10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549 

FORM 10-Q

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

or

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number: 1-5794

Masco Corporation

(Exact name of Registrant as Specified in its Charter)

Delaware	38-1794485
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

17450 College Parkway,	Livonia,	Michigan	48152
(Address of Principal Executive Offices)			(Zip Code)

(313) 274-7400

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $1.00 par value	MAS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  ☒ Yes   ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  ☒ Yes   ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

    If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

    Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 

    ☐ Yes   ☒ No

    Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 

Class	Shares Outstanding at September 30, 2020
Common stock, par value $1.00 per share	261,675,891

MASCO CORPORATION

INDEX

		Page No.
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited):
	Condensed Consolidated Balance Sheets — as at September 30, 2020 and December 31, 2019	1
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2020 and 2019	2
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2020 and 2019	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019	4
	Consolidated Statements of Shareholders’ Equity for the Three and Nine Months Ended September 30, 2020 and 2019	5
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 4.	Controls and Procedures	29
PART II.	OTHER INFORMATION	30
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 6.	Exhibits	31
	Signature	32

MASCO CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

September 30, 2020 and December 31, 2019

(In Millions, Except Share Data)

	September 30, 2020		December 31, 2019
ASSETS
Current Assets:
Cash and cash investments	$	1,326	$	697
Receivables	1,262		997
Prepaid expenses and other	88		90
Assets held for sale	—		173
Inventories:
Finished goods	514		485
Raw material	255		211
Work in process	42		58
	811		754
Total current assets	3,487		2,711
Property and equipment, net	878		878
Operating lease right-of-use assets	156		176
Goodwill	528		509
Other intangible assets, net	253		259
Other assets	273		139
Assets held for sale	—		355
Total assets	$	5,575	$	5,027
LIABILITIES
Current Liabilities:
Accounts payable	$	933	$	697
Notes payable	5		2
Accrued liabilities	799		700
Liabilities held for sale	—		149
Total current liabilities	1,737		1,548
Long-term debt	2,787		2,771
Noncurrent operating lease liabilities	143		162
Other liabilities	567		589
Liabilities held for sale	—		13
Total liabilities	5,234		5,083
Commitments and contingencies (Note P)
EQUITY
Masco Corporation's shareholders' equity:
Common shares, par value $1 per share   Authorized shares: 1,400,000,000;   Issued and outstanding: 2020 – 260,500,000; 2019 – 275,600,000	261		276
Preferred shares authorized: 1,000,000;   Issued and outstanding: 2020 and 2019 – None	—		—
Paid-in capital	21		—
Retained earnings (deficit)	15		(332)
Accumulated other comprehensive loss	(156)		(179)
Total Masco Corporation's shareholders' equity (deficit)	141		(235)
Noncontrolling interest	200		179
Total equity	341		(56)
Total liabilities and equity	$	5,575	$	5,027

See notes to condensed consolidated financial statements.

1

MASCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

For the Three and Nine Months Ended September 30, 2020 and 2019

(In Millions, Except Per Common Share Data)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Net sales	$	1,983	$	1,716	$	5,328	$	5,068
Cost of sales	1,231		1,105		3,401		3,262
Gross profit	752		611		1,927		1,806
Selling, general and administrative expenses	328		322		939		964
Impairment charge for other intangible assets	—		—		—		9
Operating profit	424		289		988		833
Other income (expense), net:
Interest expense	(40)		(39)		(110)		(119)
Other, net	(4)		(9)		(22)		(17)
	(44)		(48)		(132)		(136)
Income from continuing operations before income taxes	380		241		856		697
Income tax expense	87		66		202		181
Income from continuing operations	293		175		654		516
(Loss) income from discontinued operations, net	—		(37)		411		1
Net income	293		138		1,065		517
Less: Net income attributable to noncontrolling interest	18		12		36		35
Net income attributable to Masco Corporation	$	275	$	126	$	1,029	$	482
Income (loss) per common share attributable to Masco Corporation:
Basic:
Income from continuing operations	$	1.05	$	.57	$	2.31	$	1.66
(Loss) income from discontinued operations, net	—		(.13)		1.54		—
Net income	$	1.05	$	.44	$	3.85	$	1.66
Diluted:
Income from continuing operations	$	1.05	$	.56	$	2.31	$	1.65
(Loss) income from discontinued operations, net	—		(.12)		1.54		—
Net income	$	1.05	$	.44	$	3.85	$	1.65
Amounts attributable to Masco Corporation:
Income from continuing operations	$	275	$	163	$	618	$	481
(Loss) income from discontinued operations, net	—		(37)		411		1
Net income	$	275	$	126	$	1,029	$	482

See notes to condensed consolidated financial statements.

2

MASCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

For the Three and Nine Months Ended September 30, 2020 and 2019

(In Millions)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Net income	$	293	$	138	$	1,065	$	517
Less: Net income attributable to noncontrolling interest	18		12		36		35
Net income attributable to Masco Corporation	$	275	$	126	$	1,029	$	482
Other comprehensive income (loss), net of tax (Note L):
Cumulative translation adjustment	$	32	$	(13)	$	15	$	(11)
Interest rate swaps	—		—		1		1
Pension and other post-retirement benefits	5		4		15		12
Other comprehensive income (loss), net of tax	37		(9)		31		2
Less: Other comprehensive income (loss) attributable to noncontrolling interest	9		(8)		8		(7)
Other comprehensive income (loss) attributable to Masco Corporation	$	28	$	(1)	$	23	$	9
Total comprehensive income	$	330	$	129	$	1,096	$	519
Less: Total comprehensive income attributable to noncontrolling interest	27		4		44		28
Total comprehensive income attributable to Masco Corporation	$	303	$	125	$	1,052	$	491

See notes to condensed consolidated financial statements.

3

MASCO CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

For the Nine Months Ended September 30, 2020 and 2019

(In Millions) 

	Nine Months Ended September 30,
	2020		2019
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES:
Cash provided by operations	$	590	$	754
Increase in receivables	(294)		(136)
Increase in inventories	(66)		(27)
Increase in accounts payable and accrued liabilities, net	343		14
Net cash from operating activities	573		605
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES:
Retirement of notes	(400)		—
Purchase of Company common stock	(602)		(440)
Cash dividends paid	(108)		(105)
Dividends paid to noncontrolling interest	(23)		(42)
Issuance of notes, net of issuance costs	415		—
Debt extinguishment costs	(5)		—
Proceeds from the exercise of stock options	26		23
Employee withholding taxes paid on stock-based compensation	(25)		(21)
Increase (decrease) in debt, net	1		(3)
Credit Agreement and other financing costs	—		(2)
Net cash for financing activities	(721)		(590)
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES:
Capital expenditures	(72)		(111)
Acquisition of business, net of cash acquired	(24)		—
Proceeds from disposition of:
Businesses, net of cash disposed	868		2
Other financial investments	2		1
Property and equipment	—		15
Other, net	(4)		(11)
Net cash from (for) investing activities	770		(104)
Effect of exchange rate changes on cash and cash investments	7		10
CASH AND CASH INVESTMENTS:
Increase (decrease) for the period	629		(79)
At January 1	697		559
At September 30	$	1,326	$	480

See notes to condensed consolidated financial statements.

4

MASCO CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)

For the Three and Nine Months Ended September 30, 2020 and 2019

(In Millions, Except Per Common Share Data)

	Total		Common Shares ($1 par value)		Paid-In Capital		Retained (Deficit) Earnings		Accumulated Other Comprehensive  (Loss) Income		Noncontrolling Interest
Balance, January 1, 2019	$	69	$	294	$	—	$	(278)	$	(127)	$	180
Total comprehensive income	128						116		4		8
Shares issued	5		1		4
Shares retired:
Repurchased	(122)		(3)		(11)		(108)
Surrendered (non-cash)	(10)		(1)				(9)
Cash dividends declared	(35)						(35)
Stock-based compensation	7				7
Balance, March 31, 2019	$	42	$	291	$	—	$	(314)	$	(123)	$	188
Total comprehensive income	262						240		6		16
Shares issued	2		1		1
Shares retired:
Repurchased	(167)		(5)		(10)		(152)
Cash dividends declared	(35)						(35)
Dividends paid to noncontrolling interest	(42)										(42)
Stock-based compensation	9				9
Balance, June 30, 2019	$	71	$	287	$	—	$	(261)	$	(117)	$	162
Total comprehensive income (loss)	129						126		(1)		4
Shares issued	5				5
Shares retired:
Repurchased	(151)		(3)		(12)		(136)
Cash dividends declared	(38)						(38)
Stock-based compensation	7				7
Balance, September 30, 2019	$	23	$	284	$	—	$	(309)	$	(118)	$	166

5

MASCO CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) (Concluded)

For the Three and Nine Months Ended September 30, 2020 and 2019

(In Millions, Except Per Common Share Data)

	Total		Common Shares ($1 par value)		Paid-In Capital		Retained (Deficit) Earnings		Accumulated Other Comprehensive  (Loss) Income		Noncontrolling Interest
Balance, January 1, 2020	$	(56)	$	276	$	—	$	(332)	$	(179)	$	179
Cumulative effect of adoption of new credit loss standard (refer to Note A)	(1)						(1)
Adjusted balance, January 1, 2020	$	(57)	$	276	$	—	$	(333)	$	(179)	$	179
Total comprehensive income (loss)	514						530		(20)		4
Shares issued	11		1		10
Shares retired:
Repurchased	(602)		(14)		(28)		(560)
Surrendered (non-cash)	(13)						(13)
Cash dividends declared	(36)						(36)
Stock-based compensation	18				18
Balance, March 31, 2020	$	(165)	$	263	$	—	$	(412)	$	(199)	$	183
Total comprehensive income	252						224		15		13
Shares retired:
Repurchased	—		(3)		3
Cash dividends declared	(35)						(35)
Dividends paid to noncontrolling interest	(23)										(23)
Stock-based compensation	8				8
Balance, June 30, 2020	$	37	$	260	$	11	$	(223)	$	(184)	$	173
Total comprehensive income	330						275		28		27
Shares issued	3		1		2
Cash dividends declared	(37)						(37)
Stock-based compensation	8				8
Balance, September 30, 2020	$	341	$	261	$	21	$	15	$	(156)	$	200

See notes to condensed consolidated financial statements.

6

MASCO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

A. ACCOUNTING POLICIES

    In our opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments, of a normal recurring nature, necessary to fairly state our financial position at September 30, 2020, our results of operations and comprehensive income (loss) for the three-month and nine-month periods ended September 30, 2020 and 2019, cash flows for the nine-month period ended September 30, 2020 and 2019 and changes in shareholders' equity for the three-month and nine-month periods ended September 30, 2020 and 2019. The condensed consolidated balance sheet at December 31, 2019 was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted ("GAAP") in the United States of America.

    Reclassifications. Certain prior year amounts have been reclassified to conform to the 2020 presentation in the condensed consolidated financial statements. In our condensed consolidated statements of cash flows, the cash flows from discontinued operations are not separately classified.

    Stock-Based Compensation. We issue stock-based incentives in various forms to our employees and non-employee Directors. Outstanding stock-based incentives were in the form of long-term stock awards, stock options, restricted stock units ("RSUs"), performance restricted stock units ("PRSUs") and phantom stock awards.

    In December 2019, our Organization and Compensation Committee of the Board of Directors (the "Compensation Committee") amended the terms of equity awards under our 2014 Long Term Stock Incentive Plan to provide that newly issued stock options, RSUs and phantom stock awards vest over a three-year period and redefined retirement-eligibility as age 65 or age 55 with at least 10 years of continuous service.

As such, compensation expense for equity awards granted in 2020 and thereafter is recognized ratably over the shorter of the vesting period, typically three years, or the length of time until the grantee becomes retirement eligible.

    In February 2020, our Compensation Committee approved the grant of RSUs under the Company’s 2014 Long Term Stock Incentive Plan. We measure compensation expense for RSUs at the market price of our common stock at the grant date.

    Allowance for Credit Losses. We do business with a number of customers, including certain home center retailers. We monitor our exposure for credit losses on our customer receivable balances and other financial investments measured at amortized cost and the credit worthiness of our customers on an on-going basis, including requiring the completion of credit applications and performing periodic reviews of our open accounts receivable. We record allowances for doubtful accounts for estimated losses resulting from the inability of our customers to fulfill their required payment obligation to us. Allowances are estimated at each of our businesses based upon specific customer balances, where a risk of loss has been identified, and also include a provision for losses based upon historical collection experience and write-off activity as well as reasonable and supportable forecast information that considers macro-economic factors and industry-specific trends associated with our businesses, among others. Our receivables balances are generally due in less than one year.

    Recently Adopted Accounting Pronouncements. In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which modifies the methodology for recognizing loss impairments on certain types of financial instruments, including receivables. The new methodology requires an entity to estimate the credit losses expected over the life of an exposure. Additionally, ASU 2016-13 amends the current available-for-sale security other-than-temporary impairment model for debt securities. We adopted ASU 2016-13 and recorded a cumulative-effect adjustment to opening retained earnings on January 1, 2020. The adoption of the standard did not have a material effect on our financial position or results of operations.

    In August 2018, the FASB issued ASU 2018-15, "Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract," which allows for the capitalization of certain implementation costs incurred in a hosting arrangement that is a service contract. We adopted ASU 2018-15 prospectively beginning on January 1, 2020. The adoption of the standard did not have an impact on our financial position or results of operations.

7

MASCO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

A. ACCOUNTING POLICIES (Concluded)

    In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes," which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. We early adopted ASU 2019-12 on January 1, 2020. The adoption of the standard did not have an impact on our financial position or results of operations.

    Recently Issued Accounting Pronouncements.  In January 2020, the FASB issued ASU 2020-01, "Investments—Equity Securities (Topic 321)," "Investments—Equity Method and Joint Ventures (Topic 323)," and "Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815," which clarifies that an entity should consider observable transactions when either applying or discontinuing the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321. ASU 2020-01 clarifies that for certain forward contracts or purchased options to acquire investments, an entity should not consider whether, upon settlement of the forward contract or exercise of the purchased option, the underlying securities would be accounted for under the equity method or the fair value option. ASU 2020-01 is effective for us for annual periods beginning January 1, 2021. Early adoption is permitted. We plan to adopt this standard for annual periods beginning January 1, 2021 and do not anticipate that the adoption of this new standard will have a material impact on our financial position or results of operations.

    In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting," which provides optional guidance and expedients for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments are intended to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in this update are elective and are effective upon issuance. We are currently assessing whether and how we will elect to apply ASU 2020-04.

B. ACQUISITIONS

    In the first quarter of 2020, we acquired all of the share capital of SmarTap A.Y Ltd. ("SmarTap") for approximately $24 million in cash. SmarTap is a developer of a smart bathing system that monitors and controls the temperature and flow of water. This acquisition provides an adaptable solution for a wide range of products as it is compatible with showerheads, hand showers, spouts and shower jets. This business is included in the Plumbing Products segment. In connection with this acquisition, we recognized $10 million of definite-lived intangible assets, primarily related to technology, which is being amortized on a straight-line basis over a weighted average amortization period of 5 years. We also recognized $12 million of goodwill, which is not tax deductible, and is related primarily to the expected synergies from combining the operations into our business. During the three-month period ended September 30, 2020, we revised the allocation of the purchase price to certain identifiable assets based on analysis of information as of the acquisition date that has been made available through September 30, 2020, which resulted in a $2 million increase to goodwill.

C. DISCONTINUED OPERATIONS

On September 6, 2019, we completed the divestiture of our UK Window Group business ("UKWG"), a manufacturer and distributor of windows and doors, for proceeds of approximately $8 million, of which $2 million net of cash disposed was received upon sale. The remaining $6 million was accounted for as a note receivable that is expected to be collected within two years of the divestiture. In connection with the sale, we recognized a loss of $70 million for both the three-month and nine-month periods ended September 30, 2019, which is included in (loss) income from discontinued operations, net in the condensed consolidated statements of operations. Additionally, on November 6, 2019, we completed the divestiture of our Milgard Windows and Doors business ("Milgard"), a manufacturer and distributor of windows and doors.

In the third quarter of 2019, we determined that the previously reported Windows and Other Specialty Products segment met the criteria to be classified as a discontinued operation as a result of the combined sale of UKWG and Milgard. These businesses represented all of our windows businesses and all remaining businesses in the Windows and Other Specialty Products segment.

8

MASCO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

C. DISCONTINUED OPERATIONS (Continued)

During the second quarter of 2020, a $17 million pre-tax post-closing adjustment related to the finalization of working capital items was recorded to (loss) income from discontinued operations, net in the condensed consolidated statement of operations, as a gain on the divestiture of Milgard. Of the $17 million, we received $15 million in cash as of September 30, 2020, which is presented in investing activities on the condensed consolidated statement of cash flow as proceeds from disposition of businesses, net of cash disposed. The remaining $2 million is accounted for as a short-term receivable; payable in two monthly installments before December 31, 2020. All post-closing adjustments related to our divestiture of Milgard were finalized with the buyer in the second quarter of 2020.

On November 14, 2019, we entered into a definitive agreement to sell Masco Cabinetry LLC ("Cabinetry"), a manufacturer of cabinetry products. We completed the divestiture of Cabinetry on February 18, 2020 for proceeds of approximately $989 million, including $853 million, net of cash disposed. The remaining $136 million was accounted for as preferred stock issued by a holding company of the buyer; refer to Note G for additional information. The working capital adjustment was finalized with the buyer in the second quarter of 2020, resulting in no significant changes to net proceeds. In connection with the sale, we recognized a gain on the divestiture of $585 million for the nine months ended September 30, 2020, which is included in (loss) income from discontinued operations, net in the condensed consolidated statement of operations.

In the fourth quarter of 2019, we determined that the previously reported Cabinetry Products segment met the criteria to be classified as a discontinued operation, as Cabinetry represented all of our cabinet businesses and all remaining businesses in the Cabinetry Products segment.

We determined that the assets and liabilities for Cabinetry met the held for sale criteria in accordance with ASC 205-20, Discontinued Operations in 2019. Accordingly, the Cabinetry business' assets and liabilities were classified in the condensed consolidated balance sheet at December 31, 2019 as assets held for sale or liabilities held for sale. We ceased recording depreciation and amortization for the held for sale assets upon meeting the held for sale criteria.

As the combined sale of UKWG and Milgard and the sale of Cabinetry represented a strategic shift that will have a major effect on our operations and financial results, these businesses were presented in discontinued operations separate from continuing operations for the three and nine months ended September 30, 2020 and 2019, as applicable. In addition, depreciation and amortization, capital expenditures, and significant non-cash operating and investing activities related to discontinued operations were separately disclosed.

The results of the windows businesses recorded in income (loss) from discontinued operations before income tax was income of $6 million and $7 million for the three and nine months ended September 30, 2019, respectively. The results of the cabinetry business recorded in income (loss) from discontinued operations before income tax was income of $28 million for the three months ended September 30, 2019 and a loss of $8 million and income of $86 million for the nine months ended September 30, 2020 and 2019, respectively.

