UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC  20549

	
 	
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
 
Date of report (Date of earliest event reported): November 6, 2019

Masco Corporation
(Exact name of Registrant as Specified in Charter)

			
Delaware	1-5794	38-1794485	
(State or Other Jurisdiction of
Incorporation or Organization)	(Commission File Number)	(I.R.S. Employer Identification No.)	

					
17450 College Parkway,	Livonia,	Michigan	 	48152	
(Address of Principal Executive Offices)	 	(Zip Code)	
(313) 274-7400
(Registrant’s telephone number, including area code)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

			
Title of each class	Trading Symbol	Name of each exchange on which registered	
Common Stock, $1.00 par value	MAS	New York Stock Exchange	

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
☐ Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

	

Item 2.01.  Completion of Acquisition or disposition of Assets.
 
On November 6, 2019, Masco Corporation (“Masco”) completed the previously-announced sale (the “Transaction”) of Milgard Manufacturing Incorporated, a Washington corporation, which operates under the name Milgard Windows and Doors (“Milgard”), to MIWD Holding Company LLC, a Delaware limited liability company. The purchase price for the Transaction was $725 million in cash, and we expect to recognize a gain on the divestiture of approximately $395 million. The Transaction closed in accordance with the terms of the stock purchase agreement entered into on September 29, 2019.

On September 6, 2019, Masco completed the sale of the UK Window Group (“UKWG”). We determined that the combined sale of Milgard and UKWG represented a strategic shift that will have a major effect on our operations and financial results, as these businesses represented all of our windows businesses and all remaining businesses in the Windows and Other Specialty Products segment. As a result, we believe including UKWG as part of the pro forma financial statements is appropriate and more meaningful than solely depicting the Milgard divestiture, as the pro forma financial statements reflect Masco’s financial results excluding all of the results of our windows businesses.

Item 9.01.  Financial Statements and Exhibits.
 
(b) Pro Forma Financial Information
 
The unaudited pro forma condensed consolidated balance sheet of Masco Corporation dated as of September 30, 2019 and the unaudited pro forma condensed consolidated statements of operations of Masco Corporation for the nine months ended September 30, 2019 and for the years ended December 31, 2018, 2017 and 2016 are filed as Exhibit 99.2 to this Current Report on Form 8-K.
 
(d) Exhibits

	
				
99.1		 	Press release issued by Masco, dated November 7, 2019, announcing the completion of the Milgard sale	
99.2		 	Unaudited pro forma condensed consolidated balance sheet of Masco Corporation dated as of September 30, 2019 and the unaudited pro forma condensed consolidated statements of operations of Masco Corporation for the nine months ended September 30, 2019 and for the years ended December 31, 2018, 2017 and 2016	
104		 	Cover Page Interactive Data File (embedded within the Inline XBRL document)	

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 thereunto duly authorized.

	
			
 	MASCO CORPORATION	

 	By:	/s/ John G. Sznewajs	
 	Name:	John G. Sznewajs	
 	Title:	Vice President, Chief Financial Officer	

November 8, 2019

	

2

 Exhibit 99.1

MASCO CORPORATION ANNOUNCES COMPLETION OF
THE SALE OF MILGARD WINDOWS AND DOORS

LIVONIA, Mich. (November 7, 2019) - Masco Corporation (NYSE: MAS), one of the world’s leading manufacturers of branded home improvement and building products, announced today the completion of the sale of Milgard Windows and Doors to MI Windows and Doors LLC for approximately $725 million.

About Masco

Headquartered in Livonia, Michigan, Masco Corporation is a global leader in the design, manufacture and distribution of branded home improvement and building products. Our portfolio of industry-leading brands includes Behr® paint; Delta® and Hansgrohe® faucets, bath and shower fixtures; KraftMaid® and Merillat® cabinets; Kichler® decorative and outdoor lighting; and HotSpring® spas. We leverage our powerful brands across product categories, sales channels and geographies to create value for our customers and shareholders. For more information about Masco Corporation, visit www.masco.com.

Investor Contact

David Chaika
Vice President, Treasurer and Investor Relations    
313.792.5500
david_chaika@mascohq.com
# # #

1

 Exhibit 99.2
 
Masco Corporation
Unaudited Pro Forma Consolidated Financial Information
 
On November 6, 2019, Masco Corporation (“Masco”) completed the previously-announced sale (the “Transaction”) of Milgard Manufacturing Incorporated, a Washington corporation, which operates under the name Milgard Windows and Doors ("Milgard"), to MIWD Holding Company LLC, a Delaware limited liability company. The purchase price for the Transaction was $725 million in cash, and we expect to recognize a gain on the divestiture of approximately $395 million. The Transaction closed in accordance with the terms of the stock purchase agreement entered into on September 29, 2019.

