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LPL Financial Announces First Quarter 2012 Financial Results

BOSTON, April 30, 2012 /PRNewswire/ -- LPL Investment Holdings Inc. (NASDAQ: LPLA) (the "Company"), parent company of LPL Financial LLC ("LPL Financial"), announced today first quarter net income of $41.2 million, or $0.37 per diluted share, down $7.8 million compared to a first quarter 2011 net income of $49.0 million, or $0.43 per diluted share due primarily to a $16.5 million pre-tax charge related to the successful completion of the refinancing of its senior secured credit facilities. Adjusted Earnings, a non-GAAP measure which excludes certain non-cash charges and other adjustments, were $63.2 million, or $0.56 per diluted share, up $3.8 million or 6.4% compared to $59.4 million, or $0.52 per diluted share, in the first quarter of 2011. Net revenue for the first quarter of 2012 increased 3.2% to $901.8 million, from $873.9 million in the prior year period. A reconciliation of our GAAP measures to non-GAAP measures, along with an explanation of these metrics, is provided below.

"We are pleased to announce a positive start to 2012 led by record revenue and Adjusted Earnings for the first quarter," said Mark Casady, LPL Financial chairman and CEO. "This success was driven by the ongoing relationships our advisors maintain with clients. These relationships positioned our advisors for increased productivity as their clients re-engaged in the market. This financial performance was accompanied by a number of key milestones such as the declaration of a special dividend, plans to initiate future payments of a regular quarterly dividend and the successful completion of our debt refinancing, which increased our financial flexibility while maintaining our ability to invest in the growth of the business. Our performance underscores the resiliency and predictability of our business model and is anchored by our singular focus on supporting the needs of our advisors and institutions, which allows us to grow through various market cycles."

Mr. Casady continued, "We remain committed to investing in our business to support the long-term growth of the Company and our advisors. Propelled by our scale and capital resources, we continually seek ways to lead innovation in the industry. For example, our investments in the retirement plan market are unlocking further synergies from our acquisition of National Retirement Partners in 2011, including facilitating in-plan advice, capturing IRA rollovers, and increasing automation. We are proud to continue to expand one of the strongest and most effective offerings of tools and services for advisors in the retirement plan arena, where we see increasing opportunity."

For the quarter, total advisory and brokerage assets ended at $354.1 billion, a 7.3% increase from $330.1 billion as of March 31, 2011. Compared to the previous quarter, total advisory and brokerage assets increased 7.2% from $330.3 billion as of December 31, 2011. Net new advisory assets of $2.5 billion during the quarter and positive market conditions resulted in total advisory assets under management of $110.8 billion at quarter-end.

Robert Moore, chief financial officer, commented, "Driven by the increased advisor productivity, total revenue for the first quarter increased 3.2% year-over-year. Same store sales of our advisors displayed a recovery from the flat performance experienced in the fourth quarter last year. Contributing to our performance, advisors that joined LPL in 2011 exceeded expectations in establishing their practices and generating revenue. Our production payout ratio increased year-over-year, primarily due to strong performance by our larger practices increasing the production bonus component. We continue to actively manage our ongoing general and administrative expenses and they are consistent with our current trajectory of growth."

Mr. Moore continued, "We remain excited about our business development opportunities as we continue to attract a broad array of advisors, including larger branches, to our platform. Our pipeline remains strong across all channels in the industry, elevating our expectations for new advisor additions in the coming quarters. This is attributable to the breadth of our services and technology and our ability to consistently invest in resources to help advisors and institutions establish and grow their practices."

Mr. Casady concluded, "The first quarter results reflect the benefit from improving market conditions and the dedication of our advisors to serve their clients, leading to growth in their businesses. The first quarter was highlighted not only by our strong financial results and improved capital structure, but also by the announcement of our intent to acquire Fortigent, a leading provider of high-net-worth solutions and consulting services to RIAs, which closed on April 23, 2012. This was followed by the extension of a significant clearing services agreement and the renegotiation of certain third-party cash sweep contracts. I am encouraged by the productive start to 2012 and I believe that we are well-positioned to pursue our long-term goals."

