<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTERLY PERIOD ENDED JUNE 30, 2000
COMMISSION FILE NUMBER 1-12068
MASCOTECH, INC.
--------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 38-2513957
--------------------------------------------------------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
21001 VAN BORN ROAD, TAYLOR, MICHIGAN 48180
-------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(313) 274-7405
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(TELEPHONE NUMBER)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS, AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS
FOR THE PAST 90 DAYS.
YES X NO
----- -----
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON STOCK, AS OF THE LATEST PRACTICAL DATE.
<TABLE>
<CAPTION>
SHARES OUTSTANDING AT
CLASS JULY 31, 2000
----- ---------------------
<S> <C>
COMMON STOCK, PAR VALUE $1 PER SHARE 44,770,401
</TABLE>
<PAGE> 2
MASCOTECH, INC.
INDEX
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheet -
June 30, 2000 and December 31, 1999 1
Consolidated Condensed Statements of Income
for the Three and Six Months Ended
June 30, 2000 and 1999 2
Consolidated Condensed Statement of
Cash Flows for the Six Months
Ended June 30, 2000 and 1999 3
Notes to Consolidated Condensed Financial
Statements 4-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8-9
Part II. Other Information and Signature 10-11
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MASCOTECH, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
JUNE 30, 2000 AND DECEMBER 31, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS 2000 1999
------ ---------- ------------
<S> <C> <C>
Current assets:
Cash and cash investments $ 2,840 $ 4,490
Receivables 208,990 218,960
Inventories 177,450 183,600
Deferred and refundable income taxes 24,990 46,750
Prepaid expenses and other assets 17,950 16,320
---------- ----------
Total current assets 432,220 470,120
Equity and other investments in affiliates 116,190 110,730
Property and equipment, net 737,330 722,680
Excess of cost over net assets of acquired
companies 762,700 759,330
Notes receivable and other assets 38,980 38,410
---------- ----------
Total assets $2,087,420 $2,101,270
========== ==========
LIABILITIES
-----------
Current liabilities:
Accounts payable $ 122,420 $ 114,490
Accrued liabilities 114,710 113,910
---------- ----------
Total current liabilities 237,130 228,400
Convertible subordinated debentures 305,000 305,000
Long-term debt 978,780 1,067,890
Deferred income taxes and other long-term
liabilities 230,780 199,600
---------- ----------
Total liabilities 1,751,690 1,800,890
---------- ----------
SHAREHOLDERS' EQUITY
--------------------
Preferred stock, $1 par:
Authorized: 25 million;
Outstanding: None --- ---
Common stock, $1 par:
Authorized: 250 million;
Outstanding: 44.7 million and 44.6 million 44,690 44,640
Paid-in capital --- ---
Retained earnings 369,030 324,290
Accumulated other comprehensive loss (33,130) (24,870)
Less: Restricted stock awards (44,860) (43,680)
---------- ----------
Total shareholders' equity 335,730 300,380
---------- ----------
Total liabilities and
shareholders' equity $2,087,420 $2,101,270
========== ==========
</TABLE>
The accompanying notes are an integral part of the
consolidated condensed financial statements.
1
<PAGE> 4
MASCOTECH, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------- ---------------------
JUNE 30 JUNE 30
--------------------- ---------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $ 442,310 $ 436,510 $ 901,710 $ 885,170
Cost of sales (328,230) (322,820) (668,230) (655,460)
Selling, general and
administrative expenses (56,990) (55,250) (113,160) (112,400)
Gain (charge) for disposition of
businesses, net --- 16,540 --- 26,550
Charge for asset impairment --- (17,510) --- (17,510)
--------- --------- --------- ---------
Operating profit 57,090 57,470 120,320 126,350
--------- --------- --------- ---------
Other income (expense), net:
Interest expense (21,970) (20,320) (43,780) (41,270)
Equity and interest income
from affiliates, net 8,190 3,800 9,690 5,530
Loss from change in investment
of an equity affiliate --- (3,150) --- (3,150)
Other, net (60) 880 (300) (2,040)
--------- --------- --------- ---------
(13,840) (18,790) (34,390) (40,930)
--------- --------- --------- ---------
Income before income taxes 43,250 38,680 85,930 85,420
Income taxes 17,070 12,570 33,930 35,450
--------- --------- --------- ---------
Net income $ 26,180 $ 26,110 $ 52,000 $ 49,970
========= ========= ========= =========
Basic earnings per share $ .64 $ .64 $ 1.27 $ 1.21
========= ========= ========= =========
Diluted earnings per share $ .51 $ .51 $ 1.02 $ .98
========= ========= ========= =========
Cash dividends declared per share $ .08 $ .07 $ .16 $ .14
========= ========= ========= =========
Cash dividends paid per share $ .08 $ .07 $ .16 $ .14
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of the
consolidated condensed financial statements.
