eTrade 2008 Annual Report Download - page 111

Exit of Non-Core Operations
Institutional Brokerage Operations
In 2007, the Company announced a plan to simplify and streamline the business by exiting and/or
restructuring certain non-core operations and took steps to restructure the institutional brokerage business to
focus on areas that complement order flow generated by retail customers. In 2008, the Company announced the
decision to exit certain institutional trading operations in the U.S. that do not align with the core retail business.
As a result of these exits, the Company recognized $5.6 million and $9.1 million for facilities consolidation and
asset write-off costs, $3.1 million and $7.0 million in severance costs and $1.5 million and $1.0 million of other
costs related to these exits for the years ended December 31, 2008 and 2007, respectively. All of these charges
have been recorded in the institutional segment.
The Company expects to incur charges in future periods as it periodically evaluates the estimates made in
connection with this activity; however, the Company does not expect these charges to be significant.
Sale of RAA
In 2008, the Company sold substantially all of the assets of RAA to PHH Investments, Ltd for approximately $25
million. The sale of RAA resulted in a pre-tax gain of $2.8 million, which has been recorded in the retail segment.
Other Exit Activities
In 2007, the Company decided to consolidate and relocate certain of its facilities, which continued into
2008. The Company incurred $21.4 million and $7.5 million of charges for the years ended December 31, 2008
and 2007, primarily related to the exit of certain operating leases. These charges have been recorded in both the
institutional and retail segments. Additionally, in 2007 the Company incurred $3.1 million in connection with
reorganizing the management structure of the balance sheet management business, including changing the nature
and focus of its operations, which has been recorded in the institutional segment.
In 2006, the Company decided to relocate certain functions out of the state of California as well as outsource
certain clearing operations and costs related to the relocation of certain accounting functions. The Company
incurred charges of $0.9 million and $29.2 million for the years ended December 31, 2007 and 2006,
respectively, related to costs for exiting those facilities. The total charge for this exit activity was $30.1 million,
all of which has been recorded in the retail segment.
The Company expects to incur charges in future periods as it periodically evaluates the estimates made in
connection with this activity; however, the Company does not expect those costs to be significant.
Facility Consolidation Obligations
The components of the facility consolidation obligations for the Company’s restructuring and other exit
activities at December 31, 2008 and their timing are as follows (dollars in thousands):
Facilities
Obligations
Sublease Income Discounted
Rents and
Sublease NetContracted Estimate
Years ending December 31,
2009 $18,811 $(2,340) $ (501) $(2,956) $13,014
2010 11,539 (1,474) (3,264) (996) 5,805
2011 4,930 (285) (2,990) (426) 1,229
2012 4,572 (176) (3,092) (155) 1,149
2013 1,058 — (852) (13) 193
Thereafter — — — — —
Total future facility consolidation obligations $40,910 $(4,275) $(10,699) $(4,546) $21,390
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