þ | Annual Report Pursuant to Section 15(d) of the Securities Exchange Act of 1934 |
o | Transition Report Pursuant to 15(d) of the Securities Exchange Act of 1934 |
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Number | ||||
Report of Independent Registered Public Accounting Firm |
1 | |||
Financial Statements: |
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Statements of Net Assets Available for Benefits |
2 | |||
Statement of Changes in Net Assets Available for Benefits |
3 | |||
Notes to Financial Statements |
4 - 8 | |||
Supplemental Schedule*: |
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Schedule H, Part IV, Item 4(i) Form 5500, Schedule of Assets (Held at End of Year), December 31, 2005 |
9 | |||
Exhibit Index |
11 |
i
1
December 31 | ||||||||
2005 | 2004 | |||||||
ASSETS |
||||||||
Cash |
$ | 169,402 | $ | 3,168 | ||||
Investments: |
||||||||
At fair value: |
||||||||
Mutual Funds |
129,857,988 | 125,508,277 | ||||||
Common Stock |
22,069,635 | 20,905,861 | ||||||
Participant loans receivable |
4,920,474 | 5,806,551 | ||||||
Total cash and investments |
157,017,499 | 152,223,857 | ||||||
Employer profit sharing contribution receivable |
5,890,907 | 5,691,487 | ||||||
Common stock dividends receivable |
154,782 | 0 | ||||||
Net assets available for benefits |
$ | 163,063,188 | $ | 157,915,344 | ||||
2
Additions |
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Additions to net assets attributed to: |
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Investment income: |
||||
Dividends and interest |
$ | 4,895,471 | ||
Net appreciation in fair value of investments |
11,656,980 | |||
Net investment income |
16,552,451 | |||
Contributions: |
||||
Participants |
13,219,013 | |||
Employer |
3,654,565 | |||
Employer profit sharing |
5,890,907 | |||
Total contributions |
22,764,485 | |||
39,316,936 | ||||
Deductions |
||||
Deductions from net assets attributed to benefits paid to participants |
(30,062,592 | ) | ||
Cash and investments transferred out due to acquisition |
( 4,106,500 | ) | ||
Net increase during the year |
5,147,844 | |||
Net assets available for benefits: |
||||
Beginning of year |
157,915,344 | |||
End of year |
$ | 163,063,188 | ||
3
1. | PLAN DESCRIPTION | |
The TD Waterhouse Group, Inc. 401(k) and Profit Sharing Plan (the Plan) is a defined contribution plan formerly sponsored by TD Waterhouse Group, Inc. (TDW Group) and its subsidiaries (the Company). TDW Group was formerly a wholly owned subsidiary of The Toronto-Dominion Bank (TD). On January 24, 2006, TDW Group was acquired by Ameritrade Holding Corporation. On April 21, 2006, TDW Group was dissolved and merged into Ameritrade Online Holdings Corporation (AOH) (presently known as TD AMERITRADE Online Holdings Corporation). AOH is now the sponsor of the Plan as the successor to TDW Group. The Plan was established on September 1, 1994, and is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The following description of the Plan 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 plan covering all employees of the Company who have completed 30 days of service and are age 21 or older. Participants are eligible to make 401(k) deferrals at the later of the first day of the calendar month following 30 days of service or the January 1, April 1, June 1, or October 1 following the attainment of age 21. Participants are eligible to receive matching contributions on the January 1, April 1, June 1, or October 1 following the later of their completion of one year of service or the attainment of age 21. | ||
The Plan also provides for discretionary profit sharing contributions. The amount of the Companys annual profit sharing contribution to the Plan is determined at the discretion of the Companys Board of Directors. The Companys profit sharing contribution may be in the form of cash or shares of TDs common stock. All employees of the Company who have completed at least one year of service, as defined in the Plan, are eligible on the January 1 or July 1 immediately following the completion of one year of service, to receive the annual profit sharing contribution if the employee is employed on the last day of the Plan year. | ||
PARTICIPANT ACCOUNTS | ||
Individual accounts are maintained for each participant to reflect the participants contributions, matching contributions, profit sharing contributions and investment earnings. Investment earnings are allocated daily based on each participants investment choices and relative account balances. | ||
CONTRIBUTIONS | ||
Each year, participants may contribute up to 35 percent of their compensation, as defined in the Plan, limited to the maximum amount of pre-tax annual compensation as determined by the Internal Revenue Code (IRC). Participants who are age 50 or older may make additional catch-up contributions. Participants also may contribute amounts representing distributions from other qualified employer-sponsored retirement plans. Each year, the Company contributes to the Plan as a matching contribution 50% of the participants contributions to the Plan (not including any catch-up contributions) not to exceed 6% of the participants compensation. The Companys matching contribution shall be made in cash. A discretionary profit sharing contribution may be made annually. Participants direct the investment of all contributions into various investment options offered by the Plan. As of December 31, 2005, the Plan offered 23 mutual funds and common stock of TD as investment options for participants. | ||
