Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | Apr. 22, 2016 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | FBHS | |
Entity Registrant Name | FORTUNE BRANDS HOME & SECURITY, INC. | |
Entity Central Index Key | 1,519,751 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 153,376,002 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Net sales | $ 1,106.5 | $ 950.8 |
Cost of products sold | 728.7 | 633.9 |
Selling, general and administrative expenses | 270.2 | 241.4 |
Amortization of intangible assets | 6.5 | 3.5 |
Restructuring charges | 5.6 | 4.7 |
Operating income | 95.5 | 67.3 |
Interest expense | 11.8 | 3.4 |
Other (income) expense, net | (0.3) | 1.7 |
Income from continuing operations before income taxes | 84 | 62.2 |
Income tax | 28.3 | 21.3 |
Income from continuing operations, net of tax | 55.7 | 40.9 |
Loss from discontinued operations, net of tax | (0.6) | |
Net income | 55.7 | 40.3 |
Less: Noncontrolling interests | 0.3 | |
Net income attributable to Fortune Brands | $ 55.7 | $ 40 |
Basic earnings per common share | ||
Continuing operations | $ 0.36 | $ 0.26 |
Discontinued operations | (0.01) | |
Net income attributable to Fortune Brands common shareholders | 0.36 | 0.25 |
Diluted earnings per common share | ||
Continuing operations | 0.35 | 0.25 |
Discontinued operations | 0 | 0 |
Net income attributable to Fortune Brands common shareholders | $ 0.35 | $ 0.25 |
Comprehensive income | $ 69.3 | $ 20.9 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 | |
Current assets | |||
Cash and cash equivalents | $ 253.6 | $ 238.5 | |
Accounts receivable, net | 525.5 | 502.6 | |
Inventories | 597.9 | 555.6 | |
Other current assets | 104.3 | 121.3 | |
Total current assets | 1,481.3 | 1,418 | |
Property, plant and equipment, net of accumulated depreciation | 635.7 | 627.9 | |
Goodwill | [1] | 1,757.8 | 1,755.3 |
Other intangible assets, net of accumulated amortization | 993.3 | 996.7 | |
Other assets | 74.7 | 77.8 | |
Total assets | 4,942.8 | 4,875.7 | |
Current liabilities | |||
Notes payable to banks | 2.8 | 0.8 | |
Accounts payable | 364.1 | 344.2 | |
Other current liabilities | 318 | 412.9 | |
Total current liabilities | 684.9 | 757.9 | |
Long-term debt | 1,619.2 | 1,168.7 | |
Deferred income taxes | 177.6 | 201.7 | |
Accrued defined benefit plans | 208.6 | 218.4 | |
Other non-current liabilities | 82.7 | 75.2 | |
Total liabilities | $ 2,773 | $ 2,421.9 | |
Commitments and contingencies (see Note 17) | |||
Fortune Brands stockholders' equity | |||
Common stock | [2] | $ 1.7 | $ 1.7 |
Paid-in capital | 2,620.1 | 2,602.2 | |
Accumulated other comprehensive loss | (38.9) | (52.5) | |
Retained earnings | 558.5 | 501.6 | |
Treasury stock | (973.3) | (602.1) | |
Total Fortune Brands stockholders' equity | 2,168.1 | 2,450.9 | |
Noncontrolling interests | 1.7 | 2.9 | |
Total equity | 2,169.8 | 2,453.8 | |
Total liabilities and equity | $ 4,942.8 | $ 4,875.7 | |
[1] | Net of accumulated impairment losses of $399.5 million in the Doors segment. | ||
[2] | Common stock, par value $0.01 per share; 176.1 million shares and 175.2 million shares issued at March 31, 2016 and December 31, 2015, respectively. |
Condensed Consolidated Balance4
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares issued | 176.1 | 175.2 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Operating activities | ||
Net Income | $ 55.7 | $ 40.3 |
Non-cash pre-tax expense: | ||
Depreciation | 24.3 | 20.5 |
Amortization | 6.5 | 3.5 |
Stock-based compensation | 7.4 | 5.6 |
Recognition of actuarial losses | 0.9 | |
Deferred income taxes | (25.1) | 7.5 |
Restructuring charges | 1 | |
Amortization of deferred financing fees | 0.4 | |
Changes in assets and liabilities: | ||
Increase in accounts receivable | (20.5) | (1.4) |
Increase in inventories | (40.5) | (44.5) |
Increase (decrease) in accounts payable | 31.9 | (8.6) |
Decrease (increase) in other assets | 16.8 | (23.9) |
Decrease in accrued expenses and other liabilities | (92.2) | (68.8) |
Increase in accrued taxes | 14 | 2.1 |
Net cash used in operating activities | (20.4) | (66.7) |
Investing activities | ||
Capital expenditures | (43.8) | (24.6) |
Cost of acquisition, net of cash acquired | (6.3) | |
Proceeds from the disposition of assets | 0.3 | |
Net cash used in investing activities | (43.8) | (30.6) |
Financing activities | ||
Increase in short-term debt, net | 2 | |
Issuance of long-term debt | 450 | 155 |
Repayment of long-term debt | (0.9) | (65) |
Proceeds from the exercise of stock options | 4.9 | 8.9 |
Treasury stock purchases | (362.7) | (0.4) |
Excess tax benefit from the exercise of stock-based compensation | 5.8 | 14.2 |
Dividends to stockholders | (24.4) | (22.3) |
Other financing, net | (1.2) | |
Net cash provided by financing activities | 73.5 | 90.4 |
Effect of foreign exchange rate changes on cash | 5.8 | (5.6) |
Net increase (decrease) in cash and cash equivalents | 15.1 | (12.5) |
Cash and cash equivalents at beginning of period | 238.5 | 191.9 |
Cash and cash equivalents at end of period | $ 253.6 | $ 179.4 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Equity - USD ($) $ in Millions | Total | Common Stock | Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Deficit) | Treasury Stock | Non-controlling Interests |
Beginning Balance at Dec. 31, 2014 | $ 2,263.1 | $ 1.7 | $ 2,517.3 | $ (6.7) | $ 279.5 | $ (532.3) | $ 3.6 |
Comprehensive income: | |||||||
Net Income | 40.3 | 40 | 0.3 | ||||
Other comprehensive income | (19.4) | (19.4) | |||||
Stock options exercised | 8.9 | 8.9 | |||||
Stock-based compensation | (8) | 5.5 | (13.5) | ||||
Tax benefit on exercise of stock options | 14.1 | 14.1 | |||||
Treasury stock purchase | (0.4) | (0.4) | |||||
Ending Balance at Mar. 31, 2015 | 2,298.6 | 1.7 | 2,545.8 | (26.1) | 319.5 | (546.2) | 3.9 |
Beginning Balance at Dec. 31, 2015 | 2,453.8 | 1.7 | 2,602.2 | (52.5) | 501.6 | (602.1) | 2.9 |
Comprehensive income: | |||||||
Net Income | 55.7 | 55.7 | |||||
Other comprehensive income | 13.6 | 13.6 | |||||
Stock options exercised | 4.9 | 4.9 | |||||
Stock-based compensation | (1.1) | 7.4 | (8.5) | ||||
Tax benefit on exercise of stock options | 5.6 | 5.6 | |||||
Treasury stock purchase | (362.7) | (362.7) | |||||
Other | 1.2 | 1.2 | |||||
Dividends paid to noncontrolling interests | (1.2) | (1.2) | |||||
Ending Balance at Mar. 31, 2016 | $ 2,169.8 | $ 1.7 | $ 2,620.1 | $ (38.9) | $ 558.5 | $ (973.3) | $ 1.7 |
Basis of Presentation and Princ
Basis of Presentation and Principles of Consolidation | 3 Months Ended |
Mar. 31, 2016 | |
Basis of Presentation and Principles of Consolidation | 1. Basis of Presentation and Principles of Consolidation 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. The condensed consolidated balance sheet as of March 31, 2016, the related condensed consolidated statements of comprehensive income for the three-month periods ended March 31, 2016 and 2015 and the related condensed consolidated statements of cash flows and equity for the three-month periods ended March 31, 2016 and 2015 are unaudited. 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 consolidated financial statements and notes. The December 31, 2015 condensed consolidated balance sheet was derived from the audited financial statements, but does not include all disclosures required by U.S. generally accepted accounting principles (“GAAP”). This Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2015. The condensed consolidated financial statements included in this Quarterly Report on Form 10-Q were derived principally from the consolidated financial statements of the Company. In May 2015, we acquired Norcraft Companies, Inc. (“Norcraft”). The financial results of Norcraft were included in the Company’s condensed consolidated statements of comprehensive income and statements of cash flow for the three months ended March 31, 2016 and the condensed consolidated balance sheets as of March 31, 2016 and December 31, 2015. In September 2015, we completed the sale of Waterloo Industries, Inc. (“Waterloo”), our tool storage business. In accordance with Accounting Standards Codification (“ASC”) requirements, the results of operations of Waterloo, were classified and separately stated as discontinued operations in the accompanying condensed consolidated statements of comprehensive income for the three months ended March 31, 2015. The cash flows from discontinued operations for the three months ending March 31, 2015 were not separately classified on the accompanying condensed consolidated statements of cash flows. Information on Business Segments was revised to exclude these discontinued operations. |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 3 Months Ended |
Mar. 31, 2016 | |
