EXHIBIT 99.a
FOR IMMEDIATE RELEASE Contact:
Samuel Cypert
313-792-6646
MASCO CORPORATION REPORTS RECORD SALES AND EARNINGS FOR 2003,
ANNOUNCES DIVESTITURE PROGRAM
AND FORECASTS ANOTHER RECORD YEAR FOR 2004
Taylor, Michigan (February 13, 2004) - Masco Corporation (NYSE: MAS)
today reported that net sales from continuing operations for the year ended
December 31, 2003, aided by acquisitions, increased 20 percent to a record $10.9
billion compared with $9.1 billion for 2002.
Income from continuing operations for the year ended December 31, 2003
was $740 million or $1.51 per common share, which includes the recognition of a
non-cash, pre-tax goodwill impairment charge of $142 million ($118 million or
$.24 per common share, after tax), the majority of which relates to European
businesses that the Company plans to divest. In addition, the Company's results
include previously announced charges primarily related to certain European
businesses and income from an adjustment of the Behr litigation accrual, which
principally offset each other.
Excluding the impact of the goodwill impairment charge, income from
continuing operations was $1.75 per common share. This result is above the
Company's previous guidance that earnings, excluding any fourth quarter 2003
unusual items, would be in the range of $1.68 to $1.70 per common share.
Fourth quarter 2003 net sales from continuing operations increased 18
percent to $2.9 billion compared with $2.4 billion in the 2002 fourth quarter.
Income from continuing operations for the fourth quarter of 2003 was $93 million
or $.19 per common share and included a non-cash, pre-tax charge for goodwill
impairment of $137 million ($113 million or $.24 per common share, after tax).
Excluding such charge, income from continuing operations was $.43 per common
share.
The Company reviews its business portfolio on an ongoing basis as part
of its corporate strategic planning and has determined that several of its
European businesses are not core to the Company's long-term growth strategy and,
accordingly, has embarked on a plan of disposition. These businesses had
combined 2003 net sales in excess of $350 million and the Company expects net
proceeds from the dispositions to exceed $300 million. The dispositions are
expected to be completed within the next twelve months and the Company expects
to recognize a modest net loss upon the disposition of all of these businesses.
First quarter 2004 results will include a charge to reflect those businesses
that are expected to be divested at a loss. Any gains resulting from the
disposition of individual businesses will be recognized as such transactions
are completed.
The Company continues to experience favorable sales performance in
early 2004, and, based on current business trends, believes that it will achieve
record sales and earnings for 2004 with full-year earnings from continuing
operations in a range of $1.80 to $1.90 per common share. Earnings guidance for
2004 includes a reduction of approximately $.05 per common share resulting from
the absence of earnings related to the European businesses to be divested. These
businesses will be treated as discontinued operations effective in the first
quarter of 2004, which will include the reclassification of their prior period
results to discontinued operations. This year's earnings guidance also reflects
the Company's expectation that certain operating expenses will continue to
increase in 2004, including such items as energy, insurance and certain material
and freight costs.
Based on current business trends, the Company anticipates that first
quarter 2004, earnings from continuing operations (seasonally the lowest quarter
of the year) may be in a range of $.36 to $.38 per common share (excluding the
disposition charge), compared with first quarter 2003 reported earnings of $.32
per common share.
MASCO CORPORATION 2003 HIGHLIGHTS:
FULL-YEAR 2003
- Net sales from continuing operations increased 20 percent
to a record $10.9 billion.
- Key retailer sales were up 10 percent to approximately
$3.4 billion.
- Income from continuing operations was $1.75 per common
share excluding the impact of a goodwill impairment
charge.
- The Company retired approximately $430 million of Company
debt during 2003.
- The Company repurchased 37 million shares in 2003
including approximately 2 million shares for employee
long-term stock incentive plans.
- Working capital (defined as accounts receivable and
inventories less accounts payable)as a percentage of sales
improved to 18.1 percent of sales at December 31, 2003
from 22.5 percent of sales a year earlier.
