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,     Nine Months
Ended

September 30,
2010
 
     2005     2006     2007     2008     2009        

Earnings:

            

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

     331        405        578        (813     (107     (23

Add:

            

Fixed charges, net of capitalized interest

     262        289        251        277        288        202   

Total earnings available for fixed charges

     593        694        829        (536     181        179   

Fixed charges (1):

            

Interest expense, net

     181        208        187        174        226        170   

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     6   

Capitalized interest

     1        1        2        1        1        —     

Interest component of rent expense

     55        53        49        47        45        28   

Interest expense – discontinued operation

     4        4        —          —          —          —     

Fixed charges

     263        290        253        278        289        202   

Ratio of earnings to fixed charges

     2.3     2.4     3.3     —   (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 nine months ended September 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 $23, $108, and $814 for the nine months ended September 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.