Divestitures

9 Months Ended

Sep. 30, 2021

Discontinued Operations and Disposal Groups [Abstract]

Divestitures

DIVESTITURES

On May 31, 2021, we completed the divestiture of our Hüppe GmbH ("Hüppe") business, a manufacturer of shower enclosures and shower trays. In connection with the divestiture, we recognized a loss of $18 million for the nine months ended September 30, 2021, which is included in other, net in our condensed consolidated statements of operations. This loss resulted primarily from the recognition of $23 million of currency translation losses that were previously included within accumulated other comprehensive income (loss). The sale of Hüppe does not represent a strategic shift that will have a major effect on our operations and financial results and therefore was not presented as discontinued operations. Prior to the divestiture, the results of the business were included in our Plumbing Products segment.

On November 6, 2019, we completed the divestiture of our Milgard Windows and Doors business ("Milgard"), a manufacturer and distributor of windows and doors for proceeds of approximately $720 million, net of cash disposed. During the nine months ended September 30, 2020, a $17 million pre-tax post-closing adjustment related to the finalization of working capital items was recorded to income from discontinued operations, net in the condensed consolidated statements 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 was received in two monthly installments throughout the remainder 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. 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 income from discontinued operations, net in the condensed consolidated statement of operations.

As the sale of Milgard and Cabinetry represented a strategic shift having a major effect on our operations and financial results, these businesses were presented in discontinued operations separate from continuing operations for the nine months ended September 30, 2020, as applicable. There was no activity for the three months ended September 30, 2021 and 2020.

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

	Nine Months Ended September 30,
	2021		2020
Net sales	$	—	$	101
Cost of sales	—		78
Gross profit	—		23
Selling, general and administrative expenses	—		31
(Loss) from discontinued operations	—		(8)
Gain on disposal of discontinued operations	—		602
Income before income tax	—		594
Income tax expense	—		(183)
Income from discontinued operations, net	$	—	$	411