VESTING | ||
Participants are immediately vested in voluntary contributions plus actual earnings thereon. Vesting in the Company matching and profit sharing contributions is based on years of continuous service. A participant becomes 100% vested in the Company matching and profit sharing contributions after six years of credited |
4
Years of Service | Percentage | |||
(as defined by the Plan) | ||||
Less than 2 years |
0 | % | ||
2 years but less than 3 years |
20 | % | ||
3 years but less than 4 years |
40 | % | ||
4 years but less than 5 years |
60 | % | ||
5 years but less than 6 years |
80 | % | ||
6 years or more |
100 | % |
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another eligible retirement plan, equal monthly, quarterly, semi-annual or annual installments for a period that does not exceed the participants or the beneficiarys life expectancy, or a combination of the lump-sum and the direct rollover. Prior to March 28, 2005, with respect to distributions, the threshold for automatic distributions of the value of the participants account was $5,000. A participant can elect to receive such portion of his or her account as was invested in common stock of TD in whole shares of stock or in cash (or in a combination of the two). Withdrawals may be made under certain other circumstances in accordance with the Plan document. The related benefits paid for these party-in-interest transactions for the year ended December 31, 2005 consisted of 49,069 shares of TDs common stock, with an aggregate fair value of $2,227,362, and cash of $1,348,700. The value of the shares of T.Rowe Price funds is distributed in cash. The related benefits paid for these party-in-interest transactions was $26,486,530. | ||
FORFEITURES | ||
At December 31, 2005, forfeited nonvested accounts totaled $592,939. These amounts will be used to reinstate prior forfeitures for employees who return to work and to reduce future Company contributions. No forfeiture amounts were used to meet the employers profit sharing contribution commitment for 2005. | ||
PLAN ADMINISTRATION AND TRUSTEESHIP | ||
The terms and provisions of the Plan were administered by the Committee, as defined in the Plan document. The Committee was appointed by the Board of Directors of TD, and consisted of at least three individuals who had the authority to control and manage the operation and administration of the Plan. Committee members served without pay. Pursuant to an amendment of the Plan, effective January 24, 2006, Committee shall mean the Ameritrade Holding Corporation Associates 401(k) Profit Sharing Plan Committee (Ameritrade 401(k) Committee). The Ameritrade 401(k) Committee may by majority vote remove or add members. | ||
T.Rowe Price is directed by plan participants concerning purchases and sales of fund investments. T.Rowe Price makes investment decisions for the funds held in the T.Rowe Price mutual funds and provides record-keeping services for all Plan funds. | ||
The Plans investments are held by T.Rowe Price under a trust agreement. | ||
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 would become 100 percent vested in their employer contributions. | ||
2. | TRANSFER OUT DUE TO ACQUISITION | |
On January 24, 2006, TDW Group was acquired by Ameritrade Holding Corporation. TD Asset Management, Inc. and TD Waterhouse Bank, N.A. (presently known as TD Bank USA, N.A.), former wholly owned subsidiaries of TDW Group, were not acquired by Ameritrade Holding Corporation. On December 30, 2005, assets for employees of TD Asset Management, Inc. and TD Waterhouse Bank, N.A. with an aggregate fair value of $4,106,500 were transferred to the TD Securities Retirement USA, Inc. Retirement Plan. | ||
3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
METHOD OF ACCOUNTING | ||
The Plans financial statements are prepared on the accrual basis of accounting. |
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INVESTMENT VALUATION | ||
The Plans investments are stated at fair value. Investments in TDs common stock are stated at market value, defined as the closing price on the last business day of the Plan Year. Shares of registered investment companies are valued at quoted market prices. Participant loans are stated at their outstanding balance, which approximates fair value. | ||
Purchases and sales of securities are recorded on a trade-date basis. Dividends are recorded on the ex-dividend date. Investment income is recorded when earned. | ||
CONTRIBUTIONS | ||
Employee and employer matching contributions are recorded in the period during which the Company makes payroll deductions from the participants earnings. | ||
PAYMENT OF BENEFITS | ||
Benefits are recorded when paid. | ||
