MASCO CORP /DE/, 10-Q filed on 5/2/2012
Quarterly Report
Document and Entity Information
3 Months Ended
Mar. 31, 2012
Apr. 26, 2012
Document and Entity Information [Abstract]
 
 
Entity Registrant Name
MASCO CORP /DE/ 
 
Entity Central Index Key
0000062996 
 
Document Type
10-Q 
 
Document Period End Date
Mar. 31, 2012 
 
Amendment Flag
false 
 
Document Fiscal Year Focus
2012 
 
Document Fiscal Period Focus
Q1 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding (actual number)
 
357,100,000 
Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2012
Dec. 31, 2011
Current assets:
 
 
Cash and cash investments
$ 1,788 
$ 1,656 
Receivables
1,190 
914 
Prepaid expenses and other
78 
70 
Assets held for sale
17 
20 
Inventories:
 
 
Finished goods
446 
390 
Raw material
283 
280 
Work in process
99 
99 
Inventories
828 
769 
Total current assets
3,901 
3,429 
Property and equipment, net
1,545 
1,567 
Goodwill
1,895 
1,891 
Other intangible assets, net
195 
196 
Other assets
209 
209 
Assets held for sale
Total assets
7,750 
7,297 
Current liabilities:
 
 
Notes payable
754 
803 
Accounts payable
904 
770 
Accrued liabilities
712 
782 
Liabilities held for sale
Total current liabilities
2,378 
2,363 
Long-term debt
3,622 
3,222 
Deferred income taxes and other
958 
970 
Total liabilities
6,958 
6,555 
Commitments and contingencies
   
   
Masco Corporation's shareholders' equity:
 
 
Common shares, par value $1 per share Authorized shares: 1,400,000,000; issued and outstanding: 2012 - 348,570,000; 2011 - 347,900,000
349 
348 
Preferred shares authorized: 1,000,000; issued and outstanding: 2012 - None; 2011 - None
   
   
Paid-in capital
62 
65 
Retained earnings
45 
38 
Accumulated other comprehensive income
103 
76 
Total Masco Corporation's shareholders' equity
559 
527 
Noncontrolling interest
233 
215 
Total equity
792 
742 
Total liabilities and equity
$ 7,750 
$ 7,297 
Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) (USD $)
Mar. 31, 2012
Dec. 31, 2011
Condensed Consolidated Balance Sheets [Abstract]
 
 
Common shares, par value
$ 1 
$ 1 
Common shares, shares authorized
1,400,000,000 
1,400,000,000 
Common shares, shares issued
348,570,000 
347,900,000 
Common shares, shares outstanding
348,570,000 
347,900,000 
Preferred shares, shares authorized
1,000,000 
1,000,000 
Preferred shares, shares issued
   
   
Preferred shares, shares outstanding
   
   
Condensed Consolidated Statements of Income (Unaudited) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2012
Mar. 31, 2011
Condensed Consolidated Statements of Income [Abstract]
 
 
Net sales
$ 1,875 
$ 1,753 
Cost of sales
1,390 
1,328 
Gross profit
485 
425 
Selling, general and administrative expenses
383 
399 
Operating profit
102 
26 
Other income (expense), net:
 
 
Interest expense
(64)
(63)
Other, net
15 
21 
Total other income (expense), net
(49)
(42)
Income (loss) from continuing operations before income taxes
53 
(16)
Income taxes
13 
Income (loss) from continuing operations
49 
(29)
Loss from discontinued operations
(5)
(5)
Net income (loss)
44 
(34)
Less: Net income attributable to noncontrolling interest
11 
12 
Net income (loss) attributable to Masco Corporation
33 
(46)
Basic:
 
 
Income (loss) from continuing operations
$ 0.11 
$ (0.12)
Loss from discontinued operations
$ (0.01)
$ (0.01)
Net income (loss)
$ 0.09 
$ (0.13)
Diluted:
 
 
Income (loss) from continuing operations
$ 0.11 
$ (0.12)
Loss from discontinued operations
$ (0.01)
$ (0.01)
Net income (loss)
$ 0.09 
$ (0.13)
Amounts attributable to Masco Corporation:
 
 
Income (loss) from continuing operations
38 
(41)
Loss from discontinued operations
(5)
(5)
Net income (loss)
$ 33 
$ (46)
Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2012
Mar. 31, 2011
Condensed Consolidated Statements of Comprehensive Income [Abstract]
 
 
Net income (loss)
$ 44 
$ (34)
Other Comprehensive income (loss), net of tax:
 
 
Cumulative translation adjustment
30 
61 
Unrealized loss on interest rate swaps
   
   
Unrealized gain on marketable securities
 
(13)
Unrecognized pension prior service cost and net loss, net
Other comprehensive income
34 
51 
Total comprehensive income
78 
17 
Less: Comprehensive income attributable to the noncontrolling interest
18 
26 
Comprehensive income (loss) attributable to Masco Corporation
$ 60 
$ (9)
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2012
Mar. 31, 2011
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES:
 
 
Cash provided by operations
$ 90 
$ 41 
Increase in receivables
(272)
(220)
Increase in inventories
(50)
(93)
Increase in accounts payable and accrued liabilities, net
65 
112 
Net cash for operating activities
(167)
(160)
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES:
 
 
Issuance of Notes, net of issuance costs
396 
 
Retirement of Notes
(46)
 
Cash dividends paid
(26)
(27)
Payment for settlement of swaps
(25)
 
Purchase of Company common stock
(8)
(30)
Payment of debt
(1)
 
Credit Agreement costs
 
(1)
Net cash from (for) financing activities
290 
(58)
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES:
 
 
Capital expenditures
(24)
(29)
Proceeds from disposition of :
 
 
Marketable securities
 
14 
Other financial investments
23 
Property and equipment
Purchases of other financial investments
(1)
(6)
Other, net
(8)
 
Net cash for investing activities
(2)
(14)
Effect of exchange rate changes on cash and cash investments
11 
22 
CASH AND CASH INVESTMENTS:
 
 
Increase (decrease) for the period
132 
(210)
At January 1
1,656 
1,715 
At March 31
$ 1,788 
$ 1,505 
Consolidated Statements of Shareholders' Equity (Unaudited) (USD $)
In Millions, unless otherwise specified
Total
Common Shares ($1 par value)
Paid-In Capital
Retained Earnings
Accumulated Other Comprehensive Income
Noncontrolling Interest
Beginning Balance at Dec. 31, 2010
$ 1,582 
$ 349 
$ 42 
$ 720 
$ 273 
$ 198 
Total comprehensive income
17 
 
 
(46)
37 
26 
Shares issued
 
(2)
 
 
 
Shares retired:
 
 
 
 
 
 
Repurchased
(30)
(2)
(28)
 
 
 
Surrendered (non-cash)
(7)
(1)
(6)
 
 
 
Cash dividends declared
(27)
 
 
(27)
 
 
Stock-based compensation
15 
 
15 
 
 
 
Ending Balance at Mar. 31, 2011
1,550 
348 
21 
647 
310 
224 
Beginning Balance at Dec. 31, 2011
742 
348 
65 
38 
76 
215 
Total comprehensive income
78 
 
 
33 
27 
18 
Shares issued
 
(2)
 
 
 
Shares retired:
 
 
 
 
 
 
Repurchased
(8)
(1)
(7)
 
 
 
Surrendered (non-cash)
(7)
 
(7)
 
 
 
Cash dividends declared
(26)
 
 
(26)
 
 
Stock-based compensation
13 
 
13 
 
 
 
Ending Balance at Mar. 31, 2012
$ 792 
$ 349 
$ 62 
$ 45 
$ 103 
$ 233 
Accounting Policies
Accounting Policies
Note A: 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 March 31, 2012 and the results of operations for the three months ended March 31, 2012 and 2011 and cash flows for the three months ended March 31, 2012 and 2011. The condensed consolidated balance sheet at December 31, 2011 was derived from audited financial statements.

