Attached files
| file | filename |
|---|---|
| 8-K/A - 8-K/A - MASCO CORP /DE/ | a15-15043_28ka.htm |
Exhibit 99.2
Masco Corporation
Unaudited Pro Forma Consolidated Financial Information
On June 30, 2015, after the New York Stock Exchange market closing, the previously-announced separation (the “Separation”) of TopBuild Corp. (“TopBuild”) from Masco Corporation (“Masco”) was completed. The Separation of TopBuild, which comprises Masco’s former installation and other services businesses, was achieved through Masco’s distribution of 100% of the shares of TopBuild to holders of Masco common stock as of the record date of June 19, 2015.
The following unaudited pro forma condensed consolidated statements of operations of Masco for the three months ended March 31, 2015 and for the years ended December 31, 2014, 2013, and 2012 have been prepared as though the Separation occurred on January 1, 2012. The following unaudited pro forma condensed consolidated balance sheet of Masco as of March 31, 2015 has been prepared as though the Separation occurred on March 31, 2015.
The unaudited pro forma condensed consolidated financial statements are for illustrative purposes only, and do not reflect what Masco’s financial position or results of operations would have been had the Separation occurred on the dates indicated and are not necessarily indicative of Masco’s future financial position and future results of operations. Beginning with Masco’s quarterly report for second quarter of 2015, TopBuild’s historical financial results for periods prior to the Separation will be reflected in Masco’s consolidated financial statements within discontinued operations.
The information in the TopBuild Separation column in the unaudited pro forma condensed consolidated statements of operations was derived from Masco’s unaudited financial statements for the three months ended March 31, 2015 and Masco’s audited financial statements for the years ended December 31, 2014, 2013, and 2012, adjusted to include certain costs that are directly attributable to TopBuild and are factually supportable, and to exclude corporate overhead costs that were previously allocated to TopBuild for each period, as described in TopBuild’s Registration Statement on Form 10 (No. 001-36870). The information in the TopBuild’s Separation column in the unaudited pro forma condensed consolidated balance sheet was derived from Masco’s unaudited financial statements as of March 31, 2015, adjusted to include certain assets and liabilities that are directly attributable to TopBuild and are factually supportable.
The Pro Forma Adjustments column in the unaudited pro forma condensed consolidated statements reflects additional pro forma adjustments which are described in the accompanying notes.
These unaudited pro forma condensed consolidated financial statements should be read in conjunction with the related notes to these financial statements and with Masco’s historical consolidated financial statements and the related notes included in Masco’s previous filings with the Securities and Exchange Commission.
MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2015
(In millions, except per share amounts)
|
|
|
Masco |
|
TopBuild’s |
|
Notes |
|
Pro Forma Masco |
| |||
|
Net Sales |
|
$ |
2,018 |
|
$ |
(358 |
) |
|
|
$ |
1,660 |
|
|
Cost of sales |
|
1,450 |
|
(285 |
) |
|
|
1,165 |
| |||
|
Gross profit |
|
568 |
|
(73 |
) |
|
|
495 |
| |||
|
Selling, general and administrative expenses |
|
397 |
|
(67 |
) |
|
|
330 |
| |||
|
Operating profit |
|
171 |
|
(6 |
) |
|
|
165 |
| |||
|
Interest expense |
|
(56 |
) |
— |
|
|
|
(56 |
) | |||
|
Other, net |
