EXHIBIT 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In Thousands, Except Ratios)
Twelve Months
Ended March 31, Year Ended December 31
2003 2002 2001(1) 2000(1) 1999 1998
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Earnings:
Net income (2) $ 102,410 $ 97,137 $ 44,495 $ 56,901 $ 76,511 $ 70,367
Income taxes 53,478 46,772 21,309 37,077 43,161 39,093
Equity in losses of equity investee 2,250 1,859 463 - - -
Fixed Charges (See Below) 68,890 70,693 72,709 48,276 39,240 38,582
Less: Preferred stock dividend 34 32 758 1,017 1,078 1,095
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Total adjusted earnings $ 226,994 $216,428 $138,217 $141,237 $157,834 $ 146,947
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Fixed charges:
Total interest expense $ 68,087 $ 69,119 $ 70,745 $ 46,354 $ 36,790 $ 36,670
Interest component of rents 769 1,542 1,206 906 1,372 817
Preferred stock dividend 34 32 758 1,017 1,078 1,095
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Total fixed charges $ 68,890 $ 70,693 $ 72,709 $ 48,276 $ 39,240 $ 38,582
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Ratio of earnings to fixed charges 3.3 3.1 1.9 2.9 4.0 3.8
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(1) Merger and integration related costs incurred for the years ended December
31, 2001 and 2000 totaled $2.8 million and $32.7 million, respectively.
These costs relate primarily to employee and executive severance,
transaction costs, and other merger, integration and restructuring
activities.
As a result of merger integration activities, management has identified
certain information systems that were retired in 2001. Accordingly, the
useful lives of these assets were shortened to reflect that decision,
resulting in additional depreciation expense. For the for the years ended
December 31, 2001 and 2000, this additional depreciation expense was $9.6
million and $11.4 million, respectively.
In total, merger and integration related costs incurred for the years ended
December 31, 2001 and 2000 were $12.4 million ($7.7 million after tax) and
$44.1 million ($31.6 million after tax), respectively.
In June 2001, Utility Holdings began implementing a restructuring plan to
eliminate administrative and supervisory positions in its utility
operations and corporate office. Restructuring-related charges incurred
during the year ended December 31, 2001 totaled $15.0 million ($9.3 million
after tax).
(2) Net income, as defined, is before preferred stock dividend requirement of
subsidiary and cumulative effect of change in accounting principle.