![]() | 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 THIRD QUARTER 2008 RESULTS
Third Quarter 2008
• | Net sales from continuing operations declined 16 percent to $2.5 billion. | ||
• | Income from continuing operations was $36 million or $.10 per common share. | ||
• | The Company increased the quarterly dividend to $.235 per common share, making 2008 the 50th consecutive year in which dividends have been increased. | ||
• | The Company completed the previously announced divestiture plan, generating total net proceeds of $174 million. | ||
• | The Company had over $1 billion of cash at September 30, 2008. |
Taylor, Mich., (October 28, 2008) —Masco Corporation (NYSE: MAS) today reported that net sales from continuing operations for the quarter ended September 30, 2008 declined 16 percent to $2.5 billion compared with $3.0 billion for the third quarter of 2007. North American sales declined 18 percent and International sales declined six percent. In local currencies, International sales declined 11 percent compared with the third quarter of 2007.
Income from continuing operations was $36 million or $.10 per common share and $206 million or $.56 per common share in the third quarters of 2008 and 2007, respectively.
The third quarter of 2008 results were adversely affected by significantly lower sales volume to the new home construction market and a continued decline in consumer spending for home improvement products.
The Company continues to focus on the rationalization of its businesses, including sourcing programs, business consolidations, plant closures, headcount reductions and other initiatives. During the third quarters of 2008 and 2007, the Company incurred costs and charges of $16 million pre-tax ($.03 per common share, after tax) and $12 million pre-tax ($.02 per common share, after tax), respectively, related to these initiatives. Since late 2006, the Company has aggressively reduced its cost structure including closing 14 manufacturing facilities, reducing headcount by 20,000 (which includes an approximate 33 percent of its North American workforce) and reducing installation branches by over 25 percent.
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The third quarter of 2008 was also impacted by a higher tax rate which reduced earnings by $.13 per common share compared with the third quarter of 2007.
As previously disclosed, in the first quarter of 2008, the Company determined that several European business units were not core to the Company’s long-term growth strategy and, accordingly, embarked on a plan of disposition which was completed in the third quarter of 2008. Proceeds of $174 million (including $28 million in the third quarter) were generated through the disposition of these business units.
Business conditions remain difficult in the Company’s markets, as the Company experienced a further significant reduction in sales of its products and services late in the third quarter of 2008, which has continued into October. The Company continues to estimate that 2008 housing starts will decline to a range of 900,000 to 1,000,000 units, compared to 1.3 million units in 2007. In the first nine months of 2008, housing starts declined 31 percent from 2007. However, the Company anticipates that consumer spending for home improvement products and demand for certain of the Company’s International products will continue to decline more than previously anticipated in the near term.
While the unprecedented changes in the global economic and financial market environment make forecasting future business conditions extremely difficult, the Company currently estimates that its fourth quarter sales will decline approximately 20 percent compared to 2007. As a result, the Company currently estimates that its full-year 2008 sales will decline by mid-teens compared to 2007. The Company’s previous guidance estimated that its full- year 2008 percentage sales decline would be low-double digits to mid-teens.
The Company currently estimates that its 2008 full-year earnings will be in a range of $.25 to $.30 per common share, reflecting the additional sales decline. The guidance also includes approximately $22 million pretax ($.04 per common share, after tax) of additional costs and charges for plans undertaken to further rationalize the Company’s business, but does not include any additional costs and charges that may result from the continued evaluation of the Company’s businesses or any other charges. The Company’s previous earnings guidance was a range of $.50 to $.65 per common share for the full-year 2008.
The Company continues to estimate that 2008 free cash flow (cash from operations, after capital expenditures and before dividends) will be relatively strong and approximate $600 million.
The Company’s guidance also reflects increasingly competitive market conditions for its services and products and higher costs for freight and logistics and for certain materials, including commodities impacted by energy costs.
The Company’s guidance includes the Company’s estimate that its full-year tax rate will approximate 56 to 57 percent (due to the U.S. tax on the anticipated repatriation of low-taxed foreign earnings to utilize the Company’s foreign tax credit carryforward) which, compared to the Company’s normalized tax rate of approximately 36 percent, will reduce earnings by approximately $.18 per common share.
The Company’s guidance includes impairment charges for financial investments and currency losses incurred in the first nine months of 2008 which, together with the expected
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increase in the tax rate, decrease full-year estimated earnings by approximately $.27 per common share.
Although the Company expects market conditions in its industry, over the next several quarters, to be very challenging, the Company is confident that the long-term fundamentals for the new home construction and home improvement products markets are positive. The Company believes that its strong financial position (including cash of over $1 billion at September 30, 2008, modest debt maturities until 2012, unused bank lines and its ability to generate strong cash flow) together with its current strategy of investing in leadership brands, innovative growth and flexible and scalable supply chains along with a strong focus on cash flow to fund our dividend, will allow us to drive long-term growth and incremental leverage 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.
The Company is providing an Earnings Presentation, in a PDF format, on its Web site by 9:00 a.m. ET, October 28, 2008, that can be viewed as part of the conference call. Please refer to the Earnings Presentation for additional Business Highlights.
A conference call regarding items contained in this release is scheduled for Tuesday, October 28, 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 (719) 325-2433 (confirmation #7942632). The conference call will be webcast simultaneously on the Company’s Web site 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 Web site. A replay of the call will be available on Masco’s Web site or by phone by dialing (719) 457-0820 (replay access code #7942632) approximately two hours after the end of the call and will continue through November 4, 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 Web site atwww.masco.com.
# # #
Statements contained herein, or otherwise made available, that reflect the Company’s views about its future performance may 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 the Company’s results may differ materially from the results discussed in such forward-looking statements. For further information, refer to our most recent Annual Report on Form 10-K (particularly the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections) 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. Certain of the financial and statistical data made available are non-GAAP financial measures as defined by the SEC’s Regulation G. The Company believes that such non-GAAP performance measures and ratios used in managing the business may provide users with 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 SEC and is available on Masco’s Web site.
