eTrade 2002 Annual Report Download - page 132

Table of Contents
Index to Financial Statements
Equity method and other investments
Equity in the net income (loss) of equity method investees and unrealized loss on venture capital funds consist of (in thousands):
YearEnded December31, ThreeMonths
Ended December 31, 2000
YearEnded September30,
2000
2002 2001
Joint Ventures:
E*TRADE Japan K.K. $ (869 ) $ 1,543 $ 523 $ 3,404
eAdvisor (52 ) (1,755 ) (338 ) (1,700 )
KAP Group 9,934 — — (2,000 )
E*OFFERING/Soundview Technology Group,
Inc.
— (6,646 ) — (6,391 )
Other 58 684 (246 ) (4,826 )
Equity in income (loss) of investments $ 9,071 $ (6,174 ) $ (61 ) $ (11,513 )
Venture Capital Funds:
E*TRADE eCommerce Fund I $ (4,053 ) $ (26,851 ) $ (1,543 ) $ 3,374
ArrowPath Fund II 272 (819 ) (173 ) (292 )
Other funds (5,902 ) (7,046 ) (4,442 ) (3,818 )
Unrealized losses on venture funds $ (9,683 ) $ (34,716 ) $ (6,158 ) $ (736 )
Gains and losses from the sales and other-than-temporary impairment of available-for-sale, equity method and other investments were as
follows (in thousands):
YearEnded December31 Three MonthsEnded December 31,
2000 YearEnded September30, 2000
2002 2001
Available-for-sale investments $ (1,730 ) $ (15,101 ) $ 3,582 $ 133,425
Impairment of privately-held equity investments (12,549 ) (30,038 ) — (999 )
Other (4,228 ) (4,673 ) — 78,723
Gain (loss) on investments $ (18,507 ) $ (49,812 ) $ 3,582 $ 211,149
In fiscal 2002, the Company recorded $12.5 million in impairment charges related to several investments in privately held companies accounted
for under the cost method. In fiscal 2001, the Company recorded a $29.5million loss for the impairment of its investments in Soundview
Technology Group and eAdvisor, which is included in gain (loss) on investments. In fiscal 2000, the Company recorded a $77.5 million gain
upon the sale of a portion of its investment in E*TRADE Japan K.K., included in gain (loss) on investments. These transactions are more fully
described below.
Joint Ventures
E*TRADE Japan K.K. —In June 1998, the Company entered into a joint venture agreement with SOFTBANK Corporation (“SOFTBANK”), a
related party, to form E*TRADE Japan K.K. to provide online securities trading services to residents of Japan. As part of the transaction, the
Company invested approximately $8 million in exchange for a 42% ownership position in this joint venture, of which half was funded by a note
from SOFTBANK. The note is payable in 567 million Yen ($4.8 million at December 31, 2002), bears interest at 1.375% and was repaid when
it came due in January 2003. E*TRADE Japan K.K. issued shares to the public in an initial public offering in September 2000. Following
2003. EDGAR Online, Inc.