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8-K - FORM 8-K - MASCO CORP /DE/k50311e8vk.htm
FOR IMMEDIATE RELEASE
(MASCO LOGO)
Investor / Media Contact
Maria Duey
Vice President — Investor Relations and Communications
313.792.5500
maria_duey@mascohq.com
MASCO CORPORATION REPORTS FIRST QUARTER 2011 RESULTS
     2011 First Quarter Commentary
    Sales declined four percent to $1.8 billion.
 
    Results for key financial measures, as adjusted for certain items (see Exhibit A) and with a normalized tax rate of 36 percent, compared to the first quarter of 2010 were as follows:
    Gross profit margins were 25.3 percent compared to 26.7 percent.
 
    Operating profit margins were 3.0 percent compared to 5.0 percent.
 
    (Loss) income was $(.05) per common share compared to $.03 per common share.
    Loss, as reported, was $(.13) per common share compared to $(.02) per common share for the first quarter of 2010.
    Working capital as a percent of sales improved to 15.5 percent at March 31, 2011, compared to 16.3 percent at March 31, 2010.
    We ended the first quarter of 2011 with over $1.5 billion of cash.
Taylor, Mich., (April 25, 2011) — Masco Corporation(NYSE: MAS) today reported that net sales for the first quarter ended March 31, 2011 decreased four percent, to $1.8 billion, compared to the first quarter of 2010. North American sales decreased seven percent and International sales increased four percent. In local currencies, International sales increased five percent compared with the first quarter of 2010.
(Loss) income was $(.05) per common share and $.03 per common share for the first quarters of 2011 and 2010, respectively, excluding the items in Exhibit A and with a normalized tax rate of 36 percent. Including these items, loss, as reported was $(.13) per common share and $(.02) per common share for the first quarters ended March 31, 2011 and 2010, respectively.
“As anticipated, the trends impacting our business, including depressed new home construction, the deferral of “big ticket” repair and remodel activity and commodity cost pressures have continued into 2011. In the first quarter of 2011, our sales were down four percent. Excluding cabinet products that we are exiting, as previously announced, our sales would have been down just one percent compared to a relatively strong first quarter of 2010, which benefited from the homebuyer tax credit that expired in mid-2010. In addition,

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on that same basis, sales in February and March of 2011 were basically flat with 2010. Plumbing Products sales were strong in first quarter of 2011 compared to last year and we believe that our North American cabinet business and our installation business, while still depressed, were able to gain share sequentially, compared to fourth quarter of 2010. We continue to manage our cost structure aggressively across our business and we anticipate that actions we have taken, or expect to take, to drive productivity, cost reductions, supply chain efficiencies and price increases will offset the impact of commodity and energy cost increases and other cost inflations for full-year 2011,” said Masco’s CEO Tim Wadhams.
Loss for the three months ended March 31, 2011 included gains of $17 million pre-tax related to the sale of financial investments.
We continue to focus on the rationalization of our businesses, including business consolidations, plant closures, headcount reductions, system implementations and other initiatives. During the first quarters of 2011 and 2010, we incurred costs and charges of $32 million pre-tax ($.06 per common share, after tax) and $14 million pre-tax ($.03 per common share, after tax), respectively, related to these initiatives.
Outlook 2011
“While we still believe that the second half of 2011 will be stronger than the first half, our enthusiasm has been tempered somewhat. Job growth has been modest at best, energy costs have increased, reflecting the turmoil in the Middle East and most economists have reduced their forecasts for 2011, including for housing starts. Given the uncertainty of the timing and strength of the recovery in our markets, we will continue to focus on the things we can control to improve our execution and strengthen our brands. The Masco Business System continues to drive positive change across the Company. Our cabinet integration is on plan and we expect will drive fixed cost reductions and share gains; we have strengthened our brands and our focus on innovation is driving exciting new opportunities across all of our product groups, and we have added outstanding talent to our leadership teams to enhance the development and execution of our business strategies,” said Tim Wadhams.
Longer-term, we are confident about the fundamentals for the new home construction and home improvement markets and we are optimistic about the future. We expect that improvements in our markets and in consumer spending, together with the changes we are driving across Masco and our financial strength will create significant value for our shareholders.
Headquartered in Taylor, Michigan, Masco Corporation is one of the world’s leading manufacturers of home improvement and building products, as well as a leading provider of services that include the installation of insulation and other building products.
The 2011 first quarter supplemental material, including a presentation in PDF format, will be distributed after the market closes on April 25, 2011 and will be available on the Company’s Web site at www.masco.com.