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MASCO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME — UNAUDITED
For the Three Months and Nine Months Ended September 30, 2008 and 2007
(In Millions Except Per Common Share Data)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME — UNAUDITED
For the Three Months and Nine Months Ended September 30, 2008 and 2007
(In Millions Except Per Common Share Data)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30 | September 30 | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Net sales | $ | 2,528 | $ | 3,005 | $ | 7,621 | $ | 8,897 | ||||||||
Cost of sales | 1,880 | 2,155 | 5,643 | 6,420 | ||||||||||||
Gross profit | 648 | 850 | 1,978 | 2,477 | ||||||||||||
Selling, general and administrative expenses | 452 | 479 | 1,413 | 1,493 | ||||||||||||
Operating profit | 196 | 371 | 565 | 984 | ||||||||||||
Other income (expense), net | (57 | ) | (45 | ) | (197 | ) | (130 | ) | ||||||||
Income from continuing operations before income taxes and minority interest | 139 | 326 | 368 | 854 | ||||||||||||
Income taxes | 92 | 109 | 207 | 302 | ||||||||||||
Income from continuing operations before minority interest | 47 | 217 | 161 | 552 | ||||||||||||
Minority interest | 11 | 11 | 35 | 27 | ||||||||||||
Income from continuing operations | 36 | 206 | 126 | 525 | ||||||||||||
(Loss) income from discontinued operations, net | (3 | ) | (1 | ) | (9 | ) | 12 | |||||||||
Net income | $ | 33 | $ | 205 | $ | 117 | $ | 537 | ||||||||
Earnings per common share (diluted): | ||||||||||||||||
Income from continuing operations | $ | 0.10 | $ | 0.56 | $ | 0.36 | $ | 1.40 | ||||||||
(Loss) income from discontinued operations, net | (0.01 | ) | — | (0.03 | ) | 0.03 | ||||||||||
Net income | $ | 0.09 | $ | 0.56 | $ | 0.33 | $ | 1.43 | ||||||||
Average diluted common shares outstanding | 352 | 367 | 354 | 376 | ||||||||||||
Masco Corporation
Key Financial Data — Unaudited
Q3 — 2008(In Millions, Except Earnings Per Share and Working Capital Days)
Key Financial Data — Unaudited
Q3 — 2008(In Millions, Except Earnings Per Share and Working Capital Days)
Sales & Earnings | Q3 - 2008 | Q3 - 2007 | Change | |||||||||
Net Sales | $ | 2,528 | $ | 3,005 | -16 | % | ||||||
Operating Profit | $ | 196 | $ | 371 | -47 | % | ||||||
Operating Profit % | 7.8 | % | 12.3 | % | (450) bps | |||||||
Other Income (Expense), Net | $ | (57 | ) | $ | (45 | ) | 27 | % | ||||
Income Taxes | $ | 92 | $ | 109 | -16 | % | ||||||
Minority Interest | $ | 11 | $ | 11 | 0 | % | ||||||
Income from Continuing Operations | $ | 36 | $ | 206 | -83 | % | ||||||
Diluted EPS from Continuing Operations | $ | 0.10 | $ | 0.56 | -82 | % |
Operating Expenses | Q3 - 2008 | Q3 - 2007 | Change | |||||||||
Cost of Sales | $ | 1,880 | $ | 2,155 | -13 | % | ||||||
Gross Margin | 25.6 | % | 28.3 | % | (270) bps | |||||||
SG&A Expenses (Including GCE) | $ | 452 | $ | 479 | -6 | % | ||||||
SG&A as a % of net sales | 17.9 | % | 15.9 | % | (200) bps | |||||||
General Corporate Expense (GCE) | $ | 32 | $ | 44 | -27 | % | ||||||
General Corp Expense as a % of net sales | 1.3 | % | 1.5 | % | 20 bps |
Business Segments | Q3 - 2008 | Q3 - 2007 | Change | |||||||||
Cabinets and Related Products: | ||||||||||||
Net Sales | $ | 584 | $ | 736 | -21 | % | ||||||
Operating Profit | $ | 23 | $ | 105 | -78 | % | ||||||
Operating Profit % to Net Sales | 3.9 | % | 14.3 | % | (1,040) bps | |||||||
Plumbing Products: | ||||||||||||
Net Sales | $ | 805 | $ | 865 | -7 | % | ||||||
Operating Profit | $ | 88 | $ | 100 | -12 | % | ||||||
Operating Profit % to Net Sales | 10.9 | % | 11.6 | % | (70) bps | |||||||
Installation and Other Services: | ||||||||||||
Net Sales | $ | 492 | $ | 689 | -29 | % | ||||||
Operating Profit | $ | 10 | $ | 60 | -83 | % | ||||||
Operating Profit % to Net Sales | 2.0 | % | 8.7 | % | (670) bps | |||||||
Decorative Architectural Products: | ||||||||||||
Net Sales | $ | 446 | $ | 467 | -4 | % | ||||||
Operating Profit | $ | 94 | $ | 114 | -18 | % | ||||||
Operating Profit % to Net Sales | 21.1 | % | 24.4 | % | (330) bps | |||||||
Other Specialty Products: | ||||||||||||
Net Sales | $ | 201 | $ | 248 | -19 | % | ||||||
Operating Profit | $ | 16 | $ | 36 | -56 | % | ||||||
Operating Profit % to Net Sales | 8.0 | % | 14.5 | % | (650) bps | |||||||
Total Segment Reported: | ||||||||||||
Net Sales | $ | 2,528 | $ | 3,005 | -16 | % | ||||||
Operating Profit | $ | 231 | $ | 415 | -44 | % | ||||||
Operating Profit % to Net Sales | 9.1 | % | 13.8 | % | (470) bps | |||||||
Change in Key Retailer Sales | -11 | % | -1 | % |
1
Masco Corporation
Key Financial Data — Unaudited
Q3 — 2008(In Millions, Except Earnings Per Share and Working Capital Days)
Key Financial Data — Unaudited
Q3 — 2008(In Millions, Except Earnings Per Share and Working Capital Days)
Business Regions | Q3 - 2008 | Q3 - 2007 | Change | |||||||||
North America | ||||||||||||
Net Sales | $ | 1,975 | $ | 2,417 | -18 | % | ||||||
Operating Profit | $ | 193 | $ | 346 | -44 | % | ||||||
Operating Profit % to Net Sales | 9.8 | % | 14.3 | % | (450) bps | |||||||
International, principally Europe | ||||||||||||
Net Sales | $ | 553 | $ | 588 | -6 | % | ||||||
Operating Profit | $ | 38 | $ | 69 | -45 | % | ||||||
Operating Profit % to Net Sales | 6.9 | % | 11.7 | % | (480) bps |
Working Capital | Q3 - 2008 | Q3 - 2007 | Change | |||||||||||||
Receivable Days | 50 | 51 | (1 | ) | days | |||||||||||
Inventory Days | 52 | 49 | 3 | days | ||||||||||||
Payable Days | 41 | 42 | (1 | ) | days | |||||||||||
Working Capital (Receivables+Inventory-Payables) | $ | 1,805 | $ | 2,130 | -15 | % | ||||||||||
Working Capital as a % of Sales (As Reported TTM*) | 17.6 | % | 17.7 | % | 10 | bps |
Other | Q3 - 2008 | Q3 - 2007 | ||||||
Dividend Payments (year-to-date) | $ | 251 | $ | 262 | ||||
Cash Paid for Share Repurchases (year-to-date) | $ | 160 | $ | 804 | ||||
Common Shares Repurchased (year-to-date) | 9 | 29 | ||||||
Common Shares Repurchased (QTR) | 1 | 7 | ||||||
CAPEX (year-to-date) | $ | 142 | $ | 174 | ||||
