UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 20152018

Commission filenumber 1-35166

Fortune Brands Home & Security, Inc.

(Exact name of registrant as specified in its charter)

520 Lake Cook Road, Deerfield, IL 60015-5611

(Address of principal executive offices)Principal Executive Offices)    (Zip Code)

Registrant’s telephone number, including area code:(847) 484-4400

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes    x☒        No    ¨☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes    ¨☐        No    x☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes    x☒        No    ¨☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes    x☒        No    ¨☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 ofRegulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this annual report on Form 10-K or any amendment to this annual report on Form 10-K.        x☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” and “emerging growth company” in RuleRule 12b-2 of the Exchange Act.

Large accelerated filer      x☒      Accelerated filer      ¨☐      Non-accelerated filer      ¨☐      Smaller reporting company      ¨☐      Emerging growth company      ☐

(DoIf an emerging growth company, indicate by check mark if the registrant has elected not check if a smallerto use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.      ☐

reporting company)

Indicate by check mark whether the registrant is a shell company (as defined inRule 12b-2 of the Act).

Yes    ¨☐        No    x☒

The aggregate market value of the registrant’s voting common equity held bynon-affiliates of the registrant at June 30, 20152018 (the last day of the registrant’s most recent second quarter) was $7,264,910,465.$7,606,348,311. The number of shares outstanding of the registrant’s common stock, par value $0.01 per share, at February 5, 2016,1, 2019, was 157,593,390.140,549,295.

DOCUMENTS INCORPORATED BY REFERENCE

Certain information contained in the registrant’s proxy statement for its Annual Meeting of Stockholders to be held on April 26, 2016May 7, 2019 (to be filed not later than 120 days after the end of the registrant’s fiscal year) (the “2016“2019 Proxy Statement”) is incorporated by reference into Part III  hereof.

Form 10-K Table of Contents

PART I

Item 1. Business.

Cautionary Statement Concerning Forward-Looking Statements

This Annual Report on Form10-K contains certain “forward-looking statements” made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), regarding expected capital spending, expected pension contributions, the anticipated effects of recently issued accounting standards on our financial statements, planned business strategies, market potential, future financial performance and other matters. Statements that include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is based on the current plans and expectations at the time this report is filed with the Securities and Exchange Commission (the “SEC”) or, with respect to any documents incorporated by reference, available at the time such document was prepared or filed with the SEC. Although we believe that these statements are based on reasonable assumptions, they are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those indicated in such statements. These factors include those listed in the section below entitled “Risk Factors.” Except as required by law, we undertake no obligation to update or revise any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, new information or changes to future results over time or otherwise.

Unless the context otherwise requires, references in this Annual Report on Form10-K to (i) “Fortune Brands,” the “Company,” “we,” “our” or “us” refer to Fortune Brands Home & Security, Inc. and its consolidated subsidiaries, after giving effect to the spin-off of Fortune Brands from Fortune Brands, Inc. in 2011 and (ii) “Former Parent” refer to Fortune Brands, Inc.subsidiaries.

Our Company

We are a leading home and security products company that competes in attractive long-term growth markets in our product categories. With a foundation of market-leading brands across a diversified mix of channels, and lean and flexible supply chains, as well as a tradition of strong product innovation and customer service, we are focused on outperforming our markets in both growth and returns, and driving increased shareholder value. We have three business segments: Cabinets, Plumbing, and Doors & Security. We sell our products through a wide array of sales channels, including kitchen and bath dealers, wholesalers oriented toward builders or professional remodelers, industrial and locksmith distributors, “do-it-yourself”“do-it-yourself” remodeling-oriented home centers and other retail outlets. We believe the Company’s impressive track record reflects the long-term attractiveness and potential of our categories and our leading brands. OurDespite increased pressures driven in part by tariffs, higher interest rates and inflation, our performance since becoming an independent publicly traded company demonstrates the strength of our operating model and our ability to generate profitable growth as sales volume increases and we leverage our structural competitive advantages to gain share in our categories.

Our Strategy

Build on leading business and brand positions in attractive growth and return categories.categories.    We believe that we have leading market positions and brands in many of our product categories. In 2018, we expanded into the outdoor living market by acquiring Fiber Composites LLC (“Fiberon”), a leading U.S. manufacturer of outdoor performance materials used in decking, railing and fencing products. The acquisition of Fiberon provides category expansion and product extension opportunities into the outdoor living space for our Doors & Security segment. We continue to invest in targeted advertising and other strategic initiatives aimed at enhancing brand awareness and educating

consumers regarding the breadth, features and benefits of our product lines. For example, in the third quarter of 2018, Moen launched its new “Who designs for water” advertising and brand campaign showcasing its appreciation for Earth’s most crucial resource, while inspiring consumers to look at water from a renewed viewpoint. We also strive to leverage our brands by expanding into adjacent product categories and continue to develop new programs throughby working closely with our customers.

Continue to develop innovative products for customers, designers, installers and consumers.    Sustained investments in consumer-driven product innovation and customer service, along with our lowerlow cost structures, have contributed to our success in winning in the marketplace and creating consumer demand. In 2018, our Global Plumbing Group developed partnerships and investments in the “whole home” water space, including partnering with Flo Technologies. In 2018, MasterBrand Cabinets, continues to provide cabinetry solutionswhich provides a wide range of cabinets for the home, ranging from kitchens, bathroom vanities, to home offices. Norcraft Companies, Inc. (“Norcraft”), acquired in May 2015, strengthens our overall product offering, deepens our access to the dealer channel, expands our regional market presence and enhances our frameless cabinetry capabilities. In 2015, MasterBrand Cabinets launched innovative new cabinet door designs, lighting systems, color palettes and features in a range of styles that allows consumers to create a custom kitchen look at an affordable price and introduced new, exclusive laminate door &and finish options across multiple price segments. We continue to provide channel support with a responsive websitewebsites featuring our cabinet brands in one convenient location that drives leadsconsumers to our dealerships. Moen’s track record of continued innovation includes hand showers featuring the Magnetix magnetic docking system, a powerful new line of garbage disposals, the market-leading Spot Resist finish, our touchless Motionsense electronic faucets and our pull-out and pull-down faucets with Reflex self-retraction.partner dealers. TheTherma-Tru portfolio ofon-trend door and glass collections continued to advanceevolve to meet current and emerging architectural design trends including wider and taller door styles, with its contemporary Pulse line of doors,expanding panel configurations, as well as additional decorative, privacy and textured glass designs. In addition, Therma-Tru launched its Doorway App, an innovative app allowing homeowners to customize and visualize Therma-Tru doors on their own homes. Master Lock continuescontinued to be aan innovation leader in innovative security and safety products and services, such as itsdriven by consumer and end user focused insights with continued emphasis on electronic enabled solutions for enhanced capability and convenience. In 2018, we launched our Vault Enterprise software and suite of Bluetooth^® enabled padlockshardware for business, providing a convenient way for companies to control access, manage assets and Professional Lockout Services, a group of experts providing customized procedures and training for lockout programs. John D. Brush & Co., Inc. (“SentrySafe”), acquired in July 2014, continuesimprove accountability across many users simultaneously. SentrySafe continued to provide a full line portfolio of quality security, fire and innovative fire-resistantwater resistant safes that secure consumers’ propertyto help consumers and important documents.small business owners protect documents and valuables.

Expand in international markets.    We expect to have opportunities to expand sales by further penetrating international markets, which represented approximately 15%16% of net sales in 2015.2018. We continue to develop our relationship with dealers and distributors and their Moen-branded stores throughout China. In 2015, Moen opened a manufacturing facility in China as part of our continued international expansion. In Cabinets segment, Kitchen Craft remained a leading cabinetry brand in Canada, in 2015, while WoodCrafters providesprovided a company presence in Mexico. Within our Doors & Security segment, Master Lock continued to expand its presence in Europe and Asia, whileTherma-Tru has made inroads in Canada as consumers transitiontransitioned from traditional entry door materials to more advanced and energy-efficient fiberglass doors.

Leverage our global supply chains.    We are using lean manufacturing,design-to-manufacture and distributive assembly techniques to make our supply chains more flexible and improve supply chain quality, cost, response times and asset efficiency. We view our global supply chains and manufacturing presence as a strategic asset not only to support strong operating leverage as volumes increase, but also to enable the profitable growth of new products, adjacent market expansion and international growth.

Enhance returns and deploy our cash flow to high-return opportunities.    We continue to believe our most attractive opportunities are to invest in profitable organic growth initiatives, pursue accretive strategic acquisitions,non-controlling equity investments, and joint ventures, and return cash to shareholdersstockholders through a combination of dividends and repurchases of shares of our common stock under our share repurchase programs. Both add-on acquisitions andprogram. In 2018, we repurchased approximately 12 million shares of our outstanding common stock under the Company’s share repurchase programs for $695 million. In September 2018, we acquired Fiberon providing category expansion and product extension opportunities may be particularly attractive ininto the next few years. In 2015, we took a number of steps to position ourselvesoutdoor living space for the future including purchasing Norcraft, pricing a $900 million bond issuance, further integrating our SentrySafe business, investing in capacity, and strategically repurchasing our shares.Doors & Security segment.

Our Competitive Strengths

We believe our competitive strengths include the following:

Leading brands.    We have leading brands in many of our product categories. We believe that established brands are meaningful to both consumers and trade customers in their respective categories

and that we have the opportunity to, among other things, continue to expand many of our brands into adjacent product categories and international markets.

Strategic focus on attractive consumer-facing categories.    We believe we operate in categories that, while very competitive, are among the more attractive categories in the home products and security products markets. Some of the key characteristics that make these categories attractive in our view include the following:

Operational excellence.    We believe our investments in lean manufacturing and productivity initiatives have resulted in supply chain flexibility and the ability to cost-effectively add capacity in order to match demand levels.    In 2015 and 2014,2018, we invested in incremental capacityapproximately $45 million to support long-term growth potential.potential both in the U.S. and international markets. In addition, our supply chains and lowerlow cost manufacturing structures have created favorable operating leverage as volumes grow without sacrificing customer service levels.allow us to adapt to challenging market conditions. We believe that margin improvement will continue to be driven predominantly by organic volume growth that can be readily accommodated by additionalcurrent production shifts and equipment as necessary.capacity.

Commitment to innovation.    We have a long track record of successful product and process innovations that introduce valued new products and services to our customers and consumers. We are committed to continuing to invest in new product development and enhance customer service to strengthen our leading brands and penetrate adjacent markets.

Diverse salesend-use mix.    We sell in a variety of product categories and sales channels in the U.S. home and security products markets. In addition, our exposure to changing levels of U.S. residential new home construction activity is balanced withrepair-and-remodel activity, which comprisescomprised a substantial majority of the overall U.S. home products market and abouttwo-thirds of our U.S. home products sales.sales in 2018. We also benefit from a stable market for plumbing and security products and international sales growth opportunities.

Diverse sales channels.    We sell through a wide array of sales channels, including kitchen and bath dealers, wholesalers oriented to builders or professional remodelers, industrial and locksmith distributors, “do-it-yourself”“do-it-yourself” remodeling-oriented home centers and other retail outlets. We also sell security products to locksmiths, industrial distributors and mass merchants. We are able to leverage these existing sales channels to expand into adjacent product categories. In 2015,2018, sales to our top ten customers represented less than half of total sales.

Decentralized business model.    Our business segments are focused on distinct product categories and are responsible for their own performance. This structure enables each of our segments to independently best position itself within each category in which it competes and reinforces strong accountability for operational and financial performance. Each of our segments focusfocuses on its unique set of consumers, customers, competitors and suppliers, while also sharing best practices.

Strong capital structure.    structure.    We exited 20152018 with a strong balance sheet, even assheet. In 2018, we completed the $648.6 million acquisition of Norcraft and repurchased $51.712.0 million of our shares in 2015. In June 2015, we issued $900 million of unsecured senior notes (“Senior Notes”) in a public offering.shares. As of December 31, 2015,2018, we had $238.5$262.9 million of cash and cash equivalents and total debt was $1,172.4$2,334.0 million, resulting in a net debt position of $933.9$2,071.1 million. In addition, we had $975$930.0 million available under our credit facilitiesfacility as of December 31, 2015.2018.

Business Segments

WeIn July 2018, we publicly announced an internal reorganization to combine our Doors and Security segments under common leadership to drive innovation, accelerate product development, and enhance investments and business processes for the combined segment. In conjunction with the reorganization, we changed how our chief operating decision maker evaluates and allocates the resources across our businesses. As a result, beginning in the third quarter of 2018, we have fourthree business segments: Cabinets, Plumbing and Doors and& Security. The following table shows net sales for each of these segments includingand key brands within each segment:

Our segments compete on the basis of innovation, fashion, quality, price, service and responsiveness to distributor, retailer and installer needs, as well asend-user consumer preferences. Our markets are very competitive. Approximately 15%16% of 20152018 net sales were to international markets, and sales to two of the Company’s customers, The Home Depot, Inc. (“The Home Depot”) and Lowe’s Companies, Inc. (“Lowe’s”), each accounted for more than 10% of the Company’s net sales in 2015.2018. Sales to all U.S. home centers in the aggregate were approximately 30%26% of net sales in 2015.2018.