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A conference call regarding items contained in this release is scheduled for Tuesday, April 26, 2011 at 8:00 a.m. ET. Participants in the call are asked to register five to ten minutes prior to the scheduled start time by dialing (913) 312-9335 (confirmation #1737120). The conference call will be webcast simultaneously on the Company’s Web site at www.masco.com and supplemental material, including the financial data referred to on the call and a reconciliation of non-GAAP information provided on the call, will also be available on the Web site.
A replay of the call will be available on Masco’s Web site or by phone by dialing (719) 457-0820 (replay access code #1737120) approximately two hours after the end of the call and will continue through May 3, 2011.
Masco Corporation’s press releases and other information are available through the Company’s toll free number, 1-888-MAS-NEWS, or under the Investor Relations section of Masco’s Web site at www.masco.com.
# # #
Statements contained in this press release that reflect our views about our future performance constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “believe,” “anticipate,” “appear,” “may,” “will,” “intend,” “plan,” “estimate,” “expect,” “assume,” “seek,” and similar references to future periods. These views involve risks and uncertainties that are difficult to predict and, accordingly, our actual results may differ materially from the results discussed in our forward-looking statements. We caution you against relying on any of these forward-looking statements. Our future performance may be affected by our reliance on new home construction and home improvement, our reliance on key customers, the cost and availability of raw materials, shifts in consumer preferences and purchasing practices, and our ability to achieve cost savings through the Masco Business System and other initiatives. These and other factors are discussed in detail in Item 1A, “Risk Factors” in our most recent Annual Report on Form 10-K, as well as in our Quarterly Reports on Form 10-Q and in other filings we make with the Securities and Exchange Commission. Our forward-looking statements in this press release speak only as of the date of this press release. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. Unless required by law, we undertake no obligation to update publicly any forward-looking statements as a result of new information, future events or otherwise.
The Company believes that the non-GAAP performance measures and ratios that are contained herein, used in managing the business, may provide users of this financial information with additional meaningful comparisons between current results and results in prior periods. Non-GAAP performance measures and ratios should be viewed in addition to, and not as an alternative for, the Company’s reported results under accounting principles generally accepted in the United States. Additional information about the Company is contained in the Company’s filings with the Securities and Exchange Commission and is available on Masco’s Web site at www.masco.com.

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MASCO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS — UNAUDITED
For the Three Months Ended March 31, 2011 and 2010
(In Millions, Except Per Common Share Data)
                 
    Three Months Ended  
    March 31,  
    2011     2010  
Net sales
  $ 1,772     $ 1,852  
Cost of Sales
    1,347       1,360  
 
           
Gross profit
    425       492  
Selling, general and administrative expenses
    404       414  
 
           
Operating profit
    21       78  
Other income (expense), net
    (42 )     (56 )
 
           
(Loss) income before income taxes
    (21 )     22  
Income tax expense
    13       18  
 
           
Net (loss) income
    (34 )     4  
 
           
Less: Net income attributable to non-controlling interest
    (12 )     (11 )
 
           
Net loss attributable to Masco Corporation
  $ (46 )   $ (7 )
 
           
 
               
Loss per common share attributable to Masco Corporation (diluted):
               
 
           
Net loss attributable to Masco Corporation
  $ (0.13 )   $ (0.02 )
 
           
 
               
Average diluted common shares outstanding
    349       350  
 
           
 
               
Amounts attributable to Masco Corporation:
               
 
           
Net loss attributable to Masco Corporation
  $ (46 )   $ (7 )
 
           

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Masco Corporation
Key Financial Data As Reported — Unaudited
Q1 — 2011 and 2010
(In Millions, Except Earnings Per Share)
                         
Sales & Earnings   3/31/2011   3/31/2010   Change
Net Sales
  $ 1,772     $ 1,852       -4 %
Operating Profit
  $ 21     $ 78       N/A  
Operating Profit % of Net Sales
    1.2 %     4.2 %   (300 ) bps
Other Income (Expense), Net
  $ (42 )   $ (56 )   $ 14  
Income Tax Expense
  $ 13     $ 18       N/A  
Net Loss Attributable to Masco Corporation
  $ (46 )   $ (7 )     N/A  
Diluted EPS
  $ (0.13 )   $ (0.02 )     N/A  
                         
Operating Expenses   3/31/2011   3/31/2010   Change
Cost of Sales
  $ 1,347     $ 1,360       -1 %
Gross Margin
    24.0 %     26.6 %   (260 ) bps
SG&A Expenses (Including GCE)
  $ 404     $ 414       -2 %
SG&A as a % of net sales
    22.8 %     22.4 %   (40 ) bps
General Corporate Expense (GCE)
  $ 32     $ 30       7 %
General Corp Expense as a % of net sales
    1.8 %     1.6 %   20 bps
                         
Business Segments   3/31/2011   3/31/2010   Change
Cabinets and Related Products:
                       
Net Sales
  $ 307     $ 403       -24 %
Operating Loss
  $ (50 )   $ (15 )     N/A  
Operating Loss % of Net Sales
    -16.3 %     -3.7 %   (1,260 ) bps
Plumbing Products:
                       
