EX-12 5 dex12.htm COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES Computation of Ratio of Earnings to Fixed Charges

Exhibit 12

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

(In millions, except ratios)

 

       Year Ended December 31,  
       2005      2006      2007      2008     2009  

Earnings:

                     

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

     331      405      578      (813   (107

Add:

                     

Fixed charges, net of capitalized interest

     262      289      251      277     288   

Total earnings available for fixed charges

     593      694      829      (536   181   

Fixed charges (1):

                     

Interest expense, net

     181      208      187      174      226   

Add back interest income, which is netted in interest expense

     8      11      6      6      1   

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

     —        —        —        41      20   

Interest expense—subordinated convertible debentures, net

     14      13      9      9      (4

Capitalized interest

     1      1      2      1      1   

Interest component of rent expense

     55      53      49      47      45   

Interest expense—discontinued operation

     4      4      —        —        —     

Fixed charges

     263      290      253      278      289   

Ratio of earnings to fixed charges

     2.3x      2.4x      3.3x      —   (2)(3)    —   (2) 

 

(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 years ended December 31, 2009 and 2008, the ratio coverage was less than 1:1 for these years. We would have had to have generated additional earnings of $108 and $814 for the years ended December 31, 2009 and 2008, respectively, 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.