EX-12.1 2 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,
2011		  
     2006      2007      2008     2009     2010    

Earnings:

               

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

      405         578         (813 )      (107 )      (63 )      12   

Add:

               

Fixed charges, net of capitalized interest

      289         251         277        288        279        135   

Total earnings available for fixed charges

      694         829         (536 )      181        216        147   

Fixed charges (1):

               

Interest expense, net

      208         187         174        226        255        113   

Add back interest income, which is netted in interest expense

      11         6         6        1        1        1   

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

      —           —           41        20        (28 )      (1 ) 

Interest expense – subordinated convertible debentures, net

      13         9         9        (4 )      8        4   

Capitalized interest

      1         2         1        1        —          —     

Interest component of rent expense

      53         49         47        45        43        18   

Interest expense – discontinued operation

      4         —           —          —          —          —     

Fixed charges

      290         253         278        289        279        135   

Ratio of earnings to fixed charges

      2.4x         3.3x         —   (2)(3)      —   (2)      —   (2)      1.1x   

 

(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 years ended December 31, 2010, 2009 and 2008, the ratio coverage was less than 1:1 for these periods. We would have had to have generated additional earnings of $63, $108, and $814 for the years ended December 31, 2010, 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.