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美國

證券交易委員會

華盛頓特區20549

表格10-K

☒ 根據1934年證券交易法第13或15（d）條提交的年度報告

日終了的財政年度 十二月28, 2024

☐ 根據1934年《證券交易所法》第13或15（d）條提交的過渡報告

從 ______ 到_______

委員會檔案編號 1-35166

財富品牌創新公司

（章程中規定的註冊人的確切名稱）

 

特拉華

 

62-1411546

（州或其他司法管轄區

公司或組織）

 

(IRS僱主

識別號）

庫克湖路520號, 迪爾菲爾德, IL 60015-5611

（主要行政辦公室地址） (Zip代碼）

註冊人的電話號碼，包括地區代碼：（847) 484-4400

根據該法第12（b）條登記的證券：

每個班級的標題

交易符號

註冊的每個交易所的名稱

普通股，面值每股0.01美元

FBIN

紐約證券交易所

 

根據該法第12（g）條登記的證券：無

如果註冊人是《證券法》第405條所定義的知名經驗豐富的發行人，則通過勾選標記進行驗證。 是 ☒ 沒有 ☐

如果註冊人無需根據該法案第13條或第15（d）條提交報告，則通過勾選標記進行驗證。是的 ☐ 不是 ☒

用複選標記表示註冊人(1)是否在過去12個月內(或註冊人被要求提交此類報告的較短時間內)提交了1934年《證券交易法》第13條或15(D)節要求提交的所有報告，以及(2)在過去90天內是否符合此類提交要求。是 ☒ 沒有 ☐

用複選標記表示註冊人是否在過去12個月內(或在註冊人被要求提交此類文件的較短時間內)以電子方式提交了根據S-t法規第405條規定必須提交的每一份互動數據文件。是 ☒ 沒有 ☐

通過勾選標記來確定註冊人是大型加速申報人、加速申報人、非加速申報人、小型報告公司還是新興成長型公司。請參閱《交易法》第120亿.2條規則中「大型加速備案人」、「加速備案人」、「小型報告公司」和「新興成長型公司」的定義。

 

大型加速文件夾

☒

 

加速編報公司

☐

 

非加速文件服務器

☐

 

小型上市公司

☐

新興成長型公司

☐

 

 

 

 

 

 

 

 

 

如果是新興成長型公司，請通過勾選標記表明註冊人是否選擇不利用延長的過渡期來遵守根據《交易法》第13（a）條規定的任何新的或修訂的財務會計準則。 ☐

用複選標記表示註冊人是否提交了一份報告，證明其管理層根據《薩班斯-奧克斯利法案》(《美國聯邦法典》第15編，第7262(B)節)第404(B)條對其財務報告的內部控制的有效性進行了評估，該評估是由編制或發佈其審計報告的註冊會計師事務所進行的。☒

如果證券是根據該法第12(B)條登記的，應用複選標記表示登記人的財務報表是否反映了對以前發佈的財務報表的錯誤更正。☐

通過勾選標記檢查這些錯誤更正是否是需要根據§240.10D-1（b）對註冊人的任何執行官在相關恢復期內收到的激勵性補償進行恢復分析的重述。☐

通過勾選標記檢查註冊人是否是空殼公司（定義見該法案第120亿.2條規則）。是的 ☐ 沒有 ☒

截至2024年6月29日（註冊人最近第二次申請的最後一天），註冊人的非關聯公司持有的註冊人有投票權普通股的總市值阿特）是$8,071,063,938.截至2025年2月7日，註冊人普通股（每股面值0.01美元）的發行股數爲 122,576,651.

通過引用併入的文獻

註冊人爲其即將舉行的股東年度會議提交的委託書中包含的某些信息 於2025年5月14日（不遲於註冊人財年結束後120天提交）（“2025年委託聲明”）通過引用併入本文第三部分。

 

 

Form 10-K表格 內容

 

 

 

 

頁面

第一部分

 

 

 

項目1.

業務

 

1

項目1A.

風險因素。

 

7

項目10。

未解決的員工評論。

 

17

項目1C.

項目2.

網絡安全。

特性.

 

17

18

項目3.

