EXHIBIT 12.1
REYNOLDS AMERICAN INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES/DEFICIENCY
IN THE COVERAGE OF FIXED CHARGES BY EARNINGS BEFORE FIXED CHARGES
(Dollars in Millions)
(Unaudited)
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES/DEFICIENCY
IN THE COVERAGE OF FIXED CHARGES BY EARNINGS BEFORE FIXED CHARGES
(Dollars in Millions)
(Unaudited)
For the Three | ||||||||||||||||||||||||||||
Months Ended | ||||||||||||||||||||||||||||
For the Years Ended December 31, | March 31 | |||||||||||||||||||||||||||
2002 | 2003 | 2004 | 2005 | 2006 | 2006 | 2007 | ||||||||||||||||||||||
Earnings before fixed charges: | ||||||||||||||||||||||||||||
Income (loss) from continuing operations before income taxes | $ | 683 | $ | (3,918 | ) | $ | 829 | $ | 1,416 | $ | 1,809 | $ | 447 | $ | 524 | |||||||||||||
Addback (deduct): Loss (income) on equity investment | — | 5 | (9 | ) | (10 | ) | (17 | ) | (2 | ) | (2 | ) | ||||||||||||||||
683 | (3,913 | ) | 820 | 1,406 | 1,792 | 445 | 522 | |||||||||||||||||||||
Interest and debt expense (1) | 147 | 111 | 85 | 113 | 270 | 35 | 89 | |||||||||||||||||||||
Interest portion of rental expense | 15 | 12 | 12 | 12 | 8 | 3 | 2 | |||||||||||||||||||||
Earnings (loss) before fixed charges | $ | 845 | $ | (3,790 | ) | $ | 917 | $ | 1,531 | $ | 2,070 | $ | 483 | $ | 613 | |||||||||||||
Fixed Charges: | ||||||||||||||||||||||||||||
Interest and debt expense (1) | $ | 147 | $ | 111 | $ | 85 | $ | 113 | $ | 270 | $ | 35 | $ | 89 | ||||||||||||||
Interest portion of rental expense | 15 | 12 | 12 | 12 | 8 | 3 | 2 | |||||||||||||||||||||
Total fixed charges | $ | 162 | $ | 123 | $ | 97 | $ | 125 | $ | 278 | $ | 38 | $ | 91 | ||||||||||||||
Ratio of earnings to fixed charges | 5.2 | — | 9.5 | 12.2 | 7.4 | 12.7 | 6.7 | |||||||||||||||||||||
Deficiency in the coverage of fixed charges by earnings before fixed charges | $ | — | $ | (3,913 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
(1) | RAI classifies interest expense recognized on uncertain tax positions as income tax expense under the provisions of Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes.” Accordingly, this amount is excluded from the interest expense portion of fixed charges in the ratio of earnings to fixed charges. |