Financial Highlights

    --  As part of our ongoing capital management focus to prioritize
        sustainable growth and to seek to optimize shareholder value, the
        Company successfully completed a refinancing of its existing senior
        secured credit facilities, extending the maturity of the debt and
        lowering interest expense by approximately $10.0 million annually, based
        on current interest rates.
    --  The Board of Directors declared a one-time special cash dividend of
        $2.00 per share, payable on May 25, 2012 to all common stockholders of
        record as of the close of business on May 15, 2012. In addition, the
        Company plans to pay regular quarterly dividends, initially up to $0.12
        ($0.48 annually), beginning in the second half of 2012. The declaration
        and amount of any regular cash dividends will remain subject in each
        instance to approval by the Board of Directors.
    --  Net revenue for the first quarter of 2012 increased 3.2% to $901.8
        million from $873.9 million in the first quarter of 2011. Key drivers of
        this growth include:
        --  Commission revenue increased 2.6% for the first quarter of 2012
            compared to the prior year period. Approximately 35% of the increase
            is from increased sales activity, with the remainder due to market
            movement.
        --  Advisory revenue increased 2.8% for the first quarter of 2012
            compared to the prior year period, primarily reflecting growth in
            advisory assets over the last four quarters, as well as market
            appreciation.
        --  Recurring revenue, a statistical measure reflecting a level of
            stability in our performance, represented 63.0% of net revenue for
            the quarter.
    --  Total advisory and brokerage assets ended at $354.1 billion as of March
        31, 2012, up 7.3% compared to $330.1 billion as of March 31, 2011. Key
        drivers of this trend include:
        --  Advisory assets in the Company's fee-based platforms were $110.8
            billion at March 31, 2012, up 11.1% from $99.7 billion at March 31,
            2011.
        --  Net new advisory assets, which exclude market movement, were $2.5
            billion for the three months ended March 31, 2012, primarily as a
            result of strong new business development and mix shift toward more
            advisory business. On an annualized basis, this represents 9.0%
            growth.
    --  Revenues generated from the Company's cash sweep programs increased 8.5%
        to $34.4 million compared to $31.7 million in the prior year period. The
        assets in the Company's cash sweep programs averaged $21.5 billion for
        the first quarter of 2012 and $18.9 billion in the year-ago quarter.
        These revenues were impacted by a decrease in the effective federal
        funds rate, which averaged 0.10% for the first quarter of 2012 compared
        to 0.15% for the same period in the prior year. The decrease in the
        effective federal funds rate was offset by an increase in the insured
        cash account balances.

Operational Highlights

    --  In March, the Company hosted one of its annual conferences for
        top-producing advisors, attracting 181 attendees, including 17 financial
        institution program managers, who collectively represent $525.0 million,
        or 19%, of 2011 production. This conference provides leading advisors
        with a dynamic educational setting to discuss strategies to drive
        additional growth and manage the increasing complexity of their
        practices, through participation in sessions covering LPL Financial's
        unique offerings and significant technology enhancements.
    --  The Company added 554 net new advisors during the twelve months ending
        March 31, 2012, excluding the attrition of 146 advisors from the UVEST
        conversion. During the first quarter of 2012, 115 net new advisors
        joined LPL Financial as the Company continues to build relationships
        with advisors from all channels across the financial services industry.
    --  Assets under custody in the LPL Financial RIA platform, which provides
        integrated fee- and commission-based capabilities for independent
        advisors, grew 74.8% to $27.1 billion as of March 31, 2012 encompassing
        152 RIA firms, compared to $15.5 billion and 115 RIA firms as of March
        31, 2011.
    --  18 of the Company's advisors were recognized in a ranking of the "Top 50
        Independent Broker/Dealer Women Advisors in 2011" by Registered Rep, a
        leading publication for the financial advisor industry. According to
        Registered Rep, the full list ranked female, independent
        broker/dealer-affiliated advisors by assets under management as of
        November 1, 2011 (updated in February 2012), and included only those
        advisors for whom a majority of assets correspond to retail clients.
    --  As LPL Financial continues to grow and diversify, the Company seeks to
        develop and expand its resources and talent pool. In February, the
        Company named Joan Khoury managing director and chief marketing officer
        and appointed Mimi Bock as executive vice president of Independent
        Advisor Services. Ms. Khoury is responsible for driving the Company's
        overall marketing strategy, as well as executing programs that will
        promote advisors' growth and innovation and broaden the strategic reach
        of LPL Financial. Ms. Bock is responsible for overseeing the growth and
        satisfaction of over 4,000 LPL Financial independent advisor branch
        offices, as well as for leading the firm's Business Consulting,
        Relationship Management, and Education & Consulting teams for
        Independent Advisor Services. Both roles will be instrumental in
        promoting LPL Financial's distinctive value proposition to advisors to
        build and strengthen their client relationships and grow their
        businesses.
    --  LPL Financial announced the additions of Plan Health Check and Fee
        Comparison & Analysis Evaluation tools to augment the LPL Financial
        Retirement Partners tool suite for advisors. The tool suite offers a
        comprehensive collection of retirement plan tools designed to help
        advisors grow and maintain their book of business in an automated and
        scalable fashion. In addition, LPL Financial launched its first stage of
        the IRA rollover program, which facilitates the automated rollover from
        a defined contribution plan to a retail IRA account managed by an LPL
        Financial advisor. This program enhances the continuity and quality of
        independent advice investors can receive in the market place and
        provides LPL Financial advisors another tool to grow their businesses.

