b9c4078b1461469

UNITED STATES

SECURITIES  AND  EXCHANGE  COMMISSION

Washington, D.C.  20549

 

FORM 11-K

 

 

(Mark One)

 

 

 

ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

 

For the fiscal year ended December 31, 2013

 

 

 

OR

 

 

TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

 

For the transition period from _____ to _____

 

Commission File Number: 1-9700

 

 

 

 

A.

Full title and address of the Plan, if different from that of the issuer named below:

 

 

 

SCHWABPLAN RETIREMENT SAVINGS AND INVESTMENT PLAN
211 Main Street
San Francisco, CA 94105

 

 

B.

Name of issuer of the securities held pursuant to the Plan and the address of its principal executive office:

 

 

 

THE CHARLES SCHWAB CORPORATION
211 Main Street
San Francisco, CA 94105

 

 

REQUIRED INFORMATION

 

The SchwabPlan Retirement Savings and Investment Plan is subject to the Employee Retirement Income Security Act of 1974 (ERISA). Therefore, in lieu of the Requirements of Items 1-3 of Form 11-K, the financial statements and schedules of the Plan for the two fiscal years ended December 31, 2013 and 2012, which have been prepared in accordance with the financial reporting requirements of ERISA.

 

 

 


 

 

 

 

 

 

 

 

 

 

SchwabPlan®

Retirement Savings

and Investment Plan

EIN: 94-3025021

Plan Number: 002

 

Financial Statements as of and for the Years Ended

December 31, 2013 and 2012, Supplemental

Schedules as of December 31, 2013 and Report of

Independent Registered Public Accounting Firm

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

SCHWABPLAN RETIREMENT SAVINGS AND INVESTMENT PLAN

 

 

TABLE OF CONTENTS

 

 

 

 

Page

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

1

 

 

FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED

 

DECEMBER 31, 2013 AND 2012:

 

 

 

Statements of Net Assets Available for Benefits

2

 

 

Statements of Changes in Net Assets Available for Benefits

3

 

 

Notes to Financial Statements

4  11

 

 

SUPPLEMENTAL SCHEDULES

 

 

 

Form 5500, Schedule H, Part IV, Line 4i—Schedule of Assets (Held at End of Year)

 

as of December 31, 2013

12

 

 

Form 5500, Schedule H, Part IV, Line 4j—Schedule of Reportable Transactions for

 

the year ended December 31, 2013

13

 

 

EXHIBIT INDEX

14

 

 

SIGNATURE

15

 

 

NOTE:

All other schedules required by Section 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable.

 

 

 

 


 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

To the Employee Benefits Administrative Committee and Participants of the
SchwabPlan Retirement Savings and Investment Plan:

 

We have audited the accompanying statements of net assets available for benefits of the SchwabPlan Retirement Savings and Investment Plan (the Plan) as of December 31, 2013 and 2012, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, such financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2013 and 2012, and the changes in net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America.

 

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules listed in the Table of Contents are presented for the purpose of additional analysis and are not a required part of the basic financial statements, but are supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These schedules are the responsibility of the Plan’s management. Such schedules have been subjected to the auditing procedures applied in our audit of the basic 2013 financial statements and, in our opinion, are fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole.

 

 

 

 

/s/ Deloitte & Touche LLP

 

San Francisco, California

June 20, 2014

 

 

 


 

 

 

 

SCHWABPLAN RETIREMENT SAVINGS AND INVESTMENT PLAN

 

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

 

 

 

 

 

 

 

 

DECEMBER 31,

2013

 

2012

Assets

 

 

 

 

 

Investments – at fair value:

 

 

 

 

 

Mutual and other funds

$

1,239,217,215 

 

$

1,004,334,464 

Self-directed brokerage accounts

 

526,614,085 

 

 

427,219,052 

Common stock funds of The Charles Schwab Corporation

 

520,095,853 

 

 

329,102,102 

Collective trust funds

 

227,862,137 

 

 

163,342,179 

Money market fund

 

71,149,025 

 

 

50,744,071 

Total investments

 

2,584,938,315 

 

 

1,974,741,868 

Receivables:

 

 

 

 

 

Employer contributions

 

63,897,078 

 

 

58,128,437 

Participant notes receivable

 

45,734,132 

 

 

44,503,085 

Due from broker for investments sold

 

4,998,820 

 

 

6,374,727 

Accrued dividends and interest

 

142,498 

 

 

176,163 

Total receivables

 

114,772,528 

 

 

109,182,412 

Total assets

 

2,699,710,843 

 

 

2,083,924,280 

Liabilities

 

 

 

 

 

Due to broker for investments purchased

 

4,005,093 

 

 

6,313,004 

Net Assets Available for Benefits

$

2,695,705,750 

 

$

2,077,611,276 

 

 

See Notes to Financial Statements.

