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On September 9, 2002, we
completed our merger with Datek. Pursuant to the
merger agreement, Ameritrade Online Holdings Corp.
("AOH") (formerly Ameritrade Holding Corporation)
and Datek each became wholly owned subsidiaries
of a newly formed holding company, which was renamed
Ameritrade Holding Corporation. Upon the closing
of the transaction, stockholders of AOH and Datek
each received shares of a single class of common
stock of the new holding company, with the stockholders
of AOH and the stockholders of Datek each receiving
approximately 50 percent of the total outstanding
common stock. In connection with the transaction,
the board of directors of the new holding company
will consist of nine members, including three directors
designated by the principal stockholders of AOH,
three directors designated by the principal stockholders
of Datek and three independent directors to be selected
with the agreement of the principal stockholders
of AOH and the principal stockholders of Datek.
Currently eight of the nine board seats have been
filled, with one remaining independent director
to be named.
We are currently in the process of integrating Datek’s
business with ours. As part of the integration planning
process, we have formed an integration planning
organization comprised of representatives of both
companies and a former Datek stockholder. Integration
planning teams were assigned to determine the product
and service features, functionality for clearing
settlement services, call center organization and
services, technology platforms and order routing
for the combined company. Website enhancements to
both our and Datek’s front-end websites, along
with a new pricing schedule, were implemented on
October 19, 2002. Several months after the completion
of the merger, we intend to phase-in a combined
website, which will be a single point of entry on
to the trading platform for both Ameritrade and
Datek clients. During fiscal 2003, we plan to consolidate
the clearing functions performed by Ameritrade and
Datek using the Ameritrade, Inc. clearing platform.
Datek’s client call center function was moved
to call centers in Omaha, Nebraska and Ft. Worth,
Texas shortly after completion of the merger. The
integration plans for the operations of Ameritrade
and Datek are subject to change.
We anticipate synergies from the merger resulting
from cost savings programs, estimated to be approximately
$100 million on an annualized, after-tax basis and
which are expected to result from:
- Downsizing the workforce,
resulting in estimated annualized after-tax savings
of approximately $35 million,
- Eliminating duplicate occupancy, equipment and depreciation
expenses, resulting in estimated annualized after-tax
savings of approximately $25 million, and
- Eliminating duplicate advertising, communication,
professional fees and other expenses, resulting
in estimated annualized after-tax savings of approximately
$40 million.
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