EXTENDICARE HEALTH SERVICES INC.
EARNINGS TO FIXED CHARGE CALCULATION
PROFORMA
------------------------ ACTUAL FOR NINE
9 months 12 months MONTHS ENDED
ended ended ---------------------
Sept 30 Dec. 31 Sept 30 Sept 30
2002 2001 2002 2001
-------- --------- ------- -------
EARNINGS FROM CONTINUING OPERATIONS
Earnings before extraordinary items, taxes 10,446 (45,360) 10,446 (44,665)
and minority interest
Add: Fixed charges 32,396 49,815 28,522 34,023
Amortization of interest capitalized - - - -
Less: Interest capitalized - - - -
------ ------- ------ -------
EARNINGS 42,842 4,455 38,968 (10,642)
====== ======= ====== =======
FIXED CHARGES
Interest expense (including amortization 28,628 43,285 24,754 28,937
of deferred financing charges)
Interest capitalized - - - -
Estimate of interest within rental expense 3,768 6,530 3,768 5,086
------ ------- ------ -------
TOTAL FIXED CHARGES 32,396 49,815 28,522 34,023
====== ======= ====== =======
EARNINGS TO FIXED CHARGES RATIO 1.32 0.09 1.37 na
------ ------- ------ -------
DOLLAR AMOUNT OF THE DEFICIENCY na 45,360 na 44,665
(if less than 1:1 ratio)
ESTIMATE OF INTEREST WITHIN RENT EXPENSE:
Rental expense 8,411 14,575 8,411 11,352
Multiplier 8 8 8 8
------ ------- ------ -------
Value of rented equipment/assets 67,288 116,600 67,288 90,816
Equity assumed at 20% 13,458 23,320 13,458 18,163
Debt of Lessor 53,830 93,280 53,830 72,653
Estimated interest rate 7.0% 7.0% 7.0% 7.0%
------ ------- ------ -------
Estimated interest expense in rent 3,768 6,530 3,768 5,086
====== ======= ====== =======
PROFORMA IMPACT OF DEBT OFFERING
Interest expense as reported 24,754 37,857
Incremental interest expense 3,874 5,428
------ -------
Proforma interest expense 28,628 43,285
====== =======
Earnings as reported 10,446 (39,932)
Incremental interest expense (3,874) (5,428)
------ -------
Proforma earnings 6,572 (45,360)
====== =======
ACTUAL FOR 12 MONTHS ENDED
------------------------------------------------------------------
Sept 30 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31
2002 2001 2000 1999 1998 1997
------- ------- ------- ------- ------- -------
EARNINGS FROM CONTINUING OPERATIONS
Earnings before extraordinary items, taxes 15,179 (39,932) (82,346) (123,180) 109,252 59,130
and minority interest
Add: Fixed charges 38,886 44,387 53,588 60,251 66,175 30,919
Amortization of interest capitalized - - - - - -
Less: Interest capitalized - - - (301) (1,099) (825)
------ ------- ------- ------- ------- ------
EARNINGS 54,065 4,455 (28,758) (63,230) 174,328 89,224
====== ======= ======= ======= ======= ======
FIXED CHARGES
Interest expense (including amortization 33,674 37,857 46,541 52,499 57,955 25,519
of deferred financing charges)
Interest capitalized - - - 301 1,099 825
Estimate of interest within rental expense 5,212 6,530 7,047 7,451 7,121 4,575
------ ------- ------- ------- ------- ------
TOTAL FIXED CHARGES 38,886 44,387 53,588 60,251 66,175 30,919
====== ======= ======= ======= ======= ======
EARNINGS TO FIXED CHARGES RATIO 1.39 0.10 na na 2.63 2.89
------ ------- ------- ------- ------- ------
DOLLAR AMOUNT OF THE DEFICIENCY na 39,932 82,346 123,481 na na
(if less than 1:1 ratio)
ESTIMATE OF INTEREST WITHIN RENT EXPENSE:
Rental expense 11,634 14,575 15,731 16,631 15,895 10,213
Multiplier 8 8 8 8 8 8
------ ------- ------- ------- ------- ------
Value of rented equipment/assets 93,072 116,600 125,848 133,048 127,160 81,704
Equity assumed at 20% 18,614 23,320 25,170 26,610 25,432 16,341
Debt of Lessor 74,458 93,280 100,678 106,438 101,728 65,363
Estimated interest rate 7.0% 7.0% 7.0% 7.0% 7.0% 7.0%
------ ------- ------- ------- ------- ------
Estimated interest expense in rent 5,212 6,530 7,047 7,451 7,121 4,575
====== ======= ======= ======= ======= ======