Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. BROADRIDGE FINANCIAL SOLUTIONS, INC. (1383312) 10-Q published on May 07, 2019 at 11:30 am
Reporting Period: Mar 30, 2019
The Company has stock-based compensation plans under which the Company annually grants stock option and restricted stock unit awards. Stock options are granted to employees at exercise prices equal to the fair market value of the Company’s common stock on the dates of grant, with the measurement of stock-based compensation expense recognized in Net earnings based on the fair value of the award on the date of grant. Stock-based compensation expense of $17.4 million and $14.6 million, as well as related expected tax benefits of $4.1 million and $4.3 million were recognized for the three months ended March 31, 2019 and 2018, respectively. Stock-based compensation expense of $46.8 million and $39.2 million, as well as related expected tax benefits of $10.7 million and $11.6 million were recognized for the nine months ended March 31, 2019 and 2018, respectively.
On April 17, 2019, the Company announced that it entered into a purchase agreement to acquire the retirement plan custody and trust assets from TD Ameritrade Trust Company, a subsidiary of TD Ameritrade Holding Company. The acquisition is expected to expand Broadridge's suite of solutions for the growing qualified and non-qualified retirement plan services market and the support it provides for third-party administrators, financial advisors, record-keepers, banks, and brokers. The purchase price is expected to be approximately $61.5 million. The transaction is expected to be completed in the Company’s fiscal fourth quarter, subject to customary closing conditions and regulatory approvals.
On May 1, 2019, the Company announced that it has acquired Rockall Technologies Limited, a market leading provider of securities-based lending (SBL) and collateral management solutions for wealth management firms and commercial banks. The acquisition expands Broadridge's core front-to-back office wealth capabilities, providing innovative SBL and collateral management technology solutions to help firms manage risk and optimize clients' securities lending and financing needs. The purchase price was approximately $37.0 million net of cash acquired plus an additional contingent consideration liability.
Provision for income taxes. The Provision for income taxes and effective tax rate for the three months ended March 31, 2019 were $51.4 million and 23.0%, compared to $16.2 million and 12.9% for the three months ended March 31, 2018. The increase in the effective tax rate for the three months ended March 31, 2019 compared to the three months ended March 31, 2018 is primarily attributable to the recognition of a $1.3 million excess tax benefit attributable to stock-based compensation compared to a $15.6 million excess tax benefit in the comparable prior period.
Provision for income taxes. The Provision for income taxes and effective tax rate for the nine months ended March 31, 2019 were $78.4 million and 20.8%, compared to $81.9 million and 27.0% for the nine months ended March 31, 2018. The decrease in the effective tax rate for the nine months ended March 31, 2019 compared to the nine months ended March 31, 2018 is primarily due to the U.S. federal corporate income tax rate change from 35% to 21% under the Tax Act, which resulted in a blended U.S. federal corporate income tax rate of 28.1% for the prior year and a 21% tax rate for the current year, partially offset by the recognition of $9.2 million in ETB attributable to stock-based compensation compared to a $18.6 million ETB in the comparable prior year period.
In addition, the Company accrued in the comparable prior year period a one-time net expense of approximately $16.1 million to reflect a one-time transition tax on earnings of certain foreign subsidiaries at December 31, 2017, partially offset by a benefit related to the remeasurement of the Company’s net U.S. federal and state deferred tax liabilities.
The Fiscal 2019 Revolving Credit Facility and the senior notes are senior unsecured obligations of the Company and are ranked equally in right of payment. Interest on the senior notes due 2020 is payable semiannually on March 1st and September 1st each year based on a fixed per annum rate equal to 3.95%. Interest on the senior notes due 2026 is payable semiannually on June 27th and December 27th each year based on a fixed per annum rate equal to 3.40%.