9

MASCO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

C. DISCONTINUED OPERATIONS (Continued)

The major classes of line items constituting income from discontinued operations, net, in millions:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Net sales	$	—	$	403	$	101	$	1,234
Cost of sales	—		314		78		959
Gross profit	—		89		23		275
Selling, general and administrative expenses	—		56		31		176
Impairment charge for goodwill (A)	—		—		—		7
Other income (expense), net	—		1		—		1
Income (loss) from discontinued operations	—		34		(8)		93
(Loss) gain on disposal of discontinued operations	—		(70)		602		(70)
(Loss) income before income tax	—		(36)		594		23
Income tax expense (B)	—		(1)		(183)		(22)
(Loss) income from discontinued operations, net	$	—	$	(37)	$	411	$	1

(A) In the first quarter of 2019, we recognized a $7 million non-cash goodwill impairment charge related to a decline in the long-term outlook of our windows and doors business in the United Kingdom.

(B) The unusual relationship between income tax expense and (loss) income before income tax for 2019 resulted primarily from a loss on the sale of UKWG providing no foreign tax benefit.

The carrying amount of major classes of assets and liabilities included as part of the Cabinetry discontinued operations, were as follows, in millions:

	December 31, 2019
Receivables	$	76
Prepaid expenses and other	7
Inventories	90
Property and equipment, net	157
Operating lease right-of-use assets	4
Goodwill	181
Other intangible assets, net	1
Other assets	12
Total assets classified as held for sale	$	528
Accounts payable	$	103
Accrued liabilities	46
Noncurrent operating lease liabilities	3
Other liabilities	10
Total liabilities classified as held for sale	$	162

10

MASCO CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

C. DISCONTINUED OPERATIONS (Concluded)

    Other selected financial information for Cabinetry, Milgard and UKWG during the period owned by us, were as follows, in millions:

	Nine Months Ended September 30,
	2020		2019
Depreciation and amortization	$	—	$	27
Capital expenditures	1		27
ROU assets obtained in exchange for new lease obligations	—		3

    In conjunction with the divestiture of Milgard and Cabinetry, we entered into Transition Services Agreements to provide administrative services to the buyers. As of September 30, 2020, our Transition Service Agreement with Milgard concluded. The fees for services rendered under each of the Transition Service Agreements were not material and are not expected to be material to our results of operations for Milgard and Cabinetry, respectively.     

    As a part of the Cabinetry Transition Services Agreement, we guaranteed Cabinetry's obligations to a third-party while Cabinetry continued to participate in our voluntary supply chain finance program to the extent Cabinetry under its new ownership became delinquent on its payments. As of September 30, 2020, the amount Cabinetry and its new owners owed under the program was less than the $10 million letter of credit provided to the third-party by the new owners in conjunction with the Transition Services Agreement. Cabinetry exited our program in June 2020 and as of the date of filing, all outstanding invoices have been paid. As such, there is no remaining exposure and no losses were recognized under the guarantee.

D. REVENUE

    Our revenues are derived primarily from sales to customers in North America and Internationally, principally Europe. Net sales from these geographic markets, by segment, were as follows, in millions:

	Three Months Ended September 30, 2020
	Plumbing Products		Decorative Architectural Products		Total
Primary geographic markets:
North America	$	757	$	842	$	1,599
International, principally Europe	384		—		384
Total	$	1,141	$	842	$	1,983

	Nine Months Ended September 30, 2020
	Plumbing Products		Decorative Architectural Products		Total
Primary geographic markets:
North America	$	1,973	$	2,364	$	4,337
International, principally Europe	991		—		991
Total	$	2,964	$	2,364	$	5,328

	Three Months Ended September 30, 2019
	Plumbing Products		Decorative Architectural Products		Total
Primary geographic markets:
North America	$	664	$	710	$	1,374
International, principally Europe	342		—		342
Total	$	1,006	$	710	$	1,716

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

D. REVENUE (Concluded)

	Nine Months Ended September 30, 2019
	Plumbing Products		Decorative Architectural Products		Total
Primary geographic markets:
North America	$	1,923	$	2,110	$	4,033
International, principally Europe	1,035		—		1,035
Total	$	2,958	$	2,110	$	5,068

    Our contract asset balance was $2 million at both September 30, 2020 and December 31, 2019. Our contract liability balance was $25 million and $40 million at September 30, 2020 and December 31, 2019, respectively.

    We reversed $6 million and $2 million of revenue for the three-month periods ended September 30, 2020 and 2019, respectively, related to performance obligations settled in previous quarters of the same year. We recognized $1 million and $6 million of revenue for the three-month and nine-month periods ended September 30, 2020, respectively, and $1 million of revenue for the nine-month period ended September 30, 2019 related to performance obligations settled in previous years.

    Changes in the allowance for credit losses deducted from accounts receivable were as follows, in millions: 

	Nine Months Ended September 30, 2020
Balance at January 1 (after adopting ASU 2016-13)	$	5
Provision for expected credit losses during the period	2
Write-offs charged against the allowance	(1)
Recoveries of amounts previously written off	1
Balance at end of period	$	7

E. DEPRECIATION AND AMORTIZATION

    Depreciation and amortization expense, including discontinued operations, was $99 million and $124 million for the nine-month periods ended September 30, 2020 and 2019, respectively.

F. GOODWILL AND OTHER INTANGIBLE ASSETS

    The changes in the carrying amount of goodwill for the nine-month period ended September 30, 2020, by segment, were as follows, in millions: 

	Gross Goodwill At September 30, 2020		Accumulated Impairment Losses		Net Goodwill At September 30, 2020
Plumbing Products	$	585	$	(340)	$	245
Decorative Architectural Products	358		(75)		283
Total	$	943	$	(415)	$	528

	Gross Goodwill At December 31, 2019		Accumulated Impairment Losses		Net Goodwill At December 31, 2019		Acquisitions		Other (A)		Net Goodwill At September 30, 2020
Plumbing Products	$	566	$	(340)	$	226	$	14	$	5	$	245
Decorative Architectural Products	358		(75)		283		—		—		283
Total	$	924	$	(415)	$	509	$	14	$	5	$	528

(A)    Other consists of the effect of foreign currency translations.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

F. GOODWILL AND OTHER INTANGIBLE ASSETS (Concluded)

    The carrying value of our other indefinite-lived intangible assets was $76 million at both September 30, 2020 and December 31, 2019, and principally included registered trademarks. During the first quarter of 2019, we recognized a $9 million impairment charge related to a registered trademark in our Decorative Architectural Products segment due to a change in the long-term net sales projections of lighting products. The carrying value of our definite-lived intangible assets was $177 million (net of accumulated amortization of $66 million) and $183 million (net of accumulated amortization of $48 million) at September 30, 2020 and December 31, 2019, respectively, and principally included customer relationships.

G. FAIR VALUE OF FINANCIAL INVESTMENTS

    In conjunction with our divestiture of Cabinetry, we received preferred stock of ACProducts Holding, Inc., the holding company of the buyer, with a liquidation preference of $150 million. The preferred stock has a coupon of 8 percent until the first anniversary of issuance, 9 percent after the first anniversary and until the second anniversary of issuance, and 10 percent after the second anniversary of issuance and until the seventh anniversary of issuance. After which, the rate will increase by 50 basis points up to a maximum of 15 percent for each annual period occurring during and after the seventh anniversary until all shares have been redeemed in full.

    We do not have the ability to exercise significant influence, and the fair value of this security is not readily available. We have elected to measure this investment at cost (less impairment, if any) adjusted for observable price changes in orderly transactions for the identical or similar investments of the same issuer for subsequent measurements of fair value. As the preferred stock was received in conjunction with the sale of Cabinetry, we determined the cost to be the fair value of the preferred stock at the time of sale.

    The fair value of the preferred stock was measured on a non-recurring basis, and estimated using discounted cash flow and option pricing models (Level 3 inputs). The significant unobservable inputs used to value the preferred stock included: time to exit (deemed maturity) since the preferred stock is not mandatorily redeemable, discount rate used to determine the present value of expected cash flows, which included the spread on company specific debt and the risk-free rate of return, the liquidation preference and the coupon rate. On the date of acquisition, the fair value of this investment was determined to be $136 million and was included in other assets in our condensed consolidated balance sheet.

    Dividends earned on this investment are included within other income (expense), net in our condensed consolidated statement of operations with a corresponding increase to our basis in the investment. We had dividend income of $3 million and $7 million for the three-month and nine-month periods ended September 30, 2020, respectively. As such, the preferred stock was reported at the carrying value of $143 million in other assets in our condensed consolidated balance sheet at September 30, 2020.

    Fair Value of Debt. The fair value of our short-term and long-term fixed-rate debt instruments is based principally upon modeled market prices for the same or similar issues, which are Level 1 inputs. The aggregate estimated market value of our short-term and long-term debt at September 30, 2020 was approximately $3.2 billion, compared with the aggregate carrying value of $2.8 billion. The aggregate estimated market value of our short-term and long-term debt at December 31, 2019 was approximately $3.0 billion, compared with the aggregate carrying value of $2.8 billion.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

H. WARRANTY LIABILITY

    Changes in our warranty liability were as follows, in millions: 

	Nine Months Ended September 30, 2020		Twelve Months Ended December 31, 2019
Balance at January 1	$	84	$	81
Accruals for warranties issued during the period	25		34
Accruals related to pre-existing warranties	1		1
Settlements made (in cash or kind) during the period	(24)		(31)
Other, net (including currency translation)	(1)		(1)
Balance at end of period	$	85	$	84

I. DEBT

    On September 18, 2020, we issued $300 million of 2.0% Notes due October 1, 2030 (the "2030 Notes") and received proceeds of $300 million, net of discount, for the issuance of the 2030 Notes. Also on September 18, 2020, we issued an incremental $100 million of our existing 4.5% Notes due May 15, 2047 (the "2047 Notes") and received proceeds of $119 million, including a premium, for the issuance of the 2047 Notes. The incremental $100 million will form a single series with the existing $300 million of 4.5% Notes due May 15, 2047. The 2030 Notes and 2047 Notes are senior indebtedness and are redeemable at our option at the applicable redemption price. On September 29, 2020, proceeds from the debt issuances were used to repay and early retire $400 million of our 3.5% Notes due April 1, 2021. In connection with this early retirement, we incurred a loss on debt extinguishment of $6 million, which was recorded as interest expense.

On March 13, 2019, we entered into a credit agreement (the “Credit Agreement”) with an aggregate commitment of $1.0 billion and a maturity date of March 13, 2024. Under the Credit Agreement, at our request and subject to certain conditions, we can increase the aggregate commitment up to an additional $500 million with the current lenders or new lenders. Upon entry into the Credit Agreement, our credit agreement dated March 28, 2013, as amended, with an aggregate commitment of $750 million, was terminated.

    The Credit Agreement provides for an unsecured revolving credit facility available to us and one of our foreign subsidiaries, in U.S. dollars, European euros, British Pounds Sterling, Canadian dollars and certain other currencies for revolving credit loans, swingline loans and letters of credit. Borrowings under the revolving credit loans denominated in any agreed upon currency other than U.S. dollars are limited to $500 million, equivalent. We can also borrow swingline loans up to $100 million and obtain letters of credit of up to $25 million; outstanding letters of credit under the Credit Agreement reduce our borrowing capacity. At September 30, 2020, we had no outstanding standby letters of credit under the Credit Agreement.

    Revolving credit loans bear interest under the Credit Agreement, at our option, at (A) a rate per annum equal to the greater of (i) the JPMorgan Chase Bank, N.A. prime rate, (ii) the Federal Reserve Bank of New York effective rate plus 0.50% and (iii) if available, adjusted LIBO Rate plus 1.0% (the "Alternative Base Rate"); plus an applicable margin based upon our then-applicable corporate credit ratings; or (B) if available, adjusted LIBO Rate plus an applicable margin based upon our then-applicable corporate credit ratings. The foreign currency revolving credit loans bear interest at a rate equal to adjusted LIBO Rate, if available, plus an applicable margin based upon our then-applicable corporate credit ratings.

The Credit Agreement contains financial covenants requiring us to maintain (A) a net leverage ratio, as adjusted for certain items, not exceeding 4.0 to 1.0, and (B) a minimum interest coverage ratio, as adjusted for certain items, not less than 2.5 to 1.0.

    In order for us to borrow under the Credit Agreement, there must not be any default in our 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 our 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, 2018, no material ERISA or environmental non-compliance, and no material tax deficiency). We were in compliance with all covenants and no borrowings were outstanding at September 30, 2020. 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

J. STOCK-BASED COMPENSATION

    Our 2014 Long Term Stock Incentive Plan provides for the issuance of stock-based incentives in various forms to our employees and non-employee Directors. At September 30, 2020, outstanding stock-based incentives were in the form of long-term stock awards, stock options, restricted stock units, performance restricted stock units, and phantom stock awards.

    Pre-tax compensation expense included in income from continuing operations for these stock-based incentives was as follows, in millions: 

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Long-term stock awards	$	4	$	6	$	11	$	16
Stock options	1		1		6		3
Restricted stock units	1		—		12		—
Performance restricted stock units	2		—		3		2
Phantom stock awards and stock appreciation rights	1		1		3		3
Total	$	9	$	8	$	35	$	24

Long-Term Stock Awards. Prior to the amendment of our 2014 Long Term Stock Incentive Plan in December 2019, we granted long-term stock awards to our key employees and non-employee Directors. These grants did not cause net share dilution due to our practice of repurchasing and retiring an equal number of shares in the open market. We did not grant shares of long-term stock awards in the nine-month period ended September 30, 2020.

Our long-term stock award activity was as follows, shares in millions: 

	Nine Months Ended September 30,
	2020		2019
Unvested stock award shares at January 1	2		2
Weighted average grant date fair value	$	34	$	30
Stock award shares granted	—		1
Weighted average grant date fair value	$	—	$	36
Stock award shares vested	1		1
Weighted average grant date fair value	$	32	$	25
Stock award shares forfeited	—		—
Weighted average grant date fair value	$	35	$	32
Unvested stock award shares at September 30	1		2
Weighted average grant date fair value	$	36	$	34

    At September 30, 2020 and 2019, there was $25 million and $49 million, respectively, of total unrecognized compensation expense related to unvested stock awards; such awards had a weighted average remaining vesting period of two years and three years at September 30, 2020 and 2019, respectively.

    The total market value (at the vesting date) of stock award shares which vested was $31 million during both the nine-month periods ended September 30, 2020 and 2019.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

J. STOCK-BASED COMPENSATION (Continued)

Stock Options. Stock options are granted to certain key employees. The exercise price equals the market price of our common stock at the grant date. Beginning in 2020, stock options become exercisable (vest ratably) over three years beginning on the first anniversary from the grant date. Stock options granted prior to 2020 become exercisable (vest ratably) over five years.

    We granted 420,840 stock options in the nine-month period ended September 30, 2020 with a grant date weighted average exercise price of approximately $48 per share. In the nine-month period ended September 30, 2020, 16,240 stock options were forfeited (including options that expired unexercised).

    Our stock option activity was as follows, shares in millions: 

		Nine Months Ended September 30,
		2020		2019
Option shares outstanding, January 1		3		4
Weighted average exercise price	$	27	$	21
Option shares granted		1		1
Weighted average exercise price	$	48	$	36
Option shares exercised		1		2
Aggregate intrinsic value on date of exercise (A)	$	29 million	$	29 million
Weighted average exercise price	$	17	$	12
Option shares forfeited		—		—
Weighted average exercise price	$	42	$	34
Option shares outstanding, September 30		3		3
Weighted average exercise price	$	34	$	26
Weighted average remaining option term (in years)		7		6
Option shares vested and expected to vest, September 30		2		3
Weighted average exercise price	$	33	$	26
Aggregate intrinsic value (A)	$	54 million	$	48 million
Weighted average remaining option term (in years)		7		6
Option shares exercisable (vested), September 30		1		2
Weighted average exercise price	$	28	$	21
Aggregate intrinsic value (A)	$	35 million	$	39 million
Weighted average remaining option term (in years)		5		4

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

    At September 30, 2020 and 2019, there was $7 million and $9 million, respectively, of unrecognized compensation expense (using the Black-Scholes option pricing model at the grant date) related to unvested stock options; such options had a weighted average remaining vesting period of three years at both September 30, 2020 and 2019.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

J. STOCK-BASED COMPENSATION (Concluded)

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

	Nine Months Ended September 30,
	2020			2019
Weighted average grant date fair value	$	10.67		$	8.81
Risk-free interest rate	1.53		%	2.57		%
Dividend yield	1.14		%	1.35		%
Volatility factor	24.00		%	25.00		%
Expected option life	6 years			6 years

    Restricted Stock Units. Restricted stock units are granted to our key employees and non-employee Directors. These grants did not cause net share dilution due to our practice of repurchasing and retiring an equal number of shares in the open market. The grant date fair value is based on the fair value of our common stock. These units will vest and be settled in shares ratably over three years.

We granted 437,170 restricted stock units in the nine-month period ended September 30, 2020 with a weighted average grant date fair value of $47 per share. In the nine-month period ended September 30, 2020, 7,930 restricted stock units were forfeited.

At September 30, 2020, there was $8 million of unrecognized compensation expense related to unvested restricted stock units; such units had a weighted average remaining vesting period of two years.

    Performance Restricted Stock Units. Under our Long Term Incentive Program, we grant performance restricted stock units to certain senior executives. These performance restricted stock units will vest and share awards will be issued at no cost to the employees, subject to our achievement of specified performance metrics established by our Compensation Committee over a three-year performance period and the recipient's continued employment through the share award date. During the nine-month period ended September 30, 2020, we granted 133,390 performance restricted stock units with a grant date fair value of approximately $34 per share and 151,724 shares were issued. No performance restricted stock units were forfeited during the nine-month period ended September 30, 2020. During the nine-month period ended September 30, 2019, we granted 126,680 performance restricted stock units with a grant date fair value of approximately $39 per share and 15,600 performance restricted stock units were forfeited.

17

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

K. EMPLOYEE RETIREMENT PLANS

    Net periodic pension cost for our defined-benefit pension plans, with the exception of service cost, is recorded in other income (expense), net, in our condensed consolidated statement of operations. Net periodic pension cost for our defined-benefit pension plans was as follows, in millions: 

	Three Months Ended September 30,
	2020				2019
	Qualified		Non-Qualified		Qualified		Non-Qualified
Service cost	$	1	$	—	$	1	$	—
Interest cost	5		2		11		2
Expected return on plan assets	(6)		—		(12)		—
Amortization of net loss	7		—		4		1
Net periodic pension cost	$	7	$	2	$	4	$	3

	Nine Months Ended September 30,
	2020				2019
	Qualified		Non-Qualified		Qualified		Non-Qualified
Service cost	$	2	$	—	$	2	$	—
Interest cost	18		4		30		5
Expected return on plan assets	(17)		—		(34)		—
Amortization of net loss	18		2		14		2
Net periodic pension cost	$	21	$	6	$	12	$	7

    As of January 1, 2010, substantially all of our domestic and foreign qualified and domestic non-qualified defined-benefit pension plans were frozen to future benefit accruals. In December 2019, our Board of Directors approved the termination of our qualified domestic defined-benefit pension plans in 2021.

