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 September 30, 1997
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 October 31, 1997
Common stock, par value $1 per share 47,378,000 <PAGE>
MASCOTECH, INC.
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheet -
September 30, 1997 and December 31, 1996 1
Consolidated Condensed Statements of Income
for the Three and Nine Months Ended
September 30, 1997 and 1996 2
Consolidated Condensed Statement of
Cash Flows for the Nine Months
Ended September 30, 1997 and 1996 3
Notes to Consolidated Condensed Financial
Statements 4-6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7
Part II. Other Information and Signature 8-9
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
MASCOTECH, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
September 30, 1997 and December 31, 1996
(Dollars in thousands)
<TABLE>
September 30, December 31,
ASSETS 1997 1996
<S> <C> <C>
Current assets:
Cash and cash investments $ 66,950 $ 19,400
Marketable securities 33,690 37,760
Receivables 127,930 127,530
Inventories 70,990 69,640
Deferred and refundable income taxes 28,320 39,180
Prepaid expenses and other assets 12,490 14,480
Net current assets of businesses held
for disposition --- 85,980
Total current assets 340,370 393,970
Equity and other investments in affiliates 253,560 282,470
Property and equipment, net 408,930 388,460
Excess of cost over net assets of acquired
companies 64,340 69,140
Notes receivable and other assets 113,370 72,090
Net non-current assets of businesses held
for disposition --- 22,850
Total assets $1,180,570 $1,228,980
LIABILITIES
Current liabilities:
Accounts payable $ 65,670 $ 58,170
Accrued liabilities 108,330 96,910
Current portion of long-term debt 2,120 3,370
Total current liabilities 176,120 158,450
Long-term debt held by Masco Corporation --- 151,380
Other long-term debt 290,000 291,020
4 1/2% convertible subordinated debentures,
due 2003 310,000 310,000
Deferred income taxes and other long-term
liabilities 174,620 153,170
Total liabilities 950,740 1,064,020
SHAREHOLDERS' EQUITY
Preferred stock, $1 par, shares authorized:
25 million; outstanding: 10.8 million
in 1996 --- 10,800
Common stock, $1 par, shares authorized:
250 million; outstanding: 47.2 million
and 37.3 million 47,150 37,250
Paid-in capital 28,970 41,080
Retained earnings 147,190 61,060
Other 6,520 14,770
Total shareholders' equity 229,830 164,960
Total liabilities and
shareholders' equity $1,180,570 $1,228,980
The accompanying notes are an integral part of the
consolidated condensed financial statements.
</TABLE>
1
<PAGE>
MASCOTECH, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
For the Three and Nine Months Ended September 30, 1997 and 1996
(Dollars in thousands except per share amounts)
<TABLE>
Three Months Ended Nine Months Ended
September 30 September 30
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales $ 222,030 $ 290,790 $ 688,510 $1,009,770
Cost of sales (187,680) (235,210) (543,870) (834,820)
Selling, general and
administrative expenses (22,730) (29,100) (68,280) (100,460)
Charge for disposition of
businesses, net --- --- --- (31,520)
Operating profit 11,620 26,480 76,360 42,970
Other income (expense), net:
Interest expense, Masco Corporation (2,530) --- (7,500) ---
Other interest expense (6,990) (5,880) (21,780) (20,640)
Equity and interest income
from affiliates 8,910 11,590 34,360 29,930
Gain from change in investment --- --- 13,210 ---
Gain from disposition of an equity
affiliate 46,160 --- 46,160 ---
Other income (expense), net 6,610 280 17,850 (2,320)
52,160 5,990 82,300 6,970
Income before income taxes and
cumulative effect of accounting
change, net 63,780 32,470 158,660 49,940
Income taxes 25,120 13,080 62,690 26,470
Income before cumulative effect of
accounting change, net 38,660 19,390 95,970 23,470
Cumulative effect of accounting change, net --- --- --- 11,700
Net income $ 38,660 $ 19,390 $ 95,970 $ 35,170
Preferred stock dividends $ --- $ 3,240 $ 6,240 $ 9,720
Earnings attributable to
common stock $ 38,660 $ 16,150 $ 89,730 $ 25,450
Earnings per common and
common equivalent share:
Primary:
Earnings before cumulative effect
of accounting change, net $ .80 $ .28 $1.95 $ .24
Cumulative effect of accounting
change, net -- -- -- .21
Earnings attributable to
common stock $ .80 $ .28 $1.95 $ .45
Fully diluted:
Earnings before cumulative effect
of accounting change, net $ .70 $ .28 $1.74 $ .24
Cumulative effect of accounting
change, net -- -- -- .21
Earnings attributable to
common stock $ .70 $ .28 $1.74 $ .45
Cash dividends declared $ .06 $ .05 $ .16 $ .13
The accompanying notes are an integral part of the
consolidated condensed financial statements.
