EX-12 7 f15204exv12.htm EXHIBIT 12 exv12
 

Exhibit 12
RATIO OF EARNINGS TO FIXED CHARGES
(In thousands, except ratios)
                                         
    2001     2002     2003     2004     2005  
Income/(loss) before taxes and fixed charges (net of capitalized interest):
                                        
Income/(loss) from continuing operations before income taxes, and cumulative effect of change in accounting principle
   $ 1,103,802     $ 340,511     $ (211,556 )   $ 1,829,250     $ 1,581,569  
Add fixed charges net of capitalized interest(1)
     99,575       98,944       93,762       84,203       69,078  
 
                              
Total income/(loss) before taxes and fixed charges
   $ 1,203,377     $ 439,455     $ (117,794 )   $ 1,913,453     $ 1,650,647  
 
                              
 
                                        
Fixed charges:
                                        
Interest expense
   $ 47,640     $ 49,357     $ 46,875     $ 52,877     $ 37,819  
Capitalized interest
     3,500       —       —       —       —  
Interest component of rent expense(2)
     50,849       46,542       44,751       29,190       29,123  
 
                              
Total fixed charges
   $ 101,989     $ 95,899     $ 91,626     $ 82,067     $ 66,942  
 
                              
Ratio of earnings/(loss) to fixed charges (3)
     11.80x       4.58x       (1.29)x       23.32x       24.66x  
 
                              
 
(1)   Capitalized interest includes interest capitalized during the period, less the amount of previously capitalized interest that was amortized during the period.
 
(2)   The interest factor is estimated at one-third of total rent expense for the applicable period, which management believes represents a reasonable approximation of the interest factor.
 
(3)   Due to Applied’s loss in fiscal 2003, the ratio of coverage was less than 1:1. Applied would have needed to generate additional earnings of $209 million to achieve the coverage ratio of 1:1.