-----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, O1kOd0NnUZ0jmstg/bLYSwHQQyDtgJyE+AkzQ5iQGu98RffeSgguyWaolV7eqHQw 5+KXvu7R6IhQ78CZIzfjLQ== 0000950124-07-002564.txt : 20070501 0000950124-07-002564.hdr.sgml : 20070501 20070501102225 ACCESSION NUMBER: 0000950124-07-002564 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070501 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070501 DATE AS OF CHANGE: 20070501 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: 07803911 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 k14674e8vk.htm CURRENT REPORT e8vk
 

 
 
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 1, 2007
 
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:
        o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
        o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
        o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
        o 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 1, 2007 reporting Masco Corporation’s financial results for the first quarter of 2007 and certain other information and supplemental information prepared for use in connection with the financial results for the first quarter of 2007. On May 1, 2007, Masco Corporation will hold an investor conference call and web cast to discuss financial results for the first quarter of 2007.
     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.
     (d) Exhibits.
99 Press Release of Masco Corporation dated May 1, 2007 reporting Masco Corporation’s financial results for the first quarter of 2007 and certain other information and supplemental information prepared for use in connection with the financial results for the first quarter of 2007.
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 1, 2007

 

EXHIBIT INDEX
99       Press Release of Masco Corporation dated May 1, 2007 reporting Masco Corporation’s financial results for the first quarter of 2007 and certain other information and supplemental information prepared for use in connection with the financial results for the first quarter of 2007.

EX-99 2 k14674exv99.htm PRESS RELEASE exv99
 

FOR IMMEDIATE RELEASE
     
Media Contact:
Sharon Rothwell
Vice President, Corporate Affairs
313.792.6028
  Investor Contact:
Maria Duey
Vice President, Investor Relations
313.792.5500
MASCO CORPORATION REPORTS FIRST QUARTER RESULTS
Masco Corporation Highlights:
  First Quarter 2007
 
  •   Net sales from continuing operations declined nine percent to $2.9 billion.
 
  •   Income from continuing operations was $142 million or $.37 per common share.
 
  •   The quarterly dividend was increased from $.22 to $.23 per common share, making 2007 the 49th consecutive year in which dividends have been increased.
 
  •   The Company returned $361 million to shareholders through share repurchases and dividends.
 
  •   The Company had $1.2 billion in cash and marketable securities at March 31.
     Taylor, Michigan (May 1, 2007) — Masco Corporation (NYSE: MAS) today reported that net sales from continuing operations for the quarter ended March 31, 2007 declined nine percent to $2.9 billion compared with $3.2 billion for the first quarter of 2006. North American sales declined 15 percent and International sales increased 21 percent. In local currencies, International sales increased 10 percent compared with the first quarter of 2006.
     Income from continuing operations was $142 million or $.37 per common share and $207 million or $.50 per common share in the first quarters of 2007 and 2006, respectively. Results benefited from net gains of $.04 and $.01 per common share related to financial investments in the first quarters of 2007 and 2006, respectively.
     First quarter 2007 results, seasonally the lowest quarter of the year, were adversely affected by lower sales volume of installation and other services, assembled cabinets and windows and doors in the new home construction market and a continued moderation in consumer spending for certain “big ticket” home improvement items, such as cabinets, as well as a less favorable product mix and increased commodity costs. Results were aided by increased sales volume of paints and stains and increased sales from International operations, particularly plumbing products.

 

 

     As part of its profit improvement programs, the Company has been focused on the rationalization of its businesses, including sourcing programs, business consolidations, plant closures, headcount reductions and other initiatives. During the first quarters of 2007 and 2006, the Company incurred costs and charges of $25 million pre-tax ($.04 per common share, after tax) and $17 million pre-tax ($.03 per common share, after tax), respectively, related to profit improvement programs. Offsetting these charges in the first quarter of 2007 were lower stock-based compensation expense and gain on the sale of corporate fixed assets aggregating $12 million pre-tax ($.02 per common share, after tax) and the previously discussed income related to financial investments of $.04 per common share, after tax.
     While results in the first quarter of 2007 were substantially below the strong first quarter of 2006, reflecting a decline of approximately 30 percent in housing starts, sales and earnings were better than the Company anticipated when it issued its full-year 2007 earnings guidance in February. At that time, the Company anticipated that first quarter net sales would be down low-double digits, compared with the actual decline of nine percent.
     Economic conditions, however, remain uncertain in the Company’s markets, and certain commodity costs, which had stabilized or declined, have recently increased once again. Housing starts have declined dramatically in the last 12 months due to previous excessive speculative buying, rapidly rising home prices in recent years reducing affordability and less attractive mortgage terms. Even with the recent decline in new home construction, the inventory of unsold new and existing homes has remained at unprecedented high levels. As a result, the Company has lowered its 2007 housing starts estimate to between approximately 1.4 million to 1.5 million. In addition, we continue to see a moderation in consumer spending for certain “big ticket” home improvement items, such as cabinets, and currently estimate that 2007 full-year sales will decline low-to-mid single digits compared with 2006.
     The Company believes that the negative impacts of its downward revision in estimated housing starts to a range of approximately 1.4 million to 1.5 million from approximately 1.5 million to 1.7 million, assumed in its original guidance given in February, and increased commodity costs will be largely offset by a combination of the stronger-than-expected first quarter results, the continued strength related to International operations, including the favorable effect of currency translation, share repurchases and the profit improvement programs we are pursuing. Accordingly, at this time the Company, assuming no further escalation in commodity costs, estimates that 2007 full-year earnings will approximate $1.50 to $1.70 per common share, instead of its original guidance of “$1.50 or less to $1.80 per common share or more.” The above guidance includes approximately $60 million pre-tax ($.10 per common share, after tax) of costs related to plant start-up, severance, systems implementations and plant closures.
     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 1, 2007 at 11:00 a.m. ET. Participants in the call are asked to register five to ten minutes prior to the scheduled start time by dialing (719) 457-2649 (confirmation #8812460). 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 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 #8812460) approximately two hours after the end of the call and will continue through May 8, 2007.
     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 that reflect the Company’s views about its future performance constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. These views involve risks and uncertainties that are difficult to predict and, accordingly, the Company’s results may differ materially from the results discussed in such forward-looking statements. For an explanation of various factors that may affect our performance, refer to our most recent Annual Report on Form 10-K (particularly the “Risk Factors” section) and to any subsequent Quarterly Reports on Form 10-Q, all of which are on file with the Securities and Exchange Commission. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The Company believes that certain non-GAAP performance measures and ratios that may be contained herein, 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 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 CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended March 31, 2007 and 2006
(In Millions, Except Per Common Share Data)
                 
