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,
2003 2002 2003 2002
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Earnings from continuing operations before taxes on earnings
and extraordinary gain $ 182 $ 161 $ 279 $ 297
Fixed charges
Interest expense:
Brokerage client cash balances 24 43 48 93
Deposits from banking clients 22 23 46 45
Long-term debt 9 14 19 27
Short-term borrowings 4 7 7 13
Other 5 3 8 3
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Total 64 90 128 181
Interest portion of rental expense 23 21 44 43
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Total fixed charges (A) 87 111 172 224
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Earnings from continuing operations before taxes on earnings,
extraordinary gain and fixed charges (B) $ 269 $ 272 $ 451 $ 521
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Ratio of earnings to fixed charges (B) / (A) (1) 3.1 2.5 2.6 2.3
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Ratio of earnings to fixed charges excluding
brokerage client interest expense (2) 3.9 3.4 3.3 3.3
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(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, 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.