EXHIBIT 99
FOR IMMEDIATE RELEASE Contact:
Maria Duey
313-792-5500
MASCO CORPORATION REPORTS THIRD QUARTER RESULTS
MASCO CORPORATION HIGHLIGHTS:
THIRD QUARTER 2005
- Net sales from continuing operations increased six percent to
a record $3.4 billion.
- Income from continuing operations was $262 million or $.61 per
common share.
- The Company returned $250 million to shareholders through
share repurchases and dividends.
- The Company had over $1.5 billion in cash at
September 30, 2005.
Taylor, Michigan (November 1, 2005) - Masco Corporation (NYSE: MAS) today
reported that net sales from continuing operations for the quarter ended
September 30, 2005 increased six percent to a record $3.4 billion compared with
$3.2 billion for the third quarter of 2004.
Income from continuing operations for the third quarter of 2005 was $262
million or $.61 per common share compared with $289 million or $.64 per common
share for the comparable period of 2004. Results for the third quarter of 2005
were reduced by $.08 per common share, net, reflecting: impairment charges for
certain financial investments, charges for a discontinued product line and
headcount reductions related to the Company's Plumbing Products segment, and
currency transaction gains. Results for the third quarters of 2005 and 2004
benefited from other income of $.04 and $.01 per common share, respectively,
principally net gains from financial investments.
While third quarter 2005 sales and earnings benefited from the strong new
construction market and certain selling price increases, the Company's third
quarter results were adversely affected by recent additional increases in
commodity, energy and freight costs, as well as product mix.
The third quarter of 2004 results include income from discontinued
operations of $.02 per common share, a net gain of $.21 per common share for
those businesses sold in the third quarter of 2004 and an impairment charge of
$.07 per common share for those businesses that were expected to be divested at
a loss, all of which were included in discontinued operations.
Including the operating results of these discontinued operations and the
charge for certain of these businesses, net income for the 2004 third quarter
was $359 million or $.80 per common share. The third quarter of 2005 did not
include any net income (loss) related to discontinued operations, since the
Company completed the disposition process in the first quarter of 2005.
The Company is committed to its strategy of value creation and continues
to be focused on the simplification of its business model, cash flow generation,
improvement in return on invested capital and the return of cash to shareholders
through share repurchases and dividends.
Consistent with this strategy, the Company is pursuing a variety of
initiatives to offset cost increases and increase operating profit, including
sourcing programs, the restructuring of certain of its businesses (including
consolidations), manufacturing rationalization, headcount reductions and other
profit improvement programs. As previously disclosed, the Company believes these
initiatives, which began in early 2005, will reduce annual costs by $200 million
by the end of 2007. While the Company may incur expenses and charges related to
these programs, implementing these initiatives should improve the Company's
earnings outlook for 2006 and beyond.
The Company believes that higher energy costs and recent trends indicating
lower consumer confidence and the related slowing in sales of certain retail
products will continue. Given these factors, together with recent additional
commodity cost increases, most of which are not expected to be offset by selling
price increases until the first half of 2006, the Company believes, based on
current business trends, that fourth quarter 2005 earnings from continuing
operations will be in the range of $.48 to $.52 per common share and that
full-year 2005 earnings from continuing operations are expected to be in a range
of $2.20 to $2.24 per common share compared with the Company's previous guidance
of approximately $2.30 per common share. The Company's guidance excludes any
additional costs associated with its profit improvement programs and any other
items.
Fourth quarter 2004 earnings from continuing operations were $.55 per
common share excluding the impact of the non-cash goodwill impairment charge of
$.31 per common share. Including the charge, reported earnings were $.23 per
common share. Results for the fourth quarter of 2004 benefited from gains from
the sale of financial investments of $.06 per common share, partially offset by
an impairment charge of $.03 per common share, related to certain financial
investments. Results also benefited by $.02 per common share from a reduction in
the Company's tax rate related to the utilization of foreign tax credits
generated in the fourth quarter on distributions of foreign earnings.
