EXHIBIT 12
MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
(DOLLARS IN THOUSANDS)
-------------------------------------------------------------------------------------------
SIX
MONTHS
ENDED YEAR ENDED DECEMBER 31
JUNE 30, ---------------------------------------------------------------------------
2002 2001 2000 1999 1998 1997
----------- ----------- ----------- ----------- ----------- -----------
EARNINGS BEFORE INCOME TAXES
AND FIXED CHARGES:
Income from continuing
operations before income
taxes and cumulative effect
of accounting change, net $ 552,300 $ 300,700 $ 893,400 $ 904,100 $ 905,500 $ 733,800
Deduct/add equity in
Undistributed (earnings)/
loss of fifty-percent-or-
less-owned companies (7,240) (1,590) (9,640) (18,720) (24,070) (19,470)
Add interest on indebtedness,
net 102,220 233,440 193,000 121,520 115,700 94,780
Add amortization of debt
expense 9,680 10,300 2,430 1,350 2,130 2,310
Add estimated interest factor
for rentals 12,010 23,050 18,760 16,080 11,430 9,270
----------- ----------- ----------- ----------- ----------- -----------
Earnings before income taxes
and fixed charges and
cumulative effect of
accounting change, net $ 668,970 $ 565,900 $ 1,097,950 $ 1,024,330 $ 1,010,690 $ 820,690
=========== =========== =========== =========== =========== ===========
FIXED CHARGES:
Interest on indebtedness $ 102,550 $ 239,290 $ 202,630 $ 129,860 $ 119,750 $ 97,910
Amortization of debt expense 9,680 10,300 2,430 1,350 2,130 2,310
Estimated interest factor
for rentals 12,010 23,050 18,760 16,080 11,430 9,270
----------- ----------- ----------- ----------- ----------- -----------
Total fixed charges $ 124,240 $ 272,640 $ 223,820 $ 147,290 $ 133,310 $ 109,490
=========== =========== =========== =========== =========== ===========
PREFERRED STOCK DIVIDENDS(a) 6,820 6,820 -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Combined fixed charges and
preferred stock dividends $ 131,060 $ 279,460 $ 223,820 $ 147,290 $ 133,310 $ 109,490
=========== =========== =========== =========== =========== ===========
Ratio of earnings to fixed
charges 5.4 2.1 4.9 7.0 7.6 7.5
=========== =========== =========== =========== =========== ===========
Ratio of earnings to combined
fixed charges and preferred
stock dividends(b)(c) 5.1 2.0 4.9 7.0 7.6 7.5
=========== =========== =========== =========== =========== ===========
(a) Represents amount of income before provision for income taxes required to
meet the preferred stock dividend requirements of the Company.
(b) Excluding the third quarter 2001 pre-tax non-cash charge of $530 million
and the fourth quarter 2000 pre-tax non-cash charge of $145 million, the
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends
would have been 3.9 and 5.6 for 2001 and 2000, respectively.
(c) Prior years have not been adjusted to exclude goodwill amortization
expense.
RESOLUTIONS OF THE PRICING COMMITTEE
OF THE BOARD OF DIRECTORS OF
MASCO CORPORATION
JUNE 24, 2002
WHEREAS, Masco Corporation, a Delaware corporation (the "Company") the
Company has filed Registration Statements (Nos. 333-58034 and 333-73802) on Form
S-3 with the Securities and Exchange Commission, which are in effect;
WHEREAS, the Company desires to create a series of securities under the
indenture dated as of February 12, 2001 (the "Indenture"), with Bank One Trust
Company, National Association, (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, BE IT 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
"5-7/8% Notes Due 2012."
2. The aggregate principal amount of Securities of such series
which may be authenticated and delivered under the Indenture is limited
to Five Hundred Million Dollars ($500,000,000), except 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 3.04, 3.05, 3.06, 9.06 or 11.07 of the
Indenture.
3. The date on which the principal of the Securities of such
series shall be payable is July 15, 2012.