Cabinets.    Our Cabinets segment manufactures custom, semi-custom and stock cabinetry, as well as vanities, for the kitchen, bath and other parts of the home through a regional supply chain footprint to deliver high quality cabinets and service to our customers. This segment sells a portfolio of brands that enables our customers to differentiate themselves against competitors. This portfolio includes brand names such as Aristokraft, Diamond,Mid-Continent, Kitchen Craft, Mid-Continent, Kitchen Classics, Schrock, Homecrest, Omega, Thomasville, Homecrest, UltracraftKemper, StarMark and StarMark.Ultracraft. Substantially all of this segment’s sales are in North America. This segment sells directly to kitchen and bath dealers, home centers, wholesalers and large builders. In aggregate, sales to The Home Depot and Lowe’s comprised approximately 35%36% of net sales of the Cabinets segment in 2015.2018. This segment’s competitors include Masco and American Woodmark, and RSI, as well as a large number of overseas, regional and local suppliers.

Plumbing.    Our Plumbing segment manufactures or assembles and sells faucets, accessories, kitchen sinks and waste disposals, in North America and China, predominantly under the Moen, ROHL, Riobel, Perrin & Rowe, Victoria + Albert and Waste KingShaws brands. Although this segment sells products principally in the U.S., CanadaChina and China,Canada, this segment also sells in Mexico, Southeast Asia, Europe and South America. Approximately 23%28% of 20152018 net sales were to international markets. This segment sells directly through its own sales force and indirectly through independent manufacturers’ representatives, primarily to wholesalers, home centers, mass merchandisers and industrial distributors. In aggregate, sales to The Home Depot and Lowe’s comprised approximately 26%23% of net sales of the Plumbing segment in 2015.2018. This segment’s chief competitors include Delta (owned by Masco),

Masco, Kohler, Pfister (owned by Spectrum Brands), American Standard (owned byBrands, LIXIL Group),Group, InSinkErator (owned by Emerson Electronic Company) and imported private-label brands.

Doors.Doors & Security.    Our Doors & Security segment manufactures and sells fiberglass and steel entry door systems under theTherma-Tru brand name, composite decking, railing and fencing under the Fiberon brand name, and urethane millwork product lines under the Fypon brand name. It also manufactures, sources and distributes locks, safety and security devices, and electronic security products under the Master Lock brand and fire resistant safes, security containers and commercial cabinets under the SentrySafe brand. This segment benefits from the long-term trend away from traditional materials, such as wood, steel and aluminum, toward more energy-efficient and durable synthetic materials. Therma-Trusells products include fiberglass and steel residential entry door and patio door systems, primarily for saleprincipally in the U.S., Canada, Europe, Central America, Japan and Canada.Australia. Approximately 14% of 2018 net sales were to international markets. This segment’s principal customers are home centers, hardware and other retailers, millwork building products and wholesale distributors, and specialty dealers that provide products to the residential new construction market, as well as to the remodeling and renovation markets. In aggregate, sales to The Home Depot and Lowe’s comprised approximately 11% of net sales of the Doors segment in 2015. This segment’s competitors include Masonite, JELD-WEN, Plastpro and Pella.

Security.    Our Security segment’s products consist of locks, safety and security devices, and electronic security products manufactured, sourced and distributed under the Master Lock brandaddition, it sells lock systems and fire resistant safes security containers and commercial cabinets manufactured, sourced and distributed under the SentrySafe brand. This segment sells products principally in the U.S., Canada, Europe, Central America and Australia. Approximately 25% of 2015 net sales were to international markets. This segment manufactures and sells key-controlled and combination padlocks, bicycle and cable locks, built-in locker locks, door hardware, automotive, trailer and towing locks, electronic access control solutions, and other specialty safety and security devices for consumer use to hardware, home center and other retail outlets. In addition, the segment sells lock systems to locksmiths, industrial and institutional users, and original equipment manufacturers. In aggregate, sales to The Home Depot and Lowe’s comprised approximately 17%19% of the net sales of the Doors & Security segment in 2015.2018.Therma-Tru, Fiberon and Fypon brands compete with Masonite,JELD-WEN, Trex, Azek, Plastpro, Pella and various regional and local suppliers. The Master Lock brand competes with Abus, W.H. Brady, Hampton, Kwikset (owned by Spectrum Brands), Schlage (owned by Allegion),Brands, Allegion, Assa Abloy and various imports, andimports. SentrySafe competesbrands compete with First Alert, Magnum, Fortress, Stack-OnInterlocks and Fire King.Stack-On.

Annual net sales for each of the last three fiscal years for each of our business segments were as follows:

For additional financial information for each of our business segments, refer to Note 18,19, “Information on Business Segments,” to the Consolidated Financial Statements in Item 8 of this Annual Report on Form10-K.

Other Information

Raw materials.    The table below indicates the principal raw materials used by each of our segments. These materials are available from a number of sources. Volatility in the prices of commodities and energy used in making and distributing our products impacts the cost of manufacturing our products.

Intellectual property.    Product innovation and branding are important to the success of our business. In addition to the brand protection offered by our trademarks, patent protection helps distinguish our unique product features in the market by preventing copying and making it more difficult for competitors to benefit unfairly from our design innovation. We hold U.S. and foreign patents covering various features used in products sold within all of our business segments. Although each of our segments relies on a number of patents and patent groups that, in the aggregate, provide important protections to the Company, no single patent or patent group is material to any of the Company’s segments.

Employees.    As of December 31, 2015,2018, we had approximately 21,40025,300 full-time employees. 2,635Approximately 3,200 of these employees are covered by collective bargaining agreements of which less than 5% of these employees are subject to agreements that will expire within one year of the date on which this Annual Report on Form 10-K was filed.agreements. Employee relations are generally good.

Information about geographic areas.    For additional information about net sales and assets by geographic areas, refer to Note 18, “Information on Business Segments,” to the Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K.

Seasonality.    All of our operating segments traditionally experience lower sales in the first quarter of the year when new home construction,repair-and-remodel activity and security buying are at their lowest. As a result of sales seasonality and associated timing of working capital fluctuations, our cash flow from operating activities is typically higher in the second half of the year.

Environmental matters.    We are involved in remediation activities to clean up hazardous wastes as required by federal and state laws. Liabilities for remediation costs of each site are based on our best estimate of undiscounted future costs, excluding possible insurance recoveries or recoveries from other third parties. Uncertainties about the status of laws, regulations, technology and information related to individual sites make it difficult to develop estimates of environmental remediation exposures. Some of the potential liabilities relate to sites we own, and some relate to sites we no longer own or never owned. Several of our subsidiaries have been designated as potentially responsible parties (“PRP”) under “Superfund” or similar state laws. As of December 31, 2015,2018, ten such instances have not been dismissed, settled or otherwise resolved. In the calendar year 2015,2018, none of our subsidiaries were identified as a PRP in anya new instancesinstance and no instances were settled, dismissed or otherwise resolved. In most instances where our subsidiaries are named as a PRP, we enter into cost-sharing arrangements with other PRPs. We give notice to insurance carriers of potential PRP liability, but very rarely, if ever, receive reimbursement from insurance for PRP costs. We believe that the cost of complying with the present environmental protection laws, before considering estimated recoveries either from other PRPs or insurance, will not have a material

adverse effect on our results of operations, cash flows or financial condition. At December 31, 20152018 and 2014,2017, we had accruals of $2.8$0.6 and $0.7 million, respectively, relating to environmental compliance and clean upcleanup including, but not limited to, the above mentioned Superfund sites.

Legal structure.    Fortune Brands Home & Security, Inc. is a holding company that was initially organized as a Delaware corporation in 1988. Wholly-owned subsidiaries of the Company include MasterBrand Cabinets, Inc., Moen Incorporated,Fortune Brands Global Plumbing Group LLC, Fortune Brands Doors, Inc. and Fortune Brands Storage & Security LLC. As a holding company, Fortune Brands iswe are a legal entity separate and distinct from our subsidiaries. Accordingly, the rights of the Company, and thus the rights of our creditors (including holders of debt securities and other obligations) and stockholders to participate in any distribution of the assets or earnings of any subsidiary is subject to the claims of creditors of the subsidiary, except to the extent that claims of the Company itself as a creditor of such subsidiary may be recognized, in which event the Company’s claims may in certain circumstances be subordinate to certain claims of others. In addition, as a holding company, the source of our unconsolidated revenues and funds is dividends and other payments from subsidiaries. Our subsidiaries are not limited by long-term debt or other agreements in their abilities to pay cash dividends or to make other distributions with respect to their capital stock or other payments to the Company.

Available Information.    The Company’s website address is www.FBHS.com. The Company’s annual report onForm 10-K, quarterly reports onForm 10-Q, current reports onForm 8-K and any amendments to these reports are available free of charge on the Company’s website as soon as reasonably practicable after the reports are filed or furnished electronically with the SEC. These documents also are made available to read and copy at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information about the Public Reference Room by contacting the SEC at 1-800-SEC-0330. Reports filed with the SEC are also made available on its website at www.sec.gov. We also make available on our website, or in printed form upon request, free of charge, our Corporate Governance Principles, Code of Business Conduct and Ethics, Code of Ethics for Senior Financial Officers, Charters for the Committees of our Board of Directors and certain other information related to the Company.

Item 1A.  Risk Factors.

You should carefully considerThere are inherent risks and uncertainties associated with our business that could adversely affect our business, financial condition or operating results. Set forth below are descriptions of those risks and

uncertainties that we currently believe to be material, but the risks and uncertainties described below are not the only risks and all of the other information included in this Annual Report on Form 10-K when deciding whether to invest inuncertainties that could adversely affect our common stockbusiness, financial condition or otherwise evaluating our business.operating results. If any of the followingthese risks materialize, our business, financial condition or operating results could suffer. In this case, the trading price of our common stock could decline, and you may lose all or part of your investment.

Risks Relating to Our Business

Our business primarily relies on North American home improvement, repair and remodel and new home construction activity levels, all of which are impacted by risks associated with fluctuations in the housing market. Downward changes in the general economy, the housing market or other business conditions could adversely affect our results of operations, cash flows and financial condition.

Our business primarily relies on home improvement, repair and remodel, and new home construction activity levels, principally in North America. The housing market is sensitive to changes in economic conditions and other factors, such as the level of employment, access to labor, consumer confidence, consumer income, government tax programs, availability of financing and interest rate levels. Adverse changes in any of these conditions generally, or in any of the markets where we operate, could decrease demand and could adversely impact our businesses by: causing consumers to delay or decrease home ownership;homeownership; making consumers more price conscious resulting in a shift in demand to smaller, less expensive homes; making consumers more reluctant to make investments in their existing homes, including large kitchen and bath repair and remodel projects; or making it more difficult to secure loans for major renovations. Although the new U.S. home construction market is improving, demand for new homes is still recovering and remains below historical levels.

We operate in very competitive consumer and trade brand categories.

The markets in which we operate are very competitive. Although we believe that competition in our businesses is based largely on product quality, consumer and trade brand reputation, customer service and product features, as well as fashion trends, innovation and ease of installation, price is a significant factor for consumers as well as our trade customers. Some of our competitors may resort to price competition to sustain or grow market share and manufacturing capacity utilization. Also, certain large customers continue to offer private-label brands that compete with some of our product offerings as a lower-cost alternative. We also face increasing pressure from imported ‘flat pack’ cabinets. The strong competition that we face in all of our businesses may adversely affect our profitability and revenue levels, as well as our results of operations, cash flows and financial condition.

Risks associated with strategic acquisitions could adversely affect our results of operations, cash flows and financial condition.

We consider acquisitions and joint ventures as a means of enhancing shareholder value. Acquisitions and joint ventures involve risks and uncertainties, including difficulties integrating acquired companies and operating joint ventures; difficulties retaining the acquired businesses’ customers and brands; the inability to achieve the expected financial results and benefits of transactions; the loss of key employees from acquired companies; implementing and maintaining consistent standards, controls, policies and information systems; and diversion of management’s attention from other business matters. Future acquisitions could cause us to incur additional debt or issue shares, resulting in dilution in earnings per share and return on capital.

We may not successfully develop new products or improve existing products.

Our success depends on meeting consumer needs and anticipating changes in consumer preferences with successful new products and product improvements. We aim to introduce products and new or improved production processes proactively to offset obsolescence and decreases in sales of existing products. While we devote significant focus to the development of new products, we may not be successful in product development and our new products may not be commercially successful. In addition, it is possible that competitors may improve their products more rapidly or effectively, which could adversely affect our sales. Furthermore, market demand may decline as a result of consumer preferences trending away from our categories or trending down within our brands or product categories, which could adversely impact our results of operations, cash flows and financial condition.

