Masco (MAS) 10-Q 26 Apr 16 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information	3 Months Ended
	Mar. 31, 2016shares
Document and Entity Information [Abstract]
Entity Registrant Name	MASCO CORP /DE/
Entity Central Index Key	62,996
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding (in shares)	332,746,136
Entity Current Reporting Status	Yes

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Mar. 31, 2016	Dec. 31, 2015
Current assets:
Cash and cash investments	$ 2,175	$ 1,468
Short-term bank deposits	195	248
Receivables	1,036	853
Prepaid expenses and other	87	72
Inventories:
Finished goods	420	358
Raw material	244	238
Work in process	91	91
Total	755	687
Total current assets	4,248	3,328
Property and equipment, net	1,040	1,027
Goodwill	844	839
Other intangible assets, net	158	160
Other assets	264	310
Total assets	6,554	5,664
Current liabilities:
Notes payable	1,303	1,004
Accounts payable	834	749
Accrued liabilities	652	752
Total current liabilities	2,789	2,505
Long-term debt	2,993	2,403
Other liabilities	688	698
Total liabilities	$ 6,470	$ 5,606
Commitments and contingencies
Masco Corporation’s shareholders’ equity:
Common shares, par value $1 per share Authorized shares: 1,400,000,000; Issued and outstanding: 2016 – 328,700,000 ; 2015 – 330,500,000	$ 329	$ 330
Preferred shares authorized: 1,000,000; Issued and outstanding: 2016 and 2015 – None	0	0
Paid-in capital	0	0
Retained deficit	(310)	(300)
Accumulated other comprehensive loss	(145)	(165)
Total Masco Corporation’s shareholders’ deficit	(126)	(135)
Noncontrolling interest	210	193
Total equity	84	58
Total liabilities and equity	$ 6,554	$ 5,664

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Common share, par value (in dollars per share)	$ 1	$ 1
Common shares, shares authorized	1,400,000,000	1,400,000,000
Common shares, shares issued	328,700,000	330,500,000
Common shares, shares outstanding	328,700,000	330,500,000
Preferred shares, shares authorized	1,000,000	1,000,000
Preferred shares, shares issued	0	0
Preferred shares, shares outstanding	0	0

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Income Statement [Abstract]
Net sales	$ 1,720	$ 1,659
Cost of sales	1,151	1,164
Gross profit	569	495
Selling, general and administrative expenses	335	330
Operating profit	234	165
Other income (expense), net:
Interest expense	(56)	(56)
Other, net	(1)	1
Total other income (expense), net	(57)	(55)
Income from continuing operations before income taxes	177	110
Income tax expense	(58)	(40)
Income from continuing operations	119	70
Income from discontinued operations, net	0	3
Net income	119	73
Less: Net income attributable to noncontrolling interest	10	9
Net income attributable to Masco Corporation	$ 109	$ 64
Basic:
Income from continuing operations (in dollars per share)	$ 0.33	$ 0.17
Income (loss) from discontinued operations, net (in dollars per share)	0	0.01
Net income (in dollars per share)	0.33	0.18
Diluted:
Income from continuing operations (in dollars per share)	0.32	0.17
Income (loss) from discontinued operations, net (in dollars per share)	0	0.01
Net income (in dollars per share)	$ 0.32	$ 0.18
Amounts attributable to Masco Corporation:
Income from continuing operations	$ 109	$ 61
Income from discontinued operations, net	0	3
Net income attributable to Masco Corporation	$ 109	$ 64

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Statement of Comprehensive Income [Abstract]
Net income	$ 119	$ 73
Less: Net income attributable to noncontrolling interest	10	9
Net income attributable to Masco Corporation	109	64
Other comprehensive income (loss), net of tax
Cumulative translation adjustment	24	(96)
Pension and other post-retirement benefits	3	4
Other comprehensive income (loss)	27	(92)
Less: Other comprehensive income (loss) attributable to noncontrolling interest	7	(23)
Other comprehensive income (loss) attributable to Masco Corporation	20	(69)
Total comprehensive income (loss)	146	(19)
Less: Total comprehensive income (loss) attributable to the noncontrolling interest	17	(14)
Total comprehensive income (loss) attributable to Masco Corporation	$ 129	$ (5)

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES:
Cash provided by operations	$ 189	$ 144
Increase in receivables	(198)	(244)
Increase in inventories	(63)	(56)
(Decrease) increase in accounts payable and accrued liabilities, net	(28)	4
Net cash for operating activities	(100)	(152)
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES:
Purchase of Company common stock	(86)	(103)
Cash dividends paid	(32)	(32)
Issuance of notes, net of issuance costs	889	497
Issuance of Company common stock	1	0
Excess tax benefit from stock-based compensation	11	0
Decrease in debt, net	(2)	0
Net cash from financing activities	781	362
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES:
Capital expenditures	(37)	(32)
Acquisition of companies, net of cash acquired	0	(26)
Proceeds from disposition of:
Short-term bank deposits	60	141
Other financial investments	0	3
Property and equipment	0	3
Purchases of:
Short-term bank deposits	0	(63)
Other, net	(3)	(15)
Net cash from investing activities	20	11
Effect of exchange rate changes on cash and cash investments	6	(26)
CASH AND CASH INVESTMENTS:
Increase for the period	707	195
At January 1	1,468	1,383
At March 31	$ 2,175	$ 1,578

CONSOLIDATED STATEMENTS OF SHAR

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Millions	Total	Common Shares ($1 par value)	Paid-In Capital	Retained Earnings (Deficit)	Accumulated Other Comprehensive Loss	Noncontrolling Interest
Balance at Dec. 31, 2014	$ 1,128	$ 345	$ 0	$ 690	$ (111)	$ 204
Increase (Decrease) in Stockholders' Equity
Total comprehensive (loss) income	(19)			64	(69)	(14)
Shares issued	(5)	3	(8)
Shares retired:
Repurchased	(106)	(4)		(102)
Surrendered (non-cash)	(16)	(1)		(15)
Cash dividends declared	(31)			(31)
Stock-based compensation	8		8
Balance at Mar. 31, 2015	959	343	0	606	(180)	190
Balance at Dec. 31, 2015	58	330	0	(300)	(165)	193
Increase (Decrease) in Stockholders' Equity
Total comprehensive (loss) income	146			109	20	17
Shares issued	(6)	2	(8)
Shares retired:
Repurchased	(86)	(3)	(7)	(76)
Surrendered (non-cash)	(11)			(11)
Cash dividends declared	(32)			(32)
Stock-based compensation	15		15
Balance at Mar. 31, 2016	$ 84	$ 329	$ 0	$ (310)	$ (145)	$ 210

Accounting Policies

Accounting Policies	3 Months Ended
	Mar. 31, 2016
Accounting Policies [Abstract]
Accounting Policies	ACCOUNTING POLICIES In our opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments, of a normal recurring nature, necessary to present fairly our financial position as at March 31, 2016 , and our results of operations, comprehensive income (loss), cash flows and changes in shareholders’ equity for the three months ended March 31, 2016 and 2015 . The condensed consolidated balance sheet at December 31, 2015 was derived from audited financial statements. Reclassification. Certain prior year amounts have been reclassified to conform to the 2016 presentation in the condensed consolidated financial statements. Recently Issued Accounting Pronouncements. In February 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2015-02 (“ASU 2015-02”) “Consolidation (Topic 810) — Amendments to the Consolidations Analysis,” which modifies certain aspects of both the variable interest entities and voting interest entities models. We adopted ASU 2015-02 on January 1, 2016. The adoption of the new standard did not have an impact on our financial position or our results of operations. In April 2015, the FASB issued Accounting Standards Update 2015‑03 (“ASU 2015‑03”) “Interest - Imputation of Interest (Subtopic 835‑30) - Simplifying the Presentation of Debt Issuance Costs,” that requires that all costs incurred to issue debt be presented in the balance sheet as a direct deduction from the carrying value of the debt. In August 2015, the FASB issued ASU 2015‑15 to clarify that debt issuance costs related to line‑of‑credit arrangements may remain classified as an asset. We retrospectively adopted both ASU 2015‑03 and ASU 2015‑15 on January 1, 2016. As a result of the retrospective adoption of the standards, we reclassified $15 million of debt issuance costs from other assets to long-term debt, and $1 million of debt issuance costs from other assets to notes payable, as of December 31, 2015. In May 2014, the FASB issued a new standard for revenue recognition, Accounting Standards Codification 606 (“ASC 606”). The purpose of ASC 606 is to provide a single, comprehensive revenue recognition model for all contracts with customers to improve comparability across industries. ASC 606 is effective for us for annual periods beginning January 1, 2018. We are currently evaluating the impact the adoption of this new standard will have on our results of operations. In January 2016, the FASB issued Accounting Standards Update 2016-01 (“ASU 2016-01”), “Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities”, which primarily affects the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. ASU 2016-01 is effective for us for annual periods beginning January 1, 2018. We are currently evaluating the impact the adoption of this new standard will have on our financial position and results of operations. In February 2016, the FASB issued a new standard for leases, Accounting Standards Codification 842 (“ASC 842”), which changes the accounting model of identifying and accounting for leases. ASC 842 is effective for us for annual periods beginning January 1, 2019. We are currently evaluating the impact the adoption of this new standard will have on our financial position and results of operations. In March 2016, the FASB issued Accounting Standard Update 2016-09 (“ASU 2016-09”), “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”, which requires the tax effects related to share-based payments to be recorded through the income statement and simplifies the accounting requirements for forfeitures and employers' tax withholding requirements. ASU 2016-09 is effective for us for annual periods beginning January 1, 2017. We are currently evaluating the impact the adoption of this new standard will have on our financial position and results of operations.

