Class A common stock. We have no present intention to issue any shares of
preferred stock.
DIRECTOR NOMINATIONS AND STOCKHOLDER PROPOSALS.
Our bylaws establish procedures for the nomination of candidates for
election as directors and stockholder proposals. In order to nominate directors
or bring other business before an annual meeting of stockholders, a stockholder
must give notice to the secretary not less than 120 days and not more than 150
days prior to the date of our proxy statement for the preceding year's annual
meeting. To make nominations or bring other business before a special meeting of
stockholders, a stockholder must give notice to the secretary not less than 60
days and not more than 90 days prior to the date of the special meeting. Only
the chief executive officer, the president, the majority of the board of
directors or the holders of not less than 25% of our outstanding voting stock
may call a special meeting of the stockholders. A stockholder may nominate a
person to be a director only if that stockholder would be entitled to vote for
that person in the election for that director. Also, the stockholder's notice
for nominating a director must provide all information relating to the person
being nominated that required by Regulation 14A of the Exchange Act.
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<PAGE> 21
CERTAIN STATUTORY PROVISIONS.
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law. In general, this statute prohibits a publicly held Delaware
corporation like us from engaging in a business combination with an interested
stockholder for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless
- - prior to that date, the corporation's board of directors approved either the
business combination or the transaction that resulted in the stockholder
becoming an interested stockholder,
- - upon consummation of the transaction that resulted in such person becoming an
interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced, excluding, for purposes of determining the number of shares
outstanding, shares owned by directors who are also officers and by certain
employee stock plans, or
- - on or after the date the stockholder became an interested stockholder, the
business combination is approved by the corporation's board of directors and
authorized by the affirmative vote, and not by written consent, of at least
two-thirds of the outstanding voting stock of the corporation excluding the
stock owned by the interested stockholder.
A "business combination" includes a merger or consolidation, asset sale or
other transaction resulting, directly or indirectly, in a financial benefit to
the interested stockholder. An "interested stockholder" is a person, other than
the corporation and any direct or indirect majority owned subsidiary of the
corporation, who (1) is the owner of 15% or more of the corporation's
outstanding voting stock or (2) is an affiliate or associate of the corporation
and was the owner of 15% or more of the corporation's outstanding voting stock
at any time within the three-year period immediately prior to the date on which
it is sought to be determined whether a person is an interested stockholder,
including the affiliates or associates of that person.
Section 203 expressly exempts from the requirements described above any
business combination by a corporation with an interested stockholder who became
an interested stockholder at a time when the section did not apply to the
corporation.
LIMITATION OF LIABILITY AND INDEMNIFICATION
LIMITATIONS OF DIRECTOR LIABILITY. Section 102(b)(7) of the Delaware
General Corporation Law authorizes corporations to limit or eliminate the
personal liability of directors to corporations and their stockholders for
monetary damages for breach of directors' fiduciary duty of care. Our
certificate of incorporation limits the liability of our directors to us or our
stockholders to the full extent permitted by the law. Specifically, our
directors are not personally liable for monetary damages to us or our
stockholders for breach of the director's fiduciary duty as a director, except
for liability for:
- - any breach of the director's duty of loyalty to us or our stockholders;
- - acts or omissions not in good faith or that involve intentional misconduct or
a knowing violation of law;
- - unlawful payments of dividends or unlawful stock repurchases or redemptions as
provided in Section 174 of the Delaware General Corporation Law; and
- - any transaction from which the director derived an improper personal benefit.
These provisions in our certificate of incorporation do not eliminate a
director's duty of care and do not affect the availability of equitable remedies
such as an action to enjoin or rescind a
20
<PAGE> 22
transaction involving a breach of fiduciary duty. Moreover, these provisions
probably would not bar claims against a director for violation of the federal
securities laws.
INDEMNIFICATION. Our bylaws require us to indemnify our directors and
officers to the maximum extent permitted by law against any expense, liability
or loss to which they may become subject, or which they may incur as a result of
being or having been a director or officer of our company. In addition, we must
advance or reimburse directors and officers for expenses incurred by them
relating to indemnifiable claims. We also maintain directors' and officers'
liability insurance, which covers liabilities under the federal securities laws.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our Class A common stock is The Bank
of New York.
PLAN OF DISTRIBUTION
The selling stockholder will offer the shares of Class A common stock to a
limited number of our employees at the offering price set forth on the cover of
this prospectus. There will be no underwriters, brokers or dealers engaged in
connection with the offering. There will be no fees, commissions or expenses
payable by the purchasers in connection with the offering.
The selling stockholder will agree to guarantee each purchaser's
obligations under certain loan documents entered into for the purpose of
purchasing Class A common stock in the offering and has pledged shares of Class
A common stock in connection with such guarantees.
Each purchaser of Class A common stock will agree that, subject to certain
limited exceptions, until October 28, 1999, the purchaser will not offer, sell,
contract to sell or otherwise dispose of any shares of Class A common stock or
any securities substantially similar to the Class A common stock, including
securities convertible into or exchangeable or exercisable for shares of Class A
common stock or substantially similar securities, without the prior written
consent of Goldman, Sachs & Co.
We estimate that the total expense of the offering will be approximately
$50,000.
VALIDITY OF CLASS A COMMON STOCK
The validity of the Class A common stock offered by the selling stockholder
is being passed upon for us by Mayer, Brown & Platt, Chicago, Illinois.
EXPERTS
The consolidated financial statements as of September 25, 1998 and
September 26, 1997 and for each of the years in the three year period ended
September 25, 1998 included in this prospectus and the related financial
statement schedule incorporated by reference from our Annual Report on Form
10-K/A for the year ended September 25, 1998 in this prospectus have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports, which are included and incorporated by reference herein, and have been
so included and incorporated in reliance upon the reports of such firm given
upon their authority as experts in accounting and auditing.
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<PAGE> 23
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement that we filed with the
SEC. The registration statement, including the attached exhibits, contain
additional relevant information about us and our Class A common stock. The rules
and regulations of the SEC allow us to omit some of the information included in
the registration statement from this prospectus. In addition, we file reports,
proxy statements and other information with the SEC under the Exchange Act. You
may read and copy any of this information at the following locations of the SEC:
<TABLE>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
</TABLE>
You may obtain information on the operation of the SEC's Public Reference
Room by calling the SEC at 1-800-SEC-0330.
The SEC also maintains an Internet Web site that contains reports, proxy
statements and other information regarding issuers, like us, that file
electronically with the SEC. The address of that site is http://www.sec.gov. The
SEC file number for our documents filed under the Exchange Act is 0-22163.
