-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, G6ns5oJzNO/oulgZdhLVSC700sRyOtJOizZArY6QQX7WQr37TRxlT0TocECAJGBo DUCsR0jgMy0eWMKVoEZ8Ug== 0000062996-94-000021.txt : 19940523 0000062996-94-000021.hdr.sgml : 19940523 ACCESSION NUMBER: 0000062996-94-000021 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940516 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MASCO CORP /DE/ CENTRAL INDEX KEY: 0000062996 STANDARD INDUSTRIAL CLASSIFICATION: 2511 IRS NUMBER: 381794485 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05794 FILM NUMBER: 94528847 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 MASCO CORPORATION 10-Q 1ST QUARTER, 1994 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended March 31, 1994. Commission File Number 1-5794 MASCO CORPORATION (Exact name of Registrant as specified in its Charter) Delaware 38-1794485 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 21001 Van Born Road, Taylor, Michigan 48180 (Address of principal executive offices) (Zip Code) (313) 274-7400 (Telephone Number) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. Shares Outstanding at Class May 6, 1994 Common stock, par value $1 per share 156,554,000 MASCO CORPORATION INDEX Page No. Part I. Financial Information Item 1. Financial Statements Condensed Consolidated Balance Sheet - March 31, 1994 and December 31, 1993 1 Condensed Consolidated Statement of Income for the Three Months Ended March 31, 1994 and 1993 2 Condensed Consolidated Statement of Cash Flows for the Three Months Ended March 31, 1994 and 1993 3 Notes to Condensed Consolidated Financial Statements 4-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Unaudited Information Regarding Equity Affiliates for the Three Months Ended March 31, 1994 and 1993 9 Part II. Other Information and Signature 10 MASCO CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET March 31, 1994 and December 31, 1993 (Dollars in thousands) March 31, December 31, ASSETS 1994 1993 Current assets: Cash and cash investments $ 45,920 $ 119,980 Marketable securities 4,860 4,890 Accounts and notes receivable, net 695,460 610,120 Prepaid expenses 76,240 84,700 Inventories: Finished goods 350,750 312,470 Raw material 280,200 280,450 Work in process 232,020 231,210 862,970 824,130 Total current assets 1,685,450 1,643,820 Equity investments in MascoTech, Inc. 297,190 294,700 Equity investments in other affiliates 55,980 54,630 Property and equipment, net 1,121,910 1,095,170 Excess of cost over acquired net assets 605,510 605,170 Other noncurrent assets 361,830 327,570 Total assets $4,127,870 $4,021,060 LIABILITIES Current liabilities: Notes payable $ 43,950 $ 33,160 Accounts payable 160,010 161,220 Accrued liabilities 305,690 296,060 Total current liabilities 509,650 490,440 Long-term debt 1,417,800 1,418,290 Deferred income taxes and other 113,980 113,900 Total liabilities 2,041,430 2,022,630 SHAREHOLDERS' EQUITY Common stock, par value $1 per share Authorized shares: 400,000,000 156,530 152,850 Preferred stock, par value $1 per share Authorized shares: 1,000,000 --- --- Paid-in capital 118,180 69,880 Retained earnings 1,843,840 1,805,170 Cumulative translation adjustments (32,110) (29,470) Total shareholders' equity 2,086,440 1,998,430 Total liabilities and shareholders' equity $4,127,870 $4,021,060 See notes to condensed consolidated financial statements. 1 MASCO CORPORATION CONDENSED CONSOLIDATED STATEMENT OF INCOME For the Three Months Ended March 31, 1994 and 1993 (Amounts in thousands except per share data) Three Months Ended March 31 1994 1993 Net sales $1,050,000 $946,000 Costs and expenses, net: Cost of sales 698,000 633,100 Selling, general and administrative expenses 230,100 210,100 Other (income) expense, net: Interest expense 26,500 29,000 Re: MascoTech, Inc.: Equity earnings (7,400) (6,800) Interest and dividend income and gain from stock sale (4,500) (4,300) Other, net (2,100) (3,000) 12,500 14,900 940,600 858,100 Income before income taxes 109,400 87,900 Income taxes 44,100 33,400 Net income $ 65,300 $ 54,500 Per share data: Net income $.42 $.36 Cash dividends declared and paid $.17 $.16 Average shares outstanding 156,500 152,600 See notes to condensed consolidated financial statements. 