-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Atfb3Cb2frfOxH3BSi3M4V7Mr9GxYdcN818iaJ1DTK1Wh097xB77nN9jf4SRDWk0 r28KACcT5EzCwnnfSi7rLw== 0000950124-05-002899.txt : 20050503 0000950124-05-002899.hdr.sgml : 20050503 20050503091627 ACCESSION NUMBER: 0000950124-05-002899 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050503 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050503 DATE AS OF CHANGE: 20050503 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MASCO CORP /DE/ CENTRAL INDEX KEY: 0000062996 STANDARD INDUSTRIAL CLASSIFICATION: MILLWOOD, VENEER, PLYWOOD & STRUCTURAL WOOD MEMBERS [2430] IRS NUMBER: 381794485 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05794 FILM NUMBER: 05792941 BUSINESS ADDRESS: STREET 1: 21001 VAN BORN RD CITY: TAYLOR STATE: MI ZIP: 48180 BUSINESS PHONE: 3132747400 MAIL ADDRESS: STREET 1: 21001 VAN BORN ROAD CITY: TAYLOR STATE: MI ZIP: 48180 FORMER COMPANY: FORMER CONFORMED NAME: MASCO SCREW PRODUCTS CO DATE OF NAME CHANGE: 19731025 8-K 1 k94718e8vk.txt CURRENT REPORT, DATED MAY 3, 2005 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) MAY 3, 2005 -------------------------------- MASCO CORPORATION (Exact name of Registrant as Specified in Charter) DELAWARE 1-5794 38-1794485 -------- ------ ---------- (State or Other Jurisdiction (Commission File Number) (IRS Employer of Incorporation) Identification No.) 21001 VAN BORN ROAD, TAYLOR, MICHIGAN 48180 - ------------------------------------- ----- (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)) ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. Attached and incorporated herein by reference as Exhibit 99 is a copy of a press release dated May 3, 2005 reporting Masco Corporation's financial results for the first quarter of 2005 and certain other information and a supplemental information package prepared for use in connection with the financial results for the first quarter. On May 3, 2005, Masco Corporation will hold an investor conference and web cast to discuss financial results for the first quarter of 2005. This information, including the Exhibits attached hereto, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that section. ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits 99 Press Release of Masco Corporation dated May 3, 2005, reporting Masco Corporation's financial results for the first quarter of 2005 and certain other information and supplemental information prepared for use in connection with the financial results for the first quarter. 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/ Timothy Wadhams ------------------------------- Name: Timothy Wadhams Title: Senior Vice President and Chief Financial Officer May 3, 2005 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION 99 Press Release of Masco Corporation dated May 3, 2005, reporting Masco Corporation's financial results for the first quarter of 2005 and certain other information and supplemental information prepared for use in connection with the financial results for the first quarter. EX-99 2 k94718exv99.txt PRESS RELEASE DATED MAY 3, 2005 EXHIBIT 99 FOR IMMEDIATE RELEASE Contact: - --------------------- Samuel Cypert 313-792-6646 MASCO CORPORATION REPORTS FIRST QUARTER RESULTS MASCO CORPORATION HIGHLIGHTS: FIRST QUARTER 2005 o Net sales from continuing operations increased six percent to a record $3.0 billion. o Income from continuing operations was $212 million or $.48 per common share. o The Company returned $545 million to shareholders through share repurchases and dividends. o The quarterly dividend was increased by 11 percent, from $.18 to $.20 per common share, marking the 47th consecutive year in which dividends have been increased. o The Board of Directors authorized the repurchase of up to an additional 50 million shares of common stock. o The Company had over $1 billion in cash and marketable securities at March 31, 2005. Taylor, Michigan (May 3, 2005) -- Masco Corporation (NYSE: MAS) today reported that net sales from continuing operations for the quarter ended March 31, 2005 increased six percent to a first quarter record of $3.0 billion compared with $2.8 billion for the first quarter of 2004. Income from continuing operations for the first quarter of 2005 was $212 million or $.48 per common share compared with $241 million or $.52 per common share for the comparable period of 2004. Results for the first quarter of 2005 benefited from other income, principally net gains from the sale of financial investments, of $.06 per common share. In addition, first quarter 2005 results benefited from a reduction in the Company's tax rate of $.02 per common share, which offset currency translation losses of $.02 per common share. The first quarter of 2004 benefited from other income, principally net gains from the sale of financial investments, of $.07 per common share and income related to the Behr litigation of $.03 per common share. The Company previously announced, in the first quarter of 2004, the planned disposition of several European businesses that were not core to the Company's long-term growth strategy. First quarter 2004 results included an after-tax charge of $.16 per common share to reflect those businesses expected to be divested at a loss. During the first quarter of 2005, the Company completed the disposition process with the additional sale of two of these businesses realizing an after-tax net gain of $.04 per common share. Including the results related to the European businesses disposed, which have been treated as discontinued operations, net income for the first quarter of 2005 increased to $231 million compared with $168 million for the 2004 first quarter; earnings increased to $.52 per common share for the first quarter of 2005 compared with $.36 per common share for the 2004 first quarter. The Company's 2005 first