UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

July 22, 2010
Date of report (date of earliest event reported)

LPL Investment Holdings Inc.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdictions of incorporation or organization)		000-52609 (Commission File Number)		20-3717839 (I.R.S. Employer Identification Nos.)

One Beacon Street
Boston MA 02108
(Address of principal executive offices) (Zip Code)

(617) 423-3644
(Registrant’s telephone number, including area code)

N/A
(Former Name or Former Address, if Changed since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrants under any of the following provisions:

		o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
		o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
		o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
		o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02		Results of Operations and Financial Condition

     On July 22, 2010, LPL Investment Holdings Inc. issued a press release announcing its financial results for the first half and quarter ended June 30, 2010. A copy of the press release is furnished with this Form 8-K and attached hereto as Exhibit 99.1.

     Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act.

Item 9.01		Financial Statements and Exhibits

(d)		Exhibits
99.1		Press Release dated July 22, 2010 (“LPL Financial Announces First Half and Second Quarter 2010 Financial Results”)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: July 22, 2010

Exhibit 99.1

LPL Financial Announces First Half and Second Quarter
Financial Results

Boston, MA — July 22, 2010 — LPL Investment Holdings Inc. (the “Company”), parent company of LPL Financial Corporation (“LPL Financial”), today announced net income of $8.0 million for the second quarter of 2010, down $7.6 million or 48.7% from the second quarter of 2009. Second quarter results include $23.1 million in after-tax debt financing expense which the Company incurred in a previously announced debt restructuring to enhance financial flexibility, and $2.8 million in after-tax restructuring charges related to the previously announced conversion of the operations of the affiliated entities to the Company’s self clearing platform in the third quarter of 2009.

Adjusted Net Income for the second quarter was $46.4 million, up 69.0% from the second quarter of 2009 ⁽¹⁾. Adjusted EBITDA for the quarter increased 22.5% to $109.9 million from the second quarter of 2009 ⁽¹⁾. A reconciliation of these non-GAAP measures to GAAP measures, along with an explanation of these metrics, is provided below.

For the first six months of 2010, net income of $33.6 million was up 10.5% compared to the same period in 2009. Adjusted Net Income through June year to date was $87.5 million, up 65.8% from the same period in 2009. Adjusted EBITDA for the first six months increased 25.5% to $215.3 million from the same period in 2009.

Net revenue for the second quarter of 2010 increased 18.1% to $790.2 million over the same quarter for the prior year, and year to date increased 16.9% to $1.5 billion over the first six months of 2009. The Company’s net revenue growth was driven primarily by the growth in advisory and brokerage assets, which increased 6.9% from $259.0 billion as of June 30, 2009, to $276.9 billion as of June 30, 2010, as well as by growth in the average productivity of the financial advisors.

Financial Highlights and Key Metrics
(Dollars in thousands except per share data and where noted)

		Three Months Ended June 30,												Six Months Ended June 30,
		2010				2009				Change				2010				2009				Change
Financial Highlights (unaudited)
Net Revenue		$	790,161			$	669,317				18.1	%		$	1,533,567			$	1,312,295				16.9	%
Net Income		$	8,000			$	15,581				(48.7	)%		$	33,554			$	30,378				10.5	%
Adjusted Net Income (1)		$	46,418			$	27,473				69.0	%		$	87,517			$	52,784				65.8	%
Earnings Per Share (diluted)		$	0.08			$	0.16				(50.0	)%		$	0.33			$	0.30				10.0	%
Adjusted Net Income per Share (1)		$	0.47			$	0.28				67.9	%		$	0.88			$	0.54				63.0	%
Adjusted EBITDA (1)		$	109,864			$	89,665				22.5	%		$	215,320			$	171,613				25.5	%

		As of June 30,
		2010				2009				Change
Metric Highlights
Financial Advisors			12,066				12,489				(3.4	)%
Advisory and Brokerage Assets (2) (billions)		$	276.9			$	259.0				6.9	%