L. RECLASSIFICATIONS FROM ACCUMULATED OTHER COMPREHENSIVE LOSS

    The reclassifications from accumulated other comprehensive loss to the condensed consolidated statements of operations were as follows, in millions: 

	Amounts Reclassified				Amounts Reclassified
Accumulated Other Comprehensive Loss	Three Months Ended September 30,				Nine Months Ended September 30,				Statement of Operations Line Item
	2020		2019		2020		2019
Amortization of defined-benefit pension and other post-retirement benefits:
Actuarial losses, net	$	7	$	5	$	20	$	16	Other income (expense), net
Tax (benefit)	(2)		(1)		(5)		(4)
Net of tax	$	5	$	4	$	15	$	12
Interest rate swaps	$	—	$	—	$	1	$	1	Interest expense
Tax (benefit)	—		—		—		—
Net of tax	$	—	$	—	$	1	$	1

In addition to the above amounts, we reclassified $14 million of deferred currency translation losses from accumulated other comprehensive loss to the condensed consolidated statement of operations in conjunction with the disposition of UKWG in September 2019.

18

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

M. SEGMENT INFORMATION

    Information by segment and geographic area was as follows, in millions: 

	Three Months Ended September 30,								Nine Months Ended September 30,
	2020		2019		2020		2019		2020		2019		2020		2019
	Net Sales (A)				Operating Profit (Loss)				Net Sales (A)				Operating Profit (Loss)
Operations by segment:
Plumbing Products	$	1,141	$	1,006	$	271	$	179	$	2,964	$	2,958	$	583	$	530
Decorative Architectural Products	842		710		179		134		2,364		2,110		475		380
Total	$	1,983	$	1,716	$	450	$	313	$	5,328	$	5,068	$	1,058	$	910
Operations by geographic area:
North America	$	1,599	$	1,374	$	368	$	262	$	4,337	$	4,033	$	899	$	759
International, principally Europe	384		342		82		51		991		1,035		159		151
Total	$	1,983	$	1,716	450		313		$	5,328	$	5,068	1,058		910
General corporate expense, net					(26)		(24)						(70)		(77)
Operating profit					424		289						988		833
Other income (expense), net					(44)		(48)						(132)		(136)
Income from continuing operations before income taxes					$	380	$	241					$	856	$	697

(A)    Inter-segment sales were not material.

N. OTHER INCOME (EXPENSE), NET

    Other, net, which is included in other income (expense), net, was as follows, in millions:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Income from cash and cash investments	$	—	$	1	$	2	$	2
Equity investment income, net	1		1		1		1
Foreign currency transaction gains (losses)	1		(5)		(6)		(3)
Net periodic pension and post-retirement benefit cost	(9)		(6)		(25)		(17)
Dividend income	3		—		7		—
Other items, net	—		—		(1)		—
Total other, net	$	(4)	$	(9)	$	(22)	$	(17)

19

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

O. INCOME PER COMMON SHARE

    Reconciliations of the numerators and denominators used in the computations of basic and diluted income per common share were as follows, in millions: 

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Numerator (basic and diluted):
Income from continuing operations	$	275	$	163	$	618	$	481
Less: Allocation to unvested restricted stock awards	1		1		5		3
Income from continuing operations attributable to common shareholders	274		162		613		478
(Loss) income from discontinued operations, net	—		(37)		411		1
Less: Allocation to unvested restricted stock awards	—		—		3		—
(Loss) income from discontinued operations, net attributable to common shareholders	—		(37)		408		1
Net income attributable to common shareholders	$	274	$	125	$	1,021	$	479
Denominator:
Basic common shares (based upon weighted average)	261		286		265		289
Add: Stock option dilution	—		1		1		1
Diluted common shares	261		287		266		290

    For the three-month and nine-month periods ended September 30, 2020 and 2019, we allocated dividends and undistributed earnings to the unvested restricted stock awards.

    Additionally, 106,000 and 685,000 common shares for the three-month and nine-month periods ended September 30, 2020, respectively, and 855,000 and 1.2 million common shares for the three-month and nine-month periods ended September 30, 2019, respectively, related to stock options, and 20,000 common shares related to performance restricted stock units for the three-month and nine-month periods ended September 30, 2019 were excluded from the computation of diluted income per common share due to their antidilutive effect.

    In September 2019, our Board of Directors authorized the repurchase, for retirement, of up to $2.0 billion of shares of our common stock in open-market transactions or otherwise. In the first nine months of 2020, we repurchased and retired 16.5 million shares of our common stock for approximately $602 million. This included 0.4 million shares to offset the dilutive impact of restricted stock units granted in the first nine months of the year as well as 1.2 million shares received at no additional cost from the settlement of the accelerated stock repurchase transaction initiated in November 2019. At September 30, 2020, we had $900 million remaining under the 2019 repurchase authorization.

    On the basis of amounts paid (declared), cash dividends per common share were $0.135 ($0.140) and $0.405 ($0.410) for the three-month and nine-month periods ended September 30, 2020, respectively, and $0.120 ($0.135) and $0.360 ($0.375) for the three-month and nine-month periods ended September 30, 2019, respectively.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Concluded)

P. OTHER COMMITMENTS AND CONTINGENCIES

We are involved in claims and litigation, including class actions, mass torts and regulatory proceedings, which arise in the ordinary course of our business. The types of matters may include, among others: competition, product liability, employment, warranty, advertising, contract, personal injury, environmental, intellectual property, and insurance coverage. We believe we have adequate defenses in these matters and that the likelihood that the outcome of these matters would have a material adverse effect on us is remote. However, there is no assurance that we will prevail in these matters, and we could, in the future, incur judgments, enter into settlements of claims or revise our expectations regarding the outcome of these matters, which could materially impact our results of operations.

Q. INCOME TAXES

Our effective tax rate was 23 percent and 27 percent for the three-month periods and 24 percent and 26 percent for the nine-month periods ended September 30, 2020 and 2019, respectively. The decrease in the rate was primarily due to a $10 million and $13 million reduction in income tax expense in the three-month and nine-month periods ended September 30, 2020, respectively, resulting from IRS guidance released during the third quarter of 2020 that allows us to exclude certain high-taxed foreign income from the U.S. tax effects on Global Intangible Low-taxed Income.

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Item 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THIRD QUARTER 2020 AND THE FIRST NINE MONTHS 2020 VERSUS

THIRD QUARTER 2019 AND THE FIRST NINE MONTHS 2019

SALES AND OPERATIONS

    The following table sets forth our net sales and operating profit (loss) by business segment and geographic area, dollars in millions:

	Three Months Ended September 30,				Percent Change
	2020		2019		2020	vs.	2019
Net Sales:
Plumbing Products	$	1,141	$	1,006	13			%
Decorative Architectural Products	842		710		19			%
Total	$	1,983	$	1,716	16			%
North America	$	1,599	$	1,374	16			%
International, principally Europe	384		342		12			%
Total	$	1,983	$	1,716	16			%

	Nine Months Ended September 30,				Percent Change
	2020		2019		2020	vs.	2019
Net Sales:
Plumbing Products	$	2,964	$	2,958	—			%
Decorative Architectural Products	2,364		2,110		12			%
Total	$	5,328	$	5,068	5			%
North America	$	4,337	$	4,033	8			%
International, principally Europe	991		1,035		(4)			%
Total	$	5,328	$	5,068	5			%

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Operating Profit (Loss): (A)
Plumbing Products	$	271	$	179	$	583	$	530
Decorative Architectural Products	179		134		475		380
Total	$	450	$	313	$	1,058	$	910
North America	$	368	$	262	$	899	$	759
International, principally Europe	82		51		159		151
Total	450		313		1,058		910
General corporate expense, net	(26)		(24)		(70)		(77)
Operating profit	$	424	$	289	$	988	$	833

(A)    Before general corporate expense, net; see Note M to the condensed consolidated financial statements.

22

    We report our financial results in accordance with generally accepted accounting principles ("GAAP") in the United States of America. However, we believe that certain non-GAAP performance measures and ratios used in managing the business may provide users of this financial information with additional meaningful comparisons between current results and results in prior periods. Non-GAAP performance measures and ratios should be viewed in addition to, and not as an alternative for, our reported results under GAAP.

    The following discussion of consolidated results of operations and segment and geographic results refers to the three-month and nine-month periods ended September 30, 2020 compared to the same periods of 2019.

NET SALES

    Net sales increased 16 percent for the three-month period ended September 30, 2020 and five percent for the nine-month period ended September 30, 2020. Excluding the effect of currency translation, net sales increased 15 percent and five percent for the three-month and nine-month periods ended September 30, 2020, respectively. The following table reconciles reported net sales to net sales, excluding the effect of currency translation, in millions:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Net sales, as reported	$	1,983	$	1,716	$	5,328	$	5,068
Currency translation	(13)		—		9		—
Net sales, excluding the effect of currency translation	$	1,970	$	1,716	$	5,337	$	5,068

    North American net sales increased 16 percent and eight percent for the three-month and nine-month periods ended September 30, 2020. Higher sales volume of paints and other coating products, plumbing products and builders' hardware products, in aggregate, increased sales by 17 percent and nine percent for the three-month and nine-month periods, respectively. Such increases were slightly offset by lower net selling prices of paints and other coating products, which decreased sales by one percent for both periods.

    International net sales increased 12 percent for the three-month period ended September 30, 2020. In local currencies (including sales in currencies outside their respective functional currencies), net sales increased nine percent. Higher sales volume of plumbing products increased sales by nine percent. International net sales decreased four percent for the nine-month period ended September 30, 2020. In local currencies, net sales decreased four percent. Lower sales volume and unfavorable sales mix of plumbing products, in aggregate, decreased sales by four percent.

    Net sales in the Plumbing Products segment increased 13 percent for the three-month period ended September 30, 2020. Higher sales volume increased sales by 12 percent. Favorable foreign currency translation further increased sales by one percent. Net sales in the Plumbing Products segment was flat for the nine-month period ended September 30, 2020. Higher sales volume and net selling prices, in aggregate, increased net sales by one percent, offset by unfavorable sales mix, which decreased sales by one percent.

    Net sales in the Decorative Architectural Products segment increased 19 percent for the three-month period ended September 30, 2020, due mostly to higher sales volume of paints and other coating products, and to a lesser extent, builders' hardware products and lighting products. This increase was slightly offset by unfavorable net selling prices of paints and other coating products and builders' hardware products. Net sales in the Decorative Architectural Products segment increased 12 percent for the nine-month period ended September 30, 2020, due mostly to higher sales volume of paints and other coating products, and to a lesser extent, builders' hardware products. This increase was slightly offset by unfavorable net selling prices of paints and other coating products and lower sales volume of lighting products.

23

OPERATING PROFIT

    Our gross profit margin was 37.9 percent and 36.2 percent for the three-month and nine-month periods ended September 30, 2020, respectively, compared to 35.6 percent for both comparable periods of 2019. Gross profit margins for the three-month period ended September 30, 2020 were positively impacted by increased sales volume, cost savings initiatives, including actions taken to mitigate the coronavirus disease 2019 ("COVID-19") pandemic impact, as well as decreased commodity costs, partially attributed to tariff mitigation. Such increases were partially offset by lower net selling prices. Gross profit margins for the nine-month period ended September 30, 2020 were positively impacted by increased sales volume and cost savings initiatives, including actions taken to mitigate the impact of the COVID-19 pandemic. Such increases were partially offset by lower net selling prices, unfavorable sales mix and increased commodity costs, primarily attributed to tariffs.

    Selling, general and administrative expenses, as a percentage of sales, were 16.5 percent and 17.6 percent for the three-month and nine-month periods ended September 30, 2020, respectively, compared to 18.8 percent and 19.0 percent for the comparable periods of 2019. Selling, general and administrative expenses were positively impacted by cost containment activities including those actions taken to mitigate the COVID-19 pandemic impact and leverage of fixed expenses due primarily to increased sales volume.

    Operating profit in the Plumbing Products segment for the three-month period ended September 30, 2020 was positively impacted by increased sales volume, cost savings initiatives, including actions taken to mitigate the COVID-19 pandemic impact and decreased commodity costs, partially attributed to tariff mitigation. Operating profit in the Plumbing Products segment for the nine-month period ended September 30, 2020 was positively impacted by cost savings initiatives, including actions taken to mitigate the COVID-19 pandemic impact, favorable net selling prices and higher sales volume. These positive impacts were partially offset by increases in commodity costs, primarily attributed to tariffs.

    Operating profit in the Decorative Architectural Products segment for the three-month period ended September 30, 2020 benefited primarily from increased sales volume, as well as cost savings initiatives, including actions taken to mitigate the COVID-19 pandemic impact and decreased commodity costs. These positive impacts were partially offset by lower net selling prices. Operating profit in the Decorative Architectural Products segment for the nine-month period ended September 30, 2020 benefited primarily from increased sales volume, as well as cost savings initiatives, including actions taken to mitigate the COVID-19 pandemic impact. Additionally, operating profit was positively impacted by the non-recurrence of a 2019 non-cash impairment charge related to an other indefinite-lived intangible asset for a trademark associated with lighting products. These positive impacts were partially offset by unfavorable net selling prices and higher fixed expenses in our lighting business.

OTHER INCOME (EXPENSE), NET

    Interest expense for the three-month and nine-month periods ended September 30, 2020 was $40 million and $110 million, respectively, compared to $39 million and $119 million for the three-month and nine-month periods ended September 30, 2019, respectively. In the third quarter of 2020, we recognized a loss on debt extinguishment of $6 million on the early retirement of our 3.5% Notes due April 1, 2021, which was recorded to interest expense. This increase was offset by lower interest charges due to the extinguishment of our 7.125% Notes due March 15, 2020 in the fourth quarter of 2019.

    Other, net, for the three-month and nine-month periods ended September 30, 2020 included $9 million and $25 million, respectively, of net periodic pension and post-retirement benefit cost, $3 million and $7 million, respectively, of dividend income related to preferred stock of ACProducts Holding, Inc., and $1 million of foreign currency transaction gains for the three-month period and $6 million of foreign currency transaction losses for the nine-month period. Other, net, for the three-month and nine-month periods ended September 30, 2019 included $6 million and $17 million, respectively, of net periodic pension and post-retirement benefit cost and $5 million and $3 million, respectively of foreign currency transaction losses.

24

INCOME AND INCOME PER COMMON SHARE FROM CONTINUING OPERATIONS — ATTRIBUTABLE TO MASCO CORPORATION

    Income from continuing operations for the three-month and nine-month periods ended September 30, 2020 was $275 million and $618 million, respectively, compared to $163 million and $481 million for the comparable periods of 2019. Diluted income per common share for the three-month and nine-month periods ended September 30, 2020 was $1.05 and $2.31, respectively, per common share, compared with $0.56 and $1.65, respectively, per common share for the comparable periods of 2019.

    Our effective tax rate was 23 percent and 24 percent for the three-month and nine-month periods ended September 30, 2020, respectively. Our tax rates were lower than our normalized tax rate of 26 percent due primarily to a $10 million reduction in income tax expense in both periods, resulting from IRS guidance released during the third quarter of 2020, that allows us to exclude certain high-taxed foreign income from the U.S. tax effects on Global Intangible Low-taxed Income. Also, our effective tax rate for the nine-month period was lower than our normalized tax rate due to an additional $5 million income tax benefit on stock-based compensation.

Our effective tax rate was 27 percent and 26 percent for the three-month and nine-month periods ended September 30, 2019, respectively. Our normalized tax rate for 2019 was 26 percent.

OTHER FINANCIAL INFORMATION

    Our current ratio was 2.0 to 1 and 1.8 to 1 at September 30, 2020 and December 31, 2019, respectively. The increase in our current ratio is due primarily to increased cash on hand as a result of the temporary suspension of our share repurchase activity beginning in the first quarter of 2020. We have announced our intention to resume our share repurchase activity in the fourth quarter as part of our strategic initiative to drive long-term shareholder value. We anticipate using approximately $100 million of cash for share repurchases in the fourth quarter, for a total of approximately $700 million of share repurchases in 2020.

    For the nine-month period ended September 30, 2020, net cash provided by operating activities was $573 million. Cash provided by operations of $590 million was affected by the income tax expense of $179 million resulting from the gain recorded in connection with the divestiture of Cabinetry. Additionally, cash from operating activities was affected by increased receivables and payables as a result of increased demand for our products in the third quarter of 2020.

    For the nine-month period ended September 30, 2020, net cash used for financing activities was $721 million, primarily due to $602 million for the repurchase and retirement of our common stock (including 0.4 million shares repurchased to offset the dilutive impact of restricted stock units granted in 2020), $400 million for the early retirement of our 3.5% Notes due April 1, 2021, $108 million for the payment of cash dividends, $23 million for dividends paid to noncontrolling interest and $25 million for employee withholding taxes paid on stock-based compensation. These uses of cash were partially offset by the issuances of $300 million of 2.0% Notes due October 1, 2030 and an incremental $100 million on our existing 4.5% Notes due May 15, 2047 that was issued at a premium of $19 million and $26 million of proceeds from the exercise of stock options.

    For the nine-month period ended September 30, 2020, net cash provided by investing activities was $770 million, comprised of $853 million of proceeds from the sale of Cabinetry, net of cash disposed, and $15 million from the finalization of working capital items on the sale of Milgard, partially offset by $72 million for capital expenditures and $24 million for the acquisition of SmarTap, net of cash acquired.

    Our cash and cash investments were $1.3 billion and $697 million at September 30, 2020 and December 31, 2019, respectively. Our cash and cash investments consist of overnight interest-bearing money market demand accounts, time deposit accounts, and money market mutual funds containing government securities and treasury obligations.

    Of the $1.3 billion and $697 million of cash and cash investments held at September 30, 2020 and December 31, 2019, $324 million and $297 million, respectively, was held in our foreign subsidiaries. If these funds were needed for our operations in the U.S., their repatriation into the U.S. would not result in significant additional U.S. income tax or foreign withholding tax, as we have recorded such taxes on substantially all undistributed foreign earnings, except for those that are legally restricted.

25

On September 18, 2020, we issued $300 million of 2.0% Notes due October 1, 2030 and received proceeds of $300 million, net of discount, for the issuance of the 2030 Notes. Also on September 18, 2020, we issued an incremental $100 million on our existing 4.5% Notes due May 15, 2047 and received proceeds of $119 million, including a premium, for the issuance of the 2047 Notes. The incremental $100 million will form a single series with the existing $300 million of 4.5% Notes due May 15, 2047. The 2030 Notes and 2047 Notes are senior indebtedness and are redeemable at our option at the applicable redemption price. On September 29, 2020, proceeds from the debt issuances were used to repay and early retire $400 million of our 3.5% Notes due April 1, 2021. In connection with this early retirement, we incurred a loss on debt extinguishment of $6 million, which was recorded as interest expense.

    On March 13, 2019, we entered into a credit agreement (the "Credit Agreement") with an aggregate commitment of $1.0 billion and a maturity date of March 13, 2024. Under the Credit Agreement, at our request and subject to certain conditions, we can increase the aggregate commitment up to an additional $500 million with the current lenders or new lenders. Upon entry into the Credit Agreement, our credit agreement dated March 28, 2013, as amended, with an aggregate commitment of $750 million, was terminated. See Note I to the condensed consolidated financial statements.