The SEC allows us to "incorporate by reference" information into this
prospectus. This means we can disclose important information to you by referring
you to another document filed separately with the SEC. The information
incorporated by reference is considered to be a part of this prospectus, except
for any such information that is superseded by information included directly in
this document.
This prospectus incorporates by reference the documents listed below that
we have previously filed or will file with the SEC:
- - Our Annual Report on Form 10-K for our fiscal year ended September 25, 1998,
filed on December 21, 1998, as amended by Form 10-K/A filed on January 20,
1999 (except for Item 8, "Financial Statements and Supplementary Data", which
has been updated and included elsewhere in this prospectus);
- - Our Quarterly Report on Form 10-Q for the quarterly period ended December 31,
1998, filed on February 12, 1999;
- - Our Quarterly Report on Form 10-Q for the quarterly period ended March 26,
1999, filed on May 10, 1999;
- - Our Quarterly Report on Form 10-Q for the quarterly period ended June 25,
1999, filed on August 9, 1999;
- - Our Current Report on Form 8-K, filed on July 29, 1999; and
- - All documents filed with the SEC by us under Sections 13(a), 13(c) 14, and
15(d) of the Exchange Act after the date of this prospectus and before the
offering is terminated, are considered to be part of this prospectus,
effective as of the date these documents are filed.
In the event of conflicting information in these documents, the information
in the latest filed document should be considered correct.
22
<PAGE> 24
You can obtain any of the documents listed above from the SEC, through the
SEC's Web site at the address described above, or directly from us, by
requesting them in writing or by telephone at the following address:
Ameritrade Holding Corporation
4211 South 102nd St.
Omaha, Nebraska 68127
Attn: J. Peter Ricketts, Secretary
(402) 331-7856
We will provide a copy of any of these documents without charge, excluding
any exhibits unless the exhibit is specifically listed as an exhibit to the
registration statement of which this prospectus is a part.
23
<PAGE> 25
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report.............................. F-2
Consolidated Balance Sheets............................... F-3
Consolidated Statements of Income......................... F-4
Consolidated Statements of Stockholders' Equity........... F-5
Consolidated Statements of Cash Flows..................... F-6
Notes to Consolidated Financial Statements................ F-7
</TABLE>
F-1
<PAGE> 26
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Ameritrade Holding Corporation and Subsidiaries
Omaha, Nebraska
We have audited the accompanying consolidated balance sheets of Ameritrade
Holding Corporation and its subsidiaries (collectively, the "Company") as of
September 25, 1998 and September 26, 1997, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the three
years in the period ended September 25, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Ameritrade Holding Corporation
and its subsidiaries as of September 25, 1998 and September 26, 1997, and the
results of their operations and their cash flows for each of the three years in
the period ended September 25, 1998, in conformity with generally accepted
accounting principles.
Deloitte & Touche LLP
Omaha, Nebraska
October 27, 1998 (August 4, 1999 as to Note 11)
F-2
<PAGE> 27
AMERITRADE HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 26, 1997 AND SEPTEMBER 25, 1998
ASSETS
<TABLE>
<CAPTION>
1997 1998
------------ --------------
<S> <C> <C>
Cash and cash equivalents................................... $ 53,522,447 $ 24,526,935
Cash and investments segregated in compliance with federal
regulations............................................... 319,763,921 503,455,354
Receivable from brokers, dealers, and clearing
organizations............................................. 17,823,640 25,732,164
Receivable from customers and correspondents -- net of
allowance for doubtful accounts: 1997 -- $249,949; 1998 --
$1,039,788................................................ 325,407,147 647,121,854
Furniture, equipment and leasehold improvements -- net of
accumulated depreciation and amortization: 1997 --
$3,732,790; 1998 -- $6,728,212............................ 8,709,923 26,116,333
Goodwill -- net of accumulated amortization................. 6,346,763 5,983,761
Investments................................................. 12,597,972 30,760,729
Deferred income taxes....................................... 39,314 --
Other assets................................................ 13,145,616 26,704,546
------------ --------------
Total assets...................................... $757,356,743 $1,290,401,676
============ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Payable to brokers, dealers and clearing organizations.... $ 1,404,999 $ 11,765,785
Payable to customers and correspondents................... 666,279,440 1,136,082,337
Accounts payable and accrued liabilities.................. 19,252,931 30,716,987
Notes payable............................................. -- 11,000,000
Income taxes payable...................................... 3,430,279 1,331,170
Deferred income taxes..................................... -- 14,933,313
------------ --------------
Total liabilities................................. 690,367,649 1,205,829,592
------------ --------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $1 par value; authorized 3,000,000
shares, none issued.................................... -- --
Common stock, $0.01 par value:
Class A -- 270,000,000 shares authorized; 157,841,076
shares issued........................................ 1,578,411 1,578,411
Class B -- 18,000,000 shares authorized; 16,372,800
shares issued and outstanding........................ 163,728 163,728
------------ --------------
Total common stock................................ 1,742,139 1,742,139
Additional paid in capital.................................. 21,700,545 21,683,870
Retained earnings........................................... 43,546,410 43,756,848
Treasury stock -- Class A shares at cost (56,652 shares at
September 25, 1998)....................................... -- (133,388)
Net unrealized investment gain.............................. -- 17,522,615
------------ --------------
Total stockholders' equity........................ 66,989,094 84,572,084
------------ --------------
Total liabilities and stockholders' equity........ $757,356,743 $1,290,401,676
============ ==============
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE> 28
AMERITRADE HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED SEPTEMBER 27, 1996, SEPTEMBER 26, 1997 AND SEPTEMBER 25,
1998
<TABLE>
<CAPTION>
1996 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Commissions and clearing fees.............. $ 36,469,561 $ 51,936,902 $ 85,644,433
Interest revenue........................... 22,517,655 36,622,800 66,716,234
Equity income from investments............. 3,358,871 3,443,807 5,083,172
Gain from sale of investment............... -- -- 794,634
Other...................................... 3,032,443 3,663,685 5,955,534
------------ ------------ ------------
Total revenues..................... 65,378,530 95,667,194 164,194,007
Interest expense........................... 11,039,777 18,428,854 29,278,536
------------ ------------ ------------
Net revenues....................... 54,338,753 77,238,340 134,915,471
Expenses excluding interest:
Employee compensation and benefits......... 14,049,642 19,290,808 36,082,707
Commissions and clearance.................. 2,530,642 3,320,262 5,762,336
Communications............................. 3,685,535 5,623,468 12,926,154
Occupancy and equipment costs.............. 2,889,654 5,422,839 10,621,551
Advertising................................ 7,537,265 13,970,834 43,613,779
Other...................................... 5,228,422 8,185,016 25,377,918
------------ ------------ ------------
Total expenses excluding
interest......................... 35,921,160 55,813,227 134,384,445
------------ ------------ ------------
