eTrade 2001 Annual Report Download - page 72

expectations, or if there are broader, negative market trends. We do not undertake an obligation to update our forward-looking
statements or Risk factors to reflect future events or circumstances. See “Item 7. Risk factors—Risks related to owning our stock.”
Liquidity and Capital Resources
Liquidity represents our ability to raise capital to fund operations, support asset growth, and meet obligations, including deposit
withdrawals, maturing liabilities and other payment obligations, to maintain reserve requirements and to otherwise meet our ongoing
obligations. We have historically met our liquidity needs primarily through investing and financing activities, consisting principally of
equity and debt offerings, increases in core deposit accounts, other borrowings, and sales of loans or securities. We believe that we
will be able to renew or replace our funding sources at prevailing market rates, which may be higher or lower than current rates, as
well as to supplement these funding sources with cash flow from operations.
Equity Offerings and Retirements
In fiscal 1999, E*TRADE Technologies raised aggregate net proceeds of $30.7 million and ETFC raised aggregate net proceeds of
$395.9 million in their initial public offerings prior to being acquired by us. These proceeds have been reflected in our consolidated
financial statements.
In fiscal 2001, we repurchased and retired approximately 37.5 million shares of common stock for an aggregate purchase price of
approximately $238.9million. Of the 37.5 million shares repurchased, 30.5 million shares were repurchased under a multi-year stock
buyback program approved by our Board of Directors in September 2001 authorizing us to repurchase up to 50.0 million shares of
common stock. The remaining 7million shares were repurchased in an earlier transaction approved by our Board of Directors.
Pursuant to the stock buyback program approved by the Board, we remain authorized to repurchase up to 19.5 million additional
shares of common stock. Of the 37.5 million shares of our common stock repurchased and retired, approximately 27.0million shares
were purchased in two private transactions with SOFTBANK Corporation, a significant shareowner of E*TRADE Group, for
approximately $183.6 million. Of this total, 20.0 million shares were purchased at a price of $7.28 per share, which represented a
discount from the market price on the day of sale.
Debt Offerings and Retirements
In the quarter ended March 31, 2000, we completed a private offering of an aggregate principal amount of $650 million of convertible
subordinated notes due February 2007. The notes are convertible, at the option of the holder, into a total of 27.5 million shares of our
common stock at a conversion price of $23.60 per share. The notes bear interest at 6%, payable semi-annually, and are non-callable
for three years and may then be called by us at a premium, which declines over time. The holders have the right to require redemption
at a premium in the event of a change in control or other defined redemption event. We used $145.0 million of the $631.3 million in
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net proceeds to pay the outstanding balance on a $150 million line of credit, which was subsequently dissolved in February 2000. In
fiscal 2001, we retired $214.8 million of these notes in exchange for 19.2 million shares of our common stock and $15.3 million in
cash. See Note 15 to the Consolidated Financial Statements.
On May 29, 2001, the Company completed a private offering of $325 million aggregate principal amount of convertible subordinated
notes due May 2008. The notes are convertible, at the option of the holder, into a total of approximately 29.7 million shares of the
Company’ s common stock at a conversion price of $10.925 per share. The notes bear interest at 6.75%, payable semiannually, and are
non-callable for three years and may then be called by the Company at a premium, which declines over time. The holders have the
2002. EDGAR Online, Inc.