Masco 8K Reports 2007 Results | MAS 12 Feb 08


		FOR IMMEDIATE RELEASE


Media Contact		Investor Contact
Sharon Rothwell		Maria Duey
Vice President — Corporate Affairs		Vice President — Investor Relations
313.792.6028		313.792.5500
sharon_rothwell@mascohq.com		maria_duey@mascohq.com

MASCO CORPORATION REPORTS 2007 RESULTS

Masco Corporation 2007 Highlights:

Full-Year 2007

	•		Net sales from continuing operations declined seven percent to $11.8 billion.

	•		Income from continuing operations was $1.62 per common share, excluding non-cash impairment charges for goodwill and other intangible assets.

	•		Income from continuing operations, as reported, was $1.06 per common share.

	•		Free cash flow before dividends was approximately $980 million.

	•		The Company returned $1.2 billion to shareholders through share repurchases (31 million common shares) and dividends.

	•		The quarterly dividend was increased by five percent, the 49^th consecutive year in which dividends have been increased.

Taylor, Mich., (February 12, 2008) —Masco Corporation (NYSE: MAS) today reported that net sales from continuing operations for the year ended December 31, 2007 declined seven percent to $11.8 billion compared with $12.7 billion for 2006. North American sales declined 12 percent and International sales increased 15 percent. In local currencies, International sales increased five percent compared with 2006.

Results for 2007 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 decline in consumer spending for home improvement products.

Income from continuing operations was $1.62 per common share and $1.99 per common share for 2007 and 2006, respectively, excluding non-cash impairment charges for goodwill and other intangible assets. Including these charges, income from continuing operations, as reported, was $397 million or $1.06 per common share and $478 million or $1.20 per common share for the years ended December 31, 2007 and 2006, respectively.

net of an $8 million gain from the sale of fixed assets) and $47 million pre-tax ($.08 per common share, after tax), respectively, related to these initiatives.

During 2007, the Company recognized non-cash, pre-tax impairment charges for goodwill and other intangible assets aggregating $227 million ($.56 per common share, after tax) and non-cash, pre-tax impairment charges for financial investments aggregating $22 million ($.04 per common share, after tax). During 2006, the Company recognized non-cash, pre-tax impairment charges for goodwill aggregating $317 million ($.79 per common share, after tax) and non-cash, pre-tax impairment charges for financial investments aggregating $101 million ($.16 per common share, after tax).

Fourth Quarter 2007

Fourth quarter 2007 net sales from continuing operations declined eight percent to $2.7 billion compared with $2.9 billion for the fourth quarter 2006. North American sales declined 13 percent and International sales increased 11 percent. In local currencies, International sales increased one percent compared with the fourth quarter of 2006.

Income from continuing operations was $.19 per common share and $.35 per common share for the fourth quarters of 2007 and 2006, respectively, excluding non-cash impairment charges for goodwill and other intangible assets. Including these charges, loss from continuing operations, as reported, was $140 million or $.39 per common share and $169 million or $.44 per common share for the fourth quarters of 2007 and 2006, respectively.

During the fourth quarters of 2007 and 2006, the Company incurred costs and charges of $19 million pre-tax ($.03 per common share, after tax) and $5 million pre-tax ($.01 per common share, after tax), respectively, related to the rationalization of its businesses. During the fourth quarters of 2007 and 2006, the Company recognized non-cash, pre-tax impairment charges for goodwill and other intangible assets aggregating $227 million ($.58 per common share, after tax) and $307 million ($.79 per common share, after tax), respectively.

Outlook 2008

Economic conditions remain difficult in a number of the Company’s markets. Housing starts declined 25 percent in 2007, due to excessive inventories of homes and less attractive mortgage terms. The Company expects a further decline in housing starts in 2008 and continued softness in sales of existing homes. In addition, the Company anticipates a decline in consumer spending for home improvement products and, notwithstanding recent activities by the Federal Reserve and the government to stimulate economic growth, the Company believes that 2008 will be a difficult year for the overall U.S. economy. In the fourth quarter of 2007, the Company also experienced a softening of demand for certain of its International products due to declining European economies. As a result, the Company currently estimates that its 2008 sales will decline high-single to low-double digits compared with 2007.

operations, after capital expenditures and before dividends) will continue to be relatively strong and approximate $700 million.This guidance reflects the Company’s estimate that 2008 housing starts will decline an additional 25 to 33 percent, to a range of 900,000 to one million units, compared with 1.3 million units in 2007.

The Company also expects that consumer spending for home improvement products will continue to decline and that demand for certain of the Company’s International products, which increased five percent in local currencies in 2007, will moderate. In addition, the Company’s guidance reflects an estimated full-year 2008 tax rate of approximately 42 to 43 percent (due to the U.S. tax on the anticipated repatriation of foreign earnings to utilize favorable provisions of the U.S. tax law) which, compared to the Company’s normalized tax rate of approximately 36 percent, will reduce earnings by approximately $.11 per common share, as well as continued relatively higher costs for certain commodities, including copper and commodities impacted by energy costs.

The Company expects market conditions in its industry, in the next several quarters, to be very challenging. The Company is confident of its strategy of dividend increases and share repurchases while concentrating on organic growth, improving returns and generating superior cash flow. The Company’s strategy, together with the leveraging of the combined market strength of its retail service, distribution and installation capabilities, brands and scale, will allow Masco to continue to drive long-term growth and value for its 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, February 12, 2008 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) 312-0716 (confirmation #4347917). The conference call will be webcast simultaneously on the Company’s website atwww.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 #4347917) approximately two hours after the end of the call and will continue through February 19, 2008.

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 atwww.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 atwww.masco.com.

MASCO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS — UNAUDITED
For the Three Months and Twelve Months Ended December 31, 2007 and 2006
(In Millions, Except Per Common Share Data)


	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2007			2006			2007			2006
Net sales	$	2,698		$	2,931		$	11,770		$	12,718
Cost of sales		2,008			2,191			8,559			9,212

Gross profit		690			740			3,211			3,506
Selling, general and administrative expenses		500			489			2,025			2,050
Income regarding litigation settlement		—			(1	)		—			(1	)
Impairment charges for goodwill and other intangible assets		227			307			227			317

Operating profit (loss)		(37	)		(55	)		959			1,140
Other income (expense), net		(59	)		(53	)		(189	)		(226	)

Income (loss) from continuing operations before income taxes, minority interest and cumulative effect of accounting change, net		(96	)		(108	)		770			914
Income taxes		34			55			336			409

Income (loss) from continuing operations before minority interest and cumulative effect of accounting change, net		(130	)		(163	)		434			505
Minority interest		10			6			37			27

Income (loss) from continuing operations before cumulative effect of accounting change, net		(140	)		(169	)		397			478
(Loss) income from discontinued operations, net		(11	)		(18	)		(11	)		13
Cumulative effect of accounting change, net		—			—			—			(3	)

Net income (loss)	$	(151	)	$	(187	)	$	386		$	488


Earnings per common share (diluted):
Income (loss) from continuing operations before cumulative effect of accounting change, net	$	(0.39	)	$	(0.44	)	$	1.06		$	1.20
(Loss) income from discontinued operations, net		(0.03	)		(0.05	)		(0.03	)		0.03
Cumulative effect of accounting change, net		—			—			—			(0.01	)

Net income (loss)	$	(0.42	)	$	(0.49	)	$	1.03		$	1.22

Average diluted common shares outstanding		360			385			373			400

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 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.

