eTrade 2004 Annual Report Download - page 98

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Table of Contents
Index to Financial Statements
The following table discloses the changes in the carrying value of goodwill and intangibles with indefinite lives that occurred in the
brokerage and banking segments subsequent to the initial impairment (in thousands):
During 2004, the Company finalized certain contingencies related to its acquisition of ETCF Asset Funding Corporation. When this
business was acquired, the Company recorded deferred tax assets based on management’s best estimate of the tax basis that would be accepted
by the tax authority upon ultimate settlement. In 2004, management’s best estimate of the ultimate tax basis was modified and the Company
recorded a $15.8 million adjustment to deferred tax assets to reflect the revised tax basis. In accordance with EITF 93-7, Uncertainties Related
to Income Taxes in a Purchase Business Combination , the adjustment was applied as an increase to the balance of goodwill attributable to that
acquisition. Adjustments to goodwill in 2004 relating to the Company’s 2002 and 2003 acquisitions, were primarily related to changes in
effective tax rates resulting in a corresponding adjustment to their related deferred tax liabilities.
Other intangible assets with finite lives, which are primarily amortized on a straight-line basis, consist of the following (dollars in
thousands):
89
Brokerage
Banking
Total
Balance at December 31, 2001
$
149,116
$
114,554
$
263,670
Additions from 2002 acquisitions
87,483
33,991
121,474
Balance at December 31, 2002
236,599
148,545
385,144
Additions from 2003 acquisitions
—
9,394
9,394
Write
-
offs related to the 2003 Restructuring Plan
(1,433
)
—
(
1,433
)
Adjustments to 2002 acquisitions
14,997
(5,606
)
9,391
Balance at December 31, 2003
250,163
152,333
402,496
Write
-
offs related to disposition of E*TRADE Access
—
(
9,651
)
(9,651
)
Adjusted balance at December 31, 2003
250,163
142,682
392,845
Adjustments to 2002 acquisitions
(9,409
)
(2,451
)
(11,860
)
Adjustments to 2003 acquisitions
—
15,490
15,490
Other adjustments
(1,432
)
—
(
1,432
)
Balance at December 31, 2004
$
239,322
$
155,721
$
395,043
Weighted-
Average
Useful Life
(Years)
December 31, 2004
December 31, 2003
Gross
Amount
Accumulated
Amortization
Net
Amount
Gross
Amount
Accumulated
Amortization
Net
Amount
Specialist books
28
$
61,820
$
(8,522
)
$
53,298
$
59,800
$
(5,891
)
$
53,909
Active accounts
(1)
8
69,023
(36,121
)
32,902
53,077
(30,027
)
23,050
Credit cards
(1)
15
32,672
(4,981
)
27,691
16,006
(1,817
)
14,189
Deposit intangibles
(1)
3
15,188
(14,411
)
777
15,188
(9,898
)
5,290
Proprietary agreements
7
11,600
(9,806
)
1,794
11,600
(4,967
)
6,633
Customer list
(1)
7
10,248
(5,189
)
5,059
10,464
(3,079
)
7,385
Distribution
9
7,800
(1,486
)
6,314
7,800
(798
)
7,002
Agency relationships
6
6,300
(2,713
)
3,587
6,300
(1,663
)
4,637
Trader relationships
(1)
4
3,300
(1,653
)
1,647
3,300
(763
)
2,537
Other
2
2,671
(1,619
)
1,052
2,616
(1,216
)
1,400
Total
$
220,622
$
(86,501
)
$
134,121
$
$
(60,119
)
$
126,032
(1)
Amortized using an accelerated method.