Conference Call and Additional Information

The Company will hold a conference call to discuss results at 8 a.m. EDT on April 30, 2012. The conference call can be accessed by dialing (877) 677-9122 (domestic) or (708) 290-1401 (international) and entering passcode 66850112. For additional information, please visit the Company's website to access the Q1 2012 Financial Supplement.

The conference call will also be webcast simultaneously on the Investor Relations section of the Company's website (www.lpl.com), where a replay of the call will also be available following the live webcast. A telephonic replay will be available one hour after the call and can be accessed by dialing (855) 859-2056 (domestic) or 404-537-3406 (international) and entering passcode 66850112. The telephonic replay will be available until 11:59 pm on May 7, 2012.

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

                               Three Months Ended March 31,
                               ----------------------------
                          2012                        2011  % Change
                          ----                        ----  --------
    Financial Highlights
     (unaudited)
    Net Revenue                 $901,773                     $873,869    3.2%
    Net Income                   $41,179                      $48,999 (16.0)%
    Earnings Per Share -
     diluted                       $0.37                        $0.43 (14.0)%
    Non-GAAP Measures:
    Adjusted Earnings(1)         $63,199                      $59,373    6.4%
    Adjusted Earnings Per
     Share(1)                      $0.56                        $0.52    7.7%
    Adjusted EBITDA(1)          $124,955                     $124,331    0.5%
                            As of March 31,
                            ---------------
                        2012        2011        % Change
                        ----        ----        --------
    Metric Highlights
     (unaudited)
    Advisors(2)       12,962             12,554                 3.2%
    Advisory and
     Brokerage Assets
     (billions)(3)           $354.1                      $330.1         7.3%
    Advisory Assets
     Under Management
     (billions)(4)           $110.8                       $99.7        11.1%
    Net New Advisory
     Assets
     (billions)(5)             $2.5                        $3.7      (32.4)%
    Insured Cash
     Account Balances
     (billions)(4)            $13.9                       $12.3        13.0%
    Money Market
     Account Balances
     (billions)(4)             $7.7                        $6.9        11.6%

(1) Adjusted EBITDA, Adjusted Earnings, and Adjusted Earnings per share have limitations as analytical tools and should not be considered in isolation or as substitutes for analysis of the Company's results as reported under GAAP. Some of these limitations are:

    --  Adjusted EBITDA, Adjusted Earnings, and Adjusted Earnings per share do
        not reflect all cash expenditures, future requirements for capital
        expenditures, or contractual commitments;
    --  Adjusted EBITDA, Adjusted Earnings, and Adjusted Earnings 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.

