eTrade 2001 Annual Report Download - page 127

E*TRADE @ Net Bourse S.A.(3)
Provider of retail brokerage services to Belgium,
Netherlands, Luxembourg, Austria, Italy and France
10/99 $ 124.1 $ 108.2 4.6 million shares of common stock issued
Fiscal 1999 Acquisition:
Confluent, Inc.
Developer of personal financial management tools
9/99 $ 3.0 $ 9.5 0.3 million shares of common stock issued in fiscal 1999
0.2 million shares of common stock issued in fiscal 2001
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Table of Contents
(1) In addition to the goodwill recorded, $59.9 million of the purchase price was allocated to the specialists books of Dempsey,
representing the revocable license to trade and serve as specialist for certain securities with the approval of the Chicago
Exchange; such value is being amortized on a straight-line basis over the estimated lives of 30 years. Under the terms of the
Dempsey acquisition, certain key executives will receive payments totaling $12.0 million if they continue to be employed by the
Company over the next two years. Acquisition-related expenses for the year ended December 31, 2001 includes $4.9 million of
expenses related to these arrangements.
(2) The Company obtained a controlling interest in Web Street on June 30, 2001, and completed the acquisition of all its outstanding
shares by August 6, 2001. The excess of the purchase price over the fair value of the tangible assets acquired of $52.6 million
was allocated to the value of the customer accounts acquired and is being amortized using an accelerated depreciation method
over seven years; no amounts were allocated to goodwill. Following the acquisition, the domestic customer accounts of Web
Street were transferred to E*TRADE Securities and the domestic operations of Web Street ceased on September 30, 2001. The
net losses incurred by Web Street during this account transition period of $5.8million are included in acquisition-related expenses
for the year ended December 31, 2001.
(3) In November 2000, the Company sold its ownership interest in E*TRADE @ Net Bourse S.A. for approximately 80.5 million
Euros (approximately $68.0 million as of November 2000, the date of the transaction). Of this amount, approximately 8.2 million
Euros (approximately $7.0 million as of November 2000, the date of the transaction) was held in escrow for two years, of which
50% would be released after one year. On November 14, 2001, $3.5 million was returned to the Company with the remaining
50% to be released in 2002. In conjunction with this transaction, the Company reacquired its licensing rights to market its brand
in France, as well as the ownership interests in E*TRADE SARL, E*TRADE Italia S.r l. and E*TRADE Benelux, previously
held by E*TRADE @ Net Bourse S.A. No gain or loss resulted from this transaction.
The pro forma information below assumes that the acquisitions which took place in fiscal 2001, the three months ended December 31,
2000 and fiscal 2000 all occurred at the beginning of fiscal 2000 and includes the effect of amortization of goodwill and intangibles
acquired from that date (in thousands, except per share amounts):
Year Ended December31,
2001
Threemonths Ended
December31, 2000 Year Ended September30, 2000
Net revenues $ 1,342,382 $ 382,177 $ 1,632,168
Income (loss) before extraordinary gains (losses) $ (287,139 ) $ (584 ) $ 21,295
Net income (loss) $ (257,870 ) $ (667 ) $ 21,295
Basic and diluted income (loss) per share before
extraordinary gains (losses)
$ (0.80 ) $ (0.00 ) $ 0.06
2002. EDGAR Online, Inc.