EXHIBIT 12.2
LEINER HEALTH PRODUCTS INC.
COMPUTATION OF EBITDA TO INTEREST EXPENSE
(DOLLARS IN THOUSANDS)
FOR THE
THREE
MONTHS
ENDED
JUNE 30,
FISCAL YEARS ENDED MARCH 31, (UNAUDITED)
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1993(1) 1994 1995 1996 1997(2) 1996
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Net income (loss).......................................... $ (1,119) $ 3,417 $ 3,813 $ 1,166 $ 7,638 $ 119
Add back:
Interest expense, net.................................... 5,921 7,144 9,010 9,924 8,281 2,152
Income taxes............................................. 955 3,573 3,524 4,686 8,028 92
Depreciation and amortization............................ 4,586 7,247 10,514 12,288 12,309 2,867
Extraordinary item....................................... -- -- -- -- 295 --
Compensation related to stock options.................... 1,093 264 132 132 99 33
Impairment and closure of facility....................... -- -- -- 4,730 1,416 --
Other non-cash charges................................... -- 1,753 -- -- 18 --
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Subtotal................................................. 12,555 19,981 23,180 31,760 30,446 5,144
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EBITDA(3).................................................. $ 11,436 $ 23,398 $ 26,993 $ 32,926 $ 38,084 $ 5,263
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Interest expense, net(3)................................... $ 5,921 $ 7,144 $ 9,010 $ 9,924 $ 8,281 $ 2,152
Less amortization of deferred financing charges............ -- -- 184 212 239 59
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Adjusted interest expense, net............................. $ 5,921 $ 7,144 $ 8,826 $ 9,712 $ 8,042 $ 2,093
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Ratio of EBITDA to interest expense........................ 1.9 3.3 3.1 3.4 4.7 2.5
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1997
---------
Net income (loss).......................................... $ (23,966)
Add back:
Interest expense, net.................................... 1,800
Income taxes............................................. (7,105)
Depreciation and amortization............................ 3,066
Extraordinary item....................................... 1,109
Compensation related to stock options.................... 8,300
Impairment and closure of facility....................... --
Other non-cash charges................................... --
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Subtotal................................................. 7,170
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EBITDA(3).................................................. $ (16,796)
---------
---------
Interest expense, net(3)................................... $ 1,800
Less amortization of deferred financing charges............ 66
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Adjusted interest expense, net............................. $ 1,734
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Ratio of EBITDA to interest expense........................ (9.7)
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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. 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..
(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 other non-cash charges, consisting
of (i) the write off of deferred financing charges, net of income taxes,
included as an extraordinary item in the statements of operations for fiscal
1997 and the first quarter of fiscal 1998, (ii) the non-cash stock
compensation charges, including that which was recorded in connection with
the Recapitalization, (iii) expenses related to the impairment and closure
of the OTC liquid pharmaceuticals manufacturing facility in fiscal 1996 and
1997, and (iv) other non-cash charges in fiscal 1994 and fiscal 1997.
Although EBITDA (as well as related EBITDA ratios) is a non-GAAP
measurement, EBITDA, EBITDA margin, the ratio of total debt to EBITDA and
the ratio of EBITDA to interest expense are 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.