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Masco Corporation 2007 ANNUAL REPORT
About the Cover
Masco is building solutions for future growth
through geographic expansion, new product
innovation, further development of our Installation
and Other Services segment and expansion with
our retail, homebuilder and wholesale partners.
Through the Environments For Living®program,
which provides homeowners with energy ef cient
and environmentally friendly homes, we are able
to capitalize on emerging trends in green building.




Table of Contents
Financial Highlights ........................................ 1
To Our Shareholders....................................... 2
Product Segments.......................................... 4
Financial Results ........................................... 6
Outlook for Future Growth ............................... 10
Corporate Leadership ..................................... 13
Certi cations................................................. 14
Form 10-K
Information for Shareholders...... Inside Back Cover


FORWARD-LOOKING STATEMENTS
Our Annual Report to Shareholders contains statements reflecting our views about the Company’s future
performance. These statements are “forward-looking statements” under the Private Securities Litigation
Reform Act of 1995. Actual results may differ materially from the results discussed in such forward-looking
statements. For an explanation of various factors that may affect our performance, readers should refer to
the “Risk Factors” section of our Annual Report on Form 10-K included herein, as well as the comment at
the beginning of “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 statements, whether
as a result of new information, future events or otherwise.

NON-GAAP DISCLOSURE
The Company believes that certain non-GAAP (Generally Accepted Accounting Principles) performance
measures and ratios used in managing the business may provide users of this nancial information
with additional meaningful comparisons between current results and results in prior periods of ongoing
operations. 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.
Financial Highlights
Dollars In Millions, Except Per Common Share Data

                                                        51-Year 5-Year    2007
                                                        Growth Growth      vs
                                                         Rate    Rate     2006       2007        2006       2002       1956

Net Sales                                                15%      7%       -7% $ 11,770 $12,718 $ 8,531 $                   11
Operating Pro t                                          15%      -5%     -16% $        959 $ 1,140 $ 1,211 $                 1
                   1, 2


Income from Continuing Operations                        14%      -8%     -17% $        397 $       478 $       600 $         0
                                            1, 2, 3


Income from Continuing Operations
   as a % of Net Sales 1, 2, 3                                                           3%          4%         7%         4%

Per Common Share Data:

    Income from Continuing Operations 1, 2, 3            12%      -2%     -12% $       1.06 $      1.20 $ 1.17        $0.005/16

    Cash Dividends Paid                                  15%     11%        6% $       0.91 $      0.86 $ 0.541/2$0.001/16


Amounts exclude discontinued operations.

1   The year 2007 included non-cash impairment charges for goodwill and other intangible assets aggregating
    $208 million after tax ($227 million pre-tax).

2   The year 2006 included non-cash impairment charges for goodwill aggregating $317 million after tax
    ($317 million pre-tax) and income regarding litigation settlement of $1 million after tax ($1 million pre-tax).

3   The years 2007, 2006 and 2002 included non-cash impairment charges for nancial investments
    aggregating $14 million after tax ($22 million pre-tax), $66 million after tax ($101 million pre-tax) and
    $16 million after tax ($24 million pre-tax), respectively.




                                                      HISTORICAL SALES
                                                         1956–2007




                                           ’56                               ’07
                                                                                                                                  1
MARCH 2008




    To Our Shareholders:
             During Masco’s more than 75-year history,     brand portfolio positions us to compete at multiple
    we have rarely witnessed more challenging times        price points across all distribution channels. In
    than the dif cult economic environment we are          addition, our scale and our ability to generate and
    currently experiencing. Companies throughout the       sustain strong cash ow give us the ability to main-
    new home construction and home improvement             tain and grow relationships throughout the markets
    industries have been hit hard, including Masco.        in which we do business.
    Even our repair and remodeling sales, which histori-            Over the past few years, Masco has signi -
    cally performed well during new home construction      cantly invested in customer service support for our
    downturns, are lagging as consumers defer major        major customers. We now have more than 1,000
    remodeling of their kitchens and bathrooms.            full-time employees working with our retail and
             Throughout the year, we continued to take     wholesale customers on merchandising, inventory
    actions to mitigate the impact of deteriorating eco-   management, promotions and training. Masco is
    nomic conditions. We signi cantly reduced costs        able to customize our dedicated support to align
    by divesting non-strategic businesses and consoli-     with speci c customer needs. For example, we have
    dating plants and, over the past four years, have      more than 200 kitchen design trainers whose main
    reduced the number of our operating units from 67      focus is supporting our retail and dealer custom-
    businesses in 2003 to 29 businesses currently.         ers. This competitive differentiation and expertise
    We continued to selectively invest capital in our      uniquely position us to improve the consumer’s
    businesses to maximize returns and, in the past        in-store experience.
    18 months, have lowered our headcount by 11,000                 Our distribution and installation capabilities
    employees (22 percent of our North American work-      are a signi cant competitive advantage. We provide
    force). We continued to introduce new products to      industry-leading delivery to our retail, wholesale
    build solutions for our customers. Even with these     and homebuilder customers.
    actions, our sales declined seven percent in 2007.              Masco is well positioned in all three of our
    In the past 51 years, this is only the second sales    key distribution channels. We provide both pre-
    decline Masco has experienced.                         mium and house brands to our retail customers.
             These challenging times, however, have        For the new home construction market, in addition
    been the catalyst for further differentiating Masco    to traditional wholesale and dealer channels, we




                               asco
    from our competition. We believe that Masco’s          have a direct-to-builder model that allows us to sell
    unique market strength is the combination of four      Masco products, third party products and installa-
    key factors – our scale, customer service support,     tion services directly. To our wholesale and dealer
    distribution and installation capabilities and lead-   customers, we provide merchandising expertise and
    ing brands – that continue to distance us from the     product and sales training.
    competition, even in dif cult times.                            Perhaps most importantly, over the years
             Masco’s scale and broad product offerings     Masco has developed a critical mass of leading
    are unmatched in the new home construction and         brands that are well respected. Our brands create
    home improvement markets. The breadth of our           and drive end-user demand in both the new home




2      Masco Corporation 2007 Annual Report
Timothy Wadhams
           President and
           Chief Executive Of cer

           Richard A. Manoogian
           Executive Chairman



construction and home improvement markets. We                    In looking at 2008, the slowdowns in new
leverage our collection of brands by taking advan-      home construction and in consumer spending con-
tage of the natural synergies that exist among          tinue to negatively affect our business. We expect
them, and we continually support our brands             2008 to be even more challenging than 2007. As a
through new product innovations. The cumulative         result, while forecasting future business conditions
strength of these key areas is the foundation of our    in the current uncertain economic environment re-
Company and has enabled us to continue to solidify      mains challenging, we currently estimate that 2008
our position in the marketplace.                        sales will decline high-single to low-double digits
         Even in this dif cult economic environment,    compared with 2007.
we were able to raise our quarterly dividend for the             We are responding to today’s economy,
49th consecutive year. We maintained a strong bal-      while, at the same time, using our collective
ance sheet and also returned $1.2 billion to share-     strength to build solutions for future growth. We are
holders through share repurchases and dividends.        working to create a stronger Company, positioned
         Our competitive differentiation, together      to bene t when the industry recovers. We continue
with our more than 52,000 talented, dedicated           to believe that our focus on developing and leverag-
and committed employees worldwide, form a solid         ing our collective strengths will result in signi cant
foundation for future success. In recent years,         bene ts for our shareholders, customers, consumers
when we faced the retirement of a number of senior      and employees.
executives, the depth of our existing talent and our
reputation as an outstanding employer allowed us
to promote from within as well as recruit excep-
tional talent from outside to join Masco. Today, with   Richard A. Manoogian
almost 75 percent of our senior management team         Executive Chairman
new to their current positions within the last ve
years, we have developed a leadership team that
will carry us into the future.
         As we re ect on 2007, we would especially      Timothy Wadhams
like to thank our former President and Chief Oper-      President and Chief Executive Of cer
ating Of cer, Alan Barry, who retired at the end of
2007. We are all indebted to Alan for his dedication
to Masco during his many years of service and for
his guidance in helping to build the Company we
are today.

