The Charles Schwab Corporation and Subsidiaries - Page 48

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               3.  Useful Lives of Customer Accounts                                  
               Respondent uses a two-pronged approach in his argument that            
          petitioner has not shown the useful lives of the Rose customer              
          accounts.  First, respondent argues that petitioner is limited to           
          using Rose’s historical data to determine the useful lives of the           
          acquired accounts.  If the Court decides that petitioner is                 
          entitled to use its own historical data, respondent argues that             
          petitioner has misapplied its data to Rose’s accounts.                      
               It is not surprising that the use of petitioner’s historical           
          account life data resulted in the parties’ experts reaching                 
          generally similar useful lives for the Rose customer accounts in            
          similar categories.  So, for example, with respect to cash and              
          margin accounts, respondent’s expert concluded that the useful              
          lives were 5 and 4.3 years, respectively, whereas petitioner’s              
          expert concluded that the useful lives for the same categories              
          were 4 and 6 years, respectively.  Likewise, with respect to the            
          vendor and marketing agreements, the parties’ experts both                  
          concluded that the useful lives were 5 and 3 years, respectively.           
               The similarities result from the fact that both parties’               
          experts used petitioner’s account life experience in their                  
          analysis because there was a paucity of information available               
          from Rose regarding the acquired accounts.  The major difference            
          between the experts’ approaches as to useful life is attributable           
          to their categorization of the accounts.  Although both experts             






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Last modified: May 25, 2011