EX-12 2 dex12.htm COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES Computation of ratio of earnings to fixed charges

Exhibit 12

Humana Inc.

Computation of Ratio of Earnings to Fixed Charges

 

    

For the nine
months ended
September 30,

2006

    For the twelve months ended December 31,
        2005(1)    2004(1)    2003(1)    2002(1)    2001(1)
     (Dollars in thousands)

Income before income taxes

    $ 520,904    $ 402,880    $ 399,378    $ 336,213    $ 203,546    $ 176,952

Fixed charges

      72,902      66,434      49,246      40,972      44,349      52,010
                                         

Total earnings

    $ 593,806    $ 469,314    $ 448,624    $ 377,185    $ 247,895    $ 228,962
                                         

Interest charged to expense

    $ 47,335    $ 39,315    $ 23,172    $ 17,367    $ 17,252    $ 25,302

One-third of rent expense

      25,567      27,119      26,074      23,605      27,097      26,708
                                         

Total fixed charges

    $ 72,902    $ 66,434    $ 49,246    $ 40,972    $ 44,349    $ 52,010
                                         

Ratio of earnings to fixed charges (2)(3)

      8.1x      7.1x      9.1x      9.2x      5.6x      4.4x
                                         
Notes
(1) We adopted Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment, or SFAS 123R on January 1, 2006. We have adjusted prior period amounts to reflect the effect of expensing stock awards under the modified retrospective application method of SFAS 123R.
(2) For the purposes of determining the ratio of earnings to fixed charges, earnings consist of income 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.
(3) There are no shares of preferred stock outstanding.