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Exhibit 12
MAGELLAN HEALTH SERVICES, INC AND CONSOLIDATED SUBSIDIARIES
COMBINED WITH UNCONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO COMBINED
FIXED CHARGES AND PREFERENCE DIVIDENDS
(Dollars in thousands)
| For the Fiscal Year Ended | | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, | | |||||||||||||||||||
| Nine months ended 6/30/2002 | ||||||||||||||||||||
| 1997 | 1998 | 1999 | 2000 | 2001 | ||||||||||||||||
EARNINGS: | |||||||||||||||||||||
Income (loss) from continuing operations before income taxes, minority interest, and extraordinary items | $ | (56,163 | ) | $ | (8,931 | ) | $ | 37,457 | $ | 17,698 | $ | 69,740 | $ | 29,537 | |||||||
Less: Equity in (earnings) / loss from unconsolidated subsidiary | 5,567 | (12,795 | ) | (20,442 | ) | (9,792 | ) | (36,566 | ) | (7,664 | ) | ||||||||||
Income (loss) from continuing operations before income taxes, minority interest, extraordinary items and equity in (earnings) / loss of unconsolidated subsidiary | (50,596 | ) | (21,726 | ) | 17,015 | 7,906 | 33,174 | 21,873 | |||||||||||||
Add: | |||||||||||||||||||||
Interest expense | 55,482 | 87,290 | 104,156 | 106,711 | 103,783 | 72,778 | |||||||||||||||
Portion of rents representative of interest factor | 2,586 | 7,859 | 10,765 | 11,349 | 11,102 | 8,201 | |||||||||||||||
Cash Distributions from uncons subs | — | 11,441 | 21,970 | 14,324 | 38,353 | 8,420 | |||||||||||||||
58,068 | 106,590 | 136,891 | 132,384 | 153,238 | 89,399 | ||||||||||||||||
Total earnings | $ | 7,472 | $ | 84,864 | $ | 153,906 | $ | 140,290 | $ | 186,412 | $ | 111,272 | |||||||||
FIXED CHARGES AND PREFERENCE DIVIDENDS: | |||||||||||||||||||||
Interest expense | $ | 55,482 | $ | 87,290 | $ | 104,156 | $ | 106,711 | $ | 103,783 | $ | 72,778 | |||||||||
Portion of rents representative of interest factor | 2,586 | 7,859 | 10,765 | 11,349 | 11,102 | 8,201 | |||||||||||||||
Capitalized interest | — | 513 | 673 | — | — | — | |||||||||||||||
Less: | |||||||||||||||||||||
Fixed charges of certain unconsolidated subsidiaries | — | — | — | — | |||||||||||||||||
Fixed charges before preference dividends | 58,068 | 95,662 | 115,594 | 118,060 | 114,885 | 80,979 | |||||||||||||||
Preferred dividend requirement | — | — | — | 3,802 | 5,049 | 3,842 | |||||||||||||||
Effective tax rate (1) | N/A | N/A | N/A | 50.8 | % | 52.2 | % | 41.7 | % | ||||||||||||
Preferred dividend factor on pre-tax basis | — | — | — | 7,731 | 10,558 | 6,585 | |||||||||||||||
Combined fixed charges and preference dividends | $ | 58,068 | $ | 95,662 | $ | 115,594 | $ | 125,790 | $ | 125,443 | $ | 87,565 | |||||||||
Ratio (dollar amount of deficiency) | $ | (50,596 | ) | $ | (10,798 | ) | 1.33 | 1.12 | 1.49 | 1.27 | |||||||||||
- (1)
- Represents income from continuing operations before provision for income taxes divided by income from continuing operations, which adjusts dividends on preferred stock to a pre-tax basis.
MAGELLAN HEALTH SERVICES, INC.
FIXED CHARGES
(in thousands)
| FY 97 | FY 98 | FY 99 | FY 00 | FY 01 | Nine months ended 6/30/2002 | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
I. INTEREST EXPENSE | ||||||||||||||
Net interest per 10-K/Pro Formas | 46,438 | 76,505 | 93,752 | 97,286 | 93,662 | 69,380 | ||||||||
Less interest income | (9,044 | ) | (10,785 | ) | (10,404 | ) | (9,425 | ) | (10,121 | ) | (3,399 | ) | ||
Total interest expense | 55,482 | 87,290 | 104,156 | 106,711 | 103,783 | 72,779 | ||||||||
Non- Cash Int exp | 1,710 | 2,935 | 3,843 | 4,376 | 5,078 | 4,010 | ||||||||
Net CASH INT EXPENSE | 53,772 | 84,355 | 100,313 | 102,335 | 98,705 | 68,769 | ||||||||
II. RENTS REPRESENTATIVE OF INTEREST FACTOR | ||||||||||||||
Rent expense — continuing ops | 7,759 | 23,577 | 32,296 | 34,046 | 33,306 | 24,604 | ||||||||
Factor (1/3 of rent expense) | 2,586 | 7,859 | 10,765 | 11,349 | 11,102 | 8,201 | ||||||||
Rent expense — uncons.: | ||||||||||||||
NONE | ||||||||||||||
Total rent expense | — | — | — | — | — | — | ||||||||
Factor (1/3 of rent expense) | — | — | — | — | — | — | ||||||||
Effective Tax Rate Continuing Oper | ||||||||||||||
Pre-tax income cont ops | 17,698 | 69,740 | 29,537 | |||||||||||
Provision for income taxes cont ops | 8,994 | 36,388 | 12,305 | |||||||||||
Effective tax rate (ETR) | 50.8 | % | 52.2 | % | 41.7 | % | ||||||||
Preferred dividend rate (1-ETR) | 49.2 | % | 47.8 | % | 58.3 | % | ||||||||
preferred div | 3,802 | 5,049 | 3,842 | |||||||||||
Dividend Requirement | 7,731 | 10,558 | 6,585 | |||||||||||
Exhibit 12 Comptation of Ratio of Earnings