Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 31, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
Current Fiscal Year End Date | --12-31 | ||
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 Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
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 | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 11,359,743,400 | ||
Entity Common Stock, Shares Outstanding | 225,203,119 | ||
Entity Central Index Key | 0000062996 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Documents Incorporated by Reference | DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant's definitive Proxy Statement to be filed for its 2023 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K. |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2022 | |
Audit Information [Abstract] | |
Auditor Name | PricewaterhouseCoopers LLP |
Auditor Firm ID | 238 |
Auditor Location | Detroit, Michigan |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash investments | $ 452 | $ 926 |
Receivables | 1,149 | 1,171 |
Inventories | 1,236 | 1,216 |
Prepaid expenses and other | 109 | 109 |
Total current assets | 2,946 | 3,422 |
Property and equipment, net | 975 | 896 |
Goodwill | 537 | 568 |
Other intangible assets, net | 350 | 388 |
Operating lease right-of-use assets | 266 | 187 |
Other assets | 113 | 114 |
Total assets | 5,187 | 5,575 |
Current liabilities: | ||
Accounts payable | 877 | 1,045 |
Notes payable | 205 | 10 |
Accrued liabilities | 807 | 884 |
Total current liabilities | 1,889 | 1,939 |
Long-term debt | 2,946 | 2,949 |
Noncurrent operating lease liabilities | 255 | 172 |
Other liabilities | 339 | 437 |
Total liabilities | 5,429 | 5,497 |
Commitments and contingencies (Note U) | ||
Redeemable noncontrolling interest | 20 | 22 |
Masco Corporation's shareholders' equity: | ||
Common shares, par value $1 per share Authorized shares: 1,400,000,000; Issued and outstanding: 2022 – 225,300,000; 2021 – 241,200,000 | 225 | 241 |
Preferred shares authorized: 1,000,000; Issued and outstanding: 2022 and 2021 – None | 0 | 0 |
Paid-in capital | 16 | 0 |
Retained deficit | (947) | (652) |
Accumulated other comprehensive income | 226 | 232 |
Total Masco Corporation's shareholders' deficit | (480) | (179) |
Noncontrolling interest | 218 | 235 |
Total equity | (262) | 56 |
Total liabilities and equity | $ 5,187 | $ 5,575 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Common shares, par value (in dollars per share) | $ 1 | $ 1 |
Common shares, shares authorized (in shares) | 1,400,000,000 | 1,400,000,000 |
Common shares, shares issued (in shares) | 225,300,000 | 241,200,000 |
Common shares, shares outstanding (in shares) | 225,300,000 | 241,200,000 |
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 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement [Abstract] | |||
Net sales | $ 8,680 | $ 8,375 | $ 7,188 |
Cost of sales | 5,967 | 5,512 | 4,601 |
Gross profit | 2,713 | 2,863 | 2,587 |
Selling, general and administrative expenses | 1,390 | 1,413 | 1,292 |
Impairment charges for goodwill and other intangible assets | 26 | 45 | 0 |
Operating profit | 1,297 | 1,405 | 1,295 |
Other income (expense), net: | |||
Interest expense | (108) | (278) | (144) |
Other, net | 4 | (439) | (20) |
Other income (expense), net | (104) | (717) | (164) |
Income from continuing operations before income taxes | 1,193 | 688 | 1,131 |
Income tax expense | 288 | 210 | 269 |
Income from continuing operations | 905 | 478 | 862 |
Income from discontinued operations, net | 0 | 0 | 414 |
Net income | 905 | 478 | 1,276 |
Less: Net income attributable to noncontrolling interest | 61 | 68 | 52 |
Net income attributable to Masco Corporation | $ 844 | $ 410 | $ 1,224 |
Basic: | |||
Income from continuing operations (in dollars per share) | $ 3.65 | $ 1.63 | $ 3.05 |
Income from discontinued operations, net (in dollars per share) | 0 | 0 | 1.55 |
Net income, basic (in dollars per share) | 3.65 | 1.63 | 4.60 |
Diluted: | |||
Income from continuing operations (in dollars per share) | 3.63 | 1.62 | 3.04 |
Income from discontinued operations, net (in dollars per share) | 0 | 0 | 1.55 |
Net income, diluted (in dollars per share) | $ 3.63 | $ 1.62 | $ 4.59 |
Amounts attributable to Masco Corporation: | |||
Income from continuing operations | $ 844 | $ 410 | $ 810 |
Income from discontinued operations, net | $ 0 | $ 0 | $ 414 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 905 | $ 478 | $ 1,276 |
Less: Net income attributable to noncontrolling interest | 61 | 68 | 52 |
Net income attributable to Masco Corporation | 844 | 410 | 1,224 |
Other comprehensive (loss) income, net of tax (Note P): | |||
Cumulative translation adjustment | (60) | (32) | 72 |
Interest rate swaps | 0 | 7 | 1 |
Pension and other post-retirement benefits | 54 | 384 | (18) |
Other comprehensive (loss) income, net of tax | (6) | 359 | 55 |
Less: Other comprehensive (loss) income attributable to the noncontrolling interest: | |||
Cumulative translation adjustment | (9) | (19) | 20 |
Pension and other post-retirement benefits | 9 | 4 | (2) |
Less: Other comprehensive (loss) income attributable to noncontrolling interest | 0 | (15) | 18 |
Other comprehensive (loss) income attributable to Masco Corporation | (6) | 374 | 37 |
Total comprehensive income | 899 | 837 | 1,331 |
Less: Total comprehensive income attributable to noncontrolling interest | 61 | 53 | 70 |
Total comprehensive income attributable to Masco Corporation | $ 838 | $ 784 | $ 1,261 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES: | |||
Net income | $ 905 | $ 478 | $ 1,276 |
Depreciation and amortization | 145 | 151 | 133 |
Fair value adjustment to contingent earnout obligation | (24) | 16 | 0 |
Display amortization | 0 | 0 | 2 |
Deferred income taxes | (15) | (68) | (3) |
Employee withholding taxes paid on stock-based compensation | 17 | 15 | 25 |
Loss (gain) on investments, net | 5 | (25) | (3) |
Loss (gain) on disposition of businesses, net | 1 | 18 | (602) |
Pension and other post-retirement benefits | (3) | 312 | (32) |
Impairment of goodwill and other intangible assets | 26 | 45 | 0 |
Stock-based compensation | 49 | 61 | 45 |
Dividends paid-in-kind | 0 | (6) | (10) |
Increase in receivables | (15) | (64) | (141) |
Increase in inventories | (43) | (350) | (89) |
(Decrease) increase in accounts payable and accrued liabilities, net | (225) | 190 | 332 |
Debt extinguishment costs | 0 | 160 | 5 |
Other, net | 17 | (3) | 15 |
Net cash from operating activities | 840 | 930 | 953 |
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES: | |||
Retirement of notes | 0 | (1,326) | (400) |
Purchase of Company common stock | (914) | (1,026) | (727) |
Cash dividends paid | (258) | (211) | (145) |
Dividends paid to noncontrolling interest | (68) | (43) | (23) |
Issuance of notes, net of issuance costs | 0 | 1,481 | 415 |
Proceeds from term loan | 500 | 0 | 0 |
Payment of term loan | 300 | 0 | 0 |
Debt extinguishment costs | 0 | (160) | (5) |
Proceeds from the exercise of stock options | 1 | 5 | 26 |
Employee withholding taxes paid on stock-based compensation | (17) | (15) | (25) |
Payment of debt | (10) | (3) | (2) |
Net cash for financing activities | (1,066) | (1,298) | (886) |
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES: | |||
Capital expenditures | (224) | (128) | (114) |
Acquisition of businesses, net of cash acquired | 0 | (57) | (227) |
Proceeds from disposition of: | |||
Businesses, net of cash disposed | 0 | 5 | 870 |
Property and equipment | 1 | 0 | 1 |
Financial investments | 1 | 171 | 3 |
Other, net | (8) | (3) | (2) |
Net cash (for) from investing activities | (230) | (12) | 531 |
Effect of exchange rate changes on cash and cash investments | (18) | (20) | 31 |
CASH AND CASH INVESTMENTS: | |||
(Decrease) increase for the year | (474) | (400) | 629 |
At January 1 | 926 | 1,326 | 697 |
At December 31 | $ 452 | $ 926 | $ 1,326 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Millions | Total | Common Shares ($1 par value) | Paid-In Capital | Retained (Deficit) Earnings | Accumulated Other Comprehensive (Loss) Income | Noncontrolling Interest |
Beginning balance at Dec. 31, 2019 | $ (57) | $ 276 | $ 0 | $ (333) | $ (179) | $ 179 |
Increase (Decrease) in Stockholders' Equity | ||||||
Total comprehensive income | 1,331 | 1,224 | 37 | 70 | ||
Shares issued | 14 | 2 | 12 | |||
Shares retired: | ||||||
Repurchased | (727) | (19) | (53) | (655) | ||
Surrendered (non-cash) | (14) | (1) | (13) | |||
Cash dividends declared | (144) | (144) | ||||
Dividends declared to noncontrolling interest | (23) | (23) | ||||
Redeemable noncontrolling interest - redemption adjustment | 0 | |||||
Stock-based compensation | 41 | 41 | ||||
Ending balance at Dec. 31, 2020 | 421 | 258 | 0 | 79 | (142) | 226 |
Increase (Decrease) in Stockholders' Equity | ||||||
Total comprehensive income | 837 | |||||
Total comprehensive income (loss) | 836 | 410 | 374 | 52 | ||
Shares issued | 3 | 1 | 2 | |||
Shares retired: | ||||||
Repurchased | (1,026) | (18) | (57) | (951) | ||
Surrendered (non-cash) | (13) | (13) | ||||
Cash dividends declared | (175) | (175) | ||||
Dividends declared to noncontrolling interest | (43) | (43) | ||||
Redeemable noncontrolling interest - redemption adjustment | (2) | (2) | ||||
Stock-based compensation | 55 | 55 | ||||
Ending balance at Dec. 31, 2021 | 56 | 241 | 0 | (652) | 232 | 235 |
Increase (Decrease) in Stockholders' Equity | ||||||
Total comprehensive income | 899 | |||||
Total comprehensive income (loss) | 900 | 844 | (6) | 62 | ||
Shares issued | 1 | 1 | ||||
Shares retired: | ||||||
Repurchased | (914) | (17) | (32) | (865) | ||
Surrendered (non-cash) | (17) | (17) | ||||
Cash dividends declared | (259) | (259) | ||||
Dividends declared to noncontrolling interest | (79) | (79) | ||||
Redeemable noncontrolling interest - redemption adjustment | 2 | 2 | ||||
Stock-based compensation | 48 | 48 | ||||
Ending balance at Dec. 31, 2022 | $ (262) | $ 225 | $ 16 | $ (947) | $ 226 | $ 218 |
CONSOLIDATED STATEMENTS OF SH_2
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Statement of Stockholders' Equity [Abstract] | |||
Common shares, par value (in dollars per share) | $ 1 | $ 1 | $ 1 |
ACCOUNTING POLICIES
ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
ACCOUNTING POLICIES | ACCOUNTING POLICIES Principles of Consolidation. The consolidated financial statements include the accounts of Masco Corporation and all majority-owned subsidiaries. All significant intercompany transactions have been eliminated. We consolidate the assets, liabilities and results of operations of variable interest entities for which we are the primary beneficiary. Use of Estimates and Assumptions in the Preparation of Financial Statements. The preparation of financial statements in conformity with accounting principles generally accepted ("GAAP") in the United States of America requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of any contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates and assumptions. Revenue Recognition. We recognize revenue as control of our products is transferred to our customers, which is generally at the time of shipment or upon delivery based on the contractual terms with our customers. Our customers' payment terms generally range from 30 to 65 days. We provide customer programs and incentive offerings, including special pricing and co-operative advertising arrangements, promotions and other volume-based incentives. These customer programs and incentives are considered variable consideration. We include in revenue variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the variable consideration is resolved. This determination is made based upon known customer program and incentive offerings at the time of sale and expected sales volume for ecasts as it relates to our volume-based incentives. This determination is updated each reporting period. Certain product sales include a right of return. We estimate future product returns at the time of sale based on historical experience and record a corresponding refund liability. We additionally record an asset, based on historical experience, for the amount of product we expect to return to inventory as a result of the return, which is recorded in prepaid expenses and other in the consolidated balance sheets. We consider shipping and handling activities performed by us as activities to fulfill the sales of our products. Amounts billed for shipping and handling are included in net sales, while costs incurred for shipping and handling are included in cost of sales. We capitalize incremental costs of obtaining a contract and expense the costs on a straight-line basis over the contractual period if the cost is recoverable, the cost would not have been incurred without the contract and the term of the contract is greater than one year; otherwise, we expense the amounts as incurred. We do not adjust the promised amount of consideration for the effects of a financing component if the period between when we transfer our products or services and when our customers pay for our products or services is expected to be one year or less. Customer Displays. In-store displays that are owned by us and used to market our products are included in other assets in the consolidated balance sheets and are amortized using the straight-line method over the expected useful life of three Foreign Currency. The financial statements of our foreign subsidiaries are measured using the local currency as the functional currency. Assets and liabilities of these subsidiaries are translated at exchange rates as of the balance sheet dates. Revenues and expenses are translated at average exchange rates in effect during the year. The resulting cumulative translation adjustments have been recorded in accumulated other comprehensive income in the consolidated balance sheets. Realized foreign currency transaction gains and losses are included in other income (expense), net in the consolidated statements of operations. Cash and Cash Investments. We consider all highly liquid investments with an initial maturity of three months or less to be cash and cash investments. A. ACCOUNTING POLICIES (Continued) Receivables. We do business with home center retailers, wholesalers and a number of other customers. We monitor our exposure for credit losses on customer receivable balances and other financial investments measured at amortized cost and the credit worthiness of 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 credit losses for estimated losses resulting from the inability of our customers to fulfill their required payment obligation to us. Allowances are estimated 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. A separate allowance is recorded for customer incentive rebates and is generally based upon sales activity. Receivables are presented net of certain allowances (including allowances for credit losses) of $53 million and $67 million at December 31, 2022 and 2021, respectively. Our receivables balances are generally due in less than one year. Property and Equipment. Property and equipment, including significant improvements to existing facilities, are recorded at cost. Upon retirement or disposal, the cost and accumulated depreciation are removed from the accounts and any gain or loss is included in the consolidated statements of operations. Maintenance and repair costs are charged against earnings as incurred. We review our property and equipment as events occur or circumstances change that would more likely than not reduce the fair value of the property and equipment below its carrying amount. If the carrying amount of property and equipment is not recoverable from its undiscounted cash flows, then we would recognize an impairment loss for the difference between the carrying amount and the current fair value. Further, we evaluate the remaining useful lives of property and equipment at each reporting period to determine whether events and circumstances warrant a revision to the remaining depreciation periods. Depreciation. Depreciation expense is computed principally using the straight-line method over the estimated useful lives of the assets. Annual depreciation rates are as follows: buildings and land improvements, 2 to 10 percent, computer hardware and software, 17 to 33 percent, and machinery and equipment, 5 to 33 percent. Depreciation expense, including discontinued operations, was $112 million in 2022, $111 million in 2021 and $105 million in 2020. Leases. We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use assets (“ROU assets”), accrued liabilities and noncurrent operating lease liabilities on our consolidated balance sheet. Finance lease ROU assets are included in property and equipment, net, notes payable, and long-term debt on our consolidated balance sheets. ROU assets represent our right to use an underlying asset for the duration of the lease term while lease liabilities represent our obligation to make lease payments in exchange for the right to use an underlying asset. ROU assets and lease liabilities are measured based on the present value of fixed lease payments over the lease term at the commencement date. The ROU asset also includes any lease payments made prior to the commencement date and initial direct costs incurred, and is reduced by any lease incentives received. We review our ROU assets as events occur or circumstances change that would indicate the carrying amount of the ROU assets are not recoverable and exceed their fair values. If the carrying amount of the ROU asset is not recoverable from its undiscounted cash flows, then we would recognize an impairment loss for the difference between the carrying amount and the current fair value. As most of our leases do not provide an implicit discount rate, we generally use our incremental borrowing rate on the commencement date of the lease as the discount rate in determining the present value of future lease payments. We determine the incremental borrowing rate for each lease by using the current yields of our uncollateralized, publicly traded debts with maturity periods similar to the respective lease term or a comparable market alternative, adjusted to a collateralized basis based on third-party data. Our lease terms may include options to extend or terminate the lease when there are relevant economic incentives present that make it reasonably certain that we will exercise that option. We account for any non-lease components separately from lease components. A. ACCOUNTING POLICIES (Continued) For operating leases, lease expense for future fixed lease payments is recognized on a straight-line basis over the lease term. For finance leases, lease expense for future fixed lease payments is recognized using the effective interest rate method over the lease term. Variable lease payments are recognized as lease expense in the period incurred. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets; we recognize lease expense for these leases on a straight-line basis over the lease term. Goodwill and Other Intangible Assets. We perform our annual impairment testing of goodwill in the fourth quarter of each year, or as events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. We have defined our reporting units and completed the impairment testing of goodwill at the operating segment level. Our operating segments are reporting units that engage in business activities, for which discrete financial information, including five-year forecasts, is available. We compare the fair value of the reporting units to the carrying value of the reporting units for goodwill impairment testing. Fair value is determined using a discounted cash flow method, which includes significant unobservable inputs (Level 3 inputs), and requires us to make significant estimates and assumptions, including long-term projections of cash flows, market conditions and appropriate discount rates. Our judgments are based upon historical experience, current market trends, consultations with external valuation specialists and other information. In estimating future cash flows, we rely on internally generated five-year forecasts for sales and operating profits, and, currently, a two percent to three percent long-term assumed annual growth rate of cash flows for periods after the five-year forecast. For 2022, we utilized a weighted average cost of capital of approximately 8.75 percent as the basis to determine the discount rate to apply to the estimated future cash flows. Based upon our assessment of the risks impacting each of our businesses, we applied a risk premium to increase the discount rate to a range of 10.25 percent to 12.75 percent for our reporting units. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized to the extent that a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill in that reporting unit. We review our other indefinite-lived intangible assets for impairment annually in the fourth quarter, or as events occur or circumstances change that indicate the assets may be impaired without regard to the business unit. Potential impairment is identified by comparing the fair value of an other indefinite-lived intangible asset to its carrying value. We utilize a relief-from-royalty model to estimate the fair value of other indefinite-lived intangible assets. We consider the implications of both external (e.g., market growth, competition and local economic conditions) and internal (e.g., product sales and expected product growth) factors and their potential impact on cash flows related to the intangible asset in both the near- and long-term. We also consider the profitability of the business, among other factors, to determine the royalty rate for use in the impairment assessment. We utilize our weighted average cost of capital of approximately 8.75 percent as the basis to determine the discount rate to apply to the estimated future cash flows. In 2022, based upon our assessment of the risks impacting each of our businesses and the nature of the other indefinite-lived intangible asset (i.e., trade name), we applied a risk premium to increase the discount rate to a range of 11.25 percent to 13.75 percent for our other indefinite-lived intangible assets. While we believe that the estimates and assumptions underlying the valuation methodologies are reasonable, different estimates and assumptions could result in different outcomes. Intangible assets with finite useful lives are amortized using the straight-line method over their estimated useful lives. We review our intangible assets with finite useful lives as events occur or circumstances change that would more likely than not reduce the fair value of the assets below its carrying amount. If the carrying amount of the assets is not recoverable from the undiscounted cash flows, then we would recognize an impairment loss for the difference between the carrying amount and the current fair value. We evaluate the remaining useful lives of amortizable intangible assets at each reporting period to determine whether events or circumstances warrant a revision to the remaining periods of amortization. Refer to Note H for additional information regarding goodwill and other intangible assets. A. ACCOUNTING POLICIES (Continued) Acquisitions. We allocate the purchase price of an acquired business to its identifiable assets and liabilities based on estimated fair values. The excess of the purchase price over the amount allocated to the assets and liabilities, if any, is recorded as goodwill. In addition, any contingent consideration is fair valued as of the date of the acquisition and is recorded as part of the purchase price. This estimate is updated in future periods and any changes in the estimate, which are not considered an adjustment to the purchase price, are recorded in our consolidated statements of operations. We use all available information to estimate fair values. We typically engage external valuation specialists to assist in the fair value determination of identifiable intangible assets and any other significant assets or liabilities. We adjust the preliminary purchase price allocation, as necessary, up to one year after the acquisition closing date as we obtain more information regarding assets acquired and liabilities assumed based on facts and circumstances that existed as of the acquisition date. Our purchase price allocation methodology contains uncertainties because it requires us to make assumptions and to apply judgment to estimate the fair value of acquired assets and assumed liabilities. We estimate the fair value of assets and liabilities based upon the carrying value of the acquired assets and assumed liabilities and widely accepted valuation techniques, including discounted cash flows. Unanticipated events or circumstances may occur which could affect the accuracy of our fair value estimates, including assumptions regarding industry economic factors and business strategies. Other estimates used in determining fair value include, but are not limited to, future cash flows or income related to intangibles, market rate assumptions and appropriate discount rates. Our estimates of fair value are based upon assumptions believed to be reasonable, but that are inherently uncertain, and therefore, may not be realized. Accordingly, there can be no assurance that the estimates, assumptions, and values reflected in the valuations will be realized, and actual results could vary materially. Refer to Note B for additional information regarding acquisitions. Fair Value of Financial Instruments. We use derivative financial instruments to manage certain exposure to fluctuations in earnings and cash flows resulting from changes in foreign currency exchange rates, and occasionally from interest rate exposures. Derivative financial instruments are recorded in the consolidated balance sheets as either an asset or liability measured at fair value, netted by counterparty, where the right of offset exists. The gain or loss is recognized in determining current earnings during the period of the change in fair value. We currently do not have any derivative instruments for which we have designated hedge accounting. Refer to Note I for additional information regarding fair value of financial instruments. Warranty. We offer limited warranties on certain products with warranty periods lasting up to the lifetime of the product to the original consumer purchaser. At the time of sale, we accrue a warranty liability for the estimated future cost to provide products, parts or services to repair or replace products, or refunds to satisfy our warranty obligations. Our estimate of future costs to service our warranty obligations is based upon the information available and includes a number of factors, such as the warranty coverage, the warranty period, historical experience specific to the nature, frequency and average cost to service the claim, along with industry and demographic trends. Certain factors and related assumptions in determining our warranty liability involve judgments and estimates and are sensitive to changes in the factors described above. We believe that the warranty accrual is appropriate; however, actual claims incurred could differ from our original estimates which would require us to adjust our previously established accruals. Refer to Note U for additional information on our warranty accrual. A significant portion of our business is at the consumer retail level through home center retailers and other major retailers. A consumer may return a product to a retail outlet that is a warranty return. However, certain retail outlets do not distinguish between warranty and other types of returns when they claim a return deduction from us. Our revenue recognition policy takes into account this type of return when recognizing revenue, and an estimate of these amounts is recorded as a deduction to net sales at the time of sale. A. ACCOUNTING POLICIES (Continued) Insurance Reserves. We provide for expenses associated with workers' compensation and product liability obligations when such amounts are probable and can be reasonably estimated. The accruals are adjusted as new information develops or circumstances change that would affect the estimated liability. Any obligations expected to be settled within 12 months are recorded in accrued liabilities; all other obligations are recorded in other liabilities. Litigation. We are involved in claims and litigation, including class actions, mass torts and regulatory proceedings, which arise in the ordinary course of our business. Liabilities and costs associated with these matters require estimates and judgments based upon our professional knowledge and experience and that of our legal counsel. When a liability is probable of being incurred and our exposure in these matters is reasonably estimable, amounts are recorded as charges to earnings. The ultimate resolution of these exposures may differ due to subsequent developments. 