-----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, kwvMBTzj9O0OZECZRWpd+sVCRRpN6w+cYnoXEf688G6qTKNfZD8nFOFJI/L84dSZ 3F8DDYo9mGN3uAjfG11e/g== 0000745448-94-000013.txt : 19940523 0000745448-94-000013.hdr.sgml : 19940523 ACCESSION NUMBER: 0000745448-94-000013 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: MASCOTECH INC CENTRAL INDEX KEY: 0000745448 STANDARD INDUSTRIAL CLASSIFICATION: 3714 IRS NUMBER: 382513957 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12068 FILM NUMBER: 94528851 BUSINESS ADDRESS: STREET 1: 21001 VAN BORN RD CITY: TAYLOR STATE: MI ZIP: 48180 BUSINESS PHONE: 3132747405 MAIL ADDRESS: STREET 1: 21001 VAN BORN ROAD CITY: TAYLOR STATE: MI ZIP: 48180 FORMER COMPANY: FORMER CONFORMED NAME: MASCO INDUSTRIES INC DATE OF NAME CHANGE: 19930629 10-Q 1 1ST QUARTER TECH 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarterly Period Ended March 31, 1994 Commission File Number 1-12068 MASCOTECH, INC. (Exact name of Registrant as specified in its Charter) Delaware 38-2513957 (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) 274-7405 (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 April 30, 1994 Common stock, par value $1 per share 60,680,000 MASCOTECH, INC. INDEX Page No. Part I. Financial Information Item 1. Financial Statements Consolidated Condensed Balance Sheet - March 31, 1994 and December 31, 1993 1 Consolidated Condensed Statement of Income for the Three Months Ended March 31, 1994 and 1993 2 Consolidated Condensed Statement of Cash Flows for the Three Months Ended March 31, 1994 and 1993 3 Notes to Consolidated Condensed Financial Statements 4-5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6 Part II. Other Information and Signature 7-8 PART I. FINANCIAL INFORMATION Item 1. Financial Statements MASCOTECH, INC. CONSOLIDATED CONDENSED 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 $ 49,450 $ 83,200 Marketable securities 57,800 27,790 Receivables 259,920 238,820 Inventories 149,000 140,040 Deferred and refundable income taxes 41,580 41,780 Prepaid expenses and other assets 31,740 24,210 Total current assets 589,490 555,840 Equity and other investments in affiliates 167,660 170,510 Property and equipment, net 526,320 490,190 Excess of cost over net assets of acquired companies 436,980 439,760 Notes receivable and other assets 84,840 66,100 Net assets of discontinued operations 42,470 67,510 Total assets $1,847,760 $1,789,910 LIABILITIES Current liabilities: Accounts payable $ 103,820 $ 95,520 Accrued liabilities 100,280 103,260 Current portion of long-term debt 1,730 2,830 Total current liabilities 205,830 201,610 Long-term debt 822,490 788,360 Deferred income taxes and other long-term liabilities 131,100 132,310 Total liabilities 1,159,420 1,122,280 SHAREHOLDERS' EQUITY Preferred stock, $1 par, shares authorized: 25 million; outstanding: 10.8 million 10,800 10,800 Common stock, $1 par, shares authorized: 250 million; outstanding: 60.7 million and 60.5 million 60,670 60,510 Paid-in capital 367,810 367,290 Retained earnings 254,000 232,120 Cumulative translation adjustments (4,940) (3,090) Total shareholders' equity 688,340 667,630 Total liabilities and shareholders' equity $1,847,760 $1,789,910 The accompanying notes are an integral part of the consolidated condensed financial statements. MASCOTECH, INC. CONSOLIDATED CONDENSED STATEMENT OF INCOME For the Three Months Ended March 31, 1994 and 1993 (Dollars in thousands except per share amounts) Three Months Ended March 31 1994 1993 Net sales $ 412,410 $ 404,070 Cost of sales (332,120) (319,320) Selling, general and administrative expenses (44,660) (44,970) Operating profit 35,630 39,780 Other income (expense), net: Interest expense, Masco Corporation --- (1,950) Other interest expense (11,080) (18,470) Equity and interest income from affiliates 4,620 3,610 Other income, net 14,660 4,300 8,200 (12,510) Income from continuing operations before income taxes 43,830 27,270 Income taxes 17,530 11,200 Income from continuing operations 26,300 16,070 Income from operations of discontinued segment --- 1,450 Net income $ 26,300 $ 17,520 Preferred stock dividends $ 3,240 $ 2,330 Earnings attributable to common