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At 04:06 PM 10/26/2005, The Funkhousers wrote:
>You may feel differently, but reading that made me really uncomfortable.
I decided to reformat the unreadable text so that I could read it. I
attached it below in case you would like to be able to read it.
I see nothing particularly out of the ordinary here for a brokerage
company. Such negative items are sort of a part of the business today...
Bob Fulks
--------------------------------
TradeStation Group Reports Record Revenues, Income Before Income
Taxes, DARTs and Brokerage Accounts for 2005 Third Quarter
Company Snapshot: TRADhttp://www.TradeStation.com
Net Income Increases 188%, Revenues Increase 40%, and Operating Margin of 35%
is a 110% Increase Over 2004 Third Quarter Operating Margin
PLANTATION, Fla., Oct. 26 /PRNewswire-FirstCall/ -- TradeStation
Group, Inc. (Nasdaq: TRAD) today reported record quarterly net
revenues of $24.1 million, record quarterly income before income taxes
of $8.9 million, record daily average revenue trades (DARTs) of over
41,000, and record total brokerage accounts of over 22,000.
TradeStation Group's 2005 third quarter net income of $5.3 million, or
12 cents per share (diluted), was a 188% increase over 2004 third
quarter net income of $1.8 million, or 4 cents per share (diluted).
The company's 2005 third quarter income before income taxes of $8.9
million was a 205% increase from its 2004 third quarter income before
income taxes of $2.9 million. The company's 2005 third quarter
operating margin of 35% was a 110% increase from its 2004 third
quarter operating margin of 16%, and an 11% sequential increase from
its 2005 second quarter operating margin of 31%.
The company's 2005 third quarter net revenues of $24.1 million were a
40% increase over 2004 third quarter net revenues of $17.2 million.
Year-to-date 2005, the company had net income of $13.7 million, income
before income taxes of $22.3 million, an operating margin of 31%, and
net revenues of $68.7 million. When comparing 2005 year-to-date
results to 2004, the company believes that focusing on income before
income taxes, as opposed to net income, is a more meaningful
comparison of its performance (in 2004 the company recorded the
benefit of a large reversal of a valuation allowance on its deferred
income tax assets). Year-to-date 2005 income before income taxes
increased 145% from year-to-date 2004 income before income taxes.
"We are very pleased with our record 2005 third quarter results," said
David Fleischman, the company's Chief Financial Officer. "In the third
quarter, our 40% year-over-year revenue growth and our continued
increase in our operating margin resulted in a 205% year-over-year
growth in income before income taxes."
TradeStation Reports Record DARTs and Total Accounts For the 2005
third quarter, TradeStation experienced the following year- over-year
daily trading growth results with respect to equities, futures and
forex accounts:
Q3 05 Q3 04 % Increase
Daily Average Revenue Trades 41,206 31,035 33%
"We attribute our growth in DARTs to consistent account growth, the
robustness of our high-end client base and the diversity of our
service offering," said Fleischman.
TradeStation had 22,341 brokerage accounts at the end of the 2005
third quarter, a 35% increase year over year.
TradeStation's Average Client Trades Nearly 500 Times Per Year and Has
an Average Account Balance of $85,000 for Equities and $19,000 for
Futures
TradeStation's brokerage client account metrics are among the very
best in the industry. TradeStation brokerage clients generated the
following client account metrics in the 2005 third quarter:
Client Trading Activity
Annualized average revenue per account $3,929
Annualized trades per account 480
Client Account Assets
Average assets per account (Equities) $85,000
Average assets per account (Futures) $19,000
While the average TradeStation account traded 480 times per year, or
40 times per month, the average Ameritrade and E-Trade account traded
about 10 times per year, or less than one time per month. Also,
TradeStation's average assets per equities account of $85,000 was
substantially higher than the average assets per account of Ameritrade
and E-Trade.
TradeStation Announces Two New Initiatives Designed to Accelerate
Growth in Futures Business
TradeStation today announced that, effective December 1, 2005, it will
launch two initiatives designed to accelerate its growth in futures
business. The first initiative, designed to attract high-volume
traders, is the change from the current one-price-fits-all futures
commission structure to a tiered commission structure that rewards
more active traders with lower pricing. Under this new pricing
structure, the commission that will be charged over the applicable
exchange fee will range from $1.20 down to 25 cents per contract (per
side). Also, TradeStation currently charges an all-in-one futures
commission that includes both exchange and brokerage fees. Under the
new plan, these charges will be unbundled, so that the customer will
pay the applicable exchange fees for the contracts traded, plus the
tiered TradeStation fees applicable to that customer. This will
enable customers to see how much each exchange charges for trades, and
to better understand and take advantage of reduced fees for exchange
members.
