-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PS0aHPAj32PYoviyadzS+F+sdToxpfp6JE3UXNK/SB/P0RBodiaL4itu32+zeJQL +f0PQnoU30a4mSZbDAuyaA== 0000062996-98-000006.txt : 19980515 0000062996-98-000006.hdr.sgml : 19980515 ACCESSION NUMBER: 0000062996-98-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MASCO CORP /DE/ CENTRAL INDEX KEY: 0000062996 STANDARD INDUSTRIAL CLASSIFICATION: HOUSEHOLD FURNITURE [2510] IRS NUMBER: 381794485 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-05794 FILM NUMBER: 98620757 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 March 31, 1998. Commission File Number 1-5794 MASCO CORPORATION (Exact name of Registrant as specified in its Charter) Delaware 38-1794485 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 21001 Van Born Road, Taylor, Michigan 48180 (Address of principal executive offices) (Zip Code) (313) 274-7400 (Telephone Number) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. Shares Outstanding at Class May 1, 1998 Common stock, par value $1 per share 169,983,000 MASCO CORPORATION INDEX Page No. Part I. Financial Information Item 1. Financial Statements: Condensed Consolidated Balance Sheet - March 31, 1998 and December 31, 1997 1 Condensed Consolidated Statement of Income for the Three Months Ended March 31, 1998 and 1997 2 Condensed Consolidated Statement of Cash Flows for the Three Months Ended March 31, 1998 and 1997 3 Notes to Condensed Consolidated Financial Statements 4-8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9-11 Unaudited Information Regarding Equity Investments for the Three Months Ended March 31, 1998 and 1997 12 Part II. Other Information and Signature 13 MASCO CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET March 31, 1998 and December 31, 1997 (Dollars in thousands) March 31, December 31, ASSETS 1998 1997 Current assets: Cash and cash investments $ 174,900 $ 441,330 Accounts and notes receivable, net 679,400 559,050 Prepaid expenses and other 119,270 111,340 Inventories: Raw material 246,540 229,040 Finished goods 171,180 161,920 Work in process 126,170 124,040 543,890 515,000 Total current assets 1,517,460 1,626,720 Equity investment in MascoTech, Inc. 51,060 52,780 Equity investments in other affiliates 155,720 175,300 Securities of Furnishings International Inc. 403,280 393,140 Property and equipment, net 1,073,890 1,037,320 Acquired goodwill, net 856,420 729,190 Other noncurrent assets 324,060 319,310 Total assets $4,381,890 $4,333,760 LIABILITIES Current liabilities: Notes payable $ 25,790 $ 68,460 Accounts payable 157,370 166,310 Accrued liabilities 366,690 385,230 Total current liabilities 549,850 620,000 Long-term debt 1,162,120 1,321,470 Deferred income taxes and other 181,200 163,270 Total liabilities 1,893,170 2,104,740 SHAREHOLDERS' EQUITY Common stock, par value $1 per share Authorized shares: 400,000,000 169,930 165,570 Preferred stock, par value $1 per share Authorized shares: 1,000,000 --- --- Paid-in capital 484,960 304,560 Retained earnings 1,858,550 1,784,370 Cumulative translation adjustments (24,720) (25,480) Total shareholders' equity 2,488,720 2,229,020 Total liabilities and shareholders' equity $4,381,890 $4,333,760 See notes to condensed consolidated financial statements.
1 MASCO CORPORATION CONDENSED CONSOLIDATED STATEMENT OF INCOME For the Three Months Ended March 31, 1998 and 1997 (Dollars in thousands except per share data) Three Months Ended March 31 1998 1997 Net sales $1,039,000 $854,000 Cost of sales 659,200 539,500 Gross profit 379,800 314,500 Selling, general and administrative expenses 207,500 181,000 Amortization of acquired goodwill 6,000 3,700 Operating profit 166,300 129,800 Other income (expense), net: Interest expense (20,500) (18,500) Re: MascoTech, Inc.: Equity earnings 5,200 6,000 Interest income --- 2,500 Other, net 33,300 19,400 18,000 9,400 Income before income taxes 184,300 139,200 Income taxes 73,700 55,700 Net income $ 110,600 $ 83,500 Earnings per share: Basic $.67 $.53 Diluted $.65 $.51 Cash dividends declared and paid per share $.21 $.20 See notes to condensed consolidated financial statements.
