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

Indicate by check mark whether the registrant has submitted electronically, ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule12b-2 of the Exchange Act.

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

Indicate by check mark whether the registrant is a shell company (as defined inRule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock, par value $0.01 per share, at ~~October 20, 2017~~April 16, 2021 was ~~151,800,773.~~138,598,332.

For the ~~Nine and~~ Three Months Ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020

For the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020

The Company is a leading home and security products company with a portfolio of leading branded products used for residential home repair, remodeling, new construction and security applications.

The condensed consolidated balance sheet as of ~~September 30, 2017,~~March 31, 2021, the related condensed consolidated statements of comprehensive income and equity for the ~~nine~~three months ended March 31, 2021 and ~~three-month periods ended September 30, 2017 and 2016~~2020, and the related condensed consolidated statements of cash flows ~~and equity~~ for the ~~nine-month periods~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020 are unaudited. The presentation of these financial statements requires us to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ from those estimates. In the opinion of management, all adjustments necessary for a fair statement of the financial statements have been included. Interim results may not be indicative of results for a full year.

In 2018 our Plumbing segment entered into a strategic partnership with, and acquired non-controlling equity interests in, Flo Technologies, Inc. (“Flo”), a U.S. manufacturer of comprehensive water monitoring and shut-off systems with leak detection technologies. In January 2020, we entered into an agreement to acquire the remaining outstanding shares of Flo in a multi-phase transaction.In January 2021, upon the expiration of the minority shareholders’ substantive participating rights, we began to consolidate the financial results of Flo into the Company’s financial results. The financial results of Flo are included in the Company’s condensed consolidated statement of comprehensive income and statement of cash flow for the three months ended March 31, 2021 and the condensed consolidated balance sheet as of March 31, 2021. The results of operations are included in the Plumbing segment.

Our Doors & Security segment was renamed “Outdoors & Security” to better align with the segment’s strategic focus on the outdoor living space and to better represent the brands within the segment, including the newly acquired Larson Manufacturing (“Larson”). The Outdoors & Security segment name change had no impact on the Company’s previously reported historical financial position, results of operations, cash flow or segment level results.

In December 2020, we acquired 100% of the outstanding equity interests of Larson, the North American market leading brand of storm, screen and security doors. Larson also sells related outdoor living products including retractable screens and porch windows. The Company completed the acquisition for a total purchase price, excluding expected tax benefits, of approximately $717.5 million, net of cash acquired and final working capital adjustments of $2.3 million paid during the three months ended March 31, 2021. We financed the transaction with borrowings under our existing credit facilities. The financial results of Larson were included in the Company’s condensed consolidated statement of comprehensive income and statement of cash flow for the three months ended March 31, 2021 and the condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020. The results of operations are included in the Outdoors & Security segment.

The condensed consolidated financial statements and notes are presented pursuant to the rules and regulations of the Securities and Exchange Commission and do not contain certain information included in our annual audited consolidated financial statements and notes. The December 31, ~~2016~~2020 condensed consolidated balance sheet was derived from ~~the~~our audited consolidated financial statements, but does not include all disclosures required by U.S. generally accepted accounting principles (“GAAP”). This Quarterly Report on Form10-Q should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form10-K for the year ended December 31, ~~2016.~~2020.

In ~~July 2017, we acquired Shaws Since1897 Limited~~December 2019, the Financial Accounting Standards Board (“~~Shaws”~~FASB”)~~, aUK-based~~ ~~luxury plumbing products company that specializes~~ issued Accounting Standards Update (“ASU”) 2019-12, which is intended to simplify accounting for income taxes and improve consistency in ~~manufacturing~~application. ASU 2019-12 amends certain elements of income tax accounting, including but not limited to intraperiod tax allocations, step-ups in tax basis of goodwill, and ~~selling fireclay sinks and selling brassware and accessories~~calculating taxes on year-to-date losses in partnership with Perrin & Rowe. This acquisition broadened our plumbing portfolio and enhanced future growth opportunities. Net sales and operating income in the three months ended September 30, 2017 were not material to the Company.interim periods. The ~~financial results of Shaws were included in~~guidance is effective for the Company’s ~~consolidated balance sheets as~~fiscal year beginning January 1, 2021. The adoption of ~~September 30, 2017, the Company’s consolidated statements~~this guidance did not have a material effect on our financial statements.

Effects of ~~income for the nine and three months ended September 30, 2017, and statement of cash flows for the nine months ended September 30, 2017.~~Reference Rate Reform

In ~~September 2016, we acquired ROHL LLC (“ROHL”)~~March 2020, the FASB issued ASU 2020-04, which provides relief from accounting analysis and in a related transaction, we acquired TCL Manufacturing which gave us ownership of Perrin & Rowe Limited (“Perrin & Rowe”). In addition, in May 2016, we acquired Riobel Inc (“Riobel”). The financial results of ROHL, Perrin & Rowe, and Riobel were included inimpacts that may otherwise be required for modifications to agreements necessitated by reference rate reform. It also provides optional expedients to enable the Company’s consolidated balance sheets as of September 30, 2017 and December 31, 2016, the Company’s consolidated statements of income for the nine and three months ended September 30, 2017, and statement of cash flows for the nine months ended September 30, 2017.

~~In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)2014-09,~~ ~~which clarifies the~~continuance of hedge accounting ~~for revenue arising from contracts with customers and specifies the disclosures that an entity should include in its financial statements. The standard~~where certain hedging relationships are impacted by reference rate reform. This optional guidance is effective ~~for annual reporting periods beginning after~~immediately, and available to be used through December 15, 2017 (calendar year 2018 for Fortune Brands). During 2016, the FASB issued certain amendments to the standard relating to the principal versus agent guidance, accounting for licenses of intellectual property and identifying performance obligations as well as the guidance on transition, collectability, noncash consideration and the presentation of sales and other similar taxes. The effective date and transition requirements for these amendments are the same as those of the original ASU. We have elected the modified retrospective transition approach and also have identified focus areas for each of our reporting segments and have made substantial progress in our assessment of the accounting and financial reporting implications as of September 30, 2017. Our key considerations pursuant to ASU 2014-09 are the control of goods (i.e., timing of revenue recognition), separate performance obligations, customer rights of return (i.e., the reclassification on the balance sheet of the customer rights of return from accounts receivable to a refund liability as well as the recognition of a corresponding asset) and our accounting for display assets. We do not expect the change in accounting related to these considerations to have a material effect on our financial statements.

~~In February 2016, the FASB issued ASU2016-02,~~ ~~which requires lessees to recognize almost all leases on their balance sheet as a“right-of-use”~~ asset and lease liability but recognize related expenses in a manner similar to current accounting. The guidance also eliminates current real estate-specific provisions for all entities. The standard is effective for annual periods beginning after December 15, 2018 (calendar year 2019 for Fortune Brands) and earlier application is permitted.31, 2022. We are assessing the impact that reference rate reform and the related adoption of this ~~standard will~~guidance may have on our financial statements.

~~In August 2017, the FASB issued ASU2017-12,~~ that amends current hedge accounting model. The new standard eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item (consistent with our current practice). The change in fair value for qualifying cash flow and net investment hedges will be included in Other comprehensive income (until they are reclassified into the income statement). The standard also eases certain documentation and assessment requirements and modifies the accounting for components excluded from the assessment of the hedge effectiveness. Standard is effective as of January 1, 2019 and earlier application is permitted. We are assessing the impact the adoption of this standard will haveSupplemental information on our ~~financial statements.~~balance sheets is as follows:

~~Clarifying Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets~~Flo Technologies

In ~~May 2017,~~2018 our Plumbing segment entered into a strategic partnership with, and acquired non-controlling equity interests in, Flo, a U.S. manufacturer of comprehensive water monitoring and shut-off systems with leak detection technologies. In January 2020, we entered into an agreement to acquire the ~~FASB issued ASC610-20~~ ~~that clarifies~~remaining outstanding shares of Flo in a multi-phase transaction. As part of this agreement, we acquired a majority of Flo’s outstanding shares during 2020 and entered into a forward contract to purchase all remaining shares of Flo during the ~~scope~~first quarter of 2022 for a price based on a multiple of Flo’s 2021 sales and ~~application~~adjusted earnings before interest and taxes.

During 2020, we applied the equity method of ~~various standards for~~accounting to our investment in Flo as the ~~sale~~minority shareholders had substantive participating rights which precluded consolidation in our results of ~~nonfinancial~~operations and statements of financial position and cash flows. Immediately prior to applying the equity method of accounting, we recognized a non-cash gain of $6.6 million within other income during the three months ended March 31, 2020 related to the remeasurement of our previously existing investment in Flo.

The minority shareholders’ substantive participating rights expired on January 1, 2021, at which time we obtained control of, and began consolidating, Flo in our results of operations and statements of financial positions and cash flows. Immediately prior to consolidating Flo, we recognized a non-cash loss of $4.5 million within other expense during the three months ended March 31, 2021 related to the remeasurement of our previously existing investment in Flo. The fair value allocated to assets ~~(e.g. PP&E including real estate, intangible assets, materials~~acquired and ~~supplies). The standard distinguishes between a sale to customer vsnon-customer.~~ ~~Sales to customers are in scope of the new revenue standard. It also clarifies a derecognition model for nonfinancial assets that do not represent a business. The standard is effective~~liabilities assumed as of January 1, ~~2018 consistent with the effective date~~2021 was $87.8 million,net of cash acquired of $9.7 million. Flo’s net sales and operating income for the ~~new revenue recognition standard. We are assessing~~three months ended March 31, 2021 were not material to the ~~impact the adoption of this standard will have on our financial statements and~~Company.

In December 2020, we ~~will consider the implications~~acquired 100% of the ~~new standard on case by case basis~~outstanding equity of Larson, the North American market leading brand of storm, screen and security doors. Larson also sells related outdoor living products including retractable screens and porch windows. The Company completed the acquisition for ~~allnon-recurring~~ ~~transactions where we sell or transfer nonfinancial assets.~~

~~Stock Compensation Scope~~a total purchase price, excluding expected tax benefits, of ~~Modification Accounting~~

~~In May 2017,~~approximately $717.5 million, net of cash acquired and final working capital adjustments of $2.3 million paid during the ~~FASB issued ASU2017-09,~~ ~~which clarifies when changes~~three months ended March 31, 2021. We financed the transaction with borrowings under our existing credit facilities. The financial results of Larson were included in the Company’s consolidated balance sheet as of December 31, 2020. The results of operations are included in the Outdoors & Security segment. We incurred $4.5 million of Larson acquisition-related transaction costs in the year ended December 31, 2020. The goodwill expected to be deductible for income tax purposes is approximately $290 million, subject to the ~~terms or conditions of a share-based payment award must be accounted for as modifications. The new guidance provides a relief to entities that makenon-substantive~~ changes to their share-based payment awards and will result in fewer changes to the terms of an award being accounted for as modifications. The standard is effective January 1, 2018 and early adoption is permitted; however we have elected not to early adopt. We do not expect the adoption of this standard to have a material effect on our financial statements.

~~In March 2017, the FASB issued ASU2017-07,~~ ~~which requires entities to present the service cost component~~finalization of the ~~net periodic benefit cost in~~purchase price allocation.

The following table summarizes the ~~same income statement line item(s) as other employee compensation costs arising from services rendered during~~preliminary allocation of the ~~period. In addition, only~~purchase price to the service cost component will be eligible for capitalization in assets. Employers will present the other components (i.e., interest cost, expected return on plan assets and actuarial gains/losses) separately from the line item(s) that includes the service cost and outside of any subtotal of operating income. The standard is effective January 1, 2018 and early adoption is permitted. We are assessing the impact the adoption of this standard will have on our financial statements.

^(a) Net assets exclude $0.4 million of cash transferred to the Company as the result of the Larson acquisition.

The preceding purchase price ~~allocation).~~allocation has been determined provisionally and is subject to revision as additional information about the fair value of individual assets and liabilities becomes available. We apply significant judgement in determining the estimates and assumptions used to determine the fair value of the identifiable intangible assets, including forecasted revenue growth rates, EBITDA margins, percentage of revenue attributable to the tradename, contributory asset charges, customer attrition rate, market-participant discount rates and the assumed royalty rates. The ~~new standard~~Company is ~~effective for annual and interim impairment tests performed~~ in the ~~periods beginning after January 1, 2020~~process of finalizing valuations of certain tangible and ~~early adoption is permitted. We plan to early adopt ASU2017-04~~ ~~in conjunction with our annual goodwill impairment test during the fourth quarter~~intangible assets, including property, plant and equipment and identifiable intangible assets. The provisional measurement of ~~2017.~~property, plant and

~~In January 2017, the FASB issued ASU2017-01,~~ ~~which changes the definition of a business to assist entities with evaluating when a set of transferred~~equipment, identifiable intangible assets, and ~~activities~~goodwill is ~~a business and therefore business combination guidance would apply. The new standard requires an entity~~subject to ~~evaluate if substantially all of~~change. Any change in the acquisition date fair value of the ~~gross~~acquired assets ~~acquired~~and liabilities will change the amount of the purchase price allocable to goodwill.

Goodwill includes expected sales and cost synergies. The goodwill is ~~concentrated~~included in our Outdoors & Security segment. Larson’s identifiable intangible assets consist of a ~~single identifiable~~finite-lived customer relationships asset ~~(i.e.,~~of $168.0 million, an indefinite-lived tradename of $111.0 million and a ~~business) or a group~~finite-lived proprietary technology asset of ~~similar identifiable assets (i.e., not a business).~~$34.0 million. The ~~guidance also requires a business~~useful life of the customer relationship intangible asset is estimated to ~~include at least one substantive process and narrows the definition of outputs (e.g., revenues with customers).~~be 13 years. The ~~standard is effective January 1, 2018 and early adoption is permitted. We do not expect the adoption of~~Larson tradename has been assigned an indefinite life as we currently anticipate that this ~~standard to have a material effect on our financial statements.~~

~~In November 2016, the FASB issued ASU2016-18,~~ according to which entities are no longer required to present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. The prior standard did not address the classification of activity related to restricted cash and restricted cash equivalents in the statement oftradename will contribute cash flows ~~which has resulted in diversity in~~to the ~~presentation~~Company indefinitely. The useful life of ~~cash flows. The standard~~the proprietary technology intangible asset is ~~effective January 1, 2018~~estimated to be 7 years. Customer and ~~early adoption is permitted; however, we elected not to early adopt. We do not expect the adoption of this standard to have~~contractual relationships and proprietary technology are amortized on a ~~material effect on our financial statements.~~straight-line basis over their useful lives.

~~In October 2016, the FASB issued ASU2016-16,~~ which requires companies to account for the income tax effects of intercompany sales and transfers of assets other than inventory (e.g., intangible assets) when the transfer occurs. Under the current guidance, companies are required to defer the income tax effects of intercompany transfers of assets until the asset has been sold to an outside party or otherwise recognized (e.g., depreciated, amortized or impaired). The standard is effective January 1, 2018 and early adoption is permitted; however, we elected not to early adopt. The transition method will be a “modified retrospective” (i.e., with a cumulative adjustment to retained earnings at adoption). We are assessing the impact the adoption of this standard will have on our financial statements.

