<PAGE> 1
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 June 30, 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 August 1, 1998
----- ---------------------
Common stock, par value $1 per share 340,161,000
<PAGE> 2
MASCO CORPORATION
INDEX
PAGE NO.
Part I. Financial Information
Item 1. Financial Statements:
Condensed Consolidated Balance Sheet -
June 30, 1998 and December 31, 1997 1
Condensed Consolidated Statement of
Income for the Three Months and
Six Months Ended June 30, 1998
and 1997 2
Condensed Consolidated Statement of
Cash Flows for the Six Months Ended
June 30, 1998 and 1997 3
Notes to Condensed Consolidated
Financial Statements 4-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10-13
Unaudited Information Regarding Equity
Investments for the Three Months and
Six Months Ended June 30, 1998 and 1997 14
Part II. Other Information and Signature 15-17
<PAGE> 3
MASCO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1998 AND DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS 1998 1997
------ ---------- ------------
<S> <C> <C>
Current assets:
Cash and cash investments $ 416,590 $ 441,330
Accounts and notes receivable, net 674,850 559,050
Prepaid expenses and other 143,690 111,340
Inventories:
Raw material 257,130 229,040
Finished goods 127,860 161,920
Work in process 175,890 124,040
---------- ------------
560,880 515,000
---------- ------------
Total current assets 1,796,010 1,626,720
Equity investment in MascoTech, Inc. 52,710 52,780
Equity investments in other affiliates 156,780 175,300
Securities of Furnishings International Inc. 413,290 393,140
Property and equipment, net 1,073,170 1,037,320
Acquired goodwill, net 918,310 729,190
Other noncurrent assets 356,650 319,310
---------- ------------
Total assets $4,766,920 $ 4,333,760
========== ============
LIABILITIES
Current liabilities:
Notes payable $ 24,450 $ 68,460
Accounts payable 156,800 166,310
Accrued liabilities 384,620 385,230
---------- ------------
Total current liabilities 565,870 620,000
Long-term debt 1,417,860 1,321,470
Deferred income taxes and other 180,800 163,270
---------- ------------
Total liabilities 2,164,530 2,104,740
---------- ------------
SHAREHOLDERS' EQUITY
Common stock, par value $1 per share
Authorized shares: 900,000,000 340,030 165,570
Preferred stock, par value $1 per share
Authorized shares: 1,000,000 --- ---
Paid-in capital 317,030 304,560
Retained earnings 1,975,460 1,784,370
Cumulative translation adjustments (30,130) (25,480)
---------- ------------
Total shareholders' equity 2,602,390 2,229,020
---------- ------------
Total liabilities and
shareholders' equity $4,766,920 $ 4,333,760
========== ============
</TABLE>
See notes to condensed consolidated financial statements.
1
<PAGE> 4
MASCO CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------- -----------------------
1998 1997 1998 1997
---------- -------- ---------- -----------
<S> <C> <C> <C> <C>
Net sales $1,085,000 $913,000 $2,124,000 $ 1,767,000
Cost of sales 691,400 578,200 1,350,600 1,117,700
---------- -------- ---------- -----------
Gross profit 393,600 334,800 773,400 649,300
Selling, general and administrative
expenses 213,000 187,200 420,500 368,200
Amortization of acquired goodwill 6,800 3,800 12,800 7,500
---------- -------- ---------- -----------
Operating profit 173,800 143,800 340,100 273,600
---------- -------- ---------- -----------
Other income (expense), net:
Interest expense (20,700) (18,900) (41,200) (37,400)
Re: MascoTech, Inc.:
Equity earnings 5,100 4,300 10,300 10,300
Interest income --- 2,500 --- 5,000
Gain from change in investment --- 29,500 --- 29,500
Other, net 30,600 (8,800) 63,900 10,600
---------- -------- ---------- -----------
15,000 8,600 33,000 18,000
---------- -------- ---------- -----------
Income before income taxes 188,800 152,400 373,100 291,600
Income taxes 71,800 60,800 145,500 116,500
---------- -------- ---------- -----------
Net income $ 117,000 $ 91,600 $ 227,600 $ 175,100
========== ======== ========== ===========
Earnings per share:
Basic $ .35 $ .29 $ .69 $ .55
========== ======== ========== ===========
Diluted $ .34 $ .28 $ .66 $ .54
========== ======== ========== ===========
Cash dividends per share:
Declared -- $ .10 $ .105 $ .20
========== ======== ========== ===========
Paid $ .105 $ .10 $ .21 $ .20
========== ======== ========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE> 5
MASCO CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the Six Months Ended June 30,1998 and 1997
(Dollars in thousands)
--------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
-----------------------
1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES:
Cash provided by operations $221,590 $193,190
(Increase) in receivables (97,110) (69,420)
(Increase) in inventories (34,160) (9,480)
Increase (decrease) in current liabilities, net 15,770 (6,830)
-------- --------
Total cash from operating activities 106,090 107,460
-------- --------
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES:
Acquisition of companies, net of cash acquired (189,370) (87,850)
Capital expenditures (74,610) (64,760)
Proceeds from sale of TriMas investment 54,640 ---
0ther, net (57,060) (17,030)
-------- --------
Total cash (for) investing activities (266,400) (169,640)
-------- --------
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES:
Increase in debt 131,320 17,170
Issuance of 6.625% debentures 250,000 ---
Retirement of 9% notes, including retirement
premium (108,620) ---
Payment of debt (66,610) (31,060)
Cash dividends paid (70,520) (64,490)
-------- --------
Total cash from (for) financing activities 135,570 (78,380)
-------- --------
CASH AND CASH INVESTMENTS:
(Decrease) for the period (24,740) (140,560)
At January 1 441,330 473,730
-------- --------
At June 30 $416,590 $333,170
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 6
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 June 30, 1998 and the results of operations for the three months and
six months ended June 30, 1998 and 1997 and cash flows for the six
months ended June 30, 1998 and 1997. The condensed consolidated balance
sheet at December 31, 1997 was derived from audited financial
statements. Shares and per share data have been adjusted to reflect the
July 1998 100 percent stock distribution to shareholders and to conform
with the earnings per share presentation required under Statement of
Financial Accounting Standards ("SFAS") No. 128. Certain amounts for the
prior year periods have been reclassified to conform to the current year
presentation.
B. The following are reconciliations of the numerators and denominators
used in the computations of basic and diluted earnings per share, in
thousands:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------- ------------------
1998 1997 1998 1997
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Numerator:
Basic (net income) $117,000 $ 91,600 $227,600 $ 175,100
Add convertible debenture
interest, net --- 1,400 700 2,900
Diluted (net income) $117,000 $ 93,000 $228,300 $ 178,000
Denominator:
Basic shares (based on weighted
average) 333,500 316,000 331,100 316,000
Add:
Contingently issued award shares 6,500 6,400 6,800 6,400
Stock option dilution 4,200 2,800 4,000 2,600
Convertible debentures --- 8,400 1,900 8,400
Diluted shares 344,200 333,600 343,800 333,400
</TABLE>
Diluted earnings per share in the first and second quarters of 1997 were
$.26 and $.28, respectively, which when totaled equal $.54. Based on the
above reconciliation for the six months ended June 30, 1997, however,
diluted earnings per share approximates $.535.
C. During June 1998, the Company's Board of Directors adopted a resolution
for a stock split, effected in the form of a 100 percent stock
distribution (one additional share for every share held) to shareholders
of record on June 19, 1998 to be issued on July 10, 1998. Following the
issuance of the common shares for the stock split, the Company declared
an increased quarterly dividend of $.11 per common share on its
post-split shares. Such dividend is the equivalent of $.22 per share
quarterly prior to the stock split. The Company had been previously
paying a $.21 per share quarterly dividend on its pre-split shares.
D. During the second quarter of 1998, the Company acquired General
Accessory Manufacturing Company, a manufacturer of stainless steel
commercial washroom accessories and bathroom partitions, and Mirolin
Industries, Inc., a Canadian manufacturer of tubs, shower enclosures and
whirlpools. During the first quarter of 1998, the Company acquired Vasco
Corporation, a Belgium-based manufacturer of residential decorative
hydronic radiators and heat convectors. The aggregate net purchase price
of these acquisitions was approximately $189 million and was principally
financed with bank debt.
In July 1998, the Company acquired The Brugman Group, a European
manufacturer of residential hydronic radiators and heat convectors.
The above acquisitions were accounted for as purchase transactions.
Combined 1997 annual net sales of companies acquired in 1998 through
July were approximately $150 million.
4
<PAGE> 7
MASCO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
E. In July 1998, the Company completed the sale of its Thermador
subsidiary. Thermador is a U.S. manufacturer of kitchen appliances, with
annualized 1998 net sales of approximately $140 million. The 1998 third
quarter is expected to include a modest pre-tax gain, net from the sale.
F. The Company called for redemption its $178 million of 5.25% convertible
subordinated debentures due 2012 on February 12, 1998. Substantially all
holders exercised their right to convert these debentures into Company
common stock (at the conversion price of $21.14 per share), resulting in
the issuance of approximately 8.4 million shares of Company common stock
in February 1998.
During the first quarter of 1998, the Company retired approximately $98
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.
G. Other income (expense), net consists of the following, in thousands:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------- --------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest expense $(20,700) $(18,900) $(41,200) $(37,400)
Re: MascoTech, Inc.:
Equity earnings 5,100 4,300 10,300 10,300
Interest income --- 2,500 --- 5,000
Gain from change in
investment --- 29,500 --- 29,500
Equity earnings, other 2,700 1,700 4,000 3,500
Income from cash and
cash investments 4,600 3,600 8,200 7,900
Other interest income 10,800 9,500 21,900 19,400
Other, net 12,500 (23,600) 29,800 (20,200)
-------- -------- -------- --------
$ 15,000 $ 8,600 $ 33,000 $ 18,000
======== ======== ======== ========
</TABLE>
Included in other, net for the six months ended June 30, 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
certain asset writedowns.
Other, net for the three months and six months ended June 30, 1998
includes income and gains, net regarding certain non-operating assets of
$16.0 million and $26.4 million, respectively, as compared with $7.4
million and $12.4 million of such income and gains, net for the
comparable periods of the prior year.
Included in other interest income for the three months and six months
ended June 30, 1998 and 1997 is interest income of approximately $10.1
million and $20.2 million and approximately $9.0 million and $18.0
million, respectively, from the 12% pay-in- kind junior debt securities
of Furnishings International Inc. (approximately $336 million principal
amount at December 31, 1997).
5
<PAGE> 8
MASCO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE G - CONTINUED:
In late June 1997, MascoTech, Inc., an equity affiliate, redeemed all of
its outstanding convertible preferred stock in exchange for
approximately 10 million shares of its common stock. This redemption
reduced the Company's common equity ownership in MascoTech to 17 percent
from 21 percent, and increased the Company's equity in MascoTech's net
book value by approximately $29.5 million. As a result, the Company
recognized a pre-tax gain of approximately $29.5 million during the
second quarter of 1997.
Other, net in the second quarter of 1997 includes charges aggregating
$29.5 million, which offset the above-mentioned MascoTech gain,
primarily for the adjustment of the Company's Payless Cashways
investment to its estimated fair value.
During the first half of 1997, the Company recognized interest income at
6.625% on the $151.4 million receivable balance due from MascoTech.
H. 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>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------ -----------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income $117,000 $ 91,600 $227,600 $175,100
Other comprehensive income, currency
translation adjustments (5,410) (2,370) (4,650) (16,530)
-------- -------- -------- --------
Total comprehensive income $111,590 $ 89,230 $222,950 $158,570
</TABLE>
I. On June 15, 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS 133
is effective for all fiscal quarters of all fiscal years beginning after
June 15, 1999 (January 1, 2000 for the Company). SFAS 133 requires that
all derivative instruments be recorded on the balance sheet at their
fair value. Changes in the fair value of derivatives are recorded each
period in current earnings or other comprehensive income, depending on
whether a derivative is designated as part of a hedge transaction and,
if it is, the type of hedge transaction. The Company anticipates that
the adoption of SFAS 133 will not have a significant effect on the
Company's results of operations or its financial position.
