EXHIBIT 99
FOR IMMEDIATE RELEASE Contact:
- --------------------- Samuel Cypert
313-792-6646
MASCO CORPORATION REPORTS FIRST QUARTER RESULTS
MASCO CORPORATION HIGHLIGHTS:
FIRST QUARTER 2005
o Net sales from continuing operations increased six percent to
a record $3.0 billion.
o Income from continuing operations was $212 million or $.48
per common share.
o The Company returned $545 million to shareholders through
share repurchases and dividends.
o The quarterly dividend was increased by 11 percent, from $.18
to $.20 per common share, marking the 47th consecutive year
in which dividends have been increased.
o The Board of Directors authorized the repurchase of up to an
additional 50 million shares of common stock.
o The Company had over $1 billion in cash and marketable
securities at March 31, 2005.
Taylor, Michigan (May 3, 2005) -- Masco Corporation (NYSE: MAS) today
reported that net sales from continuing operations for the quarter ended March
31, 2005 increased six percent to a first quarter record of $3.0 billion
compared with $2.8 billion for the first quarter of 2004.
Income from continuing operations for the first quarter of 2005 was
$212 million or $.48 per common share compared with $241 million or $.52 per
common share for the comparable period of 2004. Results for the first quarter of
2005 benefited from other income, principally net gains from the sale of
financial investments, of $.06 per common share. In addition, first quarter 2005
results benefited from a reduction in the Company's tax rate of $.02 per common
share, which offset currency translation losses of $.02 per common share. The
first quarter of 2004 benefited from other income, principally net gains from
the sale of financial investments, of $.07 per common share and income related
to the Behr litigation of $.03 per common share.
The Company previously announced, in the first quarter of 2004, the
planned disposition of several European businesses that were not core to the
Company's long-term growth strategy. First quarter 2004 results included an
after-tax charge of $.16 per common
share to reflect those businesses expected to be divested at a loss. During the
first quarter of 2005, the Company completed the disposition process with the
additional sale of two of these businesses realizing an after-tax net gain of
$.04 per common share. Including the results related to the European businesses
disposed, which have been treated as discontinued operations, net income for the
first quarter of 2005 increased to $231 million compared with $168 million for
the 2004 first quarter; earnings increased to $.52 per common share for the
first quarter of 2005 compared with $.36 per common share for the 2004 first
quarter.
The Company's 2005 first quarter results, seasonally the lowest of the
year, were adversely affected by lower-than-expected consumer spending impacting
certain of its products sold through retail markets, product mix, as well as
recent increases in commodity, energy, and freight costs, much of which have not
yet been recovered due to the lag in implementing selling price increases to
customers. The Company expects these conditions to continue at least through the
second quarter of 2005.
If higher energy costs and recent trends indicating lower consumer
confidence and the related slowing in sales of certain retail products
continue, the Company believes that full-year results may be nearer to the
low end of its previously provided earnings guidance range for continuing
operations of $2.40 to $2.50 per common share.
Based on current business trends, the Company anticipates that second
quarter 2005 earnings from continuing operations will be in a range of $.58 to
$.62 per common share compared with second quarter 2004 earnings of $.65 per
common share (which included $.04 per common share of previously disclosed other
income, principally net gains from the sale of financial investments).
Headquartered in Taylor, Michigan, Masco Corporation is one of the
world's leading manufacturers of home improvement and building products as well
as a leading provider of services that include the installation of insulation
and other building products.
A conference call regarding items contained in this release is
scheduled for Tuesday, May 3, 2005 at 1:00 p.m. ET. Participants in the call are
asked to register five to ten minutes prior to the scheduled start time by
dialing (719) 457-2681 (confirmation #3166416). 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 #3166416)
approximately two hours after the end of the call and will continue through May
10, 2005.
Masco Corporation's press releases and other information are available
through the Company's toll free number, 1-888-MAS-NEWS, or under the Investor
Relations section of Masco's website at www.masco.com.
Statements contained herein 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
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's products, markets and conditions, which could affect the Company's
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 THE THREE MONTHS ENDED
3/31/05 AND 3/31/04
(in millions, except per share data)
Three Months Ended
March 31,
----------------------------------------
2005 2004
--------------- ---------------
Net Sales $ 2,969 $ 2,806
Cost of Sales 2,128 1,955
--------------- ---------------
Gross Profit 841 851
Selling, General and Administrative Expenses 500 485
(Income) Regarding Litigation Settlement (2) (21)
--------------- ---------------
Operating Profit 343 387
Other Income (Expense), Net (22) (1)
--------------- ---------------
Income from Continuing Operations before Income
Taxes and Minority Interest 321 386
Income Taxes 104 140
--------------- ---------------
Income from Continuing Operations before
Minority Interest 217 246
Minority Interest 5 5
--------------- ---------------
Income from Continuing Operations 212 241
Income (Loss) from Discontinued Operations, Net of Income Taxes 19 (73)
--------------- ---------------
Net Income $ 231 $ 168
=============== ===============
Earnings per Common Share (Diluted):
Income from Continuing Operations $ 0.48 $ 0.52
Income (Loss) from Discontinued Operations, Net of Income Taxes 0.04 (0.16)
--------------- ---------------
Net Income $ 0.52 $ 0.36
=============== ===============
Average Diluted Common Shares Outstanding 443 468
=============== ===============
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 2004 dispositions of Jung
Pumpen, The Alvic Group, Alma Kuchen, E. Missel and SKS Group, and the 2005
dispositions of Gebhardt Consolidated and the GMU Group as discontinued
operations.
