MASCO CORP /DE/, 10-Q filed on 10/28/2010
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2010
Oct. 26, 2010
Jun. 30, 2009
Document and Entity Information [Abstract]
 
 
 
Entity Registrant Name
MASCO CORP /DE/ 
 
 
Entity Central Index Key
0000062996 
 
 
Document Type
10-Q 
 
 
Document Period End Date
2010-09-30 
 
 
Amendment Flag
FALSE 
 
 
Document Fiscal Year Focus
2010 
 
 
Document Fiscal Period Focus
Q3 
 
 
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
 
 
3,338,607,000 
Entity Common Stock, Shares Outstanding (actual number)
 
358,500,000 
 
Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Millions
9 Months Ended
Sep. 30, 2010
Year Ended
Dec. 31, 2009
Current assets:
 
 
Cash and cash investments
$ 1,537 
$ 1,413 
Receivables
1,106 
983 
Prepaid expenses and other
288 
312 
Inventories:
 
 
Finished goods
431 
405 
Raw material
268 
247 
Work in process
103 
91 
Total Inventories
802 
743 
Total current assets
3,733 
3,451 
Property and equipment, net
1,838 
1,981 
Goodwill
3,098 
3,108 
Other intangible assets, net
282 
290 
Other assets
302 
345 
Total assets
9,253 
9,175 
Current liabilities:
 
 
Notes payable
66 
364 
Accounts payable
650 
578 
Accrued liabilities
842 
839 
Total current liabilities
1,558 
1,781 
Long-term debt
4,036 
3,604 
Deferred income taxes and other
959 
973 
Total liabilities
6,553 
6,358 
Commitments and contingencies
 
 
Masco Corporation's shareholders' equity:
 
 
Common shares, par value $1 per share Authorized shares: 1,400,000,000; issued and outstanding: 2010 - 348,400,000; 2009 - 350,400,000;
348 
350 
Preferred shares authorized: 1,000,000; issued and outstanding: 2010 - None; 2009 - None
Paid-in capital
36 
42 
Retained earnings
1,782 
1,871 
Accumulated other comprehensive income
339 
366 
Total Masco Corporation's shareholders' equity
2,505 
2,629 
Noncontrolling interest
195 
188 
Total equity
2,700 
2,817 
Total liabilities and equity
9,253 
9,175 
Cabinets and Related Products [Member]
 
 
Inventories:
 
 
Goodwill
224 
226 
Plumbing Products [Member]
 
 
Inventories:
 
 
Goodwill
199 
207 
Installation and Other Services [Member]
 
 
Inventories:
 
 
Goodwill
1,768 
1,768 
Decorative Architectural Products [Member]
 
 
Inventories:
 
 
Goodwill
294 
294 
Other Specialty Products [Member]
 
 
Inventories:
 
 
Goodwill
$ 613 
$ 613 
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
Sep. 30, 2010
Dec. 31, 2009
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
348,400,000 
350,400,000 
Common shares, shares outstanding
348,400,000 
350,400,000 
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
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2010
2009
2010
2009
Condensed Consolidated Statements of Income [Abstract]
 
 
 
 
Net sales
$ 1,957 
$ 2,084 
$ 5,857 
$ 5,894 
Cost of sales
1,463 
1,517 
4,325 
4,371 
Gross profit
494 
567 
1,532 
1,523 
Selling, general and administrative expenses
392 
429 
1,233 
1,263 
Charge for defined-benefit plan curtailment
 
 
 
1
Operating profit
102 
138 
299 
252 
Other income (expense), net:
 
 
 
 
Interest expense
(63)
(56)
(188)
(169)
Impairment charge for financial investments
 
 
(33)
(10)
Other, net
(1)
(2)
22 
Total Other income (expense), net
(64)
(49)
(223)
(157)
Income from continuing operations before income taxes
38 
89 
76 
95 
Income tax expense
31 
26 
53 
35 
Income from continuing operations
63 
23 
60 
Loss from discontinued operations, net
 
(23)
 
(31)
Net income
40 
23 
29 
Less: Net income attributable to noncontrolling interest
12 
12 
32 
27 
Net (loss) income attributable to Masco Corporation
(5)
28 
(9)
Basic:
 
 
 
 
(Loss) income from continuing operations
(0.02)
0.14 
(0.03)
0.09 
Loss from discontinued operations, net
 
(0.06)
 
(0.09)
Net (loss) income
(0.02)
0.08 
(0.03)
Diluted:
 
 
 
 
(Loss) income from continuing operations
(0.02)
0.14 
(0.03)
0.09 
Loss from discontinued operations, net
 
(0.06)
 
(0.09)
Net (loss) income
(0.02)
0.08 
(0.03)
Amounts attributable to Masco Corporation:
 
 
 
 
(Loss) income from continuing operations
(5)
51 
(9)
33 
Loss from discontinued operations, net
 
(23)
 
(31)
Net (loss) income
$ (5)
$ 28 
$ (9)
$ 2 
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Millions
9 Months Ended
Sep. 30,
2010
2009
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES:
 
 
Cash provided by operations
$ 333 
$ 384 
Increase in receivables
(136)
(187)
(Increase) decrease in inventories
(64)
149 
Increase in accounts payable and accrued liabilities, net
103 
69 
Net cash from operating activities
236 
415 
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES:
 
 
Increase in debt
Payment of debt
(3)
(12)
Issuance of Notes, net of issuance costs
494 
 
Retirement of Notes
(359)
 
Purchase of Company common stock
(45)
(11)
Cash dividends paid
(81)
(139)
Dividend payment to noncontrolling interest
(15)
(16)
Credit Agreement costs
(9)
 
Net cash for financing activities
(16)
(174)
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES:
 
 
Capital expenditures
(88)
(70)
Proceeds from disposition of:
 
 
Marketable securities
Other financial investments, net
Businesses, net of cash disposed
 
Property and equipment
16 
20 
Acquisition of businesses, net of cash acquired
 
(8)
Other, net
(26)
(25)
Net cash for investing activities
(87)
(74)
Effect of exchange rate changes on cash and cash investments
(9)
CASH AND CASH INVESTMENTS:
 
 
Increase for the period
124 
171 
At January 1
1,413 
1,028 
At September 30
$ 1,537 
$ 1,199 
Accounting Policies
Accounting Policies
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 September 30, 2010 and the results of operations for the three months and nine months ended September 30, 2010 and 2009 and cash flows for the nine months ended September 30, 2010 and 2009. The condensed consolidated balance sheet at December 31, 2009 was derived from audited financial statements.
    Certain prior-year amounts have been reclassified to conform to the 2010 presentation in the condensed consolidated financial statements. The results of operations related to 2009 discontinued operations have been separately stated in the accompanying condensed consolidated statements of income for the three months and nine months ended September 30, 2009. In the Company’s condensed consolidated statements of cash flows for the nine months ended September 30, 2009, cash flows of discontinued operations are not separately classified.
    Recently Issued Accounting Pronouncements
    Effective January 1, 2010, the Company adopted new FASB guidance regarding how a company determines when an entity is insufficiently capitalized or is not controlled through voting and should be consolidated. The adoption of this guidance did not have any impact on the Company’s consolidated financial condition and results of operations.
Discontinued Operations
Discontinued Operations
B. Discontinued Operations
B.   The Company has accounted for 2009 dispositions as discontinued operations.
 
    Selected financial information for these discontinued operations was as follows, in millions:
                 
    Three Months Ended     Nine Months Ended  
    September 30, 2009     September 30, 2009  
Net sales
  $ 13     $ 57  
 
           
Loss from discontinued operations
  $ (2 )   $ (11 )
Loss on disposal of discontinued operations
    (22 )     (21 )
 
           
Loss before income tax
    (24 )     (32 )
Income tax benefit
    1       1  
 
           
Loss from discontinued operations, net
  $ (23 )   $ (31 )
 
           
Goodwill and Other Intangible Assets
Goodwill and Other Intangible Assets
C. Goodwill and Other Intangible Assets
C.   The changes in the carrying amount of goodwill for the nine months ended September 30, 2010, by segment, were as follows, in millions:
                         
    Gross Goodwill     Accumulated     Net Goodwill  
    At     Impairment     At  
    Sep. 30, 2010     Losses     Sep. 30, 2010  
Cabinets and Related Products
  $ 588     $ (364 )   $ 224  
Plumbing Products
    539       (340 )     199  
Installation and Other Services
    1,819       (51 )     1,768  
Decorative Architectural Products
    294             294  
Other Specialty Products
    980       (367 )     613  
 
                 
Total
  $ 4,220     $ (1,122 )   $ 3,098  
 
                 
                                         
    Gross Goodwill     Accumulated     Net Goodwill                
    At     Impairment     At             At  
    Dec. 31, 2009     Losses     Dec. 31, 2009     Other(A)     Sep. 30, 2010  
Cabinets and Related Products
  $ 590     $ (364 )   $ 226     $ (2 )   $ 224  
Plumbing Products
    547       (340 )     207       (8 )     199  
Installation and Other Services
    1,819       (51 )     1,768             1,768  
Decorative Architectural Products
    294             294             294  
Other Specialty Products
    980       (367 )     613             613  
 
                             
Total
  $ 4,230     $ (1,122 )   $ 3,108     $ (10 )   $ 3,098  
 
                             
 
(A)   Other principally includes the effect of foreign currency translation.
    Other indefinite-lived intangible assets were $195 million and $196 million at September 30, 2010 and December 31, 2009, respectively, and principally included registered trademarks. The carrying value of the Company’s definite-lived intangible assets was $87 million (net of accumulated amortization of $73 million) at September 30, 2010 and $94 million (net of accumulated amortization of $67 million) at December 31, 2009, and principally included customer relationships and non-compete agreements.
Depreciation and Amortization Expense
Depreciation and Amortization Expense
D. Depreciation and Amortization Expense
D.   Depreciation and amortization expense was $209 million and $190 million, respectively, for the nine months ended September 30, 2010 and 2009.
 
Fair Value of Financial Investments and Liabilities
Fair Value of Financial Investments and Liabilities
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:
                 
    September 30,     December 31,  
    2010     2009  
Asahi Tec Corporation — preferred stock
  $ 10     $ 71  
Auction rate securities
    22       22  
TriMas Corporation common stock
    36       17  
 
           
Total recurring investments
    68       110  
 
               
Private equity funds
    115       123  
Other investments
    9       9  
 
           
Total non-recurring investments
    124       132  
 
           
Total
  $ 192     $ 242  
 
           
    The Company’s investments in available-for-sale securities at September 30, 2010 and December 31, 2009 were as follows, in millions:
                                 
            Pre-tax    
            Unrealized   Unrealized   Recorded
    Cost Basis   Gains   Losses   Basis
September 30, 2010
  $ 35     $ 35     $ 2     $ 68  
December 31, 2009
  $ 71     $ 39     $     $ 110  
    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:
                                 
            Fair Value Measurements Using  
                    Significant        
            Quoted     Other     Significant  
            Market     Observable     Unobservable  
    Sep. 30,     Prices     Inputs     Inputs  
    2010     (Level 1)     (Level 2)     (Level 3)  
Asahi Tec Corporation:
                               
Preferred stock
  $ 10     $     $ 10     $  
Auction rate securities
    22                   22  
TriMas Corporation
    36       36              
 
                       
Total
  $ 68     $ 36     $ 10     $ 22  
 
                       
                                 
            Fair Value Measurements Using  
                    Significant        
            Quoted     Other     Significant  
            Market     Observable     Unobservable  
    Dec. 31,     Prices     Inputs     Inputs  
    2009     (Level 1)     (Level 2)     (Level 3)  
Asahi Tec Corporation:
                               
Preferred stock
  $ 71     $     $     $ 71  
Auction rate securities
    22                   22  
TriMas Corporation
    17       17              
 