2 MASCO CORPORATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the Three Months Ended March 31, 1994 and 1993 (Dollars in thousands) Three Months Ended March 31 1994 1993 CASH FLOWS FROM (FOR) OPERATING ACTIVITIES: Cash provided by operations $ 85,880 $ 79,010 (Increase) in receivables, net (68,380) (74,220) (Increase) in inventories, net (17,680) (13,640) Decrease in prepaid expenses 8,960 7,290 Increase (decrease) in current liabilities (3,630) 15,670 Total cash from operating activities 5,150 14,110 CASH FLOWS FROM (FOR) INVESTING ACTIVITIES: Sale of affiliate investments to MascoTech --- 87,500 Proceeds from sale of MascoTech common stock 7,730 --- Capital expenditures (47,680) (27,060) Other, net (9,470) 9,650 Total cash from (for) investing activities (49,420) 70,090 CASH FLOWS FROM (FOR) FINANCING ACTIVITIES: Increase in debt 27,020 311,910 Payment of debt (30,530) (367,400) Cash dividends paid (26,280) (24,440) Total cash (for) financing activities (29,790) (79,930) CASH AND CASH INVESTMENTS: Increase (decrease) for the quarter (74,060) 4,270 At January 1 119,980 45,350 At March 31 $ 45,920 $ 49,620 Supplemental Cash Flow Information: Net cash paid during the period for: Interest $ 25,770 $ 28,040 Income taxes $ 22,010 $ 11,260 See notes to condensed consolidated financial statements. 3 MASCO CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS A. In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments, of a normal recurring nature, necessary to present fairly its financial position as at March 31, 1994 and the results of operations and changes in cash flows for the three months ended March 31, 1994 and 1993. The condensed consolidated balance sheet at December 31, 1993 was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. Earnings per share are calculated based on the weighted average common shares outstanding. B. Other (income) expense, net consists of the following, in thousands: Three Months Ended March 31 1994 1993 Interest expense $26,500 $29,000 Re: MascoTech, Inc: Equity earnings (7,400) (6,800) Interest and dividend income (100) (4,300) Gain from stock sale (4,400) --- Equity earnings, other (1,200) (1,300) Interest income and gains from marketable securities and cash investments (3,600) (3,400) Other, net 2,700 1,700 $12,500 $14,900 C. During the first quarter of 1994, the Company acquired Zenith Products Corporation ("Zenith") and Melard Manufacturing Corporation ("Melard"). Under the terms of the agreements, the Company issued approximately 3.5 million shares of its common stock and the transactions were accounted for on a pooling of interests basis. Zenith is a leading manufacturer of bath medicine cabinets, shower curtain rods and other bath storage products for the home. Melard is a leading manufacturer of bath hardware, accessories, plumbing specialty and other products for the home. For the fiscal year 1993, these companies had combined net sales of approximately $100 million. Prior year periods are not restated due to immateriality. 4 MASCO CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) D. The following presents the combined unaudited financial statements of the Company, MascoTech, Inc. and TriMas Corporation as one entity, with Masco Corporation as the parent company. Certain amounts for 1993 have been restated to reflect MascoTech's formal plan to divest its energy-related business segment. Intercompany transactions have been eliminated. Amounts, except per share data, are in thousands. Combined Balance Sheet March 31, December 31, Assets 1994 1993 Current assets: Cash and cash investments $ 151,850 $ 272,950 Marketable securities 62,660 32,680 Accounts and notes receivable, net 1,039,570 906,500 Prepaid expenses 117,850 118,700 Deferred income taxes 41,580 41,780 Inventories: Finished goods 431,330 393,820 Raw material 371,790 365,370 Work in process 288,700 281,680 1,091,820 1,040,870 Total current assets 2,505,330 2,413,480 Equity investments in affiliates 157,840 163,970 Property and equipment, net 1,812,390 1,747,590 Excess of cost over acquired net assets 1,119,020 1,114,740 Net assets of discontinued operations 42,470 67,510 Other noncurrent assets 480,400 428,390 Total assets $6,117,450 $5,935,680 Liabilities and Shareholders' Equity Current liabilities: Notes payable $ 46,000 $ 36,310 Accounts payable 287,940 277,070 Accrued liabilities 438,550 428,720 Total current liabilities 772,490 742,100 Long-term debt 2,478,950 2,445,540 Deferred income taxes and other 286,870 275,400 Other interests in combined affiliates 492,700 474,210 Equity of shareholders of Masco Corporation 2,086,440 1,998,430 Total liabilities and shareholders' equity $6,117,450 $5,935,680 5 MASCO CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued) Note