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Principal Financial Group, Inc.
Computation of Earnings to Fixed Charges Ratio
The ratio of earnings to fixed charges is a measure of our ability to cover fixed costs with current period earnings. A high ratio indicates that earnings are sufficiently covering committed expenses. The following table sets forth, for the years indicated, our ratios of:
- •
- earnings to fixed charges before interest credited on investment products; and
- •
- earnings to fixed charges.
| | For the years ended December 31, | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | 2007 | 2006 | 2005 | 2004 | 2003 | ||||||||||||
| | ($ in millions) | ||||||||||||||||
1. | Income from continuing operations before income taxes | $ | 1,048.2 | $ | 1,331.3 | $ | 1,121.6 | $ | 878.7 | $ | 819.0 | |||||||
2. | Interest expense | 115.3 | 86.0 | 77.8 | 93.5 | 114.1 | ||||||||||||
3. | Interest factor of rental expense | 12.3 | 11.1 | 7.0 | 4.6 | 4.8 | ||||||||||||
4. | Undistributed income from equity investees | (71.6 | ) | (62.7 | ) | (34.1 | ) | (19.4 | ) | (18.3 | ) | |||||||
5. | Earnings before interest credited on investment products | 1,104.2 | 1,365.7 | 1,172.3 | 957.4 | 919.6 | ||||||||||||
6. | Interest credited on investment products | 988.3 | 901.1 | 832.2 | 763.7 | 735.7 | ||||||||||||
7. | Earnings | $ | 2,092.5 | $ | 2,266.8 | $ | 2,004.5 | $ | 1,721.1 | $ | 1,655.3 | |||||||
8. | Interest expense | $ | 115.3 | $ | 86.0 | $ | 77.8 | $ | 93.5 | $ | 114.1 | |||||||
9. | Interest factor of rental expense | 12.3 | 11.1 | 7.0 | 4.6 | 4.8 | ||||||||||||
10. | Preferred stock dividends by registrant | 33.0 | 33.0 | 17.7 | — | — | ||||||||||||
11. | Preferred stock dividend requirements of majority-owned subsidiaries (non-intercompany) | — | — | — | — | 1.2 | ||||||||||||
12. | Fixed charges before interest credited on investment products | 160.6 | 130.1 | 102.5 | 98.1 | 120.1 | ||||||||||||
13. | Interest credited on investment products | 988.3 | 901.1 | 832.2 | 763.7 | 735.7 | ||||||||||||
14. | Fixed charges | $ | 1,148.9 | $ | 1,031.2 | $ | 934.7 | $ | 861.8 | $ | 855.8 | |||||||
15. | Ratio of earnings to fixed charges before interest credited on investment products (Line item 5/Line item 12) | 6.9 | 10.5 | 11.4 | 9.8 | 7.7 | ||||||||||||
16. | Ratio of earnings to fixed charges (Line item 7/Line item 14) | 1.8 | 2.2 | 2.1 | 2.0 | 1.9 |
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Principal Financial Group, Inc. Computation of Earnings to Fixed Charges Ratio