Exhibit 12
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Six Months | ||||||||||||||||||||||||
Ended | Years Ended December 31 | |||||||||||||||||||||||
June 30, 2007 | 2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Income/(loss) before income taxes | $ | 1,293 | $ | 1,483 | $ | 497 | $ | (168 | ) | $ | (46 | ) | $ | 2,563 | ||||||||||
Less: Equity income | 978 | 1,459 | 873 | 347 | 54 | — | ||||||||||||||||||
Income/(loss) before income taxes and equity income | 315 | 24 | (376 | ) | (515 | ) | (100 | ) | 2,563 | |||||||||||||||
Add: Fixed charges: | ||||||||||||||||||||||||
Preference dividends | 43 | 86 | 86 | 34 | — | — | ||||||||||||||||||
Interest expense | 76 | 172 | 163 | 168 | 81 | 28 | ||||||||||||||||||
One-third of rental expense | 22 | 39 | 37 | 30 | 30 | 27 | ||||||||||||||||||
Capitalized interest | 10 | 13 | 14 | 20 | 11 | 24 | ||||||||||||||||||
Total fixed charges | 151 | 310 | 300 | 252 | 122 | 79 | ||||||||||||||||||
Less: Capitalized interest | 10 | 13 | 14 | 20 | 11 | 24 | ||||||||||||||||||
Less: Preference dividends | 43 | 86 | 86 | 34 | — | — | ||||||||||||||||||
Add: Amortization of capitalized interest | 6 | 10 | 10 | 9 | 9 | 8 | ||||||||||||||||||
Add: Distributed income of equity investees | 702 | 1,332 | 647 | 228 | 32 | — | ||||||||||||||||||
Earnings/(loss) before income taxes and fixed charges (other than capitalized interest) | $ | 1,121 | $ | 1,577 | $ | 481 | $ | (80 | ) | $ | 52 | $ | 2,626 | |||||||||||
Ratio of earnings to fixed charges | 7.4 | 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 $65 million for the six months ended June 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.