法律訴訟。

 

19

項目4.

礦山安全披露。

 

19

 

有關我們執行官的信息。

 

19

 

 

 

第二部分

 

 

 

項目5.

註冊人普通股市場、相關股東事項和發行人購買股票證券。

 

20

項目6.

已保留.

 

21

項目7.

管理層對財務狀況和經營結果的討論和分析。

 

22

 

經營成果.

 

24

 

流動性和資本資源。

 

30

 

關鍵會計估計。

 

35

項目7A.

關於市場風險的定量和定性披露。

 

41

項目8.

財務報表和補充數據。

 

42

 

綜合財務報表附註.

 

51

項目9.

會計師在會計和財務披露方面的變化和分歧。

 

88

項目9A.

控制和程序。

 

88

項目90。

其他信息.

 

88

項目9 C.

有關阻止檢查的外國司法管轄區的披露。

 

88

 

 

 

 

第三部分

 

 

 

項目10.

董事、執行官和公司治理.

 

89

項目11.

高管薪酬.

 

89

項目12.

若干實益擁有人的擔保所有權及管理層及相關股東事宜。

 

89

項目13.

某些關係和關聯交易以及董事獨立性。

 

89

項目14.

首席會計師費用和服務。

 

89

 

 

 

 

第四部分

 

 

 

項目15.

展品和財務報表附表.

 

90

項目16.

表格10-K摘要。

 

93

簽名

 

94

附表二估值和合格帳戶

 

95

 

 

 

部分 I

項目1. 業務

關於前瞻性陳述的警示聲明

 

這份10-K表格年度報告包含某些「前瞻性陳述」，這些陳述是根據修訂後的1933年證券法(「證券法」)第27A節和修訂後的1934年證券交易法(「交易法」)第21E節的安全港條款作出的。前瞻性陳述包括所有非歷史性的事實陳述，以及有關我們對業務、運營、財務業績或財務狀況的意圖、信念或預期的陳述，以及有關我們對經營市場的預期、總體業務戰略、最近宣佈的組織和領導層變動的預期影響、我們品牌的市場潛力、房地產市場趨勢、成本的潛在影響(包括材料和勞動力成本)、通貨膨脹的潛在影響、預期資本支出、預期養老金貢獻、收購、處置和其他戰略交易的預期影響的陳述，包括剝離MasterBrand的預期收益和成本。公司和剝離交易的免稅性質，最近發佈的會計準則對我們財務報表的預期影響，以及其他非歷史性的事項。包括「相信」、「預期」、「預期」、「打算」、「計劃」、「估計」、「計劃」、「展望」、「定位」、「自信」、「機會」、「焦點」等類似表述或未來或條件動詞的表述，如「將」、「應該」、「將」、「可能」和「可能」，通常屬於前瞻性陳述，而不是歷史事實。在任何前瞻性聲明中，我們表達了對未來結果或事件的預期或信念，該預期或信念是基於我們管理層在向美國證券交易委員會(「美國證券交易委員會」)提交本報告時對我們的行業、業務和未來財務業績的當前預期、計劃、估計、假設和預測。儘管我們認爲這些陳述是基於合理的假設，但它們會受到許多因素、風險和不確定因素的影響，這些因素、風險和不確定因素可能會導致實際結果和結果與此類陳述中所指出的大不相同，包括但不限於下文「風險因素」一節中所列的那些。我們不承擔任何義務，也明確不承擔任何此類義務，以更新、修正、澄清或修改任何前瞻性陳述，以反映隨着時間或其他原因發生的假設變化、預期或意外事件、新信息或未來結果的變化，除非法律另有要求。

除非上下文另有要求，否則本年度報告中10-K表格中提及的「Fortune Brands」、「公司」、「我們」、「我們的」或「我們」指Fortune Brands Innovations，Inc.及其合併子公司。

我公司

我們是一家領先的創新公司，其目標是通過將空間轉變爲避風港來提升每個人的生活。我們通過廣泛的銷售渠道銷售我們的產品，包括廚房和浴室經銷商、面向建築商或專業改造商的批發商、工業和鎖匠分銷商、「自己動手」的改造家居中心、展廳、直接面向消費者、電子商務和其他零售店。

