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 July ~~20, 2018~~ 19, 2019 was ~~142,419,669.~~140,019,208.

																			Common Stock		Paid-In Capital		Accumulated Other Comprehensive (Loss) Income			Retained Earnings			Treasury Stock			Non- controlling Interests			Total Equity
	Common Stock		Paid-In Capital		Accumulated Other Comprehensive Loss			Retained Earnings			Treasury Stock			Non-controlling Interests		Total Equity
Balance at December 31, 2016	$	1.7	$	2,653.8	$	(71.9	)	$	814.6		$	(1,036.7	)	$	1.5	$	2,363.0
Balance at December 31, 2017																			$	1.7	$	2,724.9	$	(39.2	)	$	1,174.2		$	(1,262.1	)	$	1.6		$	2,601.1
Comprehensive income:
Net income		—		—		—			215.1			—			—		215.1			—		—		—			204.6			—			—			204.6
Other comprehensive income		—		—		17.3			—			—			—		17.3			—		—		(14.0	)		—			—			—			(14.0	)
Stock options exercised		—		22.1		—			—			—			—		22.1			0.1		3.7		—			—			—			—			3.8
Stock-based compensation		—		20.9		—			—			(9.3	)		—		11.6			—		22.9		—			—			(12.7	)		—			10.2
Treasury stock purchase		—		—		—			—			(32.7	)		—		(32.7	)		—		—		—			—			(602.7	)		—			(602.7	)
Dividends ($0.18 per common share)		—		—		—			(27.7	)		—			—		(27.7	)
Dividends ($0.20 per common share)																				—		—		—			(28.3	)		—			—			(28.3	)
Balance at June 30, 2018																			$	1.8	$	2,751.5	$	(53.2	)	$	1,350.5		$	(1,877.5	)	$	1.6		$	2,174.7

Balance at June 30, 2017	$	1.7	$	2,696.8	$	(54.6	)	$	1,002.0		$	(1,078.7	)	$	1.5	$	2,568.7

Balance at December 31, 2017	$	1.7	$	2,724.9	$	(39.2	)	$	1,174.2		$	(1,262.1	)	$	1.6	$	2,601.1
Balance at December 31, 2018																			$	1.8	$	2,766.0	$	(67.0	)	$	1,448.1		$	(1,970.7	)	$	1.8		$	2,180.0
Comprehensive income:
Net income		—		—		—			204.6			—			—		204.6			—		—		—			222.2			—			(0.6	)		221.6
Other comprehensive loss		—		—		(14.0	)		—			—			—		(14.0	)
Other comprehensive income																				—		—		11.5			—			—			—			11.5
Stock options exercised																				—		6.1		—			—			—			—			6.1
Stock-based compensation																				—		14.5		—			—			(8.2	)		—			6.3
Adoption of ASU 2018-02																				—		—		(8.6	)		8.6			—			—			—
Treasury stock purchase																				—		—		—			—			(50.0	)		—			(50.0	)
Dividends ($0.22 per common share)																				—		—		—			(30.8	)		—			—			(30.8	)
Balance at June 30, 2019																			$	1.8	$	2,786.6	$	(64.1	)	$	1,648.1		$	(2,028.9	)	$	1.2		$	2,344.7

																			Common Stock		Paid-In Capital		Accumulated Other Comprehensive (Loss) Income			Retained Earnings			Treasury Stock			Non- controlling Interests			Total Equity
Balance at March 31, 2018																			$	1.8	$	2,740.6	$	(36.0	)	$	1,249.9		$	(1,599.5	)	$	1.5		$	2,358.3
Comprehensive income:
Net income																				—		—		—			129.6			—			0.1			129.7
Other comprehensive income																				—		—		(17.2	)		—			—			—			(17.2	)
Stock options exercised		0.1		3.7		—			—			—			—		3.8			—		0.6		—			—			—			—			0.6
Stock-based compensation		—		22.9		—			—			(12.7	)		—		10.2			—		10.3		—			—			(0.5	)		—			9.8
Treasury stock purchase		—		—		—			—			(602.7	)		—		(602.7	)		—		—		—			—			(277.5	)		—			(277.5	)
Dividends ($0.20 per common share)		—		—		—			(28.3	)		—			—		(28.3	)		—		—		—			(29.0	)		—			—			(29.0	)

Balance at June 30, 2018	$	1.8	$	2,751.5	$	(53.2	)	$	1,350.5		$	(1,877.5	)	$	1.6	$	2,174.7		$	1.8	$	2,751.5	$	(53.2	)	$	1,350.5		$	(1,877.5	)	$	1.6		$	2,174.7

Balance at March 31, 2019																			$	1.8	$	2,776.0	$	(67.3	)	$	1,541.4		$	(2,006.4	)	$	1.6		$	2,247.1
Comprehensive income:
Net income																				—		—		—			137.5			—			(0.4	)		137.1
Other comprehensive income																				—		—		3.2			—			—			—			3.2
Stock options exercised																				—		3.2		—			—			—			—			3.2
Stock-based compensation																				—		7.4		—			—			(0.5	)		—			6.9
Treasury stock purchase																				—		—		—			—			(22.0	)		—			(22.0	)
Dividends ($0.22 per common share)																				—		—		—			(30.8	)		—			—			(30.8	)
Balance at June 30, 2019																			$	1.8	$	2,786.6	$	(64.1	)	$	1,648.1		$	(2,028.9	)	$	1.2		$	2,344.7

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 June 30, ~~2018,~~2019, the related condensed consolidated statements of comprehensive income and equity for the six and three months ended June 30, ~~2018~~2019 and ~~2017~~2018, and the related condensed consolidated statements of cash flows ~~and equity~~ for the six months ended June 30, ~~2018~~2019 and ~~2017~~2018 are unaudited. ~~During the first quarter of 2018, we adopted Accounting Standards Update (“ASU”)2017-07~~ “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost”. As a result, we revised our previously reported condensed consolidated financial statements as of the six and three months ended June 30, 2017. See Note 12, “Defined Benefit Plans,” for further discussion. 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.

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, ~~2017~~2018 condensed consolidated balance sheet was derived from 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, ~~2017.~~2018.

In ~~October 2017,~~September 2018, we acquired ~~Victoria +Albert, aUK-based~~ ~~premium brand~~100% of ~~standalone bathtubs, sinks, tub fillers, faucets and other accessories. In July 2017, we acquired Shaws Since1897 Limited~~the membership interests of Fiber Composites, LLC (“~~Shaws”~~Fiberon”), a~~UK-based~~ ~~luxury plumbing~~ leading U.S. manufacturer of outdoor performance materials used in decking, railing and fencing products, ~~company that specializes in manufacturing~~for a total purchase price of approximately $470 million, subject to certain post-closing adjustments. The acquisition of Fiberon provided category expansion and ~~selling fireclay sinks~~product extension opportunities into the outdoor living space for our Doors & Security segment. We financed the transaction using cash on hand and ~~selling brassware~~borrowings under our revolving credit and ~~accessories.~~term loan facilities. The financial results of ~~both of the acquired companies~~Fiberon were included ~~in the Company’s consolidated balance sheets as of June 30, 2018 and December 31, 2017 and~~ in the Company’s consolidated statements of income and statements of cash flow ~~for~~beginning in September 2018 and the ~~six months ended June 30,~~consolidated balance sheet as of December 31, 2018.

~~FORTUNE BRANDS HOME~~ The results of operations are included in the Doors & ~~SECURITY, INC.~~Security segment from the date of acquisition.

In ~~May 2014,~~February 2016, the Financial Accounting Standards Board (“FASB”) issued ~~ASU2014-09,~~ which clarifies the accounting for revenue arising from contracts with customers 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). We adopted ASU~~2014-09~~ as of January 1, 2018 and for periods thereafter using the modified retrospective approach, which we applied to all contracts not completed as of January 1, 2018. The cumulative effect of adopting the new revenue standard was not material and no adjustment was recorded to retained earnings. The comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods. The adoption of this standard did not have a material impact on the quarter ended June 30, 2018 and we do not expect it to have a material impact on revenue or net income on an ongoing basis.

A majority of our sales revenue continues to be recognized when products are shipped from our facilities to our customers. Previously, for certain products, we recognized sales revenue at destination as we determined risks and rewards transferred at that point. We now recognize sales revenue for these customers at the shipping point of the products consistent with the respective contractual terms.

~~In February 2016, the FASB issued ASU~~Accounting Standards Update (“ASU”) 2016-02, which requires lessees to recognize almost all leases on their balance sheet as a~~“right-of-use”~~ ~~asset~~“right-of-use” assets and lease ~~liability~~liabilities but recognize related expenses in a manner similar to ~~current accounting.~~previous accounting guidance. The guidance also eliminates ~~current~~previous real estate-specific provisions for all entities. In January 2018, the FASB issued ASU2018-01, which clarifies the application of the new leases guidance to land easements. In July 2018, the FASB issued ASU2018-10 and ASU 2018-11, which clarify certain guidance included in ASU2016-02 and introduces a new optional transition method. The standard is effective for annual periods beginning after December 15, 2018 (calendar year 2019 for Fortune Brands) and earlier application is permitted. The Company is evaluating its lease portfoliomethod, which does not require revisions to ~~assess the impact on its financial statements as well as on its accounting processes, internal controls and disclosures. We have not yet determined the impact of adopting the standard.~~comparative periods.

~~In March 2017, the FASB issuedASU 2017-07, 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. Companies will present the other components (i.e., amortization of prior service cost/credits, 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. We adopted ~~ASU2014-09~~this standard as of January 1, ~~2018 and for periods thereafter~~2019 using the ~~retrospective approach.~~transition method introduced by ASU 2018-11, which does not require revisions to comparative periods. We elected to implement the transition package of practical expedients permitted within the new standard, which among other things, allows us to carryforward the historical lease classification. In addition, we elected the hindsight practical expedient to determine the lease term for existing leases.

Adoption of the new standard resulted in the recording of lease assets and lease liabilities of approximately $177.2 million and $182.6 million, respectively, as of January 1, 2019. The ~~adoption of this~~difference between the lease assets and lease liabilities primarily relates to accrued rent and unamortized lease incentives recorded in accordance with the previous leasing guidance. The new standard did not ~~have a material effect on~~materially impact our ~~financial statements. See Note 12 for further information.~~condensed consolidated statements of income or cash flows.

~~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 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. We adopted the new standard beginning January 1, 2018. The adoption of this standard did not have a material effect on our financial statements.

~~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). We adopted the new standard beginning January 1, 2018. The adoption of this standard did not 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 of cash flows and this has resulted in diversity in cash flows presentation. We adopted the new standard beginning January 1, 2018. The adoption of this standard did not have a material effect on our financial statements.

~~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). We adopted the new standard beginning January 1, 2018 using a “modified retrospective” approach (i.e., with a cumulative adjustment to retained earnings at adoption). The adoption of this standard did not have a material effect 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) and 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. We retrospectively adopted the new standard beginning January 1, 2018. The adoption of this standard did not have a material effect 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. We adopted the new standard beginning January 1, 2018. The adoption of this standard did not have a material effect on our financial statements.

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

~~In February 2017, the FASB issued ASU2017-05,~~ which 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 a customer versus a~~non-customer.~~ Sales to customers are within the scope of the new revenue standard. It also clarifies a derecognition model for nonfinancial assets that do not represent a business. We adopted the new standard beginning January 1, 2018 consistent with the effective date for the new revenue recognition standard. The adoption of this standard did not have a material effect on our financial statements.

In August 2017, the FASB issued ASU2017-12, which amends the 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 (which is consistent with our ~~current~~prior practice). The change in fair value for qualifying cash flow and net investment hedges ~~will be~~is included in ~~Other~~other comprehensive ~~income~~loss (until they are reclassified into the income statement). The standard also ~~eases~~eased certain documentation and assessment requirements and ~~modifies~~modified the accounting for components excluded from the assessment of hedge effectiveness. ~~The~~We adopted this standard ~~is effective~~ as of January 1, ~~2019 and earlier application is permitted. We are assessing the impact the~~2019. The adoption of this standard ~~will~~did not have a material effect on our financial statements.

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

In February 2018, the FASB issued ASU 2018-02, which permits companies to reclassify to retained earnings the tax effects stranded in accumulated other comprehensive income (“AOCI”) as a result of U.S. Tax Cuts and Jobs Act of 2017. We adopted this standard on January 1, 2019, which resulted in a reclassification of $8.6 million between accumulated other comprehensive loss and retained earnings in our condensed consolidated statement of equity.

In June 2018, the FASB issued ASU 2018-07, which simplifies the accounting for share-based arrangements with nonemployees. The new guidance generally aligns the accounting for share-based awards to nonemployees with the guidance for share-based awards to employees. The guidance was effective for the Company’s fiscal year beginning January 1, 2019. The adoption of this standard did not have a material effect on our financial statements.

In July 2018, the FASB issued ASU 2018-09, which includes technical corrections, clarifications, and other minor improvements to various areas including business combinations, fair value measurements and hedging. The transition and effective date guidance is based on the facts and circumstances of each amendment. Some of the amendments in this standard were effective immediately, while others were effective for the Company’s fiscal year beginning January 1, 2019. The adoption of this standard did not have a material effect on our financial statements.