stock $ 23,060 $ 15,190 Earnings per common and common equivalent share: Primary: Continuing operations $ .34 $ .22 Income from operations of discontinued segment -- .03 Earnings attributable to common stock $ .34 $ .25 Fully diluted: Continuing operations $ .32 $ .22 Income from operations of discontinued segment -- .02 Earnings attributable to common stock $ .32 $ .24 Cash dividends declared $ .02 -- The accompanying notes are an integral part of the consolidated condensed financial statements. MASCOTECH, INC. CONSOLIDATED CONDENSED 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 FROM (USED FOR): OPERATIONS: Net cash from earnings $ 27,340 $ 30,860 (Increase) in inventories (7,100) (5,890) (Increase) in receivables (18,940) (18,730) (Decrease) in accounts payable and accrued liabilities (2,150) (4,860) (Increase) in marketable securities, net (30,010) (15,650) Discontinued operations, net --- 1,530 Other, net (6,990) 1,870 Net cash (used for) operating activities (37,850) (10,870) FINANCING: Issuance of convertible debt 337,240 --- Increase in other debt --- 125,000 Retirement of 10 1/4% Notes (253,120) --- Payment of other debt (69,570) (4,180) Payment of preferred stock dividends (3,240) (4,650) Payment of common stock dividends (1,200) --- Other, net (3,440) (400) Net cash from financing activities 6,670 115,770 INVESTMENTS: Capital expenditures (24,790) (12,730) Proceeds from sale of Energy-related business 13,500 --- Receipt of cash from note receivable --- 10,000 Sale of common stock of affiliate 9,810 --- Cash paid Masco Corporation --- (87,500) Other, net (1,090) (10,390) Net cash (used for) investing activities (2,570) (100,620) CASH AND CASH INVESTMENTS: (Decrease) increase for the three months (33,750) 4,280 At January 1 83,200 76,000 At March 31 $ 49,450 $ 80,280 Supplemental Cash Flow Information: Net cash paid during the period for: Interest $ 26,520 $ 30,180 Income taxes $ 2,810 $ 2,610 The accompanying notes are an integral part of the consolidated condensed financial statements. MASCOTECH, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS A. In the opinion of the Company, the accompanying unaudited consolidated condensed financial statements contain all adjustments, which are normal and recurring in nature, necessary to present fairly its financial position as at March 31, 1994 and the results of operations and cash flows for the three months ended March 31, 1994 and 1993. The statements of income and cash flows and related notes for the three months ended March 31, 1993 have been reclassified to present the Energy-related segment as discontinued operations. In addition, the balance sheet as of March 31, 1994 and December 31, 1993 reflects the Energy-related segment as discontinued operations. Effective June 23, 1993, the Company changed its name to MascoTech, Inc. from Masco Industries, Inc. Certain 1993 amounts have been reclassified to conform to the presentation adopted in 1994. Primary earnings per common share were calculated based on 77.6 million and 61.6 million weighted average common shares outstanding for the three months ended March 31, 1994 and 1993, respectively. Fully diluted earnings per common share were calculated based on 87.5 million and 72.5 million weighted average common shares outstanding for the three months ended March 31, 1994 and 1993, respectively. B. Inventories by component are as follows (in thousands): March 31, December 31, 1994 1993 Finished goods $ 36,680 $ 39,400 Work in process 43,760 38,240 Raw materials 68,560 62,400 $149,000 $140,040 C. Property and equipment, net reflects accumulated depreciation of $318 million and $308 million as at March 31, 1994 and December 31, 1993, respectively. D. Other income, net for the three months ended March 31, 1994 includes gains aggregating approximately $9.8 million pre-tax (approximately $.07 per common share after-tax) from the sale by the Company of a portion of its common stock holdings of an equity affiliate. MASCOTECH, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (concluded) E. The following presents combined supplemental financial data of the Company and TriMas Corporation as one