quarter results, seasonally the lowest of the year, were adversely affected by lower-than-expected consumer spending impacting certain of its products sold through retail markets, product mix, as well as recent increases in commodity, energy, and freight costs, much of which have not yet been recovered due to the lag in implementing selling price increases to customers. The Company expects these conditions to continue at least through the second quarter of 2005. If higher energy costs and recent trends indicating lower consumer confidence and the related slowing in sales of certain retail products continue, the Company believes that full-year results may be nearer to the low end of its previously provided earnings guidance range for continuing operations of $2.40 to $2.50 per common share. Based on current business trends, the Company anticipates that second quarter 2005 earnings from continuing operations will be in a range of $.58 to $.62 per common share compared with second quarter 2004 earnings of $.65 per common share (which included $.04 per common share of previously disclosed other income, principally net gains from the sale of financial investments). Headquartered in Taylor, Michigan, Masco Corporation is one of the world's leading manufacturers of home improvement and building products as well as a leading provider of services that include the installation of insulation and other building products. A conference call regarding items contained in this release is scheduled for Tuesday, May 3, 2005 at 1:00 p.m. ET. Participants in the call are asked to register five to ten minutes prior to the scheduled start time by dialing (719) 457-2681 (confirmation #3166416). The conference call will be webcast simultaneously on the Company's website at www.masco.com and supplemental material, including the financial data referred to on the call and a reconciliation of all non-GAAP information provided on the call, will also be available on the website. A replay of the call will be available on Masco's website or by phone by dialing (719) 457-0820 (replay access code #3166416) approximately two hours after the end of the call and will continue through May 10, 2005. Masco Corporation's press releases and other information are available through the Company's toll free number, 1-888-MAS-NEWS, or under the Investor Relations section of Masco's website at www.masco.com. Statements contained herein may include certain forward-looking statements regarding Masco's future sales, earnings growth potential and other developments. Actual results may vary materially because of external factors such as interest rate fluctuations, changes in consumer spending and other factors over which management has no control. The Company believes that certain non-GAAP performance measures and ratios, used in managing the business, may provide users of this financial information with additional meaningful comparisons between current results and results in prior periods. Non-GAAP performance measures and ratios should be viewed in addition to, and not as an alternative for, the Company's reported results under accounting principles generally accepted in the United States. Additional information about the Company's products, markets and conditions, which could affect the Company's future performance, is contained in the Company's filings with the Securities and Exchange Commission and is available on Masco's website at www.masco.com. Masco undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. # # # # MASCO CORPORATION CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED 3/31/05 AND 3/31/04
(in millions, except per share data) Three Months Ended March 31, ---------------------------------------- 2005 2004 --------------- --------------- Net Sales $ 2,969 $ 2,806 Cost of Sales 2,128 1,955 --------------- --------------- Gross Profit 841 851 Selling, General and Administrative Expenses 500 485 (Income) Regarding Litigation Settlement (2) (21) --------------- --------------- Operating Profit 343 387 Other Income (Expense), Net (22) (1) --------------- --------------- Income from Continuing Operations before Income Taxes and Minority Interest 321 386 Income Taxes 104 140 --------------- --------------- Income from Continuing Operations before Minority Interest 217 246 Minority Interest 5 5 --------------- --------------- Income from Continuing Operations 212 241 Income (Loss) from Discontinued Operations, Net of Income Taxes 19 (73) --------------- --------------- Net Income $ 231 $ 168 =============== =============== Earnings per Common Share (Diluted): Income from Continuing Operations $ 0.48 $ 0.52 Income (Loss) from Discontinued Operations, Net of Income Taxes 0.04 (0.16) --------------- --------------- Net Income $ 0.52 $ 0.36 =============== =============== Average Diluted Common Shares Outstanding 443 468 =============== ===============
MASCO CORPORATION BUSINESS AND FINANCIAL HIGHLIGHTS In accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," the Company has accounted for the 2004 dispositions of Jung Pumpen, The Alvic Group, Alma Kuchen, E. Missel and SKS Group, and the 2005 dispositions of Gebhardt Consolidated and the GMU Group as discontinued operations. FIRST QUARTER 2005 o Net sales from continuing operations increased six percent with North American sales increasing six percent and International sales increasing five percent. In local currencies, International sales increased one percent compared with the first quarter of 2004. Quarterly comparisons are challenging since net sales from continuing operations increased a strong 19 percent in the first quarter of 2004 compared with 2003. o Sales in the new construction market of installed products, assembled cabinets, and windows were particularly strong in the quarter. o Retail sales of paints and stains, faucets and cabinets were lower-than-expected. o Key retailer sales from continuing operations decreased two percent in the 2005 first quarter compared with a strong 20 percent increase in the first quarter of 2004 compared with 2003. o Sales by segment in the 2005 first quarter versus the 2004 first quarter were: o Cabinets and Related Products sales increased eight percent; o Plumbing Products sales increased three percent; o Installation and Other Services sales increased ten percent; o Decorative Architectural Products sales were flat; and o Other Specialty Products sales increased seven percent. o Income from continuing operations was $212 million compared with $241 million for the first quarter of 2004. 