Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 20, 2017 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
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 | 151,800,773 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Net sales | $ 1,348.6 | $ 1,279 | $ 3,900.8 | $ 3,683.3 |
Cost of products sold | 841.6 | 801 | 2,461.3 | 2,352.8 |
Selling, general and administrative expenses | 297.3 | 284.5 | 877.7 | 831.4 |
Amortization of intangible assets | 7.5 | 7.3 | 23.6 | 20.4 |
Loss on sale of product line | 2.4 | |||
Asset impairment charges | 3.2 | |||
Restructuring charges | 0.4 | 3.1 | 3.5 | 12.4 |
Operating income | 201.8 | 183.1 | 529.1 | 466.3 |
Interest expense | 12.3 | 11.8 | 36.5 | 37.5 |
Other expense (income), net | 0.1 | 0.6 | 0.2 | (0.1) |
Income before income taxes | 189.4 | 170.7 | 492.4 | 428.9 |
Income taxes | 59.8 | 48.8 | 145.1 | 120.9 |
Income from continuing operations, net of tax | 129.6 | 121.9 | 347.3 | 308 |
(Loss) income from discontinued operations , net of tax | 1.5 | (2.6) | 1.5 | |
Net income | 129.6 | 123.4 | 344.7 | 309.5 |
Less: Noncontrolling interests | 0.1 | 0.1 | (0.1) | |
Net income attributable to Fortune Brands | $ 129.5 | $ 123.4 | $ 344.6 | $ 309.6 |
Basic earnings per common share | ||||
Continuing operations | $ 0.84 | $ 0.79 | $ 2.26 | $ 2 |
Discontinued operations | 0.01 | (0.02) | 0.01 | |
Net income attributable to Fortune Brands common shareholders | 0.84 | 0.80 | 2.24 | 2.01 |
Diluted earnings per common share | ||||
Continuing operations | 0.83 | 0.77 | 2.22 | 1.95 |
Discontinued operations | 0.01 | (0.02) | 0.01 | |
Net income attributable to Fortune Brands common shareholders | $ 0.83 | $ 0.78 | $ 2.20 | $ 1.96 |
Comprehensive income | $ 158.7 | $ 110.5 | $ 391.1 | $ 309.8 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 | |
Current assets | |||
Cash and cash equivalents | $ 277.1 | $ 251.5 | |
Accounts receivable, net | 594.7 | 550.7 | |
Inventories | 600.1 | 531.1 | |
Other current assets | 126.4 | 111.9 | |
Total current assets | 1,598.3 | 1,445.2 | |
Property, plant and equipment, net of accumulated depreciation | 690.6 | 662.5 | |
Goodwill | [1] | 1,852.8 | 1,833.8 |
Other intangible assets, net of accumulated amortization | 1,105.4 | 1,107 | |
Other assets | 102.2 | 80 | |
Total assets | 5,349.3 | 5,128.5 | |
Current liabilities | |||
Accounts payable | 392.5 | 393.8 | |
Other current liabilities | 460 | 449 | |
Total current liabilities | 852.5 | 842.8 | |
Long-term debt | 1,462.2 | 1,431.1 | |
Deferred income taxes | 176.2 | 163.5 | |
Accrued defined benefit plans | 185.1 | 216.2 | |
Other non-current liabilities | 127.4 | 111.9 | |
Total liabilities | 2,803.4 | 2,765.5 | |
Commitments and contingencies (see Note 17) | |||
Fortune Brands stockholders' equity | |||
Common stock | [2] | 1.7 | 1.7 |
Paid-in capital | 2,712.2 | 2,653.8 | |
Accumulated other comprehensive loss | (25.5) | (71.9) | |
Retained earnings | 1,076.5 | 814.6 | |
Treasury stock | (1,220.6) | (1,036.7) | |
Total Fortune Brands stockholders' equity | 2,544.3 | 2,361.5 | |
Noncontrolling interests | 1.6 | 1.5 | |
Total equity | 2,545.9 | 2,363 | |
Total liabilities and equity | $ 5,349.3 | $ 5,128.5 | |
[1] | Net of accumulated impairment losses of $399.5 million in the Doors segment. | ||
[2] | Common stock, par value $0.01 per share: 179.6 million shares and 177.7 million shares issued at September 30, 2017 and December 31, 2016, respectively. |
Condensed Consolidated Balance4
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares shares in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares issued | 179.6 | 177.7 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | ||
Operating activities | |||
Net income | $ 344.7 | $ 309.5 | |
Non-cash pre-tax expense (income): | |||
Depreciation | 72.7 | 69.3 | |
Amortization | 23.6 | 20.4 | |
Stock-based compensation | 32.7 | 24.3 | |
Recognition of actuarial (gains) losses | (1.3) | 1.9 | |
Deferred income taxes | 8.2 | (23) | |
Loss on sale of product line | 2.4 | ||
Asset impairment charges | 3.2 | ||
Amortization of deferred financing costs | 1.5 | 3 | |
Loss on sale of property, plant and equipment | 0.3 | 1.2 | |
Changes in assets and liabilities: | |||
Increase in accounts receivable | (34.5) | (53.1) | |
(Increase) decrease in inventories | (60.7) | 22.6 | |
(Decrease) increase in accounts payable | (3.5) | 28.7 | |
Increase in other assets | (28) | (11.6) | |
Decrease in accrued expenses and other liabilities | (23.9) | (12) | |
Increase (decrease) in accrued taxes | 15.2 | (0.6) | |
Net cash provided by operating activities | 352.6 | 380.6 | |
Investing activities | |||
Capital expenditures | [1] | (95.5) | (106.1) |
Proceeds from the sale of assets | 0.2 | 2.3 | |
Proceeds from sale of product line | 1.5 | ||
Cost of acquisitions, net of cash acquired | (19.4) | (230.5) | |
Net cash used in investing activities | (113.2) | (334.3) | |
Financing activities | |||
Decrease in short-term debt, net | (1) | ||
Issuance of long-term debt | 375 | 880 | |
Repayment of long-term debt | (345) | (465) | |
Proceeds from the exercise of stock options | 25.8 | 24.8 | |
Treasury stock purchases | (173.7) | (362.7) | |
Employee withholding taxes paid related to stock-based compensation | (10.2) | (9.8) | |
Deferred acquisition payment | (12.4) | ||
Dividends to stockholders | (82.7) | (73.7) | |
Other financing, net | (0.3) | (2.1) | |
Net cash used in financing activities | (223.5) | (9.5) | |
Effect of foreign exchange rate changes on cash | 9.7 | 3.3 | |
Net increase in cash and cash equivalents | 25.6 | 40.1 | |
Cash and cash equivalents at beginning of period | 251.5 | 238.5 | |
Cash and cash equivalents at end of period | $ 277.1 | $ 278.6 | |
[1] | Capital expenditures of $11.3 million and $4.7 million that have not been paid as of September 30, 2017 and 2016, respectively, were excluded from the Statements of Cash Flows. |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Capital expenditures incurred but not yet paid | $ 11.3 | $ 4.7 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Equity (Unaudited) - USD ($) $ in Millions | Total | Common Stock | Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Treasury Stock | Non- controlling Interests |
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 | 309.5 | 309.6 | (0.1) | ||||
Other comprehensive income | 0.3 | 0.3 | |||||
Stock options exercised | 24.8 | 24.8 | |||||
Stock-based compensation | 14.5 | 24.3 | (9.8) | ||||
Treasury stock purchase | (362.7) | (362.7) | |||||
Dividends | (72.8) | (72.8) | |||||
Dividends paid to noncontrolling interests | (1.4) | (1.4) | |||||
Other | (5.8) | (5.8) | |||||
Ending Balance at Sep. 30, 2016 | 2,360.2 | 1.7 | 2,645.5 | (52.2) | 738.4 | (974.6) | 1.4 |
Beginning Balance at Dec. 31, 2016 | 2,363 | 1.7 | 2,653.8 | (71.9) | 814.6 | (1,036.7) | 1.5 |
Comprehensive income: | |||||||
Net income | 344.7 | 344.6 | 0.1 | ||||
Other comprehensive income | 46.4 | 46.4 | |||||
Stock options exercised | 25.7 | 25.7 | |||||
Stock-based compensation | 22.5 | 32.7 | (10.2) | ||||
Treasury stock purchase | (173.7) | (173.7) | |||||
Dividends | (82.7) | (82.7) | |||||
Ending Balance at Sep. 30, 2017 | $ 2,545.9 | $ 1.7 | $ 2,712.2 | $ (25.5) | $ 1,076.5 | $ (1,220.6) | $ 1.6 |
Basis of Presentation and Princ
Basis of Presentation and Principles of Consolidation | 9 Months Ended |
Sep. 30, 2017 | |
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 September 30, 2017, the related condensed consolidated statements of comprehensive income for the nine and three-month periods ended September 30, 2017 and 2016 and the related condensed consolidated statements of cash flows and equity for the nine-month periods ended September 30, 2017 and 2016 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, 2016 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 10-K In July 2017, we acquired Shaws Since1897 Limited (“Shaws”), a UK-based In September 2016, we acquired ROHL LLC (“ROHL”) and in a related transaction, we acquired TCL Manufacturing which gave us ownership of Perrin & Rowe Limited (“Perrin & Rowe”). In addition, in May 2016, we acquired Riobel Inc (“Riobel”). The financial results of ROHL, Perrin & Rowe, and Riobel were included in the Company’s consolidated balance sheets as of September 30, 2017 and December 31, 2016, the Company’s consolidated statements of income for the nine and three months ended September 30, 2017, and statement of cash flows for the nine months ended September 30, 2017. |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 9 Months Ended |
Sep. 30, 2017 | |