Discontinued Operations

Discontinued Operations	3 Months Ended
	Mar. 31, 2016
Discontinued Operations and Disposal Groups [Abstract]
Discontinued Operations	DISCONTINUED OPERATIONS The presentation of discontinued operations includes a component or group of components that we have or intend to dispose of, and represents a strategic shift that has (or will have) a major effect on our operations and financial results. For spin off transactions, discontinued operations treatment is appropriate following the completion of the spin off. On September 30, 2014, we announced a plan to spin off 100 percent of our Installation and Other Services businesses into an independent, publicly-traded company named TopBuild Corp. (“TopBuild”) through a tax-free distribution of the stock of TopBuild to our stockholders. We initiated the spin off as TopBuild was no longer considered core to our long-term growth strategy in branded building products. We completed the spin off on June 30, 2015 at which time we accounted for it as a discontinued operation. Gains from this discontinued operation were included in income from discontinued operations, net, in the condensed consolidated statement of operations for the three months ended March 31, 2015. The major classes of line items constituting income from discontinued operations, net, in millions: Three Months Ended 2016 2015 Net sales $ — $ 358 Cost of sales — 285 Gross profit — 73 Selling, general and administrative expenses — 68 Income from discontinued operations $ — $ 5 Income tax expense — (2 ) Income from discontinued operations, net $ — $ 3 Other selected financial information for TopBuild during the period owned by us was as follows, in millions: Three Months Ended 2016 2015 Depreciation and amortization $ — $ 3 Capital expenditures $ — $ 2 In conjunction with the spin off, we entered into a Transition Services Agreement with TopBuild to provide TopBuild administrative services subsequent to the separation. The fees for services rendered under the Transition Services Agreement are not material to our results of operations.

Goodwill and Other Intangible A

Goodwill and Other Intangible Assets	3 Months Ended
	Mar. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill and Other Intangible Assets	GOODWILL AND OTHER INTANGIBLE ASSETS The changes in the carrying amount of goodwill for the three months ended March 31, 2016 , by segment, were as follows, in millions: Gross Goodwill At March 31, 2016 Accumulated Net Goodwill At March 31, 2016 Plumbing Products $ 530 $ (340 ) $ 190 Decorative Architectural Products 294 (75 ) 219 Cabinetry Products 240 (59 ) 181 Windows and Other Specialty Products 988 (734 ) 254 Total $ 2,052 $ (1,208 ) $ 844 Gross Goodwill At December 31, 2015 Accumulated Impairment Losses Net Goodwill At December 31, 2015 Other(A) Net Goodwill At March 31, 2016 Plumbing Products $ 525 $ (340 ) $ 185 $ 5 $ 190 Decorative Architectural Products 294 (75 ) 219 — 219 Cabinetry Products 240 (59 ) 181 — 181 Windows and Other Specialty Products 988 (734 ) 254 — 254 Total $ 2,047 $ (1,208 ) $ 839 $ 5 $ 844 (A) Other principally includes the effect of foreign currency translation. The carrying value of our other indefinite-lived intangible assets was $137 million at both March 31, 2016 and December 31, 2015 , and principally included registered trademarks. The carrying value of our definite-lived intangible assets was $21 million (net of accumulated amortization of $51 million ) and $23 million (net of accumulated amortization of $49 million ) at March 31, 2016 and December 31, 2015 , respectively, and principally included customer relationships.

Depreciation and Amortization

Depreciation and Amortization	3 Months Ended
	Mar. 31, 2016
Depreciation, Depletion and Amortization [Abstract]
Depreciation and Amortization	DEPRECIATION AND AMORTIZATION Depreciation and amortization expense, including discontinued operations, was $32 million and $34 million for the three months ended March 31, 2016 and 2015 , respectively.

Fair Value of Financial Investm

Fair Value of Financial Investments	3 Months Ended
	Mar. 31, 2016
Fair Value Disclosures [Abstract]
Fair Value of Financial Investments	FAIR VALUE OF FINANCIAL INVESTMENTS We have maintained investments in available-for-sale securities, equity method investments and a number of private equity funds, principally as part of our tax planning strategies, as any gains enhance the utilization of any current and future tax capital losses. Financial investments were as follows, in millions: March 31, 2016 December 31, 2015 Prepaid expenses and other: Auction rate securities $ 12 $ — Other assets: Auction rate securities 10 22 Equity method investments 13 13 Private equity funds 9 10 Other investments 3 3 Total $ 47 $ 48 E. FAIR VALUE OF FINANCIAL INVESTMENTS (Concluded) Recurring Fair Value Measurements. Our auction rate securities are measured at fair value on a recurring basis, and have been estimated using a discounted cash flow model (Level 3 input). The significant inputs in the discounted cash flow model used to value the auction rate securities include: expected maturity of auction rate securities, discount rate used to determine the present value of expected cash flows and the assumptions for credit defaults, since the auction rate securities are backed by credit default swap agreements. Our investments in auction rate securities included cost basis of $19 million and pre-tax unrealized gains of $3 million and had a recorded basis of $22 million at both March 31, 2016 and December 31, 2015 . Non-Recurring Fair Value Measurements. During the three months ended March 31, 2016 and 2015 , we did not measure any financial investments at fair value on a non-recurring basis, as there was no other-than-temporary decline in the estimated value of these investments. We did not have any transfers between Level 1 and Level 2 financial assets in the three months ended March 31, 2016 or 2015 . Realized Gains (Losses). Income from financial investments, net, included in other, net, within other income (expense), net, was as follows, in millions: Three Months Ended 2016 2015 Realized gains from private equity funds $ — $ 2 Equity investment income, net 1 — Total income from financial investments, net $ 1 $ 2 Fair Value of Debt. The fair value of our short-term and long-term fixed-rate debt instruments is based principally upon modeled market prices for the same or similar issues or the current rates available to us for debt with similar terms and remaining maturities. The aggregate estimated market value of short-term and long-term debt at March 31, 2016 was approximately $4.6 billion , compared with the aggregate carrying value of $4.3 billion . The aggregate estimated market value of short-term and long-term debt at December 31, 2015 was approximately $3.6 billion , compared with the aggregate carrying value of $3.4 billion .

