eTrade 2002 Annual Report Download - page 191

Table of Contents
Index to Financial Statements
Parent Company Guarantees
Guarantees are contingent commitments issued by the Company for the purpose of guaranteeing the financial obligations of a subsidiary to a
financial institution. The collective obligation of the corporation does not change by the existence of corporate guarantees. Rather, the
guarantees shift ultimate payment responsibility of an existing financial obligation from a subsidiary to the parent company.
In support of the Company’ s brokerage business, the Company has provided guarantees on the settlement of its subsidiaries’ financial
obligations with several financial institutions related to its securities lending activities. Terms and conditions of the guarantees, although
typically undefined in the guarantees themselves, are governed by the conditions of the underlying obligation that the guarantee covers. Thus
the Company’ s obligation to pay under these guarantees coincides exactly with the terms and conditions of those underlying obligations. As of
December 31, 2002, no claims had been filed with the Company for payment under any guarantees. These guarantees are not collateralized.
In addition to guarantees issued on behalf of subsidiaries participating in securities lending programs, the Company also issues guarantees for
the settlement of foreign exchange transactions. If a subsidiary fails to deliver currency on the settlement date of a foreign exchange
arrangement, the beneficiary financial institution may seek payment from the Company. Terms are undefined, and are governed by the terms of
the underlying financial obligation. At December 31, 2002, no claims had been made on the Company under these guarantees and thus, no
obligations had been recorded. These guarantees are not collateralized.
The Company maintains letters of credit totaling $14.1 million at December 31, 2002 primarily related to operating leases held domestically
and to support a clearing and settlement arrangement in Germany. At December 31, 2002, the Company had not recorded any obligations
related to these letters of credit.
The Company also guarantees the capital sufficiency of one of its subsidiaries with the Chicago Stock Exchange. If the subsidiary’ s net capital
were to fall below regulatory minimums, the Chicago Stock Exchange could call on the Company to fund the entity, up to a maximum amount
of $20.0 million. The term of this guarantee is indefinite. At December 31, 2002, the Company had no obligation under this guarantee.
32.SUBSEQUENT EVENT
On February 1, 2003, E*TRADE Access acquired more than 4,000 ATMs from XtraCash ATM, a subsidiary of Amicus FSB, the U.S. unit of
Canada’ s CIBC for $10.1 million in cash.
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2003. EDGAR Online, Inc.