Certain prior-year amounts have been reclassified to conform to the 2012 presentation in the condensed consolidated financial statements. The results of operations related to the 2011 discontinued operations have been separately stated in the accompanying condensed consolidated statements of income for the three months ended March 31, 2012 and 2011. In the Company’s condensed consolidated statements of cash flows for the three months ended March 31, 2012 and 2011, cash flows from discontinued operations are not separately classified.

Recently Issued Accounting Pronouncements. On January 1, 2012, the Company adopted new accounting guidance requiring more prominent presentation of other comprehensive income items in the Company’s consolidated financial statements. The adoption of this new guidance did not have an impact on the Company’s financial position or its results of operations.

 

 

Discontinued Operations
Discontinued Operations
Note B: Discontinued Operations
B. Selected financial information for the discontinued operations, during the period owned by the Company, was as follows, in millions:

 

                 
    Three Months Ended
March 31,
 
    2012     2011  
     

Net Sales

  $ 20     $ 19  
   

 

 

   

 

 

 
     

Loss from discontinued operations

  $ (4   $ (5

Loss on disposal of discontinued operations, net

    (1     —    
   

 

 

   

 

 

 

Loss before income tax

    (5     (5

Income tax benefit

    —         —    
   

 

 

   

 

 

 

Loss from discontinued operations, net

  $ (5   $ (5
   

 

 

   

 

 

 

 

 

Goodwill and Other Intangible Assets
Goodwill and Other Intangible Assets
Note C: Goodwill and Other Intangible Assets
C. The changes in the carrying amount of goodwill for the three months ended March 31, 2012, by segment, were as follows, in millions:

 

                         
    Gross Goodwill
At
Mar. 31, 2012
    Accumulated
Impairment
Losses
    Net Goodwill
At

Mar.  31, 2012
 

Cabinets and Related Products

  $ 589     $ (408   $ 181  

Plumbing Products

    545       (340     205  

Installation and Other Services

    1,806       (762     1,044  

Decorative Architectural Products

    294       (75     219  

Other Specialty Products

    980       (734     246  
   

 

 

   

 

 

   

 

 

 

Total

  $ 4,214     $ (2,319   $ 1,895  
   

 

 

   

 

 

   

 

 

 

 

                                         
    Gross Goodwill
At
Dec. 31, 2011
    Accumulated
Impairment
Losses
    Net Goodwill
At
Dec. 31, 2011
    Other(A)     Net Goodwill
At
Mar. 31, 2012
 

Cabinets and Related Products

  $ 589     $ (408   $ 181     $ —       $ 181  

Plumbing Products

    541       (340     201       4       205  

Installation and Other Services

    1,806       (762     1,044       —         1,044  

Decorative Architectural Products

    294       (75     219       —         219  

Other Specialty Products

    980       (734     246       —         246  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 4,210     $ (2,319   $ 1,891     $ 4     $ 1,895  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(A) Other principally includes the effect of foreign currency translation.

Other indefinite-lived intangible assets were $174 million at both March 31, 2012 and December 31, 2011, respectively, and principally included registered trademarks. The carrying value of the Company’s definite-lived intangible assets was $21 million (net of accumulated amortization of $55 million) at March 31, 2012 and $22 million (net of accumulated amortization of $54 million) at December 31, 2011, and principally included customer relationships and non-compete agreements.

 

 

Depreciation and Amortization Expense
Depreciation and Amortization Expense Disclosure
Note D: Depreciation and Amortization Expense Disclosure
D. Depreciation and amortization expense was $55 million and $75 million (including accelerated depreciation of $7 million and $19 million for the three months ended March 31, 2012 and 2011.

 

 

Fair Value of Financial Investments and Liabilities
Fair Value of Financial Investments and Liabilities
Note E: Fair Value of Financial Investments and Liabilities
E. 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:

 

                 
    March 31,
2012
    December 31,
2011
 
     

Auction rate securities

  $ 22     $ 22  
   

 

 

   

 

 

 

Total recurring investments

    22       22  
     

Private equity funds

    81       86  

Other investments

    4       4  
   

 

 

   

 

 

 

Total non-recurring investments

    85       90  
   

 

 

   

 

 

 

Total

  $ 107     $ 112  
   

 

 

   

 

 

 

The Company’s investments in available-for-sale securities at March 31, 2012 and December 31, 2011 were as follows, in millions:

 

                                 
          Pre-tax        
    Cost Basis     Unrealized
Gains
    Unrealized
Losses
    Recorded
Basis
 
         

March 31, 2012

  $ 19     $ 3     $ —       $ 22  
         

December 31, 2011

  $ 19     $ 3     $ —       $ 22  

Recurring Fair Value Measurements. 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:

 

      0000000000       0000000000       0000000000       0000000000  
          Fair Value Measurements Using  
                Significant        
    Mar. 31,
2012
    Quoted
Market
Prices
(Level 1)
    Other
Observable
Inputs

(Level 2)
    Significant
Unobservable
Inputs

(Level 3)
 
         

Auction rate securities

  $ 22       —         —       $ 22  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 22     $ —       $ —       $ 22  
   

 

 

   

 

 

   

 

 

   

 

 

 

 

      0000000000       0000000000       0000000000       0000000000  
          Fair Value Measurements Using  
    Dec. 31,
2011
    Quoted
Market
Prices
(Level 1)
    Significant
Other
Observable
Inputs
(Level 2)
    Significant
Unobservable
Inputs

(Level 3)
 
         

Auction rate securities

  $ 22     $ —       $ —       $ 22  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 22     $ —       $ —       $ 22  
   

 

 

   

 

 

   

 

 

   

 

 

 

The fair value of the auction rate securities held by the Company have been estimated, on a recurring basis, using a discounted cash flow model (Level 3 input). The significant inputs in the discounted cash flow model used to value the auction rate securities include: expected maturity of auction rate securities, discount rate used to determine the present value of expected cash flows and the assumptions for credit defaults, since the auction rate securities are backed by credit default swap agreements.

The following table summarizes the changes in Level 3 financial assets measured at fair value on a recurring basis for the three months ended March 31, 2012 and the year ended December 31, 2011, in millions:

 

                 
    March 31, 2012
Auction Rate
Securities
    December 31, 2011
Auction Rate
Securities
 
     

Fair value at beginning of period

  $ 22     $ 22  

Total losses included in earnings

    —         —    

Unrealized (losses)

    —         —    

Purchases

    —         —    

Settlements

    —         —    

Transfer from Level 3 to Level 2

    —         —    
   

 

 

   

 

 

 

Fair value at period end

  $ 22     $ 22  
   

 

 

   

 

 

 

Non-Recurring Fair Value Measurements. For the three months ended March 31, 2012 and 2011, the Company did not measure any financial investments on a non-recurring basis, as there was no other-than-temporary decline in the estimated value of private equity funds.