Fourth Quarter 2007

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

•		Key retailer sales from continuing operations declined five percent in the 2007 fourth quarter compared with a decline of one percent for the nine months ended September 30, 2007 and a decline of seven percent in the 2006 fourth quarter.

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

	•		Cabinets and Related Products sales declined 11 percent;

	•		Plumbing Products sales increased three percent;

	•		Installation and Other Services sales declined 19 percent;

	•		Decorative Architectural Products sales declined one percent; and

	•		Other Specialty Products sales declined 12 percent.

•

Fourth quarter 2007 results 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 decline in consumer spending for home improvement products.

•

Fourth quarter 2007 results were positively affected by increased retail sales of paints and stains and International plumbing products.

MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS

Fourth Quarter 2007 (continued)

•

The Company has been focused on the rationalization of its businesses, including sourcing programs, business consolidations, plant closures, headcount reductions, plant start-ups, systems implementations and other initiatives. During the fourth quarters of 2007 and 2006, the Company incurred costs and charges of $19 million pre-tax ($.03 per common share, after tax) and $5 million pre-tax ($.01 per common share, after tax), respectively, related to these initiatives.

•

During the fourth quarter of 2007, the Company recognized non-cash, pre-tax impairment charges for goodwill and other intangible assets aggregating $227 million ($208 million or $.58 per common share, after tax). The impairment charges for goodwill and other intangible assets principally related to changes in the long-term outlook for certain business units in the Other Specialty Products segment and one business unit in the Plumbing Products segment. During the fourth quarter of 2006, the Company recognized non-cash, pre-tax impairment charges for goodwill aggregating $307 million ($307 million or $.79 per common share, after tax).

•

Loss from continuing operations was $140 million or $.39 per common share and $169 million or $.44 per common share for the fourth quarters of 2007 and 2006, respectively, including non-cash impairment charges for goodwill and other intangible assets.

•

Net loss for the fourth quarter of 2007, including discontinued operations, was $151 million or $.42 per common share. Net loss for the fourth quarter of 2006, including discontinued operations, was $187 million or $.49 per common share.

•

The Company’s diluted common shares for purposes of calculating (loss) earnings per common share were 360 million for the fourth quarter of 2007 compared with 385 million for the fourth quarter of 2006. For the fourth quarters of 2007 and 2006, one million and five million, respectively, of contingent common shares were not included in the computation of diluted (loss) per common share due to their anti-dilutive effect.

MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS

Fourth Quarter 2007 (concluded)

•

Results benefited from net gains related to financial investments of $3 million pre-tax ($.01 per common share, after tax) and $8 million pre-tax ($.01 per common share, after tax) in the fourth quarters of 2007 and 2006, respectively.

•

Gross margins were 25.6 percent in the fourth quarter of 2007 compared with 25.2 percent in the fourth quarter of 2006.

•

Operating (loss) profit margins, as reported, were (1.4) percent in the fourth quarter of 2007 compared with (1.9) percent in the fourth quarter of 2006. Excluding non-cash, pre-tax impairment charges for goodwill and other intangible assets of $227 million and pre-tax costs and charges related to business rationalizations and other initiatives of $19 million, operating profit margins were 7.7 percent in the fourth quarter of 2007. Excluding non-cash, pre-tax impairment charges for goodwill of $307 million and pre-tax costs and charges related to profit improvement programs of $5 million, operating profit margins were 8.8 percent in the fourth quarter of 2006.

•

SG&A expenses as a percent of sales, including general corporate expense, were 18.5 percent in the fourth quarter of 2007 compared with 16.7 percent in the fourth quarter of 2006, reflecting increased bad debt expense, principally related to the new home construction market, and increased severance and other employee separation-related costs, as well as lower sales volume.

•

General corporate expense was 1.4 percent of sales in the 2007 fourth quarter and 1.7 percent in the 2006 fourth quarter.

•

Excluding the impairment charges for goodwill and other intangible assets in 2007 and 2006, as anticipated, the Company’s tax rate was 40 percent in the fourth quarter of 2007 compared with 28 percent in the fourth quarter of 2006. The lower tax rate for the fourth quarter of 2006 was the result of the reinstatement of the research and development credit by Congress in the fourth quarter of 2006 and a change in the mix of taxable earnings and lower tax rates.

Full-Year 2007

•

Net sales from continuing operations for 2007 declined seven percent to $11.8 billion compared with $12.7 billion for 2006. North American sales declined 12 percent and International sales increased 15 percent. In local currencies, International sales increased five percent.

•

For the full-year 2007, key retailer sales from continuing operations declined two percent compared with 2006.

MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS

Full-Year 2007 (continued)

•

Sales changes by segment for 2007 versus 2006 were:

	•		Cabinets and Related Products sales declined 14 percent;

	•		Plumbing Products sales increased five percent;

	•		Installation and Other Services sales declined 17 percent;

	•		Decorative Architectural Products sales increased three percent; and

	•		Other Specialty Products sales declined 12 percent.

•

Results 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 decline in consumer spending for home improvement products.

•

Results were positively affected by increased retail sales of paints and stains and International plumbing products.

•

Income from continuing operations was $397 million or $1.06 per common share and $478 million or $1.20 per common share for the years ended December 31, 2007 and 2006, respectively, including non-cash impairment charges for goodwill and other intangible assets.

•

Net income for 2007 was $386 million or $1.03 per common share, including loss from discontinued operations, net of $11 million. Net income for 2006 was $488 million or $1.22 per common share, including income from discontinued operations, net of $13 million.

•

The Company has been focused on the rationalization of its businesses, including sourcing programs, business consolidations, plant closures, headcount reductions, plant start-ups, systems implementations and other initiatives. During 2007 and 2006, the Company incurred net costs and charges of $79 million pre-tax ($.13 per common share, after tax, net of an $8 million gain from the sale of fixed assets) and $47 million pre-tax ($.08 per common share, after tax), respectively, related to these initiatives.

MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS

Full-Year 2007 (continued)

•

During 2007, the Company recognized non-cash, pre-tax impairment charges for goodwill and other intangible assets aggregating $227 million ($208 million or $.56 per common share, after tax). The impairment charges for goodwill and other intangible assets principally related to changes in the long-term outlook for certain business units in the Other Specialty Products segment and one business unit in the Plumbing Products segment. During 2006, the Company recognized non-cash, pre-tax impairment charges for goodwill aggregating $317 million ($317 million or $.79 per common share, after tax).

•

During 2007, the Company recognized non-cash, pre-tax impairment charges for financial investments aggregating $22 million ($.04 per common share, after tax). During 2006, the Company recognized non-cash, pre-tax impairment charges for financial investments aggregating $101 million ($.16 per common share, after tax).

•

Full-year results benefited from net gains related to financial investments of $43 million pre-tax ($.07 per common share, after tax) and $34 million pre-tax ($.05 per common share, after tax) in 2007 and 2006, respectively.

•

Gross margins were 27.3 percent in 2007 compared with 27.6 percent in 2006. Operating profit margins, as reported, were 8.1 percent in 2007 compared with 9.0 percent in 2006. Full-year 2007 gross margins and operating profit margins were adversely impacted by the slowdown in the new home construction market and a decline in consumer spending for home improvement products.

