DIVESTITURES

12 Months Ended

Dec. 31, 2021

Discontinued Operations and Disposal Groups [Abstract]

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 year ended December 31, 2021, which is included in other, net in our 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 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 was collected in the third quarter of 2021. In connection with the sale, we recognized a loss of $70 million for the year ended December 31, 2019, which is included in income from discontinued operations, net in the consolidated statements of operations.

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. In connection with the sale, we recognized a gain on the divestiture of $368 million for the year ended December 31, 2019, which is included in income from discontinued operations, net in the consolidated statements of operations.

In 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. DIVESTITURES (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 income from discontinued operations, net in the consolidated statements of operations, as a gain on the divestiture of Milgard. As of December 31, 2020, we received $17 million in cash, which was presented in investing activities on the consolidated statement of cash flow as proceeds from disposition of businesses, net of cash disposed. 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 I 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 year ended December 31, 2020, which was included in income from discontinued operations, net in the consolidated statements of operations. 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, Milgard and UKWG met the held for sale criteria in accordance with ASC 205-20, Discontinued Operations, during 2019. 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 each 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 all periods presented. 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 from discontinued operations before income tax was income of $2 million for the year ended December 31, 2020, and a loss of $1 million for the year ended December 31, 2019. The results of the cabinetry business recorded in income from discontinued operations before income tax was a loss of $7 million for the year ended December 31, 2020 and income of $107 million the year ended December 31, 2019.

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


	Year Ended December 31,
	2021		2020		2019
Net sales	$	—	$	101	$	1,528
Cost of sales	—		78		1,184
Gross profit	—		23		344
Selling, general and administrative expenses	—		28		232
Impairment charge for goodwill (A)	—		—		7
Other income (expense), net	—		—		1
(Loss) income from discontinued operations	—		(5)		106
Gain on disposal of discontinued operations, net	—		602		298
Income before income tax	—		597		404
Income tax expense	—		(183)		(108)
Income from discontinued operations, net	$	—	$	414	$	296

(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.

C. DIVESTITURES (Concluded)

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


	Year Ended December 31,
	2021		2020		2019
Depreciation and amortization	$	—	$	—	$	29
Capital expenditures	—		1		34
ROU assets obtained in exchange for new lease obligations	—		—		3