eTrade 2005 Annual Report Download - page 131

Table of Contents
Exit of Consumer Finance Business
On October31, 2005, the Company completed the sale of the servicing and origination businesses of Consumer Finance Corporation to
GE Capital resulting in a pre-tax gain of $46.1 million. The pre-tax gain from the servicing business of $35.5 million is reflected in other
exit activity as the servicing business was not deemed to be a discontinued operation. (See Note 3 for additional information.)
Israel Exit Activity
The Company terminated the trademark and technology license of an Israeli-based company in 2002 due to failure to perform
obligations and commenced arbitration proceedings. The Israeli company counterclaimed for wrongful termination. An arbitration
tribunal in London decided against the Company and as a result, the Company recognized $14.5 million and $1.4 million in exit activities
for 2004 and 2003.
2003 Restructuring Plan
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 served as an introduction point for new customers to the
Company’s products and services. The Company exited this 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 new 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 stores. These unprofitable product lines
consisted of our Stock Basket product offered to customers and our online advisory service, eAdvisor, a joint initiative with Enlight
Holdings, LLC. The Company terminated its revenue sharing agreements associated with its Zones in Target stores to focus on other
methods of reaching its current and potential customers.
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2006. EDGAR Online, Inc.