~~In September 2016, the FASB issued ASU2016-15,~~ which changes how an entity classifies certain cash receipts and cash payments on its statement of cash flows. The key changes that may potentially impact our financial statements include the following: 1) Cash payments for debt prepayment or extinguishment costs would be classified as financing cash outflows; 2) Contingent consideration payments that are not made within three months after the consummation of a business combination would be classified as financing (if the payment is made up to the acquisition date fair value of liability) or operating outflows (if in excess of acquisition fair value). Cash payments made “soon after” the consummation of a business combination generally would be classified as cash outflows for investing activities; 3) Insurance settlement proceeds would be classified based on the nature of the loss; and 4) Company-owned life insurance settlement proceeds would be presented as investing cash inflows, and premiums would be classified as investing or operating cash outflows, or a combination of both. The new standard is effective January 1, 2018 and should be adopted retrospectively. Early adoption is permitted; however, we elected not to early adopt. We do not expect the adoption of this standard to have a material effect on our financial statements.

~~In June 2016, the FASB issued ASU2016-13,~~ which changes the impairment model for most financial assets and certain other instruments that are not measured at fair value through net income. The new guidance applies to most financial assets measured at amortized cost, including trade and other receivables and loans as well as~~off-balance-sheet~~ credit exposures (e.g., loan commitments and standby letters of credit). The standard will replace the “incurred loss” approach under the current guidance with an “expected loss” model that requires an entity to estimate its lifetime “expected credit loss.” The standard is effective January 1, 2020 and early application is permitted beginning January 1, 2019. We are assessing the impact the adoption of this standard will have on our financial statements.

~~In January 2016, the FASB issued ASU2016-01,~~ which requires entities to measure investments in unconsolidated entities (other than those accounted for using the equity method of accounting) at fair value through the income statement. There will no longer be an~~available-for-sale~~ classification (with changes in fair value reported in Other Comprehensive Income). In addition, the cost method is eliminated for equity investments without readily determinable fair values. The new standard is effective January 1, 2018. Early application is permitted for certain provisions of the standard; however, we elected not to early adopt. We do not expect this standard to have a material effect on our financial statements.

We had goodwill of ~~$1,852.8~~$2,466.2 million and ~~$1,833.8~~$2,394.8 million as of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016,~~2020, respectively. ~~The $19.0 million increase was primarily due to the acquisition-related adjustments in our Plumbing segment (See Note 4) and foreign translation adjustments.~~ The change in the net carrying amount of goodwill by segment was as follows:

^(a)

Net of accumulated impairment losses of $399.5 million in the ~~Doors~~Outdoors & Security segment.

We also had net identifiable intangible assets ~~principally tradenames,~~ of ~~$1,105.4~~$1,434.3 million and ~~$1,107.0~~$1,420.3 million as of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016,~~2020, respectively. The $32.0 million increase in gross identifiable intangible assets was primarily due to the consolidation of Flo and foreign translation adjustments.

The gross carrying value and accumulated amortization by class of identifiable intangible assets as of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016~~2020 were as follows:


(In millions)	As of September 30, 2017							As of December 31, 2016							As of March 31, 2021							As of December 31, 2020
	Gross Carrying Amounts		Accumulated Amortization			Net Book Value		Gross Carrying Amounts		Accumulated Amortization			Net Book Value		Gross Carrying Amounts		Accumulated Amortization			Net Book Value		Gross Carrying Amounts		Accumulated Amortization			Net Book Value
Indefinite-lived tradenames	$	682.6	$	—		$	682.6	$	671.8	$	—		$	671.8	$	712.2	$	—		$	712.2	$	711.0	$	—		$	711.0

Amortizable intangible assets
Tradenames		18.6		(9.4	)		9.2		15.8		(7.3	)		8.5		37.3		(14.5	)		22.8		34.8		(14.0	)		20.8
Customer and contractual relationships		627.1		(226.0	)		401.1		611.9		(203.1	)		408.8		978.2		(350.1	)		628.1		973.2		(337.3	)		635.9
Patents/proprietary technology		57.2		(44.7	)		12.5		61.9		(44.0	)		17.9		132.9		(61.7	)		71.2		109.6		(57.0	)		52.6

Total		702.9		(280.1	)		422.8		689.6		(254.4	)		435.2		1,148.4		(426.3	)		722.1		1,117.6		(408.3	)		709.3

Total identifiable intangibles	$	1,385.5	$	(280.1	)	$	1,105.4	$	1,361.4	$	(254.4	)	$	1,107.0	$	1,860.6	$	(426.3	)	$	1,434.3	$	1,828.6	$	(408.3	)	$	1,420.3

The $24.1 million increase in gross identifiable intangible assets was primarily due to acquisition-related adjustments in our Plumbing segment (See Note 4) as well as foreign translation adjustments, partially offset by impairment charges during the first quarter of 2017 related to our decision to sell Field ID (See Note 6).

Amortizable identifiable intangible assets, principally ~~tradenames and~~ customer relationships, are subject to amortization ~~on a straight-line basis~~ over their estimated useful life, ranging from 2 to 30 years, based on the assessment of a number of factors that may impact useful ~~life. These factors include historical and tradename performance with respect to consumer name recognition, geographic market presence, market share, plans for ongoing tradename support and promotion,~~life, which includes customer attrition rates and other relevant factors.

12During the first quarter of 2021, no events or circumstances occurred that required us to perform interim impairment tests of goodwill or indefinite-lived tradenames.

During the second quarter of 2020, extended closures of luxury plumbing showrooms associated with the impact of the novel coronavirus (“COVID-19”) pandemic led to lower than expected sales related to an indefinite-lived tradename within the Plumbing segment, which combined with the updated financial outlook compared to previous forecasts and the continued uncertainty of the COVID-19 pandemic on the sales and profitability related to the tradename led us to conclude that it was more likely than not that the indefinite-lived tradename was impaired. Therefore, we performed an interim impairment test as of June 30, 2020, and as a result we recognized a pre-tax impairment charge of $13.0 million related to this tradename. We also performed an evaluation of the useful life of this tradename and determined it was no longer indefinite-lived due to changes in long-term management expectations and future operating plans. As a result, the remaining carrying value of this tradename is being amortized over its estimated useful life of 30 years.

In the first quarter of 2020, we recognized an impairment charge of $9.5 million related to an indefinite-lived tradename in our Cabinets segment. This charge was primarily the result of lower expected sales of custom cabinetry products related to the impact of COVID-19. As of March 31, 2021, the carrying value of this tradename was $29.1 million.

The fair values of these tradenames were measured using the relief-from-royalty approach, which estimates the present value of royalty income that could be hypothetically earned by licensing the tradename to a third party over its remaining useful life. Some of

FORTUNE BRANDS HOME & SECURITY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5.	Goodwill and Identifiable Intangible Assets (Continued)

the more significant assumptions inherent in estimating the fair values include forecasted revenue growth rates for the tradename, assumed royalty rate, and a market-participant discount rate that reflects the level of risk associated with the tradenames’ future revenues and profitability. We selected the assumptions used in the financial forecasts using historical data, supplemented by current and anticipated market conditions, estimated growth rates, and management plans. These assumptions represent Level 3 inputs of the fair value hierarchy (refer to Note 8).

The significant assumptions used to estimate the fair values of the tradenames impaired during the year ended December 31, 2020 were as follows:

	2020
Unobservable Input	Minimum			Maximum			Weighted Average^(a)
Discount rate		14.8	%		15.8	%		15.1	%
Royalty rate^(b)		4.0	%		5.0	%		4.3	%
Long-term revenue growth rate^(c)		1.0	%		3.0	%		1.6	%

^(a)	Weighted by relative fair value of the impaired tradenames.

^(b)	Represents estimated percentage of sales a market-participant would pay to license the impaired tradenames.

^(c)	Selected long-term revenue growth rate within 10-year projection period of the impaired tradenames.

As of December 31, ~~2016,~~2020, the fair value of ~~one~~four Cabinets' tradenames exceeded their carrying values of $180.6 million by less than 30%. A reduction in the estimated fair value of the tradenames in ~~the~~our Cabinets segment ~~and one of the tradenames in the Doors segment exceeded their carrying value by less than 10%. In the second quarter of 2017, we performed an interim~~could trigger additional impairment test on the tradename in the Cabinets segment and concluded the fair value continues to exceed its carrying value. A further reduction in fair value of these tradenames may result in an impairment chargecharges in future periods. ~~As of September 30, 2017, the carrying values of these tradenames was $168 million~~.We did not identify any impairment triggers during the third quarter of 2017. In addition to evaluating the interim events that may require more frequent impairment testing, we will conduct our annual impairment testing in the fourth quarter of 2017.

~~The Company cannot predict the occurrence of certain events that might adversely affect the carrying value of goodwill and other intangible assets. The events and/~~Events or circumstances that could have a potential negative effect on the estimated fair value of our reporting units and indefinite-lived tradenames include: lower than forecasted revenues, more severe impacts of the COVID-19 pandemic than currently expected, actual new construction and repair and remodel growth rates that ~~lag~~fall below our assumptions, actions of key customers, ~~volatility of~~increases in discount rates, continued economic uncertainty, higher levels of unemployment, weak consumer confidence, lower levels of discretionary consumer spending, a decrease in royalty rates and a decline in the trading price of our common stock. We cannot predict the occurrence of certain events or changes in circumstances that might adversely affect the carrying value of goodwill and indefinite-lived ~~intangible~~ assets.

6.	~~Asset Impairment~~

In January 2017, we committed to a plan to sell Field ID, our cloud-based inspection and safety compliance software product line included in our Security segment. In accordance with FASB Accounting Standards Codification (“ASC”) 360, as a result of our decision to sell, during the first quarter of 2017 we recorded $3.2 million of~~pre-tax~~ impairment charges to write down the long-lived assets included in this disposal group to fair value, based upon their estimated fair value less cost to sell. These charges consisted of approximately $3.0 million for definite-lived intangible assets and $0.2 million for fixed assets. We completed the sale of Field ID in April 2017 (See Note 4).

7.	External Debt and Financing Arrangements

~~In June 2016,~~Unsecured Senior Notes

At March 31, 2021, the Company ~~amended~~had aggregate outstanding notes in the amount of $1.8 billion, with varying maturities (the “Notes”). The Notes are unsecured senior obligations of the Company. The following table provides a summary of the Company’s outstanding Notes, including the net carrying value of the Notes, net of underwriting commissions, price discounts, and ~~restated its credit agreement to combine~~debt issuance costs as of March 31, 2021 and ~~rollover~~December 31, 2020:

					Net Carrying Value
(in millions)	Principal Amount		Issuance Date	Maturity Date	March 31, 2021		December 31, 2020
4.000% Senior Notes	$	500.0	June 2015	June 2025	$	496.8	$	496.6
4.000% Senior Notes (the "2018 Notes")		600.0	September 2018	September 2023		597.3		597.1
3.250% Senior Notes (the "2019 Notes")		700.0	September 2019	September 2029		693.7		693.5
Total Senior Notes	$	1,800.0			$	1,787.8	$	1,787.2

Credit Facilities

In April 2020, the ~~existing~~Company entered into a 364-day supplemental, $400 million revolving credit facility ~~and term loan~~(the “2020 Revolving Credit Agreement”). This supplemental facility was never utilized by the Company prior to its expiration in April 2021.

In September 2019, the Company entered into a ~~new standalone~~second amended and restated $1.25 billion revolving credit ~~facility. This amendment of the credit agreement was anon-cash~~ ~~transaction for the Company. Terms and conditions of the amended and restated credit agreement, including the total commitment amount, essentially remained the same. As a result of the refinancing, wewrote-off~~ ~~prepaid debt issuance costs of approximately $1.3 million during the three months ended June 30, 2016. The revolving credit~~ facility ~~will mature in June 2021~~(the “2019 Revolving Credit Agreement”), and borrowings thereunder will be used for general corporate purposes. OnThe terms and conditions of the 2019 Revolving Credit Agreement, including the total commitment amount, essentially remained the same as under the previous

FORTUNE BRANDS HOME & SECURITY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

credit agreement, except that the maturity date was extended to September 30, 2017 and December 31, 2016, our outstanding borrowings under this facility were $570.0 million and $540.0 million, respectively. At September 30, 2017 and December 31, 2016, the current portion of long-term debt was zero.2024. Interest rates under the ~~facility~~2019 Revolving Credit Agreement are variable based on LIBOR at the time of the borrowing and the Company’s long-term credit rating and can range from LIBOR + ~~0.9%~~0.91% to LIBOR + ~~1.5%~~1.4%. On March 31, 2021 and December 31, 2020, our outstanding borrowings under this facility were $895.0 million and $785.0 million, respectively. This facility is included in Long-term debt in the condensed consolidated balance sheets. As of ~~September 30, 2017,~~March 31, 2021, we were in compliance with all covenants under this facility.

~~FORTUNE BRANDS HOME & SECURITY, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

7.	~~External Debt and Financing Arrangements (Continued)~~

In June 2015, we issued $900 million of unsecured senior notes (“Senior Notes”) in a registered public offering. The Senior Notes consist of two tranches: $400 million of five-year notes due 2020 with a coupon of 3% and $500 million of~~ten-year~~ notes due 2025 with a coupon of 4%. We used the proceeds from the Senior Notes offering to pay down our revolving credit facility and for general corporate purposes. On September 30, 2017 and December 31, 2016, the carrying value of the Senior Notes, net of underwriting commissions, price discounts and debt issuance costs, was $892.2 million and $891.1 million, respectively.

We currently have uncommitted bank lines of credit in China, which provide for unsecured borrowings for working capital of up to ~~$25.7~~$17.5 million in aggregate, of which there were no0 outstanding balances as of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016.~~2020.

Financial Instruments

We do not enter into financial instruments for trading or speculative purposes. We principally use financial instruments to reduce the impact of changes in foreign currency exchange rates and commodities used as raw materials in our products. The principal derivative financial instruments we enter into on a routine basis are foreign exchange contracts. Derivative financial instruments are recorded at fair value. The counterparties to derivative contracts are major financial institutions. We are subject to credit risk on these contracts equal to the fair value of these instruments. Management currently believes that the risk of incurring material losses is unlikely and that the losses, if any, would be immaterial to the Company.

Raw materials used by the Company are subject to price volatility caused by weather, supply conditions, geopolitical and economic variables, and other unpredictable external factors. As a result, from time to time, we enter into commodity swaps to manage the price risk associated with forecasted purchases of materials used in our operations.

Our primary foreign currency hedge contracts pertain to the Canadian dollar, the British pound, the Mexican peso and the Chinese ~~yuan and the Euro.~~yuan. The gross U.S. dollar equivalent notional amount of all foreign currency derivative hedges outstanding at ~~September 30, 2017~~March 31, 2021 was ~~$190.2 million, representing a net settlement payable of $2.3~~$432.7 million. Based on foreign exchange rates as of ~~September 30, 2017,~~March 31, 2021, we estimate that ~~$1.2~~$0.7 million of net ~~foreign currency~~ derivative ~~losses~~gains included in accumulated other comprehensive income as of ~~September 30, 2017~~March 31, 2021 will be reclassified to earnings within the next twelve months.

