Exhibit 12
Xerox Corporation
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 are determined using the following applicable factors:
Earnings available for fixed chargesare calculated first, by determining the sum of: (a) income (loss) from continuing operations before income taxes, (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, if any.
Fixed chargesare 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 dividendsused 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 B convertible preferred stock and our Series C mandatory convertible preferred stock. The Series B dividends were tax deductible and, as such, were equivalent to the pre-tax earnings required to cover such dividends. The Series B convertible preferred stock was redeemed and converted to common stock as of May 27, 2004 and, as such, there were no dividends beyond such date. Series C mandatory convertible preferred stock was redeemed and converted to common stock as of July 3, 2006 and, as such, there were no dividends beyond such date.
Year Ended December 31, | ||||||||||||||||||||
(in millions) | 2007 | 2006 | 2005 | 2004 | 2003 | |||||||||||||||
Fixed charges: | ||||||||||||||||||||
Interest expense | $ | 579 | $ | 544 | $ | 557 | $ | 708 | $ | 884 | ||||||||||
Capitalized interest | 8 | — | — | — | — | |||||||||||||||
Portion of rental expense which represents interest factor | 95 | 90 | 74 | 105 | 77 | |||||||||||||||
Total Fixed charges | $ | 682 | $ | 634 | $ | 631 | $ | 813 | $ | 961 | ||||||||||
Earnings available for fixed charges: | ||||||||||||||||||||
Earnings | $ | 1,535 | $ | 922 | $ | 928 | $ | 1,116 | $ | 494 | ||||||||||
Adjusted for: Undistributed equity in income of affiliated companies | (60 | ) | (70 | ) | (54 | ) | (89 | ) | (37 | ) | ||||||||||
Add: Fixed charges | 682 | 634 | 631 | 813 | 961 | |||||||||||||||
Less: Capitalized interest | (8 | ) | — | — | — | — | ||||||||||||||
Total Earnings available for fixed charges | $ | 2,149 | $ | 1,486 | $ | 1,505 | $ | 1,840 | $ | 1,418 | ||||||||||
Ratio of earnings to fixed charges | 3.15 | 2.34 | 2.39 | 2.26 | 1.48 | |||||||||||||||
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Xerox Corporation
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends
Year Ended December 31, | ||||||||||||||||||||
(in millions) | 2007 | 2006 | 2005 | 2004 | 2003 | |||||||||||||||
Fixed charges: | ||||||||||||||||||||
Interest expense | $ | 579 | $ | 544 | $ | 557 | $ | 708 | $ | 884 | ||||||||||
Capitalized interest | 8 | — | — | — | — | |||||||||||||||
Portion of rental expense which represents interest factor | 95 | 90 | 74 | 105 | 77 | |||||||||||||||
Total Fixed charges before preferred stock dividends pre-tax income requirements | 682 | 634 | 631 | 813 | 961 | |||||||||||||||
Preferred stock dividends pre-tax income requirements | — | 48 | 94 | 110 | 90 | |||||||||||||||
Total Combined fixed charges and preferred stock dividends | $ | 682 | $ | 682 | $ | 725 | $ | 923 | $ | 1,051 | ||||||||||
Earnings available for fixed charges: | ||||||||||||||||||||
Earnings | $ | 1,535 | $ | 922 | $ | 928 | $ | 1,116 | $ | 494 | ||||||||||
Adjusted for: Undistributed equity in income of affiliated companies | (60 | ) | (70 | ) | (54 | ) | (89 | ) | (37 | ) | ||||||||||
Add: Fixed charges before preferred stock dividends | 682 | 634 | 631 | 813 | 961 | |||||||||||||||
Less: Capitalized interest | (8 | ) | — | — | — | — | ||||||||||||||
Total Earnings available for fixed charges and preferred stock dividends | $ | 2,149 | $ | 1,486 | $ | 1,505 | $ | 1,840 | $ | 1,418 | ||||||||||
Ratio of earnings to combined fixed charges and preferred stock dividends | 3.15 | 2.18 | 2.08 | 1.99 | 1.35 | |||||||||||||||
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