Charles Schwab 2015 Annual Report Download - page 66

Download and view the complete annual report

Please find page 66 of the 2015 Charles Schwab annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 150

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150

THE CHARLES SCHWAB CORPORATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Tabular Amounts in Millions, Except Ratios, or as Noted)
- 46 -
procedures on a periodic basis. At December 31, 2015, $9.3 billion was available under this facility. There were no funds
drawn under this facility during 2015, except for testing purposes.
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 not to exceed the amount of the
committed, unsecured credit facility, which was $750 million at December 31, 2015. 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. CSC’s ratings for these short-term borrowings are P1 by Moody’s, A1 by Standard & Poor’s, and F1 by
Fitch. There were no borrowings of Commercial Paper Notes outstanding at December 31, 2015 or 2014.
At December 31, 2015 and 2014, CSC had long-term debt of $2.9 billion and $1.9 billion, respectively, which bears interest
at a weighted-average rate of 3.38%. CSC has a universal automatic shelf registration statement (Shelf Registration
Statement) on file with the SEC which enables it to issue debt, equity, and other securities.
On March 10, 2015, CSC issued $625 million aggregate principal amount of Senior Notes that mature in 2018 and
$375 million aggregate principal amount of Senior Notes that mature in 2025. The Senior Notes due 2018 and 2025 have a
fixed interest rate of 1.50% and 3.00%, respectively, with interest payable semi-annually. Additionally, on November 13,
2015, CSC issued $350 million aggregate amount of 3.450% Senior Notes that mature in 2026, with interest payable semi-
annually.
The following are details of CSC’s long-term debt:
Par Standard
December 31, 2015 Outstanding Maturity Interest Rate Moody’s & Poor’s Fitch
Senior Notes $ 2,581 2018 – 2026 1.50% to 4.45% fixed A2 A A
Medium-Term Notes $ 250 2017 6.375% fixed A2 A A
On August 3, 2015, CSC completed an equity offering of 24 million depositary shares, each representing a 1/40th ownership
interest in a share of 6.00% non-cumulative perpetual preferred stock (Series C). The Series C preferred stock has a fixed
dividend rate of 6.00%. The net proceeds from the sale were $581 million.
For further discussion of CSC’s long-term debt and information on the equity offering, see “Item 8 – Financial Statements
and Supplementary Data – Notes to Consolidated Financial Statements – 14. Borrowings and 18. Stockholders’ Equity.”
Off-Balance Sheet Arrangements
The Company enters into various off-balance sheet arrangements in the ordinary course of business, primarily to meet the
needs of its clients. These arrangements include firm commitments to extend credit. Additionally, the Company enters into
guarantees and other similar arrangements in the ordinary course of business. For information on each of these arrangements,
see “Item 8 – Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – 6. Bank Loans
and Related Allowance for Loan Losses, 14. Borrowings, 15. Commitments and Contingencies, and 16. Financial
Instruments Subject to Off-Balance Sheet Credit Risk or Concentration Risk.”