- The Company has approximately $1.3 billion of cash and
marketable securities at year-end.
FOURTH QUARTER 2003
- Net sales from continuing operations increased 18 percent
to a record $2.9 billion.
- Key retailer sales were up 22 percent.
- Income from continuing operations was $.43 per common
share excluding the impact of a goodwill impairment
charge compared to $.36 per common share in 2002.
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 Friday, February 13, 2004 at 11:00 a.m. ET. Participants in the
call are asked to register five to ten minutes prior to the scheduled start time
by dialing (913) 981-4900 (confirmation #675846). The conference call will be
webcast simultaneously on the Company's website at www.masco.com and
supplemental material, including the financial data referred to on the call and
a reconciliation of all non-GAAP information provided on the call, will also be
available on the website. A replay of the call will be available on Masco's
website or by phone by dialing (719) 457-0820 (replay access code #675846)
approximately two hours after the end of the call and will continue through
February 19, 2004.
Masco Corporation's press releases and other information are available
through the Company's toll free number, 1-888-MAS-NEWS, or you may visit Masco's
website at www.masco.com. For press releases, click on "Investor Relations" and
then on "Link to News Center."
Statements contained herein may include certain forward-looking
statements regarding Masco's future sales, earnings growth potential and other
developments. Actual results may vary materially because of external factors
such as interest rate fluctuations, changes in consumer spending and other
factors over which management has no control. The Company believes that certain
non-GAAP performance measures and ratios, used in managing the business, may
provide users of this financial information with additional meaningful
comparisons between current results and results in prior periods. Non-GAAP
financial measures and ratios should be viewed in addition to, and not as an
alternative for, the Company's reported results. Additional information about
our products, markets and conditions, which could affect our future performance,
is contained in the Company's filings with the Securities and Exchange
Commission and is available on Masco's website at www.masco.com. Masco
undertakes no obligation to update any forward-looking statements, whether as a
result of new information, future events or otherwise.
# # # #
MASCO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME FOR THREE MONTHS AND TWELVE MONTHS ENDED
12/31/03 AND 12/31/02
In millions, except per share data.
Three Months Ended Twelve Months Ended
December 31 December 31
---------------------- ----------------------
2003 2002 2003 2002
-------- -------- -------- --------
Net Sales $ 2,862 $ 2,421 $ 10,936 $ 9,149
Cost of Sales 1,982 1,685 7,586 6,258
-------- -------- -------- --------
Gross Profit 880 736 3,350 2,891
Selling, General and Administrative Expenses 490 390 1,856 1,459
Goodwill Impairment Charge 137 -- 142 --
(Income) from Disposition of a Business -- (16) -- (16)
(Income) Charge Regarding Litigation Settlement, Net (1) (19) (72) 147
-------- -------- -------- --------
Operating Profit 254 381 1,424 1,301
Other Income (Expense), Net (57) (90) (208) (300)
-------- -------- -------- --------
Income from Continuing Operations before Income
Taxes and Minority Interest 197 291 1,216 1,001
Income Taxes 99 101 463 337
-------- -------- -------- --------
Income from Continuing Operations before
Minority Interest 98 190 753 664
Minority Interest 5 -- 13 --
-------- -------- -------- --------
Income from Continuing Operations 93 190 740 664
Income (Loss) from Discontinued Operations and
Gain, Net of Income Taxes (1) 5 66 18
Cumulative Effect of Accounting Change, Net -- -- -- (92)
-------- -------- -------- --------
Net Income $ 92 $ 195 $ 806 $ 590
======== ======== ======== ========
Earnings per Common Share (Diluted):
Income from Continuing Operations $ 0.19 $ 0.36 $ 1.51 $ 1.29
Income (Loss) from Discontinued Operations and
Gain, Net of Income Taxes -- 0.01 0.13 0.04
Cumulative Effect of Accounting Change, Net -- -- -- (0.18)
-------- -------- -------- --------
Net Income $ 0.19 $ 0.37 $ 1.64 $ 1.15
======== ======== ======== ========
Average Diluted Common Shares Outstanding 481 529 491 514
======== ======== ======== ========
MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
Note: 2002 results have been restated to exclude operations which were sold in
2003 and treated as discontinued operations in accordance with SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets."
