(State or Other Jurisdiction of Incorporation or Organization) | (Commission File Number) | (I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Trading Symbol | Name of each exchange on which registered |
Press release issued by Masco, dated November 7, 2019, announcing the completion of the Milgard sale | |||
Unaudited pro forma condensed consolidated balance sheet of Masco Corporation dated as of September 30, 2019 and the unaudited pro forma condensed consolidated statements of operations of Masco Corporation for the nine months ended September 30, 2019 and for the years ended December 31, 2018, 2017 and 2016 | |||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
MASCO CORPORATION | ||
By: | /s/ John G. Sznewajs | |
Name: | John G. Sznewajs | |
Title: | Vice President, Chief Financial Officer | |
Masco Historical | Windows Businesses' Separation (A) (B) | Notes | Pro Forma Masco Continuing Operations | |||||||||||
Net Sales | $ | 5,787 | $ | — | (C) | $ | 5,787 | |||||||
Cost of sales | 3,813 | — | 3,813 | |||||||||||
Gross profit | 1,974 | — | 1,974 | |||||||||||
Selling, general and administrative expenses | 1,047 | — | 1,047 | |||||||||||
Impairment charge for other intangible assets | 9 | — | 9 | |||||||||||
Operating profit | 918 | — | 918 | |||||||||||
Interest expense | (119 | ) | — | (119 | ) | |||||||||
Other, net | (16 | ) | — | (16 | ) | |||||||||
Income from continuing operations before income taxes | 783 | — | 783 | |||||||||||
Income tax expense | 202 | — | 202 | |||||||||||
Income from continuing operations | $ | 581 | $ | — | $ | 581 | ||||||||
— | ||||||||||||||
Income from continuing operations attributable to Masco Corporation | $ | 546 | $ | — | $ | 546 | ||||||||
Basic income per common share attributable to Masco Corporation: | ||||||||||||||
Income from continuing operations | $ | 1.88 | $ | 1.88 | ||||||||||
Weighted average shares outstanding | 289 | 289 | ||||||||||||
Diluted income per common share attributable to Masco Corporation: | ||||||||||||||
Income from continuing operations | $ | 1.87 | $ | 1.87 | ||||||||||
Weighted average shares outstanding | 290 | 290 |
Masco Historical | Windows Businesses' Separation (A) | Notes | Pro Forma Masco Continuing Operations | |||||||||||
Net Sales | $ | 8,359 | $ | (755 | ) | (C) | $ | 7,604 | ||||||
Cost of sales | 5,670 | (596 | ) | 5,074 | ||||||||||
Gross profit | 2,689 | (159 | ) | 2,530 | ||||||||||
Selling, general and administrative expenses | 1,478 | (119 | ) | 1,359 | ||||||||||
Operating profit | 1,211 | (40 | ) | 1,171 | ||||||||||
Interest expense | (156 | ) | — | (156 | ) | |||||||||
Other, net | (13 | ) | — | (13 | ) | |||||||||
Income from continuing operations before income taxes | 1,042 | (40 | ) | 1,002 | ||||||||||
Income tax expense | 258 | (15 | ) | (D) | 243 | |||||||||
Income from continuing operations | $ | 784 | $ | (25 | ) | $ | 759 | |||||||
Income from continuing operations attributable to Masco Corporation | $ | 734 | $ | (25 | ) | $ | 709 | |||||||
Basic income per common share attributable to Masco Corporation: | ||||||||||||||
Income from continuing operations | $ | 2.38 | $ | 2.30 | ||||||||||
Weighted average shares outstanding | 305 | 305 | ||||||||||||
Diluted income per common share attributable to Masco Corporation: | ||||||||||||||
Income from continuing operations | $ | 2.37 | $ | 2.29 | ||||||||||
Weighted average shares outstanding | 307 | 307 |
Masco Historical | Windows Businesses' Separation (A) | Notes | Pro Forma Masco Continuing Operations | |||||||||||
Net Sales | $ | 7,642 | $ | (737 | ) | (C) | $ | 6,905 | ||||||
Cost of sales | 5,030 | (561 | ) | 4,469 | ||||||||||