The fair values of derivative instruments on the consolidated balance sheets as of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016~~2020 were as follows:

(In millions)       Fair Value

Location
   September 30,
2017    December 31,
2016
Assets

Foreign exchange contracts

Other current assets
   $ 3.0    $ 2.8
Net investment hedges

Other current assets
   0.2    0.6





Total assets
   $ 3.2    $ 3.4
Liabilities

Foreign exchange contracts

Other current liabilities
   $ 5.1    $ 2.9
Net investment hedges

Other current liabilities
   0.4    0.2





Total current liabilities
   $ 5.5    $ 3.1

		Fair Value
(In millions)	Location	March 31, 2021		December 31, 2020
Assets:
Foreign exchange contracts	Other current assets	$	3.2	$	3.7
Commodity contracts	Other current assets		1.3		1.9
	Total assets	$	4.5	$	5.6
Liabilities:
Foreign exchange contracts	Other current liabilities	$	3.6	$	6.5
	Total liabilities	$	3.6	$	6.5

FORTUNE BRANDS HOME & SECURITY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Financial Instruments (Continued)

The effects of derivative financial instruments on the statements of comprehensive income for the ~~nine and~~ three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016 were:~~2020 were as follows:

(In millions)       Gain (Loss) Recognized in Income
Nine Months Ended September 30,
Type of hedge

Location
   2017    2016
Cash flow
   Cost of products sold    $ 0.9    $ (2.6 )
Fair value
   Other (income) expense, net    (1.4 )    1.3




Total
      $ (0.5 )    $ (1.3 )
(In millions)       Gain (Loss) Recognized in Income Three
Months Ended September 30,
Type of hedge

Location
   2017    2016
Cash flow
   Cost of products sold    $ (0.1 )    $ (1.2 )
Fair value
   Other (income) expense, net    (0.9 )    0.3




Total
      $ (1.0 )    $ (0.9 )

(In millions)	Classification and Amount of Gain (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships
	Three Months Ended March 31, 2021
	Cost of products sold			Interest expense		Other expense, net
Total amounts per Consolidated Statements of Comprehensive Income	$	1,126.9		$	21.4	$	3.3
The effects of fair value and cash flow hedging:
Gain (loss) on fair value hedging relationships
Foreign exchange contracts:
Hedged items		—			—		(0.8	)
Derivative designated as hedging instruments		—			—		—
Gain (loss) on cash flow hedging relationships
Foreign exchange contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income		(0.8	)		—		—
Commodity contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income		0.1			—		—
Interest rate contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income		—			0.2		—

(In millions)	Classification and Amount of Gain (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships
	Three Months Ended March 31, 2020
	Cost of products sold			Interest expense		Other income, net
Total amounts per Consolidated Statements of Comprehensive Income	$	909.5		$	22.1	$	6.1
The effects of fair value and cash flow hedging:
Gain (loss) on fair value hedging relationships
Foreign exchange contracts:
Hedged items		—			—		10.0
Derivative designated as hedging instruments		—			—		(10.5	)
Gain (loss) on cash flow hedging relationships
Foreign exchange contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income		0.6			—		—
Commodity contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income		(0.2	)		—		—
Interest rate contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income		—			0.2		—

The ~~effective portion of~~ cash flow hedges recognized in other comprehensive income were a net ~~losses~~loss of ~~$(0.1)~~$2.0 million and ~~$(8.0) million in the nine months ended September 30, 2017 and 2016, respectively. The effective portion~~a net loss of ~~cash flow hedges recognized in other comprehensive income were net losses of $(3.8)~~ $6.5 million ~~and zero~~ in the three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, respectively. ~~In the nine and three months ended September 30, 2017 and 2016, the ineffective portion of cash flow hedges recognized in other (income) expense, net, was insignificant.~~

9.	~~Fair Value Measurements~~

~~ASC~~

FORTUNE BRANDS HOME & SECURITY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8.Fair Value Measurements

FASB Accounting Standards Codification (“ASC”) requirements for Fair Value Measurements and Disclosures establish a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels. Level 1 inputs, the highest priority, are quoted prices in active markets for identical assets or liabilities. Level 2 inputs reflect ~~inputs~~ other than quoted prices included in ~~level~~Level 1 that are either observable directly or through corroboration with observable market data. Level 3 inputs are unobservable inputs, due to little or no0 market activity for the asset or liability, such as internally-developed valuation models. We do not have any assets or liabilities measured at fair value on a recurring basis that are ~~level~~Level 3.

~~FORTUNE BRANDS HOME & SECURITY, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

9.	~~Fair Value Measurements (Continued)~~

The carrying value ~~net of underwriting commissions, price discounts, and debt issuance costs~~ and fair value of debt as of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016~~2020 were as follows:


(In millions)	September 30, 2017				December 31, 2016				March 31, 2021				December 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
Notes, net of underwriting commissions, price discounts and debt issuance costs									$	1,787.8	$	1,928.0	$	1,787.2	$	1,994.9
Revolving credit facility	$	570.0	$	570.0	$	540.0	$	540.0		895.0		895.0		785.0		785.0
Senior Notes		892.2		927.5		891.1		919.2
Total debt									$	2,682.8	$	2,823.0	$	2,572.2	$	2,779.9

The estimated fair value of our ~~revolving credit facility is determined primarily using broker quotes, which are level 2 inputs. The estimated fair value of our Senior~~ Notes is determined by using quoted market prices of our debt securities, which are ~~level~~Level 1 inputs.

Assets and liabilities measured at fair value on a recurring basis as of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016~~2020 were as follows:


(In millions)	Fair Value				Fair Value
	September 30, 2017		December 31, 2016		March 31, 2021		December 31, 2020
Assets
Derivative financial instruments (level 2)	$	3.2	$	3.4
Deferred compensation program assets (level 2)		7.0		4.5

Derivative financial instruments (Level 2)					$	4.5	$	5.6
Deferred compensation program assets (Level 2)						19.0		16.3
Total assets	$	10.2	$	7.9	$	23.5	$	21.9

Liabilities
Derivative financial instruments (level 2)	$	5.5	$	3.1
Derivative financial instruments (Level 2)					$	3.6	$	6.5

FORTUNE BRANDS HOME & SECURITY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~10.~~

Accumulated Other Comprehensive ~~Loss~~(Loss) Income

Total accumulated other comprehensive ~~loss~~(loss) income consists of net income and other changes in business equity from transactions and other events from sources other than shareholders. It includes currency translation gains and losses, unrealized gains and losses from derivative instruments designated as cash flow hedges, and defined benefit plan adjustments. The after-tax components of and changes in accumulated other comprehensive ~~loss, net of tax,~~(loss) income for the three months ended March 31, 2021 and 2020 were as follows:

(In millions)    Foreign
Currency
Adjustments    Derivative
Hedging
Gain
(Loss)    Defined
Benefit Plan
Adjustments^(a)    Accumulated
Other
Comprehensive
Loss
Balance at December 31, 2015
   $ (13.3 )    $ 2.1    $ (41.3 )    $ (52.5 )
Amounts classified into accumulated other comprehensive loss
   0.9    (7.3 )    9.0    2.6
Amounts reclassified from accumulated other comprehensive loss
   —      2.8    (5.1 )    (2.3 )








Net current-period other comprehensive income (loss)
   0.9    (4.5 )    3.9    0.3








Balance at September 30, 2016
   $ (12.4 )    $ (2.4 )    $ (37.4 )    $ (52.2 )








Balance at December 31, 2016
   $ (28.0 )    $ (0.6 )    $ (43.3 )    $ (71.9 )
Amounts classified into accumulated other comprehensive loss
   47.0    0.6    3.5    51.1
Amounts reclassified from accumulated other comprehensive loss
   —      (0.6 )    (4.1 )    (4.7 )








Net current-period other comprehensive income (loss)
   47.0    —      (0.6 )    46.4








Balance at September 30, 2017
   $ 19.0    $ (0.6 )    $ (43.9 )    $ (25.5 )

^(a)

~~See Note 11, “Defined Benefit Plans,” for further information on the adjustments related to defined benefit plans.~~

(In millions)	Foreign Currency Adjustments			Derivative Hedging Gain (Loss)			Defined Benefit Plan Adjustments			Accumulated Other Comprehensive Loss
Balance at December 31, 2019	$	(11.5	)	$	5.5		$	(66.6	)	$	(72.6	)
Amounts classified into accumulated other comprehensive (loss) income		(41.7	)		(7.7	)		(0.8	)		(50.2	)
Amounts reclassified from accumulated other comprehensive (loss) income		—			(0.4	)		—			(0.4	)
Net current-period other comprehensive (loss) income		(41.7	)		(8.1	)		(0.8	)		(50.6	)
Balance at March 31, 2020	$	(53.2	)	$	(2.6	)	$	(67.4	)	$	(123.2	)

Balance at December 31, 2020	$	7.2		$	4.2		$	(66.5	)	$	(55.1	)
Amounts classified into accumulated other comprehensive (loss) income		5.8			(1.8	)		(0.2	)		3.8
Amounts reclassified from accumulated other comprehensive (loss) income		—			0.3			—			0.3
Net current-period other comprehensive (loss) income		5.8			(1.5	)		(0.2	)		4.1
Balance at March 31, 2021	$	13.0		$	2.7		$	(66.7	)	$	(51.0	)

17The reclassifications out of accumulated other comprehensive loss for the three months ended March 31, 2021 and 2020 were as follows:

(In millions)
Details about Accumulated Other Comprehensive Loss Components	Amount Reclassified from Accumulated Other Comprehensive Loss Three months ended March 31,						Affected Line Item in the Statement of Comprehensive Income
	2021			2020
Gains (losses) on cash flow hedges
Foreign exchange contracts	$	(0.8	)	$	0.6		Cost of products sold
Commodity contracts		0.1			(0.2	)	Cost of products sold
Interest rate contracts		0.2			0.2		Interest expense
		(0.5	)		0.6		Total before tax
		0.2			(0.2	)	Tax expense
Total reclassifications for the period	$	(0.3	)	$	0.4		Net of tax

FORTUNE BRANDS HOME & SECURITY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10.	~~Accumulated Other Comprehensive Loss (Continued)~~ Revenue

The ~~reclassifications out of accumulated other comprehensive loss~~following table disaggregates our consolidated revenue by major sales distribution channels for the ~~nine and~~ three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016 were as follows:~~2020:

(In millions)
Details about Accumulated Other Comprehensive Loss Components
   Amount Reclassified from
Accumulated Other Comprehensive Loss
Nine Months Ended September 30,    Affected Line Item in
the Statement of
Comprehensive
Income
   2017    2016
(Losses) gains on cash flow hedges

Foreign exchange contracts
   $ 0.5    $ (2.5 )    Cost of products sold
Commodity contracts
   0.4    (0.1 )    Cost of products sold





   0.9    (2.6 )    Total before tax
   (0.3 )    (0.2 )    Tax expense





   $ 0.6    $ (2.8 )    Net of tax
Defined benefit plan items

Recognition of prior service credits
   $ 5.1    $ 10.0    ^(a)
Recognition of actuarial gains (losses)
   1.3    (1.9 )    ^(a)





   6.4    8.1    Total before tax
   (2.3 )    (3.0 )    Tax expense





   $ 4.1    $ 5.1    Net of tax





Total reclassifications for the period
   $ 4.7    $ 2.3    Net of tax

(In millions)	Three Months Ended March 31,
	2021		2020
Wholesalers^(a)	$	798.0	$	654.2
Home Center retailers^(b)		548.9		419.2
Other retailers^(c)		99.1		82.6
Builder direct		61.4		54.7
U.S. net sales		1,507.4		1,210.7
International^(d)		263.6		192.0
Net sales	$	1,771.0	$	1,402.7

(In millions)
Details about Accumulated Other Comprehensive Loss Components
   Amount Reclassified from
Accumulated Other Comprehensive Loss
Three Months Ended September 30,    Affected Line Item in
the Statement of
Comprehensive
Income
   2017    2016
Gains (losses) on cash flow hedges

Foreign exchange contracts
   $ (0.5 )    $ (1.3 )    Cost��of products sold
Commodity contracts
   0.4    0.1    Cost of products sold





   (0.1 )    (1.2 )    Total before tax
   0.2    —      Tax expense





   $ 0.1    $ (1.2 )    Net of tax
Defined benefit plan items

Recognition of prior service credits
   $ —      $ 3.8    ^(a)
Recognition of actuarial gains (losses)
   1.3    (1.0 )    ^(a)





   1.3    2.8    Total before tax
   (0.4 )    (1.0 )    Tax expense





   $ 0.9    $ 1.8    Net of tax





Total reclassifications for the period
   $ 1.0    $ 0.6    Net of tax

(a)

Represents sales to customers whose business is oriented towards builders, professional trades and home remodelers, inclusive of sales through our customers’ respective internet website portals.

^(a)

(b)

~~These accumulated other comprehensive loss components are included in~~

Represents sales to the ~~computation~~three largest “Do-It-Yourself” retailers; The Home Depot, Inc., Lowes Companies, Inc. and Menards, Inc., inclusive of ~~net periodic benefit cost. Refer to Note 11, “Defined Benefit Plans,” for additional information.~~sales through their respective internet website portals.

~~FORTUNE BRANDS HOME & SECURITY, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

(c)

Represents sales principally to our mass merchant and standalone independent e-commerce customers.

~~11.~~

(d)

Represents sales in markets outside the United States, principally in Canada, China, Europe and Mexico.

11.	Defined Benefit Plans

The components of net periodic benefit ~~cost~~income for pension ~~and postretirement benefits~~ for the ~~nine and~~ three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020 were as follows:


(In millions)	Nine Months Ended September 30,												Three Months Ended March 31,
	Pension Benefits						Postretirement Benefits						Pension Benefits
	2017			2016			2017			2016			2021			2020
Service cost	$	0.4		$	7.2		$	—		$	—		$	0.1		$	0.1
Interest cost		25.0			25.8			—			0.2			6.0			7.1
Expected return on plan assets		(28.0	)		(27.9	)		—			—			(8.7	)		(8.2	)
Recognition of prior service costs (credits)		—			—			(5.1	)		(10.0	)
Recognition of actuarial losses (gains)		0.3			—			(1.6	)		1.9

Net periodic benefit (income) cost	$	(2.3	)	$	5.1		$	(6.7	)	$	(7.9	)

(In millions)	Three Months Ended September 30,
	Pension Benefits						Postretirement Benefits
	2017			2016			2017			2016
Service cost		$0.1			$1.6			$—			$—
Interest cost		8.3			8.4			—			(0.1)
Expected return on plan assets		(9.3)			(8.9)			—			—
Recognition of prior service costs (credits)		—			—			—			(3.8)
Recognition of actuarial losses (gains)		0.3			—			(1.6)			1.0

Net periodic benefit (income) cost	$	(0.6	)	$	1.1		$	(1.6	)	$	(2.9	)
Net periodic benefit income													$	(2.6	)	$	(1.0	)

Service cost ~~for 2017~~ relates to benefit accruals in an hourly Union defined benefit plan in our Outdoors & Security segment. All other defined benefit pension plans were frozen as of December 31, 2016.

12.	Income Taxes

The effective income tax rates for the three months ended March 31, 2021 and 2020 were 20.5% and 21.5%, respectively.

The effective income tax rate in 2021 was favorably impacted by a benefit related to decreases in uncertain tax positions and a benefit related to share-based compensation.

FORTUNE BRANDS HOME & SECURITY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~12.~~

13.

~~Income Taxes~~

Product Warranties

The effective income tax rates for the nine months ended September 30, 2017 and 2016 were 29.5% and 28.2%, respectively. The increase in the effective tax rate reflected a lower tax benefit on share-based compensation, partially offset by a valuation allowance release related to state deferred tax assets. In addition, the effective tax rates in both periods were favorably impacted by a tax benefit attributable to the Domestic Production Activity (Internal Revenue Code Section 199) Deduction, favorable tax rates in foreign jurisdictions, and a benefit associated with the U.S. research and development credit, offset by state and local taxes and increases to uncertain tax positions.

