EX-12.1 6 sh12.htm RATIO OF EARNINGS TO FIXED CHARGES Humana Inc

Humana Inc.
Ratio of Earnings to Fixed Charges
(Dollars in thousands)

Exhibit 12.1

Six months

ended

June 30,

For the fiscal year ended December 31,

2002

2001

2000

1999

1998(4)

1997

Income (loss) before income taxes

$

135,484

$

183,080

$

113,990

$

(404,839

)

$

203,083

$

270,129

Fixed charges

22,215

52,010

52,843

53,592

61,327

28,793

Total earnings

$

157,699

$

235,090

$

166,833

$

(351,247

)

$

264,410

$

298,922

Interest charged to expense

$

8,781

$

25,302

$

28,615

$

33,393

$

46,972

$

19,617

One-third of rent expense

13,434

26,708

24,228

20,199

14,355

9,176

Total fixed charges

$

22,215

$

52,010

$

52,843

$

53,592

$

61,327

$

28,793

Ratio of earnings to
   fixed charges (1)(2)

7.1x

4.5x

3.2x

(3)

4.3x

10.0x

Notes

(1)

For the purposes of determining the ratio of earnings to fixed charges, earnings consist of income or loss before income taxes and fixed charges. Fixed charges include gross interest expense, amortization of deferred financing expenses and an amount equivalent to interest included in rental charges. One-third of rental expense represents a reasonable approximation of the interest amount.

(2)

There are no shares of preferred stock outstanding.

(3)

Due to a loss in 1999, caused primarily by pretax charges of $584.8 million, the ratio coverage was less than 1.0x. Additional pretax earnings of $404.8 million would be needed to achieve a coverage of 1.0x. Excluding pretax charges of $584.8 million primarily related to goodwill write-down, losses on non-core asset sales, professional liability reserve strengthening, premium deficiency and medical reserve strengthening, the ratio of earnings to fixed charges would have been 4.4x for the year ended December 31, 1999.

(4)

Excluding 1998 pretax charges of $132.4 million primarily related to the costs of certain market exits and product discontinuances, asset write-offs, premium deficiency and a one-time non-officer employee incentive, the ratio of earnings to fixed charges would have been 6.5x for the year ended December 31, 1998.