2
<PAGE> 5
MASCOTECH, INC.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
-----------------------
2000 1999
---------- ----------
<S> <C> <C>
CASH FROM (USED FOR):
OPERATIONS:
Net cash from earnings $ 103,860 $ 102,520
Decrease in inventories 9,130 10,980
(Increase) in receivables (36,860) (38,830)
Proceeds from accounts receivable sale 48,260 ---
Increase in accounts payable and
accrued liabilities 11,340 2,250
Decrease in prepaid expenses and
other current assets 19,310 8,420
Other, net (3,160) (4,040)
---------- ----------
Net cash from operating activities 151,880 81,300
---------- ----------
FINANCING:
Payment of debt (133,950) (79,000)
Increase in debt 40,460 4,260
Payment of common stock dividends (7,110) (6,300)
Retirement of Company common stock --- (16,280)
Proceeds from interest rate swap settlement 15,820 ---
Other, net (5,030) (6,720)
---------- ----------
Net cash (used for) financing
activities (89,810) (104,040)
---------- ----------
INVESTMENTS:
Capital expenditures (53,970) (72,330)
Cash received from sale of businesses, net 3,200 90,470
Acquisition of businesses, net of
cash acquired (21,090) ---
Other, net 8,140 9,200
---------- ----------
Net cash (used for) from investing
activities (63,720) 27,340
---------- ----------
CASH AND CASH INVESTMENTS:
(Decrease) increase for the six months (1,650) 4,600
At January 1 4,490 29,390
---------- ----------
At June 30 $ 2,840 $ 33,990
========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
Net cash paid during the period for:
Interest $ 39,930 $ 40,450
========== ==========
Income taxes $ (3,910) $ 14,050
========== ==========
</TABLE>
The accompanying notes are an integral part of the
consolidated condensed financial statements.
3
<PAGE> 6
MASCOTECH, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
A. In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements contain all adjustments, which are
normal and recurring in nature, necessary to present fairly its
financial position as at June 30, 2000 and the results of operations
for the three and six months ended June 30, 2000 and 1999 and cash
flows for the six months ended June 30, 2000 and 1999. Certain amounts
for the period ended June 30, 1999 have been reclassified to conform to
the presentation adopted in 2000.
B. Inventories by component are as follows (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
-------- --------
<S> <C> <C>
Finished goods $ 79,250 $ 86,240
Work in process 50,210 45,940
Raw materials 47,990 51,420
-------- --------
$177,450 $183,600
======== ========
</TABLE>
C. Property and equipment, net reflects accumulated depreciation of $350
million and $323 million as at June 30, 2000 and December 31, 1999,
respectively.
D. The Company's total comprehensive income for the period was as follows
(in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------ -------------------
2000 1999 2000 1999
-------- ------- -------- --------
<S> <C> <C> <C> <C>
Net income $26,180 $26,110 $ 52,000 $ 49,970
Other comprehensive loss (3,740) (2,910) (8,260) (13,690)
------- ------- -------- --------
Total comprehensive income $22,440 $23,200 $ 43,740 $ 36,280
======= ======= ======== ========
</TABLE>
The majority of other comprehensive loss relates to foreign currency
translation.
E. In March 2000, the Company acquired a manufacturer of towing equipment
and accessories. The acquisition was accounted for as a purchase and
results are included from date of acquisition.
