SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
September 30, 1997
Date of report (Date of earliest event reported)
MASCOTECH, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 1-12068 38-2513957
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
21001 Van Born Road, Taylor, Michigan 48180
(Address of Principal Executive Offices) (Zip Code)
(313) 274-7405
(Registrant's telephone number, including area code)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 30, 1997, the Registrant exercised its option and exchanged
approximately 9.9 million shares of the outstanding common stock of Emco Limited
("Emco") and approximately $46 million in cash to Masco Corporation ("Masco") in
payment of a promissory note issued by the Registrant in October 1996 in
connection with the Registrant's purchase and retirement of certain of its
securities held by Masco. The value of the Emco shares (approximately $106
million) was based on the market price of Emco common stock on the Toronto
Stock Exchange, translated into U.S. dollars, in accordance with the terms of
the Agreement entered into in October 1996 between the Registrant and Masco and
previously filed with the Securities and Exchange Commission. The Registrant's
press release issued September 30, 1997 announcing the transfer of the Emco
shares is attached as Exhibit 99.a hereto.
Masco holds approximately 17% of the Registrant's outstanding common
stock. Richard A. Manoogian is the Chairman and Chief Executive Officer of the
Registrant and Masco. John A. Morgan is a director of both the Registrant and
Masco, and Eugene A. Gargaro, Jr., a director and the Secretary of the
Registrant, is also an executive officer and the Secretary of Masco. Other
relationships between Masco and the Registrant have been previously reported in
other filings with the Securities and Exchange Commission.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(b) Pro Forma Financial Information. The following unaudited pro forma
financial information is included herein.
(i) Unaudited Pro Forma Consolidated Condensed Statement of Income
for the year ended December 31, 1996.
(ii) Unaudited Pro Forma Consolidated Condensed Statement of Income
for the six months ended June 30, 1997.
(iii) Unaudited Pro Forma Consolidated Condensed Balance Sheet as of
June 30, 1997.
(c) Exhibits. The following exhibits are filed herewith:
99.a Press Release dated September 30, 1997.
<PAGE>
MascoTech, Inc.
Unaudited Pro Forma Consolidated Condensed Financial Statements
The following unaudited pro forma consolidated condensed balance sheet and
income statements give effect to the following transactions which have occurred:
Disposition of Operations:
- the disposition for cash, except for known non-cash transactions, of
the net assets of businesses held for disposition or sold,
undertaken in 1994 and completed in 1996, with the cash proceeds
utilized to retire debt.
- the disposition in May 1996 of MascoTech Stamping Technologies, Inc.
for cash, common stock and warrants with the cash proceeds
(including cash realized from the subsequent sale of a portion of
the common stock) utilized to retire debt.
- the sale in January 1997 of MascoTech Technical Services Group
(including APX International, acquired by MascoTech November 6,
1996) for cash (net of the purchase of APX International), common
and preferred stock of MSX International, Inc., and notes with the
net cash proceeds utilized to retire debt.
Stock/Warrant Purchase:
- the purchase and retirement in 1996 of: 17 million shares of
MascoTech (the Company) Common Stock and the warrant to purchase 10
million shares of Company Common Stock from Masco Corporation; and
one million shares of Company Common Stock from Richard A.
Manoogian, Chairman of the Board of both Masco Corporation and
MascoTech, Inc.
Emco Exchange:
- the exchange of the Company's equity holdings in Emco Limited to
Masco Corporation together with cash borrowings under the Company's
Revolving Credit Agreement, to retire indebtedness to Masco
Corporation and Mr. Manoogian incurred in the Company's 1996
purchase and retirement of Company Common Stock.
The pro forma consolidated condensed financial statements reflect these
transactions as if they had been completed with all proceeds (including related
tax benefits) received at the beginning of the period presented for the
consolidated condensed income statements and as of June 30, 1997 for the
consolidated condensed balance sheet.
The pro forma data does not purport to be indicative of the results which
would actually have been reported if the transactions had occurred on such dates
or which may be reported in the future. The pro forma data should be read in
conjunction with the historical financial statements of the Company and the
related notes to such financial statements.
