eTrade 2007 Annual Report Download - page 105

2001 Restructuring Plan
In August 2001, the Company announced a restructuring plan (“2001 Restructuring Plan”) aimed at
streamlining operations primarily by consolidating facilities in the United States and Europe. The restructuring
was designed to consolidate certain facilities, bring together key decision-makers and streamline operations. The
original 2001 restructuring charge related to facility consolidation represents the undiscounted value of ongoing
lease commitments, offset by anticipated third-party sublease revenues, the write-off of capitalized software,
hardware and other fixed assets and other costs. Subsequent to 2001, the Company recognized additional facility
consolidation adjustments, as a result of updated estimates of sublease income and sublease start dates, driven by
economic circumstances. The rollforward of the 2001 Restructuring Plan reserve is presented below (dollars in
thousands):
Facility
Consolidation
Asset
Write-Off Other Total
Total 2001 Restructuring Reserve, originally recorded in 2001 $ 128,469 $ 52,532 $ 21,764 $ 202,765
Activity through December 31, 2005:
Adjustments and additional charges 21,947 1,852 4,272 28,071
Cash payments (101,698) (507) (19,434) (121,639)
Non-cash charges (41,263) (53,877) (5,810) (100,950)
Restructuring liabilities at December 31, 2005 7,455 — 792 8,247
Activity for the year ended December 31, 2006:
Adjustments and additional charges (732) — 365 (367)
Cash payments (2,030) — (1,073) (3,103)
Restructuring liabilities at December 31, 2006 4,693 — 84 4,777
Activity for the year ended December 31, 2007:
Adjustments and additional charges (416) — (84) (500)
Non-cash charges (37) — — (37)
Cash payments (993) — — (993)
Total facility restructuring liabilities at
December 31, 2007 $ 3,247 $ — $ — $ 3,247
Exit of Consumer Finance Business
On October 31, 2005, the Company’s retail segment 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—Discontinued Operations for additional
information).
Other Exit Activities
In the fourth quarter of 2007, the Company decided to consolidate and relocate certain of its facilities. The
Company incurred $9.2 million related to facilities consolidation and relocation primarily related to the operating
leases in Arlington, VA and Tampa, FL. Additionally, the Company incurred $3.1 million in connection with
reorganizing the management structure of the Balance Sheet Management business, including changing the
nature and focus of its operations.
In 2006, the Company decided to relocate certain functions out of the state of California as well as outsource
certain clearing operations and costs related to the relocation of certain accounting functions. The Company
incurred charges of $0.9 million and $29.2 million for the years ended December 31, 2007 and 2006,
respectively, related to costs for exiting those facilities. The total charge for this exit activity was $30.1 million,
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