Charles Schwab 2011 Annual Report Download - page 97

THE CHARLES SCHWAB CORPORATION
Notes to Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)
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The Senior Notes outstanding at December 31, 2011 have maturities ranging from 2014 to 2020 and fixed interest rates
ranging from 4.45% to 4.950% with interest payable semi-annually. The Company issued $700 million of these Senior Notes
in 2010 under the prior Shelf Registration Statement. These Senior Notes mature in 2020 and have a fixed interest rate of
4.45%.
The Senior Medium-Term Notes, Series A (Medium-Term Notes) outstanding at December 31, 2011, mature in 2017 and
have a fixed interest rate of 6.375% with interest payable semi-annually. In 2010, $200 million of Medium-Term Notes
matured.
CSC and Schwab Capital Trust I, a statutory trust formed under the laws of the State of Delaware (Trust), previously closed a
public offering of $300 million of the Trust’s fixed to floating-rate trust preferred securities. The proceeds from the sale of the
trust preferred securities were invested by the Trust in fixed to floating rate Junior Subordinated Notes issued by CSC. The
Junior Subordinated Notes, which mature in 2067, have a fixed interest rate of 7.50% until 2017, and a floating rate
thereafter. The Junior Subordinated Notes may be redeemed at a redemption price of principal plus accrued but unpaid
interest on November 15, 2017, on or after November 15, 2037, or following the occurrence of certain events, and at a make-
whole redemption price at any other time. In 2010, the Company terminated the replacement capital covenant related to the
trust preferred securities, upon receiving the requisite consents, in order to have more flexibility to manage its capital
structure. The replacement capital covenant had restricted the Company from redeeming, repaying or purchasing the Junior
Subordinated Notes or the trust preferred securities unless it received proceeds of the issuance of certain replacement capital
securities, among other conditions.
Schwab has a finance lease obligation related to an office building and land under a 20-year lease. The remaining finance
lease obligation of $100 million at December 31, 2011, is being reduced by a portion of the lease payments over the
remaining lease term of 13 years.
Annual maturities on long-term debt outstanding at December 31, 2011, are as follows:
2012 $ 6
2013 6
2014 756
2015 7
2016 7
Thereafter 1,220
Total maturities 2,002
Unamortized discount, net (1)
Total long-term debt $ 2,001
CSC has authorization from its Board of Directors to issue unsecured commercial paper notes (Commercial Paper Notes) not
to exceed $1.5 billion. Management has set a current limit for the commercial paper program of $800 million. The maturities
of the Commercial Paper Notes may vary, but are not to exceed 270 days from the date of issue. The commercial paper is not
redeemable prior to maturity and cannot be voluntarily prepaid. The proceeds of the commercial paper program are to be used
for general corporate purposes. There were no borrowings of Commercial Paper Notes outstanding at December 31, 2011 or
2010.
CSC maintains an $800 million committed, unsecured credit facility with a group of 11 banks, which is scheduled to expire in
June 2012. This facility replaced a similar facility that expired in June 2011. The funds under this facility are available for
general corporate purposes, including repayment of the Commercial Paper Notes discussed above. The financial covenants
under this facility require Schwab to maintain a minimum net capital ratio, as defined, Schwab Bank to be well capitalized, as
defined, and CSC to maintain a minimum level of stockholders’ equity. At December 31, 2011, the minimum level of
stockholders’ equity required under this facility was $5.0 billion (CSC’s stockholders’ equity at December 31, 2011 was
$7.7 billion). There were no borrowings outstanding under this facility at December 31, 2011 or 2010.