    Three Months Ended  
    March 31,  
    2007     2006  
Net sales
   $ 2,881     $ 3,167  
Cost of sales
     2,125       2,293  
 
            
Gross profit
     756       874  
Selling, general and administrative expenses
     499       519  
 
            
Operating profit
     257       355  
Other income (expense), net
     (21 )     (30 )
 
            
Income from continuing operations before income taxes, minority interest and cumulative effect of accounting change, net
     236       325  
Income taxes
     85       112  
 
            
Income from continuing operations before minority interest and cumulative effect of accounting change, net
     151       213  
Minority interest
     9       6  
 
            
Income from continuing operations before cumulative effect of accounting change, net
     142       207  
Income from discontinued operations, net
     1       —  
Cumulative effect of accounting change, net
     —       (3 )
 
            
Net income
   $ 143     $ 204  
 
            
 
                
Earnings per common share (diluted):
                
Income from continuing operations before cumulative effect of accounting change, net
   $ 0.37     $ 0.50  
Income from discontinued operations, net
     —       —  
Cumulative effect of accounting change, net
     —       (0.01 )
 
            
Net income
   $ 0.37     $ 0.50  
 
            
Average diluted common shares
     388       411  
 
            

 

 

MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
First Quarter 2007
•   Net sales from continuing operations declined nine percent, with North American sales declining 15 percent and International sales increasing 21 percent. In local currencies, International sales increased 10 percent compared with the first quarter of 2006.
 
•   Key retailer sales from continuing operations declined two percent in the 2007 first quarter compared with an increase of seven percent in the 2006 first quarter and a decline of seven percent in the 2006 fourth quarter.
 
•   Sales changes by segment in the first quarter of 2007 versus the first quarter of 2006 were:
  •   Cabinets and Related Products sales declined 19 percent;
 
  •   Plumbing Products sales increased seven percent;
 
  •   Installation and Other Services sales declined 21 percent;
 
  •   Decorative Architectural Products sales increased seven percent; and
 
  •   Other Specialty Products sales declined 13 percent.
•   International sales were strong, particularly for plumbing products, due to stronger European economies, market share gains and the favorable effect of currency translation.
 
•   Income from continuing operations was $142 million or $.37 per common share and $207 million or $.50 per common share in the first quarters of 2007 and 2006, respectively.
 
•   Net income in the first quarter of 2007 was $143 million or $.37 per common share, including income from discontinued operations, net, of $1 million. Net income in the first quarter of 2006 was $204 million or $.50 per common share after giving recognition to the cumulative effect of an accounting change, net, of $3 million or $.01 per common share related to stock-based compensation.

1

 

MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
First Quarter 2007 (continued)
•   In addition, results benefited from net gains of $.04 and $.01 per common share related to financial investments in the first quarters of 2007 and 2006, respectively.
 
•   First quarter 2007 results, seasonally the lowest quarter of the year, were adversely affected by lower sales volume of installation and other services, assembled cabinets and windows and doors in the new home construction market, lower retail sales volume of ready-to-assemble and assembled cabinets and a less favorable product mix. Results were aided by increased sales volume of paints and stains and increased sales from International operations, particularly plumbing products.
 
•   As part of its profit improvement programs, the Company has been focused on the rationalization of its businesses, including sourcing programs, business consolidations, plant closures, headcount reductions and other initiatives. During the first quarters of 2007 and 2006, the Company incurred costs and charges of $25 million pre-tax ($.04 per common share, after tax) and $17 million pre-tax ($.03 per common share, after tax), respectively, related to profit improvement programs. Offsetting these charges in the first quarter of 2007 were lower stock-based compensation expense and gain on the sale of corporate fixed assets aggregating $12 million pre-tax ($.02 per common share, after tax) and the previously discussed income related to financial investments of $.04 per common share, after tax.
 
•   Gross margins were 26.2 percent in the first quarter of 2007 compared with 27.6 percent in the first quarter of 2006. Operating profit margins, as reported, were 8.9 percent in the first quarter of 2007 compared with 11.2 percent in the first quarter of 2006. Operating profit margins in the first quarters of 2007 and 2006 include the negative effect of reduced sales volume in 2007 and costs and charges related to profit improvement programs in both years.
 
•   SG&A expenses as a percent of sales, including general corporate expense, were 17.3 percent in the 2007 first quarter compared with 16.4 percent in the 2006 first quarter.

2

 

MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
First Quarter 2007 (continued)
•   General corporate expense was 1.8 percent of sales in the first quarter of 2007 compared with 1.5 percent in the comparable period of 2006.
 
•   Although actual SG&A expenses declined by $20 million in the first quarter of 2007 compared with the first quarter of 2006, SG&A expenses as a percent of sales increased in the first quarter of 2007 due to sales volume declines and severance costs.
 
•   During the quarter, the acquisition of Metaldyne by Asahi Tec Corporation (“Asahi Tec”), a Japanese automotive supplier, was finalized. The combined fair value of the Asahi Tec common and preferred stock, as well as the derivative related to the conversion feature on the preferred stock, received in exchange for the Company’s investment in Metaldyne, was $72 million. At March 31, 2007, the Company has recognized a combined net gain of $4 million (including the transaction gain and the subsequent valuation of the derivative) in income from financial investments, net.
 
•   Accounts receivable days at the end of the first quarter were 52 days compared with 50 days a year ago.
 
•   Inventory days at the end of the first quarter were 50 days compared with 49 days a year ago.
 
•   Accounts payable days at the end of the first quarter were 42 days compared with 37 days a year ago.
 
