eTrade 2008 Annual Report Download - page 135

NOTE 15—CORPORATE DEBT
The Company’s corporate debt by type is shown below (dollars in thousands):
December 31, 2008 Face Value Discount
Fair Value
Adjustment(1) Net
Senior notes:
8% Notes, due 2011 $ 435,515 $ (1,763) $13,855 $ 447,607
7
3
⁄ 8 % Notes, due 2013 414,665 (4,334) 32,435 442,766
7
7
⁄ 8 % Notes, due 2015 243,177 (2,071) 13,183 254,289
Total senior notes 1,093,357 (8,168) 59,473 1,144,662
Springing lien notes 12
1
⁄ 2 %, due 2017 2,057,000 (460,515) 9,385 1,605,870
Total corporate debt $3,150,357 $(468,683) $68,858 $2,750,532
December 31, 2007 Face Value
Premium /
(Discount)
Fair Value
Adjustment(1) Net
Senior notes:
8% Notes, due 2011 $ 453,815 $ 1,884 $15,422 $ 471,121
7
3
⁄ 8 % Notes, due 2013 512,160 (1,555) 31,001 541,606
7
7
⁄ 8 % Notes, due 2015 248,177 — 11,838 260,015
Total senior notes 1,214,152 329 58,261 1,272,742
Springing lien notes 12
1
⁄ 2 %, due 2017 1,786,000 (481,609) — 1,304,391
Mandatory convertible notes 6
1
⁄ 8 %, due
2018 450,000 (4,435) — 445,565
Total corporate debt $3,450,152 $(485,715) $58,261 $3,022,698
(1) The fair value adjustment is related to changes in fair value of the debt while in a fair value hedge relationship in accordance with SFAS
No. 133, as amended.
Senior Notes
All of the Company’s senior notes are unsecured and will rank equal in right of payment with all of the
Company’s existing and future
unsubordinated indebtedness and will rank senior in right of payment to all its existing and future
subordinated indebtedness.
In 2008, the Company began exchanging debt for common stock to extinguish a portion of its outstanding
senior notes. The details of these exchanges are discussed below.
8% Senior Notes Due June 2011
In 2005 and 2004, the Company issued an aggregate principal amount of $100 million and $400 million in
senior notes due June 2011 (“8% Notes”), respectively. Interest is payable semi-annually and notes are
non-callable for four years and may then be called by the Company at a premium, which declines over time.
In 2007, $46.2 million in principal of the 8% Notes were exchanged for an equal amount of the 12
1
⁄ 2 %
Springing Lien notes discussed below. In 2008, the Company exchanged $18.3 million in principal of its 8%
Senior Notes for 4.9 million shares of common stock. This exchange resulted in the Company recording a $0.8
million pre-tax gain on extinguishment.
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