1 MASCO CORPORATION BUSINESS AND FINANCIAL HIGHLIGHTS FIRST QUARTER 2005 (CONTINUED) o Earnings from continuing operations were $.48 per common share compared with the Company's guidance of $.44 to $.47 per common share and compared with $.52 per common share for the 2004 first quarter. o Results for the first quarter of 2005 benefited from other income of $.06 per common share, principally net gains from the sale of financial investments and tax benefits of $.02 per common share related to the adjustment of estimated tax accruals, principally for actual tax results of International operations, which offset realized currency translation losses of $.02 per common share. The first quarter of 2004 benefited from other income, principally net gains from the sale of financial investments, of $.07 per common share and income related to the Behr litigation of $.03 per common share. o The Company previously announced, in the first quarter of 2004, the planned disposition of several European businesses that were not core to the Company's long-term growth strategy. First quarter 2004 results included an after-tax charge of $.16 per common share to reflect those businesses expected to be divested at a loss. During the first quarter of 2005, the Company completed the disposition process with the additional sale of two of these businesses, Gebhardt Consolidated and the GMU Group, realizing an after-tax net gain of $.04 per common share. Including the results of the European businesses disposed, which have been treated as discontinued operations, net income for the first quarter of 2005 increased to $231 million compared with $168 million for the 2004 first quarter; earnings for the first quarter of 2005 increased to $.52 per common share compared with $.36 per common share for the 2004 first quarter. Total net proceeds for the dispositions completed in 2004 and 2005 aggregated $282 million. o First quarter 2005 results were adversely affected by lower-than-expected consumer spending impacting certain of the Company's products sold through retail markets, product mix, as well as recent increases in commodity, energy, and freight costs, much of which have not yet been recovered due to the lag in implementing selling price increases to customers. 2 MASCO CORPORATION BUSINESS AND FINANCIAL HIGHLIGHTS FIRST QUARTER 2005 (CONTINUED) o Gross margins were 28.3 percent in the 2005 first quarter compared with 30.3 percent in the first quarter of 2004. Operating profit margins, as reported, were 11.6 percent in the first quarter of 2005 compared with 13.8 percent in the first quarter of 2004. Excluding the income regarding the litigation settlement of $2 million and $21 million in 2005 and 2004, respectively, operating profit margins were 11.5 percent in the first quarter of 2005 compared with 13.0 percent in the first quarter of 2004. Operating profit margins in the first quarter of 2005 were adversely impacted by increases in certain operating expenses, including increased commodity, energy, and freight costs, as well as lower-than-expected sales volume to the retail markets. o SG&A expenses as a percent of sales, including general corporate expense, were 16.8 percent in the first quarter 2005 compared with 17.3 percent in the 2004 first quarter. o General corporate expense was 1.5 percent of sales in the first quarter of 2005 compared with 1.3 percent in the comparable period of 2004. o Inventory days were 50 days at March 31, 2005 compared with 49 days at March 31, 2004. o Accounts receivable days at the end of the first quarter were 51 days compared with 53 days a year ago. o Accounts payable days at the end of the first quarter improved to 37 days from 36 days a year ago, as the Company continues to negotiate more favorable supplier terms. o Working capital at March 31, 2005 (defined as accounts receivable and inventories less accounts payable) improved to 18.0 percent of the last twelve months' sales from 18.5 percent a year earlier. o The Company's tax rate was 32.4 percent for the first quarter of 2005 compared with 36.3 percent for the comparable period of the prior year. The decrease in the tax rate was due to the adjustment of estimated tax accruals principally for actual tax results of International operations. The Company estimates that its effective tax rate for the full-year 2005 should approximate 35 percent. 