Recently Issued Accounting Standards | 2. Recently Issued Accounting Standards Revenue from Contracts with Customers In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Leases In February 2016, the FASB issued ASU 2016-02, “right-of-use” Improvements to Accounting for Hedging Activities In August 2017, the FASB issued ASU 2017-12, Clarifying Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets In May 2017, the FASB issued ASC 610-20 non-customer. non-recurring Stock Compensation Scope of Modification Accounting In May 2017, the FASB issued ASU 2017-09, non-substantive Presentation of Net Periodic Pension and Postretirement Cost In March 2017, the FASB issued ASU 2017-07, Simplifying the Test for Goodwill Impairment In January 2017, the FASB issued ASU 2017-04, 2017-04 Clarifying the Definition of a Business In January 2017, the FASB issued ASU 2017-01, Restricted Cash In November 2016, the FASB issued ASU 2016-18, Intra-Entity Transfers of Assets Other Than Inventory In October 2016, the FASB issued ASU 2016-16, Classification of Certain Cash Receipts and Cash Payments In September 2016, the FASB issued ASU 2016-15, Financial Instruments—Credit Losses In June 2016, the FASB issued ASU 2016-13, off-balance-sheet Recognition and Measurement of Financial Assets and Financial Liabilities In January 2016, the FASB issued ASU 2016-01, available-for-sale |
Balance Sheet Information
Balance Sheet Information | 9 Months Ended |
Sep. 30, 2017 | |
Balance Sheet Information | 3. Balance Sheet Information Supplemental information on our balance sheets is as follows: (In millions) September 30, December 31, Inventories: Raw materials and supplies $ 211.6 $ 207.6 Work in process 61.8 55.9 Finished products 326.7 267.6 Total inventories $ 600.1 $ 531.1 Property, plant and equipment, gross $ 1,715.8 $ 1,630.7 Less: accumulated depreciation 1,025.2 968.2 Property, plant and equipment, net $ 690.6 $ 662.5 |
Acquisitions and Dispositions
Acquisitions and Dispositions | 9 Months Ended |
Sep. 30, 2017 | |
Acquisitions and Dispositions | 4. Acquisitions and Dispositions In July 2017, we acquired Shaws, a UK-based luxury plumbing products company that specializes in manufacturing and selling fireclay sinks and selling brassware and accessories in partnership with Perrin & Rowe. Net sales and operating income in the three months ended September 30, 2017 were not material to the Company. We financed the transaction using cash on hand and borrowings under our existing credit facilities. The results of the operations are included in the Plumbing segment from the date of acquisition. 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 a pre-tax In September 2016, we acquired ROHL, a California-based luxury plumbing company. In a related transaction, we also acquired Perrin & Rowe, a UK manufacturer and designer of luxury kitchen and bathroom plumbing products. The total combined purchase price was approximately $166 million (including $3 million of liabilities assumed), subject to certain post-closing adjustments. We financed the transaction using cash on hand and borrowings under our existing credit facility. Net sales and operating income in the first nine months of 2017 were not material to the Company. The results of operations are included in the Plumbing segment. The goodwill expected to be deductible for income tax purposes is approximately $49 million. In May 2016, we acquired Riobel, a Canadian plumbing company specializing in premium showroom bath and shower fittings, for a total purchase price of $94.6 million in cash. We financed the transaction using cash on hand and borrowings under our existing credit facilities. Net sales and operating income in the first nine months of 2017 were not material to the Company. The results of operations are included in the Plumbing segment. We do not expect any portion of goodwill to be deductible for income tax purposes. We recognized a loss on discontinued operations primarily related to the prior sale of the Waterloo tool storage and Simonton window businesses for the nine months ended September 30, 2017. |
Goodwill and Identifiable Intan
Goodwill and Identifiable Intangible Assets | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Identifiable Intangible Assets | 5. Goodwill and Identifiable Intangible Assets We had goodwill of $1,852.8 million and $1,833.8 million as of September 30, 2017 and December 31, 2016, respectively. The $19.0 million increase was primarily due to the acquisition-related adjustments in our Plumbing segment (See Note 4) and foreign translation adjustments. The change in the net carrying amount of goodwill by segment was as follows: (In millions) Cabinets Plumbing Doors Security Total Goodwill at December 31, 2016 (a) $ 924.3 $ 670.2 $ 143.0 $ 96.3 $ 1,833.8 Year-to-date 3.3 4.6 — 1.5 9.4 Acquisition-related adjustments — 9.6 — — 9.6 Goodwill at September 30, 2017 (a) $ 927.6 $ 684.4 $ 143.0 $ 97.8 $ 1,852.8 (a) Net of accumulated impairment losses of $399.5 million in the Doors segment. We also had net identifiable intangible assets, principally tradenames, of $1,105.4 million and $1,107.0 million as of September 30, 2017 and December 31, 2016, respectively. The gross carrying value and accumulated amortization by class of identifiable intangible assets as of September 30, 2017 and December 31, 2016 were as follows: (In millions) As of September 30, 2017 As of December 31, 2016 Gross Accumulated Net Gross Accumulated Net Indefinite-lived tradenames $ 682.6 $ — $ 682.6 $ 671.8 $ — $ 671.8 Amortizable intangible assets Tradenames 18.6 (9.4 ) 9.2 15.8 (7.3 ) 8.5 Customer and contractual relationships 627.1 (226.0 ) 401.1 611.9 (203.1 ) 408.8 Patents/proprietary technology 57.2 (44.7 ) 12.5 61.9 (44.0 ) 17.9 Total 702.9 (280.1 ) 422.8 689.6 (254.4 ) 435.2 Total identifiable intangibles $ 1,385.5 $ (280.1 ) $ 1,105.4 $ 1,361.4 $ (254.4 ) $ 1,107.0 The $24.1 million increase in gross identifiable intangible assets was primarily due to acquisition-related adjustments in our Plumbing segment (See Note 4) as well as foreign translation adjustments, partially offset by impairment charges during the first quarter of 2017 related to our decision to sell Field ID (See Note 6). Amortizable identifiable intangible assets, principally tradenames and customer relationships, are subject to amortization on a straight-line basis over their estimated useful life, ranging from 2 to 30 years, based on the assessment of a number of factors that may impact useful life. These factors include historical and tradename performance with respect to consumer name recognition, geographic market presence, market share, plans for ongoing tradename support and promotion, customer attrition rates and other relevant factors. As of December 31, 2016, the fair value of one of the tradenames in the Cabinets segment and one of the tradenames in the Doors segment exceeded their carrying value by less than 10%. In the second quarter of 2017, we performed an interim impairment test on the tradename in the Cabinets segment and concluded the fair value continues to exceed its carrying value. A further reduction in fair value of these tradenames may result in an impairment charge in future periods. As of September 30, 2017, the carrying values of these tradenames was $168 million . The Company cannot predict the occurrence of certain events that might adversely affect the carrying value of goodwill and other intangible assets. The events and/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 our assumptions, actions of key customers, volatility of 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. |
Asset Impairment
Asset Impairment | 9 Months Ended |
Sep. 30, 2017 | |
Asset Impairment | 6. Asset Impairment In January 2017, we committed to a plan to sell Field ID, our cloud-based inspection and safety compliance software product line included in our Security segment. In accordance with FASB Accounting Standards Codification (“ASC”) 360, as a result of our decision to sell, during the first quarter of 2017 we recorded $3.2 million of pre-tax |
External Debt and Financing Arr
External Debt and Financing Arrangements | 9 Months Ended |
Sep. 30, 2017 | |
External Debt and Financing Arrangements | 7. External Debt and Financing Arrangements In June 2016, the Company amended and restated its credit agreement to combine and rollover the existing revolving credit facility and term loan into a new standalone $1.25 billion revolving credit facility. This amendment of the credit agreement was a non-cash wrote-off 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 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 there were no outstanding balances as of September 30, 2017 and December 31, 2016. |
Financial Instruments
Financial Instruments | 9 Months Ended |
