Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2011

Goodwill and Other Intangible Assets [Abstract]

Goodwill and Other Intangible Assets

H.  GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in the carrying amount of goodwill for 2011 and 2010, by segment, were as follows, in millions:

	Gross Goodwill At December  31, 2011		Accumulated Impairment Losses			Net Goodwill At December 31, 2011
Cabinets and Related Products	$	589	$	(408	)	$	181
Plumbing Products		541		(340	)		201
Installation and Other Services		1,806		(762	)		1,044
Decorative Architectural Products		294		(75	)		219
Other Specialty Products		980		(734	)		246
Total	$	4,210	$	2,319		$	1,891

	Gross Goodwill At December 31, 2010		Accumulated Impairment Losses			Net Goodwill At December 31, 2010		Additions(A)		Discontinued Operations(B)			Pre-tax Impairment Charge			Other(C)			Net Goodwill At December 31, 2011
Cabinets and Related Products	$	587	$	(364	)	$	223	$	—	$	—		$	(44	)	$	2		$	181
Plumbing Products		536		(340	)		196		9		—			—			(4	)		201
Installation and Other Services		1,819		(762	)		1,057		—		(13	)		—			—			1,044
Decorative Architectural Products		294		—			294		—		—			(75	)		—			219
Other Specialty Products		980		(367	)		613		—		—			(367	)		—			246
Total	$	4,216	$	(1,833	)	$	2,383	$	9	$	(13	)	$	(486	)	$	(2	)	$	1,891

	Gross Goodwill At December 31, 2009		Accumulated Impairment Losses			Net Goodwill At December 31, 2009		Additions(A)		Discontinued Operations(B)			Pre-tax Impairment Charge			Other(C)			Net Goodwill At December 31, 2010
Cabinets and Related Products	$	590	$	(364	)	$	226	$	—	$	—		$	—		$	(3	)	$	223
Plumbing Products		547		(340	)		207		—		—			—			(11	)		196
Installation and Other Services		1,819		(51	)		1,768		—		(14	)		(697	)		—			1,057
Decorative Architectural Products		294		—			294		—		—			—			—			294
Other Specialty Products		980		(367	)		613		—		—			—			—			613
Total	$	4,230	$	(1,122	)	$	3,108	$	—	$	(14	)	$	(697	)	$	(14	)	$	2,383

(A) Additions include acquisitions.

(B) During 2011, the Company reclassified the goodwill related to the business units held for sale. Subsequent to the reclassification, the Company recognized a charge for those business units expected to be divested at a loss; the charge included a write-down of goodwill of $13 million. In 2010, the Company recognized pre-tax impairment charges of $711 million related to the Installation and Other Services segment; during 2011, the Company allocated $14 million of the pre-tax impairment charge to the discontinued operations.

(C) Other principally includes the effect of foreign currency translation and purchase price adjustments related to prior-year acquisitions.

In the fourth quarters of 2011 and 2010, the Company completed its annual impairment testing of goodwill and other indefinite-lived intangible assets. During the third quarter of 2011, the Company assessed the goodwill related to the Installation and Other Services segment and determined no impairment was necessary at September 30, 2011.

The impairment tests in 2011 and 2010 indicated that goodwill recorded for certain of the Company’s reporting units was impaired. The Company recognized the non-cash, pre-tax impairment charges, in continuing operations, for goodwill of $486 million ($330 million, after tax) and $697 million ($586 million, after tax) for 2011 and 2010, respectively. In 2011, the pre-tax impairment charge in the Cabinets and Related Products segment relates to the European ready-to-assemble cabinet manufacturer and reflects the declining demand for certain products, as well as decreased operating margins. The pre-tax impairment charge in the Decorative Architectural Products segment relates to the builders’ hardware business and reflects increasing competitive conditions for that business. The pre-tax impairment charge in the Other Specialty Products segment relates to the North American window and door business and reflects the continuing weak level of new home construction activity in the western U.S., the reduced levels of repair and remodel activity and the expectation that recovery in these segments will be modestly slower than anticipated. In 2010, the pre-tax impairment charge in the Installation and Other Services segment reflects the Company’s expectation that the recovery in the new home construction market will be modestly slower than previously anticipated. The Company then assessed the long-lived assets associated with these business units and determined no impairment was necessary at December 31, 2011.

Other indefinite-lived intangible assets were $174 million and $185 million at December 31, 2011 and 2010, respectively, and principally included registered trademarks. In 2011, the impairment test indicated that the registered trademark for a North American business unit in the Other Specialty Products segment and the registered trademark for a North American business unit in the Plumbing Products segment were impaired due to changes in the long-term outlook for the business units. The Company recognized non-cash, pre-tax impairment charges for other indefinite-lived intangible assets of $8 million ($5 million, after tax) in 2011. In 2010, the Company recognized non-cash, pre-tax impairment charges for other indefinite-lived intangible assets of $10 million ($6 million after tax) related to the Installation and Other Services segment ($9 million pre-tax) and the Plumbing Products segment ($1 million pre-tax). During 2011, the Company allocated $9 million of the pre-tax impairment charge from the Installation and Other Services segment to discontinued operations.

The carrying value of the Company’s definite-lived intangible assets was $22 million at December 31, 2011 (net of accumulated amortization of $54 million) and $84 million at December 31, 2010 (net of accumulated amortization of $75 million) and principally included customer relationships and non-compete agreements, with a weighted average amortization period of 15 years in both 2011 and 2010. The change in definite-lived intangible assets is due to the classification of such assets related to business units held for sale. Subsequent to the classification, the Company recognized a charge for those business units expected to be divested at a loss; the charge included a write-down of $56 million for indefinite and definite-lived intangible assets. Amortization expense related to the definite-lived intangible assets of continuing operations was $6 million in each of 2011, 2010 and 2009.

At December 31, 2011, amortization expense related to the definite-lived intangible assets during each of the next five years was as follows: 2012 – $6 million; 2013 – $4 million; 2014 – $4 million; 2015 – $2 million; and 2016 – $2 million.