                       
Total
  $ 110     $ 17     $     $ 93  
 
                       
    The Company did not have any transfers between Level 1 and Level 2 financial assets in the first nine months of 2010 or in the full-year 2009.
    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 (approximately four percent and six percent at September 30, 2010 and December 31, 2009, respectively) and the assumptions for credit defaults, since the auction rate securities are backed by credit default swap agreements.
    During the second quarter of 2010, Asahi Tec approached the Company with an offer to amend the terms of the preferred stock held by the Company. The request was made by Asahi Tec in order to facilitate early negotiations with their bank group for debt that matures in early 2011. The Company and Asahi Tec agreed to amend the preferred stock to include a more favorable conversion feature into common stock and to include a mandatory conversion date of February 28, 2011. The Company agreed to this amendment based on favorable tax benefits related to the Asahi Tec investment. Prior to this amendment, the Company could have settled in cash or common stock in 2017. As a result of the amendment, the Company recognized a $28 million impairment loss based on the current fair value of the preferred stock on an if-converted basis at June 30, 2010. Also, as a result of the amendment, the Company reversed an unrealized gain of $23 million that was previously included in accumulated other comprehensive income. On a quarterly basis, the Asahi Tec Preferred Stock will now be valued based on the trading price of the Asahi Tec common stock (Level 2 input). During the third quarter of 2010, the Company converted and sold $8 million of its investment in Asahi Tec and recognized a loss on the sale of $3 million for the three months ended September 30, 2010.
    In the past, the preferred stock of Asahi Tec was valued primarily using a discounted cash flow model, because there were previously no observable prices in an active market for the same or similar securities. The significant inputs in the discounted cash flow model previously used to value the Asahi Tec preferred stock included: the present value of future dividends, present value of redemption rights, fair value of conversion rights and the discount rate based on credit spreads for Japanese-issued preferred securities (approximately 600 basis points at December 31, 2009) and other market factors.
    The following table summarizes the changes in Level 3 financial assets measured at fair value on a recurring basis for the nine months ended September 30, 2010 and the year ended December 31, 2009, in millions:
                         
    Asahi Tec     Auction Rate        
    Preferred Stock     Securities     Total  
Fair value January 1, 2010
  $ 71     $ 22     $ 93  
Total losses included in earnings
    (28 )           (28 )
Unrealized (losses)
    (23 )           (23 )
Purchases
                 
Settlements
                 
Transfer from Level 3 to Level 2
    (20 )           (20 )
 
                 
Fair value at September 30, 2010
  $     $ 22     $ 22  
 
                 
                         
    Asahi Tec     Auction Rate        
    Preferred Stock     Securities     Total  
Fair value January 1, 2009
  $ 72     $ 22     $ 94  
Total losses included in earnings
                 
Unrealized (losses)
    (1 )           (1 )
Purchases, issuances, settlements
                 
 
                 
Fair value at December 31, 2009
  $ 71     $ 22     $ 93  
 
                 
    Non-Recurring Fair Value Measurements. Financial investments measured at fair value on a non-recurring basis during the 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     Total  
    Sep. 30,     Prices     Inputs     Inputs     Gains  
    2010     (Level 1)     (Level 2)     (Level 3)     (Losses)  
Private equity funds
  $ 2     $     $     $ 2     $ (3 )
Other private investments
                            (2 )
 
                             
 
  $ 2     $     $     $ 2     $ (5 )
 
                             
                                         
            Fair Value Measurements Using        
                    Significant              
            Quoted     Other     Significant        
            Market     Observable     Unobservable     Total  
    Dec. 31,     Prices     Inputs     Inputs     Gains  
    2009     (Level 1)     (Level 2)     (Level 3)     (Losses)  
Private equity funds
  $ 31     $     $     $ 31     $ (10 )
Other private investments
    3                   3        
 
                             
 
  $ 34     $     $     $ 34     $ (10 )
 
                             
    During the second quarter of 2010, based on information from the fund manager, the Company determined that the decline in the estimated value of two private equity funds (with an aggregate carrying value of $5 million prior to impairment) was other-than-temporary and, accordingly, recognized non-cash, pre-tax impairment charges of $3 million. The remaining private equity investments, with an aggregate carrying value of $113 million at September 30, 2010, were not evaluated for impairment, as there were no indicators of impairment or identified events or changes in circumstances that would have a significant adverse effect on the fair value of the investments. During the second quarter of 2010, the Company also determined that the decline in the estimated value of one private investment was other-than-temporary and, accordingly, recognized a non-cash, pre-tax impairment charge of $2 million. The Company did not have any transfers between Level 1 and Level 2 financial assets in the first nine months of 2010 or in the full-year 2009.
 
    During 2009, the Company determined that the decline in the estimated value of certain private equity funds (with an aggregate carrying value of $41 million prior to impairment) was other-than-temporary and, accordingly, recognized non-cash, pre-tax impairment charges of $10 million for the year ended December 31, 2009. The remaining private equity investments, with an aggregate carrying value of $92 million at December 31, 2009, were not evaluated for impairment, as there were no indicators of impairment or identified events or changes in circumstances that would have a significant adverse effect on the fair value of the investments.
    Loss from financial investments, net, was $3 million and $2 million, respectively, for the three months and nine months ended September 30, 2010.
 
    Impairment charges for financial investments were as follows, in millions:
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2010     2009     2010     2009  
Impairment charges:
                               
Asahi Tec Preferred Stock
  $     $     $ (28 )   $  
Private equity funds
                (3 )     (10 )
Other private investments
                (2 )      
 
                       
Total impairment charges
  $     $     $ (33 )   $ (10 )
 
                       
    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 September 30, 2010 was approximately $4.1 billion, compared with the aggregate carrying value of $4.1 billion. The aggregate estimated market value of short-term and long-term debt at December 31, 2009 was approximately $3.9 billion, compared with the aggregate carrying value of $4.0 billion.
 
Derivatives
Derivatives
F. Derivatives
F.   During 2010 and 2009, the Company entered into foreign currency exchange contracts to hedge currency fluctuations related to intercompany loans denominated in non-functional currencies. At September 30, 2010, the Company had recorded losses of $5 million on the foreign currency exchange contracts, which is partially offset by gains related to the translation of loans and accounts denominated in non-functional currencies. At December 31, 2009, the Company had no recorded asset or liability related to foreign currency exchange contracts. Gains (losses) related to these contracts are recorded in the Company’s consolidated statements of income in other income (expense), net. For the nine months ended September 30, 2010 and 2009, the Company had recorded losses of $5 million and $1 million, respectively, related to these foreign currency exchange contracts. For the three months ended September 30, 2010 and 2009, the Company had recorded gains (losses) of $(10) million and $2 million, respectively, related to these foreign currency exchange contracts.
 
    During 2010 and 2009, 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. Based upon period-end market prices, the Company had recorded liabilities of $(2) million and $(1) million to reflect contract prices at September 30, 2010 and December 31, 2009, respectively. Gains (losses) related to these contracts are recorded in the Company’s consolidated statements of income in other income (expense), net. For the nine months ended September 30, 2010 and 2009, the Company had recorded (losses) of $(1) million and $(2) million, respectively, related to these foreign currency exchange contracts. For the three months ended September 30, 2010 and 2009, the Company had recorded gains (losses) of $1 million and $(1) million, respectively, 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 Company’s exposure is limited to the aggregate foreign currency rate differential with such institutions.
    During 2010, the Company entered into several contracts to manage its exposure to increases in the price of copper and zinc. Based upon period-end market prices, the Company had recorded assets of $3 million to reflect contract prices at September 30, 2010. Gains (losses) related to these contracts are recorded in the Company’s consolidated statements of income in cost of goods sold. For the three months and nine months ended September 30, 2010, the Company had recorded gains of $4 million and $3 million, respectively, related to these contracts.
 
    The fair value of these derivative contracts is estimated on a recurring basis, quarterly, using Level 2 inputs (significant other observable inputs).
 
Warranty
Warranty
G. Warranty
G.   Changes in the Company’s warranty liability were as follows, in millions:
                 
    Nine Months Ended     Twelve Months Ended  
    September 30, 2010     December 31, 2009  
Balance at January 1
  $ 109     $ 119  
Accruals for warranties issued during the period
    30       32  
Accruals related to pre-existing warranties
    (2 )     5  
Settlements made (in cash or kind) during the period
    (28 )     (44 )
Other, net
    (2 )     (3 )
 
           
Balance at end of period
  $ 107     $ 109  
 
           
Debt
Debt
H. Debt
H.   At September 30, 2010 and December 31, 2009, there were outstanding $108 million principal amount at maturity of Zero Coupon Convertible Senior Notes due 2031, with an accreted value of $57 million and $55 million, respectively.
 
    The Company retired $300 million of floating rate notes on March 12, 2010, the scheduled maturity date.
 
    On March 10, 2010, the Company issued $500 million of 7.125% Notes (“Notes”) due March 15, 2020. The Notes are senior indebtedness and are redeemable at the Company’s option.
 
    During the second quarter of 2010, the Company repurchased $59 million of 5.875% Notes due July 2012, in open-market transactions. The Company paid a premium of $2 million over par value on the purchase of the notes; such expense was included in interest expense.
 
    On June 21, 2010, the Company entered into a Credit Agreement (the “New Credit Agreement”) dated as of June 21, 2010, with a bank group, with an aggregate commitment of $1.25 billion with a maturity date of January 10, 2014. The Company’s 5-Year Revolving Credit Agreement dated as of November 5, 2004, as amended, with an aggregate commitment of $1.25 billion, was terminated.
    The New Credit Agreement provides for an unsecured revolving credit facility available to the Company and one of its foreign subsidiaries, in U.S. dollars, European euros and certain other currencies. Borrowings under the revolver denominated in euros are limited to $500 million, equivalent. The Company can also borrow swingline loans up to $150 million and obtain letters of credit of up to $250 million; any outstanding Letters of Credit reduce the Company’s borrowing capacity. At September 30, 2010, the Company had $100 million of unused Letters of Credit, reducing the Company’s borrowing capacity by such amount.
 
    Revolving credit loans bear interest under the New Credit Agreement, at the Company’s option: at (A) a rate per annum equal to the greatest of (i) prime rate, (ii) the Federal Funds effective rate plus 0.50% and (iii) LIBOR plus 1.0% (the “Alternative Base Rate”); plus an applicable margin based upon the then applicable corporate credit ratings of the Company; or (B) LIBOR plus an applicable margin based upon the then applicable corporate credit ratings of the Company. The foreign currency revolving credit loans bear interest at a rate equal to LIBOR plus an applicable margin based upon the then applicable corporate credit ratings of the Company.
 
    The New Credit Agreement contains financial covenants requiring the Company to maintain (A) a maximum debt to total capitalization ratio of 65 percent, and (B) a minimum interest coverage ratio equal to or greater than (i) 2.25 to 1.0 through the quarter ending on September 30, 2011 and (ii) 2.50 to 1.0 thereafter. The debt to total capitalization ratio allows the add-back, if incurred, of up to the first $500 million of certain non-cash charges, including goodwill and other intangible asset impairment charges, occurring from and after April 1, 2010, that would negatively impact shareholders’ equity.
 
    Based on the limitations of the debt to total capitalization covenant, at September 30, 2010, the Company had additional borrowing capacity, subject to availability, of up to $1.2 billion. Alternatively, at September 30, 2010, the Company could absorb a reduction to shareholders’ equity of approximately $700 million, and remain in compliance with the debt to total capitalization covenant.
 