Depreciation and Amortization (year-to-date) | $ | 179 | $ | 185 | ||||
Return on Invested Capital (As Reported TTM) | 5.8 | % | 8.0 | % | ||||
Return on Invested Capital (As Reconciled TTM) | 6.7 | % | 10.4 | % | ||||
Average diluted common shares outstanding (QTR) | 352 | 367 | ||||||
Average diluted common shares outstanding (October 1) | 351 | 364 | ||||||
Effective Tax Rate (QTR) | 66.2 | % | 33.4 | % |
Debt Ratio | Q3 - 2008 | Q2 - 2008 | ||||||
Long-term Debt | $ | 3,961 | $ | 3,960 | ||||
Notes Payable | $ | 115 | $ | 116 | ||||
Total Debt | $ | 4,076 | $ | 4,076 | ||||
Shareholders’ Equity | $ | 3,750 | $ | 3,954 | ||||
Debt to Capital | 52.1 | % | 50.8 | % |
* | - Trailing Twelve Months |
2
MASCO CORPORATION — 3rd Quarter 2008
Page | ||
1 | Condensed Consolidated Statements of Operations — 2008 & 2007 by Quarter — Unaudited | |
2 | Notes to Condensed Consolidated Statements of Operations — 2008 & 2007 by Quarter — Unaudited | |
3 | Sales by Segment and Geographic Area — Three Months Ended September 30, 2008 & 2007 — Unaudited | |
4 | Sales by Segment and Geographic Area — Nine Months Ended September 30, 2008 & 2007 — Unaudited | |
5 | 2008 Quarterly Segment Data Excluding Costs and Charges for Business Rationalizations and Other Initiatives — Unaudited | |
6 | 2008 Quarterly Segment Data Including Costs and Charges for Business Rationalizations and Other Initiatives — Unaudited | |
7 | 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 | |
8 | 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 | |
9 | Other Income (Expense), Net — 2008 & 2007 by Quarter — Unaudited | |
10 | Condensed Consolidated Statements of Income — Three Months Ended September 30, 2008 & 2007 — Unaudited | |
11 | Condensed Consolidated Statements of Income — Nine Months Ended September 30, 2008 & 2007 — 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 Profit and Margins — Unaudited | |
16 | Operating Profit and Shareholders’ Equity — Unaudited |
MASCO CORPORATION
Condensed Consolidated Statements of Operations
2008 & 2007 — by Quarter — Unaudited
(dollars in millions, except per share data)
Condensed Consolidated Statements of Operations
2008 & 2007 — by Quarter — Unaudited
(dollars in millions, except per share data)
2008 | 2007 | ||||||||||||||||||||||||||||||||||||||||
Year | Qtr. 4 | Qtr. 3 | Qtr. 2 | Qtr. 1 | Year | Qtr. 4 | Qtr. 3 | Qtr. 2 | Qtr. 1 | ||||||||||||||||||||||||||||||||
Net Sales: | |||||||||||||||||||||||||||||||||||||||||
- North America | $ | 1,975 | $ | 2,067 | $ | 1,893 | $ | 9,271 | $ | 2,048 | $ | 2,417 | $ | 2,548 | $ | 2,258 | |||||||||||||||||||||||||
- International, principally Europe | 553 | 576 | 557 | 2,261 | 587 | 588 | 541 | 545 | |||||||||||||||||||||||||||||||||
- Consolidated | 2,528 | 2,643 | 2,450 | 11,532 | 2,635 | 3,005 | 3,089 | 2,803 | |||||||||||||||||||||||||||||||||
Cost of Sales | 1,880 | 1,943 | 1,820 | 8,380 | 1,960 | 2,155 | 2,198 | 2,067 | |||||||||||||||||||||||||||||||||
Gross Profit | 648 | 700 | 630 | 3,152 | 675 | 850 | 891 | 736 | |||||||||||||||||||||||||||||||||
(Gross Margin as a % of Sales) | 25.6 | % | 26.5 | % | 25.7 | % | 27.3 | % | 25.6 | % | 28.3 | % | 28.8 | % | 26.3 | % | |||||||||||||||||||||||||
S,G&A Expense (before GCE & (Gain) on Sale of Corp- orate Fixed Assets, (Income) / Charge for Planned Dis- position of Business, and Charge for Litigation Settlement) | 417 | 450 | 427 | 1,806 | 449 | 435 | 486 | 436 | |||||||||||||||||||||||||||||||||
(S,G&A Expense as a % of Sales) | 16.5 | % | 17.0 | % | 17.4 | % | 15.7 | % | 17.0 | % | 14.5 | % | 15.7 | % | 15.6 | % | |||||||||||||||||||||||||
Operating Profit (before GCE, (Gain) on Sale of Corporate Fixed Assets, (Income)/ Charge for Planned Dispostion of Business, Charge for Litigation Settlement & Impairment Charges for Goodwill and Other Intangible Assets) | 231 | 250 | 203 | 1,346 | 226 | 415 | 405 | 300 | |||||||||||||||||||||||||||||||||
(Operating Margin as a % of Sales) | 9.1 | % | 9.5 | % | 8.3 | % | 11.7 | % | 8.6 | % | 13.8 | % | 13.1 | % | 10.7 | % | |||||||||||||||||||||||||
- North America | 193 | 200 | 149 | 1,008 | 60 | 346 | 360 | 242 | |||||||||||||||||||||||||||||||||
(Margin as a % of Sales) | 9.8 | % | 9.7 | % | 7.9 | % | 10.9 | % | 2.9 | % | 14.3 | % | 14.1 | % | 10.7 | % | |||||||||||||||||||||||||
- International, principally Europe | 38 | 50 | 54 | 219 | 47 | 69 | 45 | 58 | |||||||||||||||||||||||||||||||||
(Margin as a % of Sales) | 6.9 | % | 8.7 | % | 9.7 | % | 9.7 | % | 8.0 | % | 11.7 | % | 8.3 | % | 10.6 | % | |||||||||||||||||||||||||
General Corporate Expense (GCE), Net | 32 | 35 | 43 | 181 | 37 | 44 | 49 | 51 | |||||||||||||||||||||||||||||||||
S,G&A Expense as a % of Sales (Including GCE & (Gain) on Sale of Corporate Fixed Assets) | 17.8 | % | 18.4 | % | 19.2 | % | 17.2 | % | 18.4 | % | 15.9 | % | 17.2 | % | 17.3 | % | |||||||||||||||||||||||||
(Gain) on Sale of Corporate Fixed Assets, Net | — | — | — | (8 | ) | — | — | (5 | ) | (3 | ) | ||||||||||||||||||||||||||||||
(Income) / Charge for Planned Disposition of Business | (6 | ) | — | 6 | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Charge for Litigation Settlement | 9 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Impairment Charges for Goodwill and Other Intangible Assets | — | — | — | 119 | 119 | — | — | — | |||||||||||||||||||||||||||||||||
Operating Profit per F/S | $ | 196 | $ | 215 | $ | 154 | $ | 1,054 | $ | 70 | $ | 371 | $ | 361 | $ | 252 | |||||||||||||||||||||||||
Earnings (Loss) per Common Share (Diluted): | |||||||||||||||||||||||||||||||||||||||||
Income (Loss) from Continuing Operations | $ | 0.10 | $ | 0.20 | $ | 0.05 | $ | 1.32 | $ | (0.09 | ) | $ | 0.56 | $ | 0.49 | $ | 0.35 | ||||||||||||||||||||||||
(Loss) Income from Discontinued Operations, Net | (0.01 | ) | 0.03 | (0.04 | ) | (0.29 | ) | (0.33 | ) | — | 0.02 | 0.02 | |||||||||||||||||||||||||||||
Net Income (Loss) | $ | 0.09 | $ | 0.23 | $ | 0.01 | $ | 1.03 | $ | (0.42 | ) | $ | 0.56 | $ | 0.51 | $ | 0.37 | ||||||||||||||||||||||||
Please see page 2 for Notes.
