-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, VpIFpcj2JevTWWA0aLdtxCw8YJZeQ5GRuN2vjSkAhYCwTNYTqSjfGjXrPF7SiSxK 57UpeD7akgSxoYoxegFdRA== 0000062996-95-000019.txt : 19950814 0000062996-95-000019.hdr.sgml : 19950814 ACCESSION NUMBER: 0000062996-95-000019 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MASCO CORP /DE/ CENTRAL INDEX KEY: 0000062996 STANDARD INDUSTRIAL CLASSIFICATION: WOOD HOUSEHOLD FURNITURE, (NO UPHOLSTERED) [2511] IRS NUMBER: 381794485 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05794 FILM NUMBER: 95561665 BUSINESS ADDRESS: STREET 1: 21001 VAN BORN RD CITY: TAYLOR STATE: MI ZIP: 48180 BUSINESS PHONE: 3132747400 MAIL ADDRESS: STREET 1: 21001 VAN BORN ROAD CITY: TAYLOR STATE: MI ZIP: 48180 FORMER COMPANY: FORMER CONFORMED NAME: MASCO SCREW PRODUCTS CO DATE OF NAME CHANGE: 19731025 10-Q 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, 1995. 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, 1995 Common stock, par value $1 per share 160,273,000 MASCO CORPORATION INDEX Page No. Part I. Financial Information Item 1. Financial Statements Condensed Consolidated Balance Sheet - June 30, 1995 and December 31, 1994 1 Condensed Consolidated Statement of Income for the Three Months and Six Months Ended June 30, 1995 and 1994 2 Condensed Consolidated Statement of Cash Flows for the Six Months Ended June 30, 1995 and 1994 3 Notes to Condensed Consolidated Financial Statements 4-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-9 Unaudited Information Regarding Equity Affiliates for the Three Months and Six Months Ended June 30, 1995 and 1994 10 Part II. Other Information and Signature 11 MASCO CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET June 30, 1995 and December 31, 1994 (Dollars in thousands) June 30, December 31, ASSETS 1995 1994 Current assets: Cash and cash investments $ 65,810 $ 61,160 Marketable securities 11,520 9,910 Accounts and notes receivable, net 792,610 745,170 Prepaid expenses and other 120,470 126,370 Inventories Finished goods 423,060 388,440 Raw material 412,990 333,280 Work in process 201,760 227,110 1,037,810 948,830 Total current assets 2,028,220 1,891,440 Equity investments in MascoTech, Inc. 195,870 184,960 Equity investments in other affiliates 63,240 57,790 Property and equipment, net 1,307,880 1,231,810 Excess of cost over acquired net assets 760,930 706,160 Other noncurrent assets 342,400 317,880 Total assets $4,698,540 $4,390,040 LIABILITIES Current liabilities: Notes payable $ 73,150 $ 48,380 Accounts payable 190,630 201,320 Accrued liabilities 361,260 351,590 Total current liabilities 625,040 601,290 Long-term debt 1,684,290 1,592,610 Deferred income taxes and other 88,340 83,460 Total liabilities 2,397,670 2,277,360 SHAREHOLDERS' EQUITY Common stock, par value $1 per share Authorized shares: 400,000,000 160,250 156,990 Preferred stock, par value $1 per share Authorized shares: 1,000,000 --- --- Paid-in capital 125,470 44,840 Retained earnings 2,005,970 1,924,740 Cumulative translation adjustments 9,180 (13,890) Total shareholders' equity 2,300,870 2,112,680 Total liabilities and shareholders' equity $4,698,540 $4,390,040 See notes to condensed consolidated financial statements. 1 MASCO CORPORATION CONDENSED CONSOLIDATED STATEMENT OF INCOME For the Three Months and Six Months Ended June 30, 1995 and 1994 (Amounts in thousands except per share data) Three Months Ended Six Months Ended June 30 June 30 1995 1994 1995 1994 Net sales $1,208,000 $1,120,000 $2,434,000 $2,170,000 Costs and expenses, net: Cost of sales 821,900 753,500 1,637,300 1,451,500 Selling, general and administrative expenses 261,800 233,800 522,800 463,900 Other (income) expense, net: Interest expense 28,800 27,700 57,300 54,200 Re: MascoTech, Inc.: Equity earnings (4,500) (10,700) (8,300) (18,100) Interest and dividend income and gain from stock sale --- --- --- (4,500) Other, net (5,600) (600) (4,800) (2,700) 18,700 16,400 44,200 28,900 1,102,400 1,003,700 2,204,300 1,944,300 Income before income taxes 105,600 116,300 229,700 225,700 Income taxes 42,200 46,200 91,900 90,300 Net income $ 63,400 $ 70,100 $ 137,800 $ 135,400 Per share data: Net income $.40 $.44 $.87 $.86 Cash dividends declared and paid $.18 $.17 $.36 $.34 Average shares outstanding 158,800 158,100 158,800 158,100 See notes to condensed consolidated financial statements. 