Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Jan. 31, 2018 | Jun. 30, 2017 | |
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-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 313,391,500 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 12,100,656,000 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash and cash investments | $ 1,194 | $ 990 |
Short-term bank deposits | 108 | 201 |
Receivables | 1,021 | 917 |
Inventories | 796 | 712 |
Prepaid expenses and other | 96 | 114 |
Total current assets | 3,215 | 2,934 |
Property and equipment, net | 1,129 | 1,060 |
Goodwill | 841 | 832 |
Other intangible assets, net | 187 | 154 |
Other assets | 116 | 157 |
Total assets | 5,488 | 5,137 |
Current Liabilities: | ||
Accounts payable | 824 | 800 |
Notes payable | 116 | 2 |
Accrued liabilities | 688 | 658 |
Total current liabilities | 1,628 | 1,460 |
Long-term debt | 2,969 | 2,995 |
Other liabilities | 715 | 785 |
Total liabilities | 5,312 | 5,240 |
Commitments and contingencies (Note S) | ||
Masco Corporation's shareholders' equity | ||
Masco Corporation's shareholders' equity: Common shares, par value $1 per share Authorized shares: 1,400,000,000; Issued and outstanding: 2017 – 310,400,000; 2016 – 318,000,000 | 310 | 318 |
Preferred shares authorized: 1,000,000; Issued and outstanding: 2017 and 2016 – None | 0 | 0 |
Paid-in capital | 0 | 0 |
Retained deficit | (305) | (381) |
Accumulated other comprehensive loss | (65) | (235) |
Total Masco Corporation's shareholders' deficit | (60) | (298) |
Noncontrolling interest | 236 | 195 |
Total equity (deficit) | 176 | (103) |
Total liabilities and equity | $ 5,488 | $ 5,137 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Common shares, par value (in dollars per share) | $ 1 | $ 1 |
Common shares, shares authorized | 1,400,000,000 | 1,400,000,000 |
Common shares, shares issued | 310,400,000 | 318,000,000 |
Common shares, shares outstanding | 310,400,000 | 318,000,000 |
Preferred shares, shares authorized | 1,000,000 | 1,000,000 |
Preferred shares, shares issued | 0 | 0 |
Preferred shares, shares outstanding | 0 | 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Statement [Abstract] | |||
Net sales | $ 7,644 | $ 7,357 | $ 7,142 |
Cost of sales | 5,033 | 4,901 | 4,889 |
Gross profit | 2,611 | 2,456 | 2,253 |
Selling, general and administrative expenses | 1,442 | 1,403 | 1,339 |
Operating profit | 1,169 | 1,053 | 914 |
Other income (expense), net: | |||
Interest expense | (278) | (229) | (225) |
Other, net | (6) | 6 | 0 |
Total other income (expense), net | (284) | (223) | (225) |
Income from continuing operations before income taxes | 885 | 830 | 689 |
Income tax expense | 305 | 296 | 293 |
Income from continuing operations | 580 | 534 | 396 |
Loss from discontinued operations, net | 0 | 0 | (2) |
Net income | 580 | 534 | 394 |
Less: Net income attributable to noncontrolling interest | 47 | 43 | 39 |
Net income attributable to Masco Corporation | $ 533 | $ 491 | $ 355 |
Basic: | |||
Income from continuing operations (in dollars per share) | $ 1.68 | $ 1.49 | $ 1.04 |
Loss from discontinued operations, net (in dollars per share) | 0 | 0 | (0.01) |
Net income (in dollars per share) | 1.68 | 1.49 | 1.03 |
Diluted: | |||
Income from continuing operations (in dollars per share) | 1.66 | 1.47 | 1.03 |
Loss from discontinued operations, net (in dollars per share) | 0 | 0 | (0.01) |
Net income (in dollars per share) | $ 1.66 | $ 1.47 | $ 1.02 |
Amounts attributable to Masco Corporation: | |||
Income from continuing operations | $ 533 | $ 491 | $ 357 |
Loss from discontinued operations, net | 0 | 0 | (2) |
Net income attributable to Masco Corporation | $ 533 | $ 491 | $ 355 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 580 | $ 534 | $ 394 |
Less: Net income attributable to noncontrolling interest | 47 | 43 | 39 |
Net income attributable to Masco Corporation | 533 | 491 | 355 |
Other comprehensive income (loss), net of tax (Note N): | |||
Cumulative translation adjustment | 133 | (78) | (96) |
Interest rate swaps | 3 | 1 | 2 |
Pension and other post-retirement benefits | 63 | (15) | 26 |
Realized loss on available-for-sale securities | 0 | 12 | 0 |
Other comprehensive income (loss) | 199 | (80) | (68) |
Less: Other comprehensive income (loss) attributable to the noncontrolling interest: | |||
Cumulative translation adjustment | 28 | (10) | (16) |
Pension and other post-retirement benefits | 1 | 0 | 2 |
Less: Other comprehensive (loss) income attributable to noncontrolling interest | 29 | (10) | (14) |
Other comprehensive income (loss) attributable to Masco Corporation | 170 | (70) | (54) |
Total comprehensive income | 779 | 454 | 326 |
Less: Total comprehensive income attributable to noncontrolling interest | 76 | 33 | 25 |
Total comprehensive income attributable to Masco Corporation | $ 703 | $ 421 | $ 301 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES: | |||
Net income (loss) | $ 580 | $ 534 | $ 394 |
Depreciation and amortization | 127 | 134 | 133 |
Display amortization | 25 | 25 | 20 |
Deferred income taxes | 10 | 130 | 212 |
Employee withholding taxes paid on stock-based compensation | 33 | 40 | 36 |
(Gain) on disposition of investments, net | (4) | (4) | (7) |
Loss on disposition of businesses, net | 13 | 0 | 0 |
Pension and other postretirement benefits | (38) | (78) | (18) |
Impairment of financial investments, net | 2 | 0 | 0 |
Impairment of property and equipment, net | 0 | 0 | 2 |
Stock-based compensation | 38 | 29 | 41 |
Increase in receivables | (127) | (120) | (104) |
(Increase) decrease in inventories | (76) | (39) | 17 |
Increase in accounts payable and accrued liabilities, net | 53 | 71 | 82 |
Debt extinguishment costs | 104 | 40 | 0 |
Other, net | 11 | 27 | 2 |
Net cash from operating activities | 751 | 789 | 810 |
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES: | |||
Retirement of notes | (535) | (1,300) | (500) |
Purchase of Company common stock | (331) | (459) | (456) |
Cash dividends paid | (129) | (128) | (126) |
Dividends paid to noncontrolling interest | (35) | (31) | (36) |
Cash distributed to TopBuild Corp. | 0 | 0 | (63) |
Issuance of TopBuild Corp. debt | 0 | 0 | 200 |
Issuance of notes, net of issuance costs | 593 | 889 | 497 |
Debt extinguishment costs | (104) | (40) | 0 |
Increase in debt | 2 | 3 | 4 |
Issuance of Company common stock | 0 | 1 | 2 |
Employee withholding taxes paid on stock-based compensation | 33 | 40 | 36 |
Payment of debt | (5) | (4) | (4) |
Credit Agreement and other financing costs | 0 | 0 | (3) |
Net cash for financing activities | (577) | (1,109) | (521) |
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES: | |||
Capital expenditures | (173) | (180) | (158) |
Acquisition of businesses, net of cash acquired | (89) | 0 | (41) |
Proceeds from disposition of: | |||
Businesses, net of cash disposed | 128 | 0 | 0 |
Short-term bank deposits | 218 | 251 | 279 |
Property and equipment | 24 | 0 | 18 |
Other financial investments | 7 | 32 | 10 |
Purchases of short-term bank deposits | (106) | (211) | (253) |
Other, net | (34) | (16) | (44) |
Net cash for investing activities | (25) | (124) | (189) |
Effect of exchange rate changes on cash and cash investments | 55 | (34) | (15) |
CASH AND CASH INVESTMENTS: | |||
Increase (decrease) for the year | 204 | (478) | 85 |
At January 1 | 990 | 1,468 | 1,383 |
At December 31 | $ 1,194 | $ 990 | $ 1,468 |
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 Income (Loss) | Noncontrolling Interest |
Balance at Dec. 31, 2014 | $ 1,128 | $ 345 | $ 0 | $ 690 | $ (111) | $ 204 |
Increase (Decrease) in Stockholders' Equity | ||||||
Total comprehensive income (loss) | 326 | 355 | (54) | 25 | ||
Shares issued | (15) | 3 | (18) | |||
Shares retired: | ||||||
Repurchased | (456) | (17) | (65) | (374) | ||
Surrendered (non-cash) | (18) | (1) | (17) | |||
Cash dividends declared | (126) | (126) | ||||
Dividends paid to noncontrolling interest | (36) | (36) | ||||
Separation of TopBuild Corp. | (828) | (828) | ||||
Stock-based compensation | 83 | 83 | ||||
Balance at Dec. 31, 2015 | 58 | 330 | 0 | (300) | (165) | 193 |
Increase (Decrease) in Stockholders' Equity | ||||||
Total comprehensive income (loss) | 454 | 491 | (70) | 33 | ||
Shares issued | (24) | 3 | (27) | |||
Shares retired: | ||||||
Repurchased | (459) | (15) | (14) | (430) | ||
Surrendered (non-cash) | (14) | (14) | ||||
Cash dividends declared | (128) | (128) | ||||
Dividends paid to noncontrolling interest | (31) | (31) | ||||
Stock-based compensation | 41 | 41 | ||||
Balance at Dec. 31, 2016 | (103) | 318 | 0 | (381) | (235) | 195 |
Increase (Decrease) in Stockholders' Equity | ||||||
Total comprehensive income (loss) | 779 | 533 | 170 | 76 | ||
Shares issued | (19) | 2 | (21) | |||
Shares retired: | ||||||
Repurchased | (331) | (9) | (8) | (314) | ||
Surrendered (non-cash) | (15) | (1) | (14) | |||
Cash dividends declared | (129) | (129) | ||||
Dividends paid to noncontrolling interest | (35) | (35) | ||||
Stock-based compensation | 29 | 29 | ||||
Balance at Dec. 31, 2017 | $ 176 | $ 310 | $ 0 | $ (305) | $ (65) | $ 236 |
ACCOUNTING POLICIES
ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
ACCOUNTING POLICIES | ACCOUNTING POLICIES Principles of Consolidation. The consolidated financial statements include the accounts of Masco Corporation and all majority-owned subsidiaries. All significant intercompany transactions have been eliminated. We consolidate the assets, liabilities and results of operations of variable interest entities for which we are the primary beneficiary. Use of Estimates and Assumptions in the Preparation of Financial Statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of any contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates and assumptions. Revenue Recognition. We recognize revenue as title to products and risk of loss is transferred to customers or when services are rendered, net of applicable provisions for discounts, returns and allowances. Amounts billed for shipping and handling are included in net sales, while costs incurred for shipping and handling are included in cost of sales. Customer Promotion Costs. We record estimated reductions to revenue for customer programs and incentive offerings, including special pricing and certain co-operative advertising arrangements, promotions and other volume-based incentives. In-store displays that are owned by us and used to market our products are included in other assets in the consolidated balance sheets and are amortized using the straight-line method over the expected useful life of three to five years; related amortization expense is classified as a selling expense in the consolidated statement of operations. Foreign Currency. The financial statements of our foreign subsidiaries are measured using the local currency as the functional currency. Assets and liabilities of these subsidiaries are translated at exchange rates as of the balance sheet dates. Revenues and expenses are translated at average exchange rates in effect during the year. The resulting cumulative translation adjustments have been recorded in the accumulated other comprehensive loss component of shareholders' equity. Realized foreign currency transaction gains and losses are included in the consolidated statements of operations in other income (expense), net. Cash and Cash Investments. We consider all highly liquid investments with an initial maturity of three months or less to be cash and cash investments. Short-Term Bank Deposits. We invest a portion of our foreign excess cash in short-term bank deposits. These highly liquid investments have original maturities between three and twelve months and are valued at cost, which approximates fair value at December 31, 2017 and 2016 . These short-term bank deposits are classified in the current assets section of our consolidated balance sheets, and interest income related to short-term bank deposits is recorded in our consolidated statements of operations in other income (expense), net. Receivables. We do significant business with a number of customers, including certain home center retailers and homebuilders. We monitor our exposure for credit losses on our customer receivable balances and the credit worthiness of our customers on an on-going basis and record related allowances for doubtful accounts. Allowances are estimated based upon specific customer balances, where a risk of default has been identified, and also include a provision for non-customer specific defaults based upon historical collection, return and write-off activity. A separate allowance is recorded for customer incentive rebates and is generally based upon sales activity. Receivables are presented net of certain allowances (including allowances for doubtful accounts) of $44 million and $40 million at December 31, 2017 and 2016 , respectively. Property and Equipment. Property and equipment, including significant improvements to existing facilities, are recorded at cost. Upon retirement or disposal, the cost and accumulated depreciation are removed from the accounts and any gain or loss is included in the consolidated statements of operations. Maintenance and repair costs are charged against earnings as incurred. We review our property and equipment as events occur or circumstances change that would more likely than not reduce the fair value of the property and equipment below the carrying amount. If the carrying amount of property and equipment is not recoverable from its undiscounted cash flows, then we would recognize an impairment loss for the difference between the carrying amount and the current fair value. Further, we evaluate the remaining useful lives of property and equipment at each reporting period to determine whether events and circumstances warrant a revision to the remaining depreciation periods. A. ACCOUNTING POLICIES (Continued) Depreciation. Depreciation expense is computed principally using the straight-line method over the estimated useful lives of the assets. Annual depreciation rates are as follows: buildings and land improvements, 2 to 10 percent, computer hardware and software, 17 to 33 percent, and machinery and equipment, 5 to 33 percent. Depreciation expense was $116 million , $124 million and $116 million in 2017 , 2016 and 2015 , respectively. Goodwill and Other Intangible Assets. We perform our annual impairment testing of goodwill in the fourth quarter of each year, or as events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. We have defined our reporting units and completed the impairment testing of goodwill at the operating segment level. Our operating segments are reporting units that engage in business activities, for which discrete financial information, including five-year forecasts, are available. We compare the fair value of the reporting units to the carrying value of the reporting units for goodwill impairment testing. Fair value is determined using a discounted cash flow method, which includes significant unobservable inputs (Level 3 inputs), and requires us to make significant estimates and assumptions, including long-term projections of cash flows, market conditions and appropriate discount rates. Our judgments are based upon historical experience, current market trends, consultations with external valuation specialists and other information. While we believe that the estimates and assumptions underlying the valuation methodology are reasonable, different estimates and assumptions could result in different outcomes. In estimating future cash flows, we rely on internally generated five-year forecasts for sales and operating profits, including capital expenditures, and, currently, a two percent long-term assumed annual growth rate of cash flows for periods after the five -year forecast. We utilize our weighted average cost of capital of approximately 8.0 percent as the basis to determine the discount rate to apply to the estimated future cash flows. In 2017 , based upon our assessment of the risks impacting each of our businesses, we applied a risk premium to increase the discount rate to a range of 10.0 percent to 13.0 percent for our reporting units. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized to the extent that a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill in that reporting unit. We review our other indefinite-lived intangible assets for impairment annually, in the fourth quarter, or as events occur or circumstances change that indicate the assets may be impaired without regard to the business unit. We consider the implications of both external (e.g., market growth, competition and local economic conditions) and internal (e.g., product sales and expected product growth) factors and their potential impact on cash flows related to the intangible asset in both the near- and long-term. Intangible assets with finite useful lives are amortized using the straight-line method over their estimated useful lives. We evaluate the remaining useful lives of amortizable intangible assets at each reporting period to determine whether events and circumstances warrant a revision to the remaining periods of amortization. Refer to Note G to the consolidated financial statements for additional information regarding goodwill and other intangible assets. Fair Value Accounting. We use derivative financial instruments to manage certain exposure to fluctuations in earnings and cash flows resulting from changes in foreign currency exchange rates, and occasionally from changes in commodity costs and interest rate exposures. Derivative financial instruments are recorded in the consolidated balance sheets as either an asset or liability measured at fair value, netted by counterparty, where the right of offset exists. The gain or loss is recognized in determining current earnings during the period of the change in fair value. We currently do not have any derivative instruments for which we have designated hedge accounting. Warranty. We offer full and limited warranties on certain products with warranty periods ranging up to the lifetime of the product to the original consumer purchaser. At the time of sale, we accrue a warranty liability for the estimated future cost to provide products, parts or services to repair or replace products to satisfy our warranty obligations. Our estimate of future costs to service our warranty obligations is based upon the information available and includes a number of factors, such as the warranty coverage, the warranty period, historical experience specific to the nature, frequency and average cost to service the claim, along with industry and demographic trends. Certain factors and related assumptions in determining our warranty liability involve judgments and estimates and are sensitive to changes in the factors described above. We believe that the warranty accrual is appropriate; however, actual claims incurred could differ from our original estimates which would require us to adjust our previously established accruals. Refer to Note S to the consolidated financial statements for additional information on our warranty accrual. A. ACCOUNTING POLICIES (Continued) A significant portion of our business is at the consumer retail level through home center retailers and other major retailers. A consumer may return a product to a retail outlet that is a warranty return. However, certain retail outlets do not distinguish between warranty and other types of returns when they claim a return deduction from us. Our revenue recognition policy takes into account this type of return when recognizing revenue, and an estimate of these amounts is recorded as a deduction to net sales at the time of sale. Insurance Reserves. We provide for expenses associated with workers' compensation and product liability obligations when such amounts are probable and can be reasonably estimated. The accruals are adjusted as new information develops or circumstances change that would affect the estimated liability. Any obligations expected to be settled within 12 months are recorded in accrued liabilities; all other obligations are recorded in other liabilities. Stock-Based Compensation. We measure compensation expense for stock awards at the market price of our common stock at the grant date. Such expense is recognized ratably over the shorter of the vesting period of the stock awards, typically 5 or 10 years, or the length of time until the grantee becomes retirement-eligible at age 65. We measure compensation expense for stock options using a Black-Scholes option pricing model. Such expense is recognized ratably over the shorter of the vesting period of the stock options, typically five years , or the length of time until the grantee becomes retirement-eligible at age 65. We recognize forfeitures related to stock awards and stock options as they occur. Noncontrolling Interest. We owned 68 percent of Hansgrohe SE at both December 31, 2017 and 2016 . The aggregate noncontrolling interest, net of dividends, at December 31, 2017 and 2016 has been recorded as a component of equity on our consolidated balance sheets. Interest and Penalties on Uncertain Tax Positions. We record interest and penalties on our uncertain tax positions in income tax expense (benefit). Accounting for Global Intangible Low-taxed Income ("GILTI") . We record the tax effects of GILTI related to our foreign operations as a component of income tax expense (benefit) in the period the tax arises. Reclassifications. Certain prior year amounts have been reclassified to conform to the 2017 presentation in the consolidated financial statements. In our consolidated statements of cash flows, the cash flows from discontinued operations are not separately classified . Recently Adopted Accounting Pronouncements. In July 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory," which requires that inventory within the scope of the guidance be measured at the lower of cost and net realizable value, as opposed to the lower of cost or market. We adopted ASU 2015-11 on January 1, 2017. The adoption of the new standard did not have an impact on our financial position or results of operations. In March 2016, the FASB issued 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, simplifies the accounting requirements for forfeitures and employers' tax withholding requirements, and modifies the presentation of certain items on the statement of cash flows. We adopted ASU 2016-09 on January 1, 2017, using the retrospective options for reclassifying excess tax benefit from stock-based compensation and employee withholding taxes paid on stock-based compensation within our statements of cash flows. The adoption of the remaining requirements did not have an impact on our financial position or results of operations. As a result of this adoption, we increased cash flows from (for) operating activities and decreased cash flows from (for) financing activities by $63 million and $111 million for the years ended December 31, 2016 and 2015, respectively. Subsequent to adoption, tax effects related to employee share-based payments were recorded to income tax expense, thus increasing the volatility in our effective tax rate. In January 2017, the FASB issued ASU 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business," which narrows the definition of what constitutes a business for acquisition and divestiture purposes. We early adopted ASU 2017-01 effective October 1, 2017. The adoption of the new standard did not have an impact on our financial position or results of operations. A. ACCOUNTING POLICIES (Continued) In January 2017, the FASB issued ASU 2017-04, "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment," which removes Step 2 of the goodwill impairment test. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill in the reporting unit. We early adopted ASU 2017-04 effective January 1, 2017. The adoption of the new standard did not have an impact on our financial position or results of operations. Recently Issued Accounting Pronouncements. In May 2014, the FASB issued a new standard for revenue recognition, Accounting Standards Codification ("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. The standard allows for either a full retrospective or modified retrospective method of adoption. We will adopt this standard on its effective date, January 1, 2018, under the full retrospective method of adoption. The adoption of the standard will not have a material impact on our financial position or results of operations. We have finalized our accounting policy, trained our business units on the new standard and finalized our internal controls under the new standard. We did not experience significant issues in our implementation process. In January 2016, the FASB issued 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. The adoption of this standard will not have a material impact on our financial position or results of operations. In February 2016, the FASB issued a new standard for leases, ASC 842, which changes the accounting model for identifying and accounting for leases. ASC 842 is effective for us for annual periods beginning January 1, 2019 and currently requires retrospective application. We expect this standard to increase our total assets and total liabilities; however, we are currently evaluating the magnitude of the impact the adoption of this new standard will have on our financial position and results of operations. In June 2016, the FASB issued ASU 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which modifies the methodology for recognizing loss impairments on certain types of financial instruments. The new methodology requires an entity to estimate the credit losses expected over the life of an exposure. Additionally, ASU 2016-13 amends the current available-for-sale security other-than-temporary impairment model for debt securities. ASU 2016-13 is effective for us for annual periods beginning January 1, 2020. We are currently evaluating the impact the adoption of this new standard will have on our financial position and results of operations. In October 2016, the FASB issued ASU 2016-16, "Income Taxes (Topic 740): Intra-Entity Asset Transfers of Assets Other than Inventory," which no longer allows the tax effects of intra-entity asset transfers (intercompany sales) of assets other than inventory to be deferred until the transferred asset is sold to a third party or otherwise recovered through use. The new standard requires the tax expense from the sale of the asset in the seller’s tax jurisdiction and the corresponding basis differences in the buyer’s jurisdiction to be recognized when the transfer occurs even though the pre-tax effects of the transaction are eliminated in consolidation. ASU 2016-16 is effective for us for annual periods beginning January 1, 2018. The adoption of this standard will not have a material impact on our financial position or results of operations. In March 2017, the FASB issued ASU 2017-07, "Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost," which modifies the presentation of net periodic pension and post-retirement benefit cost ("net benefit cost") in the income statement and the components eligible for capitalization as assets. ASU 2017-07 is effective for us for annual periods beginning January 1, 2018. The adoption of the new standard will not have a material impact on our financial position or results of operations. For full year 2017 and 2016, we expect $26 million and $32 million of expense to be retrospectively reclassified from operating profit to other income (expense), net, within our results of operations. In May 2017, the FASB issued ASU 2017-09, "Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting," which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. ASU 2017-09 is effective for us for annual periods beginning January 1, 2018, and is applied prospectively. Upon adoption, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. A. ACCOUNTING POLICIES (Concluded) In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities," which improves and simplifies accounting rules around hedge accounting and better portrays the economic results of an entity’s risk management activities in its financial statements. ASU 2017-12 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. |
