þ | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
A. | Full title of the Plan and the address of the Plan, if different from that of the issuer named below: |
B. | Name of issuer of the securities held pursuant to the Plan and the address of its principal executive office: |
Page | ||||
1 | ||||
FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED
DECEMBER 31, 2007 AND 2006: |
||||
2 | ||||
3 | ||||
4 | ||||
SUPPLEMENTAL SCHEDULE AS OF DECEMBER 31, 2007: |
||||
8 |
1
2007 | 2006 | |||||||
ASSETS |
||||||||
CASH |
$ | 269 | $ | 14,786 | ||||
INVESTMENTS, at fair value (Notes 3 and 4) |
277,441,946 | 142,575,593 | ||||||
EMPLOYER CONTRIBUTION RECEIVABLE |
10,351,234 | 5,048,678 | ||||||
PARTICIPANT CONTRIBUTIONS RECEIVABLE |
| 251,092 | ||||||
DUE FROM BROKERS |
206,356 | 82,284 | ||||||
TOTAL ASSETS |
287,999,805 | 147,972,433 | ||||||
LIABILITIES |
||||||||
DUE TO BROKERS |
240,783 | 40,292 | ||||||
TOTAL LIABILITIES |
240,783 | 40,292 | ||||||
NET ASSETS AVAILABLE FOR BENEFITS |
$ | 287,759,022 | $ | 147,932,141 | ||||
2
2007 | 2006 | |||||||
ADDITIONS TO (SUBTRACTIONS FROM) NET ASSETS
ATTRIBUTED TO: |
||||||||
Investment income (loss): |
||||||||
Net appreciation (depreciation) in fair value
of investments (Note 3) |
$ | 19,714,587 | $ | (27,218,540 | ) | |||
Dividend income |
2,902,313 | 23,554,386 | ||||||
Interest income |
487,630 | 388,200 | ||||||
Net investment income (loss) |
23,104,530 | (3,275,954 | ) | |||||
Contributions: |
||||||||
Employer contributions |
15,409,506 | 7,786,344 | ||||||
Participant contributions |
17,323,155 | 10,205,632 | ||||||
Total contributions |
32,732,661 | 17,991,976 | ||||||
Transfer from acquired company plan (Note 6) |
108,471,415 | | ||||||
164,308,606 | 14,716,022 | |||||||
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: |
||||||||
Distributions to plan participants |
24,109,177 | 22,630,498 | ||||||
Administrative fees (Notes 2 and 4) |
372,548 | 358,931 | ||||||
24,481,725 | 22,989,429 | |||||||
NET INCREASE (DECREASE) |
139,826,881 | (8,273,407 | ) | |||||
NET ASSETS AVAILABLE FOR BENEFITS: |
||||||||
Beginning of year |
147,932,141 | 156,205,548 | ||||||
End of year |
$ | 287,759,022 | $ | 147,932,141 | ||||
3
1. | DESCRIPTION OF PLAN | |
The following description of the TD AMERITRADE Holding Corporation Associates 401(k) Profit Sharing Plan and Trust (the Plan) (formerly Ameritrade Holding Corporation Associates 401(k) Profit Sharing Plan and Trust) provides only general information. Participants should refer to the Plan Document for a more complete description of the Plans provisions. | ||
General The Plan is a defined contribution profit sharing and 401(k) plan sponsored by TD AMERITRADE Online Holdings Corp. (TDAOH). The Plan covers employees of TD AMERITRADE Holding Corporation (the Parent) and its participating affiliated companies (collectively, the Company) who meet eligibility requirements. The Plan covers employees who are 21 years old or older. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), as amended. | ||
Contributions Participants may contribute up to 75% of their compensation on a salary deferral basis, subject to limitations specified in the Internal Revenue Code. During an enrollment process, employees of the Company select their salary deferral percentage or they may elect not to participate in the Plan. Employees of the Company who do not complete the enrollment process with the Plans recordkeeper are subject to a default election in an amount equal to 3% of such employees compensation. Participants direct the investment of all contributions into various options offered by the Plan. In addition, participants may transfer fund balances between the various fund options, including Company common stock and self-directed brokerage accounts. In the event a participant does not direct the investment of their account, the trustee has been directed by the Plan to invest the participants contributions into the lifecycle fund that best approximates when the