Cover Page
Cover Page | 3 Months Ended |
Mar. 31, 2020shares | |
Cover [Abstract] | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Period End Date | Mar. 31, 2020 |
Document Transition Report | false |
Entity File Number | 1-5794 |
Entity Registrant Name | Masco Corporation |
Entity Incorporation, State or Country Code | DE |
Entity Tax Identification Number | 38-1794485 |
Entity Address, Address Line One | 17450 College Parkway, |
Entity Address, City or Town | Livonia, |
Entity Address, State or Province | MI |
Entity Address, Postal Zip Code | 48152 |
City Area Code | 313 |
Local Phone Number | 274-7400 |
Title of 12(b) Security | Common Stock, $1.00 par value |
Trading Symbol | MAS |
Security Exchange Name | NYSE |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding (in shares) | 263,755,373 |
Entity Central Index Key | 0000062996 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2020 |
Document Fiscal Period Focus | Q1 |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Current Assets: | ||
Cash and cash investments | $ 767 | $ 697 |
Receivables | 1,142 | 997 |
Prepaid expenses and other | 80 | 90 |
Assets held for sale | 0 | 173 |
Inventories: | ||
Finished goods | 487 | 485 |
Raw material | 205 | 211 |
Work in process | 64 | 58 |
Total inventories | 756 | 754 |
Total current assets | 2,745 | 2,711 |
Property and equipment, net | 861 | 878 |
Operating lease right-of-use assets | 171 | 176 |
Goodwill | 518 | 509 |
Other intangible assets, net | 264 | 259 |
Other assets | 281 | 139 |
Assets held for sale | 0 | 355 |
Total assets | 4,840 | 5,027 |
Current Liabilities: | ||
Accounts payable | 743 | 697 |
Notes payable | 5 | 2 |
Accrued liabilities | 756 | 700 |
Liabilities held for sale | 0 | 149 |
Total current liabilities | 1,504 | 1,548 |
Long-term debt | 2,771 | 2,771 |
Operating Lease, Liability, Noncurrent | 157 | 162 |
Other liabilities | 573 | 589 |
Liabilities held for sale | 0 | 13 |
Total liabilities | 5,005 | 5,083 |
Commitments and contingencies (Note P) | ||
Masco Corporation's shareholders' equity: | ||
Common shares, par value $1 per share Authorized shares: 1,400,000,000; Issued and outstanding: 2020 – 262,600,000; 2019 – 275,600,000 | 263 | 276 |
Preferred shares authorized: 1,000,000; Issued and outstanding: 2020 and 2019 – None | 0 | 0 |
Paid-in capital | 0 | 0 |
Retained deficit | (412) | (332) |
Accumulated other comprehensive loss | (199) | (179) |
Total Masco Corporation's shareholders' deficit | (348) | (235) |
Noncontrolling interest | 183 | 179 |
Total equity | (165) | (56) |
Total liabilities and equity | $ 4,840 | $ 5,027 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 |
Statement of Financial Position [Abstract] | |||
Common share, par value (in dollars per share) | $ 1 | $ 1 | $ 1 |
Common shares, shares authorized (in shares) | 1,400,000,000 | 1,400,000,000 | |
Common shares, shares issued (in shares) | 262,600,000 | 275,600,000 | |
Common shares, shares outstanding (in shares) | 262,600,000 | 275,600,000 | |
Preferred shares, shares authorized (in shares) | 1,000,000 | 1,000,000 | |
Preferred shares, shares issued (in shares) | 0 | 0 | |
Preferred shares, shares outstanding (in shares) | 0 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Net sales | $ 1,581 | $ 1,513 |
Cost of sales | 1,034 | 991 |
Gross profit | 547 | 522 |
Selling, general and administrative expenses | 322 | 316 |
Impairment charge for other intangible assets | 0 | 9 |
Operating profit | 225 | 197 |
Other income (expense), net: | ||
Interest expense | (35) | (39) |
Other, net | (16) | (5) |
Total other income (expense), net | (51) | (44) |
Income from continuing operations before income taxes | 174 | 153 |
Income tax expense | 33 | 35 |
Income from continuing operations | 141 | 118 |
Income from discontinued operations, net | 397 | 9 |
Net income | 538 | 127 |
Less: Net income attributable to noncontrolling interest | 8 | 11 |
Net income attributable to Masco Corporation | $ 530 | $ 116 |
Basic: | ||
Income from continuing operations (in dollars per share) | $ 0.49 | $ 0.36 |
(Loss) income from discontinued operations, net (in dollars per share) | 1.44 | 0.03 |
Net income (in dollars per share) | 1.93 | 0.39 |
Diluted: | ||
Income from continuing operations (in dollars per share) | 0.48 | 0.36 |
(Loss) income from discontinued operations, net (in dollars per share) | 1.44 | 0.03 |
Net income (in dollars per share) | $ 1.92 | $ 0.39 |
Amounts attributable to Masco Corporation: | ||
Income from continuing operations | $ 133 | $ 107 |
Income from discontinued operations, net | $ 397 | $ 9 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 538 | $ 127 |
Less: Net income attributable to noncontrolling interest | 8 | 11 |
Net income attributable to Masco Corporation | 530 | 116 |
Other comprehensive income (loss), net of tax (Note L): | ||
Cumulative translation adjustment | (29) | (3) |
Pension and other post-retirement benefits | 5 | 4 |
Other comprehensive (loss) income, net of tax | (24) | 1 |
Less: Other comprehensive loss attributable to noncontrolling interest | (4) | (3) |
Other comprehensive (loss) income attributable to Masco Corporation | (20) | 4 |
Total comprehensive income | 514 | 128 |
Less: Total comprehensive income attributable to noncontrolling interest | 4 | 8 |
Total comprehensive income attributable to Masco Corporation | $ 510 | $ 120 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES: | ||
Cash provided by operations | $ 7 | $ 183 |
Increase in receivables | (183) | (181) |
Increase in inventories | (21) | (65) |
Increase (decrease) in accounts payable and accrued liabilities, net | 105 | (68) |
Net cash for operating activities | (92) | (131) |
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES: | ||
Purchase of Company common stock | (602) | (116) |
Proceeds from Lines of Credit | 0 | 87 |
Cash dividends paid | (37) | (35) |
Proceeds from the exercise of stock options | 20 | 9 |
Employee withholding taxes paid on stock-based compensation | (22) | (14) |
Increase (decrease) in debt, net | 2 | (1) |
Credit Agreement and other financing costs | 0 | (2) |
Net cash for financing activities | (639) | (72) |
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES: | ||
Capital expenditures | (24) | (38) |
Acquisition of business, net of cash acquired | (24) | 0 |
Proceeds from disposition of: | ||
Business, net of cash disposed | 853 | 0 |
Property and equipment | 0 | 5 |
Other, net | 1 | (5) |
Net cash from (for) investing activities | 807 | (38) |
Effect of exchange rate changes on cash and cash investments | (6) | (2) |
CASH AND CASH INVESTMENTS: | ||
Increase (decrease) for the period | 70 | (243) |
At January 1 | 697 | 559 |
At March 31 | 767 | 316 |
Proceeds from Sale and Maturity of Other Investments | $ 1 | $ 0 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) - USD ($) $ in Millions | Total | Common Shares ($1 par value) | Paid-In Capital | Retained (Deficit) Earnings | Accumulated Other Comprehensive (Loss) Income | Noncontrolling Interest |
Balance at Dec. 31, 2018 | $ 69 | $ 294 | $ 0 | $ (278) | $ (127) | $ 180 |
Increase (Decrease) in Stockholders' Equity | ||||||
Total comprehensive income | 128 | 116 | 4 | 8 | ||
Shares issued | 5 | 1 | 4 | |||
Shares retired: | ||||||
Repurchased | (122) | (3) | (11) | (108) | ||
Surrendered (non-cash) | (10) | (1) | (9) | |||
Cash dividends declared | (35) | (35) | ||||
Stock-based compensation | 7 | 7 | ||||
Balance at Mar. 31, 2019 | 42 | 291 | 0 | (314) | (123) | 188 |
Increase (Decrease) in Stockholders' Equity | ||||||
Cumulative Effect of New Accounting Principle in Period of Adoption | Accounting Standards Update 2016-13 [Member] | (1) | (1) | ||||
Balance at Dec. 31, 2019 | (56) | 276 | 0 | (332) | (179) | 179 |
Balance (Accounting Standards Update 2016-13 [Member]) at Dec. 31, 2019 | (57) | 276 | 0 | (333) | (179) | 179 |
Increase (Decrease) in Stockholders' Equity | ||||||
Total comprehensive income | 514 | 530 | (20) | 4 | ||
Shares issued | 11 | 1 | 10 | |||
Shares retired: | ||||||
Repurchased | (602) | (14) | (28) | (560) | ||
Surrendered (non-cash) | (13) | (13) | ||||
Cash dividends declared | (36) | (36) | ||||
Stock-based compensation | 18 | 18 | ||||
Balance at Mar. 31, 2020 | $ (165) | $ 263 | $ 0 | $ (412) | $ (199) | $ 183 |
Accounting Policies
Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Accounting Policies | ACCOUNTING POLICIES In our opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments, of a normal recurring nature, necessary to fairly state our financial position at March 31, 2020 , our results of operations, comprehensive income (loss), cash flows and changes in shareholders' equity for the three-month periods ended March 31, 2020 and 2019 . The condensed consolidated balance sheet at December 31, 2019 was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted ("GAAP") in the United States of America. Reclassifications. Certain prior year amounts have been reclassified to conform to the 2020 presentation in the condensed consolidated financial statements. In our condensed consolidated statements of cash flows, the cash flows from discontinued operations are not separately classified. Stock-Based Compensation. We issue stock-based incentives in various forms to our employees and non-employee Directors. Outstanding stock-based incentives were in the form of long-term stock awards, stock options, restricted stock units ("RSUs"), performance restricted stock units ("PRSUs") and phantom stock awards. In December 2019, our Organization and Compensation Committee of the Board of Directors (the "Compensation Committee") amended the terms of equity awards under our 2014 Long Term Stock Incentive Plan to provide that newly issued stock options, RSUs and phantom stock awards vest over a three year period and redefined retirement-eligibility as age 65 or age 55 with at least 10 years of continuous service. As such, compensation expense for equity awards granted in 2020 and thereafter is recognized ratably over the shorter of the vesting period, typically three years , or the length of time until the grantee becomes retirement eligible. In February 2020, our Compensation Committee approved the grant of RSUs under the Company’s 2014 Long Term Stock Incentive Plan. We measure compensation expense for RSUs at the market price of our common stock at the grant date. Allowance for Credit Losses. We do business with a number of customers, including certain home center retailers. We monitor