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 restricted stock units ("RSUs"), performance restricted stock units ("PRSUs"), stock options, long-term stock awards and phantom stock awards. We measure compensation expense for RSUs and long-term stock awards at the market price of our common stock at the grant date. We measure compensation expense for PRSUs at the expected payout of the awards. We measure compensation expense for stock options using a Black-Scholes option pricing model. We recognize forfeitures related to RSUs, PRSUs, stock options and long-term stock awards as they occur. We initially measure compensation expense for phantom stock awards at the market price of our common stock at the grant date. Phantom stock awards are linked to the value of our common stock on the date of grant and are settled in cash upon vesting. We account for phantom stock awards as liability-based awards; the liability is remeasured and adjusted at the end of each reporting period until the awards are fully-vested and paid to the employees. In December 2019, our Compensation and Talent 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 RSUs, stock options 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. For prior year grants, expense was recognized ratably over the shorter of the vesting period of the long-term stock awards, stock options and phantom stock awards, typically five years, or the length of time until the grantee became retirement-eligible, generally at age 65. Expense for PRSUs is recognized ratably over the three-year vesting period of the units. Refer to Note M for additional information on stock-based compensation. Noncontrolling Interest. We owned 68 percent of Hansgrohe SE at both December 31, 2022 and 2021. The aggregate noncontrolling interest, net of dividends, at December 31, 2022 and 2021 has been recorded as a component of equity on our consolidated balance sheets. Discontinued Operations. We report financial results for discontinued operations separately from continuing operations to distinguish the financial impact of disposal transactions from ongoing operations. Discontinued operations reporting occurs only when the disposal of a component or a group of components represents a strategic shift that will have a major effect on our operations and financial results. In our consolidated statements of cash flows, the cash flow from discontinued operations are not separately classified. Refer to Note C for further information regarding our discontinued operations. A. ACCOUNTING POLICIES (Concluded) Income Taxes. We record deferred taxes on the future tax consequences of differences between the financial statement carrying value of our assets and liabilities and their respective tax basis. The realization of deferred tax assets depends on sufficient sources of taxable income in future periods. If, based upon all available evidence, both positive and negative, it is more likely than not our deferred tax assets will not be realized, a valuation allowance is recorded. We only recognize the tax benefits from income tax positions that have a greater than 50 percent likelihood of being sustained upon examination by the taxing authorities. A liability is recorded for uncertain tax positions where it is more likely than not the position may not be sustained based on its technical merits. We record interest and penalties on our uncertain tax positions in income tax expense. We record the tax effects of Global Intangible Low-taxed Income related to our foreign operations, if applicable, as a component of income tax expense in the period the tax arises. We allocate our provision for income taxes between continuing operations and other categories of earnings. Adjustments to deferred taxes originally recorded to other comprehensive income (loss) may reverse in a different category of earnings, such as continuing operations, resulting in a disproportionate tax effect within accumulated other comprehensive income. Generally, a disproportionate tax effect will be eliminated and recognized in income tax expense when the circumstances upon which it is premised cease to exist. The disproportionate tax effects related to our various qualified domestic defined-benefit pension plans were eliminated from accumulated other comprehensive income at the termination of the related pension plans in 2021. The disproportionate tax effect relating to our interest rate swap hedge, which was terminated in 2012, was eliminated from accumulated other comprehensive income upon the early retirement of the related debt in March 2021. Recently Adopted Accounting Pronouncements. In August 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” ASU 2020-06 simplifies the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. We adopted this standard for annual periods beginning January 1, 2022. The adoption of this new standard did not impact our financial position or results of operations. In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Acquired Contract Assets and Contract Liabilities from Contracts with Customers.” ASU 2021-08 requires contract assets and contract liabilities acquired in a business combination to be recognized in accordance with Topic 606 as if the acquirer had originated the contracts. We adopted this standard for annual periods beginning January 1, 2022. The adoption of this new standard did not impact our financial position or results of operations. Recently Issued Accounting Pronouncements. In September 2022, the FASB issued ASU 2022-04, "Liabilities – Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations,” which requires that an entity that uses a supplier finance program in connection with the purchase of goods or services disclose information about the program’s nature, activity during the period, changes from period to period, and potential magnitude. ASU 2022-04 is effective for annual periods on a retrospective basis, including interim periods within those annual periods, beginning January 1, 2023, except for the amendment on rollforward information, which is effective prospectively for annual periods beginning January 1, 2024. The adoption of this guidance will modify our disclosures, but will not have a material impact on our financial statements. |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
ACQUISITIONS | ACQUISITIONS In the third quarter of 2021, we acquired all of the share capital of Steamist, Inc. ("Steamist") for approximately $56 million in cash. Steamist is a manufacturer of residential steam bath products that are complementary to many of our plumbing products. This business is included in our Plumbing Products segment. In connection with this acquisition, we recognized $31 million of definite-lived intangible assets, primarily related to customer relationships. The definite-lived intangible assets are being amortized on a straight-line basis over a weighted average amortization period of 11 years. We also recognized $29 million of goodwill, which is not tax deductible, and is related primarily to the expected synergies from combining the operations into our business. Working capital and other adjustments were finalized with the seller in the fourth quarter of 2021, resulting in no significant changes. In the first quarter of 2021, our Hansgrohe SE subsidiary acquired a 75.1 percent equity interest in Easy Sanitary Solutions B.V. ("ESS"), for approximately €47 million ($58 million), including $52 million of cash and $6 million of debt that will be paid out over two years less any pending or settled indemnity matters. The cash payment was made to a third-party notary on December 29, 2020 for the acquisition of this equity interest in advance of the transaction closing on January 4, 2021. ESS is a manufacturer of shower channel drains that offers a wide range of products for barrier-free showering and bathroom wall niches. This business is included in our Plumbing Products segment. In connection with this acquisition, we recognized $32 million of definite-lived intangible assets, primarily related to customer relationships. The definite-lived intangible assets are being amortized on a straight-line basis over a weighted average amortization period of 10 years. We also recognized $35 million of goodwill, which is not tax deductible, and is related primarily to the expected synergies from combining the operations into our business. Working capital and other adjustments were finalized with the seller in the fourth quarter of 2021, resulting in no significant changes. The remaining 24.9 percent equity interest in ESS is subject to a call and put option that is exercisable by Hansgrohe SE or the sellers, respectively, any time after December 31, 2023. The redemption value of the call and put option is the same and based on a floating EBITDA value. The call and put options were determined to be embedded within the redeemable noncontrolling interest and were recorded as temporary equity in the consolidated balance sheets. We elected to adjust the redeemable noncontrolling interest to its full redemption amount directly into retained deficit. In the fourth quarter of 2020, we acquired substantially all of the net assets of Kraus USA Inc. ("Kraus"), a designer and distributor of sinks, faucets and accessories for the kitchen and bathroom, for approximately $103 million and an additional cash payment of up to $50 million to be paid in 2023, contingent upon the achievement of certain financial performance metrics for the year ending December 31, 2022. As of the closing date of the acquisition, the contingent consideration was assigned a fair value of approximately $8 million. Refer to Note I for additional information regarding the measurement of the contingent consideration liability. This business expands our product offerings to our customers and our online presence under the Kraus brand. This business is included in our Plumbing Products segment. In connection with this acquisition, we recognized $25 million of indefinite-lived intangible assets, which is related to trademarks, and $49 million of definite-lived intangible assets, primarily related to customer relationships. The definite-lived intangible assets are being amortized on a straight-line basis over a weighted average amortization period of 10 years. We also recognized $20 million of goodwill, which is generally tax deductible, and is related primarily to the expected synergies from combining the operations into our business. During the first quarter of 2021, we revised the allocation of the purchase price to certain identifiable assets and liabilities based on analysis of information as of the acquisition date, which resulted in a $1 million decrease to goodwill. The working capital adjustments were finalized with the seller in the second quarter of 2021, resulting in no significant changes. B. ACQUISITIONS (Concluded) In the fourth quarter of 2020, we acquired substantially all of the net assets of Work Tools International Inc. and Elder & Jenks, LLC (collectively, "Work Tools") for approximately $53 million, including $48 million of cash and $5 million of debt that was paid out in 18 months less any pending or settled indemnity matters. Work Tools expands our product offering to our customers as it is a leading manufacturer of high-quality precision painting tools and accessories including brushes, rollers and mini rollers for DIY and professionals. This business is included in our Decorative Architectural Products segment. In connection with this acquisition, we recognized $7 million of indefinite-lived intangible assets, which is related to trademarks, and $27 million of definite-lived intangible assets, primarily related to customer relationships. The definite-lived intangible assets are being amortized on a straight-line basis over a weighted average amortization period of 12 years. We also recognized $7 million of goodwill, which is generally tax deductible, and is related primarily to the expected synergies from combining the operations into our business. The working capital adjustments were finalized with the seller in the first quarter of 2021, resulting in no significant changes. 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 showerheads, hand showers, spouts and shower jets. This business is included in our Plumbing Products segment. In connection with this acquisition, we 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. We also recognized $14 million of goodwill, which is not tax deductible, and is related primarily to the expected synergies from combining the operations into our business. |
DIVESTITURES
DIVESTITURES | 12 Months Ended |
Dec. 31, 2022 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DIVESTITURES | DIVESTITURES On May 31, 2021, we completed the divestiture of our Hüppe GmbH ("Hüppe") business, a manufacturer of shower enclosures and shower trays. In connection with the divestiture, we recognized a loss of $18 million for the year ended December 31, 2021, which is included in other, net in our consolidated statement of operations. This loss resulted primarily from the recognition of $23 million of currency translation losses that were previously included within accumulated other comprehensive income. During the first quarter of 2022, we recorded a $2 million pre-tax post-closing gain related to the finalization of working capital items in other, net in our consolidated statement of operations. The sale of Hüppe did not represent a strategic shift that will have a major effect on our operations and financial results and therefore was not presented as discontinued operations. Prior to the divestiture, the results of the business were included in our Plumbing Products segment. On November 6, 2019, we completed the divestiture of our Milgard Windows and Doors business ("Milgard"), a manufacturer and distributor of windows and doors for proceeds of approximately $720 million, net of cash disposed. During the second quarter of 2020, a $17 million pre-tax post-closing adjustment related to the finalization of working capital items was recorded to income from discontinued operations, net in the consolidated statement of operations, as a gain on the divestiture of Milgard. As of December 31, 2020, we received $17 million in cash, which was presented in investing activities on the consolidated statement of cash flow as proceeds from disposition of businesses, net of cash disposed. All post-closing adjustments related to our divestiture of Milgard were finalized with the buyer in the second quarter of 2020. 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 ACProducts Holding, Inc., a holding company of the buyer; refer to Note R for additional information. The working capital adjustment was finalized with the buyer in the second quarter of 2020, resulting in no significant changes to net proceeds. In connection with the sale, we recognized a gain on the divestiture of $585 million for the year ended December 31, 2020, which was included in income from discontinued operations, net in the consolidated statement of operations. 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. C. DIVESTITURES (Concluded) As the sale of Milgard and 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 all periods presented. 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 Milgard recorded in income from discontinued operations before income tax was income of $2 million for the year ended December 31, 2020. The results of Cabinetry recorded in income from discontinued operations before income tax was a loss of $7 million for the year ended December 31, 2020. The major classes of line items constituting income from discontinued operations, net, in millions: Year Ended December 31, 2022 2021 2020 Net sales $ — $ — $ 101 Cost of sales — — 78 Gross profit — — 23 Selling, general and administrative expenses — — 28 Loss from discontinued operations — — (5) Gain on disposal of discontinued operations, net — — 602 Income before income tax — — 597 Income tax expense — — (183) Income from discontinued operations, net $ — $ — $ 414 |
REVENUE
REVENUE | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE Our revenues are derived from sales to customers in North America and Internationally, principally Europe. Net sales from these geographic markets, by segment, were as follows, in millions: Year Ended December 31, 2022 Plumbing Products Decorative Architectural Products Total Primary geographic markets: North America $ 3,550 $ 3,428 $ 6,978 International, principally Europe 1,702 — 1,702 Total $ 5,252 $ 3,428 $ 8,680 Year Ended December 31, 2021 Plumbing Products Decorative Architectural Products Total Primary geographic markets: North America $ 3,384 $ 3,240 $ 6,624 International, principally Europe 1,751 — 1,751 Total $ 5,135 $ 3,240 $ 8,375 D. REVENUE (Concluded) Year Ended December 31, 2020 Plumbing Products Decorative Architectural Products Total Primary geographic markets: North America $ 2,753 $ 3,052 $ 5,805 International, principally Europe 1,383 — 1,383 Total $ 4,136 $ 3,052 $ 7,188 We recognized increases t o revenue o f $20 million, $9 million, and $7 million in 2022, 2021, and 2020, respectively, for variable consideration related to performance obligations settled in previous periods. We record contract assets for items for which we have satisfied our performance obligation but our receipt of payment is contingent upon delivery or other circumstances other than the passage of time. Our contract assets are recorded in prepaid expenses and other in our consolidated balance sheets. Our contract assets generally become unconditional and are reclassified to receivables in the quarter subsequent to each balance sheet date. Our contract asset balance was $1 million at both December 31, 2022 and 2021. We record contract liabilities primarily for deferred revenue. Our contract liabilities are recorded in accrued liabilities in our consolidated balance sheets. Our contract liabilities are generally recognized to net sales in the immediately subsequent reporting period. Our contract liability balance was $61 million and $67 million at December 31, 2022 and 2021, respectively. Changes in the allowance for credit losses deducted from accounts receivable were as follows, in millions: Year Ended December 31, 2022 2021 Balance at January 1 $ 6 $ 7 Provision for expected credit losses during the period 5 1 Write-offs charged against the allowance (4) (2) Recoveries of amounts previously written off 1 1 Other (A) — (1) Balance at end of year $ 8 $ 6 ______________________________ (A) As a result of Hüppe being divested in May 2021, $1 million for the year ended December 31, 2021 was removed from allowance for credit losses. |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2022 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES The components of inventory were as follows, in millions: At December 31, 2022 2021 Finished goods $ 715 $ 702 Raw materials 408 383 Work in process 113 131 Total $ 1,236 $ 1,216 Inventories, which include purchased parts, materials, direct labor and applied overhead, are stated at the lower of cost or net realizable value, with cost determined primarily by use of the first-in, first-out method, and to a lesser extent the average cost method. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
LEASES | LEASES We have operating and finance leases primarily for corporate offices, manufacturing facilities, warehouses, vehicles, and equipment. Our leases have remaining lease terms up to 20 years, some of which may include one or more renewal options with terms to extend the lease for up to an additional 15 years, and some of which may include options to terminate the leases prior to their expiration. The components of lease cost included in income from continuing operations were as follows, in millions: Year Ended December 31, 2022 2021 2020 Operating lease cost $ 56 $ 48 $ 47 Short-term lease cost 10 8 7 Variable lease cost 5 4 3 Finance lease cost: Amortization of right-of-use assets 3 3 3 Interest on lease liabilities 1 1 1 Supplemental cash flow information related to leases was as follows, in millions: Year Ended December 31, 2022 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 47 $ 47 $ 47 Operating cash flows for finance leases 1 1 1 Financing cash flows for finance leases 2 2 2 ROU assets obtained in exchange for new lease obligations: Operating leases (A) 126 67 27 Finance leases — — — ______________________________ (A) Includes $2 million of ROU assets obtained in exchange for new lease obligations related to the acquisitions of ESS and Steamist in 2021. Includes $9 million of ROU assets obtained in exchange for new lease obligations related to the acquisitions of Kraus and Work Tools in the fourth quarter of 2020. F. LEASES (Concluded) Certain other information related to leases was as follows: At December 31, 2022 2021 2020 Weighted-average remaining lease term: Operating leases 10 years 9 years 10 years Finance leases 9 years 9 years 10 years Weighted-average discount rate: Operating leases 4.8 % 4.0 % 4.4 % Finance leases 3.3 % 3.3 % 3.3 % Supplemental balance sheet information related to leases was as follows, in millions: At December 31, 2022 2021 Operating Leases Finance Leases Operating Leases Finance Leases Property and equipment, net $ — $ 21 $ — $ 24 Notes payable — 3 — 3 Accrued liabilities 39 — 38 — Long-term debt — 20 — 23 Gross ROU assets under finance leases recorded within property and equipment, net At December 31, 2022, future maturities of lease liabilities were as follows, in millions: Operating Leases Finance Leases Year ending December 31, 2023 $ 50 $ 3 2024 47 3 2025 42 3 2026 38 3 2027 30 3 Thereafter 174 11 Total lease payments 381 26 Less: imputed interest (87) (3) Total $ 294 $ 23 |
LEASES | LEASES We have operating and finance leases primarily for corporate offices, manufacturing facilities, warehouses, vehicles, and equipment. Our leases have remaining lease terms up to 20 years, some of which may include one or more renewal options with terms to extend the lease for up to an additional 15 years, and some of which may include options to terminate the leases prior to their expiration. The components of lease cost included in income from continuing operations were as follows, in millions: Year Ended December 31, 2022 2021 2020 Operating lease cost $ 56 $ 48 $ 47 Short-term lease cost 10 8 7 Variable lease cost 5 4 3 Finance lease cost: Amortization of right-of-use assets 3 3 3 Interest on lease liabilities 1 1 1 Supplemental cash flow information related to leases was as follows, in millions: Year Ended December 31, 2022 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 47 $ 47 $ 47 Operating cash flows for finance leases 1 1 1 Financing cash flows for finance leases 2 2 2 ROU assets obtained in exchange for new lease obligations: Operating leases (A) 126 67 27 Finance leases — — — ______________________________ (A) Includes $2 million of ROU assets obtained in exchange for new lease obligations related to the acquisitions of ESS and Steamist in 2021. Includes $9 million of ROU assets obtained in exchange for new lease obligations related to the acquisitions of Kraus and Work Tools in the fourth quarter of 2020. F. LEASES (Concluded) Certain other information related to leases was as follows: At December 31, 2022 2021 2020 Weighted-average remaining lease term: Operating leases 10 years 9 years 10 years Finance leases 9 years 9 years 10 years Weighted-average discount rate: Operating leases 4.8 % 4.0 % 4.4 % Finance leases 3.3 % 3.3 % 3.3 % Supplemental balance sheet information related to leases was as follows, in millions: At December 31, 2022 2021 Operating Leases Finance Leases Operating Leases Finance Leases Property and equipment, net $ — $ 21 $ — $ 24 Notes payable — 3 — 3 Accrued liabilities 39 — 38 — Long-term debt — 20 — 23 Gross ROU assets under finance leases recorded within property and equipment, net At December 31, 2022, future maturities of lease liabilities were as follows, in millions: Operating Leases Finance Leases Year ending December 31, 2023 $ 50 $ 3 2024 47 3 2025 42 3 2026 38 3 2027 30 3 Thereafter 174 11 Total lease payments 381 26 Less: imputed interest (87) (3) Total $ 294 $ 23 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT The components of property and equipment, net were as follows, in millions: At December 31, 2022 2021 Land and improvements $ 67 $ 67 Buildings 579 514 Computer hardware and software 265 259 Machinery and equipment 1,255 1,199 2,166 2,039 Less: Accumulated depreciation (1,191) (1,143) Total $ 975 $ 896 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill at December 31, 2022, by segment, was as follows, in millions: Gross Goodwill At December 31, 2022 Accumulated Net Goodwill At December 31, 2022 Plumbing Products $ 611 $ (301) $ 310 Decorative Architectural Products 366 (139) 227 Total $ 977 $ (440) $ 537 The changes in the carrying amount of goodwill for years ended December 31, 2022 and 2021, by segment, were as follows, in millions: Gross Goodwill At December 31, 2021 Accumulated Net Goodwill At December 31, 2021 Acquisitions Pre-tax Other (B) Net Goodwill At December 31, 2022 Plumbing Products (A) $ 623 $ (301) $ 322 $ — $ — $ (12) $ 310 Decorative Architectural Products 366 (120) 246 — (19) — 227 Total $ 989 $ (421) $ 568 $ — $ (19) $ (12) $ 537 Gross Goodwill At December 31, 2020 Accumulated Net Goodwill At December 31, 2020 Acquisitions Pre-tax Other (B) Net Goodwill At December 31, 2021 Plumbing Products $ 613 $ (340) $ 273 $ 63 $ — $ (14) $ 322 Decorative Architectural Products 365 (75) 290 1 (45) — 246 Total $ 978 $ (415) $ 563 $ 64 $ (45) $ (14) $ 568 ______________________________ (A) As a result of Hüppe being divested in May 2021, both gross goodwill and accumulated impairment losses for the Plumbing Products segment were reduced by $39 million. (B) Other consists of the effect of foreign currency translation. H. GOODWILL AND OTHER INTANGIBLE ASSETS (Concluded) Other indefinite-lived intangible assets were $102 million and $109 million at December 31, 2022 and 2021, respectively, and principally included registered trademarks. We completed our annual impairment testing of goodwill and other indefinite-lived intangible assets in the fourth quarters of 2022, 2021 and 2020. We recognized a $19 million and $7 million non-cash impairment charge within our Decorative Architectural Products segment to goodwill and other indefinite-lived intangible assets, respectively, in the fourth quarter of 2022 due to competitive market conditions, higher inflationary costs and increased cost of capital in our lighting business. We recognized a $45 million non-cash goodwill impairment charge within our Decorative Architectural Products segment in the fourth quarter of 2021, due to competitive market conditions and higher inflationary costs in our lighting business. There was no impairment of goodwill for any of our reporting units or of our other indefinite-lived intangible assets in any of these years, other than as disclosed above. The carrying value of our definite-lived intangible assets wa s $248 million (net of accumulated amortization o f $94 million) at December 31, 2022 and $279 million (net of accumulated amortization of $75 million) at December 31, 2021 and principally included customer relationships with a weighted average amortization period of 15 years in both 2022 and 2021. Amortization expense, including discontinued operations, related to the definite-lived intangible assets wa s $29 million, $31 million and $24 million in 2022, 2021 and 2020, respectively. At December 31, 2022, amortization expense related to the definite-lived intangible assets during each of the next five years will be as follows: 2023 – $28 million; 2024 – $27 million; 2025 – $23 million, 2026 – $21 million and 2027 – $21 million. |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | FAIR VALUE OF FINANCIAL INSTRUMENTS Kraus Acquisition Contingent Consideration. As described in Note B, an additional cash payment of up to $50 million related to the Kraus acquisition was contingent upon the achievement of certain financial performance metrics for the year ended December 31, 2022. The measurement of the liability for contingent consideration was based on significant inputs that were not observable in the market, and were therefore classified as Level 3 inputs. Examples of utilized unobservable inputs were estimated future revenues and earnings of the acquired business and an applicable discount rate. The estimate of the liability fluctuated for changes in the forecast of the acquired business' future revenues and earnings, as a result of actual levels achieved, or in the discount rate used to determine the present value of contingent future cash flows. All subsequent remeasurements from the initial estimate at the time of acquisition were recorded in other, net in the consolidated statements of operations, as described in Note R. The financial performance metrics were not met and the fair value of the liability was nil as of December 31, 2022. The fair value of the liability was estimated to be $24 million as of December 31, 2021, using probability weighted discounted cash flows and a discount rate that reflected the uncertainty surrounding the expected outcomes, which we believe was appropriate and representative of a market participant assumption. 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 364-day term loan has an interest rate that resets monthly and the fair value of this instrument approximates the carrying value at December 31, 2022. The aggregate estimated market value of our short-term and long-term debt at December 31, 2022 was approximately $2.7 billion, compared with the aggregate carrying value of $3.2 billion. The aggregate estimated market value of our short-term and long-term debt at December 31, 2021 was approximately $3.2 billion, compared with the aggregate carrying value of $3.0 billion. |
