EX-12.1 4 h43631exv12w1.htm COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES exv12w1
 

Exhibit 12.1
Hanover Compressor Company
Computation of Ratio of Earnings to Fixed Charges
(Amounts in thousands of dollars, except ratio amounts)
                                         
    Year Ended December 31,  
    2006     2005 (1)     2004 (2)     2003 (3)     2002 (4)  
 
                                       
Earnings:
                                       
Income (loss) from continuing operations before taxes
    114,504       (9,434 )     (29,324 )     (113,859 )     (97,325 )
 
                                       
Add:
                                       
Interest on indebtedness, amortization of
    124,274       147,796       158,241       95,341       46,639  
capitalized interest and amortization of debt expense and discount
                                       
Leasing expense and the estimated interest factor attributable to rents
    4,075       3,234       3,450       49,818       95,362  
Equity in income of non-consolidated affiliates in excess of distributions of income
    (1,831 )     (2,783 )     (10,112 )     (4,563 )     (1,966 )
 
                             
Earnings as adjusted
    241,022       138,813       122,255       26,737       42,710  
 
                             
 
                                       
Fixed charges:
                                       
Interest on indebtedness, amortization of capitalized debt expense and discount and capitalized interest
    125,339       147,344       157,502       95,850       48,763  
Leasing expense and the estimated interest factor attributable to rents
    4,075       3,234       3,450       49,818       95,362  
 
                             
Total fixed charges
    129,414       150,578       160,952       145,668       144,125  
 
                             
Ratio of earnings to fixed charges
    1.86                          
 
                             
     
(1)
  Due to Hanover’s loss for the year ended December 31, 2005, the ratio was less than 1:1. Hanover would have had to generate additional pre-tax earnings of $11.8 million to achieve coverage of 1:1. During the year, we recorded $9.8 million in pre-tax charges. For a description of these pre-tax charges, see Note 22 in the notes to the consolidated financial statements included in Hanover’s Annual Report on Form 10-K for the year ended December 31, 2005.
 
   
(2)
  Due to Hanover’s loss for the year ended December 31, 2004, the ratio was less than 1:1. Hanover would have had to generate additional pre-tax earnings of $38.7 million to achieve coverage of 1:1. During the year, we recorded $0.4 million in pre-tax benefit. For a description of this pre-tax benefit, see Note 22 in the notes to the consolidated financial statements included in Hanover’s Annual Report on Form 10-K for the year ended December 31, 2005.
 
   
(3)
  Due to Hanover’s loss for the year ended December 31, 2003, the ratio was less than 1:1. Hanover would have had to generate additional pre-tax earnings of $118.9 million to achieve coverage of 1:1. During the year, we recorded $250.6 million in pre-tax charges. For a description of these pre-tax charges, see Note 22 in the notes to the consolidated financial statements included in Hanover’s Annual Report on Form 10-K for the year ended December 31, 2005.
 
   
(4)
  Due to Hanover’s loss for the year ended December 31, 2002, the ratio was less than 1:1. Hanover would have had to generate additional pre-tax earnings of $101.4 million to achieve coverage of 1:1. During the year, we recorded $182.7 million in pre-tax charges. For a description of these pre-tax charges, see Note 22 in the notes to the consolidated financial statements included in Hanover’s Annual Report on Form 10-K for the year ended December 31, 2004.