•   Working capital at March 31, 2007 (defined as accounts receivable and inventories less accounts payable) improved to 17.4 percent of the last twelve months’ sales from 17.6 percent a year earlier.
 
•   The Company’s tax rate was 36.0 percent in the first quarter of 2007 compared with 34.5 percent in the comparable period of the prior year. The Company anticipates that its tax rate on income from continuing operations in 2007 will approximate 35 to 36 percent.
 
•   At the end of the quarter, the Company had a strong balance sheet with $1.2 billion in cash and marketable securities and $2 billion in unused bank lines.

3

 

MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
First Quarter 2007 (concluded)
•   For the twelve months ended March 31, 2007 and March 31, 2006, return on invested capital (as reported) was 8.8 percent and 12.9 percent, respectively. For the twelve months ended March 31, 2007 and March 31, 2006, return on invested capital (as reconciled) was 11.3 percent and 13.3 percent, respectively. While the Company remains committed to the continued improvement in its ROIC, recent business trends have resulted in a reduction in operating profit over the last several quarters, which negatively impacted ROIC. The Company continues to believe that it will achieve its ROIC goal of 18 percent by 2010.
 
•   During the quarter, the Company repurchased approximately nine million shares of Company common stock. The Company had approximately 27 million common shares remaining under its repurchase authorization at March 31, 2007.
 
•   During the quarter, holders of $1.8 billion (94 percent) principal amount at maturity of the Zero Coupon Convertible Senior Notes (“Notes”) required the Company to repurchase their Notes at a cash value of $825 million.
 
•   During the first quarter, the Company also retired $300 million of floating-rate notes due March 9, 2007. On March 14, 2007, the Company issued $300 million of floating-rate notes due 2010 and $300 million of fixed-rate 5.85% notes due 2017. These debt issuances provided net proceeds of $596 million and were in consideration of the March 2007 and upcoming August 2007 debt maturities. Debt as a percent of total capitalization was 51 percent and 46 percent at March 31, 2007 and 2006, respectively.
 
•   The Company’s diluted common shares for purposes of calculating earnings per common share were 388 million for the first quarter of 2007 compared with 411 million for the first quarter of 2006.
 
•   During the quarter, the Board of Directors increased the quarterly dividend from $.22 to $.23 per common share, making 2007 the 49th consecutive year in which dividends have been increased.

4

 

MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
Outlook for 2007
•   While results in the first quarter of 2007 were substantially below the strong first quarter of 2006, reflecting a decline of approximately 30 percent in housing starts, sales and earnings were better than the Company anticipated when it issued its full-year 2007 earnings guidance in February. At that time, the Company anticipated that first quarter net sales would be down low-double digits, compared with the actual decline of nine percent.
 
•   Economic conditions, however, remain uncertain in the Company’s markets, and certain commodity costs, which had stabilized or declined, have recently increased once again. Housing starts have declined dramatically in the last 12 months due to previous excessive speculative buying, rapidly rising home prices in recent years reducing affordability and less attractive mortgage terms. Even with the recent decline in new home construction, the inventory of unsold new and existing homes has remained at unprecedented high levels. As a result, the Company has lowered its 2007 housing starts estimate to between approximately 1.4 million to 1.5 million. In addition, we continue to see a moderation in consumer spending for certain “big ticket” home improvement items, such as cabinets, and currently estimate that 2007 full-year sales will decline low-to-mid single digits compared with 2006.
 
•   The Company believes that the negative impacts of its downward revision in estimated housing starts to a range of approximately 1.4 million to 1.5 million from approximately 1.5 million to 1.7 million, assumed in its original guidance given in February, and increased commodity costs will be largely offset by a combination of the stronger-than-expected first quarter results, the continued strength related to International operations, including the favorable effect of currency translation, share repurchases and the profit improvement programs we are pursuing. Accordingly, at this time the Company, assuming no further escalation in commodity costs, estimates that 2007 full-year earnings will approximate $1.50 to $1.70 per common share, instead of its original guidance of “$1.50 or less to $1.80 per common share or more.” The above guidance includes approximately $60 million pre-tax ($.10 per common share, after tax) of costs related to plant start-up, severance, systems implementations and plant closures.

5

 

MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
Outlook for 2007 (concluded)
•   The Company expects to continue to return a minimum of $1 billion annually to shareholders, on average, through share repurchases and dividends as part of its ongoing commitment to value creation. The Company has returned $4.8 billion to shareholders over the last four calendar years including the repurchases of 126 million common shares and dividends. In addition, the first quarter of 2007, the Company returned $361 million to shareholders through share repurchases (nine million common shares) and dividends.
 
•   Diluted common shares for the computation of earnings per common share at April 1, 2007 were 383 million. This excludes the impact of any subsequent repurchases of common stock.
     Statements contained herein that reflect the Company’s views about its future performance constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. These views involve risks and uncertainties that are difficult to predict and, accordingly, the Company’s results may differ materially from the results discussed in such forward-looking statements. For an explanation of various factors that may affect our performance, refer to our most recent Annual Report on Form 10-K (particularly the “Risk Factors” section) and to any subsequent Quarterly Reports on Form 10-Q, all of which are on file with the Securities and Exchange Commission. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The Company believes that certain non-GAAP performance measures and ratios that may be contained herein, 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 is contained in the Company’s filings with the Securities and Exchange Commission and is available on Masco’s website at www.masco.com.
###

6

 

MASCO CORPORATION — 1st Quarter 2007
     
Page    
1
  Condensed Consolidated Statements of Operations — 2007 & 2006 by Quarter
 
    
2
  Notes to Condensed Consolidated Statements of Operations — 2007 & 2006 by Quarter
 
    
3
  Sales by Segment and Geographic Area — Three Months Ended March 31, 2007 & 2006
 
    
4
  2007 Quarterly Segment Data — Excluding Costs and Charges
 
    
5
  2007 Quarterly Segment Data — Including Costs and Charges
 
    
6
 
2006 Quarterly Segment Data — Excluding Costs and Charges for Profit Improvement Programs and Impairment Charges for Goodwill
 