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, November 1, 2005 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) 981-4912 (confirmation #4842826). 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 #4842826)
approximately two hours after the end of the call and will continue through
November 8, 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 AND NINE MONTHS ENDED
SEPTEMBER 30, 2005 AND SEPTEMBER 30, 2004
(in millions except per common share data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2005 2004 2005 2004
------- ------- ------- -------
Net Sales $ 3,360 $ 3,173 $ 9,677 $ 9,040
Cost of Sales 2,396 2,182 6,887 6,224
------- ------- ------- -------
Gross Profit 964 991 2,790 2,816
Selling, General and Administrative Expenses 496 502 1,511 1,491
(Income) Regarding Litigation Settlement (1) (2) (6) (30)
------- ------- ------- -------
Operating Profit 469 491 1,285 1,355
Other Income (Expense), Net (60) (31) (123) (43)
------- ------- ------- -------
Income from Continuing Operations before
Income Taxes and Minority Interest 409 460 1,162 1,312
Income Taxes 141 167 398 474
------- ------- ------- -------
Income from Continuing Operations before
Minority Interest 268 293 764 838
Minority Interest 6 4 16 14
------- ------- ------- -------
Income from Continuing Operations 262 289 748 824
Income (Loss) from Discontinued Operations, Net of Income Taxes - 70 19 (36)
------- ------- ------- -------
Net Income $ 262 $ 359 $ 767 $ 788
======= ======= ======= =======
Earnings per Common Share (Diluted):
Income from Continuing Operations $ 0.61 $ 0.64 $ 1.72 $ 1.81
Income (Loss) from Discontinued Operations, Net of Income Taxes - 0.16 0.04 (0.08)
------- ------- ------- -------
Net Income $ 0.61 $ 0.80 $ 1.77 $ 1.73
======= ======= ======= =======
Average Diluted Common Shares Outstanding 427 449 434 455
======= ======= ======= =======
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.
THIRD QUARTER 2005
- - Net sales from continuing operations increased six percent, with North
American sales increasing seven percent and International sales increasing
one percent. Net sales in North America benefited from strong housing
starts and certain selling price increases. In local currencies,
International sales increased one percent compared with the third quarter
of 2004.
- - Sales of assembled cabinets, installation services and windows in North
America were particularly strong in the quarter.
- - Key retailer sales from continuing operations increased two percent in the
2005 third quarter compared with a 10 percent increase in the second
quarter of 2005, a decrease of two percent in the first quarter of 2005
and a six percent increase in the third quarter of 2004.
- - Sales by segment in the 2005 third quarter versus the 2004 third quarter
were:
- Cabinets and Related Products sales increased eight percent;
- Plumbing Products sales increased four percent;
- Installation and Other Services sales increased nine percent;
- Decorative Architectural Products sales increased five percent; and
- Other Specialty Products sales decreased one percent.
- - Income from continuing operations was $262 million compared with $289
million for the third quarter of 2004.
1
MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
THIRD QUARTER 2005 (CONTINUED)
- - Earnings from continuing operations were $.61 per common share compared
with the Company's guidance of $.60 to $.64 per common share and compared
with $.64 per common share for the 2004 third quarter.
- - Results for the third quarter of 2005 were reduced by $43 million pre-tax
($.07 per common share) reflecting impairment
charges for financial investments, Furniture Brands International common
stock of $28 million and certain private equity funds of $15 million.
- - Results for the third quarter of 2005 were also negatively impacted by
charges aggregating $12 million pre-tax ($.02 per common share)
related to a discontinued product line and headcount
reductions in the Plumbing Products segment.
- - Results for the third quarter of 2005 also include realized currency
transaction gains of $4 million pre-tax ($.01 per common share).
- - Results for the third quarters of 2005 and 2004 benefited from other
income aggregating $23 million pre-tax ($.04 per common share) and $9
million pre-tax ($.01 per common share), respectively, principally net
gains from financial investments.
- - The third quarter of 2004 results include income from discontinued
operations of $.02 per common share, a net gain of $.21 per common share
for those businesses sold in the third quarter of 2004 and an impairment
charge of $.07 per common share for those businesses that were expected to
be divested at a loss, all of which were included in discontinued
operations. Including the operating results of these discontinued
operations and the charge for certain of these businesses, net income for
the 2004 third quarter was $359 million or $.80 per common share. Total
net proceeds from the dispositions completed in 2005 and 2004 aggregated
$281 million. The third quarter of 2005 did not include any net income
(loss) related to discontinued operations, since the Company completed the
disposition process in the first quarter of 2005.
2
MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
THIRD QUARTER 2005 (CONTINUED)
- - The Company's 2005 third quarter results benefited from the strong new
construction market and certain selling price increases, partially offset
by continued increases in commodity, energy and freight costs, as well as
product mix.
- - Gross margins were 28.7 percent in the 2005 third quarter compared with
29.4 percent in the second quarter of 2005 and 31.2 percent in the third
quarter of 2004. Operating profit margins, as reported, were 14.0 percent
in the third quarter of 2005 compared with 14.1 percent in the second
quarter of 2005 and 15.5 percent in the third quarter of 2004. Excluding
the pre-tax income regarding the litigation settlement of $1 million and
$2 million in 2005 and 2004, respectively, operating profit margins were
13.9 percent in the third quarter of 2005 compared with 15.4 percent in
the third quarter of 2004. Margins in the third quarter of 2005 were
adversely impacted by increases in certain operating expenses, including
increased commodity, energy and freight costs and product mix.