Page 1
MASCO CORPORATION
Notes to Condensed Consolidated Statements of Operations
2008 & 2007 — by Quarter — Unaudited
Notes to Condensed Consolidated Statements of Operations
2008 & 2007 — by Quarter — Unaudited
Notes:
– | Operating results in the first and third quarters of 2008 include a charge of $6 million pre–tax and after tax, and income of $6 million pre–tax and after tax, respectively, for the planned disposition of a business. This business was previously reported in discontinued operations. Operating results for the first and second quarters of 2008 have been restated to include the results of this business in continuing operations, where it is reported beginning in the third quarter 2008. Results for 2007 have not been restated. | |
– | Operating results for the first, second and third quarters of 2008 include costs and charges related to business rationalizations and other initiatives of $9 million pre–tax ($.02 per common share, after tax), $15 million pre–tax ($.03 per common share after tax) and $16 million pre–tax ($.03 per common share, after tax), respectively. | |
– | Income from continuing operations for the first, second and third quarters of 2008 includes non–cash impairment charges for financial investments of $26 million pre–tax ($.05 per common share, after tax), $3 million pre–tax and $1 million pre–tax, respectively. | |
– | Income (loss) from discontinued operations for the first and second quarters of 2008 includes non–cash charges for those business units that are expected to be divested at a loss of $43 million pre–tax ($.06 per common share, after tax) and $2 million pre–tax, respectively. | |
– | Operating results for the first, second, third and fourth quarters of 2007 include costs and charges related to 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. | |
– | Operating results for the fourth quarter of 2007 include non–cash impairment charges for goodwill and other intangible assets of $119 million pre–tax ($.28 per common share, after tax). | |
– | Income (loss) 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 fourth quarter of 2007 includes a non–cash impairment charge for goodwill of $108 million pre–tax ($.30 per common share, after tax). | |
– | Per common share amounts for the three quarters of 2008 and the four quarters of 2007 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 September 30, 2008 & 2007 — Unaudited
(dollars in millions)
Sales by Segment and Geographic Area
Three Months Ended September 30, 2008 & 2007 — Unaudited
(dollars in millions)
Three Months Ended | 3rd Qtr ’08 | |||||||||||
September 30, | vs. | |||||||||||
2008 | 2007 | 3rd Qtr ’07 | ||||||||||
Cabinets and Related Products | $ | 584 | $ | 736 | – | 21 | % | |||||
Plumbing Products | 805 | 865 | – | 7 | % | |||||||
Installation and Other Services | 492 | 689 | – | 29 | % | |||||||
Decorative Architectural Products | 446 | 467 | – | 4 | % | |||||||
Other Specialty Products | 201 | 248 | – | 19 | % | |||||||
Total | $ | 2,528 | $ | 3,005 | – | 16 | % | |||||
North America | $ | 1,975 | $ | 2,417 | – | 18 | % | |||||
International, principally Europe | 553 | 588 | – | 6 | % | |||||||
Total, as above | $ | 2,528 | $ | 3,005 | – | 16 | % | |||||
Notes:
– | Data exclude discontinued operations. | |
– | Excluding acquisitions, consolidated net sales decreased 16 percent, North American net sales decreased 19 percent and International net sales decreased six percent compared with the third quarter of 2007 (please see page 14 for the GAAP reconciliation). | |
– | International net sales in local currencies decreased 11 percent compared with the third quarter of 2007 (please see page 14 for the GAAP reconciliation). |
Page 3
MASCO CORPORATION
Sales by Segment and Geographic Area
Nine Months Ended September 30, 2008 & 2007 — Unaudited
(dollars in millions)
Sales by Segment and Geographic Area
Nine Months Ended September 30, 2008 & 2007 — Unaudited
(dollars in millions)
Nine Months Ended | 9 Months ’08 | |||||||||||
September 30, | vs. | |||||||||||
2008 | 2007 | 9 Months ’07 | ||||||||||
Cabinets and Related Products | $ | 1,788 | $ | 2,164 | – | 17 | % | |||||
Plumbing Products | 2,483 | 2,572 | – | 3 | % | |||||||
Installation and Other Services | 1,486 | 2,026 | – | 27 | % | |||||||
Decorative Architectural Products | 1,301 | 1,421 | – | 8 | % | |||||||
Other Specialty Products | 563 | 714 | – | 21 | % | |||||||
Total | $ | 7,621 | $ | 8,897 | – | 14 | % | |||||
North America | $ | 5,935 | $ | 7,223 | – | 18 | % | |||||
International, principally Europe | 1,686 | 1,674 | + | 1 | % | |||||||
Total, as above | $ | 7,621 | $ | 8,897 | – | 14 | % | |||||
Notes:
– | Data exclude discontinued operations. | |
– | Excluding acquisitions, consolidated net sales decreased 15 percent, North American net sales decreased 19 percent and International net sales increased one percent compared with the the first nine months of 2007 (please see page 14 for the GAAP reconciliation). | |
– | International net sales in local currencies decreased nine percent compared with the first nine months of 2007 (please see page 14 for the GAAP reconciliation). |
Page 4
MASCO CORPORATION
Quarterly Segment Data — 2008
Excluding Costs & Charges for Business Rationalizations and Other Initiatives — Unaudited
(dollars in millions)
Quarterly Segment Data — 2008
Excluding Costs & Charges for Business Rationalizations and Other Initiatives — Unaudited
(dollars in millions)
Year | Qtr. 4 | Qtr. 3 | Qtr. 2 | Qtr. 1 | ||||||||||||||||
Net Sales: | ||||||||||||||||||||
- Cabinets and Related Products | $ | 584 | $ | 608 | $ | 596 | ||||||||||||||
- Plumbing Products | 805 | 857 | 821 | |||||||||||||||||
- Installation and Other Services | 492 | 508 | 486 | |||||||||||||||||
- Decorative Architectural Products | 446 | 476 | 379 | |||||||||||||||||
- Other Specialty Products | 201 | 194 | 168 | |||||||||||||||||
- Total | $ | 2,528 | $ | 2,643 | $ | 2,450 | ||||||||||||||
- North America | $ | 1,975 | $ | 2,067 | $ | 1,893 | ||||||||||||||
- International, principally Europe | 553 | 576 | 557 | |||||||||||||||||
- Total, as above | $ | 2,528 | $ | 2,643 | $ | 2,450 | ||||||||||||||
Operating Profit: | ||||||||||||||||||||
- Cabinets and Related Products | $ | 29 | $ | 40 | $ | 29 | ||||||||||||||
- Plumbing Products | 95 | 109 | 102 | |||||||||||||||||
- Installation and Other Services | 11 | 8 | (1 | ) | ||||||||||||||||
- Decorative Architectural Products | 95 | 90 | 74 | |||||||||||||||||
- Other Specialty Products | 17 | 13 | 8 | |||||||||||||||||
- Total | $ | 247 | $ | 260 | $ | 212 | ||||||||||||||
- North America | $ | 200 | $ | 207 | $ | 157 | ||||||||||||||
- International, principally Europe | 47 | 53 | 55 | |||||||||||||||||
- Total, as above | $ | 247 | $ | 260 | $ | 212 | ||||||||||||||
General Corporate Expense (GCE), Net | 32 | 30 | 43 | |||||||||||||||||
