Exhibit 12
MASCO CORPORATION
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends
(Dollars in Millions) | ||||||||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2004 | 2003 | |||||||||||||||||||
(Loss) Earnings Before Income Taxes, Preferred Stock Dividends and Fixed Charges: | ||||||||||||||||||||||||
(Loss) income from continuing operations before income taxes, minority interest and cumulative effect of accounting change, net | $ | (211 | ) | $ | 866 | $ | 891 | $ | 1,454 | $ | 1,630 | $ | 1,338 | |||||||||||
Deduct equity in undistributed (earnings) of fifty-percent-or-less-owned companies | (1 | ) | (2 | ) | (1 | ) | (1 | ) | (1 | ) | ||||||||||||||
Add interest on indebtedness, net | 228 | 258 | 241 | 246 | 214 | 252 | ||||||||||||||||||
Add amortization of debt expense | 4 | 5 | 4 | 6 | 6 | 13 | ||||||||||||||||||
Add estimated interest factor for rentals | 51 | 55 | 52 | 40 | 33 | 31 | ||||||||||||||||||
Earnings before income taxes, minority interest, cumulative effect of accounting change, net, fixed charges and preferred stock dividends | $ | 71 | $ | 1,182 | $ | 1,187 | $ | 1,745 | $ | 1,882 | $ | 1,634 | ||||||||||||
Fixed Charges: | ||||||||||||||||||||||||
Interest on indebtedness | $ | 228 | $ | 259 | $ | 241 | $ | 244 | $ | 214 | $ | 252 | ||||||||||||
Amortization of debt expense | 4 | 5 | 4 | 6 | 6 | 13 | ||||||||||||||||||
Estimated interest factor for rentals | 51 | 55 | 52 | 40 | 33 | 31 | ||||||||||||||||||
Total fixed charges | $ | 283 | $ | 319 | $ | 297 | $ | 290 | $ | 253 | $ | 296 | ||||||||||||
Preferred stock dividends (a) | $ | — | $ | — | $ | — | $ | — | $ | 8 | $ | 16 | ||||||||||||
Combined fixed charges and preferred stock dividends | $ | 283 | $ | 319 | $ | 297 | $ | 290 | $ | 261 | $ | 312 | ||||||||||||
Ratio of earnings to fixed charges | 0.3 | 3.7 | 4.0 | 6.0 | 7.4 | 5.5 | ||||||||||||||||||
Ratio of earnings to combined fixed charges and preferred stock dividends | 0.3 | 3.7 | 4.0 | 6.0 | 7.2 | 5.2 | ||||||||||||||||||
Ratio of earnings to combined fixed charges and preferred stock dividends excluding certain items(b) | 2.1 | 4.1 | 5.4 | 6.2 | 7.2 | 5.0 | ||||||||||||||||||
(a) | Represents amount of income before provision for income taxes required to meet the preferred stock dividend requirements of the Company. |
(b) | Excludes the 2008 non-cash, pre-tax impairment charges for goodwill and other intangible assets of $467 million, financial investments of $58 million and litigation expense of $9 million; 2007 non-cash, pre-tax impairment charges for goodwill and other intangible assets of $119 million and the non-cash, pre-tax 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 and the non-cash, pre-tax impairment charge for financial investments of $45 million; the 2004 pre-tax income related to the Behr litigation settlement of $30 million, and the pre-tax impairment charge of $21 million related to a marketable security; and the 2003 pre-tax income related to the Behr litigation settlement of $72 million. |