eTrade 1999 Annual Report Download - page 61

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existing Silicon Valley locations. Additionally, the Company has facilities in Rancho Cordova, California and Alpharetta, Georgia.
Through ClearStation and TIR, the Company also has offices in San Francisco, New York, Australia, Hong Kong, Ireland, the
Philippines and the United Kingdom.
61
The Company has non-cancelable operating leases for office facilities through 2009 and operating leases for equipment through 2004.
Future minimum rental commitments under these leases at September 30, 1999, are as follows (in thousands):
Fiscal years ending September 30:
2000............................................................... $
29,200
2001...............................................................
23,236
2002...............................................................
18,259
2003...............................................................
18,025
2004...............................................................
16,729
Thereafter.........................................................
41,194
--------
Future minimum lease payments......................................
$146,643
========
Certain leases contain provisions for renewal options and rent escalations based on increases in certain costs incurred by the lessor.
Rent expense for the years ended September 30, 1999, 1998 and 1997 was $36,205,000, $21,510,000, and $12,217,000, respectively.
The Company has a lease facility that is collateralized by deposited funds equal to the amount of funds drawn on the facility. As of
September 30, 1999, $4.2 million was on deposit and is presented on the balance sheet in other assets. Additionally, the lease
agreement contains various financial covenants. As of September 30, 1999, the Company was in compliance with all such covenants.
14. COMMITMENTS, CONTINGENCIES AND REGULATORY MATTERS
The Company is a defendant in civil actions arising from the normal course of business. These include several putative class action
filings made during the fiscal years ended September 30, 1998 and 1999. The matters alleged by the plaintiffs include:
. False and deceptive advertising and other communications regarding the Company's commission rates and ability to timely execute
and confirm online transactions;
. Damages arising from alleged problems in accessing accounts and placing orders;
. Damages arising from the February 3, 4, and 5, 1999 system interruptions;
. Unfair business practices regarding the extent to which initial public offering shares are made available to the Company's customers.
These proceedings are at early stages, other than one which is at the discovery phase, and the Company is unable to predict their
ultimate outcome, however the Company believes that all of these claims are without merit and intends to defend against them
vigorously. An unfavorable outcome in any matters which are not covered by insurance could have a material adverse effect on the
Company's business, financial condition and results of operations. In addition, even if the ultimate outcomes are resolved in favor of
the Company, the defense of such litigation could entail considerable cost and the diversion of efforts of management, either of which
could have a material adverse effect on the Company's results of operation.
From time to time, the Company has been threatened with, or named as a defendant in, lawsuits and administrative claims. Compliance
2002. EDGAR Online, Inc.