Recently Issued Accounting Standards | 2. Recently Issued Accounting Standards Improvements to Employee Share-Based Payment Accounting In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09 that requires entities to recognize the income tax effects of awards in the income statement when the awards vest or are settled. The new standard also allows entities to withhold an amount up to an employee’s maximum individual tax rate in the relevant jurisdiction without resulting in liability classification of the award. The new standard is effective for annual and interim periods beginning January 1, 2017. Early adoption is permitted, but all of the guidance must be adopted in the same period. We are assessing the impact the adoption of this standard will have on our financial statements. Simplifying the Transition to the Equity Method of Accounting In March 2016, the FASB issued ASU 2016-07, which eliminates the requirement to apply the equity method of accounting retrospectively when an entity obtains significant influence over a previously held investment. Previously, entities were required to retrospectively apply the equity method of accounting when obtaining significant influence over an investment (for example due to an increase in ownership). The new standard is effective beginning January 1, 2017. Earlier application is permitted, however we elected not to early adopt. We do not expect this standard to have a material effect on our financial statements. Leases In February 2016, the FASB issued ASU 2016-02, “Leases” that requires lessees to recognize almost all leases on their balance sheet as a “right-of-use” asset and lease liability but recognize related expenses in a manner similar to current accounting. The guidance also eliminates current real estate-specific provisions for all entities. The new standard is effective for annual periods beginning after December 15, 2018 (calendar year 2019 for Fortune Brands) and earlier application is permitted. We are assessing the impact the adoption of this standard will have on our financial statements. Recognition and Measurement of Financial Assets and Financial Liabilities In January 2016, the FASB issued final guidance ASU 2016-01 that requires entities to measure investments in unconsolidated entities (other than those accounted for using the equity method of accounting) at fair value through the income statement. There will no longer be an available-for-sale classification (with changes in fair value reported in Other Comprehensive Income). In addition, the cost method is eliminated for equity investments without readily determinable fair values. The new standard is effective beginning January 1, 2018. Earlier application is permitted for certain provisions of the standard, however we elected not to early adopt. We do not expect this standard to have a material effect on our financial statements. Simplifying Subsequent Measurement of Inventory In July 2015, the FASB issued a final standard that simplifies the subsequent measurement of inventory by replacing the current standard of lower of cost or market test. Under the current guidance the subsequent measurement of inventory is measured at the lower of cost or market, where “market” may have multiple possible outcomes. The new guidance requires subsequent measurement of inventory at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs to sell (completion, disposal, and transportation). This new standard is effective for the annual period beginning January 1, 2017 (calendar year 2017 for Fortune Brands). Earlier application is permitted, however we elected not to early adopt. We do not expect this standard to have a material effect on our financial statements. Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In August 2014, the FASB issued ASU 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” This ASU provides guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. This amendment is effective for the annual period ending after December 15, 2016 (calendar year 2017 for Fortune Brands), and for annual periods and interim periods thereafter. Early application is permitted, however we elected not to early adopt. We do not expect this standard to have a material effect on our financial statements. Revenue from Contracts with Customers In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers.” This ASU 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). Further, in March 2016, the FASB issued the final guidance to clarify the principal versus agent guidance (i.e., whether an entity should report revenue gross or net) in its new revenue recognition standard. We are assessing the impact the adoption of this standard will have on our financial statements. |
Balance Sheet Information
Balance Sheet Information | 3 Months Ended |
Mar. 31, 2016 | |
Balance Sheet Information | 3. Balance Sheet Information Supplemental information on our balance sheets is as follows: (In millions) March 31, December 31, Inventories: Raw materials and supplies $ 249.5 $ 237.8 Work in process 60.8 60.2 Finished products 287.6 257.6 Total inventories $ 597.9 $ 555.6 Property, plant and equipment, gross $ 1,577.4 $ 1,551.7 Less: accumulated depreciation 941.7 923.8 Property, plant and equipment, net $ 635.7 $ 627.9 |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 31, 2016 | |
Acquisitions | 4. Acquisitions In May 2015, we completed our tender offer to purchase all of the outstanding shares of common stock of Norcraft, a leading publicly-owned manufacturer of kitchen and bathroom cabinetry, for a total purchase price of $648.6 million in cash. We financed the transaction using cash on hand and borrowings under our existing credit facilities. Net sales and operating income for this acquired business in the three months ended March 31, 2016 were approximately $89 million and $3 million (net of severance costs), respectively. The results of operations of Norcraft are included in the Cabinets segment from the date of acquisition. We incurred $15.2 million of Norcraft acquisition-related transaction costs. The goodwill expected to be deductible for income tax purposes is approximately $60.1 million. The following table summarizes the preliminary allocation of the purchase price to the fair value of assets acquired and liabilities assumed as of the date of the acquisition. (In millions) Accounts receivable $ 31.0 Inventories 28.7 Property, plant and equipment 45.7 Goodwill 304.9 Identifiable intangible assets 360.0 Other assets 9.3 Total assets 779.6 Deferred tax liabilities 101.3 Other liabilities and accruals 29.7 Net assets acquired (a) $ 648.6 (a) Net assets exclude $15.5 million of cash transferred to the Company as the result of the Norcraft 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 within the measurement period. Any change in the acquisition date fair value of the acquired assets and liabilities will change the amount of the purchase price allocable to goodwill. Goodwill includes expected sales and cost synergies. Identifiable intangible assets consist of an indefinite-lived tradename of $150 million and customer relationships of $210 million. The useful life of the customer relationships identifiable intangible asset is estimated to be 20 years. The following unaudited pro forma summary presents consolidated financial information as if Norcraft had been acquired on January 1, 2014. The unaudited pro forma financial information is based on historical results of operations and financial position of the Company and Norcraft. The pro forma results include: • the effect of certain transactions recorded in historical financial statements of Norcraft (reflected in pro forma 2014), • estimated amortization of a definite-lived customer relationship intangible asset, • the estimated cost of the inventory adjustment to fair value (reflected in pro forma 2014), • interest expense associated with debt that would have been incurred in connection with the acquisition, • the reclassification of Norcraft transaction costs from 2015 to the first quarter of 2014, and • adjustments to conform accounting policies. The unaudited pro forma financial information does not necessarily represent the results that would have occurred had the acquisition occurred on January 1, 2014. In addition, the unaudited pro forma information should not be deemed to be indicative of future results. (In millions, except per share amounts) Three Months Ended Net sales $ 1,045.2 Income from continuing operations 44.8 Basic earnings per common share $ 0.28 Diluted earnings per common share $ 0.27 In March 2015, we acquired a company for approximately $6 million in cash. This acquisition did not have a material impact on our financial statements. |
Discontinued Operations
Discontinued Operations | 3 Months Ended |
Mar. 31, 2016 | |
Discontinued Operations | 5. Discontinued Operations In September 2015, we completed the sale of Waterloo for approximately $14 million in cash, subject to certain post-closing adjustments. We recorded a pre-tax loss of $16.7 million as the result of this sale. Transaction and other sale-related costs were approximately $2.8 million. The estimated tax benefit on the sale was $26.5 million with the after-tax gain of $7.0 million recorded within discontinued operations. The estimated tax benefit resulted primarily from a tax loss in excess of the financial reporting loss as a result of prior period nondeductible asset impairments. Waterloo is presented as a discontinued operation in our financial statements beginning January 1, 2015 and through the date of sale in accordance with ASC 205 requirements. Prior to classifying Waterloo as a discontinued operation, it was reported in the Security segment. The condensed consolidated statements of comprehensive income and condensed consolidated balance sheets for all prior periods have been adjusted to reflect the presentation of Waterloo as discontinued operations. The following table summarizes the results of discontinued operations for the three months ended March 31, 2015. (in millions) Three Months Ended Net sales $ 22.9 Loss from discontinued operations before income taxes $ (0.8 ) Income taxes (0.2 ) Loss from discontinued operations, net of tax $ (0.6 ) |