|
1 |
|
— |
|
|
|
1 |
| |||
|
Income from continuing operations before income taxes |
|
116 |
|
(6 |
) |
|
|
110 |
| |||
|
Income tax expense |
|
43 |
|
(3 |
) |
(B) |
|
40 |
| |||
|
Income from continuing operations |
|
$ |
73 |
|
$ |
(3 |
) |
|
|
$ |
70 |
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Income from continuing operations attributable to Masco Corporation |
|
$ |
64 |
|
$ |
(3 |
) |
|
|
$ |
61 |
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Basic income per common share attributable to Masco Corporation: |
|
|
|
|
|
|
|
|
| |||
|
Income from continuing operations |
|
$ |
.18 |
|
|
|
|
|
$ |
.17 |
| |
|
Weighted average shares outstanding |
|
344 |
|
|
|
|
|
344 |
| |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Diluted income per common share attributable to Masco Corporation: |
|
|
|
|
|
|
|
|
| |||
|
Income from continuing operations |
|
$ |
.18 |
|
|
|
|
|
$ |
.17 |
| |
|
Weighted average shares outstanding |
|
347 |
|
|
|
|
|
347 |
| |||
MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2014
(In millions, except per share amounts)
|
|
|
Masco |
|
TopBuild’s |
|
Notes |
|
Pro Forma Masco |
| |||
|
Net Sales |
|
$ |
8,521 |
|
$ |
(1,515 |
) |
|
|
$ |
7,006 |
|
|
Cost of sales |
|
6,134 |
|
(1,188 |
) |
|
|
4,946 |
| |||
|
Gross profit |
|
2,387 |
|
(327 |
) |
|
|
2,060 |
| |||
|
Selling, general and administrative expenses |
|
1,607 |
|
(260 |
) |
|
|
1,347 |
| |||
|
Income for litigation settlements |
|
(9 |
) |
— |
|
|
|
(9 |
) | |||
|
Impairment charge for other intangible assets |
|
1 |
|
— |
|
|
|
1 |
| |||
|
Operating profit |
|
788 |
|
(67 |
) |
|
|
721 |
| |||
|
Interest expense |
|
(225 |
) |
— |
|
|
|
(225 |
) | |||
|
Other, net |
|
12 |
|
(1 |
) |
|
|
11 |
| |||
|
Income from continuing operations before income taxes |
|
575 |
|
(68 |
) |
|
|
507 |
| |||
|
Income tax (benefit) expense |
|
(333 |
) |
(28 |
) |
(B) |
|
(361 |
) | |||
|
Income from continuing operations |
|
$ |
908 |
|
$ |
(40 |
) |
|
|
$ |
868 |
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Income from continuing operations attributable to Masco Corporation |
|
$ |
861 |
|
$ |
(40 |
) |
|
|
$ |
821 |
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Basic income per common share attributable to Masco Corporation: |
|
|
|
|
|
|
|
|
| |||
|
Income from continuing operations |
|
$ |
2.42 |
|
|
|
|
|
$ |
2.31 |
| |
|
Weighted average shares outstanding |
|
349 |
|
|
|
|
|
349 |
| |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Diluted income per common share attributable to Masco Corporation: |
|
|
|
|
|
|
|
|
| |||
|
Income from continuing operations |
|
$ |
2.39 |
|
|
|
|
|
$ |
2.28 |
| |
|
Weighted average shares outstanding |
|
352 |
|
|
|
|
|
352 |
| |||
MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2013
(In millions, except per share amounts)
|
|
|
Masco |
|
TopBuild’s |
|
Notes |
|
Pro Forma Masco |
| |||
|
Net Sales |
|
$ |
8,173 |
|
$ |
(1,412 |
) |
|
|
$ |
6,761 |
|
|
Cost of sales |
|
5,918 |
|
(1,116 |
) |
|
|
4,802 |
| |||
|
Gross profit |
|
2,255 |
|
(296 |
) |
|
|
1,959 |
| |||
|
Selling, general and administrative expenses |
|
1,582 |
|
(235 |
) |
|
|
1,347 |
| |||
|
Operating profit |
|
673 |
|
(61 |
) |
|
|
612 |
| |||
|
Interest expense |
|
(235 |
) |
— |
|
|
|
(235 |
) | |||
|
Other, net |
|
12 |
|
(3 |
) |
|
|
9 |
| |||
|
Income from continuing operations before income taxes |
|
450 |
|
(64 |
) |
|
|
386 |
| |||
|
Income tax expense |
|
111 |
|
(25 |
) |
(B) |
|
86 |
| |||
|
Income from continuing operations |
|
$ |
339 |
|
$ |
(39 |
) |
|
|
$ |
300 |
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Income from continuing operations attributable to Masco Corporation |
