LifeStyle writeoff hurts Masco
By Furniture Today Staff -- Furniture Today, November 11, 2001
Taylor, Mich. — Home products giant Masco reported a $183 million net loss in the third quarter, mainly because of a $530 million pretax writedown of the value of investments, including securities in the parent company of furniture and fabric manufacturer LifeStyle Furnishings International.
Excluding the unusual charge, net income in the quarter was down 14% from a year earlier to $161 million or 33 cents per share.
Sales rose 18.7% to $2.2 billion in the third quarter, with U.S. sales up 21% from the same quarter last year. Excluding acquisitions and divestitures, sales were flat overall and up about 1% in the United States, said Richard Manoogian, chairman and chief executive officer.
About $460 million of the $530 million one-time, noncash charge was for writing down the value of securities in Furnishings International, LifeStyle's parent. Most was related to debt, including pay-in-kind notes, with $230 million in accrued interest. Masco sold a majority stake in the LifeStyle companies to a Citicorp Venture Capital-led investment group in 1996 for $1.1 billion in cash and debt. Masco retains a 15% equity interest.
"We continue to have a $130 million investment (in Furnishings International) which we're very comfortable with," Manoogian said. "This reflects what we think we will ultimately receive from that investment."
Masco's ready-to-assemble furniture and cabinet subsidiaries, Mill's Pride and Tvilum-Scanbirk, are part of the cabinets and related products segment. Sales in that segment were up 4%; excluding acquisitions and divestitures, sales were down 1%.
For the company as a whole, the third-quarter operating profit margin was slightly below the full-year margin from 2000 but much better than the first or second quarters.
| Masco Corp. | |||
|---|---|---|---|
| Owns Mill's Pride, Tvilum-Scanbirk and a minority interest in LifeStyle Furnishings Intl. | |||
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 9/30 | 2001 | 2000 | Change |
| (a) Includes a $530 million pretax charge for the writedown of certain long-term investments in both periods. The 2001 quarter also includes a $98.8 million income tax benefit. | |||
| Sales | $2,247,000,000 | $1,893,000,000 | 18.7% |
| Operating income | 354,800,000 | 317,900,000 | 11.6% |
| Net income | (a)(183,000,000) | 187,400,000 | ------- |
| Earnings per share | (0.39) | 0.41 | ------- |
| 9 months ended 9/30 | 2001 | 2000 | Change |
| Sales | $6,243,000,000 | $5,510,000,000 | 13.3% |
| Operating income | 896,200,000 | 917,800,000 | (2.4%) |
| Net income | (a)71,000,000 | 546,800,000 | (87.0%) |
| Earnings per share | 0.15 | 1.21 | (87.6%) |
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