In August 2018, the FASB issued ASU 2018-14, which removes several disclosure requirements, including the amount in AOCI expected to be recognized in income over the next fiscal year and the effects of a 1% change in assumed health care cost trend rates. The standard also adds new requirements to disclose reasons for significant gains and losses related to changes in the benefit obligation for the period and weighted-average interest crediting rates for plans with promised interest crediting rates. We adopted this guidance on January 1, 2019. The adoption of this standard did not 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 asoff-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 for the Company’s fiscal year beginning January 1, 2020 ~~and~~with early ~~application is~~adoption permitted beginning January 1, 2019. We are assessing the impact the adoption of this standard will have on our financial statements.

~~Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~Changes to the Disclosure Requirements for Fair Value Measurement

In ~~February~~August 2018, the FASB issued ASU~~2018-02,~~ ~~“Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification~~ 2018-13, which removes the requirement to disclose: 1) amount of ~~Certain Tax Effects from Accumulated Other Comprehensive Income.” This~~and reasons for transfers between Levels 1 and 2 of the fair value hierarchy, 2) policy for timing of transfers between levels, and 3) valuation processes for Level 3 investments. In addition, this guidance ~~permits companies~~modifies and adds other disclosure requirements, which primarily relate to ~~reclassify to retained earnings the tax effects stranded in accumulated other comprehensive income as a result~~valuation of U.S. tax reform. This guidance is effective for the Company’s fiscal year beginning January 1, 2019, with early adoption permitted. We are assessing the impact the adoption of this standard will have on our financial statements.

~~In June 2018, the FASB issued ASU2018-07~~ which simplifies the accounting for share-based arrangements with nonemployees. The new guidance generally aligns the accounting for share-based awards to nonemployees with the guidance for share-based awards to employees.Level 3 assets and liabilities. The guidance is effective for the Company’s fiscal year beginning January 1, ~~2019,~~2020, with early adoption permitted. We do not expect the adoption of this guidance to have a material effect on our financial statements.

~~Codification Improvements~~Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract

In ~~July~~August 2018, the FASB issued ASU~~2018-09~~ 2018-15 which ~~includes technical corrections, clarifications,~~aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. Costs to obtain software, including configuration and ~~other minor improvements~~integration with legacy IT systems, coding and testing, including parallel process phases are eligible for capitalization under the new standard. In addition, activities that would be expensed include costs related to ~~various areas including business combinations, fair value measurements~~vendor demonstrations, determining performance and ~~hedging.~~technology requirements and training activities. The ~~transition and effective date guidance~~standard is ~~based on the fact and circumstances of each amendment. Some of the amendments in this standard were effective immediately, while others will be~~ effective for the Company’s fiscal year beginning January 1, ~~2019.~~2020, with early adoption permitted. We ~~do not expect~~are assessing the impact the adoption of this ~~guidance to~~standard will have ~~a material effect~~ on our financial statements.

In ~~October 2017,~~September 2018, we acquired ~~Victoria + Albert,~~100% of the membership interests of Fiberon, a~~UK-based~~ ~~premium brand~~ leading U.S. manufacturer of ~~standalone bathtubs, sinks, tub fillers, faucets~~outdoor performance materials used in decking, railing and ~~other accessories. In July 2017, we acquired Shaws,~~fencing products, for a~~UK-based~~ ~~luxury plumbing products company that specializes in manufacturing and selling fireclay sinks and selling brassware and accessories. The~~ total ~~combined consideration paid was approximately $132 million, including $5.8 million of additional~~ purchase price ~~consideration paid related to post-closing adjustments during the six months ended June 30, 2018. The combined consideration paid is~~of approximately $470 million, subject to ~~further~~ certain post-closing ~~adjustments~~adjustments. The acquisition of Fiberon provided category expansion and ~~deferred acquisition payments. Net sales and operating income in~~product extension opportunities into the ~~six and three months ended June 30, 2018 from these acquisitions were not material to the Company.~~outdoor living space for our Doors & Security segment. We financed the ~~transactions~~transaction using cash on hand and borrowings under our ~~existing~~ revolving credit ~~facility.~~and term loan facilities. The financial results of Fiberon were included in the Company’s consolidated statements of income and statements of cash flow beginning in September 2018 and the consolidated balance sheet as of December 31, 2018. The results of ~~the~~ operations are included in the ~~Plumbing~~Doors & Security segment from the ~~respective dates~~date of acquisition. ~~We do not expect any portion of goodwill~~Goodwill related to bethis acquisition is deductible for income tax purposes.

~~In April 2017, we completed~~The following table summarizes the ~~sale~~preliminary allocation of ~~Field ID, our cloud-based inspection~~the purchase price to the fair value of assets acquired and ~~safety compliance software product line formerly included in our Security segment.~~liabilities assumed as of the date of the acquisition.

The preceding purchase price 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, customer attrition rates, discount rates and assumed royalty rates. Any change in the acquisition date fair value of the acquired net assets will change the amount of the purchase price allocable to goodwill.

Goodwill includes expected sales and cost synergies. Identifiable intangible assets primarily consist of customer relationships and tradenames.

We had goodwill of ~~$1,916.7~~$2,085.7 million and ~~$1,912.0~~$2,080.3 million as of June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively. The $4.7 million increase was primarily due to acquisition-related adjustments in our Plumbing segment, including $5.8 million of additional purchase price consideration paid during the six months ended June 30, 2018 related to our acquisition of Victoria + Albert, partially offset by foreign translation adjustments. The change in the net carrying amount of goodwill by segment was as follows:

We also had net identifiable intangible assets, principally tradenames, of ~~$1,139.0~~$1,229.2 million and ~~$1,162.4~~$1,246.8 million as of June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively. The ~~$8.6~~$5.1 million ~~decrease~~increase in gross identifiable intangible assets was primarily due to foreign translation ~~adjustments and acquisition related~~ adjustments.

The gross carrying value and accumulated amortization by class of identifiable intangible assets as of June 30, ~~2018~~2019 and December 31, ~~2017~~2018 were as follows:

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 2030 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, customer attrition rates and other relevant factors.

In the first ~~six months~~half of ~~2018,~~2019, no events or circumstances occurred that would have required us to perform interim impairment tests of goodwill or indefinite-lived tradenames. AsDuring the third and fourth quarters of ~~December 31, 2017, the fair value of~~2018, we recognized impairment charges related to two tradenames in the Cabinets ~~segment exceeded their carrying value by less than 10%.~~segment. Accordingly, a further reduction in the estimated fair value of these tradenames could trigger an impairment. In addition, due to lower than expected sales in our custom and semi-custom cabinetry product lines during the six months ended June 30, 2019, an impairment could be triggered on a third tradename on continuing sales decreases. As of December 31, ~~2017,~~2018, the total carrying value of these tradenames was ~~$217.8~~approximately $203 million. Factors influencing our fair value estimates of the tradenames are described in the following paragraph.

The events and/or circumstances that could have a potential negative effect on the estimated fair value of our reporting units and indefinite-lived tradenames include: actual new construction and repair and remodel growth rates that ~~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 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.

InAs discussed in Note 2, we adopted ASU 2016-02 as of January ~~2017, we committed to a plan to sell Field ID, our cloud-based inspection~~1, 2019. We have operating and ~~safety compliance software product line~~finance leases for buildings and certain machinery and equipment. Operating leases are included in operating lease assets, other current liabilities, and operating lease liabilities in our ~~Security segment. In accordance~~condensed consolidated balance sheets. Amounts recognized for finance leases as of and for the six months ended June 30, 2019 were immaterial.

Operating lease assets and operating lease liabilities are recognized based on the present value of the future lease payments over the lease term at commencement date. As most of our lease contracts do not provide an explicit interest rate, we use our incremental borrowing rate in determining the present value of future lease payments. Our incremental borrowing rates include estimates related to the impact of collateralization and the economic environment where the leased asset is located. The operating lease assets also include any prepaid lease payments and initial direct costs incurred, but exclude lease incentives received at lease commencement. Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Our leases have remaining lease terms of 1 to 36 years, some of which may include options to extend or terminate the lease. Lease expense for lease payments is recognized on a straight-line basis over the lease term in a manner similar to previous accounting guidance.

We do not recognize leases with ~~FASB Accounting Standards Codification (“ASC”) 360,~~an initial term of twelve months or less on the balance sheet and instead recognize the related lease payments as expense in the statement of comprehensive income on a straight-line basis over the lease term. We account for lease and non-lease components as a ~~result of our decision to sell,~~single lease component for all asset classes. Additionally, for certain equipment leases, we ~~recorded $3.2 million ofpre-tax~~ impairment charges to write down the long-lived assets included in this disposal group to fair value during the first quarter of 2017, based upon their estimated fair value less cost to sell. These charges consisted of approximately $3.0 millionapply a portfolio approach and account for ~~definite-lived intangible assets and $0.2 million for fixed assets. We completed the sale of Field ID in April 2017.~~multiple lease components as a single lease component.

Certain of our lease agreements include variable rental payments, including rental payments adjusted periodically for inflation. Variable rental payments are expensed during the period they are incurred and therefore are excluded from our lease assets and liabilities. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Operating lease expense recognized in the condensed consolidated statement of comprehensive income during the six and three months ended June 30, 2019 was $25.7 million and $12.7million, respectively, including approximately $4.0 million and $1.9 million of short-term and variable lease costs for the six and three months ended June 30, 2019, respectively.

Total lease payments under non-cancellable operating leases as of June 30, 2019 were as follows:

In September 2018, we issued $600 million of unsecured senior notes (“2018 Senior Notes”) in a registered public offering. The 2018 Senior Notes are due in 2023 with a coupon rate of 4%. We used the proceeds from the 2018 Senior Notes offering to pay down our revolving credit facility. On June 30, 2019 and December 31, 2018, the net carrying value of the 2018 Senior Notes, net of underwriting commissions, price discounts, and debt issuance costs, was $595.5million and $595.0 million, respectively.

In June 2015, we issued $900 million of unsecured senior notes (“2015 Senior Notes”, and collectively with the 2018 Senior Notes, the “Senior Notes”) in a registered public offering. The 2015 Senior Notes consist of two tranches: $400 million of five-year notes due in 2020 with a coupon rate of 3% and $500 million of ten-year notes due in 2025 with a coupon rate of 4%. We used the proceeds from the 2015 Senior Notes offering to pay down our revolving credit facility and for general corporate purposes. On June 30, 2019 and December 31, 2018, the net carrying value of the 2015 Senior Notes, net of underwriting commissions, price discounts and debt issuance costs, was $894.8 million and $894.0 million, respectively.

In March 2018, the Company entered into a $350 million term loan for general corporate purposes ~~that matures~~scheduled to mature in March 2019. In August 2018, the Company amended its existing $350 million term loan to increase the borrowings under the term loan from $350 million to $525 million. In March 2019, the Company amended the $525 million term loan to decrease the borrowings from $525 million to $350 million and extend the maturity date to March 2020. All other terms and conditions on the amended term loan remain the same as the previous $525 million term loan. At June 30, 2019 and December 31, 2018, amounts due under the term loan were $350.0 million and $525.0 million, respectively, which are included within short term debt in our consolidated balance sheet. Interest rates under the term loan are variable based on LIBOR at the time of the borrowing and the Company’s long-term credit rating and can range from LIBOR + 0.625% to LIBOR + 1.25%. Covenants under the term loan are the same as the existing $1.25 billion revolving credit ~~agreement described below.~~agreement. As of June 30, ~~2018,~~2019, we were in compliance with all covenants under this ~~term loan.~~facility.

In June 2016, the Company amended and restated its 2011 credit agreement to combine and rollover the ~~existing~~prior revolving credit facility and term loan into a new standalone $1.25 billion revolving credit facility. ~~The~~This amendment and restatement of the credit agreement was anon-cash transaction for the Company. Terms and conditions of the credit agreement, including the total commitment amount, essentially remained the ~~same.~~same as under the 2011 credit agreement. The revolving credit facility will mature in June 2021 and borrowings thereunder will be used for general corporate purposes. On June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, our outstanding borrowings under this facility were ~~$900.0~~$575.0 million and ~~$615.0~~$320.0 million, ~~respectively. At June 30, 2018 and December 31, 2017,~~respectively, which is included in Long-term debt in the ~~current portion of long-term debt under this facility was zero.~~condensed consolidated balance sheets. Interest rates under the facility are variable based on LIBOR at the time of the borrowing and the Company’s long-term credit rating and can range from LIBOR + 0.9% to LIBOR + 1.5%. As of June 30, ~~2018,~~2019, we were in compliance with all covenants under this facility.

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 June 30, 2018 and December 31, 2017, the net carrying value of the Senior Notes, net of underwriting commissions, price discounts and debt issuance costs, was $893.3 million and $892.6 million, respectively.

We currently have uncommitted bank lines of credit in China, which provide for unsecured borrowings for working capital of up to $23.5 million in aggregate, of which there were no outstanding balances as of June 30, ~~2018~~2019 and December 31, ~~2017.~~2018.

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 Chinese yuan and the Mexican peso. The gross U.S. dollar equivalent notional amount of all foreign currency derivative hedges outstanding at June 30, ~~2018~~2019 was ~~$355.7~~$392.9 million. Based on foreign exchange rates as of June 30, ~~2018,~~2019, we estimate that ~~$1.2~~$0.4 million of net foreign currency derivative gains included in other ~~accumulated~~ comprehensive ~~loss~~income as of June 30, ~~2018~~2019 will be reclassified to earnings within the next twelve months.