our exposure for credit losses on our customer receivable balances and other financial investments measured at amortized cost and the credit worthiness of our customers on an on-going basis, including requiring the completion of credit applications and performing periodic reviews of our open accounts receivable. We record allowances for doubtful accounts for estimated losses resulting from the inability of our customers to fulfill their required payment obligation to us. Allowances are estimated at each of our businesses based upon specific customer balances, where a risk of loss has been identified, and also include a provision for losses based upon historical collection experience and write-off activity as well as reasonable and supportable forecast information that considers macro-economic factors and industry-specific trends associated with our businesses, among others. Our receivables balances are generally due in less than one year. Recently Adopted Accounting Pronouncements. In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which modifies the methodology for recognizing loss impairments on certain types of financial instruments, including receivables. The new methodology requires an entity to estimate the credit losses expected over the life of an exposure. Additionally, ASU 2016-13 amends the current available-for-sale security other-than-temporary impairment model for debt securities. We adopted ASU 2016-13 and recorded a cumulative-effect adjustment to opening retained earnings on January 1, 2020. The adoption of the standard did not have a material effect on our financial position or results of operations. In August 2018, the FASB issued ASU 2018-15, "Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract," which allows for the capitalization of certain implementation costs incurred in a hosting arrangement that is a service contract. We adopted ASU 2018-15 prospectively beginning on January 1, 2020. The adoption of the standard did not have an impact on our financial position or results of operations. A. ACCOUNTING POLICIES (Concluded) In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes," which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. We early adopted ASU 2019-12 on January 1, 2020. The adoption of the standard did not have an impact on our financial position or results of operations. Recently Issued Accounting Pronouncements. In January 2020, the FASB issued ASU 2020-01, "Investments—Equity Securities (Topic 321)", "Investments—Equity Method and Joint Ventures (Topic 323)", and "Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815", which clarifies that an entity should consider observable transactions when either applying or discontinuing the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321. ASU 2020-01 clarifies that for certain forward contracts or purchased options to acquire investments, an entity should not consider whether, upon settlement of the forward contract or exercise of the purchased option, the underlying securities would be accounted for under the equity method or the fair value option. ASU 2020-01 is effective for us for annual periods beginning January 1, 2021. Early adoption is permitted. We are currently reviewing the provisions of this new pronouncement and the impact, if any, the adoption of this guidance has on our financial position and results of operations. |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Acquisitions | ACQUISITIONS In the first quarter of 2020, we acquired all of the share capital of SmarTap A.Y Ltd. ("SmarTap") for approximately $24 million in cash. SmarTap is a developer of a smart bathing system that monitors and controls the temperature and flow of water. This acquisition provides an adaptable solution for a wide range of products as it is compatible with all showerheads, hand showers, spouts and shower jets. This business is included in the Plumbing Products segment. In connection with this acquisition, we recognized $12 million of goodwill, which is not tax deductible, and is related primarily to the expected synergies from combining the operations into our business. We also recognized $10 million of definite-lived intangible assets, primarily related to technology, which is being amortized on a straight-line basis over a weighted average amortization period of 5 years . |
Discontinued Operations
Discontinued Operations | 3 Months Ended |
Mar. 31, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | C. DISCONTINUED OPERATIONS On September 6, 2019, we completed the divestiture of our UK Window Group business ("UKWG"), a manufacturer and distributor of windows and doors. Additionally, on November 6, 2019, we completed the divestiture of our Milgard Windows and Doors business ("Milgard"), a manufacturer and distributor of windows and doors. In the third quarter of 2019, we determined that the previously reported Windows and Other Specialty Products segment met the criteria to be classified as a discontinued operation as a result of the combined sale of UKWG and Milgard. These businesses represented all of our windows businesses and all remaining businesses in the Windows and Other Specialty Products segment. On November 14, 2019, we entered into a definitive agreement to sell Masco Cabinetry LLC ("Cabinetry"), a manufacturer of cabinetry products. We completed the divestiture of Cabinetry on February 18, 2020 for proceeds of approximately $989 million , including $853 million , net of cash disposed. The remaining $136 million was accounted for as preferred stock issued by a holding company of the buyer; refer to Note G for additional information. The total consideration for the sale is subject to final working capital adjustments. In connection with the sale, we recognized a gain on the divestiture of $585 million for the three months ended March 31, 2020, which is included in income from discontinued operations, net in the condensed consolidated statement of operations. In the fourth quarter of 2019, we determined that the previously reported Cabinetry Products segment met the criteria to be classified as a discontinued operation, as Cabinetry represented all of our cabinet businesses and all remaining businesses in the Cabinetry Products segment. We determined that the assets and liabilities for Cabinetry met the held for sale criteria in accordance with ASC 205-20, Discontinued Operations in 2019. Accordingly, the Cabinetry business' assets and liabilities were classified in the condensed consolidated balance sheet at December 31, 2019 as assets held for sale or liabilities held for sale. We ceased recording depreciation and amortization for the held for sale assets upon meeting the held for sale criteria. As the combined sale of UKWG and Milgard and the sale of Cabinetry represented a strategic shift that will have a major effect on our operations and financial results, these businesses were presented in discontinued operations separate from continuing operations for the three months ended March 31, 2019, and for Cabinetry only for the three months ended March 31, 2020. In addition, depreciation and amortization, capital expenditures, and significant non-cash operating and investing activities related to discontinued operations were separately disclosed. The results of the windows businesses recorded in (loss) income from discontinued operations before income tax was a loss of $8 million for the three months ended March 31, 2019. The results of the cabinetry business recorded in (loss) income from discontinued operations before income tax was a loss of $9 million and income of $23 million for the three months ended March 31, 2020 and 2019, respectively. C. DISCONTINUED OPERATIONS (Continued) The major classes of line items constituting income from discontinued operations, net, in millions: Three Months Ended March 31, 2020 2019 Net sales $ 101 $ 395 Cost of sales 78 318 Gross profit 23 77 Selling, general and administrative expenses 32 56 Impairment charge for goodwill (A) — 7 Other income (expense), net — 1 (Loss) income from discontinued operations (9 ) 15 Gain on disposal of discontinued operations 585 — Income before income tax 576 15 Income tax expense (179 ) (6 ) Income from discontinued operations, net $ 397 $ 9 (A) In the first quarter of 2019, we recognized a $7 million non-cash goodwill impairment charge related to a decline in the long-term outlook of our windows and doors business in the United Kingdom. The carrying amount of major classes of assets and liabilities included as part of the Cabinetry discontinued operations, were as follows, in millions: December 31, 2019 Receivables 76 Prepaid expenses and other 7 Inventories 90 Property and equipment, net 157 Operating lease right-of-use assets 4 Goodwill 181 Other intangible assets, net 1 Other assets 12 Total assets classified as held for sale $ 528 Accounts payable $ 103 Accrued liabilities 46 Noncurrent operating lease liabilities 3 Other liabilities 10 Total liabilities classified as held for sale $ 162 Other selected financial information for Cabinetry, Milgard and UKWG during the period owned by us, were as follows, in millions: Three Months Ended March 31, 2020 March 31, 2019 Depreciation and amortization $ — $ 9 Capital expenditures 1 11 ROU assets obtained in exchange for new lease obligations — — C. DISCONTINUED OPERATIONS (Concluded) In conjunction with the divestiture of Milgard and Cabinetry, we entered into Transition Services Agreements to provide administrative services to the buyers. The fees for services rendered under each Transition Services Agreement are not expected to be material to our results of operations. As a part of the Cabinetry Transition Services Agreement, we have guaranteed Cabinetry's obligations to a third-party while Cabinetry continues to participate in our voluntary supply chain finance program to the extent Cabinetry under its new ownership becomes delinquent on its payments. The amount Cabinetry and its new owners owe under the program was $33 million at March 31, 2020. In conjunction with the Transition Services Agreement, the new owners provide a letter of credit to the third-party in the amount of $10 million . As such, the maximum exposure for us associated with this guarantee is the difference between the amount Cabinetry owes at any given point and the letter of credit. Cabinetry will be out of our program no later than June 14, 2020 and our guarantee will end when all remaining payments have been made, which is expected to be in the fourth quarter of 2020. No significant loss has been experienced or is probable under this guarantee. |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2020 | |
