Business Acquisition (Tables)

9 Months Ended

Sep. 30, 2011

Summary of Preliminary Allocation of Purchase Price to Net Assets of optionsXpress

The following table summarizes the preliminary allocation of the purchase price to the net assets of optionsXpress as of September 1, 2011:

Fair value of common stock issued	$	710
Fair value of equity awards assumed		4
Total consideration paid	$	714
Fair value of net assets acquired	$	207
Preliminary goodwill (1)	$	507

⁽¹⁾  Represents a non-cash investing activity.

Condensed Statement of Net Assets Acquired

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the acquisition date. The allocation of the purchase price is preliminary and subject to further adjustment as information relative to closing date fair values and related tax balances are finalized.

	September 1, 2011
Assets
Cash and cash equivalents	$	84
Cash and investments segregated and on deposit for regulatory purposes		1,074
Receivables from brokers, dealers, and clearing organizations		40
Receivables from brokerage clients		185
Other securities owned		32
Intangible assets		285
Other assets		29
Total assets acquired (1)	$	1,729
Liabilities
Payables to brokerage clients	$	1,221
Deferred tax liability		108
Long-term debt (2)		110
Accrued expenses and other liabilities		83
Total liabilities assumed (1)	$	1,522
Net assets acquired	$	207

⁽¹⁾  All assets and liabilities, except for cash and cash equivalents, represent non-cash investing activities.

⁽²⁾  The Company paid off long-term debt acquired from optionsXpress subsequent to the acquisition date in September 2011.

Cost of Amortizable Intangible Assets Related to the Acquisition

The following table summarizes the preliminary estimated fair value and useful lives of the intangible assets.

		0000		0000
September 1, 2011	Estimated Fair Value		Estimated Useful Life (In Years)
Customer relationships	$	200		11
Technology		70		9
Trade name		15		9
Total intangible assets	$	285

Pro Forma Results of Operations

The following table presents pro forma financial information as if optionsXpress had been acquired on January 1, 2010. Pro forma net income for the third quarter and first nine months of 2011 were adjusted to exclude $10 million and $12 million, after tax, respectively, of acquisition related costs incurred by the Company in 2011. Pro forma net income for the first nine months of 2010 was adjusted to include these costs. Additionally, pro forma net income below excludes $15 million, before tax, of acquisition related costs because these costs were incurred by optionsXpress prior to the acquisition date. Pro forma net income also reflects the impact of amortizing purchase accounting adjustments relating to intangible assets, net of tax, of $6 million in both of the third quarters of 2011 and 2010, $17 million in the first nine months of 2011, and $18 million in the first nine months of 2010.

		000000		000000		000000		000000
	Three Months Ended September 30,				Nine Months Ended September 30,
	2011		2010		2011		2010
Net revenues	$	1,222	$	1,116	$	3,744	$	3,297
Net income	$	231	$	129	$	726	$	343
Basic EPS	$	.18	$	.10	$	.57	$	.27
Diluted EPS	$	.18	$	.10	$	.57	$	.27