2. On the Cover TABLE OF CONTENTS
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Building Solutions is a strategy that is built on a
Letter to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . 2
unique value proposition that is end-user driven
Our Products and Services Segments
and focuses on continual differentiation based
Cabinets and Related Products . . . . . . . . . . . . . . 4
on understanding our customers and market
Plumbing Products . . . . . . . . . . . . . . . . . . . . . . . . 5
opportunities. Masco Corporation is “Building
Installation and Other Services . . . . . . . . . . . . . . 6
Solutions” for our customers through innova-
Decorative Architectural Products . . . . . . . . . . . 7
tion to increase shareholder value. The five
Other Specialty Products . . . . . . . . . . . . . . . . . . . 8
building blocks represent our products and
services segments. Financial Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Building Solutions for Our Customers
New Construction . . . . . . . . . . . . . . . . . . . . . . . . 11
Home Improvement . . . . . . . . . . . . . . . . . . . . . . 11
Consumers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Building Solutions Through Innovation . . . . . . . . . 15
Building Solutions to Increase Shareholder Value
Shareholder Returns . . . . . . . . . . . . . . . . . . . . . . 17
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . 18
Corporate Responsibility and Governance . . . . 19
Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Corporate Leadership . . . . . . . . . . . . . . . . . . . . . . . . 22
Certifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Forty-Nine Years of Sales Growth . . . . . . . . . . . . . . 24
Form 10-K
Information for Shareholders . . . . Inside Back Cover
FORWARD-LOOKING STATEMENTS NON-GAAP DISCLOSURE
Our Annual Report to Shareholders contains The Company believes that certain non-GAAP
statements reflecting our views about the (Generally Accepted Accounting Principles)
Company’s future performance. These state- performance measures and ratios, used in
ments are “forward-looking statements” under managing the business, may provide users of
the Private Securities Litigation Reform Act of this financial information with additional
1995. Actual results may differ materially from meaningful comparisons between current results
the results discussed in such forward-looking and results in prior periods of ongoing opera-
statements. For an explanation of various factors tions. Non-GAAP performance measures and
that may affect our performance, readers should ratios should be viewed in addition to,
refer to the “Risk Factors” section of our Annual and not as an alternative for, the Company’s
Report on Form 10-K included herein, as reported results under accounting principles
well as the comment at the beginning of generally accepted in the United States.
“Management’s Discussion and Analysis of
Financial Condition and Results of Operations”
in that Report. The Company undertakes no
obligation to update any forward-looking state-
ments, whether as a result of new information,
future events or otherwise.
3. Financial Highlights
Dollars In Millions Except Per Common Share Data
49-Year 5-Year 2005
Growth Growth vs
Rate Rate 2004 2005 2004 2000 1956
Net Sales 16% 15% 7% $12,642 $11,850 $ 6,388 $ 11
Operating Profit 1, 2 16% 13% -1% $ 1,577 $ 1,592 $ 867 $ 1
Income from Continuing Operations 1, 2, 3 17% 11% -8% $ 872 $ 949 $ 527 $ 0
Income from Continuing Operations
as a % of Net Sales 7% 8% 8% 4%
Per Common Share Data:
Income from Continuing
Operations 14% 12% -2% $ 2.03 $ 2.08 $ 1.17 $0.005
/16
Cash Dividends Paid 16% 10% 18% $ 0.78 $ 0.66 $ 0.49 $0.001
/16
Amounts exclude discontinued operations.
The year 2005 includes a non-cash goodwill impairment charge of $69 million after tax ($69 million pre-tax) and income of $4 million after
1
tax ($6 million pre-tax) related to the Behr litigation settlement.
The year 2004 includes a non-cash goodwill impairment charge of $104 million after tax ($112 million pre-tax) and income of $19 million after
2
tax ($30 million pre-tax) related to the Behr litigation settlement.
The year 2000 includes a non-cash charge of $94 million after tax ($145 million pre-tax) for the planned disposition of businesses and the
3
write-down of certain investments.