The effective income tax rates for the three months ended September 30, 2017 and 2016 were 31.6% and 28.6%, respectively. The increase in the effective tax rate reflected a lower tax benefit on share-based compensation, partially offset by a valuation allowance release related to state deferred tax assets. In addition, the effective tax rates in both periods were favorably impacted by a tax benefit attributable to the Domestic Production Activity (Internal Revenue Code Section 199) Deduction, favorable tax rates in foreign jurisdictions, and a benefit associated with the U.S. research and development credit, offset by state and local taxes and increases to uncertain tax positions.

It is reasonably possible that, within the next 12 months, total unrecognized tax benefits may decrease up to $1.5 million, primarily as a result of the conclusion of pending U.S. federal, state and foreign income tax proceedings.

~~13.~~

~~Product Warranties~~

We generally record warranty expense related to contractual warranty terms at the time of sale. We may also provide customer concessions for claims made outside of the contractual warranty terms and those expenses are recorded in the period in which the concession is made. We offer our customers various warranty terms based on the type of product that is sold. Warranty expense is determined based on ~~historical claims~~historic claim experience and the nature of the product category. The following table summarizes activity related to our product warranty liability for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, respectively.


(In millions)	Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2021			2020
Reserve balance at January 1,	$	16.2		$	16.0		$	24.5		$	24.7
Provision for warranties issued		23.3			23.8			8.1			6.5
Settlements made (in cash or in kind)		(17.0	)		(22.8	)		(8.1	)		(7.0	)
Acquisition								0.6			—
Foreign translation adjustments		(1.2	)		—			—			(0.1	)
Acquisitions		0.7			0.4

Reserve balance at September 30,	$	22.0		$	17.4
Reserve balance at March 31,							$	25.1		$	24.1

~~FORTUNE BRANDS HOME & SECURITY, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

14.	Information on Business Segments

Net sales and operating income for the ~~nine and~~ three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020 by segment were as follows:

   Nine Months Ended September 30,
(In millions)    2017    2016    % Change
vs. Prior Year
Net Sales

Cabinets
   $ 1,841.2    $ 1,797.2    2.4 %
Plumbing
   1,251.5    1,108.0    13.0
Doors
   374.2    351.3    6.5
Security
   433.9    426.8    1.7





Net sales
   $ 3,900.8    $ 3,683.3    5.9 %
Operating Income

Cabinets
   $ 205.4    $ 194.0    5.9 %
Plumbing
   270.8    242.6    11.6
Doors
   55.8    46.1    21.0
Security
   56.4    44.7    26.2
Less: Corporate expenses
   (59.3 )    (61.1 )    2.9





Operating income
   $ 529.1    $ 466.3    13.5 %
Corporate expenses

General and administrative expense
   $ (63.8 )    $ (61.3 )
Defined benefit plan income
   3.2    2.1
Recognition of defined benefit plan actuarial gains (losses)
   1.3    (1.9 )





Total Corporate expenses
   $ (59.3 )    $ (61.1 )    2.9 %

	Three Months Ended March 31,
(In millions)	2021			2020			% Change vs. Prior Year
Net Sales
Plumbing	$	621.6		$	469.0			32.5		%
Outdoors & Security		461.5			313.7			47.1
Cabinets		687.9			620.0			11.0
Net sales	$	1,771.0		$	1,402.7			26.3		%
Operating Income (Loss)
Plumbing	$	147.9		$	104.5			41.5		%
Outdoors & Security		52.8			31.5			67.6
Cabinets		72.6			43.7			66.1
Less: Corporate expenses		(24.9	)		(24.7	)		(0.8	)
Operating income	$	248.4		$	155.0			60.3		%

~~FORTUNE BRANDS HOME & SECURITY, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~14.~~

15.

~~Information on Business Segments (Continued)~~

   Three Months Ended September 30,
(In millions)    2017    2016    % Change
vs. Prior Year
Net Sales
Cabinets
   $ 614.2    $ 602.1    2.0 %
Plumbing
   438.3    391.1    12.1
Doors
   138.5    129.2    7.2
Security
   157.6    156.6    0.6





Net sales
   $ 1,348.6    $ 1,279.0    5.4 %
Operating Income

Cabinets
   $ 69.7    $ 74.8    (6.8 )%
Plumbing
   97.3    84.0    15.8
Doors
   25.1    22.3    12.6
Security
   27.7    22.9    21.0
Less: Corporate expenses
   (18.0 )    (20.9 )    13.9





Operating income
   $ 201.8    $ 183.1    10.2 %
Corporate expenses

General and administrative expense
   $ (20.5 )    $ (20.5 )
Defined benefit plan income
   1.2    0.6
Recognition of defined benefit plan actuarial gains (losses)
   1.3    (1.0 )





Total Corporate expenses
   $ (18.0 )    $ (20.9 )    13.9 %

~~FORTUNE BRANDS HOME & SECURITY, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~15.~~

Restructuring and Other Charges

Pre-tax restructuring and other charges for the ~~nine and~~ three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020 are shown below.


(In millions)	Nine Months Ended September 30, 2017						Three Months Ended March 31, 2021						Three Months Ended March 31, 2020
	Restructuring Charges		Other Charges ^(a)		Total Charges		Restructuring Charges		Other Charges ^(a)		Total Charges		Restructuring Charges		Other Charges ^(a)			Total Charges
Plumbing		1.6	$	—	$	1.6	$	—	$	1.5	$	1.5	$	0.3	$	(0.4	)	$	(0.1	)
Security		1.9		0.9		2.8

Outdoors & Security								6.1		—		6.1		0.3		0.8			1.1
Cabinets								1.5		0.4		1.9		2.4		0.1			2.5
Corporate								—		—		—		1.5		0.3			1.8
Total	$	3.5	$	0.9	$	4.4	$	7.6	$	1.9	$	9.5	$	4.5	$	0.8		$	5.3

(a)

“Other Charges” represent charges directly related to restructuring initiatives that cannot be reported as restructuring under GAAP. Such costs may include losses on disposal of inventories, trade receivables allowances from exiting product lines, accelerated depreciation resulting from the closure of facilities and gains or losses on the sale of previously closed facilities.

~~Restructuring and other charges in the first nine months of 2017 largely related to severance costs within our Security and Plumbing segments.~~

(In millions)    Nine Months Ended September 30, 2016
   Restructuring
Charges    Other Charges ^(a)    Total
Charges
Cabinets
   $ 1.8    $ —      $ 1.8
Plumbing
   1.1    0.8    1.9
Security
   9.5    3.5    13.0






Total
   $ 12.4    $ 4.3    $ 16.7

^a)

Restructuring and other charges in the first nine months of 2016 primarily related to severance costs and charges associated with the relocation of a manufacturing facility within our Security segment.

2317

FORTUNE BRANDS HOME & SECURITY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~15.~~

~~Restructuring and Other Charges (Continued)~~

(In millions)    Three Months Ended September 30, 2017
   Restructuring
Charges    Other Charges ^(a)    Total
Charges
Doors
   $ 0.2    $ (0.1 )    $ 0.1
Security
   0.2    0.3    0.5






Total
   $ 0.4    $ 0.2    $ 0.6

^(a)

Restructuring and other charges in the ~~third~~first quarter of ~~2017 primarily resulted from~~2021 largely related to severance costs associated with the relocation of manufacturing facilitieswithin our ~~Doors~~Cabinets and ~~Plumbing Segments.~~

(In millions)    Three Months Ended September 30, 2016
   Restructuring
Charges    Other Charges ^(a)    Total
Charges
Plumbing
   $ 0.4    $ 0.5    $ 0.9
Security
   2.7    1.0    3.7






Total
   $ 3.1    $ 1.5    $ 4.6

^(a)

Outdoors & Security segments. Restructuring and other charges in the ~~third~~first quarter of ~~2016 primarily resulted from severance~~2020 largely related to headcount actions associated with COVID-19 across all of our segments and costs associated with changes in our manufacturing processes within our ~~Security~~Plumbing segment.

~~FORTUNE BRANDS HOME & SECURITY, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~15.~~

~~Restructuring and Other Charges (Continued)~~

Reconciliation of Restructuring Liability


(In millions)	Balance at 12/31/16		2017 Provision		Cash Expenditures ^(a)			Non-Cash Write-offs			Balance at 9/30/17		Balance at 12/31/20		2021 Provision		Cash Expenditures ^(a)			Non-Cash Write-offs		Balance at 3/31/21
Workforce reduction costs	$	2.4	$	2.8	$	(2.9	)	$	(0.5	)	$	1.8	$	6.9	$	6.5	$	(4.6	)	$	—	$	8.8
Other		0.6		0.7		(1.3	)		—			0.0		0.7		1.1		(0.4	)		—		1.4
													$	7.6	$	7.6	$	(5.0	)	$	—	$	10.2
	$	3.0	$	3.5	$	(4.2	)	$	(0.5	)	$	1.8

(a)

Cash expenditures primarily ~~related~~relate to severance charges.

(In millions)    Balance at
12/31/15    2016
Provision    Cash
Expenditures ^(a)    Non-Cash
Write-offs ^(b)    Balance at
9/30/16
Workforce reduction costs
   $ 10.4    $ 8.7    $ (15.0 )    $ 0.2    $ 4.3
Other
   0.5    3.7    (3.0 )    (0.6 )    0.6










   $ 10.9    $ 12.4    $ (18.0 )    $ (0.4 )    $ 4.9

(In millions)	Balance at 12/31/19		2020 Provision		Cash Expenditures ^(a)			Non-Cash Write-offs		Balance at 3/31/20
Workforce reduction costs	$	6.7	$	4.2	$	(3.0	)	$	—	$	7.9
Other		0.1		0.3		(0.2	)		0.4		0.6
	$	6.8	$	4.5	$	(3.2	)	$	0.4	$	8.5

(a)

Cash expenditures primarily ~~related~~relate to severance charges.

16.

^(b)

~~Non-cash~~ ~~write-offs include asset impairment charges attributable to restructuring actions.~~

~~FORTUNE BRANDS HOME & SECURITY, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)~~

~~16.~~

Earnings Per Share

The computations of earnings per common share for the three months ended March 31, 2021 and 2020 were as follows:

(In millions, except per share data)    Nine Months Ended
September 30,    Three Months Ended
September 30,
   2017    2016    2017    2016
Income from continuing operations, net of tax
   $ 347.3    $ 308.0    $ 129.6    $ 121.9
Less: Noncontrolling interest
   0.1    (0.1 )    0.1    —








Income from continuing operations for EPS
   347.2    308.1    129.5    121.9
Income from discontinued operations
   (2.6 )    1.5    —      1.5








Net income attributable to Fortune Brands
   $ 344.6    $ 309.6    $ 129.5    $ 123.4








Earnings per common share

Basic

Continuing operations
   $ 2.26    $ 2.00    $ 0.84    $ 0.79
Discontinued operations
   (0.02 )    0.01    —      0.01








Net income attributable to Fortune Brands common stockholders
   $ 2.24    $ 2.01    $ 0.84    $ 0.80
Diluted

Continuing operations
   $ 2.22    $ 1.95    $ 0.83    $ 0.77
Discontinued operations
   (0.02 )    0.01    —      0.01








Net income attributable to Fortune Brands common stockholders
   $ 2.20    $ 1.96    $ 0.83    $ 0.78
Basic average shares outstanding
   153.7    154.4    153.5    154.2
Stock-based awards
   2.5    3.6    2.4    3.4








Diluted average shares outstanding
   156.2    158.1    155.9    157.6
Antidilutive stock-based awards excluded from weighted-average number of shares outstanding for diluted earnings per share
   0.6    0.5    0.6    —

(In millions, except per share data)	Three Months Ended March 31,
	2021		2020
Net income	$	177.8	$	108.8
Less: Noncontrolling interest		—		(0.3	)
Net income attributable to Fortune Brands		177.8		109.1

Basic earnings per common share	$	1.28	$	0.78
Diluted earnings per common share	$	1.26	$	0.77

Basic average shares outstanding		138.6		139.3
Stock-based awards		2.0		1.5
Diluted average shares outstanding		140.6		140.8
Antidilutive stock-based awards excluded from weighted- average number of shares outstanding for diluted earnings per share		0.2		0.9

2617.Commitments and Contingencies

~~FORTUNE BRANDS HOME & SECURITY, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Concluded)~~

~~17.~~

~~Contingencies~~

Litigation

We are defendants in lawsuits associated with the normal conduct of our businesses and operations. It is not possible to predict the outcome of the pending actions, and, as with any litigation, it is possible that these actions could be decided unfavorably to the Company. The Company believes that there are meritorious defenses to these actions and that these actions will not have a material adverse effect upon our results of operations, cash flows or financial condition, and where appropriate, these actions are being vigorously contested. Accordingly, the Company believes the likelihood of material loss is remote.

FORTUNE BRANDS HOME & SECURITY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Environmental

Compliance with federal, state and local laws regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, did not have a material effect on capital expenditures, earnings or the competitive position of Fortune Brands during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016.~~2020. We are involved in remediation activities to clean up hazardous wastes as required by federal and state laws. Liabilities for remediation costs of each site are based on our best estimate of undiscounted future ~~costs, excluding possible insurance recoveries or recoveries from other third parties.~~costs. We believe compliance with current environmental protection laws (before taking into account estimated recoveries from third parties) will not have a material adverse effect upon our results of operations, cash flows or financial condition.Uncertainties about the status of laws, regulations, technology and information related to individual sites make it difficult to develop estimates of environmental remediation exposures.

~~18.~~

~~Subsequent Event~~

In October 2017, the Company acquired Victoria + Albert, a UK manufacturer of luxury freestanding tubs and basins. Victoria + Albert represent a strong strategic fit, adding a preeminent luxury tub brand to our plumbing portfolio. The results of operations of the acquired company will be included in the Plumbing segment from the date of acquisition. This acquisition will not have a material effect on net sales or operating income.

Item 2.

FORTUNE BRANDS HOME & SECURITY, INC.

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~

~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS.~~

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto, which are included in this report, as well as our audited consolidated financial statements for the year ended December 31, ~~2016,~~2020, which are included in our Annual Report on Form10-K for the year ended December 31, ~~2016.~~2020.