participant would reach age 65. Effective April 1, 2006, the Company contributes to the Plan as a matching contribution 50% of the participants contributions to the Plan that do not exceed 6% of the participants compensation. To adjust the year 2006 matching contributions to a full-year basis, the matching contribution percentage was temporarily increased from 50% to 65% for the nine-month period April 1, 2006 to December 31, 2006. The Company also makes discretionary contributions to the Plan. Highly compensated employees who are participants in the Ameritrade Holding Corporation 2002 Management Incentive Plan, or its successor plan or plans, shall not be eligible to receive Company matching or discretionary contributions. | ||
Participant Accounts Individual accounts are maintained for each participant. Each participant account is credited with the participant contributions, the Company matching contribution, the Company discretionary contribution (if any), an allocation of forfeitures (if applicable) and an allocation of the Plans earnings or losses, and charged with an allocation of administrative fees, provided however, that forfeitures are first used to pay administrative fees and any excess fees are then charged to participant accounts. The benefit to which a participant is entitled is the benefit that can be provided from the participants vested account. | ||
Vesting Company contributions and earnings or losses thereon vest 20% after the first year of continuous service and vest an additional 20% each year, with 100% vesting occurring for all |
4
participants after five years of service. Participants immediately vest in their contributions plus actual earnings or losses thereon. | ||
Participant Loans Participants may borrow from their Plan accounts the lesser of 50% of their vested account balance or $50,000. The loans are secured by the balance in the participants account and bear interest at the prime rate plus 1%, determined as of the date of the loan. Principal and interest is paid ratably through payroll deductions over a period not to exceed five years except for loans used to acquire a principal residence, for which the repayment period may exceed five years. | ||
Payment of Benefits On termination of service, a participant may elect to receive either a lump-sum payment or installment payments. | ||
Forfeited Accounts Forfeitures are first used to reinstate prior forfeitures for former employees who return to employment with the Company, then to pay the Plans administrative expenses and lastly to supplement the Companys contributions. In addition to the Company contributions, forfeitures of $1,840,094 and $2,830,820 were allocated to participant accounts for the years ended December 31, 2007 and 2006, respectively. As of December 31, 2007 and 2006, unallocated forfeitures of $2,022,012 and $2,815,614, respectively, were included in investments and were available to pay Plan administrative expenses and supplement Company contributions in the subsequent year. In addition, as of December 31, 2007, unallocated forfeitures of $3,272,358 were included in investments and may be available to pay Plan administrative expenses and supplement Company contributions for years 2008 through 2015, if not previously used to reinstate prior forfeitures for former employees who have returned to employment with the Company. | ||
Plan Termination Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100% vested in their accounts. | ||
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Accounting The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles. | ||
Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of net assets available for benefits and changes therein. Actual results could differ from those estimates. | ||
Risks and Uncertainties The Plan utilizes various investment instruments. Investment securities, in general, are exposed to various risks, such as interest rate, credit, and market risks. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participant account balances and the amounts reported in the financial statements. | ||