•

Excluding non-cash, pre-tax impairment charges for goodwill and other intangible assets aggregating $227 million and pre-tax costs and net charges related to business rationalizations and other initiatives of $79 million, operating profit margins were 10.7 percent in 2007. Excluding non-cash, pre-tax impairment charges for goodwill aggregating $317 million and pre-tax costs and charges related to profit improvement programs of $47 million, operating profit margins were 11.8 percent in 2006.

•

SG&A expenses as a percent of sales, including general corporate expense, were 17.2 percent in 2007 compared with 16.1 percent in 2006. Higher SG&A expenses in 2007 reflect increased bad debt expense, principally related to the new home construction market, increased systems implementation costs and increased severance costs.

•

General corporate expense was 1.5 percent of sales in 2007 compared with 1.6 percent in 2006.

MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS

Full-Year 2007 (continued)

•

The Company’s reported tax rate on income from continuing operations, excluding the impairment charges for goodwill and other intangible assets was 36 percent in 2007 and 33 percent in 2006. The Company anticipates that its tax rate on income from continuing operations for 2008 will approximate 42 to 43 percent. The increase in the expected tax rate for 2008 is primarily due to U.S. tax on anticipated dividend distributions of low tax foreign earnings. These dividends are being distributed to utilize the favorable provisions of the U.S. income tax law that are scheduled to expire at December 31, 2008. The Company estimates that its tax rate on income from continuing operations for 2009 will approximate 35 to 36 percent.

•

Accounts receivable days at December 31, 2007 were 49 days compared with 50 days a year ago.

•

Inventory days were 48 days at December 31, 2007 compared with 49 days a year ago.

•

Accounts payable days were 43 days at December 31, 2007 compared with 40 days a year ago.

•

Working capital at December 31, 2007 and 2006 (defined as accounts receivable and inventories less accounts payable) was 15.4 percent of sales, and 16.1 percent of sales, respectively.

•

For the twelve months ended December 31, 2007 and 2006, return on invested capital (ROIC) (as reported) was 8.6 percent and 9.8 percent, respectively. For the twelve months ended December 31, 2007 and 2006, ROIC (as reconciled) was 10.3 percent and 12.4 percent, respectively. While the Company remains highly committed to the continued improvement in its ROIC, recent macro business trends have resulted in a reduction in operating profit over the last several quarters, which has negatively impacted ROIC. The Company continues to believe that it will achieve its long-term ROIC goal of 18 percent and will provide guidance as to the timing when there is more clarity in the recovery of the housing and home improvement markets.

•

Capital expenditures, including discontinued operations, were $248 million or 2.1 percent of sales in 2007, compared with $388 million or 3.1 percent of sales in 2006. Depreciation and amortization was $248 million in 2007 compared with $244 million in 2006.

MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS

Full-Year 2007 (concluded)

•

During 2007, the Company repurchased 31 million shares (2 million in the fourth quarter of 2007) of Company common stock. The Company had 41 million common shares remaining at December 31, 2007 under its repurchase authorization.

•

During 2007, the Company returned $1.2 billion to shareholders through common share repurchases and dividends. For the five-year period (2003-2007) ended December 31, 2007, the Company has returned over $6 billion to shareholders through the repurchase of 157 million common shares and dividends.

•

In 2007, the Company increased its quarterly dividend by five percent from $.22 to $.23 per common share. The increased quarterly dividend reflects the Company’s favorable long-term outlook, strong balance sheet and cash flow and makes 2007 the 49^th consecutive year in which dividends have been increased.

•

The Company’s diluted common shares for purposes of calculating earnings per common share were 373 million for the year ended December 31, 2007 compared with 400 million for the year ended December 31, 2006.

•

The Company’s free cash flow (defined as cash from operations less capital expenditures and before dividends) for 2007 was approximately $980 million. For the five-year period (2003-2007) ended December 31, 2007, the Company’s free cash flow aggregated $5 billion.

•

The Company, as previously announced, acquired Erickson Construction Company and Guy Evans, Inc., which provide products and installation services to the new home construction market. The Company also acquired several relatively small installation service businesses. These acquisitions had annual net sales of over $200 million in 2006 and the total net purchase price of these acquisitions was $202 million.

•

During 2007, the Company also generated $108 million of cash from the net disposition of financial investments and $45 million from the net disposition of certain businesses.

•

At the end of the year, the Company had a strong balance sheet, with over $900 million in cash and cash investments and $2 billion in unused bank lines.

•

Debt as a percent of total capital was 50 percent at December 31, 2007 compared with 53 percent at December 31, 2006.

MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS

Outlook for 2008

•

Economic conditions remain difficult in a number of the Company’s markets. Housing starts declined 25 percent in 2007, due to excessive inventories of homes and less attractive mortgage terms. The Company expects a further decline in housing starts in 2008 and continued softness in sales of existing homes. In addition, the Company anticipates a decline in consumer spending for home improvement products, and notwithstanding recent actions by the Federal Reserve and the government to stimulate economic growth, the Company believes that 2008 will be a difficult year for the overall U.S. economy. In the fourth quarter of 2007, the Company also experienced a softening of demand for certain of its International products due to declining European economies. As a result, the Company currently estimates that the Company’s 2008 sales will decline high-single to low-double digits compared with 2007.

•

While forecasting future business conditions in the current uncertain economic environment remains challenging, the Company currently believes that 2008 earnings will be in a range of $.85 to $1.15 per common share and that free cash flow (cash from operations after capital expenditures, which are estimated at $240 million, and before dividends) will continue to be relatively strong and approximate $700 million which is two times the Company’s 2007 dividend payments of $347 million. This guidance reflects the Company’s estimate that 2008 housing starts will decline an additional 25 to 33 percent, to a range of 900,000 to one million units, compared with 1.3 million units in 2007. The Company also expects that consumer spending for home improvement products will continue to decline and that demand for certain of the Company’s International products, which increased five percent in local currencies in 2007, will moderate. In addition, the Company’s guidance reflects an estimated full-year 2008 tax rate of approximately 42 to 43 percent (due to the U.S. tax on the anticipated repatriation of foreign earnings to utilize favorable provisions of the U.S. tax law) which, compared to the Company’s normalized tax rate of 36 percent, will reduce earnings by approximately $.11 per common share, as well as continued relatively higher costs for certain commodities, including copper and commodities impacted by energy costs.

•

The Company expects to continue its strategy of returning 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 over $6 billion to shareholders over the last five calendar years, including the repurchase of 157 million common shares and dividends.

MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS

Outlook for 2008 (concluded)

•

Based on the current market price for the Company’s common stock, diluted common shares for the computation of earnings per common share at January 1, 2008 were 360 million. This excludes the impact of any 2008 repurchases of common stock. Since January 1, 2008, the Company has repurchased three million common shares.

•

# # #

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 atwww.masco.com.