Derivative Instruments and Hedg

Derivative Instruments and Hedging Activities	3 Months Ended
	Mar. 31, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivative Instruments and Hedging Activities	INSTRUMENTS AND HEDGING ACTIVITIES We are exposed to global market risk as part of our normal daily business activities. To manage these risks, we enter into various derivative contracts. These contracts include interest rate swap agreements, foreign currency contracts and metals contracts intended to hedge our exposure to copper and zinc. We review our hedging program, derivative positions and overall risk management on a regular basis. Interest Rate Swap Agreements. In 2012, in connection with the issuance of $400 million of debt, we terminated the interest rate swap hedge relationships that we had entered into in 2011. These interest rate swaps were designated as cash flow hedges and effectively fixed interest rates on the forecasted debt issuance to variable rates based on 3-month LIBOR. Upon termination, the ineffective portion of the cash flow hedges of an approximate $2 million loss was recognized in our consolidated statement of operations in other, net within other income (expense), net. The remaining loss of approximately $23 million from the termination of these swaps is being amortized as an increase to interest expense over the remaining term of the debt, through March 2022. Foreign Currency Contracts. Our net cash inflows and outflows exposed to the risk of changes in foreign currency exchange rates arise from the sale of products in countries other than the manufacturing source, foreign currency denominated supplier payments, debt and other payables, and investments in subsidiaries. To mitigate this risk, we, including certain of our European operations, entered into foreign currency forward contracts and foreign currency exchange contracts. F. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Concluded) Gains (losses) related to foreign currency forward and exchange contracts are recorded in our condensed consolidated statements of operations in other, net, within other income (expense), net. In the event that the counterparties fail to meet the terms of the foreign currency forward or exchange contracts, our exposure is limited to the aggregate foreign currency rate differential with such institutions. Metals Contracts. We have entered into several contracts to manage our exposure to increases in the price of copper and zinc. Gains (losses) related to these contracts are recorded in our condensed consolidated statements of operations in cost of sales. The pre-tax gains (losses) included in our condensed consolidated statements of operations are as follows, in millions: Three Months Ended 2016 2015 Foreign currency contracts: Exchange contracts $ — $ 4 Forward contracts — (4 ) Metal contracts 2 (2 ) Total gain (loss) $ 2 $ (2 ) We present our derivatives net by counterparty, due to the right of offset under master netting arrangements, in the condensed consolidated balance sheets. The notional amounts being hedged and the fair value of those derivative instruments are as follows, in millions: At March 31, 2016 Notional Balance Sheet Foreign currency contracts: Exchange contracts $ 27 Receivables $ 1 Forward contracts 26 Accrued liabilities (1 ) Other liabilities (2 ) Metals contracts 38 Accrued liabilities (6 ) At December 31, 2015 Notional Balance Sheet Foreign currency contracts: Exchange contracts $ 39 Receivables $ 1 Forward contracts 30 Accrued liabilities (2 ) Other liabilities (1 ) Metals contracts 50 Accrued liabilities (10 ) The fair value of all foreign currency and metals derivative contracts is estimated on a recurring basis, quarterly, using Level 2 inputs (significant other observable inputs).

Warranty Liability

Warranty Liability	3 Months Ended
	Mar. 31, 2016
Product Warranties Disclosures [Abstract]
Warranty Liability	WARRANTY LIABILITY Changes in our warranty liability were as follows, in millions: Three Months Ended Twelve Months Ended December 31, 2015 Balance at January 1 $ 152 $ 135 Accruals for warranties issued during the period 13 56 Accruals related to pre-existing warranties — 15 Settlements made (in cash or kind) during the period (13 ) (50 ) Other, net (including currency translation) — (4 ) Balance at end of period $ 152 $ 152

Debt

Debt	3 Months Ended
	Mar. 31, 2016
Debt Disclosure [Abstract]
Debt	DEBT On March 17, 2016 , we issued $400 million of 3.5% Notes due April 1, 2021 and $500 million of 4.375% Notes due April 1, 2026. We received proceeds of $ 896 million , net of discount, for the issuance of these Notes. The Notes are senior indebtedness and are redeemable at our option at the applicable redemption price. On April 15, 2016, proceeds from the debt issuances, together with cash on hand, were used to repay and early retire all of our $1 billion , 6.125% Notes which were due on October 3, 2016 and all of our $300 million , 5.85% Notes which were due on March 15, 2017. In connection with these early retirements, in April 2016 we recorded $40 million of additional interest expense in connection with the discharge of indebtedness. On March 28, 2013, we entered into a credit agreement (the “Credit Agreement”) with a bank group, with an aggregate commitment of $1.25 billion and a maturity date of March 28, 2018. On May 29, 2015 and August 28, 2015, we amended the Credit Agreement with the bank group (the “Amended Credit Agreement”). The Amended Credit Agreement reduced the aggregate commitment to $750 million and extends the maturity date to May 29, 2020. Under the Amended Credit Agreement, at our request and subject to certain conditions, we can increase the aggregate commitment up to an additional $375 million with the current bank group or new lenders. The Amended Credit Agreement provides for an unsecured revolving credit facility available to us and one of our foreign subsidiaries, in U.S. dollars, European euros and certain other currencies. Borrowings under the revolver denominated in euros are limited to $500 million , equivalent. We can also borrow swingline loans up to $75 million and obtain letters of credit of up to $100 million ; any outstanding letters of credit under the Amended Credit Agreement reduce our borrowing capacity. At March 31, 2016 , we had $1.5 million of outstanding standby letters of credit under the Amended Credit Agreement. Revolving credit loans bear interest under the Amended Credit Agreement, at our option, at (A) a rate per annum equal to the greatest of (i) the prime rate, (ii) the Federal Funds effective rate plus 0.50% and (iii) LIBOR plus 1.0% (the “Alternative Base Rate”); plus an applicable margin based upon our then-applicable corporate credit ratings; or (B) LIBOR plus an applicable margin based upon our then-applicable corporate credit ratings. The foreign currency revolving credit loans bear interest at a rate equal to LIBOR plus an applicable margin based upon our then-applicable corporate credit ratings. The Amended Credit Agreement contains financial covenants requiring us to maintain (A) a maximum net leverage ratio, as adjusted for certain items, of 4.0 to 1.0, and (B) a minimum interest coverage ratio, as adjusted for certain items, equal to or greater than 2.5 to 1.0. In order for us to borrow under the Amended Credit Agreement, there must not be any default in our covenants in the Amended Credit Agreement (i.e., in addition to the two financial covenants, principally limitations on subsidiary debt, negative pledge restrictions, legal compliance requirements and maintenance of properties and insurance) and our representations and warranties in the Amended Credit Agreement must be true in all material respects on the date of borrowing (i.e., principally no material adverse change or litigation likely to result in a material adverse change, since December 31, 2014, in each case, no material ERISA or environmental non-compliance, and no material tax deficiency). We were in compliance with all covenants and had no borrowing under the Amended Credit Agreement at March 31, 2016 .