4. The Securities of such series shall bear interest from June
27, 2002 at the rate of 5-7/8% per annum, payable semi-annually on
January 15 and July 15 of each year commencing on January 15, 2003
until the principal thereof is paid or made available for payment. The
January 1 or July 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
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 and 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 in Chicago, Illinois or at any other office
or agency designated by the Company for such purpose pursuant to the
Indenture.
7. The Securities of such series shall be subject to
redemption in whole or in part prior to maturity, at the Company's
option, at a redemption price established in accordance with current
market practice, substantially as follows: the redemption price shall
be equal to the greater of (i) 100% of the principal amount of the
Securities plus accrued interest to the redemption date, or (ii) the
sum of the present values of the remaining principal amount and
scheduled payments of interest on the Securities of such series to be
redeemed (other than accrued interest to the redemption date),
discounted to the redemption date on a semi-annual basis at the
appropriate treasury rate plus 25 basis points plus accrued interest to
the redemption date.
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 Four Hundred Ninety Million Seven Hundred
Sixty-Five Thousand Dollars ($490,765,000) after an underwriting
discount of Three Million Two Hundred Fifty Thousand Dollars
($3,250,000).
10. The Securities shall be subject to Defeasance and
discharge pursuant to Section 4.02 of the Indenture and to Covenant
Defeasance pursuant to Section 10.06 of the Indenture with respect to
any term, provision or condition set forth in any negative or
restrictive covenant of the Company applicable to the Securities.
FURTHER RESOLVED, that the Securities of such series are declared to be
issued under the Indenture and subject to the provisions hereof;
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), $500,000,000 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) 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 or
disposed of, the individual so signing shall have ceased to hold such office;
FURTHER RESOLVED, that Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Salomon Smith Barney Inc., Banc One Capital Markets, Inc.,
Barclays Capital Inc. and Commerzbank Capital Markets Corp. are appointed
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 Bank One Trust Company, National Association,
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 Bank One Trust Company,
National Association, in Chicago, Illinois 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 Bank One Trust Company, National Association, 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
Bank One Trust Company, National Association, 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).
AMENDMENT NO. 1
TO
FIRST SUPPLEMENTAL INDENTURE
THIS AMENDMENT NO. 1 dated as of July 19, 2002 (the "Amendment") to the
FIRST SUPPLEMENTAL INDENTURE, dated as of July 20, 2001 (the "SUPPLEMENTAL
INDENTURE"), between MASCO CORPORATION, a Delaware corporation (the "ISSUER"),
and BANK ONE TRUST COMPANY, NATIONAL ASSOCIATION, as trustee (the "TRUSTEE").
W I T N E S S E T H:
WHEREAS, the Issuer executed and delivered to the Trustee the Indenture
dated as of February 12, 2001 (the "BASE INDENTURE"), providing for the issuance
from time to time of the Issuer's senior debt securities;
WHEREAS, the Issuer issued $1,901,360,000 aggregate principal amount at
maturity of Zero Coupon Convertible Senior Notes Due 2031 (the "NOTES") under
the Supplemental Indenture;
WHEREAS, the Issuer desires to amend the terms of the Notes to
encourage holders of the Notes not to exercise their right to cause the Issuer
to repurchase the Notes from the Holders on July 22, 2002 (the first Business
Day after July 20, 2002);
WHEREAS, Sections 9.01(b) of the Base Indenture provides, among other
things, that the Issuer, when authorized by a resolution of its Board of
Directors certified to the Trustee, and the Trustee may enter into an indenture
supplemental to the Base Indenture without the consent of any Holder to add to
the covenants of the Issuer for the benefit of the Holders of Securities; and
WHEREAS, all requirements necessary to make this Amendment a valid and
binding instrument in accordance with its terms, have been duly performed and
complied with, and the execution and delivery of this Supplemental Indenture
have been duly authorized in all respects and the Issuer has delivered to the
Trustee an Officers' Certificate and Opinion of Counsel as required by Sections
1.02 and 9.03, respectively, of the Base Indenture.
