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 cost,
income tax, extraordinary charge
and cumulative effect of change
in accounting principles...... $862.6 $481.3 $589.9 $566.4 $536.6
b) Single Business Tax........... 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).. $901.9 $521.4 $631.0 $606.1 $577.0
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2. FIXED CHARGES
a) Total interest cost
including capital
lease obligations.............. $ 92.0 $ 98.6 $106.2 $109.6 $125.3
b) 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(b)... $105.1 $110.4 $119.7 $124.1 $140.1
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RATIO OF EARNINGS TO FIXED CHARGES............. 8.58 4.72 5.27 4.88 4.12
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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 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.
(4) Interest cost includes capitalized interest expense.
(5) Earnings have not been adjusted to reflect the timing of dividends received
and equity in earnings of unconsolidated affiliates since the effect on an
annual basis has been insignificant.