The reconciliation from net income to non-GAAP measures Adjusted EBITDA and Adjusted Earnings for the periods presented is as follows (in thousands):

                                     Three Months Ended
                                          March 31,
                                          ---------
                                        2012               2011
                                        ----               ----
                                             (unaudited)
    Net income                                $41,179            $48,999
    Interest expense                  16,032              18,172
    Income tax expense                25,684              32,559
    Amortization of purchased
     intangible assets and
     software(a)                       9,832               9,537
    Depreciation and amortization of
     all other fixed assets            7,343               8,628
                                       -----               -----
    EBITDA                           100,070             117,895
                                     -------             -------
    EBITDA Adjustments:
    Employee share-based
     compensation expense(b)           4,160               3,860
    Acquisition and integration
     related expenses(c)               1,858               1,416
    Restructuring and conversion
     costs(d)                          2,010                 835
    Debt extinguishment costs(e)      16,543                   -
    Equity issuance and related
     offering costs                        -                 292
    Other(f)                             314                  33
                                         ---                 ---
    Total EBITDA Adjustments          24,885               6,436
                                      ------               -----
    Adjusted EBITDA                          $124,955           $124,331
                                             ========           ========
                                         Three Months Ended
                                             March 31,
                                             ---------
                                            2012               2011
                                            ----               ----
                                                 (unaudited)
    Net income                                   $41,179            $48,999
    After-Tax:
    EBITDA Adjustments(g)
    Employee share-based compensation
     expense(h)                            3,167              2,901
    Acquisition and integration related
     expenses                              1,146                874
    Restructuring and conversion costs     1,240                515
    Debt extinguishment costs             10,207                  -
    Equity issuance and related offering
     costs                                     -                180
    Other                                    194                 20
                                             ---                ---
    Total EBITDA Adjustments              15,954              4,490
                                          ------              -----
    Amortization of purchased intangible
     assets and software(g)                6,066              5,884
    Adjusted Earnings                            $63,199            $59,373
                                                 =======            =======
    Adjusted Earnings per share(i)                 $0.56              $0.52
    Weighted average shares outstanding
     -diluted(j)                         112,529            113,196

___________________

(a) Represents amortization of intangible assets and software as a result of the Company's purchase accounting adjustments from its 2005 merger transaction, as well as various acquisitions.

(b) Represents share-based compensation for stock options awarded to employees and non-executive directors based on the grant date fair value under the Black-Scholes valuation model.

(c) Represents acquisition and integration costs resulting from certain of the Company's acquisitions.

(d) Represents organizational restructuring charges and conversion and other related costs incurred resulting from the 2011 consolidation of UVEST Financial Services Group, Inc. ("UVEST") and the 2009 consolidation of Associated Securities Corp., Inc., Mutual Service Corporation and Waterstone Financial Group, Inc. (together, the "Affiliated Entities"). As of March 31, 2012, approximately 72% and 97%, respectively, of costs related to these two initiatives have been recognized. The remaining costs largely consist of transition payments made in connection with these two conversions for the retention of advisors and institutions, and conversion and transfer costs that are expected to be recognized into earnings by December 2014.

(e) Represents expenses incurred in March 2012 resulting from the early extinguishment and repayment of the Company's senior secured credit facilities under its Third Amended and Restated Credit Agreement, including the write-off of $16.5 million of unamortized debt issuance costs that have no future economic benefit, as well as various other charges incurred in connection with the repayment of the prior senior secured credit facilities and the development of the new senior secured credit facilities.

(f) Represents excise and other taxes.

(g) EBITDA Adjustments and amortization of purchased intangible assets and software have been tax effected using a federal rate of 35% and the applicable effective state rate, which was 3.30% for the three months ended March 31, 2012 and 2011, net of the federal tax benefit.

(h) Represents the after-tax expense of non-qualified stock options in which the Company receives a tax deduction upon exercise, and the full expense impact of incentive stock options granted to employees that have vested and qualify for preferential tax treatment and conversely, the Company does not receive a tax deduction. Share-based compensation for vesting of incentive stock options was $1.6 million and $1.4 million, respectively, for the three months ending March 31, 2012 and 2011.