Investment Valuation Investments are valued as follows: |
| TD AMERITRADE Holding Corporation and The Toronto-Dominion Bank Common Stock The common stock is stated at fair value as determined by quoted market prices. | ||
| Mutual Funds Mutual funds are stated at fair value as determined by quoted net asset value. | ||
| Self-directed Accounts Investments in self-directed accounts are stated at fair value as determined by quoted market prices and quoted net asset values of the investments held therein. |
5
| Participant Loans Loans to participants are carried at the principal amount outstanding, which approximates fair value. |
Income Recognition Security transactions are recorded as of the trade date. Dividends are recorded on the ex-dividend date. Interest income is recorded on the accrual basis. | ||
Administrative Costs The Company pays certain administrative costs for the Plan. Only costs paid by the Plan are reflected in the Plans financial statements. | ||
Payment of Benefits Benefits are recorded when paid. | ||
3. | INVESTMENTS | |
The following table presents individual investments that represent 5% or more of the Plans net assets available for benefits. |
2007 | 2006 | |||||||
Investments at fair value as determined by quoted
market price or quoted net asset value: |
||||||||
TD AMERITRADE Holding Corporation common stock |
$ | 77,321,763 | $ | 74,516,084 | ||||
T. Rowe Price Mid Cap Growth Fund |
27,111,612 | * | ||||||
Vanguard Reserve Prime Money Market Institutional Fund |
21,038,634 | * | ||||||
Lazard Emerging Markets Open Fund |
18,128,264 | * | ||||||
American Funds Growth Fund of America R5 |
17,230,998 | * | ||||||
Vanguard Institutional Index Fund |
16,851,067 | * | ||||||
T. Rowe Price Small Cap Value Fund |
15,027,067 | * |
* | Investment represented less than 5% of Plan net assets as of December 31, 2006. |
Years Ended December 31, | ||||||||
2007 | 2006 | |||||||
Net change in fair value: |
||||||||
TD AMERITRADE Holding Corporation common stock |
$ | 16,932,406 | $ | (31,056,949 | ) | |||
The Toronto-Dominion Bank common stock |
29,733 | | ||||||
Mutual funds |
2,401,927 | 2,978,353 | ||||||
Self-directed brokerage accounts |
350,521 | 860,056 | ||||||
Net appreciation (depreciation) in fair value of investments |
$ | 19,714,587 | $ | (27,218,540 | ) | |||
4. | PARTIES-IN-INTEREST | |
The Plan holds shares of common stock of both the Parent and The Toronto-Dominion Bank. TDAOH is a wholly-owned subsidiary of the Parent. As of December 31, 2007, The Toronto-Dominion Bank owned approximately 39.9% of the Parents voting common stock. Prior to April 2006, TD AMERITRADE Clearing, Inc., a wholly-owned subsidiary of the Parent, acted as the broker for the Plans self-directed brokerage accounts. In April 2006, TD AMERITRADE Clearing, Inc. transferred its introducing broker/dealer business to TD AMERITRADE, Inc., a wholly-owned subsidiary of the Parent. TD AMERITRADE, Inc. became the introducing broker for the Plans self-directed brokerage accounts. |
6
On July 16, 2007, the trustee as defined by the Plan was changed from Intrust Bank, N.A., a discretionary trustee, to Orchard Trust Company, LLC, a non-discretionary trustee. Administrative and recordkeeping fees of $286,576 and $371,448 were paid to NestEgg Consulting, Inc., a wholly-owned subsidiary of Intrust Bank, N.A., in 2007 and 2006, respectively. Administrative and recordkeeping fees of $79,062 were paid to Great-West Retirement Services in 2007. Orchard Trust Company, LLC and Great-West Retirement Services are wholly-owned subsidiaries of Great-West Life and Annuity Insurance Company. These transactions qualify as party-in-interest transactions. | ||
At December 31, 2007, the Plan held 3,854,525 shares of Parent common stock with a cost basis of $43,950,511 and 119,186 shares of The Toronto-Dominion Bank common stock with a cost basis of $3,043,172. | ||
5. | TAX STATUS | |