Operational Highlights

	•		The Company redeemed all of its senior unsecured subordinated notes, strengthening the balance sheet and enhancing financial flexibility. The decline in net income for the first six months and second quarter of 2010 is largely attributed to non-operating expenses incurred in connection with this debt retirement.
	•		On May 13, 2010, Moody’s Investors Service revised the Company’s corporate family rating outlook to positive from stable. On the same day, Standard & Poor’s revised the Company’s counterparty credit rating outlook to positive from stable.
	•		The Company continued to achieve growth with its fee-based platforms. Advisory assets were $78.9 billion as of June 30, 2010, up 20.8% from advisory assets of $65.3 billion as of June 30, 2009.
	•		Assets in the Company’s cash sweep programs, which impacts asset-based fees, averaged $18.6 billion for the second quarter of 2010 and $21.3 billion for the same period in the prior year. Variance in fees generated from these assets are also impacted by the effective federal funds rate which averaged 0.19% for the second quarter of 2010 compared to 0.18% for the same period in the prior year.
	•		In the second quarter of 2010, the Company added new bank and credit union partnerships, as well as continued to attract financial advisors and RIAs from wirehouses, insurance broker-dealers and other independent brokerage firms. Year over year growth was offset due to anticipated attrition related to the integration of the operations of three of the Company’s affiliated broker-dealers, which was experienced in the third quarter of 2009 through the first quarter of 2010. Excluding the impact of the attrition due to this integration (720 advisors), LPL Financial added 297 net new advisor relationships year over year, representing 2.5% advisor growth.

	•		Financial advisors affiliated with the Company continued to earn distinction in key media and industry rankings. In June, six advisors were named to the Barron’s Top 100 Women Financial Advisors in America, a prestigious ranking based on data provided by over 400 women financial advisors across the United States. Two LPL Financial advisors were among the ten advisors named in the Outstanding Advisor Awards of Registered Rep., a leading industry publication, which recognizes advisors who are superior performers in money management, client service and philanthropic activities. Additionally, two bank and credit union-based program managers affiliated with LPL Financial were named to the Bank Investment Consultant Top 20 Program Managers, a ranking based principally on average advisor productivity.
	•		Subsequent to the second quarter close, the Company announced on July 14, 2010, a definitive agreement under which it will acquire certain assets from National Retirement Partners Inc. (“NRP”). NRP’s advisors offer products and services to retirement plan sponsors and participants and comprehensive financial services to high net worth individuals. Through this asset purchase, NRP’s independent advisors will have the opportunity to join LPL Financial. This transaction will further enhance the capabilities and presence of LPL Financial in the group retirement plan space, while providing unique benefits for both NRP advisors who join LPL Financial as well as for existing LPL Financial advisors. The transaction is expected to close in the fourth quarter of 2010, subject to customary closing conditions including regulatory approvals. Please see the Company’s July 14, 2010 press release for additional details.

	•		Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per share do not reflect all cash expenditures, future requirements for capital expenditures or contractual commitments;
	•		Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per share do not reflect changes in, or cash requirements for, working capital needs; and
	•		Adjusted EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt.

		Three Months Ended June 30,								Six Months Ended June 30,
		2010				2009				2010				2009
		(unaudited)								(unaudited)
Net income		$	8,000			$	15,581			$	33,554			$	30,378
Interest expense			27,683				26,032				52,019				51,973
Income tax expense			628				16,567				19,790				28,555
Depreciation and amortization			22,110				27,277				47,700				54,672
EBITDA			58,421				85,457				153,063				165,578
EBITDA Adjustments:
Share-based compensation expense(a)			2,239				1,047				4,775				2,272
Acquisition and integration related expenses (b)			3,377				839				3,517				1,661
Debt amendment and extinguishment costs (c)			38,484				—				38,605				—

		Three Months Ended June 30,								Six Months Ended June 30,
		2010				2009				2010				2009
		(unaudited)								(unaudited)
Restructuring and conversion costs (d)			7,306				2,285				15,285				2,026
Other (e)			37				37				75				76
Adjusted EBITDA		$	109,864			$	89,665			$	215,320			$	171,613
Net income		$	8,000			$	15,581			$	33,554			$	30,378
After-Tax:
EBITDA Adjustments (f)			31,771				2,772				38,786				4,167
Amortization of purchased intangible assets (f)(g)			6,647				9,120				15,177				18,239
Adjusted Net Income		$	46,418			$	27,473			$	87,517			$	52,784
Adjusted Net Income per share (h)		$	0.47			$	0.28			$	0.88			$	0.54
Weighted average shares outstanding — diluted			99,487				98,501				99,248				98,235

