eTrade 2007 Annual Report Download - page 101

2006 Acquisitions
Retirement Advisors of America
On August 1, 2006, the Company completed its acquisition of RAA, a Dallas, Texas-based investment
advisor managing over $1 billion in assets. The aggregate purchase price of approximately $24.9 million
included $19.8 million, or 0.8 million shares, in common stock issued and $5.1 million in cash. At acquisition,
the purchase price included approximately $0.1 million in net assets acquired, $9.5 million in customer list and
other intangibles and $1.6 million held in escrow, with the remaining $13.7 million recorded as goodwill. As of
December 31, 2007, none of the purchase price remained in escrow. The intangible assets will be amortized over
approximately 18 years on an accelerated basis from the date of acquisition.
2005 Acquisitions
BrownCo
On November 30, 2005, the Company completed its acquisition of BrownCo, an online discount brokerage
business with approximately 186,000 customer accounts, from JP Morgan Chase & Co. for an aggregate
purchase price of approximately $1,629.7 million in cash including $691.8 million, or 39.7 million shares, in
common stock issued. At acquisition, the purchase price included approximately $306.6 million in net assets
acquired, $269.7 million in customer list and noncompete intangibles, $9.0 million in contracts and employee
termination liabilities, with the remaining $1,062.4 million recorded as goodwill. Regulatory capital of
$294.5 million was included in the purchase price. The intangible assets will be amortized over approximately 21
years on an accelerated basis from the date of acquisition.
Harrisdirect
On October 6, 2005, the Company completed its acquisition of Harrisdirect, a U.S.-based online discount
brokerage business with approximately 425,000 customer accounts, from BMO Financial Group for an aggregate
purchase price of approximately $709.0 million in cash. At acquisition, the purchase price included
approximately $22.3 million in net assets acquired, $156.4 million in customer list and noncompete intangibles,
$11.1 million in contract and employee termination liabilities, with the remaining $541.4 million recorded as
goodwill. Regulatory capital of $16.0 million was included in the purchase price. The intangible assets will be
amortized over approximately 19 years on an accelerated basis from the date of acquisition.
Wealth Management Advisors
The Company acquired Kobren on November 2, 2005 and Howard Capital on January 1, 2005. Both
companies are registered investment advisory firms. At acquisition, the companies combined had over
$1.5 billion in assets under management. The Company recorded $24.6 million of intangible assets and $7.6
million of goodwill related to the acquisitions. The intangible assets will be amortized over approximately 20
years on an accelerated basis from the date of acquisition. In accordance with the terms of the acquisitions, the
Company may pay additional cash and stock if certain revenue and earnings targets are met. As of December 31,
2007, the Company estimates it will pay an additional $31.8 million related to these milestones, based on the
most current projections.
NOTE 3—DISCONTINUED OPERATIONS
The Company had no discontinued operations in 2007. In 2006, the Company completed the sale of
E*TRADE Professional Trading, LLC. In 2005, the Company sold its Consumer Finance Corporation and exited
the institutional proprietary trading business conducted by E*TRADE Professional Securities, LLC. All of these
transactions, except Consumer Finance Corporation’s servicing operations, were accounted for as discontinued
operations as of December 31, 2006 and 2005.
98