FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Pursuant To Section 13 or 15(d) of
the Securities Exchange Act of 1934
For Quarter Ended March 31, 1998. Commission File Number 1-5794
MASCO CORPORATION
(Exact name of Registrant as specified in its Charter)
Delaware 38-1794485
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
21001 Van Born Road, Taylor, Michigan 48180
(Address of principal executive offices) (Zip Code)
(313) 274-7400
(Telephone Number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Shares Outstanding at
Class May 1, 1998
Common stock, par value $1 per share 169,983,000
<PAGE>
MASCO CORPORATION
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements:
Condensed Consolidated Balance Sheet -
March 31, 1998 and December 31, 1997 1
Condensed Consolidated Statement of
Income for the Three Months Ended
March 31, 1998 and 1997 2
Condensed Consolidated Statement of
Cash Flows for the Three Months Ended
March 31, 1998 and 1997 3
Notes to Condensed Consolidated
Financial Statements 4-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9-11
Unaudited Information Regarding Equity
Investments for the Three Months
Ended March 31, 1998 and 1997 12
Part II. Other Information and Signature 13
<PAGE>
MASCO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 1998 and December 31, 1997
(Dollars in thousands)
<TABLE>
March 31, December 31,
ASSETS 1998 1997
<S> <C> <C>
Current assets:
Cash and cash investments $ 174,900 $ 441,330
Accounts and notes receivable, net 679,400 559,050
Prepaid expenses and other 119,270 111,340
Inventories:
Raw material 246,540 229,040
Finished goods 171,180 161,920
Work in process 126,170 124,040
543,890 515,000
Total current assets 1,517,460 1,626,720
Equity investment in MascoTech, Inc. 51,060 52,780
Equity investments in other affiliates 155,720 175,300
Securities of Furnishings International Inc. 403,280 393,140
Property and equipment, net 1,073,890 1,037,320
Acquired goodwill, net 856,420 729,190
Other noncurrent assets 324,060 319,310
Total assets $4,381,890 $4,333,760
LIABILITIES
Current liabilities:
Notes payable $ 25,790 $ 68,460
Accounts payable 157,370 166,310
Accrued liabilities 366,690 385,230
Total current liabilities 549,850 620,000
Long-term debt 1,162,120 1,321,470
Deferred income taxes and other 181,200 163,270
Total liabilities 1,893,170 2,104,740
SHAREHOLDERS' EQUITY
Common stock, par value $1 per share
Authorized shares: 400,000,000 169,930 165,570
Preferred stock, par value $1 per share
Authorized shares: 1,000,000 --- ---
Paid-in capital 484,960 304,560
Retained earnings 1,858,550 1,784,370
Cumulative translation adjustments (24,720) (25,480)
Total shareholders' equity 2,488,720 2,229,020
Total liabilities and
shareholders' equity $4,381,890 $4,333,760
See notes to condensed consolidated financial statements.
</TABLE>
1
<PAGE>
MASCO CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
For the Three Months Ended March 31, 1998 and 1997
(Dollars in thousands except per share data)
<TABLE>
Three Months Ended March 31
1998 1997
<S> <C> <C>
Net sales $1,039,000 $854,000
Cost of sales 659,200 539,500
Gross profit 379,800 314,500
Selling, general and administrative expenses 207,500 181,000
Amortization of acquired goodwill 6,000 3,700
Operating profit 166,300 129,800
Other income (expense), net:
Interest expense (20,500) (18,500)
Re: MascoTech, Inc.:
Equity earnings 5,200 6,000
Interest income --- 2,500
Other, net 33,300 19,400
18,000 9,400
Income before income taxes 184,300 139,200
Income taxes 73,700 55,700
Net income $ 110,600 $ 83,500
Earnings per share:
Basic $.67 $.53
Diluted $.65 $.51
Cash dividends declared and paid per share $.21 $.20
See notes to condensed consolidated financial statements.
