eTrade 2000 Annual Report Download - page 4

portal for managing personal finances and financial services online. The transaction was accounted for as a pooling of interests, and
accordingly, all historical information has been prepared to give retroactive effect to the acquisition.
In August 2000, we acquired the outstanding shares of VERSUS, a Canadian-based provider of electronic securities trading services
for institutional and retail investors and owner of the E*TRADE Canada license, in a share exchange. Through the acquisition of
VERSUS, we increased our retail and institutional client base and will be able to incorporate the technology underlying the VERSUS
Network, a scalable proprietary electronic trading platform, into our global cross-border trading platform, enabling institutions and
investment dealers worldwide to route orders globally through our trading networks. Each VERSUS shareowner received
approximately .725 shares of E*TRADE common stock or shares of EGI Canada Corporation (“ECC ”) that are exchangeable for
shares of E*TRADE common stock (the “Exchangeable Shares”) for every VERSUS share held (see Note 3 to the Consolidated
Financial Statements). Options held by VERSUS associates were assumed by E*TRADE and, upon exercise, are convertible into
approximately .725 shares of E*TRADE common stock. The acquisition was accounted for as a pooling of interests, and accordingly,
all historical information has been prepared to give retroactive effect to the acquisition.
We have further expanded globally during fiscal 2000 through several key acquisitions of former licensees and through the formation
of joint ventures. During the first quarter of fiscal 2000, we acquired 100% of the equity in E*TRADE U.K., E*TRADE Nordic AB,
and E*TRADE NetBourse, which owns a 34% interest in CPR E*TRADE in France, expanding our branded Web site to customers in
the United Kingdom, France, the Nordic countries, the Netherlands, Luxembourg, Austria, and Italy. However, we terminated our
relationship with CPR E*TRADE in France in September 2000 and are now evaluating new opportunities in the French market.
Acquisitions of our international affiliates, with the exception of VERSUS, have been accounted for under the purchase method.
During fiscal 2000, we also entered into joint venture agreements to establish online retail brokerage operations in Korea, Germany,
and Norway. E*TRADE Korea was launched to offer customers in Korea attractive trading rates that provide significant savings
compared to competitors’ fees and no fees for deposits and other services. We maintain a 10% investment in E*TRADE Korea. The
E*TRADE Germany AG joint venture has capitalized on the German market’ s strong growth in electronic personal financial services.
We subsequently signed an agreement to increase our ownership percentage of E*TRADE Germany AG from 60% to 100% in the first
quarter of fiscal 2001. E*TRADE Norway offers Norwegian and Swedish stocks and options trading to retail investors in Norway and
gives us access to over 1.4 million clients of our joint venture partner. E*TRADE Japan KK was also launched and went public in
fiscal 2000, at which point we sold a portion of our investment resulting in a gain of approximately $77.5 million, and reducing our
ownership percentage from 42% to 32%. The launch of E*TRADE Japan KK coincided with the deregulation of Japanese brokerage
commission rates and enabled us to determine the commission structure for securities transactions for our Japanese investors,
presenting them a wider range of investing opportunities than previously available. In the first quarter of fiscal 2001, E*TRADE South
Africa was launched to offer online trading of stocks and warrants listed on the Johannesburg Stock Exchange as well as comp
rehensive market information to the largest investor market in Africa.
During the third quarter of fiscal 2000, we launched the first phase of our cross-border trading network, allowing investors in Sweden
to purchase U.S. securities online in their own currency. We will continue to roll out cross-border trading in Australia and U.S. trading
of foreign equities in fiscal 2001. We now serve customers through branded Web sites in Australia, Canada, Denmark, Japan, Korea,
New Zealand, Norway, South Africa, Sweden, and the U.K. We expect to continue our global expansion efforts throughout fiscal
2001.
With the expansion of our business during fiscal 2000, we have separated our financial services into four major categories: 1)
Domestic Retail Brokerage, 2) Banking, 3) Global and Institutional, and 4) Asset Gathering and Other. Domestic Retail Brokerage is
comprised of the activities of our wholly-owned subsidiary, E*TRADE
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Securities, which offers domestic retail brokerage services by means of the Internet, automated telephone service, direct modem
access, Internet-enabled wireless devices, and live telephone support. Banking is comprised primarily of the activities of the Bank,
offering a wide range of Federal Deposit Insurance Corporation (“FDIC”)-insured and other banking products, and E*TRADE Access,
which operates a nationwide network of over 9,600 ATMs. These channels, in addition to the E*TRADE Zone, a service center
located in the SuperTarget store in Roswell, Georgia, offering guests access to integrated banking, brokerage and investment planning
services, and our 540 Madison Avenue, New York location, expected to open in the second quarter of 2001, will enhance customer
convenience and extend the reach of our financial services portal by offering a blended approach to our services, combining
“high-tech” with “high-touch,” through a physical E*TRADE presence. Global and Institutional includes the activities of TIR, which
provides services primarily to institutional investors, VERSUS, which provides both retail and institutional services, and our
international affiliates which provide services primarily to non-domestic retail investors. These channels have allowed us to expand
2002. EDGAR Online, Inc.