6
<PAGE> 9
MASCO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
J. 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.)
COMBINED BALANCE SHEET
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS 1998 1997
---------- ------------
<S> <C> <C>
Current assets:
Cash and cash investments $ 447,220 $ 587,820
Marketable securities 9,220 45,970
Receivables 909,950 768,030
Prepaid expenses and other 142,300 85,250
Deferred income taxes 48,240 80,520
Inventories:
Raw material 318,130 286,120
Finished goods 203,220 237,340
Work in process 217,370 162,460
---------- ----------
738,720 685,920
---------- ----------
Total current assets 2,295,650 2,253,510
Equity and other investments in affiliates 246,540 280,970
Securities of Furnishings International Inc. 413,290 393,140
Property and equipment, net 1,695,070 1,654,840
Acquired goodwill, net 1,665,230 925,120
0ther noncurrent assets 416,500 421,170
---------- ----------
Total assets $6,732,280 $5,928,750
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 27,920 $ 72,340
Accounts payable 270,640 264,980
Accrued liabilities 532,550 535,300
---------- ----------
Total current liabilities 831,110 872,620
Long-term debt 2,721,520 1,959,440
Deferred income taxes and other 361,600 365,470
Other interests in combined affiliates 215,660 502,200
Equity of shareholders of Masco Corporation 2,602,390 2,229,020
---------- ----------
Total liabilities and shareholders' equity $6,732,280 $5,928,750
========== ==========
</TABLE>
7
<PAGE> 10
MASCO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note J - Continued:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
---------------------- ----------------------
COMBINED STATEMENT OF INCOME 1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $1,516,400 $1,322,650 $2,951,200 $2,567,950
---------- ---------- ---------- ----------
Costs and expenses, net:
Cost of sales 1,005,730 873,370 1,956,340 1,695,330
Selling, general and
administrative expenses 289,750 239,650 548,810 473,170
---------- ---------- ---------- ----------
Other income (expense), net:
Interest expense (41,480) (27,670) (80,590) (55,210)
Other income, net 34,860 32,780 82,960 77,650
---------- ---------- ---------- ----------
(6,620) 5,110 2,370 22,440
---------- ---------- ---------- ----------
1,302,100 1,107,910 2,502,780 2,146,060
---------- ---------- ---------- ----------
Income before income taxes and
other interests 214,300 214,740 448,420 421,890
Income taxes 72,410 89,360 168,610 177,060
---------- ---------- ---------- ----------
Income before other interests 141,890 125,380 279,810 244,830
Other interests in combined affiliates 24,890 33,780 52,210 69,730
---------- ---------- ---------- ----------
Net income $ 117,000 $ 91,600 $ 227,600 $ 175,100
========== ========== ========== ==========
Earnings per share:
Basic $ .35 $ .29 $ .69 $ .55
========== ========== ========== ==========
Diluted $ .34 $ .28 $ .66 $ .54
========== ========== ========== ==========
Cash dividends per share:
Declared -- $ .10 $ .105 $ .20
========== ========== ========== ==========
Paid $ .105 $.10 $ .21 $ .20
========== ========== ========== ==========
</TABLE>
8
<PAGE> 11
MASCO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (concluded)
Note J - Concluded:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
---------------------
COMBINED STATEMENT OF CASH FLOWS 1998 1997
---------- ---------
<S> <C> <C>
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES:
Cash provided by operations $ 355,900 $ 318,470
(Increase) in receivables (120,050) (84,030)
(Increase) in inventories (36,790) (5,600)
Decrease in marketable securities, net 36,750 3,380
Increase (decrease) in current liabilities, net 28,640 (10,030)
---------- ---------
Total cash from operating activities 264,450 222,190
---------- ---------
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES:
Acquisition of other interests in TriMas
Corporation (868,310) ---
Acquisition of companies, net of cash acquired (207,250) (105,980)
Capital expenditures (124,400) (94,810)
Proceeds from redemption of debt by affiliate 80,500 ---
Proceeds from sale of subsidiaries 25,020 76,560
Other, net (107,150) (79,820)
---------- ---------
Total cash (for) investing activities (1,201,590) (204,050)
---------- ---------
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES:
Increase in debt 1,390,230 37,290
Payment of debt (518,060) (110,080)
Cash dividends paid (75,630) (76,800)
---------- ---------
Total cash from (for) financing activities 796,540 (149,590)
---------- ---------
CASH AND CASH INVESTMENTS:
Increase (decrease) for the period (140,600) (131,450)
At January 1 587,820 599,020
---------- ---------
At June 30 $ 447,220 $ 467,570
========== =========
</TABLE>
9
<PAGE> 12
MASCO CORPORATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SECOND QUARTER 1998 AND THE FIRST SIX MONTHS 1998 VERSUS
SECOND QUARTER 1997 AND THE FIRST SIX MONTHS 1997
SALES AND OPERATIONS
Net sales increased 19 percent and 20 percent for the three months and
six months ended June 30, 1998, respectively, from the comparable periods in
1997. Excluding acquisition of companies during 1998 and 1997, net sales for the
three months and six months ended June 30, 1998 increased 9 percent and 10
percent, respectively, from the comparable periods in 1997; these increases in
net sales are principally due to increases in unit sales volume of cabinets,
other kitchen and bath products and faucets.
Sales of Kitchen and Bath Products for the three months and six months
ended June 30, 1998 were $841 million and $1,654 million, respectively,
representing increases of 18 percent and 19 percent, respectively, from the
comparable periods in 1997; excluding acquisition of companies, net sales of
this segment increased 9 percent and 10 percent, respectively for the three
months and six months ended June 30, 1998.
Sales of Other Specialty Products for the three months and six months
ended June 30, 1998 were $244 million and $470 million, respectively,
representing increases of 21 percent and 25 percent, respectively, from the
comparable periods in 1997; excluding acquisition of companies, net sales of
this segment increased 6 percent and 9 percent, respectively, for the three
months and six months ended June 30, 1998.
Net sales from North American operations for the second quarter and six
months ended June 30, 1998 were $887 million and $1,744 million, respectively,
representing increases of 17 percent and 18 percent, respectively, from the
comparable periods in 1997; excluding acquisition of companies, net sales from
these operations increased 10 percent and 11 percent, respectively, from the
comparable periods in 1997. Net sales from European operations for the second
quarter and six months ended June 30, 1998 were $198 million and $380 million,
respectively, representing increases of 30 percent, from the comparable periods
in 1997; excluding acquisition of companies, net sales from these operations
were flat when compared with the prior year periods. A stronger U.S. dollar,
principally against the German Deutsche Mark, had a negative effect on the
translation of European sales in the first half of 1998, as compared with the
first half of 1997; excluding acquisition of companies, European net sales for
the second quarter and six months ended June 30, 1998 in local currencies
increased by approximately 10 percent.
The Company's operating profit margins improved in the second quarter
and first half of 1998 from the comparable 1997 periods. Cost of sales as a
percentage of sales increased slightly to 63.7 percent from 63.3 percent and to
63.6 percent from 63.3 percent for the second quarter and six months ended June
30, 1998, respectively, from the comparable periods in 1997; selling, general
and administrative expenses as a percentage of sales decreased to 19.7 percent
from 20.5 percent and to 19.8 percent from 20.8 percent for the second quarter
and six months ended June 30, 1998, respectively, from the comparable periods in
1997. The decrease in the selling, general and administrative expenses
percentage in 1998 includes the Company's cost-control initiatives and the
leveraging of fixed costs over a higher sales base. The Company's operating
profit margins, before general corporate expense, were 18.0 percent for both the
second quarter and six months ended June 30, 1998, respectively, as compared
with 18.0 percent and 17.8 percent for the comparable 1997 periods. Operating
profit margins, after general corporate expense, were 16.0 percent for both the
second quarter and six months ended June 30, 1998, as compared with 15.8 percent
and 15.5 percent for the comparable 1997 periods.
10
<PAGE> 13
MASCO CORPORATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
OTHER INCOME (EXPENSE), NET
Included in other income (expense), net for the second quarter and six
months ended June 30, 1998 were equity earnings from MascoTech, Inc. of $5.1
million and $10.3 million, respectively, as compared with equity earnings of
$4.3 million and $10.3 million for the comparable periods of the prior year.
Included in other, net for the six months ended June 30, 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 certain asset writedowns.
Other, net for the three months and six months ended June 30, 1998
includes income and gains, net regarding certain non-operating assets of $16.0
million and $26.4 million, respectively, as compared with $7.4 million and $12.4
million of such income and gains, net for the comparable periods of the prior
year.
Included in other interest income for the three months and six months
ended June 30, 1998 and 1997 is interest income of approximately $10.1 million
and $20.2 million and approximately $9.0 million and $18.0 million,
respectively, from the 12% pay-in-kind junior debt securities of Furnishings
International Inc. (approximately $336 million principal amount at December 31,
1997).
In late June 1997, MascoTech redeemed all of its outstanding convertible
preferred stock in exchange for approximately 10 million shares of its common
stock. This redemption reduced the Company's common equity ownership in
MascoTech to 17 percent from 21 percent, and increased the Company's equity in
MascoTech's net book value by approximately $29.5 million. As a result, the
Company recognized a pre-tax gain of approximately $29.5 million during the
second quarter of 1997.
Other, net in the second quarter of 1997 includes charges aggregating
$29.5 million, which offset the above-mentioned MascoTech gain, primarily for
the adjustment of the Company's Payless Cashways investment to its estimated
fair value.
Included in other income (expense), net for the three months and six
months ended June 30, 1997 is $2.5 million and $5.0 million, respectively, of
interest income from the $151.4 million receivable balance due from MascoTech.
11
<PAGE> 14
MASCO CORPORATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
NET INCOME AND EARNINGS PER SHARE
Net income for the second quarter of 1998 increased 28 percent to $117
million from $91.6 million in the comparable 1997 period. Basic and diluted
earnings per share for the second quarter of 1998 each increased 21 percent, to
$.35 and $.34 from $.29 and $.28, respectively, for the comparable period of
1997.
Net income for the six months ended June 30, 1998 increased 30 percent
to $227.6 million from $175.1 million in the comparable 1997 period. Basic and
diluted earnings per share for the six months ended June 30, 1998 increased 25
percent and 22 percent, respectively, to $.69 and $.66 from $.55 and $.54,
respectively, for the comparable period of 1997.
The Company's effective tax rate for the three months and six months
ended June 30, 1998 was 38.0 percent and 39.0 percent, respectively, as compared
with 39.9 percent and 40.0 percent for the comparable periods of the prior year.
The reduction in the Company's effective tax rate is principally due to the
improved utilization of foreign tax credits and the utilization of a portion of
the Company's capital loss carryforward benefit. The Company estimates that its
effective tax rate for 1998 will approximate 39.0 percent.
OTHER FINANCIAL INFORMATION
During June 1998, the Company's Board of Directors adopted a resolution
for a stock split, effected in the form of a 100 percent stock distribution (one
additional share for every share held) to shareholders of record on June 19,
1998 to be issued on July 10, 1998. Following the issuance of the common shares
for the stock-split, the Company declared an increased quarterly dividend of
$.11 per common share on its post-split shares. Such dividend is the equivalent
of $.22 per share quarterly prior to the stock split. The Company had been
previously paying a $.21 per share quarterly dividend on its pre-split shares.
At June 30, 1998, current assets were 3.2 times current liabilities.
For the six months ended June 30, 1998, cash of $106.1 million was
provided by operating activities. Cash used for investing activities was $266.4
million, including $189.4 million for acquisition of companies, $74.6 million
for capital expenditures and $57.0 million for other cash outflows; cash from
investing activities included $54.6 million from the sale of the Company's
TriMas investment. Financing activities provided cash of $135.6 million,
including $250 million from the issuance of 6.625% debentures and an increase in
debt of $131.3 million (primarily European bank debt for an acquisition); cash
used for financing activities included $108.6 million for the early retirement
of certain of the Company's 9% notes and the payment of a premium associated
with this early retirement, $66.6 million for the payment of debt and $70.5
million for cash dividends paid. The aggregate of the preceding items represents
a net cash outflow of $24.7 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.
12
<PAGE> 15
MASCO CORPORATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (concluded)
First and second quarter 1998 cash from operations was affected by an
expected and recurring first-half increase in accounts receivable. As the annual
increase in accounts receivable is historically experienced in the first half of
the year, cash flows from operations in the remaining two quarters of 1998 are
not expected to be affected by significant increases in accounts receivable.
The Company called for redemption its $178 million of 5.25% convertible
subordinated debentures due 2012 on February 12, 1998. Substantially all holders
exercised their right to convert these debentures into Company common stock (at
the conversion price of $21.14 per share), resulting in the issuance of
approximately 8.4 million shares of Company common stock in February 1998.
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 future working capital and other
investment needs.
13
<PAGE> 16
UNAUDITED INFORMATION REGARDING EQUITY INVESTMENTS
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
Equity investments in affiliates consist primarily of the following
approximate common stock and partnership interests at June 30:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C>
Emco Limited, a Canadian company 42% --
MascoTech, Inc. 17% 17%
Hans Grohe, a German partnership 27% 27%
TriMas Corporation -- 4%
</TABLE>
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 building products
for the residential, commercial and industrial construction markets.
The following presents the condensed financial data of MascoTech, Inc.
Amounts are in thousands.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------- --------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Sales $433,480 $233,040 $834,240 $466,480
======== ======== ======== ========
Gross Profit $117,070 $ 53,990 $221,460 $110,290
======== ======== ======== ========
Net Income (After
Preferred Stock
Dividends) $ 29,820 $ 21,650 $ 62,560 $ 51,070
======== ======== ======== ========
</TABLE>
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.
14
<PAGE> 17
PART II. OTHER INFORMATION
MASCO CORPORATION
Item 1. Legal Proceedings
During the second quarter of 1998, a subsidiary of the Company was
issued a proposed civil penalty in excess of $100,000 by a county
wastewater agency for alleged past exceedances of wastewater
discharge limitations. The subsidiary and the agency are in the
process of finalizing a consent decree to resolve this matter, and
the costs of any penalties will be immaterial to the Company. The
subsidiary is now in compliance with all applicable wastewater
discharge requirements.
Items 2 & 3 are not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders was held on May 20, 1998 at
which the stockholders voted upon the election of three nominees
for Class I Directors and the approval of the appointment of one
additional Class II Director and one additional Class III
Director; an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of
Company common stock to 900,000,000; and ratification of the
selection of Coopers & Lybrand L.L.P. (now known as
PricewaterhouseCoopers) as independent auditors for the Company
for 1998. The following is a tabulation of the votes.
ELECTION OF CLASS I DIRECTORS
FOR WITHHELD
----------- ---------
Wayne B. Lyon 142,067,512 3,059,918
Arman Simone 142,077,224 3,050,206
Peter W. Stroh 142,057,391 3,070,039
APPOINTMENT OF CLASS II DIRECTOR
Raymond F. Kennedy 143,332,079 1,795,351
APPOINTMENT OF CLASS III DIRECTOR
Thomas G. Denomme 142,097,254 3,030,176
APPROVAL OF AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
COMPANY COMMON STOCK TO 900,000,000.