Risks associated with our ability to improve organizational productivity and global supply chain efficiency and flexibility could adversely affect our results of operations, cash flows and financial condition.

We regularly evaluate our organizational productivity and global supply chains and assess opportunities to increase capacity, reduce costs and enhance quality. We strivemay be unable to enhance quality, speed and flexibility to meet changing and uncertain market conditions, as well as manage cost inflation, including wages, pension and medical costs. Our success depends in part on refining our cost structure and supply chains to promote consistently flexible and low cost supply chains that can respond to market changes to protect profitability and cash flow or ramp up quickly and effectively to meet demand. Import tariffs could potentially lead to increases in prices of raw materials or components which are critical to our business. Failure to achieve the desired level of quality, capacity or cost reductions could impair our results of operations, cash flows and financial condition.

We may not successfully develop new products or processes or improve existing products or processes.

Our success depends on meeting consumer needs and anticipating changes in consumer preferences with successful new products and product improvements. We aim to introduce products and new or

improved production processes proactively to offset obsolescence and decreases in sales of existing products. We may not be successful in product development and our new products may not be commercially successful. In addition, it is possible that competitors may improve their products or processes more rapidly or effectively, which could adversely affect our sales. Furthermore, market demand may decline as a result of consumer preferences trending away from our categories or trending down within our brands or product categories, which could adversely impact our results of operations, cash flows and financial condition.

Risks associated with global commodity and energy availability and price volatility, as well as the possibility of sustained inflation, could adversely affect our results of operations, cash flows and financial condition.

We are exposed to risks associated with global commodity price volatility arising from restricted or uneven supply conditions, the sustained expansion and volatility of demand from emerging markets, potentially unstable geopolitical and economic variables, weather and other unpredictable external factors. We buy raw materials that contain commodities such as brass, zinc, steel, wood, and glass and petroleum-based products such as resins. In addition, our distribution costs are significantly impacted by the price of oil and diesel fuel. Decreased availability and increased or volatile prices for these commodities, as well as energy used in making, distributing and transporting our products, could increase the costs of our products. While in the past we have been able to mitigate the impact of these cost increases through productivity improvements and passing on increasing costs to our customers over time, there is no assurance that we will be able to offset such cost increases in the future, and the risk of potentially sustained high levels of inflation could adversely impact our results of operations, cash flows and financial condition. While we may use derivative contracts to limit our short-term exposure to commodity price volatility, the commodity exposures under these contracts could still be material to our results of operations, cash flows and financial condition. In addition, in periods of declining commodity prices, these derivative contracts may have the short-term effect of increasing our expenditures for these raw materials.

We manufacture, source and sell products internationally and are exposed to risks associated with doing business globally.

We manufacture, source or sell our products in a number of locations throughout the world, predominantly in the U.S., Canada, China, Europe and Mexico. Accordingly, we are subject to risks

associated with potential disruption caused by changes in political, economic and social environments, including civil and political unrest, terrorism, possible expropriation, local labor conditions, changes in laws, regulations and policies of foreign governments and trade disputes with the U.S., and U.S. laws affecting activities of U.S. companies abroad. Risks inherent to international operations include: potentially adverse tax laws, unfavorable changes or uncertainty relating to trade agreements or importation duties, uncertainty regarding clearance and enforcement of intellectual property rights, risks associated with the Foreign Corrupt Practices Act and difficulty enforcing contracts. While we hedge certain foreign currency transactions, a change in the value of the currencies will impact our financial statements when translated into U.S. dollars. In addition, fluctuations in currency can adversely impact the cost position of our products in local currency, making it more difficult for us to compete. Our success will depend, in part, on our ability to effectively manage our businesses through the impact of these potential changes. In addition, we source certain raw materials, components and finished goods from China where we have experienced higher manufacturing costs and longer lead times due to currency fluctuations, higher wage rates, labor shortages and higher raw material costs.

Changes in government and industry regulatory standards could adversely affect our results of operations, cash flows and financial condition.

Government regulations and policies pertaining to trade agreements, health and safety (including protection of employees as well as consumers), taxes and environmental concerns continue to emerge

domestically, as well as internationally. In particular, there may be additional tariffs or taxes related to our imported inputs and finished goods. It is necessary for us to comply with current requirements (including requirements that do not become effective until a future date), and even more stringent requirements could be imposed on our products or processes in the future. Compliance with thesechanges in taxes, tariffs and other regulations (such as the restrictions on water flow rates and lead content in plumbing products and on volatile organic compounds and formaldehyde emissions that are applicable to many of our businesses) may require us to alter our manufacturing and installation processes and our sourcing. Such actions could increase our capital expenditures and adversely impact our results of operations, cash flows and financial condition,condition.

Risks associated with strategic acquisitions and joint ventures could adversely affect our results of operations, cash flows and financial condition.

We consider acquisitions and joint ventures as a means of enhancing shareholder value. Acquisitions and joint ventures involve risks and uncertainties, including difficulties integrating acquired companies and operating joint ventures; difficulties retaining the acquired businesses’ customers and brands; the inability to effectivelyachieve the expected financial results and timely meet such regulationsbenefits of transactions; the loss of key employees from acquired companies; implementing and maintaining consistent standards, controls, policies and information systems; and diversion of management’s attention from other business matters. Future acquisitions could adversely impact our competitivecause us to incur additional debt or issue additional shares, resulting in dilution in earnings per share and reputational positions.return on capital.

Our inability to secure and protect our intellectual property rights could negatively impact revenues and brand reputation.

We have many patents, trademarks, brand names and trade names that are important to our business. Unauthorized use of these intellectual property rights may not only erode sales of our products, but may also cause significant damage to our brand name and reputation, interfere with our ability to effectively represent the Company to our customers, contractors and suppliers, and increase litigation costs. There can be no assurance that our efforts to protect our brands and trademark rights will prevent violations. In addition, existing patent, trade secret and trademark laws offer only limited protection, and the laws of some countries in which our products are or may be developed, manufactured or sold may not fully protect our intellectual property from infringement by others. There can be no assurance that our efforts to assess possible third party intellectual property rights will ensure thatthe Company’s ability to manufacture, distribute, market or sell in any given country or territory. Furthermore, others may assert intellectual property infringement claims against us or our customers.

Our businesses rely on the performance of wholesale distributors, dealers and other marketing arrangements and could be adversely affected by poor performance or other disruptions in our distribution channels and customers.

We rely on a distribution network comprised of consolidating customers. Any disruption to the existing distribution channels could adversely affect our results of operations, cash flows and financial

condition. The consolidation of distributors or the financial instability or default of a distributor or one of its major customers could potentially cause such a disruption. In addition to our own sales force, we offer our products through a variety of third-party distributors, representatives and retailers. Certain of our distributors, representatives or retailers may also market other products that compete with our products. The loss or termination of one or more of our major distributors, representatives or retailers, the failure of one or more of our distributors, representatives or representativesretailers to effectively promote our products, or changes in the financial or business condition of these distributors, representatives or representativesretailers could affecteffect our ability to bring products to market.

Our pension costs and funding requirements could increase as a result of volatility in the financial markets and changes in interest rates and actuarial assumptions.

Increases in the costs of pension benefits may continue and negatively affect our business as a result of: the effect of potential declines in the stock and bond markets on the performance of our pension plan

assets; potential reductions in the discount rate used to determine the present value of our benefit obligations; and changes to our investment strategy that may impact our expected return on pension plan assets assumptions. U.S. generally accepted accounting principles require that we calculate income or expense for the plans using actuarial valuations. These valuations reflect assumptions about financial markets and interest rates, which may change based on economic conditions. Our accounting policy for defined benefit plans may subject earnings to volatility due to the recognition of actuarial gains and losses, and amortization of liability savings, particularly due to the change in the fair value of pension assets and interest rates. Funding requirements for our U.S. pension plans may become more significant. However, the ultimate amounts to be contributed are dependent upon, among other things, interest rates, underlying asset returns and the impact of legislative or regulatory changes related to pension funding obligations.

Risks associated with the disruption of operations could adversely affect our results of operations, cash flows and financial condition.

We manufacture a significant portion of the products we sell. Any prolonged disruption in our operations, whether due to technical or labor difficulties, weather, lack of raw material or component availability, startup inefficiencies for new operations, destruction of or damage to any facility (as a result of natural disasters, fires and explosions, use and storage of hazardous materials or other events) or other reasons, could negatively impact our profitability and competitive position and adversely affect our results of operations, cash flows and financial condition.

Our inability to obtain raw materials and finished goods in a timely and cost-effective manner from suppliers wouldcould adversely affect our ability to manufacture and market our products.

We purchase raw materials to be used in manufacturing our products and also rely on third-party manufacturers as a source for finished goods. We typically do not enter into long-term contracts with our suppliers or sourcing partners. Instead, most raw materials and sourced goods are obtained on a “purchase order” basis. In addition, in some instances we maintain single-source or limited-source sourcing relationships, either because multiple sources are not available or the relationship is advantageous due to performance, quality, support, delivery, capacity or price considerations. Financial, operating or other difficulties encountered by our suppliers or sourcing partners or changes in our relationships with them could result in manufacturing or sourcing interruptions, delays and inefficiencies, and prevent us from manufacturing or obtaining the finished goods necessary to meet customer demand. If we are unable to meet customer demand, there could be an adverse effect on our results of operations, cash flows and financial condition.

Our failure to attract and retain qualified personnel and other labor constraints could adversely affect our results of operations, cash flows and financial condition.

Our success depends in part on the efforts and abilities of qualified personnel at all levels, including our senior management team and other key employees. Their motivation, skills, experience, contacts and industry knowledge significantly benefit our operations and administration. TheWith low unemployment rates in the U.S., competition for qualified talent and attracting and retaining personnel in remote locations could result in the failure to attract, motivate and retain members of our senior management team and key employeespersonnel, which could have an adverse effect on our results of operations, cash flows and financial condition.

Future tax law changes or the interpretation of existing tax laws may materially impact our effective income tax rate, the resolution of unrecognized tax benefits and cash tax payments.

Our businesses are subject to income taxation in the U.S., as well as internationally. We are routinely audited by income tax authorities in many jurisdictions. Although we believe that the recorded tax estimates are reasonable and appropriate, there are significant uncertainties in these estimates. As a

result, the ultimate outcome from any audit could be materially different from amounts reflected in our income tax provisions and accruals. Future settlements of income tax audits may have a material adverse effect on earnings between the period of initial recognition of tax estimates in our financial statements and the point of ultimate tax audit settlement.

In connection withaddition, significant judgement is required in determining our provision for income taxes. Our total income tax expense could be affected by changes in tax laws rates in the divestiturejurisdictions in which our businesses are subject to taxation, changes in the valuation of businessesdeferred tax assets and liabilities or changes in tax laws or the separation from our Former Parent, we have retained and may further retaininterpretation of such laws by tax liabilities and the rights to tax refunds for periods before any divestiture or separation. As a result, from time to time, we may be required to make payments related to tax matters associated with these transactions.authorities.

Potential liabilities and costs from claims and litigation could adversely affect our results of operations, cash flows and financial condition.

We are, from time to time, involved in various claims, litigation matters and regulatory proceedings that arise in the ordinary course of our business and that could have an adverse effect on us. These matters may include contract disputes, intellectual property disputes, product recalls, personal injury claims, construction defects and home warranty claims, warranty disputes, environmental claims or proceedings, other tort claims, employment and tax matters and other proceedings and litigation, including class actions. It is not possible to predict the outcome of pending or future litigation, and, as with any litigation, it is possible that some of the actions could be decided unfavorably and could have an adverse effect on our results of operations, cash flows and financial condition.

We are subject to product safety regulations, recalls and direct claims for product liability that can result in significant liability and, regardless of the ultimate outcome, can be costly to defend. As a result of the difficulty of controlling the quality of products or components sourced from other manufacturers, we are exposed to risks relating to the quality of such products and to limitations on our recourse against such suppliers.

An impairment in the carrying value of goodwill or other acquired intangible assets could negatively affect our results of operations and financial condition.

The carrying value of goodwill represents the fair value of acquired businesses in excess of identifiable assets and liabilities as of the acquisition date. The carrying value of other intangible assets represents the fair value of trademarks,customer relationships, tradenames and other acquired intangible assets as of the acquisition date. Goodwill and other acquired intangible assets expected to contribute indefinitely to our cash flows are not amortized, but must be evaluated for impairment by our management at least annually. If the carrying value exceeds the implied fair value of goodwill, the goodwill is

considered impaired and is reduced to fair value via anon-cash charge to earnings. If the carrying value of an indefinite-lived intangible asset is greater than its fair value, the intangible asset is considered impaired and is reduced to fair value via anon-cash charge to earnings. Events and/or circumstances that could have a potential negative effect on the estimated fair value of our reporting units and indefinite-lived tradenames include: actual new construction and repair and remodel growth rates that lagfall below our assumptions, actions of key customers, volatility ofincreases in discount rates, continued economic uncertainty, higher levels of unemployment, weak consumer confidence, lower levels of discretionary consumer spending, a decrease in royalty rates and a decline in the trading price of our common stock.stock . If the value of goodwill or other acquired intangible assets is impaired, our results of operations and financial condition could be adversely affected.