    In order to borrow under the New 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 September 30, 2010.
Stock-Based Compensation
Stock-Based Compensation
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 September 30, 2010, 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     Nine Months Ended  
    September 30,     September 30,  
    2010     2009     2010     2009  
Long-term stock awards
  $ 9     $ 7     $ 28     $ 28  
Stock options
    6       6       17       21  
Phantom stock awards and stock appreciation rights
    1       3             5  
 
                       
Total
  $ 16     $ 16     $ 45     $ 54  
 
                       
 
                               
Income tax benefit
  $ 6     $ 6     $ 17     $ 20  
 
                       
    In June 2009, the Company recognized $6 million of accelerated stock compensation expense (for previously granted stock awards and options) related to the retirement from full-time employment of the Company’s Executive Chairman of the Board of Directors; he continues 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. Stock awards granted prior to January 1, 2010 have a typical vesting period of 10 years. Stock awards granted subsequent to January 1, 2010 have a vesting period of 5 years.
 
    The Company’s long-term stock award activity was as follows, shares in millions:
                 
    Nine Months Ended
    September 30,
    2010   2009
Unvested stock award shares at January 1
    9       8  
Weighted average grant date fair value
  $ 21     $ 26  
 
               
Stock award shares granted
    3       2  
Weighted average grant date fair value
  $ 14     $ 8  
 
               
Stock award shares vested
    2       1  
Weighted average grant date fair value
  $ 23     $ 26  
 
               
Stock award shares forfeited
           
Weighted average grant date fair value
  $ 19     $ 25  
 
               
Unvested stock award shares at September 30
    10       9  
Weighted average grant date fair value
  $ 19     $ 22  
    At September 30, 2010 and 2009, there was $136 million and $135 million, respectively, of total unrecognized compensation expense related to unvested stock awards; such awards had a weighted average remaining vesting period of five years and seven years, respectively.
 
    The total market value (at the vesting date) of stock award shares which vested during the nine months ended September 30, 2010 and 2009 was $22 million and $16 million, respectively.
 
    Stock Options
 
    Stock options are granted to key employees and, prior to 2010, to non-employee Directors 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 5,205,100 of stock option shares in the nine months ended September 30, 2010 with a grant date exercise price approximating $14 per share. In the first nine months of 2010, 3,552,100 stock option shares were forfeited (including options that expired unexercised).
    The Company’s stock option activity was as follows, shares in millions:
                 
    Nine Months Ended
    September 30,
    2010   2009
Option shares outstanding, January 1
    36       31  
Weighted average exercise price
  $ 23     $ 25  
 
               
Option shares granted, including restoration options
    5       6  
Weighted average exercise price
  $ 14     $ 8  
 
               
Option shares exercised
           
Aggregate intrinsic value on date of exercise (A)
    $1  million    $  
Weighted average exercise price
  $ 8     $  
 
               
Option shares forfeited
    4       1  
Weighted average exercise price
  $ 23     $ 23  
 
               
Option shares outstanding, September 30
    37       36  
Weighted average exercise price
  $ 21     $ 23  
Weighted average remaining option term (in years)
    6       6  
 
               
Option shares vested and expected to vest, September 30
    37       36  
Weighted average exercise price
  $ 22     $ 23  
Aggregate intrinsic value (A)
    $15  million      $26  million 
Weighted average remaining option term (in years)
    6       6  
 
               
Option shares exercisable (vested), September 30
    22       21  
Weighted average exercise price
  $ 25     $ 26  
Aggregate intrinsic value (A)
    $3  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 September 30, 2010 and 2009, there was $50 million and $47 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 2010 and 2009.
    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:
                 
    Nine Months Ended
    September 30,
    2010   2009
Weighted average grant date fair value
  $ 5.30     $ 2.23  
Risk-free interest rate
    2.77 %     2.59 %
Dividend yield
    2.17 %     3.73 %
Volatility factor
    46.01 %     39.07 %
Expected option life
  6 years   6 years
Employee Retirement Plans
Employee Retirement Plans
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.
 
    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.
 
    Net periodic pension cost for the Company’s defined-benefit pension plans was as follows, in millions:
                                 
    Three Months ended September 30,  
    2010     2009  
    Qualified     Non-Qualified     Qualified     Non-Qualified  
Service cost
  $ 2     $     $ 3     $  
Interest cost
    11       3       7       2  
Expected return on plan assets
    (9 )           (5 )      
Amortization of prior service cost
                       
Recognized curtailment loss
                       
Amortization of net loss
    3             3        
 
                       
Net periodic pension cost
  $ 7     $ 3       8       2  
 
                       
                                 
    Nine Months ended September 30,  
    2010     2009  
    Qualified     Non-Qualified     Qualified     Non-Qualified  
Service cost
  $ 4     $     $ 9     $ 1  
Interest cost
    34       7       26       5  
Expected return on plan assets
    (27 )           (18 )      
Amortization of prior service cost
                      1  
Recognized curtailment loss
                3       5  
Amortization of net loss
    8             10        
 
                       
Net periodic pension cost
  $ 19     $ 7     $ 30     $ 12  
 
                       
    Assumptions
 
    Major assumptions used in accounting for the Company’s defined-benefit pension plans were as follows:
                 
    December 31,
    2009   2008
Discount rate for obligations
    5.8 %     6.1 %
Expected return on plan assets
    8.0 %     8.0 %
Discount rate for net periodic pension cost
    6.1 %     6.25 %
    The discount rate for obligations was based upon the expected duration of each defined-benefit pension plan’s liabilities matched to the widely used Citigroup Pension Discount Curve and Liability Index for December 31, 2009. Such rates for the Company’s defined benefit pension plans ranged from 2.60 percent to 6.25 percent, with the most significant portion of the liabilities having a discount rate for obligations of 5.60 percent or higher at December 31, 2009. The decline in the weighted average discount rate to 5.8 percent in 2009 from 6.1 percent in 2008 was principally the result of the variation in long-term rates which were highly volatile at the end of 2008 compared to 2009, for the Citigroup Pension Discount Curve, and the freezing of all future benefit accruals under substantially all of the Company’s domestic qualified and non-qualified defined-benefit plans, which shortened the period of future pension payments. The decrease in the discount rate increased our projected benefit obligation by approximately $29 million.
 
    The Company determined the expected long-term rate of return on plan assets of 8 percent based upon an analysis of expected and historical rates of return of various asset classes utilizing the current and long-term target asset allocation of the plan assets. The projected asset return at December 31, 2009 also considered near term returns, including current market conditions and also that pension assets are long-term in nature. The actual annual rate of return on the Company’s pension plan assets was 3.3 percent and .5 percent for the 10-year periods ended December 31, 2009 and 2008, respectively. Although these rates of return are less than the Company’s current expected long-term rate of return on plan assets, the Company notes that these 10-year periods include two significant declines in the equity markets. Accordingly, the Company believes an 8 percent expected long-term rate of return is reasonable.
    The investment objectives seek to minimize the volatility of the value of the Company’s plan assets relative to pension liabilities and to ensure plan assets are sufficient to pay plan benefits. The Company, based upon discussions with its pension investment advisor, reduced its equity allocation to 70 percent from 80 percent; increased its fixed-income allocation to 25 percent from 10 percent and allocated 5 percent to alternative investments. The revised asset allocation of the investment portfolio was developed with the objective of achieving the Company’s expected rate of return and reducing volatility of asset returns, and considered the freezing of future benefits. The equity portfolios are invested in individual securities or funds that are expected to mirror broad market returns for equity securities. The fixed-income portfolio is invested in corporate bonds, bond index funds or U.S. Treasury securities. The increased allocation to fixed-income securities partially matches the bond-like and long-term nature of the pension liabilities. In 2010, the pension investment advisor recommended that, longer term, the Company should achieve the following targeted asset portfolio: 45 percent equities, 25 percent fixed-income, 15 percent global assets (combination of equity and fixed-income) and 15 percent alternative investments (such as private equity, commodities and hedge funds). The Company expects to achieve this allocation by December 31, 2011. This targeted portfolio is expected to yield a long-term rate of return of 8 percent.
 
    The fair value of the Company’s plan assets is subject to risk including significant concentrations of risk in the Company’s plan assets related to equity, interest rate and operating risk. In order to ensure plan assets are sufficient to pay benefits, a portion of plan assets is allocated to equity investments that are expected over time, to earn higher returns with more volatility than fixed-income investments which more closely match pension liabilities. Within equity, risk is mitigated by targeting a portfolio that is broadly diversified by geography, market capitalization, manager mandate size, investment style and process.
 
    In order to minimize asset volatility relative to the liabilities, a portion of plan assets are allocated to fixed-income investments that are exposed to interest rate risk. Rate increases generally will result in a decline in fixed-income assets, while reducing the present value of the liabilities. Conversely, rate decreases will increase fixed income assets, partially offsetting the related increase in the liabilities.
 
    The Company has targeted alternative investments such as hedge funds, private equity funds and commodities that are expected to comprise 15 percent of the pension assets. It is expected that the alternative investments would have a higher rate of return than the targeted overall long-term return of 8 percent. However, these investments are subject to greater volatility, due to their nature, than a portfolio of equities and fixed-income investments, and would be less liquid than financial instruments that trade on public markets.
 
    Potential events or circumstances that could have a negative effect on estimated fair value include the risks of inadequate diversification and other operating risks. To mitigate these risks, investments are diversified across and within asset classes in support of investment objectives. Policies and practices to address operating risks include ongoing manager oversight, plan and asset class investment guidelines and instructions that are communicated to managers, and periodic compliance and audit reviews to ensure adherence to these policies. In addition, the Company periodically seeks the input of its independent advisor to ensure the investment policy is appropriate.
Accumulated other Comprehensive Income
Accumulated Other Comprehensive Income
K. Accumulated Other Comprehensive Income
K.   The components of accumulated other comprehensive income attributable to Masco Corporation were as follows, in millions:
                 
    September 30, 2010     December 31, 2009  
Cumulative translation adjustments
  $ 518     $ 546  
Unrealized gain on marketable securities, net
    21       25  
Unrecognized prior service cost and net loss, net
    (200 )     (205 )
 
           
Accumulated other comprehensive income
  $ 339     $ 366  
 
           
    The components of accumulated other comprehensive attributable to noncontrolling interest were as follows, in millions:
                 
    September 30, 2010     December 31, 2009  
Cumulative translation adjustments
  $ 22     $ 31  
Unrealized gain on marketable securities, net
           
Unrecognized prior service cost and net loss, net
           
 
           
Accumulated other comprehensive income
  $ 22     $ 31  
 
           
    The Company’s total comprehensive income was as follows, in millions:
                                 
    Three Months Ended     Three Months Ended  
    September 30, 2010     September 30, 2009  
    Attributable to     Noncontrolling     Attributable to     Noncontrolling  
    Masco Corporation     Interest     Masco Corporation     Interest  
Net (loss) income
  $ (5 )   $ 12     $ 28     $ 12  
Other comprehensive income:
                               
Cumulative translation adjustments, net
    72       22       18       6  
Unrealized gain on marketable securities, net
    4             16        
Prior service cost and net loss, net
    1                    
 
                       
Total comprehensive income
  $ 72     $ 34     $ 62     $ 18  
 
                       
                                 
    Nine Months Ended     Nine Months Ended  
    September 30, 2010     September 30, 2009  
    Attributable to     Noncontrolling     Attributable to     Noncontrolling  
    Masco Corporation     Interest     Masco Corporation     Interest  
Net (loss) income
  $ (9 )   $ 32     $ 2     $ 27  
Other comprehensive income:
                               
Cumulative translation adjustments, net
    (28 )     (9 )     30       10  
Unrealized (loss) gain on marketable securities, net
    (4 )           21        
Prior service cost and net loss, net
    5             62        
 
                       
Total comprehensive (loss) income
  $ (36 )   $ 23     $ 115     $ 37  
 
                       
    The unrealized gain (loss) on marketable securities, net, is net of income tax expense (benefit) of $3 million and $(1) million, respectively, for the three months and nine months ended September 30, 2010. The unrealized gain on marketable securities, net, is net of income tax of $8 million and $11 million, respectively, for the three months and nine months ended September 30, 2009. The prior service cost and net loss, net, is net of income tax of $1 million and $3 million for the three months and nine months ended September 30, 2010, respectively. The prior service cost and net loss, net, is net of income tax of $36 million for the nine months ended September 30, 2009.
 