    
7
 
2006 Quarterly Segment Data — Including Costs and Charges for Profit Improvement Programs and Impairment Charges for Goodwill
 
    
8
  Other Income (Expense), Net — 2007 & 2006 by Quarter
 
    
9
  Condensed Consolidated Statements of Income — Three Months Ended March 31, 2007 & 2006
 
    
10
  Condensed Consolidated Balance Sheets
 
    
 
  GAAP Reconciliations:
 
    
11   
       Sales Growth Excluding the Effect of Acquisitions and Currency Translation
 
    
12   
       Operating Profit and Margins
 
    
13   
       Operating Profit and Shareholders’ Equity
 
    
14   
  Discontinued Operations

 

MASCO CORPORATION
Condensed Consolidated Statements of Operations
2007 & 2006 — by Quarter
(dollars in millions, except per common share data)
                                                                                 
    2007     2006  
    Year     Qtr. 4     Qtr. 3     Qtr. 2     Qtr. 1     Year     Qtr. 4     Qtr. 3     Qtr. 2     Qtr. 1  
Net Sales:
                                                                                
- North America
                                   $ 2,258     $ 10,537     $ 2,348     $ 2,710     $ 2,829     $ 2,650  
- International, principally Europe
                                     623       2,241       598       585       541       517  
 
                                                            
 
                                                                                
- Consolidated
                                     2,881       12,778       2,946       3,295       3,370       3,167  
 
                                                                                
Cost of Sales
                                     2,125       9,259       2,203       2,372       2,391       2,293  
 
                                                            
 
                                                                                
Gross Profit
                                     756       3,519       743       923       979       874  
(Gross Margin)
                                     26.2 %     27.5 %     25.2 %     28.0 %     29.1 %     27.6 %
 
                                                                                
S,G&A Expense (before GCE & (Gain) on Sale of Corporate Fixed Assets)
                                     451       1,860       442       471       476       471  
(S,G&A Expense as a % of Sales)
                                     15.7 %     14.6 %     15.0 %     14.3 %     14.1 %     14.9 %
 
                                                            
 
                                                                                
Operating Profit (before GCE, (Gain) on Sale of Corporate Fixed Assets, Income Regarding Litigation Settlement & Impairment Charges for Goodwill)
                                     305       1,659       301       452       503       403  
(Operating Margin)
                                     10.6 %     13.0 %     10.2 %     13.7 %     14.9 %     12.7 %
 
                                                                                
- North America
                                     242       1,427       248       392       441       346  
(Margin)
                                     10.7 %     13.5 %     10.6 %     14.5 %     15.6 %     13.1 %
- International, principally Europe
                                     63       232       53       60       62       57  
(Margin)
                                     10.1 %     10.4 %     8.9 %     10.3 %     11.5 %     11.0 %
 
                                                                                
General Corporate Expense (GCE), Net
                                     51       203       50       52       53       48  
 
                                                                                
S,G&A Expense as a % of Sales (including GCE & (Gain) on Sale of Corporate Fixed Assets)
                                     17.3 %     16.1 %     16.7 %     15.9 %     15.7 %     16.4 %
 
                                                                                
(Gain) on Sale of Corporate Fixed Assets, Net
                                     (3 )     —       —       —       —       —  
 
                                                                                
Income Regarding Litigation Settlement
                                     —       (1 )     (1 )     —       —       —  
 
                                                                                
Impairment Charges for Goodwill
                                     —       331       321       —       10       —  
 
                                                                                
 
                                                            
Operating Profit (Loss) per F/S
                                   $ 257     $ 1,126     $ (69 )   $ 400     $ 440     $ 355  
 
                                                            
 
                                                                                
Earnings (Loss) per Common Share (Diluted):
                                                                                
Income (Loss) from Continuing Operations before Cumulative Effect of Accounting Change, Net
                                   $ 0.37     $ 1.15     $ (0.48 )   $ 0.57     $ 0.53     $ 0.50  
 
                                                                                
Income from Discontinued Operations, Net
                                     —       0.08       —       0.07       0.01       —  
 
                                                                                
Cumulative Effect of Accounting Change, Net
                                     —       (0.01 )     —       —       —       (0.01 )
 
                                                            
 
                                                                                
Net Income (Loss)
                                   $ 0.37     $ 1.22     $ (0.49 )   $ 0.64     $ 0.54     $ 0.50  
 
                                                            
 
                                                                                
Please see page 2 for Notes.

Page 1

 

MASCO CORPORATION
Notes to Condensed Consolidated Statements of Operations
2007 & 2006 — by Quarter
Notes:
-   Operating results in the first quarter of 2007 include $25 million pre-tax of costs and charges related to profit improvement programs.
 
-   Operating results in the fourth quarter of 2006 include $321 million of non-cash, pre-tax impairment charges for goodwill ($.82 per common share, after tax), primarily related to the Company’s European ready-to-assemble cabinet manufacturer.
 
-   Operating results in the first, second, third and fourth quarters of 2006 include $17 million pre-tax, $26 million pre-tax, $9 million pre-tax and $5 million pre-tax, respectively, of costs and charges related to the Company’s profit improvement programs.
 
-   Income (loss) from continuing operations for the second, third and fourth quarters of 2006 include $8 million pre-tax ($.01 per common share, after tax), $78 million pre-tax ($.13 per common share, after tax) and $15 million pre-tax ($.03 per common share, after tax), respectively, of non-cash impairment charges for financial investments.
 
-   Income from discontinued operations for the third quarter of 2006 includes a $50 million pre-tax net gain ($.07 per common share, after tax) from the disposition of businesses.
 
-   Operating results exclude an operation sold in the third quarter of 2006, which was treated as discontinued operations in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.”
 
-   Per common share amounts for the four quarters of 2006 do not total to the per common share amounts for the year primarily due to the timing of common stock transactions.