Sep. 30, 2017 | |
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. 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 Mexican peso, the Chinese yuan and the Euro. The gross U.S. dollar equivalent notional amount of all foreign currency derivative hedges outstanding at September 30, 2017 was $190.2 million, representing a net settlement payable of $2.3 million. Based on foreign exchange rates as of September 30, 2017, we estimate that $1.2 million of net foreign currency derivative losses included in other comprehensive income as of September 30, 2017 will be reclassified to earnings within the next twelve months. The fair values of derivative instruments on the consolidated balance sheets as of September 30, 2017 and December 31, 2016 were as follows: (In millions) Fair Value Location September 30, December 31, Assets Foreign exchange contracts Other current assets $ 3.0 $ 2.8 Net investment hedges Other current assets 0.2 0.6 Total assets $ 3.2 $ 3.4 Liabilities Foreign exchange contracts Other current liabilities $ 5.1 $ 2.9 Net investment hedges Other current liabilities 0.4 0.2 Total current liabilities $ 5.5 $ 3.1 The effects of derivative financial instruments on the statements of comprehensive income for the nine and three months ended September 30, 2017 and 2016 were: (In millions) Gain (Loss) Recognized in Income Type of hedge Location 2017 2016 Cash flow Cost of products sold $ 0.9 $ (2.6 ) Fair value Other (income) expense, net (1.4 ) 1.3 Total $ (0.5 ) $ (1.3 ) (In millions) Gain (Loss) Recognized in Income Three Type of hedge Location 2017 2016 Cash flow Cost of products sold $ (0.1 ) $ (1.2 ) Fair value Other (income) expense, net (0.9 ) 0.3 Total $ (1.0 ) $ (0.9 ) The effective portion of cash flow hedges recognized in other comprehensive income were net losses of $(0.1) million and $(8.0) million in the nine months ended September 30, 2017 and 2016, respectively. The effective portion of cash flow hedges recognized in other comprehensive income were net losses of $(3.8) million and zero in the three months ended September 30, 2017 and 2016, respectively. In the nine and three months ended September 30, 2017 and 2016, the ineffective portion of cash flow hedges recognized in other (income) expense, net, was insignificant. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2017 | |
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 September 30, 2017 and December 31, 2016 were as follows: (In millions) September 30, 2017 December 31, 2016 Carrying Fair Carrying Fair Revolving credit facility $ 570.0 $ 570.0 $ 540.0 $ 540.0 Senior Notes 892.2 927.5 891.1 919.2 The estimated fair value of our revolving credit facility is determined primarily using broker quotes, which are level 2 inputs. The estimated fair value of our Senior Notes is determined by using quoted market prices of our debt securities, which are level 1 inputs. Assets and liabilities measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016 were as follows: (In millions) Fair Value September 30, December 31, Assets Derivative financial instruments (level 2) $ 3.2 $ 3.4 Deferred compensation program assets (level 2) 7.0 4.5 Total assets $ 10.2 $ 7.9 Liabilities Derivative financial instruments (level 2) $ 5.5 $ 3.1 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 9 Months Ended |
Sep. 30, 2017 | |
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 0.9 (7.3 ) 9.0 2.6 Amounts reclassified from accumulated other comprehensive loss — 2.8 (5.1 ) (2.3 ) Net current-period other comprehensive income (loss) 0.9 (4.5 ) 3.9 0.3 Balance at September 30, 2016 $ (12.4 ) $ (2.4 ) $ (37.4 ) $ (52.2 ) Balance at December 31, 2016 $ (28.0 ) $ (0.6 ) $ (43.3 ) $ (71.9 ) Amounts classified into accumulated other comprehensive loss 47.0 0.6 3.5 51.1 Amounts reclassified from accumulated other comprehensive loss — (0.6 ) (4.1 ) (4.7 ) Net current-period other comprehensive income (loss) 47.0 — (0.6 ) 46.4 Balance at September 30, 2017 $ 19.0 $ (0.6 ) $ (43.9 ) $ (25.5 ) (a) See Note 11, “Defined Benefit Plans,” for further information on the adjustments related to defined benefit plans. The reclassifications out of accumulated other comprehensive loss for the nine and three months ended September 30, 2017 and 2016 were as follows: (In millions) Details about Accumulated Other Comprehensive Loss Components Amount Reclassified from Affected Line Item in 2017 2016 (Losses) gains on cash flow hedges Foreign exchange contracts $ 0.5 $ (2.5 ) Cost of products sold Commodity contracts 0.4 (0.1 ) Cost of products sold 0.9 (2.6 ) Total before tax (0.3 ) (0.2 ) Tax expense $ 0.6 $ (2.8 ) Net of tax Defined benefit plan items Recognition of prior service credits $ 5.1 $ 10.0 (a) Recognition of actuarial gains (losses) 1.3 (1.9 ) (a) 6.4 8.1 Total before tax (2.3 ) (3.0 ) Tax expense $ 4.1 $ 5.1 Net of tax Total reclassifications for the period $ 4.7 $ 2.3 Net of tax (In millions) Details about Accumulated Other Comprehensive Loss Components Amount Reclassified from Affected Line Item in 2017 2016 Gains (losses) on cash flow hedges Foreign exchange contracts $ (0.5 ) $ (1.3 ) Cost of products sold Commodity contracts 0.4 0.1 Cost of products sold (0.1 ) (1.2 ) Total before tax 0.2 — Tax expense $ 0.1 $ (1.2 ) Net of tax Defined benefit plan items Recognition of prior service credits $ — $ 3.8 (a) Recognition of actuarial gains (losses) 1.3 (1.0 ) (a) 1.3 2.8 Total before tax (0.4 ) (1.0 ) Tax expense $ 0.9 $ 1.8 Net of tax Total reclassifications for the period $ 1.0 $ 0.6 Net of tax (a) 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 | 9 Months Ended |
Sep. 30, 2017 | |
Defined Benefit Plans | 11. Defined Benefit Plans The components of net periodic benefit cost for pension and postretirement benefits for the nine and three months ended September 30, 2017 and 2016 were as follows: (In millions) Nine Months Ended September 30, Pension Benefits Postretirement Benefits 2017 2016 2017 2016 Service cost $ 0.4 $ 7.2 $ — $ — Interest cost 25.0 25.8 — 0.2 Expected return on plan assets (28.0 ) (27.9 ) — — Recognition of prior service costs (credits) — — (5.1 ) (10.0 ) Recognition of actuarial losses (gains) 0.3 — (1.6 ) 1.9 Net periodic benefit (income) cost $ (2.3 ) $ 5.1 $ (6.7 ) $ (7.9 ) (In millions) Three Months Ended September 30, Pension Benefits Postretirement Benefits 2017 2016 2017 2016 Service cost $0.1 $1.6 $— $— Interest cost 8.3 8.4 — (0.1) Expected return on plan assets (9.3) (8.9) — — Recognition of prior service costs (credits) — — — (3.8) Recognition of actuarial losses (gains) 0.3 — (1.6) 1.0 Net periodic benefit (income) cost $ (0.6 ) $ 1.1 $ (1.6 ) $ (2.9 ) Service cost for 2017 relates to benefit accruals in an hourly Union defined benefit plan in our Security segment. All other defined benefit pension plans were frozen as of December 31, 2016. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Taxes | 12. Income Taxes The effective income tax rates for the nine months ended September 30, 2017 and 2016 were 29.5% and 28.2%, respectively. The increase in the effective tax rate reflected a lower tax benefit on share-based compensation, partially offset by a valuation allowance release related to state deferred tax assets. In addition, the effective tax rates in both periods were favorably impacted by a tax benefit attributable to the Domestic Production Activity (Internal Revenue Code Section 199) Deduction, favorable tax rates in foreign jurisdictions, and a benefit associated with the U.S. research and development credit, offset by state and local taxes and increases to uncertain tax positions. The effective income tax rates for the three months ended September 30, 2017 and 2016 were 31.6% and 28.6%, respectively. The increase in the effective tax rate reflected a lower tax benefit on share-based compensation, partially offset by a valuation allowance release related to state deferred tax assets. In addition, the effective tax rates in both periods were favorably impacted by a tax benefit attributable to the Domestic Production Activity (Internal Revenue Code Section 199) Deduction, favorable tax rates in foreign jurisdictions, and a benefit associated with the U.S. research and development credit, offset by state and local taxes and increases to uncertain tax positions. It is reasonably possible that, within the next 12 months, total unrecognized tax benefits may decrease up to $1.5 million, primarily as a result of the conclusion of pending U.S. federal, state and foreign income tax proceedings. |
Product Warranties
Product Warranties | 9 Months Ended |
Sep. 30, 2017 | |