2005 Masco Corporation Annual Report
Building Solutions 1
4. Building Solutions
To Our Shareholders:
We are pleased to report that, once again, Masco
Corporation achieved record sales in 2005 and
that our share price reached an all-time high
Business consolidations, together with divesti-
early in the year. It is disappointing, though, to
tures, have reduced our business units from 67 in
report that our 2005 earnings did not meet our
early 2003 to less than 40 at year-end 2005.
initial expectations. After achieving record sales
and income in 2004, it was our goal to continue
While these initiatives resulted in additional
that trend. However, in 2005, along with many
costs and charges in 2005 and will result in costs
other companies, we were adversely affected by
and charges in 2006, we believe that these
significant and unanticipated increases in com-
actions will have reduced annual costs by $200
modity and raw materials costs.
million by the end of 2007 and will improve the
Company’s long-term earnings outlook.
Energy costs such as oil and natural gas reached
record heights last year, compounded by the
Going forward, we are greatly encouraged by
impact of the closure of several refineries due to
the “Building Solutions” that Masco has devel-
the tragic Gulf Coast hurricanes. At the same
oped. Building Solutions is a strategy that is
time, the costs of raw materials including fiber-
built on a unique value proposition that is end-
glass insulation, copper, resins and titanium
user driven and focuses on continual differenti-
dioxide (a key component of paint), also
ation based on understanding our customers
increased to unprecedented levels. We believe
and market opportunities. We continue to exe-
that we will offset a great majority of these cost
cute our strategic plan by Building Solutions for
increases by the end of the first half of 2006. The
our customers through innovative products,
lag time in implementing selling price increases
services and processes to increase shareholder
with larger customers in 2005, however, resulted
value.
in profit and margin loss this past year.
We are committed to growing with all of our
In addition to implementing price increases, we
customers by Building Solutions to meet their
are addressing these escalating costs through
needs. Our added focus on the installation side
restructuring, consolidation, manufacturing
of our business creates growth as we offer both
rationalization, headcount reductions and other
products and installation services on a national
profit improvement programs, including sourc-
scale for our builder customers. Our capabilities
ing from emerging markets in Asia.
have expanded to allow us to offer paint, win-
dows and cabinets as part of the installation
During 2005, we consolidated a number of our
process. Providing both our builder and retailer
businesses to leverage synergies, share best prac-
customers with consumer-desired products, as
tices and reduce costs where possible. We also
well as other value-added solutions such as
divested companies that did not fit strategically.
consumer research aimed at converting shop-
pers into buyers, remains a top priority.
2005 Masco Corporation Annual Report
2 Building Solutions
5. Building Solutions through innovation, we place
great emphasis on new product and process
development and have established incentive
programs with additional funding towards this
effort. You will see many of these outstanding
new products later in this report.
We believe that over 90 percent of our sales are
from products enjoying a leadership position in
their respective market niches—providing our
customers with the market and brand strength
necessary to remain competitive.
We continue to focus on enhancing Building
Solutions to increase shareholder value. In 2005,
we returned $1.3 billion to shareholders through
share repurchases (31 million common shares) and
dividends. We also increased our dividend by 11
percent, making 2005 the 47th consecutive year
in which dividends have been increased.
We recognize that in today’s highly competitive
global economy, we must continually review our
strategies and businesses to maintain an edge
over our competitors and remain important to
our customers. We are placing significant ALAN H. BARRY
emphasis on growing our talent base, providing President and Chief Operating Officer
top-flight leadership programs to hone the skills
and advance the capabilities of our future lead- RICHARD A. MANOOGIAN
ers. We are confident that we are building the Chairman of the Board and
right solutions and the right management team Chief Executive Officer
to further strengthen our leading positions in the
global marketplace.
We are proud of the many achievements that
our Company made in 2005. As we work to
achieve our goals moving forward, we want to
recognize the commitment and contributions of
our more than 60,000 employees, who continue
to play a vital role in Masco Corporation’s
ongoing success.
Richard A. Manoogian
Chairman of the Board and
Chief Executive Officer
Alan H. Barry
President and Chief Operating Officer
6. The Cabinets and Related Products segment
includes assembled and ready-to-assemble kitchen and bath cabi-
nets; home office workstations; entertainment centers; storage prod-
ucts; bookcases; and kitchen utility products. The Company believes
that it is the largest U.S. manufacturer of kitchen and bath cabinetry,
offering approximately 300 styles in more than 20 product lines.
Cabinets and Related Products
™
®
™
7. The Plumbing Products segment includes faucets;
plumbing fittings and valves; showerheads and hand showers;
bathtubs and shower enclosures; and spas. Masco is a world leader in
the manufacture of plumbing products.