DIVESTITURES
DIVESTITURES | 12 Months Ended |
Dec. 31, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DIVESTITURES | DIVESTITURES In the fourth quarter of 2017 we divested Moores Furniture Group Limited ("Moores"), a manufacturer of kitchen and bathroom furniture in the United Kingdom. In connection with the divestiture we recognized a loss of $64 million for the year ended December 31, 2017, included in other, net, within other income (expense), net in our consolidated statement of operations. This loss resulted primarily from the recognition of $58 million of defined-benefit pension plan actuarial losses, net of tax, that were previously included within accumulated other comprehensive loss, due to the transfer of the plan assets and obligations to the purchaser in connection with the sale of the business. Prior to divestiture, the results of this business are included within income from continuing operations before income taxes in the consolidated statement of operations and reported as part of our Cabinetry Products segment. In the second quarter of 2017 we divested Arrow Fastener Co., LLC ("Arrow"), a manufacturer and distributor of fastening tools, for proceeds of $128 million . In connection with the divestiture we recognized a gain of $51 million for the year ended December 31, 2017, included in other, net, within other income (expense), net in our consolidated statement of operations. Prior to divestiture, the results of this business are included within income from continuing operations before income taxes in the consolidated statement of operations and reported as part of our Windows and Other Specialty Products segment. 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. On June 30, 2015, immediately prior to the effective time of the spin off, TopBuild paid a cash distribution to us of $200 million using the proceeds of its new debt financing arrangement. This transaction was reported as a financing activity in the consolidated statements of cash flows. We have accounted for the spin off of TopBuild as a discontinued operation. Losses from this discontinued operation were included in loss from discontinued operations, net, in the consolidated statement of operations. B. DIVESTITURES (Concluded) The major classes of line items constituting pre-tax (loss) profit of the discontinued operation, in millions: Year Ended December 31, 2015 Net sales $ 762 Cost of sales 603 Gross profit 159 Selling, general and administrative expenses 148 Income from discontinued operations $ 11 Other discontinued operations results: Loss on disposal of discontinued operations, net (1 ) Income before income tax 10 Income tax expense (1) (12 ) Loss from discontinued operations, net $ (2 ) (1) The unusual relationship between income tax expense and income before income tax resulted primarily from certain non-deductible transaction costs related to the spin off of TopBuild. Other selected financial information for TopBuild during the period owned by us, was as follows, in millions: Year Ended December 31, 2015 Depreciation and amortization $ 6 Capital expenditures $ 7 We did not have any assets or liabilities related to discontinued operations at either December 31, 2017 or 2016 . In conjunction with the spin off, we entered into a Transition Services Agreement with TopBuild under which we provided administrative services to TopBuild subsequent to the separation. This agreement terminated on June 30, 2016. The fees for services rendered under the Transition Services Agreement are not material to our results of operations. |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
ACQUISITIONS | ACQUISITIONS In the fourth quarter of 2017, we acquired Mercury Plastics, Inc., a plastics processor and manufacturer of water handling systems for appliance and faucet applications, for approximately $89 million in cash. This business is included in the Plumbing Products segment. This acquisition enhances our ability to develop faucet technology and provides continuity of supply of quality faucet components. In connection with this acquisition, we recognized $38 million of goodwill, which is tax deductible, and is related primarily to the expected synergies from combining the operations into our business. In the second quarter of 2015, we acquired a U.K. window business for approximately $16 million in cash in the Windows and Other Specialty Products segment. This acquisition will support our U.K. window business' growth strategy by expanding its product offerings into timber-alternative windows and doors. In the first quarter of 2015, we acquired an aquatic fitness business for approximately $25 million in cash in the Plumbing Products segment. This acquisition will allow our spa business to expand its wellness products platform, open new channels of distribution and access a new customer base. These acquisitions are not material to us. The results of these acquisitions are included in the consolidated financial statements from the date of their respective acquisition. C. ACQUISITIONS (Concluded) In December 2017, we signed a definitive agreement to acquire The L.D. Kichler Co., a leader in decorative residential and light commercial lighting products, ceiling fans and LED lighting systems. This business will expand our product offerings to repair and remodel customers. We expect this transaction to close in the first quarter of 2018, at which time we expect to pay approximately $550 million for the business, using cash on hand. We intend to report this business in our Decorative Architectural Products segment. |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES (In Millions) At December 31 2017 2016 Finished goods $ 414 $ 366 Raw materials 277 254 Work in process 105 92 Total $ 796 $ 712 Inventories, which include purchased parts, materials, direct labor and applied overhead, are stated at the lower of cost or net realizable value, with cost determined by use of the first-in, first-out method. |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 12 Months Ended |
Dec. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE 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 may include interest rate swap agreements, foreign currency contracts and metals contracts. 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. At December 31, 2017 , the balance remaining in accumulated other comprehensive loss was $8 million (pre-tax). 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 European operations, enter into foreign currency forward contracts and foreign currency exchange contracts. Gains (losses) related to foreign currency forward and exchange contracts are recorded in our consolidated statements of operations in 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. From time to time, we have entered into contracts to manage our exposure to increases in the price of copper and zinc. Gains (losses) related to these contracts are recorded in our consolidated statements of operations in cost of sales. E. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Concluded) The pre-tax (losses) gains included in our consolidated statements of operations are as follows, in millions: Year Ended December 31, 2017 2016 2015 Foreign currency contracts: Exchange contracts $ (1 ) $ — $ 4 Forward contracts 1 — (3 ) Metals contracts — 5 (17 ) Interest rate swaps (4 ) (2 ) (2 ) Total $ (4 ) $ 3 $ (18 ) We present our derivatives net by counterparty, due to the right of offset under master netting arrangements in the consolidated balance sheets. The notional amounts being hedged and the fair value of those derivative instruments are as follows, in millions: At December 31, 2017 Notional Amount Balance Sheet Foreign currency contracts: Exchange contracts $ 14 Accrued liabilities $ — Forward contracts 43 Receivables — Accrued liabilities — At December 31, 2016 Notional Amount Balance Sheet Foreign currency contracts: Forward contracts $ 21 Accrued liabilities $ (2 ) Metals contracts 1 Accrued liabilities — 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). |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT (In Millions) At December 31 2017 2016 Land and improvements $ 110 $ 111 Buildings 681 712 Computer hardware and software 327 315 Machinery and equipment 1,547 1,480 2,665 2,618 Less: Accumulated depreciation (1,536 ) (1,558 ) Total $ 1,129 $ 1,060 We lease certain equipment and plant facilities under noncancellable operating leases. Rental expense recorded in the consolidated statements of operations totaled approximately $66 million , $63 million and $60 million during 2017 , 2016 and 2015 , respectively. At December 31, 2017 , future minimum lease payments were as follows, in millions: 2018 $ 50 2019 39 2020 32 2021 25 2022 20 2023 and beyond 91 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS The changes in the carrying amount of goodwill, by segment, were as follows, in millions: Gross Goodwill At December 31, 2017 Accumulated Net Goodwill At December 31, 2017 Plumbing Products $ 574 $ (340 ) $ 234 Decorative Architectural Products 294 (75 ) 219 Cabinetry Products 181 — 181 Windows and Other Specialty Products 718 (511 ) 207 Total $ 1,767 $ (926 ) $ 841 Gross Goodwill At December 31, 2016 Accumulated Net Goodwill At December 31, 2016 Additions (A) Divestitures (B) Other (C) Net Goodwill At December 31, 2017 Plumbing Products $ 519 $ (340 ) $ 179 $ 38 $ — $ 17 $ 234 Decorative Architectural Products 294 (75 ) 219 — — — 219 Cabinetry Products 240 (59 ) 181 — — — 181 Windows and Other Specialty Products 987 (734 ) 253 — (47 ) 1 207 Total $ 2,040 $ (1,208 ) $ 832 $ 38 $ (47 ) $ 18 $ 841 Gross Goodwill At December 31, 2015 Accumulated Net Goodwill At December 31, 2015 Other (C) Net Goodwill At December 31, 2016 Plumbing Products $ 525 $ (340 ) $ 185 $ (6 ) $ 179 Decorative Architectural Products 294 (75 ) 219 — 219 Cabinetry Products 240 (59 ) 181 — 181 Windows and Other Specialty Products 988 (734 ) 254 (1 ) 253 Total $ 2,047 $ (1,208 ) $ 839 $ (7 ) $ 832 (A) Additions consist of acquisitions. (B) Included within divestitures is the disposition of Moores in the Cabinetry Products segment, which includes $59 million of both gross goodwill and accumulated impairment losses, and the disposition of Arrow in the Windows and Other Specialty Products segment, which includes $270 million of gross goodwill and $223 million of accumulated impairment losses. (C) Other consists of the effect of foreign currency translation. We completed our annual impairment testing of goodwill and other indefinite-lived intangible assets in the fourth quarters of 2017 , 2016 and 2015 . There was no impairment of goodwill for any of our reporting units for any of these years. Other indefinite-lived intangible assets were $140 million and $136 million at December 31, 2017 and 2016 , respectively, and principally included registered trademarks. In 2017 , 2016 and 2015 , the impairment test indicated there was no impairment of other indefinite-lived intangible assets for any of our business units. As a result of our 2017 and 2015 acquisitions, other indefinite lived intangible assets increased by $5 million and $7 million , respectively, as of the acquisition dates. G. GOODWILL AND OTHER INTANGIBLE ASSETS (Concluded) The carrying value of our definite-lived intangible assets was $47 million (net of accumulated amortization of $10 million ) at December 31, 2017 and $18 million (net of accumulated amortization of $16 million ) at December 31, 2016 and principally included customer relationships with a weighted average amortization period of 12 years in 2017 and 10 years in 2016 . Amortization expense related to the definite-lived intangible assets of continuing operations was $4 million , $4 million and $6 million in 2017 , 2016 and 2015 , respectively. As a result of our 2017 and 2015 acquisitions, definite-lived intangible assets increased by $26 million and $17 million , respectively, as of the acquisition dates. At December 31, 2017 , amortization expense related to the definite-lived intangible assets during each of the next five years was as follows: 2018 – $6 million ; 2019 – $5 million ; 2020 – $5 million , 2021 – $5 million and 2022 – $5 million . |
OTHER ASSETS
OTHER ASSETS | 12 Months Ended |
Dec. 31, 2017 | |
Other Assets, Noncurrent Disclosure [Abstract] | |
OTHER ASSETS | OTHER ASSETS (In Millions) At December 31 2017 2016 Equity method investments $ 11 $ 13 Private equity funds 2 5 In-store displays, net 31 42 Deferred tax assets (Note Q) 48 68 Other 24 29 Total $ 116 $ 157 In-store displays are amortized using the straight-line method over the expected useful life of three to five years, and we recognized amortization expense related to in-store displays of $25 million , $25 million and $20 million in 2017 , 2016 and 2015 , respectively. Cash spent for displays was $14 million , $11 million and $43 million in 2017 , 2016 and 2015 , respectively, and is included in other, net within investing activities on the consolidated statements of cash flows. |
ACCRUED LIABILITIES
ACCRUED LIABILITIES | 12 Months Ended |
Dec. 31, 2017 | |
Accrued Liabilities, Current [Abstract] | |
ACCRUED LIABILITIES | ACCRUED LIABILITIES (In Millions) At December 31 2017 2016 Salaries, wages and commissions $ 196 $ 191 Advertising and sales promotion 157 146 Interest 42 51 Warranty (Note S) 59 56 Employee retirement plans 50 52 Insurance reserves 40 41 Property, payroll and other taxes 27 19 Dividends payable 33 32 Other 84 70 Total $ 688 $ 658 |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT (In Millions) At December 31 2017 2016 Notes and debentures: 6.625%, due April 15, 2018 $ 114 $ 114 7.125%, due March 15, 2020 201 500 3.500%, due April 1, 2021 399 399 5.950%, due March 15, 2022 326 400 4.450%, due April 1, 2025 500 500 4.375%, due April 1, 2026 498 498 3.500%, due November 15, 2027 300 — 7.750%, due August 1, 2029 234 296 6.500%, due August 15, 2032 200 300 4.500%, due May 15, 2047 299 — Other 33 9 Prepaid debt issuance costs (19 ) (19 ) 3,085 2,997 Less: Current portion 116 2 Total long-term debt $ 2,969 $ 2,995 All of the notes and debentures above are senior indebtedness and, other than the 6.625% notes due 2018 and the 7.75% notes due 2029, are redeemable at our option. On June 21, 2017, we issued $300 million of 3.5% Notes due November 15, 2027 and $300 million of 4.5% Notes due May 15, 2047. We received proceeds of $599 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 June 27, 2017, proceeds from the debt issuances, together with cash on hand, were used to repay and early retire $299 million of our 7.125% Notes due March 15, 2020, $74 million of our 5.95% Notes due March 15, 2022, $62 million of our 7.75% Notes due August 1, 2029, and $100 million of our 6.5% Notes due August 15, 2032. In connection with these early retirements, we incurred a loss on debt extinguishment of $107 million , which was recorded as interest expense. 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, we incurred $40 million of debt extinguishment costs, which we recorded as interest expense. On June 15, 2015 , we repaid and retired all of our $500 million , 4.8% Notes on the scheduled retirement date. On March 24, 2015 , we issued $500 million of 4.45% Notes due April 1, 2025. 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 reduces 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. J. DEBT (Concluded) 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 December 31, 2017 , we had no 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 greater 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 no borrowings have been made at December 31, 2017 . At December 31, 2017 , the debt maturities during each of the next five years were as follows: 2018 – $116 million ; 2019 – $2 million ; 2020 – $203 million ; 2021 – $402 million and 2022 – $329 million . Interest paid was $175 million , $198 million and $216 million in 2017 , 2016 and 2015 , respectively. These amounts exclude $104 million and $40 million of debt extinguishment costs related to the early retirement of debt, which were recorded as interest expense and paid in 2017 and 2016, respectively. 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, which are Level 1 inputs. The aggregate estimated market value of short-term and long-term debt at December 31, 2017 was approximately $3.3 billion , compared with the aggregate carrying value of $3.1 billion . The aggregate estimated market value of short-term and long-term debt at December 31, 2016 was approximately $3.3 billion , compared with the aggregate carrying value of $3.0 billion . |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2017 | |
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") replaced the 2005 Long Term Stock Incentive Plan in May 2014 and provides for the issuance of stock-based incentives in various forms to employees and non-employee Directors of the Company. At December 31, 2017 , outstanding stock-based incentives were in the form of long-term stock awards, stock options, restricted stock units, phantom stock awards and stock appreciation rights. Pre-tax compensation expense for these stock-based incentives were as follows, in millions: 2017 2016 2015 Long-term stock awards $ 24 $ 23 $ 23 Stock options 3 2 5 Restricted stock units 2 — — Phantom stock awards and stock appreciation rights 9 4 11 Total $ 38 $ 29 $ 39 K. STOCK-BASED COMPENSATION (Continued) At December 31, 2017 , 15.4 million shares of our common stock were available under the 2014 Plan for the granting of long-term stock incentive awards, stock options and restricted stock units. 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, as we repurchase and retire an equal number of shares in the open market. We granted 853,690 shares of long-term stock awards during 2017 . Our long-term stock award activity was as follows, shares in millions: 2017 2016 2015 Unvested stock award shares at January 1 4 5 6 Weighted average grant date fair value $ 20 $ 17 $ 18 Stock award shares granted 1 1 1 Weighted average grant date fair value $ 34 $ 26 $ 26 Stock award shares vested 2 2 2 Weighted average grant date fair value $ 18 $ 16 $ 17 Stock award shares forfeited — — — Weighted average grant date fair value $ 24 $ 20 $ 18 Forfeitures upon spin off (A) — — 1 Weighted average grant date fair value $ — $ — $ 20 Modification upon spin off (B) — — 1 Unvested stock award shares at December 31 3 4 5 Weighted average grant date fair value $ 24 $ 20 $ 17 (A) In connection with the spin off of TopBuild, TopBuild employees forfeited their outstanding Masco equity awards. (B) 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 to the outstanding stock awards was made pursuant to existing anti-dilution provisions in our 2014 Plan and 2005 Long Term Incentive Plan. At December 31, 2017 , 2016 and 2015 , there was $46 million , $43 million and $42 million , respectively, of total unrecognized compensation expense related to unvested stock awards; such awards had a weighted average remaining vesting period of three years at December 31, 2017 , 2016 and 2015 . The total market value (at the vesting date) of stock award shares which vested during 2017 , 2016 and 2015 was $45 million , $43 million and $54 million , respectively. Stock Options. Stock options are granted to certain 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 397,350 shares of stock options during 2017 with a grant date weighted-average exercise price of approximately $34 per share. During 2017 , no stock option shares were forfeited (including options that expired unexercised). K. STOCK-BASED COMPENSATION (Continued) Our stock option activity was as follows, shares in millions: 2017 2016 2015 Option shares outstanding, January 1 7 12 18 Weighted average exercise price $ 15 $ 17 $ 21 Option shares granted — — — Weighted average exercise price $ 34 $ 26 $ 26 Option shares exercised 2 5 5 Aggregate intrinsic value on date of exercise (A) $ 47 million $ 64 million $ 50 million Weighted average exercise price $ 15 $ 21 $ 17 Option shares forfeited — — 3 Weighted average exercise price $ — $ — $ 29 Forfeitures upon spin off (B) — — — Weighted average exercise price $ — $ — $ 19 Modifications upon spin off (C) — — 2 Option shares outstanding, December 31 5 7 12 Weighted average exercise price $ 16 $ 15 $ 17 Weighted average remaining option term (in years) 4 4 3 Option shares vested and expected to vest, December 31 5 7 12 Weighted average exercise price $ 16 $ 15 $ 17 Aggregate intrinsic value (A) $ 147 million $ 118 million $ 133 million Weighted average remaining option term (in years) 4 4 3 Option shares exercisable (vested), December 31 4 6 10 Weighted average exercise price $ 13 $ 13 $ 18 Aggregate intrinsic value (A) $ 123 million $ 102 million $ 113 million Weighted average remaining option term (in years) 3 3 3 (A) 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 shares. (B) In connection with the spin off of TopBuild, TopBuild employees forfeited their outstanding Masco equity awards. (C) 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 to the outstanding options was made pursuant to existing anti-dilution provisions in our 2014 Plan and 2005 Long Term Incentive Plan. At December 31, 2017 , 2016 and 2015 , there was $7 million , $6 million and $6 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 three years at December 31, 2017 and 2016 and two years at December 31, 2015 . K. STOCK-BASED COMPENSATION (Continued) 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: 2017 2016 2015 Weighted average grant date fair value $ 9.68 $ 6.43 $ 9.67 Risk-free interest rate 2.16 % 1.41 % 1.75 % Dividend yield 1.19 % 1.49 % 1.32 % Volatility factor 30.00 % 29.00 % 42.00 % Expected option life 6 years 6 years 6 years The following table summarizes information for stock option shares outstanding and exercisable at December 31, 2017 , shares in millions: Option Shares Outstanding Option Shares Exercisable Range of Prices Number of Shares Weighted Average Remaining Option Term Weighted Number of Shares Weighted Average Exercise Price $ 7 - 18 3 3 Years $12 4 $12 $ 20 - 23 1 7 Years $22 — $22 $ 26 - 34 1 9 Years $29 — $26 $ 7 - 34 5 4 Years $16 4 $13 Restricted Stock Units. In March 2017, our Organization and Compensation Committee ("Compensation Committee") of the Board of Directors approved a Long Term Incentive Program ("LTIP Program"), replacing our previous Long Term Cash Incentive Plan. Under the LTIP Program, we granted restricted stock units to certain senior executives. These restricted stock units will vest and share awards will be issued at no cost to the recipients, subject to our achievement of specified return on invested capital performance goals over a three -year period that have been established by the Compensation Committee for the performance period and the recipient's continued employment through the share award date. Restricted stock units are granted at a target number; based on our performance, the number of restricted stock units that vest can be adjusted downward to zero and upward to a maximum of 200% . We granted 124,780 restricted stock units during 2017 , with a grant date fair value of approximately $34 per share. No restricted stock units were forfeited during 2017. Phantom Stock Awards and Stock Appreciation Rights ("SARs"). We grant phantom stock awards and SARs to certain non-U.S. employees. Phantom stock awards are linked to the value of our common stock on the date of grant and are settled in cash upon vesting, typically over 5 to 10 years . We account for phantom stock awards as liability-based awards; the compensation expense is initially measured as the market price of our common stock at the grant date and is recognized over the vesting period. The liability is remeasured and adjusted at the end of each reporting period until the awards are fully-vested and paid to the employees. We recognized expense of $6 million , $2 million and $5 million related to phantom stock awards in 2017 , 2016 and 2015 , respectively. In 2017 , 2016 and 2015 , we granted 104,580 shares, 140,710 shares and 134,560 shares, respectively, of phantom stock awards with an aggregate fair value of $4 million each year, and paid cash of $5 million in both 2017 and 2016 and $6 million in 2015 to settle phantom stock awards. SARs are linked to the value of our common stock on the date of grant and are settled in cash upon exercise. We account for SARs using the fair value method, which requires outstanding SARs to be classified as liability-based awards and valued using a Black-Scholes option pricing model at the grant date; such fair value is recognized as compensation expense over the vesting period, typically five years . The liability is remeasured and adjusted at the end of each reporting period until the SARs are exercised and payment is made to the employees or the SARs expire. We recognized expense of $3 million , $2 million and $6 million related to SARs in 2017 , 2016 and 2015 , respectively. During 2017 , 2016 and 2015 , we did not grant any SARs. K. STOCK-BASED COMPENSATION (Concluded) Information related to phantom stock awards and SARs was as follows, in millions: Phantom Stock Awards Stock Appreciation Rights At December 31, At December 31, 2017 2016 2017 2016 Accrued compensation cost liability $ 12 $ 10 $ 7 $ 8 Unrecognized compensation cost $ 4 $ 4 $ — $ — Equivalent common shares — — — 1 |