Net Sales
  $ 710     $ 663       7 %
Operating Profit
  $ 84     $ 84       N/A  
Operating Profit % of Net Sales
    11.8 %     12.7 %   (90 ) bps
Installation and Other Services:
                       
Net Sales
  $ 254     $ 273       -7 %
Operating Loss
  $ (40 )   $ (42 )     N/A  
Operating Loss % of Net Sales
    -15.7 %     -15.4 %   (30 ) bps
Decorative Architectural Products:
                       
Net Sales
  $ 375     $ 389       -4 %
Operating Profit
  $ 69     $ 87       N/A  
Operating Profit % of Net Sales
    18.4 %     22.4 %   (400 ) bps
Other Specialty Products:
                       
Net Sales
  $ 126     $ 124       2 %
Operating Loss
  $ (10 )   $ (6 )     N/A  
Operating Loss % of Net Sales
    -7.9 %     -4.8 %   (310 ) bps
 
                       
Total Segment Reported:
                       
Net Sales
  $ 1,772     $ 1,852       -4 %
Operating Profit
  $ 53     $ 108       N/A  
Operating Profit % of Net Sales
    3.0 %     5.8 %   (280 ) bps

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Masco Corporation
Key Financial Data As Reported — Unaudited
Q1 — 2011 and 2010
(In Millions, Except Earnings Per Share)
                         
Business Regions   3/31/2011   3/31/2010   Change
North America
                       
Net Sales
  $ 1,333     $ 1,430       -7 %
Operating Profit
  $ 11     $ 64       N/A  
Operating Profit % of Net Sales
    0.8 %     4.5 %   (370 ) bps
International, principally Europe
                       
Net Sales
  $ 439     $ 422       4 %
Operating Profit
  $ 42     $ 44       N/A  
Operating Profit % of Net Sales
    9.6 %     10.4 %   (80 ) bps
                         
Working Capital   3/31/2011   3/31/2010   Change
Receivable Days
    50       51       (1 )
Inventory Days
    55       53       2  
Payable Days
    57       49       8  
Working Capital (Receivables+Inventory-Payables)
  $ 1,165     $ 1,279       -9 %
Working Capital as a % of Sales (As Reported TTM1)
    15.5 %     16.3 %     (80 ) bps
                 
Other   3/31/2011   3/31/2010
Dividend Payments
  $ 27     $ 27  
Cash Paid for Share Repurchases2
  $ 30     $ 45  
Common Shares Repurchased2
    2       3  
CAPEX
  $ 29     $ 26  
Depreciation and Amortization
  $ 75     $ 60  
Average diluted common shares outstanding
    349       350  
                 
Balance Sheet Information                
Long-Term Debt
  $ 4,030     $ 4,100  
Notes Payable
  $ 66     $ 66  
Total Debt
  $ 4,096     $ 4,166  
Shareholders’ Equity
  $ 1,550     $ 2,703  
Debt to Capital
    73 %     61 %
Cash
    1,505       1,378  
 
1     — Trailing Twelve Months
 
2     — Common shares were repurchased to offset the effect of stock award grants in the first quarters of 2011 and 2010.

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MASCO CORPORATION
Reconciliations — Exhibit A
For the Three Months Ended March 31, 2011 and 2010
(In Millions, Except Per Common Share Data)
Gross Profit and Operating (Loss) Profit Reconciliations
                 
    Three Months Ended  
    March 31,  
    2011     2010  
Sales
  $ 1,772     $ 1,852  
 
           
Gross profit, as reported
  $ 425     $ 492  
Rationalization charges
    24       3  
 
           
Gross profit, as adjusted
  $ 449     $ 495  
 
           
Gross margin, as reported
    24.0 %     26.6 %
Gross margin, as adjusted
    25.3 %     26.7 %
 
               
Operating profit, as reported
  $ 21     $ 78  
Rationalization charges
    32       14  
 
           
Operating profit, as adjusted
  $ 51     $ 92  
 
           
Operating margin, as reported
    1.2 %     4.2 %
Operating margin, as adjusted
    3.0 %     5.0 %
Earnings Per Common Share Reconciliation
                 
    Three Months Ended  
    March 31,  
    2011     2010  
(Loss) income before income taxes — as reported
  $ (21 )   $ 22  
Rationalization charges
    32       14  
Gains from financial investments
    (17 )      
 
           
(Loss) Income before income taxes — as adjusted
    (6 )   $ 36  
Tax at 36% rate
    2       (13 )
Less: Net income attributable to non-controlling interest
    (12 )     (11 )
 
           
Net (loss) income — as adjusted
  $ (16 )   $ 12  
 
           
 
               
(Loss) earnings per common share — as adjusted
  $ (0.05 )   $ 0.03  
 
           
Shares outstanding
    349       350  
The Company believes that certain non-GAAP performance measures and ratios used in managing the business may provide 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.

