Masco (MAS) 10-Q 29 Oct 09 2009 Q3 Quarterly report Financial data

Document and Company Informatio

Document and Company Information (USD $)
	9 Months Ended Sep. 30, 2009	Oct. 28, 2009	Jun. 30, 2009
Document and Company Information [Abstract]
Entity Registrant Name	MASCO CORP /DE/
Entity Central Index Key	0000062996
Document Type	10-Q
Document Period End Date	2009-09-30
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$5,516,595,000
Entity Common Stock, Shares Outstanding (actual number)		359,100,000

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Millions	Sep. 30, 2009	Dec. 31, 2008
Current assets:
Cash and cash investments	$1,199	$1,028
Receivables	1,193	999
Prepaid expenses and other	325	332
Inventories:
Finished goods	426	483
Raw material	283	333
Work in process	89	125
Total inventories	798	941
Total current assets	3,515	3,300
Property and equipment, net	2,007	2,136
Goodwill	3,387	3,371
Other intangible assets, net	293	299
Other assets	360	377
Total assets	9,562	9,483
Current liabilities:
Notes payable	369	71
Accounts payable	623	531
Accrued liabilities	867	945
Total current liabilities	1,859	1,547
Long-term debt	3,606	3,915
Deferred income taxes and other	1,028	1,040
Total liabilities	6,493	6,502
Masco Corporation's shareholders' equity:
Common shares, par value $1 per share, Authorized shares: 1,400,000,000; issued and outstanding: 2009 - 350,400,000; 2008 - 351,400,000	350	351
Preferred shares authorized: 1,000,000; issued and outstanding: 2009 - None; 2008 - None	0	0
Paid-in capital	34	0
Retained earnings	2,083	2,162
Accumulated other comprehensive income	421	308
Total Masco Corporation's shareholders' equity	2,888	2,821
Noncontrolling interest	181	160
Total equity	3,069	2,981
Total liabilities and equity	$9,562	$9,483

1_Condensed Consolidated Balanc

Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) (USD $)
	Sep. 30, 2009	Dec. 31, 2008
Masco Corporation's shareholders' equity:
Common shares, par value	1	1
Common shares, shares authorized	1,400,000,000	1,400,000,000
Common shares, shares issued	350,400,000	351,400,000
Common shares, shares outstanding	350,400,000	351,400,000
Preferred shares, shares authorized	1,000,000	1,000,000
Preferred shares, shares issued	0	0
Preferred shares, shares outstanding	0	0

Condensed Consolidated Statemen

Condensed Consolidated Statements of Income (Unaudited) (USD $)
In Millions, except Per Share data	3 Months Ended Sep. 30, 2009	3 Months Ended Sep. 30, 2008	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
Net sales	$2,094	$2,511	$5,923	$7,560
Cost of sales	1,524	1,863	4,392	5,592
Gross profit	570	648	1,531	1,968
Selling, general and administrative expenses	432	454	1,272	1,398
Charge for defined-benefit plan curtailment	0	0	8	0
Operating profit	138	194	251	570
Other income (expense), net:
Interest expense	(56)	(59)	(169)	(172)
Impairment charge for financial investments	0	(1)	(10)	(30)
Other, net	7	4	22	6
Total Other income (expense), net:	(49)	(56)	(157)	(196)
Income from continuing operations before income taxes	89	138	94	374
Income taxes	26	92	35	207
Income from continuing operations	63	46	59	167
(Loss) from discontinued operations, net	(23)	(2)	(30)	(15)
Net income	40	44	29	152
Less: Net income attributable to noncontrolling interest	12	11	27	35
Net income attributable to Masco Corporation	28	33	2	117
Basic:
Income from continuing operations	0.14	0.09	0.09	0.36
(Loss) from discontinued operations, net	-0.06	-0.01	-0.08	-0.04
Net income	0.08	0.09	$0	0.31
Diluted:
Income from continuing operations	0.14	0.09	0.09	0.36
(Loss) from discontinued operations, net	-0.06	-0.01	-0.08	-0.04
Net income	0.08	0.09	$0	0.31
Amounts attributable to Masco Corporation:
Income from continuing operations	51	35	32	132
(Loss) from discontinued operations, net	(23)	(2)	(30)	(15)
Net income	$28	$33	$2	$117

