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Masco Annual Report, Year Ended Dec 31, 1997

Filing Date
Filed March 27, 1998
Period End
December 31, 1997
Security
MAS
In the record · 2016–202610-K1110-Q338-K95

MAS filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 95 current reports (8-K) between 2016 and 2026.

  1. FY2016 annual report10-K · Feb ’17Feb ’17
  2. Deal closed8-K · Feb ’20Feb ’20
  3. Leadership change8-K · Feb ’22Feb ’22
  4. Leadership change8-K · Jan ’26Jan ’26

01—Abstract

Summary

Summary of the 10-K filed March 27, 1998. Cited figures are marked; the original filing is the authoritative source.

Masco Corporation, a Delaware company headquartered in Taylor, Michigan, is engaged principally in the manufacture, sale and installation of home improvement and building products.

For 1997, net sales rose to $3,760 milliona from $3,237 million in 1996, and operating profit from continuing operations was $587 million. Income from continuing operations was $382.4 million, or $2.30 per diluted share, compared with $295.2 million, or $1.82 per diluted share, in 1996. Kitchen and Bath Products generated $2,940 million of net sales and $539 million of operating profit, while Other Specialty Products generated $820 million of net sales and $130 million of operating profit.

Acquisitions during 1997 included Texwood Industries and five other companies, with a combined purchase price of approximately $430 millionb. Management expects further increases in both sales and earnings for 1998, assuming moderate U.S. economic growth and stable interest rates. In early 1998, Masco completed the acquisition of the remaining 63 percent of TriMas Corporation through MascoTech, Inc. for approximately $920 million, and the company redeemed its 5.25% convertible debentures, with substantially all holders converting into common stock.

Long-term debt as a percent of total capitalization improved to approximately 36 percent at December 31, 1997, from approximately 39 percent a year earlier. Cash and cash investments were $441.3 millionc at year-end, and the company had $750 million available under its bank revolving-credit facility.

The company also holds significant equity stakes in affiliates, including approximately 17 percent of MascoTech, Inc., approximately 42 percent of Emco Limited, and a 27 percent partnership interest in Hans Grohe GmbH & Co. KG. Management reports that it had no derivative holdings at year-end 1997 and that the company's shareholder dividends have increased for 39 consecutive years, with the quarterly rate raised to $.21 per share during 1997.

02—Key points

Key Highlights

  1. Net sales increased 16 percent to $3,760 million in 1997, and income from continuing operations rose 30 percent to $382 million.
  2. Diluted earnings per share from continuing operations were $2.30 in 1997, compared with $1.82 in 1996.
  3. Kitchen and Bath Products accounted for $2,940 million of net sales and $539 million of operating profit, while Other Specialty Products contributed $820 million of net sales and $130 million of operating profit.
  4. Operating profit margin, before general corporate expense, improved to 17.8 percent in 1997 from 17.5 percent in 1996.
  5. Early 1998 acquisition of the remaining 63 percent of TriMas Corporation through MascoTech, Inc. for approximately $920 million, with Masco recording an approximate $29 million pre-tax gain on its TriMas stock sold in the tender offer.
  6. Long-term debt as a percent of total capitalization improved to approximately 36 percent at December 31, 1997, from approximately 39 percent at December 31, 1996.
  7. The quarterly dividend was increased 5 percent to $.21 per share during 1997, marking the 39th consecutive year of dividend increases.

03—Questions

Frequently Asked Questions

  1. How did Masco perform financially in 1997?

    Net sales rose 16 percent to $3,760 million and operating profit from continuing operations reached $587 million, up from $480.5 million in 1996. Income from continuing operations was $382.4 million, or $2.30 per diluted share, compared with $295.2 million, or $1.82 per diluted share, in 1996.

  2. What drove growth in 1997?

    Acquisitions contributed significantly, including Texwood Industries and five other companies acquired during 1997 at a combined purchase price of approximately $430 million. After adjusting for acquisitions, net sales increased 7 percent. Higher unit sales volume of cabinets, faucets and other kitchen and bath products, along with higher installation sales of fiberglass insulation and higher unit sales of lock sets, also contributed.

  3. What is Masco's outlook for 1998?

    Assuming the U.S. economy maintains moderate growth and interest rates remain relatively stable, the company expects further increases in both sales and earnings for 1998. It expects its effective tax rate to approximate 40 percent and capital expenditures to approximate the 1997 level, excluding potential 1998 acquisitions. It also expects SG&A as a percentage of sales to approximate 20.0 percent by the end of 1998.

  4. How strong is Masco's balance sheet and liquidity?

    At December 31, 1997, the company had cash and cash investments of $441.3 million and $750 million available under its bank revolving-credit facility. Long-term debt as a percent of total capitalization was approximately 36 percent, and the working capital ratio was 2.6 to 1. The company stated that its present cash balance and operating cash flows are sufficient to fund near-term working capital and other investment needs.

  5. What major investments and equity stakes does Masco hold?

    Masco owned approximately 17 percent of MascoTech, Inc. and approximately 42 percent of Emco Limited, a Canadian building products company. It also held a 27 percent partnership interest in Hans Grohe GmbH & Co. KG, a German faucet manufacturer, and approximately 4 percent of TriMas Corporation, which it tendered to MascoTech in January 1998.

04—Continue

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