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Masco Corporation — 1st Quarter 2011
     
Page
 
1  
Condensed Consolidated Statements of Operations — 2011 & 2010 by Quarter — Unaudited
   
 
2  
Notes to Condensed Consolidated Statements of Operations — 2011 & 2010 by Quarter — Unaudited
   
 
3  
2011 Quarterly Segment Data Excluding Costs and Charges for Business Rationalizations and Other Initiatives — Unaudited
   
 
4  
2011 Quarterly Segment Data Including Costs and Charges for Business Rationalizations and Other Initiatives — Unaudited
   
 
5  
2011 Costs and Charges for Business Rationalizations and Other Initiatives — Unaudited
   
 
6  
2010 Quarterly Segment Data Excluding Costs and Charges for Business Rationalizations and Other Initiatives and Impairment Charges for Goodwill and Other Intangible Assets — Unaudited
   
 
7  
2010 Quarterly Segment Data Including Costs and Charges for Business Rationalizations and Other Initiatives and Impairment Charges for Goodwill and Other Intangible Assets — Unaudited
   
 
8  
2010 Costs and Charges for Business Rationalizations and Other Initiatives and Impairment Charges for Goodwill and Other Intangible Assets — Unaudited
   
 
9  
Other Income (Expense), Net — 2011 & 2010 by Quarter — Unaudited
   
 
10  
Condensed Consolidated Balance Sheets — Unaudited
   
 
   
GAAP Reconciliations:
   
 
11  
Sales Growth Excluding the Effect of Acquisitions and Currency Translation — Unaudited
   
 
12  
Operating Profit and Margins — Unaudited

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MASCO CORPORATION
Condensed Consolidated Statements of Operations
2011 & 2010 — by Quarter — Unaudited
(dollars in millions, except per share data)
                                                                                 
    2011     2010  
    Year     Qtr. 4     Qtr. 3     Qtr. 2     Qtr. 1     Year     Qtr. 4     Qtr. 3     Qtr. 2     Qtr. 1  
Net Sales
                                  $ 1,772     $ 7,592     $ 1,735     $ 1,957     $ 2,048     $ 1,852  
Cost of Sales
                                    1,347       5,752       1,427       1,463       1,502       1,360  
 
                                                                   
Gross Profit
                                    425       1,840       308       494       546       492  
(Gross Margin as a % of Sales)
                                    24.0 %     24.2 %     17.8 %     25.2 %     26.7 %     26.6 %
SG&A Expense (before lines 1, 2)
                                    372       1,508       359       365       400       384  
(S,G&A Expense as a % of Sales)
                                    21.0 %     19.9 %     20.7 %     18.7 %     19.5 %     20.7 %
Operating Profit (before lines 1, 2)
                                    53       332       (51 )     129       146       108  
(Operating Margin as a % of Sales)
                                    3.0 %     4.4 %     -2.9 %     6.6 %     7.1 %     5.8 %
1 General Corporate Expense (GCE), Net
                                    32       110       26       27       27       30  
S,G&A Expense as a % of Sales (including lines 1,2)
                                    22.8 %     30.8 %     63.7 %     20.0 %     20.8 %     22.4 %
2 Impairment Charges for Goodwill and Other Intangible Assets
                                          721       721                    
 
                                                                   
Operating Profit (Loss) per F/S
                                  $ 21     $ (499 )   $ (798 )   $ 102     $ 119     $ 78  
 
                                                                   
(Loss) Income Per Common Share Attributable to Masco Corporation (Diluted):
                                                                               
 
                                                                   
Net (Loss) Income
                                  $ (0.13 )   $ (3.00 )   $ (2.96 )   $ (0.02 )   $ 0.01     $ (0.02 )
 
                                                                   
Please see page 2 for Notes.

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MASCO CORPORATION
Notes To Condensed Consolidated Statements of Operations
2011 & 2010 — by Quarter — Unaudited
Notes:
-   Data exclude discontinued operations.
 
-   Operating results for the first quarter of 2011 include costs and charges related to business rationalizations and other initiatives of $32 million pre-tax ($.06 per common share, after tax).
 
-   Operating results for the second and fourth quarters of 2010 include non-cash impairment charges for financial investments of $33 million pre-tax ($.06 per common share, after tax) and $1 million pre-tax, respectively.
 
-   Operating results for the fourth quarter of 2010 include non-cash impairment charges for goodwill and other intangible assets of $721 million pre-tax ($1.70 per common share, after tax).
 
-   Operating results for the first, second, third and fourth quarters of 2010 include costs and charges related to business rationalizations and other initiatives of $14 million pre-tax ($.03 per common share, after tax), $51 million pre-tax ($.09 per common share, after tax), $39 million pre-tax ($.07 per common share, after tax), and $104 million pre-tax ($.19 per common share, after tax), respectively.