For 108,357,421
Against 34,260,304
Abstentions and
Broker Non-voters 2,509,705
APPROVAL OF COOPERS & LYBRAND L.L.P. TO ACT AS INDEPENDENT
AUDITORS FOR THE COMPANY FOR 1998.
For 142,712,485
Against 24,392
Abstentions and
Broker Non-voters 2,390,553
15
<PAGE> 18
Part II. OTHER INFORMATION (Concluded)
MASCO CORPORATION
Item 5. OTHER INFORMATION
In accordance with new Rule 14a-4(c)(1) under the Securities Exchange
Act of 1934, management proxies for the Company's 1999 Annual Meeting
of Stockholders intend to use their discretionary voting authority with
respect to any proposal presented at the meeting by a stockholder who
does not provide the Company with written notice of such proposal prior
to December 29, 1998.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
3i - Restated Certificate of Incorporation of Masco
Corporation and amendments thereto.
4a - Director's resolutions establishing Masco
Corporation's 6.625% Debentures due April 15, 2018
under the Indenture dated as of December 1, 1982
between Masco Corporation and The First National Bank
of Chicago, as successor Trustee to Morgan Guaranty
Trust Company of New York, which Indenture has been
filed as an Exhibit to Masco Corporation's Annual
Report on Form 10-K for the year ended December 31,
1997.
4b - Amendment dated as of March 30, 1998 to the
$750,000,000 Amended and Restated Credit Agreement
dated as of November 14, 1996 among Masco
Corporation, the banks party thereto and Morgan
Guaranty Trust Company of New York, as agent.
12 - Computation of Ratio of Earnings to Fixed Charges.
27a- Financial Data Schedule as of and for the
year-to-date period ended June 30, 1998.
27b- Financial Data Schedule as of and for the
year-to-date period ended March 31, 1998, amended for
the 100 percent stock distribution to shareholders in
July 1998.
27c- Financial Data Schedule as of and for the
year-to-date periods ended December 31, 1997,
September 30, 1997, June 30, 1997 and March 31, 1997,
amended for the 100 percent stock distribution to
shareholders in July 1998.
27d- Financial Data Schedule as of and for the
year-to-date periods ended December 31, 1996,
September 30, 1996, June 30, 1996 and March 31, 1996,
amended for the 100 percent stock distribution to
shareholders in July 1998.
27e- Financial Data Schedule as of and for the year ended
December 31, 1995, amended for the 100 percent stock
distribution to shareholders in July 1998.
16
<PAGE> 19
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (CONCLUDED)
(b) REPORTS ON FORM 8-K:
None
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: AUGUST 13, 1998 BY: /s/ Richard G. Mosteller
----------------------- -------------------------------------
Richard G. Mosteller
Senior Vice-President - Finance
(Chief Financial Officer
and Authorized Signatory)
17
<PAGE> 20
MASCO CORPORATION
EXHIBIT INDEX
EXHIBIT
Exhibit 3i - Restated Certificate of Incorporation of Masco Corporation
and amendments thereto.
Exhibit 4a - Director's resolutions establishing Masco Corporation's 6.625%
Debentures due April 15, 2018 under the Indenture dated as of
December 1, 1982 between Masco Corporation and The First National
Bank of Chicago, as successor Trustee to Morgan Guaranty Trust
Company of New York, which Indenture has been filed as an Exhibit
to Masco Corporation's Annual Report on Form 10-K for the year
ended December 31, 1997.
Exhibit 4b - Amendment dated as of March 30, 1998 to the $750,000,000
Amended and Restated Credit Agreement dated as of November 14,
1996 among Masco Corporation, the banks party thereto and Morgan
Guaranty Trust Company of New York, as agent.
Exhibit 12 Computation of Ratio of Earnings to Fixed Charges.
Exhibit 27a Financial Data Schedule as of and for the year-to-date period
ended June 30, 1998.
Exhibit 27b Financial Data Schedule as of and for the year-to-date period
ended March 31, 1998, amended for the 100 percent stock
distribution to shareholders in July 1998.
Exhibit 27c Financial Data Schedule as of and for the year-to-date
periods ended December 31, 1997, September 30, 1997, June 30,
1997 and March 31, 1997, amended for the 100 percent stock
distribution to
shareholders in July 1998.
Exhibit 27d Financial Data Schedule as of and for the year-to-date
periods ended December 31, 1996, September 30, 1996, June 30,
1996 and March 31, 1996, amended for the 100 percent stock
distribution to
shareholders in July 1998.
Exhibit 27e Financial Data Schedule as of and for the year ended December
31, 1995, amended for the 100 percent stock distribution to
shareholders in July 1998.
<PAGE> 1
EXHIBIT 3.i
RESTATED CERTIFICATE OF INCORPORATION
OF
MASCO CORPORATION
* * * * *
MASCO CORPORATION, a corporation organized and existing under the laws of
the State of Delaware, hereby certifies as follows:
1. The name of the corporation is MASCO CORPORATION. The date of filing
its original Certificate of Incorporation with the Secretary of State was June
15, 1962.
2. This Restated Certificate of Incorporation only restates and integrates
and does not further amend the provisions of the Certificate of Incorporation of
this corporation as heretofore amended or supplemented and there is no
discrepancy between those provisions and the provisions of this Restated
Certificate of Incorporation.
3. The text of the Certificate of Incorporation as amended or supplemented
heretofore is hereby restated without further amendments or changes to read as
herein set forth in full:
FIRST: The name of the corporation is
MASCO CORPORATION.
SECOND: Its registered office in the State of Delaware is located at the
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name and address
<PAGE> 2
of its registered agent is The Corporation Trust Company, 1209 Orange Street,
Wilmington, Delaware 19801.
THIRD: The nature of the business, or objects or purposes to be
transacted, promoted or carried on are: To engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
FOURTH: The total number of shares of stock the Corporation shall have
authority to issue is four hundred one million (401,000,000) shares.
Four hundred million (400,000,000) of such shares shall consist of common
shares, par value one dollar ($1.00) per share, and one million (1,000,000) of
such shares shall consist of preferred shares, par value one dollar ($1.00) per
share.
The designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions thereof are as follows:
A. Each share of common stock shall be equal in all respects to all
other shares of such stock, and each share of outstanding common stock is
entitled to one vote.
B. Each share of preferred stock shall have or not have voting
rights as determined by the Board of Directors prior to issuance.
Dividends on all outstanding shares of preferred stock must be
declared and paid, or set aside for payment, before any dividends can be
declared and paid, or set aside for payment, on the shares of common stock
with respect to the same dividend period.
In the event of any liquidation, dissolution or winding up of the
affairs of the Corporation, whether voluntary or involuntary, the holders
of the preferred stock shall be entitled, before any assets of the
Corporation shall be distributed among or paid over to the holders of the
common stock, to an amount per share to be determined before issuance by
the Board of Directors, together with a sum of money equivalent to the
amount of any dividends declared thereon and remaining unpaid at the date
of such liquidation, dissolution or winding up of the Corporation. After
the making of such
- 2 -
<PAGE> 3
payments to the holders of the preferred stock, the remaining assets of the
Corporation shall be distributed among the holders of the common stock
alone, according to the number of shares held by each. If, upon such
liquidation, dissolution or winding up, the assets of the Corporation
distributable as aforesaid among the holders of the preferred stock shall
be insufficient to permit the payment to them of said amount, the entire
assets shall be distributed ratably among the holders of the preferred
stock.
The Board of Directors shall have authority to divide the shares of
preferred stock into series and fix, from time to time, before issuance,
the number of shares to be included in any series and the designation,
relative rights, preferences and limitations of all shares of such series.
The authority of the Board of Directors with respect to each series shall
include the determination of any or all of the following, and the shares of
each series may vary from the shares of any other in the following
respects: (a) the number of shares constituting such series and the
designation thereof to distinguish the shares of such series from the
shares of all other series; (b) the rate of dividend, cumulative or
noncumulative, and the extent of further participation in dividend
distribution, if any; (c) the prices at which issued (at not less than par)
and the terms and conditions upon which the shares may be redeemable by the
Corporation; (d) sinking fund provisions for the redemption or purchase of
shares; (e) the voting rights; and (f) the terms and conditions upon which
the shares are convertible into other classes of stock of the Corporation,
if such shares are to be convertible.
C. No holder of any class of stock issued by this Corporation shall
be entitled to pre-emptive rights.
FIFTH: The Corporation is to have perpetual existence.
SIXTH: The private property of the stockholders shall not be subject to
the payment of corporate debts to any extent whatever.
SEVENTH: (a) The business and affairs of the Corporation shall be managed
by or under the direction of a Board of Directors consisting of not less than
five nor more than twelve directors, the exact number of directors to be
determined from time to time by resolution adopted by affirmative vote of a
majority of the entire Board of Directors. The directors shall be divided into
three
- 3 -
<PAGE> 4
classes, designated Class I, Class II and Class III. Each class shall consist,
as nearly as may be possible, of one-third of the total number of directors
constituting the entire Board of Directors. At the 1988 Annual Meeting of
stockholders, Class I directors shall be elected for a one-year term, Class II
directors for a two-year term and Class III directors for a three-year term. At
each succeeding Annual Meeting of stockholders beginning in 1989, successors to
the class of directors whose term expires at that annual meeting shall be
elected for a three-year term. If the number of directors is changed, any
increase or decrease shall be apportioned among the classes so as to maintain
the number of directors in each class as nearly equal as possible, and any
additional director of any class elected to fill a vacancy resulting from an
increase in such class shall hold office for a term that shall coincide with the
remaining term of that class, but in no case will a decrease in the number of
directors shorten the term of any incumbent director. A director shall hold
office until the annual meeting for the year in which his term expires and until
his successor shall be elected and shall qualify, subject, however, to prior
death, resignation, retirement or removal from office. Except as otherwise
required by law, any vacancy on the Board of Directors that results from an
increase in the number of directors shall be filled only by a majority of the
Board of Directors then in office, provided that a quorum is present, and any
other vacancy occurring in the Board of Directors shall be filled only by a
majority of the directors then in office, even if less than a quorum, or by a
sole remaining director. Any director elected to fill a vacancy not resulting
from an increase in the number of directors shall serve for the remaining term
of his predecessor.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of preferred stock or any other class of stock issued by the
Corporation shall have the right, voting separately by class or series, to elect
directors at an annual or special meeting of stockholders, the election, term of
office, filling of vacancies and other features of such directorships shall be
governed by the terms of the Certificate of Designation with respect to such
stock, such directors so elected shall not be divided into classes pursuant to
this Article SEVENTH, and the number of such directors shall not be counted in
determining the maximum number of directors permitted under the foregoing
provisions of this Article SEVENTH, in each case unless expressly provided by
such terms.
- 4 -
<PAGE> 5
(b) Nominations for the election of directors may be made by the Board of
Directors or by any stockholder entitled to vote in the election of directors.
Any stockholder entitled to vote in the election of directors, however, may
nominate one or more persons for election as director only if written notice of
such stock- holder's intent to make such nomination or nominations has been
given either by personal delivery or by United States mail, postage prepaid, to
the Secretary of the Corporation not later than (i) with respect to an election
to be held at an Annual Meeting of stockholders, 45 days in advance of the date
on which the Corporation's proxy statement was released to stockholders in
connection with the previous year's Annual Meeting of stockholders and (ii) with
respect to an election to be held at a special meeting of stockholders for the
election of directors, the close of business on the seventh day following the
day on which notice of such meeting is first given to stockholders. Each such
notice shall include: (A) the name and address of the stockholder who intends to
make the nomination or nominations and of the person or persons to be nominated;
(B) a representation that the stockholder is a holder of record of stock of the
Corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice; (C) a description of all arrangements or understandings between such
stockholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations is or are to be made
by the stockholder; (D) such other information regarding each nominee proposed
by such stockholder as would have been required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission if the nominee had been nominated by the Board of Directors; and (E)
the written consent of each nominee to serve as a director of the Corporation if
elected. The chairman of any meeting of stockholders may refuse to acknowledge
the nomination of any person if not made in compliance with the foregoing
procedure.
(c) Notwithstanding any other provision of this Certificate of
Incorporation or the by-laws (and notwithstanding the fact that a lesser
percentage may be specified by law, this Certificate of Incorporation or the
by-laws), and in addition to any affirmative vote required by law, the
affirmative vote of the holders of at least 80% of the voting power of the
outstanding capital stock of the Corporation entitled to vote, voting together
as a single class, shall be required to amend, adopt in this Certificate of
Incorporation or in the by-laws any provision inconsistent with, or repeal this
Article SEVENTH.
- 5 -
<PAGE> 6
EIGHTH: Any action required or permitted to be taken by the stockholders
of the Corporation must be effected at a duly called annual or special meeting
of such holders and may not be effected by any consent in writing by any such
holders. Except as otherwise required by law, special meetings of stockholders
of the Corpora- tion may be called only by the Chairman of the Board, the
President or a majority of the Board of Directors, subject to the rights of
holders of any one or more classes or series of preferred stock or any other
class of stock issued by the Corporation which shall have the right, voting
separately by class or series, to elect directors. Notwithstanding any other
provision of this Certificate of Incorporation or the by-laws (and
notwithstanding that a lesser percentage may be specified by law, this
Certificate of Incorporation or the by-laws), and in addition to any affirmative
vote required by law, the affirmative vote of the holders of at least 80% of the
voting power of the outstanding capital stock of the Corporation entitled to
vote, voting together as a single class, shall be required to amend, adopt in
this Certificate of Incorporation or in the by-laws any provision inconsistent
with, or repeal this Article EIGHTH.
NINTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
To make, alter or repeal the by-laws of the Corporation.
