NAVIGATION

MASCO CORPORATION REPORTS RECORD SALES AND EARNINGS FOR 2004 AND FORECASTS ANOTHER RECORD YEAR FOR 2005

February 23, 2005

Masco Corporation 2004 Highlights:

Full-Year 2004

  • Net sales from continuing operations increased 14 percent to a record $12.1 billion.
  • Income from continuing operations was $2.35 per common share excluding the impact of a goodwill impairment charge and $2.04 per common share including the impairment charge.
  • Free cash flow before dividends exceeded $1.1 billion.
  • The Company returned $1.2 billion to shareholders through share repurchases (31 million shares) and dividends.
  • The quarterly dividend was increased by 12.5 percent, the 46th consecutive year in which dividends have been increased.
  • The Company had $1.5 billion of cash and marketable securities at year-end.

Taylor, Michigan (February 23, 2005) - Masco Corporation (NYSE: MAS) today reported that net sales from continuing operations for the year ended December 31, 2004 increased 14 percent, primarily from organic growth, to a record $12.1 billion compared with $10.6 billion for 2003.

Income from continuing operations for the year ended December 31, 2004 was $1,071 million or $2.35 per common share, excluding the impact of a goodwill impairment charge pertaining to certain European operations. Including the impact of this non-cash, after-tax goodwill impairment charge of $141 million, earnings from continuing operations were $930 million or $2.04 per common share.

Results for the year ended December 31, 2004 benefited from strong organic sales growth partially offset by increases in commodity costs which were not recovered due to the delay in implementing selling price increases to customers, costs associated with the Sarbanes-Oxley Legislation and increased energy and freight costs. In addition, 2004 benefited from net gains related to the liquidation of a portion of the Company's financial investments and from income related to the Behr litigation.

Fourth quarter of 2004 net sales from continuing operations increased 10 percent to over $3.0 billion compared with $2.8 billion in the 2003 fourth quarter. Income from continuing operations for the fourth quarter of 2004 was $247 million or $.55 per common share, excluding the non-cash, after-tax goodwill impairment charge of $141 million. Including such charge, income from continuing operations was $106 million or $.23 per common share.

Results for the fourth quarter of 2004 benefited from pre-tax gains from the sale of financial investments of $40 million or $.06 per common share after tax partially offset by a pre-tax impairment charge of $21 million or $.03 per common share after tax related to the Company's investment in Furniture Brands International common stock. Results also benefited 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 which benefited earnings by $.02 per common share.

The Company previously announced, in the first quarter of 2004, the planned disposition of several European businesses that are not core to the Company's long-term growth strategy. During the fourth quarter of 2004, the Company completed the additional sale of three of these businesses: Alma Kuchen, E. Missel and SKS Group.

Including discontinued operations, net income for the 2004 fourth quarter increased to $246 million compared with $205 million for the 2003 fourth quarter, and earnings increased to $.55 per common share compared with $.43 per common share for the fourth quarter of 2003, excluding non-cash, after-tax goodwill impairment charges of $141 million and $113 million in 2004 and 2003, respectively. Including discontinued operations and the goodwill impairment charges, net income for the 2004 fourth quarter increased to $105 million compared with $92 million for the 2003 fourth quarter, and earnings increased to $.23 per common share compared with $.19 per common share for the fourth quarter of 2003.

The Company believes, based on current business trends, that it will achieve record sales and earnings for 2005 with full-year earnings from continuing operations in a range of $2.40 to $2.50 per common share. The Company anticipates that first quarter 2005 earnings from continuing operations (seasonally the lowest quarter of the year) are expected to be in a range of $.44 to $.47 per common share, compared with first quarter 2004 earnings from continuing operations of $.52 per common share, which included $.03 per common share of income related to the Behr litigation and $.07 per common share of previously disclosed other income, principally net gains from the sale of financial investments. The Company's guidance reflects recent additional increases in commodity costs which the Company believes will not be offset with selling price increases until later in 2005.

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 Wednesday, February 23, 2005 at 1:00 p.m. ET. Participants in the call are asked to register five to ten minutes prior to the scheduled start time by dialing (719) 457-2632 (confirmation #8393274). 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 #8393274) approximately two hours after the end of the call and will continue through March 2, 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.

Click Here for Financial Information.

Contact:
Samuel Cypert
313-792-6646