2_Condensed Consolidated Statem

Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Millions	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES:
Cash provided by operations	$384	$528
(Increase) in receivables	(187)	(104)
Decrease (increase) in inventories	149	(5)
Increase in accounts payable and accrued liabilities, net	69	98
Net cash from operating activities	415	517
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES:
Increase in debt	4	0
Payment of debt	(12)	(22)
Purchase of Company common stock	(11)	(160)
Cash dividends paid	(139)	(251)
Dividend payment to noncontrolling interest	(16)	(22)
Net cash (for) financing activities	(174)	(455)
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES:
Capital expenditures	(70)	(142)
Proceeds from disposition of:
Marketable securities	4	10
Other financial investments, net	2	42
Businesses, net of cash disposed	3	179
Property and equipment	20	5
Acquisition of businesses, net of cash acquired	(8)	(19)
Other, net	(25)	(19)
Net cash (for) from investing activities	(74)	56
Effect of exchange rate changes on cash and cash investments	4	(10)
CASH AND CASH INVESTMENTS:
Increase for the period	171	108
At January 1	1,028	922
At September 30	$1,199	$1,030

Accounting Policies

Accounting Policies
	9 Months Ended Sep. 30, 2009 USD / shares
Accounting Policies [Abstract]
Accounting Policies	A. In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments, of a normal recurring nature, necessary to present fairly its financial position as at September30, 2009 and the results of operations for the three months and nine months ended September30, 2009 and 2008 and cash flows for the nine months ended September30, 2009 and 2008. The condensed consolidated balance sheet at December31, 2008 was derived from audited financial statements. Certain prior-year amounts have been reclassified to conform to the 2009 presentation in the condensed consolidated financial statements. The results of operations related to 2009 and 2008 discontinued operations have been separately stated in the accompanying condensed consolidated statements of income for the three months and nine months ended September30, 2009 and 2008. In the Companys condensed consolidated statements of cash flows for the nine months ended September30, 2009 and 2008, cash flows of discontinued operations are not separately classified. The Company has evaluated subsequent events through October29, 2009, the date the Companys condensed consolidated financial statements were issued. Recently Issued Accounting Pronouncements In May2009, the FASB issued new guidance regarding subsequent events. This new guidance requires the disclosure of the date through which an entity has evaluated subsequent events and whether that date represents the date the financial statements were issued or were available to be issued. The Company adopted the new guidance effective June30, 2009; such adoption did not have an effect on its condensed consolidated financial statements. In April2009, the FASB issued new guidance regarding accounting for assets acquired and liabilities assumed in a business combination that arise from contingencies. This new guidance amends and clarifies the accounting, measurement and recognition provisions and the related disclosures arising from contingencies in a business combination. The new guidance is effective for the Company for any business combination that is completed subsequent to January 1, 2009. In April2009, the FASB issued new guidance regarding determining fair value when the volume and level of activity for the asset or liability have significantly decreased and identifying transactions that are not orderly. This new guidance provides additional guidance for estimating fair value when the volume and level of market activity for an asset or liability have significantly decreased when compared with normal market activity for the asset or liability. If there is a significant decrease in the volume and activity for the asset or liability, transactions or quoted prices may not be determinative of fair value in an orderly transaction and further analysis and adjustment of the transactions or quoted prices may be necessary. This new guidance was effective for the quarter ended June30, 2009 and there were not any adjustments to the Companys estimates of fair value for assets and liabilities measured at fair value upon adoption. In April2009, the FASB i