 

2023年1月19日，公司董事會批准將公司財年結束日期從12月31日改爲爲期52周或53周的財年，截止日期爲每年12月31日最近但不晚於12月31日的週六，自2023年1月1日公司財年開始時生效。做出這一變更是爲了使公司的財年與其運營業務的財年保持一致，並使公司的報告日曆與公司評估其業務的方式保持一致。公司2024財年年終爲截至2024年12月28日的52周（以下簡稱「2024年」）。

1

 

自2023年第一季度起，該公司將分部報告從兩個可報告分部Water Innovations（「Water」）和Outdoors & Security修訂爲三個可報告分部Water、Outdoors和Security。分部報告的變更是爲了與我們的首席運營決策者在評估業績和分配資源時審查公司經營業績的方式的變更保持一致。比較前期金額已重新計算，以符合新的分部呈列方式。

從歷史上看，財富品牌經營着一個櫥櫃業務部門，製造和銷售廚房、浴室和家庭其他部分的櫥櫃和梳妝檯。2022年12月14日，公司通過免稅剝離交易完成了櫥櫃業務MasterBrand，Inc.(簡稱MasterBrand)的分拆。分拆創建了兩家獨立的上市公司。分離完成後，該公司立即從「財富品牌家居和安全公司」更名爲「財富品牌家居和安全公司」。致《財富品牌創新公司》其股票代碼從「FBHS」改爲「FBIN」，以更好地反映其對以品牌和創新爲核心的活動的關注。作爲分離的結果，我們以前的櫥櫃部門被處置，櫥櫃業務的經營結果在本年度報告中以Form 10-K的形式報告爲所有時期的非持續經營。除另有說明外，所有期間的所有金額、百分比和披露僅反映公司的持續經營情況。有關更多信息，請參閱本年度報告中表格10-K第8項的合併財務報表附註5「非持續經營」。

我們的戰略

 

在具有吸引力的增長和回報類別中建立領先的業務和品牌地位.我們在許多產品類別中都擁有領先品牌，我們認爲這些品牌具有可持續的競爭優勢，我們主要在北美和中國銷售這些產品。我們相信，知名品牌對各自類別的消費者和貿易客戶都是有意義的，我們有機會在市場上獲得份額，並通過交叉品牌、擴展到相鄰的產品類別以及在國際和電子商務市場擴張來繼續加強我們的許多品牌。例如，我們正在繼續使我們的水、戶外和安全產品與互聯產品、戶外生活、可持續發展、水管理、材料轉換、奢侈品以及安全和健康領域的長期趨勢保持一致。我們致力於通過戰略採購、自動化、機器學習、人工智能、數據驅動的洞察力和流程，繼續投資於我們的品牌、我們的數字化和互聯轉型、產能和供應鏈，並利用我們的全球規模來加強我們的業務，繼續滿足對我們產品的需求。

爲客戶和消費者開發創新產品和流程. 我們在產品和流程創新方面擁有悠久的成功記錄，這些創新爲我們的客戶和消費者推出有價值的新產品。我們的重點是能夠推動有意義和有價值的功能以及改善人們和社區生活的產品，包括節水、利用回收材料、節約能源以及保護人員和空間的產品。我們致力於繼續投資新產品開發並加強客戶服務，以加強我們的領先品牌並滲透鄰近市場，包括數字空間和互聯產品。

利用財富品牌優勢來推動成果。 雖然我們的業務部門對自己的業績負責，但我們相信，在財富品牌優勢的推動下，我們的一致結構和業務模式使我們能夠以更高的效率和靈活性運營。財富品牌優勢是一種運營模式，由一系列統一的能力組成，我們認爲這些能力對於我們所有業務的戰略增長至關重要。財富品牌優勢目前由四個關鍵支柱組成：

•
品類管理 - 與我們的渠道合作伙伴合作，通過可操作的類別見解來提高最佳性能併爲我們的消費者提供最佳服務。
•
業務簡化 - 簡化工作流以提高效率。作爲公司正在進行的重組和整合工作的一部分，以將我們以業務部門主導的運營模式統一在一個簡化的執行領導團隊下，我們預計將繼續優先考慮品牌、創新和渠道的核心活動.