OTHER ASSETS
OTHER ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
Other Assets, Noncurrent Disclosure [Abstract] | |
OTHER ASSETS | OTHER ASSETS The components of other assets were as follows, in millions: At December 31, 2022 2021 Deferred tax assets (Note S) $ 60 $ 57 Equity method investments 10 18 Other investments 12 7 Other 31 32 Total $ 113 $ 114 |
ACCRUED LIABILITIES
ACCRUED LIABILITIES | 12 Months Ended |
Dec. 31, 2022 | |
Accrued Liabilities, Current [Abstract] | |
ACCRUED LIABILITIES | ACCRUED LIABILITIES The components of accrued liabilities were as follows, in millions: At December 31, 2022 2021 Advertising and sales promotion $ 295 $ 297 Salaries, wages and commissions 136 195 Deferred revenue 61 67 Income taxes payable 48 34 Employee retirement plans 41 49 Operating lease liabilities (Note F) 39 38 Warranty (Note U) 34 31 Interest 30 29 Product returns 25 23 Insurance reserves 20 27 Property, payroll and other taxes 16 32 Other 62 62 Total $ 807 $ 884 |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT The carrying value of outstanding debt was as follows, in millions: At December 31, 2022 2021 Notes and debentures: 3.500%, due November 15, 2027 $ 300 $ 300 1.500%, due February 15, 2028 599 599 7.750%, due August 1, 2029 235 235 2.000%, due October 1, 2030 300 300 2.000%, due February 15, 2031 596 596 6.500%, due August 15, 2032 200 200 4.500%, due May 15, 2047 416 417 3.125%, due February 15, 2051 300 300 364-day term loan, due April 26, 2023 200 — Other 25 35 Prepaid debt issuance costs (20) (23) 3,151 2,959 Less: Current portion 205 10 Total long-term debt $ 2,946 $ 2,949 All of the notes and debentures above are senior indebtedness and, other than the 7.75% Notes due 2029, are redeemable at our option. At December 31, 2022, the debt maturities during each of the next five years were as follows: 2023 – $205 million; 2024 – $3 million; 2025 – $3 million; 2026 – $2 million and 2027 – $302 million. On April 26, 2022, we entered into a revolving credit agreement (the “2022 Credit Agreement”) with an aggregate commitment of $1.0 billion and a maturity date of April 26, 2027. Under the 2022 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 2022 Credit Agreement, our credit agreement dated March 13, 2019, as amended, with an aggregate commitment of $1.0 billion, was terminated. The 2022 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 the equivalent of $500 million. We can also borrow swingline loans up to $125 million and obtain letters of credit of up to $25 million. Outstanding letters of credit under the 2022 Credit Agreement reduce our borrowing capacity and we had no outstanding letters of credit at December 31, 2022. L. DEBT (Continued) Revolving credit loans denominated in U.S. dollars bear interest under the 2022 Credit Agreement at our option, at (A) SOFR rate for the interest period in effect for the borrowing, plus 0.1%, plus an applicable margin based upon our then-applicable corporate credit ratings; or (B) a rate per annum equal to the greatest of (i) the U.S. prime rate, (ii) the Federal Reserve Bank of New York effective rate plus 0.50% and (iii) the adjusted term SOFR rate for a one month interest period, plus 1.0%; plus an applicable margin based upon our then-applicable corporate credit ratings. Foreign currency revolving credit loans denominated in Canadian dollars bear interest at a rate per annum equal to the greater of (i) the rate equal to the PRIMCAN Index rate and (ii) the CDOR rate for a one month interest period, plus 1.0%; plus an applicable margin based upon our then-applicable corporate credit ratings. Foreign currency revolving credit loans denominated in British pounds sterling bear interest at a rate per annum equal to the Daily Simple SONIA, plus an applicable margin based upon our then-applicable corporate credit ratings. Foreign currency revolving credit loans denominated in European euros bear interest at the adjusted EURIBOR rate, plus an applicable margin based upon our then-applicable corporate credit ratings. The various benchmarks are subject to applicable floors. The 2022 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) an interest coverage ratio, as adjusted for certain items, not less than 2.5 to 1.0. In order for us to borrow under the 2022 Credit Agreement, there must not be any default in our covenants in the 2022 Credit Agreement (i.e., in addition to the two financial covenants described above, principally limitations on subsidiary debt, negative pledge restrictions, and requirements relating to legal compliance, maintenance of our properties and insurance) and our representations and warranties in the 2022 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, 2021, 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 December 31, 2022. As of the date of this report, $69 million was borrowed and outstanding at a weighted average interest rate of 5.800%. On April 26, 2022, we entered into a 364-day $500 million senior unsecured delayed draw term loan due April 26, 2023 with a syndicate of lenders. The senior unsecured term loan and commitments thereunder are subject to prepayment or termination at our option and the loans will bear interest at SOFR plus a spread adjustment and 0.70%. The covenants, including the financial covenants, are substantially the same as those in the 2022 Credit Agreement. We repaid $300 million during 2022. On March 4, 2021, we issued $600 million of 1.500% Notes due February 15, 2028, $600 million of 2.000% Notes due February 15, 2031 and $300 million of 3.125% Notes due February 15, 2051. We received proceeds of $1,495 million, net of discount, for the issuance of these Notes. The Notes are senior indebtedness and are redeemable at our option at the applicable redemption price. On March 22, 2021, proceeds from the debt issuances, together with cash on hand, were used to repay and early retire our $326 million 5.950% Notes due March 15, 2022, $500 million 4.450% Notes due April 1, 2025, and $500 million 4.375% Notes due April 1, 2026. In connection with these early retirements, we incurred a loss on debt extinguishment of $168 million for the year ended December 31, 2021, which was recorded as interest expense in the consolidated statement of operations. On September 18, 2020, we issued $300 million of 2.000% Notes due October 1, 2030 (the "2030 Notes") and received proceeds of $300 million, net of discount, for the issuance of the 2030 Notes. Also on September 18, 2020, we issued an incremental $100 million of our existing 4.500% Notes due May 15, 2047 (the "2047 Notes") and received proceeds of $119 million, including a premium, for the issuance of the 2047 Notes. The incremental $100 million formed a single series with the existing $300 million of 4.500% Notes due May 15, 2047. The 2030 Notes and 2047 Notes are senior indebtedness and are redeemable at our option at the applicable redemption price. On September 29, 2020, proceeds from the debt issuances were used to repay and early retire our $400 million 3.500% Notes due April 1, 2021. In connection with this early retirement, we incurred a loss on debt extinguishment of $6 million, which was recorded as interest expense in our consolidated statements of operations. L. DEBT (Concluded) Interest paid was $107 million , $114 million and $136 million in 2022, 2021 and 2020, respectively. These amounts exclude $160 million and $5 million of debt extinguishment costs related to the early retirement of debt, which were recorded as interest expense and paid in 2021 and 2020, respectively. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Our 2014 Long Term Stock Incentive Plan (the "2014 Plan") provides for the issuance of stock-based incentives in various forms to our employees and non-employee Directors. At December 31, 2022, outstanding stock-based incentives were in the form of restricted stock units, performance restricted stock units, stock options, long-term stock awards and phantom stock awards. Pre-tax compensation expense included in income from continuing operations for these stock-based incentives was as follows, in millions: Year Ended December 31, 2022 2021 2020 Restricted stock units $ 32 $ 28 $ 13 Performance restricted stock units 3 10 5 Stock options 7 7 7 Long-term stock awards 6 10 14 Phantom stock awards 1 6 4 Total $ 49 $ 61 $ 43 At December 31, 2022, 11.7 million shares of our common stock were available under the 2014 Plan for the granting of restricted stock units, performance restricted stock units, stock options and long-term stock awards. 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. Our restricted stock unit activity was as follows, units in thousands: Year Ended December 31, 2022 2021 2020 Number of Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value Unvested restricted stock units at January 1 934 $ 54 435 $ 47 — $ — Granted 621 59 670 57 446 47 Vested (351) 53 (142) 47 — — Forfeited (50) 54 (29) 54 (11) 48 Unvested restricted stock units at December 31 1,154 $ 57 934 $ 54 435 $ 47 At December 31, 2022, 2021, and 2020 there was $17 million, $15 million, and $7 million, respectively, of unrecognized compensation expense related to unvested restricted stock units; such units had a weighted average remaining vesting period of two years at December 31, 2022, 2021, and 2020. The total market value (at the vesting date) of restricted stock units which vested was $20 million and $8 million during 2022 and 2021, respectively. M. STOCK-BASED COMPENSATION (Continued) 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 return on invested capital performance goals, and beginning with the 2020 grant, an additional earning per share metric over a three During 2022, we granted approximately 92,000 performance restricted stock units with a grant date fair value of approximately $55 per share, approximately 168,000 performance restricted stock units were issued. No performance restricted stock units were forfeited. At December 31, 2022, there were approximately 255,000 shares vested but unissued. During 2021, we granted approximately 85,000 performance restricted stock units with a grant date fair value of approximately $53 per share, approximately 105,000 performance restricted stock units were issued and no performance restricted stock units were forfeited. At December 31, 2021, there were approximately 186,000 shares vested but unissued. During 2020, we granted approximately 133,000 performance restricted stock units with a grant date fair value of approximately $34 per share, approximately 152,000 performance restricted stock units were issued and approximately 11,000 performance restricted stock units were forfeited. At December 31, 2020, there were approximately 103,000 shares vested but unissued. 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 and the stock options expire no later than 10 years after the grant date. Our stock option activity was as follows, shares in thousands: Year Ended December 31, 2022 2021 2020 Number of Shares Weighted Average Exercise Price Number of Shares Weighted Average Exercise Price Number of Shares Weighted Average Exercise Price Outstanding stock options at January 1 2,692 $ 37 2,488 $ 33 3,006 $ 27 Granted 338 59 332 56 421 48 Exercised (32) 34 (128) 25 (878) 17 Forfeited (10) 37 — 11 (61) 40 Outstanding stock options at December 31 2,988 $ 39 2,692 $ 37 2,488 $ 33 Vested and expected to vest stock options at December 31 2,966 $ 39 2,617 $ 36 2,338 $ 33 Exercisable (vested) stock options at December 31 2,051 $ 34 1,606 $ 31 1,283 $ 28 The 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. The aggregate intrinsic value for options exercised during 2022, 2021 and 2020 was $1 million, $5 million and $29 million, respectively. The aggregate intrinsic value for options vested and expected to vest at December 31, 2022, 2021 and 2020 was $30 million, $89 million and $51 million, respectively. The aggregate intrinsic value for options exercisable (vested) at December 31, 2022, 2021 and 2020 was $28 million, $63 million and $35 million, respectively. The weighted-average remaining term for options outstanding was 5 years at December 31, 2022 and 6 years at both December 31, 2021 and 2020. The weighted-average remaining term for options vested and expected to vest was 5 years at December 31, 2022 and 6 years at both December 31, 2021 and 2020. The weighted-average remaining term for options exercisable (vested) was 4 years at December 31, 2022 and 5 years at both December 31, 2021 and 2020. M. STOCK-BASED COMPENSATION (Continued) At December 31, 2022, 2021 and 2020, there was $1 million, $4 million and $6 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 one year at December 31, 2022 and two years at both December 31, 2021 and 2020. 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: Year Ended December 31, 2022 2021 2020 Weighted average grant date fair value $ 14.66 $ 13.61 $ 10.67 Risk-free interest rate 1.90 % 0.75 % 1.53 % Dividend yield 1.89 % 1.67 % 1.14 % Volatility factor 29.00 % 30.00 % 24.00 % Expected option life 6 years 6 years 6 years The following table summarizes information for stock option shares outstanding and exercisable, shares in thousands: At December 31, 2022 Option Shares Outstanding Option Shares Exercisable Range of Number of Weighted Weighted Number of Weighted $ 17 - 21 191 1 $20 191 $20 $ 22 - 26 628 3 $24 628 $24 $ 27 - 36 786 5 $35 604 $35 $ 37 - 60 1,383 7 $51 628 $47 $ 17 - 60 2,988 5 $39 2,051 $34 Long-Term Stock Awards. Prior to the amendment of our 2014 Plan in December 2019, we granted long-term stock awards to our key employees and non-employee Directors. Our long-term stock award activity was as follows, shares in thousands: Year Ended December 31, 2022 2021 2020 Number of Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value Unvested stock award shares at January 1 608 $ 37 1,125 $ 36 1,910 $ 34 Vested (324) 37 (491) 34 (655) 32 Forfeited (11) 38 (26) 36 (130) 35 Unvested stock award shares at December 31 273 $ 38 608 $ 37 1,125 $ 36 At December 31, 2022, 2021 and 2020, there was $3 million, $10 million and $21 million, respectively, of total unrecognized compensation expense related to unvested stock awards; such awards had a weighted average remaining vesting period of one year at December 31, 2022 and two years at both December 31, 2021 and 2020. M. STOCK-BASED COMPENSATION (Concluded) The total market value (at the vesting date) of stock award shares which vested was $21 million, $28 million and $31 million during 2022, 2021 and 2020, respectively. Phantom Stock Awards. Certain non-U.S. employees are granted phantom stock awards. We recognized expense of $1 million, $6 million and $4 million in 2022, 2021 and 2020, respectively, related to phantom stock awards. In 2022, 2021 and 2020, we granted approximately 74,000, 82,000, and 83,000 shares, respectively, of phantom stock awards with an aggregate fair value of $4 million, $5 million and $3 million in 2022, 2021 and 2020, respectively, and paid cash of $4 million in 2022 and $3 million in both 2021 and 2020, to settle phantom stock awards. Information related to phantom stock awards was as follows, dollars in millions and shares in thousands: At December 31, 2022 2021 Accrued compensation cost liability $ 5 $ 8 Unrecognized compensation cost $ 2 $ 3 Equivalent common shares 149 169 |
EMPLOYEE RETIREMENT PLANS
EMPLOYEE RETIREMENT PLANS | 12 Months Ended |
Dec. 31, 2022 | |
Retirement Benefits [Abstract] | |
EMPLOYEE RETIREMENT PLANS | EMPLOYEE RETIREMENT PLANS Substantially all salaried employees participate in non-contributory defined-contribution retirement plans, to which payments are determined annually by the Compensation Committee. We also sponsor qualified defined-benefit and non-qualified defined-benefit pension plans covering certain employees and former employees. Pre-tax expense included in income from continuing operations related to our retirement plans was as follows, in millions: Year Ended December 31, 2022 2021 2020 Defined-contribution plans $ 39 $ 57 $ 46 Defined-benefit pension plans 12 435 38 $ 51 $ 492 $ 84 As of January 1, 2010, substantially all 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 a resolution to terminate our qualified domestic defined-benefit pension plans. In the second quarter of 2021, we settled these plans and made a final contribution of $101 million. The settlement loss included $447 million of pre-tax actuarial losses that were reclassified out of accumulated other comprehensive income for the year ended December 31, 2021. In the fourth quarter of 2021, we recognized a $7 million reduction in pension expense related to the reversion of excess pension plan assets for the settlement of such plans. N. EMPLOYEE RETIREMENT PLANS (Continued) Changes in the projected benefit obligation and fair value of plan assets, and the funded status of our defined-benefit pension plans were as follows, in millions: Year Ended December 31, 2022 2021 Qualified Non-Qualified Qualified Non-Qualified Changes in projected benefit obligation: Projected benefit obligation at January 1 $ 178 $ 148 $ 1,118 $ 162 Service cost 3 — 4 — Interest cost 2 3 15 4 Actuarial (gain), net (54) (27) (105) (6) Foreign currency exchange (11) — (16) — Benefit payments (3) (12) (230) (12) Divestitures — — (14) — Settlements — — (594) — Projected benefit obligation at December 31 $ 115 $ 112 $ 178 $ 148 Changes in fair value of plan assets: Fair value of plan assets at January 1 $ 99 $ — $ 863 $ — Actual return on plan assets (15) — (40) — Foreign currency exchange (6) — (7) — Company contributions 3 12 107 12 Benefit payments (3) (12) (230) (12) Settlements — — (594) — Fair value of plan assets at December 31 $ 78 $ — $ 99 $ — Funded status at December 31 $ (37) $ (112) $ (79) $ (148) Amounts in our consolidated balance sheets were as follows, in millions: At December 31, 2022 2021 Qualified Non-Qualified Qualified Non-Qualified Other assets $ 2 $ — $ 1 $ — Accrued liabilities — (12) — (12) Other liabilities (39) (100) (80) (136) Total net liability $ (37) $ (112) $ (79) $ (148) N. EMPLOYEE RETIREMENT PLANS (Continued) Unrealized loss included in accumulated other comprehensive income before income taxes was as follows, in millions: At December 31, 2022 2021 Qualified Non-Qualified Qualified Non-Qualified Net loss $ 16 $ 24 $ 56 $ 57 Net prior service cost 2 — 3 — Total $ 18 $ 24 $ 59 $ 57 Information for defined-benefit pension plans with an accumulated benefit obligation in excess of plan assets was as follows, in millions: At December 31, 2022 2021 Qualified Non-Qualified Qualified Non-Qualified Projected benefit obligation $ 112 $ 112 $ 174 $ 148 Accumulated benefit obligation 112 112 174 148 Fair value of plan assets 73 — 94 — The projected benefit obligation was in excess of plan assets for all of our qualified defined-benefit pension plans at December 31, 2022 and 2021 which had an accumulated benefit obligation in excess of plan assets. Net periodic pension cost for our defined-benefit pension plans, with the exception of service cost, is recorded in other net, in our consolidated statements of operations. Net periodic pension cost for our defined-benefit pension plans was as follows, in millions: Year Ended December 31, 2022 2021 2020 Qualified Non-Qualified Qualified Non-Qualified Qualified Non-Qualified Service cost $ 3 $ — $ 4 $ — $ 3 $ — Interest cost 2 3 15 4 28 5 Expected return on plan assets (3) — (9) — (24) — Settlement loss — — 404 — — — Recognized net loss 3 3 14 2 22 3 Recognized prior service cost 1 — 1 — 1 — Net periodic pension cost $ 6 $ 6 $ 429 $ 6 $ 30 $ 8 We expect to recognize $1 million of pre-tax net loss from accumulated other comprehensive income into net periodic pension cost in 2023 related to our defined-benefit pension plans. For plans in which almost all of the plan's participants are inactive, pre-tax net loss within accumulated other comprehensive income is amortized using the straight-line method over the remaining life expectancy of the inactive plan participants. For plans which do not have almost all inactive participants, pre-tax net loss within accumulated other comprehensive income is amortized using the straight-line method over the average remaining service period of the active employees expected to receive benefits from the plan. N. EMPLOYEE RETIREMENT PLANS (Continued) Plan Assets. Our qualified defined-benefit pension plan weighted average asset allocation, which is based upon fair value, was as follows: At December 31, 2022 2021 Equity securities 30 % 38 % Debt securities 38 % 48 % Other 32 % 14 % Total 100 % 100 % For our qualified defined-benefit pension plans, we have adopted accounting guidance that defines fair value, establishes a framework for measuring fair value and prescribes disclosures about fair value measurements. Accounting guidance defines fair value as "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date." Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2022 compared to December 31, 2021. Common and Preferred Stocks and Short-Term and Other Investments: Valued at the closing price reported on the active market on which the individual securities are traded. Other investments include liability-driven investments in interest rate swap funds that are priced daily based on the use of observable inputs. Corporate, Government and Other Debt Securities: Valued based on using pricing models maximizing the use of observable inputs for similar securities. This includes basing value on yields currently available on comparable securities of issuers with similar credit ratings. Real Estate: Real Estate consists of Real Estate Investment Trusts and property funds. Real Estate Investment Trusts are valued at the closing price reported on the active market on which the individual securities are traded. Real Estate property funds are valued based on the underlying investments, which include inputs such as cost, discounted future cash flows, independent appraisals and market based comparable data. There is no active trading market for these investments, and they are generally illiquid. Due to the significant unobservable inputs, the fair value measurements used to estimate fair value are a Level 3 input. The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while we believe our valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. N. EMPLOYEE RETIREMENT PLANS (Continued) The following tables set forth, by level within the fair value hierarchy, the qualified defined-benefit pension plan assets at fair value as of December 31, 2022 and 2021, in millions. At December 31, 2022 Level 1 Level 2 Level 3 Total Plan Assets Common and Preferred Stocks: United States $ 15 $ — $ — $ 15 International 8 — — 8 Corporate Debt Securities: United States — 3 — 3 International — 3 — 3 Government and Other Debt Securities: United States — 2 — 2 International — 22 — 22 Real Estate: United States 3 — — 3 International 2 — 12 14 Short-Term and Other Investments – International 1 7 — 8 Total Plan Assets $ 29 $ 37 $ 12 $ 78 At December 31, 2021 Level 1 Level 2 Level 3 Total Plan Assets Common and Preferred Stocks: United States $ 25 $ — $ — $ 25 International 13 — — 13 Corporate Debt Securities: United States — 5 — 5 International — 2 — 2 Government and Other Debt Securities: United States — 4 — 4 International — 36 — 36 Real Estate: United States 3 — — 3 International 2 — 6 8 Short-Term and Other Investments – International 3 — — 3 Total Plan Assets $ 46 $ 47 $ 6 $ 99 N. EMPLOYEE RETIREMENT PLANS (Continued) Changes in the fair value of the qualified defined-benefit pension plan Level 3 assets, were as follows, in millions: Year Ended December 31, 2022 2021 Fair Value, January 1 $ 6 $ 1 Purchases 6 5 Fair Value, December 31 $ 12 $ 6 Assumptions. Weighted average major assumptions used in accounting for our defined-benefit pension plans were as follows: At December 31, 2022 2021 2020 Discount rate for obligations 4.50 % 1.80 % 1.70 % Expected return on plan assets 4.50 % 3.00 % 2.00 % Rate of compensation increase — % — % — % Discount rate for net periodic pension cost 1.80 % 1.70 % 2.50 % The discount rate for obligations for 2022, 2021 and 2020 is based primarily upon the expected duration of each defined-benefit pension plan's liabilities matched to the December 31, 2022, 2021 and 2020 Willis Towers Watson Rate Link Curve. At December 31, 2022, such rates for our defined-benefit pension plans ranged from 0.8 percent to 5.3 percent, with the most significant portion of the liabilities having a discount rate for obligations of 3.7 percent or higher. At December 31, 2021, such rates for our defined-benefit pension plans ranged from 0.8 percent to 2.6 percent, with the most significant portion of the liabilities having a discount rate for obligations of 1.2 percent or higher. At December 31, 2020, such rates for our defined‑benefit pension plans ranged from 0.7 percent to 2.1 percent, with the most significant portion of the liabilities having a discount rate for obligations of 1.6 percent or higher. The increase in the weighted average discount rate from 2021 to 2022 and the increase in the weighted average discount rate from 2020 to 2021 is principally the result of higher long-term interest rates in the bond markets. Our weighted average projected long-term rate of return on plan assets for the foreign qualified defined-benefit pension plans was 4.5 percent, 3.0 percent and 2.9 percent for 2022, 2021 and 2020, respectively. The asset allocation of the investment portfolio was developed with the objective of achieving our expected rate of return and reducing volatility of asset returns, and considered the freezing of future benefits. The fixed-income portfolio is invested in corporate bonds, bond index funds and U.S. Treasury securities. Although we would expect alternative investments to yield a higher rate of return than the targeted overall long-term return, these investments are subject to greater volatility and would be less liquid than financial instruments that trade on public markets. The fair value of our plan assets is subject to risk including significant concentrations of risk in our plan assets related to equity, interest rate and operating risk. In order to ensure plan assets are sufficient to pay benefits, a portion of our foreign qualified plans' assets are allocated to equity investments and real assets that are expected, over time, to earn higher returns with more volatility than fixed-income investments which more closely match pension liabilities. Within equity, risk is mitigated by targeting a portfolio that is broadly diversified by geography, market capitalization, manager mandate size, investment style and process. In order to minimize asset volatility relative to the liabilities, a significant portion of plan assets are allocated to fixed-income investments that are exposed to interest rate risk. Rate increases generally will result in a decline in fixed-income assets, while reducing the present value of the liabilities. Conversely, rate decreases will increase fixed income assets, partially offsetting the related increase in the liabilities. N. EMPLOYEE RETIREMENT PLANS (Concluded) Potential events or circumstances that could have a negative effect on estimated fair value include the risks of inadequate diversification and other operating risks. To mitigate these risks, investments are diversified across and within asset classes in support of investment objectives. Policies and practices to address operating risks include ongoing manager oversight, plan and asset class investment guidelines and instructions that are communicated to managers, and periodic compliance and audit reviews to ensure adherence to these policies. In addition, we periodically seek the input of our independent advisor to ensure the investment policy is appropriate. Other. We sponsor certain post-retirement benefit plans that provide medical, dental and life insurance coverage for eligible retirees and dependents based upon age and length of service. Substantially all of these plans were frozen as of January 1, 2010. The aggregate present value of the unfunded accumulated post-retirement benefit obligation was $7 million and $9 million at December 31, 2022 and 2021, respectively. Cash Flows. At December 31, 2022, we expect to contribute approximately $12 million in 2023 to our non-qualified (domestic) defined-benefit pension plans. At December 31, 2022, the benefits expected to be paid in each of the next five years, and in aggregate for the five years thereafter, relating to our defined-benefit pension plans, were as follows, in millions: Qualified Non-Qualified 2023 $ 4 $ 12 2024 4 12 2025 5 11 2026 5 11 2027 5 10 2028 - 2032 30 45 |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
