Exhibit 12 MICHIGAN BELL TELEPHONE COMPANY COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Dollars in Millions) 1996 1995 1994 1993 1992 ---- ---- ---- ---- ---- 1. EARNINGS a) Income before interest expense, income tax, extraordinary charge, cumulative effect of change in accounting principles and undistributed equity earnings (3)...... $1,002.8 $ 863.1 $ 477.3 $ 584.2 $ 548.0 b) Single Business Tax (2) .. 31.4 26.2 28.3 27.6 25.2 c) Portion of rental expense representative of the interest factor (1) (2).. 12.2 13.1 11.8 13.5 14.5 -------- -------- -------- -------- -------- Total 1(a) through 1(c). $1,046.4 $ 902.4 $ 517.4 $ 625.3 $ 587.7 ======== ======== ======== ======== ======== 2. FIXED CHARGES a) Total interest expense including capital lease obligations....... $ 85.1 $ 90.3 $ 97.1 $ 104.8 $ 108.4 b) Capitalized interest ..... 1.9 1.7 1.5 1.4 1.2 c) Portion of rental expense representative of the interest factor (1)...... 12.2 13.1 11.8 13.5 14.5 -------- -------- -------- -------- -------- Total 2(a) through 2(c). $ 99.2 $ 105.1 $ 110.4 $ 119.7 $ 124.1 ======== ======== ======== ======== ======== RATIO OF EARNINGS TO FIXED CHARGES................. 10.55 8.59 4.69 5.22 4.74 ======== ======== ======== ======== ======== (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 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, 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 million pretax charge associated with the nonmanagement work force restructuring.