FOURTH QUARTER 2003
- - Net sales from continuing operations for the quarter, aided by
acquisitions, increased 18 percent with North American sales increasing 13
percent and International sales increasing 44 percent.
- - Excluding acquisitions and divestitures, consolidated net sales for the
quarter increased 13 percent, with North American internal sales increasing
12 percent; International internal sales increased 18 percent. In local
currencies, International sales increased two percent compared with the
fourth quarter of 2002.
- - Excluding acquisitions and divestitures, the increase in net sales for the
fourth quarter of 2003 was primarily due to stronger sales of assembled
cabinets, paints and stains, installation services, vinyl windows and
faucets.
- - Income from continuing operations for the quarter was $93 million or $.19
per common share, and included a non-cash, pre-tax charge for goodwill
impairment of $137 million ($113 million or $.24 per common share, after
tax). Excluding the impairment charge, income from continuing operations
was $.43 per common share compared with the Company's previous guidance of
$.38 to $.40 per common share.
- - Key retailer sales (excluding discontinued operations) in the quarter
increased 22 percent, compared with an eight percent increase in the third
quarter of 2003, a seven percent increase in the second quarter of 2003 and
a five percent increase in the 2003 first quarter. Combined sales to Home
Depot, Lowe's and Wal-Mart in the fourth quarter of 2003 also increased 22
percent compared with an increase of eight percent in the 2003 third
quarter, a six percent increase in the second quarter of 2003 and a four
percent increase in the first quarter of 2003.
MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
FOURTH QUARTER 2003 (CONTINUED)
- - Sales by segment in the 2003 fourth quarter versus the 2002 fourth quarter
were:
- Cabinets and Related Products sales increased 13 percent;
- Plumbing Products sales increased 31 percent;
- Installation and Other Services sales increased 13 percent;
- Decorative Architectural Products sales increased 22 percent; and
- Other Specialty Products sales increased 16 percent.
- - Gross margins were 30.7 percent in the 2003 fourth quarter compared with
30.4 percent in the fourth quarter of 2002.
- - Operating profit margins as reported were 8.9 percent in the fourth quarter
of 2003 compared with 15.7 percent in the fourth quarter of 2002. Operating
profit margins, before the goodwill impairment charge in 2003, litigation
income in 2003 and 2002, and income from the planned disposition of a
business in 2002, were 13.6 percent and 14.3 percent in the fourth quarters
of 2003 and 2002, respectively.
- - SG&A expenses as a percent of sales, including general corporate expense,
were 17.1 percent compared with 16.1 percent in the 2002 fourth quarter.
The increase was principally the result of increased advertising and
promotion costs.
- - General corporate expense was 0.9 percent of sales in the fourth quarter of
2003 compared with 1.0 percent in the comparable period of 2002.
- - The Company's tax rate was 50.3 percent in the 2003 fourth quarter
reflecting the impact of the goodwill impairment charge ($113 million after
the tax benefit of $24 million), which had a lower tax benefit than the
statutory rate. Excluding the goodwill impairment charge, the Company's tax
rate was 36.8 percent in the 2003 fourth quarter compared with 34.7 percent
in the 2002 fourth quarter. The increase in the tax rate is due to an
increase in domestic earnings (relative to total earnings), which are taxed
at a higher rate than earnings from the Company's foreign operations.
MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
FOURTH QUARTER 2003 (CONCLUDED)
- - The Company's diluted common shares for purposes of calculating earnings
per common share were 481 million in the fourth quarter of 2003.
