eTrade 2006 Annual Report Download - page 97

E*TRADE Access
In 2004, the Company completed the sale of substantially all of the assets and liabilities of
E*TRADE Access to Cardtronics, LP and Cardtronics, Inc. Although the Company believes that an ATM
network is an important distribution channel for its customers, it determined that its continued ownership and
direct operation of the ATM network was not essential to providing this customer benefit and that the capital it
had invested in this endeavor could be better applied to other operations.
The sale resulted in a $57.5 million pre-tax gain ($31.4 million, net of tax). As part of the sales agreement,
Cardtronics assumed substantially all of the liabilities of E*TRADE Access. The Company has reflected
E*TRADE Access’ results of operations, financial position and cash flows as discontinued operations in the
consolidated financial statement for all periods presented.
The following table summarizes the results of discontinued operations of the ATM business (dollars in
thousands):
Year Ended
December 31, 2004
Net revenue $20,029
Loss from discontinued operations $ (3,085)
Income tax benefit (1,230)
Loss from discontinued operations, net of tax $ (1,855)
NOTE 4—FACILITY RESTRUCTURING AND OTHER EXIT ACTIVITIES
The Company periodically evaluates and adjusts its estimated costs associated with its restructuring plans
and other exit activities. Restructuring liabilities are included in accounts payable, accrued and other liabilities in
the consolidated balance sheet. The following table summarizes the expense recognized by the Company as
facility restructuring and other exit activities for the periods presented (dollars in thousands):
Year Ended December 31,
2006 2005 2004
2003 Restructuring Plan $ (963) $ 2,002 $ 1,857
2001 Restructuring Plan (367) 1,096 (800)
Exit of Consumer Finance Corporation—servicing business — (35,496) —
Israel exit activities — — 14,500
Other exit activities 29,867 2,381 131
Total facility restructuring and other exit activities $28,537 $(30,017) $15,688
Exit of Consumer Finance Business
On October 31, 2005, the Company’s retail segment completed the sale of the servicing and origination
businesses of Consumer Finance Corporation to GE Capital resulting in a pre-tax gain of $46.1 million. The
pre-tax gain from the servicing business of $35.5 million is reflected in other exit activity as the servicing
business was not deemed to be a discontinued operation. (See Note 3—Discontinued Operations for additional
information).
Israel Exit Activity
The Company terminated the trademark and technology license of an Israeli-based company in 2002 due to
failure to perform obligations and commenced arbitration proceedings. The Israeli company counterclaimed for
wrongful termination. During 2004, an arbitration tribunal in London decided against the Company and as a
result, the Company recognized $14.5 million in exit activities for 2004.
94