##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934FOR THE FISCAL YEAR ENDED
    DECEMBER 31, 2007ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934   001-32878
 (Commission File Number)
      PENSON WORLDWIDE,
    INC.
 (Exact name of registrant as
    specified in its charter)
  Delaware

6211

75-2896356(State or Other Jurisdiction
    of
    Incorporation or Organization)

(Primary Standard Industrial
    Classification Code Number)

(I.R.S. Employer
    Identification No.)   1700 Pacific Avenue, Suite 1400
 Dallas, Texas 75201
 (214) 765-1100
 (Address, including zip code,
    and telephone number, including area code, of the
    registrants principal executive offices)
  Securities registered pursuant to Section 12(b) of the
    Act
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, par value $0.01 per share

NASDAQ Global Select Market   Securities registered pursuant to Section 12(g) of the
    Act
    None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  12b-2
  Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller reporting
    company o   Rule 12b-2 o þ
      DOCUMENTS INCORPORATED BY REFERENCE




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##### 





PENSON
    WORLDWIDE, INC.Form 10-K
    For the Fiscal Year Ended December 31, 2007
  TABLE OF CONTENTS
   
 Basis of Presentation


1Special Note Regarding Forward-Looking
    Statements


1PART I


4Item 1.


Business


4Item 1A.


Risk Factors


20Item 1B.


Unresolved Staff Comments


32Item 2.


Properties


32Item 3.


Legal Proceedings


33Item 4.


Submission of Matters to a Vote of Security
    Holders


33PART II


33Item 5.


Market for the Registrants Common
    Equity, Related Stockholder Matters and Issuer Purchases of
    Equity Securities


33Item 6.


Selected Financial Data


36Item 7.


Managements discussion and analysis of
    financial condition and results of operations


37Item 7A.


Quantitative and qualitative disclosure about
    market risk


51Item 8.


Financial Statements and Supplementary
    Data


52Item 9.


Changes in and Disagreements with Accountants
    on Accounting and Financial Disclosure


52Item 9A.


Controls and Procedures


53Item 9B.


Other Information


53PART III


54Item 10.


Directors and Executive Officers of the
    Registrant


54Item 11.


Executive Compensation


54Item 12.


Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters


54Item 13.


Certain Relationships and Related
    Transactions


54Item 14.


Principal Accounting Fees and Services


54PART IV


54Item 15.


Exhibits and Financial Statement
    Schedules


54Signatures


55Sixth Amendment to Credit AgreementList of SubsidiariesConsent of BDO Siedman, LLPCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906




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Basis of
    Presentation  Form 10-K,
     Special
    Note Regarding Forward-Looking Statements    
    interest rate fluctuations;
    general economic conditions and the effect of economic
    conditions on consumer confidence;
    reduced margin loan balances maintained by our customers;
    fluctuations in overall market trading volume;
    reductions in per transaction clearing fees;
    legislative and regulatory changes;
    our ability to maintain our technological advantages;
    our ability to attract and retain customers and key
    personnel; and
    those risks detailed from time to time in our press releases and
    periodic filings with the Securities and Exchange Commission.   1




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Glossary
    of selected terms
  Algorithmic traders
  Algorithmic trading
  ASP
  Back-end trading software
  Clearing
  Clearing firm and/or
  Client
  Correspondent and/or and/or and/or
  Custody
  Customer
  Direct access Direct market
    access
  Electronic Communications Network ECN
  Execution routing
  FCM
  Front-end trading software
 2




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Level I market information
  Level II market information
  Level I trading software
  Level II trading software
  Online trading
  Settlement
 3




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PART I  Item 1.
    Business  Overview
             4




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Managements Discussion and Analysis of financial
    condition and results of operations
    Clients
  non-U.S. entities
    Market
    opportunity
    
    Increase in trading volumes and
    executions.  The increase in trading volumes and
    executions in equities, options and futures markets over the
    past several years has led to an increase in the number of
    transactions requiring execution, processing and settlement.
    Shift to outsourced solutions.  Broker-dealers
    outside the U.S. are increasingly following the continuing
    and common practice in the U.S. of outsourcing their
    clearing functions. In addition, firms in the global securities
    and investment industry are expanding their use of third-party
    technology to manage their securities trading infrastructure. 5




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
    Increase in trading in multiple
    markets.  Investors increasingly seek to trade in
    multiple instruments, multiple markets and in multiple
    currencies at once. The technological challenges associated with
    clearing, settlement, and custody in multiple geographies,
    currencies, and asset classes will push correspondents to seek
    the most comprehensive and sophisticated service providers.
    Industry consolidation.  Although the
    significant effort and potential business disruption associated
    with conversion to a new clearing firm may discourage
    correspondents from switching service providers, consolidation
    among clearing service providers has led to forced conversions.
    These conversions result in opportunities for correspondents to
    seek competing offers and, therefore, for service providers to
    solicit new correspondents business without having to
    overcome the difficulties of moving from an incumbent.
    Demand for increased reporting capabilities and integrated
    technology solutions.  Clients are increasingly
    demanding products that seamlessly integrate front, middle and
    back-office systems and allow for near real-time updating of
    account status and margin balances.
    Opportunities in Canadian, European and Asian
    markets.  The Canadian and European securities and
    investments industries have followed many of the same trends as
    the U.S. market. In addition, clearing firms in these
    markets are less likely to own trading applications, creating
    opportunities for the sale of NEXAs products. We opened
    our first Asian office in Hong Kong in the first quarter of
    2007. We generated net revenues in 2007 from our Asian
    operations of approximately $782,000 and expect to expand our
    Asian operations in 2008. Our Asian operations will initially be
    limited to marketing our technology products.  Our
    differentiated product offerings
    
    Variable clearing costs and economies of
    scale.  We offer clearing services to our
    correspondents on a variable cost structure based on transaction
    volume. We believe that our pricing structure allows our
    correspondents to take advantage of economies of scale by
    leveraging our investment in technology, software and systems at
    a significantly lower cost than these correspondents would
    generally incur to self-clear. The ability to obtain securities
    and futures clearing services on a cost-effective basis is a key
    factor in enabling direct access and online broker-dealers to
    charge their customers lower commissions than those charged by
    traditional broker-dealers.
    Trading support in multiple markets and
    currencies.  We offer multi-lingual,
    multi-currency international products. We believe that our
    global service offering provides our correspondents with the
    ability to operate efficiently across multiple markets, asset
    classes and currencies. Our global service offerings allow us to
    provide a single statement showing customer trades in multiple
    international markets.
    Enhanced account portfolio information
    services.  We have created customized software
    solutions to enable our correspondents to manage and analyze
    their accounts, which assists them in improving service levels
    to their customers while lowering fixed costs. We offer private
    label and custom development capability to meet the branding
    needs of our correspondent and other institutional clients.
    Technology and clearing integration.  Our
    solutions provide an integration of front, middle and back
    office systems and allow near real-time updating of account
    status and margin balances, providing better service to
    investors and better risk management to the correspondent.
    Facilitation of compliance with governmental
    regulation.  By outsourcing regulated activities,
    such as margin lending, our correspondents are able to minimize
    reporting requirements and reduce the burden on management of
    dealing with related compliance issues. In addition, we can
    facilitate broker-dealer 6




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compliance with other regulatory requirements by providing
    automated reporting, record keeping and other tasks.  
    Margin lending availability.  We make margin
    loans directly to the customers of our correspondent
    broker-dealers. As a result, our correspondents can compete more
    effectively in attracting their customers by earning interest
    income relating to margin loans without having to satisfy
    related capital requirements In April of 2007, we were one of
    only two brokers approved by the NASD to offer portfolio
    margining at that time (the NASD is now subsumed within the
    Financial Industry Regulatory Authority (FINRA)).
    Portfolio margining allows us to extend margin lending to
    qualified customers in excess of what is permitted under
    Regulation T. Regulation T is the Federal Reserve
    Board regulation that governs the amount of credit that
    brokerage firms and dealers may extend to their customers for
    the purchase of securities. Regulation T allows a trader to
    borrow 50% of the purchase price of securities that can be
    purchased on margin. Portfolio margining allows us to extend
    margin lending to cover a greater percentage of the purchase
    price of securities based upon a risk calculation model approved
    by FINRA. As of December 31, 2007 we have approved six
    correspondents for portfolio margining and have opened
    approximately 125 portfolio margining accounts with balances of
    approximately $146.3 million.
    Foreign currency exchange trading
    availability.  In 2007, we began to act as a
    dealer for currency foreign exchange trades with certain
    institutional clients and other parties, offer quotes in certain
    modeled currencies and clear foreign currency trades through
    certain exchanges and ECNs. We also offer a third party
    banks foreign exchange trading program to certain of our
    retail clients.  Our
    competitive strengths
    
    Fully-integrated securities and futures processing and
    technology solutions.  We are a leading provider
    of infrastructure services to financial intermediaries offering
    a fully-integrated solution across major securities and futures
    processing needs. We believe our ability to integrate our
    technology offerings into all of our products and services is a
    significant factor in the successful expansion of our client
    base and the increase of our revenue from existing clients. Our
    products and services support trading in multiple markets,
    multiple investment products and multiple currencies, with
    integrated execution, clearing and settlement solutions. It is
    our belief that, while some clients are willing to obtain these
    products from multiple vendors, most will determine that it is
    easier to obtain solutions with lower integration costs and
    risks from one provider that can also address the regulated
    securities and futures aspects of their business. In addition,
    NEXA provides real-time and historical trading and brokerage
    management tools which complement our clearing services.
    Flexible services and infrastructure.  We
    provide a broad offering of infrastructure and technology
    products and services to our clients, available both on an
    unbundled basis and as a fully-integrated solution. Our clients
    may choose to host these products on their own computer
    infrastructure or select that we host them. In addition, clients
    may either incorporate NEXAs brand name or provide these
    products and services to their customers on a private label
    basis. We work closely with each of our clients to provide the
    set of products and services appropriate for their individual
    needs.
    Established market position as an independent provider of
    correspondent clearing services.  Since our
    establishment in 1995, we have grown organically and through
    acquisitions to become a leading provider of securities clearing
    services to approximately 243 active correspondents in the U.S.,
    Canadian and U.K. markets and futures clearing services to 34
    correspondents. Unlike most other major clearing providers, we
    are not affiliated with a larger financial institution. As an
    independent clearing and technology solutions provider, we
    generally do not compete with our clients in other lines of
    business. Our independence is a key selling point when
    soliciting new business.
    Highly attractive and diversified client
    base.  Our client base is comprised of online,
    direct access and traditional retail broker-dealers, banks,
    hedge funds, FCMs and other futures traders, algorithmic traders
    and securities exchanges and is internationally diversified
    through our operations in Canada, the U.K. and Asia. 7