(i) Represents Adjusted Earnings, a non-GAAP measure, divided by weighted average number of shares outstanding on a fully diluted basis. Set forth is a reconciliation of earnings per share on a fully diluted basis as calculated in accordance with GAAP to Adjusted Earnings per share, a non-GAAP measure:

                                         For the Three Months Ended
                                                  March 31,
                                                  ---------
                                              2012            2011
                                              ----            ----
                                                 (unaudited)
    Earnings per share - diluted                     $0.37               $0.43
    After-Tax:
    EBITDA Adjustments per share              0.14                  0.04
    Amortization of purchased intangible
     assets and software per share            0.05                  0.05
                                              ----
    Adjusted Earnings per share                      $0.56               $0.52
                                                     =====               =====

(j) Included within the weighted average share count for the three months ended March 31, 2012, is approximately 850,000 shares resulting from the distribution pursuant to the 2008 Nonqualified Deferred Compensation Plan.

(2) Advisors are defined as those independent financial advisors and financial advisors at financial institutions who are licensed to do business with the Company's broker-dealer subsidiaries. The number of advisors at March 31, 2012 reflects attrition of 146 advisors related to the integration of the UVEST platform.

(3) Advisory and brokerage assets are comprised of assets that are custodied, networked, and non-networked and reflect market movement in addition to new assets, inclusive of new business development and net of attrition. Such totals do not include the market value of client assets held in retirement plans administered by us and trust assets supported by Concord Wealth Management.

(4) Advisory assets under management, insured cash account balances and money market account balances are components of advisory and brokerage assets.

(5) Represents net new advisory assets that are custodied in our fee-based advisory platforms during the three month periods then ended.

Non-GAAP Financial Measures

Adjusted Earnings represent net income before: (a) employee share-based compensation expense, (b) amortization of intangible assets and software, a component of depreciation and amortization, resulting from previous acquisitions, (c) debt extinguishment costs (d) restructuring and conversion costs and (e) equity issuance and related offering 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 Earnings per share represents Adjusted Earnings divided by weighted average outstanding shares on a fully diluted basis. The Company prepared Adjusted Earnings and Adjusted Earnings 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 Earnings and Adjusted Earnings 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 not a measure of the Company's financial performance under GAAP and should not be considered as an alternative to net income 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. 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.

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, ability and plans to pay dividends, 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. For example, our board of directors may not approve the payment of quarterly cash dividends or may authorize quarterly cash dividends of a different amount than previously considered or specified. Other factors include, but are not limited to, risks and uncertainties associated with changes in general economic and financial market conditions, fluctuations in the value of assets under management, our ability to integrate our acquisition of Fortigent, 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 Annual Report on Form 10-K for the period ended December 31, 2011, which is available on www.lpl.com and www.sec.gov.

About LPL Financial

LPL Financial, a wholly owned subsidiary of LPL Investment Holdings Inc. (NASDAQ: LPLA), is the nation's largest independent broker-dealer (based on total revenues, Financial Planning magazine, June 1996-2011), a top RIA custodian, and a leading independent consultant to retirement plans. LPL Financial offers proprietary technology, comprehensive clearing and compliance services, practice management programs and training, and independent research to over 12,900 financial advisors and approximately 680 financial institutions. In addition, LPL Financial supports over 4,400 financial advisors licensed with insurance companies by providing customized clearing, advisory platforms and technology solutions. LPL Financial and its affiliates have approximately 2,700 employees with headquarters in Boston, Charlotte, and San Diego. For more information, please visit www.lpl.com.

Securities offered through LPL Financial. Member FINRA/SIPC

LPLA-F

    Media Relations                 Investor Relations
    Michael Herley                  Trap Kloman
    LPL Financial                   LPL Financial
    Phone: (212) 521-4897           Phone: (617) 897-4574
    Email: michael-herley@kekst.com Email: investor.relations@lpl.com

LPL Investment Holdings Inc.
Condensed Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited)