The fair values of derivative instruments on the consolidated balance sheets as of June 30, ~~2018~~2019 and December 31, ~~2017~~2018 were as follows:

The effects of derivative financial instruments on the statements of comprehensive income for the six ~~and three~~ months ended June 30, ~~2018~~2019 and ~~2017~~2018 were as follows:

The effective portion of cash flow hedges recognized in other comprehensive income were net gains of $4.0 million and $3.7 million in the six months ended June 30, 2018 and 2017, respectively. The effective portion of cash flow hedges recognized in other comprehensive income were net losses of $0.3 million and $1.6 million in the three months ended June 30, 2018 and 2017, respectively. In the six and three months ended June 30, 2018 and 2017, the ineffective portion of cash flow hedges recognized in other (income) expense, net, was insignificant.

The effects of derivative financial instruments on the statements of comprehensive income for the three months ended June 30, 2019 and 2018 were as follows:

The cash flow hedges recognized in other comprehensive income was a net loss of $0.2 million and a net gain of $4.0 million in the six months ended June 30, 2019 and 2018, respectively. The cash flow hedges recognized in other comprehensive income was a net loss of $0.7 million and $0.3 million in the three months ended June 30, 2019 and 2018, respectively.

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 no 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.

The carrying value, net of underwriting commissions, price discounts, and debt issuance costs and fair value of debt as of June 30, ~~2018~~2019 and December 31, ~~2017~~2018 were as follows:

The estimated fair value of our term loan and revolving credit facility is determined primarily using broker quotes, which are ~~level~~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 2~~Level 1 inputs.

Assets and liabilities measured at fair value on a recurring basis as of June 30, ~~2018~~2019 and December 31, ~~2017~~2018 were as follows:

Total accumulated other comprehensive (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. Theafter-tax components of and changes in accumulated other comprehensive ~~loss~~(loss) income for the six and three months ended June 30, 2019 and 2018 were as follows:

The reclassifications out of accumulated other comprehensive loss for the six and three months ended June 30, ~~2018~~2019 and ~~2017~~2018 were as follows:

Our principal performance obligations are the sale of kitchen and bath cabinets, faucets and accessories, fiberglass and steel entry-door systems and locks, safes, safety and security devices (collectively, “goods” or “products”). We recognize revenue for the sale of goods based on our assessment of when control transfers to our customers. For the majority of our sales, we recognize revenue at the point in time when we ship product from our facilities to our customers. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods to our customers. Payment terms on our product sales normally range from 30 to 90 days. Taxes assessed by a governmental authority that we collect are excluded from revenue. The expected costs associated with our contractual warranties will continue to be recognized as expense when the products are sold. See Note 14, “Product Warranties,” for further discussion.

We record estimates to reduce revenue for customer programs and incentives, which are considered variable consideration, and include price discounts, volume-based incentives, promotions and cooperative advertising when revenue is recognized in order to determine the amount of consideration the Company will ultimately be entitled to receive. These estimates are based on historical and projected experience for each type of customer. In addition, for certain customer program incentives, we receive an identifiable benefit (goods or services) in exchange for the consideration given and record the associated expenditure in selling, general and administrative expenses.

We account for shipping and handling costs that occur after the customer has obtained control of a product as a fulfillment activity (i.e., as an expense) rather than as a promised service (i.e., as a revenue element). These costs are classified within selling, general and administrative expenses.

Settlement of our outstanding accounts receivable balances is normally within 30 to 90 days of the original sale transaction date. Obligations arise for us from customer rights to return our goods for any reason, including among others, product obsolescence, stock rotations,~~trade-in~~ agreements for newer products and upon termination of a customer contract. We estimate future product returns at the time of sale based on historical experience and record a corresponding refund obligation, which amounted to $12.4 million as of June 30, 2018. Refund obligations are classified within other current liabilities in our consolidated balance sheet. Return assets related to the refund obligation are measured at the carrying amount of the goods at the time of sale, less any expected costs to recover the goods and any expected reduction in value. Return assets are classified within other current assets and were immaterial as of June 30, 2018.

The Company disaggregates revenue from contracts with customers into (i) major sales distribution channels in the U.S. and (ii) total sales to customers outside the U.S. market as these categories depict the nature, amount, timing and uncertainty of revenues and cash flows that are affected by economic factors. The following table disaggregates our consolidated revenue by major sales distribution channels for the six and three months ended June 30, ~~2018.~~2019 and 2018:

(1)

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.

(2)

Represents sales to the three largest~~“Do-It-Yourself”~~ “Do-It-Yourself” retailers; The Home Depot, Inc., Lowes Companies, Inc. and Menards, Inc., inclusive of sales through their respective internet website portals.

(3)

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

(4)

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

~~Practical Expedients~~

Incremental costs of obtaining a contract include only those costs the Company incurs that would not have been incurred if the contract had not been obtained. These costs are required to be recognized as assets and amortized over the period that the related goods or services transfer to the customer. As a practical expedient, we expense as incurred costs to obtain a contract when the expected amortization period is one year or less. These costs are recorded within selling, general and administrative expenses.

2117

FORTUNE BRANDS HOME & SECURITY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12.	Defined Benefit Plans

The components of net periodic benefit cost for pension ~~and postretirement~~ benefits for the six and three months ended June 30, ~~2018~~2019 and ~~2017~~2018 were as follows:


(In millions)	Six Months Ended June 30,											Six Months Ended June 30,						Three Months Ended June 30,
	Pension Benefits						Postretirement Benefits					Pension Benefits						Pension Benefits
	2018			2017			2018		2017			2019			2018			2019			2018
Service cost	$	0.3		$	0.3		$	—	$	—		$	0.2		$	0.3		$	0.1		$	0.1
Interest cost		15.3			16.7			—		—			16.4			15.3			8.2			7.7
Expected return on plan assets		(20.5	)		(18.7	)		—		—			(17.6	)		(20.5	)		(8.8	)		(10.2	)
Recognition of prior service credits		—			—			—		(5.1	)

Net periodic benefit income	$	(4.9	)	$	(1.7	)	$	—	$	(5.1	)	$	(1.0	)	$	(4.9	)	$	(0.5	)	$	(2.4	)

(In millions)    Three Months Ended June 30,
   Pension Benefits    Postretirement Benefits
   2018    2017    2018    2017
Service cost    $ 0.1    $ 0.2    $ —      $ —
Interest cost    7.7    8.3    —      —
Expected return on plan assets    (10.2 )    (9.4 )    —      —
Recognition of prior service credits
   —      —      —      (2.1 )








Net periodic benefit income
   $ (2.4 )    $ (0.9 )    $ —      $ (2.1 )

Service cost ~~for 2018~~ relates to benefit accruals in an hourly Union defined benefit plan in our Doors & Security segment. All other defined benefit pension plans were frozen as of December 31, 2016.

~~In March 2017, the FASB issued ASU2017-07,~~ ~~which requires entities to present the defined benefit plannon-service~~ related costs outside the operating income subtotal. The new guidance was applied retrospectively in the condensed consolidated statement of comprehensive income. As a result, we reclassified $7.1 million of income from the operating income subtotal to the other income, net subtotal in the six months ended June 30, 2017 and $3.2 in the three months ended June 30, 2017. The retrospective impact of adopting ASU~~2017-07~~ ~~on the six and three months ended June 30, 2017 was as follows:~~

13.	Income Taxes

(In millions)
   Six Months Ended
June 30    Three Months Ended
June 30,
   2017    2017
Increase to cost of products sold
   $ 5.1    $ 2.2
Increase to selling, general and administrative expenses
   2.0    1.0




Decrease to operating income
   $ (7.1 )    $ (3.2 )

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

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

~~13.~~

~~Income Taxes~~

The effective income tax rates for the six months ended June 30, 2019 and 2018 were 24.0% and ~~2017 were~~ 27.4% ~~and 28.2%~~, respectively. The effective income tax ~~rate~~rates in 2019 and 2018 ~~was~~were favorably impacted by ~~the corporate tax rate reduction from 35% to 21% under the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), and~~ a benefit associated with the U.S. research and development ~~credit. The~~credit and unfavorably impacted by state and local taxes and unfavorable tax rates in foreign jurisdictions. Additionally, the 2018 effective income tax rate ~~in 2018~~ was unfavorably impacted by an adjustment to the deemed repatriation tax liability recorded in 2017 under the Tax Cuts and Jobs Act ~~the repeal~~ of ~~the Domestic Production Activity (Internal Revenue Code Section 199) Deduction, state and local taxes,~~2017 and increases to uncertain tax positions.

~~The effective income tax rate in 2017 was favorably impacted by a tax benefit attributable to the share-based compensation (ASU2016-09)~~ deduction, 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 June 30, 2019 and 2018 were 23.2% and ~~2017 were~~ 25.7% ~~and 29.6%~~, respectively. The effective income tax ~~rate for the three months ended June 30,~~rates in 2019 and 2018 ~~was~~were favorably impacted by the corporate tax rate reduction from 35% to 21% under the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), and a benefit associated with the U.S. research and development credit. The effective income tax rate for the three months ended June 30, 2018 was unfavorably impacted by the repeal of the Domestic Production Activity (Internal Revenue Code Section 199) Deduction, state and local taxes, and increases to uncertain tax positions.

The effective income tax rate for the three months ended June 30, 2017 was favorably impacted by a tax benefit attributable to the share-based compensation deduction, 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~~and unfavorably impacted by state and local taxes and ~~increases~~unfavorable tax rates in foreign jurisdictions. Additionally, the 2019 effective income tax rate was favorably impacted by decreases to uncertain tax ~~positions.~~

~~On December 22, 2017, Staff Accounting Bulletin No. 118 (“SAB 118”) was issued which deals with the application~~positions, as a result of U.S. GAAP to situations where a registrant does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. In accordance with SAB 118, we calculated our best estimate of the impact of the Tax Act on our 2017 effective income tax rate. Due to additional guidance received in the first quarter of 2018 and additional analysis, an unfavorable adjustment of $5.4 million, impacting the six months ended June 30, 2018 was recorded to income tax expense during the first quarter of 2018. As of June 30, 2018, we have not completed our accounting for all of the tax effects of the Tax Act.audit settlements.

It is reasonably possible that, within the next 12 months, total unrecognized tax benefits may decrease in the range of ~~$2.0 million~~$2.5 to ~~$11.0~~$3.1 million, primarily as a result of the conclusion of pending U.S. federal, state and foreign income tax proceedings.

2318

FORTUNE BRANDS HOME & SECURITY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14.	~~14.~~ 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 historic claim experience and the nature of the product category. The following table summarizes activity related to our product warranty liability for the six months ended June 30, 2019 and 2018, ~~and 2017.~~respectively.


(In millions)	Six Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2019			2018
Reserve balance at January 1,	$	17.2		$	16.2		$	24.9		$	17.2
Provision for warranties issued		12.6			13.1			13.0			12.6
Settlements made (in cash or in kind)		(12.8	)		(13.3	)		(12.5	)		(12.8	)

Reserve balance at June 30,	$	17.0		$	16.0
Reserve balance at June 30, ^(a)							$	25.4		$	17.0

~~15.~~

(a)

Balance at January 1, 2019 includes the impact of acquiring Fiberon. See Note 4, “Acquisitions and Dispositions,” for additional information.

15.	Information on Business Segments

Beginning in the third quarter of 2018, we combined our Doors and Security segments and historical financial segment information has been restated to conform to the new segment presentation. Net sales and operating income for the six and three months ended June 30, ~~2018~~2019 and ~~2017~~2018 by segment were as follows:

   Six Months Ended June 30,
(In millions)    2018    2017    % Change
vs. Prior Year
Net Sales

Cabinets
   $ 1,194.8    $ 1,227.0    (2.6 )%
Plumbing
   933.4    813.2    14.8
Doors
   270.5    235.7    14.8
Security
   284.9    276.3    3.1





Net sales
   $ 2,683.6    $ 2,552.2    5.1 %
Operating Income

Cabinets
   $ 93.5    $ 135.7    (31.1 )%
Plumbing^(a)
   183.7    168.4    9.1
Doors
   41.0    30.7    33.6
Security
   32.5    28.7    13.2
Less: Corporate expenses^(a)
   (42.7 )    (43.3 )    1.4





Operating income
   $ 308.0    $ 320.2    (3.8 )%

^(a)

~~We revised our previously reported results for the six months ended June 30, 2017 for ASU2017-07,~~ ~~Presentation of Net Periodic Pension and Postretirement Costs.~~

	Six Months Ended June 30,
(In millions)	2019			2018			% Change vs. Prior Year
Net Sales
Cabinets	$	1,208.0		$	1,194.8			1.1		%
Plumbing		964.7			933.4			3.4
Doors & Security		662.4			555.4			19.3
Net sales	$	2,835.1		$	2,683.6			5.6		%
Operating Income (Loss)
Cabinets	$	108.9		$	93.5			16.5		%
Plumbing		195.9			183.7			6.6
Doors & Security		72.4			73.5			(1.5	)
Less: Corporate expenses		(39.2	)		(42.7	)		8.2
Operating income	$	338.0		$	308.0			9.7		%

	Three Months Ended June 30,
(In millions)	2019			2018			% Change vs. Prior Year
Net Sales
Cabinets	$	635.0		$	637.6			(0.4	)	%
Plumbing		506.1			483.7			4.6
Doors & Security		366.1			307.7			19.0
Net sales	$	1,507.2		$	1,429.0			5.5		%
Operating Income (Loss)
Cabinets	$	65.7		$	69.4			(5.3	)	%
Plumbing		106.7			95.3			12.0
Doors & Security		50.0			45.3			10.4
Less: Corporate expenses		(20.0	)		(21.4	)		6.5
Operating income	$	202.4		$	188.6			7.3		%

FORTUNE BRANDS HOME & SECURITY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~15.~~

16.

