EXHIBIT 12
TIME WARNER
RATIO OF EARNINGS TO FIXED CHARGES
(IN MILLIONS, EXCEPT RATIOS)
HISTORICAL (B)
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PRO FORMA (A)
----------------------------- THREE MONTHS ENDED
YEAR ENDED MARCH 31,
DECEMBER 31, 1996 ------------------
----------------------------- 1997
GUARANTOR ------------------
---------
ISSUER
------------------
ISSUER
-----------------
Earnings:
Net income (loss) before
income taxes and
extraordinary items..... $ 23 $ (142) $228
Interest expense.......... 870 1,079 237
Amortization of
capitalized interest.... 2 19 --
Portion of rents
representative of an
interest factor......... 55 86 14
Preferred stock dividend
requirements of
majority-owned
subsidiaries............ 72 72 18
Adjustment for partially
owned subsidiaries and
50% owned companies..... 801 801 255
Undistributed losses of
less than 50% owned
companies............... 50 46 5
------ --------- -----
Total earnings........ $ 1,873 $ 1,961 $757
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------ --------- -----
Fixed Charges:
Interest expense.......... $ 870 $ 1,079 $237
Capitalized interest...... 1 23 --
Portion of rents
representative of an
interest factor......... 55 86 14
Preferred stock dividend
requirements of
majority-owned
subsidiaries............ 72 72 18
Adjustment for partially
owned subsidiaries and
50% owned companies..... 607 607 150
------ --------- -----
Total fixed charges... $ 1,605 $ 1,867 $419
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------ --------- -----
Ratio of earnings to fixed
charges (deficiency in the
coverage of fixed charges
by earnings before fixed
charges).................... 1.2x 1.1x 1.8x
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------ --------- -----
YEARS ENDED DECEMBER 31,
------------------------------------------------------
1996 1995 1994 1993 1992
1996 ------------------ ------ ------ ------ ------
------
GUARANTOR ISSUER GUARANTOR ISSUER ISSUER ISSUER ISSUER
------ ISSUER ------ --------- ------ ------ ------ ------
------
Earnings:
Net income (loss) before
income taxes and
extraordinary items.....$199 $(88) $ (15) $ 4 $ 2 $ 89 $ 81 $ 320
Interest expense.......... 278 247 908 968 877 769 698 729
Amortization of
capitalized interest.... 5 -- 2 6 2 2 -- 19
Portion of rents
representative of an
interest factor......... 21 14 55 63 57 52 54 85
Preferred stock dividend
requirements of
majority-owned
subsidiaries............ 18 18 72 72 11 -- -- --
Adjustment for partially
owned subsidiaries and
50% owned companies..... 255 148 801 801 691 665 663 97
Undistributed losses of
less than 50% owned
companies............... 7 18 50 52 117 82 47 56
------ ------ ------ --------- ------ ------ ------ ------
Total earnings........$783 $357 $1,873 $ 1,966 $1,757 $1,659 $1,543 $1,306
------ ------ ------ --------- ------ ------ ------ ------
------ ------ ------ --------- ------ ------ ------ ------
Fixed Charges:
Interest expense..........$278 $247 $ 908 $ 968 $ 877 $ 769 $ 698 $ 729
Capitalized interest...... 6 1 1 7 4 2 -- 15
Portion of rents
representative of an
interest factor......... 21 14 55 63 57 52 54 85
Preferred stock dividend
requirements of
majority-owned
subsidiaries............ 18 18 72 72 11 -- -- --
Adjustment for partially
owned subsidiaries and
50% owned companies..... 150 153 607 607 697 668 664 81
------ ------ ------ --------- ------ ------ ------ ------
Total fixed charges...$473 $433 $1,643 $ 1,717 $1,646 $1,491 $1,416 $ 910
------ ------ ------ --------- ------ ------ ------ ------
------ ------ ------ --------- ------ ------ ------ ------
Ratio of earnings to fixed
charges (deficiency in the
coverage of fixed charges
by earnings before fixed
charges).................... 1.7 x $(76) 1.1x 1.1x 1.1x 1.1x 1.1x 1.4x
------ ------ ------ --------- ------ ------ ------ ------
------ ------ ------ --------- ------ ------ ------ ------
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(a) The pro forma ratio of earnings to fixed charges for each of the Issuer and
the Guarantor for the year ended December 31, 1996 give effect to (i) the
Preferred Stock Refinancing, as defined elsewhere herein, and certain other
debt refinancings and (ii) with respect to the Guarantor only, the TBS
Transaction, as if such transactions had occurred at the beginning of 1996.
(b) In connection with the TBS Transaction that occurred on October 10, 1996,
the Guarantor, formerly a wholly owned subsidiary of the Issuer, acquired
each outstanding share of capital stock of the Issuer (other than shares
held directly or indirectly by the Issuer) and became the parent of the
Issuer. Accordingly, the historical ratios of earnings to fixed charges (or
coverage deficiencies) of the Issuer and the Guarantor are the same for all
periods prior to such date because the Issuer is treated for financial
reporting purposes as the predecessor of the Guarantor.