    The Credit Agreement contains financial covenants requiring us to maintain (A) a net leverage ratio, as adjusted for certain items, not exceeding 4.0 to 1.0, and (B) a minimum interest coverage ratio, as adjusted for certain items, not less than 2.5 to 1.0.  We were in compliance with all covenants and no borrowings were outstanding under our Credit Agreement at September 30, 2020.

    As part of our ongoing efforts to improve our cash flow and related liquidity, we work with suppliers to optimize our terms and conditions, including extending payment terms. We also facilitate a voluntary supply chain finance program (the "program") to provide certain of our suppliers with the opportunity to sell receivables due from us to participating financial institutions at the sole discretion of both the suppliers and the financial institutions. A third party administers the program; our responsibility is limited to making payment on the terms originally negotiated with our supplier, regardless of whether the supplier sells its receivable to a financial institution. We do not enter into agreements with any of the participating financial institutions in connection with the program. The range of payment terms we negotiate with our suppliers is consistent, irrespective of whether a supplier participates in the program.

    All outstanding payments owed under the program are recorded within accounts payable in our condensed consolidated balance sheets. The amounts owed to participating financial institutions under the program and included in accounts payable for our continuing operations were $47 million and $29 million at September 30, 2020 and December 31, 2019, respectively. We account for all payments made under the program as a reduction to our cash flows from operations and reported within our increase in accounts payable and accrued liabilities, net, line within our condensed consolidated statements of cash flows. The amounts settled through the program and paid to participating financial institutions were $97 million and $92 million for our continuing operations during the nine-month periods ended September 30, 2020 and 2019, respectively. A downgrade in our credit rating or changes in the financial markets could limit the financial institutions’ willingness to commit funds to, and participate in, the program. We do not believe such risk would have a material impact on our working capital or cash flows, as substantially all of our payments are made outside of the program.

    The COVID-19 pandemic did not impact our financial performance during the third quarter of 2020 to the extent we anticipated. Operational activity that was previously slowed at certain of our facilities, as a result of the pandemic, have largely resumed operations at normal capacities enabling them to progress on the fulfillment of production and distribution backlogs that developed in the first half of the year as well as to meet current consumer demand.

Many, but not all, of our businesses remained operating in the first nine months of 2020 because the products we provide are critical to infrastructure sectors and the day-to-day operations of homes and businesses in our communities as defined by applicable local orders. However, certain of our facilities experienced full closures ranging from a few days to several weeks, and if certain governmental orders are reimposed or if we are required to close a facility for employee safety reasons, we could experience new or extended closures which might adversely impact our ability to produce and distribute our products. Finally, we may experience supply chain disruptions, particularly disruptions related to our ability to source plumbing, lighting and builders’ hardware products.

26

We may experience an adverse impact to our fourth quarter of 2020 results due to economic contraction as a result of high unemployment levels and remaining or potential renewed shelter-in-place and social distancing orders. However, given our portfolio of lower ticket, repair and remodel-oriented products, we expect that demand for our products will continue to be solid as we recover from the COVID-19 pandemic.

We believe that our present cash balance, cash flows from operations, and borrowing availability under our Credit Agreement are sufficient to fund our near-term working capital and other investment needs. We anticipate that our longer-term working capital and other general corporate requirements will be satisfied through cash flows from operations and, to the extent necessary, from bank borrowings and future financial market activities. However, due to the highly uncertain nature, severity and duration or resurgence of the COVID-19 pandemic and its impact on our customers, suppliers and employees, we are unable to fully estimate the extent of the impact it may have on our future financial condition.

In preparing this Form 10-Q, including our financial statements contained in this report, we made certain estimates and assumptions that affect or could have affected the reported amounts of assets and liabilities, disclosure of any contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. As the impact of the COVID-19 pandemic to our business becomes more certain, we will update and refine our estimates and assumptions, which could affect the reported amounts of assets and liabilities and related disclosures, and future revenues and expenses.

We continue to be committed to the safety and well-being of our employees during this time, and, led by our cross-functional COVID-19 task force, we have employed best practices and followed guidance from the World Health Organization and the Centers for Disease Control and Prevention. We have implemented and are continuing to implement alternative work arrangements to support the health and safety of our employees, including working remotely and avoiding large gatherings. In addition, we have modified work areas and workstations to provide protective measures for employees, are staggering shifts, requiring the use of face coverings, practicing social distancing and increasing the cleaning of our facilities, and in the event that we learn of an employee testing positive for COVID-19, we are completing contact tracing and requiring impacted employees to self-quarantine.

OUTLOOK FOR THE COMPANY

    We continue to execute our strategies of leveraging our strong brand portfolio, industry-leading positions and the Masco Operating System, our methodology to drive growth and productivity, to create long-term shareholder value. We believe that our strong financial position and cash flow generation, together with our investments in our industry-leading branded building products, our continued focus on innovation and disciplined capital allocation, will allow us to drive long-term growth and create value for our shareholders. While we continue to remain uncertain regarding the short-term impact that the COVID-19 pandemic may have on our businesses, we remain confident in the fundamentals of our businesses and long-term strategy.

27

FORWARD-LOOKING STATEMENTS

    This report contains statements that reflect our views about our future performance and constitute "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "outlook," "believe," "anticipate," "appear," "may," "will," "should," "intend," "plan," "estimate," "expect," "assume," "seek," "forecast," and similar references to future periods. Our views about future performance involve risks and uncertainties that are difficult to predict and, accordingly, our actual results may differ materially from the results discussed in our forward-looking statements. We caution you against relying on any of these forward-looking statements. Our future performance may be affected by the levels of residential repair and remodel activity and new home construction, our ability to maintain our strong brands and reputation and to develop innovative products, our ability to maintain our competitive position in our industries, our reliance on key customers, the length and severity of the ongoing COVID-19 pandemic, including its impact on domestic and international economic activity, consumer demand for our products, our production capabilities, our employees and our supply chain, the cost and availability of materials and the imposition of tariffs, our dependence on third-party suppliers, risks associated with our international operations and global strategies, our ability to achieve the anticipated benefits of our strategic initiatives, our ability to successfully execute our acquisition strategy and integrate businesses that we have and may acquire, our ability to attract, develop and retain talented personnel, risks associated with our reliance on information systems and technology, and our ability to achieve the anticipated benefits from our investments in new technology. These and other factors are discussed in detail in Item 1A, "Risk Factors" in our most recent Annual Report on Form 10-K, as well as in other filings we make with the Securities and Exchange Commission.  The forward-looking statements in this report speak only as of the date of this report. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. Unless required by law, we undertake no obligation to update publicly any forward-looking statements as a result of new information, future events or otherwise.

28

MASCO CORPORATION

Item 4.

CONTROLS AND PROCEDURES

a.     Evaluation of Disclosure Controls and Procedures.

    The Company’s principal executive officer and principal financial officer have concluded, based on an evaluation of the Company’s disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) or 15d-15(e)) as required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15 that, as of September 30, 2020, the Company's disclosure controls and procedures were effective.

b.     Changes in Internal Control over Financial Reporting.

    In connection with the evaluation of the Company's internal control over financial reporting that occurred during the quarter ended September 30, 2020, which is required under the Securities Exchange Act of 1934 by paragraph (d) of Exchange Rules 13a-15 or 15d-15 (as defined in paragraph (f) of Rule 13a-15), management determined that there was no change that materially affected or is reasonably likely to materially affect internal control over financial reporting.

29

MASCO CORPORATION

PART II.  OTHER INFORMATION

Item 1. Legal Proceedings

Information regarding legal proceedings involving us is set forth in Note P to our condensed consolidated financial statements included in Part I, Item 1 of this Report and is incorporated herein by reference.

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, the reader should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Except as set forth in our Quarterly Report on Form 10-Q for the quarter period ended June 30, 2020, there have been no material changes to our risk factors from those disclosed in Part I, Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

30

MASCO CORPORATION

PART II.  OTHER INFORMATION, Continued

Item 6. Exhibits 

4.1	–	Resolutions establishing the terms of the 2.000% Notes Due 2030 and form of global note. Incorporated by reference to Exhibit 4.1 to Masco Corporation’s Current Report on Form 8-K dated and filed on September 18, 2020.
4.2	–	Resolutions establishing the terms of the 4.500% Notes Due 2047 and form of global note. Incorporated by reference to Exhibit 4.2 to Masco Corporation’s Current Report on Form 8-K dated and filed on September 18, 2020.
4.3	–	Second Supplemental Indenture dated as of September 18, 2020 to the Indenture dated as of February 12, 2001 between Masco Corporation and The Bank of New York Mellon Trust Company, N.A., as successor trustee under agreement originally with Bank One Trust Company, National Association, as Trustee, as supplemented. Incorporated by reference to Exhibit 4.3 to Masco Corporation’s Current Report on Form 8-K dated and filed on September 18, 2020.
31a	–	Certification by Chief Executive Officer Required by Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934
31b	–	Certification by Chief Financial Officer Required by Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934
32	–	Certification Required by Rule 13a-14(b) or 15d-14(b) of the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code
101	–	The following financial information from Masco Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, formatted in Inline XBRL: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income (Loss), (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Shareholders' Equity, and (vi) Notes to Condensed Consolidated Financial Statements.
104	–	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

31

MASCO CORPORATION

PART II.  OTHER INFORMATION, Concluded

SIGNATURE

    Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. 

MASCO CORPORATION
By:	/s/ John G. Sznewajs
Name:	John G. Sznewajs
Title:	Vice President, Chief Financial Officer

October 28, 2020

32

EX-31.A

Exhibit 31a

MASCO CORPORATION

Certification Required by Rule 13a-14(a) or 15d-14(a)

of the Securities Exchange Act of 1934

I, Keith J. Allman, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Masco Corporation ("the registrant");

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	October 28, 2020	By:	/s/ Keith J. Allman
			Keith J. Allman
			President and Chief Executive Officer

1

EX-31.B

Exhibit 31b

MASCO CORPORATION

Certification Required by Rule 13a-14(a) or 15d-14(a)

of the Securities Exchange Act of 1934

I, John G. Sznewajs, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Masco Corporation ("the registrant");

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	October 28, 2020	By:	/s/ John G. Sznewajs
			John G. Sznewajs
			Vice President, Chief Financial Officer

1

EX-32

Exhibit 32

MASCO CORPORATION

Certification Required by Rule 13a-14(b) or 15d-14(b)

of the Securities Exchange Act of 1934 and

Section 1350 of Chapter 63 of Title 18 of the

United States Code

    The certification set forth below is being submitted in connection with the Masco Corporation Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2020 (the “Report”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code.

    Keith J. Allman, the President and Chief Executive Officer, and John G. Sznewajs, the Vice President, Chief Financial Officer, of Masco Corporation, each certifies that, to the best of his knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results of operations of Masco Corporation.

Date:	October 28, 2020	/s/ Keith J. Allman
		Keith J. Allman
		President and Chief Executive Officer
Date:	October 28, 2020	/s/ John G. Sznewajs
		John G. Sznewajs
		Vice President, Chief Financial Officer

1

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Cover Page	9 Months Ended
	Sep. 30, 2020 shares
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2020
Document Transition Report	false
Entity File Number	1-5794
Entity Registrant Name	Masco Corporation
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	38-1794485
Entity Address, Address Line One	17450 College Parkway,
Entity Address, City or Town	Livonia,
Entity Address, State or Province	MI
Entity Address, Postal Zip Code	48152
City Area Code	313
Local Phone Number	274-7400
Title of 12(b) Security	Common Stock, $1.00 par value
Trading Symbol	MAS
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)	261,675,891
Entity Central Index Key	0000062996
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Amendment Flag	false

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Current Assets:
Cash and cash investments	$ 1,326	$ 697
Receivables	1,262	997
Prepaid expenses and other	88	90
Assets held for sale	0	173
Inventories:
Finished goods	514	485
Raw material	255	211
Work in process	42	58
Total inventories	811	754
Total current assets	3,487	2,711
Property and equipment, net	878	878
Operating lease right-of-use assets	156	176
Goodwill	528	509
Other intangible assets, net	253	259
Other assets	273	139
Assets held for sale	0	355
Total assets	5,575	5,027
Current Liabilities:
Accounts payable	933	697
Notes payable	5	2
Accrued liabilities	799	700
Liabilities held for sale	0	149
Total current liabilities	1,737	1,548
Long-term debt	2,787	2,771
Operating Lease, Liability, Noncurrent	143	162
Other liabilities	567	589
Liabilities held for sale	0	13
Total liabilities	5,234	5,083
Commitments and contingencies (Note P)
Masco Corporation's shareholders' equity:
Common shares, par value $1 per share Authorized shares: 1,400,000,000; Issued and outstanding: 2020 – 260,500,000; 2019 – 275,600,000	261	276
Preferred shares authorized: 1,000,000; Issued and outstanding: 2020 and 2019 – None	0	0
Paid-in capital	21	0
Retained earnings (deficit)	15	(332)
Accumulated other comprehensive loss	(156)	(179)
Total Masco Corporation's shareholders' equity (deficit)	141	(235)
Noncontrolling interest	200	179
Total equity	341	(56)
Total liabilities and equity	$ 5,575	$ 5,027

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Common share, par value (in dollars per share)	$ 1	$ 1
Common shares, shares authorized (in shares)	1,400,000,000	1,400,000,000
Common shares, shares issued (in shares)	260,500,000	275,600,000
Common shares, shares outstanding (in shares)	260,500,000	275,600,000
Preferred shares, shares authorized (in shares)	1,000,000	1,000,000
Preferred shares, shares issued (in shares)	0	0
Preferred shares, shares outstanding (in shares)	0	0

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Income Statement [Abstract]
Net sales	$ 1,983	$ 1,716	$ 5,328	$ 5,068
Cost of sales	1,231	1,105	3,401	3,262
Gross profit	752	611	1,927	1,806
Selling, general and administrative expenses	328	322	939	964
Impairment charge for other intangible assets	0	0	0	9
Operating profit	424	289	988	833
Other income (expense), net:
Interest expense	(40)	(39)	(110)	(119)
Other, net	(4)	(9)	(22)	(17)
Total other income (expense), net	(44)	(48)	(132)	(136)
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest, Total	380	241	856	697
Income tax expense	87	66	202	181
Income from continuing operations	293	175	654	516
(Loss) income from discontinued operations, net	0	(37)	411	1
Net income	293	138	1,065	517
Less: Net income attributable to noncontrolling interest	18	12	36	35
Net income attributable to Masco Corporation	$ 275	$ 126	$ 1,029	$ 482
Basic:
Income from continuing operations (in dollars per share)	$ 1.05	$ 0.57	$ 2.31	$ 1.66
(Loss) income from discontinued operations, net (in dollars per share)	0	(0.13)	1.54	0
Net income (in dollars per share)	1.05	0.44	3.85	1.66
Diluted:
Income from continuing operations (in dollars per share)	1.05	0.56	2.31	1.65
(Loss) income from discontinued operations, net (in dollars per share)	0	(0.12)	1.54	0
Net income (in dollars per share)	$ 1.05	$ 0.44	$ 3.85	$ 1.65
Amounts attributable to Masco Corporation:
Income from continuing operations	$ 275	$ 163	$ 618	$ 481
(Loss) income from discontinued operations, net	$ 0	$ (37)	$ 411	$ 1

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Statement of Comprehensive Income [Abstract]
Net income	$ 293	$ 138	$ 1,065	$ 517
Less: Net income attributable to noncontrolling interest	18	12	36	35
Net income attributable to Masco Corporation	275	126	1,029	482
Other comprehensive income (loss), net of tax (Note L):
Cumulative translation adjustment	32	(13)	15	(11)
Interest rate swaps	0	0	1	1
Pension and other post-retirement benefits	5	4	15	12
Other comprehensive income (loss), net of tax	37	(9)	31	2
Less: Other comprehensive income (loss) attributable to noncontrolling interest	9	(8)	8	(7)
Other comprehensive income (loss) attributable to Masco Corporation	28	(1)	23	9
Total comprehensive income	330	129	1,096	519
Less: Total comprehensive income attributable to noncontrolling interest	27	4	44	28
Total comprehensive income attributable to Masco Corporation	$ 303	$ 125	$ 1,052	$ 491

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES:
Cash provided by operations	$ 590	$ 754
Increase in receivables	(294)	(136)
Increase in inventories	(66)	(27)
Increase in accounts payable and accrued liabilities, net	343	14
Net cash from operating activities	573	605
Repayments of Notes Payable	(400)	0
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES:
Purchase of Company common stock	(602)	(440)
Cash dividends paid	(108)	(105)
Dividends paid to noncontrolling interest	(23)	(42)
Proceeds from Notes Payable	415	0
Payment for Debt Extinguishment or Debt Prepayment Cost	(5)	0
Proceeds from the exercise of stock options	26	23
Employee withholding taxes paid on stock-based compensation	(25)	(21)
Increase (decrease) in debt, net	1	(3)
Credit Agreement and other financing costs	0	(2)
Net cash for financing activities	(721)	(590)
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES:
Capital expenditures	(72)	(111)
Acquisition of business, net of cash acquired	(24)	0
Proceeds from disposition of:
Businesses, net of cash disposed	868	2
Other financial investments	2	1
Property and equipment	0	15
Other, net	(4)	(11)
Net cash from (for) investing activities	770	(104)
Effect of exchange rate changes on cash and cash investments	7	10
CASH AND CASH INVESTMENTS:
Increase (decrease) for the period	629	(79)
At January 1	697	559
At September 30	$ 1,326	$ 480

