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Table of Contents
Index to Financial Statements
related to the exit of eAdvisor activity were approximately $15.3 million of which the Company’s net share was approximately $10.2 million.
The remaining portion of $5.1 million was allocated to the eAdvisor joint venture partner, reflected as minority interest in subsidiaries, net of
tax for 2003. Other charges include termination of consulting agreements, severance, cancellation penalties on services no longer required and
restructuring of the Company’s Hong Kong brokerage operations.
2001 Facility Restructuring Plan
In August 2001, the Company announced a restructuring plan (“2001 Restructuring Plan”) aimed at streamlining operations primarily by
consolidating facilities in the United States and Europe. The 2001 Restructuring Plan resulted in a pre-tax charge of $202.8 million in 2001.
The restructuring was designed to consolidate certain facilities, to bring together key decision-makers and to streamline operations.
The rollforward of the 2001 Restructuring Plan reserve is presented below (in thousands):
Facility Consolidation
Facility
Consolidation
Asset
Write-
Off
Other
Total
Original 2001 Restructuring Reserve:
Facility restructuring and other nonrecurring charges recorded in August
2001
$
131,755
$
49,442
$
15,844
$
197,041
Adjustments and additional charges
(3,286
)
3,090
5,920
5,724
Total 2001 facility restructuring and other nonrecurring charges
recorded in 2001
128,469
52,532
21,764
202,765
Cash payments
(7,534
)
(49
)
(8,846
)
(16,429
)
Non
-
cash charges
(38,570
)
(52,483
)
(5,740
)
(96,793
)
Restructuring liabilities at December 31, 2001
82,365
—
7,178
89,543
2002 activity on original 2001 facility restructuring reserve:
Adjustments and additional charges recorded in 2002
7,345
488
3,552
11,385
Cash payments
(17,894
)
(18
)
(9,627
)
(27,539
)
Non
-
cash charges
(2,693
)
(470
)
(70
)
(3,233
)
Restructuring liabilities at December 31, 2002
69,123
—
1,033
70,156
2003 activity on original 2001 facility restructuring reserve:
Adjustments and additional charges recorded in 2003
14,859
1,584
(53
)
16,390
Cash payments
(67,453
)
—
(
808
)
(68,261
)
Non
-
cash charges
—
(
924
)
—
(
924
)
Restructuring liabilities at December 31, 2003
$
16,529
$
660
$
172
$
17,361
The 2001 original facility restructuring charge included $128.5 million related to facility consolidation, representing the undiscounted
value of ongoing lease commitments offset by anticipated third party sublease revenues. The charge also includes non-cash charges of
leasehold improvements and furniture and fixtures totaling $38.6 million. The charge did not include relocation costs, which were expensed as
incurred.
In 2002 and 2003, the Company recognized additional facility consolidation expenses as a result of updated estimates of sublease income
and sublease start dates, driven by economic circumstances. The overall 2002 net increase also reflects the Company’s final negotiations to
terminate a significant contractual lease obligation, which required a one time $33.0 million payment by the Company in 2003. In exchange,
the Company received full release from its future lease obligations.
89