-----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, LFuN7obQkCtiC64OETTblVSm/Pgd8zFxDJDAMJnm50uS2xdqfTlH9H43XNwcMRj5 2YmyqOgsMyrmTm8DyBh/pg== 0000950124-00-003120.txt : 20000515 0000950124-00-003120.hdr.sgml : 20000515 ACCESSION NUMBER: 0000950124-00-003120 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MASCOTECH INC CENTRAL INDEX KEY: 0000745448 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 382513957 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12068 FILM NUMBER: 629289 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 FORM 10-Q 1 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, 2000 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 28, 2000 ----- --------------------- COMMON STOCK, PAR VALUE $1 PER SHARE 44,557,000 2 MASCOTECH, INC. INDEX PAGE NO. -------- Part I. Financial Information Item 1. Financial Statements Consolidated Condensed Balance Sheet - March 31, 2000 and December 31, 1999 1 Consolidated Condensed Statement of Income for the Three Months Ended March 31, 2000 and 1999 2 Consolidated Condensed Statement of Cash Flows for the Three Months Ended March 31, 2000 and 1999 3 Notes to Consolidated Condensed Financial Statements 4-6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7-8 Part II. Other Information and Signature 9-10 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS MASCOTECH, INC. CONSOLIDATED CONDENSED BALANCE SHEET MARCH 31, 2000 AND DECEMBER 31, 1999 (DOLLARS IN THOUSANDS)
MARCH 31, DECEMBER 31, ASSETS 2000 1999 ------ ------------ ------------ Current assets: Cash and cash investments $ 11,090 $ 4,490 Receivables 263,980 218,960 Inventories 183,340 183,600 Deferred and refundable income taxes 26,660 46,750 Prepaid expenses and other assets 14,620 16,320 ----------- ----------- Total current assets 499,690 470,120 Equity and other investments in affiliates 108,440 110,730 Property and equipment, net 727,490 722,680 Excess of cost over net assets of acquired companies 768,210 759,330 Notes receivable and other assets 39,770 38,410 ----------- ----------- Total assets $ 2,143,600 $ 2,101,270 =========== =========== LIABILITIES ----------- Current liabilities: Accounts payable $ 129,780 $ 114,490 Accrued liabilities 114,390 113,910 ----------- ----------- Total current liabilities 244,170 228,400 Convertible subordinated debentures 305,000 305,000 Long-term debt 1,066,260 1,067,890 Deferred income taxes and other long-term liabilities 208,740 199,600 ----------- ----------- Total liabilities 1,824,170 1,800,890 ----------- ----------- SHAREHOLDERS' EQUITY -------------------- Preferred stock, $1 par: Authorized: 25 million; Outstanding: None -- -- Common stock, $1 par: Authorized: 250 million; Outstanding: 44.7 million and 44.6 million 44,720 44,640 Paid-in capital 250 -- Retained earnings 346,580 324,290 Accumulated other comprehensive loss (29,390) (24,870) Less: Restricted stock awards (42,730) (43,680) ----------- ----------- Total shareholders' equity 319,430 300,380 ----------- ----------- Total liabilities and shareholders' equity $ 2,143,600 $ 2,101,270 =========== ===========
The accompanying notes are an integral part of the consolidated condensed financial statements. 1 4 MASCOTECH, INC. CONSOLIDATED CONDENSED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED MARCH 31 --------------------------- 2000 1999 --------- --------- Net sales $ 459,400 $ 448,660 Cost of sales (340,000) (332,640) Selling, general and administrative expenses (56,170) (57,150) Gain on disposition of businesses, net -- 10,010 --------- --------- Operating profit 63,230 68,880 --------- --------- Other income (expense), net: Interest expense (21,810) (20,950) Equity and interest income from affiliates 1,500 1,730 Other, net (240) (2,920) --------- --------- (20,550) (22,140) --------- --------- Income before income taxes 42,680 46,740 Income taxes 16,860 22,880 --------- --------- Net income $ 25,820 $ 23,860 ========= ========= Basic earnings per share $ .63 $ .58 ========= ========= Diluted earnings per share $ .51 $ .47 ========= ========= Cash dividends declared per share $ .08 $ .07 ========= ========= Cash dividends paid per share $ .08 $ .07 ========= =========
The accompanying notes are an integral part of the consolidated condensed financial statements. 2 5 MASCOTECH, INC. CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 (DOLLARS IN THOUSANDS)
