EX-12 6 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, 2004 2003 2004 2003 -------- -------- -------- -------- Earnings from continuing operations before taxes on earnings $ 72 $ 196 $ 485 $ 484 Fixed charges Interest expense: Deposits from banking clients 24 23 74 69 Brokerage client cash balances 29 14 59 62 Long-term debt 8 8 24 27 Short-term borrowings 6 4 11 10 Other 5 5 9 14 ------------------------------------------------------------------------------------------------------------------------------------ Total 72 54 177 182 Interest portion of rental expense 20 22 62 65 ------------------------------------------------------------------------------------------------------------------------------------ Total fixed charges (A) 92 76 239 247 ------------------------------------------------------------------------------------------------------------------------------------ Earnings from continuing operations before taxes on earnings and fixed charges (B) $ 164 $ 272 $ 724 $ 731 ==================================================================================================================================== Ratio of earnings to fixed charges (B) / (A) (1) 1.8 3.6 3.0 3.0 ------------------------------------------------------------------------------------------------------------------------------------ Ratio of earnings to fixed charges excluding brokerage client interest expense (2) 2.1 4.2 3.7 3.6 ------------------------------------------------------------------------------------------------------------------------------------ (1) The ratio of earnings to fixed charges is calculated in accordance with SEC requirements. For such purposes, "earnings" consist of earnings from continuing operations before taxes on earnings 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.