01—Abstract
Summary
Summary of the 10-K filed March 26, 1999. Cited figures are marked; the original filing is the authoritative source.
Masco Corporation, a manufacturer of home improvement and building products, reported net sales of $4.345 billiona for 1998, up 16 percent from $3.760 billion in 1997, with net income of $476 million, or $1.39 per diluted share, compared with $382 million and $1.15 a year earlier.
Net sales growth was 10 percent after adjusting for acquisitions and divestitures. Kitchen and Bath Products generated $3.294 billionb of sales and $613 million of operating profit, Environmental Products and Services contributed $485 million in sales, and Builders' Hardware and Other Specialty Products contributed $566 million. The Company acquired Vasco Corporation, The Brugman Group and Heritage Bathrooms PLC during 1998, for a combined purchase price of approximately $323 million, and sold its Thermador subsidiary in July 1998.
Cash from operations was $419.1 millionc in 1998, and capital expenditures totaled $189.0 million. Long-term debt as a percent of total capitalization improved to approximately 33 percent at year-end from approximately 36 percent, following the conversion of $178 million of convertible subordinated debentures. The Company had $750 million available under its bank revolving-credit facility at December 31, 1998, and its working capital ratio was 2.2 to 1.
Management expects further increases in both sales and earnings for 1999, assuming moderate U.S. economic growth and relatively stable interest rates. The filing also includes the financial statements of MascoTech, Inc., in which Masco holds an approximately 17 percent ownership interest.
MascoTech reported 1998 net sales of approximately $1.6 billiond after its acquisition of TriMas Corporation in January 1998. Masco's quarterly dividend was increased to $.11 per share following the 1998 two-for-one stock split, marking the 40th consecutive year of dividend increases.
02—Key points
Key Highlights
- Net sales rose 16 percent to $4.345 billion in 1998, and 10 percent after adjusting for acquisitions and divestitures.
- Net income increased to $476 million, and diluted earnings per share rose to $1.39 from $1.15 in 1997.
- Operating profit reached $681 million, and the operating profit margin before general corporate expense was 17.6 percent in 1998.
- Kitchen and Bath Products remained the largest segment, with $3.294 billion in sales and $613 million in operating profit.
- Acquisitions of Vasco, Brugman, Heritage Bathrooms and other companies totaled approximately $323 million, expanding European and Canadian operations.
- Long-term debt as a percent of total capitalization fell to approximately 33 percent, and $750 million remained available under the bank revolver.
- Management expects further increases in sales and earnings for 1999, and the effective tax rate is estimated at approximately 37 percent.
03—Questions
Frequently Asked Questions
How did Masco perform financially in 1998?
Masco reported net sales of $4.345 billion, up 16 percent from 1997, and net income of $476 million, up from $382 million. Diluted earnings per share were $1.39, compared with $1.15 in 1997. Sales growth was 10 percent after adjusting for acquisitions and divestitures.
What drove the growth in Masco's sales and earnings?
Acquisitions contributed significantly, and the Company cited higher unit sales volume of cabinets, faucets and other kitchen and bath products. Environmental Products and Services sales rose 39 percent, driven largely by higher fiberglass insulation installation sales. Cabinet sales increased 23 percent to $1.334 billion.
How is Masco's balance sheet and liquidity position?
Cash and cash investments were $541.7 million at year-end 1998. Long-term debt as a percent of total capitalization improved to approximately 33 percent from approximately 36 percent. The working capital ratio was 2.2 to 1, and $750 million was available under the bank revolving-credit facility.
What are Masco's plans for 1999?
Masco expects capital expenditures excluding potential 1999 acquisitions to exceed $200 million and depreciation and amortization to approximate $160 million. The Company expects further increases in sales and earnings, assuming moderate U.S. economic growth and stable interest rates, and plans to pursue acquisition candidates.
What is Masco's relationship with MascoTech and Furnishings International?
Masco owns approximately 17 percent of MascoTech, which reported 1998 net sales of approximately $1.6 billion. Masco also holds 12 percent pay-in-kind junior debt securities and a 13 percent cumulative preferred stock investment in Furnishings International Inc., carried at $434.6 million in total at December 31, 1998.
04—Continue