MASCO CORPORATION — 4th Quarter 2007


Page
1		Condensed Consolidated Statements of Operations — 2007 & 2006 by Quarter — Unaudited

2		Notes to Condensed Consolidated Statements of Operations — 2007 & 2006 by Quarter — Unaudited

3		Sales by Segment and Geographic Area - Three Months Ended December 31, 2007 & 2006 — Unaudited

4		Sales by Segment and Geographic Area - Twelve Months Ended December 31, 2007 & 2006 — Unaudited

5		2007 Quarterly Segment Data Excluding Net Costs and Charges for Business Rationalizations and Other Initiatives and Impairment Charges for Goodwill and Other Intangible Assets — Unaudited

6		2007 Quarterly Segment Data Including Net Costs and Charges for Business Rationalizations and Other Initiatives and Impairment Charges for Goodwill and Other Intangible Assets — Unaudited

7		2006 Quarterly Segment Data Excluding Costs and Charges for Profit Improvement Programs and Impairment Charges for Goodwill — Unaudited

8		2006 Quarterly Segment Data Including Costs and Charges for Profit Improvement Programs and Impairment Charges for Goodwill — Unaudited

9		Other Income (Expense), Net — 2007 & 2006 by Quarter — Unaudited

10		Condensed Consolidated Statements of Operations - Three Months Ended December 31, 2007 & 2006 — Unaudited

11		Condensed Consolidated Statements of Income - Twelve Months Ended December 31, 2007 & 2006 — Unaudited

12		Condensed Consolidated Balance Sheets — Unaudited

13		Discontinued Operations — Unaudited GAAP Reconciliations:

14		Sales Growth Excluding the Effect of Acquisitions and Currency Translation — Unaudited

15		Operating (Loss) Profit and Margins — Unaudited

16		Operating Profit and Shareholders’ Equity — Unaudited

MASCO CORPORATION
Condensed Consolidated Statements of Operations
2007 & 2006 — by Quarter — Unaudited
(dollars in millions, except per 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	$	9,271		$	2,048		$	2,417		$	2,548		$	2,258		$	10,537		$	2,348		$	2,710		$	2,829		$	2,650
- International, principally Europe		2,499			650			642			600			607			2,181			583			569			525			504

- Consolidated		11,770			2,698			3,059			3,148			2,865			12,718			2,931			3,279			3,354			3,154
Cost of Sales		8,559			2,008			2,197			2,241			2,113			9,212			2,191			2,360			2,378			2,283

Gross Profit		3,211			690			862			907			752			3,506			740			919			976			871
(Gross Margin as a % of Sales)		27.3	%		25.6	%		28.2	%		28.8	%		26.2	%		27.6	%		25.2	%		28.0	%		29.1	%		27.6	%
S,G&A Expense (before GCE & (Gain) on Sale of Corporate Fixed Assets)		1,852			463			444			498			447			1,847			439			468			472			468
(S,G&A Expense as a % of Sales)		15.7	%		17.2	%		14.5	%		15.8	%		15.6	%		14.5	%		15.0	%		14.3	%		14.1	%		14.8	%

Operating Profit (before GCE, (Gain) on Sale of Corporate Fixed Assets, Income Regarding Litigation Settlement & Impairment Charges for Goodwill and Other Intangible Assets)		1,359			227			418			409			305			1,659			301			451			504			403
(Operating Margin as a % of Sales)		11.5	%		8.4	%		13.7	%		13.0	%		10.6	%		13.0	%		10.3	%		13.8	%		15.0	%		12.8	%
- North America		1,127			179			346			360			242			1,427			248			392			441			346
(Margin as a % of Sales)		12.2	%		8.7	%		14.3	%		14.1	%		10.7	%		13.5	%		10.6	%		14.5	%		15.6	%		13.1	%
- International, principally Europe		232			48			72			49			63			232			53			59			63			57
(Margin as a % of Sales)		9.3	%		7.4	%		11.2	%		8.2	%		10.4	%		10.6	%		9.1	%		10.4	%		12.0	%		11.3	%
General Corporate Expense (GCE), Net		181			37			44			49			51			203			50			52			53			48
S,G&A Expense as a % of Sales (Including GCE & (Gain) on Sale of Corporate Fixed Assets)		17.2	%		18.5	%		16.0	%		17.2	%		17.3	%		16.1	%		16.7	%		15.9	%		15.7	%		16.4	%
(Gain) on Sale of Corporate Fixed Assets, Net		(8	)		—			—			(5	)		(3	)		—			—			—			—			—
Income Regarding Litigation Settlement		—			—			—			—			—			(1	)		(1	)		—			—			—
Impairment Charges for Goodwill and Other Intangible Assets		227			227			—			—			—			317			307			—			10			—

Operating Profit (Loss) per F/S	$	959		$	(37	)	$	374		$	365		$	257		$	1,140		$	(55	)	$	399		$	441		$	355


Earnings (Loss) per Common Share (Diluted):
Income (Loss) from Continuing Operations before Cumulative Effect of Accounting Change, Net	$	1.06		$	(0.39	)	$	0.57		$	0.50		$	0.37		$	1.20		$	(0.44	)	$	0.57		$	0.53		$	0.50
(Loss) Income from Discontinued Operations, Net		(0.03	)		(0.03	)		(0.01	)		0.01			—			0.03			(0.05	)		0.07			0.01			—
Cumulative Effect of Accounting Change, Net		—			—			—			—			—			(0.01	)		—			—			—			(0.01	)

Net Income (Loss)	$	1.03		$	(0.42	)	$	0.56		$	0.51		$	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 — Unaudited

Notes:

-		Operating results for the fourth quarter of 2007 include non-cash impairment charges for goodwill and other intangible assets of $227 million pre-tax ($.58 per common share, after tax).

-		Operating results for the first, second, third and fourth quarters of 2007 include costs and charges related to the business rationalizations and other initiatives of $25 million pre-tax ($.04 per common share, after tax), $23 million pre-tax ($.04 per common share, after tax), $12 million pre-tax ($.02 per common share, after tax, net of an $8 million gain from the sale of fixed assets) and $19 million pre-tax ($.03 per common share, after tax), respectively.

-		Income from continuing operations for the second and third quarters of 2007 includes non-cash impairment charges for financial investments of $10 million pre-tax ($.02 per common share, after tax) and $12 million pre-tax ($.02 per common share, after tax), respectively.

-		Income from continuing operations for the first, second, third and fourth quarters of 2007 includes income related to financial investments of $22 million pre-tax ($.04 per common share, after tax), $7 million pre-tax ($.01 per common share, after tax), $11 million pre-tax ($.02 per common share, after tax) and $3 million pre-tax ($.01 per common share, after tax), respectively.

-		Loss from discontinued operations for the third and fourth quarters of 2007 includes a net loss from the sales of the 2007 and 2006 discontinued operations of $4 million, pre-tax ($.01 per common share, after tax) and $6 million pre-tax ($.01 per common share, after tax), respectively.

-		Operating results for the fourth quarter of 2006 include non-cash impairment charges for goodwill of $307 million pre-tax ($.79 per common share, after tax), primarily related to the Company’s European ready-to-assemble cabinet manufacturer.

-		Operating results for the first, second, third and fourth quarters of 2006 include costs and charges related to the Company’s profit improvement programs of $17 million pre-tax ($.03 per common share, after tax), $26 million pre-tax ($.05 per common share, after tax), $9 million pre-tax ($.01 per common share, after tax) and $5 million pre-tax ($.01 per common share, after tax), respectively.