The Plan has received a determination letter from the Internal Revenue Service, dated April 3, 2003, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the Code) and, therefore the related trust is exempt from taxation. Subsequent to this determination by the Internal Revenue Service, the Plan was amended. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Plan administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan, as amended, is qualified and the related trust is tax exempt. | ||
6. | TRANSFER FROM ACQUIRED COMPANY PLAN | |
On July 16, 2007, assets held in the TD Waterhouse Group, Inc. 401(k) and Profit Sharing Plan with a fair value of $108,471,415 were transferred into the Plan. This transfer is reflected on the Statements of Changes in Net Assets Available for Benefits as Transfer from acquired company plan. |
7
Column B | Column C | Column E | ||||
Description of Investment | ||||||
Including Collateral, | ||||||
Identity of Issue, Borrower, | Rate of Interest, Maturity | Current | ||||
Lessor or Similar Party | Date, Par or Maturity Value | Value | ||||
TD AMERITRADE Holding Corporation* |
Common stock, 3,854,525 shares | $ | 77,321,763 | |||
TD AMERITRADE Clearing, Inc.* |
Self-directed brokerage accounts (comprised of various self-directed investments) | 22,142,573 | ||||
The Toronto-Dominion Bank* |
Common stock, 119,186 shares | 8,337,063 | ||||
American Funds |
American Funds Growth Fund of America R5, 506,794 shares | 17,230,998 | ||||
Goldman Sachs |
Goldman Sachs Large Cap Value Institutional Fund, 971,180 shares | 13,538,256 | ||||
The Lazard Funds, Inc. |
Lazard Emerging Markets Open Fund, 750,032 shares | 18,128,264 | ||||
Pacific Investment Management Co. |
PIMCO Total Return Institutional Fund, 609,480 shares | 6,515,340 | ||||
T. Rowe Price |
T. Rowe Price International Bond Fund, 108,096 shares | 1,090,688 | ||||
T. Rowe Price |
T. Rowe Price Mid Cap Growth Fund, 470,116 shares | 27,111,612 | ||||
T. Rowe Price |
T. Rowe Price Retirement 2005 Fund, 1,586 shares | 18,702 | ||||
T. Rowe Price |
T. Rowe Price Retirement 2010 Fund, 40,156 shares | 650,932 | ||||
T. Rowe Price |
T. Rowe Price Retirement 2015 Fund, 58,730 shares | 742,937 | ||||
T. Rowe Price |
T. Rowe Price Retirement 2020 Fund, 130,238 shares | 2,310,424 | ||||
T. Rowe Price |
T. Rowe Price Retirement 2025 Fund, 38,952 shares | 513,392 | ||||
T. Rowe Price |
T. Rowe Price Retirement 2030 Fund, 234,657 shares | 4,470,210 | ||||
T. Rowe Price |
T. Rowe Price Retirement 2035 Fund, 109,048 shares | 1,473,235 | ||||
T. Rowe Price |
T. Rowe Price Retirement 2040 Fund, 280,164 shares | 5,379,142 | ||||
T. Rowe Price |
T. Rowe Price Retirement 2045 Fund, 19,158 shares | 243,881 | ||||
T. Rowe Price |
T. Rowe Price Retirement 2050 Fund, 8,003 shares | 83,871 | ||||
T. Rowe Price |
T. Rowe Price Retirement 2055 Fund, 12,532 shares | 131,331 | ||||
T. Rowe Price |
T. Rowe Price Retirement Income Fund, 14,452 shares | 192,206 | ||||
T. Rowe Price |
T. Rowe Price Small Cap Value Fund, 418,348 shares | 15,027,067 | ||||
The Vanguard Group, Inc. |
Vanguard Institutional Index Fund, 125,623 shares | 16,851,067 | ||||
The Vanguard Group, Inc. |
Vanguard Reserve Prime Money Market Institutional Fund, 21,038,634 shares | 21,038,634 | ||||
The Vanguard Group, Inc. |
Vanguard Total Bond Market Index Signal Fund, 18,534 shares | 188,305 | ||||
The Vanguard Group, Inc. |
Vanguard Total International Stock Index Fund, 564,768 shares | 11,233,241 | ||||
The Vanguard Group, Inc. |
Vanguard Total Stock Market Index Signal Fund, 25,069 shares | 855,604 | ||||
Loans to Participants * |
Maturing from January 2008 to September 2022, interest range: 5.00% to 10.5% | 4,621,208 | ||||
$ | 277,441,946 | |||||
* | Represents a party-in-interest |
8
Date: June 26, 2008 | By: | /s/ WILLIAM J. GERBER | ||
William J. Gerber | ||||
TD AMERITRADE Holding Corporation Executive Vice President, Chief Financial Officer |
9
Exhibit Number | Description | |
23.1
|
Consent of Ernst & Young LLP |
10