EX-12 7 k89874exv12.txt STATEMENT REGARDING COMPUTATION OF RATIO OF EARNINGS . . . 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.