3 MASCO CORPORATION BUSINESS AND FINANCIAL HIGHLIGHTS FIRST QUARTER 2005 (CONCLUDED) o At the end of the quarter, the Company had a strong balance sheet with over $1 billion in cash and marketable securities and $2 billion in unused bank lines. o In the first quarter of 2005, the Company generated approximately $69 million of cash from the net sale of financial investments and $63 million of net cash from the disposition of two European businesses. o Debt as a percent of total capitalization was 46 percent at March 31, 2005 compared with 47 percent at March 31, 2004. o For the twelve months ended March 31, 2005 and March 31, 2004, return on invested capital (as reported) was 11.6 percent and 11.5 percent, respectively. For the twelve months ended March 31, 2005 and March 31, 2004, return on invested capital (as reconciled) was 12.7 percent and 11.6 percent, respectively. The Company continues to believe that it will achieve its 15 percent return on invested capital goal by the end of 2006 and 18 percent by 2010. o During the quarter, the Company repurchased approximately 13 million common shares. The Board of Directors authorized the repurchase of up to an additional 50 million shares of common stock, replacing the Company's previous authorization. The Company had approximately 47 million common shares remaining under the new repurchase authorization at March 31, 2005. o The Company's diluted common shares for purposes of calculating earnings per common share were 443 million for the first quarter of 2005 compared with 468 million for the first quarter of 2004. o During the quarter, the Board of Directors increased the quarterly dividend by 11 percent, from $.18 to $.20 per common share, marking the 47th consecutive year in which dividends have been increased. 4 MASCO CORPORATION BUSINESS AND FINANCIAL HIGHLIGHTS FULL-YEAR OUTLOOK o If higher energy costs and recent trends indicating lower consumer confidence and the related slowing in sales of certain retail products continue, the Company believes that full-year results may be nearer to the low end of its previously provided earnings guidance range for continuing operations of $2.40 to $2.50 per common share. o The Company's guidance is based on housing starts approximating 2004 levels, no additional share repurchases beyond the 13 million common shares repurchased in the first quarter of 2005, modest margin improvement in the second half of 2005, reflecting selling price increases offsetting rising commodity costs, and anticipated income from financial investments. The guidance also assumes no further significant commodity cost increases. o Based on current business trends, the Company anticipates that second quarter 2005 earnings from continuing operations will be in a range of $.58 to $.62 per common share compared with second quarter 2004 earnings of $.65 per common share which included $.04 per common share of previously disclosed other income, principally net gains from the sale of financial investments. o The higher commodity costs experienced late in 2004 are continuing in 2005 and are having an adverse impact on first half results. The Company is continuing to implement additional price increases for a number of its products and believes that by the second half of 2005 most of these commodity cost increases should be largely offset. o The Company expects to return a minimum of $1 billion annually to shareholders, on average, over the next several years through share repurchases and dividends as part of its ongoing commitment to value creation. In 2004 and 2003, the Company returned $2.3 billion, in aggregate, to shareholders through share repurchases and dividends. In the first quarter of 2005, the Company returned $545 million to shareholders through share repurchases and dividends. 5 MASCO CORPORATION BUSINESS AND FINANCIAL HIGHLIGHTS FULL-YEAR OUTLOOK (CONCLUDED) o Based on the current market price for the Company's common stock, diluted common shares for the computation of earnings per common share at April 1, 2005 are 437 million. This excludes the impact of any second quarter repurchases of common stock. Statements contained herein may include certain forward-looking statements regarding Masco's future sales, earnings growth potential and other developments. Actual results may vary materially because of external factors such as interest rate fluctuations, changes in consumer spending and other factors over which management has no control. The Company believes that certain non-GAAP performance measures and ratios, used in managing the business, may provide users of this financial information with additional meaningful comparisons between current results and results in prior periods. Non-GAAP performance measures and ratios should be viewed in addition to, and not as an alternative for, the Company's reported results under accounting principles generally accepted in the United States. Additional information about our products, markets and conditions, which could affect our future performance, is contained in the Company's filings with the Securities and Exchange Commission and is available on Masco's website at www.masco.com. Masco undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. ### 6 MASCO CORPORATION - 1ST QUARTER 2005
Page - ---- 1 Condensed Statements of Income - 2005 & 2004 Quarters 2 Notes to Condensed Statements of Income - 2005 & 2004 Quarters 3 Sales by Segment and Geographic Area - Three Months Ended March 31, 2005 & 2004 4 2005 Quarterly Segment Data 5 2004 Quarterly Segment Data - Excluding Goodwill Impairment Charge 6 2004 Quarterly Segment Data - Including Goodwill Impairment Charge 7 Other Income (Expense), Net - 2005 & 2004 Quarters 8 Consolidated Statements of Income - Three Months Ended March 31, 2005 & 2004 9 Consolidated Balance Sheets GAAP Reconciliations: 10 Sales Growth Excluding Effect of Acquisitions & Currency Translation 11 Operating Profit and Margins 12 Operating Profit and Shareholders' Equity 13 Discontinued Operations
MASCO CORPORATION CONDENSED STATEMENTS OF INCOME 2005 & 2004 - BY QUARTER (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