The Company did not have any transfers between Level 1 and Level 2 financial assets in the first quarter of 2012 or 2011.

Realized Gains. Income from financial investments, net, included in other, net, within other income (expense), net, was as follows, in millions:

 

                 
    Three Months Ended
March 31,
 
    2012     2011  
     

Realized gains – distributions from private equity funds

  $ 16     $ 3  

Realized gains – sale of TriMas

               

Corporation common stock

    —         14  
   

 

 

   

 

 

 

Total income from financial investments

  $ 16     $ 17  
   

 

 

   

 

 

 

The fair value of the Company’s short-term and long-term fixed-rate debt instruments is based principally upon quoted market prices for the same or similar issues or the current rates available to the Company for debt with similar terms and remaining maturities. The aggregate estimated market value of short-term and long-term debt at March 31, 2012 was approximately $4.5 billion, compared with the aggregate carrying value of $4.4 billion. The aggregate estimated market value of short-term and long-term debt at December 31, 2011 was approximately $4.0 billion, compared with the aggregate carrying value of $4.0 billion.

 

 

Derivative Instrument and Hedging Activities
Derivative Instrument and Hedging Activities
Note F: Derivative Instrument and Hedging Activities
F. The Company is exposed to global market risk as part of its normal daily business activities. To manage these risks, the Company enters into various derivative contracts. These contracts include interest rate swap agreements, foreign currency exchange contracts and contracts intended to hedge the Company’s exposure to copper and zinc. The Company reviews its hedging program, derivative positions and overall risk management on a regular basis.

Interest Rate Swap Agreements. In March 2012, in connection with the issuance of $400 million of debt, the Company terminated the interest rate swap hedge relationships that had been entered into in August 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 approximately $2 million was recognized in the Company’s consolidated statement of income in other, 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, 2011, the interest rate swaps were considered 100 percent effective; therefore, the market valuation loss of $23 million was recorded in other comprehensive income in the Company’s statement of shareholders’ equity with a corresponding increase to accrued liabilities in the Company’s condensed consolidated balance sheet at December 31, 2011.

For both the three months ended March 31, 2012 and 2011, the Company recognized a net decrease in interest expense of $3 million related to the amortization of gains resulting from the terminations (in 2012, 2008 and 2004) of the interest rate swap agreements.

Foreign Currency Contracts. The Company’s 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 during 2012 and 2011, the Company, including certain European operations, entered into foreign currency forward contracts and foreign currency exchange contracts.

Gains (losses) related to foreign currency forward and exchange contracts are recorded in the Company’s consolidated statements of income in other income (expense), net. In the event that the counterparties fail to meet the terms of the foreign currency forward contracts, the Company’s exposure is limited to the aggregate foreign currency rate differential with such institutions.

Metal Contracts. During 2012 and 2011, the Company entered into several contracts to manage its exposure to increases in the price of copper and zinc. Gains (losses) related to these contracts are recorded in the Company’s consolidated statements of income in cost of goods sold.

 

The pre-tax gain (loss) included in the Company’s consolidated statements of income is as follows, in millions:

 

                 
    Three Months Ended
March  31,
 
    2012     2011  
     

Foreign Currency Contracts

               

Exchange Contracts

  $ (5   $ (8

Forward Contracts

    (1     2  

Metal Contracts

    7       —    
   

 

 

   

 

 

 
     

Total gain (loss)

  $ 1     $ (6
   

 

 

   

 

 

 

The Company presents its derivatives net due to the right of offset by its counterparties under master netting arrangements in current assets or accrued liabilities in the consolidated balance sheet. The notional amounts being hedged and the fair value of those derivative instruments, on a gross basis, are as follows, in millions:

 

      0000000000       0000000000       0000000000  
    At March 31, 2012  
    Notional
Amount
    Assets     Liabilities  

Foreign Currency Contracts

                       

Exchange Contracts

  $ 114                  

Current assets

          $ 4     $ 3  

Forward Contracts

    71                  

Current assets

            1       —    

Current liabilities

            —         2  
       

Metal Contracts

    53                  

Current assets

            5       —    

Current liabilities

            —         1  
           

 

 

   

 

 

 
       

Total

          $ 10     $ 6  
           

 

 

   

 

 

 

 

      0000000000       0000000000       0000000000  
    At December 31, 2011  
    Notional
Amount
    Assets     Liabilities  

Foreign Currency Contracts

                       

Exchange Contracts

  $ 108                  

Current assets

          $ 8     $ —    

Forward Contracts

    76                  

Current assets

            1       —    

Current liabilities

            1       2  
       

Metal Contracts

    67                  

Current assets

            2       —    

Current liabilities

            —         4  
           

 

 

   

 

 

 
       

Total

          $ 12     $ 6  
           

 

 

   

 

 

 

The fair value of all metal and foreign currency derivative contracts is estimated on a recurring basis, quarterly, using Level 2 inputs (significant other observable inputs).

 

 

Warranty
Warranty
Note G: Warranty
G. Changes in the Company’s warranty liability were as follows, in millions:

 

                 
    Three Months Ended
March  31, 2012
    Twelve Months  Ended
December 31, 2011
 
     

Balance at January 1

  $ 102     $ 107  

Accruals for warranties issued during the period

    8       28  

Accruals related to pre-existing warranties

    3       8  

Settlements made (in cash or kind) during the period

    (11     (38

Other, net

    —         (3
   

 

 

   

 

 

 

Balance at end of period

  $ 102     $ 102  
   

 

 

   

 

 

 

 

 

Debt
Debt
Note H: Debt
H. On March 5, 2012, the Company issued $400 million of 5.95% Notes due March 15, 2022 (“Notes”). Including the interest rate swap amortization, the effective interest for the Notes is approximately 6.5%. The Notes are senior indebtedness and are redeemable at the Company’s option. In January 2012, the Company repurchased $46 million of 5.875% Notes due July 2012 in open-market transactions; the Company paid a premium of $1 million for the repurchase. The issuance of the Notes and the repurchase of debt were done in anticipation of the retirement of $745 million of 5.875% Notes due July 2012.

Based on the limitations of the debt to total capitalization covenant in the Company’s credit agreement with a bank group (the “Credit Agreement”), at March 31, 2012, the Company had additional borrowing capacity, subject to availability, of up to $783 million. Additionally, at March 31, 2012, the Company could absorb a reduction to shareholders’ equity of approximately $422 million, and remain in compliance with the debt to total capitalization covenant.

In order for the Company to borrow under the Credit Agreement, there must not be any default in the Company’s covenants in the 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 the Company’s representations and warranties in the 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, 2009, in each case, no material ERISA or environmental non-compliance and no material tax deficiency). The Company was in compliance with all covenants and no borrowings have been made at March 31, 2012.