                                                                                                                 3
Product Segments
    Masco’s market strength is the cumulative
    service support, distribution & installation
    PLUMBING                                  CABINETS AND RELATED                 INSTALLATION AND
    PRODUCTS                                  PRODUCTS                             OTHER SERVICES
    This segment includes faucets;            This segment includes assembled      This segment includes the sale,
    plumbing ttings and valves;               and ready-to-assemble kitchen and    installation and distribution of insu-
    showerheads and hand showers;             bath cabinets; home of ce work-      lation; as well as the installation of
    bathtubs and shower enclosures;           stations; entertainment centers;     cabinetry, gutters, replaces, garage
    and spas.                                 storage products; bookcases; and     doors, bath accessories, windows,
                                              kitchen utility products.            paint and other building products.

      2007 net sales: $3.5 billion              2007 net sales: $2.8 billion         2007 net sales: $2.6 billion


      a world leader in manufacturing           the largest U.S. manufacturer of     one of the largest providers of a
      plumbing products.                        kitchen and bath cabinetry, of-      variety of installed products for
                                                fering approximately 300 styles      homebuilders across the United
                                                in more than 20 product lines.       States.
      access globally through our
      premier brands.                                                                                                -
                                                kitchen design trainers support-     vides homebuilders with totally
                                                ing retail and dealer customers.     integrated supply chain solutions,
                                  ®                                                  from product procurement to job
                                                                          ®          site delivery and installation.
                                      ®




                  istribu
                                                                      ®

                                                                                                               ®




4      Masco Corporation 2007 Annual Report
result of our scale, customer
capabilities and leading brands.
   DECORATIVE ARCHITECTURAL                   OTHER SPECIALTY
   PRODUCTS                                   PRODUCTS
   This segment principally includes          This segment includes windows,
   paints and stains; and door,               window frame components and
   window and other hardware.                 patio doors; staple gun tackers,
                                              staples and other fastening tools;
                                              and hydronic radiators and heat
                                              convectors.

     2007 net sales: $1.8 billion                2007 net sales: $1.1 billion


     is the largest supplier of archi-           is the leading manufacturer of
     tectural coatings to the North              vinyl and berglass windows in
     American do-it-yourself market.             the western United States.

                                                                            ®
     service representatives serving
     our customers in North America.




      tion
                                 ®




   Brands noted on pages 4–5 each had 2007 net sales in excess of $500 million.




                                                                                   5
Financial Results
    SHAREHOLDER RETURNS                                   Cash Dividends

                                                            2007 by ve percent to $.23 from $.22 per com-
      shareholders through share repurchases and divi-
                                                            mon share. The new quarterly dividend re ects
      dends for the ve-year period ended December
                                                            the Company’s favorable long-term outlook,
      31, 2007. The Company expects to continue to
                                                            strong balance sheet and cash ow, and makes
      return a minimum of $1 billion annually to share-
                                                            2007 the 49th consecutive year in which the
      holders, on average, through share repurchases
                                                            quarterly dividend was increased.
      and dividends as part of its ongoing commitment
      to value creation.
                                                          Cash Returned to Shareholders
    Share Repurchases
                                                            billion each year to shareholders through share
                                                            repurchases and dividends.
      its common stock during 2007 and had 41 mil-
      lion shares remaining at December 31, 2007 un-
      der the July 2007 Board of Directors repurchase     FINANCIAL REVIEW
      authorization of 50 million shares.
                                                            declined seven percent to $11.8 billion com-
                                                            pared with the $12.7 billion achieved in 2006.
      in the last ve years, representing approximately
      32 percent of the shares outstanding at the be-
      ginning of the ve-year period.                        accounting for 79 percent of the Company’s net
                                                            sales, declined 12 percent to $9.3 billion in 2007.
         2007 NET SALES BY SEGMENT
                                                            Net sales of $2.5 billion from International opera-
              (Percent of Total Net Sales)
                                                            tions, principally in Europe, increased 15 percent
                                                            compared with 2006.

                                                                                                          -




Service
                                                            ing operations was $397 million or $1.06 per
                                                            common share, including non-cash impairment
                                                            charges for goodwill and other intangible assets
                                                            and nancial investments, and costs and charges
                                                            related to business rationalizations and other
                                                            initiatives. For the full-year 2006, income from
                                              29%
         Plumbing Products
                                              24%
         Cabinets and Related Products
                                              22%
         Installation and Other Services
                                              15%
         Decorative Architectural Products
                                              10%
         Other Specialty Products



6      Masco Corporation 2007 Annual Report
CASH RETURNED TO SHAREHOLDERS
  continuing operations was $478 million or $1.20
                                                      (In Millions)
  per common share, including non-cash impair-

                                                           ’07
  ment charges for goodwill and nancial invest-
  ments, and costs and charges related to pro t
                                                           ’06
  improvement programs.
                                                           ’05
                                                           ’04
  2007 compared with 9.0 percent in 2006. Op-
                                                           ’03
  erating pro t margins were adversely impacted
  by impairment charges for goodwill and other        $0      $300           $600         $900     $1,200   $1,500
  intangible assets, the continued decline in the
                                                             Shares Repurchased
  new home construction market, a moderation                 Cash Dividends
  in consumer spending for home improvement
  products, as well as costs and charges related to
                                                      NET WORKING CAPITAL AS A % OF NET SALES
  business rationalizations and other initiatives.
                                                      (In Percent)


                                                           ’07
Capital Expenditures

                                                           ’06
  2.1 percent of sales in 2007 compared with
                                                           ’05
  $388 million or 3.1 percent of sales in 2006.
                                                           ’04
  Depreciation and amortization expense was
  $248 million in 2007 compared with $244
                                                           ’03
  million in 2006.
                                                      0%              5%            10%          15%         20%

Cash Flow
                                                      FREE CASH FLOW
  (de ned as cash from operations less capital        (In Millions)
  expenditures and before dividends) of approxi-
                                                           ’07
  mately $980 million. For the ve-year period
                                                           ’06
  ended December 31, 2007, the Company’s free
                                                           ’05
  cash ow aggregated $5 billion.

