8-KOther EventsExhibits & Filings

SCHWAB CHARLES CORP 8-K Report, Corporate Update (Jun 1, 2009)

Filed June 1, 2009For Securities:SCHWSCHW-PDSCHW-PJ

Summary

This 8-K filing from The Charles Schwab Corporation primarily serves to update its Annual Report on Form 10-K for the year ended December 31, 2008, with two key changes. First, the company has realigned its business segments, combining Schwab Institutional and Schwab Corporate and Retirement Services into a single "Institutional Services" unit. This change, effective in the first quarter of 2009, impacts how the company presents its segment information in various sections of its filings, including business descriptions, selected financial data, and management's discussion and analysis. Second, Schwab has adopted new accounting guidance (FSP EITF 03-6-1) regarding the treatment of share-based payments in earnings per share (EPS) calculations. This change requires including unvested share-based awards with dividend rights as participating securities. While this required retrospective adjustments to EPS data for fiscal years 2007 and 2006, it did not alter the previously reported EPS for the year ended December 31, 2008. Importantly, the company emphasizes that these updates do not affect its previously reported overall results of operations, financial position, or cash flows.

Key Highlights

  • 1Schwab has reorganized its business segments, consolidating Schwab Institutional and Schwab Corporate and Retirement Services into a new "Institutional Services" segment.
  • 2The segment realignment took effect in the first quarter of 2009 and affects disclosures in multiple parts of the 10-K filing.
  • 3The company has adopted new accounting guidance (FSP EITF 03-6-1) affecting the calculation of Earnings Per Share (EPS) for share-based payment awards.
  • 4The new EPS guidance requires unvested share-based awards with dividend rights to be treated as participating securities.
  • 5Retrospective adjustments to EPS were made for fiscal years 2007 and 2006 due to the adoption of the new EPS accounting guidance.
  • 6The previously reported EPS for the year ended December 31, 2008, remains unchanged.
  • 7These updates are purely presentational and do not impact Schwab's overall reported financial results, financial position, or cash flows.

Frequently Asked Questions

This 8-K filing is being made to update Schwab's Annual Report on Form 10-K for the year ended December 31, 2008. The updates are primarily for two reasons: to reflect a change in the company's business segment reporting structure and to adopt new accounting guidance for calculating earnings per share (EPS) related to share-based payments.

Schwab has combined its former Schwab Institutional and Schwab Corporate and Retirement Services segments into a single, new segment named "Institutional Services." This change was implemented in the first quarter of 2009 and impacts how the company reports and discusses its business operations.

The adoption of FSP EITF 03-6-1 requires that unvested share-based payment awards that have non-forfeitable rights to dividends or dividend equivalents be treated as 'participating securities.' This impacts the EPS calculation under the two-class method. Retrospective adjustments were made to prior-period EPS data for 2007 and 2006, but the EPS for 2008 was not changed by this guidance.

No, Schwab explicitly states that these updates are for presentation and disclosure purposes only. They do not alter the company's previously reported results of operations, financial position, or cash flows for any period.