Statement of Computation of Ratio of Earnings to Fixed Charges
Omnicare, Inc. and Subsidiary Companies
(in thousands, except ratio)
For the years ended December 31, | ||||||||||||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||||||
Income from continuing operations before income taxes | $ | (73,991 | ) | (2 | ) | $ | 332,339 | (2 | ) | $ | 241,796 | (2 | ) | $ | 167,107 | (2 | ) | $ | 296,051 | (2 | ) | |||||||||
Add fixed charges: | ||||||||||||||||||||||||||||||
Interest expense | 115,481 | 114,307 | 135,177 | 155,864 | 161,890 | |||||||||||||||||||||||||
Amortization of discount on convertible notes (1) | 29,536 | 27,977 | 25,934 | 24,041 | 22,286 | |||||||||||||||||||||||||
Amortization of debt issuance expense | 5,944 | 5,589 | 7,896 | 7,209 | 7,278 | |||||||||||||||||||||||||
Interest expense-special items | 14,297 | (2 | ) | - | - | - | - | |||||||||||||||||||||||
Interest portion of rent expense | 20,926 | 23,049 | 25,157 | 23,794 | 22,459 | |||||||||||||||||||||||||
Adjusted income from continuing operations | $ | 112,193 | $ | 503,261 | $ | 435,960 | $ | 378,015 | $ | 509,964 | ||||||||||||||||||||
Fixed charges: | ||||||||||||||||||||||||||||||
Interest expense | $ | 115,481 | $ | 114,307 | $ | 135,177 | $ | 155,864 | $ | 161,890 | ||||||||||||||||||||
Amortization of discount on convertible notes (1) | 29,536 | 27,977 | 25,934 | 24,041 | 22,286 | |||||||||||||||||||||||||
Amortization of debt issuance expense | 5,944 | 5,589 | 7,896 | 7,209 | 7,278 | |||||||||||||||||||||||||
Interest expense-special items | 14,297 | (2 | ) | - | - | - | - | |||||||||||||||||||||||
Interest portion of rent expense | 20,926 | 23,049 | 25,157 | 23,794 | 22,459 | |||||||||||||||||||||||||
Fixed charges | $ | 186,184 | $ | 170,922 | $ | 194,164 | $ | 210,908 | $ | 213,913 | ||||||||||||||||||||
Ratio of earnings to fixed charges(3) | - | x | 2.9 | x | 2.2 | x | 1.8 | x | 2.4 | x |
(1) | See the “Debt” note of the Notes to Consolidated Financial Statements. |
(2) | Certain of the Company’s debt agreements and indentures provide for the exclusion of various special charges/(credits) from applicable financial covenant coverage calculations. The following listing of charges/(credits), which are included in the Company’s income from continuing operations before income taxes, includes certain of these excludable charges/(credits) for the years ended December 31 (in thousands): |
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Restructuring and other related charges (a) | $ | 27,927 | $ | 29,155 | $ | 35,784 | $ | 27,883 | $ | 29,562 | ||||||||||
Settlement, litigation and other related charges (b) | 113,709 | 77,449 | 99,267 | 42,516 | 125,128 | |||||||||||||||
Goodwill and other asset impairment charges (c) | 113,512 | - | - | - | - | |||||||||||||||
Separation, benefit plan termination and related costs (d) | 64,760 | |||||||||||||||||||
Other expense (b)(e)(f)(g)(a) | 87,316 | 5,893 | 6,445 | 17,193 | 39,858 | |||||||||||||||
Total - non-interest expense special items | $ | 407,224 | $ | 112,497 | $ | 141,496 | $ | 87,592 | $ | 194,548 | ||||||||||
Interest expense special items (d) | $ | 14,297 | $ | - | $ | - | $ | - | $ | - | ||||||||||
(a) See the "Restructuring and Other Related Charges" note of the Notes to Consolidated Financial Statements. | ||||||||||||||||||||
(b) See the "Commitments and Contingencies" note of the Notes to the Consolidated Financial Statements. | ||||||||||||||||||||
(c) See the "Goodwill and Other Intangible Assets" note of the Notes to the Consolidated Financial Statements. | ||||||||||||||||||||
(d) See the "Separation, Benefit Plan Termination and Related Costs" note of the Notes to the Consolidated Financial Statements. | ||||||||||||||||||||
(e) See the "Debt" note of the Notes to the Consolidated Financial Statements. | ||||||||||||||||||||
(f) See the "Acquisitions" note of the Notes to the Consolidated Financial Statements. | ||||||||||||||||||||
(g) See the "Stock-Based Compensation" note of the Notes to Consolidated Financial Statements. |
For the 2007 and 2006 years data, see the respective note in that years consolidated financial statements for additional information on the nature of the charge reflected above.
(3) | The ratio of earnings to fixed charges has been computed by adding income 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 expense) and one-third (the proportion deemed representative of the interest portion) of rent expense. Due to the registrant’s loss (including the charges/(credits) above) in the year ended December 31, 2010, the ratio coverage was less than 1:1. The registrant would have needed to generate additional earnings of $73,991 to achieve a coverage of 1:1 in the year ended December 31, 2010. |