entity, with MascoTech as the parent company. The Company had an equity ownership interest in TriMas of approximately 28 percent at March 31, 1993 and approximately 42 percent at March 31, 1994. Intercompany transactions have been eliminated. Approximate combined condensed financial data are as follows (in thousands): March 31 1994 1993 Current assets $ 820,740 $ 852,870 Current liabilities (263,700) (249,740) Working capital 557,040 603,130 Property and equipment, net 690,480 689,040 Excess of cost over net assets of acquired companies 523,290 596,320 Other assets 283,520 238,710 Long-term debt (1,061,150) (1,425,190) Deferred income taxes and other long-term liabilities (160,660) (233,250) Equity of the other shareholders of TriMas (144,180) (109,320) Equity of shareholders of MascoTech $ 688,340 $ 359,440 Net sales $ 545,350 $ 510,170 Operating profit $ 56,030 $ 55,290 Income from continuing operations $ 26,300 $ 16,070 Net income $ 26,300 $ 17,520 Earnings attributable to common stock $ 23,060 $ 15,190 F. In January, 1994, the Company issued, in a public offering, $345 million of 4 1/2% Convertible Subordinated Debentures due December 15, 2003. These debentures are convertible into Company Common Stock at $31 per share. The net proceeds of approximately $337 million were used to redeem $250 million of 10 1/4% Subordinated Notes on February 1, 1994 and to reduce other indebtedness. MASCOTECH, INC. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Sales and earnings per common share from continuing operations for the first quarter 1994 were the highest for any first quarter in the history of the Company. Net sales from continuing operations for the first quarter ended March 31, 1994 increased two percent to $412 million from $404 million in 1993. Sales of transportation-related products for the first quarter of 1994 increased four percent. First quarter transportation-related products sales were negatively impacted by the planned phaseout in 1993 of certain product programs by the Company's automotive customers. This reduction was more than offset by higher levels of automotive production and by certain new product and replacement programs in the first quarter. Additionally, the Company anticipates increased sales from new and replacement programs scheduled for introduction in the latter half of 1994 and in 1995. Sales of specialty products decreased six percent from first quarter 1993, primarily as a result of the severe winter weather in the first quarter which adversely impacted the residential and commercial construction markets served by the Company. Income from continuing operations for the first quarter 1994, after preferred stock dividends, increased 68 percent to $23.1 million or $.32 per common share as compared with $13.7 million or $.22 per common share in the first quarter of 1993. Operating profit was impacted by the phaseout of certain product programs by our automotive customers, new product program launch costs and by costs and expenses associated with the architectural products group related to the consolidation of certain operating activities, start up costs associated with a new manufacturing process and the severe winter weather. First quarter 1994 income benefitted from higher income from equity affiliates and reduced interest expense resulting from the redemption in late 1993 of convertible subordinated debt for Company Common Stock and the redemption in early 1994 of subordinated debt with lower cost financing. First quarter 1994 results also benefitted from gains aggregating approximately $9.8 million pre-tax (approximately $.07 per common share after-tax) from the sale by the Company of a portion of its common stock holdings of an equity affiliate. In January, 1994, the Company issued, in a public offering, $345 million of 4 1/2% Convertible Subordinated Debentures due December 15, 2003. These debentures are convertible into Company Common Stock at $31 per share. The net proceeds were used to redeem $250 million of 10 1/4% Subordinated Notes on February 1, 1994 and to reduce other indebtedness. In late 1993, the Company adopted a formal plan to divest its energy- related business