 

 

 

2


 

 

 

 

SCHWABPLAN RETIREMENT SAVINGS AND INVESTMENT PLAN

 

STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

 

 

 

 

 

 

 

YEARS ENDED DECEMBER 31,

2013

 

2012

Additions to Net Assets Available for Benefits

 

 

 

 

 

Investment income:

 

 

 

 

 

Dividends and interest

$

34,108,993 

 

$

35,521,242 

Net appreciation (depreciation) in fair value of investments:

 

 

 

 

 

Mutual and other funds:

 

 

 

 

 

Large-cap stock funds

 

144,049,527 

 

 

62,300,230 

Small/Mid-cap stock funds

 

65,984,525 

 

 

22,493,288 

International stock funds

 

34,597,054 

 

 

24,181,046 

Bond funds

 

(7,482,942)

 

 

5,428,862 

Total mutual and other funds

 

237,148,164 

 

 

114,403,426 

Self-directed brokerage accounts

 

65,248,998 

 

 

32,647,578 

Common stock funds of The Charles Schwab Corporation

 

 

 

 

 

Schwab 401(k) Equity Unit Fund

 

145,232,199 

 

 

43,623,258 

Schwab ESOP Equity Unit Fund

 

101,881,088 

 

 

31,398,718 

Total common stock funds of The Charles Schwab Corporation

 

247,113,287 

 

 

75,021,976 

Collective trust funds:

 

 

 

 

 

Schwab Managed Retirement Trust Funds

 

36,466,298 

 

 

20,371,933 

Charles Schwab Stable Value Fund

 

 -

 

 

943,041 

Total collective trust funds

 

36,466,298 

 

 

21,314,974 

Total net investment income

 

620,085,740 

 

 

278,909,196 

Contributions:

 

 

 

 

 

Participants’ salary deferral and rollover

 

130,681,467 

 

 

112,225,485 

Net employer contributions

 

63,765,655 

 

 

57,995,391 

Total contributions

 

194,447,122 

 

 

170,220,876 

Interest income on participant notes receivable

 

1,492,864 

 

 

1,470,449 

Total additions to Net Assets Available for Benefits

 

816,025,726 

 

 

450,600,521 

Deductions from Net Assets Available for Benefits

 

 

 

 

 

Distributions to participants

 

(197,931,252)

 

 

(182,657,729)

Net Increase in Net Assets Available for Benefits

 

618,094,474 

 

 

267,942,792 

Net Assets Available For Benefits

 

 

 

 

 

Beginning of year

 

2,077,611,276 

 

 

1,809,668,484 

End of year

$

2,695,705,750 

 

$

2,077,611,276 

 

 

See Notes to Financial Statements.

 

 

3


 

 

 

 

SCHWABPLAN RETIREMENT SAVINGS AND INVESTMENT PLAN

 

NOTES TO FINANCIAL STATEMENTS

 

YEARS ENDED DECEMBER 31, 2013 AND 2012

 

1.PLAN DESCRIPTION

 

The following description of the SchwabPlan Retirement Savings and Investment Plan (the Plan), which describes the terms of the Plan as of December 31, 2013, provides only general information. Participants should refer to the Plan document for a more complete description of the Plan’s provisions.

 

The Plan is a 401(k) salary deferral program (generally defined as an employee stock ownership plan with a cash or deferred arrangement) sponsored by The Charles Schwab Corporation (CSC) and covers all eligible employees of CSC and participating affiliates. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).

 

The Business Trust Division (BTD) serves as trustee of the Plan. BTD is a division of Charles Schwab Bank, a depository institution subsidiary of CSC. A purchasing agent, designated by BTD, acts as the agent of BTD with respect to purchases and sales of CSC common stock funds held by the Plan.

 

401(k) Salary Deferral Program—Eligible employees may participate in the 401(k) salary deferral program on the first day of the fourth calendar month following their dates of hire (or, in the case of eligible employees whose service commences on the first day or business day of a month, the first day of the third calendar month following their commencement of service). Participants may elect to have up to 50 percent of their eligible compensation (generally defined as wages as reported on Form W-2) contributed directly to the Plan, not to exceed the limit on 401(k) deferrals under the Internal Revenue Code (IRC) ($17,500 for 2013 and $17,000 for 2012). Such contributions are not currently taxable to participants and may be matched by CSC’s contribution (Basic Match) equal to 200 percent of the first $250 of salary deferred plus 100 percent of salary deferred thereafter, up to a maximum of five percent of eligible compensation. The Plan also permits eligible participants who will reach age 50 before the end of the Plan year and eligible participants older than age 50 to make catch-up contributions up to 50 percent of their eligible compensation subject to the limit on catch-up contributions under section 414(v) of the IRC ($5,500 for both 2013 and 2012). Catch-up contributions are not eligible for the Basic Match. The Basic Match contribution was provided by CSC in 2013 and 2012.