 

 

Stock-Based Compensation
Stock-Based Compensation
Note I: Stock-Based Compensation
I. The Company’s 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 March 31, 2012, outstanding stock-based incentives were in the form of long-term stock awards, stock options, phantom stock awards and stock appreciation rights. Pre-tax compensation expense and the related income tax benefit for these stock-based incentives were as follows, in millions:

 

                 
    Three Months Ended
March  31,
 
    2012     2011  
     

Long-term stock awards

  $ 8     $ 10  

Stock options

    5       5  

Phantom stock awards and stock appreciation rights

    5       3  
   

 

 

   

 

 

 
     

Total

  $ 18     $ 18  
   

 

 

   

 

 

 
     

Income tax benefit (before valuation allowance)

  $ 7     $ 7  
   

 

 

   

 

 

 

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 in the open market. The Company granted 675,110 shares of long-term stock awards in the three months ended March 31, 2012.

The Company’s long-term stock award activity was as follows, shares in millions:

 

                 
    Three Months Ended
March  31,
 
    2012     2011  
     

Unvested stock award shares at January 1

    10       10  

Weighted average grant date fair value

  $ 17     $ 19  
     

Stock award shares granted

    1       2  

Weighted average grant date fair value

  $ 12     $ 13  
     

Stock award shares vested

    2       1  

Weighted average grant date fair value

  $ 17     $ 19  
     

Stock award shares forfeited

    —         —    

Weighted average grant date fair value

  $ 18     $ 18  
     

Unvested stock award shares at March 31

    9       11  

Weighted average grant date fair value

  $ 16     $ 17  

At March 31, 2012 and 2011, there was $103 million and $145 million, respectively, of total unrecognized compensation expense related to unvested stock awards; such awards had a weighted average remaining vesting period of four years and five years, respectively.

The total market value (at the vesting date) of stock award shares which vested during the three months ended March 31, 2012 and 2011 was $23 million and $23 million, respectively.

Stock Options. Stock options are granted to key employees of the Company. The exercise price equals the market price of the Company’s 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.

The Company granted 1,050,750 of stock option shares in the three months ended March 31, 2012 with a grant date exercise price approximating $12 per share. In the first three months of 2012, 2,238,640 stock option shares were forfeited (including options that expired unexercised).

The Company’s stock option activity was as follows, shares in millions:

 

                 
    Three Months Ended
March  31,
 
    2012     2011  
     

Option shares outstanding, January 1

    36       37  

Weighted average exercise price

  $ 21     $ 21  
     

Option shares granted

    1       2  

Weighted average exercise price

  $ 12     $ 13  
     

Option shares exercised

    —         —    

Aggregate intrinsic value on date of exercise (A)

  $ 1 million     $ 1 million  

Weighted average exercise price

  $ 8     $ 8  
     

Option shares forfeited

    2       —    

Weighted average exercise price

  $ 18     $ 23  
     

Option shares outstanding, March 31

    35       39  

Weighted average exercise price

  $ 21     $ 21  

Weighted average remaining option term (in years)

    5       6  
     

Option shares vested and expected to vest, March 31

    35       39  

Weighted average exercise price

  $ 21     $ 21  

Aggregate intrinsic value (A)

  $ 26 million     $ 33 million  

Weighted average remaining option term (in years)

    5       6  
     

Option shares exercisable (vested), March 31

    25       24  

Weighted average exercise price

  $ 23     $ 24  

Aggregate intrinsic value (A)

  $ 14 million     $ 11 million  

Weighted average remaining option term (in years)

    4       4  

 

(A) Aggregate intrinsic value is calculated using the Company’s stock price at each respective date, less the exercise price (grant date price) multiplied by the number of shares.

At March 31, 2012 and 2011, there was $29 million and $51 million, respectively, of unrecognized compensation expense (using the Black-Scholes option pricing model) related to unvested stock options; such options had a weighted average vesting period of three years in both 2012 and 2011.

 

The weighted average grant date fair value of option shares granted and the assumptions used to estimate those values using a Black-Scholes option pricing model, were as follows:

 

                 
    Three Months Ended
March 31,
 
    2012     2011  
     

Weighted average grant date fair value

  $ 4.44     $ 5.10  

Risk-free interest rate

    1.10     2.72

Dividend yield

    2.57     2.34

Volatility factor

    51.00     49.00

Expected option life

    6 years       6 years  

 

 

Employee Retirement Plans
Employee Retirement Plans
Note J: Employee Retirement Plans
J. The Company sponsors qualified defined-benefit or defined-contribution retirement plans for most of its employees. In addition to the Company’s 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. The Company participates in 20 regional multi-employer pension plans, principally related to building trades; none of the plans are considered significant to the Company.

Effective January 1, 2010, the Company froze all future benefit accruals under substantially all of the Company’s domestic qualified and non-qualified defined-benefit pension plans. Future benefit accruals related to the Company’s foreign non-qualified plans were frozen several years ago.

Net periodic pension cost for the Company’s defined-benefit pension plans was as follows, in millions:

 

                                 
    Three Months ended March 31,  
    2012     2011  
    Qualified     Non-Qualified     Qualified     Non-Qualified  
         

Service cost

  $ 2     $ —       $ 1     $ —    

Interest cost

    10       2       11       2  

Expected return on plan assets

    (8     —         (8     —    

Amortization of net loss

    3       —         2       —    
   

 

 

   

 

 

   

 

 

   

 

 

 

Net periodic pension cost

  $ 7     $ 2     $ 6     $ 2  
   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

Segment Information
Segment Information
Note K: Segment Information
K. Information about the Company by segment and geographic area was as follows, in millions:

 

                                 
    Three Months Ended March 31,  
    2012     2011     2012     2011  
    Net Sales(A)     Operating Profit (Loss)  

The Company’s operations by segment were:

                               

Cabinets and Related Products

  $ 297     $ 307     $ (23   $ (50

Plumbing Products

    742       710       97       84  

Installation and Other Services

    278       235       (14     (35

Decorative Architectural Products

    434       375       73       69  

Other Specialty Products

    124       126       (5     (10
   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 1,875     $ 1,753     $ 128     $ 58  
   

 

 

   

 

 

   

 

 

   

 

 

 
         

The Company’s operations by geographic area were:

                               

North America

  $ 1,431     $ 1,314     $ 88     $ 16  

International, principally Europe

    444       439       40       42  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 1,875     $ 1,753       128       58  
   

 

 

   

 

 

                 
         

General corporate expense, net

                    (28     (32

Income from litigation settlements

                    2       —    
                   

 

 

   

 

 

 

Operating profit

                    102       26  

Other income (expense), net

                    (49     (42
                   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

                  $ 53     $ (16
                   

 

 

   

 

 

 

 

(A) Inter-segment sales were not material.

 

 

Other Income (Expense), Net
Other Income (Expense), Net
Note L: Other Income (Expense), Net
L. Other, net, which is included in other income (expense), net, was as follows, in millions:

 

                 
    Three Months Ended
March  31,
 
    2012     2011  
     

Income from cash and cash investments

  $ 2     $ 2  

Income from financial investments, net (Note E)

    16       17  

Other items, net

    (3     2  
   

 

 

   

 

 

 

Total other, net

  $ 15     $ 21  
   

 

 

   

 

 

 

Other items, net, included $(1) million and $2 million of currency gains (losses) for the three months ended March 31, 2012 and 2011, respectively.