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For the year ended December 31, 2007, net revenues from
    clearing and commissions, including related net interest
    revenues, accounted for approximately 75% of net revenues. The
    following percentages are approximates. Direct market access
    broker-dealers accounted for 16.6% of these revenues and
    represented 11.9% of our total correspondents, traditional
    retail broker-dealers accounted for 16.9% of these revenues and
    represented 33.2% of our total correspondents, online
    broker-dealers accounted for 22.4% of these revenues and
    represented 11.1% of our total correspondents and institutional
    clients accounted for 20.8% of these revenues and 19.9% of our
    total correspondents. We have more recently expanded our market
    to include large banks, hedge funds, FCMs and other futures
    traders, algorithmic traders and securities exchanges which
    comprised the balance of our revenues and correspondents.  
    Scalable, recurring revenue business
    model.  Our business benefits from a scalable
    operating platform. Our existing infrastructure is capable of
    processing significant additional volumes with limited
    incremental increases in our fixed costs. We receive a recurring
    stream of revenues based on volumes from each of our
    correspondents with a low marginal cost of sales. In addition, a
    significant portion of our technology revenues are based on ASP
    arrangements with clients, linked to transactions and users.
    Proven and highly motivated management
    team.  With an average of over 32 years of
    industry experience and holding a substantial equity interest in
    Penson, our three-member Executive Committee has the proven
    ability to manage our business through all stages of the
    business cycle. Roger J. Engemoen, Jr., Daniel P. Son, and
    Philip A. Pendergraft, our Chairman, President and Chief
    Executive Officer, respectively, founded our business in 1995
    and have built it to its current position. This senior
    management group continues to own a significant portion of our
    Company.  Our
    growth strategies
    
    Capitalize on industry trends.  We believe we
    are positioned to benefit from several broad industry trends:  
    Internationalization.  Cross-border
    functionality is becoming increasingly important to attracting
    correspondents. With operations in four countries and the
    ability to provide access to markets as well as clearing and
    settlement services covering multiple depositories around the
    world in multiple currencies, we can provide this high-value
    service to our clients.
    Consolidation.  Typically, high conversion
    costs are a significant obstacle which must be overcome by a
    clearing firm which seeks to attract business from
    correspondents who are currently clients of another clearing
    firm. However, consolidation among clearing service providers
    has led to many forced conversions. As an independent provider
    and technology leader, we are well positioned to attract new
    clients faced with conversion decisions due to industry
    consolidation.
    Trading in multiple products.  Clients
    increasingly seek to trade in multiple products on the same
    computer terminal, including equities, options and futures. Our
    products and services provide this capability and we believe
    this trend provides us with a significant opportunity to grow
    our business.
    Outsourcing.  The high cost of self-clearing
    and increased regulatory scrutiny on securities and futures
    firms have driven many broker-dealers to outsource their
    clearing responsibilities and technology needs. Even some larger
    firms are finding it more efficient to outsource such services.
    We believe this trend will continue.  
    Enhance revenue potential of each client
    relationship.  We offer a variety of products and
    solutions to broker-dealers and securities firms, which together
    form an end-to-end solution. As a result, we intend to grow in
    part by selling additional products to our existing clients.
    Some of NEXAs clients are not currently clearing clients
    of Penson. We believe we have a significant opportunity to offer
    the full spectrum of clearing and execution services to many of
    NEXAs clients, as well as offering technology services to
    our clearing and execution clients. 8




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
    Expand offering of portfolio margining.  During
    2007, we approved six of our correspondents for portfolio
    margining and opened approximately 125 portfolio margining
    accounts with balances of approximately $146.3 million. We
    have experienced an increase in trading volume as a result of
    our introduction of portfolio margin accounts and expect to
    continue that trend in 2008.
    Leverage existing platform to expand our product set and
    client base.  Due to our significant investments
    in technology, we believe our infrastructure provides a leading
    fully-integrated securities clearing and technology package to
    our core market. This infrastructure facilitates clearing across
    several security types, including options and futures, and
    additional products can be offered and new clients added with
    minimal marginal cost. Using this infrastructure, we intend to
    expand our client base by:  
    Focusing on the high-volume direct access, online
    broker-dealers and the futures trading
    industry.  We will continue to target our clearing
    services to the growing futures trading, direct access and
    online broker-dealer markets and on margin lending as a core
    complementary service. By promoting our integrated suite of
    solutions, we believe our clearing and margin lending activities
    will increase as our market share grows while the size of the
    direct access and online brokerage industry increases.
    Further expanding our client base in the institutional and
    retail brokerage markets.  As the brokerage
    industry has added a broader array of products and services and
    the operating margins in the industry have diminished, the
    profitability of the infrastructure services offered by many
    traditional institutional and retail brokers is under pressure.
    We believe this trend will favor our business model of
    cost-effectively providing dedicated infrastructure solutions to
    the broader brokerage community. Accordingly, we are expanding
    our focus on the traditional institutional and retail brokerage
    industry. Many institutional and retail brokers in the
    U.S. have outsourced their clearing functions, and we
    believe this trend is now increasing internationally, which
    creates opportunities for us on a global basis. We are also
    targeting these firms for our technology products and services.
    Expanding our client base in the algorithmic trading and
    hedge fund sectors.  Our technology products
    enable us to increasingly market our services to algorithmic
    traders and hedge funds. These sectors are among the most
    significant drivers of growth in the overall securities markets
    and we intend to increase our focus on these clients.
    Expanding our operations internationally.  We
    previously acquired a London-based clearing company with
    experience in agency clearing operations in European securities
    markets and a Canadian clearing company that provides clearing
    services to the direct access, on-line discount and traditional
    retail markets in Canada. In the first quarter of 2007 we opened
    our first Asian office in Hong Kong. We have used these
    platforms to increase significantly our international
    capabilities to clear securities transactions and market our
    technology products. We believe our ability to service clients
    throughout the North American and European securities markets
    will become more important as investors increasingly trade on a
    global basis, and we intend to expand our offering of technology
    products in the Asian markets in fiscal year 2007 and beyond. In
    addition, we intend to expand our margin lending business
    internationally.
    Expanding our futures business.  We believe
    that our purchase of GHCO in February, 2007 was a significant
    step in expanding our futures clearing operations and our
    purchase of FCG in November, 2007 now gives us the ability to
    expand our futures offering to clients that need risk management
    and other services.  
    Pursue accretive acquisitions.  Through our
    past acquisitions, we have grown internationally, expanded our
    product base and added additional correspondents. We intend to
    continue to pursue accretive acquisitions that will expand our
    technology product offerings, our clearing service capabilities
    and our client base.  Securities
    processing
   9




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Clearing
    and related operations
  United
    States
        Canada
  and/or
    United
    Kingdom
     10




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Asia
    Execution
    routing services
    Internet
    account portfolio information services
    Holding
    and safeguarding securities and cash deposits
    Securities
    lending and borrowing
    Proprietary
    trading
    Futures
    products
   11




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Technology
    and data products
              Institutional
    and active retail front-end trading software
     12




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Global
    execution hub
    Global
    data products
  tick-by-tick
    Key
    licensed technology and proprietary customization
    
    see critical information in real-time on a continuously updated
    basis; 13




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
    manage their buying power across different accounts containing
    diverse instruments such as equities, options and futures, and;
    receive highly customized reports relating to their activity.  non-U.S. customers, non-U.S. affiliates
  Sales and
    marketing
          Strategic
    acquisitions
  Section 1-02 Regulation S-X.
   14




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Competition
       15




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Intellectual
    property and other proprietary rights
      Government
    regulation
    cease-and-desist
     16




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Regulation
    of clearing activities
    Regulation
    of securities lending and borrowing
      Rules 8c-1
 17




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Regulation
    of internet activities
    Regulatory
    capital requirements
     18




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30-day
          on-site
     19




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Margin
    risk management
      State and
    provincial regulation
    Employees
      Public
    Reporting
  Form 10-K, Form 10-Q, Form 8-K,
  Item 1A.
    Risk
    Factors  Many factors could have an effect on PWIs financial
    condition, cash flows and results of operations. We are subject
    to various risks resulting from changing economic,
    environmental, political, industry, business and financial
    conditions. The principal factors are described below.
 20




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Risks
    related to our business and our industry
  We
    face substantial competition from other securities and
    commodities processing and infrastructure firms, which could
    harm our financial performance and reduce our market
    share.
      We
    depend on a limited number of clients for a significant portion
    of our clearing revenues.
    Our
    clearing operations could expose us to legal liability for
    errors in performing clearing functions and improper activities
    of our correspondents.
     21




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Sharp
    decreases in short-term interest rates would negatively impact
    the profitability of our margin lending business.
      Our
    margin lending business subjects us to credit risks and if we
    are unable to liquidate an investors securities when the
    margin collateral becomes insufficient, the profitability of our
    business may suffer.
    
    the pledged securities may not be actively traded;
    there may be an undue concentration of securities
    pledged; or
    a stop order may be issued with regard to pledged securities.     22




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We
    rely, in part, on third parties to provide and support the
    software and systems we use to provide our services. Any
    interruption or cessation of service by these third parties
    could harm our business.
      Our
    products and services, and the products and services provided to
    us by third parties, may infringe upon intellectual property
    rights of third parties, and any infringement claims could
    require us to incur substantial costs, distract our management
    or prevent us from conducting our business.
    If our
    clients account information is misappropriated, we may be
    held liable or suffer harm to our reputation.
     23




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Any
    slowdown or failure of our computer or communications systems
    could subject us to liability for losses suffered by our clients
    or their customers.
    
    computer viruses or undetected errors in our internal software
    programs or computer systems;
    our inability to rapidly monitor all intraday trading activity;
    our inability to effectively resolve any errors in our internal
    software programs or computer systems once they are detected;
    heavy stress placed on our systems during peak trading
    times; or
    power or telecommunications failure, fire, tornado or any other
    natural disaster.    If our
    operational systems and infrastructure fail to keep pace with
    our anticipated growth, we may experience operating
    inefficiencies, client dissatisfaction and lost revenue
    opportunities.
      
    to improve our systems for operations, financial controls, and
    communication and information management;
    to refine our compliance procedures and enhance our compliance
    oversight; and
    to recruit, train, manage and retain our employees.   24




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If we
    are unable to respond to the demands of our existing and new
    clients, our ability to reach our revenue goals or maintain our
    profitability could be diminished.
    Our
    existing correspondents may choose to perform their own clearing
    services as their operations grow.
    Our
    ability to sell our services and grow our business could be
    significantly impaired if we lose the services of key
    personnel.
    We may
    face risks associated with potential future acquisitions that
    could reduce our profitability or hinder our ability to
    successfully expand our operations.
    
    diversion of managements time and attention to the
    negotiation of the acquisitions;
    difficulties in assimilating acquired businesses, technologies,
    operations and personnel including, but not limited to, the
    increased trade volume of acquired businesses;
    the need to modify financial and other systems and to add
    management resources;
    assumption of unknown liabilities of the acquired businesses; 25




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
    unforeseen difficulties in the acquired operations and
    disruption of our ongoing business;
    dilution to our existing stockholders due to the issuance of
    equity securities;
    possible adverse short-term effects on our cash flows or
    operating results; and
    possible accounting charges due to impairment of goodwill or
    other purchased intangible assets.    Restrictive
    covenants in our credit facilities may limit our ability to
    engage in certain transactions.
      Our
    revenues may decrease due to declines in trading volume, market
    prices, liquidity of securities markets or proprietary trading
    activity.
    