-		Income (loss) from continuing operations for the second, third and fourth quarters of 2006 includes non-cash impairment charges for financial investments of $78 million pre-tax ($.13 per common share, after tax), $8 million pre-tax ($.01 per common share, after tax) and $15 million pre-tax ($.03 per common share, after tax), respectively.

-		Income (loss) from continuing operations for the first, second, third and fourth quarters of 2006 includes income related to financial investments of $6 million pre-tax ($.01 per common share, after tax), $11 million pre-tax ($.02 per common share, after tax), $9 million pre-tax ($.01 per common share, after tax) and $8 million pre-tax ($.01 per common share, after tax), respectively.

-		Income from discontinued operations for the third quarter of 2006 includes a net gain from the disposition of businesses of $50 million pre-tax ($.07 per common share, after tax).

-		Operating results exclude a business unit reclassified to discontinued operations in the second quarter of 2007 and sold in the fourth quarter of 2007 and a business unit sold in the third quarter of 2006, which were 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 2007 and 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 December 31, 2007 & 2006 — Unaudited
(dollars in millions)


	Three Months Ended				4th Qtr ‘07
	December 31,				vs.
	2007		2006		4th Qtr ‘06
Cabinets and Related Products	$	665	$	745		—	11	%

Plumbing Products		832		809		+	3	%

Installation and Other Services		589		726		—	19	%

Decorative Architectural Products		349		351		—	1	%

Other Specialty Products		263		300		—	12	%


Total	$	2,698	$	2,931		—	8	%


North America	$	2,048	$	2,348		—	13	%

International, principally Europe		650		583		+	11	%


Total, as above	$	2,698	$	2,931		—	8	%

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 11 percent compared with the fourth quarter of 2006 (please see page 14 for the GAAP reconciliation).

-		International net sales in local currencies increased one percent compared with the fourth quarter of 2006 (please see page 14 for the GAAP reconciliation).

Page 3

MASCO CORPORATION
Sales by Segment and Geographic Area
Twelve Months Ended December 31, 2007 & 2006 — Unaudited
(dollars in millions)


	Twelve Months Ended				12 Months ‘07
	December 31,				vs.
	2007		2006		12 Months ‘06
Cabinets and Related Products	$	2,829	$	3,286		—	14	%

Plumbing Products		3,449		3,296		+	5	%

Installation and Other Services		2,615		3,158		—	17	%

Decorative Architectural Products		1,771		1,717		+	3	%

Other Specialty Products		1,106		1,261		—	12	%


Total	$	11,770	$	12,718		—	7	%


North America	$	9,271	$	10,537		—	12	%

International, principally Europe		2,499		2,181		+	15	%


Total, as above	$	11,770	$	12,718		—	7	%

Notes:

-		Data exclude discontinued operations.

-		Excluding acquisitions, consolidated net sales declined nine percent, North American net sales declined 14 percent and International net sales increased 15 percent compared with the twelve months ended December 31, 2006 (please see page 14 for the GAAP reconciliation).

-		International net sales in local currencies increased five percent compared with the twelve months ended December 31, 2006 (please see page 14 for the GAAP reconciliation).

Page 4

MASCO CORPORATION
Quarterly Segment Data — 2007
Excluding Net Costs & Charges for Business Rationalizations and Other Initiatives
and Impairment Charges for Goodwill and Other Intangible Assets — Unaudited
(dollars in millions)


	Year			Qtr. 4			Qtr. 3			Qtr. 2			Qtr. 1
Net Sales:
- Cabinets and Related Products	$	2,829		$	665		$	736		$	737		$	691
- Plumbing Products		3,449			832			878			886			853
- Installation and Other Services		2,615			589			689			699			638
- Decorative Architectural Products		1,771			349			468			534			420
- Other Specialty Products		1,106			263			288			292			263

- Total	$	11,770		$	2,698		$	3,059		$	3,148		$	2,865


- North America	$	9,271		$	2,048		$	2,417		$	2,548		$	2,258
- International, principally Europe		2,499			650			642			600			607

- Total, as above	$	11,770		$	2,698		$	3,059		$	3,148		$	2,865


Operating Profit:
- Cabinets and Related Products	$	368		$	71		$	108		$	107		$	82
- Plumbing Products		350			64			104			99			83
- Installation and Other Services		197			34			65			62			36
- Decorative Architectural Products		384			63			113			115			93
- Other Specialty Products		132			14			39			45			34

- Total	$	1,431		$	246		$	429		$	428		$	328


- North America	$	1,191		$	195		$	356		$	377		$	263
- International, principally Europe		240			51			73			51			65

- Total, as above	$	1,431		$	246		$	429		$	428		$	328


General Corporate Expense (GCE), Net		174			37			43			45			49

(Gain) on Sale of Corporate Fixed Assets, Net		(8	)		—			—			(5	)		(3	)

Operating Profit (after GCE and Adjustments)		1,265			209			386			388			282

Other Income (Expense), Net		(189	)		(59	)		(45	)		(64	)		(21	)


Income from Continuing Operations before
Income Taxes, Minority Interest and Cumulative
Effect of Accounting Change, Net	$	1,076		$	150		$	341		$	324		$	261


Margins:
- Cabinets and Related Products		13.0	%		10.7	%		14.7	%		14.5	%		11.9	%
- Plumbing Products		10.1	%		7.7	%		11.8	%		11.2	%		9.7	%
- Installation and Other Services		7.5	%		5.8	%		9.4	%		8.9	%		5.6	%
- Decorative Architectural Products		21.7	%		18.1	%		24.1	%		21.5	%		22.1	%
- Other Specialty Products		11.9	%		5.3	%		13.5	%		15.4	%		12.9	%
- Total		12.2	%		9.1	%		14.0	%		13.6	%		11.4	%

- North America		12.8	%		9.5	%		14.7	%		14.8	%		11.6	%
- International, principally Europe		9.6	%		7.8	%		11.4	%		8.5	%		10.7	%
- Total, as above		12.2	%		9.1	%		14.0	%		13.6	%		11.4	%

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.

-		Operating profit margins for the fourth quarter of 2007 exclude $227 million of impairment charges for goodwill and other intangible assets as follows: Plumbing Products ($69 million) and Other Specialty Products ($158 million).

-		Operating profit margins for the fourth quarter of 2007 exclude costs and charges of $19 million pre-tax related to business rationalization and other initiatives as follows: Cabinets and Related Products ($8 million), Plumbing Products ($5 million) and Installation and Other Services ($6 million).

-		Operating profit margins for the third quarter of 2007 exclude net costs and charges of $12 million pre-tax related to business rationalizations and other initiatives as follows: Cabinets and Related Products ($3 million, net of an $8 million gain from the sale of fixed assets), Plumbing Products ($3 million), Installation and Other Services ($5 million), and GCE ($1 million).

-		Operating profit margins for the second quarter of 2007 exclude costs and charges of $23 million pre-tax related to business rationalizations and other initiatives as follows: Cabinets and Related Products ($11 million), Plumbing Products ($2 million),

-		Installation and Other Services ($4 million), Decorative Architectural Products ($1 million), Other Specialty Products ($1 million) and GCE ($4 million).

-		Operating profit margins for the first quarter of 2007 exclude costs and charges of $25 million pre-tax related to business rationalizations and other initiatives 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).

