<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 COMMISSION FILE NUMBER 1-12068
MASCOTECH, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 38-2513957
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
21001 VAN BORN ROAD, TAYLOR, MICHIGAN 48180
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 313-274-7405
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
<S> <C>
COMMON STOCK, $1.00 PAR VALUE NEW YORK STOCK EXCHANGE, INC.
4 1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2003 NEW YORK STOCK EXCHANGE, INC.
SERIES A PARTICIPATING CUMULATIVE PREFERRED STOCK NEW YORK STOCK EXCHANGE, INC.
PURCHASE RIGHTS
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
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 BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. [X]
THE AGGREGATE MARKET VALUE OF THE REGISTRANT'S COMMON STOCK HELD BY
NON-AFFILIATES OF THE REGISTRANT ON MARCH 15, 2000 (BASED ON THE CLOSING SALE
PRICE OF $12 1/8 OF THE REGISTRANT'S COMMON STOCK ON THE NEW YORK STOCK EXCHANGE
COMPOSITE TAPE ON SUCH DATE) WAS APPROXIMATELY $358,103,000.
NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK AT MARCH 15,
2000:
44,689,000 SHARES OF COMMON STOCK, PAR VALUE $1.00 PER SHARE
PORTIONS OF THE REGISTRANT'S DEFINITIVE PROXY STATEMENT TO BE FILED FOR ITS
2000 ANNUAL MEETING OF STOCKHOLDERS ARE INCORPORATED BY REFERENCE INTO PART III
OF THIS FORM 10-K.
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<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
- ---- ----
<C> <S> <C>
PART I
1. Business.................................................... 2
2. Properties.................................................. 6
3. Legal Proceedings........................................... 7
4. Submission of Matters to a Vote of Security Holders......... 7
Supplementary Item. Executive Officers of Registrant........ 8
PART II
5. Market for Registrant's Common Equity and Related
Stockholder Matters......................................... 9
6. Selected Financial Data..................................... 10
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 11
8. Financial Statements and Supplementary Data................. 17
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................... 43
PART III
10. Directors and Executive Officers of the Registrant.......... 43
11. Executive Compensation...................................... 43
12. Security Ownership of Certain Beneficial Owners and
Management.................................................. 43
13. Certain Relationships and Related Transactions.............. 43
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K......................................................... 44
Signatures.................................................. 47
FINANCIAL STATEMENT SCHEDULES
MascoTech, Inc. Financial Statement Schedules............... F-1
TriMas Corporation and Subsidiaries Consolidated Financial
Statements.................................................. F-3
</TABLE>
1
<PAGE> 3
PART I
ITEM 1. BUSINESS.
MascoTech, Inc. (the "Company") is a diversified industrial manufacturing
company utilizing advanced metalworking capabilities to supply metal formed
components used in vehicle engine and drivetrain applications, specialty
fasteners, towing systems, packaging and sealing products and other industrial
products. Except as the context otherwise indicates, the terms "MascoTech" and
the "Company" refer to MascoTech, Inc. and its consolidated subsidiaries.
BACKGROUND
MascoTech was incorporated in Delaware in 1984 as a wholly-owned subsidiary
of Masco Corporation, which in May 1984 transferred its industrial businesses to
MascoTech. The Company became a separate public company in July, 1984 when Masco
Corporation distributed shares of Company common stock as a special dividend to
its stockholders. Masco Corporation currently owns approximately 17 percent of
the Company's common stock.
In early 1997, the Company completed the sale of its engineering and
technical services businesses to MSX International, Inc. As part of that
transaction, the Company acquired an approximate 45 percent common equity
interest in MSX International, Inc. See "Equity Investments -- Other Equity
Investments," elsewhere in Item 1 of this Report. In 1999, the Company completed
the planned sale of certain of its automotive aftermarket businesses and vacuum
metalizing operation for total proceeds of approximately $105 million. Pursuant
to a plan adopted in 1999, the Company's specialty tubing business was sold for
approximately $6 million in January 2000. The cash portion of the proceeds from
these sales was applied to reduce the Company's indebtedness. The disposition of
these businesses did not meet the criteria for discontinued operations treatment
for accounting purposes; accordingly, the sales and results of operations of
these businesses are included in the results of continuing operations through
the respective dates of disposition. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Disposition of Businesses,"
included in Item 7 of this Report.
In January 1998, the Company completed the acquisition of TriMas
Corporation ("TriMas") by purchasing all of the outstanding shares of TriMas not
already owned by the Company for approximately $920 million. In connection with
the TriMas acquisition, the Company entered into a $1.3 billion credit facility
which is collateralized by a pledge of the stock of TriMas. See the Note to the
Company's Consolidated Financial Statements captioned "Long-Term Debt," included
in Item 8 of this Report.
During 1999, the Company acquired Windfall Products, Inc., a manufacturer
of transportation-related components that utilizes powder metal technology,
significantly expanding the Company's powder metal manufacturing operations.
2
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OPERATING SEGMENTS
The following table sets forth for the three years ended December 31, the
net sales and operating profit for MascoTech's operating segments. Information
for 1998 is presented on a pro forma basis, as though TriMas had been acquired
at January 1, 1998.
<TABLE>
<CAPTION>
(IN THOUSANDS)
NET SALES(1)
------------------------------------
1999 1998 1997
---------- ---------- --------
<S> <C> <C> <C>
Specialty Metal Formed Products.................... $ 817,000 $ 760,000 $711,000
Towing Systems..................................... 260,000 238,000 --
Specialty Fasteners................................ 241,000 226,000 44,000
Specialty Packaging and Sealing Products........... 216,000 223,000 --
Specialty Industrial Products...................... 107,000 110,000 37,000
Companies Sold or Held for Sale.................... 39,000 115,000 130,000
---------- ---------- --------
$1,680,000 $1,672,000 $922,000
========== ========== ========
</TABLE>
<TABLE>
<CAPTION>
OPERATING PROFIT(2)(3)(4)
------------------------------------
1999 1998 1997
---------- ---------- --------
<S> <C> <C> <C>
Specialty Metal Formed Products.................... $ 112,000 $ 106,000 $ 88,000
Towing Systems..................................... 37,000 34,000 --
Specialty Fasteners................................ 35,000 38,000 8,000
Specialty Packaging and Sealing Products........... 41,000 46,000 --
Specialty Industrial Products...................... 14,000 16,000 7,000
Companies Sold or Held for Sale.................... 4,000 12,000 16,000
---------- ---------- --------
$ 243,000 $ 252,000 $119,000
========== ========== ========
</TABLE>
(1) The 1998 net sales amounts include TriMas sales occurring before the
acquisition date of January 22, 1998. These sales amounted to approximately
$36 million.
(2) Amounts are before General Corporate Expense.
(3) Segment operating profit in 1997 includes approximately $17 million of
nonrecurring charges.
(4) The 1998 operating profit amounts include TriMas operating profit occurring
before the acquisition date of January 22, 1998. This operating profit
amounted to approximately $5 million.
Additional financial information concerning the Company's operations by
operating segments as of and for the three years ended December 31, 1999 is set
forth in the Note to the Company's Consolidated Financial Statements captioned
"Segment Information," included in Item 8 of this Report.
Advanced technology plays a significant role in MascoTech's businesses and
in the design, engineering and manufacturing of many of its products. Products
are manufactured utilizing a variety of metalworking and other process
technologies. Although published industry statistics are not available, the
Company believes that it is a leading independent producer of many of the
component parts that it produces using cold, warm or hot forming processes. The
Company manufactures a broad range of semi-finished components, subassemblies
and assembled products for the original equipment and aftermarket segments of
the global transportation industry. Approximately 85 percent of the Company's
1999 sales were from operations involving metalworking technologies, including
cold, warm or hot metal forming, and machining and fabricating. The Company
provides components and products for which reliability, quality and certainty of
supply are major factors in customers' selection of suppliers.
3
<PAGE> 5
The Company manufactures specialty metal formed products for engine and
drivetrain applications, including semi-finished transmission shafts, drive
gears, engine connecting rods, wheel spindles and front wheel drive components.
The Company's metal formed products are manufactured using various process
technologies, including cold, warm and hot forming, powder metalworking,
value-added machining and tubular steel fabricating. The Company believes that
its recent acquisition of Windfall Products, Inc. has reinforced its position as
a leading U. S. producer of powder metal components. The Company believes that
its metal forming technologies provide cost-competitive, high-performance,
quality components required to meet the increasing demands of the automotive and
truck markets it serves.
Approximately 46 percent of the Company's 1999 sales were of original
equipment automotive products and services. Sales to original equipment
manufacturers are made through factory sales personnel and independent sales
representatives. During 1999, sales to various divisions and subsidiaries of New
Venture Gear, Inc. accounted for approximately 12 percent of the Company's net
sales.
The Company manufactures towing systems products, including vehicle
hitches, jacks, winches, couplers and related accessories for the passenger car,
light truck, recreational vehicle, marine, agricultural and industrial markets.
Towing systems products are sold to independent installers, distributors,
manufacturers and aftermarket retailers by the Company's sales organization and
independent sales representatives.
The Company's specialty fasteners products include standard- and
custom-designed ferrous, nonferrous and special alloy fasteners for the building
construction, farm implement, medium- and heavy-duty truck, appliance,
aerospace, electronics and other industries. The Company also provides metal
treating services for manufacturers of fasteners and similar products. Specialty
fasteners are sold through the Company's own sales personnel and independent
sales representatives to both distributors and manufacturers in these
industries.
The Company also manufactures specialty packaging and sealing products,
including industrial and consumer container closures and dispensing products
primarily for the chemical, agricultural, refining, food, petrochemical and
health care industries; high-pressure seamless compressed gas cylinders
primarily used for shipping, storing and dispensing oxygen, nitrogen, argon and
helium and a complete line of low-pressure welded cylinders used to contain and
dispense acetylene gas for the welding and cutting industries; and specialty
industrial gaskets for refining, petrochemical and other industrial
applications. Sales of specialty packaging and sealing products are made by the
Company's own sales staff primarily to container manufacturers, industrial gas
producers, refineries and independent distributors.
The Company's specialty industrial products include flame-retardant facings
and jacketings used in conjunction with fiberglass insulation, principally for
commercial and industrial construction applications, pressure-sensitive
specialty tape products and a variety of specialty precision tools such as
center drills, cutters, end mills, reamers, master gears, gages and punches.
These products are marketed to manufacturers and distributors by both Company
sales personnel and independent sales representatives.
GENERAL INFORMATION CONCERNING OPERATING SEGMENTS
No material portion of MascoTech's business has special working capital
requirements. Sales by the Company's Towing Systems segment are generally
stronger during the spring and summer periods; no other operating segment
experiences significant seasonal fluctuation in its business. The Company does
not consider backlog orders to be a material factor in its operating segments.
Except as noted above under "Operating Segments," no material portion of its
business is dependent upon any one customer or subject to renegotiation of
profits or termination of contracts at the election of the federal government.
Compliance with federal, state and local regulations relating to the discharge
of materials into the environment, or otherwise relating to the protection of
the environment, is not expected to result in material capital expenditures by
the Company or to have a material effect on the Company's earnings or
competitive position.
4
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See, however, "Legal Proceedings," included as Item 3 of this Report, for a
discussion of certain pending proceedings concerning environmental matters. In
general, raw materials required by the Company are obtainable from various
sources and in the quantities desired.
INTERNATIONAL OPERATIONS
The Company has operations located in Australia, Brazil, Canada, Czech
Republic, England, Germany, Italy, Mexico and Spain. Products manufactured by
the Company outside of the United States include forged automotive component
parts, constant-velocity joints, specialty packaging and sealing products and
towing systems products. See the Note to the Company's Consolidated Financial
Statements captioned "Segment Information," included in Item 8 of this Report
for a discussion of the Company's foreign operations and export sales.
The Company's foreign operations are subject to political, monetary,
economic and other risks attendant generally to international businesses. These
risks generally vary from country to country.
EQUITY INVESTMENTS
Information regarding the Company's equity investments is also set forth in
the Note to the Company's Consolidated Financial Statements captioned "Equity
and Other Investments in Affiliates," included in Item 8 of this Report.
Titan International, Inc.
The Company owns approximately 16 percent of the outstanding common stock
of Titan International, Inc. ("Titan"). Titan is a manufacturer of wheels, tires
and other products for agricultural, construction and other off-highway
equipment markets. Titan's sales for the year ended December 31, 1999 were
approximately $588 million.
Delco Remy International, Inc.
In December 1997, Delco Remy International, Inc. ("DRI") completed an
initial public offering of its common stock, reducing the Company's equity
ownership interest to approximately 12 percent on a fully diluted basis (the
Company currently owns approximately 17 percent of the voting common stock). DRI
is a manufacturer of automotive electric motors and other components. DRI's
sales for the year ended July 31, 1999 were approximately $954 million.
Other Equity Investments
In addition to its equity investments in the publicly traded affiliates
described in the preceding paragraphs, the Company has investments in privately
held companies, including MSX International, Inc., a provider of
technology-based business services and product development services. MSX
International, Inc. was formed in 1997 by an investor group consisting of the
Company, Citicorp Venture Capital, Ltd. and the senior management of MSX
International to purchase the assets of the Company's engineering and technical
services businesses. The Company also has investments in Saturn Electronics &
Engineering, Inc., a manufacturer of electromechanical and electronic automotive
components, and in Qualitor, Inc., a supplier of automotive aftermarket
products.
PATENTS AND TRADEMARKS
The Company holds a number of patents, patent applications, licenses,
trademarks and trade names. The Company considers its patents, patent
applications, licenses, trademarks and trade names to be valuable,
5
<PAGE> 7
but does not believe that there is any reasonable likelihood of a loss of such
rights that would have a material adverse effect on the Company's operating
segments or on its present business as a whole.
COMPETITION
The major domestic and foreign markets for the Company's products are
highly competitive. Competition is based primarily on price, product
engineering, performance, technology, quality and overall customer service, with
the relative importance of such factors varying among products. The Company's
global competitors include a large number of other well-established independent
manufacturers as well as certain customers who have their own internal
manufacturing capabilities. Although a number of companies of varying size
compete with the Company, no single competitor is in substantial competition
with the Company with respect to more than a few of its product lines and
services.
EMPLOYEES
The Company employs approximately 9,500 people. Satisfactory relations have
generally prevailed between the Company and its employees.
ITEM 2. PROPERTIES.
The following list sets forth the location of the Company's principal
manufacturing facilities and identifies the principal operating segment
utilizing such facilities.
<TABLE>
<S> <C>
California.................. Commerce (4)
Illinois.................... Wheeling (4) and Wood Dale (4)
Indiana..................... Auburn (5), Elkhart (2)(2), Fort Wayne (1),
Frankfort (4), Goshen (2), North Vernon (1) and
Peru (2)(2)
Louisiana................... Baton Rouge (5)
Massachusetts............... Plymouth (3)
Michigan.................... Canton (1) (2), Detroit (1) (4), Farmington Hills
(1), Fraser (1), Green Oak Township (1), Hamburg
(1), Livonia (4), Royal Oak (1), Troy (1), Warren
(1) (3) (3) and Ypsilanti (4)
New Jersey.................. Edison (3) and Netcong (3)
Ohio........................ Canal Fulton (1), Lakewood (4), Minerva (1),
Newburgh Heights (4) and Port Clinton (1)
Oklahoma.................... Tulsa (3)
Pennsylvania................ Ridgway (1) (1) and St. Marys (1)
Texas....................... Houston (5) and Longview (5)
Wisconsin................... Mosinee (2) and West Bend (2)
Australia................... Hampton Park, Victoria (2), Rhodes, New South
Wales (2) and Wakerley, Queensland (2)
Brazil...................... Sao Paolo(1)
Canada...................... Fort Erie (5) and Oakville (2), Ontario
Czech Republic.............. Oslavany (1)
England..................... Leicester (5) and Wolverhampton (1)
Germany..................... Neunkirchen (5), Nurnberg (1) and Zell am
Harmersbach (1)
Italy....................... Poggio Rusco (1) and Valmadrera (5)
Mexico...................... Mexico City (5) and Ramos Arispe (1)
Spain....................... Almusaffes (1)
</TABLE>
6
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Operating segments in the preceding table are identified as follows: (1)
Specialty Metal Formed Products, (2) Towing Systems, (3) Specialty Industrial
Products, (4) Specialty Fasteners and (5) Specialty Packaging and Sealing
Products. Multiple footnotes to the same municipality denote separate facilities
in that location.
The Company's principal manufacturing facilities range in size from
approximately 10,000 square feet to 420,000 square feet, substantially all of
which are owned by the Company and are not subject to significant encumbrances.
The Company's executive offices are located in Taylor, Michigan, and are
provided by Masco Corporation to the Company under a corporate services
agreement.
The Company's buildings, machinery and equipment have been generally well
maintained, are in good operating condition, and are adequate for current
production requirements.
ITEM 3. LEGAL PROCEEDINGS.
A civil suit was filed in the United States District Court for the Central
District of California in April, 1983 by the United States of America and the
State of California against over 30 defendants, including a subsidiary of the
Company, for alleged release into the environment of hazardous waste disposed of
at the Stringfellow Disposal Site in California. The plaintiffs have requested,
among other things, that the defendants clean up the contamination at that site.
A consent decree has been entered into by the plaintiffs and the defendants,
including the Company, providing that the consenting parties perform partial
remediation at the site. Another civil suit was filed in the United States
District Court for the Central District of California in December, 1988 by the
United States of America and the State of California against more than 180
defendants, including the Company, for alleged release into the environment of
hazardous waste disposed of at the Operating Industries, Inc. site in
California. This site served for many years as a depository for municipal and
industrial waste. The plaintiffs have requested, among other things, that the
defendants clean up the contamination at that site. Consent decrees have been
entered into by the plaintiffs and a group of the defendants, including the
Company, providing that the consenting parties perform certain remedial work at
the site and reimburse the plaintiffs for certain past costs incurred by the
plaintiffs at the site. Based upon its present knowledge and subject to future
legal and factual developments, the Company does not believe that any of this
litigation will have a material adverse effect on its consolidated financial
position, results of operations or cash flow.
The Company is subject to other claims and litigation in the ordinary
course of its business, but does not believe that any such claim or litigation
will have a material adverse effect on its consolidated financial position,
results of operations or cash flow.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
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SUPPLEMENTARY ITEM. EXECUTIVE OFFICERS OF REGISTRANT (PURSUANT TO INSTRUCTION 3
TO ITEM 401(b) OF REGULATION S-K).
<TABLE>
<CAPTION>
OFFICER
NAME POSITION AGE SINCE
- ---- -------- --- -------
<S> <C> <C> <C>
Richard A. Manoogian................. Chairman of the Board 63 1984
Frank M. Hennessey................... Vice Chairman and Chief Executive Officer 61 1998
Lee M. Gardner....................... President and Chief Operating Officer 53 1992
Timothy Wadhams...................... Executive Vice President, Finance and
Administration, and Chief Financial
Officer 51 1984
William T. Anderson.................. Vice President and Controller 52 1998
Eugene A. Gargaro, Jr. .............. Secretary 57 1984
David B. Liner....................... Vice President and General Counsel and
Assistant Secretary 44 1997
James F. Tompkins.................... Treasurer and Assistant Secretary 44 1998
</TABLE>
Executive officers are elected to a term of one year or less and serve at
the discretion of the Board of Directors. Each elected executive officer has
been employed in a managerial capacity with the Company for over five years,
except Messrs. Hennessey and Liner. Prior to joining MascoTech in 1998, Mr.
Hennessey served Masco Corporation for more than five years in various
managerial positions and most recently as Executive Vice President. He continues
to provide services to Masco Corporation as a part-time employee (for no more
than 20 percent of his time) in connection with matters with which he was
involved as Executive Vice President of Masco Corporation. Mr. Liner had served
as Associate Corporate Counsel of Masco Corporation for more than five years
prior to joining the Company in 1997 as its Vice President and Corporate
Counsel. He was elected to his current position in September, 1998.
8
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock is traded on the New York Stock Exchange
("NYSE") under the symbol "MSX." The following table sets forth for the periods
indicated the high and low sale prices of the Company's Common Stock as reported
on the NYSE Composite Tape and Common Stock dividends declared for the periods
indicated:
<TABLE>
<CAPTION>
DIVIDENDS
HIGH LOW DECLARED
------ ------ ---------
<S> <C> <C> <C>
1998
First Quarter................................ $23 1/4 $17 11/16 --(1)
Second Quarter............................... $26 7/16 $22 5/16 $.06
Third Quarter................................ $24 1/8 $16 1/4 .07
Fourth Quarter............................... $18 3/4 $15 1/4 .07
----
$.20
====
</TABLE>
<TABLE>
<CAPTION>
DIVIDENDS
HIGH LOW DECLARED
------ ------ ---------
<S> <C> <C> <C>
1999
First Quarter................................ $17 $14 $.07
Second Quarter............................... $17 3/4 $15 1/8 .07
Third Quarter................................ $17 11/16 $15 9/16 .08
Fourth Quarter............................... $17 1/16 $10 5/8 .08
----
$.30
====
</TABLE>
(1) A dividend of $.06 per share declared in the fourth quarter of 1997 was paid
in the first quarter of 1998.
Future declarations of dividends on the Company's Common Stock are
discretionary with the Board of Directors and will depend upon the Company's
earnings, capital requirements, financial condition and other factors. In
addition, certain of the Company's long-term debt instruments contain provisions
that restrict the dividends that the Company may pay on its capital stock. Under
the most restrictive of these provisions, approximately $26 million would have
been available at December 31, 1999 for the payment of cash dividends and the
acquisition of Company stock. See the discussion under "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Financial
Position and Liquidity," included in Item 7 of this Report and the Note to the
Company's Consolidated Financial Statements captioned "Long-Term Debt," included
in Item 8 of this Report.
On March 15, 2000, there were 3,892 holders of record of the Company's
Common Stock.
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ITEM 6. SELECTED FINANCIAL DATA.
The following table sets forth summary consolidated financial information
of the Company, for the years and dates indicated:
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net sales............ $1,679,690 $1,635,500 $ 922,130 $1,281,220 $1,678,210
From continuing
operations before
accounting change:
Income.......... $ 92,430 $ 97,470 $ 115,240 $ 39,920 $ 59,190
Earnings per
common
share........ $1.84 $1.83 $2.12 $.50 $.81
Dividends declared
per common share... $ .30 $ .20 $ .28 $.18 $.11
At December 31:
Total assets....... $2,101,270 $2,090,540 $1,144,680 $1,202,840 $1,421,720
Long-term debt..... $1,372,890 $1,388,240 $ 592,000 $ 752,400 $ 701,910
</TABLE>
Results in 1999 include the completion of the sale of the Company's
aftermarket-related and vacuum metalizing businesses which resulted in a pre-tax
gain of approximately $26 million.
Results in 1999 include a non-cash pre-tax charge of approximately $17.5
million related to impairment of certain long-lived assets, which included its
hydroforming equipment and related intellectual property.
Results in 1999 include pre-tax charges aggregating approximately $18
million, principally related to the closure of a plant, the sale of a business
and the decline in value of equity affiliates.
Results in 1998 include sales and operating profits from TriMas
Corporation, which was purchased in January 1998.
Results for 1998 include a pre-tax charge related to the disposition of
certain businesses aggregating approximately $41 million. In addition, the
Company recorded a pre-tax gain of approximately $25 million related to the
receipt of additional consideration based on the operating performance of the
Company's stamping businesses sold in 1996. Also, the Company recognized a gain
(deferred at time of sale pending receipt of cash) of $7 million pre-tax related
to the disposition of the Company's Technical Services Group in 1997.
Results for 1997 include pre-tax gains approximating $83 million
principally related to the sale by the Company of its common stock holdings of
an equity affiliate, gains from the Company's marketable securities portfolio
and income resulting from equity transactions by affiliates. These gains were
partially offset by costs and expenses of approximately $24 million pre-tax
related to plant closure costs, the Company's share of special charges recorded
by equity affiliates, write-off of deferred charges and employee termination and
other expenses.
Results for 1996 include an after-tax charge of approximately $26 million
related to the sale of MascoTech Stamping Technologies, Inc. ("MSTI").
Results for 1995 include net gains of approximately $5 million pre-tax
related to the dispositions of businesses, and a gain of approximately $5
million pre-tax resulting from the issuance of stock through a public offering
by an equity affiliate.
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Income from continuing operations before accounting change attributable to
common stock was $92.4 million, $97.5 million, $109.0 million, $27.0 million and
$46.2 million after preferred stock dividends in 1999, 1998, 1997, 1996 and
1995, respectively.
Earnings per common share, from continuing operations before accounting
change, are presented on a diluted basis. Basic earnings per common share, from
continuing operations before accounting change, were $2.25, $2.23, $2.70, $.54
and $.85 in 1999, 1998, 1997, 1996 and 1995, respectively.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
CORPORATE DEVELOPMENT
RECENT DEVELOPMENTS
In August 1999, the Company acquired a manufacturer of
transportation-related powder metal components with annual sales of
approximately $80 million. This business complements the Company's specialty
metal formed businesses.
In January 1998, the Company completed the acquisition of TriMas
Corporation ("TriMas") by purchasing all the outstanding shares of TriMas not
already owned by the Company for approximately $920 million. The Company
previously owned 37 percent of TriMas.
In addition to the TriMas acquisition, the Company in 1998 also acquired
three companies and a product line with combined annual sales of approximately
$60 million. These businesses complement the Company's specialty fasteners and
specialty packaging and sealing products businesses.
SHARE REPURCHASE
In late 1996, the Company purchased from Masco Corporation 17 million
shares of MascoTech common stock and warrants to acquire 10 million shares of
MascoTech common stock, for approximately $266 million. In addition, as part of
this transaction, Masco Corporation also agreed that MascoTech will have the
right of first refusal to purchase the approximate 7.8 million shares of
MascoTech common stock that Masco Corporation continues to hold, should Masco
Corporation decide to dispose of such shares prior to September 30, 2000. At
December 31, 1999, Masco Corporation owned approximately 17 percent of the
MascoTech common stock outstanding.
DISPOSITION OF BUSINESSES
In early 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 ("APX") which were acquired by the
Company in November 1996. The sale resulted in total proceeds to the Company of
approximately $145 million, consisting of cash, subordinated debentures,
preferred stock and an approximate 45 percent common equity interest in MSXI.
Net proceeds to the Company approximated $90 million, after taking into account
the purchase price for APX and taxes payable in connection with this
transaction. In January 1998, the Company received $48 million of cash from MSXI
in payment of certain amounts due MascoTech, resulting in a realized pre-tax
gain in the first quarter 1998 of approximately $7 million (gain recognition was
deferred at the time of the transaction pending cash receipt).
In mid-1998, the Company adopted a plan to sell certain of its
aftermarket-related businesses and its vacuum metalizing operation and recorded
a pre-tax loss of approximately $41 million. In early 1999, the Company
completed the sale of these businesses for total proceeds aggregating
approximately $105 million, consisting of cash of $90 million, a note receivable
of $6 million and retained equity interests in the ongoing
11
<PAGE> 13
businesses. The Company recognized a pre-tax gain of approximately $26 million
related to the disposition of these businesses.
The businesses sold had net sales of $39 million, $115 million and $130
million in 1999, 1998 and 1997, respectively, and operating profit of $4
million, $12 million and $16 million in 1999, 1998 and 1997, respectively.
In 1999, the Company adopted a plan to sell its specialty tubing business,
resulting in a pre-tax loss of approximately $7 million and an after-tax gain of
approximately $5.5 million, due to the tax basis in the net assets of the
business exceeding book carrying values. This business, which had annual sales
of approximately $14 million, was sold in January 2000 for proceeds of
approximately $6 million.
PROFIT MARGINS
Operating profit margins, excluding net charges in 1999 and 1998 and net
gains in 1997, were approximately 13.0 percent in 1999, 13.6 percent in 1998 and
10.5 percent in 1997. Operating profit margin in 1999 was negatively impacted by
decreased sales for certain products including tubular, aftermarket
constant-velocity joints, cylinders, certain fastener applications including
aerospace, agricultural and off-highway, and certain products impacted by oil
and gas prices. Margins were also negatively impacted by higher than expected
costs associated with capacity expansions, launches of new product and process
capabilities and other growth initiatives. In addition, margins were hampered by
disruptions associated with the integration of acquisitions, the divestiture of
businesses and the restructuring of certain operations.
CASH FLOWS AND CAPITAL EXPENDITURES
Net cash flows from operating activities decreased to approximately $153
million in 1999 from approximately $200 million in 1998. In 1998, net cash from
operating activities included approximately $46 million from the liquidation of
marketable securities.
Reflecting the favorable long-term prospects for MascoTech, the Company's
Board of Directors authorized in 1994 the repurchase of 10 million shares of
Company Common Stock and Convertible Preferred Stock (converted into common
stock in 1997). This repurchase authorization was completed in 1998 and the
Board of Directors in late 1998 authorized an additional repurchase of five
million shares of Company Common Stock. During 1998, the Company repurchased 3.6
million shares for approximately $64 million, including .4 million shares
pursuant to the 1998 Board authorization. The Company repurchased and retired
approximately 1.3 million shares of its common stock in 1999.
The Company in 1999 increased the quarterly dividend on its common stock to
$.08 per share from $.07.
Capital expenditures in 1999 were approximately $136 million as compared
with $106 million and $55 million in 1998 and 1997, respectively. The increase
in capital expenditures from 1998 is related to product line extensions,
capacity expansions and expenditures for new advanced manufacturing
technologies. The increase in capital expenditures from 1997 is principally
related to the businesses acquired in 1998.
INVENTORIES
The Company's investment in inventories for its businesses decreased to
approximately $184 million at December 31, 1999 as compared with $198 million in
1998. The decrease is principally the result of the disposition of the
aftermarket-related businesses and vacuum metalizing operation.
12
<PAGE> 14
FINANCIAL POSITION AND LIQUIDITY
In connection with the TriMas acquisition in January 1998, the Company
entered into a new $1.3 billion credit facility. The Company's credit facility
includes a $500 million term loan and an $800 million revolver, both of which
terminate in 2003. The interest rates applicable to the credit facility are
principally at alternative floating rates which approximated seven percent at
December 31, 1999. Interest rate swap agreements covering a notional amount of
$400 million of the Company's floating rate debt were entered into in 1998 at an
aggregate interest rate of approximately seven percent, including the current
borrowing spread under the Company's revolving credit agreement. The credit
facility requires the maintenance of a specified level of shareholders' equity
plus subordinated debt, with limitations on the ratios of total debt to cash
flow (as defined) and cash flow less capital expenditures (as defined) to
interest plus scheduled debt payments. In addition, there are limitations on
dividends, share repurchases and subordinated debt repurchases. Under the most
restrictive of these provisions, approximately $26 million would have been
available at December 31, 1999 for the payment of cash dividends and the
acquisition of Company stock.
Although the Company incurred increased debt with the purchase of TriMas,
the Company's interest coverage ratio and debt to cash flow ratio remain strong.
The Company expects that its ratio of debt to total debt plus equity will
improve from the operating performance of its businesses and from the
disposition of certain financial assets. The Company's financial assets include
equity ownership positions in two publicly traded companies with an aggregate
carrying value of approximately $56 million.
On September 30, 1997, the Company exchanged its equity holdings in Emco
Limited and approximately $46 million in cash to Masco Corporation to satisfy
the indebtedness to Masco incurred in 1996 in connection with the Company's
purchase and retirement of certain of its common shares and warrants held by
Masco.
At December 31, 1999, current assets, which aggregated approximately $470
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.
GENERAL FINANCIAL ANALYSIS
1999 VERSUS 1998
Sales increased approximately three percent in 1999 from 1998. Sales,
excluding the impact of the sale of the aftermarket-related and vacuum
metalizing businesses, aided by acquisitions, would have increased approximately
eight percent in 1999 over 1998.
Net income in 1999 was $92.4 million or $1.84 per common share. Results in
1999 include a net gain of $14.4 million pre-tax related to the sale of the
aftermarket-related and vacuum metalizing businesses partially offset by charges
related to the disposition of certain other operations and a plant closure. In
addition, 1999 results include charges of approximately $17.5 million pre-tax
related to impairment of certain long-lived assets, which include the Company's
hydroforming equipment and related intellectual property. Other income and
expense was negatively impacted by pre-tax charges aggregating approximately
$5.2 million (net of $1 million of nonrecurring income) which were principally
related to equity affiliate investments. Excluding these gains and the charges,
net income in 1999 would have been approximately $89 million or $1.78 per common
share.
Net income in 1998 was $97.5 million or $1.83 per common share. Results in
1998 include a charge related to the disposition of certain businesses
aggregating approximately $41 million pre-tax. In addition, the Company recorded
a pre-tax gain of approximately $25 million related to the receipt of additional
13
<PAGE> 15
consideration based on the operating performance of the Company's stamping
businesses which were sold in 1996. Results in 1998 also benefitted from a gain
(deferred at time of sale pending receipt of cash) of $7 million pre-tax related
to the disposition of the Company's Technical Services Group in 1997 and gains
from the Company's marketable securities portfolio. Excluding these gains and
the charge, net income in 1998 would have been approximately $89 million or
$1.68 per common share.
The following information is presented on a pro forma basis as though
TriMas was acquired on January 1, 1998 and excludes the unusual pre-tax income
and charges mentioned above.
Sales for the Company's Specialty Metal Formed Products, aided by
acquisitions, increased approximately eight percent in 1999 as compared to
1998. Towing Systems sales increased approximately nine percent. Sales of
Specialty Fasteners, aided by acquisitions, increased approximately seven
percent. Sales of Specialty Packaging and Sealing Products declined
approximately three percent as a 15 percent increase in sales of closures
and dispensing systems was offset by a 25 percent decline in sales of
compressed gas cylinders principally as a result of market conditions and
an 11 percent decline in sales of specialty gaskets and related products
principally as a result of reduced activity in the oil and gas industry.
Sales of Specialty Industrial Products declined approximately three percent
from 1998 levels.
Operating margins approximated 13.0 percent and 13.5 percent for the
years ended December 31, 1999 and 1998, respectively. Margins were
negatively impacted by sales declines for certain products and start-up
costs related to the launch of new products and new manufacturing
facilities.
Operating margins in 1999 for the Company's Specialty Metal Formed
Products and Towing Systems approximated 1998 levels. Operating margins for
Specialty Fasteners declined from 16.8 percent in 1998 to 14.5 percent in
1999 principally due to reduced sales for aerospace, agricultural, off-
highway and certain other fastener applications. Operating margins for
Specialty Packaging and Sealing Products declined from 20.6 percent in 1998
to 19.0 percent in 1999 due to sales declines resulting from decreased
demand for compressed gas cylinders and specialty gaskets as a result of
depressed market conditions. Specialty Industrial Products profit margins
were down slightly in 1999 versus 1998.
The unusual relationship between income before taxes and income taxes
relates to the unusual gains and charges discussed above. Excluding the impact
of the unusual gains and charges for the full year, 1999 would result in an
effective tax rate of approximately 40 percent.
Other income (expense), net in 1999 was expense of $76 million as compared
with $62 million of expense in 1998. Results for 1999 include pre-tax charges
principally related to equity affiliate investments aggregating approximately $5
million, net of $1 million of nonrecurring income. Results for 1998 benefitted
from a gain (deferred at time of sale pending receipt of cash) of $7 million
pre-tax related to the disposition of the Company's Technical Services Group in
1997 and gains of approximately $3 million pre-tax from the Company's marketable
securities portfolio.
1998 VERSUS 1997
Sales increased to $1.6 billion in 1998 from $922 million in 1997
principally as a result of acquisitions. Excluding acquisitions, sales would
have increased approximately three percent over 1997.
Net income in 1998 was $97.5 million or $1.83 per common share. Results in
1998 include a charge related to the disposition of certain businesses
aggregating approximately $41 million pre-tax. In addition, the Company recorded
a pre-tax gain of approximately $25 million related to the receipt of additional
consideration based on the operating performance of the Company's stamping
businesses which were sold in 1996. Results in 1998 also benefitted from a gain
(deferred at time of sale pending receipt of cash) of
14
<PAGE> 16
$7 million pre-tax related to the disposition of the Company's Technical
Services Group in 1997 and gains from the Company's marketable securities
portfolio. Excluding these gains and the charge, net income in 1998 would have
been approximately $89 million or $1.68 per common share.
Income after preferred stock dividends in 1997 was $109 million or $2.12
per common share. Results in 1997 include pre-tax gains approximating $83
million principally related to the disposition of the Company's equity ownership
interest in Emco Limited, gains from the Company's marketable securities
portfolio and income resulting from equity transactions by affiliates. These
gains were partially offset by costs and expenses of approximately $24 million
pre-tax related to plant closure costs, the Company's share of special charges
recorded by equity affiliates, write-off of deferred charges, and employee
termination and other expenses. Excluding these gains and unusual costs, income
after preferred stock dividends in 1997 would have been approximately $73
million or $1.50 per common share.
The following information is presented on a pro forma basis as though
TriMas was acquired on January 1, 1997.
Sales increased approximately five percent to $1.7 billion in 1998
from $1.6 billion in 1997. Excluding acquisitions other than TriMas, sales
would have increased approximately four percent in 1998 as compared to
1997.
Sales of Specialty Metal Formed Products increased approximately six
percent in 1998 as compared to 1997. Towing Systems sales, driven by demand
for new products, increased by 13 percent over 1997 levels. Sales of
Specialty Packaging and Sealing Products and Specialty Fasteners, aided by
acquisitions, increased modestly in 1998. Sales of Specialty Industrial
Products approximated 1997 levels. Sales for certain of the Company's
aftermarket-related businesses that were being held for sale declined by 13
percent.
Although 1998 results benefitted from increased sales, operating
margins for the Company's Specialty Metal Formed Products in 1998 were
slightly below 1997 levels (excluding 1997 nonrecurring charges). Operating
results for both 1998 and 1997 were hampered by work stoppages at major
customers and at one of the Company's manufacturing facilities. In
addition, operating results for both 1998 and 1997 were adversely impacted
by start-up costs associated with the Company's hydroforming manufacturing
process. Specialty Metal Formed Products' operating margins were also
negatively impacted by launch costs related to a new facility in Spain to
manufacture powder metal connecting rods.
Operating margins in 1998 for the Company's Specialty Fasteners,
Towing Systems, Specialty Packaging and Sealing Products and Specialty
Industrial Products approximated or slightly exceeded 1997 levels, while
operating margins for aftermarket-related products decreased in 1998 from
1997 principally as a result of decreased sales volumes.
Operating margins on a pro forma basis including increased
amortization expense and before general corporate expense and gain (charge)
on dispositions approximated 15 percent for the years 1998 and 1997.
The Company's lower effective tax rate for 1998 is the result of the
recognition of a non-taxable gain from the sale of MSTI and tax benefits from
additional tax losses in excess of book losses related to the disposition of
certain businesses. On a pro forma basis, excluding both the gain and charge,
the effective tax rate would approximate 40 percent. The Company, through
acquisitions and growth, has increased its foreign presence, principally in
Europe. In the future, if the Company's foreign operations contribute an
increased percentage of pre-tax income, the Company's effective tax rate could
increase as a result of higher foreign tax rates versus the U.S. domestic tax
rate.
15
<PAGE> 17
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 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 continue to monitor the status of the Company's Year 2000 remediation
plans. The process includes an assessment of issues and the 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.
The cost of Year 2000 compliance for the Company approximated $12 million,
including: replacement costs of $7 million which are normal and recurring;
upgrades of $2 million which are normal and recurring; repair/programming costs
of $2 million; and other costs of $1 million, which are not material to the
Company's consolidated results of operations, financial position or cash flow.
The majority of the replacement and upgrade costs would have been incurred by
the Company over time as part of its regular information system replacement
process.
