EX-12 2 y41280exv12.htm EX-12: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES EX-12
 

Exhibit 12
 
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
 
                                                 
    Nine Months
 		                               
    Ended
 		                               
    September 30,
 		    Years Ended December 31  
    2007     2006     2005     2004     2003     2002  
    (Dollars in millions)  
 
Income/(loss) before income taxes
  $ 2,125     $ 1,483     $ 497     $ (168 )   $ (46 )   $ 2,563  
Less: Equity income
    1,483       1,459       873       347       54       —  
                                                 
Income/(loss) before income taxes and equity income
    642       24       (376 )     (515 )     (100 )     2,563  
Add: Fixed charges:
                                               
Preference dividends
    80       86       86       34       —       —  
Interest expense
    120       172       163       168       81       28  
One-third of rental expense
    34       39       37       30       30       27  
Capitalized interest
    14       13       14       20       11       24  
                                                 
Total fixed charges
    248       310       300       252       122       79  
Less: Capitalized interest
    14       13       14       20       11       24  
Less: Preference dividends
    80       86       86       34       —       —  
Add: Amortization of capitalized interest
    8       10       10       9       9       8  
Add: Distributed income of equity investees
    1,323       1,332       647       228       32       —  
                                                 
Earnings/(loss) before income taxes and fixed charges (other than capitalized interest)
  $ 2,127     $ 1,577     $ 481     $ (80 )   $ 52     $ 2,626  
                                                 
Ratio of earnings to fixed charges
    8.6       5.1       1.6       (0.3 )*     0.4 **     33.2  
                                                 
 
 
* For the year ended December 31, 2004, earnings were insufficient to cover fixed charges by $332 million.
 
** For the year ended December 31, 2003, earnings were insufficient to cover fixed charges by $70 million.
 
“Earnings” consist of income/(loss) before income taxes and equity income, plus fixed charges (other than capitalized interest and preference dividends), amortization of capitalized interest and distributed income of equity investee. Schering-Plough includes interest expense or interest income on unrecognized tax benefits as a component of income tax expense. “Fixed charges” consist of interest expense, capitalized interest, preference dividends and one-third of rentals which Schering-Plough believes to be a reasonable estimate of an interest factor on leases. Total rent expense was $101 million for the nine months ended September 30, 2007 and was $118 million, $110 million, $100 million, $91 million and $81 million for the years ended December 31, 2006, 2005, 2004, 2003 and 2002, respectively.


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