                                                           ’04
                                                           ’03
                                                      $0     $200          $400     $600    $800    $1,000 $1,200




                                                                                                                     7
Working Capital
                                                -           at December 31, 2007 compared with 53 per-
      able and inventories less accounts payable) as        cent at December 31, 2006.
      a percent of sales improved to 15.4 percent at
      December 31, 2007 compared with 16.1 percent        Return on Invested Capital
      at December 31, 2006.
                                                            and December 31, 2006, return on invested
    Liquidity                                               capital was 8.6 percent and 9.8 percent, respec-
                                                            tively. While we remain highly committed to the
      position with over $900 million in cash, even         continued improvement in our return on invested
      after using $857 million to repurchase common         capital, recent macro business trends have re-
      shares in 2007.                                       sulted in a reduction in operating pro t over the
                                                            last several quarters that has negatively impact-
                                                            ed our return on invested capital. We continue to
      of oating-rate notes due 2010 and $300 million
                                                            believe that we will achieve our long-term return
      of xed-rate 5.85% notes due 2017, resulting in
                                                            on invested capital goal of approximately 18
      net proceeds of $596 million. The notes were
                                                            percent; however, timing of this goal is uncertain
      issued in consideration of 2007 debt maturities.
                                                            until there is more clarity in the recovery of the
                                                            new home construction and home improvement
                                                            markets.
      $825 million of cash, the accreted value (94 per-
      cent of the total outstanding) of its Zero Coupon
      Convertible Senior Notes which were put to the
                                                            RETURN ON INVESTED CAPITAL
      Company in accordance with their terms.
                                                            (In Percent)


                                                             ’07
      cash from the net disposition of nancial invest-
                                                             ’06
      ments and $45 million from the net disposition

                                                             ’05
      of certain businesses and used $203 million for
      acquisitions.
                                                             ’04
                                                             ’03




    Scale
                                                           0%        3%       6%       9%       12%       15%




8      Masco Corporation 2007 Annual Report
9
    9
Outlook for Future Growth
     In spite of the current economic
     conditions, we continue to believe
     that our markets provide Masco with
     favorable long-term growth.
              Demographics support sustainable long-       its well-known brands by offering related bathroom
     term demand for new homes as a result of strong       products to penetrate other high-growth emerg-
     new household formations. The housing stock con-      ing markets. In addition, Hansgrohe’s successful
     tinues to age and, as a result, we believe mainte-    market strategy is being utilized by other Masco
     nance and home improvement spending will steadi-      operating units.
     ly increase. When consumers invest in their homes,             Installation and Other Services is a unique
     typically it is to remodel kitchens and bathrooms.    growth vehicle for Masco. Masco Contractor Ser-
     The home remains the largest and most important       vices (MCS) currently sources, distributes and
     personal investment for most Americans.               installs more than 20 different product categories
              For the short term, the markets for our      for homebuilders nationally. With our established
     products remain very challenging. We believe, how-    infrastructure and national supply chain, additional
     ever, that we have multiple avenues for pro table     Masco products as well as non-Masco products
     growth in the future, including geographic expan-     can be added to our Installation and Other Services
     sion, new product innovation, further development     capabilities, resulting in incremental opportunities
     of our Installation and Other Services segment and    and sales growth.
     expansion with our retail, homebuilder and whole-              We also continue to invest in enterprise
     sale partners.                                        resource planning (ERP) systems. At MCS, we have
              We continually focus on expanding our geo-   a major ERP system implementation project under-
     graphic presence not only to penetrate additional     way which creates a shared service center for our




     nstalla
     national and international markets, but to become     contracting locations that handles administrative
     a global supplier in other product categories. Our    functions such as invoicing, purchasing and vendor
     Hansgrohe plumbing operation in Germany is a          management. This ERP system will not only reduce
     good example of a global style leader with proven     costs, but enable our contracting locations to bet-
     international growth capabilities. Hansgrohe has      ter focus on the customer. The pilot program for
     expanded into Asian markets as well as Eastern        this new ERP system began in December 2007.
     European markets. Hansgrohe continues to leverage




10      Masco Corporation 2007 Annual Report
Masco is recognized as a leader in Build-                   consumption through the use of Energy Star® certi-
ing Science and the construction of energy ef cient                   ed products.
homes. To date, more than 100,000 homes around                               In addition, in 2007, MCS and General Elec-
the United States have been built to the Environ-                   tric Company (GE) worked together to couple the
ments For Living® program speci cations, and                        GE ecomagination® initiative and the Environments
Masco is working with national and local builders to                For Living Certi ed Green program into a new GE
plan, construct and certify even more homes under                   program, called ecomagination Homebuilder Pro-
this program.                                                       gram, that helps homebuilders and developers con-
        We expanded the Environments For Living                     struct state-of-the-art, durable and environmentally
program to capitalize further on emerging trends in                 friendly homes. This collaboration combines GE’s
green building. The Environments For Living Certi-                  high-performance products with Masco’s advanced
 ed GreenSM program expands existing energy                         principles of Building Science.
ef ciency and home comfort speci cations by add-                             These programs allow for substantial
ing requirements to help conserve water, improve                    growth opportunities with the increasing environ-
indoor air quality and further reduce overall energy                mentally conscious consumers who appreciate

“ecomagination” is a registered mark of General Electric Company.


                                                        3
                        2
                                                                                            4

           1




to
tion                                                                                             5




                                                                                                                           11
comfort, but also value durability and protecting the            contains NanoGuard® technology for a superior
     environment. They are already generating signi cant              paint coating. Behr also recently introduced Behr
     interest and have been well received by developers,              Premium Plus Ultra™, a revolutionary (patent pend-
     homebuilders and consumers.                                      ing) exterior paint and primer in one that features
              Masco is committed to helping concerned                 both NanoGuard technology and improved protec-
     consumers identify simple ways to incorporate                    tion against damage from sunlight, moisture, stains
     conservation into their everyday lives. We believe               and dirt.
     there is substantial growth opportunity in becom-                         To further enhance our market position,
     ing a leader in the development of green building                Masco continues to invest in product technology.
     products. Delta Faucet Company recently intro-                   Delta Faucet Company recently previewed its patent
     duced the Lahara™ collection, a new line of faucets              pending Diamond™ Seal Technology, a revolution-
     that received WaterSense® certi cation by the U.S.               ary advancement in valve design. Diamond Seal
     Environmental Protection Agency for promoting and                Technology signi cantly extends faucet performance
     enhancing water-ef cient products. The Lahara                    and effectively eliminates the potential for faucet
     collection leads the way in providing concerned con-             leaks or failures, while at the same time enabling
     sumers with water conservation without sacri cing                Delta to engineer contaminant-free waterways – all
     experience.                                                      with the goal of increasing customer satisfaction
              We continue to accelerate the speed of new              and helping to deliver the purest water possible.
     and updated product launches to bring to market                           The incremental growth of our retail, home-
     what the consumer desires. Masco’s window com-                   builder and wholesale partners should result in
     panies continue to provide premium quality vinyl                 future sales growth for Masco. Our strong presence
     windows while adding enhanced features. For ex-                  with our retail partners results in our bene ting
     ample, Milgard’s SmartTouch™ lock was engineered                 from their new store openings, new programs and
     to provide homeowners with a simple, one-touch                   entry into new markets. As our channel partners
     operation to close and lock the window. When the                 continue to consolidate suppliers to support their
     window is locked, the one-touch mechanism is                     own geographic growth, Masco is in a unique
     recessed into the window, allowing the homeowner                 position to be a preferred partner as a supplier
     to easily verify that the window is secure. In addi-             of multiple products.
     tion, our cabinet companies provide options for the                       Given our many strengths and our proven
     individual consumer in response to their needs. The              historical growth record, we continue to view the




                     rands
     Masco Builder Cabinet Group added new options to                 future with optimism. Our numerous growth oppor-
     its universal access line in the Quality Cabinets®               tunities make us con dent that we can remain one
     brand to meet the needs of aging or physically chal-             of the largest and most important global manufac-
     lenged consumers who require additional assis-                   turers and national providers of building and home
     tance and convenience.                                           improvement products and services. We believe
              Through the strength of our leading con-                that our strategy, together with the leveraging of our
     sumer brands, we are able to introduce innovative                market strength, will allow Masco to continue to dif-
     new products. Behr’s kitchen and bath enamel                     ferentiate itself and drive long-term growth.
     coating, with improved mildew and stain resistance,

     “Energy Star” and “WaterSense” are registered trademarks of the U.S. Environmental Protection Agency.




