EX-12 2 ex12.htm EXHIBIT 12 Exhibit 12
LINCOLN NATIONAL CORPORATION AND SUBSIDIARIES
 
EXHIBIT 12—HISTORICAL RATIO OF EARNINGS TO FIXED CHARGES

   
Year Ended December 31
  
                       
(millions of dollars)
  
2005
 
2004
 
2003
 
2002
 
2001
  
Income (Loss) before Federal Income Taxes,
                      
Cumulative Effect of Accounting Changes and Minority Interest
   $
1,074.6
  $
1,035.7
  $
1,047.6
  $
(53.8
)
 $
705.9
 
Equity in Losses (Earnings) of Unconsolidated Affiliates
    
-
   
-
   
-
   
0.6
   
(5.7
)
Fixed Charges
    
110.2
   
116.2
   
111.8
   
118.9
   
147.5
 
Adjusted Net Income
    
1,184.8
   
1,151.9
   
1,159.4
   
65.7
   
847.7
 
Interest on Annuities & Financial Products
    
1,570.1
   
1,570.6
   
1,617.0
   
1,617.1
   
1,506.0
 
Adjusted Income Base
   $
2,754.9
  $
2,722.5
  $
2,776.4
  $
1,682.8
  $
2,353.7
 
                                 
Rent Expense
    
64.6
   
66.3
   
67.1
   
67.0
   
79.4
 
                                 
Fixed Charges:
                                
Interest and Debt Expense
   $
88.7
  $ 
94.1
  $ 
89.5
  $ 
96.6
  $ 
121.0
 
Portion of Rent Expense Representing Interest
    
21.5
   
22.1
   
22.3
   
22.3
   
26.5
 
Fixed Charges
    
110.2
   
116.2
   
111.8
   
118.9
   
147.5
 
Interest on Annuities & Financial Products
    
1,570.1
   
1,570.6
   
1,617.0
   
1,617.1
   
1,506.0
 
Sub-total of Fixed Charges
    
1,680.3
   
1,686.8
   
1,728.8
   
1,736.0
   
1,653.5
 
Preferred Dividends (Pre-tax)
    
-
   
0.1
   
0.1
   
0.1
   
0.1
 
Total Fixed Charges
   $ 
1,680.3
  $ 
1,686.9
  $ 
1,728.9
  $ 
1,736.1
  $ 
1,653.6
 
                                 
Ratio of Earnings to Fixed Charges:
                                
Ratio of Earnings to Fixed Charges
                                
(Including Interest on Annuities and
                                
Financial Products) (1)
    
1.64
    
1.61
    
1.61
    
0.97
    
1.42
  
Excluding Interest on Annuities and
                                
Financial Products (2)
    
10.75
    
9.91
    
10.37
    
0.55
    
5.75
  
Ratio of Earnings to Combined Fixed
                                
Charges and Preferred Stock
                                
Dividends (3)
    
1.64
    
1.61
    
1.61
    
0.97
    
1.42
  
                                 
 
1.
For purposes of determining this ratio, earnings consist of income before Federal income taxes, cumulative effect of accounting change, if any, and minority interests adjusted for the difference between income or losses from unconsolidated equity investments and cash distributions from such investments, plus fixed charges. Fixed charges consist of 1) interest and debt expense on short and long-term debt and junior subordinated debentures issued to affiliated trusts; 2) interest on annuities and financial products and; 3) the portion of operating leases that are representative of the interest factor.
2.
Same as the ratio of earnings to fixed charges, except fixed charges and earnings in this calculation do not include interest on annuities and financial products. This coverage ratio is not required, but is provided as additional information. This ratio is commonly used by individuals who analyze LNC’s results.
3.
Same as the ratio of earnings to fixed charges, including interest on annuities and financial products, except that fixed charges include the pre-tax earnings required to cover preferred stock dividend requirements.