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 historical claims experience and the nature of the product category. The following table summarizes activity related to our product warranty liability for the nine months ended September 30, 2017 and 2016, respectively. (In millions) Nine Months Ended 2017 2016 Reserve balance at January 1, $ 16.2 $ 16.0 Provision for warranties issued 23.3 23.8 Settlements made (in cash or in kind) (17.0 ) (22.8 ) Foreign translation adjustments (1.2 ) — Acquisitions 0.7 0.4 Reserve balance at September 30, $ 22.0 $ 17.4 |
Information on Business Segment
Information on Business Segments | 9 Months Ended |
Sep. 30, 2017 | |
Information on Business Segments | 14. Information on Business Segments Net sales and operating income for the nine and three months ended September 30, 2017 and 2016 by segment were as follows: Nine Months Ended September 30, (In millions) 2017 2016 % Change Net Sales Cabinets $ 1,841.2 $ 1,797.2 2.4 % Plumbing 1,251.5 1,108.0 13.0 Doors 374.2 351.3 6.5 Security 433.9 426.8 1.7 Net sales $ 3,900.8 $ 3,683.3 5.9 % Operating Income Cabinets $ 205.4 $ 194.0 5.9 % Plumbing 270.8 242.6 11.6 Doors 55.8 46.1 21.0 Security 56.4 44.7 26.2 Less: Corporate expenses (59.3 ) (61.1 ) 2.9 Operating income $ 529.1 $ 466.3 13.5 % Corporate expenses General and administrative expense $ (63.8 ) $ (61.3 ) Defined benefit plan income 3.2 2.1 Recognition of defined benefit plan actuarial gains (losses) 1.3 (1.9 ) Total Corporate expenses $ (59.3 ) $ (61.1 ) 2.9 % Three Months Ended September 30, (In millions) 2017 2016 % Change Net Sales Cabinets $ 614.2 $ 602.1 2.0 % Plumbing 438.3 391.1 12.1 Doors 138.5 129.2 7.2 Security 157.6 156.6 0.6 Net sales $ 1,348.6 $ 1,279.0 5.4 % Operating Income Cabinets $ 69.7 $ 74.8 (6.8 )% Plumbing 97.3 84.0 15.8 Doors 25.1 22.3 12.6 Security 27.7 22.9 21.0 Less: Corporate expenses (18.0 ) (20.9 ) 13.9 Operating income $ 201.8 $ 183.1 10.2 % Corporate expenses General and administrative expense $ (20.5 ) $ (20.5 ) Defined benefit plan income 1.2 0.6 Recognition of defined benefit plan actuarial gains (losses) 1.3 (1.0 ) Total Corporate expenses $ (18.0 ) $ (20.9 ) 13.9 % |
Restructuring and Other Charges
Restructuring and Other Charges | 9 Months Ended |
Sep. 30, 2017 | |
Restructuring and Other Charges | 15. Restructuring and Other Charges Pre-tax (In millions) Nine Months Ended September 30, 2017 Restructuring Other Charges (a) Total Plumbing 1.6 $ — $ 1.6 Security 1.9 0.9 2.8 Total $ 3.5 $ 0.9 $ 4.4 (a) “Other Charges” represent charges directly related to restructuring initiatives that cannot be reported as restructuring under GAAP. Such costs may include losses on disposal of inventories, trade receivables allowances from exiting product lines, accelerated depreciation resulting from the closure of facilities and gains or losses on the sale of previously closed facilities. Restructuring and other charges in the first nine months of 2017 largely related to severance costs within our Security and Plumbing segments. (In millions) Nine Months Ended September 30, 2016 Restructuring Other Charges (a) Total Cabinets $ 1.8 $ — $ 1.8 Plumbing 1.1 0.8 1.9 Security 9.5 3.5 13.0 Total $ 12.4 $ 4.3 $ 16.7 a) “Other Charges” represent charges directly related to restructuring initiatives that cannot be reported as restructuring under GAAP. Such costs may include losses on disposal of inventories, trade receivables allowances from exiting product lines, accelerated depreciation resulting from the closure of facilities and gains or losses on the sale of previously closed facilities. Restructuring and other charges in the first nine months of 2016 primarily related to severance costs and charges associated with the relocation of a manufacturing facility within our Security segment. (In millions) Three Months Ended September 30, 2017 Restructuring Other Charges (a) Total Doors $ 0.2 $ (0.1 ) $ 0.1 Security 0.2 0.3 0.5 Total $ 0.4 $ 0.2 $ 0.6 (a) “Other Charges” represent charges directly related to restructuring initiatives that cannot be reported as restructuring under GAAP. Such costs may include losses on disposal of inventories, trade receivables allowances from exiting product lines, accelerated depreciation resulting from the closure of facilities and gains or losses on the sale of previously closed facilities. Restructuring and other charges in the third quarter of 2017 primarily resulted from severance costs within our Doors and Plumbing Segments. (In millions) Three Months Ended September 30, 2016 Restructuring Other Charges (a) Total Plumbing $ 0.4 $ 0.5 $ 0.9 Security 2.7 1.0 3.7 Total $ 3.1 $ 1.5 $ 4.6 (a) “Other Charges” represent charges directly related to restructuring initiatives that cannot be reported as restructuring under GAAP. Such costs may include losses on disposal of inventories, trade receivables allowances from exiting product lines, accelerated depreciation resulting from the closure of facilities and gains or losses on the sale of previously closed facilities. Restructuring and other charges in the third quarter of 2016 primarily resulted from severance costs within our Security segment. Reconciliation of Restructuring Liability (In millions) Balance at 2017 Cash (a) Non-Cash Write-offs Balance at Workforce reduction costs $ 2.4 $ 2.8 $ (2.9 ) $ (0.5 ) $ 1.8 Other 0.6 0.7 (1.3 ) — 0.0 $ 3.0 $ 3.5 $ (4.2 ) $ (0.5 ) $ 1.8 (a) Cash expenditures primarily related to severance charges. (In millions) Balance at 2016 Cash (a) Non-Cash Write-offs (b) Balance at Workforce reduction costs $ 10.4 $ 8.7 $ (15.0 ) $ 0.2 $ 4.3 Other 0.5 3.7 (3.0 ) (0.6 ) 0.6 $ 10.9 $ 12.4 $ (18.0 ) $ (0.4 ) $ 4.9 (a) Cash expenditures primarily related to severance charges. (b) Non-cash |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share | 16. Earnings Per Share The computations of earnings per common share were as follows: (In millions, except per share data) Nine Months Ended Three Months Ended 2017 2016 2017 2016 Income from continuing operations, net of tax $ 347.3 $ 308.0 $ 129.6 $ 121.9 Less: Noncontrolling interest 0.1 (0.1 ) 0.1 — Income from continuing operations for EPS 347.2 308.1 129.5 121.9 Income from discontinued operations (2.6 ) 1.5 — 1.5 Net income attributable to Fortune Brands $ 344.6 $ 309.6 $ 129.5 $ 123.4 Earnings per common share Basic Continuing operations $ 2.26 $ 2.00 $ 0.84 $ 0.79 Discontinued operations (0.02 ) 0.01 — 0.01 Net income attributable to Fortune Brands common stockholders $ 2.24 $ 2.01 $ 0.84 $ 0.80 Diluted Continuing operations $ 2.22 $ 1.95 $ 0.83 $ 0.77 Discontinued operations (0.02 ) 0.01 — 0.01 Net income attributable to Fortune Brands common stockholders $ 2.20 $ 1.96 $ 0.83 $ 0.78 Basic average shares outstanding 153.7 154.4 153.5 154.2 Stock-based awards 2.5 3.6 2.4 3.4 Diluted average shares outstanding 156.2 158.1 155.9 157.6 Antidilutive stock-based awards excluded from weighted-average number of shares outstanding for diluted earnings per share 0.6 0.5 0.6 — |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
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 nine months ended September 30, 2017 and 2016. 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. |
Subsequent Event
Subsequent Event | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Event | 18. Subsequent Event In October 2017, the Company acquired Victoria + Albert, a UK manufacturer of luxury freestanding tubs and basins. Victoria + Albert represent a strong strategic fit, adding a preeminent luxury tub brand to our plumbing portfolio. The results of operations of the acquired company will be included in the Plumbing segment from the date of acquisition. This acquisition will not have a material effect on net sales or operating income. |
Balance Sheet Information (Tabl
Balance Sheet Information (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Supplemental Information on Balance Sheets | Supplemental information on our balance sheets is as follows: (In millions) September 30, December 31, Inventories: Raw materials and supplies $ 211.6 $ 207.6 Work in process 61.8 55.9 Finished products 326.7 267.6 Total inventories $ 600.1 $ 531.1 Property, plant and equipment, gross $ 1,715.8 $ 1,630.7 Less: accumulated depreciation 1,025.2 968.2 Property, plant and equipment, net $ 690.6 $ 662.5 |
Goodwill and Identifiable Int27