</TABLE>
2
<PAGE>
MASCO CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the Three Months Ended March 31, 1998 and 1997
(Dollars in thousands)
<TABLE>
Three Months Ended
March 31
1998 1997
<S> <C> <C>
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES:
Cash provided by operations $ 102,040 $ 87,420
Increase in receivables (105,780) (57,660)
(Increase) decrease in inventories (21,780) 2,450
Decrease in current liabilities, net (27,710) (35,180)
Total cash (for) operating activities (53,230) (2,970)
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES:
Acquisition of companies, net of cash acquired (159,440) (46,420)
Capital expenditures (36,430) (28,200)
Proceeds from sale of TriMas investment 54,640 ---
0ther, net 8,080 (14,360)
Total cash (for) investing activities (133,150) (88,980)
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES:
Increase in debt 120,070 450
Retirement of 9% notes, including
retirement premium (107,920) ---
Payment of debt (57,460) (22,570)
Cash dividends paid (34,740) (32,070)
Total cash (for) financing activities (80,050) (54,190)
CASH AND CASH INVESTMENTS:
Decrease for the quarter (266,430) (146,140)
At January 1 441,330 473,730
At March 31 $ 174,900 $327,590
See notes to condensed consolidated financial statements.
</TABLE>
3
<PAGE>
MASCO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
A. In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements contain all adjustments, of a normal
recurring nature, necessary to present fairly its financial position as at
March 31, 1998 and the results of operations and changes in cash flows for
the three months ended March 31, 1998 and 1997. The condensed consolidated
balance sheet at December 31, 1997 was derived from audited financial
statements. Certain amounts for the prior year period have been
reclassified to conform to the current year presentation.
B. At December 31, 1997, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings Per Share," which replaces
the presentation of primary and fully diluted earnings per share, as
computed under Accounting Principles Board ("APB") Opinion No. 15, with a
presentation of basic and diluted earnings per share. The financial
statements have been restated to conform with the earnings per share
presentation required under SFAS No. 128.
The following are reconciliations of the numerators and denominators used
in the computations of basic and diluted earnings per share, in thousands:
<TABLE>
Three Months Ended
March 31
1998 1997
<S> <C> <C>
Numerator:
Basic shares (net income) $110,600 $ 83,500
Add convertible debenture interest, net 700 1,500
Diluted (net income) $111,300 $ 85,000
Denominator:
Basic shares (based on weighted average) 163,900 157,800
Add:
Contingently issued award shares 4,000 3,200
Stock option dilution 2,000 1,100
Convertible debentures 1,900 4,200
Diluted shares 171,800 166,300
</TABLE>
C. During the first quarter of 1998, the Company acquired Vasco Corporation, a
leading Belgium-based manufacturer of residential decorative hydronic
radiators and heat convectors. The aggregate purchase price was
approximately $159 million and was principally financed with European bank
debt. The acquisition was accounted for as a purchase transaction. Vasco's
annual net sales in 1997 were in excess of $60 million.
D. The Company called its $178 million of 5.25% convertible subordinated
debentures due 2012 for redemption on February 12, 1998. Substantially all
holders exercised their right to convert these debentures into Company
common stock (at the conversion price of $42.28 per share), resulting in
the issuance of approximately 4.2 million shares of Company common stock in
February 1998.
During the first quarter of 1998, the Company retired $97.3 million face
value of its outstanding 9% debentures due 2001 (of a total face value of
$175 million at December 31, 1997), using a portion of its available cash.
The Company recognized an approximate $12 million pre-tax charge related to
the early retirement of long-term debt.
During the second quarter of 1998, the Company issued $250 million of
6.625% debentures due April 2018.
4
<PAGE>
MASCO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
E. On January 22, 1998, MascoTech, Inc. announced the completion of its
acquisition of TriMas Corporation. The Company recognized a gain in the
first quarter of 1998, as a result of selling its common stock investment
in TriMas to MascoTech in the public tender offer. This gain is discussed
further in Note F below.
F. Other income (expense), net consists of the following, in thousands:
<TABLE>
Three Months Ended
March 31
1998 1997
<S> <C> <C>
Interest expense $(20,500) $(18,500)
Re: MascoTech, Inc.:
Equity earnings 5,200 6,000
Interest income --- 2,500
Equity earnings, other 1,300 1,800
Income from cash and cash investments 3,600 4,300
Other interest income 11,100 9,900
Other, net 17,300 3,400
$ 18,000 $ 9,400
</TABLE>
Other interest income for the three months ended March 31, 1998 and 1997
included $10.1 million and $9.2 million, respectively, of interest income
from the 12% pay-in-kind junior debt securities (approximately $336 million
at December 31, 1997) of Furnishings International Inc.
Other, net for the first quarters of 1998 and 1997 included income and
gains aggregating $10.4 million and $5.0 million, respectively, regarding
certain non-operating assets.