THREE MONTHS ENDED MARCH 31 ------------------------ 2000 1999 ----------- ---------- CASH FROM (USED FOR): OPERATIONS: Net cash from earnings $ 55,110 $ 55,920 Decrease in inventories 3,240 1,920 (Increase) in receivables (43,460) (52,690) Increase in accounts payable and accrued liabilities 18,800 11,740 Decrease in prepaid expenses and other current assets 21,510 3,330 Other, net (1,160) (3,210) ----------- ---------- Net cash from operating activities 54,040 17,010 ----------- ---------- FINANCING: Payment of debt (52,820) (39,330) Increase in debt 47,310 54,850 Payment of common stock dividends (3,540) (3,180) Retirement of Company common stock -- (12,280) Other, net (300) (5,980) ----------- ---------- Net cash (used for) financing activities (9,350) (5,920) ----------- ---------- INVESTMENTS: Capital expenditures (26,000) (29,940) Cash received from sale of businesses, net 3,200 3,540 Acquisition of businesses, net of cash acquired (19,960) --- Other, net 4,670 5,960 ----------- ---------- Net cash (used for) investing activities (38,090) (20,440) ----------- ---------- CASH AND CASH INVESTMENTS: Increase (decrease) for the three months 6,600 (9,350) At January 1 4,490 29,390 ----------- ---------- At March 31 $ 11,090 $ 20,040 =========== ========== SUPPLEMENTAL CASH FLOW INFORMATION: Net cash paid during the period for: Interest $ 16,840 $ 16,250 =========== ========= Income taxes $ (9,490) $ 9,120 =========== =========
The accompanying notes are an integral part of the consolidated condensed financial statements. 3 6 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, 2000 and the results of operations and cash flows for the three months ended March 31, 2000 and 1999. Certain amounts for the period ended March 31, 1999 have been reclassified to conform to the presentation adopted in 2000. B. Inventories by component are as follows (in thousands):
MARCH 31 DECEMBER 31 2000 1999 -------- -------- Finished goods $ 83,600 $ 86,240 Work in process 49,030 45,940 Raw materials 50,710 51,420 -------- -------- $183,340 $183,600 ======== ========
C. Property and equipment, net reflects accumulated depreciation of $339 million and $323 million at March 31, 2000 and December 31, 1999, respectively. D. The Company's total comprehensive income for the period was as follows (in thousands):
Three Months Ended March 31 ------------------ 2000 1999 -------- -------- Net income $ 25,820 $ 23,860 Other comprehensive loss (principally foreign currency translation) (4,520) (10,780) ------- -------- Total comprehensive income $ 21,300 $ 13,080 ======== ========
E. In March 2000, the Company acquired a manufacturer of towing equipment and accessories. The acquisition was accounted for as a purchase and results are included from date of acquisition. F. The Company completed the sale of its aftermarket-related and vacuum metalizing businesses in 1999. These transactions resulted in a pre-tax gain of approximately $26 million, of which $10 million was recognized in the first quarter of 1999 (including $15.2 million ($6 million after-tax) resulting from the Company's revised estimate of the fair market value of certain assets held for sale at March 31, 1999 and a loss of approximately $5.2 million ($3.8 million after-tax) on a transaction that closed in March 1999). 4 7 MASCOTECH, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED) G. Segment activity for the three months ended March 31, 2000 and 1999 are as follows:
Three Months Ended March 31 --------------------------- 2000 1999 -------- -------- REVENUES FROM EXTERNAL CUSTOMERS Specialty Metal Formed Products $230,500 $202,700 Towing Systems 80,510 69,090 Specialty Fasteners 61,270 61,260 Specialty Packaging & Sealing Products 60,930 57,550 Specialty Industrial Products 26,190 27,460 Companies Sold or Held for Sale --- 30,600 -------- -------- Total $459,400 $448,660 ======== ======== INTERSEGMENT REVENUES Specialty Metal Formed Products $ 2,580 $ 2,380 Towing Systems 3,060 2,250 Specialty Fasteners 1,160 830 Specialty Packaging & Sealing Products 40 --- Specialty Industrial Products 190 170 Companies Sold or Held for Sale --- 700 -------- -------- Total $ 7,030 $ 6,330 ======== ======== OPERATING PROFIT Specialty Metal Formed Products $ 33,540 $ 29,600 Towing Systems 13,130 8,930 Specialty Fasteners 6,690 8,510 Specialty Packaging & Sealing Products 12,250 9,710 Specialty Industrial Products 2,900 4,140 Companies Sold or Held for Sale --- 3,640 -------- -------- Total $ 68,510 $ 64,530 ======== ======== Three Months Ended March 31 --------------------------- 2000 1999 -------- -------- OPERATING PROFIT Total operating profit for reportable segments $ 68,510 $ 64,530 General corporate expenses (5,280) (5,660) Net gain on disposition of businesses --- 10,010 -------- -------- Total operating profit $ 63,230 $ 68,880 ======== ========
5 8 MASCOTECH, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONCLUDED) H. The following are reconciliations of the numerators and denominators used in the computations of basic and diluted earnings per share:
