EX-12 2 k07341exv12.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)  
    Six        
    Months        
    Ended        
    June 30,     Year Ended December 31,  
    2006     2005     2004     2003     2002     2001  
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
  $ 672     $ 1,412     $ 1,542     $ 1,247     $ 933     $ 256  
 
                                               
Deduct equity in undistributed (earnings) of fifty-percent-or- less-owned companies
          (1 )     (1 )           (10 )     (1 )
 
                                               
Add interest on indebtedness, net
    117       246       214       252       226       230  
 
                                               
Add amortization of debt expense
    2       6       6       13       13       10  
 
                                               
Add estimated interest factor for rentals
    25       40       34       31       24       21  
 
                                   
 
                                               
Earnings before income taxes, minority interest, cumulative effect of accounting change, net, fixed charges and preferred stock dividends
  $ 816     $ 1,703     $ 1,795     $ 1,543     $ 1,186     $ 516  
 
                                   
 
                                               
Fixed Charges:
                                               
Interest on indebtedness
  $ 118     $ 244     $ 214     $ 253     $ 225     $ 234  
 
                                               
Amortization of debt expense
    2       6       6       13       13       10  
 
                                               
Estimated interest factor for rentals
    25       40       34       31       24       21  
 
                                   
 
                                               
Total fixed charges
  $ 145     $ 290     $ 254     $ 297     $ 262     $ 265  
 
                                   
 
                                               
Preferred stock dividends(a)
  $     $     $ 8     $ 16     $ 14     $ 7  
 
                                   
 
                                               
Combined fixed charges and preferred stock dividends
  $ 145     $ 290     $ 262     $ 313     $ 276     $ 272  
 
                                   
 
                                               
Ratio of earnings to fixed charges
    5.6       5.9       7.1       5.2       4.5       1.9  
 
                                   
Ratio of earnings to combined fixed charges and preferred stock dividends(b) (c)
    5.6       5.9       6.9       4.9       4.3       1.9  
 
                                   
 
(a)   Represents amount of income before provision for income taxes required to meet the preferred stock dividend requirements of the Company.
 
(b)   Excluding the 2006 non-cash, pre-tax impairment charge for investments of $78 million, the 2005 pre-tax income of $6 million related to the Behr litigation settlement, the non-cash, pre-tax goodwill impairment charge of $69 million and the pre-tax impairment charge of $45 million relating to financial investments, the 2004 pre-tax income of $30 million related to the Behr litigation settlement, the non-cash, pre-tax goodwill impairment charge of $112 million, and the pre-tax impairment charge of $21 million related to a marketable security, the 2003 pre-tax income of $72 million related to the Behr litigation settlement and the non-cash, pre-tax goodwill impairment charge of $53 million, the 2002 pre-tax net charge of $147 million related to the Behr litigation settlement, and the 2001 non-cash, pre-tax charge of $530 million, the Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends would be 6.2, 6.2, 7.2, 4.9, 4.8 and 3.8 for the six months ended June 30, 2006 and the years 2005, 2004, 2003, 2002 and 2001, respectively.
 
(c)   The year 2001 includes goodwill amortization expense.