2 MASCO CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the Six Months Ended June 30, 1995 and 1994 (Dollars in thousands) Six Months Ended June 30 1995 1994 CASH FLOWS FROM (FOR) OPERATING ACTIVITIES: Cash provided by operations $188,450 $177,340 (Increase) in receivables, net (72,990) (59,330) (Increase) in inventories, net (86,620) (36,150) Decrease in prepaid expenses 6,740 7,570 (Decrease) in current liabilities (10,190) (320) Total cash from operating activities 25,390 89,110 CASH FLOWS FROM (FOR) INVESTING ACTIVITIES: Proceeds from sale of Formica investment 74,470 --- Proceeds from sale of MascoTech common stock --- 7,730 Capital expenditures (114,050) (91,060) Other, net (13,920) (21,280) Total cash (for) investing activities (53,500) (104,610) CASH FLOWS FROM (FOR) FINANCING ACTIVITIES: Increase in debt 398,710 70,010 Payment of debt (308,970) (63,050) Cash dividends paid (56,980) (52,920) Total cash from (for) financing activities 32,760 (45,960) CASH AND CASH INVESTMENTS: Increase (decrease) for the period 4,650 (61,460) At January 1 61,160 119,980 At June 30 $ 65,810 $ 58,520 Supplemental Cash Flow Information: Net cash paid during the period for: Interest $ 56,430 $ 53,980 Income taxes $ 92,640 $ 89,490 See notes to condensed consolidated financial statements. 3 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, 1995 and the results of operations for the three months and six months ended June 30, 1995 and 1994 and cash flows for the six months ended June 30, 1995 and 1994. The condensed consolidated balance sheet at December 31, 1994 was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. Earnings per share are calculated based on the weighted average common shares outstanding. B. Other (income) expense, net consists of the following, in thousands: Three Months Ended Six Months Ended June 30 June 30 1995 1994 1995 1994 Interest expense $28,800 $27,700 $57,300 $54,200 Re: MascoTech, Inc.: Equity earnings (4,500) (10,700) (8,300) (18,100) Interest and dividend income --- --- --- (100) Gain from sale of common stock --- --- --- (4,400) Equity earnings, other (2,200) (900) (4,300) (2,100) Interest income and gains from marketable securities and cash investments (4,900) (4,100) (7,900) (7,700) Other, net 1,500 4,400 7,400 7,100 $18,700 $16,400 $44,200 $28,900 Included in other, net for the six months ended June 30, 1995, was a $15.9 million gain from the sale of the Company's investment in Formica Corporation; this gain was offset by charges and reserves for profit improvement programs and asset disposals that should enhance the Company's future performance. C. As announced during the second quarter of 1995, the Company's Board of Directors has determined that the divestiture of the Home Furnishings Group appears to be in the Company's and its shareholders' long-term strategic interest and thus has directed the Company to explore alternatives with respect to a possible divestiture. Alternatives currently being explored include the creation of a new independent public company through either an initial public offering or a spin-off to Company shareholders or the sale of the Home Furnishings Group. The Company anticipates receiving substantial cash proceeds either from a cash payment paid by the Home Furnishings Group to the Company prior to its becoming a public company or from the sale of the Home Furnishings Group. Sales of the Home Furnishings Group in 1994 approximated $1.9 billion with operating profit of approximately $80 million. While these sales represented 42 percent of the Company's total 1994 sales, operating profit from this group comprised less than 14 percent of the Company's 1994 operating profit. 4 MASCO CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) Note C - Continued: The Home Furnishings Group represents an investment of approximately $1.7 billion on the Company's December 31, 1994 balance sheet. While the Company believes that the book value of its investment in the Home Furnishings Group is realizable in the longer term in the ordinary course of business, the Company believes that the current value of the Home Furnishings Group is well in excess of $1 billion. Even then, depending upon the nature and timing of a divestiture, the potential transactions, while strengthening the Company's balance sheet, may involve a substantial non-cash charge to the Company's financial statements. D. The following presents the combined unaudited financial statements of the Company, MascoTech, Inc. and TriMas Corporation as one entity, with Masco Corporation as the parent company. Intercompany transactions have been eliminated. Amounts, except per share data, are in thousands. Combined Balance Sheet June 30, December 31, Assets 1995 1994 Current assets: Cash and cash investments $ 195,620 $ 230,780 Marketable securities 20,400 72,020 Accounts and notes receivable, net 1,058,720 980,940 Prepaid expenses 111,030 133,490 Deferred income taxes 50,800 68,270 Net current assets of businesses held for disposition 97,700 146,690 Inventories: Finished goods 491,890 449,290 Raw material 477,120 404,240 Work in process 249,580 266,810 1,218,590 1,120,340 Total current assets 2,752,860 2,752,530 Equity investments in affiliates 196,760 150,310 Property and equipment, net 1,894,070 1,779,520 Excess of cost over acquired net assets 1,019,310 964,000 Net noncurrent assets of businesses held for disposition 206,300 232,370 Other noncurrent assets 450,890 405,220 Total assets $6,520,190 $6,283,950 Liabilities and Shareholders' Equity Current