		For the Three								For the Six
		Months Ended								Months Ended
		June 30,								June 30,
		2010				2009				2010				2009
		(unaudited)								(unaudited)
Earnings per share (diluted)		$	0.08			$	0.16			$	0.33			$	0.30
Adjustment for allocation of undistributed earnings to stock units			—				—				0.01				0.01
After-Tax:
EBITDA Adjustments per share			0.32				0.03				0.39				0.04
Amortization of purchased intangible assets per share			0.07				0.09				0.15				0.19
Adjusted Net Income per share		$	0.47			$	0.28			$	0.88			$	0.54

About LPL Financial

LPL Financial is an independent broker-dealer with over 2,500 employees and offices in Boston, Charlotte, and San Diego. LPL Financial and its affiliates offer proprietary technology, comprehensive clearing and compliance services, practice management programs and training, and independent research to over 12,000 independent financial advisors and financial advisors at financial institutions. Additionally, the Company supports over 4,000 financial advisors who are affiliated and licensed with insurance companies with customized clearing, advisory platforms and technology solutions. For more information, please visit www.lpl.com.

Member FINRA/SIPC

Forward-Looking Statements

This press release may contain forward-looking statements (regarding the Company’s future financial condition, results of operations, business strategy and financial needs, and other similar matters) that involve risks and uncertainties. Forward-looking statements can be identified by words such as “anticipates,” “expects,” “believes,” “plans,” “predicts,” and similar terms. Forward-looking statements are not guarantees of future performance and actual results may differ significantly from the results discussed in the forward-looking statements. Important factors that may cause such differences include, but are not limited to, changes in general economic and financial market conditions, fluctuations in the value of assets under management, effects of competition in the financial services industry, changes in the number of the Company’s financial advisors and institutions and their ability to effectively market financial products and services, the effect of current, pending and future legislation, regulation and regulatory actions, and other factors set forth in the Company’s Amendment No. 2 to Form S-1/A filed on July 9, 2010, which is available on www.lpl.com and www.sec.gov.

Use of Non-GAAP Financial Measures

Adjusted Net Income represents net income before: (a) share-based compensation expense, (b) amortization of intangible assets and software, a component of depreciation and amortization, resulting from the merger transaction in 2005 and the 2007 acquisitions of UVEST, the Affiliated Entities and IFMG, (c) debt amendment and extinguishment costs and (d) restructuring and conversion costs. Reconciling items are tax effected using the income tax rates in effect for the applicable period, adjusted for any potentially non-deductible amounts. Adjusted Net Income per share represents Adjusted Net Income divided by weighted average outstanding shares on a fully diluted basis. The Company prepared Adjusted Net Income and Adjusted Net Income per share to eliminate the effects of items that it does not consider indicative of its core operating performance. The Company believes this measure provides investors with greater transparency by helping illustrate the underlying financial and business trends relating to results of operations and financial condition and comparability between current and prior periods. Adjusted Net Income and Adjusted Net Income per share are not measures of the Company’s financial performance under GAAP and should not be considered as an alternative to net income or earnings per share or any other performance measure derived in accordance with GAAP, or as an alternative to cash flows from operating activities as a measure of profitability or liquidity.

Adjusted EBITDA is defined as EBITDA (net income plus interest expense, income tax expense, depreciation and amortization), further adjusted to exclude certain non-cash charges and other

adjustments set forth in the table above. The Company presents Adjusted EBITDA because the Company considers it a useful financial metric in assessing the Company’s operating performance from period to period by excluding certain items that the Company believes are not representative of its core business, such as certain material non-cash items and other adjustments that are outside the control of management. Adjusted EBITDA is a non-GAAP measure as defined by Regulation G under the Securities Act and does not purport to be an alternative to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. In addition, Adjusted EBITDA can differ significantly from company to company depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments.