Discontinued Operations

Discontinued Operations
	9 Months Ended Sep. 30, 2009 USD / shares
Discontinued Operations [Abstract]
Discontinued Operations	B. On July31, 2009, the Company completed the sale of a European business unit in the Plumbing Products segment. The Company received cash of $2million and recognized a net loss of $22 million for the sale of this business unit. During the second quarter of 2009, the Company recorded income of $1million included in gain on disposal of discontinued operations related to cash received for a disposition completed in prior years. During the first quarter of 2008, the Company determined that several European business units (previously included in the Plumbing Products segment and the Other Specialty Products segment) were not core to the Companys long-term growth strategy and, accordingly, embarked on a plan of disposition; the dispositions were completed in August2008. During the second quarter of 2008, the Company recorded income of $6million related to a previously recorded impairment charge. The Company has accounted for the 2009 and 2008 dispositions as discontinued operations. Selected financial information for these discontinued operations was as follows, in millions: Three Months Ended Nine Months Ended September 30 September 30 2009 2008 2009 2008 Net sales $ 4 $ 24 $ 30 $ 162 (Loss) income from discontinued operations $ (2 ) $ (4 ) $ (10 ) $ 7 (Loss) gain on disposal of discontinued operations (22 ) (4 ) (21 ) 3 Impairment of assets held for sale 6 (45 ) (Loss)before income tax (24 ) (2 ) (31 ) (35 ) Income tax benefit 1 1 20 (Loss)from discontinued operations, net $ (23 ) $ (2 ) $ (30 ) $ (15 ) The unusual relationship between income taxes and lossbefore income taxes (excluding the impairment charge for assets held for sale) resulted primarily from certain losses providing no current tax benefit and from income not subject to taxes.

Stock Based Compensation

Stock Based Compensation
	9 Months Ended Sep. 30, 2009 USD / shares
Stock Based Compensation [Abstract]
Stock Based Compensation	C. The Companys 2005 Long Term Stock Incentive Plan (the 2005 Plan) provides for the issuance of stock-based incentives in various forms to employees and non-employee Directors of the Company. At September30, 2009, outstanding stock-based incentives were in the form of long-term stock awards, stock options, phantom stock awards and stock appreciation rights. Pre-tax compensation expense (income)and the related income tax benefit, for these stock-based incentives, were as follows, in millions: Three Months Ended Nine Months Ended September 30, September 30, 2009 2008 2009 2008 Long-term stock awards $ 7 $ 10 $ 28 $ 33 Stock options 6 10 21 28 Phantom stock awards and stock appreciation rights 3 1 5 (2 ) Total $ 16 $ 21 $ 54 $ 59 Income tax benefit $ 6 $ 8 $ 20 $ 22 In June2009, the Company recognized $6million of accelerated stock compensation expense (for previously granted stock awards and options) related to the retirement from full-time employment of the Companys Executive Chairman of the Board of Directors; he will continue to serve as a non-executive, non-employee Chairman of the Board of Directors. Long-Term Stock Awards Long-term stock awards are granted to key employees and non-employee Directors of the Company and do not cause net share dilution inasmuch as the Company continues the practice of repurchasing and retiring an equal number of shares on the open market. The Companys long-term stock award activity was as follows, shares in millions: Nine Months Ended September 30, 2009 2008 Unvested stock award shares at January 1 8 9 Weighted average grant date fair value $ 26 $ 28 Stock award shares granted 2 2 Weighted average grant date fair value $ 8 $ 21 Stock award shares vested 1 2 Weighted average grant date fair value $ 26 $ 26 Stock award shares forfeited Weighted average grant date fair value $ 25 $ 28 Unvested stock award shares at September 30 9 9 Weighted average grant date fair value $ 22 $ 26 At September30, 2009 and 2008, there was $135million and $172million, respectively, of total unrecognized compensation expense related to unvested stock awards; such awards had a weighted average remaining vesting period of seven years at both dates. The total market value (at the vesting date) of stock award shares which vested during the nine months ended September30, 2009 and 2008 was $16million and $29million, respectively. Stock Options Stock options are granted to key employees and non-employee Directors of the Company. The exercise price equals the market price of the Companys common stock at the grant date. These options generally become exercisable (vest ratably) over five y