Page 5

MASCO CORPORATION
Quarterly Segment Data — 2007
Including Net Costs & Charges for Business Rationalizations and Other Initiatives
and Impairment Charges for Goodwill and Other Intangible Assets — Unaudited
(dollars in millions)


	Year			Qtr. 4			Qtr. 3			Qtr. 2			Qtr. 1
Net Sales:
- Cabinets and Related Products	$	2,829		$	665		$	736		$	737		$	691
- Plumbing Products		3,449			832			878			886			853
- Installation and Other Services		2,615			589			689			699			638
- Decorative Architectural Products		1,771			349			468			534			420
- Other Specialty Products		1,106			263			288			292			263

- Total	$	11,770		$	2,698		$	3,059		$	3,148		$	2,865


- North America	$	9,271		$	2,048		$	2,417		$	2,548		$	2,258
- International, principally Europe		2,499			650			642			600			607

- Total, as above	$	11,770		$	2,698		$	3,059		$	3,148		$	2,865


Operating Profit (Loss):
- Cabinets and Related Products		336		$	63		$	105		$	96		$	72
- Plumbing Products		265			(10	)		101			97			77
- Installation and Other Services		176			28			60			58			30
- Decorative Architectural Products		383			63			113			114			93
- Other Specialty Products		(28	)		(144	)		39			44			33

- Total	$	1,132		$	—		$	418		$	409		$	305


- North America	$	1,008		$	60		$	346		$	360		$	242
- International, principally Europe		124			(60	)		72			49			63

- Total, as above	$	1,132		$	—		$	418		$	409		$	305


General Corporate Expense (GCE), Net		181			37			44			49			51

(Gain) on Sale of Corporate Fixed Assets, Net		(8	)		—			—			(5	)		(3	)

Operating Profit (Loss) (after GCE and Adjustments)		959			(37	)		374			365			257

Other Income (Expense), Net		(189	)		(59	)		(45	)		(64	)		(21	)


Income (Loss) from Continuing Operations before Income Taxes, Minority Interest and Cumulative Effect of Accounting Change, Net	$	770		$	(96	)	$	329		$	301		$	236


Margins:
- Cabinets and Related Products		11.9	%		9.5	%		14.3	%		13.0	%		10.4	%
- Plumbing Products		7.7	%		-1.2	%		11.5	%		10.9	%		9.0	%
- Installation and Other Services		6.7	%		4.8	%		8.7	%		8.3	%		4.7	%
- Decorative Architectural Products		21.6	%		18.1	%		24.1	%		21.3	%		22.1	%
- Other Specialty Products		-2.5	%		-54.8	%		13.5	%		15.1	%		12.5	%
- Total		9.6	%		0.0	%		13.7	%		13.0	%		10.6	%

- North America		10.9	%		2.9	%		14.3	%		14.1	%		10.7	%
- International, principally Europe		5.0	%		-9.2	%		11.2	%		8.2	%		10.4	%
- Total, as above		9.6	%		0.0	%		13.7	%		13.0	%		10.6	%

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.

-		Operating profit margins for the fourth quarter of 2007 include $227 million of impairment charges for goodwill and other intangible assets as follows: Plumbing Products ($69 million) and Other Specialty Products ($158 million).

-		Operating profit margins for the fourth quarter of 2007 include net costs and charges of $19 million pre-tax related to business rationalizations and other initiatives as follows: Cabinets and Related Products ($8 million), Plumbing Products ($5 million) and Installation and Other Services ($6 million).

-		Operating profit margins for the third quarter of 2007 include net costs and charges of $12 million pre-tax related to business rationalizations and other initiatives as follows: Cabinets and Related Products ($3 million, net of an $8 million gain from the sale of fixed assets), Plumbing Products ($3 million), Installation and Other Services ($5 million), and GCE ($1 million).

-		Operating profit margins for the second quarter of 2007 include costs and charges of $23 million pre-tax related to business rationalizations and other initiatives as follows: Cabinets and Related Products ($11 million), Plumbing Products ($2 million), Installation and Other Services ($4 million), Decorative Architectural Products ($1 million), Other Specialty Products ($1 million) and GCE ($4 million).

-		Operating profit margins for the first quarter of 2007 include costs and charges of $25 million pre-tax related to business rationalizations and other initiatives 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).

Page 6

MASCO CORPORATION
Quarterly Segment Data — 2006
Excluding Costs and Charges for Profit Improvement Programs
and Impairment Charges for Goodwill — Unaudited
(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		1,717			351			461			509			396
- Other Specialty Products		1,261			300			330			328			303

- Total	$	12,718		$	2,931		$	3,279		$	3,354		$	3,154


- North America	$	10,537		$	2,348		$	2,710		$	2,829		$	2,650
- International, principally Europe		2,181			583			569			525			504

- Total, as above	$	12,718		$	2,931		$	3,279		$	3,354		$	3,154


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			107			121			77
- Other Specialty Products		225			47			69			65			44

- Total	$	1,706		$	306		$	460		$	520		$	420


- North America	$	1,475		$	254		$	401		$	457		$	363
- International, principally Europe		231			52			59			63			57

- Total, as above	$	1,706		$	306		$	460		$	520		$	420


General Corporate Expense (GCE)		203			50			52			53			48

(Gain) Loss on Sale of Corporate Fixed Assets, Net		—			—			—			—			—

Income Regarding Litigation Settlement		(1	)		(1	)		—			—			—

Operating Profit (after GCE and Adjustments)		1,504			257			408			467			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		$	364		$	368		$	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		21.6	%		18.8	%		23.2	%		23.8	%		19.4	%
- Other Specialty Products		17.8	%		15.7	%		20.9	%		19.8	%		14.5	%
- Total		13.4	%		10.4	%		14.0	%		15.5	%		13.3	%

- North American		14.0	%		10.8	%		14.8	%		16.2	%		13.7	%
- International		10.6	%		8.9	%		10.4	%		12.0	%		11.3	%
- Total, as above		13.4	%		10.4	%		14.0	%		15.5	%		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 $307 million of impairment charges for goodwill as follows: Cabinets and Related Products ($306 million) and Plumbing Products ($1 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 7

MASCO CORPORATION
Quarterly Segment Data — 2006
Including Costs and Charges for Profit Improvement Programs
and Impairment Charges for Goodwill — Unaudited
(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		1,717			351			461			509			396
- Other Specialty Products		1,261			300			330			328			303

- Total	$	12,718		$	2,931		$	3,279		$	3,354		$	3,154


- North America	$	10,537		$	2,348		$	2,710		$	2,829		$	2,650
- International, principally Europe		2,181			583			569			525			504

- Total, as above	$	12,718		$	2,931		$	3,279		$	3,354		$	3,154


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		371			66			107			121			77
- Other Specialty Products		225			47			69			65			44

- Total	$	1,342		$	(6	)	$	451		$	494		$	403


- North America	$	1,417		$	248		$	392		$	431		$	346
- International, principally Europe		(75	)		(254	)		59			63			57