 

 

Earning Per Common Share
Earnings Per Common Share
Note M: Earnings Per Common Share
M. 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
March  31,
 
    2012     2011  

Numerator (basic and diluted):

               

Income (loss) from continuing operations

  $ 38     $ (41

Allocation to unvested restricted stock awards

    (1     (1
   

 

 

   

 

 

 

Income (loss) from continuing operations attributable to common shareholders

  $ 37     $ (42

Loss from discontinued operations, net

    (5     (5
   

 

 

   

 

 

 

Net income (loss) available to common shareholders

  $ 32     $ (47
   

 

 

   

 

 

 
     

Denominator:

               

Basic common shares (based upon weighted average)

    349       349  

Add:

               

Contingent common shares

    —         —    

Stock option dilution

    1       —    
   

 

 

   

 

 

 

Diluted common shares

    350       349  
   

 

 

   

 

 

 

For the three months ended March 31, 2012 and 2011, the Company allocated dividends to the unvested restricted stock awards (participating securities).

Additionally, 34 million and 39 million common shares for the three months ended March 31, 2012 and 2011, respectively, related to stock options were excluded from the computation of diluted earnings per common share due to their antidilutive effect.

In the first three months of 2012, the Company granted 675,110 shares of long-term stock awards; to offset the dilutive impact of these awards, the Company also repurchased and retired 675,110 shares of Company common stock, for cash aggregating approximately $8 million. At March 31, 2012, the Company had 24 million shares of its common stock remaining under the July 2007 Board of Directors repurchase authorization.

On the basis of amounts paid (declared), cash dividends per common share were $.075 ($.075) and $.075 ($.075), respectively, for the three months ended March 31, 2012 and 2011.

Other Commitments and Contingencies
Other Commitments and Contingencies
Note N: Other Commitments and Contingencies
N. 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 was brought against the Company and a number of its insulation installation companies alleging that certain of their practices violated provisions of the federal antitrust laws. The case was filed in October 2004 in the United States District Court for the Northern District of Georgia by Columbus Drywall & Insulation, Inc., Leo Jones Insulation, Inc., Southland Insulators, Inc., Southland Insulators of Maryland, Inc. d/b/a Devere Insulation, Southland Insulators of Delaware LLC d/b/a Delmarva Insulation, and Whitson Insulation Company of Grand Rapids, Inc. against the Company, its subsidiaries Masco Contractors Services Group Corp., Masco Contractor Services Central, Inc. (“MCS Central”) and Masco Contractor Services East, Inc., and several insulation manufacturers (the “Columbus Drywall case”). In February 2009, the court certified a class of 377 insulation contractors. A trial date in this case has been scheduled for July 2012. Another suit was filed in March 2003 in the United States District Court for the Northern District of Georgia by Wilson Insulation Company, Wilson Insulation of Augusta, Inc. and The Wilson Insulation Group, Inc. against the Company, Masco Contractor Services, Inc., and MCS Central that alleged anticompetitive conduct. This case has been removed from the court’s active docket. In March 2007, Albert Von Der Werth and Valerie Good filed suit in the United States District Court for the Northern District of California against the Company, its subsidiary Masco Contractor Services, and several insulation manufacturers seeking class action status and alleging anticompetitive conduct. This case was subsequently transferred to the United States District Court for the Northern District of Georgia and has been administratively stayed by the court. An additional suit, which was filed in September 2005 and alleged anticompetitive conduct, was dismissed with prejudice in December 2006.

The Company is vigorously defending the Columbus Drywall case. Based upon the advice of its outside counsel, the Company believes that the conduct of the Company and its insulation installation companies, which is 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 these 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.

 

 

Income Taxes
Income Taxes
Note O: Income Taxes
O. In the first quarter of 2012, the Company incurred income tax expense of $4 million on pre-tax income from continuing operations of $53 million. The income tax expense includes a $21 million state income tax benefit resulting from the decrease in the liability for uncertain tax positions, primarily resulting from the expiration of applicable statutes of limitations in various jurisdictions and certain tax audit closings.

As a result of tax audit closings, settlements and expiration of applicable statutes of limitations in various jurisdictions within the next 12 months, the Company anticipates that it is reasonably possible that the liability for uncertain tax positions could be reduced by approximately $6 million.

Accounting Policies (Policies)
Recently issued accounting pronouncements

Recently Issued Accounting Pronouncements. On January 1, 2012, the Company adopted new accounting guidance requiring more prominent presentation of other comprehensive income items in the Company’s consolidated financial statements. The adoption of this new guidance did not have an impact on the Company’s financial position or its results of operations.

Discontinued Operations (Tables)
Financial information for discontinued operations
                 
    Three Months Ended
March 31,
 
    2012     2011  
     

Net Sales

  $ 20     $ 19  
   

 

 

   

 

 

 
     

Loss from discontinued operations

  $ (4   $ (5

Loss on disposal of discontinued operations, net

    (1     —    
   

 

 

   

 

 

 

Loss before income tax

    (5     (5

Income tax benefit

    —         —    
   

 

 

   

 

 

 

Loss from discontinued operations, net

  $ (5   $ (5
   

 

 

   

 

 

 
Goodwill and Other Intangible Assets (Tables)
Changes in carrying amount of goodwill
                         
    Gross Goodwill
At
Mar. 31, 2012
    Accumulated
Impairment
Losses
    Net Goodwill
At

Mar.  31, 2012
 

Cabinets and Related Products

  $ 589     $ (408   $ 181  

Plumbing Products

    545       (340     205  

Installation and Other Services

    1,806       (762     1,044  

Decorative Architectural Products

    294       (75     219  

Other Specialty Products

    980       (734     246  
   

 

 

   

 

 

   

 

 

 

Total

  $ 4,214     $ (2,319   $ 1,895  
   

 

 

   

 

 

   

 

 

 

 

                                         
    Gross Goodwill
At
Dec. 31, 2011
    Accumulated
Impairment
Losses
    Net Goodwill
At
Dec. 31, 2011
    Other(A)     Net Goodwill
At
Mar. 31, 2012
 

Cabinets and Related Products

  $ 589     $ (408   $ 181     $ —       $ 181  

Plumbing Products

    541       (340     201       4       205  

Installation and Other Services

    1,806       (762     1,044       —         1,044  

Decorative Architectural Products

    294       (75     219       —         219  

Other Specialty Products

    980       (734     246       —         246  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 4,210     $ (2,319   $ 1,891     $ 4     $ 1,895  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(A) Other principally includes the effect of foreign currency translation.
Fair Value of Financial Investments and Liabilities (Tables)
                 
    March 31,
2012
    December 31,
2011
 
     

Auction rate securities

  $ 22     $ 22  
   

 

 

   

 

 

 

Total recurring investments

    22       22  
     

Private equity funds

    81       86  

Other investments

    4       4  
   

 

 

   

 

 

 

Total non-recurring investments

    85       90  
   

 

 

   

 

 

 

Total

  $ 107     $ 112  
   

 

 

   

 

 

 
                                 
          Pre-tax        
    Cost Basis     Unrealized
Gains
    Unrealized
Losses
    Recorded
Basis
 
         

March 31, 2012

  $ 19     $ 3     $ —       $ 22  
         

December 31, 2011

  $ 19     $ 3     $ —       $ 22  
      0000000000       0000000000       0000000000       0000000000  
          Fair Value Measurements Using  
                Significant        
    Mar. 31,
2012
    Quoted
Market
Prices
(Level 1)
    Other
Observable
Inputs

