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Exhibit (12)
CONSUMERS ENERGY COMPANY
Ratio of Earnings to Fixed Charges
(Millions of Dollars)
Nine Months
Ended Years Ended December 31 -
September 30- 2002 2001
2004 2003 (c) (b) 2000 1999
Earnings as defined (a)
Consolidated net income $ 175 $ 196 $ 363 $ 199 $ 284 $ 340
Income taxes 91 137 180 97 137 172
Exclude equity basis subsidiaries (e) (1) (42) (53) (38) (57) (50)
Include equity basis dividends received (e) - 45 15 8 10 10
Fixed charges as defined, adjusted to exclude
capitalized interest of $3, $9, $12, $6, $2,
and $5 for the nine months ended September 30,
2004 and the years ended December 31, 2003,
2002, 2001, 2000, and 1999, respectively 259 252 178 197 194 192
----- ----- ----- ----- ----- -----
Earnings as defined $ 524 $ 588 $ 683 $ 463 $ 568 $ 664
===== ===== ===== ===== ===== =====
Fixed charges as defined (a)
Interest on long-term debt (d) $ 248 $ 241 $ 153 $ 151 $ 141 $ 140
Estimated interest portion of lease rental 5 7 10 11 11 11
Other interest charges 11 13 27 41 44 41
----- ----- ----- ----- ----- -----
Fixed charges as defined $ 264 $ 261 $ 190 $ 203 $ 196 $ 192
===== ===== ===== ===== ===== =====
Ratio of earnings to fixed charges and
preferred securities dividends and
distributions 1.98 2.25 3.59 2.28 2.90 3.46
===== ===== ===== ===== ===== =====
NOTES:
(a) Earnings and fixed charges as defined in instructions for Item 503 of
Regulation S-K.
(b) Excludes a cumulative effect of change-in-accounting after-tax loss of $11
million; if included, ratio would be 1.81.
(c) Excludes a cumulative effect of change-in-accounting after-tax gain of $18
million; if included, ratio would be unchanged, since the change-in-accounting
resulted from the equity-based subsidiary MCV Partnership. The total net incomes
of equity-based subsidiaries are excluded from determining earnings as defined.
(d) We determined that we do not hold the controlling interest in our trust
preferred security structures. Accordingly, those securities have been
deconsolidated as of December 31, 2003. Therefore, our trust preferred
securities that were previously included in mezzanine equity, have been
eliminated due to deconsolidation and are reflected in Long-term debt - related
parties.
(e) The MCV Partnership and the FMLP are variable interest entities and
Consumers was determined to be the primary beneficiary. Therefore, these
entities are no longer equity method subsidiaries and we have consolidated the
MCV Partnership and the FMLP into our consolidated financial statements for the
first time as of and for the quarter ended March 31, 2004.
CONSUMERS ENERGY COMPANY
Ratio of Earnings to Combined Fixed Charges and Preference Dividends
(Millions of Dollars)
Nine Months
Ended Years Ended December 31
September 30 2002 2001
2004 2003 (c) (b) 2000 1999
Earnings as defined (a)
Consolidated net income $ 175 $ 196 $ 363 $ 199 $ 284 $ 340
Income taxes 91 137 180 97 137 172
Exclude equity basis subsidiaries (e) (1) (42) (53) (38) (57) (50)
Include equity basis dividends received (e) - 45 15 8 10 10
Fixed charges as defined, adjusted to exclude
capitalized interest of $3, $9, $12, $6, $2,
and $5 for the nine months ended September 30,
2004 and the years ended December 31, 2003,
2002, 2001, 2000, and 1999, respectively 261 252 178 197 194 192
----- ----- ----- ----- ----- -----
Earnings as defined $ 526 $ 588 $ 683 $ 463 $ 568 $ 664
===== ===== ===== ===== ===== =====
Fixed charges as defined (a)
Interest on long-term debt (d) $ 248 $ 241 $ 153 $ 151 $ 141 $ 140
Estimated interest portion of lease rental 5 7 10 11 11 11
Other interest charges 11 13 27 41 44 41
Preferred securities dividends and
distributions (d) 2 3 47 44 37 30
----- ----- ----- ----- ----- -----
Fixed charges as defined $ 266 $ 264 $ 237 $ 247 $ 233 $ 222
===== ===== ===== ===== ===== =====
Ratio of earnings to fixed charges and
preferred securities dividends and
distributions 1.98 2.23 2.88 1.87 2.44 2.99
===== ===== ===== ===== ===== =====
NOTES:
(a) Earnings and fixed charges as defined in instructions for Item 503 of
Regulation S-K.
(b) Excludes a cumulative effect of change-in-accounting after-tax loss of $11
million; if included, ratio would be 1.81.
(c) Excludes a cumulative effect of change-in-accounting after-tax gain of $18
million; if included, ratio would be unchanged, since the change-in-accounting
resulted from the equity-based subsidiary MCV Partnership. The total net incomes
of equity-based subsidiaries are excluded from determining earnings as defined.
(d) We determined that we do not hold the controlling interest in our trust
preferred security structures. Accordingly, those securities have been
deconsolidated as of December 31, 2003. Therefore, our trust preferred
securities that were previously included in mezzanine equity, have been
eliminated due to deconsolidation and are reflected in Long-term debt - related
parties.
(e) The MCV Partnership and the FMLP are variable interest entities and
Consumers was determined to be the primary beneficiary. Therefore, these
entities are no longer equity method subsidiaries and we have consolidated the
MCV Partnership and the FMLP into our consolidated financial statements for the
first time as of and for the quarter ended March 31, 2004.