Revenues [Abstract] | |
Revenue | REVENUE Our revenues are derived primarily from sales to customers in North America and Internationally, principally Europe. Net sales from these geographic markets, by segment, were as follows, in millions: Three Months Ended March 31, 2020 Plumbing Products Decorative Architectural Products Total Primary geographic markets: North America $ 632 $ 626 $ 1,258 International, principally Europe 323 — 323 Total $ 955 $ 626 $ 1,581 Three Months Ended March 31, 2019 Plumbing Products Decorative Architectural Products Total Primary geographic markets: North America $ 598 $ 573 $ 1,171 International, principally Europe 342 — 342 Total $ 940 $ 573 $ 1,513 Our contract asset balance was $2 million at both March 31, 2020 and December 31, 2019 . Our contract liability balance was $12 million and $40 million at March 31, 2020 and December 31, 2019 , respectively. We recognized $3 million of revenue for the three-month period ended March 31, 2020 related to performance obligations settled in previous years. Changes in the allowance for credit losses deducted from accounts receivable were as follows, in millions: Three Months Ended Balance at January 1 (after adopting ASU 2016-13) $ 5 Provision for expected credit losses during the period 2 Write-offs charged against the allowance (1 ) Recoveries of amounts previously written off 1 Balance at end of period $ 7 |
Depreciation and Amortization
Depreciation and Amortization | 3 Months Ended |
Mar. 31, 2020 | |
Depreciation, Depletion and Amortization [Abstract] | |
Depreciation and Amortization | DEPRECIATION AND AMORTIZATION Depreciation and amortization expense, including discontinued operations, was $33 million and $40 million for the three-month periods ended March 31, 2020 and 2019 , respectively. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | GOODWILL AND OTHER INTANGIBLE ASSETS The changes in the carrying amount of goodwill for the three-month period ended March 31, 2020 , by segment, were as follows, in millions: Gross Goodwill At March 31, 2020 Accumulated Net Goodwill At March 31, 2020 Plumbing Products $ 575 $ (340 ) $ 235 Decorative Architectural Products 358 (75 ) 283 Total $ 933 $ (415 ) $ 518 Gross Goodwill At December 31, 2019 Accumulated Impairment Losses Net Goodwill At December 31, 2019 Acquisitions Other (A) Net Goodwill At March 31, 2020 Plumbing Products $ 566 $ (340 ) $ 226 $ 12 $ (3 ) $ 235 Decorative Architectural Products 358 (75 ) 283 — — 283 Total $ 924 $ (415 ) $ 509 $ 12 $ (3 ) $ 518 (A) Other consists of the effect of foreign currency translations. The carrying value of our other indefinite-lived intangible assets was $76 million at both March 31, 2020 and December 31, 2019 , and principally included registered trademarks. During the first quarter of 2019, we recognized a $9 million impairment charge related to a registered trademark in our Decorative Architectural Products segment due to a change in the long-term net sales projections of lighting products. The carrying value of our definite-lived intangible assets was $188 million (net of accumulated amortization of $54 million ) and $183 million (net of accumulated amortization of $48 million ) at March 31, 2020 and December 31, 2019 , respectively, and principally included customer relationships. The increase in our definite-lived intangible assets is primarily a result of our acquisition of SmarTap. |
Fair Value of Financial Investm
Fair Value of Financial Investments (Notes) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Of Financial Investments | G. FAIR VALUE OF FINANCIAL INVESTMENTS In conjunction with our divestiture of Cabinetry, we received preferred stock of ACProducts Holding, Inc. with a liquidation preference of $150 million . The preferred stock has a coupon of 8 percent until the first anniversary of issuance, 9 percent after the first anniversary and until the second anniversary of issuance, and 10 percent after the second anniversary of issuance and until the seventh anniversary of issuance. After which, the rate will increase by 50 basis points up to a maximum of 15 percent for each annual period occurring during and after the seventh anniversary until all shares have been redeemed in full. We do not have the ability to exercise significant influence, and the fair value of this security is not readily available. We have elected to measure this investment at cost (less impairment, if any) adjusted for observable price changes in orderly transactions for the identical or similar investments of the same issuer for subsequent measurements of fair value. As the preferred stock was received in conjunction with the sale of Cabinetry, we determined the cost to be the fair value of the preferred stock at the time of sale. The fair value of the preferred stock was measured on a non-recurring basis, and estimated using discounted cash flow and option pricing models (Level 3 inputs). The significant unobservable inputs used to value the preferred stock included: time to exit (deemed maturity) since the preferred stock is not mandatorily redeemable, discount rate used to determine the present value of expected cash flows, which included the spread on company specific debt and the risk-free rate of return, the liquidation preference and the coupon rate. On the date of acquisition, the fair value of this investment was determined to be $136 million and was included in other assets in our condensed consolidated balance sheet. Dividends earned on this investment is included within other income (expense), net in our condensed consolidated statement of operations with a corresponding increase to our basis in the investment. Fair Value of Debt. The fair value of our short-term and long-term fixed-rate debt instruments is based principally upon modeled market prices for the same or similar issues, which are Level 1 inputs. The aggregate estimated market value of our short-term and long-term debt was approximately $2.8 billion at March 31, 2020 , which equaled the aggregate carrying value of short-term and long-term debt at that date. The aggregate estimated market value of our short-term and long-term debt at December 31, 2019 was approximately $3.0 billion , compared with the aggregate carrying value of $2.8 billion . |
Warranty Liability
Warranty Liability | 3 Months Ended |
Mar. 31, 2020 | |
Product Warranties Disclosures [Abstract] | |
Warranty Liability | WARRANTY LIABILITY Changes in our warranty liability were as follows, in millions: Three Months Ended Twelve Months Ended December 31, 2019 Balance at January 1 $ 84 $ 81 Accruals for warranties issued during the period 7 34 Accruals related to pre-existing warranties — 1 Settlements made (in cash or kind) during the period (8 ) (31 ) Other, net (including currency translation) (1 ) (1 ) Balance at end of period $ 82 $ 84 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt | DEBT On March 13, 2019, we entered into a credit agreement (the “Credit Agreement”) with an aggregate commitment of $1.0 billion and a maturity date of March 13, 2024. Under the Credit Agreement, at our request and subject to certain conditions, we can increase the aggregate commitment up to an additional $500 million with the current lenders or new lenders. Upon entry into the Credit Agreement, our credit agreement dated March 28, 2013, as amended, with an aggregate commitment of $750 million , was terminated. The Credit Agreement provides for an unsecured revolving credit facility available to us and one of our foreign subsidiaries, in U.S. dollars, European euros, British Pounds Sterling, Canadian dollars and certain other currencies for revolving credit loans, swingline loans and letters of credit. Borrowings under the revolving credit loans denominated in any agreed upon currency other than U.S. dollars are limited to $500 million , equivalent. We can also borrow swingline loans up to $100 million and obtain letters of credit of up to $25 million ; outstanding letters of credit under the Credit Agreement reduce our borrowing capacity. At March 31, 2020 , we had no outstanding standby letters of credit under the Credit Agreement. Revolving credit loans bear interest under the Credit Agreement, at our option, at (A) a rate per annum equal to the greater of (i) the JPMorgan Chase Bank, N.A. prime rate, (ii) the Federal Reserve Bank of New York effective rate plus 0.50% and (iii) if available, adjusted LIBO Rate plus 1.0% (the "Alternative Base Rate"); plus an applicable margin based upon our then-applicable corporate credit ratings; or (B) if available, adjusted LIBO Rate plus an applicable margin based upon our then-applicable corporate credit ratings. The foreign currency revolving credit loans bear interest at a rate equal to adjusted LIBO Rate, if available, plus an applicable margin based upon our then-applicable corporate credit ratings. The Credit Agreement contains financial covenants requiring us to maintain (A) a net leverage ratio, as adjusted for certain items, not exceeding 4.0 to 1.0, and (B) a minimum interest coverage ratio, as adjusted for certain items, not less than 2.5 to 1.0. In order for us to borrow under the Credit Agreement, there must not be any default in our covenants in the Credit Agreement (i.e., in addition to the two financial covenants, principally limitations on subsidiary debt, negative pledge restrictions, legal compliance requirements and maintenance of properties and insurance) and our representations and warranties in the Credit Agreement must be true in all material respects on the date of borrowing (i.e., principally no material adverse change or litigation likely to result in a material adverse change, since December 31, 2018, no material ERISA or environmental non-compliance, and no material tax deficiency). We were in compliance with all covenants and no borrowings were outstanding at March 31, 2020 |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | STOCK-BASED COMPENSATION Our 2014 Long Term Stock Incentive Plan provides for the issuance of stock-based incentives in various forms to our employees and non-employee Directors. At March 31, 2020 , outstanding stock-based incentives were in the form of long-term stock awards, stock options, restricted stock units, performance restricted stock