D - Continued: Three Months Ended March 31 Combined Statement of Income 1994 1993 Net sales $1,592,860 $1,454,380 Costs and expenses, net: Cost of sales 1,119,310 1,023,960 Selling, general and administrative expenses 295,620 272,330 Other (income) expense, net: Interest expense 40,420 49,410 Other income, net (20,910) (8,650) 19,510 40,760 1,434,440 1,337,050 Income before income taxes and other interests 158,420 117,330 Income taxes 70,800 50,420 Income before other interests 87,620 66,910 Other interests in combined affiliates 22,320 12,410 Net income $ 65,300 $ 54,500 Per share data: Net income $.42 $.36 Cash dividends declared and paid $.17 $.16 Average shares outstanding 156,500 152,600 6 MASCO CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (concluded) Note D - Concluded: Three Months Ended March 31 Combined Statement of Cash Flows 1994 1993 Cash Flows From (For) Operating Activities: Cash provided by operations $ 107,330 $ 110,380 (Increase) in receivables (114,370) (116,910) (Increase) in inventories (27,930) (19,040) (Increase) in marketable securities, net (30,010) (15,650) Decrease in prepaid expenses 1,930 9,890 Increase in current liabilities 1,580 21,740 Discontinued operations, net --- 1,530 Total cash (for) operating activities (61,470) (8,060) Cash Flows From (For) Investing Activities: Capital expenditures (78,940) (44,340) Other, net 39,390 6,710 Total cash (for) investing activities (39,550) (37,630) Cash Flows From (For) Financing Activities: Issuance of convertible debt 337,240 --- Increase in other debt 27,020 583,910 Retirement of notes (253,120) --- Payment of other debt (100,330) (518,600) Cash dividends paid (30,890) (24,440) Total cash from (for) financing activities (20,080) 40,870 Cash and Cash Investments: (Decrease) for the period (121,100) (4,820) At January 1 272,950 186,120 At March 31 $ 151,850 $ 181,300 7 MASCO CORPORATION Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FIRST QUARTER 1994 VERSUS FIRST QUARTER 1993 Net sales for the three months ended March 31, 1994 increased 11 percent to $1,050 million from $946 million in the comparable period in 1993. Building and Home Improvement products sales, including companies acquired in 1994, increased 14 percent for the three months ended March 31, 1994 from the comparable period in 1993. (This group's sales, absent the companies acquired in 1994, increased 8 percent.) Home Furnishings Products sales for the three months ended March 31, 1994 increased 8 percent from the comparable period in 1993. Cost of sales as a percentage of sales decreased modestly to 66.5 percent for the first quarter 1994 from 66.9 percent for the comparable period in 1993. Selling, general and administrative expenses as a percentage of sales for the three months ended March 31, 1994 decreased modestly to 21.9 percent from 22.2 percent for the comparable period in 1993. The Company's operating profit margins continued to improve in the first quarter with major product lines benefitting primarily from increased sales and profit improvement programs. Included in other (income) expense, net for the three months ended March 31, 1994 are equity earnings from MascoTech, Inc. of $7.4 million as compared with equity earnings of $6.8 million in the comparable period in 1993, and interest and dividend income and gain from the sale of common stock aggregating $4.5 million as compared with $4.3 million in the 1993 first quarter. Net income for the first quarter of 1994 increased 20 percent to $65.3 million from $54.5 million in the comparable period in 1993, and earnings per share increased 17 percent to $.42 from $.36. The Company is continuing to experience increased demand for most of its products. The Company believes that improved consumer confidence, a stronger economy and market share gains will more than offset any negative effect of recent higher interest rates on its businesses. At March 31, 1994 current assets were 3.3 times current liabilities. First quarter 1994 cash from operations was affected by an expected and recurring first quarter increase in accounts receivable. As the annual increase in accounts receivable is historically experienced in the first quarter, cash from operations in the remaining three quarters of 1994 should not be affected by significant increases in accounts receivable. The Company believes that its cash from operations and, to the extent necessary, future financial market activities, are sufficient to fund its working capital and other investment needs. The Company has on file with the Securities and Exchange Commission, shelf registration statements pursuant to which the Company is able to issue up to an additional $200 million of debt securities as well as up to 9.6 million shares of its common stock. 