F. Interest rate swap agreements covering a notional debt amount of $400
million expired or were terminated in June 2000 at a gain, and the
Company received proceeds of approximately $15.8 million. The Company
has deferred a portion of the gain in the amount of approximately $14.9
million which will be recognized through a reduction in annual interest
expense through 2003. The cash proceeds were used for the reduction of
long-term debt and are reflected as financing activities in the
Consolidated Condensed Statement of Cash Flows.
4
<PAGE> 7
MASCOTECH, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(CONTINUED)
G. Segment activity for the three and six months ended June 30, 2000 and
1999 is as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------- -------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES FROM EXTERNAL CUSTOMERS
Specialty Metal Formed Products $215,680 $206,250 $446,180 $408,950
Towing Systems 84,420 79,060 164,930 148,150
Specialty Fasteners 57,980 60,880 119,250 122,140
Specialty Packaging & Sealing Products 56,920 55,960 117,850 113,510
Specialty Industrial Products 27,310 26,150 53,500 53,610
Companies Sold or Held for Sale --- 8,210 --- 38,810
-------- -------- -------- --------
Total $442,310 $436,510 $901,710 $885,170
======== ======== ======== ========
INTERSEGMENT REVENUES
Specialty Metal Formed Products $ 1,850 $ 2,150 $ 4,430 $ 4,530
Towing Systems 2,730 2,000 5,790 4,250
Specialty Fasteners 500 740 1,660 1,570
Specialty Packaging & Sealing Products 60 --- 100 ---
Specialty Industrial Products 120 190 310 360
Companies Sold or Held for Sale --- 230 --- 930
-------- -------- -------- --------
Total $ 5,260 $ 5,310 $ 12,290 $ 11,640
======== ======== ======== ========
OPERATING PROFIT
Specialty Metal Formed Products $ 29,640 $ 27,970 $ 63,180 $ 57,570
Towing Systems 14,120 14,230 27,250 23,160
Specialty Fasteners 6,240 7,900 12,930 16,410
Specialty Packaging & Sealing Products 9,430 10,640 21,680 20,350
Specialty Industrial Products 2,720 2,470 5,620 6,610
Companies Sold or Held for Sale --- 750 --- 4,390
-------- -------- -------- --------
Total $ 62,150 $ 63,960 $130,660 $128,490
======== ======== ======== ========
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------- -------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
OPERATING PROFIT
Total operating profit for reportable
segments $ 62,150 $ 63,960 $130,660 $128,490
General corporate expenses (5,060) (5,520) (10,340) (11,180)
Net gain on disposition of
businesses --- 16,540 --- 26,550
Charge for asset impairment --- (17,510) --- (17,510)
-------- -------- -------- --------
Total operating profit $ 57,090 $ 57,470 $120,320 $126,350
======== ======== ======== ========
</TABLE>
5
<PAGE> 8
MASCOTECH, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(CONTINUED)
H. The following are reconciliations of the numerators and denominators
used in the computations of basic and diluted earnings per share:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------- -------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Weighted average number of
shares outstanding 41,000 40,890 41,000 41,170
======== ======== ======== ========
Earnings used for basic earnings
per share computation $ 26,180 $ 26,110 $ 52,000 $ 49,970
======== ======== ======== ========
Basic earnings per share $ .64 $ .64 $ 1.27 $ 1.21
======== ======== ======== ========
Total shares used for basic earnings
per share computation 41,000 40,890 41,000 41,170
Dilutive securities:
Stock options 340 600 360 570
Convertible debentures 9,840 9,840 9,840 9,840
Contingently issuable shares 4,580 3,960 4,550 3,890
-------- -------- -------- --------
Total shares used for diluted
earnings per share computation 55,760 55,290 55,750 55,470
======== ======== ======== ========
Earnings used for basic earnings
per share computation $ 26,180 $ 26,110 $ 52,000 $ 49,970
Add back of debenture interest 2,340 2,340 4,680 4,630
-------- -------- -------- --------
Earnings used for diluted
earnings per share computation $ 28,520 $ 28,450 $ 56,680 $ 54,600
======== ======== ======== ========
Diluted earnings per share $ .51 $ .51 $ 1.02 $ .98
======== ======== ======== ========
</TABLE>
Diluted earnings per share reflect the potential dilution that would
occur if securities or other contracts to issue common stock were
converted or exercised into common stock.
