EXHIBIT 12.2
LEINER HEALTH PRODUCTS INC.
COMPUTATION OF EBITDA TO INTEREST EXPENSE
(DOLLARS IN THOUSANDS)
FOR THE THREE MONTHS
FISCAL YEARS ENDED MARCH 31, ENDED JUNE 30,
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UNAUDITED (UNAUDITED)
PRO FORMA
1993(1) 1994 1995 1996 1997 1997(2) 1996 1997
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Net income (loss).................... $ (1,033) $ 3,417 $ 3,813 $ 1,166 $ 7,638 $ (2,626) $ 119 $ (12,183)
Add Back:
Interest expense, net.............. 5,791 7,144 9,010 9,924 8,281 23,368 2,152 1,800
Income taxes....................... 999 3,573 3,524 4,686 8,028 1,669 92 (7,105)
Depreciation and amortization...... 4,586 7,247 10,514 12,288 12,309 12,862 2,867 3,066
Extraordinary item................. -- -- -- -- 2,756 2,756 -- 1,109
Non-recurring charges:
Impairment and closure of
facility....................... -- -- -- 4,730 1,416 1,416 -- --
Management reorganization........ -- -- -- -- 1,000 1,000 187 --
Compensation related to stock
options........................ -- -- -- -- -- -- -- 15,431
Management transaction bonuses... -- -- -- -- -- -- -- 5,125
Other charges.................... 3,631 2,017 132 132 528 528 33 --
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Subtotal....................... 15,007 19,981 23,180 31,760 34,318 43,599 5,331 19,426
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EBITDA(3)............................ $ 13,974 $ 23,398 $ 26,993 $ 32,926 $ 41,956 $ 40,973 $ 5,450 $ 7,243
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Interest expense, net(3)............. $ 5,791 $ 7,144 $ 9,010 $ 9,924 $ 8,281 $ 23,368 $ 2,152 $ 1,800
Less amortization of deferred
financing charges.................. -- -- 184 212 239 1,573 59 66
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Adjusted interest expense, net....... $ 5,791 $ 7,144 $ 8,826 $ 9,712 $ 8,042 $ 21,795 $ 2,093 $ 1,734
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Ratio of EBITDA to interest
expense............................ 2.4 3.3 3.1 3.4 5.2 1.9 2.6 4.2
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1997
PRO FORMA
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Net income (loss).................... $ (2,431)
Add Back:
Interest expense, net.............. 5,816
Income taxes....................... (604)
Depreciation and amortization...... 3,066
Extraordinary item................. 1,109
Non-recurring charges:
Impairment and closure of
facility....................... --
Management reorganization........ --
Compensation related to stock
options........................ --
Management transaction bonuses... --
Other charges.................... --
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Subtotal....................... 9,387
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EBITDA(3)............................ $ 6,956
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Interest expense, net(3)............. $ 5,816
Less amortization of deferred
financing charges.................. 393
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Adjusted interest expense, net....... $ 5,423
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Ratio of EBITDA to interest
expense............................ 1.3
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(1) The computation of EBITDA to interest expense for the fiscal year ended
March 31, 1993 represents the results of operations of LHP, the results of
operations for XCEL from the date of its acquisition, and purchase
accounting for the acquisitions of LHP and XCEL during that fiscal year. See
"The Company."
(2) On January 30, 1997, the Company purchased Vita Health. This column gives
effect to the acquisition of Vita Health, as well as the Recapitalization
and related transactions. See "Unaudited Pro Forma Financial Information."
The Vita Health acquisition was accounted for under the purchase method of
accounting. Consequently, the results of operations of Vita Health were
included in the consolidated financial results of the Company for the two
months ended March 31, 1997. The pro forma column includes the operating
results of Vita Health for the additional ten months ended January 30, 1997.
(3) For purposes of calculating the ratio of EBITDA to interest expense,
interest expense excludes the amortization of deferred financing fees, which
is included in interest expense in the income statement in the audited
consolidated financial statements.
"EBITDA," as presented, represents earnings before interest expense, income
taxes, depreciation and amortization and extraordinary item, and also
excludes certain expenses that are not expected to be continued. (See Notes
5 and 6 to the "Selected Historical and Pro Forma Financial Data"). EBITDA
is included because management understands that such information is
considered by certain investors to be an additional basis for evaluating the
Company's ability to pay interest, repay debt and make capital expenditures.
EBITDA should not be considered an alternative to measures of operating
performance as determined in accordance with generally accepted accounting
principles, including net income as a measure of the Company's operating
results and cash flows as a measure of the Company's liquidity. Because
EBITDA is not calculated identically by all companies, the presentation
herein may not be comparable to other similarly titled measures of other
companies.
EBITDA for Pro Forma Fiscal 1997 was $43.4 million, excluding the
discontinued profit distribution at Vita Health of $2.4 million.