- Total, as above	$	1,342		$	(6	)	$	451		$	494		$	403


General Corporate Expense (GCE), Net		203			50			52			53			48

(Gain) Loss on Sale of Corporate Fixed Assets, Net		—			—			—			—			—

Income Regarding Litigation Settlement		(1	)		(1	)		—			—			—

Operating Profit (Loss) (after GCE and Adjustments)		1,140			(55	)		399			441			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	$	914		$	(108	)	$	355		$	342		$	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		21.6	%		18.8	%		23.2	%		23.8	%		19.4	%
- Other Specialty Products		17.8	%		15.7	%		20.9	%		19.8	%		14.5	%
- Total		10.6	%		-0.2	%		13.8	%		14.7	%		12.8	%

- North America		13.4	%		10.6	%		14.5	%		15.2	%		13.1	%
- International, principally Europe		-3.4	%		-43.6	%		10.4	%		12.0	%		11.3	%
- Total, as above		10.6	%		-0.2	%		13.8	%		14.7	%		12.8	%

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 (loss) margins for the fourth quarter of 2006 include $307 million of impairment charges for goodwill as follows: Cabinets and Related Products ($306 million) and Plumbing Products ($1 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 8

MASCO CORPORATION
Other Income (Expense), Net
2007 & 2006 — by Quarter — Unaudited
(in millions)


	2007															2006
	Year			Qtr. 4			Qtr. 3			Qtr. 2			Qtr. 1			Year			Qtr. 4			Qtr. 3			Qtr. 2			Qtr. 1
Interest Expense	$	(258	)	$	(61	)	$	(65	)	$	(69	)	$	(63	)	$	(240	)	$	(69	)	$	(54	)	$	(53	)	$	(64	)
Income from Cash and Cash Investments		37			7			8			8			14			44			19			6			5			14
Other Interest Income		3			1			—			2			—			2			—			—			1			1
Realized Gains from Financial Investments, Net		43			3			11			7			22			34			8			9			11			6
Dividend Income		6			—			—			1			5			10			2			1			1			6
Impairment Charges for Financial Investments		(22	)		—			(12	)		(10	)		—			(101	)		(15	)		(8	)		(78	)		—
Other, Net		2			(9	)		13			(3	)		1			25			2			2			14			7

Total Other Income (Expense), Net	$	(189	)	$	(59	)	$	(45	)	$	(64	)	$	(21	)	$	(226	)	$	(53	)	$	(44	)	$	(99	)	$	(30	)

Notes:


-		Data exclude discontinued operations.

-		Other, net, for the fourth quarter of 2007 includes $2 million of realized currency transaction losses.

Page 9

MASCO CORPORATION
Condensed Consolidated Statements of Operations
Three Months Ended December 31, 2007 & 2006 — Unaudited
(dollars and shares in millions, except per share data)


						Three Months Ended						As a Percent of Sales
			%			December 31,						Three Months Ended December 31,
Line			Change			2007			2006			2007			2006
	1	Net Sales		-8	%	$	2,698		$	2,931			100.0	%		100.0	%
	2	Cost of Sales		-8	%		2,008			2,191			74.4	%		74.8	%

	3	Gross Profit		-7	%		690			740			25.6	%		25.2	%

		Operating Profit
	4	- Before GCE, Litigation (Income), (Gain) on Sale of Corporate Fixed Assets and Impairment Charges for Goodwill and Other Intangible Assets (3-8)		-25	%		227			301			8.4	%		10.3	%
	5	- After GCE, Litigation (Income), (Gain) on Sale of Corporate Fixed Assets and Impairment Charges for Goodwill and Other Intangible Assets (3-9-10-11)		-33	%		(37	)		(55	)		-1.4	%		-1.9	%

		S,G&A Expense:
	6	- General Corporate Expense (GCE)		-26	%		37			50			1.4	%		1.7	%
	7	- (Gain) on Sales of Corporate Fixed Assets, Net					—			—			0.0	%		0.0	%
	8	- All Other		5	%		463			439			17.2	%		15.0	%

	9	- Total S,G&A Expense		2	%		500			489			18.5	%		16.7	%

	10	Impairment Charges for Goodwill and Other Intangible Assets					227			307			8.4	%		10.5	%
	11	Income Regarding Litigation Settlement					—			(1	)		0.0	%		0.0	%
	12	Other Income (Expense), Net					(59	)		(38	)		-2.2	%		-1.3	%
	13	Impairment Charges for Financial Investments					—			(15	)		0.0	%		-0.5	%

	14	(Loss) Income from Continuing Operations before Income Taxes, Minority Interest and Cumulative Effect of Accounting Change, Net (5+12+13)		-11	%		(96	)		(108	)		-3.6	%		-3.7	%
	15	Income Taxes		-38	%		34			55			1.3	%		1.9	%
		(Tax Rate)					35.4	%		50.9	%

	16	(Loss) from Continuing Operations before Minority Interest and Cumulative Effect of Accounting Change		-20	%		(130	)		(163	)		-4.8	%		-5.6	%
	17	Minority Interest					(10	)		(6	)		-0.4	%		-0.2	%

	18	(Loss) from Continuing Operations before Cumulative Effect of Accounting Change, Net		-17	%		(140	)		(169	)		-5.2	%		-5.8	%
	19	(Loss) from Discontinued Operations, Net					(11	)		(18	)		-0.4	%		-0.6	%
	20	Cumulative Effect of Accounting Change, Net					—			—			0.0	%		0.0	%

	21	Net (Loss)		-19	%	$	(151	)	$	(187	)		-5.6	%		-6.4	%

		Earnings Per Common Share (Diluted):
		(Loss) from Continuing Operations before Cumulative Effect of Accounting Change, Net		-11	%	$	(0.39	)	$	(0.44	)
		(Loss) from Discontinued Operations, Net					(0.03	)		(0.05	)
		Cumulative Effect of Accounting Change, Net					—			—

		Net (Loss)		-14	%	$	(0.42	)	$	(0.49	)

		Average (Diluted) Common Shares		-6	%		360			385

Page 10

MASCO CORPORATION
Condensed Consolidated Statements of Income
Twelve Months Ended December 31, 2007 & 2006 — Unaudited
(dollars and shares in millions, except per share data)


						Twelve Months Ended						As a Percent of Sales
			%			December 31,						Twelve Months Ended December 31,
Line			Change			2007			2006			2007			2006
	1	Net Sales		-7	%	$	11,770		$	12,718			100.0	%		100.0	%
	2	Cost of Sales		-7	%		8,559			9,212			72.7	%		72.4	%

	3	Gross Profit		-8	%		3,211			3,506			27.3	%		27.6	%

		Operating Profit
	4	- Before GCE, Litigation (Income), (Gain) on Sale of Corporate Fixed Assets and Impairment Charges for Goodwill and Other Intangible Assets (3-8)		-18	%		1,359			1,659			11.5	%		13.0	%
	5	- After GCE, Litigation (Income), (Gain) on Sale of Corporate Fixed Assets and Impairment Charges for Goodwill and Other Intangible Assets (3-9-10-11)		-16	%		959			1,140			8.1	%		9.0	%

		S,G&A Expense:
	6	- General Corporate Expense (GCE)		-11	%		181			203			1.5	%		1.6	%
	7	- (Gain) on Sales of Corporate Fixed Assets, Net					(8	)		—			-0.1	%		0.0	%
	8	- All Other		0	%		1,852			1,847			15.7	%		14.5	%