EMPLOYEE RETIREMENT PLANS
EMPLOYEE RETIREMENT PLANS | 12 Months Ended |
Dec. 31, 2017 | |
Compensation and Retirement Disclosure [Abstract] | |
EMPLOYEE RETIREMENT PLANS | EMPLOYEE RETIREMENT PLANS We sponsor qualified defined-benefit and defined-contribution retirement plans for most of our employees. In addition to our qualified defined-benefit pension plans, we have unfunded non-qualified defined-benefit pension plans covering certain employees, which provide for benefits in addition to those provided by the qualified pension plans. Substantially all salaried employees participate in non-contributory defined-contribution retirement plans, to which payments are determined annually by the Compensation Committee. Pre-tax expense related to our retirement plans was as follows, in millions: 2017 2016 2015 Defined-contribution plans $ 55 $ 58 $ 52 Defined-benefit pension plans 29 34 32 $ 84 $ 92 $ 84 In addition to the pre-tax expense related to our defined-benefit pension plans, we recognized $58 million of actuarial losses, net of tax, that were previously included within accumulated other comprehensive loss due to the disposition of a pension plan in connection with the divestiture of Moores, which was recorded within other income (expense), net. As of January 1, 2010, substantially all our domestic and foreign qualified and domestic non-qualified defined-benefit pension plans were frozen to future benefit accruals. L. EMPLOYEE RETIREMENT PLANS (Continued) Changes in the projected benefit obligation and fair value of plan assets, and the funded status of our defined-benefit pension plans were as follows, in millions: 2017 2016 Qualified Non-Qualified Qualified Non-Qualified Changes in projected benefit obligation: Projected benefit obligation at January 1 $ 1,055 $ 170 $ 1,059 $ 174 Service cost 3 — 3 — Interest cost 36 6 41 7 Actuarial loss, net 34 7 50 1 Foreign currency exchange 20 — (29 ) — Benefit payments (43 ) (13 ) (69 ) (12 ) Divestitures (144 ) — — — Projected benefit obligation at December 31 $ 961 $ 170 $ 1,055 $ 170 Changes in fair value of plan assets: Fair value of plan assets at January 1 $ 717 $ — $ 658 $ — Actual return on plan assets 77 — 58 — Foreign currency exchange 8 — (20 ) — Company contributions 52 13 100 12 Expenses, other (7 ) — (10 ) — Benefit payments (43 ) (13 ) (69 ) (12 ) Divestitures (109 ) — — — Fair value of plan assets at December 31 $ 695 $ — $ 717 $ — Funded status at December 31 $ (266 ) $ (170 ) $ (338 ) $ (170 ) Amounts in our consolidated balance sheets were as follows, in millions: At December 31, 2017 At December 31, 2016 Qualified Non-Qualified Qualified Non-Qualified Other assets $ 1 $ — $ 2 $ — Accrued liabilities (1 ) (13 ) (1 ) (12 ) Other liabilities (266 ) (157 ) (339 ) (158 ) Total net liability $ (266 ) $ (170 ) $ (338 ) $ (170 ) Unrealized loss included in accumulated other comprehensive loss before income taxes was as follows, in millions: At December 31, 2017 At December 31, 2016 Qualified Non-Qualified Qualified Non-Qualified Net loss $ 442 $ 59 $ 519 $ 54 Net transition obligation — — 1 — Net prior service cost 3 — 3 — Total $ 445 $ 59 $ 523 $ 54 L. EMPLOYEE RETIREMENT PLANS (Continued) Information for defined-benefit pension plans with an accumulated benefit obligation in excess of plan assets was as follows, in millions: At December 31 2017 2016 Qualified Non-Qualified Qualified Non-Qualified Projected benefit obligation $ 945 $ 170 $ 1,044 $ 170 Accumulated benefit obligation $ 945 $ 170 $ 1,044 $ 170 Fair value of plan assets $ 679 $ — $ 704 $ — The projected benefit obligation was in excess of plan assets for all of our qualified defined-benefit pension plans at December 31, 2017 and 2016 which had an accumulated benefit obligation in excess of plan assets. Net periodic pension cost for our defined-benefit pension plans was as follows, in millions: 2017 2016 2015 Qualified Non-Qualified Qualified Non-Qualified Qualified Non-Qualified Service cost $ 3 $ — $ 3 $ — $ 3 $ — Interest cost 44 6 49 7 47 7 Expected return on plan assets (46 ) — (44 ) — (46 ) — Recognized net loss 19 3 17 2 18 3 Net periodic pension cost $ 20 $ 9 $ 25 $ 9 $ 22 $ 10 We expect to recognize $20 million of pre-tax net loss from accumulated other comprehensive loss into net periodic pension cost in 2018 related to our defined-benefit pension plans. For plans in which almost all of the plan's participants are inactive, pre-tax net loss within accumulated other comprehensive loss is amortized using the straight-line method over the remaining life expectancy of the inactive plan participants. For plans which do not have almost all inactive participants, pre-tax net loss within accumulated other comprehensive loss is amortized using the straight-line method over the average remaining service period of the active employees expected to receive benefits from the plan. Plan Assets. Our qualified defined-benefit pension plan weighted average asset allocation, which is based upon fair value, was as follows: 2017 2016 Equity securities 55 % 49 % Debt securities 28 % 32 % Other 17 % 19 % Total 100 % 100 % For our qualified defined-benefit pension plans, we have adopted accounting guidance that defines fair value, establishes a framework for measuring fair value and prescribes disclosures about fair value measurements. Accounting guidance defines fair value as "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date." L. EMPLOYEE RETIREMENT PLANS (Continued) Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2017 compared to December 31, 2016 . Common and Preferred Stocks and Short-Term and Other Investments: Valued at the closing price reported on the active market on which the individual securities are traded or based on the active market for similar securities. Certain investments are valued based on NAV, which approximates fair value. Such basis is determined by referencing the respective fund's underlying assets. There are no unfunded commitments or other restrictions associated with these investments. Private Equity and Hedge Funds: Valued based on an estimated fair value using either a market approach or an income approach, both of which require a significant degree of judgment. There is no active trading market for these investments and they are generally illiquid. Due to the significant unobservable inputs, the fair value measurements used to estimate fair value are a Level 3 input. Certain investments are valued based on NAV, which approximates fair value. Such basis is determined by referencing the respective fund's underlying assets. There are no unfunded commitments or other restrictions associated with these investments. Corporate, Government and Other Debt Securities: Valued based on either the closing price reported on the active market on which the individual securities are traded or using pricing models maximizing the use of observable inputs for similar securities. This includes basing value on yields currently available on comparable securities of issuers with similar credit ratings. Certain investments are valued based on NAV, which approximates fair value. Such basis is determined by referencing the respective fund's underlying assets. There are unfunded commitments of $2 million and no other restrictions associated with these investments. Common Collective Trust Fund: Valued based on an amortized cost basis, which approximates fair value. Such basis is determined by reference to the respective fund's underlying assets, which are primarily cash equivalents. There are no unfunded commitments or other restrictions associated with this fund. Buy-in Annuity: Valued based on the associated benefit obligation for which the buy-in annuity covers the benefits, which approximates fair value. Such basis is determined based on various assumptions, including the discount rate, long-term rate of return on plan assets and mortality rate. The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while we believe our valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. The following tables set forth, by level within the fair value hierarchy, the qualified defined-benefit pension plan assets at fair value as of December 31, 2017 and 2016 , as well as those valued at NAV using the practical expedient, which approximates fair value, in millions. L. EMPLOYEE RETIREMENT PLANS (Continued) At December 31, 2017 Level 1 Level 2 Level 3 Valued at NAV Total Plan Assets Common and Preferred Stocks: United States $ 144 $ — $ — $ 47 $ 191 International 66 — — 125 191 Private Equity and Hedge Funds: United States — — 36 — 36 International — — 24 35 59 Corporate Debt Securities: United States 31 26 — — 57 International — 7 — 21 28 Government and Other Debt Securities: United States 15 7 — 31 53 International 31 28 — — 59 Common Collective Trust Fund – United States — 6 — — 6 Buy-in Annuity - International — 12 — — 12 Short-Term and Other Investments: United States 2 — — — 2 International — 1 — — 1 Total Plan Assets $ 289 $ 87 $ 60 $ 259 $ 695 At December 31, 2016 Level 1 Level 2 Level 3 Valued at NAV Total Plan Assets Common and Preferred Stocks: United States $ 142 $ — $ — $ 118 $ 260 International 74 — — 16 90 Private Equity and Hedge Funds: United States — — 37 — 37 International — — 24 32 56 Corporate Debt Securities: United States 27 28 — 2 57 International — 26 — 17 43 Government and Other Debt Securities: United States 46 4 — — 50 International 27 53 — — 80 Common Collective Trust Fund – United States — 4 — — 4 Short-Term and Other Investments: United States 2 — — — 2 International 5 15 18 — 38 Total Plan Assets $ 323 $ 130 $ 79 $ 185 $ 717 L. EMPLOYEE RETIREMENT PLANS (Continued) Changes in the fair value of the qualified defined-benefit pension plan Level 3 assets, were as follows, in millions: 2017 2016 Fair Value, January 1 $ 79 $ 88 Purchases 6 6 Sales (31 ) (19 ) Unrealized gains 6 4 Fair Value, December 31 $ 60 $ 79 Assumptions. Weighted average major assumptions used in accounting for our defined-benefit pension plans were as follows: 2017 2016 2015 Discount rate for obligations 3.30 % 3.50 % 4.00 % Expected return on plan assets 7.25 % 7.25 % 7.25 % Rate of compensation increase — % — % — % Discount rate for net periodic pension cost 3.50 % 4.00 % 3.80 % The discount rate for obligations for 2017 , 2016 and 2015 was based upon the expected duration of each defined-benefit pension plan's liabilities matched to the December 31, 2017 , 2016 and 2015 Willis Towers Watson Rate Link Curve. At December 31, 2017 , such rates for our defined-benefit pension plans ranged from 1.5 percent to 3.6 percent , with the most significant portion of the liabilities having a discount rate for obligations of 3.4 percent or higher. At December 31, 2016 , such rates for our defined-benefit pension plans ranged from 1.5 percent to 4.0 percent , with the most significant portion of the liabilities having a discount rate for obligations of 3.8 percent or higher. At December 31, 2015 , such rates for our defined‑benefit pension plans ranged from 2.0 percent to 4.3 percent , with the most significant portion of the liabilities having a discount rate for obligations of 4.0 percent or higher. The decreases in the weighted average discount rates from 2015 to 2016, and from 2016 to 2017, are principally the result of lower long-term interest rates in the bond markets. For 2017 , 2016 and 2015 , we determined the expected long-term rate of return on plan assets of 7.25 percent based upon an analysis of expected and historical rates of return of various asset classes utilizing the current and long-term target asset allocation of the plan assets. The projected asset return at December 31, 2017 , 2016 and 2015 also considered near term returns, including current market conditions as well as that pension assets are long-term in nature. The actual annual rate of return on our pension plan assets was positive 13.9 percent , positive 8.3 percent and negative 1.8 percent in 2017 , 2016 and 2015 , respectively. For the 10-year period ended December 31, 2017 , the actual annual rate of return on our pension plan assets was 4.3 percent . Although this rate of return is less than our current expected long-term rate of return on plan assets, we note that the 10-year period ended December 31, 2017 includes one significant decline in the equity markets in 2008 (of negative 32.1 percent ). Accordingly, and based on our target allocation, we believe a 7.25 percent expected long-term rate of return is reasonable. The investment objectives seek to minimize the volatility of the value of our plan assets relative to pension liabilities and to ensure plan assets are sufficient to pay plan benefits. In 2017 , we substantially achieved targeted asset allocation: 50 percent equities, 30 percent fixed-income, and 20 percent alternative investments (such as private equity, commodities and hedge funds). The asset allocation of the investment portfolio was developed with the objective of achieving our expected rate of return and reducing volatility of asset returns, and considered the freezing of future benefits. The equity portfolios are invested in individual securities or funds that are expected to mirror broad market returns for equity securities. The fixed-income portfolio is invested in corporate bonds, bond index funds and U.S. Treasury securities. It is expected that the alternative investments would have a higher rate of return than the targeted overall long-term return of 7.25 percent . However, these investments are subject to greater volatility, due to their nature, than a portfolio of equities and fixed-income investments, and would be less liquid than financial instruments that trade on public markets. This portfolio is expected to yield a long-term rate of return of 7.25 percent . L. EMPLOYEE RETIREMENT PLANS (Concluded) The fair value of our plan assets is subject to risk including significant concentrations of risk in our plan assets related to equity, interest rate and operating risk. In order to ensure plan assets are sufficient to pay benefits, a portion of plan assets is allocated to equity investments that are expected, over time, to earn higher returns with more volatility than fixed-income investments which more closely match pension liabilities. Within equity, risk is mitigated by targeting a portfolio that is broadly diversified by geography, market capitalization, manager mandate size, investment style and process. In order to minimize asset volatility relative to the liabilities, a portion of plan assets are allocated to fixed-income investments that are exposed to interest rate risk. Rate increases generally will result in a decline in fixed-income assets, while reducing the present value of the liabilities. Conversely, rate decreases will increase fixed income assets, partially offsetting the related increase in the liabilities. Potential events or circumstances that could have a negative effect on estimated fair value include the risks of inadequate diversification and other operating risks. To mitigate these risks, investments are diversified across and within asset classes in support of investment objectives. Policies and practices to address operating risks include ongoing manager oversight, plan and asset class investment guidelines and instructions that are communicated to managers, and periodic compliance and audit reviews to ensure adherence to these policies. In addition, we periodically seek the input of our independent advisor to ensure the investment policy is appropriate. Other. We sponsor certain post-retirement benefit plans that provide medical, dental and life insurance coverage for eligible retirees and dependents based upon age and length of service. Substantially all of these plans were frozen as of January 1, 2010. The aggregate present value of the unfunded accumulated post-retirement benefit obligation was $10 million and $9 million at December 31, 2017 and 2016 , respectively. Cash Flows. At December 31, 2017 , we expect to contribute approximately $45 million to our domestic qualified defined-benefit pension plans in 2018 , which will exceed ERISA requirements. We also expect to contribute approximately $3 million and $13 million to our foreign and non-qualified (domestic) defined-benefit pension plans, respectively, in 2018 . At December 31, 2017 , the benefits expected to be paid in each of the next five years, and in aggregate for the five years thereafter, relating to our defined-benefit pension plans, were as follows, in millions: Qualified Plans Non-Qualified Plans 2018 $ 47 $ 13 2019 $ 48 $ 12 2020 $ 49 $ 12 2021 $ 50 $ 12 2022 $ 50 $ 13 2023 - 2027 $ 262 $ 56 |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
SHAREHOLDERS' EQUITY | SHAREHOLDERS' EQUITY In May 2017, our Board of Directors authorized the repurchase, for retirement, of up to $1.5 billion of shares of our common stock in open-market transactions or otherwise, replacing the previous Board of Directors' authorization established in 2014. During 2017 , we repurchased and retired 9.2 million shares of our common stock (including 0.9 million shares to offset the dilutive impact of long-term stock awards granted in 2017), for cash aggregating $331 million . At December 31, 2017, we had $1.3 billion remaining under the 2017 authorization. During 2016 , we repurchased and retired 14.9 million shares of our common stock for cash aggregating $459 million (including 1.1 million shares to offset the dilutive impact of long-term stock awards granted in 2016 ). During 2015 , we repurchased and retired 17.2 million shares of our common stock for cash aggregating $456 million (including 0.7 million shares to offset the dilutive impact of long-term stock awards granted in 2015 ). On June 30, 2015, we completed the spin off of Top Build as an independent publicly traded company. As a result of the separation, our retained earnings decreased by $828 million in 2015. M. SHAREHOLDERS' EQUITY (Concluded) On the basis of amounts paid (declared), cash dividends per common share were $0.405 ( $0.410 ) in 2017 , $0.385 ( $0.390 ) in 2016 and $0.365 ( $0.370 ) in 2015 Accumulated Other Comprehensive Loss. The components of accumulated other comprehensive loss attributable to Masco Corporation were as follows, in millions: At December 31 2017 2016 Cumulative translation adjustments, net $ 282 $ 177 Unrealized loss on interest rate swaps, net (12 ) (15 ) Unrecognized net loss and prior service cost, net (335 ) (397 ) Accumulated other comprehensive loss $ (65 ) $ (235 ) The cumulative translation adjustment, net, is reported net of income tax benefit of $2 million at December 31, 2016 . The unrealized loss on interest rate swaps, net, is reported net of income tax expense of $4 million and $2 million at December 31, 2017 and 2016 , respectively. The unrecognized net loss and prior service cost, net, is reported net of income tax benefit of $154 million and $164 million at December 31, 2017 and 2016 , respectively. |
RECLASSIFICATIONS FROM OTHER CO
RECLASSIFICATIONS FROM OTHER COMPREHENSIVE INCOME (LOSS) | 12 Months Ended |
Dec. 31, 2017 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
RECLASSIFICATIONS FROM OTHER COMPREHENSIVE INCOME (LOSS) | RECLASSIFICATIONS FROM OTHER COMPREHENSIVE INCOME (LOSS) The reclassifications from accumulated other comprehensive income (loss) to the consolidated statements of operations were as follows, in millions: Accumulated Other Comprehensive Income (Loss) 2017 2016 2015 Statement of Operations Line Item Amortization of defined benefit pension and other postretirement benefits: Actuarial losses, net $ 86 $ 19 $ 21 Other income (expense), net and selling, general and administrative expenses Tax (benefit) (13 ) (7 ) (8 ) Net of tax (A) $ 73 $ 12 $ 13 Interest rate swaps $ 4 $ 2 $ 2 Interest expense Tax (benefit) (1 ) (1 ) — Net of tax $ 3 $ 1 $ 2 Available-for-sale securities $ — $ (3 ) $ — Other, net Tax expense (B) — 15 — Net of tax $ — $ 12 $ — (A) The 2017 amortization of defined benefit pension and other postretirement benefits includes $58 million , net of tax, due to the disposition of a pension plan in connection with the divestiture of Moores and was recorded within other income (expense), net. Other costs were primarily recorded in selling, general and administrative expenses. (B) The tax expense related to the available-for-sale securities in 2016 includes $14 million related to the disproportionate tax effect that we recognized as a result of the redemption of all of our auction rate securities. Refer to Note Q to the consolidated financial statements for additional information. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION Our reportable segments are as follows: Plumbing Products – principally includes faucets, plumbing fittings and valves, showerheads and hand showers, bathtubs and shower enclosures, toilets, spas, exercise pools and water handling systems. Decorative Architectural Products – principally includes paints and other coating products, cabinet door, window and other hardware and glass shower doors. Cabinetry Products – principally includes assembled kitchen and bath cabinets, home office workstations, entertainment centers and storage products. Windows and Other Specialty Products – principally includes windows, window frame components, patio doors, and, until the divestiture of Arrow, staple gun tackers, staples and other fastening tools. The above products are sold to the residential repair and remodel and new home construction markets through home center retailers, online retailers, mass merchandisers, hardware stores, homebuilders, distributors and other outlets for consumers and contractors and direct to the customer. Our operations are principally located in North America and Europe. Our country of domicile is the United States of America. Corporate assets consist primarily of real property, equipment, cash and cash investments and other investments. Our segments are based upon similarities in products and represent the aggregation of operating units, for which financial information is regularly evaluated by our corporate operating executive in determining resource allocation and assessing performance, and is periodically reviewed by the Board of Directors. Accounting policies for the segments are the same as those for us. We primarily evaluate performance based upon operating profit (loss) and, other than general corporate expense, allocate specific corporate overhead to each segment. Information by segment and geographic area was as follows, in millions: Net Sales (1)(2)(3)(4)(5) Operating Profit (Loss) (5)(6) Assets at December 31 (7) 2017 2016 2015 2017 2016 2015 2017 2016 2015 Our operations by segment were: Plumbing Products $ 3,735 $ 3,526 $ 3,341 $ 698 $ 642 $ 512 $ 2,260 $ 2,009 $ 1,972 Decorative Architectural Products 2,205 2,092 2,020 434 430 403 961 894 874 Cabinetry Products 934 970 1,025 90 93 51 524 537 567 Windows and Other Specialty Products 770 769 756 52 (3 ) 57 673 743 748 Total $ 7,644 $ 7,357 $ 7,142 $ 1,274 $ 1,162 $ 1,023 $ 4,418 $ 4,183 $ 4,161 Our operations by geographic area were: North America $ 6,069 $ 5,834 $ 5,645 $ 1,072 $ 961 $ 841 $ 3,211 $ 3,001 $ 2,925 International, principally Europe 1,575 1,523 1,497 202 201 182 1,207 1,182 1,236 Total, as above $ 7,644 $ 7,357 $ 7,142 1,274 1,162 1,023 4,418 4,183 4,161 General corporate expense, net (6) (105 ) (109 ) (109 ) Operating profit, as reported 1,169 1,053 914 Other income (expense), net (284 ) (223 ) (225 ) Income from continuing operations before income taxes $ 885 $ 830 $ 689 Corporate assets 1,070 954 1,503 Total assets $ 5,488 $ 5,137 $ 5,664 O. SEGMENT INFORMATION (Concluded) Property Additions (5) Depreciation and Amortization (5) 2017 2016 2015 2017 2016 2015 Our operations by segment were: Plumbing Products $ 115 $ 110 $ 87 $ 63 $ 57 $ 56 Decorative Architectural Products 19 22 16 16 16 16 Cabinetry Products 14 8 6 14 21 24 Windows and Other Specialty Products 13 30 41 21 21 18 161 170 150 114 115 114 Unallocated amounts, principally related to corporate assets 12 10 1 13 19 13 Total $ 173 $ 180 $ 151 $ 127 $ 134 $ 127 (1) Included in net sales were export sales from the U.S. of $232 million , $226 million and $217 million in 2017 , 2016 and 2015 , respectively. (2) Excluded from net sales were intra-company sales between segments of less than one percent in 2017 , 2016 and 2015 . (3) Included in net sales were sales to one customer of $2,535 million , $2,480 million and $2,378 million in 2017 , 2016 and 2015 , respectively. Such net sales were included in each of our segments. (4) Net sales from our operations in the U.S. were $5,821 million , $5,605 million and $5,407 million in 2017 , 2016 and 2015 , respectively. (5) Net sales, operating profit (loss), property additions and depreciation and amortization expense for 2015 excluded the results of businesses reported as discontinued operations. (6) General corporate expense, net included those expenses not specifically attributable to our segments. (7) Long-lived assets of our operations in the U.S. and Europe were $1,582 million and $482 million , $1,508 million and $417 million , and $1,487 million and $427 million at December 31, 2017 , 2016 and 2015 , respectively. |
OTHER INCOME (EXPENSE), NET