Included in other, net for the first quarter of 1998 is a $29 million pre-
tax gain from the sale of the Company's investment in TriMas Corporation to
MascoTech, Inc. in the public tender offer. Such gain was largely offset
by an approximate $12 million pre-tax charge related to the early
retirement of long-term debt, and by pre-tax charges aggregating
approximately $11 million principally related to asset writedowns.
Interest income from MascoTech for the three months ended March 31, 1997
resulted from a $151.4 note receivable due from MascoTech, which was paid
on September 30, 1997.
5
<PAGE>
MASCO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
G. The Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 130, "Reporting Comprehensive Income," in the first quarter of 1998.
Accordingly, the Company's total comprehensive income was as follows, in
thousands:
<TABLE>
Three Months Ended
March 31
1998 1997
<S> <C> <C>
Net income $110,600 $ 83,500
Other comprehensive income, currency
translation adjustments 760 (14,160)
Total comprehensive income $111,360 $ 69,340
</TABLE>
H. For 1998, the following presents, as one entity with Masco Corporation as
the parent company, the combined unaudited financial statements of the
Company and MascoTech, Inc., and for 1997, the combined unaudited financial
statements of the Company, MascoTech and TriMas Corporation. Intercompany
transactions have been eliminated. Amounts, except per share data, are in
thousands. (MascoTech completed its acquisition of TriMas Corporation in
the first quarter of 1998.)
<TABLE>
Combined Balance Sheet
March 31, December 31,
Assets 1998 1997
<S> <C> <C>
Current assets:
Cash and cash investments $ 251,640 $ 587,820
Marketable securities 18,630 45,970
Receivables 921,200 768,030
Prepaid expenses and other 91,100 85,250
Deferred income taxes 73,850 80,520
Inventories:
Raw material 305,530 286,120
Finished goods 247,750 237,340
Work in process 167,900 162,460
721,180 685,920
Total current assets 2,077,600 2,253,510
Equity and other investments in affiliates 241,530 280,970
Securities of Furnishings International Inc. 403,280 393,140
Property and equipment, net 1,790,270 1,654,840
Acquired goodwill, net 1,525,500 925,120
0ther noncurrent assets 405,100 421,170
Total assets $6,443,280 $5,928,750
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable $ 28,430 $ 72,340
Accounts payable 270,840 264,980
Accrued liabilities 523,250 535,300
Total current liabilities 822,520 872,620
Long-term debt 2,554,430 1,959,440
Deferred income taxes and other 375,200 365,470
Other interests in combined affiliates 202,410 502,200
Equity of shareholders of Masco Corporation 2,488,720 2,229,020
Total liabilities and shareholders' equity $6,443,280 $5,928,750
6
<PAGE>
MASCO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note H - Continued:
Three Months Ended
March 31
Combined Statement of Income 1998 1997
Net sales $1,434,800 $1,245,300
Costs and expenses, net:
Cost of sales 950,610 821,960
Selling, general and administrative expenses 259,060 233,520
Other income (expense), net:
Interest expense (39,110) (27,540)
Other income, net 48,100 44,870
8,990 17,330
1,200,680 1,038,150
Income before income taxes and other interests 234,120 207,150
Income taxes 96,200 87,700
Income before other interests 137,920 119,450
Other interests in combined affiliates 27,320 35,950
Net income $ 110,600 $ 83,500
Earnings per share:
Basic $.67 $.53
Diluted $.65 $.51
Cash dividends declared and paid per share $.21 $.20
7
<PAGE>
MASCO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (concluded)
Note H - Concluded:
Three Months Ended
March 31
Combined Statement of Cash Flows 1998 1997
Cash Flows From (For) Operating Activities:
Cash provided by operations $ 175,250 $ 140,030
(Increase) in receivables (139,820) (83,240)
(Increase) in inventories (26,160) (3,830)
(Increase) decrease in marketable securities, net 27,340 (6,920)
Increase (decrease) in current liabilities, net 1,450 (17,770)
Total cash from operating activities 38,060 28,270
Cash Flows From (For) Investing Activities:
Acquisition of other interests in TriMas
Corporation (865,460) ---
Acquisitions, net of cash acquired (159,440) (57,520)
Capital expenditures (61,260) (43,270)
Proceeds from redemption of debt by affiliate 56,900 ---
Proceeds from sale of subsidiaries --- 76,560
Other, net (18,140) (43,860)
Total cash (for) investing activities (1,047,400) (68,090)
Cash Flows From (For) Financing Activities:
Increase in debt 1,105,430 17,230
Payment of debt (395,190) (104,750)
Cash dividends paid (37,080) (38,090)
Total cash from (for) financing activities 673,160 (125,610)
Cash and Cash Investments:
Decrease for the period (336,180) (165,430)
At January 1 587,820 599,020
At March 31 $ 251,640 $ 433,590
</TABLE>
8
<PAGE>
MASCO CORPORATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FIRST QUARTER 1998 VERSUS FIRST QUARTER 1997
SALES AND OPERATIONS
Net sales for the three months ended March 31, 1998 increased 22 percent to
$1,039 million from $854 million for the comparable period in 1997; excluding
recent acquisitions, first quarter 1998 net sales increased 10 percent. The
increase in net sales includes increases in unit sales volume of cabinets,
faucets and other kitchen and bath products.
