EX-12 4 exhibit121.txt EXHIBIT 12.1 Exhibit 12.1 CONSECO, INC. AND SUBSIDIARIES Computation of Ratio of Earnings to Fixed Charges, Preferred Dividends and Distributions on Company-Obligated Mandatorily Redeemable Preferred Securities of Subsidiary Trusts - Consolidated Basis (Dollars in millions)
Successor Predecessor ---------------------------- --------------------------- Year Four months Eight months Year ended ended ended ended December 31, December 31, August 31, December 31, 2004 2003 2003(b) 2002 ---- ---- ---- ---- Pretax income (loss) from operations: Net income (loss)...................................... $294.8 $ 96.3 $2,201.7 $(7,835.7) Add income tax expense (benefit)....................... 159.3 53.2 (13.5) 864.3 Add discontinued operations............................ - - (16.0) 2,216.8 Add minority interest.................................. - - - 173.2 Add cumulative effect of accounting change............. - - - 2,949.2 ------ ------ -------- --------- Pretax income (loss) from operations................ 454.1 149.5 2,172.2 (1,632.2) ------ ------ -------- --------- Add fixed charges: Interest expense on corporate debt, including amortization........................................ 71.5 34.4 223.2 346.7 Interest expense on investment borrowings.............. 8.0 2.4 8.3 16.4 Interest added to policyholder account balances........ 410.4 145.5 307.9 496.6 Portion of rental (a).................................. 13.5 6.4 8.9 13.8 ------ ------ -------- --------- Fixed charges....................................... 503.4 188.7 548.3 873.5 ------ ------ --------- --------- Adjusted earnings (loss)............................ $957.5 $338.2 $2,720.5 $ (758.7) ====== ====== ======== ========= Ratio of earnings to fixed charges............... 1.90X 1.79X 4.96X (c) ===== ===== ===== = Fixed charges.............................................. $503.4 $188.7 $ 548.3 $ 873.5 Add dividends on preferred stock, including dividends on preferred stock of subsidiaries (divided by the ratio of income before minority interest to pretax income)...... 100.9 43.2 - 3.2 Add distributions on Company-obligated mandatorily redeemable preferred securities of subsidiary trusts... - - - 173.2 ------ ------ -------- --------- Fixed charges plus preferred dividends and distributions on Company-obligated mandatorily redeemable preferred securities of subsidiary trusts.............. $604.3 $231.9 $ 548.3 $ 1,049.9 ====== ====== ======== ========= Adjusted earnings (loss)............................ $957.5 $338.2 $2,720.5 $ (758.7) ====== ====== ======== ========= Ratio of earnings to fixed charges, preferred dividends and distributions on Company-obligated mandatorily redeemable preferred securities of subsidiary trusts.... 1.58X 1.46X 4.96X (d) ===== ===== ===== =
-------------------- (a) Interest portion of rental is estimated to be 33 percent. (b) Earnings for the eight months ended August 31, 2003 included reorganization items totaling $2,130.5 million. The reorganization items included: (i) $3,151.4 million related to the gain on the discharge of prepetition liabilities; (ii) $(950.0) million related to fresh start adjustments; and (iii) $(70.9) million related to professional fees. The ratios for the eight months ended August 31, 2003, excluding such reorganization items would be as follows: (i) ratio of earnings to fixed charges - 1.08X; and (ii) ratio of earnings to fixed charges excluding interest added to policyholder account balances - 1.17X. There were no preferred stock dividends or distributions on Company-obligated mandatorily redeemable preferred securities of subsidiary trusts during the eight months ended August 31, 2003. (c) For such ratios, earnings were $1,632.2 million less than fixed charges. Earnings for the year ended December 31, 2002 included: (i) special and reorganization charges of $110.9 million; (ii) goodwill impairment charges of $500 million; and (iii) provision for losses related to loan guarantees of $240.0 million, as described in greater detail in the notes to the accompanying consolidated financial statements. (d) For such ratios, earnings were $1,808.6 million less than fixed charges. Earnings for the year ended December 31, 2002 included: (i) special and reorganization charges of $110.9 million; (ii) goodwill impairment charges of $500 million; and (iii) provision for losses related to loan guarantees of $240.0 million, as described in greater detail in the notes to the accompanying consolidated financial statements.