eTrade 2000 Annual Report Download - page 96

The Bank is subject to certain restrictions on the amount of dividends it may declare without prior regulatory approval. At September
30, 2000, approximately $137.2 million of the Bank’ s retained earnings was available for dividend declaration.
19. LEASE ARRANGEMENTS
The Company has facilities in Menlo Park, California, Rancho Cordova, California and Alpharetta, Georgia. Through ClearStation,
TIR, and the Bank, the Company also leases facilities in California, New York, Virginia, New Jersey, Australia, Hong Kong, Ireland,
the Philippines and the United Kingdom.
The Company has non-cancelable operating leases for facilities through 2025 and operating leases for equipment through 2013.
Future minimum rental commitments under these leases at September 30, 2000 are as follows (in thousands):
Fiscal years ending September 30:
2001 $ 53,646
2002 49,854
2003 49,220
2004 43,211
2005 32,655
Thereafter 176,184
Future minimum lease payments $ 404,770
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Certain leases contain provisions for renewal options and rent escalations based on increases in certain costs incurred by the lessor.
Rent expense for the years ended September 30, 2000, 1999 and 1998 was $43.6 million, $37.1 million and $22.0 million,
respectively. 20. COMMITMENTS, CONTINGENCIES AND OTHER REGULATORY MATTERS
The Company is a defendant in civil actions arising from the normal course of business. These include six putative class actions
alleging various causes of action for “unfair or deceptive business practices” that were filed against the Company between November
21, 1997, and April 14, 1999, as a result of various systems interruptions the Company previously experienced.
To date, none of these putative class actions has been certified, and the Company believes that the foregoing claims are without merit
and intends to defend against them vigorously. An unfavorable outcome in any of these matters for which the Company’ s pending
insurance claims are rejected could have a material adverse effect on the Company’ s business, financial condition and results of
operations. In addition, even if the ultimate outcomes are resolved in the Company’ s favor, the defense of such litigation could entail
considerable cost and the diversion of efforts of management, either of which could have a material adverse effect on the Company’ s
results of operations.
From time to time, the Company has been threatened with, or named as a defendant in, lawsuits, arbitrations and administrative
claims. Compliance and trading problems that are reported to regulators such as the SEC or the NASDR by dissatisfied customers or
others are investigated by such regulators, and may, if pursued, result in formal arbitration claims being filed against the Company by
customers and/or disciplinary action being taken against the Company by regulators. Any such claims or disciplinary actions that are
decided against the Company could have a material adverse effect on the Company’ s business, financial condition and results of
operations. The Company is also subject to periodic regulatory audits and inspections.
The securities industry is subject to extensive regulation under federal, state and applicable international laws. As a result, the
Company is required to comply with many complex laws and rules and its ability to so comply is dependent in large part upon the
establishment and maintenance of a qualified compliance system.
The Company maintains insurance in such amounts and with such coverage, deductibles and policy limits as management believes are
reasonable and prudent. The principal risks that the Company insures against are comprehensive general liability, commercial property
damage, hardware/software damage, directors and officers, Fidelity (crime) Bond, and errors and omissions liability. The Company
believes that such insurance coverage is adequate for the purpose of its business.
The Company has entered into employment agreements with several of its key executive officers. These employment agreements
provide for annual base salary compensation, stock option acceleration and severance payments in the event of termination of
2002. EDGAR Online, Inc.