In addition, TradeStation plans to further reduce the trading activity
thresholds futures and forex customers need to meet to qualify for a
waiver of the monthly platform fee. Under the new thresholds, futures
clients who trade 10 round-turn contracts per month, as opposed to the
current threshold of 50 round-turns per month, and forex clients who
trade 10, as opposed to 25, deals per month, will qualify for the
waiver.
The company has estimated the cost of both of these initiatives,
assuming no offsetting benefits, to be about $200,000 to net income
for December, and that estimate has been included in the company's
2005 fourth quarter Business Outlook.
Company Provides Business Outlook For 2005 Fourth Quarter The
company's fourth quarter Business Outlook estimated ranges are as
follows:
FOURTH QUARTER 2005 BUSINESS OUTLOOK
(In Millions, Except Per Share Data)
Fourth
Quarter 2005
REVENUES $24.0 to $25.5
INCOME BEFORE INCOME TAXES $8.5 to $9.0
EARNINGS PER SHARE (Diluted) $0.12 to $0.13
The company also announced that its Earnings Per Share (Diluted)
Business Outlook for the 2005 year is now an estimated range of
43 to 44 cents.
The company's fourth quarter 2005 Business Outlook is based on
assumptions about anticipated growth of active trader equities and
futures accounts, the effects of the lowering of thresholds for
waiving the monthly platform fee, the rate of growth and impact of the
company's direct-access options execution service offering, the rate
of growth and impact of new forex accounts, interest rates (and the
extent to which they will increase), the ability to collect unsecured
accounts receivable that may arise from time to time, the cost of
ongoing litigation and the amount of any judgments, awards or
settlements, the timing of expenses relating to company growth
initiatives as compared to the timing of anticipated benefits from
those initiatives, and numerous other assumptions, expectations and
beliefs concerning its business, its industry, market conditions, and
decisions, acts or failures to act of third parties outside of the
company's control.
All assumptions, expectations and beliefs relating to the Business
Outlook are forward-looking in nature and actual results may differ
materially from those estimated, including, but not limited to, as a
result of, or as indicated by, the issues, uncertainties and risk
factors set forth and referenced below.
Conference Call/Webcast
At 11:00, a.m., Eastern Time, today, the senior management of
TradeStation Group will conduct an analyst conference call to discuss
the company's 2005 third quarter results. All company shareholders
and the public are invited to listen. The telephone conference will be
broadcast live via the Internet at http://www.TradeStation.com . The
live webcast will be accompanied by slides of graphs and charts. A
rebroadcast of the call will be accessible for approximately 90 days.
About TradeStation Group, Inc.
TradeStation Group, Inc. (Nasdaq: TRAD), through its operating
subsidiary, TradeStation Securities, Inc., offers the TradeStation
platform to institutional, professional and serious, active individual
traders. TradeStation is an electronic trading platform that offers
state-of-the-art direct-access order execution and enables clients to
design, test, monitor and automate their own custom trading
strategies. In February 2005, TradeStation was named Best Stock
Brokerage and Best Futures Brokerage and, for the third year in a row,
Best Direct-Access Stock Broker, Best Direct-Access Futures Broker,
Best Professional Platform and Best Institutional Platform, in
Technical Analysis of Stocks and Commodities magazine. The trading
platform currently offers streaming real-time Equities, Options,
Futures and Forex market data.
TradeStation Securities, Inc. (Member NASD, NYSE, SIPC, NSCC, DTC, OCC
& NFA) is a licensed securities broker-dealer and a registered futures
commission merchant, and also a member of the American Stock Exchange,
Archipelago Exchange, Boston Options Exchange, Chicago Board Options
Exchange, Eurex US, International Securities Exchange and Philadelphia
Stock Exchange. The company's other operating subsidiary, TradeStation
Technologies, Inc., develops and offers strategy trading software
tools and subscription services, and hosts the company's annual users
conference.
Forward-Looking Statements -- Issues, Uncertainties and Risk Factors
This press release and today's earnings conference call contain
statements and estimates that are forward-looking and are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. When used in this press release, or
the conference call, the words "anticipate(s)," "anticipated,"
"anticipation," "assume(s)," "assumption(s)," "become(s),"
"belief(s)," "believe(s)," "believed," "could," "designed,"
"estimate," "estimates," "estimated," "expect(s)," "expected,"
"expectation(s)," "going forward," "future," "hopeful," "hope(s),"
"intend(s)," "intended," "look forward," "may," "might,"
"opportunity," "opportunities," "outlook(s)," "pending," "plan(s),"
"planned," "potential," "scheduled," "shall," "should," "think(s),"
"to be," "upcoming," "well- positioned," "will," "wish," "would," and
similar expressions, if and to the extent used, are intended to
identify forward-looking statements. All forward-looking statements
are based largely on current expectations and beliefs concerning
future events that are subject to substantial risks and uncertainties.