2

 

•
全球供應鏈卓越 - 利用我們強大的全球供應鏈，通過尖端能力從戰略上提高規模效率。
•
數字化轉型- 通過一流的服務、技術、數據和分析支持我們未來的產品，並利用數據科學釋放寶貴的消費者和業務見解。我們正在推進數字戰略，以推動增長，並目標是成爲行業的數字領導者。我們繼續投資於數字能力，利用我們在技術、數據和人才方面的規模，進一步提高可持續生產力和效率，提高員工發展、滿意度和保留率，並加速和維持電子商務和互聯產品、採購和數據科學的增長。這包括整合我們的數字組織，以提高進入市場的速度，進一步發展促進創新、協作和價值創造的文化，以及開發由服務技術、數據和分析支持的產品。

我們繼續增強在這些領域的能力，使我們的每個業務都能專注於收入增長和利潤率提高的機會，無論市場環境如何。

通過人才創造價值。 該公司建立了一支才華橫溢、包容的領導團隊，能夠繼續 執行我們向更加一致的運營模式的轉型。 我們相信，投資於員工是我們業務戰略的重要組成部分。我們努力通過人才獲取、發展、繼任規劃和培養包容性勞動力來實現這一目標。

提高回報並將我們的現金流配置到高回報機會上。 我們仍然相信，我們最有吸引力的機會是投資於有利可圖的有機增長計劃，追求增值性戰略收購、非控股股權投資和合資企業，並通過股息和機會性回購普通股相結合向股東返還現金。

我們相信，推進環境、社會和治理（「ESG」）舉措以及以道德方式開展業務是我們吸引和留住最優秀人才的重要因素。ONE Home是我們在整個公司範圍內的ESG計劃和舉措，是一項全面計劃，重點關注我們可以發揮最大影響力以及我們的努力與公司更大的商業機會相關的領域。我們繼續尋找方法來改善我們的ESG計劃和實踐，重點關注節水、材料轉化和安全等有意義的舉措。

業務細分

我們有三個業務部門：水務、戶外和安全。

我們的部門在創新、時尚、質量、價格、服務和對分銷商、零售商和安裝商需求的響應能力以及最終用戶消費者偏好的基礎上進行競爭。我們的市場競爭非常激烈。2024年淨銷售額中約有17%銷往國際市場，並銷往該公司的兩個客戶Lowe ' s Companies，Inc.（「Lowe ' s」）和家得寶公司。（「家得寶」）分別佔公司2024年淨銷售額的11%和10%。2024年，美國所有家庭中心的銷售總額約佔淨銷售額的24%。2024年，我們對十大客戶的銷售額約佔總銷售額的48%。

水。我們的水務部門製造、組裝和銷售水龍頭、配件、廚房水槽和垃圾處理器，主要品牌爲Moen、Rohl、Riobel、Victoria+Albert、Perrin&Rowe、Aqualisa、Shaws、Emtek、Schaub和Springwell品牌。雖然這一細分市場主要在美國、中國和加拿大銷售，但這一細分市場也在歐洲、墨西哥、東南亞和南美銷售。在2024年的淨銷售額中，約有24%銷往國際市場。這一細分市場通過自己的銷售隊伍直接銷售，並通過獨立製造商代表間接銷售，主要銷售給批發商、家庭中心和大衆銷售商。這一細分市場正在越來越多地投資和開發數字產品和「智能」家居功能。總體而言，對家得寶和勞氏的銷售額約佔19% 2024年水務部門淨銷售額的百分比。這一細分市場的主要競爭對手包括Masco、Kohler、LIXIL Group、InSinkErator(惠而浦公司所有)、HUIDA、Hgill和Jomoo以及進口自有品牌。

3

 

