EX-12 2 exhibit12.htm EXHIBIT 12 exhibit12.htm
EXHIBIT 12
 
 
Statement of Computation of Ratio of Earnings to Fixed Charges
Omnicare, Inc. and Subsidiary Companies
(in thousands, except ratios)
Unaudited
 
 
Three months ended,
  
Nine months ended
  
 
September 30,
  
September 30,
  
 
2011
  
2010
  
2011
  
2010
  
Income from continuing operations before income taxes
 $61,127
 (1)
 $(23,736)
 (1)
 $202,790
 (1)
 $106,973
 (1)
Add fixed charges:
                
Interest expense
 28,173
  
 28,965
  
 81,074
  
 83,203
  
Amortization of discount on convertible notes (3)
 6,107
  
 7,615
  
 17,969
  
 22,419
  
Amortization of debt issuance expense
 1,499
  
 1,673
  
 4,320
  
 6,371
  
Interest expense-special items
 20,168
  
 337
  
 21,247
  
 9,721
  
Interest portion of rent expense
 4,798
  
 4,977
  
 14,953
  
 15,411
  
Adjusted income
 $121,872
  
 $19,831
  
 $342,353
  
 $244,098
  
Fixed charges:
                
Interest expense
 $28,173
  
 $28,965
  
 $81,074
  
 $83,203
  
Amortization of discount on convertible notes (3)
 6,107
  
 7,615
  
 17,969
  
 22,419
  
Amortization of debt issuance expense
 1,499
  
 1,673
  
 4,320
  
 6,371
  
Interest expense-special items
 20,168
  
 337
  
 21,247
  
 9,721
  
Interest portion of rent expense
 4,798
  
 4,977
  
 14,953
  
 15,411
  
Fixed charges
 $60,745
  
 $43,567
  
 $139,563
  
 $137,125
  
Ratio of earnings to fixed charges(2)
 2.0
 x
 0.5
 x
 2.5
 x
 1.8
 x
 

(1)           Certain of the Company’s debt agreements and indentures provide for the exclusion of various special charges from applicable financial covenant coverage calculations.  The following listing of charges, which are included in the Company’s income from continuing operations before income taxes, includes certain of these excludable charges:


 
Three months ended,
  
Nine months ended
  
 
September 30,
  
September 30,
  
 
2011
  
2010
  
2011
  
2010
  
Settlements, litigation and other related charges (a)
   6,742     36,731     32,571     71,598  
Separation, benefit plan termination and related costs (b)
   -     64,760     -     64,760  
Gain on sale of rabbi trust assets (b)
   -     (3,164 )   -     (3,164 )
Other miscellaneous charges (c)
   6,718     5,186     10,939     17,145  
Total - non-interest expense special items
 $ 13,460   $ 103,513   $ 43,510   $ 150,339  
                         
Interest expense special items (d)
 $ 20,168   $ 337   $ 21,247   $ 9,721  
                         
(a) See the "Commitments and Contingencies" note of the Notes to the Consolidated Financial Statements.
        
(b) See further discussion at the “Separation, Benefit Plan Termination and Related Costs” caption of the “Significant Accounting Policies”
note of the Notes to Consolidated Financial Statements.
  
(c) See further discussion at the “Other Miscellaneous Charges” caption of the “Significant Accounting Policies” note of the Notes to Consolidated Financial Statements.
  
(d) See the "Debt" note of the Notes to the Consolidated Financial Statements.
                    

(2)           The ratio of earnings to fixed charges has been computed by adding income from continuing operations before income taxes and fixed charges to derive adjusted income, and dividing adjusted income by fixed charges.  Fixed charges consist of interest expense on debt (including the amortization of debt issuance expense) and one-third (the proportion deemed representative of the interest portion) of rent expense.  Due to the registrants loss (including special items) in the three months ended September 30, 2010, the ratio coverage was less than 1:1.  The registrant would have needed to generate additional earnings of $23,736 to achieve coverage of 1:1 in the three months ended September 30, 2010.
 
(3)           See the “Debt” note of the Notes to Consolidated Financial Statements.