-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QKUA8mJo9fp8BZGe8q2dEs9s/8nqoojZVy7LQXoxLveGZcJC/yfS83Ray0fZ5iXK IvYuFW9PjwSjjvIbpuNHKg== 0000316709-04-000030.txt : 20040903 0000316709-04-000030.hdr.sgml : 20040903 20040903142222 ACCESSION NUMBER: 0000316709-04-000030 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040830 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Cost Associated with Exit or Disposal Activities ITEM INFORMATION: Material Impairments ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20040903 DATE AS OF CHANGE: 20040903 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SCHWAB CHARLES CORP CENTRAL INDEX KEY: 0000316709 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] IRS NUMBER: 943025021 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09700 FILM NUMBER: 041016434 BUSINESS ADDRESS: STREET 1: 120 KEARNY STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94104 BUSINESS PHONE: 4156277000 MAIL ADDRESS: STREET 1: 101 MONTGOMERY ST STREET 2: (SF120KNY-9) CITY: SAN FRANCISCO STATE: CA ZIP: 94104 8-K 1 body.txt AUGUST 30, 2004 FORM 8K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 August 30, 2004 Date of Report (Date of earliest event reported) THE CHARLES SCHWAB CORPORATION (Exact name of registrant as specified in its charter) Delaware 1-9700 94-3025021 (State or other jurisdiction (Commission (I.R.S. Employer of incorporation or organization) File Number) Identification Number) 120 Kearny Street, San Francisco, CA 94108 (Address of principal executive offices and zip code) Registrant's telephone number, including area code: (415) 627-7000 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: __ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) __ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) __ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) __ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) THE CHARLES SCHWAB CORPORATION Item 1.01 Entry into a Material Definitive Agreement On August 31, 2004, The Charles Schwab Corporation (the Company) along with CS Capital Markets & Co. and Schwab Associates & Co. entered into a definitive purchase agreement with UBS Securities LLC and UBS Americas Inc. pursuant to which the UBS entities will acquire all of the partnership interests of Schwab Capital Markets L.P. and all of the outstanding capital stock of SoundView Technology Group, Inc., for $265 million in cash, subject to certain conditions including regulatory approval. This $265 million transaction for the sale of the Company's capital markets business includes commitments for the Company and Charles Schwab & Co., Inc. (Schwab) to enter into eight-year services agreements for the handling of Schwab's equity and listed options order flow, to be executed at closing. A copy of the press release announcing the execution of the purchase agreement is attached as Exhibit 99.1 to this Current Report on Form 8-K. Item 2.05 Costs Associated with Exit or Disposal Activities See Item 1.01 - Entry into a Material Definitive Agreement. The Board of Directors of the Company approved the sale of the Company's capital markets business on August 30, 2004. As disclosed in the press release, additional charges associated with exiting the capital markets business are expected to result in total after-tax charges of approximately $75 million to $85 million during the remainder of 2004, of which $45 million to $55 million relate to severance charges with the remainder relating to excess real estate. These total after-tax charges are expected to include non-cash charges of approximately $15 million to $25 million. Item 2.06 Material Impairments See Item 1.01 - Entry into a Material Definitive Agreement and Item 2.05 - Costs Associated with Exit or Disposal Activities. As disclosed in the press release, charges, in addition to those discussed in Item 2.05 - Costs Associated with Exit or Disposal Activities, associated with the sale of the Company's capital markets business are expected to result in a non-cash after-tax charge of approximately $70 million to $80 million in the third quarter of 2004. - 1 - Item 9.01 Financial Statements and Exhibits (c) Exhibits 99.1 Press release dated August 31, 2004 ("Schwab Announces Sale of Schwab Soundview Capital Markets"). This Current Report on Form 8-K contains forward-looking statements that reflect management's current expectations with respect to charges associated with the sale of the Company's capital markets business and for severance and excess real estate associated with this transaction. Achievement of these expectations is subject to risks and uncertainties that could cause actual results to differ materially from the expressed expectations. Important factors that may cause such differences include, but are not limited to, the extent of the workforce reduction associated with exiting the capital markets business and the scope of severance payments, the impact of evolving real estate market conditions on sublease rates for the Company's excess office space, and the final valuation of certain assets and liabilities associated with the transaction. - 2 - SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE CHARLES SCHWAB CORPORATION (Registrant) Date: September 3, 2004 /s/ Christopher V. Dodds ----------------- ---------------------------- Christopher V. Dodds Executive Vice President and Chief Financial Officer - 3 - EX-99 2 exhibit99_1.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 THE CHARLES SCHWAB CORPORATION NEWS RELEASE Contact Media: Investors/Analysts: Greg Gable Rich Fowler Phone: 415-636-5847 Phone: 415-636-9869 SCHWAB ANNOUNCES SALE OF SCHWAB SOUNDVIEW CAPITAL MARKETS SAN FRANCISCO, August 31, 2004 - The Charles Schwab Corporation (NYSE/Nasdaq: SCH) today announced an agreement to sell its capital markets business, Schwab Soundview Capital Markets (SSCM), to UBS for $265 million in cash. Under the agreement, dated as of today, UBS will acquire the Company's proprietary trading technology, SSCM's institutional sales and trading business, over the counter, listed and NASDAQ market making operations and correspondent business. Schwab plans to exit its institutional research operations in the near future. The $265 million transaction includes an eight-year services agreement for the handling of Schwab's equity and listed options order flow, subject to certain conditions including rigorous standards for execution quality. The transaction is expected to close in the next 60 days, subject to regulatory approvals. The transaction will result in a non-cash after-tax charge to earnings of approximately $70-80 million in the third quarter of 2004. Additional charges associated with exiting the business, including charges for severance and excess real estate, are expected to result in after-tax charges of between $75 million and $85 million during the remainder of 2004. "Given the current market environment, I have come to the conclusion there is not enough synergy between SSCM and our core businesses to justify our continued investment in the capital markets arena," said Charles R. Schwab, Schwab Chairman and CEO. "In addition to improving our overall profit margin and return on equity, our exit from capital markets reinforces our strategic focus on individual investors and independent financial advisors. We are moving the company forward on a solid financial foundation that includes a strong balance sheet with over $4.5 billion of stockholder equity." Mr. Schwab concluded, "A primary objective of this transaction is to establish a relationship that assures our clients will receive the same superior trade executions they have come to expect from Schwab, and we are very pleased to partner with UBS to that end." This press release contains forward looking statements that reflect management's current expectations. These statements relate to charges for severance and excess real estate, and the Company's future margin and return on equity performance. Achievement of these expectations is subject to risks and uncertainties that could cause actual results to differ materially from the expressed expectations. Important factors that may cause such differences include, but are not limited to, the extent of the workforce reduction associated with exiting the capital markets business, the impact of evolving real estate market conditions on sublease rates for the Company's excess office space, the final valuation of certain assets and liabilities associated with the transaction, and the Company's ability to achieve the expense savings it expects as a result of the transaction. The Charles Schwab Corporation, through Charles Schwab & Co., Inc. (member SIPC/NYSE), U.S. Trust Corporation, CyberTrader, Inc. and its other operating subsidiaries, is one of the nation's largest financial services firms in terms of client assets. The Charles Schwab, U.S. Trust and CyberTrader Web sites can be reached at http://www.schwab.com/, http://www.ustrust.com/ and http://www.cybertrader.com/, respectively. ### -----END PRIVACY-ENHANCED MESSAGE-----