Stock-Based Compensation

Stock-Based Compensation	3 Months Ended
	Mar. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock-Based Compensation	STOCK-BASED COMPENSATION Our 2014 Long Term Stock Incentive Plan (the “2014 Plan”) provides for the issuance of stock-based incentives in various forms to our employees and non-employee Directors. At March 31, 2016 , outstanding stock-based incentives were in the form of long-term stock awards, stock options, phantom stock awards and stock appreciation rights. Pre-tax compensation expense and the related income tax benefit for these stock-based incentives were as follows, in millions: Three Months Ended 2016 2015 Long-term stock awards $ 5 $ 6 Stock options 1 1 Phantom stock awards and stock appreciation rights 3 3 Total $ 9 $ 10 Income tax benefit (37 percent tax rate) $ 3 $ 4 Long-Term Stock Awards. Long-term stock awards are granted to our key employees and non-employee Directors and do not cause net share dilution inasmuch as we continue the practice of repurchasing and retiring an equal number of shares in the open market. We granted 1,013,480 shares of long-term stock awards in the three months ended March 31, 2016 . Our long-term stock award activity was as follows, shares in millions: Three Months Ended 2016 2015 Unvested stock award shares at January 1 5 6 Weighted average grant date fair value $ 17 $ 18 Stock award shares granted 1 1 Weighted average grant date fair value $ 26 $ 26 Stock award shares vested 2 2 Weighted average grant date fair value $ 16 $ 17 Stock award shares forfeited — — Weighted average grant date fair value $ 19 $ 19 Unvested stock award shares at March 31 4 5 Weighted average grant date fair value $ 20 $ 19 At March 31, 2016 and 2015 , there was $62 million and $68 million , respectively, of total unrecognized compensation expense related to unvested stock awards; such awards had a weighted average remaining vesting period of 4 years at March 31, 2016 and 3 years at March 31, 2015 . The total market value (at the vesting date) of stock award shares which vested during the three months ended March 31, 2016 and 2015 was $36 million and $48 million , respectively. Stock Options. Stock options are granted to our key employees. The exercise price equals the market price of our common stock at the grant date. These options generally become exercisable (vest ratably) over five years beginning on the first anniversary from the date of grant and expire no later than 10 years after the grant date. We granted 474,500 of stock option shares in the three months ended March 31, 2016 with a grant date exercise price approximating $26 per share. In the three months ended March 31, 2016 , no stock option shares were forfeited (including options that expired unexercised). I. STOCK-BASED COMPENSATION (Continued) Our stock option activity was as follows, shares in millions: Three Months Ended 2016 2015 Option shares outstanding, January 1 12 18 Weighted average exercise price (A) $ 17 $ 21 Option shares granted — — Weighted average exercise price $ 26 $ 26 Option shares exercised 1 1 Aggregate intrinsic value on date of exercise (B) $ 18 million $ 17 million Weighted average exercise price $ 18 $ 14 Option shares forfeited — — Weighted average exercise price $ — $ 22 Option shares outstanding, March 31 11 17 Weighted average exercise price (A) $ 18 $ 22 Weighted average remaining option term (in years) 4 3 Option shares vested and expected to vest, March 31 11 17 Weighted average exercise price (A) $ 18 $ 22 Aggregate intrinsic value (B) $ 154 million $ 108 million Weighted average remaining option term (in years) 4 3 Option shares exercisable (vested), March 31 10 15 Weighted average exercise price (A) $ 17 $ 22 Aggregate intrinsic value (B) $ 138 million $ 94 million Weighted average remaining option term (in years) 3 3 (A) Subsequent to the separation of TopBuild, we modified our outstanding equity awards to employees and non-employee directors such that all individuals received an equivalent fair value both before and after the separation. The modification contributed to the lower exercise price. (B) Aggregate intrinsic value is calculated using our stock price at each respective date, less the exercise price (grant date price) multiplied by the number of share. At March 31, 2016 and 2015 , there was $8 million and $9 million , respectively, of unrecognized compensation expense (using the Black-Scholes option pricing model at the grant date) related to unvested stock options; such options had a weighted average remaining vesting period of 3 years at both March 31, 2016 and 2015 . I. STOCK-BASED COMPENSATION (Concluded) The weighted average grant date fair value of option shares granted and the assumptions used to estimate those values using a Black-Scholes option pricing model were as follows: Three Months Ended 2016 2015 Weighted average grant date fair value $ 6.43 $ 9.67 Risk-free interest rate 1.41 % 1.75 % Dividend yield 1.49 % 1.32 % Volatility factor 29.00 % 42.00 % Expected option life 6 years 6 years

Employee Retirement Plans

Employee Retirement Plans	3 Months Ended
	Mar. 31, 2016
Compensation and Retirement Disclosure [Abstract]
Employee Retirement Plans	EMPLOYEE RETIREMENT PLANS Net periodic pension cost for our defined-benefit pension plans was as follows, in millions: Three Months Ended March 31, 2016 2015 Qualified Non-Qualified Qualified Non-Qualified Service cost $ 1 $ — $ 1 $ — Interest cost 11 1 12 1 Expected return on plan assets (10 ) — (11 ) — Amortization of net loss 4 1 4 1 Net periodic pension cost $ 6 $ 2 $ 6 $ 2 We froze all future benefit accruals under substantially all of our domestic qualified and foreign and domestic non-qualified defined benefit pension plans several years ago.

Reclassifications From Accumula

Reclassifications From Accumulated Other Comprehensive Loss	3 Months Ended
	Mar. 31, 2016
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]
Reclassifications From Accumulated Other Comprehensive Income	RECLASSIFICATIONS FROM ACCUMULATED OTHER COMPREHENSIVE LOSS The reclassifications from accumulated other comprehensive loss to the condensed consolidated statements of operations were as follows, in millions: Amounts Reclassified Accumulated Other Three Months Ended Statement of Operations Line Item 2016 2015 Amortization of defined benefit pension and other postretirement benefits: Actuarial losses, net $ 5 $ 5 Selling, general and administrative expenses Tax (benefit) (2 ) (1 ) Net of tax $ 3 $ 4

Segment Information

Segment Information	3 Months Ended
	Mar. 31, 2016
Segment Reporting [Abstract]
Segment Information	SEGMENT INFORMATION Information by segment and geographic area was as follows, in millions: Three Months Ended March 31, 2016 2015 2016 2015 Net Sales(A) Operating Profit (Loss) Our operations by segment were (B): Plumbing Products $ 813 $ 796 $ 129 $ 111 Decorative Architectural Products 493 451 105 83 Cabinetry Products 236 249 24 (4 ) Windows and Other Specialty Products 178 163 3 6 Total $ 1,720 $ 1,659 $ 261 $ 196 Our operations by geographic area were: North America $ 1,350 $ 1,282 $ 215 $ 151 International, principally Europe 370 377 46 45 Total $ 1,720 $ 1,659 261 196 General corporate expense, net (27 ) (31 ) Operating profit 234 165 Other income (expense), net (57 ) (55 ) Income from continuing operations before income taxes $ 177 $ 110 (A) Inter-segment sales were not material. (B) In Q1 2016, we renamed our Cabinetry Products and Windows and Other Specialty Products segments. The name change did not impact the review of financial information by our corporate operating executive or the composition of the segments.

Severance Costs

Severance Costs	3 Months Ended
	Mar. 31, 2016
Restructuring Charges [Abstract]
Severance Costs	SEVERANCE COSTS We recorded charges related to severance of $2 million and $6 million for the three months ended March 31, 2016 and 2015 , respectively. Such charges are principally reflected in the condensed consolidated statements of operations in selling, general and administrative expenses.

Other Income (Expense), Net

Other Income (Expense), Net	3 Months Ended
	Mar. 31, 2016
Other Income and Expenses [Abstract]
Other Income (Expense), Net	OTHER INCOME (EXPENSE), NET Other, net, which is included in other income (expense), net, was as follows, in millions: Three Months Ended 2016 2015 Income from cash and cash investments $ 1 $ — Income from financial investments, net (Note E) 1 2 Foreign currency transaction losses — (1 ) Other items, net (3 ) — Total other, net $ (1 ) $ 1

Earnings Per Common Share

Earnings Per Common Share	3 Months Ended
	Mar. 31, 2016
Earnings Per Share [Abstract]
Earnings Per Common Share	EARNINGS PER COMMON SHARE Reconciliations of the numerators and denominators used in the computations of basic and diluted earnings per common share were as follows, in millions: Three Months Ended 2016 2015 Numerator (basic and diluted): Income from continuing operations $ 109 $ 61 Less: Allocation to unvested restricted stock awards 1 1 Income from continuing operations attributable to common shareholders 108 60 Income from discontinued operations, net — 3 Less: Allocation to unvested restricted stock awards — — Income from discontinued operations attributable to common shareholders — 3 Net income available to common shareholders $ 108 $ 63 Denominator: Basic common shares (based upon weighted average) 330 344 Add: Stock option dilution 3 3 Diluted common shares 333 347 For the three months ended March 31, 2016 and 2015 , we allocated dividends and undistributed earnings to the unvested restricted stock awards. Additionally, 1 million and 8 million common shares for the three months ended March 31, 2016 and 2015, respectively, related to stock options were excluded from the computation of diluted earnings per common share due to their antidilutive effect. On September 30, 2014, we announced that our Board of Directors authorized the repurchase of up to 50 million shares for retirement of our common stock in open-market transactions or otherwise, replacing the previous Board of Directors authorization established in 2007. In the first three months of 2016 , we repurchased and retired 3.2 million shares of our common stock (including 1.0 million shares to offset the dilutive impact of long-term stock awards granted in the first quarter), for approximately $86 million . At March 31, 2016 , we had 24.6 million shares remaining under the authorization. On the basis of amounts paid (declared), cash dividends per common share were $0.095 ( $0.095 ) and $0.090 ( $0.090 ) for the three months ended March 31, 2016 and 2015, respectively.

Other Commitments and Contingen

Other Commitments and Contingencies	3 Months Ended
	Mar. 31, 2016
Commitments and Contingencies Disclosure [Abstract]
Other Commitments and Contingencies	OTHER COMMITMENTS AND CONTINGENCIES We are subject to claims, charges, litigation and other proceedings in the ordinary course of our business, including those arising from or related to contractual matters, intellectual property, personal injury, environmental matters, product liability, product recalls, construction defect, insurance coverage, personnel and employment disputes, anti-trust issues and other matters, including class actions. We believe we have adequate defenses in these matters and that the likelihood that the outcome of these matters would have a material adverse effect on us is remote. However, there is no assurance that we will prevail in these matters, and we could, in the future, incur judgments, enter into settlements of claims or revise our expectations regarding the outcome of these matters, which could materially impact our results of operations.

