THE CHARLES SCHWAB CORPORATION
EXHIBIT 12.1
THE CHARLES SCHWAB CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollar amounts in thousands, unaudited)
YEAR ENDED DECEMBER 31,
1997 1996 1995 1994 1993
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EARNINGS BEFORE TAXES ON INCOME
AND EXTRAORDINARY CHARGE $ 447,247 $394,063 $277,104 $224,343 $206,272
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FIXED CHARGES
Interest expense - customer 480,988 368,462 321,225 178,067 114,609
Interest expense - other 65,495 57,410 35,998 20,169 17,943
Interest portion of rental expense 26,045 23,051 20,810 17,102 15,428
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Total fixed charges (A) 572,528 448,923 378,033 215,338 147,980
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EARNINGS BEFORE TAXES ON INCOME,
EXTRAORDINARY CHARGE AND FIXED CHARGES (B) $1,019,775 $842,986 $655,137 $439,681 $354,252
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RATIO OF EARNINGS TO FIXED CHARGES
(B) DIVIDED BY (A)* 1.8 1.9 1.7 2.0 2.4
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RATIO OF EARNINGS TO FIXED CHARGES EXCLUDING
CUSTOMER INTEREST EXPENSE** 5.9 5.9 5.9 7.0 7.2
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* THE RATIO OF EARNINGS TO FIXED CHARGES IS CALCULATED IN A MANNER CONSISTENT
WITH SEC REQUIREMENTS. FOR SUCH PURPOSES, "EARNINGS" CONSIST OF EARNINGS
BEFORE TAXES ON INCOME, EXTRAORDINARY CHARGE AND FIXED CHARGES. "FIXED
CHARGES" CONSIST OF INTEREST EXPENSE INCURRED ON PAYABLES TO CUSTOMERS,
SUBORDINATED BORROWINGS, TERM DEBT, CAPITALIZED INTEREST AND ONE-THIRD OF
RENTAL EXPENSE, WHICH IS ESTIMATED TO BE REPRESENTATIVE OF THE INTEREST
FACTOR.
** BECAUSE INTEREST EXPENSE INCURRED IN CONNECTION WITH PAYABLES TO CUSTOMERS
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 AS ADJUSTED REFLECTS
THE ELIMINATION OF SUCH INTEREST EXPENSE AS A FIXED CHARGE.