Gross profit | 2,612 | (176 | ) | 2,436 | ||||||||||
Selling, general and administrative expenses | 1,418 | (120 | ) | 1,298 | ||||||||||
Operating profit | 1,194 | (56 | ) | 1,138 | ||||||||||
Interest expense | (278 | ) | (1 | ) | (279 | ) | ||||||||
Other, net | (32 | ) | — | (32 | ) | |||||||||
Income from continuing operations before income taxes | 884 | (57 | ) | 827 | ||||||||||
Income tax expense | 304 | (21 | ) | (D) | 283 | |||||||||
Income from continuing operations | $ | 580 | $ | (36 | ) | $ | 544 | |||||||
Income from continuing operations attributable to Masco Corporation | $ | 533 | $ | (36 | ) | $ | 497 | |||||||
Basic income per common share attributable to Masco Corporation: | ||||||||||||||
Income from continuing operations | $ | 1.68 | $ | 1.57 | ||||||||||
Weighted average shares outstanding | 314 | 314 | ||||||||||||
Diluted income per common share attributable to Masco Corporation: | ||||||||||||||
Income from continuing operations | $ | 1.66 | $ | 1.55 | ||||||||||
Weighted average shares outstanding | 318 | 318 |
Masco Historical | Windows Businesses' Separation (A) | Notes | Pro Forma Masco Continuing Operations | |||||||||||
Net Sales | $ | 7,361 | $ | (699 | ) | (C) | $ | 6,662 | ||||||
Cost of sales | 4,899 | (578 | ) | 4,321 | ||||||||||
Gross profit | 2,462 | (121 | ) | 2,341 | ||||||||||
Selling, general and administrative expenses | 1,375 | (129 | ) | 1,246 | ||||||||||
Operating profit | 1,087 | 8 | 1,095 | |||||||||||
Interest expense | (229 | ) | (2 | ) | (231 | ) | ||||||||
Other, net | (26 | ) | — | (26 | ) | |||||||||
Income from continuing operations before income taxes | 832 | 6 | 838 | |||||||||||
Income tax expense | 296 | 3 | (D) | 299 | ||||||||||
Income from continuing operations | $ | 536 | $ | 3 | $ | 539 | ||||||||
Income from continuing operations attributable to Masco Corporation | $ | 493 | $ | 3 | $ | 496 | ||||||||
Basic income per common share attributable to Masco Corporation: | ||||||||||||||
Income from continuing operations | $ | 1.49 | $ | 1.50 | ||||||||||
Weighted average shares outstanding | 326 | 326 | ||||||||||||
Diluted income per common share attributable to Masco Corporation: | ||||||||||||||
Income from continuing operations | $ | 1.48 | $ | 1.49 | ||||||||||
Weighted average shares outstanding | 330 | 330 |
Masco Historical | Windows Businesses' Separation (A) | Pro Forma Adjustments | Notes | Pro Forma Masco Continuing Operations | ||||||||||||||
ASSETS | ||||||||||||||||||
Current assets: | ||||||||||||||||||
Cash and cash investments | $ | 475 | $ | 725 | $ | — | $ | 1,200 | ||||||||||
Receivables | 1,177 | — | — | 1,177 | ||||||||||||||
Inventories | 924 | — | — | 924 | ||||||||||||||
Prepaid expenses and other | 105 | — | — | 105 | ||||||||||||||
Assets held for sale | 111 | (111 | ) | — | — | |||||||||||||
Total current assets | 2,792 | 614 | — | 3,406 | ||||||||||||||
Property and equipment, net | 1,017 | — | — | 1,017 | ||||||||||||||
Operating lease right-of-use assets | 183 | — | — | 183 | ||||||||||||||
Goodwill | 687 | — | — | 687 | ||||||||||||||
Other intangible assets, net | 264 | — | — | 264 | ||||||||||||||
Other assets | 85 | — | — | 85 | ||||||||||||||
Assets held for sale | 492 | (492 | ) | — | — | |||||||||||||
Total assets | $ | 5,520 | $ | 122 | $ | — | $ | 5,642 | ||||||||||
LIABILITIES AND EQUITY | ||||||||||||||||||
Current liabilities: | ||||||||||||||||||
Accounts payable | $ | 879 | $ | — | $ | — | $ | 879 | ||||||||||
Notes payable | 208 | — | — | 208 | ||||||||||||||
Accrued liabilities | 682 | — | 14 | (E) | 696 | |||||||||||||
Liabilities held for sale | 140 | (140 | ) | — | — | |||||||||||||
