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Table of Contents
Index to Financial Statements
The Company evaluates the performance of its segments based on segment contribution (net revenues and operating income). All
corporate overhead, administrative and technology charges are allocated to segments either in proportion to their respective direct costs and
revenues or based upon specific operating criteria. In prior years, these costs were included in the Domestic Retail Brokerage Segment.
Financial information for the Company’s reportable segments is presented in the following tables. The following amounts for 2003, 2002 and
2001 have been presented to conform to the revised segment format (in thousands):
103
Year Ended December 2003
Brokerage
Banking
Eliminations
(1)
Total
Net revenues:
Commissions
$
337,468
$
—
$
—
$
337,468
Principal transactions
229,846
—
—
229,846
Interest income
144,379
748,527
—
892,906
Interest expense
(10,305
)
(475,824
)
—
(
486,129
)
Gain on sales of originated loans
—
192,467
—
192,467
Gain on sales of loans held-for-sale and
securities, net
—
97,261
—
97,261
Provision for loan losses
—
(
38,523
)
—
(
38,523
)
Other revenues
186,457
80,730
(8,775
)
258,412
Net revenues
887,845
604,638
(8,775
)
1,483,708
Cost of services and operating expenses:
Cost of services
408,648
209,737
—
618,385
Selling and marketing
120,695
61,146
(8,775
)
173,066
Technology development
47,541
13,200
—
60,741
General and administrative
132,685
123,024
—
255,709
Amortization of other intangibles
21,213
11,810
—
33,023
Acquisition
-
related expenses
2,202
(343
)
—
1,859
Restructuring and other exit charges
106,945
27,616
—
134,561
Total cost of services and operating
expenses
839,929
446,190
(8,775
)
1,277,344
Operating income
$
47,916
$
158,448
$
—
$
206,364
(1) Reflects the elimination of an intercompany payment made by the Banking Segment to the Brokerage Segment related to the Sweep Deposit Account (“SDA”) product, which was
initiated in 2003. Under this relationship, the Banking Segment pays the Brokerage Segment a negotiated rate that approximates market on the average SDA balance. The Banking
Segment reflects this payment as marketing expense as it is a fee associated with deposit gathering activity and the Brokerage Segment reflects this payment as other revenue as it is a
fee for access to customers.