</TABLE>
2
<PAGE>
MASCOTECH, INC.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
For the Nine Months Ended September 30, 1997 and 1996
(Dollars in thousands)
<TABLE>
Nine Months Ended
September 30
1997 1996
<S> <S> <S>
CASH FROM (USED FOR):
OPERATIONS:
Net cash from earnings $ 71,290 $ 73,010
Decrease in inventories 4,820 8,550
(Increase) in receivables (5,540) 1,370
Increase in accounts payable and
accrued liabilities 9,250 22,340
Decrease (increase)in marketable
securities, net 5,590 (14,270)
Other, net (2,670) 21,130
Net cash from operating activities 82,740 112,130
FINANCING:
Payment of debt (67,860) (251,100)
Increase in debt 20,000 1,350
Retirement of Company Common Stock (6,610) (8,040)
Retirement of preferred stock (8,360) ---
Payment of preferred stock dividends (6,480) (9,720)
Payment of common stock dividends (6,610) (7,540)
Other, net (7,600) 1,890
Net cash (used for) financing
activities (83,520) (273,160)
INVESTMENTS:
Capital expenditures (32,650) (28,390)
Cash from sale of businesses, net 76,560 212,100
Acquisition of businesses (11,100) (4,470)
Receipt of cash from notes receivable 9,090 9,300
Other, net 6,430 4,610
Net cash from investing activities 48,330 193,150
CASH AND CASH INVESTMENTS:
Increase for the nine months 47,550 32,120
At January 1 19,400 16,380
At September 30 $ 66,950 $ 48,500
Supplemental Cash Flow Information:
Net cash paid (refunded) during the period for:
Interest $ 28,020 $ 19,570
Income taxes $ 20,290 $(18,740)
The accompanying notes are an integral part of the
consolidated condensed financial statements.
</TABLE>
3
<PAGE>
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 September 30, 1997 and the results of operations for the
three and nine months ended September 30, 1997 and 1996 and cash flows for
nine months ended September 30, 1997 and 1996. In addition, the balance
sheet as of December 31, 1996 reflects the segregation of net current and
net non-current assets related to the disposition of the Company's
Technical Services Group.
Primary earnings per common share were computed based on 48.6 million and
49.1 million weighted average common shares and common equivalent shares
outstanding for the three and nine months ended September 30, 1997,
respectively. Primary earnings per common share were computed based on
57.0 million and 56.7 million weighted average common shares and common
equivalent shares outstanding for the three and nine months ended
September 30, 1996, respectively.
The convertible preferred stock, redeemed for Company Common Stock on June
27, 1997, met the criteria for inclusion as a common stock equivalent for
the nine months ended September 30, 1997 for purposes of determining
earnings per share. As a result, the weighted average convertible
preferred shares outstanding are included in the primary and fully diluted
earnings per common share calculation for the nine months ended September
30, 1997. If such conversion had taken place at the beginning of 1997,
the primary earnings per common share amounts would have approximated the
amounts presented, for the nine months ended September 30, 1997.
Fully diluted earnings per common share are only presented when the
assumed conversion of convertible securities is dilutive. Fully diluted
earnings per common share were calculated based on 58.6 million and 59.2
million weighted average common shares outstanding for the three and nine
months ended September 30, 1997, respectively. Fully diluted earnings per
common share were calculated based on 67.0 million and 57.1 million
weighted average common shares outstanding for the three and nine months
ended September 30, 1996, respectively.
B. Inventories by component are as follows (in thousands):
September 30, December 31,
1997 1996
Finished goods $ 19,120 $ 21,020
Work in process 21,990 20,360
Raw materials 29,880 28,260
$ 70,990 $ 69,640
C. Property and equipment, net reflects accumulated depreciation of $262
million and $252 million at September 30, 1997 and December 31, 1996,
respectively.
4
<PAGE>
MASCOTECH, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(continued)
D. In the first quarter of 1997, the Company completed the sale of its
Technical Services Group (comprised of the Company's engineering and
technical business services units) to MSX International, Inc. ("MSXI").