2 MASCO CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the Three Months Ended March 31, 1998 and 1997 (Dollars in thousands) Three Months Ended March 31 1998 1997 CASH FLOWS FROM (FOR) OPERATING ACTIVITIES: Cash provided by operations $ 102,040 $ 87,420 Increase in receivables (105,780) (57,660) (Increase) decrease in inventories (21,780) 2,450 Decrease in current liabilities, net (27,710) (35,180) Total cash (for) operating activities (53,230) (2,970) CASH FLOWS FROM (FOR) INVESTING ACTIVITIES: Acquisition of companies, net of cash acquired (159,440) (46,420) Capital expenditures (36,430) (28,200) Proceeds from sale of TriMas investment 54,640 --- 0ther, net 8,080 (14,360) Total cash (for) investing activities (133,150) (88,980) CASH FLOWS FROM (FOR) FINANCING ACTIVITIES: Increase in debt 120,070 450 Retirement of 9% notes, including retirement premium (107,920) --- Payment of debt (57,460) (22,570) Cash dividends paid (34,740) (32,070) Total cash (for) financing activities (80,050) (54,190) CASH AND CASH INVESTMENTS: Decrease for the quarter (266,430) (146,140) At January 1 441,330 473,730 At March 31 $ 174,900 $327,590 See notes to condensed consolidated financial statements.
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 March 31, 1998 and the results of operations and changes in cash flows for the three months ended March 31, 1998 and 1997. The condensed consolidated balance sheet at December 31, 1997 was derived from audited financial statements. Certain amounts for the prior year period have been reclassified to conform to the current year presentation. B. At December 31, 1997, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share," which replaces the presentation of primary and fully diluted earnings per share, as computed under Accounting Principles Board ("APB") Opinion No. 15, with a presentation of basic and diluted earnings per share. The financial statements have been restated to conform with the earnings per share presentation required under SFAS No. 128. The following are reconciliations of the numerators and denominators used in the computations of basic and diluted earnings per share, in thousands: Three Months Ended March 31 1998 1997 Numerator: Basic shares (net income) $110,600 $ 83,500 Add convertible debenture interest, net 700 1,500 Diluted (net income) $111,300 $ 85,000 Denominator: Basic shares (based on weighted average) 163,900 157,800 Add: Contingently issued award shares 4,000 3,200 Stock option dilution 2,000 1,100 Convertible debentures 1,900 4,200 Diluted shares 171,800 166,300
C. During the first quarter of 1998, the Company acquired Vasco Corporation, a leading Belgium-based manufacturer of residential decorative hydronic radiators and heat convectors. The aggregate purchase price was approximately $159 million and was principally financed with European bank debt. The acquisition was accounted for as a purchase transaction. Vasco's annual net sales in 1997 were in excess of $60 million. D. The Company called its $178 million of 5.25% convertible subordinated debentures due 2012 for redemption on February 12, 1998. Substantially all holders exercised their right to convert these debentures into Company common stock (at the conversion price of $42.28 per share), resulting in the issuance of approximately 4.2 million shares of Company common stock in February 1998. During the first quarter of 1998, the Company retired $97.3 million face value of its outstanding 9% debentures due 2001 (of a total face value of $175 million at December 31, 1997), using a portion of its available cash. The Company recognized an approximate $12 million pre-tax charge related to the early retirement of long-term debt. During the second quarter of 1998, the Company issued $250 million of 6.625% debentures due April 2018. 4 MASCO CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) E. On January 22, 1998, MascoTech, Inc. announced the completion of its acquisition of TriMas Corporation. The Company recognized a gain in the first quarter of 1998, as a result of selling its common stock investment in TriMas to MascoTech in the public tender offer. This gain is discussed further in Note F below. F. Other income (expense), net consists of the following, in thousands: Three Months Ended March 31 1998 1997 Interest expense $(20,500) $(18,500) Re: MascoTech, Inc.: Equity earnings 5,200 6,000 Interest income --- 2,500 Equity earnings, other 1,300 1,800 Income from cash and cash investments 3,600 4,300 Other interest income 11,100 9,900 Other, net 17,300 3,400 $ 18,000 $ 9,400