Income before provision for income taxes..... 18,417,593 21,425,113 531,026
Provision for income taxes................... 7,259,248 7,602,964 320,588
------------ ------------ ------------
Net income................................... $ 11,158,345 $ 13,822,149 $ 210,438
============ ============ ============
Basic earnings per share..................... $ 0.07 $ 0.08 $ 0.00
Diluted earnings per share................... $ 0.07 $ 0.08 $ 0.00
Weighted average shares outstanding --
basic...................................... 153,765,876 165,226,668 174,187,962
Weighted average shares outstanding --
diluted.................................... 153,765,876 165,233,442 174,464,730
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE> 29
AMERITRADE HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED SEPTEMBER 27, 1996, SEPTEMBER 26, 1997 AND SEPTEMBER 25,
1998
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
------------------------------------ PAID-IN RETAINED TREASURY
TOTAL CLASS A CLASS B TOTAL CAPITAL EARNINGS STOCK
----------- ---------- --------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, September 29, 1995.... $19,503,719 $1,595,811 $ 299,376 $ 1,895,187 $ (793,519) $19,839,450 $(1,437,399)
Net Income................... 11,158,345 -- -- -- -- 11,158,345 --
Retirement of treasury
stock...................... -- (221,880) (135,648) (357,528) 193,663 (1,273,534) 1,437,399
----------- ---------- --------- ----------- ----------- ----------- -----------
Balance, September 27, 1996.... 30,662,064 1,373,931 163,728 1,537,659 (599,856) 29,724,261 --
Net Income................... 13,822,149 -- -- -- -- 13,822,149 --
Issuance of 48,000 shares
from compensation plans.... 33,750 480 -- 480 33,270 -- --
Issuance of 20,400,000 shares
from initial public
offering................... 22,471,131 204,000 -- 204,000 22,267,131 -- --
----------- ---------- --------- ----------- ----------- ----------- -----------
Balance, September 26, 1997.... 66,989,094 1,578,411 163,728 1,742,139 21,700,545 43,546,410 --
Net Income................... 210,438 -- -- -- -- 210,438 --
Purchase of treasury stock... (286,375) -- -- -- -- -- (286,375)
Reissuance of treasury
stock...................... 136,312 -- -- -- (16,675) -- 152,987
Net unrealized investment
gain....................... 17,522,615 -- -- -- -- -- --
----------- ---------- --------- ----------- ----------- ----------- -----------
Balance, September 25, 1998.... $84,572,084 $1,578,411 $ 163,728 $ 1,742,139 $21,683,870 $43,756,848 $ (133,388)
=========== ========== ========= =========== =========== =========== ===========
<CAPTION>
NET
UNREALIZED
INVESTMENT
GAIN
-----------
<S> <C>
Balance, September 29, 1995.... $ --
Net Income................... --
Retirement of treasury
stock...................... --
-----------
Balance, September 27, 1996.... --
Net Income................... --
Issuance of 48,000 shares
from compensation plans.... --
Issuance of 20,400,000 shares
from initial public
offering................... --
-----------
Balance, September 26, 1997.... --
Net Income................... --
Purchase of treasury stock... --
Reissuance of treasury
stock...................... --
Net unrealized investment
gain....................... 17,522,615
-----------
Balance, September 25, 1998.... $17,522,615
===========
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE> 30
AMERITRADE HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 27, 1996, SEPTEMBER 26, 1997 AND SEPTEMBER 25,
1998
<TABLE>
<CAPTION>
1996 1997 1998
------------ ------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income.............................................. $ 11,158,345 $ 13,822,149 $ 210,438
Adjustments to reconcile net income to net cash from
operating activities:
Depreciation and amortization........................... 1,048,692 1,693,487 2,999,017
Provision for losses.................................... 148,014 59,000 815,000
Deferred income taxes................................... (358,139) 405,064 3,769,643
Equity income from investments.......................... (3,358,871) (3,443,807) (5,083,172)
Gain from sale of investment............................ -- -- (794,634)
Amortization of goodwill................................ 363,002 363,002 363,002
Changes in operating assets and liabilities:
Cash and investments segregated in compliance with
Federal regulations................................. (51,977,699) (144,095,424) (183,691,433)
Receivable from brokers, dealers and clearing
organizations....................................... (5,080,870) (2,726,778) (7,908,524)
Receivable from customers and correspondents.......... (36,035,750) (159,391,092) (322,529,707)
Other assets.......................................... (658,027) (7,132,072) (13,558,930)
Payable to brokers, dealers and clearing
organizations....................................... (1,664,200) 211,520 10,360,786
Payable to customers and correspondents............... 105,080,587 309,336,470 469,802,897
Accounts payable and accrued liabilities.............. 1,999,534 12,031,923 11,464,056
Income taxes payable.................................. 244,342 2,623,568 (2,099,109)
------------ ------------- -------------
Net cash provided by (used in) operating
activities....................................... 20,908,960 23,757,010 (35,880,670)
------------ ------------- -------------
Cash flows from investing activities:
Acquisition of subsidiary............................... (188,953) -- --
Purchase of furniture, equipment and leasehold
improvements.......................................... (1,104,124) (6,657,232) (20,405,427)
Purchase of investments................................. (6,272,361) (659,613) (1,652,740)
Distributions received from investments................. 2,902,005 3,663,231 12,264,993
Proceeds from sale of investments....................... -- -- 5,828,395
------------ ------------- -------------
Net cash used in investing activities............... (4,663,433) (3,653,614) (3,964,779)
------------ ------------- -------------
Cash flows from financing activities:
Issuance of Class A common stock........................ -- 33,750 --
Proceeds from initial public offering, net of offering
costs................................................. -- 22,471,131 --
Proceeds from notes payable............................. -- -- 22,500,000
Principal payments on notes payable..................... (2,244,000) (4,853,000) (11,500,000)
Purchase of treasury stock.............................. -- -- (286,375)
Reissuance of treasury stock............................ -- -- 136,312
------------ ------------- -------------
Net cash provided by (used in) financing
activities....................................... (2,244,000) 17,651,881 10,849,937
------------ ------------- -------------
Net increase (decrease) in cash and cash equivalents...... 14,001,527 37,755,277 (28,995,512)
Cash and cash equivalents at beginning of year............ 1,765,643 15,767,170 53,522,447
------------ ------------- -------------
Cash and cash equivalents at end of year.................. $ 15,767,170 $ 53,522,447 $ 24,526,935
============ ============= =============
Supplemental cash flow information:
Interest paid........................................... $ 11,025,779 $ 17,623,539 $ 28,258,819
Income taxes paid (refunds received).................... $ 7,342,359 $ 4,525,078 $ (1,418,800)
Supplemental investing activities:
Unrealized investment gain net of deferred taxes of
$11,202,984........................................... $ -- $ -- $ 17,522,615
Noncash financing activities:
Retirement of treasury stock............................ $ 1,437,399 $ -- $ --
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE> 31
AMERITRADE HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 27, 1996, SEPTEMBER 26, 1997
AND SEPTEMBER 25, 1998
1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation -- The consolidated financial statements include the
accounts of Ameritrade Holding Corporation and its wholly-owned subsidiaries
(collectively, the "Company"), Advanced Clearing, Inc. ("Advanced Clearing"),
formerly known as AmeriTrade Clearing, Inc., Accutrade, Inc. ("Accutrade"),
Ameritrade (Inc.), formerly known as Ceres Securities, Inc., AmeriVest, Inc.