FULL-YEAR 2003
- - Net sales from continuing operations for 2003, aided by acquisitions,
increased 20 percent to over $10.9 billion compared with $9.1 billion for
2002. North American sales increased 14 percent and International sales
increased 49 percent.
- - Excluding acquisitions and divestitures, 2003 consolidated net sales
increased 9 percent compared with 2002 sales. North American sales
increased 8 percent and International sales increased 17 percent. In local
currencies, International sales were flat compared with 2002.
- - For the full-year 2003, income from continuing operations was $740 million
or $1.51 per common share, and included a non-cash, pre-tax charge for
goodwill impairment of $142 million ($118 million or $.24 per common share,
after tax). Excluding such charge, income from continuing operations was
$1.75 per common share.
- - Sales of the Company's products continued strong in 2003 with a high single
digit increase in combined internal sales growth of assembled cabinets,
installation services, faucets, architectural coatings and vinyl windows.
- - For the full-year 2003, key retailer sales were approximately $3.4 billion,
an increase of approximately 10 percent over $3.1 billion for 2002.
- - Combined sales to Home Depot, Lowe's and Wal-Mart also increased by
approximately 10 percent compared with 2002.
- - Sales by segment for 2003 versus 2002 were:
- Cabinets and Related Products sales increased nine percent;
- Plumbing Products sales increased 30 percent;
- Installation and Other Services sales increased 31 percent;
MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
FULL-YEAR 2003 (CONTINUED)
- Decorative Architectural Products sales increased 12 percent; and
- Other Specialty Products sales increased 16 percent.
- - Gross margins were 30.6 percent in 2003 compared with 31.6 percent in 2002.
- - Operating profit margins as reported were 13.0 percent in 2003 compared
with 14.2 percent in 2002. Operating profit margins, before the goodwill
impairment charge in 2003, litigation income/charge in 2003 and 2002,
accelerated benefit expense in 2003, European charges in 2003 and income
from the planned disposition of a business in 2002 were 14.3 percent in
2003 compared with 15.7 percent in 2002.
- - Full-year 2003 gross margins and operating margins were adversely affected
by:
- Increased energy, insurance and pension costs;
- Higher promotion and display costs;
- Stronger foreign currencies resulting in increased International sales
which have lower margins;
- Product mix and relatively higher sales in product segments with
somewhat lower margins; and
- Recently acquired companies with lower operating margins.
- - SG&A expenses as a percent of sales, including general corporate expense,
were 17.0 percent in 2003 compared with 15.9 percent in 2002. The increase
was principally the result of increased advertising, promotion and the
accelerated benefit expense related to the unexpected passing of the
Company's President and Chief Operating Officer.
- - General corporate expense was 1.0 percent of sales in 2003 compared with
1.1 percent in 2002.
MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
FULL-YEAR 2003 (CONTINUED)
- - The Company's tax rate for 2003 was 38.1 percent reflecting the impact of
the goodwill impairment charge ($118 million after the tax benefit of $24
million), which had a lower tax benefit than the statutory rate. Excluding
the goodwill impairment charge, the Company's tax rate was 35.9 percent for
2003 compared with 33.7 percent for 2002. The increase in the tax rate is
due to an increase in domestic earnings (relative to total earnings), which
are taxed at a higher rate than earnings from the Company's foreign
operations. The Company anticipates that its tax rate for 2004 will
approximate 36 percent.
- - Accounts receivable at year-end were 54 days, which were comparable with
last year.
- - Year-end inventory improved to 47 days for 2003 compared with 56 days for
2002.
- - Accounts payable days at year-end improved to 36 days from 33 days a year
ago, as the Company continues to negotiate more favorable supplier terms.
- - Working capital (defined as accounts receivable and inventories less
accounts payable) improved to 18.1 percent of sales at December 31, 2003
from 22.5 percent of sales at December 31, 2002.
- - Capital expenditures for 2003 were $271 million or 2.5 percent of sales,
compared with $285 million or 3.1 percent of sales in 2002. Depreciation
and amortization was $244 million in 2003 compared with $220 million for
2002.
