Charles Schwab 2013 Annual Report Download - page 39

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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)
- 28 -
Depreciation and amortization expense was relatively flat in 2013 compared to 2012. Depreciation and amortization expense
increased in 2012 from 2011 primarily due to the amortization of intangible assets relating to the optionsXpress acquisition.
Other expense increased in 2013 from 2012 primarily due to an increase in regulatory assessments. Other expense was
relatively flat in 2012 compared to 2011.
Taxes on Income
The Company’s effective income tax rate on income before taxes was 37.2% in 2013, 36.0% in 2012, and 37.9% in 2011.
The increase in 2013 from 2012 was primarily due to the impact of a non-recurring state tax benefit of $20 million in 2012,
partially offset by the recognition of an additional state tax benefit of $4 million in 2013. The decrease in 2012 from 2011
was primarily due to the recognition of the non-recurring state tax benefit discussed above.
Segment Information
The Company provides financial services to individuals and institutional clients through two segments – Investor Services
and Advisor Services. The Investor Services segment provides retail brokerage and banking services to individual investors,
retirement plan services, and corporate brokerage services. The Advisor Services segment provides custodial, trading, and
support services to independent investment advisors, and retirement business services to independent retirement plan advisors
and recordkeepers whose plan assets are held at Schwab Bank. Banking revenues and expenses are allocated to the
Company’s two segments based on which segment services the client. The Company evaluates the performance of its
segments on a pre-tax basis, excluding items such as significant nonrecurring gains, impairment charges on non-financial
assets, discontinued operations, extraordinary items, and significant restructuring and other charges. Segment assets and
liabilities are not used for evaluating segment performance or in deciding how to allocate resources to segments.