Page 2

 

MASCO CORPORATION
Sales by Segment and Geographic Area
Three Months Ended March 31, 2007 & 2006
(dollars in millions)
                         
    Three Months Ended     1st Qtr ’07  
    March 31     vs.  
    2007     2006     1st Qtr ’06  
Cabinets and Related Products
   $ 691     $ 852     - 19 %
Plumbing Products
     853       797     + 7 %
Installation and Other Services
     638       806     - 21 %
Decorative Architectural Products
     436       409     + 7 %
Other Specialty Products
     263       303     - 13 %
 
                        
 
                  
    Total
   $ 2,881     $ 3,167     - 9 %
 
                    
 
                        
North America
   $ 2,258     $ 2,650     - 15 %
 
                        
International, principally Europe
     623       517     + 21 %
 
                        
 
                  
    Total, as above
   $ 2,881     $ 3,167     - 9 %
 
                    
Notes:
-   Data exclude discontinued operations.
 
-   Excluding acquisitions, consolidated net sales declined nine percent, North American net sales declined 15 percent and International net sales increased 21 percent compared with the first quarter of 2006 (please see page 11 for the GAAP reconciliation).
 
-   International net sales in local currencies increased 10 percent compared with the first quarter of 2006 (please see page 11 for the GAAP reconciliation).

Page 3

 

MASCO CORPORATION
Quarterly Segment Data — 2007
Excluding Costs and Charges
(dollars in millions)
                                         
    Year     Qtr. 4     Qtr. 3     Qtr. 2     Qtr. 1  
Net Sales:
                                        
- Cabinets and Related Products
                                   $ 691  
- Plumbing Products
                                     853  
- Installation and Other Services
                                     638  
- Decorative Architectural Products
                                     436  
- Other Specialty Products
                                     263  
 
                              
- Total
                                     2,881  
 
                              
 
                                        
- North America
                                     2,258  
- International, principally Europe
                                     623  
 
                              
- Total, as above
                                     2,881  
 
                              
 
                                        
Operating Profit:
                                        
- Cabinets and Related Products
                                     82  
- Plumbing Products
                                     83  
- Installation and Other Services
                                     36  
- Decorative Architectural Products
                                     93  
- Other Specialty Products
                                     34  
 
                              
- Total
                                     328  
 
                              
 
                                        
- North America
                                     263  
- International, principally Europe
                                     65  
 
                              
- Total, as above
                                     328  
 
                              
 
                                        
General Corporate Expense (GCE), Net
                                     49  
 
                                        
(Gain) on Sale of Corporate Fixed Assets, Net
                                     (3 )
 
                                        
Income Regarding Litigation Settlement
                                     —  
 
                                        
 
                              
Operating Profit (after GCE and Adjustments)
                                     282  
 
                                        
Other Income (Expense), Net
                                     (21 )
 
                              
 
                                        
Income from Continuing Operations before Income Taxes, Minority Interest and Cumulative Effect of Accounting Change, Net
                                   $ 261  
 
                              
 
                                        
Margins:
                                        
- Cabinets and Related Products
                                     11.9 %
- Plumbing Products
                                     9.7 %
- Installation and Other Services
                                     5.6 %
- Decorative Architectural Products
                                     21.3 %
- Other Specialty Products
                                     12.9 %
- Total
                                     11.4 %
 
                                        
- North America
                                     11.6 %
- International, principally Europe
                                     10.4 %
- Total, as above
                                     11.4 %
Notes:
–   Operating profit and margins by segment and geographic area are before general corporate expense, (gain) on sale of Corporate fixed assets and income regarding litigation settlement.
 
–   Operating profit margins for the first quarter of 2007 exclude costs and charges of $25 million pre-tax related to severance, plant start-up and system implementations as follows: Cabinets and Related Products ($10 million), Plumbing Products ($6 million), Installation and Other Services ($6 million), Other Specialty Products ($1 million) and GCE ($2 million).

 

 

MASCO CORPORATION
Quarterly Segment Data — 2007
Including Costs and Charges
(dollars in millions)
                                         
    Year     Qtr. 4     Qtr. 3     Qtr. 2     Qtr. 1  
Net Sales:
                                        
- Cabinets and Related Products
                                   $ 691  
- Plumbing Products
                                     853  
- Installation and Other Services
                                     638  
- Decorative Architectural Products
                                     436  
- Other Specialty Products
                                     263  
 
                              
- Total
                                     2,881  
 
                              
 
                                        
- North America
                                     2,258  
- International, principally Europe
                                     623  
 
                              
- Total, as above
                                     2,881  
 
                              
 
                                        
Operating Profit:
                                        
- Cabinets and Related Products
                                     72  
- Plumbing Products
                                     77  
- Installation and Other Services
                                     30  
- Decorative Architectural Products
                                     93  
- Other Specialty Products
                                     33  
 
                              
- Total
                                     305  
 
                              
 
                                        
- North America
                                     242  
- International, principally Europe
                                     63  
 
                              
- Total, as above
                                     305  
 
                              
 
                                        
General Corporate Expense (GCE), Net
                                     51  
 
                                        
(Gain) on Sale of Corporate Fixed Assets, Net
                                     (3 )
 
                                        
Income Regarding Litigation Settlement
                                     —  
 
                                        
 
                              
Operating Profit (after GCE and Adjustments)
                                     257  
 
                                        
Other Income (Expense), Net
                                     (21 )
 
                              
 
                                        
Income from Continuing Operations before Income Taxes, Minority Interest and Cumulative
                                        
 
                              
Effect of Accounting Change, Net
                                   $ 236  
 
                              
 
                                        
Margins:
                                        
- Cabinets and Related Products
                                     10.4 %
- Plumbing Products
                                     9.0 %
- Installation and Other Services
                                     4.7 %
- Decorative Architectural Products
                                     21.3 %
- Other Specialty Products
                                     12.5 %
- Total
                                     10.6 %
 
                                        
- North America
                                     10.7 %
- International, principally Europe
                                     10.1 %
- Total, as above
                                     10.6 %
Note:
-   Operating profit and margins by segment and geographic area are before general corporate expense, (gain) on sale of Corporate fixed assets and income regarding litigation settlement.
 
