eTrade 2009 Annual Report Download - page 48

Discontinued Operations
During the year ended December 31, 2008, we sold our Canadian brokerage business to Scotiabank. The
sale resulted in proceeds of approximately $515 million, including $54 million in repatriation of capital prior to
the close and a pre-tax gain of $429.0 million. We also exited our direct retail lending business, which was our
last remaining loan origination channel (we exited our wholesale mortgage lending channel in 2007). Therefore,
the results of operations of our Canadian brokerage business, including the gain on sale, and the entire direct
retail lending business are reported as discontinued operations on our consolidated statement of income (loss) for
all periods presented. The following table outlines the components of discontinued operations (dollars in
millions):
Years Ended December 31,
Variance
2008 vs. 2007
2008 2007 Amount %
Lending loss, net of tax $ (6.2) $(21.6) $ 15.4 (71)%
Canada income, net of tax 10.9 22.2 (11.3) (51)%
Canada—gain on disposal, net of tax 268.8 — 268.8 *
Canada—tax benefit of excess tax basis over book basis 24.1 — 24.1 *
Income from discontinued operations, net of tax $297.6 $ 0.6 $297.0 *
* Percentage not meaningful.
The benefit of excess tax basis over book basis is related to our Canadian brokerage business, which
resulted from the difference between the tax and financial reporting bases of the business. We recognized this
difference in the second quarter of 2008 because a commitment to sell the Canadian brokerage business was in
place. The sale of the Canadian brokerage business was completed in the third quarter of 2008 for a gain of
$268.8 million, net of tax.
SEGMENT RESULTS REVIEW
Beginning in the first quarter of 2009, we revised our segment financial reporting to reflect the manner in
which our chief operating decision maker had begun assessing the Company’s performance and making resource
allocation decisions. As a result, we now report our operating results in two segments: 1) “Trading and
Investing,” which includes the businesses that were formerly in the “Retail” segment and now includes our
market-making business; and 2) “Balance Sheet Management,” which includes the businesses from the former
“Institutional” segment, other than the market-making business. Our segment financial information from prior
periods has been reclassified in accordance with the new segment financial reporting.
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