    reduced trading activity;
    illiquid markets;
    declines in the market values of securities carried by our
    customers and correspondents;
    the failure of buyers and sellers of securities to fulfill their
    settlement obligations;
    reduced margin loan balances of investors; and
    increases in claims and litigation.     26




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Our
    significant
    non-U.S.
    operations expose us to global exchange rate fluctuations that
    could impact our profitability.
      and/or
  General
    economic and political conditions and broad trends in business
    and finance that are beyond our control may contribute to
    reduced levels of activity in the securities markets, which
    could result in lower revenues from our business
    operations.
    
    the availability of short-term and long-term funding and capital;
    the level and volatility of interest rates;
    legislative and regulatory changes;
    currency values and inflation; and
    national, state and local taxation levels affecting securities
    transactions.    Our
    quarterly revenue and operating results are subject to
    significant fluctuations.
    
    changes in the proportion of clearing operations revenues and
    interest income;
    our lengthy sales and integration cycle with new correspondents;
    the gain or loss of business from a correspondent;
    reductions in per-transaction clearing fees; 27




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
    changes in bad debt expense from margin lending as compared to
    historical levels;
    changes in the rates we charge for margin loans, changes in the
    rates we pay for cash deposits we hold on behalf of our
    correspondents and their customers and changes in the rates at
    which we can invest such cash deposits;
    changes in the market price of securities and our ability to
    manage related risks;
    fluctuations in overall market trading volume;
    the relative success
    and/or
    failure of third party clearing competitors, many of which have
    increasingly larger resources than we have as a result of recent
    consolidation in our industry;
    the relative success
    and/or
    failure of third party technology competitors including, without
    limitation, competitors to our NEXA business;
    our ability to manage personnel, overhead and other
    expenses; and
    the amount and timing of capital expenditures.      Our
    involvement in futures and options markets subjects us to risks
    inherent in conducting business in those markets.
    We may
    not be able to hedge our foreign exchange risk.
    The
    securities and futures businesses are highly dependent on
    certain market centers that may be targets of
    terrorism.
   28




---



##### Table of Contents



Risks
    related to government regulation
  All
    aspects of our business are subject to extensive government
    regulation. If we fail to comply with these regulations, we may
    be subject to disciplinary or other action by regulatory
    organizations, and our business may be harmed.
    
    sales methods;
    trade practices among broker-dealers and FCMs;
    use and safekeeping of investors funds and securities;
    capital structure;
    margin lending;
    record keeping;
    conduct of directors, officers and employees; and
    supervision of investor accounts.      non-U.S. businesses non-U.S. markets
  The
    regulatory environment in which we operate has experienced
    increasing scrutiny by regulatory authorities in recent years
    and further changes in legislation or regulations may affect our
    ability to conduct our business or reduce our
    profitability.
   29




---



##### Table of Contents



If we
    do not maintain the capital levels required by regulations, we
    may be subject to fines, suspension, revocation of registration
    or expulsion by regulatory authorities.
            Procedures
    and requirements of the USA PATRIOT Act may expose us to
    significant costs or penalties.
   30




---



##### Table of Contents



Risks
    related to our corporate structure
  Our
    discontinued operations expose us to legal and other
    risks.
    Provisions
    in our certificate of incorporation and bylaws and under
    Delaware law may prevent or frustrate a change in control or a
    change in management that stockholders believe is
    desirable.
    
    a classified board of directors;
    limitations on the removal of directors;
    advance notice requirements for stockholder proposals and
    nominations; and
    the inability of stockholders to act by written consent or to
    call special meetings.        Risks
    related to our requirements as a public company
  Our
    stockholders could be harmed if our management and larger
    stockholders use their influence in a manner adverse to other
    stockholders interests.
   31




---



##### Table of Contents



The
    price of our common stock may be volatile.
    
    reductions in market prices or volume;
    changes in securities or other government regulations;
    quarterly variations in operating results;
    our technological capabilities to accommodate any future growth
    in our operations or clients;
    announcements of technological innovations, new products,
    services, significant contracts, acquisitions or joint ventures
    by us or our competitors; and
    changes in financial estimates and recommendations by securities
    analysts or our failure to meet or exceed analyst estimates.    Our
    internal controls over financial reporting may not be effective
    and our independent auditors may not be able to certify as to
    their effectiveness, which could have a significant and adverse
    effect on our business and reputation.
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties  Description
    of Property
   32




---



##### Table of Contents



Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   PART II  Item 5.
    Market
    for the Registrants Common Equity, Related Stockholder
    Matters and Issuer Purchases of Equity Securities  Market
    Information
      Price RangeHigh


Low2007Quarter ended March 31, 2007

$
33.22


$
25.32Quarter ended June 30, 2007

$
34.08


$
24.10Quarter ended September 30, 2007

$
25.40


$
15.50Quarter ending December 31, 2007

$
19.59


$
13.582006Quarter ended June 30, 2006

$
20.44


$
17.21Quarter ended September 30, 2006

$
19.59


$
15.90Quarter ending December 31, 2006

$
27.81


$
18.16   Holders
    Dividend
    Policy
       33




---



##### Table of Contents



and/or
  PWIs
    Purchases of its Equity Securities
  Total Number ofShares Purchased as


Maximum Number ofTotal Number





Part of Publicly


Shares that May Yet beof Shares


Average Price


Announced Plans or


Purchased Under the PlansPeriod

Purchased(1)


Paid per Share


Programs


or Programs(2)October 1, 2007 through October 31, 2007


189,660


$
18.68



184,725



November 1, 2007 through November 30, 2007


7,299


$
15.52







December 1, 2007 through December 31, 2007


75,614


$
14.29



74,340



800,425     (1)
    
    Includes shares withheld to cover tax-withholding requirements
    related to the vesting of restricted stock units issued to
    employees pursuant to the Companys shareholder-approved
    stock incentive plan.(2)
    
    Remaining shares represent the remaining dollar amount
    authorized divided by the average purchase price in the month.  Equity
    Compensation Plans
  Number of Securities to


Weighted-Averagebe Issued Upon Exercise


Exercise Price of


Number of Securitiesof Outstanding Options,


Outstanding Options,


Remaining AvailablePlan Category

Warrants and Rights(3)


Warrants and Rights


for Future IssuanceEquity Compensation Plans Approved by Security Holders(4)


1,559,255


$
17.10



1,109,817Equity Compensation Plans Not Approved by Security Holders










1,559,255


$
17.10



1,109,817   (3)
    
    Includes shares issuable for unvested restricted stock units.(4)
    
    Includes shares issuable pursuant to the Penson Worldwide, Inc.
    Amended and Restated 2000 Stock Incentive Plan, of which there
    were 925,838 shares remaining available for future issuance
    and the Penson Worldwide, Inc. 2005 Employee Stock Purchase Plan
    of which there were 183,979 shares remaining available for
    future issuance.  Recent
    Sales of Unregistered Securities
   34




---



##### Table of Contents



Stock
    Performance Graph
    Cumulative Total Return to Stockholders
    Penson Worldwide, Inc., NASDAQ Composite Index and NASDAQ
    Financial Stocks Index
    % Return to Stockholders, May 17, 2006 to December 31,
    2007
  Total
    Return Performance
  
   35




---



##### Table of Contents



Item 6.
    Selected
    Financial Data    Year Ended December 31,2007


2006


2005


2004


2003(In thousands, except per share data)Consolidated statement of income data:Net revenues

$
264,725


$
198,189


$
127,907


$
102,478


$
84,464Total expenses(1)


222,767



160,611



123,229



94,296



76,135Income from continuing operations before income taxes


41,958



37,578



4,678



8,182



8,329Income tax expense


15,125



13,299



1,951



1,489



503Income from continuing operations


26,833



24,279



2,727



6,693



7,826Income from discontinued operations, net of tax(2)






243



177



1,060



835Net income

$
26,833


$
24,522


$
2,904


$
7,753


$
8,661Earnings per share  basicEarnings per share from continuing operations

$
1.02


$
1.07


$
0.18


$
0.51


$
0.61Earnings per share from discontinued operations






0.01



0.01



0.08



0.07Earnings per share

$
1.02


$
1.08


$
0.19


$
0.59


$
0.68Earning per share  dilutedEarnings per share from continuing operations

$
1.00


$
1.05


$
0.16


$
0.43


$
0.58Earnings per share from discontinued operations






0.01



0.01



0.07



0.06Earnings per share

$
1.00


$
1.06


$
0.17


$
0.50


$
0.64Weighted average shares outstanding  basic and
    dilutedBasic


26,232



22,689



15,185



13,136



12,744Diluted


26,817



23,058



18,300



16,456



13,680     (1)
    
    Results from 2007 and 2006 include $4.7 million and
    $3.1 million of compensation expense related to the
    implementation of SFAS No. 123 (R). Accordingly, 2007
    and 2006 results may not be comparable to prior periods.(2)
    
    Concurrent with our public offering, we split off certain
    non-core business operations into SAMCO Holdings, a newly formed
    company which gives effect to a capital contribution to SAMCO in
    an amount equal to the difference between the net book value of
    the division to be split off, as of such date, and the value of
    the 1,041,667 shares of our common stock to be exchanged in
    the split off. Except as otherwise indicated, financial
    information presented sets forth the results of operations and
    balance sheet data of the entities split off as 36




---



##### Table of Contents



discontinued operations. See Managements discussion
    and analysis of financial condition and results of
    operations  Discontinued operations.  As of December 31,2007


2006


2005


2004


2003(In thousands)Consolidated balance sheet data:Cash and cash equivalents

$
120,923


$
103,054


$
99,506


$
35,155


$
18,434Total assets


7,846,977



4,644,390



3,578,881



2,342,844



1,893,714Notes payable


55,000



10,000



52,395



38,931



39,770Total stockholders equity


265,428



211,784



89,952



67,716



32,211   Item 7.
    Managements
    discussion and analysis of financial condition and results of
    operations  The following discussion and analysis should be read in
    conjunction with Part II, Item 6 Selected
    Financial Data and our audited consolidated financial
    statements and the related notes included elsewhere in this
    annual report on
    Form 10-K.
    This discussion contains forward-looking statements that involve
    risks and uncertainties. Our actual results could differ
    materially from those anticipated in the forward-looking
    statements as a result of certain factors including the risks
    discussed in Item 1A Risk factors Special
    Note Regarding Forward-Looking Statements and elsewhere in
    this annual report on
    Form 10-K.
  Overview
        Fiscal
    2007 Highlights
  
    In February, 2007 we completed the acquisition of GHCO, a
    Chicago based futures and commodities clearing firm.
    In April 2007 we were approved by FINRA to offer Portfolio
    Margining to customers, including correspondents and their
    retail customers. As of December 31, 2007 we have approved
    six correspondents and approximately 125 portfolio margining
    accounts have been opened.
    In the second quarter of 2007, we completed the conversion of
    the seven Schonfeld correspondents. 37




