EXHIBIT 12.2
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XXXXXX HEALTH PRODUCTS INC.
COMPUTATION OF EBITDA TO INTEREST EXPENSE
(DOLLARS IN THOUSANDS)
FISCAL YEARS ENDED MARCH 31,
1994 1995 1996 1997(1) 1998
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Net income (loss) $ 3,417 $ 3,813 $ 1,166 $ 7,638 $ (17,417)
Add back:
Interest expense, net 7,144 9,010 9,924 8,281 19,494
Income taxes 3,573 3,524 4,686 8,028 1,196
Depreciation and amortization 7,247 10,514 12,288 12,309 13,349
Extraordinary item - - - 295 1,109
Compensation related to stock options 264 132 132 99 8,300
Impairment and closure of facilities - - 4,730 1,416 1,221
Other non-cash charges 1,753 - - 18 -
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Subtotal 19,981 23,180 31,760 30,446 44,669
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EBITDA (2) $ 23,398 $ 26,993 $ 32,926 $ 38,084 $ 27,252
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Interest expense, net (2) $ 7,144 $ 9,010 $ 9,924 $ 8,281 $ 19,494
Less amortization of deferred financing charges - 184 212 239 1,331
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Adjusted interest expense, net $ 7,144 $ 8,826 $ 9,712 $ 8,042 $ 18,163
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Ratio of EBITDA to interest expense 3.3 3.1 3.4 4.7 1.5
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(1) 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.
(2) 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.
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