Primary earnings per common share for the twelve months ended December 31,
1996 is based on 53.8 million weighted average shares of common stock and common
stock equivalents outstanding. The Company's Dividend Enhanced Convertible
Stock (DECS) was not included as such inclusion would be anti-dilutive.
Convertible debt securities did not have a dilutive effect on earnings per
common share in 1996.
Pro forma primary earnings per common share for the twelve months ended
December 31, 1996 is based on 49.0 million shares outstanding including
approximately .9 million of common stock equivalents and 10.8 million common
shares from the assumed conversion of the DECS. Fully diluted earnings per
common share after adjustments is based on 59.3 million shares outstanding
including the assumed conversion of convertible debt securities into 10.0
million common shares.
<PAGE>
Both primary earnings per common share and pro forma primary earnings per
common share for the six months ended June 30, 1997 are based on 49.5 million
shares outstanding including approximately 1.3 million of common stock
equivalents and 10.5 million common shares from the assumed conversion of the
DECS. Fully diluted earnings per common share are based on 59.5 million shares
outstanding including the assumed conversion of convertible debt securities into
10.0 million common shares.
<PAGE>
<TABLE>
MascoTech, Inc.
Pro Forma Consolidated Condensed Income Statement
for the year ended December 31, 1996
(unaudited)
(amounts are in thousands except per share amounts)
<CAPTION>
Company Exchange of
Historical Disposition Stock/Warrant Emco Equity Pro Forma Pro Forma
12/31/96 of Operations Purchase Holdings Adjustments Adjusted
(A) (B) (C) (D)
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 1,281,220 $ 411,810 --- --- --- $ 869,410
Cost of sales (1,048,110) (374,470) --- --- --- (673,640)
Selling, general and
administrative expenses (132,260) (50,230) --- --- --- (82,030)
Charge on disposition of
businesses, net (31,520) (31,520) --- --- --- ---
Operating profit (loss) 69,330 (44,410) --- --- --- 113,740
Other income (expense), net:
Interest expense (29,970) (930) $ (14,580) --- $ 17,190 (26,430)
Equity and interest income from
affiliates 40,460 --- --- $ 5,180 4,000 39,280
Other, net (2,600) 1,230 --- --- 350 (3,480)
Other income (expense), net 7,890 300 (14,580) 5,180 21,540 9,370
Income (loss) before income
taxes (credit) 77,220 (44,110) (14,580) 5,180 21,540 123,110
Income taxes (credit) 37,300 (10,170) (5,830) 2,070 8,620 48,190
Income (loss) $ 39,920 $ (33,940) $ (8,750) $ 3,110 $ 12,920 $ 74,920
Preferred stock dividends $ 12,960 $ 12,960
Earnings attributable to
common stock $ 26,960 $ 61,960
Per common share data:
Primary $ .50 $ 1.53
Fully diluted $ .49 $ 1.42
Primary shares outstanding 53,790 48,990
Fully diluted shares outstanding 55,130 59,270
</TABLE>
<PAGE>
MascoTech, Inc.
Footnotes to Pro Forma Consolidated Condensed Income Statement
for the year ended December 31, 1996
(A) To reflect the following:
- elimination of the sales and directly allocable expenses related to
the Company's businesses held for disposition;
- elimination of the sales and directly allocable expenses related to
the disposition of MascoTech Stamping Technologies, Inc.;
- elimination of the sales and directly allocable expenses related to
MascoTech's Technical Services Group due to its sale;
- the related tax credit at the appropriate U.S. and foreign statutory
tax rate including state tax provision, net of federal tax benefit.
(B) To reflect the following:
- interest expense from the notes due Masco Corporation - $151.4
million and Mr. Manoogian - $7.6 million; and borrowings under the
Company's Revolving Credit Agreement - $121.0 million; to purchase
17 million shares of Company Common Stock and the warrant to
purchase 10 million shares of Company Common Stock from Masco
Corporation and one million shares of Company Common Stock from Mr.