---



##### Table of Contents




    We amended our $75 million credit facility to permit us to
    make non-controlling equity or property investments to the
    extent that such investments do not exceed $5.0 million for
    any single transaction and $20.0 million in the aggregate
    during any fiscal year.
    We recorded a charge of $10.9 million, $6.9 million
    after tax, from the loss of funds placed with Sentinel
    Management Group, which is now in bankruptcy.
    In November, 2007 we acquired FCG, a leading provider of
    technology products and services to futures traders
    Our Board approved two stock repurchase programs totaling
    $37.5 million. In October 2007, we completed the first
    repurchase program ($25 million), repurchasing
    approximately 1.5 million shares. The Company has
    repurchased approximately 310,000 shares as a result of the
    second repurchase program ($12.5 million), of which
    approximately 236,000 shares were purchased subsequent to
    December 31, 2007.
    We continued to expand our stock loan business, as our average
    daily balances increased approximately 41% to approximately
    $1.5 billion
    We generated our first quarterly profit in the fourth quarter in
    our NEXA subsidiary.
    We expanded our Asian operations.
    We generated four consecutive quarterly profits in our U.K.
    subsidiary during 2007.  Acquisition
    of FCG
    Acquisition
    of GHCO
    Acquisition
    of Schonfeld
   38




---



##### Table of Contents



Financial
    overview
  Net
    revenues
  Revenues
          Interest
    expense from securities operations
     39




---



##### Table of Contents



Expenses
  Employee
    compensation and benefits
    Other
    operating expenses
        Profitability
    of services provided
   40




---



##### Table of Contents



Results
    of operations
    Year Ended December 312007


2006


2005Revenues:Clearing and commission fees


45
%


41
%


49
%Technology


6
%


6
%


5
%Interest, gross


86
%


83
%


72
%Other revenues


16
%


15
%


10
%Total revenues


153
%


145
%


136
%Interest expense from securities operations


53
%


45
%


36
%Net revenues


100
%


100
%


100
%Expenses:Employee compensation and benefits


38
%


40
%


46
%Floor brokerage exchange and clearance fees


9
%


10
%


11
%Communications and data processing


13
%


12
%


16
%Occupancy and equipment


9
%


9
%


10
%Vendor related asset impairment


4
%






Other expenses


10
%


8
%


11
%Interest expense on long-term debt


1
%


2
%


2
%Total expenses


84
%


81
%


96
%Income from continuing operations before income taxes


16
%


19
%


4
%Provision for income taxes


6
%


7
%


2
%Income from continuing operations


10
%


12
%


2
%   Comparison
    of years ended December 31, 2007 and December 31,
    2006
  Overview
         41




---



##### Table of Contents



%Change fromAmount


Previous Year(In thousands)Revenues:Clearing and commission fees

$
35,999



44.0Technology


3,280



27.5Interest:Interest on asset based balances


45,255



42.0Interest on conduit borrows


18,568



36.9Money market


855



14.6Interest, gross


64,678



39.5Other revenue


13,227



44.1Total revenues


117,184



40.7Interest expense:Interest expense on liability based balances


35,110



81.0Interest on conduit loans


15,538



33.7Interest expense from securities operations


50,648



56.6Net revenues


66,536



33.6Expenses:Employee compensation and benefits


22,250



27.9Floor brokerage, exchange and clearance fees


3,880



19.0Communications and data processing


9,756



40.5Occupancy and equipment


6,131



35.2Vendor related asset impairment


10,861Other expenses


9,335



58.2Interest expense on long-term debt


(57
)


(1.9
)Total expenses


62,156



38.7Income from continuing operations before income taxes

$
4,380



11.7   Net
    Revenues
       42




---



##### Table of Contents



Employee
    compensation and benefits
        Floor
    brokerage, exchange and clearance fees
    Communications
    and data processing
   43




---



##### Table of Contents



Occupancy
    and equipment
    Vendor
    related asset impairment
    Other
    expenses
    Interest
    expense on long-term debt
    Provision
    for income taxes
      Net
    income
    Comparison
    of years ended December 31, 2006 and December 31,
    2005
  Overview
     44




---



##### Table of Contents



%Change fromAmount


Previous Year(In thousands)Revenues:Clearing and commission fees

$
19,479



31.2Technology


5,036



73.3Interest:Interest on asset based balances


28,872



36.7Interest on conduit borrows


41,026



442.9Money market


1,882



47.3Interest, gross


71,780



78.0Other revenue


16,755



126.5Total revenues


113,050



64.8Interest expense:Interest expense on liability based balances


4,979



13.0Interest on conduit loans


37,789



454.2Interest expense from securities operations


42,768



91.7Net revenues


70,282



54.9Expenses:Employee compensation and benefits


20,467



34.5Floor brokerage, exchange and clearance fees


6,161



43.3Communications and data processing


4,188



21.1Occupancy and equipment


4,734



37.3Other expenses


2,004



14.3Interest expense on long-term debt


(172
)


(5.5
)Total expenses


37,382



30.3Income from continuing operations before income taxes

$
32,900



703.3  45




---



##### Table of Contents



Net
    Revenues
                Employee
    compensation and benefits
    Accounting for Stock Issued to
    Employees non-employee
 46




---



##### Table of Contents



Floor
    brokerage, exchange and clearance fees
    Communications
    and data processing
    Occupancy
    and equipment
    Other
    expenses
    Interest
    expense on long-term debt
    Provision
    for income taxes
     47




---



##### Table of Contents



Net
    income
    Liquidity
    and capital resources
  Operating Liquidity 
      Capital Resources 
        (Rule 15c3-1),
 48




---



##### Table of Contents



Rule 15c3-1, (Rule 15c3-3).
  Contractual
    obligations
    Less Than








More ThanContractual Obligations

Total


1 Year


13 Years


45 Years


5 Years(In thousands)Long-term debt obligations and accrued interest(1)

$
56,070


$
1,070


$
55,000


$



$
Capital lease obligations


13,975



8,107



5,868







Operating lease obligations


32,366



4,623



7,466



6,952



13,325Total

$
102,411


$
13,800


$
68,334


$
6,952


$
13,325     (1)
    
    The entire long-term debt balance is a revolving credit facility
    which the Company may pay down at any time, accordingly, only
    interest accrued at December 31 has been included here.        Off-balance
    sheet arrangements
    Critical
    accounting policies
   49




---



##### Table of Contents



Revenue
    Recognition
      97-2, Software Revenue Recognition SOP 97-2 81-1, Accounting for Performance of Construction-Type and Certain
    Production Type Contracts (SOP 81-1), Revenue
    Recognition
  Software
    development
  SOP 98-1
  Stock-based
    compensation
  Share-Based Payment,
 50




---



##### Table of Contents



Item 7A.
    Quantitative
    and qualitative disclosure about market risk       51




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  F-33 Form 10-K. page F-1.
  Quarterly
    results of operations (unaudited)
  Dec. 31,


Sep. 30,


Jun. 30,


Mar. 31,


Dec. 31,


Sep. 30,


Jun. 30,


Mar. 31,Quarter Ended

2007


2007


2007


2007


2006


2006


2006


2006(In thousands, except per share data)Revenues:Clearing and commission fees

$
34,607


$
30,670


$
27,963


$
24,665


$
21,490


$
18,365


$
21,162


$
20,889Technology


4,538



3,876



3,758



3,019



3,460



2,890



2,767



2,794Interest, gross


58,385



60,647



61,210



48,235



46,615



40,038



38,890



38,256Other revenues


13,204



9,895



11,063



9,067



7,821



7,499



7,516



7,166Total revenues


110,734



105,088



103,994



84,986



79,386



68,792



70,335



69,105Interest expense on short-term obligations


35,171



36,992



39,614



28,300



26,769



19,030



21,232



22,398Net revenues


75,563



68,096



64,380



56,686



52,617



49,762



49,103



46,707Expenses:Employee compensation and benefits


27,864



25,739



24,903



23,473



20,739



19,607



19,754



19,629Floor brokerage, exchange and clearance fees


5,558



6,615



7,107



4,991



3,978



5,265



6,182



4,966Communications and data processing


10,345



8,593



8,106



6,781



6,195



5,586



5,946



6,342Occupancy and equipment


6,674



6,075



5,993



4,828



4,604



4,433



4,327



4,075Vendor related asset impairment


51



10,810























Other expenses


7,836



6,939



5,806



4,786



4,980



4,110



3,421



3,521Interest expense on long-term debt


1,207



760



474



453



339



539



911



1,162Total expenses


59,535



65,531



52,389



45,312



40,835



39,540



40,541



39,695Income from continuing operations before income taxes


16,028



2,565



11,991



11,374



11,782



10,222



8,562



7,012Income tax expense


5,834



618



4,437



4,236



4,054



3,579



2,998



2,668Income from continuing operations


10,194



1,947



7,554



7,138



7,728



6,643



5,564



4,344Income from discontinued operations, net of tax


























114



129Net income

$
10,194


$
1,947


$
7,554


$
7,138


$
7,728


$
6,643


$
5,678


$
4,473Earnings per share  basic:Earnings per share from continuing operations

$
0.40


$
0.07


$
0.28


$
0.27


$
0.31


$
0.27


$
0.25


$
0.29Earnings per share from discontinued operations


























0.01



Earnings per share

$
0.40


$
0.07


$
0.28


$
0.27


$
0.31


$
0.27


$
0.26


$
0.29Earnings per share  diluted:Earnings per share from continuing operations

$
0.39


$
0.07


$
0.28


$
0.27


$
0.30


$
0.26


$
0.25


$
0.24Earnings per share from discontinued operations


























0.01



Earnings per share

$
0.39


$
0.07


$
0.28


$
0.27


$
0.30


$
0.26


$
0.26


$
0.24Weighted average shares outstanding  basic


25,502



26,402



26,689



26,328



25,131



25,034



21,773



15,208Weighted average shares outstanding  diluted


26,314



26,920



27,276



26,905



25,470



25,314



22,020



18,918   Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure   52




---



##### Table of Contents



Item 9A.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
    Changes
    in Internal Control over Financial Reporting
  Rule 13a-15(f)
  Managements
    Report on Internal Control over Financial Reporting
  Rules 13a-15(f) 15d-15(f)
        Inherent
    Limitation of the Effectiveness of Internal Control
    Item 9B.
    Other
    Information   53




---



##### Table of Contents



PART III  Item 10.
    Directors
    and Executive Officers of the Registrant    Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13.
    Certain
    Relationships and Related Transactions    Item 14.
    Principal
    Accounting Fees and Services   PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  1. Financial Statements
  page F-1 Form 10-K.
  PageNumberReport of Independent Registered Public Accounting Firm


F-2Statements of Financial Condition


F-4Statements of Income


F-5Statements of Stockholders Equity


F-6Statements of Cash Flows


F-7Notes to the Consolidated Financial Statements


F-8   Financial Statement Schedules.
    3. Exhibit List.
   54




---



##### Table of Contents



Signatures      By:
    /s/  PHILIP
    A. PENDERGRAFT   Title:
    Chief Executive Officer      Signature

Title

Date/s/  ROGER
    J. ENGEMOEN, JR.Roger
    J. Engemoen, Jr.