OTHER INCOME (EXPENSE), NET | 12 Months Ended |
Dec. 31, 2017 | |
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: 2017 2016 2015 Loss on sales of businesses, net (A) $ (13 ) $ — $ — Income from cash and cash investments and short-term bank deposits 4 4 3 Equity investment income, net 1 2 2 Realized gain from auction rate securities — 3 — Realized gains from private equity funds 3 5 6 Impairment of private equity funds (2 ) — — Foreign currency transaction losses — (3 ) (14 ) Other items, net 1 (5 ) 3 Total other, net $ (6 ) $ 6 $ — (A) Included in loss on sales of businesses, net is a loss of $64 million related to the divestiture of Moores and a gain of $51 million related to the divestiture of Arrow. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES (In Millions) 2017 2016 2015 Income from continuing operations before income taxes: U.S. $ 731 $ 614 $ 496 Foreign 154 216 193 $ 885 $ 830 $ 689 Income tax expense on income from continuing operations: Currently payable: U.S. Federal $ 196 $ 73 $ 10 State and local 31 24 27 Foreign 68 69 56 Deferred: U.S. Federal 10 140 192 State and local (1 ) 2 3 Foreign 1 (12 ) 5 $ 305 $ 296 $ 293 Deferred tax assets at December 31: Receivables $ 8 $ 10 Inventories 13 17 Other assets, including stock-based compensation 36 58 Accrued liabilities 45 53 Long-term liabilities 169 280 Net operating loss carryforward 53 51 Capital loss carryforward 1 — Tax credit carryforward 8 9 333 478 Valuation allowance (47 ) (45 ) 286 433 Deferred tax liabilities at December 31: Property and equipment 98 127 Intangibles 139 222 Investment in foreign subsidiaries 7 15 Other 20 21 264 385 Net deferred tax asset at December 31 $ 22 $ 48 The net deferred tax asset consisted of net deferred tax assets (included in other assets) of $48 million and $68 million , and net deferred tax liabilities (included in other liabilities) of $26 million and $20 million , at December 31, 2017 and 2016 , respectively. The current portion of the state and local income tax includes a $5 million , $8 million and $5 million tax benefit from the reversal of an accrual for uncertain tax positions resulting primarily from the expiration of applicable statutes of limitations and favorable settlements on state audits in 2017 , 2016 and 2015 , respectively. The deferred portion of the state and local taxes includes a $(1) million , $5 million and $(1) million tax (benefit) expense resulting from a change in the valuation allowance against state and local deferred tax assets in 2017 , 2016 and 2015 , respectively. The deferred portion of the foreign taxes includes $6 million and $12 million tax expense from a change in the valuation allowance against foreign deferred tax assets in 2016 and 2015 , respectively. Q. INCOME TAXES (Continued) Due to the enactment of the Tax Cuts and Jobs Act (“Tax Act”) on December 22, 2017, we recorded a $20 million tax benefit from the elimination of a deferred tax liability previously recorded on undistributed foreign earnings as a result of the change from a worldwide to a territorial system of taxation. This tax benefit was offset by a $3 million tax charge resulting from the re-measurement of our remaining net deferred tax assets due to a reduction in the U.S. Federal corporate tax rate from 35 percent to 21 percent . In addition, the Tax Act requires a mandatory deemed repatriation of undistributed foreign earnings resulting in a toll charge of 15.5 percent on earnings related to cash and liquid assets and 8 percent on earnings for non-liquid assets. Due to the ability to offset positive foreign earnings with existing foreign deficits, we do not anticipate paying any toll charge related to our undistributed foreign earnings . The $64 million loss from the divestiture of Moores that was recorded in the fourth quarter of 2017 provided no tax benefit. The accounting guidance for income taxes requires us to allocate our provision for income taxes between continuing operations and other categories of earnings, such as other comprehensive income (loss). Subsequent adjustments to deferred taxes originally recorded to other comprehensive income (loss) may reverse in a different category of earnings, such as continuing operations resulting in a disproportionate tax effect within accumulated other comprehensive loss. We created a $14 million disproportionate tax effect in prior years as the result of allocating a deferred tax charge to other comprehensive income (loss) on the unrealized gain of certain available-for-sale securities that was later reversed through continuing operations by a valuation allowance adjustment, followed by the disposition of the securities while in a full valuation allowance position. Such disproportionate tax effect has remained in accumulated other comprehensive loss until such time as we cease to have an available-for-sale securities portfolio. In the fourth quarter of 2016 as a result of our final auction rate securities being called by our counterparty and redeemed , the disproportionate tax effect was eliminated by recording a $14 million charge to income tax expense included in continuing operations that was offset by a corresponding tax benefit included in other comprehensive income (loss). In the fourth quarter of 2016, we recorded a $13 million tax benefit from the recognition of a deferred tax asset on certain German net operating losses primarily resulting from a return to sustainable profitability. During 2015 we recorded a $21 million valuation allowance against certain deferred tax assets related to TopBuild as a non-cash charge to income tax expense. The TopBuild deferred tax assets have been impaired by our decision to spin off TopBuild into a separate company that on a stand-alone basis as of June 30, 2015 , the spin off date, was unlikely to be able to realize the value of such deferred tax assets as a result of its history of losses. Our capital allocation strategy includes reinvesting in our business, balancing share repurchases with potential acquisitions and maintaining an appropriate dividend. In order to provide greater flexibility in the execution of our capital allocation strategy, we determined in the fourth quarter of 2015 that we may repatriate earnings from certain foreign subsidiaries that were previously considered permanently reinvested. As a result, we recorded a $19 million charge to income tax expense in 2015 to recognize the required taxes on foreign earnings, including those previously considered permanently reinvested. Our December 31, 2016 , deferred tax balance on investments in foreign subsidiaries reflects the impact of all taxable temporary differences, including those related to substantially all undistributed foreign earnings, except those that are legally restricted. As a result of the enactment of the Tax Act, no deferred tax is required at December 31, 2017 on our foreign taxable temporary differences, other than foreign withholding taxes. During 2015, the tax benefit from certain stock-based compensation was not recognized as a deferred tax asset until the tax deduction reduces cash taxes. We recorded deferred tax assets of $53 million to paid-in capital in 2015 related to additional net operating losses, previously not recognized, that were used to reduce cash taxes on our 2015 taxable income. We continue to maintain a valuation allowance on certain state and foreign deferred tax assets as of December 31, 2017 . Should we determine that we would not be able to realize our remaining deferred tax assets in these jurisdictions in the future, an adjustment to the valuation allowance would be recorded in the period such determination is made. Q. INCOME TAXES (Continued) Of the $61 million and $60 million deferred tax asset related to the net operating loss and tax credit carryforwards at December 31, 2017 and 2016 , respectively, $33 million and $35 million will expire between 2021 and 2036 and $28 million a nd $25 million are unlimited, respectively. A reconciliation of the U.S. Federal statutory tax rate to the income tax expense on income from continuing operations was as follows: 2017 2016 2015 U.S. Federal statutory tax rate 35 % 35 % 35 % State and local taxes, net of U.S. Federal tax benefit 2 2 3 Lower taxes on foreign earnings (1 ) (2 ) (1 ) U.S. and foreign taxes on distributed and undistributed foreign earnings 1 1 3 Domestic production deduction (2 ) (1 ) — Stock-based compensation (2 ) — — Business divestitures with no tax impact 4 — — Change in U.S. Federal tax law (2 ) — — U.S. Federal valuation allowance — — 3 Other, net (1 ) 1 — Effective tax rate 34 % 36 % 43 % Income taxes paid were $258 million , $190 million and $107 million in 2017 , 2016 and 2015 , respectively. A reconciliation of the beginning and ending liability for uncertain tax positions, including related interest and penalties, is as follows, in millions: Uncertain Tax Positions Interest and Penalties Total Balance at January 1, 2016 $ 43 $ 10 $ 53 Current year tax positions: Additions 11 — 11 Reductions (1 ) — (1 ) Prior year tax positions: Additions 1 — 1 Reductions (2 ) — (2 ) Lapse of applicable statute of limitations (6 ) — (6 ) Interest and penalties recognized in income tax expense — (1 ) (1 ) Balance at December 31, 2016 $ 46 $ 9 $ 55 Current year tax positions: Additions 13 — 13 Reductions — — — Prior year tax positions: Additions 3 — 3 Reductions (1 ) — (1 ) Lapse of applicable statute of limitations (7 ) — (7 ) Interest and penalties recognized in income tax expense — (1 ) (1 ) Balance at December 31, 2017 $ 54 $ 8 $ 62 Q. INCOME TAXES (Concluded) If recognized, $43 million and $30 million of the liability for uncertain tax positions at December 31, 2017 and 2016 , respectively, net of any U.S. Federal tax benefit, would impact our effective tax rate. Of the $62 million and $55 million total liability for uncertain tax positions (including related interest and penalties) at December 31, 2017 and 2016 , respectively, $59 million and $54 million are recorded in other liabilities, respectively, and $3 million and $1 million is recorded as a net offset to other assets at December 31, 2017 and 2016, respectively. We file income tax returns in the U.S. Federal jurisdiction, and various local, state and foreign jurisdictions. We continue to participate in the Compliance Assurance Process ("CAP"). CAP is a real-time audit of the U.S. Federal income tax return that allows the Internal Revenue Service ("IRS"), working in conjunction with us, to determine tax return compliance with the U.S. Federal tax law prior to filing the return. This program provides us with greater certainty about our tax liability for a given year within months, rather than years, of filing our annual tax return and greatly reduces the need for recording a liability for U.S. Federal uncertain tax positions. The IRS has completed their examination of our consolidated U.S. Federal tax returns through 2016. With few exceptions, we are no longer subject to state or foreign income tax examinations on filed returns for years before 2006. As a result of tax audit closings, settlements and the expiration of applicable statutes of limitations in various jurisdictions within the next 12 months, we anticipate that it is reasonably possible the liability for uncertain tax positions could be reduced by approximately $8 million . |
EARNINGS PER COMMON SHARE
EARNINGS PER COMMON SHARE | 12 Months Ended |
Dec. 31, 2017 | |
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: 2017 2016 2015 Numerator (basic and diluted): Income from continuing operations $ 533 $ 491 $ 357 Less: Allocation to unvested restricted stock awards 5 6 5 Income from continuing operations attributable to common shareholders 528 485 352 Loss from discontinued operations, net — — (2 ) Less: Allocation to unvested restricted stock awards — — — Loss from discontinued operations attributable to common shareholders — — (2 ) Net income available to common shareholders $ 528 $ 485 $ 350 Denominator: Basic common shares (based upon weighted average) 314 326 338 Add: Stock option dilution 4 4 3 Diluted common shares 318 330 341 We follow accounting guidance regarding determining whether instruments granted in share-based payment transactions are participating securities. This accounting guidance clarifies that share-based payment awards that entitle their holders to receive non-forfeitable dividends prior to vesting should be considered participating securities. We have granted restricted stock awards that contain non-forfeitable rights to dividends on unvested shares; such unvested restricted stock awards are considered participating securities. As participating securities, the unvested shares are required to be included in the calculation of our basic earnings per common share, using the "two-class method." The two-class method of computing earnings per common share is an allocation method that calculates earnings per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. For the years ended December 31, 2017 , 2016 and 2015 , we allocated dividends and undistributed earnings to the participating securities. R. EARNINGS PER COMMON SHARE (Concluded) Additionally, 354,000 , 338,000 and 5 million common shares for 2017 , 2016 and 2015 , respectively, related to stock options were excluded from the computation of diluted earnings per common share due to their antidilutive effect. Common shares outstanding included on our balance sheet and for the calculation of earnings per common share do not include unvested stock awards ( 3 million common shares and 4 million common shares at December 31, 2017 and 2016 , respectively); shares outstanding for legal requirements included all common shares that have voting rights (including unvested stock awards). |
OTHER COMMITMENTS AND CONTINGEN
OTHER COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
OTHER COMMITMENTS AND CONTINGENCIES | OTHER COMMITMENTS AND CONTINGENCIES Litigation. We are are involved in claims and litigation, including class actions and regulatory proceedings, which arise in the ordinary course of our business. The types of matters may include, among others: competition, product liability, employment, warranty, advertising, contract, personal injury, environmental, intellectual property, and insurance coverage. 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. Warranty. Changes in our warranty liability were as follows, in millions: 2017 2016 Balance at January 1 $ 192 $ 152 Accruals for warranties issued during the year 63 66 Accruals related to pre-existing warranties 9 33 Settlements made (in cash or kind) during the year (59 ) (56 ) Other, net (including currency translation) — (3 ) Balance at December 31 $ 205 $ 192 During 2016, a business in the Windows and Other Specialty Products segment recorded $31 million for increases in its estimate of expected future warranty claims relating to previously sold windows and doors. The change in estimate resulted from the adoption of an improved warranty valuation model and the availability of additional information used to support the estimate of costs to service claims and recent warranty claims trends, including a shift to increased cost to repair. Investments. With respect to our investments in private equity funds, we had, at December 31, 2017 , commitments to contribute up to $5 million of additional capital to such funds representing our aggregate capital commitment to such funds less capital contributions made to date. We are contractually obligated to make additional capital contributions to certain of our private equity funds upon receipt of a capital call from the private equity fund. We have no control over when or if the capital calls will occur. Capital calls are funded in cash and generally result in an increase in the carrying value of our investment in the private equity fund when paid. Other Matters. We enter into contracts, which include reasonable and customary indemnifications that are standard for the industries in which we operate. Such indemnifications include claims made against builders by homeowners for issues relating to our products and workmanship. In conjunction with divestitures and other transactions, we occasionally provide reasonable and customary indemnifications. We have never had to pay a material amount related to these indemnifications, and we evaluate the probability that amounts may be incurred and record an estimated liability when it is probable and reasonably estimable. |
INTERIM FINANCIAL INFORMATION (
INTERIM FINANCIAL INFORMATION (UNAUDITED) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
INTERIM FINANCIAL INFORMATION (UNAUDITED) | INTERIM FINANCIAL INFORMATION (UNAUDITED) Our quarterly results attributable to Masco Corporation were as follows: Quarters Ended (In Millions, Except Per Common Share Data) Total Year December 31 September 30 June 30 March 31 2017 Net sales $ 7,644 $ 1,874 $ 1,936 $ 2,057 $ 1,777 Gross profit $ 2,611 $ 616 $ 650 $ 737 $ 608 Net income $ 533 $ 87 $ 148 $ 158 $ 140 Earnings per common share: Basic: Net income $ 1.68 $ 0.28 $ 0.47 $ 0.50 $ 0.44 Diluted: Net income $ 1.66 $ 0.27 $ 0.46 $ 0.49 $ 0.43 2016 Net sales $ 7,357 $ 1,759 $ 1,877 $ 2,001 $ 1,720 Gross profit $ 2,456 $ 573 $ 614 $ 700 $ 569 Net income $ 491 $ 98 $ 134 $ 150 $ 109 Earnings per common share: Basic: Net income $ 1.49 $ 0.30 $ 0.41 $ 0.45 $ 0.33 Diluted: Net income $ 1.47 $ 0.30 $ 0.40 $ 0.45 $ 0.32 Earnings per common share amounts for the four quarters of December 31, 2017 and 2016 may not total to the earnings per common share amounts for the years ended December 31, 2017 and 2016 due to the allocation of income to participating securities. |
SCHEDULE II. VALUATION AND QUAL
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2017 | |
Valuation and Qualifying Accounts [Abstract] | |
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS | SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS For the Years Ended December 31, 2017, 2016 and 2015 (In Millions) Column A Column B Column C Column D Column E Additions Description Balance at Beginning of Period Charged to Costs and Expenses Charged to Other Accounts Deductions Balance at End of Period Allowances for doubtful accounts, deducted from accounts receivable in the balance sheet (e) : 2017 $ 11 $ 5 $ — $ (3 ) (a) $ 13 2016 $ 11 $ 4 $ — $ (4 ) (a) $ 11 2015 $ 14 $ 4 $ — $ (7 ) (a) $ 11 Valuation allowance on deferred tax assets: 2017 $ 45 $ — $ 2 (b) $ — $ 47 2016 $ 49 $ 11 $ — $ (15 ) (c) $ 45 2015 $ 66 $ 36 $ — $ (53 ) (d) $ 49 (a) Deductions, representing uncollectible accounts written off, less recoveries of accounts written off in prior years. (b) $2 million adjustment to the valuation allowance was recorded primarily in other comprehensive income (loss). (c) Write off $13 million of deferred tax assets on certain state and local net operating loss carryforwards against the valuation allowance, as it was determined that there was only a remote likelihood that such carryforwards could be utilized; and, $2 million adjustment to the valuation allowance was recorded primarily in other comprehensive income (loss). (d) Valuation allowance on deferred tax assets allocated to TopBuild due to its spin off into a separate stand-alone company on June 30, 2015. (e) Amounts exclude discontinued operations. |
ACCOUNTING POLICIES (Policies)
ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation. The consolidated financial statements include the accounts of Masco Corporation and all majority-owned subsidiaries. All significant intercompany transactions have been eliminated. |
Use of Estimates and Assumptions in the Preparation of Financial Statements | Use of Estimates and Assumptions in the Preparation of Financial Statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of any contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates and assumptions. |
Revenue Recognition | Revenue Recognition. We recognize revenue as title to products and risk of loss is transferred to customers or when services are rendered, net of applicable provisions for discounts, returns and allowances. Amounts billed for shipping and handling are included in net sales, while costs incurred for shipping and handling are included in cost of sales. |
Customer Promotion Costs | Customer Promotion Costs. We record estimated reductions to revenue for customer programs and incentive offerings, including special pricing and certain co-operative advertising arrangements, promotions and other volume-based incentives. In-store displays that are owned by us and used to market our products are included in other assets in the consolidated balance sheets and are amortized using the straight-line method over the expected useful life of three to five years; related amortization expense is classified as a selling expense in the consolidated statement of operations. |
Foreign Currency | Foreign Currency. The financial statements of our foreign subsidiaries are measured using the local currency as the functional currency. Assets and liabilities of these subsidiaries are translated at exchange rates as of the balance sheet dates. Revenues and expenses are translated at average exchange rates in effect during the year. The resulting cumulative translation adjustments have been recorded in the accumulated other comprehensive loss component of shareholders' equity. Realized foreign currency transaction gains and losses are included in the consolidated statements of operations in other income (expense), net. |
Cash and Cash Investments | Cash and Cash Investments. We consider all highly liquid investments with an initial maturity of three months or less to be cash and cash investments. |
Short-Term Bank Deposits | Short-Term Bank Deposits. We invest a portion of our foreign excess cash in short-term bank deposits. These highly liquid investments have original maturities between three and twelve months and are valued at cost, which approximates fair value at December 31, 2017 and 2016 . These short-term bank deposits are classified in the current assets section of our consolidated balance sheets, and interest income related to short-term bank deposits is recorded in our consolidated statements of operations in other income (expense), net. |
Receivables | Receivables. We do significant business with a number of customers, including certain home center retailers and homebuilders. We monitor our exposure for credit losses on our customer receivable balances and the credit worthiness of our customers on an on-going basis and record related allowances for doubtful accounts. Allowances are estimated based upon specific customer balances, where a risk of default has been identified, and also include a provision for non-customer specific defaults based upon historical collection, return and write-off activity. A separate allowance is recorded for customer incentive rebates and is generally based upon sales activity. |
Property and Equipment | Property and Equipment. Property and equipment, including significant improvements to existing facilities, are recorded at cost. Upon retirement or disposal, the cost and accumulated depreciation are removed from the accounts and any gain or loss is included in the consolidated statements of operations. Maintenance and repair costs are charged against earnings as incurred. We review our property and equipment as events occur or circumstances change that would more likely than not reduce the fair value of the property and equipment below the carrying amount. If the carrying amount of property and equipment is not recoverable from its undiscounted cash flows, then we would recognize an impairment loss for the difference between the carrying amount and the current fair value. Further, we evaluate the remaining useful lives of property and equipment at each reporting period to determine whether events and circumstances warrant a revision to the remaining depreciation periods. |
Depreciation | Depreciation. Depreciation expense is computed principally using the straight-line method over the estimated useful lives of the assets. Annual depreciation rates are as follows: buildings and land improvements, 2 to 10 percent, computer hardware and software, 17 to 33 percent, and machinery and equipment, 5 to 33 percent. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets. We perform our annual impairment testing of goodwill in the fourth quarter of each year, or as events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. We have defined our reporting units and completed the impairment testing of goodwill at the operating segment level. Our operating segments are reporting units that engage in business activities, for which discrete financial information, including five-year forecasts, are available. We compare the fair value of the reporting units to the carrying value of the reporting units for goodwill impairment testing. Fair value is determined using a discounted cash flow method, which includes significant unobservable inputs (Level 3 inputs), and requires us to make significant estimates and assumptions, including long-term projections of cash flows, market conditions and appropriate discount rates. Our judgments are based upon historical experience, current market trends, consultations with external valuation specialists and other information. While we believe that the estimates and assumptions underlying the valuation methodology are reasonable, different estimates and assumptions could result in different outcomes. In estimating future cash flows, we rely on internally generated five-year forecasts for sales and operating profits, including capital expenditures, and, currently, a two percent long-term assumed annual growth rate of cash flows for periods after the five -year forecast. We utilize our weighted average cost of capital of approximately 8.0 percent as the basis to determine the discount rate to apply to the estimated future cash flows. In 2017 , based upon our assessment of the risks impacting each of our businesses, we applied a risk premium to increase the discount rate to a range of 10.0 percent to 13.0 percent for our reporting units. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized to the extent that a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill in that reporting unit. We review our other indefinite-lived intangible assets for impairment annually, in the fourth quarter, or as events occur or circumstances change that indicate the assets may be impaired without regard to the business unit. We consider the implications of both external (e.g., market growth, competition and local economic conditions) and internal (e.g., product sales and expected product growth) factors and their potential impact on cash flows related to the intangible asset in both the near- and long-term. Intangible assets with finite useful lives are amortized using the straight-line method over their estimated useful lives. We evaluate the remaining useful lives of amortizable intangible assets at each reporting period to determine whether events and circumstances warrant a revision to the remaining periods of amortization. Refer to Note G to the consolidated financial statements for additional information regarding goodwill and other intangible assets. |
