eTrade 2008 Annual Report Download - page 43

2007 was (33.7)% compared to 32.8% for 2006. For additional information, see Note 17—Income Taxes to the
consolidated financial statements.
Discontinued Operations
Our income from discontinued operations, net of tax was $0.6 million for the year ended December 31,
2007 compared to $1.9 million for the same period in 2006. During 2007 and 2006, discontinued operations
included operating results from our Canadian brokerage business and our direct retail lending business. During
2006, discontinued operations also included the results from our professional agency business, E*TRADE
Professional Trading, LLC.
SEGMENT RESULTS REVIEW
Retail
The following table summarizes retail financial and key metrics for the periods ended December 31, 2008,
2007 and 2006 (dollars in thousands, except for key metrics):
Year Ended December 31,
Variance
2008 vs. 2007
2008 2007 2006 Amount %
Retail segment income:
Net operating interest income $ 829,707 $ 962,557 $ 870,462 $(132,850) (14)%
Commission 514,736 520,216 458,463 (5,480) (1)%
Fees and service charges 200,726 218,682 202,037 (17,956) (8)%
Gain (loss) on loans and securities, net (78) 180 3,414 (258) *
Other revenue 38,463 40,653 35,357 (2,190) (5)%
Net segment revenue 1,583,554 1,742,288 1,569,733 (158,734) (9)%
Total segment expense 975,488 947,864 866,568 27,624 3%
Total retail segment income $ 608,066 $ 794,424 $ 703,165 $(186,358) (23)%
Key Metrics(1):
Retail customer assets (dollars in billions) $ 112.2 $ 185.0 $ 191.3 $ (72.8) (39)%
Net new customer assets (dollars in billions)(2) $ 5.4 $ (11.3) $ 3.2 $ 16.7 *
Customer cash and deposits (dollars in billions) $ 32.3 $ 32.7 $ 33.0 $ (0.4) (1)%
DARTs 188,116 177,900 153,146 10,216 6%
Average commission per trade $ 10.88 $ 11.72 $ 11.97 $ (0.84) (7)%
End of period margin debt (dollars in billions) $ 2.8 $ 7.0 $ 6.8 $ (4.2) (60)%
End of period total accounts 4,533,034 4,287,240 4,002,496 245,794 6%
* Percentage not meaningful.
(1) Metrics have been represented to exclude activity from discontinued operations. All discussions, unless otherwise noted, are based on
metrics from continuing operations.
(2) For the year ended December 31, 2008, net new customer assets were $6.4 billion excluding the sale of RAA.
Our retail segment generates revenue from brokerage and banking relationships with retail customers. These
relationships essentially drive five sources of revenue: net operating interest income; commission; fees and
service charges; gain (loss) on loans and securities, net; and other revenue. Other revenue includes results from
our stock plan administration products and services, as we ultimately service retail customers through these
corporate relationships.
2008 Compared to 2007
During the fourth quarter of 2007, we experienced a disruption in our customer base which caused a decline
in the core drivers of our retail segment, including: net new accounts, customer cash and deposits, DARTs,
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