12       Masco Corporation 2007 Annual Report
Corporate Leadership
CORPORATE OFFICERS                                                       BOARD OF DIRECTORS
William T. Anderson                  Timothy J. Monteith                 Dennis W. Archer     1, 3

Vice President–Controller            Vice President and                  Chairman
                                     Chief Information Of cer            Dickinson Wright PLLC
Ronald W. Ayers
                                     Sharon J. Rothwell                  Thomas G. Denomme 1, 3
Group President
                                     Vice President–Corporate Affairs    Retired Vice Chairman and
Donald J. DeMarie, Jr.                                                   Chief Administrative Of cer
                                     Jai Shah
Executive Vice President and                                             Chrysler Corporation
Chief Operating Of cer               Vice President–Strategic Planning
                                                                         Peter A. Dow 1, 2
                                     and Group Vice President
Maria C. Duey                                                            Retired Vice Chairman, Chief Operat-
                                     Barry J. Silverman
Vice President–Investor Relations                                        ing Of cer and Executive Committee
                                     Vice President–Associate            Chairman
Eugene A. Gargaro, Jr.               General Counsel                     Campbell-Ewald
Vice President and Secretary
                                     John G. Sznewajs                    Anthony F. Earley, Jr. 1, 3
Charles F. Greenwood                 Vice President, Treasurer and       Chairman and Chief Executive Of cer
Vice President–Human Resources       Chief Financial Of cer              DTE Energy Company
John R. Leekley                      David W. Van Hise                   Verne G. Istock 1, 2, 3
Senior Vice President and            Vice President–International        Retired Chairman and President
General Counsel
                                                                         Bank One Corporation
                                     Jerry Volas
Richard A. Manoogian                 Group President                     David L. Johnston 2, 3
Executive Chairman
                                                                         President and Vice Chancellor
                                     Thomas Voss
Karen R. Mendelsohn                                                      of the University of Waterloo
                                     President–Masco Europe
Vice President–Sales and Marketing                                       in Ontario, Canada
                                     Timothy Wadhams
                                                                         J. Michael Losh 1, 2
                                     President and
                                                                         Retired Chief Financial Of cer
                                     Chief Executive Of cer
                                                                         and Executive Vice President
                                                                         General Motors Corporation
                                                                         Richard A. Manoogian
                                                                         Executive Chairman
                                                                         Masco Corporation
                                                                         Lisa A. Payne 1
                                                                         Vice Chairman and
                                                                         Chief Financial Of cer
                                                                         Taubman Centers, Inc.
                                                                         Mary Ann Van Lokeren 2, 3
                                                                         Retired Chairman and
                                                                         Chief Executive Of cer
                                                                         Krey Distributing Company
                                                                         Timothy Wadhams
                                                                         President and
                                                                         Chief Executive Of cer
                                                                         Masco Corporation

                                                                         1
                                                                             Member of Audit Committee
                                                                         2
                                                                             Member of Organization and
                                                                             Compensation Committee
                                                                         3
                                                                             Member of Corporate Governance
                                                                                                                13
                                                                             and Nominating Committee
Certifications
             Timothy Wadhams and John G. Sznewajs          In addition, management maintains a program of in-
     have provided certi cations to the Securities and     ternal auditing within the Company to examine and
     Exchange Commission as required by Section 302        evaluate the adequacy and effectiveness of estab-
     of the Sarbanes-Oxley Act of 2002. These certi ca-    lished internal controls related to Company poli-
     tions are included as Exhibits 31.a and 31.b to the   cies, procedures and objectives. The report of the
     Company’s Form 10-K, included herein, for the year    Company’s Independent Registered Public Account-
     ended December 31, 2007.                              ing Firm (included in the accompanying Form 10-K)
             As required by the New York Stock             states their opinion on the Company’s consolidated
     Exchange (NYSE), on May 22, 2007, Richard A.            nancial statements and the effectiveness of
     Manoogian submitted the annual Chief Executive        internal controls over nancial reporting, based on
     Of cer certi cation to the NYSE that stated that he   audits conducted in accordance with the standards
     was not aware of any violation by the Company of      of the Public Company Accounting Oversight Board
     the NYSE corporate governance listing standards.      (U.S.). The Audit Committee of the Board of Direc-
                                                           tors meets periodically with both management and
     RESPONSIBILITY FOR                                    the Independent Registered Public Accounting Firm
     FINANCIAL STATEMENTS                                  to provide oversight with respect to the Company’s
               Management is responsible for the fair-       nancial reporting process and system of internal
     ness and integrity of the Company’s consolidated      controls.
      nancial statements. In order to meet this respon-
     sibility, management maintains formal policies and
     procedures that are consistent with high standards
     of accounting and administrative practices, which
     are regularly communicated within the organization.