FORWARD-LOOKING STATEMENTS
This discussion and other sections of this Report contain statements
reflecting the Company's views about its future performance and constitute
"forward-looking statements." These views involve risks and uncertainties that
are difficult to predict and may cause the Company's actual results to differ
significantly from the results discussed in such forward-looking statements.
Readers should consider that various factors may affect the Company's ability to
attain the projected performance, including: conditions within the markets in
which the Company competes, the cyclical nature of the automobile industry in
general, changes in the costs of raw materials, labor relations of the Company
and certain of its customers, the ability to supply new and existing products on
a timely, cost-effective basis, financial results of the Company's equity
investments and general economic conditions. The Company undertakes no
obligation to update publicly any forward-looking statements, whether as a
result of new information, future events or otherwise.
16
<PAGE> 18
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
of MascoTech, Inc.:
In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) present fairly, in all material respects, the
financial position of MascoTech, Inc. and its subsidiaries at December 31, 1999
and 1998, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States. In addition, in
our opinion, the financial statement schedule listed in the index appearing
under Item 14(a)(2)(i) presents fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements. These financial statements and financial
statement schedule are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits. We conducted our audits of
these statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Detroit, Michigan
February 25, 2000
17
<PAGE> 19
MASCOTECH, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999 AND 1998
ASSETS
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
Current assets:
Cash and cash investments........................... $ 4,490,000 $ 29,390,000
Receivables......................................... 218,960,000 223,340,000
Inventories......................................... 183,600,000 198,350,000
Deferred and refundable income taxes................ 46,750,000 26,590,000
Prepaid expenses and other assets................... 16,320,000 23,710,000
-------------- --------------
Total current assets....................... 470,120,000 501,380,000
Equity and other investments in affiliates............ 110,730,000 93,560,000
Property and equipment, net........................... 722,680,000 678,130,000
Excess of cost over net assets of acquired
companies........................................... 759,330,000 764,220,000
Notes receivable and other assets..................... 38,410,000 53,250,000
-------------- --------------
Total assets............................... $2,101,270,000 $2,090,540,000
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................... $ 114,490,000 $ 114,830,000
Accrued liabilities................................. 113,910,000 135,230,000
-------------- --------------
Total current liabilities.................. 228,400,000 250,060,000
Convertible subordinated debentures................... 305,000,000 310,000,000
Other long-term debt.................................. 1,067,890,000 1,078,240,000
Deferred income taxes................................. 100,680,000 88,140,000
Other long-term liabilities........................... 98,920,000 110,220,000
-------------- --------------
Total liabilities.......................... 1,800,890,000 1,836,660,000
-------------- --------------
Shareholders' equity:
Preferred stock, $1 par:
Authorized: 25 million;
Outstanding: None................................ -- --
Common stock, $1 par:
Authorized: 250 million;
Outstanding: 44.6 million and 45.8 million....... 44,640,000 45,780,000
Paid-in capital..................................... -- 16,820,000
Retained earnings................................... 324,290,000 245,860,000
Accumulated other comprehensive loss................ (24,870,000) (7,460,000)
Less: Restricted stock awards....................... (43,680,000) (47,120,000)
-------------- --------------
Total shareholders' equity................. 300,380,000 253,880,000
-------------- --------------
Total liabilities and shareholders'
equity................................... $2,101,270,000 $2,090,540,000
============== ==============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
18
<PAGE> 20
MASCOTECH, INC.
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
--------------- --------------- -------------
<S> <C> <C> <C>
Net sales.............................. $ 1,679,690,000 $ 1,635,500,000 $ 922,130,000
Cost of sales.......................... (1,246,660,000) (1,208,930,000) (735,470,000)
--------------- --------------- -------------
Gross profit...................... 433,030,000 426,570,000 186,660,000
Selling, general and administrative
expenses............................. (214,530,000) (204,180,000) (89,930,000)
Gains (charge) on disposition of
businesses, net...................... 14,440,000 (15,580,000) 4,980,000
Charge for asset impairment............ (17,510,000) -- --
--------------- --------------- -------------
Operating profit.................. 215,430,000 206,810,000 101,710,000
--------------- --------------- -------------
Other income (expense), net:
Interest expense, Masco
Corporation....................... -- -- (7,500,000)
Other interest expense............... (80,820,000) (81,500,000) (29,030,000)
Equity and other income from
affiliates........................ 13,230,000 10,150,000 43,360,000
Gain (charge) from disposition of, or
changes in, investments in equity
affiliates........................ (3,150,000) -- 64,350,000
Deferred gain recognized from
disposition of business........... -- 7,000,000 --
Other, net........................... (5,220,000) 2,060,000 17,400,000
--------------- --------------- -------------
(75,960,000) (62,290,000) 88,580,000
--------------- --------------- -------------
Income before income taxes........ 139,470,000 144,520,000 190,290,000
Income taxes........................... 47,040,000 47,050,000 75,050,000
--------------- --------------- -------------
Net income........................ $ 92,430,000 $ 97,470,000 $ 115,240,000
=============== =============== =============
Preferred stock dividends.............. -- -- $ 6,240,000
=============== =============== =============
Earnings attributable to common
stock.......................... $ 92,430,000 $ 97,470,000 $ 109,000,000
=============== =============== =============
</TABLE>
<TABLE>
<CAPTION>
BASIC DILUTED BASIC DILUTED BASIC DILUTED
----- ------- ----- ------- ----- -------
<S> <C> <C> <C> <C> <C> <C>
Earnings per common share:
Earnings attributable to common
stock.......................... $2.25 $1.84 $2.23 $1.83 $2.70 $2.12
===== ===== ===== ===== ===== =====
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
19
<PAGE> 21
MASCOTECH, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
------------- -------------- -------------
<S> <C> <C> <C>
CASH FROM (USED FOR):
OPERATING ACTIVITIES:
Net income.................................. $ 92,430,000 $ 97,470,000 $ 115,240,000
Adjustments to reconcile net income to net
cash provided by operating activities:
(Gains) charge on disposition of
businesses, net........................ (14,440,000) 15,580,000 (4,980,000)
Charges (gains) from disposition or other
changes in investments in equity
affiliates............................. 6,270,000 (7,000,000) (64,350,000)
Charge for asset impairment............... 17,510,000 -- --
Depreciation and amortization............. 83,300,000 83,640,000 43,460,000
Equity earnings, net of dividends......... (10,100,000) (6,080,000) (27,180,000)
Deferred income taxes..................... 9,560,000 (110,000) 17,520,000
Decrease (increase) in marketable
securities, net........................ -- 45,970,000 (8,210,000)
(Increase) decrease in receivables........ (3,500,000) (6,700,000) 2,670,000
Decrease (increase) in inventories........ 400,000 (19,640,000) 1,950,000
(Increase) decrease in prepaid expenses
and other current assets............... (14,390,000) 1,240,000 (1,280,000)
(Decrease) increase in accounts payable
and accrued liabilities................ (5,150,000) (6,060,000) 11,140,000
Other, net................................ (9,260,000) 2,290,000 (7,480,000)
------------- -------------- -------------
Net cash from operating
activities...................... 152,630,000 200,600,000 78,500,000
------------- -------------- -------------
FINANCING ACTIVITIES:
Increase in debt............................ 28,540,000 1,162,670,000 7,080,000
Payment of debt............................. (40,150,000) (410,660,000) (16,590,000)
Payment of note due to Masco Corporation.... -- -- (45,580,000)
Retirement of preferred stock............... -- -- (8,360,000)
Retirement of Company Common Stock.......... (19,530,000) (63,550,000) (6,610,000)
Payment of dividends........................ (13,470,000) (12,240,000) (15,900,000)
Other, net.................................. (5,490,000) (13,480,000) (9,070,000)
------------- -------------- -------------
Net cash (used for) from financing
activities...................... (50,100,000) 662,740,000 (95,030,000)
------------- -------------- -------------
INVESTING ACTIVITIES:
Cash received from sale of businesses,
net....................................... 92,620,000 25,020,000 76,560,000
Acquisition of businesses, net of cash
acquired.................................. (88,550,000) (879,370,000) (11,100,000)
Capital expenditures........................ (135,740,000) (106,300,000) (54,780,000)
Receipt of cash from notes receivable....... 2,180,000 4,880,000 17,330,000
Proceeds from redemptions of debt by
affiliates................................ -- 80,500,000 --
Other, net.................................. 2,060,000 210,000 10,230,000
------------- -------------- -------------
Net cash (used for) from investing
activities...................... (127,430,000) (875,060,000) 38,240,000
------------- -------------- -------------
CASH AND CASH INVESTMENTS:
(Decrease) increase for the year............ (24,900,000) (11,720,000) 21,710,000
At January 1................................ 29,390,000 41,110,000 19,400,000
------------- -------------- -------------
At December 31.................... $ 4,490,000 $ 29,390,000 $ 41,110,000
============= ============== =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
20
<PAGE> 22
MASCOTECH, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
(IN THOUSANDS)
OTHER COMPREHENSIVE
INCOME
-----------------------
FOREIGN
CURRENCY MINIMUM RESTRICTED TOTAL
PREFERRED COMMON PAID-IN RETAINED TRANSLATION PENSION STOCK SHAREHOLDERS'
STOCK STOCK CAPITAL EARNINGS AND OTHER LIABILITY AWARDS EQUITY
--------- ------- -------- -------- ----------- --------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances, January 1, 1997..... $ 10,800 $37,250 $ 47,800 $ 61,060 $ 8,050 $ -- $(26,140) $138,820
Comprehensive income:
Net income................ 115,240 115,240
Foreign currency
translation............. (9,220) (9,220)
Unrealized gain (loss) on
securities (net of tax
benefit, $(920))........ (1,390) (1,390)
--------
Total comprehensive
income............. 104,630
Preferred stock dividends... 150 2,850 (6,240) (3,240)
Common stock dividends...... (12,270) (12,270)
Retirement of common
stock..................... (330) (6,280) (6,610)
Retirement of preferred
stock..................... (450) (7,910) (8,360)
Conversion of outstanding
preferred stock........... (10,350) 9,750 600 --
Exercise of stock options... 430 4,000 4,430
Restricted stock awards, net
of amortization........... (6,740) (6,740)
-------- ------- -------- -------- -------- -------- -------- --------
Balances, December 31, 1997... -- 47,250 41,060 157,790 (2,560) -- (32,880) 210,660
Comprehensive income:
Net income................ 97,470 97,470
Foreign currency
translation............. 6,410 6,410
Minimum pension liability
(net of tax benefit
$(6,700))............... (10,700) (10,700)
Unrealized gain (loss) on
securities (net of tax
benefit, $(420))........ (610) (610)
--------
Total comprehensive
income............. 92,570
Common stock dividends...... (9,400) (9,400)
Retirement of common
stock..................... (3,640) (60,170) (63,810)
Exercise of stock options... 1,160 14,750 15,910
Restricted stock awards, net
of amortization........... (14,240) (14,240)
Common stock issued for
acquisition of business... 1,010 21,180 22,190
-------- ------- -------- -------- -------- -------- -------- --------
Balances, December 31, 1998... -- 45,780 16,820 245,860 3,240 (10,700) (47,120) 253,880
Comprehensive income:
Net income................ 92,430 92,430
Foreign currency
translation............. (18,110) (18,110)
Minimum pension liability
(net of tax, $450)...... 700 700
--------
Total comprehensive
income............. 75,020
Common stock dividends...... (13,470) (13,470)
Retirement of common
stock..................... (1,280) (18,580) (19,860)
Exercise of stock options... 140 1,760 (530) 1,370
Restricted stock awards, net
of amortization........... 3,440 3,440
-------- ------- -------- -------- -------- -------- -------- --------
Balances, December 31, 1999... -- $44,640 -- $324,290 $(14,870) $(10,000) $(43,680) $300,380
======== ======= ======== ======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
21
<PAGE> 23
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ACCOUNTING POLICIES:
Principles of Consolidation. The consolidated financial statements include
the accounts of the Company and all majority-owned subsidiaries. All significant
intercompany transactions have been eliminated. Corporations that are 20 to 50
percent owned are accounted for by the equity method of accounting; ownership
less than 20 percent is accounted for on the cost basis unless the Company
exercises significant influence over the investee. Capital transactions by
equity affiliates, which change the Company's ownership interest at amounts
differing from the Company's carrying amount, are reflected in other income or
expense and the investment in affiliates account.
The Company has a corporate services agreement with Masco Corporation,
which at December 31, 1999 owned approximately 17 percent of the Company's
Common Stock. Under the terms of the agreement, the Company pays fees to Masco
Corporation for various corporate staff support and administrative services,
research and development and facilities. Such fees aggregated approximately $6.4
million in 1999, $8.7 million in 1998 and $5.5 million in 1997.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Company to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements. Such estimates and assumptions also affect the reported amounts of
revenues and expenses during the reporting periods. Actual results may differ
from such estimates and assumptions.
Cash and Cash Investments. The Company considers all highly liquid debt
instruments with an initial maturity of three months or less to be cash and cash
investments.
Marketable Securities and Derivative Financial Instruments. In prior years,
the Company had marketable equity securities holdings which were categorized as
trading and, as a result, were stated at fair value. Changes in the fair value
of trading securities were recognized in earnings. The Company may enter into
futures contracts which are held for purposes other than trading and are carried
at market value. Changes in market value of outstanding futures contracts are
recognized in earnings. The Company may enter into interest rate swap agreements
to limit the effect of changes in the interest rates on any floating rate debt.
For interest rate instruments that effectively hedge interest rate exposures,
the net cash amounts paid or received on the agreements are recognized as an
adjustment to interest expense.
Receivables. Receivables are presented net of allowances for doubtful
accounts of approximately $4.3 million and $3.4 million at December 31, 1999 and
1998, respectively. The Company does a significant amount of business with a
number of individual customers in the transportation industry. The Company
monitors its exposure for credit losses and maintains adequate allowances for
doubtful accounts; the Company does not believe that significant credit risk
exists.
Inventories. Inventories are stated at the lower of cost or net realizable
value, with cost determined principally by use of the first-in, first-out
method.
Property and Equipment, Net. Property and equipment additions, including
significant betterments, are recorded at cost. Upon retirement or disposal of
property and equipment, the cost and accumulated depreciation are removed from
the accounts, and any gain or loss is included in income. Repair and maintenance
costs are charged to expense as incurred.
Depreciation and Amortization. Depreciation is computed principally using
the straight-line method over the estimated useful lives of the assets. Annual
depreciation rates are as follows: buildings and land
22
<PAGE> 24
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
improvements, 2 1/2 to 10 percent, and machinery and equipment, 6 2/3 to 33 1/3
percent. Deferred financing costs are amortized over the lives of the related
debt securities. The excess of cost over net assets of acquired companies is
amortized using the straight-line method over the period estimated to be
benefitted, not exceeding 40 years. At each balance sheet date, management
assesses whether there has been a permanent impairment of the excess of cost
over net assets of acquired companies by comparing anticipated undiscounted
future cash flows from operating activities with the carrying amount of the
excess of cost over net assets of acquired companies. The factors considered by
management in performing this assessment include current operating results,
business prospects, market trends, potential product obsolescence, competitive
activities and other economic factors. Based on this assessment, there was no
permanent impairment related to the excess of cost over net assets of acquired
companies at December 31, 1999.
At December 31, 1999 and 1998, accumulated amortization of the excess of
cost over net assets of acquired companies and patents was $68.5 million and
$56.4 million, respectively. Amortization expense was $28.4 million, $31.8
million and $9.3 million in 1999, 1998 and 1997, respectively.
New Accounting Pronouncements and Reclassifications. On June 15, 1998, the
Financial Accounting Standards Board ("FASB") issued SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities." SFAS No. 133 requires that
all derivative instruments be recorded on the balance sheet at fair value.
Changes in the fair value of derivatives are recorded each period in current
earnings or other comprehensive income, depending on whether a derivative is
designated as part of a hedge transaction and, if it is, the type of hedge
transaction. In June 1999, FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities -- Deferral of the Effective Date of FASB
Statement No. 133." SFAS No. 137 defers the effective adoption date of SFAS No.
133 to January 1, 2001. The Company is currently evaluating the impact SFAS No.
133 will have on its financial statements, if any.
The American Institute of Certified Public Accountants' Statement of
Position No. 98-5, "Reporting on the Costs of Start-up Activities," became
effective on January 1, 1999 and did not have a material impact on the Company's
financial statements.
23
<PAGE> 25
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
EARNINGS PER SHARE:
The following are reconciliations of the numerators and denominators used
in the computations of basic and diluted earnings per common share:
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT
PER SHARE AMOUNTS)
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Weighted average number of shares outstanding......... 41,110 43,630 40,300
======== ======== ========
Net income............................................ $ 92,430 $ 97,470 $115,240
Less: Preferred stock dividends....................... -- -- (6,240)
-------- -------- --------
Earnings used for basic earnings per share
computation....................................... $ 92,430 $ 97,470 $109,000
======== ======== ========
Basic earnings per share.............................. $2.25 $2.23 $2.70
======== ======== ========
Total shares used for basic earnings per share
computation......................................... 41,110 43,630 40,300
Dilutive securities:
Stock options....................................... 530 1,060 1,250
Assumed conversion of preferred stock at January 1,
1997............................................. -- -- 5,210
Convertible debentures.............................. 9,840 10,000 10,000
Contingently issuable shares........................ 3,720 3,830 2,160
-------- -------- --------
Total shares used for diluted earnings per
share computation.......................... 55,200 58,520 58,920
======== ======== ========
Earnings used for basic earnings per share
computation......................................... $ 92,430 $ 97,470 $109,000
Add back of preferred stock dividends................. -- -- 6,240
Add back of debenture interest........................ 9,310 9,530 9,530
-------- -------- --------
Earnings used for diluted earnings per share
computation....................................... $101,740 $107,000 $124,770
======== ======== ========
Diluted earnings per share....................... $1.84 $1.83 $2.12
======== ======== ========
</TABLE>
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.
SUPPLEMENTARY CASH FLOWS INFORMATION:
Significant transactions not affecting cash were: in 1999, the assumption
of approximately $10 million of liabilities in an acquisition; in 1998, the
issuance of $22 million of Company Common Stock in partial exchange for the
assets of an acquired company; the acquisition of TriMas for cash and the
assumption of liabilities of approximately $179 million; and in 1997, the
conversion of the Company's outstanding shares of Dividend Enhanced Convertible
Preferred Stock for approximately 10 million shares of Company Common Stock (see
"Shareholders' Equity" note); the exchange of approximately 9.9 million shares
of the outstanding common stock of Emco Limited ("Emco") with a value of
approximately $106 million, in addition to the cash payment of approximately $46
million, in payment of a promissory note due to Masco Corporation.
Income taxes paid were $54 million, $38 million and $44 million in 1999,
1998 and 1997, respectively. Interest paid was $79 million, $79 million and $39
million in 1999, 1998 and 1997, respectively.
24
<PAGE> 26
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
ACQUISITIONS:
In January 1998, the Company completed the acquisition of TriMas
Corporation ("TriMas") by purchasing all the outstanding shares of TriMas not
already owned by the Company for approximately $920 million. The Company
previously owned 37 percent of TriMas. The results for 1998 reflect TriMas'
sales and operating results from the date of acquisition. The acquisition has
been accounted for as a purchase and the excess of the aggregate purchase price
over the fair value of net assets acquired of approximately $680 million is
being amortized over 40 years.
The Company acquired a business operation and a product line extension in
1999, which will provide annual sales of approximately $85 million, for an
aggregate purchase price of approximately $93 million. These transactions have
been accounted for as purchases and the excess of the aggregate purchase price
over the fair value of net assets acquired of approximately $51 million is being
amortized over 40 years. The results for 1999 reflect sales and operating
results from the dates of acquisition.
DISPOSITIONS OF BUSINESSES:
The Company received approximately $30 million of contingent consideration
($5 million in 1997 and $25 million in 1998) based on the subsequent operating
performance of certain businesses sold in 1996. This gain, which is non-taxable,
is included in the caption "gains (charge) on disposition of businesses, net" in
the consolidated statement of income.
On January 3, 1997, the Company sold its Technical Services Group
(comprised of the Company's engineering and technical business services units)
to MSX International, Inc. 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, subject to certain adjustments, consisting of cash,
$30 million of subordinated debentures, $18 million of preferred stock and an
approximate 45 percent common equity interest in MSX International, Inc. valued
at $2 million. In January 1998, the Company received $48 million of cash from
MSX International, Inc. in payment of the subordinated debentures and other
amounts due MascoTech, resulting in a realized gain in the first quarter 1998 of
$7 million. The remaining deferred gain of approximately $20 million will be
recognized upon the liquidation of the common and preferred stock holdings for
cash.
In the second quarter of 1998, the Company recorded a non-cash charge
aggregating approximately $41 million pre-tax (approximately $22 million
after-tax) to reflect the write-down of certain long-lived assets principally
related to the plan to dispose of certain businesses and to accrue exit costs of
approximately $8 million. In April 1999, the Company completed the sale of these
aftermarket-related and vacuum metalizing businesses for total proceeds
aggregating approximately $105 million, including $90 million of cash which was
applied to reduce the Company's indebtedness, a note receivable of $6 million
and retained equity interests in the ongoing businesses. These transactions
resulted in a pre-tax gain of approximately $26 million ($15 million after-tax).
In 1999, management adopted a plan to sell its specialty tubing business
which resulted in a pre-tax loss of approximately $7 million and an after-tax
gain of approximately $5.5 million, due to the tax basis in the net assets of
the businesses exceeding book carrying values. This business was sold in January
2000 for proceeds of approximately $6 million consisting of cash and notes.
25
<PAGE> 27
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In addition, the Company recorded in the second quarter 1999 a non-cash
pre-tax charge of approximately $17.5 million related to impairment of certain
long-lived assets, which included its hydroforming equipment and related
intellectual property.
In the fourth quarter 1999, the Company announced the closure of a plant
and recorded a non-cash pre-tax charge of approximately $4 million ($2 million
after-tax) related principally to employee benefit costs and asset impairments.
Accrued exit costs at January 1, 1999 were approximately $12 million, new
accruals in 1999 were approximately $2 million, payments and adjustments to
accrued estimates approximated $2 million and the accrual at December 31, 1999
was approximately $12 million.
INVENTORIES:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
-------------------
1999 1998
-------- --------
<S> <C> <C>
Finished goods.................................... $ 86,240 $ 87,810
Work in process................................... 45,940 47,960
Raw material...................................... 51,420 62,580
-------- --------
$183,600 $198,350
======== ========
</TABLE>
EQUITY AND OTHER INVESTMENTS IN AFFILIATES:
Equity and other investments in affiliates consist of the following common
stock interests in publicly traded affiliates:
<TABLE>
<CAPTION>
AT DECEMBER 31
------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
TriMas Corporation.................................. -- -- 37%
Titan International, Inc. .......................... 16% 16% 15%
Delco Remy International, Inc. (voting)............. 17% 17% 18%
</TABLE>
Titan International, Inc. ("Titan") is a manufacturer of wheels, tires and
other products for agricultural, construction and off-highway equipment markets.
Delco Remy International, Inc. ("DRI") is a manufacturer of automotive
electronic motors and other components. The above companies are accounted for
under the equity method.
26
<PAGE> 28
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The carrying amount of investments in affiliates at December 31, 1999 and
1998 and quoted market values at December 31, 1999 for publicly traded
affiliates (which may differ from the amounts that could have been realized upon
disposition) are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1999
QUOTED 1999 1998
MARKET CARRYING CARRYING
VALUE AMOUNT AMOUNT
------- -------- --------
<S> <C> <C> <C>
Common stock:
Titan International, Inc. .............. $21,550 $ 40,880 $46,900
Delco Remy International, Inc. ......... 24,960 15,300 10,920
------- -------- -------
Investments in publicly traded
affiliates.............................. $46,510 56,180 57,820
=======
Other non-public affiliates............... 54,550 35,740
-------- -------
Total..................................... $110,730 $93,560
======== =======
</TABLE>
The Company's carrying value in common stock of these equity affiliates
exceeded its equity in the underlying net book value by approximately $12
million at December 31, 1999. This excess is being amortized over 40 years.
In March 1997, TriMas called for redemption its 5% Convertible Subordinated
Debentures which resulted in the issuance of approximately 4.7 million common
shares, reducing the Company's common equity ownership in TriMas to
approximately 37 percent. The Company recognized pre-tax income of approximately
$13 million as a result of the change in the Company's common equity ownership
interest in TriMas.
In September 1997, the Company exchanged its equity holdings in Emco
Limited, with a value approximating $106 million (resulting in a pre-tax gain of
approximately $46 million), and approximately $46 million in cash to satisfy an
indebtedness to Masco Corporation.
In December 1997, DRI completed an initial public offering reducing the
Company's common equity ownership interest in DRI to approximately 12 percent on
a diluted basis. As a result of the change in the Company's common equity
ownership interest in DRI, the Company recognized a pre-tax gain of
approximately $5 million.
In addition to its equity investments in publicly traded affiliates, the
Company has equity and other investment interests in privately held
automotive-related companies, including the Company's 36 percent common equity
ownership in Saturn Electronics & Engineering, Inc., a manufacturer of
electromechanical and electronic automotive components; a 45 percent common
equity ownership in MSX International, Inc., a provider of technology-based
business services and product development services; and a 16 percent common
equity ownership in Qualitor, Inc., a supplier of automotive aftermarket
products.
Equity in undistributed earnings of affiliates of $15 million at December
31, 1999, $6 million at December 31, 1998 and $68 million at December 31, 1997
are included in consolidated retained earnings.
27
<PAGE> 29
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Approximate combined condensed financial data of the Company's equity
affiliates (including TriMas through the date of acquisition in early 1998,
Qualitor since its formation in early 1999, and Emco through the date of
disposition September 30, 1997) accounted for under the equity method are as
follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
-----------------------
1999 1998
----------- ---------
<S> <C> <C>
Current assets.................................... $ 1,180,990 $ 948,370
Current liabilities............................... (708,150) (451,200)
----------- ---------
Working capital................................. 472,840 497,170
Property and equipment, net....................... 632,530 473,460
Excess of cost over net assets of acquired
companies and other assets...................... 499,040 349,060
Long-term debt.................................... (1,087,650) (846,330)
Deferred income taxes and other long-term
liabilities..................................... (70,250) (52,030)
----------- ---------
Shareholders' equity............................ $ 446,510 $ 421,330
=========== =========
</TABLE>
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31
------------------------------------
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Net sales........................................... $3,304,610 $2,764,860 $3,484,540
========== ========== ==========
Operating profit.................................... $ 177,220 $ 125,730 $ 264,590
========== ========== ==========
Earnings attributable to common stock............... $ 41,070 $ 32,480 $ 108,230
========== ========== ==========
</TABLE>
Equity and other income from affiliates consists of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31
---------------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
The Company's equity in affiliates'
earnings available for common shareholders........ $10,300 $ 7,340 $31,330
Interest and dividend income........................ 2,930 2,810 12,030
------- ------- -------
Equity and other income from affiliates............. $13,230 $10,150 $43,360
======= ======= =======
</TABLE>
PROPERTY AND EQUIPMENT, NET:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
---------------------
1999 1998
---------- --------
<S> <C> <C>
Cost:
Land and land improvements..................... $ 30,650 $ 33,160
Buildings...................................... 184,170 179,870
Machinery and equipment........................ 830,400 777,710
---------- --------
1,045,220 990,740
Less: Accumulated depreciation................... 322,540 312,610
---------- --------
$ 722,680 $678,130
========== ========
</TABLE>
Depreciation expense totalled $55 million, $52 million and $34 million in
1999, 1998 and 1997, respectively.
28
<PAGE> 30
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
ACCRUED LIABILITIES:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
-------------------
1999 1998
-------- --------
<S> <C> <C>
Salaries, wages and commissions................... $ 8,800 $ 16,550
Vacation, holiday and bonus....................... 18,550 19,420
Income taxes...................................... 3,940 8,790
Interest.......................................... 5,250 4,300
Insurance......................................... 24,130 22,470
Property, payroll and other taxes................. 5,380 5,490
Pension........................................... 20,850 13,600
Other............................................. 27,010 44,610
-------- --------
$113,910 $135,230
======== ========
</TABLE>
LONG-TERM DEBT:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31
-----------------------
1999 1998
---------- ----------
<S> <C> <C>
4 1/2% Convertible Subordinated Debentures, due
2003 and convertible into Company Common
Stock at $31 per share....................... $ 305,000 $ 310,000
Bank revolving credit agreement................ 606,000 500,000
Bank term loan................................. 383,000 475,000
Other.......................................... 85,660 108,060
---------- ----------
1,379,660 1,393,060
Less: Current portion of long-term debt........ 6,770 4,820
---------- ----------
Long-term debt................................. $1,372,890 $1,388,240
========== ==========
</TABLE>
In connection with the TriMas acquisition in early 1998 (see "Acquisitions"
note), the Company entered into a new $1.3 billion credit facility. This
facility includes a $500 million term loan with remaining principal payments as
follows: 2000 -- $60 million; 2001 -- $75 million; 2002 -- $138 million; and
2003 -- $110 million. The credit facility also includes an $800 million revolver
which terminates in 2003. The Company has recorded the $60 million principal
payment due in 2000 as long-term because the Company has the ability and intent
to refinance amounts due in 2000 on a long-term basis utilizing the revolver.
Other debt at December 31, 1999 principally consists of borrowings
denominated in foreign currencies under the revolving credit agreement by the
Company's subsidiaries. At December 31, 1999, there was approximately $120
million unused under the revolving credit agreement.
The interest rates applicable to the revolver and term loan are principally
at alternative floating rates which approximated seven percent at December 31,
1999. Interest rate swaps covering a notional amount
29
<PAGE> 31
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
of $400 million of the Company's floating rate debt were entered into in 1998 at
an aggregate interest rate of approximately seven percent including the current
borrowing spread under the Company's revolving credit agreement. These swap
agreements expire at various dates in 2000 through 2007.
The credit facility requires the maintenance of a specified level of
shareholders' equity plus subordinated debt, with limitations on the ratios of
total debt to cash flow (as defined) and cash flow less capital expenditures (as
defined) to interest plus taxes and scheduled debt payments. In addition, there
are limitations on dividends, share repurchases and subordinated debt
repurchases. Under the most restrictive of these provisions, approximately $26
million would have been available at December 31, 1999 for the payment of cash
dividends and the acquisition of Company capital stock. The facility is
collateralized by a pledge of the stock of TriMas.
Masco Corporation has agreed to purchase from the Company, at the Company's
option, up to $200 million of subordinated debentures through 2002.
The maturities of debt as at December 31, 1999 during the next five years
are as follows (in millions): 2000 -- $67; 2001 -- $84; 2002 -- $141;
2003 -- $1,033; and 2004 -- $2.
SHAREHOLDERS' EQUITY:
On June 27, 1997, the Company completed the conversion of all remaining
issued and outstanding shares of its Dividend Enhanced Convertible Preferred
Stock (DECS). Holders of DECS received in exchange for each share of DECS .955
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.
The Company repurchased and retired approximately 1.3 million shares of its
common stock in 1999, 3.6 million shares of its common stock in 1998 and
approximately .3 million shares of its common stock and approximately .5 million
shares of its preferred stock in 1997, pursuant to Board of Directors'
authorized repurchase programs. At December 31, 1999, the Company may repurchase
approximately 3.3 million additional shares of Company Common Stock pursuant to
the repurchase authorization.
In 1996, the Company purchased from Masco Corporation 17 million shares of
MascoTech common stock and warrants to purchase 10 million shares of MascoTech
common stock for cash and notes approximating $266 million. In addition, Masco
Corporation has agreed to purchase from the Company, at the Company's option, up
to $200 million of subordinated debentures through 2002.
MascoTech has the right of first refusal to purchase the approximate 7.8
million shares of MascoTech common stock that Masco Corporation continues to
hold, should Masco Corporation decide to dispose of such shares.
On the basis of amounts paid (declared), cash dividends per common share
were $.30 ($.30) in 1999, $.26 ($.20) in 1998 and $.22 ($.28) in 1997.
STOCK OPTIONS AND AWARDS:
The Company's Long Term Stock Incentive Plan (the "Plan") provides for the
issuance of stock-based incentives in various forms. At December 31, 1999,
outstanding stock-based incentives are in the form of restricted long-term stock
awards and stock options.
30
<PAGE> 32
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Pursuant to the Plan, the Company granted long-term stock awards, net, for
622,000, 908,000 and 565,000 shares of Company Common Stock during 1999, 1998
and 1997, respectively, to key employees of the Company. The weighted average
fair value per share of long-term stock awards granted during 1999, 1998 and
1997 on the date of grant was $14, $19 and $19, respectively. Compensation
expense for the vesting of long-term stock awards was approximately $4.7
million, $5.2 million and $4.7 million in 1999, 1998 and 1997, respectively. The
unamortized value of unvested stock awards, aggregating approximately $44
million at December 31, 1999, are generally amortized over ten-year vesting
periods and are recorded in the financial statements as a deduction from
shareholders' equity.
Fixed stock options are granted to key employees of the Company and have a
maximum term of ten years. The exercise price of each fixed option equals the
market price of Company Common Stock on the date of grant. These options either
vest no later than ten years after grant or in installments beginning in the
third year and extending through the eighth year after grant.
A summary of the status of the Company's stock options granted under the
Plan or prior plans for the three years ended December 31, 1999 is presented
below.
<TABLE>
<CAPTION>
(SHARES IN THOUSANDS)
1999 1998 1997
----- ------ -----
<S> <C> <C> <C>
Option shares outstanding, January 1....................... 3,950 3,770 4,290
Weighted average exercise price.......................... $14 $10 $10
Option shares granted...................................... 180 1,480 80
Weighted average exercise price.......................... $14 $19 $20
Option shares exercised.................................... (140) (1,160) (500)
Weighted average exercise price.......................... $5 $10 $8
Option shares canceled..................................... (110) (140) (100)
Weighted average exercise price.......................... $18 $15 $16
Option shares outstanding, December 31..................... 3,880 3,950 3,770
Weighted average exercise price.......................... $14 $14 $10
Weighted average remaining option term (in years)........ 5.9 6.6 4.7
Option shares exercisable, December 31..................... 1,200 750 1,430
Weighted average exercise price.......................... $9 $9 $9
</TABLE>
The following table summarizes information about stock options outstanding
at December 31, 1999:
<TABLE>
<CAPTION>
(SHARES IN THOUSANDS)
NUMBER NUMBER
RANGE OF OUTSTANDING WEIGHTED AVERAGE WEIGHTED AVERAGE EXERCISABLE WEIGHTED AVERAGE
EXERCISE PRICES AT 12/31/99 REMAINING LIFE EXERCISE PRICE AT 12/31/99 EXERCISE PRICE
- ----------------- ----------- ---------------- ----------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
$4.50 -- $14 1,060 1.6 $ 5.46 790 $ 5.06
$14 -- $18 1,380 7.0 $14.51 360 $14.58
$18 -- $25 1,440 7.9 $19.20 50 $22.16
----- -----
Total Outstanding 3,880 Total Exercisable 1,200
===== =====
</TABLE>
31
<PAGE> 33
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
At December 31, 1999, 1998 and 1997, a combined total of 3,450,000,
3,820,000 and 5,223,000 shares, respectively, of Company Common Stock were
available for the granting of options and incentive awards under the above
plans.
The Company has elected to continue to apply the provisions of Accounting
Principles Board Opinion No. 25 and, accordingly, no stock option compensation
expense is included in the determination of net income in the statement of
income. The weighted average fair value on the date of grant of options granted
was $3.60, $6.30 and $7.70 in 1999, 1998 and 1997, respectively. Had stock
option compensation expense been determined pursuant to the methodology of SFAS
No. 123, "Accounting for Stock-Based Compensation," the pro forma effects on the
Company's earnings per share would have been a reduction of approximately $.04,
$.04 and $.02 in 1999, 1998 and 1997, respectively.
The fair value for these options was estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted average
assumptions:
<TABLE>
<CAPTION>
1999 1998 1997
----- ----- -----
<S> <C> <C> <C>
Risk-free interest rate.......................... 5.1% 5.5% 6.5%
Dividend yield................................... 1.9% 1.3% 1.4%
Volatility factor................................ 26.2% 28.8% 35.0%
Expected option life (in years).................. 5.5 5.5 5.5
</TABLE>
EMPLOYEE BENEFIT PLANS:
Pension and Profit-Sharing Benefits. The Company sponsors defined-benefit
pension plans for most of its employees. In addition, substantially all salaried
employees participate in noncontributory profit-sharing plans, to which payments
are approved annually by the Board of Directors. Aggregate charges to income
under these plans were $21 million in 1999, $15 million in 1998 and $9 million
in 1997.
Net periodic pension cost for the Company's defined-benefit pension plans
includes the following components for the three years ended December 31, 1999:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1999 1998 1997
------- -------- -------
<S> <C> <C> <C>
Service cost.................................... $ 7,590 $ 6,470 $ 3,480
Interest cost................................... 12,640 11,380 6,650
Expected return on assets....................... (9,670) (11,430) (6,600)
Amortization of transition obligation (asset)... 130 (170) (120)
Amortization of prior-service cost.............. 650 750 690
Amortization of net loss........................ 1,440 670 410
------- -------- -------
Net periodic pension cost....................... $12,780 $ 7,670 $ 4,510
======= ======== =======
</TABLE>
Major assumptions used in accounting for the Company's defined-benefit
pension plans are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
----- ------ ------
<S> <C> <C> <C>
Discount rate for obligations....................... 7.75% 6.75% 7.25%
Rate of increase in compensation levels............. 5.00% 5.00% 5.00%
Expected long-term rate of return on plan assets.... 9.00% 11.00% 11.00%
</TABLE>
32
<PAGE> 34
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following provides a reconciliation of the changes in the
defined-benefit pension plans' projected benefit obligations and fair value of
assets for each of the two years ended December 31, 1999, and the funded status
as of December 31, 1999 and 1998:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1999 1998
--------- ---------
<S> <C> <C>
CHANGES IN PROJECTED BENEFIT OBLIGATIONS
Benefit obligations at January 1................. $(184,030) $ (99,150)
Acquisitions................................... -- (63,720)
Service cost................................... (7,130) (5,900)
Interest cost.................................. (12,640) (11,380)
Plan amendments................................ (1,460) (650)
Actuarial gain (loss).......................... 22,830 (9,580)
Benefit payments............................... 8,660 6,350
--------- ---------
Projected benefit obligations at December 31..... $(173,770) $(184,030)
--------- ---------
CHANGES IN PLAN ASSETS
Fair value of plan assets at January 1........... $ 110,760 $ 63,020
Actual return on plan assets................... (12,110) 1,890
Acquisitions................................... -- 46,420
Contributions.................................. 11,520 6,430
Benefit payments............................... (8,480) (6,350)
Expenses/Other................................. (430) (650)
--------- ---------
Fair value of plan assets at December 31......... $ 101,260 $ 110,760
========= =========
FUNDED STATUS
Plan assets less than projected benefits at
December 31.................................... $ (72,510) $ (73,270)
Unamortized transition obligation (asset)...... 270 (1,100)
Unamortized prior-service cost................. 7,500 7,640
Unamortized net loss........................... 29,340 36,600
--------- ---------
Net liability recognized at December 31.......... $ (35,400) $ (30,130)
========= =========
</TABLE>
The following provides the amounts related to the plans at December 31,
1999 and 1998:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1999 1998
-------- --------
<S> <C> <C>
Accrued benefit liability.......................... $(56,650) $(51,370)
Intangible asset................................... 11,250 10,540
Accumulated other comprehensive income............. 10,000 10,700
-------- --------
Net liability recognized......................... $(35,400) $(30,130)
======== ========
</TABLE>
33
<PAGE> 35
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Postretirement Benefits. The Company provides postretirement medical and
life insurance benefits, none of which are funded, for certain of its active and
retired employees. Net periodic postretirement benefit cost includes the
following components for the years ended December 31, 1999, 1998 and 1997:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Service cost.................................. $ 400 $ 300 $ 300
Interest cost................................. 1,200 1,200 1,400
Net amortization.............................. 500 (100) 700
------ ------ ------
Net periodic postretirement benefit cost...... $2,100 $1,400 $2,400
====== ====== ======
</TABLE>
The following provides a reconciliation of the changes in the
postretirement benefit plans' benefit obligations for each of the two years
ended December 31, 1999 and the status as of December 31, 1999 and 1998:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1999 1998
-------- --------
<S> <C> <C>
CHANGES IN BENEFIT OBLIGATIONS
Benefit obligations at January 1................... $(18,900) $(12,400)
Acquisitions..................................... -- (4,400)
Service cost..................................... (400) (300)
Interest cost.................................... (1,200) (1,200)
Employee contributions........................... (100) (100)
Actuarial gain (loss)............................ 1,000 (1,900)
Benefit payments................................. 1,300 1,200
Curtailment...................................... 100 200
-------- --------
Benefit obligations at December 31................. $(18,200) $(18,900)
======== ========
STATUS
Benefit obligations at December 31................. $(18,200) $(18,900)
Unamortized transition obligation................ 8,400 9,300
Unrecognized prior-service cost.................. 400 500
Unrecognized net gain............................ (6,700) (6,200)
-------- --------
Net liability at December 31....................... $(16,100) $(15,300)
======== ========
</TABLE>
The discount rate used in determining the accumulated postretirement
benefit obligation increased from 6.75 percent in 1998 to 7.75 percent in 1999.