(Level 2)
    Significant
Unobservable
Inputs

(Level 3)
 
         

Auction rate securities

  $ 22       —         —       $ 22  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 22     $ —       $ —       $ 22  
   

 

 

   

 

 

   

 

 

   

 

 

 

 

      0000000000       0000000000       0000000000       0000000000  
          Fair Value Measurements Using  
    Dec. 31,
2011
    Quoted
Market
Prices
(Level 1)
    Significant
Other
Observable
Inputs
(Level 2)
    Significant
Unobservable
Inputs

(Level 3)
 
         

Auction rate securities

  $ 22     $ —       $ —       $ 22  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 22     $ —       $ —       $ 22  
   

 

 

   

 

 

   

 

 

   

 

 

 
                 
    March 31, 2012
Auction Rate
Securities
    December 31, 2011
Auction Rate
Securities
 
     

Fair value at beginning of period

  $ 22     $ 22  

Total losses included in earnings

    —         —    

Unrealized (losses)

    —         —    

Purchases

    —         —    

Settlements

    —         —    

Transfer from Level 3 to Level 2

    —         —    
   

 

 

   

 

 

 

Fair value at period end

  $ 22     $ 22  
   

 

 

   

 

 

 
                 
    Three Months Ended
March 31,
 
    2012     2011  
     

Realized gains – distributions from private equity funds

  $ 16     $ 3  

Realized gains – sale of TriMas

               

Corporation common stock

    —         14  
   

 

 

   

 

 

 

Total income from financial investments

  $ 16     $ 17  
   

 

 

   

 

 

 
Derivative Instruments and Hedging Activities (Tables)
                 
    Three Months Ended
March  31,
 
    2012     2011  
     

Foreign Currency Contracts

               

Exchange Contracts

  $ (5   $ (8

Forward Contracts

    (1     2  

Metal Contracts

    7       —    
   

 

 

   

 

 

 
     

Total gain (loss)

  $ 1     $ (6
   

 

 

   

 

 

 
      0000000000       0000000000       0000000000  
    At March 31, 2012  
    Notional
Amount
    Assets     Liabilities  

Foreign Currency Contracts

                       

Exchange Contracts

  $ 114                  

Current assets

          $ 4     $ 3  

Forward Contracts

    71                  

Current assets

            1       —    

Current liabilities

            —         2  
       

Metal Contracts

    53                  

Current assets

            5       —    

Current liabilities

            —         1  
           

 

 

   

 

 

 
       

Total

          $ 10     $ 6  
           

 

 

   

 

 

 

 

      0000000000       0000000000       0000000000  
    At December 31, 2011  
    Notional
Amount
    Assets     Liabilities  

Foreign Currency Contracts

                       

Exchange Contracts

  $ 108                  

Current assets

          $ 8     $ —    

Forward Contracts

    76                  

Current assets

            1       —    

Current liabilities

            1       2  
       

Metal Contracts

    67                  

Current assets

            2       —    

Current liabilities

            —         4  
           

 

 

   

 

 

 
       

Total

          $ 12     $ 6  
           

 

 

   

 

 

 
Warranty (Tables)
Warranty liability
                 
    Three Months Ended
March  31, 2012
    Twelve Months  Ended
December 31, 2011
 
     

Balance at January 1

  $ 102     $ 107  

Accruals for warranties issued during the period

    8       28  

Accruals related to pre-existing warranties

    3       8  

Settlements made (in cash or kind) during the period

    (11     (38

Other, net

    —         (3
   

 

 

   

 

 

 

Balance at end of period

  $ 102     $ 102  
   

 

 

   

 

 

 
Stock-Based Compensation (Tables)
                 
    Three Months Ended
March  31,
 
    2012     2011  
     

Long-term stock awards

  $ 8     $ 10  

Stock options

    5       5  

Phantom stock awards and stock appreciation rights

    5       3  
   

 

 

   

 

 

 
     

Total

  $ 18     $ 18  
   

 

 

   

 

 

 
     

Income tax benefit (before valuation allowance)

  $ 7     $ 7  
   

 

 

   

 

 

 
                 
    Three Months Ended
March  31,
 
    2012     2011  
     

Unvested stock award shares at January 1

    10       10  

Weighted average grant date fair value

  $ 17     $ 19  
     

Stock award shares granted

    1       2  

Weighted average grant date fair value

  $ 12     $ 13  
     

Stock award shares vested

    2       1  

Weighted average grant date fair value

  $ 17     $ 19  
     

Stock award shares forfeited

    —         —    

Weighted average grant date fair value

  $ 18     $ 18  
     

Unvested stock award shares at March 31

    9       11  

Weighted average grant date fair value

  $ 16     $ 17  
                 
    Three Months Ended
March  31,
 
    2012     2011  
     

Option shares outstanding, January 1

    36       37  

Weighted average exercise price

  $ 21     $ 21  
     

Option shares granted

    1       2  

Weighted average exercise price

  $ 12     $ 13  
     

Option shares exercised

    —         —    

Aggregate intrinsic value on date of exercise (A)

  $ 1 million     $ 1 million  

Weighted average exercise price

  $ 8     $ 8  
     

Option shares forfeited

    2       —    

Weighted average exercise price

  $ 18     $ 23  
     

Option shares outstanding, March 31

    35       39  

Weighted average exercise price

  $ 21     $ 21  

Weighted average remaining option term (in years)

    5       6  
     

Option shares vested and expected to vest, March 31

    35       39  

Weighted average exercise price

  $ 21     $ 21  

Aggregate intrinsic value (A)

  $ 26 million     $ 33 million  

Weighted average remaining option term (in years)

    5       6  
     

Option shares exercisable (vested), March 31

    25       24  

Weighted average exercise price

  $ 23     $ 24  

Aggregate intrinsic value (A)

  $ 14 million     $ 11 million  

Weighted average remaining option term (in years)

    4       4  

 

(A) Aggregate intrinsic value is calculated using the Company’s stock price at each respective date, less the exercise price (grant date price) multiplied by the number of shares.
                 
    Three Months Ended
March 31,
 
    2012     2011  
     

Weighted average grant date fair value

  $ 4.44     $ 5.10  

Risk-free interest rate

    1.10     2.72

Dividend yield

    2.57     2.34

Volatility factor

    51.00     49.00

Expected option life

    6 years       6 years  
Employee Retirement Plans (Tables)
Net periodic pension cost for defined-benefit pension plans
                                 
    Three Months ended March 31,  
    2012     2011  
    Qualified     Non-Qualified     Qualified     Non-Qualified  
         

Service cost

  $ 2     $ —       $ 1     $ —    

Interest cost

    10       2       11       2  

Expected return on plan assets

    (8     —         (8     —    

Amortization of net loss

    3       —         2       —    
   

 

 

   

 

 

   

 

 

   

 

 

 

Net periodic pension cost

  $ 7     $ 2     $ 6     $ 2  
   

 

 

   

 

 

   

 

 

   

 

 

 
Segment Information (Tables)
Company by segment and geographic area
                                 
    Three Months Ended March 31,  
    2012     2011     2012     2011  
    Net Sales(A)     Operating Profit (Loss)  

The Company’s operations by segment were:

                               