Employee Retirement Plans

Employee Retirement Plans
	9 Months Ended Sep. 30, 2009 USD / shares
Employee Retirement Plans [Abstract]
Employee Retirement Plans	D. The Company sponsors qualified defined-benefit and defined-contribution retirement plans for most of its employees. In addition to the Companys qualified defined-benefit pension plans, the Company has 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 Organization and Compensation Committee of the Board of Directors. Net periodic pension cost for the Companys defined-benefit pension plans was as follows, in millions: Three Months ended September 30, 2009 2008 Qualified Non-Qualified Qualified Non-Qualified Service cost $ 3 $ $ 4 $ Interest cost 7 2 12 3 Expected return on plan assets (5 ) (13 ) Amortization of prior service cost Amortization of net loss 3 Net periodic pension cost $ 8 $ 2 $ 3 $ 3 Nine Months ended September 30, 2009 2008 Qualified Non-Qualified Qualified Non-Qualified Service cost $ 9 $ 1 $ 13 $ 1 Interest cost 26 5 40 7 Expected return on plan assets (18 ) (43 ) Amortization of prior service cost 1 Recognized curtailment loss 3 5 Amortization of net loss 10 1 1 Net periodic pension cost $ 30 $ 12 $ 11 $ 9 In March2009, based on managements recommendation, the Board of Directors approved a plan to freeze all future benefit accruals under substantially all of the Companys domestic qualified and non-qualified defined-benefit pension plans. The freeze is effective January1, 2010. As a result of this action, the liabilities for the plans impacted by the freeze were remeasured and the Company recognized a curtailment charge of $8million in the first quarter of 2009. In addition, the Company expects net periodic pension costs related to the domestic defined-benefit pension plans that were remeasured to decrease by approximately $14million in 2009 to $31million from the original forecast of $45million at December31, 2008. Assumptions Major assumptions used in accounting for the Companys domestic defined-benefit pension plans that have been frozen were as follows: At March 31, 2009 Discount rate for obligations 7.3 % Expected return on plan assets 8.0 % Discount rate for net periodic pension cost 6.1 % The discount rate for obligations was based upon the expected duration of each defined-benefit pension plans liabilities matched to the March31, 2009 Citigroup Pension Discount Curve. Such rates for the Companys domestic defined-benefit pension plans

Goodwill and Other Intangible A

Goodwill and Other Intangible Assets
	9 Months Ended Sep. 30, 2009 USD / shares
Goodwill and Other Intangible Assets [Abstract]
Goodwill and Other Intangible Assets	E. The changes in the carrying amount of goodwill for the nine months ended September30, 2009, by segment, were as follows, in millions: At At Dec. 31, 2008 Additions (A) Other(B) Sep. 30, 2009 Cabinets and Related Products $ 225 $ $ 2 $ 227 Plumbing Products 248 4 10 262 Installation and Other Services 1,768 1,768 Decorative Architectural Products 294 294 Other Specialty Products 836 836 Total $ 3,371 $ 4 $ 12 $ 3,387 (A) Additions include acquisitions. (B) Other principally includes the effect of foreign currency translation, reclassifications and purchase price adjustments related to prior-year acquisitions. Other indefinite-lived intangible assets were $196million and $195million at September30, 2009 and December31, 2008, respectively, and principally included registered trademarks. The carrying value of the Companys definite-lived intangible assets was $97million (net of accumulated amortization of $64million) at September30, 2009 and $104million (net of accumulated amortization of $56million) at December31, 2008, and principally included customer relationships and non-compete agreements.

Depreciation and Amortization E

Depreciation and Amortization Expense
	9 Months Ended Sep. 30, 2009 USD / shares
Depreciation and Amortization Expense [Abstract]
Depreciation and Amortization Expense	F. Depreciation and amortization expense was $190million and $179million, respectively, for the nine months ended September30, 2009 and 2008.

Financial Investments

Financial Investments
	9 Months Ended Sep. 30, 2009 USD / shares
Financial Investments [Abstract]
Financial Investments	G. The Company has maintained investments in available-for-sale securities and a number of private equity funds, principally as part of its tax planning strategies, as any gains enhance the utilization of any current and future tax capital losses. Financial investments included in other assets were as follows, in millions: September 30, December 31, 2009 2008 Asahi Tec Corporation common and preferred stock $ 74 $ 73 TriMas Corporation 13 3 Auction rate securities 22 22 Marketable securities 3 Private equity funds 125 138 Other investments 9 10 Total $ 243 $ 249 The Companys investments in available-for-sale securities at September30, 2009 and December 31, 2008 (including marketable securities, auction rate securities, Asahi Tec Corporation common and preferred stock and TriMas Corporation) were as follows, in millions: Pre-tax Unrealized Unrealized Recorded Cost Basis Gains Losses Basis September30, 2009 $ 72 $ 37 $ $ 109 December31, 2008 $ 75 $ 26 $ $ 101 The Companys investments in private equity funds and other private investments are carried at cost. It is not practicable for the Company to estimate a fair value because the private equity funds have no quoted market price and sufficient information is not readily available for the Company to utilize a valuation model to determine the fair value for each fund. These investments are evaluated quarterly for potential other-than-temporary impairment when impairment indicators are present, or when an event or change in circumstances has occurred, that may have a significant adverse effect on the fair value of the investment. Impairment indicators the Company considers include the following: whether there has been a significant deterioration in earnings performance, asset quality or business prospects; a significant adverse change in the regulatory, economic or technological environment; a significant adverse change in the general market condition or geographic area in which the investment operates; industry and sector performance; current equity and credit market conditions; and any bona fide offers to purchase the investment for less than the carrying value. The Company also considers specific adverse conditions related to the financial health of and business outlook for the fund, including industry and sector performance. The significant assumptions utilized in analyzing a fund for potential other-than-temporary impairment include current economic conditions, market analysis for specific funds and performance indicators in the automotive and transportation, residential and commercial construction, bio-technology, health care and information technology sectors in which the applicable funds investments operate. Since there is no active trading market for these investments, they are for the most part illiquid. These investments, by their nature, can also have a relatively higher