Total current liabilities | 1,909 | (140 | ) | 14 | 1,783 | |||||||||||||
Long-term debt | 2,771 | — | — | 2,771 | ||||||||||||||
Other liabilities | 684 | — | — | 684 | ||||||||||||||
Liabilities held for sale | 133 | (133 | ) | — | — | |||||||||||||
Total liabilities | 5,497 | (273 | ) | 14 | 5,238 | |||||||||||||
Equity: | ||||||||||||||||||
Common shares - $1 par value; Authorized shares: 1,400,000,000; Issued and outstanding: 284,100,000 | 284 | — | — | 284 | ||||||||||||||
Preferred shares authorized: 1,000,000; Issues and outstanding – None | — | — | — | — | ||||||||||||||
Paid-in capital | — | — | — | — | ||||||||||||||
Retained (deficit) equity | (309 | ) | 395 | (14 | ) | (F) | 72 | |||||||||||
Accumulated other comprehensive loss | (118 | ) | — | — | (118 | ) | ||||||||||||
Total Masco Corporation’s shareholders’ (deficit) equity | (143 | ) | 395 | (14 | ) | 238 | ||||||||||||
Noncontrolling interest | 166 | — | — | 166 | ||||||||||||||
Total equity | 23 | 395 | (14 | ) | 404 | |||||||||||||
Total liabilities and equity | $ | 5,520 | $ | 122 | $ | — | $ | 5,642 |
(A) | The information in the Window Businesses’ Separation column of the unaudited pro forma condensed consolidated statements of operations was derived from Masco’s unaudited financial statements for the nine months ended September 30, 2019 and Masco’s audited financial statements for the years ended December 31, 2018, 2017, and 2016, adjusted to include certain costs that are directly attributable to the windows businesses and are factually supportable, and to exclude corporate overhead costs that were previously allocated to the windows businesses for each period. The information in the Windows Businesses’ Separation column of the unaudited pro forma condensed consolidated balance sheet was derived from Masco’s unaudited financial statements as of September 30, 2019, adjusted to include certain assets and liabilities that are directly attributable to the windows businesses and are factually supportable. The Windows Businesses’ Separation column also reflects the $725 million cash proceeds received in conjunction with the sale of Milgard. The UKWG proceeds were already reflected in the September 30, 2019 unaudited pro forma balance sheet. |
(B) | Amounts reported in Masco's Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2019, as filed with the Securities and Exchange Commission on October 30, 2019, which presents the results of operations of the Milgard and UKWG businesses as discontinued operations. Therefore, no adjustments are necessary. |
(C) | Net sales for Milgard were $432 million, $605 million, $575 million, and $529 million for the nine months ended September 30, 2019 and years ended December 31, 2018, 2017, and 2016, respectively. Net sales for UKWG were $83 million, $150 million, $162 million, and $170 million for the nine months ended September 30, 2019 and years ended December 31, 2018, 2017, and 2016, respectively. |
(D) | Represents the tax impact of the Separations of the windows businesses from Masco. |
(E) | Reflects additional one-time transaction costs of $14 million expected to be incurred subsequent to September 30, 2019. One-time transaction costs incurred by Masco for the nine months ended September 30, 2019 was $7 million. Masco expects to incur and pay an aggregate of approximately $21 million of one-time transaction costs associated with the Separations, including legal and advisory costs. |
(F) | Shareholders’ (deficit) equity was adjusted for the pro forma adjustments specified in Notes (A) and (E), including the $725 million cash proceeds received in conjunction with the sale of Milgard. |
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