RISKS AND UNCERTAINITIES | ||
The Plan provides for various investment options, whose underlying investments may include investments in any combination of equities, fixed income securities, currency and commodities and derivative contracts. Investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is possible that changes in risks in the near term could materially affect participants account balances and the amounts reported in the statements of net assets available for benefits and the statement of changes in net assets available for benefits. | ||
EXPENSES | ||
Administrative expenses of the Plan are borne by the Company and are not included within the Plans financial statements. | ||
USE OF ESTIMATES | ||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. |
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4. | INVESTMENTS | |
The following table presents the fair value of investments that represent five percent or more of the Plans net assets available for benefits. |
December 31 | ||||||||
2005 | 2004 | |||||||
Common Stock |
||||||||
The Toronto-Dominion Bank (418,779 and 501,580 shares) |
$ | 22,069,635 | $ | 20,905,861 | ||||
Mutual funds |
||||||||
T. Rowe Price Blue Chip Growth Fund (505,197 and 567,304 shares) |
$ | 16,509,842 | $ | 17,541,051 | ||||
T.Rowe Price Capital Appreciation Fund (487,674 and 421,792 shares) |
9,782,739 | 8,220,719 | ||||||
T.Rowe Price Emerging Markets Stock Fund (329,143 and 256,750 shares) |
8,452,380 | * | ||||||
T. Rowe Price Equity Index Fund (353,166 and 390,784 shares) |
11,848,726 | 12,723,913 | ||||||
T.Rowe Price Mid-Cap Growth Fund (302,593 and 303,710 shares ) |
16,382,392 | 15,149,043 | ||||||
T.Rowe Price Prime Reserve Fund (20,397,463 and 21,939,970 shares) |
20,397,463 | 21,939,970 | ||||||
T.Rowe Price Small-Cap Value Fund (353,918 and 353,300 shares) |
13,063,130 | 12,605,740 | ||||||
T.Rowe Price Science and Technology Fund (462,184 and 575,618 shares) |
9,044,933 | 10,994,296 |
* | Investment represented less than 5% of Plan net assets as of December 31, 2004. |
The closing price for TDs common stock was $52.70 and $41.68 per share on December 31, 2005 and December 31, 2004, respectively. | ||
During 2005, the Plans investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value as follows: |
Common stock |
$ | 4,839,219 | ||
Mutual funds |
6,817,761 | |||
$ | 11,656,980 | |||
5. | FEDERAL INCOME TAX STATUS | |
The Plan has received a determination letter from the Internal Revenue Service, dated May 20, 2003, stating that the Plan is qualified under Section 401(a) of the IRC 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 IRC to maintain its qualification. The Plan administrator believes the Plan is being operated in compliance with the applicable requirements of the IRC and, therefore, believes that the Plan, as amended, is qualified and the related trust is tax exempt. |
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Number | Fair | |||||||
Of Shares | Value | |||||||
Cash |
$ | 169,402 | ||||||
The Toronto-Dominion Bank Common Stock |
418,779 | 22,069,635 | ||||||
T.Rowe Price New Income Fund |
438,013 | 3,928,972 | ||||||
T.Rowe Price Blue Chip Growth Fund |
505,197 | 16,509,842 | ||||||
T.Rowe Price Capital Appreciation Fund |
487,674 | 9,782,739 | ||||||
T.Rowe Price Emerging Markets Stock Fund |
329,143 | 8,452,380 | ||||||
T.Rowe Price Equity Index 500 Fund |
353,166 | 11,848,726 | ||||||
T.Rowe Price International Stock Fund |
319,165 | 4,720,450 | ||||||
T.Rowe Price Mid-Cap Growth Fund |
302,593 | 16,382,392 | ||||||
T.Rowe Price Prime Reserve fund |
20,397,463 | 20,397,463 | ||||||
T.Rowe Price Small-Cap Value Fund |
353,918 | 13,063,130 | ||||||
T.Rowe Price Science and Technology Fund |
462,184 | 9,044,933 | ||||||
T.Rowe Price Equity Income Fund |
181,877 | 4,714,243 | ||||||
T.Rowe Price International Bond Fund |
159,871 | 1,502,783 | ||||||
T.Rowe Price Media and Telecommunications Fund |
184,654 | 6,202,521 | ||||||
T.Rowe Price Retirement 2005 |
545 | 5,923 | ||||||
T.Rowe Price Retirement 2010 |
3,154 | 45,953 | ||||||
T.Rowe Price Retirement 2015 |
7,717 | 86,584 | ||||||
T.Rowe Price Retirement 2020 |
19,384 | 302,973 | ||||||
T.Rowe Price Retirement 2025 |
34,172 | 391,948 | ||||||
T.Rowe Price Retirement 2030 |
52,575 | 866,967 | ||||||
T.Rowe Price Retirement 2035 |
65,712 | 763,579 | ||||||
T.Rowe Price Retirement 2040 |
45,600 | 755,591 | ||||||
T.Rowe Price Retirement 2045 |
2,797 | 30,314 | ||||||
T.Rowe Price Retirement Income Fund |
4,621 | 57,582 | ||||||
Participants loans receivable maturing in 1-180 months
(Interest rates on loans range from 5% -10.50%) |
4,920,474 | |||||||
Total Assets Held at End of Year |
$ | 157,017,499 | ||||||
9
By: | /s/ JOHN R. MACDONALD
|
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John R. MacDonald | ||||||
Executive Vice President, Chief Financial Officer and Chief Administrative Officer |
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TD AMERITRADE Holding Corporation |
10
Exhibit No. | Description | |
23.1
|
Consent of Independent Registered Public Accounting Firm |
11