Exhibit 12
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
2007(1) | 2006 | 2005 | 2004 | 2003 | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
(Loss)/Income Before Income Taxes | $ | (1,215 | ) | $ | 1,483 | $ | 497 | $ | (168 | ) | $ | (46 | ) | |||||||
Less: Equity Income | 2,049 | 1,459 | 873 | 347 | 54 | |||||||||||||||
(Loss)/Income Before Income Taxes and Equity Income | (3,264 | ) | 24 | (376 | ) | (515 | ) | (100 | ) | |||||||||||
Add Fixed Charges: | ||||||||||||||||||||
Preference Dividends | 118 | 86 | 86 | 34 | — | |||||||||||||||
Interest Expense | 245 | 172 | 163 | 168 | 81 | |||||||||||||||
One-third of Rental Expense | 52 | 39 | 37 | 30 | 30 | |||||||||||||||
Capitalized Interest | 18 | 13 | 14 | 20 | 11 | |||||||||||||||
Total Fixed Charges | 433 | 310 | 300 | 252 | 122 | |||||||||||||||
Less: Capitalized Interest | 18 | 13 | 14 | 20 | 11 | |||||||||||||||
Less: Preference Dividends | 118 | 86 | 86 | 34 | — | |||||||||||||||
Add: Amortization of Capitalized Interest | 15 | 10 | 10 | 9 | 9 | |||||||||||||||
Add: Distributed Income of Equity Investees | 1,787 | 1,332 | 647 | 228 | 32 | |||||||||||||||
(Loss)/Earnings Before Income Taxes and Fixed | ||||||||||||||||||||
Charges (other than Capitalized Interest) | $ | (1,165 | ) | $ | 1,577 | $ | 481 | $ | (80 | ) | $ | 52 | ||||||||
Ratio of Earnings to Fixed Charges | (2.7 | )* | 5.1 | 1.6 | (0.3 | )** | 0.4 | *** | ||||||||||||
(1) | (Loss)/income before income taxes includes the purchase accounting impacts of the OBS acquisition, | |
* | For the year ended December 31, 2007, earnings were insufficient to cover fixed charges by $1.6 billion. | |
** | 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 $156 million, $118 million, $110 million, $100 million and $91 million for the years ended December 31, 2007, 2006, 2005, 2004 and 2003, respectively.
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