eTrade 2006 Annual Report Download - page 52

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The Company’s broker-dealer subsidiaries are subject to the Uniform Net Capital Rule under the Securities
Exchange Act of 1934 administered by the SEC, the NYSE and NASD, which requires the maintenance of
minimum net capital. At December 31, 2006 and 2005, all of our brokerage subsidiaries met their minimum net
capital requirements. The Company’s broker-dealer subsidiaries had excess net capital of $628.1 million at
December 31, 2006.
Off-Balance-Sheet Arrangements
We enter into various off-balance-sheet arrangements in the ordinary course of business, primarily to meet
the needs of our clients and to reduce our own exposure to interest rate risk. These arrangements include firm
commitments to extend credit and letters of credit. Additionally, we enter into guarantees and other similar
arrangements as part of transactions in the ordinary course of business. For additional information on each of
these arrangements, see Item 8. Financial Statements and Supplementary Data.
Other Sources of Liquidity
We maintain committed and uncommitted financing facilities with banks totaling $800.0 million to meet
corporate liquidity needs and finance margin lending. There were no outstanding balances and the full
$800.0 million was available under these lines at December 31, 2006 and 2005.
We rely on borrowed funds, such as FHLB advances and securities sold under agreements to repurchase to
provide liquidity for the Bank. At December 31, 2006, the Bank had approximately $7.6 billion in additional
borrowing capacity.
Contractual Obligations
The following summarizes our contractual obligations at December 31, 2006 and the effect such obligations
are expected to have on our liquidity and cash flow in future periods (dollars in thousands):
Years ending December 31,
2007 2008 2009 2010 2011 Thereafter Total
Security commitments to:
Purchase securities $ 3,611,937 $ —$—$—$—$ —$3,611,937
Sell securities (2,718,931) ———— —(2,718,931)
Loan commitments to:
Purchase loans 1,118,529 ———— —1,118,529
Originate loans(1) 456,630 ———— —456,630
Sell loans (60,282) ———— —(60,282)
Equity funding commitments(2) 17,393 17,514 43 — — — 34,950
Acquisition-related commitments(3) 1,250 ———— — 1,250
Certificates of deposit(4)(5) 4,496,319 388,397 187,764 130,218 128,453 118,313 5,449,464
Securities sold under agreements to
repurchase and other borrowings(5) 11,590,124 1,154,323 252,489 226,331 125,391 3,714,084 17,062,742
Convertible and Senior notes(6) 136,062 135,905 135,438 135,438 615,438 1,712,578 2,870,859
Facilities offered for sublease, less estimated
future sublease income(7) 11,743 5,542 5,059 3,012 71 68 25,495
Operating lease payments 38,478 36,315 30,874 28,348 21,184 75,414 230,613
Purchase Obligations(8) 74,141 14,574 3,219 2,264 1,833 — 96,031
Total contractual obligations(9) $18,773,393 $1,752,570 $614,886 $525,611 $892,370 $5,620,457 $28,179,287
(1) Contains optional commitments to originate.
(2) Estimated based on investment plans of the venture capital funds, low income housing tax credit partnerships and joint ventures.
(3) Includes portion of RAA acquisition purchase price held in escrow at December 31, 2006.
(4) Does not include demand deposit, money market, passbook savings accounts or sweep deposit accounts, as there are no maturities and/or
scheduled contractual payments.
(5) Includes annual interest based on the contractual features of each transaction, using market rates at December 31, 2006. Interest rates are
assumed to remain at current levels over the life of all adjustable rate instruments. For mandatorily redeemable preferred securities
included in other borrowings, does not assume early redemption under current call provisions.
(6) Includes annual interest payments; does not assume early redemption under current call provisions.
(7) Included in the facilities restructuring accrual.
(8) Includes purchase obligations for goods and services covered by non-cancelable contracts and contracts including cancellation fees.
Excluded from the table are purchase obligations expected to be settled in cash within one year of the end of the reporting period.
(9) The tables does not include $6.2 billion of unused lines of credit available to customers under HELOC and $1.2 billion of unused credit
card and commercial lines as of December 31, 2006.
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