The assumed health care cost trend rate in 1999 was eight percent, decreasing to
an ultimate rate in the year 2007 of five percent. If the assumed medical cost
trend rates were increased by one percent, the accumulated postretirement
benefit obligations would increase by $1.3 million and the aggregate of the
service and interest cost components of net periodic postretirement benefit
obligations cost would increase by $.1 million. If the assumed medical cost
trend rates were decreased by one percent, the accumulated postretirement
benefit obligations would decrease by $1.1 million and the aggregate of the
service and interest cost components of net periodic postretirement benefit cost
would decrease by $.1 million.
34
<PAGE> 36
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEGMENT INFORMATION:
The Company has defined a segment as a component, with business activity
resulting in revenue and expense, that has separate financial information
evaluated regularly by the Company's chief operating decision maker in
determining resource allocation and assessing performance. The Company has five
operating segments involving the manufacture and sale of the following:
Specialty Metal Formed Products -- Precision products, principally
engine and drivetrain components and subassemblies, generally produced
using advanced metalworking technologies with significant proprietary
content for the transportation industry.
Towing Systems -- Vehicle hitches, jacks, winches, couplers and related
towing accessories.
Specialty Fasteners -- Cold formed fasteners and related metallurgical
processing.
Specialty Packaging and Sealing Products -- Industrial container
closures, pressurized gas cylinders and metallic and nonmetallic
gaskets.
Specialty Industrial Products -- Specialty drills, cutters and
specialized metal finishing services, and flame-retardant facings and
jacketings and pressure-sensitive tapes.
The Company purchased TriMas in January 1998 and the segment data for 1998
reflects TriMas as though the transaction had occurred on January 1, 1998,
consistent with the Company's internal management reporting.
Included in the Specialty Metal Formed Products segment are sales to one
customer of $197 million, $184 million and $156 million in 1999, 1998 and 1997,
respectively; sales to another customer, attributed mainly to the Specialty
Metal Formed Products segment, of $140 million in 1997; sales to a third
customer, attributed mainly to the Specialty Metal Formed Products segment, of
$79 million in 1997; and sales to a fourth customer, attributed mainly to the
Specialty Metal Formed Products segment, of $62 million in 1997. Specialty Metal
Formed Products' operating profit for 1997 was reduced by $17 million of
nonrecurring charges.
The Company's export sales approximated $143 million, $142 million and $71
million in 1999, 1998 and 1997, respectively.
35
<PAGE> 37
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Intersegment transactions represent principally transactions occurring in
the ordinary course of business.
<TABLE>
<CAPTION>
SPECIALTY (IN THOUSANDS)
SPECIALTY PACKAGING SPECIALTY COMPANIES
METAL FORMED TOWING SPECIALTY AND SEALING INDUSTRIAL SOLD OR HELD
PRODUCTS SYSTEMS FASTENERS PRODUCTS PRODUCTS FOR SALE TOTAL
------------ -------- --------- ----------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1999
- ---------------------
Revenue from external
customers.......... $817,000 $260,000 $241,000 $216,000 $107,000 $ 39,000 $1,680,000
Intersegment
revenue............ 9,000 8,000 4,000 -- 1,000 1,000 23,000
Depreciation and
amortization....... 35,000 10,000 12,000 13,000 5,000 2,000 77,000
Segment operating
profit............. 112,000 37,000 35,000 41,000 14,000 4,000 243,000
Segment net assets... 602,000 289,000 329,000 422,000 140,000 -- 1,782,000
Capital
expenditures....... 87,000 9,000 12,000 19,000 7,000 -- 134,000
1998
- ---------------------
Revenue from external
customers.......... $760,000 $238,000 $226,000 $223,000 $110,000 $115,000 $1,672,000
Intersegment
revenue............ 5,000 6,000 3,000 -- 1,000 3,000 18,000
Depreciation and
amortization....... 34,000 9,000 10,000 11,000 5,000 6,000 75,000
Segment operating
profit............. 106,000 34,000 38,000 46,000 16,000 12,000 252,000
Segment net assets... 494,000 281,000 328,000 423,000 140,000 102,000 1,768,000
Capital
expenditures....... 63,000 8,000 14,000 16,000 4,000 3,000 108,000
1997
- ---------------------
Revenue from external
customers.......... $711,000 -- $ 44,000 -- $ 37,000 $130,000 $ 922,000
Intersegment
revenue............ 9,000 -- 1,000 -- -- 2,000 12,000
Depreciation and
amortization....... 29,000 -- 1,000 -- 2,000 6,000 38,000
Segment operating
profit............. 88,000 -- 8,000 -- 7,000 16,000 119,000
Segment net assets... 444,000 -- 17,000 -- 18,000 109,000 588,000
Capital
expenditures....... 46,000 -- 1,000 -- 2,000 5,000 54,000
</TABLE>
The following table presents the Company's revenues for each of the years
ended December 31 and net assets at each year ended December 31 by geographic
area, attributed to each subsidiary's continent of domicile. Revenue and net
assets from no single foreign country was material to the consolidated revenues
and net assets of the Company.
<TABLE>
<CAPTION>
(IN THOUSANDS)
1999 1998 1997
---------------------- ---------------------- ----------------------
SALES NET ASSETS SALES NET ASSETS SALES NET ASSETS
-------- ---------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Europe................... $165,000 $182,000 $149,000 $171,000 $100,000 $111,000
Australia................ 23,000 14,000 18,000 10,000 -- --
Other North America...... 12,000 18,000 16,000 12,000 -- --
-------- -------- -------- -------- -------- --------
Total foreign.......... $200,000 $214,000 $183,000 $193,000 $100,000 $111,000
======== ======== ======== ======== ======== ========
</TABLE>
36
<PAGE> 38
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following is a reconciliation of reportable segment revenue from
external customers, segment operating profit and segment net assets to the
Company's consolidated totals:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1999 1998 1997
---------- ---------- --------
<S> <C> <C> <C>
REVENUE FROM EXTERNAL CUSTOMERS
Revenue from external customers for reportable
segments......................................... $1,680,000 $1,672,000 $922,000
TriMas sales prior to acquisition.................. -- (36,000) --
---------- ---------- --------
Total net sales......................... $1,680,000 $1,636,000 $922,000
========== ========== ========
</TABLE>
<TABLE>
<CAPTION>
(IN THOUSANDS)
1999 1998 1997
---------- ---------- --------
<S> <C> <C> <C>
OPERATING PROFIT
Total operating profit for reportable segments..... $ 243,000 $ 252,000 $119,000
General corporate expense.......................... (24,000) (24,000) (22,000)
Gain (loss) on disposition of businesses........... 14,000 (41,000) --
Charge for asset impairment........................ (18,000) -- --
MSTI earnout....................................... -- 25,000 5,000
TriMas operating profit prior to acquisition....... -- (5,000) --
---------- ---------- --------
Total operating profit.................. $ 215,000 $ 207,000 $102,000
========== ========== ========
</TABLE>
<TABLE>
<CAPTION>
(IN THOUSANDS)
1999 1998 1997
---------- ---------- --------
<S> <C> <C> <C>
NET ASSETS AT DECEMBER 31
Total net operating assets for reportable
segments......................................... $1,782,000 $1,768,000 $588,000
Corporate net assets............................... 91,000 72,000 372,000
---------- ---------- --------
Total net assets........................ $1,873,000 $1,840,000 $960,000
========== ========== ========
</TABLE>
The information that the chief operating decision maker utilizes includes
total net assets as presented in the table above. Total net assets is defined by
the Company as total assets less current liabilities. Included in corporate net
assets for 1999 were capital expenditures of $2 million.
OTHER SIGNIFICANT ITEMS
<TABLE>
<CAPTION>
(IN THOUSANDS)
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
DEPRECIATION AND AMORTIZATION
Segment totals........................................... $77,000 $75,000 $38,000
Adjustments.............................................. 6,000 9,000 5,000
------- ------- -------
Consolidated totals........................... $83,000 $84,000 $43,000
======= ======= =======
</TABLE>
The above adjustments to depreciation and amortization are principally the
result of compensation expense related to stock award amortization and prepaid
debenture expense amortization.
37
<PAGE> 39
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
OTHER INCOME (EXPENSE), NET:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Other, net:
Net realized and unrealized gains from
marketable securities................... $ -- $ 3,330 $13,130
Interest income............................ 2,170 4,180 3,440
Other, net................................. (7,390) (5,450) 830
------- ------- -------
$(5,220) $ 2,060 $17,400
======= ======= =======
</TABLE>
INCOME TAXES:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Income before income taxes:
Domestic............................... $123,610 $115,630 $173,410
Foreign................................ 15,860 28,890 16,880
-------- -------- --------
$139,470 $144,520 $190,290
======== ======== ========
Provision for income taxes:
Currently payable:
Federal............................. $ 26,810 $ 28,210 $ 40,290
State and local..................... 5,450 3,950 6,810
Foreign............................. 5,220 15,000 10,430
Deferred:
Federal............................. 7,390 590 18,840
Foreign............................. 2,170 (700) (1,320)
-------- -------- --------
Income taxes........................ $ 47,040 $ 47,050 $ 75,050
======== ======== ========
</TABLE>
The components of deferred taxes at December 31, 1999 and 1998 are as
follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1999 1998
-------- --------
<S> <C> <C>
Deferred tax assets:
Inventories...................................... $ 2,920 $ 2,990
Accrued liabilities and other long-term
liabilities................................... 47,880 51,910
Expected capital loss benefit from disposition of
businesses.................................... 8,900 7,910
-------- --------
59,700 62,810
-------- --------
Deferred tax liabilities:
Property and equipment........................... 111,680 101,640
Other, principally equity investments in
affiliates.................................... 26,710 26,170
-------- --------
138,390 127,810
-------- --------
Net deferred tax liability......................... $ 78,690 $ 65,000
======== ========
</TABLE>
38
<PAGE> 40
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following is a reconciliation of tax computed at the U.S. federal
statutory rate to the provision for income taxes allocated to income before
income taxes:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
U.S. federal statutory rate................. 35% 35% 35%
------- ------- -------
Tax at U.S. federal statutory rate.......... $48,810 $50,580 $66,600
State and local taxes, net of federal tax
benefit................................... 3,540 2,570 4,430
Higher effective foreign tax rate........... 1,840 4,210 3,200
Non-taxable additional consideration from
previously sold business.................. -- (8,190) (1,710)
Disposition of businesses................... (7,870) (2,400) --
Amortization in excess of tax, net.......... 2,950 1,390 (760)
Other, net.................................. (2,230) (1,110) 3,290
------- ------- -------
Income taxes.............................. $47,040 $47,050 $75,050
======= ======= =======
</TABLE>
A provision has not been made at December 31, 1999 for U.S. or additional
foreign withholding taxes on approximately $93 million of undistributed earnings
of foreign subsidiaries as those earnings are intended to be permanently
reinvested. Generally, such earnings become subject to U.S. tax upon the
remittance of dividends and under certain other circumstances. It is not
practicable to estimate the amount of deferred tax liability on such
undistributed earnings.
FAIR VALUE OF FINANCIAL INSTRUMENTS:
In accordance with Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financial Instruments," the following methods
were used to estimate the fair value of each class of financial instruments:
CASH AND CASH INVESTMENTS
The carrying amount reported in the balance sheet for cash and cash
investments approximates fair value.
MARKETABLE SECURITIES, NOTES RECEIVABLE AND OTHER ASSETS
Fair values of financial instruments included in marketable securities,
notes receivable and other assets were estimated using various methods including
quoted market prices and discounted future cash flows based on the incremental
borrowing rates for similar types of investments. In addition, for variable-rate
notes receivable that fluctuate with the prime rate, the carrying amounts
approximate fair value.
LONG-TERM DEBT
The carrying amount of bank debt and certain other long-term debt
instruments approximate fair value as the floating rates inherent in this debt
reflect changes in overall market interest rates. The fair values of the
Company's subordinated debt instruments are based on quoted market prices. The
fair values of certain other debt instruments are estimated by discounting
future cash flows based on the Company's incremental borrowing rate for similar
types of debt instruments.
39
<PAGE> 41
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DERIVATIVES
The Company has limited involvement with derivative financial instruments,
and does not use derivatives for trading purposes. The derivatives, principally
consisting of futures contracts and interest rate swap agreements, are intended
to reduce the market risk associated with the Company's marketable equity
securities portfolio and floating rate debt.
The Company's investment in futures contracts increases in value as a
result of decreases in the underlying index and decreases in value when the
underlying index increases. The contracts are financial instruments (with
off-balance sheet market risk), as they are required to be settled in cash. The
Company's market risk is subject to the price differential between the contract
market value and contract cost. The average monthly notional amount of futures
contracts in 1997 was approximately $17 million. 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. There were no
contracts outstanding at December 31, 1999 or 1998.
Interest rate swap agreements covering a notional amount of $400 million of
the Company's floating rate debt were entered into in 1998 at an aggregate
interest rate of approximately seven percent including the current borrowing
spread under the Company's revolving credit agreement. The fair value of the
swap agreements was not recognized in the consolidated financial statements
since they are accounted for as hedges of the floating rate exposure. These swap
agreements expire at various dates in 2000 to 2007.
The estimated fair value of the interest rate swap agreements, based on
current market rates, approximated a net receivable of $13 million at December
31, 1999. Exposure to credit loss occurs when the fair value of the agreements
is a net receivable. The interest rate swaps are with major banks of high credit
quality; therefore, the risk of non-performance by the counterparties is
considered to be negligible.
The carrying amounts and fair values of the Company's financial instruments
at December 31, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1999 1998
----------------------- -----------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Cash and cash investments........... $ 4,490 $ 4,490 $ 29,390 $ 29,390
Notes receivable and other assets... $ 4,180 $ 4,560 $ 5,290 $ 4,480
Long-term debt:
Bank debt......................... $1,039,890 $1,039,890 $1,051,260 $1,051,260
4 1/2% Convertible Subordinated
Debentures..................... $ 305,000 $ 225,700 $ 310,000 $ 251,100
Other long-term debt.............. $ 28,000 $ 27,850 $ 26,980 $ 25,580
</TABLE>
40
<PAGE> 42
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
INTERIM AND OTHER SUPPLEMENTAL FINANCIAL DATA (UNAUDITED):
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
FOR THE QUARTERS ENDED
------------------------------------------------------------------------
DECEMBER SEPTEMBER JUNE MARCH
31ST 30TH 30TH 31ST
-------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1999:
- ------------------------------------
Net sales........................... $395,220 $399,300 $436,510 $448,660
Gross profit........................ $103,980 $ 99,340 $113,690 $116,020
Net income.......................... $ 22,260 $ 20,200 $ 26,110 $ 23,860
Per common share:
Basic.................... $.54 $.49 $.64 $.58
Diluted.................. $.45 $.41 $.51 $.47
Market price per common share:
High.............................. $17 1/16 $17 11/16 $17 3/4 $17
Low............................... $10 5/8 $15 9/16 $15 1/8 $14
1998:
- ------------------------------------
Net sales........................... $401,760 $399,500 $433,480 $400,760
Gross profit........................ $104,960 $100,150 $117,070 $104,390
Net income.......................... $ 18,120 $ 16,790 $ 29,820 $ 32,740
Per common share:
Basic.................... $.43 $.38 $.68 $.74
Diluted.................. $.36 $.33 $.54 $.60
Market price per common share:
High.............................. $18 3/4 $24 1/8 $26 7/16 $23 1/4
Low............................... $15 1/4 $16 1/4 $22 5/16 $17 11/16
</TABLE>
In the first quarter and second quarter of 1999, the Company recognized
non-cash charges aggregating approximately $6 million pre-tax to reflect the
other than temporary decline in value of equity affiliates of the Company.
In 1999, the Company completed the sale of its aftermarket-related and
vacuum metalizing businesses. These transactions resulted in a pre-tax gain of
approximately $26 million, of which approximately $10 million was recognized in
the first quarter 1999 and approximately $16 million in the second quarter 1999.
In the second quarter 1999, the Company recorded a non-cash pre-tax charge
of approximately $17.5 million related to impairment of certain long-lived
assets, which included its hydroforming equipment and related intellectual
property.
In the fourth quarter 1999, the Company recognized pre-tax charges
aggregating approximately $12 million, principally related to the closure of a
plant and the sale of a business.
In January 1998, the Company completed the acquisition of TriMas
Corporation ("TriMas") by purchasing all the outstanding shares of TriMas not
already owned by the Company for approximately $920 million. The results for
1998 reflect TriMas' sales and operating results from the date of acquisition.
41
<PAGE> 43
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONCLUDED)
Results for first quarter 1998 benefitted from pre-tax gains aggregating
approximately $12 million which resulted from partial recognition of a deferred
gain related to the 1997 divestiture of a business and gains from the Company's
marketable securities portfolio.
Second quarter results for 1998 were impacted by a charge (approximately
$41 million pre-tax) principally related to the disposition of certain
businesses. This charge more than offset the gain related to additional
consideration received by the Company in the second quarter of 1998 resulting
from the disposition of MascoTech Stamping Technologies, Inc. in 1996.
42
<PAGE> 44
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not Applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information regarding executive officers required by this Item is set forth
as a Supplementary Item at the end of Part I hereof (pursuant to Instruction 3
to Item 401(b) of Regulation S-K). Other information required by this Item will
be contained in the Company's definitive Proxy Statement for its 2000 Annual
Meeting of Stockholders, to be filed on or before April 29, 2000, and such
information is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
Information required by this Item will be contained in the Company's
definitive Proxy Statement for its 2000 Annual Meeting of Stockholders, to be
filed on or before April 29, 2000, and such information is incorporated herein
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information required by this Item will be contained in the Company's
definitive Proxy Statement for its 2000 Annual Meeting of Stockholders, to be
filed on or before April 29, 2000, and such information is incorporated herein
by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required by this Item will be contained in the Company's
definitive Proxy Statement for its 2000 Annual Meeting of Stockholders, to be
filed on or before April 29, 2000, and such information is incorporated herein
by reference.
43
<PAGE> 45
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) LISTING OF DOCUMENTS.
(1) Financial Statements. The Company's Consolidated Financial
Statements included in Item 8 hereof, as required at December 31, 1999 and 1998,
and for the years ended December 31, 1999, 1998 and 1997, consist of the
following:
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Cash Flows
Consolidated Statement of Shareholders' Equity
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules.
(i) Financial Statement Schedule of the Company appended hereto, as
required for the years ended December 31, 1999, 1998 and 1997,
consists of the following:
II. Valuation and Qualifying Accounts
(ii) TriMas Corporation and Subsidiaries Consolidated Financial
Statements appended hereto, as required at December 31, 1997
and 1996, and for the years ended December 31, 1997, 1996 and
1995, consist of the following:
Consolidated Statement of Income
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
(3) Exhibits.
<TABLE>
<S> <C>
3.i Restated Certificate of Incorporation of MascoTech, Inc. and
amendments thereto.(7)
3.ii Bylaws of MascoTech, Inc., as amended.(filed herewith)
4.a Indenture dated as of November 1, 1986 between Masco
Industries, Inc. (now known as MascoTech, Inc.) and Morgan
Guaranty Trust Company of New York, as Trustee; Agreement of
Appointment and Acceptance of Successor Trustee dated as of
August 4, 1994 among MascoTech, Inc., Morgan Guaranty Trust
Company of New York and The First National Bank of Chicago;
Supplemental Indenture dated as of August 5, 1994 between
MascoTech, Inc. and The First National Bank of Chicago, as
Trustee; Directors' resolutions establishing the Company's
4 1/2% Convertible Subordinated Debentures Due 2003(7); and
Form of Note. (filed herewith)
4.b $1,300,000,000 Credit Agreement dated as of January 16, 1998
among MascoTech, Inc., MascoTech Acquisition, Inc., the
banks party thereto from time to time, The First National
Bank of Chicago, as Administrative Agent, Bank of America
NT&SA and NationsBank N.A., as Syndication Agents(4) and
Amendment No. 1 thereto dated as of February 10, 1998.(3)
4.c Rights Agreement dated as of February 20, 1998, between
MascoTech, Inc. and The Bank of New York, as Rights Agent(5)
and Amendment No. 1 to Rights Agreement dated as of
September 22, 1998.(6)
</TABLE>
44
<PAGE> 46
<TABLE>
<S> <C>
NOTE: Other instruments, notes or extracts from agreements
defining the rights of holders of long-term MascoTech, Inc.
or its subsidiaries have not been filed since (i) in each
case the total amount of long-term debt permitted thereunder
does not exceed 10 percent of MascoTech, Inc.'s consolidated
assets, and (ii) such instruments, notes and extracts will
be furnished by MascoTech, Inc. to the Securities and
Exchange Commission upon request.
10.a Assumption and Indemnification Agreement dated as of May 1,
1984 between Masco Corporation and Masco Industries, Inc.
(now known as MascoTech, Inc.).(1)
10.b Corporate Services Agreement and Annex dated as of January
1, 1987 between Masco Industries, Inc. (now known as
MascoTech, Inc.) and Masco Corporation, Amendment No. 1
dated as of October 31, 1996 and related letter agreements
dated January 22, 1998 and June 17, 1998. (all filed
herewith)
10.c Corporate Opportunities Agreement dated as of May 1, 1984
between Masco Corporation and Masco Industries, Inc. (now
known as MascoTech, Inc.)(1) and Amendment No. 1 dated as of
October 31, 1996.(2)
10.d Stock Repurchase Agreement dated as of May 1, 1984 between
Masco Corporation and Masco Industries, Inc. (now known as
MascoTech, Inc.) and related letter dated September 20,
1985, Amendment to Stock Repurchase Agreement dated as of
December 20, 1990 and Amendment to Stock Repurchase
Agreement included in Agreement dated as of November 23,
1993.(7)
10.e Amended and Restated Securities Purchase Agreement dated as
of November 23, 1993 ("Securities Purchase Agreement")
between MascoTech, Inc. and Masco Corporation, including
form of Note, Agreement dated as of November 23, 1993
relating thereto, and Amendment No. 1 to the Securities
Purchase Agreement dated as of October 31, 1996.(7)
10.f Registration Agreement dated as of March 31, 1993, between
Masco Corporation and Masco Industries, Inc. (now known as
MascoTech, Inc.). (filed herewith)
10.g Stock Purchase Agreement dated as of October 15, 1996
between Masco Corporation and MascoTech, Inc.(2)
NOTE: Exhibits 10.h through 10.q constitute the management
contracts and executive compensatory plans or arrangements
in which certain of the Directors and executive officers of
the Company participate.
10.h MascoTech, Inc. 1991 Long Term Stock Incentive Plan
(Restated July 15, 1998).(7)
10.i MascoTech, Inc. 1984 Restricted Stock Incentive Plan
(Restated December 6, 1995).(1)
10.j MascoTech, Inc. 1984 Stock Option Plan (Restated September
21, 1999). (filed herewith)
10.k Masco Corporation 1991 Long Term Stock Incentive Plan
(Amended and Restated July 10, 1998). (filed herewith)
10.l Masco Corporation 1988 Restricted Stock Incentive Plan
(Restated December 6, 1995).(1)
10.m Masco Corporation 1988 Stock Option Plan (Restated September
22, 1999). (filed herewith)
10.n MascoTech, Inc. Supplemental Executive Retirement and
Disability Plan. (filed herewith)
10.o MascoTech, Inc. 1997 Non-Employee Directors Stock Plan.(3)
</TABLE>
45
<PAGE> 47
<TABLE>
<S> <C>
10.p Description of the MascoTech, Inc. Program for Estate,
Financial Planning and Tax Assistance.(3)
10.q Masco Corporation 1997 Non-Employee Directors Stock Plan
(Amended July 10, 1998). (filed herewith)
12 Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends. (filed herewith)
21 List of Subsidiaries. (filed herewith)
23 Consent of PricewaterhouseCoopers LLP relating to MascoTech,
Inc.'s Financial Statements and Financial Statement
Schedule. (filed herewith)
27 Financial Data Schedule as of and for the year ended
December 31, 1999. (filed herewith)
</TABLE>
- -------------------------
(1) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1995.
(2) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated November 13, 1996.
(3) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1997.
(4) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated January 30, 1998.
(5) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Registration Statement on Form 8-A dated February 23, 1998.
(6) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Quarterly Report on Form 10-Q dated September 30, 1998.
(7) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1998.
THE COMPANY WILL FURNISH ANY OF ITS STOCKHOLDERS A COPY OF ANY OF THE ABOVE
EXHIBITS NOT INCLUDED HEREIN UPON THE WRITTEN REQUEST OF SUCH STOCKHOLDER AND
THE PAYMENT TO THE COMPANY OF THE REASONABLE EXPENSES INCURRED BY THE COMPANY
IN FURNISHING SUCH COPY OR COPIES.
(B) REPORTS ON FORM 8-K.
None.
46
<PAGE> 48
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
By: /s/ TIMOTHY WADHAMS
------------------------------------
TIMOTHY WADHAMS
Executive Vice President -- Finance
and
Administration and Chief Financial
Officer
March 29, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
<TABLE>
<C> <S> <C>
PRINCIPAL EXECUTIVE OFFICER:
/s/ FRANK M. HENNESSEY Vice Chairman and Chief
- --------------------------------------------- Executive Officer
FRANK M. HENNESSEY
PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER:
/s/ TIMOTHY WADHAMS Executive Vice President --
- --------------------------------------------- Finance and Administration and
TIMOTHY WADHAMS Chief Financial Officer
/s/ RICHARD A. MANOOGIAN Chairman of the Board
- ---------------------------------------------
RICHARD A. MANOOGIAN
/s/ PETER A. DOW Director
- ---------------------------------------------
PETER A. DOW
/s/ ROGER T. FRIDHOLM Director
- ---------------------------------------------
ROGER T. FRIDHOLM
/s/ WILLIAM K. HOWENSTEIN Director
- ---------------------------------------------
WILLIAM K. HOWENSTEIN
/s/ JOHN A. MORGAN Director
- ---------------------------------------------
JOHN A. MORGAN
/s/ HELMUT F. STERN Director
- ---------------------------------------------
HELMUT F. STERN
</TABLE>
March 29, 2000
47
<PAGE> 49
MASCOTECH, INC.
FINANCIAL STATEMENT SCHEDULES
PURSUANT TO ITEM 14(a)(2) OF FORM 10-K
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
FOR THE YEAR ENDED DECEMBER 31, 1999
Schedules, as required for the years ended December 31, 1999, 1998 and 1997:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
II. Valuation and Qualifying Accounts....................... F-2
TriMas Corporation and Subsidiaries Consolidated Financial
Statements................................................ F-3
</TABLE>
F-1
<PAGE> 50
MASCOTECH, INC.
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ------------------------ ---------- ------------------------- ---------- -------------
ADDITIONS
-------------------------
CHARGED
BALANCE AT CHARGED (CREDITED)
BEGINNING TO COSTS TO OTHER BALANCE AT
DESCRIPTION OF PERIOD AND EXPENSES ACCOUNTS DEDUCTIONS END OF PERIOD
- ------------------------ ---------- ------------ ---------- ---------- -------------
(A) (B)
<S> <C> <C> <C> <C> <C>
Allowance for doubtful
accounts, deducted
from accounts
receivable in the
balance sheet:
1999.................. $3,410,000 $1,080,000 $ 20,000 $ 220,000 $4,290,000
========== ========== ========== ========== ==========
1998.................. $1,180,000 $ 750,000 $2,590,000 $1,110,000 $3,410,000
========== ========== ========== ========== ==========
1997.................. $2,000,000 $ 500,000 $ 60,000 $1,380,000 $1,180,000
========== ========== ========== ========== ==========
</TABLE>
NOTES:
(A) Allowance of companies acquired, and other adjustments, net.
(B) Deductions, representing uncollectible accounts written off, less recoveries
of accounts written off in prior years.
F-2
<PAGE> 51
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
of MascoTech, Inc.:
We have audited the consolidated balance sheet of TriMas Corporation and
subsidiaries as of December 31, 1997 and 1996, and the related consolidated
statements of income and cash flows for each of the three years in the period
ended December 31, 1997 as listed in Item 14(a)(2)(ii) of this Form 10-K. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of TriMas
Corporation and subsidiaries as of December 31, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles.
As discussed in Note 2 to the financial statements, substantially all the
outstanding shares of the Company not already owned by MascoTech, Inc. were
acquired by them in January 1998. The Company is now a wholly owned subsidiary
of MascoTech, Inc.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
February 17, 1998
F-3
<PAGE> 52
TRIMAS CORPORATION
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------
1997 1996 1995
------------- ------------- -------------
<S> <C> <C> <C>
Net sales................................. $ 667,910,000 $ 600,230,000 $ 553,490,000
Cost of sales............................. (447,940,000) (403,380,000) (371,470,000)
Selling, general and administrative
expenses................................ (106,270,000) (92,560,000) (83,340,000)
------------- ------------- -------------
Operating profit........................ 113,700,000 104,290,000 98,680,000
Interest expense.......................... (5,420,000) (10,810,000) (13,530,000)
Other, net (principally interest
income)................................. 6,790,000 7,110,000 6,690,000
------------- ------------- -------------
Income before income taxes and
extraordinary
charge............................... 115,070,000 100,590,000 91,840,000
Income taxes.............................. 43,730,000 39,230,000 35,820,000
------------- ------------- -------------
Income before extraordinary charge...... 71,340,000 61,360,000 56,020,000
Extraordinary charge related to becoming a
private company......................... (4,970,000)
------------- ------------- -------------
Net income.............................. $ 66,370,000 $ 61,360,000 $ 56,020,000
============= ============= =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE> 53
TRIMAS CORPORATION
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................. $105,380,000 $105,890,000
Receivables............................................ 83,340,000 80,390,000
Inventories............................................ 97,060,000 92,210,000
Other current assets................................... 4,850,000 4,130,000
------------ ------------
Total current assets.......................... 290,630,000 282,620,000
Property and equipment................................... 200,490,000 194,540,000
Excess of cost over net assets of acquired companies..... 177,770,000 174,710,000
Other assets............................................. 39,570,000 44,800,000
------------ ------------
Total assets................................ $708,460,000 $696,670,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable....................................... $ 31,430,000 $ 33,750,000
Other current liabilities.............................. 36,710,000 45,430,000
------------ ------------
Total current liabilities..................... 68,140,000 79,180,000
Deferred income taxes and other.......................... 44,950,000 39,920,000
Long-term debt........................................... 45,970,000 187,120,000
------------ ------------
Total liabilities............................. 159,060,000 306,220,000
------------ ------------
Shareholders' equity:
Common stock, $.01 par value, authorized 100 million
shares, outstanding 41.3 million shares in 1997;
36.6 million shares in 1996......................... 410,000 370,000
Paid-in capital........................................ 260,310,000 155,690,000
Retained earnings...................................... 293,500,000 238,290,000
Cumulative translation adjustments..................... (4,820,000) (3,900,000)
------------ ------------
Total shareholders' equity.................... 549,400,000 390,450,000
------------ ------------
Total liabilities and shareholders'
equity................................... $708,460,000 $696,670,000
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE> 54
TRIMAS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
CASH FROM (USED FOR):
OPERATIONS:
Net income............................ $ 66,370,000 $ 61,360,000 $ 56,020,000
Adjustments to reconcile net income to
net cash from operations:
Extraordinary charge............ 4,970,000
Depreciation and amortization... 25,680,000 22,930,000 21,480,000
Deferred income taxes........... 4,830,000 2,100,000 5,560,000
(Increase) decrease in
receivables................... (1,360,000) (1,460,000) (4,670,000)
(Increase) decrease in
inventories................... (5,050,000) (2,430,000) (5,930,000)
Increase (decrease) in accounts
payable and other current
liabilities................... (9,900,000) 7,320,000 (2,500,000)
Other, net...................... (1,720,000) 1,260,000 (3,710,000)
------------ ------------ ------------
Net cash from operations...... 83,820,000 91,080,000 66,250,000
------------ ------------ ------------
INVESTMENTS:
Capital expenditures.................. (28,560,000) (26,670,000) (23,470,000)
Acquisitions, net of cash acquired.... (27,490,000)
Contingent acquisition price paid
(including $7.0 million to
MascoTech, Inc.)................... (11,250,000)
------------ ------------ ------------
Net cash from (used for)
investments................ (39,810,000) (54,160,000) (23,470,000)
------------ ------------ ------------
FINANCING:
Long-term debt:
Issuance........................ 23,750,000 27,920,000
Retirement...................... (55,980,000) (43,280,000) (51,470,000)
Fees related to becoming a private
company............................ (1,820,000)
Common stock dividends paid........... (10,470,000) (8,060,000) (6,590,000)
------------ ------------ ------------
Net cash from (used for)
financing.................. (44,520,000) (23,420,000) (58,060,000)
------------ ------------ ------------
CASH AND CASH EQUIVALENTS:
Increase (decrease) for the year...... (510,000) 13,500,000 (15,280,000)
At beginning of the year.............. 105,890,000 92,390,000 107,670,000
------------ ------------ ------------
At end of the year................. $105,380,000 $105,890,000 $ 92,390,000
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE> 55
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of TriMas
Corporation and its wholly owned subsidiaries (the "Company"). All significant
intercompany transactions have been eliminated.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
AFFILIATES
As of December 31, 1997 MascoTech, Inc.'s common stock ownership in the
Company approximated 36.8 percent (see "Subsequent Event" note), and Masco
Corporation's common stock ownership approximated 3.8 percent. The Company has a
corporate services agreement with Masco Corporation. Under the terms of the
agreement, the Company pays a fee to Masco Corporation for various corporate
support staff, administrative services, and research and development services.
Such fee equals .8 percent of the Company's net sales, subject to certain
adjustments, and totaled $4.0 million, $3.3 million and $3.1 million in 1997,
1996 and 1995.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents. At December 31, 1997
the Company had $81.4 million invested in prime commercial paper of several
United States issuers having the highest rating given by one of the two
principal rating agencies.
RECEIVABLES
Receivables are presented net of an allowance for doubtful accounts of $2.0
million and $1.9 million at December 31, 1997 and 1996.
INVENTORIES
Inventories are stated at the lower of cost or net realizable value, with
cost determined principally by use of the first-in, first-out method.
PROPERTY AND EQUIPMENT
Property and equipment additions, including significant betterments, are
recorded at cost. Upon retirement or disposal of property and equipment, the
cost and accumulated depreciation are removed from the accounts and any gain or
loss is included in income. Maintenance and repair costs are charged to expense
as incurred.
F-7
<PAGE> 56
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. ACCOUNTING POLICIES (CONTINUED)
DEPRECIATION AND AMORTIZATION
Depreciation is computed principally using the straight-line method over
the estimated useful lives of the assets. Annual depreciation rates are as
follows: buildings and land improvements, 2 1/2 to 5 percent, and machinery and
equipment, 6 2/3 to 33 1/3 percent. The excess of cost over net assets of
acquired companies is being amortized using the straight-line method over the
periods estimated to be benefited, not exceeding 40 years. At December 31, 1997
and 1996, accumulated amortization of the excess of cost over net assets of
acquired companies and other intangible assets was $42.7 million and $36.6
million. Amortization expense was $6.1 million, $5.3 million and $5.0 million in
1997, 1996 and 1995.
As of each balance sheet date management assesses whether there has been an
impairment in the value of excess of cost over net assets of acquired companies
by comparing anticipated undiscounted future cash flows from the related
operating activities with the carrying value. The factors considered by
management in performing this assessment include current operating results,
trends and prospects, as well as the effects of obsolescence, demand,
competition and other economic factors. Based on this assessment there was no
impairment at December 31, 1997.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values of financial instruments classified in the balance
sheet as current assets and current liabilities approximate fair values. The
fair value of notes receivable, a portion of which is included in both
receivables and other assets, based on discounted cash flows using current
interest rates, approximates the carrying value of $7.8 million at December 31,
1997.
The carrying amount of borrowings from banks approximates fair value as the
floating rates applicable to this debt generally reflect changes in overall
market interest rates.
FOREIGN CURRENCY TRANSLATION
Net assets of the Company's operations outside of the United States are
translated into U.S. dollars using current exchange rates with the effects of
translation adjustments deferred and included as a separate component of
shareholders' equity. Revenues, expenses and cash flows are translated at the
average rates of exchange during the period.
NOTE 2. SUBSEQUENT EVENT
On December 17, 1997 MascoTech Inc.("MascoTech"), through its wholly owned
subsidiary MascoTech Acquisition, Inc.("MascoTech Acquisition"), commenced a
tender offer to acquire all of the outstanding shares of the Company not already
owned by MascoTech. The tender offer was made in accordance with the terms of a
merger agreement between the Company, MascoTech and MascoTech Acquisition. The
tender offer expired on January 16, 1998 after approximately 95 percent of the
Company's outstanding shares not owned by MascoTech had been tendered. On
January 22, 1998 MascoTech Acquisition made payment on the tendered shares and
was merged with and into the Company, with the Company surviving as a private
and wholly owned subsidiary of MascoTech. During 1997 the Company recognized a
$5.0 million (pre-tax and after tax) extraordinary charge related to the
expenses incurred in connection with this going private transaction.
F-8
<PAGE> 57
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3. ACQUISITIONS
During 1996 the Company acquired Queensland Towbars Pty. Ltd., The Englass
Group Limited, Heinrich Stolz GmbH and Beaumont Bolt & Gasket Co., all for an
aggregate $54.2 million of cash and assumed liabilities. The acquisitions were
accounted for as purchases. The aggregate excess of cost over net assets
acquired of $28.8 million is being amortized on a straight-line basis over 40
years. The results of operations of the acquired businesses have been included
in the consolidated financial statements from the respective acquisition dates.
During 1997 the Company paid $11.3 million to the former owners of
businesses acquired in previous years, including $7.0 million to MascoTech, Inc.
These payments resulted from the acquired businesses having achieved specified
levels of profitability during designated periods subsequent to the acquisition.
These payments were recorded as additional excess of cost over net assets of
acquired companies and are being amortized over the remainder of the original 40
year amortization period.