Goodwill and Identifiable Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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, 2016 (a) $ 924.3 $ 670.2 $ 143.0 $ 96.3 $ 1,833.8 Year-to-date 3.3 4.6 — 1.5 9.4 Acquisition-related adjustments — 9.6 — — 9.6 Goodwill at September 30, 2017 (a) $ 927.6 $ 684.4 $ 143.0 $ 97.8 $ 1,852.8 (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 September 30, 2017 and December 31, 2016 were as follows: (In millions) As of September 30, 2017 As of December 31, 2016 Gross Accumulated Net Gross Accumulated Net Indefinite-lived tradenames $ 682.6 $ — $ 682.6 $ 671.8 $ — $ 671.8 Amortizable intangible assets Tradenames 18.6 (9.4 ) 9.2 15.8 (7.3 ) 8.5 Customer and contractual relationships 627.1 (226.0 ) 401.1 611.9 (203.1 ) 408.8 Patents/proprietary technology 57.2 (44.7 ) 12.5 61.9 (44.0 ) 17.9 Total 702.9 (280.1 ) 422.8 689.6 (254.4 ) 435.2 Total identifiable intangibles $ 1,385.5 $ (280.1 ) $ 1,105.4 $ 1,361.4 $ (254.4 ) $ 1,107.0 |
Financial Instruments (Tables)
Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Values of Derivative Instruments | The fair values of derivative instruments on the consolidated balance sheets as of September 30, 2017 and December 31, 2016 were as follows: (In millions) Fair Value Location September 30, December 31, Assets Foreign exchange contracts Other current assets $ 3.0 $ 2.8 Net investment hedges Other current assets 0.2 0.6 Total assets $ 3.2 $ 3.4 Liabilities Foreign exchange contracts Other current liabilities $ 5.1 $ 2.9 Net investment hedges Other current liabilities 0.4 0.2 Total current liabilities $ 5.5 $ 3.1 |
Effects of Derivative Financial Instruments on Consolidated Statements of Income | The effects of derivative financial instruments on the statements of comprehensive income for the nine and three months ended September 30, 2017 and 2016 were: (In millions) Gain (Loss) Recognized in Income Type of hedge Location 2017 2016 Cash flow Cost of products sold $ 0.9 $ (2.6 ) Fair value Other (income) expense, net (1.4 ) 1.3 Total $ (0.5 ) $ (1.3 ) (In millions) Gain (Loss) Recognized in Income Three Type of hedge Location 2017 2016 Cash flow Cost of products sold $ (0.1 ) $ (1.2 ) Fair value Other (income) expense, net (0.9 ) 0.3 Total $ (1.0 ) $ (0.9 ) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Carrying Value 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 September 30, 2017 and December 31, 2016 were as follows: (In millions) September 30, 2017 December 31, 2016 Carrying Fair Carrying Fair Revolving credit facility $ 570.0 $ 570.0 $ 540.0 $ 540.0 Senior Notes 892.2 927.5 891.1 919.2 |
Assets and Liabilities Measured at Fair Value on Recurring Basis | Assets and liabilities measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016 were as follows: (In millions) Fair Value September 30, December 31, Assets Derivative financial instruments (level 2) $ 3.2 $ 3.4 Deferred compensation program assets (level 2) 7.0 4.5 Total assets $ 10.2 $ 7.9 Liabilities Derivative financial instruments (level 2) $ 5.5 $ 3.1 |
Accumulated Other Comprehensi30
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Net of Tax Components of and Changes in Accumulated Other Comprehensive Loss | 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 0.9 (7.3 ) 9.0 2.6 Amounts reclassified from accumulated other comprehensive loss — 2.8 (5.1 ) (2.3 ) Net current-period other comprehensive income (loss) 0.9 (4.5 ) 3.9 0.3 Balance at September 30, 2016 $ (12.4 ) $ (2.4 ) $ (37.4 ) $ (52.2 ) Balance at December 31, 2016 $ (28.0 ) $ (0.6 ) $ (43.3 ) $ (71.9 ) Amounts classified into accumulated other comprehensive loss 47.0 0.6 3.5 51.1 Amounts reclassified from accumulated other comprehensive loss — (0.6 ) (4.1 ) (4.7 ) Net current-period other comprehensive income (loss) 47.0 — (0.6 ) 46.4 Balance at September 30, 2017 $ 19.0 $ (0.6 ) $ (43.9 ) $ (25.5 ) |
Reclassifications Out of Accumulated Other Comprehensive Loss | The reclassifications out of accumulated other comprehensive loss for the nine and three months ended September 30, 2017 and 2016 were as follows: (In millions) Details about Accumulated Other Comprehensive Loss Components Amount Reclassified from Affected Line Item in 2017 2016 (Losses) gains on cash flow hedges Foreign exchange contracts $ 0.5 $ (2.5 ) Cost of products sold Commodity contracts 0.4 (0.1 ) Cost of products sold 0.9 (2.6 ) Total before tax (0.3 ) (0.2 ) Tax expense $ 0.6 $ (2.8 ) Net of tax Defined benefit plan items Recognition of prior service credits $ 5.1 $ 10.0 (a) Recognition of actuarial gains (losses) 1.3 (1.9 ) (a) 6.4 8.1 Total before tax (2.3 ) (3.0 ) Tax expense $ 4.1 $ 5.1 Net of tax Total reclassifications for the period $ 4.7 $ 2.3 Net of tax (In millions) Details about Accumulated Other Comprehensive Loss Components Amount Reclassified from Affected Line Item in 2017 2016 Gains (losses) on cash flow hedges Foreign exchange contracts $ (0.5 ) $ (1.3 ) Cost of products sold Commodity contracts 0.4 0.1 Cost of products sold (0.1 ) (1.2 ) Total before tax 0.2 — Tax expense $ 0.1 $ (1.2 ) Net of tax Defined benefit plan items Recognition of prior service credits $ — $ 3.8 (a) Recognition of actuarial gains (losses) 1.3 (1.0 ) (a) 1.3 2.8 Total before tax (0.4 ) (1.0 ) Tax expense $ 0.9 $ 1.8 Net of tax Total reclassifications for the period $ 1.0 $ 0.6 Net of tax (a) 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) | 9 Months Ended |
Sep. 30, 2017 | |
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 nine and three months ended September 30, 2017 and 2016 were as follows: (In millions) Nine Months Ended September 30, Pension Benefits Postretirement Benefits 2017 2016 2017 2016 Service cost $ 0.4 $ 7.2 $ — $ — Interest cost 25.0 25.8 — 0.2 Expected return on plan assets (28.0 ) (27.9 ) — — Recognition of prior service costs (credits) — — (5.1 ) (10.0 ) Recognition of actuarial losses (gains) 0.3 — (1.6 ) 1.9 Net periodic benefit (income) cost $ (2.3 ) $ 5.1 $ (6.7 ) $ (7.9 ) (In millions) Three Months Ended September 30, Pension Benefits Postretirement Benefits 2017 2016 2017 2016 Service cost $0.1 $1.6 $— $— Interest cost 8.3 8.4 — (0.1) Expected return on plan assets (9.3) (8.9) — — Recognition of prior service costs (credits) — — — (3.8) Recognition of actuarial losses (gains) 0.3 — (1.6) 1.0 Net periodic benefit (income) cost $ (0.6 ) $ 1.1 $ (1.6 ) $ (2.9 ) |
Product Warranties (Tables)
Product Warranties (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Activity Related to Product Warranty Liability | The following table summarizes activity related to our product warranty liability for the nine months ended September 30, 2017 and 2016, respectively. (In millions) Nine Months Ended 2017 2016 Reserve balance at January 1, $ 16.2 $ 16.0 Provision for warranties issued 23.3 23.8 Settlements made (in cash or in kind) (17.0 ) (22.8 ) Foreign translation adjustments (1.2 ) — Acquisitions 0.7 0.4 Reserve balance at September 30, $ 22.0 $ 17.4 |
Information on Business Segme33
Information on Business Segments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Net Sales and Operating Income by Segment | Net sales and operating income for the nine and three months ended September 30, 2017 and 2016 by segment were as follows: Nine Months Ended September 30, (In millions) 2017 2016 % Change Net Sales Cabinets $ 1,841.2 $ 1,797.2 2.4 % Plumbing 1,251.5 1,108.0 13.0 Doors 374.2 351.3 6.5 Security 433.9 426.8 1.7 Net sales $ 3,900.8 $ 3,683.3 5.9 % Operating Income Cabinets $ 205.4 $ 194.0 5.9 % Plumbing 270.8 242.6 11.6 Doors 55.8 46.1 21.0 Security 56.4 44.7 26.2 Less: Corporate expenses (59.3 ) (61.1 ) 2.9 Operating income $ 529.1 $ 466.3 13.5 % Corporate expenses General and administrative expense $ (63.8 ) $ (61.3 ) Defined benefit plan income 3.2 2.1 Recognition of defined benefit plan actuarial gains (losses) 1.3 (1.9 ) Total Corporate expenses $ (59.3 ) $ (61.1 ) 2.9 % Three Months Ended September 30, (In millions) 2017 2016 % Change Net Sales Cabinets $ 614.2 $ 602.1 2.0 % Plumbing 438.3 391.1 12.1 Doors 138.5 129.2 7.2 Security 157.6 156.6 0.6 Net sales $ 1,348.6 $ 1,279.0 5.4 % Operating Income Cabinets $ 69.7 $ 74.8 (6.8 )% Plumbing 97.3 84.0 15.8 Doors 25.1 22.3 12.6 Security 27.7 22.9 21.0 Less: Corporate expenses (18.0 ) (20.9 ) 13.9 Operating income $ 201.8 $ 183.1 10.2 % Corporate expenses General and administrative expense $ (20.5 ) $ (20.5 ) Defined benefit plan income 1.2 0.6 Recognition of defined benefit plan actuarial gains (losses) 1.3 (1.0 ) Total Corporate expenses $ (18.0 ) $ (20.9 ) 13.9 % |
Restructuring and Other Charg34
Restructuring and Other Charges (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Pre Tax Restructuring and Other Charges | Pre-tax (In millions) Nine Months Ended September 30, 2017 Restructuring Other Charges (a) Total Plumbing 1.6 $ — $ 1.6 Security 1.9 0.9 2.8 Total $ 3.5 $ 0.9 $ 4.4 (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. (In millions) Nine Months Ended September 30, 2016 Restructuring Other Charges (a) Total Cabinets $ 1.8 $ — $ 1.8 Plumbing 1.1 0.8 1.9 Security 9.5 3.5 13.0 Total $ 12.4 $ 4.3 $ 16.7 a) “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. (In millions) Three Months Ended September 30, 2017 Restructuring Other Charges (a) Total Doors $ 0.2 $ (0.1 ) $ 0.1 Security 0.2 0.3 0.5 Total $ 0.4 $ 0.2 $ 0.6 (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. (In millions) Three Months Ended September 30, 2016 Restructuring Other Charges (a) Total Plumbing $ 0.4 $ 0.5 $ 0.9 Security 2.7 1.0 3.7 Total $ 3.1 $ 1.5 $ 4.6 (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. |