("AmeriVest"), formerly known as All American Brokers, Inc., K. Aufhauser &
Company ("Aufhauser"), and OnMoney Financial Services Corporation ("OnMoney").
All significant intercompany balances and transactions have been eliminated.
On September 27, 1996, the Company's Board of Directors approved a
resolution to reincorporate in the State of Delaware and change its name from
TransTerra Co. to Ameritrade Holding Corporation. The reincorporation was
accomplished by exchanging each share of Class A and Class B common stock of
TransTerra Co. for thirty shares of Class A and Class B common stock of the
Company. On January 23, 1997, the Company effected an eight-for-five stock split
in the form of a stock dividend. During 1998, the Company's Board of Directors
declared a two-for-one common stock split, distributed August 1998, and effected
in the form of a stock dividend. All share data and per share amounts have been
restated to reflect these exchanges.
The Company reports on a fifty-two/fifty-three week year. The fiscal years
ended 1998, 1997, and 1996 were each fifty-two week years.
Nature of Operations -- The Company provides discount securities brokerage
services through its Ameritrade (Inc.), Accutrade, Aufhauser, and AmeriVest
subsidiaries. The Company also provides trading execution and clearing services
for its own broker-dealer operations and for unaffiliated broker-dealers through
Advanced Clearing. OnMoney is a development-stage entity involved in on-line
financial services. The Company's broker-dealer subsidiaries are subject to
regulation by the Securities and Exchange Commission, the National Association
of Securities Dealers, and the Chicago Stock Exchange, Inc.
Capital Stock -- The authorized capital stock of the Company consists of
Class A common stock, Class B common stock and preferred stock. Each share of
Class A and Class B common stock is entitled to one vote on all matters, except
that the Class B common stock is entitled to elect a majority of the directors
of the Company and the Class A common stock is entitled to elect the remainder
of the directors. Each class of common stock is equally entitled to dividends
if, as and when declared by the Board of Directors. Shares of Class A common
stock are not convertible, while each share of Class B common stock is
convertible into one share of Class A common stock at the option of the Class B
holder or upon the occurrence of certain events. Class A and Class B common
stock have equal participation rights in the event of a liquidation of the
Company.
Voting, dividend, conversion and liquidation rights of the preferred stock
would be established by the Board of Directors upon issuance of such preferred
stock.
Use of Estimates -- The preparation of consolidated financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates.
F-7
<PAGE> 32
AMERITRADE HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED SEPTEMBER 27, 1996, SEPTEMBER 26, 1997
AND SEPTEMBER 25, 1998
Securities Transactions -- Securities transactions are recorded on a
settlement date basis with such transactions generally settling three business
days after trade date. Revenues and expenses related to securities transactions,
including revenues from execution agents, are also recorded on settlement date,
which is not materially different than trade date.
Depreciation and Amortization -- Depreciation is provided on a
straight-line basis using estimated useful service lives of three to seven
years. Leasehold improvements are amortized over the lesser of the economic
useful life of the improvement or the term of the lease.
Goodwill is amortized on a straight-line basis generally over a twenty year
period. Accumulated amortization at September 25, 1998 and September 26, 1997
was $1,243,026 and $880,024, respectively. The Company reviews its intangible
assets for impairment at least annually or whenever events or change in
circumstances indicate that the carrying amount of such asset may not be
recoverable.
Income Taxes -- The Company files a consolidated income tax return with its
subsidiaries on a calendar year basis. Deferred income taxes are provided for
temporary differences between financial statement and taxable income. The
principal temporary differences arise from depreciation, bad debts, prepaid
expenses, and certain accrued liabilities. Deferred tax liabilities and assets
are determined based on the differences between the financial statement carrying
amounts and tax bases of assets and liabilities using enacted tax rates in
effect in the years in which the differences are expected to reverse.
Cash and Cash Equivalents -- The Company considers temporary, highly liquid
investments with an original maturity of three months or less to be cash
equivalents.
Segregated Cash and Investments -- Cash and investments consisting
primarily of U.S. Treasury Bills and repurchase agreements at Advanced Clearing
of $503,455,354 and $319,763,921 as of September 25, 1998 and September 26,
1997, respectively, have been segregated in a special reserve bank account for
the benefit of customers under Rule 15c3-3 of the Securities and Exchange
Commission.
Estimated Fair Value of Financial Instruments -- The Company considers the
amounts presented for financial instruments on the consolidated balance sheets
to be reasonable estimates of fair value. The estimated fair value amounts have
been determined by the Company using available market information and
appropriate valuation methodologies.
Investments -- The Company's investments in companies and partnerships are
accounted for under the equity method when the Company has the ability to
exercise significant influence over the investee's operating and financial
policies. The cost method is used for investments that do not meet equity method
requirements. The Company's investments in marketable equity securities are
carried at fair market value and designated as available for sale. Unrealized
gains and losses, net of deferred income taxes, are reflected as a separate
component of stockholders' equity. Realized gains and losses are determined on
the specific identification method and reflected in operations.
Advertising -- The Company generally expenses advertising costs as they are
incurred.
