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Table of Contents
Index to Financial Statements
Equity Method Investments
Equity in the net income (losses) of investments and venture funds were as follows (in thousands):
Losses from the sales and other-than-temporary impairment of equity method and other investments were as follows (in thousands):
Joint Venture
Year Ended December 31,
2004
2003
2002
Joint Ventures:
KAP Group
$
10,272
$
14,584
$
9,934
E*TRADE Japan K.K.
—
203
(869
)
Other
(156
)
(15
)
(64
)
Total joint ventures
10,116
14,772
9,001
Venture Capital Funds:
E*TRADE eCommerce Fund I
268
(756
)
(4,053
)
ArrowPath Fund II
(1,314
)
(1,348
)
272
Other funds
(4,602
)
(3,536
)
(5,902
)
Total venture capital funds
(5,648
)
(5,640
)
(9,683
)
Total recognized in equity in income (losses) of investments and venture
funds
$
4,468
$
9,132
$
(682
)
Year Ended December 31,
2004
2003
2002
Impairment of privately held equity investments
$
(60
)
$
(8,006
)
$
(12,549
)
Other
(4,371
)
—
(
4,315
)
Net recognized losses included in gain (loss) on sale and impairment of
investments
$
(4,431
)
$
(8,006
)
$
(16,864
)
KAP Group — At December 31, 2004 , the Company has a 31% ownership in KAP Group with a carrying amount of $8.5 million that is
accounted for under the equity method. KAP Group has invested substantially all of its assets in two other entities, which were formed for the
purpose of engaging in electronic options trading. KAP Group investors include two members of the Company’
s Board of Directors. Beginning
in 2002, the Company has received distributions from KAP Group in proportion to its ownership of shares totaling $13.8 million in 2004, $4.7
million in 2003 and $8.2 million in 2002.
Venture Capital Funds
The Company has investments in E*TRADE eCommerce Fund I (“Fund I”) and ArrowPath Fund II (“Fund II”). The Company is a non-
managing member of each fund and their general partners. The Company’s former CEO and former Chief Strategic Investment Officer are
managing members of the general partner of each fund. At December 31, 2004, the Company’
s remaining capital commitment was $0.4 million
to Fund I and $29.8 million to Fund II.
The Company also has limited partnership interests in three other unrelated venture capital funds, including one sponsored by
SOFTBANK Corp. (“SOFTBANK”). At December 31, 2004, the Company had funding commitments to these funds totaling $1.1 million.
83