- - SG&A expenses as a percent of sales, including general corporate expense,
were 14.8 percent in the third quarter of 2005 compared with 15.8 percent
in the 2004 third quarter.
- - General corporate expense was 1.5 percent of sales in the third quarter of
2005 compared with 1.7 percent in the comparable period of 2004.
- - Inventory days were 47 days at September 30, 2005 compared with 49 days at
September 30, 2004.
- - Accounts receivable days at the end of September 30, 2005 were 49 days
compared with 51 days at September 30, 2004.
- - Accounts payable days were 36 days at September 30, 2005 compared with 38
days at September 30, 2004.
- - Working capital at September 30, 2005 (defined as accounts receivable and
inventories less accounts payable) improved to 17.7 percent of the last
twelve months' sales from 18.5 percent a year earlier.
3
MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
THIRD QUARTER 2005 (CONCLUDED)
- - The Company's tax rate was 34.5 percent for the third quarter of 2005
compared with 36.3 percent for the comparable period of the prior year.
The Company's tax rate for the second quarter of 2005 was 35.4 percent.
The Company estimates that its effective tax rate for the full-year 2005
should approximate 35 percent.
- - On June 10, 2005, the Company issued $500 million of fixed-rate 4.80%
notes due 2015, resulting in net proceeds of $494 million. The Company
issued this debt to take advantage of favorable interest rates and in
anticipation of debt maturing in early 2006.
- - At the end of the quarter, the Company had a strong balance sheet with
over $1.5 billion in cash and $2 billion in unused bank lines.
The Company intends to use a portion of its cash to retire $800 million of
6.75% notes due in March 2006.
- - In the third quarter of 2005, the Company generated approximately $56
million of cash from the net sale of financial investments.
- - Debt as a percent of total capitalization was 49 percent at September 30,
2005 compared with 45 percent at September 30, 2004.
- - For the twelve months ended September 30, 2005 and September 30, 2004,
return on invested capital (as reported) was 11.9 percent and 12.9
percent, respectively. For the twelve months ended September 30, 2005 and
September 30, 2004, return on invested capital (as reconciled) was 13.0
percent for both periods. 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.
- - During the quarter, the Company repurchased approximately five million
common shares. The Company had approximately 37 million common shares
remaining under its repurchase authorization at September 30, 2005.
- - The Company's diluted common shares for purposes of calculating earnings
per common share were 427 million for the third quarter of 2005 compared
with 449 million for the third quarter of 2004.
4
MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
FULL-YEAR OUTLOOK
- - The Company remains committed to its strategy of value creation and is
focused on the simplification of its business model, cash flow generation,
improvement in return on invested capital and the return of cash to
shareholders through share repurchases and dividends.
- - Consistent with this strategy, the Company is pursuing a variety of
initiatives to offset cost increases and increase operating profit,
including sourcing programs, the restructuring of certain of its
businesses (including consolidations), manufacturing rationalization,
headcount reductions and other profit improvement programs. As previously
disclosed, the Company believes these initiatives, which began in early
2005, will reduce annual costs by $200 million by the end of 2007. While
the Company may incur expenses and charges related to the these programs,
implementing these initiatives should improve the Company's earnings
outlook for 2006 and beyond.
- - The Company believes that higher energy costs and recent trends indicating
lower consumer confidence and the related slowing in sales of certain
retail products will continue. Given these factors, together with recent
additional commodity cost increases, most of which are not expected to be
offset by selling price increases until the first half of 2006, the
Company believes, based on current business trends, that fourth quarter
2005 earnings from continuing operations will be in the range of $.48 to
$.52 per common share and that full-year 2005 earnings from continuing
operations are expected to be in a range of $2.20 to $2.24 per common
share compared with the Company's previous guidance of approximately $2.30
per common share. The Company's guidance reflects anticipated income from
financial investments and excludes any additional costs associated with
its profit improvement programs and any other items.
5
MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
FULL-YEAR OUTLOOK (CONCLUDED)
- - Fourth quarter 2004 earnings from continuing operations were $.55 per
common share excluding the impact of the non-cash goodwill impairment
charge of $.31 per common share. Including the charge, reported earnings
were $.23 per common share. Results for the fourth quarter of 2004
benefited from gains from the sale of financial investments of $.06 per
common share, partially offset by an impairment charge of $.03 per common
share, related to the Company's investment in Furniture Brands
International common stock. Results also benefited by $.02 per common
share from a reduction in the Company's tax rate related to the
utilization of foreign tax credits generated in the fourth quarter on
distributions of foreign earnings.
- - The Company's guidance is based on no additional share repurchases beyond
the 23 million common shares repurchased in the first nine months of
2005.
- - 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 the first nine months of 2005, the Company has already
returned over $1 billion to shareholders through share repurchases and
dividends. In 2004 and 2003, the Company returned $2.3 billion, in
aggregate, to shareholders through share repurchases and dividends.