Three Months Ended March 31 --------------------------- 2000 1999 ----------- ---------- Weighted average number of shares outstanding 40,980 41,460 =========== ========== Earnings used for basic earnings per share computation $ 25,820 $ 23,860 =========== ========== Basic earnings per share $ .63 $ .58 =========== ========== Total shares used for basic earnings per share computation 40,980 41,460 Dilutive securities: Stock options 380 540 Convertible debentures 9,840 9,840 Contingently issuable shares 4,370 3,820 ----------- ---------- Total shares used for diluted earnings per share computation 55,570 55,660 =========== ========== Earnings used for basic earnings per share computation $ 25,820 $ 23,860 Add back of debenture interest 2,340 2,290 ----------- ---------- Earnings used for diluted earnings per share computation $ 28,160 $ 26,150 =========== ========== Diluted earnings per share $ .51 $ .47 =========== ==========
Diluted earnings per share reflect the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock. 6 9 MASCOTECH, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS MascoTech sales for the first quarter 2000 increased two percent to $459 million as compared with $449 million in 1999. Income in the first quarter 2000 increased eight percent to $25.8 million or $.51 per share, compared with $23.9 million or $.47 per share in 1999. Excluding the 1999 sales contribution from the Company's aftermarket-related and vacuum metalizing businesses which were sold in early 1999, first quarter 2000 sales, aided by acquisitions, would have increased approximately ten percent. Results for first quarter 1999 benefitted from a nonrecurring pre-tax gain, related to the disposition of certain businesses, of approximately $10 million. This gain was partially offset by a charge of approximately $2 million, net in other expense principally related to the decline in value of an equity affiliate. Earnings per share, excluding the operating results of the aftermarket-related and vacuum metalizing businesses and the non-recurring pre-tax gain and charge, for the first quarter 1999, would have been $.43. The following information related to sales, operating profit and margins relates to the Company's operating segments. Sales for the Company's Specialty Metal Formed products, aided by an acquisition, increased 14 percent in the first quarter 2000 as compared with 1999. Excluding the acquisition, sales would have increased approximately four percent. Excluding the acquisition, sales of powder metal products increased 11 percent reflecting the continued ramp-up of our new Valencia, Spain plant and new product launches. Currency fluctuations and the disposition of the Company's Specialty Tubing business reduced sales by approximately $7 million in first quarter 2000 as compared to 1999. Sales of Specialty Fasteners for first quarter 2000 approximated 1999 levels. Sales of large diameter fasteners, benefitting from improved markets for agricultural and off-highway applications increased 10 percent. This increase was offset by the phase out of certain products resulting from a plant closure and continued softness for aerospace fastener applications. Sales of Towing Systems, aided by acquisitions, increased 17 percent in the first quarter 2000 as compared with 1999. First quarter 2000 sales for Specialty Packaging and Sealing Products increased six percent as sales for specialty gaskets and related products increased 12 percent and sales of compressed gas cylinders increased modestly, benefitting from improved market conditions in the oil and gas industry. Sales of Specialty Industrial Products were down five percent in the first quarter 2000 from 1999 levels. Operating margin was 13.8 percent in 2000 compared with 13.2 percent in 1999, excluding, in 1999, the results of the aftermarket and vacuum metalizing businesses and the gain on disposition. The improvement in operating margin is the result of improved market conditions for certain of the Company's products serving the oil and gas industry and continued growth of the Towing segment. In addition, start up costs related to the launch of new products and a new manufacturing facility negatively impacted operating performance. The tax rate for first quarter 2000 was 39.5 percent. The higher than statutory rate of 39.5 percent results primarily from non-deductible goodwill amortization from the TriMas acquisition. The tax rate for first quarter 1999 was 49 percent which resulted from the tax treatment related to the divested businesses. The Board of Directors declared a dividend of $.08 per common share, payable on May 15, 2000, to shareholders of record on April 14, 2000. 