Exhibit 12
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Three Months | ||||||||||||||||||||||||
Ended | ||||||||||||||||||||||||
March 31, | Years Ended December 31 | |||||||||||||||||||||||
2008(1) | 2007(1) | 2006 | 2005 | 2004 | 2003 | |||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Income/(loss) before income taxes | $ | 363 | $ | (1,215 | ) | $ | 1,483 | $ | 497 | $ | (168 | ) | $ | (46 | ) | |||||||||
Less: Equity income | 517 | 2,049 | 1,459 | 873 | 347 | 54 | ||||||||||||||||||
(Loss)/income before income taxes and equity income | (154 | ) | (3,264 | ) | 24 | (376 | ) | (515 | ) | (100 | ) | |||||||||||||
Add: Fixed charges: | ||||||||||||||||||||||||
Preference dividends | 38 | 118 | 86 | 86 | 34 | — | ||||||||||||||||||
Interest expense | 138 | 245 | 172 | 163 | 168 | 81 | ||||||||||||||||||
One-third of rental expense | 20 | 52 | 39 | 37 | 30 | 30 | ||||||||||||||||||
Capitalized interest | 5 | 18 | 13 | 14 | 20 | 11 | ||||||||||||||||||
Total fixed charges | 201 | 433 | 310 | 300 | 252 | 122 | ||||||||||||||||||
Less: Capitalized interest | 5 | 18 | 13 | 14 | 20 | 11 | ||||||||||||||||||
Less: Preference dividends | 38 | 118 | 86 | 86 | 34 | — | ||||||||||||||||||
Add: Amortization of capitalized interest | 3 | 15 | 10 | 10 | 9 | 9 | ||||||||||||||||||
Add: Distributed income of equity investees | 539 | 1,787 | 1,332 | 647 | 228 | 32 | ||||||||||||||||||
Earnings/(loss) before income taxes and fixed charges (other than capitalized interest) | $ | 546 | $ | (1,165 | ) | $ | 1,577 | $ | 481 | $ | (80 | ) | $ | 52 | ||||||||||
Ratio of earnings to fixed charges | 2.7 | (2.7 | )* | 5.1 | 1.6 | (0.3 | )** | 0.4 | *** | |||||||||||||||
(1) | Income/(loss) 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 investees. 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 $60 million for the three months ended March 31, 2008 and 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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