Fair Value Accounting | Fair Value Accounting. We use derivative financial instruments to manage certain exposure to fluctuations in earnings and cash flows resulting from changes in foreign currency exchange rates, and occasionally from changes in commodity costs and interest rate exposures. Derivative financial instruments are recorded in the consolidated balance sheets as either an asset or liability measured at fair value, netted by counterparty, where the right of offset exists. The gain or loss is recognized in determining current earnings during the period of the change in fair value. |
Warranty | Warranty. We offer full and limited warranties on certain products with warranty periods ranging up to the lifetime of the product to the original consumer purchaser. At the time of sale, we accrue a warranty liability for the estimated future cost to provide products, parts or services to repair or replace products to satisfy our warranty obligations. Our estimate of future costs to service our warranty obligations is based upon the information available and includes a number of factors, such as the warranty coverage, the warranty period, historical experience specific to the nature, frequency and average cost to service the claim, along with industry and demographic trends. Certain factors and related assumptions in determining our warranty liability involve judgments and estimates and are sensitive to changes in the factors described above. We believe that the warranty accrual is appropriate; however, actual claims incurred could differ from our original estimates which would require us to adjust our previously established accruals. Refer to Note S to the consolidated financial statements for additional information on our warranty accrual. A. ACCOUNTING POLICIES (Continued) A significant portion of our business is at the consumer retail level through home center retailers and other major retailers. A consumer may return a product to a retail outlet that is a warranty return. However, certain retail outlets do not distinguish between warranty and other types of returns when they claim a return deduction from us. Our revenue recognition policy takes into account this type of return when recognizing revenue, and an estimate of these amounts is recorded as a deduction to net sales at the time of sale. |
Insurance Reserves | Insurance Reserves. We provide for expenses associated with workers' compensation and product liability obligations when such amounts are probable and can be reasonably estimated. The accruals are adjusted as new information develops or circumstances change that would affect the estimated liability. Any obligations expected to be settled within 12 months are recorded in accrued liabilities; all other obligations are recorded in other liabilities. |
Stock-Based Compensation | Stock-Based Compensation. We measure compensation expense for stock awards at the market price of our common stock at the grant date. Such expense is recognized ratably over the shorter of the vesting period of the stock awards, typically 5 or 10 years, or the length of time until the grantee becomes retirement-eligible at age 65. We measure compensation expense for stock options using a Black-Scholes option pricing model. Such expense is recognized ratably over the shorter of the vesting period of the stock options, typically five years , or the length of time until the grantee becomes retirement-eligible at age 65. |
Noncontrolling Interest | Noncontrolling Interest. We owned 68 percent of Hansgrohe SE at both December 31, 2017 and 2016 . The aggregate noncontrolling interest, net of dividends, at December 31, 2017 and 2016 has been recorded as a component of equity on our consolidated balance sheets. |
Interest and Penalties on Uncertain Tax Positions | Interest and Penalties on Uncertain Tax Positions. We record interest and penalties on our uncertain tax positions in income tax expense (benefit). Accounting for Global Intangible Low-taxed Income ("GILTI") . We record the tax effects of GILTI related to our foreign operations as a component of income tax expense (benefit) in the period the tax arises. |
Reclassifications | Reclassifications. Certain prior year amounts have been reclassified to conform to the 2017 presentation in the consolidated financial statements. In our consolidated statements of cash flows, the cash flows from discontinued operations are not separately classified . |
Recently Adopted Accounting Pronouncements | Recently Issued Accounting Pronouncements. In May 2014, the FASB issued a new standard for revenue recognition, Accounting Standards Codification ("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. The standard allows for either a full retrospective or modified retrospective method of adoption. We will adopt this standard on its effective date, January 1, 2018, under the full retrospective method of adoption. The adoption of the standard will not have a material impact on our financial position or results of operations. We have finalized our accounting policy, trained our business units on the new standard and finalized our internal controls under the new standard. We did not experience significant issues in our implementation process. In January 2016, the FASB issued 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. The adoption of this standard will not have a material impact on our financial position or results of operations. In February 2016, the FASB issued a new standard for leases, ASC 842, which changes the accounting model for identifying and accounting for leases. ASC 842 is effective for us for annual periods beginning January 1, 2019 and currently requires retrospective application. We expect this standard to increase our total assets and total liabilities; however, we are currently evaluating the magnitude of the impact the adoption of this new standard will have on our financial position and results of operations. In June 2016, the FASB issued ASU 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which modifies the methodology for recognizing loss impairments on certain types of financial instruments. The new methodology requires an entity to estimate the credit losses expected over the life of an exposure. Additionally, ASU 2016-13 amends the current available-for-sale security other-than-temporary impairment model for debt securities. ASU 2016-13 is effective for us for annual periods beginning January 1, 2020. We are currently evaluating the impact the adoption of this new standard will have on our financial position and results of operations. In October 2016, the FASB issued ASU 2016-16, "Income Taxes (Topic 740): Intra-Entity Asset Transfers of Assets Other than Inventory," which no longer allows the tax effects of intra-entity asset transfers (intercompany sales) of assets other than inventory to be deferred until the transferred asset is sold to a third party or otherwise recovered through use. The new standard requires the tax expense from the sale of the asset in the seller’s tax jurisdiction and the corresponding basis differences in the buyer’s jurisdiction to be recognized when the transfer occurs even though the pre-tax effects of the transaction are eliminated in consolidation. ASU 2016-16 is effective for us for annual periods beginning January 1, 2018. The adoption of this standard will not have a material impact on our financial position or results of operations. In March 2017, the FASB issued ASU 2017-07, "Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost," which modifies the presentation of net periodic pension and post-retirement benefit cost ("net benefit cost") in the income statement and the components eligible for capitalization as assets. ASU 2017-07 is effective for us for annual periods beginning January 1, 2018. The adoption of the new standard will not have a material impact on our financial position or results of operations. For full year 2017 and 2016, we expect $26 million and $32 million of expense to be retrospectively reclassified from operating profit to other income (expense), net, within our results of operations. In May 2017, the FASB issued ASU 2017-09, "Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting," which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. ASU 2017-09 is effective for us for annual periods beginning January 1, 2018, and is applied prospectively. Upon adoption, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. A. ACCOUNTING POLICIES (Concluded) In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities," which improves and simplifies accounting rules around hedge accounting and better portrays the economic results of an entity’s risk management activities in its financial statements. ASU 2017-12 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. |
Inventories | Inventories, which include purchased parts, materials, direct labor and applied overhead, are stated at the lower of cost or net realizable value, with cost determined by use of the first-in, first-out method. |
Derivatives | 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). |
DIVESTITURES (Tables)
DIVESTITURES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
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 pre-tax (loss) profit of the discontinued operation, in millions: Year Ended December 31, 2015 Net sales $ 762 Cost of sales 603 Gross profit 159 Selling, general and administrative expenses 148 Income from discontinued operations $ 11 Other discontinued operations results: Loss on disposal of discontinued operations, net (1 ) Income before income tax 10 Income tax expense (1) (12 ) Loss from discontinued operations, net $ (2 ) (1) The unusual relationship between income tax expense and income before income tax resulted primarily from certain non-deductible transaction costs related to the spin off of TopBuild. Other selected financial information for TopBuild during the period owned by us, was as follows, in millions: Year Ended December 31, 2015 Depreciation and amortization $ 6 Capital expenditures $ 7 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | (In Millions) At December 31 2017 2016 Finished goods $ 414 $ 366 Raw materials 277 254 Work in process 105 92 Total $ 796 $ 712 |
DERIVATIVE INSTRUMENTS AND HE32
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
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 (losses) gains included in our consolidated statements of operations are as follows, in millions: Year Ended December 31, 2017 2016 2015 Foreign currency contracts: Exchange contracts $ (1 ) $ — $ 4 Forward contracts 1 — (3 ) Metals contracts — 5 (17 ) Interest rate swaps (4 ) (2 ) (2 ) Total $ (4 ) $ 3 $ (18 ) |
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 December 31, 2017 Notional Amount Balance Sheet Foreign currency contracts: Exchange contracts $ 14 Accrued liabilities $ — Forward contracts 43 Receivables — Accrued liabilities — At December 31, 2016 Notional Amount Balance Sheet Foreign currency contracts: Forward contracts $ 21 Accrued liabilities $ (2 ) Metals contracts 1 Accrued liabilities — |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | (In Millions) At December 31 2017 2016 Land and improvements $ 110 $ 111 Buildings 681 712 Computer hardware and software 327 315 Machinery and equipment 1,547 1,480 2,665 2,618 Less: Accumulated depreciation (1,536 ) (1,558 ) Total $ 1,129 $ 1,060 |
Schedule of future minimum lease payments | At December 31, 2017 , future minimum lease payments were as follows, in millions: 2018 $ 50 2019 39 2020 32 2021 25 2022 20 2023 and beyond 91 |
GOODWILL AND OTHER INTANGIBLE34
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of changes in carrying amount of goodwill | The changes in the carrying amount of goodwill, by segment, were as follows, in millions: Gross Goodwill At December 31, 2017 Accumulated Net Goodwill At December 31, 2017 Plumbing Products $ 574 $ (340 ) $ 234 Decorative Architectural Products 294 (75 ) 219 Cabinetry Products 181 — 181 Windows and Other Specialty Products 718 (511 ) 207 Total $ 1,767 $ (926 ) $ 841 Gross Goodwill At December 31, 2016 Accumulated Net Goodwill At December 31, 2016 Additions (A) Divestitures (B) Other (C) Net Goodwill At December 31, 2017 Plumbing Products $ 519 $ (340 ) $ 179 $ 38 $ — $ 17 $ 234 Decorative Architectural Products 294 (75 ) 219 — — — 219 Cabinetry Products 240 (59 ) 181 — — — 181 Windows and Other Specialty Products 987 (734 ) 253 — (47 ) 1 207 Total $ 2,040 $ (1,208 ) $ 832 $ 38 $ (47 ) $ 18 $ 841 Gross Goodwill At December 31, 2015 Accumulated Net Goodwill At December 31, 2015 Other (C) Net Goodwill At December 31, 2016 Plumbing Products $ 525 $ (340 ) $ 185 $ (6 ) $ 179 Decorative Architectural Products 294 (75 ) 219 — 219 Cabinetry Products 240 (59 ) 181 — 181 Windows and Other Specialty Products 988 (734 ) 254 (1 ) 253 Total $ 2,047 $ (1,208 ) $ 839 $ (7 ) $ 832 (A) Additions consist of acquisitions. (B) Included within divestitures is the disposition of Moores in the Cabinetry Products segment, which includes $59 million of both gross goodwill and accumulated impairment losses, and the disposition of Arrow in the Windows and Other Specialty Products segment, which includes $270 million of gross goodwill and $223 million of accumulated impairment losses. (C) Other consists of the effect of foreign currency translation. |
OTHER ASSETS (Tables)
OTHER ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Other Assets, Noncurrent Disclosure [Abstract] | |
Schedule of other assets | (In Millions) At December 31 2017 2016 Equity method investments $ 11 $ 13 Private equity funds 2 5 In-store displays, net 31 42 Deferred tax assets (Note Q) 48 68 Other 24 29 Total $ 116 $ 157 |
ACCRUED LIABILITIES (Tables)
ACCRUED LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accrued Liabilities, Current [Abstract] | |
Schedule of Accrued Liabilities | (In Millions) At December 31 2017 2016 Salaries, wages and commissions $ 196 $ 191 Advertising and sales promotion 157 146 Interest 42 51 Warranty (Note S) 59 56 Employee retirement plans 50 52 Insurance reserves 40 41 Property, payroll and other taxes 27 19 Dividends payable 33 32 Other 84 70 Total $ 688 $ 658 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | (In Millions) At December 31 2017 2016 Notes and debentures: 6.625%, due April 15, 2018 $ 114 $ 114 7.125%, due March 15, 2020 201 500 3.500%, due April 1, 2021 399 399 5.950%, due March 15, 2022 326 400 4.450%, due April 1, 2025 500 500 4.375%, due April 1, 2026 498 498 3.500%, due November 15, 2027 300 — 7.750%, due August 1, 2029 234 296 6.500%, due August 15, 2032 200 300 4.500%, due May 15, 2047 299 — Other 33 9 Prepaid debt issuance costs (19 ) (19 ) 3,085 2,997 Less: Current portion 116 2 Total long-term debt $ 2,969 $ 2,995 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
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 for these stock-based incentives were as follows, in millions: 2017 2016 2015 Long-term stock awards $ 24 $ 23 $ 23 Stock options 3 2 5 Restricted stock units 2 — — Phantom stock awards and stock appreciation rights 9 4 11 Total $ 38 $ 29 $ 39 |
Schedule of the Company's long-term stock award activity | Our long-term stock award activity was as follows, shares in millions: 2017 2016 2015 Unvested stock award shares at January 1 4 5 6 Weighted average grant date fair value $ 20 $ 17 $ 18 Stock award shares granted 1 1 1 Weighted average grant date fair value $ 34 $ 26 $ 26 Stock award shares vested 2 2 2 Weighted average grant date fair value $ 18 $ 16 $ 17 Stock award shares forfeited — — — Weighted average grant date fair value $ 24 $ 20 $ 18 Forfeitures upon spin off (A) — — 1 Weighted average grant date fair value $ — $ — $ 20 Modification upon spin off (B) — — 1 Unvested stock award shares at December 31 3 4 5 Weighted average grant date fair value $ 24 $ 20 $ 17 (A) In connection with the spin off of TopBuild, TopBuild employees forfeited their outstanding Masco equity awards. (B) 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 to the outstanding stock awards was made pursuant to existing anti-dilution provisions in our 2014 Plan and 2005 Long Term Incentive Plan. |
Schedule of the Company's stock option activity | Our stock option activity was as follows, shares in millions: 2017 2016 2015 Option shares outstanding, January 1 7 12 18 Weighted average exercise price $ 15 $ 17 $ 21 Option shares granted — — — Weighted average exercise price $ 34 $ 26 $ 26 Option shares exercised 2 5 5 Aggregate intrinsic value on date of exercise (A) $ 47 million $ 64 million $ 50 million Weighted average exercise price $ 15 $ 21 $ 17 Option shares forfeited — — 3 Weighted average exercise price $ — $ — $ 29 Forfeitures upon spin off (B) — — — Weighted average exercise price $ — $ — $ 19 Modifications upon spin off (C) — — 2 Option shares outstanding, December 31 5 7 12 Weighted average exercise price $ 16 $ 15 $ 17 Weighted average remaining option term (in years) 4 4 3 Option shares vested and expected to vest, December 31 5 7 12 Weighted average exercise price $ 16 $ 15 $ 17 Aggregate intrinsic value (A) $ 147 million $ 118 million $ 133 million Weighted average remaining option term (in years) 4 4 3 Option shares exercisable (vested), December 31 4 6 10 Weighted average exercise price $ 13 $ 13 $ 18 Aggregate intrinsic value (A) $ 123 million $ 102 million $ 113 million Weighted average remaining option term (in years) 3 3 3 (A) 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 shares. (B) In connection with the spin off of TopBuild, TopBuild employees forfeited their outstanding Masco equity awards. (C) 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 to the outstanding options was made pursuant to existing anti-dilution provisions in our 2014 Plan and 2005 Long Term Incentive Plan. |
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: 2017 2016 2015 Weighted average grant date fair value $ 9.68 $ 6.43 $ 9.67 Risk-free interest rate 2.16 % 1.41 % 1.75 % Dividend yield 1.19 % 1.49 % 1.32 % Volatility factor 30.00 % 29.00 % 42.00 % Expected option life 6 years 6 years 6 years |
Summary of stock option shares outstanding and exercisable | The following table summarizes information for stock option shares outstanding and exercisable at December 31, 2017 , shares in millions: Option Shares Outstanding Option Shares Exercisable Range of Prices Number of Shares Weighted Average Remaining Option Term Weighted Number of Shares Weighted Average Exercise Price $ 7 - 18 3 3 Years $12 4 $12 $ 20 - 23 1 7 Years $22 — $22 $ 26 - 34 1 9 Years $29 — $26 $ 7 - 34 5 4 Years $16 4 $13 |
Schedule of phantom stock awards and SARs | Information related to phantom stock awards and SARs was as follows, in millions: Phantom Stock Awards Stock Appreciation Rights At December 31, At December 31, 2017 2016 2017 2016 Accrued compensation cost liability $ 12 $ 10 $ 7 $ 8 Unrecognized compensation cost $ 4 $ 4 $ — $ — Equivalent common shares — — — 1 |
EMPLOYEE RETIREMENT PLANS (Tabl
EMPLOYEE RETIREMENT PLANS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Compensation and Retirement Disclosure [Abstract] | |
Schedule of pre-tax expense related to retirement plans | Pre-tax expense related to our retirement plans was as follows, in millions: 2017 2016 2015 Defined-contribution plans $ 55 $ 58 $ 52 Defined-benefit pension plans 29 34 32 $ 84 $ 92 $ 84 |
Schedule of changes in the projected benefit obligation and fair value of the plan assets, and the funded status of the Company's defined-benefit pension plans | Changes in the projected benefit obligation and fair value of plan assets, and the funded status of our defined-benefit pension plans were as follows, in millions: 2017 2016 Qualified Non-Qualified Qualified Non-Qualified Changes in projected benefit obligation: Projected benefit obligation at January 1 $ 1,055 $ 170 $ 1,059 $ 174 Service cost 3 — 3 — Interest cost 36 6 41 7 Actuarial loss, net 34 7 50 1 Foreign currency exchange 20 — (29 ) — Benefit payments (43 ) (13 ) (69 ) (12 ) Divestitures (144 ) — — — Projected benefit obligation at December 31 $ 961 $ 170 $ 1,055 $ 170 Changes in fair value of plan assets: Fair value of plan assets at January 1 $ 717 $ — $ 658 $ — Actual return on plan assets 77 — 58 — Foreign currency exchange 8 — (20 ) — Company contributions 52 13 100 12 Expenses, other (7 ) — (10 ) — Benefit payments (43 ) (13 ) (69 ) (12 ) Divestitures (109 ) — — — Fair value of plan assets at December 31 $ 695 $ — $ 717 $ — Funded status at December 31 $ (266 ) $ (170 ) $ (338 ) $ (170 ) |
Schedule of amounts in the Company's consolidated balance sheets | Amounts in our consolidated balance sheets were as follows, in millions: At December 31, 2017 At December 31, 2016 Qualified Non-Qualified Qualified Non-Qualified Other assets $ 1 $ — $ 2 $ — Accrued liabilities (1 ) (13 ) (1 ) (12 ) Other liabilities (266 ) (157 ) (339 ) (158 ) Total net liability $ (266 ) $ (170 ) $ (338 ) $ (170 ) |
Schedule of unrealized loss included in accumulated other comprehensive income before income taxes | Unrealized loss included in accumulated other comprehensive loss before income taxes was as follows, in millions: At December 31, 2017 At December 31, 2016 Qualified Non-Qualified Qualified Non-Qualified Net loss $ 442 $ 59 $ 519 $ 54 Net transition obligation — — 1 — Net prior service cost 3 — 3 — Total $ 445 $ 59 $ 523 $ 54 |
Schedule of information for defined-benefit pension plans with an accumulated benefit obligation in excess of plan assets | Information for defined-benefit pension plans with an accumulated benefit obligation in excess of plan assets was as follows, in millions: At December 31 2017 2016 Qualified Non-Qualified Qualified Non-Qualified Projected benefit obligation $ 945 $ 170 $ 1,044 $ 170 Accumulated benefit obligation $ 945 $ 170 $ 1,044 $ 170 Fair value of plan assets $ 679 $ — $ 704 $ — |
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: 2017 2016 2015 Qualified Non-Qualified Qualified Non-Qualified Qualified Non-Qualified Service cost $ 3 $ — $ 3 $ — $ 3 $ — Interest cost 44 6 49 7 47 7 Expected return on plan assets (46 ) — (44 ) — (46 ) — Recognized net loss 19 3 17 2 18 3 Net periodic pension cost $ 20 $ 9 $ 25 $ 9 $ 22 $ 10 |
Schedule of the Company's qualified defined-benefit pension plan weighted average asset allocation | Our qualified defined-benefit pension plan weighted average asset allocation, which is based upon fair value, was as follows: 2017 2016 Equity securities 55 % 49 % Debt securities 28 % 32 % Other 17 % 19 % Total 100 % 100 % |
Schedule of qualified defined-benefit pension plan assets at fair value | The following tables set forth, by level within the fair value hierarchy, the qualified defined-benefit pension plan assets at fair value as of December 31, 2017 and 2016 , as well as those valued at NAV using the practical expedient, which approximates fair value, in millions. L. EMPLOYEE RETIREMENT PLANS (Continued) At December 31, 2017 Level 1 Level 2 Level 3 Valued at NAV Total Plan Assets Common and Preferred Stocks: United States $ 144 $ — $ — $ 47 $ 191 International 66 — — 125 191 Private Equity and Hedge Funds: United States — — 36 — 36 International — — 24 35 59 Corporate Debt Securities: United States 31 26 — — 57 International — 7 — 21 28 Government and Other Debt Securities: United States 15 7 — 31 53 International 31 28 — — 59 Common Collective Trust Fund – United States — 6 — — 6 Buy-in Annuity - International — 12 — — 12 Short-Term and Other Investments: United States 2 — — — 2 International — 1 — — 1 Total Plan Assets $ 289 $ 87 $ 60 $ 259 $ 695 At December 31, 2016 Level 1 Level 2 Level 3 Valued at NAV Total Plan Assets Common and Preferred Stocks: United States $ 142 $ — $ — $ 118 $ 260 International 74 — — 16 90 Private Equity and Hedge Funds: United States — — 37 — 37 International — — 24 32 56 Corporate Debt Securities: United States 27 28 — 2 57 International — 26 — 17 43 Government and Other Debt Securities: United States 46 4 — — 50 International 27 53 — — 80 Common Collective Trust Fund – United States — 4 — — 4 Short-Term and Other Investments: United States 2 — — — 2 International 5 15 18 — 38 Total Plan Assets $ 323 $ 130 $ 79 $ 185 $ 717 |
Schedule of changes in the fair value of the qualified defined-benefit pension plan level 3 assets | Changes in the fair value of the qualified defined-benefit pension plan Level 3 assets, were as follows, in millions: 2017 2016 Fair Value, January 1 $ 79 $ 88 Purchases 6 6 Sales (31 ) (19 ) Unrealized gains 6 4 Fair Value, December 31 $ 60 $ 79 |
Schedule of weighted-average major assumptions used in accounting for the Company's defined-benefit pension plans | Weighted average major assumptions used in accounting for our defined-benefit pension plans were as follows: 2017 2016 2015 Discount rate for obligations 3.30 % 3.50 % 4.00 % Expected return on plan assets 7.25 % 7.25 % 7.25 % Rate of compensation increase — % — % — % Discount rate for net periodic pension cost 3.50 % 4.00 % 3.80 % |
Schedule of benefits expected to be paid relating to the Company's defined-benefit pension plans | At December 31, 2017 , the benefits expected to be paid in each of the next five years, and in aggregate for the five years thereafter, relating to our defined-benefit pension plans, were as follows, in millions: Qualified Plans Non-Qualified Plans 2018 $ 47 $ 13 2019 $ 48 $ 12 2020 $ 49 $ 12 2021 $ 50 $ 12 2022 $ 50 $ 13 2023 - 2027 $ 262 $ 56 |