To authorize and cause to be executed mortgages and liens upon the real and
personal property of the Corporation.
To set apart out of any of the funds of the Corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
By resolution passed by a majority of the whole board, to designate one or
more committees, each committee to consist of two or more of the Directors of
the Corporation, which, to the extent provided in the resolution or in the
by-laws of the Corporation, shall have and may exercise the powers of the Board
of Directors in the management of the business and affairs of the Corporation,
and may authorize the seal of the Corporation to be affixed to all papers which
may require it. Such committee or committees shall have such name or names as
may be stated in the by-laws of the
- 6 -
<PAGE> 7
Corporation or as may be determined from time to time by resolution adopted by
the Board of Directors.
When and as authorized by the affirmative vote of the holders of a majority
of the stock issued and outstanding having voting power given at a stockholders'
meeting duly called for that purpose, to sell, lease or exchange all of the
property and assets of the Corporation, including its good will and its
corporate franchises, upon such terms and conditions and for such consideration,
which may be in whole or in part shares of stock in, and/or other securities of,
any other corporation or corporations, as its Board of Directors shall deem
expedient and for the best interests of the Corporation.
TENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
ELEVENTH: Meetings of stockholders may be held outside the State of
Delaware, if the by-laws so provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the by-laws of the Corporation. Elections of Directors
need not be by ballot unless the by-laws of the Corporation shall so provide.
- 7 -
<PAGE> 8
TWELFTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
THIRTEENTH: 1. The affirmative vote of the holders of 95% of all shares of
stock of the Corporation entitled to vote in elections of directors, considered
for the purposes of this Article THIRTEENTH as one class, shall be required for
the adoption or authorization of a business combination (as hereinafter defined)
with any other entity (as hereinafter defined) if, as of the record date for the
determination of stockholders entitled to notice thereof and to vote thereon,
such other entity is the beneficial owner, directly or indirectly, of 30% or
more of the outstanding shares of stock of the Corporation entitled to vote in
elections of directors considered for the purposes of this Article THIRTEENTH as
one class; provided that such 95% voting requirement shall not be applicable if:
(a) The cash, or fair market value of other consideration, to be received
per share by common stockholders of the Corporation in such business combination
bears the same or a greater percentage relationship to the market price of the
Corporation's common stock immediately prior to the announcement of such
business combination as the highest per share price (including brokerage
commissions and soliciting dealers' fees) which such other entity has
theretofore paid for any of the shares of the Corporation's common stock already
owned by it bears to the market price of the common stock of the Corporation
immediately prior to the commencement of acquisition of the Corporation's common
stock by such other entity;
(b) The cash, or fair market value of other consideration, to be received
per share by common stockholders of the Corporation in such business combination
(i) is not less than the highest per share price (including brokerage
commissions and soliciting dealers' fees) paid by such other entity in acquiring
any of its holdings of the Corporation's common stock, and (ii) is not less than
the earnings per share of common stock of the Corporation for the four full
consecutive fiscal quarters immediately preceding the record date for
solicitation of votes on such business combination, multiplied by the then
price/earnings multiple (if any) of such other entity as customarily computed
and reported in the financial community;
- 8 -
<PAGE> 9
(c) After such other entity has acquired a 30% interest and prior to the
consummation of such business combination: (i) such other entity shall have
taken steps to ensure that the Corpora- tion's Board of Directors included at
all times representation by continuing director(s) (as hereinafter defined)
proportionate to the stockholdings of the Corporation's public common
stockholders not affiliated with such other entity (with a continuing director
to occupy any resulting fractional board position); (ii) there shall have been
no reduction in the rate of dividends payable on the Corporation's common stock
except as necessary to insure that a quarterly dividend payment does not exceed
5% of the net income of the Corporation for the four full consecutive fiscal
quarters immediately preceding the declaration date of such dividend, or except
as may have been approved by a unanimous vote of the directors; (iii) such other
entity shall not have acquired any newly issued shares of stock, directly or
indirectly, from the Corporation (except upon conversion of convertible
securities acquired by it prior to obtaining a 30% interest or as a result of a
pro rata stock dividend or stock split); and (iv) such other entity shall not
have acquired any additional shares of the Corporation's outstanding common
stock or securities convertible into common stock except as a part of the
transaction which results in such other entity acquiring its 30% interest;
(d) Such other entity shall not have (i) received the benefit, directly or
indirectly (except proportionately as a stockholder) of any loans, advances,
guarantees, pledges or other financial assis- tance or tax credits of or
provided by the Corporation, or (ii) made any major change in the Corporation's
business or equity capital structure without the unanimous approval of the
directors, in either case prior to the consummation of such business
combination; and
(e) A proxy statement responsive to the requirements of the United States
securities laws shall be mailed to all common stock- holders of the Corporation
for the purpose of soliciting stock- holder approval of such business
combination and shall contain on its first page thereof, in a prominent place,
any recommendations as to the advisability (or inadvisability) of the business
combination which the continuing directors, or any of them, may choose to state
and, if deemed advisable by a majority of the continuing directors, an opinion
of a reputable investment banking firm as to the fairness (or not) of the terms
of such business combination, from the point of view of the remaining public
stockholders of the Corporation (such investment banking firm to be
- 9 -
<PAGE> 10
selected by a majority of the continuing directors and to be paid a reasonable
fee for their services by the Corporation upon receipt of such opinion).
The provisions of this Article THIRTEENTH shall also apply to a business
combination with any other entity which at any time has been the beneficial
owner, directly or indirectly, of 30% or more of the outstanding shares of stock
of the Corporation entitled to vote in elections of directors considered for the
purposes of this Article THIRTEENTH as one class, notwithstanding the fact that
such other entity has reduced its shareholdings below 30% if, as of the record
date for the determination of stockholders entitled to notice of and to vote on
to the business combination, such other entity is an "affiliate" of the
Corporation (as hereinafter defined).
2. As used in this Article THIRTEENTH, (a) the term "other entity" shall
include any corporation, person or other entity and any other entity with which
it or its "affiliate" or "associate" (as defined below) has any agreement,
arrangement or understanding, directly or indirectly, for the purpose of
acquiring, holding, voting or disposing of stock of the Corporation, or which is
its "affiliate" or "associate" as those terms are defined in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act of 1934 as in
effect on March 31, 1981, together with the successors and assigns of such
persons in any transaction or series of transactions not involving a public
offering of the Corpora- tion's stock within the meaning of the Securities Act
of 1933; (b) an other entity shall be deemed to be the beneficial owner of any
shares of stock of the Corporation which the other entity (as defined above) has
the right to acquire pursuant to any agreement, arrangement or understanding or
upon exercise of conversion rights, warrants or options, or otherwise; (c) the
outstanding shares of any class of stock of the Corporation shall include shares
deemed owned through application of clause (b) above but shall not include any
other shares which may be issuable pursuant to any agreement, or upon exercise
of conversion rights, warrants or options, or otherwise; (d) the term "business
combination" shall include any merger or consolidation of the Corporation with
or into any other entity, or the sale or lease of all or any substantial part of
the assets of the Corporation to, or any sale or lease to the Corporation or any
subsidiary thereof in exchange for securities of the Corporation of any assets
(except assets having an aggregate fair market value of less than $5,000,000) of
any other entity; (e) the term "continuing director" shall mean a person who was
a member
- 10 -
<PAGE> 11
of the Board of Directors of the Corporation elected by stockholders prior to
the time that such other entity acquired in excess of 10% of the stock of the
Corporation entitled to vote in the election of directors, or a person
recommended to succeed a continuing director by a majority of continuing
directors; and (f) for the purposes of subparagraphs l(a) and (b) of this
Article THIRTEENTH the term "other consideration to be received" shall mean, in
addition to other consideration received, if any, capital stock of the
Corporation retained by its existing public stockholders in the event of a
business combination with such other entity in which the Corporation is the
surviving corporation.
3. A majority of the continuing directors shall have the power and duty
to determine for the purposes of this Article THIRTEENTH on the basis of
information known to them whether (a) such other entity beneficially owns 30% or
more of the outstanding shares of stock of the Corporation entitled to vote in
elections of directors; (b) an other entity is an "affiliate" or "associate" (as
defined above) of another; (c) an other entity has an agreement, arrangement or
understanding with another; or (d) the assets being acquired by the Corporation,
or any subsidiary thereof, have an aggregate fair market value of less than
$5,000,000.
4. No amendment to the Certificate of Incorporation of the Corporation
shall amend or repeal any of the provisions of this Article THIRTEENTH, unless
the amendment effecting such amendment or repeal shall receive the affirmative
vote of the holders of 95% of all shares of stock of the corporation entitled to
vote in elections of directors, considered for the purposes of this Article
THIRTEENTH as one class; provided that this paragraph 4 shall not apply to, and
such 95% vote shall not be required for, any amendment or repeal unanimously
recommended to the stockholders by the Board of Directors of the Corporation if
all of such directors are persons who would be eligible to serve as "continuing
directors" within the meaning of paragraph 2 of this Article THIRTEENTH.
5. Nothing contained in this Article THIRTEENTH shall be construed to
relieve any other entity from any fiduciary obligation imposed by law.
FOURTEENTH: A director of this Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (a) for any breach of the
director's duty of loyalty
- 11 -
<PAGE> 12
to the Corporation or its stockholders, (b) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law, (c)
under Section 174 of the Delaware General Corporation Law, or (d) for any
transaction from which the director derived an improper personal benefit. If the
Delaware General Corporation Law hereafter is amended to authorize the further
limitation or elimination of the liability of directors, then the liability of a
director of the Corporation, in addition to the limitation on liability provided
herein, shall be limited to the fullest extent permitted by the Delaware General
Corporation Law, as amended. Any repeal or modification of this Article
FOURTEENTH shall not increase the liability of any director of this Corporation
for any act or occurrence taking place prior to such repeal or modification, or
otherwise adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification.
FIFTEENTH: 1. Each person who was or is made a party or is threatened to be
made a party to or is otherwise involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is or was a director, officer or employee of the Corporation,
whether the basis of such proceeding is alleged action in an official capacity
as a director, officer or employee or in any other capacity while serving as a
director, officer, or employee, shall be indemnified and held harmless by the
Corporation to the fullest extent permitted by the Delaware General Corporation
Law, as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than such law permitted the
Corporation to provide prior to such amendment), against all expense, liability
and loss (including, without limitation, attorneys' fees, judgments, fines and
amounts paid in settlement) reasonably incurred or suffered by such person in
connection therewith, and such indemnification shall continue as to a person who
has ceased to be a director, officer or employee and shall inure to the benefit
of such person's heirs, executors and administrators. The Corporation shall
indemnify a director, officer or employee in connection with an action, suit or
proceeding (other than an action, suit or proceeding to enforce indemnification
rights provided for herein or elsewhere) initiated by such director, officer or
employee only if such action, suit or proceeding was authorized by the Board of
Directors. The right to indemnification conferred in this Paragraph 1 shall be a
contract right and shall include the right to be paid by the Corporation the
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<PAGE> 13
expenses incurred in defending any action, suit or proceeding in advance of its
final disposition; provided, however, that, if the Delaware General Corporation
Law requires, the payment of such expenses incurred by a director or officer in
such person's capacity as a director or officer (and not in any other capacity
in which service was or is rendered by such person) in advance of the final
disposition of an action, suit or proceeding shall be made only upon delivery to
the Corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined by final
judicial decision from which there is no further right to appeal that such
director or officer is not entitled to be indemnified for such expenses under
this Article FIFTEENTH or otherwise.
2. The Corporation may, to the extent authorized from time to time by the
Board of Directors, provide indemnification and the advancement of expenses, to
any agent of the Corporation and to any person (other than directors, officers
and employees of the Corpo- ration, who shall be entitled to indemnification
under Paragraph 1 above) who is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, to such extent and to
such effect as the Board of Directors shall determine to be appropriate and
permitted by applicable law, as the same exists or may hereafter be amended.
3. The rights to indemnification and to the advancement of expenses
conferred in this Article FIFTEENTH shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation or by-laws of the Corporation, agreement, vote
of stockholders or disinterested directors or otherwise.
4. This Restated Certificate of Incorporation was duly adopted by the
Board of Directors in accordance with Section 245 of the General Corporation Law
of Delaware.
IN WITNESS WHEREOF, said MASCO CORPORATION has caused its
corporate seal to be affixed and this Certificate to be
- 13 -
<PAGE> 14
signed by Richard A. Manoogian, its Chairman of the Board, and attested by
Gerald Bright, its Secretary, this 25th day of May, 1988.
MASCO CORPORATION
BY /s/ Richard A. Manoogian
---------------------------
Richard A. Manoogian
Chairman of the Board
ATTEST:
/s/ Gerald Bright
- ----------------------
Gerald Bright
Secretary
- 14 -
<PAGE> 15
STATE OF MICHIGAN )
)
COUNTY OF WAYNE )
I, , a notary public, do hereby certify that on this 25th
day of May, 1988, personally appeared before me Richard A. Manoogian, who, being
by me first duly sworn, declared that he is the Chairman of the Board of Masco
Corporation, that he signed the foregoing document as the act and deed of said
corporation, and that the statements therein contained are true.
/s/ Terry Lynn Przybylo
-----------------------
Notary Public
Wayne County, Michigan
My commission expires:
- 15 -
<PAGE> 16
CERTIFICATE OF MERGER
OF
WASTE KING, INC.