liabilities: Notes payable $ 79,620 $ 52,330 Accounts payable 310,540 334,770 Accrued liabilities 476,120 457,160 Total current liabilities 866,280 844,260 Long-term debt 2,686,150 2,699,450 Deferred income taxes and other 219,960 206,630 Other interests in combined affiliates 446,930 420,930 Equity of shareholders of Masco Corporation 2,300,870 2,112,680 Total liabilities and shareholders' equity $6,520,190 $6,283,950 5 MASCO CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) Note D - Continued: Three Months Ended Six Months Ended June 30 June 30 Combined Statement of Income 1995 1994 1995 1994 Net sales $1,800,730 $1,696,450 $3,611,490 $3,289,310 Costs and expenses, net: Cost of sales 1,295,850 1,190,920 2,572,950 2,310,230 Selling, general and administrative expenses 329,790 305,000 660,810 600,620 Other (income) expense, net: Interest expense 45,610 42,630 92,540 83,050 Other income, net (16,790) (7,280) (20,790) (28,190) 28,820 35,350 71,750 54,860 1,654,460 1,531,270 3,305,510 2,965,710 Income before income taxes and other interests 146,270 165,180 305,980 323,600 Income taxes 64,150 68,650 133,290 139,450 Income before other interests 82,120 96,530 172,690 184,150 Other interests in combined affiliates 18,720 26,430 34,890 48,750 Net income $ 63,400 $ 70,100 $ 137,800 $ 135,400 Per share data: Net income $.40 $.44 $.87 $.86 Cash dividends declared and paid $.18 $.17 $.36 $.34 Average shares outstanding 158,800 158,100 158,800 158,100 6 MASCO CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (concluded) Note D - Concluded: Six Months Ended June 30 Combined Statement of Cash Flows 1995 1994 Cash Flows From (For) Operating Activities: Cash provided by operations $ 236,000 $ 224,860 (Increase) in receivables, net (102,300) (116,100) (Increase) in inventories, net (90,720) (44,310) (Increase) decrease in marketable securities, net 53,230 (36,670) (Increase) decrease in prepaid expenses 13,870 (10,410) Increase (decrease) in current liabilities (31,910) 14,470 Total cash from operating activities 78,170 31,840 Cash Flows From (For) Investing Activities: Capital expenditures (167,370) (158,210) Proceeds from sale of Formica Investment 74,470 --- Proceeds from sale of subsidiaries 37,400 20,330 Acquisitions, net of cash acquired (22,810) --- Other, net 50,680 33,780 Total cash (for) investing activities (27,630) (104,100) Cash Flows From (For) Financing Activities: Increase in debt 572,460 407,250 Payment of debt (590,850) (368,880) Cash dividends paid (67,310) (62,550) Total cash (for) financing activities (85,700) (24,180) Cash and Cash Investments: (Decrease) for the period (35,160) (96,440) At January 1 230,780 272,950 At June 30 $ 195,620 $ 176,510 7 MASCO CORPORATION Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SECOND QUARTER 1995 AND THE FIRST SIX MONTHS 1995 VERSUS SECOND QUARTER 1994 AND THE FIRST SIX MONTHS 1994 Net sales increased 8 percent and 12 percent for the second quarter and six months ended June 30, 1995, respectively, from the comparable periods in 1994. Sales of Home Improvement and Building Products including acquisitions increased 10 percent and 13 percent, and excluding acquisitions increased 3 percent and 8 percent for the second quarter and six months ended June 30, 1995, respectively, from the comparable periods in 1994. Sales of Home Furnishings Products increased 5 percent and 11 percent and excluding a recent acquisition increased 5 percent and 5 percent for the second quarter and six months ended June 30, 1995, respectively, from the comparable periods in 1994. The Company's operating profit margins declined in the first half of 1995 from the first half of 1994. Cost of sales as a percentage of sales increased to 68.0 percent from 67.3 percent and 67.3 percent from 66.9 percent for the second quarter and six months ended June 30, 1995, respectively, from the comparable periods in 1994; these increases were the result, among others, of changing product sales mix, higher brass costs and plant start-up costs. Selling, general and administrative expenses as a percentage of sales increased to 21.7 percent from 20.9 percent and 21.5 percent from 21.4 percent for the second quarter and six months ended June 30, 1995 from the comparable periods in 1994. The increases in selling, general and administrative expenses as a percentage of sales are primarily due to increased promotional and advertising costs in the 1995 periods. Included in other (income) expense, net for the second quarter and six months ended June 30, 1995 are equity earnings from MascoTech, Inc. aggregating $4.5 million and $8.3 million, respectively, as compared with $10.7 million and $18.1 million of equity earnings in the comparable 1994 periods. MascoTech's operating results for the first half of 1995 were negatively impacted by the reduced results, including restructuring related costs, of certain businesses MascoTech plans to divest; and by increased costs and expenses reflecting start-up costs associated with MascoTech's expanded capital investment programs, launch costs for new products and increased steel costs, principally for its core transportation-related businesses. Also included in other (income) expense, net for the six months ended June 30, 1995, was a $15.9 million gain from the sale of the Company's investment in Formica Corporation; this gain was offset by charges and reserves for profit improvement programs and asset disposals that should enhance the Company's future performance. Included in other (income) expense, net for the six months ended June 30, 1994 was a $4.4 million gain from the sale of MascoTech stock. 