FIRST QUARTER 2005
o Net sales from continuing operations increased six percent with North
American sales increasing six percent and International sales increasing
five percent. In local currencies, International sales increased one
percent compared with the first quarter of 2004. Quarterly comparisons are
challenging since net sales from continuing operations increased a strong
19 percent in the first quarter of 2004 compared with 2003.
o Sales in the new construction market of installed products, assembled
cabinets, and windows were particularly strong in the quarter.
o Retail sales of paints and stains, faucets and cabinets were
lower-than-expected.
o Key retailer sales from continuing operations decreased two percent in the
2005 first quarter compared with a strong 20 percent increase in the first
quarter of 2004 compared with 2003.
o Sales by segment in the 2005 first quarter versus the 2004 first quarter
were:
o Cabinets and Related Products sales increased eight percent;
o Plumbing Products sales increased three percent;
o Installation and Other Services sales increased ten percent;
o Decorative Architectural Products sales were flat; and
o Other Specialty Products sales increased seven percent.
o Income from continuing operations was $212 million compared with $241
million for the first quarter of 2004.
1
MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
FIRST QUARTER 2005 (CONTINUED)
o Earnings from continuing operations were $.48 per common share compared
with the Company's guidance of $.44 to $.47 per common share and compared
with $.52 per common share for the 2004 first quarter.
o Results for the first quarter of 2005 benefited from other income of $.06
per common share, principally net gains from the sale of financial
investments and tax benefits of $.02 per common share related to the
adjustment of estimated tax accruals, principally for actual tax results of
International operations, which offset realized currency translation losses
of $.02 per common share. The first quarter of 2004 benefited from other
income, principally net gains from the sale of financial investments, of
$.07 per common share and income related to the Behr litigation of $.03 per
common share.
o The Company previously announced, in the first quarter of 2004, the planned
disposition of several European businesses that were not core to the
Company's long-term growth strategy. First quarter 2004 results included an
after-tax charge of $.16 per common share to reflect those businesses
expected to be divested at a loss. During the first quarter of 2005, the
Company completed the disposition process with the additional sale of two
of these businesses, Gebhardt Consolidated and the GMU Group, realizing an
after-tax net gain of $.04 per common share. Including the results of the
European businesses disposed, which have been treated as discontinued
operations, net income for the first quarter of 2005 increased to $231
million compared with $168 million for the 2004 first quarter; earnings for
the first quarter of 2005 increased to $.52 per common share compared with
$.36 per common share for the 2004 first quarter. Total net proceeds for
the dispositions completed in 2004 and 2005 aggregated $282 million.
o First quarter 2005 results were adversely affected by lower-than-expected
consumer spending impacting certain of the Company's products sold through
retail markets, product mix, as well as recent increases in commodity,
energy, and freight costs, much of which have not yet been recovered due to
the lag in implementing selling price increases to customers.
2
MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
FIRST QUARTER 2005 (CONTINUED)
o Gross margins were 28.3 percent in the 2005 first quarter compared with
30.3 percent in the first quarter of 2004. Operating profit margins, as
reported, were 11.6 percent in the first quarter of 2005 compared with 13.8
percent in the first quarter of 2004. Excluding the income regarding the
litigation settlement of $2 million and $21 million in 2005 and 2004,
respectively, operating profit margins were 11.5 percent in the first
quarter of 2005 compared with 13.0 percent in the first quarter of 2004.
Operating profit margins in the first quarter of 2005 were adversely
impacted by increases in certain operating expenses, including increased
commodity, energy, and freight costs, as well as lower-than-expected sales
volume to the retail markets.
o SG&A expenses as a percent of sales, including general corporate expense,
were 16.8 percent in the first quarter 2005 compared with 17.3 percent in
the 2004 first quarter.
o General corporate expense was 1.5 percent of sales in the first quarter of
2005 compared with 1.3 percent in the comparable period of 2004.
o Inventory days were 50 days at March 31, 2005 compared with 49 days at
March 31, 2004.
o Accounts receivable days at the end of the first quarter were 51 days
compared with 53 days a year ago.
o Accounts payable days at the end of the first quarter improved to 37 days
from 36 days a year ago, as the Company continues to negotiate more
favorable supplier terms.
o Working capital at March 31, 2005 (defined as accounts receivable and
inventories less accounts payable) improved to 18.0 percent of the last
twelve months' sales from 18.5 percent a year earlier.
o The Company's tax rate was 32.4 percent for the first quarter of 2005
compared with 36.3 percent for the comparable period of the prior year. The
decrease in the tax rate was due to the adjustment of estimated tax
accruals principally for actual tax results of International operations.
The Company estimates that its effective tax rate for the full-year 2005
should approximate 35 percent.
