eTrade 2007 Annual Report Download - page 88

E*TRADE FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
Year Ended December 31,
2007 2006 2005
Cash Flows From Operating Activities:
Net income (loss) $ (1,441,754) $ 628,859 $ 430,412
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Cumulative effect of accounting change, net of tax — — (1,646)
Provision for loan losses 640,078 44,970 54,016
Depreciation and amortization (including discount
amortization and accretion) 282,491 286,841 362,965
(Gain) loss on loans and securities, net and (gain) loss on
sales of investments, net 2,414,056 (125,953) (174,798)
Impairment of goodwill 101,208 — —
Gain on sale of Consumer Finance Corporation — — (46,099)
Minority interest in subsidiaries and equity in income of
investments and venture funds (7,665) (2,451) (6,289)
Non-cash facility restructuring costs and other exit activities 14,349 20,712 6,528
Share-based compensation 34,982 32,584 18,253
Tax benefit from tax deductions in excess of compensation
expense (19,910) (30,166) (24,530)
Other 2,940 3,635 (7,132)
Net effect of changes in assets and liabilities:
(Increase) decrease in cash and investments required to be
segregated under Federal or other regulations (22,045) 357,204 525,102
Increase in margin receivables (284,267) (1,135,243) (534,883)
Increase (decrease) in customer payables (987,620) 511,550 30,976
Proceeds from sales, repayments and maturities of loans
held-for-sale 1,418,313 1,506,896 7,182,775
Purchases and originations of loans held-for-sale (1,261,980) (1,836,108) (3,717,745)
Proceeds from sales, repayments and maturities of trading
securities 2,831,736 1,943,977 3,779,503
Purchases of trading securities (2,777,449) (1,978,687) (6,751,698)
Decrease (increase) in other assets 16,968 572,010 (499,870)
Increase (decrease) in accounts payable, accrued and other
liabilities (158,949) 76,250 243,156
Facility restructuring liabilities (241) (16,325) (5,053)
Net cash provided by operating activities 795,241 860,555 863,943
Cash Flows From Investing Activities:
Purchases of available-for-sale mortgage-backed and
investment securities (13,113,671) (15,416,233) (14,320,762)
Proceeds from sales, maturities of and principal payments on
available-for-sale mortgage-backed and investment
securities 13,805,661 14,181,506 14,059,538
Net increase in loans receivable (5,275,866) (6,969,132) (7,887,040)
Purchases of property and equipment (129,295) (109,493) (79,014)
Cash used in business acquisitions, net (5,974) (806) (2,218,932)
Net cash flow from derivatives hedging assets 6,848 (64,600) (34,696)
Proceeds from sales of discontinued businesses — 3,470 56,902
Other (72,812) (46,744) 19,376
Net cash used in investing activities $ (4,785,109) $ (8,422,032) $(10,404,628)
See accompanying notes to consolidated financial statements
85