Goodwill and Identifiable Intan
Goodwill and Identifiable Intangible Assets | 3 Months Ended |
Mar. 31, 2016 | |
Goodwill and Identifiable Intangible Assets | 6. Goodwill and Identifiable Intangible Assets We had goodwill of $1,757.8 million and $1,755.3 million as of March 31, 2016 and December 31, 2015. The $2.5 million increase was primarily due to foreign exchange adjustments. The change in the net carrying amount of goodwill by segment was as follows: (In millions) Cabinets Plumbing Doors Security Total Goodwill at December 31, 2015 (a) $ 937.7 $ 578.6 $ 143.0 $ 96.0 $ 1,755.3 Year-to-date translation adjustments 1.2 — — 1.0 2.2 Acquisition-related adjustments 0.3 — — — 0.3 Goodwill at March 31, 2016 (a) $ 939.2 $ 578.6 $ 143.0 $ 97.0 $ 1,757.8 (a) Net of accumulated impairment losses of $399.5 million in the Doors segment. We also had identifiable intangible assets, principally tradenames, of $993.3 million and $996.7 million as of March 31, 2016 and December 31, 2015, respectively. The $3.4 million decrease in gross identifiable intangible assets was due to the amortization of intangible assets, partially offset by foreign exchange adjustments. The gross carrying value and accumulated amortization by class of identifiable intangible assets as of March 31, 2016 and December 31, 2015 were as follows: (In millions) As of March 31, 2016 As of December 31, 2015 Gross Net Gross Net Carrying Accumulated Book Carrying Accumulated Book Amounts Amortization Value Amounts Amortization Value Indefinite-lived tradenames $ 641.3 $ — $ 641.3 $ 638.6 $ — $ 638.6 Amortizable intangible assets Tradenames 16.4 (7.1 ) 9.3 19.1 (8.6 ) 10.5 Customer and contractual relationships 512.7 (184.4 ) 328.3 511.2 (177.4 ) 333.8 Patents/proprietary technology 57.9 (43.5 ) 14.4 54.7 (40.9 ) 13.8 Total 587.0 (235.0 ) 352.0 585.0 (226.9 ) 358.1 Total identifiable intangibles $ 1,228.3 $ (235.0 ) $ 993.3 $ 1,223.6 $ (226.9 ) $ 996.7 Amortizable identifiable intangible assets, principally tradenames and customer relationships, are subject to amortization over their estimated useful life, ranging from 3 to 30 years, based on the assessment of a number of factors that may impact useful life. These factors include historical and tradename performance with respect to consumer name recognition, geographic market presence, market share, plans for ongoing tradename support and promotion, customer attrition rates and other relevant factors. In the first quarter of 2016, no events or circumstances occurred that would have required us to perform interim impairment tests of goodwill or indefinite-lived intangible assets. |
External Debt and Financing Arr
External Debt and Financing Arrangements | 3 Months Ended |
Mar. 31, 2016 | |
External Debt and Financing Arrangements | 7. External Debt and Financing Arrangements 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 March 31, 2016 and December 31, 2015, the net carrying value of the Senior Notes, net of underwriting commissions, price discounts and debt issuance costs, was $890.1 million and $889.7 million, respectively. We have a $975 million committed revolving credit facility, as well as a term loan in the initial amount of $525 million, both of which expire in July 2018. Both facilities can be used for general corporate purposes. On March 31, 2016 and December 31, 2015, our outstanding borrowings under the revolving credit facility were $450.0 million and zero, respectively; the amounts outstanding under the term loan, net of debt issuance costs, were $279.1 million and $279.0 million, respectively. At March 31, 2016 and December 31, 2015, the current portion of long-term debt was zero. The interest rates under all of these facilities are variable based on LIBOR at the time of the borrowing and the Company’s leverage as measured by a debt to Adjusted EBITDA ratio. Based upon the Company’s debt to Adjusted EBITDA ratio at March 31, 2016, the Company’s borrowing rate could range from LIBOR + 1.0% to LIBOR + 2.0%. At March 31, 2016, we were in compliance with all covenants under these facilities. We retrospectively adopted ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs,” on January 1, 2016, resulting in the reclassification of approximately $3 million of debt issuance costs from other current assets and other assets to long-term debt as of December 31, 2015. Adoption of this new guidance did not impact the Company’s equity, results of operations or cash flows. We currently have uncommitted bank lines of credit in China, which provide for unsecured borrowings for working capital of up to $25.7 million in aggregate, of which $2.8 million and $0.8 million were outstanding, as of March 31, 2016 and December 31, 2015. The weighted-average interest rates on these borrowings were 1.4% and zero in the three-month periods ended March 31, 2016 and March 31, 2015, respectively. |
Financial Instruments
Financial Instruments | 3 Months Ended |
Mar. 31, 2016 | |
Financial Instruments | 8. Financial Instruments We do not enter into financial instruments for trading or speculative purposes. We principally use financial instruments to reduce the impact of changes in foreign currency exchange rates and commodities used as raw materials in our products. The principal derivative financial instruments we enter into on a routine basis are foreign exchange contracts. Derivative financial instruments are recorded at fair value. The counterparties to derivative contracts are major financial institutions. Management currently believes that the risk of incurring material losses is unlikely and that the losses, if any, would be immaterial to the Company. In addition, from time to time, we enter into commodity swaps. Our primary foreign currency hedge contracts pertain to the Canadian dollar, the Mexican peso and the Chinese yuan. The gross U.S. dollar equivalent notional amount of all foreign currency derivative hedges outstanding at March 31, 2016 was $189.6 million, representing a net settlement liability of $2.1 million. Based on foreign exchange rates as of March 31, 2016, we estimate that $2.3 million of net foreign currency derivative losses included in other comprehensive income as of March 31, 2016 will be reclassified to earnings within the next twelve months. The fair values of derivative instruments on the consolidated balance sheets as of March 31, 2016 and December 31, 2015 were: (In millions) Fair Value Location March 31, December 31, Assets Foreign exchange contracts Other current assets $ 1.6 $ 6.7 Net investment hedges Other current assets — 0.1 Total assets $ 1.6 $ 6.8 Liabilities Foreign exchange contracts Other current liabilities $ 3.6 $ 3.1 Net investment hedges Other current liabilities 0.1 — Total current liabilities $ 3.7 $ 3.1 The effects of derivative financial instruments on the statements of comprehensive income for the three months ended March 31, 2016 and 2015 were: (In millions) Type of hedge Gain Recognized in Income Location March 31, March 31, Cash flow Cost of products sold $ 0.7 $ 1.0 Fair value Other (income) expense, net 0.5 1.0 Total $ 1.2 $ 2.0 The effective portion of cash flow hedges recognized in other comprehensive income were net (losses) gains of $(4.6) million and $3.9 million at March 31, 2016 and 2015, respectively. In the three months ended March 31, 2016 and 2015, the ineffective portion of cash flow hedges recognized in other (income) expense, net, was insignificant. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Measurements | 9. Fair Value Measurements 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 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 3. The carrying value, net of underwriting commissions, price discounts, and debt issuance costs and fair value of debt as of March 31, 2016 and December 31, 2015 were as follows: (In millions) March 31, 2016 December 31, 2015 Carrying Fair Carrying Fair Revolving credit facility $ 450.0 $ 450.0 $ — $ — Notes payable to bank 2.8 2.8 0.8 0.8 Term loan 279.1 280.0 279.0 280.0 Senior Notes 890.1 909.4 889.7 894.1 The estimated fair value of our term loan, revolving credit facility and notes payable to bank are determined primarily using broker quotes, which are level 2 inputs. The estimated fair value of our Senior Notes is determined by using quoted market prices of our debt securities, which are level 1 inputs. Assets and liabilities measured at fair value on a recurring basis as of March 31, 2016 and December 31, 2015 were as follows: (In millions) Fair Value March 31, December 31, Assets Derivative financial instruments (level 2) $ 1.6 $ 6.8 Deferred compensation program assets (level 2) 2.9 3.1 Total assets $ 4.5 $ 9.9 Liabilities Derivative financial instruments (level 2) $ 3.7 $ 3.1 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Mar. 31, 2016 | |