    On the basis of amounts paid (declared), cash dividends per common share were $.075 ($.075) and $.225 ($.225) for the three months and nine months ended September 30, 2010, respectively. On the basis of amounts paid (declared), cash dividends per common share were $.075 ($.075) and $.385 ($.225) for the three months and nine months ended September 30, 2009, respectively.
Segment Information
Segment Information
L. 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,  
    2010     2009     2010     2009     2010     2009     2010     2009  
    Net Sales(A)     Operating Profit (Loss)     Net Sales(A)     Operating Profit (Loss)  
The Company’s operations by segment were:
                                                               
Cabinets and Related Products
  $ 357     $ 434     $ (61 )   $ (16 )   $ 1,160     $ 1,248     $ (113 )   $ (56 )
Plumbing Products
    686       678       97       93       2,031       1,893       267       202  
Installation and Other Services
    292       332       (22 )     (34 )     874       961       (87 )     (104 )
Decorative Architectural Products
    463       474       104       122       1,357       1,365       300       313  
Other Specialty Products
    159       166       11       16       435       427       16       16  
 
                                               
Total
  $ 1,957     $ 2,084     $ 129     $ 181     $ 5,857     $ 5,894     $ 383     $ 371  
 
                                               
 
                                                               
The Company’s operations by geographic area were:
                                                               
North America
  $ 1,528     $ 1,630     $ 79     $ 123     $ 4,617     $ 4,694     $ 257     $ 261  
International, principally Europe
    429       454       50       58       1,240       1,200       126       110  
 
                                               
Total
  $ 1,957     $ 2,084       129       181     $ 5,857     $ 5,894       383       371  
 
                                                       
 
                                                               
General corporate expense, net
                    (27 )     (36 )                     (84 )     (96 )
Charge for litigation settlement (B)
                          (7 )                           (7 )
Accelerated stock compensation expense (C)
                                                      (6 )
(Loss) on corporate fixed assets, net
                                                      (2 )
Charge for defined-benefit plan curtailment (D)
                                                      (8 )
 
                                                       
Operating profit
                    102       138                       299       252  
Other income (expense), net
                    (64 )     (49 )                     (223 )     (157 )
 
                                                       
Income from continuing operations before income taxes
                  $ 38     $ 89                     $ 76     $ 95  
 
                                                       
 
(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.
 
(C)   See Note I to the condensed consolidated financial statements.
 
(D)   In March 2009, the Company recognized a curtailment loss related to the plan to freeze all future benefit accruals beginning January 1, 2010 under substantially all of the Company’s domestic qualified and non-qualified defined-benefit pension plans.
Other Income (Expense), Net
Other Income (Expense), Net
M. 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,  
    2010     2009     2010     2009  
Income from cash and cash investments
  $ 2     $ 2     $ 4     $ 6  
Other interest income
          1       1       1  
Loss from financial investments (Note E)
    (3 )           (2 )      
Other items, net
          4       (5 )     15  
 
                       
Total
  $ (1 )   $ 7     $ (2 )   $ 22  
 
                       
    Other items, net, included $4 million and $(2) million of currency gains (losses) for the three months and nine months ended September 30, 2010, respectively. Other items, net, included $5 million and $14 million of currency gains for the three months and nine months ended September 30, 2009, respectively.
 
Earning Per Common Share
Earnings Per Common Share
N. Earnings Per Common 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,  
    2010     2009     2010     2009  
Numerator (basic and diluted):
                               
(Loss) income from continuing operations
  $ (5 )   $ 51     $ (9 )   $ 33  
Allocation to unvested restricted stock awards
    (1 )     (1 )     (2 )     (2 )
 
                       
(Loss) income from continuing operations attributable to common shareholders
    (6 )     50       (11 )     31  
Loss from discontinued operations, net
          (23 )           (31 )
 
                       
Net (loss) income available to common shareholders
  $ (6 )   $ 27     $ (11 )   $  
 
                       
 
                               
Denominator:
                               
Basic common shares (based upon weighted average)
    349       350       349       351  
Add:
                               
Contingent common shares
                       
Stock option dilution
          1              
 
                       
Diluted common shares
    349       351       349       351  
 
                       
    For the three months and nine months ended September 30, 2010 and the nine months ended September 30, 2009, the Company allocated dividends to the unvested restricted stock awards (participating securities). For the three months ended September 30, 2009, the Company allocated dividends and income to the unvested restricted stock awards (participating securities).
 
    At September 30, 2010 and 2009, 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 Company’s common stock at September 30, 2010 and 2009 did not exceed the equivalent accreted value of the Notes.
    Additionally, 37 million common shares for both the three months and nine months ended September 30, 2010 and 35 million and 36 million common shares for the three months and nine months ended September 30, 2009, respectively, related to stock options were excluded from the computation of diluted earnings per common share due to their antidilutive effect.
 
    In the first nine months of 2010, the Company granted three million shares of long-term stock awards. In the first nine months of 2010, the Company also repurchased and retired approximately three million shares of Company common stock, for cash aggregating $45 million to offset the dilutive impact of these long-term stock awards. At September 30, 2010, the Company had 27 million shares of its common stock remaining under the July 2007 Board of Directors repurchase authorization.
 
Other Commitments and Contingencies
Other Commitments and Contingencies
O. Other 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 February 2009, 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 has been dismissed with prejudice and, with respect to the second lawsuit, which was originally filed in northern California and was subsequently transferred to Atlanta, Georgia, the Court has recently administratively stayed the case. 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.
 
Income Taxes
Income Taxes
P. Income Taxes
P.   The increased tax rate for the first nine months of 2010 includes the impact of certain plant closure costs and other losses not providing tax benefits in certain jurisdictions combined with a decrease in 2010 pre-tax income.
 
    During the first nine months of 2010, the liability on uncertain tax positions including interest and penalties, net of U.S. Federal income tax benefit, increased by $8 million primarily due to changes in the tax environment related to certain activities performed in various jurisdictions that caused a re-measurement of this liability. 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 on uncertain tax positions could be reduced by approximately $11 million.
 
    Due to the difficulty in estimating the annual effective tax rate in 2009, a discrete calculation was used to report tax expense rather than an estimated annual effective tax rate.
Subsequent Events
Subsequent Events
Q. Subsequent Events
Q.   As announced in February 2010, the Company is combining its Builder Cabinet Group and Retail Cabinet Group to form Masco Cabinetry. In April 2010, Masco Cabinetry decided to discontinue the manufacture of ready-to-assemble and other non-core in-stock assembled cabinet product lines as they are not consistent with Masco Cabinetry’s strategy of growth through brand building and innovation. These product lines had aggregate annual sales of approximately $200 million in 2009. The Company anticipates it will close two manufacturing facilities associated with these products in the first half of 2011. The Company expects to incur approximately $119 million (principally recognized ratably over 15 months beginning April 2010) of pre-tax charges related to the anticipated plant closures including approximately $99 million related to non-cash charges principally associated with property, plant and equipment and approximately $20 million of other cash charges. At September 30, 2010, the Company had incurred $33 million related to accelerated depreciation costs and $15 million related to inventory reserves.
Accounting Policies (Policies)
Recently Issued Accounting Pronouncements
    Recently Issued Accounting Pronouncements
    Effective January 1, 2010, the Company adopted new FASB guidance regarding how a company determines when an entity is insufficiently capitalized or is not controlled through voting and should be consolidated. The adoption of this guidance did not have any impact on the Company’s consolidated financial condition and results of operations.
Discontinued Operations (Tables)
Financial information for discontinued operations
                 
    Three Months Ended     Nine Months Ended  
    September 30, 2009     September 30, 2009  
Net sales
  $ 13     $ 57  
 
           
Loss from discontinued operations
  $ (2 )   $ (11 )
Loss on disposal of discontinued operations
    (22 )     (21 )
 
           
Loss before income tax
    (24 )     (32 )
Income tax benefit
    1       1  
 
           
Loss from discontinued operations, net
  $ (23 )   $ (31 )
 
           
Goodwill and Other Intangible Assets (Tables)
Changes in carrying amount of goodwill
                         
    Gross Goodwill     Accumulated     Net Goodwill  
    At     Impairment     At  
    Sep. 30, 2010     Losses     Sep. 30, 2010  
Cabinets and Related Products
  $ 588     $ (364 )   $ 224  
Plumbing Products
    539       (340 )     199  
Installation and Other Services
    1,819       (51 )     1,768  
Decorative Architectural Products
    294             294  
Other Specialty Products
    980       (367 )     613  
 
                 
Total
  $ 4,220     $ (1,122 )   $ 3,098  
 
                 
                                         
    Gross Goodwill     Accumulated     Net Goodwill                
    At     Impairment     At             At  
    Dec. 31, 2009     Losses     Dec. 31, 2009     Other(A)     Sep. 30, 2010  
Cabinets and Related Products
  $ 590     $ (364 )   $ 226     $ (2 )   $ 224  
Plumbing Products
    547       (340 )     207       (8 )     199  
Installation and Other Services
    1,819       (51 )     1,768             1,768  
Decorative Architectural Products
    294             294             294  
Other Specialty Products
    980       (367 )     613             613  
 
                             
Total
  $ 4,230     $ (1,122 )   $ 3,108     $ (10 )   $ 3,098  
 
                             
 
(A)   Other principally includes the effect of foreign currency translation.
    Other indefinite-lived intangible assets were $195 million and $196 million at September 30, 2010 and December 31, 2009, respectively, and principally included registered trademarks. The carrying value of the Company’s definite-lived intangible assets was $87 million (net of accumulated amortization of $73 million) at September 30, 2010 and $94 million (net of accumulated amortization of $67 million) at December 31, 2009, and principally included customer relationships and non-compete agreements.
Fair Value of Financial Investments and Liabilities (Tables)
                 
    September 30,     December 31,  
    2010     2009  
Asahi Tec Corporation — preferred stock
  $ 10     $ 71  
Auction rate securities
    22       22  
TriMas Corporation common stock
    36       17  
 
           
Total recurring investments
    68       110  
 
               
Private equity funds
    115       123  
Other investments
    9       9  
 
           
Total non-recurring investments
    124       132  
 
           
Total
  $ 192     $ 242  
 
           
                                 
            Pre-tax    
            Unrealized   Unrealized   Recorded
    Cost Basis   Gains   Losses   Basis
September 30, 2010
  $ 35     $ 35     $ 2     $ 68  
December 31, 2009
  $ 71     $ 39     $     $ 110  
                                 
            Fair Value Measurements Using  
                    Significant        
            Quoted     Other     Significant  
            Market     Observable     Unobservable  
    Sep. 30,     Prices     Inputs     Inputs  
    2010     (Level 1)     (Level 2)     (Level 3)  
Asahi Tec Corporation:
                               
Preferred stock
  $ 10     $     $ 10     $  
Auction rate securities
    22                   22  
TriMas Corporation
    36       36              
 
                       
Total
  $ 68     $ 36     $ 10     $ 22  
 
                       
                                 
            Fair Value Measurements Using  
                    Significant        
            Quoted     Other     Significant  
            Market     Observable     Unobservable  
    Dec. 31,     Prices     Inputs     Inputs  
    2009     (Level 1)     (Level 2)     (Level 3)  
Asahi Tec Corporation:
                               
Preferred stock
  $ 71     $     $     $ 71  
Auction rate securities
    22                   22  
TriMas Corporation
    17       17              
 
                       
Total
  $ 110     $ 17     $     $ 93  
 
                       
                         
    Asahi Tec     Auction Rate        
    Preferred Stock     Securities     Total  
Fair value January 1, 2010
  $ 71     $ 22     $ 93  
Total losses included in earnings
    (28 )           (28 )
Unrealized (losses)
    (23 )           (23 )
Purchases
                 