8 UNAUDITED INFORMATION REGARDING EQUITY AFFILIATES FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1993 Equity investments in affiliates consist primarily of the following approximate common stock and partnership interests at March 31: 1994 1993 MascoTech, Inc. 41% 35% Hans Grohe, a German partnership 27% 27% TriMas Corporation 5% 7% The following presents the condensed financial data of MascoTech, Inc. Certain amounts for 1993 have been restated to reflect MascoTech's formal plan to divest its energy-related business segment. Amounts are in thousands. Three Months Ended March 31 1994 1993 Sales - Net $412,410 $404,070 Gross Profit $ 80,290 $ 84,750 Net Income (Before Preferred Stock Dividends) $ 26,300 $ 17,520 9 PART II. OTHER INFORMATION MASCO CORPORATION Items 1 through 5 are not applicable. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: 11 - Computation of Earnings Per Share 12 - Computation of Ratio of Earnings to Fixed Charges (b) Reports on Form 8-K: A Current Report on Form 8-K, dated March 2, 1994, was filed by Masco Corporation in the calendar quarter ended March 31, 1994, reporting under Item 5, "Other Events," the Company's recent operating results. The financial statements of Masco Corporation and Subsidiaries as of December 31, 1993 and 1992 and for the three years ended December 31, 1993, together with the report thereon of Coopers & Lybrand, were filed with such reports. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MASCO CORPORATION (Registrant) Date: May 12, 1994 By: /s/Richard G. Mosteller Richard G. Mosteller Senior Vice-President - Finance (Chief Financial officer and authorized signatory) 10 MASCO CORPORATION EXHIBIT INDEX Exhibit Exhibit 11 Computation of Earnings Per Share - Primary and Fully Diluted Earnings Per Share Exhibit 12 Computation of Ratio of Earnings to Fixed Charges EX-11 2 MASCO CORP 10-Q EXHIBIT 11 1ST QUARTER 1994 Exhibit 11 MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE Primary and Fully Diluted Earnings Per Share For the Three Months Ended March 31, 1994 and 1993 (Amounts in thousands except per share amounts) Three Months Ended March 31 1994 1993 Shares for computation of primary and fully diluted earnings per share: Average number of shares outstanding 156,500 152,600 Common stock equivalents: Shares issuable assuming conversion of debentures 4,200 4,200 Stock options 1,400 1,400 162,100 158,200 Net income, adjusted to basis of earnings per share: Net income $65,300 $54,500 Add interest on convertible debentures, net of tax 1,500 1,500 $66,800 $56,000 Primary and fully diluted earnings per share $.42 $.36 Earnings per share as reported $.42 $.36 This calculation is submitted in accordance with Regulation S-K Item 601(b)(11), although not required by APB Opinion No. 15, inasmuch as dilution for either period was less than 3 percent. EX-12 3 MASCO CORPORATION 10-Q EXHIBIT 12 1ST QUARTER 1994 Exhibit 12 MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES Computation of Ratio of Earnings to Fixed Charges
(Thousands of Dollars) Three Months Ended March 31, Year Ended December 31, 1994 1993 1992 1991 1990 1989 Earnings Before Income Taxes And Fixed Charges: Income before income taxes $109,400 $362,600 $304,800 $ 97,600 $235,900 $327,100 Deduct/add equity in undistributed (earnings) losses of fifty-percent- or-less-owned companies (8,600) (18,740) (17,290) 12,640 8,760 (29,060) Add dividends received from fifty-percent-or-less- owned companies 500 4,940 4,100 25,450 1,780 1,990 Add interest on indebtedness, net 26,360 104,080 100,490 124,950 125,770 112,830 Add amortization of debt expense 560 2,650 2,710 1,630 1,420 1,460 Add one-third of rentals 2,860 10,970 10,800 12,530 9,610 8,830 Earnings before income taxes and fixed charges $131,080 $466,500 $405,610 $274,800 $383,240 $423,150 Fixed charges: Interest on indebtedness $ 26,950 $105,420 $113,670 $128,450 $125,770 $112,830 Amortization of debt expense 560 2,650 2,710 1,630 1,420 1,460 One-third of rentals 2,860 10,970 10,800 12,530 9,610 8,830 $ 30,370 $119,040 $127,180 $142,610 $136,800 $123,120 Ratio of earnings to fixed charges 4.3 3.9 3.2 1.9 2.8 3.4
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