eTrade 2006 Annual Report Download - page 147

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Parent Company Guarantees
Guarantees are contingent commitments issued by the Company for the purpose of guaranteeing the
financial obligations of a subsidiary to a financial institution. The collective obligation of the corporation does
not change by the existence of corporate guarantees. Rather, the guarantees shift ultimate payment responsibility
of an existing financial obligation from a subsidiary to the parent company.
In support of the Company’s brokerage business, the Company has provided guarantees on the settlement of
its subsidiaries’ financial obligations with several financial institutions related to its securities lending activities.
Terms and conditions of the guarantees, although typically undefined in the guarantees themselves, are governed
by the conditions of the underlying obligation that the guarantee covers. Thus, the Company’s obligation to pay
under these guarantees coincides exactly with the terms and conditions of those underlying obligations. At
December 31, 2006, no claims had been filed with the Company for payment under any guarantees. These
guarantees are not collateralized.
In addition to guarantees issued on behalf of subsidiaries participating in securities lending programs, the
Company also issues guarantees for the settlement of foreign exchange transactions. If a subsidiary fails to
deliver currency on the settlement date of a foreign exchange arrangement, the beneficiary financial institution
may seek payment from the Company. Terms are undefined, and are governed by the terms of the underlying
financial obligation. At December 31, 2006, no claims had been made on the Company under these guarantees
and thus, no obligations had been recorded. These guarantees are not collateralized.
NOTE 30—SUBSEQUENT EVENT
On February 13, 2007, the Company’s open offer to purchase an additional 20% of Investsmart’s
outstanding shares closed. During this open offer, approximately 5% of Investmart’s shares were tendered,
increasing our total ownership percentage to 45%.
NOTE 31—QUARTERLY DATA (UNAUDITED)
The information presented below reflects all adjustments, which, in the opinion of management, are of a
normal and recurring nature necessary to present fairly the results of operations for the periods presented (dollars
in thousands, except per share amounts):
2006 2005
1st 2nd 3rd 4th 1st 2nd 3rd 4th
Total net revenue $598,349 $611,358 $581,766 $628,848 $417,397 $387,687 $419,836 $478,925
Net income from continuing
operations $142,984 $156,692 $150,228 $176,910 $102,206 $109,383 $109,138 $125,511
Net income $142,471 $156,484 $153,249 $176,655 $ 91,994 $101,567 $107,491 $129,360
Earnings per share from continuing
operations:
Basic $ 0.34 $ 0.37 $ 0.35 $ 0.42 $ 0.28 $ 0.30 $ 0.30 $ 0.32
Diluted $ 0.33 $ 0.36 $ 0.34 $ 0.40 $ 0.27 $ 0.29 $ 0.29 $ 0.31
Net earnings per share:
Basic $ 0.34 $ 0.37 $ 0.36 $ 0.42 $ 0.25 $ 0.28 $ 0.29 $ 0.33
Diluted $ 0.33 $ 0.36 $ 0.35 $ 0.40 $ 0.24 $ 0.27 $ 0.28 $ 0.32
144