 

Employees eligible to participate in the 401(k) salary deferral program are eligible to elect and make Roth 401(k) contributions, which are made on an after-tax basis. Combined pre-tax contributions and Roth 401(k) contributions may not exceed the limit on 401(k) deferrals under the IRC. CSC may match Roth 401(k) contributions in the same manner as the pre-tax 401(k) Basic Match. Any of CSC’s Roth 401(k) match contributions are made on a pre-tax basis and will be taxed to the participant upon distribution from the Plan.

 

At the discretion of CSC, an additional contribution (Profit Contribution) based on CSC’s performance may also be made. No Profit Contribution was made by CSC in 2013 or 2012.

 

CSCs Basic Match and Profit Contribution, if any, are made in the first quarter of the subsequent year. A participant must be an eligible employee on the last workday of the year to receive a Basic Match or Profit Contribution for that Plan year. However, if a participant terminates employment during the year due to death, retirement or disability as defined in the Plan, the participant is eligible to receive the Basic Match and the Profit Contribution for that Plan year, if made. The Basic Match allocation will be based on the participant’s salary deferral contribution and eligible compensation while an employee during the Plan year. The Profit Contribution allocation will be based on eligible compensation while an employee during the Plan year.

 

Participant AccountsIndividual accounts are maintained for each Plan participant. Each participant account is credited with the participant’s contribution, the Basic Match, the Profit Contribution, if any, and Plan earnings. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

 

4


 

 

 

 

SCHWABPLAN RETIREMENT SAVINGS AND INVESTMENT PLAN

 

NOTES TO FINANCIAL STATEMENTS

 

YEARS ENDED DECEMBER 31, 2013 AND 2012

 

Investment Options—As of December 31, 2013, participants had 15 core investment options, which included mutual and other funds that cover stocks and bonds, common stock funds of CSC, and a money market fund.

 

Additionally, CSC provided a set of collective trust funds – Schwab Managed Retirement Trust FundsTM. The Schwab Managed Retirement Trust Funds are designed to provide a single investment solution that is adjusted over time to meet participants’ changing risks and return objectives depending on retirement age. The Schwab Managed Retirement Trust Funds are diversified across multiple asset classes, including commodities, large-cap equities, mid-cap equities, small-cap equities, international equities, fixed income, treasury inflation protected securities, real estate investment trusts, stable value funds, and money market funds. CSC also provided the Charles Schwab Stable Value Fund, a collective trust fund that was terminated effective April 30, 2012.

 

CSC also provides a self-directed brokerage account investment alternative called Schwab Personal Choice Retirement Account® (PCRA), which offers participants additional investment choices beyond the collective trust funds and core investment options. Participants are responsible for paying trading fees and commissions in their PCRAs. PCRA investments are regulated by ERISA, and CSC policies. Participants may choose to invest all or part of their Plan balance in a PCRA.

 

Participants may invest their 401(k) contributions or rebalance their accounts in any or all of these options in increments of one percent.

 

Participant Notes Receivable—Participants may borrow a minimum of $1,000 up to a maximum of 50 percent of their 401(k) account balances or $50,000, whichever is less. Loan terms may not exceed 5 years (or 15 years for the purchase of a primary residence). A loan is secured by the balance in the participant’s account and bears interest at a rate equal to the prime rate, at the time the loan application is made, plus one percent. Principal and interest are paid ratably through payroll deductions. Loan payoffs can be made with no prepayment penalties.

 

Vesting—Participants are immediately vested in their 401(k) contributions, rollovers, Basic Match, and investment earnings on these amounts. Participants with at least four years of service are fully vested in the value of any discretionary Profit Contribution. A year of service is defined as a calendar year during which the participant has completed at least 1,000 hours of service.

 

Distributions—A participant is entitled to receive a distribution of the vested portion of his or her account upon termination of employment for any reason, including on account of death, disability, or retirement. Distributions may be made only in the form of a single lump sum, unless the participant is receiving a minimum required distribution as defined in the Plan. Distributions are also available in the event of certain defined events constituting financial hardship and upon meeting specific criteria. Once distributed to the participant, the hardship distribution cannot be deposited back into the participant’s account. The Plan also allows a terminating participant to receive a distribution in-kind to a Charles Schwab & Co., Inc. brokerage account, for certain mutual fund shares instead of cash, and permits a terminating participant to elect to receive, in cash or in-kind, the value of his or her account in the Plan that had been invested in CSC’s common stock through investment in CSC’s unitized stock funds.

 

Forfeitures—Participants forfeit any nonvested portion of any discretionary Profit Contribution upon termination of employment for any reason other than death, disability, or retirement. Retirement is defined as the earlier of age 55 with ten years of service or age 65 (age 50 with seven years of service for participants who were participating in the Plan as of December 31, 2008). The forfeited amount may be restored if the participant is rehired, depending upon the circumstances. Participants must also forfeit any portion of  a Basic Match associated with a salary deferral contribution that is in excess of the IRC 401(k) deferral limit. Forfeitures of any discretionary Profit Contributions or Basic Match arising during the plan year are generally used to reduce the amount of the employer contribution for that year. During 2013 and 2012, forfeiture amounts used to reduce the employer contribution were not material.

