EX-99.2
3
exhibit992-mascocabine.htm
EXHIBIT 99.2
Exhibit
Exhibit 99.2
Masco Corporation
Unaudited Pro Forma Consolidated Financial Information
On February 18, 2020, Masco Corporation ("Masco") completed the previously-announced sale (the "Transaction") of Masco Cabinetry LLC, a Delaware limited liability company ("Cabinetry") to ACProducts, Inc., a Delaware corporation ("ACPI"). The purchase price for the Transaction was $1 billion, consisting of $850 million in cash and preferred stock issued by ACProducts Holdings, Inc., a Delaware corporation and holding company of ACPI, with a liquidation preference of $150 million. The Transaction closed in accordance with the terms of the securities purchase agreement entered into on November 14, 2019.
We determined that the sale of Cabinetry (the "Separation") represented a strategic shift that will have a major effect on our operations and financial results, as this business represented all of our cabinet businesses and all remaining businesses in our previously reported Cabinetry Products segment.
The unaudited pro forma condensed consolidated statement of operations has been prepared as though the Separation occurred on January 1, 2019. The following unaudited pro forma condensed consolidated balance sheet of Masco as of December 31, 2019 has been prepared as though the Separation occurred on December 31, 2019.
The unaudited pro forma consolidated financial statements are for illustrative purposes only, and do not reflect Masco's financial position or results of operations had the Separation occurred on the date indicated and are not necessarily indicative of Masco's future financial position and future results of operations. Beginning with Masco's annual report for 2019, Cabinetry's historical financial results for periods prior to the Separation were reflected in Masco's consolidated financial statements within discontinued operations.
The information in the Cabinetry Business' Separation column of the unaudited pro forma condensed consolidated statement of operations was derived from Masco's audited financial statements for the year ended December 31, 2019, adjusted to include certain costs that are directly attributable to the Cabinetry business and are factually supportable, and to exclude corporate overhead costs that were previously allocated to the Cabinetry business. The information in the Cabinetry Business' Separation column of the unaudited pro forma condensed consolidated balance sheet was derived from Masco's audited financial statements as of December 31, 2019, adjusted to include certain assets and liabilities that are directly attributable to the Cabinetry business and are factually supportable.
The Pro Forma Adjustments column in the unaudited pro forma condensed consolidated balance sheet 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.
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MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2019
(In millions, except per share amounts)
Masco Historical
Cabinetry Business' Separation
(A) (B)
Notes
Pro Forma Masco Continuing Operations
Net Sales
$
6,707
$
-
$
6,707
Cost of sales
4,336
-
4,336
Gross profit
2,371
-
2,371
Selling, general and administrative expenses
1,274
-
1,274
Impairment charge for other intangible assets
9
-
9
Operating profit
1,088
-
1,088
Interest expense
(159
)
-
(159
)
Other, net
(15
)
-
(15
)
Income from continuing operations before income taxes
914
-
914
Income tax expense
230
-
230
Income from continuing operations
$
684
$
-
$
684
Income from continuing operations attributable to Masco Corporation
$
639
$
-
$
639
Basic income per common share attributable to Masco Corporation:
Income from continuing operations
$
2.21
$
2.21
Weighted average shares outstanding
287
287
Diluted income per common share attributable to Masco Corporation:
Income from continuing operations
$
2.20
$
2.20
Weighted average shares outstanding
288
288
2
MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 2019
(In millions, except share and per share amounts)
Masco Historical
Cabinetry Business' Separation (A)
Pro Forma Adjustments
Notes
Pro Forma Masco Continuing Operations
ASSETS
Current assets:
Cash and cash investments
$
697
$
850
$
-
$
1,547
Receivables
997
-
-
997
Inventories
754
-
-
754
Prepaid expenses and other
90
-
-
90
Assets held for sale
173
(173
)
-
-
Total current assets
2,711
677
-
3,388
Property and equipment, net
878
-
-
878
Operating lease right-of-use assets
176
-
-
176
Goodwill
509
-
-
509
Other intangible assets, net
259
-
-
259
Other assets
139
150
-
289
Assets held for sale
355
(355
)
-
-
Total assets
$
5,027
$
472
$
-
$
5,499
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
697
$
-
$
-
$
697
Notes payable
2
-
-
2
Accrued liabilities
700
-
16
(C)
716
Liabilities held for sale
149
(149
)
-
-
Total current liabilities
1,548
(149
)
16
1,415
Long-term debt
2,771
-
-
2,771
Other liabilities
751
-
-
751
Liabilities held for sale
13
(13
)
-
-
Total liabilities
5,083
(162
)
16
4,937
Equity:
Common shares - $1 par value; Authorized shares: 1,400,000,000; Issued and outstanding: 275,600,000
276
-
-
276
Preferred shares authorized: 1,000,000; Issued and outstanding - None
-
-
-
-
Paid-in capital
-
-
-
-
Retained (deficit) equity
(332
)
634
(16
)
(D)
286
Accumulated other comprehensive loss
(179
)
-
-
(179
)
Total Masco Corporation's shareholders' (deficit) equity
(235
)
634
(16
)
383
Noncontrolling interest
179
-
-
179
Total equity
(56
)
634
(16
)
562
Total liabilities and equity
$
5,027
$
472
$
-
$
5,499
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MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
(A)
The information in the Cabinetry Business' Separation column of the unaudited pro forma condensed consolidated statement of operations was derived from Masco's audited financial statements for the year ended December 31, 2019, adjusted to include certain costs that are directly attributable to the Cabinetry business and are factually supportable, and to exclude corporate overhead costs that were previously allocated to the Cabinetry business. The information in the Cabinetry Business' Separation column of the unaudited pro forma condensed consolidated balance sheet was derived from Masco's audited financial statements as of December 31, 2019, adjusted to include certain assets and liabilities that are directly attributable to the Cabinetry business and are factually supportable. The Cabinetry Business' Separation column also reflects the $850 million cash proceeds and $150 million of preferred stock based on the liquidation preference received in conjunction with the sale of Cabinetry.