Derivatives

Derivatives
	9 Months Ended Sep. 30, 2009 USD / shares
Derivatives [Abstract]
Derivatives	H. During 2009 and 2008, the Company entered into foreign currency exchange contracts to hedge currency fluctuations related to intercompany loans denominated in non-functional currencies. At September30, 2009 and December31, 2008, the Company had recorded losses of $1million and $16million, respectively, on the foreign currency exchange contracts, which is more than offset by gains related to the translation of loans and accounts denominated in non-functional currencies. Gains (losses)related to these contracts are recorded in the Companys consolidated statements of income in other income (expense), net. For the three months and nine months ended September30, 2009, the Company had recorded gains (losses)of $2 million and $(1) million, respectively, related to these foreign currency exchange contracts. For the three months and nine months ended September30, 2008, the Company had recorded losses of $14million and $18million, respectively, related to these foreign currency exchange contracts. During 2009 and 2008, the Company, including certain European operations, also entered into foreign currency forward contracts to manage a portion of its exposure to currency fluctuations in the European euro and the U.S. dollar. At September30, 2009, no gains had been recorded, based upon period-end market prices. At December31, 2008, the Company had recorded gains of $2million on these contracts based upon period-end market prices. Gains (losses)related to these contracts are recorded in the Companys consolidated statements of income in other income (expense), net. For the three months and nine months ended September30, 2009, the Company had recorded losses of $1million and $2million, respectively, related to these foreign currency exchange contracts. For the nine months ended September30, 2008, the Company had recorded a gain of $1million related to these foreign currency exchange contracts. In the event that the counterparties fail to meet the terms of the foreign currency forward contracts, the Companys exposure is limited to the aggregate foreign currency rate differential with such institutions.

Debt

Debt
	9 Months Ended Sep. 30, 2009 USD / shares
Debt [Abstract]
Debt	I. At September30, 2009 and December31, 2008, there were outstanding $108million principal amount of Zero Coupon Convertible Senior Notes due 2031, with an accreted value of $55million and $54million, respectively. The Company adopted new FASB guidance regarding accounting for convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) effective January1, 2009. The adoption of this new guidance will have no impact on 2009 results; the Company recorded a $1million cumulative effect of accounting change as of January1, 2007 and the adoption had no impact on the Companys condensed consolidated financial statements for the periods ended September30, 2009 and 2008. At the Companys request, in late April2009, the Company and its Bank Group modified the terms of its Five-Year Revolving Credit Facility, which expires February2011. After reviewing its anticipated liquidity position, the Company requested that the maximum amount the Company could borrow under this facility be reduced to $1.25billion from $2.0billion; in addition, the debt to total capitalization ratio has been increased from 60percent to 65 percent. The debt to total capitalization ratio and the minimum net worth covenant have also been amended to allow the add-back, if incurred, of up to the first $500million of certain non-cash charges, including goodwill and other intangible asset impairment charges that would negatively impact shareholders equity. Under the terms of the Amended Credit Facility, any outstanding Letters of Credit reduce the Companys borrowing capacity. At September30, 2009, the Company had $72million of unused Letters of Credit; accordingly, the Companys remaining borrowing capacity is approximately $1.2billion. The Company incurred approximately $2million of fees and expenses associated with the Amendment. The Company, if the facility is utilized, will incur higher borrowing costs as a result of the Amendment. At September30, 2009, the Company was in compliance with the requirements of the Amended Five-Year Revolving Credit Facility.