3
MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
FIRST QUARTER 2005 (CONCLUDED)
o At the end of the quarter, the Company had a strong balance sheet with over
$1 billion in cash and marketable securities and $2 billion in unused bank
lines.
o In the first quarter of 2005, the Company generated approximately $69
million of cash from the net sale of financial investments and $63
million of net cash from the disposition of two European businesses.
o Debt as a percent of total capitalization was 46 percent at March 31, 2005
compared with 47 percent at March 31, 2004.
o For the twelve months ended March 31, 2005 and March 31, 2004, return on
invested capital (as reported) was 11.6 percent and 11.5 percent,
respectively. For the twelve months ended March 31, 2005 and March 31,
2004, return on invested capital (as reconciled) was 12.7 percent and 11.6
percent, respectively. The Company continues to believe that it will
achieve its 15 percent return on invested capital goal by the end of 2006
and 18 percent by 2010.
o During the quarter, the Company repurchased approximately 13 million common
shares. The Board of Directors authorized the repurchase of up to an
additional 50 million shares of common stock, replacing the Company's
previous authorization. The Company had approximately 47 million common
shares remaining under the new repurchase authorization at March 31, 2005.
o The Company's diluted common shares for purposes of calculating earnings
per common share were 443 million for the first quarter of 2005 compared
with 468 million for the first quarter of 2004.
o During the quarter, the Board of Directors increased the quarterly dividend
by 11 percent, from $.18 to $.20 per common share, marking the 47th
consecutive year in which dividends have been increased.
4
MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
FULL-YEAR OUTLOOK
o If higher energy costs and recent trends indicating lower consumer
confidence and the related slowing in sales of certain retail products
continue, the Company believes that full-year results may be nearer to the
low end of its previously provided earnings guidance range for continuing
operations of $2.40 to $2.50 per common share.
o The Company's guidance is based on housing starts approximating 2004
levels, no additional share repurchases beyond the 13 million common shares
repurchased in the first quarter of 2005, modest margin improvement in the
second half of 2005, reflecting selling price increases offsetting rising
commodity costs, and anticipated income from financial investments. The
guidance also assumes no further significant commodity cost increases.
o Based on current business trends, the Company anticipates that second
quarter 2005 earnings from continuing operations will be in a range of $.58
to $.62 per common share compared with second quarter 2004 earnings of $.65
per common share which included $.04 per common share of previously
disclosed other income, principally net gains from the sale of financial
investments.
o The higher commodity costs experienced late in 2004 are continuing in 2005
and are having an adverse impact on first half results. The Company is
continuing to implement additional price increases for a number of its
products and believes that by the second half of 2005 most of these
commodity cost increases should be largely offset.
o The Company expects to return a minimum of $1 billion annually to
shareholders, on average, over the next several years through share
repurchases and dividends as part of its ongoing commitment to value
creation. In 2004 and 2003, the Company returned $2.3 billion, in
aggregate, to shareholders through share repurchases and dividends. In the
first quarter of 2005, the Company returned $545 million to shareholders
through share repurchases and dividends.
5
MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
FULL-YEAR OUTLOOK (CONCLUDED)
o Based on the current market price for the Company's common stock, diluted
common shares for the computation of earnings per common share at April 1,
2005 are 437 million. This excludes the impact of any second quarter
repurchases of common stock.
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
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 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.
###
6
MASCO CORPORATION - 1ST QUARTER 2005
Page
- ----
1 Condensed Statements of Income - 2005 & 2004 Quarters
2 Notes to Condensed Statements of Income - 2005 & 2004 Quarters
3 Sales by Segment and Geographic Area - Three Months Ended March 31, 2005 & 2004
4 2005 Quarterly Segment Data
5 2004 Quarterly Segment Data - Excluding Goodwill Impairment Charge
6 2004 Quarterly Segment Data - Including Goodwill Impairment Charge
7 Other Income (Expense), Net - 2005 & 2004 Quarters
8 Consolidated Statements of Income - Three Months Ended March 31, 2005 & 2004
9 Consolidated Balance Sheets
GAAP Reconciliations:
10 Sales Growth Excluding Effect of Acquisitions & Currency Translation
11 Operating Profit and Margins