For the first quarter of 1998, sales of Kitchen and Bath Products
increased 20 percent to $813 million from $679 million in the first quarter
of 1997; excluding recent acquisitions, first quarter 1998 net sales for this
segment increased 10 percent. Sales of Other Specialty Products for the
first quarter of 1998 were $226 million, representing a 29 percent increase
over net sales of $175 million for the first quarter of 1997; excluding
recent acquisitions, net sales for this segment increased 11 percent for the
first quarter of 1998.
Net sales from North American operations for the first quarter of 1998
increased 20 percent to $857 million from $713 million for the comparable period
in the prior year; excluding recent acquisitions, first quarter 1998 net sales
from these operations increased 12 percent. Net sales from European-based
operations for the first quarter of 1998 increased 29 percent to $182 million
from $141 million for the first quarter of 1997; excluding recent acquisitions,
first quarter 1998 net sales from these operations were relatively flat when
compared with the first quarter of 1997. A stronger U.S. dollar, principally
against the German Deutsche Mark, had a negative effect on the translation of
European sales in the first quarter of 1998 as compared with the first quarter
of 1997; excluding recent acquisitions, European net sales in the 1998 first
quarter in local currencies increased by approximately 10 percent.
Cost of sales as a percentage of sales increased slightly to 63.4 percent
for the first quarter of 1998 from 63.2 percent for the comparable period in
1997. Excluding amortization of acquired goodwill ($6.0 million and $3.7 million
for the first quarters of 1998 and 1997, respectively), selling, general and
administrative expenses as a percentage of sales for the first quarter of 1998
decreased to 20.0 percent from 21.2 percent for the comparable period in 1997.
The decrease in the selling, general and administrative expenses percentage in
1998 results largely from the Company's cost-containment initiatives and the
leveraging of fixed and semi-fixed costs over a higher sales base.
The Company's operating profit margins improved in the first quarter of
1998 as compared with the first quarter of 1997 principally due to the reduction
in selling, general and administrative expenses as a percentage of sales. The
Company's operating profit margin, before general corporate expense, was 18.0
percent for the first quarter of 1998 as compared with 17.6 percent for the
first quarter of 1997. Operating profit margin, after general corporate
expense, was 16.0 percent for the first quarter of 1998 as compared with 15.2
percent for the first quarter of 1997.
9
<PAGE>
MASCO CORPORATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FIRST QUARTER 1998 VERSUS FIRST QUARTER 1997 (continued)
OTHER INCOME (EXPENSE), NET
Equity earnings from MascoTech, Inc. for the first quarter of 1998 were
$5.2 million as compared with equity earnings from MascoTech of $6.0 million for
the comparable period of 1997. In January 1998, MascoTech completed its
acquisition of TriMas Corporation; the Company anticipates that this transaction
will result in slightly higher equity earnings from MascoTech in future periods.
Included in other income (expense), net for the three months ended March
31, 1997 is $2.5 million of interest income from a $151.4 million note
receivable due from MascoTech, which was paid on September 30, 1997.
Included in other interest income under other income (expense), net for the
three months ended March 31, 1998 and 1997 is $10.1 million and $9.2 million,
respectively, of interest income from the 12% pay-in-kind junior debt securities
of Furnishings International Inc. (approximately $336 million at December 31,
1997).
