eTrade 2011 Annual Report Download - page 146

7
7
⁄ 8 % Senior Notes due December 2015 (“2015 Notes”)
In 2005, the Company issued an aggregate principal amount of $300 million in 7
7
⁄ 8 % senior notes due
December 2015. 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.
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3
⁄ 4 % Senior Notes due May 2016 (“2016 Notes”)
In May 2011, the Company issued an aggregate principal amount of $435 million in 6
3
⁄ 4 % senior notes due
May 2016. Interest is payable semi-annually and the notes may be called by the Company at a premium, which
declines over time.
The Company used the proceeds from the sale of the 2016 Notes to redeem all of its outstanding 2013 Notes
including paying the associated redemption premium, accrued interest and related fees and expenses.
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1
⁄ 2 % Springing Lien Notes due November 2017 (“2017 Notes”)
In 2007 and 2008, the Company issued an aggregate principal amount of $1.8 billion and $150 million of
2017 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 had the option to make
interest payments on its 2017 Notes in the form of either cash or additional 2017 Notes through May 2010. In
2008, the Company elected to make its May interest payment of $121 million in cash and its November interest
payment of $121 million in the form of additional 2017 Notes. In 2009, the Company elected to make both the
May and November interest payments of $128.5 million and $54.7 million, respectively, in the form of additional
2017 Notes. In 2010, the Company made both the May and November interest payments in cash. In 2009, $1.3
billion of the 2017 Notes were exchanged for an equal principal amount of the newly-issued non-interest-bearing
convertible debentures. Refer to the Debt Exchange section above for more details.
0% Convertible Debentures due August 2019 (“2019 Notes”)
In 2009, the Company issued an aggregate principal amount of $1.7 billion in Class A convertible
debentures and $2.3 million in Class B convertible debentures (collectively “convertible debentures” or “2019
Notes”) of non-interest-bearing notes due August 31, 2019, in exchange for $1.3 billion principal of the 2017
Notes and $0.4 billion principal of the 2011 Notes.
The Class A convertible debentures are convertible into the Company’s common stock at a conversion rate
of $10.34 per $1,000 principal amount of Class A convertible debentures and the Class B convertible debentures
are convertible into the Company’s common stock at a conversion rate of $15.51 per $1,000 principal amount of
Class B convertible debentures. The holders of the convertible debentures may convert all or any portion of the
debentures at any time prior to the close of business on the second scheduled trading day immediately preceding
the maturity date. The indenture for the Company’s convertible debentures requires the Company to secure
equally and ratably the convertible debentures to the extent the 2017 Notes are secured.
In 2011, $660.9 million of the Company’s convertible debentures were converted into 63.9 million shares of
common stock. As of December 31, 2011, a cumulative total of $1.7 billion of the Class A convertible
debentures and $2.2 million of the Class B convertible debentures had been converted into 164.1 million shares
and 0.1 million shares, respectively, of the Company’s common stock.
Ranking, Security and Subsidiary Guarantees
All of the Company’s notes rank equal in right of payment with all of the Company’s existing and future
unsubordinated indebtedness and rank senior in right of payment to all its existing and future subordinated
indebtedness.
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