12 Operating Profit and Shareholders' Equity
13 Discontinued Operations
MASCO CORPORATION
CONDENSED STATEMENTS OF INCOME
2005 & 2004 - BY QUARTER
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
2005
---------------------------------------------------------
YEAR QTR. 4 QTR. 3 QTR. 2 QTR. 1
---- ------ ------ ------ ------
Net Sales:
- North America $ 2,405
- International 564
-------- -------- -------- -------- --------
- Consolidated 2,969
Cost of Sales 2,128
-------- -------- -------- -------- --------
Gross Profit 841
(Gross Margin) 28.3%
S,G&A Expense (before GCE & (Gain) Loss on Sale of
Corporate Fixed Assets) 454
(S,G&A Expense as a % of Sales) 15.3%
-------- -------- -------- -------- --------
Operating Profit (before GCE, (Gain) Loss on Sale of
Corporate Fixed Assets & Goodwill Impairment Charge) 387
(Operating Margin) 13.0%
- North America 326
(Margin) 13.6%
- International 61
(Margin) 10.8%
General Corporate Expense (GCE) 46
S,G&A Expense as a % of Sales (including GCE & (Gain)
Loss on Sale of Corporate Fixed Assets) 16.8%
(Gain) Loss on Sale of Corporate Fixed Assets, Net -
(Income) Regarding Litigation Settlement (2)
Goodwill Impairment Charge -
-------- -------- -------- -------- --------
Operating Profit per F/S $ 343
======== ======== ======== ======== ========
Earnings per Common Share (Diluted):
Income from Continuing Operations $ 0.48
Income (Loss) from Discontinued Operations 0.04
-------- -------- -------- -------- --------
Net Income $ 0.52
======== ======== ======== ======== ========
2004
---------------------------------------------------------
YEAR QTR. 4 QTR. 3 QTR. 2 QTR. 1
---- ------ ------ ------ ------
Net Sales:
- North America $ 9,879 $ 2,450 $ 2,627 $ 2,531 $ 2,271
- International 2,195 584 546 530 535
-------- -------- -------- -------- --------
- Consolidated 12,074 3,034 3,173 3,061 2,806
Cost of Sales 8,356 2,132 2,182 2,087 1,955
-------- -------- -------- -------- --------
Gross Profit 3,718 902 991 974 851
(Gross Margin) 30.8% 29.7% 31.2% 31.8% 30.3%
S,G&A Expense (before GCE & (Gain) Loss on Sale of
Corporate Fixed Assets) 1,824 459 449 460 456
(S,G&A Expense as a % of Sales) 15.1% 15.1% 14.2% 15.0% 16.3%
-------- -------- -------- -------- --------
Operating Profit (before GCE, (Gain) Loss on Sale of
Corporate Fixed Assets & Goodwill Impairment Charge) 1,894 443 542 514 395
(Operating Margin) 15.7% 14.6% 17.1% 16.8% 14.1%
- North America 1,639 390 478 442 329
(Margin) 16.6% 15.9% 18.2% 17.5% 14.5%
- International 255 53 64 72 66
(Margin) 11.6% 9.1% 11.7% 13.6% 12.3%
General Corporate Expense (GCE) 194 60 53 45 36
S,G&A Expense as a % of Sales (including GCE & (Gain)
Loss on Sale of Corporate Fixed Assets) 16.7% 17.1% 15.8% 16.5% 17.3%
(Gain) Loss on Sale of Corporate Fixed Assets, Net (7) 1 - (1) (7)
(Income) Regarding Litigation Settlement (30) - (2) (7) (21)
Goodwill Impairment Charge 168 168 - - -
-------- -------- -------- -------- --------
Operating Profit per F/S $ 1,569 $ 214 $ 491 $ 477 $ 387
======== ======== ======== ======== ========
Earnings per Common Share (Diluted):
Income from Continuing Operations $ 2.04 $ 0.23 $ 0.64 $ 0.65 $ 0.52
Income (Loss) from Discontinued Operations (0.08) - 0.16 (0.07) (0.16)
-------- -------- -------- -------- --------
Net Income $ 1.96 $ 0.23 $ 0.80 $ 0.58 $ 0.36
======== ======== ======== ======== ========
PLEASE SEE PAGE 2 FOR NOTES.
Page 1
MASCO CORPORATION
NOTES TO CONDENSED STATEMENTS OF INCOME
2005 & 2004 - BY QUARTER
NOTES:
- - Operating results exclude 2004 planned dispositions as well as operations
which were sold in 2005 and 2004, all of which were treated as
discontinued operations in accordance with SFAS No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets."
- - Income from discontinued operations in the first quarter of 2005 includes
an $11 million pre-tax gain, net ($.04 per common share, after tax) from
the sale of two businesses.
- - Operating results for the fourth quarter of 2004 reflect a non-cash,
pre-tax charge for goodwill impairment of $168 million ($141 million or
$.31 per common share, after tax).
- - Income from discontinued operations in the third quarter of 2004 includes
a $108 million pre-tax gain, net ($93 million or $.21 per common share,
after tax) from the sale of two businesses.
- - Income (loss) from discontinued operations in the first, second and third
quarters of 2004 includes pre-tax charges of $64 million ($76 million or
$.16 per common share, after tax), $44 million ($44 million or $.10 per
common share, after tax) and $31 million ($31 million or $.07 per common
share, after tax), respectively.
- - Per common share amounts for the four quarters of 2004 do not total to the
per common share amount for the year due to the timing of capital stock
transactions and the effect of contingently issuable shares.
Page 2
MASCO CORPORATION
SALES BY SEGMENT AND GEOGRAPHIC AREA
THREE MONTHS ENDED MARCH 31, 2005 & 2004
(DOLLARS IN MILLIONS)
Three Months Ended
March 31, 1st Qtr '05
------------------ vs.