NOTE 4. SUPPLEMENTAL CASH FLOWS INFORMATION
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1997 1996 1995
---------- --------- ---------
<S> <C> <C> <C>
Interest paid........................................... $ 7,420 $10,610 $13,560
======== ======= =======
Income taxes paid....................................... $ 41,080 $33,180 $30,690
======== ======= =======
Significant noncash transactions:
Conversion of convertible subordinated debentures into
common stock....................................... $106,000
========
Accrued fees related to becoming a private company.... $ 3,150
========
Common stock dividends declared, payable in subsequent
year............................................... $ 2,890 $ 2,200 $ 1,830
======== ======= =======
Assumption of liabilities as partial consideration for
the assets of companies acquired................... $26,720
=======
Increase in obligation, including accrued interest, to
former owner, MascoTech, Inc., of business
acquired, recorded as additional excess of cost
over net assets of acquired companies.............. $ 5,850
=======
</TABLE>
NOTE 5. INVENTORIES
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
-----------------
1997 1996
------- -------
<S> <C> <C>
Finished goods.............................................. $53,260 $53,380
Work in process............................................. 15,430 14,340
Raw material................................................ 28,370 24,490
------- -------
$97,060 $92,210
======= =======
</TABLE>
F-9
<PAGE> 58
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
--------------------
1997 1996
-------- --------
<S> <C> <C>
Cost:
Land and land improvements................................ $ 14,080 $ 14,010
Buildings................................................. 71,420 71,260
Machinery and equipment................................... 261,070 240,960
-------- --------
346,570 326,230
Less accumulated depreciation............................... 146,080 131,690
-------- --------
$200,490 $194,540
======== ========
</TABLE>
Depreciation expense was $19.5 million, $17.7 million and $16.4 million in
1997, 1996 and 1995.
NOTE 7. OTHER CURRENT LIABILITIES
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
------------------
1997 1996
------- -------
<S> <C> <C>
Employee wages and benefits................................. $19,890 $18,570
Dividends................................................... 2,890 2,200
Property taxes.............................................. 2,070 1,930
Current income taxes........................................ 1,690 3,810
Interest.................................................... 720 2,710
Amount due former owner, MascoTech, Inc., of business
acquired.................................................. 5,850
Other....................................................... 9,450 10,360
------- -------
$36,710 $45,430
======= =======
</TABLE>
NOTE 8. LONG-TERM DEBT
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
------------------
1997 1996
------- --------
<S> <C> <C>
Borrowings from banks....................................... $42,130 $ 68,030
5% convertible subordinated debentures...................... 115,000
Other....................................................... 4,840 4,260
------- --------
46,970 187,290
Less current maturities..................................... 1,000 170
------- --------
$45,970 $187,120
======= ========
</TABLE>
At December 31, 1997 borrowings from banks are owing under the Company's
L20.0 million revolving credit facility in England ($25.8 million) and its DM
30.0 million revolving credit facility in Germany ($16.3 million). At December
31, 1996 borrowings from banks are owing under the Company's domestic $350.0
million revolving credit facility ($33.0 million), its L20.0 million revolving
credit facility in England ($19.3
F-10
<PAGE> 59
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8. LONG-TERM DEBT (CONTINUED)
million), its DM 30.0 million revolving credit facility in Germany ($9.0
million) and other borrowing arrangements in Germany ($6.7 million). The
domestic facility, which was terminated in January, 1998 as a result of the
acquisition of the Company by MascoTech, Inc., permitted the Company to borrow
under several different interest rate options, while the foreign facilities base
interest rates on the London Interbank Offered Rate (LIBOR). At December 31,
1997 the blended interest rate on bank borrowings equaled 6.4 percent. The
facilities contain certain restrictive covenants, the most restrictive of which,
at December 31, 1997, required $381.5 million of shareholders' equity. The
Company had available credit of $8.6 million under its foreign revolving credit
facilities at December 31, 1997.
During 1997 the Company redeemed, for cash, $9.0 million of its $115.0
million of 5% Convertible Subordinated Debentures Due 2003. The remaining $106.0
million of debentures were converted into 4.7 million shares of TriMas
Corporation common stock at the conversion price of $22 5/8 per share.
NOTE 9. SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
(IN THOUSANDS)
CUMULATIVE
COMMON PAID-IN RETAINED TRANSLATION
STOCK CAPITAL EARNINGS ADJUSTMENTS TOTAL
------ -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1995............ $370 $155,210 $136,310 $(1,290) $290,600
Net income........................ 56,020 56,020
Common stock dividends............ (6,960) (6,960)
Other............................. 220 (1,210) (990)
---- -------- -------- ------- --------
Balance, December 31, 1995.......... 370 155,430 185,370 (2,500) 338,670
Net income........................ 61,360 61,360
Common stock dividends............ (8,440) (8,440)
Other............................. 260 (1,400) (1,140)
---- -------- -------- ------- --------
Balance, December 31, 1996.......... 370 155,690 238,290 (3,900) 390,450
Net income........................ 66,370 66,370
Common stock dividends............ (11,160) (11,160)
Convertible debt conversion....... 40 104,160 104,200
Other............................. 460 (920) (460)
---- -------- -------- ------- --------
Balance, December 31, 1997.......... $410 $260,310 $293,500 $(4,820) $549,400
==== ======== ======== ======= ========
</TABLE>
During 1997 $106.0 million of the Company's $115.0 million of 5%
Convertible Subordinated Debentures Due 2003 were converted into 4.7 million
shares of TriMas Corporation common stock at the conversion price of $22 5/8 per
share. As a result of the conversion, $1.8 million of costs associated with the
issuance of the debentures was charged against Paid-In-Capital.
F-11
<PAGE> 60
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10. STOCK OPTIONS AND AWARDS
The Company's stock incentive plans include the TriMas Corporation 1995
Long Term Stock Incentive Plan, the 1988 Restricted Stock Incentive Plan and the
1988 Stock Option Plan. Company common stock available for grant under these
plans includes the 2,000,000 shares initially established under the 1995 plan,
plus additional shares resulting from certain reacquisitions of shares by the
Company.
The Company granted long-term incentive awards of Company common stock,
net, for 64,815 shares in 1997, 159,071 shares in 1996 and 290,588 shares in
1995, to key employees of the Company. The weighted average fair value per
share, on date of grant, of long-term incentive awards granted in 1997, 1996 and
1995 was $24.15, $19.66 and $23.21. Compensation expense recorded in 1997, 1996
and 1995 related to long-term incentive awards was $2.4 million, $2.2 million
and $1.6 million. The unamortized costs of incentive awards, aggregating $13.2
million at December 31, 1997, are being amortized over the vesting periods,
which are typically ten years.
Fixed stock options are granted to key employees of the Company and have a
maximum term of ten years. The exercise price of each fixed option equals the
market price of the Company's common stock on the date of grant. The options
generally vest in installments beginning in the second year and extending
through the eighth year after grant. For the three years ended December 31, 1997
stock option information is as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Options outstanding, January 1......................... 538,557 576,064 594,200
Options granted:
At option prices per share of $18.38-$25.50.......... 890 16,154 4,864
Weighted average option price per share.............. $23.89 $22.12 $23.35
Options exercised:
At option price per share of $8.88................... 33,400 53,661 23,000
Options outstanding, December 31:
At option prices per share of $7.50-$8.88............ 484,139 517,539 571,200
Weighted average option price per share........... $8.42 $8.45 $8.49
Weighted average remaining term................... 2.5 years 3.5 years 4.6 years
At option prices per share of $18.38-$25.50.......... 21,908 21,018 4,864
Weighted average option price per share........... $22.46 $22.40 $23.35
Weighted average remaining term................... 3.3 years 4.3 years 5.3 years
Exercisable, December 31............................... 327,647 312,552 260,464
Weighted average option price per share.............. $9.11 $8.94
</TABLE>
The Company applies Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees, in accounting for stock based compensation.
Accordingly, no compensation expense has been charged against income for fixed
stock option grants. Had compensation expense been determined based on the fair
value at the 1997, 1996 and 1995 grant dates, consistent with the methodology of
Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation, the pro forma effect on the Company's net income would not have
been material.
F-12
<PAGE> 61
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10. STOCK OPTIONS AND AWARDS (CONTINUED)
At December 31, 1997 and 1996, a combined total of 1,952,669 and 2,011,642
shares of Company common stock were available for the granting of options and
incentive awards under the aforementioned plans.
NOTE 11. RETIREMENT PLANS
The Company has noncontributory retirement benefit plans, both defined
benefit plans and profit-sharing and other defined contribution plans, for most
of its employees.
The annual expense for all plans was:
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Defined contribution plans.............................. $3,040 $2,480 $3,470
Defined benefit plans................................... 2,290 2,660 1,690
------ ------ ------
$5,330 $5,140 $5,160
====== ====== ======
</TABLE>
Contributions to profit-sharing and other defined contribution plans are
generally determined as a percentage of the covered employee's annual salary.
Defined benefit plans provide retirement benefits for salaried employees
based primarily on years of service and average earnings for the five highest
consecutive years of compensation. Defined benefit plans covering hourly
employees generally provide benefits of stated amounts for each year of service.
These plans are funded based on an actuarial evaluation and review of the
assets, liabilities and requirements of each plan. Plan assets are held by a
trustee and invested principally in cash equivalents and marketable equity and
fixed income instruments.
Net periodic pension cost of defined benefit plans includes the following
components:
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Service cost........................................... $ 2,490 $ 2,670 $ 2,000
Interest cost.......................................... 4,270 3,980 3,570
Actual (return) or loss on assets...................... (2,960) (4,010) (5,360)
Net amortization and deferral.......................... (1,510) 20 1,480
------- ------- -------
$ 2,290 $ 2,660 $ 1,690
======= ======= =======
</TABLE>
Weighted average rate assumptions used were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Discount rate............................................... 7.3% 7.5% 7.3%
Rate of increase in compensation levels..................... 5.1% 5.1% 5.1%
Expected long-term rate of return on plan assets............ 10.6% 10.6% 10.7%
</TABLE>
F-13
<PAGE> 62
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11. RETIREMENT PLANS (CONTINUED)
The following table sets forth the funded status of the defined benefit
plans:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
--------------------------------------------------------
1997 1996
-------------------------- --------------------------
PLANS PLANS PLANS PLANS
WHERE WHERE WHERE WHERE
ASSETS ACCUMULATED ASSETS ACCUMULATED
EXCEED BENEFITS EXCEED BENEFITS
ACCUMULATED EXCEED ACCUMULATED EXCEED
BENEFITS ASSETS BENEFITS ASSETS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefit obligation.............. $ 2,800 $48,110 $30,850 $12,060
======= ======= ======= =======
Accumulated benefit obligation......... $ 2,800 $49,370 $31,220 $14,190
======= ======= ======= =======
Projected benefit obligation........... $ 2,800 $60,540 $41,030 $15,270
Plan assets at fair value................ 4,720 41,700 35,660 9,200
------- ------- ------- -------
Projected benefit obligation (in excess
of) or less than plan assets........... 1,920 (18,840) (5,370) (6,070)
Unrecognized net (asset) or obligation... (250) (170) (980) 390
Unrecognized prior service cost.......... 2,340 400 1,680
Unrecognized net (gain) or loss.......... (1,630) 14,340 5,630 3,240
Requirement to recognize minimum
liability.............................. (5,520) (4,220)
------- ------- ------- -------
Prepaid pension cost or (pension
liability)....................... $ 40 $(7,850) $ (320) $(4,980)
======= ======= ======= =======
</TABLE>
The Company provides postretirement health care and life insurance benefits
for certain eligible retired employees under unfunded plans. Some of the plans
have cost-sharing provisions. Net periodic postretirement benefit costs during
1997, 1996 and 1995 were $1.0 million, $1.0 million and $.8 million.
The aggregate accumulated postretirement benefit obligation of these
unfunded plans was $4.4 million and $7.1 million at December 31, 1997 and 1996.
The discount rates used in determining the accumulated postretirement benefit
obligations and the net periodic postretirement benefit costs were 7.25 percent,
7.5 percent and 7.25 percent in 1997, 1996 and 1995. The assumed health care
cost trend rate in 1997 was nine percent, decreasing to an ultimate rate in the
years subsequent to 2006 of five percent. A one percent increase in the assumed
health care cost trend rates would have increased the net periodic
postretirement benefit cost by $.1 million during 1997 and would have increased
the accumulated postretirement benefit obligation at December 31, 1997 by $.5
million. The Company is amortizing the unrecognized transition accumulated
postretirement benefit obligation and subsequent plan net gains and losses in
accordance with Statement of Financial Accounting Standards No. 106. The accrued
postretirement benefit obligation was $4.1 million and $3.5 million at December
31, 1997 and 1996.
F-14
<PAGE> 63
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12. BUSINESS SEGMENT AND GEOGRAPHIC AREA INFORMATION
The Company's operations in its business segments consist principally of
the manufacture and sale of the following:
Specialty Fasteners: Cold formed fasteners and related metallurgical
processing.
Towing Systems: Vehicle hitches, jacks, winches, couplers and related
towing accessories.
Specialty Container Products: Industrial container closures, pressurized
gas cylinders and metallic and nonmetallic gaskets.
Corporate Companies: Specialty drills, cutters and specialized metal
finishing services, and flame-retardant facings and jacketings and
pressure-sensitive tapes.
F-15
<PAGE> 64
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12. BUSINESS SEGMENT AND GEOGRAPHIC AREA INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
NET SALES
Specialty Fasteners.................................... $161,640 $141,510 $141,050
Towing Systems......................................... 201,410 189,540 175,000
Specialty Container Products........................... 218,920 189,320 165,670
Corporate Companies.................................... 85,940 79,860 71,770
-------- -------- --------
Total net sales..................................... $667,910 $600,230 $553,490
======== ======== ========
OPERATING PROFIT
Specialty Fasteners.................................... $ 29,630 $ 25,740 $ 27,290
Towing Systems......................................... 31,190 31,480 31,080
Specialty Container Products........................... 46,810 42,890 39,040
Corporate Companies.................................... 14,490 11,980 8,420
-------- -------- --------
Total operating profit.............................. 122,120 112,090 105,830
Other income (expense), net.............................. 1,370 (3,700) (6,840)
General corporate expense................................ (8,420) (7,800) (7,150)
-------- -------- --------
Income before income taxes and extraordinary
charge............................................ $115,070 $100,590 $ 91,840
======== ======== ========
IDENTIFIABLE ASSETS AT DECEMBER 31
Specialty Fasteners.................................... $149,400 $143,060 $146,200
Towing Systems......................................... 155,500 158,840 151,160
Specialty Container Products........................... 244,600 231,610 149,790
Corporate Companies.................................... 58,020 57,220 56,230
Corporate (A).......................................... 100,940 105,940 112,980
-------- -------- --------
Total assets........................................ $708,460 $696,670 $616,360
======== ======== ========
CAPITAL EXPENDITURES
Specialty Fasteners.................................... $ 8,340 $ 4,500 $ 10,840
Towing Systems......................................... 4,770 9,160 4,790
Specialty Container Products........................... 13,580 23,170 5,780
Corporate Companies.................................... 1,830 2,690 2,030
Corporate.............................................. 40 10 30
-------- -------- --------
Total capital expenditures.......................... $ 28,560 $ 39,530(B) $ 23,470
======== ======== ========
DEPRECIATION AND AMORTIZATION
Specialty Fasteners.................................... $ 7,510 $ 7,510 $ 7,230
Towing Systems......................................... 6,460 6,070 5,610
Specialty Container Products........................... 8,860 6,690 6,140
Corporate Companies.................................... 2,780 2,590 2,430
Corporate.............................................. 70 70 70
-------- -------- --------
Total depreciation and amortization................. $ 25,680 $ 22,930 $ 21,480
======== ======== ========
</TABLE>
- -------------------------
(A) Corporate assets consist primarily of cash and cash equivalents.
(B) Including $12.9 million from businesses acquired.
Sales of the Company's foreign operations equaled $74.2 million, $46.0
million and $33.7 million in 1997, 1996 and 1995. Identifiable assets of foreign
operations totaled $88.3 million, $82.9 million and $32.4 million at December
31, 1997, 1996 and 1995. Export sales equaled less than ten percent of total
sales for each of the three years presented.
F-16
<PAGE> 65
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONCLUDED)
NOTE 13. INCOME TAXES
<TABLE>
<CAPTION>
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
1997 1996 1995
-------- -------- -------
<S> <C> <C> <C>
Income before income taxes and extraordinary
charge:
Domestic......................................... $105,810 $ 92,990 $86,900
Foreign.......................................... 9,260 7,600 4,940
-------- -------- -------
$115,070 $100,590 $91,840
======== ======== =======
Provision for income taxes:
Federal.......................................... $ 31,090 $ 29,700 $23,810
State and local.................................. 5,170 4,690 4,460
Foreign.......................................... 2,640 2,740 1,990
Deferred, principally federal.................... 4,830 2,100 5,560
-------- -------- -------
$ 43,730 $ 39,230 $35,820
======== ======== =======
</TABLE>
The following is a reconciliation of the U.S. federal statutory tax rate to
the effective tax rate:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
U.S. federal statutory tax rate....................... 35.0% 35.0% 35.0%
State and local taxes, net of federal tax benefit..... 2.9 3.0 3.1
Foreign taxes in excess of U.S federal tax rate....... .1 .1 .3
Nondeductible amortization of excess of cost over net
assets of acquired companies........................ .6 .6 .7
Other, net............................................ (.6) .3 (.1)
----- ----- -----
Effective tax rate............................... 38.0% 39.0% 39.0%
===== ===== =====
</TABLE>
Items that gave rise to deferred taxes:
<TABLE>
<CAPTION>
(IN THOUSANDS)
AT DECEMBER 31,
------------------------------------------------------------------
1997 1996
------------------------------ ------------------------------
DEFERRED TAX DEFERRED TAX DEFERRED TAX DEFERRED TAX
ASSETS LIABILITIES ASSETS LIABILITIES
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Property and equipment................ $27,260 $23,940
Intangible assets..................... 6,300 4,960
Accrued employee benefits............. $3,350 $2,950
Inventory............................. 650 620
Other................................. 1,050 4,710 1,420 4,480
------ ------- ------ -------
$5,050 $38,270 $4,990 $33,380
====== ======= ====== =======
</TABLE>
F-17
<PAGE> 66
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
3.i Restated Certificate of Incorporation of MascoTech, Inc. and
amendments thereto.(7)
3.ii Bylaws of MascoTech, Inc., as amended.(filed herewith)
4.a Indenture dated as of November 1, 1986 between Masco
Industries, Inc. (now known as MascoTech, Inc.) and Morgan
Guaranty Trust Company of New York, as Trustee; Agreement of
Appointment and Acceptance of Successor Trustee dated as of
August 4, 1994 among MascoTech, Inc., Morgan Guaranty Trust
Company of New York and The First National Bank of Chicago;
Supplemental Indenture dated as of August 5, 1994 between
MascoTech, Inc. and The First National Bank of Chicago, as
Trustee; Directors' resolutions establishing the Company's
4 1/2% Convertible Subordinated Debentures Due 2003(7); and
Form of Note. (filed herewith)
4.b $1,300,000,000 Credit Agreement dated as of January 16, 1998
among MascoTech, Inc., MascoTech Acquisition, Inc., the
banks party thereto from time to time, The First National
Bank of Chicago, as Administrative Agent, Bank of America
NT&SA and NationsBank N.A., as Syndication Agents(4) and
Amendment No. 1 thereto dated as of February 10, 1998.(3)
4.c Rights Agreement dated as of February 20, 1998, between
MascoTech, Inc. and The Bank of New York, as Rights Agent(5)
and Amendment No. 1 to Rights Agreement dated as of
September 22, 1998.(6)
NOTE: Other instruments, notes or extracts from agreements
defining the rights of holders of long-term MascoTech, Inc.
or its subsidiaries have not been filed since (i) in each
case the total amount of long-term debt permitted thereunder
does not exceed 10 percent of MascoTech, Inc.'s consolidated
assets, and (ii) such instruments, notes and extracts will
be furnished by MascoTech, Inc. to the Securities and
Exchange Commission upon request.
10.a Assumption and Indemnification Agreement dated as of May 1,
1984 between Masco Corporation and Masco Industries, Inc.
(now known as MascoTech, Inc.).(1)
10.b Corporate Services Agreement and Annex dated as of January
1, 1987 between Masco Industries, Inc. (now known as
MascoTech, Inc.) and Masco Corporation, Amendment No. 1
dated as of October 31, 1996 and related letter agreements
dated January 22, 1998 and June 17, 1998. (all filed
herewith)
10.c Corporate Opportunities Agreement dated as of May 1, 1984
between Masco Corporation and Masco Industries, Inc. (now
known as MascoTech, Inc.)(1) and Amendment No. 1 dated as of
October 31, 1996.(2)
10.d Stock Repurchase Agreement dated as of May 1, 1984 between
Masco Corporation and Masco Industries, Inc. (now known as
MascoTech, Inc.) and related letter dated September 20,
1985, Amendment to Stock Repurchase Agreement dated as of
December 20, 1990 and Amendment to Stock Repurchase
Agreement included in Agreement dated as of November 23,
1993.(7)
10.e Amended and Restated Securities Purchase Agreement dated as
of November 23, 1993 ("Securities Purchase Agreement")
between MascoTech, Inc. and Masco Corporation, including
form of Note, Agreement dated as of November 23, 1993
relating thereto, and Amendment No. 1 to the Securities
Purchase Agreement dated as of October 31, 1996.(7)
10.f Registration Agreement dated as of March 31, 1993, between
Masco Corporation and Masco Industries, Inc. (now known as
MascoTech, Inc.). (filed herewith)
10.g Stock Purchase Agreement dated as of October 15, 1996
between Masco Corporation and MascoTech, Inc.(2)
</TABLE>
<PAGE> 67
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
NOTE: Exhibits 10.h through 10.q constitute the management
contracts and executive compensatory plans or arrangements
in which certain of the Directors and executive officers of
the Company participate.
10.h MascoTech, Inc. 1991 Long Term Stock Incentive Plan
(Restated July 15, 1998).(7)
10.i MascoTech, Inc. 1984 Restricted Stock Incentive Plan
(Restated December 6, 1995).(1)
10.j MascoTech, Inc. 1984 Stock Option Plan (Restated September
21, 1999). (filed herewith)
10.k Masco Corporation 1991 Long Term Stock Incentive Plan
(Amended and Restated July 10, 1998). (filed herewith)
10.l Masco Corporation 1988 Restricted Stock Incentive Plan
(Restated December 6, 1995).(1)
10.m Masco Corporation 1988 Stock Option Plan (Restated September
22, 1999). (filed herewith)
10.n MascoTech, Inc. Supplemental Executive Retirement and
Disability Plan. (filed herewith)
10.o MascoTech, Inc. 1997 Non-Employee Directors Stock Plan.(3)
10.p Description of the MascoTech, Inc. Program for Estate,
Financial Planning and Tax Assistance.(3)
10.q Masco Corporation 1997 Non-Employee Directors Stock Plan
(Amended July 10, 1998). (filed herewith)
12 Computation of Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends. (filed herewith)
21 List of Subsidiaries. (filed herewith)
23 Consent of PricewaterhouseCoopers LLP relating to MascoTech,
Inc.'s Financial Statements and Financial Statement
Schedule. (filed herewith)
27 Financial Data Schedule as of and for the year ended
December 31, 1999. (filed herewith)
</TABLE>
- -------------------------
(1) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1995.
(2) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated November 13, 1996.
(3) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1997.
(4) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated January 30, 1998.
(5) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Registration Statement on Form 8-A dated February 23, 1998.
(6) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Quarterly Report on Form 10-Q dated September 30, 1998.
(7) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1998.
<PAGE> 1
EXHIBIT 3.ii
BYLAWS
OF
MASCOTECH, INC.
(A DELAWARE CORPORATION)
(AS AMENDED FEBRUARY 17, 1998)
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1.01. Annual Meetings. The annual meeting of stockholders for
election of Directors and for the transaction of such other proper business,
notice of which was given in the notice of the meeting, shall be held on a date
(other than a legal holiday) in May or June of each year which shall be
designated by the Board of Directors, or on such other date to which a meeting
may be adjourned or re-scheduled, at such time and place within or without the
State of Delaware as shall be designated in the notice of such meeting.
Section 1.02. Special Meetings. Except as otherwise required by law,
special meetings of stockholders of the Corporation may be called only by the
Chairman of the Board, the Chief Executive Officer or a majority of the Board of
Directors, subject to the rights of holders of any one or more classes or series
of preferred stock or any other class of stock issued by the Corporation which
shall have the right, voting separately by class or series, to elect Directors.
Special meetings shall be held at such place within or without the State of
Delaware and at such hour as may be designated in the notice of such meeting and
the business transacted shall be confined to the object stated in the notice of
the meeting.
Section 1.03. Re-scheduling and Adjournment of Meetings.
Notwithstanding Sections 1.01 and 1.02 of this Article, the Board of Directors
may postpone and re-schedule any previously scheduled annual or special meeting
of stockholders. The person presiding at any meeting is empowered to adjourn the
meeting at any time after it has been convened.
Section 1.04. Notice of Stockholders' Meetings. The notice of all
meetings of stockholders shall be in writing and shall state the place, date and
hour of the meeting. The notice of an annual meeting shall state that the
meeting is called for the election of the Directors to be elected at such
meeting and for the transaction of such other business as is stated in the
notice of the meeting. The notice of a special meeting shall state the purpose
or purposes for which the meeting is called and shall also indicate that it is
being issued by or at the direction of the person or persons calling the
meeting. If, at any meeting, action is proposed to be taken which would, if
taken, entitle stockholders fulfilling the requirements of the General
Corporation Law to receive payment for their shares, the notice of such meeting
shall include a statement to that effect.
A copy of the notice of each meeting of stockholders shall be given,
personally or by mail, not less than ten days nor more than sixty days before
the date of the meeting, to each stockholder entitled to vote at such meeting at
his record address or at such other address as he may have furnished by request
in writing to the Secretary of the Corporation. If a meeting is adjourned to
another
<PAGE> 2
time or place, and, if any announcement of the adjourned time or place is made
at the meeting, it shall not be necessary to give notice of the adjourned
meeting unless the adjournment is for more than thirty days or the Directors,
after adjournment, fix a new record date for the adjourned meeting.
Notice of a meeting need not be given to any stockholder who submits a
signed waiver of notice, in person or by proxy, whether before or after the
meeting. The attendance of a stockholder at a meeting, in person or by proxy,
without protesting prior to the meeting the lack of notice of such meeting shall
constitute a waiver of notice of the meeting.
Section 1.05 Business to be Considered. Only those matters stated to be
considered in the notice of the meeting, or of which written notice has been
given to the Corporation either by personal delivery to the Chairman of the
Board or the Secretary or by U.S. mail, postage prepaid, of a stockholder's
intent to bring the matter before the meeting, may be considered at the Annual
Meeting of Stockholders. Such notice shall be received no later than 120 days in
advance of the date on which the Corporation's proxy statement was released to
stockholders in connection with the previous year's Annual Meeting.
Only that business brought before a special meeting pursuant to the
notice of the meeting may be conducted or considered at such meeting.
Only such business brought before an annual or special meeting of
stockholders pursuant to these bylaws shall be eligible to be conducted or
considered at such meetings.
Section 1.06. Quorum. Except as otherwise required by law, by the
Certificate of Incorporation or by these bylaws, the presence, in person or by
proxy, of stockholders holding a majority of the stock of the Corporation
entitled to vote shall constitute a quorum at all meetings of the stockholders.
In case a quorum shall not be present at any meeting, a majority in interest of
the stockholders entitled to vote thereat, present in person or by proxy, shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until the requisite amount of stock entitled to
vote shall be present. At any such adjourned meeting at which the requisite
amount of stock entitled to vote shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed; but only those stockholders entitled to vote at the meeting as
originally noticed shall be entitled to vote at any adjournment or adjournments
thereof.
Directors shall be elected by a plurality of the votes cast at a
meeting of stockholders by the holders of shares entitled to vote in the
election. Whenever any corporate action, other than the election of Directors,
is to be taken by vote of the stockholders, except as otherwise required by the
General Corporation Law, the Certificate of Incorporation or these bylaws, it
shall be authorized by a majority of the votes cast on the proposal by the
holders of shares entitled to vote thereon at a meeting of stockholders.
Section 1.07. Inspectors at Stockholders' Meetings. The Board of
Directors, in advance of any stockholders' meeting, shall appoint one or more
inspectors to act at the meeting or any adjournment thereof and to make a
written report thereof. In case any inspector or alternate
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<PAGE> 3
appointed is unable to act, the person presiding at the meeting shall appoint
one or more inspectors to act at the meeting. Each inspector, before entering
upon the discharge of his duties, shall take and sign an oath faithfully to
execute the duties of inspector at such meeting with strict impartiality and
according to the best of his ability.
The inspectors shall determine the number of shares outstanding and the
voting power of each, and shares represented at the meeting, the existence of a
quorum, and the validity and effect of proxies, and shall receive votes, ballots
or consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are proper to conduct the
election or vote with fairness to all stockholders. On request of the person
presiding at the meeting or any stockholder entitled to vote thereat, the
inspectors shall make a report in writing of any challenge, question or matter
determined by them and execute a certificate of any fact found by them. Any
report or certificate made by them shall be prima facie evidence of the facts
stated and of the vote as certified by them.
Section 1.08. Presiding Officer at Stockholders' Meetings. The Chairman
of the Board or in his absence the Chief Executive Officer shall preside at
Stockholders' Meetings as more particularly provided in Article III hereof. In
the event that both the Chairman and the Chief Executive Officer shall be absent
or otherwise unable to preside, then a majority of the Directors present at the
meeting shall appoint one of the Directors or some other appropriate person to
preside.
ARTICLE II
DIRECTORS
Section 2.01. Qualifications and Number; Term; Vacancies. A Director
need not be a stockholder, a citizen of the United States, or a resident of the
State of Delaware. The number of Directors constituting the entire Board shall
be not less than five nor more than twelve, the exact number of Directors to be
determined from time to time by resolution adopted by affirmative vote of a
majority of the entire Board of Directors. The Directors shall be divided into
three classes, designated Class I, Class II and Class III. Each class shall
consist, as nearly as may be possible, of one-third of the total number of
Directors constituting the entire Board of Directors. Directors shall be
nominated and serve for such terms, and vacancies shall be filled, as provided
in the Certificate of Incorporation. Directors may be removed only for cause.
Section 2.02. Place and Time of Meetings of the Board. Regular and
special meetings of the Board shall be held at such places (within or without
the State of Delaware) and at such times as may be fixed by the Board or upon
call of the Chairman of the Board of the Corporation or of the executive
committee or of any two Directors, provided that the Board of Directors shall
hold at least four meetings a year.
Section 2.03. Quorum and Manner of Acting. A majority of the entire
Board of Directors shall constitute a quorum for the transaction of business,
but if there shall be less than a quorum at any meeting of the Board, a majority
of those present (or if only one be present, then that one) may adjourn the
meeting from time to time and the meeting may be held as adjourned without
further
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<PAGE> 4
notice. Except as provided to the contrary by the General Corporation Law, by
the Certificate of Incorporation or by these bylaws, at all meetings of
Directors, a quorum being present, all matters shall be decided by the vote of a
majority of the Directors present at the time of the vote.
Section 2.04. Renumeration of Directors. In addition to reimbursement
for his reasonable expenses incurred in attending meetings or otherwise in
connection with his attention to the affairs of the Corporation, each Director
as such, and as a member of any committee of the Board, shall be entitled to
receive such remuneration as may be fixed from time to time by the Board.
Section 2.05. Notice of Meetings of the Board. Regular meetings of the
Board may be held without notice if the time and place of such meetings are
fixed by the Board. All regular meetings of the Board, the time and place of
which have not been fixed by the Board, and all special meetings of the Board
shall be held upon twenty-four hours' notice to the Directors given by letter or
telegram. No notice need specify the purpose of the meeting. Any requirement of
notice shall be effectively waived by any Director who signs a waiver of notice
before or after the meeting or who attends the meeting without protesting (prior
thereto or at its commencement) the lack of notice to him; provided, however,
that a regular meeting of the Board may be held without notice immediately
following the annual meeting of the stockholders at the same place as such
meeting was held, for the purpose of electing officers and a Chairman of the
Board for the ensuing year.
Section 2.06. Executive Committee and Other Committees. The Board of
Directors, by resolution adopted by a majority of the entire Board, may
designate from among its members an Executive Committee and other committees to
serve at the pleasure of the Board. Each Committee shall consist of such number
of Directors as shall be specified by the Board in the resolution designating
the Committee. Except as set forth below, the Executive Committee shall have all
of the authority of the Board of Directors. Each other committee shall be
empowered to perform such functions, as may, by resolution, be delegated to it
by the Board.
The Board of Directors may designate one or more Directors as alternate
members of any such committee, who may replace any absent member or members at
any meetings of such committee. Vacancies in any committee, whether caused by
resignation or by increase in the number of members constituting said committee,
shall be filled by a majority of the entire Board of Directors. The Executive
Committee may fix its own quorum and elect its own Chairman. In the absence or
disqualification of any member of any such committee, the member or members
thereof present at any meeting and not disqualified from voting whether or not
he or they constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in place of any such absent or
disqualified member.
Section 2.07. Action Without Meeting. Any action required or permitted
to be taken at any meeting of the Board of Directors, or of any committee
thereof, may be taken without a meeting, if prior to such action a written
consent thereto is signed by all members of the Board, or of such committee as
the case may be, and such written consent is filed with the minutes of
proceedings of the Board or committee.
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<PAGE> 5
ARTICLE III
OFFICERS
Section 3.01. Officers. The Board of Directors, at its first meeting
held after the annual meeting of stockholders in each year may elect such
officers as the Board of Directors may determine, and such officers may include
a Chairman of the Board, a Chief Executive Officer, one or more Vice Chairman,
one or more Presidents, one or more Vice Presidents, a Secretary, a Treasurer
and a Controller. In addition, the Board of Directors may, in its discretion,
also appoint from time to time, such other officers or agents as it may deem
proper. The Chairman of the Board shall be elected from among the members of the
Board of Directors.
Any two or more offices may be held by the same person.
Unless otherwise provided in the resolution of election or appointment,
each officer shall hold office until the meeting of the Board of Directors
following the next annual meeting of stockholders and until his successor has
been elected and qualified; provided, however, that the Board of Directors may
remove any officer for cause or without cause at any time.
Section 3.02. Chairman of the Board. The Chairman of the Board shall
preside, unless he designates another to act in his stead, at all meetings of
the stockholders, the Board of Directors, and the Executive Committee and shall
be a member ex officio of all committees appointed by the Board of Directors,
except that the Board may, at his request, excuse him from membership on a
committee. The Chairman of the Board shall have the power on behalf of the
Corporation to enter into, execute, or deliver all contracts, instruments,
conveyances, or documents and to affix the corporate seal thereto. The Chairman
shall do and perform all acts and duties herein specified or which may be
assigned to him from time to time by the Board of Directors.
Section 3.03. Chief Executive Officer. The Chief Executive Officer of
the Corporation shall have general supervision of the affairs of the Corporation
subject to the control of the Board of Directors and the Chairman of the Board.
At the request of the Chairman of the Board or in his absence or inability to
act, the Chief Executive Officer shall preside at meetings of the stockholders.
The Chief Executive Officer shall also perform such other duties as may be
prescribed by the Board of Directors or the Executive Committee or the Chairman
of the Board.
Section 3.04. President(s). The President or Presidents shall perform
such duties as may be prescribed by the Board of Directors or the Executive
Committee or the Chairman of the Board or the Chief Executive Officer.
Section 3.05. Secretary. The Secretary shall keep minutes of the
proceedings taken and the resolutions adopted at all meetings of the
stockholders, the Board of Directors and the Executive Committee, and shall give
due notice of the meetings of the stockholders, the Board of Directors and the
Executive Committee. He shall have charge of the seal and all books and papers
of the Corporation, and shall perform all duties incident to his office. In case
of the absence or disability of the Secretary, his duties and powers may be
exercised by such person as may be appointed by the Board of Directors or the
Executive Committee.
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<PAGE> 6
Section 3.06. Treasurer. The Treasurer shall receive all the monies
belonging to the Corporation, and shall forthwith deposit the same to the credit
of the Corporation in such financial institutions as may be selected by the
Board of Directors or the Executive Committee. He shall keep books of account
and vouchers for all monies disbursed. He shall also perform such other duties
as may be prescribed by the Board of Directors or Executive Committee, the
Chairman of the Board or the Chief Executive Officer, and, in case of the
absence or disability of the Treasurer, his duties and powers may be exercised
by such person as may be appointed by the Board of Directors or Executive
Committee.
Section 3.07. Controller. The Controller shall have custody of the
financial records of the Corporation and shall keep full and accurate books and
records of the financial transactions of the Corporation. He shall determine the
methods of accounting and reporting for all entities comprising the Corporation,
and shall be responsible for assuring adequate systems of internal control. The
Controller shall render to the Chairman of the Board of Directors, the Chief
Executive Officer and the Board of Directors, whenever they may request it, a
report on the financial condition of the Corporation and on the results of its
operations.
ARTICLE IV
CAPITAL STOCK
Section 4.01. Share Certificates. Each certificate representing shares
of the Corporation shall be in such form as may be approved by the Board of
Directors, and, when issued, shall contain upon the face or back thereof the
statements prescribed by the General Corporation Law and by any other applicable
provision of law. Each such certificate shall be signed by the Chairman of the
Board, the Chief Executive Officer, a President or a Vice President and by the
Secretary or Treasurer or an Assistant Secretary or Assistant Treasurer. The
signatures of said officers upon a certificate may be facsimile if the
certificate is countersigned by a transfer agent or registered by a registrar
other than the Corporation itself or its employee. In case any officer who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer before such certificate is issued, it may be
issued by the Corporation with the same effect as if he were such officer at the
date of issue.
Section 4.02. Lost, Destroyed or Stolen Certificates. No certificate
representing shares shall be issued in place of any certificate alleged to have
been lost, destroyed or stolen, except on production of evidence of such loss,
destruction or theft and, unless waived by the Board of Directors, on delivery
to the Corporation, if the Board of Directors shall so require, of a bond of
indemnity in such amount, upon such terms and secured by such surety as the
Board of Directors may in its discretion require.
Section 4.03. Transfer of Shares. The shares of stock of the
Corporation shall be transferable or assignable on the books of the Corporation
only by the person to whom may have been issued or his legal representative, in
person or by attorney, and only upon surrender of the certificate or
certificates representing such shares properly assigned. The person in whose
name shares of stock shall stand on the record of stockholders of the
Corporation shall be deemed the owner thereof for all purposes as regards the
Corporation.
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<PAGE> 7
Section 4.04. Record Dates. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other action, the Board may fix, in advance, a date as the record date of any
such determination of stockholders. Such date shall not be more than sixty nor
less than ten days before the date of such meeting, nor more than sixty days
prior to any other action.
ARTICLE V
MISCELLANEOUS
Section 5.01. Signing of Instruments. All checks, drafts, notes,
acceptances, bills of exchange, and orders for the payment of money shall be
signed in such manner as may be provided and by such person or persons as may be
authorized from time to time by resolution of the Board of Directors or the
Executive Committee or these bylaws.
Section 5.02. Corporate Seal. The seal of the Corporation shall consist
of a metal disc having engraved thereon the words "MascoTech, Inc., Delaware."
Section 5.03. Fiscal Year. The fiscal year of the Corporation shall
begin on the first day of January of each year and shall end on the thirty-first
day of December following.