Plumbing Products
®
®
®
8. The Installation and Other Services segment
includes the sale and installation principally of insulation as well as
cabinetry, fireplaces, gutters, garage doors, bath accessories, shelving,
windows and paint. Masco provides a variety of installation services
for homebuilders across North America.
Installation and Other Services
™
®
9. The Decorative Architectural Products segment
includes paints and stains; and door, window and other hardware.
Decorative Architectural
Products
®
10. The Other Specialty Products segment includes
windows, window frame components and patio doors; electronic
locksets; staple gun tackers, staples and other fastening tools; and
hydronic radiators and heat convectors.
Other Specialty Products
™
12. 2
1 2
2 3
1 MERILLAT SUPER
MODEL HOME
RESEARCH
2 MASCO CONTRAC-
TOR SERVICES
SM
BUILDLOGIX
3 BEHR PREMIUM
SELECT™ PAINT
13. Our Customers
Building Solutions for
New Construction
The single-family new home construction market
has been strong for well over a decade, with
underlying fundamentals supporting its future
• Behr Process Corporation, together with MCS,
vitality. Production builders, however, are now
introduced Behr Premium Select™, a new line of
facing unprecedented challenges, including
premium paints exclusively formulated for
access to land, labor and capital, as well as regu-
application in single-family new home construc-
latory constraints. Additionally, builders are
tion. MCS will offer Behr Premium Select paint
attempting to develop brands, differentiate prod-
as a new installation service for homebuilders.
ucts, streamline operations and create customers
for life, focusing on total customer satisfaction. • Merillat is completing phase two of its Super
Model Home Research. This research provides
Masco is uniquely positioned to help meet
builders with statistically significant and
today’s challenges and partner with our builder
detailed information about what consumers
customers to accomplish their objectives, there-
are looking for in their new homes and what
by making us more integral to the basic opera-
features are most likely to convert shoppers
tions of their business. This unique capability
into buyers.
originates from our position as more than just a
supplier of products and services. We are a
Home Improvement
resource for brands, distribution and installation
Big box retailers, mass merchandisers, traditional
capability, with the ability to customize our
home centers, local hardware stores and specialty
approach to support each of our customers’ spe-
retailers and dealers are all competing for a
cific value propositions and priorities. In short,
greater share of the consumer’s disposable
Masco is valued as a solutions provider by our
income. Consumers are demanding more from
customers in this channel.
their home improvement and repair experience in
Building Solutions for our new construction cus- exchange for their discretionary income.
tomers include: Moreover, as many of the players in the home
improvement market strive to attract the same
• BuildLogixSM is a value-integration process
target audience, distinctions among the retail for-
developed by Masco Contractor Services
mats begin to blur, creating consumer confusion.
(MCS) to eliminate supply-chain waste and
inefficiency, reduce builder cycle times and Success in the home improvement market is
improve builder customer satisfaction. The dependent on a clear strategic focus that pro-
BuildLogix program defines the sequencing of vides an understanding of the breadth and
products and processes in the build cycle with depth of products, services and experiences that
the goal of increasing Masco’s involvement in will delight the “right” consumer and build
various stages of the construction process.
2005 Masco Corporation Annual Report
Building Solutions 11
14. Consumers will not accept look-alike products,
retailer brand loyalty. Masco’s extensive “good,
lack of innovation and “joyless” shopping. They
better, best” product portfolio and broad distri-
also reject impersonal service and demand supe-
bution, in combination with the complementary
rior quality. Customization is the ultimate con-
nature of our brands, products and services,
sumer preference, with enough options to
enable us to drive meaningful differentiation to
excite, but not so many as to overwhelm the
address the diverse segments of the home
selection process.
improvement market.
At Masco, we believe that this ever-more-
We also attribute our retail success to extensive
demanding consumer presents an opportunity
training programs, conducted by Masco employees,
for us to create a competitive advantage for our
including those that we have instituted in the paint
products and services. We do this by applying
and cabinet departments of certain of our key
insights gained from researching and under-
retailer customers.
standing consumer demographics, attitudinal
Building Solutions for our home improvement
data and life-stage and lifestyle preferences.
customers include:
Today’s consumer is more concerned about
making their house fit the way they live and less
• Masco’s recent BathScapes® program for a
concerned about its resale value. Their home and
major Canadian retailer created a total category
home improvement shopping experience must
solution for over 400 of their stores across
be an expression of their values.
