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Exhibit 12.1
PICTURETEL CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
(Amounts in thousands of dollars)
<TABLE>
<CAPTION>
1995 1996 1997 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Pre-tax income (loss) from continuing operations $ 31,101 $ 48,095 $(55,490) $(19,898)
======== ======== ======== ========
Fixed charges:
Interest expense 1,063 1,050 1,821 2,909
Building rentals - 54% 3,887 5,165 6,229 6,279
-------- -------- -------- --------
Total fixed charges $ 4,950 $ 6,215 $ 8,050 $ 9,188
======== ======== ======== ========
Pre-tax income (loss) from continuing operations
plus fixed charges $ 36,051 $ 54,310 $(47,440) $(10,710)
======== ======== ======== ========
Ratio of earnings to fixed charges 7.3 8.7 Note A Note A
======== ======== ======== ========
Preferred stock dividends -- -- -- --
Total fixed charges and preferred stock dividends $ 4,950 $ 6,215 $ 8,050 $ 9,188
======== ======== ======== ========
Ratio of earnings to combined fixed charges and
preferred stock dividends 7.3 8.7 Note B Note B
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
1999 1-Jul-00
---- --------
<S> <C> <C>
Pre-tax income (loss) from continuing operations $(80,142) $(60,185)
======== ========
Fixed charges:
Interest expense 4,636 2,498
Building rentals - 54% 5,790 1,179
-------- --------
Total fixed charges $ 10,425 $ 3,677
======== ========
Pre-tax income (loss) from continuing operations
plus fixed charges $(69,717) $(56,508)
======== ========
Ratio of earnings to fixed charges Note D Note A
======== ========
Preferred stock dividends 5,939C --
Total fixed charges and preferred stock dividends $ 16,364 $ 3,677
======== ========
Ratio of earnings to combined fixed charges and
preferred stock dividends Note D Note B
======== ========
</TABLE>
NOTES:
A: Due to PictureTel Corporation's losses in these periods, additional
earnings of $55,490, $19,898 and $60,185 would have been needed for the
years ending 1997, 1998, and the six months ending July 1, 2000,
respectively, to cover these fixed charges.
B: Due to PictureTel Corporation's losses in these periods, additional
earnings of $55,490, $19,898 and $60,185 would have been needed for the
years ending 1997, 1998, and the six months ending July 1, 2000,
respectively, to cover these fixed charges and preferred stock dividends.
C: The amount of pre-tax earnings required to cover the preferred stock
dividends has been calculated using the reciprocal of PictureTel's
effective income tax rate of 5.5% on continuing operations. The amount has
been calculated as: the beneficial conversion charge of $5,612 divided by
(1 minus the effective tax rate of 5.5%).
D: Included in earnings for 1999 was a nonrecurring gain of $8,495 before
income taxes relating to the third quarter sale of RealNetworks as
disclosed in Note 5 of PictureTel's consolidated financial statements. If
such sale had not occurred, the total additional earnings needed to achieve
a 1:1 coverage ratio of earnings to fixed charges and earnings to fixed
charges and preferred stock dividends would have been $88,637 and $94,576,
respectively.