Also included in this transaction were the net assets of APX
International, which were acquired by the Company in November, 1996 for
approximately $44 million. The sale resulted in total proceeds to the
Company of approximately $145 million consisting principally of cash,
subordinated debentures, preferred stock and an approximate 45 percent
common equity interest in MSXI. The excess of the consideration received
by the Company over the book value of the related assets has been
accounted for as a reduction in the carrying value of the Company's
investment in MSXI, and will be recognized when additional cash is
realized from the non-cash proceeds received in the transaction.
E. In the first quarter of 1997, TriMas Corporation ("TriMas"), an equity
affiliate, issued stock as a result of the redemption of a convertible
debt instrument. The Company recognized pre-tax income of approximately
$13 million (approximately $.13 per common share after-tax) as a result of
the change in the Company's equity ownership in TriMas.
F. The Company previously announced that it had signed a Memorandum of
Understanding with Teksid S.p.A. concerning a possible acquisition by the
Company of certain businesses of Teksid's Steel Components Division. It
is contemplated that the businesses, with 1996 sales of approximately $150
million, would be spun-off from Teksid and contributed to newly formed
companies in which Teksid would retain a participation. The transaction
is subject to the completion of due diligence, the execution of a
definitive agreement, regulatory approvals, and approval by the respective
Boards of Directors.
G. On June 27, 1997, the Company completed the redemption of all remaining
issued and outstanding shares of its $1.20 Convertible Preferred Stock
("DECS"). Holders of DECS shares received in exchange for each share of
DECS .955 percent of a share of the Company's Common Stock, par value
$1.00 per share, resulting in the issuance of approximately 10 million
shares of Company Common Stock.
H. On September 30, 1997, the Company exercised its option and exchanged its
equity holdings in Emco Limited ("Emco") and approximately $46 million in
cash to Masco Corporation ("Masco") to satisfy the indebtedness to Masco
incurred in 1996 in connection with the Company's purchase and retirement
of certain of its common shares held by Masco. The transfer of the
Company's equity holdings in Emco, which approximated $106 million in
value, resulted in a pre-tax gain of approximately $46 million
(approximately $.50 per common share after-tax) in the third quarter of
1997.
I. The Company has limited involvement with derivative financial instruments,
and does not use derivatives for trading purposes. The derivatives,
principally consisting of S&P 500 futures contracts, are intended to
reduce the market risk associated with the Company's marketable equity
securities portfolio. Derivatives are carried at market value and changes
in market value of outstanding futures contracts are recognized as
incurred. The Company's investment in futures contracts increases in value
as a result of decreases in the underlying stock index and decreases in
value when the underlying stock index increases. The contracts are
financial instruments (with off balance sheet market risk), as they are
required to be settled in cash. At September 30, 1997, the notional
amount of the derivatives was $19 million. The notional amounts do not
represent the amounts exchanged by the parties, and thus are not a measure
of the exposure of the Company through its use of derivatives. The
Company's market risk is subject to
5
<PAGE>
MASCOTECH, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(concluded)
the price differential between the future contract market value and future
contract cost.
Futures contracts trade on organized exchanges, and as a result,
settlement of such contracts has little credit risk. Initial margin
requirements are met in cash or other instruments, and changes in the
contract values are settled periodically. Initial margin requirements are
recorded as cash investments in the balance sheet. Futures contracts are
short-term in nature, usually less than six months. Related gains and
losses are reported as income or loss in other income (expense) as part of
marketable securities portfolio gain or loss. The Company recognized net
gains from its marketable securities portfolio and S&P 500 futures
contracts of approximately $4 million in the quarter ended September 30,
1997.
J. The Company expects that Statement of Financial Accounting Standards No.
128 ("SFAS 128"), "Earnings Per Share," will not have a material impact on
its fully diluted earnings per share calculation when adopted at December
31, 1997.
K. During the third quarter, the Company recorded a charge of $7.0 million
related to the closure of a manufacturing facility which will be completed
in 1998. The components of the $7.0 million charge include asset write
downs of $4.8 million, employee severance and other benefits of $1.6
million and accruable exit costs of $.6 million.
L. The following presents combined supplemental financial data of the Company
and TriMas as one entity, with MascoTech as the parent company. The
Company had an equity ownership interest in TriMas of approximately 37
percent and 41 percent at September 30, 1997 and September 30, 1996,
respectively. Intercompany transactions have been eliminated.