ARTICLE VI
AMENDMENTS OF BYLAWS
Section 6.01. Amendments. Except as provided to the contrary by the
General Corporation Law, by the Certificate of Incorporation or by these bylaws,
these bylaws may be amended or repealed at a meeting, (1) by vote of a majority
of the whole Board of Directors, provided that notices of the proposed
amendments shall have been sent to all the Directors not less than three days
before the meeting at which they are to be acted upon, or at any regular meeting
of the Directors by the unanimous vote of all the Directors present, or (2) by
the affirmative vote of the holders of at least 80% of the stock of the
Corporation generally entitled to vote, voting together as a single class.
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<PAGE> 1
EXHIBIT 4.a
Temporary Certificate - Exchangeable for Definitive Engraved
Certificate - When Ready for Delivery
MASCOTECH, INC.
4 1/2% Convertible Subordinated Debenture Due 2003
REGISTERED CUSIP No. 574670 AB 1
No. TR
MascoTech, Inc., a corporation duly organized and existing under the laws of the
State of Delaware (herein referred to as the "Company"), for value received,
hereby promises to pay to __________________ or registered assigns, at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, the principal sum of ____________________________ Dollars on December 15,
2003, in such coin or currency of the United States of America as at the time of
payment shall be legal tender for the payment of public and private debts, and
to pay interest, semi-annually on June 15 and December 15 of each year, on said
principal sum at said office or agency, in like coin or currency, at the rate
per annum specified in the title of this Debenture, from the June 15 and
December 15, as the case may be, next preceding the date of this Debenture to
which interest has been paid or duly provided for, unless the date hereof is a
date to which interest has been paid or duly provided for, in which case from
the date of this Debenture, or unless no interest has been paid or duly provided
for on the Debentures since the original issue date (as defined in the Indenture
referred to on the reverse hereof) of this Debenture, in which case from January
21, 1994, until payment of said principal sum has been made or duly provided
for. Notwithstanding the foregoing, if the date hereof is after June 1 or
December 1, as the case may be, and before the following June 15 or December 15,
this Debenture shall bear interest from such June 15 or December 15; provided,
however, that if the Company shall default in the payment of interest on such
June 15 or December 15, then this Debenture shall bear interest from the next
preceding June 15 or December 15 to which interest has been paid or duly
provided for, or, if no interest has been paid or duly provided for on the
Debentures since the original issue date (as defined in such Indenture) of this
Debenture, from the January 21, 1994. The interest so payable on any June 15 or
December 15 will, subject to certain exceptions provided in such Indenture, be
paid to the person in whose name this Debenture is registered at the close of
business on the June 1 or December 1, as the case may be, next preceding such
June 15 or December 15, whether or not such June 1 or December 1 is a business
day, and may, at the option of the Company, be paid by check mailed to the
registered address of such person.
Reference is made to the further provisions of this Debenture set forth on the
reverse hereof. Such further provisions shall for all purposes have the same
effect as though fully set forth at this place.
This Debenture shall not be valid or become obligatory for any purpose until the
certificate of authentication hereon shall have been signed by or on behalf of
the Trustee under such Indenture.
<PAGE> 2
IN WITNESS WHEREOF, MascoTech, Inc. has caused this instrument to be executed in
its corporate name by the facsimile signature of its Chairman of the Board or
its President and imprinted with a facsimile of its corporate seal, attested by
the facsimile signature of its Secretary or an Assistant Secretary.
Dated: ______________
MascoTech, Inc.
By: Richard Manoogian
Chairman of the Board
Attest: Eugene A. Gargaro, Jr.
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the securities of the series designated therein referred to in
the within-mentioned indenture.
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
AS TRUSTEE
BY________________________
AUTHORIZED OFFICER
2
<PAGE> 3
REVERSE OF DEBENTURES
MASCOTECH, INC.
4 1/2% CONVERTIBLE SUBORDINATED DEBENTURE DUE 2003
This Debenture is one of a duly authorized issue of debentures, notes,
bonds or other evidences of indebtedness of the Company (hereinafter called the
"Securities") of the series hereinafter specified, all issued or to be issued
under and pursuant to an indenture dated as of November 1, 1986 (herein called
the "Indenture"), duly executed and delivered by the Company to Morgan Guaranty
Trust Company of New York, Trustee (herein called the "Trustee"), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and holders of the Securities.
The Securities may be issued in one or more series, which different series may
be issued in various aggregate principal amounts, may mature at different times,
may bear interest (if any) at different rates, may be subject to different
redemption provision (if any), may be subject to different sinking, purchase or
analogous funds (if any), may be subject to different covenants and Events of
Default and may otherwise vary as in the Indenture provided. This Debenture is
one of a series designated as the 4 1/2% Convertible Subordinated Debentures Due
2003 of the Company, limited in aggregate principal amount to $345,000,000.
Subject to the provisions of the Indenture, the holder of this
Debenture is entitled, at such holder's option, at any time on or after March
22, 1994 and prior to December 15, 2003 (except that, in case this Debenture or
any portion hereof shall be called for redemption, such right shall terminate
with respect to this Debenture or portion hereof, as the case may be, so called
for redemption at the close of business on the last business day preceding the
date fixed for redemption as provided in the Indenture, unless the Company shall
default in the payment due upon redemption thereof), to convert the principal
amount of this Debenture (or any portion hereof which is $1,000 or an integral
multiple thereof), into shares of Common Stock of the Company (calculated to the
nearest 1/100th of a share), as said shares shall be constituted at the Date of
Conversion, at the Conversion Price of $31.00 principal amount of Debentures for
each share of Common Stock, or at the adjusted Conversion Price in effect at the
Date of Conversion determined as provided in the Indenture, upon surrender of
this Debenture, together with the conversion notice hereon duly executed, to the
Company at the designated office or agency of the Company in the Borough of
Manhattan, The City of New York, accompanied (if so required by the Company) by
instruments of transfer, in form satisfactory to the Company and to the Trustee,
duly executed by the holder or by such holder's duly authorized attorney in
writing. Such surrender shall, if made during any period beginning at the close
of business on a record date and ending at the opening of business on the
interest payment date next following such record date (unless this Debenture or
the portion being converted shall have been called for redemption on a
redemption date during such period) also be accompanied by payment in New York
Clearing House funds or other funds acceptable to the Company of any amount
equal to the interest payable on such interest payment date on the principal
amount of this Debenture then being surrendered for conversion. Except as
aforesaid no adjustment is to be made on conversion for interest accrued hereon
of for dividends on shares of Common Stock issued on conversion. The Company is
not required to issue fractional shares upon any such conversion, but shall make
adjustment therefor in cash on the basis of the market value of such fractional
interest as provided in the Indenture.
3
<PAGE> 4
The indebtedness evidenced by the Debentures is, to the extent and in
the manner provided in the Indenture, subordinate and subject in right of
payment to the prior payment in full of the principal of (and premium, if any)
and interest on all Senior Indebtedness as defined in the Indenture, and this
Debenture is issued subject to such provisions and each holder of this
Debenture, by accepting the same, agrees to and shall be bound by such
provisions, and authorizes the Trustee in such holder's behalf to take such
action as may be necessary or appropriate to effectuate as between the holders
of the Debentures and the holders of Senior Indebtedness the subordination as
provided in the Indenture and appoints the Trustee such holder's
attorney-in-fact for such purpose.
In case an Event of Default with respect to the 4 1/2% Convertible
Subordinated Debentures Due 2003 shall have occurred and be continuing, the
principal hereof may be declared, and upon such declaration shall become, due
and payable, in the manner, with the effect and subject to the conditions
provided in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than 66 2/3% in aggregate
principal amount of the Securities at the time outstanding of all series to be
affected (voting as a class), evidenced as in the Indenture provided, to execute
supplemental indentures adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any supplemental
indenture or modifying in any manner the rights of the holders of the Securities
of each such series; provided, however, that no such supplemental indenture
shall (i) extend the final maturity of any Security, or reduce the rate or
extend the time of payment of interest thereon, or reduce the principal amount
thereof or any premium thereon, or reduce any amount payable on redemption
thereof, or make the principal thereof or any interest or premium thereon
payable in any coin or currency other than that hereinbefore provided, or impair
the right to convert the 4 1/2% Convertible Subordinated Debentures Due 2003
into Common Stock on the terms defined in the Indenture, or impair or affect the
right of any holder to institute suit for payment thereof or the right of
repayment, if any, at the option of the holder, or modify any of the provisions
of the Indenture relating to the subordination of the Securities in a manner
adverse to the holders thereof, without the consent of the holder of each
Security so affected, or (ii) reduce the aforesaid principal amount of
Securities of all series to be affected, the holders of which are required to
consent to any such supplemental indenture, without the consent of the holders
of all Securities so affected then outstanding. It is also provided in the
Indenture that, with respect to certain defaults or Events of Default regarding
the Securities of any series, prior to any declaration accelerating the maturity
of such Securities, the holders of a majority in aggregate principal amount of
the Securities of such series at the time outstanding (or, in the case of
certain defaults or Events of Default, all the Securities) may on behalf of the
holders of all of the Securities of such series (or all the Securities, as the
case may be) waive any such past default or Event of Default under the Indenture
and its consequences except a default in the payment of principal of, premium,
if any, or interest, if any, on any of the Securities. Any such consent or
waiver by the holder of this Debenture (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such holder and upon all future
holders and owners of this Debenture and any Debentures which may be issued in
exchange or transfer hereof or in substitution herefor, irrespective of whether
or not any notation thereof is made upon this Debenture or such other
Debentures.
No reference herein to the Indenture and no provision of this Debenture
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the
4
<PAGE> 5
principal of and interest on this Debenture at the place, at the respective
times, at the rate and in the coin or currency herein prescribed.
The Debentures are issuable in registered form without coupons in
denominations of $1,000 and any integral multiple of $1,000. In the manner and
subject to the limitations provided in the Indenture, but without the payment of
any charge (except for any tax or other governmental charge imposed in
connection therewith), Debentures may be exchanged for an equal aggregate
principal amount of Debentures of other authorized denominations at the office
or agency of the Company for such exchange in the Borough of Manhattan, The City
of New York or at such other location or locations as may be provided for
pursuant to the Indenture.
The Debentures may be redeemed at the option of the Company as a whole,
or from time to time in part, on any date on or after December 22, 1996 and
prior to maturity, upon mailing a notice of such redemption not less than thirty
nor more than sixty days prior to the date fixed for redemption to the holders
of Debentures at their last registered addresses, all as provided in the
Indenture, at the following optional redemption prices (expressed in percentages
of the principal amount to be redeemed) together in each case with accrued
interest to the date fixed for redemption; provided, however, that if the date
fixed for redemption of any Debenture is an interest payment date, then the
regular semi-annual payment of interest becoming due on such date shall be
payable to the registered holder of such Debenture at the close of business on
the applicable record date.
If redeemed during the twelve-month period beginning
December 15.
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
1996.....................................................................103.00%
1997.....................................................................102.50%
1998.....................................................................102.00%
1999.....................................................................101.50%
2000.....................................................................101.00%
2001.....................................................................100.50%
2002.....................................................................100.00%
</TABLE>
Upon due presentment for registration of transfer of this Debenture at
the office or agency of the Company for such registration in the Borough of
Manhattan, The City of New York, or any other location or locations as may be
provided for pursuant to the Indenture, a new Debenture or Debentures of
authorized denominations for an equal aggregate principal amount will be issued
to the transferee in exchange therefor, subject to the limitations provided in
the Indenture, without charge except for any tax or other governmental charge
imposed in connection therewith.
The Company, the Trustee and any agent of the Company or the Trustee
may deem and treat the holder hereof as the absolute owner of this Debenture
(whether or not this Debenture shall be overdue and notwithstanding any notation
of ownership or other writing hereon), for the purpose of receiving payment of
or on account of the principal hereof and, subject to the provisions on the face
hereof, interest hereon, and for all other purposes, and neither the Company nor
the Trustee nor any such agent shall be affected by any notice to the contrary.
All payments made to or upon the order
5
<PAGE> 6
of such holder shall, to the extent of the sum or sums paid, effectually satisfy
and discharge liability for moneys payable on this Debenture.
No recourse for the payment of the principal of, or premium, if any, or
interest on this Debenture, or for any claim based hereon or otherwise in
respect hereof, and no recourse under or upon any obligation, covenant or
agreement of the Company in the Indenture or any indenture supplemental thereto
or in any Debenture, or because of the creation of any indebtedness represented
thereby, shall be had against any incorporator, stockholder, officer or
director, as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law or by
the enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
All terms used in this Debenture which are defined in the Indenture
shall have the respective meanings ascribed to them therein.
This Debenture shall be deemed to be a contract made under the laws of
the State of New York, and for all purposes shall be construed in accordance
with and governed by the laws of that State.
---------------------------------
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT - Custodian
------------------------ ------------------
(Cust) (Minor)
under Uniform Gifts to Minors
Act
---------------------
(State)
Additional abbreviations may also be used though not in the above list.
---------------------------------
6
<PAGE> 7
I or we assign and transfer this Security to
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
----------------------------------------------------
| |
| |
----------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
- --------------------------------------------------------------------------------
and irrevocably appoint
- --------------------------------------------------------------------------------
to transfer this Security on the books of the Company. The agent may substitute
another to act for him
Dated Signed:
-------------------------------- ----------------------------
- --------------------------------------------------------------------------------
(Sign exactly as name appears on the other side of this Security)
CONVERSION NOTICE
TO MASCOTECH, INC.:
The undersigned owner of this Debenture hereby irrevocably exercises
the option to convert this Debenture into shares of Common Stock of the Company
in accordance with the terms of the indenture referred to in this Debenture, and
directs that the shares issuable and deliverable upon the conversion together
with any check in payment for fractional shares and any Debentures representing
any unconverted principal amount hereof, be issued and delivered to the
registered holder hereof unless a different name has been indicated below. If
shares are to be issued in the name of a person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect hereto. Any amount
required to be paid by the undersigned on account of interest accompanies this
Debenture.
Dated:
-------------------------------- -----------------------------------
Signature
Fill in for registration of shares of Common Stock and Debentures if to be
issued otherwise than to the registered holder.
- -------------------------- Social Security or other Taxpayer Identifying Number
(Name)
- -------------------------- ----------------------------------------------------
(Address)
- ---------------------------------------------------------
Please print name and address (including zip code number)
7
<PAGE> 1
EXHIBIT 10.b
CORPORATE SERVICES AGREEMENT
This Agreement is made as of January 1, 1987 between Masco Corporation,
a Delaware corporation ("Masco"), and Masco Industries, Inc., a Delaware
corporation ("Industries").
WHEREAS, Masco and Industries desire to amend and restate that certain
Corporate Services Agreement between them dated as of May 1, 1984 (the "1984
Corporate Services Agreement"); and
WHEREAS, Masco and Industries desire to terminate that certain
Corporate Services Agreement dated as of July 1, 1985 (the "1985 Corporate
Services Agreement") between Masco's wholly-owned subsidiary Masco Building
Products Corp., a Delaware corporation ("MBPC"), and NI Industries, Inc. a
Delaware corporation and currently an indirect wholly-owned subsidiary of
Industries ("NI"); and
WHEREAS, Industries desires that Masco provide, and Masco is willing to
provide, either directly or through its subsidiaries, certain services and
facilities on the terms and conditions hereinafter set forth; and
WHEREAS, Masco desires that Industries provide, and Industries is
willing to provide, either directly or through NI, certain facilities on the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties agree to amend and restate the 1984 Corporate
Services Agreement and take certain other action as follows:
1. Masco shall provide to Industries and its subsidiaries corporate
support staff and administrative services of those personnel which Masco
maintains internally for its own officers, operating executives and business
operations and which Masco has heretofore provided to Industries headquarters
and businesses pursuant to the 1984 Corporate Services Agreement, such as
accounting, legal, treasury, tax, corporate development, data processing,
research and development and human resources, provided that Masco shall not be
obligated to provide any services which would be in contravention of law. Masco
shall furnish such services at the reasonable request of Industries, provided
that Masco shall not be required to disrupt the provisions of services for its
own business purposes and shall not be obligated to retain additional employees
in order to accommodate Industries requirements for services other than in the
ordinary course of business. In addition, Masco shall provide to Industries
headquarters office space and data processing equipment in Masco's corporate
office in Taylor, Michigan.
2. Industries shall provide to MBPC headquarters office space at the
corporate offices of NI in Long Beach, California, as heretofore provided
pursuant to the 1985 Corporate Services Agreement.
3. Industries will pay Masco a fee for the services and office space
provided under Section 1 hereof, irrespective of Industries or its subsidiaries'
actual use thereof, equal to eight tenths of one percent of Industries'
consolidated annual net sales (pro rated for any partial year), as shown in
Industries' annual audited financial statements, less (in consideration of the
facilities provided by Industries to MBPC pursuant to Section 2 hereof) the real
estate related costs incurred by NI to maintain headquarters office space for
MBPC in NI's Long Beach, California headquarters, including, but not limited to,
depreciation expense, maintenance, repairs and taxes related to such facility.
Such fee shall be payable monthly in arrears within 30 days of the end of each
month, based upon Industries consolidated unaudited net sales for each month,
with such timely adjustment as may be required following the preparation of such
audited financial
<PAGE> 2
statements. Industries shall be responsible for the payment of fees and expenses
for services rendered by third parties retained by Masco on behalf of Industries
and its subsidiaries. In addition, Industries shall pay for material utilized
and purchased components in research and development projects, in accordance
with Masco's customary practice. The parties recognize that Industries may, in
the future, hire certain support and administrative staff to be employed solely
by Industries and incur other expenses for equipment, services or space, and to
the extent any such support and administrative staff are employed by Industries
or such expenses are incurred, Masco shall review the resulting cost savings, if
any, to Masco in providing support staff and administrative services, equipment
and headquarters office space hereunder and if, in Masco's good faith judgment,
such a cost savings has resulted, Masco shall reflect such savings by a
corresponding reduction in the subsequent fees to be paid hereunder.
4. Additional services, facilities and other items made available by
Masco to its operating units which are not covered by the base fee will
similarly be made available to Industries except if the provision of such
services, facilities and other items would be in contravention of law. The
charges for additional services, facilities and other items shall be determined
form time to time by Masco, but Industries shall have no obligation to purchase
or use any such additional services, facilities or other times.
5. The term of this agreement shall be from the date hereof through
December 31, 1988. the term shall be extended automatically for a period of one
year each January 1 thereafter, provided that Masco may give notice of
non-renewal not less than 90 days prior to any such January 1. This Agreement
may be terminated by Industries at any time, without cause, on 90 days written
notice, provided that such termination shall not relieve Industries of its
obligations accruing hereunder through the effective date of such termination.
6. In providing services, equipment and facilities hereunder, Masco and
Industries shall each have a duty to act, and to cause their respective
employees to act, in a reasonable and prudent manner. Subject to the provisions
of the Research and Development Undertaking attached as Annex A hereto, neither
Masco or its subsidiaries, nor any officer, Director, employee or agent of Masco
or its subsidiaries, nor Industries or its subsidiaries, nor any officer,
director, employee or agent of Industries or its subsidiaries, shall be liable
for any loss incurred in connection with the matters to which this Agreement
relates, except a loss resulting from willful misfeasance or bad faith.
7. The selection of Masco employees to provide services hereunder shall
be determined by Masco and such employees shall be the employees of Masco. All
work performed hereunder by Masco shall be performed by Masco as an independent
contractor.
8. Masco and Industries shall take reasonable measures to keep
confidential all information concerning the other which is acquired in the
course of performing services hereunder and which is of a nature customarily
considered to be confidential by them. Research and development services
provided by Masco shall be subject to the additional provisions set forth in
Annex A hereto.
9. This Agreement shall not be assigned by Industries without the
express written consent of Masco, except for an assignment by Industries to a
successor to substantially all of its business.
10. The 1985 Corporate Services Agreement is hereby terminated.
<PAGE> 3
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
MASCO CORPORATION MASCO INDUSTRIES, INC.
By/s/Richard G. Mosteller By/s/Erwin H. Billig
------------------------- --------------------
Senior Vice President - President
Finance
The termination of the 1985 Corporate Services Agreement is accepted and agreed
to as of the day and year first above written.
NI INDUSTRIES, INC.
By/s/James Shaffer
------------------
<PAGE> 4
ANNEX A
RESEARCH AND DEVELOPMENT UNDERTAKING
RESEARCH AND DEVELOPMENT PROGRAM
1.01 Masco shall provide to Industries such research and development
services as have heretofore been provided to the businesses Masco is
transferring to Industries. Nothing herein or in the Corporate Services
Agreement (of which this Annex is a part) shall require Masco to provide
research and development services in kind, quality or amount greater than those
customarily provided to Masco's own business units.
CONFIDENTIAL RELATIONSHIP
2.01 It is acknowledged that in furtherance of performance by Masco of
the research and development services performed under this Annex, Masco and
Industries, during the term of this Annex may be exposed to and become privy to
and will generate various confidential or secret information proprietary to the
other, which confidential information may include, but is not limited to,
information, technical information, and know-how concerning products,
developments, new product plans, equipment, drawings, specifications, models,
prototypes, ideas, designs, software, processes, methods, research, sales and
customers and information relating to the management, operation or planning of
the other, and the fact of the others interest in certain projections or
technology (collectively hereinafter referred to as "Confidential Information").
Confidential Information shall be limited to information disclosed by one party
to the other party in writing (including information confirmed in writing to be
confidential within thirty (30) days after oral or visual disclosure) and
designated as confidential, exclusive or any information which:
(1) Was in the possession of the receiving party prior to receipt
thereof;
(2) Is or becomes available to the public through no fault of the
receiving party;
(3) Is obtained by the receiving party in good faith without
obligation of non-disclosure from a third party who has a right to
disclose the same; or
(4) Is developed by the receiving party independently of receipt of
such information from the disclosing party.
2.02 Masco and Industries shall hold and maintain the Confidential
Information of the other in confidence. Masco and Industries shall not without
the written consent of the disclosing party, except as specifically provided
herein, disclose to any third party any Confidential Information of the
disclosing party prior to the tenth (10th) anniversary of the date such
Confidential Information either is generated by the research and development
services or is disclosed by the disclosing party to the receiving party.
2.03 Masco, to the extent required for the furtherance of the research
and development services for Industries contemplated by this Annex may disclose
Industries Confidential Information to any engineering or equipment
manufacturing or consulting firm that prior to such disclosure has agreed in
writing with Masco in a manner consistent with this Annex neither to
<PAGE> 5
disclose the information to any party nor use it for any purpose other than in
furtherance of the research and development services provided by Masco to
Industries.
2.04 Upon termination of the Corporate Services Agreement or the
undertakings of this Annex, Masco will deliver to Industries upon request by
Industries all Industries Confidential Information including the work product
and all documentation generated by Masco relating thereto along with all
equipment, drawings, specifications, materials, notes and any other
documentation and physical things that Masco received from Industries.
REPORTS AND FUNDING
3.01 Masco will keep Industries generally informed of the work
performed and the results achieved under the research and development services
provided by Masco to Industries. Interim reports will be provided to the
business units of Industries upon their request.
3.02 Monies for financing materials and other property utilized in the
research and development services shall be provided in accordance with the
Corporate Services Agreement of which this Annex is a part.
IV. INVENTIONS AND PATENTS
4.01 Title to each invention or improvement and to patent applications
and patents thereon, made during performance of research and development
services by Masco under the Corporate Services Agreement performed at the
specific request of Industries and directed to the design, manufacture,
installation or use of a process, machine, manufacture, or composition of
matter, or improvement thereof, for manufacture, use, or sale by Industries
(hereinafter "Industries Originated Inventions") shall reside in Industries.
4.02 Title to each invention or improvement and to patent applications
and patents thereof, made during performance of research and development
services by Masco under the Corporate Services Agreement not specifically
performed at the request of Industries, but which invention or improvement is
directed to the design, manufacture, installation or use of a process, machine,
manufacture, or composition of matter, or improvement thereof, suitable for
manufacture, use or sale by Masco in its business, or by industries in its
business, and which invention makes substantial use of Industries Confidential
Information (hereinafter "Masco Originated Inventions") shall reside in
Industries.
4.03 Masco, its subsidiaries and, upon Masco's request, its affiliates,
are hereby granted an unlimited, royalty-free, irrevocable, non-exclusive
license, but not the right to grant sub-licenses, under Masco Originated
Inventions, and patent applications and patents thereof, to manufacture, use and
sell any process, machine, manufacture or composition of matter, and
improvements thereof, incorporating, such Masco Originated Inventions, to the
extent Industries has the right to grant such a license.
<PAGE> 6
4.04 Masco and Industries hereby agree to negotiate in good faith a
license granting to Masco the right to manufacture, use and sell any process,
machine, manufacture, or composition of matter, and improvements thereof,
incorporating Industries Originated Inventions, to the extent Industries has the
right to grant such a license, which license shall be on terms and conditions in
all respects reasonable to Masco in light of Masco's close involvement in the
research and development. This agreement to negotiate in good faith a license
under Industries Originated Inventions survives any termination of the Corporate
Services Agreement and this Annex.
4.05 Nothing in this Annex shall be construed as a grant to Industries
by Masco, by implication, estoppel or otherwise, of a right to use or a license
to Industries in any Masco patent, trademark, tradename, Masco Confidential
Information or other proprietary right not specifically granted to Industries.
Title to any invention or improvement, and any patent application or patent
thereon, made using both Masco Confidential Information and Industries
Confidential Information shall reside with the party whose Confidential
Information predominates and the other party shall be granted an unlimited,
royalty-free, irrevocable, non-exclusive license to manufacture, use and sell
any process, machine, manufacture or composition of matter, and improvements
thereof, incorporating such inventions and improvements.
4.06 Notwithstanding any non-disclosure provisions of this Annex, Masco
shall, if requested by Industries or an Industries business unit, and after
notifying Industries, file and prosecute, or have filed and prosecuted, patent
applications to protect any such inventions described in sub-paragraphs 4.01 and
4.02 above, in any and all countries. The expense of monitoring the preparation,
filing and maintaining such patent applications and patents thereon by third
parties shall be borne by Masco under the Corporate Services Agreement, except
for government fees, annuities and taxes and any monies paid to third parties
(collectively hereafter "Third Party Expenses"), which Third Party Expenses
shall be paid by Industries or reimbursed to Masco by Industries. Masco will
execute, acknowledge, and deliver all lawful papers which in the opinion of
Industries counsel are necessary or desirable to vest or perfect title if
required and in accordance with sub-paragraphs 4.01 and 4.02, as directed by
Industries, its successors or assigns, including applications for divisions of
pending applications, applications for reissue of patents and specific
assignments of applications and patents, and all rights under the International
Convention for the Protection of Industrial Property. In the event Industries
decides not to file a patent application on any Masco Originated Invention, then
Masco may do so in its own name at its own expense and Industries will assist
Masco, its nominees, successors and assigns, at any time in every proper manner
and without charge to Masco, but entirely at Masco's expense, to obtain patents
on the Masco Originated Invention in any and all countries, and will execute,
acknowledge and deliver all lawful papers which in the opinion of Masco counsel
are necessary or desirable for applying and obtaining patents thereon as Masco
may desire, and the provisions of Section 4.02 with respect to such Masco owned
Masco Originated Inventions shall not be applicable thereto.
4.07 Industries agrees to assert no rights, claims or entitlements
against Masco, its suppliers, its customers, its successors, assigns, or
nominees, whether arising out of patents, trade secrets, or otherwise based on
non-substantial use by Masco of Industries Confidential Information acquired by
Masco in the performance of the research and development services or based on
the use of Industries Confidential Information in existence at the time the
Corporate Services Agreement of which this Annex is a part, is signed.
<PAGE> 7
V. INFRINGEMENT AND INDEMNIFICATION
5.01 Industries agrees to indemnify and hold Masco harmless for
damages, costs, expenses and reasonable attorney's fees against any third party
claim of patent, trademark or copyright infringement, unfair competition, or
misappropriation of proprietary, confidential or trade secret information to the
extent such claim is based solely on Industries Confidential Information or on
the specifications and other materials provided by Industries to Masco.
5.02 Masco agrees to indemnify and hold Industries harmless for
damages, costs, expenses and reasonable attorney's fees, against any third party
claim of patent, trademark or copyright infringement, unfair competition, or
misappropriation of proprietary, confidential or trade secret information to the
extent such claim is based solely on Masco's manufacture, use, or sale of a
Masco Originated Invention.
5.03 Masco and Industries agree to promptly notify each other of any
claim brought by a third party against the other that comes under either
sub-paragraph 5.01 and 5.02 and agree that Masco shall promptly undertake
reasonable efforts to obtain a discontinuance of such claim, and, if not
successful, Masco shall consult with Industries. If the third party claim
becomes the subject of a court action, the party against whom the action is
brought shall select defense counsel (in consultation with Masco if the claim is
brought against Industries), and damages, costs, expenses, and attorney's fees
will be borne as stated in sub-paragraphs 5.01 and 5.02.
5.04 Masco and Industries shall notify the other promptly following the
discovery of any infringement of any unexpired patent or pending published
patent application directed to an invention defined in sub-paragraphs 4.01 and
4.02 above by any third party. Masco shall promptly undertake reasonable efforts
to obtain a discontinuance of the aforesaid infringement, and, if not
successful, Masco shall consult with Industries. If Industries, at its option,
brings suite against such infringer, Industries shall select counsel in
consultation with Masco and Masco shall guide such infringement action and
assist Industries counsel and all costs, expenses and attorney's fees of such
action shall be borne by Industries. Masco shall have the right, at its expense,
to bring suit against any infringer of a patent directed to a Masco Originated
Invention or an Industries Originated Invention licensed by Masco when the act
of infringement by the third party competes in the marketplace with a business
line of Masco.
5.05 Masco and Industries each agree to cooperate fully with the other
and furnish any evidence in its possession bearing on the issues involved in any
court action brought against Masco or Industries described in sub-paragraphs
5.01 and 5.02 and in any infringement action brought pursuant to sub-paragraph
5.04.
5.06 Any infringement action brought pursuant to sub-paragraph 5.04
shall be either in the name of Masco, or in the name of Industries, or jointly
by Masco and Industries, as may be required by the law of the forum. For this
purpose, Masco and Industries agree to execute such legal papers necessary for
the prosecution of such action. In any such action, both Masco and Industries
shall be entitled to recoup their expenses, costs and attorney's fees from any
recoveries in such action. The excess recovery over such recoupment for
infringement of a Masco Originated
<PAGE> 8
Invention shall be divided equally between Masco and Industries. Industries
shall retain the excess recovery for infringement of an Industries Originated
Invention.
VI. TERMINATION
6.01 This Annex shall terminate simultaneously with termination of the
Corporate Services Agreement unless terminated earlier or extended by agreement
of the parties. Sub-paragraphs 2.02, 2.03, 4.01, 4.02, 4.03, 4.04, 4.06, 4.07,
5.01, 5.02, 5.03, 5.04, 5.05 and 5.06 shall survive termination of this Annex.
<PAGE> 9
AMENDMENT NO. 1 TO
CORPORATE SERVICES AGREEMENT
This Amendment is made as of October 31, 1996 between Masco
Corporation, a Delaware corporation ("Masco"), and MascoTech, Inc., f/k/a Masco
Industries, Inc., a Delaware corporation ("Tech"), concerning that certain
Corporate Services Agreement (the "Services Agreement"), dated as of January 1,
1987, between Masco and Tech. All capitalized terms not otherwise defined in
this Amendment shall have the meanings given them in the Services Agreement.
A. Masco holds 24,824,690 shares of the Common Stock, par value $1.00
per share, of Tech (the "Tech Common Stock");
B. Concurrently herewith, Tech has, among other things, repurchased
form Masco 17,000,000 shares of the Tech Common Stock;
C. In connection therewith, Masco and Tech desire to amend certain
provisions of the Services Agreement as set forth herein.
IN CONSIDERATION of the mutual covenants and agreements contained in
this Amendment, the parties agree to amend the Services Agreement as follows:
1. All references to "Industries" are hereby revised to be
references to "Tech".
2. Paragraph 5 is hereby amended to read in its entirety as
follows:
5. The term of this Agreement shall expire on September 30,
1998; provided however that the term shall be extended
automatically for a period of one year each October 1
thereafter, subject to either party's right to terminate this
Agreement by written notice to the other received at least 90
days prior to any such October 1. Termination of this
Agreement shall not relieve either party of its obligations
accruing hereunder through the effective date of termination.
3. All other terms and conditions of the Services Agreement are
hereby ratified and confirmed and remain in full force and
effect.
<PAGE> 10
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Amendment as of the date first above written.
MASCO CORPORATION
By: /s/John R. Leekley
------------------
Name: John R. Leekley
---------------
Title: Senior Vice President and General Counsel
-----------------------------------------
MASCOTECH, INC.
By: /s/Timothy Wadhams
------------------
Name: Timothy Wadhams
---------------
Title: Vice President-Controller and Treasurer
---------------------------------------
<PAGE> 11
June 17, 1998
John R. Leekley
Senior Vice President
and General Counsel
Masco Corporation
21001 Van Born Road
Taylor, Michigan 48180
Dear John:
As you know, Masco Corporation and MascoTech, Inc. are both in the
process of reviewing the arrangement for corporate services that are currently
provided by Masco to MascoTech under the Corporate Services Agreement dated as
of January 1, 1987, as amended (the "Agreement"). The term of the Agreement will
be extended automatically for one year on October 1, 1998 unless written notice
of termination is given at least 90 days prior thereto.
MascoTech is prepared to waive the automatic one year extension and
permit the Agreement to continue beyond September 30, 1998 on the condition that
the Agreement may be terminated by either party at any time on or after
September 30, 1998 on [90] days' prior written notice (or such other notice
period as the parties may agree).
Please confirm that you join in this waiver, whereupon the foregoing
waiver will become binding on each of the parties.
Sincerely,
/s/Timothy Wadhams
------------------
Timothy Wadhams
Senior Vice President and
Chief Financial Officer
Confirmed:
MASCO CORPORATION
By: /s/John R. Leekley
------------------
John R. Leekley
Senior Vice President
and General Counsel
<PAGE> 12
January 22, 1998
Masco Corporation
21001 Van Born Road
Taylor, Michigan 48180
Gentlemen:
As you are aware, MascoTech, Inc. completed its acquisition of TriMas
Corporation on Thursday, January 22, 1998 (the "Effective Date"). This will
confirm our agreement that the Corporate Services Agreement, dated as of
December 27, 1988, between Masco Corporation ("Masco") and TriMas Corporation
(the "TriMas Corporate Services Agreement"), is terminated effective as of the
end of business on the Effective Date, except with respect to rights and
obligations of the parties thereto which have accrued as a result of services
rendered thereunder prior to the Effective Date. Furthermore, Masco agrees that
the period for which a fee is payable under the TriMas Corporate Services
Agreement will terminate on the earlier of (i) the Effective Date, or (ii) the
date immediately preceding the date that the consolidated net sales of TriMas
are included in the consolidated net sales of MascoTech, Inc. After such date,
Masco will be compensated for work performed for the TriMas companies under
Masco's Corporate Services Agreement with MascoTech (the "MascoTech Corporate
Services Agreement"). Finally, Masco agrees that, in calculating the fee payable
under the MascoTech Corporate Services Agreement, MascoTech is entitled to the
credits that were historically permitted to TriMas under the TriMas Corporate
Services Agreement of up to $250,000 per year for occupancy costs at TriMas' Ann
Arbor headquarters (consisting of rent, utilities, maintenance and property
taxes), office supplies and postage costs at TriMas' Ann Arbor headquarters and
the credit historically provided for the Norris management services that had
been discontinued by you when Masco Building Products shut down its operations.
If the foregoing is your understanding of our Agreement, please
acknowledge by signing below on the attached copy of this letter, and returning
same to the undersigned.
Very truly yours,
MASCOTECH, INC.
By/s/David B. Liner
-----------------
The foregoing is acknowledged
and agreed to:
MASCO CORPORATION
By/s/John R. Leekley
------------------
<PAGE> 1
EXHIBIT 10.f
REGISTRATION AGREEMENT
This Agreement is made as of March 31, 1993, between Masco Industries,
Inc., a Delaware corporation (the "Company") and Masco Corporation, a Delaware
corporation ("Masco").
WHEREAS, Masco currently holds certain Company securities; and
WHEREAS, Masco is acquiring certain Company securities pursuant to a
Purchase Agreement (the "Purchase Agreement") and an Exchange Agreement (the
"Exchange Agreement"), each with the Company of even date herewith, and may
acquire additional Company securities pursuant to a Securities Purchase
Agreement (the "Securities Purchase Agreement") with the Company of even date
herewith; and
WHEREAS, in connection with the Purchase Agreement, the Exchange
Agreement and the Securities Purchase Agreement, the Company has agreed to
provide to Masco certain registration rights with respect to certain Company
securities as provided herein.
NOW, THEREFORE, the parties agree as follows:
1. Definitions.
"Common Stock" means the Company's Common Stock, par value $1.00 per
share.
"Convertible Debentures" means the Company's 6% Convertible
Subordinated Debentures due 2011.
"Preferred Stock" means the Company's 10% Exchangeable Preferred Stock
issued pursuant to the Exchange Agreement and the Company's exchangeable
preferred stock that may be issued pursuant to the Securities Purchase
Agreement.
"Registrable Securities" means (i) the 17,946,498 shares of Common
Stock held by Masco as of the date hereof (after giving effect to the Company's
acquisition of 10 million shares of Common Stock pursuant to the Exchange
Agreement between the Company and Masco of even date herewith) and shares of
Common Stock that may be reacquired by Masco pursuant to the Masco Corporation
1984 Restricted Stock (Industries) Plan, (ii) $130 million principal amount of
Convertible Debentures held by Masco, (iii) Preferred Stock, (iv) Subordinated
Debentures, (v) Warrants, (vi) Common Stock issuable upon conversion of the
Convertible Debentures and upon exercise of the Warrants, and (vii) any
securities issued or issuable with respect to, or derived from, the securities
referred to in clauses (i) through (vi) by way of stock dividend, stock split or
other distribution or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization.
-1-
<PAGE> 2
"Subordinated Debentures" means the Company's subordinated debentures
that are issuable upon redemption and exchange of the Preferred Stock and the
Company's subordinated debentures that may be issued pursuant to the Securities
Purchase Agreement.
"Warrants" means the warrants issued by the Company to purchase 10
million shares of Common Stock, which warrants were issued pursuant to the
Purchase Agreement.
2 (a). Registration of Registrable Securities. Whenever the Company
shall receive a written request signed by Masco requesting the Company to file a
registration statement under the Securities Act of 1933, as in effect at the
relevant time, or a comparable statement under any similar Federal statute then
in effect (a "Registration Statement"), covering any class or series of
Registrable Securities held by Masco, the Company shall promptly prepare and
file a Registration Statement covering the Registrable Securities requested to
be registered. The registration request may, at the option of Masco, require the
Registration Statement to include Registrable Securities held by persons who
acquired such Registrable Securities directly from Masco in a private placement
(hereinafter referred to, together with Masco, as a "Selling Holder"). The
Company shall use its best efforts to cause the Registration Statement to become
effective and remain effective for the period required to permit the offering
and sale of the Registrable Securities covered thereby, which may be an
indefinite period of time if the registration request shall specify a delayed or
continuous offering pursuant to Rule 415 of the Securities and Exchange
Commission or any successor or comparable provision then in effect ("Shelf
Registration").
2(b). Limitations on Registration and Disposition. (i) The Company
shall not be obligated to (A) file a Registration Statement with respect to less
than $25 million market value of Registrable Securities (as determined in good
faith by Masco at the time of the request), except that if the Company shall
have redeemed or exchanged any class or series of Registrable Securities such
that Masco holds less than $25 million market value of such class or series,
Masco may request registration of all of any such class or series then held, or
(B) make any such filing within 6 months from the effective date of the next
preceding filing made pursuant hereto, except Masco may, within the period
commencing with the date of issuance of Preferred Stock or Subordinated
Debentures issued pursuant to the Securities Purchase Agreement or Subordinated
Debentures issued upon redemption and exchange of Preferred Stock and ending six
months from such effective date, require the filing of a Registration Statement
covering such Preferred Stock or Subordinated Debentures.