INTO
MASCO CORPORATION
Masco Corporation, a corporation organized and existing under and by virtue
of the General Corporation Law of the State of Delaware (the "GCL"), certifies
that:
FIRST: The name and state of incorporation of each of the constituent
corporations is as follows:
State of
Name Incorporation
---- -------------
Masco Corporation ("Masco") Delaware
Waste King, Inc. ("Waste King") Delaware
SECOND: An Agreement of Merger between Masco and Waste King with respect
to the merger of Waste King into Masco (the "Merger"), has been approved,
adopted, certified, executed and acknowledged by each of the constituent
corporations in accordance with Section 251 of the GCL.
THIRD: That the name of the surviving corporation of the Merger is Masco
Corporation, a Delaware corporation.
FOURTH: That the Restated Certificate of Incorporation of Masco, which is
the surviving corporation, shall continue in full force and effect as the
Restated Certificate of Incorporation of the surviving corporation.
FIFTH: The executed Agreement is on file at the principal place of
business of the surviving corporation, 21001 Van Born Road, Taylor, Michigan
48180.
SIXTH: A copy of the Agreement will be furnished by the surviving
corporation, on request and without cost, to any stockholder of the constituent
corporations.
SEVENTH: This Certificate of Merger shall be effective as of January 1,
1993.
MASCO CORPORATION
By/s/ Richard G. Mosteller
-------------------------
<PAGE> 17
Richard G. Mosteller
Senior Vice President - Finance
ATTEST:
By/s/ Gerald Bright
-----------------
Gerald Bright
Secretary
<PAGE> 18
EXHIBIT A
CERTIFICATE OF DESIGNATION
OF
SERIES A PARTICIPATING CUMULATIVE
PREFERRED STOCK
OF
MASCO CORPORATION
Pursuant to Section 151 of the
General Corporation Law of the
State of Delaware
We, Richard G. Mosteller, Senior Vice President - Finance, and Eugene
A. Gargaro, Jr., Vice President and Secretary, of Masco Corporation, a
corporation organized and existing under the General Corporation Law of the
State of Delaware ("Delaware Law"), in accordance with the provisions thereof,
DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Certificate of Incorporation of the Corporation, the Board of Directors on
December 6, 1995, adopted the following resolution creating a series of
Preferred Stock in the amount and having the designation, voting powers,
preferences and relative, participating, optional and other special rights and
qualifications, limitations and restrictions thereof as follows:
Section 1. Designation and Number of Shares. The shares of such
series shall be designated as "Series A Participating Cumulative Preferred
Stock" (the "Series A Preferred Stock"), and the number of shares constituting
such series shall be 175,106. Such number of shares of the Series A Preferred
Stock may be increased or decreased by resolution of the Board of Directors;
<PAGE> 19
provided that no decrease shall reduce the number of shares of Series A
Preferred Stock to a number less than the number of shares then outstanding plus
the number of shares issuable upon exercise or conversion of outstanding rights,
options or other securities issued by the Corporation.
<PAGE> 20
Section 2. Dividends and Distributions.
(A) The holders of shares of Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable on February
15, May 15, August 15 and November 15 of each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of any share or
fraction of a share of Series A Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $1.00 and (b) subject to the
provision for adjustment hereinafter set forth, 1,000 times the aggregate per
share amount of all cash dividends or other distributions and 1,000 times the
aggregate per share amount of all non-cash dividends or other distributions
(other than (i) a dividend payable in shares of Common Stock, par value $1.00
per share, of the Corporation (the "Common Stock") or (ii) a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise)), declared
on the Common Stock since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series A Preferred Stock.
If the Corporation shall at any time after December 6, 1995 (the "Rights
Declaration Date") pay any dividend on Common Stock payable in shares of Common
Stock or effect a subdivision or combination of the outstanding shares of Common
Stock (by reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then in each such case the amount to which holders of
shares of Series A Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) above immediately after it
declares a dividend or distribution on the Common Stock (other than as described
in clauses (i) and (ii) of the first sentence of paragraph (A)); provided that
if no dividend or distribution shall have been declared on the Common Stock
during the period between any
<PAGE> 21
Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date (or, with respect to the first Quarterly Dividend Payment Date, the
period between the first issuance of any share or fraction of a share of Series
A Preferred Stock and such first Quarterly Dividend Payment Date), a dividend of
$1.00 per share on the Series A Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Preferred Stock, unless
the date of issue of such shares is on or before the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue and be cumulative from the date of issue of such shares, or
unless the date of issue is a date after the record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive a quarterly
dividend and on or before such Quarterly Dividend Payment Date, in which case
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on shares of Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall not be more
than 60 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. In addition to any other voting rights
required by law, the holders of shares of Series A Preferred Stock shall have
the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of stockholders of the Corporation. If
the Corporation shall at any time after the Rights Declaration Date pay any
dividend on Common Stock payable in shares of Common Stock or effect a
subdivision or combination of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of
<PAGE> 22
shares of Common Stock, then in each such case the number of votes per share to
which holders of shares of Series A Preferred Stock were entitled immediately
prior to such event shall be adjusted by multiplying such number by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Preferred Stock and the holders of shares of Common Stock
shall vote together as a single class on all matters submitted to a vote of
stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Preferred Stock
shall be in arrears in an amount equal to six quarterly dividends thereon, the
occurrence of such contingency shall mark the beginning of a period (herein
called a "default period") which shall extend until such time when all accrued
and unpaid dividends for all previous quarterly dividend periods and for the
current quarterly dividend period on all shares of Series A Preferred Stock then
outstanding shall have been declared and paid or set apart for payment. During
each default period, all holders of Preferred Stock and any other series of
Preferred Stock then entitled as a class to elect directors, voting together as
a single class, irrespective of series, shall have the right to elect two
Directors.
(ii) During any default period, such voting right of the holders of
Series A Preferred Stock may be exercised initially at a special meeting called
pursuant to subparagraph (iii) of this Section 3(C) or at any annual meeting of
stockholders, and thereafter at annual meetings of stockholders, provided that
neither such voting right nor the right of the holders of any other series of
Preferred Stock, if any, to increase, in certain cases, the authorized number of
Directors shall be exercised unless the holders of 10% in number of shares of
Preferred Stock outstanding shall be present in person or by proxy. The absence
of a quorum of holders of Common Stock shall not affect the exercise by holders
of Preferred Stock of such voting right. At any meeting at which holders of
Preferred Stock shall exercise such voting right initially during an existing
default period, they shall have the right, voting as a class, to elect Directors
to fill such vacancies, if any, in the Board of Directors as may then exist up
<PAGE> 23
to two Directors or, if such right is exercised at an annual meeting, to elect
two Directors. If the number which may be so elected at any special meeting does
not amount to the required number, the holders of the Preferred Stock shall have
the right to make such increase in the number of Directors as shall be necessary
to permit the election by them of the required number. After the holders of the
Preferred Stock shall have exercised their right to elect Directors in any
default period and during the continuance of such period, the number of
Directors shall not be increased or decreased except by vote of the holders of
Preferred Stock as herein provided or pursuant to the rights of any equity
securities ranking senior to or pari passu with the Series A Preferred Stock.
(iii) Unless the holders of Preferred Stock shall, during an existing
default period, have previously exercised their right to elect Directors, the
Board of Directors may order, or any stockholder or stockholders owning in the
aggregate not less than 10% of the total number of shares of Preferred Stock
outstanding, irrespective of series, may request, the calling of special meeting
of holders of Preferred Stock, which meeting shall thereupon be called by the
President, a Vice President or the Secretary of the Corporation. Notice of such
meeting and of any annual meeting at which holders of Preferred Stock are
entitled to vote pursuant to this paragraph (C)(iii) shall be given to each
holder of record of Preferred Stock by mailing a copy of such notice to him at
his last address as the same appears on the books of the Corporation. Such
meeting shall be called for a time not earlier than 20 days and not later than
60 days after such order or request or in default of the calling of such meeting
within 60 days after such order or request, such meeting may be called on
similar notice by any stockholder or stockholders owning in the aggregate not
less than 10% of the total number of shares of Preferred Stock outstanding,
irrespective of series. Notwithstanding the provisions of this paragraph
(C)(iii), no such special meeting shall be called during the period within 60
days immediately preceding the date fixed for the next annual meeting of
stockholders.
(iv) In any default period, the holders of Common Stock, and other
classes of stock of the Corporation if applicable, shall continue to be entitled
to elect the whole number of Directors until the holders of Preferred Stock
shall have exercised their right to elect two Directors voting as a class, after
the exercise of which right (x) the Directors so elected by the holders of
<PAGE> 24
Preferred Stock shall continue in office until their successors shall have been
elected by such holders or until the expiration of the default period, and (y)
any vacancy in the Board of Directors may (except as provided in paragraph
(C)(ii) of this Section 3) be filled by vote of a majority of the remaining
Directors theretofore elected by the holders of the class of stock which elected
the Director whose office shall have become vacant. References in this paragraph
(C) to Directors elected by the holders of a particular class of stock shall
include Directors elected by such Directors to fill vacancies as provided in
clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Preferred Stock as a class to elect Directors shall
cease, (y) the term of any Directors elected by the holders of Preferred Stock
as a class shall terminate, and (z) the number of Directors shall be such number
as may be provided for in the certificate of incorporation or bylaws
irrespective of any increase made pursuant to the provisions of paragraph
(C)(ii) of this Section 3 (such number being subject, however, to change
thereafter in any manner provided by law or in the certificate of incorporation
or bylaws). Any vacancies in the Board of Directors effected by the provisions
of clauses (y) and (z) in the preceding sentence may be filled by a majority of
the remaining Directors.
(D) The Certificate of Incorporation of the Corporation shall not be
amended in any manner (whether by merger or otherwise) so as to adversely affect
the powers, preferences or special rights of the Series A Preferred Stock
without the affirmative vote of the holders of a majority of the outstanding
shares of Series A Preferred Stock, voting separately as a class.
(E) Except as otherwise provided herein, holders of Series A
Preferred Stock shall have no special voting rights, and their consent shall not
be required for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on
<PAGE> 25
outstanding shares of Series A Preferred Stock shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends on, or make any other distributions on,
any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on, or make any other distributions
on, any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
other parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are
then entitled;
(iii) redeem, purchase or otherwise acquire for value any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock; provided that
the Corporation may at any time redeem, purchase or otherwise acquire
shares of any such junior stock in exchange for shares of stock of the
Corporation ranking junior (as to dividends and upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or
(iv) redeem, purchase or otherwise acquire for value any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of Series A Preferred Stock and all such other
parity stock upon such terms as the Board of Directors, after consideration
of the respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective
series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for value any
<PAGE> 26
shares of stock of the Corporation unless the Corporation could, under paragraph
(A) of this Section 4, purchase or otherwise acquire such shares at such time
and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
redeemed, purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock without designation as to series and may be reissued
as part of a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors as permitted by the Certificate of
Incorporation or as otherwise permitted under Delaware Law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $1.00 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment; provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 1,000
times the aggregate amount to be distributed per share to holders of Common
Stock, or (2) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except distributions made ratably on the Series A Preferred
Stock and all such other parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. If the Corporation shall at any time after the Rights
Declaration Date pay any dividend on Common Stock payable in shares of Common
Stock or effect a subdivision or combination of the outstanding shares of Common
Stock (by reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event under the proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by
<PAGE> 27
a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Section 7. Consolidation, Merger, etc. If the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash or any other property, then in any such case the shares of
Series A Preferred Stock shall at the same time be similarly exchanged for or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount of stock,
securities, cash or any other property, as the case may be, into which or for
which each share of Common Stock is changed or exchanged. If the Corporation
shall at any time after the Rights Declaration Date pay any dividend on Common
Stock payable in shares of Common Stock or effect a subdivision or combination
of the outstanding shares of Common Stock (by reclassification or otherwise)
into a greater or lesser number of shares of Common Stock, then in each such
case the amount set forth in the preceding sentence with respect to the exchange
or change of shares of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 8. No Redemption. The Series A Preferred Stock shall not be
redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank junior (as
to dividends and upon liquidation, dissolution and winding up) to all other
series of the Corporation's preferred stock except any series that specifically
provides that such series shall rank junior to the Series A Preferred Stock.
Section 10. Fractional Shares. Series A Preferred Stock may be issued
in fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
<PAGE> 28
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
this 12th day of December, 1995.
/s/Richard G. Mosteller
------------------------------------
Richard G. Mosteller
Senior Vice President - Finance
Masco Corporation
Attest:
/s/Eugene A. Gargaro, Jr.
- -------------------------
Eugene A. Gargaro, Jr.
Vice President and Secretary
Masco Corporation
<PAGE> 29
CERTIFICATE OF MERGER
OF
LA GARD, INC.
INTO
MASCO CORPORATION
MASCO Corporation, a coropration organized and existing under and by virtue
of the General Corporation Law of the State of Delaware (the "GCL"), certifies
that:
FIRST: The name and state of incorporation of each of the constituent
corporations are as follows:
State of
Name Incorporation
---- -------------
La Gard, Inc. ("La Gard") California
MASCO Corporation ("Masco") Delaware
SECOND: An Agreement and Plan of Reorganization dated February 21, 1997
(the "Agreement"), among Masco, La Gard and the Shareholders of La Gard, with
respect to, among other things, the merger of La Gard into Masco (the "Merger"),
has been approved, adopted, certified, executed and acknowledged by each of the
constituent corporations in accordance with the requirements of Section 252 of
the GCL.
THIRD: That the name of the surviving corporation of the Merger is Masco
Corporation, a Delaware corporation.
FOURTH: That the Restated Certificate of Incorporation of Masco
Corporation, a Delaware corporation which is surviving the merger, shall be the
Certificate of Incorporation of the surviving corporation.
FIFTH: The executed Agreement is on file at the principal place of
business of the surviving corporation 21001 Van Born Road, Taylor, Michigan
48180.