The 1999 basic earnings per share amounts for the quarters may not
total to the year-to-date amounts due to the purchase and retirement of
shares throughout the year.
I. During June 2000, the Company entered into an agreement to sell, on an
ongoing basis, the trade accounts receivable of certain business
operations to a wholly owned, bankruptcy-remote, special purpose
subsidiary ("MTSPC") of the Company. MTSPC has sold and, subject to
certain conditions, may from time to time sell, an undivided fractional
ownership interest in the pool of receivables up to approximately $50
million to a third party multi-seller receivables funding company (the
"conduit"). Upon sale to the conduit, MTSPC holds a subordinated
retained interest in the receivables. The estimated fair value of the
subordinated retained interest, excluding allowance for doubtful
accounts, was approximately $23.7 million at June 30, 2000, which is
included in the receivables balance. Under the terms of the agreement,
new receivables are added to the pool as collections reduce previously
sold receivables. The Company services, administers, and collects the
receivables on behalf of MTSPC and the conduit. The proceeds of sale
are less than the face amount of accounts receivable sold by an amount
that approximates the purchaser's financing costs. The related expense
of approximately $.35 million has been included in selling, general and
administrative expenses in the Company's Consolidated Condensed
Statement of Income. The proceeds were used for the reduction of
long-term debt and are reflected as operating cash flows in the
accompanying Consolidated Condensed Statement of Cash Flows.
6
<PAGE> 9
MASCOTECH, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(CONCLUDED)
J. The Company completed the sale of its aftermarket-related and vacuum
metalizing businesses in 1999. These transactions resulted in a pre-tax
gain of approximately $26 million, of which $10 million was recognized
in the first quarter of 1999 (including $15.2 million ($6 million
after-tax) resulting from the Company's revised estimate of the fair
market value of certain assets held for sale at March 31, 1999 and a
loss of approximately $5.2 million ($3.8 million after-tax) on a
transaction that closed in March 1999). The remaining pre-tax gain on
disposition of approximately $16 million ($13.0 million after-tax) was
recognized in the second quarter of 1999.
K. In the second quarter of 1999, the Company recognized a non-cash charge
of $3.1 million pre-tax to reflect the other than temporary decline in
value of an equity affiliate of the Company.
L. In the second quarter 1999, the Company recorded a non-cash charge of
$17.5 million related to an impairment of certain long lived assets,
related to its hydroforming equipment and intellectual property. The
revised carrying values of these assets were generally calculated based
on expected future cash flows which were determined to be insufficient
to recover the related carrying value.
M. On August 2, 2000, the Company entered into a definitive agreement to
merge with an affiliate of Heartland Industrial Partners, L.P. in a
going private transaction. The value of the recapitalization
transaction, including the assumption of debt, is expected to exceed $2
billion. The agreement provides for a cash payment at the closing of
$16.90 per common share plus an additional amount based upon proceeds
realized on the disposition of certain non-operating assets, currently
anticipated to result in an aggregate per common share payment of
between $17 and $18. The transaction is subject to certain conditions
including the completion of financing and a stockholder vote.
7
<PAGE> 10
MASCOTECH, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MascoTech sales for the second quarter 2000 increased modestly to $442
million as compared with $437 million in 1999. Sales for the second quarter
2000, excluding the impact of the disposition of the Company's specialty tubing
and aftermarket-related businesses and including recent acquisitions, would have
increased approximately four percent to $442 million in 2000 as compared with
$425 million in 1999. Sales for the second quarter 2000, excluding acquisitions
and dispositions, would have decreased approximately one percent.
Second quarter income and earnings per share were $26 million and $.51 in
both 2000 and 1999. Second quarter 2000 income benefited from increased equity
affiliate income principally related to a gain recognized by one of the
Company's affiliates from the sale of assets. The Company's share of this gain
was principally offset by costs and expenses related to the previously announced
closure of a plant and costs associated with the launch of a new manufacturing
facility. The second quarter income for 1999 benefited from a gain of
approximately $16.5 million pre-tax, related to the sale of the Company's
aftermarket-related businesses. This gain, which has a low effective tax rate,
was offset by charges to reflect the impairment in value of certain assets
related to the Company's hydroforming process, $17.5 million pre-tax, and
approximately $3 million pre-tax to reflect an other than temporary decline in
the value of an equity affiliate.