segment, which consisted of seven business units with net sales and operating profit of $52 million and $3.3 million, respectively, for the three months ended March 31, 1993. As of March 31, 1994, three energy-related business units have been sold for approximately $118 million cash and other non-cash consideration. The remaining four energy- related business units had net assets at March 31, 1994 of approximately $42.5 million (adjusted to reflect the anticipated loss upon disposition, net of tax benefit). The energy-related business segment had net sales of $25.5 and a net operating loss of $.3 million (charged to the loss reserve established in 1993) for the three months ended March 31, 1994. The Company's cash, additional borrowings available under the Company's revolving credit agreement and anticipated internal cash flow are expected to provide sufficient liquidity to fund its near-term working capital and other investment needs. The Company believes that its longer-term working capital and other general corporate requirements, including the retirement of Senior Subordinated Notes maturing in 1995, will be satisfied through the following: its internal cash flow; divestiture of the remaining businesses in the energy-related segment, other nonstrategic operating assets and certain additional financial assets; and, to the extent necessary, future financings in the financial markets. At March 31, 1994, current assets were in excess of two times current liabilities. PART II. OTHER INFORMATION MASCOTECH, INC. Items 1 through 5 are not applicable. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit 11 Computation of Earnings Per Common Share - Primary and Fully Diluted Exhibit 12 Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends (b) Reports on Form 8-K: 1. Report on Form 8-K dated January 11, 1994 reporting under Item 5 "Other Events" the reclassification of certain of the Company's financial statements and financial information to reflect the treatment of the Company's energy-related businesses as discontinued operations in connection with the Company's previously reported plan to dispose of such businesses. The following financial statements and financial information were filed with such report: (i) Selected Financial Data; (ii) MascoTech, Inc. and Subsidiaries Audited Consolidated Financial Statements as of December 31, 1992 and 1991 and for the three years in the period ended December 31, 1992 and notes thereto; and (iii) MascoTech, Inc. and Subsidiaries Unaudited Consolidated Condensed Financial Statements as of September 30, 1993 and December 31, 1992 and for the three month and nine month periods ended September 30, 1993 and 1992 and notes thereto. 2. Report on Form 8-K dated March 2, 1994 reporting under Item 5 "Other Events" certain financial information related to 1993. The following financial statements were filed with such report: (i) MascoTech, Inc. and Subsidiaries Audited Consolidated Financial Statements as of December 31, 1993 and 1992 and for the three years in the period ended December 31, 1993 and notes thereto. 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. MASCOTECH, INC. (Registrant) Date: May 13, 1994 By: /s/ Timothy Wadhams Timothy Wadhams Vice President - Controller and Treasurer (Chief accounting officer and authorized signatory) MASCOTECH, INC. EXHIBIT INDEX Exhibit Exhibit 11 Computation of Earnings Per Common Share - Primary and Fully Diluted Exhibit 12 Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends EX-11 2 1ST QUARTER TECH EX-11 Exhibit 11 MASCOTECH, INC. Computation of Earnings Per Common Share Primary and Fully Diluted (In thousands except per share amounts) Three Months Ended March 31, 1994 1993 PRIMARY: Income from continuing operations $26,300 $16,070 Preferred stock dividends 3,240 2,330 Income from continuing operations attributable to common stock 23,060 13,740 Add convertible preferred stock dividends 3,240 --- Earnings for computing primary earnings from continuing operations per common share 26,300 13,740 Income from operations of discontinued segment --- 1,450 Earnings attributable to common stock for computing primary earnings per