eTrade 2000 Annual Report Download - page 79

Years Ended September 30,
2000 1999
Net revenues $ 1,378,999 $ 729,917
Net income (loss) $ 10,639 $ (85,275 )
Income (loss) per share:
Basic $ 0.04 $ (0.30 )
Diluted $ 0.03 $ (0.30 )
The pro forma information is for informational purposes only and is not necessarily indicative of the results of future operations nor
results that would have been achieved had the acquisitions taken place at the beginning of fiscal 1999.
In August 2000, the Company entered into an agreement to acquire all of the issued and outstanding common stock of
PrivateAccounts, Inc. (“PrivateAccounts”). The Company will issue approximately 618,000 shares of E*TRADE common stock in
connection with this acquisition. The Company expects to issue an additional 618,000 shares of E*TRADE common stock if
PrivateAccounts achieves certain milestones and up to an additional $22.0 million of Company common stock and, if necessary, cash
consideration if certain asset targets are exceeded.
4. BROKERAGE RECEIVABLES—NET AND PAYABLES
Brokerage receivables—net and payables consist of the following (in thousands):
September 30,
2000 1999
Receivable from customers and non-customers (less allowance for
doubtful accounts of $3,887 and $1,016 in fiscal 2000 and 1999, respectively)
$ 5,173,220 $ 2,628,778
Receivable from brokers, dealers and clearing organizations:
Net settlement and deposits with clearing organizations 89,031 20,066
Deposits paid for securities borrowed 1,267,109 306,326
Securities failed to deliver 1,970 7,508
Other 11,178 19,398
Total brokerage receivables-net $ 6,542,508 $ 2,982,076
Payable to customers and non-customers $ 1,735,228 $ 1,020,365
Payable to brokers, dealers and clearing organizations:
Deposits received for securities loaned 4,296,399 1,806,590
Securities failed to receive 6,266 7,235
Other 17,637 77,488
Total brokerage payables $ 6,055,530 $ 2,911,678
Receivable from and payable to brokers, dealers and clearing organizations result from the Company’ s brokerage activities.
Receivable from customers and non-customers represents credit extended to customers and non-customers to finance their purchases
of securities on margin. At September 30, 2000 and 1999, credit extended to customers and non-customers with respect to margin
accounts was $5,040 million and $2,476 million, respectively. Securities owned by customers and non-customers are held as collateral
for amounts due on margin balances, the value of which is not reflected on the accompanying consolidated balance sheets. Payable to
customers and non-customers represents free credit balances and other customer and non-customer funds pending completion of
securities transactions. The Company pays interest on certain customer and non-customer credit balances. 5.
MORTGAGE-BACKED SECURITIES
Mortgage-backed securities represent participating interests in pools of long-term first mortgage loans originated and serviced by the
issuers of the securities. The Company has also invested in collateralized mortgage obligations (“CMOs”), which are securities issued
by special purpose entities generally collateralized by pools of
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mortgage-backed securities. The Company’ s CMOs are senior tranches collateralized by federal agency securities or whole loans. The
fair value of mortgage-backed and related securities fluctuates according to current interest rate conditions and prepayments. Fair
value is estimated using quoted market prices. For illiquid securities, market prices are estimated by obtaining market price quotes on
2002. EDGAR Online, Inc.