Other interest income for the three months ended March 31, 1998 and 1997 included $10.1 million and $9.2 million, respectively, of interest income from the 12% pay-in-kind junior debt securities (approximately $336 million at December 31, 1997) of Furnishings International Inc. Other, net for the first quarters of 1998 and 1997 included income and gains aggregating $10.4 million and $5.0 million, respectively, regarding certain non-operating assets. Included in other, net for the first quarter of 1998 is a $29 million pre- tax gain from the sale of the Company's investment in TriMas Corporation to MascoTech, Inc. in the public tender offer. Such gain was largely offset by an approximate $12 million pre-tax charge related to the early retirement of long-term debt, and by pre-tax charges aggregating approximately $11 million principally related to asset writedowns. Interest income from MascoTech for the three months ended March 31, 1997 resulted from a $151.4 note receivable due from MascoTech, which was paid on September 30, 1997. 5 MASCO CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) G. The Company adopted Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income," in the first quarter of 1998. Accordingly, the Company's total comprehensive income was as follows, in thousands: Three Months Ended March 31 1998 1997 Net income $110,600 $ 83,500 Other comprehensive income, currency translation adjustments 760 (14,160) Total comprehensive income $111,360 $ 69,340
H. For 1998, the following presents, as one entity with Masco Corporation as the parent company, the combined unaudited financial statements of the Company and MascoTech, Inc., and for 1997, the combined unaudited financial statements of the Company, MascoTech and TriMas Corporation. Intercompany transactions have been eliminated. Amounts, except per share data, are in thousands. (MascoTech completed its acquisition of TriMas Corporation in the first quarter of 1998.) Combined Balance Sheet March 31, December 31, Assets 1998 1997 Current assets: Cash and cash investments $ 251,640 $ 587,820 Marketable securities 18,630 45,970 Receivables 921,200 768,030 Prepaid expenses and other 91,100 85,250 Deferred income taxes 73,850 80,520 Inventories: Raw material 305,530 286,120 Finished goods 247,750 237,340 Work in process 167,900 162,460 721,180 685,920 Total current assets 2,077,600 2,253,510 Equity and other investments in affiliates 241,530 280,970 Securities of Furnishings International Inc. 403,280 393,140 Property and equipment, net 1,790,270 1,654,840 Acquired goodwill, net 1,525,500 925,120 0ther noncurrent assets 405,100 421,170 Total assets $6,443,280 $5,928,750 Liabilities and Shareholders' Equity Current liabilities: Notes payable $ 28,430 $ 72,340 Accounts payable 270,840 264,980 Accrued liabilities 523,250 535,300 Total current liabilities 822,520 872,620 Long-term debt 2,554,430 1,959,440 Deferred income taxes and other 375,200 365,470 Other interests in combined affiliates 202,410 502,200 Equity of shareholders of Masco Corporation 2,488,720 2,229,020 Total liabilities and shareholders' equity $6,443,280 $5,928,750 6 MASCO CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) Note H - Continued: Three Months Ended March 31 Combined Statement of Income 1998 1997 Net sales $1,434,800 $1,245,300 Costs and expenses, net: Cost of sales 950,610 821,960 Selling, general and administrative expenses 259,060 233,520 Other income (expense), net: Interest expense (39,110) (27,540) Other income, net 48,100 44,870 8,990 17,330 1,200,680 1,038,150 Income before income taxes and other interests 234,120 207,150 Income taxes 96,200 87,700 Income before other interests 137,920 119,450 Other interests in combined affiliates 27,320 35,950 Net income $ 110,600 $ 83,500 Earnings per share: Basic $.67 $.53 Diluted $.65 $.51 Cash dividends declared and paid per share $.21 $.20 7 MASCO CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (concluded) Note H - Concluded: Three Months Ended March 31 Combined Statement of Cash Flows 1998 1997 Cash Flows From (For) Operating Activities: Cash provided by operations $ 175,250 $ 140,030 (Increase) in receivables (139,820) (83,240) (Increase) in inventories (26,160) (3,830) (Increase) decrease in marketable securities, net 27,340 (6,920) Increase (decrease) in current liabilities, net 1,450 (17,770) Total cash from operating activities 38,060 28,270 Cash Flows From (For) Investing Activities: Acquisition of other interests in TriMas Corporation (865,460) --- Acquisitions, net of cash acquired (159,440) (57,520) Capital expenditures (61,260) (43,270) Proceeds from redemption of debt by affiliate 56,900 --- Proceeds from sale of subsidiaries --- 76,560 Other, net (18,140) (43,860) Total cash (for) investing activities (1,047,400) (68,090) Cash Flows From (For) Financing Activities: Increase in debt 1,105,430 17,230 Payment of debt (395,190) (104,750) Cash dividends paid (37,080) (38,090) Total cash from (for) financing activities 673,160 (125,610) Cash and Cash Investments: Decrease for the period (336,180) (165,430) At January 1 587,820 599,020 At March 31 $ 251,640 $ 433,590