8 Net income for the first six months of 1995 increased modestly to $137.8 million from $135.4 million, and earnings per share increased to $.87 from $.86. Excluding the 1994 MascoTech stock gain and year-to-date equity earnings from MascoTech for both 1995 and 1994, net income for the first six months of 1995 would have increased 9 percent, from the comparable 1994 period. Net income for the second quarter of 1995 decreased 10 percent to $63.4 million from $70.1 million in the comparable 1994 period, and earnings per share decreased 9 percent to $.40 from $.44. Excluding second quarter equity earnings from MascoTech for both 1995 and 1994, net income for the second quarter of 1995 would have decreased 4 percent from the comparable 1994 period. The Company's major markets experienced a slowdown in the 1995 second quarter as a result of lower housing activity, reduced consumer spending and inventory reductions by certain customers. The economic decline in the Company's major markets currently appears to have bottomed and, unless there is a further weakening, the Company continues to anticipate improved sales and operating profit for 1995. As announced during the second quarter of 1995, the Company's Board of Directors has determined that the divestiture of the Home Furnishings Group appears to be in the Company's and its shareholders' long-term strategic interest and thus has directed the Company to explore alternatives with respect to a possible divestiture. Alternatives currently being explored include the creation of a new independent public company through either an initial public offering or a spin-off to Company shareholders or the sale of the Home Furnishings Group. The Company anticipates receiving substantial cash proceeds either from a cash payment paid by the Home Furnishings Group to the Company prior to its becoming a public company or from the sale of the Home Furnishings Group. Sales of the Home Furnishings Group in 1994 approximated $1.9 billion with operating profit of approximately $80 million. While these sales represented 42 percent of the Company's total 1994 sales, operating profit from this group comprised less than 14 percent of the Company's 1994 operating profit. The Home Furnishings Group represents an investment of approximately $1.7 billion on the Company's December 31, 1994 balance sheet. While the Company believes that the book value of its investment in the Home Furnishings Group is realizable in the longer term in the ordinary course of business, the Company believes that the current value of the Home Furnishings Group is well in excess of $1 billion. Even then, depending upon the nature and timing of a divestiture, the potential transactions, while strengthening the Company's balance sheet, may involve a substantial non-cash charge to the Company's financial statements. The Company's Home Furnishings Group includes such well-known brands as Henredon, Drexel Heritage, Lexington, Universal, Berkline, Bench Craft, Maitland-Smith and Robert Allen Fabrics. 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 $759.4 million of debt and equity securities. At June 30, 1995 current assets were 3.2 times current liabilities. First and second quarter 1995 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 1995 should not be affected by significant increases in accounts receivable. The Company believes that its cash flows from operations and, to the extent necessary, future financial market activities and bank borrowings, are sufficient to fund its working capital and other investment needs. 