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2016
Income Tax Disclosure [Abstract]
Income Taxes	INCOME TAXES Our effective tax rate was 33 percent and 36 percent for the three months ended March 31, 2016 and 2015 , respectively. The 2016 tax rate includes a $4 million state income tax benefit on uncertain tax positions resulting from the expiration of applicable statutes of limitation and the tax benefit of the domestic production deduction which allows a deduction for certain qualified production activities within the U.S.

Accounting Policies (Policies)

Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2016
Accounting Policies [Abstract]
Reclassification	Reclassification. Certain prior year amounts have been reclassified to conform to the 2016 presentation in the condensed consolidated financial statements.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements. In February 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2015-02 (“ASU 2015-02”) “Consolidation (Topic 810) — Amendments to the Consolidations Analysis,” which modifies certain aspects of both the variable interest entities and voting interest entities models. We adopted ASU 2015-02 on January 1, 2016. The adoption of the new standard did not have an impact on our financial position or our results of operations. In April 2015, the FASB issued Accounting Standards Update 2015‑03 (“ASU 2015‑03”) “Interest - Imputation of Interest (Subtopic 835‑30) - Simplifying the Presentation of Debt Issuance Costs,” that requires that all costs incurred to issue debt be presented in the balance sheet as a direct deduction from the carrying value of the debt. In August 2015, the FASB issued ASU 2015‑15 to clarify that debt issuance costs related to line‑of‑credit arrangements may remain classified as an asset. We retrospectively adopted both ASU 2015‑03 and ASU 2015‑15 on January 1, 2016. As a result of the retrospective adoption of the standards, we reclassified $15 million of debt issuance costs from other assets to long-term debt, and $1 million of debt issuance costs from other assets to notes payable, as of December 31, 2015. In May 2014, the FASB issued a new standard for revenue recognition, Accounting Standards Codification 606 (“ASC 606”). The purpose of ASC 606 is to provide a single, comprehensive revenue recognition model for all contracts with customers to improve comparability across industries. ASC 606 is effective for us for annual periods beginning January 1, 2018. We are currently evaluating the impact the adoption of this new standard will have on our results of operations. In January 2016, the FASB issued Accounting Standards Update 2016-01 (“ASU 2016-01”), “Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities”, which primarily affects the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. ASU 2016-01 is effective for us for annual periods beginning January 1, 2018. We are currently evaluating the impact the adoption of this new standard will have on our financial position and results of operations. In February 2016, the FASB issued a new standard for leases, Accounting Standards Codification 842 (“ASC 842”), which changes the accounting model of identifying and accounting for leases. ASC 842 is effective for us for annual periods beginning January 1, 2019. We are currently evaluating the impact the adoption of this new standard will have on our financial position and results of operations. In March 2016, the FASB issued Accounting Standard Update 2016-09 (“ASU 2016-09”), “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”, which requires the tax effects related to share-based payments to be recorded through the income statement and simplifies the accounting requirements for forfeitures and employers' tax withholding requirements. ASU 2016-09 is effective for us for annual periods beginning January 1, 2017. We are currently evaluating the impact the adoption of this new standard will have on our financial position and results of operations.

Discontinued Operations (Tables

Discontinued Operations (Tables)	3 Months Ended
	Mar. 31, 2016
Discontinued Operations and Disposal Groups [Abstract]
Schedules of major classes of line items constituting pre-tax profit (loss) of discontinued operations, carrying amount of major classes of assets and liabilities, and other selected financial information during the period owned	The major classes of line items constituting income from discontinued operations, net, in millions: Three Months Ended 2016 2015 Net sales $ — $ 358 Cost of sales — 285 Gross profit — 73 Selling, general and administrative expenses — 68 Income from discontinued operations $ — $ 5 Income tax expense — (2 ) Income from discontinued operations, net $ — $ 3 Other selected financial information for TopBuild during the period owned by us was as follows, in millions: Three Months Ended 2016 2015 Depreciation and amortization $ — $ 3 Capital expenditures $ — $ 2

Goodwill and Other Intangible27

Goodwill and Other Intangible Assets (Tables)	3 Months Ended
	Mar. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of changes in carrying amount of goodwill	The changes in the carrying amount of goodwill for the three months ended March 31, 2016 , by segment, were as follows, in millions: Gross Goodwill At March 31, 2016 Accumulated Net Goodwill At March 31, 2016 Plumbing Products $ 530 $ (340 ) $ 190 Decorative Architectural Products 294 (75 ) 219 Cabinetry Products 240 (59 ) 181 Windows and Other Specialty Products 988 (734 ) 254 Total $ 2,052 $ (1,208 ) $ 844 Gross Goodwill At December 31, 2015 Accumulated Impairment Losses Net Goodwill At December 31, 2015 Other(A) Net Goodwill At March 31, 2016 Plumbing Products $ 525 $ (340 ) $ 185 $ 5 $ 190 Decorative Architectural Products 294 (75 ) 219 — 219 Cabinetry Products 240 (59 ) 181 — 181 Windows and Other Specialty Products 988 (734 ) 254 — 254 Total $ 2,047 $ (1,208 ) $ 839 $ 5 $ 844 (A) Other principally includes the effect of foreign currency translation.

Fair Value of Financial Inves28

Fair Value of Financial Investments (Tables)	3 Months Ended
	Mar. 31, 2016
Fair Value Disclosures [Abstract]
Schedule of financial investments included in other assets	Financial investments were as follows, in millions: March 31, 2016 December 31, 2015 Prepaid expenses and other: Auction rate securities $ 12 $ — Other assets: Auction rate securities 10 22 Equity method investments 13 13 Private equity funds 9 10 Other investments 3 3 Total $ 47 $ 48
Schedule of income from financial investments, net, included in other, net, within other income (expense), net,	Income from financial investments, net, included in other, net, within other income (expense), net, was as follows, in millions: Three Months Ended 2016 2015 Realized gains from private equity funds $ — $ 2 Equity investment income, net 1 — Total income from financial investments, net $ 1 $ 2

Derivative Instruments and He29

Derivative Instruments and Hedging Activities (Tables)	3 Months Ended
	Mar. 31, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Schedule of pre-tax (losses) gains included in the Company's condensed consolidated statements of operations	The pre-tax gains (losses) included in our condensed consolidated statements of operations are as follows, in millions: Three Months Ended 2016 2015 Foreign currency contracts: Exchange contracts $ — $ 4 Forward contracts — (4 ) Metal contracts 2 (2 ) Total gain (loss) $ 2 $ (2 )
Schedule of notional amounts being hedged and the fair value of derivative instruments	The notional amounts being hedged and the fair value of those derivative instruments are as follows, in millions: At March 31, 2016 Notional Balance Sheet Foreign currency contracts: Exchange contracts $ 27 Receivables $ 1 Forward contracts 26 Accrued liabilities (1 ) Other liabilities (2 ) Metals contracts 38 Accrued liabilities (6 ) At December 31, 2015 Notional Balance Sheet Foreign currency contracts: Exchange contracts $ 39 Receivables $ 1 Forward contracts 30 Accrued liabilities (2 ) Other liabilities (1 ) Metals contracts 50 Accrued liabilities (10 )

Warranty Liability (Tables)

Warranty Liability (Tables)	3 Months Ended
	Mar. 31, 2016
Product Warranties Disclosures [Abstract]
Schedule of changes in the Company's warranty liability	Changes in our warranty liability were as follows, in millions: Three Months Ended Twelve Months Ended December 31, 2015 Balance at January 1 $ 152 $ 135 Accruals for warranties issued during the period 13 56 Accruals related to pre-existing warranties — 15 Settlements made (in cash or kind) during the period (13 ) (50 ) Other, net (including currency translation) — (4 ) Balance at end of period $ 152 $ 152