Reconciliation of Restructuring Liability | Reconciliation of Restructuring Liability (In millions) Balance at 2017 Cash (a) Non-Cash Write-offs Balance at Workforce reduction costs $ 2.4 $ 2.8 $ (2.9 ) $ (0.5 ) $ 1.8 Other 0.6 0.7 (1.3 ) — 0.0 $ 3.0 $ 3.5 $ (4.2 ) $ (0.5 ) $ 1.8 (a) Cash expenditures primarily related to severance charges. (In millions) Balance at 2016 Cash (a) Non-Cash Write-offs (b) Balance at Workforce reduction costs $ 10.4 $ 8.7 $ (15.0 ) $ 0.2 $ 4.3 Other 0.5 3.7 (3.0 ) (0.6 ) 0.6 $ 10.9 $ 12.4 $ (18.0 ) $ (0.4 ) $ 4.9 (a) Cash expenditures primarily related to severance charges. (b) Non-cash |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Computations of Earnings per Common Share | The computations of earnings per common share were as follows: (In millions, except per share data) Nine Months Ended Three Months Ended 2017 2016 2017 2016 Income from continuing operations, net of tax $ 347.3 $ 308.0 $ 129.6 $ 121.9 Less: Noncontrolling interest 0.1 (0.1 ) 0.1 — Income from continuing operations for EPS 347.2 308.1 129.5 121.9 Income from discontinued operations (2.6 ) 1.5 — 1.5 Net income attributable to Fortune Brands $ 344.6 $ 309.6 $ 129.5 $ 123.4 Earnings per common share Basic Continuing operations $ 2.26 $ 2.00 $ 0.84 $ 0.79 Discontinued operations (0.02 ) 0.01 — 0.01 Net income attributable to Fortune Brands common stockholders $ 2.24 $ 2.01 $ 0.84 $ 0.80 Diluted Continuing operations $ 2.22 $ 1.95 $ 0.83 $ 0.77 Discontinued operations (0.02 ) 0.01 — 0.01 Net income attributable to Fortune Brands common stockholders $ 2.20 $ 1.96 $ 0.83 $ 0.78 Basic average shares outstanding 153.7 154.4 153.5 154.2 Stock-based awards 2.5 3.6 2.4 3.4 Diluted average shares outstanding 156.2 158.1 155.9 157.6 Antidilutive stock-based awards excluded from weighted-average number of shares outstanding for diluted earnings per share 0.6 0.5 0.6 — |
Balance Sheet Information - Sup
Balance Sheet Information - Supplemental Information on Balance Sheets (Detail) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Inventories: | ||
Raw materials and supplies | $ 211.6 | $ 207.6 |
Work in process | 61.8 | 55.9 |
Finished products | 326.7 | 267.6 |
Total inventories | 600.1 | 531.1 |
Property, plant and equipment, gross | 1,715.8 | 1,630.7 |
Less: accumulated depreciation | 1,025.2 | 968.2 |
Property, plant and equipment, net | $ 690.6 | $ 662.5 |
Acquisitions and Dispositions -
Acquisitions and Dispositions - Additional Information (Detail) - USD ($) $ in Millions | 1 Months Ended | 9 Months Ended | |
Sep. 30, 2016 | May 31, 2016 | Sep. 30, 2017 | |
Acquisitions and Dispositions [Line Items] | |||
Loss on sale of product line | $ 2.4 | ||
TCL Manufacturing Ltd [Member] | |||
Acquisitions and Dispositions [Line Items] | |||
Business acquisition purchase price | $ 166 | ||
Business acquisition, liabilities assumed | $ 3 | ||
Goodwill expected to be deductible for income tax purposes | $ 49 | ||
Riobel [Member] | |||
Acquisitions and Dispositions [Line Items] | |||
Payment to acquire business | $ 94.6 |
Goodwill and Identifiable Int38
Goodwill and Identifiable Intangible Assets - Additional Information (Detail) $ in Millions | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2017USD ($) | Dec. 31, 2016USD ($)asset_group | ||
Goodwill [Line Items] | |||
Goodwill | [1] | $ 1,852.8 | $ 1,833.8 |
Other intangible assets, net of accumulated amortization | 1,105.4 | 1,107 | |
Carrying value of tradenames | 682.6 | 671.8 | |
Plumbing [Member] | |||
Goodwill [Line Items] | |||
Goodwill | [1] | 684.4 | 670.2 |
Goodwill decrease due to foreign exchange adjustments | 19 | ||
Increase in gross identifiable intangible assets | 24.1 | ||
Cabinets [Member] | |||
Goodwill [Line Items] | |||
Goodwill | [1] | 927.6 | $ 924.3 |
Number of tradenames, with the fair value exceeded their carrying value | asset_group | 1 | ||
Doors [Member] | |||
Goodwill [Line Items] | |||
Goodwill | [1] | 143 | $ 143 |
Number of tradenames, with the fair value exceeded their carrying value | asset_group | 1 | ||
Cabinets and Doors Segment [Member] | |||
Goodwill [Line Items] | |||
Carrying value of tradenames | $ 168 | ||
Minimum [Member] | Tradenames and Customer Relationship [Member] | |||
Goodwill [Line Items] | |||
Amortizable identifiable intangible assets, estimated useful life | 2 years | ||
Maximum [Member] | Cabinets [Member] | Tradenames [Member] | |||
Goodwill [Line Items] | |||
Percentage of fair value of reporting unit in excess of carrying amount | 10.00% | ||
Maximum [Member] | Doors [Member] | Tradenames [Member] | |||
Goodwill [Line Items] | |||
Percentage of fair value of reporting unit in excess of carrying amount | 10.00% | ||
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 Int39
Goodwill and Identifiable Intangible Assets - Change in Net Carrying Amount of Goodwill by Segment (Detail) $ in Millions | 9 Months Ended | |
Sep. 30, 2017USD ($) | ||
Goodwill [Line Items] | ||
Beginning Balance | $ 1,833.8 | [1] |
Year-to-date translation adjustments | 9.4 | |
Acquisition-related adjustments | 9.6 | |
Ending Balance | 1,852.8 | [1] |
Cabinets [Member] | ||
Goodwill [Line Items] | ||
Beginning Balance | 924.3 | [1] |
Year-to-date translation adjustments | 3.3 | |
Ending Balance | 927.6 | [1] |
Plumbing [Member] | ||
Goodwill [Line Items] | ||
Beginning Balance | 670.2 | [1] |
Year-to-date translation adjustments | 4.6 | |
Acquisition-related adjustments | 9.6 | |
Ending Balance | 684.4 | [1] |
Doors [Member] | ||
Goodwill [Line Items] | ||
Beginning Balance | 143 | [1] |
Ending Balance | 143 | [1] |
Security [Member] | ||
Goodwill [Line Items] | ||
Beginning Balance | 96.3 | [1] |
Year-to-date translation adjustments | 1.5 | |
Ending Balance | $ 97.8 | [1] |
[1] | Net of accumulated impairment losses of $399.5 million in the Doors segment. |
Goodwill and Identifiable Int40
Goodwill and Identifiable Intangible Assets - Change in Net Carrying Amount of Goodwill by Segment (Parenthetical) (Detail) $ in Millions | Sep. 30, 2017USD ($) |
Doors [Member] | |
Goodwill [Line Items] | |
Accumulated impairment losses | $ 399.5 |
Goodwill and Identifiable Int41
Goodwill and Identifiable Intangible Assets - Gross Carrying Value and Accumulated Amortization by Class of Identifiable Intangible Assets (Detail) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Intangible Assets [Line Items] | ||
Gross Carrying Amounts, Total identifiable intangibles | $ 1,385.5 | $ 1,361.4 |
Gross Carrying Amounts, Finite Lived | 702.9 | 689.6 |
Accumulated Amortization, Finite Lived | (280.1) | (254.4) |
Net Book Value, Total identifiable intangibles | 1,105.4 | 1,107 |
Net Book Value, Finite Lived | 422.8 | 435.2 |
Gross Carrying Amounts, Indefinite-lived tradenames | 682.6 | 671.8 |
Net Book Value, Indefinite-lived tradenames | 682.6 | 671.8 |
Tradenames [Member] | ||
Intangible Assets [Line Items] | ||
Gross Carrying Amounts, Finite Lived | 18.6 | 15.8 |
Accumulated Amortization, Finite Lived | (9.4) | (7.3) |
Net Book Value, Finite Lived | 9.2 | 8.5 |
Customer and contractual relationships [Member] | ||
Intangible Assets [Line Items] | ||
Gross Carrying Amounts, Finite Lived | 627.1 | 611.9 |
Accumulated Amortization, Finite Lived | (226) | (203.1) |
Net Book Value, Finite Lived | 401.1 | 408.8 |
Patents/proprietary technology [Member] | ||
Intangible Assets [Line Items] | ||
Gross Carrying Amounts, Finite Lived | 57.2 | 61.9 |
Accumulated Amortization, Finite Lived | (44.7) | (44) |
Net Book Value, Finite Lived | $ 12.5 | $ 17.9 |
Asset Impairment - Additional i
Asset Impairment - Additional information (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Mar. 31, 2017 | Sep. 30, 2017 | |
Asset Impairment Charges [Line Items] | ||
Asset impairment charge | $ 3.2 | $ 3.2 |
Definite-lived intangible assets | 3 | |
Fixed Assets | $ 0.2 |
External Debt and Financing A43
External Debt and Financing Arrangements - Additional Information (Detail) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2016 | Sep. 30, 2017 | Dec. 31, 2016 | |
Debt Instrument [Line Items] | ||||
Revolving credit facility, extended expiration date | 2021-06 | |||
Prepaid debt issuance cost, write off | $ 1,300,000 | |||
Uncommitted bank lines of credit, which provide for unsecured borrowings for working capital | $ 25,700,000 | $ 25,700,000 | ||
