eTrade 1999 Annual Report Download - page 55

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Years Ended
September 30,
--------------------
1999 1998 1997
----- ------ ----
Tax expense (benefit) at federal statutory rate....... (35.0)% 35.0%
35.0%
State income taxes, net of federal tax benefit........ (5.6) 5.8 5.8
Income (loss) of Subchapter S corporation............. -- 58.9
(1.6)
Nondeductible acquisition costs....................... 1.5 22.0 --
Tax-exempt interest................................... (1.1) (106.3) --
Benefit of lower tax rates in foreign jurisdictions... (1.7) (10.6)
(2.5)
Other................................................. 1.4 5.6
(2.2)
----- ------ ----
Effective tax rate.................................... (40.5)% 10.4%
34.5%
===== ====== ====
Prior to being acquired by the Company, ShareData was a Subchapter S corporation and was not subject to federal and state corporate
income taxes.
The Company has not provided deferred income taxes on approximately $23,069,000 of undistributed earnings in its foreign
subsidiaries as it is the Company's intention to permanently reinvest the earnings.
At September 30, 1999, the Company had net operating loss carry forwards of approximately $218,743,000 and $68,438,000 for
federal and state income tax purposes, respectively. These carryforwards expire through 2019 and 2004, respectively. The net
operating loss carryforwards available for state tax purposes are substantially less than for federal tax purposes, primarily because only
50% of net operating losses can be utilized to offset future state taxable income. The extent to which the loss carryforwards can be
used to offset future taxable income may be limited, depending on the extent of ownership changes within any three year period.
9. MANDATORILY REDEEMABLE PREFERRED SECURITIES
On April 30, 1996, TIR issued 3,000,000, 8% cumulative redeemable preference shares, $1 par, which were redeemable at par value
from time to time or, if not previously redeemed, on April 30, 2001. These shares were redeemed upon the closing of the TIR
acquisition on August 31, 1999.
Dividend payments are included within retained earnings (deficit) and are deducted from net income or added to net loss when
computing income (loss) applicable to common stock, respectively.
10. SHAREOWNERS' EQUITY
Stock Issuances
In August 1997, the Company completed a secondary public offering of 29,220,000 shares of the Company's common stock at a price
of $6.88 per share. The proceeds to the Company from the offering, net of underwriting discounts and offering expenses of $14.8
million, were $188.8 million.
In July 1998, the Company entered into an agreement to issue and sell 62,600,000 shares of common stock to SOFTBANK Holdings,
Inc. for an aggregate purchase price of $400 million.
Stock Option Plans
The Company's stock option plans provide for the granting of nonqualified or incentive stock options to officers, directors, key
employees and consultants for the purchase of shares of the Company's common stock at
2002. EDGAR Online, Inc.