units, and phantom stock awards. Pre-tax compensation expense included in income from continuing operations for these stock-based incentives was as follows, in millions: Three Months Ended March 31, 2020 2019 Long-term stock awards $ 4 $ 5 Stock options 3 1 Restricted stock units 8 — Performance restricted stock units 1 1 Phantom stock awards and stock appreciation rights — 1 Total $ 16 $ 8 Long-Term Stock Awards. Prior to the amendment of our 2014 Long Term Stock Incentive Plan in December 2019, we granted long-term stock awards to our key employees and non-employee Directors. These grants did not cause net share dilution due to our practice of repurchasing and retiring an equal number of shares in the open market. We did not grant shares of long-term stock awards in the three-month period ended March 31, 2020 . Our long-term stock award activity was as follows, shares in millions: Three Months Ended March 31, 2020 2019 Unvested stock award shares at January 1 2 2 Weighted average grant date fair value $ 34 $ 30 Stock award shares granted — 1 Weighted average grant date fair value $ — $ 36 Stock award shares vested 1 1 Weighted average grant date fair value $ 32 $ 24 Stock award shares forfeited — — Weighted average grant date fair value $ 35 $ 29 Unvested stock award shares at March 31 1 2 Weighted average grant date fair value $ 36 $ 34 At March 31, 2020 and 2019 , there was $32 million and $61 million , respectively, of total unrecognized compensation expense related to unvested stock awards; such awards had a weighted average remaining vesting period of three years and four years at March 31, 2020 and 2019 , respectively. The total market value (at the vesting date) of stock award shares which vested was $29 million during each of the three-month periods ended March 31, 2020 and 2019 . J. STOCK-BASED COMPENSATION (Continued) Stock Options. Stock options are granted to certain key employees. The exercise price equals the market price of our common stock at the grant date. These options become exercisable (vest ratably) over five years beginning on the first anniversary from the date of grant. Beginning in 2020, stock options become exercisable (vest ratably) over three years . We granted 420,840 stock options in the three-month period ended March 31, 2020 with a grant date weighted average exercise price of approximately $48 per share. In the three-month period ended March 31, 2020 , 16,240 stock options were forfeited (including options that expired unexercised). Our stock option activity was as follows, shares in millions: Three Months Ended March 31, 2020 2019 Option shares outstanding, January 1 3 4 Weighted average exercise price $ 27 $ 21 Option shares granted 1 1 Weighted average exercise price $ 48 $ 36 Option shares exercised 1 1 Aggregate intrinsic value on date of exercise (A) $ 22 million $ 13 million Weighted average exercise price $ 17 $ 11 Option shares forfeited — — Weighted average exercise price $ 42 $ — Option shares outstanding, March 31 3 4 Weighted average exercise price $ 32 $ 25 Weighted average remaining option term (in years) 7 6 Option shares vested and expected to vest, March 31 3 4 Weighted average exercise price $ 32 $ 25 Aggregate intrinsic value (A) $ 14 million $ 57 million Weighted average remaining option term (in years) 7 6 Option shares exercisable (vested), March 31 1 2 Weighted average exercise price $ 26 $ 19 Aggregate intrinsic value (A) $ 13 million $ 50 million Weighted average remaining option term (in years) 6 4 (A) Aggregate intrinsic value is calculated using our stock price at each respective date, less the exercise price (grant date price), multiplied by the number of shares. At March 31, 2020 and 2019 , there was $9 million and $12 million , respectively, of unrecognized compensation expense (using the Black-Scholes option pricing model at the grant date) related to unvested stock options; such options had a weighted average remaining vesting period of three years and four years at March 31, 2020 and 2019 , respectively. J. STOCK-BASED COMPENSATION (Concluded) The weighted average grant date fair value of option shares granted and the assumptions used to estimate those values using a Black-Scholes option pricing model were as follows: Three Months Ended March 31, 2020 2019 Weighted average grant date fair value $ 10.67 $ 8.81 Risk-free interest rate 1.53 % 2.57 % Dividend yield 1.14 % 1.35 % Volatility factor 24.00 % 25.00 % Expected option life 6 years 6 years Restricted Stock Units. Restricted stock units are granted to our key employees and non-employee Directors. These grants did not cause net share dilution due to our practice of repurchasing and retiring an equal number of shares in the open market. The grant date fair value is based on the fair value of our common stock. These units will vest and be settled in shares ratably over three years . We granted 394,970 restricted stock units in the three-month period ended March 31, 2020 with a weighted average grant date fair value of $47 per share. In the three-month period ended March 31, 2020 , 4,760 restricted stock units were forfeited. At March 31, 2020 , there was $10 million of unrecognized compensation expense related to unvested restricted stock units; such units had a weighted average remaining vesting period of three years . Performance Restricted Stock Units. Under our Long Term Incentive Program, we grant performance restricted stock units to certain senior executives. These performance restricted stock units will vest and share awards will be issued at no cost to the employees, subject to our achievement of specified performance metrics established by our Compensation Committee over a three-year performance period and the recipient's continued employment through the share award date. During the three-month period ended March 31, 2020 , we granted 133,390 performance restricted stock units with a grant date fair value of approximately $34 per share and 151,724 shares were issued. During the three-month period ended March 31, 2019 , we granted 126,680 performance restricted stock units with a grant date fair value of approximately $39 per share. No performance restricted stock units were forfeited in either period. |
Employee Retirement Plans
Employee Retirement Plans | 3 Months Ended |
Mar. 31, 2020 | |
Retirement Benefits [Abstract] | |
Employee Retirement Plans | EMPLOYEE RETIREMENT PLANS Net periodic pension cost for our defined-benefit pension plans, with the exception of service cost, is recorded in other income (expense), net, in our condensed consolidated statement of operations. Net periodic pension cost for our defined-benefit pension plans was as follows, in millions: Three Months Ended March 31, 2020 2019 Qualified Non-Qualified Qualified Non-Qualified Service cost $ 1 $ — $ 1 $ — Interest cost 6 1 10 1 Expected return on plan assets (6 ) — (11 ) — Amortization of net loss 6 1 4 1 Net periodic pension cost $ 7 $ 2 $ 4 $ 2 As of January 1, 2010, substantially all of our domestic and foreign qualified and domestic non-qualified defined-benefit pension plans were frozen to future benefit accruals. In December 2019, our Board of Directors approved the termination of our qualified domestic defined-benefit pension plans in 2021. |
Reclassifications From Accumula
Reclassifications From Accumulated Other Comprehensive Loss | 3 Months Ended |
Mar. 31, 2020 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Reclassifications From Accumulated Other Comprehensive Loss | RECLASSIFICATIONS FROM ACCUMULATED OTHER COMPREHENSIVE LOSS The reclassifications from accumulated other comprehensive loss to the condensed consolidated statements of operations were as follows, in millions: Amounts Reclassified Accumulated Other Comprehensive Loss Three Months Ended March 31, Statement of Operations Line Item 2020 2019 Amortization of defined-benefit pension and other post-retirement benefits: Actuarial losses, net $ 7 $ 5 Other income (expense), net Tax (benefit) (2 ) (1 ) Net of tax $ 5 $ 4 |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | SEGMENT INFORMATION Information by segment and geographic area was as follows, in millions: Three Months Ended March 31, 2020 2019 2020 2019 Net Sales (A) Operating Profit (Loss) Operations by segment: Plumbing Products $ 955 $ 940 $ 157 $ 153 Decorative Architectural Products 626 573 95 73 Total $ 1,581 $ 1,513 $ 252 $ 226 Operations by geographic area: North America $ 1,258 $ 1,171 $ 210 $ 181 International, principally Europe 323 342 42 45 Total $ 1,581 $ 1,513 252 226 General corporate expense, net (27 ) (29 ) Operating profit 225 197 Other income (expense), net (51 ) (44 ) Income from continuing operations before income taxes $ 174 $ 153 (A) Inter-segment sales were not material. |
Other Income (Expense), Net
Other Income (Expense), Net | 3 Months Ended |
Mar. 31, 2020 | |
Other Income and Expenses [Abstract] | |
Other Income (Expense), Net | OTHER INCOME (EXPENSE), NET Other, net, which is included in other income (expense), net, was as follows, in millions: Three Months Ended March 31, 2020 2019 Income from cash and cash investments $ 1 $ 1 Foreign currency transaction losses (9 ) — Net periodic pension and post-retirement benefit cost (8 ) (5 ) Other items, net — (1 ) Total other, net $ (16 ) $ (5 ) |
Income Per Common Share