 

5


 

 

 

 

SCHWABPLAN RETIREMENT SAVINGS AND INVESTMENT PLAN

 

NOTES TO FINANCIAL STATEMENTS

 

YEARS ENDED DECEMBER 31, 2013 AND 2012

 

Administrative Expenses—The Plan document provides for payment of professional fees and other administrative expenses by the Plan, but permits such expenses to be paid by CSC. During 2013 and 2012, substantially all such fees and expenses were paid by CSC. Certain administrative functions are performed by officers or employees of CSC. No such officer or employee receives compensation from the Plan.

 

Termination of the Plan—CSC has the right under the Plan document to discontinue its contributions at any time or to terminate the Plan, subject to the provisions of ERISA. CSC has not expressed any intent to terminate the Plan. In the event that the Plan is terminated, affected participants’ account balances will become fully vested and distributed immediately.

 

 

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation—The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions that affect the reported amounts in the accompanying financial statements. Actual results may differ from those estimates.

 

Risks and Uncertainties—The investments of the Plan are exposed to various risks, such as interest rate, market, and credit risks. Due to the level of risk associated with certain investments, it is at least reasonably possible that changes in the values of investments will occur in the near term and that such changes could materially affect participants account balances and the amounts reported in the financial statements.

 

Investments—The Plan’s investments are generally stated at fair value. The Plan classifies its investments into three levels: Level 1, which refers to securities valued using quoted prices from active markets for identical assets; Level 2, which refers to securities not traded on an active market but for which observable market inputs are readily available; and Level 3, which refers to securities valued based on significant unobservable inputs.

 

When available, the Plan uses quoted prices in active markets to measure the fair value of assets. When quoted prices do not exist, the Plan uses quoted prices for similar securities and valuations provided by alternative pricing sources supported by observable inputs, such as interest rates, prepayment speeds, credit risk, and illiquidity and/or non-transferability discounts. Investments classified as Level 2 include positions that are not traded in active markets and/or are subject to transfer restrictions. The Plan did not adjust any valuations to reflect entity-specific illiquidity or non-transferability at December 31, 2013 or 2012.

 

CSC’s common stock is valued at the closing price reported on the New York Stock Exchange on the last business day of the Plan year. Shares of mutual and other funds, collective trust funds, and the money market fund are valued at the quoted net asset value of shares held by the Plan or using quoted prices of the underlying investments of these funds at year end. Investments held in a PCRA are valued using quoted market prices at year end, when available. When quoted prices do not exist, investments are valued using quoted prices for similar securities and valuations provided by alternative pricing sources supported by observable inputs.

 

Purchases and sales of securities are recorded on a trade-date basis. Dividends are recorded on the ex-dividend date. Interest income is recorded on the accrual basis. Distributions and benefits are recorded when paid or at the time of in-kind distribution.

 

Management fees and operating expenses charged to the Plan for investments in mutual and other funds and collective trust funds are deducted from income earned by such investments on a daily basis and are not separately disclosed on the statements of changes in net assets available for benefits.

6


 

 

 

 

SCHWABPLAN RETIREMENT SAVINGS AND INVESTMENT PLAN

 

NOTES TO FINANCIAL STATEMENTS

 

YEARS ENDED DECEMBER 31, 2013 AND 2012

 

 

Participant Notes Receivable—Participant notes receivable are measured at their unpaid principal balance plus any accrued but unpaid interest. Delinquent participant loans are recorded as distributions based on the terms of the Plan document and are reported as taxable income to the participant regardless of whether the loan amount was provided from pre-tax or after-tax accounts. Participant loans are considered delinquent upon becoming 90 days past due as to interest or principal.

 

Payment of Benefits—Benefit payments to participants are recorded upon distribution.

 

Administrative Expenses—Certain administrative functions are performed by officers or employees of CSC or its subsidiaries. No such officer or employee receives compensation from the Plan. The day-to-day operation of the Plan involves expenses for basic administrative services, such as plan record keeping, accounting, and legal and trustee services, which are necessary for administering the Plan as a whole. Additional services, such as telephone voice response systems, access to a customer service representative, educational seminars, retirement planning software, investment advice, electronic access to plan information, daily valuation and online transactions, can result in additional administrative expenses. In some instances, the costs of administrative services will be covered by investment fees that are deducted directly from investment returns of the investments in the Plan. Otherwise, if administrative costs are separately charged, they will be borne either by CSC or charged directly against the assets of the Plan. Currently, direct administrative costs of the Plan not covered by investment fees are paid by CSC.