We may experience delays or outages in our information technology systemsystems and computer networks. We may be subject to breaches of our information technology systems, which could damage our reputation and consumer relationships. Such breaches could subject us to significant financial, legal and operational consequences.

We, like most companies, may be subject to information technology system failures and network disruptions. These may bedisruptions caused by delays or disruptions due to system updates, natural disasters, malicious attacks, accidents, power disruptions, telecommunications failures, acts of terrorism or war, computer viruses, physical or electronicbreak-ins, or similar events or disruptions. Our businesses may implement enterprise

resource planning systems or add applications to replace outdated systems and to operate more efficiently. Predictions regarding benefits resulting from the implementation of these projects are subject to uncertainties. We may not be able to successfully implement the projects without experiencing difficulties. In addition, any expected benefits of implementing projects might not be realized or the costs of implementation might outweigh the benefits realized.

We may be subject to breaches of our In addition, information technology systems, which could damage our reputation and consumer relationships. Such breaches could subject us to significant financial, legal and operational consequences.

Information security risks have generally increased in recent years because of the proliferation of new technologies and the increased sophistication and activities of perpetrators of cyber-attacks. In particular, our Security business is increasingly utilizing digital elements that allow third parties to use and store personally identifiable information and other information pertaining to their customers and their employees and businesses through online services operated by Master Lock. Such information may include names, passwords, addresses, phone numbers, access to facilities, email addresses, contact preferences, tax identification numbers and payment account information. We believe we devote appropriate resources to network security, data encryption, and other security measures to protect our systems and data, but these security measures cannot provide absolute security. In the event of a breach, we would be exposed to a risk of loss or litigation and possible liability, which could have an adverse effect on our business, results of operations, cash flows and financial condition.

There can be no assurance that we will have access to the capital markets on terms acceptable to us.

From time to time we may need to access the long-term and short-term capital markets to obtain financing. Although we believe that the sources of capital currently in place permit us to finance our operations for the foreseeable future on acceptable terms and conditions, our access to, and the availability of, financing on acceptable terms and conditions in the future will be impacted by many factors, including, but not limited to: (i) our financial performance, (ii) our credit ratings, (iii) the liquidity of the overall capital markets and (iv) the state of the economy, including the U.S. housing market. There can be no assurance that we will have access to the capital markets on terms acceptable to us. In addition, a prolonged global economic downturn may also adversely impact our access to long-term capital markets, result in increased interest rates on our corporate debt, and

weaken operating cash flow and liquidity. Decreased cash flow and liquidity could potentially adversely impact our ability to pay dividends, fund acquisitions and repurchase shares in the future.

Item 1B.  Unresolved Staff Comments.

None.

Item 2.  Properties.

Our principal executive office is located at 520 Lake Cook Road, Deerfield, Illinois 60015. We operate 3130 U.S. manufacturing facilities in 1716 states and have 1322 manufacturing facilities in international locations (7(9 in Mexico, 3 in Asia, 4 in Europe, 4 in Africa, and 32 in Canada). In addition, we have 3453 distribution centers and warehouses worldwide, of which 3042 are leased. The following table provides additional information with respect to these properties.

We are of the opinion that the properties are suitable to our respective businesses and have production capacities adequate to meet the current needs of our businesses.

Item 3.  Legal Proceedings.

The Company is a defendant in lawsuits associated with the normal conduct ofthat are ordinary routine litigation matters incidental to its businesses and operations.businesses. It is not possible to predict the outcome of the pending actions, and, as with any litigation, it is possible that these actions could be decided unfavorably to the Company. The Company believes that

there are meritorious defenses to these actions and that these actions will not have a material adverse effect upon the Company’s results of operations, cash flows or financial condition, and, where appropriate, these actions are being vigorously contested. Accordingly, the Company believes the likelihood of material loss is remote.

Item 4.  Mine Safety Disclosures.

Not applicable.

Executive Officers of the Registrant.

Christopher J. Klein has served as Chief Executive Officer of Fortune Brands since January 2010. Mr. Klein held several leadership positions with our Former Parent, including President and Chief Operating Officer of the Home & Security business segment and Senior Vice President — Strategy & Corporate Development beginning in 2003.

E. Lee Wyatt, Jr.Patrick D. Hallinanhas served as Senior Vice President and Chief Financial Officer of Fortune Brands since July 2011.2017. From January 2017 to July 2017, Mr. WyattHallinan served as ExecutiveSenior Vice President Chief Financial Officer of Hanesbrands Inc., a global consumer goods company, from September 2006Finance of Fortune Brands. Prior to June 2011.

Michael P. Bauerhasjoining Fortune Brands’ executive team, Mr. Hallinan served as Presidentchief financial officer of Master Lock Company LLC since December 2014. From April 2011 through December 2014, Mr. Bauer served as the President of the U.S. Businesses at Moen Incorporated, a subsidiary of Fortune Brands. Mr. BauerBrands, from November 2013 to January 2017.

Nicholas I. Finkhas served as President of the Plumbing segment since August 2016. From June 2015 to August 2016, Mr. Fink served as Senior Vice President-Global Growth and Development of Fortune Brands. From June 2006 to May 2015, Mr. Fink worked at Beam Suntory, Inc., a global spirits company, and its predecessor entities in various senior positions including as Senior Vice President and General Manager of U.S. Retail at Moen Incorporated from January 2010 to April 2011.President, Asia-Pacific/South America.

Brett E. Finleyhas served as President of the Doors & Security segment since July 2018. From February 2016 to July 2018, Mr. Finley served as the President of Fortune Brands Doors, Inc. since February 2016. From February 2008 to February 2016, Mr. Finley held various leadership positions at IDEX Corporation, a global manufacturer of fluidics systems and specialty engineered products, including Senior Vice President, Group Executive, Fluid & Metering Technologies Segment and President- IDEX-Asia.

David B. Lingafelter has served as President of Moen Incorporated, a subsidiary of Fortune Brands, since October 2007.

David M. Randich has served as President of MasterBrandthe Cabinets Inc., a subsidiarysegment since October 2012.

Tracey L. Belcourt has served as Senior Vice President of Global Growth and Development of Fortune Brands since October 2012.December 2016. From November 20072012 to October 2012, Mr. Randich2016, Ms. Belcourt served as Executive Vice President, Strategy of Therma-Tru Corp.,Mondelez International, Inc. a subsidiary of Fortune Brands.confectionary, food and beverage company.

Robert K. Biggart has served as Senior Vice President, General Counsel and Secretary of Fortune Brands since December 2013. From March 2005 through December 2013, Mr. Biggart served as Senior Vice President — General Counsel of PepsiCo Americas Beverages, a business division of PepsiCo, Inc., a global food and beverage company.

Nicholas I. Finkhas served as Senior Vice President-Global Growth and Development of Fortune Brands since June 2015. From June 2006 to May 2015, Mr. Fink worked at Beam Suntory, Inc., a global spirits company, and its predecessor entities in various senior positions including as Senior Vice President and President, Asia-Pacific/South America from July 2013 to May 2015 and as Senior Vice President, Chief Strategy Officer from May 2012 to December 2013.

Sheri R. Grissomhas served as Senior Vice President — Human Resources of Fortune Brands since February 2015. Ms. Grissom served as Executive Vice President — Global Human Resources of Actuant Corporation, a diversified industrial company, from October 2010 to February 2015.

Brian C. Lantzhas served as Senior Vice President, Communications & Corporate Administration since January 2017. Mr. Lantz joined Fortune Brands in June 2011 as Vice President of Investor Relations.

Marty Thomashas served as Senior Vice President, Operations and Supply Chain Strategy since September 2017. Mr. Thomas served as Senior Vice President of Global Operations and Engineering Services at Rockwell Automation, Inc., a provider of industrial automation and information products, from 2006 to 2016.

Dan Luburichas served as Vice President and Corporate Controller of Fortune Brands since October 2011. Prior to that, Mr. Luburic served as Assistant Corporate Controller of our Former Parent from December 2007 through September 2011.

PART II

Market Information, Dividends and Holders of Record

Our common stock is listed on the New York Stock Exchange (the “NYSE”) under the ticker symbol “FBHS”. The following table presents the high and low prices for our common stock as reported on the NYSE and the dividends declared for each of the periods indicated.

In December 2015,2018, our Board of Directors increased the quarterly cash dividend by 14%10% to $0.16$0.22 per share of our common stock. We currently expectOur Board of Directors will continue to payevaluate dividend payment opportunities on a quarterly cashbasis. There can be no assurance as to when and if future dividends inwill be paid, or at what level, because the future, but such payments arepayment of dividends is dependent upon our financial condition, results of operations, capital requirements and other factors including those set forth under “Item 1A. Risk Factors.”deemed relevant by our Board of Directors.

On February 5, 2016,1, 2019, there were 12,2119,946 record holders of the Company’s common stock, par value $0.01 per share. A substantially greater number of holders of the Company’s common stock are “street name” or beneficial holders, whose shares of record are held by banks, brokers or other financial institutions.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Below are the repurchases of common stock by the Company or any “affiliated purchaser” (as defined inRule 10b-18(a)(3) under the Exchange Act) for the three months ended December 31, 2015:2018:

Stock Performance

The above graph compares the relative performance of our common stock, the S&P Midcap 400500 Index and a Peer Group Index. This graph covers the period from September 16, 2011 (the first day our common stock began “when-issued” trading on the NYSE)December 31, 2013 through December 31, 2015.2018. This graph assumes $100 was invested in the stock or the index on September 16, 2011December 31, 2013 and also assumes the reinvestment of dividends. The foregoing performance graph is being furnished as part of this Annual Report on Form10-K solely in accordance with the requirement under Rule14a-3(b)(9) to furnish our stockholders with such information, and therefore, shall not be deemed to be filed or incorporated by reference into any filings by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.Act.

Peer Group IndexIndex.The Peer Group2018 peer group is composed of the following publicly traded companies corresponding to the Company’s core businesses:

Armstrong World Industries, Inc., Fastenal Company, Leggett & Platt Incorporated, Lennox International Inc., Masco Corporation, Mohawk Industries, Inc., Newell RubbermaidBrands Inc., The Sherwin-Williams Company, Stanley Black & Decker, Inc., and USG Corporation and The Valspar Corporation.

Calculation of Peer Group Index

The weighted-average total return of the entire Peer Group,peer group, for the period of September 16, 2011 (the first day of “when-issued” trading on the NYSE of Fortune Brands Home & Security, Inc. common stock)December 31, 2013 through December 31, 2015,2018, is calculated in the following manner:

Five-year Consolidated Selected Financial Data

Introduction

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is a supplement to the accompanying consolidated financial statements and provides additional information on our business, recent developments, financial condition, liquidity and capital resources, cash flows and results of operations. MD&A is organized as follows:

Overview

The Company is a leader in home and security products focused on the design, manufacture and sale of market-leading branded products in the following categories: kitchen and bath cabinetry, plumbing and accessories, entry door systems, security products and securityoutdoor performance materials used in decking, railing and fencing products.

For the year ended December 31, 2015,2018, net sales based on country of destination were:

We believe the Company has certain competitive advantages including market-leading brands, a diversified mix of customer channels, and lean and flexible supply chains, a decentralized business model and a strong capital structure as well as a tradition of strong innovation and customer service. We are focused on outperforming our markets in growth, profitability and returns in order to drive increased shareholder value. We believe the Company’s track record reflects the long-term attractiveness and potential of our categories and our leading brands. As consumer demand and the housing market continue to grow, we expect the benefits of operating

leverage and strategic spending to support increased manufacturing capacity and long-term growth initiatives will help us to continue to achieve profitable organic growth.

We believe our most attractive opportunities are to invest in profitable organic growth initiatives. We also believe that as the market grows, we have the potential to generate additional growth from leveraging our cash flows and balance sheet strength by pursuing accretive strategic acquisitions,non-controlling equity investments, and joint ventures, and by returning cash to shareholders through a combination of dividends and repurchases under our share repurchase programsprogram as explained in further detail under “Liquidity and Capital Resources” below.

