EXHIBIT 12
MICHIGAN BELL TELEPHONE COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in Millions)
Three Months Ended
March 31
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1996 1995
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1. EARNINGS
a) Income before interest expense,
income taxes and undistributed
equity earnings (3)................. $ 245.9 $ 257.9
b) Single Business Tax (2).............. 6.3 7.2
c) Portion of rental expense
representative of the
interest factor (1)(2).............. 3.1 2.8
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Total 1(a) through 1(c)................. $ 255.3 $ 267.9
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2. FIXED CHARGES
a) Total interest expense including
capital lease obligations........... $ 21.1 $ 22.8
b) Capitalized interest................. 0.5 0.4
c) Portion of rental expense
representative of the
interest factor (1)................. 3.1 2.8
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Total 2(a) through 2(c)................. $ 24.7 $ 26.0
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3. RATIO OF EARNINGS TO FIXED CHARGES...... 10.34 10.30
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(1) One-third of rental expense is considered to be the amount
representing return on capital.
(2) Earnings are income before income taxes and fixed charges. Since
the Single Business Tax (the Tax) and rental expense have already
been deducted, the Tax and the one-third portion of rental
expense considered to be fixed charges are added back.
(3) The results for the first three months of 1995 reflect a $72.8
million pretax credit primarily from settlement gains resulting
from lump sum pension payments from the pension plan to former
employees who left the business in the nonmanagement work force
restructuring.
EXHIBIT 12
MICHIGAN BELL TELEPHONE COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in Millions)
1995 1994 1993 1992 1991
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1. EARNINGS
a) Income before interest expense, income
tax, extraordinary charge, cumulative
effect of change in accounting
principles and undistributed
equity earnings (3)... $ 863.1 $ 477.3 $ 584.2 $ 548.0 $ 533.8
b) Single Business Tax (2)........ 26.2 28.3 27.6 25.2 25.6
c) Portion of rental expense representative
of the interest factor (1)(2). 13.1 11.8 13.5 14.5 14.8
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Total 1(a) through 1(c)... $ 902.4 $ 517.4 $ 625.3 $ 587.7 $ 574.2
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2. FIXED CHARGES
a) Total interest expense including capital
lease obligations............. $ 90.3 $ 97.1 $ 104.8 $ 108.4 $ 123.1
b) Capitalized interest........... 1.7 1.5 1.4 1.2 2.2
c) Portion of rental expense representative
of the interest factor (1).... 13.1 11.8 13.5 14.5 14.8
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Total 2(a) through 2(c)... $ 105.1 $ 110.4 $ 119.7 $ 124.1 $ 140.1
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3. RATIO OF EARNINGS TO FIXED CHARGES 8.59 4.69 5.22 4.74 4.10
======== ======= ======= ======= =======
(1) One-third of rental expense is considered to be the amount representing
return on capital.
(2) Earnings are income before income taxes and fixed charges. Since the
Single Business Tax (the Tax) and rental expense have already been
deducted, the Tax and the one-third portion of rental expense considered
to be fixed charges are added back.
(3) The results for 1995 reflect a $64.9 pretax credit primarily from
settlement gains resulting from lump sum pension payments from the
pension plan to former employees who left the business in the
nonmanagement work force restructuring, partially offset by increased
force costs related to the restructuring started in 1994, as well as a
write-down of certain data processing equipment to net realizable value.
Results for 1994 reflect a $174.4 pretax charge associated with the
nonmanagement work force restructuring. Costs of the work force
restructuring program have largely been funded from the Ameritech Pension
Plan.