EX-12 4 exhibit12.htm COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

Exhibit 12

Meritor, Inc.
Computation of Ratio of Earnings to Fixed Charges
(Amounts in millions, except the ratios)

    Three months ended
December 31, Fiscal Year ended September 30,
2011 2010 2011 2010 2009 2008 2007
Earnings Available for Fixed Charges (A):                        
Pre-tax income (loss) from continuing operations $    11   $    18   $    159 $    76 $    (52 ) $    131 $    (41 )
 
Less:
Equity in earnings of affiliates, net of dividends (11 ) (9 ) (25 ) (37 ) 10 (18 ) (13 )
  9 134 39 (42 ) 113 (54 )
Add: fixed charges included in earnings:        
Interest expense 24 27 98   114 98 101 125
Interest element of rentals   2   2 6 5 6 4   5
Total 26 29 104 119   104 105 130
 
Total earnings available for fixed charges: $ 26 $ 38 $ 238 $ 158 $ 62 $ 218 $ 76  
 
Fixed Charges (B):
Fixed charges included in earnings $ 26 $ 29 $ 104 $ 119 $ 104 $ 105 $ 130
Capitalized interest    
Total fixed charges $ 26 $ 29 $ 104 $ 119 $ 104 $ 105 $ 130
 
Ratio of Earnings to Fixed Charges 1.00 1.31 2.29 1.33 N/A (C ) 2.08 N/A (C )

(A)   “Earnings” are defined as pre-tax income from continuing operations, adjusted for undistributed earnings of less than majority owned subsidiaries and fixed charges excluding capitalized interest.
 
(B) “Fixed charges” are defined as interest on borrowings (whether expensed or capitalized), the portion of rental expense applicable to interest, and amortization of debt issuance costs.
 
(C) The ratio coverage was less than 1:1 for fiscal years 2009 and 2007. The company would have needed to generate additional pretax earnings of $42 million and $54 million to achieve coverage of 1:1 for fiscal years 2009 and 2007, respectively.