SHAREHOLDERS' EQUITY | SHAREHOLDERS' EQUITY During 2022, we repurchased and retired 16.6 million shares of our common stock (including 0.6 million shares to offset the dilutive impact of restricted stock units granted in 2022), for cash aggregating $914 million. Effective October 20, 2022, 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, replacing the previous Board of Directors authorization established in 2021. At December 31, 2022, we had $2.0 billion remaining under the 2022 authorization. During 2021, we repurchased and retired 17.6 million shares of our common stock (including 0.7 million shares to offset the dilutive impact of restricted stock units granted in 2021), for cash aggregating $1,026 million. During 2020, we repurchased and retired 18.8 million shares of our common stock (including 0.4 million shares to offset the dilutive impact of restricted stock units granted in 2020) for cash aggregating $727 million. On the basis of amounts paid (declared), cash dividends per common share were $1.120 ($1.120) in 2022, $0.845 ($0.705) in 2021 and $0.545 ($0.550) in 2020. O. SHAREHOLDERS' EQUITY (Concluded) Accumulated Other Comprehensive Income. The components of accumulated other comprehensive income attributable to Masco Corporation were as follows, in millions: At December 31, 2022 2021 Cumulative translation adjustments, net $ 261 $ 312 Unrecognized net loss and prior service cost, net (35) (80) Accumulated other comprehensive income $ 226 $ 232 |
RECLASSIFICATIONS FROM ACCUMULA
RECLASSIFICATIONS FROM ACCUMULATED OTHER COMPREHENSIVE INCOME | 12 Months Ended |
Dec. 31, 2022 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
RECLASSIFICATIONS FROM ACCUMULATED OTHER COMPREHENSIVE INCOME | RECLASSIFICATIONS FROM ACCUMULATED OTHER COMPREHENSIVE INCOME The reclassifications from accumulated other comprehensive income to the consolidated statements of operations were as follows, in millions: Year Ended December 31, Accumulated Other Comprehensive Income 2022 2021 2020 Statement of Operations Line Item Settlement and amortization of defined-benefit pension and other post-retirement benefits (A) : Actuarial losses, net and prior service cost $ 6 $ 18 $ 26 Other, net Settlement loss — 451 — Other, net Tax (benefit) (2) (104) (7) Net of tax $ 4 $ 365 $ 19 Interest rate swaps (B) : $ — $ 2 $ 2 Interest expense Tax expense (benefit) — 5 (1) Net of tax $ — $ 7 $ 1 (A) In the second quarter of 2021, we settled our qualified domestic defined-benefit pension plans and recognized $447 million of pre-tax actuarial losses from accumulated other comprehensive income and $96 million of income tax benefit, which included $11 million of related disproportionate tax expense. Additionally, the amortization of defined-benefit pension and post-retirement benefits included $3 million, net of tax, due to the disposition of pension plans in connection with the divestiture of Hüppe. (B) Upon full repayment and retirement of the 5.950% Notes due March 15, 2022, in the first quarter of 2021, we recognized the remaining interest rate swap loss and related disproportionate tax expense. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION Our reportable segments are as follows: Plumbing Products – principally includes faucets, plumbing system components and valves, showerheads and handheld showers, bath hardware and accessories, bath units, tubs and shower bases and enclosures, shower drains, steam shower systems, sinks, kitchen accessories, toilets, spas, exercise pools and fitness systems and water handling systems. Decorative Architectural Products – principally includes paints and other coating products, paint applicators and accessories, lighting fixtures, ceiling fans, landscape lighting and LED lighting systems, and cabinet and other hardware. The above products are sold to the residential repair and remodel and to a lesser extent the new home construction markets through home center retailers, online retailers, wholesalers and distributors, mass merchandisers, hardware stores, direct to the consumer and homebuilders. Our operations are principally located in North America and Europe. Our country of domicile is the United States of America. Other than those assets specifically identified within a segment, corporate assets consist primarily of property and equipment, right-of-use assets, deferred tax assets, cash and cash investments and other investments. Our segments are based upon similarities in products and represent the aggregation of operating units, for which financial information is regularly evaluated by our corporate operating executive in determining resource allocation and assessing performance, and is periodically reviewed by the Board of Directors. Accounting policies for the segments are the same as those for us. We primarily evaluate performance based upon operating profit and, other than general corporate expense, allocate specific corporate overhead to each segment. Q. SEGMENT INFORMATION (Concluded) Information by segment and Geographic Area was as follows, in millions: Year Ended December 31, At December 31, Net Sales (1)(2)(3)(4) Operating Profit Assets 2022 2021 2020 2022 2021 2020 2022 2021 2020 Our operations by segment were: Plumbing Products $ 5,252 $ 5,135 $ 4,136 $ 819 $ 929 $ 806 $ 3,096 $ 3,195 $ 2,822 Decorative Architectural Products 3,428 3,240 3,052 565 581 583 1,780 1,781 1,633 Total $ 8,680 $ 8,375 $ 7,188 $ 1,384 $ 1,510 $ 1,389 $ 4,876 $ 4,976 $ 4,455 Our operations by Geographic Area were: North America $ 6,978 $ 6,624 $ 5,805 $ 1,116 $ 1,214 $ 1,167 $ 3,552 $ 3,510 $ 3,101 International, principally Europe 1,702 1,751 1,383 268 296 222 1,324 1,466 1,354 Total, as above $ 8,680 $ 8,375 $ 7,188 1,384 1,510 1,389 4,876 4,976 4,455 General corporate expense, net (5) (87) (105) (94) Operating profit, as reported 1,297 1,405 1,295 Other income (expense), net (104) (717) (164) Income from continuing operations before income taxes $ 1,193 $ 688 $ 1,131 Corporate assets 311 599 1,322 Total assets $ 5,187 $ 5,575 $ 5,777 Year Ended December 31, Property Additions Depreciation and 2022 2021 2020 2022 2021 2020 Our operations by segment were: Plumbing Products $ 154 $ 94 $ 86 $ 103 $ 101 $ 84 Decorative Architectural Products 64 31 25 34 37 41 218 125 111 137 138 125 Unallocated amounts, principally related to corporate assets 6 3 2 8 13 8 Discontinued operations — — 1 — — — Total $ 224 $ 128 $ 114 $ 145 $ 151 $ 133 ______________________________ (1) Included in net sales were export sales from the U.S. of $337 million, $322 million and $274 million in 2022, 2021 and 2020, respectively. (2) Excluded from net sales were intra-company sales between segments of less than one percent in 2022, 2021 and 2020. (3) Included in net sales were sales to one customer of $3,298 million, $3,037 million and $2,812 million in 2022, 2021 and 2020, respectively. Such net sales were included in each of our segments. (4) Net sales from our operations in the U.S. were $6,756 million, $6,387 million and $5,592 million in 2022, 2021 and 2020, respectively. (5) General corporate expense, net included those expenses not specifically attributable to our segments. (6) Long-lived assets of our operations in the U.S. and Europe were $1,372 million and $548 million, $1,332 million and $546 million, and $1,301 million and $522 million at December 31, 2022, 2021 and 2020, respectively. |
OTHER INCOME (EXPENSE), NET
OTHER INCOME (EXPENSE), NET | 12 Months Ended |
Dec. 31, 2022 | |
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: Year Ended December 31, 2022 2021 2020 Contingent consideration (A) $ 24 $ (16) $ — Net periodic pension and post-retirement benefit expense (B) (10) (430) (35) Equity investment (loss) income, net (6) 11 3 Foreign currency transaction losses (C) (3) (4) (10) Income from cash and cash investments 2 1 3 Loss on sale of business, net (1) (18) — Gain on preferred stock redemption (D) — 14 — Dividend income — 6 10 Other items, net (E) (2) (3) 9 Total other, net $ 4 $ (439) $ (20) _________________________________________________ (A) We recognized $24 million of income in 2022 and $16 million of expense in 2021 from the revaluation of contingent consideration related to a prior acquisition. Refer to Note I for additional information. (B) In the second quarter of 2021, we settled our qualified domestic defined-benefit pension plans and recognized $406 million of additional pension expense. In the fourth quarter of 2021, we recognized a $7 million reduction in pension expense related to the reversion of excess pension plan assets for the settlement of such plans. Refer to Note N for additional information. (C) Included in foreign currency transaction losses for 2020 was a $9 million deferred currency translation loss reclassified from accumulated other comprehensive income in conjunction with the liquidation of certain UK dormant entities upon receiving final regulatory approval in 2020. (D) In May 2021, we received, in cash, $166 million for the redemption of the ACProducts Holding, Inc. preferred stock, including all accrued but unpaid dividends, and recognized a gain of $14 million. Refer to Note C for additional information. (E) Included in other items, net for 2020 was $9 million of miscellaneous income related to an escrow settlement. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Components of income taxes on income from continuing operations and the components of deferred tax assets and liabilities were as follows, in millions: 2022 2021 2020 Income from continuing operations before income taxes: U.S. $ 873 $ 374 $ 892 Foreign 320 314 239 $ 1,193 $ 688 $ 1,131 Income tax expense: Currently payable: U.S. Federal $ 178 $ 145 $ 170 State and local 29 40 33 Foreign 96 93 69 Deferred: U.S. Federal (16) (57) (9) State and local 2 (10) 11 Foreign (1) (1) (5) $ 288 $ 210 $ 269 Deferred tax assets at December 31: Receivables $ 10 $ 14 Inventories 21 17 Other assets, including stock-based compensation 13 13 Accrued liabilities 52 58 Noncurrent operating lease liabilities 50 40 Other long-term liabilities 51 79 Capitalized research expenditures 20 5 Net operating loss carryforward 21 26 Tax credit carryforward 11 11 249 263 Valuation allowance (15) (17) 234 246 Deferred tax liabilities at December 31: Property and equipment 56 62 Operating lease right-of-use assets 53 43 Intangibles 65 75 Investment in foreign subsidiaries 10 10 Other investments — 3 Other 17 16 201 209 Net deferred tax asset at December 31 $ 33 $ 37 The net deferred tax asset consisted of net deferred tax assets (included in other assets) of $60 million and $57 million, and net deferred tax liabilities (included in other liabilities) of $27 million and $20 million, at December 31, 2022 and 2021, respectively. S. INCOME TAXES (Continued) We continue to maintain a valuation allowance of $15 million and $17 million on certain state and foreign deferred tax assets as of December 31, 2022 and 2021, respectively, due primarily to cumulative loss positions in those jurisdictions. We recorded a $5 million income tax benefit in 2020 due to changes in judgment regarding the realizability of deferred tax assets in certain foreign jurisdictions. Our capital allocation strategy includes reinvesting in our business, balancing share repurchases with potential acquisitions and maintaining a relevant dividend. In order to provide greater flexibility in the execution of our capital allocation strategy, we may repatriate earnings from certain foreign subsidiaries. Our deferred tax balance on investment in foreign subsidiaries reflects the impact of all taxable temporary differences, including those related to substantially all undistributed foreign earnings, except those that are legally restricted, and consists primarily of foreign withholding taxes. Of the $32 million and $37 million deferred tax assets related to the net operating loss and tax credit carryforwards at December 31, 2022 and 2021, respectively, $20 million and $25 million, respectively, will expire within approximately 15 years and $12 million, for both years, have no expiration. A reconciliation of the U.S. Federal statutory tax rate to the income tax expense on income from continuing operations before income taxes was as follows: Year Ended December 31, 2022 2021 2020 U.S. Federal statutory tax rate 21 % 21 % 21 % State and local taxes, net of U.S. Federal tax benefit 2 4 3 Higher taxes on foreign earnings 2 3 1 Stock-based compensation — (1) (1) Business divestiture with no tax impact — 1 — Disproportionate tax effects — 2 — Other, net (1) 1 — Effective tax rate 24 % 31 % 24 % We incurred a $14 million state income tax expense in 2021 resulting from the loss on the termination of our qualified domestic defined-benefit pension plans providing no tax benefit in certain state jurisdictions. The loss from the divestiture of Hüppe provided no tax benefit in certain foreign jurisdictions resulting in a $4 million foreign income tax expense in 2021. We recorded a $16 million income tax expense due to the elimination of disproportionate tax effects from accumulated other comprehensive income relating to our interest rate swap following the retirement of the related debt and the termination of our qualified domestic defined-benefit pension plans in 2021. Income taxes paid were $281 million, $246 million and $442 million in 2022, 2021 and 2020, respectively. S. INCOME TAXES (Concluded) A reconciliation of the beginning and ending liability for uncertain tax positions, is as follows, in millions: 2022 2021 Balance at January 1 $ 81 $ 74 Current year tax positions: Additions 21 19 Reductions (5) (2) Prior year tax positions: Additions — 1 Reductions (3) (1) Lapse of applicable statutes of limitation (11) (10) Balance at December 31 $ 83 $ 81 Liability for interest and penalties 11 11 Balance at December 31, including interest and penalties $ 94 $ 92 If recognized, $66 million and $64 million of the liability for uncertain tax positions at December 31, 2022 and 2021, respectively, net of any U.S. Federal tax benefit, would impact our effective tax rate. Interest and penalties recognized in income tax expense were insignificant in years ended December 31, 2022, 2021 and 2020. Of the $94 million and $92 million total liability for uncertain tax positions (including related interest and penalties) at December 31, 2022 and 2021, respectively, $92 million and $88 million are recorded in other liabilities, respectively, and $2 million and $4 million are recorded as a net offset to other assets, respectively. We file income tax returns in the U.S. Federal jurisdiction, and various local, state and foreign jurisdictions. We continue to participate in the Compliance Assurance Process ("CAP"). CAP is a real-time audit of the U.S. Federal income tax return that allows the Internal Revenue Service ("IRS"), working in conjunction with us, to determine tax return compliance with the U.S. Federal tax law prior to filing the return. This program provides us with greater certainty about our tax liability for a given year within months, rather than years, of filing our annual tax return and greatly reduces the need for recording a liability for U.S. Federal uncertain tax positions. The IRS has completed their examination of our consolidated U.S. Federal tax returns through 2021. With few exceptions, we are no longer subject to state or foreign income tax examinations on filed returns for years before 2018. As a result of tax audit closings, settlements and the expiration of applicable statutes of limitation in various jurisdictions within the next 12 months, we anticipate that it is reasonably possible the liability for uncertain tax positions could be reduced by approximately $13 million. |
INCOME PER COMMON SHARE
INCOME PER COMMON SHARE | 12 Months Ended |
Dec. 31, 2022 | |
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 earnings per common share were as follows, in millions: Year Ended December 31, 2022 2021 2020 Numerator (basic and diluted): Income from continuing operations $ 844 $ 410 $ 810 Less: Allocation to redeemable noncontrolling interest (2) 2 — Less: Allocation to unvested restricted stock awards 4 2 6 Income from continuing operations attributable to common shareholders 842 406 804 Income from discontinued operations, net — — 414 Less: Allocation to unvested restricted stock awards — — 3 Income from discontinued operations, net attributable to common shareholders — — 411 Net income attributable to common shareholders $ 842 $ 406 $ 1,215 Denominator: Basic common shares (based upon weighted average) 231 249 264 Add: Stock option dilution 1 2 — Diluted common shares 232 251 264 We follow accounting guidance regarding determining whether instruments granted in share-based payment transactions are participating securities. This accounting guidance clarifies that share-based payment awards that entitle their holders to receive non-forfeitable dividends prior to vesting should be considered participating securities. The dividends associated with the unvested restricted stock units are forfeitable, and consequently, the restricted stock units are not considered a participating security and are not accounted for under the two-class method. We have also granted restricted stock awards that contain non-forfeitable rights to dividends on unvested shares; such unvested restricted stock awards are considered participating securities. As participating securities, the unvested shares are required to be included in the calculation of our basic income per common share, using the two-class method. The two-class method of computing income per common share is an allocation method that calculates income per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. For the years ended December 31, 2022, 2021 and 2020, we allocated dividends and undistributed earnings to the participating securities. The following stock options, restricted stock units and performance restricted stock units were excluded from the computation of weighted-average diluted common shares outstanding due to their anti-dilutive effect, in thousands: Year Ended December 31, 2022 2021 2020 Number of stock options 635 296 374 Number of restricted stock units 20 — — Number of performance restricted stock units 15 — — |
OTHER COMMITMENTS AND CONTINGEN
OTHER COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
OTHER COMMITMENTS AND CONTINGENCIES | OTHER COMMITMENTS AND CONTINGENCIES Litigation. 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: advertising, competition, contract, data privacy, employment, environmental, insurance coverage, intellectual property, personal injury, product compliance, product liability, securities and warranty. We believe we have adequate defenses in these matters. We are also subject to product safety regulations, product recalls and direct claims for product liabilities. We believe the likelihood that the outcome of these claims, litigation and product safety 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 or penalties, enter into settlements of claims or revise our expectations regarding the outcome of these matters, which could materially impact our results of operations. Warranty. Changes in our warranty liability were as follows, in millions: Year Ended December 31, 2022 2021 Balance at January 1 $ 80 $ 83 Accruals for warranties issued during the year 40 38 Accruals related to pre-existing warranties (3) (8) Settlements made (in cash or kind) during the year (34) (31) Other, net (including currency translation and acquisitions) (3) (2) Balance at December 31 $ 80 $ 80 Other Matters. We enter into contracts, which include reasonable and customary indemnifications that are standard for the industries in which we operate. Such indemnifications include claims made against builders by homeowners for issues relating to our products and workmanship. In conjunction with divestitures and other transactions, we occasionally provide reasonable and customary indemnifications. We have not paid a material amount related to these indemnifications, and we evaluate the probability that amounts may be incurred and record an estimated liability when it is probable and reasonably estimable. |
SCHEDULE II. VALUATION AND QUAL
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2022 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS | SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS For the Years Ended December 31, 2022, 2021 and 2020 (In Millions) Column A Column B Column C Column D Column E Additions Description Balance at Charged to Charged Deductions Balance at Allowances for credit losses deducted from accounts receivable in the balance sheet: 2022 $ 6 $ 5 $ — $ (3) (a) $ 8 2021 $ 7 $ 1 $ — $ (2) (a) (b) $ 6 2020 $ 5 $ 3 $ — $ (1) (a) $ 7 Valuation allowance on deferred tax assets: 2022 $ 17 $ — $ — $ (2) (d) $ 15 2021 $ 35 $ 5 $ — $ (23) (b) $ 17 2020 $ 38 $ — $ 2 (c) $ (5) (d) $ 35 ______________________________ (a) Deductions, representing uncollectible accounts written off, less recoveries of accounts written off in prior years. (b) As a result of the Hüppe divestiture in May 2021, $1 million was removed from allowance for credit losses and $23 million was removed from valuation allowance on deferred tax assets. (c) $2 million net increase in valuation allowance due to currency translation recorded in other comprehensive income. (d) Net reduction to valuation allowance recorded as an income tax benefit. |
ACCOUNTING POLICIES (Policies)
ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation. The consolidated financial statements include the accounts of Masco Corporation and all majority-owned subsidiaries. All significant intercompany transactions have been eliminated. We consolidate the assets, liabilities and results of operations of variable interest entities for which we are the primary beneficiary. |
Use of Estimates and Assumptions in the Preparation of Financial Statements | Use of Estimates and Assumptions in the Preparation of Financial Statements. The preparation of financial statements in conformity with accounting principles generally accepted ("GAAP") in the United States of America requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of any contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates and assumptions. |
Revenue Recognition | Revenue Recognition. We recognize revenue as control of our products is transferred to our customers, which is generally at the time of shipment or upon delivery based on the contractual terms with our customers. Our customers' payment terms generally range from 30 to 65 days. We provide customer programs and incentive offerings, including special pricing and co-operative advertising arrangements, promotions and other volume-based incentives. These customer programs and incentives are considered variable consideration. We include in revenue variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the variable consideration is resolved. This determination is made based upon known customer program and incentive offerings at the time of sale and expected sales volume for ecasts as it relates to our volume-based incentives. This determination is updated each reporting period. Certain product sales include a right of return. We estimate future product returns at the time of sale based on historical experience and record a corresponding refund liability. We additionally record an asset, based on historical experience, for the amount of product we expect to return to inventory as a result of the return, which is recorded in prepaid expenses and other in the consolidated balance sheets. We consider shipping and handling activities performed by us as activities to fulfill the sales of our products. Amounts billed for shipping and handling are included in net sales, while costs incurred for shipping and handling are included in cost of sales. We capitalize incremental costs of obtaining a contract and expense the costs on a straight-line basis over the contractual period if the cost is recoverable, the cost would not have been incurred without the contract and the term of the contract is greater than one year; otherwise, we expense the amounts as incurred. We do not adjust the promised amount of consideration for the effects of a financing component if the period between when we transfer our products or services and when our customers pay for our products or services is expected to be one year or less. |
Customer Displays | Customer Displays. In-store displays that are owned by us and used to market our products are included in other assets in the consolidated balance sheets and are amortized using the straight-line method over the expected useful life of three |
Foreign Currency | Foreign Currency. The financial statements of our foreign subsidiaries are measured using the local currency as the functional currency. Assets and liabilities of these subsidiaries are translated at exchange rates as of the balance sheet dates. Revenues and expenses are translated at average exchange rates in effect during the year. The resulting cumulative translation adjustments have been recorded in accumulated other comprehensive income in the consolidated balance sheets. Realized foreign currency transaction gains and losses are included in other income (expense), net in the consolidated statements of operations. |
Cash and Cash Investments | Cash and Cash Investments. We consider all highly liquid investments with an initial maturity of three months or less to be cash and cash investments. |
Receivables | Receivables. We do business with home center retailers, wholesalers and a number of other customers. We monitor our exposure for credit losses on customer receivable balances and other financial investments measured at amortized cost and the credit worthiness of 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 credit losses for estimated losses resulting from the inability of our customers to fulfill their required payment obligation to us. Allowances are estimated 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. A separate allowance is recorded for customer incentive rebates and is generally based upon sales activity. Receivables are presented net of certain allowances (including allowances for credit losses) of $53 million and $67 million at December 31, 2022 and 2021, respectively. Our receivables balances are generally due in less than one year. |
Property and Equipment | Property and Equipment. Property and equipment, including significant improvements to existing facilities, are recorded at cost. Upon retirement or disposal, the cost and accumulated depreciation are removed from the accounts and any gain or loss is included in the consolidated statements of operations. Maintenance and repair costs are charged against earnings as incurred. We review our property and equipment as events occur or circumstances change that would more likely than not reduce the fair value of the property and equipment below its carrying amount. If the carrying amount of property and equipment is not recoverable from its undiscounted cash flows, then we would recognize an impairment loss for the difference between the carrying amount and the current fair value. Further, we evaluate the remaining useful lives of property and equipment at each reporting period to determine whether events and circumstances warrant a revision to the remaining depreciation periods. |
Depreciation | Depreciation. Depreciation expense is computed principally using the straight-line method over the estimated useful lives of the assets. Annual depreciation rates are as follows: buildings and land improvements, 2 to 10 percent, computer hardware and software, 17 to 33 percent, and machinery and equipment, 5 to 33 percent. |