# # #

Media Relations		Investor Relations
Michael Herley / David Lilly		Ian Lee
Kekst and Company		Solebury Communications Group LLC
Phone: 212-521-4897 or 212-521-4878		Phone: (203) 428-3215
Email: media.inquiries@lpl.com		Email: investor.relations@lpl.com

LPL Investment Holdings Inc.
Condensed Consolidated Statements of Income
(Dollars in thousands except per share data and where noted)

(Unaudited)

		Three Months Ended												Six Months Ended
		June 30,								%				June 30,								%
		2010				2009				Change				2010				2009				Change
Revenues
Commissions		$	420,169			$	367,431				14.4	%		$	809,141			$	714,651				13.2	%
Advisory fees			215,146				161,463				33.2	%			421,476				325,368				29.5	%
Asset-based fees			77,436				67,739				14.3	%			148,886				130,393				14.2	%
Transaction and other fees			68,132				61,609				10.6	%			135,495				122,947				10.2	%
Other			9,278				11,075				(16.2	)%			18,569				18,936				(1.9	)%
Net revenues			790,161				669,317				18.1	%			1,533,567				1,312,295				16.9	%
Expenses
Production			556,538				463,988				19.9	%			1,069,740				906,519				18.0	%
Compensation and benefits			74,822				64,841				15.4	%			148,397				131,819				12.6	%
General and administrative			54,550				49,501				10.2	%			107,787				99,372				8.5	%
Depreciation and amortization			22,110				27,277				(18.9	)%			47,700				54,672				(12.8	)%
Restructuring charges			4,622				(197	)			*				8,571				(524	)			*
Other			3,274				5,643				(42.0	)%			8,051				9,363				(14.0	)%
Total operating expenses			715,916				611,053				17.2	%			1,390,246				1,201,221				15.7	%
Non-operating interest expense			27,683				26,032				6.3	%			52,019				51,973				0.1	%
Loss on extinguishment of debt			37,979				—				*				37,979				—				*
(Gain) loss on equity method investment			(45	)			84				*				(21	)			168				*
Total expenses			781,533				637,169				22.7	%			1,480,223				1,253,362				18.1	%
Income before provision for income taxes			8,628				32,148				(73.2)	%			53,344				58,933				(9.5)	%
Provision for income taxes			628				16,567				(96.2)	%			19,790				28,555				(30.7)	%
Net income		$	8,000			$	15,581				(48.7)	%		$	33,554			$	30,378				10.5	%
Earnings per share
Basic		$	0.09			$	0.18				(50.0)	%		$	0.38			$	0.34				11.8	%
Diluted		$	0.08			$	0.16				(50.0)	%		$	0.33			$	0.30				10.0	%

LPL Investment Holdings Inc.
Financial Highlights
(Dollars in thousands, unless otherwise noted)
(Unaudited)