Chairman

March 13, 2008/s/  PHILIP
    A. PENDERGRAFTPhilip
    A. Pendergraft

Chief Executive Officer
    (Principal Executive Officer)
    and Director

March 13, 2008/s/  DANIEL
    P. SONDaniel
    P. Son

President and Director

March 13, 2008/s/  KEVIN
    W. McAleerKevin
    W. McAleer

Senior Vice President and Chief Financial
    Officer (Principal Financial
    and Accounting Officer)

March 13, 2008/s/  JAMES
    S. DYERJames
    S. Dyer

Director

March 13, 2008/s/  J.
    KELLY GRAYJ.
    Kelly Gray

Director

March 13, 2008/s/  DAVID
    JOHNSONDavid
    Johnson

Director

March 13, 2008/s/  THOMAS
    R. JOHNSONThomas
    R. Johnson

Director

March 13, 2008/s/  DAVID
    M. KELLYDavid
    M. Kelly

Director

March 13, 2008/s/  DAVID
    REEDDavid
    Reed

Director

March 13, 2008/s/  RONALD
    G. STEINHARTRonald
    G. Steinhart

Director

March 13, 2008  55




---



##### 



Index to
    consolidated financial statements
   
 Penson Worldwide, Inc. consolidated financial statements:Report of Independent Registered Public
    Accounting Firm


F-2Consolidated Financial Statements:Statements of Financial Condition


F-4Statements of Income


F-5Statements of Stockholders Equity


F-6Statements of Cash Flows


F-7Notes to the Consolidated Financial Statements


F-8   F-1




---



##### Table of Contents



Report of
    independent registered public accounting firm                BDO
    Siedman, llp
     F-2




---



##### Table of Contents



Report of
    independent registered public accounting firm
      Internal Control  Integrated Framework
              BDO
    Siedman, llp
      F-3




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Consolidated
    Statements of Financial Condition
  December 31,2007


2006(In thousands,except par values)ASSETSCash and cash equivalents

$
120,923


$
103,054Cash and securities  segregated under federal and
    other regulations


1,437,561



577,336Receivable from broker-dealers and clearing organizations


1,519,078



338,872Receivable from customers, net


1,324,213



1,239,170Receivable from correspondents


532,504



117,343Securities borrowed


2,065,997



1,783,403Securities owned, at market value


235,680



172,277Deposits with clearing organizations


293,230



202,033Property and equipment, net


25,116



18,698Other assets


292,675



92,204Total assets

$
7,846,977


$
4,644,390LIABILITIES AND STOCKHOLDERS EQUITYPayable to broker-dealers and clearing organizations

$
1,077,312


$
169,749Payable to customers


3,590,315



2,214,987Payable to correspondents


616,863



260,029Short-term bank loans


340,530



60,186Notes payable


55,000



10,000Securities loaned


1,726,677



1,589,395Securities sold, not yet purchased


82,116



60,124Accounts payable, accrued and other liabilities


92,736



68,136Total liabilities


7,581,549



4,432,606Commitments and contingenciesSTOCKHOLDERS EQUITYPreferred stock, $0.01 par value, 10,000 shares
    authorized; none issued and outstanding as of December 31,
    2007 and 2006






Common stock, $0.01 par value, 100,000 shares
    authorized; 28,226 issued and 25,543 outstanding as of
    December 31, 2007; 26,154 issued and 25,078 outstanding as
    of December 31, 2006


282



262Additional paid-in capital


238,253



188,219Accumulated other comprehensive income


6,964



2,159Retained earnings


65,815



39,562Treasury stock, at cost; 2,683 shares at December 31,
    2007; 1,076 shares at December 31, 2006


(45,886
)


(18,418
)Total stockholders equity


265,428



211,784Total liabilities and stockholders equity

$
7,846,977


$
4,644,390    F-4




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Consolidated
    Statements of Income
  Year Ended December 31,2007


2006


2005(In thousands, except per share data)RevenuesClearing and commission fees

$
117,905


$
81,906


$
62,427Technology


15,191



11,911



6,875Interest, gross


228,477



163,799



92,019Other


43,229



30,002



13,247Total Revenue


404,802



287,618



174,568Interest expense from securities operations


140,077



89,429



46,661Net revenues


264,725



198,189



127,907ExpensesEmployee compensation and benefits


101,979



79,729



59,262Floor brokerage, exchange and clearance fees


24,271



20,391



14,230Communications and data processing


33,825



24,069



19,881Occupancy and equipment


23,570



17,439



12,705Vendor related asset impairment


10,861







Other expenses


25,367



16,032



14,028Interest expense on long-term debt


2,894



2,951



3,123222,767



160,611



123,229Income from continuing operations before income taxes


41,958



37,578



4,678Income tax expense


15,125



13,299



1,951Income from continuing operations


26,833



24,279



2,727Income from discontinued operations, net of tax expense of $0,
    $156 and $114 respectively






243



177Net income

$
26,833


$
24,522


$
2,904Earnings per share-basic:Earnings per share from continuing operations

$
1.02


$
1.07


$
0.18Earnings per share from discontinued operations






0.01



0.01Net income per share

$
1.02


$
1.08


$
0.19Earnings per share-diluted:Earnings per share from continuing operations

$
1.00


$
1.05


$
0.16Earnings per share from discontinued operations






0.01



0.01Net income per share

$
1.00


$
1.06


$
0.17Weighted average shares  basic


26,232



22,689



15,185Weighted average shares  diluted


26,817



23,058



18,300    F-5




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Consolidated
    Statements of Stockholders Equity
  AccumulatedPreferred








Additional





Other





TotalStock


Common stock


Paid-In


Treasury


Comprehensive


Retained


StockholdersAmount


Shares


Amount


Capital


Stock


Income


Earnings


Equity(In thousands)Balance, December 31, 2004

$
24,750



13,259


$
133


$
28,849


$



$
1,848


$
12,136


$
67,716Net income


























2,904



2,904Sale of preferred stock


9,930



























9,930Foreign currency translation adjustments, net of tax of $91






















142







142Issuance of common stock, net














10















10Conversion of convertible notes






1,921



19



9,231















9,250Balance, December 31, 2005


34,680



15,180



152



38,090







1,990



15,040



89,952Net income


























24,522



24,522Proceeds from initial public offering






7,197



72



114,080















114,152Direct costs of capital raised














(3,074
)














(3,074
)Foreign currency translation adjustments, net of tax of $109






















169







169Preferred stock converted into common stock


(34,680
)


3,526



35



34,645















Repurchase of treasury stock, at cost






(1,076
)


1



(1
)


(17,708
)










(17,708
)Stock-based compensation expense






113







3,120



(710
)










2,410Exercise of stock options






75



1



348















349Purchases of stock under the Employee Stock Purchase Plan






63



1



1,011















1,012Balance, December 31, 2006






25,078



262



188,219



(18,418
)


2,159



39,562



211,784Net income


























26,833



26,833Foreign currency translation adjustments, net of tax of $3,098






















4,805







4,805Repurchase of treasury stock, at cost






(1,607
)










(27,468
)










(27,468
)Stock-based compensation expense






173



1



4,692















4,693Exercise of stock options






112



1



1,066















1,067Excess tax benefit due to exercise of stock options














823















823Purchases of stock under the Employee Stock Purchase Plan






128



1



2,014















2,015Issuance of common stock






1,659



17



41,439















41,456Cumulative effect of adoption of FIN 48


























(580
)


(580
)Balance, December 31, 2007

$




25,543


$
282


$
238,253


$
(45,886
)

$
6,964


$
65,815


$
265,428    F-6




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Consolidated
    Statements of Cash Flows
  Year Ended December 31,2007


2006


2005(In thousands)Cash flows from operating activities:Net income

$
26,833


$
24,522


$
2,904Income from discontinued operations






(243
)


(177
)Adjustments to reconcile net income to net cash provided by
    (used in) operating activities:Depreciation and amortization


16,777



11,321



6,995Deferred income taxes


(2,274
)


1,625



Stock based compensation


4,693



3,120



Operating activities from discontinued operations






243



1,273Changes in operating assets and liabilities:Cash and securities  segregated under federal and
    other regulations


(804,145
)


(210,300
)


266,836Net receivable/payable with customers


1,291,953



667,186



(15,543
)Net receivable/payable with correspondents


(51,266
)


52,078



(49,197
)Securities borrowed


(282,594
)


(410,480
)


(990,799
)Securities owned


(58,533
)


(46,067
)


(12,570
)Deposits with clearing organizations


(82,314
)


(67,723
)


(31,894
)Other assets


(146,832
)


(6,881
)


(17,799
)Net receivable/payable with broker dealers and clearing
    organizations


(334,763
)


(98,013
)


(56,932
)Securities loaned


137,282



57,172



978,245Securities sold, not yet purchased


21,992



23,329



28,241Accounts payable, accrued and other liabilities


24,114



13,341



12,471Net cash provided by (used in) operating activities


(239,077
)


14,230



122,054Cash flows from investing activities:Business combinations, net of cash acquired


(34,156
)


(4,536
)


(1,000
)Purchase of property and equipment, net


(15,484
)


(12,647
)


(14,058
)Investing activities from discontinued operations










(805
)Net cash used in investing activities


(49,640
)


(17,183
)


(15,863
)Cash flows from financing activities:Proceeds from notes payable


206,000



95,300



31,000Repayments of notes payable


(161,000
)


(137,695
)


(8,286
)Net borrowing on short-term bank loans


280,344



(55,736
)


(74,636
)Exercise of stock options


1,067



349



Excess tax benefit on exercise of stock options


823



4



Purchase of treasury stock


(27,468
)


(7,976
)


Issuance of preferred stock










9,930Proceeds from initial public offering






114,152



Direct costs of capital raised






(3,074
)


Issuance of common stock, net


2,015



1,008



10Net cash provided by (used in) financing activities


301,781



6,332



(41,982
)Effect of exchange rates on cash


4,805



169



142Increase in cash and cash equivalents


17,869



3,548



64,351Cash and cash equivalents at beginning of period


103,054



99,506



35,155Cash and cash equivalents at end of period

$
120,923


$
103,054


$
99,506Supplemental cash flow disclosures:Interest payments

$
23,252


$
12,457


$
2,154Income tax payments

$
16,466


$
9,408


$
12,399Non-cash financing activity:Distribution of net assets of discontinued operations

$



$
(10,442
)

$
    F-7




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Notes
    to the Consolidated Financial Statements
 (In
    thousands, except per share data or where noted)
  1.
    Basis of
    Presentation  Organization and Business
            2.
    Summary
    of significant accounting policies  Securities Transactions
  Securities Lending Activities
 F-8