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) - USD ($) $ in Millions	Total	Cumulative Effect, Period of Adoption, Adjustment	Cumulative Effect, Period of Adoption, Adjusted Balance	Common Shares ($1 par value)	Common Shares ($1 par value) Cumulative Effect, Period of Adoption, Adjusted Balance	Paid-In Capital	Paid-In Capital Cumulative Effect, Period of Adoption, Adjusted Balance	Retained (Deficit) Earnings	Retained (Deficit) Earnings Cumulative Effect, Period of Adoption, Adjustment	Retained (Deficit) Earnings Cumulative Effect, Period of Adoption, Adjusted Balance	Accumulated Other Comprehensive (Loss) Income	Accumulated Other Comprehensive (Loss) Income Cumulative Effect, Period of Adoption, Adjusted Balance	Noncontrolling Interest	Noncontrolling Interest Cumulative Effect, Period of Adoption, Adjusted Balance
Balance at Dec. 31, 2018	$ 69			$ 294		$ 0		$ (278)			$ (127)		$ 180
Increase (Decrease) in Stockholders' Equity
Total comprehensive income	128							116			4		8
Shares issued	5			1		4
Shares retired:
Repurchased	(122)			(3)		(11)		(108)
Surrendered (non-cash)	(10)			(1)				(9)
Cash dividends declared	(35)							(35)
Stock-based compensation	7					7
Balance at Mar. 31, 2019	42			291		0		(314)			(123)		188
Balance at Dec. 31, 2018	69			294		0		(278)			(127)		180
Increase (Decrease) in Stockholders' Equity
Total comprehensive income	519
Balance at Sep. 30, 2019	23			284		0		(309)			(118)		166
Balance at Mar. 31, 2019	42			291		0		(314)			(123)		188
Increase (Decrease) in Stockholders' Equity
Total comprehensive income	262							240			6		16
Shares issued	2			1		1
Shares retired:
Repurchased	(167)			(5)		(10)		(152)
Cash dividends declared	(35)							(35)
Dividends paid to noncontrolling interest	(42)												(42)
Stock-based compensation	9					9
Balance at Jun. 30, 2019	71			287		0		(261)			(117)		162
Increase (Decrease) in Stockholders' Equity
Total comprehensive income	129							126			(1)		4
Shares issued	5					5
Shares retired:
Repurchased	(151)			(3)		(12)		(136)
Cash dividends declared	(38)							(38)
Stock-based compensation	7					7
Balance at Sep. 30, 2019	$ 23			284		0		(309)			(118)		166
Shares retired:
Common share, par value (in dollars per share)	$ 1
Balance at Dec. 31, 2019	$ (56)		$ (57)	276	$ 276	0	$ 0	(332)		$ (333)	(179)	$ (179)	179	$ 179
Balance (Accounting Standards Update 2016-13) at Dec. 31, 2019		$ (1)							$ (1)
Increase (Decrease) in Stockholders' Equity
Total comprehensive income	514							530			(20)		4
Shares issued	11			1		10
Shares retired:
Repurchased	(602)			(14)		(28)		(560)
Surrendered (non-cash)	(13)							(13)
Cash dividends declared	(36)							(36)
Stock-based compensation	18					18
Balance at Mar. 31, 2020	(165)			263		0		(412)			(199)		183
Balance at Dec. 31, 2019	(56)		$ (57)	276	$ 276	0	$ 0	(332)		$ (333)	(179)	$ (179)	179	$ 179
Balance (Accounting Standards Update 2016-13) at Dec. 31, 2019		$ (1)							$ (1)
Increase (Decrease) in Stockholders' Equity
Total comprehensive income	1,096
Shares retired:
Repurchased	(602)
Balance at Sep. 30, 2020	341			261		21		15			(156)		200
Balance at Mar. 31, 2020	(165)			263		0		(412)			(199)		183
Increase (Decrease) in Stockholders' Equity
Total comprehensive income	252							224			15		13
Shares retired:
Repurchased	0			(3)		3
Cash dividends declared	(35)							(35)
Dividends paid to noncontrolling interest	(23)												(23)
Stock-based compensation	8					8
Balance at Jun. 30, 2020	37			260		11		(223)			(184)		173
Increase (Decrease) in Stockholders' Equity
Total comprehensive income	330							275			28		27
Shares issued	3			1		2
Shares retired:
Cash dividends declared	(37)							(37)
Stock-based compensation	8					8
Balance at Sep. 30, 2020	$ 341			$ 261		$ 21		$ 15			$ (156)		$ 200
Shares retired:
Common share, par value (in dollars per share)	$ 1

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Accounting Policies

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Accounting Policies

ACCOUNTING POLICIES

    In our opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments, of a normal recurring nature, necessary to fairly state our financial position at September 30, 2020, our results of operations and comprehensive income (loss) for the three-month and nine-month periods ended September 30, 2020 and 2019, cash flows for the nine-month period ended September 30, 2020 and 2019 and changes in shareholders' equity for the three-month and nine-month periods ended September 30, 2020 and 2019. The condensed consolidated balance sheet at December 31, 2019 was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted ("GAAP") in the United States of America.

    Reclassifications. Certain prior year amounts have been reclassified to conform to the 2020 presentation in the condensed consolidated financial statements. In our condensed consolidated statements of cash flows, the cash flows from discontinued operations are not separately classified.

    Stock-Based Compensation. We issue stock-based incentives in various forms to our employees and non-employee Directors. Outstanding stock-based incentives were in the form of long-term stock awards, stock options, restricted stock units ("RSUs"), performance restricted stock units ("PRSUs") and phantom stock awards.

    In December 2019, our Organization and Compensation Committee of the Board of Directors (the "Compensation Committee") amended the terms of equity awards under our 2014 Long Term Stock Incentive Plan to provide that newly issued stock options, RSUs and phantom stock awards vest over a three-year period and redefined retirement-eligibility as age 65 or age 55 with at least 10 years of continuous service.

As such, compensation expense for equity awards granted in 2020 and thereafter is recognized ratably over the shorter of the vesting period, typically three years, or the length of time until the grantee becomes retirement eligible.

    In February 2020, our Compensation Committee approved the grant of RSUs under the Company’s 2014 Long Term Stock Incentive Plan. We measure compensation expense for RSUs at the market price of our common stock at the grant date.

    Allowance for Credit Losses. We do business with a number of customers, including certain home center retailers. We monitor our exposure for credit losses on our customer receivable balances and other financial investments measured at amortized cost and the credit worthiness of our customers on an on-going basis, including requiring the completion of credit applications and performing periodic reviews of our open accounts receivable. We record allowances for doubtful accounts for estimated losses resulting from the inability of our customers to fulfill their required payment obligation to us. Allowances are estimated at each of our businesses based upon specific customer balances, where a risk of loss has been identified, and also include a provision for losses based upon historical collection experience and write-off activity as well as reasonable and supportable forecast information that considers macro-economic factors and industry-specific trends associated with our businesses, among others. Our receivables balances are generally due in less than one year.

    Recently Adopted Accounting Pronouncements. In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which modifies the methodology for recognizing loss impairments on certain types of financial instruments, including receivables. The new methodology requires an entity to estimate the credit losses expected over the life of an exposure. Additionally, ASU 2016-13 amends the current available-for-sale security other-than-temporary impairment model for debt securities. We adopted ASU 2016-13 and recorded a cumulative-effect adjustment to opening retained earnings on January 1, 2020. The adoption of the standard did not have a material effect on our financial position or results of operations.

    In August 2018, the FASB issued ASU 2018-15, "Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract," which allows for the capitalization of certain implementation costs incurred in a hosting arrangement that is a service contract. We adopted ASU 2018-15 prospectively beginning on January 1, 2020. The adoption of the standard did not have an impact on our financial position or results of operations.

A. ACCOUNTING POLICIES (Concluded)

    In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes," which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. We early adopted ASU 2019-12 on January 1, 2020. The adoption of the standard did not have an impact on our financial position or results of operations.

    Recently Issued Accounting Pronouncements.  In January 2020, the FASB issued ASU 2020-01, "Investments—Equity Securities (Topic 321)," "Investments—Equity Method and Joint Ventures (Topic 323)," and "Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815," which clarifies that an entity should consider observable transactions when either applying or discontinuing the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321. ASU 2020-01 clarifies that for certain forward contracts or purchased options to acquire investments, an entity should not consider whether, upon settlement of the forward contract or exercise of the purchased option, the underlying securities would be accounted for under the equity method or the fair value option. ASU 2020-01 is effective for us for annual periods beginning January 1, 2021. Early adoption is permitted. We plan to adopt this standard for annual periods beginning January 1, 2021 and do not anticipate that the adoption of this new standard will have a material impact on our financial position or results of operations.

    In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting," which provides optional guidance and expedients for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments are intended to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in this update are elective and are effective upon issuance. We are currently assessing whether and how we will elect to apply ASU 2020-04.

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Acquisitions	9 Months Ended
	Sep. 30, 2020
Business Combinations [Abstract]
Acquisitions	ACQUISITIONS    In the first quarter of 2020, we acquired all of the share capital of SmarTap A.Y Ltd. ("SmarTap") for approximately $24 million in cash. SmarTap is a developer of a smart bathing system that monitors and controls the temperature and flow of water. This acquisition provides an adaptable solution for a wide range of products as it is compatible with showerheads, hand showers, spouts and shower jets. This business is included in the Plumbing Products segment. In connection with this acquisition, we recognized $10 million of definite-lived intangible assets, primarily related to technology, which is being amortized on a straight-line basis over a weighted average amortization period of 5 years. We also recognized $12 million of goodwill, which is not tax deductible, and is related primarily to the expected synergies from combining the operations into our business. During the three-month period ended September 30, 2020, we revised the allocation of the purchase price to certain identifiable assets based on analysis of information as of the acquisition date that has been made available through September 30, 2020, which resulted in a $2 million increase to goodwill.

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Discontinued Operations

9 Months Ended

Sep. 30, 2020

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

DISCONTINUED OPERATIONS

On September 6, 2019, we completed the divestiture of our UK Window Group business ("UKWG"), a manufacturer and distributor of windows and doors, for proceeds of approximately $8 million, of which $2 million net of cash disposed was received upon sale. The remaining $6 million was accounted for as a note receivable that is expected to be collected within two years of the divestiture. In connection with the sale, we recognized a loss of $70 million for both the three-month and nine-month periods ended September 30, 2019, which is included in (loss) income from discontinued operations, net in the condensed consolidated statements of operations. Additionally, on November 6, 2019, we completed the divestiture of our Milgard Windows and Doors business ("Milgard"), a manufacturer and distributor of windows and doors.

In the third quarter of 2019, we determined that the previously reported Windows and Other Specialty Products segment met the criteria to be classified as a discontinued operation as a result of the combined sale of UKWG and Milgard. These businesses represented all of our windows businesses and all remaining businesses in the Windows and Other Specialty Products segment.

C. DISCONTINUED OPERATIONS (Continued)

During the second quarter of 2020, a $17 million pre-tax post-closing adjustment related to the finalization of working capital items was recorded to (loss) income from discontinued operations, net in the condensed consolidated statement of operations, as a gain on the divestiture of Milgard. Of the $17 million, we received $15 million in cash as of September 30, 2020, which is presented in investing activities on the condensed consolidated statement of cash flow as proceeds from disposition of businesses, net of cash disposed. The remaining $2 million is accounted for as a short-term receivable; payable in two monthly installments before December 31, 2020. All post-closing adjustments related to our divestiture of Milgard were finalized with the buyer in the second quarter of 2020.

On November 14, 2019, we entered into a definitive agreement to sell Masco Cabinetry LLC ("Cabinetry"), a manufacturer of cabinetry products. We completed the divestiture of Cabinetry on February 18, 2020 for proceeds of approximately $989 million, including $853 million, net of cash disposed. The remaining $136 million was accounted for as preferred stock issued by a holding company of the buyer; refer to Note G for additional information. The working capital adjustment was finalized with the buyer in the second quarter of 2020, resulting in no significant changes to net proceeds. In connection with the sale, we recognized a gain on the divestiture of $585 million for the nine months ended September 30, 2020, which is included in (loss) income from discontinued operations, net in the condensed consolidated statement of operations.

In the fourth quarter of 2019, we determined that the previously reported Cabinetry Products segment met the criteria to be classified as a discontinued operation, as Cabinetry represented all of our cabinet businesses and all remaining businesses in the Cabinetry Products segment.

We determined that the assets and liabilities for Cabinetry met the held for sale criteria in accordance with ASC 205-20, Discontinued Operations in 2019. Accordingly, the Cabinetry business' assets and liabilities were classified in the condensed consolidated balance sheet at December 31, 2019 as assets held for sale or liabilities held for sale. We ceased recording depreciation and amortization for the held for sale assets upon meeting the held for sale criteria.

As the combined sale of UKWG and Milgard and the sale of Cabinetry represented a strategic shift that will have a major effect on our operations and financial results, these businesses were presented in discontinued operations separate from continuing operations for the three and nine months ended September 30, 2020 and 2019, as applicable. In addition, depreciation and amortization, capital expenditures, and significant non-cash operating and investing activities related to discontinued operations were separately disclosed.

The results of the windows businesses recorded in income (loss) from discontinued operations before income tax was income of $6 million and $7 million for the three and nine months ended September 30, 2019, respectively. The results of the cabinetry business recorded in income (loss) from discontinued operations before income tax was income of $28 million for the three months ended September 30, 2019 and a loss of $8 million and income of $86 million for the nine months ended September 30, 2020 and 2019, respectively.

C. DISCONTINUED OPERATIONS (Continued)

The major classes of line items constituting income from discontinued operations, net, in millions:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Net sales	$	—	$	403	$	101	$	1,234
Cost of sales	—		314		78		959
Gross profit	—		89		23		275
Selling, general and administrative expenses	—		56		31		176
Impairment charge for goodwill (A)	—		—		—		7
Other income (expense), net	—		1		—		1
Income (loss) from discontinued operations	—		34		(8)		93
(Loss) gain on disposal of discontinued operations	—		(70)		602		(70)
(Loss) income before income tax	—		(36)		594		23
Income tax expense (B)	—		(1)		(183)		(22)
(Loss) income from discontinued operations, net	$	—	$	(37)	$	411	$	1

(A) In the first quarter of 2019, we recognized a $7 million non-cash goodwill impairment charge related to a decline in the long-term outlook of our windows and doors business in the United Kingdom.

(B) The unusual relationship between income tax expense and (loss) income before income tax for 2019 resulted primarily from a loss on the sale of UKWG providing no foreign tax benefit.

The carrying amount of major classes of assets and liabilities included as part of the Cabinetry discontinued operations, were as follows, in millions:

	December 31, 2019
Receivables	$	76
Prepaid expenses and other	7
Inventories	90
Property and equipment, net	157
Operating lease right-of-use assets	4
Goodwill	181
Other intangible assets, net	1
Other assets	12
Total assets classified as held for sale	$	528
Accounts payable	$	103
Accrued liabilities	46
Noncurrent operating lease liabilities	3
Other liabilities	10
Total liabilities classified as held for sale	$	162

C. DISCONTINUED OPERATIONS (Concluded)

    Other selected financial information for Cabinetry, Milgard and UKWG during the period owned by us, were as follows, in millions:

	Nine Months Ended September 30,
	2020		2019
Depreciation and amortization	$	—	$	27
Capital expenditures	1		27
ROU assets obtained in exchange for new lease obligations	—		3

    In conjunction with the divestiture of Milgard and Cabinetry, we entered into Transition Services Agreements to provide administrative services to the buyers. As of September 30, 2020, our Transition Service Agreement with Milgard concluded. The fees for services rendered under each of the Transition Service Agreements were not material and are not expected to be material to our results of operations for Milgard and Cabinetry, respectively.     

    As a part of the Cabinetry Transition Services Agreement, we guaranteed Cabinetry's obligations to a third-party while Cabinetry continued to participate in our voluntary supply chain finance program to the extent Cabinetry under its new ownership became delinquent on its payments. As of September 30, 2020, the amount Cabinetry and its new owners owed under the program was less than the $10 million letter of credit provided to the third-party by the new owners in conjunction with the Transition Services Agreement. Cabinetry exited our program in June 2020 and as of the date of filing, all outstanding invoices have been paid. As such, there is no remaining exposure and no losses were recognized under the guarantee.

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Revenue

9 Months Ended

Sep. 30, 2020

Revenues [Abstract]

Revenue

REVENUE

    Our revenues are derived primarily from sales to customers in North America and Internationally, principally Europe. Net sales from these geographic markets, by segment, were as follows, in millions:

	Three Months Ended September 30, 2020
	Plumbing Products		Decorative Architectural Products		Total
Primary geographic markets:
North America	$	757	$	842	$	1,599
International, principally Europe	384		—		384
Total	$	1,141	$	842	$	1,983

	Nine Months Ended September 30, 2020
	Plumbing Products		Decorative Architectural Products		Total
Primary geographic markets:
North America	$	1,973	$	2,364	$	4,337
International, principally Europe	991		—		991
Total	$	2,964	$	2,364	$	5,328

	Three Months Ended September 30, 2019
	Plumbing Products		Decorative Architectural Products		Total
Primary geographic markets:
North America	$	664	$	710	$	1,374
International, principally Europe	342		—		342
Total	$	1,006	$	710	$	1,716

D. REVENUE (Concluded)

	Nine Months Ended September 30, 2019
	Plumbing Products		Decorative Architectural Products		Total
Primary geographic markets:
North America	$	1,923	$	2,110	$	4,033
International, principally Europe	1,035		—		1,035
Total	$	2,958	$	2,110	$	5,068

    Our contract asset balance was $2 million at both September 30, 2020 and December 31, 2019. Our contract liability balance was $25 million and $40 million at September 30, 2020 and December 31, 2019, respectively.

    We reversed $6 million and $2 million of revenue for the three-month periods ended September 30, 2020 and 2019, respectively, related to performance obligations settled in previous quarters of the same year. We recognized $1 million and $6 million of revenue for the three-month and nine-month periods ended September 30, 2020, respectively, and $1 million of revenue for the nine-month period ended September 30, 2019 related to performance obligations settled in previous years.

    Changes in the allowance for credit losses deducted from accounts receivable were as follows, in millions: 

	Nine Months Ended September 30, 2020
Balance at January 1 (after adopting ASU 2016-13)	$	5
Provision for expected credit losses during the period	2
Write-offs charged against the allowance	(1)
Recoveries of amounts previously written off	1
Balance at end of period	$	7

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Depreciation and Amortization

9 Months Ended

Sep. 30, 2020

Depreciation, Depletion and Amortization [Abstract]

Depreciation and Amortization

DEPRECIATION AND AMORTIZATION

    Depreciation and amortization expense, including discontinued operations, was $99 million and $124 million for the nine-month periods ended September 30, 2020 and 2019, respectively.

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Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

GOODWILL AND OTHER INTANGIBLE ASSETS

    The changes in the carrying amount of goodwill for the nine-month period ended September 30, 2020, by segment, were as follows, in millions: 

	Gross Goodwill At September 30, 2020		Accumulated Impairment Losses		Net Goodwill At September 30, 2020
Plumbing Products	$	585	$	(340)	$	245
Decorative Architectural Products	358		(75)		283
Total	$	943	$	(415)	$	528

	Gross Goodwill At December 31, 2019		Accumulated Impairment Losses		Net Goodwill At December 31, 2019		Acquisitions		Other (A)		Net Goodwill At September 30, 2020
Plumbing Products	$	566	$	(340)	$	226	$	14	$	5	$	245
Decorative Architectural Products	358		(75)		283		—		—		283
Total	$	924	$	(415)	$	509	$	14	$	5	$	528

(A)    Other consists of the effect of foreign currency translations.

F. GOODWILL AND OTHER INTANGIBLE ASSETS (Concluded)

    The carrying value of our other indefinite-lived intangible assets was $76 million at both September 30, 2020 and December 31, 2019, and principally included registered trademarks. During the first quarter of 2019, we recognized a $9 million impairment charge related to a registered trademark in our Decorative Architectural Products segment due to a change in the long-term net sales projections of lighting products. The carrying value of our definite-lived intangible assets was $177 million (net of accumulated amortization of $66 million) and $183 million (net of accumulated amortization of $48 million) at September 30, 2020 and December 31, 2019, respectively, and principally included customer relationships.