|
$ |
298 |
|
$ |
(39 |
) |
|
|
$ |
259 |
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Basic income per common share attributable to Masco Corporation: |
|
|
|
|
|
|
|
|
| |||
|
Income from continuing operations |
|
$ |
.83 |
|
|
|
|
|
$ |
.72 |
| |
|
Weighted average shares outstanding |
|
350 |
|
|
|
|
|
350 |
| |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Diluted income per common share attributable to Masco Corporation: |
|
|
|
|
|
|
|
|
| |||
|
Income from continuing operations |
|
$ |
.83 |
|
|
|
|
|
$ |
.72 |
| |
|
Weighted average shares outstanding |
|
352 |
|
|
|
|
|
352 |
| |||
MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2012
(In millions, except per share amounts)
|
|
|
Masco |
|
TopBuild’s |
|
Notes |
|
Pro Forma Masco |
| |||
|
Net Sales |
|
$ |
7,495 |
|
$ |
(1,209 |
) |
|
|
$ |
6,286 |
|
|
Cost of sales |
|
5,539 |
|
(978 |
) |
|
|
4,561 |
| |||
|
Gross profit |
|
1,956 |
|
(231 |
) |
|
|
1,725 |
| |||
|
Selling, general and administrative expenses |
|
1,535 |
|
(237 |
) |
|
|
1,298 |
| |||
|
Charge for litigation settlements |
|
77 |
|
(76 |
) |
|
|
1 |
| |||
|
Impairment charge for other intangible assets |
|
42 |
|
— |
|
|
|
42 |
| |||
|
Operating profit |
|
302 |
|
82 |
|
|
|
384 |
| |||
|
Interest expense |
|
(254 |
) |
— |
|
|
|
(254 |
) | |||
|
Other, net |
|
25 |
|
— |
|
|
|
25 |
| |||
|
Income from continuing operations before income taxes |
|
73 |
|
82 |
|
|
|
155 |
| |||
|
Income tax expense |
|
91 |
|
(25 |
) |
(B) |
|
66 |
| |||
|
(Loss) income from continuing operations |
|
$ |
(18 |
) |
$ |
107 |
|
|
|
$ |
89 |
|
|
|
|
|
|
|
|
|
|
|
| |||
|
(Loss) income from continuing operations attributable to Masco Corporation |
|
$ |
(53 |
) |
$ |
107 |
|
|
|
$ |
54 |
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Basic (loss) income per common share attributable to Masco Corporation: |
|
|
|
|
|
|
|
|
| |||
|
(Loss) income from continuing operations |
|
$ |
(.16 |
) |
|
|
|
|
$ |
.15 |
| |
|
Weighted average shares outstanding |
|
349 |
|
|
|
|
|
349 |
| |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Diluted (loss) income per common share attributable to Masco Corporation: |
|
|
|
|
|
|
|
|
| |||
|
(Loss) income from continuing operations |
|
$ |
(.16 |
) |
|
|
|
|
$ |
.15 |
| |
|
Weighted average shares outstanding |
|
349 |
|
|
|
|
|
349 |
| |||
MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2015
(In millions, except share and per share amounts)
|
|
|
Masco |
|
TopBuild |
|
Pro Forma |
|
Notes |
|
Pro Forma Masco |
| ||||
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
| ||||
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
| ||||
|
Cash and cash investments |
|
$ |
1,578 |
|
$ |
140 |
|
$ |
— |
|
|
|
$ |
1,718 |
|
|
Short-term bank deposits |
|
197 |
|
— |
|
— |
|
|
|
197 |
| ||||
|
Receivables |
|
1,248 |
|
(217 |
) |
— |
|
|
|
1,031 |
| ||||
|
Inventories |
|
863 |
|
(104 |
) |
— |
|
|
|
759 |
| ||||
|
Deferred income taxes |
|
219 |
|
— |
|
— |
|
|
|
219 |
| ||||
|
Prepaid expenses and other |
|
74 |
|
(4 |
) |
— |
|
|
|
70 |
| ||||
|
Total current assets |
|
4,179 |
|
(185 |
) |
— |
|
|
|
3,994 |
| ||||
|
Property and equipment, net |
|
1,106 |
|
(92 |
) |
— |
|
|
|
1,014 |
| ||||
|
Goodwill |
|
1,878 |
|
(1,044 |
) |
— |
|
|
|
834 |
| ||||
|
Other intangible assets, net |
|
158 |
|
(3 |
) |
— |
|
|
|
155 |
| ||||
|
Other assets |
|
147 |
|
46 |
|
— |
|
|
|
193 |
| ||||
|
Total assets |
|
$ |
7,468 |
|
$ |
(1,278 |
) |
$ |
— |
|
|
|
$ |
6,190 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
| ||||
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