Canada. Masco worked with this retailer to
reduce the number of product suppliers for the
Building Solutions that we have provided for
bath section in its stores. According to the
consumers include:
retailer, Masco was one of the few companies
• KraftMaid Cabinetry’s new Venicia™ series of
in the world with the variety of products to
selectively distributed cabinets, offered at rea-
become the primary supplier in this category.
sonable prices, combines the high-end appeal
• Based on extensive color, demographic and
of European styling with the practical func-
psychographic research, Behr Process
tionality required by North American con-
Corporation developed the Colores Origenes™
sumers. Venicia cabinets allow consumers to
Color Palette to enhance a major retailer’s
customize their own cabinetry solution, from
strategic initiative to target Hispanic con-
pure minimalist to European transitional.
sumers. Colores Origenes, created and intro-
• Hansgrohe’s Phillipe Starck Collection builds
duced in select markets, includes a unique color
on the success of its Axor Starck™ faucets by
palette with color cards and support and
joining with German kitchen-bath product
training materials in Spanish.
manufacturer Duravit in product development,
Consumers cross-marketing and selling. The collaboration
provides consumers with a coordinated luxury
Today’s consumers are more discriminating and
bath offering, including tubs, lavatories and
diverse than at any other time in history.
bidets, all part of the high-end Axor™ collection.
2005 Masco Corporation Annual Report
12 Building Solutions
17. Innovation
Building Solutions Through
In today’s crowded, complex and global
marketplace, companies are finding it increas-
ingly difficult to develop a competitive edge.
Innovation —doing things differently and
applying new ideas to real situations in order to • Behr’s kitchen and bath paint with
create meaningful value for customers and Nanoguard® technology is engineered for
shareholders—is critical to creating that edge. greater toughness and moisture resistance in a
waterborne latex coating by employing the lat-
Innovation involves people, passion, creativity
est advances in materials science. This product
and business savvy. Innovation requires under-
is designed to create a harder, more durable
standing customer and consumer needs and
surface that is resistant to water, mildew, stains,
values, and then developing solutions that
and grease in high traffic areas of the home.
improve the customer/consumer experience
This product is available in over 2,000 shades
and our performance. Innovation is also a
in the Sateen Lustre™ sheen featured in Behr’s
strategy—one that provides customers with a
Premium Plus® coating lines.
compelling reason to choose Masco and its
• Milgard Windows fabricates premium quality
brands.
windows and patio doors utilizing fiberglass
Our employees bring tremendous creativity and frames—a material with substantial structural
enthusiasm to creating new solutions. The fol- and thermal performance characteristics.
lowing are just a few of our many outstanding While the exterior color finish is virtually
product innovations: maintenance-free, the fiberglass WoodClad™
product series presents a real wood veneered
• The Brizo™ Pascal™ culinary faucet with Smart
interior of elegant, clear vertical-grain Douglas
Technology, manufactured by Delta Faucet
Fir. Milgard is also preparing to launch a new
Company, is the first faucet designed more
line of complex frame shapes by creating fiber-
as a kitchen “appliance.” It focuses on the
glass radius and arch-top window styles uti-
actual art of cooking, improving efficiency and
lizing its own innovative proprietary process.
ease-of-use. Combining hands-free and touch-
control technology, water flow is activated
by either “tapping” the faucet or using the
hands-free option. The Pascal faucet is
designed for commercial and residential
applications, providing water conservation
and hygiene benefits for professionals and
consumers alike.
2005 Masco Corporation Annual Report
Building Solutions 15
18. 1
2 3
1 KRAFTMAID
CABINETRY’S
VENICIA™ SERIES
2 BRASSCRAFT®
PLUMBING
FIXTURES AND
HANSGROHE™
FAUCET
3 NEWPORT BRASS®
FAUCET
19. Shareholder Value
Building Solutions to Increase
Behind Masco’s growth stands a strategic com-
mitment to building greater shareholder value.
We have demonstrated this commitment
through a variety of actions, including returning
$3.6 billion to shareholders, through share
repurchases and dividends, for the three-year
period ended December 31, 2005, increasing our
dividend for 47 consecutive years and continuing
to review our corporate strategies and share-
holder goals to build even better solutions as we
move forward.