~~Information on Business Segments (Continued)~~

(In millions)    Three Months Ended June 30,
   2018    2017    % Change
vs. Prior Year
Net Sales

Cabinets
   $ 637.6    $ 653.4    (2.4 )%
Plumbing
   483.7    434.8    11.2
Doors
   160.2    133.5    20.0
Security
   147.5    143.7    2.6





Net sales
   $ 1,429.0    $ 1,365.4    4.7 %
Operating Income

Cabinets
   $ 69.4    $ 88.7    (21.8 )%
Plumbing^(a)
   95.3    101.2    (5.8 )
Doors
   27.9    22.5    24.0
Security
   17.4    18.6    (6.5 )
Less: Corporate expenses^(a)
   (21.4 )    (21.8 )    1.8





Operating income
   $ 188.6    $ 209.2    (9.8 )%

^(a)

~~We revised our previously reported results for the three months ended June 30, 2017 for ASU2017-07,~~ ~~Presentation of Net Periodic Pension and Postretirement Costs.~~

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

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

~~16.~~

Restructuring and Other Charges

Pre-tax restructuring and other charges for the six and three months ended June 30, ~~2018~~2019 and ~~2017~~2018 are shown below.


(In millions)	Six Months Ended June 30, 2018						Six Months Ended June 30, 2017								Six Months Ended June 30, 2019						Six Months Ended June 30, 2018
	Restructuring Charges		Other Charges ^(a)		Total Charges		Restructuring Charges			Other Charges ^(a)		Total Charges			Restructuring Charges		Other Charges ^(a)		Total Charges		Restructuring Charges		Other Charges ^(a)		Total Charges
Cabinets	$	7.6	$	4.3	$	11.9	$	—		$	—	$	—		$	2.3	$	0.7	$	3.0	$	7.6	$	4.3	$	11.9
Plumbing		1.5		0.1		1.6		1.6			—		1.6			3.3		5.8		9.1		1.5		0.1		1.6
Doors		0.8		—		0.8		(0.2	)		0.1		(0.1	)
Security		1.7		1.0		2.7		1.7			0.6		2.3

Doors & Security																0.1		2.0		2.1		2.5		1.0		3.5
Total	$	11.6	$	5.4	$	17.0	$	3.1		$	0.7	$	3.8		$	5.7	$	8.5	$	14.2	$	11.6	$	5.4	$	17.0

(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 and forfeiture of stock based compensation related to workforce reduction actions.~~facilities.

Restructuring and other charges in the first six months of 2019 largely related to severance costs within our Plumbing and Cabinets segments and costs associated with closing facilities within our Plumbing and Doors & Security segments. Restructuring and other charges in the first six months of 2018 largely related to severance costs ~~within our Cabinets, Security and Plumbing~~across all segments and our initiatives to consolidate our manufacturing footprint in our Cabinets segment. ~~Restructuring and other charges in the first six months of 2017 largely related to severance costs within our Security and Plumbing segments.~~


(In millions)	Three Months Ended June 30, 2018						Three Months Ended June 30, 2017							Three Months Ended June 30, 2019						Three Months Ended June 30, 2018
	Restructuring Charges		Other Charges ^(a)		Total Charges		Restructuring Charges		Other Charges ^(a)			Total Charges		Restructuring Charges		Other Charges ^(a)		Total Charges		Restructuring Charges		Other Charges ^(a)		Total Charges
Cabinets	$	7.3	$	4.5	$	11.8	$	—	$	—		$	—	$	1.2	$	0.4	$	1.6	$	7.3	$	4.5	$	11.8
Plumbing		1.7		0.1		1.8		0.2		—			0.2		3.2		4.6		7.8		1.7		0.1		1.8
Doors		0.1		—		0.1		—		0.1			0.1
Security		1.7		0.9		2.6		0.7		(0.1	)		0.6

Doors & Security															0.1		0.1		0.2		1.8		0.9		2.7
Total	$	10.8	$	5.5	$	16.3	$	0.9	$	—		$	0.9	$	4.5	$	5.1	$	9.6	$	10.8	$	5.5	$	16.3

(a)

Restructuring and other charges in the second quarter of 2019 largely related to severance costs within our Plumbing and Cabinets segments and costs associated with closing facilities within our Plumbing segment. Restructuring and other charges in the second quarter of 2018 primarily resulted from severance costs ~~within our Cabinets, Security and Plumbing~~across all segments and our initiatives to consolidate our manufacturing footprint in our Cabinets segment.

Reconciliation of Restructuring ~~and other charges in the second quarter of 2017 primarily resulted from severance costs and charges associated with supply chain initiatives within our Security segment.~~Liability

(In millions)	Balance at 12/31/18		2019 Provision		Cash Expenditures ^(a)			Non-Cash Write-offs			Balance at 6/30/19
Workforce reduction costs	$	9.9	$	4.9	$	(5.7	)	$	(0.1	)	$	9.0
Other		0.6		0.8		(0.9	)		—			0.5
	$	10.5	$	5.7	$	(6.6	)	$	(0.1	)	$	9.5

^(a)

Cash expenditures primarily relate to severance charges.

(In millions)	Balance at 12/31/17		2018 Provision		Cash Expenditures ^(a)			Non-Cash Write-offs^(b)			Balance at 6/30/18
Workforce reduction costs	$	5.0	$	11.1	$	(3.7	)	$	—		$	12.4
Other		0.8		0.5		(0.5	)		(0.6	)		0.2
	$	5.8	$	11.6	$	(4.2	)	$	(0.6	)	$	12.6

^(a)

Cash expenditures primarily relate to severance charges.

^(b)

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

2620

FORTUNE BRANDS HOME & SECURITY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17.	Earnings Per Share

The computations of earnings per common share for the six and three months ended June 30, 2019 and 2018 were as follows:

~~16.~~

~~Restructuring and Other Charges (Continued)~~

(In millions, except per share data)	Six Months Ended June 30,						Three Months Ended June 30,
	2019			2018			2019			2018
Income from continuing operations, net of tax	$	221.6		$	204.8		$	137.1		$	129.7
Less: Noncontrolling interest		(0.6	)		—			(0.4	)		0.1
Income from continuing operations for EPS		222.2			204.8			137.5			129.6
Loss from discontinued operations		-			(0.2	)		—			-
Net income attributable to Fortune Brands	$	222.2		$	204.6		$	137.5			129.6
Earnings per common share
Basic
Continuing operations	$	1.58		$	1.39		$	0.98		$	0.89
Discontinued operations		—			—			—			—
Net income attributable to Fortune Brands common stockholders	$	1.58		$	1.39		$	0.98		$	0.89
Diluted
Continuing operations	$	1.57		$	1.37		$	0.97		$	0.88
Discontinued operations		—			—			—			—
Net income attributable to Fortune Brands common stockholders	$	1.57		$	1.37		$	0.97		$	0.88
Basic average shares outstanding		140.3			147.4			139.9			144.9
Stock-based awards		1.3			2.0			1.4			1.8
Diluted average shares outstanding		141.6			149.4			141.3			146.7
Antidilutive stock-based awards excluded from weighted- average number of shares outstanding for diluted earnings per share		2.4			1.0			1.9			1.5

~~Reconciliation of Restructuring Liability~~

(In millions)    Balance at
12/31/17    2018
Provision    Cash
Expenditures ^(a) Non-Cash
Write-offs ^(b) Balance at
6/30/18
Workforce reduction costs
   $ 5.0    $ 11.1    $ (3.7 ) $ — $ 12.4
Other
   0.8    0.5    (0.5 ) (0.6 ) 0.2






   $ 5.8    $ 11.6    $ (4.2 ) $ (0.6 ) $ 12.6

(In millions)    Balance at
12/31/16    2017
Provision    Cash
Expenditures ^(a) Non-Cash
Write-offs ^(b)    Balance at
6/30/17
Workforce reduction costs
   $ 2.4    $ 2.6    $ (2.1 ) $ —    $ 2.9
Other
   0.6    0.5    (0.9 ) —    0.2








   $ 3.0    $ 3.1    $ (3.0 ) $ —    $ 3.1

^(a)

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

^(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)

~~17.~~

18.

~~Earnings Per Share~~

Commitments and Contingencies

~~The computations of earnings per common share were as follows:~~

(In millions, except per share data)    Six Months Ended
June 30,    Three Months Ended
June 30,
   2018    2017    2018    2017
Income from continuing operations, net of tax
   $ 204.8    $ 217.7    $ 129.7    $ 140.3
Less: Noncontrolling interest
   —      —      0.1    —








Income from continuing operations for EPS
   $ 204.8    $ 217.7    $ 129.6    $ 140.3
Loss from discontinued operations, net of tax
   (0.2 )    (2.6 )    —      (2.6 )








Net income attributable to Fortune Brands
   $ 204.6    $ 215.1    $ 129.6    $ 137.7








Earnings per common share

Basic

Continuing operations
   $ 1.39    $ 1.42    $ 0.89    $ 0.91
Discontinued operations
   —      (0.02 )    —      (0.02 )








Net income attributable to Fortune Brands common stockholders
   $ 1.39    $ 1.40    $ 0.89    $ 0.89
Diluted

Continuing operations
   $ 1.37    $ 1.39    $ 0.88    $ 0.90
Discontinued operations
   —      (0.02 )    —      (0.02 )








Net income attributable to Fortune Brands common stockholders
   $ 1.37    $ 1.37    $ 0.88    $ 0.88
Basic average shares outstanding
   147.4    153.7    144.9    154.2
Stock-based awards
   2.0    2.7    1.8    2.4








Diluted average shares outstanding
   149.4    156.4    146.7    156.6
Antidilutive stock-based awards excluded from weighted-average number of shares outstanding for diluted earnings per share
   1.0    0.6    1.5    0.6

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

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

~~18.~~

~~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.

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 ~~three~~six and ~~six~~three months ended June 30, ~~2018~~2019 and ~~2017.~~2018. 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.

Lease Commitments

Future minimum rental payments under non-cancelable operating leases as of December 31, 2018 were as follows:

~~19.~~

~~Subsequent Events~~

(In millions)
2019	$	37.8
2020		29.6
2021		23.4
2022		18.9
2023		13.8
Remainder		58.8
Total minimum rental payments	$	182.3

On July 13, 2018, the Company’s Board of Directors authorized the repurchase of up to $400 million of shares of the Company’s common stock over the two years ending July 13, 2020. 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 July 2018, we publicly announced an internal reorganization to combine our Doors and Security segments under common leadership to drive innovation, accelerate product development, and enhance investments and business processes. In conjunctionThese minimum rental payments were determined in accordance with the ~~reorganization,~~previous leasing guidance (ASC 840). Accordingly, the minimum payments exclude optional lease payments that we ~~changed how our chief operating decision maker evaluates and allocates resources for the combined business. As a result, starting~~can avoid. The minimum lease payments as of June 30, 2019, disclosed in ~~the third quarter of 2018, we will have a new reportable segment – Doors and Security. Reporting for~~Note 6, are determined in accordance with the new ~~Doors and Security segment will begin in the third quarter of 2018 with historical financial segment information restated prospectively~~leasing guidance (ASC 842), which include optional lease payments if we are reasonably certain to ~~conform to the new segment presentation.~~incur them.

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, ~~2017,~~2018, which are included in our Annual Report on Form10-K for the year ended December 31, ~~2017.~~2018.

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 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, ~~pension contributions, the anticipated effects~~impact of ~~the combination of our Doors and Security businesses~~acquisitions and other matters. 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, 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: (i) our reliance on the North American home improvement, repair 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) ~~risk~~our ability to develop new products or processes and improve existing products and processes, (iv) risks associated with our ability to improve organizational productivity and global supply chain efficiency and flexibility, (v) risks associated with global commodity and energy availability and price volatility, as well as the possibility of sustained inflation, (vi) risks associated with doing business internationally, (vii) changes in government and industry standards, (viii) risks associated with entering into potential strategic acquisitions and integrating acquired ~~businesses, (iv)~~property, (ix) our ability to ~~remain competitive, innovative~~secure and protect our intellectual property ~~(v)~~rights, (x) our reliance on key customers and suppliers, ~~(vi) the cost~~including wholesale distributors and ~~availability associated with our supply chains and the availability of raw materials, (vii)~~dealers, (xi) risk of increases in our defined benefit-related costs and funding requirements, ~~(viii) compliance~~(xii) risks associated with the disruption of operations, (xiii) our inability to obtain raw materials and finished goods in a timely and cost-effective manner, (xiv) our ability to attract and retain qualified personnel and other labor constraints, (xv) future tax ~~environmental~~law changes or the interpretation of existing tax laws, (xvi) potential liabilities and ~~federal, state~~costs from claims and ~~international laws~~litigation, (xvii) impairments in the carrying value of goodwill or other acquired intangible assets, (xviii) delays or outages in our information technology system or computer networks and ~~industry regulatory standards and (ix)~~(xix) our ability to access the ~~risk of doing business internationally.~~capital markets on 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, ~~2017.~~2018. We undertake no obligation to, and expressly disclaim any such obligation to, update ~~amend~~ or clarify any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, new information or ~~circumstances 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 leading home and security products company with a portfolio of leading branded products used for residential home repair, remodeling, new construction and security applications.