Settlements
                 
Transfer from Level 3 to Level 2
    (20 )           (20 )
 
                 
Fair value at September 30, 2010
  $     $ 22     $ 22  
 
                 
                         
    Asahi Tec     Auction Rate        
    Preferred Stock     Securities     Total  
Fair value January 1, 2009
  $ 72     $ 22     $ 94  
Total losses included in earnings
                 
Unrealized (losses)
    (1 )           (1 )
Purchases, issuances, settlements
                 
 
                 
Fair value at December 31, 2009
  $ 71     $ 22     $ 93  
 
                 
                                         
            Fair Value Measurements Using        
                    Significant              
            Quoted     Other     Significant        
            Market     Observable     Unobservable     Total  
    Sep. 30,     Prices     Inputs     Inputs     Gains  
    2010     (Level 1)     (Level 2)     (Level 3)     (Losses)  
Private equity funds
  $ 2     $     $     $ 2     $ (3 )
Other private investments
                            (2 )
 
                             
 
  $ 2     $     $     $ 2     $ (5 )
 
                             
                                         
            Fair Value Measurements Using        
                    Significant              
            Quoted     Other     Significant        
            Market     Observable     Unobservable     Total  
    Dec. 31,     Prices     Inputs     Inputs     Gains  
    2009     (Level 1)     (Level 2)     (Level 3)     (Losses)  
Private equity funds
  $ 31     $     $     $ 31     $ (10 )
Other private investments
    3                   3        
 
                             
 
  $ 34     $     $     $ 34     $ (10 )
 
                             
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2010     2009     2010     2009  
Impairment charges:
                               
Asahi Tec Preferred Stock
  $     $     $ (28 )   $  
Private equity funds
                (3 )     (10 )
Other private investments
                (2 )      
 
                       
Total impairment charges
  $     $     $ (33 )   $ (10 )
 
                       
Warranty (Tables)
Warranty liability
                 
    Nine Months Ended     Twelve Months Ended  
    September 30, 2010     December 31, 2009  
Balance at January 1
  $ 109     $ 119  
Accruals for warranties issued during the period
    30       32  
Accruals related to pre-existing warranties
    (2 )     5  
Settlements made (in cash or kind) during the period
    (28 )     (44 )
Other, net
    (2 )     (3 )
 
           
Balance at end of period
  $ 107     $ 109  
 
           
Stock-Based Compensation (Tables)
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2010     2009     2010     2009  
Long-term stock awards
  $ 9     $ 7     $ 28     $ 28  
Stock options
    6       6       17       21  
Phantom stock awards and stock appreciation rights
    1       3             5  
 
                       
Total
  $ 16     $ 16     $ 45     $ 54  
 
                       
 
                               
Income tax benefit
  $ 6     $ 6     $ 17     $ 20  
 
                       
                 
    Nine Months Ended
    September 30,
    2010   2009
Unvested stock award shares at January 1
    9       8  
Weighted average grant date fair value
  $ 21     $ 26  
 
               
Stock award shares granted
    3       2  
Weighted average grant date fair value
  $ 14     $ 8  
 
               
Stock award shares vested
    2       1  
Weighted average grant date fair value
  $ 23     $ 26  
 
               
Stock award shares forfeited
           
Weighted average grant date fair value
  $ 19     $ 25  
 
               
Unvested stock award shares at September 30
    10       9  
Weighted average grant date fair value
  $ 19     $ 22  
                 
    Nine Months Ended
    September 30,
    2010   2009
Option shares outstanding, January 1
    36       31  
Weighted average exercise price
  $ 23     $ 25  
 
               
Option shares granted, including restoration options
    5       6  
Weighted average exercise price
  $ 14     $ 8  
 
               
Option shares exercised
           
Aggregate intrinsic value on date of exercise (A)
    $1  million    $  
Weighted average exercise price
  $ 8     $  
 
               
Option shares forfeited
    4       1  
Weighted average exercise price
  $ 23     $ 23  
 
               
Option shares outstanding, September 30
    37       36  
Weighted average exercise price
  $ 21     $ 23  
Weighted average remaining option term (in years)
    6       6  
 
               
Option shares vested and expected to vest, September 30
    37       36  
Weighted average exercise price
  $ 22     $ 23  
Aggregate intrinsic value (A)
    $15  million      $26  million 
Weighted average remaining option term (in years)
    6       6  
 
               
Option shares exercisable (vested), September 30
    22       21  
Weighted average exercise price
  $ 25     $ 26  
Aggregate intrinsic value (A)
    $3  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.
                 
    Nine Months Ended
    September 30,
    2010   2009
Weighted average grant date fair value
  $ 5.30     $ 2.23  
Risk-free interest rate
    2.77 %     2.59 %
Dividend yield
    2.17 %     3.73 %
Volatility factor
    46.01 %     39.07 %
Expected option life
  6 years   6 years
Employee Retirement Plans (Tables)
                                 
    Three Months ended September 30,  
    2010     2009  
    Qualified     Non-Qualified     Qualified     Non-Qualified  
Service cost
  $ 2     $     $ 3     $  
Interest cost
    11       3       7       2  
Expected return on plan assets
    (9 )           (5 )      
Amortization of prior service cost
                       
Recognized curtailment loss
                       
Amortization of net loss
    3             3        
 
                       
Net periodic pension cost
  $ 7     $ 3       8       2  
 
                       
                                 
    Nine Months ended September 30,  
    2010     2009  
    Qualified     Non-Qualified     Qualified     Non-Qualified  
Service cost
  $ 4     $     $ 9     $ 1  
Interest cost
    34       7       26       5  
Expected return on plan assets
    (27 )           (18 )      
Amortization of prior service cost
                      1  
Recognized curtailment loss
                3       5  
Amortization of net loss
    8             10        
 
                       
Net periodic pension cost
  $ 19     $ 7     $ 30     $ 12  
 
                       
    Assumptions
 
    Major assumptions used in accounting for the Company’s defined-benefit pension plans were as follows:
                 
    December 31,
    2009   2008
Discount rate for obligations
    5.8 %     6.1 %
Expected return on plan assets
    8.0 %     8.0 %
Discount rate for net periodic pension cost
    6.1 %     6.25 %
Accumulated Other Comprehensive Income (Tables)
                 
    September 30, 2010     December 31, 2009  
Cumulative translation adjustments
  $ 518     $ 546  
Unrealized gain on marketable securities, net
    21       25  
Unrecognized prior service cost and net loss, net
    (200 )     (205 )
 
           
Accumulated other comprehensive income
  $ 339     $ 366  
 
           
                 
    September 30, 2010     December 31, 2009  
Cumulative translation adjustments
  $ 22     $ 31  
Unrealized gain on marketable securities, net
           
Unrecognized prior service cost and net loss, net
           
 
           
Accumulated other comprehensive income
  $ 22     $ 31  
 
           
                                 
    Three Months Ended     Three Months Ended  
    September 30, 2010     September 30, 2009  
    Attributable to     Noncontrolling     Attributable to     Noncontrolling  
    Masco Corporation     Interest     Masco Corporation     Interest  
Net (loss) income
  $ (5 )   $ 12     $ 28     $ 12  
Other comprehensive income:
                               
Cumulative translation adjustments, net
    72       22       18       6  
Unrealized gain on marketable securities, net
    4             16        
Prior service cost and net loss, net
    1                    
 
                       
Total comprehensive income
  $ 72     $ 34     $ 62     $ 18  
 
                       
                                 
    Nine Months Ended     Nine Months Ended  
    September 30, 2010     September 30, 2009  
    Attributable to     Noncontrolling     Attributable to     Noncontrolling  
    Masco Corporation     Interest     Masco Corporation     Interest  
Net (loss) income
  $ (9 )   $ 32     $ 2     $ 27  
Other comprehensive income:
                               
Cumulative translation adjustments, net
    (28 )     (9 )     30       10  
Unrealized (loss) gain on marketable securities, net
    (4 )           21        
Prior service cost and net loss, net
    5             62        
 
                       
Total comprehensive (loss) income
  $ (36 )   $ 23     $ 115     $ 37  
 
                       
Segment Information (Tables)
Company by segment and geographic area
                                                                 
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2010     2009     2010     2009     2010     2009     2010     2009  
    Net Sales(A)     Operating Profit (Loss)     Net Sales(A)     Operating Profit (Loss)  
The Company’s operations by segment were:
                                                               
Cabinets and Related Products
  $ 357     $ 434     $ (61 )   $ (16 )   $ 1,160     $ 1,248     $ (113 )   $ (56 )
Plumbing Products
    686       678       97       93       2,031       1,893       267       202  
Installation and Other Services
    292       332       (22 )     (34 )     874       961       (87 )     (104 )
Decorative Architectural Products
    463       474       104       122       1,357       1,365       300       313  
Other Specialty Products
    159       166       11       16       435       427       16       16  
 
                                               
Total
  $ 1,957     $ 2,084     $ 129     $ 181     $ 5,857     $ 5,894     $ 383     $ 371  
 
                                               
 
                                                               
The Company’s operations by geographic area were:
                                                               
North America
  $ 1,528     $ 1,630     $ 79     $ 123     $ 4,617     $ 4,694     $ 257     $ 261  
International, principally Europe
    429       454       50       58       1,240       1,200       126       110  
 
                                               
Total
  $ 1,957     $ 2,084       129       181     $ 5,857     $ 5,894       383       371  
 
                                                       
 
                                                               
General corporate expense, net
                    (27 )     (36 )                     (84 )     (96 )
Charge for litigation settlement (B)
                          (7 )                           (7 )
Accelerated stock compensation expense (C)
                                                      (6 )
(Loss) on corporate fixed assets, net
                                                      (2 )
Charge for defined-benefit plan curtailment (D)
                                                      (8 )
 
                                                       
Operating profit
                    102       138                       299       252  
Other income (expense), net
                    (64 )     (49 )                     (223 )     (157 )
 
                                                       
Income from continuing operations before income taxes
                  $ 38     $ 89                     $ 76     $ 95  
 
                                                       
 
(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.
 
(C)   See Note I to the condensed consolidated financial statements.
 
(D)   In March 2009, the Company recognized a curtailment loss related to the plan to freeze all future benefit accruals beginning January 1, 2010 under substantially all of the Company’s domestic qualified and non-qualified defined-benefit pension plans.
Other Income (Expense), Net (Tables)
Other, net
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2010     2009     2010     2009  
Income from cash and cash investments
  $ 2     $ 2     $ 4     $ 6  
Other interest income
          1       1       1  
Loss from financial investments (Note E)
    (3 )           (2 )      
Other items, net
          4       (5 )     15  
 
                       
Total
  $ (1 )   $ 7     $ (2 )   $ 22  
 
                       
Earning Per Common Share (Tables)
Numerators and denominators used in the computations of basic and diluted earnings per common share
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2010     2009     2010     2009  
Numerator (basic and diluted):
                               
(Loss) income from continuing operations
  $ (5 )   $ 51     $ (9 )   $ 33  
Allocation to unvested restricted stock awards
    (1 )     (1 )     (2 )     (2 )
 
                       
(Loss) income from continuing operations attributable to common shareholders
    (6 )     50       (11 )     31  
Loss from discontinued operations, net
          (23 )           (31 )
 
                       
Net (loss) income available to common shareholders
  $ (6 )   $ 27     $ (11 )   $  
 
                       
 
                               
Denominator:
                               
Basic common shares (based upon weighted average)
    349       350       349       351  
Add:
                               
Contingent common shares
                       
Stock option dilution
          1              
 
                       
Diluted common shares
    349       351       349       351  
 
                       
Discontinued Operations (Details) (USD $)
In Millions
3 Months Ended
Sep. 30, 2009
9 Months Ended
Sep. 30, 2009
Financial information for discontinued operations
 
