eTrade 2001 Annual Report Download - page 139

December 31,
2001 2000
Balance sheet data:
Cash $ 1,458 $ 2,815
Investments (at estimated fair market value) 57,382 90,299
Other assets 167 5
Total assets $ 59,007 $ 93,119
Accrued management fees $ 6,427 $ 3,793
Other liabilities 70 253
Partners’ capital—E*TRADE 7,907 26,641
Partners’ capital—other limiteds 44,603 62,432
Total liabilities and partners’ capital $ 59,007 $ 93,119
The Company also has limited partnership interests in two other unrelated venture capital funds, one of which is sponsored by
SOFTBANK Corp. At December 31, 2001, the Company had funding commitments to these funds totalling $4.0 million.
E*OFFERING Corp/SoundView Technology Group, Inc.
At September 30, 2000, E*TRADE owned a 23.6% investment in E*OFFERING Corp., a full service, Internet-based investment bank
(“E*OFFERING”). On October 16, 2000, SoundView Technology Group, Inc., formerly known as Wit SoundView Group, Inc.
(“Wit”), completed the acquisition of E*OFFERING. Under the terms of the E*OFFERING acquisition agreement, the Company
received approximately 5.3 million shares of Wit common stock and warrants, which were immediately exercisable to purchase Wit
common stock of approximately 535,000 shares for $5.99 per share expiring in February 2001 and 1.8 million shares for $0.60 per
share expiring in January 2005, as well as the right to name one representative to Wit’ s Board of Directors. The warrants to purchase
approximately 535,000 shares of Wit common stock expired unexercised in February 2001 and the Company did not exercise any of
the warrants to purchase approximately 1.8 million shares. Concurrently with this agreement, the Company and Wit entered into a
Strategic Alliance Agreement with Wit, (“Strategic Alliance Agreement”). Pursuant to the terms of the Strategic Alliance Agreement,
the Company acquired Wit’ s retail brokerage business, received approximately 4.0 million shares of Wit common stock and a warrant
to purchase up to 2.0 million shares of Wit common stock for $10.25 per share as consideration for naming Wit to be the exclusive
source of initial public offerings and entering into certain arrangements concerning follow-on offerings, investment banking products
and secondary market-making services. The Strategic Alliance Agreement had a total term of five years. The fair value of the
consideration for the Strategic Alliance Agreement was recorded as deferred revenue and amortized to other revenue over the term of
the
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Strategic Alliance Agreement. In a related transaction, the Company also purchased 2.0 million shares of Wit common stock for $20.5
million in cash. The Company subsequently purchased 300,000 shares of Wit common stock for approximately $1.9 million on the
open market. As a result of these transactions, the Company held an approximate 10% ownership interest in Wit, and accounted for its
investment under the equity method.
Effective August 20, 2001, the Company entered into a Termination Agreement and General Release with Wit (“Termination
Agreement”). Pursuant to the terms of the Termination Agreement, the Company and Wit terminated the Strategic Alliance Agreement
in its entirety and entered into a new business relationship. In consideration of the Termination Agreement, the Company transferred to
Wit 9.3 million shares of Wit common stock, warrants to purchase 1.8 million shares of Wit common stock at a price of $0.60 per
2002. EDGAR Online, Inc.