Page 2


 

MASCO CORPORATION
Quarterly Segment Data — 2011
Excluding Costs and Charges for Business Rationalizations and Other Initiatives
(dollars in millions)
                                         
    Year   Qtr. 4   Qtr. 3   Qtr. 2   Qtr. 1
     
Net Sales:
                                       
- Cabinets and Related Products
                                  $ 307  
- Plumbing Products
                                    710  
- Installation and Other Services
                                    254  
- Decorative Architectural Products
                                    375  
- Other Specialty Products
                                    126  
     
- Total
                                  $ 1,772  
     
 
                                       
- North America
                                  $ 1,333  
- International, principally Europe
                                    439  
     
- Total, as above
                                  $ 1,772  
     
 
                                       
Operating (Loss) Profit:
                                       
- Cabinets and Related Products
                                  $ (29 )
- Plumbing Products
                                    90  
- Installation and Other Services
                                    (38 )
- Decorative Architectural Products
                                    70  
- Other Specialty Products
                                    (10 )
     
- Total
                                  $ 83  
     
 
                                       
- North America
                                  $ 41  
- International, principally Europe
                                    42  
     
- Total, as above
                                  $ 83  
     
 
                                       
General Corporate Expense (GCE), Net
                                    30  
     
 
                                       
Operating Profit (after GCE and Adjustments)
                                    53  
 
                                       
Other Income (Expense), Net
                                    (42 )
     
 
                                       
(Loss) Income before Income Taxes
                                  $ 11  
     
 
                                       
Margins:
                                       
- Cabinets and Related Products
                                    -9.4 %
- Plumbing Products
                                    12.7 %
- Installation and Other Services
                                    -15.0 %
- Decorative Architectural Products
                                    18.7 %
- Other Specialty Products
                                    -7.9 %
- Total
                                    4.7 %
 
                                       
- North America
                                    3.1 %
- International, principally Europe
                                    9.6 %
- Total, as above
                                    4.7 %
Notes:
 
-   Data exclude discontinued operations.
 
-   Operating (loss) profit and margins by segment and geographic area are before general corporate expense.
 
-   See 2011 Costs and Charges for Business Rationalizations and Other Initiatives — page 5.

Page 3


 

MASCO CORPORATION
Quarterly Segment Data — 2011
Including Costs and Charges for Business Rationalizations and Other Initiatives
(dollars in millions)
                                         
    Year   Qtr. 4   Qtr. 3   Qtr. 2   Qtr. 1
     
Net Sales:
                                       
- Cabinets and Related Products
                                  $ 307  
- Plumbing Products
                                    710  
- Installation and Other Services
                                    254  
- Decorative Architectural Products
                                    375  
- Other Specialty Products
                                    126  
     
- Total
                                  $ 1,772  
     
 
                                       
- North America
                                  $ 1,333  
- International, principally Europe
                                    439  
     
- Total, as above
                                  $ 1,772  
     
 
                                       
Operating (Loss) Profit:
                                       
- Cabinets and Related Products
                                  $ (50 )
- Plumbing Products
                                    84  
- Installation and Other Services
                                    (40 )
- Decorative Architectural Products
                                    69  
- Other Specialty Products
                                    (10 )
     
- Total
                                  $ 53  
     
 
                                       
- North America
                                  $ 11  
- International, principally Europe
                                    42  
     
- Total, as above
                                  $ 53  
     
 
                                       
General Corporate Expense (GCE), Net
                                    32  
 
                                       
     
Operating Profit (after GCE and Adjustments)
                                    21  
 
                                       
Other Income (Expense), Net
                                    (42 )
     
 
                                       
(Loss) Income before Income Taxes
                                  $ (21 )
     
 
                                       
Margins:
                                       
- Cabinets and Related Products
                                    -16.3 %
- Plumbing Products
                                    11.8 %
- Installation and Other Services
                                    -15.7 %
- Decorative Architectural Products
                                    18.4 %
- Other Specialty Products
                                    -7.9 %
- Total
                                    3.0 %
 
                                       
- North America
                                    0.8 %
- International, principally Europe
                                    9.6 %
- Total, as above
                                    3.0 %
Notes:
 
-   Data exclude discontinued operations.
 
-   Operating (loss) profit and margins by segment and geographic area are before general corporate expense.
 
-   See 2011 Costs and Charges for Business Rationalizations and Other Initiatives — page 5.