The U.S. market for our home products consists of spending on both new home construction and repair and remodel activities within existing homes, with the substantial majority of the markets we serve consisting of repair and remodel spending. We believe thatContinued growth in the U.S. market for our home products is in the midst of a multi-year recovery from the U.S. economic recession that ended in mid-2009 and that a continued recovery will largely depend on consumer confidence, employment, home prices, stable mortgage rates and credit availability. Over the long term, we believe that the U.S. home products market will benefit from favorable population and immigration trends, which will drive demand for new housing units, and from aging existing housing stock that will continue to need to be repaired and remodeled.

We may be impacted by fluctuations in raw material andmaterials, tariffs, transportation costs, foreign exchange rates and promotional activity among our competitors. We strive to offset the potential unfavorable impact of these items with productivity initiativesimprovements and price increases.

During the past three years ended December 31, 2015,2018, our net sales grew at a compounded annual rate of 13%6.2% as we benefited from an improving U.S. home products market, acquisitions, share gains and growth in international markets. Operating income grew at a compounded annual rate of 51%7.4% with consolidated operating margins improving from 5%10% in 20122015 to 11% in 2015.2018. Growth in operating income was primarily due to higher sales volume, changes to our portfolio of businesses, control and leverage of our operating expenses and the benefits of productivity programs, and changes to our portfolio of businesses.programs.

During 2015,2018, the U.S. home products market grew due to increases in new home construction and repair and remodel activities. We believe new housing construction experienced low double-digitapproximately 5% growth in 20152018 compared to 20142017 and spending for home repair and remodeling increased approximately 5%4%. In 2015,2018, net sales grew 14% and operating income increased 23%4% due to price increases to help mitigate cumulative raw material cost increases, the acquisitions of Norcraft Companies, Inc. (“Norcraft”) in 2015,our Plumbing and John D. BrushDoors & Co., Inc. (“SentrySafe”) and Anaheim Manufacturing Company (“Anaheim”) in 2014,Security segments, higher sales volume primarily resulting from U.S. home products market growth, price increasesand the effect of favorable foreign exchange. In 2018, operating income decreased 12.8% due to help mitigate cumulative raw material cost increasesunfavorable mix, asset impairment charges, higher employee-related costs and productivity improvements.restructuring charges.

During 2014,2017, the U.S. home products market also grew due to expansion of bothincreases in new home construction and repair and remodel activities. We believe new housing construction experienced high-single digitapproximately 7% growth in 20142017 compared to 20132016 and spending for home repair and remodeling increased by approximately 4% to 5%. In 2014,2017, net sales grew 8%6% and operating income increased 25%9% due to higher sales volume primarily resulting from U.S. home products market growth, the acquisitions in our Plumbing segments, price increases to help mitigate cumulative raw material cost increases, the effect of WoodCrafters Home Products Holding, LLC (“WoodCrafters”) in 2013 and SentrySafe in 2014,favorable foreign exchange and productivity improvements.

During the fourth quarter of 2018, our Plumbing segment entered into strategic partnerships with several companies who incorporate emerging technology into plumbing-related products, and at the same time acquirednon-controlling equity interests in two of our partners. This includes an investment in Flo Technologies, Inc.

In September 2018, we issued $600 million of unsecured senior notes (“2018 Senior Notes”) in a registered public offering. The 2018 Senior Notes are due in 2023 with a coupon rate of 4%. All other terms and conditions of the 2018 Senior Notes are substantially consistent with our other senior notes issued in June 2015 (“2015 Senior Notes”, and collectively with the 2018 Senior Notes, the “Senior Notes”). We used the proceeds from the 2018 Senior Notes offering to pay down our revolving credit facility.

In September 2018, we completedacquired 100% of the salemembership interests of Waterloo Industries, Inc.Fiber Composites LLC (“Waterloo”Fiberon”), a leading U.S. manufacturer of outdoor performance materials used in decking, railing and fencing products

for a total purchase price of approximately $14$470.0 million, subject to certain post-closing adjustments. The acquisition of Fiberon provides category expansion and product extension opportunities into the outdoor living space for our Doors & Security segment. We financed the transaction using cash on hand and borrowings under our revolving credit and term loan facilities. Fiberon’s results of operations are included in the Doors & Security segment from the date of acquisition.

In July 2018, we publicly announced an internal reorganization to combine our historical Doors and Security segments under common leadership to drive innovation, accelerate product development, and enhance investments and business processes. In connection with the reorganization, we changed how our chief operating decision maker evaluates and allocates the resources for the combined business. Reporting for the new Doors & Security segment began in the third quarter of 2018 and historical financial segment information has been restated to conform to the new segment presentation.

In March 2018, the Company entered into a $350 million term loan for general corporate purposes that matures in March 2019. In August 2018, the Company amended its existing $350 million term loan to increase the borrowings under the term loan from $350 million to $525 million. All terms and conditions on the amended term loan remain the same as the previous $350 million term loan. Interest rates under the term loan are variable based on LIBOR at the time of the borrowing and the Company’s long-term credit rating and can range from LIBOR + 0.625% to LIBOR + 1.25%. Covenants under the term loan are the same as the existing $1.25 billion revolving credit agreement.

In October 2017, we acquired Domotec Holdings Limited (“Victoria + Albert”), aUK-based premium brand of standalone bathtubs, sinks, tub fillers, faucets and other accessories. In July 2017, we acquired Shaws Since1897 Limited (“Shaws”), aUK-based luxury plumbing products company that specializes in manufacturing and selling fireclay sinks and selling brassware and accessories. The total combined consideration paid was approximately $146 million, subject to certain post-closing adjustments and deferred acquisition payments. We financed both of the acquisitions using cash on hand and borrowings under our revolving credit facility. These transactions broadened our plumbing portfolio.

During the third quarter of 2016, we announced the creation of GPG, which was designed to support the growth of multiple plumbing brands with an enhanced set of products and brands, while leveraging Moen’s existing global supply chain and broad distribution network.

In September 2016, we acquired ROHL LLC (“ROHL”), a California-based luxury plumbing company and in a related transaction, we acquired TCL Manufacturing Ltd, which gave us ownership of Perrin & Rowe, a UK manufacturer and designer of luxury kitchen and bathroom plumbing products. The total combined purchase price was approximately $166 million, subject to certain post-closing adjustments. We recordedfinanced both acquisitions using cash on hand and borrowings under our existing credit facility. These transactions broadened the plumbing portfolio and enhanced future growth opportunities.

In June 2016, we amended and restated our credit agreement to combine and rollover the existing revolving credit facility and term loan into a pre-tax loss of $16.7 million as the result of this sale. Transactionnew standalone $1.25 billion revolving credit facility. Terms and other sale related costs were approximately $2.8 million. The related estimated tax benefit on the sale was $26.5 million with the after-tax gain of $7.0

million recorded within discontinued operations. The estimated tax benefit resulted primarily from a tax loss in excessconditions of the financial reporting losscredit agreement, including the total commitment amount, essentially remained the same as a result of prior period nondeductible asset impairments. Prior to classifying Waterloo as a discontinued operation, it was reportedour previous credit assesment. The revolving credit facility will mature in the Security segment.June 2021 and borrowings thereunder will be used for general corporate purposes.

In May 2015,2016, we acquired Norcraft,Riobel Inc (“Riobel”), a leading publicly-owned manufacturer of kitchenCanadian plumbing company specializing in premium showroom bath and bathroom cabinetry,shower fittings, for a total purchase price of $648.6 million. Pursuant$94.6 million, subject to the agreement, we acquired all outstanding shares of Norcraft for $25.50 per share of common stock in cash.certain post-closing adjustments. We financed the transaction using cash on hand and borrowings under our existing credit facilities. This acquisition is expected to strengthen our overall product offering, round out our regional market penetration and enhance our frameless cabinetry capabilities.

In December 2014, we acquired Anaheim, which markets and sells garbage disposals, for $28.9 million in cash. In July 2014, we acquired SentrySafe, a leading manufacturer of home safes, for a purchase price of $116.7 million in cash. The financial results of SentrySafe were included in the Company’s results of operations and cash flows beginning in August of 2014. The purchase prices were funded from cash on hand and our existing credit facilities.

In September 2014, we sold the Simonton windows business (“Simonton”) for $130 million in cash.

In June 2013, the Company acquired WoodCrafters, a manufacturer of bathroom vanities and tops, for a purchase price of $302.0 million. We paid the purchase price using a combination of cash on hand and borrowings under our existing credit facilities. The financial results of WoodCrafters were included in the Company’s results of operations and cash flows beginning in the third quarter of 2013. This acquisition greatly expanded our offering of bathroom cabinetry products.

Basis of Presentation

The consolidated financial statements in this Annual Report on Form10-K have been derived from the accounts of the Company and its majority-ownedwholly-owned subsidiaries. The Company’s consolidated financial

statements are based on a fiscal year ending December 31. Certain of the Company’s subsidiaries operate on a 52 or 53 week fiscal year ending during the month of December. In May 2015,December 2017, there were certain transactions that resulted in approximately $38 million of net cash outflows relating to payments made to third parties in the normal course of business during the period between theyear-end of our wholly-owned subsidiaries and the Company’syear-end (in 2018, amounts were immaterial).

In September 2018, we acquired Norcraft.Fiber Composites LLC (“Fiberon”). The financial results of NorcraftFiberon were included in the Company’s consolidated statements of income and statements of cash flow beginning in May 2015September 2018 and the consolidated balance sheet as of December 31, 2018. The results of operations are included in the Doors & Security segment.

In October 2017, we acquired Victoria + Albert. In July 2017, we acquired Shaws. The financial results of both of the acquisitions were included in the Company’s consolidated balance sheets as of December 31, 2015. On September 10, 2015, we completed the sale of Waterloo. In accordance with Accounting Standards Codification (“ASC”) requirements, the results of operations of Waterloo through the date of sale, were classified2017 and separately stated as discontinued operations in the accompanyingCompany’s consolidated statements of income for 2015, 2014 and 2013.statements of cash flow beginning in October 2017 and July 2017, respectively. The assets and liabilitiesresults of Waterloo were classified as discontinued operations are included in the accompanyingPlumbing segment.

In September 2016, we acquired ROHL and in a related transaction, we acquired TCL Manufacturing Ltd., which gave us ownership of Perrin & Rowe and in May 2016, we acquired Riobel. The financial results of ROHL and Riobel were included in the Company’s consolidated balance sheetsheets as of December 31, 2014.

In2016 and in the Company’s consolidated statements of income and statements of cash flow beginning in September 2014, we sold of all of the shares of stock of Fortune Brands Windows, Inc., our subsidiary that owned2016 and operated the Simonton windows business.May 2016, respectively. The results of operations of Simonton were reclassified and separately stated as discontinued operationsare included in the accompanying consolidated statements of income for 2014 and 2013.

The cash flows from discontinued operations for 2015, 2014 and 2013 were not separately classified on the accompanying consolidated statements of cash flows. Information on Business Segments was revised to exclude these discontinued operations.Plumbing segment.

Results of Operations

The following discussion of both consolidated results of operations and segment results of operations refers to the year ended December 31, 20152018 compared to the year ended December 31, 2014,2017, and

the year ended December 31, 20142017 compared to the year ended December 31, 2013.2016. The discussion of consolidated results of operations should be read in conjunction with the discussion of segment results of operations and our financial statements and notes thereto included in this Annual Report on Form10-K. Unless otherwise noted, all discussion of results of operations are for continuing operations.

Years Ended December 31, 2015, 20142018, 2017 and 20132016

Certain items had a significant impact on our results in 2015, 20142018, 2017 and 2013.2016. These included the acquisitions of Norcraft, SentrySafeFiberon, Victoria + Albert, Shaws, Riobel, ROHL and WoodCrafters, dispositions of Waterloo and Simonton, defined benefit plan recognition of actuarial losses,Perrin & Rowe, restructuring and other charges, asset impairment charges and the impact of changes in foreign currency exchange rates.

In 2015,2018, financial results included:

In 2014,2017, financial results included:

In 2013,2016, financial results included:

20152018 Compared to 20142017

Total Fortune Brands

Net sales

Net sales increased $565.8$201.8 million, or 14%3.8%. The increase was due to the benefit of the acquisitions of Norcraft, SentrySafe, and Anaheim (approximately $369 million in aggregate), higher sales volume primarily from the continuing improvement in U.S. market conditions for home products, price increases to help mitigate cumulative raw material cost increases, higher international sales, principally in China, our acquisitions

during 2017 and 2018 in our Plumbing and Doors & Security segments, higher sales volume primarily from the growth in the U.S. home products market, the benefit from new product introductions and favorable mix. These factors were partially offset by unfavorable foreign exchange of approximately $66 million and higher sales rebates.

Cost of products sold

Cost of products sold increased $350.8 million, or 13%, due to higher net sales, including the impact of the acquisitions of Norcraft, SentrySafe and Anaheim (approximately $246 million in aggregate), and investments to support increased manufacturing capacity and long-term growth initiatives, partially offset by the benefit of productivity improvements.