 
Net sales
$ 13 
$ 57 
Loss from discontinued operations
(2)
(11)
Loss on disposal of discontinued operations
(22)
(21)
Loss before income tax
(24)
(32)
Income tax benefit
Loss from discontinued operations, net
$ (23)
$ (31)
Goodwill and Other Intangible Assets (Details) (USD $)
In Millions
9 Months Ended
Sep. 30, 2010
Dec. 31, 2009
Changes in carrying amount of goodwill
 
 
Gross Goodwill
$ 4,220 
$ 4,230 
Accumulated Impairment Losses
(1,122)
(1,122)
Goodwill
3,098 
3,108 
Other
(10)1
 
Goodwill and Other Intangible Assets (Textuals) [Abstract]
 
 
Other indefinite-lived intangible assets
195 
196 
Carrying value of definite-lived intangible assets
87 
94 
Accumulated amortization
73 
67 
Cabinets and Related Products [Member]
 
 
Changes in carrying amount of goodwill
 
 
Gross Goodwill
588 
590 
Accumulated Impairment Losses
(364)
(364)
Goodwill
224 
226 
Other
(2)1
 
Plumbing Products [Member]
 
 
Changes in carrying amount of goodwill
 
 
Gross Goodwill
539 
547 
Accumulated Impairment Losses
(340)
(340)
Goodwill
199 
207 
Other
(8)1
 
Installation and Other Services [Member]
 
 
Changes in carrying amount of goodwill
 
 
Gross Goodwill
1,819 
1,819 
Accumulated Impairment Losses
(51)
(51)
Goodwill
1,768 
1,768 
Decorative Architectural Products [Member]
 
 
Changes in carrying amount of goodwill
 
 
Gross Goodwill
294 
294 
Accumulated Impairment Losses
Goodwill
294 
294 
Other Specialty Products [Member]
 
 
Changes in carrying amount of goodwill
 
 
Gross Goodwill
980 
980 
Accumulated Impairment Losses
(367)
(367)
Goodwill
$ 613 
$ 613 
Depreciation and Amortization Expense (Details) (USD $)
In Millions
9 Months Ended
Sep. 30,
2010
2009
Depreciation and Amortization Expense (Textuals) [Abstract]
 
 
Depreciation and amortization expense
$ 209 
$ 190 
Financial Investments Included in Other Assets (Details 1) (USD $)
In Millions
9 Months Ended
Sep. 30, 2010
Year Ended
Dec. 31, 2009
Financial investments included in other assets
 
 
Total recurring investments
$ 68 
$ 110 
Total non-recurring investments
124 
132 
Total
192 
242 
Company's investments in available-for-sale securities
 
 
Cost Basis
35 
71 
Pre-tax Unrealized Gains
35 
39 
Pre-tax Unrealized Losses
 
Recorded Basis
68 
110 
Asahi Tec Corporation - preferred stock [Member]
 
 
Financial investments included in other assets
 
 
Total recurring investments
10 
71 
Auction rate securities [Member]
 
 
Financial investments included in other assets
 
 
Total recurring investments
22 
22 
TriMas Corporation common stock [Member]
 
 
Financial investments included in other assets
 
 
Total recurring investments
36 
17 
Private equity funds [Member]
 
 
Financial investments included in other assets
 
 
Total non-recurring investments
115 
123 
Other investments [Member]
 
 
Financial investments included in other assets
 
 
Total non-recurring investments
$ 9 
$ 9 
Recurring Fair Value Measurements (Details 2) (USD $)
In Millions
3 Months Ended
Sep. 30, 2010
9 Months Ended
Sep. 30, 2010
Dec. 31, 2009
Financial investments included in other assets
 
 
 
Total recurring investments
$ 68 
$ 68 
$ 110 
Fair Value of Financial Investments and Liabilities (Textuals) [Abstract]
 
 
 
Discount rate used to determine the present value of expected cash flow
0.04 
0.04 
0.06 
Credit spread for Japanese issued preferred securities
 
 
600 
Reversal of Unrealized gain, included in accumulated other comprehensive income
 
23 
 
Convertion and sale of preferred stock
 
 
Loss recognized on sale of preferred stock
 
 
Asahi Tec Corporation - preferred stock [Member]
 
 
 
Financial investments included in other assets
 
 
 
Total recurring investments
10 
 
71 
Asahi Tec Corporation - preferred stock [Member] | Quoted Market Prices (Level 1) [Member]
 
 
 
Financial investments included in other assets
 
 
 
Total recurring investments
 
Asahi Tec Corporation - preferred stock [Member] | Significant Other Observable Inputs (Level 2) [Member]
 
 
 
Financial investments included in other assets
 
 
 
Total recurring investments
10 
 
Asahi Tec Corporation - preferred stock [Member] | Significant Unobservable Inputs Level 3 [Member]
 
 
 
Financial investments included in other assets
 
 
 
Total recurring investments
 
71 
Auction rate securities [Member]
 
 
 
Financial investments included in other assets
 
 
 
Total recurring investments
22 
 
22 
Auction rate securities [Member] | Quoted Market Prices (Level 1) [Member]
 
 
 
Financial investments included in other assets
 
 
 
Total recurring investments
 
Auction rate securities [Member] | Significant Other Observable Inputs (Level 2) [Member]
 
 
 
Financial investments included in other assets
 
 
 
Total recurring investments
 
Auction rate securities [Member] | Significant Unobservable Inputs Level 3 [Member]
 
 
 
Financial investments included in other assets
 
 
 
Total recurring investments
22 
 
22 
TriMas Corporation common stock [Member]
 
 
 
Financial investments included in other assets
 
 
 
Total recurring investments
36 
 
17 
TriMas Corporation common stock [Member] | Quoted Market Prices (Level 1) [Member]
 
 
 
Financial investments included in other assets
 
 
 
Total recurring investments
36 
 
17 
TriMas Corporation common stock [Member] | Significant Other Observable Inputs (Level 2) [Member]
 
 
 
Financial investments included in other assets
 
 
 
Total recurring investments
 
TriMas Corporation common stock [Member] | Significant Unobservable Inputs Level 3 [Member]
 
 
 
Financial investments included in other assets
 
 
 
Total recurring investments
 
Quoted Market Prices (Level 1) [Member]
 
 
 
Financial investments included in other assets
 
 
 
Total recurring investments
36 
 
17 
Significant Other Observable Inputs (Level 2) [Member]
 
 
 
Financial investments included in other assets
 
 
 
Total recurring investments
10 
 
Significant Unobservable Inputs Level 3 [Member]
 
 
 
Financial investments included in other assets
 
 
 
Total recurring investments
22 
 
93 
Level 3 Financial Assets Fair Value (Details 3) (USD $)
In Millions
9 Months Ended
Sep. 30, 2010
Year Ended
Dec. 31, 2009
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Fair value, Beginning Balance
$ 93 
$ 94 
Total losses included in earnings
(28)
Unrealized (losses)
(23)
(1)
Purchases
 
Settlements
 
Purchases, issuances, settlements
 
Transfer from Level 3 to Level 2
(20)
 
Fair value, Ending Balance
22 
93 
Asahi Tec Corporation - preferred stock [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Fair value, Beginning Balance
71 
72 
Total losses included in earnings
(28)
Unrealized (losses)
(23)
(1)
Purchases
 
Settlements
 
Purchases, issuances, settlements
 
Transfer from Level 3 to Level 2
(20)
 
Fair value, Ending Balance
71 
Auction rate securities [Member]
 
 
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
 
 
Fair value, Beginning Balance
22 
22 
Total losses included in earnings
 
Purchases
 
Settlements
 
Purchases, issuances, settlements
 
Fair value, Ending Balance
$ 22 
$ 22 
Non-recurring Fair Value Measurements (Details 4)
3 Months Ended
Sep. 30, 2010
6 Months Ended
Jun. 30, 2010
9 Months Ended
Sep. 30, 2010
Year Ended
Dec. 31, 2009
Non-Recurring Fair Value Measurements
 
 
 
 
Total impairment charges
 
 
(33,000,000)
 
Fair Value of Financial Investments and Liabilities (Textuals) [Abstract]
 
 
 
 
Estimated decline in the private equity fund value
 
5,000,000 
 
41,000,000 
Total impairment charges
 
 
(33,000,000)
 
Aggregate carrying value of remaining private equity funds
113,000,000 
 
113,000,000 
92,000,000 
Estimated market value of long-term and short-term debt
4,100,000,000 
 
4,100,000,000 
3,900,000,000 
Aggregate carrying value of long-term and short-term debt
4,100,000,000 
 
4,100,000,000 
4,000,000,000 
Net loss from financial investments
3,000,000 
 
2,000,000 
 
Two Private Equity Funds [Member]
 
 
 
 
Non-Recurring Fair Value Measurements
 
 
 
 
Total impairment charges
 
(3,000,000)
 
(10,000,000)
Fair Value of Financial Investments and Liabilities (Textuals) [Abstract]
 
 
 
 
Total impairment charges
 
(3,000,000)
 
(10,000,000)
Private equity funds [Member]
 
 
 
 
Non-Recurring Fair Value Measurements
 
 
 
 
Fair value on a non-recurring basis of financial investments
 
 
2,000,000 
31,000,000 
Total impairment charges
 
 
(3,000,000)
 
Fair Value of Financial Investments and Liabilities (Textuals) [Abstract]
 
 
 
 
Total impairment charges
 
 
(3,000,000)
 
Private equity funds [Member] | Quoted Market Prices (Level 1) [Member]
 
 
 
 
Non-Recurring Fair Value Measurements
 
 
 
 
Fair value on a non-recurring basis of financial investments
 
 
Private equity funds [Member] | Significant Other Observable Inputs (Level 2) [Member]
 
 
 
 
Non-Recurring Fair Value Measurements
 
 
 
 
Fair value on a non-recurring basis of financial investments
 
 
Private equity funds [Member] | Significant Unobservable Inputs Level 3 [Member]
 
 
 
 
Non-Recurring Fair Value Measurements
 
 
 
 
Fair value on a non-recurring basis of financial investments
2,000,000 
 
 
31,000,000 
Private equity funds [Member] | Non Recurring Fair-Value Measurements [Member]
 
 
 
 
Non-Recurring Fair Value Measurements
 
 
 
 
Total impairment charges
 
 
3,000,000 
10,000,000 
Fair Value of Financial Investments and Liabilities (Textuals) [Abstract]
 
 
 
 
Total impairment charges
 
 
3,000,000 
10,000,000 
Other investments [Member]
 
 
 
 
Non-Recurring Fair Value Measurements
 
 
 
 
Fair value on a non-recurring basis of financial investments
 
 
3,000,000 
Total impairment charges
 
(2,000,000)
(2,000,000)
 
Fair Value of Financial Investments and Liabilities (Textuals) [Abstract]
 
 
 
 
Total impairment charges
 
(2,000,000)
(2,000,000)
 
Other investments [Member] | Quoted Market Prices (Level 1) [Member]
 
 
 
 
Non-Recurring Fair Value Measurements
 
 
 
 
Fair value on a non-recurring basis of financial investments
 
 
Other investments [Member] | Significant Other Observable Inputs (Level 2) [Member]
 
 
 
 
Non-Recurring Fair Value Measurements
 
 
 
 
Fair value on a non-recurring basis of financial investments
 
 
Other investments [Member] | Significant Unobservable Inputs Level 3 [Member]
 
 
 
 
Non-Recurring Fair Value Measurements
 
 
 
 
Fair value on a non-recurring basis of financial investments
 
 
3,000,000 
Other investments [Member] | Non Recurring Fair-Value Measurements [Member]
 
 
 
 
Non-Recurring Fair Value Measurements
 
 
 
 
Total impairment charges
 
 
2,000,000 
Fair Value of Financial Investments and Liabilities (Textuals) [Abstract]
 
 
 
 
Total impairment charges
 
 
2,000,000 
Quoted Market Prices (Level 1) [Member] | Non Recurring Fair-Value Measurements [Member]
 
