EXHIBIT 12
PHH Corporation and Subsidiaries
Computation of Ratio of Earnings to Fixed Charges
(In millions)
Nine Months Ended September 30,
1998 1997
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Income (loss) before income taxes $ 299.6 $ (33.5)
Plus: Fixed charges 264.2 212.5
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Earnings available to cover
fixed charges 563.8 179.0
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Fixed charges (1):
Interest including amortization
of deferred financing costs 258.2 206.7
Interest portion of rental payment 6.0 5.8
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Total fixed charges $ 264.2 $ 212.5
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Ratio of earnings to fixed charges (2) 2.13x 0.84x
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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 nine months ended September 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 2.16x. For the nine months ended September 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 1.89x.