Income Per Common Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Income Per Common Share | INCOME PER COMMON SHARE Reconciliations of the numerators and denominators used in the computations of basic and diluted income per common share were as follows, in millions: Three Months Ended March 31, 2020 2019 Numerator (basic and diluted): Income from continuing operations $ 133 $ 107 Less: Allocation to unvested restricted stock awards 1 1 Income from continuing operations attributable to common shareholders 132 106 Income from discontinued operations, net 397 9 Less: Allocation to unvested restricted stock awards 3 — Income from discontinued operations, net attributable to common shareholders 394 9 Net income attributable to common shareholders $ 526 $ 115 Denominator: Basic common shares (based upon weighted average) 273 293 Add: Stock option dilution 1 1 Diluted common shares 274 294 For the three-month period ended March 31, 2020 and 2019 , we allocated dividends and undistributed earnings to the unvested restricted stock awards. Additionally, 582,000 and 1.1 million common shares for the three-month periods ended March 31, 2020 and 2019 , respectively, related to stock options, 20,000 common shares related to performance restricted stock units for the three-month period ended March 31, 2019 , and 7,000 restricted stock units for the three-month period ended March 31, 2020 were excluded from the computation of diluted income per common share due to their antidilutive effect. In September 2019, our Board of Directors authorized the repurchase, for retirement, of up to $2.0 billion of shares of our common stock in open-market transactions or otherwise. In March 2020, we agreed to repurchase a total of $350 million of shares of our common stock with an immediate delivery of 7.3 million shares under an accelerated stock repurchase transaction. This transaction will be completed no later than May 8, 2020, at which time we anticipate receiving, at no additional cost, approximately 2.3 million shares of our common stock resulting from expected changes in the volume weighted average stock price of our common shares over the term of the transaction. In total, excluding any incremental shares we will receive from the accelerated stock repurchase transaction, we repurchased and retired 14.2 million shares of our common stock in the first three months of 2020 for approximately $602 million . This included 0.4 million shares to offset the dilutive impact of restricted stock units granted in the first three months of the year as well as 1.2 million shares received at no additional cost from the settlement of the accelerated stock repurchase initiated in November 2019. At March 31, 2020 , we had $900 million remaining under the 2019 repurchase authorization. On the basis of amounts paid (declared), cash dividends per common share were $0.135 ( $0.135 ) and $0.120 ( $0.120 ) for the three-month periods ended March 31, 2020 and 2019 , respectively. |
Other Commitments and Contingen
Other Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Other Commitments and Contingencies | OTHER COMMITMENTS AND CONTINGENCIES We are involved in claims and litigation, including class actions, mass torts and regulatory proceedings, which arise in the ordinary course of our business. The types of matters may include, among others: competition, product liability, employment, warranty, advertising, contract, personal injury, environmental, intellectual property, and insurance coverage. We believe we have adequate defenses in these matters and that the likelihood that the outcome of these matters would have a material adverse effect on us is remote. However, there is no assurance that we will prevail in these matters, and we could, in the future, incur judgments, enter into settlements of claims or revise our expectations regarding the outcome of these matters, which could materially impact our results of operations. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES Our effective tax rate was 19 percent and 23 percent for the three-month periods ended March 31, 2020 and 2019 , respectively. The decrease in the tax rate was primarily due to an additional $2 million income tax benefit on stock-based compensation and an additional $2 million state income tax benefit from a reduction in the liability for uncertain tax positions resulting from the expiration of statutes of limitation, recognized in the first quarter of 2020. |
Accounting Policies (Policies)
Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Reclassifications | Reclassifications. Certain prior year amounts have been reclassified to conform to the 2020 presentation in the condensed consolidated financial statements. In our condensed consolidated statements of cash flows, the cash flows from discontinued operations are not separately classified. |
Compensation Related Costs | Stock-Based Compensation. We issue stock-based incentives in various forms to our employees and non-employee Directors. Outstanding stock-based incentives were in the form of long-term stock awards, stock options, restricted stock units ("RSUs"), performance restricted stock units ("PRSUs") and phantom stock awards. In December 2019, our Organization and Compensation Committee of the Board of Directors (the "Compensation Committee") amended the terms of equity awards under our 2014 Long Term Stock Incentive Plan to provide that newly issued stock options, RSUs and phantom stock awards vest over a three year period and redefined retirement-eligibility as age 65 or age 55 with at least 10 years of continuous service. As such, compensation expense for equity awards granted in 2020 and thereafter is recognized ratably over the shorter of the vesting period, typically three years , or the length of time until the grantee becomes retirement eligible. In February 2020, our Compensation Committee approved the grant of RSUs under the Company’s 2014 Long Term Stock Incentive Plan. We measure compensation expense for RSUs at the market price of our common stock at the grant date. |
Credit Loss, Financial Instrument | Allowance for Credit Losses. We do business with a number of customers, including certain home center retailers. We monitor our exposure for credit losses on our customer receivable balances and other financial investments measured at amortized cost and the credit worthiness of our customers on an on-going basis, including requiring the completion of credit applications and performing periodic reviews of our open accounts receivable. We record allowances for doubtful accounts for estimated losses resulting from the inability of our customers to fulfill their required payment obligation to us. Allowances are estimated at each of our businesses based upon specific customer balances, where a risk of loss has been identified, and also include a provision for losses based upon historical collection experience and write-off activity as well as reasonable and supportable forecast information that considers macro-economic factors and industry-specific trends associated with our businesses, among others. Our receivables balances are generally due in less than one year. |
Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncements. In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which modifies the methodology for recognizing loss impairments on certain types of financial instruments, including receivables. The new methodology requires an entity to estimate the credit losses expected over the life of an exposure. Additionally, ASU 2016-13 amends the current available-for-sale security other-than-temporary impairment model for debt securities. We adopted ASU 2016-13 and recorded a cumulative-effect adjustment to opening retained earnings on January 1, 2020. The adoption of the standard did not have a material effect on our financial position or results of operations. In August 2018, the FASB issued ASU 2018-15, "Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract," which allows for the capitalization of certain implementation costs incurred in a hosting arrangement that is a service contract. We adopted ASU 2018-15 prospectively beginning on January 1, 2020. The adoption of the standard did not have an impact on our financial position or results of operations. A. ACCOUNTING POLICIES (Concluded) In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes," which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. We early adopted ASU 2019-12 on January 1, 2020. The adoption of the standard did not have an impact on our financial position or results of operations. Recently Issued Accounting Pronouncements. In January 2020, the FASB issued ASU 2020-01, "Investments—Equity Securities (Topic 321)", "Investments—Equity Method and Joint Ventures (Topic 323)", and "Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815", which clarifies that an entity should consider observable transactions when either applying or discontinuing the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321. ASU 2020-01 clarifies that for certain forward contracts or purchased options to acquire investments, an entity should not consider whether, upon settlement of the forward contract or exercise of the purchased option, the underlying securities would be accounted for under the equity method or the fair value option. ASU 2020-01 is effective for us for annual periods beginning January 1, 2021. Early adoption is permitted. We are currently reviewing the provisions of this new pronouncement and the impact, if any, the adoption of this guidance has on our financial position and results of operations. |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Discontinued Operations | The major classes of line items constituting income from discontinued operations, net, in millions: Three Months Ended March 31, 2020 2019 Net sales $ 101 $ 395 Cost of sales 78 318 Gross profit 23 77 Selling, general and administrative expenses 32 56 Impairment charge for goodwill (A) — 7 Other income (expense), net — 1 (Loss) income from discontinued operations (9 ) 15 Gain on disposal of discontinued operations 585 — Income before income tax 576 15 Income tax expense (179 ) (6 ) Income from discontinued operations, net $ 397 $ 9 (A) In the first quarter of 2019, we recognized a $7 million non-cash goodwill impairment charge related to a decline in the long-term outlook of our windows and doors business in the United Kingdom. The carrying amount of major classes of assets and liabilities included as part of the Cabinetry discontinued operations, were as follows, in millions: December 31, 2019 Receivables 76 Prepaid expenses and other 7 Inventories 90 Property and equipment, net 157 Operating lease right-of-use assets 4 Goodwill 181 Other intangible assets, net 1 Other assets 12 Total assets classified as held for sale $ 528 Accounts payable $ 103 Accrued liabilities 46 Noncurrent operating lease liabilities 3 Other liabilities 10 Total liabilities classified as held for sale $ 162 Other selected financial information for Cabinetry, Milgard and UKWG during the period owned by us, were as follows, in millions: Three Months Ended March 31, 2020 March 31, 2019 Depreciation and amortization $ — $ 9 Capital expenditures 1 11 ROU assets obtained in exchange for new lease obligations — — |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenues [Abstract] | |
