EX-12.1 3 dex121.htm COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES Computation of Ratio of Earnings to Fixed Charges

Exhibit 12.1

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

(In millions, except ratios)

 

     Year Ended December 31,     Six Months
Ended June 30,
2010
 
     2005     2006     2007     2008     2009        

Earnings:

            

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

   331      405      578      (813 )   (107 )   (61 )

Add:

            

Fixed charges, net of capitalized interest

   262      289      251      277      288      138   

Total earnings available for fixed charges

   593      694      829      (536 )   181      77   

Fixed charges (1):

            

Interest expense, net

   181      208      187      174      226      115   

Add back interest income, which is netted in interest expense

   8      11      6      6      1      1   

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

   —        —        —        41      20      (3 )

Interest expense – subordinated convertible debentures, net

   14      13      9      9      (4 )   4   

Capitalized interest

   1      1      2      1      1      —     

Interest component of rent expense

   55      53      49      47      45      21   

Interest expense – discontinued operation

   4      4      —        —        —        —     

Fixed charges

   263      290      253      278      289      138   

Ratio of earnings to fixed charges

   2.3 x   2.4 x   3.3 x   (2)(3)   (2)   (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 is determined based on an estimate of a reasonable interest factor at the inception of the leases.
(2) Due to our losses for the six months ended June 30, 2010 and the years ended December 31, 2009 and 2008, the ratio coverage was less than 1:1 for these periods. We would have had to have generated additional earnings of $61, $108, and $814 for the six months ended June 30, 2010 and 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.