EXHIBIT 12 MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS (DOLLARS IN THOUSANDS) ------------------------------------------------------------------------------- NINE MONTHS ENDED YEAR ENDED DECEMBER 31, SEPT. 30, ------------------------------------------------------------------ 2003 2002 2001 2000 1999 1998 ----------- ----------- ----------- ----------- ----------- ----------- 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 $ 1,019,070 $ 1,001,480 $ 305,470 $ 872,560 $ 859,920 $ 858,370 Deduct equity in undistributed (earnings) of fifty-percent-or-less-owned companies (210) (9,560) (1,590) (9,640) (18,720) (24,070) Add interest on indebtedness, net 200,510 228,800 232,910 192,510 121,150 115,300 Add amortization of debt expense 4,440 13,040 10,300 2,430 1,350 2,130 Add estimated interest factor for rentals 24,620 25,890 23,050 17,970 15,330 9,450 ----------- ----------- ----------- ----------- ----------- ----------- Earnings before income taxes, minority interest, cumulative effect of accounting change, net, fixed charges and preferred stock dividends $ 1,248,430 $ 1,259,650 $ 570,140 $ 1,075,830 $ 979,030 $ 961,180 =========== =========== =========== =========== =========== =========== FIXED CHARGES: Interest on indebtedness $ 201,880 $ 227,550 $ 237,930 $ 201,410 $ 124,720 $ 119,080 Amortization of debt expense 4,440 13,040 10,300 2,430 1,350 2,130 Estimated interest factor for rentals 24,620 25,890 23,050 17,970 15,330 9,450 ----------- ----------- ----------- ----------- ----------- ----------- Total fixed charges $ 230,948 $ 266,480 $ 271,280 $ 221,810 $ 141,400 $ 130,660 =========== =========== =========== =========== =========== =========== PREFERRED STOCK DIVIDENDS(a) 11,430 13,830 6,660 --- --- --- ----------- ----------- ----------- ----------- ----------- ----------- Combined fixed charges and preferred stock dividends $ 242,370 $ 280,310 $ 277,940 $ 221,810 $ 141,400 $ 130,660 =========== =========== =========== =========== =========== =========== Ratio of earnings to fixed charges 5.4 4.7 2.1 4.9 6.9 7.4 =========== =========== =========== =========== =========== =========== Ratio of earnings to combined fixed charges and preferred stock dividends(b)(c) 5.2 4.5 2.1 4.9 6.9 7.4 =========== =========== =========== =========== =========== =========== (a) Represents amount of income before provision for income taxes required to meet the preferred stock dividend requirements of the Company. (b) Excluding the 2003 pre-tax income regarding litigation settlement of $71.1 million, 2002 pre-tax charge for litigation settlement, net of $146.8 million, the 2001 pre-tax non-cash charge of $530 million and the 2000 pre-tax non-cash charge of $145 million, the Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends would have been 4.9, 5.0, 4.0 and 5.5 for the third quarter of 2003, and the years 2002, 2001 and 2000, respectively. (c) Years prior to 2002 have not been adjusted to exclude goodwill amortization expense.