Exhibit 12
MASCO CORPORATION
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends
(Dollars in Millions) | ||||||||||||||||||||||||
Nine | ||||||||||||||||||||||||
Months | ||||||||||||||||||||||||
Ended | ||||||||||||||||||||||||
Sep. 30, | Year Ended December 31, | |||||||||||||||||||||||
2007 | 2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||||||||||
Earnings Before Income Taxes, Preferred Stock Dividends and Fixed Charges: | ||||||||||||||||||||||||
Income from continuing operations before income taxes, minority interest and cumulative effect of accounting change, net | $ | 866 | $ | 914 | $ | 1,425 | $ | 1,604 | $ | 1,302 | $ | 911 | ||||||||||||
Deduct equity in undistributed (earnings) of fifty-percent-or- less-owned companies | (1 | ) | (1 | ) | (1 | ) | (1 | ) | — | (10 | ) | |||||||||||||
Add interest on indebtedness, net | 197 | 241 | 246 | 214 | 252 | 226 | ||||||||||||||||||
Add amortization of debt expense | 4 | 4 | 6 | 6 | 13 | 13 | ||||||||||||||||||
Add estimated interest factor for rentals | 41 | 52 | 40 | 33 | 31 | 23 | ||||||||||||||||||
Earnings before income taxes, minority interest, cumulative effect of accounting change, net, fixed charges and preferred stock dividends | $ | 1,107 | $ | 1,210 | $ | 1,716 | $ | 1,856 | $ | 1,598 | $ | 1,163 | ||||||||||||
Fixed Charges: | ||||||||||||||||||||||||
Interest on indebtedness | $ | 197 | $ | 241 | $ | 244 | $ | 214 | $ | 252 | $ | 224 | ||||||||||||
Amortization of debt expense | 4 | 4 | 6 | 6 | 13 | 13 | ||||||||||||||||||
Estimated interest factor for rentals | 41 | 52 | 40 | 33 | 31 | 23 | ||||||||||||||||||
Total fixed charges | $ | 242 | $ | 297 | $ | 290 | $ | 253 | $ | 296 | $ | 260 | ||||||||||||
Preferred stock dividends (a) | $ | — | $ | — | $ | — | $ | 8 | $ | 16 | $ | 14 | ||||||||||||
Combined fixed charges and preferred stock dividends | $ | 242 | $ | 297 | $ | 290 | $ | 261 | $ | 312 | $ | 274 | ||||||||||||
Ratio of earnings to fixed charges | 4.6 | 4.1 | 5.9 | 7.3 | 5.4 | 4.5 | ||||||||||||||||||
Ratio of earnings to combined fixed charges and preferred stock dividends | 4.6 | 4.1 | 5.9 | 7.1 | 5.1 | 4.2 | ||||||||||||||||||
Ratio of earnings to combined fixed charges and preferred stock dividends excluding certain items(b) | 4.7 | 5.5 | 6.2 | 7.3 | 5.0 | 4.8 | ||||||||||||||||||
(a) | Represents amount of income before provision for income taxes required to meet the preferred stock dividend requirements of the Company. | |
(b) | Excludes the 2007 non-cash, pre-tax impairment charge for financial investments of $22 million; 2006 non-cash, pre-tax impairment charges for goodwill and financial investments of $317 million and $101 million, respectively, and the pre-tax income related to the Behr litigation settlement of $1 million; the 2005 pre-tax income related to the Behr litigation settlement of $6 million, the non-cash, pre-tax impairment charges for goodwill and financial investments of $43 million and $45 million, respectively; the 2004 pre-tax income related to the Behr litigation settlement of $30 million, the non-cash, pre-tax impairment charges for goodwill of $50 million and the pre-tax impairment charge of $21 million related to a marketable security; the 2003 pre-tax income related to the Behr litigation settlement of $72 million and the non-cash, pre-tax goodwill impairment charges of $48 million; and the 2002 pre-tax net charge of $147 million related to the Behr litigation settlement. |
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