eTrade 2008 Annual Report Download - page 129

Depreciation and amortization expense from continuing operations related to property and equipment was
$82.5 million, $83.2 million and $71.2 million for the years ended December 31, 2008, 2007 and 2006,
respectively.
Software includes capitalized internally developed software costs. These costs were $65.5 million,
$64.1 million and $37.3 million for the years ended December 31, 2008, 2007 and 2006, respectively. Completed
projects are carried at cost and are amortized on a straight-line basis over their estimated useful lives, generally
four years. Amortization expense from continuing operations for the capitalized amounts was $33.4 million,
$27.2 million and $24.6 million for the years ended December 31, 2008, 2007 and 2006. Also included in
software at December 31, 2008 is $54.0 million of internally developed software in the process of development
for which amortization has not begun.
NOTE 11—GOODWILL AND OTHER INTANGIBLES, NET
The following table discloses the changes in the carrying value of goodwill that occurred in the retail and
institutional segments for the periods presented (dollars in thousands):
Retail Institutional Total
Balance at December 31, 2006 $1,828,085 $ 244,835 $2,072,920
Impairment of goodwill — (101,208) (101,208)
Equity method investment in Investsmart(1) (38,668) (4,296) (42,964)
Write-off of goodwill related to exit activities — (3,741) (3,741)
Purchase accounting and other adjustments 6,191 2,170 8,361
Balance at December 31, 2007 $1,795,608 $ 137,760 $1,933,368
Additional purchase consideration 17,314 — 17,314
Write-off of goodwill related to exit activities and
discontinued operations (12,357) — (12,357)
Balance at December 31, 2008 $1,800,565 $ 137,760 $1,938,325
(1) The $43.0 million of goodwill related to Investsmart was moved to the Investsmart investment in the other assets line item during 2007.
For the year ended December 31, 2008, the changes in the carrying value of goodwill are the result of the
Company paying additional purchase consideration in connection with prior acquisitions, offset by write-offs of
goodwill related to certain exit activities and discontinued operations (see Note 2—Discontinued Operations and
Note 3—Facility Restructuring and Other Exit Activities for further discussion).
For the year ended December 31, 2007, the changes in the carrying value of goodwill are the result of the
Company recognizing an impairment of goodwill related the Company’s balance sheet management business.
The impairment of goodwill for this business occurred during the fourth quarter of 2007 and was due primarily to
the decline in fair value related to the crisis in the residential real-estate and credit markets. The method used for
determining the fair value of the balance sheet management business was a combination of prices for comparable
businesses and the expected present value of future cash flows of the business. In addition, there was a write-off
of goodwill related to certain exit activities. These decreases were slightly offset by purchase accounting
adjustments related to earn outs and escrow releases on prior acquisitions that were made by the Company.
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