~~OVERVIEW (Continued)~~

We believe 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 on outperforming our markets in growth, profitability and returns in order to drive increased shareholder value. We believe the Company’s track record reflects the long-term attractiveness and potential of our categories and our leading brands. ~~As consumer demand and the housing market grow, we~~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.

We believe our most attractive opportunities are to invest in profitable organic growth initiatives. We also believe that ~~as the market grows,~~ we have the potential to generate additional growth from leveraging our cash flow and balance sheet strength by pursuing accretive strategic acquisitions and joint ventures, and by returning cash to shareholders through a combination of dividends and common stock repurchases under our share repurchase ~~programs~~program 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 substantial~~a majority of the markets we serve consisting of repair and remodel spending. ~~We believe that~~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 aging existing housing stock that will continue to need to be repaired and remodeled.

We may be impacted by fluctuations in raw material and transportation costs, changes in foreign exchange 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~~September 2018, we publicly announced an internal reorganization to combine our Doors and Security segments under common leadership to drive innovation, accelerate product development, and enhance investments and business processes. In conjunction withacquired 100% of the ~~reorganization, we changed how our chief operating decision maker evaluates and allocates the resources for the combined business. As a result, starting in the third quarter~~membership interests of 2018, we will have a new reportable segment – Doors and Security. Reporting for the new Doors and Security segment will begin in the third quarter of 2018 with historical financial segment information restated prospectively to conform to the new segment presentation.

~~In October 2017, we acquired Victoria +Albert, aUK-based~~ ~~premium brand of standalone bathtubs, sinks, tub fillers, faucets and other accessories. In July 2017, we acquired Shaws Since1897 Limited~~Fiber Composites, LLC (“~~Shaws”~~Fiberon”), a~~UK-based~~ ~~luxury plumbing~~ leading U.S. manufacturer of outdoor performance materials used in decking, railing and fencing products, ~~company that specializes in manufacturing and selling fireclay sinks and selling brassware and accessories. The~~for a total ~~combined consideration paid was~~purchase price of approximately ~~$132~~$470 million, subject to certain post-closing ~~adjustments~~adjustments. The acquisition of Fiberon provided category expansion and ~~deferred acquisition payments.~~product extension opportunities into the outdoor living space for our Doors & Security segment. We financed ~~both of~~ the ~~acquisitions~~transaction using cash on hand and borrowings under our revolving credit ~~facility. These transactions broadened our plumbing portfolio~~ and ~~enhanced future growth opportunities.~~term loan facilities. The results of operations are included in the Doors & Security segment from the date of acquisition.

RESULTS OF OPERATIONS

Six Months Ended June 30, ~~2018~~2019 Compared To Six Months Ended June 30, ~~2017~~2018

   Net Sales
(In millions)    2018    2017    % Change
vs. Prior Year
Cabinets
   $ 1,194.8    $ 1,227.0    (2.6 )%
Plumbing
   933.4    813.2    14.8
Doors
   270.5    235.7    14.8
Security
   284.9    276.3    3.1






Net sales
   $ 2,683.6    $ 2,552.2    5.1 %
   Operating Income
   2018    2017    % Change
vs. Prior Year
Cabinets
   $ 93.5    $ 135.7    (31.1 )%
Plumbing^(a)
   183.7    168.4    9.1
Doors
   41.0    30.7    33.6
Security
   32.5    28.7    13.2
Less: Corporate expenses^(a)
   (42.7 )    (43.3 )    1.4






Operating income
   $ 308.0    $ 320.2    (3.8 )%

	Net Sales
(In millions)	2019		2018		% Change vs. Prior Year
Cabinets	$	1,208.0	$	1,194.8		1.1	%
Plumbing		964.7		933.4		3.4
Doors & Security		662.4		555.4		19.3
Net sales	$	2,835.1	$	2,683.6		5.6	%

^(a)

~~We revised our previously reported results for the six months ended June 30, 2017 for ASU2017-07,~~ ~~Presentation of Net Periodic Pension and Postretirement Costs.~~

	Operating Income (Loss)
	2019			2018			% Change vs. Prior Year
Cabinets	$	108.9		$	93.5			16.5		%
Plumbing		195.9			183.7			6.6
Doors & Security		72.4			73.5			(1.5	)
Less: Corporate expenses		(39.2	)		(42.7	)		8.2
Operating income	$	338.0		$	308.0			9.7		%

The following discussion of consolidated results of operations and segment results refers to the six months ended June 30, ~~2018~~2019 compared to the six months ended June 30, ~~2017.~~2018. Consolidated results of operations should be read in conjunction with segment results of operations.

Net sales

Net sales increased ~~$131.4~~by $151.5 million, or ~~5.1%. The increase was~~5.6%, due to ~~higher sales volume primarily~~the benefit from the ~~continuing improvement~~2018 Fiberon acquisition in ~~U.S. market conditions for home products as well as higher international sales principally in China and Canada,~~our Doors & Security segment ($96 million), price increases to help mitigate cumulative raw material cost increases ~~the benefit from new product introductions, favorable foreign exchange of approximately $21 million~~ and ~~the benefit from the 2017 acquisitions~~higher sales volume, including growth in ~~our Plumbing segment.~~China. These benefits were partially offset by lower sales unit volume of make-to-order custom and semi-custom cabinetry products, unfavorable mix ~~as well as~~in our Doors & Security segment, unfavorable ~~weather conditions affecting our U.S. market performance.~~foreign exchange of $21 million and unfavorable promotion and rebate costs.

Cost of products sold

Cost of products sold increased ~~$95.1~~by $118.8 million, or ~~5.9%~~6.9%, due to the higher net sales ~~including the impact of the acquisitions in our Plumbing segment~~ and increased commodity costs, partially offset by the benefit offrom productivity improvements.

Selling, general and administrative expenses

Selling, general and administrative expenses increased ~~$45.3~~by $4.9 million, or ~~7.8%~~0.8%, due to higher ~~employee-related~~employee related costs and transportation costs, as well as the impact of the ~~acquisitions~~2018 Fiberon acquisition in our ~~Plumbing~~Doors & Security segment.

~~RESULTS OF OPERATIONS (Continued)~~

~~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 during the second quarter of 2017.~~

Amortization of intangible assets

Amortization of intangible assets increased ~~$0.3~~by $3.7 million primarily due to the ~~2017 acquisitions~~2018 Fiberon acquisition in our ~~Plumbing segment offset by a decrease~~Doors & Security segment.

Restructuring charges

Restructuring charges of $5.7 million in the six months ended June 30, 2019 primarily related to ~~a definite-lived customer relationship intangible that was fully amortized during the second quarter of 2017.~~

~~Asset impairment charges~~

~~Asset impairment charges of $3.2 million during the first quarter of 2017 related to~~severance costs within our ~~decision to sell Field ID.~~

~~Restructuring charges~~

Plumbing and Cabinets segments and costs associated with closing facilities within our Plumbing and Doors & Security segments. Restructuring charges of $11.6 million in the six months ended June 30, 2018 primarily related to severance costs ~~associated with~~across all segments and our initiatives to consolidate our manufacturing footprint in our Cabinets segment, in addition to severance costs within our Security, Plumbing and Doors segments. Restructuring charges of $3.1 million in the six months ended June 30, 2017 primarily related to severance costs within our Security and Plumbing segments.segment.

Operating income

Operating income ~~decreased $12.2~~increased by $30.0 million, or ~~3.8%~~9.7%, primarily due to ~~increased~~higher net sales, productivity improvements and lower restructuring ~~and other charges, commodity cost inflation, unfavorable mix, and higher employee-related costs.~~charges. These benefits were partially offset by ~~higher net sales and productivity improvements.~~unfavorable commodity costs.

RESULTS OF OPERATIONS (Continued)

Interest expense

Interest expense increased ~~$7.9~~by $16.1 million to ~~$32.1~~$48.2 million due to higher average borrowings and higher average interest rates.

Other income, net

Other income, net, was $1.9 million in the six months ended June 30, 2019, compared to $6.2 million in the six months ended June 30, ~~2018, compared to income of $7.0 million in the six months ended June 30, 2017.~~2018. The decrease in other income, net is primarily due to lower defined benefit plan income in ~~2018~~2019 ($~~1.9~~4.0 million decrease).

Income taxes

~~RESULTS OF OPERATIONS (Continued)~~

Net income from continuing operations

Net income from continuing operations was $221.6 million in the six months ended June 30, 2019 compared to $204.8 million in the six months ended June 30, ~~2018 compared to $217.7 million in the six months ended June 30, 2017.~~2018. The ~~decrease~~increase of ~~$12.9~~$16.8 million was ~~primarily~~ due to ~~lower~~higher operating income and lower income tax expenses, partly offset by higher interest expense ~~partially offset by~~and lower ~~income tax.~~other income.

~~Loss from discontinued operations~~

The loss from discontinued operations was $0.2 and $2.6 million in the six months ended June 30, 2018 and 2017, respectively. The loss on discontinued operations in the six months ended June 30, 2018 and 2017 is primarily related to the prior sale of the Waterloo tool storage and Simonton window businesses.

Results By Segment

Cabinets

Net sales ~~decreased $32.2~~increased by $13.2 million, or ~~2.6%~~1.1%, predominantly due to ~~the impact~~higher sales unit volume of exiting a customer relationship, unfavorable weather conditions affecting our U.S. market performance and unfavorable mix. These factors were partly offset by the benefit from new product introductionsstock cabinetry products and price increases to help mitigate cumulative raw material cost increases. These factors were partly offset by lower sales unit volume of make-to-order custom and semi-custom cabinetry products, lower sales in Canada and increased promotional costs. Foreign exchange was unfavorable by approximately $3 million.

Operating income ~~decreased $42.2~~increased by $15.4 million, or ~~31.1%~~16.5%, due to ~~lower~~higher net sales, ~~including~~ the ~~impact of underutilization of our fixed cost base~~benefit from productivity improvements and ~~unfavorable mix, higher~~lower restructuring ~~and other charges of $11.9 million to consolidate our manufacturing footprint and increased headcount-related~~ costs partially offset by ~~the benefit from productivity improvements.~~an increase in employee related costs.

Plumbing

Net sales increased ~~$120.2~~by $31.3 million, or ~~14.8%~~3.4%, due to higher sales ~~unit~~ volume ~~new product introductions across our distribution channels, the benefit~~principally from ~~the 2017 acquisitions of Victoria & Albert and Shaws and higher sales in international markets, principally~~growth in China and ~~Canada. Foreign exchange was favorable by approximately $14 million.~~price increases to help mitigate cumulative raw material cost increases. These benefits were ~~slightly~~partially offset by ~~higher~~lower sales ~~rebates tied to higher sales volumes.~~volume in Canada and luxury-branded products as well as unfavorable foreign exchange of approximately $15 million.

Operating income increased ~~$15.3~~by $12.2 million, or ~~9.1%~~6.6%, due to ~~the~~ higher net sales, ~~and~~the benefit from productivity ~~improvements.~~improvements and the absence in 2019 of the amortization of the acquisition-related inventory fair value adjustment ($1.7 million of expense in 2018) related to our Victoria+Albert acquisition. These benefits were partially offset by commodity cost inflation, higher ~~employee-related, advertising and marketing~~restructuring costs and ~~higher amortization of the acquisition-related inventory fair value adjustment related to our acquisitions. In addition, 2017 operating income reflects the impact of adopting ASU2017-07~~ ~~during the first six months of 2018 and the reclassification of approximately $5.1 million from Plumbing operating income to other income, net.~~

~~RESULTS OF OPERATIONS (Continued)~~

~~Results By Segment (Continued)~~

unfavorable channel mix.

Doors & Security

Net sales increased ~~$34.8~~by $107.0 million, or ~~14.8%~~19.3%, due to ~~share gains, including~~ the benefit from ~~new product introductions, higher sales volume driven primarily by continuing improvement in~~ the ~~U.S. home products market,~~2018 Fiberon acquisition ($96 million), price increases to help mitigate cumulative raw material cost increases and ~~favorable product~~higher sales volume. These benefits were partially offset by higher customer program costs and unfavorable mix. Foreign exchange was unfavorable by approximately $3 million.

Operating income ~~increased $10.3~~decreased by $1.1 million, or ~~33.6%~~1.5%, due to ~~the higher net sales,~~Fiberon’s inventory fair value adjustments ($1.8 million in 2019) and ~~leveraging the sales on our existing fixed cost base.~~

~~Security~~

~~Net sales increased $8.6 million, or 3.1%,~~an expense due to ~~higher sales volume, the impact from favorable foreign exchange and price increases to help mitigate cumulative raw material cost increases partly~~a fair value adjustment associated with an idle manufacturing facility ($1.7 million in 2019). These factors were partially offset by the ~~impact~~benefit of ~~our exiting of two product lines in our commercial distribution channel.~~the higher sales.