SHAREHOLDERS' EQUITY (Tables)
SHAREHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Schedule of components of accumulated other comprehensive loss | The components of accumulated other comprehensive loss attributable to Masco Corporation were as follows, in millions: At December 31 2017 2016 Cumulative translation adjustments, net $ 282 $ 177 Unrealized loss on interest rate swaps, net (12 ) (15 ) Unrecognized net loss and prior service cost, net (335 ) (397 ) Accumulated other comprehensive loss $ (65 ) $ (235 ) |
RECLASSIFICATIONS FROM OTHER 41
RECLASSIFICATIONS FROM OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | |
Schedule of reclassifications from accumulated other comprehensive income (loss) to the condensed consolidated statements of operations | The reclassifications from accumulated other comprehensive income (loss) to the consolidated statements of operations were as follows, in millions: Accumulated Other Comprehensive Income (Loss) 2017 2016 2015 Statement of Operations Line Item Amortization of defined benefit pension and other postretirement benefits: Actuarial losses, net $ 86 $ 19 $ 21 Other income (expense), net and selling, general and administrative expenses Tax (benefit) (13 ) (7 ) (8 ) Net of tax (A) $ 73 $ 12 $ 13 Interest rate swaps $ 4 $ 2 $ 2 Interest expense Tax (benefit) (1 ) (1 ) — Net of tax $ 3 $ 1 $ 2 Available-for-sale securities $ — $ (3 ) $ — Other, net Tax expense (B) — 15 — Net of tax $ — $ 12 $ — (A) The 2017 amortization of defined benefit pension and other postretirement benefits includes $58 million , net of tax, due to the disposition of a pension plan in connection with the divestiture of Moores and was recorded within other income (expense), net. Other costs were primarily recorded in selling, general and administrative expenses. (B) The tax expense related to the available-for-sale securities in 2016 includes $14 million related to the disproportionate tax effect that we recognized as a result of the redemption of all of our auction rate securities. Refer to Note Q to the consolidated financial statements for additional information. |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Schedule of information by segment and geographic area | Information by segment and geographic area was as follows, in millions: Net Sales (1)(2)(3)(4)(5) Operating Profit (Loss) (5)(6) Assets at December 31 (7) 2017 2016 2015 2017 2016 2015 2017 2016 2015 Our operations by segment were: Plumbing Products $ 3,735 $ 3,526 $ 3,341 $ 698 $ 642 $ 512 $ 2,260 $ 2,009 $ 1,972 Decorative Architectural Products 2,205 2,092 2,020 434 430 403 961 894 874 Cabinetry Products 934 970 1,025 90 93 51 524 537 567 Windows and Other Specialty Products 770 769 756 52 (3 ) 57 673 743 748 Total $ 7,644 $ 7,357 $ 7,142 $ 1,274 $ 1,162 $ 1,023 $ 4,418 $ 4,183 $ 4,161 Our operations by geographic area were: North America $ 6,069 $ 5,834 $ 5,645 $ 1,072 $ 961 $ 841 $ 3,211 $ 3,001 $ 2,925 International, principally Europe 1,575 1,523 1,497 202 201 182 1,207 1,182 1,236 Total, as above $ 7,644 $ 7,357 $ 7,142 1,274 1,162 1,023 4,418 4,183 4,161 General corporate expense, net (6) (105 ) (109 ) (109 ) Operating profit, as reported 1,169 1,053 914 Other income (expense), net (284 ) (223 ) (225 ) Income from continuing operations before income taxes $ 885 $ 830 $ 689 Corporate assets 1,070 954 1,503 Total assets $ 5,488 $ 5,137 $ 5,664 O. SEGMENT INFORMATION (Concluded) Property Additions (5) Depreciation and Amortization (5) 2017 2016 2015 2017 2016 2015 Our operations by segment were: Plumbing Products $ 115 $ 110 $ 87 $ 63 $ 57 $ 56 Decorative Architectural Products 19 22 16 16 16 16 Cabinetry Products 14 8 6 14 21 24 Windows and Other Specialty Products 13 30 41 21 21 18 161 170 150 114 115 114 Unallocated amounts, principally related to corporate assets 12 10 1 13 19 13 Total $ 173 $ 180 $ 151 $ 127 $ 134 $ 127 (1) Included in net sales were export sales from the U.S. of $232 million , $226 million and $217 million in 2017 , 2016 and 2015 , respectively. (2) Excluded from net sales were intra-company sales between segments of less than one percent in 2017 , 2016 and 2015 . (3) Included in net sales were sales to one customer of $2,535 million , $2,480 million and $2,378 million in 2017 , 2016 and 2015 , respectively. Such net sales were included in each of our segments. (4) Net sales from our operations in the U.S. were $5,821 million , $5,605 million and $5,407 million in 2017 , 2016 and 2015 , respectively. (5) Net sales, operating profit (loss), property additions and depreciation and amortization expense for 2015 excluded the results of businesses reported as discontinued operations. (6) General corporate expense, net included those expenses not specifically attributable to our segments. (7) Long-lived assets of our operations in the U.S. and Europe were $1,582 million and $482 million , $1,508 million and $417 million , and $1,487 million and $427 million at December 31, 2017 , 2016 and 2015 , respectively. |
OTHER INCOME (EXPENSE), NET (Ta
OTHER INCOME (EXPENSE), NET (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
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: 2017 2016 2015 Loss on sales of businesses, net (A) $ (13 ) $ — $ — Income from cash and cash investments and short-term bank deposits 4 4 3 Equity investment income, net 1 2 2 Realized gain from auction rate securities — 3 — Realized gains from private equity funds 3 5 6 Impairment of private equity funds (2 ) — — Foreign currency transaction losses — (3 ) (14 ) Other items, net 1 (5 ) 3 Total other, net $ (6 ) $ 6 $ — (A) Included in loss on sales of businesses, net is a loss of $64 million related to the divestiture of Moores and a gain of $51 million related to the divestiture of Arrow. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of components of income taxes expense (benefit) from continuing operations | (In Millions) 2017 2016 2015 Income from continuing operations before income taxes: U.S. $ 731 $ 614 $ 496 Foreign 154 216 193 $ 885 $ 830 $ 689 Income tax expense on income from continuing operations: Currently payable: U.S. Federal $ 196 $ 73 $ 10 State and local 31 24 27 Foreign 68 69 56 Deferred: U.S. Federal 10 140 192 State and local (1 ) 2 3 Foreign 1 (12 ) 5 $ 305 $ 296 $ 293 Deferred tax assets at December 31: Receivables $ 8 $ 10 Inventories 13 17 Other assets, including stock-based compensation 36 58 Accrued liabilities 45 53 Long-term liabilities 169 280 Net operating loss carryforward 53 51 Capital loss carryforward 1 — Tax credit carryforward 8 9 333 478 Valuation allowance (47 ) (45 ) 286 433 Deferred tax liabilities at December 31: Property and equipment 98 127 Intangibles 139 222 Investment in foreign subsidiaries 7 15 Other 20 21 264 385 Net deferred tax asset at December 31 $ 22 $ 48 |
Schedule of reconciliation of the U.S. Federal statutory tax rate to the income tax expense (benefit) on income (loss) from continuing operations | A reconciliation of the U.S. Federal statutory tax rate to the income tax expense on income from continuing operations was as follows: 2017 2016 2015 U.S. Federal statutory tax rate 35 % 35 % 35 % State and local taxes, net of U.S. Federal tax benefit 2 2 3 Lower taxes on foreign earnings (1 ) (2 ) (1 ) U.S. and foreign taxes on distributed and undistributed foreign earnings 1 1 3 Domestic production deduction (2 ) (1 ) — Stock-based compensation (2 ) — — Business divestitures with no tax impact 4 — — Change in U.S. Federal tax law (2 ) — — U.S. Federal valuation allowance — — 3 Other, net (1 ) 1 — Effective tax rate 34 % 36 % 43 % |
Schedule of reconciliation of the beginning and ending liability for uncertain tax positions, including related interest and penalties | A reconciliation of the beginning and ending liability for uncertain tax positions, including related interest and penalties, is as follows, in millions: Uncertain Tax Positions Interest and Penalties Total Balance at January 1, 2016 $ 43 $ 10 $ 53 Current year tax positions: Additions 11 — 11 Reductions (1 ) — (1 ) Prior year tax positions: Additions 1 — 1 Reductions (2 ) — (2 ) Lapse of applicable statute of limitations (6 ) — (6 ) Interest and penalties recognized in income tax expense — (1 ) (1 ) Balance at December 31, 2016 $ 46 $ 9 $ 55 Current year tax positions: Additions 13 — 13 Reductions — — — Prior year tax positions: Additions 3 — 3 Reductions (1 ) — (1 ) Lapse of applicable statute of limitations (7 ) — (7 ) Interest and penalties recognized in income tax expense — (1 ) (1 ) Balance at December 31, 2017 $ 54 $ 8 $ 62 |
EARNINGS PER COMMON SHARE (Tabl
EARNINGS PER COMMON SHARE (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
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: 2017 2016 2015 Numerator (basic and diluted): Income from continuing operations $ 533 $ 491 $ 357 Less: Allocation to unvested restricted stock awards 5 6 5 Income from continuing operations attributable to common shareholders 528 485 352 Loss from discontinued operations, net — — (2 ) Less: Allocation to unvested restricted stock awards — — — Loss from discontinued operations attributable to common shareholders — — (2 ) Net income available to common shareholders $ 528 $ 485 $ 350 Denominator: Basic common shares (based upon weighted average) 314 326 338 Add: Stock option dilution 4 4 3 Diluted common shares 318 330 341 |
OTHER COMMITMENTS AND CONTING46
OTHER COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of changes in the Company's warranty liability | Changes in our warranty liability were as follows, in millions: 2017 2016 Balance at January 1 $ 192 $ 152 Accruals for warranties issued during the year 63 66 Accruals related to pre-existing warranties 9 33 Settlements made (in cash or kind) during the year (59 ) (56 ) Other, net (including currency translation) — (3 ) Balance at December 31 $ 205 $ 192 |
INTERIM FINANCIAL INFORMATION47
INTERIM FINANCIAL INFORMATION (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of interim financial information | Our quarterly results attributable to Masco Corporation were as follows: Quarters Ended (In Millions, Except Per Common Share Data) Total Year December 31 September 30 June 30 March 31 2017 Net sales $ 7,644 $ 1,874 $ 1,936 $ 2,057 $ 1,777 Gross profit $ 2,611 $ 616 $ 650 $ 737 $ 608 Net income $ 533 $ 87 $ 148 $ 158 $ 140 Earnings per common share: Basic: Net income $ 1.68 $ 0.28 $ 0.47 $ 0.50 $ 0.44 Diluted: Net income $ 1.66 $ 0.27 $ 0.46 $ 0.49 $ 0.43 2016 Net sales $ 7,357 $ 1,759 $ 1,877 $ 2,001 $ 1,720 Gross profit $ 2,456 $ 573 $ 614 $ 700 $ 569 Net income $ 491 $ 98 $ 134 $ 150 $ 109 Earnings per common share: Basic: Net income $ 1.49 $ 0.30 $ 0.41 $ 0.45 $ 0.33 Diluted: Net income $ 1.47 $ 0.30 $ 0.40 $ 0.45 $ 0.32 |
ACCOUNTING POLICIES - Customer
ACCOUNTING POLICIES - Customer Promotion Costs (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Minimum | |
Property and Equipment | |
Expected useful life of product | 3 years |
Maximum | |
Property and Equipment | |
Expected useful life of product | 5 years |
ACCOUNTING POLICIES - Receivabl
ACCOUNTING POLICIES - Receivables (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Receivables | ||
Certain receivables allowances including allowances for doubtful accounts | $ 44 | $ 40 |
ACCOUNTING POLICIES - Depreciat
ACCOUNTING POLICIES - Depreciation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property and equipment | |||
Depreciation expense | $ 116 | $ 124 | $ 116 |
Buildings | Minimum | |||
Property and equipment | |||
Annual depreciation rates (as a percent) | 2.00% | ||
Buildings | Maximum | |||
Property and equipment | |||
Annual depreciation rates (as a percent) | 10.00% | ||
Computer Equipment | Minimum | |||
Property and equipment | |||
Annual depreciation rates (as a percent) | 17.00% | ||
Computer Equipment | Maximum | |||
Property and equipment | |||
Annual depreciation rates (as a percent) | 33.00% | ||
Machinery and equipment | Minimum | |||
Property and equipment | |||
Annual depreciation rates (as a percent) | 5.00% | ||
Machinery and equipment | Maximum | |||
Property and equipment | |||
Annual depreciation rates (as a percent) | 33.00% |
ACCOUNTING POLICIES - Goodwill
ACCOUNTING POLICIES - Goodwill and Other Intangible Assets (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Other Intangible Assets | |
Assumed annual growth rate of cash flows (as a percent) | 2.00% |
Period of operation forecasts used in impairment test | 5 years |
Weighted average cost of capital (as a percent) | 8.00% |
Minimum | |
Goodwill and Other Intangible Assets | |
Discount rate on estimated discounted cash flows (as a percent) | 10.00% |
Maximum | |
Goodwill and Other Intangible Assets | |
Discount rate on estimated discounted cash flows (as a percent) | 13.00% |
ACCOUNTING POLICIES - Stock-Bas
ACCOUNTING POLICIES - Stock-Based Compensation (Details) - Long-term stock awards | 12 Months Ended |
Dec. 31, 2017 | |
Minimum | |
Stock-based compensation | |
Award vesting period | 5 years |
Maximum | |
Stock-based compensation | |
Award vesting period | 10 years |
Age 65 Or Older | |
Stock-based compensation | |
Award vesting period | 5 years |
ACCOUNTING POLICIES - Noncontro
ACCOUNTING POLICIES - Noncontrolling Interest (Details) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Hansgrohe SE | ||
Noncontrolling interest | ||
Ownership percentage of Hansgrohe SE | 68.00% | 68.00% |
ACCOUNTING POLICIES - Recently
ACCOUNTING POLICIES - Recently Issued Accounting Pronouncements (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Recently Issued Accounting Pronouncements | |||
Net cash for financing activities | $ (577) | $ (1,109) | $ (521) |
Net cash from operating activities | 751 | 789 | 810 |
Accounting Standards Update 2016-09, Statutory Tax Withholding Component | |||
Recently Issued Accounting Pronouncements | |||
Net cash for financing activities | (63) | (111) | |
Net cash from operating activities | 63 | $ 111 | |
Accounting Standards Update 2017-07 | |||
Recently Issued Accounting Pronouncements | |||
Non-operating income (expense), expected to be adjusted | $ 26 | $ 32 |
DIVESTITURES - Selected Financi
DIVESTITURES - Selected Financial Information (Details) - USD ($) $ in Millions | Jun. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Loss on disposal | $ 13 | $ 0 | $ 0 | ||||
Selected financial information of discontinued operations | |||||||
Issuance of TopBuild Corp. debt | 0 | $ 0 | $ 200 | ||||
TopBuild | |||||||
Selected financial information of discontinued operations | |||||||
Issuance of TopBuild Corp. debt | $ 200 | ||||||
Moores Furniture | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Actuarial (gain) loss, net | 58 | ||||||
Arrow Fastener | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Proceeds from divestiture of businesses, net of cash divested | $ 128 | ||||||
TopBuild | Installation and Other Services | |||||||
Selected financial information of discontinued operations | |||||||
Percentage of businesses planned for spinoff | 100.00% | ||||||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Moores Furniture | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Loss on disposal | $ 64 | ||||||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Arrow Fastener | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Loss on disposal | $ (51) |
DIVESTITURES - The Major Classe
DIVESTITURES - The Major Classes of Line Items Constituting Pre-tax (Loss) Profit (Details) - TopBuild $ in Millions | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Pre-tax profit (Loss) of discontinued operations | |
Net sales | $ 762 |
Cost of sales | 603 |
Gross profit | 159 |
Selling, general and administrative expenses | 148 |
Income from discontinued operations | 11 |
Loss on disposal of discontinued operations, net | (1) |
Income before income tax | 10 |
Income tax expense | (12) |
Loss from discontinued operations, net | $ (2) |
DIVESTITURES - Other Selected F
DIVESTITURES - Other Selected Financial Information (Details) - TopBuild $ in Millions | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Depreciation and amortization | $ 6 |
Capital expenditures | $ 7 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2017 | |
Acquisitions | ||||
Goodwill acquired during the period | $ 38 | |||
Plumbing Products | ||||
Acquisitions | ||||
Cash consideration | $ 89 | |||
Goodwill acquired during the period | 38 | |||
Plumbing Products | Aquatic fitness business | ||||
Acquisitions | ||||
Cash consideration | $ 25 | |||
Windows and Other Specialty Products | ||||
Acquisitions | ||||
Goodwill acquired during the period | 0 | |||
Windows and Other Specialty Products | U.K. window business | ||||
Acquisitions | ||||
Cash consideration | $ 16 | |||
Decorative Architectural Products | ||||
Acquisitions | ||||
Goodwill acquired during the period | $ 0 | |||
Payments to acquire business, expected | $ 550 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 414 | $ 366 |
Raw material | 277 | 254 |
Work in process | 105 | 92 |
Total | $ 796 | $ 712 |
DERIVATIVE INSTRUMENTS AND HE60
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Interest Rate Swap Agreements (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2012 | |
Interest Rate Swap Agreements | ||
Debt issued | $ 400,000,000 | |
Derivatives designated as hedging instruments | Cash flow hedges | Interest Rate Swaps | Three-month LIBOR | ||
Interest Rate Swap Agreements | ||
Interest rate swap loss amortized as an increase to interest expense over the remaining term of the debt | 23,000,000 | |
Balance remaining in accumulated other comprehensive loss | $ 8,000,000 | |
Derivatives designated as hedging instruments | Cash flow hedges | Interest Rate Swaps | Other, net | Three-month LIBOR | ||
Interest Rate Swap Agreements | ||
Ineffective portion of the cash flow hedges | $ 2,000,000 |
DERIVATIVE INSTRUMENTS AND HE61
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - The Pre-tax (Losses) Gains Included in the Consolidated Statements of Operations (Details) - Not designated as a hedge - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Derivative instruments and hedging activities | |||
Total (loss) gain | $ (4) | $ 3 | $ (18) |
Foreign currency exchange contracts | Other, net | |||
Derivative instruments and hedging activities | |||
Total (loss) gain | (1) | 0 | 4 |
Foreign currency forward contracts | Other, net | |||
Derivative instruments and hedging activities | |||
Total (loss) gain | 1 | 0 | (3) |
Metals contracts | Cost of sales | |||
Derivative instruments and hedging activities | |||
Total (loss) gain | 0 | 5 | (17) |
Interest Rate Swaps | Other, net | |||
Derivative instruments and hedging activities | |||
Total (loss) gain | $ (4) | $ (2) | $ (2) |
DERIVATIVE INSTRUMENTS AND HE62
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Notional Amounts Being Hedged and the Fair Value of those Derivative Instruments (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Foreign currency exchange contracts | ||
Derivative instruments and hedging activities | ||
Notional Amount | $ 14 | |
Foreign currency exchange contracts | Accrued liabilities, current | Recurring | Level 2 | ||
Derivative instruments and hedging activities | ||
Derivative Liability, Current | 0 | |
Foreign currency forward contracts | ||
Derivative instruments and hedging activities | ||
Notional Amount | 43 | $ 21 |
Foreign currency forward contracts | Accrued liabilities, current | Recurring | Level 2 | ||
Derivative instruments and hedging activities | ||
Derivative Liability, Current | 0 | (2) |
Foreign currency forward contracts | Receivables | Recurring | Level 2 | ||
Derivative instruments and hedging activities | ||
Derivative Asset, Current | $ 0 | |
Metals contracts | ||
Derivative instruments and hedging activities | ||
Notional Amount | 1 | |
Metals contracts | Accrued liabilities, current | Recurring | Level 2 | ||
Derivative instruments and hedging activities | ||
Derivative Liability, Current | $ 0 |
PROPERTY AND EQUIPMENT - Proper
PROPERTY AND EQUIPMENT - Property and Equipment, Net (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Property and Equipment | ||
Property and equipment, Gross | $ 2,665 | $ 2,618 |
Less: Accumulated depreciation | (1,536) | (1,558) |
Total | 1,129 | 1,060 |
Land and improvements | ||
Property and Equipment | ||
Property and equipment, Gross | 110 | 111 |
Buildings | ||
Property and Equipment | ||
Property and equipment, Gross | 681 | 712 |
Computer Equipment | ||
Property and Equipment | ||
Property and equipment, Gross | 327 | 315 |
Machinery and equipment | ||
Property and Equipment | ||
Property and equipment, Gross | $ 1,547 | $ 1,480 |
PROPERTY AND EQUIPMENT - Future
PROPERTY AND EQUIPMENT - Future Minimum Lease Payments (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |||
Rental expense | $ 66 | $ 63 | $ 60 |
2,018 | 50 | ||
2,019 | 39 | ||
2,020 | 32 | ||
2,021 | 25 | ||
2,022 | 20 | ||
2023 and beyond | $ 91 |
GOODWILL AND OTHER INTANGIBLE65
GOODWILL AND OTHER INTANGIBLE ASSETS - Goodwill, Net (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Goodwill | |||
Gross Goodwill | $ 1,767 | $ 2,040 | $ 2,047 |
Accumulated Impairment Losses | (926) | (1,208) | (1,208) |
Net Goodwill | 841 | 832 | 839 |
Plumbing Products | |||
Goodwill | |||
Gross Goodwill | 574 | 519 | 525 |
Accumulated Impairment Losses | (340) | (340) | (340) |
Net Goodwill | 234 | 179 | 185 |
Decorative Architectural Products | |||
Goodwill | |||
Gross Goodwill | 294 | 294 | 294 |
Accumulated Impairment Losses | (75) | (75) | (75) |
Net Goodwill | 219 | 219 | 219 |
Cabinetry Products | |||
Goodwill | |||
Gross Goodwill | 181 | 240 | 240 |
Accumulated Impairment Losses | 0 | (59) | (59) |
Net Goodwill | 181 | 181 | 181 |
Windows and Other Specialty Products | |||
Goodwill | |||
Gross Goodwill | 718 | 987 | 988 |
Accumulated Impairment Losses | (511) | (734) | (734) |
Net Goodwill | $ 207 | $ 253 | $ 254 |
GOODWILL AND OTHER INTANGIBLE66
GOODWILL AND OTHER INTANGIBLE ASSETS - Changes in the Carrying Amount of Goodwill (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Goodwill [Line Items] | |||
Gross Goodwill | $ 1,767 | $ 2,040 | $ 2,047 |
Accumulated Impairment Losses | (926) | (1,208) | (1,208) |
Changes in the carrying amount of goodwill | |||
Beginning balance | 832 | 839 | |
Additions | 38 | ||
Divestitures | (47) | ||
Other | 18 | (7) | |
Ending balance | 841 | 832 | |
Plumbing Products | |||
Goodwill [Line Items] | |||
Gross Goodwill | 574 | 519 | 525 |
Accumulated Impairment Losses | (340) | (340) | (340) |
Changes in the carrying amount of goodwill | |||
Beginning balance | 179 | 185 | |
Additions | 38 | ||
Divestitures | 0 | ||
Other | 17 | (6) | |
Ending balance | 234 | 179 | |
Decorative Architectural Products | |||
Goodwill [Line Items] | |||
Gross Goodwill | 294 | 294 | 294 |
Accumulated Impairment Losses | (75) | (75) | (75) |
Changes in the carrying amount of goodwill | |||
Beginning balance | 219 | 219 | |
Additions | 0 | ||
Divestitures | 0 | ||
Other | 0 | 0 | |
Ending balance | 219 | 219 | |
Cabinetry Products | |||
Goodwill [Line Items] | |||
Gross Goodwill | 181 | 240 | 240 |
Accumulated Impairment Losses | 0 | (59) | (59) |
Changes in the carrying amount of goodwill | |||
Beginning balance | 181 | 181 | |
Additions | 0 | ||
Divestitures | 0 | ||
Other | 0 | 0 | |
Ending balance | 181 | 181 | |
Accumulated impairment loss written off | 59 | ||
Windows and Other Specialty Products | |||
Goodwill [Line Items] | |||
Gross Goodwill | 718 | 987 | 988 |
Accumulated Impairment Losses | (511) | (734) | $ (734) |
Changes in the carrying amount of goodwill | |||
Beginning balance | 253 | 254 | |
Additions | 0 | ||
Divestitures | (47) | ||
Other | 1 | (1) | |
Ending balance | 207 | $ 253 | |
Moores Furniture | Cabinetry Products | |||
Changes in the carrying amount of goodwill | |||
Gross goodwill written off | 59 | ||
Arrow Fastener | Windows and Other Specialty Products | |||
Changes in the carrying amount of goodwill | |||
Gross goodwill written off | 270 | ||
Accumulated impairment loss written off | $ 223 |
GOODWILL AND OTHER INTANGIBLE67
GOODWILL AND OTHER INTANGIBLE ASSETS - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Definite-lived Intangible Assets | |||
Pre-tax impairment charges for goodwill | $ 0 | $ 0 | $ 0 |
Other indefinite-lived intangible assets | 140,000,000 | 136,000,000 | |
Impairment of other indefinite-lived assets | 0 | 0 | 0 |
Increase in other indefinite-lived intangible assets | 5,000,000 | 7,000,000 | |
Carrying value of definite-lived intangible assets | 47,000,000 | 18,000,000 | |
Accumulated amortization | 10,000,000 | 16,000,000 | |
Amortization expense related to the definite-lived intangible assets | 4,000,000 | $ 4,000,000 | 6,000,000 |
Increase in definite-lived intangible assets | 26,000,000 | $ 17,000,000 | |
Amortization expense related to the definite-lived intangible assets, 2018 | 6,000,000 | ||
Amortization expense related to the definite-lived intangible assets, 2019 | 5,000,000 | ||
Amortization expense related to the definite-lived intangible assets, 2020 | 5,000,000 | ||
Amortization expense related to the definite-lived intangible assets, 2021 | 5,000,000 | ||
Amortization expense related to the definite-lived intangible assets, 2022 | $ 5,000,000 | ||
Weighted average | |||
Definite-lived Intangible Assets | |||
Weighted average amortization period | 12 years | 10 years |
OTHER ASSETS (Details)
OTHER ASSETS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Defined Benefit Plan Disclosure [Line Items] | |||
Equity method investments | $ 11 | $ 13 | |
Private equity funds | 2 | 5 | |
In-store displays, net | 31 | 42 | |
Deferred tax assets (Note Q) | 48 | 68 | |
Other | 24 | 29 | |
Total | 116 | 157 | |
Amortization expense related to in-store displays | 25 | 25 | $ 20 |
Cash spent for in-store displays | $ 14 | $ 11 | $ 43 |
Minimum | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Expected useful life of product | 3 years | ||
Maximum | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Expected useful life of product | 5 years |
ACCRUED LIABILITIES (Details)