14      Masco Corporation 2007 Annual Report
Information for Shareholders
COMPANY PROFILE                                          ANNUAL MEETING OF SHAREHOLDERS
Masco Corporation is one of the world’s largest          The 2008 Annual Meeting of Shareholders of Masco
manufacturers of brand name products for the home        Corporation will be held at the executive of ces of the
improvement and new home construction markets.           Company on May 13, 2008 at 10:00 a.m., E.D.T.
The Company is also a leading provider of a variety of
installed products and services, including insulation    TRANSFER AGENT, REGISTRAR AND
and other building products, for homebuilders.           DIVIDEND DISBURSING AGENT
                                                         Answers to many of your shareholder questions
Our products include faucets, kitchen and bath
                                                         and requests for forms are available by visiting the
cabinets, paints and stains, bath and shower units,
                                                         BNY Mellon Shareowner Services Web site at
spas, showering and plumbing specialties, windows
                                                         www.bnymellon.com/shareowner/isd.
and decorative hardware.
                                                         Send Certi cates For Transfer to:
As of December 31, 2007, the Company had
                                                         BNY Mellon Shareowner Services
more than 52,000 employees and approximately
                                                         P Box 358015
                                                         .O.
120 manufacturing facilities. Masco’s principal
                                                         Pittsburgh, PA 15252-8015
manufacturing facilities are located throughout the
United States. International operations are located      Dividend Reinvestment Plan:
principally in Europe.                                   Masco Corporation has appointed BNY Mellon
                                                         Shareowner Services to serve as agent to its Dividend
EXECUTIVE OFFICES                                        Reinvestment Plan. All inquiries regarding the Plan
Masco Corporation                                        should be sent to:
21001 Van Born Road                                      Masco Corporation
Taylor, MI 48180-1340                                    C/O BNY Mellon Shareowner Services
Phone: 313-274-7400, Fax: 313-792-4177                   P Box 358035
                                                         .O.
                                                         Pittsburgh, PA 15252-8035
INDEPENDENT REGISTERED
                                                         Shareholder inquiries regarding lost certi cates should
PUBLIC ACCOUNTING FIRM
                                                         be directed to:
PricewaterhouseCoopers LLP
                                                         BNY Mellon Shareowner Services
PricewaterhouseCoopers Plaza
                                                         P Box 358333
                                                         .O.
1900 St. Antoine
                                                         Pittsburgh, PA 15252-8333
Detroit, MI 48226-2263
                                                         Duplicate mailings and other inquiries:
STOCK EXCHANGE INFORMATION                               Multiple shareholders who reside at one address and
Masco Corporation’s common stock is traded on the        hold their shares through a bank or broker may receive
New York Stock Exchange under the symbol MAS.            only one Annual Report and Proxy Statement. This
                                                         “householding” procedure reduces duplicate mailings
INTERNET CONTACT                                         and Company expenses. Shareholders who wish to opt
                                                         out of householding should contact their bank or broker.
Current information about Masco Corporation can be
found by visiting our home page on the Internet at
                                                         Shares owned by one person, but held in different
www.masco.com or you may contact us via e-mail at
                                                         forms of the same name may result in duplicate
webmaster@mascohq.com.
                                                         mailings of shareholder information at added expense
                                                         to the Company. Please notify BNY Mellon Shareowner
INVESTOR RELATIONS CONTACT
                                                         Services in order to eliminate such duplication.
Additional information about the Company is
available without charge to shareholders who direct      General inquiries and address changes should be
a request to:                                            directed as follows:
Maria C. Duey                                            BNY Mellon Shareowner Services
Vice President–Investor Relations                        480 Washington Blvd, 27th Floor
Masco Corporation                                        Jersey City, NJ 07310
21001 Van Born Road                                      Phone: 866-230-0666 (in the U.S.)
                                                                 201-680-6685 (outside of the U.S.)
Taylor, MI 48180-1340
                                                                 800-231-5469 (hearing impaired – TTD phone)
                                                         E-Mail Address: shrrelations@mellon.com
MASCO CORPORATION
21001 Van Born Road
Taylor, Michigan 48180
    313 274 7400
   www.masco.com