2005 2004 1st Qtr '04
------ ------- -----------
Cabinets & Related Products $ 838 $ 779 + 8%
Plumbing Products 760 739 + 3%
Installation & Other Services 693 630 + 10%
Decorative Architectural Products 371 370 + -
Other Specialty Products 307 288 + 7%
------ ------
Total $2,969 $2,806 + 6%
====== ======
North America $2,405 $2,271 + 6%
International, principally Europe 564 535 + 5%
------ ------
Total, as above $2,969 $2,806 + 6%
====== ======
NOTES:
- - Data excludes discontinued operations.
- - Excluding acquisitions, consolidated net sales increased six percent,
North American net sales increased six percent and International net sales
increased five percent (please see page 10 for the GAAP reconciliation).
- - International sales in local currencies increased one percent compared
with the first quarter of 2004 (please see page 10 for the GAAP
reconciliation).
Page 3
MASCO CORPORATION
QUARTERLY SEGMENT DATA - 2005
(DOLLARS IN MILLIONS)
Year Qtr. 4 Qtr. 3 Qtr. 2 Qtr. 1
---- ------ ------ ------ ------
Net Sales:
- Cabinets and Related Products $ 838
- Plumbing Products 760
- Installation and Other Services 693
- Decorative Architectural Products 371
- Other Specialty Products 307
------- ------- ------- ------- -------
- TOTAL 2,969
======= ======= ======= ======= =======
- North America 2,405
- International, principally Europe 564
------- ------- ------- ------- -------
- TOTAL, AS ABOVE 2,969
======= ======= ======= ======= =======
Operating Profit:
- Cabinets and Related Products 124
- Plumbing Products 79
- Installation and Other Services 80
- Decorative Architectural Products 59
- Other Specialty Products 45
------- ------- ------- ------- -------
- TOTAL 387
======= ======= ======= ======= =======
- North America 326
- International, principally Europe 61
------- ------- ------- ------- -------
- TOTAL, AS ABOVE 387
======= ======= ======= ======= =======
General Corporate Expense (GCE) 46
(Gain) Loss on Sale of Corporate Fixed Assets, Net -
(Income) Regarding Litigation Settlement (2)
------- ------- ------- ------- -------
Operating Profit (after GCE and Adjustments) 343
Other Income (Expense), Net (22)
------- ------- ------- ------- -------
Income from Continuing Operations Before
Income Taxes and Minority Interest $ 321
======= ======= ======= ======= =======
Margins:
- Cabinets and Related Products 14.8%
- Plumbing Products 10.4%
- Installation and Other Services 11.5%
- Decorative Architectural Products 15.9%
- Other Specialty Products 14.7%
- TOTAL 13.0%
- North America 13.6%
- International, principally Europe 10.8%
- TOTAL, AS ABOVE 13.0%
NOTES:
- - Data excludes discontinued operations.
- - Operating profit and margins by segment and geographic area are before
general corporate expense and exclude (income) regarding the litigation
settlement.
Page 4
MASCO CORPORATION
QUARTERLY SEGMENT DATA - 2004
EXCLUDING GOODWILL IMPAIRMENT CHARGE
(DOLLARS IN MILLIONS)
Year Qtr. 4 Qtr. 3 Qtr. 2 Qtr. 1
---- ------ ------ ------ ------
Net Sales:
- Cabinets and Related Products $ 3,289 $ 857 $ 856 $ 797 $ 779
- Plumbing Products 3,057 758 775 785 739
- Installation and Other Services 2,771 718 737 686 630
- Decorative Architectural Products 1,610 356 433 451 370
- Other Specialty Products 1,347 345 372 342 288
-------- -------- -------- -------- --------
- TOTAL 12,074 3,034 3,173 3,061 2,806
======== ======== ======== ======== ========
- North America 9,879 2,450 2,627 2,531 2,271
- International, principally Europe 2,195 584 546 530 535
-------- -------- -------- -------- --------
- TOTAL, AS ABOVE 12,074 3,034 3,173 3,061 2,806
======== ======== ======== ======== ========
Operating Profit:
- Cabinets and Related Products 552 156 150 137 109
- Plumbing Products 395 81 101 117 96
- Installation and Other Services 358 86 103 88 81
- Decorative Architectural Products 331 64 102 101 64
- Other Specialty Products 258 56 86 71 45
-------- -------- -------- -------- --------
- TOTAL 1,894 443 542 514 395
======== ======== ======== ======== ========
- North America 1,639 390 478 442 329
- International, principally Europe 255 53 64 72 66
-------- -------- -------- -------- --------
- TOTAL, AS ABOVE 1,894 443 542 514 395
======== ======== ======== ======== ========
General Corporate Expense (GCE) 194 60 53 45 36
(Gain) Loss on Sale of Corporate Fixed Assets, Net (7) 1 - (1) (7)
(Income) Regarding Litigation Settlement (30) - (2) (7) (21)
-------- -------- -------- -------- --------
Operating Profit (after GCE and Adjustments) 1,737 382 491 477 387
Other Income (Expense), Net (51) (8) (31) (11) (1)
-------- -------- -------- -------- --------
Income from Continuing Operations Before
Income Taxes and Minority Interest $ 1,686 $ 374 $ 460 $ 466 $ 386
======== ======== ======== ======== ========
Margins:
- Cabinets and Related Products 16.8% 18.2% 17.5% 17.2% 14.0%
- Plumbing Products 12.9% 10.7% 13.0% 14.9% 13.0%
- Installation and Other Services 12.9% 12.0% 14.0% 12.8% 12.9%
- Decorative Architectural Products 20.6% 18.0% 23.6% 22.4% 17.3%
- Other Specialty Products 19.2% 16.2% 23.1% 20.8% 15.6%
- TOTAL 15.7% 14.6% 17.1% 16.8% 14.1%
- North America 16.6% 15.9% 18.2% 17.5% 14.5%
- International, principally Europe 11.6% 9.1% 11.7% 13.6% 12.3%
- TOTAL, AS ABOVE 15.7% 14.6% 17.1% 16.8% 14.1%
NOTES:
- - Data excludes discontinued operations.