Earnings Per Share -- The Company adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 128, Earnings Per Share ("SFAS 128")
and accordingly, restated all prior period earnings per share ("EPS") to conform
with SFAS 128. This statement requires dual presentation of basic and diluted
earnings per share on the face of the Statement
F-8
<PAGE> 33
AMERITRADE HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED SEPTEMBER 27, 1996, SEPTEMBER 26, 1997
AND SEPTEMBER 25, 1998
of Income. Basic EPS excludes dilution and is computed by dividing income
available to common stockholders by the weighted-average number of all classes
common shares outstanding for the period. Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised or securities converted into common stock or resulted in the
issuance of common stock that then shared in the earnings of the entity. The
adoption of SFAS 128 did not have a material effect on previously reported EPS.
Stock Based Compensation -- As permitted by SFAS No. 123, Accounting for
Stock Based Compensation, the Company accounts for its stock-based compensation
on the intrinsic-value method in accordance with Accounting Principles Board
("APB") Opinion No. 25.
Reclassifications -- Certain items in prior years' consolidated financial
statements have been reclassified to conform to the current year presentation.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:
SFAS No. 130 -- In June 1997, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards No. 130, Reporting
Comprehensive Income ("SFAS No. 130"). This statement establishes standards for
reporting and display of comprehensive income and its components in a full set
of financial statements. This statement is effective for fiscal years beginning
after December 15, 1997. Companies are also required to report comparative
totals for comprehensive income in interim reports. The Company will report
comprehensive income commencing in fiscal 1999.
SFAS No. 131 -- In June 1997, the FASB issued Statement of Financial
Accounting Standards No. 131, Disclosures About Segments of an Enterprise and
Related Information ("SFAS No. 131"). This statement requires disclosures for
each segment that are similar to those required under current standards with the
addition of quarterly disclosure requirements and more specific and detailed
geographic disclosures especially by countries as opposed to broad geographic
regions. The provisions of SFAS No. 131 are effective for fiscal years beginning
after December 15, 1997. This statement will have no impact on the Company as
the Company currently does not have reportable operating segments.
SFAS No. 133 -- In June 1998, the FASB issued Statement of Financial
Accounting Standards No. 133, Accounting for Derivatives and Similar Financial
Instruments and for Hedging Activities. This statement revises the accounting
for the recognition and measurement of derivatives and hedging transactions and
is effective for fiscal years beginning after June 15, 2000. The Company has not
determined the impact this statement will have on the consolidated financial
statements.
F-9
<PAGE> 34
AMERITRADE HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED SEPTEMBER 27, 1996, SEPTEMBER 26, 1997
AND SEPTEMBER 25, 1998
2. RECEIVABLE FROM AND PAYABLE TO BROKERS, DEALERS AND CLEARING ORGANIZATIONS
Amounts receivable from and payable to brokers, dealers and clearing
organizations are comprised of the following:
<TABLE>
<CAPTION>
SEPTEMBER 26, SEPTEMBER 25,
1997 1998
------------- -------------
<S> <C> <C>
Receivable:
Securities borrowed............................. $15,072,400 $21,638,669
Securities failed to deliver.................... 2,751,240 4,069,740
Clearing organizations.......................... -- 23,755
----------- -----------
Total........................................ $17,823,640 $25,732,164
=========== ===========
Payable:
Securities loaned............................... $ -- $ 5,519,000
Securities failed to receive.................... 1,005,984 2,227,342
Clearing organizations.......................... 399,015 4,019,443
----------- -----------
Total........................................ $ 1,404,999 $11,765,785
=========== ===========
</TABLE>
3. INVESTMENTS
Knight/Trimark Group, Inc. -- Prior to July 8, 1998, the Company owned a
9.2 percent interest in Roundtable Partners L.L.C. ("Roundtable"), a company
formed to hold equity interests in securities trading and market making
companies. The Company had accounted for its investment in Roundtable under the
equity method since its inception. On July 8, 1998, Roundtable was reorganized
into a corporation known as Knight/Trimark Group, Inc. ("Knight/ Trimark")
coincident with an initial public offering of Knight/Trimark common stock. As a
result of this reorganization, all of the Company's ownership interest in
Roundtable was converted to common stock of Knight/Trimark, which represents 7.7
percent of the issued and outstanding shares of common stock of Knight/Trimark.
As of September 25, 1998, the Company also received a cash distribution of
$7,817,329 in connection with the reorganization. The cash distribution was a
return of capital, therefore there was no gain or loss associated with the
distribution. As a result of the reorganization of Knight/Trimark and subsequent
initial public offering in 1998, the Company accounts for its investment in
Knight/Trimark as a marketable equity security held available-for-sale. The
Company's investment in Knight/Trimark is subject to a 180-day sale restriction
agreement from the initial public offering date with the underwriters of the
initial public offering and potential registration costs. On September 25, 1998,
the Company valued its investment in Knight/Trimark at $29,454,879. The
Company's cost basis on September 25, 1998 was $729,280, therefore the gross
unrealized gain is $28,725,599. The Company executes a portion of its securities
transactions through subsidiaries of Knight/Trimark. Revenues related to such
transactions totaled $9,435,696, $6,843,502, and $7,758,836 in 1998, 1997, and
1996, respectively. These amounts are included in Commissions and Clearing Fees.
Comprehensive Software Systems, Ltd.("CSS") -- As of September 25, 1998,
the Company owned 7.2 percent of CSS, a partnership formed for the purpose of
developing software for securities broker-dealers, banks and other financial
institutions. On June 3, 1998, the Company earned $794,634 on the sale of a
portion of its limited partnership interest in CSS. As a result of this
transaction, the Company's ownership interest in CSS decreased from 14.3 percent
to 7.2 percent. Accordingly, the Company began accounting for its investment in
CSS under the
F-10
<PAGE> 35
AMERITRADE HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED SEPTEMBER 27, 1996, SEPTEMBER 26, 1997
AND SEPTEMBER 25, 1998
cost method as of that date, and will, therefore, no longer recognize income or
loss based on the operations of CSS.
Adirondack Trading Partners, L.L.C. ("Adirondack") -- As of September 25,
1998, the Company owned a minority interest in Adirondack, a development-stage
company formed to trade listed equity and index options. The Company accounts
for its ownership in Adirondack under the cost method.
Telescan, Inc. ("Telescan") -- As of September 26, 1997, the Company owned
769,794 shares of common stock of Telescan, a publicly traded software/online
services company. During fiscal 1998, in a series of transactions, the Company
sold its interest in Telescan.