(Gain) on Sale of Corporate Fixed Assets, Net | — | — | — | |||||||||||||||||
Charge for Litigation Settlement | (9 | ) | — | — | ||||||||||||||||
Income / (Charge) for Planned Disposition of Business | 6 | — | (6 | ) | ||||||||||||||||
Operating Profit (after GCE and Adjustments) | 212 | 230 | 163 | |||||||||||||||||
Other Income (Expense), Net | (57 | ) | (56 | ) | (84 | ) | ||||||||||||||
Income from Continuing Operations before Income Taxes and Minority Interest | $ | 155 | $ | 174 | $ | 79 | ||||||||||||||
Margins: | ||||||||||||||||||||
- Cabinets and Related Products | 5.0 | % | 6.6 | % | 4.9 | % | ||||||||||||||
- Plumbing Products | 11.8 | % | 12.7 | % | 12.4 | % | ||||||||||||||
- Installation and Other Services | 2.2 | % | 1.6 | % | -0.2 | % | ||||||||||||||
- Decorative Architectural Products | 21.3 | % | 18.9 | % | 19.5 | % | ||||||||||||||
- Other Specialty Products | 8.5 | % | 6.7 | % | 4.8 | % | ||||||||||||||
- Total | 9.8 | % | 9.8 | % | 8.7 | % | ||||||||||||||
- North America | 10.1 | % | 10.0 | % | 8.3 | % | ||||||||||||||
- International, principally Europe | 8.5 | % | 9.2 | % | 9.9 | % | ||||||||||||||
- Total, as above | 9.8 | % | 9.8 | % | 8.7 | % |
Notes:
– | Data exclude discontinued operations. | |
– | Operating profit and margins by segment and geographic area are before general corporate expense and (gain) on sale of Corporate fixed assets, charge for litigation settlement and (income)/charge for planned disposition of a business. | |
– | Operating profit margins for the third quarter of 2008 exclude costs and charges of $16 million pre-tax for business rationalizations and other initiatives as follows: Cabinets and Related Products ($6 million), Plumbing Products ($7 million), Installation and Other Services ($1 million), Decorative Architectural Products ($1 million), and Other Specialty Products ($1 million). | |
– | Operating profit margins for the second quarter of 2008 exclude costs and charges of $15 million pre-tax for business rationalizations and other initiatives as follows: Cabinets and Related Products ($3 million), Plumbing Products ($2 million), Installation and Other Services ($4 million), Decorative Architectural Products ($1 million) and GCE ($5 million). | |
– | Operating profit margins for the first quarter of 2008 exclude costs and charges of $9 million pre-tax for business rationalizations and other initiatives as follows: Cabinets and Related Products ($1 million), Plumbing Products ($3 million), and Installation and Other Services ($5 million). |
Page 5
MASCO CORPORATION
Quarterly Segment Data — 2008
Including Costs & Charges for Business Rationalizations and Other Initiatives — Unaudited
(dollars in millions)
Quarterly Segment Data — 2008
Including Costs & Charges for Business Rationalizations and Other Initiatives — Unaudited
(dollars in millions)
Year | Qtr. 4 | Qtr. 3 | Qtr. 2 | Qtr. 1 | ||||||||||||||||
Net Sales: | ||||||||||||||||||||
- Cabinets and Related Products | $ | 584 | $ | 608 | $ | 596 | ||||||||||||||
- Plumbing Products | 805 | 857 | 821 | |||||||||||||||||
- Installation and Other Services | 492 | 508 | 486 | |||||||||||||||||
- Decorative Architectural Products | 446 | 476 | 379 | |||||||||||||||||
- Other Specialty Products | 201 | 194 | 168 | |||||||||||||||||
- Total | $ | 2,528 | $ | 2,643 | $ | 2,450 | ||||||||||||||
- North America | $ | 1,975 | $ | 2,067 | $ | 1,893 | ||||||||||||||
- International, principally Europe | 553 | 576 | 557 | |||||||||||||||||
- Total, as above | $ | 2,528 | $ | 2,643 | $ | 2,450 | ||||||||||||||
Operating Profit: | ||||||||||||||||||||
- Cabinets and Related Products | $ | 23 | $ | 37 | $ | 28 | ||||||||||||||
- Plumbing Products | 88 | 107 | 99 | |||||||||||||||||
- Installation and Other Services | 10 | 4 | (6 | ) | ||||||||||||||||
- Decorative Architectural Products | 94 | 89 | 74 | |||||||||||||||||
- Other Specialty Products | 16 | 13 | 8 | |||||||||||||||||
- Total | $ | 231 | $ | 250 | $ | 203 | ||||||||||||||
- North America | $ | 193 | $ | 200 | $ | 149 | ||||||||||||||
- International, principally Europe | 38 | 50 | 54 | |||||||||||||||||
- Total, as above | $ | 231 | $ | 250 | $ | 203 | ||||||||||||||
General Corporate Expense (GCE), Net | 32 | 35 | 43 | |||||||||||||||||
(Gain) on Sale of Corporate Fixed Assets, Net | — | — | — | |||||||||||||||||
Charge for Litigation Settlement | (9 | ) | — | — | ||||||||||||||||
Income / (Charge) for Planned Disposition of Business | 6 | — | (6 | ) | ||||||||||||||||
Operating Profit (after GCE and Adjustments) | 196 | 215 | 154 | |||||||||||||||||
Other Income (Expense), Net | (57 | ) | (56 | ) | (84 | ) | ||||||||||||||
Income from Continuing Operations before Income Taxes and Minority Interest | $ | 139 | $ | 159 | $ | 70 | ||||||||||||||
Margins: | ||||||||||||||||||||
- Cabinets and Related Products | 3.9 | % | 6.1 | % | 4.7 | % | ||||||||||||||
- Plumbing Products | 10.9 | % | 12.5 | % | 12.1 | % | ||||||||||||||
- Installation and Other Services | 2.0 | % | 0.8 | % | -1.2 | % | ||||||||||||||
- Decorative Architectural Products | 21.1 | % | 18.7 | % | 19.5 | % | ||||||||||||||
- Other Specialty Products | 8.0 | % | 6.7 | % | 4.8 | % | ||||||||||||||
- Total | 9.1 | % | 9.5 | % | 8.3 | % | ||||||||||||||
- North America | 9.8 | % | 9.7 | % | 7.9 | % | ||||||||||||||
- International, principally Europe | 6.9 | % | 8.7 | % | 9.7 | % | ||||||||||||||
- Total, as above | 9.1 | % | 9.5 | % | 8.3 | % |
Notes:
– | Data exclude discontinued operations. | |
Operating profit and margins by segment and geographic area are before general corporate expense and (gain) on sale of Corporate fixed assets, charge for litigation settlement and (income)/charge for planned disposition of a business. | ||
– | Operating profit margins for the third quarter of 2008 include costs and charges of $16 million pre-tax for business rationalizations and other initiatives as follows: Cabinets and Related Products ($6 million), Plumbing Products ($7 million), Installation and Other Services ($1 million), Decorative Architectural Products ($1 million), and Other Specialty Products ($1 million). | |
– | Operating profit margins for the second quarter of 2008 include costs and charges of $15 million pre-tax for business rationalizations and other initiatives as follows: Cabinets and Related Products ($3 million), Plumbing Products ($2 million), Installation and Other Services ($4 million), Decorative Architectural Products ($1 million) and GCE ($5 million). | |
– | Operating profit margins for the first quarter of 2008 include costs and charges of $9 million pre-tax for business rationalizations and other initiatives as follows: Cabinets and Related Products ($1 million), Plumbing Products ($3 million), and Installation and Other Services ($5 million). |
Page 6