Approximate combined condensed financial data are as follows (in
thousands):
<TABLE>
September 30
1997 1996
<S> <C> <C>
Current assets $ 654,700 $ 692,940
Current liabilities (242,640) (262,290)
Working capital 412,060 430,650
Property and equipment, net 603,590 585,320
Excess of cost over net
assets of acquired companies 175,610 175,300
Other assets 275,070 300,720
Long-term debt (671,630) (639,710)
Deferred income taxes and
other long-term liabilities (222,160) (203,680)
Equity of the other shareholders
of TriMas (342,710) (221,590)
Equity of shareholders of
MascoTech $ 229,830 $ 427,010
Net sales $ 1,201,080 $1,463,920
Operating profit $ 165,020 $ 122,650
Cumulative effect of accounting change $ --- $ 11,700
Net income $ 95,970 $ 35,170
Earnings attributable to
common stock $ 89.730 $ 25,450
</TABLE>
6
<PAGE>
MASCOTECH, INC.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Sales of the Company's core transportation-related businesses, aided by an
acquisition, increased approximately three percent to approximately $222 million
in the third quarter of 1997 from $215 million in 1996. The Company's reported
consolidated sales for the 1996 third quarter of approximately $291 million
include the results of certain businesses which have been disposed, as
previously announced.
Sales of the Company's core transportation-related businesses, aided by an
acquisition, increased approximately five percent to approximately $689 million
for the nine months ended September 30, 1997 from approximately $658 million in
1996. The Company's reported consolidated sales for the nine month period ended
September 30, 1996 of approximately $1.0 billion include the results of certain
businesses which have been disposed, as previously announced.
Income in the third quarter of 1997 was $38.7 million or $.70 per common
share, compared with $16.2 million or $.28 per common share in the comparable
period in 1996. Income in 1997 was impacted by a pre-tax gain of approximately
$46 million related to the transfer of the Company's equity holdings in Emco
Limited ("Emco") to Masco Corporation ("Masco"). This gain was partially offset
by costs, of approximately $14 million, associated with a plant closure and the
Company's share of a special charge recorded by an equity affiliate and other
expenses. Excluding the impact of the gain and unusual expenses, income in the
third quarter of 1997 would have been $19.2 million or $.37 per common share.
Third quarter 1997 income was also negatively affected by costs and expenses as
a result of a strike at one of the Company's manufacturing facilities and higher
than anticipated product start-up costs. The negative impact of these costs was
partially offset by gains from the Company's marketable securities portfolio.
Operating profit for the Company's core businesses before general
corporate expense, plant closure costs and other costs and expenses for the
nine months and three months ended September 30, 1997 was approximately $101
million and $26 million, respectively, as compared with $99 million and $34
million for the comparable periods in 1996.
Results for the nine month period ended September 30, 1997 benefitted from
pre-tax gains aggregating approximately $26.6 million (approximately $.27 per
common share after-tax) as a result of an equity transaction by an affiliate of
the Company and gains from the Company's marketable securities portfolio.
Results for the nine month period ended September 30, 1996 benefitted from the
required adoption of an accounting change, which resulted in after-tax income of
$11.7 million, and include after-tax losses of approximately $26 million from
the disposition of MascoTech Stamping Technologies, Inc.
In the second quarter of 1997, the Company completed the redemption of all
remaining issued and outstanding shares of its $1.20 Convertible Preferred Stock
("DECS") on June 27, 1997. Holders of DECS shares received in exchange for each
share of DECS .955 percent of a share of the Company's Common Stock, par value
$1.00 per share, resulting in the issuance of approximately 10 million shares of
Company Common Stock.
In the first quarter of 1997, the Company completed the sale of its
Technical Services Group (comprised of the Company's engineering and technical
business services units) to MSX International, Inc. ("MSXI"). Also included in
this transaction were the net assets of APX International, which were acquired
by the Company in November, 1996 for approximately $44 million. The sale
resulted in total proceeds to the Company of approximately $145 million
consisting principally of cash, subordinated debentures, preferred stock and an
approximate 45 percent common equity interest in MSXI. The excess of the
consideration received by the Company over the book value of the related assets
has been accounted for as a reduction in the carrying value of the Company's
investment in MSXI, and will be recognized when additional cash is realized from
the non-cash proceeds received in the transaction.
Equity and interest income from affiliates decreased in the third quarter
of 1997 as compared to the third quarter of 1996 principally as a result of the
Company's share of a special charge recorded by an equity affiliate.
