THE CHARLES SCHWAB CORPORATION
Exhibit 12.1
Computation of Ratio of Earnings to Fixed Charges
(Dollar amounts in millions)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
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Earnings from continuing operations before taxes on earnings $ 329 $ 72 $ 878 $ 485
Fixed charges
Interest expense:
Brokerage client cash balances 96 29 271 59
Deposits from banking clients 59 24 149 74
Long-term debt 9 8 26 24
Short-term borrowings 8 6 23 11
Other 6 5 14 9
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Total 178 72 483 177
Interest portion of rental expense 17 20 51 62
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Total fixed charges (A) 195 92 534 239
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Earnings from continuing operations before taxes on earnings and fixed
charges (B) $ 524 $ 164 $1,412 $ 724
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Ratio of earnings to fixed charges (B) / (A) (1) 2.7 1.8 2.6 3.0
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Ratio of earnings to fixed charges excluding brokerage and banking client
interest expense (2) 9.2 2.8 8.7 5.6
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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 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 both payables to brokerage clients and deposits from banking clients is
completely offset by interest revenue on related investments and loans, the Company considers such interest to be an operating
expense. Accordingly, the ratio of earnings to fixed charges excluding brokerage and banking client interest expense reflects
the elimination of such interest expense as a fixed charge.