eTrade 2005 Annual Report Download - page 208

Table of Contents
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. At December31, 2005, 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 December31, 2005, no claims had been made on the Company under
these guarantees and thus, no obligations had been recorded. These guarantees are not collateralized.
NOTE 29—SUBSEQUENT EVENTS
On February 17, 2006, the Company signed an agreement to sell its professional agency business, E*TRADE Professional Trading,
LLC for approximately $5.0 million. This business includes a broker-dealer registered with the SEC and a member of the NASD who
currently executes and clears its customer security transactions through E*TRADE Clearing LLC, on a fully disclosed basis under an
introducing broker-dealer relationship.
NOTE 30—QUARTERLY DATA (UNAUDITED)
The information presented below reflects all adjustments, which, in the opinion of management, are of a normal and recurring nature
necessary to present fairly the results of operations for the periods presented (in thousands, except per share amounts):
2005
2004
1
st
Quarter
2
nd
Quarter
3
rd
Quarter
4
th
Quarter
1
st
Quarter
2
nd
Quarter
3
rd
Quarter
4
th
Quarter
Net revenues
$
417,397
$
387,687
$
419,836
$
478,925
$
374,662
$
374,465
$
330,122
$
403,673
Income from continuing operations
$
102,206
$
109,383
$
109,138
$
125,511
$
91,045
$
103,204
$
88,103
$
99,478
Net income
$
91,994
$
101,567
$
107,491
$
129,360
$
88,475
$
122,905
$
79,274
$
89,829
Income per share from continuing
operations:
Basic
$
0.28
$
0.30
$
0.30
$
0.32
$
0.25
$
0.28
$
0.24
$
0.26
Diluted
$
0.27
$
0.29
$
0.29
$
0.31
$
0.23
$
0.27
$
0.23
$
0.26
Income per share:
Basic
$
0.25
$
0.28
$
0.29
$
0.33
$
0.24
$
0.34
$
0.21
$
0.24
Diluted
$
0.24
$
0.27
$
0.28
$
0.32
$
0.23
$
0.31
$
0.21
$
0.24
133
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2006. EDGAR Online, Inc.