Accumulated Other Comprehensive Loss | 10. Accumulated Other Comprehensive Loss Total accumulated other comprehensive loss consists of net income and other changes in business equity from transactions and other events from sources other than shareholders. It includes currency translation gains and losses, unrealized gains and losses from derivative instruments designated as cash flow hedges, and defined benefit plan adjustments. The components of and changes in accumulated other comprehensive loss, net of tax, were as follows: (In millions) Foreign Derivative Defined (a) Accumulated Balance at December 31, 2015 $ (13.3 ) $ 2.1 $ (41.3 ) $ (52.5 ) Amounts classified into accumulated other comprehensive loss 11.4 (3.9 ) 7.2 14.7 Amounts reclassified from accumulated other comprehensive loss — (0.2 ) (0.9 ) (1.1 ) Net current-period other comprehensive income (loss) 11.4 (4.1 ) 6.3 13.6 Balance at March 31, 2016 $ (1.9 ) $ (2.0 ) $ (35.0 ) $ (38.9 ) (a) See Note 11, “Defined Benefit Plans,” for further information on the adjustments related to defined benefit plans. The reclassifications out of accumulated other comprehensive loss for the three months ended March 31, 2016 and 2015 were as follows: (In millions) Details about Accumulated Other Comprehensive Loss Components Amount Reclassified from Affected Line Item in the Statement of Comprehensive Income 2016 2015 Gains on cash flow hedges Foreign exchange contracts $ 0.6 $ 1.0 Cost of products sold (0.4 ) (0.5 ) Tax expense $ 0.2 $ 0.5 Net of tax Defined benefit plan items Recognition of prior service cost $ 2.3 $ 3.5 (a) Recognition of actuarial losses (0.9 ) — (a) 1.4 3.5 Total before tax (0.5 ) (1.4 ) Tax expense $ 0.9 $ 2.1 Net of tax Total reclassifications for the period $ 1.1 $ 2.6 Net of tax (a) These accumulated other comprehensive loss components are included in the computation of net periodic benefit cost. Refer to Note 11, “Defined Benefit Plans,” for additional information. |
Defined Benefit Plans
Defined Benefit Plans | 3 Months Ended |
Mar. 31, 2016 | |
Defined Benefit Plans | 11. Defined Benefit Plans The components of net periodic benefit cost for pension and postretirement benefits for the three months ended March 31, 2016 and 2015 were as follows: (In millions) Three Months Ended March 31, Pension Benefits Postretirement Benefits 2016 2015 2016 2015 Service cost $ 2.8 $ 3.2 $ — $ — Interest cost 8.7 8.5 0.1 0.2 Expected return on plan assets (9.5 ) (10.2 ) — — Recognition of prior service credits — — (2.3 ) (3.5 ) Recognition of actuarial losses — — 0.9 — Net periodic benefit cost $ 2.0 $ 1.5 $ (1.3 ) $ (3.3 ) In the first quarter of 2013, the Company communicated a plan amendment to reduce health benefits to certain retired employees. Due to the risk of litigation at the time of the initial communication, the Company elected to defer the full recognition of the benefit arising from the plan amendment. Following a favorable court decision in the first quarter of 2016, the Company determined that it was now probable that it would realize the benefit from the plan amendment. As a result, the Company performed a re-measurement of the affected retiree plan liability as of March 31, 2016. This remeasurement resulted in a $10.7 million reduction of accrued retiree benefit plan liabilities and a corresponding increase in prior service credits. These prior service credits will be amortized over the next 14 months. In addition, we recorded a $0.9 million actuarial loss during the first quarter of 2016. See Note 10, “Accumulated Other Comprehensive Loss,” for information on the impact of the remeasurement on other comprehensive loss. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2016 | |
Income Taxes | 12. Income Taxes The effective income tax rates for the three months ended March 31, 2016 and 2015 were 33.7% and 34.2%, respectively. The effective income tax rates in 2016 and 2015 were favorably impacted by the tax benefit attributable to the Domestic Production Activity (Internal Revenue Code Section 199) Deduction, favorable tax rates in foreign jurisdictions, and a benefit associated with the U.S. research and development credit, offset by state and local taxes and increases to uncertain tax positions. It is reasonably possible that, within the next 12 months, total unrecognized tax benefits may decrease in the range of $1 million to $6 million, primarily as a result of the conclusion of pending U.S. federal, state and foreign income tax proceedings. |
Product Warranties
Product Warranties | 3 Months Ended |
Mar. 31, 2016 | |
Product Warranties | 13. Product Warranties We generally record warranty expense at the time of sale. 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 three months ended March 31, 2016 and 2015, respectively. (In millions) Three Months Ended 2016 2015 Reserve balance at January 1, $ 16.0 $ 13.0 Provision for warranties issued 7.1 7.1 Settlements made (in cash or in kind) (6.7 ) (6.6 ) Reserve balance at March 31, $ 16.4 $ 13.5 The increase of $2.9 million in product warranty liability as of March 31, 2016 compared to the same period of 2015 is primarily due to Norcraft acquisition. |
Information on Business Segment
Information on Business Segments | 3 Months Ended |
Mar. 31, 2016 | |
Information on Business Segments | 14. Information on Business Segments Net sales and operating income for the three months ended March 31, 2016 and 2015 by segment were as follows: Three Months Ended March 31, (In millions) 2016 2015 % Change Net Sales Cabinets $ 550.0 $ 411.1 33.8 % Plumbing 338.6 333.6 1.5 Doors 94.3 83.2 13.3 Security 123.6 122.9 0.6 Net sales $ 1,106.5 $ 950.8 16.4 % Operating Income (Loss) Cabinets $ 35.7 $ 13.0 174.6 % Plumbing 71.5 63.8 12.1 Doors 4.2 (1.2 ) nm Security 5.6 8.0 (30.0 ) Less: Corporate expenses (21.5 ) (16.3 ) (31.9 ) Operating income $ 95.5 $ 67.3 41.9 % Corporate expenses General and administrative expense $ (21.4 ) $ (17.9 ) Defined benefit plan costs 0.8 1.6 Recognition of defined benefit plan actuarial losses (0.9 ) — Total Corporate expenses $ (21.5 ) $ (16.3 ) (31.9 )% |
Restructuring and Other Charges
Restructuring and Other Charges | 3 Months Ended |
Mar. 31, 2016 | |
Restructuring and Other Charges | 15. Restructuring and Other Charges Pre-tax restructuring and other charges for the three months ended March 31, 2016 and 2015 are shown below. (In millions) Three Months Ended March 31, 2016 Restructuring Other (a) Total Cabinets $ 1.8 $ — $ 1.8 Plumbing 0.4 — 0.4 Security 3.4 2.5 5.9 Total $ 5.6 $ 2.5 $ 8.1 Restructuring and other charges in the first quarter of 2016 largely related to severance costs and accelerated depreciation to relocate a manufacturing facility within our Security segment and severance costs within our Cabinets segment. (In millions) Three Months Ended March 31, 2015 Restructuring Other (a) Total Cabinets $ 0.9 $ — $ 0.9 Plumbing 1.0 0.1 1.1 Security 1.9 — 1.9 Corporate 0.9 — 0.9 Total $ 4.7 $ 0.1 $ 4.8 (a) “Other Charges” represent charges directly related to restructuring initiatives that cannot be reported as restructuring under U.S. GAAP. Such costs may include losses on disposal of inventories, trade receivables allowances from exiting product lines, accelerated depreciation resulting from the closure of facilities and gains or losses on the sale of previously closed facilities. Restructuring and other charges in the first quarter of 2015 related to severance and supply chain initiatives. Reconciliation of Restructuring Liability (In millions) Balance at 2016 Cash (a) Non-Cash Write-offs (b) Balance at Workforce reduction costs $ 10.4 $ 5.4 $ (1.8 ) $ — $ 14.0 Other 0.5 0.2 (0.3 ) (0.1 ) 0.3 $ 10.9 $ 5.6 $ (2.1 ) $ (0.1 ) $ 14.3 (a) Cash expenditures primarily related to severance charges. (b) Non-cash write-offs include long-lived asset impairment charges attributable to restructuring actions |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share | 16. Earnings Per Share The computations of earnings per common share were as follows: (In millions, except per share data) Three Months Ended 2016 2015 Income from continuing operations, net of tax $ 55.7 $ 40.9 Less: Noncontrolling interest — 0.3 Income from continuing operations for EPS 55.7 40.6 Loss from discontinued operations — (0.6 ) Net income attributable to Fortune Brands $ 55.7 $ 40.0 Earnings (loss) per common share Basic Continuing operations $ 0.36 $ 0.26 Discontinued operations — (0.01 ) Net income attributable to Fortune Brands common stockholders $ 0.36 $ 0.25 Diluted Continuing operations $ 0.35 $ 0.25 Discontinued operations — — Net income attributable to Fortune Brands common stockholders $ 0.35 $ 0.25 Basic average shares outstanding 155.7 158.8 Stock-based awards 2.8 3.8 Diluted average shares outstanding 158.5 162.6 Antidilutive stock-based awards excluded from weighted-average number of shares outstanding for diluted earnings per share 0.6 0.8 |
Contingencies
Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Contingencies | 17. Contingencies Litigation We are defendants in lawsuits associated with the normal conduct of our businesses and operations. It is not possible to predict the outcome of the pending actions, and, as with any litigation, it is possible that these actions could be decided unfavorably to the Company. The Company believes that there are meritorious defenses to these actions and that these actions will not have a material adverse effect upon our results of operations, cash flows or financial condition, and where appropriate, these actions are being vigorously contested. 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 months ended March 31, 2016 and 2015. 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. 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. |