Included in other, net under other income (expense), net for the first
quarters of 1998 and 1997 were income and gains aggregating $10.4 million and
$5.0 million, respectively, regarding certain non-operating assets.
Included in other, net under other income (expense), net for the first
quarter of 1998 is a $29 million pre-tax gain from the sale of the Company's
investment in TriMas Corporation to MascoTech, Inc. in the public tender offer.
Such gain was largely offset by an approximate $12 million pre-tax charge
related to the early retirement of long-term debt, and by pre-tax charges
aggregating approximately $11 million principally related to asset writedowns.
NET INCOME AND EARNINGS PER SHARE
Net income for the first quarter of 1998 increased 32 percent to $110.6
million from $83.5 million for the comparable period of 1997. Basic and diluted
earnings per share for the first quarter of 1998 increased 26 percent and 27
percent, respectively, to $.67 and $.65 from $.53 and $.51, respectively, for
the first quarter of 1997.
The Company estimates that its effective tax rate for 1998 will approximate
40 percent.
10
<PAGE>
MASCO CORPORATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FIRST QUARTER 1998 VERSUS FIRST QUARTER 1997 (concluded)
OTHER FINANCIAL INFORMATION
At March 31, 1998, current assets were 2.8 times current liabilities.
For the three months ended March 31, 1998, cash of $53.2 million was used
for operating activities. Cash used for investing activities was $133.2
million, including $159.4 million for an acquisition and $36.4 million for
capital expenditures; cash from investing activities included $54.6 million from
the sale of the Company's TriMas investment and $8.0 million for other cash
inflows. Cash used for financing activities was $80.0 million, including $107.9
million for the early retirement of certain of the Company's 9% notes and the
payment of a premium associated with this early retirement, $57.5 million for
the payment of debt and $34.7 million for cash dividends paid; cash provided by
financing activities included an increase in debt of $120.1 million (primarily
European bank debt for an acquisition). The aggregate of the preceding items
represents a net cash outflow of $266.4 million. Changes in working capital and
debt as indicated on the statement of cash flows exclude the effect of
acquisition of companies, other than as mentioned above.
First quarter 1998 cash from operations was affected by an expected and
annually recurring first quarter increase in accounts receivable (although there
was no significant increase in receivable days). The annual increase in accounts
receivable is historically experienced in the first half of the year.
The Company's long-term debt as a percent of total capitalization ratio
improved to 31 percent at March 31, 1998 as compared with approximately 36
percent at December 31, 1997. Such improvement primarily resulted from the
conversion of the Company's $178 million of 5.25% convertible subordinated
debentures due 2012, which the Company called for redemption on February 12,
1998. Substantially all holders exercised their right to convert these
debentures into Company common stock (at the conversion price of $42.28 per
share), resulting in the issuance of approximately 4.2 million shares of Company
common stock in February 1998.
During the second quarter of 1998, the Company issued $250 million of
6.625% debentures due 2018. Had the Company issued these debentures as of March
31, 1998, the Company's long-term debt as a percent of total capitalization
ratio would have been approximately 35 percent. After giving effect to the
issuance of these debentures, the Company has on file with the Securities and
Exchange Commission, an unallocated shelf registration pursuant to which the
Company is able to issue up to a combined $509 million of debt and equity
securities.
The Company believes that its present cash balance, its cash flows from
operations and, to the extent necessary, future financial market activities and
bank borrowings, are sufficient to fund its working capital and other investment
needs.
11
<PAGE>
UNAUDITED INFORMATION REGARDING EQUITY INVESTMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
Equity investments in affiliates consist primarily of the following
approximate common stock and partnership interests at March 31:
1998 1997
Emco Limited, a Canadian company 42% --
MascoTech, Inc. 17% 21%
TriMas Corporation -- 4%
Hans Grohe, a German partnership 27% 27%
During the second quarter of 1997, MascoTech effected conversion of all of
its publicly held outstanding convertible preferred stock with the issuance of
approximately 10 million shares of its common stock. This conversion reduced
the Company's common equity ownership in MascoTech to 17 percent from 21
percent.
During October 1996, the Company completed the sale to MascoTech of 17
million shares of MascoTech common stock and warrants to purchase 10 million
shares of MascoTech common stock. Under the sale agreement, the Company
received approximately $266 million, with $115 million cash paid at closing.
