SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
August 5, 1996
Date of report (Date of earliest event reported)
MASCO CORPORATION
(Exact Name of Registrant as Specified in Charter)
Delaware 1-5794 38-1794485
(State or Other (Commission File (IRS Employer
Jurisdiction of Number) Identification
Incorporation) Number)
21001 Van Born Road, Taylor, Michigan 48180
(Address of Principal Executive Offices) (Zip Code)
(313) 274-7400
(Registrant's telephone number, including area code)
Item 2. OTHER EVENTS
On August 5, 1996, Registrant completed the sale of its Home Furnishings
Group ("HFG") to Furnishings International Inc., a Delaware corporation
("FII"), pursuant to the terms of an Acquisition Agreement between FII and
Registrant dated as of March 29, 1996, and amended as of June 29, 1996 and
August 5, 1996. HFG is a manufacturer and marketer of residential furniture
and a designer, marketer and distributor of decorative home furnishing
fabrics. HFG consists of the following companies and their direct and
indirect subsidiaries: Ametex Fabrics; Ametex U.K. Limited; The Berkline
Corporation; Dixie Furniture Company, Incorporated; Drexel Heritage
Furnishings Inc.; Hanhill (Great Britain) Limited; Henredon Furniture
Industries, Inc.; Henry Link Corporation; Interior Fabric Design, Inc.; Intro
Europe, Inc.; La Barge, Inc.; Lexington Furniture Industries, Inc.; Lineage
Home Furnishings, Inc.; Link-Taylor Corporation; Maitland-Smith, Inc.; Marbro
Lamp Company; Masco Home Furnishings, Inc.; Ramm, Son & Crocker, Inc.; Ramm,
Son & Crocker Limited; Robert Allen Fabrics, Inc.; Robert Allen Fabrics
(Canada) Ltd.; Robert Allen Fabrics of N.Y., Inc.; Sunbury Textile Mills,
Inc.; Universal Furniture Limited and Young-Hinkle Corporation.
The aggregate purchase price for HFG was approximately $1.050 billion,
consisting of approximately $710 million in cash, $285 million in 12% junior
debt securities, and the balance in 13% cumulative preferred stock and 15
percent of the common stock of FII. In addition, Registrant received certain
transferable rights to acquire additional equity in FII. In connection with the
transaction, FII assumed approximately $30 million of bank and other third party
indebtedness. FII is owned by a group of investors including 399 Venture
Partners, Inc., Registrant, certain affiliates of Travelers Group, Inc., and
certain members of FII's management, including Wayne B. Lyon, the former
President and a current Director of Registrant. Mr. Lyon is the chief executive
officer and a Director of FII. John Morgan, a director of Registrant, has been
designated by Registrant to be a Director of FII.
The determination of the amount of consideration received by Registrant
from FII for HFG and the terms of the transaction resulted from extensive
negotiations between the parties. Mr. Lyon abstained from voting at the
meeting of the Board of Directors of Registrant at which the transaction was
reviewed and approved. Registrant received an opinion from Merrill Lynch,
Pierce, Fenner & Smith Incorporated that, based upon the provisions contained
therein, the consideration received by Registrant in the HFG sale transaction
was fair, from a financial point of view, to the Registrant.
The press release issued by Registrant is filed as Exhibit 99.a hereto.
Item 7. FINANCIAL STATEMENTS, PROFORMA FINANCIAL INFORMATION AND EXHIBITS
(b) Unaudited Proforma Financial Information. The following
unaudited proforma financial information is included herein.
Introduction
Unaudited Proforma Condensed Consolidated Statement of
Income for the year ended December 31, 1995
Unaudited Proforma Condensed Consolidated Statement of
Income for the six months ended June 30, 1996
Unaudited Proforma Condensed Consolidated Balance Sheet
as of June 30, 1996
(c) Exhibits. The following exhibits are filed herewith:
2.a Acquisition Agreement dated as of March 29, 1996
between Furnishings International Inc. and Masco
Corporation.(1)
2.b Amendment No. 1 dated as of June 29, 1996 to
Acquisition Agreement dated as of March 29, 1996
between Furnishings International Inc. and Masco
Corporation.(1)
2.c Amendment No. 2 dated as of August 5, 1996 to Acquisition
Agreement dated as of March 29, 1996 between Furnishings
International Inc. and Masco Corporation.(1)
99.a Press Release dated August 5, 1996
____________________
(1) Omitted schedules will be furnished supplementally to the Commission
upon request.
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, hereunto duly authorized.
MASCO CORPORATION
By:/s/ RICHARD G. MOSTELLER
Richard G. Mosteller
Senior Vice President-Finance
Date: August 20, 1996
EXHIBIT INDEX
2.a Acquisition Agreement dated as of March 29, 1996 between Furnishings
International Inc. and Masco Corporation.
2.b Amendment No. 1 dated as of June 29, 1996 to Acquisition Agreement dated
as of March 29, 1996 between Furnishings International Inc. and Masco
Corporation.
2.c Amendment No. 2 dated as of August 5, 1996 to Acquisition Agreement
dated as of March 29, 1996 between Furnishings International Inc. and
Masco Corporation.
99.a Press Release dated August 5, 1996
Masco Corporation
Unaudited Proforma Condensed Consolidated Financial Statements
The following unaudited proforma condensed consolidated balance sheet and
income statements give effect to the Company's sale of its home furnishings
products segment. Proceeds from the sale include approximately $710 million
cash, $285 million in notes and $55 million in common and preferred equity.
The home furnishings products segment was classified as discontinued operations
in 1995 (See "Discontinued Operations" note in the Company's 1995 Form 10-K).
