EX-12.1 9 exh12_1.txt EXHIBIT 12.1
EXHIBIT 12.1 THE CHARLES SCHWAB CORPORATION Computation of Ratio of Earnings to Fixed Charges (Dollar amounts in millions, unaudited) ------------------------------------------------------------------------------------------------------------------------------------ Year Ended December 31, 2001 2000 1999 1998 1997 ---- ---- ---- ---- ---- Earnings before taxes on earnings and extraordinary gain $ 135 $1,231 $1,099 $ 678 $ 531 ------------------------------------------------------------------------------------------------------------------------------------ Fixed charges Interest expense: Brokerage client cash balances 696 1,076 701 580 481 Deposits from banking clients 128 155 117 108 100 Long-term debt 55 55 33 30 25 Short-term borrowings 27 20 8 9 16 Stock-lending activities 17 40 32 37 37 Other 5 6 7 10 8 ------------------------------------------------------------------------------------------------------------------------------------ Total 928 1,352 898 774 667 Interest portion of rental expense 93 75 54 41 36 ------------------------------------------------------------------------------------------------------------------------------------ Total fixed charges (A) 1,021 1,427 952 815 703 ------------------------------------------------------------------------------------------------------------------------------------ Earnings before taxes on earnings and extraordinary gain and fixed charges (B) $1,156 $2,658 $2,051 $1,493 $1,234 ==================================================================================================================================== Ratio of earnings to fixed charges (B) divided by (A)(1) 1.1 1.9 2.2 1.8 1.8 ==================================================================================================================================== Ratio of earnings to fixed charges excluding brokerage client interest expense(2) 1.4 4.5 5.4 3.9 3.4 ==================================================================================================================================== (1)The ratio of earnings to fixed charges is calculated in accordance with SEC requirements. For such purposes, "earnings" consist of earnings before taxes on earnings and extraordinary gain and fixed charges. "Fixed charges" consist of interest expense as listed above, including one-third of rental expense, which is estimated to be representative of the interest factor. (2)Because interest expense incurred in connection with payables to brokerage clients is completely offset by interest revenue on related investments and margin loans, the Company considers such interest to be an operating expense. Accordingly, the ratio of earnings to fixed charges excluding brokerage client interest expense reflects the elimination of such interest expense as a fixed charge.