Actual results may differ materially from the results herein suggested
or suggested in the conference call. Factors that may cause or
contribute to the various potential differences include, but are not
limited to, the effects of the company's new pricing structure for
futures traders and new fee waiver plan for futures and forex traders
being materially different than anticipated;
market pressure to continue to lower substantially pricing on
brokerage and subscription services as a result of such services being
provided at lower or minimal costs by brokerages, financial
institutions and other financial companies to their customers, or for
other market reasons;
technical difficulties, errors and/or failures in the company's
electronic and software products, services and systems relating to
market data, order execution and trade processing and reporting, and
other software or system errors and failures (there have been several
market data and order execution outages recently, the causes of which
the company is working to correct, as well as failures to perform on
the part of the brokerage firm's back-office system vendor, to whom
the company has served a notice concerning such failures), any of
which could result in a business or legal requirement to issues large
credit amounts to customers, loss of accounts, reduced trading
activity, loss of or diminished reputation and recognition in the
industry, increased monetary costs and diversion of internal
resources, regulatory inquiries, fines and sanctions, and other
material adverse consequences;
the company does not maintain a seamless, redundant back-up system to
its order execution systems, which could materially intensify the
negative consequences described in the previous risk factor;
TradeStation continues to be subject to an NASD inquiry concerning
OATS reporting, and may soon be subject to an NYSE inquiry concerning
OTS reporting, either of which could result in fines, sanctions and
other negative consequences;
TradeStation Securities has received a notice from the NASD alleging
violations of NASD Conduct Rule 3370 ("Prompt Receipt and Delivery of
Securities") alleging that in March and April 2004 (when the firm's
accounts and trades were carried by and cleared through Bear Stearns
and customer short sales were authorized and arranged by Bear Stearns
on behalf of the firm's accounts using Bear Stearns's short sale
inventory and short sale policies) 172 customer short sale orders were
accepted without annotating an affirmative determination that the firm
would receive delivery of the security on behalf of the customer or
that the firm could borrow the security on behalf of the customer for
delivery by the settlement date, and whatever NASD enforcement action
follows may result in a fine, sanction and/or other negative
consequences;
the results of a recently- implemented reduction to the trading
activity level at which brokerage customers' monthly platform fees are
waived, and the timing, cost and success of marketing campaigns generally;
the date by which TradeStation Securities is able to offer a
seamlessly-integrated forex trading platform to customers and prospects;
the effect of unanticipated increased infrastructure costs that may be
incurred as the company grows its brokerage firm operations, adds
accounts and introduces and expands existing and new product and
service offerings;
change or lack of change in the federal funds rate of interest that is
different than what the company anticipates;
the frequency and collectibility of unsecured client account debits as
a result of volatile market movements in concentrated positions held
in client accounts and other high-risk positions or circumstances;
TradeStation's technology and services not attracting as many new
customers, or resulting in as much increased trading activity, or
producing as many subscriptions for optional premium services, as the
company expects;
the company's ability (or lack thereof) to achieve significant net
increases in DARTs, brokerage accounts and brokerage revenues
sequentially or quarter over quarter (for example, last year
TradeStation DARTs decreased sequentially from second to third quarter
2004 and may decrease sequentially in subsequent periods as a result
of negative market conditions or other factors);
changes in the condition of the securities and financial markets,
including decreases in the combined average share volume of the major
exchanges and in market volatility;
issues and difficulties, and unanticipated expenses or claims, the
company may face as it seeks to grow an institutional trader market
business (as the company has no significant prior experience with
institutional trader marketing, sales or product development
operations), including potential acquisition costs incurred in
connection with such attempted growth;
the entrance of new competitors or competitive products or services
into the market;
adverse results in pending or possible future litigation against the
company (including three lawsuits filed by the co-founders of
onlinetrading.com, a brokerage acquired by the company in 2000, and
one pending NASD arbitration proceeding concerning claims of a
brokerage client seeking several million dollars in damages) that are
significantly different than is currently estimated or expected (and
it should be noted that the company does not maintain errors or
omissions insurance that might cover, in whole or in part, some of the
claims and costs related to certain litigation);
the amount of unexpected legal, consultation and professional fees
(including those expenses as they relate to the onlinetrading.com
co-founder lawsuits against the company described above, all of which
the company considers baseless, but which may result in
higher-than-anticipated attorneys' fees and litigation expenses);
the company's estimated earnings per share (diluted) being based on
assumptions of a certain number of outstanding shares and an average
stock price for particular time periods (if the number of outstanding
shares and/or the average stock price is actually higher than what has
been assumed, there will be more dilution and the actual earnings per
share would be lower);
the general variability and unpredictability of operating results
forecast on a quarterly basis; other items, events and unpredictable
costs or revenue impact that may occur;
and other issues, risks and uncertainties indicated from time to time
in the company's filings with the Securities and Exchange Commission
including, but not limited to, the company's Quarterly Report on Form
10-Q for the fiscal quarter ended June 30, 2005, Annual Report on Form
10-K for the fiscal year ended December 31, 2004, and other SEC
filings and company press releases.