Fair Value

Fair Value
	9 Months Ended Sep. 30, 2009 USD / shares
Fair Value [Abstract]
Fair Value	J. On January1, 2008, the Company adopted FASB guidance that defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements for its financial assets and liabilities. On January1, 2009, the Company adopted this guidance for its non-financial assets and liabilities; such adoption did not have a significant effect on its condensed consolidated financial statements. The FASB 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. Further, it defines a fair value hierarchy, as follows: Level 1 inputs as quoted prices in active markets for identical assets or liabilities; Level 2 inputs as observable inputs other than Level 1 prices, such as quoted market prices for similar assets or liabilities or other inputs that are observable or can be corroborated by market data; and Level 3 inputs as unobservable inputs that are supported by little or no market activity and that are financial instruments whose value is determined using pricing models or instruments for which the determination of fair value requires significant management judgment or estimation. Financial investments that are available to be traded on readily accessible stock exchanges (domestic or foreign) are considered to have active markets and have been valued using Level 1 inputs. Financial investments that are not available to be traded on a public market or have limited secondary markets, or contain provisions that limit the ability to sell the investment are considered to have inactive markets and have been valued using Level 2 or 3 inputs. The Company incorporated credit risk into the valuations of financial investments by estimating the likelihood of non-performance by the counterparty to the applicable transactions. The estimate included the length of time relative to the contract, financial condition of the counterparty and current market conditions. The criteria for estimating if a market was active or inactive were based on the individual facts and circumstances. Financial assets and (liabilities)measured at fair value on a recurring basis at each reporting period and the amounts for each level within the fair value hierarchy were as follows, in millions: Fair Value Measurements Using Significant Quoted Other Significant Market Observable Unobservable Sep. 30, Prices Inputs Inputs 2009 (Level 1) (Level 2) (Level 3) Asahi Tec Corporation: Preferred stock $ 73 $ $ $ 73 Common stock 1 1 Foreign currency exchange contracts (A) (1 ) (1 ) Auction rate securities 22 22 TriMas Corporation 13 13 Total $ 108 $ 14 $ (1 ) $ 95 Fair Value Measurements Using Significa

Shareholders Equity and Compreh

Shareholders Equity and Comprehensive Income
	9 Months Ended Sep. 30, 2009 USD / shares
Shareholders' Equity and Comprehensive Income [Abstract]
Shareholders' Equity and Comprehensive Income	K. Effective January1, 2009, the Company adopted new FASB guidance regarding noncontrolling interests in consolidated financial statements. At September30, 2009 and December31, 2008, the Company owns 68percent of Hansgrohe AG. The new FASB guidance requires the reclassification of the Companys noncontrolling interest in Hansgrohe AG to shareholders equity from deferred income taxes and other. At December31, 2008, the Company did not have a balance in paid-in capital due to repurchases of Company common stock. The Companys activity in shareholders equity was as follows, in millions: Accumulated Other Common Paid-in- Retained Comprehensive Noncontrolling Total Shares Capital Earnings Income Interest Balance, January1, 2008 $ 4,142 $ 359 $ $ 2,969 $ 661 $ 153 Net (loss)income (352 ) (391 ) 39 Cumulative translation adjustments (221 ) (210 ) (11 ) Unrealized gain on marketable securities, net of income tax of $4 7 7 Prior service cost and net loss, net of income tax benefit of $86 (150 ) (150 ) Total comprehensive (loss)income (716 ) Shares issued 1 1 Shares retired: Repurchased (160 ) (9 ) (71 ) (80 ) Surrendered (non-cash) (7 ) (7 ) Cash dividends declared (357 ) (336 ) (21 ) Stock-based compensation 78 78 Balance, December31, 2008 $ 2,981 $ 351 $ $ 2,162 $ 308 $ 160 Net income 29 2 27 Cumulative translation adjustments 40 30 10 Unrealized gain on marketable securities, net of income tax of $11 21 21 Prior service cost and net loss, net of income tax of $36 62 62 Total comprehensive income 152 Shares issued 2 (2 ) Shares retired: Repurchased (11 ) (2 ) (9 ) Surrendered (non-cash) (5 ) (1 ) (4 ) Cash dividends declared (81 ) (81 ) Dividend payments to noncontrolling interest (16 ) (16 ) Stock-based compensation 49 49 Balance, September30, 2009 $ 3,069 $ 350 $ 34 $ 2,083 $ 421 $ 181 Noncontrolling interest includes accumulated other compreh