| ||||
|
Notes payable |
|
$ |
506 |
|
$ |
— |
|
$ |
— |
|
|
|
$ |
506 |
|
|
Accounts payable |
|
1,019 |
|
(197 |
) |
— |
|
|
|
822 |
| ||||
|
Accrued liabilities |
|
682 |
|
(75 |
) |
11 |
|
(C) |
|
618 |
| ||||
|
Total current liabilities |
|
2,207 |
|
(272 |
) |
11 |
|
|
|
1,946 |
| ||||
|
Long-term debt |
|
3,418 |
|
— |
|
— |
|
|
|
3,418 |
| ||||
|
Other liabilities |
|
770 |
|
(42 |
) |
— |
|
|
|
728 |
| ||||
|
Deferred income taxes |
|
114 |
|
(114 |
) |
— |
|
|
|
— |
| ||||
|
Total liabilities |
|
6,509 |
|
(428 |
) |
11 |
|
|
|
6,092 |
| ||||
|
Equity: |
|
|
|
|
|
|
|
|
|
|
| ||||
|
Preferred shares — 1,000,000 shares authorized; none issued and outstanding |
|
— |
|
— |
|
— |
|
|
|
— |
| ||||
|
Common shares - $1 par value; Authorized shares: 1,400,000,000; issued and outstanding: 342,600,000 |
|
343 |
|
— |
|
— |
|
|
|
343 |
| ||||
|
Paid-in capital |
|
— |
|
— |
|
— |
|
|
|
— |
| ||||
|
Retained earnings (deficit) |
|
606 |
|
(850 |
) |
(11 |
) |
(D) |
|
(255 |
) | ||||
|
Accumulated other comprehensive loss |
|
(180 |
) |
— |
|
— |
|
|
|
(180 |
) | ||||
|
Total Masco Corporation’s shareholders’ equity |
|
769 |
|
(850 |
) |
(11 |
) |
|
|
(92 |
) | ||||
|
Noncontrolling interest |
|
190 |
|
— |
|
— |
|
|
|
190 |
| ||||
|
Total equity |
|
959 |
|
(850 |
) |
(11 |
) |
|
|
98 |
| ||||
|
Total liabilities and equity |
|
$ |
7,468 |
|
$ |
(1,278 |
) |
$ |
— |
|
|
|
$ |
6,190 |
|
MASCO CORPORATION
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
(A) The information in the TopBuild Separation column in the unaudited pro forma condensed consolidated statements of operations was derived from Masco’s unaudited financial statements for the three months ended March 31, 2015 and Masco’s audited financial statements for the years ended December 31, 2014, 2013, and 2012, adjusted to include certain costs that are directly attributable to TopBuild and are factually supportable, and to exclude corporate overhead costs that were previously allocated to TopBuild for each period. The information in the TopBuild Separation column in the unaudited pro forma condensed consolidated balance sheet was derived from Masco’s unaudited financial statements as of March 31, 2015, adjusted to include certain assets and liabilities that are directly attributable to TopBuild and are factually supportable. The TopBuild Separation column also reflects the $200 million cash distribution from TopBuild prior to the Separation from proceeds of third party debt incurred by TopBuild on the date of Separation, reduced by approximately $60 million, which represents TopBuild’s cash balance on the date of Separation.
(B) Represents the tax impact of the Separation of TopBuild from Masco. Masco’s effective tax rate following the Separation could be either higher or lower than that used to calculate its pro forma provision for income taxes, depending on activities subsequent to the Separation of TopBuild from Masco.
(C) Reflects additional one-time costs of $11 million expected to be incurred subsequent to March 31, 2015. One-time costs incurred by Masco for the three months ended March 31, 2015 and year ended December 31, 2014 were $4 million and $6 million, respectively. Masco expects to incur and pay an aggregate of approximately $21 million of one-time costs associated with the Separation, including legal and advisory costs.
(D) Shareholders’ equity was adjusted for the pro forma adjustments specified in Notes (A) and (C), including the cash distribution of $200 million from TopBuild, reduced by approximately $60 million representing TopBuild’s cash balance on the date of Separation.