 

 

7


 

 

 

 

SCHWABPLAN RETIREMENT SAVINGS AND INVESTMENT PLAN

 

NOTES TO FINANCIAL STATEMENTS

 

YEARS ENDED DECEMBER 31, 2013 AND 2012

 

3.INVESTMENTS

 

The following presents investments that represent five percent or more of the Plan’s net assets available for benefits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

 

 

2013

 

 

2012

 

 

 

 

 

 

 

 

 

 

 

*

 

Schwab 401(k) Equity Unit Fund —

 

 

 

 

 

 

 

 

 

11,670,979 shares and 13,316,318 shares, respectively

$

305,611,043 

 

 

$

192,898,902 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dodge & Cox Stock Fund —

 

 

 

 

 

 

 

 

 

1,318,978 and 1,349,487 shares, respectively

$

222,735,885 

 

 

$

164,502,524 

 

 

 

 

 

 

 

 

 

 

 

*

 

Schwab ESOP Equity Unit Fund —

 

 

 

 

 

 

 

 

 

8,203,587 shares and 9,417,625 shares, respectively

$

214,484,810 

 

 

$

136,203,200 

 

 

 

 

 

 

 

 

 

 

 

**

 

Schwab S&P 500 Index Fund —

 

 

 

 

 

 

 

 

 

6,282,016 and 6,662,118 shares, respectively

$

181,236,176 

 

 

$

147,832,403 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vanguard Growth Index Instituitional Fund —

 

 

 

 

 

 

 

 

 

3,214,695 and 0 shares, respectively

$

153,887,462 

 

 

$

 -

 

 

 

 

 

 

 

 

 

 

 

 

 

American Funds Europacific Growth Fund of America —

 

 

 

 

 

 

 

 

 

2,427,481 shares and 2,539,973 R6 shares, respectively

$

119,019,370 

(1)

 

$

104,596,101 

 

 

 

 

 

 

 

 

 

 

 

 

 

PIMCO Total Return Fund —

 

 

 

 

 

 

 

 

 

9,914,968 and 10,386,509 Institutional shares, respectively

$

105,991,009 

(1)

 

$

116,744,353 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

This investment represented less than five percent of the Plan’s net assets available for benefits at the respective date.

*

 

A party in interest as defined by ERISA.

**

 

Managed by a party in interest as defined by ERISA.

 

 

4.FAIR VALUE MEASUREMENTS

 

For a description of the fair value hierarchy and the Plan’s fair value methodologies, see note “2. Summary of Significant Accounting Policies.”

 

The Plan did not have any investments utilizing Level 3 inputs as of December 31, 2013 or 2012. Investments are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. There were no transfers in or out of Levels 1, 2, or 3, for the years ended December 31, 2013 or 2012.

 

 

8


 

 

 

 

SCHWABPLAN RETIREMENT SAVINGS AND INVESTMENT PLAN

 

NOTES TO FINANCIAL STATEMENTS

 

YEARS ENDED DECEMBER 31, 2013 AND 2012

 

The following tables present the fair value hierarchy for the Plan’s investments measured at fair value:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quoted Prices

 

 

 

  

 

 

 

 

 

 

in Active Markets

 

Significant

 

Significant

 

 

 

 

for Identical

 

Other Observable

 

Unobservable

 

 

 

 

Assets

 

Inputs

 

Inputs

 

Balance at

December 31, 2013

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

Fair Value

Investments:

 

 

 

 

 

 

  

 

 

 

 

 

Mutual and other funds:

 

 

 

 

 

 

  

 

 

 

 

 

Large-cap stock funds

 

$

557,859,523 

 

$

 -

 

$

 -

 

$

557,859,523 

Small/Mid-cap stock funds

 

 

263,871,128 

 

 

 -

 

 

 -

 

 

263,871,128 

International stock funds

 

 

215,948,668 

 

 

 -

 

 

 -

 

 

215,948,668 

Bond funds

 

 

141,615,239 

 

 

59,922,657 

 

 

 -

 

 

201,537,896 

Total mutual and other funds

 

 

1,179,294,558 

 

 

59,922,657 

 

 

 -

 

 

1,239,217,215 

Self-directed brokerage accounts:

 

 

 

 

 

 

  

 

 

 

 

 

Mutual funds

 

 

188,897,560 

 

 

 -

 

 

 -

 

 

188,897,560 

Common stock

 

 

135,886,628 

 

 

 -

  

 

 -

 

 

135,886,628 

Cash equivalents

 

 

110,535,844 

 

 

1,987,053 

  

 

 -

 

 

112,522,897 

Unit investment trusts

 

 

81,996,392 

 

 

 -

  

 

 -

 

 

81,996,392 

Corporate debt securities

 

 

 -

 

 

3,184,646 

 

 

 -

 

 

3,184,646 

Other assets

 

 

3,627,381 

 

 

498,581 

  

 

 -

 

 

4,125,962 

Total self-directed brokerage accounts

 

 

520,943,805 

 

 

5,670,280 

  

 

 -

 

 

526,614,085 

Common stock funds of The Charles

 

 

 

 

 

 

  

 

 

 

 

 

Schwab Corporation:

 

 

 

 

 

 

  

 

 

 

 

 

Schwab 401(k) Equity Unit Fund

 

 

305,611,043 

 

 

 -

  

 

 -

 