Cabinets and Related Products

  $ 297     $ 307     $ (23   $ (50

Plumbing Products

    742       710       97       84  

Installation and Other Services

    278       235       (14     (35

Decorative Architectural Products

    434       375       73       69  

Other Specialty Products

    124       126       (5     (10
   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 1,875     $ 1,753     $ 128     $ 58  
   

 

 

   

 

 

   

 

 

   

 

 

 
         

The Company’s operations by geographic area were:

                               

North America

  $ 1,431     $ 1,314     $ 88     $ 16  

International, principally Europe

    444       439       40       42  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 1,875     $ 1,753       128       58  
   

 

 

   

 

 

                 
         

General corporate expense, net

                    (28     (32

Income from litigation settlements

                    2       —    
                   

 

 

   

 

 

 

Operating profit

                    102       26  

Other income (expense), net

                    (49     (42
                   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

                  $ 53     $ (16
                   

 

 

   

 

 

 

 

(A) Inter-segment sales were not material.
Other Income (Expense), Net (Tables)
Other, net
                 
    Three Months Ended
March  31,
 
    2012     2011  
     

Income from cash and cash investments

  $ 2     $ 2  

Income from financial investments, net (Note E)

    16       17  

Other items, net

    (3     2  
   

 

 

   

 

 

 

Total other, net

  $ 15     $ 21  
   

 

 

   

 

 

 
Earning Per Common Share (Tables)
Numerators and denominators used in the computations of basic and diluted earnings per common share
                 
    Three Months Ended
March  31,
 
    2012     2011  

Numerator (basic and diluted):

               

Income (loss) from continuing operations

  $ 38     $ (41

Allocation to unvested restricted stock awards

    (1     (1
   

 

 

   

 

 

 

Income (loss) from continuing operations attributable to common shareholders

  $ 37     $ (42

Loss from discontinued operations, net

    (5     (5
   

 

 

   

 

 

 

Net income (loss) available to common shareholders

  $ 32     $ (47
   

 

 

   

 

 

 
     

Denominator:

               

Basic common shares (based upon weighted average)

    349       349  

Add:

               

Contingent common shares

    —         —    

Stock option dilution

    1       —    
   

 

 

   

 

 

 

Diluted common shares

    350       349  
   

 

 

   

 

 

 
Discontinued Operations (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2012
Mar. 31, 2011
Financial information for discontinued operations
 
 
Net Sales
$ 20 
$ 19 
Loss from discontinued operations
(4)
(5)
Loss on disposal of discontinued operations, net
(1)
 
Loss before income tax
(5)
(5)
Income tax benefit
   
   
Loss from discontinued operations
$ (5)
$ (5)
Goodwill and Other Intangible Assets (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2012
Dec. 31, 2011
Changes in carrying amount of goodwill
 
 
Gross Goodwill
$ 4,214 
$ 4,210 
Accumulated Impairment Losses
(2,319)
(2,319)
Goodwill
1,895 
1,891 
Other
 
Goodwill and Other Intangible Assets (Textual) [Abstract]
 
 
Other indefinite-lived intangible assets
174 
174 
Carrying value of definite-lived intangible assets
21 
22 
Accumulated amortization
55 
54 
Cabinets and Related Products [Member]
 
 
Changes in carrying amount of goodwill
 
 
Gross Goodwill
589 
589 
Accumulated Impairment Losses
(408)
(408)
Goodwill
181 
181 
Plumbing Products [Member]
 
 
Changes in carrying amount of goodwill
 
 
Gross Goodwill
545 
541 
Accumulated Impairment Losses
(340)
(340)
Goodwill
205 
201 
Other
 
Installation and Other Services [Member]
 
 
Changes in carrying amount of goodwill
 
 
Gross Goodwill
1,806 
1,806 
Accumulated Impairment Losses
(762)
(762)
Goodwill
1,044 
1,044 
Decorative Architectural Products [Member]
 
 
Changes in carrying amount of goodwill
 
 
Gross Goodwill
294 
294 
Accumulated Impairment Losses
(75)
(75)
Goodwill
219 
219 
Other Specialty Products [Member]
 
 
Changes in carrying amount of goodwill
 
 
Gross Goodwill
980 
980 
Accumulated Impairment Losses
(734)
(734)
Goodwill
$ 246 
$ 246 
Depreciation and Amortization Expense (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2012
Mar. 31, 2011
Depreciation And Amortization Expense (Textual) [Abstract]
 
 
Depreciation and amortization expense
$ 55 
$ 75 
Accelerated depreciation
$ 7 
$ 19 
Fair Value of Financial Investments and Liabilities (Details) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2012
Dec. 31, 2011
Financial investments included in other assets
 
 
Investments, fair value disclosure
$ 107 
$ 112 
Company's investments in available-for-sale securities
 
 
Cost Basis
19 
19 
Pre-tax Unrealized Gains
Pre-tax Unrealized Losses
   
   
Recorded Basis
22 
22 
Auction rate securities [Member]
 
 
Financial investments included in other assets
 
 
Investments, fair value disclosure
22 
22 
Recurring investments [Member]
 
 
Financial investments included in other assets
 
 
Investments, fair value disclosure
22 
22 
Recurring investments [Member] |
Auction rate securities [Member]
 
 
Financial investments included in other assets
 
 
Investments, fair value disclosure
22 
22 
Nonrecurring investments [Member]
 
 
Financial investments included in other assets
 
 
Investments, fair value disclosure
85 
90 
Nonrecurring investments [Member] |
Private Equity Funds [Member]
 
 
Financial investments included in other assets
 
 
Investments, fair value disclosure
81 
86 
Nonrecurring investments [Member] |
Other investments [Member]
 
 
Financial investments included in other assets
 
 
Investments, fair value disclosure
$ 4 
$ 4 
Fair Value of Financial Investments and Liabilities (Details 1) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2012
Dec. 31, 2011
Recurring Fair Value Measurements
 
 
Investments, fair value disclosure
$ 107 
$ 112 
Auction rate securities [Member]
 
 
Recurring Fair Value Measurements
 
 
Investments, fair value disclosure
22 
22 
Quoted Market Prices (Level 1) [Member]
 
 
Recurring Fair Value Measurements
 
 
Investments, fair value disclosure
   
   
Quoted Market Prices (Level 1) [Member] |
Auction rate securities [Member]
 
 
Recurring Fair Value Measurements
 
 
Investments, fair value disclosure
   
   
Significant Other Observable Inputs (Level 2) [Member]
 
 
Recurring Fair Value Measurements
 
 
Investments, fair value disclosure
   
   
Significant Other Observable Inputs (Level 2) [Member] |
Auction rate securities [Member]
 
 
Recurring Fair Value Measurements
 
 
Investments, fair value disclosure
   
   
Significant Unobservable Inputs (Level 3) [Member]
 
 
Recurring Fair Value Measurements
 
 
Investments, fair value disclosure
22 
22 
Significant Unobservable Inputs (Level 3) [Member] |
Auction rate securities [Member]
 
 
Recurring Fair Value Measurements
 
 
Investments, fair value disclosure
$ 22 
$ 22 
Fair Value of Financial Investments and Liabilities (Details 2) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Mar. 31, 2012
Dec. 31, 2011
Changes in Level 3 financial assets measured at fair value on a recurring basis
 
 
Settlements
   
 
Auction rate securities [Member]
 