                    Three Months Ended March 31,
                    ----------------------------
                       2012                2011  %   Change
                       ----                ----  ----------
    Revenues
    Commissions             $463,653               $451,877            2.6%
    Advisory fees   250,981             244,087                2.8%
    Asset-based
     fees            97,241              89,823                8.3%
    Transaction
     and other
     fees            74,572              73,749                1.1%
    Other            15,326              14,333                6.9%
                     ------              ------
    Net revenues    901,773             873,869                3.2%
                    -------             -------
    Expenses
    Production      626,907             604,327                3.7%
    Compensation
     and benefits    89,012              84,142                5.8%
    General and
     administrative  67,566              66,968                0.9%
    Depreciation
     and
     amortization    17,175              18,165              (5.5)%
    Restructuring
     charges          1,694                 537                  *
                      -----                 ---
    Total
     operating
     expenses       802,354             774,139                3.6%
                    -------             -------
    Non-
     operating
     interest
     expense         16,032              18,172             (11.8)%
    Loss on
     extinguishment
     of debt         16,524                   -                  *
                     ------                 ---
    Total
     expenses       834,910             792,311                5.4%
                    -------             -------
    Income before
     provision
     for income
     taxes           66,863              81,558             (18.0)%
    Provision for
     income taxes    25,684              32,559             (21.1)%
    Net income               $41,179                $48,999         (16.0)%
                             =======                =======
    Earnings per
     share
    Basic                      $0.38                  $0.44         (13.6)%
    Diluted                    $0.37                  $0.43         (14.0)%

___________________
* Not Meaningful

LPL Investment Holdings Inc.
Financial Highlights
(Dollars in thousands, except per share data and where noted)
(Unaudited)

                                           Three Month Quarterly Results
                                           -----------------------------
                              Q1 2012            Q4 2011        Q3 2011          Q2 2011           Q1 2011
                              -------            -------        -------          -------           -------
    REVENUES
    Commissions                         $463,653               $404,382                  $438,294                   $459,882 $451,877
    Advisory fees              250,981                251,219           267,878           264,289          244,087
    Asset-based fees            97,241                 89,706            89,691            90,504           89,823
    Transaction and other
     fees                       74,572                 71,227            78,476            68,755           73,749
    Other                       15,326                 12,119             8,518            10,566           14,333
                                ------                 ------             -----            ------           ------
    Net revenues               901,773                828,653           882,857           893,996          873,869
                               -------                -------           -------           -------          -------
    EXPENSES
    Production(1)              626,907                586,123           623,886           634,088          604,327
    Compensation and benefits   89,012                 79,237            77,337            81,410           84,142
    General and
     administrative             67,566                 58,553            76,063            61,644           66,968
    Depreciation and
     amortization               17,175                 16,947            19,222            18,407           18,165
    Restructuring charges        1,694                  8,372             7,684             4,814              537
                                 -----                  -----             -----             -----              ---
    Total operating expenses   802,354                749,232           804,192           800,363          774,139
                               -------                -------           -------           -------          -------
    Non-operating interest
     expense                    16,032                 15,835            16,603            18,154           18,172
    Loss on extinguishment of
     debt                       16,524                      -                 -                 -                -
                                ------                    ---               ---               ---              ---
    Total expenses             834,910                765,067           820,795           818,517          792,311
                               -------                -------           -------           -------          -------
    INCOME BEFORE PROVISION
     FOR INCOME TAXES           66,863                 63,586            62,062            75,479           81,558
    PROVISION FOR INCOME
     TAXES                      25,684                 24,138            25,634            29,972           32,559
                                                       ------            ------            ------           ------
    NET INCOME                           $41,179                $39,448                   $36,428                    $45,507  $48,999
                                         =======                =======                   =======                    =======  =======
    EARNINGS PER SHARE
    Basic                                  $0.38                  $0.36                     $0.33                      $0.41    $0.44
    Diluted                                $0.37                  $0.35                     $0.32                      $0.40    $0.43
    FINANCIAL CONDITION
    Total Cash & Cash
     Equivalents (billions)                 $0.7                   $0.7                      $0.7                       $0.7     $0.6
    Total Assets (billions)                 $3.8                   $3.8                      $3.7                       $3.7     $3.7
    Total Debt (billions)(2)                $1.4                   $1.3                      $1.3                       $1.3     $1.3
    Stockholders' Equity
     (billions)                             $1.2                   $1.3                      $1.3                       $1.3     $1.3
    KEY METRICS
    Advisors                    12,962                 12,847            12,799            12,660           12,554
    Production Payout(1)          86.4%                  88.0%             87.0%             86.3%            85.4%
    Advisory and Brokerage
     Assets (billions)                    $354.1                 $330.3                    $316.4                     $340.8   $330.1
    Advisory Assets Under
     Management (billions)                $110.8                 $101.6                     $96.3                     $103.2    $99.7
    Net New Advisory Assets
     (billions)(3)                          $2.5                   $1.0                      $3.0                       $3.1     $3.7
    Insured Cash Account
     Balances (billions)(4)                $13.9                  $14.4                     $14.2                      $13.2    $12.3
    Money Market Account
     Balances (billions)(4)                 $7.7                   $8.0                      $8.9                       $8.2     $6.9
    Adjusted EBITDA(5)                  $124,955               $100,796                  $111,596                   $122,997 $124,331
    Adjusted Earnings(5)                 $63,199                $48,838                   $51,567                    $58,807  $59,373
    Adjusted Earnings per
     share(5)                              $0.56                  $0.44                     $0.46                      $0.52    $0.52