The $151 million balance of the consideration was paid by MascoTech to the
Company on September 30, 1997; as provided for in the sale agreement, MascoTech
at that date delivered to the Company 9.9 million shares (approximately 42
percent) of the outstanding common stock of Emco Limited and $45.6 million in
cash. Emco Limited is a leading Canadian distributor and manufacturer of home
improvement and building products.
The following presents condensed financial data of MascoTech, Inc. Amounts
are in thousands.
Three Months Ended March 31
1998 1997
Sales - Net $400,760 $233,440
Gross Profit $104,390 $ 56,300
Net Income (After Preferred
Stock Dividends in 1997) $ 32,740 $ 29,420
On January 22, 1998, MascoTech announced the completion of its acquisition
of TriMas Corporation. The Company recognized a $29 million pre-tax gain in the
first quarter of 1998, as a result of selling its common stock investment in
TriMas to MascoTech in the public tender offer.
12
<PAGE>
PART II. OTHER INFORMATION
MASCO CORPORATION
Items 1 through 5 are not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
12 - Computation of Ratio of Earnings to Fixed Charges
27 - Financial Data Schedule
(b) Reports on Form 8-K:
Report on Form 8-K dated February 12, 1998 reporting under item
5 the completion of the Company's redemption on February 12,
1998 of all of its outstanding 5.25% convertible subordinated
debentures due 2012 and the issuance of a press release
relating to the announcement of the Company's earnings for
1997.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MASCO CORPORATION
(Registrant)
Date: May 13, 1998 By: /s/Richard G. Mosteller
Richard G. Mosteller
Senior Vice-President - Finance
(Chief Financial Officer
and Authorized Signatory)
13
<PAGE>
MASCO CORPORATION
EXHIBIT INDEX
Exhibit
Exhibit 12 Computation of Ratio of Earnings to Fixed Charges
Exhibit 27 Financial Data Schedule
Exhibit 12
MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
<TABLE>
(Thousands of Dollars)
Three
Months
Ended
March 31, Year Ended December 31,
1998 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Earnings Before Income Taxes
and Fixed Charges:
Income from continuing
operations before income
taxes $184,300 $630,900 $502,700 $351,790 $292,830 $349,190
Deduct/add equity in
undistributed (earnings)/
loss of equity affiliates (5,230) (19,470) (12,310) (17,770) 106,200 (13,750)
Add interest on indebtedness,
net 20,720 80,390 74,790 73,400 60,360 62,860
Add amortization of debt
expense 270 1,260 1,400 1,930 2,220 2,650
Add estimated interest factor
for rentals 2,480 8,150 6,150 4,970 4,220 3,190
Earnings before income
taxes and fixed charges $202,540 $701,230 $572,730 $414,320 $465,830 $404,140
Fixed Charges:
Interest on indebtedness
regarding continuing
operations $ 21,460 $ 83,520 $ 77,250 $ 76,460 $ 63,220 $ 63,600
Amortization of debt expense 270 1,260 1,400 1,930 2,220 2,650
Estimated interest factor
for rentals 2,480 8,150 6,150 4,970 4,220 3,190
$ 24,210 $ 92,930 $ 84,800 $ 83,360 $ 69,660 $ 69,440
Ratio of earnings to fixed
charges 8.4 7.5 6.8 5.0 6.7 5.8
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MASCO
CORPORATION'S MARCH 31, 1998 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 174,900
<SECURITIES> 0
<RECEIVABLES> 679,400<F1>
<ALLOWANCES> 0
<INVENTORY> 543,890
<CURRENT-ASSETS> 1,517,460
<PP&E> 1,073,890<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,381,890
<CURRENT-LIABILITIES> 549,850
<BONDS> 1,162,120
0
0
<COMMON> 169,930
<OTHER-SE> 2,318,790
<TOTAL-LIABILITY-AND-EQUITY> 4,381,890
<SALES> 1,039,000
<TOTAL-REVENUES> 1,039,000
<CGS> 659,200
<TOTAL-COSTS> 659,200
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,500
<INCOME-PRETAX> 184,300
<INCOME-TAX> 73,700
<INCOME-CONTINUING> 110,600
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 110,600
<EPS-PRIMARY> .67
<EPS-DILUTED> .65
<FN>
<F1>Receivables and property and equipment are presented net of allowances for
doubtful accounts and accumulated depreciation and amortization, respectively.
</FN>
</TABLE>
