eTrade 2012 Annual Report Download - page 51

Advertising and Market Development
Advertising and market development expense increased 10% to $145.2 million for the year ended
December 31, 2011 compared to 2010. This fluctuation was due largely to a planned increase in advertising
expenditures in our continuing effort to attract new accounts and customer assets during the year ended
December 31, 2011.
FDIC Insurance Premiums
FDIC insurance premiums increased 36% to $105.4 million for the year ended December 31, 2011
compared to 2010. The increase was due primarily to an industry wide change in the FDIC insurance premium
assessment calculation, effective in the second quarter of 2011.
Professional Services
Professional services increased 10% to $89.7 million for the year ended December 31, 2011 compared to
2010. The increase was due primarily to a $6.0 million credit in connection with a legal settlement in the third
quarter of 2010, which decreased professional services for the year ended December 31, 2010. There were no
similar settlements made during the year ended December 31, 2011.
Communications
Communications expense decreased 8% to $67.3 million for the year ended December 31, 2011 compared
to 2010. The decrease was driven primarily by a decline in vendor services fees compared to 2010.
Other Operating Expenses
Other operating expenses increased 48% to $154.3 million for the year ended December 31, 2011 compared
to 2010. The increase was driven by an estimated liability of $48 million related to an offer to purchase auction
rate securities held by customers of E*TRADE Securities LLC, as well as former customers who purchased
auction rate securities through E*TRADE Securities LLC. This estimated liability related primarily to our
estimate of the securities’ current fair value relative to their par value and included penalties and other estimated
settlement costs. We also entered into a memorandum of understanding to settle the Freudenberg Action, which
resulted in the recording of a net estimated liability of $10.8 million for the year ended December 31, 2011.
Other Income (Expense)
Other income (expense) increased 11% to $175.8 million for the year ended December 31, 2011 compared
to 2010 as shown in the following table (dollars in millions):
Variance
Year Ended December 31, 2011 vs. 2010
2011 2010 Amount %
Corporate interest income $ 0.7 $ 6.2 $ (5.5) (89)%
Corporate interest expense (177.8) (167.1) (10.7) 6%
Gains on sales of investments, net — 2.7 (2.7) *
Gains on early extinguishment of debt 3.1 — 3.1 *
Equity in loss of investments and venture funds (1.8) (0.8) (1.0) *
Total other income (expense) $(175.8) $(159.0) $(16.8) 11%
* Percentage not meaningful.
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