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Fair Value of Financial Investments

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Of Financial Investments

FAIR VALUE OF FINANCIAL INVESTMENTS

    In conjunction with our divestiture of Cabinetry, we received preferred stock of ACProducts Holding, Inc., the holding company of the buyer, with a liquidation preference of $150 million. The preferred stock has a coupon of 8 percent until the first anniversary of issuance, 9 percent after the first anniversary and until the second anniversary of issuance, and 10 percent after the second anniversary of issuance and until the seventh anniversary of issuance. After which, the rate will increase by 50 basis points up to a maximum of 15 percent for each annual period occurring during and after the seventh anniversary until all shares have been redeemed in full.

    We do not have the ability to exercise significant influence, and the fair value of this security is not readily available. We have elected to measure this investment at cost (less impairment, if any) adjusted for observable price changes in orderly transactions for the identical or similar investments of the same issuer for subsequent measurements of fair value. As the preferred stock was received in conjunction with the sale of Cabinetry, we determined the cost to be the fair value of the preferred stock at the time of sale.

    The fair value of the preferred stock was measured on a non-recurring basis, and estimated using discounted cash flow and option pricing models (Level 3 inputs). The significant unobservable inputs used to value the preferred stock included: time to exit (deemed maturity) since the preferred stock is not mandatorily redeemable, discount rate used to determine the present value of expected cash flows, which included the spread on company specific debt and the risk-free rate of return, the liquidation preference and the coupon rate. On the date of acquisition, the fair value of this investment was determined to be $136 million and was included in other assets in our condensed consolidated balance sheet.

    Dividends earned on this investment are included within other income (expense), net in our condensed consolidated statement of operations with a corresponding increase to our basis in the investment. We had dividend income of $3 million and $7 million for the three-month and nine-month periods ended September 30, 2020, respectively. As such, the preferred stock was reported at the carrying value of $143 million in other assets in our condensed consolidated balance sheet at September 30, 2020.

    Fair Value of Debt. The fair value of our short-term and long-term fixed-rate debt instruments is based principally upon modeled market prices for the same or similar issues, which are Level 1 inputs. The aggregate estimated market value of our short-term and long-term debt at September 30, 2020 was approximately $3.2 billion, compared with the aggregate carrying value of $2.8 billion. The aggregate estimated market value of our short-term and long-term debt at December 31, 2019 was approximately $3.0 billion, compared with the aggregate carrying value of $2.8 billion.

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Warranty Liability

9 Months Ended

Sep. 30, 2020

Product Warranties Disclosures [Abstract]

Warranty Liability

WARRANTY LIABILITY

    Changes in our warranty liability were as follows, in millions: 

	Nine Months Ended September 30, 2020		Twelve Months Ended December 31, 2019
Balance at January 1	$	84	$	81
Accruals for warranties issued during the period	25		34
Accruals related to pre-existing warranties	1		1
Settlements made (in cash or kind) during the period	(24)		(31)
Other, net (including currency translation)	(1)		(1)
Balance at end of period	$	85	$	84

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Debt

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

Debt

DEBT

    On September 18, 2020, we issued $300 million of 2.0% Notes due October 1, 2030 (the "2030 Notes") and received proceeds of $300 million, net of discount, for the issuance of the 2030 Notes. Also on September 18, 2020, we issued an incremental $100 million of our existing 4.5% Notes due May 15, 2047 (the "2047 Notes") and received proceeds of $119 million, including a premium, for the issuance of the 2047 Notes. The incremental $100 million will form a single series with the existing $300 million of 4.5% Notes due May 15, 2047. The 2030 Notes and 2047 Notes are senior indebtedness and are redeemable at our option at the applicable redemption price. On September 29, 2020, proceeds from the debt issuances were used to repay and early retire $400 million of our 3.5% Notes due April 1, 2021. In connection with this early retirement, we incurred a loss on debt extinguishment of $6 million, which was recorded as interest expense.

On March 13, 2019, we entered into a credit agreement (the “Credit Agreement”) with an aggregate commitment of $1.0 billion and a maturity date of March 13, 2024. Under the Credit Agreement, at our request and subject to certain conditions, we can increase the aggregate commitment up to an additional $500 million with the current lenders or new lenders. Upon entry into the Credit Agreement, our credit agreement dated March 28, 2013, as amended, with an aggregate commitment of $750 million, was terminated.

    The Credit Agreement provides for an unsecured revolving credit facility available to us and one of our foreign subsidiaries, in U.S. dollars, European euros, British Pounds Sterling, Canadian dollars and certain other currencies for revolving credit loans, swingline loans and letters of credit. Borrowings under the revolving credit loans denominated in any agreed upon currency other than U.S. dollars are limited to $500 million, equivalent. We can also borrow swingline loans up to $100 million and obtain letters of credit of up to $25 million; outstanding letters of credit under the Credit Agreement reduce our borrowing capacity. At September 30, 2020, we had no outstanding standby letters of credit under the Credit Agreement.

    Revolving credit loans bear interest under the Credit Agreement, at our option, at (A) a rate per annum equal to the greater of (i) the JPMorgan Chase Bank, N.A. prime rate, (ii) the Federal Reserve Bank of New York effective rate plus 0.50% and (iii) if available, adjusted LIBO Rate plus 1.0% (the "Alternative Base Rate"); plus an applicable margin based upon our then-applicable corporate credit ratings; or (B) if available, adjusted LIBO Rate plus an applicable margin based upon our then-applicable corporate credit ratings. The foreign currency revolving credit loans bear interest at a rate equal to adjusted LIBO Rate, if available, plus an applicable margin based upon our then-applicable corporate credit ratings.

The Credit Agreement contains financial covenants requiring us to maintain (A) a net leverage ratio, as adjusted for certain items, not exceeding 4.0 to 1.0, and (B) a minimum interest coverage ratio, as adjusted for certain items, not less than 2.5 to 1.0.

    In order for us to borrow under the Credit Agreement, there must not be any default in our 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 our 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, 2018, no material ERISA or environmental non-compliance, and no material tax deficiency). We were in compliance with all covenants and no borrowings were outstanding at September 30, 2020.

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

STOCK-BASED COMPENSATION

    Our 2014 Long Term Stock Incentive Plan provides for the issuance of stock-based incentives in various forms to our employees and non-employee Directors. At September 30, 2020, outstanding stock-based incentives were in the form of long-term stock awards, stock options, restricted stock units, performance restricted stock units, and phantom stock awards.

    Pre-tax compensation expense included in income from continuing operations for these stock-based incentives was as follows, in millions: 

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Long-term stock awards	$	4	$	6	$	11	$	16
Stock options	1		1		6		3
Restricted stock units	1		—		12		—
Performance restricted stock units	2		—		3		2
Phantom stock awards and stock appreciation rights	1		1		3		3
Total	$	9	$	8	$	35	$	24

Long-Term Stock Awards. Prior to the amendment of our 2014 Long Term Stock Incentive Plan in December 2019, we granted long-term stock awards to our key employees and non-employee Directors. These grants did not cause net share dilution due to our practice of repurchasing and retiring an equal number of shares in the open market. We did not grant shares of long-term stock awards in the nine-month period ended September 30, 2020.

Our long-term stock award activity was as follows, shares in millions: 

	Nine Months Ended September 30,
	2020		2019
Unvested stock award shares at January 1	2		2
Weighted average grant date fair value	$	34	$	30
Stock award shares granted	—		1
Weighted average grant date fair value	$	—	$	36
Stock award shares vested	1		1
Weighted average grant date fair value	$	32	$	25
Stock award shares forfeited	—		—
Weighted average grant date fair value	$	35	$	32
Unvested stock award shares at September 30	1		2
Weighted average grant date fair value	$	36	$	34

    At September 30, 2020 and 2019, there was $25 million and $49 million, respectively, of total unrecognized compensation expense related to unvested stock awards; such awards had a weighted average remaining vesting period of two years and three years at September 30, 2020 and 2019, respectively.

    The total market value (at the vesting date) of stock award shares which vested was $31 million during both the nine-month periods ended September 30, 2020 and 2019.

J. STOCK-BASED COMPENSATION (Continued)

Stock Options. Stock options are granted to certain key employees. The exercise price equals the market price of our common stock at the grant date. Beginning in 2020, stock options become exercisable (vest ratably) over three years beginning on the first anniversary from the grant date. Stock options granted prior to 2020 become exercisable (vest ratably) over five years.

    We granted 420,840 stock options in the nine-month period ended September 30, 2020 with a grant date weighted average exercise price of approximately $48 per share. In the nine-month period ended September 30, 2020, 16,240 stock options were forfeited (including options that expired unexercised).

    Our stock option activity was as follows, shares in millions: 

		Nine Months Ended September 30,
		2020		2019
Option shares outstanding, January 1		3		4
Weighted average exercise price	$	27	$	21
Option shares granted		1		1
Weighted average exercise price	$	48	$	36
Option shares exercised		1		2
Aggregate intrinsic value on date of exercise (A)	$	29 million	$	29 million
Weighted average exercise price	$	17	$	12
Option shares forfeited		—		—
Weighted average exercise price	$	42	$	34
Option shares outstanding, September 30		3		3
Weighted average exercise price	$	34	$	26
Weighted average remaining option term (in years)		7		6
Option shares vested and expected to vest, September 30		2		3
Weighted average exercise price	$	33	$	26
Aggregate intrinsic value (A)	$	54 million	$	48 million
Weighted average remaining option term (in years)		7		6
Option shares exercisable (vested), September 30		1		2
Weighted average exercise price	$	28	$	21
Aggregate intrinsic value (A)	$	35 million	$	39 million
Weighted average remaining option term (in years)		5		4

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

    At September 30, 2020 and 2019, there was $7 million and $9 million, respectively, of unrecognized compensation expense (using the Black-Scholes option pricing model at the grant date) related to unvested stock options; such options had a weighted average remaining vesting period of three years at both September 30, 2020 and 2019.

J. STOCK-BASED COMPENSATION (Concluded)

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

	Nine Months Ended September 30,
	2020			2019
Weighted average grant date fair value	$	10.67		$	8.81
Risk-free interest rate	1.53		%	2.57		%
Dividend yield	1.14		%	1.35		%
Volatility factor	24.00		%	25.00		%
Expected option life	6 years			6 years

    Restricted Stock Units. Restricted stock units are granted to our key employees and non-employee Directors. These grants did not cause net share dilution due to our practice of repurchasing and retiring an equal number of shares in the open market. The grant date fair value is based on the fair value of our common stock. These units will vest and be settled in shares ratably over three years.

We granted 437,170 restricted stock units in the nine-month period ended September 30, 2020 with a weighted average grant date fair value of $47 per share. In the nine-month period ended September 30, 2020, 7,930 restricted stock units were forfeited.

At September 30, 2020, there was $8 million of unrecognized compensation expense related to unvested restricted stock units; such units had a weighted average remaining vesting period of two years.

    Performance Restricted Stock Units. Under our Long Term Incentive Program, we grant performance restricted stock units to certain senior executives. These performance restricted stock units will vest and share awards will be issued at no cost to the employees, subject to our achievement of specified performance metrics established by our Compensation Committee over a three-year performance period and the recipient's continued employment through the share award date. During the nine-month period ended September 30, 2020, we granted 133,390 performance restricted stock units with a grant date fair value of approximately $34 per share and 151,724 shares were issued. No performance restricted stock units were forfeited during the nine-month period ended September 30, 2020. During the nine-month period ended September 30, 2019, we granted 126,680 performance restricted stock units with a grant date fair value of approximately $39 per share and 15,600 performance restricted stock units were forfeited.

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Employee Retirement Plans

9 Months Ended

Sep. 30, 2020

Retirement Benefits [Abstract]

Employee Retirement Plans

EMPLOYEE RETIREMENT PLANS

    Net periodic pension cost for our defined-benefit pension plans, with the exception of service cost, is recorded in other income (expense), net, in our condensed consolidated statement of operations. Net periodic pension cost for our defined-benefit pension plans was as follows, in millions: 

	Three Months Ended September 30,
	2020				2019
	Qualified		Non-Qualified		Qualified		Non-Qualified
Service cost	$	1	$	—	$	1	$	—
Interest cost	5		2		11		2
Expected return on plan assets	(6)		—		(12)		—
Amortization of net loss	7		—		4		1
Net periodic pension cost	$	7	$	2	$	4	$	3

	Nine Months Ended September 30,
	2020				2019
	Qualified		Non-Qualified		Qualified		Non-Qualified
Service cost	$	2	$	—	$	2	$	—
Interest cost	18		4		30		5
Expected return on plan assets	(17)		—		(34)		—
Amortization of net loss	18		2		14		2
Net periodic pension cost	$	21	$	6	$	12	$	7

    As of January 1, 2010, substantially all of our domestic and foreign qualified and domestic non-qualified defined-benefit pension plans were frozen to future benefit accruals. In December 2019, our Board of Directors approved the termination of our qualified domestic defined-benefit pension plans in 2021.

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Reclassifications From Accumulated Other Comprehensive Loss

9 Months Ended

Sep. 30, 2020

Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]

Reclassifications From Accumulated Other Comprehensive Loss

RECLASSIFICATIONS FROM ACCUMULATED OTHER COMPREHENSIVE LOSS

    The reclassifications from accumulated other comprehensive loss to the condensed consolidated statements of operations were as follows, in millions: 

	Amounts Reclassified				Amounts Reclassified
Accumulated Other Comprehensive Loss	Three Months Ended September 30,				Nine Months Ended September 30,				Statement of Operations Line Item
	2020		2019		2020		2019
Amortization of defined-benefit pension and other post-retirement benefits:
Actuarial losses, net	$	7	$	5	$	20	$	16	Other income (expense), net
Tax (benefit)	(2)		(1)		(5)		(4)
Net of tax	$	5	$	4	$	15	$	12
Interest rate swaps	$	—	$	—	$	1	$	1	Interest expense
Tax (benefit)	—		—		—		—
Net of tax	$	—	$	—	$	1	$	1

In addition to the above amounts, we reclassified $14 million of deferred currency translation losses from accumulated other comprehensive loss to the condensed consolidated statement of operations in conjunction with the disposition of UKWG in September 2019.

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Segment Information

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

    Information by segment and geographic area was as follows, in millions: 

	Three Months Ended September 30,								Nine Months Ended September 30,
	2020		2019		2020		2019		2020		2019		2020		2019
	Net Sales (A)				Operating Profit (Loss)				Net Sales (A)				Operating Profit (Loss)
Operations by segment:
Plumbing Products	$	1,141	$	1,006	$	271	$	179	$	2,964	$	2,958	$	583	$	530
Decorative Architectural Products	842		710		179		134		2,364		2,110		475		380
Total	$	1,983	$	1,716	$	450	$	313	$	5,328	$	5,068	$	1,058	$	910
Operations by geographic area:
North America	$	1,599	$	1,374	$	368	$	262	$	4,337	$	4,033	$	899	$	759
International, principally Europe	384		342		82		51		991		1,035		159		151
Total	$	1,983	$	1,716	450		313		$	5,328	$	5,068	1,058		910
General corporate expense, net					(26)		(24)						(70)		(77)
Operating profit					424		289						988		833
Other income (expense), net					(44)		(48)						(132)		(136)
Income from continuing operations before income taxes					$	380	$	241					$	856	$	697

(A)    Inter-segment sales were not material.

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Other Income (Expense), Net

9 Months Ended

Sep. 30, 2020

Other Income and Expenses [Abstract]

Other Income (Expense), Net

OTHER INCOME (EXPENSE), NET

    Other, net, which is included in other income (expense), net, was as follows, in millions:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Income from cash and cash investments	$	—	$	1	$	2	$	2
Equity investment income, net	1		1		1		1
Foreign currency transaction gains (losses)	1		(5)		(6)		(3)
Net periodic pension and post-retirement benefit cost	(9)		(6)		(25)		(17)
Dividend income	3		—		7		—
Other items, net	—		—		(1)		—
Total other, net	$	(4)	$	(9)	$	(22)	$	(17)

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Income Per Common Share

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

Income Per Common Share

INCOME PER COMMON SHARE

    Reconciliations of the numerators and denominators used in the computations of basic and diluted income per common share were as follows, in millions: 

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Numerator (basic and diluted):
Income from continuing operations	$	275	$	163	$	618	$	481
Less: Allocation to unvested restricted stock awards	1		1		5		3
Income from continuing operations attributable to common shareholders	274		162		613		478
(Loss) income from discontinued operations, net	—		(37)		411		1
Less: Allocation to unvested restricted stock awards	—		—		3		—
(Loss) income from discontinued operations, net attributable to common shareholders	—		(37)		408		1
Net income attributable to common shareholders	$	274	$	125	$	1,021	$	479
Denominator:
Basic common shares (based upon weighted average)	261		286		265		289
Add: Stock option dilution	—		1		1		1
Diluted common shares	261		287		266		290

    For the three-month and nine-month periods ended September 30, 2020 and 2019, we allocated dividends and undistributed earnings to the unvested restricted stock awards.

    Additionally, 106,000 and 685,000 common shares for the three-month and nine-month periods ended September 30, 2020, respectively, and 855,000 and 1.2 million common shares for the three-month and nine-month periods ended September 30, 2019, respectively, related to stock options, and 20,000 common shares related to performance restricted stock units for the three-month and nine-month periods ended September 30, 2019 were excluded from the computation of diluted income per common share due to their antidilutive effect.

    In September 2019, our Board of Directors authorized the repurchase, for retirement, of up to $2.0 billion of shares of our common stock in open-market transactions or otherwise. In the first nine months of 2020, we repurchased and retired 16.5 million shares of our common stock for approximately $602 million. This included 0.4 million shares to offset the dilutive impact of restricted stock units granted in the first nine months of the year as well as 1.2 million shares received at no additional cost from the settlement of the accelerated stock repurchase transaction initiated in November 2019. At September 30, 2020, we had $900 million remaining under the 2019 repurchase authorization.

    On the basis of amounts paid (declared), cash dividends per common share were $0.135 ($0.140) and $0.405 ($0.410) for the three-month and nine-month periods ended September 30, 2020, respectively, and $0.120 ($0.135) and $0.360 ($0.375) for the three-month and nine-month periods ended September 30, 2019, respectively.

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Other Commitments and Contingencies

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Other Commitments and Contingencies

OTHER COMMITMENTS AND CONTINGENCIES

We are involved in claims and litigation, including class actions, mass torts and regulatory proceedings, which arise in the ordinary course of our business. The types of matters may include, among others: competition, product liability, employment, warranty, advertising, contract, personal injury, environmental, intellectual property, and insurance coverage. We believe we have adequate defenses in these matters and that the likelihood that the outcome of these matters would have a material adverse effect on us is remote. However, there is no assurance that we will prevail in these matters, and we could, in the future, incur judgments, enter into settlements of claims or revise our expectations regarding the outcome of these matters, which could materially impact our results of operations.

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Income Taxes	9 Months Ended
	Sep. 30, 2020
Income Tax Disclosure [Abstract]
Income Taxes	INCOME TAXESOur effective tax rate was 23 percent and 27 percent for the three-month periods and 24 percent and 26 percent for the nine-month periods ended September 30, 2020 and 2019, respectively. The decrease in the rate was primarily due to a $10 million and $13 million reduction in income tax expense in the three-month and nine-month periods ended September 30, 2020, respectively, resulting from IRS guidance released during the third quarter of 2020 that allows us to exclude certain high-taxed foreign income from the U.S. tax effects on Global Intangible Low-taxed Income.

