EXHIBIT 12
PHH Corporation and Subsidiaries
Computation of Ratio of Earnings to Fixed Charges
(In millions)
Six Months
Ended June 30,
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1998 1997
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Income (loss) before income taxes $ 188.0 $ (105.9)
Plus: Fixed charges 173.4 125.8
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Earnings available to cover
fixed charges 361.4 19.9
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Fixed charges (1):
Interest including amortization
of deferred financing costs 169.5 122.2
Interest portion of rental payment 3.9 3.6
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Total fixed charges $ 173.4 $ 125.8
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Ratio of earnings to fixed charges (2) 2.08x 0.16x
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(1) Fixed charges consist of interest expense on all indebtedness (including
amortization of deferred financing costs) and the portion of operating
lease rental expense that is representative of the interest factor
(deemed to be one-third of operating lease rentals). The substantial
portion of interest expense incurred on debt is used to finance the
Company's fleet leasing, mortgage service and relocation service
activities.
(2) For the six months ended June 30, 1998, income before income taxes
includes non-recurring merger-related costs and other unusual charges of
$7.8 million. Excluding such charges, the ratio of earnings to fixed
charges is 2.14x. For the six months ended June 30, 1997, loss before
income taxes includes non-recurring merger-related costs and other
unusual charges associated with the HFS Merger of $223.1 million ($174.3
million after-tax). Excluding such charges, the ratio of earnings to
fixed charges is 1.93x.