Balance Sheet Information (Tabl
Balance Sheet Information (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Supplemental Information on Balance Sheets | Supplemental information on our balance sheets is as follows: (In millions) March 31, December 31, Inventories: Raw materials and supplies $ 249.5 $ 237.8 Work in process 60.8 60.2 Finished products 287.6 257.6 Total inventories $ 597.9 $ 555.6 Property, plant and equipment, gross $ 1,577.4 $ 1,551.7 Less: accumulated depreciation 941.7 923.8 Property, plant and equipment, net $ 635.7 $ 627.9 |
Acquisitions (Tables)
Acquisitions (Tables) - Norcraft Companies, Inc [Member] | 3 Months Ended |
Mar. 31, 2016 | |
Preliminary Allocation of Purchase Price to Fair Value of Assets Acquired and Liabilities Assumed | The following table summarizes the preliminary allocation of the purchase price to the fair value of assets acquired and liabilities assumed as of the date of the acquisition. (In millions) Accounts receivable $ 31.0 Inventories 28.7 Property, plant and equipment 45.7 Goodwill 304.9 Identifiable intangible assets 360.0 Other assets 9.3 Total assets 779.6 Deferred tax liabilities 101.3 Other liabilities and accruals 29.7 Net assets acquired (a) $ 648.6 (a) Net assets exclude $15.5 million of cash transferred to the Company as the result of the Norcraft acquisition. |
Proforma Consolidated Financial Information | The unaudited pro forma financial information does not necessarily represent the results that would have occurred had the acquisition occurred on January 1, 2014. In addition, the unaudited pro forma information should not be deemed to be indicative of future results. (In millions, except per share amounts) Three Months Ended Net sales $ 1,045.2 Income from continuing operations 44.8 Basic earnings per common share $ 0.28 Diluted earnings per common share $ 0.27 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Summary of the Results of Discontinued Operations | The following table summarizes the results of discontinued operations for the three months ended March 31, 2015. (in millions) Three Months Ended Net sales $ 22.9 Loss from discontinued operations before income taxes $ (0.8 ) Income taxes (0.2 ) Loss from discontinued operations, net of tax $ (0.6 ) |
Goodwill and Identifiable Int27
Goodwill and Identifiable Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Change in Net Carrying Amount of Goodwill by Segment | The change in the net carrying amount of goodwill by segment was as follows: (In millions) Cabinets Plumbing Doors Security Total Goodwill at December 31, 2015 (a) $ 937.7 $ 578.6 $ 143.0 $ 96.0 $ 1,755.3 Year-to-date translation adjustments 1.2 — — 1.0 2.2 Acquisition-related adjustments 0.3 — — — 0.3 Goodwill at March 31, 2016 (a) $ 939.2 $ 578.6 $ 143.0 $ 97.0 $ 1,757.8 (a) Net of accumulated impairment losses of $399.5 million in the Doors segment. |
Gross Carrying Value and Accumulated Amortization by Class of Identifiable Intangible Assets | The gross carrying value and accumulated amortization by class of identifiable intangible assets as of March 31, 2016 and December 31, 2015 were as follows: (In millions) As of March 31, 2016 As of December 31, 2015 Gross Net Gross Net Carrying Accumulated Book Carrying Accumulated Book Amounts Amortization Value Amounts Amortization Value Indefinite-lived tradenames $ 641.3 $ — $ 641.3 $ 638.6 $ — $ 638.6 Amortizable intangible assets Tradenames 16.4 (7.1 ) 9.3 19.1 (8.6 ) 10.5 Customer and contractual relationships 512.7 (184.4 ) 328.3 511.2 (177.4 ) 333.8 Patents/proprietary technology 57.9 (43.5 ) 14.4 54.7 (40.9 ) 13.8 Total 587.0 (235.0 ) 352.0 585.0 (226.9 ) 358.1 Total identifiable intangibles $ 1,228.3 $ (235.0 ) $ 993.3 $ 1,223.6 $ (226.9 ) $ 996.7 |
Financial Instruments (Tables)
Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Fair Values of Derivative Instruments | The fair values of derivative instruments on the consolidated balance sheets as of March 31, 2016 and December 31, 2015 were: (In millions) Fair Value Location March 31, December 31, Assets Foreign exchange contracts Other current assets $ 1.6 $ 6.7 Net investment hedges Other current assets — 0.1 Total assets $ 1.6 $ 6.8 Liabilities Foreign exchange contracts Other current liabilities $ 3.6 $ 3.1 Net investment hedges Other current liabilities 0.1 — Total current liabilities $ 3.7 $ 3.1 |
Effects of Derivative Financial Instruments on Statements of Comprehensive Income | The effects of derivative financial instruments on the statements of comprehensive income for the three months ended March 31, 2016 and 2015 were: (In millions) Type of hedge Gain Recognized in Income Location March 31, March 31, Cash flow Cost of products sold $ 0.7 $ 1.0 Fair value Other (income) expense, net 0.5 1.0 Total $ 1.2 $ 2.0 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Carrying Value, Net of Underwriting Commissions, Price Discounts, and Debt Issuance Costs and Fair Value of Debt | The carrying value, net of underwriting commissions, price discounts, and debt issuance costs and fair value of debt as of March 31, 2016 and December 31, 2015 were as follows: (In millions) March 31, 2016 December 31, 2015 Carrying Fair Carrying Fair Revolving credit facility $ 450.0 $ 450.0 $ — $ — Notes payable to bank 2.8 2.8 0.8 0.8 Term loan 279.1 280.0 279.0 280.0 Senior Notes 890.1 909.4 889.7 894.1 |
Assets and Liabilities Measured at Fair Value on Recurring Basis | Assets and liabilities measured at fair value on a recurring basis as of March 31, 2016 and December 31, 2015 were as follows: (In millions) Fair Value March 31, December 31, Assets Derivative financial instruments (level 2) $ 1.6 $ 6.8 Deferred compensation program assets (level 2) 2.9 3.1 Total assets $ 4.5 $ 9.9 Liabilities Derivative financial instruments (level 2) $ 3.7 $ 3.1 |
Accumulated Other Comprehensi30
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Components of and Changes in Accumulated Other Comprehensive Loss, Net of Tax | The components of and changes in accumulated other comprehensive loss, net of tax, were as follows: (In millions) Foreign Derivative Defined (a) Accumulated Balance at December 31, 2015 $ (13.3 ) $ 2.1 $ (41.3 ) $ (52.5 ) Amounts classified into accumulated other comprehensive loss 11.4 (3.9 ) 7.2 14.7 Amounts reclassified from accumulated other comprehensive loss — (0.2 ) (0.9 ) (1.1 ) Net current-period other comprehensive income (loss) 11.4 (4.1 ) 6.3 13.6 Balance at March 31, 2016 $ (1.9 ) $ (2.0 ) $ (35.0 ) $ (38.9 ) (a) See Note 11, “Defined Benefit Plans,” for further information on the adjustments related to defined benefit plans. |
Reclassifications Out of Accumulated Other Comprehensive Loss | The reclassifications out of accumulated other comprehensive loss for the three months ended March 31, 2016 and 2015 were as follows: (In millions) Details about Accumulated Other Comprehensive Loss Components Amount Reclassified from Affected Line Item in the Statement of Comprehensive Income 2016 2015 Gains on cash flow hedges Foreign exchange contracts $ 0.6 $ 1.0 Cost of products sold (0.4 ) (0.5 ) Tax expense $ 0.2 $ 0.5 Net of tax Defined benefit plan items Recognition of prior service cost $ 2.3 $ 3.5 (a) Recognition of actuarial losses (0.9 ) — (a) 1.4 3.5 Total before tax (0.5 ) (1.4 ) Tax expense $ 0.9 $ 2.1 Net of tax Total reclassifications for the period $ 1.1 $ 2.6 Net of tax (a) These accumulated other comprehensive loss components are included in the computation of net periodic benefit cost. Refer to Note 11, “Defined Benefit Plans,” for additional information. |
Defined Benefit Plans (Tables)
Defined Benefit Plans (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Components of Net Periodic Benefit Cost for Pension and Postretirement Benefits | The components of net periodic benefit cost for pension and postretirement benefits for the three months ended March 31, 2016 and 2015 were as follows: (In millions) Three Months Ended March 31, Pension Benefits Postretirement Benefits 2016 2015 2016 2015 Service cost $ 2.8 $ 3.2 $ — $ — Interest cost 8.7 8.5 0.1 0.2 Expected return on plan assets (9.5 ) (10.2 ) — — Recognition of prior service credits — — (2.3 ) (3.5 ) Recognition of actuarial losses — — 0.9 — Net periodic benefit cost $ 2.0 $ 1.5 $ (1.3 ) $ (3.3 ) |
Product Warranties (Tables)
Product Warranties (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Activity Related to Product Warranty Liability | The following table summarizes activity related to our product warranty liability for the three months ended March 31, 2016 and 2015, respectively. (In millions) Three Months Ended 2016 2015 Reserve balance at January 1, $ 16.0 $ 13.0 Provision for warranties issued 7.1 7.1 Settlements made (in cash or in kind) (6.7 ) (6.6 ) Reserve balance at March 31, $ 16.4 $ 13.5 |
Information on Business Segme33
Information on Business Segments (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Net Sales and Operating Income by Segment | Net sales and operating income for the three months ended March 31, 2016 and 2015 by segment were as follows: Three Months Ended March 31, (In millions) 2016 2015 % Change Net Sales Cabinets $ 550.0 $ 411.1 33.8 % Plumbing 338.6 333.6 1.5 Doors 94.3 83.2 13.3 Security 123.6 122.9 0.6 Net sales $ 1,106.5 $ 950.8 16.4 % Operating Income (Loss) Cabinets $ 35.7 $ 13.0 174.6 % Plumbing 71.5 63.8 12.1 Doors 4.2 (1.2 ) nm Security 5.6 8.0 (30.0 ) Less: Corporate expenses (21.5 ) (16.3 ) (31.9 ) Operating income $ 95.5 $ 67.3 41.9 % Corporate expenses General and administrative expense $ (21.4 ) $ (17.9 ) Defined benefit plan costs 0.8 1.6 Recognition of defined benefit plan actuarial losses (0.9 ) — Total Corporate expenses $ (21.5 ) $ (16.3 ) (31.9 )% |