The following information related to sales, operating profit and
margins relates to the Company's operating segments.
Sales for the Company's Specialty Metal Formed products, aided by an
acquisition, increased five percent in the second quarter 2000 as compared with
1999. Excluding the impact of an acquisition and the disposition of the
Company's specialty tubing business, sales would have decreased approximately
three percent principally as a result of currency fluctuations.
Sales of Specialty Fasteners for second quarter 2000 declined
approximately five percent reflecting the phase out of certain products
resulting from a plant closure and continued softness for aerospace fastener
applications. Excluding the impact of the plant closure, sales would have
approximated 1999 levels. Sales of Towing Systems, aided by acquisitions,
increased seven percent in the second quarter 2000 as compared with 1999.
Excluding the impact of an acquisition, Towing sales would have approximated
1999 levels. Second quarter sales for Specialty Packaging and Sealing Products
increased two percent as a result of improved sales of specialty gaskets
and related products. Sales of Specialty Industrial Products increased four
percent in second quarter 2000 from 1999 levels.
Sales for the six months ended June 30, 2000 increased two percent to $902
million from $885 million in 1999. Sales for the six months ended June 30, 2000,
excluding the impact of the disposition of the Company's specialty tubing and
aftermarket-related businesses and including recent acquisitions, would have
increased approximately 7 percent to $901 million in 2000 as compared with $840
million in 1999. Sales for the six months ended June 30, 2000, excluding
acquisitions and dispositions, would have increased two percent. Operating
profit, excluding in 1999 the net gain on disposition of businesses and charge
for asset impairment, for the six months ended June 30, 2000 and 1999 was
approximately $120 million and $126 million, respectively. For the six month
period ended June 30, 2000, sales of Specialty Metal Formed products and Towing
Systems aided by acquisitions increased nine and eleven percent, respectively,
as compared with 1999. Sales for Specialty Fasteners decreased two percent as a
result of the phase out of certain products related to a plant closure and a
decline in aerospace fastener sales as a result of soft market conditions.
Specialty Packaging and Sealing sales for the first six months increased four
percent as a result of improved sales of specialty gaskets and related products.
Sales for Specialty Industrial products for the first half of 2000 approximated
1999 levels.
8
<PAGE> 11
MASCOTECH, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONCLUDED)
Second quarter operating margin was 12.9 percent in 2000 compared with
13.4 percent in 1999, excluding, in 1999, the results of the Company's
aftermarket and vacuum metalizing businesses, the gain on disposition and the
non-recurring charge for asset impairment. The decrease in operating margin is
the result of the phase out of certain products and plant closure costs. In
addition, start up costs related to the launch of new products and a new
manufacturing facility negatively impacted operating performance.
The tax rate for second quarter 2000 was 39.5 percent. The higher than
statutory rate of 39.5 percent results primarily from non-deductible goodwill
amortization for tax purposes. The tax rate for second quarter 1999 was 33
percent, which resulted from the tax treatment related to the divested
businesses and the asset impairment charge.
The Board of Directors declared a dividend of $.08 per common share,
payable on August 14, 2000, to shareholders of record on July 21, 2000.
In the second quarter, the Company entered into a securitization
agreement to sell, on an ongoing basis, a pool of its trade accounts receivable.
The proceeds, approximately $48 million, from the sale were used for the
reduction of long-term debt.
In the second quarter, the Company's interest rate swap agreements
covering a notional amount of $400 million expired or were terminated resulting
in proceeds of approximately $15.8 million. The cash proceeds were used for the
reduction of long-term debt. As a result of the expiration or termination of the
interest rate swap agreements, the Company has greater exposure to interest rate
fluctuations on its floating rate debt.