- - Operating results for the fourth quarter of 2004 exclude a non-cash,
pre-tax charge for goodwill impairment of $168 million. The charge related
to certain of the Company's European business units and was allocated
among the Cabinets and Related Products segment ($56 million); Plumbing
Products segment ($25 million); Decorative Architectural Products segment
($62 million); and Other Specialty Products segment ($25 million).
- - Operating profit and margins by segment and geographic area are before
general corporate expense and exclude (income) regarding the litigation
settlement and (gain) loss on sale of Corporate fixed assets, net.
Page 5
MASCO CORPORATION
QUARTERLY SEGMENT DATA - 2004
INCLUDING GOODWILL IMPAIRMENT CHARGE
(DOLLARS IN MILLIONS)
Year Qtr. 4 Qtr. 3 Qtr. 2 Qtr. 1
--------- -------- -------- -------- --------
Net Sales:
- Cabinets and Related Products $ 3,289 $ 857 $ 856 $ 797 $ 779
- Plumbing Products 3,057 758 775 785 739
- Installation and Other Services 2,771 718 737 686 630
- Decorative Architectural Products 1,610 356 433 451 370
- Other Specialty Products 1,347 345 372 342 288
--------- -------- -------- -------- --------
- TOTAL 12,074 3,034 3,173 3,061 2,806
========= ======== ======== ======== ========
- North America 9,879 2,450 2,627 2,531 2,271
- International, principally Europe 2,195 584 546 530 535
--------- -------- -------- -------- --------
- TOTAL, AS ABOVE 12,074 3,034 3,173 3,061 2,806
========= ======== ======== ======== ========
Operating Profit:
- Cabinets and Related Products 496 100 150 137 109
- Plumbing Products 370 56 101 117 96
- Installation and Other Services 358 86 103 88 81
- Decorative Architectural Products 269 2 102 101 64
- Other Specialty Products 233 31 86 71 45
--------- -------- -------- -------- --------
- TOTAL 1,726 275 542 514 395
========= ======== ======== ======== ========
- North America 1,639 390 478 442 329
- International, principally Europe 87 (115) 64 72 66
--------- -------- -------- -------- --------
- TOTAL, AS ABOVE 1,726 275 542 514 395
========= ======== ======== ======== ========
General Corporate Expense (GCE) 194 60 53 45 36
(Gain) Loss on Sale of Corporate Fixed Assets, Net (7) 1 - (1) (7)
(Income) Regarding Litigation Settlement (30) - (2) (7) (21)
--------- -------- -------- -------- --------
Operating Profit (after GCE and Adjustments) 1,569 214 491 477 387
Other Income (Expense), Net (51) (8) (31) (11) (1)
--------- -------- -------- -------- --------
Income from Continuing Operations Before
Income Taxes and Minority Interest $ 1,518 $ 206 $ 460 $ 466 $ 386
========= ======== ======== ======== ========
Margins:
- Cabinets and Related Products 15.1% 11.7% 17.5% 17.2% 14.0%
- Plumbing Products 12.1% 7.4% 13.0% 14.9% 13.0%
- Installation and Other Services 12.9% 12.0% 14.0% 12.8% 12.9%
- Decorative Architectural Products 16.7% 0.6% 23.6% 22.4% 17.3%
- Other Specialty Products 17.3% 9.0% 23.1% 20.8% 15.6%
- TOTAL 14.3% 9.1% 17.1% 16.8% 14.1%
- North America 16.6% 15.9% 18.2% 17.5% 14.5%
- International, principally Europe 4.0% -19.7% 11.7% 13.6% 12.3%
- TOTAL, AS ABOVE 14.3% 9.1% 17.1% 16.8% 14.1%
NOTES:
- - Data excludes discontinued operations.
- - Operating results for the fourth quarter of 2004 include a non-cash, pre-tax
charge for goodwill impairment of $168 million. The charge related to certain
of the Company's European business units and was allocated among the Cabinets
and Related Products segment ($56 million); Plumbing Products segment ($25
million); Decorative Architectural Products segment ($62 million); and Other
Specialty Products segment ($25 million).
- - Operating profit and margins by segment and geographic area are before general
corporate expense and exclude (income) regarding the litigation settlement and
(gain) loss on sale of Corporate fixed assets, net.
