eTrade 1999 Annual Report Download - page 37

general economic conditions.
Because of the foregoing factors, in addition to other factors that affect the Company's operating results and financial position,
investors should not consider past financial performance or management's expectations a reliable indicator of future performance, and
not use historical trends to anticipate results or trends in future periods. In that regard, results of operations and financial condition
could be adversely affected by a number of factors in addition to those discussed above, including overall economic conditions and
lower than expected
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demand. Further, the Company's stock price is subject to volatility. Any of the factors discussed above could have an adverse effect on
the Company's stock price. In addition, the Company's stock price could be adversely affected if the Company's revenues or earnings
in any quarter fail to meet the investment community's expectations, or if there are broader, negative market trends. The Company does
not undertake an obligation to update its forward- looking statements or risk factors to reflect future events or circumstances.
Liquidity and Capital Resources
In August 1997, the Company completed a secondary public offering of 29,220,000 shares of the Company's common stock at a price
of $6.88 per share. The proceeds to the Company from the offering, net of underwriting discounts and offering expenses of $14.8
million, were $188.8 million.
In July 1998, the Company entered into an agreement to issue and sell 62,600,000 shares of its common stock to SOFTBANK
Holdings, Inc. for an aggregate purchase price of $400 million. This investment represents a minority interest ownership of
approximately 26.1% in the Company as of September 30, 1999.
The Company has financing facilities totaling $325 million, to be collateralized by customer securities. There were no borrowings
outstanding under these lines at September 30, 1999 or 1998. In addition, the Company has entered into numerous agreements with
other broker-dealers to provide financing under the Company's stock loan program.
The Company currently anticipates that its available cash resources and credit facilities will be sufficient to meet its presently
anticipated working capital and capital expenditure requirements for at least the next 12 months. However, the Company 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 or take advantage of unanticipated opportunities. The
Company's future liquidity and capital requirements will depend upon numerous factors, including costs and timing of expansion of
research and development efforts and the success of such efforts, the success of the Company's existing and new service offerings and
competing technological and market developments. The Company's forecast of the period of time through which its financial resources
will be adequate to support its operations is a forward-looking statement that involves risks and uncertainties, and actual results could
vary. The factors described earlier in this paragraph will impact the Company's future capital requirements and the adequacy of its
available funds. If additional funds are raised through the issuance of equity securities, the percentage ownership of the shareowners of
the 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 the Company's common stock. There can be no assurance
that additional financing will be available when needed on terms favorable to the Company, if at all.
If adequate funds are not available on acceptable terms, the Company may be unable to develop or enhance its services and products,
take advantage of future opportunities or respond to competitive pressures, any of which could have a material adverse effect on the
Company's business, financial condition and operating results.
Cash used in operating activities was $106.3 million in fiscal 1999, primarily as a result of the net loss in fiscal 1999 of $54.4 million,
deferred income taxes of $39.0 million, a $50.0 million gain on sale of investments, and an increase in brokerage-related assets in
excess of related liabilities of $66.1 million, offset in part by depreciation and amortization of $32.4 million, equity in losses of
investments of $9.1 million, a $2.2 million compensation charge for options issued to consultants, and increases in accounts payable,
accrued and other liabilities in excess of other assets of $58.4 million. Cash used in operating activities in fiscal 1998 and 1997 was
$27.7 million and $6.5 million, respectively. Such amounts primarily reflect net income for the respective periods, increases in
brokerage-related assets in excess of related liabilities, the impact of depreciation and amortization and increases in accounts payable,
accrued and other liabilities in excess of other assets.
Cash provided by (used in) investing activities was $125.6 million in fiscal 1999, ($382.2) million in fiscal
1998 and ($175.4) million in fiscal 1997. In fiscal 1999, the cash provided by investing activities was the result
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2002. EDGAR Online, Inc.