4. NOTES PAYABLE
The Company entered into a revolving credit agreement with a bank group on
January 16, 1998. The revolving credit agreement permits borrowings up to $50
million through June 30, 1999, with permissible borrowings decreasing $2.5
million quarterly to $35 million maturity at December 31, 2000. The revolving
credit agreement is collateralized by the common stock of the Company's
subsidiaries, as well as all assets of the Company. Borrowings under the
revolving credit agreement bear interest at prime rate less 0.75 percent (7.75
percent at September 25, 1998). The Company had outstanding indebtedness under
the revolving credit agreement of $11 million at September 25, 1998. The Company
pays a maintenance fee of 0.25 percent per annum of the unused credit available
under the revolving credit agreement. The revolving credit agreement contains
certain restrictions, including restrictions on the payment of cash dividends
and additional borrowings.
5. INCOME TAXES
Provision for income tax is comprised of the following for fiscal years
ended:
<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Current expense (benefit):
Federal............................................ $7,132,387 $7,150,775 $(3,051,000)
State.............................................. 485,000 47,125 (398,055)
---------- ---------- -----------
7,617,387 7,197,900 (3,449,055)
Deferred expense (benefit):
Federal............................................ (306,777) 344,066 3,383,013
State.............................................. (51,362) 60,998 386,630
---------- ---------- -----------
(358,139) 405,064 3,769,643
---------- ---------- -----------
Provision for income taxes........................... $7,259,248 $7,602,964 $ 320,588
========== ========== ===========
</TABLE>
F-11
<PAGE> 36
AMERITRADE HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED SEPTEMBER 27, 1996, SEPTEMBER 26, 1997
AND SEPTEMBER 25, 1998
A reconciliation of the federal statutory tax rate to the effective tax
rate applicable to income before provision for income taxes follows:
<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Federal statutory rate...................................... 35.00% 35.00% 35.00%
State taxes, net of federal tax effect...................... 4.29 3.57 2.78
Amortization of goodwill.................................... 0.75 0.59 23.93
State credits............................................... (2.87) (3.72) 0.00
Other....................................................... 2.24 0.05 (1.34)
----- ----- -----
Effective tax rate.......................................... 39.41% 35.49% 60.37%
===== ===== =====
</TABLE>
Deferred tax assets (liabilities) are comprised of the following:
<TABLE>
<CAPTION>
1997 1998
---- ----
<S> <C> <C>
Unrealized investment gain.................................. $ -- $(11,202,984)
Depreciation and amortization, net.......................... (181,323) (575,425)
Prepaid expenses............................................ (1,107,460) (4,279,343)
----------- ------------
(1,288,783) (16,057,752)
Accrued liabilities......................................... 1,328,097 1,124,439
----------- ------------
Net deferred tax assets (liabilities)....................... $ 39,314 $(14,933,313)
=========== ============
</TABLE>
6. NET CAPITAL
The Company's subsidiaries are subject to the Securities and Exchange
Commission Uniform Net Capital Rule (SEC rule 15c3-1), which requires the
maintenance of minimum net capital, as defined. Net capital and the related net
capital requirement may fluctuate on a daily basis.
The Company's broker-dealer subsidiaries had net capital, in the aggregate,
of $40,062,733 and $26,121,959 as of September 25, 1998 and September 26, 1997,
respectively, which exceeded aggregate minimum net capital requirements by
$25,247,775 and $18,058,972, respectively. Subsidiary net capital in the amount
of $14,814,958 and $8,062,987 as of September 25, 1998 and September 26, 1997,
respectively, is not available for transfer to the Company due to net capital
regulations.
7. STOCK OPTION AND INCENTIVE PLANS
The Company has two stock option plans, the Ameritrade Holding Corporation
Long-Term Incentive Plan (the "Long-Term Incentive Plan") and the Ameritrade
Holding Corporation Directors Incentive Plan (the "Directors Plan"), both
initiated in fiscal 1997.
The Long-Term Incentive Plan authorizes the award of options to purchase
Class A Common Stock, Class A Common Stock appreciation rights, shares of Class
A Common Stock and performance units. The Long-Term Incentive Plan reserves
9,600,000 shares of the Company's Class A Common Stock for issuance to eligible
employees. The Directors Plan authorizes the award of options to purchase Class
A Common Stock. The Directors Plan reserves 960,000 shares of the Company's
Class A Common Stock for issuance to non-employee directors. Options are
generally granted at not less than the fair market value at grant date, vest
over a one to three year period, and expire ten years after the grant date.
F-12
<PAGE> 37
AMERITRADE HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED SEPTEMBER 27, 1996, SEPTEMBER 26, 1997
AND SEPTEMBER 25, 1998
A summary of the status of the Company's outstanding stock options as of
September 26, 1997 and September 25, 1998 is presented below:
<TABLE>
<CAPTION>
1997 1998
----------------------------- -----------------------------
NUMBER WEIGHTED-AVERAGE NUMBER WEIGHTED-AVERAGE
OF OPTIONS EXERCISE PRICE OF OPTIONS EXERCISE PRICE
---------- ---------------- ---------- ----------------
<S> <C> <C> <C> <C>
Outstanding at beginning of year... -- -- 96,000 $1.25
Granted.......................... 96,000 $1.25 1,681,200 $2.14
Exercised........................ -- -- -- --
Canceled......................... -- -- -- --
---------- ----- --------- -----
Outstanding at end of year......... 96,000 $1.25 1,777,200 $2.09
Exercisable at end of year......... -- -- 96,000 $1.25
Available for future grant at end
of year.......................... 10,464,000 8,782,800
Weighted-average fair value of
options granted during the
year............................. $1.12 $1.23
</TABLE>
The following table summarizes information about the stock options
outstanding at September 25, 1998:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------------ -----------------------------
WEIGHTED-AVERAGE
REMAINING
NUMBER CONTRACTUAL WEIGHTED-AVERAGE NUMBER WEIGHTED-AVERAGE
RANGE OF EXERCISE PRICES OF OPTIONS LIFE(IN YEARS) EXERCISE PRICE OF OPTIONS EXERCISE PRICE
- ------------------------ ---------- ---------------- ---------------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
$0.83-$1.66........... 96,000 6.44 $1.25 96,000 $1.25
$1.67-$2.50........... 1,653,600 7.14 $2.13 -- --
$2.51-$3.33........... 27,600 7.81 $2.86 -- --
--------- ---- ----- ------ -----
$0.83-$3.33........... 1,777,200 7.11 $2.09 96,000 $1.25
</TABLE>
There are no Stock Appreciation Rights or performance units outstanding as
of September 25, 1998.
As discussed in Note 1, the Company has elected to follow APB 25 and
related Interpretations in accounting for stock-based awards to employees. Under
APB 25, the Company generally recognizes no compensation expense with respect to
such awards.