2005 --------------------------------------------------------- YEAR QTR. 4 QTR. 3 QTR. 2 QTR. 1 ---- ------ ------ ------ ------ Net Sales: - North America $ 2,405 - International 564 -------- -------- -------- -------- -------- - Consolidated 2,969 Cost of Sales 2,128 -------- -------- -------- -------- -------- Gross Profit 841 (Gross Margin) 28.3% S,G&A Expense (before GCE & (Gain) Loss on Sale of Corporate Fixed Assets) 454 (S,G&A Expense as a % of Sales) 15.3% -------- -------- -------- -------- -------- Operating Profit (before GCE, (Gain) Loss on Sale of Corporate Fixed Assets & Goodwill Impairment Charge) 387 (Operating Margin) 13.0% - North America 326 (Margin) 13.6% - International 61 (Margin) 10.8% General Corporate Expense (GCE) 46 S,G&A Expense as a % of Sales (including GCE & (Gain) Loss on Sale of Corporate Fixed Assets) 16.8% (Gain) Loss on Sale of Corporate Fixed Assets, Net - (Income) Regarding Litigation Settlement (2) Goodwill Impairment Charge - -------- -------- -------- -------- -------- Operating Profit per F/S $ 343 ======== ======== ======== ======== ======== Earnings per Common Share (Diluted): Income from Continuing Operations $ 0.48 Income (Loss) from Discontinued Operations 0.04 -------- -------- -------- -------- -------- Net Income $ 0.52 ======== ======== ======== ======== ======== 2004 --------------------------------------------------------- YEAR QTR. 4 QTR. 3 QTR. 2 QTR. 1 ---- ------ ------ ------ ------ Net Sales: - North America $ 9,879 $ 2,450 $ 2,627 $ 2,531 $ 2,271 - International 2,195 584 546 530 535 -------- -------- -------- -------- -------- - Consolidated 12,074 3,034 3,173 3,061 2,806 Cost of Sales 8,356 2,132 2,182 2,087 1,955 -------- -------- -------- -------- -------- Gross Profit 3,718 902 991 974 851 (Gross Margin) 30.8% 29.7% 31.2% 31.8% 30.3% S,G&A Expense (before GCE & (Gain) Loss on Sale of Corporate Fixed Assets) 1,824 459 449 460 456 (S,G&A Expense as a % of Sales) 15.1% 15.1% 14.2% 15.0% 16.3% -------- -------- -------- -------- -------- Operating Profit (before GCE, (Gain) Loss on Sale of Corporate Fixed Assets & Goodwill Impairment Charge) 1,894 443 542 514 395 (Operating Margin) 15.7% 14.6% 17.1% 16.8% 14.1% - North America 1,639 390 478 442 329 (Margin) 16.6% 15.9% 18.2% 17.5% 14.5% - International 255 53 64 72 66 (Margin) 11.6% 9.1% 11.7% 13.6% 12.3% General Corporate Expense (GCE) 194 60 53 45 36 S,G&A Expense as a % of Sales (including GCE & (Gain) Loss on Sale of Corporate Fixed Assets) 16.7% 17.1% 15.8% 16.5% 17.3% (Gain) Loss on Sale of Corporate Fixed Assets, Net (7) 1 - (1) (7) (Income) Regarding Litigation Settlement (30) - (2) (7) (21) Goodwill Impairment Charge 168 168 - - - -------- -------- -------- -------- -------- Operating Profit per F/S $ 1,569 $ 214 $ 491 $ 477 $ 387 ======== ======== ======== ======== ======== Earnings per Common Share (Diluted): Income from Continuing Operations $ 2.04 $ 0.23 $ 0.64 $ 0.65 $ 0.52 Income (Loss) from Discontinued Operations (0.08) - 0.16 (0.07) (0.16) -------- -------- -------- -------- -------- Net Income $ 1.96 $ 0.23 $ 0.80 $ 0.58 $ 0.36 ======== ======== ======== ======== ========
PLEASE SEE PAGE 2 FOR NOTES. Page 1 MASCO CORPORATION NOTES TO CONDENSED STATEMENTS OF INCOME 2005 & 2004 - BY QUARTER NOTES: - - Operating results exclude 2004 planned dispositions as well as operations which were sold in 2005 and 2004, all of which were treated as discontinued operations in accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." - - Income from discontinued operations in the first quarter of 2005 includes an $11 million pre-tax gain, net ($.04 per common share, after tax) from the sale of two businesses. - - Operating results for the fourth quarter of 2004 reflect a non-cash, pre-tax charge for goodwill impairment of $168 million ($141 million or $.31 per common share, after tax). - - Income from discontinued operations in the third quarter of 2004 includes a $108 million pre-tax gain, net ($93 million or $.21 per common share, after tax) from the sale of two businesses. - - Income (loss) from discontinued operations in the first, second and third quarters of 2004 includes pre-tax charges of $64 million ($76 million or $.16 per common share, after tax), $44 million ($44 million or $.10 per common share, after tax) and $31 million ($31 million or $.07 per common share, after tax), respectively. - - Per common share amounts for the four quarters of 2004 do not total to the per common share amount for the year due to the timing of capital stock transactions and the effect of contingently issuable shares. Page 2 MASCO CORPORATION SALES BY SEGMENT AND GEOGRAPHIC AREA THREE MONTHS ENDED MARCH 31, 2005 & 2004 (DOLLARS IN MILLIONS)
Three Months Ended March 31, 1st Qtr '05 ------------------ vs. 2005 2004 1st Qtr '04 ------ ------- ----------- Cabinets & Related Products $ 838 $ 779 + 8% Plumbing Products 760 739 + 3% Installation & Other Services 693 630 + 10% Decorative Architectural Products 371 370 + - Other Specialty Products 307 288 + 7% ------ ------ Total $2,969 $2,806 + 6% ====== ====== North America $2,405 $2,271 + 6% International, principally Europe 564 535 + 5% ------ ------ Total, as above $2,969 $2,806 + 6% ====== ======
NOTES: - - Data excludes discontinued operations. - - Excluding acquisitions, consolidated net sales increased six percent, North American net sales increased six percent and International net sales increased five percent (please see page 10 for the GAAP reconciliation). - - International sales in local currencies increased one percent compared with the first quarter of 2004 (please see page 10 for the GAAP reconciliation). Page 3 MASCO CORPORATION QUARTERLY SEGMENT DATA - 2005 (DOLLARS IN MILLIONS)