Disaggregation of Revenue | Net sales from these geographic markets, by segment, were as follows, in millions: Three Months Ended March 31, 2020 Plumbing Products Decorative Architectural Products Total Primary geographic markets: North America $ 632 $ 626 $ 1,258 International, principally Europe 323 — 323 Total $ 955 $ 626 $ 1,581 Three Months Ended March 31, 2019 Plumbing Products Decorative Architectural Products Total Primary geographic markets: North America $ 598 $ 573 $ 1,171 International, principally Europe 342 — 342 Total $ 940 $ 573 $ 1,513 |
Financing Receivable, Allowance for Credit Loss [Table Text Block] | Changes in the allowance for credit losses deducted from accounts receivable were as follows, in millions: Three Months Ended Balance at January 1 (after adopting ASU 2016-13) $ 5 Provision for expected credit losses during the period 2 Write-offs charged against the allowance (1 ) Recoveries of amounts previously written off 1 Balance at end of period $ 7 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of changes in carrying amount of goodwill | The changes in the carrying amount of goodwill for the three-month period ended March 31, 2020 , by segment, were as follows, in millions: Gross Goodwill At March 31, 2020 Accumulated Net Goodwill At March 31, 2020 Plumbing Products $ 575 $ (340 ) $ 235 Decorative Architectural Products 358 (75 ) 283 Total $ 933 $ (415 ) $ 518 Gross Goodwill At December 31, 2019 Accumulated Impairment Losses Net Goodwill At December 31, 2019 Acquisitions Other (A) Net Goodwill At March 31, 2020 Plumbing Products $ 566 $ (340 ) $ 226 $ 12 $ (3 ) $ 235 Decorative Architectural Products 358 (75 ) 283 — — 283 Total $ 924 $ (415 ) $ 509 $ 12 $ (3 ) $ 518 (A) Other consists of the effect of foreign currency translations. |
Warranty Liability (Tables)
Warranty Liability (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Product Warranties Disclosures [Abstract] | |
Schedule of changes in the Company's warranty liability | Changes in our warranty liability were as follows, in millions: Three Months Ended Twelve Months Ended December 31, 2019 Balance at January 1 $ 84 $ 81 Accruals for warranties issued during the period 7 34 Accruals related to pre-existing warranties — 1 Settlements made (in cash or kind) during the period (8 ) (31 ) Other, net (including currency translation) (1 ) (1 ) Balance at end of period $ 82 $ 84 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of pre-tax compensation expense and the related income tax benefit for these stock-based incentives | Pre-tax compensation expense included in income from continuing operations for these stock-based incentives was as follows, in millions: Three Months Ended March 31, 2020 2019 Long-term stock awards $ 4 $ 5 Stock options 3 1 Restricted stock units 8 — Performance restricted stock units 1 1 Phantom stock awards and stock appreciation rights — 1 Total $ 16 $ 8 |
Schedule of the Company's long-term stock award activity | Our long-term stock award activity was as follows, shares in millions: Three Months Ended March 31, 2020 2019 Unvested stock award shares at January 1 2 2 Weighted average grant date fair value $ 34 $ 30 Stock award shares granted — 1 Weighted average grant date fair value $ — $ 36 Stock award shares vested 1 1 Weighted average grant date fair value $ 32 $ 24 Stock award shares forfeited — — Weighted average grant date fair value $ 35 $ 29 Unvested stock award shares at March 31 1 2 Weighted average grant date fair value $ 36 $ 34 |
Schedule of the Company's stock option activity | Our stock option activity was as follows, shares in millions: Three Months Ended March 31, 2020 2019 Option shares outstanding, January 1 3 4 Weighted average exercise price $ 27 $ 21 Option shares granted 1 1 Weighted average exercise price $ 48 $ 36 Option shares exercised 1 1 Aggregate intrinsic value on date of exercise (A) $ 22 million $ 13 million Weighted average exercise price $ 17 $ 11 Option shares forfeited — — Weighted average exercise price $ 42 $ — Option shares outstanding, March 31 3 4 Weighted average exercise price $ 32 $ 25 Weighted average remaining option term (in years) 7 6 Option shares vested and expected to vest, March 31 3 4 Weighted average exercise price $ 32 $ 25 Aggregate intrinsic value (A) $ 14 million $ 57 million Weighted average remaining option term (in years) 7 6 Option shares exercisable (vested), March 31 1 2 Weighted average exercise price $ 26 $ 19 Aggregate intrinsic value (A) $ 13 million $ 50 million Weighted average remaining option term (in years) 6 4 (A) Aggregate intrinsic value is calculated using our stock price at each respective date, less the exercise price (grant date price), multiplied by the number of shares. |
Schedule of weighted average grant date fair value of option shares granted and the assumptions used to estimate those values using a Black-Scholes option pricing model | The weighted average grant date fair value of option shares granted and the assumptions used to estimate those values using a Black-Scholes option pricing model were as follows: Three Months Ended March 31, 2020 2019 Weighted average grant date fair value $ 10.67 $ 8.81 Risk-free interest rate 1.53 % 2.57 % Dividend yield 1.14 % 1.35 % Volatility factor 24.00 % 25.00 % Expected option life 6 years 6 years |
Employee Retirement Plans (Tabl
Employee Retirement Plans (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Retirement Benefits [Abstract] | |
Schedule of net periodic pension cost for the Company's defined-benefit pension plans | Net periodic pension cost for our defined-benefit pension plans, with the exception of service cost, is recorded in other income (expense), net, in our condensed consolidated statement of operations. Net periodic pension cost for our defined-benefit pension plans was as follows, in millions: Three Months Ended March 31, 2020 2019 Qualified Non-Qualified Qualified Non-Qualified Service cost $ 1 $ — $ 1 $ — Interest cost 6 1 10 1 Expected return on plan assets (6 ) — (11 ) — Amortization of net loss 6 1 4 1 Net periodic pension cost $ 7 $ 2 $ 4 $ 2 |
Reclassifications From Accumu_2
Reclassifications From Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Schedule of reclassifications from accumulated other comprehensive (loss) income to the condensed consolidated statements of operations | The reclassifications from accumulated other comprehensive loss to the condensed consolidated statements of operations were as follows, in millions: Amounts Reclassified Accumulated Other Comprehensive Loss Three Months Ended March 31, Statement of Operations Line Item 2020 2019 Amortization of defined-benefit pension and other post-retirement benefits: Actuarial losses, net $ 7 $ 5 Other income (expense), net Tax (benefit) (2 ) (1 ) Net of tax $ 5 $ 4 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Schedule of information by segment and geographic area | Information by segment and geographic area was as follows, in millions: Three Months Ended March 31, 2020 2019 2020 2019 Net Sales (A) Operating Profit (Loss) Operations by segment: Plumbing Products $ 955 $ 940 $ 157 $ 153 Decorative Architectural Products 626 573 95 73 Total $ 1,581 $ 1,513 $ 252 $ 226 Operations by geographic area: North America $ 1,258 $ 1,171 $ 210 $ 181 International, principally Europe 323 342 42 45 Total $ 1,581 $ 1,513 252 226 General corporate expense, net (27 ) (29 ) Operating profit 225 197 Other income (expense), net (51 ) (44 ) Income from continuing operations before income taxes $ 174 $ 153 (A) Inter-segment sales were not material. |
Other Income (Expense), Net (Ta
Other Income (Expense), Net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Other Income and Expenses [Abstract] | |
Schedule of components of other, net, which is included in other income (expense), net | Other, net, which is included in other income (expense), net, was as follows, in millions: Three Months Ended March 31, 2020 2019 Income from cash and cash investments $ 1 $ 1 Foreign currency transaction losses (9 ) — Net periodic pension and post-retirement benefit cost (8 ) (5 ) Other items, net — (1 ) Total other, net $ (16 ) $ (5 ) |
Income Per Common Share (Tables
Income Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of reconciliations of the numerators and denominators used in the computations of basic and diluted earnings per common share | Reconciliations of the numerators and denominators used in the computations of basic and diluted income per common share were as follows, in millions: Three Months Ended March 31, 2020 2019 Numerator (basic and diluted): Income from continuing operations $ 133 $ 107 Less: Allocation to unvested restricted stock awards 1 1 Income from continuing operations attributable to common shareholders 132 106 Income from discontinued operations, net 397 9 Less: Allocation to unvested restricted stock awards 3 — Income from discontinued operations, net attributable to common shareholders 394 9 Net income attributable to common shareholders $ 526 $ 115 Denominator: Basic common shares (based upon weighted average) 273 293 Add: Stock option dilution 1 1 Diluted common shares 274 294 |
Accounting Policies Accounting
Accounting Policies Accounting Policies (Details) | 3 Months Ended |
Mar. 31, 2020 | |
Minimum | |
Stock-based compensation | |
Vesting period | 3 years |
Restricted Stock | |
Stock-based compensation | |
Vesting period | 3 years |
Acquisitions (Details)
Acquisitions (Details) | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Business Acquisition [Line Items] | |
Goodwill, acquired during period | $ 12,000,000 |
Plumbing Products | |
Business Acquisition [Line Items] | |
Payments to acquire businesses | 24,000,000 |
Goodwill, acquired during period | 12,000,000 |
Finite-lived intangible assets acquired | $ 10,000,000 |
Weighted average useful life (in years) | 5 years |
Discontinued Operations - Narra
Discontinued Operations - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Business, net of cash disposed | $ 853 | $ 0 |
Discontinued Operations, Disposed of by Sale | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Income before income tax, discontinued operations | 15 | |
Masco Cabinetry | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Income before income tax, discontinued operations | (9) | 23 |
Masco Cabinetry | Discontinued Operations, Held-for-sale | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Business, net of cash disposed | 989 | |
Proceeds from divestiture of businesses | 136 | |
Gain (loss) on disposition of business | 585 | |
Milgard and UKWG | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Income before income tax, discontinued operations | $ 8 | |