 

305,611,043 

Schwab ESOP Equity Unit Fund

 

 

214,484,810 

 

 

 -

 

 

 -

 

 

214,484,810 

Total common stock funds of The

 

 

 

 

 

 

  

 

 

 

 

 

Charles Schwab Corporation

 

 

520,095,853 

 

 

 -

  

 

 -

 

 

520,095,853 

Collective trust funds:

 

 

 

 

 

 

  

 

 

 

 

 

Schwab Managed Retirement Trust

 

 

 

 

 

 

 

 

 

 

 

 

Funds

 

 

 -

 

 

227,862,137 

  

 

 -

 

 

227,862,137 

Money market fund:

 

 

 

 

 

 

  

 

 

 

 

 

Schwab Value Advantage Money Fund

 

 

71,149,025 

 

 

 -

  

 

 -

 

 

71,149,025 

Total investments at fair value

 

$

2,291,483,241 

 

$

293,455,074 

  

$

 -

 

$

2,584,938,315 

9


 

 

 

 

SCHWABPLAN RETIREMENT SAVINGS AND INVESTMENT PLAN

 

NOTES TO FINANCIAL STATEMENTS

 

YEARS ENDED DECEMBER 31, 2013 AND 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quoted Prices

 

 

 

  

 

 

 

 

 

 

in Active Markets

 

Significant

 

Significant

 

 

 

 

for Identical

 

Other Observable

 

Unobservable

 

 

 

 

Assets

 

Inputs

 

Inputs

 

Balance at

December 31, 2012

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

Fair Value

Investments:

 

 

 

 

 

 

  

 

 

 

 

 

Mutual and other funds:

 

 

 

 

 

 

  

 

 

 

 

 

Large-cap stock funds

 

$

415,610,098 

 

$

 -

 

$

 -

 

$

415,610,098 

Small/Mid-cap stock funds

 

 

68,049,489 

 

 

121,870,415 

 

 

 -

 

 

189,919,904 

International stock funds

 

 

172,371,345 

 

 

 -

 

 

 -

 

 

172,371,345 

Bond funds

 

 

154,790,233 

 

 

71,642,884 

 

 

 -

 

 

226,433,117 

Total mutual and other funds

 

 

810,821,165 

 

 

193,513,299 

 

 

 -

 

 

1,004,334,464 

Self-directed brokerage accounts:

 

 

 

 

 

 

  

 

 

 

 

 

Common stock

 

 

143,956,617 

 

 

440,476 

  

 

 -

 

 

144,397,093 

Mutual funds

 

 

115,271,301 

 

 

28,728 

 

 

 -

 

 

115,300,029 

Cash equivalents

 

 

96,521,550 

 

 

2,026,748 

  

 

 -

 

 

98,548,298 

Unit investment trusts

 

 

62,605,104 

 

 

 -

  

 

 -

 

 

62,605,104 

Corporate debt securities

 

 

 -

 

 

2,333,509 

 

 

 -

 

 

2,333,509 

Other assets

 

 

3,010,834 

 

 

1,024,185 

  

 

 -

 

 

4,035,019 

Total self-directed brokerage accounts

 

 

421,365,406 

 

 

5,853,646 

  

 

 -

 

 

427,219,052 

Common stock funds of The Charles

 

 

 

 

 

 

  

 

 

 

 

 

Schwab Corporation:

 

 

 

 

 

 

  

 

 

 

 

 

Schwab 401(k) Equity Unit Fund

 

 

192,898,902 

 

 

 -

  

 

 -

 

 

192,898,902 

Schwab ESOP Equity Unit Fund

 

 

136,203,200 

 

 

 -

 

 

 -

 

 

136,203,200 

Total common stock funds of The

 

 

 

 

 

 

  

 

 

 

 

 

Charles Schwab Corporation

 

 

329,102,102 

 

 

 -

  

 

 -

 

 

329,102,102 

Collective trust funds:

 

 

 

 

 

 

  

 

 

 

 

 

Schwab Managed Retirement Trust

 

 

 

 

 

 

 

 

 

 

 

 

Funds

 

 

 -

 

 

163,342,179 

  

 

 -

 

 

163,342,179 

Money market fund:

 

 

 

 

 

 

  

 

 

 

 

 

Schwab Value Advantage Money Fund

 

 

50,744,071 

 

 

 -

  

 

 -

 

 

50,744,071 

Total investments at fair value

 

$

1,612,032,744 

 

$

362,709,124 

  

$

 -

 

$

1,974,741,868 

 

Certain of the Plan’s investments at fair value have been estimated using the net asset value per share of the investment. Plan participants had the ability to redeem those investments with the investee at net asset value per share at December 31, 2013 and 2012. There were no unfunded commitments, normal course of business redemption restrictions, or other redemption restrictions on those investments at December 31, 2013 or 2012.

