eTrade 2009 Annual Report Download - page 155

Preferred Stock
The Company has 1.0 million shares authorized in preferred stock. None were issued and outstanding at
December 31, 2009 and 2008.
Common Stock Offerings
In September 2009, the Company initiated and completed an At the Market Program to offer and sell up to
$150 million of common stock, in which the Company issued 80.2 million shares of common stock resulting in
net proceeds of $147 million.
In June 2009, the Company issued 500 million shares of common stock, par value $0.01 in a Public Equity
Offering. The Public Equity Offering resulted in net proceeds, after commissions, of $523 million. Citadel, the
Company’s largest stock and debt holder, purchased approximately 90.9 million shares of the Company’s
common stock in the Public Equity Offering.
In May 2009, the Company initiated an Equity Drawdown Program to offer and sell up to $150 million of
common stock from time to time, in which the Company issued 40.7 million shares of common stock resulting in
net proceeds of $63 million. The Equity Drawdown Program was suspended in June 2009.
In 2008, the Company exchanged a total of $120.8 million in principal of outstanding senior notes for
27.1 million shares of common stock. Also in 2008, the Company retired the entire $450 million principal
amount of the 6
1
⁄ 8 % Mandatory Convertible Notes due November 2018 by issuing 25.0 million shares of
common stock at $18 per share (the mandatory conversion price).
In 2008 and 2007, the Company issued $339.0 million or 84.7 million shares of common stock in
conjunction with the Citadel Investment. The 84.7 million shares of common stock were issued in three
increments: 14.8 million upon initial closing in November 2007; 23.2 million shares upon Hart-Scott-Rodino
Antitrust Improvements Act approval in December 2007 and 46.7 million shares upon all required regulatory
approvals in May 2008.
Debt Exchange Impact on Shareholders’ Equity
The completion of the Debt Exchange in 2009 resulted in a pre-tax non-cash charge of $968.3 million 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. The increase of $707.2 million in additional paid-in capital was attributable to
the amortization of the entire premium on the newly-issued convertible debentures, which was immediately
amortized to additional paid-in capital since amortizing the premium into interest expense over the life of the
non-interest-bearing convertible debentures would have resulted in recording interest income on a liability (a
negative yield)(1).
Conversions of Convertible Debentures
During the year ended December 31, 2009, $720.9 million of the Company’s convertible debentures were
converted into 696.6 million shares of common stock. For further details on the convertible debentures, see
Note 14—Corporate Debt.
(1) See Note 1—Organization, Basis of Presentation and Summary of Significant Accounting Policies for a description of the accounting of
the Debt Exchange.
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