EX-12 2 k84947exv12.txt COMPUTATION OF RATIO OF EARNINGS EXHIBIT 12 MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(DOLLARS IN MILLIONS) ---------------------------------------------------------- THREE MONTHS ENDED YEAR ENDED DECEMBER 31, MARCH 31, ---------------------------------------------- 2004 2003 2002 2001 2000 1999 -------- ------ ------ ------ ------ ------ 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 $ 386 $1,280 $ 966 $ 278 $ 824 $ 805 Deduct equity in undistributed (earnings) of fifty-percent-or- less-owned companies --- --- (10) (1) (10) (19) Add interest on indebtedness, net 53 253 228 230 190 119 Add amortization of debt expense 1 12 13 10 2 1 Add estimated interest factor for rentals 9 32 24 21 17 14 ------ ------ ------ ------ ------ ------ Earnings before income taxes, minority interest, cumulative effect of accounting change, net, fixed charges and preferred stock dividends $ 449 $1,577 $1,221 $ 538 $1,023 $ 920 ====== ====== ====== ====== ====== ====== FIXED CHARGES: Interest on indebtedness $ 52 $ 253 $ 226 $ 236 $ 198 $ 122 Amortization of debt expense 1 12 13 10 2 1 Estimated interest factor for rentals 9 32 24 21 17 14 ------ ------ ------ ------ ------ ------ Total fixed charges $ 62 $ 297 $ 263 $ 267 $ 217 $ 137 ====== ====== ====== ====== ====== ====== PREFERRED STOCK DIVIDENDS(a) $ 4 $ 16 $ 14 $ 7 --- --- ------ ------ ------ ------ ------ ------ Combined fixed charges and preferred stock dividends $ 66 $ 313 $ 277 $ 274 $ 217 $ 137 ====== ====== ====== ====== ====== ====== Ratio of earnings to fixed charges 7.2 5.3 4.6 2.0 4.7 6.7 ====== ====== ====== ====== ====== ====== Ratio of earnings to combined fixed charges and preferred stock dividends(b)(c) 6.8 5.0 4.4 2.0 4.7 6.7 ====== ====== ====== ====== ====== ======
(a) Represents amount of income before provision for income taxes required to meet the preferred stock dividend requirements of the Company. (b) Excluding the 2004 pre-tax income of $21 million related to the Behr litigation accrual, the 2003 pre-tax income for litigation settlement of $72 million and the non-cash, pre-tax goodwill impairment charge of $53 million, the 2002 pre-tax charge for litigation settlement, net, of $147 million, the 2001 non-cash, pre-tax charge of $530 million and the 2000 non-cash, pre-tax charge of $145 million, the Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends would be 6.5, 5.0, 4.9, 3.9 and 5.4 for the first quarter of 2004, and the years 2003, 2002, 2001 and 2000, respectively. (c) Years prior to 2002 have not been adjusted to exclude goodwill amortization expense.