Leases | Leases. We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use assets (“ROU assets”), accrued liabilities and noncurrent operating lease liabilities on our consolidated balance sheet. Finance lease ROU assets are included in property and equipment, net, notes payable, and long-term debt on our consolidated balance sheets. ROU assets represent our right to use an underlying asset for the duration of the lease term while lease liabilities represent our obligation to make lease payments in exchange for the right to use an underlying asset. ROU assets and lease liabilities are measured based on the present value of fixed lease payments over the lease term at the commencement date. The ROU asset also includes any lease payments made prior to the commencement date and initial direct costs incurred, and is reduced by any lease incentives received. We review our ROU assets as events occur or circumstances change that would indicate the carrying amount of the ROU assets are not recoverable and exceed their fair values. If the carrying amount of the ROU asset is not recoverable from its undiscounted cash flows, then we would recognize an impairment loss for the difference between the carrying amount and the current fair value. As most of our leases do not provide an implicit discount rate, we generally use our incremental borrowing rate on the commencement date of the lease as the discount rate in determining the present value of future lease payments. We determine the incremental borrowing rate for each lease by using the current yields of our uncollateralized, publicly traded debts with maturity periods similar to the respective lease term or a comparable market alternative, adjusted to a collateralized basis based on third-party data. Our lease terms may include options to extend or terminate the lease when there are relevant economic incentives present that make it reasonably certain that we will exercise that option. We account for any non-lease components separately from lease components. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets. We perform our annual impairment testing of goodwill in the fourth quarter of each year, or as events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. We have defined our reporting units and completed the impairment testing of goodwill at the operating segment level. Our operating segments are reporting units that engage in business activities, for which discrete financial information, including five-year forecasts, is available. We compare the fair value of the reporting units to the carrying value of the reporting units for goodwill impairment testing. Fair value is determined using a discounted cash flow method, which includes significant unobservable inputs (Level 3 inputs), and requires us to make significant estimates and assumptions, including long-term projections of cash flows, market conditions and appropriate discount rates. Our judgments are based upon historical experience, current market trends, consultations with external valuation specialists and other information. In estimating future cash flows, we rely on internally generated five-year forecasts for sales and operating profits, and, currently, a two percent to three percent long-term assumed annual growth rate of cash flows for periods after the five-year forecast. For 2022, we utilized a weighted average cost of capital of approximately 8.75 percent as the basis to determine the discount rate to apply to the estimated future cash flows. Based upon our assessment of the risks impacting each of our businesses, we applied a risk premium to increase the discount rate to a range of 10.25 percent to 12.75 percent for our reporting units. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized to the extent that a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill in that reporting unit. We review our other indefinite-lived intangible assets for impairment annually in the fourth quarter, or as events occur or circumstances change that indicate the assets may be impaired without regard to the business unit. Potential impairment is identified by comparing the fair value of an other indefinite-lived intangible asset to its carrying value. We utilize a relief-from-royalty model to estimate the fair value of other indefinite-lived intangible assets. We consider the implications of both external (e.g., market growth, competition and local economic conditions) and internal (e.g., product sales and expected product growth) factors and their potential impact on cash flows related to the intangible asset in both the near- and long-term. We also consider the profitability of the business, among other factors, to determine the royalty rate for use in the impairment assessment. We utilize our weighted average cost of capital of approximately 8.75 percent as the basis to determine the discount rate to apply to the estimated future cash flows. In 2022, based upon our assessment of the risks impacting each of our businesses and the nature of the other indefinite-lived intangible asset (i.e., trade name), we applied a risk premium to increase the discount rate to a range of 11.25 percent to 13.75 percent for our other indefinite-lived intangible assets. While we believe that the estimates and assumptions underlying the valuation methodologies are reasonable, different estimates and assumptions could result in different outcomes. Intangible assets with finite useful lives are amortized using the straight-line method over their estimated useful lives. We review our intangible assets with finite useful lives as events occur or circumstances change that would more likely than not reduce the fair value of the assets below its carrying amount. If the carrying amount of the assets is not recoverable from the undiscounted cash flows, then we would recognize an impairment loss for the difference between the carrying amount and the current fair value. We evaluate the remaining useful lives of amortizable intangible assets at each reporting period to determine whether events or circumstances warrant a revision to the remaining periods of amortization. Refer to Note H for additional information regarding goodwill and other intangible assets. |
Acquisitions | Acquisitions. We allocate the purchase price of an acquired business to its identifiable assets and liabilities based on estimated fair values. The excess of the purchase price over the amount allocated to the assets and liabilities, if any, is recorded as goodwill. In addition, any contingent consideration is fair valued as of the date of the acquisition and is recorded as part of the purchase price. This estimate is updated in future periods and any changes in the estimate, which are not considered an adjustment to the purchase price, are recorded in our consolidated statements of operations. We use all available information to estimate fair values. We typically engage external valuation specialists to assist in the fair value determination of identifiable intangible assets and any other significant assets or liabilities. We adjust the preliminary purchase price allocation, as necessary, up to one year after the acquisition closing date as we obtain more information regarding assets acquired and liabilities assumed based on facts and circumstances that existed as of the acquisition date. Our purchase price allocation methodology contains uncertainties because it requires us to make assumptions and to apply judgment to estimate the fair value of acquired assets and assumed liabilities. We estimate the fair value of assets and liabilities based upon the carrying value of the acquired assets and assumed liabilities and widely accepted valuation techniques, including discounted cash flows. Unanticipated events or circumstances may occur which could affect the accuracy of our fair value estimates, including assumptions regarding industry economic factors and business strategies. Other estimates used in determining fair value include, but are not limited to, future cash flows or income related to intangibles, market rate assumptions and appropriate discount rates. Our estimates of fair value are based upon assumptions believed to be reasonable, but that are inherently uncertain, and therefore, may not be realized. Accordingly, there can be no assurance that the estimates, assumptions, and values reflected in the valuations will be realized, and actual results could vary materially. Refer to Note B for additional information regarding acquisitions. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments. We use derivative financial instruments to manage certain exposure to fluctuations in earnings and cash flows resulting from changes in foreign currency exchange rates, and occasionally from interest rate exposures. Derivative financial instruments are recorded in the consolidated balance sheets as either an asset or liability measured at fair value, netted by counterparty, where the right of offset exists. The gain or loss is recognized in determining current earnings during the period of the change in fair value. We currently do not have any derivative instruments for which we have designated hedge accounting. |
Warranty | Warranty. We offer limited warranties on certain products with warranty periods lasting up to the lifetime of the product to the original consumer purchaser. At the time of sale, we accrue a warranty liability for the estimated future cost to provide products, parts or services to repair or replace products, or refunds to satisfy our warranty obligations. Our estimate of future costs to service our warranty obligations is based upon the information available and includes a number of factors, such as the warranty coverage, the warranty period, historical experience specific to the nature, frequency and average cost to service the claim, along with industry and demographic trends. Certain factors and related assumptions in determining our warranty liability involve judgments and estimates and are sensitive to changes in the factors described above. We believe that the warranty accrual is appropriate; however, actual claims incurred could differ from our original estimates which would require us to adjust our previously established accruals. Refer to Note U for additional information on our warranty accrual. A significant portion of our business is at the consumer retail level through home center retailers and other major retailers. A consumer may return a product to a retail outlet that is a warranty return. However, certain retail outlets do not distinguish between warranty and other types of returns when they claim a return deduction from us. Our revenue recognition policy takes into account this type of return when recognizing revenue, and an estimate of these amounts is recorded as a deduction to net sales at the time of sale. |
Insurance Reserves | Insurance Reserves. We provide for expenses associated with workers' compensation and product liability obligations when such amounts are probable and can be reasonably estimated. The accruals are adjusted as new information develops or circumstances change that would affect the estimated liability. Any obligations expected to be settled within 12 months are recorded in accrued liabilities; all other obligations are recorded in other liabilities |
Litigation | Litigation. We are involved in claims and litigation, including class actions, mass torts and regulatory proceedings, which arise in the ordinary course of our business. Liabilities and costs associated with these matters require estimates and judgments based upon our professional knowledge and experience and that of our legal counsel. When a liability is probable of being incurred and our exposure in these matters is reasonably estimable, amounts are recorded as charges to earnings. The ultimate resolution of these exposures may differ due to subsequent developments. |
Stock-Based Compensation | 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 restricted stock units ("RSUs"), performance restricted stock units ("PRSUs"), stock options, long-term stock awards and phantom stock awards. We measure compensation expense for RSUs and long-term stock awards at the market price of our common stock at the grant date. We measure compensation expense for PRSUs at the expected payout of the awards. We measure compensation expense for stock options using a Black-Scholes option pricing model. We recognize forfeitures related to RSUs, PRSUs, stock options and long-term stock awards as they occur. We initially measure compensation expense for phantom stock awards at the market price of our common stock at the grant date. Phantom stock awards are linked to the value of our common stock on the date of grant and are settled in cash upon vesting. We account for phantom stock awards as liability-based awards; the liability is remeasured and adjusted at the end of each reporting period until the awards are fully-vested and paid to the employees. In December 2019, our Compensation and Talent 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 RSUs, stock options 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. For prior year grants, expense was recognized ratably over the shorter of the vesting period of the long-term stock awards, stock options and phantom stock awards, typically five years, or the length of time until the grantee became retirement-eligible, generally at age 65. Expense for PRSUs is recognized ratably over the three-year vesting period of the units. Refer to Note M for additional information on stock-based compensation. |
Noncontrolling Interest | Noncontrolling Interest. We owned 68 percent of Hansgrohe SE at both December 31, 2022 and 2021. The aggregate noncontrolling interest, net of dividends, at December 31, 2022 and 2021 has been recorded as a component of equity on our consolidated balance sheets. |
Discontinued Operations | Discontinued Operations. We report financial results for discontinued operations separately from continuing operations to distinguish the financial impact of disposal transactions from ongoing operations. Discontinued operations reporting occurs only when the disposal of a component or a group of components represents a strategic shift that will have a major effect on our operations and financial results. In our consolidated statements of cash flows, the cash flow from discontinued operations are not separately classified. Refer to Note C for further information regarding our discontinued operations. |
Income Taxes | Income Taxes. We record deferred taxes on the future tax consequences of differences between the financial statement carrying value of our assets and liabilities and their respective tax basis. The realization of deferred tax assets depends on sufficient sources of taxable income in future periods. If, based upon all available evidence, both positive and negative, it is more likely than not our deferred tax assets will not be realized, a valuation allowance is recorded. We only recognize the tax benefits from income tax positions that have a greater than 50 percent likelihood of being sustained upon examination by the taxing authorities. A liability is recorded for uncertain tax positions where it is more likely than not the position may not be sustained based on its technical merits. We record interest and penalties on our uncertain tax positions in income tax expense. We record the tax effects of Global Intangible Low-taxed Income related to our foreign operations, if applicable, as a component of income tax expense in the period the tax arises. We allocate our provision for income taxes between continuing operations and other categories of earnings. Adjustments to deferred taxes originally recorded to other comprehensive income (loss) may reverse in a different category of earnings, such as continuing operations, resulting in a disproportionate tax effect within accumulated other comprehensive income. Generally, a disproportionate tax effect will be eliminated and recognized in income tax expense when the circumstances upon which it is premised cease to exist. The disproportionate tax effects related to our various qualified domestic defined-benefit pension plans were eliminated from accumulated other comprehensive income at the termination of the related pension plans in 2021. The disproportionate tax effect relating to our interest rate swap hedge, which was terminated in 2012, was eliminated from accumulated other comprehensive income upon the early retirement of the related debt in March 2021. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements. In August 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” ASU 2020-06 simplifies the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. We adopted this standard for annual periods beginning January 1, 2022. The adoption of this new standard did not impact our financial position or results of operations. In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Acquired Contract Assets and Contract Liabilities from Contracts with Customers.” ASU 2021-08 requires contract assets and contract liabilities acquired in a business combination to be recognized in accordance with Topic 606 as if the acquirer had originated the contracts. We adopted this standard for annual periods beginning January 1, 2022. The adoption of this new standard did not impact our financial position or results of operations. Recently Issued Accounting Pronouncements. In September 2022, the FASB issued ASU 2022-04, "Liabilities – Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations,” which requires that an entity that uses a supplier finance program in connection with the purchase of goods or services disclose information about the program’s nature, activity during the period, changes from period to period, and potential magnitude. ASU 2022-04 is effective for annual periods on a retrospective basis, including interim periods within those annual periods, beginning January 1, 2023, except for the amendment on rollforward information, which is effective prospectively for annual periods beginning January 1, 2024. The adoption of this guidance will modify our disclosures, but will not have a material impact on our financial statements. |
Inventories | Inventories, which include purchased parts, materials, direct labor and applied overhead, are stated at the lower of cost or net realizable value, with cost determined primarily by use of the first-in, first-out method, and to a lesser extent the average cost method. |
DIVESTITURES (Tables)
DIVESTITURES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Discontinued Operations | The major classes of line items constituting income from discontinued operations, net, in millions: Year Ended December 31, 2022 2021 2020 Net sales $ — $ — $ 101 Cost of sales — — 78 Gross profit — — 23 Selling, general and administrative expenses — — 28 Loss from discontinued operations — — (5) Gain on disposal of discontinued operations, net — — 602 Income before income tax — — 597 Income tax expense — — (183) Income from discontinued operations, net $ — $ — $ 414 |
REVENUE (Tables)
REVENUE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | Our revenues are derived from sales to customers in North America and Internationally, principally Europe. Net sales from these geographic markets, by segment, were as follows, in millions: Year Ended December 31, 2022 Plumbing Products Decorative Architectural Products Total Primary geographic markets: North America $ 3,550 $ 3,428 $ 6,978 International, principally Europe 1,702 — 1,702 Total $ 5,252 $ 3,428 $ 8,680 Year Ended December 31, 2021 Plumbing Products Decorative Architectural Products Total Primary geographic markets: North America $ 3,384 $ 3,240 $ 6,624 International, principally Europe 1,751 — 1,751 Total $ 5,135 $ 3,240 $ 8,375 D. REVENUE (Concluded) Year Ended December 31, 2020 Plumbing Products Decorative Architectural Products Total Primary geographic markets: North America $ 2,753 $ 3,052 $ 5,805 International, principally Europe 1,383 — 1,383 Total $ 4,136 $ 3,052 $ 7,188 |
Financing Receivable, Allowance for Credit Loss | Changes in the allowance for credit losses deducted from accounts receivable were as follows, in millions: Year Ended December 31, 2022 2021 Balance at January 1 $ 6 $ 7 Provision for expected credit losses during the period 5 1 Write-offs charged against the allowance (4) (2) Recoveries of amounts previously written off 1 1 Other (A) — (1) Balance at end of year $ 8 $ 6 ______________________________ (A) As a result of Hüppe being divested in May 2021, $1 million for the year ended December 31, 2021 was removed from allowance for credit losses. |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | The components of inventory were as follows, in millions: At December 31, 2022 2021 Finished goods $ 715 $ 702 Raw materials 408 383 Work in process 113 131 Total $ 1,236 $ 1,216 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Lease, Cost | The components of lease cost included in income from continuing operations were as follows, in millions: Year Ended December 31, 2022 2021 2020 Operating lease cost $ 56 $ 48 $ 47 Short-term lease cost 10 8 7 Variable lease cost 5 4 3 Finance lease cost: Amortization of right-of-use assets 3 3 3 Interest on lease liabilities 1 1 1 |
Schedule of Supplemental Cash Flow Information Related to Leases | Supplemental cash flow information related to leases was as follows, in millions: Year Ended December 31, 2022 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 47 $ 47 $ 47 Operating cash flows for finance leases 1 1 1 Financing cash flows for finance leases 2 2 2 ROU assets obtained in exchange for new lease obligations: Operating leases (A) 126 67 27 Finance leases — — — ______________________________ |
Lessee, Other Lease Information | Certain other information related to leases was as follows: At December 31, 2022 2021 2020 Weighted-average remaining lease term: Operating leases 10 years 9 years 10 years Finance leases 9 years 9 years 10 years Weighted-average discount rate: Operating leases 4.8 % 4.0 % 4.4 % Finance leases 3.3 % 3.3 % 3.3 % |
Schedule of Supplemental Balance Sheet Information Related to Leases | Supplemental balance sheet information related to leases was as follows, in millions: At December 31, 2022 2021 Operating Leases Finance Leases Operating Leases Finance Leases Property and equipment, net $ — $ 21 $ — $ 24 Notes payable — 3 — 3 Accrued liabilities 39 — 38 — Long-term debt — 20 — 23 |
Finance Lease, Liability, Maturity | At December 31, 2022, future maturities of lease liabilities were as follows, in millions: Operating Leases Finance Leases Year ending December 31, 2023 $ 50 $ 3 2024 47 3 2025 42 3 2026 38 3 2027 30 3 Thereafter 174 11 Total lease payments 381 26 Less: imputed interest (87) (3) Total $ 294 $ 23 |
Operating Lease, Liability, Maturity | At December 31, 2022, future maturities of lease liabilities were as follows, in millions: Operating Leases Finance Leases Year ending December 31, 2023 $ 50 $ 3 2024 47 3 2025 42 3 2026 38 3 2027 30 3 Thereafter 174 11 Total lease payments 381 26 Less: imputed interest (87) (3) Total $ 294 $ 23 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | The components of property and equipment, net were as follows, in millions: At December 31, 2022 2021 Land and improvements $ 67 $ 67 Buildings 579 514 Computer hardware and software 265 259 Machinery and equipment 1,255 1,199 2,166 2,039 Less: Accumulated depreciation (1,191) (1,143) Total $ 975 $ 896 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of changes in carrying amount of goodwill | Goodwill at December 31, 2022, by segment, was as follows, in millions: Gross Goodwill At December 31, 2022 Accumulated Net Goodwill At December 31, 2022 Plumbing Products $ 611 $ (301) $ 310 Decorative Architectural Products 366 (139) 227 Total $ 977 $ (440) $ 537 The changes in the carrying amount of goodwill for years ended December 31, 2022 and 2021, by segment, were as follows, in millions: Gross Goodwill At December 31, 2021 Accumulated Net Goodwill At December 31, 2021 Acquisitions Pre-tax Other (B) Net Goodwill At December 31, 2022 Plumbing Products (A) $ 623 $ (301) $ 322 $ — $ — $ (12) $ 310 Decorative Architectural Products 366 (120) 246 — (19) — 227 Total $ 989 $ (421) $ 568 $ — $ (19) $ (12) $ 537 Gross Goodwill At December 31, 2020 Accumulated Net Goodwill At December 31, 2020 Acquisitions Pre-tax Other (B) Net Goodwill At December 31, 2021 Plumbing Products $ 613 $ (340) $ 273 $ 63 $ — $ (14) $ 322 Decorative Architectural Products 365 (75) 290 1 (45) — 246 Total $ 978 $ (415) $ 563 $ 64 $ (45) $ (14) $ 568 ______________________________ (A) As a result of Hüppe being divested in May 2021, both gross goodwill and accumulated impairment losses for the Plumbing Products segment were reduced by $39 million. (B) Other consists of the effect of foreign currency translation. |
OTHER ASSETS (Tables)
OTHER ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Other Assets, Noncurrent Disclosure [Abstract] | |
Schedule of other assets | The components of other assets were as follows, in millions: At December 31, 2022 2021 Deferred tax assets (Note S) $ 60 $ 57 Equity method investments 10 18 Other investments 12 7 Other 31 32 Total $ 113 $ 114 |
ACCRUED LIABILITIES (Tables)
ACCRUED LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accrued Liabilities, Current [Abstract] | |
Schedule of Accrued Liabilities | The components of accrued liabilities were as follows, in millions: At December 31, 2022 2021 Advertising and sales promotion $ 295 $ 297 Salaries, wages and commissions 136 195 Deferred revenue 61 67 Income taxes payable 48 34 Employee retirement plans 41 49 Operating lease liabilities (Note F) 39 38 Warranty (Note U) 34 31 Interest 30 29 Product returns 25 23 Insurance reserves 20 27 Property, payroll and other taxes 16 32 Other 62 62 Total $ 807 $ 884 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | The carrying value of outstanding debt was as follows, in millions: At December 31, 2022 2021 Notes and debentures: 3.500%, due November 15, 2027 $ 300 $ 300 1.500%, due February 15, 2028 599 599 7.750%, due August 1, 2029 235 235 2.000%, due October 1, 2030 300 300 2.000%, due February 15, 2031 596 596 6.500%, due August 15, 2032 200 200 4.500%, due May 15, 2047 416 417 3.125%, due February 15, 2051 300 300 364-day term loan, due April 26, 2023 200 — Other 25 35 Prepaid debt issuance costs (20) (23) 3,151 2,959 Less: Current portion 205 10 Total long-term debt $ 2,946 $ 2,949 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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: Year Ended December 31, 2022 2021 2020 Restricted stock units $ 32 $ 28 $ 13 Performance restricted stock units 3 10 5 Stock options 7 7 7 Long-term stock awards 6 10 14 Phantom stock awards 1 6 4 Total $ 49 $ 61 $ 43 |
Schedule of the Company's long-term stock award activity | Our restricted stock unit activity was as follows, units in thousands: Year Ended December 31, 2022 2021 2020 Number of Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value Unvested restricted stock units at January 1 934 $ 54 435 $ 47 — $ — Granted 621 59 670 57 446 47 Vested (351) 53 (142) 47 — — Forfeited (50) 54 (29) 54 (11) 48 Unvested restricted stock units at December 31 1,154 $ 57 934 $ 54 435 $ 47 Our long-term stock award activity was as follows, shares in thousands: Year Ended December 31, 2022 2021 2020 Number of Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value Unvested stock award shares at January 1 608 $ 37 1,125 $ 36 1,910 $ 34 Vested (324) 37 (491) 34 (655) 32 Forfeited (11) 38 (26) 36 (130) 35 Unvested stock award shares at December 31 273 $ 38 608 $ 37 1,125 $ 36 Information related to phantom stock awards was as follows, dollars in millions and shares in thousands: At December 31, 2022 2021 Accrued compensation cost liability $ 5 $ 8 Unrecognized compensation cost $ 2 $ 3 Equivalent common shares 149 169 |
Schedule of the Company's stock option activity | Our stock option activity was as follows, shares in thousands: Year Ended December 31, 2022 2021 2020 Number of Shares Weighted Average Exercise Price Number of Shares Weighted Average Exercise Price Number of Shares Weighted Average Exercise Price Outstanding stock options at January 1 2,692 $ 37 2,488 $ 33 3,006 $ 27 Granted 338 59 332 56 421 48 Exercised (32) 34 (128) 25 (878) 17 Forfeited (10) 37 — 11 (61) 40 Outstanding stock options at December 31 2,988 $ 39 2,692 $ 37 2,488 $ 33 Vested and expected to vest stock options at December 31 2,966 $ 39 2,617 $ 36 2,338 $ 33 Exercisable (vested) stock options at December 31 2,051 $ 34 1,606 $ 31 1,283 $ 28 |
