eTrade 1999 Annual Report Download - page 38

of the net sale/maturity of $311.9 million in investment securities and $50.9 million in proceeds from the sale of investments, offset by
the purchase of $110.7 million of investments and the purchase of $130.2 million of property and equipment. This compares to cash
used in fiscal 1998 and 1997 where the Company was a net purchaser of investment securities, investments, property and equipment.
Cash provided by financing activities was $18.7 million in fiscal 1999, compared with $410.6 million in fiscal 1998 and $188.9
million in fiscal 1997. Cash provided by financing activities in fiscal 1999 primarily resulted from the exercise of stock options. In
fiscal 1998, cash provided by financing activities primarily consisted of $400 million in proceeds from the common stock issuance to
SOFTBANK Holdings, Inc. and in fiscal 1997 the net proceeds from the Company's secondary public offering.
The Company expects that it will incur approximately $180 million of capital expenditures for the 12 months ended September 30,
2000.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk Disclosures
The following discussion about the Company's market risk disclosures involves forward-looking statements. Actual results could differ
materially from those projected in the forward-looking statements. The Company is exposed to market risk related to changes in
interest rates, foreign currency exchange rates and equity security price risk. The Company does not have derivative financial
instruments for speculative or trading purposes.
Interest Rate Sensitivity
The Company maintains a short-term investment portfolio consisting of mainly income securities with an average maturity of less than
two years. These available-for-sale securities are subject to interest rate risk and will fall in value if market interest rates increase. If
market interest rates were to increase immediately and uniformly by 10 percent levels at September 30, 1999, the fair value of the
portfolio would decline by an immaterial amount. The Company has the ability to hold its fixed income investments until maturity, and
therefore the Company would not expect its operating results or cash flows to be affected to any significant degree by the effect of a
sudden change in market interest rates on its securities portfolio.
Equity Price Risk
The Company has investments in publicly-traded equity securities. The fair value of these securities at September 30, 1999 was $317.8
million, compared with $45.8 million at September 30, 1998. If the market price of the securities held at September 30, 1999 were to
decrease by 10%, the fair value of the portfolio would decline by $31.8 million, which would not have a material affect on the
financial position of the Company. The Company accounts for these securities as available-for-sale, and unrealized gains and losses
resulting from changes in the fair value of these securities are reflected as a change in shareowners' equity, and not reflected in the
determination of operating results until the securities are sold. At September 30, 1999, unrealized gains on these securities were
$282.3 million.
Financial Instruments
For its working capital and reserves which are required to be segregated under Federal or other regulations, the Company invests in
money market funds, resale agreements, certificates of deposit, and commercial paper. Money market funds do not have maturity dates
and do not present a material market risk. The other financial instruments are fixed rate investments with short maturities and do not
present a material interest rate risk.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements
2002. EDGAR Online, Inc.