- - Based on the current market price for the Company's common stock, diluted
common shares for the computation of earnings per common share at October
1, 2005 are 424 million. This excludes the impact of any fourth quarter
repurchases of common stock.
6
MASCO CORPORATION
BUSINESS AND FINANCIAL HIGHLIGHTS
SALES GROWTH AND MARGINS BY SEGMENT
AND GEOGRAPHIC AREA
QUARTERLY DATA
Sales Growth
3rd Qtr '05
vs. Margins Margins
3rd Qtr '04 3rd Qtr '05 2nd Qtr '05 3rd Qtr '04
------------ ----------- ----------- -----------
Cabinets & Related Products + 8% 16.0% 16.0% 17.5%
Plumbing Products + 4% 12.8% 13.1% 13.0%
Installation & Other Services + 9% 13.6% 13.4% 14.0%
Decorative Architectural Products + 5% 17.2% 19.0% 23.6%
Other Specialty Products - 1% 21.7% 19.2% 23.1%
TOTAL + 6% 15.4% 15.5% 17.1%
North America + 7% 16.0% 16.1% 18.2%
International, principally Europe + 1% 12.8% 12.6% 11.7%
TOTAL, AS ABOVE + 6% 15.4% 15.5% 17.1%
NOTES:
- - Data exclude discontinued operations.
- - Operating profit margins by segment and geographic area are before general
corporate expense and exclude (income) regarding the litigation
settlement.
7
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
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 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.
###
8
MASCO CORPORATION - 3RD 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 September 30,
2005 & 2004
4 Sales by Segment and Geographic Area - Nine Months Ended September 30,
2005 & 2004
5 2005 Quarterly Segment Data
6 2004 Quarterly Segment Data - Excluding Goodwill Impairment Charge
7 2004 Quarterly Segment Data - Including Goodwill Impairment Charge
8 Other Income (Expense), Net - 2005 & 2004 Quarters
9 Consolidated Statements of Income - Three Months Ended September 30, 2005
& 2004
10 Consolidated Statements of Income - Nine Months Ended September 30, 2005
& 2004
11 Consolidated Balance Sheets
GAAP Reconciliations:
12 Sales Growth Excluding Effect of Acquisitions & Currency Translation
13 Operating Profit and Margins
14 Operating Profit and Shareholders' Equity
15 Discontinued Operations
MASCO CORPORATION
CONDENSED STATEMENTS OF INCOME
2005 & 2004 - BY QUARTER
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
2005 2004
------------------------------------ ---------------------------------------
YEAR QTR. 4 QTR. 3 QTR. 2 QTR. 1 YEAR QTR. 4 QTR. 3 QTR. 2 QTR. 1
---- ------ ------ ------ ------ ------- ------ ------ ------ ------
Net Sales:
- North America $2,811 $2,784 $2,405 $ 9,879 $2,450 $2,627 $2,531 $2,271
- International 549 564 564 2,195 584 546 530 535
---- ------ ------ ------ ------ ------- ------ ------ ------ ------
- Consolidated 3,360 3,348 2,969 12,074 3,034 3,173 3,061 2,806
Cost of Sales 2,396 2,363 2,128 8,356 2,132 2,182 2,087 1,955
---- ------ ------ ------ ------ ------- ------ ------ ------ ------
Gross Profit 964 985 841 3,718 902 991 974 851
(Gross Margin) 28.7% 29.4% 28.3% 30.8% 29.7% 31.2% 31.8% 30.3%
S,G&A Expense (before GCE & (Gain) Loss on Sale of
Corporate Fixed Assets) 445 467 454 1,824 459 449 460 456
(S,G&A Expense as a % of Sales) 13.2% 13.9% 15.3% 15.1% 15.1% 14.2% 15.0% 16.3%
---- ------ ------ ------ ------ ------- ------ ------ ------ ------
Operating Profit (before GCE, (Gain) Loss on Sale of
Corporate Fixed Assets, Litigation (Income)
& Goodwill Impairment Charge) 519 518 387 1,894 443 542 514 395
(Operating Margin) 15.4% 15.5% 13.0% 15.7% 14.6% 17.1% 16.8% 14.1%
- North America 449 447 326 1,639 390 478 442 329
(Margin) 16.0% 16.1% 13.6% 16.6% 15.9% 18.2% 17.5% 14.5%
- International 70 71 61 255 53 64 72 66
(Margin) 12.8% 12.6% 10.8% 11.6% 9.1% 11.7% 13.6% 12.3%
General Corporate Expense (GCE) 51 48 46 194 60 53 45 36
S,G&A Expense as a % of Sales (including GCE &
(Gain) Loss on Sale of Corporate Fixed Assets) 14.8% 15.4% 16.8% 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 (1) (3) (2) (30) -- (2) (7) (21)
Goodwill Impairment Charge -- -- -- 168 168 -- -- --
---- ------ ------ ------ ------ ------- ------ ------ ------ ------
Operating Profit per F/S $ 469 $ 473 $ 343 $ 1,569 $ 214 $ 491 $ 477 $ 387
==== ====== ====== ====== ====== ======= ====== ====== ====== ======
Earnings per Common Share (Diluted):
Income from Continuing Operations $ 0.61 $ 0.64 $ 0.48 $ 2.04 $ 0.23 $ 0.64 $ 0.65 $ 0.52
Income (Loss) from Discontinued Operations -- -- 0.04 (0.08) -- 0.16 (0.07) (0.16)
---- ------ ------ ------ ------ ------- ------ ------ ------ ------
Net Income $ 0.61 $ 0.64 $ 0.52 $ 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 continuing operations in the third quarter of 2005 includes $43
million of pre-tax impairment charges ($.07 per common share, after tax)
related to the Company's investments in Furniture Brands International
common stock and certain private equity funds.