在戶外。我們的戶外部門製造和銷售Therma-Tru品牌的玻璃纖維和鋼質進入門系統，Larson品牌的STORM、屏蔽門和防盜門，Fiberon品牌的複合甲板、欄杆和覆層，Fypon品牌的氨基甲酸酯木製品，以及Solar Innovation品牌的大開口式外門系統和室外圍護結構。這一細分市場主要在美國和加拿大銷售產品。這一細分市場的主要客戶是住宅中心、五金和其他零售商、木結構建築產品和批發分銷商、工業分銷商和向住宅新建市場以及改建和翻新市場提供產品的專業經銷商。總體而言，對家得寶和勞氏的銷售額約佔 2024年戶外部分淨銷售額的26%。Therma-Tru、Larson、Fiberon、Fypon和Solar Innovation與美森特、JELD-WEN、安達信、Trex、AZEK、Plastpro、Pella以及各種地區和本地供應商競爭。

保安。我們的安防部門的產品包括鎖、安全和安保設備、連接和機械鎖出標籤解決方案和電子安防產品，主要以Master Lock、American Lock、Yale和Austall品牌製造、採購和分銷，以及以SentrySafe品牌製造、採購和分銷的防火保險箱、安全容器和商用櫥櫃。這一細分市場主要在美國、加拿大、歐洲、中美洲、日本和澳大利亞銷售產品。在2024年安全部門的淨銷售額中，約有23%銷往國際市場。這一細分市場製造和銷售鑰匙控制和組合掛鎖、自行車和電纜鎖、內置儲物櫃鎖、有鑰匙和無鑰匙智能鎖、門五金、汽車、拖車和拖車鎖、電子門禁解決方案以及其他供消費者使用的特殊安全和安保設備，供硬件、家庭中心和其他零售店使用。該細分市場主要面向鎖匠、工業和機構用戶、住宅和多戶住宅硬件和服務提供商、第三方集成商以及原始設備製造商。總體而言，對家得寶和勞氏的銷售額約佔2024年安全部門淨銷售額的16%。大師鎖、美國鎖、耶魯和奧古斯特競爭s擁有ABUS、W.H.Brady、Hampton、Kwikset、Schlage和各種進口產品，SentrySafe與First Alert、Magnum、Forresse、Stack-on和Fire King競爭。

其他信息

原料 下表列出了我們每個部門使用的主要原材料。這些材料可從多種來源獲得。製造和分銷我們產品所使用的商品和能源價格的波動會影響我們產品的製造成本。

 

段

 

原材料

水

 

黃銅、鋅、樹脂、不鏽鋼和鋁

戶外

 

木材、鋁、鋼、塑料、樹脂、玻璃、乙烯基和絕緣泡沫

安防

 

鋼、鋅、黃銅和樹脂

 

知識產權。 產品創新和品牌推廣對於我們業務的成功至關重要。除了我們的商標提供的品牌保護外，專利保護還有助於通過防止複製並使競爭對手更難不公平地從我們的設計創新中受益，從而區分我們在市場上獨特的產品功能。我們擁有美國和外國專利，涵蓋我們所有業務部門銷售的產品中使用的各種功能。儘管我們的每個部門都依賴於多項專利和專利組，這些專利和專利組總體上爲公司提供了重要保護，但沒有一項專利或專利組對公司的任何部門來說都是重要的。

人力資本資源。 截至2024年12月28日，財富品牌在全球擁有超過11，000名全職和兼職員工（不包括合同工）。我們大約58%的員工由小時生產和分銷員工組成，其餘人員由辦公室員工組成。我們在美國沒有根據集體談判協議工作的同事. 以下是按部門和角色列出的員工人數摘要：

 

段

 

生產和分配

 

 

辦公室

 

 

總計

 

水

 

 

2,294

 

 

 

2,576

 

 

 

4,870

 

戶外

 

 

2,735

 

 

 

965

 

 

 

3,700

 

安防

 

 

1,398

 

 

 

819

 

 

 

2,217

 

企業

 

 

—

 

 

 

254

 

 

 

254

 

 

4

 

我們相信我們的同事是我們成功的關鍵。我們投資我們的團隊並培養我們的員工，使其成爲下一代領導者，以推動創新並推動公司增長。該公司還努力爲所有人創造一個家，確保員工的安全，以尊嚴和尊重的方式對待他們，並培養績效文化。我們還努力創建一種文化，將做正確的事情融入到我們開展業務的方式中。Fortune Brands通過以下概述的計劃實現這一目標，每個計劃的目標和相關風險均由我們的董事會或其委員會監督。