(ii) No disposition of Registrable Securities shall be made under a
Shelf Registration unless the Selling Holder of such securities shall give the
Company five days' prior written notice of such holder's intent to make such
disposition.
(iii) The Company may elect to defer, for a period not exceeding a
total of 90 days, the preparation of any Registration Statement or the
disposition of Registrable Securities pursuant to an effective Shelf
Registration if in the Company's good faith judgment pending or prospective
business developments (including financing plans) justify a temporary delay or
the prospectus contained in an effective Shelf Registration contains an untrue
statement of a material fact or omits to state a material fact necessary to make
the statements made in the light of the circumstances in which they were made,
not misleading.
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(iv) The exercise of Warrants or conversion of Convertible Debentures
shall not constitute a disposition of Registrable Securities for purposes of
clauses (ii) and (iii) above.
2(c). Registration Procedures. (i) Whenever the Company shall file a
Registration Statement pursuant hereto, the Company shall (A) thereafter, for
such period of time as shall be required in connection with the transactions
contemplated thereby and permitted by applicable rules, regulations and
administrative practice, file all post-effective amendments and supplements
thereto or to the prospectus contained therein and all filings under the
Securities Exchange Act of 1934 that are necessary or appropriate so that
neither the Registration Statement nor any related prospectus shall contain any
material misstatement or omission relative to the Company or any of its assets
or its business or affairs and so that the Registration Statement and such
prospectus will otherwise comply with all applicable legal requirements, subject
to the provisions of Paragraph 2(b) (iii) above, (B) furnish to the Selling
Holders of the registered Registrable Securities such number of copies of the
Registration Statement and any related preliminary prospectus, prospectus,
post-effective amendment or supplement as such Selling Holders reasonably may
request, and (C) take all action that may be necessary under the securities or
Blue Sky laws of any state and as reasonably may be requested to permit the
public offering and sale of the Registered Securities covered by the
Registration Statement; provided, however, that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not now
qualified or to take any action which would subject it to service of process in
suits, other than those arising out of the offering or sale of the Registrable
Securities, in any jurisdiction where it is not now subject. In connection with
any such Registration Statement, the Company shall deliver to such Selling
Holders and any underwriters such indemnities, contribution agreements, opinions
of counsel and letters of independent public accountants as are then customarily
given to underwriters of registered public offerings and selling security
holders. The underwriters and such Selling Holders shall deliver to the Company
such indemnities, contribution agreements and opinions as are then customarily
given to issuers of registered public offerings.
(ii) Anything in this Agreement to the contrary notwithstanding, the
Company shall not be obligated to file a Registration Statement unless the
Selling Holders of the Registrable Securities being registered shall have
furnished the Company in writing all information with respect to such Selling
Holders, the Registrable Securities held by such Selling Holders requested to be
so included, the transaction or transactions which such Selling Holders
contemplate and each underwriter, if any, who will act for such Selling Holders
in connection therewith, that any law, rule or regulation requires to be
disclosed therein.
(iii) The Company covenants that it will file the reports required to
be filed by it under the Securities Exchange Act of 1934, as in effect from time
to time, and the rules and regulations adopted by the Securities and Exchange
Commission thereunder, and will deliver to Masco at its request a written
statement affirming that it has complied with such requirements.
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<PAGE> 4
(iv) Whenever a Registration Statement is requested with respect to
Subordinated Debentures, the Company will enter into an indenture on
substantially similar terms and conditions (but not materially inconsistent with
the terms of such Subordinated Debentures) as those contained in the Indenture
dated as of November 1, 1986 between the Company and Morgan Guaranty Trust
Company of New York. The trustee designated by the Company to act as trustee
under the Indenture shall be a bank or trust company or national banking
association which has a combined capital and surplus in excess of $50,000,000.
(v) The Company will, at it own expense, take whatever action is
necessary to cause all Registrable Securities registered pursuant to these
registration rights to be listed on a national securities exchange or to be
included for quotation in the over-the-counter market as reported by the
National Association of Securities Dealers Automated Quotation System or similar
organization.
(vi) All expenses (other than fees (including underwriters' discounts
and commissions) and expenses of any underwriters and counsel to the Selling
Holders) in connection with registrations undertaken pursuant hereto shall be
borne by the Company, provided, however, that if Masco withdraws or abandons its
request, then Masco shall reimburse the Company for all expenses reasonably
incurred by the Company in complying with such request.
(vii) Masco shall be deemed to be the representative of all Selling
Holders, with full authority to select a managing underwriter, withdraw or
abandon the Registration Statement, and make comparable decisions on behalf of
all Selling Holders after reasonable consultation therewith.
(viii) The Company will make available for inspection any Selling
Holder, any underwriter participating in any disposition pursuant to a
Registration Statement and any attorney, accountant or other professional
retained by any Selling Holder or any such underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate documents
and properties of the Company (collectively, the "Records") as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any Inspectors in connection with
such registration statement. Records which the Company determines, in good
faith, to be confidential and which it notifies the Inspectors are confidential
shall not be disclosed by the Inspectors unless (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in such
Registration Statement or (ii) the release of such Records is ordered pursuant
to a subpoena or other order from a court of competent jurisdiction. Information
obtained as a result of such inspections shall be deemed confidential and shall
not be used as the basis for any market transactions in the securities of the
Company unless and until such is made generally available to the public. Each
Selling Holder of such Registrable Securities will, upon learning that
disclosure of such Records is sought in a court of competent jurisdiction, give
notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of the Records deemed confidential.
3 (a). Amendments and Waivers. This Agreement may not be amended or
terminated, nor any condition or term hereof be waived orally, but only by an
instrument in writing duly executed by the parties hereto or, in the case of a
waiver, by the party otherwise entitled to performance.
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<PAGE> 5
3 (b). Benefit of Agreement. This Agreement shall inure to the benefit
of and be binding upon the parties hereto, and upon their respective successors
and assigns, provided, however, that Masco may not assign any of its rights
hereunder.
3 (c). Governing Law. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Michigan.
3 (d). Paragraph and Other Headings. The paragraph and other headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
MASCO CORPORATION
By /s/ Wayne B. Lyon
------------------------
MASCO INDUSTRIES, INC.
By /s/ Timothy Wadhams
------------------------
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<PAGE> 1
EXHIBIT 10.j
MASCOTECH, INC.
1984 STOCK OPTION PLAN
(Amended and Restated September 21, 1999)
ARTICLE I. PURPOSE
The purpose of the 1984 Stock Option Plan (the "Plan") is to secure for
MascoTech, Inc. (the "Company") and its stockholders the benefits inherent in
stock ownership by selected key employees of and consultants to the Company and
its subsidiaries and affiliated companies who in the judgment of the committee
responsible for the administration of the Plan are largely responsible for the
Company's growth and success. The Plan is designed to accomplish this purpose by
offering such employees and consultants an opportunity to purchase shares of the
Common Stock of the Company. For purposes of the Plan a "subsidiary" is any
corporation in which the Company owns, directly or indirectly, stock possessing
more than fifty percent of the total combined voting power of all classes of
stock. For purposes of Articles III and VII of the Plan, an "affiliated company"
is any other corporation (and its subsidiaries) in which the Company or its
subsidiaries own stock possessing at least twenty percent of the total combined
voting power of all classes of stock, and for all other purposes of the Plan, an
"affiliated company" is any other corporation, at least twenty percent of the
total combined voting power of all classes of stock of which is owned by the
Company or by one or more other corporations in a chain of corporations, at
least twenty percent of the stock of each of which is held by the Company or a
subsidiary or another corporation within such chain.
ARTICLE II. ADMINISTRATION
The Plan shall be administered by a committee (the "Committee")
consisting of three or more of the Company's directors to be appointed by the
Board of Directors. No director shall become or remain a member of the Committee
unless at the time of his exercise of any discretionary function as a Committee
member such director is not eligible, and has not at any time within one year
prior to the exercise of such discretion been eligible for selection as a person
to whom stock may be allocated or to whom stock options or stock appreciation
rights may be granted pursuant to the Plan or any other plan of the Company or
any of its affiliates entitling the participants therein to acquire stock, stock
options or stock appreciation rights of the Company or any of its affiliates.
The Committee shall have authority, consistent with the Plan:
(a) to determine which key employees of and consultants to the
Company, its subsidiaries and affiliated companies shall be granted
options;
(b) to determine the time or times when options shall be
granted and the number of shares of Common Stock to be subject to each
option;
(c) to determine the option price of the stock subject to each
option and the method of payment of such price;
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<PAGE> 2
(d) to determine the time or times when each option becomes
exercisable, limitations on exercise, and the duration of the exercise
period;
(e) to prescribe the form or forms of the instruments
evidencing any options granted under the Plan and of any other
instruments required under the Plan, and to change such forms from time
to time;
(f) to designate options granted to key employees of the
Company or its "subsidiaries" under the Plan as "incentive stock
options" ("ISOs"), as such terms are defined under the Internal Revenue
Code;
(g) to adopt, amend and rescind rules and regulations for the
administration of the Plan and the options and for its own acts and
proceedings; and
(h) to decide all questions and settle all controversies and
disputes which may arise in connection with the Plan.
All decisions, determinations and interpretations of the Committee
shall be binding on all parties concerned.
ARTICLE III. PARTICIPANTS
Key employees of and consultants to the Company, its subsidiaries or
affiliated companies, including officers of the Company who are also employees
(who may also be directors, but excluding members of the Committee, any person
who serves only as a director or a non-employee officer of the Company and any
consultant to the Company or any of its subsidiaries or affiliated companies who
is not rendering services pursuant to a written agreement with the corporation
in question), as may be selected from time to time by the Committee in its
discretion, are eligible to receive options under the Plan. The grant of an
option to an employee or consultant shall not entitle such individual to other
grants or options, nor shall such grant disqualify such individual from further
participation.
ARTICLE IV. LIMITATIONS
No options shall be granted under the Plan after December 31, 1999, but
options theretofore granted may extend beyond that date. Subject to adjustment
as provided in Article IX, the number of shares of Common Stock of the Company
which may be issued under the Plan shall not exceed in the aggregate 8,160,000
shares; provided, however, that such total amount shall be reduced by the
aggregate number of shares of the Company's Common Stock awarded under the
Company's 1984 Restricted Stock Incentive Plan since the original adoption
thereof (other than shares forfeited to the Company which are thereby available
for further awards under Paragraph 2 of such Plan). To the extent that any
option granted under the Plan shall expire or terminate unexercised or for any
reason become unexercisable as to any stock subject thereto, such stock shall
thereafter be available for further grants under the Plan, within the limit
specified above. If an option granted under the Plan
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<PAGE> 3
shall be accepted for surrender pursuant to Article VIII, any stock covered by
options so accepted shall not thereafter be available for the granting of other
options under the Plan.
Notwithstanding any provision to the contrary in the Plan, no option
may be designated an ISO unless all of the following conditions are satisfied
with respect to such option:
(a) Such option must be granted on or prior to May 1, 1994,
and such option by its terms is not exercisable after the expiration of
ten years from the date such option is granted;
(b) Either (i) the employee to whom such option is granted
does not, determined at the time such option is granted, own capital
stock representing more than ten percent of the voting power of all
classes of stock of the Company, its parent or any of its subsidiaries,
or (ii) the option price is at least 110 percent of the fair market
value, determined at the time such option is granted, of the stock
subject to such option and such option by its terms is not exercisable
more than five years from the date it is granted;
(c) Such option by its terms is not exercisable while there is
outstanding an ISO which was granted to the same employee at an earlier
time. For purposes of this clause (c), an ISO which has not been
exercised in full shall be deemed to be outstanding, notwithstanding
any cancellation or termination thereof, until the expiration of the
period during which it could have been exercised under its original
terms; and
(d) The aggregate fair market value of the Common Stock
subject to such option plus the aggregate fair market value of Common
Stock subject to ISOs previously or concurrently granted to the same
employee in the same calendar year (all determined at the respective
dates of grant of such options) must not exceed $100,000 (the "Basic
Amount") plus the sum of the "Carry-Over Amounts" for each of the three
calendar years immediately preceding the year in which such option is
granted. The "Carry-Over Amount", as used in this clause (d) for any
calendar year, shall mean (i) fifty percent of the amount by which
$100,000 exceeds the fair market value, determined at the time of
grant, of Common Stock subject to ISOs which were granted during such
calendar year to the employee for whom the Carry-Over Amount is being
determined, or (ii) $50,000 in the case such employee has not in such
calendar year been granted any ISO. No amount shall be included in a
Carry-Over Amount for any year to the extent such amount was
theretofore necessarily included as a Carry-Over Amount to permit the
qualification of an ISO under this clause (d), and Carry-Over Amounts
shall only be utilized to permit the qualification of an ISO under this
clause (d) in the order in which they first arose and then only if the
Basic Amount has not theretofore been utilized to permit such
qualification.
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ARTICLE V. STOCK TO BE ISSUED
The stock as to which options may be granted is the Company's Common
Stock, $1 par value. Such Stock may be authorized but unissued shares or shares
of Common Stock reacquired by the Company, including but not limited to shares
purchased on the open market. The Board of Directors and the officers of the
Company shall take any appropriate action required for such issuance.
ARTICLE VI. TERMS AND CONDITIONS OF OPTIONS
All options granted under the Plan shall be subject to the following
terms and conditions (except as otherwise provided in Article VII) and to such
other terms and condition as the Committee shall deem appropriate.
(a) Option Price. Each option granted hereunder shall have such per
share option price as the Committee may determine, but not less than the fair
market value of Common Stock of the Company on the date the option is granted.
(b) Terms of Options. The term of an option shall not exceed eleven
years from the date of grant. The date of grant shall be the date on which the
option is awarded by the Committee.
(c) Exercise of Options.
(i) Each option shall be made exercisable not less than six
months from the date of grant and at such time or times, whether or not
in installments, as the Committee shall prescribe at the time the
option is granted.
(ii) A person electing to exercise an option shall give
written notice to the Company, as may be specified by the Committee, of
exercise of the option and of the number of shares of stock elected for
exercise, such notice to be accompanied by such instruments or
documents as may be required by the Committee, and such person shall at
the time of such exercise tender the purchase price of the stock
elected for exercise unless otherwise directed by the Committee.
(iii) (A) Notwithstanding any of the provisions of this Plan
or instruments evidencing options heretofore or hereafter granted
hereunder, in the case of a Change in Control of the Company, each
Option then outstanding shall immediately become exercisable in full. A
Change in Control shall occur if any of the events described below in
subparagraphs (1), (2) or (3) shall have occurred, unless the holder of
any such option shall have consented to the application of subparagraph
(3) in lieu of subparagraphs (1) and (2):
(1) any "person" or "group of persons" as such terms
are used in Section 13(d) and 14(d) of the Securities Exchange
Act of 1934 (the "Exchange Act") other than pursuant to a
transaction or agreement previously approved by the Board
directly or indirectly purchases or otherwise becomes the
"beneficial owner" (as defined
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in Rule 13d-3 under the Exchange Act) or has the right to
acquire such beneficial ownership (whether or not such right
is exercisable immediately, with the passage of time, or
subject to any condition), of voting securities representing
25% or more of the combined voting power of all outstanding
voting securities of (A) the Company or (B) of Masco
Corporation, a Delaware corporation ("Masco");
(2) during any period of twenty-four consecutive
calendar months, the individuals who at the beginning of such
period constitute the Company's or Masco's Board of Directors,
and any new directors whose election by either such Board or
nomination for election by stockholders was approved by a vote
of at least two-thirds of the members of such Board who were
either directors on such Board at the beginning of the period
or whose election or nomination for election as directors was
previously so approved, for any reason cease to constitute at
least a majority of the members thereof; or
(3) during any period of twenty-four consecutive
calendar months, the individuals who at the beginning of such
period constitute the Company's Board of Directors, and any
new directors (other than Excluded Directors, as hereinafter
defined), whose election by such Board or nomination for
election by stockholders was approved by a vote of at least
two-thirds of the members of such Board who were either
directors on such Board at the beginning of the period or
whose election or nomination for election as directors was
previously so approved, for any reason cease to constitute at
least a majority of the members thereof. For purposes hereof,
"Excluded Directors" are directors whose election by the Board
or approval by the Board for stockholder election occurred
within one year of any "person" or "group of persons", as such
terms are used in Sections 13(d) and 14(d) of the Exchange
Act, commencing a tender offer for, or becoming the beneficial
owner of, voting securities representing 25 percent or more of
the combined voting power of all outstanding voting securities
of the Company, other than pursuant to a tender offer approved
by the Board prior to its commencement or pursuant to stock
acquisitions approved by the Board prior to their representing
25 percent or more of such combined voting power.
(B)(1) In the event that subsequent to a Change in Control it
is determined that any payment or distribution by the Company to or for
the benefit of a participant, whether paid or payable or distributed or
distributable pursuant to the terms of this Plan or otherwise, other
than any payment pursuant to this subparagraph (B) (a "Payment"), would
be subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended from time to time (the "Code"), or any
interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then such participant
shall be entitled to receive from the Company, within 15 days following
the determination described in (2) below, an additional payment
("Excise Tax Adjustment Payment") in an amount such that after payment
by such participant of all applicable Federal, state and local taxes
(computed at the maximum marginal rates and including any interest or
penalties imposed with respect to such taxes),
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including any Excise Tax, imposed upon the Excise Tax Adjustment
Payment, such participant retains an amount of the Excise Tax
Adjustment Payment equal to the Excise Tax imposed upon the Payments.
(2) All determinations required to be made under this Article
VI(c)(iii)(B), including whether an Excise Tax Adjustment Payment is
required and the amount of such Excise Tax Adjustment Payment, shall be
made by PricewaterhouseCoopers LLP, or such other national accounting
firm as the Company, or, subsequent to a Change in Control, the Company
and the participant jointly, may designate, for purposes of the Excise
Tax, which shall provide detailed supporting calculations to the
Company and the affected participant within 15 business days of the
date of the applicable Payment. Except as hereinafter provided, any
determination by PricewaterhouseCoopers LLP, or such other national
accounting firm, shall be binding upon the Company and the participant.
As a result of the uncertainty in the application of Section 4999 of
the Code that may exist at the time of the initial determination
hereunder, it is possible that (x) certain Excise Tax Adjustment
Payments will not have been made by the Company which should have been
made (an "Underpayment"), or (y) certain Excise Tax Adjustment Payments
will have been made which should not have been made (an "Overpayment"),
consistent with the calculations required to be made hereunder. In the
event of an Underpayment, such Underpayment shall be promptly paid by
the Company to or for the benefit of the affected participant. In the
event that the participant discovers that an Overpayment shall have
occurred, the amount thereof shall be promptly repaid to the Company.
(3) This Article VI(c)(iii)(B) shall not apply to any option
that was granted to an executive officer of the Company, as determined
under the Exchange Act.
(d) Payment for Issuance of Stock. Upon and at the time of exercise of
any option granted pursuant to the Plan, payment in full shall be made for all
such stock then being purchased either in cash or, at the discretion of the
Committee, in whole or in part in Common Stock of the Company valued at its then
fair market value. Notwithstanding the foregoing, the Committee may in its
discretion permit the issuance of stock upon such other plan of payment as it
deems reasonable, provided that the then unpaid portion of the purchase price
shall be evidenced by a promissory note at such rate of interest and upon such
other terms and conditions as the Committee shall deem appropriate. In all cases
where stock is issued for less than present full payment of the purchase price,
there shall be placed upon the certificate or certificates representing such
stock a legend setting forth the amount paid at issuance, and the amount
remaining unpaid thereon, and stating that the stock is subject to call for the
remainder and may not be transferred by the holder until the balance due thereon
shall be fully paid.
The Committee, in its discretion and in accordance with the procedures
established by the Committee, may permit a participant to satisfy, in whole or
in part, the applicable income tax withholding obligations in connection with
the exercise of a non-qualified stock option under the Plan by having withheld
from the shares to be issued upon the exercise of the option or by delivering
from shares of Common Stock of the Company owned by the participant such number
of shares having a fair market value equal to the amount needed to satisfy such
obligations.
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(e) Conditions to Issuance. The Company shall not be obligated to issue
any stock unless and until:
(i) in the event of the Company's outstanding Common Stock is
at the time listed upon any stock exchange, the shares of stock to be
issued have been listed, or authorized to be added to the list upon
official notice of issuance, upon such exchange, and
(ii) in the opinion of the Company's counsel there has been
compliance with applicable law in connection with the issuance and
delivery of stock and such issuance shall have been approved by the
Company's counsel.
Without limiting the generality of the foregoing, the Company may require from
the participant such investment representation or such agreement, if any, as
counsel for the Company may consider necessary in order to comply with the
Securities Act of 1933 as then in effect, and may require that the participant
agree that any sale of the stock will be made only in such manner as shall be in
accordance with law and that the participant will notify the Company of any
intent to make any disposition of the stock whether by sale, gift or otherwise.
The participant shall take any action reasonably requested by the Company in
such connection. A participant shall have the rights of a stockholder only as
and when shares of stock have been actually issued to the participant pursuant
to the Plan.
(f) Limits on Transferability of Options. No option may be transferred
by the participant other than (i) by designation of beneficiary as provided in
subsection (j) of this Article, or (ii) by will or the laws of descent and
distribution, or (iii) to a revocable grantor trust established by the
participant for the sole benefit of the participant during the participant's
life, and under the terms of which the participant is and remains the sole
trustee until death or physical or mental incapacity. Such assignment shall be
effected by a written instrument in form and content satisfactory to the
Committee, and the participant shall deliver to the Committee a true copy of the
agreement or other document evidencing such trust. If in the judgment of the
Committee the trust to which a participant may attempt to assign rights under
such an Award does not meet the criteria of a trust to which an assignment is
permitted by the terms hereof, or if after assignment, because of amendment, by
force of law or any other reason such trust no longer meets such criteria, such
attempted assignment shall be void and may be disregarded by the Committee and
the Company and all rights to any such Options shall revert to and remain solely
in the participant. Notwithstanding a qualified assignment, the participant, and
not the trust to which rights under such an Option may be assigned, for the
purpose of determining compensation arising by reason of the Option, shall
continue to be considered an employee or consultant, as the case may be, of the
Company or an affiliated company, but such trust and the participant shall be
bound by all of the terms and conditions of this Plan and any written agreement,
contract or other instrument or document evidencing any award granted under this
Plan. Shares issued in the name of and delivered to such trust shall be
conclusively considered issuance and delivery to the participant.
(g) Consideration for Option. Each person receiving an option must
agree to remain as an employee or consultant upon the terms of employment or the
consulting arrangement then existing (unless different terms are mutually agreed
upon) for at least one year from the date of the granting
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of the option, subject to the right of the Company, its subsidiary or affiliated
company to terminate the participant's employment or consulting arrangement at
any time.
(h) Termination of Employment. If the employment of or consulting
arrangement with a participant terminates for any reason (including termination
by reason of the fact that such corporation is no longer a subsidiary of
affiliated company) other than the participant's death or permanent and total
disability or, in the case of an employee, retirement on or after normal
retirement date, unless discharged for misconduct which in the opinion of the
Committee casts such discredit on the participant as to justify termination of
the option, the participant may thereafter exercise the option as provided
below. If such termination is voluntary on the part of the participant, the
option may be exercised only within ten days after the date of termination
unless a longer period is permitted by the Committee in its discretion. If such
termination is involuntary on the part of the participant, the option may be
exercised within three months after the day of termination. Except as expressly
provided in the Plan, in no event may a participant whose employment or
consulting agreement has been terminated voluntarily or involuntarily exercise
an option at a time when the option would not have been exercisable had the
employment or consulting arrangement continued. Notwithstanding the foregoing,
the Committee may by the express terms of the grant of the option extend the
aforesaid periods of time within which the participant may exercise an option
after the termination of employment or the consulting arrangement. For purposes
of this Article VI(h), a participant's employment or consulting arrangement
shall not be considered terminated (i) in the case of sick leave or other bona
fide leave of absence (not to exceed one year unless otherwise approved by the
Committee), (ii) in the case of a transfer of employment or the consulting
arrangement among the Company, its subsidiaries and affiliated companies, or
(iii) by virtue of a change of status from employee to consultant or from
consultant to employee. Unless otherwise expressly provided in the Plan or the
grant of the option, an option may be exercised only to the extent exercisable
on the date of termination of employment or of the consulting arrangement by
reason of death, permanent and total disability, retirement or otherwise.
(i) Retirement; Disability. If prior to the expiration date of an
option the employee shall retire on or after normal retirement date or if the
employment or consulting relationship is terminated by reason of permanent and
total disability, such option may be exercised to the extent exercisable on the
date of retirement or such termination, provided such option shall be exercised
within three months of the date of retirement or such termination.
Notwithstanding the foregoing, in its discretion the Committee may permit the
exercise of an option held by a retired or disabled option holder upon other
terms and conditions as it deems advisable under the circumstances, and if the
period within which an option may be exercised has been extended the Committee
may terminate all unexercised options if it shall determine that the participant
has engaged in any activity detrimental to the Company's interests.
(j) Death. If a participant dies at a time when entitled to exercise an
option, then at any time or times within one year after death (or such further
period as the Committee may allow) such option may be exercised, as to all or
any of the shares which the participant was entitled to purchase immediately
prior to death (unless the Committee shall have provided in the instrument
evidencing such option that all shares covered by the option are subject to
purchase upon death), by the person or persons designated in writing by the
participant in such form of beneficiary designation as may
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<PAGE> 9
be approved by the Company, or failing designation by the participant's personal
representative, executor or administrator or the person or persons to whom the
option is transferred by will or the applicable laws of descent and
distribution. The Company may decline to deliver shares to a designated
beneficiary until it receives indemnity against claims of third parties
satisfactory to the Company. Except as so exercised such option shall expire at
the end of such period.
ARTICLE VII. REPLACEMENT OPTIONS
The Committee may grant options under the Plan on terms differing from
those provided for in Article VI where such options are granted in substitution
for options held by employees of or consultants who have written agreement to
render services to other entities who concurrently become employees of or
consultants to the Company or a subsidiary or an affiliated company as the
result of a merger, consolidation or other reorganization of such other entity
with the Company or a subsidiary or an affiliated company, or the acquisition by
the Company or a subsidiary or an affiliated company of the business, property
or stock of such other entity. The Committee may direct that the substitute
options be granted on such terms and conditions as the Committee considers
appropriate in the circumstances.
ARTICLE VIII. SURRENDER OF OPTIONS
The Committee may, in its discretion and under such terms and
conditions as it deems appropriate, accept the surrender by a participant of a
presently exercisable right to purchase stock granted under an option and
authorize payment by the Company in consideration therefor of an amount equal to
the difference obtained by subtracting the option price of the stock from its
fair market value on the date of such surrender, such payment to be in cash or
shares of the Common Stock of the Company valued at fair market value on the
date of such surrender, or partly in such stock and partly in cash, provided
that the Committee determines such settlement is consistent with the purpose of
the Plan.
ARTICLE IX. CHANGES IN STOCK
The Board of Directors is authorized to make such adjustments, if any,
as it shall deem appropriate in the number and kind of shares which may be
granted under the Plan, the number and kind of shares which are subject to
options then outstanding and the purchase price of shares subject to such
outstanding options, in the event of any change in capital or shares of capital
stock, any special distribution to stockholders or any extraordinary transaction
(including a merger, consolidation or dissolution) to which the Company is a
party. The determination of the Board of Directors as to such matters shall be
binding on all persons.
ARTICLE X. EMPLOYMENT RIGHTS
The adoption of the Plan does not confer upon any employee of or
consultant to the Company or a subsidiary or an affiliated company any right to
continue the employment or consulting relationship with the Company or a
subsidiary or an affiliated company, as the case may be, nor does it in any way
impair the right of the Company or a subsidiary or an affiliated company
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to terminate the employment of any of its employees or the consulting
arrangement with any of its consultants at any time.
ARTICLE XI. AMENDMENTS
The Committee may at any time discontinue granting options under the
Plan. The Board of Directors may at any time or times amend the Plan or amend
any outstanding option or options for the purpose of satisfying the requirements
of any changes in applicable laws or regulations or for any other purpose which
may at the time be permitted by law, provided that except to the extent
permitted under Article IX, without the approval of the stockholders of the
Company no such amendment shall increase the maximum number of shares of stock
available under the Plan, or alter the class of persons eligible to receive
options under the Plan, or without the consent of the participant void or
diminish options previously granted, nor increase or accelerate the conditions
and actions required for the exercise of the same, except that nothing herein
shall limit the Company's right to call stock, issued for deferred payment which
is evidenced by promissory note where the participant is in default of the
obligations on such note.
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<PAGE> 1
EXHIBIT 10.K
MASCO CORPORATION
1991 LONG TERM STOCK INCENTIVE PLAN
(Restated July 10, 1998)
SECTION 1. PURPOSES
The purposes of the 1991 Long Term Stock Incentive Plan (the "Plan") are to
encourage selected employees of and consultants to Masco Corporation (the
"Company") and its Affiliates to acquire a proprietary interest in the Company
in order to create an increased incentive to contribute to the Company's future
success and prosperity, and enhance the ability of the Company and its
Affiliates to attract and retain exceptionally qualified individuals upon whom
the sustained progress, growth and profitability of the Company depend, thus
enhancing the value of the Company for the benefit of its stockholders.
SECTION 2. DEFINITIONS
As used in the Plan, the following terms shall have the meanings set forth
below:
(a) "Affiliate" shall mean any entity in which the Company's direct or
indirect equity interest is at least twenty percent, and any other entity in
which the Company has a significant direct or indirect equity interest, whether
more or less than twenty percent, as determined by the Committee.
(b) "Award" shall mean any Option, Stock Appreciation Right, Restricted
Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent or Other
Stock-Based Award granted under the Plan.
(c) "Award Agreement" shall mean any written agreement, contract or other
instrument or document evidencing any Award granted under the Plan.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(e) "Committee" shall mean a committee of the Company's directors
designated by the Board of Directors to administer the Plan and composed of not
less than two directors, each of whom is a "non-employee director" within the
meaning of Rule 16b-3.
(f) "Dividend Equivalent" shall mean any right granted under Section 6(e)
of the Plan.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(h) "Incentive Stock Option" shall mean an Option granted under Section
6(a) of the Plan that is intended to meet the requirements of Section 422 of the
Code, or any successor provision thereto.
(i) "Non-Qualified Stock Option" shall mean an Option granted under Section
6(a) of the Plan that is not intended to be an Incentive Stock Option.
(j) "Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option.
(k) "Other Stock-Based Award" shall mean any right granted under Section
6(f) of the Plan.
(l) "Participant" shall mean an employee of or consultant to the Company or
any Affiliate designated to be granted an Award under the Plan.
(m) "Performance Award" shall mean any right granted under Section 6(d) of
the Plan.
<PAGE> 2
(n) "Restricted Period" shall mean the period of time during which Awards
of Restricted Stock or Restricted Stock Units are subject to restrictions.
(o) "Restricted Stock" shall mean any Share granted under Section 6(c) of
the Plan.
(p) "Restricted Stock Unit" shall mean any right granted under Section 6(c)
of the Plan that is denominated in Shares.
(q) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Exchange Act, or any successor rule or regulation.
(r) "Section 16" shall mean Section 16 of the Exchange Act, the rules and
regulations promulgated by the Securities and Exchange Commission thereunder, or
any successor provision, rule or regulation.
(s) "Shares" shall mean the Company's common stock, par value $1.00 per
share, and such other securities or property as may become the subject of
Awards, or become subject to Awards, pursuant to an adjustment made under
Section 4(c) of the Plan.
(t) "Stock Appreciation Right" shall mean any right granted under Section
6(b) of the Plan.
SECTION 3. ADMINISTRATION
The Committee shall administer the Plan, and subject to the terms of the
Plan and applicable law, the Committee's authority shall include without
limitation the power to:
(i) designate Participants;
(ii) determine the types of Awards to be granted;
(iii) determine the number of Shares to be covered by Awards and
any payments, rights or other matters to be calculated in connection
therewith;
(iv) determine the terms and conditions of Awards and amend the
terms and conditions of outstanding Awards;
(v) determine how, whether, to what extent, and under what
circumstances Awards may be settled or exercised in cash, Shares, other
securities, other Awards or other property, or canceled, forfeited or
suspended;
(vi) determine how, whether, to what extent, and under what
circumstances cash, Shares, other securities, other Awards, other
property and other amounts payable with respect to an Award shall be
deferred either automatically or at the election of the holder thereof
or of the Committee;
(vii) determine the methods or procedures for establishing the
fair market value of any property (including, without limitation, any
Shares or other securities) transferred, exchanged, given or received
with respect to the Plan or any Award;
(viii) prescribe and amend the forms of Award Agreements and other
instruments required under or advisable with respect to the Plan;
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<PAGE> 3
(ix) designate Options granted to key employees of the Company or
its subsidiaries as Incentive Stock Options;
(x) interpret and administer the Plan, Award Agreements, Awards
and any contract, document, instrument or agreement relating thereto;
(xi) establish, amend, suspend or waive such rules and regulations
and appoint such agents as it shall deem appropriate for the
administration of the Plan;
(xii) decide all questions and settle all controversies and
disputes which may arise in connection with the Plan, Award Agreements
and Awards;
(xiii) delegate to directors of the Company the authority to
designate Participants and grant Awards, and to amend Awards granted to
Participants;
(xiv) make any other determination and take any other action that
the Committee deems necessary or desirable for the interpretation,
application and administration of the Plan, Award Agreements and
Awards.
All designations, determinations, interpretations and other decisions under
or with respect to the Plan, Award Agreements or any Award shall be within the
sole discretion of the Committee, may be made at any time and shall be final,
conclusive and binding upon all persons, including the Company, Affiliates,
Participants, beneficiaries of Awards and stockholders of the Company.
SECTION 4. SHARES AVAILABLE FOR AWARDS
(a) Shares Available. Subject to adjustment as provided in Section 4(c):
(i) Initial Authorization. There shall be 16,000,000 Shares
initially available for issuance under the Plan.
(ii) Acquired Shares. In addition to the amount set forth above,
up to 16,000,000 Shares acquired by the Company subsequent to the 1997
Annual Meeting of Stockholders as full or partial payment for the
exercise price for an Option or any other stock option granted by the
Company, or acquired by the Company, in open market transactions or
otherwise, in connection with the Plan or any Award hereunder or any
other employee stock option or restricted stock issued by the Company
may thereafter be included in the Shares available for Awards. If any
Shares covered by an Award or to which an Award relates are forfeited,
or if an Award expires, terminates or is cancelled, then the Shares
covered by such Award, or to which such Award relates, or the number of
Shares otherwise counted against the aggregate number of Shares
available under the Plan by reason of such Award, to the extent of any
such forfeiture, expiration, termination or cancellation, may
thereafter be available for further granting of Awards and included as
acquired Shares for purposes of the preceding sentence.
(iii) Shares Under Prior Plans. In addition to the amounts set
forth above, shares remaining available for issuance upon any
termination of authority to make further awards under both the
Company's 1988 Restricted Stock Incentive Plan and its 1988 Stock
Option Plan shall thereafter be available for issuance hereunder.
(iv) Accounting for Awards. For purposes of this Section 4,
(A) if an Award (other than a Dividend Equivalent) is
denominated in Shares, the number of Shares covered by such Award,
or to which such Award relates, shall be counted on the date of
grant of such Award against the aggregate number of Shares
available for granting Awards under the Plan to the extent
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<PAGE> 4
determinable on such date and insofar as the number of Shares is
not then determinable under procedures adopted by the Committee
consistent with the purposes of the Plan; and
(B) Dividend Equivalents and Awards not denominated in Shares
shall be counted against the aggregate number of Shares available
for granting Awards under the Plan in such amount and at such time
as the Committee shall determine under procedures adopted by the
Committee consistent with the purposes of the Plan;
provided, however, that Awards that operate in tandem with (whether granted
simultaneously with or at a different time from), or that are substituted for,
other Awards or restricted stock awards or stock options granted under any other
plan of the Company may be counted or not counted under procedures adopted by
the Committee in order to avoid double counting. Any Shares that are delivered
by the Company or its Affiliates, and any Awards that are granted by, or become
obligations of, the Company, through the assumption by the Company of, or in
substitution for, outstanding restricted stock awards or stock options
previously granted by an acquired company shall not, except in the case of
Awards granted to Participants who are directors or officers of the Company for
purposes of Section 16, be counted against the Shares available for granting
Awards under the Plan.
(v) Sources of Shares Deliverable Under Awards. Any Shares delivered
pursuant to an Award may consist, in whole or in part, of authorized but
unissued Shares or of Shares reacquired by the Company, including but not
limited to Shares purchased on the open market.
(b) Individual Stock-Based Awards. Subject to adjustment as provided in
Section 4(c), no Participant may receive Options or Stock Appreciation Rights
under the Plan in any calendar year that relate to more than 2,000,000 Shares in
the aggregate; provided, however, that such number may be increased with respect
to any Participant by any Shares available for grant to such Participant in
accordance with this Paragraph 4(b) in any prior years that were not granted in
such prior year beginning on or after January 1, 1997. No provision of this
Paragraph 4(b) shall be construed as limiting the amount of any other
stock-based or cash-based Award which may be granted to any Participant.
(c) Adjustments. Upon the occurrence of any dividend or other distribution
(whether in the form of cash, Shares, other securities or other property),
change in the capital or shares of capital stock, recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of Shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company or extraordinary transaction or event which affects
the Shares, then the Committee shall have the authority to make such adjustment,
if any, in such manner as it deems appropriate, in (i) the number and type of
Shares (or other securities or property) which thereafter may be made the
subject of Awards, (ii) outstanding Awards including without limitation the
number and type of Shares (or other securities or property) subject thereto, and
(iii) the grant, purchase or exercise price with respect to outstanding Awards
and, if deemed appropriate, make provision for cash payments to the holders of
outstanding Awards; provided, however, that the number of Shares subject to any
Award denominated in Shares shall always be a whole number.
SECTION 5. ELIGIBILITY
Any employee of or consultant to the Company or any Affiliate, including
any officer of the Company (who may also be a director, any person who serves
only as a director of the Company and any consultant to the Company or an
Affiliate who is also a director of the Company and who is not rendering
services pursuant to a written agreement with the entity in question), as may be
selected from time to time by the Committee or by the directors to whom
authority may be delegated pursuant to Section 3 hereof in its or their
discretion, is eligible to be designated a Participant.
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<PAGE> 5
SECTION 6. AWARDS
(a) Options. The Committee is authorized to grant Options to Participants.
(i) Committee Determinations. Subject to the terms of the Plan,
the Committee shall determine:
(A) the purchase price per Share under each Option, provided,
however, that such price shall be not less than 100% of the fair
market value of the Shares underlying such Option on the date of
grant;
(B) the term of each Option; and
(C) the time or times at which an Option may be exercised, in
whole or in part, the method or methods by which and the form or
forms (including, without limitation, cash, Shares, other Awards
or other property, or any combination thereof, having a fair
market value on the exercise date equal to the relevant exercise
price) in which payment of the exercise price with respect thereto
may be made or deemed to have been made. The terms of any
Incentive Stock Option granted under the Plan shall comply in all
respects with the provisions of Section 422 of the Code, or any
successor provision thereto, and any regulations promulgated
thereunder.
Subject to the terms of the Plan, the Committee may impose such
conditions or restrictions on any Option as it deems appropriate.