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: Year Ended December 31, 2022 2021 2020 Weighted average grant date fair value $ 14.66 $ 13.61 $ 10.67 Risk-free interest rate 1.90 % 0.75 % 1.53 % Dividend yield 1.89 % 1.67 % 1.14 % Volatility factor 29.00 % 30.00 % 24.00 % Expected option life 6 years 6 years 6 years |
Summary of stock option shares outstanding and exercisable | The following table summarizes information for stock option shares outstanding and exercisable, shares in thousands: At December 31, 2022 Option Shares Outstanding Option Shares Exercisable Range of Number of Weighted Weighted Number of Weighted $ 17 - 21 191 1 $20 191 $20 $ 22 - 26 628 3 $24 628 $24 $ 27 - 36 786 5 $35 604 $35 $ 37 - 60 1,383 7 $51 628 $47 $ 17 - 60 2,988 5 $39 2,051 $34 |
EMPLOYEE RETIREMENT PLANS (Tabl
EMPLOYEE RETIREMENT PLANS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Retirement Benefits [Abstract] | |
Schedule of pre-tax expense related to retirement plans | Pre-tax expense included in income from continuing operations related to our retirement plans was as follows, in millions: Year Ended December 31, 2022 2021 2020 Defined-contribution plans $ 39 $ 57 $ 46 Defined-benefit pension plans 12 435 38 $ 51 $ 492 $ 84 |
Schedule of changes in the projected benefit obligation and fair value of the plan assets, and the funded status of the Company's defined-benefit pension plans | Changes in the projected benefit obligation and fair value of plan assets, and the funded status of our defined-benefit pension plans were as follows, in millions: Year Ended December 31, 2022 2021 Qualified Non-Qualified Qualified Non-Qualified Changes in projected benefit obligation: Projected benefit obligation at January 1 $ 178 $ 148 $ 1,118 $ 162 Service cost 3 — 4 — Interest cost 2 3 15 4 Actuarial (gain), net (54) (27) (105) (6) Foreign currency exchange (11) — (16) — Benefit payments (3) (12) (230) (12) Divestitures — — (14) — Settlements — — (594) — Projected benefit obligation at December 31 $ 115 $ 112 $ 178 $ 148 Changes in fair value of plan assets: Fair value of plan assets at January 1 $ 99 $ — $ 863 $ — Actual return on plan assets (15) — (40) — Foreign currency exchange (6) — (7) — Company contributions 3 12 107 12 Benefit payments (3) (12) (230) (12) Settlements — — (594) — Fair value of plan assets at December 31 $ 78 $ — $ 99 $ — Funded status at December 31 $ (37) $ (112) $ (79) $ (148) |
Schedule of amounts in the Company's consolidated balance sheets | Amounts in our consolidated balance sheets were as follows, in millions: At December 31, 2022 2021 Qualified Non-Qualified Qualified Non-Qualified Other assets $ 2 $ — $ 1 $ — Accrued liabilities — (12) — (12) Other liabilities (39) (100) (80) (136) Total net liability $ (37) $ (112) $ (79) $ (148) |
Schedule of unrealized loss included in accumulated other comprehensive income before income taxes | Unrealized loss included in accumulated other comprehensive income before income taxes was as follows, in millions: At December 31, 2022 2021 Qualified Non-Qualified Qualified Non-Qualified Net loss $ 16 $ 24 $ 56 $ 57 Net prior service cost 2 — 3 — Total $ 18 $ 24 $ 59 $ 57 |
Schedule of information for defined-benefit pension plans with an accumulated benefit obligation in excess of plan assets | Information for defined-benefit pension plans with an accumulated benefit obligation in excess of plan assets was as follows, in millions: At December 31, 2022 2021 Qualified Non-Qualified Qualified Non-Qualified Projected benefit obligation $ 112 $ 112 $ 174 $ 148 Accumulated benefit obligation 112 112 174 148 Fair value of plan assets 73 — 94 — |
Schedule of net periodic pension cost for the Company's defined-benefit pension plans | Net periodic pension cost for our defined-benefit pension plans was as follows, in millions: Year Ended December 31, 2022 2021 2020 Qualified Non-Qualified Qualified Non-Qualified Qualified Non-Qualified Service cost $ 3 $ — $ 4 $ — $ 3 $ — Interest cost 2 3 15 4 28 5 Expected return on plan assets (3) — (9) — (24) — Settlement loss — — 404 — — — Recognized net loss 3 3 14 2 22 3 Recognized prior service cost 1 — 1 — 1 — Net periodic pension cost $ 6 $ 6 $ 429 $ 6 $ 30 $ 8 |
Schedule of the Company's qualified defined-benefit pension plan weighted average asset allocation | Our qualified defined-benefit pension plan weighted average asset allocation, which is based upon fair value, was as follows: At December 31, 2022 2021 Equity securities 30 % 38 % Debt securities 38 % 48 % Other 32 % 14 % Total 100 % 100 % |
Schedule of qualified defined-benefit pension plan assets at fair value | The following tables set forth, by level within the fair value hierarchy, the qualified defined-benefit pension plan assets at fair value as of December 31, 2022 and 2021, in millions. At December 31, 2022 Level 1 Level 2 Level 3 Total Plan Assets Common and Preferred Stocks: United States $ 15 $ — $ — $ 15 International 8 — — 8 Corporate Debt Securities: United States — 3 — 3 International — 3 — 3 Government and Other Debt Securities: United States — 2 — 2 International — 22 — 22 Real Estate: United States 3 — — 3 International 2 — 12 14 Short-Term and Other Investments – International 1 7 — 8 Total Plan Assets $ 29 $ 37 $ 12 $ 78 At December 31, 2021 Level 1 Level 2 Level 3 Total Plan Assets Common and Preferred Stocks: United States $ 25 $ — $ — $ 25 International 13 — — 13 Corporate Debt Securities: United States — 5 — 5 International — 2 — 2 Government and Other Debt Securities: United States — 4 — 4 International — 36 — 36 Real Estate: United States 3 — — 3 International 2 — 6 8 Short-Term and Other Investments – International 3 — — 3 Total Plan Assets $ 46 $ 47 $ 6 $ 99 |
Schedule of changes in the fair value of the qualified defined-benefit pension plan level 3 assets | Changes in the fair value of the qualified defined-benefit pension plan Level 3 assets, were as follows, in millions: Year Ended December 31, 2022 2021 Fair Value, January 1 $ 6 $ 1 Purchases 6 5 Fair Value, December 31 $ 12 $ 6 |
Schedule of weighted-average major assumptions used in accounting for the Company's defined-benefit pension plans | Weighted average major assumptions used in accounting for our defined-benefit pension plans were as follows: At December 31, 2022 2021 2020 Discount rate for obligations 4.50 % 1.80 % 1.70 % Expected return on plan assets 4.50 % 3.00 % 2.00 % Rate of compensation increase — % — % — % Discount rate for net periodic pension cost 1.80 % 1.70 % 2.50 % |
Schedule of benefits expected to be paid relating to the Company's defined-benefit pension plans | At December 31, 2022, the benefits expected to be paid in each of the next five years, and in aggregate for the five years thereafter, relating to our defined-benefit pension plans, were as follows, in millions: Qualified Non-Qualified 2023 $ 4 $ 12 2024 4 12 2025 5 11 2026 5 11 2027 5 10 2028 - 2032 30 45 |
SHAREHOLDERS' EQUITY (Tables)
SHAREHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
Schedule of components of accumulated other comprehensive loss | The components of accumulated other comprehensive income attributable to Masco Corporation were as follows, in millions: At December 31, 2022 2021 Cumulative translation adjustments, net $ 261 $ 312 Unrecognized net loss and prior service cost, net (35) (80) Accumulated other comprehensive income $ 226 $ 232 |
RECLASSIFICATIONS FROM ACCUMU_2
RECLASSIFICATIONS FROM ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Schedule of reclassifications from accumulated other comprehensive income (loss) to the condensed consolidated statements of operations | The reclassifications from accumulated other comprehensive income to the consolidated statements of operations were as follows, in millions: Year Ended December 31, Accumulated Other Comprehensive Income 2022 2021 2020 Statement of Operations Line Item Settlement and amortization of defined-benefit pension and other post-retirement benefits (A) : Actuarial losses, net and prior service cost $ 6 $ 18 $ 26 Other, net Settlement loss — 451 — Other, net Tax (benefit) (2) (104) (7) Net of tax $ 4 $ 365 $ 19 Interest rate swaps (B) : $ — $ 2 $ 2 Interest expense Tax expense (benefit) — 5 (1) Net of tax $ — $ 7 $ 1 (A) In the second quarter of 2021, we settled our qualified domestic defined-benefit pension plans and recognized $447 million of pre-tax actuarial losses from accumulated other comprehensive income and $96 million of income tax benefit, which included $11 million of related disproportionate tax expense. Additionally, the amortization of defined-benefit pension and post-retirement benefits included $3 million, net of tax, due to the disposition of pension plans in connection with the divestiture of Hüppe. (B) Upon full repayment and retirement of the 5.950% Notes due March 15, 2022, in the first quarter of 2021, we recognized the remaining interest rate swap loss and related disproportionate tax expense. |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
Schedule of information by segment and geographic area | Information by segment and Geographic Area was as follows, in millions: Year Ended December 31, At December 31, Net Sales (1)(2)(3)(4) Operating Profit Assets 2022 2021 2020 2022 2021 2020 2022 2021 2020 Our operations by segment were: Plumbing Products $ 5,252 $ 5,135 $ 4,136 $ 819 $ 929 $ 806 $ 3,096 $ 3,195 $ 2,822 Decorative Architectural Products 3,428 3,240 3,052 565 581 583 1,780 1,781 1,633 Total $ 8,680 $ 8,375 $ 7,188 $ 1,384 $ 1,510 $ 1,389 $ 4,876 $ 4,976 $ 4,455 Our operations by Geographic Area were: North America $ 6,978 $ 6,624 $ 5,805 $ 1,116 $ 1,214 $ 1,167 $ 3,552 $ 3,510 $ 3,101 International, principally Europe 1,702 1,751 1,383 268 296 222 1,324 1,466 1,354 Total, as above $ 8,680 $ 8,375 $ 7,188 1,384 1,510 1,389 4,876 4,976 4,455 General corporate expense, net (5) (87) (105) (94) Operating profit, as reported 1,297 1,405 1,295 Other income (expense), net (104) (717) (164) Income from continuing operations before income taxes $ 1,193 $ 688 $ 1,131 Corporate assets 311 599 1,322 Total assets $ 5,187 $ 5,575 $ 5,777 Year Ended December 31, Property Additions Depreciation and 2022 2021 2020 2022 2021 2020 Our operations by segment were: Plumbing Products $ 154 $ 94 $ 86 $ 103 $ 101 $ 84 Decorative Architectural Products 64 31 25 34 37 41 218 125 111 137 138 125 Unallocated amounts, principally related to corporate assets 6 3 2 8 13 8 Discontinued operations — — 1 — — — Total $ 224 $ 128 $ 114 $ 145 $ 151 $ 133 ______________________________ (1) Included in net sales were export sales from the U.S. of $337 million, $322 million and $274 million in 2022, 2021 and 2020, respectively. (2) Excluded from net sales were intra-company sales between segments of less than one percent in 2022, 2021 and 2020. (3) Included in net sales were sales to one customer of $3,298 million, $3,037 million and $2,812 million in 2022, 2021 and 2020, respectively. Such net sales were included in each of our segments. (4) Net sales from our operations in the U.S. were $6,756 million, $6,387 million and $5,592 million in 2022, 2021 and 2020, respectively. (5) General corporate expense, net included those expenses not specifically attributable to our segments. (6) Long-lived assets of our operations in the U.S. and Europe were $1,372 million and $548 million, $1,332 million and $546 million, and $1,301 million and $522 million at December 31, 2022, 2021 and 2020, respectively. |
OTHER INCOME (EXPENSE), NET (Ta
OTHER INCOME (EXPENSE), NET (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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: Year Ended December 31, 2022 2021 2020 Contingent consideration (A) $ 24 $ (16) $ — Net periodic pension and post-retirement benefit expense (B) (10) (430) (35) Equity investment (loss) income, net (6) 11 3 Foreign currency transaction losses (C) (3) (4) (10) Income from cash and cash investments 2 1 3 Loss on sale of business, net (1) (18) — Gain on preferred stock redemption (D) — 14 — Dividend income — 6 10 Other items, net (E) (2) (3) 9 Total other, net $ 4 $ (439) $ (20) _________________________________________________ (A) We recognized $24 million of income in 2022 and $16 million of expense in 2021 from the revaluation of contingent consideration related to a prior acquisition. Refer to Note I for additional information. (B) In the second quarter of 2021, we settled our qualified domestic defined-benefit pension plans and recognized $406 million of additional pension expense. In the fourth quarter of 2021, we recognized a $7 million reduction in pension expense related to the reversion of excess pension plan assets for the settlement of such plans. Refer to Note N for additional information. (C) Included in foreign currency transaction losses for 2020 was a $9 million deferred currency translation loss reclassified from accumulated other comprehensive income in conjunction with the liquidation of certain UK dormant entities upon receiving final regulatory approval in 2020. (D) In May 2021, we received, in cash, $166 million for the redemption of the ACProducts Holding, Inc. preferred stock, including all accrued but unpaid dividends, and recognized a gain of $14 million. Refer to Note C for additional information. (E) Included in other items, net for 2020 was $9 million of miscellaneous income related to an escrow settlement. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of components of income taxes expense (benefit) from continuing operations | Components of income taxes on income from continuing operations and the components of deferred tax assets and liabilities were as follows, in millions: 2022 2021 2020 Income from continuing operations before income taxes: U.S. $ 873 $ 374 $ 892 Foreign 320 314 239 $ 1,193 $ 688 $ 1,131 Income tax expense: Currently payable: U.S. Federal $ 178 $ 145 $ 170 State and local 29 40 33 Foreign 96 93 69 Deferred: U.S. Federal (16) (57) (9) State and local 2 (10) 11 Foreign (1) (1) (5) $ 288 $ 210 $ 269 Deferred tax assets at December 31: Receivables $ 10 $ 14 Inventories 21 17 Other assets, including stock-based compensation 13 13 Accrued liabilities 52 58 Noncurrent operating lease liabilities 50 40 Other long-term liabilities 51 79 Capitalized research expenditures 20 5 Net operating loss carryforward 21 26 Tax credit carryforward 11 11 249 263 Valuation allowance (15) (17) 234 246 Deferred tax liabilities at December 31: Property and equipment 56 62 Operating lease right-of-use assets 53 43 Intangibles 65 75 Investment in foreign subsidiaries 10 10 Other investments — 3 Other 17 16 201 209 Net deferred tax asset at December 31 $ 33 $ 37 |
Schedule of reconciliation of the U.S. Federal statutory tax rate to the income tax expense (benefit) on income (loss) from continuing operations | A reconciliation of the U.S. Federal statutory tax rate to the income tax expense on income from continuing operations before income taxes was as follows: Year Ended December 31, 2022 2021 2020 U.S. Federal statutory tax rate 21 % 21 % 21 % State and local taxes, net of U.S. Federal tax benefit 2 4 3 Higher taxes on foreign earnings 2 3 1 Stock-based compensation — (1) (1) Business divestiture with no tax impact — 1 — Disproportionate tax effects — 2 — Other, net (1) 1 — Effective tax rate 24 % 31 % 24 % |
Schedule of reconciliation of the beginning and ending liability for uncertain tax positions, including related interest and penalties | A reconciliation of the beginning and ending liability for uncertain tax positions, is as follows, in millions: 2022 2021 Balance at January 1 $ 81 $ 74 Current year tax positions: Additions 21 19 Reductions (5) (2) Prior year tax positions: Additions — 1 Reductions (3) (1) Lapse of applicable statutes of limitation (11) (10) Balance at December 31 $ 83 $ 81 Liability for interest and penalties 11 11 Balance at December 31, including interest and penalties $ 94 $ 92 |
INCOME PER COMMON SHARE (Tables
INCOME PER COMMON SHARE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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 earnings per common share were as follows, in millions: Year Ended December 31, 2022 2021 2020 Numerator (basic and diluted): Income from continuing operations $ 844 $ 410 $ 810 Less: Allocation to redeemable noncontrolling interest (2) 2 — Less: Allocation to unvested restricted stock awards 4 2 6 Income from continuing operations attributable to common shareholders 842 406 804 Income from discontinued operations, net — — 414 Less: Allocation to unvested restricted stock awards — — 3 Income from discontinued operations, net attributable to common shareholders — — 411 Net income attributable to common shareholders $ 842 $ 406 $ 1,215 Denominator: Basic common shares (based upon weighted average) 231 249 264 Add: Stock option dilution 1 2 — Diluted common shares 232 251 264 |
Schedule of Weighted Average Number of Shares | The following stock options, restricted stock units and performance restricted stock units were excluded from the computation of weighted-average diluted common shares outstanding due to their anti-dilutive effect, in thousands: Year Ended December 31, 2022 2021 2020 Number of stock options 635 296 374 Number of restricted stock units 20 — — Number of performance restricted stock units 15 — — |
OTHER COMMITMENTS AND CONTING_2
OTHER COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of changes in the Company's warranty liability | Changes in our warranty liability were as follows, in millions: Year Ended December 31, 2022 2021 Balance at January 1 $ 80 $ 83 Accruals for warranties issued during the year 40 38 Accruals related to pre-existing warranties (3) (8) Settlements made (in cash or kind) during the year (34) (31) Other, net (including currency translation and acquisitions) (3) (2) Balance at December 31 $ 80 $ 80 |
ACCOUNTING POLICIES - Revenue R
ACCOUNTING POLICIES - Revenue Recognition (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Minimum | |
Revenue from External Customer [Line Items] | |
Customers' payment terms | 30 days |
Maximum | |
Revenue from External Customer [Line Items] | |
Customers' payment terms | 65 days |
ACCOUNTING POLICIES - Customer
ACCOUNTING POLICIES - Customer Displays (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Minimum | |
Property and Equipment | |
Expected useful life of product | 3 years |
Maximum | |
Property and Equipment | |
Expected useful life of product | 5 years |
ACCOUNTING POLICIES - Receivabl
ACCOUNTING POLICIES - Receivables (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Receivables | ||
Certain receivables allowances including allowances for doubtful accounts | $ 53 | $ 67 |
ACCOUNTING POLICIES - Depreciat
ACCOUNTING POLICIES - Depreciation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property and equipment | |||
Depreciation expense | $ 112 | $ 111 | $ 105 |
Buildings | Minimum | |||
Property and equipment | |||
Annual depreciation rates (as a percent) | 2% | ||
Buildings | Maximum | |||
Property and equipment | |||
Annual depreciation rates (as a percent) | 10% | ||
Computer hardware and software | Minimum | |||
Property and equipment | |||
Annual depreciation rates (as a percent) | 17% | ||
Computer hardware and software | Maximum | |||
Property and equipment | |||
Annual depreciation rates (as a percent) | 33% | ||
Machinery and equipment | Minimum | |||
Property and equipment | |||
Annual depreciation rates (as a percent) | 5% | ||
Machinery and equipment | Maximum | |||
Property and equipment | |||
Annual depreciation rates (as a percent) | 33% |
ACCOUNTING POLICIES - Goodwill
ACCOUNTING POLICIES - Goodwill and Other Intangible Assets (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Other Intangible Assets | |
Period of operation forecasts used in impairment test | 5 years |
Weighted average cost of capital (as a percent) | 8.75% |
Minimum | |
Goodwill and Other Intangible Assets | |
Assumed annual growth rate of cash flows (as a percent) | 2% |
Maximum | |
Goodwill and Other Intangible Assets | |
Assumed annual growth rate of cash flows (as a percent) | 3% |
Measurement Input, Discount Rate | Minimum | |
Goodwill and Other Intangible Assets | |
Goodwill, measurement input | 10.25% |
Measurement Input, Discount Rate | Maximum | |
Goodwill and Other Intangible Assets | |
Goodwill, measurement input | 12.75% |
Measurement Input, Discount Rate | Assets, Total | Minimum | |
Goodwill and Other Intangible Assets | |
Discount rate on estimated discounted cash flows (as a percent) | 11.25% |
Measurement Input, Discount Rate | Assets, Total | Maximum | |
Goodwill and Other Intangible Assets | |
Discount rate on estimated discounted cash flows (as a percent) | 13.75% |
ACCOUNTING POLICIES - Stock Bas
ACCOUNTING POLICIES - Stock Based Compensation (Details) | 1 Months Ended |
Dec. 31, 2019 | |
Stock Options | |
Award requisite service period | 10 years |
Phantom Share Units (PSUs) | |
Stock Options | |
Award vesting period | 3 years |
Phantom Share Units (PSUs) | 2019 | |
Stock Options | |
Award vesting period | 5 years |
Phantom Share Units (PSUs) | 2020 | |
Stock Options | |
Award vesting period | 3 years |
Stock options | |
Stock Options | |
Award vesting period | 3 years |
Stock options | 2019 | |
Stock Options | |
Award vesting period | 5 years |
Stock options | 2020 | |
Stock Options | |
Award vesting period | 3 years |
Restricted stock units | |
Stock Options | |
Award vesting period | 3 years |
Restricted stock units | 2019 | |
Stock Options | |
Award vesting period | 5 years |
Restricted stock units | 2020 | |
Stock Options | |
Award vesting period | 3 years |
Performance restricted stock units | |
Stock Options | |
Award vesting period | 3 years |
ACCOUNTING POLICIES - Noncontro
ACCOUNTING POLICIES - Noncontrolling Interest (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Hansgrohe SE | ||
Noncontrolling interest | ||
Ownership percentage of Hansgrohe SE | 68% | 68% |
ACQUISITIONS - Narrative (Detai
ACQUISITIONS - Narrative (Details) € in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||||
Sep. 30, 2021 USD ($) | Mar. 31, 2021 USD ($) | Mar. 31, 2021 EUR (€) | Dec. 31, 2020 USD ($) | Mar. 31, 2020 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Acquisitions | |||||||
Goodwill | $ 0 | $ 64 | |||||
Kraus USA Inc. | |||||||
Acquisitions | |||||||
Cash consideration | $ 103 | ||||||
Increase in definite-lived intangible assets | $ 49 | ||||||
Weighted average useful life | 10 years | ||||||
Goodwill | $ 20 | ||||||
Contingent consideration, liability | 8 | $ 24 | |||||
Increase in other indefinite-lived intangible assets | 25 | ||||||
Goodwill, purchase accounting adjustments | 1 | ||||||
Easy Sanitary Solutions B.V. | |||||||
Acquisitions | |||||||
Cash consideration | $ 52 | ||||||
Increase in definite-lived intangible assets | $ 32 | ||||||
Weighted average useful life | 10 years | 10 years | |||||
Goodwill | $ 35 | ||||||
Equity interest acquired | 75.10% | 75.10% | |||||
Consideration transferred | $ 58 | € 47 | |||||
Liabilities incurred | $ 6 | ||||||
Liabilities incurred, payment period | 2 years | 2 years | |||||
Steamist, Inc. | |||||||
Acquisitions | |||||||
Cash consideration | $ 56 | ||||||
Increase in definite-lived intangible assets | $ 31 | ||||||
Weighted average useful life | 11 years | ||||||
Goodwill | $ 29 | ||||||
Work Tools International Inc. and Elder & Jenks LLC | |||||||
Acquisitions | |||||||
Cash consideration | 48 | ||||||
Increase in definite-lived intangible assets | $ 27 | ||||||
Weighted average useful life | 12 years | ||||||
Goodwill | $ 7 | ||||||
Consideration transferred | 53 | ||||||
Liabilities incurred | $ 5 | ||||||
Liabilities incurred, payment period | 18 months | ||||||
Increase in other indefinite-lived intangible assets | $ 7 | ||||||
SmarTap | |||||||
Acquisitions | |||||||
Cash consideration | $ 24 | ||||||
Increase in definite-lived intangible assets | $ 10 | ||||||
Weighted average useful life | 5 years | ||||||
Goodwill | $ 14 | ||||||
Maximum | Kraus USA Inc. | |||||||
Acquisitions | |||||||
Contingent consideration, liability | $ 50 | ||||||
Easy Sanitary Solutions B.V. | |||||||
Acquisitions | |||||||
Noncontrolling interest ownership | 24.90% | 24.90% |
DIVESTITURES - Narrative (Detai
DIVESTITURES - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||
Feb. 18, 2020 | Nov. 06, 2019 | Mar. 31, 2022 | Jun. 30, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Loss on sales of businesses, net | $ 1 | $ 18 | $ 0 | ||||
Businesses, net of cash disposed | 0 | 5 | 870 | ||||
Gain (loss) on disposition of business | (1) | (18) | 602 | ||||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Disposal group, not discontinued operation, currency translation gain (loss) | 23 | ||||||
Discontinued Operations, Disposed of by Sale | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Gain on disposal of discontinued operations, net | 0 | 0 | 602 | ||||
Income (loss) from discontinued operation, before income tax | $ 0 | 0 | 597 | ||||
Hüppe | Disposal Group, Disposed of by Sale, Not Discontinued Operations | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Loss on sales of businesses, net | $ 2 | $ 18 | |||||
Milgard Manufacturing Inc | 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 | $ 720 | 17 | |||||
Gain on disposal of discontinued operations, net | $ 17 | ||||||
Income (loss) from discontinued operation, before income tax | 2 | ||||||
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 | $ 989 | ||||||
Businesses, net of cash disposed | 853 | ||||||
Gain (loss) on disposition of business | 585 | ||||||
Masco Cabinetry | Discontinued Operations, Disposed of by Sale | ACProducts Preferred Stock | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Other assets acquired | $ 136 | ||||||
Cabinetry Products | Discontinued Operations, Disposed of by Sale | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Income (loss) from discontinued operation, before income tax | $ (7) |
DIVESTITURES - Income Statement
DIVESTITURES - Income Statement (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Income from discontinued operations, net | $ 0 | $ 0 | $ 414 |
Discontinued Operations, Disposed of by Sale | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Net sales | 0 | 0 | 101 |
Cost of sales | 0 | 0 | 78 |
Gross profit | 0 | 0 | 23 |
Selling, general and administrative expenses | 0 | 0 | 28 |
Loss from discontinued operations | 0 | 0 | (5) |
Gain on disposal of discontinued operations, net | 0 | 0 | 602 |
Income before income tax | 0 | 0 | 597 |
Income tax expense | 0 | 0 | (183) |
Income from discontinued operations, net | $ 0 | $ 0 | $ 414 |
REVENUE (Details)
REVENUE (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | |||
Net sales | $ 8,680 | $ 8,375 | $ 7,188 |
North America | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 6,978 | 6,624 | 5,805 |
International, principally Europe | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 1,702 | 1,751 | 1,383 |
Plumbing Products | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 5,252 | 5,135 | 4,136 |
Plumbing Products | North America | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 3,550 | 3,384 | 2,753 |
Plumbing Products | International, principally Europe | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 1,702 | 1,751 | 1,383 |
Decorative Architectural Products | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 3,428 | 3,240 | 3,052 |
Decorative Architectural Products | North America | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | 3,428 | 3,240 | 3,052 |
Decorative Architectural Products | International, principally Europe | |||
Disaggregation of Revenue [Line Items] | |||
Net sales | $ 0 | $ 0 | $ 0 |
REVENUE - Narrative (Details)
REVENUE - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue Recognition and Deferred Revenue [Abstract] | |||
Performance obligation satisfied in previous period | $ 20 | $ 9 | $ 7 |
Contract with customer, asset, gross, current | 1 | 1 | |
Deferred revenue | $ 61 | $ 67 |
REVENUE - Rollforward (Details)
REVENUE - Rollforward (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance at January 1 | $ 6 | $ 7 |
Provision for expected credit losses during the period | 5 | 1 |
Write-offs charged against the allowance | (4) | (2) |
Recoveries of amounts previously written off | 1 | 1 |
Other | 0 | (1) |
Balance at end of year | $ 8 | 6 |
Hüppe | ||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Other | $ (1) |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 715 | $ 702 |
Raw materials | 408 | 383 |
Work in process | 113 | 131 |
Total | $ 1,236 | $ 1,216 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
Operating lease remaining lease term | 20 years | |
Finance lease, remaining lease term | 20 years | |
