eTrade 2007 Annual Report Download - page 37
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Clearing and Servicing
Clearing and servicing expense increased 13% to $286.1 million for the year ended December 31, 2007
compared to the same period in 2006. This increase is due primarily to higher loan balances during the period,
which resulted in higher servicing costs, and increased trading activity, which resulted in higher clearing
expenses.
Advertising and Market Development
Advertising and market development expense increased 25% to $149.6 million for the year ended
December 31, 2007 compared to the same period in 2006. This planned increase is a result of expanded efforts to
promote our products and services to retail investors.
Impairment of Goodwill
Impairment of goodwill was $101.2 million for the year ended December 31, 2007. This impairment
represents the entire amount of goodwill associated with our balance sheet management business, which had a
significant decline in fair value during the fourth quarter of 2007.
Facility Restructuring and Other Exit Activities
Facility restructuring and other exit activities expense was $33.2 million for the year ended
December 31, 2007. The majority of this expense was incurred during the fourth quarter of 2007 and was driven
primarily by the shut down of the international portion of our institutional brokerage business.
Other
Other expense increased 53% to $207.6 million for the year ended December 31, 2007 compared to the
same period in 2006. The increase for the year ended December 31, 2007 is due primarily to higher expense for
certain legal and regulatory matters and higher FDIC premiums.
Other Income (Expense)
Other income (expense) increased to an expense of $123.1 million for 2007 compared to an expense of
$72.0 million for 2006, as shown in the following table (dollars in thousands):
Year Ended
December 31,
Variance
2007 vs. 2006
2007 2006 Amount %
Other income (expense):
Corporate interest income $ 5,755 $ 8,433 $ (2,678) (32)%
Corporate interest expense (172,482) (152,496) (19,986) 13 %
Gain on sales of investments, net 35,980 70,796 (34,816) (49)%
Loss on early extinguishment of debt (19) (1,179) 1,160 (98)%
Equity in income of investments and venture funds 7,665 2,451 5,214 213 %
Total other income (expense) $(123,101) $ (71,995) $(51,106) 71 %
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