(B)
Amounts reported in Masco's Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the Securities and Exchange Commission on February 11, 2020, which presents the results of operations of the Cabinetry business as discontinued operations. Therefore, no adjustments for this business are necessary.
(C)
Reflects additional one-time transaction costs of $16 million expected to be incurred subsequent to December 31, 2019. One-time transaction costs incurred by Masco for the year ended December 31, 2019 was $8 million. Masco expects to incur and pay an aggregate of approximately $24 million of one-time transaction costs associated with the Separation, including legal and advisory costs.
(D)
Shareholders' (deficit) equity was adjusted for the pro forma adjustments specified in Notes (A) and (C), including the $850 million of cash and $150 million of preferred stock based on the liquidation preference received in conjunction with the sale of Cabinetry.
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EX - 99 . 2 3 exhibit992 - mascocabine . htm EXHIBIT 99 . 2 Exhibit Exhibit 99 . 2 Masco Corporation Unaudited Pro Forma Consolidated Financial Information On February 18 , 2020 , Masco Corporation ( " Masco " ) completed the previously - announced sale ( the " Transaction " ) of Masco Cabinetry LLC , a Delaware limited liability company ( " Cabinetry " ) to ACProducts , Inc . , a Delaware corporation ( " ACPI " ) . The purchase price for the Transaction was $ 1 billion , consisting of $ 850 million in cash and preferred stock issued by ACProducts Holdings , Inc . , a Delaware corporation and holding company of ACPI , with a liquidation preference of $ 150 million . The Transaction closed in accordance with the terms of the securities purchase agreement entered into on November 14 , 2019 . We determined that the sale of Cabinetry ( the " Separation " ) represented a strategic shift that will have a major effect on our operations and financial results , as this business represented all of our cabinet businesses and all remaining businesses in our previously reported Cabinetry Products segment . The unaudited pro forma condensed consolidated statement of operations has been prepared as though the Separation occurred on January 1 , 2019 . The following unaudited pro forma condensed consolidated balance sheet of Masco as of December 31 , 2019 has been prepared as though the Separation occurred on December 31 , 2019 . The unaudited pro forma consolidated financial statements are for illustrative purposes only , and do not reflect Masco 's financial position or results of operations had the Separation occurred on the date indicated and are not necessarily indicative of Masco 's future financial position and future results of operations . Beginning with Masco 's annual report for 2019 , Cabinetry 's historical financial results for periods prior to the Separation were reflected in Masco 's consolidated financial statements within discontinued operations . The information in the Cabinetry Business ' Separation column of the unaudited pro forma condensed consolidated statement of operations was derived from Masco 's audited financial statements for the year ended December 31 , 2019 , adjusted to include certain costs that are directly attributable to the Cabinetry business and are factually supportable , and to exclude corporate overhead costs that were previously allocated to the Cabinetry business . The information in the Cabinetry Business ' Separation column of the unaudited pro forma condensed consolidated balance sheet was derived from Masco 's audited financial statements as of December 31 , 2019 , adjusted to include certain assets and liabilities that are directly attributable to the Cabinetry business and are factually supportable . The Pro Forma Adjustments column in the unaudited pro forma condensed consolidated balance sheet 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 . 1 MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31 , 2019 ( In millions , except per share amounts ) Masco Historical Cabinetry Business ' Separation ( A ) ( B ) Notes Pro Forma Masco Continuing Operations Net Sales $ 6,707 $ - $ 6,707 Cost of sales 4,336 - 4,336 Gross profit 2,371 - 2,371 Selling , general and administrative expenses 1,274 - 1,274 Impairment charge for other intangible assets 9 - 9 Operating profit 1,088 - 1,088 Interest expense ( 159 ) - ( 159 ) Other , net ( 15 ) - ( 15 ) Income from continuing operations before income taxes 914 - 914 Income tax expense 230 - 230 Income from continuing operations $ 684 $ - $ 684 Income from continuing operations attributable to Masco Corporation $ 639 $ - $ 639 Basic income per common share attributable to Masco Corporation : Income from continuing operations $ 2 . 