- - During 2003, the Company retired approximately $430 million of its
outstanding debt. Debt as a percent of total capitalization was 43 percent
at December 31, 2003 compared with 47 percent at December 31, 2002.
- - The Company repurchased approximately 37 million shares of its Common Stock
during 2003, of which approximately 9 million shares were repurchased in
the fourth quarter. Approximately 2 million of these shares were used for
employee long-term stock incentive plans.
MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
FULL-YEAR 2003 (CONCLUDED)
- - In December 2003, the Company's Board of Directors authorized the purchase
of up to 50 million shares of Common Stock, there are approximately 48
million shares remaining under this authorization.
- - Return on invested capital was 10.6 percent on an as-reported basis for
both 2003 and 2002, and 11.5 percent on an as-reconciled basis for both
2003 and 2002. The Company continues to believe it will achieve its 15
percent return on invested capital target by 2008.
- - The Company's liquidity was very strong at year-end with over $1.3 billion
in cash and marketable securities. In addition, the Company had unused bank
lines of $2 billion.
- - The Company increased its quarterly dividend for the 2003 fourth quarter by
14 percent (a larger percentage increase than in recent years) from $.14 to
$.16 per common share. The new quarterly dividend reflects the Company's
favorable long-term outlook, strong balance sheet and cash flow and recent
tax law changes, and makes this the 45th consecutive year in which
dividends have been increased.
- - The Company's diluted common shares for purposes of calculating earnings
per common share were 491 million for the year ended December 31, 2003.
- - Final court approval was received for the settlement of all class action
lawsuits in the United States involving certain exterior wood coating
products manufactured by the Company's subsidiary, Behr Process
Corporation.
MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
2004 OUTLOOK
- - The Company reviews its business portfolio on an ongoing basis as part of
its corporate strategic planning and has determined that several of its
European businesses are not core to the Company's long-term growth strategy
and, accordingly, has embarked on a plan of disposition. These businesses
had combined 2003 net sales in excess of $350 million and the Company
expects net proceeds from the dispositions to exceed $300 million. The
dispositions are expected to be completed within the next twelve months and
the Company expects to recognize a modest net loss upon the disposition of
all of these businesses. First quarter 2004 results will include a charge
to reflect those businesses that are expected to be divested at a loss. Any
gains resulting from the disposition of individual businesses will be
recognized as such transactions are completed.
- - The Company continues to experience favorable sales performance in early
2004, and, based on current business trends, believes that it will achieve
record sales and earnings for 2004 with full-year earnings from continuing
operations expected to be at an all-time record in a range of $1.80 to
$1.90 per common share. This year's earnings guidance includes a reduction
of approximately $.05 per common share resulting from the absence of
earnings related to the European businesses to be divested.
- - Based on current business trends, the Company anticipates that first
quarter 2004 earnings from continuing operations (seasonally the lowest
quarter of the year) may be in a range of $.36 to $.38 per common share
(excluding any disposition charge), compared with first quarter 2003
reported earnings of $.32 per common share.
- - 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, 2004 are 478 million, this excludes the impact of any 2004 repurchases
of common stock.
MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
Statements contained herein may include certain forward-looking
statements regarding Masco's future sales, earnings growth potential and other
developments. Actual results may vary materially because of external factors
such as interest rate fluctuations, changes in consumer spending and other
factors over which management has no control. The Company believes that certain
non-GAAP performance measures and ratios, used in managing the business, may
provide users of this financial information with additional meaningful
comparisons between current results and results in prior periods. Non-GAAP
financial measures and ratios should be viewed in addition to, and not as an
alternative for, the Company's reported results. Additional information about
our products, markets and conditions, which could affect our future performance,
is contained in the Company's filings with the Securities and Exchange
Commission and is available on Masco's website at www.masco.com. Masco
undertakes no obligation to update any forward-looking statements, whether as a
result of new information, future events or otherwise.
###