share $26,300 $15,190 Weighted average number of common shares outstanding during each period 60,610 59,530 Addition from assumed exercise of stock options and warrants 6,440 2,020 Addition from assumed conversion of preferred stock 10,540 --- Weighted average number of common shares and equivalents outstanding during each period --without dilution 77,590 61,550 Primary earnings per common and common equivalent share: Continuing operations $ .34 $ .22 Income from operations of discontinued segment -- .03 Earnings attributable to common stock $ .34 $ .25 Exhibit 11 MASCOTECH, INC. Computation of Earnings Per Common Share Primary and Fully Diluted (In thousands except per share amounts) (concluded) Three Months Ended March 31, 1994 1993 FULLY DILUTED: Income from continuing operations $26,300 $16,070 Preferred stock dividends 3,240 2,330 Income from continuing operations attributable to common stock 23,060 13,740 Add after-tax convertible debenture related expenses 2,040 1,870 Add convertible preferred stock dividends 3,240 --- Earnings for computing fully diluted earnings from continuing operations per common share 28,340 15,610 Income from operations of discontinued segment --- 1,450 Earnings attributable to common stock, as adjusted $28,340 $17,060 Weighted average number of common shares outstanding during each period 60,610 59,530 Addition from assumed conversion of convertible debentures as of the issue date 9,650 10,380 Addition from assumed exercise of stock options and warrants 6,440 2,570 Addition from assumed conversion of preferred stock 10,800 --- Weighted average number of common shares and equivalents outstanding during each period --fully diluted basis 87,500 72,480 Fully diluted earnings per common and common equivalent share: Continuing operations $ .32 $ .22 Income from operations of discontinued segment -- .02 Earnings attributable to common stock $ .32 $ .24 EX-12 3 1ST QUARTER TECH EX-12 Exhibit 12 MASCOTECH, INC. Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends (Dollars in thousands)
3 Months Ended March 31, For The Years Ended December 31 1994 1993 1992 1991 1990 1989 Earnings Before Income Taxes and Fixed Charges: Income (loss) from continuing operations before income taxes and extraordinary income..................... $ 43,830 $121,180 $ 68,250 $(12,470) $(30,240) $85,410 Add (deduct) equity in undistributed (earnings) losses of less-than-fifty- percent owned companies.... (4,150) (19,930) (21,760) (3,530) (3,430) (1,980) Add interest on indebtedness, net.......... 11,450 83,000 87,830 124,220 139,770 146,570 Add amortization of debt expense.................... 660 4,390 1,930 2,230 2,670 3,510 Estimated interest factor for rentals................ 1,420 5,550 5,740 5,220 4,520 4,470 Earnings before income taxes and fixed charges.... $ 53,210 $194,190 $141,990 $115,670 $113,290 $237,980 Fixed Charges: Interest on indebtedness, net........................ $ 11,470 $ 83,110 $ 87,980 $124,370 $140,380 $147,320 Amortization of debt expense.................... 660 4,390 1,930 2,230 2,670 3,510 Estimated interest factor for rentals................ 1,420 5,550 5,740 5,220 4,520 4,470 Total fixed charges...... 13,550 93,050 95,650 131,820 147,570 155,300 Preferred stock dividend requirement (a)............ 5,430 25,860 17,140 11,350 120 130 Combined fixed charges and preferred stock dividends.. $ 18,980 $118,910 $112,790 $143,170 $147,690 $155,430 Ratio of earnings to fixed charges................ 3.9 2.1 1.5 .9(b) .8(d) 1.5 Ratio of earnings to combined fixed charges and preferred stock dividends.............. 2.8 1.6 1.3 .8(c) .8(e) 1.5
(a) Represents amount of income before provision for income taxes required to meet the preferred stock dividend requirements of the Company and its 50% owned companies. (b) 1991 earnings are inadequate to cover fixed charges by $16,150. (c) 1991 earnings are inadequate to cover combined fixed charges and preferred stock dividends by $27,500. (d) 1990 earnings are inadequate to cover fixed charges by $34,280. (e) 1990 earnings are inadequate to cover combined fixed charges and preferred stock dividends by $34,400. -----END PRIVACY-ENHANCED MESSAGE-----