-   Operating profit margins for the first quarter of 2007 include costs and charges of $25 million pre-tax related to severance, plant start-up and system implementations as follows: Cabinets and Related Products ($10 million), Plumbing Products ($6 million), Installation and Other Services ($6 million), Other Speciality Products ($1 million) and GCE ($2 million).

Page 5

 

MASCO CORPORATION
Quarterly Segment Data — 2006
Excluding Costs and Charges for Profit Improvement Programs
and Impairment Charges for Goodwill
(dollars in millions)
                                         
    Year     Qtr. 4     Qtr. 3     Qtr. 2     Qtr. 1  
Net Sales:
                                        
- Cabinets and Related Products
   $ 3,286     $ 745     $ 826     $ 863     $ 852  
- Plumbing Products
     3,296       809       848       842       797  
- Installation and Other Services
     3,158       726       814       812       806  
- Decorative Architectural Products
     1,777       366       477       525       409  
- Other Specialty Products
     1,261       300       330       328       303  
 
                              
- Total
     12,778       2,946       3,295       3,370       3,167  
 
                              
 
                                        
- North America
     10,537       2,348       2,710       2,829       2,650  
- International, principally Europe
     2,241       598       585       541       517  
 
                              
- Total, as above
     12,778       2,946       3,295       3,370       3,167  
 
                              
 
                                        
Operating Profit:
                                        
- Cabinets and Related Products
     446       80       107       138       121  
- Plumbing Products
     320       48       88       101       83  
- Installation and Other Services
     344       65       89       95       95  
- Decorative Architectural Products
     371       66       108       120       77  
- Other Specialty Products
     225       47       69       65       44  
 
                              
- Total
     1,706       306       461       519       420  
 
                              
 
                                        
- North America
     1,475       254       401       457       363  
- International, principally Europe
     231       52       60       62       57  
 
                              
- Total, as above
     1,706       306       461       519       420  
 
                              
 
                                        
General Corporate Expense (GCE), Net
     203       50       52       53       48  
 
                                        
(Gain) on Sale of Corporate Fixed Assets, Net
     —       —       —       —       —  
 
                                        
Income Regarding Litigation Settlement
     (1 )     (1 )     —       —       —  
 
                                        
 
                              
Operating Profit (after GCE and Adjustments)
     1,504       257       409       466       372  
 
                                        
Other Income (Expense), Net
     (226 )     (53 )     (44 )     (99 )     (30 )
 
                              
Income from Continuing Operations before
                                       
Income Taxes, Minority Interest and Cumulative
                                        
Effect of Accounting Change, Net
   $ 1,278     $ 204     $ 365     $ 367     $ 342  
 
                              
 
                                        
Margins:
                                        
- Cabinets and Related Products
     13.6 %     10.7 %     13.0 %     16.0 %     14.2 %
- Plumbing Products
     9.7 %     5.9 %     10.4 %     12.0 %     10.4 %
- Installation and Other Services
     10.9 %     9.0 %     10.9 %     11.7 %     11.8 %
- Decorative Architectural Products
     20.9 %     18.0 %     22.6 %     22.9 %     18.8 %
- Other Specialty Products
     17.8 %     15.7 %     20.9 %     19.8 %     14.5 %
- Total
     13.4 %     10.4 %     14.0 %     15.4 %     13.3 %
 
                                        
- North America
     14.0 %     10.8 %     14.8 %     16.2 %     13.7 %
- International, principally Europe
     10.3 %     8.7 %     10.3 %     11.5 %     11.0 %
- Total, as above
     13.4 %     10.4 %     14.0 %     15.4 %     13.3 %
Notes:
-   Data exclude discontinued operations.
 
-   Operating profit and margins by segment and geographic area are before general corporate expense, (gain) on sale of corporate fixed assets and income regarding litigation settlement.
 
-   Operating profit margins for the fourth quarter of 2006 exclude $321 million of impairment charges for goodwill as follows: Cabinets and Related Products ($306 million), Plumbing Products ($1 million) and Decorative Architectural Products ($14 million).
 
-   Operating profit margins for the first, second, third and fourth quarters of 2006 for the Plumbing Products segment exclude $17 million pre-tax, $11 million pre-tax, $7 million pre-tax and $4 million pre-tax, respectively, of costs and charges related to the Company’s profit improvement programs.
 
-   Operating profit margins for the second, third and fourth quarters of 2006 for the Cabinets and Related Products segment exclude $15 million pre-tax, $2 million pre-tax and $1 million pre-tax, respectively, of costs and charges related to the closure of a relatively small ready-to-assemble cabinet manufacturing facility.

Page 6

 

MASCO CORPORATION
Quarterly Segment Data — 2006
Including Costs and Charges for Profit Improvement Programs
and Impairment Charges for Goodwill
(dollars in millions)
                                         
    Year     Qtr. 4     Qtr. 3     Qtr. 2     Qtr. 1  
Net Sales:
                                        
- Cabinets and Related Products
   $ 3,286     $ 745     $ 826     $ 863     $ 852  
- Plumbing Products
     3,296       809       848       842       797  
- Installation and Other Services
     3,158       726       814       812       806  
- Decorative Architectural Products
     1,777       366       477       525       409  
- Other Specialty Products
     1,261       300       330       328       303  
 
                              
- Total
     12,778       2,946       3,295       3,370       3,167  
 
                              
 
                                        
- North America
     10,537       2,348       2,710       2,829       2,650  
- International, principally Europe
     2,241       598       585       541       517  
 
                              
- Total, as above
     12,778       2,946       3,295       3,370       3,167  
 
                              
 
                                        
Operating Profit (Loss):
                                        
- Cabinets and Related Products
     122       (227 )     105       123       121  
- Plumbing Products
     280       43       81       90       66  
- Installation and Other Services
     344       65       89       95       95  
- Decorative Architectural Products
     357       52       108       120       77  
- Other Specialty Products
     225       47       69       65       44  
 
                              
- Total
     1,328       (20 )     452       493       403  
 
                              
 
                                        
- North America
     1,417       248       392       431       346  
- International, principally Europe
     (89 )     (268 )     60       62       57  
 
                              
- Total, as above
     1,328       (20 )     452       493       403  
 
                              
 
