EXHIBIT 12
PHH CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN MILLIONS)
YEAR ENDED
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DECEMBER 31,
----------------------------------------------- JANUARY 31,
1999 1998(2) 1997 1996 1996
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Earnings before fixed charges:
Income (loss) before income taxes .................... $ 294 $ 309 $(56) $ 92 $ 76
Plus: Fixed charges .................................. 153 174 116 107 93
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Earnings available to cover fixed charges ............ $ 447 $ 483 $ 60 $ 199 $ 169
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Fixed charges (1):
Interest, including amortization of deferred financing
costs ............................................... $ 143 $ 166 $110 $ 99 $ 86
Interest portion of rental payment ................... 10 8 6 8 7
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Total fixed charges .................................. $ 153 $ 174 $116 $ 107 $ 93
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Ratio of earnings to fixed charges ................... 2.92x 2.78x (*) 1.86x 1.82x
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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 mortgage services and relocation services activities.
(2) For the year ended December 31, 1998, income from continuing operations
before income taxes includes non-recurring merger-related costs and other
unusual credits of $19 million. Excluding such credits, the ratio of
earnings to fixed charges is 2.67x.
(*) Earnings are inadequate to cover fixed charges (deficiency of $56 million)
for the year ended December 31, 1997. Loss from continuing operations
before income taxes includes non-recurring merger-related costs and other
unusual charges of $190 million. Excluding such charges, the ratio of
earnings to fixed charges is 2.16x.