-----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, BRTmbIfr1l9NQ2bCyA/En7qAhVWCPcasax5CPoUhWzIoMjC0YnRmh9jnc0+ipAaq k3tuz3VIXkGQIan8fjzH3Q== 0000950124-98-004500.txt : 19980817 0000950124-98-004500.hdr.sgml : 19980817 ACCESSION NUMBER: 0000950124-98-004500 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MASCO CORP /DE/ CENTRAL INDEX KEY: 0000062996 STANDARD INDUSTRIAL CLASSIFICATION: HEATING EQUIP, EXCEPT ELEC & WARM AIR & PLUMBING FIXTURES [3430] 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: 98689022 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 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 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 3 MASCO CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET JUNE 30, 1998 AND DECEMBER 31, 1997 (DOLLARS IN THOUSANDS)
JUNE 30, DECEMBER 31, ASSETS 1998 1997 ------ ---------- ------------ 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 ========== ============
See notes to condensed consolidated financial statements. 1 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)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 -------------------- ----------------------- 1998 1997 1998 1997 ---------- -------- ---------- ----------- 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 ========== ======== ========== ===========
See notes to condensed consolidated financial statements. 2 5 MASCO CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the Six Months Ended June 30,1998 and 1997 (Dollars in thousands) --------------------
SIX MONTHS ENDED JUNE 30 ----------------------- 1998 1997 -------- -------- 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 ======== ========
See notes to condensed consolidated financial statements. 3 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:
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 ------------------- ------------------ 1998 1997 1998 1997 -------- -------- -------- --------- 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
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 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:
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 -------------------- -------------------- 1998 1997 1998 1997 -------- -------- -------- -------- 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 ======== ======== ======== ========
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 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:
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 ------------------ ----------------- 1998 1997 1998 1997 -------- -------- -------- -------- 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
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 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
JUNE 30, DECEMBER 31, ASSETS 1998 1997 ---------- ------------ 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 ========== ==========
7 10 MASCO CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) Note J - Continued:
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 ---------------------- ---------------------- COMBINED STATEMENT OF INCOME 1998 1997 1998 1997 ---------- ---------- ---------- ---------- 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 ========== ========== ========== ==========
8 11 MASCO CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (concluded) Note J - Concluded:
SIX MONTHS ENDED JUNE 30 --------------------- COMBINED STATEMENT OF CASH FLOWS 1998 1997 ---------- --------- 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 ========== =========
9 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 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 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 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 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:
1998 1997 ---- ---- Emco Limited, a Canadian company 42% -- MascoTech, Inc. 17% 17% Hans Grohe, a German partnership 27% 27% TriMas Corporation -- 4%
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.
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 -------------------- -------------------- 1998 1997 1998 1997 -------- -------- -------- -------- 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 ======== ======== ======== ========
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 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 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 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 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. EX-3.I 2 RESTATED CERT. OF INCORPORATION 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 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 - 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 - 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 - 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 - 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 - 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 - 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 - 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 - 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 - 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 - 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 - 12 - 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 - 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 - 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 - 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 ------------------------- 17 Richard G. Mosteller Senior Vice President - Finance ATTEST: By/s/ Gerald Bright ----------------- Gerald Bright Secretary 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; 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. 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 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 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 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 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 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 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 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. 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 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. 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. 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. 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 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:_________________ ____________________ EX-4.A 3 RESOLUTIONS 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. 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 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 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). 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 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 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 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 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 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 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 EX-4.B 4 CREDIT AGREEMENT 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". 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- 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- 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- 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- 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- 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- EX-12 5 RATIO OF EARNINGS 1 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, 1998 1997 1996 1995 1994 1993 -------- -------- -------- -------- -------- ------ 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 === === === === === ===
EX-27.1 6 RESTATED MARCH 31, 1998 FINANCIAL DATA SCHEDULE
5 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. 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 .34 .32 Receivables and property and equipment are presented net of allowances for doubtful accounts and accumulated depreciation and amortization, respectively.