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)
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 | 3,391 | 819 | 865 | 869 | 838 | |||||||||||||||
- Installation and Other Services | 2,615 | 589 | 689 | 699 | 638 | |||||||||||||||
- Decorative Architectural Products | 1,768 | 347 | 467 | 534 | 420 | |||||||||||||||
- Other Specialty Products | 929 | 215 | 248 | 250 | 216 | |||||||||||||||
- Total | $ | 11,532 | $ | 2,635 | $ | 3,005 | $ | 3,089 | $ | 2,803 | ||||||||||
- North America | $ | 9,271 | $ | 2,048 | $ | 2,417 | $ | 2,548 | $ | 2,258 | ||||||||||
- International, principally Europe | 2,261 | 587 | 588 | 541 | 545 | |||||||||||||||
- Total, as above | $ | 11,532 | $ | 2,635 | $ | 3,005 | $ | 3,089 | $ | 2,803 | ||||||||||
Operating Profit: | ||||||||||||||||||||
- Cabinets and Related Products | $ | 368 | $ | 71 | $ | 108 | $ | 107 | $ | 82 | ||||||||||
- Plumbing Products | 349 | 66 | 103 | 97 | 83 | |||||||||||||||
- Installation and Other Services | 197 | 34 | 65 | 62 | 36 | |||||||||||||||
- Decorative Architectural Products | 385 | 62 | 114 | 116 | 93 | |||||||||||||||
- Other Specialty Products | 119 | 12 | 36 | 42 | 29 | |||||||||||||||
- Total | $ | 1,418 | $ | 245 | $ | 426 | $ | 424 | $ | 323 | ||||||||||
- North America | $ | 1,191 | $ | 195 | $ | 356 | $ | 377 | $ | 263 | ||||||||||
- International, principally Europe | 227 | 50 | 70 | 47 | 60 | |||||||||||||||
- Total, as above | $ | 1,418 | $ | 245 | $ | 426 | $ | 424 | $ | 323 | ||||||||||
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) | 1,252 | 208 | 383 | 384 | 277 | |||||||||||||||
Other Income (Expense), Net | (188 | ) | (58 | ) | (45 | ) | (64 | ) | (21 | ) | ||||||||||
Income from Continuing Operations before Income Taxes and Minority Interest | $ | 1,064 | $ | 150 | $ | 338 | $ | 320 | $ | 256 | ||||||||||
Margins: | ||||||||||||||||||||
- Cabinets and Related Products | 13.0 | % | 10.7 | % | 14.7 | % | 14.5 | % | 11.9 | % | ||||||||||
- Plumbing Products | 10.3 | % | 8.1 | % | 11.9 | % | 11.2 | % | 9.9 | % | ||||||||||
- Installation and Other Services | 7.5 | % | 5.8 | % | 9.4 | % | 8.9 | % | 5.6 | % | ||||||||||
- Decorative Architectural Products | 21.8 | % | 17.9 | % | 24.4 | % | 21.7 | % | 22.1 | % | ||||||||||
- Other Specialty Products | 12.8 | % | 5.6 | % | 14.5 | % | 16.8 | % | 13.4 | % | ||||||||||
- Total | 12.3 | % | 9.3 | % | 14.2 | % | 13.7 | % | 11.5 | % | ||||||||||
- North America | 12.8 | % | 9.5 | % | 14.7 | % | 14.8 | % | 11.6 | % | ||||||||||
- International, principally Europe | 10.0 | % | 8.5 | % | 11.9 | % | 8.7 | % | 11.0 | % | ||||||||||
- Total, as above | 12.3 | % | 9.3 | % | 14.2 | % | 13.7 | % | 11.5 | % |
Notes:
– | Data exclude discontinued operations. | |
– | Operating profit and margins by segment and geographic area are before general corporate expense and (gain) on sale of Corporate fixed assets. | |
– | Operating profit margins for the fourth quarter of 2007 exclude $119 million of impairment charges for goodwill and other intangible assets as follows: Plumbing Products ($69 million) and Other Specialty Products ($50 million). | |
– | Operating profit margins for the fourth quarter of 2007 exclude costs and charges of $19 million pre-tax related 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 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 7
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)
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 | 3,391 | 819 | 865 | 869 | 838 | |||||||||||||||
- Installation and Other Services | 2,615 | 589 | 689 | 699 | 638 | |||||||||||||||
- Decorative Architectural Products | 1,768 | 347 | 467 | 534 | 420 | |||||||||||||||
- Other Specialty Products | 929 | 215 | 248 | 250 | 216 | |||||||||||||||
- Total | $ | 11,532 | $ | 2,635 | $ | 3,005 | $ | 3,089 | $ | 2,803 | ||||||||||
- North America | $ | 9,271 | $ | 2,048 | $ | 2,417 | $ | 2,548 | $ | 2,258 | ||||||||||
- International, principally Europe | 2,261 | 587 | 588 | 541 | 545 | |||||||||||||||
- Total, as above | $ | 11,532 | $ | 2,635 | $ | 3,005 | $ | 3,089 | $ | 2,803 | ||||||||||
Operating Profit (Loss): | ||||||||||||||||||||
- Cabinets and Related Products | $ | 336 | $ | 63 | $ | 105 | $ | 96 | $ | 72 | ||||||||||
- Plumbing Products | 264 | (8 | ) | 100 | 95 | 77 | ||||||||||||||
- Installation and Other Services | 176 | 28 | 60 | 58 | 30 | |||||||||||||||
- Decorative Architectural Products | 384 | 62 | 114 | 115 | 93 | |||||||||||||||
- Other Specialty Products | 67 | (38 | ) | 36 | 41 | 28 | ||||||||||||||
- Total | $ | 1,227 | $ | 107 | $ | 415 | $ | 405 | $ | 300 | ||||||||||
- North America | $ | 1,008 | $ | 60 | $ | 346 | $ | 360 | $ | 242 | ||||||||||
- International, principally Europe | 219 | 47 | 69 | 45 | 58 | |||||||||||||||
- Total, as above | $ | 1,227 | $ | 107 | $ | 415 | $ | 405 | $ | 300 | ||||||||||
General Corporate Expense (GCE), Net | 181 | 37 | 44 | 49 | 51 | |||||||||||||||
(Gain) on Sale of Corporate Fixed Assets, Net | (8 | ) | — | — | (5 | ) | (3 | ) | ||||||||||||
Operating Profit (after GCE and Adjustments) | 1,054 | 70 | 371 | 361 | 252 | |||||||||||||||
Other Income (Expense), Net | (188 | ) | (58 | ) | (45 | ) | (64 | ) | (21 | ) | ||||||||||
Income from Continuing Operations before Income Taxes and Minority Interest | $ | 866 | $ | 12 | $ | 326 | $ | 297 | $ | 231 | ||||||||||
Margins: | ||||||||||||||||||||
- Cabinets and Related Products | 11.9 | % | 9.5 | % | 14.3 | % | 13.0 | % | 10.4 | % | ||||||||||
- Plumbing Products | 7.8 | % | -1.0 | % | 11.6 | % | 10.9 | % | 9.2 | % | ||||||||||
- Installation and Other Services | 6.7 | % | 4.8 | % | 8.7 | % | 8.3 | % | 4.7 | % | ||||||||||
- Decorative Architectural Products | 21.7 | % | 17.9 | % | 24.4 | % | 21.5 | % | 22.1 | % | ||||||||||
- Other Specialty Products | 7.2 | % | -17.7 | % | 14.5 | % | 16.4 | % | 13.0 | % | ||||||||||
- Total | 10.6 | % | 4.1 | % | 13.8 | % | 13.1 | % | 10.7 | % | ||||||||||
- North America | 10.9 | % | 2.9 | % | 14.3 | % | 14.1 | % | 10.7 | % | ||||||||||
- International, principally Europe | 9.7 | % | 8.0 | % | 11.7 | % | 8.3 | % | 10.6 | % | ||||||||||
- Total, as above | 10.6 | % | 4.1 | % | 13.8 | % | 13.1 | % | 10.7 | % |
Notes:
– | Data exclude discontinued operations. | |
– | Operating profit and margins by segment and geographic area are before general corporate expense and (gain) on sale of Corporate fixed assets. | |
– | Operating profit margins for the fourth quarter of 2007 include $119 million of impairment charges for goodwill and other intangible assets as follows: Plumbing Products ($69 million) and Other Specialty Products ($50 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 8
MASCO CORPORATION
Other Income (Expense), Net
2008 & 2007 — by Quarter — Unaudited
(in millions)
Other Income (Expense), Net
2008 & 2007 — by Quarter — Unaudited
(in millions)