9 UNAUDITED INFORMATION REGARDING EQUITY AFFILIATES FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1995 AND 1994 Equity investments in affiliates consist primarily of the following approximate common stock and partnership interests at June 30: 1995 1994 MascoTech, Inc. 44% 41% Hans Grohe, a German partnership 27% 27% TriMas Corporation 5% 5% The following presents the condensed financial data of MascoTech, Inc. Amounts are in thousands. Three Months Ended Six Months Ended June 30 June 30 1995 1994 1995 1994 Sales - Net $439,290 $432,780 $884,300 $845,190 Gross Profit $ 68,250 $ 89,710 $143,710 $170,000 Net Income (Before Preferred Stock Dividends) $ 15,100 $ 29,440 $ 28,560 $ 55,740 10 PART II. OTHER INFORMATION MASCO CORPORATION Items 1, 2, 3, and 5 are not applicable. Item 4. Submission of Matters to a Vote of Security Holders The Annual Meeting of Stockholders was held on May 17, 1995 at which the three nominees for the Company's Board of Directors identified in the Company's proxy statement dated April 18, 1995, were re-elected. Following is a tabulation of shares voted: Election of Directors Wayne B. Lyon Arman Simone Peter W. Stroh For 132,163,830 132,171,371 132,164,850 Withheld 355,770 348,229 354,750 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: 4 - Amendment No. 1 dated as of June 1, 1995 amending the $750,000,000 Amended and Restated Credit Agreement dated as of May 18, 1994 among Masco Corporation, the banks party thereto and Morgan Guaranty Trust Company of New York, as Agent. 11 - Computation of Earnings Per Share 12 - Computation of Ratio of Earnings to Fixed Charges 27 - Financial Data Schedule (b) Reports on Form 8-K: Report on Form 8-K dated June 8, 1995 reporting under Item 5 the issuance of a press release relating to the possible divestiture of the Company's Home Furnishings Group. 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 10, 1995 By: /s/Richard G. Mosteller Richard G. Mosteller Senior Vice President - Finance (Chief Financial Officer and Authorized Signatory) 11 MASCO CORPORATION EXHIBIT INDEX Exhibit Exhibit 4 Amendment No. 1 dated as of June 1, 1995 amending the $750,000,000 Amended and Restated Credit Agreement dated as of May 18, 1994 among Masco Corporation, the banks party thereto and Morgan Guaranty Trust Company of New York, as Agent. Exhibit 11 Computation of Earnings Per Share Exhibit 12 Computation of Ratio of Earnings to Fixed Charges Exhibit 27 Financial Data Schedule EX-4 2 Exhibit 4 AMENDMENT NO. 1 dated as of June 1, 1995 amending the $750,000,000 AMENDED AND RESTATED CREDIT AGREEMENT dated as of May 18, 1994 among MASCO CORPORATION THE BANKS PARTY THERETO and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent AMENDMENT NO. 1 AMENDMENT NO. 1 dated as of June 1, 1995 to the Amended and Restated Credit Agreement dated as of May 18, 1994 (the "Agreement") among MASCO CORPORATION, the BANKS party thereto and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent. WHEREAS, the undersigned parties desire to amend the Agreement (i) to extend the Termination Date from May 15, 1998 to May 15, 2000, (ii) to reduce certain interest rates and fees, (iii) to increase or reduce the Commitments of certain Banks and add The Bank of New York and The Mitsubishi Bank, Limited as additional Banks and (iv) to make certain other changes; NOW, THEREFORE, the parties hereto agree as follows: SECTION 1. Definitions; References. Unless otherwise specifically defined herein, each term used herein which is defined in the Agreement has the meaning assigned to such term in the 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 Agreement shall from and after the date hereof refer to the Agreement as amended hereby. SECTION 2. Amendment of Section 1.01. Section 1.01 of the Agreement is amended as follows: (a) The definition of "Borrower's 1993 Form 10-K" is deleted. (b) The following new definitions are added in the appropriate alphabetical order: "Amendment No. 1" means Amendment No. 1 dated as of June 1, 1995 to this Agreement. "Amendment No. 1 Effective Date" means the date on which Amendment No. 1 became effective pursuant to Section 10 thereof. "Borrower's 1994 Form 10-K" means the Borrower's annual report on Form 10-K for the year ended December 31, 1994, as filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended. (c) The definition of "Continuing Director" is amended by changing the date therein from "May 18, 1994" to "June 1, 1995". (d) The definition of "Termination Date" is amended by changing the date therein from "May 15, 1998" to "May 15, 2000". SECTION 3. Interest Rates. (a) The definition of "CD Margin" in Section 2.07(b) of the Agreement is amended to read as follows: "CD Margin" means, subject to Section 2.17: (i) for any day on which Level I Status exists, 32.50 Basis Points; (ii) for any day on which Level II Status exists, 37.50 Basis Points; (iii) for any day on which Level III Status exists, 40.00 Basis Points; or (iv) for any day on which Level IV Status exists, 42.50 Basis Points. (b) The definition of "Assessment Rate" in Section 2.07(b) of the Agreement is amended by changing the statutory reference therein from "12 C.F.R. Section 327.3(d)" to "12 C.F.R. Section 327.4(a)". (c) The definition of "Euro-Dollar Margin" in Section 2.07(c) of the Agreement is amended to read as follows: "Euro-Dollar Margin" means, subject to Section 2.17: (i) for any day on which Level I Status exists, 20.00 Basis Points; (ii) for any day on which Level II Status exists, 25.00 Basis Points; (iii) for any day on which Level III Status exists, 27.50 Basis Points; or 2 (iv) for any day on which Level IV Status exists, 