In addition to our focus on achieving our finan-
cial objectives for our shareholders, Masco has
always strived to maintain the highest stan-
dards of excellence, accountability and leader-
ship. We’re proud of the programs that we have
SHARE REPURCHASES
in place to encourage social responsibility—not
only at the corporate level but among our oper- • The Company repurchased 31 million shares
ating companies as well. of its common stock during 2005 and had
29 million common shares remaining at
December 31, 2005 under the March 2005
Shareholder Returns
Board of Directors repurchase authorization of
• We continue to focus on initiatives that
50 million shares.
enable the Company to create value for our
• Masco repurchased 97 million common shares
shareholders. Through a combination of
in the last three years, representing approxi-
growth, share repurchases and dividends, we
mately 20 percent of our shares outstanding at
believe that we will be able to achieve returns
the beginning of this period.
of 12 to 15 percent a year, on average, for the
next several years.
CASH DIVIDENDS
Average Annual Return to Shareholders • The Company increased its quarterly divi-
Organic Sales Growth 6-8% dend in 2005 by 11 percent to $.20 from $.18
per common share. The new quarterly divi-
Share Repurchase 4-5%
dend reflects the Company’s favorable
Cash Dividends 2%
long-term outlook, and strong balance sheet
Total 12-15%
Assumes operating margins at 2005 levels.
2005 Masco Corporation Annual Report
Building Solutions 17
20. and cash flow, and makes 2005 the 47th in 2004. Excluding non-cash, pre-tax goodwill
consecutive year in which dividends were impairment charges and income related to the
increased. Behr litigation settlement, operating profit mar-
gins were 13.0 percent in 2005 compared with
CASH RETURNED TO SHAREHOLDERS 14.1 percent in 2004. Operating margins were
• In 2005 and 2004, the Company returned adversely impacted by increased commodity,
$1.3 billion and $1.2 billion, respectively, to freight, energy and other petroleum-based
shareholders through share repurchases and costs, as well as a less favorable product mix.
dividends. • Income from continuing operations for 2005,
which was adversely impacted by increased
Financial Highlights costs, declined to $872 million compared with
$949 million in 2004, including non-cash, after-
• Net sales from continuing operations were a
tax charges for goodwill impairment of $69
record $12.6 billion, a seven percent increase
million and $104 million in 2005 and 2004,
over the $11.9 billion that we achieved in 2004.
respectively. Earnings from continuing opera-
Since the Company had no significant acquisi-
tions were $2.03 per common share in 2005
tions during the past year, virtually all of that
compared with $2.08 per common share in
increase was from organic growth.
2004, including the non-cash, after-tax charges
for goodwill impairment.
PROFIT IMPROVEMENT PROGRAMS
• During 2005, our profit improvement initiatives
resulted in costs of approximately $30 million
and savings of approximately $40 million.
• The Company continues to reduce costs and
add value through sourcing from emerging
markets, including Asia. We now have over
1,300 employees and 400,000 square feet of
manufacturing and distribution space in
China. Our Asian sourcing has grown from
• Net sales from North American operations, $200 million in 2003 to $450 million in 2004
accounting for 83 percent of the Company’s and in 2005 exceeded our goal of $550 million.
sales, increased eight percent to $10.5 billion in We generally save 25 to 30 percent on products
2005 from $9.7 billion in 2004. Net sales of $2.1 and components that we source from Asia.
billion from International operations, primarily
in Europe, increased one percent from 2004. CAPITAL EXPENDITURES
• Including discontinued operations, capital
• Excluding the charges for goodwill
expenditures were $282 million or 2.2 percent
impairment in 2005 and 2004, earnings from
of sales in 2005 compared with $310 million
continuing operations in 2005 were $2.19 per
or 2.5 percent of sales in 2004. Including dis-
common share, compared with $2.31 per com-
continued operations, depreciation and amor-
mon share in 2004.
tization expense was $241 million in 2005
• Operating profit margins, as reported, were
compared with $237 million in 2004.
12.5 percent in 2005 compared with 13.4 percent
2005 Masco Corporation Annual Report
18 Building Solutions
21. CASH FLOW
• In 2005, the Company achieved free cash flow
(defined as cash from operations less capital
expenditures and before dividends) of over
$1 billion, for the third consecutive year.
RETURN ON INVESTED CAPITAL (ROIC)
• For the twelve months ended December 31,
2005 and 2004, return on invested capital (as
reported) was 13.0 percent and 12.0 percent,
respectively. We continue to believe that we
will approximate our goal of 15 percent ROIC
by the end of 2006 and 18 percent by 2010.