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Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Reclassifications

Reclassifications. Certain prior year amounts have been reclassified to conform to the 2020 presentation in the condensed consolidated financial statements. In our condensed consolidated statements of cash flows, the cash flows from discontinued operations are not separately classified.

Compensation Related Costs

Stock-Based Compensation. We issue stock-based incentives in various forms to our employees and non-employee Directors. Outstanding stock-based incentives were in the form of long-term stock awards, stock options, restricted stock units ("RSUs"), performance restricted stock units ("PRSUs") and phantom stock awards.

    In December 2019, our Organization and Compensation Committee of the Board of Directors (the "Compensation Committee") amended the terms of equity awards under our 2014 Long Term Stock Incentive Plan to provide that newly issued stock options, RSUs and phantom stock awards vest over a three-year period and redefined retirement-eligibility as age 65 or age 55 with at least 10 years of continuous service.

As such, compensation expense for equity awards granted in 2020 and thereafter is recognized ratably over the shorter of the vesting period, typically three years, or the length of time until the grantee becomes retirement eligible.

    In February 2020, our Compensation Committee approved the grant of RSUs under the Company’s 2014 Long Term Stock Incentive Plan. We measure compensation expense for RSUs at the market price of our common stock at the grant date.

Credit Loss, Financial Instrument

Allowance for Credit Losses. We do business with a number of customers, including certain home center retailers. We monitor our exposure for credit losses on our customer receivable balances and other financial investments measured at amortized cost and the credit worthiness of our customers on an on-going basis, including requiring the completion of credit applications and performing periodic reviews of our open accounts receivable. We record allowances for doubtful accounts for estimated losses resulting from the inability of our customers to fulfill their required payment obligation to us. Allowances are estimated at each of our businesses based upon specific customer balances, where a risk of loss has been identified, and also include a provision for losses based upon historical collection experience and write-off activity as well as reasonable and supportable forecast information that considers macro-economic factors and industry-specific trends associated with our businesses, among others. Our receivables balances are generally due in less than one year.

Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncements. In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which modifies the methodology for recognizing loss impairments on certain types of financial instruments, including receivables. The new methodology requires an entity to estimate the credit losses expected over the life of an exposure. Additionally, ASU 2016-13 amends the current available-for-sale security other-than-temporary impairment model for debt securities. We adopted ASU 2016-13 and recorded a cumulative-effect adjustment to opening retained earnings on January 1, 2020. The adoption of the standard did not have a material effect on our financial position or results of operations.

    In August 2018, the FASB issued ASU 2018-15, "Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract," which allows for the capitalization of certain implementation costs incurred in a hosting arrangement that is a service contract. We adopted ASU 2018-15 prospectively beginning on January 1, 2020. The adoption of the standard did not have an impact on our financial position or results of operations.

A. ACCOUNTING POLICIES (Concluded)

    In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes," which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. We early adopted ASU 2019-12 on January 1, 2020. The adoption of the standard did not have an impact on our financial position or results of operations.

    Recently Issued Accounting Pronouncements.  In January 2020, the FASB issued ASU 2020-01, "Investments—Equity Securities (Topic 321)," "Investments—Equity Method and Joint Ventures (Topic 323)," and "Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815," which clarifies that an entity should consider observable transactions when either applying or discontinuing the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321. ASU 2020-01 clarifies that for certain forward contracts or purchased options to acquire investments, an entity should not consider whether, upon settlement of the forward contract or exercise of the purchased option, the underlying securities would be accounted for under the equity method or the fair value option. ASU 2020-01 is effective for us for annual periods beginning January 1, 2021. Early adoption is permitted. We plan to adopt this standard for annual periods beginning January 1, 2021 and do not anticipate that the adoption of this new standard will have a material impact on our financial position or results of operations.

    In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting," which provides optional guidance and expedients for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments are intended to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in this update are elective and are effective upon issuance. We are currently assessing whether and how we will elect to apply ASU 2020-04.

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Discontinued Operations (Tables)

9 Months Ended

Sep. 30, 2020

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Discontinued Operations

The major classes of line items constituting income from discontinued operations, net, in millions:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Net sales	$	—	$	403	$	101	$	1,234
Cost of sales	—		314		78		959
Gross profit	—		89		23		275
Selling, general and administrative expenses	—		56		31		176
Impairment charge for goodwill (A)	—		—		—		7
Other income (expense), net	—		1		—		1
Income (loss) from discontinued operations	—		34		(8)		93
(Loss) gain on disposal of discontinued operations	—		(70)		602		(70)
(Loss) income before income tax	—		(36)		594		23
Income tax expense (B)	—		(1)		(183)		(22)
(Loss) income from discontinued operations, net	$	—	$	(37)	$	411	$	1

(A) In the first quarter of 2019, we recognized a $7 million non-cash goodwill impairment charge related to a decline in the long-term outlook of our windows and doors business in the United Kingdom.

(B) The unusual relationship between income tax expense and (loss) income before income tax for 2019 resulted primarily from a loss on the sale of UKWG providing no foreign tax benefit.

The carrying amount of major classes of assets and liabilities included as part of the Cabinetry discontinued operations, were as follows, in millions:

	December 31, 2019
Receivables	$	76
Prepaid expenses and other	7
Inventories	90
Property and equipment, net	157
Operating lease right-of-use assets	4
Goodwill	181
Other intangible assets, net	1
Other assets	12
Total assets classified as held for sale	$	528
Accounts payable	$	103
Accrued liabilities	46
Noncurrent operating lease liabilities	3
Other liabilities	10
Total liabilities classified as held for sale	$	162

Other selected financial information for Cabinetry, Milgard and UKWG during the period owned by us, were as follows, in millions:

	Nine Months Ended September 30,
	2020		2019
Depreciation and amortization	$	—	$	27
Capital expenditures	1		27
ROU assets obtained in exchange for new lease obligations	—		3

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Revenue (Tables)

9 Months Ended

Sep. 30, 2020

Revenues [Abstract]

Disaggregation of Revenue

Our revenues are derived primarily from sales to customers in North America and Internationally, principally Europe. Net sales from these geographic markets, by segment, were as follows, in millions:

	Three Months Ended September 30, 2020
	Plumbing Products		Decorative Architectural Products		Total
Primary geographic markets:
North America	$	757	$	842	$	1,599
International, principally Europe	384		—		384
Total	$	1,141	$	842	$	1,983

	Nine Months Ended September 30, 2020
	Plumbing Products		Decorative Architectural Products		Total
Primary geographic markets:
North America	$	1,973	$	2,364	$	4,337
International, principally Europe	991		—		991
Total	$	2,964	$	2,364	$	5,328

	Three Months Ended September 30, 2019
	Plumbing Products		Decorative Architectural Products		Total
Primary geographic markets:
North America	$	664	$	710	$	1,374
International, principally Europe	342		—		342
Total	$	1,006	$	710	$	1,716

D. REVENUE (Concluded)

	Nine Months Ended September 30, 2019
	Plumbing Products		Decorative Architectural Products		Total
Primary geographic markets:
North America	$	1,923	$	2,110	$	4,033
International, principally Europe	1,035		—		1,035
Total	$	2,958	$	2,110	$	5,068

Financing Receivable, Allowance for Credit Loss

Changes in the allowance for credit losses deducted from accounts receivable were as follows, in millions: 

	Nine Months Ended September 30, 2020
Balance at January 1 (after adopting ASU 2016-13)	$	5
Provision for expected credit losses during the period	2
Write-offs charged against the allowance	(1)
Recoveries of amounts previously written off	1
Balance at end of period	$	7

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Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of changes in carrying amount of goodwill

The changes in the carrying amount of goodwill for the nine-month period ended September 30, 2020, by segment, were as follows, in millions: 

	Gross Goodwill At September 30, 2020		Accumulated Impairment Losses		Net Goodwill At September 30, 2020
Plumbing Products	$	585	$	(340)	$	245
Decorative Architectural Products	358		(75)		283
Total	$	943	$	(415)	$	528

	Gross Goodwill At December 31, 2019		Accumulated Impairment Losses		Net Goodwill At December 31, 2019		Acquisitions		Other (A)		Net Goodwill At September 30, 2020
Plumbing Products	$	566	$	(340)	$	226	$	14	$	5	$	245
Decorative Architectural Products	358		(75)		283		—		—		283
Total	$	924	$	(415)	$	509	$	14	$	5	$	528

(A)    Other consists of the effect of foreign currency translations.

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Warranty Liability (Tables)

9 Months Ended

Sep. 30, 2020

Product Warranties Disclosures [Abstract]

Schedule of changes in the Company's warranty liability

Changes in our warranty liability were as follows, in millions: 

	Nine Months Ended September 30, 2020		Twelve Months Ended December 31, 2019
Balance at January 1	$	84	$	81
Accruals for warranties issued during the period	25		34
Accruals related to pre-existing warranties	1		1
Settlements made (in cash or kind) during the period	(24)		(31)
Other, net (including currency translation)	(1)		(1)
Balance at end of period	$	85	$	84

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Schedule of pre-tax compensation expense and the related income tax benefit for these stock-based incentives

Pre-tax compensation expense included in income from continuing operations for these stock-based incentives was as follows, in millions: 

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Long-term stock awards	$	4	$	6	$	11	$	16
Stock options	1		1		6		3
Restricted stock units	1		—		12		—
Performance restricted stock units	2		—		3		2
Phantom stock awards and stock appreciation rights	1		1		3		3
Total	$	9	$	8	$	35	$	24

Schedule of the Company's long-term stock award activity

Our long-term stock award activity was as follows, shares in millions: 

	Nine Months Ended September 30,
	2020		2019
Unvested stock award shares at January 1	2		2
Weighted average grant date fair value	$	34	$	30
Stock award shares granted	—		1
Weighted average grant date fair value	$	—	$	36
Stock award shares vested	1		1
Weighted average grant date fair value	$	32	$	25
Stock award shares forfeited	—		—
Weighted average grant date fair value	$	35	$	32
Unvested stock award shares at September 30	1		2
Weighted average grant date fair value	$	36	$	34

Schedule of the Company's stock option activity

Our stock option activity was as follows, shares in millions: 

		Nine Months Ended September 30,
		2020		2019
Option shares outstanding, January 1		3		4
Weighted average exercise price	$	27	$	21
Option shares granted		1		1
Weighted average exercise price	$	48	$	36
Option shares exercised		1		2
Aggregate intrinsic value on date of exercise (A)	$	29 million	$	29 million
Weighted average exercise price	$	17	$	12
Option shares forfeited		—		—
Weighted average exercise price	$	42	$	34
Option shares outstanding, September 30		3		3
Weighted average exercise price	$	34	$	26
Weighted average remaining option term (in years)		7		6
Option shares vested and expected to vest, September 30		2		3
Weighted average exercise price	$	33	$	26
Aggregate intrinsic value (A)	$	54 million	$	48 million
Weighted average remaining option term (in years)		7		6
Option shares exercisable (vested), September 30		1		2
Weighted average exercise price	$	28	$	21
Aggregate intrinsic value (A)	$	35 million	$	39 million
Weighted average remaining option term (in years)		5		4

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

Schedule of weighted average grant date fair value of option shares granted and the assumptions used to estimate those values using a Black-Scholes option pricing model

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

	Nine Months Ended September 30,
	2020			2019
Weighted average grant date fair value	$	10.67		$	8.81
Risk-free interest rate	1.53		%	2.57		%
Dividend yield	1.14		%	1.35		%
Volatility factor	24.00		%	25.00		%
Expected option life	6 years			6 years

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Employee Retirement Plans (Tables)

9 Months Ended

Sep. 30, 2020

Retirement Benefits [Abstract]

Schedule of net periodic pension cost for the Company's defined-benefit pension plans

Net periodic pension cost for our defined-benefit pension plans, with the exception of service cost, is recorded in other income (expense), net, in our condensed consolidated statement of operations. Net periodic pension cost for our defined-benefit pension plans was as follows, in millions: 

	Three Months Ended September 30,
	2020				2019
	Qualified		Non-Qualified		Qualified		Non-Qualified
Service cost	$	1	$	—	$	1	$	—
Interest cost	5		2		11		2
Expected return on plan assets	(6)		—		(12)		—
Amortization of net loss	7		—		4		1
Net periodic pension cost	$	7	$	2	$	4	$	3

	Nine Months Ended September 30,
	2020				2019
	Qualified		Non-Qualified		Qualified		Non-Qualified
Service cost	$	2	$	—	$	2	$	—
Interest cost	18		4		30		5
Expected return on plan assets	(17)		—		(34)		—
Amortization of net loss	18		2		14		2
Net periodic pension cost	$	21	$	6	$	12	$	7

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Reclassifications From Accumulated Other Comprehensive Loss (Tables)

9 Months Ended

Sep. 30, 2020

Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]

Schedule of reclassifications from accumulated other comprehensive (loss) income to the condensed consolidated statements of operations

The reclassifications from accumulated other comprehensive loss to the condensed consolidated statements of operations were as follows, in millions: 

	Amounts Reclassified				Amounts Reclassified
Accumulated Other Comprehensive Loss	Three Months Ended September 30,				Nine Months Ended September 30,				Statement of Operations Line Item
	2020		2019		2020		2019
Amortization of defined-benefit pension and other post-retirement benefits:
Actuarial losses, net	$	7	$	5	$	20	$	16	Other income (expense), net
Tax (benefit)	(2)		(1)		(5)		(4)
Net of tax	$	5	$	4	$	15	$	12
Interest rate swaps	$	—	$	—	$	1	$	1	Interest expense
Tax (benefit)	—		—		—		—
Net of tax	$	—	$	—	$	1	$	1

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Schedule of information by segment and geographic area

Information by segment and geographic area was as follows, in millions: 

	Three Months Ended September 30,								Nine Months Ended September 30,
	2020		2019		2020		2019		2020		2019		2020		2019
	Net Sales (A)				Operating Profit (Loss)				Net Sales (A)				Operating Profit (Loss)
Operations by segment:
Plumbing Products	$	1,141	$	1,006	$	271	$	179	$	2,964	$	2,958	$	583	$	530
Decorative Architectural Products	842		710		179		134		2,364		2,110		475		380
Total	$	1,983	$	1,716	$	450	$	313	$	5,328	$	5,068	$	1,058	$	910
Operations by geographic area:
North America	$	1,599	$	1,374	$	368	$	262	$	4,337	$	4,033	$	899	$	759
International, principally Europe	384		342		82		51		991		1,035		159		151
Total	$	1,983	$	1,716	450		313		$	5,328	$	5,068	1,058		910
General corporate expense, net					(26)		(24)						(70)		(77)
Operating profit					424		289						988		833
Other income (expense), net					(44)		(48)						(132)		(136)
Income from continuing operations before income taxes					$	380	$	241					$	856	$	697

(A)    Inter-segment sales were not material.

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Other Income (Expense), Net (Tables)

9 Months Ended

Sep. 30, 2020

Other Income and Expenses [Abstract]

Schedule of components of other, net, which is included in other income (expense), net

Other, net, which is included in other income (expense), net, was as follows, in millions:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Income from cash and cash investments	$	—	$	1	$	2	$	2
Equity investment income, net	1		1		1		1
Foreign currency transaction gains (losses)	1		(5)		(6)		(3)
Net periodic pension and post-retirement benefit cost	(9)		(6)		(25)		(17)
Dividend income	3		—		7		—
Other items, net	—		—		(1)		—
Total other, net	$	(4)	$	(9)	$	(22)	$	(17)

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Income Per Common Share (Tables)

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

Schedule of reconciliations of the numerators and denominators used in the computations of basic and diluted earnings per common share

Reconciliations of the numerators and denominators used in the computations of basic and diluted income per common share were as follows, in millions: 

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Numerator (basic and diluted):
Income from continuing operations	$	275	$	163	$	618	$	481
Less: Allocation to unvested restricted stock awards	1		1		5		3
Income from continuing operations attributable to common shareholders	274		162		613		478
(Loss) income from discontinued operations, net	—		(37)		411		1
Less: Allocation to unvested restricted stock awards	—		—		3		—
(Loss) income from discontinued operations, net attributable to common shareholders	—		(37)		408		1
Net income attributable to common shareholders	$	274	$	125	$	1,021	$	479
Denominator:
Basic common shares (based upon weighted average)	261		286		265		289
Add: Stock option dilution	—		1		1		1
Diluted common shares	261		287		266		290

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Accounting Policies Accounting Policies (Details)	9 Months Ended
	Sep. 30, 2020
Long-term stock awards
Stock-based compensation
Vesting period	3 years
Minimum
Stock-based compensation
Vesting period	3 years

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Acquisitions (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Mar. 31, 2020	Sep. 30, 2020
Business Acquisition [Line Items]
Goodwill, acquired during period			$ 14
SmarTap
Business Acquisition [Line Items]
Payments to acquire businesses		$ 24
Goodwill, acquired during period		12
Finite-lived intangible assets acquired		$ 10
Weighted average useful life (in years)		5 years
Increase to goodwill	$ 2

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Discontinued Operations - Narrative (Details) - USD ($) $ in Millions	3 Months Ended				9 Months Ended
	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Sep. 06, 2019
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Businesses, net of cash disposed					$ 868	$ 2
Discontinued Operations, Disposed of by Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
(Loss) gain on disposal of discontinued operations	$ 0			$ (70)	602	(70)
Income before income tax, discontinued operations	0			(36)	594	23
Masco Cabinetry
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Income before income tax, discontinued operations				28	(8)	86
Letters of credit outstanding, amount	10				10
Masco Cabinetry | Discontinued Operations, Held-for-sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Businesses, net of cash disposed			$ 989
Gain (loss) on disposition of business					585
Milgard and UKWG
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Income before income tax, discontinued operations				6		7
Milgard [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Businesses, net of cash disposed					15
(Loss) gain on disposal of discontinued operations		$ 17
Short term receivable from divestiture of businesses, payable in five monthly installments	$ 2				$ 2
UK Window Group
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from divestiture				8
Businesses, net of cash disposed				2
Consideration received							$ 6
Notes receivable, collection period					2 years
Gain (loss) on disposition of business				$ 70		$ 70
Cash and Cash Equivalents | Masco Cabinetry | Discontinued Operations, Disposed of by Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Businesses, net of cash disposed			853
ACProducts Preferred Stock | Masco Cabinetry | Discontinued Operations, Held-for-sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from divestiture of businesses			$ 136

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Discontinued Operations - Income Statement (Details) - USD ($) $ in Millions	3 Months Ended			9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Mar. 31, 2019	Sep. 30, 2020	Sep. 30, 2019
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
(Loss) income from discontinued operations, net	$ 0	$ (37)		$ 411	$ 1
Discontinued Operations, Disposed of by Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net sales	0	403		101	1,234
Cost of sales	0	314		78	959
Gross profit	0	89		23	275
Selling, general and administrative expenses	0	56		31	176
Impairment charge for goodwill	0	0		0	7
Other income (expense), net	0	1		0	1
Income (loss) from discontinued operations	0	34		(8)	93
(Loss) gain on disposal of discontinued operations	0	(70)		602	(70)
(Loss) income before income tax	0	(36)		594	23
Income tax benefit (expense)	0	(1)		(183)	(22)
(Loss) income from discontinued operations, net	$ 0	$ (37)		$ 411	$ 1
UK Window Group | Discontinued Operations, Disposed of by Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Noncash goodwill impairment			$ 7