Manoogian, all of which were retired;
- the related tax credit at the appropriate U.S. statutory tax rate
including state tax provision, net of federal tax benefit.
(C) To reflect the following:
- elimination of the Company's equity income from Emco Limited related
to the exchange of the Company's equity investment in Emco Limited
with Masco Corporation;
- the related tax provision at the appropriate U.S. statutory tax rate
including state tax provision, net of federal tax benefit.
(D) To reflect the following:
- dividend income from the $18 million of 12% preferred stock and
interest income from the $30 million of 12 1/2% subordinated
debentures received as part of the sale of Technical Services
Group and estimated pro forma equity earnings from the equity
interest in MSX International, Inc.;
- elimination of interest expense from the notes due Masco Corporation
- $151.4 million and Mr. Manoogian - $7.6 million;
- net interest savings from the use of assumed cash proceeds of $235
million from both the sale of businesses described in (A) (including
related cash tax benefits of $53 million) and the exchange of Emco
Limited equity holdings described in (C) to repay debt;
- the related net tax provision of the pro forma adjustments at the
appropriate U.S. statutory rates including state tax provision, net
of federal tax benefit.
<PAGE>
<TABLE>
MascoTech, Inc.
Pro Forma Consolidated Condensed Income Statement
for the six months ended June 30, 1997
(unaudited)
(amounts are in thousands except per share amounts)
<CAPTION>
Company Exchange of
Historical Emco Equity Pro Forma Pro Forma
06/30/97 Holdings Adjustments Adjusted
(A) (B)
<S> <C> <C> <C> <C>
Net sales $ 466,480 --- --- $ 466,480
Cost of sales (356,190) --- --- (356,190)
Selling, general and
administrative expenses (45,550) --- --- (45,550)
Operating profit 64,740 --- --- 64,740
Other income (expense), net:
Interest expense, Masco
Corporation (4,970) --- $ 4,970 ---
Other interest expense (14,790) --- (1,360) (16,150)
Equity and interest income
from affiliates 25,450 $ 3,130 --- 22,320
Gain from change in investment
of an equity affiliate 13,210 --- --- 13,210
Other, net 11,240 --- --- 11,240
Other income (expense), net 30,140 3,130 3,610 30,620
Income before income taxes 94,880 3,130 3,610 95,360
Income taxes 37,570 1,250 1,440 37,760
Net Income $ 57,310 $ 1,880 $ 2,170 $ 57,600
Preferred stock dividends $ 6,240 $ 6,240
Earnings attributable to
common stock $ 51,070 $ 51,360
Per common share data:
Primary $ 1.16 $ 1.16
Fully diluted $ 1.04 $ 1.05
Primary shares outstanding 49,460 49,460
Fully diluted shares outstanding 59,520 59,520
</TABLE>
<PAGE>
MascoTech, Inc.
Footnotes to Pro Forma Consolidated Condensed Income Statement
for the six months ended June 30, 1997
(A) To reflect the following:
- elimination of the Company's equity income from Emco Limited related
to the exchange of the Company's equity investment in Emco Limited
to Masco Corporation;
- the related tax provision at the appropriate U.S. statutory tax rate
including state tax provision, net of federal tax benefit.
(B) To reflect the following:
- elimination of interest expense from the notes due Masco Corporation
- $151.4 million and Mr. Manoogian - $7.6 million;
- the interest expense from the borrowings under the Company's
Revolving Credit Agreement required to retire that portion of the
outstanding notes due Masco Corporation, which is in excess of the
assumed proceeds from the exchange of the Company's common equity
investment in Emco Limited to Masco Corporation, and due Mr.
Manoogian;
- the related tax provision of the proforma adjustments at the
appropriate U.S. statutory rates including state tax provision, net
of federal tax benefit.
<PAGE>
<TABLE>
MascoTech, Inc.
