eTrade 2007 Annual Report Download - page 104

for facilities consolidation and asset write-off costs and $0.9 million in severance costs for the year ended
December 31, 2007. The facility consolidation charge primarily related to charges to exit the facilities located in
San Ramon, CA, Englewood, CO and Melville, NY. The total charge for this exit activity was $3.6 million,
majority 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.
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 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.
In 2004, the Company completed its exit of the Enlight Holdings, LLC product offering resulting in
adjustments to estimated costs associated with its exit. In 2007 and 2006, the Company made additional
adjustments to previously estimated costs associated with the consolidation of facilities in California. The
rollforward of the 2003 Restructuring Plan reserve is presented below (dollars in thousands):
Facility
Consolidation Other Total
Total 2003 Restructuring Reserve, originally recorded in 2003 $ 55,010 $ 57,960 $112,970
Activity through December 31, 2005:
Adjustments and additional charges 4,500 (641) 3,859
Cash payments (21,539) (18,949) (40,488)
Non-cash charges (19,254) (38,370) (57,624)
Restructuring liabilities at December 31, 2005 18,717 — 18,717
Activity for the year ended December 31, 2006:
Adjustments and additional charges (963) — (963)
Cash payments (4,832) — (4,832)
Restructuring liabilities at December 31, 2006 12,922 — 12,922
Activity for the year ended December 31, 2007:
Adjustments and additional charges 11 — 11
Non-cash charges 92 — 92
Cash payments (5,287) — (5,287)
Total facility restructuring liabilities at December 31, 2007 $ 7,738 $ — $ 7,738
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