- - Income from discontinued operations in the first quarter of 2005 ($.04 per
common share, after tax) includes a net $10 million pre-tax gain 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 impairment 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 three quarters of 2005 and the four
quarters of 2004 do not total to the per common share amount for the
year-to-date and 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 SEPTEMBER 30, 2005 & 2004
(DOLLARS IN MILLIONS)
Three Months Ended
September 30, 3rd Qtr '05
------------------ vs.
2005 2004 3rd Qtr '04
------ ------ -----------
Cabinets & Related Products $ 925 $ 856 + 8%
Plumbing Products 807 775 + 4%
Installation & Other Services 807 737 + 9%
Decorative Architectural Products 453 433 + 5%
Other Specialty Products 368 372 - 1%
------ ------
Total $3,360 $3,173 + 6%
====== ======
North America $2,811 $2,627 + 7%
International, principally Europe 549 546 + 1%
------ ------
Total, as above $3,360 $3,173 + 6%
====== ======
NOTES:
- - Data exclude discontinued operations.
- - Excluding acquisitions, consolidated net sales also increased six percent,
North American net sales increased seven percent and International net
sales increased one percent (please see page 12 for the GAAP
reconciliation).
- - International sales in local currencies increased one percent compared with
the third quarter of 2004 (please see page 12 for the GAAP reconciliation).
Page 3
MASCO CORPORATION
SALES BY SEGMENT AND GEOGRAPHIC AREA
NINE MONTHS ENDED SEPTEMBER 30, 2005 & 2004
(DOLLARS IN MILLIONS)
Nine Months Ended
September 30, 9 Months '05
----------------- vs.
2005 2004 9 Months '04
------ ------ ------------
Cabinets & Related Products $2,663 $2,432 + 9%
Plumbing Products 2,390 2,299 + 4%
Installation & Other Services 2,264 2,053 + 10%
Decorative Architectural Products 1,330 1,254 + 6%
Other Specialty Products 1,030 1,002 + 3%
------ ------
Total $9,677 $9,040 + 7%
====== ======
North America $8,000 $7,429 + 8%
International, principally Europe 1,677 1,611 + 4%
------ ------
Total, as above $9,677 $9,040 + 7%
====== ======
NOTES:
- - Data exclude discontinued operations.
- - Excluding acquisitions, consolidated net sales increased seven percent,
North American net sales increased seven percent and International net
sales increased four percent (please see page 12 for the GAAP
reconciliation).
- - International sales in local currencies increased two percent compared with
the first nine months of 2004 (please see page 12 for the GAAP
reconciliation).