 
Changes in Level 3 financial assets measured at fair value on a recurring basis
 
 
Fair value, Beginning Balance
22 
22 
Total losses included in earnings
   
   
Unrealized (losses)
   
   
Purchases
   
   
Settlements
 
   
Transfer from Level 3 to Level 2
   
   
Fair value, Ending Balance
$ 22 
$ 22 
Fair Value of Financial Investments and Liabilities (Details 3) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2012
Mar. 31, 2011
Income from financial investments net included in other net within other income expense net
 
 
Total income from financial investments
$ 16 
$ 17 
Private Equity Funds [Member]
 
 
Income from financial investments net included in other net within other income expense net
 
 
Realized gains
16 
TriMas Corporation Common Stock [Member]
 
 
Income from financial investments net included in other net within other income expense net
 
 
Realized gains
 
$ 14 
Fair Value of Financial Investments and Liabilities (Details Textual) (USD $)
In Billions, unless otherwise specified
Mar. 31, 2012
Dec. 31, 2011
Fair Value of Financial Investments and Liabilities (Textual) [Abstract]
 
 
Estimated market value of long-term and short-term debt
$ 4.5 
$ 4.0 
Aggregate carrying value of long-term and short-term debt
$ 4.4 
$ 4.0 
Derivative Instruments and Hedging Activities (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2012
Mar. 31, 2011
Derivative Contracts
 
 
Total (loss) gain
$ 1 
$ (6)
Exchange Contract [Member]
 
 
Derivative Contracts
 
 
Total (loss) gain
(5)
(8)
Forward Contracts [Member]
 
 
Derivative Contracts
 
 
Total (loss) gain
(1)
Metal Contract [Member]
 
 
Derivative Contracts
 
 
Total (loss) gain
$ 7 
 
Derivative Instruments and Hedging Activities (Details 1) (USD $)
In Millions, unless otherwise specified
Mar. 31, 2012
Dec. 31, 2011
Assets
 
 
Current assets
$ 10 
$ 12 
Liabilities
 
 
Current liabilities
Foreign Currency Contract [Member]
 
 
Notional Amount
 
 
Notional Amount
114 
108 
Assets
 
 
Current assets
Liabilities
 
 
Current liabilities
 
Forward Contract [Member]
 
 
Notional Amount
 
 
Notional Amount
71 
76 
Assets
 
 
Current assets
Liabilities
 
 
Current liabilities
Current liabilities
 
Commodity Contract [Member]
 
 
Notional Amount
 
 
Notional Amount
53 
67 
Assets
 
 
Current assets
Liabilities
 
 
Current liabilities
$ 1 
$ 4 
Derivative Instruments and Hedging Activities (Details Textual) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Mar. 31, 2012
Mar. 31, 2011
Dec. 31, 2011
Derivative Instrument and Hedging Activities (Textual) [Abstract]
 
 
 
Forecasted debt issuance variable rate period
3-month LIBOR 
 
 
Percentage of interest rate swap effectiveness
 
 
100.00% 
Interest rate swap recorded in other comprehensive income
 
 
$ 23 
Increase Decrease in Interest expense due to amortization of gain on discontinuation of interest rate swap agreement
 
Ineffective portion of the cash flow hedges
 
 
Loss from the termination of the interest rate swap agreement
23 
 
 
Issued notes
$ 400 
 
 
Warranty (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Mar. 31, 2012
Dec. 31, 2011
Warranty liability
 
 
Balance at January 1
$ 102 
$ 107 
Accruals of warranties issued during the period
28 
Accruals related to pre-existing warranties
Settlements made (in cash or kind) during the period
(11)
(38)
Other, Net
 
(3)
Balance at end of period
$ 102 
$ 102 
Debt (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Mar. 31, 2012
Financial_Covenants
Mar. 31, 2012
5.875% Notes and Debentures due July 2012 [Member]
Mar. 31, 2012
5.95% Notes and Debentures due March 15, 2022 [Member]
Mar. 5, 2012
5.95% Notes and Debentures due March 15, 2022 [Member]
Debt Instrument [Line Items]
 
 
 
 
Interest on notes
 
5.875% 
5.95% 
 
Issued notes
$ 400 
$ 745 
 
$ 400 
Debt (Textual) [Abstract]
 
 
 
 
Additional borrowing capacity
783 
 
 
 
Effective interest for notes
6.50% 
 
 
 
Absorption of reduction to shareholders' equity to remain in compliance with covenant
422 
 
 
 
Financial covenants
 
 
 
Company repurchased Notes in open-market transactions
46 
 
 
 
Premium paid on repurchase of notes
 
 
 
Borrowings under Five Year Revolving Credit Agreement
$ 0 
 
 
 
Stock-Based Compensation (Details) (USD $)
3 Months Ended
Mar. 31, 2012
Y
Mar. 31, 2011
Y
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
 
 
Total unrecognized compensation expense
$ 103,000,000 
$ 145,000,000 
Remaining weighted average vesting period in years
Option shares granted
1,000,000 
2,000,000 
Pre-tax compensation expense and related income tax benefit for stock -based incentives
 
 
Long-term stock awards
8,000,000 
10,000,000 
Stock options
5,000,000 
5,000,000 
Phantom stock awards and stock appreciation rights
5,000,000 
3,000,000 
Total
18,000,000 
18,000,000 
Income tax benefit (before valuation allowance)
7,000,000 
7,000,000 
Company's long-term stock award activity
 
 
Unvested stock award shares at January 1
10,000,000 
10,000,000 
Weighted average grant date fair value
$ 17 
$ 19 
Stock award shares granted
1,000,000 
2,000,000 
Weighted average grant date fair value
$ 12 
$ 13 
Stock award shares vested
2,000,000 
1,000,000 
Weighted average grant date fair value
$ 17 
$ 19 
Stock award shares forfeited
   
   
Weighted average grant date fair value
$ 18 
$ 18 
Unvested stock award shares at December 31
9,000,000 
11,000,000 
Weighted average grant date fair value
$ 16 
$ 17 
Company's stock option activity
 
 
Option shares outstanding, January 1
36,000,000 
37,000,000 
Weighted average exercise price
$ 21 
$ 21 
Option shares granted
1,000,000 
2,000,000 
Weighted average exercise price
$ 12 
$ 13 
Option shares exercised
   
   
Aggregate intrinsic value on date of exercise(A)
1,000,000 
1,000,000 
Weighted average exercise price
$ 8 
$ 8 
Option shares forfeited
2,000,000 
   
Weighted average exercise price
$ 18 
$ 23 
Option shares outstanding, March 31
35,000,000 
39,000,000 
Weighted average exercise price
$ 21 
$ 21 
Weighted average remaining option term (in years)
Option shares vested and expected to vest, March 31
35,000,000 
39,000,000 
Weighted average exercise price
$ 21 
$ 21 
Aggregate intrinsic value (A)
26,000,000 
33,000,000 
Weighted average remaining option term (in years)
Option shares exercisable (vested), March 31
25,000,000 
24,000,000 
Weighted average exercise price
$ 23 
$ 24 
Aggregate intrinsic value (A)
14,000,000 
11,000,000 
Weighted average remaining option term (in years)
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
 
 
Weighted average grant date fair value
$ 4.44 
$ 5.10 
Risk-free interest rate
1.10% 
2.72% 
Dividend yield
2.57% 
2.34%