Year Qtr. 4 Qtr. 3 Qtr. 2 Qtr. 1 ---- ------ ------ ------ ------ Net Sales: - Cabinets and Related Products $ 838 - Plumbing Products 760 - Installation and Other Services 693 - Decorative Architectural Products 371 - Other Specialty Products 307 ------- ------- ------- ------- ------- - TOTAL 2,969 ======= ======= ======= ======= ======= - North America 2,405 - International, principally Europe 564 ------- ------- ------- ------- ------- - TOTAL, AS ABOVE 2,969 ======= ======= ======= ======= ======= Operating Profit: - Cabinets and Related Products 124 - Plumbing Products 79 - Installation and Other Services 80 - Decorative Architectural Products 59 - Other Specialty Products 45 ------- ------- ------- ------- ------- - TOTAL 387 ======= ======= ======= ======= ======= - North America 326 - International, principally Europe 61 ------- ------- ------- ------- ------- - TOTAL, AS ABOVE 387 ======= ======= ======= ======= ======= General Corporate Expense (GCE) 46 (Gain) Loss on Sale of Corporate Fixed Assets, Net - (Income) Regarding Litigation Settlement (2) ------- ------- ------- ------- ------- Operating Profit (after GCE and Adjustments) 343 Other Income (Expense), Net (22) ------- ------- ------- ------- ------- Income from Continuing Operations Before Income Taxes and Minority Interest $ 321 ======= ======= ======= ======= ======= Margins: - Cabinets and Related Products 14.8% - Plumbing Products 10.4% - Installation and Other Services 11.5% - Decorative Architectural Products 15.9% - Other Specialty Products 14.7% - TOTAL 13.0% - North America 13.6% - International, principally Europe 10.8% - TOTAL, AS ABOVE 13.0%
NOTES: - - Data excludes discontinued operations. - - Operating profit and margins by segment and geographic area are before general corporate expense and exclude (income) regarding the litigation settlement. Page 4 MASCO CORPORATION QUARTERLY SEGMENT DATA - 2004 EXCLUDING GOODWILL IMPAIRMENT CHARGE (DOLLARS IN MILLIONS)
Year Qtr. 4 Qtr. 3 Qtr. 2 Qtr. 1 ---- ------ ------ ------ ------ Net Sales: - Cabinets and Related Products $ 3,289 $ 857 $ 856 $ 797 $ 779 - Plumbing Products 3,057 758 775 785 739 - Installation and Other Services 2,771 718 737 686 630 - Decorative Architectural Products 1,610 356 433 451 370 - Other Specialty Products 1,347 345 372 342 288 -------- -------- -------- -------- -------- - TOTAL 12,074 3,034 3,173 3,061 2,806 ======== ======== ======== ======== ======== - North America 9,879 2,450 2,627 2,531 2,271 - International, principally Europe 2,195 584 546 530 535 -------- -------- -------- -------- -------- - TOTAL, AS ABOVE 12,074 3,034 3,173 3,061 2,806 ======== ======== ======== ======== ======== Operating Profit: - Cabinets and Related Products 552 156 150 137 109 - Plumbing Products 395 81 101 117 96 - Installation and Other Services 358 86 103 88 81 - Decorative Architectural Products 331 64 102 101 64 - Other Specialty Products 258 56 86 71 45 -------- -------- -------- -------- -------- - TOTAL 1,894 443 542 514 395 ======== ======== ======== ======== ======== - North America 1,639 390 478 442 329 - International, principally Europe 255 53 64 72 66 -------- -------- -------- -------- -------- - TOTAL, AS ABOVE 1,894 443 542 514 395 ======== ======== ======== ======== ======== General Corporate Expense (GCE) 194 60 53 45 36 (Gain) Loss on Sale of Corporate Fixed Assets, Net (7) 1 - (1) (7) (Income) Regarding Litigation Settlement (30) - (2) (7) (21) -------- -------- -------- -------- -------- Operating Profit (after GCE and Adjustments) 1,737 382 491 477 387 Other Income (Expense), Net (51) (8) (31) (11) (1) -------- -------- -------- -------- -------- Income from Continuing Operations Before Income Taxes and Minority Interest $ 1,686 $ 374 $ 460 $ 466 $ 386 ======== ======== ======== ======== ======== Margins: - Cabinets and Related Products 16.8% 18.2% 17.5% 17.2% 14.0% - Plumbing Products 12.9% 10.7% 13.0% 14.9% 13.0% - Installation and Other Services 12.9% 12.0% 14.0% 12.8% 12.9% - Decorative Architectural Products 20.6% 18.0% 23.6% 22.4% 17.3% - Other Specialty Products 19.2% 16.2% 23.1% 20.8% 15.6% - TOTAL 15.7% 14.6% 17.1% 16.8% 14.1% - North America 16.6% 15.9% 18.2% 17.5% 14.5% - International, principally Europe 11.6% 9.1% 11.7% 13.6% 12.3% - TOTAL, AS ABOVE 15.7% 14.6% 17.1% 16.8% 14.1%
NOTES: - - Data excludes discontinued operations. - - Operating results for the fourth quarter of 2004 exclude a non-cash, pre-tax charge for goodwill impairment of $168 million. The charge related to certain of the Company's European business units and was allocated among the Cabinets and Related Products segment ($56 million); Plumbing Products segment ($25 million); Decorative Architectural Products segment ($62 million); and Other Specialty Products segment ($25 million). - - Operating profit and margins by segment and geographic area are before general corporate expense and exclude (income) regarding the litigation settlement and (gain) loss on sale of Corporate fixed assets, net. Page 5 MASCO CORPORATION QUARTERLY SEGMENT DATA - 2004 INCLUDING GOODWILL IMPAIRMENT CHARGE (DOLLARS IN MILLIONS)
Year Qtr. 4 Qtr. 3 Qtr. 2 Qtr. 1 --------- -------- -------- -------- -------- Net Sales: - Cabinets and Related Products $ 3,289 $ 857 $ 856 $ 797 $ 779 - Plumbing Products 3,057 758 775 785 739 - Installation and Other Services 2,771 718 737 686 630 - Decorative Architectural Products 1,610 356 433 451 370 - Other Specialty Products 1,347 345 372 342 288 --------- -------- -------- -------- -------- - TOTAL 12,074 3,034 3,173 3,061 2,806 ========= ======== ======== ======== ======== - North America 9,879 2,450 2,627 2,531 2,271 - International, principally Europe 2,195 584 546 530 535 --------- -------- -------- -------- -------- - TOTAL, AS ABOVE 12,074 3,034 3,173 3,061 2,806 ========= ======== ======== ======== ======== Operating Profit: - Cabinets and Related Products 496 100 150 137 109 - Plumbing Products 370 56 101 117 96 - Installation and Other Services 358 86 103 88 81 - Decorative Architectural Products 269 2 102 101 64 - Other Specialty Products 233 31 86 71 45 --------- -------- -------- -------- -------- - TOTAL 1,726 275 542 514 395 ========= ======== ======== ======== ======== - North America 1,639 390 478 442 329 - International, principally Europe 87 (115) 64 72 66 --------- -------- -------- -------- -------- - TOTAL, AS