optionsXpress Holdings, Inc.

The Company has recorded goodwill for purchase business combinations to the extent the purchase price of each completed acquisition exceeded the fair value of the net identifiable tangible and intangible assets of the acquired company. The following table summarizes changes in the carrying amount of goodwill:

The Company reviews other intangible assets for impairment on an annual basis and whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of the Company’s finite-lived intangible assets is evaluated by comparing the current and forecasted cash flows associated with the assets to the assets’ carrying values. The fair value of the Company’s customer relationships’ intangible assets were $3,569 at December 31, 2010 and $2,517 at June 30, 2011. For the six months ended June 30, 2011, the Company determined that one of its customer relationships’ intangible assets was deemed to be non-recoverable. The Company used the market approach to determine the fair value of this intangible asset and, as a result, recorded $337 of impairment charges in other general and administrative expenses. For the six months ended June 30, 2010, no impairment was recorded against the Company’s customer relationships intangible assets.

As previously disclosed in the Company’s Quarterly Report on Form 10Q filed with the SEC on May 10, 2011, a number of purported class action lawsuits were filed by optionsXpress stockholders challenging Schwab’s proposed acquisition of optionsXpress. These suits name as defendants optionsXpress, members of optionsXpress’ board of directors (whom we refer to as the individual defendants), Schwab and Neon Acquisition Corp. (collectively referred to as defendants).

Three lawsuits were filed in the Court of Chancery of the State of Delaware. By order dated April 25, 2011, the Delaware lawsuits were consolidated under the caption In re optionsXpress Holdings, Inc. Shareholder Litigation, Consolidated C.A. No. 6314-VCL (which we refer to as the Consolidated Delaware Action). The Delaware plaintiffs filed a consolidated amended complaint on April 25, 2011. On April 28, 2011, the Delaware court stayed the Consolidated Delaware Action in favor of the Consolidated Illinois Action.

The complaints generally allege that (i) the individual defendants breached fiduciary duties owed to optionsXpress’ stockholders by allegedly approving the merger agreement at an unfair price and through an unfair process and by agreeing to certain deal protection devices; and (ii) the transaction unfairly benefits certain members of optionsXpress’ board of directors, including the chief executive officer, to the disadvantage of other optionsXpress stockholders. The complaints also allege that Schwab and Neon Acquisition Corp. aided and abetted the alleged fiduciary breaches by the individual defendants. The complaints seek, among other relief, to enjoin the transaction, rescission in the event the transaction is consummated, an order directing defendants to account to plaintiff and other members of the putative class for all damages caused by their breaches, and an award of costs and disbursements, including reasonable attorneys’ and expert fees.

On July 29, 2011, the parties entered into a settlement agreement to resolve all claims related to the Schwab Merger. Per the terms of the Memorandum of Understanding entered into by the parties on June 22, 2011, the parties agreed that, in exchange for full releases of all claims related to the Schwab Merger, defendants would provide supplemental disclosures to the amended Registration Statement on Form S-4, which was filed by Schwab with the SEC on July 22, 2011. Defendants have also agreed not to oppose any fee application by plaintiffs’ counsel that does not exceed $0.7 million. The settlement is subject to final documentation and court approval and is conditioned on consummation of the Schwab Merger. Defendants deny any wrongdoing in connection with the Schwab Merger and believe the claims lack merit. In the event the settlement is not finalized, the remaining defendants will continue to defend the claims vigorously.