This discussion contains forward-looking statements that are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), regarding our business, operations or financial condition in addition to statements regarding our general business strategies, market potential, future financial performance, the potential of our brands and other matters, expected capital spending, expected pension contributions, the anticipated impact of recently issued accounting standards on our financial statements, planned business strategies, anticipated market potential, future financial performance, impact of acquisitions and other ~~matters.~~matters including the expected or potential impact of the novel coronavirus (“COVID-19”) pandemic. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is based on current expectations, estimates, assumptions and projections about our industry, business and future financial results, ~~based on information~~ available at the time this report is filed with the Securities and Exchange Commission. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including but not limited to:4 (i) our reliance on the North American home improvement, repair and remodel and new home construction activity levels, ~~(ii)~~and the North American and global economies generally, (ii) the competitive nature of consumer and trade brand businesses, (iii) our ability to develop new products or processes and improve existing products and processes, (iv) our reliance on key customers and suppliers, including wholesale distributors and dealers, (v) risks associated with our ability to improve organizational productivity and global supply chain efficiency and flexibility, (vi) risks associated with global commodity and energy availability and price volatility, as well as the possibility of sustained inflation, (vii) risks associated with doing business globally, including changes in trade-related tariffs and risks with uncertain trade environments, (viii) changes in government and industry regulatory standards, (ix) risks associated with the disruption of operations, (x) our inability to obtain raw materials and finished goods in a timely and cost-effective manner, (xi) impairments in the carrying value of goodwill or other acquired intangible assets, (xii) delays or outages in our information technology system or computer networks, (xiii) risk of increases in our defined benefit-related costs and funding requirements, (xiv) the uncertainties relating to the impact of COVID-19 on the Company’s business, financial performance and operating results, (xv) risks associated with entering into potential strategic acquisitions and integrating acquired property, ~~(iv)~~(xvi) future tax law changes or the interpretation of existing tax laws, (xvii) our ability to ~~remain competitive, innovative~~secure and protect our intellectual property ~~(v)~~rights, (xviii) our ~~reliance~~ability to attract and retain qualified personnel and other labor constraints, (xix) potential liabilities and costs from claims and litigation, and (xx) our ability to access the capital markets on key customers and suppliers, (vi) the cost and availability associated with our supply chains and the availability of raw materials, (vii) risk of increases in our defined benefit-related costs and funding requirements, (viii) compliance with tax, environmental and federal, state and international laws and industry regulatory standards and (ix) the risk of doing business internationally.terms acceptable to us. These and other factors are discussed in Part I, Item 1A “Risk Factors” of our Annual Report on Form10-K for the year ended December 31, ~~2016.~~2020. We undertake no obligation to, and expressly disclaim any such obligation to, update or clarify any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, new information or changes to future results over time or otherwise, except as required by law.

OVERVIEW

References to “Fortune Brands,” “the Company,” “we,” “our” and “us” refer to Fortune Brands Home & Security, Inc. and its consolidated subsidiaries as a whole, unless the context otherwise requires. The Company is a ~~leader in~~leading home and security products ~~focused on the design, manufacture and sale~~company with a portfolio of ~~market-leading~~leading branded products ~~in the following categories: kitchen and bath cabinetry, plumbing and accessories, entry door systems~~used for residential home repair, remodeling, new construction and security ~~products.~~applications.

We believe that the Company has certain competitive advantages including market-leading brands, a diversified mix of channels, lean and flexible supply chains, a decentralized business model and a strong capital structure, as well as a tradition of strong innovation and customer service. We ~~are focused~~believe these long-held strengths will enable us to compete effectively and continue to focus on outperforming our markets in growth, profitability and returns in order to drive increased shareholder value. We believe the Company’s track record reflects the long-term attractiveness and potential of ~~our~~the categories we serve and our leading brands. As consumer demand and the housing market grow, we expect the benefits of operating leverage and strategic spending to support increased manufacturing capacity and long-term growth initiatives will help us continue to achieve profitable organic growth.

~~OVERVIEW (Continued)~~

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

The U.S. market for our ~~home~~ products primarily consists of spending on both new home construction and repair and remodel activities within existing homes, with ~~the~~a substantial majority of the markets we serve consisting of repair and remodel spending. We believe that recent increases in consumer focus on the home have accelerated the home products market. We expect this expanding market will continue after the pandemic is over due to an underbuilt housing supply in the U.S. and as more flexible workspaces allow for a greater number of housing options. Growth in the U.S. market for our ~~home~~ products ~~is in the midst of an elongated recovery from the U.S. economic recession that ended inmid-2009~~ ~~and that a continued recovery~~ will largely depend on consumer confidence, employment, home prices, stable mortgage rates and credit availability. Over the long term, we believe that the U.S. home products market will benefit from favorable population and immigration trends, which will drive demand for new housing units, and from an aging existing housing stock that will continue to need to be repaired and remodeled.

We may be impacted by fluctuations in the cost and availability of raw ~~material and~~materials, tariffs, transportation costs, changes in foreign exchange, inflation and promotional activity among our competitors. We strive to offset the potential unfavorable impact of these items with productivity improvement initiatives and price increases.

In ~~July 2017,~~January 2021, we obtained control of and began consolidating Flo in our results. Flo, which is included in our Plumbing segment, is a U.S. manufacturer of comprehensive water monitoring and shut-off systems with leak detection technologies. During 2020, we applied the equity method of accounting to our investment in Flo as the minority shareholders had substantive participating rights which precluded consolidation. The fair value allocated to assets acquired and liabilities assumed as of January 1, 2021 was $87.8 million, net of cash acquired of $9.7 million.

In December 2020, we acquired ~~Shaws Since1897 Limited (“Shaws”),~~100% of the outstanding equity of Larson, the North American market leading brand of storm, screen and security doors. Larson also sells related outdoor living products including retractable screens and porch windows. The Company completed the acquisition for a~~UK-based~~ ~~luxury plumbing products company that specializes in manufacturing~~ total purchase price, excluding expected tax benefits, of approximately $717.5 million, net of cash acquired and selling fireclay sinks and selling brassware and accessories in partnership with Perrin & Rowe. We financed the transaction using cash on hand and borrowings under our existing credit facilities. This acquisition broadened our plumbing portfolio and enhanced future growth opportunities. Net sales and operating income infinal working capital adjustments of $2.3 million paid during the three months ended ~~September 30, 2017 were not material to the Company.~~March 31, 2021. The results of ~~the~~ operations are included in the ~~Plumbing~~Outdoors & Security segment.

During the third quarter of 2016, we created the Global Plumbing Group (“GPG”), which was designed to support the growth of multiple plumbing brands with an enhanced set of products and brands, while leveraging Moen’s existing global supply chain and broad distribution network.

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

In June 2016, we amended and restated our credit agreement to combine and rollover our existing revolving credit facility and term loan into a new standalone $1.25 billion revolving credit facility. Terms and conditions of the credit agreement, including the total commitment amount, essentially remained the same. The revolving credit facility will mature in June 2021 and borrowings thereunder will be used for general corporate purposes.

In May 2016, we acquired Riobel Inc. (“Riobel”), a Canadian plumbing company specializing in premium showroom bath and shower fittings, for a total purchase price of $94.6 million in cash. We financed the transaction using cash on hand and borrowings under our existing credit facility.

~~Nine Months Ended September 30, 2017 Compared To Nine Months Ended September 30, 2016~~

   Net Sales
(In millions)    2017    2016    % Change
vs. Prior Year
Cabinets
   $ 1,841.2    $ 1,797.2    2.4 %
Plumbing
   1,251.5    1,108.0    13.0
Doors
   374.2    351.3    6.5
Security
   433.9    426.8    1.7






Net sales
   $ 3,900.8    $ 3,683.3    5.9 %
   Operating Income
   2017    2016    % Change
vs. Prior Year
Cabinets
   $ 205.4    $ 194.0    5.9 %
Plumbing
   270.8    242.6    11.6
Doors
   55.8    46.1    21.0
Security
   56.4    44.7    26.2
Less: Corporate expenses
   (59.3 )    (61.1 )    2.9
Operating income
   $ 529.1    $ 466.3    13.5 %

The following discussion of consolidated results of operations and segment results refers to the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. Consolidated results of operations should be read in conjunction with segment results of operations.

~~Net sales~~

Net sales increased $217.5 million, or 5.9%. The increase was due to higher sales volume primarily from the continuing improvement in U.S. market conditions for home products, new product introductions, the benefits from the acquisitions in our Plumbing segment and price increases to help mitigate cumulative raw material cost increases. These benefits were partially offset by unfavorable mix, higher sales promotions, sales rebates and unfavorable foreign exchange of approximately $4 million.

~~Cost of products sold~~

Cost of products sold increased $108.5 million, or 4.6%, due to higher net sales, including the impact of the acquisitions in our Plumbing segment and raw material cost increases, partially offset by the benefit of productivity improvements.

~~Selling, general and administrative expenses~~

Selling, general and administrative expenses increased $46.3 million, or 5.6%, due to higher employee-related costs and advertising costs as well as the impact of the acquisitions in our Plumbing segment.

RESULTS OF OPERATIONS ~~(Continued)~~

~~Amortization of intangible assets~~

Amortization of intangible assets increased $3.2 million primarily due to the acquisitions in our Plumbing segment, partially offset by a decrease relating to a definite-lived customer relationship intangible in our Doors segment that was fully amortized during the second quarter of 2017.

~~Loss on sale of product line~~

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

~~Asset impairment charges~~

Asset impairment charges of $3.2 million relate to our decision in the first quarter of 2017 to sell Field ID, our cloud-based inspection and safety compliance software product line included in our Security segment.

~~Restructuring charges~~

Restructuring charges of $3.5 million in the nine months ended September 30, 2017 primarily relates to severance costs within our Security and Plumbing segments. Restructuring charges in the nine months ended September 30, 2016 were $12.4 million and primarily related to severance costs and charges associated with supply chain initiatives within our Security segment.

~~Operating income~~

Operating income increased $62.8 million, or 13.5%, primarily due to higher net sales, including the benefits from the acquisitions in our Plumbing segment and productivity improvements. These benefits were partially offset by unfavorable mix, higher employee-related, raw material and advertising costs.

~~Interest expense~~

~~Interest expense decreased $1.0 million to $36.5 million primarily due to the absence in 2017 of thewrite-off~~ ~~of debt issuance costs of approximately $1.3 million incurred during 2016.~~

~~Other (income) expense, net~~

~~Other (income) expense, net, was expense of $0.2 million in the nine months ended September 30, 2017, compared to income of $0.1 million in the nine months ended September 30, 2016.~~

~~Income taxes~~

~~Net income from continuing operations~~

Net income from continuing operations was $347.3 million in the nine months ended September 30, 2017 compared to $308.0 million in the nine months ended September 30, 2016. The increase of $39.3 million was primarily due to higher operating income.

~~RESULTS OF OPERATIONS (Continued)~~

~~Loss from discontinued operations~~

The loss from discontinued operations of $2.6 million in the nine months ended September 30, 2017 primarily related to the prior sale of the Waterloo tool storage and Simonton window businesses. The income from discontinued operations of $1.5 million in the nine months ended September 30, 2016 included the effect of tax adjustments relating to the Waterloo business.

~~Results by Segment~~

~~Cabinets~~

Net sales increased $44.0 million, or 2.4%, due to higher sales volume driven primarily by continuing improvement in the U.S. home products market and the benefit from new product introductions and price increases to help mitigate cumulative raw material cost increases. These benefits were partially offset by unfavorable mix and higher sales promotions.

Operating income increased $11.4 million, or 5.9%, due to the increase in net sales and productivity improvements. These benefits were partially offset by unfavorable mix and higher employee-related costs.

~~Plumbing~~

Net sales increased $143.5 million, or 13.0%, due to higher sales volume driven by continuing improvement in the U.S. home products market and the benefit from new product introductions, higher sales in international markets, principally China, and the benefit from the acquisitions of Riobel, ROHL and Perrin & Rowe in 2016 as well as Shaws in 2017. These benefits were partially offset by higher sales rebates and unfavorable foreign exchange of approximately $4 million.

Operating income increased $28.2 million, or 11.6%, due to higher net sales, productivity improvements and favorable mix. These benefits were partially offset by higher employee-related costs, raw material costs and advertising costs.

~~Doors~~

Net sales increased $22.9 million, or 6.5%, due to higher sales volume driven primarily by continuing improvement in the U.S. home products market and the benefit from new product introductions and price increases to help mitigate cumulative raw material cost increases.

~~Operating income increased $9.7 million, or 21.0%, due to the higher net sales and leveraging sales on our existing fixed cost base.~~

~~RESULTS OF OPERATIONS (Continued)~~

~~Results by Segment (Continued)~~

~~Security~~

Net sales increased $7.1 million, or 1.7%, due to higher sales volume and price increases to help mitigate cumulative raw material cost increases. These benefits were partially offset by unfavorable foreign exchange of approximately $1 million and by the impact of our exiting of two product lines in our commercial distribution channel.

Operating income increased $11.7 million, or 26.2%, primarily due to productivity improvements, lower restructuring and other charges (approximately $10 million) relating to the completion in 2016 of a manufacturing facility relocation and the related cost savings resulting from the facility relocation, as well as higher net sales. These benefits were partially offset by higher raw material costs.

~~Corporate~~

Corporate expenses decreased by $1.8 million predominantly due to recognition of an actuarial gain versus an actuarial loss in the prior year and higher defined benefit plan income during 2017 in comparison to prior year.

(In millions)    Nine Months Ended
September 30,
   2017    2016
General and administrative expense
   $ (63.8 )    $ (61.3 )
Defined benefit plan income
   3.2    2.1
Defined benefit plan recognition of actuarial gain/(loss)
   1.3    (1.9 )




Total Corporate expenses
   $ (59.3 )    $ (61.1 )

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

~~RESULTS OF OPERATIONS (Continued)~~

Three Months Ended ~~September 30, 2017~~March 31, 2021 Compared Toto Three Months Ended ~~September 30, 2016~~March 31, 2020


	Net Sales									Net Sales
(In millions)	2017			2016			% Change vs. Prior Year			2021			2020			% Change vs. Prior Year

Plumbing										$	621.6		$	469.0			32.5		%
Outdoors & Security											461.5			313.7			47.1
Cabinets	$	614.2		$	602.1			2.0	%		687.9			620.0			11.0
Plumbing		438.3			391.1			12.1
Doors		138.5			129.2			7.2
Security		157.6			156.6			0.6

Net sales	$	1,348.6		$	1,279.0			5.4	%	$	1,771.0		$	1,402.7			26.3		%

										Operating Income (Loss)
	Operating Income									2021			2020			% Change vs. Prior Year
	2017			2016			% Change vs. Prior Year

Plumbing										$	147.9		$	104.5			41.5		%
Outdoors & Security											52.8			31.5			67.6
Cabinets	$	69.7		$	74.8			(6.8	)%		72.6			43.7			66.1
Plumbing		97.3			84.0			15.8
Doors		25.1			22.3			12.6
Security		27.7			22.9			21.0
Less: Corporate expenses		(18.0	)		(20.9	)		13.9			(24.9	)		(24.7	)		(0.8	)

Operating income	$	201.8		$	183.1			10.2	%	$	248.4		$	155.0			60.3		%

The following discussion of consolidated results of operations and segment results refers to the three months ended ~~September 30, 2017~~March 31, 2021 compared to the three months ended ~~September 30, 2016.~~March 31, 2020. Consolidated results of operations should be read in conjunction with segment results of operations.

Net sales

Net sales increased ~~$69.6~~by $368.3 million, or ~~5.4%. The increase was~~26.3%, due to higher sales volume, ~~primarily~~the benefit from the ~~continuing improvement in U.S. market conditions for home products, new product introductions, the benefits from the acquisitions in our Plumbing segment,~~2020 Larson acquisition ($101.2 million), favorable mix, price increases to help mitigate the impact of cumulative ~~raw material~~commodity and transportation cost increases ~~and~~as well as favorable foreign exchange of approximately $4$12 million. These benefits were partially offset by ~~unfavorable mix,~~ higher ~~sales rebates~~promotion and ~~sales promotions.~~rebate costs.

Cost of products sold

Cost of products sold increased ~~$40.6~~by $217.4 million, or ~~5.1%~~23.9%, due to higher net sales, ~~including~~ the impact of ~~acquisitions~~the Larson acquisition including higher amortization of the acquisition related inventory fair value adjustment ($3.3 million in ~~our Plumbing segment~~2021) and ~~higher raw material costs,~~product mix, partially offset by the benefit offrom productivity improvements.