Cash and Cash Equivalents | Masco Cabinetry | Discontinued Operations, Disposed of by Sale | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Business, net of cash disposed | 853 | |
Masco Cabinetry | Financial Guarantee | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Guarantor obligations, maximum exposure, undiscounted | 33 | |
Masco Cabinetry | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Letters of credit outstanding, amount | $ 10 |
Discontinued Operations - Incom
Discontinued Operations - Income Statement (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
(Loss) income from discontinued operations, net | $ 397 | $ 9 |
Discontinued Operations, Disposed of by Sale | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Net sales | 395 | |
Cost of sales | 318 | |
Gross profit | 77 | |
Selling, general and administrative expenses | 56 | |
Impairment charge for goodwill | 0 | 7 |
Other income (expense), net | 1 | |
(Loss) income from discontinued operations | 15 | |
Gain on disposal of discontinued operations | 0 | |
Income before income tax | 15 | |
Income tax benefit (expense) | (6) | |
(Loss) income from discontinued operations, net | $ 9 | |
Cabinetry Products [Member] | Discontinued Operations, Disposed of by Sale | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Net sales | 101 | |
Cost of sales | 78 | |
Gross profit | 23 | |
Selling, general and administrative expenses | 32 | |
Other income (expense), net | 0 | |
(Loss) income from discontinued operations | (9) | |
Gain on disposal of discontinued operations | 585 | |
Income before income tax | 576 | |
Income tax benefit (expense) | (179) | |
(Loss) income from discontinued operations, net | 397 | |
UK Window Group | Discontinued Operations, Disposed of by Sale | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Noncash goodwill impairment | $ 7 |
Discontinued Operations - Balan
Discontinued Operations - Balance Sheet (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Operating lease right-of-use assets | $ 171 | $ 176 |
Other assets | 0 | 355 |
Noncurrent operating lease liabilities | $ 157 | 162 |
Masco Cabinetry | Discontinued Operations, Held-for-sale or Disposed of by Sale | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Receivables | 76 | |
Prepaid expenses and other | 7 | |
Inventories | 90 | |
Property and equipment, net | 157 | |
Operating lease right-of-use assets | 4 | |
Goodwill | 181 | |
Other intangible assets, net | 1 | |
Other assets | 12 | |
Total assets classified as held for sale | 528 | |
Accounts payable | 103 | |
Accrued liabilities | 46 | |
Noncurrent operating lease liabilities | 3 | |
Other liabilities | 10 | |
Total liabilities classified as held for sale | $ 162 |
Discontinued Operations - Addit
Discontinued Operations - Additional Information (Details) - Discontinued Operations, Held-for-sale or Disposed of by Sale - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Depreciation and amortization | $ 9 | |
Capital expenditures | 11 | |
ROU assets obtained in exchange for new lease obligations | $ 0 | |
Masco Cabinetry | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Depreciation and amortization | $ 0 | |
Capital expenditures | 1 | |
ROU assets obtained in exchange for new lease obligations | $ 0 |
Revenue (Details)
Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Disaggregation of Revenue [Line Items] | |||
Net sales | $ 1,581 | $ 1,513 | |
Contract with customer, asset, gross, current | 2 | $ 2 | |
Contract with customer, liability | 12 | $ 40 | |
Performance obligation satisfied in previous period | 3 | ||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |||
Balance at January 1 (after adopting ASU 2016-13) | 5 | ||
Provision for expected credit losses during the period | 2 | ||
Write-offs charged against the allowance | (1) | ||
Recoveries of amounts previously written off | 1 | ||
Balance at end of period | 7 | ||
Plumbing Products | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 955 | 940 | |
Decorative Architectural Products | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 626 | 573 | |
North America | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 1,258 | 1,171 | |
North America | Plumbing Products | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 632 | 598 | |
North America | Decorative Architectural Products | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 626 | 573 | |
International, principally Europe | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 323 | 342 | |
International, principally Europe | Plumbing Products | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 323 | 342 | |
International, principally Europe | Decorative Architectural Products | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | $ 0 | $ 0 |
Depreciation and Amortization (
Depreciation and Amortization (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Depreciation, Depletion and Amortization [Abstract] | ||
Depreciation and amortization expense | $ 33 | $ 40 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Goodwill Rollforward (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | |
Goodwill [Line Items] | |||
Gross goodwill | $ 933,000,000 | $ 924,000,000 | |
Accumulated Impairment Losses | (415,000,000) | (415,000,000) | |
Net goodwill | $ 518,000,000 | 518,000,000 | 509,000,000 |
Goodwill [Roll Forward] | |||
Gross goodwill | 933,000,000 | 924,000,000 | |
Accumulated Impairment Losses | (415,000,000) | (415,000,000) | |
Net Goodwill, December 31, 2019 | 509,000,000 | ||
Acquisitions | 12,000,000 | ||
Goodwill, other | (3,000,000) | ||
Net Goodwill, March 31, 2020 | 518,000,000 | ||
Plumbing Products | |||
Goodwill [Line Items] | |||
Gross goodwill | 575,000,000 | 566,000,000 | |
Accumulated Impairment Losses | (340,000,000) | (340,000,000) | |
Net goodwill | 226,000,000 | 235,000,000 | 226,000,000 |
Goodwill [Roll Forward] | |||
Gross goodwill | 575,000,000 | 566,000,000 | |
Accumulated Impairment Losses | (340,000,000) | (340,000,000) | |
Net Goodwill, December 31, 2019 | 226,000,000 | ||
Acquisitions | 12,000,000 | ||
Goodwill, other | (3,000,000) | ||
Net Goodwill, March 31, 2020 | 235,000,000 | ||
Decorative Architectural Products | |||
Goodwill [Line Items] | |||
Gross goodwill | 358,000,000 | 358,000,000 | |
Accumulated Impairment Losses | (75,000,000) | (75,000,000) | |
Net goodwill | 283,000,000 | 283,000,000 | 283,000,000 |
Goodwill [Roll Forward] | |||
Gross goodwill | 358,000,000 | 358,000,000 | |
Accumulated Impairment Losses | $ (75,000,000) | $ (75,000,000) | |
Net Goodwill, December 31, 2019 | 283,000,000 | ||
Acquisitions | 0 | ||
Goodwill, other | 0 | ||
Net Goodwill, March 31, 2020 | $ 283,000,000 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2020 | Dec. 31, 2019 | |
Goodwill [Line Items] | |||
Other indefinite-lived intangible assets | $ 76 | $ 76 | |
Carrying value of definite-lived intangible assets | 188 | 183 | |
Accumulated amortization | $ 54 | $ 48 | |
Decorative Architectural Products | |||
Goodwill [Line Items] | |||
Impairment of intangible assets | $ 9 |
Fair Value of Financial Inves_2
Fair Value of Financial Investments (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Investments, fair value disclosure | $ 136 | |
Estimate of Fair Value Measurement | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Estimated market value of long-term and short-term debt | 2,800 | $ 3,000 |
Carrying Value Reported Value Measurement | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Aggregate carrying value of long-term and short-term debt | $ 2,800 | $ 2,800 |
ACProducts Preferred Stock | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Preferred stock, coupon rate, percentage until first anniversary issuance | 8.00% | |
Preferred stock, coupon rate, percentage after the first anniversary until the second anniversary issuance | 9.00% | |
Preferred stock, coupon rate, percentage after the second anniversary until the seventh anniversary issuance | 10.00% | |
Preferred stock, percentage of coupon rate increase | 5000.00% | |
Preferred stock, coupon rate, maximum percentage | 15.00% | |
ACProducts Holding, Inc | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Preferred stock, liquidation preference, value | $ 150 |
Warranty Liability (Details)
Warranty Liability (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward] | ||
Balance at the beginning of the period | $ 84 | $ 81 |
Accruals for warranties issued during the period | 7 | 34 |
Accruals related to pre-existing warranties | 0 | 1 |
Settlements made (in cash or kind) during the period | (8) | (31) |
Other, net (including currency translation) | (1) | (1) |
Balance at the end of the period | $ 82 | $ 84 |
Debt (Details)
Debt (Details) - USD ($) | Mar. 13, 2019 | Mar. 31, 2020 | Mar. 28, 2013 |
Credit Agreement dated March 13, 2019 | |||
Debt | |||
Borrowing capacity, maximum | $ 1,000,000,000 | ||
Increase in maximum borrowing capacity | $ 500,000,000 | ||
Maximum net leverage ratio | 4 | ||
Minimum interest coverage ratio | 2.5 | ||
Borrowings outstanding | $ 0 | ||
Credit Agreement dated March 13, 2019 | Federal funds effective rate | |||
Debt | |||
Interest rate, basis spread (as a percent) | 0.50% | ||
Credit Agreement dated March 13, 2019 | Libor rate | |||
Debt | |||
Interest rate, basis spread (as a percent) | 1.00% | ||
Credit Agreement dated March 13, 2019 | Revolver | |||
Debt | |||
Borrowing capacity, maximum | $ 500,000,000 | ||
Credit Agreement dated March 13, 2019 | Swingline loans | |||
Debt | |||
Borrowing capacity, maximum | 100,000,000 | ||
Credit Agreement dated March 13, 2019 | Letters of credit | |||
Debt | |||
Borrowing capacity, maximum | $ 25,000,000 | ||
Letters of credit outstanding, amount | $ 0 | ||
Credit Agreement dated March 28, 2013 | |||
Debt | |||
Borrowing capacity, maximum | $ 750,000,000 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Stock-based compensation | ||
Pre-tax compensation expense | $ 16 | $ 8 |
Long-term stock awards | ||
Stock-based compensation | ||
Pre-tax compensation expense | 4 | 5 |
Stock options | ||
Stock-based compensation | ||
Pre-tax compensation expense | 3 | 1 |
Restricted stock units | ||
Stock-based compensation | ||
Pre-tax compensation expense | 8 | 0 |
Performance Restricted Stock Units | ||
Stock-based compensation | ||
Pre-tax compensation expense | 1 | 1 |
Phantom stock awards and stock appreciation rights | ||
Stock-based compensation | ||
Pre-tax compensation expense | $ 0 | $ 1 |
Stock-Based Compensation - Long