Restructuring and Other Charg34
Restructuring and Other Charges (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Pre Tax Restructuring and Other Charges | Pre-tax restructuring and other charges for the three months ended March 31, 2016 and 2015 are shown below. (In millions) Three Months Ended March 31, 2016 Restructuring Other (a) Total Cabinets $ 1.8 $ — $ 1.8 Plumbing 0.4 — 0.4 Security 3.4 2.5 5.9 Total $ 5.6 $ 2.5 $ 8.1 Restructuring and other charges in the first quarter of 2016 largely related to severance costs and accelerated depreciation to relocate a manufacturing facility within our Security segment and severance costs within our Cabinets segment. (In millions) Three Months Ended March 31, 2015 Restructuring Other (a) Total Cabinets $ 0.9 $ — $ 0.9 Plumbing 1.0 0.1 1.1 Security 1.9 — 1.9 Corporate 0.9 — 0.9 Total $ 4.7 $ 0.1 $ 4.8 (a) “Other Charges” represent charges directly related to restructuring initiatives that cannot be reported as restructuring under U.S. 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. |
Reconciliation of Restructuring Liability | Reconciliation of Restructuring Liability (In millions) Balance at 2016 Cash (a) Non-Cash Write-offs (b) Balance at Workforce reduction costs $ 10.4 $ 5.4 $ (1.8 ) $ — $ 14.0 Other 0.5 0.2 (0.3 ) (0.1 ) 0.3 $ 10.9 $ 5.6 $ (2.1 ) $ (0.1 ) $ 14.3 (a) Cash expenditures primarily related to severance charges. (b) Non-cash write-offs include long-lived asset impairment charges attributable to restructuring actions |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Computations of Earnings per Common Share | The computations of earnings per common share were as follows: (In millions, except per share data) Three Months Ended 2016 2015 Income from continuing operations, net of tax $ 55.7 $ 40.9 Less: Noncontrolling interest — 0.3 Income from continuing operations for EPS 55.7 40.6 Loss from discontinued operations — (0.6 ) Net income attributable to Fortune Brands $ 55.7 $ 40.0 Earnings (loss) per common share Basic Continuing operations $ 0.36 $ 0.26 Discontinued operations — (0.01 ) Net income attributable to Fortune Brands common stockholders $ 0.36 $ 0.25 Diluted Continuing operations $ 0.35 $ 0.25 Discontinued operations — — Net income attributable to Fortune Brands common stockholders $ 0.35 $ 0.25 Basic average shares outstanding 155.7 158.8 Stock-based awards 2.8 3.8 Diluted average shares outstanding 158.5 162.6 Antidilutive stock-based awards excluded from weighted-average number of shares outstanding for diluted earnings per share 0.6 0.8 |
Balance Sheet Information - Sup
Balance Sheet Information - Supplemental Information on Balance Sheets (Detail) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Inventories: | ||
Raw materials and supplies | $ 249.5 | $ 237.8 |
Work in process | 60.8 | 60.2 |
Finished products | 287.6 | 257.6 |
Total inventories | 597.9 | 555.6 |
Property, plant and equipment, gross | 1,577.4 | 1,551.7 |
Less: accumulated depreciation | 941.7 | 923.8 |
Property, plant and equipment, net | $ 635.7 | $ 627.9 |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Detail) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | ||
May. 31, 2015 | Mar. 31, 2015 | Mar. 31, 2016 | Mar. 31, 2015 | |
Business Acquisition [Line Items] | ||||
Operating income | $ 95.5 | $ 67.3 | ||
Net sales | 1,106.5 | $ 950.8 | ||
Payment to acquire business | $ 6 | |||
Norcraft Companies, Inc [Member] | ||||
Business Acquisition [Line Items] | ||||
Business acquisition purchase price | $ 648.6 | |||
Operating income | 3 | |||
Acquisition related transaction costs | 15.2 | |||
Net sales | 89 | |||
Goodwill expected to be deductible for income tax purposes | 60.1 | |||
Identifiable intangible assets, customer relationships | 210 | |||
Indefinite intangible assets, tradename | $ 150 | |||
Payment to acquire business | $ 15.5 | |||
Norcraft Companies, Inc [Member] | Customer Relationships | ||||
Business Acquisition [Line Items] | ||||
Amortizable identifiable intangible assets, estimated useful life | 20 years |
Acquisitions - Preliminary Allo
Acquisitions - Preliminary Allocation of Purchase Price to Fair Value of Assets Acquired and Liabilities Assumed (Detail) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 | May. 31, 2015 | |
Business Acquisition [Line Items] | ||||
Goodwill | [1] | $ 1,757.8 | $ 1,755.3 | |
Norcraft Companies, Inc [Member] | ||||
Business Acquisition [Line Items] | ||||
Accounts receivable | $ 31 | |||
Inventories | 28.7 | |||
Property, plant and equipment | 45.7 | |||
Goodwill | 304.9 | |||
Identifiable intangible assets | 360 | |||
Other assets | 9.3 | |||
Total assets | 779.6 | |||
Deferred tax liabilities | 101.3 | |||
Other liabilities and accruals | 29.7 | |||
Net assets acquired | [2] | $ 648.6 | ||
[1] | Net of accumulated impairment losses of $399.5 million in the Doors segment. | |||
[2] | Net assets exclude $15.5 million of cash transferred to the Company as the result of the Norcraft acquisition. |
Acquisitions - Preliminary Al39
Acquisitions - Preliminary Allocation of Purchase Price to Fair Value of Assets Acquired and Liabilities Assumed (Parenthetical) (Detail) - USD ($) $ in Millions | 1 Months Ended | |
May. 31, 2015 | Mar. 31, 2015 | |
Business Acquisition [Line Items] | ||
Payment to acquire business | $ 6 | |
Norcraft Companies, Inc [Member] | ||
Business Acquisition [Line Items] | ||
Payment to acquire business | $ 15.5 |
Acquisitions - ProForma Consoli
Acquisitions - ProForma Consolidated Financial Information (Detail) $ / shares in Units, $ in Millions | 3 Months Ended |
Mar. 31, 2015USD ($)$ / shares | |
Business Acquisition [Line Items] | |
Net sales | $ | $ 1,045.2 |
Income from continuing operations | $ | $ 44.8 |
Basic earnings per common share | $ / shares | $ 0.28 |
Diluted earnings per common share | $ / shares | $ 0.27 |
Discontinued Operations - Addit
Discontinued Operations - Additional Information (Detail) - Waterloo [Member] $ in Millions | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Proceeds from sale of discontinued operation | $ 14 |
Gain on disposal of discontinued operations | $ 7 |
Discontinued operation beginning period | Jan. 1, 2015 |
Pre-tax loss on sale of discontinued operations | $ 16.7 |
Transaction and other sale-related costs of discontinued operation | 2.8 |
Estimated tax effect on sale of discontinued operation | $ 26.5 |
Discontinued Operations - Summa
Discontinued Operations - Summary of Operating Results and Summary of Major Classes of Assets and Liabilities Reflected as Discontinued Operations on Consolidated Comprehensive Income and Balance Sheet (Detail) $ in Millions | 3 Months Ended |
Mar. 31, 2015USD ($) | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Loss from discontinued operations, net of tax | $ (0.6) |
Waterloo [Member] | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Net sales | 22.9 |
Loss from discontinued operations before income taxes | (0.8) |
Income taxes | (0.2) |
Loss from discontinued operations, net of tax | $ (0.6) |
Goodwill and Identifiable Int43
Goodwill and Identifiable Intangible Assets - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2016 | Dec. 31, 2015 | ||
Goodwill [Line Items] | |||
Goodwill | [1] | $ 1,757.8 | $ 1,755.3 |
Goodwill increase (decrease) due to foreign exchange adjustments | 2.5 | ||
Other intangible assets, net of accumulated amortization | 993.3 | $ 996.7 | |
Decrease in gross identifiable intangible assets | $ (3.4) | ||
Minimum [Member] | Tradenames and Customer Relationship [Member] | |||
Goodwill [Line Items] | |||
Amortizable identifiable intangible assets, estimated useful life | 3 years | ||
Maximum [Member] | Tradenames and Customer Relationship [Member] | |||
Goodwill [Line Items] | |||
Amortizable identifiable intangible assets, estimated useful life | 30 years | ||
[1] | Net of accumulated impairment losses of $399.5 million in the Doors segment. |
Goodwill and Identifiable Int44
Goodwill and Identifiable Intangible Assets - Change in Net Carrying Amount of Goodwill by Segment (Detail) $ in Millions | 3 Months Ended | |
Mar. 31, 2016USD ($) | ||
Goodwill [Line Items] | ||
Beginning Balance | $ 1,755.3 | [1] |
Year-to-date translation adjustments | 2.2 | |
Acquisition-related adjustments | 0.3 | |
Ending Balance | 1,757.8 | [1] |
Doors [Member] | ||
Goodwill [Line Items] | ||
Beginning Balance | 143 | [1] |
Ending Balance | 143 | [1] |
Cabinets [Member] | ||
Goodwill [Line Items] | ||
Beginning Balance | 937.7 | [1] |
Year-to-date translation adjustments | 1.2 | |
Acquisition-related adjustments | 0.3 | |
Ending Balance | 939.2 | [1] |
Plumbing [Member] | ||
Goodwill [Line Items] | ||
Beginning Balance | 578.6 | [1] |
Ending Balance | 578.6 | [1] |
Security [Member] | ||
Goodwill [Line Items] | ||
Beginning Balance | 96 | [1] |
Year-to-date translation adjustments | 1 | |
Ending Balance | $ 97 | [1] |
[1] | Net of accumulated impairment losses of $399.5 million in the Doors segment. |