Page 4


 

MASCO CORPORATION
Quarterly Segment Data — 2011
Costs and Charges for Business Rationalizations and Other Initiatives
(in millions)
                                         
    Year   Qtr. 4   Qtr. 3   Qtr. 2   Qtr. 1
Business Rationalizations & Other Initiatives
                                       
- Cabinets and Related Products
                                  $ 21  
- Plumbing Products
                                    6  
- Installation and Other Services
                                    2  
- Decorative Architectural Products
                                    1  
- Other Specialty Products
                                     
     
- Total
                                  $ 30  
     
 
                                       
- North America
                                  $ 30  
- International, principally Europe
                                     
     
- Total, as above
                                  $ 30  
 
                                       
General Corporate Expense (GCE), Net
                                    2  
     
 
                                       
- Total
                                  $ 32  
     
Notes:
 
-   Data exclude discontinued operations.
 
-   Business rationalizations and other initiatives include costs and charges for business consolidations, plant closures, headcount reductions, system implementations and other initiatives.

Page 5


 

MASCO CORPORATION
Quarterly Segment Data — 2010
Excluding Costs and Charges for Business Rationalizations and Other Initiatives
and Impairment Charges for Goodwill and Other Intangible Assets — Unaudited
(dollars in millions)
                                         
    Year   Qtr. 4   Qtr. 3   Qtr. 2   Qtr. 1
     
Net Sales:
                                       
- Cabinets and Related Products
  $ 1,464     $ 304     $ 357     $ 400     $ 403  
- Plumbing Products
    2,692       661       686       682       663  
- Installation and Other Services
    1,147       273       292       309       273  
- Decorative Architectural Products
    1,693       336       463       505       389  
- Other Specialty Products
    596       161       159       152       124  
     
- Total
  $ 7,592     $ 1,735     $ 1,957     $ 2,048     $ 1,852  
     
 
                                       
- North America
  $ 5,929     $ 1,312     $ 1,528     $ 1,659     $ 1,430  
- International, principally Europe
    1,663       423       429       389       422  
     
- Total, as above
  $ 7,592     $ 1,735     $ 1,957     $ 2,048     $ 1,852  
     
 
                                       
Operating (Loss) Profit:
                                       
- Cabinets and Related Products
  $ (71 )   $ (46 )   $ (27 )   $ 6     $ (4 )
- Plumbing Products
    347       70       100       92       85  
- Installation and Other Services
    (106 )     (25 )     (20 )     (21 )     (40 )
- Decorative Architectural Products
    350       50       104       109       87  
- Other Specialty Products
    19       3       11       11       (6 )
     
- Total
  $ 539     $ 52     $ 168     $ 197     $ 122  
     
 
                                       
- North America
  $ 373     $ 21     $ 116     $ 160     $ 76  
- International, principally Europe
    166       31       52       37       46  
     
- Total, as above
  $ 539     $ 52     $ 168     $ 197     $ 122  
     
 
                                       
General Corporate Expense (GCE), Net
    109       25       27       27       30  
 
                                       
     
Operating Profit (after GCE and Adjustments)
    430       27       141       170       92  
 
                                       
Other Income (Expense), Net
    (278 )     (55 )     (64 )     (103 )     (56 )
     
 
                                       
(Loss) Income before Income Taxes
  $ 152     $ (28 )   $ 77     $ 67     $ 36  
     
 
                                       
Margins:
                                       
- Cabinets and Related Products
    -4.8 %     -15.1 %     -7.6 %     1.5 %     -1.0 %
- Plumbing Products
    12.9 %     10.6 %     14.6 %     13.5 %     12.8 %
- Installation and Other Services
    -9.2 %     -9.2 %     -6.8 %     -6.8 %     -14.7 %
- Decorative Architectural Products
    20.7 %     14.9 %     22.5 %     21.6 %     22.4 %
- Other Specialty Products
    3.2 %     1.9 %     6.9 %     7.2 %     -4.8 %
- Total
    7.1 %     3.0 %     8.6 %     9.6 %     6.6 %
 
                                       
- North America
    6.3 %     1.6 %     7.6 %     9.6 %     5.3 %
- International, principally Europe
    10.0 %     7.3 %     12.1 %     9.5 %     10.9 %
- Total, as above
    7.1 %     3.0 %     8.6 %     9.6 %     6.6 %
Notes:
 
-   Data exclude discontinued operations.
 
-   Operating (loss) profit and margins by segment and geographic area are before general corporate expense.
 
-   See 2010 Costs and Charges for Business Rationalizations and Other Initiatives — page 8.