30.00 Basis Points. SECTION 4. Fees. Section 2.08 of the Agreement is amended to read as follows: SECTION 2.08 Fees (a) Facility Fees. The Borrower shall pay to the Agent for the account of the Banks ratably in proportion to their Commitments a facility fee calculated, subject to Section 2.17, on a daily basis at the rate per annum of (i) 10.00 Basis Points for any day on which Level I Status exists, (ii) 12.50 Basis Points for any day on which Level II Status exists, (iii) 15.00 Basis Points for any day on which Level III Status exists or (iv) 20.00 Basis Points for any day on which Level IV Status exists. Such facility fee shall accrue (i) from and including the Effective Date to but excluding the Termination Date (or earlier date of termination of the Commitments in their entirety), on the daily aggregate amount of the Commitments (whether used or unused) and (ii) from and including such date of termination of the Commitments to but excluding the date the Loans shall be repaid in their entirety, on the daily aggregate outstanding principal amount of the Loans. (b) Payments. Fees accrued under this Section shall be payable quarterly on the last Domestic Business Day of each March, June, September and December and upon the termination of the Commitments in their entirety (and, if later, the date the Loans shall be repaid in their entirety). SECTION 5. Application of Interest Rates and Fees. Section 2.17 is amended to read as follows: SECTION 2.17. Application of Interest Rates and Fees. Interest and fees shall accrue on and after the Amendment No. 1 Effective Date at the rates described in Sections 2.07 and 2.08. Interest and fees (including commitment fees) for all periods prior to the Amendment No. 1 Effective Date shall be calculated and paid in accordance with this Agreement as in effect before the Amendment No. 1 Effective Date. SECTION 6. Financial Information. (a) Section 4.04(a) of the Agreement is amended by changing the date therein from "December 31, 1993" to "December 31, 1994" and 3 by changing the words "Borrower's 1993 Form 10-K" therein to "Borrower's 1994 Form 10-K." (b) Section 4.04(b) of the Agreement is amended by changing the date therein from "December 31, 1993" to "December 31, 1994". SECTION 7. Illegality. The first sentence of Section 8.02 of the Agreement is amended by changing the words "the date of this Agreement" therein to "June 1, 1995". SECTION 8. Increased Cost and Reduced Return. The first sentence of each of Section 8.03(a) and Section 8.03(b) of the Agreement is amended by changing the words "the date hereof" therein to "June 1, 1995". SECTION 9. Amendment of Signature Pages. The signature pages of the Agreement are amended as follows: (a) The Commitment set forth opposite the name of Morgan Guaranty Trust Company of New York is increased from "$75,000,000" to "$80,000,000". (b) The Commitment set forth opposite the name of Comerica Bank is reduced from "$70,000,000" to "$65,000,000". (c) The Commitment set forth opposite the name of NationsBank of Texas, N.A. is increased from "$45,000,000" to "$55,000,000". (d) The name of "Continental Bank N.A." is changed to "Bank of America Illinois" and the Commitment set forth opposite the name of such Bank is increased from "$30,000,000" to "$60,000,000". (e) The following new Commitment and signature line are added after the Commitment and signature line of "ROYAL BANK OF CANADA": $30,000,000 THE BANK OF NEW YORK By Title:. (f) The Commitment set forth opposite the name of Commerzbank Aktiengesellschaft Grand Cayman Branch is increased from "$20,000,000" to "$30,000,000". 4 (g) The following new Commitment and signature line are added after the Commitment and signature line of "ISTITUTO BANCARIO SAN PAOLO DI TORINO, S.p.A.": $20,000,000 THE MITSUBISHI BANK, LIMITED By Title:. (h) The names of Bank of America NT&SA, Citibank, N.A. and National City Bank and the Commitments set forth opposite their respective names are deleted. SECTION 10. Effectiveness of This Amendment. This Amendment shall become effective on the date (the "Amendment No. 1 Effective Date") when each of the following conditions shall have been satisfied: (a) the Agent shall have received counterparts hereof signed by each of the parties listed on the signature pages hereof (or, in the case of any party as to which an executed counterpart shall not have been received, the Agent shall have received in form satisfactory to it a facsimile or other written confirmation that such party has executed a counterpart hereof); (b) the Agent shall have received an opinion of John R. Leekley, Vice President-General Counsel of the Borrower, substantially in the form of Exhibit A hereto; (c) the Agent shall have received a certificate of a duly authorized officer of the Borrower, dated the Amendment No. 1 Effective Date, certifying that (i) as of such date, no Default (as defined in the Agreement as amended hereby) shall have occurred and be