Selling, general and administrative expenses

Selling, general and administrative expenses increased ~~$12.8~~by $57.6 million, or ~~4.5%~~18.3%, due to higher ~~employee-related costs, including higher healthcare costs, as well as the impact of the acquisitions in our Plumbing segment.~~employee related, transportation, and advertising costs.

~~RESULTS OF OPERATIONS (Continued)~~

Amortization of intangible assets

Amortization of intangible assets increased ~~$0.2~~by $6.3 million primarily due to the ~~acquisitions~~2020 Larson acquisition in our Outdoors & Security segment and the 2021 consolidation of Flo in our Plumbing ~~segment, partially offset by a decrease relating~~segment.

Asset impairment charges

Asset impairment charges of $9.5 million in 2020 related to ~~a definite-lived customer relationship intangible in Doors segment that was fully amortized during the second quarter of 2017.~~

~~Restructuring charges~~an indefinite-lived tradename within our Cabinets segment.

Restructuring charges

Restructuring charges of $7.6 million in the three months ended ~~September 30, 2017~~March 31, 2021 primarily related to severance costs associated with the relocation of manufacturing facilities within our Cabinets and ~~2016 were $0.4 million and $3.1 million, respectively.~~ Outdoors & Security segments. Restructuring charges of $4.5 million in ~~2017 relate~~the three months ended March 31, 2020 primarily related to severance costs ~~within~~across all our ~~Security and Doors~~ segments. ~~Restructuring charges in 2016 primarily relate to supply chain initiatives within our Security segment.~~

RESULTS OF OPERATIONS (Continued)

Operating income

Operating income increased ~~$18.7~~by $93.4 million, or ~~10.2%~~60.3%, primarily due to higher net sales, productivity improvements, the absence of the 2020 asset impairment charges and ~~productivity improvements.~~the benefit from the 2020 Larson acquisition. These benefits were partially offset by ~~unfavorable mix~~higher employee related, transportation and advertising costs, higher restructuring charges and higher ~~employee-related costs.~~amortization of intangible assets.

Interest expense

Interest expense ~~increased $0.5~~decreased $0.7 million to ~~$12.3~~$21.4 million ~~primarily~~ due to ~~higher~~lower average interest rates, partially offset by ~~lower~~higher average borrowings.

Other expense (income), net

Other expense, net,

~~Other (income) expense, net, was expense~~ of ~~$0.1~~$3.3 million in the three months ended ~~September 30, 2017 compared~~March 31, 2021 includes a non-cash loss of $4.5 million related to ~~expense~~the remeasurement of ~~$0.6~~our investment in Flo immediately prior to consolidation and foreign currency adjustments, partially offset by defined benefit plan income. Other income, net of $6.1 million in the three months ended ~~September 30, 2016.~~March 31, 2020 includes a non-cash gain of $6.6 million related to the remeasurement of our investment in Flo immediately prior to applying the equity method of accounting, partially offset by unfavorable foreign currency adjustments.

Income taxes

The effective income tax rates for the three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020 were ~~31.6%~~20.5% and ~~28.6%~~21.5%, respectively.The ~~increase in the~~ effective income tax rate ~~reflected a lower tax benefit on share-based compensation, partially offset by a valuation allowance release related to state deferred tax assets. In addition, the effective tax rates~~ in ~~both periods were~~2021 was favorably impacted by a benefit related to decreases in uncertaintax ~~benefit attributable to the Domestic Production Activity (Internal Revenue Code Section 199) Deduction, favorable tax rates in foreign jurisdictions,~~positions and a benefit ~~associated with the U.S. research and development credit, offset by state and local taxes and increases~~related to ~~uncertain tax positions.~~

~~Net income from continuing operations~~share-based compensation.

Net income ~~from continuing operations~~attributable to Fortune Brands

Net income attributable to Fortune Brands was ~~$129.6~~$177.8 million in the three months ended ~~September 30, 2017~~March 31, 2021 compared to ~~$121.9~~$109.1 million in the three months ended ~~September 30, 2016.~~March 31, 2020. The increase ~~of $7.7 million~~ was ~~primarily~~ due to a higher operating ~~income.~~income and lower interest expense, partly offset by higher income tax expenses and higher other expense.

Results By Segment

~~RESULTS OF OPERATIONS (Continued)~~

~~Results by Segment~~

~~Cabinets~~Plumbing

Net sales increased ~~$12.1~~by $152.6 million, or ~~2.0%~~32.5%, due to higher sales volume ~~driven primarily by continuing improvement in the U.S. home products market~~across most brands and ~~the benefit from new product introductions,~~markets and price increases to help mitigate the impact of cumulative ~~raw material~~commodity and transportation cost increases ~~and~~as well as favorable foreign exchange of approximately ~~$2 million. These benefits were partly offset by unfavorable mix and higher sales promotions.~~

Operating income decreased $5.1 million, or 6.8%, due to higher employee-related costs, including higher healthcare costs. These benefits were partially offset by the increase in net sales and productivity improvements.

~~Plumbing~~

Net sales increased $47.2 million, or 12.1%, due to higher sales volume in the U.S. driven by continuing improvement in the U.S. home products market and the benefit from new product introductions, higher sales in international markets, principally China and Canada, the benefit from the acquisitions of ROHL and Perrin & Rowe in 2016 as well as Shaws in 2017 and favorable foreign exchange of approximately $2$10 million. These benefits were partially offset by higher sales ~~rebates.~~rebate costs.

Operating income increased ~~$13.3~~by $43.4 million, or ~~15.8%~~41.5%, due to higher net sales and the benefit from productivity improvements as well as favorable foreign exchange of approximately $3 million. These benefits were partially offset by the impact of higher ~~employee-related costs, sales rebates~~marketing, freight and ~~raw material~~employee related costs.

~~Doors~~Outdoors & Security

Net sales increased ~~$9.3~~by $147.8 million, or ~~7.2%~~47.1%, due to ~~favorable mix, higher sales volume driven primarily by improved conditions in the U.S. home products markets and~~ the benefit from ~~new product introductions~~the 2020 Larson acquisition ($101.2 million) and ~~price increases to help mitigate cumulative raw material cost increases.~~higher sales volume.

Operating income increased ~~$2.8~~by $21.3 million, or ~~12.6%~~67.6%, due to higher net sales, the benefit from the 2020 Larson acquisition and ~~leveraging sales on our existing fixed~~productivity improvements. These benefits were partially offset by commodity cost ~~base.~~inflation, higher freight costs and restructuring charges.

~~Security~~Cabinets

Net sales increased ~~$1.0~~by $67.9 million, or ~~0.6%~~11.0%, due to higher sales volume, in both our make-to-order and value priced points, favorable mix and price increases to help mitigate the ~~U.S.~~impact of cumulative commodity and ~~international markets for our core locks and safes product lines and~~transportation cost increases as well as favorable foreign exchange of approximately $1 million. These factors were partly offset by ~~the impact from our exiting of two product lines in our commercial sales distribution channel.~~increased promotional costs.

Operating income increased ~~$4.8~~by $28.9 million, or ~~21.0%~~66.1%, ~~primarily~~ due to ~~productivity improvements, lower restructuring and other~~higher net sales, the absence of asset impairment charges ~~(approximately $3~~booked during the three months ended March 31, 2020 ($9.5 million) ~~relating to the completion in 2016 of a manufacturing facility relocation~~, favorable mix and the benefit from productivity improvements. These factors were partly offset by higher freight costs, commodity inflation and higher employee related ~~cost savings resulting from the facility relocation.~~

~~RESULTS OF OPERATIONS (Continued)~~

~~Results by Segment (Continued)~~

costs.

Corporate

Corporate expenses ~~decreased~~increased by ~~$2.9~~$0.2 million, ~~predominantly~~or 0.8%, due to ~~recognition of an actuarial gain versus an actuarial loss in the prior quarter and~~ higher ~~defined benefit plan income during 2017 in comparison to prior quarter.~~employee related costs.

(In millions)    Three Months Ended
September 30,
   2017    2016
General and administrative expense
   $ (20.5 )    $ (20.5 )
Defined benefit plan income
   1.2    0.6
Defined benefit plan recognition of actuarial gains (losses)
   1.3    (1.0 )




Total Corporate expenses
   $ (18.0 )    $ (20.9 )

LIQUIDITY AND CAPITAL RESOURCES

Our ~~primary~~principal sources of liquidity are cash on hand, cash flows from operating activities, cash borrowed under our credit facilities and cash from debt issuances in the capital markets. Our operating income is generated by our subsidiaries. We believe our operating cash flows, including funds available under our credit facilities and access to capital markets, provide sufficient liquidity to support the Company’s liquidity and financing needs, which are to support working capital requirements, fund capital expenditures and service indebtedness, as well as to finance acquisitions, repurchase shares of our common stock and pay dividends to stockholders, as ~~deemed~~the Board of Directors deems appropriate.

Our ~~principal sources of liquidity have been cash on hand,~~ cash flows from ~~operating activities~~operations, borrowing availability and ~~availability under our credit facilities. Our operating income is generated by our subsidiaries. There~~overall liquidity are ~~no restrictions on~~subject to certain risks and uncertainties, including those described in the ~~ability~~section of our ~~subsidiaries to~~Annual Report on Form 10-K for the year-ended December 31, 2020 entitled “Item 1A. Risk Factors.” In addition, we cannot predict whether or when we may enter into acquisitions, joint ventures or dispositions, pay dividends, or ~~make other distributions~~what impact any such transactions could have on our results of operations, cash flows or financial condition, whether as a result of the issuance of debt or equity securities, or otherwise.

Long-Term Debt

At March 31, 2021, the Company had aggregate outstanding notes in the amount of $1.8 billion, with varying maturities (the “Notes”). The Notes are unsecured senior obligations of the Company. The following table provides a summary of the Company’s outstanding Notes, including the net carrying value of the Notes, net of underwriting commissions, price discounts and debt issuance costs as of March 31, 2021 and December 31, 2020:

					Net Carrying Value
(in millions)	Principal Amount		Issuance Date	Maturity Date	March 31, 2021		December 31, 2020
4.000% Senior Notes	$	500.0	June 2015	June 2025	$	496.8	$	496.6
4.000% Senior Notes (the "2018 Notes")		600.0	September 2018	September 2023		597.3		597.1
3.250% Senior Notes (the "2019 Notes")		700.0	September 2019	September 2029		693.7		693.5
Total Senior Notes	$	1,800.0			$	1,787.8	$	1,787.2

Credit Facilities

In April 2020, the Company entered into a 364-day, supplemental $400 million revolving credit facility (the “2020 Revolving Credit Agreement”). This supplemental facility was never utilized by the Company prior to ~~Fortune Brands.~~ its expiration in April 2021.

In September 2019, the Company entered into a second amended and restated $1.25 billion revolving credit facility (the “2019 Revolving Credit Agreement”), and borrowings thereunder will be used for general corporate purposes. The terms and conditions of the 2019 Revolving Credit Agreement, including the total commitment amount, essentially remained the same as under the previous credit agreement, except that the maturity date was extended to September 2024. Interest rates under the 2019 Revolving Credit Agreement are variable based on LIBOR at the time of the borrowing and the Company’s long-term credit rating and can range from LIBOR + 0.91% to LIBOR + 1.4%.On March 31, 2021 and December ~~2016,~~31, 2020, our ~~Board~~outstanding borrowings under this facility were $895.0 million and $785.0 million, respectively. This facility is included in Long-term debt in the condensed consolidated balance sheets. As of ~~Directors increased~~March 31, 2021, we were in compliance with all covenants under this facility.

Cash and Seasonality

On March 31, 2021, we had cash and cash equivalents of $356.1 million, of which $302.2 million was held at non-U.S. subsidiaries. We manage our global cash requirements considering (i) available funds among the ~~quarterly~~subsidiaries through which we conduct business, (ii) the geographic location of our liquidity needs, and (iii) the cost to access international cash balances. The repatriation of non-U.S. cash balances from certain subsidiaries could have adverse tax consequences as we may be required to pay and record tax expense on those funds that are repatriated.

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

We believe that our current cash position, cash flow generated from operations, and amounts available under our revolving credit facilities should be sufficient for our operating requirements and enable us to fund our capital expenditures, dividend ~~by 13%~~payments, and any required long-term debt payments. In addition, we believe that we have the ability to ~~$0.18 per share~~obtain alternative sources of financing if required.

Share Repurchases and Dividends

In the first quarter of 2021, we repurchased 0.6 million shares of our outstanding common ~~stock.~~stock under the Company’s share repurchase program for $54.1 million. As of March 31, 2021, the Company’s total remaining share repurchase authorization under its share repurchase program was approximately $408.4 million. The share repurchase program does not obligate the Company to repurchase any specific dollar amount or number of shares and may be suspended or discontinued at any time.

In the first quarter of 2021, we paid dividends in the amount of $36.0 million to the Company’s shareholders. Our Board of Directors will continue to evaluate dividend payment opportunities on a quarterly basis. There can be no assurance as to when and if future dividends will be paid, and at what level, because the payment of dividends is dependent on our financial condition, results of operations, cash flows, capital requirements and other factors deemed relevant by our Board of Directors.

In There are no restrictions on the ~~first nine months of 2017, we repurchased 2.8 million shares~~ability of our outstanding common stock under the Company’s share repurchase programs for $173.7 million. As of September 30, 2017, the Company’s total remaining share repurchase authorization under the repurchase programs was approximately $347 million. The share repurchase programs do not obligate the Companysubsidiaries to ~~repurchase any specific dollar amount~~pay dividends or ~~number of shares and may be suspended or discontinued at any time.~~make other distributions to Fortune Brands.

Acquisitions

We periodically review our portfolio of brands and evaluate potential strategic transactions and other capital initiatives to increase shareholder value. However, we cannot predict whether or when we may enter into acquisitions, joint ventures or dispositions, make any purchases of shares of our common stock under our share repurchase programs, or pay dividends, or what impact any such transactions could have on our results of operations, cash flows or financial condition, whether as a result of the issuance of debt or equity securities, or otherwise. Our cash flows from operations, borrowing availability and overall liquidity are subject to certain risks and uncertainties, including those described in the section of our Annual Report on Form~~10-K~~ ~~for the year-ended December 31, 2016 entitled “Item 1A. Risk Factors.”~~

~~Acquisitions in 2017 and 2016 included:~~

In October 2017, the Company acquired Victoria + Albert, a UK manufacturer of luxury freestanding tubs and basins. The results of operations of the acquired company will be included in the Plumbing segment from the date of acquisition. This acquisition will not have a material effect on net sales or operating income.

In July 2017, we acquired Shaws Since1897 Limited, a U.K.-based company that specializes in the design, production and marketing of luxury fire-clay kitchen sinks. We financed the transaction using cash on hand and borrowings under our existing credit facilities. Net sales and operating income in the three months ended September 30, 2017 were not material to the Company.

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

In May 2016, we acquired Riobel, a Canadian plumbing company specializing in premium showroom bath and shower fittings, for a total purchase price of $94.6 million in cash. We financed the transaction using cash on hand and borrowings under our existing credit facilities.

~~On September 30, 2017, we had cash and cash equivalents of $277.1 million, of which $257.9 million was held atnon-U.S.~~ subsidiaries. We manage our global cash requirements considering (i) available funds among the subsidiaries through which we conduct business, (ii) the geographic location of our liquidity needs, and (iii) the cost to access international cash balances. The repatriation of~~non-U.S.~~ cash balances from certain subsidiaries could have adverse tax consequences as we may be required to pay and record income tax expense on those funds to the extent they were previously considered indefinitely reinvested.

Cash Flows

Below is a summary of cash flows for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016.~~2020.


