eTrade 2003 Annual Report Download - page 95

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Table of Contents
Index to Financial Statements
Payables for Bank Securities Purchased, Collateral Not Received
The Bank has payables to third-party brokers for mortgage-backed securities the Bank committed to buy, but did not receive from the
brokers by the settlement date. The Bank’s interest rate risk exposure related to this payable is mitigated by its commitments to sell mortgage-
backed securities to other third-party brokers at a fixed price.
Other Short-Term Borrowing Arrangements
The principal source of financing for E*TRADE Clearing’s margin lending activity is cash balances in customers’
accounts and financing
obtained from other broker-dealers through E*TRADE Clearing’s stock loan program. E*TRADE Clearing also maintains financing facilities
with banks totaling $325.0 million to finance margin lending. There was none outstanding under these lines at December 31, 2003 and $5.5
million at December 31, 2002. The Company also has multiple term loans from financial institutions. These loans are collateralized by
equipment. Borrowings under these term loans bear interest at 3.00% to 3.25% above LIBOR (4.12% to 4.37% at December 31, 2003). The
Company had approximately $17.2 million of principal outstanding under these loans at December 31, 2003.
NOTE 17—INCOME TAXES
The components of income tax expense (benefit) are as follows (in thousands)
The components of pre-tax income (loss) before minority interest in subsidiaries are as follows (in thousands):
82
Year Ended December 31,
2003
2002
2001
Current:
Federal
$
82,087
$
—
$
160
Foreign
5,894
(4,209
)
(2,099
)
State
18,917
6,762
1,629
Total current
106,898
2,553
(310
)
Deferred:
Federal
(5,798
)
77,840
(6,409
)
Foreign
5,418
—
—
State
5,870
4,729
(13,166
)
Total deferred
5,490
82,569
(19,575
)
Income tax expense (benefit)
$
112,388
$
85,122
$
(19,885
)
Year Ended December 31,
2003
2002
2001
Domestic
$
312,194
$
198,339
$
(214,281
)
Foreign
(1,840
)
(4,398
)
(46,656
)
Total pre
-
tax income (loss)
$
310,354
$
193,941
$
(260,937
)