Exhibit 12
Statement of Computation of Ratio of Earnings to Fixed Charges
Omnicare, Inc. and Subsidiary Companies
(in thousands, except ratios)
Unaudited
Three months ended, | Nine months ended | |||||||||||||||||
September 30, | September 30, | |||||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||||
Income (loss) from continuing operations before income taxes | $ | (117,290 | ) | (1) | $ | 96,584 | (1) | $ | 4,882 | (1) | $ | 230,837 | (1) | |||||
Add fixed charges: | ||||||||||||||||||
Interest expense | 29,305 | 28,261 | 92,927 | 86,423 | ||||||||||||||
Amortization of discount on convertible notes (3) | 7,615 | 7,059 | 22,419 | 20,783 | ||||||||||||||
Amortization of debt issuance expense | 1,673 | 1,327 | 6,371 | 4,227 | ||||||||||||||
Interest portion of rent expense | 4,977 | 5,703 | 15,411 | 17,366 | ||||||||||||||
Adjusted income (loss) | $ | (73,720 | ) | $ | 138,934 | $ | 142,010 | $ | 359,636 | |||||||||
Fixed charges: | ||||||||||||||||||
Interest expense | $ | 29,305 | $ | 28,261 | $ | 92,927 | $ | 86,423 | ||||||||||
Amortization of discount on convertible notes (3) | 7,615 | 7,059 | 22,419 | 20,783 | ||||||||||||||
Amortization of debt issuance expense | 1,673 | 1,327 | 6,371 | 4,227 | ||||||||||||||
Interest portion of rent expense | 4,977 | 5,703 | 15,411 | 17,366 | ||||||||||||||
Fixed charges | $ | 43,570 | $ | 42,350 | $ | 137,128 | $ | 128,799 | ||||||||||
Ratio of earnings (loss) to fixed charges(2) | -1.7 | x | 3.3 | x | 1.0 | x | 2.8 | x |
(1) Income from continuing operations before income taxes includes certain special items and accounting change impacts (pretax), (which are further discussed in the Management’s Discussion and Analysis at Part I, Item 2 of this Filing):
Three months ended, | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Restructuring and other related charges (a) | $ | 4,332 | $ | 6,295 | $ | 16,851 | $ | 19,095 | ||||||||
Settlements, litigation and other related charges (b) | 36,731 | 1,739 | 71,598 | 71,761 | ||||||||||||
Repack matters (b) | (2,997 | ) | 2,032 | (1,117 | ) | 5,221 | ||||||||||
Acquisition and other related costs (c) | 3,915 | (632 | ) | 3,978 | 2,218 | |||||||||||
Separation costs (d) | 39,573 | - | 39,573 | - | ||||||||||||
Stock option expense (e) | 933 | 1,054 | 3,509 | 4,237 | ||||||||||||
Debt redemption costs (f) | 337 | - | 10,167 | - | ||||||||||||
Benefit plan termination and related costs (g) | 25,187 | - | 25,187 | - | ||||||||||||
Goodwill impairment charge (h) | 90,628 | - | 90,628 | - | ||||||||||||
Gain on rabbi trust assets (g) | (3,164 | ) | - | (3,164 | ) | - |
(a) See the "Restructuring and Other Related Charges" note of the Notes to the Consolidated Financial Statements.
(b) See the "Commitments and Contingencies" note of the Notes to the Consolidated Financial Statements.
(c) See the "Acquisitions" note of the Notes to the Consolidated Financial Statements.
(d) See the "Separation Costs" note of the Notes to the Consolidated Financial Statements.
(e) See the "Stock-Based Compensation" note of the Notes to the Consolidated Financial Statements.
(f) See the "Debt" note of the Notes to the Consolidated Financial Statements.
(g) See the "Employee Benefit Plans" note of the Notes to the Consolidated Financial Statements.
(h) See the "Goodwill and Other Intangible Assets" note of the Notes to the Consolidated Financial Statements.
(2) The ratio of earnings to fixed charges has been computed by adding income from continuing operations before income taxes and fixed charges to derive adjusted income, and dividing adjusted income by fixed charges. Fixed charges consist of interest expense on debt (including the amortization of debt issuance expense) and one-third (the proportion deemed representative of the interest portion) of rent expense. Due to the registrant's loss (including special items) in the three months ended September 30, 2010, the ratio coverage was less than 1:1. The registrant would have needed to generate additional earnings of $117,290 to achieve a coverage of 1:1 in the three months ended September 30, 2010.
(3) See the “Debt” note of the Notes to Consolidated Financial Statements.