          Cert no. SW-COC-1530

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Masco 2007

  • 1. Masco Corporation 2007 ANNUAL REPORT
  • 2. About the Cover Masco is building solutions for future growth through geographic expansion, new product innovation, further development of our Installation and Other Services segment and expansion with our retail, homebuilder and wholesale partners. Through the Environments For Living®program, which provides homeowners with energy ef cient and environmentally friendly homes, we are able to capitalize on emerging trends in green building. Table of Contents Financial Highlights ........................................ 1 To Our Shareholders....................................... 2 Product Segments.......................................... 4 Financial Results ........................................... 6 Outlook for Future Growth ............................... 10 Corporate Leadership ..................................... 13 Certi cations................................................. 14 Form 10-K Information for Shareholders...... Inside Back Cover FORWARD-LOOKING STATEMENTS Our Annual Report to Shareholders contains statements reflecting our views about the Company’s future performance. These statements are “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from the results discussed in such forward-looking statements. For an explanation of various factors that may affect our performance, readers should refer to the “Risk Factors” section of our Annual Report on Form 10-K included herein, as well as the comment at the beginning of “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 statements, whether as a result of new information, future events or otherwise. NON-GAAP DISCLOSURE The Company believes that certain non-GAAP (Generally Accepted Accounting Principles) performance measures and ratios used in managing the business may provide users of this nancial information with additional meaningful comparisons between current results and results in prior periods of ongoing operations. 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.
  • 3. Financial Highlights Dollars In Millions, Except Per Common Share Data 51-Year 5-Year 2007 Growth Growth vs Rate Rate 2006 2007 2006 2002 1956 Net Sales 15% 7% -7% $ 11,770 $12,718 $ 8,531 $ 11 Operating Pro t 15% -5% -16% $ 959 $ 1,140 $ 1,211 $ 1 1, 2 Income from Continuing Operations 14% -8% -17% $ 397 $ 478 $ 600 $ 0 1, 2, 3 Income from Continuing Operations as a % of Net Sales 1, 2, 3 3% 4% 7% 4% Per Common Share Data: Income from Continuing Operations 1, 2, 3 12% -2% -12% $ 1.06 $ 1.20 $ 1.17 $0.005/16 Cash Dividends Paid 15% 11% 6% $ 0.91 $ 0.86 $ 0.541/2$0.001/16 Amounts exclude discontinued operations. 1 The year 2007 included non-cash impairment charges for goodwill and other intangible assets aggregating $208 million after tax ($227 million pre-tax). 2 The year 2006 included non-cash impairment charges for goodwill aggregating $317 million after tax ($317 million pre-tax) and income regarding litigation settlement of $1 million after tax ($1 million pre-tax). 3 The years 2007, 2006 and 2002 included non-cash impairment charges for nancial investments aggregating $14 million after tax ($22 million pre-tax), $66 million after tax ($101 million pre-tax) and $16 million after tax ($24 million pre-tax), respectively. HISTORICAL SALES 1956–2007 ’56 ’07 1
  • 4. MARCH 2008 To Our Shareholders: During Masco’s more than 75-year history, brand portfolio positions us to compete at multiple we have rarely witnessed more challenging times price points across all distribution channels. In than the dif cult economic environment we are addition, our scale and our ability to generate and currently experiencing. Companies throughout the sustain strong cash ow give us the ability to main- new home construction and home improvement tain and grow relationships throughout the markets industries have been hit hard, including Masco. in which we do business. Even our repair and remodeling sales, which histori- Over the past few years, Masco has signi - cally performed well during new home construction cantly invested in customer service support for our downturns, are lagging as consumers defer major major customers. We now have more than 1,000 remodeling of their kitchens and bathrooms. full-time employees working with our retail and Throughout the year, we continued to take wholesale customers on merchandising, inventory actions to mitigate the impact of deteriorating eco- management, promotions and training. Masco is nomic conditions. We signi cantly reduced costs able to customize our dedicated support to align by divesting non-strategic businesses and consoli- with speci c customer needs. For example, we have dating plants and, over the past four years, have more than 200 kitchen design trainers whose main reduced the number of our operating units from 67 focus is supporting our retail and dealer custom- businesses in 2003 to 29 businesses currently. ers. This competitive differentiation and expertise We continued to selectively invest capital in our uniquely position us to improve the consumer’s businesses to maximize returns and, in the past in-store experience. 18 months, have lowered our headcount by 11,000 Our distribution and installation capabilities employees (22 percent of our North American work- are a signi cant competitive advantage. We provide force). We continued to introduce new products to industry-leading delivery to our retail, wholesale build solutions for our customers. Even with these and homebuilder customers. actions, our sales declined seven percent in 2007. Masco is well positioned in all three of our In the past 51 years, this is only the second sales key distribution channels. We provide both pre- decline Masco has experienced. mium and house brands to our retail customers. These challenging times, however, have For the new home construction market, in addition been the catalyst for further differentiating Masco to traditional wholesale and dealer channels, we asco from our competition. We believe that Masco’s have a direct-to-builder model that allows us to sell unique market strength is the combination of four Masco products, third party products and installa- key factors – our scale, customer service support, tion services directly. To our wholesale and dealer distribution and installation capabilities and lead- customers, we provide merchandising expertise and ing brands – that continue to distance us from the product and sales training. competition, even in dif cult times. Perhaps most importantly, over the years Masco’s scale and broad product offerings Masco has developed a critical mass of leading are unmatched in the new home construction and brands that are well respected. Our brands create home improvement markets. The breadth of our and drive end-user demand in both the new home 2 Masco Corporation 2007 Annual Report
  • 5. Timothy Wadhams President and Chief Executive Of cer Richard A. Manoogian Executive Chairman construction and home improvement markets. We In looking at 2008, the slowdowns in new leverage our collection of brands by taking advan- home construction and in consumer spending con- tage of the natural synergies that exist among tinue to negatively affect our business. We expect them, and we continually support our brands 2008 to be even more challenging than 2007. As a through new product innovations. The cumulative result, while forecasting future business conditions strength of these key areas is the foundation of our in the current uncertain economic environment re- Company and has enabled us to continue to solidify mains challenging, we currently estimate that 2008 our position in the marketplace. sales will decline high-single to low-double digits Even in this dif cult economic environment, compared with 2007. we were able to raise our quarterly dividend for the We are responding to today’s economy, 49th consecutive year. We maintained a strong bal- while, at the same time, using our collective ance sheet and also returned $1.2 billion to share- strength to build solutions for future growth. We are holders through share repurchases and dividends. working to create a stronger Company, positioned Our competitive differentiation, together to bene t when the industry recovers. We continue with our more than 52,000 talented, dedicated to believe that our focus on developing and leverag- and committed employees worldwide, form a solid ing our collective strengths will result in signi cant foundation for future success. In recent years, bene ts for our shareholders, customers, consumers when we faced the retirement of a number of senior and employees. executives, the depth of our existing talent and our reputation as an outstanding employer allowed us to promote from within as well as recruit excep- tional talent from outside to join Masco. Today, with Richard A. Manoogian almost 75 percent of our senior management team Executive Chairman new to their current positions within the last ve years, we have developed a leadership team that will carry us into the future. As we re ect on 2007, we would especially Timothy Wadhams like to thank our former President and Chief Oper- President and Chief Executive Of cer ating Of cer, Alan Barry, who retired at the end of 2007. We are all indebted to Alan for his dedication to Masco during his many years of service and for his guidance in helping to build the Company we are today. 3
  • 6. Product Segments Masco’s market strength is the cumulative service support, distribution & installation PLUMBING CABINETS AND RELATED INSTALLATION AND PRODUCTS PRODUCTS OTHER SERVICES This segment includes faucets; This segment includes assembled This segment includes the sale, plumbing ttings and valves; and ready-to-assemble kitchen and installation and distribution of insu- showerheads and hand showers; bath cabinets; home of ce work- lation; as well as the installation of bathtubs and shower enclosures; stations; entertainment centers; cabinetry, gutters, replaces, garage and spas. storage products; bookcases; and doors, bath accessories, windows, kitchen utility products. paint and other building products. 2007 net sales: $3.5 billion 2007 net sales: $2.8 billion 2007 net sales: $2.6 billion a world leader in manufacturing the largest U.S. manufacturer of one of the largest providers of a plumbing products. kitchen and bath cabinetry, of- variety of installed products for fering approximately 300 styles homebuilders across the United in more than 20 product lines. States. access globally through our premier brands. - kitchen design trainers support- vides homebuilders with totally ing retail and dealer customers. integrated supply chain solutions, ® from product procurement to job ® site delivery and installation. ® istribu ® ® 4 Masco Corporation 2007 Annual Report
