TAYLOR, MI - Masco Corp. today reported that net sales from continuing operations for the year ended Dec. 31, 2011 at $7.5 billion were relatively flat, compared to 2010. North American sales decreased three percent and International sales increased eight percent compared to 2010. In local currencies, International sales increased three percent compared with 2010.

Income from continuing operations was $.02 per common share and $.23 per common share for 2011 and 2010, respectively, excluding the items in Exhibit A and with a normalized tax rate of 36 percent. Including these items, loss from continuing operations, as reported was $(1.34) per common share and $(2.94) per common share for the years ended December 31, 2011 and 2010, respectively.

"Our performance in 2011 was challenged by commodity cost volatility, a competitive retail environment, a flat housing environment in North America and difficult economic conditions in Europe" said Masco's President and CEO, Tim Wadhams. "Despite these headwinds, we continued to: strengthen our leading brand positions, including the introduction of new products and programs; improve our cost structure and productivity; invest in future growth opportunities and improve our working capital management."

2011 marked the completion of our major rationalization activities, including business consolidations, plant closures, headcount reductions, system implementations and other initiatives. During 2011 and 2010, we incurred costs and charges of $121 million pre-tax ($.22 per common share, after tax) and $208 million pre-tax ($.38 per common share, after tax), respectively, related to these initiatives. "We believe these actions have better positioned our businesses for the current environment and have improved our leverage to a housing recovery," said Wadhams.

In the fourth quarter of 2011, we recorded non-cash, pre-tax impairment charges for goodwill and other intangible assets of $494 million ($.96 per common share, after tax). The impairment charge for goodwill and other intangible assets is primarily related to our North American window business in our Other Specialty Products segment.

In the fourth quarter of 2010, we recorded non-cash, pre-tax impairment charges for goodwill and other intangible assets of $698 million ($1.68 per common share, after tax).

We recently successfully amended our revolving credit facility to reflect the impact of our impairment charges in 2011 for goodwill and other intangible assets and the valuation allowance for our deferred tax assets on our net worth. We currently have borrowing capacity of approximately $630 million available under the revolving credit facility.

Fourth Quarter 2011

2011 Fourth Quarter Commentary

Sales increased one percent to over $1.7 billion

Results for key financial measures, as adjusted for certain items (see Exhibit B) and with a normalized tax rate of 36 percent, compared to the fourth quarter of 2010 were as follows:

Gross profit margins were 21.9 percent compared to 23.5 percent

Operating profit margins were 1.6 percent compared to 1.9 percent

Loss from continuing operations was $(.09) per common share compared to $(.08) per common share

Loss from continuing operations, as reported was $(1.42) per common share compared to $(2.92) per common share in the fourth quarter of 2010

Fourth quarter 2011 net sales from continuing operations increased one percent, to over $1.7 billion compared with $1.7 billion for the fourth quarter of 2010. North American sales increased two percent and International sales decreased one percent. In local currencies, International sales were flat compared with the fourth quarter of 2010.

Loss from continuing operations was $(.09) per common share and $(.08) per common share, for the fourth quarters of 2011 and 2010, respectively, excluding the items in Exhibit B and with a normalized tax rate of 36 percent. Including these items, loss from continuing operations, as reported, was $(1.42) per common share in the fourth quarter of 2011 compared to $(2.92) per common share in the fourth quarter of 2010.

During the fourth quarters of 2011 and 2010, we incurred business rationalization costs and charges of $61 million pre-tax ($.11 per common share, after tax) and $104 million pre-tax ($.19 per common share, after tax), respectively.

Outlook 2012

"While 2011 was a difficult year, we head into 2012 with cautious optimism. The major restructuring activities impacting our Installation segment and our North American cabinet operations are behind us and those businesses experienced improving operational trends in the fourth quarter. While our efforts to reduce costs and increase revenues did not improve performance as quickly as we anticipated in 2011, we firmly believe that these actions will drive significant improvement in 2012, even if we see no improvement in the housing markets. In cabinetry, we have taken significant actions to drive improvement both in North America and Europe, but do remain concerned about general economic conditions in the UK and Europe" said Wadhams.

"We are focused on achieving our 2012 strategic initiatives, which include leveraging our brands, reducing our costs, improving our Installation and Cabinet segments and strengthening our balance sheet. We believe these initiatives, coupled with the actions we have taken over the past several years, should position us for improved results in 2012 even in a flat housing market, and continue to believe that we will outperform as the housing market recovers."

Source: Masco Corp..