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.
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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.
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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
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Christopher V. Dodds
Executive Vice President and
Chief Financial Officer
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