eTrade 2009 Annual Report Download - page 30

Company Financial Metrics
• Corporate cash is an indicator of the liquidity at the parent company. It is also a source of cash that can
be deployed in our regulated subsidiaries.
• E*TRADE Bank excess risk-based capital is the excess capital that E*TRADE Bank has compared to
the regulatory minimum to be considered well-capitalized and is an indicator of E*TRADE Bank’s
ability to absorb future loan losses.
• Allowance for loan losses is an estimate of the losses inherent in our loan portfolio as of the balance
sheet date and is typically equal to the expected charge-offs in our loan portfolio over the next twelve
months as well as the estimated charge-offs, including economic concessions to borrowers, over the
estimated remaining life of loans modified in troubled debt restructurings.
• Enterprise interest-earning assets, in conjunction with our enterprise net interest spread, are indicators
of our ability to generate net operating interest income.
Significant Events in 2009
Completion of $1.7 Billion Debt Exchange
• We exchanged $1.7 billion aggregate principal amount of our corporate debt, including $1.3 billion
principal amount of our 12
1
⁄ 2 % Notes and $0.4 billion principal amount of our 8% Notes, for an equal
principal amount of newly-issued non-interest-bearing convertible debentures (“Debt Exchange”);
• As a result of the Debt Exchange, we reduced our annual corporate interest payments by approximately
$200 million and eliminated any substantial debt maturities until 2013; and
• The completion of the Debt Exchange resulted in a pre-tax non-cash charge of $968.3 million ($772.9
million after tax) and an increase of $707.2 million to additional paid-in capital. The net effect of the
exchange to shareholders’ equity was a reduction of $65.7 million. For further details regarding this
charge, see Note 1—Organization, Basis of Presentation and Summary of Significant Accounting
Policies and Note 14—Corporate Debt of Item 8. Financial Statements and Supplementary Data.
Conversions of the Newly-Issued Convertible Debentures into Equity
• The newly-issued non-interest-bearing convertible debentures are convertible into shares of our
common stock at any time at the election of the holder; and
• As of December 31, 2009, $720.9 million principal amount, or 41%, of the convertible debentures had
been converted into 696.6 million shares of our common stock.
Raised $765 Million in Gross Proceeds from Common Stock Offerings
• We raised $65 million in gross proceeds ($63 million in net proceeds) from our equity drawdown
program launched in May 2009 (the “Equity Drawdown Program”) in which a total of 41 million
shares of common stock were issued;
• We raised $550 million in gross proceeds ($523 million in net proceeds) from a public offering of our
common stock that was launched and completed in June 2009 (the “Public Equity Offering”) in which
a total of 500 million shares of common stock were issued; and
• We raised $150 million in gross proceeds ($147 million in net proceeds) from our common stock
offering that was launched and completed in September 2009 (the “At the Market Offering”) in which
a total of 80.2 million shares of common stock were issued.
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