SIXTH: A copy of the Agreement will be furnished by the surviving
corporation, on request and without cost, to any stockholder of Masco and La
Gard.
SEVENTH: The authorized capital stock of LaGard, Inc., the foreign
corporation which is a party to the merger is 1,000,000 shares of Common Stock,
no par value, of which 134,000 shares are issued, outstanding and owned by the
Stockholders.
<PAGE> 30
EIGHTH: The Merger has been approved by the Shareholders of LaGard, Inc.
This Certificate of Merger shall be effective as of filing with the
Secretary of State of Delaware.
MASCO CORPORATION
By /s/ Richard G. Mosteller
-------------------------
Richard G. Mosteller
Vice President
ATTEST:
By /s/ Eugene A. Gargaro, Jr.
---------------------------
Eugene A. Gargaro, Jr.
<PAGE> 31
CERTIFICATE OF MERGER
OF
TEXWOOD INDUSTRIES, INC.
INTO
MASCO CORPORATION
Masco Corporation, a corporation organized and existing under and by virtue
of the General Corporation Law of the State of Delaware (the "GCL"), certifies
that:
FIRST: The name and state of incorporation of each of the constituent
corporations are as follows:
State of
Name Incorporation
---- -------------
Texwood Industries, Inc. Texas
Masco Corporation Delaware
SECOND: An Agreement and Plan of Reorganization dated July 24, 1997 (the
"Agreement") among Masco Corporation, Texwood Industries, Inc. and the
shareholders of Texwood Industries, Inc., with respect to, among other things,
the merger of Texwood Industries, Inc. into Masco Corporation (the "Merger"),
has been approved, adopted, certified, executed and acknowledged by each of the
constituent corporations in accordance with the requirements of Section 252 of
the GCL.
THIRD: That the name of the surviving corporation of the Merger is Masco
Corporation, a Delaware corporation.
FOURTH: That the Restated Certificate of Incorporation of Masco
Corporation, a Delaware corporation which is surviving the merger, shall be the
Certificate of Incorporation of the surviving corporation.
FIFTH: The executed Agreement is on file at the principal place of
business of the surviving corporation, the address of which is 21001 Van Born
Road, Taylor, Michigan 48180.
SIXTH: A copy of the Agreement will be furnished by the surviving
corporation, on request and without cost, to any stockholder of either
constituent corporation.
SEVENTH: The authorized capital stock of Texwood Industries, Inc., the
foreign corporation which is a party to the Merger, is 100,000 shares of common
stock, $1 par value.
<PAGE> 32
EIGHTH: The Merger shall become effective upon filing the Certificate of
Merger with the Secretary of State of Delaware and the Articles of Merger with
the Secretary of State of Texas.
IN WITNESS WHEREOF, Masco Corporation has caused this Certificate of Merger
to be signed by a Vice President and attested by its Secretary this 25th day of
July, 1997.
MASCO CORPORATION
By /s/ John R. Leekley
-------------------
John R. Leekley
Senior Vice President
ATTEST:
By /s/ Eugene A. Gargaro, Jr.
--------------------------
Eugene A. Gargaro,Jr.
Secretary
<PAGE> 33
CERTIFICATE OF AMENDMENT TO THE
CERTIFICATE OF INCORPORATION
OF MASCO CORPORATION
MASCO CORPORATION, a corporation organized and existing under the laws of
the State of Delaware (the "Company"), does hereby certify:
FIRST: That the Board of Directors of the Company, by consent resolution
dated April 20, 1998, adopted a resolution declaring advisable and proposing for
stockholder approval an amendment to the Company's Certificate of Incorporation
as follows:
The first two paragraphs of ARTICLE FOURTH shall be amended to read
as follows:
"FOURTH: The total number of shares of stock the Corporation shall
have authority to issue is nine hundred one million (901,000,000) shares.
Nine hundred million (900,000,000) of such shares shall consist of
common shares, par value one dollar ($1.00) per share, and one million
(1,000,000) of such shares shall consist of preferred shares, par value one
dollar ($1.00) per share."
SECOND: That the amendment to ARTICLE FOURTH of the Company's Certificate
of Incorporation was approved by a majority of the issued and outstanding shares
of common stock entitled to vote thereon in accordance with Section 242 of the
General Corporation Law of Delaware.
IN WITNESS WHEREOF, MASCO CORPORATION has caused its seal to be affixed and
the Certificate to be signed by Richard A. Manoogian, its Chairman of the Board,
and attested by Eugene A. Gargaro, Jr., its Secretary, this 20th day of May,
1998.
MASCO CORPORATION
[Corporate Seal] By:
-------------------------------------
Richard A. Manoogian, Chairman of the
Board
Attest:
By:
------------------------------------
Eugene A. Gargaro, Jr., Secretary
STATE OF MICHIGAN )
) ss.
COUNTY OF WAYNE )
I,_________________, a Notary Public do hereby certify that on this 20th
day of May, 1998, personally appeared before me Richard A. Manoogian, who being
by me first duly sworn, declared that he is the Chairman of the Board of Masco
Corporation, that he signed the foregoing document as the act and deed of said
corporation, and that the statements therein contained are true.
My commission expires:_________________ ____________________
<PAGE> 1
EXHIBIT 4.a
RESOLUTIONS
OF THE
PRICING COMMITTEE
OF THE
BOARD OF DIRECTORS
OF MASCO CORPORATION
April 16, 1998
In lieu of a meeting, the undersigned being all of the members of the
Pricing Committee of the Board of Directors of Masco Corporation, a Delaware
corporation (the "Company"), adopt the following resolutions:
WHEREAS, the Company has filed a Registration Statement (No. 33-56043) on
Form S-3 with the Securities and Exchange Commission, which is in effect;
WHEREAS, the Company desires to create an additional series of securities
under the Indenture dated as of December 1, 1982 (as amended to the date hereof,
the "Indenture"), with The First National Bank of Chicago, as successor trustee
to Morgan Guaranty Trust Company of New York (the "Trustee"), providing for the
issuance from time to time of unsecured debentures, notes or other evidences of
indebtedness of this Company ("Securities") in one or more series under such
Indenture; and
WHEREAS, capitalized terms used in these resolutions and not otherwise
defined are used with the same meaning ascribed to such terms in the Indenture;
THEREFORE RESOLVED, that there is established a series of Securities under
the Indenture, the terms of which shall be as follows:
1. The Securities of such series shall be designated as the
"6.625% Debentures Due April 15, 2018".
2. The aggregate principal amount of Securities of such series
which may be authenticated and delivered under the Indenture is limited to
Two Hundred Fifty Million Dollars ($250,000,000), expect for Securities of
such series authenticated and delivered upon registration of, transfer of,
or in exchange for, or in lieu of, other Securities of such series pursuant
to Sections 2.07, 2.08, 2.09, 9.04 or 14.03 of the Indenture.
3. The date on which the principal of the Securities of such
series shall be payable is April 15, 2018.
<PAGE> 2
4. The Securities of such series shall bear interest from April
21, 1998, at the rate of 6.625% per annum, payable semi-annually on April
15 and October 15 of each year commencing on October 15, 1998, until the
principal thereof is paid or made available for payment. The April 1 or
October 1 (whether or not a business day), as the case may be, next
preceding each such interest payment date shall be the "record date" for
the determination of holders to whom interest is payable.
5. The Securities shall be issued initially in the form of one or
more global securities registered in the name of Cede & Co., as nominee of
The Depository Trust Company ("DTC"), and will be held by the Trustee as
custodian for DTC. The Securities shall be subject to the procedures of DTC
described in the Company's prospectus supplement dated April 16, 1998
relating to the Securities and, except as described in such prospectus
supplement, will not be issued in definitive registered form.
6. The principal of and interest on the Securities of such series
shall be payable at the office or agency of this Company maintained for
such purpose under Section 3.02 of the Indenture in the Borough of
Manhattan, The City of New York, or at any other office or agency
designated by the Company, for such purpose pursuant to the Indenture;
provided, however, that if Securities in definitive registered form are
issued, then at the option of the Company payment of interest may be made
by check mailed to the address of the person entitled thereto as such
address shall appear on the Company's registry books.
7. The Securities of such series shall not be redeemable prior to
maturity.
8. The Securities of such series shall be issuable in denominations
of One Thousand Dollars ($1,000) and any integral multiples thereof.
9. The Securities shall be issuable at a price such that this
Company shall receive $247,460,000 after an underwriting discount of
$2,187,500.
10. The Securities shall be subject to defeasance and discharge and
to defeasance of certain obligations as set forth in the Indenture.
FURTHER RESOLVED, that the Securities of such series are declared to be
issued under the Indenture and subject to the provisions hereof;
2
<PAGE> 3
FURTHER RESOLVED, that the Chairman of the Board, the President or any Vice
President of the Company is authorized to execute, on the Company's behalf and
in its name, and the Secretary or any Assistant Secretary of the Company is
authorized to attest to such execution and under the Company's seal (which may
be in the form of a facsimile of the Company's seal), $250,000,000 aggregate
principal amount of the Securities of such series (and in addition Securities to
replace lost, stolen, mutilated or destroyed Securities and Securities required
for exchange, substitution or transfer, all as provided in the Indenture) in
fully registered form in substantially the form of the note filed as an exhibit
to the Company's Registration Statement on Form S-3 (No. 33-56043), but with
such changes and insertions therein as are appropriate to conform the Securities
to the terms set forth herein or otherwise as the respective officers executing
the Securities shall approve and as are not inconsistent with these resolutions,
such approval to be conclusively evidenced by such officer's execution and
delivery of such Securities, and to deliver such Securities to the Trustee for
authentication, and the Trustee is authorized and directed thereupon to
authenticate and deliver the same to or upon the written order of this Company
as provided in the Indenture;
FURTHER RESOLVED, that the signatures of the Company officers so authorized
to execute the Securities of such series may be the manual or facsimile
signatures of the present or any future authorized officers and may be imprinted
or otherwise reproduced thereon, and the Company for such purpose adopts each
facsimile signature as binding upon it notwithstanding the fact that at the time
the respective Securities shall be authenticated and delivered of disposed of,
the individual so signing shall have ceased to hold such office;
FURTHER RESOLVED, that Salomon Brothers Inc. and Merrill Lynch, Pierce,
Fenner & Smith Incorporated are appointed as the underwriters for the issuance
and sale of the Securities of such series, and the Chairman of the Board, the
President or any Vice President of the Company is authorized, in the Company's
name and on its behalf, to execute and deliver an Underwriting Agreement,
substantially in the form heretofore approved by the Company's Board of
Directors, with such underwriters, with such changes and insertions therein as
are appropriate to conform such Underwriting Agreement to the terms set forth
herein or otherwise as the officer executing such Underwriting Agreement shall
approve and as are not inconsistent with these resolutions, such approval to be
conclusively evidenced by such officer's execution and delivery of the
Underwriting Agreement;
FURTHER RESOLVED, that The First National Bank of Chicago, the Trustee
under the Indenture, is appointed trustee for Securities of such series, and as
Agent of this Company for the purpose of effecting the registration, transfer
and exchange of the Securities of such series as provided in the Indenture, and
the corporate trust office of The First National Bank of Chicago in the Borough
of
3
<PAGE> 4
Manhattan, The City of New York is designated pursuant to the Indenture as the
office or agency of the Company where such Securities may be presented for
registration, transfer and exchange and where notices and demands to or upon
this Company in respect of the Securities and the Indenture may be served;
FURTHER RESOLVED, that The First National Bank of Chicago is appointed
Paying Agent of this Company for the payment of interest on and principal of the
Securities of such series, and the corporate trust office of The First National
Bank of Chicago, is designated, pursuant to the Indenture, as the office or
agency of the Company where Securities may be presented for payment; and
FURTHER RESOLVED, that each of the Company's officers is authorized and
directed, on behalf of the Company and in its name, to do or cause to be done
everything such officer deems advisable to effect the sale and delivery of the
Securities of such series pursuant to the Underwriting Agreement and otherwise
to carry out the Company's obligations under the Underwriting Agreement, and to
do or cause to be done everything and to execute and deliver all documents as
such officer deems advisable in connection with the execution and delivery of
the Underwriting Agreement and the execution, authentication and delivery of
such Securities (including, without limiting the generality of the foregoing,
delivery to the Trustee of the Securities for authentication and of requests or
orders for the authentication and delivery of Securities).
<PAGE> 5
[Form of Security]
Permanent Global Registered Fixed Rate Security
THIS DEBENTURE IS A GLOBAL SECURITY AND IS REGISTERED IN THE NAME OF A
DEPOSITORY OR A NOMINEE THEREOF. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN
PART FOR NOTES IN CERTIFICATED FORM, THIS DEBENTURE MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC") TO A NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR
DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS DEBENTURE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO MASCO CORPORATION OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY DEBENTURE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
MASCO CORPORATION
6.625% Debenture Due April 15, 2018
REGISTERED CUSIP No. 574599 AR 7
No. R
Masco Corporation, a corporation duly organized and existing under the laws of
the State of Delaware (herein referred to as the "Company"), for value received,
hereby promises to pay to CEDE & CO. or registered assigns, at the office or
agency of the Company in the Borough of Manhattan, The City of New York, the
principal sum of ___________________DOLLARS ($_____________) on April 15, 2018,
in such coin or currency of the United States of America as at the time of
payment shall be legal tender for the payment of public and private debts, and
to pay interest, semi-annually on April 15 and October 15 of each year, on said
principal sum at said office or agency, in like coin or currency, at the rate
per annum specified in the title of this Debenture, from the April 15 or October
15, as the case may be, next preceding the date of this Debenture to which
interest has been paid or duly provided for, unless the date hereof is a date to
which interest has been paid or duly provided for, in which case from the date
of this Debenture, or unless no Interest has been paid or duly provided for on
the Debentures since the original issue date (as defined in the Indenture
referred to on the reverse hereof) of this Debenture, in which case from the
original issue date, until payment of said principal sum has been made or duly
provided for. Notwithstanding the foregoing, if the date hereof is after April 1
or October 1, as the case may be, and before the following April 15 or October
15, this Debenture shall bear interest from such April 15 or October 15;
provided, however,
2
<PAGE> 6
that if the Company shall default in the payment of interest on such April 15 or
October 15, then this Debenture shall bear interest from the next preceding
April 15 or October 15 to which interest has been paid or duly provided for, or,
if no interest has been paid or duly provided for on the Debentures since the
original issue date (as defined in such Indenture) of this Debenture, from the
original issue date hereof. The interest so payable on any April 15 or October
15 will, subject to certain exceptions provided in such Indenture, be paid to
the person in whose name this Debenture is registered at the close of business
on the April 1 or October 1, as the case may be, next preceding such April 15 or
October 15, whether or not such April 1 or October 1 is a business day, and may,
at the option of the Company, be paid by check mailed to the registered address
of such person.
