eTrade 2008 Annual Report Download - page 28

with the issuance of 25 million shares of our common stock at $18 per share. Additionally, we exchanged $120.8
million in principal of our senior notes through debt for equity exchanges.
Completion of Citadel Investment
In January 2008, the Company issued an additional $150.0 million of springing lien notes in accordance
with the terms of the agreement with Citadel. This was the final note issuance under the agreement with Citadel
and brought the total springing lien notes outstanding to $1.9 billion in principal(1). In connection with this
issuance, the Company received $150.0 million in cash. Additionally, the Company issued to Citadel the
remaining 46.7 million shares of common stock that had been required to be issued under the agreement.
Enhancements to our Retail Investor Focused Products and Services
• We introduced E*TRADE Mobile Pro, which offers wireless customers access to their E*TRADE
accounts. Mobile Pro offers BlackBerry®smartphone users real-time streaming stock and options
quotes, the ability to trade equities and options and brokerage and bank account cash transfers, among
other features.
• We began offering expanded tools and services, including improved charting capabilities and
redesigned our “Global Markets,” “US Markets,” and “Market News” pages. We also began offering
customization, expanded our mutual fund center with research capabilities and improved charting and
analytics for Power E*TRADE Pro.
• We launched Retirement QuickPlan, which provides a quick assessment of an individual’s or family’s
retirement savings and investing plan as well as guidelines to get on track with personal retirement
goals.
Ranked #1 Online Broker by SmartMoney Magazine
For the second year in a row, SmartmoneyTM ranked the Company as the #1 Online Discount Broker. The
Company earned five out of five stars in the Research, Trading Tools, Banking Service and Mutual Funds and
Investment Products categories.
Significant Events in 2007
Citadel Investment of $2.5 Billion Including Sale of Asset-Backed Securities Portfolio
The operating environment during 2007, particularly during the second half of the year, was extremely
challenging as our exposure to the crisis in the residential real estate and credit markets adversely impacted our
financial performance and led to a disruption in our customer base. As a result, we believe it was necessary to
obtain a significant infusion of cash, which would in turn stabilize our balance sheet and our customer base.
On November 29, 2007, we entered into an agreement to receive a $2.5 billion cash infusion from Citadel.
In consideration for the cash infusion, Citadel received three primary items: substantially all of our asset-backed
securities portfolio, 84.7 million shares of common stock(2) in the Company and approximately $1.8 billion in
12
1
⁄ 2 % springing lien notes(3). We believe this transaction provided timely stability for our business and helped
alleviate customer concerns.
(1) The $1.9 billion in principal does not include the $121.0 million of capitalized interest in November 2008, which resulted in $2.1 billion
in principal of springing lien notes outstanding to Citadel as of December 31, 2008.
(2) The 84.7 million shares of common stock were issued in increments: 14.8 million upon initial closing in November 2007; 23.2 million
upon Hart-Scott-Rodino Antitrust Improvements Act approval in December 2007; and 46.7 million shares are expected to be issued in
the first quarter of 2008 as the Company has received all necessary regulatory approvals.
(3) Included in the $1.8 billion issuance is $186 million of 12 1
⁄ 2 % springing lien notes in exchange for $186 million of the Company’s
senior notes that were owned by Citadel. The $1.8 billion in 12
1
⁄ 2 % springing lien notes includes $100 million in notes issued to
BlackRock in connection with the transaction. The $1.8 billion in 12
1
⁄ 2 % springing lien notes represents the amount outstanding as of
December 31, 2007 and does not include the additional $150 million of springing lien notes issued in January 2008 in accordance with
the terms of the agreement with Citadel.
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