August 02, 2005

Masco Corporation Highlights:

Second Quarter 2005

  • Net sales from continuing operations increased nine percent to a record $3.3 billion.
  • Income from continuing operations was $274 million or $.64 per common share.
  • The Company returned $229 million to shareholders through share repurchases and dividends.
  • The Company issued $500 million of fixed-rate 4.80% notes due 2015 and had over $1.6 billion in cash and marketable securities at June 30, 2005.

Taylor, Michigan (August 2, 2005) – Masco Corporation (NYSE: MAS) today reported that net sales from continuing operations for the quarter ended June 30, 2005 increased nine percent to a record $3.3 billion compared with $3.1 billion for the second quarter of 2004.

Income from continuing operations for the second quarter of 2005 was $274 million or $.64 per common share compared with $294 million or $.65 per common share for the comparable period of 2004. Results for the second quarter of 2005 benefited from other income, principally net gains from financial investments, of $.04 per common share, partially offset by realized currency transaction losses of $.02 per common share. The second quarter of 2004 benefited from $.03 per common share of other income, principally net gains from financial investments and other non-operating assets, as well as $.01 per common share of income related to insurance proceeds from the Behr litigation settlement and $.01 per common share of realized currency transaction gains.

The Company's 2005 first half results were adversely affected by increases in commodity, energy and freight costs, which have not been totally recovered due, in part, to the lag in implementing selling price increases to customers, as well as product mix. Second quarter 2005 sales and earnings, however, were better-than-expected due to the strong new construction market as well as an improvement in Key Retailer Sales.

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. Net income for the second 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 second quarter of 2004 results include after-tax income from discontinued operations of $11 million, and an additional after-tax charge aggregating $44 million ($.10 per common share) for those businesses that were expected to be divested at a loss, both of which are 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 second quarter was $261 million or $.58 per common share.

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 will reduce annual costs by $200 million by the end of 2007. Costs and charges related to the acceleration of these profit improvement programs, when combined with recent additional energy-related and commodity cost increases and the adverse effect of changes in currency values, are expected to result in the Company's full-year 2005 earnings from continuing operations being closer to $2.30 per common share than the previous guidance of approximately $2.40 per common share. Implementing these initiatives should improve the Company's earnings outlook for 2006 and beyond.

Based on current business trends, the Company anticipates that third quarter 2005 earnings from continuing operations will be in the range of $.60 to $.64 per common share compared with third quarter 2004 earnings from continuing operations of $.64 per common share.

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, August 2, 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 (719) 457-2692 (confirmation #4876876). The conference call will be webcast simultaneously on the Company's website at 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 #4876876) approximately two hours after the end of the call and will continue through August 9, 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

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 Masco undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

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Maria Duey