Goodwill and Identifiable Int45
Goodwill and Identifiable Intangible Assets - Change in Net Carrying Amount of Goodwill by Segment (Parenthetical) (Detail) $ in Millions | Mar. 31, 2016USD ($) |
Doors [Member] | |
Goodwill [Line Items] | |
Accumulated impairment losses | $ 399.5 |
Goodwill and Identifiable Int46
Goodwill and Identifiable Intangible Assets - Gross Carrying Value and Accumulated Amortization by Class of Identifiable Intangible Assets (Detail) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Intangible Assets [Line Items] | ||
Gross Carrying Amounts, Total identifiable intangibles | $ 1,228.3 | $ 1,223.6 |
Accumulated Amortization, Total identifiable intangibles | (235) | (226.9) |
Net Book Value, Total identifiable intangibles | 993.3 | 996.7 |
Gross Carrying Amounts, Indefinite-lived tradenames | 641.3 | 638.6 |
Accumulated Amortization, Indefinite-lived tradenames | 0 | 0 |
Net Book Value, Indefinite-lived tradenames | 641.3 | 638.6 |
Gross Carrying Amounts, Finite Lived | 587 | 585 |
Accumulated Amortization, Finite Lived | (235) | (226.9) |
Net Book Value, Finite Lived | 352 | 358.1 |
Tradenames | ||
Intangible Assets [Line Items] | ||
Gross Carrying Amounts, Finite Lived | 16.4 | 19.1 |
Accumulated Amortization, Finite Lived | (7.1) | (8.6) |
Net Book Value, Finite Lived | 9.3 | 10.5 |
Customer and contractual relationships [Member] | ||
Intangible Assets [Line Items] | ||
Gross Carrying Amounts, Finite Lived | 512.7 | 511.2 |
Accumulated Amortization, Finite Lived | (184.4) | (177.4) |
Net Book Value, Finite Lived | 328.3 | 333.8 |
Patents/proprietary technology [Member] | ||
Intangible Assets [Line Items] | ||
Gross Carrying Amounts, Finite Lived | 57.9 | 54.7 |
Accumulated Amortization, Finite Lived | (43.5) | (40.9) |
Net Book Value, Finite Lived | $ 14.4 | $ 13.8 |
External Debt and Financing A47
External Debt and Financing Arrangements - Additional Information (Detail) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Jun. 30, 2015 | Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Debt Instrument [Line Items] | ||||
Current portion of long-term debt | $ 0 | $ 0 | ||
Revolving credit facility, extended expiration date | 2018-07 | |||
Term loan, extended expiration date | 2018-07 | |||
Other current assets | $ 104,300,000 | 121,300,000 | ||
Long-term debt | 1,619,200,000 | 1,168,700,000 | ||
Uncommitted bank lines of credit, which provide for unsecured borrowings for working capital | 25,700,000 | |||
Uncommitted bank lines of credit, which provide for unsecured borrowings for working capital amount outstanding | $ 2,800,000 | 800,000 | ||
Weighted-average interest rates on borrowings | 1.40% | 0.00% | ||
Accounting Standards Update 2015-03 | Restatement Adjustment | ||||
Debt Instrument [Line Items] | ||||
Other current assets | (3,000,000) | |||
Long-term debt | (3,000,000) | |||
LIBOR [Member] | Minimum [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate over LIBOR | 1.00% | |||
LIBOR [Member] | Maximum [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate over LIBOR | 2.00% | |||
Senior Unsecured Notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Senior unsecured notes, price | $ 900,000,000 | |||
Senior notes, outstanding amount | $ 890,100,000 | 889,700,000 | ||
Senior Unsecured Notes [Member] | Notes Due 2020 [Member] | ||||
Debt Instrument [Line Items] | ||||
Senior unsecured notes, price | $ 400,000,000 | |||
Senior unsecured notes, maturity period | 5 years | |||
Senior unsecured notes, maturity year | 2,020 | |||
Senior unsecured notes, coupon rate | 3.00% | |||
Senior Unsecured Notes [Member] | Notes Due 2025 [Member] | ||||
Debt Instrument [Line Items] | ||||
Senior unsecured notes, price | $ 500,000,000 | |||
Senior unsecured notes, maturity period | 10 years | |||
Senior unsecured notes, maturity year | 2,025 | |||
Senior unsecured notes, coupon rate | 4.00% | |||
Revolving Credit Facility [Member] | ||||
Debt Instrument [Line Items] | ||||
Revolving credit facility, maximum borrowing capacity | 975,000,000 | |||
Term loan, outstanding borrowings | 450,000,000 | 0 | ||
Term Loan Facilities [Member] | ||||
Debt Instrument [Line Items] | ||||
Revolving credit facility, maximum borrowing capacity | 525,000,000 | |||
Term loan, outstanding borrowings | $ 279,100,000 | $ 279,000,000 |
Financial Instruments - Additio
Financial Instruments - Additional Information (Detail) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Derivative [Line Items] | ||
Net settlement asset | $ 2,100,000 | |
Estimated amount of net foreign currency derivative gains (loss) in other comprehensive income reclassified to earnings | (2,300,000) | |
Foreign exchange contracts [Member] | ||
Derivative [Line Items] | ||
Notional amount of foreign currency derivative hedges | 189,600,000 | |
Cash flow hedge [Member] | ||
Derivative [Line Items] | ||
Net gains (losses) recognized in OCI | $ (4,600,000) | $ 3,900,000 |
Financial Instruments - Fair Va
Financial Instruments - Fair Values of Derivative Instruments (Detail) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Derivatives, Fair Value [Line Items] | ||
Derivative assets, fair value | $ 1.6 | $ 6.8 |
Derivative liabilities, fair value | 3.7 | 3.1 |
Net investment hedges [Member] | Other current assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets, fair value | 0.1 | |
Net investment hedges [Member] | Other current liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liabilities, fair value | 0.1 | |
Foreign exchange contracts [Member] | Other current assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets, fair value | 1.6 | 6.7 |
Foreign exchange contracts [Member] | Other current liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liabilities, fair value | $ 3.6 | $ 3.1 |
Financial Instruments - Effects
Financial Instruments - Effects of Derivative Financial Instruments on Consolidated Statements of Income (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain Recognized in Income | $ 1.2 | $ 2 |
Cash flow hedge [Member] | Cost of products sold [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain Recognized in Income | 0.7 | 1 |
Fair value hedge [Member] | Other (income) expense, net [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain Recognized in Income | $ 0.5 | $ 1 |
Fair Value Measurement - Carryi
Fair Value Measurement - Carrying Value, Net of Underwriting Commissions, Price Discounts, and Debt Issuance Costs and Fair Value of Debt (Detail) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Carrying Value | Revolving Credit Facility [Member] | ||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||
Fair Value | $ 450 | |
Carrying Value | Term Loan Facilities [Member] | ||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||
Fair Value | 279.1 | $ 279 |
Carrying Value | Notes Payable to Banks [Member] | ||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||
Fair Value | 2.8 | 0.8 |
Carrying Value | Senior Notes | ||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||
Fair Value | 890.1 | 889.7 |
Fair Value | Revolving Credit Facility [Member] | ||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||
Fair Value | 450 | |
Fair Value | Term Loan Facilities [Member] | ||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||
Fair Value | 280 | 280 |
Fair Value | Notes Payable to Banks [Member] | ||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||
Fair Value | 2.8 | 0.8 |
Fair Value | Senior Notes | ||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||
Fair Value | $ 909.4 | $ 894.1 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative financial instruments (level 2) | $ 1.6 | $ 6.8 |
Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets | 4.5 | 9.9 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative financial instruments (level 2) | 1.6 | 6.8 |
Deferred compensation program assets (level 2) | 2.9 | 3.1 |
Derivative financial instruments (level 2) | $ 3.7 | $ 3.1 |
Accumulated Other Comprehensi53
Accumulated Other Comprehensive Loss - Components of and Changes in Accumulated Other Comprehensive Loss, Net of Tax (Detail) $ in Millions | 3 Months Ended | |
Mar. 31, 2016USD ($) | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning Balance | $ (52.5) | |
Amounts classified into accumulated other comprehensive loss | 14.7 | |
Amounts reclassified from accumulated other comprehensive loss | (1.1) | |
Net current-period other comprehensive income (loss) | 13.6 | |
Ending Balance | (38.9) | |
Foreign Currency Adjustments [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning Balance | (13.3) | |
Amounts classified into accumulated other comprehensive loss | 11.4 | |
Net current-period other comprehensive income (loss) | 11.4 | |
Ending Balance | (1.9) | |
Derivative Hedging Gain Loss [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning Balance | 2.1 | |
Amounts classified into accumulated other comprehensive loss | (3.9) | |
Amounts reclassified from accumulated other comprehensive loss | (0.2) | |
Net current-period other comprehensive income (loss) | (4.1) | |
Ending Balance | (2) | |
Defined Benefit Plan Adjustments [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning Balance | (41.3) | [1] |
Amounts classified into accumulated other comprehensive loss | 7.2 | [1] |
Amounts reclassified from accumulated other comprehensive loss | (0.9) | [1] |