Page 6


 

MASCO CORPORATION
Quarterly Segment Data — 2010
Including Costs and Charges for Business Rationalizations and Other Initiatives
and Impairment Charges for Goodwill and Other Intangible Assets — Unaudited
(dollars in millions)
                                         
    Year   Qtr. 4   Qtr. 3   Qtr. 2   Qtr. 1
Net Sales:    
- Cabinets and Related Products
  $ 1,464     $ 304     $ 357     $ 400     $ 403  
- Plumbing Products
    2,692       661       686       682       663  
- Installation and Other Services
    1,147       273       292       309       273  
- Decorative Architectural Products
    1,693       336       463       505       389  
- Other Specialty Products
    596       161       159       152       124  
     
- Total
  $ 7,592     $ 1,735     $ 1,957     $ 2,048     $ 1,852  
     
 
                                       
- North America
  $ 5,929     $ 1,312     $ 1,528     $ 1,659     $ 1,430  
- International, principally Europe
    1,663       423       429       389       422  
     
- Total, as above
  $ 7,592     $ 1,735     $ 1,957     $ 2,048     $ 1,852  
     
 
                                       
Operating (Loss) Profit:
                                       
- Cabinets and Related Products
  $ (250 )   $ (137 )   $ (61 )   $ (37 )   $ (15 )
- Plumbing Products
    331       64       97       86       84  
- Installation and Other Services
    (834 )     (747 )     (22 )     (23 )     (42 )
- Decorative Architectural Products
    345       45       104       109       87  
- Other Specialty Products
    19       3       11       11       (6 )
     
- Total
  $ (389 )   $ (772 )   $ 129     $ 146     $ 108  
     
 
                                       
- North America
  $ (543 )   $ (800 )   $ 79     $ 114     $ 64  
- International, principally Europe
    154       28       50       32       44  
     
- Total, as above
  $ (389 )   $ (772 )   $ 129     $ 146     $ 108  
     
 
                                       
General Corporate Expense (GCE), Net
    110       26       27       27       30  
 
                                       
     
Operating Profit (after GCE and Adjustments)
    (499 )     (798 )     102       119       78  
 
                                       
Other Income (Expense), Net
    (278 )     (55 )     (64 )     (103 )     (56 )
     
 
                                       
(Loss) Income before Income Taxes
  $ (777 )   $ (853 )   $ 38     $ 16     $ 22  
     
 
                                       
Margins:
                                       
- Cabinets and Related Products
    -17.1 %     -45.1 %     -17.1 %     -9.3 %     -3.7 %
- Plumbing Products
    12.3 %     9.7 %     14.1 %     12.6 %     12.7 %
- Installation and Other Services
    -72.7 %     -273.6 %     -7.5 %     -7.4 %     -15.4 %
- Decorative Architectural Products
    20.4 %     13.4 %     22.5 %     21.6 %     22.4 %
- Other Specialty Products
    3.2 %     1.9 %     6.9 %     7.2 %     -4.8 %
- Total
    -5.1 %     -44.5 %     6.6 %     7.1 %     5.8 %
 
                                       
- North America
    -9.2 %     -61.0 %     5.2 %     6.9 %     4.5 %
- International, principally Europe
    9.3 %     6.6 %     11.7 %     8.2 %     10.4 %
- Total, as above
    -5.1 %     -44.5 %     6.6 %     7.1 %     5.8 %
Notes:
 
-   Data exclude discontinued operations.
 
-   Operating (loss) profit and margins by segment and geographic area are before general corporate expense.
 
-   See 2010 Costs and Charges for Business Rationalizations and Other Initiatives — page 8.

Page 7


 

MASCO CORPORATION
Quarterly Segment Data — 2010
Costs and Charges for Business Rationalizations and Other Initiatives
and Impairment Charges for Goodwill and Other Intangible Assets — Unaudited
(in millions)
                                         
    Year   Qtr. 4   Qtr. 3   Qtr. 2   Qtr. 1
Business Rationalizations & Other Initiatives
                                       
- Cabinets and Related Products
  $ 179     $ 91     $ 34     $ 43     $ 11  
- Plumbing Products
    15       5       3       6       1  
- Installation and Other Services
    8       2       2       2       2  
- Decorative Architectural Products
    5       5                    
- Other Specialty Products
                             
     
- Total
  $ 207     $ 103     $ 39     $ 51     $ 14  
     
 
                                       
- North America
  $ 195     $ 100     $ 37     $ 46     $ 12  
- International, principally Europe
    12       3       2       5       2  
     
- Total, as above
  $ 207     $ 103     $ 39     $ 51     $ 14  
 
                                       
General Corporate Expense (GCE), Net
    1       1                    
     
 
                                       
- Total
  $ 208     $ 104     $ 39     $ 51     $ 14  
     
 
                                       
Goodwill and Other Intangible Assets Impairment
                                       
- Cabinets and Related Products
  $     $     $     $     $  
- Plumbing Products
    1       1                    
- Installation and Other Services
    720       720                    
- Decorative Architectural Products
                             
- Other Specialty Products
                             
     
- Total
  $ 721     $ 721     $     $     $  
     
 
                                       
- North America
  $ 721     $ 721     $     $     $  
- International, principally Europe
                             
     
- Total, as above
  $ 721     $ 721     $     $     $  
     
Notes:
 
-   Data exclude discontinued operations.
 
-   Business rationalizations and other initiatives include costs and charges for business consolidations, plant closures, headcount reductions, system implementations and other initiatives.