Finance lease, renewal term | 15 years | |
Operating lease, renewal term | 15 years | |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Property and equipment, net | Property and equipment, net |
Finance lease, right-of-use asset | $ 41 | $ 42 |
Finance lease, right-of-use asset, accumulated amortization | $ 20 | $ 18 |
LEASES - Lease Costs (Details)
LEASES - Lease Costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Leases [Abstract] | |||
Operating lease cost | $ 56 | $ 48 | $ 47 |
Short-term lease cost | 10 | 8 | 7 |
Variable lease cost | 5 | 4 | 3 |
Amortization of right-of-use assets | 3 | 3 | 3 |
Interest on lease liabilities | $ 1 | $ 1 | $ 1 |
LEASES - Supplemental Cash Flow
LEASES - Supplemental Cash Flow Information (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Lessee, Lease, Description [Line Items] | ||||
Operating cash flows for operating leases | $ 47 | $ 47 | $ 47 | |
Operating cash flows for finance leases | 1 | 1 | 1 | |
Financing cash flows for finance leases | 2 | 2 | 2 | |
Right-of-Use asset obtained in exchange for new lease obligations - Operating leases | 126 | 67 | 27 | |
Right-of-Use asset obtained in exchange for new lease obligations - Finance leases | $ 0 | 0 | $ 0 | |
ESS And Steamist, Inc. | ||||
Lessee, Lease, Description [Line Items] | ||||
Right-of-Use asset obtained in exchange for new lease obligations - Operating leases | $ 2 | |||
Kraus and Work Tools | ||||
Lessee, Lease, Description [Line Items] | ||||
Right-of-Use asset obtained in exchange for new lease obligations - Operating leases | $ 9 |
LEASES - Weighted Average Lease
LEASES - Weighted Average Lease Term and Discount Rate (Details) | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Weighted-average remaining lease term: | |||
Operating leases | 10 years | 9 years | 10 years |
Finance leases | 9 years | 9 years | 10 years |
Weighted-average discount rate: | |||
Operating leases | 4.80% | 4% | 4.40% |
Finance leases | 3.30% | 3.30% | 3.30% |
LEASES - Supplemental Balance S
LEASES - Supplemental Balance Sheet Information (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Lessee, Lease, Description [Line Items] | ||
Operating Leases, current | $ 39 | $ 38 |
Operating lease, liability attributable to long-term debt | 0 | 0 |
Finance Leases, noncurrent | $ 20 | $ 23 |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Long-term debt | Long-term debt |
Property and equipment, net | ||
Lessee, Lease, Description [Line Items] | ||
Operating Leases, current | $ 0 | $ 0 |
Finance Leases, current | 21 | 24 |
Notes payable | ||
Lessee, Lease, Description [Line Items] | ||
Operating Leases, current | 0 | 0 |
Finance Leases, current | 3 | 3 |
Accrued liabilities | ||
Lessee, Lease, Description [Line Items] | ||
Operating Leases, current | 39 | 38 |
Finance Leases, current | $ 0 | $ 0 |
LEASES - Future Maturities of L
LEASES - Future Maturities of Lease Liabilities (Details) $ in Millions | Dec. 31, 2022 USD ($) |
Operating Leases | |
2023 | $ 50 |
2024 | 47 |
2025 | 42 |
2026 | 38 |
2027 | 30 |
Thereafter | 174 |
Total lease payments | 381 |
Less: imputed interest | (87) |
Total | 294 |
Finance Leases | |
2023 | 3 |
2024 | 3 |
2025 | 3 |
2026 | 3 |
2027 | 3 |
Thereafter | 11 |
Total lease payments | 26 |
Less: imputed interest | (3) |
Total | $ 23 |
PROPERTY AND EQUIPMENT - Proper
PROPERTY AND EQUIPMENT - Property and Equipment, Net (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Property and Equipment | ||
Property and equipment, gross | $ 2,166 | $ 2,039 |
Less: Accumulated depreciation | (1,191) | (1,143) |
Total | 975 | 896 |
Land and improvements | ||
Property and Equipment | ||
Property and equipment, gross | 67 | 67 |
Buildings | ||
Property and Equipment | ||
Property and equipment, gross | 579 | 514 |
Computer hardware and software | ||
Property and Equipment | ||
Property and equipment, gross | 265 | 259 |
Machinery and equipment | ||
Property and Equipment | ||
Property and equipment, gross | $ 1,255 | $ 1,199 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS - Goodwill, Net (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Goodwill [Line Items] | |||
Goodwill, Gross | $ 977 | $ 989 | $ 978 |
Accumulated Impairment Losses | (440) | (421) | (415) |
Net Goodwill | 537 | 568 | 563 |
Plumbing Products | |||
Goodwill [Line Items] | |||
Goodwill, Gross | 611 | 623 | 613 |
Accumulated Impairment Losses | (301) | (301) | (340) |
Net Goodwill | 310 | 322 | 273 |
Decorative Architectural Products | |||
Goodwill [Line Items] | |||
Goodwill, Gross | 366 | 366 | 365 |
Accumulated Impairment Losses | (139) | (120) | (75) |
Net Goodwill | $ 227 | $ 246 | $ 290 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS - Changes in the Carrying Amount of Goodwill (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
May 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | |
Goodwill [Line Items] | ||||||
Gross Goodwill | $ 977,000,000 | $ 989,000,000 | $ 978,000,000 | $ 977,000,000 | $ 989,000,000 | |
Accumulated Impairment Losses | (440,000,000) | (421,000,000) | (415,000,000) | (440,000,000) | (421,000,000) | |
Changes in the carrying amount of goodwill | ||||||
Beginning balance | 568,000,000 | 563,000,000 | ||||
Acquisitions | 0 | 64,000,000 | ||||
Pre-tax Impairment Charge | 0 | 0 | 0 | (19,000,000) | (45,000,000) | |
Other | (12,000,000) | (14,000,000) | ||||
Ending balance | 537,000,000 | 568,000,000 | 563,000,000 | 537,000,000 | 568,000,000 | |
Plumbing Products | ||||||
Goodwill [Line Items] | ||||||
Gross Goodwill | 611,000,000 | 623,000,000 | 613,000,000 | 611,000,000 | 623,000,000 | |
Accumulated Impairment Losses | (301,000,000) | (301,000,000) | (340,000,000) | (301,000,000) | (301,000,000) | |
Changes in the carrying amount of goodwill | ||||||
Beginning balance | 322,000,000 | 273,000,000 | ||||
Acquisitions | 0 | 63,000,000 | ||||
Pre-tax Impairment Charge | 0 | 0 | ||||
Other | (12,000,000) | (14,000,000) | ||||
Ending balance | 310,000,000 | 322,000,000 | 273,000,000 | 310,000,000 | 322,000,000 | |
Goodwill, written off related to sale of business unit | $ 39,000,000 | |||||
Decorative Architectural Products | ||||||
Goodwill [Line Items] | ||||||
Gross Goodwill | 366,000,000 | 366,000,000 | 365,000,000 | 366,000,000 | 366,000,000 | |
Accumulated Impairment Losses | (139,000,000) | (120,000,000) | (75,000,000) | (139,000,000) | (120,000,000) | |
Changes in the carrying amount of goodwill | ||||||
Beginning balance | 246,000,000 | 290,000,000 | ||||
Acquisitions | 0 | 1,000,000 | ||||
Pre-tax Impairment Charge | (19,000,000) | (45,000,000) | (19,000,000) | (45,000,000) | ||
Other | 0 | 0 | ||||
Ending balance | $ 227,000,000 | $ 246,000,000 | $ 290,000,000 | $ 227,000,000 | $ 246,000,000 |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLE ASSETS - Narrative (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Definite-lived Intangible Assets | ||||||
Other indefinite-lived intangible assets | $ 102,000,000 | $ 109,000,000 | $ 102,000,000 | $ 109,000,000 | ||
Impairment charge for goodwill | 0 | 0 | $ 0 | 19,000,000 | 45,000,000 | |
Impairment of intangible assets, indefinite-lived (excluding goodwill) | 0 | 0 | $ 0 | |||
Carrying value of definite-lived intangible assets | 248,000,000 | 279,000,000 | 248,000,000 | 279,000,000 | ||
Accumulated amortization | 94,000,000 | 75,000,000 | 94,000,000 | 75,000,000 | ||
Amortization expense related to the definite-lived intangible assets | 29,000,000 | $ 31,000,000 | $ 24,000,000 | |||
Amortization expense related to the definite-lived intangible assets, 2023 | 28,000,000 | 28,000,000 | ||||
Amortization expense related to the definite-lived intangible assets, 2024 | 27,000,000 | 27,000,000 | ||||
Amortization expense related to the definite-lived intangible assets, 2025 | 23,000,000 | 23,000,000 | ||||
Amortization expense related to the definite-lived intangible assets, 2026 | 21,000,000 | 21,000,000 | ||||
Amortization expense related to the definite-lived intangible assets, 2027 | 21,000,000 | $ 21,000,000 | ||||
Weighted average | ||||||
Definite-lived Intangible Assets | ||||||
Weighted average amortization period | 15 years | 15 years | ||||
Decorative Architectural Products | ||||||
Definite-lived Intangible Assets | ||||||
Impairment charge for goodwill | 19,000,000 | $ 45,000,000 | $ 19,000,000 | $ 45,000,000 | ||
Impairment of intangible assets, indefinite-lived (excluding goodwill) | $ 7,000,000 |
FAIR VALUE OF FINANCIAL INSTR_2
FAIR VALUE OF FINANCIAL INSTRUMENTS - General Disclosures (Details) - Kraus USA Inc. - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Contingent consideration, undiscounted amount, maximum | $ 0 | $ 50 | |
Contingent consideration, liability | $ 24 | $ 8 |
FAIR VALUE OF FINANCIAL INSTR_3
FAIR VALUE OF FINANCIAL INSTRUMENTS - Fair Value of Debt (Details) - USD ($) $ in Billions | Dec. 31, 2022 | Dec. 31, 2021 |
Fair Value | ||
Fair value of debt | ||
Long-term and short-term debt | $ 2.7 | $ 3.2 |
Carrying Value | ||
Fair value of debt | ||
Debt, long-term and short-term | $ 3.2 | $ 3 |
OTHER ASSETS (Details)
OTHER ASSETS (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Other Assets, Noncurrent Disclosure [Abstract] | ||
Deferred tax assets (Note S) | $ 60 | $ 57 |
Equity method investments | 10 | 18 |
Other investments | 12 | 7 |
Other | 31 | 32 |
Total | $ 113 | $ 114 |
ACCRUED LIABILITIES (Details)
ACCRUED LIABILITIES (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Accrued Liabilities, Current [Abstract] | ||
Advertising and sales promotion | $ 295 | $ 297 |
Salaries, wages and commissions | 136 | 195 |
Deferred revenue | 61 | 67 |
Income taxes payable | 48 | 34 |
Employee retirement plans | 41 | 49 |
Operating lease liabilities (Note F) | 39 | 38 |
Warranty (Note U) | 34 | 31 |
Interest | 30 | 29 |
Product returns | 25 | 23 |
Insurance reserves | 20 | 27 |
Property, payroll and other taxes | 16 | 32 |
Other | 62 | 62 |
Total | $ 807 | $ 884 |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | Total | Total |
DEBT - Tabular Disclosure - Not
DEBT - Tabular Disclosure - Notes and Debentures and Other (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 | Mar. 04, 2021 | Sep. 18, 2020 |
Debt Instrument [Line Items] | ||||
Other | $ 25 | $ 35 | ||
Prepaid debt issuance costs | (20) | (23) | ||
Total long-term debt, current and non-current | 3,151 | 2,959 | ||
Less: Current portion | 205 | 10 | ||
Total long-term debt | $ 2,946 | 2,949 | ||
3.500%, due November 15, 2027 | Senior notes and debentures | ||||
Debt Instrument [Line Items] | ||||
Interest rate (as a percent) | 3.50% | |||
Notes and debentures | $ 300 | 300 | ||
1.500%, due February 15, 2028 | ||||
Debt Instrument [Line Items] | ||||
Interest rate (as a percent) | 1.50% | |||
1.500%, due February 15, 2028 | Senior notes and debentures | ||||
Debt Instrument [Line Items] | ||||
Interest rate (as a percent) | 1.50% | |||
Notes and debentures | $ 599 | 599 | ||
7.750%, due August 1, 2029 | Senior notes and debentures | ||||
Debt Instrument [Line Items] | ||||
Interest rate (as a percent) | 7.75% | |||
Notes and debentures | $ 235 | 235 | ||
2.000%, due October 1, 2030 | ||||
Debt Instrument [Line Items] | ||||
Interest rate (as a percent) | 2% | |||
2.000%, due October 1, 2030 | Senior notes and debentures | ||||
Debt Instrument [Line Items] | ||||
Interest rate (as a percent) | 2% | |||
Notes and debentures | $ 300 | 300 | ||
2.000%, due February 15, 2031 | ||||
Debt Instrument [Line Items] | ||||
Interest rate (as a percent) | 2% | |||
2.000%, due February 15, 2031 | Senior notes and debentures | ||||
Debt Instrument [Line Items] | ||||
Interest rate (as a percent) | 2% | |||
Notes and debentures | $ 596 | 596 | ||
6.500%, due August 15, 2032 | Senior notes and debentures | ||||
Debt Instrument [Line Items] | ||||
Interest rate (as a percent) | 6.50% | |||
Notes and debentures | $ 200 | 200 | ||
4.500%, due May 15, 2047 | ||||
Debt Instrument [Line Items] | ||||
Interest rate (as a percent) | 4.50% | |||
4.500%, due May 15, 2047 | Senior notes and debentures | ||||
Debt Instrument [Line Items] | ||||
Interest rate (as a percent) | 4.50% | |||
Notes and debentures | $ 416 | 417 | ||
3.125%, due February 15, 2051 | ||||
Debt Instrument [Line Items] | ||||
Interest rate (as a percent) | 3.125% | |||
3.125%, due February 15, 2051 | Senior notes and debentures | ||||
Debt Instrument [Line Items] | ||||
Interest rate (as a percent) | 3.125% | |||
Notes and debentures | $ 300 | 300 | ||
364-day term loan, due April 26, 2023 | Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Unsecured Debt | $ 200 | $ 0 |
DEBT - Narrative (Details)
DEBT - Narrative (Details) - USD ($) | 12 Months Ended | |||||||||
Apr. 26, 2022 | Mar. 22, 2021 | Mar. 04, 2021 | Sep. 29, 2020 | Sep. 18, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Feb. 09, 2023 | Mar. 13, 2019 | |
Debt | ||||||||||
2023 | $ 205,000,000 | |||||||||
2024 | 3,000,000 | |||||||||
2025 | 3,000,000 | |||||||||
2026 | 2,000,000 | |||||||||
2027 | 302,000,000 | |||||||||
Payment of term loan | 300,000,000 | $ 0 | $ 0 | |||||||
Proceeds from issuance of debt | $ 1,495,000,000 | |||||||||
Repayments of notes payable | 0 | 1,326,000,000 | 400,000,000 | |||||||
Debt extinguishment costs | 0 | 160,000,000 | 5,000,000 | |||||||
Interest paid | 107,000,000 | 114,000,000 | 136,000,000 | |||||||
Debt extinguishment costs | 0 | 160,000,000 | 5,000,000 | |||||||
1.500%, due February 15, 2028 | ||||||||||
Debt | ||||||||||
Interest rate (as a percent) | 1.50% | |||||||||
Long-term debt, gross | $ 600,000,000 | |||||||||
2.000%, due February 15, 2031 | ||||||||||
Debt | ||||||||||
Interest rate (as a percent) | 2% | |||||||||
Long-term debt, gross | $ 600,000,000 | |||||||||
3.125%, due February 15, 2051 | ||||||||||
Debt | ||||||||||
Interest rate (as a percent) | 3.125% | |||||||||
Long-term debt, gross | $ 300,000,000 | |||||||||
5.950%, due March 15, 2022 | ||||||||||
Debt | ||||||||||
Interest rate (as a percent) | 5.95% | |||||||||
Repayments of notes payable | $ 326,000,000 | |||||||||
4.450%, due April 1, 2025 | ||||||||||
Debt | ||||||||||
Interest rate (as a percent) | 4.45% | |||||||||
Repayments of notes payable | $ 500,000,000 | |||||||||
4.375%, due April 1, 2026 | ||||||||||
Debt | ||||||||||
Interest rate (as a percent) | 4.375% | |||||||||
Repayments of notes payable | $ 500,000,000 | |||||||||
5.950% Notes and Debentures due 2022, 4.450% Notes and Debentures due April 2025, and 4.375% Notes and Debentures Due April 1, 2026 | ||||||||||
Debt | ||||||||||
Debt extinguishment costs | $ 168,000,000 | |||||||||
2.000%, due October 1, 2030 | ||||||||||
Debt | ||||||||||
Interest rate (as a percent) | 2% | |||||||||
Long-term debt, gross | $ 300,000,000 | |||||||||
Proceeds from issuance of debt | $ 300,000,000 | |||||||||
4.500%, due May 15, 2047 | ||||||||||
Debt | ||||||||||
Interest rate (as a percent) | 4.50% | |||||||||
Long-term debt, gross | $ 100,000,000 | $ 300,000,000 | ||||||||
Proceeds from issuance of debt | $ 119,000,000 | |||||||||
2022 Credit Agreement | Line of Credit | SOFR Rate | Variable Rate Component One | ||||||||||
Debt | ||||||||||
Interest rate, basis spread (as a percent) | 0.10% | |||||||||
2022 Credit Agreement | Line of Credit | Revolver | ||||||||||
Debt | ||||||||||
Borrowing capacity, maximum | $ 1,000,000,000 | |||||||||
Increase in maximum borrowing capacity | $ 500,000,000 | |||||||||
Year 2019 Credit Agreement | Line of Credit | ||||||||||
Debt | ||||||||||
Borrowing capacity, maximum | $ 1,000,000,000 | |||||||||
Amended Credit Agreement | ||||||||||
Debt | ||||||||||
Maximum net leverage ratio | 4 | |||||||||
Minimum interest coverage ratio | 2.5 | |||||||||
Amount borrowed | 0 | |||||||||
Amended Credit Agreement | Subsequent Event | ||||||||||
Debt | ||||||||||
Interest rate (as a percent) | 5.80% | |||||||||
Amount borrowed | $ 69,000,000 | |||||||||
Amended Credit Agreement | Federal funds effective rate | ||||||||||
Debt | ||||||||||
Interest rate, basis spread (as a percent) | 0.50% | |||||||||
Amended Credit Agreement | Libor rate | ||||||||||
Debt | ||||||||||
Interest rate, basis spread (as a percent) | 1% | |||||||||
Amended Credit Agreement | Canadian Interest Rate | ||||||||||
Debt | ||||||||||
Interest rate, basis spread (as a percent) | 1% | |||||||||
Amended Credit Agreement | Revolver | ||||||||||
Debt | ||||||||||
Borrowing capacity, maximum | $ 500,000,000 | |||||||||
Amended Credit Agreement | Swingline loans | ||||||||||
Debt | ||||||||||
Borrowing capacity, maximum | 125,000,000 | |||||||||
Amended Credit Agreement | Letters of credit | ||||||||||
Debt | ||||||||||
Borrowing capacity, maximum | 25,000,000 | |||||||||
Outstanding and unused Letters of Credit | 0 | |||||||||
Unsecured Term Loan | ||||||||||
Debt | ||||||||||
Senior unsecured loan | $ 500,000,000 | |||||||||
Payment of term loan | $ 300,000,000 | |||||||||
Unsecured Term Loan | SOFR Rate | ||||||||||
Debt | ||||||||||
Interest rate (as a percent) | 0.70% | |||||||||
3.500% Notes and Debentures Due April 1, 2021 | ||||||||||
Debt | ||||||||||
Interest rate (as a percent) | 3.50% | |||||||||
Repayments of notes payable | $ 400,000,000 | |||||||||
Debt extinguishment costs | $ 6,000,000 |
STOCK-BASED COMPENSATION - Pre-
STOCK-BASED COMPENSATION - Pre-tax Compensation Expense and the Related Income Tax Benefit (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Stock-based compensation | |||
Pre-tax compensation expense | $ 49 | $ 61 | $ 43 |
Restricted stock units | |||
Stock-based compensation | |||
Pre-tax compensation expense | 32 | 28 | 13 |
Performance restricted stock units | |||
Stock-based compensation | |||
Pre-tax compensation expense | 3 | 10 | 5 |
Stock options | |||
Stock-based compensation | |||
Pre-tax compensation expense | 7 | 7 | 7 |
Long-term stock awards | |||
Stock-based compensation | |||
Pre-tax compensation expense | 6 | 10 | 14 |
Phantom stock awards | |||
Stock-based compensation | |||
Pre-tax compensation expense | $ 1 | $ 6 | $ 4 |
STOCK-BASED COMPENSATION - Narr
STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Restricted stock units | |||
Stock Options | |||
Unrecognized compensation cost | $ 17 | $ 15 | $ 7 |
Unrecognized compensation expense, recognition period | 2 years | 2 years | 2 years |
Total market value (at the vesting date) of stock award shares | $ 20 | $ 8 | |
Granted (in shares) | 621 | 670 | 446 |
Forfeited (in shares) | 50 | 29 | 11 |
Vested (in shares) | 351 | 142 | 0 |
Performance restricted stock units | |||
Stock Options | |||
Period for recognition | 3 years | ||
Stock options | |||
Stock Options | |||
Unrecognized compensation expense, recognition period | 1 year | 2 years | 2 years |
Granted (in shares) | 338 | 332 | 421 |
Expiration period | 10 years | ||
Grant date weighted-average exercise price (in dollars per share) | $ 59 | $ 56 | $ 48 |
Exercised | $ 1 | $ 5 | $ 29 |
Vested and expected to vest | 30 | 89 | 51 |
Outstanding at the end of the period | $ 28 | $ 63 | $ 35 |
Outstanding at the end of the period | 5 years | 6 years | 6 years |
Option shares vested and expected to vest at the end of the period | 5 years | 6 years | |
Option shares exercisable at the end of the period | 4 years | 5 years | 5 years |
Total unrecognized compensation expense | $ 1 | $ 4 | $ 6 |
Long-term stock awards | |||
Stock Options | |||
Unrecognized compensation expense, recognition period | 1 year | 2 years | 2 years |
Total market value (at the vesting date) of stock award shares | $ 21 | $ 28 | $ 31 |
Forfeited (in shares) | 11 | 26 | 130 |
Vested (in shares) | 324 | 491 | 655 |
Total unrecognized compensation expense | $ 3 | $ 10 | $ 21 |
Phantom Share Units (PSUs) | |||
Stock Options | |||
Unrecognized compensation cost | 2 | 3 | |
Total market value (at the vesting date) of stock award shares | $ 4 | $ 5 | $ 3 |
Granted (in shares) | 74 | 82 | 83 |
Recognized expense (income) related to valuation | $ 1 | $ 6 | $ 4 |
Cash paid to settle awards | $ 4 | $ 3 | $ 3 |
2014 Plan | |||
Stock Options | |||
Common stock available for granting stock options and other long-term stock incentive awards (in shares) | 11,700 | ||
LTIP Program | Minimum | |||
Stock Options | |||
Award vesting rights, percentage | 0% | ||
LTIP Program | Maximum | |||
Stock Options | |||
Award vesting rights, percentage | 200% | ||
LTIP Program | Performance restricted stock units | |||
Stock Options | |||
Granted (in shares) | 92 | 85 | 133 |
Granted (in dollars per share) | $ 55 | $ 53 | $ 34 |
Shares issued during period (in shares) | 168 | 105 | 152 |
Forfeited (in shares) | 11 | ||
Vested (in shares) | 255 | 186 | 103 |
STOCK-BASED COMPENSATION - Rest
STOCK-BASED COMPENSATION - Restricted Stock Units (Details) - Restricted stock units - $ / shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Number of Shares | |||
Balance at the beginning of the period (in shares) | 934 | 435 | 0 |
Granted (in shares) | 621 | 670 | 446 |
Vested (in shares) | (351) | (142) | 0 |
Forfeited (in shares) | (50) | (29) | (11) |
Balance at the end of the period (in shares) | 1,154 | 934 | 435 |
Weighted Average Grant Date Fair Value | |||
Balance at the beginning of the period (in dollars per share) | $ 54 | $ 47 | $ 0 |
Granted (in dollars per share) | 59 | 57 | 47 |
Vested (in dollars per share) | 53 | 47 | 0 |
Forfeited (in dollars per share) | 54 | 54 | 48 |
Balance at the end of the period (in dollars per share) | $ 57 | $ 54 | $ 47 |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock Options (Details) - Stock options - $ / shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Number of Shares | |||
Outstanding at the beginning of the period (in shares) | 2,692 | 2,488 | 3,006 |
Granted (in shares) | 338 | 332 | 421 |
Exercised (in shares) | (32) | (128) | (878) |
Forfeited (in shares) | (10) | 0 | (61) |
Outstanding at the end of the period (in shares) | 2,988 | 2,692 | 2,488 |
Option shares vested and expected to vest at the end of the period (in shares) | 2,966 | 2,617 | 2,338 |
Option shares exercisable at the end of the period (in shares) | 2,051 | 1,606 | 1,283 |
Weighted Average Exercise Price | |||
Outstanding at the beginning of the period (in dollars per share) | $ 37 | $ 33 | $ 27 |
Granted (in dollars per share) | 59 | 56 | 48 |
Exercised (in dollars per share) | 34 | 25 | 17 |
Forfeited (in dollars per share) | 37 | 11 | 40 |
Outstanding at the end of the period (in dollars per share) | 39 | 37 | 33 |
Option shares vested and expected to vest at the end of the period (in dollars per share) | 39 | 36 | 33 |
Option shares exercisable at the end of the period (in dollars per share) | $ 34 | $ 31 | $ 28 |
STOCK-BASED COMPENSATION - Weig
STOCK-BASED COMPENSATION - Weighted Average Grant Date Fair Value of Option Shares Granted and Assumptions Used (Details) - Stock options - $ / shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Stock Options | |||
Weighted average grant date fair value (in dollars per share) | $ 14.66 | $ 13.61 | $ 10.67 |
Risk-free interest rate | 1.90% | 0.75% | 1.53% |
Dividend yield | 1.89% | 1.67% | 1.14% |
Volatility factor | 29% | 30% | 24% |
Expected option life | 6 years | 6 years | 6 years |
STOCK-BASED COMPENSATION - St_2
STOCK-BASED COMPENSATION - Stock Option Shares Outstanding and Exercisable (Details) shares in Thousands | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Stock-based compensation | |
Exercise price range, low end of range (in dollars per share) | $ 17 |
Exercise price range, high end of range (in dollars per share) | $ 60 |
Option shares outstanding, number of shares (in shares) | shares | 2,988 |
Weighted average exercise price (in usd per share) | 5 years |
Option shares outstanding, weighted average exercise price (in dollars per share) | $ 39 |
Option shares exercisable, number of shares (in shares) | shares | 2,051 |
Option shares exercisable, weighted average exercise price (in dollars per share) | $ 34 |
Range One | |
Stock-based compensation | |
Exercise price range, low end of range (in dollars per share) | 17 |
Exercise price range, high end of range (in dollars per share) | $ 21 |
Option shares outstanding, number of shares (in shares) | shares | 191 |
Weighted average exercise price (in usd per share) | 1 year |
Option shares outstanding, weighted average exercise price (in dollars per share) | $ 20 |
Option shares exercisable, number of shares (in shares) | shares | 191 |
Option shares exercisable, weighted average exercise price (in dollars per share) | $ 20 |
Range Two | |
Stock-based compensation | |
Exercise price range, low end of range (in dollars per share) | 22 |
Exercise price range, high end of range (in dollars per share) | $ 26 |
Option shares outstanding, number of shares (in shares) | shares | 628 |
Weighted average exercise price (in usd per share) | 3 years |
Option shares outstanding, weighted average exercise price (in dollars per share) | $ 24 |
Option shares exercisable, number of shares (in shares) | shares | 628 |
Option shares exercisable, weighted average exercise price (in dollars per share) | $ 24 |
Range Three | |
Stock-based compensation | |
Exercise price range, low end of range (in dollars per share) | 27 |
Exercise price range, high end of range (in dollars per share) | $ 36 |
Option shares outstanding, number of shares (in shares) | shares | 786 |
Weighted average exercise price (in usd per share) | 5 years |
Option shares outstanding, weighted average exercise price (in dollars per share) | $ 35 |
Option shares exercisable, number of shares (in shares) | shares | 604 |
Option shares exercisable, weighted average exercise price (in dollars per share) | $ 35 |
Range Four | |
Stock-based compensation | |
Exercise price range, low end of range (in dollars per share) | 37 |
Exercise price range, high end of range (in dollars per share) | $ 60 |
Option shares outstanding, number of shares (in shares) | shares | 1,383 |
Weighted average exercise price (in usd per share) | 7 years |
Option shares outstanding, weighted average exercise price (in dollars per share) | $ 51 |
Option shares exercisable, number of shares (in shares) | shares | 628 |
Option shares exercisable, weighted average exercise price (in dollars per share) | $ 47 |
STOCK-BASED COMPENSATION - Long
STOCK-BASED COMPENSATION - Long-Term Stock Awards (Details) - Long-term stock awards - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Number of Shares | |||
Balance at the beginning of the period (in shares) | 608 | 1,125 | 1,910 |
Vested (in shares) | (324) | (491) | (655) |
Forfeited (in shares) | (11) | (26) | (130) |
Balance at the end of the period (in shares) | 273 | 608 | 1,125 |
Weighted Average Grant Date Fair Value | |||
Balance at the beginning of the period (in dollars per share) | $ 37 | $ 36 | $ 34 |
Vested (in dollars per share) | 37 | 34 | 32 |
Forfeited (in dollars per share) | 38 | 36 | 35 |
Balance at the end of the period (in dollars per share) | $ 38 | $ 37 | $ 36 |
Additional disclosures | |||
Total unrecognized compensation expense | $ 3 | $ 10 | $ 21 |
Remaining weighted average vesting period | 1 year | 2 years | 2 years |
Total market value (at the vesting date) of stock award shares | $ 21 | $ 28 | $ 31 |
STOCK-BASED COMPENSATION - Perf
STOCK-BASED COMPENSATION - Performance Restricted Stock Units and Phantom Stock Awards (Details) - Phantom Share Units (PSUs) - USD ($) shares in Thousands, $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Stock-based compensation | ||
Accrued compensation cost liability | $ 5 | $ 8 |
Unrecognized compensation cost | $ 2 | $ 3 |
Equivalent common shares | 149 | 169 |
EMPLOYEE RETIREMENT PLANS - Pre
EMPLOYEE RETIREMENT PLANS - Pre-tax Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2021 | Jun. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||||
Pre-tax expense | $ 406 | $ 51 | $ 492 | $ 84 | |
Settlements | $ 101 | ||||
Reduction in pension expense | $ 7 | ||||
Amount reclassified | |||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||||
Settlement loss | 447 | ||||
Defined-contribution plans | |||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||||
Pre-tax expense | 39 | 57 | 46 | ||
Defined-benefit pension plans | |||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||||
Pre-tax expense | $ 12 | $ 435 | $ 38 |
EMPLOYEE RETIREMENT PLANS - Cha
EMPLOYEE RETIREMENT PLANS - Changes in the Projected Benefit Obligation and Fair Value of Plan Assets, and the Funded Status of Defined-benefit Pension Plans (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Jun. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | ||||
Settlements | $ (101) | |||
Qualified | ||||
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | ||||
Projected benefit obligation at January 1 | $ 178 | $ 1,118 | ||
Service cost | 3 | 4 | $ 3 | |
Interest cost | 2 | 15 | ||
Actuarial (gain), net | (54) | (105) | ||