Segment Information

Segment Information
	9 Months Ended Sep. 30, 2009 USD / shares
Segment Information [Abstract]
Segment Information	L. Information about the Company by segment and geographic area was as follows, in millions: Three Months Ended September 30, Nine Months Ended September 30, 2009 2008 2009 2008 2009 2008 2009 2008 Net Sales(A) Operating Profit (Loss) Net Sales(A) Operating Profit (Loss) The Companys operations by segment were: Cabinets and Related Products $ 434 $ 584 $ (16 ) $ 23 $ 1,248 $ 1,788 $ (56 ) $ 88 Plumbing Products 688 788 93 92 1,922 2,422 201 299 Installation and Other Services 332 492 (34 ) 10 961 1,486 (104 ) 8 Decorative Architectural Products 474 446 122 94 1,365 1,301 313 257 Other Specialty Products 166 201 16 16 427 563 16 37 Total $ 2,094 $ 2,511 $ 181 $ 235 $ 5,923 $ 7,560 $ 370 $ 689 The Companys operations by geographic area were: North America $ 1,630 $ 1,975 $ 123 $ 193 $ 4,694 $ 5,935 $ 261 $ 542 International, principally Europe 464 536 58 42 1,229 1,625 109 147 Total $ 2,094 $ 2,511 181 235 $ 5,923 $ 7,560 370 689 General corporate expense, net (36 ) (32 ) (96 ) (110 ) Charge for litigation settlement (B) (7 ) (9 ) (7 ) (9 ) Charge for defined-benefit plan curtailment (C) (8 ) Accelerated stock compensation expense (D) (6 ) (Loss) on corporate fixed assets, net (2 ) Operating profit 138 194 251 570 Other income (expense), net (49 ) (56 ) (157 ) (196 ) Income from continuing operations before income taxes $ 89 $ 138 $ 94 $ 374 (A) Inter-segment sales were not material. (B) The charge for litigation settlement in 2009 relates to a business unit in the Cabinets and Related Products segment. The charge for litigation settlement in 2008 relates to a business unit in the Installation and Other Services segment. (C) In March2009, the Company recognized a curtailment loss related to the plan to freeze all future benefit accruals beginning January1, 2010 un

Other Income

Other Income (Expense), Net
	9 Months Ended Sep. 30, 2009 USD / shares
Other Income (Expense), Net [Abstract]
Other Income (Expense), Net	M. Other, net, which is included in other income (expense), net, was as follows, in millions: Three Months Ended Nine Months Ended September 30, September 30, 2009 2008 2009 2008 Income from cash and cash investments $ 2 $ 6 $ 6 $ 17 Other interest income 1 1 1 1 Income from financial investments, net (Note G) Other items, net 4 (3 ) 15 (12 ) Total $ 7 $ 4 $ 22 $ 6 Other items, net, included $5million and $14million of currency gains for the three months and nine months ended September30, 2009, respectively. Other items, net, included $3 million and $18million of currency losses for the three months and nine months ended September30, 2008, respectively.

