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Overview
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 For debt offerings, show ratio of earnings to fixed charges
For preferred offerings, show ratio of combined fixed charges and preference dividends to earnings
- For last five years and latest interim period
- File calculation as an exhibit
- Include ratios in
Summary
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S-K 503(d) Ratio of Earnings to Fixed Charges
 General
- Complete text of Instruction
- GPO version
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Preamble
to S-K 503 Plain English applies
- The registrant must furnish this information in plain English. See
Rule 421(d) of Regulation C of this chapter.
- GPO version
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S-K
503(d)
- Ratio of earnings to fixed charges. If you register debt securities,
show a ratio of earnings to fixed charges. If you register preference equity
securities, show the ratio of combined fixed charges and preference dividends to
earnings. Present the ratio for each of the last five fiscal years and the
latest interim period for which financial statements are presented in the
document. If you will use the proceeds from the sale of debt or preference
securities to repay any of your outstanding debt or to retire other securities
and the change in the ratio would be ten percent or greater, you must include a
ratio showing the application of the proceeds, commonly referred to as the pro
forma ratio.
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Instructions
to Item 503(d):
- 1. Definitions. In calculating the ratio of earnings to fixed charges,
you must use the following definitions:
- A. Fixed charges. The term "fixed charges"
means the sum of the following: (a) interest expensed and capitalized, (b)
amortized premiums, discounts and capitalized expenses related to indebtedness,
(c) an estimate of the interest within rental expense, and (d) preference
security dividend requirements of consolidated subsidiaries.
- B. Preference security dividend. The term
"preference security dividend" is the amount of pre-tax earnings that is
required to pay the dividends on outstanding preference securities. The dividend
requirement must be computed as the amount of the dividend divided by (1 minus
the effective income tax rate applicable to continuing operations).
- C. Earnings. The term "earnings" is the
amount resulting from adding and subtracting the following items. Add the
following: (a) Pre-tax income from continuing operations before adjustment for
minority interests in consolidated subsidiaries or income or loss from equity
investees, (b) fixed charges, (c) amortization of capitalized interest, (d)
distributed income of equity investees, and (e) your share of pre-tax losses of
equity investees for which charges arising from guarantees are included in fixed
charges. From the total of the added items, subtract the following: (a) interest
capitalized, (b) preference security dividend requirements of consolidated
subsidiaries, and (c) the minority interest in pre-tax income of subsidiaries
that have not incurred fixed charges. Equity investees are investments that you
account for using the equity method of accounting. Public utilities following
SFAS 71 should not add amortization of capitalized interest in determining
earnings, nor reduce fixed charges by any allowance for funds used during
construction.
- 2. Disclosure. Disclose the following information when showing the
ratio of earnings to fixed charges:
- A. Deficiency. If a ratio indicates less
than one-to-one coverage, disclose the dollar amount of the deficiency.
- B. Pro forma ratio. You may show the pro
forma ratio only for the most recent fiscal year and the latest interim period.
Use the net change in interest or dividends from the refinancing to calculate
the pro forma ratio.
- C. Foreign private issuers. A foreign
private issuer must show the ratio based on the figures in the primary financial
statement. A foreign private issuer must show the ratio based on the figures
resulting from the reconciliation to U.S. generally accepted accounting
principles if this ratio is materially different.
- D. Summary Section. If you provide a
summary or similar section in the prospectus, show the ratios in that section.
- 3. Exhibit. File an exhibit to the registration statement to show the
figures used to calculate the ratios. See paragraph (b)(12) of Item 601 of
Regulation S-K.
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| Instruction
to Item 503 (Asset-backed issuers) SEC_CODE_REF_0090001192884
- For asset-backed securities, see also Item 1103 of Regulation AB.
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Applies To
SEC Releases
Related Topics
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