EX-12 10 k22937exv12.htm COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS exv12
 

Exhibit 12
MASCO CORPORATION
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends
                                                 
    (Dollars in Millions)  
    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
   $ 770     $ 914     $ 1,425     $ 1,604     $ 1,302     $ 911  
 
                                                
Deduct equity in undistributed (earnings) of fifty-percent-or- less-owned companies
     (2 )     (1 )     (1 )     (1 )     —       (10 )
 
Add interest on indebtedness, net
     258       241       246       214       252       226  
 
Add amortization of debt expense
     5       4       6       6       13       13  
 
Add estimated interest factor for rentals
     55       52       40       33       31       23  
 
                                    
 
                                                
Earnings before income taxes, minority interest, cumulative effect of accounting change, net, fixed charges and preferred stock dividends
   $ 1,086     $ 1,210     $ 1,716     $ 1,856     $ 1,598     $ 1,163  
 
                                    
 
                                                
Fixed Charges:
                                                
Interest on indebtedness
   $ 259     $ 241     $ 244     $ 214     $ 252     $ 224  
 
Amortization of debt expense
     5       4       6       6       13       13  
 
Estimated interest factor for rentals
     55       52       40       33       31       23  
 
                                    
 
Total fixed charges
   $ 319     $ 297     $ 290     $ 253     $ 296     $ 260  
 
                                    
 
Preferred stock dividends(a)
   $ —     $ —     $ —     $ 8     $ 16     $ 14  
 
                                    
 
                                                
Combined fixed charges and preferred stock dividends
   $ 319     $ 297     $ 290     $ 261     $ 312     $ 274  
 
                                    
 
Ratio of earnings to fixed charges
     3.4       4.1       5.9       7.3       5.4       4.5  
 
                                    
Ratio of earnings to combined fixed charges and preferred stock dividends
     3.4       4.1       5.9       7.1       5.1       4.2  
 
                                    
Ratio of earnings to combined fixed charges and preferred stock dividends excluding certain items
     4.2       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 charges for goodwill and other intangible assets of $227 million and the 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.