Foreign currency exchange | (11) | (16) | ||
Benefit payments | (3) | (230) | ||
Divestitures | 0 | (14) | ||
Settlements | 0 | (594) | ||
Projected benefit obligation at December 31 | 115 | 178 | 1,118 | |
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||||
Fair value of plan assets at January 1 | 99 | 863 | ||
Actual return on plan assets | (15) | (40) | ||
Foreign currency exchange | (6) | (7) | ||
Company contributions | 3 | 107 | ||
Benefit payments | (3) | (230) | ||
Settlements | 0 | (594) | ||
Fair value of plan assets at December 31 | 78 | 99 | 863 | |
Funded status at December 31 | (37) | (79) | ||
Non-Qualified | ||||
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | ||||
Projected benefit obligation at January 1 | 148 | 162 | ||
Service cost | 0 | 0 | 0 | |
Interest cost | 3 | 4 | ||
Actuarial (gain), net | (27) | (6) | ||
Foreign currency exchange | 0 | 0 | ||
Benefit payments | (12) | (12) | ||
Divestitures | 0 | 0 | ||
Settlements | 0 | 0 | ||
Projected benefit obligation at December 31 | 112 | 148 | 162 | |
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||||
Fair value of plan assets at January 1 | 0 | 0 | ||
Actual return on plan assets | 0 | 0 | ||
Foreign currency exchange | 0 | 0 | ||
Company contributions | 12 | 12 | ||
Benefit payments | (12) | (12) | ||
Settlements | 0 | 0 | ||
Fair value of plan assets at December 31 | 0 | 0 | $ 0 | |
Funded status at December 31 | $ (112) | $ (148) |
EMPLOYEE RETIREMENT PLANS - Amo
EMPLOYEE RETIREMENT PLANS - Amounts in Consolidated Balance Sheets (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Amounts in the company's consolidated balance sheets | ||
Accrued liabilities | $ (41) | $ (49) |
Qualified | ||
Amounts in the company's consolidated balance sheets | ||
Other assets | 2 | 1 |
Accrued liabilities | 0 | 0 |
Other liabilities | (39) | (80) |
Total net liability | (37) | (79) |
Non-Qualified | ||
Amounts in the company's consolidated balance sheets | ||
Other assets | 0 | 0 |
Accrued liabilities | (12) | (12) |
Other liabilities | (100) | (136) |
Total net liability | $ (112) | $ (148) |
EMPLOYEE RETIREMENT PLANS - Unr
EMPLOYEE RETIREMENT PLANS - Unrealized Loss Included in Accumulated Other Comprehensive (Loss) Income before Income Taxes (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Qualified | ||
Amounts in accumulated other comprehensive income (loss) before income taxes | ||
Net loss | $ 16 | $ 56 |
Net prior service cost | 2 | 3 |
Total | 18 | 59 |
Non-Qualified | ||
Amounts in accumulated other comprehensive income (loss) before income taxes | ||
Net loss | 24 | 57 |
Net prior service cost | 0 | 0 |
Total | $ 24 | $ 57 |
EMPLOYEE RETIREMENT PLANS - Def
EMPLOYEE RETIREMENT PLANS - Defined-benefit Pension Plans with an Accumulated Benefit Obligation in Excess of Plan Assets (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Qualified | ||
Information for the defined-benefit pension plans with an accumulated benefit obligation in excess of plan assets | ||
Projected benefit obligation | $ 112 | $ 174 |
Accumulated benefit obligation | 112 | 174 |
Fair value of plan assets | 73 | 94 |
Non-Qualified | ||
Information for the defined-benefit pension plans with an accumulated benefit obligation in excess of plan assets | ||
Projected benefit obligation | 112 | 148 |
Accumulated benefit obligation | 112 | 148 |
Fair value of plan assets | $ 0 | $ 0 |
EMPLOYEE RETIREMENT PLANS - Net
EMPLOYEE RETIREMENT PLANS - Net Periodic Pension Cost for Defined-benefit Pension Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Net periodic pension cost for the company's defined-benefit pension plans | |||
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) Excluding Service Cost, Statement of Income or Comprehensive Income [Extensible Enumeration] | Other, net | Other, net | Other, net |
Pre-tax net loss from accumulated other comprehensive income (loss) into net periodic pension cost | $ 1 | ||
Qualified | |||
Net periodic pension cost for the company's defined-benefit pension plans | |||
Service cost | 3 | $ 4 | $ 3 |
Interest cost | 2 | 15 | 28 |
Expected return on plan assets | (3) | (9) | (24) |
Settlement loss | 0 | 404 | 0 |
Recognized prior service cost | 1 | 1 | 1 |
Recognized net loss | 3 | 14 | 22 |
Net periodic pension cost | 6 | 429 | 30 |
Non-Qualified | |||
Net periodic pension cost for the company's defined-benefit pension plans | |||
Service cost | 0 | 0 | 0 |
Interest cost | 3 | 4 | 5 |
Expected return on plan assets | 0 | 0 | 0 |
Settlement loss | 0 | 0 | 0 |
Recognized prior service cost | 0 | 0 | 0 |
Recognized net loss | 3 | 2 | 3 |
Net periodic pension cost | $ 6 | $ 6 | $ 8 |
EMPLOYEE RETIREMENT PLANS - Qua
EMPLOYEE RETIREMENT PLANS - Qualified Defined-benefit Pension Plan Weighted Average Asset Allocation (Details) - Qualified | Dec. 31, 2022 | Dec. 31, 2021 |
Plan Assets | ||
Weighted average asset allocation (as a percent) | 100% | 100% |
Equity securities | ||
Plan Assets | ||
Weighted average asset allocation (as a percent) | 30% | 38% |
Debt securities | ||
Plan Assets | ||
Weighted average asset allocation (as a percent) | 38% | 48% |
Other | ||
Plan Assets | ||
Weighted average asset allocation (as a percent) | 32% | 14% |
EMPLOYEE RETIREMENT PLANS - Q_2
EMPLOYEE RETIREMENT PLANS - Qualified Defined-benefit Pension Plan Assets at Fair Value by Level within the Fair Value Hierarchy (Details) - Qualified - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Fair Value | |||
Private equity funds | $ 78 | $ 99 | $ 863 |
Level 1 | |||
Fair Value | |||
Private equity funds | 29 | 46 | |
Level 2 | |||
Fair Value | |||
Private equity funds | 37 | 47 | |
Level 3 | |||
Fair Value | |||
Private equity funds | 12 | 6 | |
United States | Common and Preferred Stocks: | |||
Fair Value | |||
Private equity funds | 15 | 25 | |
United States | Corporate Debt Securities: | |||
Fair Value | |||
Private equity funds | 3 | 5 | |
United States | Government and Other Debt Securities: | |||
Fair Value | |||
Private equity funds | 2 | 4 | |
United States | Real Estate: | |||
Fair Value | |||
Private equity funds | 3 | 3 | |
United States | Level 1 | Common and Preferred Stocks: | |||
Fair Value | |||
Private equity funds | 15 | 25 | |
United States | Level 1 | Corporate Debt Securities: | |||
Fair Value | |||
Private equity funds | 0 | 0 | |
United States | Level 1 | Government and Other Debt Securities: | |||
Fair Value | |||
Private equity funds | 0 | 0 | |
United States | Level 1 | Real Estate: | |||
Fair Value | |||
Private equity funds | 3 | 3 | |
United States | Level 2 | Common and Preferred Stocks: | |||
Fair Value | |||
Private equity funds | 0 | 0 | |
United States | Level 2 | Corporate Debt Securities: | |||
Fair Value | |||
Private equity funds | 3 | 5 | |
United States | Level 2 | Government and Other Debt Securities: | |||
Fair Value | |||
Private equity funds | 2 | 4 | |
United States | Level 2 | Real Estate: | |||
Fair Value | |||
Private equity funds | 0 | 0 | |
United States | Level 3 | Common and Preferred Stocks: | |||
Fair Value | |||
Private equity funds | 0 | 0 | |
United States | Level 3 | Corporate Debt Securities: | |||
Fair Value | |||
Private equity funds | 0 | 0 | |
United States | Level 3 | Government and Other Debt Securities: | |||
Fair Value | |||
Private equity funds | 0 | 0 | |
United States | Level 3 | Real Estate: | |||
Fair Value | |||
Private equity funds | 0 | 0 | |
International | Common and Preferred Stocks: | |||
Fair Value | |||
Private equity funds | 8 | 13 | |
International | Corporate Debt Securities: | |||
Fair Value | |||
Private equity funds | 3 | 2 | |
International | Government and Other Debt Securities: | |||
Fair Value | |||
Private equity funds | 22 | 36 | |
International | Real Estate: | |||
Fair Value | |||
Private equity funds | 14 | 8 | |
International | Short-Term and Other Investments – International | |||
Fair Value | |||
Private equity funds | 8 | 3 | |
International | Level 1 | Common and Preferred Stocks: | |||
Fair Value | |||
Private equity funds | 8 | 13 | |
International | Level 1 | Corporate Debt Securities: | |||
Fair Value | |||
Private equity funds | 0 | 0 | |
International | Level 1 | Government and Other Debt Securities: | |||
Fair Value | |||
Private equity funds | 0 | 0 | |
International | Level 1 | Real Estate: | |||
Fair Value | |||
Private equity funds | 2 | 2 | |
International | Level 1 | Short-Term and Other Investments – International | |||
Fair Value | |||
Private equity funds | 1 | 3 | |
International | Level 2 | Common and Preferred Stocks: | |||
Fair Value | |||
Private equity funds | 0 | 0 | |
International | Level 2 | Corporate Debt Securities: | |||
Fair Value | |||
Private equity funds | 3 | 2 | |
International | Level 2 | Government and Other Debt Securities: | |||
Fair Value | |||
Private equity funds | 22 | 36 | |
International | Level 2 | Real Estate: | |||
Fair Value | |||
Private equity funds | 0 | 0 | |
International | Level 2 | Short-Term and Other Investments – International | |||
Fair Value | |||
Private equity funds | 7 | 0 | |
International | Level 3 | Common and Preferred Stocks: | |||
Fair Value | |||
Private equity funds | 0 | 0 | |
International | Level 3 | Corporate Debt Securities: | |||
Fair Value | |||
Private equity funds | 0 | 0 | |
International | Level 3 | Government and Other Debt Securities: | |||
Fair Value | |||
Private equity funds | 0 | 0 | |
International | Level 3 | Real Estate: | |||
Fair Value | |||
Private equity funds | 12 | 6 | |
International | Level 3 | Short-Term and Other Investments – International | |||
Fair Value | |||
Private equity funds | $ 0 | $ 0 |
EMPLOYEE RETIREMENT PLANS - C_2
EMPLOYEE RETIREMENT PLANS - Changes in the Fair Value of the Qualified Defined-benefit Pension Plan Level 3 Assets (Details) - Qualified - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Changes in the fair value of plan level 3 assets | ||
Fair Value, January 1 | $ 6 | $ 1 |
Purchases | 6 | 5 |
Fair Value, December 31 | $ 12 | $ 6 |
EMPLOYEE RETIREMENT PLANS - Ass
EMPLOYEE RETIREMENT PLANS - Assumptions - Tabular Disclosure (Details) - Defined-benefit pension plans | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Assumptions | |||
Discount rate for obligations | 4.50% | 1.80% | 1.70% |
Expected return on plan assets | 4.50% | 3% | 2% |
Rate of compensation increase | 0% | 0% | 0% |
Discount rate for net periodic pension cost | 1.80% | 1.70% | 2.50% |
EMPLOYEE RETIREMENT PLANS - A_2
EMPLOYEE RETIREMENT PLANS - Assumptions - General Disclosures (Details) - Defined-benefit pension plans | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Assumptions | |||
Discount rate for obligations | 4.50% | 1.80% | 1.70% |
Expected return on plan assets | 4.50% | 3% | 2% |
Minimum | |||
Assumptions | |||
Discount rate for obligations | 0.80% | 0.80% | 0.70% |
Liabilities having a discount rate for obligations (as a percent) | 3.70% | 1.20% | 1.60% |
Maximum | |||
Assumptions | |||
Discount rate for obligations | 5.30% | 2.60% | 2.10% |
International | |||
Assumptions | |||
Expected return on plan assets | 4.50% | 3% | 2.90% |
EMPLOYEE RETIREMENT PLANS - Oth
EMPLOYEE RETIREMENT PLANS - Other and Cash Flows (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Non-Qualified | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Payments to participants defined-benefit pension plans | $ 12 | |
Defined-contribution plans | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Aggregate present value of unfunded accumulated post-retirement benefit obligation | $ 7 | $ 9 |
EMPLOYEE RETIREMENT PLANS - Ben
EMPLOYEE RETIREMENT PLANS - Benefits Expected to be Paid in Each of the Next Five Years, and in Aggregate for the Five Years Thereafter (Details) $ in Millions | Dec. 31, 2022 USD ($) |
Qualified | |
Defined Benefit Plan Disclosure [Line Items] | |
2023 | $ 4 |
2024 | 4 |
2025 | 5 |
2026 | 5 |
2027 | 5 |
2028 - 2032 | 30 |
Non-Qualified | |
Defined Benefit Plan Disclosure [Line Items] | |
2023 | 12 |
2024 | 12 |
2025 | 11 |
2026 | 11 |
2027 | 10 |
2028 - 2032 | $ 45 |
SHAREHOLDERS' EQUITY - Stock Re
SHAREHOLDERS' EQUITY - Stock Repurchase (Details) - USD ($) shares in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Oct. 20, 2022 | |
Equity [Abstract] | ||||
Repurchase and retirement of common stock (in shares) | 16.6 | 17.6 | 18.8 | |
Repurchase and retirement of common stock to offset the dilutive impact of the grant of long-term stock awards (in shares) | 0.6 | 0.7 | 0.4 | |
Repurchase and retirement of common stock | $ 914 | $ 1,026 | $ 727 | |
Stock repurchase program, authorized amount (in shares) | $ 2,000 | |||
Remaining authorized repurchase amount | $ 2,000 |
SHAREHOLDERS' EQUITY - Dividend
SHAREHOLDERS' EQUITY - Dividends (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Equity [Abstract] | |||
Cash dividends per common share paid (in dollars per share) | $ 1.120 | $ 0.845 | $ 0.545 |
Cash dividends per common share declared (in dollars per share) | $ 1.120 | $ 0.705 | $ 0.550 |
SHAREHOLDERS' EQUITY - Accumula
SHAREHOLDERS' EQUITY - Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Equity [Abstract] | ||
Cumulative translation adjustments, net | $ 261 | $ 312 |
Unrecognized net loss and prior service cost, net | (35) | (80) |
Accumulated other comprehensive income | 226 | 232 |
Income tax benefit on cumulative translation adjustment | 2 | 1 |
Income tax benefit on prior service cost and net loss | $ 4 | $ 20 |
RECLASSIFICATIONS FROM ACCUMU_3
RECLASSIFICATIONS FROM ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 22, 2021 | |
Reclassifications from accumulated other comprehensive (loss) income | ||||||
Actuarial losses, net and prior service cost | $ 104 | $ 717 | $ 164 | |||
Tax expense (benefit) | 288 | 210 | 269 | |||
Net of tax | (905) | (478) | (1,276) | |||
Interest rate swaps | 108 | 278 | 144 | |||
Disproportionate tax expense | $ 11 | |||||
5.95 Notes and Debentures Due March 15, 2022 | ||||||
Reclassifications from accumulated other comprehensive (loss) income | ||||||
Interest rate (as a percent) | 5.95% | |||||
Amount reclassified | ||||||
Reclassifications from accumulated other comprehensive (loss) income | ||||||
Actuarial losses, net and prior service cost | 9 | |||||
Settlement loss | 447 | |||||
Tax expense (benefit) | (96) | |||||
Accumulated Defined Benefit Plans Adjustment, Net Gain (Loss) Including Portion Attributable to Noncontrolling Interest | Amount reclassified | ||||||
Reclassifications from accumulated other comprehensive (loss) income | ||||||
Actuarial losses, net and prior service cost | 6 | 18 | 26 | |||
Settlement loss | $ 447 | 0 | 451 | 0 | ||
Tax expense (benefit) | (2) | (104) | (7) | |||
Net of tax | 4 | 365 | 19 | |||
Hüppe | Accumulated Defined Benefit Plans Adjustment, Net Gain (Loss) Attributable to Parent | Amount reclassified | ||||||
Reclassifications from accumulated other comprehensive (loss) income | ||||||
Actuarial losses, net and prior service cost | (3) | |||||
Hüppe | Accumulated Foreign Currency Adjustment Attributable to Parent | Amount reclassified | ||||||
Reclassifications from accumulated other comprehensive (loss) income | ||||||
Actuarial losses, net and prior service cost | $ 23 | |||||
Interest Rate Swaps | Accumulated Gain (Loss), Cash Flow Hedge, Including Noncontrolling Interest | Amount reclassified | ||||||
Reclassifications from accumulated other comprehensive (loss) income | ||||||
Tax expense (benefit) | 0 | 5 | (1) | |||
Net of tax | 0 | 7 | 1 | |||
Interest rate swaps | $ 0 | $ 2 | $ 2 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Net Sales | |||
Net sales | $ 8,680 | $ 8,375 | $ 7,188 |
Operating profit | 1,297 | 1,405 | 1,295 |
Other income (expense), net | (104) | (717) | (164) |
Income from continuing operations before income taxes | 1,193 | 688 | 1,131 |
Assets | 5,187 | 5,575 | 5,777 |
Export sales from U.S. included in net sales | $ 337 | $ 322 | $ 274 |
Maximum | |||
Net Sales | |||
Intra-company sales between segments in percentage | 1% | 1% | 1% |
One customer | Customer concentration risk | Sales | |||
Net Sales | |||
Net sales | $ 3,298 | $ 3,037 | $ 2,812 |
North America | |||
Net Sales | |||
Net sales | 6,978 | 6,624 | 5,805 |
International, principally Europe | |||
Net Sales | |||
Net sales | 1,702 | 1,751 | 1,383 |
United States | |||
Net Sales | |||
Long-lived assets | 1,372 | 1,332 | 1,301 |
United States | Sales | |||
Net Sales | |||
Net sales | 6,756 | 6,387 | 5,592 |
Europe | |||
Net Sales | |||
Long-lived assets | 548 | 546 | 522 |
Plumbing Products | |||
Net Sales | |||
Net sales | 5,252 | 5,135 | 4,136 |
Plumbing Products | North America | |||
Net Sales | |||
Net sales | 3,550 | 3,384 | 2,753 |
Plumbing Products | International, principally Europe | |||
Net Sales | |||
Net sales | 1,702 | 1,751 | 1,383 |
Decorative Architectural Products | |||
Net Sales | |||
Net sales | 3,428 | 3,240 | 3,052 |
Decorative Architectural Products | North America | |||
Net Sales | |||
Net sales | 3,428 | 3,240 | 3,052 |
Decorative Architectural Products | International, principally Europe | |||
Net Sales | |||
Net sales | 0 | 0 | 0 |
Operating Segments | |||
Net Sales | |||
Net sales | 8,680 | 8,375 | 7,188 |
Operating profit | 1,384 | 1,510 | 1,389 |
Assets | 4,876 | 4,976 | 4,455 |
Operating Segments | North America | |||
Net Sales | |||
Net sales | 6,978 | 6,624 | 5,805 |
Operating profit | 1,116 | 1,214 | 1,167 |
Assets | 3,552 | 3,510 | 3,101 |
Operating Segments | International, principally Europe | |||
Net Sales | |||
Net sales | 1,702 | 1,751 | 1,383 |
Operating profit | 268 | 296 | 222 |
Assets | 1,324 | 1,466 | 1,354 |
Operating Segments | Plumbing Products | |||
Net Sales | |||
Net sales | 5,252 | 5,135 | 4,136 |
Operating profit | 819 | 929 | 806 |
Assets | 3,096 | 3,195 | 2,822 |
Operating Segments | Decorative Architectural Products | |||
Net Sales | |||
Net sales | 3,428 | 3,240 | 3,052 |
Operating profit | 565 | 581 | 583 |
Assets | 1,780 | 1,781 | 1,633 |
Corporate, Non-Segment | |||
Net Sales | |||
General corporate expense, net | (87) | (105) | (94) |
Assets | $ 311 | $ 599 | $ 1,322 |
SEGMENT INFORMATION - Depreciat
SEGMENT INFORMATION - Depreciation and Amortization (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Depreciation and Amortization | |||
Property Additions | $ 224 | $ 128 | $ 114 |
Depreciation and amortization | 145 | 151 | 133 |
Operating Segments | |||
Depreciation and Amortization | |||
Property Additions | 218 | 125 | 111 |
Depreciation and amortization | 137 | 138 | 125 |
Operating Segments | Plumbing Products | |||
Depreciation and Amortization | |||
Property Additions | 154 | 94 | 86 |
Depreciation and amortization | 103 | 101 | 84 |
Operating Segments | Decorative Architectural Products | |||
Depreciation and Amortization | |||
Property Additions | 64 | 31 | 25 |
Depreciation and amortization | 34 | 37 | 41 |
Corporate, Non-Segment | |||
Depreciation and Amortization | |||
Property Additions | 6 | 3 | 2 |
Depreciation and amortization | 8 | 13 | 8 |
Discontinued operations | |||
Depreciation and Amortization | |||
Property Additions | 0 | 0 | 1 |
Depreciation and amortization | $ 0 | $ 0 | $ 0 |
OTHER INCOME (EXPENSE), NET (De
OTHER INCOME (EXPENSE), NET (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | ||
May 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Other Income and Expenses [Abstract] | ||||
Contingent consideration | $ 24 | $ (16) | $ 0 | |
Net periodic pension and post-retirement benefit expense | (10) | (430) | (35) | |
Equity investment (loss) income, net | (6) | 11 | 3 | |
Foreign currency transaction losses | (3) | (4) | (10) | |
Income from cash and cash investments | 2 | 1 | 3 | |
Loss on sale of business, net | (1) | (18) | 0 | |
Gain on preferred stock redemption | $ 14 | 0 | 14 | 0 |
Dividend income | 0 | 6 | 10 | |
Other items, net | (2) | (3) | 9 | |
Total other, net | $ 4 | $ (439) | $ (20) |
OTHER INCOME (EXPENSE), NET - F
OTHER INCOME (EXPENSE), NET - Footnote Details (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
May 31, 2021 | Dec. 31, 2021 | Jun. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Net Investment Income [Line Items] | ||||||
Contingent consideration | $ 24 | |||||
Expense from revaluation of contingent consideration | (24) | $ 16 | $ 0 | |||
Pre-tax expense | $ 406 | 51 | 492 | 84 | ||
Reduction in pension expense | $ 7 | |||||
Deferred currency translation loss | 104 | 717 | 164 | |||
Proceeds from redemption of preferred stock | $ 166 | |||||
Gain (loss) on preferred stock redemption | $ 14 | $ 0 | $ 14 | 0 | ||
Miscellaneous income related to escrow settlement | 9 | |||||
Amount reclassified | ||||||
Net Investment Income [Line Items] | ||||||
Deferred currency translation loss | $ 9 |
INCOME TAXES - Income from Cont
INCOME TAXES - Income from Continuing Operations before Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income from continuing operations before income taxes: | |||
U.S. | $ 873 | $ 374 | $ 892 |
Foreign | 320 | 314 | 239 |
Income from continuing operations before income taxes | 1,193 | 688 | 1,131 |
Currently payable: | |||
U.S. Federal | 178 | 145 | 170 |
State and local | 29 | 40 | 33 |
Foreign | 96 | 93 | 69 |
Deferred: | |||
U.S. Federal | (16) | (57) | (9) |
State and local | 2 | (10) | 11 |
Foreign | (1) | (1) | (5) |
Income tax (benefit) expense | 288 | 210 | $ 269 |
Deferred tax assets at December 31: | |||
Receivables | 10 | 14 | |
Inventories | 21 | 17 | |
Other assets, including stock-based compensation | 13 | 13 | |
Accrued liabilities | 52 | 58 | |
Noncurrent operating lease liabilities | 50 | 40 | |
Other long-term liabilities | 51 | 79 | |
Capitalized research expenditures | 20 | 5 | |
Net operating loss carryforward | 21 | 26 | |
Tax credit carryforward | 11 | 11 | |
Total | 249 | 263 | |
Valuation allowance | (15) | (17) | |
Total | 234 | 246 | |
Deferred tax liabilities at December 31: | |||
Property and equipment | 56 | 62 | |
Operating lease right-of-use assets | 53 | 43 | |
Intangibles | 65 | 75 | |
Investment in foreign subsidiaries | 10 | 10 | |
Other investments | 0 | 3 | |
Other | 17 | 16 | |
Total | 201 | 209 | |
Net deferred tax asset at December 31 | $ 33 | $ 37 |
INCOME TAXES - Income Tax Discl
INCOME TAXES - Income Tax Disclosure (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Contingency [Line Items] | |||
Deferred tax assets | $ 60 | $ 57 | |
Deferred Tax Assets, Valuation Allowance | (15) | (17) | |
Tax (expense) benefit, change in valuation allowance | $ (5) | ||
Deferred tax assets. net operating loss and tax credit carryforwards | 32 | 37 | |
Deferred tax assets. net operating loss and tax credit carryforwards, subject to expiration | $ 20 | $ 25 | |
Deferred tax assets. net operating loss and tax credit carryforwards, subject to expiration, expiration term | 15 years | 15 years | |
Deferred tax assets. net operating loss and tax credit carryforwards, not subject to expiration | $ 12 | $ 12 | |
Income tax expense from loss on termination of defined benefit plan | 14 | ||
Income tax expense from divestiture of business | 4 | ||
Income tax expense due to disproportionate tax effects | 16 | ||
Income taxes paid | 281 | 246 | $ 442 |
Other Noncurrent Assets | |||
Income Tax Contingency [Line Items] | |||
Deferred tax assets | 60 | 57 | |
Other Noncurrent Liabilities | |||
Income Tax Contingency [Line Items] | |||
Deferred tax liabilities | $ 27 | $ 20 |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of the U.S. Federal Statutory Tax Rate to the Income Tax (Benefit) Expense (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
U.S. Federal statutory tax rate | 21% | 21% | 21% |
State and local taxes, net of U.S. Federal tax benefit | 2% | 4% | 3% |
Higher taxes on foreign earnings | 2% | 3% | 1% |
Stock-based compensation | 0% | (1.00%) | (1.00%) |
Business divestiture with no tax impact | 0% | 1% | 0% |
Disproportionate tax effects | 0% | 2% | 0% |
Other, net | (1.00%) | 1% | 0% |
Effective tax rate | 24% | 31% | 24% |
INCOME TAXES - Uncertain Tax Po
INCOME TAXES - Uncertain Tax Positions (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Uncertain Tax Positions | ||
Balance at the beginning of the period | $ 81 | $ 74 |
Current year tax positions: Additions | 21 | 19 |
Current year tax positions: Reductions | (5) | (2) |
Prior year tax positions: Additions | 0 | 1 |
Prior year tax positions: Reductions | (3) | (1) |
Lapse of applicable statutes of limitation | (11) | (10) |
Balance at the end of the period | 83 | 81 |
Liability for interest and penalties | 11 | 11 |
Balance at December 31, including interest and penalties | $ 94 | $ 92 |
INCOME TAXES - Uncertain Tax _2
INCOME TAXES - Uncertain Tax Positions and Interest and Penalties - Additional Disclosures (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Income Taxes | ||
Unrecognized tax benefits that would impact effective tax rate if recognized | $ 66 | $ 64 |
Liability for uncertain tax positions | 94 | 92 |
Reasonably possible reduction in the liability for uncertain tax positions | 13 | |
Other Noncurrent Liabilities | ||
Income Taxes | ||
Liability for uncertain tax positions | 92 | 88 |
Other Noncurrent Assets | ||
Income Taxes | ||
Liability for uncertain tax positions | $ 2 | $ 4 |
INCOME PER COMMON SHARE - Recon
INCOME PER COMMON SHARE - Reconciliations of the Numerators and Denominators Used in the Computations of Basic and Diluted Earnings per Common Share (Details) - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Numerator (basic and diluted): | |||
Income from continuing operations | $ 844 | $ 410 | $ 810 |
Less: Allocation to redeemable noncontrolling interest | (2) | 2 | 0 |
Less: Allocation to unvested restricted stock awards | 4 | 2 | 6 |
Income from continuing operations attributable to common shareholders | 842 | 406 | 804 |
Income from discontinued operations, net | 0 | 0 | 414 |
Less: Allocation to unvested restricted stock awards | 0 | 0 | 3 |
Income from discontinued operations, net attributable to common shareholders | 0 | 0 | 411 |
Net income attributable to common shareholders | $ 842 | $ 406 | $ 1,215 |
Denominator: | |||
Basic common shares (based upon weighted average) (in shares) | 231 | 249 | 264 |
Add: Stock option dilution (in shares) | 1 | 2 | 0 |
Diluted common shares (in shares) | 232 | 251 | 264 |
INCOME PER COMMON SHARE - Antid
INCOME PER COMMON SHARE - Antidilutive Securities (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Stock options | |||
Antidilutive securities excluded from computation of earnings per share | |||
Antidilutive effect on computation of diluted earnings per common share (in shares) | 635 | 296 | 374 |
Restricted stock units | |||
Antidilutive securities excluded from computation of earnings per share | |||
Antidilutive effect on computation of diluted earnings per common share (in shares) | 20 | 0 | 0 |
Performance restricted stock units | |||
Antidilutive securities excluded from computation of earnings per share | |||
Antidilutive effect on computation of diluted earnings per common share (in shares) | 15 | 0 | 0 |
INCOME PER COMMON SHARE - Narra
INCOME PER COMMON SHARE - Narrative (Details) - shares shares in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Long-term stock awards | ||
Antidilutive securities excluded from computation of earnings per share | ||
Antidilutive effect on computation of diluted earnings per common share (in shares) | 273 | 608 |
OTHER COMMITMENTS AND CONTING_3
OTHER COMMITMENTS AND CONTINGENCIES - Warranty (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Changes in the company's warranty liability | ||
Balance at January 1 | $ 80 | $ 83 |
Accruals for warranties issued during the year | 40 | 38 |
Accruals related to pre-existing warranties | (3) | (8) |
Settlements made (in cash or kind) during the year | (34) | (31) |
Other, net (including currency translation and acquisitions) | (3) | (2) |
Balance at December 31 | $ 80 | $ 80 |
SCHEDULE II. VALUATION AND QU_2
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | ||
May 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Movement in valuation and qualifying accounts | ||||
Balance at Beginning of Period | $ 6 | $ 7 | $ 5 | |
Charged to Costs and Expenses | 5 | 1 | 3 | |
Charged to Other Accounts | 0 | 0 | 0 | |
Deductions | (3) | (2) | (1) | |
Balance at End of Period | 8 | 6 | 7 | |
Hüppe | ||||
Movement in valuation and qualifying accounts | ||||
Deductions | $ (1) | |||
Valuation allowance on deferred tax assets: | ||||
Movement in valuation and qualifying accounts | ||||
Balance at Beginning of Period | 17 | 35 | 38 | |
Charged to Costs and Expenses | 0 | 5 | 0 | |
Charged to Other Accounts | 0 | 0 | 2 | |
Deductions | (2) | (5) | ||
Balance at End of Period | $ 15 | 17 | $ 35 | |
Valuation allowance on deferred tax assets: | Hüppe | ||||
Movement in valuation and qualifying accounts | ||||
Deductions | $ (23) |