Selling, general and administrative expenses

Selling, general and administrative expenses increased $104.3 million, or 11%, due to the impact of the acquisitions of Norcraft, SentrySafe, and Anaheim (approximately $82 million in aggregate), $15.1 million of Norcraft transaction costs, higher employee-related costs, and planned increases in strategic spending to support increased capacity and long-term growth initiatives.

Amortization of intangible assets

Amortization of intangible assets increased $8.5 million due to the acquisitions of Norcraft, SentrySafe and Anaheim.

Restructuring charges

Restructuring charges of $16.6 million in 2015 primarily related to relocating a manufacturing facility, including severance costs within our Security segment and severance costs to relocate a plumbing manufacturing facility in China. Restructuring charges of $7.0 million in 2014 related to severance in Security, Plumbing and Corporate, partially offset by a benefit from a foreign currency gain associated with the dissolution of a foreign entity in the Plumbing segment.

Operating income

Operating income increased $92.6 million or 23%. Operating income benefited from higher net sales, including the impact of acquisitions, productivity improvements, and $11.2 million in lower defined benefit plan actuarial losses.$9 million. These benefits were partially offset by investments to support manufacturing capacity increases for long-termmore moderate industry growth higher employee-related costs, higher sales rebates, approximately $16 millionduring the second half of 2018, unfavorable foreign exchange, $15.1 million of Norcraft transaction costs and $15.0 million of higher restructuring and other charges.

Interest expense

Interest expense increased $21.5 million to $31.9 million due to higher average borrowingsmix and higher average interest rates.

Other expense, net

Other expense, net, was expense of $4.3 million in 2015 compared to $1.2 million in 2014. The change was principally due to unfavorable foreign currency adjustments.

Income taxes

The effective income tax rates for 2015promotions and 2014 were 33.4% and 30.2%, respectively. The effective income tax rates for 2015 and 2014 were favorably impacted by the tax benefit attributable to the Domestic Production Activity (Internal Revenue Code Section 199) Deduction ($12.5 million and $7.6 million, respectively), favorable tax rates in foreign jurisdictions ($8.7 million and $13.4 million, respectively) and a benefit associated with the extensions of the U.S. research and development credit ($2.2 million and $1.8 million, respectively), offset by state and local taxes and increases to

uncertain tax positions ($4.7 million and $4.7 million, respectively). The benefit associated with the favorable tax rates in foreign jurisdictions is affected by overall allocation of income, rate changes and impact of foreign exchange rates. In 2015, the effective income tax rate benefit from foreign tax rates was reduced, as compared to 2014, due to the overall allocation of income within foreign jurisdictions and an expiration of a favorable tax incentive that in total increased the effective foreign tax rate by 6%. The 2015 effective income tax rate was unfavorably impacted by $2.4 million related to nondeductible acquisition costs. The effective tax rate in 2014 was favorably impacted by the release of valuation allowances related to state net operating loss carryforwards of $4.1 million.

Noncontrolling interests

Noncontrolling interest was $0.5 million and $1.2 million in 2015 and 2014, respectively.

Income from continuing operations

Net income from continuing operations was $306.5 million in 2015 compared to $273.6 million in 2014.

Income (loss) from discontinued operations

The income (loss) from discontinued operations was $9.0 million and $(114.3) million in 2015 and 2014, respectively. The discontinued operations in 2015 consist of the results of operations of Waterloo and the after-tax gain associated with the sale of the business. The net loss from discontinued operations was $(114.3) in 2014, of which $(111.2) million was the loss on the sale of Simonton windows business, as well as $(14.1) million in restructuring and impairment losses recorded as a result of the decision to sell the Waterloo tool storage business.

Results By Segment

Cabinets

Net sales increased $385.9 million, or 22%, due to the benefit of the Norcraft acquisition (approximately $258 million), higher sales volume including the impact of new product introductions, favorable mix and the benefit of price increases to help mitigate cumulative raw material cost increases. These benefits were partially offset by approximately $24 million of unfavorable foreign exchange.

Operating income increased $54.5 million, or 40%, due to an increase in net sales, productivity improvements and approximately $28 million benefit from the acquisition of Norcraft, including a $2.0 million charge related to an inventory purchase accounting adjustment to fair value. These benefits were partially offset by investments to support manufacturing capacity increases for long-term growth, higher employee-related costs, higher wood-related raw material costs and costs associated with new product introductions.

Plumbing

Net sales increased $83.5 million, or 6%, due to higher sales volume in the U.S. driven by improving U.S. market conditions, the acquisition of Anaheim (approximately $31 million benefit) and price increases to help mitigate cumulative raw material cost increases. These benefits were partially offset by unfavorable foreign exchange of approximately $29 million and higher sales rebates.

Operating income increased $26.5 million, or 10%, due to an increase in net sales, and productivity improvements. Operating income was unfavorably impacted by higher sales rebates, approximately $14 million of unfavorable foreign exchange and $5.9 million of higher restructuring and other charges primarily related to severance costs to relocate a manufacturing facility in China.

Doors

Net sales increased $25.2 million, or 6%, due to higher sales volume driven primarily by improved conditions in the U.S. home products market, price increases to help mitigate cumulative raw material cost increases and favorable mix.

Operating income increased $14.8 million, or 51%, due to an increase in net sales, productivity improvements and approximately $2 million of favorable foreign exchange, partially offset by higher employee related costs.

Security

Net sales increased $71.2 million, or 15%, due primarily to the impact of the acquisition of SentrySafe (approximately $80 million), partially offset by unfavorable foreign exchange (approximately $14 million).

Operating income increased $6.5 million, or 13%. Operating income was favorably impacted by productivity improvements and the acquisition of SentrySafe, partially offset by an increase of $9.3 million of restructuring and other charges primarily to relocate a manufacturing facility, higher employee related costs and unfavorable foreign exchange of approximately $4 million.

Corporate

Corporate expenses increased $9.7 million predominantly due to $15.1 million of transaction costs associated with the Norcraft acquisition partially offset by lower defined benefit plan actuarial losses of $11.2 million.

In future periods the Company may record, in the Corporate segment, material expense or income associated with actuarial gains and losses arising from periodic remeasurement of our liabilities for defined benefit plans. At a minimum the Company will remeasure its defined benefit plan liabilities in the fourth quarter of each year. Remeasurements due to plan amendments and settlements may also occur in interim periods during the year. Remeasurement of these liabilities attributable to updating our liability discount rates and expected return on assets may, in particular, result in material income or expense recognition.

2014 Compared to 2013

Total Fortune Brands

Net sales

Net sales increased $310.0 million, or 8%. The increase was due to the benefit of the acquisitions of WoodCrafters and SentrySafe (approximately $165 million in aggregate), higher sales volume primarily from the continuing improvement in U.S. market conditions for home products, price increases to help mitigate material cost increases, and favorable product mix. These increases were partially offset by the impact of the planned exit from low margin builder direct cabinet business in the western U.S. (approximately $53 million) and approximately $25 million of unfavorable foreign exchange.

Cost of products sold

Cost of products sold increased $238.2$167.4 million, or 10%5.0%, due to higher net sales, volume, material cost increasesincreased commodity costs, higher restructuring and higherother charges related to costs associated with our initiatives to consolidate and rationalize our manufacturing capacity increases to support long-term growth, as well as the $126.0 million impactfootprint and discontinue certain product lines in our Cabinets segment, and higher amortization of the acquisitions of SentrySafeacquisition-related inventory fair value adjustment in our Plumbing and WoodCrafters.Doors & Security segments. These cost increasesfactors were partially offset by the benefit of productivity improvements.

Selling, general and administrative expenses

Selling, general and administrative expenses increased $4.6$44.5 million, or 3.7%, due to higher volume-relatedemployee-related costs, the impact from our acquisitions during 2017 and the $19.0 million impact of the acquisitions of SentrySafe2018 in our Plumbing and WoodCrafters,Doors & Security segments and higher transportation costs partially offset by lower employee-related costs. Selling, general and administrative expenses were also unfavorable due to higher expensethe benefit from actuarial losses related to defined benefits plans ($10.7 million in 2014 compared to $2.5 million in 2013).restructuring actions.

Amortization of intangible assets

Amortization of intangible assets increased $3.7$4.4 million due to our acquisitions during 2017 and 2018 in our Plumbing and Doors & Security segments offset by a decrease related to a definite-lived customer relationship intangible that was fully amortized during the acquisitionssecond quarter of WoodCrafters ($2.92017.

Loss on sale of product line

In April 2017, we completed the sale of Field ID, our cloud-based inspection and safety compliance software product line included in our Doors & Security segment. We recorded apre-tax loss of $2.4 million incremental) and SentrySafe ($0.8 million).as the result of this sale.

Asset impairment charges

Asset impairment charges of $62.6 million in 2018 related to two indefinite-lived tradenames within our Cabinets segment. During the third quarter of 2018, we recognized an impairment of $27.1 million related to one tradename, which was primarily the result of reduced revenue growth expectations associated with Cabinets operations in Canada, including the announced closure of Company-owned retail locations during the third quarter of 2018. During the fourth quarter of 2018, we recognized an impairment of $35.5 million related to another tradename, which was primarily the result of lower than forecasted sales during the fourth quarter of 2018 as well as projected changes in the mix of revenue across our tradenames in future periods, including the impact of more moderate industry growth expectations, which were finalized during our annual planning process conducted during the fourth quarter. Asset impairment charges of $3.2 million in the first quarter of 2017 related to our decision to sell Field ID.

Restructuring charges

Restructuring charges of $7.0$24.1 million in 20142018 primarily related to severance in Security, Plumbingcosts within all of our segments and Corporate, partially offset by a benefit from a foreign currency gaincosts associated with dissolution of a foreign entityour initiatives to consolidate our manufacturing footprint and product lines in the Plumbingour Cabinets segment. Restructuring charges of $2.8$8.3 million in 20132017 primarily related to supply chain initiatives.

Asset impairment charge

No asset impairmentseverance costs across all segments and charges were recorded in 2014 in operating income. In 2013,associated with the relocation of a manufacturing facility within our Cabinets segment completed an evaluation of its information technology strategy. As a result of this evaluation, the segment abandoned certain software developed for internal use and recorded an impairment charge of $21.2 million, which was recorded in operating income and reduced property, plant and equipment.segment.

Operating income

Operating income increased $80.5decreased $87.3 million or 25%, primarily12.8%. Operating income decreased due to unfavorable mix, asset impairment charges, higher employee-related costs and restructuring charges partially offset by

higher net sales, volume from our growth initiatives and improving U.S. home products market conditions,including the benefit from the WoodCraftersacquisitions in our Plumbing segment and SentrySafe acquisitions (approximately $9 million in aggregate) and improved product mix. Operating income was unfavorably impacted by planned costs associated with manufacturing capacity increases to support long-term growth. Operating income was also impacted by approximately $13 million of unfavorable foreign exchange. In addition, the following items had a significant impact on operating income trends:productivity improvements.

Interest expense

Interest expense increased $3.2$25.1 million primarilyto $74.5 million due to higher average borrowings.borrowings to finance share repurchases and acquisitions and higher average interest rates.

Other expense,income, net

Other expense,income, net, was $1.2$16.3 million in 2014,the twelve months ended December 31, 2018, compared to $5.3$1.7 million in 2013.the twelve months ended December 31, 2017. The decrease of $4.1 million wasincrease in other income, net, is primarily due to hedge gains associated with our September 2018 debt issuance, favorable foreign currency adjustments and various tax credits within our Plumbing business partially offset by lower defined benefit plan income in 2018 ($3.0 million decrease). In addition, 2017 reflects a $6.2$7.0 million impairment charge pertainingrelated to a cost method investment in 2013, partially offset by a $1.6 million impairment charge pertaining to a different cost method investment in 2014.investment.

Income taxes

The effective income tax rates for 20142018 and 20132017 were 30.2%27.4% and 32.7%25.1%, respectively. The 2018 effective income tax rate was favorably impacted by the corporate tax rate reduction from 35% to 21% under The Tax Cuts and Jobs Act of 2017 (the “Tax Act”). The 2018 effective income tax rate was unfavorably impacted by the repeal of the Domestic Production Activity (Internal Revenue Code Section 199) Deduction, a valuation allowance increase ($3 million), an adjustment to the provisional net benefit recorded in 2017 under the Tax Act ($5.5 million), state and local taxes, unfavorable tax rates in foreign jurisdictions ($3.5 million), and increases in uncertain tax positions ($4.1 million).

The 2017 effective income tax rate was favorably impacted by the Tax Act. The effective income tax rate for 20142017 was favorably impacted by a tax benefit related to share-based compensation ($23.9 million), the tax benefit attributable to the Domestic Production Activity (Internal Revenue Code Section 199) Deduction ($7.610.9 million) and favorable tax rates in foreign jurisdictions ($8.3 million), partially offset by state and local taxes and increases to uncertain tax positions ($11.6 million).