On September 6, 2019, Masco completed the sale of the UK Window Group (“UKWG”). We determined that the combined sale of Milgard and UKWG (the “Separations”) represented a strategic shift that will have a major effect on our operations and financial results, as these businesses represented all of our windows businesses and all remaining businesses in the Windows and Other Specialty Products segment. As a result, we believe including UKWG as part of the pro forma financial statements is appropriate and more meaningful than solely depicting the Milgard divestiture, as the pro forma financial statements reflect Masco’s financial results excluding all of the results of our windows businesses.
 
The unaudited pro forma condensed consolidated statements of operations have been prepared as though the Separations occurred on January 1, 2018. The historical financial statements have been recast for periods required under ASC 205-20.  The following unaudited pro forma condensed consolidated balance sheet of Masco as of September 30, 2019 has been prepared as though the Separations occurred on September 30, 2019.
 
The unaudited pro forma condensed consolidated financial statements are for illustrative purposes only, and do not reflect Masco’s financial position or results of operations had the Separations 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 third quarter of 2019, Milgard and UKWG’s historical financial results for periods prior to the Separations were reflected in Masco’s consolidated financial statements within discontinued operations.
 
The information in the Windows Businesses’ Separation column of the unaudited pro forma condensed consolidated statements of operations was derived from Masco’s unaudited financial statements for the nine months ended September 30, 2019 and Masco’s audited financial statements for the years ended December 31, 2018, 2017, and 2016, adjusted to include certain costs that are directly attributable to the windows businesses and are factually supportable, and to exclude corporate overhead costs that were previously allocated to the windows businesses for each period. The information in the Windows Businesses’ Separation column of the unaudited pro forma condensed consolidated balance sheet was derived from Masco’s unaudited financial statements as of September 30, 2019, adjusted to include certain assets and liabilities that are directly attributable to the windows businesses 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
NINE MONTHS ENDED SEPTEMBER 30, 2019
(In millions, except per share amounts)

	
															
 	 	Masco Historical	 	Windows Businesses' Separation (A) (B)	 	Notes	 	Pro Forma Masco Continuing Operations	
Net Sales	 	$	5,787		 	$	—		 	(C)	 	$	5,787		
Cost of sales	 	3,813		 	—		 	 	 	3,813		
Gross profit	 	1,974		 	—		 	 	 	1,974		
Selling, general and administrative expenses	 	1,047		 	—		 	 	 	1,047		
Impairment charge for other intangible assets	 	9		 	—		 	 	 	9		
Operating profit	 	918		 	—		 	 	 	918		
Interest expense	 	(119	)	 	—		 	 	 	(119	)	
Other, net	 	(16	)	 	—		 	 	 	(16	)	
Income from continuing operations before income taxes	 	783		 	—		 	 	 	783		
Income tax expense	 	202		 	—		 	 	 	202		
Income from continuing operations	 	$	581		 	$	—		 	 	 	$	581		
 	 	 	 	—		 	 	 	 	
Income from continuing operations attributable to Masco Corporation	 	$	546		 	$	—		 	 	 	$	546		
 	 	 	 	 	 	 	 	 	
Basic income per common share attributable to Masco Corporation:	 	 	 	 	 	 	 	 	
Income from continuing operations	 	$	1.88		 	 	 	 	 	$	1.88		
Weighted average shares outstanding	 	289		 	 	 	 	 	289		
 	 	 	 	 	 	 	 	 	
Diluted income per common share attributable to Masco Corporation:	 	 	 	 	 	 	 	 	
Income from continuing operations	 	$	1.87		 	 	 	 	 	$	1.87		
Weighted average shares outstanding	 	290		 	 	 	 	 	290		

2

MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2018
(In millions, except per share amounts)

	
															
 	 	Masco Historical	 	Windows Businesses' Separation (A)	 	Notes	 	Pro Forma Masco Continuing Operations	
Net Sales	 	$	8,359		 	$	(755	)	 	(C)	 	$	7,604		
Cost of sales	 	5,670		 	(596	)	 	 	 	5,074		
Gross profit	 	2,689		 	(159	)	 	 	 	2,530		
Selling, general and administrative expenses	 	1,478		 	(119	)	 	 	 	1,359		
Operating profit	 	1,211		 	(40	)	 	 	 	1,171		
Interest expense	 	(156	)	 	—		 	 	 	(156	)	
Other, net	 	(13	)	 	—		 	 	 	(13	)	
Income from continuing operations before income taxes	 	1,042		 	(40	)	 	 	 	1,002		
Income tax expense	 	258		 	(15	)	 	(D)	 	243		
Income from continuing operations	 	$	784		 	$	(25	)	 	 	 	$	759		
 	 	 	 	 	 	 	 		
Income from continuing operations attributable to Masco Corporation	 	$	734		 	$	(25	)	 	 	 	$	709		
 	 	 	 	 	 	 	 	 	
