eTrade 2001 Annual Report Download - page 52
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•
Determination of the allowance for loan losses;
•
The classification and carrying value of investments;
•
Accounting for financial derivatives;
•
Recognition of deferred tax assets; and
•
The valuation of goodwill.
Accrued restructuring costs
On August 29, 2001, we announced a restructuring plan aimed at streamlining operations and enhancing profitability by consolidating
facilities in the United States and Europe. The restructuring resulted in a pre-tax charge of $202.8 million in fiscal 2001, and is more
fully described under the caption “Facility Restructuring and Other Nonrecurring Charges”. This charge included the write-off of
assets totaling approximately $96.8 million, while the remainder represents cash obligations. As of December 31, 2001, our estimated
future cash obligations were $89.5 million. This includes rental payments due for certain facilities no longer to be used by the
Company totaling $170.4 million, offset by our best estimate of the future sublease income we expect to receive.
In calculating the charge related to our facilities consolidation, certain estimates were made including time to vacate facilities, sublease
terms upon the negotiation of future leases, broker commissions, tenant
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Table of Contents
improvements and operating costs. In developing our estimates, we obtained information from third party leasing agents to calculate
anticipated third party sublease income. In calculating the undiscounted value of ongoing lease commitments for facilities expected to
be vacated or unused, we considered ongoing facility needs and the time required to vacate facilities and execute on our restructuring
plan. Market conditions will affect our ability to sublease facilities on terms consistent with our estimates. Our ability to vacate
premises and sublease facilities ahead of schedule, or the negotiation of lease terms resulting in higher or lower sublease income than
estimated, will affect our accrual and the related restructuring charge. Differences between estimates of related broker commissions,
tenant improvements and operating costs may increase or decrease the accrual upon final negotiation. We recorded a reduction in our
initial facility consolidation charge of $3.3 million in the fourth quarter of 2001 primarily because we were able to utilize a larger
portion of our furniture and fixtures than originally estimated.
Determination of the allowance for loan losses
2002. EDGAR Online, Inc.