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Schedule of pre-tax compensation expense and the related income tax benefit for these stock-based incentives	Pre-tax compensation expense and the related income tax benefit for these stock-based incentives were as follows, in millions: Three Months Ended 2016 2015 Long-term stock awards $ 5 $ 6 Stock options 1 1 Phantom stock awards and stock appreciation rights 3 3 Total $ 9 $ 10 Income tax benefit (37 percent tax rate) $ 3 $ 4
Schedule of the Company's long-term stock award activity	Our long-term stock award activity was as follows, shares in millions: Three Months Ended 2016 2015 Unvested stock award shares at January 1 5 6 Weighted average grant date fair value $ 17 $ 18 Stock award shares granted 1 1 Weighted average grant date fair value $ 26 $ 26 Stock award shares vested 2 2 Weighted average grant date fair value $ 16 $ 17 Stock award shares forfeited — — Weighted average grant date fair value $ 19 $ 19 Unvested stock award shares at March 31 4 5 Weighted average grant date fair value $ 20 $ 19
Schedule of the Company's stock option activity	Our stock option activity was as follows, shares in millions: Three Months Ended 2016 2015 Option shares outstanding, January 1 12 18 Weighted average exercise price (A) $ 17 $ 21 Option shares granted — — Weighted average exercise price $ 26 $ 26 Option shares exercised 1 1 Aggregate intrinsic value on date of exercise (B) $ 18 million $ 17 million Weighted average exercise price $ 18 $ 14 Option shares forfeited — — Weighted average exercise price $ — $ 22 Option shares outstanding, March 31 11 17 Weighted average exercise price (A) $ 18 $ 22 Weighted average remaining option term (in years) 4 3 Option shares vested and expected to vest, March 31 11 17 Weighted average exercise price (A) $ 18 $ 22 Aggregate intrinsic value (B) $ 154 million $ 108 million Weighted average remaining option term (in years) 4 3 Option shares exercisable (vested), March 31 10 15 Weighted average exercise price (A) $ 17 $ 22 Aggregate intrinsic value (B) $ 138 million $ 94 million Weighted average remaining option term (in years) 3 3 (A) Subsequent to the separation of TopBuild, we modified our outstanding equity awards to employees and non-employee directors such that all individuals received an equivalent fair value both before and after the separation. The modification contributed to the lower exercise price. (B) Aggregate intrinsic value is calculated using our stock price at each respective date, less the exercise price (grant date price) multiplied by the number of share.
Schedule of weighted average grant date fair value of option shares granted and the assumptions used to estimate those values using a Black-Scholes option pricing model	The weighted average grant date fair value of option shares granted and the assumptions used to estimate those values using a Black-Scholes option pricing model were as follows: Three Months Ended 2016 2015 Weighted average grant date fair value $ 6.43 $ 9.67 Risk-free interest rate 1.41 % 1.75 % Dividend yield 1.49 % 1.32 % Volatility factor 29.00 % 42.00 % Expected option life 6 years 6 years

Employee Retirement Plans (Tabl

Employee Retirement Plans (Tables)	3 Months Ended
	Mar. 31, 2016
Compensation and Retirement Disclosure [Abstract]
Schedule of net periodic pension cost for the Company's defined-benefit pension plans	Net periodic pension cost for our defined-benefit pension plans was as follows, in millions: Three Months Ended March 31, 2016 2015 Qualified Non-Qualified Qualified Non-Qualified Service cost $ 1 $ — $ 1 $ — Interest cost 11 1 12 1 Expected return on plan assets (10 ) — (11 ) — Amortization of net loss 4 1 4 1 Net periodic pension cost $ 6 $ 2 $ 6 $ 2

Reclassifications From Accumu33

Reclassifications From Accumulated Other Comprehensive Loss (Tables)	3 Months Ended
	Mar. 31, 2016
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]
Schedule of reclassifications from accumulated other comprehensive (loss) income to the condensed consolidated statements of operations	The reclassifications from accumulated other comprehensive loss to the condensed consolidated statements of operations were as follows, in millions: Amounts Reclassified Accumulated Other Three Months Ended Statement of Operations Line Item 2016 2015 Amortization of defined benefit pension and other postretirement benefits: Actuarial losses, net $ 5 $ 5 Selling, general and administrative expenses Tax (benefit) (2 ) (1 ) Net of tax $ 3 $ 4

Segment Information (Tables)

Segment Information (Tables)	3 Months Ended
	Mar. 31, 2016
Segment Reporting [Abstract]
Schedule of information by segment and geographic area	Information by segment and geographic area was as follows, in millions: Three Months Ended March 31, 2016 2015 2016 2015 Net Sales(A) Operating Profit (Loss) Our operations by segment were (B): Plumbing Products $ 813 $ 796 $ 129 $ 111 Decorative Architectural Products 493 451 105 83 Cabinetry Products 236 249 24 (4 ) Windows and Other Specialty Products 178 163 3 6 Total $ 1,720 $ 1,659 $ 261 $ 196 Our operations by geographic area were: North America $ 1,350 $ 1,282 $ 215 $ 151 International, principally Europe 370 377 46 45 Total $ 1,720 $ 1,659 261 196 General corporate expense, net (27 ) (31 ) Operating profit 234 165 Other income (expense), net (57 ) (55 ) Income from continuing operations before income taxes $ 177 $ 110 (A) Inter-segment sales were not material. (B) In Q1 2016, we renamed our Cabinetry Products and Windows and Other Specialty Products segments. The name change did not impact the review of financial information by our corporate operating executive or the composition of the segments.

Other Income (Expense), Net (Ta

Other Income (Expense), Net (Tables)	3 Months Ended
	Mar. 31, 2016
Other Income and Expenses [Abstract]
Schedule of components of other, net, which is included in other income (expense), net	Other, net, which is included in other income (expense), net, was as follows, in millions: Three Months Ended 2016 2015 Income from cash and cash investments $ 1 $ — Income from financial investments, net (Note E) 1 2 Foreign currency transaction losses — (1 ) Other items, net (3 ) — Total other, net $ (1 ) $ 1

Earnings Per Common Share (Tabl

Earnings Per Common Share (Tables)	3 Months Ended
	Mar. 31, 2016
Earnings Per Share [Abstract]
Schedule of reconciliations of the numerators and denominators used in the computations of basic and diluted earnings per common share	Reconciliations of the numerators and denominators used in the computations of basic and diluted earnings per common share were as follows, in millions: Three Months Ended 2016 2015 Numerator (basic and diluted): Income from continuing operations $ 109 $ 61 Less: Allocation to unvested restricted stock awards 1 1 Income from continuing operations attributable to common shareholders 108 60 Income from discontinued operations, net — 3 Less: Allocation to unvested restricted stock awards — — Income from discontinued operations attributable to common shareholders — 3 Net income available to common shareholders $ 108 $ 63 Denominator: Basic common shares (based upon weighted average) 330 344 Add: Stock option dilution 3 3 Diluted common shares 333 347

Accounting Policies - Narrative

Accounting Policies - Narrative (Details) $ in Millions	3 Months Ended
	Mar. 31, 2016USD ($)
Adjustment for Reclassifying Issuance Costs Other Assets to Long Term Debt | Long term debt
Debt Instrument [Line Items]
Reclassification of issuance costs	$ (15)
Adjustment for Reclassifying Issuance Costs Other Assets to Long Term Debt | Other assets
Debt Instrument [Line Items]
Reclassification of issuance costs	15
Adjustment for Reclassifying Issuance costs from Other Assets to Notes Payable | Other assets
Debt Instrument [Line Items]
Reclassification of issuance costs	1
Adjustment for Reclassifying Issuance costs from Other Assets to Notes Payable | Notes payable
Debt Instrument [Line Items]
Reclassification of issuance costs	$ (1)

Discontinued Operations (Detail

Discontinued Operations (Details)	Sep. 30, 2014
Spinoff | TopBuild | Installation and Other Services
Selected financial information of discontinued operations
Percentage of businesses planned for spinoff	100.00%

Discontinued Operations - Incom

Discontinued Operations - Income Statement Line Items (Details) - Spinoff - TopBuild - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Pre-tax profit (Loss) of discontinued operations
Net sales	$ 0	$ 358
Cost of sales	0	285
Gross profit	0	73
Selling, general and administrative expenses	0	68
Income from discontinued operations	0	5
Income tax expense	0	(2)
Income from discontinued operations, net	$ 0	$ 3

Discontinued Operations - Other

Discontinued Operations - Other Financial Information (Details) - Spinoff - TopBuild - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Selected financial information of discontinued operations
Depreciation and amortization	$ 0	$ 3
Capital expenditures	$ 0	$ 2