LIQUIDITY
• The Company ended 2005 in a strong financial
position with over $2 billion in cash and mar-
ketable securities, even after using $986 million
to repurchase common shares in 2005.
• In 2005, the Company generated $193 million
of cash from the net disposition of financial
investments and $278 million from the net dis-
position of certain businesses.
• During 2005, the Company issued $500 million
of fixed-rate 4.8% notes due 2015. The
Corporate Responsibility
Company issued this debt to take advantage of
and Governance
favorable interest rates and in anticipation of
$800 million of debt maturing in March 2006. • In late 2004, Masco published its first
Corporate Sustainability Report that was
BALANCE SHEET
intended to provide stakeholders with a meas-
• Working capital at December 31, 2005 (defined urement of our performance, a balanced and
as accounts receivable and inventories less reasonable picture of Masco’s sustainability
accounts payable) improved to 15.9 percent of practices, outcomes and activities as well as
sales from 16.8 percent a year earlier. our track record in economic, environmental
and social responsibility.
CAPITALIZATION
• We also believe in supporting the communi-
• Debt as a percent of total capital was 49 per-
ties in which we live and operate. As a respon-
cent at December 31, 2005 compared with 44
sible corporate citizen, our Company, directly
percent at December 31, 2004.
and through the Masco Corporation
2005 Masco Corporation Annual Report
Building Solutions 19
22. Foundation, provides financial and product • We would especially like to thank our former
support to not-for-profit organizations that president, Wayne B. Lyon, who retired from
promote affordable housing, and cultural and our Board of Directors last year, for his guid-
other civic initiatives. ance and dedication during his many years of
valued service to the Company.
• During a year filled with natural disasters and
human tragedy brought on by the Pacific Rim
Leadership
Tsunami and the multiple hurricanes that
Masco’s greatest strength is its people. We
impacted America’s Gulf Coast, Masco was
strongly believe that outstanding performance
proud to match employee gifts and respond to
is achieved by people who are provided the
the devastation directly with contributions of
proper environment in which to excel and grow.
cash and products for rebuilding communities
We develop and recruit people who are able to
and lives. The Foundation also aided the Gulf
creatively apply their business knowledge with-
Coast with funding directed to the American
in a highly competitive global industry. While
Red Cross and the Hands On Network, among
Masco’s culture has evolved, the founding prin-
others, to assist with bringing volunteer
ciples that value individual initiative, innova-
resources and related support to the region.
tive management and maximum contribution
• Masco’s Foundation also helped to rebuild
have not changed.
lives through a variety of initiatives including
its major sponsorship of Habitat for We are committed to continually identifying
Humanity’s® Jimmy Carter Work Project that and developing future generations of senior
built 250 homes for low-income families leadership. Through Masco’s Leadership
across the State of Michigan during one week Program and Masters of Business
in June. Administration (MBA) Program and other in-
house programs, we contribute to the training
• We continue to strengthen our Ethics Program.
and nourishing of our future leaders.
In 2005, we created a separate position of
Corporate Ethics Officer, expanded our train- • The Masco Leadership Program, begun in
ing programs and enhanced our hotline to 2000 in partnership with Michigan State
reach employees worldwide. In addition, we University’s Eli Broad School of Business, pro-
continue to successfully advance ethics aware- vides key employees with a solid educational
ness, as evidenced by the promotion of our foundation, as well as a practical application
hotline and our high on-line training comple- of operational and leadership skills. Since its
tion rates. We also introduced our on-line inception, 150 employees, representing
ethics training course in Chinese. numerous operating companies, have gradu-
• Excluding the Company’s Chief Executive ated from this innovative program.
Officer, all Directors are independent under • The Masco MBA Program, developed in 1997,
New York Stock Exchange standards and all is dedicated to developing our high-potential
members of the Audit Committee, employees to take on strategic leadership roles
Organization and Compensation Committee throughout the Masco family of companies.
and Corporate Governance and Nominating Since its inception, 137 employees have grad-
Committee are independent. uated from this program.