		Three Month Quarterly Results
		Q2 2010				Q1 2010				Q4 2009				Q3 2009				Q2 2009
REVENUES
Commissions		$	420,169			$	388,972			$	392,755			$	370,249			$	367,431
Advisory fees			215,146				206,330				196,630				182,141				161,463
Asset-based fees			77,436				71,450				71,606				70,894				67,739
Transaction and other fees			68,132				67,363				63,863				68,764				61,609
Other			9,278				9,291				10,026				10,278				11,075
Net revenues			790,161				743,406				734,880				702,326				669,317
EXPENSES
Production			556,538				513,202				516,878				481,182				463,988
Compensation and benefits			74,822				73,575				72,280				66,337				64,841
General and administrative			54,550				53,237				53,257				65,787				49,501
Depreciation and amortization			22,110				25,590				26,700				26,924				27,277
Restructuring charges			4,622				3,949				17,000				42,219				(197	)
Other			3,274				4,777				4,291				1,640				5,643
Total operating expenses			715,916				674,330				690,406				684,089				611,053
Non-operating interest expense			27,683				24,336				24,323				24,626				26,032
Loss on extinguishment of debt			37,979				—				—				—				—
(Gain) loss on equity method investment			(45	)			24				32				96				84
Total expenses			781,533				698,690				714,761				708,811				637,169
INCOME (LOSS) BEFORE PROVISION FOR / (BENEFIT FROM) INCOME TAXES			8,628				44,716				20,119				(6,485	)			32,148
PROVISION FOR / (BENEFIT FROM) INCOME TAXES(3)			628				19,162				1,521				(5,029	)			16,567
NET INCOME (LOSS)		$	8,000			$	25,554			$	18,598			$	(1,456	)		$	15,581
EARNINGS PER SHARE
Basic		$	0.09			$	0.29			$	0.21			$	(0.02	)		$	0.18
Diluted		$	0.08			$	0.25			$	0.19			$	(0.02	)		$	0.16
FINANCIAL CONDITION
Total Cash & Cash Equivalents		$	402,741			$	324,761			$	378,594			$	245,489			$	333,855
Total Assets		$	3,315,310			$	3,343,286			$	3,336,936			$	3,213,879			$	3,232,091
Total Debt(4)		$	1,393,625			$	1,407,117			$	1,369,223			$	1,404,829			$	1,463,435
Stockholders’ Equity		$	897,863			$	883,157			$	850,875			$	828,029			$	827,482
Capital Expenditures(5)		$	2,189			$	1,463			$	1,910			$	2,767			$	2,401
KEY METRICS
Financial Advisors			12,066				12,026				11,950				12,027				12,489
Advisory and Brokerage Assets(billions)		$	276.9			$	284.6			$	279.4			$	268.9			$	259.0
Adjusted EBITDA(6)		$	109,864			$	105,457			$	94,849			$	89,606			$	89,665
Adjusted Net Income(6)		$	46,418			$	41,099			$	42,057			$	34,715			$	27,473
Adjusted Net Income per share(6)		$	0.47			$	0.42			$	0.43			$	0.35			$	0.28

		Q2 2010				Q1 2010				Q4 2009				Q3 2009				Q2 2009
		(unaudited)
Net income (loss)		$	8,000			$	25,554			$	18,598			$	(1,456	)		$	15,581
Interest expense			27,683				24,336				24,323				24,626				26,032
Income tax expense			628				19,162				1,521				(5,029	)			16,567
Depreciation and amortization			22,110				25,590				26,700				26,924				27,277
EBITDA		$	58,421			$	94,642			$	71,142			$	45,065			$	85,457
EBITDA Adjustments:
Share-based compensation expense(a)		$	2,239			$	2,536			$	2,525			$	1,640			$	1,047
Acquisition and integration related expenses(b)			3,377				140				648				728				839
Debt amendment and extinguishment costs (c)			38,484				121				—				—				—
Restructuring and conversion costs(d)			7,306				7,979				20,497				42,135				2,285
Other(e)			37				39				37				38				37
Adjusted EBITDA		$	109,864			$	105,457			$	94,849			$	89,606			$	89,665
Net income (loss)		$	8,000			$	25,554			$	18,598			$	(1,456	)		$	15,581
After-Tax:
EBITDA Adjustments(f)			31,771				7,015				14,745				27,177				2,772
Amortization of purchased intangible assets(f)(g)			6,647				8,530				8,714				8,994				9,120
Adjusted Net Income		$	46,418			$	41,099			$	42,057			$	34,715			$	27,473
Adjusted Net Income per share (h)		$	0.47			$	0.42			$	0.43			$	0.35			$	0.28
Weighted average shares outstanding — diluted			99,487				98,945				98,787				98,703				98,501

		Q2 2010				Q1 2010				Q4 2009				Q3 2009				Q2 2009
		(unaudited)
Earnings per share (diluted)		$	0.08			$	0.25			$	0.19			$	(0.02	)		$	0.16
Adjustment for allocation of undistributed earnings to stock units			—				0.01				—				—				—
After-Tax:
EBITDA Adjustments per share			0.32				0.07				0.15				0.28				0.03
Amortization of purchased intangible assets per share			0.07				0.09				0.09				0.09				0.09
Adjusted Net Income per share		$	0.47			$	0.42			$	0.43			$	0.35			$	0.28