Page 6
MASCO CORPORATION
OTHER INCOME (EXPENSE), NET
2005 & 2004 - BY QUARTER
(IN MILLIONS)
2005 2004
--------------------------------- ----------------------------------
Year Qtr. 4 Qtr. 3 Qtr. 2 Qtr. 1 Year Qtr. 4 Qtr. 3 Qtr. 2 Qtr. 1
---- ------ ------- ------ ------ ------ ------ ------ ------ ------
Interest Expense $ (59) $ (217)$ (57)$ (55)$ (52)$ (53)
Income from Cash and Cash Investments 6 11 5 3 1 2
Other Interest Income 1 6 1 2 1 2
Realized Gains from the Sale of
Financial Investments, Net 41 92 40 9 14 29
Dividend Income 4 27 5 8 7 7
Impairment Charge for Investments - (21) (21) - - -
Other, Net (15) 51 19 2 18 12
---- ------ ------- ------ ------ ------ ------ ------ ------ ------
Total Other Income (Expense), Net $ (22) $ (51)$ (8)$ (31)$ (11)$ (1)
==== ====== ======= ====== ====== ====== ====== ====== ====== ======
NOTES:
- - Data excludes discontinued operations.
- - Other, net for the first quarter of 2005 principally includes $13 million of
currency translation losses; the first quarter of 2004 includes $6 million of
realized currency translation gains.
- - The impairment charge recognized in the fourth quarter of 2004 relates to the
Company's investment in Furniture Brands International common stock.
Page 7
MASCO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2005 & 2004
(DOLLARS AND SHARES IN MILLIONS, EXCEPT PER SHARE DATA)
Three
Months Ended As a Percent of Sales
March 31, 3 Months Ended March 31,
% ----------------- ------------------------
Line Change 2005 2004 2005 2004
- --------------------------------------------------------------------- ------ ------- -------- ----------- -----------
1 Net Sales 6% $ 2,969 $ 2,806 100.0% 100.0%
2 Cost of Sales 9% 2,128 1,955 71.7% 69.7%
------- -------- ---- ----
3 Gross Profit -1% 841 851 28.3% 30.3%
------- -------- ---- ----
Operating Profit:
4 - Before GCE, Litigation (Income), (Gain) on Sale of
Corporate Fixed Assets (3-8) -2% 387 395 13.0% 14.1%
5 - After GCE, Litigation (Income), (Gain) on Sale of
Corporate Fixed Assets (3-9-10) -11% 343 387 11.6% 13.8%
------- -------- ---- ----
S,G&A Expense:
6 - General Corporate Expense (GCE) 28% 46 36 1.5% 1.3%
7 - (Gain) on Sale of Corporate Fixed Assets, Net - (7) 0.0% -0.2%
8 - All Other 0% 454 456 15.3% 16.3%
------- -------- ---- ----
9 - Total S,G&A Expense 3% 500 485 16.8% 17.3%
------- -------- ---- ----
10 (Income) Regarding Litigation Settlement (2) (21) -0.1% -0.7%
11 Other Income (Expense), Net (22) (1) -0.7% 0.0%
------- -------- ---- ----
12 Income from Continuing Operations Before Income Taxes and
Minority Interest (5+11) -17% 321 386 10.8% 13.8%
13 Income Taxes -26% 104 140 3.5% 5.0%
(Tax Rate) 32.4% 36.3%
------- -------- ---- ----
14 Income from Continuing Operations Before Minority Interest -12% 217 246 7.3% 8.8%
15 Minority Interest (5) (5) -0.2% -0.2%
------- -------- --- ---
16 Income from Continuing Operations -12% 212 241 7.1% 8.6%
17 Income (Loss) from Discontinued Operations, Net of Income Taxes 19 (73) 0.6% -2.6%
------- -------- --- ---
18 Net Income 38% $ 231 $ 168 7.8% 6.0%
======= ======== === ===
Earnings Per Common Share (Diluted):
Income from Continuing Operations -8% $ 0.48 $ 0.52
Income (Loss) from Discontinued Operations, Net of Income Taxes 0.04 (0.16)
------- --------
Net Income 45% $ 0.52 $ 0.36
======= ========
Average (Diluted) Common Shares -5% 443 468
Page 8
MASCO CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
March 31, December 31,
2005 2004
----------- ------------
ASSETS
Current Assets:
Cash and Cash Investments $ 940 $ 1,256
Accounts and Notes Receivable, Net 1,902 1,732
Inventories 1,191 1,132
Prepaid Expenses and Other 269 282
----------- ------------
Total Current Assets 4,302 4,402
Property and Equipment, Net 2,243 2,272
Goodwill 4,364 4,408
Other Intangible Assets, Net 321 326
Assets Held for Sale - 163
Other Assets 905 970
----------- ------------
Total Assets $ 12,135 $ 12,541
=========== ============
LIABILITIES
Current Liabilities:
Notes Payable $ 882 $ 80
Accounts Payable 892 837
Accrued Liabilities 1,202 1,230
----------- ------------
Total Current Liabilities 2,976 2,147
Long-Term Debt 3,407 4,187
Liabilities Held for Sale - 44
Deferred Income Taxes and Other 744 740
----------- ------------
Total Liabilities 7,127 7,118
SHAREHOLDERS' EQUITY 5,008 5,423
----------- ------------
Total Liabilities and Shareholders' Equity $ 12,135 $ 12,541
=========== ============
Page 9
MASCO CORPORATION
GAAP RECONCILIATION OF SALES GROWTH
EXCLUDING EFFECT OF ACQUISITIONS & CURRENCY TRANSLATION
(IN MILLIONS)
Three Months Ended March 31,
----------------------------
2005 2004
------------ ------------
Consolidated Net Sales, as reported $ 2,969 $ 2,806
- Acquisitions (5) -
------------ ------------
Consolidated Net Sales (excl. acquisitions) $ 2,964 $ 2,806
============ ============
North American Net Sales, as reported $ 2,405 $ 2,271
- Acquisitions (5) -
------------ ------------
North American Net Sales (excl. acquisitions) $ 2,400 $ 2,271
============ ============
International Net Sales, as reported $ 564 $ 535
- Acquisitions - -
------------ ------------
International Net Sales (excl. acquisitions) 564 535
- Currency Translation (23) -
------------ ------------
International Net Sales (excl. acquisitions & currency) $ 541 $ 535
============ ============
NOTES:
The Company presents information comparing results from one period to another
excluding the results of businesses acquired in order to assess the performance
of the underlying businesses and to assess to what extent acquisitions are
driving growth.