ABOVE 1,726 275 542 514 395 ========= ======== ======== ======== ======== General Corporate Expense (GCE) 194 60 53 45 36 (Gain) Loss on Sale of Corporate Fixed Assets, Net (7) 1 - (1) (7) (Income) Regarding Litigation Settlement (30) - (2) (7) (21) --------- -------- -------- -------- -------- Operating Profit (after GCE and Adjustments) 1,569 214 491 477 387 Other Income (Expense), Net (51) (8) (31) (11) (1) --------- -------- -------- -------- -------- Income from Continuing Operations Before Income Taxes and Minority Interest $ 1,518 $ 206 $ 460 $ 466 $ 386 ========= ======== ======== ======== ======== Margins: - Cabinets and Related Products 15.1% 11.7% 17.5% 17.2% 14.0% - Plumbing Products 12.1% 7.4% 13.0% 14.9% 13.0% - Installation and Other Services 12.9% 12.0% 14.0% 12.8% 12.9% - Decorative Architectural Products 16.7% 0.6% 23.6% 22.4% 17.3% - Other Specialty Products 17.3% 9.0% 23.1% 20.8% 15.6% - TOTAL 14.3% 9.1% 17.1% 16.8% 14.1% - North America 16.6% 15.9% 18.2% 17.5% 14.5% - International, principally Europe 4.0% -19.7% 11.7% 13.6% 12.3% - TOTAL, AS ABOVE 14.3% 9.1% 17.1% 16.8% 14.1%
NOTES: - - Data excludes discontinued operations. - - Operating results for the fourth quarter of 2004 include a non-cash, pre-tax charge for goodwill impairment of $168 million. The charge related to certain of the Company's European business units and was allocated among the Cabinets and Related Products segment ($56 million); Plumbing Products segment ($25 million); Decorative Architectural Products segment ($62 million); and Other Specialty Products segment ($25 million). - - Operating profit and margins by segment and geographic area are before general corporate expense and exclude (income) regarding the litigation settlement and (gain) loss on sale of Corporate fixed assets, net. Page 6 MASCO CORPORATION OTHER INCOME (EXPENSE), NET 2005 & 2004 - BY QUARTER (IN MILLIONS)
2005 2004 --------------------------------- ---------------------------------- Year Qtr. 4 Qtr. 3 Qtr. 2 Qtr. 1 Year Qtr. 4 Qtr. 3 Qtr. 2 Qtr. 1 ---- ------ ------- ------ ------ ------ ------ ------ ------ ------ Interest Expense $ (59) $ (217)$ (57)$ (55)$ (52)$ (53) Income from Cash and Cash Investments 6 11 5 3 1 2 Other Interest Income 1 6 1 2 1 2 Realized Gains from the Sale of Financial Investments, Net 41 92 40 9 14 29 Dividend Income 4 27 5 8 7 7 Impairment Charge for Investments - (21) (21) - - - Other, Net (15) 51 19 2 18 12 ---- ------ ------- ------ ------ ------ ------ ------ ------ ------ Total Other Income (Expense), Net $ (22) $ (51)$ (8)$ (31)$ (11)$ (1) ==== ====== ======= ====== ====== ====== ====== ====== ====== ======
NOTES: - - Data excludes discontinued operations. - - Other, net for the first quarter of 2005 principally includes $13 million of currency translation losses; the first quarter of 2004 includes $6 million of realized currency translation gains. - - The impairment charge recognized in the fourth quarter of 2004 relates to the Company's investment in Furniture Brands International common stock. Page 7 MASCO CORPORATION CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2005 & 2004 (DOLLARS AND SHARES IN MILLIONS, EXCEPT PER SHARE DATA)
Three Months Ended As a Percent of Sales March 31, 3 Months Ended March 31, % ----------------- ------------------------ Line Change 2005 2004 2005 2004 - --------------------------------------------------------------------- ------ ------- -------- ----------- ----------- 1 Net Sales 6% $ 2,969 $ 2,806 100.0% 100.0% 2 Cost of Sales 9% 2,128 1,955 71.7% 69.7% ------- -------- ---- ---- 3 Gross Profit -1% 841 851 28.3% 30.3% ------- -------- ---- ---- Operating Profit: 4 - Before GCE, Litigation (Income), (Gain) on Sale of Corporate Fixed Assets (3-8) -2% 387 395 13.0% 14.1% 5 - After GCE, Litigation (Income), (Gain) on Sale of Corporate Fixed Assets (3-9-10) -11% 343 387 11.6% 13.8% ------- -------- ---- ---- S,G&A Expense: 6 - General Corporate Expense (GCE) 28% 46 36 1.5% 1.3% 7 - (Gain) on Sale of Corporate Fixed Assets, Net - (7) 0.0% -0.2% 8 - All Other 0% 454 456 15.3% 16.3% ------- -------- ---- ---- 9 - Total S,G&A Expense 3% 500 485 16.8% 17.3% ------- -------- ---- ---- 10 (Income) Regarding Litigation Settlement (2) (21) -0.1% -0.7% 11 Other Income (Expense), Net (22) (1) -0.7% 0.0% ------- -------- ---- ---- 12 Income from Continuing Operations Before Income Taxes and Minority Interest (5+11) -17% 321 386 10.8% 13.8% 13 Income Taxes -26% 104 140 3.5% 5.0% (Tax Rate) 32.4% 36.3% ------- -------- ---- ---- 14 Income from Continuing Operations Before Minority Interest -12% 217 246 7.3% 8.8% 15 Minority Interest (5) (5) -0.2% -0.2% ------- -------- --- --- 16 Income from Continuing Operations -12% 212 241 7.1% 8.6% 17 Income (Loss) from Discontinued Operations, Net of Income Taxes 19 (73) 0.6% -2.6% ------- -------- --- --- 18 Net Income 38% $ 231 $ 168 7.8% 6.0% ======= ======== === === Earnings Per Common Share (Diluted): Income from Continuing Operations -8% $ 0.48 $ 0.52 Income (Loss) from Discontinued Operations, Net of Income Taxes 0.04 (0.16) ------- -------- Net Income 45% $ 0.52 $ 0.36 ======= ======== Average (Diluted) Common Shares -5% 443 468
Page 8 MASCO CORPORATION CONSOLIDATED BALANCE SHEETS (IN MILLIONS)
March 31, December 31, 2005 2004 ----------- ------------ ASSETS Current Assets: Cash and Cash Investments $ 940 $ 1,256 Accounts and Notes Receivable, Net 1,902 1,732 Inventories 1,191 1,132 Prepaid Expenses and Other 269 282 ----------- ------------ Total Current Assets 4,302 4,402 Property and Equipment, Net 2,243 2,272 Goodwill 4,364 4,408 Other Intangible Assets, Net 321 326 Assets Held for Sale - 163 Other Assets 905 970 ----------- ------------ Total Assets $ 12,135 $ 12,541 =========== ============ LIABILITIES Current Liabilities: Notes Payable $ 882 $ 80 Accounts Payable 892 837 Accrued Liabilities 1,202 1,230 ----------- ------------ Total Current Liabilities 2,976 2,147 Long-Term Debt 3,407 4,187 Liabilities Held for Sale - 44 Deferred Income Taxes and Other 744 740 ----------- ------------ Total Liabilities 7,127 7,118 SHAREHOLDERS' EQUITY 5,008 5,423 ----------- ------------ Total Liabilities and Shareholders' Equity $ 12,135 $ 12,541 =========== ============