 

 

5.TAX STATUS

 

The Internal Revenue Service (IRS) determined, and informed CSC in a letter dated May 25, 2007, that the Plan and related trust are designed in accordance with applicable sections of the IRC. The Plan and related trust are currently being operated in compliance with those sections. Therefore, no provision for income taxes has been included in the Plan’s financial statements. The Plan applied for a new IRS determination letter on October 31, 2011. As of June 20, 2014, the letter had not been received by the Plan.

 

10


 

 

 

 

SCHWABPLAN RETIREMENT SAVINGS AND INVESTMENT PLAN

 

NOTES TO FINANCIAL STATEMENTS

 

YEARS ENDED DECEMBER 31, 2013 AND 2012

 

GAAP requires management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan’s management has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2013 and 2012, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Plan administrator believes it is no longer subject to income tax examinations for years prior to 2010.

 

 

6.ADMINISTRATION OF PLAN ASSETS

 

The Plan’s assets, including CSC common stock, are held in trust by BTD. The dividend income earned on the CSC common stock held by the Plan was $5,123,178 and $5,687,566 for 2013 and 2012, respectively.

 

CSC contributions are held by BTD, which invests cash received, interest, and dividend income and makes distributions to participants in shares or cash value, as directed by the participants.

 

Subsidiaries of CSC also provide investment management services related to several plan investments.

 

See note “2. Summary of Significant Accounting Policies” for detail relating to administrative expenses of the Plan, including services for which such expenses are incurred.

 

 

7.SUBSEQUENT EVENTS

 

CSC has evaluated the impact of events that have occurred subsequent to December 31, 2013, through the date the Plan’s financial statements were filed with the SEC. Based on this evaluation, other than as recorded or disclosed within these financial statements and related notes, CSC has determined none of these events were required to be recognized or disclosed.

 

 

******

 

11


 

SCHWABPLAN RETIREMENT SAVINGS AND INVESTMENT PLAN

(EIN: 94–3025021; PN 002)

 

FORM 5500, SCHEDULE H, PART IV, LINE 4i—

SCHEDULE OF ASSETS (HELD AT END OF YEAR)

DECEMBER 31, 2013

 

 

 

 

 

 

 

 

 

 

 

(a)

(b)

(c)

 

 

(d)

 

 

(e)

 

 

Shares or

 

 

 

 

 

Current

 

Identity of Issue

Par Value

 

 

Cost (1)

 

 

Value

 

 

 

 

 

 

 

 

 

 

COMMON STOCK FUNDS OF THE CHARLES SCHWAB

 

 

 

 

 

 

 

 

CORPORATION:

 

 

 

 

 

 

 

*

Schwab 401(k) Equity Unit Fund

11,670,979 

 

 

 

 

$

305,611,043 

*

Schwab ESOP Equity Unit Fund

8,203,587 

 

 

 

 

 

214,484,810 

 

 

 

 

 

 

 

 

 

 

Total common stock funds of The Charles Schwab

 

 

 

 

 

 

 

 

Corporation

19,874,566 

 

 

 

 

 

520,095,853 

 

 

 

 

 

 

 

 

 

 

MUTUAL AND OTHER FUNDS:

 

 

 

 

 

 

 

 

Dodge & Cox Stock Fund

1,318,978 

 

 

 

 

 

222,735,885 

**

Schwab S&P 500 Index Fund

6,282,016 

 

 

 

 

 

181,236,176 

 

Vanguard Growth Index Fund

3,214,695 

 

 

 

 

 

153,887,462 

 

American Funds Europacific Growth Fund

 

 

 

 

 

 

 

 

of America – R6 Shares

2,427,481 

 

 

 

 

 

119,019,370 

 

Vanguard Small-Cap Growth Index Fund

3,135,098 

 

 

 

 

 

107,910,076 

 

PIMCO Total Return Fund – Institutional Shares

9,914,968 

 

 

 

 

 

105,991,009 

**

Schwab Small-Cap Index Fund®

2,965,413 

 

 

 

 

 

81,815,758 

 

Vanguard Small-Cap Value Index Fund

3,172,670 

 

 

 

 

 

74,145,294 

 

Short Duration Bond Strategy

5,840,415 

 

 

 

 

 

59,922,657 

**

Schwab International Index Fund®

2,952,383 

 

 

 

 

 

58,693,366 

 

Dodge & Cox International Stock Fund

888,381 

 

 

 

 

 

38,235,932 

 

Vanguard Total Bond Market Index Fund

3,373,507 

 

 

 

 

 

35,624,230 

 

 

 

 

 

 

 

 

 

 

Total mutual and other funds

45,486,005 

 

 

 

 

 

1,239,217,215 

 

 

 

 

 

 

 

 

 

 

SELF-DIRECTED BROKERAGE ACCOUNTS

 

 

 

 

 

 

526,614,085 

 

 

 

 

 

 

 

 

 

 

COLLECTIVE TRUST FUNDS:

 

 

 

 

 

 

 

**

Schwab Managed Retirement Trust 2040 Fund

1,945,692 

 

 

 

 

 