健康與安全

安全是財富品牌增長戰略的關鍵要素，是公司文化的組成部分，也是我們的核心價值觀之一。我們的員工安全和環境管理原則爲我們如何維護安全的工作環境和指導我們的業務運營設定了標準。該公司還擁有一個環境、健康和安全網絡，由來自公司各業務部門的代表組成，分享最佳實踐並實施環境、健康和安全戰略。這有助於推動我們一流的計劃，旨在加強積極的行爲，使我們的員工能夠積極參與維護安全的工作環境，提高認識並降低關鍵安全部件的風險。在我們的每個製造和分銷設施中，我們都有針對特定地點的安全和環境計劃，旨在降低風險。通過不斷致力於改善我們的安全表現，我們歷來成功地減少了員工的受傷人數。我們的兩個主要安全措施是總可記錄發病率(「TRIR」)和損失時間率(「LTR」)。2024年，我們的TRIR爲0.98，而截至2023年12月30日的年度爲0.99(本文稱爲「2023年」)，2024年和2023年的TRR均爲0.31(2023年的數據不包括Emtek和Schaub高級及豪華門櫃五金業務(「Emtek和Schaub業務」)或美國和加拿大耶魯和奧古斯特住宅智能鎖業務(「耶魯和奧古斯特業務」，以及與Emtek和Schaub業務合計的「收購業務」)，這些業務是我們於2023年從ASSA ABLOY，Inc.及其附屬公司(「ASSA」)收購的。

 

吸引和留住優秀人才

 

財富品牌致力於投資於員工的身體、情感和財務健康，我們相信這是我們商業戰略的關鍵組成部分。爲了吸引和留住公司各級的優秀人才，我們的總獎勵旨在具有市場競爭力，使員工激勵與公司業績保持一致，並在員工生活的許多方面爲他們提供支持。我們有強大的績效薪酬文化，這種文化得到了考慮業務結果和員工績效的激勵計劃的支持。我們還提供一系列福利，包括退休儲蓄計劃、全面的醫療保健和精神健康福利，包括醫療、牙科和視力保險、健康儲蓄和支出帳戶，以及員工援助服務。我們最近採取措施加強我們的福利計劃，通過爲我們的美國同事提供更多的父母支持福利來進一步增強包容性，包括生育福利以及從收養和代孕援助到懷孕和產後的專門支持。我們的許多企業也提供帶薪育兒假。

 

創造包容和尊重所有人的文化

 

在我們公司，我們相信擁抱各種觀點有助於推動業務成果。通過尊重和整合不同的觀點，我們相信我們可以促進創新並實現卓越績效。

 

5

 

我們繼續採取有分寸的行動，創造包容的文化，增加來自不同背景的員工的參與，並反映我們的消費者和社區。我們相信，吸引和留住來自不同背景的優秀員工將使我們能夠更具創新性和對消費者需求做出更快的反應，並帶來強勁的業績和增長。該公司有一個跨職能的包容性文化理事會，負責制定優先事項和倡議。公司通過培訓、向所有員工開放的企業範圍的員工資源小組以及與外部小組的合作伙伴關係，在整個組織內加強公平、公平和有效的做法。所有員工領導者都會定期參加包容性學習計劃，我們會定期進行參與度調查，以培養我們對員工傾聽的承諾，這將爲我們提供反饋和有意義的行動，以推動我們的文化進步。

人才發展與繼承

我們的目標是激勵和裝備我們的員工在他們目前在組織內的角色中取得成功，並幫助他們發展技能，以利用機會發展他們的職業生涯。我們了解我們最關鍵的角色，這些角色是提供價值的槓桿，並將我們最優秀的人員安排在這些角色中，同時吸引新的人才和能力，以支持我們所做的一切持續改進。財富品牌利用績效管理計劃支持高績效文化，加強員工敬業度，幫助留住我們的頂尖人才。本公司爲員工提供相關技能培訓，併爲擔任主管職務的生產和分銷員工以及中層辦公室員工提供領導力培訓。該公司還進行了大量投資，根據近期和未來的工作情況評估我們的人才，並確保我們的領導人爲承擔更高級別的責任做好準備，並能夠成功過渡到新的角色。

