Charles Schwab 2010 Annual Report Download - page 99

THE CHARLES SCHWAB CORPORATION
Notes to Consolidated Financial Statements
(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)
The Company’s unrecognized tax benefits, which are included in accrued expenses and other liabilities, represent the difference
between positions taken on tax return filings and estimated potential tax settlement outcomes. Resolving these uncertain tax matters
as of December 31, 2010, in the Company’s favor would reduce income tax expense from continuing operations by $7 million, net of
federal tax benefit. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
The Company recognizes interest and penalties related to unrecognized tax benefits in taxes on income. Interest charges for the years
ended December 31, 2010, 2009, and 2008 were not material. The Company’s liability for estimated interest on the unrecognized tax
benefits was not material at December 31, 2010 or 2009.
CSC and its subsidiaries file income tax returns in the federal jurisdiction, as well as most state and applicable local jurisdictions and
are subject to routine examinations by the respective taxing authorities. Federal return audits have been completed through 2006.
December 31, 2010 2009
Balance at be
g
innin
g
of
y
ear $ 1
0
$12
Additions for current
y
ear tax
p
ositions 4
—
Additions for tax
p
ositions of
p
rior
y
ears 3 4
Reductions for tax
p
ositions of
p
rior
y
ears (2) (4)
Reductions due to la
p
se of statute of limitations (3) (2)
Settlements
(1)
—
Balance at end of
y
ear $ 11 $ 1
0
22. Earnings Per Share
Basic EPS is computed by dividing net income available to common stockholders by the weighted-average number of common shares
outstanding during the period. The computation of diluted EPS is similar to the computation of basic EPS, except that the
denominator is increased to include the number of additional common shares that would have been outstanding if dilutive potential
common shares had been issued. Dilutive potential common shares include the effect of outstanding stock options and unvested
restricted stock awards and units. EPS under the basic and diluted computations is as follows:
-80 -
Year Ended December 31, 2010 2009 2008
Net income available to common stockholders $ 454 $ 787 $ 1,212
Wei
g
hted-avera
g
e common shares outstandin
g
—
basic 1,191 1,156 1,148
Common stock e
q
uivalent shares related to stock incentive
p
lans 3 4 9
Wei
g
hted-avera
g
e common shares outstandin
g
—
diluted 1,194 1,16
0
1,157
Basic EPS:
Income from continuin
g
o
p
erations $.38 $.68 $1.07
Loss from discontinued o
p
erations, net of tax $
—
$
—
$(.01)
Net income
$.38 $.68 $1.06
Diluted EPS:
Income from continuin
g
o
p
erations $.38 $.68 $1.06
Loss from discontinued o
p
erations, net of tax $
—
$
—
$(.01)
Net income
$.38 $.68 $1.05
Net income available to participating securities (unvested restricted shares) was not material for the years ended December 31,
2010, 2009, or 2008.
Total antidilutive stock options and restricted stock awards excluded from the calculation of diluted EPS were 52 million,
53 million, and 33 million shares for the
y
ears ended December 31, 2010, 2009, and 2008, res
p
ectivel
y
.
(1)
(2)
(1)
(2)