EX-12 4 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 Nine Months Ended September 30, September 30, 2003 2002 2003 2002 ------ ------ ------ ------ Earnings (loss) from continuing operations before taxes on earnings and extraordinary gain $ 197 $ (1) $ 476 $ 296 Fixed charges Interest expense: Brokerage client cash balances 14 41 62 134 Deposits from banking clients 23 24 69 69 Long-term debt 8 10 27 37 Short-term borrowings 4 6 11 19 Other 6 2 14 5 ------------------------------------------------------------------------------------------------------------------------------------ Total 55 83 183 264 Interest portion of rental expense 22 20 66 63 ------------------------------------------------------------------------------------------------------------------------------------ Total fixed charges (A) 77 103 249 327 ------------------------------------------------------------------------------------------------------------------------------------ Earnings from continuing operations before taxes on earnings, extraordinary gain and fixed charges (B) $ 274 $ 102 $ 725 $ 623 ==================================================================================================================================== Ratio of earnings to fixed charges (B) / (A) (1) 3.6 1.0 (2) 2.9 1.9 ------------------------------------------------------------------------------------------------------------------------------------ Ratio of earnings to fixed charges excluding brokerage client interest expense (3) 4.1 1.0 3.5 2.5 ------------------------------------------------------------------------------------------------------------------------------------ (1) The ratio of earnings to fixed charges is calculated in accordance with SEC requirements. For such purposes, "earnings" consist of earnings (loss) from continuing operations before taxes on earnings (loss), 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 $1 million for the three months ended September 30, 2002. (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.