(In millions)	Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2021			2020
Net cash provided by operating activities	$	352.6		$	380.6
Net cash used in operating activities							$	(69.2	)	$	(13.8	)
Net cash used in investing activities		(113.2	)		(334.3	)		(18.5	)		(77.0	)
Net cash used in financing activities		(223.5	)		(9.5	)
Net cash provided by financing activities								22.8			77.3
Effect of foreign exchange rate changes on cash		9.7			3.3			1.7			(15.0	)

Net increase in cash and cash equivalents	$	25.6		$	40.1
Net decrease in cash and cash equivalents							$	(63.2	)	$	(28.5	)

Net cash ~~provided by~~used in operating activities was ~~$352.6~~$69.2 million in the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021, compared to ~~$380.6~~net cash used in operating activities of $13.8 million in the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2020. The ~~decrease~~increase in cash ~~provided~~used of ~~$28.0~~$55.4 million was primarily due to a higher ~~build~~increases in working capital ~~during 2017 compared to 2016 which included~~driven by higher inventory ~~reductions as we completed~~associated with our ~~manufacturing facility relocations in our Plumbing~~strong sales growth (26.3% versus the three months ended March 31, 2020) and ~~Security businesses, partly~~the payment of 2020 customer program and employee incentive accruals, partially offset by higher net ~~income.~~income and increases in accrued taxes.

Net cash used in investing activities was ~~$113.2~~$18.5 million in the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021, compared to ~~$334.3~~net cash used in investing activities of $77.0 million in the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2020. The decrease in cash used of ~~$221.1~~$58.5 million was primarily due to the ~~decrease~~acquisition of additional shares of Flo in ~~cost of acquisitions of $211.1 million.~~January 2020.

Net cash ~~used~~provided by financing activities was ~~$223.5~~$22.8 million in the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021, compared to ~~net~~ cash ~~used~~provided by financing activities of ~~$9.5~~$77.3 million in the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2020. The ~~increase~~decrease in cash ~~used~~provided of ~~$214~~$54.5 million ~~during 2017~~ was primarily due to lower net borrowings ~~of $384~~in 2021 compared to 2020 ($140.0 million ~~and higher dividends of $9 million, partially~~decrease), partly offset by lower share repurchases in ~~2017~~2021 compared to 2016 ($189 million decrease). Additionally, during the third quarter 2017, we paid deferred acquisition payments totaling $12.4 million (net of certain working capital and other adjustments) relating to the ROHL and Perrin & Rowe acquisitions.2020.

Pension Plans

Subsidiaries of Fortune Brands sponsor their respective defined benefit pension plans that are funded by a portfolio of investments maintained within our benefit plan trust. As of December 31, ~~2016,~~2020, the fair value of our total pension plan assets was ~~$577.7~~$784.9 million, representing ~~73%~~84% of the accumulated benefit obligation liability. In ~~2017,~~2021, we expect to make ~~total~~ pension contributions of approximately ~~$25 million of which $22 million has been paid as of September 30, 2017.~~$10 million. For the foreseeable future, we believe that we have sufficient liquidity to meet the minimum funding that may be required by the Pension Protection Act of 2006.

Foreign Exchange

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

RECENTLY ISSUED ACCOUNTING STANDARDS

~~Revenue from Contracts with Customers~~

~~In May 2014, the Financial~~The adoption of recent accounting standards, as discussed in Note 2, “Recently Issued Accounting Standards, ~~Board (“FASB”) issued Accounting Standards Update (“ASU”)2014-09,~~ ~~which clarifies the accounting for revenue arising from contracts with customers~~” to our Consolidated Financial Statements, has not had and ~~specifies the disclosures that an entity should include in its financial statements. The standard~~ is effective for annual reporting periods beginning after December 15, 2017 (calendar year 2018 for Fortune Brands). During 2016, the FASB issued certain amendments to the standard relating to the principal versus agent guidance, accounting for licenses of intellectual property and identifying performance obligations as well as the guidance on transition, collectability, noncash consideration and the presentation of sales and other similar taxes. The effective date and transition requirements for these amendments are the same as those of the original ASU. We have elected the modified retrospective transition approach and also have identified focus areas for each of our reporting segments and have made substantial progress in our assessment of the accounting and financial reporting implications as of September 30, 2017. Our key considerations pursuant to~~ASU 2014-09~~ are the control of goods (i.e., timing of revenue recognition), separate performance obligations, customer rights of return (i.e., the reclassification on the balance sheet of the customer rights of return from accounts receivable to a refund liability as well as the recognition of a corresponding asset) and our accounting for display assets. We do not ~~expect the change in accounting related to these considerations~~expected to have a ~~material effect~~significant impact on our ~~financial statements.~~

~~Leases~~

~~In February 2016, the FASB issued ASU2016-02,~~ ~~which requires lessees to recognize almost all leases on their balance sheet as a“right-of-use”~~ asset and lease liability but recognize related expenses in a manner similar to current accounting. The guidance also eliminates current real estate-specific provisions for all entities. The standard is effective for annual periods beginning after December 15, 2018 (calendar year 2019 for Fortune Brands) and earlier application is permitted. We are assessing the impact the adoption of this standard will have on our financial statements.

~~Improvements to Accounting for Hedging Activities~~

~~In August 2017, the FASB issued ASU2017-12,~~ that amends current hedge accounting model. The new standard eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item (consistent with our current practice). The change in fair value for qualifying cash flow and net investment hedges will be included in Other comprehensive income (until they are reclassified into the income statement). The standard also eases certain documentation and assessment requirements and modifies the accounting for components excluded from the assessment of hedge effectiveness. The standard is effective as of January 1, 2019 and earlier application is permitted. We are assessing the impact the adoption of this standard will have on our financial statements.

~~RECENTLY ISSUED ACCOUNTING STANDARDS (Continued)~~

~~Clarifying Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets~~

~~In May 2017, the FASB issued ASC610-20~~ that clarifies the scope and application of various standards for the sale of nonfinancial assets (e.g. PP&E including real estate, intangible assets, materials and supplies). The standard distinguishes between a sale to customer vs~~non-customer.~~ ~~Sales to customers are in scope of the new~~ revenue, standard. It also clarifies a derecognition model for nonfinancial assets that do not represent a business. The standard is effective as of January 1, 2018 consistent with the effective date for the new revenue recognition standard. We are assessing the impact the adoption of this standard will have on our financial statements and we will consider the implications of the new standard on case by case basis for all~~non-recurring~~ ~~transactions where we sell~~earnings or ~~transfer nonfinancial assets.~~liquidity.

~~Stock Compensation Scope of Modification Accounting~~

~~In May 2017, the FASB issued ASU2017-09,~~ ~~which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. The new guidance provides a relief to entities that makenon-substantive~~ changes to their share-based payment awards and will result in fewer changes to the terms of an award being accounted for as modifications. The standard is effective January 1, 2018 and early adoption is permitted, however we elected not to early adopt. We do not expect the adoption of this standard to have a material effect on our financial statements.

~~Presentation of Net Periodic Pension and Postretirement Cost~~

~~In March 2017, the FASB issued ASU2017-07,~~ which requires entities to present the service cost component of the net periodic benefit cost in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. In addition, only the service cost component will be eligible for capitalization in assets. Employers will present the other components (i.e., interest cost, expected return on plan assets and actuarial gains/losses) separately from the line item(s) that includes the service cost and outside of any subtotal of operating income. The standard is effective January 1, 2018 and early adoption is permitted. We are assessing the impact the adoption of this standard will have on our financial statements.

~~Simplifying the Test for Goodwill Impairment~~

~~In January 2017, the FASB issued ASU2017-04,~~ which simplifies the accounting for goodwill impairment for all entities. Under the new standard, if a reporting unit’s carrying amount exceeds its fair value, an entity will record an impairment charge based on that difference. The standard eliminates the current requirement to calculate a goodwill impairment charge by comparing the implied fair value of goodwill with its carrying amount (i.e., hypothetical purchase price allocation). The standard is effective for annual and interim impairment tests performed in the periods beginning after January 1, 2020 and early adoption is permitted. We plan to early adopt ASU~~2017-04~~ ~~in conjunction with our annual goodwill impairment test during the fourth quarter of 2017.~~

~~RECENTLY ISSUED ACCOUNTING STANDARDS (Continued)~~

~~Clarifying the Definition of a Business~~

~~In January 2017, the FASB issued ASU2017-01,~~ which changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business and therefore business combination guidance would apply. The new standard requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset (i.e., a business) or a group of similar identifiable assets (i.e., not a business). The guidance also requires a business to include at least one substantive process and narrows the definition of outputs (e.g., revenues with customers). The standard is effective January 1, 2018 and early adoption is permitted. We do not expect the adoption of this standard to have a material effect on our financial statements.

~~Restricted Cash~~

~~In November 2016, the FASB issued ASU2016-18,~~ according to which entities are no longer required to present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. The prior standard did not address the classification of activity related to restricted cash and restricted cash equivalents in the statement of cash flows which has resulted in diversity in cash flows presentation. The standard is effective January 1, 2018 and early adoption is permitted; however, we elected not to early adopt. We do not expect the adoption of this standard to have a material effect on our financial statements.

~~Intra-Entity Transfers of Assets Other Than Inventory~~

~~In October 2016, the FASB issued ASU2016-16,~~ which requires companies to account for the income tax effects of intercompany sales and transfers of assets other than inventory (e.g., intangible assets) when the transfer occurs. Under the current guidance companies are required to defer the income tax effects of intercompany transfers of assets until the asset has been sold to an outside party or otherwise recognized (e.g., depreciated, amortized or impaired). The standard is effective January 1, 2018 and early adoption is permitted; however, we elected not to early adopt. The transition method will be a “modified retrospective” (i.e., with a cumulative adjustment to retained earnings at adoption). We are assessing the impact the adoption of this standard will have on our financial statements.

~~Classification of Certain Cash Receipts and Cash Payments~~

~~In September 2016 the FASB issued ASU2016-15,~~ which changes how an entity classifies certain cash receipts and cash payments on its statement of cash flows. The key changes that may potentially impact our financial statements include the following: 1) Cash payments for debt prepayment or extinguishment costs would be classified as financing cash outflows; 2) Contingent consideration payments that are not made within three months after the consummation of a business combination would be classified as financing (if the payment is made up to the acquisition date fair value of liability) or operating outflows (if in excess of acquisition fair value). Cash payments made “soon after” the consummation of a business combination generally would be classified as cash outflows for investing activities; 3) Insurance settlement proceeds would be classified based on the nature of the loss; and 4) Company-owned life insurance settlement proceeds would be presented as investing cash inflows, and premiums would be classified as investing or operating cash outflows, or a combination of both. The new standard is effective January 1, 2018 and should be adopted retrospectively. Early adoption is permitted; however, we elected not to early adopt. We do not expect the adoption of this standard to have a material effect on our financial statements.

~~RECENTLY ISSUED ACCOUNTING STANDARDS (Continued)~~

~~Financial Instruments—Credit Losses~~

~~Recognition and Measurement of Financial Assets and Financial Liabilities~~

~~In January 2016, the FASB issued ASU2016-01,~~ which requires entities to measure investments in unconsolidated entities (other than those accounted for using the equity method of accounting) at fair value through the income statement. There will no longer be an~~available-for-sale~~ classification (with changes in fair value reported in Other Comprehensive Income). In addition, the cost method is eliminated for equity investments without readily determinable fair values. The standard is effective January 1, 2018. Early application is permitted for certain provisions of the standard; however, we elected not to early adopt. We do not expect this standard to have a material effect on our financial statements.

Item 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

There have been no material changes in the information provided in the section entitled “Quantitative and Qualitative Disclosures about Market Risk” in our Annual Report on Form10-K for the year ended December 31, ~~2016.~~2020.

Item 4.

CONTROLS AND PROCEDURES.

(a)

Evaluation of Disclosure Controls and Procedures.

The Company’s management has evaluated, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of the ~~Company’s~~Company's disclosure controls and procedures (as defined in Rules13a-15(e) and15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the ~~Company’s~~Company's disclosure controls and procedures were effective as of the end of the period covered by this report.

(b)

Changes in Internal Control Over Financial Reporting.

There have not been any changes in the ~~Company’s~~Company's internal control over financial reporting that occurred during the ~~Company’s~~ fiscal quarter ended ~~September 30, 2017~~March 31, 2021 that have materially affected, or are reasonably likely to materially affect, the ~~Company’s~~Company's internal control over financial reporting. The Company is in the process of reviewing the internal control structure of ~~acquired businesses~~Larson and Flo and, if necessary, will make appropriate changes as we incorporate our controls and procedures into ~~those~~these recently acquired businesses.

PART II. OTHER INFORMATION

Item 1.

LEGAL PROCEEDINGS.

(a)

~~Other~~

Litigation.

~~The Company is a defendant~~We are defendants in lawsuits associated with the normal conduct of ~~its~~our businesses and operations. It is not possible to predict the outcome of the pending actions, and, as with any litigation, it is possible that these actions could be decided unfavorably to the Company. The Company believes that there are meritorious defenses to these actions and that these actions will not have a material adverse effect upon ~~the Company’s~~our results of operations, cash flows or financial condition, and where appropriate, these actions are being vigorously contested. Accordingly, the Company believes the likelihood of material loss is remote.

(b)

Environmental Matters.

Item 1A.

RISK FACTORS.

There have been no material changes to the risk factors previously disclosed in our Annual Report on Form10-K for the year ended December 31, ~~2016~~2020 in the section entitled “Risk Factors.”

Item 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Below are the repurchases of common stock by the Company or any “affiliated purchaser” (as defined in Rule10b-18(a)(3) under the Exchange Act) for the three months ended ~~September 30, 2017:~~March 31, 2021:

Issuer Purchases of Equity Securities

Period
   Total number
of shares
purchased^(a)    Average price
paid per share    Total number of
shares purchased
as part of publicly
announced plans
or programs^(a)    Maximum dollar
amount that may
yet be purchased
under the plans or
programs^(a)
July 1 – July 31
   603,750    $ 66.18    603,750    $ 450,381,443
August 1 – August 31
   881,646    63.53    881,646    394,375,046
September 1 – September 30
   729,023    64.51    729,023    347,346,977







Total
   2,214,419    $ 64.57    2,214,419

Three Months Ended March 31, 2021	Total number of shares purchased ^(a)		Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs ^(a)		Maximum dollar amount that may yet be purchased under the plans or programs ^(a)
January 1 – January 31		19,577	$	83.9		19,577	$	460,795,545
February 1 – February 28		290,556		85.1		290,556		436,080,047
March 1 – March 31		328,874		84.2		328,874		408,384,159
Total		639,007	$	84.6		639,007

^(a)

Information on the Company’s share repurchase ~~programs~~program follows:

Authorization date

Announcement date

Authorization amount of shares of outstanding common stock

Expiration date

~~Authorization and announcement date~~September 21, 2020

~~Announcement date~~

~~Authorization amount of~~
~~shares of outstanding~~
~~common stock~~

~~Expiration date~~

~~February 16, 2016~~

~~February 22, 2016~~

~~400 million~~

~~February 16, 2018~~

~~February 28, 2017~~September 21, 2020

$500 million

~~March 1, 2017~~

~~300 million~~

~~February 28, 2019~~

September 21, 2022

Item 6.

EXHIBITS



3(i).		Restated Certificate of Incorporation of Fortune Brands Home & Security, Inc. ~~(incorporated~~incorporated herein by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form10-Q filed with the SEC on November 5, ~~2012, Commission file number1-35166).~~2012.