Operating income increased $3.8 million, or 13.2%, due to higher net sales, the absence in 2018 of charges related to the sale of Field ID and productivity improvements. These benefits were partly offset by higher commodity costs and employee-related costs.

Corporate

Corporate expenses decreased by ~~$0.6 million. In addition, 2017 operating income reflects the impact of adopting ASU2017-07~~ ~~during the first quarter of 2018 and the~~$3.5 million, or 8.2%, due to lower employee related ~~reclassification of approximately $2.0 million from Corporate expenses to other income, net.~~costs.

RESULTS OF OPERATIONS (Continued)

Three Months Ended June 30, ~~2018~~2019 Compared To Three Months Ended June 30, ~~2017~~2018


	Net Sales									Net Sales
(In millions)	2018			2017			% Change vs. Prior Year			2019			2018			% Change vs. Prior Year

Cabinets	$	637.6		$	653.4			(2.4	)%	$	635.0		$	637.6			(0.4	)	%
Plumbing		483.7			434.8			11.2			506.1			483.7			4.6
Doors		160.2			133.5			20.0
Security		147.5			143.7			2.6

Doors & Security											366.1			307.7			19.0
Net sales	$	1,429.0		$	1,365.4			4.7	%	$	1,507.2		$	1,429.0			5.5		%

	Operating Income									Operating Income (Loss)
	2018			2017			% Change vs. Prior Year			2019			2018			% Change vs. Prior Year
Cabinets	$	69.4		$	88.7			(21.8	)%	$	65.7		$	69.4			(5.3	)	%
Plumbing^(a)		95.3			101.2			(5.8	)
Doors		27.9			22.5			24.0
Security		17.4			18.6			(6.5	)
Less: Corporate expenses^(a)		(21.4	)		(21.8	)		1.8

Plumbing											106.7			95.3			12.0
Doors & Security											50.0			45.3			10.4
Less: Corporate expenses											(20.0	)		(21.4	)		6.5
Operating income	$	188.6		$	209.2			(9.8	)%	$	202.4		$	188.6			7.3		%

^(a)

~~We revised our previously reported results for the three months ended June 30, 2017 for ASU2017-07,~~ ~~Presentation of Net Periodic Pension and Postretirement Costs.~~

The following discussion of consolidated results of operations and segment results refers to the three months ended June 30, ~~2018~~2019 compared to the three months ended June 30, ~~2017.~~2018. Consolidated results of operations should be read in conjunction with segment results of operations.

Net sales

Net sales increased ~~$63.6~~by $78.2 million, or ~~4.7%. The increase was~~5.5%, due to the benefit from the 2018 Fiberon acquisition in our Doors & Security segment ($59 million), higher sales volume, ~~primarily from the continuing improvement in U.S. market conditions for home products as well as higher international sales principally~~including growth in China and ~~Canada, the benefit from new product introductions,~~ price increases to help mitigate cumulative raw material cost ~~increases, the benefit from the 2017 acquisitions in our Plumbing segment and favorable foreign exchange of approximately $11 million.~~increases. These benefits were partially offset by lower sales unit volume of make-to-order custom and semi-custom cabinetry products, unfavorable ~~mix.~~mix in our Doors & Security segment, higher customer rebates and promotion costs and unfavorable foreign exchange of $11 million.

Cost of products sold

Cost of products sold increased ~~$52.8~~by $64.7 million, or ~~6.2%~~7.1%, due to higher net sales ~~including the impact of the acquisitions in our Plumbing segment~~ and increased commodity costs, partially offset by the benefit of productivity improvements.

Selling, general and administrative expenses

Selling, general and administrative expenses increased ~~$23.7~~by $4.1 million, or ~~8.1%~~1.3%, due to higher ~~employee-related~~employee related costs and transportation costs as well as the impact of the ~~acquisitions~~2018 Fiberon acquisition in our ~~Plumbing segment.~~

~~RESULTS OF OPERATIONS (Continued)~~

~~Loss on sale of product line~~

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

Amortization of intangible assets

Amortization of intangible assets increased ~~$0.2~~by $1.9 million primarily due to the ~~2017 acquisitions~~2018 Fiberon acquisition in our ~~Plumbing segment offset by a decrease related to a definite-lived customer relationship intangible that was fully amortized during the second quarter of 2017.~~

~~Restructuring charges~~Doors & Security segment.

Restructuring charges

Restructuring charges of $4.5 million in the three months ended June 30, ~~2018~~2019 primarily related to severance costs within our Plumbing and ~~2017 were~~Cabinets segments and costs associated with closing facilities within our Plumbing segment. Restructuring charges of $10.8 million ~~and $0.9 million, respectively. Restructuring charges~~ in the three months ended June 30, 2018 primarily related to severance costs ~~associated with~~across all segments and our initiatives to consolidate our manufacturing footprint in our Cabinets segment, in addition to severance costs within our Plumbing and Security segments. Restructuring charges in the three months ended June 30, 2017 primarily related to severance costs and charges associated with supply chain initiatives within our Security segment.

Operating income

Operating income ~~decreased $20.6~~increased by $13.8 million, or ~~9.8%~~7.3%, primarily due to ~~increased~~higher net sales, including the impact of the 2018 Fiberon acquisition in our Doors & Security segment, productivity improvements and lower restructuring ~~and other charges, commodity cost inflation, unfavorable mix, and higher employee-related costs.~~charges. These benefits were partially offset by ~~higher net sales and productivity improvements.~~unfavorable commodity costs.

RESULTS OF OPERATIONS (Continued)

Interest expense

Interest expense increased ~~$5.1~~by $7.1 million to ~~$17.4~~$24.5 million due to higher average borrowings and higher average interest rates.

Other income, net

Other income, net, was $0.7 million in the three months ended June 30, 2019, compared to $3.4 million in the three months ended June 30, ~~2018, compared to income of $2.3 million in the three months ended June 30, 2017.~~2018. The decrease in other income, net is primarily due to lower defined benefit plan income in ~~2018~~2019 ($~~0.6~~1.9 million decrease).

Income taxes

~~RESULTS OF OPERATIONS (Continued)~~

Net income from continuing operations

Net income from continuing operations was $137.1 million in the three months ended June 30, 2019 compared to $129.7 million in the three months ended June 30, ~~2018 compared to $140.3 million in the three months ended June 30, 2017.~~2018. The ~~decrease~~increase of ~~$10.6~~$7.4 million was ~~primarily~~ due to ~~lower~~higher operating income and lower income tax expenses, partly offset by higher interest expense ~~partially offset by~~and lower ~~income tax.~~other income.

~~Loss from discontinued operations~~

~~The loss from discontinued operations of $2.6 million in the three months ended June 30, 2017 is primarily related to the prior sale of the Waterloo tool storage and Simonton window businesses.~~

Results By Segment

Cabinets

Net sales decreased ~~$15.8~~by $2.6 million, or ~~2.4%~~0.4%, predominantly due to ~~the impact~~lower sales unit volume of ~~exiting a customer relationship~~make-to-order custom and semi-custom cabinetry products, lower sales in Canada and increased promotional costs. Foreign exchange was unfavorable ~~mix.~~by approximately $1 million. These factors were partly offset by ~~the benefit from new product introductions~~higher sales unit volume of stock cabinetry products and price increases to help mitigate cumulative raw material cost ~~increases.~~increases, including the impact of tariffs.

Operating income decreased ~~$19.3~~by $3.7 million, or ~~21.8%~~5.3%, due to ~~the~~ lower net sales, including the impact of underutilization of our fixed cost base and unfavorable mix, higher restructuring and other charges of $11.8 million to consolidate our manufacturing footprint and increased headcount-related costs partially offset by the benefit from productivity improvements.

~~Plumbing~~

~~Net sales increased $48.9 million, or 11.2% due to higher~~ sales unit volume ~~new product introductions across our distribution channels, the benefit from the 2017 acquisitions~~ of ~~Victoria & Albert~~make-to-order custom and ~~Shaws~~semi-custom cabinetry products, which led to underutilization of make-to-order plant capacity, increased promotions and ~~higher sales~~an increase in international markets, principally in China and Canada. Foreign exchange was favorable by approximately $7 million. These benefits were slightly offset by higher sales rebates tied to higher sales volumes.

Operating income decreased $5.9 million, or 5.8%, due to commodity cost inflation, higher employee-related costs, amortization of the acquisition-related inventory fair value adjustment ($1.7 million)employee related ~~to our 2017 acquisitions and higher restructuring and other charges ($1.6 million).~~cost. These factors were partly offset by higher ~~net~~ sales unit volume of stock cabinetry products and ~~benefit from productivity improvements. In addition, 2017 operating income reflects the impact of adopting ASU2017-07~~ ~~during the second quarter of 2018 and the reclassification of approximately $2.1 million from Plumbing operating income to other income, net.~~lower restructuring costs.

~~Doors~~Plumbing

Net sales increased ~~$26.7~~by $22.4 million, or ~~20.0%~~4.6%, due to ~~share gains, including new product introductions,~~ higher sales volume ~~driven primarily by continuing improvement~~principally from growth in ~~the U.S. home products market~~China and price increases to help mitigate cumulative raw material cost increases.

~~RESULTS OF OPERATIONS (Continued)~~

~~Results By Segment (Continued)~~

These benefits were partially offset by lower sales volume in Canada and luxury-branded products, higher rebates costs as well as unfavorable foreign exchange of approximately $9 million.

Operating income increased ~~$5.4~~by $11.4 million, or ~~24.0%, due to the higher net sales, and leveraging the sales on our existing fixed cost base.~~

~~Security~~

~~Net sales increased $3.8 million, or 2.6%~~12.0%, due to higher sales unit volume and ~~favorable foreign exchange partly offset by~~ the ~~impact of exiting two product lines in our commercial distribution channel.~~

~~Operating income decreased $1.2 million, or 6.5%, due to higher commodity costs, higher restructuring and other charges ($2.0 million), unfavorable mix and employee-related costs.~~benefit from productivity improvements. These ~~factors~~benefits were partially offset by ~~benefits~~higher restructuring charges, unfavorable mix, unfavorable foreign exchange of approximately $4 million and higher rebates costs.

Doors & Security

Net sales increased by $58.4 million, or 19.0%, principally due to the benefit from the Fiberon acquisition ($59 million) and price increases to help mitigate cumulative raw material cost increases. These benefits were partially offset by unfavorable mix and higher ~~sales volume~~customer program costs. Foreign exchange was unfavorable by approximately $1 million.

Operating income increased by $4.7 million, or 10.4%, due to the benefit from the Fiberon acquisition, partly offset by unfavorable product mix and ~~productivity improvements.~~higher customer program costs.

Corporate

Corporate expenses decreased by ~~$0.4 million. In addition, 2017 operating income reflects the impact of adopting ASU2017-07~~ ~~during the first quarter of 2018 and the~~$1.4 million, or 6.5% due to lower employee related ~~reclassification of approximately $1.1 million from Corporate expenses to other income, net.~~costs.

LIQUIDITY AND CAPITAL RESOURCES

Our primary liquidity needs are to support working capital requirements, fund capital expenditures and service indebtedness, as well as to finance acquisitions, repurchase shares of our common stock and pay dividends to stockholders, as deemed appropriate. Our principal sources of liquidity are cash on hand, cash flows from operating activities, ~~and~~ availability under our credit ~~facility.~~ facility and debt issuances in the capital markets. We believe our operating cash flows, availability under the credit facility and access to capital markets will provide sufficient liquidity to support the Company’s financing needs.

Our operating income is generated by our subsidiaries. There are no restrictions on the ability of our subsidiaries to pay dividends or make other distributions to Fortune Brands. ~~In December 2017, our Board of Directors increased the quarterly cash dividend by 11% to $0.20 per share of our outstanding common stock.~~ Our Board of Directors will continue to evaluate dividend payment opportunities on a quarterly basis. There can be no assurance as to when and if future dividends will be paid, and at what level, because the payment of dividends is dependent on our financial condition, results of operations, cash flows, capital requirements and other factors deemed relevant by our Board of Directors.

~~On April 30,~~In September 2018, ~~our Board of Directors authorized the repurchase of up to $150~~we issued $600 million of ~~shares~~unsecured senior notes (“2018 Senior Notes”) in a registered public offering. The 2018 Senior Notes are due in 2023 with a coupon rate of 4%. We used the proceeds from the 2018 Senior Notes offering to pay down our ~~common stock over the two years ending April 30, 2020. During the six months ended on~~revolving credit facility. On June 30, ~~2018, we repurchased 10.0 million shares of our common stock under the Company’s share repurchase programs for $602.7 million. As of June 30,~~2019 and December 31, 2018, the ~~Company’s total remaining share repurchase authorization under~~outstanding amount of the ~~repurchase programs~~2018 Senior Notes, net of underwriting commissions, price discounts, and debt issuance costs, was ~~approximately $105.7 million. On July 13, 2018, our Board~~$595.5 million and $595.0 million, respectively.

In June 2015, we issued $900 million of ~~Directors authorized the repurchase~~unsecured senior notes in a registered public offering, of ~~up to~~which $400 million of ~~shares of our common stock over~~ the ~~two years ending July 13,~~aggregate principle amount becomes due and payable in June 2020. The ~~share repurchase programs do not obligate~~company expects to repay or refinance these notes prior to the ~~Company to repurchase any specific dollar amount or number of shares and may be suspended or discontinued at any time.~~maturity date.