ACCRUED LIABILITIES (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Accrued Liabilities, Current [Abstract] | ||
Salaries, wages and commissions | $ 196 | $ 191 |
Advertising and sales promotion | 157 | 146 |
Interest | 42 | 51 |
Warranty (Note S) | 59 | 56 |
Employee retirement plans | 50 | 52 |
Insurance reserves | 40 | 41 |
Property, payroll and other taxes | 27 | 19 |
Dividends payable | 33 | 32 |
Other | 84 | 70 |
Total | $ 688 | $ 658 |
DEBT - Tabular Disclosure - Not
DEBT - Tabular Disclosure - Notes and Debentures and Other (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Jun. 27, 2017 | Jun. 21, 2017 | Dec. 31, 2016 | Mar. 17, 2016 | Mar. 24, 2015 |
Debt | ||||||
Other | $ 33 | $ 9 | ||||
Debt Issuance Costs, Net | (19) | (19) | ||||
Total long-term debt, current and non-current | 3,085 | 2,997 | ||||
Less: Current portion | 116 | 2 | ||||
Total long-term debt | 2,969 | 2,995 | ||||
6.625% Notes and Debentures Due 15 April 2018 | Senior notes and debentures | ||||||
Debt | ||||||
Notes and debentures | $ 114 | 114 | ||||
Interest rate (as a percent) | 6.625% | |||||
7.125% Notes and Debentures Due 15 March 2020 | Senior notes and debentures | ||||||
Debt | ||||||
Notes and debentures | $ 201 | 500 | ||||
Interest rate (as a percent) | 7.125% | 7.125% | ||||
3.5% Notes and Debentures Due April 1, 2021 | ||||||
Debt | ||||||
Interest rate (as a percent) | 3.50% | |||||
3.5% Notes and Debentures Due April 1, 2021 | Senior notes and debentures | ||||||
Debt | ||||||
Notes and debentures | $ 399 | 399 | ||||
Interest rate (as a percent) | 3.50% | |||||
5.95% Notes and Debentures Due 15 March 2022 | Senior notes and debentures | ||||||
Debt | ||||||
Notes and debentures | $ 326 | 400 | ||||
Interest rate (as a percent) | 5.95% | |||||
4.45% Notes and Debentures Due 1 April 2025 | Senior notes and debentures | ||||||
Debt | ||||||
Notes and debentures | $ 500 | 500 | ||||
Interest rate (as a percent) | 4.45% | 4.45% | ||||
4.375% Notes and Debentures Due April 1, 2026 | ||||||
Debt | ||||||
Interest rate (as a percent) | 4.375% | |||||
4.375% Notes and Debentures Due April 1, 2026 | Senior notes and debentures | ||||||
Debt | ||||||
Notes and debentures | $ 498 | 498 | ||||
Interest rate (as a percent) | 4.375% | |||||
3.5% Notes and Debentures Due November 15, 2027 | ||||||
Debt | ||||||
Interest rate (as a percent) | 3.50% | |||||
3.5% Notes and Debentures Due November 15, 2027 | Senior notes and debentures | ||||||
Debt | ||||||
Notes and debentures | $ 300 | 0 | ||||
Interest rate (as a percent) | 3.50% | |||||
7.75% Notes and Debentures Due 1 August 2029 | Senior notes and debentures | ||||||
Debt | ||||||
Notes and debentures | $ 234 | $ 296 | ||||
Interest rate (as a percent) | 7.75% | 7.75% | 7.75% | |||
6.5% Notes and Debentures Due 15 August 2032 | Senior notes and debentures | ||||||
Debt | ||||||
Notes and debentures | $ 200 | $ 300 | ||||
Interest rate (as a percent) | 6.50% | 6.50% | ||||
4.5% Notes and Debentures Due May 15, 2047 | Senior notes and debentures | ||||||
Debt | ||||||
Notes and debentures | $ 299 | $ 0 | ||||
Interest rate (as a percent) | 4.50% | 4.50% |
DEBT - Notes and Debentures (De
DEBT - Notes and Debentures (Details) - USD ($) | Jun. 27, 2017 | Jun. 21, 2017 | Mar. 17, 2016 | Jun. 15, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Apr. 15, 2016 | Mar. 24, 2015 | Dec. 31, 2012 |
Debt | ||||||||||
Proceeds from issuance of debt | $ 599,000,000 | $ 896,000,000 | ||||||||
Repayments of notes payable | $ 535,000,000 | $ 1,300,000,000 | $ 500,000,000 | |||||||
Debt extinguishment costs | 104,000,000 | 40,000,000 | 0 | |||||||
Debt extinguishment costs | $ 104,000,000 | 40,000,000 | $ 0 | |||||||
Debt issued | $ 400,000,000 | |||||||||
6.625% Notes and Debentures Due 15 April 2018 | Senior notes and debentures | ||||||||||
Debt | ||||||||||
Interest rate (as a percent) | 6.625% | |||||||||
Senior Notes | $ 114,000,000 | $ 114,000,000 | ||||||||
7.75% Notes and Debentures Due 1 August 2029 | Senior notes and debentures | ||||||||||
Debt | ||||||||||
Interest rate (as a percent) | 7.75% | 7.75% | 7.75% | |||||||
Repayments of notes payable | $ 62,000,000 | |||||||||
Senior Notes | $ 234,000,000 | $ 296,000,000 | ||||||||
3.5% Notes and Debentures Due November 15, 2027 | ||||||||||
Debt | ||||||||||
Interest rate (as a percent) | 3.50% | |||||||||
3.5% Notes and Debentures Due November 15, 2027 | Senior notes and debentures | ||||||||||
Debt | ||||||||||
Interest rate (as a percent) | 3.50% | |||||||||
Long-term debt, gross | $ 300,000,000 | |||||||||
Senior Notes | $ 300,000,000 | 0 | ||||||||
4.5% Notes and Debentures Due May 15, 2047 | Senior notes and debentures | ||||||||||
Debt | ||||||||||
Interest rate (as a percent) | 4.50% | 4.50% | ||||||||
Long-term debt, gross | $ 300,000,000 | |||||||||
Senior Notes | $ 299,000,000 | 0 | ||||||||
7.125% Notes and Debentures Due 15 March 2020 | Senior notes and debentures | ||||||||||
Debt | ||||||||||
Interest rate (as a percent) | 7.125% | 7.125% | ||||||||
Repayments of notes payable | $ 299,000,000 | |||||||||
Senior Notes | $ 201,000,000 | 500,000,000 | ||||||||
5.95% Notes and Debentures Due March 15, 2022 [Member] | Senior notes and debentures | ||||||||||
Debt | ||||||||||
Interest rate (as a percent) | 5.95% | |||||||||
Repayments of notes payable | $ 74,000,000 | |||||||||
6.5% Notes and Debentures Due 15 August 2032 | Senior notes and debentures | ||||||||||
Debt | ||||||||||
Interest rate (as a percent) | 6.50% | 6.50% | ||||||||
Repayments of notes payable | $ 100,000,000 | |||||||||
Senior Notes | $ 200,000,000 | 300,000,000 | ||||||||
7.125%, 5.95%, 7.75% and 6.5% Notes and Debentures [Member] | ||||||||||
Debt | ||||||||||
Debt extinguishment costs | $ 107,000,000 | |||||||||
3.5% Notes and Debentures Due April 1, 2021 | ||||||||||
Debt | ||||||||||
Interest rate (as a percent) | 3.50% | |||||||||
3.5% Notes and Debentures Due April 1, 2021 | Senior notes and debentures | ||||||||||
Debt | ||||||||||
Interest rate (as a percent) | 3.50% | |||||||||
Long-term debt, gross | $ 400,000,000 | |||||||||
Senior Notes | $ 399,000,000 | 399,000,000 | ||||||||
4.375% Notes and Debentures Due April 1, 2026 | ||||||||||
Debt | ||||||||||
Interest rate (as a percent) | 4.375% | |||||||||
4.375% Notes and Debentures Due April 1, 2026 | Senior notes and debentures | ||||||||||
Debt | ||||||||||
Interest rate (as a percent) | 4.375% | |||||||||
Long-term debt, gross | $ 500,000,000 | |||||||||
Senior Notes | $ 498,000,000 | 498,000,000 | ||||||||
6.125% Notes and Debentures Due October 3, 2016 | Senior notes and debentures | ||||||||||
Debt | ||||||||||
Interest rate (as a percent) | 6.125% | |||||||||
Senior Notes | $ 1,000,000,000 | |||||||||
5.85% Notes and Debenture Due March 15, 2017 | Senior notes and debentures | ||||||||||
Debt | ||||||||||
Interest rate (as a percent) | 5.85% | |||||||||
Senior Notes | $ 300,000,000 | |||||||||
4.8% Notes and Debentures Due 15 June 2015 | Senior notes and debentures | ||||||||||
Debt | ||||||||||
Interest rate (as a percent) | 4.80% | |||||||||
Repayments of notes payable | $ 500,000,000 | |||||||||
4.45% Notes and Debentures Due 1 April 2025 | Senior notes and debentures | ||||||||||
Debt | ||||||||||
Interest rate (as a percent) | 4.45% | 4.45% | ||||||||
Senior Notes | $ 500,000,000 | $ 500,000,000 | ||||||||
Debt issued | $ 500,000,000 |
DEBT - Credit Agreement (Detail
DEBT - Credit Agreement (Details) - Line of credit | 12 Months Ended | ||
Dec. 31, 2017USD ($) | May 29, 2015USD ($) | Mar. 28, 2013USD ($) | |
Credit Agreement dated March 28, 2013 | |||
Debt | |||
Borrowing capacity, maximum | $ 1,250,000,000 | ||
Credit agreement dated March 28, 2013 as amended on May 29, 2015 and August 28, 2015 | |||
Debt | |||
Borrowing capacity, maximum | $ 750,000,000 | ||
Increase in maximum borrowing capacity | $ 375,000,000 | ||
Maximum net leverage ratio | 4 | ||
Minimum interest coverage ratio | 2.5 | ||
Amount borrowed | $ 0 | ||
Credit agreement dated March 28, 2013 as amended on May 29, 2015 and August 28, 2015 | Prime rate | |||
Debt | |||
Basis spread | prime rate | ||
Credit agreement dated March 28, 2013 as amended on May 29, 2015 and August 28, 2015 | Federal funds effective rate | |||
Debt | |||
Basis spread | Federal Funds effective rate | ||
Interest rate, basis spread (as a percent) | 0.50% | ||
Credit agreement dated March 28, 2013 as amended on May 29, 2015 and August 28, 2015 | Libor rate | |||
Debt | |||
Basis spread | LIBOR | ||
Interest rate, basis spread (as a percent) | 1.00% | ||
Credit agreement dated March 28, 2013 as amended on May 29, 2015 and August 28, 2015 | Revolver | European euros | |||
Debt | |||
Increase in maximum borrowing capacity | $ 500,000,000 | ||
Credit agreement dated March 28, 2013 as amended on May 29, 2015 and August 28, 2015 | Swingline loans | |||
Debt | |||
Borrowing capacity, maximum | 75,000,000 | ||
Credit agreement dated March 28, 2013 as amended on May 29, 2015 and August 28, 2015 | Letters of credit | |||
Debt | |||
Borrowing capacity, maximum | 100,000,000 | ||
Outstanding and unused Letters of Credit | $ 0 |
DEBT - Debt Maturities (Details
DEBT - Debt Maturities (Details) $ in Millions | Dec. 31, 2017USD ($) |
Debt maturities | |
2,018 | $ 116 |
2,019 | 2 |
2,020 | 203 |
2,021 | 402 |
2,022 | $ 329 |
DEBT - Interest Paid (Details)
DEBT - Interest Paid (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Interest paid | |||
Interest paid | $ 175 | $ 198 | $ 216 |
Debt extinguishment costs | $ 104 | $ 40 | $ 0 |
DEBT - Fair Value (Details)
DEBT - Fair Value (Details) - USD ($) $ in Billions | Dec. 31, 2017 | Dec. 31, 2016 |
Estimate of Fair Value Measurement | ||
Debt Instrument [Line Items] | ||
Estimated market value of long-term and short-term debt | $ 3.3 | $ 3.3 |
Carrying Value Reported Value Measurement | ||
Debt Instrument [Line Items] | ||
Debt, long-term and short-term | $ 3.1 | $ 3 |
STOCK-BASED COMPENSATION - Pre-
STOCK-BASED COMPENSATION - Pre-tax Compensation Expense and the Related Income Tax Benefit (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Stock-based compensation | |||
Pre-tax compensation expense | $ 38 | $ 29 | $ 39 |
Long-term stock awards | |||
Stock-based compensation | |||
Pre-tax compensation expense | 24 | 23 | 23 |
Stock Options | |||
Stock-based compensation | |||
Pre-tax compensation expense | 3 | 2 | 5 |
Restricted Stock Units (RSUs) | |||
Stock-based compensation | |||
Pre-tax compensation expense | 2 | 0 | 0 |
Phantom stock awards and stock appreciation rights | |||
Stock-based compensation | |||
Pre-tax compensation expense | $ 9 | $ 4 | $ 11 |
STOCK-BASED COMPENSATION - Comm
STOCK-BASED COMPENSATION - Common Stock Available under the Plan (Details) shares in Millions | Dec. 31, 2017shares |
2014 Plan | |
Stock-based compensation | |
Common stock available for granting stock options and other long-term stock incentive awards | 15.4 |
STOCK-BASED COMPENSATION - Long
STOCK-BASED COMPENSATION - Long-Term Stock Awards (Details) - Long-term stock awards - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Unvested stock award shares | |||
Balance at the beginning of the period (in shares) | 4,000,000 | 5,000,000 | 6,000,000 |
Granted (in shares) | 853,690 | 1,000,000 | 1,000,000 |
Vested (in shares) | 2,000,000 | 2,000,000 | 2,000,000 |
Forfeited (in shares) | 0 | 0 | |
Forfeitures upon spin off (in shares) | 0 | 0 | 1,000,000 |
Modification upon spin off (in shares) | 0 | 0 | 1,000,000 |
Balance at the end of the period (in shares) | 3,000,000 | 4,000,000 | 5,000,000 |
Weighted average grant date fair value | |||
Balance at the beginning of the period (in dollars per share) | $ 20 | $ 17 | $ 18 |
Granted (in dollars per share) | 34 | 26 | 26 |
Vested (in dollars per share) | 18 | 16 | 17 |
Forfeited (in dollars per share) | 24 | 20 | 18 |
Forfeitures upon spin off (in dollars per share) | 0 | 0 | 20 |
Balance at the end of the period (in dollars per share) | $ 24 | $ 20 | $ 17 |
Additional disclosures | |||
Total unrecognized compensation expense | $ 46 | $ 43 | $ 42 |
Remaining weighted average vesting period | 3 years | 3 years | 3 years |
Total market value (at the vesting date) of stock award shares | $ 45 | $ 43 | $ 54 |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock Options (Details) - Stock Options - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Stock Options | |||
Vesting period | 5 years | ||
Expiration period | 10 years | ||
Shares | |||
Outstanding at the beginning of the period (in shares) | 7,000,000 | 12,000,000 | 18,000,000 |
Granted (in shares) | 397,350 | 0 | 0 |
Exercised (in shares) | 2,000,000 | 5,000,000 | 5,000,000 |
Forfeited (in shares) | 0 | 0 | 3,000,000 |
Forfeitures upon spin off (in shares) | 0 | 0 | 0 |
Modification upon spin off (in shares) | 0 | 0 | 2,000,000 |
Outstanding at the end of the period (in shares) | 5,000,000 | 7,000,000 | 12,000,000 |
Option shares vested and expected to vest at the end of the period (in shares) | 5,000,000 | 7,000,000 | 12,000,000 |
Option shares exercisable at the end of the period (in shares) | 4,000,000 | 6,000,000 | 10,000,000 |
Weighted average exercise price | |||
Outstanding at the beginning of the period (in dollars per share) | $ 15 | $ 17 | $ 21 |
Granted (in dollars per share) | 34 | 26 | 26 |
Exercised (in dollars per share) | 15 | 21 | 17 |
Forfeited (in dollars per share) | 0 | 0 | 29 |
Forfeitures upon spin off (in dollars per share) | 0 | 0 | 19 |
Outstanding at the end of the period (in dollars per share) | 16 | 15 | 17 |
Option shares vested and expected to vest at the end of the period (in dollars per share) | 16 | 15 | 17 |
Option shares exercisable at the end of the period (in dollars per share) | $ 13 | $ 13 | $ 18 |
Aggregate intrinsic value | |||
Exercised shares | $ 47 | $ 64 | $ 50 |
Option shares vested and expected to vest at the end of the period | 147 | 118 | 133 |
Option shares exercisable at the end of the period | $ 123 | $ 102 | $ 113 |
Weighted average remaining option term | |||
Outstanding at the end of the period | 4 years | 4 years | 3 years |
Option shares vested and expected to vest at the end of the period | 4 years | 4 years | 3 years |
Option shares exercisable at the end of the period | 3 years | 3 years | 3 years |
Additional disclosures | |||
Total unrecognized compensation expense | $ 7 | $ 6 | $ 6 |
Weighted average remaining vesting period | 3 years | 3 years | 2 years |
STOCK-BASED COMPENSATION - Weig
STOCK-BASED COMPENSATION - Weighted Average Grant Date Fair Value of Option Shares Granted and Assumptions Used (Details) - Stock Options - $ / shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Stock Options | |||
Weighted average grant date fair value (in dollars per share) | $ 9.68 | $ 6.43 | $ 9.67 |
Risk-free interest rate (as a percent) | 2.16% | 1.41% | 1.75% |
Dividend yield (as a percent) | 1.19% | 1.49% | 1.32% |
Volatility factor (as a percent) | 30.00% | 29.00% | 42.00% |
Expected option life | 6 years | 6 years | 6 years |
STOCK-BASED COMPENSATION - St81
STOCK-BASED COMPENSATION - Stock Option Shares Outstanding and Exercisable (Details) shares in Millions | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Stock-based compensation | |
Exercise price range, low end of range (in dollars per share) | $ 7 |
Exercise price range, high end of range (in dollars per share) | $ 34 |
Option Shares Outstanding, Number of shares (in shares) | shares | 5 |
Option Shares Outstanding, Weighted Average Remaining Option Term | 4 years |
Option Shares Outstanding, Weighted Average Exercise Price (in dollars per share) | $ 16 |
Option Shares Exercisable, Number of Shares (in shares) | shares | 4 |
Option Shares Exercisable, Weighted Average Exercise price (in dollars per share) | $ 13 |
Range One | |
Stock-based compensation | |
Exercise price range, low end of range (in dollars per share) | 7 |
Exercise price range, high end of range (in dollars per share) | $ 18 |
Option Shares Outstanding, Number of shares (in shares) | shares | 3 |
Option Shares Outstanding, Weighted Average Remaining Option Term | 3 years |
Option Shares Outstanding, Weighted Average Exercise Price (in dollars per share) | $ 12 |
Option Shares Exercisable, Number of Shares (in shares) | shares | 4 |
Option Shares Exercisable, Weighted Average Exercise price (in dollars per share) | $ 12 |
Range Two | |
Stock-based compensation | |
Exercise price range, low end of range (in dollars per share) | 20 |
Exercise price range, high end of range (in dollars per share) | $ 23 |
Option Shares Outstanding, Number of shares (in shares) | shares | 1 |
Option Shares Outstanding, Weighted Average Remaining Option Term | 7 years |
Option Shares Outstanding, Weighted Average Exercise Price (in dollars per share) | $ 22 |
Option Shares Exercisable, Number of Shares (in shares) | shares | 0 |
Option Shares Exercisable, Weighted Average Exercise price (in dollars per share) | $ 22 |
Range Three | |
Stock-based compensation | |
Exercise price range, low end of range (in dollars per share) | 26 |
Exercise price range, high end of range (in dollars per share) | $ 34 |
Option Shares Outstanding, Number of shares (in shares) | shares | 1 |
Option Shares Outstanding, Weighted Average Remaining Option Term | 9 years |
Option Shares Outstanding, Weighted Average Exercise Price (in dollars per share) | $ 29 |
Option Shares Exercisable, Number of Shares (in shares) | shares | 0 |
Option Shares Exercisable, Weighted Average Exercise price (in dollars per share) | $ 26 |
STOCK-BASED COMPENSATION - Rest
STOCK-BASED COMPENSATION - Restricted Stock Units (Details) | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Stock-based compensation | |
Period for recognition (in years) | 3 years |
Grants in period, intrinsic value (in dollars per share) | $ / shares | $ 34 |
Minimum | |
Stock-based compensation | |
Award vesting rights, percentage | 0.00% |
Maximum | |
Stock-based compensation | |
Award vesting rights, percentage | 200.00% |
LTIP Program | Restricted Stock Units (RSUs) | |
Stock-based compensation | |
Granted (in shares) | 124,780 |
Forfeited (in shares) | 0 |
STOCK-BASED COMPENSATION - Phan
STOCK-BASED COMPENSATION - Phantom Stock Awards and Stock Appreciation Rights ("SARs") (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Phantom Stock Awards | |||
Stock-based compensation | |||
Recognized expense (income) related to valuation | $ 6 | $ 2 | $ 5 |
Granted (in shares) | 104,580 | 140,710 | 134,560 |
Fair value of stock award granted | $ 4 | $ 4 | $ 4 |
Cash paid to settle awards | 5 | 5 | 6 |
Accrued compensation cost liability | 12 | 10 | |
Unrecognized compensation cost | $ 4 | $ 4 | |
Equivalent common shares (in shares) | 0 | 0 | |
Phantom Stock Awards | Minimum | |||
Stock-based compensation | |||
Vesting period | 5 years | ||
Phantom Stock Awards | Maximum | |||
Stock-based compensation | |||
Vesting period | 10 years | ||
Stock Appreciation Rights | |||
Stock-based compensation | |||
Vesting period | 5 years | ||
Recognized expense (income) related to valuation | $ 3 | $ 2 | $ 6 |
Accrued compensation cost liability | 7 | 8 | |
Unrecognized compensation cost | $ 0 | $ 0 | |
Equivalent common shares (in shares) | 0 | 1,000,000 |
EMPLOYEE RETIREMENT PLANS - Pre
EMPLOYEE RETIREMENT PLANS - Pre-tax Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Pre-tax expense | |||
Pre-tax expense | $ 84 | $ 92 | $ 84 |
Defined-benefit pension plans | |||
Pre-tax expense | |||
Pre-tax expense | 29 | 34 | 32 |
Defined-contribution plans | |||
Pre-tax expense | |||
Pre-tax expense | $ 55 | $ 58 | $ 52 |
EMPLOYEE RETIREMENT PLANS - Cha
EMPLOYEE RETIREMENT PLANS - Changes in the Projected Benefit Obligation and Fair Value of Plan Assets, and the Funded Status of Defined-benefit Pension Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Qualified | |||
Changes in projected benefit obligation: | |||
Balance at the beginning of the period | $ 1,055 | $ 1,059 | |
Service cost | 3 | 3 | $ 3 |
Interest cost | 36 | 41 | |
Actuarial (gain) loss, net | 34 | 50 | |
Foreign currency exchange | 20 | (29) | |
Benefit payments | (43) | (69) | |
Divestitures | (144) | 0 | |
Balance at the end of the period | 961 | 1,055 | 1,059 |
Changes in fair value of plan assets: | |||
Balance at the beginning of the period | 717 | 658 | |
Actual return on plan assets | 77 | 58 | |
Foreign currency exchange | 8 | (20) | |
Company contributions | 52 | 100 | |
Expenses, other | (7) | (10) | |
Benefit payments | (43) | (69) | |
Divestitures | (109) | 0 | |
Balance at the end of the period | 695 | 717 | 658 |
Funded status at the end of the period | (266) | (338) | |
Non-Qualified | |||
Changes in projected benefit obligation: | |||
Balance at the beginning of the period | 170 | 174 | |
Service cost | 0 | 0 | |
Interest cost | 6 | 7 | |
Actuarial (gain) loss, net | 7 | 1 | |
Foreign currency exchange | 0 | 0 | |
Benefit payments | (13) | (12) | |
Divestitures | 0 | 0 | |
Balance at the end of the period | 170 | 170 | 174 |
Changes in fair value of plan assets: | |||
Balance at the beginning of the period | 0 | 0 | |
Actual return on plan assets | 0 | 0 | |
Foreign currency exchange | 0 | 0 | |
Company contributions | 13 | 12 | |
Expenses, other | 0 | 0 | |
Benefit payments | (13) | (12) | |
Divestitures | 0 | 0 | |
Balance at the end of the period | 0 | 0 | $ 0 |
Funded status at the end of the period | $ (170) | $ (170) |
EMPLOYEE RETIREMENT PLANS - Amo
EMPLOYEE RETIREMENT PLANS - Amounts in Consolidated Balance Sheets (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Amounts in the company's consolidated balance sheets | ||
Accrued liabilities | $ (50) | $ (52) |
Qualified | ||
Amounts in the company's consolidated balance sheets | ||
Other assets | 1 | 2 |
Accrued liabilities | (1) | (1) |
Other liabilities | (266) | (339) |
Total net liability | (266) | (338) |
Non-Qualified | ||
Amounts in the company's consolidated balance sheets | ||
Other assets | 0 | 0 |
Accrued liabilities | (13) | (12) |
Other liabilities | (157) | (158) |
Total net liability | $ (170) | $ (170) |
EMPLOYEE RETIREMENT PLANS - Unr
EMPLOYEE RETIREMENT PLANS - Unrealized Loss Included in Accumulated Other Comprehensive (Loss) Income before Income Taxes (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Qualified | ||
Amounts in accumulated other comprehensive income (loss) before income taxes | ||
Net loss | $ 442 | $ 519 |
Net transition obligation | 0 | 1 |
Net prior service cost | 3 | 3 |
Total | 445 | 523 |
Non-Qualified | ||
Amounts in accumulated other comprehensive income (loss) before income taxes | ||
Net loss | 59 | 54 |
Net transition obligation | 0 | 0 |
Net prior service cost | 0 | 0 |
Total | $ 59 | $ 54 |
EMPLOYEE RETIREMENT PLANS - Def
EMPLOYEE RETIREMENT PLANS - Defined-benefit Pension Plans with an Accumulated Benefit Obligation in Excess of Plan Assets (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Qualified | ||
Information for the defined-benefit pension plans with an accumulated benefit obligation in excess of plan assets | ||
Projected benefit obligation | $ 945 | $ 1,044 |
Accumulated benefit obligation | 945 | 1,044 |
Fair value of plan assets | 679 | 704 |
Non-Qualified | ||
Information for the defined-benefit pension plans with an accumulated benefit obligation in excess of plan assets | ||
Projected benefit obligation | 170 | 170 |
Accumulated benefit obligation | 170 | 170 |
Fair value of plan assets | $ 0 | $ 0 |
EMPLOYEE RETIREMENT PLANS - Net
EMPLOYEE RETIREMENT PLANS - Net Periodic Pension Cost for Defined-benefit Pension Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Net periodic pension cost for the company's defined-benefit pension plans | |||
Pre-tax net loss from accumulated other comprehensive income (loss) into net periodic pension cost | $ 20 | ||
Qualified | |||
Net periodic pension cost for the company's defined-benefit pension plans | |||
Service cost | 3 | $ 3 | $ 3 |
Interest cost | 44 | 49 | 47 |
Expected return on plan assets | (46) | (44) | (46) |
Amortization of net loss | 19 | 17 | 18 |
Net periodic pension cost | 20 | 25 | 22 |
Actuarial (gain) loss, net | (34) | (50) | |
Non-Qualified | |||
Net periodic pension cost for the company's defined-benefit pension plans | |||
Service cost | 0 | 0 | |
Interest cost | 6 | 7 | 7 |
Amortization of net loss | 3 | 2 | 3 |
Net periodic pension cost | 9 | 9 | $ 10 |
Actuarial (gain) loss, net | (7) | $ (1) | |
Moores Furniture | |||
Net periodic pension cost for the company's defined-benefit pension plans | |||
Actuarial (gain) loss, net | $ (58) |
EMPLOYEE RETIREMENT PLANS - Qua
EMPLOYEE RETIREMENT PLANS - Qualified Defined-benefit Pension Plan Weighted Average Asset Allocation (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Plan Assets | ||
Unfunded commitments | $ 2 | |
Qualified | ||
Plan Assets | ||
Weighted average asset allocation (as a percent) | 100.00% | 100.00% |
Qualified | Equity securities | ||
Plan Assets | ||
Weighted average asset allocation (as a percent) | 55.00% | 49.00% |
Qualified | Debt securities | ||
Plan Assets | ||
Weighted average asset allocation (as a percent) | 28.00% | 32.00% |
Qualified | Other | ||
Plan Assets | ||
Weighted average asset allocation (as a percent) | 17.00% | 19.00% |
EMPLOYEE RETIREMENT PLANS - Q91
EMPLOYEE RETIREMENT PLANS - Qualified Defined-benefit Pension Plan Assets at Fair Value by Level within the Fair Value Hierarchy (Details) - Qualified - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Fair Value | |||
Private equity funds | $ 695 | $ 717 | $ 658 |
Total asset at net asset value | 259 | 185 | |
UNITED STATES | Common and Preferred Stocks | |||
Fair Value | |||
Private equity funds | 191 | 260 | |
Total asset at net asset value | 47 | 118 | |
UNITED STATES | Private Equity and Hedge Funds | |||
Fair Value | |||
Private equity funds | 36 | 37 | |
Total asset at net asset value | 0 | ||
UNITED STATES | Corporate Debt Securities | |||
Fair Value | |||
Private equity funds | 57 | 57 | |
Total asset at net asset value | 0 | 2 | |
UNITED STATES | US Treasury and Government | |||
Fair Value | |||
Private equity funds | 53 | 50 | |
Total asset at net asset value | 31 | ||
UNITED STATES | Common Collective Trust Fund | |||
Fair Value | |||
Private equity funds | 6 | 4 | |
UNITED STATES | Short-Term and other Investments | |||
Fair Value | |||
Private equity funds | 2 | 2 | |
