EXHIBIT 12
CHEMED CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS, EXCEPT RATIOS)
2001 2002 2003 2004 2005
-------- -------- -------- -------- --------
Pretax income/ (loss) from continuing operations
before equity in earnings/ loss of affiliate $(15,478) $ 17,140 $ 16,446 $ 37,087 $ 57,283
Additions:
Fixed charges 12,642 5,621 4,801 28,597 30,737
Amortization of capitalized interest - - - 1 2
Deductions:
Capitalized interest - - - (72) (380)
-------- -------- -------- -------- --------
Adjusted income/ (loss) $ (2,836) $ 22,761 $ 21,247 $ 65,613 $ 87,642
======== ======== ======== ======== ========
Fixed Charges:
Interest expense $ 6,537 $ 4,007 $ 3,211 $ 21,167 $ 21,264
Capitalized interest - - - 72 380
Interest component of rental expense 3,488 1,614 1,590 4,028 5,122
Loss on extinguishment of debt (a), (b), (c) 2,617 - - 3,330 3,971
-------- -------- -------- -------- --------
Fixed charges $ 12,642 $ 5,621 $ 4,801 $ 28,597 $ 30,737
======== ======== ======== ======== ========
Ratio of earnings to fixed charges (d) n.a. 4.0 x 4.4 x 2.3 x 2.9 x
======== ======== ======== ======== ========
Additional earnings needed to achieve 1:1 ratio
coverage (e) 15,478 n.a. n.a. n.a. n.a.
======== ======== ======== ======== ========
- ---------------
(a) The year ended December 31, 2001 includes interest penalties related to
the prepayment of the Company's 8.15% senior notes due 2002 through 2004
and its 10.67% senior notes due 2002 through 2003.
(b) The year ended December 31, 2004 includes interest penalties related to
the retirement of the Company's 7.31% senior notes due 2005 through 2009.
Refer to Note 12 in the Notes to Consolidated Financial Statements for
further discussion.
(c) The year ended December 31, 2005 includes interest penalties related to
the retirement of the Company's floating rate notes due 2010. Refer to
Note 12 in the Notes to Consolidated Financial Statements for further
discussion.
(d) For purposes of computing the ratio of earnings to fixed charges, pretax
income/ (loss) from continuing operations before equity in earnings/
(loss) of affiliate has been added to fixed charges and adjusted for
capitalized interest to derive adjusted income/ (loss). Fixed charges
consist of interest expense on debt (including the amortization of
deferred financing costs), capitalized interest, prepayment penalties on
the early extinguishment of debt and one-third (the proportion deemed
representative of the interest component) of rental expense. Fixed charge
amounts include interest from both continuing and discontinued operations.
(e) In the year ended December 31, 2001 earnings were insufficient to cover
fixed charges. Additional earnings of $15,478,000 must be generated to
achieve a coverage ratio of 1:1.