continuing, and (ii) the representations and warranties of the Borrower contained in the Agreement as amended hereby are correct as though made on and as of such date; (d) the Agent shall have received, for the account of each of The Bank of New York and The Mitsubishi Bank, Limited, a duly executed Note dated on or before the Amendment No. 1 Effective Date, complying with the provisions of Section 2.05 of the Agreement; and (e) the Agent shall have received all documents it may reasonably request relating to the existence of 5 the Borrower, the corporate authority for and the validity of this Amendment and any other matters relevant hereto, all in form and substance satisfactory to the Agent; provided that this Amendment shall not become effective or be binding on any party hereto unless all of the foregoing conditions are satisfied not later than June 15, 1995. The Agent shall promptly notify the Borrower and the Banks of the Amendment No. 1 Effective Date, and such notice shall be conclusive and binding on all parties hereto. SECTION 11. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of New York. SECTION 12. 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. 6 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first above written. The Borrower: MASCO CORPORATION By /s/ Robert B. Rosowski Title: Vice President- Controller The Banks: MORGAN GUARANTY TRUST COMPANY OF NEW YORK By /s/ Timothy S. Broadbent Title: Vice President COMERICA BANK By /s/ Charles L. Weddell Title: Vice President NBD BANK By /s/ Richard H. Huttenlocher Title: Vice President BANK OF AMERICA NT&SA By /s/ Steven K. Ahrenholz Title: Vice President 7 BANK OF AMERICA ILLINOIS By /s/ Steven K. Ahrenholz Title: Vice President NATIONSBANK OF TEXAS, N.A. By /s/ Michael S. Zehfuss Title: Senior Vice President CITIBANK, N.A. By /s/ Barbara A. Cohen Title: Vice President THE FIRST NATIONAL BANK OF CHICAGO By /s/ Susan L. Comstock Title: Vice President PNC BANK, NATIONAL ASSOCIATION By /s/ John F. Broeren Title: Assistant Vice President THE BANK OF NOVA SCOTIA By /s/ F.C.H. Ashby Title: Senior Manager Loan Operations 8 ROYAL BANK OF CANADA By /s/ Patricia L. Shupert Title: Manager, Corporate Banking THE BANK OF NEW YORK By /s/ H. Stephen Griffith Title: Vice President COMMERZBANK AKTIENGESELLSCHAFT GRAND CAYMAN BRANCH By /s/ Carol M. Otten Title: Assistant Treasurer By /s/ Dr. Helmut R. Tollner Title: Executive Vice President WACHOVIA BANK OF GEORGIA, N.A. By /s/ Terry L. Akins Title: Senior Vice President CHEMICAL BANK By /s/ Rosemary Bradley Title: Vice President THE DAI-ICHI KANGYO BANK, LTD., CHICAGO BRANCH By /s/ Masami Tsuboi Title: Vice President 9 DEUTSCHE BANK AG CHICAGO BRANCH AND/OR CAYMAN ISLANDS BRANCH By /s/ Pamela Neal Title: Assistant Vice President By /s/ David S. Berger Title: Assistant Vice President DRESDNER BANK AG CHICAGO AND GRAND CAYMAN BRANCHES By /s/ Haig Garabedian Title: Vice President By /s/ E.R. Holder Title: Senior Vice President ISTITUTO BANCARIO SAN PAOLO DI TORINO, S.p.A. By /s/ Roberto Gorlier Title: First Vice President and Deputy General Manager By /s/ William J. DeAngelo Title: First Vice President THE MITSUBISHI BANK, LIMITED By /s/ Noboru Kobayashi Title: Senior Vice President and Joint General Manager 10 NATIONAL CITY BANK By /s/ Andrew J. Walshaw Title: Account Representative THE SANWA BANK LIMITED By /s/ Richard H. Ault Title: Vice President SOCIETY NATIONAL BANK By /s/ Michael J. Jackson Title: Vice President THE SUMITOMO BANK, LIMITED By /s/ Hiroyuki Iwami Title: Joint General Manager The Agent: MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent By /s/ Timothy S. Broadbent Title: Vice President 11 EXHIBIT A OPINION OF COUNSEL FOR THE BORROWER ___________ __, 199_ To the Banks and the Agent Referred to Below c/o Morgan Guaranty Trust Company of New York, as Agent 60 Wall Street New York, New York 10260 Dear Sirs: I am Vice President-General Counsel of Masco Corporation (the "Borrower") and am familiar with the Amended and Restated Credit Agreement dated as of May 18, 1994 among the Borrower, the banks party thereto and Morgan Guaranty Trust Company of New York, as Agent (the "Credit Agreement") and Amendment No. 1 dated as of June 1, 1995 thereto ("Amendment No. 1"). Terms defined in the Credit Agreement are used herein as therein defined. This opinion is being rendered to you pursuant to Section 11 of Amendment No. 1. I have examined originals or copies, certified or otherwise identified to my satisfaction, of such documents, corporate records, certificates of public officials and other instruments and have conducted such other investigations of fact and law as I have deemed necessary or advisable for purposes of this opinion. Upon the basis of the foregoing, I am of the opinion that: 1. The Borrower is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware, and has all corporate powers and all material governmental licenses, authorizations, consents and approvals required to carry on its businesses substantially as now conducted. 