EXHIBIT 12
INTERNATIONAL PAPER COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
(Dollar amounts in millions)
(Unaudited)
TITLE | 2004 | 2005 | 2006 | 2007 | 2008 | |||||||||||||||
A) Earnings (loss) before income taxes, minority interest, extraordinary items and accounting changes | $ | 376.0 | $ | 286.0 | $ | 3,188.0 | $ | 1,654.0 | $ | (1,153.0 | )(1) | |||||||||
B) Minority interest expense, net of taxes | (24.0 | ) | (9.0 | ) | (17.0 | ) | (24.0 | ) | (3.0 | ) | ||||||||||
C) Fixed charges excluding capitalized interest | 859.7 | 752.0 | 724.5 | 552.8 | 648.2 | |||||||||||||||
D) Amortization of previously capitalized interest | 40.3 | 39.2 | 34.8 | 27.2 | 30.0 | |||||||||||||||
E) Equity in undistributed earnings of affiliates | (13.4 | ) | 9.7 | (5.8 | ) | (10.7 | ) | – | (1) | |||||||||||
F) Distributed income of equity investees | — | — | — | — | 73.0 | |||||||||||||||
G) Earnings (loss) before income taxes, extraordinary items, accounting changes and fixed charges | $ | 1,238.6 | $ | 1,077.9 | $ | 3,924.5 | $ | 2,199.3 | $ | (404.8 | ) | |||||||||
Fixed Charges | ||||||||||||||||||||
H) Interest and amortization of debt expense | $ | 780.3 | $ | 680.8 | $ | 651.4 | $ | 487.0 | $ | 572.5 | ||||||||||
I) Interest factor attributable to rentals | 63.9 | 61.2 | 60.2 | 55.4 | 65.8 | |||||||||||||||
J) Preferred dividends of subsidiaries | 15.5 | 10.0 | 12.9 | 10.4 | 9.9 | |||||||||||||||
K) Capitalized interest | 9.7 | 13.7 | 20.7 | 29.9 | 27.5 | |||||||||||||||
L) Total fixed charges | $ | 869.4 | $ | 765.7 | $ | 745.2 | $ | 582.7 | $ | 675.7 | ||||||||||
M) Ratio of earnings to fixed charges | 1.42 | 1.41 | 5.27 | 3.77 | ||||||||||||||||
N) Deficiency in earnings necessary to cover fixed charges | $ | (1,080.5 | ) |
(1) | Beginning in 2008, earnings from continuing operations are reported before equity earnings. Therefore, equity earnings will no longer be adjusted out of the total in line E. |
Note: Dividends on International Paper’s preferred stock are insignificant. As a result, for all periods presented, the ratios of earnings to fixed charges and preferred stock dividends are the same as the ratios of earnings to fixed charges.