  • 7. result of our scale, customer capabilities and leading brands. DECORATIVE ARCHITECTURAL OTHER SPECIALTY PRODUCTS PRODUCTS This segment principally includes This segment includes windows, paints and stains; and door, window frame components and window and other hardware. patio doors; staple gun tackers, staples and other fastening tools; and hydronic radiators and heat convectors. 2007 net sales: $1.8 billion 2007 net sales: $1.1 billion is the largest supplier of archi- is the leading manufacturer of tectural coatings to the North vinyl and berglass windows in American do-it-yourself market. the western United States. ® service representatives serving our customers in North America. tion ® Brands noted on pages 4–5 each had 2007 net sales in excess of $500 million. 5
  • 8. Financial Results SHAREHOLDER RETURNS Cash Dividends 2007 by ve percent to $.23 from $.22 per com- shareholders through share repurchases and divi- mon share. The new quarterly dividend re ects dends for the ve-year period ended December the Company’s favorable long-term outlook, 31, 2007. The Company expects to continue to strong balance sheet and cash ow, and makes return a minimum of $1 billion annually to share- 2007 the 49th consecutive year in which the holders, on average, through share repurchases quarterly dividend was increased. and dividends as part of its ongoing commitment to value creation. Cash Returned to Shareholders Share Repurchases billion each year to shareholders through share repurchases and dividends. its common stock during 2007 and had 41 mil- lion shares remaining at December 31, 2007 un- der the July 2007 Board of Directors repurchase FINANCIAL REVIEW authorization of 50 million shares. declined seven percent to $11.8 billion com- pared with the $12.7 billion achieved in 2006. in the last ve years, representing approximately 32 percent of the shares outstanding at the be- ginning of the ve-year period. accounting for 79 percent of the Company’s net sales, declined 12 percent to $9.3 billion in 2007. 2007 NET SALES BY SEGMENT Net sales of $2.5 billion from International opera- (Percent of Total Net Sales) tions, principally in Europe, increased 15 percent compared with 2006. - Service ing operations was $397 million or $1.06 per common share, including non-cash impairment charges for goodwill and other intangible assets and nancial investments, and costs and charges related to business rationalizations and other initiatives. For the full-year 2006, income from 29% Plumbing Products 24% Cabinets and Related Products 22% Installation and Other Services 15% Decorative Architectural Products 10% Other Specialty Products 6 Masco Corporation 2007 Annual Report
  • 9. CASH RETURNED TO SHAREHOLDERS continuing operations was $478 million or $1.20 (In Millions) per common share, including non-cash impair- ’07 ment charges for goodwill and nancial invest- ments, and costs and charges related to pro t ’06 improvement programs. ’05 ’04 2007 compared with 9.0 percent in 2006. Op- ’03 erating pro t margins were adversely impacted by impairment charges for goodwill and other $0 $300 $600 $900 $1,200 $1,500 intangible assets, the continued decline in the Shares Repurchased new home construction market, a moderation Cash Dividends in consumer spending for home improvement products, as well as costs and charges related to NET WORKING CAPITAL AS A % OF NET SALES business rationalizations and other initiatives. (In Percent) ’07 Capital Expenditures ’06 2.1 percent of sales in 2007 compared with ’05 $388 million or 3.1 percent of sales in 2006. ’04 Depreciation and amortization expense was $248 million in 2007 compared with $244 ’03 million in 2006. 0% 5% 10% 15% 20% Cash Flow FREE CASH FLOW (de ned as cash from operations less capital (In Millions) expenditures and before dividends) of approxi- ’07 mately $980 million. For the ve-year period ’06 ended December 31, 2007, the Company’s free ’05 cash ow aggregated $5 billion. ’04 ’03 $0 $200 $400 $600 $800 $1,000 $1,200 7
  • 10. Working Capital - at December 31, 2007 compared with 53 per- able and inventories less accounts payable) as cent at December 31, 2006. a percent of sales improved to 15.4 percent at December 31, 2007 compared with 16.1 percent Return on Invested Capital at December 31, 2006. and December 31, 2006, return on invested Liquidity capital was 8.6 percent and 9.8 percent, respec- tively. While we remain highly committed to the position with over $900 million in cash, even continued improvement in our return on invested after using $857 million to repurchase common capital, recent macro business trends have re- shares in 2007. sulted in a reduction in operating pro t over the last several quarters that has negatively impact- ed our return on invested capital. We continue to of oating-rate notes due 2010 and $300 million believe that we will achieve our long-term return of xed-rate 5.85% notes due 2017, resulting in on invested capital goal of approximately 18 net proceeds of $596 million. The notes were percent; however, timing of this goal is uncertain issued in consideration of 2007 debt maturities. until there is more clarity in the recovery of the new home construction and home improvement markets. $825 million of cash, the accreted value (94 per- cent of the total outstanding) of its Zero Coupon Convertible Senior Notes which were put to the RETURN ON INVESTED CAPITAL Company in accordance with their terms. (In Percent) ’07 cash from the net disposition of nancial invest- ’06 ments and $45 million from the net disposition ’05 of certain businesses and used $203 million for acquisitions. ’04 ’03 Scale 0% 3% 6% 9% 12% 15% 8 Masco Corporation 2007 Annual Report
  • 11. 9 9
  • 12. Outlook for Future Growth In spite of the current economic conditions, we continue to believe that our markets provide Masco with favorable long-term growth. Demographics support sustainable long- its well-known brands by offering related bathroom term demand for new homes as a result of strong products to penetrate other high-growth emerg- new household formations. The housing stock con- ing markets. In addition, Hansgrohe’s successful tinues to age and, as a result, we believe mainte- market strategy is being utilized by other Masco nance and home improvement spending will steadi- operating units. ly increase. When consumers invest in their homes, Installation and Other Services is a unique typically it is to remodel kitchens and bathrooms. growth vehicle for Masco. Masco Contractor Ser- The home remains the largest and most important vices (MCS) currently sources, distributes and personal investment for most Americans. installs more than 20 different product categories For the short term, the markets for our for homebuilders nationally. With our established products remain very challenging. We believe, how- infrastructure and national supply chain, additional ever, that we have multiple avenues for pro table Masco products as well as non-Masco products growth in the future, including geographic expan- can be added to our Installation and Other Services sion, new product innovation, further development capabilities, resulting in incremental opportunities of our Installation and Other Services segment and and sales growth. expansion with our retail, homebuilder and whole- We also continue to invest in enterprise sale partners. resource planning (ERP) systems. At MCS, we have We continually focus on expanding our geo- a major ERP system implementation project under- graphic presence not only to penetrate additional way which creates a shared service center for our nstalla national and international markets, but to become contracting locations that handles administrative a global supplier in other product categories. Our functions such as invoicing, purchasing and vendor Hansgrohe plumbing operation in Germany is a management. This ERP system will not only reduce good example of a global style leader with proven costs, but enable our contracting locations to bet- international growth capabilities. Hansgrohe has ter focus on the customer. The pilot program for expanded into Asian markets as well as Eastern this new ERP system began in December 2007. European markets. Hansgrohe continues to leverage 10 Masco Corporation 2007 Annual Report
  • 13. Masco is recognized as a leader in Build- consumption through the use of Energy Star® certi- ing Science and the construction of energy ef cient ed products. homes. To date, more than 100,000 homes around In addition, in 2007, MCS and General Elec- the United States have been built to the Environ- tric Company (GE) worked together to couple the ments For Living® program speci cations, and GE ecomagination® initiative and the Environments Masco is working with national and local builders to For Living Certi ed Green program into a new GE plan, construct and certify even more homes under program, called ecomagination Homebuilder Pro- this program. gram, that helps homebuilders and developers con- We expanded the Environments For Living struct state-of-the-art, durable and environmentally program to capitalize further on emerging trends in friendly homes. This collaboration combines GE’s green building. The Environments For Living Certi- high-performance products with Masco’s advanced ed GreenSM program expands existing energy principles of Building Science. ef ciency and home comfort speci cations by add- These programs allow for substantial ing requirements to help conserve water, improve growth opportunities with the increasing environ- indoor air quality and further reduce overall energy mentally conscious consumers who appreciate “ecomagination” is a registered mark of General Electric Company. 3 2 4 1 to tion 5 11