The Tax Act made significant changes to the releaseU.S. Internal Revenue Code including a reduction in the corporate tax rate from 35% to 21% for tax years beginning after December 31, 2017, generally providing for an exemption from federal income tax for dividends received from foreign subsidiaries, and imposing aone-time transition tax on the deemed repatriation of valuation allowances related to state net operating loss carryforwards ($4.1 million),cumulative foreign earnings and a $1.8 million benefit associatedprofits as of December 31, 2017. On December 22, 2017, Staff Accounting Bulletin No. 118 (“SAB 118”) was issued, which deals with the extensionapplication of U.S. GAAP to situations where a registrant does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the U.S. research and development credit underTax Act. In accordance with SAB 118, we calculated our best estimate of the impact of the Tax Increase Prevention Act 2014. Theon our 2017 effective income tax rate for 2013rate. As a result, the Company recorded a provisional net benefit of $25.7 million in the fourth quarter of 2017, the period in which the Tax Act was favorably impacted byenacted. This provisional amount included an estimated reduction in the tax benefit attributable to the Domestic Production Activity (Internal Revenue Code Section 199) Deduction ($5.2 million), $1.6 million ofCompany’s net deferred tax benefits associatedliabilities of $62.4 million resulting from the decrease in the federal income tax rate; an estimated deemed repatriation tax liability of $28.5 million; and an estimated net increase to our provision for taxes on foreign earnings not considered permanently reinvested of $8.2 million. During the fourth quarter of 2018, the Company completed its analysis in conjunction with the enacted repealSAB 118 measurement period ending on December 22, 2018. The total tax provision impact for the year ended December 31, 2018 was an unfavorable adjustment of the Mexican Business Flat Tax under the 2014 Mexican Tax Reform Package,$5.5 million related primarily to certain deferred tax assets and a $1.4 million tax benefit associated with the extension of the U.S. research and development credit under The American Taxpayer Relief Act of 2012. The effective income tax rate in 2013 was unfavorably impacted by an increase in the valuation allowance related to an investment impairment charge for which we could not record an income tax benefit ($2.1 million).

Noncontrolling interestsliabilities.

Noncontrolling interest was $1.2 million in 2014 and 2013.

Income from continuing operations

Net income from continuing operations was $273.6$390.0 million in 20142018 compared to $209.0$475.3 million in 2013.2017. The decrease of $85.3 million was primarily due to lower operating income.

Loss from discontinued operations

The loss from discontinued operations was $0.2 million and $2.6 million in 2018 and 2017, respectively and is related to the prior sale of the Waterloo tool storage and Simonton window businesses.

Results By Segment

Cabinets

Net sales decreased $48.5 million, or 2.0%, predominantly due to the impact of exiting a customer relationship and unfavorable mix. These factors were partially offset by the benefit from new product introductions and price increases to help mitigate cumulative raw material cost increases.

Operating income decreased $123.7 million, or 46.3%, primarily due to lower net sales, tradename asset impairment charges of $62.6 million, higher restructuring and other charges incurred to consolidate our manufacturing footprint and discontinue certain product lines and increased employee-related costs due to inflation, partially offset by the benefit from productivity improvements.

Plumbing

Net sales increased $162.5 million, or 9.4% due to higher sales unit volume in the U.S. China and Canada, new product introductions across our distribution channels, the benefit from the 2017 acquisitions of Victoria + Albert and Shaws and price increases to help mitigate cumulative raw material cost increases partially offset by higher rebates. Foreign exchange was favorable by approximately $5 million.

Operating income increased $16.8 million, or 4.7%, due to the higher net sales and benefits from productivity improvements. These benefits were partially offset by commodity cost inflation, higher employee-related costs, unfavorable mix, amortization of the acquisition-related inventory fair value adjustments ($5.5 million) related to our 2017 acquisitions and increased marketing and advertising costs. In addition, 2017 operating income reflects the impact of adopting ASU2017-07 during 2018 and the reclassification of approximately $5.1 million from Plumbing operating income to other income, net.

Doors & Security

Net sales increased $87.8 million, or 8.0%, due to higher sales volume, resulting from the benefit from new product introductions, the acquisition of Fiberon in 2018, price increases to help mitigate cumulative raw material cost increases and the impact of favorable foreign exchange, which were partly offset by increasednon-repeating sales promotions and unfavorable mix.

Operating income increased $8.7 million, or 5.9%, due to higher net sales and an inventory valuation accounting change benefit of $12.8 million, which were partially offset bynon-repeating sales promotions and inventory step up amortization related to the Fiberon acquisition.

Corporate

Corporate expenses decreased by $10.9 million mainly due to lower employee-related costs. In addition, 2017 corporate expense reflects the impact of adopting ASU2017-07 during the first quarter of 2018 and the related reclassification of approximately $4.5 million of 2017 income from Corporate expenses to other income, net.

2017 Compared to 2016

Total Fortune Brands

Net sales

Net sales increased $298.4 million, or 6.0%. The increase was due to higher sales volume primarily from improvement in U.S. market conditions for home products, new product introductions, the benefit from the acquisitions in our Plumbing segment and price increases to help mitigate cumulative raw material cost increases as well as the benefit from favorable foreign exchange of approximately $4 million. These benefits were partially offset by unfavorable mix, higher sales promotions, and sales rebates.

Cost of products sold

Cost of products sold increased $169.5 million, or 5.3%, due to higher net sales, including the impact of the acquisitions in our Plumbing segment and raw material cost increases, partially offset by the benefit of productivity improvements.

Selling, general and administrative expenses

Selling, general and administrative expenses increased $61.4 million, or 5.4%, due to higher employee-related costs and advertising costs as well as the impact of the acquisitions in our Plumbing segment.

Amortization of intangible assets

Amortization of intangible assets increased $3.6 million primarily due to the acquisitions in our Plumbing segment, partially offset by a decrease relating to a definite-lived customer relationship intangible in our Doors & Security segment that was fully amortized during the second quarter of 2017.

Loss on sale of product line

In April 2017, we completed the sale of Field ID, our cloud-based inspection and safety compliance software product line included in our Doors & Security segment. We recorded apre-tax loss of $2.4 million as the result of this sale.

Asset impairment charges

Asset impairment charges of $3.2 million relate to our decision in the first quarter of 2017 to sell Field ID.

Restructuring charges

Restructuring charges of $8.3 million in 2017 primarily related to severance costs within all of our segments as well as charges associated with a plant relocation in our Cabinets segment. Restructuring charges of $13.9 million in 2016 primarily related to the severance costs and charges associated with the relocation of a manufacturing facility within our Doors & Security segment.

Operating income

Operating income increased $63.9 million or 10.3%. Operating income increased due to higher net sales, including the benefit from acquisitions in our Plumbing segment and productivity improvements. These benefits were partially offset by unfavorable mix, higher employee-related costs, raw material, labor inflation and advertising costs. 2017 and 2016 were adjusted to reflect the impact of adopting ASU2017-07 and reclassification of $9.6 million and $14.1 million, respectively from operating income to other income, net.

Interest expense

Interest expense of $49.4 million was $0.3 million higher as compared to last year primarily due to higher average interest rates which was partially offset by lower average borrowings and the absence of thewrite-off of debt issuance costs incurred in 2016.

Other income, net

Other income, net, was of $1.7 million in the twelve months ended December 31, 2017 compared to $12.6 million in the twelve months ended December 31, 2016. The decrease of $10.9 million was primarily due to a $7.0 million impairment charge in 2017 pertaining to a cost method investment and a decrease in defined benefit income of $4.5 million.

Income taxes

The effective income tax rates for 2017 and 2016 were 25.1% and 29.2% respectively. The 2017 effective income tax rate was favorably impacted by the Tax Act ($25.7 million). The effective income tax rates for 2017 and 2016 were favorably impacted by the tax benefit attributable to share-based compensation (ASU2016-09) deduction ($23.9 million and $27.8 million, respectively), the Domestic Production Activity (Internal Revenue Code Section 199) deduction ($10.9 million and $13.0 million, respectively) and favorable tax rates in foreign jurisdictions ($8.3 million and $7.6 million, respectively), offset by state and local taxes and increases to uncertain tax positions ($11.6 million and $13.2 million, respectively).

Income from continuing operations

Net income from continuing operations was $475.3 million in 2017 compared to $412.4 million in 2016. The increase of $64.6$62.9 million was primarily due to higher operating income and the impact of the lower effective income tax rate.income.

Income (loss)(Loss) income from discontinued operations

Discontinued operations consist of the results of operations of Simonton and the loss associated with the sale of the business in 2014, as well as the results of operations of Waterloo. The net loss from discontinued operations was $114.3of $2.6 million in 2014, of which $111.2 million was2017 primarily related to the loss on theprior sale of the Simonton windows business, as well as $14.1 million in restructuring and impairment losses recorded as a result of the decision to sell the Waterloo tool storage business. Incomeand Simonton window businesses. The income from discontinued operations was $21.9of $0.8 million in 2013.2016 included the effect of tax adjustments relating to the Waterloo business.

Results By Segment

Cabinets

Net sales increased $145.3$69.3 million, or 9%, primarily due to the benefit of the acquisition of WoodCrafters (approximately $100 million) and strength in the repair and remodel market. Net sales also benefited from favorable product mix and price increases to help mitigate raw material cost increases. Net sales were unfavorably affected by the impact of the planned exit from low margin builder direct business in the western U.S. (approximately $53 million) and approximately $15 million of unfavorable foreign exchange.

Operating income increased $40.8 million, or 42%, due to the acquisition of WoodCrafters (approximately $12 million) and the absence in 2014 of the 2013 asset impairment charge of $21.2 million. Operating income also benefited from productivity improvements, lower employee-related costs, price increases to help mitigate raw material cost increases (wood-related) and improved product mix. Operating income was unfavorably impacted by higher costs associated with manufacturing capacity increases to support long-term growth.

Plumbing

Net sales increased $44.0 million, or 3%, due to higher sales volume in the U.S. driven primarily by improving U.S. market conditions, price increases to help mitigate raw material cost increases and approximately $13 million in higher international sales, primarily China and Canada. These benefits were partially offset by approximately $10 million of unfavorable foreign exchange.

Operating income increased $30.6 million, or 13%, due to higher sales volume, price increases to help mitigate raw material cost increases and cost saving initiatives. These benefits were partially offset by planned strategic and supply chain initiatives to increase capacity for long-term growth, as well as unfavorable foreign exchange of approximately $10 million.

Doors

Net sales increased $42.3 million, or 11%2.9%, due to higher sales volume driven primarily by improved conditionscontinuing improvement in the U.S. home products market benefitsand the benefit from new distribution partnersproduct introductions, price increases to help mitigate cumulative raw material cost increases and a $3 million benefit from favorable foreign exchange. These benefits were partially offset by unfavorable mix and higher sales promotions.

Operating income increased $9.4 million, or 3.6%, due to the increase in net sales and productivity improvements. These benefits were partially offset by unfavorable mix, higher employee-related costs, higher labor inflation and higher transportation costs.

Plumbing

Net sales increased $186.4 million, or 12.1%, due to higher sales volume driven by continuing improvement in the U.S. home products market and the benefit from new product introductions, higher sales in international markets, principally China, and the benefit from the acquisitions of Riobel, ROHL and Perrin & Rowe in 2016 as well as Shaws and Victoria + Albert in 2017. These benefits were partially offset by higher sales rebates.

Operating income increased $43.6 million, or 13.8%, due to higher net sales, productivity improvements and favorable mix as well as a $4 million benefit from favorable foreign exchange. These benefits were partially offset by employee-related costs, higher raw materials costs and higher advertising costs. In addition, 2017 and 2016 operating income reflects the impact of adopting ASU2017-07 and reclassification of approximately $5.1 million and $11.4 million, respectively from operating income to other income, net.

Doors & Security

Net sales increased $42.7 million, or 4.1%, due to higher sales volume, including the benefit from new product introductions, and price increases to help mitigate cumulative raw material cost increases.

Operating income increased $13.9 million, or 91%, due to higher sales volume. Operating income also benefited from price increases to help mitigate raw material cost increases and cost savings initiatives, as well as lower employee-related costs. These benefits were partially offset by increased material costs and higher costs related to planned capacity investments.the impact of exiting two security product lines in our commercial distribution channels.

Security

Net salesOperating income increased $78.4$20.5 million, or 19%16.2%, primarily due to the benefit ofhigher net sales, the acquisition of SentrySafebenefits from productivity improvements, lower restructuring and other charges (approximately $65$6 million), as well as higher sales volume, including internationally, particularly in Europe.