2005 Masco Corporation Annual Report
20 Building Solutions
23. 1
3
2
1 MASCO MBA
PROGRAM
2 MASCO ON-LINE
ETHICS TRAINING
3 HABITAT FOR
HUMANITY®
24. Corporate Leadership
Corporate Officers and Operating Executives Board of
Directors
WILLIAM T. ANDERSON DANIEL R. FOLEY RICHARD G. MOSTELLER
Vice President–Controller Vice President– Vice President and
DENNIS W. ARCHER 1, 3
Corporate Accounting Human Resources Senior Financial Advisor
Chairman
RONALD W. AYERS LAU FRANDSEN SHARON J. ROTHWELL Dickinson Wright PLLC
Group President President–Masco Europe Vice President–
THOMAS G. DENOMME 1, 3
Corporate Affairs
GRAHAM BALLS EUGENE A. GARGARO, JR. Retired Vice Chairman and
JAI SHAH
Vice President–Controller Vice President and Secretary Chief Administrative Officer
European Operations Vice President– Chrysler Corporation
TED GOOLD
Strategic Planning
ALAN H. BARRY Group Vice President PETER A. DOW 1, 2
BARRY J. SILVERMAN
President and Retired Vice Chairman, Chief
CLAY H. KIEFABER
Chief Operating Officer Vice President–Associate Operating Officer and Executive
Group President
General Counsel Committee Chairman
DR. LILLIAN BAUDER
LARRY J. LA BO Campbell-Ewald
JOHN G. SZNEWAJS
Vice President
Vice President–Controller
Vice President–Corporate ANTHONY F EARLEY, JR. 1, 3
.
NICHOLAS BILLIG North American Operations
Development and Treasurer Chairman, Chief Executive
Group Vice President
JOHN R. LEEKLEY Officer, President and Chief
DAVID W. VAN HISE
JOHN C. CALKINS Senior Vice President and Operating Officer
Vice President–International
Vice President– General Counsel DTE Energy Company
JERRY VOLAS
Corporate Services
RICHARD A. MANOOGIAN VERNE G. ISTOCK 1, 2, 3
Group Vice President
THOMAS N. CHIEFFE Chairman of the Board and Retired Chairman and President
THOMAS VOSS
Group Vice President Chief Executive Officer Bank One Corporation
Executive Vice
DONALD J. DEMARIE, JR. KAREN R. MENDELSOHN DAVID L. JOHNSTON 2, 3
President–Europe
Group President Vice President– President and Vice Chancellor
TIMOTHY WADHAMS
Sales and Marketing of the University of Waterloo in
WAYNE DEVINE
Senior Vice President and Ontario, Canada
DONALD J. MILROY
Group Vice President
Chief Financial Officer
Group Vice President J. MICHAEL LOSH 1
DAVID A. DORAN
JOHN C.WILLS Retired Chief Financial Officer
JERRY W. MOLLIEN
Vice President–Taxes
Group President and Executive Vice President
Vice President–Corporate Taxes
General Motors Corporation
CHARLES A. DOWD, JR.
TIMOTHY J. MONTEITH
Group President
RICHARD A. MANOOGIAN
Vice President and
Chairman of the Board and
MARIA C. DUEY
Chief Information Officer
Chief Executive Officer
Vice President–
Masco Corporation
Investor Relations
MARY ANN VAN LOKEREN 2, 3
JEFFREY D. FILLEY
Chairman and
Group Vice President
Chief Executive Officer
Krey Distributing Company
1 Member of Audit Committee
2 Member of Organization and Compensation Committee
2005 Masco Corporation Annual Report 3 Member of Corporate Governance and Nominating Committee
22 Building Solutions
25. Certifications
Richard A. Manoogian and Timothy Wadhams
have provided certifications to the Securities
and Exchange Commission as required by
Section 302 of the Sarbanes-Oxley Act of 2002.
These certifications are included as Exhibits within the Company to examine and evaluate
31.a and 31.b to the Company’s Form 10-K for the adequacy and effectiveness of established
the year ended December 31, 2005. internal controls as related to Company policies,
procedures and objectives. The accompanying
As required by the New York Stock Exchange
report of the Company’s Independent
(NYSE), on June 7, 2005, Richard A. Manoogian
Registered Public Accounting Firm states their
submitted the annual Chief Executive Officer
opinion on the Company’s consolidated finan-
certification to the NYSE that stated that he
cial statements, management’s assessment of
was not aware of any violation by the
internal controls over financial reporting and
Company of the NYSE corporate governance
the effectiveness of internal controls over
listing standards.
financial reporting, based on audits conducted
in accordance with the standards of the
Responsibility for Public Company Accounting Oversight Board
Financial Statements (United States).