Page 4
MASCO CORPORATION
QUARTERLY SEGMENT DATA - 2005
(DOLLARS IN MILLIONS)
Year Qtr. 4 Qtr. 3 Qtr. 2 Qtr. 1
---- ------ ------ ------ ------
Net Sales:
- Cabinets and Related Products $ 925 $ 900 $ 838
- Plumbing Products 807 823 760
- Installation and Other Services 807 764 693
- Decorative Architectural Products 453 506 371
- Other Specialty Products 368 355 307
---- ------ ------ ------ ------
- TOTAL 3,360 3,348 2,969
==== ====== ====== ====== ======
- North America 2,811 2,784 2,405
- International, principally Europe 549 564 564
---- ------ ------ ------ ------
- TOTAL, AS ABOVE 3,360 3,348 2,969
==== ====== ====== ====== ======
Operating Profit:
- Cabinets and Related Products 148 144 124
- Plumbing Products 103 108 79
- Installation and Other Services 110 102 80
- Decorative Architectural Products 78 96 59
- Other Specialty Products 80 68 45
---- ------ ------ ------ ------
- TOTAL 519 518 387
==== ====== ====== ====== ======
- North America 449 447 326
- International, principally Europe 70 71 61
---- ------ ------ ------ ------
- TOTAL, AS ABOVE 519 518 387
==== ====== ====== ====== ======
General Corporate Expense (GCE) 51 48 46
(Gain) Loss on Sale of Corporate Fixed Assets, Net -- -- --
(Income) Regarding Litigation Settlement (1) (3) (2)
---- ------ ------ ------ ------
Operating Profit (after GCE and Adjustments) 469 473 343
Other Income (Expense), Net (60) (41) (22)
---- ------ ------ ------ ------
Income from Continuing Operations Before
Income Taxes and Minority Interest $ 409 $ 432 $ 321
==== ====== ====== ====== ======
Margins:
- Cabinets and Related Products 16.0% 16.0% 14.8%
- Plumbing Products 12.8% 13.1% 10.4%
- Installation and Other Services 13.6% 13.4% 11.5%
- Decorative Architectural Products 17.2% 19.0% 15.9%
- Other Specialty Products 21.7% 19.2% 14.7%
- TOTAL 15.4% 15.5% 13.0%
- North America 16.0% 16.1% 13.6%
- International, principally Europe 12.8% 12.6% 10.8%
- TOTAL, AS ABOVE 15.4% 15.5% 13.0%
NOTES:
- - Data exclude discontinued operations.
- - Operating profit and margins by segment and geographic area are before
general corporate expense and exclude (income) regarding the litigation
settlement.
Page 5
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 exclude 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 6
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 exclude 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 7
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 $(65) $(57) $(59) $(217) $(57) $(55) $(52) $(53)
Income from Cash and Cash Investments 11 5 6 11 5 3 1 2
Other Interest Income 3 1 1 6 1 2 1 2
Realized Gains from Financial Investments,
Net 23 28 41 92 40 9 14 29
Dividend Income 4 4 4 27 5 8 7 7
Impairment Charge for Marketable Securities (28) (2) -- (21) (21) -- -- --
Impairment Charge for Private Equity Funds (15) -- -- -- -- -- -- --
Other, Net 7 (20) (15) 51 19 2 18 12
---- ------ ---- ---- ---- ----- ---- ---- ---- ----
Total Other Income (Expense), Net $(60) $(41) $(22) $ (51) $ (8) $(31) $(11) $ (1)
==== ====== ==== ==== ==== ===== ==== ==== ==== ====
NOTES:
- - Data exclude discontinued operations.
- - Other, net for the third quarter of 2005 principally includes $4 million of
realized currency transaction gains; the third quarter of 2004 includes $1
million of realized currency transaction losses.
- - The third quarter of 2005 and the fourth quarter of 2004 impairment charges
for marketable securities relate to the Company's investment in Furniture
Brands International common stock.
Page 8
MASCO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2005 & 2004
(DOLLARS AND SHARES IN MILLIONS, EXCEPT PER SHARE DATA)
Three Months Ended As a Percent of Sales
September 30, 3 Months Ended September 30,
% ------------------ ----------------------------
Line Change 2005 2004 2005 2004
- ---- ------ ------ ------ ----- -----
1 Net Sales 6% $3,360 $3,173 100.0% 100.0%
2 Cost of Sales 10% 2,396 2,182 71.3% 68.8%
------ ------ ----- -----
3 Gross Profit -3% 964 991 28.7% 31.2%
------ ------ ----- -----
Operating Profit:
4 - Before GCE, Litigation (Income) + (Gain) on Sale of
Corporate Fixed Assets (3-8) -4% 519 542 15.4% 17.1%
5 - After GCE, Litigation (Income) + (Gain) on Sale of
Corporate Fixed Assets (3-9-10) -4% 469 491 14.0% 15.5%
------ ------ ----- -----
S,G&A Expense:
6 - General Corporate Expense (GCE) -4% 51 53 1.5% 1.7%
7 - (Gain) on Sale of Corporate Fixed Assets, Net -- -- -- --