                                        
General Corporate Expense (GCE), Net
     203       50       52       53       48  
(Gain) on Sale of Corporate Fixed Assets, Net
     —       —       —       —       —  
Income Regarding Litigation Settlement
     (1 )     (1 )     —       —       —  
 
                              
Operating Profit (Loss) (after GCE and Adjustments)
     1,126       (69 )     400       440       355  
Other Income (Expense), Net
     (226 )     (53 )     (44 )     (99 )     (30 )
 
                              
Income (Loss) from Continuing Operations before
                                       
Income Taxes, Minority Interest and Cumulative
                                        
Effect of Accounting Change, Net
   $ 900     $ (122 )   $ 356     $ 341     $ 325  
 
                              
 
                                        
Margins:
                                        
- Cabinets and Related Products
     3.7 %     -30.5 %     12.7 %     14.3 %     14.2 %
- Plumbing Products
     8.5 %     5.3 %     9.6 %     10.7 %     8.3 %
- Installation and Other Services
     10.9 %     9.0 %     10.9 %     11.7 %     11.8 %
- Decorative Architectural Products
     20.1 %     14.2 %     22.6 %     22.9 %     18.8 %
- Other Specialty Products
     17.8 %     15.7 %     20.9 %     19.8 %     14.5 %
- Total
     10.4 %     -0.7 %     13.7 %     14.6 %     12.7 %
 
                                        
- North America
     13.4 %     10.6 %     14.5 %     15.2 %     13.1 %
- International, principally Europe
     -4.0 %     -44.8 %     10.3 %     11.5 %     11.0 %
- Total, as above
     10.4 %     -0.7 %     13.7 %     14.6 %     12.7 %
Notes:
-   Data exclude discontinued operations.
 
-   Operating profit (loss) and margins by segment and geographic area are before general corporate expense, (gain) on sale of corporate fixed assets and income regarding litigation settlement.
 
-   Operating profit (loss) margins for the fourth quarter of 2006 include $321 million of impairment charges for goodwill as follows: Cabinets and Related Products ($306 million), Plumbing Products ($1 million) and Decorative Architectural Products ($14 million).
 
-   Operating profit margins for the first, second, third and fourth quarters of 2006 for the Plumbing Products segment include $17 million pre-tax, $11 million pre-tax, $7 million pre-tax and $4 million pre-tax, respectively, of costs and charges related to the Company’s profit improvement programs.
 
-   Operating profit (loss) margins for the second, third and fourth quarters of 2006 for the Cabinets and Related Products segment include $15 million pre-tax, $2 million pre-tax and $1 million pre-tax, respectively, of costs and charges related to the closure of a relatively small ready-to-assemble cabinet manufacturing facility.

Page 7

 

MASCO CORPORATION
Other Income (Expense), Net
2007 & 2006 — by Quarter
(in millions)
                                                                                 
    2007     2006  
    Year     Qtr. 4     Qtr. 3     Qtr. 2     Qtr. 1     Year     Qtr. 4     Qtr. 3     Qtr. 2     Qtr. 1  
Interest Expense
                                   $ (63 )   $ (240 )   $ (69 )   $ (54 )   $ (53 )   $ (64 )
 
                                                                                
Income from Cash and Cash Investments
                                     14       47       22       6       5       14  
 
                                                                                
Other Interest Income
                                     —       2       —       —       1       1  
 
                                                                                
Realized Gains from Financial Investments, Net
                                     22       31       5       9       11       6  
 
                                                                                
Dividend Income
                                     5       10       2       1       1       6  
 
                                                                                
Impairment Charges for Financial Investments
                                     —       (101 )     (15 )     (8 )     (78 )     —  
 
                                                                                
Other, Net
                                     1       25       2       2       14       7  
 
                                                                                
 
                                                            
Total Other Income (Expense), Net
                                   $ (21 )   $ (226 )   $ (53 )   $ (44 )   $ (99 )   $ (30 )
 
                                                            
Notes:
-   Data exclude discontinued operations.
 
-   Other, net, for the first quarter of 2006 includes $4 million of currency transaction gains.

Page 8

 

MASCO CORPORATION
Condensed Consolidated Statements of Income
Three Months Ended March 31, 2007 & 2006
(dollars and shares in millions, except per common share data)
                                                   
                  Three Months Ended       As a Percent of Sales    
          %     March 31,       Three Months Ended March 31,    
Line         Change     2007     2006       2007     2006    
1  
Net Sales
       -9 %   $ 2,881     $ 3,167         100.0 %     100.0 %  
2  
Cost of Sales
       -7 %     2,125       2,293         73.8 %     72.4 %  
   
 
                                      
3  
Gross Profit
       -14 %     756       874         26.2 %     27.6 %  
   
 
                                      
   
Operating Profit:
                                              
4  
- Before GCE, Income Regarding Litigation Settlement, (Gain) on Sale of Corporate Fixed Assets and Impairment Charges for Goodwill (3-8)
       -24 %     305       403         10.6 %     12.7 %  
5  
- After GCE, Income Regarding Litigation Settlement, (Gain) on Sale of Corporate Fixed Assets and Impairment Charges for Goodwill (3-9-10-11)
       -28 %     257       355         8.9 %     11.2 %  
   
 
                                      
   
 
                                              
   
S,G&A Expense:
                                              
6  
- General Corporate Expense (GCE), Net
       6 %     51       48         1.8 %     1.5 %  
7  
- (Gain) on Sale of Corporate Fixed Assets, Net
               (3 )     —         -0.1 %     0.0 %  
8  
- All Other
       -4 %     451       471         15.7 %     14.9 %  
   
 
                                      
9  
- Total S,G&A Expense
       -4 %     499       519         17.3 %     16.4 %  
   
 
                                      
10  
Impairment Charges for Goodwill
               —       —         0.0 %     0.0 %  
11  
Income Regarding Litigation Settlement
               —       —         0.0 %     0.0 %  
12  
Other Income (Expense), Net
               (21 )     (30 )       -0.7 %     -0.9 %  
13  
Impairment Charges for Financial Investments
               —       —         0.0 %     0.0 %  
   