Pro forma information regarding the net income and earnings per share is
required by SFAS 123. This information is required as if the Company had
accounted for its stock-based awards to employees under the fair value method.
The fair value of options was estimated at the date of the grant using the
Black-Scholes option pricing model with the following weighted average
assumptions for fiscal 1998 and 1997, respectively: risk-free interest rate of
5.95 percent and 6.37 percent; dividend yield of zero for both years; expected
volatility of 49.8 percent for both years; and an expected option life of eight
years for both years. The weighted average fair value
F-13
<PAGE> 38
AMERITRADE HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED SEPTEMBER 27, 1996, SEPTEMBER 26, 1997
AND SEPTEMBER 25, 1998
of options granted in fiscal 1997 and 1998 was $1.12 and $1.23, respectively.
Pro forma net income and earnings per share are as follows:
<TABLE>
<CAPTION>
1997 1998
---- ----
<S> <C> <C> <C>
Net Income:.......................... As reported $13,822,149 $ 210,438
Pro forma 13,787,640 (301,983)
Basic earnings per share:............ As reported $ 0.08 $ 0.00
Pro forma 0.08 (0.00)
Diluted earnings per share:.......... As reported 0.08 0.00
Pro forma 0.08 (0.00)
</TABLE>
8. EMPLOYEE BENEFIT PLANS
The Company has a profit-sharing plan under which the annual contribution
is determined at the discretion of the Board of Directors. Profit sharing
expense was $779,657, $595,222 and $388,800 for the fiscal years ended 1998,
1997 and 1996, respectively.
The Company has a 401(k) plan covering all eligible employees. The plan
provides for matching contributions at the discretion of the Board of Directors.
Contribution expense under this plan was $-0-, $-0- and $9,093 for the fiscal
years ended 1998, 1997 and 1996, respectively.
The Company has an executive bonus plan that was designed to allow
designated executive participants the opportunity to earn bonus awards with
current and deferred components. The value of each component is based on the
annual increase (if any) in the book value per share of the common stock.
Executive bonus plan expense was $960,000, $2,170,000 and $1,710,000 for the
fiscal years ended 1998, 1997 and 1996, respectively.
9. EARNINGS PER SHARE
Reconciliation between the weighted average shares outstanding used in the
basic and diluted earnings per share ("EPS") computation is presented below.
<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Net Income...................................... $ 11,158,345 $ 13,822,149 $ 210,438
------------ ------------ ------------
Weighted average shares outstanding -- basic.... 153,765,876 165,226,668 174,187,962
Effect of dilutive securities:
Assumed exercise of stock options............. -- 6,774 276,768
Weighted average shares outstanding --
diluted....................................... 153,765,876 165,233,442 174,464,730
Earnings per share -- basic..................... $ 0.07 $ 0.08 $ 0.00
Earnings per share -- diluted................... $ 0.07 $ 0.08 $ 0.00
</TABLE>
F-14
<PAGE> 39
AMERITRADE HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED SEPTEMBER 27, 1996, SEPTEMBER 26, 1997
AND SEPTEMBER 25, 1998
10. COMMITMENTS AND CONTINGENCIES
Lease Commitments -- The Company and its subsidiaries have various
non-cancelable operating leases on facilities and certain computer and office
equipment requiring annual payments as follows:
<TABLE>
<CAPTION>
FISCAL YEAR ENDING AMOUNT
- ------------------ ------
<S> <C>
1999........................................................ $ 6,970,754
2000........................................................ 6,028,228
2001........................................................ 3,075,012
2002........................................................ 1,776,036
2003........................................................ 1,790,677
Thereafter (to December 31, 2017)........................... 20,904,751
-----------
Total....................................................... $40,545,458
===========
</TABLE>
The Company and certain of its subsidiaries lease one of their office
facilities from the Chief Executive Officer of the Company. The lease expires on
December 31, 2017, and provides for annual rentals of $1,288,000. Additionally,
the Company and its subsidiaries lease certain computer equipment, office
equipment, and office facilities under various operating leases. Rental expense
was $6,225,232, $3,155,550 and $1,581,171 for fiscal years ended 1998, 1997 and
1996, respectively.
Advertising Commitment -- The Company has entered into a two-year agreement
with America Online, Inc. ("AOL") that will feature Ameritrade (Inc.) as one of
four brokerages on AOL's Personal Finance Channel. The pact calls for the
Company to pay AOL $12.5 million annually over a two-year term.
Letter of Credit -- A letter of credit in the amount of $44 million as of
September 25, 1998, has been issued by a financial institution on behalf of
Advanced Clearing, a wholly-owned subsidiary of the Company which acts as a
securities clearing firm. The letter of credit has been issued to support margin
requirements. Advanced Clearing pays a maintenance fee of 0.5 percent of the
committed amount for the letter of credit. As of September 25, 1998 and
September 26, 1997, no amounts were outstanding under the credit facility. In
addition, the same financial institution may make loans to Advanced Clearing if
requested under a note. Advanced Clearing has pledged customer securities, the
amount of which fluctuates from time to time, to secure its obligations under
the letter of credit and the note.
Legal -- On September 16, 1998, a putative class action complaint was filed
in the District Court, Douglas County, Nebraska, seeking injunctive and
equitable relief due to the Company's alleged breach of contract, violation of
the Consumer Protection Act, fraudulent inducement, negligent misrepresentation,
negligence, and unjust enrichment regarding the Company's alleged inability to
handle the volume of subscribers to its Internet brokerage services. The
complaint seeks injunctive relief enjoining alleged deceptive, fraudulent, and
misleading practices and unspecified compensatory damages. The Company believes
that it has viable defenses to the allegations raised in the complaint. However,
because this proceeding is at a preliminary phase and the amount of damages
sought has not been quantified, the Company is not presently able to predict the
ultimate outcome of this matter.
F-15
<PAGE> 40
AMERITRADE HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED SEPTEMBER 27, 1996, SEPTEMBER 26, 1997
AND SEPTEMBER 25, 1998
The Company and its subsidiaries are parties to a number of other legal
matters arising in the ordinary course of business. In management's opinion, the
Company has adequate legal defenses respecting each of these actions and does
not believe that they will materially affect the Company's results of operations
or its financial position.
General Contingencies -- In the general course of business, there are
various contingencies which are not reflected in the consolidated financial
statements. These include Advanced Clearing's customer activities involving the
execution, settlement and financing of various customer securities transactions.
These activities may expose the Company to off-balance-sheet credit risk in the
event the customers are unable to fulfill their contracted obligations.
