eTrade 2007 Annual Report Download - page 117

NOTE 9—PROPERTY AND EQUIPMENT, NET
Property and equipment, net consists of the following (dollars in thousands):
December 31,
2007 2006
Software $ 464,384 $ 390,091
Equipment and transportation(1) 216,853 197,295
Leasehold improvements 115,199 92,648
Buildings 71,927 72,352
Furniture and fixtures 33,333 31,749
Land 3,853 3,428
Total property and equipment, gross 905,549 787,563
Less accumulated depreciation and amortization (550,116) (469,174)
Total property and equipment, net $ 355,433 $ 318,389
(1) As of December 31, 2007, this includes $47.4 million of aircraft that met the criteria and are being accounted for as being held-for-sale in
accordance with SFAS No. 144. The net book value of the aircraft was $30.9 million and $34.1 million at December 31, 2007 and 2006,
respectively.
Depreciation and amortization expense related to property and equipment was $85.4 million, $73.8 million
and $75.0 million for the years ended December 31, 2007, 2006 and 2005, respectively.
Software includes capitalized internally developed software costs. These costs were $64.1 million,
$37.3 million and $34.7 million for the years ended December 31, 2007, 2006 and 2005, respectively. Completed
projects are carried at cost and are amortized on a straight-line basis over their estimated useful lives, generally
four years. Amortization expense for the capitalized amounts was $28.8 million, $26.1 million and $31.5 million
for the years ended December 31, 2007, 2006 and 2005. Also included in software at December 31, 2007 is
$39.9 million of internally developed software in the process of development for which amortization has not
begun.
NOTE 10—GOODWILL AND OTHER INTANGIBLES, NET
The following table discloses the changes in the carrying value of goodwill for the periods presented
(dollars in thousands):
Balance at December 31, 2005 $2,003,456
Purchase accounting adjustments related to 2005 acquisitions 11,953
Additions from 2006 acquisition of RAA(1) 14,116
Additions from equity method investment in Investsmart(2) 42,964
Other adjustments 431
Balance at December 31, 2006 2,072,920
Impairment of goodwill (101,208)
Reclass of equity method investment in Investsmart(2) (42,964)
Write off of goodwill related to exit activities (3,741)
Purchase accounting and other adjustments 8,361
Balance at December 31, 2007 $1,933,368
(1) Includes purchase accounting adjustments as of December 31, 2006.
(2) The $43.0 million of goodwill related to Investsmart was reclassified to the other assets line item during 2007. See Note 11—Other
Assets for further discussion.
114