_____________________________

(1) Production expense is comprised of commission and advisory fees and brokerage, clearing and exchange fees. Production payout, a statistical measure, excludes brokerage, clearing and exchange fees and is calculated as commission and advisory fees divided by commission and advisory revenues.

(2) Represents borrowings on the Company's senior secured credit facilities, revolving line of credit and bank loans payable.

(3) Represents net new advisory assets that are custodied in our fee-based advisory platforms during the three month periods then ended.

(4) Represents insured cash and money market account balances as of each reporting period.

(5) The reconciliation from net income to non-GAAP measures Adjusted EBITDA and Adjusted Earnings for the periods presented is as follows (in thousands, except per share data):

                                        Q1 2012             Q4 2011                 Q3 2011         Q2 2011  Q1 2011
                                        -------             -------                 -------         -------  -------
                                                                      (unaudited)
    Net income                                    $41,179                           $39,448                   $36,428         $45,507  $48,999
    Interest expense                      16,032                15,835                       16,603            18,154  18,172
    Income tax expense                    25,684                24,138                       25,634            29,972  32,559
    Amortization of purchasedintangible    9,832                 9,849                        9,909             9,686   9,537
       assets and software(a)
    Depreciation and amortization of
     all other                             7,343                 7,098                        9,313             8,721   8,628
       fixed assets

    EBITDA                               100,070                96,368                       97,887           112,040 117,895
                                         -------                ------                       ------           ------- -------
    EBITDA Adjustments:
    Employee share-based compensation      4,160                 3,858                        3,833             3,427   3,860
      expense(b)
    Acquisition and integration related    1,858               (8,020)                        1,241             1,548   1,416
      expenses(c)
    Restructuring and conversion
     costs(d)                              2,010                 8,532                        8,086             4,599     835
    Debt extinguishment costs(e)          16,543                     -                            -                 -       -
    Equity issuance and offering
     related                                   -                     -                          421             1,349     292
      costs(f)
    Other(g)                                 314                    58                          128                34      33
                                             ---                   ---                          ---               ---     ---
    Total EBITDA Adjustments              24,885                 4,428                       13,709            10,957   6,436
    Adjusted EBITDA                              $124,955                          $100,796                  $111,596        $122,997 $124,331
                                                 ========                          ========                  ========        ======== ========

                                        Q1 2012           Q4 2011                 Q3 2011           Q2 2011 Q1 2011
                                        -------           -------                 -------           ------- -------
                                                                       (unaudited)
    Net income                                    $41,179                           $39,448                   $36,428         $45,507  $48,999
    After-Tax:
    EBITDA Adjustments(h)
    Employee share-based compensation      3,167                 2,961                        2,933             2,677   2,901
        expense(i)
    Acquisition and integration related    1,146               (4,948)                          765               955     874
        expenses
    Restructuring and conversion costs     1,240                 5,264                        4,989             2,838     515
    Debt extinguishment costs             10,207                     -                            -                 -       -
    Equity issuance and offering               -                     -                          260               832     180
        related costs
    Other                                    194                    36                           79                21      20
                                             ---                   ---                          ---               ---     ---
    Total EBITDA Adjustments              15,954                 3,313                        9,026             7,323   4,490
                                          ------                 -----                        -----             -----   -----
    Amortization of purchased
     intangible                            6,066                 6,077                        6,113             5,977   5,884
        assets and software(h)

    Adjusted Earnings                             $63,199                           $48,838                   $51,567         $58,807  $59,373
                                                  =======                           =======                   =======         =======  =======
    Adjusted Earnings per share(j)                  $0.56                             $0.44                     $0.46           $0.52    $0.52
    Weighted average shares outstanding
     -diluted(k)                         112,529               111,095                      111,173           113,150 113,196

______________________________

(a) Represents amortization of intangible assets and software as a result of the Company's purchase accounting adjustments from its 2005 merger transaction, as well as various acquisitions.

