EX-12 4 extw3.txt EX-12
LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES EXHIBIT 12 - HISTORICAL RATIO OF EARNINGS TO FIXED CHARGES Six Months Ended June 30 Year Ended December 31, ------------------------ --------------------------------------------------------- (millions of dollars) 2003 2002(1) 2002(1) 2001(1) 2000 1999 1998 --------- --------- --------- --------- --------- --------- --------- (Loss) Income before Federal Income Taxes, Cumulative Effect of Accounting Changes and Minority Interest $223.1 $142.4 $(53.8) $705.9 $836.3 $570.0 $697.4 Equity in Losses (Earnings) of Unconsolidated Affiliates -- 0.6 0.6 (5.7) 0.4 (5.8) (3.3) Sub-total of Fixed Charges 57.5 62.7 118.9 147.5 168.9 160.9 144.1 --------- --------- --------- --------- --------- --------- --------- Sub-total of Adjusted Net Income 280.6 205.7 65.7 847.7 1,005.6 725.1 838.2 Interest on Annuities & Financial Products 815.6 788.6 1,617.1 1,506.0 1,474.2 1,510.4 1,446.2 --------- --------- --------- --------- --------- --------- --------- Adjusted Income Base 1,096.2 994.3 1,682.8 2,353.7 2,479.8 2,235.5 2,284.4 Rent Expense 33.5 39.7 67.0 79.4 88.4 81.5 81.3 Fixed Charges: Interest and Debt Expense 46.3 49.5 96.6 121.0 139.5 133.7 117.1 Rent (Pro-rated) 11.2 13.2 22.3 26.5 29.4 27.2 27.0 --------- --------- --------- --------- --------- --------- --------- Sub-total of Fixed Charges 57.5 62.7 118.9 147.5 168.9 160.9 144.1 Interest on Annuities & Financial Products 815.6 788.6 1,617.1 1,506.0 1,474.2 1,510.4 1,446.2 --------- --------- --------- --------- --------- --------- --------- Sub-total of Fixed Charges $873.1 $851.3 1,736.0 1,653.5 1,643.1 1,671.3 1,590.3 Preferred Dividends (Pre-tax) * * 0.1 0.1 0.1 0.1 0.1 --------- --------- --------- --------- --------- --------- --------- Total Fixed Charges $873.1 $851.3 $1,736.1 $1,653.6 $1,643.2 $1,671.4 $1,590.4 *Less than $100,000 Ratio of Earnings to Fixed Charges: Ratio of Earnings to Fixed Charges (Including Interest on Annuities and Financial Products) (2) 1.26 1.17 0.97 1.42 1.51 1.34 1.44 Excluding Interest on Annuities and Financial Products (3) 4.88 3.28 0.55 5.75 5.95 4.51 5.82 Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends (4) 1.26 1.17 0.97 1.42 1.51 1.34 1.44 (1) Restated, see Note 2 - Changes in Accounting Principle to the June 30, 2003 unaudited consolidated financial statements for additional information. (2) For purposes of determining this ratio, earnings consist of income before Federal income taxes, cumulative effect of accounting changes, if any, and minority interests adjusted for the difference between income or losses from unconsolidated equity investments and cash distributions from such investments, plus fixed charges. Fixed charges consist of 1) interest and debt expense on short and long-term debt and distributions to minority interest-preferred securities of subsidiary companies; 2) interest on annuities and financial products and; 3) the portion of operating leases that are representative of the interest factor. (3) Same as the ratio of earnings to fixed charges, except fixed charges and earnings in this calculation do not include interest on annuities and financial products. This coverage ratio is not required, but is provided as additional information. This ratio is commonly used by individuals who analyze LNC's results. (4) Same as the ratio of earnings to fixed charges, including interest on annuities and financial products, except that fixed charges include the pre-tax earnings required to cover preferred stock dividend requirements.