8 MASCO CORPORATION Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FIRST QUARTER 1998 VERSUS FIRST QUARTER 1997 SALES AND OPERATIONS Net sales for the three months ended March 31, 1998 increased 22 percent to $1,039 million from $854 million for the comparable period in 1997; excluding recent acquisitions, first quarter 1998 net sales increased 10 percent. The increase in net sales includes increases in unit sales volume of cabinets, faucets and other kitchen and bath products. For the first quarter of 1998, sales of Kitchen and Bath Products increased 20 percent to $813 million from $679 million in the first quarter of 1997; excluding recent acquisitions, first quarter 1998 net sales for this segment increased 10 percent. Sales of Other Specialty Products for the first quarter of 1998 were $226 million, representing a 29 percent increase over net sales of $175 million for the first quarter of 1997; excluding recent acquisitions, net sales for this segment increased 11 percent for the first quarter of 1998. Net sales from North American operations for the first quarter of 1998 increased 20 percent to $857 million from $713 million for the comparable period in the prior year; excluding recent acquisitions, first quarter 1998 net sales from these operations increased 12 percent. Net sales from European-based operations for the first quarter of 1998 increased 29 percent to $182 million from $141 million for the first quarter of 1997; excluding recent acquisitions, first quarter 1998 net sales from these operations were relatively flat when compared with the first quarter of 1997. A stronger U.S. dollar, principally against the German Deutsche Mark, had a negative effect on the translation of European sales in the first quarter of 1998 as compared with the first quarter of 1997; excluding recent acquisitions, European net sales in the 1998 first quarter in local currencies increased by approximately 10 percent. Cost of sales as a percentage of sales increased slightly to 63.4 percent for the first quarter of 1998 from 63.2 percent for the comparable period in 1997. Excluding amortization of acquired goodwill ($6.0 million and $3.7 million for the first quarters of 1998 and 1997, respectively), selling, general and administrative expenses as a percentage of sales for the first quarter of 1998 decreased to 20.0 percent from 21.2 percent for the comparable period in 1997. The decrease in the selling, general and administrative expenses percentage in 1998 results largely from the Company's cost-containment initiatives and the leveraging of fixed and semi-fixed costs over a higher sales base. The Company's operating profit margins improved in the first quarter of 1998 as compared with the first quarter of 1997 principally due to the reduction in selling, general and administrative expenses as a percentage of sales. The Company's operating profit margin, before general corporate expense, was 18.0 percent for the first quarter of 1998 as compared with 17.6 percent for the first quarter of 1997. Operating profit margin, after general corporate expense, was 16.0 percent for the first quarter of 1998 as compared with 15.2 percent for the first quarter of 1997. 9 MASCO CORPORATION Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FIRST QUARTER 1998 VERSUS FIRST QUARTER 1997 (continued) OTHER INCOME (EXPENSE), NET Equity earnings from MascoTech, Inc. for the first quarter of 1998 were $5.2 million as compared with equity earnings from MascoTech of $6.0 million for the comparable period of 1997. In January 1998, MascoTech completed its acquisition of TriMas Corporation; the Company anticipates that this transaction will result in slightly higher equity earnings from MascoTech in future periods. Included in other income (expense), net for the three months ended March 31, 1997 is $2.5 million of interest income from a $151.4 million note receivable due from MascoTech, which was paid on