Basic income per common share attributable to Masco Corporation:	 	 	 	 	 	 	 	 	
Income from continuing operations	 	$	2.38		 	 	 	 	 	$	2.30		
Weighted average shares outstanding	 	305		 	 	 	 	 	305		
 	 	 	 	 	 	 	 	 	
Diluted income per common share attributable to Masco Corporation:	 	 	 	 	 	 	 	 	
Income from continuing operations	 	$	2.37		 	 	 	 	 	$	2.29		
Weighted average shares outstanding	 	307		 	 	 	 	 	307		

 

 

3

MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2017
(In millions, except per share amounts)

	
															
 	 	Masco Historical	 	Windows Businesses' Separation (A)	 	Notes	 	Pro Forma Masco Continuing Operations	
Net Sales	 	$	7,642		 	$	(737	)	 	(C)	 	$	6,905		
Cost of sales	 	5,030		 	(561	)	 	 	 	4,469		
Gross profit	 	2,612		 	(176	)	 	 	 	2,436		
Selling, general and administrative expenses	 	1,418		 	(120	)	 	 	 	1,298		
Operating profit	 	1,194		 	(56	)	 	 	 	1,138		
Interest expense	 	(278	)	 	(1	)	 	 	 	(279	)	
Other, net	 	(32	)	 	—		 	 	 	(32	)	
Income from continuing operations before income taxes	 	884		 	(57	)	 	 	 	827		
Income tax expense	 	304		 	(21	)	 	(D)	 	283		
Income from continuing operations	 	$	580		 	$	(36	)	 	 	 	$	544		
 	 	 	 	 	 	 	 		
Income from continuing operations attributable to Masco Corporation	 	$	533		 	$	(36	)	 	 	 	$	497		
 	 	 	 	 	 	 	 	 	
Basic income per common share attributable to Masco Corporation:	 	 	 	 	 	 	 	 	
Income from continuing operations	 	$	1.68		 	 	 	 	 	$	1.57		
Weighted average shares outstanding	 	314		 	 	 	 	 	314		
 	 	 	 	 	 	 	 	 	
Diluted income per common share attributable to Masco Corporation:	 	 	 	 	 	 	 	 	
Income from continuing operations	 	$	1.66		 	 	 	 	 	$	1.55		
Weighted average shares outstanding	 	318		 	 	 	 	 	318		

 

4

MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2016
(In millions, except per share amounts)

	
															
 	 	Masco Historical	 	Windows Businesses' Separation (A)	 	Notes	 	Pro Forma Masco Continuing Operations	
Net Sales	 	$	7,361		 	$	(699	)	 	(C)	 	$	6,662		
Cost of sales	 	4,899		 	(578	)	 	 	 	4,321		
Gross profit	 	2,462		 	(121	)	 	 	 	2,341		
Selling, general and administrative expenses	 	1,375		 	(129	)	 	 	 	1,246		
Operating profit	 	1,087		 	8		 	 	 	1,095		
Interest expense	 	(229	)	 	(2	)	 	 	 	(231	)	
Other, net	 	(26	)	 	—		 	 	 	(26	)	
Income from continuing operations before income taxes	 	832		 	6		 	 	 	838		
Income tax expense	 	296		 	3		 	(D)	 	299		
Income from continuing operations	 	$	536		 	$	3		 	 	 	$	539		
 	 	 	 	 	 	 	 		
Income from continuing operations attributable to Masco Corporation	 	$	493		 	$	3		 	 	 	$	496		
 	 	 	 	 	 	 	 	 	
Basic income per common share attributable to Masco Corporation:	 	 	 	 	 	 	 	 	
Income from continuing operations	 	$	1.49		 	 	 	 	 	$	1.50		
Weighted average shares outstanding	 	326		 	 	 	 	 	326		
 	 	 	 	 	 	 	 	 	
Diluted income per common share attributable to Masco Corporation:	 	 	 	 	 	 	 	 	
Income from continuing operations	 	$	1.48		 	 	 	 	 	$	1.49		
Weighted average shares outstanding	 	330		 	 	 	 	 	330		

 

5

MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2019
(In millions, except share and per share amounts)

	
																			