 
 
 
Non-Recurring Fair Value Measurements
 
 
 
 
Fair value on a non-recurring basis of financial investments
 
 
Significant Other Observable Inputs (Level 2) [Member] | Non Recurring Fair-Value Measurements [Member]
 
 
 
 
Non-Recurring Fair Value Measurements
 
 
 
 
Fair value on a non-recurring basis of financial investments
 
 
Significant Unobservable Inputs Level 3 [Member] | Non Recurring Fair-Value Measurements [Member]
 
 
 
 
Non-Recurring Fair Value Measurements
 
 
 
 
Fair value on a non-recurring basis of financial investments
2,000,000 
 
 
34,000,000 
Non Recurring Fair-Value Measurements [Member]
 
 
 
 
Non-Recurring Fair Value Measurements
 
 
 
 
Fair value on a non-recurring basis of financial investments
 
 
2,000,000 
34,000,000 
Total impairment charges
 
 
5,000,000 
10,000,000 
Fair Value of Financial Investments and Liabilities (Textuals) [Abstract]
 
 
 
 
Total impairment charges
 
 
5,000,000 
10,000,000 
Impairment Charges for Financial Assets (Details 5) (USD $)
In Millions
9 Months Ended
Sep. 30,
2010
2009
2010
2010
2009
6 Months Ended
Jun. 30, 2010
9 Months Ended
Sep. 30, 2010
Impairment charges:
 
 
 
 
 
 
 
Total impairment charges
$ (33)
$ (10)
$ (28)
$ (3)
$ (10)
$ (2)
$ (2)
Derivatives (Details)
In Millions
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2010
2009
2010
2009
Dec. 31, 2009
Derivatives (Textuals) [Abstract]
 
 
 
 
 
Liabilities related to foreign currency forward contracts from European operations
(2)
 
(2)
 
(1)
Gains (losses) related to these foreign currency forward contracts recorded in the Company consolidated statements of income
(10)
 
Gain related to hedging contracts
 
 
 
Intercompany Loans [Member]
 
 
 
 
 
Derivatives (Textuals) [Abstract]
 
 
 
 
 
Gains on the foreign currency exchange contracts
 
 
 
 
Gains (losses) related to these foreign currency forward contracts recorded in the Company consolidated statements of income
(1)
(1)
(2)
 
Fair Value Hedging [Member]
 
 
 
 
 
Derivatives (Textuals) [Abstract]
 
 
 
 
 
Assets recored by the company as a result of hedging activities
 
 
 
 
Warranty (Details) (USD $)
In Millions
9 Months Ended
Sep. 30, 2010
Year Ended
Dec. 31, 2009
Warranty liability
 
 
Balance at January 1
$ 109 
$ 119 
Accruals for warranties issued during the period
30 
32 
Accruals related to pre-existing warranties
(2)
Settlements made (in cash or kind) during the period
(28)
(44)
Other, net
(2)
(3)
Balance at end of period
$ 107 
$ 109 
Debt (Details)
3 Months Ended
Sep. 30,
2011
2010
3 Months Ended
Jun. 30, 2010
9 Months Ended
Sep. 30, 2010
Jun. 21, 2010
Mar. 12, 2010
Mar. 10, 2010
Dec. 31, 2009
Nov. 04, 2004
Long-term Debt, Unclassified [Abstract]
 
 
 
 
 
 
 
 
 
Issued notes
 
 
 
 
 
 
500,000,000 
 
 
Debt (Textuals) [Abstract]
 
 
 
 
 
 
 
 
 
Principal amount of Zero Coupon Convertible Senior Notes
 
108,000,000 
 
108,000,000 
 
 
 
108,000,000 
 
Accreted value, Principal amount of Zero Coupon Convertible Senior Notes
 
57,000,000 
 
57,000,000 
 
 
 
55,000,000 
 
Retirement of floating rate notes
 
 
 
 
 
300,000,000 
 
 
 
Aggregate commitment under Credit Agreement
 
 
 
 
1,250,000,000 
 
 
 
 
Terminated credit agreement
 
 
 
 
 
 
 
 
1,250,000,000 
Revolving credit agreement maturity period
 
 
 
 
 
 
 
 
Effective interest rate under credit agreement
 
 
 
either a rate per annum equal to the lower of prime rate, the Federal Funds effective rate plus 0.50% or LIBOR plus 1.0%; plus an applicable margin 
 
 
 
 
 
Maximum debt to total capitalization ratio, in percent
 
 
 
0.65 
 
 
 
 
 
Minimum interest coverage ratio
equal to or greater than 2.25 to 1.0 
 
 
 
 
 
 
 
 
Minimum interest coverage ratio after period
2.50 to 1.0 
 
 
 
 
 
 
 
 
Maximum non cash charges can be added back
 
500,000,000 
 
 
 
 
 
 
 
Additional borrowing capacity
 
1,200,000,000 
 
1,200,000,000 
 
 
 
 
 
Absorption of reduction to shareholders' equity to remain in compliance with covenant
 
700,000,000 
 
700,000,000 
 
 
 
 
 
Financial covenants
 
 
 
 
 
 
 
Premium paid on purchase of the notes over par value
 
 
2,000,000 
 
 
 
 
 
 
euro denominated revolver [Member]
 
 
 
 
 
 
 
 
 
Debt (Textuals) [Abstract]
 
 
 
 
 
 
 
 
 
Borrowing capacity,maximum
 
 
 
 
500,000,000 
 
 
 
 
Swingline loans [Member]
 
 
 
 
 
 
 
 
 
Debt (Textuals) [Abstract]
 
 
 
 
 
 
 
 
 
Borrowing capacity,maximum
 
 
 
 
150,000,000 
 
 
 
 
Letter of Credit [Member]
 
 
 
 
 
 
 
 
 
Debt (Textuals) [Abstract]
 
 
 
 
 
 
 
 
 
Borrowing capacity,maximum
 
 
 
 
250,000,000 
 
 
 
 
Unused Letters of Credit
 
100,000,000 
 
 
 
 
 
 
 
Federal Funds Effective Rate Plus [Member]
 
 
 
 
 
 
 
 
 
Debt (Textuals) [Abstract]
 
 
 
 
 
 
 
 
 
Either a rate per annum equal to the lower of prime rate, the Federal Funds effective rate plus 0.50% or LIBOR plus 1.0%; plus an applicable margin
 
 
 
0.005 
 
 
 
 
 
Federal Funds Effective Libor Plus [Member]
 
 
 
 
 
 
 
 
 
Debt (Textuals) [Abstract]
 
 
 
 
 
 
 
 
 
Either a rate per annum equal to the lower of prime rate, the Federal Funds effective rate plus 0.50% or LIBOR plus 1.0%; plus an applicable margin
 
 
 
0.01 
 
 
 
 
 
Notes Payable, Other Payables [Member]
 
 
 
 
 
 
 
 
 
Debt (Textuals) [Abstract]
 
 
 
 
 
 
 
 
 
Interest on notes
 
 
 
 
 
 
0.07125 
 
 
5.875% Notes Due July 2012 [Member]
 
 
 
 
 
 
 
 
 
Long-term Debt, Unclassified [Abstract]
 
 
 
 
 
 
 
 
 
Company repurchased Notes in open-market transactions
 
 
59,000,000 
 
 
 
 
 
 
Debt (Textuals) [Abstract]
 
 
 
 
 
 
 
 
 
Interest on notes
 
 
0.05875 
 
 
 
 
 
 
Stock-Based Compensation (Details)
Share data in Millions, except Per Share data, unless otherwise specified
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2010
2009
6 Months Ended
Jun. 30, 2009
2010
2009
Pre-tax compensation expense and related income tax benefit for stock -based incentives
 
 
 
 
 
Long-term stock awards
9,000,000 
7,000,000 
 
28,000,000 
28,000,000 
Stock options
6,000,000 
6,000,000 
 
17,000,000 
21,000,000 
Phantom stock awards and stock appreciation rights
1,000,000 
3,000,000 
 
 
5,000,000 
Total
16,000,000 
16,000,000 
 
45,000,000 
54,000,000 
Income tax benefit
6,000,000 
6,000,000 
 
17,000,000 
20,000,000 
Company's long-term stock award activity
 
 
 
 
 
Unvested stock award shares at January 1
 
 
8,000,000 
9,000,000 
8,000,000 
Weighted average grant date fair value
 
 
26 
21 
26 
Stock award shares granted
 
 
 
3,000,000 
2,000,000 
Weighted average grant date fair value
 
 
 
14 
Stock award shares vested
 
 
 
2,000,000 
1,000,000 
Weighted average grant date fair value
 
 
 
23 
26 
Stock award shares forfeited
 
 
 
Weighted average grant date fair value
 
 
 
19 
25 
Unvested stock award shares at September 30
10,000,000 
9,000,000 
 
10,000,000 
9,000,000 
Weighted average grant date fair value
19 
22 
 
19 
22 
Companys stock option activity
 
 
 
 
 
Option shares outstanding, January 1
 
 
31,000,000 
36,000,000 1
31,000,000 
Weighted average exercise price
 
 
25 
23 
25 
Option shares granted, including restoration options
 
 
 
5,000,000 
6,000,000 
Weighted average exercise price
 
 
 
14 1
Option shares exercised
 
 
 
Aggregate intrinsic value on date of exercise (A)
 
 
 
1,000,000 2
 
Weighted average exercise price
 
 
 
 
Option shares forfeited
 
 
 
4,000,000 
1,000,000 
Weighted average exercise price
 
 
 
23 
23 
Option shares outstanding,September30
37,000,000 
36,000,000 
 
37,000,000 
36,000,000 
Weighted average exercise price
21 
23 
 
21 
23 
Weighted average remaining option term (in years)
 
 
 
Option shares vested and expected to vest, September 30
37,000,000 
36,000,000 
 
37,000,000 
36,000,000 
Weighted average exercise price
22 
23 
 
22 
23 
Aggregate intrinsic value (A)
15,000,000 2
26,000,000 2
 
15,000,000 2
26,000,000 2
Weighted average remaining option term (in years)
 
 
 
Option shares exercisable (vested), September 30
22,000,000 
21,000,000 
 
22,000,000 
21,000,000 
Weighted average exercise price
25 
26 
 
25 
26 
Aggregate intrinsic value (A)
 
 
 
3,000,000 2
 
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
 
 
 
5.3 
2.23 
Risk-free interest rate
 
 
 
0.0277 
0.0259 
Dividend yield
 
 
 
0.0217 
0.0373 
Volatility factor
 
 
 
0.4601 
0.3907 
Expected option life (in years)
 
 
 
Stock-Based Compensation (Textuals) (Abstract)
 
 
 
 
 
Accelerated stock compensation expense
 
 
6,000,000 
 
6,000,000 3
Typical vesting period of stock awards granted prior to January 1, 2010
 
 
 
10 
 
Stock awards granted subsequent to January1, 2010 have a vesting period, in years
 
 
 
 
Total unrecognized compensation expense
136,000,000 
135,000,000 
 
136,000,000 
135,000,000 
Remaining weighted average vesting period
 
 
 
Total market value (at the vesting date) of stock award shares
 
 
 
22,000,000 
16,000,000 
Beginig period stock option exercised from the date of grant
 
 
 
 
Grant and expire date
 
 
 
Not less then 10 years 
 
Stock option shares granted
 
 
 
5,000,000 
6,000,000 
Approx grant date exercise price
 
 
 
14 1
Stock option shares forfeited
 
 
 
4,000,000 
1,000,000 
Unrecognized compensation expense related to unvested stock options
50,000,000 
47,000,000 
 
50,000,000 
47,000,000 
Weighted average vesting period for unvested stock options
 
 
 
3
Employee Retirement Plans (Details)
In Millions
3 Months Ended
Sep. 30,
Year Ended
Dec. 31,
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2010
2009
9 Months Ended
Sep. 30, 2010
2009
2008
Dec. 31, 2009
Dec. 31, 2008
2010
2009
2010
2009
2010
2009
2010
2009
Net periodic pension cost for defined-benefit pension plans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Service cost
 