3(ii).		Amended and Restated~~By-laws~~ Bylaws of Fortune Brands Home & Security, Inc., ~~as adopted September 27, 2011 (incorporated~~effective February 23, 2021, are incorporated herein by reference to Exhibit ~~3.2~~3.1 to the Company’s Current Report on Form8-K filed with the SEC on ~~September 30, 2011, Commission file number1-35166).~~February 23, 2021.

31.1.* 31.1*		Certificate of Chief Executive Officer Required Under Section 302 of the Sarbanes-Oxley Act of 2002.

31.2.* 31.2*		Certificate of Chief Financial Officer Required Under Section 302 of the Sarbanes-Oxley Act of 2002.

32.*		Joint CEO/CFO Certificate Required Under Section 906 of the Sarbanes-Oxley Act of 2002.

101.*		The following materials from the Company’s Quarterly Report on Form10-Q for the quarter ended ~~September 30, 2017~~March 31, 2021 formatted in Inline eXtensible Business Reporting Language ~~(XBRL)~~(iXBRL): (i) the Cover Page, (ii) the Condensed Consolidated Statements of Comprehensive Income, ~~(ii)~~(iii) the Condensed Consolidated Balance Sheets, ~~(iii)~~(iv) the Condensed Consolidated Statements of Cash Flows, ~~(iv)~~(v) the Condensed Consolidated Statements of Equity, and ~~(v)~~(vi) the Notes to the Condensed Consolidated Financial Statements.

104.*	Cover Page Interactive Data File (embedded within the iXBRL document).

*	Filed or furnished herewith.

*	~~Filed herewith.~~

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		FORTUNE BRANDS HOME & SECURITY, INC.
	(Registrant)

Date: ~~October 31, 2017~~May 4, 2021		/s/ Patrick D. Hallinan
		Patrick D. Hallinan
		Senior Vice President and Chief Financial Officer
		(Duly authorized officer and principal financial officer of the Registrant)

4830

Delaware
~~DELAWARE~~		62-1411546
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

~~520 Lake Cook Road, Deerfield, Illinois~~		~~60015-5611~~
~~(Address of principal executive offices)~~		~~(Zip Code)~~

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	FBHS	New York Stock Exchange


	September 30, 2017			December 31, 2016			March 31, 2021			December 31, 2020
Assets
Current assets
Cash and cash equivalents	$	277.1		$	251.5		$	356.1		$	419.1
Accounts receivable, net		594.7			550.7
Accounts receivable less allowances for discounts and credit losses								828.5			734.9
Inventories		600.1			531.1			958.4			867.2
Other current assets		126.4			111.9			202.9			187.3

Total current assets		1,598.3			1,445.2			2,345.9			2,208.5
Property, plant and equipment, net of accumulated depreciation		690.6			662.5			905.1			917.4
Operating lease assets								179.2			170.2
Goodwill		1,852.8			1,833.8			2,466.2			2,394.8
Other intangible assets, net of accumulated amortization		1,105.4			1,107.0			1,434.3			1,420.3
Other assets		102.2			80.0			151.4			247.5

Total assets	$	5,349.3		$	5,128.5		$	7,482.1		$	7,358.7


Liabilities and equity
Current liabilities
Accounts payable	$	392.5		$	393.8			599.2			620.5
Other current liabilities		460.0			449.0			597.8			724.6

Total current liabilities		852.5			842.8			1,197.0			1,345.1
Long-term debt		1,462.2			1,431.1			2,682.8			2,572.2
Deferred income taxes		176.2			163.5			167.1			160.5
Accrued defined benefit plans		185.1			216.2			156.8			159.5
Operating lease liabilities								149.1			140.5
Othernon-current liabilities		127.4			111.9			204.9			205.4

Total liabilities		2,803.4			2,765.5			4,557.7			4,583.2
Commitments and contingencies (see Note 17)
Equity
Fortune Brands stockholders’ equity
Stockholders' equity
Common stock^(a)		1.7			1.7			1.9			1.8
Paid-in capital		2,712.2			2,653.8			2,955.1			2,926.3
Accumulated other comprehensive loss		(25.5	)		(71.9	)		(51.0	)		(55.1	)
Retained earnings		1,076.5			814.6			2,358.0			2,180.2
Treasury stock		(1,220.6	)		(1,036.7	)		(2,339.6	)		(2,277.7	)

Total Fortune Brands stockholders’ equity		2,544.3			2,361.5
Noncontrolling interests		1.6			1.5

Total equity		2,545.9			2,363.0


Total stockholders' equity								2,924.4			2,775.5
Total liabilities and equity	$	5,349.3		$	5,128.5		$	7,482.1		$	7,358.7


	2017			2016
Operating activities
Net income	$	344.7		$	309.5
Non-cashpre-tax expense (income):
Depreciation		72.7			69.3
Amortization		23.6			20.4
Stock-based compensation		32.7			24.3
Recognition of actuarial (gains) losses		(1.3	)		1.9
Deferred income taxes		8.2			(23.0	)
Loss on sale of product line		2.4			—
Asset impairment charges		3.2			—
Amortization of deferred financing costs		1.5			3.0
Loss on sale of property, plant and equipment		0.3			1.2
Changes in assets and liabilities:
Increase in accounts receivable		(34.5	)		(53.1	)
(Increase) decrease in inventories		(60.7	)		22.6
(Decrease) increase in accounts payable		(3.5	)		28.7
Increase in other assets		(28.0	)		(11.6	)
Decrease in accrued expenses and other liabilities		(23.9	)		(12.0	)
Increase (decrease) in accrued taxes		15.2			(0.6	)

Net cash provided by operating activities		352.6			380.6


Investing activities
Capital expenditures^(a)		(95.5	)		(106.1	)
Proceeds from the sale of assets		0.2			2.3
Proceeds from sale of product line		1.5			—
Cost of acquisitions, net of cash acquired		(19.4	)		(230.5	)

Net cash used in investing activities		(113.2)			(334.3)

Financing activities
Decrease in short-term debt, net		—			(1.0	)
Issuance of long-term debt		375.0			880.0
Repayment of long-term debt		(345.0	)		(465.0	)
Proceeds from the exercise of stock options		25.8			24.8
Treasury stock purchases		(173.7	)		(362.7	)
Employee withholding taxes paid related to stock-based compensation		(10.2	)		(9.8	)
Deferred acquisition payment		(12.4	)		—
Dividends to stockholders		(82.7	)		(73.7	)
Other financing, net		(0.3	)		(2.1	)

Net cash used in financing activities		(223.5	)		(9.5	)


Effect of foreign exchange rate changes on cash		9.7			3.3


Net increase in cash and cash equivalents	$	25.6		$	40.1


Cash and cash equivalents at beginning of period	$	251.5		$	238.5
Cash and cash equivalents at end of period	$	277.1		$	278.6

	2021			2020
Operating activities
Net income	$	177.8		$	108.8
Non-cash adjustments:
Depreciation		31.1			27.2
Amortization of intangibles		16.6			10.3
Non-cash lease expense		10.7			7.4
Stock-based compensation		11.6			11.1
Deferred taxes		(0.1	)		0.5
Asset impairment charges		—			9.5
Amortization of deferred financing fees		1.2			0.9
Equity in losses of affiliate		—			0.3
Loss (gain) on equity investments		2.9			(6.6	)
Loss (gain) on sale of property, plant and equipment		0.2			(0.1	)
Changes in assets and liabilities:
Increase in accounts receivable		(91.6	)		(81.3	)
(Increase) decrease in inventories		(86.4	)		9.6
Decrease in accounts payable		(15.9	)		(25.6	)
Increase in other assets		(10.9	)		(7.4	)
Decrease in accrued expenses and other liabilities		(150.7	)		(92.9	)
Increase in accrued taxes		34.3			14.5
Net cash used in operating activities		(69.2	)		(13.8	)
Investing activities
Capital expenditures^(a)		(25.4	)		(26.9	)
Proceeds from the disposition of assets		1.7			1.5
Cost of acquisitions, net of cash acquired		5.2			—
Cost of investments in equity securities		—			(51.6	)
Net cash used in investing activities		(18.5	)		(77.0	)
Financing activities
Issuance of long-term debt		370.0			380.0
Repayment of long-term debt		(260.0	)		(130.0	)
Proceeds from the exercise of stock options ^(b)		10.6			18.4
Treasury stock purchases		(54.1	)		(150.0	)
Employee withholding taxes related to stock-based compensation		(7.8	)		(7.6	)
Dividends to stockholders		(36.0	)		(33.5	)
Other financing, net		0.1			—
Net cash provided by financing activities		22.8			77.3
Effect of foreign exchange rate changes on cash		1.7			(15.0	)
Net decrease in cash and cash equivalents	$	(63.2	)	$	(28.5	)
Cash, cash equivalents and restricted cash^(c) at beginning of period	$	425.0		$	394.9
Cash, cash equivalents and restricted cash^(c)at end of period	$	361.8		$	366.4


Large accelerated filer	☒	☒	Accelerated filer		☐

Non-accelerated filer	☐	~~☐ (Do not check if a smaller reporting company)~~	Smaller reporting company		☐

			Emerging growth company	☐	☐

											Three Months Ended
	Nine Months Ended September 30,						Three Months Ended September 30,				March 31,
	2017			2016			2017		2016		2021		2020
Net sales	$	3,900.8		$	3,683.3		$	1,348.6	$	1,279.0	$	1,771.0	$	1,402.7
Cost of products sold		2,461.3			2,352.8			841.6		801.0		1,126.9		909.5
Selling, general and administrative expenses		877.7			831.4			297.3		284.5		371.5		313.9
Amortization of intangible assets		23.6			20.4			7.5		7.3		16.6		10.3
Loss on sale of product line (see Note 4)		2.4			—			—		—
Asset impairment charges		3.2			—			—		—		—		9.5
Restructuring charges		3.5			12.4			0.4		3.1		7.6		4.5


Operating income		529.1			466.3			201.8		183.1		248.4		155.0
Interest expense		36.5			37.5			12.3		11.8		21.4		22.1
Other expense (income), net		0.2			(0.1	)		0.1		0.6		3.3		(6.1	)


Income before income taxes		492.4			428.9			189.4		170.7
Income taxes		145.1			120.9			59.8		48.8

Income from continuing operations, net of tax		347.3			308.0			129.6		121.9
(Loss) income from discontinued operations , net of tax		(2.6	)		1.5			—		1.5

Income before taxes												223.7		139.0
Income tax												45.9		29.9
Income after tax												177.8		109.1
Equity in losses of affiliate												—		0.3
Net income		344.7			309.5			129.6		123.4		177.8		108.8
Less: Noncontrolling interests		0.1			(0.1	)		0.1		—		—		(0.3	)

Net income attributable to Fortune Brands	$	344.6		$	309.6		$	129.5	$	123.4	$	177.8	$	109.1

Basic earnings per common share											$	1.28	$	0.78
Diluted earnings per common share											$	1.26	$	0.77

Basic earnings per common share
Continuing operations	$	2.26		$	2.00		$	0.84	$	0.79
Discontinued operations		(0.02	)		0.01			—		0.01

Net income attributable to Fortune Brands common shareholders	$	2.24		$	2.01		$	0.84	$	0.80
Diluted earnings per common share
Continuing operations	$	2.22		$	1.95		$	0.83	$	0.77
Discontinued operations		(0.02	)		0.01			—		0.01

Net income attributable to Fortune Brands common shareholders	$	2.20		$	1.96		$	0.83	$	0.78
Comprehensive income	$	391.1		$	309.8		$	158.7	$	110.5	$	181.9	$	58.2


	Common Stock		Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Treasury Stock			Non- controlling Interests			Total Equity
Balance at December 31, 2015	$	1.7	$	2,602.2		$	(52.5	)	$	501.6		$	(602.1	)	$	2.9		$	2,453.8
Comprehensive income:
Net income		—		—			—			309.6			—			(0.1	)		309.5
Other comprehensive income		—		—			0.3			—			—			—			0.3
Stock options exercised		—		24.8			—			—			—			—			24.8
Stock-based compensation		—		24.3			—			—			(9.8	)		—			14.5
Treasury stock purchase		—		—			—			—			(362.7	)		—			(362.7	)
Dividends ($0.28 per common share)		—		—			—			(72.8	)		—			—			(72.8	)
Dividends paid to noncontrolling interests		—		—			—			—			—			(1.4	)		(1.4	)
Other		—		(5.8	)		—			—			—			—			(5.8	)

Balance at September 30, 2016	$	1.7	$	2,645.5		$	(52.2	)	$	738.4		$	(974.6	)	$	1.4		$	2,360.2


Balance at December 31, 2016	$	1.7	$	2,653.8		$	(71.9	)	$	814.6		$	(1,036.7	)	$	1.5		$	2,363.0
Comprehensive income:
Net income		—		—			—			344.6			—			0.1			344.7
Other comprehensive income		—		—			46.4			—			—			—			46.4
Stock options exercised		—		25.7			—			—			—			—			25.7
Stock-based compensation		—		32.7			—			—			(10.2	)		—			22.5
Treasury stock purchase		—		—			—			—			(173.7	)		—			(173.7	)
Dividends ($0.54 per common share)		—		—			—			(82.7	)		—			—			(82.7	)

Balance at September 30, 2017	$	1.7	$	2,712.2		$	(25.5	)	$	1,076.5		$	(1,220.6	)	$	1.6		$	2,545.9

	Common Stock		Paid-In Capital		Accumulated Other Comprehensive (Loss) Income			Retained Earnings		Treasury Stock			Non- controlling Interests			Total Equity
Balance at December 31, 2019	$	1.8	$	2,813.8	$	(72.6	)	$	1,763.0	$	(2,079.4	)	$	1.2		$	2,427.8
Comprehensive income:
Net income		—		—		—			109.1		—			(0.3	)		108.8
Other comprehensive income (loss)		—		—		(50.6	)		—		—			—			(50.6	)
Stock options exercised		—		18.4		—			—		—			—			18.4
Stock-based compensation		—		11.1		—			—		(7.6	)		—			3.5
Treasury stock purchases		—		—		—			—		(150.0	)		—			(150.0	)
Balance at March 31, 2020	$	1.8	$	2,843.3	$	(123.2	)	$	1,872.1	$	(2,237.0	)	$	0.9		$	2,357.9

Balance at December 31, 2020	$	1.8	$	2,926.3	$	(55.1	)	$	2,180.2	$	(2,277.7	)	$	—		$	2,775.5
Comprehensive income:
Net income		—		—		—			177.8		—			—			177.8
Other comprehensive income (loss)		—		—		4.1			—		—			—			4.1
Stock options exercised		0.1		17.2		—			—		—			—			17.3
Stock-based compensation		—		11.6		—			—		(7.8	)		—			3.8
Treasury stock purchases		—		—		—			—		(54.1	)		—			(54.1	)
Balance at March 31, 2021	$	1.9	$	2,955.1	$	(51.0	)	$	2,358.0	$	(2,339.6	)	$	—		$	2,924.4

(In millions)
Accounts receivable	$	42.3
Inventories		51.8
Property, plant and equipment		66.1
Goodwill		304.1
Identifiable intangible assets		313.0
Operating lease assets		6.2
Other assets		4.5
Total assets		788.0
Accounts payable		6.5
Other current liabilities and accruals		31.1
Other non-current liabilities		32.9
Net assets acquired^(a)	$	717.5