Page 8


 

MASCO CORPORATION
Other Income (Expense), Net
2011 & 2010 — by Quarter — Unaudited
(in millions)
                                                                                 
    2011     2010
    Year   Qtr. 4   Qtr. 3   Qtr. 2   Qtr. 1   Year   Qtr. 4   Qtr. 3   Qtr. 2   Qtr. 1
 
                                                                               
Interest Expense
                                  $ (63 )   $ (251 )   $ (63 )   $ (63 )   $ (67 )   $ (58 )
Income from Cash and Cash Investments
                                    2       6       2       2       1       1  
Other Interest Income
                                          1                         1  
Realized Gains (Losses) from Financial Investments, Net
                                    17       9       11       (3 )     1        
Impairment Charges for Financial Investments
                                          (34 )     (1 )           (33 )      
Other, Net
                                    2       (9 )     (4 )           (5 )      
                                                                     
Total Other Income (Expense), Net
                                  $ (42 )   $ (278 )   $ (55 )   $ (64 )   $ (103 )   $ (56 )
                                                                     
Notes:
-   Data exclude discontinued operations.
 
-   Other, Net, in 2011 includes currency gains of $2 million for the first quarter.
 
-   Other, Net, in 2010 includes currency (losses) gains of ($1) million, ($5) million, $4 million and $— for the first, second, third and fourth quarters, respectively.

Page 9


 

MASCO CORPORATION
Condensed Consolidated Balance Sheets — Unaudited
(in millions)
                 
    March 31,     December 31,  
    2011     2010  
Assets
               
Current Assets:
               
Cash and Cash Investments
  $ 1,505     $ 1,715  
Receivables
    1,113       888  
Inventories
    839       732  
Prepaid Expenses and Other
    138       129  
 
           
Total Current Assets
    3,595       3,464  
Property and Equipment, Net
    1,719       1,737  
Goodwill
    2,395       2,383  
Other Intangible Assets, Net
    268       269  
Other Assets
    269       287  
 
           
Total Assets
  $ 8,246     $ 8,140  
 
           
 
               
Liabilities
               
Current Liabilities:
               
Notes Payable
  $ 66     $ 66  
Accounts Payable
    787       602  
Accrued Liabilities
    773       819  
 
           
Total Current Liabilities
    1,626       1,487  
Long-Term Debt
    4,030       4,032  
Deferred Income Taxes and Other
    1,040       1,039  
 
           
Total Liabilities
    6,696       6,558  
Shareholders’ Equity
    1,550       1,582  
 
           
Total Liabilities and Shareholders’ Equity
  $ 8,246     $ 8,140  
 
           

Page 10


 

MASCO CORPORATION
GAAP Reconciliation of Sales Growth
Excluding the Effect of Acquisitions and Currency Translation — Unaudited
(dollars in millions)
                         
    Three Months Ended        
    March 31,        
    2011     2010     % △  
 
                       
Net Sales, As Reported
  $ 1,772     $ 1,852       -4 %
- Acquisitions
                   
- Currency Translation
                   
 
                   
Net Sales, Excluding Acquisitions and Currency Translation
  $ 1,772     $ 1,852       -4 %
 
                   
 
                       
North America Net Sales, As Reported
  $ 1,333     $ 1,430       -7 %
- Acquisitions
                   
- Currency Translation
    (3 )              
 
                   
North America Net Sales, Excluding Acquisitions and Currency Translation
  $ 1,330     $ 1,430       -7 %
 
                   
 
                       
International Net Sales, As Reported
  $ 439     $ 422       4 %
- Acquisitions
                   
- Currency Translation
    3                
 
                   
International Net Sales, Excluding Acquisitions and Currency Translation
  $ 442     $ 422       5 %
 
                   
Notes:
-   Data exclude discontinued operations.
 
-   The Company presents information comparing results from one period to another excluding the results of businesses acquired in order to assess the performance of the underlying businesses and to assess to what extent acquisitions are impacting growth.
 
-   The Company also presents information comparing results of International operations from one period to another using constant exchange rates. 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 to assess how the underlying businesses performed in local currencies before taking into account currency fluctuations.
 
-   The currency translation effect on North American net sales includes currency translation related to Canadian business units.

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MASCO CORPORATION
GAAP Reconciliation of Operating Profit and Margins — Unaudited
(dollars in millions)
                                 
    Three Months Ended March 31,  
    2011     2010  
    $     Margin     $     Margin  
Operating Profit, As Reported
  $ 21       1.2 %   $ 78       4.2 %
Business Rationalizations and Other Initiatives
    32               14          
 
                           
Operating Profit, As Reconciled
  $ 53       3.0 %   $ 92       5.0 %
 
                           
Notes:
-   Data exclude discontinued operations.
 
-   The Company believes that certain non-GAAP performance measures and ratios used in managing the business may provide 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.

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