EX-27.2 7 6 MOS. 6/30/98 FINANCIAL DATA SCHEDULE
5 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. 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 416,590 0 674,850 0 560,880 1,796,010 1,073,170 0 4,766,920 565,870 1,417,860 0 0 340,030 2,262,360 4,766,920 2,124,000 2,124,000 1,350,600 1,350,600 0 0 41,200 373,100 145,500 227,600 0 0 0 227,600 .69 .66 Receivables and property and equipment are presented net of allowances for doubtful accounts and accumulated depreciation and amortization, respectively.
EX-27.3 8 RESTATED 1997 FINANCIAL DATA SCHEDULE
5 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. YEAR 9-MOS 6-MOS 3-MOS DEC-31-1997 DEC-31-1997 DEC-31-1997 DEC-31-1997 DEC-31-1997 SEP-30-1997 JUN-30-1997 MAR-31-1997 441,330 379,040 333,170 327,590 0 0 0 0 578,850 607,380 556,570 536,980 19,800 22,930 19,050 18,560 515,000 496,920 448,270 424,700 1,626,720 1,569,010 1,410,800 1,362,080 1,625,370 1,588,950 1,503,590 1,483,450 588,050 584,780 553,940 544,390 4,333,760 4,223,620 3,796,290 3,684,130 620,000 641,590 510,320 479,690 1,321,470 1,321,250 1,228,730 1,216,170 0 0 0 0 0 0 0 0 165,570 165,170 161,650 161,240 2,063,450 1,978,960 1,790,180 1,725,350 4,333,760 4,223,620 3,796,290 3,684,130 3,760,000 2,770,000 1,767,000 854,000 3,760,000 2,770,000 1,767,000 854,000 2,378,250 1,751,700 1,117,700 539,500 2,378,250 1,751,700 1,117,700 539,500 0 0 0 0 0 0 0 0 79,850 58,200 37,400 18,500 630,900 461,500 291,600 139,200 248,500 184,600 116,500 55,700 382,400 276,900 175,100 83,500 0 0 0 0 0 0 0 0 0 0 0 0 382,400 276,900 175,100 83,500 1.20 .87 .55 .26 1.15 .84 .54 .26
EX-27.4 9 RESTATED 1996 FINANCIAL DATA SCHEDULE
5 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. YEAR 9-MOS 6-MOS 3-MOS DEC-31-1996 DEC-31-1996 DEC-31-1996 DEC-31-1996 DEC-31-1996 SEP-30-1996 JUN-30-1996 MAR-31-1996 473,730 196,500 73,030 45,690 0 0 0 0 484,800 543,020 508,750 505,370 17,900 16,980 16,150 15,630 411,940 417,130 399,360 389,400 1,429,770 1,212,230 1,038,040 991,110 1,474,080 1,435,500 1,398,050 1,367,780 533,490 529,050 514,000 502,440 3,701,650 3,489,820 3,918,760 3,802,960 518,440 497,570 476,840 420,940 1,236,320 1,102,020 1,622,040 1,594,890 0 0 0 0 0 0 0 0 160,870 160,710 160,540 160,430 1,678,940 1,616,460 1,552,930 1,523,740 3,701,650 3,489,820 3,918,760 3,802,960 3,237,000 2,394,000 1,551,000 764,000 3,237,000 2,394,000 1,551,000 764,000 2,048,070 1,498,900 976,900 480,330 2,048,070 1,498,900 976,900 480,330 0 0 0 0 0 0 0 0 74,680 54,900 34,000 17,500 502,700 353,000 216,700 106,800 207,500 141,200 86,700 44,800 295,200 211,800 130,000 62,000 0 0 0 0 0 0 0 0 0 0 0 0 295,200 211,800 130,000 62,000 .94 .67 .41 .20 .91 .65 .40 .19
EX-27.4 10 RESTATED 1995 FINANCIAL DATA SCHEDULE
5 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. YEAR DEC-31-1995 DEC-31-1995 60,470 0 456,200 16,300 391,760 964,500 1,342,370 485,680 3,778,630 445,850 1,577,100 0 0 160,380 1,495,050 3,778,630 2,927,000 2,927,000 1,846,330 1,846,330 0 0 73,800 351,790 151,740 200,050 (641,730) 0 0 (441,680) .64 .62
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