Reference is made to the further provisions of this Debenture set forth on the
reverse hereof. Such further provisions shall for all purposes have the same
effect as though fully set forth at this place.
This Debenture shall not be valid or become obligatory for any purpose until the
certificate of authentication hereon shall have been signed by or on behalf of
the Trustee under such Indenture.
****[end of page 2]***
2
<PAGE> 7
IN WITNESS WHEREOF, Masco Corporation has caused this instrument to be executed
in its corporate name by the manual or facsimile signature of its Chairman of
the Board or its President and imprinted with a manual or facsimile of its
corporate seal, attested by the manual or facsimile signature of its Secretary
or an Assistant Secretary.
Dated: April 21, 1997
Masco Corporation
By________________________
Chairman of the Board
Attest
By________________________
Assistant Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the securities of the series designated therein referred to in
the within-mentioned indenture.
THE FIRST NATIONAL BANK OF CHICAGO,
AS TRUSTEE
BY________________________
AUTHORIZED OFFICER
3
<PAGE> 8
REVERSE OF NOTES
This Debenture is one of a duly authorized issue of debentures, notes,
bonds or other evidences of indebtedness of the Company (hereinafter called the
"Securities") of the series hereinafter specified, all issued or to be issued
under and pursuant to an indenture dated as of December 1, 1982 (herein called
the "Indenture"), duly executed and delivered by the Company to The First
National Bank of Chicago (as successor trustee to Morgan Guaranty Trust Company
of New York), Trustee (herein called the "Trustee"), to which Indenture and all
indentures supplemental thereto reference is hereby made for a description of
the rights, limitations of rights, obligations, duties and immunities thereunder
of the Trustee, the Company and holders of the Securities. The Securities may be
issued in one or more series, which different series may be issued in various
aggregate principal amounts, may mature at different times, may bear interest
(if any) at different rates, may be subject to different redemption provisions
(if any), may be subject to different sinking, purchase or analogous funds (if
any), may be subject to different covenants and Events of Default and may
otherwise vary as in the Indenture provided. This Debenture is one of a series
designated as the 6.625% Debentures Due April 15, 2018 of the Company, limited
in aggregate principal amount to $250,000,000.
In case an Event of Default with respect to the 6.625% Debentures Due April
15, 2018 shall have occurred and be continuing, the principal hereof may be
declared, and upon such declaration shall become due and payable, in the manner,
with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than 66 % in aggregate principal
amount of the Securities at the time outstanding of all series to be affected
(voting as a class), evidenced as in the Indenture provided, to execute
supplemental indentures adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any supplemental
indenture or modifying in any manner the rights of the holders of the Securities
of each such series; provided, however, that no such supplemental indenture
shall (i) extend the final maturity of any Security, or reduce the rate or
extend the time of payment of interest thereon, or reduce the principal amount
thereof or any premium thereon, or reduce any amount payable on redemption
thereof or make the principal thereof or any interest of premium thereon payable
in any coin or currency other than that hereinbefore provided, or impair or
affect the right of any holder to institute suit for payment thereof or the
right of repayment, if any, at the option of the holder, without the consent of
the holder of each Security so affected, or (ii) reduce the aforesaid principal
amount of Securities of all series to be affected, the holders of which are
required to consent to any such supplemental indenture, without the consent of
the holders of all Securities so affected then outstanding. It is also provided
in the Indenture that, with respect to certain defaults or Events of Default
regarding the Securities of any series, prior to any declaration accelerating
the maturity of such Securities, the holders of a majority in aggregate
principal amount of the Securities of such series at the time outstanding
4
<PAGE> 9
(or, in the case of certain defaults or Events of Default, all the Securities)
may on behalf of the holders of all of the Securities of such series (or all the
Securities, as the case may be) waive any such past default or Event of Default
under the Indenture and its consequences except a default in the payment of
principal of, premium, if any, or interest, if any, on any of the Securities.
Any such consent or waiver by the holder of this Debenture (unless revoked as
provided in the Indenture) shall be conclusive and binding upon such holder and
upon all future holders and owners of this Debenture and any Debentures which
may be issued in exchange or transfer hereof or in substitution herefor,
irrespective of whether or not any notation thereof is made upon this Debenture
or such other Debentures.
No reference herein to the Indenture and no provision of this Debenture or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this
Debenture at the place, at the respective times, at the rate and in the coin or
currency herein prescribed.
The Debentures are issuable in registered form without coupons in
denominations of $1,000 and any multiple of $1,000. Upon due presentment for
registration of transfer of this Debenture at the office or agency of the
Company for such registration in the Borough of Manhattan, The City of New York,
or any other location or locations as may be provided for pursuant to the
Indenture, a new Debenture or Debentures of authorized denominations for an
equal aggregate principal amount will be issued to the transferee in exchange
therefor, subject to the limitations provided in the Indenture, without charge
except for any tax or other governmental charge imposed in connection therewith.
The Debentures may not be redeemed prior to maturity.
The Debentures will be subject to defeasance and discharge and to
defeasance of certain obligations as set forth in the Indenture.
The Company, the Trustee and any agent of the Company or the Trustee may
deem and treat the holder hereof as the absolute hereof (whether or not this
Debenture shall be overdue and notwithstanding any notation of ownership or
other writing hereon), for the purpose of receiving payment of or on account of
the principal hereof and, subject to the provisions on the face hereof, interest
hereon, and for all other purposes, and neither the Company nor the Trustee nor
any such agent shall be affected by any notice to the contrary. All payments
made to or upon the order of such holder shall, to the extent of the sum or sums
paid, effectually satisfy and discharge liability for moneys payable hereon.
No recourse for the payment of the principal of, or premium, if any, or
interest on this Debenture, or for any claim based hereon or otherwise in
respect hereof, and no recourse under or upon any obligation, covenant or
agreement of the Company in the Indenture or any indenture supplemental thereto
or in any Debenture, or because of the creation of any indebtedness represented
thereby, shall
5
<PAGE> 10
be had against any incorporator, stockholder, officer or director, as such,
past, present or future, of the Company or of any successor corporation, either
directly or through the Company or any successor corporation, whether by virtue
of any constitution, statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
All terms used in this Debenture which are defined in the Indenture shall
have the respective meanings ascribed to them therein.
This Debenture shall be deemed to be a contract made under the laws of the
State of New York, and for all purposes shall be construed in accordance with
and governed by the laws of that State.
***[end of page 6]***
6
<PAGE> 11
The following abbreviations, where such abbreviations appear on this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations: TEN COM as tenants in common TEN
ENT as tenants by the entireties JT TEN as joint tenants with right of
survivorship and not as tenants in common
UNIF GIFT MIN ACT..............Custodian............
(Cust) (Minor)
under Uniform Gifts to Minors Act......................
(State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, the undersigned hereby sells, assigns
and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
/ /
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
- --------------------------------------------------------------------------------
the within Debenture of MASCO CORPORATION and hereby does irrevocably
constitute and appoint
Attorney to transfer the said Debenture on the books of the within-named
Company, with full power of substitution in the premises.
- --------------------------------------------------------------------------------
Dated
--------------------- --------------------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME AS WRITTEN UPON THE
FACE OF THE CERTIFICATE IN EVERY PARTICULAR
WITHOUT ALTERATION OR ENLARGEMENT OR ANY
CHANGE WHATEVER.
7
<PAGE> 1
EXHIBIT 4.b
AMENDMENT TO AMENDED AND RESTATED
CREDIT AGREEMENT
AMENDMENT dated as of March 30, 1998 to the Amended and Restated Credit
Agreement dated as of November 14, 1996 (as heretofore amended, the "Credit
Agreement") among MASCO CORPORATION (the "Borrower"), the BANKS party thereto
(the "Banks") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the
"Agent").
WITNESSETH:
WHEREAS, the parties hereto desire to amend the Credit Agreement to:
(i) change the minimum tangible net worth covenant to a minimum net
worth covenant and update the minimum amount specified therein,
(ii) reduce the maximum permitted ratio of (x) Consolidated Debt to (y)
the sum of Consolidated Debt and Consolidated Adjusted Net Worth from 57% to 53%
and
(iii) replace the defined term "Shareholders' Equity" with the term
"Consolidated Net Worth";
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Defined Terms; References. Unless otherwise specifically defined
herein, each term used herein which is defined in the Credit Agreement has the
meaning assigned to such term in the Credit Agreement. Each reference to
"hereof", "hereunder", "herein" and "hereby" and each other similar reference
and each reference to "this Agreement" and each other similar reference
contained in the Credit Agreement shall, after this Amendment becomes effective,
refer to the Credit Agreement as amended hereby.
SECTION 2. Definitions. (a) The definitions of "Consolidated Tangible Net
Worth" and "Shareholders' Equity" in Section 1.01 of the Credit Agreement are
deleted.
(b) The following new definition is added to Section 1.01 of the Credit
Agreement in the appropriate alphabetical order:
"Consolidated Net Worth" means at any date the consolidated
shareholders' equity of the Borrower and its Consolidated
Subsidiaries determined as of such date.
(c) The definitions of "Consolidated Adjusted Net Worth" and
"Consolidated Total Liabilities" in Section 1.01 of the Credit Agreement are
amended by changing the words "Shareholders' Equity" to "Consolidated Net
Worth".
<PAGE> 2
SECTION 3. Minimum Consolidated Net Worth. Section 5.02 of the Credit
Agreement is amended to read in full as follows:
Section 5.02. Minimum Consolidated Net Worth. At no time will
Consolidated Net Worth be less than Minimum Consolidated Net Worth.
"Minimum Consolidated Net Worth" means $1,700,000,000; provided that such
amount shall be adjusted at the end of each Fiscal Quarter ending after
December 31, 1997, as follows:
(i) increased by 50% of Consolidated Net Income for such
Fiscal Quarter; provided that, if Consolidated Net Income for such
Fiscal Quarter is a negative number (a "Consolidated Net Loss"), an
amount up to 50% of such Consolidated Net Loss shall be applied first
to reduce Minimum Consolidated Net Worth to the extent of offsetting
prior increases (if any) in Minimum Consolidated Net Worth Made
pursuant to this clause (i) during the same Fiscal Year and second to
reduce (but not below zero) any future increase in Minimum
Consolidated Net Worth that would otherwise be made pursuant to this
clause (i) during the same Fiscal Year; and
(ii) increased by an amount equal to 50% of all increases
in Consolidated Net Worth during such Fiscal Quarter attributable to
sales or issuances of the Borrower's Equity Securities; provided that
an amount up to 50% of all decreases in Consolidated New Worth during
such Fiscal Quarter attributable to purchases or other retirements of
the Borrower's Equity Securities shall be applied first to offset any
increase in Minimum Consolidated Net Worth that would otherwise be
made pursuant to this clause (ii) at the end of such Fiscal Quarter,
second to reduce Minimum Consolidated Net Worth to the extent of
offsetting prior increases (if any) in Minimum Consolidated Net Worth
made pursuant to this clause (ii) and third to reduce (but not below
zero) any future increase in Minimum Consolidated Net Worth that would
otherwise be made pursuant to this clause (ii).
SECTION 4. Limitations on Debt. (a) Section 5.03(a) of the Credit Agreement
is amended to read in full as follows:
(a) The Borrower will not at any time, and will not suffer or
permit any Consolidated Subsidiary at any time to, create, incur, issue,
guarantee or assume any Debt if, immediately after giving effect thereto,
the ratio of (i) Consolidated Debt to (ii) the sum of Consolidated Debt and
Consolidated Adjusted Net Worth would exceed 53%.
(b) Subsections (b) and (d) of Section 5.03 of the Credit Agreement
are amended by changing the words "Shareholders' Equity" to "Consolidated
Net Worth".
SECTION 5. Negative Pledge. Clause (i) of Section 5.04 of the Credit
Agreement is amended by changing "5% of Consolidated Tangible Net Worth" to "3%
of "Consolidated Net Worth".
-2-
<PAGE> 3
SECTION 6. Financial Information. Section 4.04 of the Credit Agreement is
amended to read as follows:
SECTION 4.04. Financial Information.
(a) The consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of December 31, 1997 and the related
consolidated statements of income and cash flows for the Fiscal Year then
ended, reported on by Coopers & Lybrand L.L.P. and set forth in the
Borrower's 1997 Form 10-K, a copy of which has been delivered to each of
the Banks, fairly present, in conformity with generally accepted accounting
principles, the consolidated financial position of the Borrower and its
Consolidated Subsidiaries as of such date and the consolidated results of
their operations and their cash flows for such Fiscal Year.
