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, | |||||||||||||||||||||||
2009 | 2008(1) | 2007(1) | 2006 | 2005 | 2004 | |||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Income/(Loss) Before Income Taxes | $ | 934 | $ | 2,049 | $ | (1,215 | ) | $ | 1,483 | $ | 497 | $ | (168 | ) | ||||||||||
Less: Equity Income | 400 | 1,870 | 2,049 | 1,459 | 873 | 347 | ||||||||||||||||||
Income/(Loss) Before Income Taxes and Equity Income | 534 | 179 | (3,264 | ) | 24 | (376 | ) | (515 | ) | |||||||||||||||
Add Fixed Charges: | ||||||||||||||||||||||||
Preferred Stock Dividends | 38 | 150 | 118 | 86 | 86 | 34 | ||||||||||||||||||
Interest Expense | 109 | 536 | 245 | 172 | 163 | 168 | ||||||||||||||||||
One-third of Rental Expense | 20 | 86 | 52 | 39 | 37 | 30 | ||||||||||||||||||
Capitalized Interest | 7 | 19 | 18 | 13 | 14 | 20 | ||||||||||||||||||
Total Fixed Charges | 174 | 791 | 433 | 310 | 300 | 252 | ||||||||||||||||||
Less: Capitalized Interest | 7 | 19 | 18 | 13 | 14 | 20 | ||||||||||||||||||
Less: Preferred Stock Dividends | 38 | 150 | 118 | 86 | 86 | 34 | ||||||||||||||||||
Add: Amortization of Capitalized Interest | 3 | 12 | 15 | 10 | 10 | 9 | ||||||||||||||||||
Add: Distributed Income of Equity Investees | 370 | 1,782 | 1,787 | 1,332 | 647 | 228 | ||||||||||||||||||
Earnings/(Loss) Before Income Taxes and Fixed Charges (other than Capitalized Interest) | $ | 1,036 | $ | 2,595 | $ | (1,165 | ) | $ | 1,577 | $ | 481 | $ | (80 | ) | ||||||||||
Ratio of Earnings to Fixed Charges | 6.0 | 3.3 | (2.7 | )* | 5.1 | 1.6 | (0.3 | )** | ||||||||||||||||
(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. |
“Earnings” consist of income/(loss) before income taxes and equity income, plus fixed charges (other than capitalized interest and preferred stock 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, preferred stock 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, 2009 and was $258 million, $156 million, $118 million, $110 million and $100 million for the years ended December 31, 2008, 2007, 2006, 2005 and 2004, respectively.