eTrade 2000 Annual Report Download - page 38

* All prior year amounts presented have been restated to reflect the acquisitions of ETFC and VERSUS in fiscal 2000,
which were accounted for as poolings of interests (see Note 3 to the Consolidated Financial Statements).
** The cumulative effect of change in accounting principle resulted from the implementation by ETFC of Statement of
Position 98-5 , Reporting on the Cost of Start-Up Activities, which requires that the cost of start-up activities be
expensed as incurred rather than capitalized, with the initial application reported as the cumulative effect of a change
in accounting principle. In June 1999, ETFC redeemed all of its outstanding debt. ETFC wrote off both the related
premium and the remaining discount as an extraordinary loss on the early extinguishment of debt, totaling
approximately $2.0 million, net of tax.
The selected consolidated financial data should be read in conjunction with “Item 7. Management’ s Discussion and Analysis of
Financial Condition and Results of Operations”, and “Item 8. Consolidated Financial Statements and Supplementary Data.”
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Forward-Looking Statements
Statements in this document, other than statements of historical information, are forward-looking statements that are made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, as well as
other oral and written forward-looking statements made by or on behalf of E*TRADE Group, Inc. ("E*TRADE") from time to time,
including statements contained in our filings with the Securities and Exchange Commission (“SEC”) and our reports to shareowners,
involve known and unknown risks and other factors which may cause our actual results in future periods to differ materially from
those expressed in any forward-looking statements. Any such statement is qualified by reference to the risks and factors discussed
below under the headings “Overview”, “Liquidity and Capital Resources,” and “Risk Factors,” as well as in our filings with the
Securities and Exchange Commission, which are available from the Securities and Exchange Commission or which may be obtained
upon request from the Company. We caution that the risks and factors discussed below and in such filings are not exclusive. We do
not undertake to update any forward-looking statement that may be made from time to time by or on behalf of E*TRADE.
Overview
E*TRADE is a global leader in online personal financial services offering value-added investing, banking, research and educational
tools, premium customer service and a proprietary Stateless Architecture infrastructure to our customers through services provided by
our wholly-owned subsidiaries, including but not limited to, E*TRADE Securities, Inc. (“E*TRADE Securities”), TIR (Holdings)
Limited (“TIR”), E*TRADE Bank (the “Bank”), Card Capture Services Inc. (“CCS”), now E*TRADE Access Inc. (“E*TRADE
Access”), VERSUS Technologies, Inc. (“VERSUS”) and other international subsidiaries. Our business is discussed in greater detail in
this Form 10-K in “Item 1. Business.”
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During fiscal 2000, we expanded and diversified our business through several strategic acquisitions, domestically, as well as globally.
Through our acquisitions of Telebanc Financial Corporation (“Telebanc”), now E*TRADE Financial Corporation (“ETFC”), the
holding company of the Bank, in January 2000, and E*TRADE Access in May 2000, we began offering banking services during fiscal
2000, and during the fourth quarter, extended those services through our network of automated teller machines (“ATMs”). We have
also positioned ourselves to grow internationally, increasing our institutional client base worldwide and enhancing our ability to
conduct cross-border trading through the acquisitions of VERSUS in August 2000 and several other international affiliates throughout
the year. In addition, we formed our asset gathering group during fiscal 2000, combining our mutual fund operations, Business
Solutions Group (“BSG”), and corporate operations, while expanding our financial service portfolio through the acquisitions of
Electronic Investing Corporation (“eInvesting”) in July 2000 and PrivateAccounts, Inc. (“PrivateAccounts”) in October 2000. Our
acquisitions of ETFC and VERSUS have been accounted for as poolings of interests, and accordingly, our consolidated financial
statements have been restated to give retroactive effect to these acquisitions. Our acquisitions of E*TRADE Access and our
international affiliates have been accounted for under the purchase method, and accordingly, the operating results of these entities have
been combined with those of the Company since the dates of acquisition.
We face a number of risks and challenges that could negatively impact our operations and financial results. The most significant of
these risks and challenges relate to competition, security and confidentiality concerns, retaining key customers, retaining and hiring
skilled personnel, potential technical problems processing customer transactions, market conditions, expansion efforts and
governmental regulation.
2002. EDGAR Online, Inc.