49,868,086 

**

Schwab Managed Retirement Trust 2030 Fund

1,839,919 

 

 

 

 

 

45,501,190 

**

Schwab Managed Retirement Trust 2020 Fund

1,690,044 

 

 

 

 

 

38,533,014 

**

Schwab Managed Retirement Trust 2035 Fund

1,870,723 

 

 

 

 

 

25,516,662 

**

Schwab Managed Retirement Trust 2025 Fund

1,440,776 

 

 

 

 

 

19,234,365 

**

Schwab Managed Retirement Trust 2050 Fund

1,319,022 

 

 

 

 

 

18,149,742 

**

Schwab Managed Retirement Trust 2045 Fund

1,181,141 

 

 

 

 

 

15,579,252 

**

Schwab Managed Retirement Trust Income Fund

413,437 

 

 

 

 

 

6,387,595 

**

Schwab Managed Retirement Trust 2010 Fund

237,914 

 

 

 

 

 

4,848,681 

**

Schwab Managed Retirement Trust 2015 Fund

326,427 

 

 

 

 

 

4,243,550 

 

 

 

 

 

 

 

 

 

 

Total collective trust funds

12,265,095 

 

 

 

 

 

227,862,137 

 

 

 

 

 

 

 

 

 

 

CASH EQUIVALENT:

 

 

 

 

 

 

 

**

Schwab Value Advantage Money Fund®

71,149,025 

 

 

 

 

 

71,149,025 

 

 

 

 

 

 

 

 

 

*

PARTICIPANT NOTES RECEIVABLE:

 

 

 

 

 

 

 

 

5,688 loans with interest rates ranging from

 

 

 

 

 

 

 

 

3.25% to 10.50%, maturing through 2029

 

 

 

 

 

 

45,734,132 

 

 

 

 

 

 

 

 

 

 

TOTAL

 

 

 

 

 

$

2,630,672,447 

 

 

 

 

 

 

 

 

 

(1)

Cost information not required as investments are participant directed.

 

 

 

 

 

 

 

*

A party in interest as defined by ERISA.

 

 

 

 

 

 

 

**

Managed by a party in interest as defined by ERISA.

 

 

 

 

 

 

 

 

12


 

SCHWABPLAN RETIREMENT SAVINGS AND INVESTMENT PLAN

(EIN: 94–3025021; PN 002)

 

FORM 5500, SCHEDULE H, PART IV, LINE 4j—

SCHEDULE OF REPORTABLE TRANSACTIONS

FOR THE YEAR ENDING DECEMBER 31, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

 

(b)

 

 

 

 

 

 

 

 

(c)

 

 

(d)

 

(e)

 

(f)

 

 

(g)

 

 

(h)

 

 

(i)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aggregate Transactions

 

 

 

 

 

 

 

 

value of assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

on

 

 

 

Identity of party

 

 

 

 

 

Number of

 

 

Purchase

 

 

Selling

 

Lease

 

Expense

 

 

Cost of

 

transaction

 

 

Net gain

involved

 

Description of asset

 

 

 

transactions

 

 

price

 

 

price

 

rental

 

incurred

 

 

asset

 

date(s)

 

 

or (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Vanguard Group

 

Vanguard Small-Cap Growth

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Index Fund

 

purchases

 

 

114 

 

 

$

103,578,657 

 

 

N/A

 

-

 

-

 

$

103,578,657 

 

$

103,578,657 

 

 

 -

The Vanguard Group

 

Vanguard Growth Index

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fund

 

 

 

 

 

 

$

120,973,881 

 

 

N/A

 

-

 

-

 

$

120,973,881 

 

$

120,973,881 

 

 

 -

The Vanguard Group

 

Vanguard Growth Index

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fund

 

 

 

 

114 

 

 

$

24,042,157 

 

 

N/A

 

-

 

-

 

$

24,042,157 

 

$

24,042,157 

 

 

 -

The Vanguard Group

 

Vanguard Growth Index

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fund

 

purchases

 

 

115 

 

 

$

145,016,038 

 

 

N/A

 

-

 

-

 

$

145,016,038 

 

$

145,016,038 

 

 

 -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Research

 

American Funds Growth Fund

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and Management Co.

 

of America – R6 Shares

 

 

 

 

 

 

 

N/A

 

$

120,835,395 

 

-

 

-

 

$

83,071,275 

 

$

120,835,395 

 

$

37,764,120 

Capital Research

 

American Funds Growth Fund

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and Management Co.

 

of America – R6 Shares

 

 

 

 

139 

 

 

 

N/A

 

$

14,524,159 

 

-

 

-

 

$

10,706,137 

 

$

14,524,159 

 

$

3,818,022 

Capital Research

 

American Funds Growth Fund

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and Management Co.

 

of America – R6 Shares

 

sales

 

 

140 

 

 

 

N/A

 

$

135,359,554 

 

-

 

-

 

$

93,777,412 

 

$

135,359,554 

 

$

41,582,142