(b) Represents employee share-based compensation for stock options awarded to employees and non-executive directors based on the grant date fair value under the Black-Scholes valuation model.

(c) Represents acquisition and integration costs resulting from certain of the Company's acquisitions. As previously disclosed, the Company has been involved in a legal dispute with a third-party indemnitor under a purchase and sale agreement with respect to the indemnitor's refusal to make indemnity payments that the Company believed were required under the purchase and sale agreement. The Company settled this legal dispute in the fourth quarter of 2011. Accordingly, the Company received a $10.5 million cash settlement, $9.8 million of which has been excluded from the presentation of Adjusted EBITDA, a non-GAAP measure.

(d) Represents organizational restructuring charges and conversion and other related costs incurred resulting from the 2011 consolidation of UVEST and the 2009 consolidation of the Affiliated Entities. As of March 31, 2012, approximately 72% and 97%, respectively, of costs related to these two initiatives have been recognized. The remaining costs largely consist of transition payments made in connection with these two conversions for the retention of advisors and institutions, and conversion and transfer costs that are expected to be recognized into earnings by December 2014.

(e) Represents expenses incurred in March 2012 resulting from the early extinguishment and repayment of the Company's senior secured credit facilities under its Third Amended and Restated Credit Agreement, including the write-off of $16.5 million of unamortized debt issuance costs that have no future economic benefit, as well as various other charges incurred in connection with the repayment of the prior senior secured credit facilities and the development of the new senior secured credit facilities.

(f) Represents equity issuance and offering costs related to the closing of a secondary offering in the second quarter of 2011.

(g) Represents excise and other taxes.

(h) EBITDA Adjustments and amortization of purchased intangible assets, a component of depreciation and amortization, have been tax effected using a federal rate of 35% and the applicable effective state rate, which was 3.30% for the periods presented, net of the federal tax benefit.

(i) Represents the after-tax expense of non-qualified stock options in which the Company receives a tax deduction upon exercise, and the full expense impact of incentive stock options granted to employees that have vested and qualify for preferential tax treatment and conversely, the Company does not receive a tax deduction. Employee share-based compensation for vesting of incentive stock options was $1.6 million, $1.5 million, $1.5 million, $1.5 million and $1.4 million for the three months ended March 31, 2012, December 31, 2011, September 30, 2011, June 30, 2011 and March 31, 2011, respectively.

(j) Set forth is a reconciliation of earnings per share on a fully diluted basis as calculated in accordance with GAAP to Adjusted Earnings per share, a non-GAAP measure:

                   Q1 2012 Q4 2011    Q3 2011          Q2 2011 Q1 2011
                   ------- -------    -------          ------- -------
                                        (unaudited)
    Earnings
     per
     share -
     diluted                $0.37                $0.35                 $0.32      $0.40 $0.43
     Adjustment
     for
     allocation
     of
     undistributed
     earnings
     to stock
     units                -        0.01                      -          0.01    -
    After-
     Tax:
    EBITDA
     Adjustments
     per
     share             0.14        0.03                   0.09          0.06 0.04
     Amortization
     of
     purchased
     intangible
     assets
     per
     share             0.05        0.05                   0.05          0.05 0.05
                       ----        ----                   ----          ---- ----
    Adjusted
     Earnings
     per
     share                  $0.56                $0.44                 $0.46      $0.52 $0.52
                            =====                =====                 =====      ===== =====

(k) Included within the weighted average share count for the three months ended March 31, 2012, is approximately 850,000 shares resulting from the distribution pursuant to the 2008 Nonqualified Deferred Compensation Plan.

SOURCE LPL Investment Holdings Inc.

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