8 - All Other -1% 445 449 13.2% 14.2%
------ ------ ----- -----
9 - Total S,G&A Expense -1% 496 502 14.8% 15.8%
------ ------ ----- -----
10 (Income) Regarding Litigation Settlement (1) (2) 0.0% -0.1%
11 Other Income (Expense), Net (60) (31) -1.8% -1.0%
------ ------ ----- -----
12 Income from Continuing Operations Before Income Taxes and
Minority Interest (5+11) -11% 409 460 12.2% 14.5%
13 Income Taxes -16% 141 167 4.2% 5.3%
(Tax Rate) 34.5% 36.3%
------ ------ ----- -----
14 Income from Continuing Operations Before Minority Interest -9% 268 293 8.0% 9.2%
15 Minority Interest (6) (4) -0.2% -0.1%
------ ------ ----- -----
16 Income from Continuing Operations -9% 262 289 7.8% 9.1%
17 Income from Discontinued Operations, Net of Income Taxes -- 70 -- 2.2%
------ ------ ----- -----
18 Net Income -27% $ 262 $ 359 7.8% 11.3%
====== ====== ===== =====
Earnings Per Common Share (Diluted):
Income from Continuing Operations -4% $ 0.61 $ 0.64
Income from Discontinued Operations, Net of Income Taxes -- 0.16
------ ------
Net Income -23% $ 0.61 $ 0.80
====== ======
Average (Diluted) Common Shares -5% 427 449
Page 9
MASCO CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 & 2004
(DOLLARS AND SHARES IN MILLIONS, EXCEPT PER SHARE DATA)
Nine Months Ended As a Percent of Sales
September 30, 9 Months Ended September 30,
% ------------------ ----------------------------
Line Change 2005 2004 2005 2004
- ---- ------ ------ ------- ----- -----
1 Net Sales 7% $9,677 $ 9,040 100.0% 100.0%
2 Cost of Sales 11% 6,887 6,224 71.2% 68.8%
------ ------- ----- -----
3 Gross Profit -1% 2,790 2,816 28.8% 31.2%
------ ------- ----- -----
Operating Profit:
4 - Before GCE, Litigation (Income) + (Gain) on Sale of
Corporate Fixed Assets (3-8) -2% 1,424 1,451 14.7% 16.1%
5 - After GCE, Litigation (Income) + (Gain) on Sale of
Corporate Fixed Assets (3-9-10) -5% 1,285 1,355 13.3% 15.0%
------ ------- ----- -----
S,G&A Expense:
6 - General Corporate Expense (GCE) 8% 145 134 1.5% 1.5%
7 - (Gain) on Sale of Corporate Fixed Assets, Net -- (8) -- -0.1%
8 - All Other 0% 1,366 1,365 14.1% 15.1%
------ ------- ----- -----
9 - Total S,G&A Expense 1% 1,511 1,491 15.6% 16.5%
------ ------- ----- -----
10 (Income) Regarding Litigation Settlement (6) (30) -0.1% -0.3%
11 Other Income (Expense), Net (123) (43) -1.3% -0.5%
------ ------- ----- -----
12 Income from Continuing Operations Before Income Taxes and
Minority Interest (5+11) -11% 1,162 1,312 12.0% 14.5%
13 Income Taxes -16% 398 474 4.1% 5.2%
(Tax Rate) 34.3% 36.1%
------ ------- ----- -----
14 Income from Continuing Operations Before Minority Interest -9% 764 838 7.9% 9.3%
15 Minority Interest (16) (14) -0.2% -0.2%
------ ------- ----- -----
16 Income from Continuing Operations -9% 748 824 7.7% 9.1%
17 Income (Loss) from Discontinued Operations, Net of Income Taxes 19 (36) 0.2% -0.4%
------ ------- ----- -----
18 Net Income -3% $ 767 $ 788 7.9% 8.7%
====== ======= ===== =====
Earnings Per Common Share (Diluted):
Income from Continuing Operations -5% $ 1.72 $ 1.81
Income (Loss) from Discontinued Operations, Net of Income Taxes 0.04 (0.08)
------ -------
Net Income 2% $ 1.77 $ 1.73
====== =======
Average (Diluted) Common Shares -5% 434 455
Page 10
MASCO CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
September 30, December 31,
2005 2004
------------- ------------
ASSETS
Current Assets:
Cash and Cash Investments $ 1,560 $ 1,256
Accounts and Notes Receivable, Net 1,982 1,732
Inventories 1,177 1,132
Prepaid Expenses and Other 280 282
------- -------
Total Current Assets 4,999 4,402
Property and Equipment, Net 2,208 2,272
Goodwill 4,299 4,408
Other Intangible Assets, Net 308 326
Other Assets 790 1,133
------- -------
Total Assets $12,604 $12,541
======= =======
LIABILITIES
Current Liabilities:
Notes Payable $ 824 $ 80
Accounts Payable 911 837
Accrued Liabilities 1,183 1,230
------- -------
Total Current Liabilities 2,918 2,147
Long-Term Debt 3,900 4,187
Deferred Income Taxes and Other 789 784
------- -------
Total Liabilities 7,607 7,118
SHAREHOLDERS' EQUITY 4,997 5,423
------- -------
Total Liabilities and Shareholders' Equity $12,604 $12,541
======= =======
Page 11
MASCO CORPORATION
GAAP RECONCILIATION OF SALES GROWTH
EXCLUDING EFFECT OF ACQUISITIONS & CURRENCY TRANSLATION
(IN MILLIONS)
Three Months Ended
September 30,
------------------
2005 2004
------ ------
Consolidated Net Sales, as reported $3,360 $3,173