NOW, THEREFORE, each party hereto agrees as follows for the benefit of
each other party and for the equal and ratable benefit of the Holders of the
Notes:
ARTICLE 1
DEFINITIONS; EFFECT OF SUPPLEMENTAL INDENTURE
SECTION 1.01. Defined Terms. Capitalized terms used in this Amendment
and not otherwise defined herein shall have the meaning assigned to such terms
in the Supplemental Indenture, the Base Indenture and the Notes.
SECTION 1.02. Effect of Supplemental Indenture. This Amendment is
intended to amend and supplement the terms only of the Notes and shall not be
construed to amend or supplement the terms of any Securities, other than the
Notes, issued or to be issued under the Supplemental Indenture or the Base
Indenture.
ARTICLE 2
SUPPLEMENTAL PROVISIONS
SECTION 2.01. Additional Repurchase Date. Pursuant to the terms
described in the Notes and the Supplemental Indenture, holders of Notes may
require the Issuer to repurchase the Notes on July 20, 2002, January 20, 2005,
January 20, 2007, July 20, 2011, July 20, 2016, July 20, 2021 and July 20, 2026
(each, a "PURCHASE DATE"). In addition to the foregoing Purchase Dates, Holders
of Notes shall be entitled to require the Issuer to repurchase the Notes on
April 20, 2004 (the "ADDITIONAL PURCHASE DATE"). For all purposes of the Notes,
the Additional Purchase Date shall be deemed a Purchase Date. The Purchase Price
of a Note shall be $429.57 payable in cash on April 26, 2004 (in accordance with
Section 4.03(h) of the Supplemental Indenture as if April 26, 2004 were the
Business Day immediately following the April 20, 2004 Purchase Date),
notwithstanding anything else to the contrary in the First Supplemental
Indenture, the Base Indenture or the Notes.
Section 2.02. Trustee's Acceptance. The Trustee affirms its acceptance
of the trusts created by the Base Indenture, the First Supplemental Indenture
and the Notes, as supplemented by this Amendment, and agrees to perform the same
upon the terms and conditions of the Base Indenture, the First Supplemental
Indenture and the Notes, as supplemented by this Amendment.
ARTICLE 3
MISCELLANEOUS
SECTION 3.01. Instruments to Be Read Together. This Amendment is an
amendment to the First Supplemental Indenture, the Base Indenture and the Notes,
and the Base Indenture, the First Supplemental Indenture, the Notes and this
Amendment shall henceforth be read together.
SECTION 3.02. Confirmation. The Base Indenture, the First Supplemental
Indenture and the Notes, as amended and supplemented by this Amendment, is in
all respects confirmed and preserved.
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SECTION 3.03. New York Law to Govern. This Amendment shall be deemed to
be a contract under the laws of the State of New York, and for all purposes
shall be construed in accordance with the laws of such State, except as may
otherwise be required by mandatory provisions of law.
SECTION 3.04. Counterparts. This Amendment may be executed in any
number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
Section 3.05. Effect of Headings. The Article and Section headings
herein are for convenience only and shall not affect the construction hereof.
Section 3.06. Effectiveness. This Amendment shall become effective
when executed and delivered by the Issuer and the Trustee.
Section 3.07. Successors and Assigns of Issuer Bound by Supplemental
Indenture. All the covenants, stipulations, promises and agreements in this
Amendment contained by or in behalf of the Issuer shall bind its successors and
assigns, whether so expressed or not.
Section 3.08. Severability. In case any provisions in this Amendment
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 3.09. Benefits of the Agreement. Nothing in this Amendment,
express or implied, shall give to any Person, other than the parties hereto and
their successors under the Base Indenture and the Holders of the Securities, any
benefit or any legal or equitable right, remedy or claim under the Base
Indenture or the Supplemental Indenture.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first written above.
MASCO CORPORATION
By: /a/ Timothy Wadhams
------------------------------------
Name: Timothy Wadhams
Title: Vice President and
Chief Financial Officer
BANK ONE TRUST COMPANY,
NATIONAL ASSOCIATION,
as Trustee
By: /s/ Chris Holly
------------------------------------
Name: Chris Holly
Title: Vice President
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