In March 2018, the Company entered into a $350 million term loan for general corporate purposes ~~that matures~~scheduled to mature in March 2019. In August 2018, the Company amended its existing $350 million term loan to increase the borrowings under the term loan from $350 million to $525 million. In March 2019, the Company amended the $525 million term loan to decrease the borrowings from $525 million to $350 million and extend the maturity date to March 2020. All other terms and conditions on the amended term loan remain the same as the previous $525 million term loan. At June 30, 2019 and December 31, 2018, amounts due under the term loan were $350.0 million and $525.0 million, respectively, which are included within short term debt in our consolidated balance sheet. Interest rates under the term loan are variable based on LIBOR at the time of the borrowing and the Company’s long-term credit rating and can range from LIBOR + 0.625% to LIBOR + 1.25%. Covenants under the term loan are the same as the existing $1.25 billion revolving credit agreement. As of June 30, ~~2018,~~2019, we were in compliance with all covenants under this facility.

In June 2016, we amended and restated our 2011 credit agreement to combine and rollover the existing revolving credit facility and term ~~loan.~~loan into a new standalone $1.25 billion revolving credit facility. This amendment and restatement of the credit agreement was a non-cash transaction for the Company. Terms and conditions of the credit agreement, including the total commitment amount, essentially remained the same as under the 2011 credit agreement. The revolving credit facility will mature in June 2021 and borrowings thereunder will be used for general corporate purposes. On June 30, 2019 and December 31, 2018, our outstanding borrowings under this facility were $575.0 million and $320.0 million, respectively. Interest rates under the facility are variable based on LIBOR at the time of the borrowing and the Company’s long-term credit rating and can range from LIBOR + 0.9% to LIBOR + 1.5%. At June 30, 2019, we were in compliance with all covenants under this facility. The company expects to repay or refinance the aggregate principle amount due prior to the maturity date.

In the first half of 2019, we repurchased 1.1 million shares of our outstanding common stock under the Company’s share repurchase programs for $50.0 million. As of June 30, 2019, the Company’s total remaining share repurchase authorization under the remaining program was approximately $364 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.

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 Form10-K for the year-ended December 31, ~~2017~~2018 entitled “Item 1A. Risk Factors.”

~~Acquisitions in 2017 included:~~

In ~~October 2017, the Company acquired Victoria + Albert, aUK-based~~ ~~premium brand of standalone bathtubs, sinks, tub fillers, faucets and other accessories. In July 2017,~~September 2018, we acquired ~~Shaws,~~100% of the membership interests of Fiberon, a~~UK-based~~ ~~luxury plumbing~~ leading U.S. manufacturer of outdoor performance materials used in decking, railing and fencing products, company that specializes in manufacturing and selling fireclay sinks and selling brassware and accessories. The combined consideration paid was approximately $132 million, including $5.8 million of additionalfor a total purchase price ~~consideration paid related to post-closing adjustments during the six months ended June 30, 2018. The combined consideration paid is~~of approximately $470 million, subject to ~~further~~ certain post-closing ~~adjustments~~adjustments. The acquisition of Fiberon provided category expansion and ~~deferred acquisition payments. The results of operations of~~product extension opportunities into the ~~acquired companies are included in the Plumbing segment from the respective dates of acquisition.~~outdoor living space for our Doors & Security segment. We financed the ~~transactions~~transaction using cash on hand and borrowings under our revolving credit ~~facility.~~

and term loan facilities. The results of operations are included in the Doors & Security segment from the date of acquisition.

On June 30, ~~2018,~~2019, we had cash and cash equivalents of ~~$345.5~~$276.3 million, of which ~~$276.1~~$227.4 million was held atnon-U.S. subsidiaries. We manage our global cash requirements considering (i) available funds among the subsidiaries through which we conduct business, (ii) the geographic location of our liquidity needs, and (iii) the cost to access international cash balances. The repatriation ofnon-U.S. cash balances from certain subsidiaries could have adverse tax consequences as we may be required to pay and record tax expense on those funds that are repatriated.

In June 2016, we amended and restated our credit agreement to combine and rollover the 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 as under the 2011 credit agreement. The revolving credit facility will mature in June 2021 and borrowings thereunder will be used for general corporate purposes. Interest rates under the facility are variable based on LIBOR at the time of the borrowing and the Company’s long-term credit rating and can range from LIBOR + 0.9% to LIBOR + 1.5%. At June 30, 2018, we were in compliance with all covenants under this facility.

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 ~~half~~quarter of the ~~year, particularly in the first quarter.~~year.

Cash Flows

Below is a summary of cash flows for the six months ended June 30, ~~2018~~2019 and ~~2017.~~2018.


(In millions)	Six Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2019			2018
Net cash provided by operating activities	$	137.3		$	171.2		$	112.0		$	137.3
Net cash used in investing activities		(72.3	)		(58.1	)		(50.8	)		(72.3	)
Net cash (used) provided by financing activities		(35.2	)		(115.2	)
Net cash used in financing activities								(53.0	)		(35.2	)
Effect of foreign exchange rate changes on cash		(7.3	)		3.3			4.9			(7.3	)

Net increase in cash and cash equivalents	$	22.5		$	1.2		$	13.1		$	22.5

Net cash provided by operating activities was $112.0 million in the six months ended June 30, 2019, compared to net cash provided by operating activities of $137.3 million in the six months ended June 30, ~~2018 compared~~2018. The decrease in cash provided of $25.3 million was primarily due to ~~$171.2~~increases in accounts receivable, decreases in accrued taxes related to estimated tax payments and increases in other current liabilities.

Net cash used in investing activities was $50.8 million in the six months ended June 30, ~~2017. The decrease in cash provided of $33.9 million was primarily due to lower net income and higher build in working capital mainly driven by higher accounts receivable in 2018~~2019, compared to ~~2017.~~

~~Net~~net cash used in investing activities ~~was~~of $72.3 million in the six months ended June 30, ~~2018 compared~~2018. The decrease in cash used of $21.5 million was due to ~~$58.1~~$12.3 million of lower capital spending, lower cost of acquisitions of $5.8 million and higher proceeds from the sale of PP&E in 2019 of $3.4 million.

Net cash used in financing activities was $53.0 million in the six months ended June 30, ~~2017. The increase in~~2019, compared to cash used ~~of $14.2 million was primarily due to $7.7 million of higher capital spending and a $5.7 million increase~~ in ~~cost of acquisitions.~~

~~Net cash used by~~ financing activities ~~was~~of $35.2 million in the six months ended June 30, ~~2018 compared to $115.2 million in the six months ended June 30, 2017.~~2018. The ~~decrease~~increase in cash used of ~~$80.0~~$17.8 million was primarily due to ~~higher~~lower net borrowings in ~~2018~~2019 compared to ~~2017~~2018 ($~~675.0~~555.0 million ~~increase),~~decrease) and deferred acquisition payments during 2019 ($19 million) partly offset by ~~higher~~lower share repurchases in ~~2018~~2019 compared to ~~2017~~2018 ($~~570.0~~552.7 million ~~increase)~~decrease).

Pension Plans

Subsidiaries of Fortune Brands ~~Home & Security, Inc.~~ 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, ~~2017,~~2018, the fair value of our total pension plan assets was ~~$656.6~~$599.6 million, representing 79% of the accumulated benefit obligation liability.~~During 2017,~~ In 2019, we ~~contributed our 2018 minimum required contribution~~expect to make pension contributions of approximately ~~$6.4~~$8 million. ~~During 2018, we may make an additional voluntary contribution of up to approximately $25~~ ~~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 ~~Japan.~~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

The adoption of recent accounting standards, as discussed in Note 2, “Recently Issued Accounting Standards,” to our Consolidated Financial Statements, has not had and is not expected to have a significant impact on our revenue, earnings or liquidity.

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, ~~2017.~~2018.

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 fiscal quarter ended June 30, ~~2018~~2019 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 and, if necessary, will make appropriate changes as we incorporate our controls and procedures into those recently acquired businesses.

PART II. OTHER INFORMATION

Item 1.

LEGAL PROCEEDINGS.

(a)

~~Other~~

Litigation.

(b)

Environmental Matters.

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 six and three months ended June 30, ~~2018~~2019 and ~~2017.~~2018. 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.

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, ~~2017~~2018 in the section entitled “Risk Factors.”

Item2.

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 June 30, ~~2018:~~2019:

Issuer Purchases of Equity Securities


Three Months Ended June 30, 2018	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)
Three Months Ended June 30, 2019									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)
April 1 – April 30		840,464	$	58.63		840,464	$	308,995,372		453,051	$	48.6		453,051	$	363,740,089
May 1 – May 31		2,381,663		56.97		2,381,663		173,301,711		—		—		—		363,740,089
June 1 – June 30		1,194,838		56.57		1,194,838		105,708,670		—		—		—		363,740,089

Total		4,416,965	$	57.18		4,416,965				453,051	$	48.6		453,051

^(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 date~~July 13, 2018

~~Announcement date~~

July 16, 2018

$400 million

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

~~Expiration date~~

July 13, 2020

~~February 28, 2017~~

~~March 1, 2017~~

~~300 million~~

~~February 28, 2019~~

~~December 8, 2017~~

~~December 11, 2017~~

~~250 million~~

~~December 8, 2019~~

~~April 30, 2018~~

~~150 million~~

~~April 30, 2020~~

~~July 13, 2018~~

~~July 16, 2018~~

~~400 million~~

~~July 13, 2020~~

Item 6.

EXHIBITS

3(i).

~~3(i).~~		Restated Certificate of Incorporation of Fortune Brands Home & Security, Inc. (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).

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

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

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 June 30, ~~2018~~2019 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.

*	Filed or furnished herewith.

**	~~Furnished 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: ~~July 31, 2018~~August 2, 2019		/s/ Patrick D. Hallinan
		Patrick D. Hallinan
		Senior Vice President and Chief Financial Officer
		(Duly authorized officer and principal financial officer of the Registrant)

4636

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

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


	June 30, 2018			December 31, 2017			June 30, 2019			December 31, 2018
Assets
Current assets
Cash and cash equivalents	$	345.5		$	323.0		$	276.3		$	262.9
Accounts receivable, net		657.5			555.3
Accounts receivable less allowances for discounts and doubtful accounts								706.2			571.7
Inventories		627.0			580.8			741.9			678.9
Other current assets		175.5			142.6			192.5			172.6

Total current assets		1,805.5			1,601.7			1,916.9			1,686.1
Property, plant and equipment, net of accumulated depreciation		737.6			740.0			804.9			813.4
Operating lease assets								173.2			—
Goodwill		1,916.7			1,912.0			2,085.7			2,080.3
Other intangible assets, net of accumulated amortization		1,139.0			1,162.4			1,229.2			1,246.8
Other assets		98.3			95.3			133.5			138.0

Total assets	$	5,697.1		$	5,511.4		$	6,343.4		$	5,964.6


Liabilities and equity
Current liabilities
Short-term debt	$	350.0		$	—		$	749.3		$	525.0
Accounts payable		428.7			428.8			476.6			459.0
Other current liabilities		451.8			478.0			469.3			508.1

Total current liabilities		1,230.5			906.8			1,695.2			1,492.1
Long-term debt		1,793.3			1,507.6			1,666.0			1,809.0
Deferred income taxes		156.2			166.8			167.9			162.6
Accrued defined benefit plans		170.6			175.9			162.1			163.3
Operating lease liabilities								146.3			—
Othernon-current liabilities		171.8			153.2			161.2			157.6

Total liabilities		3,522.4			2,910.3			3,998.7			3,784.6
Commitments and contingencies (see Note 18)
Equity
Fortune Brands stockholders’ equity
Fortune Brands equity
Common stock^(a)		1.8			1.7			1.8			1.8
Paid-in capital		2,751.5			2,724.9			2,786.6			2,766.0
Accumulated other comprehensive loss		(53.2	)		(39.2	)		(64.1	)		(67.0	)
Retained earnings		1,350.5			1,174.2			1,648.1			1,448.1
Treasury stock		(1,877.5	)		(1,262.1	)		(2,028.9	)		(1,970.7	)

Total Fortune Brands stockholders’ equity		2,173.1			2,599.5
Total Fortune Brands equity								2,343.5			2,178.2
Noncontrolling interests		1.6			1.6			1.2			1.8

Total equity		2,174.7			2,601.1			2,344.7			2,180.0

Total liabilities and equity	$	5,697.1		$	5,511.4		$	6,343.4		$	5,964.6


(In millions)	June 30, 2018		December 31, 2017		June 30, 2019		December 31, 2018
Inventories:
Raw materials and supplies	$	229.6	$	224.9	$	267.0	$	227.4
Work in process		61.2		58.3		75.5		66.4
Finished products		336.2		297.6		399.4		385.1
Total inventories					$	741.9	$	678.9

Total inventories	$	627.0	$	580.8
Property, plant and equipment, gross	$	1,815.9	$	1,780.4	$	1,945.5	$	1,911.7
Less: accumulated depreciation		1,078.3		1,040.4		1,140.6		1,098.3

