EX-12 8 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) Three Months Ended Six Months Ended June 30, June 30, 2002 2001 2002 2001 --------- --------- --------- --------- Earnings (loss) before taxes on earnings (loss) and extraordinary gain $ 156 $ (26) $ 286 $ 138 Fixed charges Interest expense: Brokerage client cash balances 46 195 98 460 Deposits from banking clients 24 34 46 74 Long-term debt 14 14 27 29 Short-term borrowings 7 5 13 10 Stock-lending activities 1 5 2 14 Other 4 2 ------------------------------------------------------------------------------------------------------------------------------------ Total 92 257 186 589 Interest portion of rental expense 22 23 44 46 ------------------------------------------------------------------------------------------------------------------------------------ Total fixed charges (A) 114 280 230 635 ----------------------------------------------------------------------------------------------------------------------------------- Earnings before taxes on earnings and extraordinary gain and fixed charges (B) $ 270 $ 254 $ 516 $ 773 ==================================================================================================================================== Ratio of earnings to fixed charges (B) / (A) (1) 2.4 .9 (2) 2.2 1.2 ==================================================================================================================================== Ratio of earnings to fixed charges excluding brokerage client interest expense (3) 3.3 .7 3.2 1.8 ==================================================================================================================================== (1) The ratio of earnings to fixed charges is calculated in accordance with SEC requirements. For such purposes, "earnings" consist of earnings (loss) before taxes on earnings (loss) 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) The amount of the deficiency in the ratio of earnings to fixed charges was $26 million for the three months ended June 30, 2001. (3) 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.