2. The execution, delivery and performance by the Borrower of Amendment No. 1, the Credit Agreement as amended thereby and the Notes being issued today to The Bank of New York and The Mitsubishi Bank, Limited (the "New Notes") are within the Borrower's corporate powers, have been duly authorized by all necessary corporate action of the Borrower, require no action in respect of the Borrower by, or filing in respect of the Borrower with, any governmental body, agency or official (except filings under the Securities Exchange Act of 1934, as amended) and do not contravene, or constitute a default under any provision of applicable law or regulation or of the certificate of incorporation or by-laws of the Borrower or of any agreement, judgment, injunction, order, decree or other instrument known to me to be binding upon the Borrower or result in the creation or imposition of any Lien on any asset of the Borrower or any of its Subsidiaries under any such agreement or instrument. 3. Each of Amendment No. 1 and the Credit Agreement as amended thereby constitutes a valid and binding agreement of the Borrower and each of the New Notes constitutes a valid and binding obligation of the Borrower, in each case enforceable in accordance with its terms except as the same may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally and by general principles of equity. 4. There is no action, suit or proceeding pending against, or to the best of my knowledge threatened against or affecting, the Borrower or any of its Subsidiaries before any court or arbitrator or any governmental body, agency or official which, in my opinion, is likely to have a material adverse effect on the business or financial position of the Borrower and its Consolidated Subsidiaries, considered as a whole, or which in any manner draws into question the validity or enforceability of Amendment No. 1, the Credit Agreement as amended thereby or the New Notes. Very truly yours, John R. Leekley Vice President and General Counsel 2 EX-11 3 Exhibit 11 MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE Primary and Fully Diluted Earnings Per Share For the Three Months and Six Months Ended June 30, 1995 and 1994 (Amounts in thousands except per share data) Three Months Ended Six Months Ended June 30 June 30 1995 1994 1995 1994 Shares for computation of primary and fully diluted earnings per share: Average number of shares outstanding 158,800 158,100 158,800 158,100 Common stock equivalents: Shares issuable assuming conversion of debentures 4,200 4,200 4,200 4,200 Stock options 700 1,100 700 1,100 163,700 163,400 163,700 163,400 Net income, adjusted to basis of earnings per share: Net income $63,400 $70,100 $137,800 $135,400 Add interest on convertible debentures, net of tax 1,400 1,400 2,900 2,900 $64,800 $71,500 $140,700 $138,300 Primary and fully diluted earnings per share $.40 $.44 $.87 $.86 Earnings per share as reported $.40 $.44 $.87 $.86 This calculation is submitted in accordance with Regulation S-K Item 601(b)(11), although not required by APB Opinion No. 15, inasmuch as dilution for any period was less than 3 percent. EX-12 4 Exhibit 12
MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES Computation of Ratio of Earnings to Fixed Charges (Thousands of Dollars) Six Months Ended June 30, Year Ended December 31, 1995 1994 1993 1992 1991 1990 Earnings Before Income Taxes And Fixed Charges: Income before income taxes $229,700 $322,600 $362,600 $304,800 $ 97,600 $235,900 Deduct/add equity in undistributed (earnings) losses of fifty-percent- or-less-owned companies (8,070) 108,030 (13,800) (13,190) 38,090 10,540 Add interest on indebtedness, net 57,060 103,800 104,080 100,490 124,950 125,770 Add amortization of debt expense 1,080 2,220 2,650 2,710 1,630 1,420 Add one-third of rentals 6,340 11,180 10,970 10,800 12,530 9,610 Earnings before income taxes and fixed charges $286,110 $547,830 $466,500 $405,610 $274,800 $383,240 Fixed charges: Interest on indebtedness $ 58,720 $107,510 $105,420 $113,670 $128,450 $125,770 Amortization of debt expense 1,080 2,220 2,650 2,710 1,630 1,420 One-third of rentals 6,340 11,180 10,970 10,800 12,530 9,610 Fixed charges $ 66,140 $120,910 $119,040 $127,180 $142,610 $136,800 Ratio of earnings to fixed charges 4.3 4.5 3.9 3.2 1.9 2.8
EX-27 5
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MASCO CORPORATION'S JUNE 30, 1995 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1995 JUN-30-1995 65,810 11,520 792,610 0 1,037,810 2,028,220 1,307,880 0 4,698,540 625,040 1,684,290 160,250 0 0 2,140,620 4,698,540 2,434,000 2,434,000 1,637,300 1,637,300 0 0 57,300 229,700 91,900 229,700 0 0 0 137,800 .87 .87 Receivables and property and equipment are presented net of allowances for doubtful accounts and accumulated depreciation and amortization, respectively.
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