International | Common and Preferred Stocks | |||
Fair Value | |||
Private equity funds | 191 | 90 | |
Total asset at net asset value | 125 | 16 | |
International | Private Equity and Hedge Funds | |||
Fair Value | |||
Private equity funds | 59 | 56 | |
Total asset at net asset value | 35 | 32 | |
International | Corporate Debt Securities | |||
Fair Value | |||
Private equity funds | 28 | 43 | |
Total asset at net asset value | 21 | 17 | |
International | Government and Other Debt Securities | |||
Fair Value | |||
Private equity funds | 59 | 80 | |
International | Buy-in Annuity | |||
Fair Value | |||
Private equity funds | 12 | ||
International | Short-Term and other Investments | |||
Fair Value | |||
Private equity funds | 1 | 38 | |
Level 1 | |||
Fair Value | |||
Private equity funds | 289 | 323 | |
Level 1 | UNITED STATES | Common and Preferred Stocks | |||
Fair Value | |||
Private equity funds | 144 | 142 | |
Level 1 | UNITED STATES | Corporate Debt Securities | |||
Fair Value | |||
Private equity funds | 31 | 27 | |
Level 1 | UNITED STATES | US Treasury and Government | |||
Fair Value | |||
Private equity funds | 15 | 46 | |
Level 1 | UNITED STATES | Short-Term and other Investments | |||
Fair Value | |||
Private equity funds | 2 | 2 | |
Level 1 | International | Common and Preferred Stocks | |||
Fair Value | |||
Private equity funds | 66 | 74 | |
Level 1 | International | Government and Other Debt Securities | |||
Fair Value | |||
Private equity funds | 31 | 27 | |
Level 1 | International | Short-Term and other Investments | |||
Fair Value | |||
Private equity funds | 5 | ||
Level 2 | |||
Fair Value | |||
Private equity funds | 87 | 130 | |
Level 2 | UNITED STATES | Common and Preferred Stocks | |||
Fair Value | |||
Private equity funds | 0 | ||
Level 2 | UNITED STATES | Corporate Debt Securities | |||
Fair Value | |||
Private equity funds | 26 | 28 | |
Level 2 | UNITED STATES | US Treasury and Government | |||
Fair Value | |||
Private equity funds | 7 | 4 | |
Level 2 | UNITED STATES | Common Collective Trust Fund | |||
Fair Value | |||
Private equity funds | 6 | 4 | |
Level 2 | International | Common and Preferred Stocks | |||
Fair Value | |||
Private equity funds | 0 | ||
Level 2 | International | Corporate Debt Securities | |||
Fair Value | |||
Private equity funds | 7 | 26 | |
Level 2 | International | Government and Other Debt Securities | |||
Fair Value | |||
Private equity funds | 28 | 53 | |
Level 2 | International | Buy-in Annuity | |||
Fair Value | |||
Private equity funds | 12 | ||
Level 2 | International | Short-Term and other Investments | |||
Fair Value | |||
Private equity funds | 1 | 15 | |
Level 3 | |||
Fair Value | |||
Private equity funds | 60 | 79 | |
Level 3 | UNITED STATES | Private Equity and Hedge Funds | |||
Fair Value | |||
Private equity funds | 36 | 37 | |
Level 3 | International | Private Equity and Hedge Funds | |||
Fair Value | |||
Private equity funds | $ 24 | 24 | |
Level 3 | International | Short-Term and other Investments | |||
Fair Value | |||
Private equity funds | $ 18 |
EMPLOYEE RETIREMENT PLANS - C92
EMPLOYEE RETIREMENT PLANS - Changes in the Fair Value of the Qualified Defined-benefit Pension Plan Level 3 Assets (Details) - Qualified - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Changes in the fair value of plan level 3 assets | ||
Balance at the beginning of the period | $ 79 | $ 88 |
Purchases | 6 | 6 |
Sales | (31) | (19) |
Unrealized (losses) gains | 6 | 4 |
Balance at the end of the period | $ 60 | $ 79 |
EMPLOYEE RETIREMENT PLANS - Ass
EMPLOYEE RETIREMENT PLANS - Assumptions - Tabular Disclosure (Details) - Defined-benefit pension plans | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Assumptions | |||
Discount rate for obligations (as a percent) | 3.30% | 3.50% | 4.00% |
Expected return on plan assets (as a percent) | 7.25% | 7.25% | 7.25% |
Rate of compensation increase (as a percent) | 0.00% | 0.00% | 0.00% |
Discount rate for net periodic pension cost (as a percent) | 3.50% | 4.00% | 3.80% |
EMPLOYEE RETIREMENT PLANS - A94
EMPLOYEE RETIREMENT PLANS - Assumptions - General Disclosures (Details) - Defined-benefit pension plans | 12 Months Ended | 120 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2008 | Dec. 31, 2016 | |
Assumptions | |||||
Discount rate for obligations (as a percent) | 3.30% | 3.50% | 4.00% | 3.50% | |
Expected return on plan assets (as a percent) | 7.25% | 7.25% | 7.25% | ||
Actual annual rate of return on pension plan assets (as a percent) | 13.90% | 8.30% | (1.80%) | (32.10%) | 4.30% |
Equity securities | |||||
Assumptions | |||||
Asset allocation (as a percent) | 50.00% | ||||
Debt securities | |||||
Assumptions | |||||
Asset allocation (as a percent) | 30.00% | ||||
Alternative investments | |||||
Assumptions | |||||
Asset allocation (as a percent) | 20.00% | ||||
Minimum | |||||
Assumptions | |||||
Discount rate for obligations (as a percent) | 1.50% | 1.50% | 2.00% | 1.50% | |
Liabilities having a discount rate for obligations (as a percent) | 3.40% | 3.80% | 4.00% | 3.80% | |
Maximum | |||||
Assumptions | |||||
Discount rate for obligations (as a percent) | 3.60% | 4.00% | 4.30% | 4.00% |
EMPLOYEE RETIREMENT PLANS - Oth
EMPLOYEE RETIREMENT PLANS - Other and Cash Flows (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Other US post-retirement benefit plans | ||
Employee Retirement Plans | ||
Aggregate present value of unfunded accumulated post-retirement benefit obligation | $ 10 | $ 9 |
Qualified | ||
Employee Retirement Plans | ||
Contribution to qualified defined-benefit pension plans | 45 | |
Payments to participants defined-benefit pension plans | 47 | |
Foreign defined-benefit pension plans | ||
Employee Retirement Plans | ||
Payments to participants defined-benefit pension plans | 3 | |
Non-Qualified | ||
Employee Retirement Plans | ||
Payments to participants defined-benefit pension plans | $ 13 |
EMPLOYEE RETIREMENT PLANS - Ben
EMPLOYEE RETIREMENT PLANS - Benefits Expected to be Paid in Each of the Next Five Years, and in Aggregate for the Five Years Thereafter (Details) $ in Millions | Dec. 31, 2017USD ($) |
Qualified | |
Benefits expected to be paid in each of the next five years, and in aggregate for the five years thereafter | |
2,018 | $ 47 |
2,019 | 48 |
2,020 | 49 |
2,021 | 50 |
2,022 | 50 |
2023-2027 | 262 |
Non-Qualified | |
Benefits expected to be paid in each of the next five years, and in aggregate for the five years thereafter | |
2,018 | 13 |
2,019 | 12 |
2,020 | 12 |
2,021 | 12 |
2,022 | 13 |
2023-2027 | $ 56 |
SHAREHOLDERS' EQUITY - Stock Re
SHAREHOLDERS' EQUITY - Stock Repurchase (Details) - USD ($) shares in Millions, $ in Millions | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | May 31, 2017 | |
Equity [Abstract] | ||||
Stock repurchase program, authorized amount | $ 1,500 | |||
Repurchase and retirement of common stock (in shares) | 9.2 | 14.9 | 17.2 | |
Repurchase and retirement of common stock to offset the dilutive impact of the grant of long-term stock awards (in shares) | 0.9 | 1.1 | 0.7 | |
Remaining authorized repurchase amount | $ 1,300 | |||
Repurchase and retirement of common stock | $ 331 | $ 459 | $ 456 |
SHAREHOLDERS' EQUITY - Spin off
SHAREHOLDERS' EQUITY - Spin off (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2015USD ($) | |
SHAREHOLDERS' EQUITY | |
Separation of TopBuild Corp. | $ 828 |
Retained Earnings (Deficit) | |
SHAREHOLDERS' EQUITY | |
Separation of TopBuild Corp. | 828 |
TopBuild | Retained Earnings (Deficit) | |
SHAREHOLDERS' EQUITY | |
Separation of TopBuild Corp. | $ 828 |
SHAREHOLDERS' EQUITY - Dividend
SHAREHOLDERS' EQUITY - Dividends (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Equity [Abstract] | |||
Cash dividends per common share paid (in dollars per share) | $ 0.405 | $ 0.385 | $ 0.365 |
Cash dividends per common share declared (in dollars per share) | $ 0.41 | $ 0.390 | $ 0.37 |
SHAREHOLDERS' EQUITY - Accumula
SHAREHOLDERS' EQUITY - Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Equity [Abstract] | ||
Cumulative translation adjustments, net | $ 282 | $ 177 |
Unrealized loss on interest rate swaps, net | (12) | (15) |
Unrecognized net loss and prior service cost, net | (335) | (397) |
Accumulated other comprehensive loss | (65) | (235) |
Income tax benefit on cumulative translation adjustment | 2 | |
Income tax benefit on unrealized loss on interest rate swap securities | 4 | 2 |
Income tax benefit on prior service cost and net loss | $ 154 | $ 164 |
RECLASSIFICATIONS FROM OTHER101
RECLASSIFICATIONS FROM OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reclassifications from accumulated other comprehensive (loss) income | ||||
Income from cash and cash investments and short-term bank deposits | $ 4 | $ 4 | $ 3 | |
Income tax expense | (305) | (296) | (293) | |
Net income available to common shareholders | 528 | 485 | 350 | |
Other nonoperating income (expense) | (6) | 6 | 0 | |
Accumulated Defined Benefit Plans Adjustment, Net Gain (Loss) Attributable to Parent [Member] | ||||
Reclassifications from accumulated other comprehensive (loss) income | ||||
Reclassification from accumulated other comprehensive income, before tax | 86 | 19 | 21 | |
Accumulated Other Comprehensive Income (Loss) - Actuarial losses, net | ||||
Reclassifications from accumulated other comprehensive (loss) income | ||||
Reclassification from AOCI, Current Period, Tax | (13) | (7) | (8) | |
Reclassification from accumulated other comprehensive income, net of tax | 73 | 12 | 13 | |
Accumulated Other Comprehensive Income (Loss) - Interest rate swaps | Amount reclassified | ||||
Reclassifications from accumulated other comprehensive (loss) income | ||||
Income tax expense | (1) | (1) | 0 | |
Net income available to common shareholders | 3 | 1 | 2 | |
Accumulated Other Comprehensive Income (Loss) - Available -for-Sale Securities | Amount reclassified | ||||
Reclassifications from accumulated other comprehensive (loss) income | ||||
Income tax expense | 0 | 15 | 0 | |
Net income available to common shareholders | 0 | 12 | 0 | |
Other nonoperating income (expense) | 0 | (3) | 0 | |
Federal | ||||
Reclassifications from accumulated other comprehensive (loss) income | ||||
Income tax expense | $ 13 | |||
Interest Rate Swaps | Accumulated Other Comprehensive Income (Loss) - Interest rate swaps | Amount reclassified | ||||
Reclassifications from accumulated other comprehensive (loss) income | ||||
Income from cash and cash investments and short-term bank deposits | $ 4 | $ 2 | $ 2 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Net Sales | |||||||||||
Net Sales | $ 1,874 | $ 1,936 | $ 2,057 | $ 1,777 | $ 1,759 | $ 1,877 | $ 2,001 | $ 1,720 | $ 7,644 | $ 7,357 | $ 7,142 |
Operating Profit (Loss) | 1,169 | 1,053 | 914 | ||||||||
Total other income (expense), net | (284) | (223) | (225) | ||||||||
Income from continuing operations before income taxes | 885 | 830 | 689 | ||||||||
Assets | 5,488 | 5,137 | 5,488 | 5,137 | 5,664 | ||||||
Export sales from U.S. included in net sales | $ 232 | $ 226 | $ 217 | ||||||||
Maximum | |||||||||||
Net Sales | |||||||||||
Intra-company sales between segments in percentage | 1.00% | 1.00% | 1.00% | ||||||||
One customer | Customer concentration risk | Sales | |||||||||||
Net Sales | |||||||||||
Net Sales | $ 2,535 | $ 2,480 | $ 2,378 | ||||||||
UNITED STATES | |||||||||||
Net Sales | |||||||||||
Long-lived assets | 1,582 | 1,508 | 1,582 | 1,508 | 1,487 | ||||||
UNITED STATES | Sales | |||||||||||
Net Sales | |||||||||||
Net Sales | 5,821 | 5,605 | 5,407 | ||||||||
Europe | |||||||||||
Net Sales | |||||||||||
Long-lived assets | 482 | 417 | 482 | 417 | 427 | ||||||
Operating Segments | |||||||||||
Net Sales | |||||||||||
Net Sales | 7,644 | 7,357 | 7,142 | ||||||||
Operating Profit (Loss) | 1,274 | 1,162 | 1,023 | ||||||||
Assets | 4,418 | 4,183 | 4,418 | 4,183 | 4,161 | ||||||
Operating Segments | Plumbing Products | |||||||||||
Net Sales | |||||||||||
Net Sales | 3,735 | 3,526 | 3,341 | ||||||||
Operating Profit (Loss) | 698 | 642 | 512 | ||||||||
Assets | 2,260 | 2,009 | 2,260 | 2,009 | 1,972 | ||||||
Operating Segments | Decorative Architectural Products | |||||||||||
Net Sales | |||||||||||
Net Sales | 2,205 | 2,092 | 2,020 | ||||||||
Operating Profit (Loss) | 434 | 430 | 403 | ||||||||
Assets | 961 | 894 | 961 | 894 | 874 | ||||||
Operating Segments | Cabinetry Products | |||||||||||
Net Sales | |||||||||||
Net Sales | 934 | 970 | 1,025 | ||||||||
Operating Profit (Loss) | 90 | 93 | 51 | ||||||||
Assets | 524 | 537 | 524 | 537 | 567 | ||||||
Operating Segments | Windows and Other Specialty Products | |||||||||||
Net Sales | |||||||||||
Net Sales | 770 | 769 | 756 | ||||||||
Operating Profit (Loss) | 52 | (3) | 57 | ||||||||
Assets | 673 | 743 | 673 | 743 | 748 | ||||||
Reportable Geographical Components | |||||||||||
Net Sales | |||||||||||
Net Sales | 7,644 | 7,357 | 7,142 | ||||||||
Operating Profit (Loss) | 1,274 | 1,162 | 1,023 | ||||||||
Assets | 4,418 | 4,183 | 4,418 | 4,183 | 4,161 | ||||||
Reportable Geographical Components | North America | |||||||||||
Net Sales | |||||||||||
Net Sales | 6,069 | 5,834 | 5,645 | ||||||||
Operating Profit (Loss) | 1,072 | 961 | 841 | ||||||||
Assets | 3,211 | 3,001 | 3,211 | 3,001 | 2,925 | ||||||
Reportable Geographical Components | International, principally Europe | |||||||||||
Net Sales | |||||||||||
Net Sales | 1,575 | 1,523 | 1,497 | ||||||||
Operating Profit (Loss) | 202 | 201 | 182 | ||||||||
Assets | 1,207 | 1,182 | 1,207 | 1,182 | 1,236 | ||||||
Corporate | |||||||||||
Net Sales | |||||||||||
General corporate expense, net | (105) | (109) | (109) | ||||||||
Assets | $ 1,070 | $ 954 | $ 1,070 | $ 954 | $ 1,503 |
SEGMENT INFORMATION - Depreciat
SEGMENT INFORMATION - Depreciation and Amortization (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Depreciation and Amortization | |||
Property Additions | $ 173 | $ 180 | $ 151 |
Depreciation and Amortization | 127 | 134 | 127 |
Operating Segments | |||
Depreciation and Amortization | |||
Property Additions | 161 | 170 | 150 |
Depreciation and Amortization | 114 | 115 | 114 |
Operating Segments | Plumbing Products | |||
Depreciation and Amortization | |||
Property Additions | 115 | 110 | 87 |
Depreciation and Amortization | 63 | 57 | 56 |
Operating Segments | Decorative Architectural Products | |||
Depreciation and Amortization | |||
Property Additions | 19 | 22 | 16 |
Depreciation and Amortization | 16 | 16 | 16 |
Operating Segments | Cabinetry Products | |||
Depreciation and Amortization | |||
Property Additions | 14 | 8 | 6 |
Depreciation and Amortization | 14 | 21 | 24 |
Operating Segments | Windows and Other Specialty Products | |||
Depreciation and Amortization | |||
Property Additions | 13 | 30 | 41 |
Depreciation and Amortization | 21 | 21 | 18 |
Corporate | |||
Depreciation and Amortization | |||
Property Additions | 12 | 10 | 1 |
Depreciation and Amortization | $ 13 | $ 19 | $ 13 |
OTHER INCOME (EXPENSE), NET (De
OTHER INCOME (EXPENSE), NET (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Net Investment Income [Line Items] | ||||
Loss on sales of businesses, net | $ (13) | $ 0 | $ 0 | |
Income from cash and cash investments and short-term bank deposits | 4 | 4 | 3 | |
Equity investment income, net | 1 | 2 | 2 | |
Foreign currency transaction losses | 0 | (3) | (14) | |
Other items, net | 1 | (5) | 3 | |
Total other, net | (6) | 6 | 0 | |
Auction rate securities | ||||
Net Investment Income [Line Items] | ||||
Realized gains (losses) from investments | 0 | 3 | 0 | |
Private equity funds | ||||
Net Investment Income [Line Items] | ||||
Realized gains (losses) from investments | 3 | 5 | 6 | |
Impairment of private equity funds | (2) | $ 0 | $ 0 | |
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Moores Furniture | ||||
Net Investment Income [Line Items] | ||||
Loss on sales of businesses, net | $ (64) | |||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Arrow Fastener | ||||
Net Investment Income [Line Items] | ||||
Loss on sales of businesses, net | $ 51 |
INCOME TAXES - Income from Cont
INCOME TAXES - Income from Continuing Operations before Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income from continuing operations before income taxes | |||
U.S. | $ 731 | $ 614 | $ 496 |
Foreign | 154 | 216 | 193 |
Income from continuing operations before income taxes | 885 | 830 | 689 |
Currently payable: | |||
U.S. Federal | 196 | 73 | 10 |
State and local | 31 | 24 | 27 |
Foreign | 68 | 69 | 56 |
Deferred: | |||
U.S. Federal | 10 | 140 | 192 |
State and local | (1) | 2 | 3 |
Foreign | 1 | (12) | 5 |
Income tax (benefit) expense | 305 | 296 | $ 293 |
Deferred tax assets at December 31: | |||
Receivables | 8 | 10 | |
Inventories | 13 | 17 | |
Other assets, principally stock-based compensation | 36 | 58 | |
Accrued liabilities | 45 | 53 | |
Long-term liabilities | 169 | 280 | |
Net operating loss carryforward | 53 | 51 | |
Capital loss carryforward | 1 | 0 | |
Tax credit carryforward | 8 | 9 | |
Total | 333 | 478 | |
Valuation allowance | (47) | (45) | |
Total | 286 | 433 | |
Deferred tax liabilities at December 31: | |||
Property and equipment | 98 | 127 | |
Intangibles | 139 | 222 | |
Investment in foreign subsidiaries | 7 | 15 | |
Other | 20 | 21 | |
Total | 264 | 385 | |
Net deferred tax asset at December 31 | $ 22 | $ 48 |
INCOME TAXES - General Textual
INCOME TAXES - General Textual Disclosures (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Taxes | |||||
Net long-term deferred tax assets | $ 48 | $ 68 | $ 48 | $ 68 | |
Tax Cuts and Jobs Act of 2017, deferred tax liability, income tax (expense) benefit | 20 | ||||
Tax Cuts and Jobs Act of 2017, deferred tax asset, income tax expense (benefit) | $ 3 | ||||
U.S. Federal statutory tax rate-expense (as a percent) | 35.00% | 35.00% | 35.00% | ||
Loss on disposal | $ 13 | $ 0 | $ 0 | ||
Income tax benefit | (305) | (296) | (293) | ||
Valuation allowance | 47 | 45 | 47 | 45 | |
Income tax effect from share-based compensation, net | 53 | ||||
Deferred tax asset related to net operating loss and tax credit carryforwards | 61 | 60 | |||
Deferred tax assets related to net operating loss and tax credit carryforwards expiring between 2020 and 2032 for 2012 and between 2020 and 2033 for 2013 | 33 | 35 | |||
Deferred tax assets related to net operating loss and tax credit carryforwards with unlimited expiration period | 28 | 25 | |||
Income taxes paid | 258 | 190 | 107 | ||
State | |||||
Income Taxes | |||||
Tax benefit, reversal of accrual for uncertain tax positions, expiration of statutes of limitations and settlements on audits | 5 | 8 | 5 | ||
Non-cash charge to deferred income tax (benefit) expense due to change in deferred tax assets valuation allowance | (1) | 5 | (1) | ||
Foreign | |||||
Income Taxes | |||||
Non-cash charge to deferred income tax (benefit) expense due to change in deferred tax assets valuation allowance | 6 | 12 | |||
Income tax benefit | (19) | ||||
Federal | |||||
Income Taxes | |||||
Disproportionate Tax Effect in OCI | 14 | ||||
Income tax benefit | 13 | ||||
TopBuild | |||||
Income Taxes | |||||
Valuation allowance | $ 21 | ||||
Other non-current assets | |||||
Income Taxes | |||||
Net long-term deferred tax assets | 48 | 68 | 48 | 68 | |
Other non-current liabilities | |||||
Income Taxes | |||||
Net long-term deferred tax liabilities | 26 | $ 20 | $ 26 | $ 20 | |
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Moores Furniture | |||||
Income Taxes | |||||
Loss on disposal | $ 64 |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of the U.S. Federal Statutory Tax Rate to the Income Tax (Benefit) Expense (Details) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
U.S. Federal statutory tax rate-expense (as a percent) | 35.00% | 35.00% | 35.00% |
State and local taxes, net of U.S. Federal tax benefit (as a percent) | 2.00% | 2.00% | 3.00% |
Lower taxes on foreign earnings (as a percent) | (1.00%) | (2.00%) | (1.00%) |
U.S. and foreign taxes on distributed and undistributed foreign earnings (as a percent) | 1.00% | 1.00% | 3.00% |
Domestic production deduction (as a percent) | (2.00%) | (1.00%) | (0.00%) |
Stock-based compensation | (2.00%) | (0.00%) | (0.00%) |
Business divestitures with no tax impact | 4.00% | 0.00% | 0.00% |
Change in U.S. Federal tax law | (2.00%) | (0.00%) | (0.00%) |
U.S. Federal valuation allowance (as a percent) | 0.00% | 0.00% | 3.00% |
Other, net (as a percent) | (1.00%) | 1.00% | 0.00% |
Effective tax rate - (benefit) expense (as a percent) | 34.00% | 36.00% | 43.00% |
INCOME TAXES - Uncertain Tax Po
INCOME TAXES - Uncertain Tax Positions (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Uncertain Tax Positions | ||
Balance at the beginning of the period | $ 46 | $ 43 |
Total balance at beginning of the period | 55 | 53 |
Current year tax positions: Additions | 13 | 11 |
Current year tax positions: Reductions | 0 | (1) |
Prior year tax positions: Additions | 3 | 1 |
Prior year tax positions: Reductions | (1) | (2) |
Lapse of applicable statute of limitations | (7) | (6) |
Balance at the end of the period | 54 | 46 |
Total balance at the end of the period | 62 | 55 |
Unrecognized Tax Benefits, Income Tax Penalties and Interest Expense [Abstract] | ||
Interest and penalties at period start | 9 | 10 |
Unrecognized Tax Benefits, Income Tax Penalties and Interest Expense | (1) | (1) |
Interest and penalties at period end | $ 8 | $ 9 |
INCOME TAXES - Uncertain Tax109
INCOME TAXES - Uncertain Tax Positions and Interest and Penalties - Additional Disclosures (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Income Taxes | |||
Unrecognized tax benefits that would impact effective tax rate if recognized | $ 43 | $ 30 | |
Liability for uncertain tax positions | 62 | 55 | $ 53 |
Reasonably possible reduction in the liability for uncertain tax positions | 8 | ||
Other non-current liabilities | |||
Income Taxes | |||
Liability for uncertain tax positions | 59 | 54 | |
Other non-current assets | |||
Income Taxes | |||
Liability for uncertain tax positions | $ 3 | $ 1 |
EARNINGS PER COMMON SHARE - Rec
EARNINGS PER COMMON SHARE - Reconciliations of the Numerators and Denominators Used in the Computations of Basic and Diluted Earnings per Common Share (Details) - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Numerator (basic and diluted): | |||
Income from continuing operations | $ 533 | $ 491 | $ 357 |
Less: Allocation to unvested restricted stock awards | 5 | 6 | 5 |
Income from continuing operations attributable to common shareholders | 528 | 485 | 352 |
(Loss) income from discontinued operations, net | 0 | 0 | (2) |
Less: Allocation to unvested restricted stock awards | 0 | 0 | 0 |
(Loss) income from discontinued operations attributable to common shareholders | 0 | 0 | (2) |
Net income available to common shareholders | $ 528 | $ 485 | $ 350 |
Denominator: | |||
Basic common shares (based upon weighted average) (in shares) | 314 | 326 | 338 |
Add: Stock option dilution (in shares) | 4 | 4 | 3 |
Diluted common shares (in shares) | 318 | 330 | 341 |
EARNINGS PER COMMON SHARE - Ant
EARNINGS PER COMMON SHARE - Antidilutive Securities (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Stock Options | |||
Antidilutive securities excluded from computation of earnings per share | |||
Antidilutive effect on computation of diluted earnings per common share (in shares) | 354 | 300 | 5,000 |
Long-term stock awards | |||
Antidilutive securities excluded from computation of earnings per share | |||
Antidilutive effect on computation of diluted earnings per common share (in shares) | 3,000 | 4,000 |
OTHER COMMITMENTS AND CONTIN112
OTHER COMMITMENTS AND CONTINGENCIES - Warranty (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Changes in the company's warranty liability | ||
Balance at January 1 | $ 192 | $ 152 |
Accruals for warranties issued during the year | 63 | 66 |
Accruals related to pre-existing warranties | 9 | 33 |
Settlements made (in cash or kind) during the year | (59) | (56) |
Other, net (including currency translation) | 0 | (3) |
Balance at December 31 | 205 | $ 192 |
Windows and Other Specialty Products | ||
Product Warranty Liability [Line Items] | ||
Increase in future warranty claims | $ 31 |
OTHER COMMITMENTS AND CONTIN113
OTHER COMMITMENTS AND CONTINGENCIES - Investments (Details) $ in Millions | Dec. 31, 2017USD ($) |
Private equity funds, capital calls | Maximum | |
Investments | |
Company's obligation to make additional capital contributions | $ 5 |
INTERIM FINANCIAL INFORMATIO114
INTERIM FINANCIAL INFORMATION (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Net sales | $ 1,874 | $ 1,936 | $ 2,057 | $ 1,777 | $ 1,759 | $ 1,877 | $ 2,001 | $ 1,720 | $ 7,644 | $ 7,357 | $ 7,142 |
Gross profit | 616 | 650 | 737 | 608 | 573 | 614 | 700 | 569 | 2,611 | 2,456 | 2,253 |
Net income (loss) | $ 87 | $ 148 | $ 158 | $ 140 | $ 98 | $ 134 | $ 150 | $ 109 | $ 533 | $ 491 | $ 355 |
Basic: | |||||||||||
Net income (in dollars per share) | $ 0.28 | $ 0.47 | $ 0.50 | $ 0.44 | $ 0.30 | $ 0.41 | $ 0.45 | $ 0.33 | $ 1.68 | $ 1.49 | $ 1.03 |
Diluted: | |||||||||||
Net income (in dollars per share) | $ 0.27 | $ 0.46 | $ 0.49 | $ 0.43 | $ 0.30 | $ 0.40 | $ 0.45 | $ 0.32 | $ 1.66 | $ 1.47 | $ 1.02 |
SCHEDULE II. VALUATION AND Q115
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Allowances for doubtful accounts, deducted from accounts receivable | |||
Movement in valuation and qualifying accounts | |||
Balance at Beginning of Period | $ 11 | $ 11 | $ 14 |
Additions, Charged to Costs and Expenses | 5 | 4 | 4 |
Additions, Charged to Other Accounts | 0 | 0 | 0 |
Deductions | (3) | (4) | (7) |
Balance at End of Period | 13 | 11 | 11 |
Valuation Allowance on deferred tax assets | |||
Movement in valuation and qualifying accounts | |||
Balance at Beginning of Period | 45 | 49 | 66 |
Additions, Charged to Costs and Expenses | 0 | 11 | 36 |
Additions, Charged to Other Accounts | 2 | 0 | 0 |
Deductions | 0 | (15) | (53) |
Balance at End of Period | 47 | 45 | $ 49 |
Valuation Allowance on deferred tax assets | Other Comprehensive Income (Loss) | |||
Movement in valuation and qualifying accounts | |||
Additions, Charged to Other Accounts | $ 2 | ||
Deductions | (2) | ||
Certain net operating loss carryforward | |||
Movement in valuation and qualifying accounts | |||
Deductions | $ (13) |