 	 	Masco Historical	 	Windows Businesses' Separation (A)	 	Pro Forma Adjustments	 	Notes	 	Pro Forma Masco Continuing Operations	
ASSETS	 	 	 	 	 	 	 	 	 	 	
Current assets:	 	 	 	 	 	 	 	 	 	 	
Cash and cash investments	 	$	475		 	$	725		 	$	—		 	 	 	$	1,200		
Receivables	 	1,177		 	—		 	—		 	 	 	1,177		
Inventories	 	924		 	—		 	—		 	 	 	924		
Prepaid expenses and other	 	105		 	—		 	—		 	 	 	105		
Assets held for sale	 	111		 	(111	)	 	—		 	 	 	—		
Total current assets	 	2,792		 	614		 	—		 	 	 	3,406		
Property and equipment, net	 	1,017		 	—		 	—		 	 	 	1,017		
Operating lease right-of-use assets	 	183		 	—		 	—		 	 	 	183		
Goodwill	 	687		 	—		 	—		 	 	 	687		
Other intangible assets, net	 	264		 	—		 	—		 	 	 	264		
Other assets	 	85		 	—		 	—		 	 	 	85		
Assets held for sale	 	492		 	(492	)	 	—		 	 	 	—		
Total assets	 	$	5,520		 	$	122		 	$	—		 	 	 	$	5,642		
 	 	 	 	 	 	 	 	 	 	 	
LIABILITIES AND EQUITY	 	 	 	 	 	 	 	 	 	 	
Current liabilities:	 	 	 	 	 	 	 	 	 	 	
Accounts payable	 	$	879		 	$	—		 	$	—		 	 	 	$	879		
Notes payable	 	208		 	—		 	—		 	 	 	208		
Accrued liabilities	 	682		 	—		 	14		 	(E)	 	696		
Liabilities held for sale	 	140		 	(140	)	 	—		 	 	 	—		
Total current liabilities	 	1,909		 	(140	)	 	14		 	 	 	1,783		
Long-term debt	 	2,771		 	—		 	—		 	 	 	2,771		
Other liabilities	 	684		 	—		 	—		 	 	 	684		
Liabilities held for sale	 	133		 	(133	)	 	—		 	 	 	—		
Total liabilities	 	5,497		 	(273	)	 	14		 	 	 	5,238		
Equity:	 	 	 	 	 	 	 	 	 	 	
Common shares - $1 par value; Authorized shares: 1,400,000,000; Issued and outstanding: 284,100,000	 	284		 	—		 	—		 	 	 	284		
Preferred shares authorized: 1,000,000; Issues and outstanding – None	 	—		 	—		 	—		 	 	 	—		
Paid-in capital	 	—		 	—		 	—		 	 	 	—		
Retained (deficit) equity	 	(309	)	 	395		 	(14	)	 	(F)	 	72		
Accumulated other comprehensive loss	 	(118	)	 	—		 	—		 	 	 	(118	)	
Total Masco Corporation’s shareholders’ (deficit) equity	 	(143	)	 	395		 	(14	)	 	 	 	238		
Noncontrolling interest	 	166		 	—		 	—		 	 	 	166		
Total equity	 	23		 	395		 	(14	)	 	 	 	404		
Total liabilities and equity	 	$	5,520		 	$	122		 	$	—		 	 	 	$	5,642		

6

MASCO CORPORATION AND CONSOLIDATED SUBSIDIARIES
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

(A)	The information in the Window Businesses’ Separation column of the unaudited pro forma condensed consolidated statements of operations was derived from Masco’s unaudited financial statements for the nine months ended September 30, 2019 and Masco’s audited financial statements for the years ended December 31, 2018, 2017, and 2016, adjusted to include certain costs that are directly attributable to the windows businesses and are factually supportable, and to exclude corporate overhead costs that were previously allocated to the windows businesses for each period. The information in the Windows Businesses’ Separation column of the unaudited pro forma condensed consolidated balance sheet was derived from Masco’s unaudited financial statements as of September 30, 2019, adjusted to include certain assets and liabilities that are directly attributable to the windows businesses and are factually supportable. The Windows Businesses’ Separation column also reflects the $725 million cash proceeds received in conjunction with the sale of Milgard. The UKWG proceeds were already reflected in the September 30, 2019 unaudited pro forma balance sheet.	

(B)	Amounts reported in Masco's Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2019, as filed with the Securities and Exchange Commission on October 30, 2019, which presents the results of operations of the Milgard and UKWG businesses as discontinued operations. Therefore, no adjustments are necessary.	

(C)	Net sales for Milgard were $432 million, $605 million, $575 million, and $529 million for the nine months ended September 30, 2019 and years ended December 31, 2018, 2017, and 2016, respectively. Net sales for UKWG were $83 million, $150 million, $162 million, and $170 million for the nine months ended September 30, 2019 and years ended December 31, 2018, 2017, and 2016, respectively.	

(D)	Represents the tax impact of the Separations of the windows businesses from Masco.	

(E)	Reflects additional one-time transaction costs of $14 million expected to be incurred subsequent to September 30, 2019.  One-time transaction costs incurred by Masco for the nine months ended September 30, 2019 was $7 million.  Masco expects to incur and pay an aggregate of approximately $21 million of one-time transaction costs associated with the Separations, including legal and advisory costs.	

(F)	Shareholders’ (deficit) equity was adjusted for the pro forma adjustments specified in Notes (A) and (E), including the $725 million cash proceeds received in conjunction with the sale of Milgard.	

7