eTrade 2009 Annual Report Download - page 174

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 financial obligations of the Company and the relevant
subsidiary do not change by the existence of a corporate guarantee. Rather, upon the occurrence of certain events, the
guarantee shifts ultimate payment responsibility of an existing financial obligation from the relevant subsidiary to the
guaranteeing 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, 2009, no
claims had been filed with the Company for payment under any of these guarantees. None of these guarantees are
collateralized.
In addition to guarantees issued on behalf its 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, 2009, no claims had been made against the Company for payment under these guarantees
and thus, no obligations have been recorded. None of these guarantees are collateralized.
NOTE 25—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 quarterly periods presented (dollars in
thousands, except per share amounts):
2009 2008
1st 2nd 3rd 4th 1st 2nd 3rd 4th
Total net revenue $ 497,343 $ 620,906 $ 575,327 $523,440 $529,094 $ 532,337 $ 377,732 $ 486,433
Loss from continuing
operations $(232,685) $(143,237) $(854,691) $ (67,149) $ (92,927) $(119,443) $(320,789) $(276,225)
Net loss $(232,685) $(143,237) $(854,691) $ (67,149) $ (91,193) $ (94,559) $ (50,475) $(275,563)
Loss per share from
continuing
operations:
Basic $ (0.41) $ (0.22) $ (0.67) $ (0.04) $ (0.20) $ (0.24) $ (0.60) $ (0.50)
Diluted $ (0.41) $ (0.22) $ (0.67) $ (0.04) $ (0.20) $ (0.24) $ (0.60) $ (0.50)
Net loss per share:
Basic $ (0.41) $ (0.22) $ (0.67) $ (0.04) $ (0.20) $ (0.19) $ (0.09) $ (0.50)
Diluted $ (0.41) $ (0.22) $ (0.67) $ (0.04) $ (0.20) $ (0.19) $ (0.09) $ (0.50)
Subsequent to the issuance of the Company’s interim financial statements as of and for the periods ended
September 30, 2009 and during the preparation of the consolidated financial statements for the year ended
December 31, 2009, management determined that the previously reported income tax benefit for the three months
ended September 30, 2009 was overstated as a result of preparation and effective tax rate errors. The net effect of
correcting these errors was to reduce the Company’s income tax benefit in the third quarter by $23 million (from the
previously reported $319 million to a corrected $296 million). This correction increased the Company’s net loss by $23
million (from the previously reported $832 million to a corrected $855 million) and increased the diluted net loss per
share by $0.01 (from the previously reported $0.66 to a corrected $0.67) for the three months ended September 30,
2009. The Company has corrected the unaudited quarterly data in the table above for the three months ended
September 30, 2009 for the overstatement of the estimated income tax benefit. Based on an evaluation of all relevant
factors, management concluded the overstatement of income tax benefit was immaterial to the Company’s results for
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