EXHIBIT 12-1
MCN ENERGY GROUP INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Twelve Twelve Twelve Twelve Twelve Twelve Months Months Months Months Months Months Ended Ended Ended Ended Ended Ended June 30, December 31, December 31, December 31, December 31, December 31, 1999 1998 1997 1996 1995 1994 (Dollars in Thousands) EARNINGS AS DEFINED (1)(5)(6) Pre-tax income(2)(7)(8) $ (273,006 ) $ (497,476 ) $ 167,336 $ 146,607 $ 128,997 $ 100,143 Fixed charges(3) 169,143 158,242 125,338 99,944 72,895 55,197 Earnings as defined $ (103,863 ) $ (339,234 ) $ 292,674 $ 246,551 $ 201,892 $ 155,340 FIXED CHARGES AS DEFINED(1)(4)(5)(6) Interest, expensed $ 120,957 $ 111,750 $ 86,453 $ 77,781 $ 57,675 $ 49,104 Interest, capitalized 14,419 19,938 18,190 13,235 7,926 2,928 Amortization of debt discounts, premium and expense 3,118 2,869 2,426 2,217 1,641 1,332 Interest implicit in rentals 2,501 2,554 2,181 2,339 2,325 1,904 Preferred securities dividend requirements of subsidiaries 38,055 36,370 31,090 12,390 9,699 2,194 Fixed charges as defined $ 179,050 $ 173,481 $ 140,340 $ 107,962 $ 79,266 $ 57,462 Ratio of Earnings to Fixed Charges 2.09 2.28 2.55 2.70 Coverage Deficiency(9)(10) $ 282,913 $ 512,715
| (1) | Earnings and fixed charges are defined and computed in accordance with Item 503 of Regulation S-K. | |
| (2) | This amount represents the aggregate of (a) the pre-tax income from continuing operations of MCN and its majority-owned subsidiaries, (b) MCN’s share of pre-tax income of its 50% owned companies, and (c) any income actually received from less than 50% owned companies. | |
| (3) | Fixed charges added to earnings are adjusted to exclude interest capitalized during the period for nonutility companies and the preferred securities dividend requirements of MichCon included in fixed charges but not deducted in the determination of pre-tax income. | |
| (4) | Fixed charges represent (a) interest, whether expensed or capitalized, (b) amortization of debt discount, premium and expense, (c) an estimate of interest implicit in rentals, and (d) preferred securities dividend requirements of subsidiaries, increased to reflect the pre-tax earnings requirement for MichCon. | |
| (5) | In June 1996, MCN completed the sale of The Genix Group, its computer operations subsidiary. For purposes of calculating the Ratio of Earnings to Fixed Charges, it has been classified as a discontinued operation and therefore excluded from the ratio for all periods presented. | |
| (6) | The E&P segment has been reclassified from discontinued operations to continuing operations as described in Note 6 to the Consolidated Financial Statements included herein. Therefore, for purposes of calculating the Ratio of Earnings to Fixed Charges, E&P financial information is included in the ratio for all periods presented. | |
| (7) | For the twelve-month period ended June 30, 1999, MCN recorded several unusual charges, consisting of property write-downs, investment losses, restructuring charges and losses on sale of properties, totaling $396,050,000 pre-tax ($252,511,000 net of taxes and minority interest). | |
| (8) | For the twelve-month period ended December 31, 1998, MCN recorded several unusual charges, consisting of property write-downs, investment losses and restructuring charges, totaling $606,953,000 pre-tax ($389,598,000 net of taxes and minority interest). | |
| (9) | Earnings for the twelve-month period ended June 30, 1999, were not adequate to cover fixed charges. The amount of the coverage deficiency was $282,913,000. The Ratio of Earnings to Fix Charges excluding unusual charges would have been 1.63. |
| (10) | Earnings for the twelve-month period ended December 31, 1998, were not adequate to cover fixed charges. The amount of the coverage deficiency was $512,715,000. The Ratio of Earnings to Fix Charges excluding unusual charges would have been 1.54. |
