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In addition, third quarter 2007 results benefited from a reduction in the Company’s anticipated income tax rate and net reductions in certain variable expenses reflecting lower sales and operating performance. These items aggregated $.04 per common share.

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 third quarters of 2007 and 2006, the Company incurred costs and charges of $12 million pre-tax ($.02 per common share, after tax, net of an $8 million gain from the sale of fixed assets) and $9 million pre-tax ($.01 per common share, after tax), respectively, related to profit improvement programs.

The Company also had non-cash impairment charges for financial investments of $12 million pre-tax ($.02 per common share, after tax) and $8 million pre-tax ($.01 per common share, after tax) in the third quarters of 2007 and 2006, respectively. Results benefited from net gains related to financial investments of $11 million pre-tax ($.02 per common share, after tax) and $9 million pre-tax ($.01 per common share, after tax) in the third quarters of 2007 and 2006, respectively.

Economic conditions remain uncertain in a number of the Company’s markets. Housing starts have declined dramatically in the last 18 months due to previous excessive speculative buying, reduced affordability, excessive inventories of homes and less attractive mortgage terms. The subprime mortgage issues that have plagued the new home construction and credit markets in recent months have made it more difficult to obtain a mortgage, adding to an already difficult housing market. As a result, the Company, as previously communicated, reduced its full-year 2007 housing starts estimate to approximately 1.35 million from 1.4 million and the Company expects further declines in housing starts over the next several quarters. In addition, the Company continues to see a moderation in consumer spending for certain “big ticket” home improvement items, such as cabinets, and currently estimates that the Company’s fourth quarter and full-year 2007 sales will decline mid-to-high single digits compared with the same periods in 2006.

While forecasting future business conditions in the current environment remains challenging, the Company currently believes that its stronger than anticipated third quarter performance should result in 2007 full-year earnings from continuing operations approximating or modestly exceeding the high end of its previous guidance of $1.55 to $1.65 per common share. This guidance includes net costs of approximately $75 million pre-tax ($.13 per common share, after tax) related to plant start-up, severance, systems implementations and other initiatives.

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“Given the difficult housing environment, we are very pleased with our third quarter operating performance, particularly our operating margins, which approximated last year’s third quarter operating performance on sales that were down seven percent,“ said Tim Wadhams, Chief Executive Officer of Masco Corporation. “While we expect market conditions in our industry, in the next several quarters, to be even more challenging, we are confident that the continued focus on our strategy of concentrating on organic growth, improving returns and generating superior cash flow, together with the leveraging of the combined market strength of our retail service, distribution and installation capabilities, brands and scale will allow the Masco team to continue to drive long-term value for our shareholders.”

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, October 30, 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 (913) 981-5507 (confirmation #9477966). 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 #9477966) approximately two hours after the end of the call and will continue through November 5, 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 — UNAUDITED
For the Three Months and Nine Months Ended September 30, 2007 and 2006
(In Millions Except Per Common Share Data)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2007			2006			2007			2006
Net sales	$	3,059		$	3,279		$	9,072		$	9,787
Cost of sales		2,197			2,360			6,551			7,021

Gross profit		862			919			2,521			2,766
Selling, general and administrative expenses		488			520			1,525			1,561
Impairment charge for goodwill		—			—			—			10


Operating profit		374			399			996			1,195
Other income (expense), net		(45	)		(44	)		(130	)		(173	)

Income from continuing operations before income taxes, minority interest and cumulative effect of accounting change, net		329			355			866			1,022
Income taxes		109			123			302			354

Income from continuing operations before minority interest and cumulative effect of accounting change, net		220			232			564			668
Minority interest		11			7			27			21

Income from continuing operations before cumulative effect of accounting change, net		209			225			537			647
(Loss) income from discontinued operations, net		(4	)		27			—			31
Cumulative effect of accounting change, net		—			—			—			(3	)

Net income	$	205		$	252		$	537		$	675


Earnings per common share (diluted):
Income from continuing operations before cumulative effect of accounting change, net	$	0.57		$	0.57		$	1.43		$	1.61
(Loss) income from discontinued operations, net		(0.01	)		0.07			—			0.08
Cumulative effect of accounting change, net		—			—			—			(0.01	)

Net income	$	0.56		$	0.64		$	1.43		$	1.68


Average diluted common shares outstanding		367			393			376			402

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 2007 planned disposition of a European business unit in the Decorative Architectural Products segment and the September 2006 disposition of a business unit in the Other Specialty Products segment as discontinued operations.

In April 2007 and July 2007, the Company also completed the sale of two relatively small business units in the Plumbing Products segment; these business units were included in continuing operations through their respective dates of sale.

Third Quarter 2007

•		Net sales from continuing operations declined seven percent, with North American sales declining 11 percent and International sales increasing 13 percent. In local currencies, International sales increased five percent compared with the third quarter of 2006.

•		Key retailer sales from continuing operations decreased one percent in the 2007 third quarter compared with an increase of two percent in the 2007 second quarter and a decline of two percent in the 2007 first quarter.

•		Retail sales of paints and stains continued relatively strong in the third quarter of 2007.

•		International sales were strong, particularly for plumbing products, due to stronger European economies, market share gains and the favorable effect of currency translation.

•		Sales changes by segment in the third quarter of 2007 versus the third quarter of 2006 were:

	§		Cabinets and Related Products sales declined 11 percent;

	§		Plumbing Products sales increased four percent;

	§		Installation and Other Services sales declined 15 percent;

	§		Decorative Architectural Products sales increased two percent; and

	§		Other Specialty Products sales declined 13 percent.

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