	9	- Total S,G&A Expense		-1	%		2,025			2,050			17.2	%		16.1	%

	10	Impairment Charges for Goodwill and Other Intangible Assets					227			317			1.9	%		2.5	%
	11	Income Regarding Litigation Settlement					—			(1	)		0.0	%		0.0	%
	12	Other Income (Expense), Net					(167	)		(125	)		-1.4	%		-1.0	%
	13	Impairment Charges for Financial Investments					(22	)		(101	)		-0.2	%		-0.8	%

	14	Income from Continuing Operations before Income Taxes, Minority Interest and Cumulative Effect of Accounting Change, Net (5+12+13)		-16	%		770			914			6.5	%		7.2	%
	15	Income Taxes		-18	%		336			409			2.9	%		3.2	%
		(Tax Rate)					43.6	%		44.7	%

	16	Income from Continuing Operations before Minority Interest and Cumulative Effect of Accounting Change		-14	%		434			505			3.7	%		4.0	%
	17	Minority Interest					(37	)		(27	)		-0.3	%		-0.2	%

	18	Income from Continuing Operations before Cumulative Effect of Accounting Change, Net		-17	%		397			478			3.4	%		3.8	%
	19	(Loss) Income from Discontinued Operations, Net					(11	)		13			-0.1	%		0.1	%
	20	Cumulative Effect of Accounting Change, Net					—			(3	)		0.0	%		0.0	%

	21	Net Income		-21	%	$	386		$	488			3.3	%		3.8	%

		Earnings Per Common Share (Diluted):
		Income from Continuing Operations before Cumulative Effect of Accounting Change, Net		-11	%	$	1.06		$	1.20
		(Loss) Income from Discontinued Operations, Net					(0.03	)		0.03
		Cumulative Effect of Accounting Change, Net					—			(0.01	)

		Net Income		-15	%	$	1.03		$	1.22

		Average (Diluted) Common Shares		-7	%		373			400

Page 11

MASCO CORPORATION
Condensed Consolidated Balance Sheets — Unaudited
(in millions)


	December 31,		December 31,
	2007		2006
Assets
Current Assets:
Cash and Cash Investments	$	922	$	1,958
Receivables		1,405		1,613
Inventories		1,126		1,263
Prepaid Expenses and Other		355		281

Total Current Assets		3,808		5,115
Property and Equipment, Net		2,367		2,363
Goodwill		3,938		3,957
Other Intangible Assets, Net		323		306
Other Assets		471		584

Total Assets	$	10,907	$	12,325


Liabilities
Current Liabilities:
Accounts Payable	$	714	$	815
Notes Payable		122		1,446
Accrued Liabilities		1,072		1,128

Total Current Liabilities		1,908		3,389
Long-term Debt		3,966		3,533
Deferred Income Taxes and Other		1,008		932

Total Liabilities		6,882		7,854
Shareholders’ Equity		4,025		4,471

Total Liabilities and Shareholders’ Equity	$	10,907	$	12,325

Page 12

MASCO CORPORATION
Discontinued Operations — Unaudited
(in millions)


	Three Months Ended
	December 31,
	2007			2006
Net Sales	$	9		$	15

(Loss) Income from Discontinued Operations	$	—		$	(14	)
(Loss) on Disposal of Discontinued Operations, Net		(9	)		(1	)

(Loss) before Income Tax		(9	)		(15	)
Income Tax		(2	)		(3	)

(Loss) from Discontinued Operations, Net	$	(11	)	$	(18	)


	Twelve Months Ended
	December 31,
	2007			2006
Net Sales	$	63		$	115

Income (Loss) from Discontinued Operations	$	2		$	(6	)
(Loss) Gain on Disposal of Discontinued Operations, Net		(10	)		50

(Loss) Income before Income Tax		(8	)		44
Income Tax		(3	)		(31	)

(Loss) Income from Discontinued Operations, Net	$	(11	)	$	13

Page 13

MASCO CORPORATION
GAAP Reconciliation of Sales Growth
Excluding the Effect of Acquisitions and Currency Translation — Unaudited
(in millions)


	Three Months Ended
	December 31,
	2007			2006
Consolidated Net Sales, As Reported	$	2,698		$	2,931
- Acquisitions		(44	)		—

Consolidated Net Sales, Excluding Acquisitions	$	2,654		$	2,931

North American Net Sales, As Reported	$	2,048		$	2,348
- Acquisitions		(44	)		—

North American Net Sales, Excluding Acquisitions	$	2,004		$	2,348

International Net Sales, As Reported	$	650		$	583
- Acquisitions		—			—

International Net Sales, Excluding Acquisitions		650			583
- Currency Translation		(63	)		—

International Net Sales, Excluding Acquisitions and Currency Translation	$	587		$	583


	Twelve Months Ended
	December 31,
	2007			2006
Consolidated Net Sales, As Reported	$	11,770		$	12,718
- Acquisitions		(175	)		—

Consolidated Net Sales, Excluding Acquisitions	$	11,595		$	12,718

North American Net Sales, As Reported	$	9,271		$	10,537
- Acquisitions		(175	)		—

North American Net Sales, Excluding Acquisitions	$	9,096		$	10,537

International Net Sales, As Reported	$	2,499		$	2,181
- Acquisitions		—			—

International Net Sales, Excluding Acquisitions		2,499			2,181
- Currency Translation		(207	)		—

International Net Sales, Excluding Acquisitions and Currency Translation	$	2,292		$	2,181

Notes:


-		Data exclude discontinued operations.

-		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 14

MASCO CORPORATION
GAAP Reconciliation of Operating (Loss) Profit and Margins — Unaudited
(dollars in Millions)


	Three Months Ended December 31,
	2007						2006
	$			Margin			$			Margin

Operating Loss, As Reported	$	(37	)		-1.4	%	$	(55	)		-1.9	%
Impairment Charges for Goodwill and Other Intangible Assets		227						307
Business Rationalizations and Other Initiatives		19						5

Operating Profit, As Reconciled	$	209			7.7	%	$	257			8.8	%


	Twelve Months Ended December 31,
	2007					2006
	$		Margin			$		Margin
Operating Profit, As Reported	$	959		8.1	%	$	1,140		9.0	%
Impairment Charges for Goodwill and Other Intangible Assets		227					317
Business Rationalizations and Other Initiatives		79					47

Operating Profit, As Reconciled	$	1,265		10.7	%	$	1,504		11.8	%

Notes:


-		Data exclude discontinued operations.

-		Business rationalizations and other initiatives costs of $79 million for the year ended December 31, 2007 are net of an $8 million gain from the sale of fixed assets.

-		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 15

MASCO CORPORATION
GAAP Reconciliation of Operating Profit and Shareholders’ Equity — Unaudited
(in millions)


	Twelve
	Months Ended
	December 31,
	2007
Operating Profit, As Reported	$	959
Impairment Charges for Goodwill and Other Intangible Assets, Continuing Operations		227

Operating Profit, As Reconciled	$	1,186


	Twelve Months Ended
	December 31,
	2007		2006
Shareholders’ Equity, As Reported	$	4,025	$	4,471
Impairment Charges for Goodwill and Other Intangible Assets (after tax)		208		331
Income Regarding Litigation Settlement (after tax)		—		(1	)

Shareholders’ Equity, As Reconciled	$	4,233	$	4,801

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 16

Masco (MAS) 8-KMasco Corporation Reports 2007 Results