7 10 MASCOTECH, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONCLUDED) At March 31, 2000, current assets, which aggregated approximately $500 million, were approximately two times current liabilities. Additional borrowings available under the Company's revolving credit agreement and otherwise, anticipated internal cash flows, and to the extent necessary, future financings in the financial markets are expected to provide sufficient liquidity to fund the Company's foreseeable working capital, capital expansion programs and other investment needs subject to compliance with bank covenants. Other Matters Year 2000 The Company did not experience any significant disruptions to its operating systems or lose any revenues as a result of the date change to year 2000. The Company has had in place an internal review team that has been and is continuing to address the Year 2000 issues that encompass operating and administrative areas of the Company. Also, executive management and the Board of Directors continues to monitor the status of the Company's Year 2000 remediation plans. The process includes an assessment of issues and development of remediation plans, where necessary, as they relate to internally used software, computer hardware and the use of computer applications in the Company's manufacturing processes. Additionally, contingency plans were designed to address either internal or external Year 2000 problems. Forward-Looking Statements Statements in this quarterly report on Form 10-Q which are not historical facts are forward looking statements that involve certain risks and uncertainty including, but not limited to, risks associated with the uncertainty of future financial results, conditions within the markets in which the Company competes, labor relations of the Company and certain of its customers and other uncertainties detailed in the Company's filings with the Securities and Exchange Commission. 8 11 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 12 Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends Exhibit 27 Financial Data Schedule (B) REPORTS ON FORM 8-K: None. 9 12 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 12, 2000 BY: /s/ TIMOTHY WADHAMS ------------------------------ ------------------------------------ Timothy Wadhams Executive Vice President Finance and Administration (Principal financial officer and authorized signatory) 10 13 MASCOTECH, INC. EXHIBIT INDEX EXHIBIT - ------- Exhibit 12 Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends Exhibit 27 Financial Data Schedule EX-12 2 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES 1 EXHIBIT 12 MASCOTECH, INC. COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS (DOLLARS IN THOUSANDS)
3 MONTHS ENDED FOR THE YEARS ENDED DECEMBER 31 MARCH 31, ------------------------------------------------- 2000 1999 1998 1997 1996 1995 -------- -------- -------- -------- -------- --------- EARNINGS BEFORE INCOME TAXES AND FIXED CHARGES: Income from continuing operations before income taxes and cumulative effect of accounting change, net................ $ 42,680 $139,470 $144,520 $190,290 $ 77,220 $ 100,280 Deduct equity in undistributed earnings of less-than-fifty percent owned companies.... (1,350) (9,800) (8,530) (46,030) (31,650) (29,590) Add interest on indebtedness, net.......... 21,850 80,660 81,280 36,650 30,350 51,500 Add amortization of debt expense.................... 670 2,740 3,250 900 1,490 1,670 Estimated interest factor for rentals................ 970 3,710 3,620 2,100 6,350 7,070 -------- -------- ------- -------- -------- --------- Earnings before income taxes and fixed charges.... $ 64,820 $216,780 $224,140 $183,910 $ 83,760 $ 130,930 ======== ======== ======== ======== ======== ========= FIXED CHARGES: Interest on indebtedness, net........................ $ 21,840 $ 80,950 $ 81,740 $ 36,770 $ 30,590 $ 51,690 Amortization of debt expense.................... 670 2,740 3,250 900 1,490 1,670 Estimated interest factor for rentals................ 970 3,710 3,620 2,100 6,350 7,070 -------- -------- -------- -------- -------- --------- Total fixed charges...... 23,480 87,400 88,610 39,770 38,430 60,430 -------- -------- -------- -------- -------- --------- Preferred stock dividend requirement (a)............ --- --- --- 10,300 21,570 21,970 -------- -------- -------- -------- -------- --------- Combined fixed charges and preferred stock dividends.. $ 23,480 $ 87,400 $ 88,610 $ 50,070 $ 60,000 $ 82,400 ======== ======== ======== ======== ======== ========= RATIO OF EARNINGS TO FIXED CHARGES................ 2.8 2.5 2.5 4.6 2.2 2.2 === === === === === === RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS.............. 2.8 2.5 2.5 3.7 1.4 1.6 === === === === === ===
(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. 12 EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MARCH 31, 2000 MASCOTECH, INC. 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-2000 MAR-31-2000 11,090 0 263,980 (3,970) 183,340 499,690 1,066,960 339,470 2,143,600 244,170 1,371,260 0 0 44,720 274,710 2,143,600 459,400 459,400 (340,000) (340,000) 0 0 21,810 42,680 16,860 25,820 0 0 0 25,820 0.63 0.51
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