Earnings Per Share

Earnings Per Share
	9 Months Ended Sep. 30, 2009 USD / shares
Earnings Per Share [Abstract]
Earnings Per Share	N. Reconciliations of the numerators and denominators used in the computations of basic and diluted earnings per common share were as follows, in millions: Three Months Ended Nine Months Ended September 30, September 30, 2009 2008 2009 2008 Numerator (basic and diluted): Income from continuing operations $ 51 $ 35 $ 32 $ 132 Allocation to unvested restricted stock awards (1 ) (2 ) (2 ) (6 ) Income from continuing operations attributable to common shareholders 50 33 30 126 (Loss) from discontinued operations, net (23 ) (2 ) (30 ) (15 ) Net income available to common shareholders $ 27 $ 31 $ $ 111 Denominator: Basic common shares (based upon weighted average) 350 352 351 354 Add: Contingent common shares Stock option dilution 1 Diluted common shares 351 352 351 354 Effective January1, 2009, the Company adopted FASB guidance regarding determining whether instruments granted in share-based payment transactions are participating securities. This new FASB guidance clarifies that share-based payment awards that entitle their holders to receive non-forfeitable dividends prior to vesting should be considered participating securities. The Company has 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 the Companys 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. Unvested restricted stock awards were previously included in the Companys diluted share calculation using the treasury stock method. For the three months and nine months ended September30, 2009 and 2008, the Company allocated dividends and income to the unvested restricted stock awards (participating securities). At September30, 2009 and 2008, the Company did not include any common shares related to the Zero Coupon Convertible Senior Notes (Notes) in the calculation of diluted earnings per common share, as the price of the Companys common stock at September30, 2009 and 2008 did not exceed the equivalent accreted value of the Notes. Additionally, 35million and 36million common shares for the three months and nine months ended September30, 2009, respectively, and 32million common shares for both the three months and nine months ended September30, 2008 related to stock options were excluded from the

Commitments and Contingencies

Commitments and Contingencies
	9 Months Ended Sep. 30, 2009 USD / shares
Commitments and Contingencies [Abstract]
Commitments and Contingencies	O. The Company is subject to lawsuits and pending or asserted claims with respect to matters generally arising in the ordinary course of business. As previously disclosed, a lawsuit has been brought against the Company and a number of its insulation installation companies in the federal court in Atlanta, Georgia alleging that certain practices violate provisions of the federal antitrust laws. In February2009, the federal court in Atlanta certified a class of 377 insulation contractors. Two additional lawsuits, seeking class action status and alleging anticompetitive conduct, were filed against the Company and a number of its insulation suppliers. One of these lawsuits was filed in a Florida state court and has been dismissed by the court with prejudice. The other lawsuit was filed in federal court in northern California and was subsequently transferred to federal court in Atlanta, Georgia. The Company is vigorously defending the pending cases. Based upon the advice of its outside counsel, the Company believes that the conduct of the Company and its insulation installation companies, which has been the subject of the above-described lawsuits, has not violated any antitrust laws. The Company is unable at this time to reliably estimate any potential liability which might occur from an adverse judgment. There cannot be any assurance that the Company will ultimately prevail in the remaining lawsuits, or, if unsuccessful, that the ultimate liability would not be material and would not have a material adverse effect on its businesses or the methods used by its insulation installation companies in doing business. As previously disclosed, European governmental authorities are investigating possible anticompetitive business practices relating to the plumbing and heating industries in Europe. The investigations involve a number of European companies, including certain of the Companys European manufacturing divisions and a number of other large businesses. The Company believes that it will not incur material liability as a result of the matters that are subject to these investigations.

Warranty

Warranty
	9 Months Ended Sep. 30, 2009 USD / shares
Warranty [Abstract]
Warranty	P. Changes in the Companys warranty liability were as follows, in millions: Nine Months Ended Twelve Months Ended September 30, 2009 December 31, 2008 Balance at January 1 $ 119 $ 133 Accruals for warranties issued during the period 23 42 Accruals related to pre-existing warranties 4 6 Settlements made (in cash or kind) during the period (32 ) (53 ) Other, net (4 ) (9 ) Balance at end of period $ 110 $ 119

Income Taxes

Income Taxes
	9 Months Ended Sep. 30, 2009 USD / shares
Income Taxes [Abstract]
Income Taxes	Q. Because the Companys projected pre-tax income is near break-even, small changes in projected pre-tax income may cause large changes in the estimated annual effective tax rate thereby producing potentially unreliable estimates of tax expense. Since these small changes to pre-tax income are likely to occur, the Company recorded the tax expense for the first nine months of 2009 using the actual effective tax rate on the year-to-date pre-tax income and did not use the estimated annual effective tax rate. During the first nine months of 2009, the Companys liability for unrecognized tax benefits and accrued interest and penalties decreased by $12million and $3million, respectively, due primarily to a settlement with a tax authority on various unrecognized tax benefits. As a result of tax audit closings, settlements and expiration of applicable statutes of limitations in various jurisdictions within the next 12months, the Company anticipates that it is reasonably possible that the liability for unrecognized tax benefits could be reduced by approximately $8million.