September 30, 1997. Included in other interest income under other income (expense), net for the three months ended March 31, 1998 and 1997 is $10.1 million and $9.2 million, respectively, of interest income from the 12% pay-in-kind junior debt securities of Furnishings International Inc. (approximately $336 million at December 31, 1997). Included in other, net under other income (expense), net for the first quarters of 1998 and 1997 were income and gains aggregating $10.4 million and $5.0 million, respectively, regarding certain non-operating assets. Included in other, net under other income (expense), net for the first quarter of 1998 is a $29 million pre-tax gain from the sale of the Company's investment in TriMas Corporation to MascoTech, Inc. in the public tender offer. Such gain was largely offset by an approximate $12 million pre-tax charge related to the early retirement of long-term debt, and by pre-tax charges aggregating approximately $11 million principally related to asset writedowns. NET INCOME AND EARNINGS PER SHARE Net income for the first quarter of 1998 increased 32 percent to $110.6 million from $83.5 million for the comparable period of 1997. Basic and diluted earnings per share for the first quarter of 1998 increased 26 percent and 27 percent, respectively, to $.67 and $.65 from $.53 and $.51, respectively, for the first quarter of 1997. The Company estimates that its effective tax rate for 1998 will approximate 40 percent. 10 MASCO CORPORATION Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FIRST QUARTER 1998 VERSUS FIRST QUARTER 1997 (concluded) OTHER FINANCIAL INFORMATION At March 31, 1998, current assets were 2.8 times current liabilities. For the three months ended March 31, 1998, cash of $53.2 million was used for operating activities. Cash used for investing activities was $133.2 million, including $159.4 million for an acquisition and $36.4 million for capital expenditures; cash from investing activities included $54.6 million from the sale of the Company's TriMas investment and $8.0 million for other cash inflows. Cash used for financing activities was $80.0 million, including $107.9 million for the early retirement of certain of the Company's 9% notes and the payment of a premium associated with this early retirement, $57.5 million for the payment of debt and $34.7 million for cash dividends paid; cash provided by financing activities included an increase in debt of $120.1 million (primarily European bank debt for an acquisition). The aggregate of the preceding items represents a net cash outflow of $266.4 million. Changes in working capital and debt as indicated on the statement of cash flows exclude the effect of acquisition of companies, other than as mentioned above. First quarter 1998 cash from operations was affected by an expected and annually recurring first quarter increase in accounts receivable (although there was no significant increase in receivable days). The annual increase in accounts receivable is historically experienced in the first half of the year. The Company's long-term debt as a percent of total capitalization ratio improved to 31 percent at March 31, 1998 as compared with approximately 36 percent at December 31, 1997. Such improvement primarily resulted from the conversion of the Company's $178 million of 5.25% convertible subordinated debentures due 2012, which the Company called for redemption on February 12, 1998. Substantially all holders exercised their right to convert these debentures into Company common stock (at the conversion price of $42.28 per share), resulting in the issuance of approximately 4.2 million shares of Company common stock in February 1998. During the second quarter of 1998, the Company issued $250 million of 6.625% debentures due 2018. Had the Company issued these debentures as of March 31, 1998, the Company's long-term debt as a percent of total capitalization ratio would have been approximately 35 percent. After giving effect to the issuance of these debentures, the Company has on file with the Securities and Exchange Commission, an unallocated shelf registration pursuant to which the Company is able to issue up to a combined $509 million of debt and equity securities. The Company believes that its present cash balance, its cash flows from operations and, to the extent necessary, future financial market activities and bank borrowings, are sufficient to fund its working capital and other investment needs. 