Goodwill and Other Intangible41

Goodwill and Other Intangible Assets - Goodwill Rollforward (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Goodwill [Roll Forward]
Goodwill, Gross	$ 2,052	$ 2,047
Accumulated Impairment Losses	(1,208)	(1,208)
Beginning balance	839
Other	5
Ending balance	844
Plumbing Products
Goodwill [Roll Forward]
Goodwill, Gross	530	525
Accumulated Impairment Losses	(340)	(340)
Beginning balance	185
Other	5
Ending balance	190
Decorative Architectural Products
Goodwill [Roll Forward]
Goodwill, Gross	294	294
Accumulated Impairment Losses	(75)	(75)
Beginning balance	219
Other	0
Ending balance	219
Cabinetry Products
Goodwill [Roll Forward]
Goodwill, Gross	240	240
Accumulated Impairment Losses	(59)	(59)
Beginning balance	181
Other	0
Ending balance	181
Windows and Other Specialty Products
Goodwill [Roll Forward]
Goodwill, Gross	988	988
Accumulated Impairment Losses	(734)	$ (734)
Beginning balance	254
Other	0
Ending balance	$ 254

Goodwill and Other Intangible42

Goodwill and Other Intangible Assets - Narrative (Details) - USD ($) $ in Millions	Mar. 31, 2016	Dec. 31, 2015
Goodwill and Intangible Assets Disclosure [Abstract]
Other indefinite-lived intangible assets	$ 137	$ 137
Carrying value of definite-lived intangible assets	21	23
Accumulated amortization	$ 51	$ 49

Depreciation and Amortization (

Depreciation and Amortization (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Depreciation, Depletion and Amortization [Abstract]
Depreciation and amortization expense	$ 32	$ 34

Fair Value of Financial Inves44

Fair Value of Financial Investments - Financial Investments (Details) - USD ($) $ in Millions	Mar. 31, 2016	Dec. 31, 2015
Fair value of financial investments and liabilities
Total financial investments	$ 47	$ 48
Prepaid expenses and other | Auction rate securities
Fair value of financial investments and liabilities
Available-for-sale Securities, Equity Securities, Current	12
Available-for-sale Securities, Debt Securities, Current		0
Other assets | Auction rate securities
Fair value of financial investments and liabilities
Recurring investments, available-for-sale securities	10	22
Other assets | Equity method investments
Fair value of financial investments and liabilities
Equity method investments	13	13
Other assets | Private equity funds
Fair value of financial investments and liabilities
Non-recurring investments	9	10
Other assets | Other investments
Fair value of financial investments and liabilities
Non-recurring investments	$ 3	$ 3

Fair Value of Financial Inves45

Fair Value of Financial Investments - Realized Gains (Losses) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Income from financial investments, net and impairment charges
Equity investments income (loss), net	$ 1	$ 0
Total income from financial investments, net	1	2
Private equity funds
Income from financial investments, net and impairment charges
Realized gains from private equity funds	$ 0	$ 2

Fair Value of Financial Inves46

Fair Value of Financial Investments - Narrative (Details) - USD ($) $ in Millions	Mar. 31, 2016	Dec. 31, 2015
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cost basis available-for-sale securities	$ 19	$ 19
Pre-tax unrealized gains, available-for-sale securities	3	3
Recorded basis, available for sale securities	22	22
Estimate of Fair Value Measurement
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Estimated market value of long-term and short-term debt	4,600	3,600
Carrying Value Reported Value Measurement
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Aggregate carrying value of long-term and short-term debt	$ 4,300	$ 3,400

Derivative Instruments and He47

Derivative Instruments and Hedging Activities (Details) - Derivatives designated as hedging instruments - Cash flow hedges - Interest Rate Swaps - 3 month LIBOR interest rate swap, cash flow hedge terminated March 2012 - USD ($)	1 Months Ended	12 Months Ended
	Mar. 31, 2012	Dec. 31, 2012
Interest Rate Swap Agreements
Debt issued		$ 400,000,000
Interest rate swap loss amortized as an increase to interest expense over the remaining term of the debt	$ 23,000,000
Other, net
Interest Rate Swap Agreements
Ineffective portion of the cash flow hedges		$ 2,000,000

Derivative Instruments and He48

Derivative Instruments and Hedging Activities - Pre-tax Gains (Losses) (Details) - Not designated as a hedge - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Derivative instruments and hedging activities
Total gain (loss)	$ 2	$ (2)
Foreign currency exchange contracts | Other, net
Derivative instruments and hedging activities
Total gain (loss)	0	4
Foreign currency forward contracts | Other, net
Derivative instruments and hedging activities
Total gain (loss)	0	(4)
Metal contracts | Cost of sales
Derivative instruments and hedging activities
Total gain (loss)	$ 2	$ (2)

Derivative Instruments and He49

Derivative Instruments and Hedging Activities - Fair Value of Derivative Instruments (Details) - USD ($) $ in Millions	Mar. 31, 2016	Dec. 31, 2015
Foreign currency exchange contracts
Derivative instruments and hedging activities
Notional Amount	$ 27	$ 39
Foreign currency exchange contracts | Receivables | Recurring | Level 2
Derivative instruments and hedging activities
Assets	1	1
Foreign currency forward contracts
Derivative instruments and hedging activities
Notional Amount	26	30
Foreign currency forward contracts | Accrued liabilities | Recurring | Level 2
Derivative instruments and hedging activities
Liabilities	(1)	(2)
Foreign currency forward contracts | Other liabilities | Recurring | Level 2
Derivative instruments and hedging activities
Liabilities	(2)	(1)
Metal contracts
Derivative instruments and hedging activities
Notional Amount	38	50
Metal contracts | Accrued liabilities | Recurring | Level 2
Derivative instruments and hedging activities
Liabilities	$ (6)	$ (10)

Warranty Liability (Details)

Warranty Liability (Details) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward]
Balance at the beginning of the period	$ 152	$ 135
Accruals for warranties issued during the year	13	56
Accruals related to pre-existing warranties	0	15
Settlements made (in cash or kind) during the year	(13)	(50)
Other, net (including currency translation)	0	(4)
Balance at the end of the period	$ 152	$ 152

Debt (Details)

Debt (Details)	Apr. 15, 2016USD ($)	Mar. 17, 2016USD ($)	May. 29, 2015USD ($)	Apr. 30, 2016USD ($)	Mar. 31, 2016USD ($)	Mar. 28, 2013USD ($)
Debt
Proceeds from issuance of debt		$ 896,000,000
3.5% Notes and Debentures Due April 1, 2021
Debt
Long-term debt, gross		$ 400,000,000
Interest rate (as a percent)		3.50%
4.375% Notes and Debentures Due April 1, 2026
Debt
Long-term debt, gross		$ 500,000,000
Interest rate (as a percent)		4.375%
Credit Agreement dated March 28, 2013
Debt
Borrowing capacity, maximum						$ 1,250,000,000
Credit agreement dated May 29, 2015 and August 28, 2015, as amended
Debt
Borrowing capacity, maximum			$ 750,000,000
Increase in maximum borrowing capacity			$ 375,000,000
Outstanding and unused Letters of Credit					$ 0
Maximum net leverage ratio			4
Minimum interest coverage ratio			2.5
Credit agreement dated May 29, 2015 and August 28, 2015, as amended | Federal funds effective rate
Debt
Interest rate, basis spread (as a percent)			0.50%
Credit agreement dated May 29, 2015 and August 28, 2015, as amended | Libor rate
Debt
Interest rate, basis spread (as a percent)			1.00%
Credit agreement dated May 29, 2015 and August 28, 2015, as amended | Revolver
Debt
Borrowing capacity, maximum					500,000,000
Credit agreement dated May 29, 2015 and August 28, 2015, as amended | Swingline loans
Debt
Borrowing capacity, maximum					75,000,000
Credit agreement dated May 29, 2015 and August 28, 2015, as amended | Letters of credit
Debt
Borrowing capacity, maximum					100,000,000
Outstanding and unused Letters of Credit					$ 1,500,000
Subsequent Event | 6.125% Notes and Debentures Due October 3, 2016
Debt
Interest rate (as a percent)	6.125%
Notes repaid and retired	$ 1,000,000,000
Subsequent Event | 5.85% Notes and Debenture Due March 15, 2017
Debt
Interest rate (as a percent)	5.85%
Notes repaid and retired	$ 300,000,000
Subsequent Event | 5.85% and 6.125% Notes and Debentures
Debt
Interest expense, debt				$ 40,000,000