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Notes to
    the Consolidated Financial
    Statements  (Continued)
    Reverse Repurchase and Repurchase Agreements
  Revenue Recognition
  97-2, Software Revenue Recognition (SOP 97-2). SOP 97-2 81-1 Accounting for Performance of Construction-Type and Certain
    Production Type Contracts (SOP 81-1), Revenue
    Recognition
  Income Taxes
  Property and Equipment
  Goodwill Goodwill and
    Other Intangible Assets
 F-9




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Notes to
    the Consolidated Financial
    Statements  (Continued)
    Balance, December 31, 2005

$
538Goodwill acquired


8,743Balance, December 31, 2006


9,281Goodwill acquired


34,836Balance, December 31, 2007

$
44,117     Intangibles
  Gross Carrying


Accumulated2007

Amount


Amortization


Net Book ValueCustomer related intangible assets

$
14,497


$
850


$
13,647Purchased Technology


14,082



8,923



5,159Other


12,218



64



12,154Total

$
40,797


$
9,837


$
30,960   Gross Carrying


Accumulated2006

Amount


Amortization


Net Book ValueCustomer related intangible assets

$
672


$
155


$
517Purchased Technology


13,087



6,128



6,959Total

$
13,759


$
6,283


$
7,476     Financing Costs Accounting for Nonrefundable Fees and
    Costs Associated with Originating or Acquiring Loans and Initial
    Direct Costs of Leases, an amendment of FASB Statements
    No. 13, 60, and 65 and a rescission of FASB Statement
    No. 17.
  Operating Leases
  Stock-Based Compensation Share-Based Payment
 F-10




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  Accounting for Stock Issued to
    Employees Accounting for Stock-Based
    Compensation
  Managements Estimates and Assumptions
  Cash and Cash Equivalents
  Securities Owned and Securities Sold, Not Yet
    Purchased
  Fair Value of Financial Instruments
  Allowance for Doubtful Accounts account-by-account
 F-11




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Notes to
    the Consolidated Financial
    Statements  (Continued)
    Software Costs and Expenses 98-1 Accounting for the Costs of Computer Software Developed or
    Obtained for Internal Use.
  Net Income Per Share
  Foreign Currency Translation Adjustments Foreign Currency
    Translation
  Costs Associated with Disposal Activities Accounting for Costs Associated with Exit or Disposal
    Activities,
  Reclassifications 
  Recent
    Accounting Pronouncements
  Business Combinations
  The Fair Value Option for Financial
    Assets and Financial Liabilities  Including an
    Amendment of FASB Statement No. 115
 F-12




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  instrument-by-instrument
  Fair Value Measurements
  3.
    Discontinued
    operations  Accounting for the Disposal of
    Long-Lived Assets
  Year Ended December 31,2007


2006


2005Revenues

$



$
9,565


$
26,319Costs and expenses






9,166



26,028Income before income taxes






399



291Income taxes






156



114Income from discontinued Operations

$



$
243


$
177   4.
    Acquisitions  First
    Capitol Group, LLC
   F-13




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Notes to
    the Consolidated Financial
    Statements  (Continued)
    Goldenberg
    Hehmeyer and Co.
    Acquisition
    of the clearing business of Schonfeld Securities,
    LLC
    Computer
    Clearing Services, Inc.
   F-14




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  5.
    Computation
    of net income per share  Net income
    Per Share.
  Year Ended December 31,2007


2006


2005Basic:Income from continuing operations

$
26,833


$
24,279


$
2,727Income from discontinued operations, net






243



177Basic net income

$
26,833


$
24,522


$
2,904Diluted:Income from continuing operations

$
26,833


$
24,279


$
2,727Interest adjustment for convertible debt, converted
    June 30, 2005










226Income from continuing operations  diluted


26,833



24,279



2,953Discontinued operations






243



177Diluted net income

$
26,833


$
24,522


$
3,130Weighted average common shares outstanding  basic


26,232



22,689



15,185Assumed conversion of Series A and Series B preferred
    stock










2,942Incremental shares from outstanding stock options


202



169



173Incremental shares from non-vested restricted stock units


120



130



Shares issuable


263



70



Weighted average common shares and common share
    equivalents  diluted


26,817



23,058



18,300Basic earnings per common share:Before cumulative effect of discontinued operations

$
1.02


$
1.07


$
0.18Discontinued operations






0.01



0.01Basic earnings per common share

$
1.02


$
1.08


$
0.19Diluted earnings per common share:Before cumulative effect of discontinued operations

$
1.00


$
1.05


$
0.16Discontinued operations






0.01



0.01Diluted earnings per common share

$
1.00


$
1.06


$
0.17     6.
    Segregated
    assets  Rule 15c3-3
 F-15




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  Rule 15c3-3. Rule 15c3-3
  7.
    Receivable
    from and payable to broker-dealers and clearing
    organizations    December 31,2007


2006Receivable:Securities failed to deliver

$
499,966


$
241,108Receivable from clearing organizations


1,019,112



97,764$
1,519,078


$
338,872Payable:Securities failed to receive

$
468,421


$
102,238Payable to clearing organizations


608,891



67,511$
1,077,312


$
169,749     8.
    Receivable
    from and payable to customers and correspondents   F-16




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  9.
    Securities
    owned and securities sold, not yet purchased    December 31,2007


2006Securities Owned:Corporate

$
74,962


$
38,934Certificates of deposit and term deposits


9,502



25,355U.S. federal, state and municipal


41,153



28,049Canadian government obligations


95,063



79,939Money market


15,000



$
235,680


$
172,277Securities Sold, Not Yet Purchased:Corporate

$
47,262


$
19,739Canadian government obligations


34,854



40,385$
82,116


$
60,124   10.
    Reverse
    repurchase and repurchase agreements    11.
    Property
    and equipment    December 31,2007


2006Equipment

$
23,868


$
16,895Software


32,703



23,472Furniture


4,611



2,531Leasehold improvements


6,349



4,382Other


1,306



1,45968,837



48,739Less accumulated depreciation


43,721



30,041Property and equipment, net

$
25,116


$
18,698  F-17




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Notes to
    the Consolidated Financial
    Statements  (Continued)
    12.
    Short-term
    bank loans      13.
    Notes
    payable    December 31,2007


2006Bank credit line up to $75,000, unsecured, with a variable rate
    of interest that approximated 7.6% and 8.6% at December 31,
    2007 and 2006. Payable in full in May, 2009

$
55,000


$
10,000$
55,000


$
10,000       Amount2008

$
2009


55,000$
55,000  F-18




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  14.
    Stockholders
    Equity    Preferred


Common


TreasuryStock


Stock


StockBalance, December 31, 2004


2,657



13,259



Sale of preferred stock


939







Conversion of convertible notes






1,921



Balance, December 31, 2005


3,596



15,180



Proceeds from initial public offering






7,197



Preferred stock converted into common stock


(3,596
)


3,526



Repurchase of treasury stock, at cost






(1,076
)


1,076Stock-based compensation expense






113



Purchases under the Employee Stock Purchase Plan






63



Exercise of stock options






75



Balance, December 31, 2006






25,078



1,076Issuance of common stock






1,659



Repurchase of treasury stock, at cost






(1,607
)


1,607Stock-based compensation expense






173



Purchases under the Employee Stock Purchase Plan






128



Exercise of stock options






112



Balance, December 31, 2007






25,543



2,683   Private
    placements of Preferred and Common Shares
    Preferred
    Conversion
    Additional
    Paid-In Capital
   F-19




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Notes to
    the Consolidated Financial
    Statements  (Continued)
    Accumulated
    Other Comprehensive Income
      Year Ended December 31,2007


2006


2005Net income

$
26,833


$
24,522


$
2,904Foreign currency translation gain


4,805



169



142Comprehensive income

$
31,638


$
24,691


$
3,046     Year Ended December 31,2007


2006


2005Canadian DollarsIncome statement

$
0.95


$
0.88


$
0.84Balance sheet


1.01



0.86



0.86British PoundsIncome statement

$
2.01


$
1.92


$
1.89Balance sheet


1.99



1.96



1.72     Dividends
    15.
    Financial
    instruments with off-balance sheet risk       F-20




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Notes to
    the Consolidated Financial
    Statements  (Continued)
        16.
    Related
    party transactions      and/or and/or and/or
   F-21




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Notes to
    the Consolidated Financial
    Statements  (Continued)
            17.
    Employee
    benefit plan    18.
    Stock-based
    compensation   F-22




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Notes to
    the Consolidated Financial
    Statements  (Continued)
    Accounting for Stock Issued to Employees, and
    related interpretations
    Stock
    options
      Year Ended


Year EndedDecember 31,


December 31,2007


2006Weighted-average grant date fair value

$
6.93


$
4.82Weighted average assumptions used:Expected volatility


27.0
%


20.0
%Expected term (in years)


3.90



4.70Risk-free interest rate


4.7
%


5.0
%Expected dividend yield






    F-23




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Notes to
    the Consolidated Financial
    Statements  (Continued)
        Weighted


AggregateWeighted


Average


IntrinsicNumber of


Average


Contractual


Value of In-theShares


Exercise Price


Term


Money Options(In whole dollars)


(In years)Outstanding, December 31, 2005


227



4.04



6.16



Granted


1,145



17.21







Exercised


(75
)


4.67







Forfeited, cancelled or expired


(17
)


17.00







Outstanding, December 31, 2006


1,280


$
15.44



6.43


$
15,320Granted


160



25.22







Exercised


(112
)


9.54







Forfeited, cancelled or expired


(159
)


17.16







Outstanding, December 31, 2007


1,169


$
17.10



5.79


$
946Options exercisable at December 31, 2007


479


$
15.26



5.35


$
946    F-24




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  Restricted
    Stock Units
    Weighted


WeightedAverage


Average


AggregateNumber of


Grant Date


Contractual


IntrinsicUnits


Fair Value


Term


Value(In whole dollars)


(In years)Outstanding, December 31, 2005


64











Granted


640



14.64







Vested and issued


(122
)


13.57







Terminated, cancelled or expired


(23
)


16.07







Outstanding, December 31, 2006


559


$
14.44



3.2


$
15,335Granted


94



27.12







Vested and issued


(170
)


15.51







Terminated, cancelled or expired


(93
)


13.42







Outstanding, December 31, 2007


390


$
17.39



2.6


$
5,596     Employee
    stock purchase plan
     F-25




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  Prior
    Period Pro Forma Presentations
  Accounting for Stock-Based Compensation 
    Transition and Disclosure, an amendment of FASB Statement
    No. 123
  19.
    Commitments
    and contingencies    Capital


OperatingLeases


Leases2008

$
8,107


$
4,6232009


4,866



3,8762010


1,002



3,5902011






3,6502012






3,3022013 and thereafter






13,325$
13,975


$
32,366          F-26




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  20.
    Income
    taxes    Year Ended December 31,2007


2006


2005Income tax expenseCurrent

$
17,399


$
11,830


$
2,065Deferred


(2,274
)


1,625



Total

$
15,125


$
13,455


$
2,065Income tax expenseContinuing operations

$
15,125


$
13,299


$
1,951Discontinued operations






156



114$
15,125


$
13,455


$
2,065     Year Ended December 31,2007


2006


2005Federal statutory income tax rate


35.0
%


35.0
%


35.0
%Foreign taxes


(2.7
)