(b) There has been no material adverse change since December 31,
1997 in the business or financial position of the Borrower and its
Consolidated Subsidiaries, considered as a whole, as reflected in the
financial statements referred to in subsection (a) of this Section.
SECTION 7. Conforming Change in Conditions to Borrowing. Clause (d) of
Section 3.02 is amended by changing the reference therein to Section "4.04(c)"
to refer to Section "4.04(b)".
SECTION 8. Representations of Borrower. The Borrower represents and
warrants that (i) the representations and warranties of the Borrower set forth
in Article 4 of the Credit Agreement will be true on and as of the Amendment
Effective Date and (ii) no Default will have occurred and be continuing on such
date.
SECTION 9. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 10. Counterparts. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
SECTION 11. Effectiveness. This Amendment shall become effective on the
date (the "AMENDMENT EFFECTIVE DATE") when the Agent shall have received from
each of the Borrower and the Required Banks a counterpart hereof signed by such
party or facsimile or other written confirmation (in form satisfactory to the
Agent) that such party has signed a counterpart hereof.
-3-
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.
MASCO CORPORATION
By: /s/Robert B. Rosowski
---------------------------------------
Title: Vice President - Controller and
Treasurer
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/John M. Mikolay
---------------------------------------
Title: Vice President
NBD BANK
By: /s/William J. Maxbauer
---------------------------------------
Title: Vice President
BANK OF AMERICA ILLINOIS
By: /s/Andrew J. Sutherland
---------------------------------------
Title: Vice President
COMERICA BANK
By: /s/Arden J. Anderson
---------------------------------------
Title: First Vice President
NATIONSBANK, N.A.
By: /s/Wallace Harris, Jr.
---------------------------------------
Title: Vice President
-4-
<PAGE> 5
PNC BANK, NATIONAL ASSOCIATION
By: /s/Peter F. Stack
---------------------------------------
Title: Assistant Vice President
THE BANK OF NEW YORK
By: /s/Edward J. Doughery III
---------------------------------------
Title: Vice President
U.S. Commercial Banking
THE CHASE MANHATTAN BANK
By: /s/Andris G. Kalnins
---------------------------------------
Title: Vice President
COMMERZBANK AKTIENGESELLSCHAFT
CHICAGO BRANCH
By: /s/J. Timothy Shortly
---------------------------------------
Title: Senior Vice President
By: /s/William Binder
---------------------------------------
Title: Vice President
ROYAL BANK OF CANADA
By: /s/Gordon MacArthur
---------------------------------------
Title: Manager
WACHOVIA BANK OF GEORGIA, N.A.
By: /s/Debra L. Coheley
---------------------------------------
Title: Senior Vice President
-5-
<PAGE> 6
THE BANK OF NOVA SCOTIA
By: /s/F.C.H. Ashby
---------------------------------------
Title: Senior Manager Loan Operations
THE BANK OF TOKYO-MITSUBISHI LTD.,
CHICAGO BRANCH
By: /s/Hajime Watannabe
---------------------------------------
Title: Deputy General Manager
THE DAI-ICHI KANGYO BANK, LTD.,
CHICAGO BRANCH
By: /s/Sunao Hirata
---------------------------------------
Title: Vice President
DRESDNER BANK AG NEW YORK AND
GRAND CAYMAN BRANCHES
By: /s/B. Craig Erickson
---------------------------------------
Title: Vice President
By: /s/Kam Pasha
---------------------------------------
Title: Vice President
KEYBANK NATIONAL ASSOCIATION
By: /s/Thomas A. Crandell
---------------------------------------
Title: Vice President
ISTITUTO BANCARIOSAN PAOLO
DI TORINO SPA
By: /s/Carlo Persico
---------------------------------------
Title: Deputy General Manager
By: /s/William J. DeAngelo
---------------------------------------
Title: First Vice President
-6-
<PAGE> 7
THE SANWA BANK LTD.
CHICAGO BRANCH
By: /s/Richard H. Ault
---------------------------------------
Title: VP Corporate Banking
TH SUMITOMO BANK, LTD.
By: /s/Kenichiro Kobayashi
---------------------------------------
Title: Joint General Manager
-7-
<PAGE> 1
EXHIBIT 12
MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
(THOUSANDS OF DOLLARS)
--------------------------------------------------------
SIX
MONTHS
ENDED
JUNE 30, 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 $373,100 $630,900 $502,700 $351,790 $292,830 $349,190
Deduct/add equity in
undistributed (earnings)/
loss of equity affiliates (11,550) (19,470) (12,310) (17,770) 106,200 (13,750)
Add interest on indebtedness,
net 41,600 80,390 74,790 73,400 60,360 62,860
Add amortization of debt
expense 580 1,260 1,400 1,930 2,220 2,650
Add estimated interest factor
for rentals 5,120 8,150 6,150 4,970 4,220 3,190
-------- -------- -------- -------- -------- --------
Earnings before income
taxes and fixed charges $408,850 $701,230 $572,730 $414,320 $465,830 $404,140
======== ======== ======== ======== ======== ========
FIXED CHARGES:
Interest on indebtedness
regarding continuing
operations $ 43,080 $ 83,520 $ 77,250 $ 76,460 $ 63,220 $ 63,600
Amortization of debt expense 580 1,260 1,400 1,930 2,220 2,650
Estimated interest factor
for rentals 5,120 8,150 6,150 4,970 4,220 3,190
-------- -------- -------- -------- -------- --------
$ 48,780 $ 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 FORM 10-Q FOR THE FIRST QUARTER OF 1998. THIS INFORMATION IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS, EXCEPT FOR
PRIMARY (WHICH IS BASIC) AND DILUTED EARNINGS PER SHARE WHICH HAVE BEEN
RESTATED TO REFLECT THE 100 PERCENT STOCK DISTRIBUTION TO SHAREHOLDERS IN
JULY 1998.
</LEGEND>
<RESTATED>
<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> .34
<EPS-DILUTED> .32
<FN>
<F1>Receivables and property and equipment are presented net of allowances for
doubtful accounts and accumulated depreciation and amortization, respectively.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MASCO
CORPORATION'S JUNE 30, 1998 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 416,590
<SECURITIES> 0
<RECEIVABLES> 674,850
<ALLOWANCES> 0
<INVENTORY> 560,880
<CURRENT-ASSETS> 1,796,010
<PP&E> 1,073,170<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,766,920
<CURRENT-LIABILITIES> 565,870
<BONDS> 1,417,860
0
0
<COMMON> 340,030
<OTHER-SE> 2,262,360
<TOTAL-LIABILITY-AND-EQUITY> 4,766,920
<SALES> 2,124,000
<TOTAL-REVENUES> 2,124,000
<CGS> 1,350,600
<TOTAL-COSTS> 1,350,600
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 41,200
<INCOME-PRETAX> 373,100
<INCOME-TAX> 145,500
<INCOME-CONTINUING> 227,600
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 227,600
<EPS-PRIMARY> .69
<EPS-DILUTED> .66
<FN>
<F1>Receivables and property and equipment are presented net of allowances for
doubtful accounts and accumulated depreciation and amortization, respectively.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MASCO
CORPORATION'S 1997 FORM 10-K AND ITS FORM 10-Q'S FOR THE FIRST, SECOND AND THIRD
QUARTERS OF 1997. THIS INFORMATION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS, EXCEPT FOR PRIMARY (WHICH IS BASIC) AND DILUTED
EARNINGS PER SHARE WHICH HAVE BEEN RESTATED TO REFLECT THE 100 PERCENT STOCK
DISTRIBUTION TO SHAREHOLDERS IN JULY 1998.
</LEGEND>
<RESTATED>
<S> <C> <C> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS 6-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997 DEC-31-1997 DEC-31-1997
<PERIOD-END> DEC-31-1997 SEP-30-1997 JUN-30-1997 MAR-31-1997
<CASH> 441,330 379,040 333,170 327,590
<SECURITIES> 0 0 0 0
<RECEIVABLES> 578,850 607,380 556,570 536,980
<ALLOWANCES> 19,800 22,930 19,050 18,560
<INVENTORY> 515,000 496,920 448,270 424,700
<CURRENT-ASSETS> 1,626,720 1,569,010 1,410,800 1,362,080
<PP&E> 1,625,370 1,588,950 1,503,590 1,483,450
<DEPRECIATION> 588,050 584,780 553,940 544,390
<TOTAL-ASSETS> 4,333,760 4,223,620 3,796,290 3,684,130
<CURRENT-LIABILITIES> 620,000 641,590 510,320 479,690
<BONDS> 1,321,470 1,321,250 1,228,730 1,216,170
0 0 0 0
0 0 0 0
<COMMON> 165,570 165,170 161,650 161,240
<OTHER-SE> 2,063,450 1,978,960 1,790,180 1,725,350
<TOTAL-LIABILITY-AND-EQUITY> 4,333,760 4,223,620 3,796,290 3,684,130
<SALES> 3,760,000 2,770,000 1,767,000 854,000
<TOTAL-REVENUES> 3,760,000 2,770,000 1,767,000 854,000
<CGS> 2,378,250 1,751,700 1,117,700 539,500
<TOTAL-COSTS> 2,378,250 1,751,700 1,117,700 539,500
<OTHER-EXPENSES> 0 0 0 0
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 79,850 58,200 37,400 18,500
<INCOME-PRETAX> 630,900 461,500 291,600 139,200
<INCOME-TAX> 248,500 184,600 116,500 55,700
<INCOME-CONTINUING> 382,400 276,900 175,100 83,500
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 382,400 276,900 175,100 83,500
<EPS-PRIMARY> 1.20 .87 .55 .26
<EPS-DILUTED> 1.15 .84 .54 .26
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MASCO
CORPORATION'S 1996 FORM 10-K AND ITS FORM 10-Q'S FOR THE FIRST, SECOND AND
THIRD QUARTERS OF 1996. THIS INFORMATION IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS, EXCEPT FOR PRIMARY (WHICH IS BASIC) AND
DILUTED EARNINGS PER SHARE WHICH HAVE BEEN RESTATED TO REFLECT THE 100 PERCENT
STOCK DISTRIBUTION TO SHAREHOLDERS IN JULY 1998.
</LEGEND>
<RESTATED>
<S> <C> <C> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS 6-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996 DEC-31-1996 DEC-31-1996
<PERIOD-END> DEC-31-1996 SEP-30-1996 JUN-30-1996 MAR-31-1996
<CASH> 473,730 196,500 73,030 45,690
<SECURITIES> 0 0 0 0
<RECEIVABLES> 484,800 543,020 508,750 505,370
<ALLOWANCES> 17,900 16,980 16,150 15,630
<INVENTORY> 411,940 417,130 399,360 389,400
<CURRENT-ASSETS> 1,429,770 1,212,230 1,038,040 991,110
<PP&E> 1,474,080 1,435,500 1,398,050 1,367,780
<DEPRECIATION> 533,490 529,050 514,000 502,440
<TOTAL-ASSETS> 3,701,650 3,489,820 3,918,760 3,802,960
<CURRENT-LIABILITIES> 518,440 497,570 476,840 420,940
<BONDS> 1,236,320 1,102,020 1,622,040 1,594,890
0 0 0 0
0 0 0 0
<COMMON> 160,870 160,710 160,540 160,430
<OTHER-SE> 1,678,940 1,616,460 1,552,930 1,523,740
<TOTAL-LIABILITY-AND-EQUITY> 3,701,650 3,489,820 3,918,760 3,802,960
<SALES> 3,237,000 2,394,000 1,551,000 764,000
<TOTAL-REVENUES> 3,237,000 2,394,000 1,551,000 764,000
<CGS> 2,048,070 1,498,900 976,900 480,330
<TOTAL-COSTS> 2,048,070 1,498,900 976,900 480,330
<OTHER-EXPENSES> 0 0 0 0
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 74,680 54,900 34,000 17,500
<INCOME-PRETAX> 502,700 353,000 216,700 106,800
<INCOME-TAX> 207,500 141,200 86,700 44,800
<INCOME-CONTINUING> 295,200 211,800 130,000 62,000
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 295,200 211,800 130,000 62,000
<EPS-PRIMARY> .94 .67 .41 .20
<EPS-DILUTED> .91 .65 .40 .19
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MASCO
CORPORATION'S DECEMBER 31, 1995 FORM 10-K. THIS INFORMATION IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS, EXCEPT FOR PRIMARY (WHICH IS
BASIC) AND DILUTED EARNINGS PER SHARE FROM CONTINUING OPERATIONS WHICH HAVE BEEN
RESTATED TO REFLECT THE 100 PERCENT STOCK DISTRIBUTION TO SHAREHOLDERS IN JULY
1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 60,470
<SECURITIES> 0
<RECEIVABLES> 456,200
<ALLOWANCES> 16,300
<INVENTORY> 391,760
<CURRENT-ASSETS> 964,500
<PP&E> 1,342,370
<DEPRECIATION> 485,680
<TOTAL-ASSETS> 3,778,630
<CURRENT-LIABILITIES> 445,850
<BONDS> 1,577,100
0
0
<COMMON> 160,380
<OTHER-SE> 1,495,050
<TOTAL-LIABILITY-AND-EQUITY> 3,778,630
<SALES> 2,927,000
<TOTAL-REVENUES> 2,927,000
<CGS> 1,846,330
<TOTAL-COSTS> 1,846,330
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 73,800
<INCOME-PRETAX> 351,790
<INCOME-TAX> 151,740
<INCOME-CONTINUING> 200,050
<DISCONTINUED> (641,730)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (441,680)
<EPS-PRIMARY> .64
<EPS-DILUTED> .62
</TABLE>