 
 
 
 
 
 
 
 
 
Interest cost
 
 
 
 
 
 
 
11 
34 
26 
Expected return on plan assets
 
 
 
 
 
 
 
(9)
(5)
(27)
(18)
 
 
 
 
Amortization of prior service cost
 
 
 
 
 
 
 
 
 
 
 
 
Recognized curtailment loss
 
 
 
 
 
 
 
 
 
 
 
Amortization of net loss
 
 
 
 
 
 
 
10 
 
 
 
 
Net periodic pension cost
 
 
 
 
 
 
 
19 
30 
12 
Major assumptions used in defined-benefit pension plans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Discount rate for obligations
 
 
 
0.058 
0.061 
0.058 
0.061 
 
 
 
 
 
 
 
 
Expected return on plan assets
0.08 
 
0.08 
0.08 
0.08 
0.08 
0.08 
 
 
 
 
 
 
 
 
Discount rate for net periodic pension cost
 
 
 
0.061 
0.0625 
0.061 
0.0625 
 
 
 
 
 
 
 
 
Employee Retirement Plans (Textuals) [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Minimum discount rate for defined benefit pension plans
 
 
 
0.026 
 
0.026 
 
 
 
 
 
 
 
 
 
Maximum discount rate for defined benefit pension plans
 
 
 
0.0625 
 
0.0625 
 
 
 
 
 
 
 
 
 
Minimum liabilities having a discount rate for obligations
 
 
 
0.056 
 
0.056 
 
 
 
 
 
 
 
 
 
Weighted average discount rate
 
 
 
0.058 
0.061 
0.058 
0.061 
 
 
 
 
 
 
 
 
Increase in projected benefit obligation
 
 
 
29 
 
 
 
 
 
 
 
 
 
 
 
Expected long-term rate of return on plan assets
0.08 
 
0.08 
0.08 
0.08 
0.08 
0.08 
 
 
 
 
 
 
 
 
Actual annual rate of return on the Company's pension plan assets
 
 
 
 
 
0.033 
0.005 
 
 
 
 
 
 
 
 
Reasonable long-term rate of return
0.08 
 
0.08 
 
 
 
 
 
 
 
 
 
 
 
 
Equity allocation
 
 
0.45 
0.7 
0.8 
 
 
 
 
 
 
 
 
 
 
Debt allocation
 
 
0.25 
0.25 
0.1 
 
 
 
 
 
 
 
 
 
 
Allocation to alternative investments
 
 
0.15 
0.05 
0.05 
 
 
 
 
 
 
 
 
 
 
Portfolio in global assets
 
 
0.15 
 
 
 
 
 
 
 
 
 
 
 
 
Rate of return from targeted portfolio
0.08 
 
0.08 
 
 
 
 
 
 
 
 
 
 
 
 
Targeted alternative investment in hedge funds, private equity funds and commodities
0.15 
 
0.15 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated Other Comprehensive Income (Details)
In Millions, except Per Share data
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2010
2009
2010
2009
Dec. 31, 2009
Accumulated other comprehensive income
 
 
 
 
 
Unrealized gain on marketable securities, net
 
 
 
 
Unrecognized prior service cost and net loss, net
 
 
 
 
Accumulated other comprehensive income
339 
 
339 
 
366 
Accumulated other comprehensive attributable to noncontrolling interest
 
 
 
 
 
Unrealized gain on marketable securities, net
 
 
 
 
Unrecognized prior service cost and net loss, net
 
 
 
 
Accumulated other comprehensive income
339 
 
339 
 
366 
Total comprehensive income
 
 
 
 
 
Net (loss) income
40 
23 
29 
 
Accumulated Other Comprehensive Income (Textuals) [Abstract]
 
 
 
 
 
Income tax on unrealized (loss) gain on marketable securities
(1)
11 
 
Income tax on prior service cost and net loss
 
36 
 
Cash dividends per common share paid
0.075 
0.075 
0.225 
0.385 
 
Cash dividends per common share declared
0.075 
0.075 
0.225 
0.225 1
 
Parent Company [Member]
 
 
 
 
 
Accumulated other comprehensive income
 
 
 
 
 
Cumulative translation adjustments
518 
 
518 
 
546 
Unrealized gain on marketable securities, net
21 
 
21 
 
25 
Unrecognized prior service cost and net loss, net
(200)
 
(200)
 
(205)
Accumulated other comprehensive income
339 
 
339 
 
366 
Accumulated other comprehensive attributable to noncontrolling interest
 
 
 
 
 
Cumulative translation adjustments
518 
 
518 
 
546 
Unrealized gain on marketable securities, net
21 
 
21 
 
25 
Unrecognized prior service cost and net loss, net
(200)
 
(200)
 
(205)
Accumulated other comprehensive income
339 
 
339 
 
366 
Total comprehensive income
 
 
 
 
 
Net (loss) income
(5)
28 
(9)
 
Other comprehensive income:
 
 
 
 
 
Cumulative translation adjustments, net
72 
18 
(28)
30 
 
Unrealized (loss) gain on marketable securities, net
16 
(4)
21 
 
Prior service cost and net loss, net
 
62 
 
Total comprehensive (loss) income
72 
62 
(36)
115 
 
Noncontrolling Interest [Member]
 
 
 
 
 
Accumulated other comprehensive income
 
 
 
 
 
Cumulative translation adjustments
22 
 
22 
 
31 
Unrealized gain on marketable securities, net
 
 
 
Unrecognized prior service cost and net loss, net
 
 
 
Accumulated other comprehensive income
22 
 
22 
 
31 
Accumulated other comprehensive attributable to noncontrolling interest
 
 
 
 
 
Cumulative translation adjustments
22 
 
22 
 
31 
Unrealized gain on marketable securities, net
 
 
 
Unrecognized prior service cost and net loss, net
 
 
 
Accumulated other comprehensive income
22 
 
22 
 
31 
Total comprehensive income
 
 
 
 
 
Net (loss) income
12 
12 
32 
27 
 
Other comprehensive income:
 
 
 
 
 
Cumulative translation adjustments, net
22 
(9)
10 
 
Total comprehensive (loss) income
34 
18 
23 
37 
 
Segment Information (Details) (USD $)
In Millions
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2010
2009
2010
2009
Company by segment and geographic area
 
 
 
 
Segment Reporting, Net Sales
$ 1,957 1
$ 2,084 1
$ 5,857 1
$ 5,894 1
Segment Reporting, Operating Profit (Loss)
129 
181 
383 
371 
General corporate expense, net
(27)
(36)
(84)
(96)
Charge for litigation settlement
 
(7)2
 
(7)2
Accelerated stock compensation expense
 
 
 
(6)3
(Loss) on corporate fixed assets
 
 
 
(2)
Charge for defined-benefit plan curtailment
 
 
 
(8)4
Operating (loss) profit
102 
138 
299 
252 
Other income (expense), net
(64)
(49)
(223)
(157)
Income from continuing operations before income taxes
38 
89 
76 
95 
Cabinets and Related Products [Member]
 
 
 
 
Company by segment and geographic area
 
 
 
 
Segment Reporting, Net Sales
357 1
434 1
1,160 1
1,248 1
Segment Reporting, Operating Profit (Loss)
(61)
(16)
(113)
(56)
Plumbing Products [Member]
 
 
 
 
Company by segment and geographic area
 
 
 
 
Segment Reporting, Net Sales
686 1
678 1
2,031 1
1,893 1
Segment Reporting, Operating Profit (Loss)
97 
93 
267 
202 5
Installation and Other Services [Member]
 
 
 
 
Company by segment and geographic area
 
 
 
 
Segment Reporting, Net Sales
292 1
332 1
874 1
961 1
Segment Reporting, Operating Profit (Loss)
(22)
(34)
(87)
(104)
Decorative Architectural Products [Member]
 
 
 
 
Company by segment and geographic area
 
 
 
 
Segment Reporting, Net Sales
463 1
474 1
1,357 1
1,365 1
Segment Reporting, Operating Profit (Loss)
104 
122 
300 
313 
Other Specialty Products [Member]
 
 
 
 
Company by segment and geographic area
 
 
 
 
Segment Reporting, Net Sales
159 1
166 1
435 1
427 1
Segment Reporting, Operating Profit (Loss)
11 
16 
16 
16 
North America [Member]
 
 
 
 
Company by segment and geographic area
 
 
 
 
Segment Reporting, Net Sales
1,528 1
1,630 1
4,617 1
4,694 1
Segment Reporting, Operating Profit (Loss)
79 
123 
257 
261 
International, principally Europe [Member]
 
 
 
 
Company by segment and geographic area
 
 
 
 
Segment Reporting, Net Sales
429 1
454 1
1,240 1
1,200 1
Segment Reporting, Operating Profit (Loss)
$ 50 
$ 58 
$ 126 
$ 110 
Other Income (Expense), Net (Details) (USD $)
In Millions
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2010
2009
2010
2009
Other, net
 
 
 
 
Income from cash and cash investments
$ 2 
$ 2 
$ 4 
$ 6 
Other interest income
 
Loss from financial investments (Note E)
(3)
 
(2)
 
Other items, net
(5)
15 
Total other, net
(1)
(2)
22 
Other Income (Expense), Net (Textuals) [Abstract]
 
 
 
 
Currency losses included in other items , net
$ 4 
$ 5 
$ (2)
$ 14 
Earning Per Common Share (Details) (USD $)
In Millions
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2010
2009
2010
2009
Numerator (basic and diluted):
 
 
 
 
(Loss) income from continuing operations
$ (5)
$ 51 
$ (9)
$ 33 
Allocation to unvested restricted stock awards
(1)
(1)
(2)
(2)
Loss (income) from continuing operations attributable to common shareholders
(6)
50 
(11)
31 
Loss from discontinued operations, net
 
(23)
 
(31)
Net (loss) income available to common shareholders
(6)
27 
(11)
 
Denominator:
 
 
 
 
Basic common shares (based upon weighted average)
349 
350 
349 
351 
Add:
 
 
 
 
Contingent common shares
Stock option dilution
 
 
 
Diluted common shares
349 
351 
349 
351 
Earning Per Common Share (Textuals) [Abstract]
 
 
 
 
Antidilutive effect on computation of diluted earnings per common share
37 
35 
37 
36 
Long Term stock awards
 
 
 
Repurchase and retirement of common stock to offset the dilutive impact of long term stock awards
 
 
 
Repurchase and retirement of common stock to offset the dilutive effect
 
 
45 
 
Common stock outstanding under repurchase authorization
27 
 
27 
 
Other Commitments and Contingencies (Details)
9 Months Ended
Sep. 30, 2010
Other Commitments and Contingencies (Textuals) [Abstract]
 
Number of insulation installation contractors certified by the federal court in Atlanta
377 
Number of additional lawsuits pending
Income Taxes (Details) (USD $)
In Millions
3 Months Ended
Sep. 30, 2010
9 Months Ended
Sep. 30, 2010
Income Taxes (Textuals) [Abstract]
 
 
Tax benefit
 
Increase in the Company's liability for uncertain tax positions including interest and penalties, net of U.S. federal tax benefit
 
Time limits for tax audit closings, settlements and expiration of applicable statutes of limitations in various jurisdictions
 
12 
Approximate reduction in liability for uncertain tax positions
$ 11 
$ 11 
Subsequent Events (Details) (USD $)
In Millions
9 Months Ended
Sep. 30, 2010
Subsequent Events (Textuals) [Abstract]
 
Number of manufacturing facilities to be closed down
Expected pre-tax charges
$ 119 
Expected non-cash charges related to property, plant and equipment
99 
Expected other cash charges
20 
Accelerated depreciation costs
33 1
Inventory reserves
$ 15