  • 14. comfort, but also value durability and protecting the contains NanoGuard® technology for a superior environment. They are already generating signi cant paint coating. Behr also recently introduced Behr interest and have been well received by developers, Premium Plus Ultra™, a revolutionary (patent pend- homebuilders and consumers. ing) exterior paint and primer in one that features Masco is committed to helping concerned both NanoGuard technology and improved protec- consumers identify simple ways to incorporate tion against damage from sunlight, moisture, stains conservation into their everyday lives. We believe and dirt. there is substantial growth opportunity in becom- To further enhance our market position, ing a leader in the development of green building Masco continues to invest in product technology. products. Delta Faucet Company recently intro- Delta Faucet Company recently previewed its patent duced the Lahara™ collection, a new line of faucets pending Diamond™ Seal Technology, a revolution- that received WaterSense® certi cation by the U.S. ary advancement in valve design. Diamond Seal Environmental Protection Agency for promoting and Technology signi cantly extends faucet performance enhancing water-ef cient products. The Lahara and effectively eliminates the potential for faucet collection leads the way in providing concerned con- leaks or failures, while at the same time enabling sumers with water conservation without sacri cing Delta to engineer contaminant-free waterways – all experience. with the goal of increasing customer satisfaction We continue to accelerate the speed of new and helping to deliver the purest water possible. and updated product launches to bring to market The incremental growth of our retail, home- what the consumer desires. Masco’s window com- builder and wholesale partners should result in panies continue to provide premium quality vinyl future sales growth for Masco. Our strong presence windows while adding enhanced features. For ex- with our retail partners results in our bene ting ample, Milgard’s SmartTouch™ lock was engineered from their new store openings, new programs and to provide homeowners with a simple, one-touch entry into new markets. As our channel partners operation to close and lock the window. When the continue to consolidate suppliers to support their window is locked, the one-touch mechanism is own geographic growth, Masco is in a unique recessed into the window, allowing the homeowner position to be a preferred partner as a supplier to easily verify that the window is secure. In addi- of multiple products. tion, our cabinet companies provide options for the Given our many strengths and our proven individual consumer in response to their needs. The historical growth record, we continue to view the rands Masco Builder Cabinet Group added new options to future with optimism. Our numerous growth oppor- its universal access line in the Quality Cabinets® tunities make us con dent that we can remain one brand to meet the needs of aging or physically chal- of the largest and most important global manufac- lenged consumers who require additional assis- turers and national providers of building and home tance and convenience. improvement products and services. We believe Through the strength of our leading con- that our strategy, together with the leveraging of our sumer brands, we are able to introduce innovative market strength, will allow Masco to continue to dif- new products. Behr’s kitchen and bath enamel ferentiate itself and drive long-term growth. coating, with improved mildew and stain resistance, “Energy Star” and “WaterSense” are registered trademarks of the U.S. Environmental Protection Agency. 12 Masco Corporation 2007 Annual Report
  • 15. Corporate Leadership CORPORATE OFFICERS BOARD OF DIRECTORS William T. Anderson Timothy J. Monteith Dennis W. Archer 1, 3 Vice President–Controller Vice President and Chairman Chief Information Of cer Dickinson Wright PLLC Ronald W. Ayers Sharon J. Rothwell Thomas G. Denomme 1, 3 Group President Vice President–Corporate Affairs Retired Vice Chairman and Donald J. DeMarie, Jr. Chief Administrative Of cer Jai Shah Executive Vice President and Chrysler Corporation Chief Operating Of cer Vice President–Strategic Planning Peter A. Dow 1, 2 and Group Vice President Maria C. Duey Retired Vice Chairman, Chief Operat- Barry J. Silverman Vice President–Investor Relations ing Of cer and Executive Committee Vice President–Associate Chairman Eugene A. Gargaro, Jr. General Counsel Campbell-Ewald Vice President and Secretary John G. Sznewajs Anthony F. Earley, Jr. 1, 3 Charles F. Greenwood Vice President, Treasurer and Chairman and Chief Executive Of cer Vice President–Human Resources Chief Financial Of cer DTE Energy Company John R. Leekley David W. Van Hise Verne G. Istock 1, 2, 3 Senior Vice President and Vice President–International Retired Chairman and President General Counsel Bank One Corporation Jerry Volas Richard A. Manoogian Group President David L. Johnston 2, 3 Executive Chairman President and Vice Chancellor Thomas Voss Karen R. Mendelsohn of the University of Waterloo President–Masco Europe Vice President–Sales and Marketing in Ontario, Canada Timothy Wadhams J. Michael Losh 1, 2 President and Retired Chief Financial Of cer Chief Executive Of cer and Executive Vice President General Motors Corporation Richard A. Manoogian Executive Chairman Masco Corporation Lisa A. Payne 1 Vice Chairman and Chief Financial Of cer Taubman Centers, Inc. Mary Ann Van Lokeren 2, 3 Retired Chairman and Chief Executive Of cer Krey Distributing Company Timothy Wadhams President and Chief Executive Of cer Masco Corporation 1 Member of Audit Committee 2 Member of Organization and Compensation Committee 3 Member of Corporate Governance 13 and Nominating Committee
  • 16. Certifications Timothy Wadhams and John G. Sznewajs In addition, management maintains a program of in- have provided certi cations to the Securities and ternal auditing within the Company to examine and Exchange Commission as required by Section 302 evaluate the adequacy and effectiveness of estab- of the Sarbanes-Oxley Act of 2002. These certi ca- lished internal controls related to Company poli- tions are included as Exhibits 31.a and 31.b to the cies, procedures and objectives. The report of the Company’s Form 10-K, included herein, for the year Company’s Independent Registered Public Account- ended December 31, 2007. ing Firm (included in the accompanying Form 10-K) As required by the New York Stock states their opinion on the Company’s consolidated Exchange (NYSE), on May 22, 2007, Richard A. nancial statements and the effectiveness of Manoogian submitted the annual Chief Executive internal controls over nancial reporting, based on Of cer certi cation to the NYSE that stated that he audits conducted in accordance with the standards was not aware of any violation by the Company of of the Public Company Accounting Oversight Board the NYSE corporate governance listing standards. (U.S.). The Audit Committee of the Board of Direc- tors meets periodically with both management and RESPONSIBILITY FOR the Independent Registered Public Accounting Firm FINANCIAL STATEMENTS to provide oversight with respect to the Company’s Management is responsible for the fair- nancial reporting process and system of internal ness and integrity of the Company’s consolidated controls. nancial statements. In order to meet this respon- sibility, management maintains formal policies and procedures that are consistent with high standards of accounting and administrative practices, which are regularly communicated within the organization. 14 Masco Corporation 2007 Annual Report
  • 17. Information for Shareholders COMPANY PROFILE ANNUAL MEETING OF SHAREHOLDERS Masco Corporation is one of the world’s largest The 2008 Annual Meeting of Shareholders of Masco manufacturers of brand name products for the home Corporation will be held at the executive of ces of the improvement and new home construction markets. Company on May 13, 2008 at 10:00 a.m., E.D.T. The Company is also a leading provider of a variety of installed products and services, including insulation TRANSFER AGENT, REGISTRAR AND and other building products, for homebuilders. DIVIDEND DISBURSING AGENT Answers to many of your shareholder questions Our products include faucets, kitchen and bath and requests for forms are available by visiting the cabinets, paints and stains, bath and shower units, BNY Mellon Shareowner Services Web site at spas, showering and plumbing specialties, windows www.bnymellon.com/shareowner/isd. and decorative hardware. Send Certi cates For Transfer to: As of December 31, 2007, the Company had BNY Mellon Shareowner Services more than 52,000 employees and approximately P Box 358015 .O. 120 manufacturing facilities. Masco’s principal Pittsburgh, PA 15252-8015 manufacturing facilities are located throughout the United States. International operations are located Dividend Reinvestment Plan: principally in Europe. Masco Corporation has appointed BNY Mellon Shareowner Services to serve as agent to its Dividend EXECUTIVE OFFICES Reinvestment Plan. All inquiries regarding the Plan Masco Corporation should be sent to: 21001 Van Born Road Masco Corporation Taylor, MI 48180-1340 C/O BNY Mellon Shareowner Services Phone: 313-274-7400, Fax: 313-792-4177 P Box 358035 .O. Pittsburgh, PA 15252-8035 INDEPENDENT REGISTERED Shareholder inquiries regarding lost certi cates should PUBLIC ACCOUNTING FIRM be directed to: PricewaterhouseCoopers LLP BNY Mellon Shareowner Services PricewaterhouseCoopers Plaza P Box 358333 .O. 1900 St. Antoine Pittsburgh, PA 15252-8333 Detroit, MI 48226-2263 Duplicate mailings and other inquiries: STOCK EXCHANGE INFORMATION Multiple shareholders who reside at one address and Masco Corporation’s common stock is traded on the hold their shares through a bank or broker may receive New York Stock Exchange under the symbol MAS. only one Annual Report and Proxy Statement. This “householding” procedure reduces duplicate mailings INTERNET CONTACT and Company expenses. Shareholders who wish to opt out of householding should contact their bank or broker. Current information about Masco Corporation can be found by visiting our home page on the Internet at Shares owned by one person, but held in different www.masco.com or you may contact us via e-mail at forms of the same name may result in duplicate webmaster@mascohq.com. mailings of shareholder information at added expense to the Company. Please notify BNY Mellon Shareowner INVESTOR RELATIONS CONTACT Services in order to eliminate such duplication. Additional information about the Company is available without charge to shareholders who direct General inquiries and address changes should be a request to: directed as follows: Maria C. Duey BNY Mellon Shareowner Services Vice President–Investor Relations 480 Washington Blvd, 27th Floor Masco Corporation Jersey City, NJ 07310 21001 Van Born Road Phone: 866-230-0666 (in the U.S.) 201-680-6685 (outside of the U.S.) Taylor, MI 48180-1340 800-231-5469 (hearing impaired – TTD phone) E-Mail Address: shrrelations@mellon.com
  • 18. MASCO CORPORATION 21001 Van Born Road Taylor, Michigan 48180 313 274 7400 www.masco.com Cert no. SW-COC-1530