eTrade 2000 Annual Report Download - page 45

international and banking businesses are expected to increase as we expand our advertising efforts for these segments through fiscal
2001. Our cost per new account totaled $263 in
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fiscal 2000, an increase of 7% from $245 in fiscal 1999, which was an increase of 12% from $219 in fiscal 1998. These increases were
primarily the result of increased marketing spending in the past three years.
Technology Development
Technology development increased 79% from fiscal 1999 to fiscal 2000 and 121% from fiscal 1998 to fiscal 1999. The increased
level of expense for technology development in the past two years was incurred to enhance our existing product offerings, including
maintenance of our Web site and development of our CRM technology prior to achievement of technological feasibility, reflecting our
continuing commitment to invest in new products and technologies. The rate of growth of technology development costs in fiscal 2000
as compared to fiscal 1999 has decreased, primarily due to an increase in capitalizeable development costs for certain internally
developed software which reached technological feasibility during fiscal 2000, as well as a reduction in the use of outside consultants
as we refocused our efforts on fewer, but more beneficial projects.
General and Administrative
General and administrative expenses increased 104% from fiscal 1999 to fiscal 2000 and 100% from fiscal 1998 to fiscal 1999.
General and administrative expenses increased over the past two years as a result of personnel additions and the development of
administrative functions resulting from our overall growth and increased business activities.
Amortization of Goodwill and Other Intangibles
Amortization of goodwill and other intangibles was $22.8 million, $2.9 million and $2.5 million in fiscal 2000, 1999, and 1998,
respectively. The significant increase in the amortization of goodwill and other intangibles primarily consists of the amortization of
goodwill related to the acquisitions of several of our international affiliates and E*TRADE Access during fiscal 2000, that were
accounted for under the purchase method. Goodwill is amortized over 5 to 20 years. Other intangibles are not significant.
Acquisition-Related Expenses
Acquisition-related expenses were $36.4 million, $7.2 million and $1.2 million in fiscal 2000, 1999 and 1998, respectively, and
primarily represent transaction costs associated with acquisitions accounted for as poolings of interests. Acquisition-related expenses
in fiscal 2000 primarily relate to transaction costs associated with the acquisitions of ETFC and VERSUS. In fiscal 1999,
acquisition-related expenses were incurred primarily in connection with the acquisitions of TIR, ClearStation and ETFC. In fiscal
1998, we recognized transaction costs in association with the acquisition of ShareData.
Non-Operating Income (Expenses)
Corporate interest income was $17.2 million, $20.7 million and $11.2 million in fiscal 2000, 1999 and 1998, respectively. Corporate
interest income primarily relates to interest income earned on corporate investment balances.
Corporate interest expense was $29.5 million, $0.1 million and $0 in fiscal 2000, 1999 and 1998, respectively. Corporate interest
expense in fiscal 2000 primarily relates to interest expense resulting from the issuance of $650 million in convertible subordinated
notes during the second quarter of fiscal 2000. In fiscal 1999 and 1998, corporate interest expense was not significant.
Realized gains on sale of investments were $211.1 million, $54.1 million and $0 in fiscal 2000, 1999 and 1998, respectively. In fiscal
2000, we continued to liquidate portions of our investment portfolio, recognizing realized gains as a result of these liquidations.
Included in realized gains on sale of investments in fiscal 2000 is $77.5 million on the sale of a portion of our equity holdings in
E*TRADE Japan KK following their initial public offering and realized gains of $132.3 million on the sale of other publicly-traded
equities. E*TRADE Japan KK is accounted for on the equity method. In addition, we have made strategic investments in other
non-public entities, several of which have subsequently gone public. These investments have been classified as available-for-sale
under the provisions of Statement of Financial Accounting Standard (“SFAS”) No. 115, Accounting for Certain Investments in Debt
and Equity Securities .
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2002. EDGAR Online, Inc.