Management is responsible for the fairness and The Audit Committee of the Board of Directors
integrity of the Company’s consolidated finan- meets periodically with both management and
cial statements. In order to meet this responsi- the independent registered public accounting
bility, management maintains formal policies firm to provide oversight with respect to the
and procedures that are consistent with high Company’s financial reporting process and
standards of accounting and administrative system of internal controls.
practices, which are regularly communicated
within the organization. In addition, manage-
ment maintains a program of internal auditing
2005 Masco Corporation Annual Report
Building Solutions 23
26. Forty-Nine Years of
Sales Growth
2005 Masco Corporation Annual Report
24 Building Solutions
27. Information for Shareholders for certificates and optional cash payments regarding
the Plan should be sent to:
COMPANY PROFILE
The Bank of New York
Masco Corporation is one of the world’s largest man-
Dividend Reinvestment Department
ufacturers of brand-name consumer products for the
P.O. Box 1958
home improvement and new construction markets.
The Company is also a leading provider of services Newark, NJ 07101-1958
that include the sale and installation of insulation and
Duplicate Mailings
other building products.
Shares owned by one person, but held in different
Our products include faucets, kitchen and bath cabi- forms of the same name (e.g., John Smith, John B. Smith,
nets, architectural coatings (paints and stains), bath J.B. Smith), may result in duplicate mailings of share-
and shower units, spas, showering and plumbing holder information at added expense to the Company.
specialties, windows and electronic locksets and other
Please notify The Bank of New York by calling
hardware.
800-524-4458 in order to eliminate such duplication.
The Company has approximately 62,000 employees
Multiple shareholders who reside at one address and
and over 120 manufacturing facilities. Masco’s princi-
hold their shares through a bank or broker may receive
pal manufacturing facilities are located throughout
only one Annual Report and Proxy Statement. This
the United States. International operations are located
“householding” procedure reduces duplicate mailings
primarily in Europe.
and Company expenses. Shareholders who wish to opt
out of householding should contact their bank or broker.
EXECUTIVE OFFICES
Masco Corporation
Other Inquiries
21001 Van Born Road
All other shareholder inquiries, including those
Taylor, MI 48180
regarding lost, stolen or destroyed stock certificates,
Phone: 313-274-7400, Fax: 313-792-4177
should be directed to:
The Bank of New York
INDEPENDENT REGISTERED PUBLIC
Investor Services Department
ACCOUNTING FIRM
P.O. Box 11258
PricewaterhouseCoopers LLP
New York, NY 10286-1258
PricewaterhouseCoopers Plaza
Phone: 800-524-4458 (in the U.S.)
1900 St. Antoine
212-815-3700 (outside of the U.S.)
Detroit, MI 48226-2263
888-269-5221 (hearing inpaired-TTY phone)
E-Mail Address: shareowners@bankofny.com
STOCK EXCHANGE INFORMATION
Masco Corporation’s common stock is traded on the
INTERNET CONTACT
New York Stock Exchange under the symbol MAS.
Current information about Masco Corporation
can be found by visiting our home page on the
TRANSFER AGENT, REGISTRAR AND
Internet at www.masco.com or via e-mail at
DIVIDEND DISBURSING AGENT
webmaster@mascohq.com.
Answers to many of your shareholder questions and
requests for forms are available by visiting The Bank
INVESTOR RELATIONS CONTACT
of New York’s web site at www.stockbny.com.
Additional information about the Company is avail-
able without charge to shareholders who direct a
Transfer and Address Changes
request to:
Send certificates for transfer and address changes to:
Maria C. Duey
The Bank of New York
Vice President–Investor Relations
Receive and Deliver Department
Masco Corporation
P.O. Box 11002
21001 Van Born Road
New York, NY 10286-1002
Taylor, MI 48180
Dividend Reinvestment Plan
ANNUAL MEETING OF SHAREHOLDERS
Masco Corporation has appointed The Bank of New
York to serve as agent for its Dividend Reinvestment The 2006 Annual Meeting of Shareholders of Masco
Plan. All enrollments, terminations, sales, requests Corporation will be held at the executive offices of
the Company on May 9, 2006 at 10:00 a.m., E.D.T.
