eTrade 2009 Annual Report Download - page 147

All of the Company’s 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.
Debt Exchanges
In the third quarter of 2009, the Company exchanged $1.7 billion aggregate principal amount of its
corporate debt, including $1.3 billion principal amount of the 12
1
⁄ 2 % Notes and $0.4 billion principal amounts of
the 8% Notes for an equal principal amount of newly-issued non-interest-bearing convertible debentures. The
Company recorded a pre-tax non-cash charge of $968.3 million on the early extinguishment of debt related to the
Debt Exchange for the year ended December 31, 2009. For further details regarding the accounting on the
exchange of the corporate debt, see Note 1—Organization, Basis of Presentation and Summary of Significant
Accounting Policies.
In 2008, the Company exchanged $120.8 million in principal of its outstanding senior notes through debt to
equity exchanges. 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, 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 2009, $0.4 billion of the 8% Notes were exchanged for an equal principal amount of the newly-issued
non-interest-bearing convertible debentures. Refer to the Debt Exchanges section above for more details. 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.
7
3
⁄ 8 % Senior Notes due September 2013
In 2005, the Company issued an aggregate principal amount of $600 million in senior notes due
September 2013 (“7
3
⁄ 8 % Notes”). Interest is payable semi-annually and the notes are non-callable for four years
and may then be called by the Company at a premium, which declines over time.
In 2008, the Company exchanged $97.5 million in principal of its 7
3
⁄ 8 % Senior Notes for 21.1 million
shares of common stock. This exchange resulted in the Company recording a $19.7 million pre-tax gain on
extinguishment.
7
7
⁄ 8 % Senior Notes due December 2015
In 2005, the Company issued an aggregate principal amount of $300 million in senior notes due
December 2015 (“7
7
⁄ 8 % Notes”). Interest is payable semi-annually and the notes are non-callable for four years
and may then be called by the Company at a premium, which declines over time.
In 2008, the Company exchanged $5.0 million in principal of its 7
7
⁄ 8 % Senior Notes for 1.1 million shares
of common stock. This exchange resulted in the Company recording a $1.0 million pre-tax gain on
extinguishment.
12
1
⁄ 2 % Springing Lien Notes due November 2017
In 2007 and 2008, the Company issued an aggregate principal amount of $1.8 billion and $150 million of
12
1
⁄ 2 % Notes, respectively. Interest is payable semi-annually and the notes are non-callable for five years and may
then be called by the Company at a premium, which declines over time. The Company has the option to make
interest payments on its 12
1
⁄ 2 % Notes in the form of either cash or additional 12
1
⁄ 2 % Notes through May 2010. In
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