Page 9 MASCO CORPORATION GAAP RECONCILIATION OF SALES GROWTH EXCLUDING EFFECT OF ACQUISITIONS & CURRENCY TRANSLATION (IN MILLIONS)
Three Months Ended March 31, ---------------------------- 2005 2004 ------------ ------------ Consolidated Net Sales, as reported $ 2,969 $ 2,806 - Acquisitions (5) - ------------ ------------ Consolidated Net Sales (excl. acquisitions) $ 2,964 $ 2,806 ============ ============ North American Net Sales, as reported $ 2,405 $ 2,271 - Acquisitions (5) - ------------ ------------ North American Net Sales (excl. acquisitions) $ 2,400 $ 2,271 ============ ============ International Net Sales, as reported $ 564 $ 535 - Acquisitions - - ------------ ------------ International Net Sales (excl. acquisitions) 564 535 - Currency Translation (23) - ------------ ------------ International Net Sales (excl. acquisitions & currency) $ 541 $ 535 ============ ============
NOTES: The Company presents information comparing results from one period to another excluding the results of businesses acquired in order to assess the performance of the underlying businesses and to assess to what extent acquisitions are driving growth. The Company also presents information comparing results of International operations from one period to another using constant exchange rates. To present this information, current period results for foreign entities are converted into U.S. dollars using the prior period's exchange rates, rather than exchange rates for the current period. The Company presents this information in order to assess how the underlying businesses performed in local currencies before taking into account currency fluctuations. Page 10 MASCO CORPORATION GAAP RECONCILIATION OF OPERATING PROFIT AND MARGINS (DOLLARS IN MILLIONS)
THREE MONTHS ENDED MARCH 31, ------------------------------------- 2005 2004 ----------------- ---------------- $ Margin $ Margin -------- ------ ------- ------ Operating Profit, As Reported $ 343 11.6% $ 387 13.8% (Income) Regarding Litigation Settlement (2) (21) -------- ------- Operating Profit, As Reconciled $ 341 11.5% $ 366 13.0% ======== =======
NOTE: The Company believes that certain non-GAAP performance measures and ratios, used in managing the business, may provide users of this financial information with additional meaningful comparisons between current results and results in prior periods. Non-GAAP performance measures and ratios should be viewed in addition to, and not as an alternative for, the Company's reported results under accounting principles generally accepted in the United States. Page 11 MASCO CORPORATION GAAP RECONCILIATION OF OPERATING PROFIT AND SHAREHOLDERS' EQUITY (IN MILLIONS)
TWELVE MONTHS ENDED MARCH 31, ------------------- 2005 2004 ------- --------- Operating Profit from Continuing Operations $ 1,525 $ 1,570 Goodwill Impairment Charge 168 53 European Charges - 54 Accelerated Benefit (Income) - (5) (Income) Regarding Litigation Settlement (11) (80) ------- --------- Operating Profit, As Reconciled $ 1,682 $ 1,592 ======= =========
TWELVE MONTHS ENDED MARCH 31, --------------------- 2005 2004 --------- --------- Shareholders' Equity, As Reported $ 5,008 $ 5,127 Goodwill Impairment Charge (after tax) 141 47 European Charges (after tax) - 38 Accelerated Benefit (Income) (after tax) - (3) (Income) Regarding Litigation Settlement (after tax) (7) (50) --------- --------- Shareholders' Equity, As Reconciled $ 5,142 $ 5,159 ==-====== =========
NOTES: Data excludes discontinued operations. The Company believes that certain non-GAAP performance measures and ratios, used in managing the business, may provide users of this financial information with additional meaningful comparisons between current results and results in prior periods. Non-GAAP performance measures and ratios should be viewed in addition to, and not as an alternative for, the Company's reported results under accounting principles generally accepted in the United States. This information is provided to explain the calculation of return on invested capital ("ROIC") which is calculated as after-tax operating profit (last twelve months) divided by the total of average debt (net of average cash) and average shareholders' equity. Page 12 MASCO CORPORATION DISCONTINUED OPERATIONS (IN MILLIONS)
Three Months Ended March 31, -------------------- 2005 2004 --------- --------- Net Sales $ 17 $ 95 ========= ========= Income from Discontinued Operations $ 3 $ 6 Gain on Disposal of Discontinued Operations, Net 11 - Impairment of Assets Held for Sale - (64) --------- --------- Income (Loss) Before Income Taxes 14 (58) Income Tax Benefit (Expense) 5 (15) --------- --------- Income (Loss) from Discontinued Operations, Net of Income Taxes $ 19 $ (73) ========= =========
NOTES: The unusual relationship between income tax benefit and income before income taxes (including the gain on the disposition of businesses) in 2005 results, from the gain requiring no current tax expense and the reversal of deferred tax liabilities of the discontinued operations which are no longer expected to be incurred. The after-tax charge for the impairment of assets held for sale in the first quarter of 2004 was $76 million and includes $12 million for the expensing of deferred tax assets of the discontinued operations. The information for discontinued operations is for the period prior to the respective dates of disposition. Page 13 -----END PRIVACY-ENHANCED MESSAGE-----