Salomon Swapco Inc
Summary of Accounting Policies
Compensation and employee-related expenses include employee base salaries, bonuses and fringe benefits,
including the cost of medical insurance, life insurance, retirement plans, payroll taxes and recruiting agency fees.
Compensation also includes the cost of Salomon Inc shares allocated to individual employee accounts pursuant to
Swapco's participation in the Salomon Inc Equity Partnership Plan.
Professional services include audit and legal fees as well as ongoing rating agency surveillance fees.
Technology expense includes costs for computer services, office automation, market data services and voice, data
and network communications.
Occupancy expense includes rent, maintenance, utilities, occupancy taxes, property insurance and moving and
other occupancy-related expenses incurred in connection with Swapco's office space at 7 World Trade Center in
New York and at 8800 Hidden River Parkway in Tampa, Florida.
Other expenses include premiums related to insurance which Swapco has obtained on selected derivative
receivables, custodial and bank charges as well as other miscellaneous items.
Swapco is organized as a legally and financially separate, bankruptcy-remote corporation from its Salomon
affiliates. As a result, Swapco's creditors rely on Swapco's credit, not on Salomon's.
SBHC has contributed capital to Swapco for the purpose of enhancing the creditworthiness of Swapco's obligations.
This capital is not available for Salomon's creditors until Swapco's creditors have been paid in full.
Under the terms of its Certificate of Incorporation, Swapco is required to have two independent directors on its
board and one independent officer responsible for important aspects of day-to-day operations. Currently, the
Company has three independent directors and two independent officers.
Swapco's assets are invested separately from those of Salomon and are held by a third-party custodian. Significant
relationships between Swapco and its affiliates are governed by formal agreements which are designed to
compensate each of the parties on terms which approximate those which would prevail in comparable arms-length
Certain Swapco costs are incurred, in the first instance, by other Salomon affiliates on Swapco's behalf. Such
amounts are reimbursed by Swapco on a monthly basis.
Swapco's employees are all seconded employees of Salomon Brothers Inc. As such, those employees participate in
medical and other employee benefit plans of Salomon Brothers Inc. Swapco reimburses Salomon Brothers Inc on a
monthly basis for the full cost of that participation.