On August 2, 2000, the Company entered into a definitive agreement to merge
with an affiliate of Heartland Industrial Partners, L.P. in a going private
transaction. The value of the recapitalization transaction, including the
assumption of debt, is expected to exceed $2 billion. The agreement provides for
a cash payment at the closing of $16.90 per common share plus an additional
amount based upon proceeds realized on the disposition of certain non-operating
assets, currently anticipated to result in an aggregate per common share payment
of between $17 and $18. To the extent the disposition of the non-operating
assets is not completed prior to closing, proceeds from any subsequent
disposition will be distributed to stockholders after the disposition is
completed. The transaction is subject to certain conditions, including the
completion of financing and a stockholder vote. Several stockholder class
action lawsuits have been filed against the Company and each of the Company's
directors in the Delaware Court of Chancery on behalf of the Company's
unaffiliated stockholders related to this transaction. The Company believes that
the allegations contained in these complaints are without merit and intend to
contest the actions vigorously.
For the six months ended June 30, 2000 the Company's revenues were
negatively impacted by changes in foreign exchange rates related to the German
mark, the Italian lira, the Australian dollar and the British pound.
At June 30, 2000, current assets, which aggregated approximately $430
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.
Forward-Looking Statements
Statements in this quarterly report on Form 10-Q which are not
historical facts are forward looking statements that involve certain risks and
uncertainty including, but not limited to, risks associated with the uncertainty
of future financial results, conditions within the markets in which the Company
competes, labor relations of the Company and certain of its customers and other
uncertainties detailed in the Company's filings with the Securities and Exchange
Commission.
9
<PAGE> 12
PART II. OTHER INFORMATION
MASCOTECH, INC.
Items 1, 2, 3 and 5 are not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of stockholders was held on May 18, 2000 at which
the stockholders voted upon the election of two nominees for Class III
Directors; ratification of the selection of PricewaterhouseCoopers LLP
as independent auditors for the Company for 2000; and a shareholder
proposal requiring two candidates for each directorship to be filled at
the annual meetings. The following is a tabulation of the votes.
Election of Class III Directors
<TABLE>
<CAPTION>
For Withheld
<S> <C> <C>
William K. Howenstein 39,363,926 660,056
John A. Morgan 39,313,706 710,276
</TABLE>
Approval of the appointment of PricewaterhouseCoopers LLP as
independent auditors of the Company for 2000
<TABLE>
<CAPTION>
Abstentions and
For Against Broker Non-Votes
<S> <C> <C>
39,818,183 133,365 72,434
</TABLE>
Shareholder Proposal
<TABLE>
<CAPTION>
For Against Abstentions Broker Non-Votes
<S> <C> <C> <C>
3,154,305 30,228,378 556,714 6,084,585
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
Exhibit 10.a Receivables Purchase Agreement dated as of June 22,
2000 among MTSPC, Inc., MascoTech, Inc., Blue Ridge
Asset Funding Corporation and Wachovia Bank, N.A.
Exhibit 10.b Purchase and Sale Agreement dated as of June 22, 2000
among each of the sellers named therein and MTSPC, Inc.
Exhibit 12 Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends
Exhibit 27 Financial Data Schedule
(b) REPORTS ON FORM 8-K:
A report on Form 8-K dated August 7, 2000 reporting under Item 5 "Other
Events" that MascoTech, Inc. has entered into a Recapitalization
Agreement with an affiliate of Heartland Industrial Partners L.P.
pursuant to which the affiliate will be merged with and into MascoTech,
Inc. with MascoTech, Inc. as the surviving corporation. As a result of
the transactions contemplated by the Recapitalization Agreement,
Heartland Industrial Partners L.P. will acquire control of MascoTech,
Inc.
10
<PAGE> 13
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MASCOTECH, INC.
(REGISTRANT)
DATE: AUGUST 14, 2000 BY: /s/ Timothy Wadhams
--------------------------- ---------------------------
Timothy Wadhams
Executive Vice President
Finance and Administration
(Principal financial officer
and authorized signatory)
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<PAGE> 14
MASCOTECH, INC.
EXHIBIT INDEX
EXHIBIT
Exhibit 10.a Receivables Purchase Agreement dated as of June 22, 2000 among
MTSPC, Inc., MascoTech, Inc., Blue Ridge Asset Funding
Corporation and Wachovia Bank, N.A.
Exhibit 10.b Purchase and Sale Agreement dated as of June 22, 2000 among
each of the sellers named therein and MTSPC, Inc.
Exhibit 12 Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends
Exhibit 27 Financial Data Schedule
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