Uncommitted bank lines of credit, which provide for unsecured borrowings for working capital amount outstanding | $ 0 | 0 | ||
LIBOR [Member] | Minimum [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate over LIBOR | 0.90% | |||
LIBOR [Member] | Maximum [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate over LIBOR | 1.50% | |||
Revolving Credit Facility [Member] | ||||
Debt Instrument [Line Items] | ||||
Term loan, outstanding borrowings | $ 570,000,000 | 540,000,000 | ||
Current portion of long-term debt | 0 | 0 | ||
Amended and Restated Credit Agreement [Member] | Revolving Credit Facility [Member] | ||||
Debt Instrument [Line Items] | ||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 1,250,000,000 | |||
Senior Unsecured Notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Senior unsecured notes, price | $ 900,000,000 | |||
Senior notes, outstanding amount | $ 892,200,000 | $ 891,100,000 | ||
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% |
Financial Instruments - Additio
Financial Instruments - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Derivative [Line Items] | ||||
Net settlement payable | $ 2,300,000 | $ 2,300,000 | ||
Estimated amount of net foreign currency derivative losses in other comprehensive income reclassified to earnings within 12 months | (1,200,000) | (1,200,000) | ||
Cash flow hedge | ||||
Derivative [Line Items] | ||||
Net losses recognized in OCI | (3,800,000) | $ 0 | (100,000) | $ (8,000,000) |
Foreign exchange contracts [Member] | ||||
Derivative [Line Items] | ||||
Notional amount of foreign currency derivative hedges | $ 190,200,000 | $ 190,200,000 |
Financial Instruments - Fair Va
Financial Instruments - Fair Values of Derivative Instruments (Detail) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Derivatives, Fair Value [Line Items] | ||
Derivative assets, fair value | $ 3.2 | $ 3.4 |
Derivative liabilities, fair value | 5.5 | 3.1 |
Net investment hedges [Member] | Other current assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets, fair value | 0.2 | 0.6 |
Net investment hedges [Member] | Other current liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liabilities, fair value | 0.4 | 0.2 |
Foreign exchange contracts [Member] | Other current assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative assets, fair value | 3 | 2.8 |
Foreign exchange contracts [Member] | Other current liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liabilities, fair value | $ 5.1 | $ 2.9 |
Financial Instruments - Effects
Financial Instruments - Effects of Derivative Financial Instruments on Consolidated Statements of Income (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
(Loss) Gain Recognized in Income | $ (1) | $ (0.9) | $ (0.5) | $ (1.3) |
Cash flow hedge | Cost of products sold [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
(Loss) Gain Recognized in Income | (0.1) | (1.2) | 0.9 | (2.6) |
Fair value hedge [Member] | Other (income) expense, net [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
(Loss) Gain Recognized in Income | $ (0.9) | $ 0.3 | $ (1.4) | $ 1.3 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) | Sep. 30, 2017USD ($) |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Assets or liabilities measured at fair value on recurring basis | $ 0 |
Fair Value Measurements - Carry
Fair Value Measurements - Carrying Value and Fair Value of Debt (Detail) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Carrying Value | Senior Unsecured Notes [Member] | ||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||
Fair Value | $ 892.2 | $ 891.1 |
Carrying Value | Revolving Credit Facility [Member] | ||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||
Fair Value | 570 | 540 |
Fair Value | Senior Unsecured Notes [Member] | ||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||
Fair Value | 927.5 | 919.2 |
Fair Value | Revolving Credit Facility [Member] | ||
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | ||
Fair Value | $ 570 | $ 540 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative financial instruments (level 2) | $ 3.2 | $ 3.4 |
Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets | 10.2 | 7.9 |
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) | 3.2 | 3.4 |
Deferred compensation program assets (level 2) | 7 | 4.5 |
Derivative financial instruments (level 2) | $ 5.5 | $ 3.1 |
Accumulated Other Comprehensi50
Accumulated Other Comprehensive Loss - After-Tax Components of and Changes in Accumulated Other Comprehensive (Loss) Income (Detail) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning Balance | $ 2,363 | $ 2,453.8 | |
Other comprehensive (loss) income, net of tax | 46.4 | 0.3 | |
Ending Balance | 2,545.9 | 2,360.2 | |
Foreign Currency Adjustments [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning Balance | (28) | (13.3) | |
Amounts classified into accumulated other comprehensive loss | 47 | 0.9 | |
Other comprehensive (loss) income, net of tax | 47 | 0.9 | |
Ending Balance | 19 | (12.4) | |
Derivative Hedging Gains (Loss) [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning Balance | (0.6) | 2.1 | |
Amounts classified into accumulated other comprehensive loss | 0.6 | (7.3) | |
Amounts reclassified from accumulated other comprehensive loss | (0.6) | 2.8 | |
Other comprehensive (loss) income, net of tax | (4.5) | ||
Ending Balance | (0.6) | (2.4) | |
Defined benefit plan items [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning Balance | [1] | (43.3) | (41.3) |
Amounts classified into accumulated other comprehensive loss | [1] | 3.5 | 9 |
Amounts reclassified from accumulated other comprehensive loss | [1] | (4.1) | (5.1) |
Other comprehensive (loss) income, net of tax | [1] | (0.6) | 3.9 |
Ending Balance | [1] | (43.9) | (37.4) |
Accumulated Other Comprehensive Loss [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning Balance | (71.9) | (52.5) | |
Amounts classified into accumulated other comprehensive loss | 51.1 | 2.6 | |
Amounts reclassified from accumulated other comprehensive loss | (4.7) | (2.3) | |
Other comprehensive (loss) income, net of tax | 46.4 | 0.3 | |
Ending Balance | $ (25.5) | $ (52.2) | |
[1] | See Note 11, "Defined Benefit Plans," for further information on the adjustments related to defined benefit plans. |
Accumulated Other Comprehensi51
Accumulated Other Comprehensive (Loss) Income - Reclassifications Out of Accumulated Other Comprehensive (Loss) Income (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||
Cost of products sold | $ 841.6 | $ 801 | $ 2,461.3 | $ 2,352.8 | |||
Derivative Hedging Gains (Loss) [Member] | |||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||
Reclassification from Accumulated Other Comprehensive Income (Loss), Current Period, Net of Tax | 0.6 | (2.8) | |||||
Defined benefit plan items [Member] | |||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||
Reclassification from Accumulated Other Comprehensive Income (Loss), Current Period, Net of Tax | [1] | 4.1 | 5.1 | ||||
Reclassification out of Accumulated Other Comprehensive Income (Loss) [Member] | |||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||
Reclassification from Accumulated Other Comprehensive Income (Loss), Current Period, Net of Tax | 1 | 0.6 | 4.7 | 2.3 | |||
Reclassification out of Accumulated Other Comprehensive Income (Loss) [Member] | Derivative Hedging Gains (Loss) [Member] | |||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax | (0.1) | (1.2) | 0.9 | (2.6) | |||
Reclassification from AOCI, Current Period, Tax | 0.2 | (0.3) | (0.2) | ||||
Reclassification from Accumulated Other Comprehensive Income (Loss), Current Period, Net of Tax | 0.1 | (1.2) | 0.6 | (2.8) | |||
Reclassification out of Accumulated Other Comprehensive Income (Loss) [Member] | Derivative Hedging Gains (Loss) [Member] | Foreign exchange contracts [Member] | |||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||
Cost of products sold | (0.5) | (1.3) | 0.5 | (2.5) | |||
Reclassification out of Accumulated Other Comprehensive Income (Loss) [Member] | Derivative Hedging Gains (Loss) [Member] | Commodity contracts [Member] | |||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||
Cost of products sold | 0.4 | 0.1 | 0.4 | (0.1) | |||
Reclassification out of Accumulated Other Comprehensive Income (Loss) [Member] | Prior service credits [Member] | |||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax | 3.8 | [2] | 5.1 | 10 | [2] | ||
Reclassification out of Accumulated Other Comprehensive Income (Loss) [Member] | Actuarial gains (losses) [Member] | |||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax | 1.3 | (1) | [2] | 1.3 | (1.9) | [2] | |
