EX-12.1 5 a2193814zex-12_1.htm COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

Exhibit 12.1

 

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

(In millions, except ratios)

 

 

 

Fiscal Year Ended December 31,

 

Six Months
Ended
June 30,

 

 

 

2004

 

2005

 

2006

 

2007

 

2008

 

2009

 

Income (loss) from continuing operations before provision (benefit) for income taxes

 

100

 

331

 

405

 

578

 

(813

)

(62

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed charges(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

327

 

181

 

208

 

187

 

174

 

92

 

Add back interest income, which is netted in interest expense

 

2

 

8

 

11

 

6

 

6

 

—

 

Add back refinance charges/gains on bond repurchases/retirement of subordinated convertible debentures, included in interest expense

 

(171

)

—

 

—

 

—

 

45

 

30

 

Interest expense – subordinated convertible debentures, net

 

14

 

14

 

13

 

9

 

9

 

(8

)

Capitalized interest

 

—

 

1

 

1

 

2

 

1

 

—

 

Interest component of rent expense

 

50

 

55

 

53

 

49

 

47

 

25

 

Interest expense – discontinued operation

 

4

 

4

 

4

 

—

 

—

 

—

 

Fixed charges

 

226

 

263

 

290

 

253

 

282

 

139

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings plus fixed charges

 

326

 

594

 

695

 

831

 

(531

)

77

 

Ratio of earnings to fixed charges

 

1.4

x

2.3

x

2.4

x

3.3

x

—

(2)(3)

—

(2)(3)

 

(1)                                        Fixed charges consist of interest expense, which includes amortization of deferred finance charges, interest expense-subordinated debentures, capitalized interest and imputed interest on our lease obligations. The interest component of rent was determined based on an estimate of a reasonable interest factor at the inception of the leases.

(2)                                        Due to our losses for the year ended December 31, 2008 and the six months ended June 30, 2009, the ratio coverage was less than 1:1 for these periods. We would have had to have generated additional earnings of $813 for the year ended December 31, 2008 and $62 for the six months ended June 30, 2009 to have achieved coverage ratios of 1:1.

(3)                                        The loss for the year ended December 31, 2008 includes the effect of an $1,147 pretax non-cash goodwill impairment charge. The effect of this charge was to reduce the ratio of earnings to fixed charges.  Had this charge been excluded from the calculation, the ratio of earnings to fixed charges would have been 2.2x for the year ended December 31, 2008.