Net current-period other comprehensive income (loss) | 6.3 | [1] |
Ending Balance | $ (35) | [1] |
[1] | See Note 11, "Defined Benefit Plans," for further information on the adjustments related to defined benefit plans. |
Accumulated Other Comprehensi54
Accumulated Other Comprehensive (Loss) Income - Reclassifications Out of Accumulated Other Comprehensive (Loss) Income (Detail) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||
Cost of products sold | $ (728.7) | $ (633.9) | |
Income from continuing operations before income taxes | 84 | 62.2 | |
Tax (expense) benefit | (28.3) | (21.3) | |
Net income | 55.7 | 40.3 | |
Reclassification out of Accumulated Other Comprehensive Income [Member] | |||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||
Net income | 1.1 | 2.6 | |
Reclassification out of Accumulated Other Comprehensive Income [Member] | Derivative Hedging Gain Loss [Member] | |||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||
Tax (expense) benefit | (0.4) | (0.5) | |
Net income | 0.2 | 0.5 | |
Reclassification out of Accumulated Other Comprehensive Income [Member] | Derivative Hedging Gain Loss [Member] | Foreign exchange contracts [Member] | |||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||
Cost of products sold | 0.6 | 1 | |
Reclassification out of Accumulated Other Comprehensive Income [Member] | Defined Benefit Plan Adjustments [Member] | |||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||
Recognition of prior service cost | [1] | 2.3 | 3.5 |
Recognition of actuarial losses | [1] | (0.9) | |
Income from continuing operations before income taxes | 1.4 | 3.5 | |
Tax (expense) benefit | (0.5) | (1.4) | |
Net income | $ 0.9 | $ 2.1 | |
[1] | See Note 11, "Defined Benefit Plans," for further information on the adjustments related to defined benefit plans. |
Defined Benefit Plans - Compone
Defined Benefit Plans - Components of Net Periodic Benefit Cost for Pension and Postretirement Benefits (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Defined Benefit Plan Disclosure [Line Items] | ||
Recognition of actuarial losses | $ 0.9 | |
Pension Benefits [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | 2.8 | $ 3.2 |
Interest cost | 8.7 | 8.5 |
Expected return on plan assets | (9.5) | (10.2) |
Net periodic benefit cost | 2 | 1.5 |
Postretirement Benefits [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Interest cost | 0.1 | 0.2 |
Recognition of prior service credits | (2.3) | (3.5) |
Recognition of actuarial losses | 0.9 | |
Net periodic benefit cost | $ (1.3) | $ (3.3) |
Defined Benefit Plans - Additio
Defined Benefit Plans - Additional Information (Detail) $ in Millions | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Recognition of actuarial (losses) gains | $ (0.9) |
Postretirement Benefits [Member] | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Reduction in accrued retiree benefit plans | (10.7) |
Prior service credits amortized over the next 14 months | 10.7 |
Recognition of actuarial (losses) gains | $ (0.9) |
Prior service credits amortization period | 14 months |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Taxes [Line Items] | ||
Effective income tax rate | 33.70% | 34.20% |
Minimum [Member] | ||
Income Taxes [Line Items] | ||
Reasonably possible decrease in unrecognized tax benefits | $ 1 | |
Maximum [Member] | ||
Income Taxes [Line Items] | ||
Reasonably possible decrease in unrecognized tax benefits | $ 6 |
Product Warranties - Activity R
Product Warranties - Activity Related to Product Warranty Liability (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Product Warranty Liability [Line Items] | ||
Reserve balance at the beginning of the year | $ 16 | $ 13 |
Provision for warranties issued | 7.1 | 7.1 |
Settlements made (in cash or in kind) | (6.7) | (6.6) |
Reserve balance at end of year | $ 16.4 | $ 13.5 |
Product Warranties - Additional
Product Warranties - Additional Information (Detail) $ in Millions | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Product Warranty Liability [Line Items] | |
Increase in product warranty liability | $ 2.9 |
Information on Business Segme60
Information on Business Segments - Net Sales and Operating Income by Segment (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Net sales | $ 1,106.5 | $ 950.8 |
Recognition of defined benefit plan actuarial losses | (0.9) | |
Operating income | $ 95.5 | 67.3 |
Net Sales, Percentage Change vs. Prior Year | 16.40% | |
Operating Income(Loss), Percentage Change vs. Prior Year | 41.90% | |
Operating Segments [Member] | Cabinets [Member] | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Net sales | $ 550 | 411.1 |
Operating income | $ 35.7 | 13 |
Net Sales, Percentage Change vs. Prior Year | 33.80% | |
Operating Income(Loss), Percentage Change vs. Prior Year | 174.60% | |
Operating Segments [Member] | Plumbing [Member] | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Net sales | $ 338.6 | 333.6 |
Operating income | $ 71.5 | 63.8 |
Net Sales, Percentage Change vs. Prior Year | 1.50% | |
Operating Income(Loss), Percentage Change vs. Prior Year | 12.10% | |
Operating Segments [Member] | Doors [Member] | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Net sales | $ 94.3 | 83.2 |
Operating income | $ 4.2 | (1.2) |
Net Sales, Percentage Change vs. Prior Year | 13.30% | |
Operating Segments [Member] | Security [Member] | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Net sales | $ 123.6 | 122.9 |
Operating income | $ 5.6 | 8 |
Net Sales, Percentage Change vs. Prior Year | 0.60% | |
Operating Income(Loss), Percentage Change vs. Prior Year | (30.00%) | |
Corporate [Member] | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
General and administrative expense | $ (21.4) | (17.9) |
Defined benefit plan costs | 0.8 | 1.6 |
Recognition of defined benefit plan actuarial losses | (0.9) | |
Operating income | $ (21.5) | $ (16.3) |
Operating Income(Loss), Percentage Change vs. Prior Year | (31.90%) | |
Total Corporate expenses, Percentage Change vs. Prior Year | (31.90%) |
Restructuring and Other Charg61
Restructuring and Other Charges - Pre-tax Restructuring and Other Charges (Detail) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | ||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | $ 5.6 | $ 4.7 | |
Other Charges | [1] | 2.5 | 0.1 |
Total Charges | 8.1 | 4.8 | |
Operating Segments [Member] | Cabinets [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | 1.8 | 0.9 | |
Total Charges | 1.8 | 0.9 | |
Operating Segments [Member] | Plumbing [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | 0.4 | 1 | |
Other Charges | [1] | 0.1 | |
Total Charges | 0.4 | 1.1 | |
Operating Segments [Member] | Security [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | 3.4 | 1.9 | |
Other Charges | [1] | 2.5 | |
Total Charges | $ 5.9 | 1.9 | |
Corporate [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | 0.9 | ||
Total Charges | $ 0.9 | ||
[1] | "Other Charges" represent charges directly related to restructuring initiatives that cannot be reported as restructuring under U.S. GAAP. Such costs may include losses on disposal of inventories, trade receivables allowances from exiting product lines, accelerated depreciation resulting from the closure of facilities and gains or losses on the sale of previously closed facilities. |
Restructuring and Other Charg62
Restructuring and Other Charges - Reconciliation of Restructuring Liability (Detail) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | ||
Restructuring Cost and Reserve [Line Items] | |||
Beginning Balance | $ 10.9 | ||
Provision | 5.6 | $ 4.7 | |
Cash Expenditures | [1] | (2.1) | |
Non-Cash Write-offs | [2] | (0.1) | |
Ending Balance | 14.3 | ||
Workforce Reduction Costs [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Beginning Balance | 10.4 | ||
Provision | 5.4 | ||
Cash Expenditures | [1] | (1.8) | |
Ending Balance | 14 | ||
Other [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Beginning Balance | 0.5 | ||
Provision | 0.2 | ||
Cash Expenditures | [1] | (0.3) | |
Non-Cash Write-offs | [2] | (0.1) | |
Ending Balance | $ 0.3 | ||
[1] | Cash expenditures primarily related to severance charges. | ||
[2] | Non-cash write-offs include long-lived asset impairment charges attributable to restructuring actions |
Earnings Per Share - Computatio
Earnings Per Share - Computations of Earnings Per Common Share (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Schedule of Earnings Per Share, Basic and Diluted, by Common Class [Line Items] | ||
Income from continuing operations, net of tax | $ 55.7 | $ 40.9 |
Less: Noncontrolling interest | 0.3 | |
Income from continuing operations for EPS | 55.7 | 40.6 |
Loss from discontinued operations | (0.6) | |
Net income attributable to Fortune Brands | $ 55.7 | $ 40 |
Basic | ||
Continuing operations | $ 0.36 | $ 0.26 |
Discontinued operations | (0.01) | |
Net income attributable to Fortune Brands common stockholders | 0.36 | 0.25 |
Diluted | ||
Continuing operations | 0.35 | 0.25 |
Discontinued operations | 0 | 0 |
Net income attributable to Fortune Brands common stockholders | $ 0.35 | $ 0.25 |
Basic average shares outstanding | 155.7 | 158.8 |
Stock-based awards | 2.8 | 3.8 |
Diluted average shares outstanding | 158.5 | 162.6 |
Antidilutive stock-based awards excluded from weighted-average number of shares outstanding for diluted earnings per share | 0.6 | 0.8 |