Advanced Clearing's customer securities activities are transacted on either
a cash or margin basis. In margin transactions, Advanced Clearing extends credit
to the customer, subject to various regulatory and internal margin requirements,
collateralized by cash and securities in the customer's account. In connection
with these activities, Advanced Clearing executes and clears customer
transactions involving the sale of securities not yet purchased (short sales),
substantially all of which are transacted on a margin basis subject to
individual exchange regulations. Such transactions may expose the Company to
off-balance-sheet risk in the event margin requirements are not sufficient to
fully cover losses which customers may incur. In the event the customer fails to
satisfy its obligations, Advanced Clearing may be required to purchase or sell
financial instruments at prevailing market prices in order to fulfill the
customer's obligations.
Advanced Clearing seeks to control the risks associated with its customer
activities by requiring customers to maintain margin collateral in compliance
with various regulatory and internal guidelines. Advanced Clearing monitors
required margin levels daily and, pursuant to such guidelines, requires
customers to deposit additional collateral, or to reduce positions, when
necessary.
Advanced Clearing borrows securities both to cover short sales and to
complete customer transactions in the event that a customer fails to deliver
securities by the required date. Such borrowings are collateralized by
depositing cash or pledging securities with lending institutions and are "marked
to market" on a daily basis. Failure to maintain levels of cash deposits or
pledged securities at all times at least equal to the value of the related
securities can subject Advanced Clearing to risk of loss. Advanced Clearing
seeks to control the risk of loss by monitoring the market value of securities
pledged and requiring adjustments of collateral levels where necessary.
NOTE 11 -- SUBSEQUENT EVENTS
Subsequent to September 25, 1998, the Company announced a two-for-one and a
three-for-one stock split. Stockholders of record as of the close of business on
February 5, 1999 received, in the form of a stock dividend, one additional share
for each share held by them. This two-for-one split was distributed on or about
February 22, 1999 and the stock began trading at post-split value on February
23, 1999. Stockholders of record as of the close of business on June 11, 1999
received, in the form of a stock dividend, two additional shares for each share
held by them. This three-for-one split was distributed on July 2, 1999 and the
stock began trading at post-split value on July 6, 1999. On July 1, 1999, the
stockholders approved a restated certificate of incorporation increasing the
number of shares of Class A common stock to 270,000,000 and
F-16
<PAGE> 41
AMERITRADE HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE YEARS ENDED SEPTEMBER 27, 1996, SEPTEMBER 26, 1997
AND SEPTEMBER 25, 1998
Class B common stock to 18,000,000. All share data and per share amounts have
been restated to reflect the two-for-one and three-for-one stock splits.
On August 4, 1999, the Company sold $200,000,000 principal amount of 5.75
percent Convertible Subordinated Notes due August 1, 2004 (the "Notes") to
qualified institutional investors in a private placement pursuant to Rule 144A
of the Securities Act of 1933. The Notes are convertible into a total of
6,142,470 shares of the Class A common stock of the Company at approximately
$32.56 per share. On August 4, 1999, the Company used a portion of the proceeds
of the Notes to repay all outstanding indebtedness under its revolving credit
agreement. After the sale of the Notes, the Company will not be able to make
additional borrowings under the revolving credit agreement until new
arrangements have been made with the bank group.
F-17
<PAGE> 42
QUARTERLY FINANCIAL DATA (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AND STOCK PRICE DATA)
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED SEPTEMBER 25, 1998
---------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues........................................ $ 31,365 $ 36,762 $ 47,926 $ 48,141
Interest expense................................ 5,689 6,684 8,320 8,586
-------- -------- -------- --------
Net revenues.......................... 25,676 30,078 39,606 39,555
Total expenses excluding interest............... 43,171 30,394 30,346 30,473
-------- -------- -------- --------
Income (loss) before provision for income
taxes......................................... (17,495) (316) 9,260 9,082
Net income (loss)............................... $(11,249) $ (271) $ 5,940 $ 5,790
-------- -------- -------- --------
Basic earnings (loss) per share................. $ (0.06) $ (0.00) $ 0.03 $ 0.03
Diluted earnings (loss) per share............... $ (0.06) $ (0.00) $ 0.03 $ 0.03
Stock price data ($)
High.......................................... 3.25 2.59 2.74 4.47
Low........................................... 1.50 1.86 1.91 2.16
</TABLE>
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED SEPTEMBER 26, 1997
---------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues........................................ $ 19,042 $ 22,641 $ 24,904 $ 29,080
Interest expense................................ 3,690 4,197 4,959 5,583
-------- -------- -------- --------
Net revenues.......................... 15,352 18,444 19,945 23,497
Total expenses excluding interest............... 15,416 13,036 12,805 14,556
-------- -------- -------- --------
Income (loss) before provision for income
taxes......................................... (64) 5,408 7,140 8,941
Net income (loss)............................... $ (75) $ 3,469 $ 4,587 $ 5,841
-------- -------- -------- --------
Basic earnings (loss) per share................. $ 0.00 $ 0.02 $ 0.03 $ 0.03
Diluted earnings (loss) per share............... $ 0.00 $ 0.02 $ 0.03 $ 0.03
Stock price data ($)
High.......................................... N/A 1.88* 1.53 2.24
Low........................................... N/A 1.35* 0.98 1.22
</TABLE>
- ---------------
* Commencing March 4, 1997
All information is adjusted for the two-for-one stock splits effective on
August 18, 1998 and February 22, 1999 and the three-for-one stock split
effective on July 2, 1999. The stock prices listed above do not include retail
markups, markdowns, or commissions, and may not represent actual transactions.
F-18
<PAGE> 43
- ------------------------------------------------------
- ------------------------------------------------------
No person is authorized to give any information or to represent anything not
contained in this prospectus. You must not rely on any unauthorized information
or representations. This prospectus is an offer to sell only the shares offered
hereby, but only under circumstances and in jurisdictions where it is lawful to
do so. The information contained in this prospectus is current only as of its
date.
----------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Summary............................ 1
Risk Factors....................... 7
Cautionary Note Regarding Forward-
Looking Statements............... 14
Use of Proceeds.................... 14
Dividend Policy.................... 14
Market Price of Class A Common
Stock............................ 15
Capitalization..................... 16
Selling Stockholder................ 17
Description of Capital Stock....... 18
Plan of Distribution............... 21
Validity of Class A Common Stock... 21
Experts............................ 21
Where You Can Find More
Information...................... 22
Index to Consolidated Financial
Statements....................... F-1
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
222,222 Shares
AMERITRADE HOLDING
CORPORATION
Class A Common Stock
---------------------------------
[Ameritrade Holding Corporation Logo]
---------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
