eTrade 2001 Annual Report Download - page 75

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Table of Contents
Following E*TRADE Japan K.K.’ s initial public offering, we sold a portion of our investment recognizing a pre-tax gain of $77.5
million, reducing our ownership percentage from 42% to 32% in fiscal 2000. In fiscal 2001, E*TRADE Japan K.K. completed two
additional acquisitions that resulted in a decrease of our ownership percentage to 30%. As part of our commitment to the joint venture,
we are required to provide a continuing level of systems support to E*TRADE Japan K.K.; the cost of such support was $3.8 million
in fiscal 2001, $629,000 in the three months ended December 31, 2000, $1.2 million in fiscal 2000 and $1.9 million in fiscal 1999.
The Company does not expect development commitments under this arrangement to be material in future periods.
We currently anticipate that our available cash resources and credit will be sufficient to meet our presently anticipated working capital
and capital expenditure requirements for at least the next 12 months. We may need to raise additional funds in order to support more
rapid expansion, develop new or enhanced services and products, respond to competitive pressures, acquire complementary businesses
or technologies and/or take advantage of unanticipated opportunities. Our future liquidity and capital requirements will depend upon
numerous factors, including costs and timing of expansion of technology development efforts and the success of such efforts, the
success of our existing and new service offerings and competing technological and market developments. Our forecast of the period of
time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves
risks and uncertainties, and actual results could vary. If additional funds are raised through the issuance of equity securities, the
percentage ownership of the shareowners in our company will be reduced, shareowners may experience additional dilution in net book
value per share or such equity securities may have rights, preferences or privileges senior to those of the holders of our common stock.
There can be no assurance that additional financing will be available when needed on terms favorable to our Company, if at all. See
“Item 7. Risk Factors—We may need additional funds in the future which may not be available and which may result in dilution of the
value of our common stock.”
If adequate funds are not available on acceptable terms, we may be unable to develop or enhance our services and products, take
advantage of future opportunities or respond to competitive pressures, any of which could harm our business. See “Item 7. Risk
Factors—If we are unable to quickly introduce new products and services that satisfy changing customer needs, we could lose
customers and have difficulty attracting new customers.”
Cash used in operating activities was $254.7 million for the year ended December 31, 2001. Cash used in operating activities resulted
primarily from net loss for the year of $241.5 million, adjusted for non-cash items totaling $139.3 million (including depreciation and
amortization expenses of $179.1 million, the non-cash components of our restructuring charge of $96.8 million, and realized gains on
securities of $166.8 million), an excess of purchases of banking-related assets over the net sale/maturity of banking-related assets of
$434.4million, offset by a decrease in brokerage-related assets in excess of liabilities of $325.4 million. Cash used in operating
activities, net of effects from acquisitions was $138.7 million for the year ended September 30, 2000. Cash used in operating activities
resulted primarily from net income for the year of $19.2 million, adjusted for non-cash items totalling $(42.6) million (including
depreciation of $97.6 million and realized gains on securities of $219.3 million), an increase in brokerage-related assets in excess of
liabilities of $413.3 million, an increase in other assets of $61.3 million, offset by a decrease in banking related assets from sales and
maturities in excess of new purchases of $163.1 million and an increase in accounts payable, accrued and other liabilities of
$199.2million. Cash provided by operating activities, net of effects from acquisitions, was $23.8 million for the year ended September
30, 1999. Cash provided by operating activities resulted primarily from net loss of $56.8million, adjusted for non-cash items totalling
$(44.5) million (including depreciation of $34.3 million and realized gains on securities of $54.7 million), an increase in
brokerage-related liabilities in excess of assets of $66.1million, an increase in banking-related liabilities in excess of assets of $162.7
million, and an increase in accounts payable, accrued and other liabilities of $86.9 million, offset by an increase in other assets of
$44.4million and a net loss of $56.8 million.
Cash used in investing activities was $1,255.2 million, $5,037.0 million and $1,833.1 million for the year ended December 31, 2001
and the fiscal years ended September 30, 2000 and 1999, respectively. For the year ended December 31, 2001, cash used in investing
activities resulted primarily from an increase in loans
2002. EDGAR Online, Inc.