Stock-Based Compensation (Detai

Stock-Based Compensation (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Stock-based compensation
Pre-tax compensation expense	$ 9	$ 10
Income tax benefit	$ 3	$ 4
Tax rate (as a percent)	37.00%	37.00%
Long-term stock awards
Stock-based compensation
Pre-tax compensation expense	$ 5	$ 6
Stock Options
Stock-based compensation
Pre-tax compensation expense	1	1
Phantom stock awards and stock appreciation rights
Stock-based compensation
Pre-tax compensation expense	$ 3	$ 3

Stock-Based Compensation - Long

Stock-Based Compensation - Long-Term Stock Award (Details) - Long-term stock awards - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Unvested stock award shares
Balance at the beginning of the period (in shares)	5,000,000	6,000,000
Granted (in shares)	1,013,480	1,000,000
Vested (in shares)	2,000,000	2,000,000
Forfeited (in shares)	0	0
Balance at the end of the period (in shares)	4,000,000	5,000,000
Weighted average grant date fair value
Balance at the beginning of the period (in dollars per share)	$ 17	$ 18
Granted (in dollars per share)	26	26
Vested (in dollars per share)	16	17
Forfeited (in dollars per share)	19	19
Balance at the end of the period (in dollars per share)	$ 20	$ 19
Additional disclosures
Total unrecognized compensation expense	$ 62	$ 68
Remaining weighted average vesting period	4 years	3 years
Total market value (at the vesting date) of stock award shares	$ 36	$ 48

Stock-Based Compensation - Stoc

Stock-Based Compensation - Stock Options (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Stock Options
Grant date exercise price	$ 26
Stock Options
Stock Options
Vesting period	5 years
Expiration period	10 years
Shares
Outstanding at the beginning of the period (in shares)	12,000,000	18,000,000
Granted (in shares)	474,500	0
Exercised (in shares)	1,000,000	1,000,000
Forfeited (in shares)	0	0
Outstanding at the end of the period (in shares)	11,000,000	17,000,000
Option shares vested and expected to vest at the end of the period (in shares)	11,000,000	17,000,000
Option shares exercisable at the end of the period (in shares)	10,000,000	15,000,000
Weighted average exercise price
Outstanding at the beginning of the period (in dollars per share)	$ 17	$ 21
Granted (in dollars per share)	26	26
Exercised (in dollars per share)	18	14
Forfeited (in dollars per share)	0	22
Outstanding at the end of the period (in dollars per share)	18	22
Option shares vested and expected to vest at the end of the period (in dollars per share)	18	22
Option shares exercisable at the end of the period (in dollars per share)	$ 17	$ 22
Aggregate intrinsic value
Exercised	$ 18	$ 17
Option shares vested and expected to vest at the end of the period	154	108
Option shares exercisable at the end of the period	$ 138	$ 94
Weighted average remaining option term
Outstanding at the end of the period	4 years	3 years
Option shares vested and expected to vest at the end of the period	4 years	3 years
Option shares exercisable at the end of the period	3 years	3 years
Additional disclosures
Total unrecognized compensation expense	$ 8	$ 9
Weighted average remaining vesting period	3 years	3 years

Stock-Based Compensation - Opti

Stock-Based Compensation - Option Pricing Assumptions and Estimates (Details) - Stock Options - $ / shares	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Stock Options
Weighted average grant date fair value (in dollars per share)	$ 6.43	$ 9.67
Risk-free interest rate (as a percent)	1.41%	1.75%
Dividend yield (as a percent)	1.49%	1.32%
Volatility factor (as a percent)	29.00%	42.00%
Expected option life	6 years	6 years

Employee Retirement Plans (Deta

Employee Retirement Plans (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Qualified
Net periodic pension cost for the company's defined-benefit pension plans
Service cost	$ 1	$ 1
Interest cost	11	12
Expected return on plan assets	(10)	(11)
Amortization of net loss	4	4
Net periodic pension cost	6	6
Non-Qualified
Net periodic pension cost for the company's defined-benefit pension plans
Service cost	0	0
Interest cost	1	1
Expected return on plan assets	0	0
Amortization of net loss	1	1
Net periodic pension cost	$ 2	$ 2

Reclassifications From Accumu57

Reclassifications From Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Reclassifications from accumulated other comprehensive (loss) income
Net of tax	$ (3)	$ (4)
Accumulated Defined Benefit Plans Adjustment Attributable to Parent
Reclassifications from accumulated other comprehensive (loss) income
Tax (benefit)	(2)	(1)
Selling, General and Administrative Expenses | Accumulated Defined Benefit Plans Adjustment, Net Gain (Loss) Attributable to Parent
Reclassifications from accumulated other comprehensive (loss) income
Actuarial losses, net	$ 5	$ 5

Segment Information (Details)

Segment Information (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Segment Information
Net Sales	$ 1,720	$ 1,659
Operating Profit (Loss)	234	165
Other income (expense), net	(57)	(55)
Income from continuing operations before income taxes	177	110
Operating Segments
Segment Information
Net Sales	1,720	1,659
Operating Profit (Loss)	261	196
Operating Segments | Plumbing Products
Segment Information
Net Sales	813	796
Operating Profit (Loss)	129	111
Operating Segments | Decorative Architectural Products
Segment Information
Net Sales	493	451
Operating Profit (Loss)	105	83
Operating Segments | Cabinetry Products
Segment Information
Net Sales	236	249
Operating Profit (Loss)	24	(4)
Operating Segments | Windows and Other Specialty Products
Segment Information
Net Sales	178	163
Operating Profit (Loss)	3	6
Geographic Areas
Segment Information
Net Sales	1,720	1,659
Operating Profit (Loss)	261	196
Geographic Areas | North America
Segment Information
Net Sales	1,350	1,282
Operating Profit (Loss)	215	151
Geographic Areas | International, principally Europe
Segment Information
Net Sales	370	377
Operating Profit (Loss)	46	45
Corporate
Segment Information
General corporate expense, net	$ (27)	$ (31)

Severance Costs (Details)

Severance Costs (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Restructuring Charges [Abstract]
Severance costs	$ 2	$ 6

Other Income (Expense), Net (De

Other Income (Expense), Net (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Other Income and Expenses [Abstract]
Income from cash and cash investments	$ 1	$ 0
Income from financial investments, net	1	2
Foreign currency transaction losses	0	(1)
Other items, net	(3)	0
Total other, net	$ (1)	$ 1

Earnings Per Common Share (Deta

Earnings Per Common Share (Details) - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Numerator (basic and diluted):
Income from continuing operations	$ 109	$ 61
Less: Allocation to unvested restricted stock awards	1	1
Income from continuing operations attributable to common shareholders	108	60
Income from discontinued operations, net	0	3
Less: Allocation to unvested restricted stock awards	0	0
Income (loss) from discontinued operations attributable to common shareholders	0	3
Net income available to common shareholders	$ 108	$ 63
Denominator:
Basic common shares (based upon weighted average) (in shares)	330	344
Add: Stock option dilution (in shares)	3	3
Diluted common shares (in shares)	333	347

Earnings Per Common Share - Nar

Earnings Per Common Share - Narrative (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Sep. 30, 2014
Antidilutive securities excluded from computation of earnings per share
Repurchase and retirement of common stock (in shares)	3.2
Remaining number of shares authorized to be repurchased	24.6		50
Total consideration for repurchase of common stock including unpaid cash	$ 86
Dividends
Cash dividends per common share declared (in dollars per share)	$ 0.095	$ 0.090
Cash dividends per common share paid (in dollars per share)	$ 0.095	$ 0.090
Stock Options
Antidilutive securities excluded from computation of earnings per share
Antidilutive effect on computation of diluted earnings per common share (in shares)	1	8
Long-term stock awards
Antidilutive securities excluded from computation of earnings per share
Repurchase and retirement of common stock to offset the dilutive impact of stock awards (in shares)	1

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Income Tax Disclosure [Abstract]
Effective tax rate (as a percent)	33.00%	36.00%
Uncertain tax position expirations	$ 4