2008 | 2007 | ||||||||||||||||||||||||||||||||||||||||
Year | Qtr. 4 | Qtr. 3 | Qtr. 2 | Qtr. 1 | Year | Qtr. 4 | Qtr. 3 | Qtr. 2 | Qtr. 1 | ||||||||||||||||||||||||||||||||
Interest Expense | $ | (59 | ) | $ | (57 | ) | $ | (56 | ) | $ | (258 | ) | $ | (61 | ) | $ | (65 | ) | $ | (69 | ) | $ | (63 | ) | |||||||||||||||||
Income from Cash and Cash Investments | 6 | 5 | 6 | 37 | 8 | 7 | 8 | 14 | |||||||||||||||||||||||||||||||||
Other Interest Income | 1 | — | — | 3 | 1 | 1 | 1 | — | |||||||||||||||||||||||||||||||||
Realized (Losses) Gains from Financial Investments, Net | — | 3 | (3 | ) | 43 | 3 | 11 | 7 | 22 | ||||||||||||||||||||||||||||||||
Dividend Income | — | — | — | 6 | — | — | 1 | 5 | |||||||||||||||||||||||||||||||||
Impairment Charges for Financial Investments | (1 | ) | (3 | ) | (26 | ) | (22 | ) | — | (12 | ) | (10 | ) | — | |||||||||||||||||||||||||||
Other, Net | (4 | ) | (4 | ) | (5 | ) | 3 | (9 | ) | 13 | (2 | ) | 1 | ||||||||||||||||||||||||||||
Total Other Income (Expense), Net | $ | (57 | ) | $ | (56 | ) | $ | (84 | ) | $ | (188 | ) | $ | (58 | ) | $ | (45 | ) | $ | (64 | ) | $ | (21 | ) | |||||||||||||||||
Notes:
– | Data exclude discontinued operations. | |
– | Other, net, includes currency (losses) of $(11) million, $(4) million and $(4) million for the first, second, and third quarters of 2008, respectively. | |
– | Other, net, includes currency gains (losses) of $3 million, $9 million and $(3) million for the second, third and fourth quarters of 2007, respectively. |
Page 9
MASCO CORPORATION
Condensed Consolidated Statements of Income
Three Months Ended September 30, 2008 & 2007 — Unaudited
(dollars and shares in millions, except per share data)
Condensed Consolidated Statements of Income
Three Months Ended September 30, 2008 & 2007 — Unaudited
(dollars and shares in millions, except per share data)
Three Months Ended | As a Percent of Sales | |||||||||||||||||||||
% | September 30, | Three Months Ended September 30, | ||||||||||||||||||||
Line | Change | 2008 | 2007 | 2008 | 2007 | |||||||||||||||||
1 | Net Sales | -16 | % | $ | 2,528 | $ | 3,005 | 100.0 | % | 100.0 | % | |||||||||||
2 | Cost of Sales | -13 | % | 1,880 | 2,155 | 74.4 | % | 71.7 | % | |||||||||||||
3 | Gross Profit | -24 | % | 648 | 850 | 25.6 | % | 28.3 | % | |||||||||||||
Operating Profit | ||||||||||||||||||||||
4 | - Before GCE, (Gain) on Sale of Corporate Fixed Assets, Charge for Litigation Settlement and (Income)/Charge for Planned Disposition of Business (3-10) | -44 | % | 231 | 415 | 9.1 | % | 13.8 | % | |||||||||||||
5 | - After GCE, (Gain) on Sale of Corporate Fixed Assets, Charge for Litigation Settlement and (Income)/Charge for Planned Disposition of Business (3-11) | -47 | % | 196 | 371 | 7.8 | % | 12.3 | % | |||||||||||||
S,G&A Expense: | ||||||||||||||||||||||
6 | - General Corporate Expense (GCE) | -27 | % | 32 | 44 | 1.3 | % | 1.5 | % | |||||||||||||
7 | - (Gain) on Sales of Corporate Fixed Assets, Net | — | — | |||||||||||||||||||
8 | - Charge for Litigation Settlement | 9 | — | 0.4 | % | 0.0 | % | |||||||||||||||
9 | - (Income) Charge for Planned Disposition of Business | (6 | ) | — | ||||||||||||||||||
10 | - All Other | -4 | % | 417 | 435 | 16.5 | % | 14.5 | % | |||||||||||||
11 | - Total S,G&A Expense | -6 | % | 452 | 479 | 17.9 | % | 15.9 | % | |||||||||||||
12 | Other Income (Expense), Net | (56 | ) | (33 | ) | -2.2 | % | -1.1 | % | |||||||||||||
13 | Impairment Charges for Financial Investments | (1 | ) | (12 | ) | 0.0 | % | -0.4 | % | |||||||||||||
14 | Income from Continuing Operations before Income Taxes and Minority Interest (5+12+13) | -57 | % | 139 | 326 | 5.5 | % | 10.8 | % | |||||||||||||
15 | Income Taxes | -16 | % | 92 | 109 | 3.6 | % | 3.6 | % | |||||||||||||
(Tax Rate) | 66.2 | % | 33.4 | % | ||||||||||||||||||
16 | Income from Continuing Operations before Minority Interest | -78 | % | 47 | 217 | 1.9 | % | 7.2 | % | |||||||||||||
17 | Minority Interest | (11 | ) | (11 | ) | -0.4 | % | -0.4 | % | |||||||||||||
18 | Income from Continuing Operations | -83 | % | 36 | 206 | 1.4 | % | 6.9 | % | |||||||||||||
19 | (Loss) from Discontinued Operations, Net | (3 | ) | (1 | ) | -0.1 | % | 0.0 | % | |||||||||||||
20 | Net Income | -84 | % | $ | 33 | $ | 205 | 1.3 | % | 6.8 | % | |||||||||||
Earnings Per Common Share (Diluted): | ||||||||||||||||||||||
Income from Continuing Operations | -82 | % | $ | 0.10 | $ | 0.56 | ||||||||||||||||
(Loss) from Discontinued Operations, Net | (0.01 | ) | (0.00 | ) | ||||||||||||||||||
Net Income | -83 | % | $ | 0.09 | $ | 0.56 | ||||||||||||||||
Average (Diluted) Common Shares | -4 | % | 352 | 367 |
Page 10
MASCO CORPORATION
Condensed Consolidated Statements of Income
Nine Months Ended September 30, 2008 & 2007 — Unaudited
(dollars and shares in millions, except per share data)
Condensed Consolidated Statements of Income
Nine Months Ended September 30, 2008 & 2007 — Unaudited
(dollars and shares in millions, except per share data)
Nine Months Ended | As a Percent of Sales | ||||||||||||||||||||||
% | September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
Line | Change | 2008 | 2007 | 2008 | 2007 | ||||||||||||||||||
1 | Net Sales | -14 | % | $ | 7,621 | $ | 8,897 | 100.0 | % | 100.0 | % | ||||||||||||
2 | Cost of Sales | -12 | % | 5,643 | 6,420 | 74.0 | % | 72.2 | % | ||||||||||||||
3 | Gross Profit | -20 | % | 1,978 | 2,477 | 26.0 | % | 27.8 | % | ||||||||||||||
Operating Profit | |||||||||||||||||||||||
4 | - Before GCE, (Gain) on Sale of Corporate Fixed Assets, Charge for Litigation Settlement and (Income)/Charge for Planned Disposition of Business (3-10) | -39 | % | 684 | 1,120 | 9.0 | % | 12.6 | % | ||||||||||||||
5 | - After GCE, (Gain) on Sale of Corporate Fixed Assets, Charge for Litigation Settlement and (Income)/Charge for Planned Disposition of Business (3-11) | -43 | % | 565 | 984 | 7.4 | % | 11.1 | % | ||||||||||||||
S,G&A Expense: | |||||||||||||||||||||||
6 | - General Corporate Expense (GCE) | -24 | % | 110 | 144 | 1.4 | % | 1.6 | % | ||||||||||||||
7 | - (Gain) on Sales of Corporate Fixed Assets, Net | — | (8 | ) | |||||||||||||||||||
8 | - Charge for Litigation Settlement | 9 | — | 0.1 | % | 0.0 | % | ||||||||||||||||
9 | - (Income) Charge for Planned Disposition of Business | — | — | ||||||||||||||||||||
10 | - All Other | -5 | % | 1,294 | 1,357 | 17.0 | % | 15.3 | % | ||||||||||||||
11 | - Total S,G&A Expense (6+7+8+9+10) | -5 | % | 1,413 | 1,493 | 18.5 | % | 16.8 | % | ||||||||||||||
12 | Other Income (Expense), Net | (167 | ) | (108 | ) | -2.2 | % | -1.2 | % | ||||||||||||||
13 | Impairment Charges for Financial Investments | (30 | ) | (22 | ) | -0.4 | % | -0.2 | % | ||||||||||||||
14 | Income from Continuing Operations before Income Taxes and Minority Interest (5+12+13) | -57 | % | 368 | 854 | 4.8 | % | 9.6 | % | ||||||||||||||