The Company declared and paid a cash dividend of $.06 per common share in
the third quarter of 1997. The Board of Directors also declared a dividend of
$.06 per common share on September 23, 1997 payable on November 17, 1997.
On September 30, 1997, the Company exercised its option and exchanged its
equity holdings in Emco and approximately $46 million in cash to Masco to
satisfy the indebtedness to Masco incurred in 1996 in connection with the
Company's purchase and retirement of certain of its common shares held by Masco.
Additional borrowings available under the Company's amended revolving
credit agreement and otherwise, and anticipated internal cash flows are expected
to provide sufficient liquidity to fund the Company's foreseeable working
capital, acquisitions, capital expansion programs, dividends, any stock
repurchases and other investment needs. At September 30, 1997, current assets
were approximately two times current liabilities.
7
<PAGE>
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
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K:
1. Report on Form 8-K dated September 30, 1997 reporting under
Item 2 "Acquisition or Disposition of Assets" and under Item 7
unaudited pro forma consolidated condensed balance sheet as of
June 30, 1997 and unaudited pro forma consolidated condensed
income statements for the year ended December 31, 1996 and for
the six months ended June 30, 1997 for the assumed exchange of
the Company's holdings in its equity affiliate, Emco Limited,
and approximately $46 million in cash to Masco Corporation for
the payment of a promissory note held by Masco Corporation,
issued in connection with the Company's 1996 purchase and
retirement of certain of its securities held by Masco
Corporation.
8
<PAGE>
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: November 13, 1997 By: /s/Timothy Wadhams
Timothy Wadhams
Vice President - Controller
and Treasurer
(Chief accounting officer
and authorized signatory)
9
<PAGE>
MASCOTECH, INC.
EXHIBIT INDEX
Exhibit Sequential
Page No.
Exhibit 11 Computation of Earnings Per Common Share
- Primary and Fully Diluted 11-12
Exhibit 12 Computation of Ratio of Earnings to Combined
Fixed Charges and Preferred Stock
Dividends 13
Exhibit 27 Financial Data Schedule 14
Exhibit 11
MASCOTECH, INC.
Computation of Earnings Per Common Share
Primary and Fully Diluted
(In thousands except per share amounts)
<TABLE>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
PRIMARY:
Income before cumulative effect
of accounting change $38,660 $19,390 $95,970 $23,470
Preferred stock dividends --- 3,240 6,240 9,720
Income before cumulative effect
of accounting change attributable
to common stock 38,660 16,150 89,730 13,750
Add convertible preferred stock dividends --- --- (A) 6,240 --- (A)
Earnings before cumulative effect
of accounting change attributable
to common stock 38,660 16,150 95,970 13,750
Cumulative effect of accounting change --- --- --- 11,700
Earnings attributable to common
stock, as adjusted $38,660 $16,150 $95,970 $25,450
Weighted average number of common shares
outstanding during each period 47,250 55,270 40,870 55,330
Addition from assumed exercise of stock
options and warrants 1,300 1,680 1,290 1,360
Addition from assumed conversion of
preferred stock at conversion date --- --- (A) 6,960 --- (A)
Weighted average number of common shares
and equivalents outstanding during each
period-without dilution 48,550 56,950 49,120 56,690
Primary earnings per common and
common equivalent share:
Earnings before cumulative
effect of accounting change $ .80 $ .28 $1.95 $ .24
Cumulative effect of accounting change -- -- -- .21
Earnings attributable to
common stock $ .80 $ .28 $1.95 $ .45
Earnings per common share for the periods ended September 30, 1997 and 1996 were computed based on the treasury stock method.
For the nine months ended September 30, 1997, the additional weighted average shares from assumed conversion of preferred stock
was computed assuming conversion on a one-to-one basis at the conversion date.
(A) Anti-dilutive in 1996.
<PAGE>
Exhibit 11
MASCOTECH, INC.