(0.1
)


5.9State and local income taxes


2.6



3.0



.7Other, net


1.1



1.6



Change in valuation allowance due to NOL utilization






(4.1
)


36.0
%


35.4
%


41.6
%    F-27




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  Deferred
    income taxes consist of the following:
  December 31,2007


2006Current deferred taxes:Bad debt allowance

$
1,033


$
185Prepaid assets


(976
)


(241
)Total

$
57


$
(56
)Non-current deferred taxes:Fixed asset basis differences

$
1,324


$
207Intangible assets


1,714



1,213Stock compensation


633



112Other


(59
)


(81
)Total

$
3,612


$
1,451Total

$
3,669


$
1,395     non-U.S. income
    Balance at January 1, 2007

$
580Additions based on tax positions related to the current year


398Reductions for tax positions of prior years


(152
)Balance at December 31, 2007

$
826     21.
    Segment
    information   F-28




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Notes to
    the Consolidated Financial
    Statements  (Continued)
    UnitedDecember 31, 2007

States


Canada


Other


ConsolidatedRevenue

$
303,999


$
75,279


$
25,524


$
404,802Interest, net


73,688



12,664



2,048



88,400Income before tax


23,238



16,025



2,695



41,958Net income


13,519



11,442



1,872



26,833Segment assets


5,957,182



1,619,398



270,397



7,846,977Goodwill and intangibles


74,216



549



312



75,077Capital expenditures


11,888



1,807



1,789



15,484Depreciation and amortization


10,853



1,388



982



13,223Amortization of intangibles


3,498



56







3,554   UnitedDecember 31, 2006

States


Canada


Other


ConsolidatedRevenue

$
213,724


$
58,591


$
15,303


$
287,618Interest, net


64,680



8,552



1,138



74,370Income (loss) before tax


26,062



12,842



(1,326
)


37,578Income from discontinued operations


243











243Net income (loss)


17,509



8,390



(1,377
)


24,522Segment assets


3,745,876



684,682



213,832



4,644,390Goodwill and intangibles


16,151



605







16,756Capital expenditures


9,844



1,451



1,352



12,647Depreciation and amortization


6,585



1,619



590



8,794Amortization of intangibles


2,527











2,527   UnitedDecember 31, 2005

States


Canada


Other


ConsolidatedRevenue

$
121,693


$
41,154


$
11,721


$
174,568Interest, net


38,451



6,895



12



45,358Income (loss) before tax


5,410



5,679



(6,411
)


4,678Income from discontinued operations


177











177Net income (loss)


5,669



3,646



(6,411
)


2,904Segment assets


2,820,458



580,286



178,137



3,578,881Goodwill and intangibles


7,928



538







8,466Capital expenditures


11,934



1,313



811



14,058Depreciation and amortization


3,392



1,088



375



4,855Amortization of intangibles


2,140











2,140   22.
    Regulatory
    requirements  (Rule 15c3-1), Rule 15c3-1, (Rule 15c3-3).
 F-29




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Notes to
    the Consolidated Financial
    Statements  (Continued)
        23.
    Guarantees  Guarantors Accounting
    and Disclosure Requirements for Guarantees, Including Indirect
    Guarantees of Indebtedness of Others,
    24.
    Vendor
    related asset impairment       F-30




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Notes to
    the Consolidated Financial
    Statements  (Continued)
      25.
    Stock
    repurchase program    26.
    Condensed
    Financial Statements of Penson Worldwide, Inc. (parent
    only)    Penson
    Worldwide, Inc. (parent only)
    Condensed Statements of Financial Condition
  December 31,2007


2006AssetsCash and cash equivalents

$
12


$
5Receivable from affiliates


133,761



62,806Property and equipment, net


6,992



6,827Investment in subsidiaries


189,020



158,651Other assets


4,778



2,242Total assets

$
334,563


$
230,531Liabilities and stockholders equityNotes payable

$
55,000


$
10,000Accounts payable, accrued and other liabilities


14,135



8,747Total liabilities


69,135



18,747Total stockholders equity


265,428



211,784Total liabilities and stockholders equity

$
334,563


$
230,531  F-31




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  Penson
    Worldwide, Inc. (parent only)
    Condensed Statements of Income
  Year Ended December 31,2007


2006


2005Revenues

$
4,776


$
2,805


$
804ExpensesEmployee compensation and benefits


440



397



180Other expenses


8,132



4,692



2,136Interest expense on long-term debt


2,894



1,643



1,03611,466



6,732



3,352Loss before income taxes and equity in earnings of subsidiaries


(6,690
)


(3,927
)


(2,548
)Income tax benefit


(11,057
)


(8,782
)


(9,595
)Income before equity in earnings of subsidiaries


4,367



4,855



7,047Equity in earnings of subsidiaries


22,466



19,667



(4,143
)Net income

$
26,833


$
24,522


$
2,904  F-32




---



##### Table of Contents



Penson
    Worldwide, Inc.
  Notes to
    the Consolidated Financial
    Statements  (Continued)
  Penson
    Worldwide, Inc. (parent only)
    Condensed Statements of Cash Flows
  Year Ended December 31,2007


2006


2005Cash flows from operating activities:Net income

$
26,833


$
24,522


$
2,904Adjustments to reconcile net income to net cash provided by
    (used in) operating activities:Depreciation and amortization


4,112



2,564



964Deferred income taxes


(2,274
)


1,625



Stock based compensation


4,693



3,120



Changes in operating assets and liabilities:Net receivable/payable with affiliates


(29,500
)


(6,194
)


(28,420
)Other assets


(262
)


2,203



(1,208
)Accounts payable, accrued and other liabilities


4,808



1,191



3,667Net cash provided by (used in) operating activities


8,410



29,031



(22,093
)Cash flows from investing activities:Purchase of property and equipment, net


(4,277
)


(4,301
)


(4,651
)Decrease (increase) in investment in subs


(30,369
)


(120,388
)


3,911Net cash used in investing activities


(34,646
)


(124,689
)


(740
)Cash flows from financing activities:Proceeds from notes payable


206,000



95,300



15,000Repayments of notes payable


(161,000
)


(104,288
)


(2,236
)Exercise of stock options


1,067



349



Excess tax benefit on exercise of stock options


823



4



Purchase of treasury stock


(27,468
)


(7,976
)


Issuance of preferred stock










9,930Proceeds from initial public offering






114,152



Direct costs of capital raised






(3,074
)


Issuance of common stock, net


2,016



1,008



10Net cash provided by financing activities


21,438



95,475



22,704Effect of exchange rates on cash


4,805



169



142Increase (decrease) in cash and cash equivalents


7



(14
)


13Cash and cash equivalents at beginning of period


5



19



6Cash and cash equivalents at end of period

$
12


$
5


$
19Supplemental cash flow disclosures:Interest payments

$
1,562


$
982


$
1,127Income tax payments

$
9,940


$
6,922


$
61  F-33




---



##### Table of Contents



INDEX TO
    EXHIBITS
  Incorporated by Reference

FilingExhibit

Name of Exhibit

Form

File Number

Exhibit

Date1
.1

Form of Underwriting Agreement

S-1/A

333-127385


1
.1

5/9/062
.1

Stock Purchase Agreement by and among SAI Holdings, Inc.,
    Computer Clearing Services, Inc., and the Selling Stockholders
    dated May 12, 2005, as amended July 8, 2005

S-1

333-127385


2
.1

8/10/052
.2

Asset Purchase Agreement by and among SAI Holdings, Inc.,
    Computer Clearing Services, Inc., and the Computer Clearing
    Services, Inc. Stockholders dated January 31, 2006

S-1/A

333-127385


2
.2

3/21/062
.3

Asset Purchase Agreement by and between SAI Holdings, Inc. and
    Schonfeld Securities, LLC, dated as of November 20, 2006

8-K

001-32878


2
.1

11/21/062
.4

Purchase Agreement by and among Goldenberg Hehmeyer &
    Co. and Goldenberg LLC, Hehmeyer LLC, GHCO Partners LLC, GH
    Traders LLC, each of the Principals listed on the signature
    pages thereto and SAI Holdings, Inc., GHP1, Inc., GHP2, LLC and
    Christopher Hehmeyer in his capacity as Sellers
    Representative

8-K

001-32878


2
.1

11/7/062
.5

Letter Agreement, dated as of October 8, 2007, by and among
    SAI Holdings, Inc., Penson Financial Services, Inc., Schonfeld
    Group Holdings LLC, Schonfeld Securities, LLC, Opus Trading
    Fund LLC and Quantitative Trading Strategies LLC

8-K

001-32878


2
.1

10/12/073
.1

Form of Amended and Restated Certificate of Incorporation of
    Penson Worldwide, Inc.

S-1/A

333-127385


3
.1

5/1/063
.2

Form of Amended and Restated Bylaws of Penson Worldwide,
    Inc.

S-1/A

333-127385


3
.2

4/24/064
.1

Specimen certificate for shares of Common Stock

S-1

333-127385


4
.1

4/24/064
.2+

Amended and Restated Registration Rights Agreement between Roger
    J. Engemoen, Jr., Philip A. Pendergraft and Daniel P. Son and
    Penson Worldwide, Inc. dated November 30, 2000

S-1

333-127385


4
.2

8/10/054
.3

Amended and Restated Investors Rights Agreement between
    TCV V, L.P., TCV Member Fund, L.P., Penson Worldwide, Inc.,
    and the Company Subsidiaries dated September 30, 2005

S-1/A

333-127385


4
.3

10/19/0510
.1+

Penson Worldwide, Inc. Amended and Restated 2000 Stock Incentive
    Plan

S-1/A

333-127385


10
.1

4/24/0610
.2+

Penson Worldwide, Inc. 2005 Employee Stock Purchase Plan

S-1/A

333-127385


10
.2

4/24/0610
.3

1700 Pacific Avenue Office Lease by and between F/P/D Master
    Lease, Inc. and Penson Financial Services, Inc. (f/k/a Service
    Asset Management Company) dated May 20, 1998 as amended
    July 16, 1998, February 17, 1999, September 20,
    1999, November 30, 1999, May 25, 2000 and
    January 9, 2001

S-1

333-127385


10
.3

8/10/0510
.4

Lease of Premises between Downing Street Holdings (330 Bay St),
    Inc. and Penson Financial Services Canada Inc. (one of our
    subsidiaries) dated September 17, 2002

S-1

333-127385


10
.4

8/10/0510
.5

Offer to Lease between Penson Financial Services Canada Inc. and
    360 St-Jacques Nova Scotia Company dated October 14, 2003

S-1

333-127385


10
.5

8/10/05




---



##### Table of Contents



Incorporated by Reference

FilingExhibit

Name of Exhibit

Form

File Number

Exhibit

Date10
.6

Lease agreement between Derwent Valley London Limited, Derwent
    Valley Central Limited, Penson Financial Services Limited, and
    Penson Worldwide, Inc. effective August 11, 2005

