COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
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| Year Ended December 31, |
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| 2019 |
| 2018 |
| 2017 |
| 2016 |
| 2015 |
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| (in thousands) |
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Earnings: |
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Income (loss) before income taxes | $ | (1,026) | $ | 11,947 | $ | 10,853 | $ | 5,699 | $ | (2,002) |
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Less: Equity in loss (earnings) of investees |
| 1,876 |
| 1,080 |
| 1,694 |
| 1,995 |
| (462) |
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Less: Pre-tax net (income) loss attributable to noncontrolling interest |
| (1,012) |
| (1,355) |
| 87 |
| 670 |
| 305 |
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Add: Distributions paid by equity investees |
| - |
| - |
| - |
| - |
| 305 |
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Fixed charges and preferred stock dividends, as calculated below |
| 358 |
| 283 |
| 278 |
| 287 |
| 281 |
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Total earnings | $ | 196 | $ | 11,955 | $ | 12,912 | $ | 8,651 | $ | (1,573) |
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Computation of fixed charges and preferred stock dividends: |
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Interest expense | $ | 94 | $ | - | $ | - | $ | - | $ | - |
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Preferred stock dividends(1) |
| 177 |
| 177 |
| 177 |
| 177 |
| 177 |
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Interest component of rent expense(2) |
| 87 |
| 106 |
| 101 |
| 110 |
| 104 |
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Total combined fixed charges and preferred stock dividends | $ | 358 | $ | 283 | $ | 278 | $ | 287 | $ | 281 |
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Ratio of earnings to combined fixed charges and preferred stock dividends(3) |
| 0.55 |
| 42.24 |
| 46.45 |
| 30.14 |
| N/A |
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Deficiency of earnings to combined fixed charges and preferred stock dividends |
| N/A |
| N/A |
| N/A |
| N/A |
| (1,854) |
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(1) | Dividends accrue on our outstanding Series A preferred stock at the rate of $0.20 per annum per share of Series A preferred stock. We have not paid any dividends on preferred stock. 883,000 shares of our preferred stock were issued and outstanding for all of the periods presented. |
(2) | Effective January 1, 2019, interest is calculated consistent with guidance under ASC 842, where an estimate for the Company's incremental borrowing rate of 4.6% is used to calculate the interest component of rent expense. The borrowing rate is calculated using a weighted average for the interest rate on the Company's revolving line of credit of 4.4% and credit facility with the Bank of China of 4.7%. For the years prior to 2019, represents one-third of total rent expense which we believe is a reasonable estimate of the interest component of rent expense. Interest component of rental expense is estimated based on a tenant improvement loan at 4%, which is considered a reasonable approximation of the interest factor. In 2010, the full amount of the tenant improvement loan was paid off. |
(3) | For periods in which there is a deficiency of earnings available to cover combined fixed charges and preferred stock dividends, the ratio information is not applicable. |