 
                                      
   
 
                                              
14  
Income from Continuing Operations before Income Taxes, Minority Interest and Cumulative Effect of Accounting Change, Net (5+12+13)
       -27 %     236       325         8.2 %     10.3 %  
15  
Income Taxes
       -24 %     85       112         3.0 %     3.5 %  
   
(Tax Rate)
               36.0 %     34.5 %                    
   
 
                                      
16  
Income from Continuing Operations before Minority Interest and Cumulative Effect of Accounting Change, Net
       -29 %     151       213         5.2 %     6.7 %  
17  
Minority Interest
               (9 )     (6 )       -0.3 %     -0.2 %  
   
 
                                      
   
 
                                              
18  
Income from Continuing Operations before Cumulative Effect of Accounting Change, Net
       -31 %     142       207         4.9 %     6.5 %  
19  
Income from Discontinued Operations, Net
               1       —         0.0 %     0.0 %  
20  
Cumulative Effect of Accounting Change, Net
               —       (3 )       0.0 %     -0.1 %  
   
 
                                      
21  
Net Income
       -30 %   $ 143     $ 204         5.0 %     6.4 %  
   
 
                                      
   
Earnings Per Common Share (Diluted):
                                              
   
Income from Continuing Operations before Cumulative Effect of Accounting Change, Net
       -27 %   $ 0.37     $ 0.50                      
   
Income from Discontinued Operations, Net
               —       —                      
   
Cumulative Effect of Accounting Change, Net
               —       (0.01 )                    
   
 
                                          
   
Net Income
       -26 %   $ 0.37     $ 0.50                      
   
 
                                          
   
Average (Diluted) Common Shares
       -6 %     388       411                      

Page 9

 

MASCO CORPORATION
Condensed Consolidated Balance Sheets
(in millions)
                 
    March 31,     December 31,  
    2007     2006  
Assets
                
Current Assets:
                
Cash and Cash Investments
   $ 1,165     $ 1,958  
Receivables
     1,779       1,613  
Inventories
     1,279       1,263  
Prepaid Expenses and Other
     313       281  
 
            
Total Current Assets
     4,536       5,115  
Property and Equipment, Net
     2,351       2,363  
Goodwill
     3,965       3,957  
Other Intangible Assets, Net
     304       306  
Other Assets
     529       584  
 
            
Total Assets
   $ 11,685     $ 12,325  
 
            
Liabilities
                
Current Liabilities:
                
Notes Payable
   $ 323     $ 1,446  
Accounts Payable
     890       815  
Accrued Liabilities
     1,126       1,128  
 
            
Total Current Liabilities
     2,339       3,389  
Long-term Debt
     4,044       3,533  
Deferred Income Taxes and Other
     1,041       932  
 
            
Total Liabilities
     7,424       7,854  
Shareholders’ Equity
     4,261       4,471  
 
            
Total Liabilities and Shareholders’ Equity
   $ 11,685     $ 12,325  
 
            

Page 10

 

MASCO CORPORATION
GAAP Reconciliation of Sales Growth
Excluding the Effect of Acquisitions and Currency Translation
(in millions)
                 
    Three Months Ended  
    March 31,  
    2007     2006  
Consolidated Net Sales, As Reported
   $ 2,881     $ 3,167  
- Acquisitions
     (18 )     —  
 
            
Consolidated Net Sales, Excluding Acquisitions
   $ 2,863     $ 3,167  
 
            
North American Net Sales, As Reported
   $ 2,258     $ 2,650  
- Acquisitions
     (18 )     —  
 
            
North American Net Sales, Excluding Acquisitions
   $ 2,240     $ 2,650  
 
            
International Net Sales, As Reported
   $ 623     $ 517  
- Acquisitions
     —       —  
 
            
International Net Sales, Excluding Acquisitions
     623       517  
- Currency Translation
     (55 )     —  
 
            
International Net Sales, Excluding Acquisitions and Currency
   $ 568     $ 517  
 
            
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 11

 

MASCO CORPORATION
GAAP Reconciliation of Operating Profit and Margins
(dollars in millions)
                                 
    Three Months Ended March 31,  
    2007     2006  
    $     Margin     $     Margin  
Operating Profit, As Reported
   $ 257       8.9 %   $ 355       11.2 %
 
                                
Profit Improvement Programs, Plumbing Products Segment
     —               17          
 
                                
Costs and Charges
     25               —          
 
                        
 
                                
Operating Profit, As Reconciled
   $ 282       9.8 %   $ 372       11.7 %
 
                        
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 12

 

MASCO CORPORATION
GAAP Reconciliation of Operating Profit and Shareholders’ Equity
(in millions)
                 
    Twelve          
    Months Ended          
    March 31,          
    2007          
Operating Profit, As Reported
   $ 1,028          
Impairment Charges for Goodwill
     331          
Income Regarding Litigation Settlement
     (1 )        
 
              
Operating Profit, As Reconciled
   $ 1,358          
 
              
                 
    Twelve Months Ended  
    March 31,  
    2007     2006  
Shareholders’ Equity, As Reported
   $ 4,261     $ 4,682  
Impairment Charges for Goodwill (after tax)
     331       69  
Income Regarding Litigation Settlement (after tax)
     (1 )     (3 )
 
            
Shareholders’ Equity, As Reconciled
   $ 4,591     $ 4,748  
 
            
Notes:
Data exclude 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 as detail for the calculation of return on invested capital (“ROIC”) which is calculated as after-tax operating profit (last twelve months, as reconciled) divided by the total of average debt (net of average cash) and average shareholders’ equity.

Page 13

 

MASCO CORPORATION
Discontinued Operations
(in millions)
                 
    Three Months Ended  
    March 31,  
    2007     2006  
Net Sales
   $ —     $ 19  
 
            
Income from Discontinued Operations
     —       2  
Gain (Loss) on Disposal of Discontinued Operations, Net
     1       (1 )
 
            
Income Before Income Taxes
     1       1  
Income Tax Expense
     —       (1 )
 
            
Income from Discontinued Operations, Net
   $ 1     $ —  
 
            

Page 14

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