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Discontinued Operations - Balance Sheet (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Operating lease right-of-use assets	$ 156	$ 176
Other assets	0	355
Noncurrent operating lease liabilities	$ 143	162
Masco Cabinetry | Discontinued Operations, Held-for-sale or Disposed of by Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Receivables		76
Prepaid expenses and other		7
Inventories		90
Property and equipment, net		157
Operating lease right-of-use assets		4
Goodwill		181
Other intangible assets, net		1
Other assets		12
Total assets classified as held for sale		528
Accounts payable		103
Accrued liabilities		46
Noncurrent operating lease liabilities		3
Other liabilities		10
Total liabilities classified as held for sale		$ 162

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Discontinued Operations - Additional Information (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Discontinued Operations, Held-for-sale or Disposed of by Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Depreciation and amortization	$ 0	$ 27
Capital expenditures	1	27
ROU assets obtained in exchange for new lease obligations	0	$ 3
Masco Cabinetry
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Letters of credit outstanding, amount	$ 10

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Revenue (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Disaggregation of Revenue [Line Items]
Net sales	$ 1,983	$ 1,716	$ 5,328	$ 5,068
Contract with customer, asset, gross, current	2		2		$ 2
Contract with customer, liability	25		25		$ 40
Contract with customer, liability, revenue recognized	6	2
Performance obligation satisfied in previous period	1		6	1
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Balance at January 1 (after adopting ASU 2016-13)			5
Provision for expected credit losses during the period			2
Write-offs charged against the allowance			(1)
Recoveries of amounts previously written off			1
Balance at end of period	7		7
Plumbing Products
Disaggregation of Revenue [Line Items]
Net sales	1,141	1,006	2,964	2,958
Decorative Architectural Products
Disaggregation of Revenue [Line Items]
Net sales	842	710	2,364	2,110
North America
Disaggregation of Revenue [Line Items]
Net sales	1,599	1,374	4,337	4,033
North America | Plumbing Products
Disaggregation of Revenue [Line Items]
Net sales	757	664	1,973	1,923
North America | Decorative Architectural Products
Disaggregation of Revenue [Line Items]
Net sales	842	710	2,364	2,110
International, principally Europe
Disaggregation of Revenue [Line Items]
Net sales	384	342	991	1,035
International, principally Europe | Plumbing Products
Disaggregation of Revenue [Line Items]
Net sales	384	342	991	1,035
International, principally Europe | Decorative Architectural Products
Disaggregation of Revenue [Line Items]
Net sales	$ 0	$ 0	$ 0	$ 0

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Depreciation and Amortization (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Depreciation, Depletion and Amortization [Abstract]
Depreciation and amortization expense	$ 99	$ 124

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Goodwill and Other Intangible Assets - Goodwill Rollforward (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020	Dec. 31, 2019
Goodwill [Line Items]
Gross goodwill		$ 943	$ 924
Accumulated Impairment Losses		(415)	(415)
Net goodwill	$ 509	528	509
Goodwill [Roll Forward]
Gross goodwill		943	924
Accumulated Impairment Losses		(415)	(415)
December 31, 2019	509
Acquisitions	14
Goodwill, Other Increase (Decrease)	5
September 30, 2020	528
Plumbing Products
Goodwill [Line Items]
Gross goodwill		585	566
Accumulated Impairment Losses		(340)	(340)
Net goodwill	245	245	226
Goodwill [Roll Forward]
Gross goodwill		585	566
Accumulated Impairment Losses		(340)	(340)
December 31, 2019	226
Acquisitions	14
Goodwill, Other Increase (Decrease)	5
September 30, 2020	245
Decorative Architectural Products
Goodwill [Line Items]
Gross goodwill		358	358
Accumulated Impairment Losses		(75)	(75)
Net goodwill	283	283	283
Goodwill [Roll Forward]
Gross goodwill		358	358
Accumulated Impairment Losses		$ (75)	$ (75)
December 31, 2019	283
Acquisitions	0
Goodwill, Other Increase (Decrease)	0
September 30, 2020	$ 283

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Goodwill and Other Intangible Assets - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Sep. 30, 2020	Dec. 31, 2019
Goodwill [Line Items]
Other indefinite-lived intangible assets		$ 76	$ 76
Carrying value of definite-lived intangible assets		177	183
Accumulated amortization		$ 66	$ 48
Decorative Architectural Products
Goodwill [Line Items]
Impairment of intangible assets	$ 9

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Fair Value of Financial Investments (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Feb. 18, 2020	Dec. 31, 2019
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments, fair value disclosure					$ 136,000,000
Dividend income	$ 3,000,000	$ 0	$ 7,000,000	$ 0
Estimate of Fair Value Measurement
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Estimated market value of long-term and short-term debt	3,200,000,000		3,200,000,000			$ 3,000,000,000.0
Carrying Value Reported Value Measurement
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Aggregate carrying value of long-term and short-term debt	2,800,000,000		$ 2,800,000,000			$ 2,800,000,000
ACProducts Preferred Stock
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Preferred stock, coupon rate, percentage until first anniversary issuance			8.00%
Preferred stock, coupon rate, percentage after the first anniversary until the second anniversary issuance			9.00%
Preferred stock, coupon rate, percentage after the second anniversary until the seventh anniversary issuance			10.00%
Preferred stock, percentage of coupon rate increase			5000.00%
Preferred stock, coupon rate, maximum percentage			15.00%
ACProducts Preferred Stock | Other Assets
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments	143,000,000		$ 143,000,000
ACProducts Holding, Inc
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Preferred stock, liquidation preference, value	$ 150,000,000		$ 150,000,000

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Warranty Liability (Details) - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward]
Balance at the beginning of the period	$ 84	$ 81
Accruals for warranties issued during the period	25	34
Accruals related to pre-existing warranties	1	1
Settlements made (in cash or kind) during the period	(24)	(31)
Other, net (including currency translation)	(1)	(1)
Balance at the end of the period	$ 85	$ 84

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Debt (Details) - USD ($)				9 Months Ended
	Sep. 29, 2020	Sep. 18, 2020	Mar. 13, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019	Mar. 28, 2013
Debt
Repayments of Notes Payable				$ 400,000,000	$ 0
Credit Agreement dated March 13, 2019
Debt
Borrowing capacity, maximum			$ 1,000,000,000.0
Increase in maximum borrowing capacity			$ 500,000,000
Maximum net leverage ratio			4.0
Minimum interest coverage ratio			2.5
Borrowings outstanding				0
Credit Agreement dated March 13, 2019 | Federal funds effective rate
Debt
Interest rate, basis spread (as a percent)			0.50%
Credit Agreement dated March 13, 2019 | Libor rate
Debt
Interest rate, basis spread (as a percent)			1.00%
Credit Agreement dated March 13, 2019 | Revolver
Debt
Borrowing capacity, maximum			$ 500,000,000
Credit Agreement dated March 13, 2019 | Swingline loans
Debt
Borrowing capacity, maximum			100,000,000
Credit Agreement dated March 13, 2019 | Letters of credit
Debt
Borrowing capacity, maximum			$ 25,000,000
Letters of credit outstanding, amount				$ 0
Credit Agreement dated March 28, 2013
Debt
Borrowing capacity, maximum							$ 750,000,000
2.0 Notes and Debentures Due October 1 2030 [Member]
Debt
Long-term Debt, Gross		$ 300,000,000
Debt Instrument, Interest Rate, Stated Percentage		2.00%
Proceeds from Issuance of Debt		$ 300,000,000
4.5 Notes and Debentures Due May 15 2047 [Member]
Debt
Long-term Debt, Gross		$ 100,000,000				$ 300,000,000
Debt Instrument, Interest Rate, Stated Percentage		4.50%				4.50%
Proceeds from Issuance of Debt		$ 119,000,000
3.5 Notes and Debentures Due April 1 2021 [Member]
Debt
Debt Instrument, Interest Rate, Stated Percentage	3.50%
Repayments of Notes Payable	$ 400,000,000
Gain (Loss) on Extinguishment of Debt	$ 6,000,000

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Stock-Based Compensation (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Stock-based compensation
Pre-tax compensation expense	$ 9	$ 8	$ 35	$ 24
Long-term stock awards
Stock-based compensation
Pre-tax compensation expense	4	6	11	16
Stock options
Stock-based compensation
Pre-tax compensation expense	1	1	6	3
Restricted stock units
Stock-based compensation
Pre-tax compensation expense	1	0	12	0
Performance Restricted Stock Units
Stock-based compensation
Pre-tax compensation expense	2	0	3	2
Phantom stock awards and stock appreciation rights
Stock-based compensation
Pre-tax compensation expense	$ 1	$ 1	$ 3	$ 3

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Stock-Based Compensation - Long-Term Stock Award (Details) - Long-term stock awards - USD ($) $ / shares in Units, shares in Millions, $ in Millions	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Unvested stock award shares
Balance at the beginning of the period (in shares)	2	2
Granted (in shares)	0	1
Vested (in shares)	1	1
Forfeited (in shares)	0	0
Balance at the end of the period (in shares)	1	2
Weighted average grant date fair value
Balance at the beginning of the period (in dollars per share)	$ 34	$ 30
Granted (in dollars per share)	0	36
Vested (in dollars per share)	32	25
Forfeited (in dollars per share)	35	32
Balance at the end of the period (in dollars per share)	$ 36	$ 34
Additional disclosures
Total unrecognized compensation expense	$ 25	$ 49
Weighted average remaining vesting period	2 years	3 years
Total market value (at the vesting date) of stock award shares	$ 31	$ 31

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Stock-Based Compensation - Stock Options (Details) - USD ($) $ / shares in Units, $ in Millions	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Stock Options
Grant date intrinsic value (in dollars per share)	$ 48
Shares
Granted (in shares)	420,840
Forfeited (in shares)	16,240
Stock options
Shares
Outstanding at the beginning of the period (in shares)	3,000,000	4,000,000
Granted (in shares)	1,000,000	1,000,000
Exercised (in shares)	1,000,000	2,000,000
Forfeited (in shares)	0	0
Outstanding at the end of the period (in shares)	3,000,000	3,000,000
Vested and expected to vest at the end of the period (in shares)	2,000,000	3,000,000
Exercisable at the end of the period (in shares)	1,000,000	2,000,000
Weighted average exercise price
Outstanding at the beginning of the period (in dollars per share)	$ 27	$ 21
Granted (in dollars per share)	48	36
Exercised (in dollars per share)	17	12
Forfeited (in dollars per share)	42	34
Outstanding at the end of the period (in dollars per share)	34	26
Vested and expected to vest at the end of the period (in dollars per share)	33	26
Exercisable at the end of the period (in dollars per share)	$ 28	$ 21
Aggregate intrinsic value
Exercised	$ 29	$ 29
Vested and expected to vest at the end of the period	54	48
Exercisable at the end of the period	$ 35	$ 39
Weighted average remaining option term
Outstanding at the end of the period	7 years	6 years
Vested and expected to vest at the end of the period	7 years	6 years
Exercisable at the end of the period	5 years	4 years
Additional disclosures
Total unrecognized compensation expense	$ 7	$ 9
Weighted average remaining vesting period	3 years	3 years
Five Year Vesting | Stock options
Stock Options
Vesting period	5 years
Three Year Vesting | Stock options
Stock Options
Vesting period	3 years

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Stock-Based Compensation - Option Pricing Assumptions and Estimates (Details) - Stock options - $ / shares	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Stock Options
Weighted average grant date fair value (in dollars per share)	$ 10.67	$ 8.81
Risk-free interest rate (as a percent)	1.53%	2.57%
Dividend yield (as a percent)	1.14%	1.35%
Volatility factor (as a percent)	24.00%	25.00%
Expected option life	6 years	6 years

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Stock-Based Compensation - Restricted Stock Units (Details) - USD ($) $ / shares in Units, $ in Millions	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Restricted stock units
Stock-based compensation
Period for recognition	3 years
Granted (in shares)	437,170
Granted (in dollars per share)	$ 47
Forfeited (in shares)	7,930
unrecognized compensation expense	$ 8
Weighted average remaining vesting period	2 years
Stock options
Stock-based compensation
Weighted average remaining vesting period	3 years	3 years
Performance Restricted Stock Units
Stock-based compensation
Period for recognition	3 years
LTIP Program | Performance Restricted Stock Units
Stock-based compensation
Granted (in shares)	133,390	126,680
Granted (in dollars per share)	$ 34	$ 39
Forfeited (in shares)	0	15,600
Shares issued in period (in shares)	151,724

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Employee Retirement Plans (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Qualified
Net periodic pension cost for the company's defined-benefit pension plans
Service cost	$ 1	$ 1	$ 2	$ 2
Interest cost	5	11	18	30
Expected return on plan assets	(6)	(12)	(17)	(34)
Amortization of net loss	7	4	18	14
Net periodic pension cost	7	4	21	12
Non-Qualified
Net periodic pension cost for the company's defined-benefit pension plans
Service cost	0	0	0	0
Interest cost	2	2	4	5
Expected return on plan assets	0	0	0	0
Amortization of net loss	0	1	2	2
Net periodic pension cost	$ 2	$ 3	$ 6	$ 7

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Reclassifications From Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Reclassifications from accumulated other comprehensive (loss) income
Other income (expense), net	$ 44	$ 48	$ 132	$ 136
Tax (benefit)	87	66	202	181
Reclassifications, after tax	(293)	(138)	(1,065)	(517)
Interest Expense	40	39	110	119
Reclassification out of Accumulated Other Comprehensive Income | UK Window Group
Reclassifications from accumulated other comprehensive (loss) income
Other income (expense), net				(14)
Reclassification out of Accumulated Other Comprehensive Income | Actuarial losses, net
Reclassifications from accumulated other comprehensive (loss) income
Other income (expense), net	7	5	20	16
Tax (benefit)	(2)	(1)	(5)	(4)
Reclassifications, after tax	5	4	15	12
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Gain (Loss), Cash Flow Hedge, Including Noncontrolling Interest
Reclassifications from accumulated other comprehensive (loss) income
Tax (benefit)	0	0	0	0
Reclassifications, after tax	0	0	(1)	(1)
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Gain (Loss), Cash Flow Hedge, Including Noncontrolling Interest | Interest Rate Swap
Reclassifications from accumulated other comprehensive (loss) income
Interest Expense	$ 0	$ 0	$ 1	$ 1

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Segment Information (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Segment Information
Net sales	$ 1,983	$ 1,716	$ 5,328	$ 5,068
Operating Profit (Loss)	424	289	988	833
Other income (expense), net	(44)	(48)	(132)	(136)
Income from continuing operations before income taxes	380	241	856	697
North America
Segment Information
Net sales	1,599	1,374	4,337	4,033
International, principally Europe
Segment Information
Net sales	384	342	991	1,035
Plumbing Products
Segment Information
Net sales	1,141	1,006	2,964	2,958
Plumbing Products | North America
Segment Information
Net sales	757	664	1,973	1,923
Plumbing Products | International, principally Europe
Segment Information
Net sales	384	342	991	1,035
Decorative Architectural Products
Segment Information
Net sales	842	710	2,364	2,110
Decorative Architectural Products | North America
Segment Information
Net sales	842	710	2,364	2,110
Decorative Architectural Products | International, principally Europe
Segment Information
Net sales	0	0	0	0
Operating Segments
Segment Information
Net sales	1,983	1,716	5,328	5,068
Operating Profit (Loss)	450	313	1,058	910
Operating Segments | Plumbing Products
Segment Information
Net sales	1,141	1,006	2,964	2,958
Operating Profit (Loss)	271	179	583	530
Operating Segments | Decorative Architectural Products
Segment Information
Net sales	842	710	2,364	2,110
Operating Profit (Loss)	179	134	475	380
Geographic Areas
Segment Information
Net sales	1,983	1,716	5,328	5,068
Operating Profit (Loss)	450	313	1,058	910
Geographic Areas | North America
Segment Information
Net sales	1,599	1,374	4,337	4,033
Operating Profit (Loss)	368	262	899	759
Geographic Areas | International, principally Europe
Segment Information
Net sales	384	342	991	1,035
Operating Profit (Loss)	82	51	159	151
Corporate, Non-Segment
Segment Information
General corporate expense, net	$ (26)	$ (24)	$ (70)	$ (77)

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Other Income (Expense), Net (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Other Income and Expenses [Abstract]
Income from cash and cash investments	$ 0	$ 1	$ 2	$ 2
Income (Loss) from Equity Method Investments	1	1	1	1
Foreign currency transaction gains (losses)	1	(5)	(6)	(3)
Net periodic pension and post-retirement benefit cost	(9)	(6)	(25)	(17)
Dividend income	3	0	7	0
Other items, net	0	0	(1)	0
Total other, net	$ (4)	$ (9)	$ (22)	$ (17)

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Income Per Common Share (Details) - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Numerator (basic and diluted):
Income from continuing operations	$ 275	$ 163	$ 618	$ 481
Less: Allocation to unvested restricted stock awards	1	1	5	3
Income from continuing operations attributable to common shareholders	274	162	613	478
(Loss) income from discontinued operations, net	0	(37)	411	1
Less: Allocation to unvested restricted stock awards	0	0	3	0
(Loss) income from discontinued operations, net attributable to common shareholders	0	(37)	408	1
Net income attributable to common shareholders	$ 274	$ 125	$ 1,021	$ 479
Denominator:
Basic common shares (based upon weighted average) (in shares)	261	286	265	289
Add: Stock option dilution (in shares)	0	1	1	1
Diluted common shares (in shares)	261	287	266	290

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Income Per Common Share - Narrative (Details) - USD ($)	3 Months Ended						9 Months Ended
	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2020	Sep. 30, 2019	Sep. 17, 2019
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Amount authorized for repurchase									$ 2,000,000,000.0
Stock repurchased during period (in shares)							16,500,000
Stock repurchased and retired during period		$ 0	$ 602,000,000	$ 151,000,000	$ 167,000,000	$ 122,000,000	$ 602,000,000
Remaining authorized repurchase amount	$ 900,000,000						$ 900,000,000
Dividends
Cash dividends per common share paid (in dollars per share)	$ 0.135			$ 0.120			$ 0.405	$ 0.360
Cash dividends per common share declared (in dollars per share)	$ 0.140			$ 0.135			$ 0.410	$ 0.375
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive effect on computation of diluted earnings per common share (in shares)	106,000			855,000			685,000	1,200,000
Performance Restricted Stock Units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive effect on computation of diluted earnings per common share (in shares)				20,000				20,000
Long-term stock awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Stock repurchased and retired during period to offset dilutive impact of awards granted (in shares)							400,000
Common Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Stock repurchased during period, additional shares (in shares)	1,200,000

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Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Income Tax Disclosure [Abstract]
Effective tax rate (as a percent)	23.00%	27.00%	24.00%	26.00%
Reduction in income tax expense	$ 10		$ 13