(ii) Other Terms. Unless otherwise determined by the Committee:
(A) A Participant electing to exercise an Option shall give
written notice to the Company, as may be specified by the
Committee, of exercise of the Option and the number of Shares
elected for exercise, such notice to be accompanied by such
instruments or documents as may be required by the Committee, and
shall tender the purchase price of the Shares elected for
exercise.
(B) At the time of exercise of an Option payment in full in
cash or in Shares (that have been held by the Participant for at
least six months) or any combination thereof, at the option of the
Participant, shall be made for all Shares then being purchased.
(C) The Company shall not be obligated to issue any Shares
unless and until:
(I) if the class of Shares at the time is listed upon
any stock exchange, the Shares to be issued have been listed,
or authorized to be added to the list upon official notice of
issuance, upon such exchange, and
(II) in the opinion of the Company's counsel there
has been compliance with applicable law in connection with the
issuance and delivery of Shares and such issuance shall have
been approved by the Company's counsel.
Without limiting the generality of the foregoing, the Company
may require from the Participant such investment representation or
such agreement, if any, as the Company's counsel may consider
necessary in order to comply with the Securities Act of 1933 as
then in effect, and may require that the Participant agree that
any sale of the Shares will be made only in such manner as shall
be in accordance with law and that the Participant will notify the
Company of any intent to make any disposition of the Shares
whether by sale, gift or otherwise. The Participant shall take any
action reasonably requested by the Company in such connection. A
Participant shall have the rights of a stockholder only as and
when Shares have been actually issued to the Participant pursuant
to the Plan.
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<PAGE> 6
(D) If the employment of or consulting arrangement with a
Participant terminates for any reason (including termination by
reason of the fact that an entity is no longer an Affiliate) other
than the Participant's death, the Participant may thereafter
exercise the Option as provided below, except that the Committee
may terminate the unexercised portion of the Option concurrently
with or at any time following termination of the employment or
consulting arrangement (including termination of employment upon a
change of status from employee to consultant) if it shall
determine that the Participant has engaged in any activity
detrimental to the interests of the Company or an Affiliate. If
such termination is voluntary on the part of the Participant, the
Option may be exercised only within ten days after the date of
termination. If such termination is involuntary on the part of the
Participant, if an employee retires on or after normal retirement
date or if the employment or consulting relationship is terminated
by reason of permanent and total disability, the Option may be
exercised within three months after the date of termination or
retirement. For purposes of this Paragraph (D), a Participant's
employment or consulting arrangement shall not be considered
terminated (i) in the case of approved sick leave or other bona
fide leave of absence (not to exceed one year), (ii) in the case
of a transfer of employment or the consulting arrangement among
the Company and Affiliates, or (iii) by virtue of a change of
status from employee to consultant or from consultant to employee,
except as provided above.
(E) If a Participant dies at a time when entitled to exercise
an Option, then at any time or times within one year after death
such Option may be exercised, as to all or any of the Shares which
the Participant was entitled to purchase immediately prior to
death. The Company may decline to deliver Shares to a designated
beneficiary until it receives indemnity against claims of third
parties satisfactory to the Company. Except as so exercised such
Option shall expire at the end of such period.
(F) An Option may be exercised only if and to the extent such
Option was exercisable at the date of termination of employment or
the consulting arrangement, and an Option may not be exercised at
a time when the Option would not have been exercisable had the
employment or consulting arrangement continued.
(iii) Restoration Options. The Committee may grant a Participant
the right to receive a restoration Option with respect to an Option or
any other stock option granted by the Company. Unless the Committee
shall otherwise determine, a restoration Option shall provide that the
underlying option must be exercised while the Participant is an
employee of or consultant to the Company or an Affiliate and the number
of Shares which are subject to a restoration Option shall not exceed
the number of whole Shares exchanged in payment for the exercise of the
original option.
(b) Stock Appreciation Rights. The Committee is authorized to grant Stock
Appreciation Rights to Participants. Subject to the terms of the Plan, a Stock
Appreciation Right granted under the Plan shall confer on the holder thereof a
right to receive, upon exercise thereof, the excess of (i) the fair market value
of one Share on the date of exercise or, if the Committee shall so determine in
the case of any such right other than one related to any Incentive Stock Option,
at any time during a specified period before or after the date of exercise over
(ii) the grant price of the right as specified by the Committee. Subject to the
terms of the Plan, the Committee shall determine the grant price, term, methods
of exercise and settlement and any other terms and conditions of any Stock
Appreciation Right and may impose such conditions or restrictions on the
exercise of any Stock Appreciation Right as it may deem appropriate.
(c) Restricted Stock and Restricted Stock Units.
(i) Issuance. The Committee is authorized to grant to Participants
Awards of Restricted Stock, which shall consist of Shares, and
Restricted Stock Units which shall give the Participant the right to
receive cash, other securities, other Awards or other property, in each
case subject to the termination of the Restricted Period determined by
the Committee.
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(ii) Restrictions. The Restricted Period may differ among
Participants and may have different expiration dates with respect to
portions of Shares covered by the same Award. Subject to the terms of
the Plan, Awards of Restricted Stock and Restricted Stock Units shall
have such restrictions as the Committee may impose (including, without
limitation, limitations on the right to vote Restricted Stock or the
right to receive any dividend or other right or property), which
restrictions may lapse separately or in combination at such time or
times, in installments or otherwise. Unless the Committee shall
otherwise determine, any Shares or other securities distributed with
respect to Restricted Stock or which a Participant is otherwise
entitled to receive by reason of such Shares shall be subject to the
restrictions contained in the applicable Award Agreement. Subject to
the aforementioned restrictions and the provisions of the Plan,
Participants shall have all of the rights of a stockholder with respect
to Shares of Restricted Stock.
(iii) Registration. Restricted Stock granted under the Plan may be
evidenced in such manner as the Committee may deem appropriate,
including, without limitation, book-entry registration or issuance of
stock certificates.
(iv) Forfeiture. Except as otherwise determined by the Committee:
(A) If the employment of or consulting arrangement with a
Participant terminates for any reason (including termination by
reason of the fact that any entity is no longer an Affiliate),
other than the Participant's death or permanent and total
disability or, in the case of an employee, retirement on or after
normal retirement date, all Shares of Restricted Stock theretofore
awarded to the Participant which are still subject to restrictions
shall upon such termination of employment or the consulting
relationship be forfeited and transferred back to the Company.
Notwithstanding the foregoing or Paragraph (C) below, if a
Participant continues to hold an Award of Restricted Stock
following termination of the employment or consulting arrangement
(including retirement and termination of employment upon a change
of status from employee to consultant), the Shares of Restricted
Stock which remain subject to restrictions shall nonetheless be
forfeited and transferred back to the Company if the Committee at
any time thereafter determines that the Participant has engaged in
any activity detrimental to the interests of the Company or an
Affiliate. For purposes of this Paragraph (A), a Participant's
employment or consulting arrangement shall not be considered
terminated (i) in the case of approved sick leave or other bona
fide leave of absence (not to exceed one year), (ii) in the case
of a transfer of employment or the consulting arrangement among
the Company and Affiliates, or (iii) by virtue of a change of
status from employee to consultant or from consultant to employee,
except as provided above.
(B) If a Participant ceases to be employed or retained by the
Company or an Affiliate by reason of death or permanent and total
disability or if following retirement a Participant continues to
have rights under an Award of Restricted Stock and thereafter
dies, the restrictions contained in the Award shall lapse with
respect to such Restricted Stock.
(C) If an employee ceases to be employed by the Company or an
Affiliate by reason of retirement on or after normal retirement
date, the restrictions contained in the Award of Restricted Stock
shall continue to lapse in the same manner as though employment
had not terminated.
(D) At the expiration of the Restricted Period as to Shares
covered by an Award of Restricted Stock, the Company shall deliver
the Shares as to which the Restricted Period has expired, as
follows:
(1) if an assignment to a trust has been made in
accordance with Section 6(g)(iv)(B)(2)(c), to such trust; or
(2) if the Restricted Period has expired by reason of
death and a beneficiary has been designated in form approved
by the Company, to the beneficiary so designated; or
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(3) in all other cases, to the Participant or the legal
representative of the Participant's estate.
(d) Performance Awards. The Committee is authorized to grant Performance
Awards to Participants. Subject to the terms of the Plan, a Performance Award
granted under the Plan (i) may be denominated or payable in cash, Shares
(including, without limitation, Restricted Stock), other securities, other
Awards, or other property and (ii) shall confer on the holder thereof rights
valued as determined by the Committee and payable to, or exercisable by, the
holder of the Performance Award, in whole or in part, upon the achievement of
such performance goals during such performance periods as the Committee shall
establish. Subject to the terms of the Plan, the performance goals to be
achieved during any performance period, the length of any performance period,
the amount of any Performance Award granted, the amount of any payment or
transfer to be made pursuant to any Performance Award and other terms and
conditions shall be determined by the Committee.
(e) Dividend Equivalents. The Committee is authorized to grant to
Participants Awards under which the holders thereof shall be entitled to receive
payments equivalent to dividends or interest with respect to a number of Shares
determined by the Committee, and the Committee may provide that such amounts (if
any) shall be deemed to have been reinvested in additional Shares or otherwise
reinvested. Subject to the terms of the Plan, such Awards may have such terms
and conditions as the Committee shall determine.
(f) Other Stock-Based Awards. The Committee is authorized to grant to
Participants such other Awards that are denominated or payable in, valued in
whole or in part by reference to or otherwise based on or related to Shares
(including, without limitation, securities convertible into Shares), as are
deemed by the Committee to be consistent with the purposes of the Plan,
provided, however, that such grants to persons who are subject to Section 16
must comply with the provisions of Rule 16b-3. Subject to the terms of the Plan,
the Committee shall determine the terms and conditions of such Awards. Shares or
other securities delivered pursuant to a purchase right granted under this
Section 6(f) shall be purchased for such consideration, which may be paid by
such method or methods and in such form or forms, including, without limitation,
cash, Shares, other securities, other Awards or other property or any
combination thereof, as the Committee shall determine.
(g) General.
(i) No Cash Consideration for Awards. Awards may be granted for no cash
consideration or for such minimal cash consideration as may be required by
applicable law.
(ii) Awards May Be Granted Separately or Together. Awards may, in the
discretion of the Committee, be granted either alone or in addition to, in
tandem with or in substitution for any other Award or any award granted
under any other plan of the Company or any Affiliate. Awards granted in
addition to or in tandem with other Awards or in addition to or in tandem
with awards granted under another plan of the Company or any Affiliate, may
be granted either at the same time as or at a different time from the grant
of such other Awards or awards.
(iii) Forms of Payment Under Awards. Subject to the terms of the Plan
and of any applicable Award Agreement, payments or transfers to be made by
the Company or an Affiliate upon the grant, exercise, or payment of an
Award may be made in such form or forms as the Committee shall determine,
including, without limitation, cash, Shares, other securities, other
Awards, or other property, or any combination thereof, and may be made in a
single payment or transfer, in installments, or on a deferred basis, in
each case in accordance with rules and procedures established by the
Committee. Such rules and procedures may include, without limitation,
provisions for the payment or crediting of reasonable interest on
installment or deferred payments or the grant or crediting of Dividend
Equivalents in respect of installment or deferred payments.
(iv) Limits on Transfer of Awards.
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(A) Except as the Committee may otherwise determine, no Award
or right under any Award may be sold, encumbered, pledged,
alienated, attached, assigned or transferred in any manner and any
attempt to do any of the foregoing shall be void and unenforceable
against the Company.
(B) Notwithstanding the provisions of Paragraph (A) above:
(1) An Option may be transferred:
(a) to a beneficiary designated by the Participant in
writing on a form approved by the Committee;
(b) by will or the applicable laws of descent and
distribution to the personal representative, executor or
administrator of the Participant's estate; or
(c) to a revocable grantor trust established by the
Participant for the sole benefit of the Participant during
the Participant's life, and under the terms of which the
Participant is and remains the sole trustee until death or
physical or mental incapacity. Such assignment shall be
effected by a written instrument in form and content
satisfactory to the Committee, and the Participant shall
deliver to the Committee a true copy of the agreement or
other document evidencing such trust. If in the judgment
of the Committee the trust to which a Participant may
attempt to assign rights under such an Award does not meet
the criteria of a trust to which an assignment is
permitted by the terms hereof, or if after assignment,
because of amendment, by force of law or any other reason
such trust no longer meets such criteria, such attempted
assignment shall be void and may be disregarded by the
Committee and the Company and all rights to any such
Options shall revert to and remain solely in the
Participant. Notwithstanding a qualified assignment, the
Participant, and not the trust to which rights under such
an Option may be as signed, for the purpose of determining
compensation arising by reason of the Option shall
continue to be considered an employee or consultant, as
the case may be, of the Company or an Affiliate, but such
trust and the Participant shall be bound by all of the
terms and conditions of the Award Agreement and this Plan.
Shares issued in the name of and delivered to such trust
shall be conclusively considered issuance and delivery to
the Participant.
(2) A Participant may assign or transfer rights under an
Award of Restricted Stock or Restricted Stock Units:
(a) to a beneficiary designated by the Participant in
writing on a form approved by the Committee;
(b) by will or the applicable laws of descent and
distribution to the personal representative, executor or
administrator of the Participant's estate; or
(c) to a revocable grantor trust established by the
Participant for the sole benefit of the Participant during
the Participant's life, and under the terms of which the
Participant is and remains the sole trustee until death or
physical or mental incapacity. Such assignment shall be
effected by a written instrument in form and content
satisfactory to the Committee, and the Participant shall
deliver to the Committee a true copy of the agreement or
other document evidencing such trust. If in the judgment of
the Committee the trust to which a Participant may attempt to
assign rights under such an Award does not meet the criteria
of a trust to which an assignment is permitted by the terms
hereof, or if after assignment, because of amendment, by
force of law or any other reason such trust no longer meets
such criteria, such attempted assignment shall be void and
may be disregarded by the Committee and the Company and all
rights to any such Awards shall revert to and remain solely
in the Participant. Notwithstanding a qualified assignment,
the Participant, and not the trust
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<PAGE> 10
to which rights under such an Award may be assigned, for the
purpose of determining compensation arising by reason of the
Award shall continue to be considered an employee or
consultant, as the case may be, of the Company or an
Affiliate, but such trust and the Participant shall be bound
by all of the terms and conditions of the Award Agreement and
this Plan. Shares issued in the name of and delivered to such
trust shall be conclusively considered issuance and delivery
to the Participant.
(3) The Committee shall not permit directors or officers of
the Company for purposes of Section 16 to transfer or assign
Awards except as permitted under Rule 16b-3.
(C) The Committee, the Company and its officers, agents and
employees may rely upon any beneficiary designation, assignment or
other instrument of transfer, copies of trust agreements and any other
documents delivered to them by or on behalf of the Participant which
they believe genuine and any action taken by them in reliance thereon
shall be conclusive and binding upon the Participant, the personal
representatives of the Participant's estate and all persons asserting a
claim based on an Award. The delivery by a Participant of a beneficiary
designation, or an assignment of rights under an Award as permitted
hereunder, shall constitute the Participant's irrevocable undertaking
to hold the Committee, the Company and its officers, agents and
employees harmless against claims, including any cost or expense
incurred in defending against claims, of any person (including the
Participant) which may be asserted or alleged to be based on an Award
subject to a beneficiary designation or an assignment. In addition, the
Company may decline to deliver Shares to a beneficiary until it
receives indemnity against claims of third parties satisfactory to the
Company.
(v) Share Certificates. All certificates for Shares or other securities
delivered under the Plan pursuant to any Award or the exercise thereof shall be
subject to such stop transfer orders and other restrictions as the Committee may
deem advisable under the Plan or the rules, regulations and other requirements
of the Securities and Exchange Commission, any stock exchange upon which such
Shares or other securities are then listed and any applicable Federal or state
securities laws, and the Committee may cause a legend or legends to be put on
any such certificates to make appropriate reference to such restrictions.
(vi) Change in Control. (A) Notwithstanding any of the provisions of this
Plan or instruments evidencing Awards granted hereunder, upon a Change in
Control of the Company (as hereinafter defined) the vesting of all rights of
Participants under outstanding Awards shall be accelerated and all restrictions
thereon shall terminate in order that Participants may fully realize the
benefits thereunder. Such acceleration shall include, without limitation, the
immediate exercisability in full of all Options and the termination of
restrictions on Restricted Stock and Restricted Stock Units. Further, in
addition to the Committee's authority set forth in Section 4(c), the Committee,
as constituted before such Change in Control, is authorized, and has sole
discretion, as to any Award, either at the time such Award is made hereunder or
any time thereafter, to take any one or more of the following actions: (i)
provide for the purchase of any such Award, upon the Participant's request, for
an amount of cash equal to the amount that could have been attained upon the
exercise of such Award or realization of the Participant's rights had such Award
been currently exercisable or payable; (ii) make such adjustment to any such
Award then outstanding as the Committee deems appropriate to reflect such Change
in Control; and (iii) cause any such Award then outstanding to be assumed, or
new rights substituted therefor, by the acquiring or surviving corporation after
such Change in Control.
(B) With respect to any Award granted hereunder prior to December
6, 1995, a Change in Control shall occur if:
(1) any "person" or "group of persons" as such terms are used
in Sections 13(d) and 14(d) of the Exchange Act, other than
pursuant to a transaction or agreement previously approved by the
Board of Directors of the Company, directly or indirectly
purchases or otherwise becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act) or has the right to acquire
such beneficial ownership
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<PAGE> 11
(whether or not such right is exercisable immediately, with the
passage of time, or subject to any condition) of voting securities
representing 25 percent or more of the combined voting power of
all outstanding voting securities of the Company; or
(2) during any period of twenty-four consecutive calendar
months, the individuals who at the beginning of such period
constitute the Company's Board of Directors, and any new directors
whose election by such Board or nomination for election by
stockholders was approved by a vote of at least two-thirds of the
members of such Board who were either directors on such Board at
the beginning of the period or whose election or nomination for
election as directors was previously so approved, for any reason
cease to constitute at least a majority of the members thereof.
(C) Notwithstanding the provisions of subparagraph (B), with
respect to Awards granted hereunder on or after December 6, 1995, a
Change in Control shall occur only if the event described in this
subparagraph (C) shall have occurred. With respect to any other Award
granted prior thereto, a Change in Control shall occur if any of the
events described in subparagraphs (B) or (C) shall have occurred,
unless the holder of any such Award shall have consented to the
application of this subparagraph (C) in lieu of the foregoing
subparagraph (B). A Change in Control for purposes of this subparagraph
(C) shall occur if, during any period of twenty-four consecutive
calendar months, the individuals who at the beginning of such period
constitute the Company's Board of Directors, and any new directors
(other than Excluded Directors, as hereinafter defined), whose election
by such Board or nomination for election by stockholders was approved
by a vote of at least two-thirds of the members of such Board who were
either directors on such Board at the beginning of the period or whose
election or nomination for election as directors was previously so
approved, for any reason cease to constitute at least a majority of the
members thereof. For purposes hereof, "Excluded Directors" are
directors whose election by the Board or approval by the Board for
stockholder election occurred within one year of any "person" or "group
of persons", as such terms are used in Sections 13(d) and 14(d) of the
Exchange Act, commencing a tender offer for, or becoming the beneficial
owner of, voting securities representing 25 percent or more of the
combined voting power of all outstanding voting securities of the
Company, other than pursuant to a tender offer approved by the Board
prior to its commencement or pursuant to stock acquisitions approved by
the Board prior to their representing 25 percent or more of such
combined voting power.
(D) (1) In the event that subsequent to a Change in Control it is
determined that any payment or distribution by the Company to or for
the benefit of a Participant, whether paid or payable or distributed or
distributable pursuant to the terms of this Plan or otherwise, other
than any payment pursuant to this subparagraph (D) (a "Payment"), would
be subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then such Participant
shall be entitled to receive from the Company, within 15 days following
the determination described in (2) below, an additional payment
("Excise Tax Adjustment Payment") in an amount such that after payment
by such Participant of all applicable Federal, state and local taxes
(computed at the maximum marginal rates and including any interest or
penalties imposed with respect to such taxes), including any Excise
Tax, imposed upon the Excise Tax Adjustment Payment, such Participant
retains an amount of the Excise Tax Adjustment Payment equal to the
Excise Tax imposed upon the Payments.
(2) All determinations required to be made under this Section
6(g)(vi)(D), including whether an Excise Tax Adjustment Payment is
required and the amount of such Excise Tax Adjustment Payment, shall be
made by PricewaterhouseCoopers LLP, or such other national accounting
firm as the Company, or, subsequent to a Change in Control, the Company
and the Participant jointly, may designate, for purposes of the Excise
Tax, which shall provide detailed supporting calculations to the
Company and the affected Participant within 15 business days of the
date of the applicable Payment. Except as hereinafter provided, any
determination by PricewaterhouseCoopers LLP, or such other national
accounting firm, shall be binding upon the Company and the Participant.
As a result of the uncertainty in the application of Section 4999 of
11
<PAGE> 12
the Code that may exist at the time of the initial determination
hereunder, it is possible that (x) certain Excise Tax Adjustment
Payments will not have been made by the Company which should have been
made (an "Underpayment"), or (y) certain Excise Tax Adjustment Payments
will have been made which should not have been made (an "Overpayment"),
consistent with the calculations required to be made hereunder. In the
event of an Underpayment, such Underpayment shall be promptly paid by
the Company to or for the benefit of the affected Participant. In the
event that the Participant discovers that an Overpayment shall have
occurred, the amount thereof shall be promptly repaid to the Company.
(3) This Section 6(g)(vi)(D) shall not apply to any Award (x)
that was granted prior to February 17, 1993 and (y) the holder of which
is an executive officer of the Company, as determined under the
Exchange Act.
(vii) Cash Settlement. Notwithstanding any provision of this Plan or of any
Award Agreement to the contrary, any Award outstanding hereunder may at any time
be cancelled in the Committee's sole discretion upon payment of the value of
such Award to the holder thereof in cash or in another Award hereunder, such
value to be determined by the Committee in its sole discretion.
SECTION 7. AMENDMENT AND TERMINATION
Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:
(a) Amendments to the Plan. The Board of Directors of the Company may amend
the Plan and the Board of Directors or the Committee may amend any outstanding
Award; provided, however, that (i) no Plan amendment shall be effective until
approved by stockholders of the Company insofar as stockholder approval thereof
is required in order for the Plan to continue to satisfy the conditions of Rule
16b-3, and (ii) without the consent of affected Participants no amendment of the
Plan or of any Award may impair the rights of Participants under outstanding
Awards, and (iii) no Option may be amended to reduce its initial exercise price
other than in connection with an event described in Section 4(c) hereof.
(b) Waivers. The Committee may waive any conditions or rights under any
Award theretofore granted, prospectively or retroactively, without the consent
of any Participant.
(c) Adjustments of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee shall be authorized to make adjustments in
the terms and conditions of, and the criteria included in, Awards in recognition
of unusual or nonrecurring events (including, without limitation, the events
described in Section 4(c) hereof) affecting the Company, any Affiliate, or the
financial statements of the Company or any Affiliate, or of changes in
applicable laws, regulations, or accounting principles, whenever the Committee
determines that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits to be made available under the
Plan.
(d) Correction of Defects, Omissions, and Inconsistencies. The Committee
may correct any defect, supply any omission or reconcile any inconsistency in
the Plan or any Award in the manner and to the extent it shall deem desirable to
effectuate the Plan.
SECTION 8. GENERAL PROVISIONS
(a) No Rights to Awards. No Participant or other person shall have any
claim to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Participants or holders or beneficiaries of Awards
under the Plan. The terms and conditions of Awards of the same type and the
determination of the Committee to grant a waiver or modification of any Award
and the terms and conditions thereof need not be the same with respect to each
Participant.
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<PAGE> 13
(b) Withholding. The Company or any Affiliate shall be authorized to
withhold from any Award granted or any payment due or transfer made under any
Award or under the Plan the amount (in cash, Shares, other securities, other
Awards or other property) of withholding taxes due in respect of an Award, its
exercise or any payment or transfer under such Award or under the Plan and to
take such other action as may be necessary in the opinion of the Company or
Affiliate to satisfy all obligations for the payment of such taxes.
(c) No Limit on Other Compensation Arrangements. Nothing contained in the
Plan shall prevent the Company or any Affiliate from adopting or continuing in
effect other or additional compensation arrangements, including the grant of
options and other stock-based awards, and such arrangements may be either
generally applicable or applicable only in specific cases.
(d) No Right to Employment. The grant of an Award shall not be construed as
giving a Participant the right to be retained in the employ of the Company or
any Affiliate. Further, the Company or an Affiliate may at any time dismiss a
Participant from employment, free from any liability, or any claim under the
Plan, unless otherwise expressly provided in the Plan or in any Award Agreement
or other written agreement with the Participant.
(e) Governing Law. The validity, construction and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of Michigan and applicable Federal law.
(f) Severability. If any provision of the Plan or any Award is or becomes
or is deemed to be invalid, illegal or unenforceable in any jurisdiction or as
to any person or Award, or would disqualify the Plan or any Award under any law
deemed applicable by the Committee, such provision shall be construed or deemed
amended to conform to applicable laws, or if it cannot be so construed or deemed
amended without, in the determination of the Committee, materially altering the
intent of the Plan or the Award, such provision shall be stricken as to such
jurisdiction, person or Award, and the remainder of the Plan and any such Award
shall remain in full force and effect.
(g) No Trust or Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any other
person. To the extent that any person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Award, such right shall be no
greater than the right of any unsecured general creditor of the Company or any
Affiliate.
(h) No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine whether
cash, other securities, or other property shall be paid or transferred in lieu
of any fractional Shares, or whether such fractional Shares or any rights
thereto shall be cancelled, terminated or otherwise eliminated.
(i) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.
SECTION 9. EFFECTIVE DATE OF THE PLAN
The Plan shall be effective as of the date of its approval by the Company's
stockholders.
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<PAGE> 1
EXHIBIT 10.m
MASCO CORPORATION
1988 STOCK OPTION PLAN
(Amended and Restated September 22, 1999)
ARTICLE I. PURPOSE
The purpose of the 1988 Stock Option Plan (the "Plan") is to secure for
Masco Corporation (the "Company") and its stockholders the benefits inherent in
stock ownership by selected key employees of and consultants to the Company and
its subsidiaries and affiliated companies who in the judgment of the committee
responsible for the administration of the Plan are largely responsible for the
Company's growth and success. The Plan is designed to accomplish this purpose by
offering such employees and consultants an opportunity to purchase shares of the
Common Stock of the Company. For purposes of the Plan a "subsidiary" is any
corporation in which the Company owns, directly or indirectly, stock possessing
more than fifty percent of the total combined voting power of all classes of
stock, and an "affiliated company" is any other corporation, at least twenty
percent of the total combined voting power of all classes of stock of which is
owned by the Company or by one or more other corporations in a chain of
corporations, at least twenty percent of the stock of each of which is held by
the Company or a subsidiary or another corporation within such chain.
ARTICLE II. ADMINISTRATION
The Plan shall be administered by a committee (the "Committee") of
three or more of the Company's directors to be appointed by the Board of
Directors. Members of the Committee shall be "disinterested persons" as such
term is defined in Rule 16b-3(d) under the Securities Exchange Act of 1934 (the
"Exchange Act") or any rule which modifies, amends or replaces Rule 16b-3(d).
The Committee shall have authority, consistent with the Plan:
(a) to determine which key employees of and consultants to the
Company, its subsidiaries and affiliated companies shall be granted
options;
(b) to determine the time or times when options shall be
granted and the number of shares of Common Stock subject to each
option;
(c) to determine the option price of the stock subject to each
option and the method of payment of such price;
(d) to determine the time or times when each option becomes
exercisable, limitations on exercise, and the duration of the exercise
period;
(e) to prescribe the form or forms of the instruments
evidencing options granted under the Plan and of any other instruments
required under the Plan, and to change such forms from time to time;
<PAGE> 2
(f) to designate options granted to key employees of the
Company or its subsidiaries under the Plan as "incentive stock options"
("ISOs"), as such terms are defined in the Internal Revenue Code of
1986;
(g) to adopt, amend and rescind rules and regulations for the
administration of the Plan and options and for its own acts and
proceedings; and
(h) to decide all questions and settle all controversies and
disputes which may arise in connection with the Plan.
All decisions, determinations and interpretations of the Committee
shall be conclusive and binding on all parties concerned.
ARTICLE III. PARTICIPANTS
Key employees of and consultants to the Company, its subsidiaries and
affiliated companies, including officers of the Company (who may also be
directors, but excluding members of the Committee, any person who serves only as
a director of the Company and any consultant to the Company or any of its
subsidiaries or affiliated companies who is also a director of the Company or
who is not rendering services pursuant to a written agreement with the
corporation in question), as may be selected from time to time by the Committee
in its discretion, are eligible to receive options under the Plan. The grant of
an option to an employee or consultant shall not entitle such individual to
other grants or options, nor shall such grant disqualify such individual from
further participation.
ARTICLE IV. LIMITATIONS
No options shall be granted under the Plan after December 31, 1998, but
options theretofore granted may extend beyond that date. Subject to adjustment
as provided in Article IX, the number of shares of Common Stock of the Company
which may be issued under the Plan shall not exceed 8,000,000; provided,
however, that such number of shares shall be reduced by the number of shares of
the Company's Common Stock awarded under the Company's 1988 Restricted Stock
Incentive Plan (other than shares awarded under such plan which are later
forfeited to the Company). To the extent that any option granted under the Plan
shall expire or terminate unexercised or for any reason become unexercisable,
any stock theretofore subject to such expired or terminated option shall
thereafter be available for further grants under the Plan. If an option granted
under the Plan shall be accepted for surrender pursuant to Article VIII, any
stock subject to such option shall not thereafter be available for further
grants.
Notwithstanding any provision to the contrary in the Plan, no option
may be designated an ISO unless all of the following conditions are satisfied:
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<PAGE> 3
(a) Such option must be granted on or prior to April 1, 1998,
and such option by its terms must not be exercisable after the
expiration of ten years from the date such option is granted;
(b) Either (i) the employee to whom such option is granted
does not, determined at the time such option is granted, own capital
stock representing more than ten percent of the voting power of all
classes of stock of the Company, its parent or any of its subsidiaries,
or (ii) the option price is at least 110 percent of the fair market
value, determined at the time such option is granted, of the stock
subject to such option and such option by its terms is not exercisable
more than five years from the date it is granted; and
(c) The aggregate fair market value of the Common Stock
subject to such option plus the aggregate fair market value of Common
Stock subject to ISOs previously or concurrently granted to the same
employee exercisable in the same calendar year (all determined at the
respective dates of grant of such options) must not exceed $100,000.
ARTICLE V. STOCK TO BE ISSUED
The stock as to which options may be granted is the Company's Common
Stock, $1 par value. Such stock may be authorized but unissued shares or shares
of Common Stock reacquired by the Company, including but not limited to shares
purchased on the open market. The Board of Directors and the officers of the
Company shall take any appropriate action required for such issuance.
ARTICLE VI. TERMS AND CONDITIONS OF OPTIONS
All options granted under the Plan shall be subject to the following
terms and conditions (except as otherwise provided in Article VII) and to such
other terms and conditions as the Committee shall deem appropriate.
(a) Option Price. Each option shall have such per share option price as
the Committee may determine, but not less than the fair market value of Common
Stock of the Company on the date the option is granted.
(b) Term of Options. The term of an option shall not exceed eleven
years from the date of grant. The date of grant shall be the date on which the
option is awarded by the Committee.
(c) Exercise of Options.
(i) Each option shall be made exercisable not less than six
months from the date of grant and at such time or times, whether or not
in installments, as the Committee shall prescribe at the time the
option is granted.
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<PAGE> 4
(ii) A person electing to exercise an option shall give
written notice to the Company, as may be specified by the Committee, of
exercise of the option and the number of shares of stock elected for
exercise, such notice to be accompanied by such instruments or
documents as may be required by the Committee, and shall tender the
purchase price of the stock elected for exercise unless otherwise
directed by the Committee.
(iii) (A) Notwithstanding any of the provisions of this Plan
or instruments evidencing options granted hereunder, in the case of a
Change in Control of the Company, each option then outstanding shall
immediately become exercisable in full. A Change in Control shall occur
if any of the events described below in subparagraphs (1), (2) or (3)
shall have occurred, unless the holder of any such option shall have
consented to the application of subparagraph (3) in lieu of
subparagraphs (1) and (2):
(1) any "person" or "group of persons" as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act other
than pursuant to a transaction or agreement previously
approved by the Board of Directors directly or indirectly
purchases or otherwise becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act) or has the right
to acquire such beneficial ownership (whether or not such
right is exercisable immediately, with the passage of time, or
subject to any condition) of voting securities representing
25% or more of the combined voting power of all outstanding
voting securities of the Company;
(2) during any period of twenty-four consecutive calendar
months, the individuals who at the beginning of such period
constitute the Company's Board of Directors, and any new
directors whose election by such Board or nomination for
election by stockholders was approved by a vote of at least
two-thirds of the members of such Board who were either
directors on such Board at the beginning of the period or
whose election or nomination for election as directors was
previously so approved, for any reason cease to constitute at
least a majority of the members thereof; or
(3) during any period of twenty-four consecutive calendar
months, the individuals who at the beginning of such period
constitute the Company's Board of Directors, and any new
directors (other than Excluded Directors, as hereinafter
defined), whose election by such Board or nomination for
election by stockholders was approved by a vote of at least
two-thirds of the members of such Board who were either
directors on such Board at the beginning of the period or
whose election or nomination for election as directors was
previously so approved, for any reason cease to constitute at
least a majority of the members thereof. For purposes hereof,
"Excluded Directors" are directors whose election by the Board
or approval by the Board for stockholder election occurred
within one year of any "person" or "group of persons", as such
terms are used in Sections 13(d) and 14(d) of the Exchange
Act, commencing a tender offer for, or becoming the beneficial
owner of, voting securities representing 25 percent or more of
the combined voting power of all outstanding voting securities
of the Company, other than pursuant to a tender offer approved
by the Board prior
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<PAGE> 5
to its commencement or pursuant to stock acquisitions approved
by the Board prior to their representing 25 percent or more of
such combined voting power.
(B)(1) In the event that subsequent to a Change in Control it
is determined that any payment or distribution by the Company to or for
the benefit of a participant, whether paid or payable or distributed or
distributable pursuant to the terms of this Plan or otherwise, other
than any payment pursuant to this subparagraph (B) (a "Payment"), would
be subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended from time to time ("Code"), or any
interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then such participant
shall be entitled to receive from the Company, within 15 days following
the determination described in (2) below, an additional payment
("Excise Tax Adjustment Payment") in an amount such that after payment
by such participant of all applicable Federal, state and local taxes
(computed at the maximum marginal rates and including any interest or
penalties imposed with respect to such taxes), including any Excise
Tax, imposed upon the Excise Tax Adjustment Payment, such participant
retains an amount of the Excise Tax Adjustment Payment equal to the
Excise Tax imposed upon the Payments.
(2) All determinations required to be made under this Article
VI(c)(iii)(B), including whether an Excise Tax Adjustment Payment is
required and the amount of such Excise Tax Adjustment Payment, shall be
made by PricewaterhouseCoopers LLP, or such other national accounting
firm as the Company, or, subsequent to a Change in Control, the Company
and the participant jointly, may designate, for purposes of the Excise
Tax, which shall provide detailed supporting calculations to the
Company and the affected participant within 15 business days of the
date of the applicable Payment. Except as hereinafter provided, any
determination by PricewaterhouseCoopers LLP, or such other national
accounting firm, shall be binding upon the Company and the participant.
As a result of the uncertainty in the application of Section 4999 of
the Code that may exist at the time of the initial determination
hereunder, it is possible that (x) certain Excise Tax Adjustment
Payments will not have been made by the Company which should have been
made (an "Underpayment"), or (y) certain Excise Tax Adjustment Payments
will have been made which should not have been made (an "Overpayment"),
consistent with the calculations required to be made hereunder. In the
event of an Underpayment, such Underpayment shall be promptly paid by
the Company to or for the benefit of the affected participant. In the
event that the participant discovers that an Overpayment shall have
occurred, the amount thereof shall be promptly repaid to the Company.
(3) This Article VI(c)(iii)(B) shall not apply to any option
that was granted to an executive officer of the Company, as determined
under the Exchange Act.
(d) Payment for Issuance of Stock. At the time of exercise of any
option granted pursuant to the Plan, payment in full shall be made for all stock
then being purchased either in cash or, at the discretion of the Committee, in
whole or in part in Common Stock of the Company valued at its then fair market
value. Notwithstanding the foregoing, the Committee may in its discretion permit
the
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<PAGE> 6
issuance of stock upon such other plan of payment as it deems reasonable,
provided that the then unpaid portion of the purchase price shall be evidenced
by a promissory note at such rate of interest and upon such other terms and
conditions as the Committee shall deem appropriate. In all cases where stock is
issued for less than present full payment of the purchase price, there shall be
placed upon the certificate or certificates representing such stock a legend
setting forth the amount paid at issuance, and the amount remaining unpaid
thereon, and stating that the stock is subject to call for the remainder and may
not be transferred by the holder until the balance due thereon shall be fully
paid.
The Committee, in its discretion and in accordance with its procedures,
may permit a participant to satisfy, in whole or in part, the income tax
withholding obligations in connection with the exercise of a non-qualified stock
option by having shares withheld from the shares to be issued upon the exercise
of the option or by delivering shares of Common Stock of the Company having a
fair market value equal to the amount needed to satisfy such obligations.
(e) Conditions to Issuance. The Company shall not be obligated to issue
any stock unless and until:
(i) if the Company's outstanding Common Stock is at the time
listed upon any stock exchange, the shares of stock to be issued have
been listed, or authorized to be added to the list upon official notice
of issuance, upon such exchange, and
(ii) in the opinion of the Company's counsel there has been
compliance with applicable law in connection with the issuance and
delivery of stock and such issuance shall have been approved by the
Company's counsel.
Without limiting the generality of the foregoing, the Company may require from
the participant such investment representation or such agreement, if any, as
counsel for the Company may consider necessary in order to comply with the
Securities Act of 1933 as then in effect, and may require that the participant
agree that any sale of the stock will be made only in such manner as shall be in
accordance with law and that the participant will notify the Company of any
intent to make any disposition of the stock whether by sale, gift or otherwise.
The participant shall take any action reasonably requested by the Company in
such connection. A participant shall have the rights of a stockholder only as
and when shares of stock have been actually issued to the participant pursuant
to the Plan.
(f) Limits on Transferability of Options. No option may be transferred
by the participant other than (i) by designation of beneficiary as provided in
subsection (j) of this Article, or (ii) by will or the laws of descent and
distribution, or (iii) to a revocable grantor trust established by the
participant for the sole benefit of the participant during the participant's
life, and under the terms of which the participant is and remains the sole
trustee until death or physical or mental incapacity. Such assignment shall be
effected by a written instrument in form and content satisfactory to the
Committee, and the participant shall deliver to the Committee a true copy of the
agreement or other document evidencing such trust. If in the judgment of the
Committee the trust to which a participant may attempt to assign rights under
such an Award does not meet the criteria of a trust to which an
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assignment is permitted by the terms hereof, or if after assignment, because of
amendment, by force of law or any other reason such trust no longer meets such
criteria, such attempted assignment shall be void and may be disregarded by the
Committee and the Company and all rights to any such Options shall revert to and
remain solely in the participant. Notwithstanding a qualified assignment, the
participant, and not the trust to which rights under such an Option may be
assigned, for the purpose of determining compensation arising by reason of the
Option, shall continue to be considered an employee or consultant, as the case
may be, of the Company or an affiliated company, but such trust and the
participant shall be bound by all of the terms and conditions of this Plan and
any written agreement, contract or other instrument or document evidencing any
award granted under this Plan. Shares issued in the name of and delivered to
such trust shall be conclusively considered issuance and delivery to the
participant.