Property, plant and equipment, net	$	737.6	$	740.0	$	804.9	$	813.4

(In millions)
Accounts receivable	$	18.8
Inventories		50.9
Property, plant and equipment		48.5
Goodwill		174.9
Identifiable intangible assets		195.0
Other assets		4.8
Total assets		492.9
Accounts payable		16.8
Other liabilities and accruals		16.3
Net assets acquired	$	459.8


Large accelerated filer	☒	☒	Accelerated filer		☐

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			Emerging growth company	☐	☐

													Six Months Ended						Three Months Ended
	Six Months Ended June 30,						Three Months Ended June 30,						June 30,						June 30,
	2018			2017			2018			2017			2019			2018			2019			2018
Net sales	$	2,683.6		$	2,552.2		$	1,429.0		$	1,365.4		$	2,835.1		$	2,683.6		$	1,507.2		$	1,429.0
Cost of products sold		1,719.9			1,624.8			904.9			852.1			1,838.7			1,719.9			969.6			904.9
Selling, general and administrative expenses		627.7			582.4			316.5			292.8			632.6			627.7			320.6			316.5
Amortization of intangible assets		16.4			16.1			8.2			8.0			20.1			16.4			10.1			8.2
Loss on sale of product line (see Note 4)		—			2.4			—			2.4
Asset impairment charges		—			3.2			—			—
Restructuring charges		11.6			3.1			10.8			0.9			5.7			11.6			4.5			10.8

Operating income		308.0			320.2			188.6			209.2			338.0			308.0			202.4			188.6
Interest expense		32.1			24.2			17.4			12.3			48.2			32.1			24.5			17.4
Other income, net		(6.2	)		(7.0	)		(3.4	)		(2.3	)		(1.9	)		(6.2	)		(0.7	)		(3.4	)

Income before income taxes		282.1			303.0			174.6			199.2
Income taxes		77.3			85.3			44.9			58.9

Income from continuing operations before income taxes														291.7			282.1			178.6			174.6
Income tax														70.1			77.3			41.5			44.9
Income from continuing operations, net of tax		204.8			217.7			129.7			140.3			221.6			204.8			137.1			129.7
Loss from discontinued operations, net of tax		(0.2	)		(2.6	)		—			(2.6	)		—			(0.2	)		—			-

Net income		204.6			215.1			129.7			137.7			221.6			204.6			137.1			129.7
Less: Noncontrolling interests		—			—			0.1			—			(0.6	)		—			(0.4	)		0.1

Net income attributable to Fortune Brands	$	204.6		$	215.1		$	129.6		$	137.7		$	222.2		$	204.6		$	137.5		$	129.6

Basic earnings per common share
Continuing operations	$	1.39		$	1.42		$	0.89		$	0.91		$	1.58		$	1.39		$	0.98		$	0.89
Discontinued operations		—			(0.02	)		—			(0.02	)		—			—			—			—

Net income attributable to Fortune Brands common shareholders	$	1.39		$	1.40		$	0.89		$	0.89		$	1.58		$	1.39		$	0.98		$	0.89
Diluted earnings per common share
Continuing operations	$	1.37		$	1.39		$	0.88		$	0.90		$	1.57		$	1.37		$	0.97		$	0.88
Discontinued operations		—			(0.02	)		—			(0.02	)		—			—			—			—

Net income attributable to Fortune Brands common shareholders	$	1.37		$	1.37		$	0.88		$	0.88		$	1.57		$	1.37		$	0.97		$	0.88
Comprehensive income	$	190.6		$	232.4		$	112.4		$	147.8		$	233.1		$	190.6		$	140.3		$	112.4


(In millions)	As of June 30, 2018							As of December 31, 2017							As of June 30, 2019							As of December 31, 2018
	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	$	706.2	$	—		$	706.2	$	709.9	$	—		$	709.9	$	676.2	$	—		$	676.2	$	673.9	$	—		$	673.9

Amortizable intangible assets
Tradenames		15.5		(10.8	)		4.7		15.7		(9.9	)		5.8		20.1		(12.5	)		7.6		19.8		(11.9	)		7.9
Customer and contractual relationships		658.9		(244.7	)		414.2		663.8		(232.0	)		431.8		802.8		(280.6	)		522.2		800.3		(260.2	)		540.1
Patents/proprietary technology		60.4		(46.5	)		13.9		60.2		(45.3	)		14.9		73.5		(50.3	)		23.2		73.5		(48.6	)		24.9

Total		734.8		(302.0	)		432.8		739.7		(287.2	)		452.5		896.4		(343.4	)		553.0		893.6		(320.7	)		572.9

Total identifiable intangibles	$	1,441.0	$	(302.0	)	$	1,139.0	$	1,449.6	$	(287.2	)	$	1,162.4	$	1,572.6	$	(343.4	)	$	1,229.2	$	1,567.5	$	(320.7	)	$	1,246.8

(In millions, except lease term and discount rate)	Six Months Ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	20.5
Right-of-use assets obtained in exchange for operating lease obligations	$	12.8
Weighted average remaining lease term - operating leases	7.4 years
Weighted average discount rate - operating leases		4.4	%

(In millions)
Year Ending December 31,
2019 (excluding six months ended June 30, 2019)	$	20.3
2020		36.6
2021		30.5
2022		24.4
2023		20.2
Thereafter		79.8
Total lease payments		211.8
Less imputed interest		(32.2	)
Total	$	179.6
Reported as of June 30, 2019
Other current liabilities	$	33.3
Operating lease liabilities		146.3
Total	$	179.6


(In millions)		Fair Value
	Location	June 30, 2018		December 31, 2017
Assets
Foreign exchange contracts	Other current assets	$	8.9	$	0.8
Net investment hedges	Other current assets		0.5		—
Commodity contracts	Other current assets		—		0.2

	Total assets	$	9.4	$	1.0
Liabilities
Foreign exchange contracts	Other current liabilities	$	1.9	$	5.6
Commodity contracts	Other current liabilities		0.1		—
Net investment hedges	Other current liabilities		—		0.8

	Total current liabilities	$	2.0	$	6.4

(In millions)			Fair Value
Type of hedge	Type of contract	Location	June 30, 2019		December 31, 2018
Cash flow	Foreign exchange contracts	Other current assets	$	1.3	$	3.9
Fair value	Foreign exchange contracts	Other current assets		0.7		1.4
Net investment hedges	Net investment hedges	Other current assets		-		0.7
		Total assets	$	2.0	$	6.0
Cash flow	Foreign exchange contracts	Other current liabilities	$	0.7	$	0.3
Fair value	Foreign exchange contracts	Other current liabilities		0.4		1.6
Net investment hedges	Net investment hedges	Other current liabilities		0.5		1.6
		Total liabilities	$	1.6	$	1.9


		Gain (Loss) Recognized in Income Six Months Ended June 30,
(In millions) Type of hedge	Location	2018		2017
Cash flow	Cost of products sold	$	—	$	1.0
Fair value	Other expense (income), net		1.4		(0.5	)

Total		$	1.4	$	0.5

		Gain (Loss) Recognized in Income Three Months Ended June 30,
(In millions) Type of hedge	Location	2018		2017
Cash flow	Cost of products sold	$	0.5	$	1.6
Fair value	Other expense (income), net		1.5		0.6

Total		$	2.0	$	2.2

(In millions)	Classification and Amount of Gain (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships
	Three Months Ended June 30, 2019
	Cost of products sold			Interest expense		Other income, net
Total amounts per Consolidated Statements of Earnings	$	969.6		$	24.5	$	0.7
The effects of fair value and cash flow hedging:
Gain (loss) on fair value hedging relationships
Foreign exchange contracts:
Hedged items							(0.5	)
Derivative designated as hedging instruments							0.7
Gain (loss) on cash flow hedging relationships
Foreign exchange contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income		1.6
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					0.1

(In millions)	Classification and Amount of Gain (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships
	Three Months Ended June 30, 2018
	Cost of products sold			Interest expense		Other income, net
Total amounts per Consolidated Statements of Earnings	$	904.9		$	17.4	$	3.4
The effects of fair value and cash flow hedging:
Gain (loss) on fair value hedging relationships
Foreign exchange contracts:
Hedged items							(4.2	)
Derivative designated as hedging instruments							3.2
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		(0.1	)
Interest rate contracts:
Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income					—


(In millions)	June 30, 2018				December 31, 2017				June 30, 2019				December 31, 2018
	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
Revolving credit facility	$	900.0	$	900.0	$	615.0	$	615.0	$	575.0	$	575.0	$	320.0	$	320.0
Term Loan		350.0		350.0		—		—		350.0		350.0		525.0		525.0
Senior Notes		893.3		898.5		892.6		926.3		1,490.3		1,552.4		1,489.0		1,490.4


(In millions)	Foreign Currency Adjustments			Derivative Hedging Gain (Loss)			Defined Benefit Plan Adjustments^(a)			Accumulated Other Comprehensive Loss
Balance at December 31, 2016	$	(28.0	)	$	(0.6	)	$	(43.3	)	$	(71.9	)
Amounts classified into accumulated other comprehensive income (loss)		17.7			3.3			—			21.0
Amounts reclassified from accumulated other comprehensive loss		—			(0.5	)		(3.2	)		(3.7	)

Net current-period other comprehensive income (loss)		17.7			2.8			(3.2	)		17.3

Balance at June 30, 2017	$	(10.3	)	$	2.2		$	(46.5	)	$	(54.6	)
Balance at December 31, 2017	$	5.8		$	(2.4	)	$	(42.6	)	$	(39.2	)
Amounts classified into accumulated other comprehensive income (loss)		(17.1	)		2.9			0.2			(14.0	)
Amounts reclassified from accumulated other comprehensive loss		—			—			—			—

Net current-period other comprehensive (loss) income		(17.1	)		2.9			0.2			(14.0	)

Balance at June 30, 2018	$	(11.3	)	$	0.5		$	(42.4	)	$	(53.2	)

(In millions)	Foreign Currency Adjustments			Derivative Hedging Gain (Loss)			Defined Benefit Plan Adjustments^(a)			Accumulated Other Comprehensive Loss
Balance at December 31, 2017	$	5.8		$	(2.4	)	$	(42.6	)	$	(39.2	)
Amounts classified into accumulated other comprehensive (loss) income		(17.1	)		2.9			0.2			(14.0	)
Amounts reclassified from accumulated other comprehensive (loss) income		—			—			—			—
Net current-period other comprehensive (loss) income		(17.1	)		2.9			0.2			(14.0	)
Balance at June 30, 2018	$	(11.3	)	$	0.5		$	(42.4	)	$	(53.2	)

Balance at December 31, 2018	$	(25.3	)	$	4.2		$	(45.9	)	$	(67.0	)
Amounts classified into accumulated other comprehensive (loss) income		13.7			0.3			—			14.0
Adoption of ASU 2018-02(b)		—			—			(8.6	)		(8.6	)
Amounts reclassified from accumulated other comprehensive (loss) income		—			(2.5	)		—			(2.5	)
Net current-period other comprehensive (loss) income		13.7			(2.2	)		(8.6	)		2.9
Balance at June 30, 2019	$	(11.6	)	$	2.0		$	(54.5	)	$	(64.1	)


(In millions)
Details about Accumulated Other Comprehensive Loss Components	Amount Reclassified from Accumulated Other Comprehensive Loss Six Months Ended June 30,					Affected Line Item in the Statement of Comprehensive Income
	2018		2017
Gains (losses) on cash flow hedges
Foreign exchange contracts	$	—	$	1.0			Cost of products sold

		—		1.0			Total before tax
		—		(0.5	)		Tax expense

	$	—	$	0.5			Net of tax
Defined benefit plan items
Recognition of prior service credits	$	—	$	5.1			(a)

		—		5.1			Total before tax
		—		(1.9	)		Tax expense

	$	—	$	3.2			Net of tax

Total reclassifications for the period	$	—	$	3.7			Net of tax

(In millions)
Details about Accumulated Other Comprehensive Loss Components	Amount Reclassified from Accumulated Other Comprehensive Loss Six months ended June 30,						Affected Line Item in the Statement of Comprehensive Income
	2019			2018
Gains (losses) on cash flow hedges
Foreign exchange contracts	$	2.8			—		Cost of products sold
Interest rate contracts		0.2			—		Interest expense
		3.0			—		Total before tax
		(0.5	)		—		Tax expense
Total reclassifications for the period	$	2.5			—		Net of tax


(In millions)
Details about Accumulated Other Comprehensive Loss Components	Amount Reclassified from Accumulated Other Comprehensive Loss Three Months Ended June 30,						Affected Line Item in the Statement of Comprehensive Income
	2019			2018
Gains (losses) on cash flow hedges
Foreign exchange contracts	$	1.6		$	0.6		Cost of products sold
Commodity contracts		(0.1	)		(0.1	)	Cost of products sold
Interest rate contracts		0.1			—		Interest expense
		1.6			0.5		Total before tax
		(0.2	)		(0.2	)	Tax expense
Total reclassifications for the period	$	1.4		$	0.3		Net of tax


(In millions)
	Six Months Ended June 30,		Three Months Ended June 30,
	2018		2018
Wholesalers⁽¹⁾	$	1,268.7	$	683.1
Home Center retailers⁽²⁾		724.7		375.0
Other retailers⁽³⁾		157.2		81.1
Builder direct		110.1		58.6

U.S. net sales		2,260.7		1,197.8
International⁽⁴⁾		422.9		231.2

Net sales	$	2,683.6	$	1,429.0