EX-12 3 exhibit12.txt EXHIBIT 12.1 Exhibit 12.1 Computation of Ratio of Earnings to Fixed Charges, Preferred Dividends and Distributions on Company-Obligated Mandatorily Redeemable Preferred Securities of Subsidiary Trusts - Consolidated Basis for the six months ended June 30, 2003 and the year ended December 31, 2002 (Dollars in millions)
Six months ended Year ended June 30, December 31, 2003 2002 ---- ---- Pretax loss from operations: Net loss.................................................................... $(39.6) $(7,835.7) Add income tax expense (benefit)............................................ (31.2) 864.3 Add discontinued operations................................................. (16.0) 2,215.0 Add minority interest....................................................... - 173.2 Add cumulative effect of accounting change.................................. - 2,949.2 ------ --------- Pretax loss from operations.............................................. (86.8) (1,634.0) ------ --------- Add fixed charges: Interest expense (a)........................................................ 161.6 346.7 Interest expense on investment borrowings................................... 6.4 16.4 Interest added to policyholder account balances ............................ 233.9 501.7 Portion of rental (b)....................................................... 6.7 13.8 ------ --------- Fixed charges............................................................ 408.6 878.6 ------ --------- Adjusted earnings (loss)................................................. $321.8 $ (755.4) ====== ========= Ratio of earnings to fixed charges................................... (e) (c) = = Fixed charges................................................................. $408.6 $ 878.6 Add dividends on preferred stock, including dividends on preferred stock of subsidiaries (divided by the ratio of income before minority interest to pretax income).................................................. - 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...................................... $408.6 $ 1,055.0 ====== ========= Adjusted earnings (loss)................................................. $321.8 $ (755.4) ====== ========= Ratio of earnings to fixed charges, preferred dividends and distributions on Company-obligated mandatorily redeemable preferred securities of subsidiary trusts.............................. (f) (d) = = -------------------- (a) Interest expense includes $20.9 million and $21.2 million for the six months ended June 30, 2003, and the year ended December 31, 2002, respectively, for the interest incurred on the bank loans of current and former directors, officers and key employees used to purchase Conseco common stock. Such bank loans and interest are guaranteed by the Company. (b) Interest portion of rental is estimated to be 33 percent. (c) For such ratio, adjusted earnings were $1,634.0 million less than fixed charges. Adjusted earnings for the year ended December 31, 2002, included: (i) special charges and reorganization items totaling $110.9 million; (ii) goodwill impairment charges of $500.0 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 ratio, adjusted earnings were $1,810.4 million less than fixed charges. Adjusted earnings for the year ended December 31, 2002, included: (i) special charges and reorganization items totaling $110.9 million; (ii) goodwill impairment charges of $500.0 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. (e) For such ratio, adjusted earnings were $86.8 million less than fixed charges. Adjusted earnings for the six months ended June 30, 2003, included: (i) reorganization items totaling $32.5 million; and (ii) provision for losses related to loan guarantees of $31.1 million, as described in greater detail in the notes to the accompanying consolidated financial statements. (f) For such ratio, adjusted earnings were $86.8 million less than fixed charges. Adjusted earnings for the six months ended June 30, 2003, included: (i) reorganization items totaling $32.5 million; and (ii) provision for losses related to loan guarantees of $31.1 million, as described in greater detail in the notes to the accompanying consolidated financial statements.