Operating income decreased $6.0 million, or 11%, due to $5.7 million of inventory step-up amortization related relating to the acquisitioncompletion in 2016 of SentrySafe, increased raw material costs, higher sellinga manufacturing facility relocation, favorable foreign exchange and administrative expensesthe related cost savings resulting from the facility relocation. In addition, 2017 and 2016 operating income reflects the impact of adopting ASU2017-07 and reclassification of zero and $2.1 million, respectively from operating income to support long-term growth and $4.1 million of restructuring charges in 2014. Operatingother income, benefited from higher sales volume and lower employee-related costs.net.

Corporate

Corporate expenses decreased $1.2increased by $9.6 million or 2%,mainly due to lower employee-related coststhe impairment of a long lived asset. In addition, 2017 and consulting expense, partially offset by recognition2016 operating income reflects the impact of higher actuarial losses recognized in 2014 comparedadopting ASU2017-07 and reclassification of $4.5 million and $0.6 million, respectively from operating income to 2013 (an $8.5 million increase) and $2.0 million of restructuring charges in 2014. The actuarial losses related to the normal remeasurement of the defined benefit plan liabilities ($13.1 million) and defined benefit plan amendments that required a remeasurement of certain postretirement benefit liabilities ($0.6 million).other income, net.

Liquidity and Capital Resources

Our primary liquidity needs are to support working capital requirements, fund capital expenditures and service indebtedness, as well as to finance acquisitions, repurchase shares of our common stock and pay dividends to stockholders, as deemed appropriate. Our principal sources of liquidity have beenare cash on hand, cash flows from operating activities, availability under our credit agreementsfacility and debt issuances in the capital markets. Our operating income is generated by our subsidiaries. There are no restrictions on the ability of our subsidiaries to pay dividends or make other distributions to Fortune Brands. In December 2015,2018, our Board of Directors increased the quarterly cash dividend by 14%10% to $0.16$0.22 per share of our common stock. Our Board of Directors will continue to evaluate dividend payment opportunities on a quarterly basis. There can be no assurance as to when and if future dividends will be paid, and at what level, because the payment of dividends is dependent on our financial condition, results of operations, cash flows, capital requirements and other factors deemed relevant by our Board of Directors.

In September 2018, we issued $600 million of unsecured senior notes (“2018 Senior Notes”) in a registered public offering. The 2018 Senior Notes are due in 2023 with a coupon rate of 4%. We used the proceeds from the Senior Notes offering to pay down our revolving credit facility. On December 31, 2018, the outstanding amount of the 2018 Senior Notes, net of underwriting commissions, price discounts, and debt issuance costs, was $595.0 million.

In March 2018, the Company entered into a $350 million term loan for general corporate purposes that matures in March 2019. In August 2018, the Company amended its existing $350 million term loan to increase the borrowings under the term loan from $350 million to $525 million. All terms and conditions on the amended term loan remain the same as the previous $350 million term loan. The amended term loan is for general corporate purposes and matures in March 2019. At December 31, 2018 and December 31, 2017, amounts due under the term loan were $525.0 million and zero, respectively, which are included within short term debt in our consolidated balance sheet. Interest rates under the term loan are variable

based on LIBOR at the time of the borrowing and the Company’s long-term credit rating and can range from LIBOR + 0.625% to LIBOR + 1.25%. Covenants under the term loan are the same as the existing $1.25 billion revolving credit agreement. As of December 31, 2018, we were in compliance with all covenants under this term loan.

We periodically review our portfolio of brands and evaluate potential strategic transactions to increase shareholder value. However, we cannot predict whether or when we may enter into acquisitions, joint ventures or dispositions, make any purchases of shares of our common stock under our share repurchase programs,program, or pay dividends, or what impact any such transactions could have on our results of operations, cash flows or financial condition, whether as a result of the issuance of debt or equity securities, or otherwise. Our cash flows from operations, borrowing availability and overall liquidity are subject to certain risks and uncertainties, including those described in the section “Item 1A. Risk Factors.”

In June 2016, the Company amended and restated its 2011 credit agreement to combine and rollover the prior revolving credit facility and term loan into a new standalone $1.25 billion revolving credit facility. This amendment and restatement of the credit agreement was anon-cash transaction for the Company. Terms and conditions of the credit agreement, including the total commitment amount, essentially remained the same as under the 2011 credit agreement. The revolving credit facility will mature in June 2021 and borrowings thereunder will be used for general corporate purposes. On December 31, 2018 and December 31, 2017, our outstanding borrowings under these facilities were $320.0 million and $615.0 million, respectively, all of which is included in long-term debt in our consolidated balance sheet. Interest rates under the facility are variable based on LIBOR at the time of the borrowing and the Company’s long-term credit rating and can range from LIBOR + 0.9% to LIBOR + 1.5%. As of December 31, 2018, we were in compliance with all covenants under this facility. As a result of the refinancing, we wrote off prepaid debt issuance costs of approximately $1.3 million as of June 30, 2016.

In June 2015, we repurchased approximately 1.1issued $900 million of unsecured senior notes (“2015 Senior Notes”, and collectively with the 2018 Senior Notes, the “Senior Notes”) in a registered public offering. The 2015 Senior Notes consist of two tranches: $400 million of five-year notes due in 2020 with a coupon rate of 3% and $500 million often-year notes due in 2025 with a coupon rate of 4%. We used the proceeds from the 2015 Senior Notes offering to pay down our revolving credit facility and for general corporate purposes. On December 31, 2018, the outstanding amount of the 2015 Senior Notes, net of underwriting commissions, price discounts, and debt issuance costs, was $894.1 million.

On April 30, 2018, our Board of Directors authorized the repurchase of up to $150 million of shares of our outstanding common stock underover the Company’s share repurchase programs for $51.7 million.two years ending April 30, 2020. On February 16, 2016, the Company’sJuly 13, 2018, our Board of Directors authorized the repurchase of up to $400 million of shares of the Company’sour common stock over the two years ending February 16, 2018.July 13, 2020. As of December 31, 2018, the Company’s total remaining share repurchase authorization under the repurchase programs was approximately $413.7 million. The share repurchase programs do not obligate the Company to repurchase any specific dollar amount or number of shares and may be suspended or discontinued at any time.

We currently have uncommitted bank lines of credit in China, which provide for unsecured borrowings for working capital of up to $23.5 million in aggregate as of both December 31, 2018 and 2017, of which zero were outstanding, as of December 31, 2018 and 2017. The weighted-average interest rates on these borrowings were 0%, 0% and 1.5% in 2018, 2017 and 2016 respectively.

Acquisitions, divestitures and divestituresother strategic partnerships in 2015, 20142018, 2017 and 20132016 include:

In 2015,2018, we invested approximately $45 million in incremental capacity to support long-term growth potential. We expect capital spending in 20162019 to be approximatelyin the range of $135 to $145 million.

On December 31, 2015,2018, we had cash and cash equivalents of $238.5$262.9 million, of which $219.8$260.1 million was held atnon-U.S. subsidiaries. We manage our global cash requirements considering (i) available funds among the subsidiaries through which we conduct business, (ii) the geographic location of our liquidity needs, and (iii) the cost to access international cash balances. The repatriation ofnon-U.S. cash balances from certain subsidiaries could have adverse tax consequences as we may be required to pay and record income tax expense on those funds to the extent they were previously considered indefinitely reinvested.that are repatriated.

Our operating cash flows are significantly impacted by the seasonality of our businesses. We typically generate most of our operating cash flow in the third and fourth quarters of each year.

In June 2015, we issued $900 million of Senior Notes in a registered public offering. The Senior Notes consist of two tranches: $400 million of five-year notes due 2020 with a coupon of 3% and $500 million of ten-year notes due 2025 with a coupon of 4%. We used the proceeds from the Senior Notes offering to pay down our revolving credit facility and for general corporate purposes. On December 31, 2015, the outstanding amount of the Senior Notes, net of underwriting commissions and price discounts, was $891.6 million.

As of December 31, 2015, we had a $975 million committed revolving credit facility, as well as a term loan in the initial amount of $525 million, both of which expire in July 2018. Both facilities can be used for general corporate purposes. As of December 31, 2015 and 2014, our outstanding borrowings under the revolving credit facility were zero and $145.0 million, respectively; the amounts outstanding under the term loan were $280.0 million and $525.0 million, respectively. The interest rates under these facilities are variable based on LIBOR at the time of the borrowing and the Company’s leverage as measured by a debt to Adjusted EBITDA ratio (as defined in the agreements governing the facilities). Based upon the Company’s debt to Adjusted EBITDA ratio, the Company’s borrowing rate will range from LIBOR + 1.0% to LIBOR + 2.0%. At December 31, 2015, we were in compliance with all covenants under these facilities. The credit facilities also include a minimum Consolidated Interest Coverage Ratio requirement of 3.0 to 1.0. The Consolidated Interest Coverage Ratio is defined as the ratio of Adjusted EBITDA to Consolidated Interest Expense. Adjusted EBITDA is defined as

consolidated net income before interest expense, income taxes, depreciation, amortization of intangible assets, losses from asset impairments, and certain other adjustments. Consolidated Interest Expense is as disclosed in our financial statements. The credit facilities also include a Maximum Leverage Ratio of 3.5 to 1.0 as measured by the ratio of our debt to Adjusted EBITDA. The Maximum Leverage Ratio is permitted to increase to 3.75 to 1.0 for three succeeding quarters in the event of an acquisition. We believe our operating cash flows, availability under the credit facility and access to capital markets will provide sufficient liquidity to support the Company’s financing needs.

Cash Flows

Below is a summary of cash flows for the years ended December 31, 2015, 20142018, 2017 and 2013.2016.

Net cash provided by operating activities was $411.1$604.0 million in 20152018 compared to $253.7$600.3 million in 20142017 and $297.8$650.5 million in 2013.2016. The $157.4$3.7 million increase in cash provided by operating activities from 2014 to 2015 was primarily due to higher net income.lower build in working capital, primarily driven by lower accounts receivable balances and increases in accrued taxes. The $44.1$50.2 million decrease in cash provided by operating activities from 20132017 to 20142016 was primarily due to higher incentive compensation and customer program paymentsbuild in the first quarter of 2014 compared to 2013 and lower accrualsworking capital, primarily driven by higher inventory purchases in 2014 (approximately $75 million impact in aggregate),2017, partially offset by lower working capital levels in 2014 and absence of the 2013 inventory build that did not repeat in 2014.a higher net income.

Net cash used in investing activities was $766.6$634.3 million in 20152018 compared to $151.1$287.7 million in 20142017 and $396.7$385.1 million in 2013.2016. The increase in cash used of $615.5$346.6 million from 20142017 to 20152018 was primarily due to the impacta $341.0 million increase in cost of the Norcraft acquisition.acquisitions. The $245.6decrease of $97.4 million decrease from 20132016 to 20142017 was primarily due to the impactlower cost of acquisitions and divestitures,of $115.1 million, partially offset by $30.8$15.7 million inof higher capital expenditures.

Net cash providedused by financing activities was $416.9$6.8 million in 20152018 compared to $250.1 million in 2017 and $250.4 million in 2016. The decrease in net cash used in financing activities of $(147.5)$243.3 million in 2014 compared to cash provided by financing activities of $4.1 million in 2013. The increase in cash provided of $564.4 million in 2015 compared to 2014 was primarily due to lower share repurchases ($388.1 million decrease) and higher net borrowings of $185.9 million, partially offset by an increase in dividends in 20152018 compared to 20142017 ($12.1751.2 million increase). The $151.6 million change in cash used, partly offset by financing activities from 2013 to 2014 was due to higher share repurchases (a $387.7 million increasein 2018 compared to 2013), four dividend payments in 2014 compared to three in 20132017 ($27.5 million) and lower proceeds from the exercise of stock options ($21.8 million), partially offset by higher net borrowings ($282.5 million)479.8 million increase).

Pension Plans

Subsidiaries of Fortune Brands sponsor their respective defined benefit pension plans that are funded by a portfolio of investments maintained within our benefit plan trust. In 20152018, 2017 and 2014,2016, we contributed $2.3$10.0 million, $28.4 million and $1.5 million,zero, respectively, to qualified pension plans. Due to higher interest rates and higher than expected returns on pension plan assets in 2013, we did not make any pension contributions to qualified pension plans in 2013. In 2016,2019, we expect to make pension contributions of approximately $1$8.0 million. As of December 31, 2015,2018, the fair value of our total pension plan assets was $561.9$599.6 million, representing funding of 74%79% of the accumulated benefit obligation liability. For the foreseeable future, we believe that we have sufficient liquidity to meet the minimum funding that may be required by the Pension Protection Act of 2006.

Foreign Exchange

We have operations in various foreign countries, principally Mexico, Canada, China, Mexico, the United Kingdom, France, Australia and France.Japan. Therefore, changes in the value of the related currencies affect our financial statements when translated into U.S. dollars.

Contractual Obligations and Other Commercial Commitments

The following table describes ourother obligations and commitments to make future payments under contracts, such as debt and lease agreements, and under contingent commitments, such as debt guarantees, as of December 31, 2015.2018.