Nine Months Ended

September 30,

2016

2015

(Dollars in millions)

EARNINGS:

Income before income taxes1

$

103 

$

443 

Add (deduct):

Equity in earnings of unconsolidated entities

(109)

(110)

Distributions from unconsolidated entities

55 

45 

Amortization of capitalized interest

6 

6 

Income attributable to noncontrolling interests in subsidiaries

  that do not have fixed charges

– 

(6)

$

55 

$

378 

Add fixed charges:

Consolidated interest expense2

127 

103 

Interest portion (1/3) of consolidated rent expense

46 

46 

$

228 

$

527 

FIXED CHARGES:

Consolidated interest expense2

$

127 

$

103 

Capitalized interest

2 

6 

Interest portion (1/3) of consolidated rent expense

46 

46 

$

175 

$

155 

RATIO OF EARNINGS TO FIXED CHARGES3

1.30 

3.40 

1

Includes Gain on sale of business and other exit costs, net of $130 million in 2015.  Additionally, includes $16 million and $147 million of Gain on license sales and exchanges, net in 2016 and 2015, respectively.

2

Interest expense on income tax contingencies is not included in fixed charges.

3

Ratio of earnings to fixed charges and preferred dividends was also 1.30 and 3.40 for the nine months ended September 30, 2016 and 2015, respectively.