EX-12 8 xrx-123114xex12.htm EXHIBIT 12 XRX-12.31.14-Ex12
EXHIBIT 12

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

The ratio of earnings to fixed charges, the ratio of earnings to combined fixed charges and preferred stock dividends, as well as any deficiency of earnings are determined using the following applicable factors:
 
Earnings available for fixed charges are calculated first, by determining the sum of: (a) income from continuing operations before income taxes and equity income; (b) distributed equity income; (c) fixed charges, as defined below; and (d) amortization of capitalized interest, if any. From this total, we subtract capitalized interest and net income attributable to noncontrolling interests.
 
Fixed charges are calculated as the sum of: (a) interest costs (both expensed and capitalized); (b) amortization of debt expense and discount or premium relating to any indebtedness; and (c) that portion of rental expense that is representative of the interest factor.

Preferred stock dividends used in the ratio of earnings to combined fixed charges and preferred stock dividends consist of the amount of pre-tax earnings required to cover dividends paid on our Series A convertible preferred stock.
 
 
Year Ended December 31,
(in millions)
 
2014
 
2013(1)
 
2012(1)
 
2011(1)
 
2010(1)
Fixed Charges:
 
 
 
 
 
 
 
 
 
 
Interest expense (2)
 
$
381

 
$
406

 
$
430

 
$
478

 
$
592

Capitalized interest
 
4

 
4

 
13

 
13

 
5

Portion of rental expense which represents interest factor (2)
 
273

 
251

 
215

 
227

 
211

Total Fixed Charges
 
$
658

 
$
661

 
$
658

 
$
718

 
$
808

 
 
 
 
 
 
 
 
 
 
 
Earnings Available for Fixed Charges:
 
 
 
 
 
 
 
 
 
 
Pre-tax income
 
$
1,206

 
$
1,243

 
$
1,284

 
$
1,450

 
$
718

Distributed equity income of affiliated companies
 
69

 
77

 
62

 
63

 
41

Add: Fixed charges
 
658

 
661

 
658

 
718

 
808

Less: Capitalized interest
 
(4
)
 
(4
)
 
(13
)
 
(13
)
 
(5
)
Less: Net income-noncontrolling interests
 
(23
)
 
(20
)
 
(28
)
 
(33
)
 
(31
)
Total Earnings Available for Fixed Charges
 
$
1,906

 
$
1,957

 
$
1,963

 
$
2,185

 
$
1,531

 
 
 

 
 

 
 

 
 

 
 

Ratio of Earnings to Fixed Charges
 
2.90

 
2.96

 
2.98

 
3.04

 
1.89

 
 
 
 
 
 
 
 
 
 
 
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends
 
 
 
 
 
 
 
 
 
 
Fixed Charges:
 
 
 
 
 
 
 
 
 
 
Interest expense (2)
 
$
381

 
$
406

 
$
430

 
$
478

 
$
592

Capitalized interest
 
4

 
4

 
13

 
13

 
5

Portion of rental expense which represents interest factor (2)
 
273

 
251

 
215

 
227

 
211

Total Fixed Charges before preferred stock dividends pre-tax income requirements
 
658

 
661

 
658

 
718

 
808

Preferred stock dividends pre-tax income requirements
 
39

 
39

 
39

 
39

 
35

Total Combined Fixed Charges and Preferred Stock Dividends
 
$
697

 
$
700

 
$
697

 
$
757

 
$
843

Earnings Available for Fixed Charges:
 
 
 
 
 
 
 
 
 
 
Pre-tax income
 
$
1,206

 
$
1,243

 
$
1,284

 
$
1,450

 
$
718

Distributed equity income of affiliated companies
 
69

 
77

 
62

 
63

 
41

Add: Fixed charges before preferred stock dividends
 
658

 
661

 
658

 
718

 
808

Less: Capitalized interest
 
(4
)
 
(4
)
 
(13
)
 
(13
)
 
(5
)
Less: Net income-noncontrolling interests
 
(23
)
 
(20
)
 
(28
)
 
(33
)
 
(31
)
Total Earnings Available for Fixed Charges and Preferred Stock Dividends
 
$
1,906

 
$
1,957

 
$
1,963

 
$
2,185

 
$
1,531

 
 
 
 
 
 
 
 
 
 
 
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends
 
2.73

 
2.80

 
2.82

 
2.89

 
1.82


(1)
The ratios have been restated to reflect discontinued operations. Refer to Note 4 - Divestitures in the Consolidated Financial Statements for additional information regarding discontinued operations.
(2)
Includes amounts related to our ITO business which is held for sale and reported as a discontinued operation at December 31, 2014. Refer to Note 4 - Divestitures in the Consolidated Financial Statements for additional information regarding this pending sale.