The proforma condensed consolidated financial statements reflect the sale as
if it occurred at the beginning of the period presented for the condensed
consolidated statements of income and as of June 30, 1996 for the condensed
consolidated balance sheet.
The proforma data do not purport to be indicative of the results which would
actually have been reported if the sale had occurred on such date or which may
be reported in the future. The proforma data should be read in conjunction
with the historical financial statements of the Company and the related notes
thereto.
F-1
Masco Corporation
Proforma Condensed Consolidated Statement of Income
for the year ended December 31, 1995
(In thousands except per share amounts)
Assumed
Disposition
of Home
Masco Furnishings
Corporation Products Proforma
Historical Segment Adjusted
(A) (B)(C)
Net sales $2,927,000 $2,927,000
Cost of sales 1,846,330 1,846,330
Gross profit 1,080,670 1,080,670
Selling, general and
administrative expenses 678,330 678,330
Operating profit 402,340 402,340
Other (income) expense, net:
Interest expense 73,800 73,800
Other, net (23,250) ($34,200) (57,450)
50,550 (34,200) 16,350
Income from continuing
operations before income
taxes 351,790 34,200 385,990
Income taxes 151,740 13,000 164,740
Income from continuing
operations $200,050 $21,200 $221,250
Earnings per share,
continuing operations $1.25 $1.39
Average shares outstanding 159,600 159,600
(A) The Company classified its home furnishings products segment as
discontinued operations in 1995 (See "Discontinued Operations" note in
the Company's 1995 Form 10-K) and included for the year 1995 a $44
million reduction of interest expense allocated to discontinued
operations.
(B) To reflect additional investment income earned from the $285 million of
junior debt securities as part of the proceeds from the disposition; and
the related net tax liability of the proforma adjustment at the
appropriate U.S. federal and state statutory rates.
(C) Excludes: interest income from the use of cash proceeds in excess of the
amount applied to debt reduction; and income from equity securities.
F-2
Masco Corporation
Proforma Condensed Consolidated Statement of Income
for the six months ended June 30, 1996
(In thousands except per share amounts)
Assumed
Disposition
of Home
Masco Furnishings
Corporation Products Proforma
Historical Segment Adjusted
(A) (B)(C)
Net sales $1,551,000 $1,551,000
Cost of sales 976,900 976,900
Gross profit 574,100 574,100
Selling, general and
administrative expenses 344,600 344,600
Operating profit 229,500 229,500
Other (income) expense, net:
Interest expense 34,000 34,000
Other, net (21,200) ($17,100) (38,300)
12,800 (17,100) (4,300)
Income before income taxes 216,700 17,100 233,800
Income taxes 86,700 6,500 93,200
Net income $130,000 $10,600 $140,600
Earnings per share $0.81 $0.88
Average shares outstanding 160,500 160,500
(A) The Company classified its home furnishings products segment as
discontinued operations in 1995 (See "Discontinued Operations" note in
the Company's 1995 Form 10-K and notes to condensed consolidated
financial statements in the Company's June 30, 1996 Form 10-Q) and
included for the six months ended June 30, 1996 a $19.3 million
reduction of interest expense allocated to discontinued operations.
(B) To reflect additional investment income earned from the $285 million of
junior debt securities as part of the proceeds from the disposition; and
the related net tax liability of the proforma adjustment at the
appropriate U.S. federal and state statutory rates.
(C) Excludes: interest income from the use of cash proceeds in excess of the
amount applied to debt reduction; and income from equity securities.
F-3
Masco Corporation
Proforma Condensed Consolidated Balance Sheet
as of June 30, 1996
(In thousands)
Assumed
Disposition
of Home
Masco Furnishings
Corporation Products Proforma
Historical Segment Adjusted
ASSETS (A) (B)
Current assets:
Cash and cash investments $73,030 $160,000 $233,030
Accounts and notes receivable, net 492,600 492,600
Inventories 399,370 399,370
Prepaid expenses and other 73,030 73,030
Total current assets 1,038,030 160,000 1,198,030
Equity investments in MascoTech, Inc. 201,360 201,360
Equity investments in other affiliates 59,340 59,340
Property and equipment, net 884,050 884,050
Excess of cost over acquired net assets 414,730 414,730
Other noncurrent assets 288,050 340,000 628,050
Net assets of discontinued operations 1,033,200 (1,033,200) -
Total assets $3,918,760 ($533,200) $3,385,560
LIABILITIES
Current liabilities:
Notes payable $23,220 $23,220
Accounts payable 118,910 118,910
Accrued liabilities 334,710 $16,800 351,510
Total current liabilities 476,840 16,800 493,640
Long-term debt 1,622,040 (550,000) 1,072,040
Deferred income taxes and other 106,410 106,410
Total liabilities 2,205,290 (533,200) 1,672,090
SHAREHOLDERS' EQUITY
Common stock 160,540 160,540
Preferred stock - -
Paid-in capital 131,800 131,800
Retained earnings 1,434,550 1,434,550
Cumulative translation adjustments (13,420) (13,420)
Total shareholders' equity 1,713,470 1,713,470
Total liabilities and shareholders'
equity $3,918,760 ($533,200) $3,385,560
(A) The Company classified its home furnishings products segment as discontinued operations in 1995 (See "Discontinued
Operations" note in the Company's 1995 Form 10-K and notes to condensed consolidated financial statements in the
Company's June 30, 1996 Form 10-Q).
(B) To reflect the elimination of net assets of discontinued operations with proceeds of approximately $1,050 million,
net of assumed indebtedness, from the sale - approximately $710 million cash, $285 million in notes and $55 million
in common and preferred equity; and debt reduction of $550 million from a portion of the proceeds from the sale.
F-4