11 UNAUDITED INFORMATION REGARDING EQUITY INVESTMENTS FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 Equity investments in affiliates consist primarily of the following approximate common stock and partnership interests at March 31: 1998 1997 Emco Limited, a Canadian company 42% -- MascoTech, Inc. 17% 21% TriMas Corporation -- 4% Hans Grohe, a German partnership 27% 27% During the second quarter of 1997, MascoTech effected conversion of all of its publicly held outstanding convertible preferred stock with the issuance of approximately 10 million shares of its common stock. This conversion reduced the Company's common equity ownership in MascoTech to 17 percent from 21 percent. During October 1996, the Company completed the sale to MascoTech of 17 million shares of MascoTech common stock and warrants to purchase 10 million shares of MascoTech common stock. Under the sale agreement, the Company received approximately $266 million, with $115 million cash paid at closing. The $151 million balance of the consideration was paid by MascoTech to the Company on September 30, 1997; as provided for in the sale agreement, MascoTech at that date delivered to the Company 9.9 million shares (approximately 42 percent) of the outstanding common stock of Emco Limited and $45.6 million in cash. Emco Limited is a leading Canadian distributor and manufacturer of home improvement and building products. The following presents condensed financial data of MascoTech, Inc. Amounts are in thousands. Three Months Ended March 31 1998 1997 Sales - Net $400,760 $233,440 Gross Profit $104,390 $ 56,300 Net Income (After Preferred Stock Dividends in 1997) $ 32,740 $ 29,420 On January 22, 1998, MascoTech announced the completion of its acquisition of TriMas Corporation. The Company recognized a $29 million pre-tax gain in the first quarter of 1998, as a result of selling its common stock investment in TriMas to MascoTech in the public tender offer. 12 PART II. OTHER INFORMATION MASCO CORPORATION Items 1 through 5 are not applicable. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: 12 - Computation of Ratio of Earnings to Fixed Charges 27 - Financial Data Schedule (b) Reports on Form 8-K: Report on Form 8-K dated February 12, 1998 reporting under item 5 the completion of the Company's redemption on February 12, 1998 of all of its outstanding 5.25% convertible subordinated debentures due 2012 and the issuance of a press release relating to the announcement of the Company's earnings for 1997. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MASCO CORPORATION (Registrant) Date: May 13, 1998 By: /s/Richard G. Mosteller Richard G. Mosteller Senior Vice-President - Finance (Chief Financial Officer and Authorized Signatory) 13 MASCO CORPORATION EXHIBIT INDEX Exhibit Exhibit 12 Computation of Ratio of Earnings to Fixed Charges Exhibit 27 Financial Data Schedule EX-12 2 Exhibit 12 MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES Computation of Ratio of Earnings to Fixed Charges (Thousands of Dollars) Three Months Ended March 31, Year Ended December 31, 1998 1997 1996 1995 1994 1993 Earnings Before Income Taxes and Fixed Charges: Income from continuing operations before income taxes $184,300 $630,900 $502,700 $351,790 $292,830 $349,190 Deduct/add equity in undistributed (earnings)/ loss of equity affiliates (5,230) (19,470) (12,310) (17,770) 106,200 (13,750) Add interest on indebtedness, net 20,720 80,390 74,790 73,400 60,360 62,860 Add amortization of debt expense 270 1,260 1,400 1,930 2,220 2,650 Add estimated interest factor for rentals 2,480 8,150 6,150 4,970 4,220 3,190 Earnings before income taxes and fixed charges $202,540 $701,230 $572,730 $414,320 $465,830 $404,140 Fixed Charges: Interest on indebtedness regarding continuing operations $ 21,460 $ 83,520 $ 77,250 $ 76,460 $ 63,220 $ 63,600 Amortization of debt expense 270 1,260 1,400 1,930 2,220 2,650 Estimated interest factor for rentals 2,480 8,150 6,150 4,970 4,220 3,190 $ 24,210 $ 92,930 $ 84,800 $ 83,360 $ 69,660 $ 69,440 Ratio of earnings to fixed charges 8.4 7.5 6.8 5.0 6.7 5.8
EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MASCO CORPORATION'S MARCH 31, 1998 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1998 MAR-31-1998 174,900 0 679,400 0 543,890 1,517,460 1,073,890 0 4,381,890 549,850 1,162,120 0 0 169,930 2,318,790 4,381,890 1,039,000 1,039,000 659,200 659,200 0 0 20,500 184,300 73,700 110,600 0 0 0 110,600 .67 .65 Receivables and property and equipment are presented net of allowances for doubtful accounts and accumulated depreciation and amortization, respectively.
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