(g) Consideration for Option. Each person receiving an option must
agree to remain as an employee or consultant upon the terms of employment or the
consulting arrangement then existing (unless different terms are mutually agreed
upon) for at least ninety days from the date the option is granted.
(h) Termination of Employment. If the employment of or consulting
arrangement with a participant terminates for any reason (including termination
by reason of the fact that any corporation is no longer a subsidiary or
affiliated company) other than the participant's death or permanent and total
disability or, in the case of an employee, retirement on or after normal
retirement date, unless discharged for misconduct which in the opinion of the
Committee casts such discredit on the participant as to justify termination of
the option, the participant may thereafter exercise the option as provided
below. If such termination is voluntary on the part of the participant, the
option may be exercised only within ten days after the day of termination. If
such termination is involuntary on the part of the participant, the option may
be exercised within three months after the day of termination. Except as
expressly provided in the Plan or the option, whether the termination of
employment or consulting arrangement is voluntary or involuntary, options may be
exercised only if such options were exercisable at the date of such termination,
and an option may not be exercised at a time when the option would not have been
exercisable had the employment or consulting arrangement continued.
Notwithstanding the preceding three sentences, the Committee may extend the time
within which or alter the terms and conditions on which the participant may
exercise an option after the termination of employment or the consulting
arrangement, and if the period within which an option may be exercised has been
extended, the Committee may terminate the unexercised portion of the option if
it shall determine that the participant has engaged in any activity detrimental
to the Company's interests. For purposes of this Article VI(h), a participant's
employment or consulting arrangement shall not be considered terminated (i) in
the case of approved sick leave or other bona fide leave of absence (not to
exceed one year unless otherwise approved by the Committee), (ii) in the case of
a transfer of employment or the consulting arrangement among the Company, its
subsidiaries and affiliated companies, or (iii) by virtue of a change of status
from employee to consultant or from consultant to employee.
(i) Retirement; Disability. If prior to the expiration date of an
option the employee shall retire on or after normal retirement date or if the
employment or consulting relationship is terminated by reason of permanent and
total disability, such option may be exercised to the extent exercisable
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on the date of retirement or such termination, provided such option shall be
exercised within three months of the date of retirement or such termination.
Notwithstanding the foregoing, in its discretion the Committee may extend the
time within which or alter the terms and conditions on which an option held by a
retired or disabled option holder may be exercised, and if the period within
which an option may be exercised has been extended, the Committee may terminate
the unexercised portion of the option if it shall determine that the participant
has engaged in any activity detrimental to the Company's interests.
(j) Death. If a participant dies at a time when entitled to exercise an
option, then at any time or times within one year after death (or such further
period as the Committee may allow) such option may be exercised, as to all or
any of the shares which the participant was entitled to purchase immediately
prior to death (or such additional shares covered by the option as the Committee
may allow), by the person or persons designated in writing by the participant in
such form of beneficiary designation as may be approved by the Company, or
failing designation by the participant's personal representative, executor or
administrator or the person or persons to whom the option is transferred by will
or the applicable laws of descent and distribution. The Company may decline to
deliver shares to a designated beneficiary until it receives indemnity against
claims of third parties satisfactory to the Company. Except as so exercised such
option shall expire at the end of such period.
ARTICLE VII. REPLACEMENT OPTIONS
The Committee may grant options under the Plan on terms and conditions
differing from those provided for in Article VI where such options are granted
in substitution for options held by employees of or consultants to other
entities who concurrently become employees of or consultants to the Company or a
subsidiary or an affiliated company as the result of a merger, consolidation or
other reorganization of such other entity with the Company or a subsidiary or an
affiliated company, or the acquisition by the Company or a subsidiary or an
affiliated company of the business, property or stock of such other entity. The
Committee may direct that the replacement options be granted on such terms and
conditions as the Committee considers appropriate in the circumstances.
ARTICLE VIII. SURRENDER OF OPTIONS
The Committee may, in its discretion and upon such terms and conditions
as it deems appropriate, accept the surrender by a participant of a presently
exercisable right to purchase stock granted under an option and authorize
payment by the Company in consideration therefor of an amount equal to the
difference obtained by subtracting the option price of the stock from its fair
market value on the date of such surrender, such payment to be in cash or shares
of the Common Stock of the Company valued at fair market value on the date of
such surrender, or partly in such stock and partly in cash, provided that the
Committee determines such settlement is consistent with the purpose of the Plan.
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ARTICLE IX. CHANGES IN STOCK
The Board of Directors is authorized to make such adjustments, if any,
as it shall deem appropriate in the number and kind of shares which may be
granted under the Plan, the number and kind of shares which are subject to
options then outstanding and the purchase price of shares subject to such
outstanding options, in the event of any change in capital or shares of capital
stock, any special distribution to stockholders or any extraordinary transaction
(including a merger, consolidation or dissolution) to which the Company is a
party. The determination of the Board of Directors as to such matters shall be
conclusive and binding on all persons.
ARTICLE X. EMPLOYMENT RIGHTS
The adoption of the Plan, the grant of options hereunder and the
participation by a participant in the Plan do not confer upon any employee of or
consultant to the Company or subsidiary or an affiliated company any right to
continue the employment or consulting relationship with the Company or a
subsidiary or an affiliated company, as the case may be, nor does it in any way
impair the right of the Company or a subsidiary or an affiliated company to
terminate the employment of any of its employees or the consulting arrangement
with any of its consultants at any time, with or without cause, unless a written
employment or consulting agreement provides otherwise.
ARTICLE XI. AMENDMENTS
The Board of Directors may at any time or times amend the Plan or amend
any outstanding option or options for the purpose of satisfying the requirements
of changes in applicable laws or regulations or for any other purpose which may
at the time be permitted by law, provided that except to the extent permitted
under Article IX, without the approval of the stockholders of the Company no
amendment shall increase the maximum number of shares of stock available under
the Plan, alter the class of persons eligible to receive options under the Plan,
or without the consent of the participant void or diminish options previously
granted, nor increase or accelerate the conditions required for the exercise of
the same, except that nothing herein shall limit the Company's right under
Article VI(d) to call stock, issued for deferred payment which is evidenced by a
promissory note, where the participant is in default of the obligations of such
note.
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EXHIBIT 10.n
February 28, 1995
Dear
As you know, our company's Board of Directors has adopted a Plan
whereby supplemental retirement and other benefits, in addition to those
provided under the Company's pension and other benefit plans, will be made
available to those Company and subsidiary executives as may be designated from
time to time by the company's Chief Executive Officer. You have been previously
designated as a participant in the Plan by a letter agreement signed by you and
dated December 10, 1992. This agreement amends and replaces in its entirety your
previously signed letter agreement and describes in full your benefits pursuant
to the Plan and all of the Company's obligations to you and yours to the Company
under the Plan. These benefits as described below are contractual obligations of
the Company.
For the purposes of this Agreement, words and terms are defined as follows:
a. "Retirement" shall mean your termination of employment with the
Company, on or after you attain age 65. Your acting as a
consultant shall not be considered employment.
b. "Average Compensation" shall mean the aggregate of your highest
three years' total annual cash compensation paid to you by the
Company, consisting of (i) base salaries and (ii) regular year-end
cash bonuses paid with respect to the years in which such salaries
are paid, divided by three.
c. If you become Disabled, "Total Compensation" shall mean your
annual base salary rate in the year in which you become Disabled
plus the regular year-end cash bonus paid to you for the year
immediately prior thereto.
d. "Surviving Spouse" shall be the person to whom you shall be
legally married (under the law of the jurisdiction of your
permanent residence) at the date of (i) your Retirement or death
after attaining age 65 (if death terminated employment with the
Company) for the purposes of paragraphs 1, 2 and 3, (ii) your
death for the purposes of paragraph 5, and (iii) your Disability
for the purposes of paragraphs 6 and 7. For the purposes of
paragraphs 10a, 10e, 10f, 10g and 10h, "Surviving Spouse" shall be
any spouse entitled to survivor's benefits.
e. "Disability" and "Disabled" shall mean your being unable to
perform your duties as a Company executive by reason of your
physical or mental condition, prior to your attaining age 65,
provided that you have been employed by the Company for two
consecutive Years or more.
<PAGE> 2
f. "Company" shall mean MascoTech, Inc. or any corporation in which
MascoTech, Inc. or a subsidiary owns stock possessing at least 20%
of the total combined voting power of all classes of stock.
g. "Year" shall mean twelve full consecutive months, and "year" shall
mean a calendar year.
h. "Plan Limitation" for any year shall mean (x) for 1989, $300,000
multiplied by the Cost of Living Factor for 1988, and (y) for any
year subsequent to 1989, the Plan Limitation for the immediately
preceding year multiplied by the Cost of Living Factor for such
preceding year.
i. "Cost of Living Factor" for any year shall mean, except as
otherwise provided generally with respect to the Plan by the
Company's Board of Directors, the quotient (in no event to exceed
1.03 or to be less than .97) obtained by dividing the monthly
Consumer Price Index Number (as compiled in the Consumer Price
Index for Urban Consumers by the Bureau of Labor Statistics) for
the month of December in such year by the monthly Consumer Price
Index Number for the immediately preceding month of December.
j. A "Change in Control" shall be deemed to have occurred if, during
any period of twenty-four consecutive calendar months, the
individuals who at the beginning of such period constitute the
Company's Board of Directors, and any new directors whose election
by such Board or nomination for election by stockholders was
approved by a vote of at least two-thirds of the members of such
Board who were either directors on such Board at the beginning of
the period or whose election or nomination for election as
directors was previously so approved, for any reason cease to
constitute at least a majority of the members thereof.
1. In accordance with the Plan, upon your Retirement the Company will pay
you annually during your lifetime 60% of your Average Compensation, less: (i) a
sum equal to the annual benefit which would be payable to you upon your
Retirement if benefits payable to you under the Company funded qualified pension
plans and the defined benefit (pension) plan restoration provisions of the
Company's Retirement Benefits Restoration Plan and any similar plan were
converted to a life annuity, or if you are married when you retire, to a joint
and spouse survivor life annuity, (ii) a sum equal to the annual benefit which
would be payable to you upon Retirement if your vested accounts in the Company's
Future Service Profit Sharing Trust and the defined contribution (profit
sharing) restoration provisions of the Company's Retirement Benefits Restoration
Plan and any similar plan were converted to a life annuity, and (iii) any
retirement benefits payable to you by reason of employment by your prior
employers (excluding, however, from such deduction any portion thereof, and
earnings thereon, determined by the committee referred to in paragraph 10 to
have been contributed by you rather than your prior employers). In all cases the
amount offset pursuant to these subsections (i) and (ii) shall be determined
prior to the effect of any payments from the plans and trust referred to therein
which are authorized pursuant to a Qualified Domestic Relations Order under
ERISA.
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2. Upon your death after Retirement or while employed by the Company after
attaining age 65, your Surviving Spouse shall receive for life 75% of the annual
benefit pursuant to paragraph 1 of this Agreement which was payable to you prior
to your death (or, if death terminated employment after attaining age 65, which
would have been payable to you had your Retirement occurred immediately prior to
your death).
3. Upon your Retirement the Company will provide or purchase for you and
your spouse's benefit, or at its option reimburse you or your Surviving Spouse
for premiums paid, during your joint and several lives, such supplemental
medical insurance as the Company may deem advisable from time to time.
4. Under no circumstances (i) will any retirement benefits be paid to you or
your Surviving Spouse pursuant to this Agreement unless you were employed by the
Company or Disabled on your Retirement, or were employed by the Company at the
time of your death after attaining age 65, and (ii) will you or your Surviving
Spouse be entitled to receive retirement benefits under this Agreement if your
Retirement commences prior to your attaining age 65.
5. If while employed by the Company you die prior to your attaining age 65
leaving a Surviving Spouse, and provided you shall have been employed by the
Company for two consecutive Years or more, your Surviving Spouse shall receive
annually for life 45% of your Average Compensation, less: (i) a sum equal to the
annual benefit which would be payable to your Surviving Spouse under Company
funded qualified pension plans and the defined benefit (pension) plan
restoration provisions of the Company's Retirement Benefits Restoration Plan and
any similar plan if such benefit were converted to a life annuity, and (ii) a
sum equal to the annual payments which would be received by your Surviving
Spouse as if your spouse were designated as the beneficiary of your vested
accounts in the Company's Future Service Profit Sharing Trust and the defined
contribution (profit sharing) restoration provisions of the Company's Retirement
Benefits Restoration Plan and any similar plan and such accounts were converted
to a life annuity. In all cases the amount offset pursuant to these subsections
(i) and (ii) shall be determined prior to the effect of any payments from the
plans and trust referred to therein which are authorized pursuant to a Qualified
Domestic Relations Order under ERISA. No death benefits are payable except to
your Surviving Spouse.
6. If you shall have been employed by the Company for two Years or more and
while employed by the Company you become Disabled prior to your attaining age
65, until the earlier of your death, termination of Disability or attaining age
65 the Company will pay you an annual benefit equal to 60% of your Total
Compensation less any benefits payable to you pursuant to long-term disability
insurance or other plans the cost of which is paid by the Company. If your
Disability continues until you attain age 65, you shall be considered retired
and you shall receive retirement benefits pursuant to paragraph 1 above, based
upon your Average Compensation as of the date it is determined you became
Disabled.
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<PAGE> 4
7. If you die leaving a Surviving Spouse while receiving Disability
benefits pursuant to paragraph 6 of this Agreement, notwithstanding paragraph 4
you will be deemed to have retired on your death and your Surviving Spouse shall
receive for life 75% of the annual benefit which would have been payable to you
if you had retired on the date of your death and your benefit determined
pursuant to paragraph 1, based upon your Average Compensation as of your
becoming Disabled.
8. Notwithstanding any of the provisions of this Agreement, the maximum
retirement, disability and death benefits payable to you and your spouse
pursuant to this Agreement for any year shall in no event exceed the higher of
(A) $500,000 less those sums to be deducted from benefits pursuant to clauses
(i), (ii) and (iii) of paragraph 1, clauses (i) and (ii) of paragraph 5, or
under paragraph 6, whichever is applicable, or (B) the Plan Limitation for the
year in which such benefits were first paid, less the aggregate annual benefit
with respect to the Company's Retirement Benefits Restoration Plan (and any
future non-qualified retirement plan) to be deducted (x) under clauses (i) and
(ii) of paragraph 1, (y) under paragraph 5 should you die while employed prior
to attaining age 65 or (z) under paragraph 6 should you become disabled prior to
attaining age 65.
9. If you are eligible to receive benefits hereunder, unless otherwise
specifically agreed by the Company in writing, you will not be able to receive
benefits under any other Company sponsored non-qualified retirement plans other
than the Company's Retirement Benefits Restoration Plan.
10. We also agree upon the following:
a. The Compensation Committee of the company's Board of Directors, or
any other committee however titled which shall be vested with
authority with respect to the compensation of the company's
officers and executives, shall have the exclusive authority to
make all determinations which may be necessary in connection with
this Agreement including the date of and whether you are Disabled,
the amount of annual benefits payable to you by reason of
employment by other employers, the interpretation of this
Agreement, and all other matters or disputes arising under this
Agreement. The determinations and findings of the Compensation
Committee or such other committee of the company's Board of
Directors shall be conclusive and binding, without appeal, upon
both of us.
b. You will not during your employment or Disability, and after
Retirement or the termination of your employment, for any reason
disclose or make use of for your own or another person's benefit
under any circumstances any of the Company's Proprietary
Information. Proprietary Information shall include trade secrets,
secret processes, information concerning products, developments,
manufacturing techniques, new product or marketing plans,
inventions, research and development information or results,
sales, pricing and financial data, information relating to the
management, operations or planning of the Company and any other
information treated as confidential or proprietary.
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<PAGE> 5
c. If your employment by the Company shall terminate for any reason
whatsoever prior to your Retirement other than by reason of your
death or Disability, for a period of two years after the
termination of your employment, and if your employment shall be
terminated by reason of Retirement or any Disability during such
time as you shall receive retirement or disability benefits
pursuant to this Agreement, you agree that you will not directly
or indirectly engage in any business activities, whether as a
consultant, advisor or otherwise, in which the Company is engaged
in any geographic area in which the products or services of the
Company have been sold, distributed or provided during the five
year period prior to the date of termination of employment or
Retirement.
In addition to the foregoing and provided no "Change in Control"
has occurred, if while you are receiving retirement or other
benefits pursuant to this Agreement, in the judgment of the
committee you directly or indirectly engage in activity or act in
a manner which can be considered adverse to the interest of the
Company or any of its direct or indirect subsidiaries or
affiliated companies, the committee may terminate your rights to
any further benefits hereunder.
d. Except as may be provided to the contrary in a duly authorized
written agreement between yourself and the Company you acknowledge
that the Company has made no commitments to you of any kind with
respect to the continuation of your employment, which we expressly
agree is an employment at will, and you or the Company shall have
the unrestricted right to terminate your employment with or
without cause, at any time in your or its discretion.
e. At the Company's request, expressed through a Company officer, you
agree to provide such information with respect to matters which
may arise in connection with this Agreement as may be deemed
necessary by the Company or the Compensation or other committee,
including for example only and not in limitation, information
concerning benefits payable to you from third parties, and you
further agree to submit to such medical examinations by duly
licensed physicians as may be requested by the Company or such
committee from time to time. You also agree to direct third
parties to provide such information, and your Surviving Spouse's
cooperation in providing such information is a condition to the
receipt of survivor's benefits under this Agreement.
f. To the extent permitted by law, no interest in this Agreement or
benefits payable to you or to your Surviving Spouse shall be
subject to anticipation, or to pledge, assignment, sale or
transfer in any manner nor shall you or your Surviving Spouse have
the power in any manner to charge or encumber such interest or
benefits, nor shall such interest or benefits be liable or subject
in any manner for the liabilities of you or your Surviving
Spouse's debts, contracts, torts or other engagements of any kind.
g. No person other than you and your Surviving Spouse shall have any
rights or property interest of any kind whatsoever pursuant to
this Agreement, and neither you nor your
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<PAGE> 6
Surviving Spouse shall have any rights hereunder other than those
expressly provided in this Agreement. Upon the death of you and
your Surviving Spouse no further benefits of whatsoever kind or
nature shall accrue or be payable pursuant to this Agreement.
h. All benefits payable pursuant to this Agreement shall be paid in
installments of one-twelfth of the annual benefit, or at such
shorter intervals as may be deemed advisable by the Company in its
discretion, upon receipt of your or your Surviving Spouse's
written application, or by the applicant's personal representative
in the event of disability.
i. All benefits under this Agreement shall be payable from the
Company's general assets, which assets are subject to the claims
of general creditors, and are not set aside for your or your
Surviving Spouse's benefit.
j. This Agreement shall be governed by the laws of the State of
Michigan.
11. We have agreed that the determinations of the committee described in
paragraph 10a shall be conclusive as provided in such paragraph, but if for any
reason a claim is asserted which subverts the provisions of paragraph 10a, we
agree that, except for causes of action which may arise under paragraph 10b and
the first paragraph of paragraph 10c, arbitration shall be the sole and
exclusive remedy to resolve all disputes, claims or controversies which could be
the subject of litigation (hereafter referred to as "dispute") involving or
arising out of this Agreement. It is our mutual intention that the arbitration
award will be final and binding and that a judgment on the award may be entered
in any court of competent jurisdiction and enforcement may be had according to
its terms.
The arbitrator shall be chosen in accordance with the commercial
arbitration rules of the American Arbitration Association and the expenses of
the arbitration shall be borne equally by the parties to the dispute. The place
of the arbitration shall be the principal offices of the American Arbitration
Association in the metropolitan Detroit area.
The arbitrator's sole authority shall be to apply the clauses of this
Agreement.
We agree that the provisions of this paragraph 11, and the decision of the
arbitrator with respect to any dispute, with only the exception provided in this
paragraph 11, shall be the sole and exclusive remedy for any alleged cause of
action in any manner based upon or arising out of this Agreement. Subject to the
foregoing exception, we acknowledge that since arbitration is the exclusive
remedy, neither of us or any party claiming under this Agreement has the right
to resort to any federal, state or local court or administrative agency
concerning any matters dealt with by this Agreement and that the decision of the
arbitrator shall be a complete defense to any action or proceeding instituted in
any tribunal or agency with respect to any dispute. The arbitration provisions
contained in this paragraph shall survive the termination or expiration of this
Agreement, and shall be binding on our respective successors, personal
representatives and any other party asserting a claim based upon this Agreement.
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We further agree that any demand for arbitration must be made within one
year of the time any claim accrues which you or any person claiming hereunder
may have against the Company; unless demand is made within such period it is
forever barred.
We are pleased to be able to make this supplemental plan available to you.
Please examine the terms of this Agreement carefully and at your earliest
convenience indicate your assent to all of its terms and conditions by signing
and dating where provided below and returning a signed copy to me.
Sincerely,
MASCOTECH, INC.
By /s/ Richard A. Manoogian
-----------------------------
Richard A. Manoogian
Chief Executive Officer
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DATE:
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<PAGE> 1
EXHIBIT 10.q
MASCO CORPORATION
1997 NON-EMPLOYEE DIRECTORS STOCK PLAN
(AS AMENDED JULY 10, 1998)
SECTION 1. PURPOSE
The purpose of this Plan is to ensure that the non-employee Directors
of Masco Corporation (the "Company") have an equity interest in the Company and
thereby have a direct and long term interest in the growth and prosperity of the
Company by payment of part of their compensation in the form of common stock of
the Company.
SECTION 2. ADMINISTRATION OF THE PLAN
This Plan will be administered by the Company's Board of Directors (the
"Board"). The Board shall be authorized to interpret the Plan, to establish,
amend, and rescind any rules and regulations relating to the Plan and to make
all other determinations necessary or advisable for the administration of the
Plan. The Board's interpretation of the terms and provisions of this Plan shall
be final and conclusive. The Secretary of the Company shall be authorized to
implement the Plan in accordance with its terms and to take such actions of a
ministerial nature as shall be necessary to effectuate the intent and purposes
thereof. The validity, construction and effect of the Plan and any rules and
regulations relating to the Plan shall be determined in accordance with the laws
of the State of Michigan and applicable Federal law.
SECTION 3. ELIGIBILITY
Participation will be limited to individuals who are Eligible
Directors, as hereinafter defined. Eligible Director shall mean any Director of
the Company who is not an employee of the Company and who receives a fee for
services as a Director.
SECTION 4. SHARES SUBJECT TO THE PLAN
(a) Subject to the adjustments set forth below, the aggregate number of
shares of Company Common Stock, par value $1.00 per share ("Shares"), which may
be the subject of awards issued under the Plan shall be 1,000,000.
(b) Any Shares to be delivered under the Plan shall be made available
from newly issued Shares or from Shares reacquired by the Company, including
Shares purchased in the open market.
(c) To the extent a Stock Option award, as hereinafter defined,
terminates without having been exercised, or an award of Restricted Stock, as
hereinafter defined, is forfeited, the Shares subject to such Stock Option or
Restricted Stock award shall again be available for distribution in connection
with future awards under the Plan. Shares equal in number to the Shares
surrendered to the Company in payment of the option price or withholding taxes
(if any) relating to or arising in connection with any Restricted Stock or Stock
Option hereunder shall be added to the number of Shares then available for
future awards under clause (a) above.
(d) In the event of any merger, reorganization, consolidation,
recapitalization, stock split, stock dividend, or other change in corporate
structure affecting the Shares, the aggregate number of Shares which may be
issued under the Plan, the number of Shares subject to Stock Options to be
granted under Section 6(a) hereof and the number of Shares subject to any
outstanding award of Restricted Stock or unexercised Stock Option shall be
adjusted to avoid enhancement or diminution of the benefits intended to be made
available hereunder.
SECTION 5. DIRECTOR STOCK COMPENSATION
(a) The compensation of each Eligible Director for the five year period
beginning January 1, 1997 shall be payable in part with an award of Restricted
Stock determined as set forth below, and in part in cash. Compensation for this
purpose means annual retainer fees but does not include supplemental retainer
fees for committee positions or fees
1
<PAGE> 2
for attendance at meetings, which shall be paid in cash. The portion of
compensation payable in Restricted Stock during the five year period shall be
equal to one-half of the annual compensation paid to Eligible Directors in the
year immediately prior to the award multiplied by five, and the balance of
compensation, unless otherwise determined by the Board, shall be payable in
cash. Each award of Restricted Stock shall vest in twenty percent annual
installments (disregarding fractional shares) on January 1 of each of the five
consecutive years following the year in which the award is made. Subject to the
approval of this Plan by the Company's stockholders, each Eligible Director on
February 18, 1997 is awarded as of that date 3,470 Shares of Restricted Stock,
based on the closing price of the Shares as reported on the New York Stock
Exchange Composite Tape (the "NYSE") on February 18, 1997. Cash shall be paid to
an Eligible Director in lieu of a fractional share.
(b) Subject to the approval of this Plan by the Company's stockholders,
each Eligible Director who is first elected or appointed to the Board on or
after the date of the Company's 1997 annual meeting of stockholders shall
receive, as of the date of such election or appointment, an award of Restricted
Stock determined in accordance with Section 5(a) for the five year period
beginning on January 1 of the year in which such election or appointment
occurred; provided, however, that the price of the Shares used in determining
the number of Shares of Restricted Stock which shall be issued to such Eligible
Director shall be the closing price of the Shares as reported on the NYSE on the
date on which such Eligible Director is elected or appointed, and provided,
further, that the amount of Restricted Stock awarded to any Eligible Director
who begins serving as a Director other than at the beginning of a calendar year
shall be prorated to reflect the partial service of the initial year of the
Director's term, such proration to be effected in the initial vesting.
(c) Upon the full vesting of any award of Restricted Stock awarded
pursuant to Section 5(a) or 5(b), each affected Eligible Director shall be
eligible to receive a new award of Restricted Stock, subject to Section 4. The
number of Shares subject to such award shall be determined generally in
accordance with the provisions of Section 5(b); provided, however, that the
Board shall have sole discretion to adjust the amount of compensation then to be
paid in the form of Shares and the terms of any such award of Shares. Except as
the Board may otherwise determine, any increase or decrease in an Eligible
Director's annual compensation during the period when such Director has an
outstanding award of Restricted Stock shall be implemented by increasing or
decreasing the cash portion of such Director's compensation.
(d) Each Eligible Director shall be entitled to vote and receive
dividends on the unvested portion of his or her Restricted Stock, but will not
be able to obtain a stock certificate or sell, encumber or otherwise transfer
such Restricted Stock except in accordance with the terms of the Company's 1991
Long Term Stock Incentive Plan (the "Long Term Plan"). If an Eligible Director's
term is terminated by reason of death or permanent and total disability, the
restrictions on the Restricted Stock will lapse and such Eligible Director's
rights to the Shares will become vested on the date of such termination. If an
Eligible Director's term is terminated for any reason other than death or
permanent and total disability, the Restricted Stock that has not vested shall
be forfeited and transferred back to the Company; provided, however, that a pro
rata portion of the Restricted Stock which would have vested on January 1 of the
year following the year of the Eligible Director's termination shall vest on the
date of termination, based upon the portion of the year during which the
Eligible Director served as a Director of the Company.
SECTION 6. STOCK OPTION GRANT
(a) Subject to approval of this Plan by the Company's stockholders,
each Eligible Director on the date of such approval will be granted on such date
a stock option to purchase 8,000 Shares (the "Stock Option"). Thereafter, on the
date of each of the Company's subsequent annual stockholders meetings, each
person who is or becomes an Eligible Director on that date and whose service on
the Board will continue after such date shall be granted a Stock Option, subject
to Section 4, effective as of the date of such meeting.
(b) Stock Options granted under this Section 6 shall be non-qualified
stock options and shall have the following terms and conditions.
1. Option Price. The option price per Share shall be equal to the
closing price of the Shares as reflected on the NYSE on the date of grant (or if
there were no sales on such date, the most recent prior date on which there were
sales).
2. Term of Option. The term of the Stock Option shall be ten years
from the date of grant, subject to earlier termination in the event of
termination of service as an Eligible Director. If an Eligible Director's term
is terminated for any reason other than death at a time when such Director is
entitled to exercise an outstanding Stock Option, then
2
<PAGE> 3
at any time or times within three months after termination such Stock Option may
be exercised as to all or any of the Shares which the Eligible Director was
entitled to purchase at the date of termination. If an Eligible Director dies at
a time when such Director is entitled to exercise a Stock Option, then at any
time or times within one year after death such Stock Option may be exercised as
to all or any of the Shares which the Eligible Director was entitled to purchase
immediately prior to such Director's death. Except as so exercised, such Stock
Options shall expire at the end of such periods. That portion of the Stock
Option not exercisable at the time of such termination shall be forfeited and
transferred back to the Company on the date of such termination.
3. Exercisability. Subject to clause 2 above, each Stock Option shall
vest and become exercisable with respect to twenty percent of the underlying
Shares on each of the first five anniversaries of the date of grant, provided
that the optionee is an Eligible Director on such date.
4. Method of Exercise. A Stock Option may be exercised in whole or in
part during the period in which such Stock Option is exercisable by giving
written notice of exercise to the Company specifying the number of shares to be
purchased, accompanied by payment of the purchase price. Payment of the purchase
price shall be made in cash, by delivery of Shares, or by any combination of the
foregoing.
5. Non-Transferability. Unless otherwise provided by the terms of the
Long Term Plan or the Board, (i) Stock Options shall not be transferable by the
optionee other than by will or by the laws of descent and distribution, and (ii)
during the optionee's lifetime, all Stock Options shall be exercisable only by
the optionee or by his or her guardian or legal representative.
6. Stockholder Rights. The holder of a Stock Option shall, as such,
have none of the rights of a stockholder.
SECTION 7. GENERAL
(a) Plan Amendments. The Board may amend, suspend or discontinue the
Plan as it shall deem advisable or to conform to any change in any law or
regulation applicable thereto; provided, that the Board may not, without the
authorization and approval of the stockholders of the Company: (a) modify the
class of persons who constitute Eligible Directors as defined in the Plan; or
(b) increase the total number of Shares available under the Plan. In addition,
without the consent of affected participants, no amendment of the Plan or any
award under the Plan may impair the rights of participants under outstanding
awards.
(b) Listing and Registration. If at any time the Board shall determine,
in its discretion, that the listing, registration or qualification of the Shares
under the Plan upon any securities exchange or under any state or Federal law,
or the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting of any award
hereunder, no Shares may be delivered or disposed of unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any condition not acceptable to the Board.
(c) Award Agreements. Each award of Restricted Stock and Stock Option
granted hereunder shall be evidenced by the Eligible Director's written
agreement with the Company which shall contain such terms and conditions not
inconsistent with the provisions of the Plan as shall be determined by the Board
in its discretion.
3
<PAGE> 1
EXHIBIT 12
MASCOTECH, INC.
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
---------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
EARNINGS BEFORE INCOME TAXES AND
FIXED CHARGES:
Income from continuing
operations before income
taxes, and cumulative effect
of accounting change, net... $139,470 $144,520 $190,290 $77,220 $100,280
Deduct equity in undistributed
earnings of less-than-fifty
percent owned companies..... (9,800) (8,530) (46,030) (31,650) (29,590)
Add interest on indebtedness,
net......................... 80,660 81,280 36,650 30,350 51,500
Add amortization of debt
expense..................... 2,740 3,250 900 1,490 1,670
Estimated interest factor for
rentals..................... 3,710 3,620 2,100 6,350 7,070
-------- -------- -------- ------- --------
Earnings before income taxes
and fixed charges........... $216,780 $224,140 $183,910 $83,760 $130,930
======== ======== ======== ======= ========
FIXED CHARGES:
Interest on indebtedness,
net......................... $ 80,950 $ 81,740 $ 36,770 $30,590 $ 51,690
Amortization of debt expense... 2,740 3,250 900 1,490 1,670
Estimated interest factor for
rentals..................... 3,710 3,620 2,100 6,350 7,070
-------- -------- -------- ------- --------
Total fixed charges... 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... $ 87,400 $ 88,610 $ 50,070 $60,000 $ 82,400
======== ======== ======== ======= ========
RATIO OF EARNINGS TO FIXED
CHARGES........................ 2.5 2.5 4.6 2.2 2.2
======== ======== ======== ======= ========
RATIO OF EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED
STOCK DIVIDENDS................ 2.5 2.5 3.7 1.4 1.6
======== ======== ======== ======= ========
</TABLE>
- ---------------
(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.
<PAGE> 1
EXHIBIT 21
MASCOTECH, INC.
(A DELAWARE CORPORATION)
Subsidiaries as of January 31, 2000 *
<TABLE>
<CAPTION>
NAME JURISDICTION OF
---- INCORPORATION OR ORGANIZATION
-----------------------------
<S> <C>
Arrow Specialty Company Delaware
Cuyam Corporation Ohio
E.R. Acquisition Corp. Delaware
Gruppo Tov Sr.l (80%) Italy
K-Tech Mfg., Inc. Delaware
Kendallville Foundry, Inc. Delaware
Masco Industries International Sales, Inc. Barbados
MascoTech Europe, Inc. Delaware
MascoTech European Holdings Inc. Delaware
GLO S.p.A. Italy
MascoTech Forming Technologies - Fort Wayne, Inc. Indiana
MascoTech GmbH Germany
Gruppo Tov Sr.l. (20%) Italy
H&B Hyprotec Technology OHG Germany
Huber & Bauer GmbH (20%) Germany
Holzer GmbH & Co. Germany
Holzer Limited United Kingdom
MascoTech Sintered Components Espana S.L. Spain
Neumeyer CR spol S.r.o. Czech Republic
Neumeyer Fliesspressen GmbH Germany
MascoTech Services, Inc. Delaware
MascoTech Sintered Components Limited United Kingdom
MascoTech Sintered Components of Indiana, Inc. Delaware
MascoTech Sintered Components, Inc. Delaware
MascoTech Sintered Components Holdings, Mexico
S. de R.L. de C.V.
MascoTech Sintered Components Mexico
Services, S.de R.L. de C.V.
MascoTech Sintered Components Mexico
Mexico, S.A. de C.V.
MascoTech Tubular Products, Inc. Michigan
MASX Energy Services Group, Inc. Delaware
MASG Disposition, Inc. Michigan
NI Wheel, Incorporated Ontario
Plastic Form, Inc. Delaware
Precision Headed Products, Inc. Delaware
</TABLE>
- ----------------------
* Directly owned subsidiaries appear at the left hand margin, first tier and
second tier subsidiaries are indicated by single and double indentation,
respectively, and are listed under the names of their respective parent
companies. Unless otherwise indicated, all subsidiaries are wholly owned.
Certain of these companies may also use trade names or other assumed names in
the conduct of their business.
1
<PAGE> 2
<TABLE>
<CAPTION>
NAME JURISDICTION OF
---- INCORPORATION OR ORGANIZATION
-----------------------------
<S> <C>
TriMas Corporation Delaware
Beaumont Bolt & Gasket, Inc. Texas
Industrial Bolt & Gasket, Inc. Louisiana
Compac Corporation Delaware
Netcong Investments, Inc. New Jersey
Di-Rite Company Ohio
Draw-Tite, Inc. Delaware
Draw-Tite (Canada) Ltd. Ontario
Eskay Screw Corporation Delaware
Fulton Performance Products, Inc. Delaware
Heinrich Stolz GmbH Germany
Hitch'N Post, Inc. Delaware
K.S. Disposition, Inc. Michigan
Keo Cutters, Inc. Michigan
Lake Erie Screw Corporation Ohio
Lamons Metal Gasket Co. Delaware
Canadian Gasket & Supply Inc. Canada
Louisiana Hose & Rubber Co. Louisiana
Monogram Aerospace Fasteners, Inc. Delaware
NI Foreign Military Sales, Inc. Delaware
NI West, Inc. California
Norris Cylinder Company Delaware
Norris Environmental Services, Inc. California
Norris Industries, Inc. California
Punchcraft Company Michigan
Reese Products, Inc. Indiana
TriMas Corporation Pty. Ltd. Australia
Roof Rack Industries Pty Ltd. Australia
Reese Products of Canada Ltd. Ontario
Reska Spline Products, Inc. Michigan
Richards Micro-Tool, Inc. Delaware
Rieke Corporation Indiana
Rieke Canada Limited Canada
Rieke Corporation (S) Pte Ltd Singapore
Rieke of Indiana, Inc. Indiana
Rieke of Mexico, Inc. Delaware
Rieke de Mexico, S.A. de Mexico
C.V.
Rieke Leasing Co., Incorporated Delaware
TriMas Corporation Limited United Kingdom
The Englass Group Limited United Kingdom
The English Glass Company Limited United Kingdom
</TABLE>
- ----------------------
* Directly owned subsidiaries appear at the left hand margin, first tier and
second tier subsidiaries are indicated by single and double indentation,
respectively, and are listed under the names of their respective parent
companies. Unless otherwise indicated, all subsidiaries are wholly owned.
Certain of these companies may also use trade names or other assumed names in
the conduct of their business.
2
<PAGE> 3
<TABLE>
<CAPTION>
NAME JURISDICTION OF
---- INCORPORATION OR ORGANIZATION
-----------------------------
<S> <C>
Top Emballage S.A. France
TriMas Export, Inc. Barbados
TriMas Fasteners, Inc. Delaware
TriMas Services Corp. Delaware
W.C. McCurdy & Co. Michigan
Windfall Products, Inc. Pennsylvania
Windfall Specialty Powders, Inc. Pennsylvania
WIPCO, Inc. Delaware
Windfall do Brasil Ltda. Brazil
Windfall Foreign Sales Corp. Barbados
</TABLE>
- ----------------------
* Directly owned subsidiaries appear at the left hand margin, first tier and
second tier subsidiaries are indicated by single and double indentation,
respectively, and are listed under the names of their respective parent
companies. Unless otherwise indicated, all subsidiaries are wholly owned.
Certain of these companies may also use trade names or other assumed names in
the conduct of their business.
3
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the prospectuses
included in the registration statements of MascoTech, Inc. on Form S-3
(Registration Nos. 33-59222, 33-55837 and 333-66307) and Form S-8 (Registration
Nos. 33-30735, 33-42230, 333-30869, 333-64531 and 333-74875) of our report dated
February 25, 2000, on our audits of the consolidated financial statements and
financial statement schedule of MascoTech, Inc. and subsidiaries as of December
31, 1999 and 1998, and for each of the three years in the period ended December
31, 1999, which report is included in this Annual Report on Form 10-K. We also
consent to the reference to our Firm under the caption "Experts" in such
prospectuses.
PRICEWATERHOUSECOOPERS LLP
Detroit, Michigan
March 27, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM DECEMBER 31,
1999 MASCOTECH, INC. 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 4,490
<SECURITIES> 0
<RECEIVABLES> 223,250
<ALLOWANCES> (4,290)
<INVENTORY> 183,600
<CURRENT-ASSETS> 470,120
<PP&E> 1,045,220
<DEPRECIATION> (322,540)
<TOTAL-ASSETS> 2,101,270
<CURRENT-LIABILITIES> 228,400
<BONDS> 1,372,890
0
0
<COMMON> 44,640
<OTHER-SE> 255,740
<TOTAL-LIABILITY-AND-EQUITY> 2,101,270
<SALES> 1,679,690
<TOTAL-REVENUES> 1,679,690
<CGS> (1,246,660)
<TOTAL-COSTS> (1,246,660)
<OTHER-EXPENSES> (3,070)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (80,820)
<INCOME-PRETAX> 139,470
<INCOME-TAX> (47,040)
<INCOME-CONTINUING> 92,430
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 92,430
<EPS-BASIC> 2.25
<EPS-DILUTED> 1.84
</TABLE>
