eTrade 2002 Annual Report Download - page 82

Table of Contents
Index to Financial Statements
RISKS RELATING TO OWNING OUR STOCK
We have incurred losses in the past and we cannot assure you that we will be profitable
We have incurred operating losses in prior periods and we may do so in the future. We reported net losses of $186.4 million in fiscal 2002,
which includes a cumulative effect of accounting change of $293.7 million, net losses of $241.5 million in fiscal 2001, which includes pre-tax
facility restructuring and other exit charges of $202.8 million and net income of $19.2 million in fiscal 2000. Although we achieved profitability
in fiscal 2000 due in part to sales of investment securities, we cannot assure you that profitability will be achieved in future periods.
Our ratio of debt to equity may make it more difficult to make payments on our debts or to obtain financing
At December 31, 2002, we had an outstanding balance of $695.3 million in convertible subordinated notes. Combined with the share buyback
program through December 2002, and the cumulative effect of accounting change recorded in fiscal 2002, our ratio of debt (our convertible
debt, capital lease obligations and term loans) to equity (expressed as a percentage) was 46.9% as of December 31, 2002. We may incur
additional indebtedness in the future. The level of our indebtedness, among other things, could:
• make it more difficult to make payments on our debt;
• make it more difficult or costly for us to obtain any necessary financing in the future for working capital, capital expenditures, debt
service requirements or other purposes;
• limit our flexibility in planning for or reacting to changes in our business; and
• make us more vulnerable in the event of a downturn in our business.
The market price of our common stock may continue to be volatile
From January 1, 2001 through December 31, 2002, the price per share of our common stock has ranged from a high of $15.38 to a low of
$2.81. The market price of our common stock has been, and is likely to continue to be, highly volatile and subject to wide fluctuations. In the
past, volatility in the market price of a company’ s securities has often led to securities class action litigation. Such litigation could result in
substantial costs to us and divert our attention and resources, which could harm our business. Declines in the market price of our common stock
or failure of the market price to increase could also harm our ability to retain key employees, reduce our access to capital and otherwise harm
our business.
We may need additional funds in the future which may not be available and which may result in dilution of the value of our common
stock
In the future, we may need to raise additional funds, which may not be available on favorable terms, if at all. If adequate funds are not available
on acceptable terms, we may be unable to fund our business growth plans. In addition, if funds are available, the issuance of securities could
dilute the value of shares of our common stock and cause the market price to fall.
We have various mechanisms in place that may discourage takeover attempts
Certain provisions of our certificate of incorporation and bylaws may discourage, delay or prevent a third party from acquiring control of us in a
merger, acquisition or similar transaction that a shareholder may consider favorable. Such provisions include:
2003. EDGAR Online, Inc.