15 | Income Taxes | -31 | % | 207 | 302 | 2.7 | % | 3.4 | % | ||||||||||||||
(Tax Rate) | 56.3 | % | 35.4 | % | |||||||||||||||||||
16 | Income from Continuing Operations before Minority Interest | -71 | % | 161 | 552 | 2.1 | % | 6.2 | % | ||||||||||||||
17 | Minority Interest | (35 | ) | (27 | ) | -0.5 | % | -0.3 | % | ||||||||||||||
18 | Income from Continuing Operations | -76 | % | 126 | 525 | 1.7 | % | 5.9 | % | ||||||||||||||
19 | (Loss) Income from Discontinued Operations, Net | (9 | ) | 12 | -0.1 | % | 0.1 | % | |||||||||||||||
20 | Net Income | -78 | % | $ | 117 | $ | 537 | 1.5 | % | 6.0 | % | ||||||||||||
Earnings Per Common Share (Diluted): | |||||||||||||||||||||||
Income from Continuing Operations | -75 | % | $ | 0.36 | $ | 1.40 | |||||||||||||||||
(Loss) Income from Discontinued Operations, Net | (0.03 | ) | 0.03 | ||||||||||||||||||||
Net Income | -77 | % | $ | 0.33 | $ | 1.43 | |||||||||||||||||
Average (Diluted) Common Shares | -6 | % | 354 | 376 |
Page 11
MASCO CORPORATION
Condensed Consolidated Balance Sheets — Unaudited
(in millions)
Condensed Consolidated Balance Sheets — Unaudited
(in millions)
September 30, | December 31, | |||||||
2008 | 2007 | |||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash and Cash Investments | $ | 1,030 | $ | 922 | ||||
Receivables | 1,442 | 1,405 | ||||||
Inventories | 1,080 | 1,126 | ||||||
Prepaid Expenses and Other | 284 | 355 | ||||||
Total Current Assets | 3,836 | 3,808 | ||||||
Property and Equipment, Net | 2,194 | 2,367 | ||||||
Goodwill | 3,888 | 3,938 | ||||||
Other Intangible Assets, Net | 316 | 323 | ||||||
Other Assets | 403 | 471 | ||||||
Total Assets | $ | 10,637 | $ | 10,907 | ||||
Liabilities | ||||||||
Current Liabilities: | ||||||||
Accounts Payable | $ | 717 | $ | 714 | ||||
Notes Payable | 115 | 122 | ||||||
Accrued Liabilities | 1,068 | 1,072 | ||||||
Total Current Liabilities | 1,900 | 1,908 | ||||||
Long-Term Debt | 3,961 | 3,966 | ||||||
Deferred Income Taxes and Other | 1,026 | 1,008 | ||||||
Total Liabilities | 6,887 | 6,882 | ||||||
Shareholders’ Equity | 3,750 | 4,025 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 10,637 | $ | 10,907 | ||||
Page 12
MASCO CORPORATION
Discontinued Operations — Unaudited
(in millions)
Discontinued Operations — Unaudited
(in millions)
Three Months Ended | ||||||||
September 30, | ||||||||
2008 | 2007 | |||||||
Net Sales | $ | 7 | $ | 73 | ||||
Income from Discontinued Operations | $ | 1 | $ | 3 | ||||
(Loss) on Disposal of Discontinued Operations, Net | (4 | ) | (4 | ) | ||||
Income Before Income Tax | (3 | ) | (1 | ) | ||||
Income Tax Benefit (Expense) | — | — | ||||||
Income from Discontinued Operations, Net | $ | (3 | ) | $ | (1 | ) | ||
Nine Months Ended | ||||||||
September 30, | ||||||||
2008 | 2007 | |||||||
Net Sales | $ | 100 | $ | 229 | ||||
Income from Discontinued Operations | $ | 13 | $ | 14 | ||||
Gain (Loss) on Disposal of Discontinued Operations, Net | 3 | (1 | ) | |||||
Impairment of Assets Held for Sale | (45 | ) | — | |||||
(Loss) Income Before Income Tax | (29 | ) | 13 | |||||
Income Tax Benefit (Expense) | 20 | (1 | ) | |||||
(Loss) Income from Discontinued Operations, Net | $ | (9 | ) | $ | 12 | |||
Page 13
MASCO CORPORATION
GAAP Reconciliation of Sales Growth
Excluding the Effect of Acquisitions and Currency Translation — Unaudited
(in millions)
GAAP Reconciliation of Sales Growth
Excluding the Effect of Acquisitions and Currency Translation — Unaudited
(in millions)
Three Months Ended September 30, | ||||||||
2008 | 2007 | |||||||
Consolidated Net Sales, As Reported | $ | 2,528 | $ | 3,005 | ||||
- Acquisitions | (16 | ) | — | |||||
Consolidated Net Sales, Excluding Acquisitions | $ | 2,512 | $ | 3,005 | ||||
North American Net Sales, As Reported | $ | 1,975 | $ | 2,417 | ||||
- Acquisitions | (16 | ) | — | |||||
North American Net Sales, Excluding Acquisitions | $ | 1,959 | $ | 2,417 | ||||
International Net Sales, As Reported | $ | 553 | $ | 588 | ||||
- Acquisitions | — | — | ||||||
International Net Sales, Excluding Acquisitions | 553 | 588 | ||||||
- Currency Translation | (31 | ) | — | |||||
International Net Sales, Excluding Acquisitions and Currency Translation | $ | 522 | $ | 588 | ||||
NIne Months Ended September 30, | ||||||||
2008 | 2007 | |||||||
Consolidated Net Sales, As Reported | $ | 7,621 | $ | 8,897 | ||||
- Acquisitions | (65 | ) | — | |||||
Consolidated Net Sales, Excluding Acquisitions | $ | 7,556 | $ | 8,897 | ||||
North American Net Sales, As Reported | $ | 5,935 | $ | 7,223 | ||||
- Acquisitions | (65 | ) | — | |||||
North American Net Sales, Excluding Acquisitions | $ | 5,870 | $ | 7,223 | ||||
International Net Sales, As Reported | $ | 1,686 | $ | 1,674 | ||||
- Acquisitions | — | — | ||||||
International Net Sales, Excluding Acquisitions | 1,686 | 1,674 | ||||||
- Currency Translation | (156 | ) | — | |||||
International Net Sales, Excluding Acquisitions and Currency Translation | $ | 1,530 | $ | 1,674 | ||||
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 Profit and Margins — Unaudited
(dollars in Millions)
GAAP Reconciliation of Operating Profit and Margins — Unaudited
(dollars in Millions)
Three Months Ended September 30, | ||||||||||||||||
2008 | 2007 | |||||||||||||||
$ | Margin | $ | Margin | |||||||||||||
Operating Profit, As Reported | $ | 196 | 7.8 | % | $ | 371 | 12.3 | % | ||||||||
Business Rationalizations and Other Initiatives | 16 | 12 | ||||||||||||||
Operating Profit, As Reconciled | $ | 212 | 8.4 | % | $ | 383 | 12.7 | % | ||||||||
Nine Months Ended September 30, | ||||||||||||||||
2008 | 2007 | |||||||||||||||
$ | Margin | $ | Margin | |||||||||||||
Operating Profit, As Reported | $ | 565 | 7.4 | % | $ | 984 | 11.1 | % | ||||||||
Business Rationalizations and Other Initiatives | 40 | 60 | ||||||||||||||
Operating Profit, As Reconciled | $ | 605 | 7.9 | % | $ | 1,044 | 11.7 | % | ||||||||
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. |
Page 15
MASCO CORPORATION
GAAP Reconciliation of Operating Profit and Shareholders’ Equity — Unaudited
(in millions)
GAAP Reconciliation of Operating Profit and Shareholders’ Equity — Unaudited
(in millions)
Twelve | ||||
Months Ended | ||||
September 30, | ||||
2008 | ||||
Operating Profit, As Reported | $ | 635 | ||
Income Regarding Litigation Settlement | 9 | |||
Impairment Charges for Goodwill and Other Intangible Assets, Continuing Operations | 119 | |||
Operating Profit, As Reconciled | $ | 763 | ||
Twelve Months Ended | ||||||||
September 30, | ||||||||
2008 | 2007 | |||||||
Shareholders’ Equity, As Reported | $ | 3,750 | $ | 4,203 | ||||
Impairment Charges for Goodwill and Other Intangible Assets (after tax) | 208 | 321 | ||||||
Income Regarding Litigation Settlement (after tax) | 6 | (1 | ) | |||||
Shareholders’ Equity, As Reconciled | $ | 3,964 | $ | 4,523 | ||||
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