eTrade 2004 Annual Report Download - page 115

Table of Contents
Index to Financial Statements
options without vesting restrictions, which significantly differ from the Company’s stock option awards. These models also require subjective
assumptions, including future stock price volatility and expected time to exercise, which greatly affect the calculated values.
The Company’s calculations are based on a multiple option valuation approach and forfeitures are recognized as they occur. The
valuations of the computed weighted-average fair values of option grants under SFAS No. 123 were $5.95 for 2004, $2.83 for 2003 and $4.69
for 2002.
Supplemental Executive Retirement Plan
The Company’s Board of Directors adopted the Supplemental Executive Retirement Plan (“SERP”)
for certain executive officers in 2001,
which was terminated in April 2003. The Company made cash contributions to the SERP of $15.6 million in 2002. The Company did not make
any contributions in 2003 and recovered approximately $6 million of cash previously contributed to the SERP in October 2003. In 2002, the
Company recognized a benefit of $16.1 million in executive agreement in the consolidated statement of operations related to the return of
vested benefits in the SERP by the Company’s former CEO.
401(k) Plan
The Company has a 401(k) salary deferral program for eligible employees who have met certain service requirements. The Company
matches certain employee contributions; additional contributions to this plan are at the discretion of the Company. Total contribution expense
under this plan was $5.0 million for 2004, $8.7 million for 2003 and $8.1 million for 2002.
NOTE 22—FACILITY RESTRUCTURING AND OTHER EXIT CHARGES
The following table summarizes the amount recognized by the Company as facility restructuring and other exit charges for the periods
presented (in thousands):
2003 Restructuring Plan
Year Ended December 31,
2004 2003 2002
2003 Restructuring Plan
$
1,857
$
112,564
$
—
2001 Restructuring Plan
(800
)
16,367
10,223
Other exit charges
15,100
5,260
5,134
Total restructuring and other exit charges
$
16,157
$
134,191
$
15,357
In April 2003, the Company announced a restructuring plan (“2003 Restructuring Plan”) exiting and consolidating leased facilities and
exiting and disposing of certain unprofitable product offerings and initiatives. The original 2003 facility consolidation charge primarily related
to charges to exit the E*TRADE FINANCIAL Center in New York and consolidation of excess facilities located in Menlo Park and Rancho
Cordova, California. The E*TRADE FINANCIAL Center in New York, encompassing approximately 31,000 square feet, was used by
customers to access the Company’s products and services and serve as an introduction point for new customers to the Company’s products and
services. The Company exited the Center as it was not cost effective to engage in these activities within a facility of its size, and subsequently,
opened an approximately 2,000 square foot Center in New York that was more cost effective. The leased California facilities were used for
corporate and administrative functions and were exited as the Company consolidated employees into nearby offices and moved certain
functions to its offices in Virginia.
The other charges related to the exit of or write-
off of unprofitable product lines and the early termination of certain contracts, such as the
revenue sharing agreements associated with 43 E*TRADE Zones located in Target
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