eTrade 2012 Annual Report Download - page 167

NOTE 18—LEASE ARRANGEMENTS
The Company has non-cancelable operating leases for facilities through 2022. Future minimum lease
payments and sublease proceeds under these leases with initial or remaining terms in excess of one year,
including leases involved in facility restructurings, are as follows (dollars in thousands):
Minimum Lease
Payments
Sublease
Proceeds
Net Lease
Commitments
Years ending December 31,
2013 $ 24,287 $(2,805) $ 21,482
2014 24,431 (2,889) 21,542
2015 23,114 (285) 22,829
2016 21,437 — 21,437
2017 19,948 — 19,948
Thereafter 58,449 — 58,449
Total future minimum lease payments $171,666 $(5,979) $165,687
Certain leases contain provisions for renewal options and rent escalations based on increases in certain costs
incurred by the lessor. Rent expense, net of sublease income, was $22.6 million, $19.6 million and $22.6 million
for the years ended December 31, 2012, 2011 and 2010, respectively. Rent expense, which is recorded in the
occupancy and equipment line item in the consolidated statement of income (loss), excludes costs related to
leases involved in facility restructurings, which are recorded in the facility restructuring and other exit activities
line item in the consolidated statement of income (loss).
NOTE 19—COMMITMENTS, CONTINGENCIES AND OTHER REGULATORY MATTERS
Legal Matters
Litigation Matters
On October 27, 2000, Ajaxo, Inc. (“Ajaxo”) filed a complaint in the Superior Court for the State of
California, County of Santa Clara. Ajaxo sought damages and certain non-monetary relief for the Company’s
alleged breach of a non-disclosure agreement with Ajaxo pertaining to certain wireless technology that Ajaxo
offered the Company as well as damages and other relief against the Company for their alleged misappropriation
of Ajaxo’s trade secrets. Following a jury trial, a judgment was entered in 2003 in favor of Ajaxo against the
Company for $1.3 million for breach of the Ajaxo non-disclosure agreement. Although the jury found in favor of
Ajaxo on its claim against the Company for misappropriation of trade secrets, the trial court subsequently denied
Ajaxo’s requests for additional damages and relief. On December 21, 2005, the California Court of Appeal
affirmed the above-described award against the Company for breach of the nondisclosure agreement but
remanded the case to the trial court for the limited purpose of determining what, if any, additional damages
Ajaxo may be entitled to as a result of the jury’s previous finding in favor of Ajaxo on its claim against the
Company for misappropriation of trade secrets. Although the Company paid Ajaxo the full amount due on the
above-described judgment, the case was remanded back to the trial court, and on May 30, 2008, a jury returned a
verdict in favor of the Company denying all claims raised and demands for damages against the Company.
Following the trial court’s filing of entry of judgment in favor of the Company on September 5, 2008, Ajaxo filed
post-trial motions for vacating this entry of judgment and requesting a new trial. By order dated November 4,
2008, the trial court denied these motions. On December 2, 2008, Ajaxo filed a notice of appeal with the Court of
Appeal of the State of California for the Sixth District. Oral argument on the appeal was heard on July 15, 2010.
On August 30, 2010, the Court of Appeal affirmed the trial court’s verdict in part and reversed the verdict in part,
remanding the case. The Company petitioned the Supreme Court of California for review of the Court of Appeal
decision. On December 16, 2010, the California Supreme Court denied the Company’s petition for review and
remanded for further proceedings to the trial court. On September 20, 2011, the trial court granted limited
discovery at a conference on November 4, 2011. The testimonial phase of the third trial in this matter
164