The Company also presents information comparing results of International
operations from one period to another using constant exchange rates. To present
this information, current period results for foreign entities are converted into
U.S. dollars using the prior period's exchange rates, rather than exchange rates
for the current period. The Company presents this information in order to assess
how the underlying businesses performed in local currencies before taking into
account currency fluctuations.
Page 10
MASCO CORPORATION
GAAP RECONCILIATION OF OPERATING PROFIT AND MARGINS
(DOLLARS IN MILLIONS)
THREE MONTHS ENDED MARCH 31,
-------------------------------------
2005 2004
----------------- ----------------
$ Margin $ Margin
-------- ------ ------- ------
Operating Profit, As Reported $ 343 11.6% $ 387 13.8%
(Income) Regarding Litigation Settlement (2) (21)
-------- -------
Operating Profit, As Reconciled $ 341 11.5% $ 366 13.0%
======== =======
NOTE:
The Company believes that certain non-GAAP performance measures and ratios, used
in managing the business, may provide users of this financial information with
additional meaningful comparisons between current results and results in prior
periods. Non-GAAP performance measures and ratios should be viewed in addition
to, and not as an alternative for, the Company's reported results under
accounting principles generally accepted in the United States.
Page 11
MASCO CORPORATION
GAAP RECONCILIATION OF OPERATING PROFIT AND SHAREHOLDERS' EQUITY
(IN MILLIONS)
TWELVE MONTHS ENDED
MARCH 31,
-------------------
2005 2004
------- ---------
Operating Profit from Continuing Operations $ 1,525 $ 1,570
Goodwill Impairment Charge 168 53
European Charges - 54
Accelerated Benefit (Income) - (5)
(Income) Regarding Litigation Settlement (11) (80)
------- ---------
Operating Profit, As Reconciled $ 1,682 $ 1,592
======= =========
TWELVE MONTHS ENDED
MARCH 31,
---------------------
2005 2004
--------- ---------
Shareholders' Equity, As Reported $ 5,008 $ 5,127
Goodwill Impairment Charge (after tax) 141 47
European Charges (after tax) - 38
Accelerated Benefit (Income) (after tax) - (3)
(Income) Regarding Litigation Settlement (after tax) (7) (50)
--------- ---------
Shareholders' Equity, As Reconciled $ 5,142 $ 5,159
==-====== =========
NOTES:
Data excludes 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 to explain the calculation of return on invested
capital ("ROIC") which is calculated as after-tax operating profit (last twelve
months) divided by the total of average debt (net of average cash) and average
shareholders' equity.
Page 12
MASCO CORPORATION
DISCONTINUED OPERATIONS
(IN MILLIONS)
Three Months Ended
March 31,
--------------------
2005 2004
--------- ---------
Net Sales $ 17 $ 95
========= =========
Income from Discontinued Operations $ 3 $ 6
Gain on Disposal of Discontinued Operations, Net 11 -
Impairment of Assets Held for Sale - (64)
--------- ---------
Income (Loss) Before Income Taxes 14 (58)
Income Tax Benefit (Expense) 5 (15)
--------- ---------
Income (Loss) from Discontinued Operations, Net of Income Taxes $ 19 $ (73)
========= =========
NOTES:
The unusual relationship between income tax benefit and income before income
taxes (including the gain on the disposition of businesses) in 2005 results,
from the gain requiring no current tax expense and the reversal of deferred tax
liabilities of the discontinued operations which are no longer expected to be
incurred. The after-tax charge for the impairment of assets held for sale in
the first quarter of 2004 was $76 million and includes $12 million for the
expensing of deferred tax assets of the discontinued operations.
The information for discontinued operations is for the period prior to the
respective dates of disposition.
Page 13