Pro Forma Consolidated Condensed Balance Sheet
as of June 30, 1997
(unaudited)
(amounts are in thousands)
<CAPTION>
Company Exchange of
Historical Emco Equity Pro Forma Pro Forma
06/30/97 Holdings Adjustments Adjusted
(A) (B)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash investments $ 39,680 $ 39,680
Marketable securities 48,440 48,440
Receivables 125,160 125,160
Inventories 70,960 70,960
Deferred and refundable
income taxes 36,790 36,790
Prepaid expenses and other assets 12,520 12,520
Total current assets 333,550 333,550
Equity and other investments in
affiliates 344,160 $ (51,270) 292,890
Property and equipment, net 398,320 398,320
Goodwill 68,520 68,520
Notes receivable and other assets 71,730 71,730
Total assets $1,216,280 $ (51,270) $1,165,010
LIABILITIES and SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 59,710 $ 59,710
Accrued liabilities 102,370 $ 14,310 116,680
Current portion of long-term debt 2,320 2,320
Total current liabilities 164,400 14,310 178,710
Long-term debt held by Masco Corporation 151,380 $ (151,380)
4 1/2% convertible subordinated debentures,
due 2003 310,000 310,000
Other long-term debt 237,720 (7,620) 53,200 283,300
Deferred income taxes and other
long-term liabilities 155,780 6,010 161,790
Total liabilities 1,019,280 (159,000) 73,520 933,800
Shareholders' Equity:
Common stock 47,300 47,300
Paid-in capital 32,050 32,050
Retained earnings 111,380 30,480 141,860
Other 6,270 3,730 10,000
Total shareholders' equity 197,000 3,730 30,480 231,210
Total liabilities and
shareholders' equity $1,216,280 $ (155,270) $ 104,000 $1,165,010
</TABLE>
<PAGE>
MascoTech, Inc.
Footnotes to Pro Forma Consolidated Condensed Balance Sheet
as of June 30, 1997
(A) To reflect the following:
- the exchange of the Company's common equity investment in Emco
Limited to Masco Corporation;
- the retirement of a note due Masco Corporation ($151.4 million) from
the proceeds from the exchange of the Company's common equity
investment in Emco Limited to Masco Corporation as well as with
borrowings under the Company's Revolving Credit Agreement;
- the retirement of a note due Mr. Manoogian ($7.6 million) with
borrowings under the Company's Revolving Credit Agreement.
(B) To reflect the following:
- borrowings under the Company's Revolving Credit Agreement to retire
notes due Masco Corporation and Mr. Manoogian;
- taxes payable on the gain, as well as the after-tax gain related to
the exchange of the Company's common equity investment in Emco
Limited to Masco Corporation.
<PAGE>
SIGNATURES
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, hereunto duly authorized.
MASCOTECH, INC.
By:/s/Timothy Wadhams
Timothy Wadhams
Vice President/Controller and
Treasurer
Date: October 15 , 1997
<PAGE>
EXHIBIT INDEX
99.a Press Release dated September 30, 1997
Exhibit 99.a
FOR IMMEDIATE RELEASE
September 30, 1997
MASCOTECH ANNOUNCES TRANSFER OF EMCO LIMITED EQUITY
TO MASCO CORPORATION
MascoTech announced today that it has exercised its option to transfer its
equity holdings in Emco Limited to Masco Corporation. This transfer and a
payment of approximately $50 million in cash, satisfies the indebtedness to
Masco Corporation incurred last year in connection with the Company's purchase
and retirement of certain of its common shares held by Masco Corporation, as
previously announced. The transfer of the Company's equity holdings in Emco,
which approximates $100 million in value, will result in a pre-tax gain to
MascoTech of approximately $46 million in the third quarter of 1997.
Headquartered in Taylor, Michigan, MascoTech's transportation-related
businesses include metal-worked components primarily for vehicle engine and
drivetrain applications and automotive aftermarket products.
Visit MascoTech's website at http://www.mascotech.com. MascoTech's press
releases are also available through Company News On-Call by fax, 800-758-5804,
extension 535375, or http://www.prnewswire.com.