Computation of Earnings Per Common Share
Primary and Fully Diluted
(In thousands except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
FULLY DILUTED:
Income before cumulative effect
of accounting change $38,660 $19,390 $ 95,970 $23,470
Preferred stock dividends --- 3,240 6,240 9,720
Income attributable to common stock 38,660 16,150 89,730 13,750
Add after-tax convertible debenture
related expenses 2,380 2,380 7,140 --- (A)
Add convertible preferred stock dividends --- --- (A) 6,240 --- (A)
Earnings before cumulative effect
of accounting change attributable to
common stock $41,040 $18,530 $103,110 $13,750
Cumulative effect of accounting change --- --- --- 11,700
Earnings attributable to common
stock, as adjusted $41,040 $18,530 $103,110 $25,450
Weighted average number of common shares
outstanding during each period 47,250 55,270 40,870 55,330
Addition from assumed conversion of
convertible debentures 10,000 10,000 10,000 --- (A)
Addition from assumed exercise of stock
options and warrants 1,300 1,760 1,320 1,760
Addition from assumed conversion of
preferred stock at conversion date --- --- (A) 6,960 --- (A)
Weighted average number of common shares
and equivalents outstanding during
each period
-fully diluted basis 58,550 67,030 59,150 57,090
Fully diluted earnings per common
and common equivalent share:
Earnings before cumulative
effect of accounting change $ .70 $ .28 $1.74 $ .24
Cumulative effect of accounting change -- -- -- .21
Earnings attributable to
common stock $ .70 $ .28 $1.74 $ .45
Earnings per common share for the periods ended September 30, 1997 and 1996 were computed based on the treasury stock method.
For the nine months ended September 30, 1997, the additional weighted average shares from assumed conversion of preferred stock
was computed assuming conversion on a one-to-one basis at the conversion date.
(A) Anti-dilutive in 1996.
</TABLE>
Exhibit 12
MASCOTECH, INC.
Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends
(Dollars in thousands)
<TABLE>
9 Months
Ended
Sept. 30, For The Years Ended December 31
1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Earnings (Loss) Before Income
Taxes and Fixed Charges:
Income (loss) from continuing
operations before income
taxes (credit),
extraordinary item and
cumulative effect of
accounting change, net..... $158,660 $ 77,220 $100,280 $(264,490) $121,180 $ 68,250
Deduct equity in
undistributed earnings
of less-than-fifty-
percent owned companies.... (35,400) (31,650) (29,590) (23,350) (19,930) (21,760)
Add interest on
indebtedness, net.......... 29,370 30,350 51,500 51,290 83,000 87,830
Add amortization of debt
expense.................... 650 1,490 1,670 3,450 4,390 1,930
Estimated interest factor
for rentals................ 1,530 6,350 7,070 6,220 5,550 5,740
Earnings (loss) before income
taxes and fixed charges.... $154,810 $ 83,760 $130,930 $(226,880) $194,190 $141,990
Fixed Charges:
Interest on indebtedness,
net........................ $ 29,460 $ 30,590 $ 51,690 $ 51,540 $ 83,110 $ 87,980
Amortization of debt
expense.................... 650 1,490 1,670 3,450 4,390 1,930
Estimated interest factor
for rentals................ 1,530 6,350 7,070 6,220 5,550 5,740
Total fixed charges...... 31,640 38,430 60,430 61,210 93,050 95,650
Preferred stock dividend
requirement (a)............ 10,320 21,570 21,970 14,630 25,860 17,140
Combined fixed charges and
preferred stock dividends.. $ 41,960 $ 60,000 $ 82,400 $ 75,840 $118,910 $112,790
Ratio of earnings to
fixed charges................ 4.9 2.2 2.2 -- (b) 2.1 1.5
Ratio of earnings to combined
fixed charges and preferred
stock dividends.............. 3.7 1.4 1.6 -- (c) 1.6 1.3
(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) 1994 results of operations are inadequate to cover fixed charges by $288,090.
(c) 1994 results of operations are inadequate to cover combined fixed charges and preferred stock dividends by $302,720.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEPTEMBER
30, 1997 MASCOTECH, INC. 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 66,950
<SECURITIES> 33,690
<RECEIVABLES> 127,930
<ALLOWANCES> 0
<INVENTORY> 70,990
<CURRENT-ASSETS> 340,370
<PP&E> 671,050
<DEPRECIATION> 262,120
<TOTAL-ASSETS> 1,180,570
<CURRENT-LIABILITIES> 176,120
<BONDS> 600,000
0
0
<COMMON> 47,150
<OTHER-SE> 182,680
<TOTAL-LIABILITY-AND-EQUITY> 1,180,570
<SALES> 688,510
<TOTAL-REVENUES> 688,510
<CGS> 543,870
<TOTAL-COSTS> 543,870
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,280
<INCOME-PRETAX> 158,660
<INCOME-TAX> 62,690
<INCOME-CONTINUING> 95,970
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 95,970
<EPS-PRIMARY> 1.95
<EPS-DILUTED> 1.74
</TABLE>