S-1

333-127385


10
.6

8/10/0510
.7

Amended and Restated Loan Agreement by and between SAI Holdings,
    Inc. (f/k/a Service Asset Investments, Inc.) and Guaranty Bank
    (f/k/a Guaranty Federal Bank, F.S.B.), dated April 30,
    2001, as amended March 24, 2005 and May 6, 2005

S-1

333-127385


10
.7

8/10/0510
.8

Fifth Amended and Restated Stock Pledge Agreement by and between
    SAI Holdings, Inc. (f/k/a Service Asset Investments, Inc.) and
    Guaranty Bank (f/k/a Service Asset Investments, Inc.), dated
    October 4, 2004, as reaffirmed by the Reaffirmation of
    Stock Pledge Agreements dated March 24, 2005

S-1

333-127385


10
.8

8/10/0510
.9+

Fifth Amended and Restated Guaranty Agreements in connection
    with the Amended and Restated Loan Agreement by and between SAI
    Holdings, Inc. (f/k/a Service Asset Investments, Inc.) and
    Guaranty Bank (f/k/a Service Asset Investments, Inc.), by Daniel
    P. Son, Philip A. Pendergraft, William D. Gross, and Roger J.
    Engemoen, Jr. as Guarantors, all dated December 31, 2002,
    as reaffirmed by the Eleventh Amendment to the Amended and
    Restated Loan Agreement dated March 24, 2005

S-1

333-127385


10
.9

8/10/0510
.10

Credit Agreement, dated as of May 26, 2006 among Penson
    Worldwide, Inc., Guaranty Bank, as Administrative Agent, Swing
    Line Lender, Arranger and Line of Credit Issuer, Wachovia Bank,
    National Association, as Documentation Agent, and the other
    lenders party thereto

10-Q

001-32878


10
.1

8/11/0610
.11

Remote Processing Agreement between Penson Worldwide, Inc. and
    SunGard Data Systems Inc. dated July 10, 1995, as amended
    September 13, 1996 and August 1, 2002

S-1/A

333-127385


10
.11

8/10/0510
.12

Form of SAMCO Reorganization Agreement by and between Penson
    Worldwide, Inc., SAI Holdings, Inc. and Penson Financial
    Services, Inc. and SAMCO Capital Markets, Inc. and SAMCO
    Holdings, Inc.

S-1/A

333-127385


10
.12

5/1/0610
.13

Form of Transition Services Agreement by and between SAMCO
    Holdings, Inc. and Penson Worldwide, Inc.

S-1/A

333-127385


10
.13

5/1/0610
.14+

Employment Letter Agreement between the Company and David Henkel
    dated January 16, 2002

S-1

333-127385


10
.14

8/10/0510
.15+

Employment Letter Agreement between the Company and Andrew
    Koslow dated August 26, 2002

S-1

333-127385


10
.15

8/10/0510
.16+

Form of Indemnification Agreement entered into between Penson
    Worldwide, Inc. and its officers and directors

S-1

333-127385


10
.16

8/10/0510
.17

Thirteenth Amendment to Amended and Restated Loan Agreement by
    and between SAI Holdings, Inc. (f/k/a Service Asset Investments,
    Inc.) and Guaranty Bank (f/k/a Guaranty Federal Bank, F.S.B.),
    dated September 19, 2005

S-1/A

333-127385


10
.17

9/23/0510
.18

Fourteenth Amendment to Amended and Restated Loan Agreement by
    and between SAI Holdings, Inc. (f/k/a Service Asset Investments,
    Inc.) and Guaranty Bank (f/k/a Guaranty Federal Bank, F.S.B.),
    dated September 30, 2005

S-1/A

333-127385


10
.18

10/19/05




---



##### Table of Contents



Incorporated by Reference

FilingExhibit

Name of Exhibit

Form

File Number

Exhibit

Date10
.19

Fifteenth Amendment to Amended and Restated Loan Agreement and
    Waiver by and between SAI Holdings, Inc. (f/k/a Service Asset
    Investments, Inc.) and Guaranty Bank, dated December 28,
    2005

S-1/A

333-127385


10
.19

3/21/0610
.20

Promissory Note by and between the Company and JPMorgan Chase
    Bank, N.A. dated December 30, 2005

S-1/A

333-127385


10
.20

3/21/0610
.21

Registration Rights Agreement by and between Penson Worldwide,
    Inc. and Schonfeld Securities, LLC, dated as of
    November 20, 2006

8-K

001-32878


10
.1

3/21/0610
.22

Stockholders Agreement effective as of November 20,
    2006 between Penson Worldwide, Inc. and Schonfeld Securities, LLC

8-K

001-32878


10
.2

11/21/0610
.23

Guaranty Agreement made as of November 20, 2006 by
    Schonfeld Group Holdings LLC in favor of SAI Holdings, Inc. and
    Penson Financial Services, Inc.

8-K

001-32878


10
.3

11/21/0610
.24

Unconditional Guaranty Agreement made as of November 20,
    2006 by Schonfeld Group Holdings LLC, Schonfeld Securities LLC
    and Steven B. Schonfeld in favor of Penson Financial Services,
    Inc.

8-K

001-32878


10
.4

11/21/0610
.25

Termination/Compensation Payment Agreement, dated as of
    November 20, 2006, by and among Opus Trading Fund LLC,
    Quantitative Trading Solutions, LLC and Penson Financial
    Services, Inc.

8-K

001-32878


10
.5

11/21/0610
.26+

Employment Letter Agreement between the Company and Kevin W.
    McAleer dated February 15, 2006

S-1/A

333-127385


10
.22

3/21/0610
.27+

Executive Employment Agreement between the Company and Philip A.
    Pendergraft dated April 21, 2006

S-1/A

333-127385


10
.23

5/1/0610
.28+

Executive Employment Agreement between the Company and Daniel P.
    Son dated April 21, 2006

S-1/A

333-127385


10
.24

5/1/0610
.29

Eighth Amendment to 1700 Pacific Avenue Office Lease by and
    between Berkeley First City, Ltd. and Penson Worldwide, Inc.
    dated April 12, 2006

S-1/A

333-127385


10
.25

5/9/0610
.30

Sixteenth Amendment to Amended and Restated Agreement by and
    between SAI Holdings, Inc. (f/k/a Service Asset Investments,
    Inc.) and Guaranty Bank (f/k/a Guaranty Federal Bank, F.S.B.),
    dated April 21, 2006

S-1/A

333-127385


10
.27

5/1/0610
.31

Guaranty Bank Consent, dated May 8, 2006, to SAMCO
    Reorganization Agreement by and between Penson Worldwide, Inc.,
    SAI Holdings, Inc. and Penson Financial Services, Inc. and SAMCO
    Capital Markets, Inc. and SAMCO Holdings, Inc.

S-1/A

333-127385


10
.27

5/9/0610
.32

Amendment to Remote Processing Agreement between Penson
    Worldwide, Inc. and SunGard Data Systems Inc. dated
    July 10, 1995, as amended September 13, 1996 and
    August 1, 2002

8-K

001-32878


10
.10

7/31/0610
.33

First Amendment to Credit Agreement, dated the 29th day of
    September, 2006, to be effective as of May 26, 2006, by and
    among the Company, Guaranty Bank, as Administrative Agent, Swing
    Line Lender, Arranger and Letter of Credit Issuer, Wachovia
    Bank, National Association, as Documentation Agent and the other
    lenders party thereto

8-K

001-32878


10
.1

10/3/06




---



##### Table of Contents



Incorporated by Reference

FilingExhibit

Name of Exhibit

Form

File Number

Exhibit

Date10
.34

Second Amendment to Credit Agreement, dated the 16th day of
    February, 2007, to be effective as of May 26, 2006, by and
    among the Company, Guaranty Bank, as Administrative Agent, Swing
    Line Lender, Arranger and Letter of Credit Issuer, Wachovia
    Bank, National Association, as Documentation Agent and the other
    lenders party thereto

8-K

001-32878


10
.1

2/16/0710
.35

Letter Agreement dated February 16th, 2007, amending that
    certain Purchase Agreement dated as of November 6, 2006
    among Goldenberg Hehmeyer & Co., Goldenberg LLC,
    Hehmeyer LLC, GH Trading LLC, GHCO Partners LLC, Christopher
    Hehmeyer, Ralph Goldenberg, SAI Holdings, Inc., GH1 Inc. and GH2
    LLC and Christopher Hehmeyer in his capacity as Sellers
    Representative

8-K

001-32878


10
.2

2/16/0710
.36

Third Amendment to Credit Agreement, dated the 5th day of
    April, 2007, by and among the Company, Guaranty Bank, as
    Administrative Agent, Swing Line Lender, Arranger and Letter of
    Credit Issuer, Wachovia Bank, National Association, as
    Documentation Agent and the other lenders party thereto

10-Q

001-32878


10
.1

5/11/0710
.37

Fourth Amendment to Credit Agreement, dated the 31st day of
    July, 2007, by and among the Company, Guaranty Bank, as
    Administrative Agent, Swing Line Lender, Arranger and Letter of
    Credit Issuer, Wachovia Bank, National Association, as
    Documentation Agent and the other lenders party thereto

10-Q

001-32878


10
.1

8/14/0710
.38

Fifth Amendment to Credit Agreement, dated the 19th day of
    September, 2007, by and among the Company, Guaranty Bank, as
    Administrative Agent, Swing Line Lender, Arranger and Letter of
    Credit Issuer, Wachovia Bank, National Association, as
    Documentation Agent and the other lenders party thereto

10-Q

001-32878


10
.1

9/19/0710
.39

Schedule E, dated July 23, 2007, to the Remote
    Processing Agreement between Penson Worldwide, Inc. and SunGard
    Data Systems Inc. dated July 10, 1995, as amended
    September 13, 1996 and August 1, 2002

10-Q

001-32878


10
.2

9/19/0710
.40*

Sixth Amendment to Credit Agreement, dated the 5th day of
    December, 2007, by and among the Company, Guaranty Bank, as
    Administrative Agent, Swing Line Lender, Arranger and Letter of
    Credit Issuer, Wachovia Bank, National Association, as
    Documentation Agent and the other lenders party thereto11
.1

Statement regarding computation of per share earnings

S-1/A

333-127385


11
.1

5/1/0621
.1*

List of Subsidiaries23
.1*

Consent of BDO Siedman, LLP31
.1*

Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002 (filed
    herewith)31
.2*

Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002 (filed
    herewith)




---



##### Table of Contents



Incorporated by Reference

FilingExhibit

Name of Exhibit

Form

File Number

Exhibit

Date32
.1*

Certification of Chief Executive Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002 (filed
    herewith)32
.2*

Certification of Chief Financial Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002 (filed
    herewith)     *
    
    Filed herewith.+
    
    Management contracts or compensation plans or arrangements in
    which directors or executive officers are eligible to
    participate.  
    
    Confidential treatment has been requested for certain
    information contained in this document. Such information has
    been omitted and filed separately with the Securities and
    Exchange Commission.