Reclassification out of Accumulated Other Comprehensive Income (Loss) [Member] | Defined benefit plan items [Member] | |||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax | 1.3 | 2.8 | 6.4 | 8.1 | |||
Reclassification from AOCI, Current Period, Tax | (0.4) | (1) | (2.3) | (3) | |||
Reclassification from Accumulated Other Comprehensive Income (Loss), Current Period, Net of Tax | $ 0.9 | $ 1.8 | $ 4.1 | $ 5.1 | |||
[1] | See Note 11, "Defined Benefit Plans," for further information on the adjustments related to defined benefit plans. | ||||||
[2] | 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 - Compone
Defined Benefit Plans - Components of Net Periodic Benefit Cost for Pension and Postretirement Benefits (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Defined Benefit Plan Disclosure [Line Items] | ||||
Recognition of actuarial losses (gains) | $ (1.3) | $ 1.9 | ||
Pension Benefits [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 0.1 | $ 1.6 | 0.4 | 7.2 |
Interest cost | 8.3 | 8.4 | 25 | 25.8 |
Expected return on plan assets | (9.3) | (8.9) | (28) | (27.9) |
Recognition of actuarial losses (gains) | 0.3 | 0.3 | ||
Net periodic benefit (income) cost | (0.6) | 1.1 | (2.3) | 5.1 |
Postretirement Benefits [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Interest cost | (0.1) | 0.2 | ||
Recognition of prior service costs (credits) | (3.8) | (5.1) | (10) | |
Recognition of actuarial losses (gains) | (1.6) | 1 | (1.6) | 1.9 |
Net periodic benefit (income) cost | $ (1.6) | $ (2.9) | $ (6.7) | $ (7.9) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Taxes [Line Items] | ||||
Effective income tax rate | 31.60% | 28.60% | 29.50% | 28.20% |
Maximum [Member] | ||||
Income Taxes [Line Items] | ||||
Reasonably possible decrease in unrecognized tax benefits | $ 1,500,000 | $ 1,500,000 |
Product Warranties - Activity R
Product Warranties - Activity Related to Product Warranty Liability (Detail) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Product Warranty Liability [Line Items] | ||
Reserve balance at the beginning of the year | $ 16.2 | $ 16 |
Provision for warranties issued | 23.3 | 23.8 |
Settlements made (in cash or in kind) | (17) | (22.8) |
Foreign translation adjustments | (1.2) | |
Acquisitions | 0.7 | 0.4 |
Reserve balance at end of year | $ 22 | $ 17.4 |
Information on Business Segme55
Information on Business Segments - Net Sales and Operating Income by Segment (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Net sales | $ 1,348.6 | $ 1,279 | $ 3,900.8 | $ 3,683.3 |
Operating Income (Loss) | $ 201.8 | 183.1 | 529.1 | 466.3 |
Recognition of defined benefit plan actuarial gains (losses) | $ 1.3 | (1.9) | ||
Net Sales, Percentage Change vs. Prior Year | 5.40% | 5.90% | ||
Operating Income (Loss), Percentage Change vs. Prior Year | 10.20% | 13.50% | ||
Corporate [Member] | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Operating Income (Loss) | $ (18) | (20.9) | $ (59.3) | (61.1) |
General and administrative expense | (20.5) | (20.5) | (63.8) | (61.3) |
Defined benefit plan costs | 1.2 | 0.6 | 3.2 | 2.1 |
Recognition of defined benefit plan actuarial gains (losses) | 1.3 | (1) | 1.3 | (1.9) |
Total Corporate expenses | $ (18) | (20.9) | $ (59.3) | (61.1) |
Operating Income (Loss), Percentage Change vs. Prior Year | 13.90% | 2.90% | ||
Total Corporate expenses, Percentage Change vs. Prior Year | 13.90% | 2.90% | ||
Cabinets [Member] | Operating Segments [Member] | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Net sales | $ 614.2 | 602.1 | $ 1,841.2 | 1,797.2 |
Operating Income (Loss) | $ 69.7 | 74.8 | $ 205.4 | 194 |
Net Sales, Percentage Change vs. Prior Year | 2.00% | 2.40% | ||
Operating Income (Loss), Percentage Change vs. Prior Year | (6.80%) | 5.90% | ||
Plumbing [Member] | Operating Segments [Member] | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Net sales | $ 438.3 | 391.1 | $ 1,251.5 | 1,108 |
Operating Income (Loss) | $ 97.3 | 84 | $ 270.8 | 242.6 |
Net Sales, Percentage Change vs. Prior Year | 12.10% | 13.00% | ||
Operating Income (Loss), Percentage Change vs. Prior Year | 15.80% | 11.60% | ||
Doors [Member] | Operating Segments [Member] | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Net sales | $ 138.5 | 129.2 | $ 374.2 | 351.3 |
Operating Income (Loss) | $ 25.1 | 22.3 | $ 55.8 | 46.1 |
Net Sales, Percentage Change vs. Prior Year | 7.20% | 6.50% | ||
Operating Income (Loss), Percentage Change vs. Prior Year | 12.60% | 21.00% | ||
Security [Member] | Operating Segments [Member] | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Net sales | $ 157.6 | 156.6 | $ 433.9 | 426.8 |
Operating Income (Loss) | $ 27.7 | $ 22.9 | $ 56.4 | $ 44.7 |
Net Sales, Percentage Change vs. Prior Year | 0.60% | 1.70% | ||
Operating Income (Loss), Percentage Change vs. Prior Year | 21.00% | 26.20% |
Restructuring and Other Charg56
Restructuring and Other Charges - Pre-tax Restructuring and Other Charges (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | ||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charges | $ 0.4 | $ 3.1 | $ 3.5 | $ 12.4 | |
Other Charges | [1] | 0.2 | 1.5 | 0.9 | 4.3 |
Total Charges | 0.6 | 4.6 | 4.4 | 16.7 | |
Operating Segments [Member] | Cabinets [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charges | 1.8 | ||||
Total Charges | 1.8 | ||||
Operating Segments [Member] | Plumbing [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charges | 0.4 | 1.6 | 1.1 | ||
Other Charges | [1] | 0.5 | 0.8 | ||
Total Charges | 0.9 | 1.6 | 1.9 | ||
Operating Segments [Member] | Security [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charges | 0.2 | 2.7 | 1.9 | 9.5 | |
Other Charges | [1] | 0.3 | 1 | 0.9 | 3.5 |
Total Charges | 0.5 | $ 3.7 | $ 2.8 | $ 13 | |
Operating Segments [Member] | Doors [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charges | 0.2 | ||||
Other Charges | [1] | (0.1) | |||
Total Charges | $ 0.1 | ||||
[1] | "Other Charges" represent charges directly related to restructuring initiatives that cannot be reported as restructuring under GAAP. Such costs may include losses on disposal of inventories, trade receivables allowances from exiting product lines, accelerated depreciation resulting from the closure of facilities and gains or losses on the sale of previously closed facilities. |
Restructuring and Other Charg57
Restructuring and Other Charges - Reconciliation of Restructuring Liability (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |||
Restructuring Cost and Reserve [Line Items] | ||||||
Beginning Balance | $ 3 | $ 10.9 | ||||
Provision | $ 0.4 | $ 3.1 | 3.5 | 12.4 | ||
Cash Expenditures | [1] | (4.2) | (18) | |||
Non-Cash Write-offs | (0.5) | (0.4) | [2] | |||
Ending Balance | 1.8 | 4.9 | 1.8 | 4.9 | ||
Workforce Reduction Costs [Member] | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Beginning Balance | 2.4 | 10.4 | ||||
Provision | 2.8 | 8.7 | ||||
Cash Expenditures | [1] | (2.9) | (15) | |||
Non-Cash Write-offs | (0.5) | 0.2 | [2] | |||
Ending Balance | 1.8 | 4.3 | 1.8 | 4.3 | ||
Other [Member] | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Beginning Balance | 0.6 | 0.5 | ||||
Provision | 0.7 | 3.7 | ||||
Cash Expenditures | [1] | (1.3) | (3) | |||
Non-Cash Write-offs | [2] | (0.6) | ||||
Ending Balance | $ 0 | $ 0.6 | $ 0 | $ 0.6 | ||
[1] | Cash expenditures primarily related to severance charges. | |||||
[2] | Non-cash write-offs include 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 | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Schedule of Earnings Per Share, Basic and Diluted, by Common Class [Line Items] | ||||
Income from continuing operations, net of tax | $ 129.6 | $ 121.9 | $ 347.3 | $ 308 |
Less: Noncontrolling interest | 0.1 | 0.1 | (0.1) | |
Income from continuing operations for EPS | 129.5 | 121.9 | 347.2 | 308.1 |
Income from discontinued operations | 1.5 | (2.6) | 1.5 | |
Net income attributable to Fortune Brands | $ 129.5 | $ 123.4 | $ 344.6 | $ 309.6 |
Basic | ||||
Continuing operations | $ 0.84 | $ 0.79 | $ 2.26 | $ 2 |
Discontinued operations | 0.01 | (0.02) | 0.01 | |
Net income attributable to Fortune Brands common stockholders | 0.84 | 0.80 | 2.24 | 2.01 |
Diluted | ||||
Continuing operations | 0.83 | 0.77 | 2.22 | 1.95 |
Discontinued operations | 0.01 | (0.02) | 0.01 | |
Net income attributable to Fortune Brands common stockholders | $ 0.83 | $ 0.78 | $ 2.20 | $ 1.96 |
Basic average shares outstanding | 153.5 | 154.2 | 153.7 | 154.4 |
Stock-based awards | 2.4 | 3.4 | 2.5 | 3.6 |
Diluted average shares outstanding | 155.9 | 157.6 | 156.2 | 158.1 |
Antidilutive stock-based awards excluded from weighted-average number of shares outstanding for diluted earnings per share | 0.6 | 0.6 | 0.5 |