TRADESTATION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
REVENUES:
Commissions and fees $16,183,062 $13,419,246 $48,392,825 $41,569,402
Interest income 6,442,805 1,368,657 15,408,459 3,061,509
Interest expense 1,048,668 113,441 2,548,169 113,441
Net interest income 5,394,137 1,255,216 12,860,290 2,948,068
Net brokerage
revenues 21,577,199 14,674,462 61,253,115 44,517,470
Subscription fees
and other 2,508,794 2,521,996 7,417,067 7,358,864
Net revenues 24,085,993 17,196,458 68,670,182 51,876,334
OPERATING EXPENSES:
Clearing and
execution costs 5,453,374 5,527,725 16,802,994 16,762,562
Data center costs 1,331,807 1,288,722 4,286,159 4,460,869
Technology development 1,983,276 1,833,934 5,896,998 5,592,309
Sales and marketing 3,456,273 2,905,573 10,100,713 8,224,629
General and
administrative 3,524,038 2,810,780 10,390,117 7,952,035
Total operating
expenses 15,748,768 14,366,734 47,476,981 42,992,404
Income from
operations 8,337,225 2,829,724 21,193,201 8,883,930
OTHER INCOME, net 539,064 77,946 1,067,800 202,834
Income before income
taxes 8,876,289 2,907,670 22,261,001 9,086,764
INCOME TAX PROVISION
(BENEFIT) 3,606,086 1,075,269 8,535,094 (2,053,311)
Net income $ 5,270,203 $ 1,832,401 $13,725,907 $11,140,075
EARNINGS PER SHARE:
Basic $ 0.12 $ 0.04 $ 0.32 $ 0.27
Diluted $ 0.12 $ 0.04 $ 0.31 $ 0.25
WEIGHTED AVERAGE SHARES
OUTSTANDING:
Basic 43,147,365 41,728,054 42,396,269 41,613,718
Diluted 44,481,956 44,119,043 43,870,783 44,320,478
TRADESTATION GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2005 2004
(Unaudited)
ASSETS:
Cash and cash equivalents, including
restricted cash of $1,672,497 at
September 30, 2005 and $1,911,426 at
December 31, 2004 $ 47,811,853 $ 32,111,235
Cash segregated in compliance with federal
regulations 409,756,241 347,094,597
Receivables from brokers, dealers, clearing
organizations and clearing agents 30,173,733 19,404,102
Receivables from brokerage customers, net 60,744,299 56,984,622
Property and equipment, net 3,190,459 3,075,186
Prepaid income taxes 1,657,454 --
Deferred income taxes, net 1,237,559 3,811,716
Deposits with clearing organizations and
clearing agents 11,254,434 14,498,375
Other assets 3,376,865 2,695,996
Total assets $569,202,897 $479,675,829
LIABILITIES AND SHAREHOLDERS' EQUITY:
LIABILITIES:
Payables to brokers, dealers and clearing
organizations $ 827,612 $ 3,089,950
Payables to brokerage customers 490,365,139 420,709,173
Accounts payable 2,382,254 2,204,845
Accrued expenses 5,145,478 4,346,621
Total liabilities 498,720,483 430,350,589
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY 70,482,414 49,325,240
Total liabilities and shareholders' equity $569,202,897 $479,675,829
SOURCE TradeStation Group, Inc.
Web Site: http://www.TradeStation.com
Issuers of news releases and not PR Newswire are solely responsible
for the accuracy of the content.
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Copyright © 1996-2005 PR Newswire Association LLC. All Rights Reserved.
A United Business Media company.
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