21 $ 2 . 21 Weighted average shares outstanding 287 287 Diluted income per common share attributable to Masco Corporation : Income from continuing operations $ 2 . 20 $ 2 . 20 Weighted average shares outstanding 288 288 2 MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31 , 2019 ( In millions , except share and per share amounts ) Masco Historical Cabinetry Business ' Separation ( A ) Pro Forma Adjustments Notes Pro Forma Masco Continuing Operations ASSETS Current assets : Cash and cash investments $ 697 $ 850 $ - $ 1,547 Receivables 997 - - 997 Inventories 754 - - 754 Prepaid expenses and other 90 - - 90 Assets held for sale 173 ( 173 ) - - Total current assets 2,711 677 - 3,388 Property and equipment , net 878 - - 878 Operating lease right - of - use assets 176 - - 176 Goodwill 509 - - 509 Other intangible assets , net 259 - - 259 Other assets 139 150 - 289 Assets held for sale 355 ( 355 ) - - Total assets $ 5,027 $ 472 $ - $ 5,499 LIABILITIES AND EQUITY Current liabilities : Accounts payable $ 697 $ - $ - $ 697 Notes payable 2 - - 2 Accrued liabilities 700 - 16 ( C ) 716 Liabilities held for sale 149 ( 149 ) - - Total current liabilities 1,548 ( 149 ) 16 1,415 Long - term debt 2,771 - - 2,771 Other liabilities 751 - - 751 Liabilities held for sale 13 ( 13 ) - - Total liabilities 5,083 ( 162 ) 16 4,937 Equity : Common shares - $ 1 par value ; Authorized shares : 1,400,000,000 ; Issued and outstanding : 275,600,000 276 - - 276 Preferred shares authorized : 1,000,000 ; Issued and outstanding - None - - - - Paid - in capital - - - - Retained ( deficit ) equity ( 332 ) 634 ( 16 ) ( D ) 286 Accumulated other comprehensive loss ( 179 ) - - ( 179 ) Total Masco Corporation 's shareholders ' ( deficit ) equity ( 235 ) 634 ( 16 ) 383 Non controlling interest 179 - - 179 Total equity ( 56 ) 634 ( 16 ) 562 Total liabilities and equity $ 5,027 $ 472 $ - $ 5,499 3 MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements ( A ) The information in the Cabinetry Business ' Separation column of the unaudited pro forma condensed consolidated statement of operations was derived from Masco 's audited financial statements for the year ended December 31 , 2019 , adjusted to include certain costs that are directly attributable to the Cabinetry business and are factually supportable , and to exclude corporate overhead costs that were previously allocated to the Cabinetry business . The information in the Cabinetry Business ' Separation column of the unaudited pro forma condensed consolidated balance sheet was derived from Masco 's audited financial statements as of December 31 , 2019 , adjusted to include certain assets and liabilities that are directly attributable to the Cabinetry business and are factually supportable . The Cabinetry Business ' Separation column also reflects the $ 850 million cash proceeds and $ 150 million of preferred stock based on the liquidation preference received in conjunction with the sale of Cabinetry . ( B ) Amounts reported in Masco 's Annual Report on Form 10 - K for the year ended December 31 , 2019 , as filed with the Securities and Exchange Commission on February 11 , 2020 , which presents the results of operations of the Cabinetry business as discontinued operations . Therefore , no adjustments for this business are necessary . ( C ) Reflects additional one - time transaction costs of $ 16 million expected to be incurred subsequent to December 31 , 2019 . One - time transaction costs incurred by Masco for the year ended December 31 , 2019 was $ 8 million . Masco expects to incur and pay an aggregate of approximately $ 24 million of one - time transaction costs associated with the Separation , including legal and advisory costs . ( D ) Shareholders ' ( deficit ) equity was adjusted for the pro forma adjustments specified in Notes ( A ) and ( C ) , including the $ 850 million of cash and $ 150 million of preferred stock based on the liquidation preference received in conjunction with the sale of Cabinetry . 4