- Acquisitions (4) --
------ ------
Consolidated Net Sales (excl. acquisitions) $3,356 $3,173
====== ======
North American Net Sales, as reported $2,811 $2,627
- Acquisitions (4) --
------ ------
North American Net Sales (excl. acquisitions) $2,807 $2,627
====== ======
International Net Sales, as reported $ 549 $ 546
- Acquisitions -- --
------ ------
International Net Sales (excl. acquisitions) 549 546
- Currency Translation 4 --
------ ------
International Net Sales (excl. acquisitions & currency) $ 553 $ 546
====== ======
Nine Months Ended
September 30,
-----------------
2005 2004
------ ------
Consolidated Net Sales, as reported $9,677 $9,040
- Acquisitions (14) --
------ ------
Consolidated Net Sales (excl. acquisitions) $9,663 $9,040
====== ======
North American Net Sales, as reported $8,000 $7,429
- Acquisitions (14) --
------ ------
North American Net Sales (excl. acquisitions) $7,986 $7,429
====== ======
International Net Sales, as reported $1,677 $1,611
- Acquisitions -- --
------ ------
International Net Sales (excl. acquisitions) 1,677 1,611
- Currency Translation (40) --
------ ------
International Net Sales (excl. acquisitions & currency) $1,637 $1,611
====== ======
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 12
MASCO CORPORATION
GAAP RECONCILIATION OF OPERATING PROFIT AND MARGINS
(DOLLARS IN MILLIONS)
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------
2005 2004
--------------- --------------
$ Margin $ Margin
------ ------ ---- ------
Operating Profit, As Reported $469 14.0% $491 15.5%
(Income) Regarding Litigation Settlement (1) (2)
---- ----
Operating Profit, As Reconciled $468 13.9% $489 15.4%
==== ====
NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------
2005 2004
--------------- ---------------
$ Margin $ Margin
------ ------ ------ ------
Operating Profit, As Reported $1,285 13.3% $1,355 15.0%
(Income) Regarding Litigation Settlement (6) (30)
------ ------
Operating Profit, As Reconciled $1,279 13.2% $1,325 14.7%
====== ======
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 13
MASCO CORPORATION
GAAP RECONCILIATION OF OPERATING PROFIT AND SHAREHOLDERS' EQUITY
(IN MILLIONS)
TWELVE MONTHS ENDED
SEPTEMBER 30,
-------------------
2005 2004
------ ------
Operating Profit from Continuing Operations $1,499 $1,691
Goodwill Impairment Charge 168 48
(Income) Regarding Litigation Settlement (6) (31)
------ ------
Operating Profit, As Reconciled $1,661 $1,708
====== ======
TWELVE MONTHS ENDED
SEPTEMBER 30,
--------------------------
2005 2004 2003
------ ------ ------
Shareholders' Equity, As Reported $4,997 $5,242 $5,405
Goodwill Impairment Charge (after tax) 141 43 5
European charge (after tax) --- --- 38
(Income) from Planned Disposition of
Businesses (after tax) --- --- (10)
Accelerated Benefit Expense, net (after tax) --- --- 10
(Income) Regarding Litigation Settlement (after tax) (4) (20) (57)
------ ------ ------
Shareholders' Equity, As Reconciled $5,134 $5,265 $5,391
====== ====== ======
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 14
MASCO CORPORATION
DISCONTINUED OPERATIONS
(IN MILLIONS)
Three Months Ended
September 30,
------------------
2005 2004
---- ----
Net Sales $-- $ 99
=== ====
Income from Discontinued Operations $-- $ 10
Gain on Disposal of Discontinued Operations, Net -- 108
Impairment of Assets Held for Sale -- (31)
--- ----
Income Before Income Taxes -- 87
Income Tax (Expense) -- (17)
--- ----
Income from Discontinued Operations,
Net of Income Taxes $-- $ 70
=== ====
Nine Months Ended
September 30,
-----------------
2005 2004
---- -----
Net Sales $17 $ 302
=== =====
Income from Discontinued Operations $ 4 $ 28
Gain on Disposal of Discontinued Operations, Net 10 108
Impairment of Assets Held for Sale -- (139)
--- -----
Income (Loss) Before Income Taxes 14 (3)
Income Tax Benefit (Expense) 5 (33)
--- -----
Income (Loss) from Discontinued Operations,
Net of Income Taxes $19 $ (36)
=== =====
NOTES:
The unusual relationship between income tax benefit and income before income
taxes (including the net gain on disposal of discontinued operations) in 2004
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 of $151 million included $12 million for the expensing of deferred tax
assets of the discontinued operations for the nine months ended September 30,
2004.
The information for discontinued operations is for the period prior to the
respective dates of disposition.
Page 15