Charles Schwab 2011 Annual Report Download - page 98

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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To manage short-term liquidity, Schwab maintains uncommitted, unsecured bank credit lines with a group of six banks
totaling $875 million at December 31, 2011. CSC has direct access to $750 million of these credit lines. There were no
borrowings outstanding under these lines at December 31, 2011 or 2010.
To partially satisfy the margin requirement of client option transactions with the Options Clearing Corporation (OCC),
Schwab has unsecured standby LOCs with eight banks in favor of the OCC aggregating $350 million at December 31, 2011.
In connection with its securities lending activities, Schwab is required to provide collateral to certain brokerage clients.
Schwab satisfies the collateral requirements by arranging LOCs, in favor of these brokerage clients, which are issued by
multiple banks. At December 31, 2011, the aggregate face amount of these LOCs totaled $78 million. There were no funds
drawn under any of these LOCs at December 31, 2011 or 2010.
15. Commitments and Contingencies
Operating leases and other commitments: The Company has non-cancelable operating leases for office space and equipment.
Future annual minimum rental commitments under these leases, net of contractual subleases, at December 31, 2011, are as
follows:
Operating
Leases Subleases Net
2012 $ 116 $ 30 $ 86
2013 96 26 70
2014 83 24 59
2015 72 24 48
2016 64 24 40
Thereafter 139 18 121
Total $ 570 $ 146 $ 424
Certain leases contain provisions for renewal options, purchase options, and rent escalations based on increases in certain
costs incurred by the lessor. Rent expense was $187 million, $168 million, and $213 million in 2011, 2010, and 2009,
respectively. Rent expense in 2009 included charges of $37 million relating to the Company’s cost reduction measures.
Purchase obligations: The Company has purchase obligations for services such as advertising and marketing,
telecommunications, professional services, and hardware- and software-related agreements. At December 31, 2011, the
Company has purchase obligations as follows:
2012 $ 118
2013 48
2014 33
2015 27
2016 6
Thereafter 1
Total $ 233
Guarantees and indemnifications: In the normal course of business, the Company provides certain indemnifications (i.e.,
protection against damage or loss) to counterparties in connection with the disposition of certain of its assets. Such
indemnifications are generally standard contractual terms with various expiration dates and typically relate to title to the assets
transferred, ownership of intellectual property rights (e.g., patents), accuracy of financial statements, compliance with laws
and regulations, failure to pay, satisfy or discharge any liability, or to defend claims, as well as errors, omissions, and
misrepresentations. The maximum potential future liability under these indemnifications cannot be estimated. The Company
has not recorded a liability for these indemnifications and believes that the occurrence of events that would trigger payments
under these agreements is remote.