Stock-Based Compensation - Long-Term Stock Award (Details) - Long-term stock awards - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Unvested stock award shares | ||
Balance at the beginning of the period (in shares) | 2 | 2 |
Granted (in shares) | 0 | 1 |
Vested (in shares) | 1 | 1 |
Forfeited (in shares) | 0 | 0 |
Balance at the end of the period (in shares) | 1 | 2 |
Weighted average grant date fair value | ||
Balance at the beginning of the period (in dollars per share) | $ 34 | $ 30 |
Granted (in dollars per share) | 0 | 36 |
Vested (in dollars per share) | 32 | 24 |
Forfeited (in dollars per share) | 35 | 29 |
Balance at the end of the period (in dollars per share) | $ 36 | $ 34 |
Additional disclosures | ||
Total unrecognized compensation expense | $ 32 | $ 61 |
Weighted average remaining vesting period | 3 years | 4 years |
Total market value (at the vesting date) of stock award shares | $ 29 | $ 29 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Options (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Stock Options | ||
Grant date intrinsic value (in dollars per share) | $ 48 | |
Shares | ||
Granted (in shares) | 420,840 | |
Forfeited (in shares) | 16,240 | |
Stock options | ||
Shares | ||
Outstanding at the beginning of the period (in shares) | 3,000,000 | 4,000,000 |
Granted (in shares) | 1,000,000 | 1,000,000 |
Exercised (in shares) | 1,000,000 | 1,000,000 |
Forfeited (in shares) | 0 | 0 |
Outstanding at the end of the period (in shares) | 3,000,000 | 4,000,000 |
Vested and expected to vest at the end of the period (in shares) | 3,000,000 | 4,000,000 |
Exercisable at the end of the period (in shares) | 1,000,000 | 2,000,000 |
Weighted average exercise price | ||
Outstanding at the beginning of the period (in dollars per share) | $ 27 | $ 21 |
Granted (in dollars per share) | 48 | 36 |
Exercised (in dollars per share) | 17 | 11 |
Forfeited (in dollars per share) | 42 | 0 |
Outstanding at the end of the period (in dollars per share) | 32 | 25 |
Vested and expected to vest at the end of the period (in dollars per share) | 32 | 25 |
Exercisable at the end of the period (in dollars per share) | $ 26 | $ 19 |
Aggregate intrinsic value | ||
Exercised | $ 22 | $ 13 |
Vested and expected to vest at the end of the period | 14 | 57 |
Exercisable at the end of the period | $ 13 | $ 50 |
Weighted average remaining option term | ||
Outstanding at the end of the period | 7 years | 6 years |
Vested and expected to vest at the end of the period | 7 years | 6 years |
Exercisable at the end of the period | 6 years | 4 years |
Additional disclosures | ||
Total unrecognized compensation expense | $ 9 | $ 12 |
Weighted average remaining vesting period | 3 years | |
Five Year Vesting | Stock options | ||
Stock Options | ||
Vesting period | 5 years | |
Three Year Vesting | Stock options | ||
Stock Options | ||
Vesting period | 3 years |
Stock-Based Compensation - Opti
Stock-Based Compensation - Option Pricing Assumptions and Estimates (Details) - Stock options - $ / shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Stock Options | ||
Weighted average grant date fair value (in dollars per share) | $ 10.67 | $ 8.81 |
Risk-free interest rate (as a percent) | 1.53% | 2.57% |
Dividend yield (as a percent) | 1.14% | 1.35% |
Volatility factor (as a percent) | 24.00% | 25.00% |
Expected option life | 6 years | 6 years |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Units (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Restricted stock units | ||
Stock-based compensation | ||
Period for recognition | 3 years | |
Granted (in shares) | 394,970 | |
Granted (in dollars per share) | $ 47 | |
Forfeited (in shares) | 4,760 | |
unrecognized compensation expense | $ 10 | |
Weighted average remaining vesting period | 3 years | |
Stock options | ||
Stock-based compensation | ||
Weighted average remaining vesting period | 3 years | |
LTIP Program | Performance Restricted Stock Units | ||
Stock-based compensation | ||
Period for recognition | 3 years | |
Granted (in shares) | 133,390 | 126,680 |
Granted (in dollars per share) | $ 34 | $ 39 |
Forfeited (in shares) | 0 | 0 |
Shares issued in period (in shares) | 151,724 |
Employee Retirement Plans (Deta
Employee Retirement Plans (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Qualified | ||
Net periodic pension cost for the company's defined-benefit pension plans | ||
Service cost | $ 1 | $ 1 |
Interest cost | 6 | 10 |
Expected return on plan assets | (6) | (11) |
Amortization of net loss | 6 | 4 |
Net periodic pension cost | 7 | 4 |
Non-Qualified | ||
Net periodic pension cost for the company's defined-benefit pension plans | ||
Service cost | 0 | 0 |
Interest cost | 1 | 1 |
Expected return on plan assets | 0 | 0 |
Amortization of net loss | 1 | 1 |
Net periodic pension cost | $ 2 | $ 2 |
Reclassifications From Accumu_3
Reclassifications From Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Reclassifications from accumulated other comprehensive (loss) income | ||
Other income (expense), net | $ 51 | $ 44 |
Tax (benefit) | 33 | 35 |
Reclassifications, after tax | (538) | (127) |
Reclassification out of Accumulated Other Comprehensive Income | Actuarial losses, net | ||
Reclassifications from accumulated other comprehensive (loss) income | ||
Other income (expense), net | 7 | 5 |
Tax (benefit) | (2) | (1) |
Reclassifications, after tax | $ 5 | $ 4 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Segment Information | ||
Net sales | $ 1,581 | $ 1,513 |
Operating Profit (Loss) | 225 | 197 |
Other income (expense), net | (51) | (44) |
Income from continuing operations before income taxes | 174 | 153 |
North America | ||
Segment Information | ||
Net sales | 1,258 | 1,171 |
International, principally Europe | ||
Segment Information | ||
Net sales | 323 | 342 |
Plumbing Products | ||
Segment Information | ||
Net sales | 955 | 940 |
Plumbing Products | North America | ||
Segment Information | ||
Net sales | 632 | 598 |
Plumbing Products | International, principally Europe | ||
Segment Information | ||
Net sales | 323 | 342 |
Decorative Architectural Products | ||
Segment Information | ||
Net sales | 626 | 573 |
Decorative Architectural Products | North America | ||
Segment Information | ||
Net sales | 626 | 573 |
Decorative Architectural Products | International, principally Europe | ||
Segment Information | ||
Net sales | 0 | 0 |
Operating Segments | ||
Segment Information | ||
Net sales | 1,581 | 1,513 |
Operating Profit (Loss) | 252 | 226 |
Operating Segments | Plumbing Products | ||
Segment Information | ||
Net sales | 955 | 940 |
Operating Profit (Loss) | 157 | 153 |
Operating Segments | Decorative Architectural Products | ||
Segment Information | ||
Net sales | 626 | 573 |
Operating Profit (Loss) | 95 | 73 |
Geographic Areas | ||
Segment Information | ||
Net sales | 1,581 | 1,513 |
Operating Profit (Loss) | 252 | 226 |
Geographic Areas | North America | ||
Segment Information | ||
Net sales | 1,258 | 1,171 |
Operating Profit (Loss) | 210 | 181 |
Geographic Areas | International, principally Europe | ||
Segment Information | ||
Net sales | 323 | 342 |
Operating Profit (Loss) | 42 | 45 |
Corporate, Non-Segment | ||
Segment Information | ||
General corporate expense, net | $ (27) | $ (29) |
Other Income (Expense), Net (De
Other Income (Expense), Net (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Other Income and Expenses [Abstract] | ||
Income from cash and cash investments | $ 1 | $ 1 |
Foreign currency transaction losses | (9) | 0 |
Net periodic pension and post-retirement benefit cost | (8) | (5) |
Other Nonoperating Income (Expense) Other Income (Expense) Items, Net | 0 | (1) |
Total other, net | $ (16) | $ (5) |
Income Per Common Share (Detail
Income Per Common Share (Details) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Numerator (basic and diluted): | ||
Income from continuing operations | $ 133 | $ 107 |
Less: Allocation to unvested restricted stock awards | 1 | 1 |
Income from continuing operations attributable to common shareholders | 132 | 106 |
Income from discontinued operations, net | 397 | 9 |
Less: Allocation to unvested restricted stock awards | 3 | 0 |
Income from discontinued operations, net attributable to common shareholders | 394 | 9 |
Net income attributable to common shareholders | $ 526 | $ 115 |
Denominator: | ||
Basic common shares (based upon weighted average) (in shares) | 273 | 293 |
Add: Stock option dilution (in shares) | 1 | 1 |
Diluted common shares (in shares) | 274 | 294 |
Income Per Common Share - Narra
Income Per Common Share - Narrative (Details) - USD ($) | 3 Months Ended | |||
Jun. 30, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | Sep. 17, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Amount authorized for repurchase | $ 2,000,000,000 | |||
Stock repurchased during period (in shares) | 14,200,000 | |||
Stock repurchased and retired during period | $ 602,000,000 | $ 122,000,000 | ||
Remaining authorized repurchase amount | $ 900,000,000 | |||
Dividends | ||||
Cash dividends per common share paid (in dollars per share) | $ 0.135 | $ 0.120 | ||
Cash dividends per common share declared (in dollars per share) | $ 0.135 | $ 0.120 | ||
Stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive effect on computation of diluted earnings per common share (in shares) | 582,000 | 1,100,000 | ||
Performance Restricted Stock Units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive effect on computation of diluted earnings per common share (in shares) | 20,000 | |||
Long-term stock awards | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive effect on computation of diluted earnings per common share (in shares) | 7,000 | |||
Stock repurchased and retired during period to offset dilutive impact of awards granted (in shares) | 400,000 | |||
Common Stock [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Stock repurchased during period, value | $ 350,000,000 | |||
Stock repurchased during period, shares (in shares) | 7,300,000 | |||
Stock repurchased during period, additional shares (in shares) | 1,200,000 | |||
Subsequent Event [Member] | Common Stock [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Stock repurchased during period, additional shares (in shares) | 2,300,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate (as a percent) | 19.00% | 23.00% |
Income tax reconciliation, share-based compensation cost | $ 2 | |
Effective Income Tax Rate Reconciliation, Other Adjustments, Amount | $ 2 |