關鍵職位的繼任規劃是我們人才計劃的重要組成部分。制定並監控繼任和發展計劃，以確保按照既定時間表取得進展。

季節性。 傳統上，我們所有的運營部門在今年第一季度的銷售額都會下降，此時新房建設、維修和改造活動以及證券購買處於最低水平。由於銷售季節性和相關的流動資金波動時間，下半年我們的經營活動現金流通常較高。

 

影響我們業務的法律和法規。 我們的業務受美國國內外衆多聯邦、州和地方法律法規的約束，在環境保護和氣候變化、國際貿易、數據隱私、稅收、消費者保護、政府合同等領域。我們還受到我們開展業務或以其他方式開展業務的國家/地區的進出口管制、關稅以及其他貿易相關法規和限制的約束。有關影響我們業務的各種法律和法規的更詳細描述，請參閱第1A項。危險因素在正常業務過程中，我們還參與各種法律訴訟，包括與環境問題有關的訴訟。

 

遵守政府法規（包括環境和氣候變化法規）並未對我們的資本支出、經營業績或競爭地位產生重大影響，並且根據當前信息和當前有效的適用法律和法規，預計也不會對我們的資本支出、經營業績或競爭地位產生重大影響。然而，法律和法規的變更、加速或採用可能對我們施加重大運營限制和合規要求，並可能對我們的經營業績和財務狀況產生負面影響。

可用信息。 該公司的網站地址爲www.FBIN.com。公司10-K表格年度報告、10-Q表格季度報告、8-K表格當前報告以及對這些報告的任何修訂將在報告提交或以電子方式向SEC提交後，在合理可行的範圍內儘快免費在公司網站上提供。向SEC提交的報告也可在其網站www.sec.gov上查看。

6

 

I項目1A。 危險因素

 

與我們的業務相關的固有風險和不確定性可能對我們的業務、財務狀況或經營業績產生不利影響。下文描述了我們目前認爲重大的風險和不確定性，但下文描述的風險和不確定性並不是唯一可能對我們的業務、財務狀況或經營業績產生不利影響的風險和不確定性。如果其中任何一個風險成爲現實，我們的業務、財務狀況或經營業績可能會受到影響。在這種情況下，我們普通股的交易價格可能會下降，您可能會損失全部或部分投資。

 

行業風險

 

我們的業務主要依賴北美和中國的房屋裝修、維修和改造以及新房建設活動水平，所有這些都受到房地產市場波動相關風險的影響。整體經濟或房地產市場的下行變化，或不利的利率或其他商業狀況，可能會對我們的經營業績、現金流和財務狀況產生不利影響。

 

我們的業務主要依賴於家居裝修、維修和改造，以及新房建設活動水平，主要是在北美和中國。這些房地產市場對經濟狀況和其他因素的變化非常敏感，如就業水平、獲得和勞動力成本、消費者信心、人口結構變化、消費者收入、政府稅收計劃、融資可獲得性、通脹和利率水平。這些條件中的任何一項或我們運營的任何市場中的任何不利變化，都可能減少消費者需求，並可能通過以下方式對我們的業務產生不利影響：導致消費者推遲或拒絕購買住房；使消費者對價格更加敏感，導致需求轉向更小、更便宜的住房；使消費者更不願對現有住房進行投資或導致他們推遲投資，包括廚房和浴室維修和改造項目；或使消費者更難獲得用於重大住房翻新的貸款。美國獨棟和多戶新房建設活動總體上比2023年的水平有所上升，而美國的維修和改造活動總體上比2023年的水平有所下降。

 

我們經營競爭非常激烈的消費者和貿易品牌類別。

 

我們運營的市場競爭非常激烈。儘管我們相信我們業務的競爭主要基於產品質量、消費者和貿易品牌聲譽、客戶服務和產品功能，以及時尚趨勢、創新和安裝便利性，但價格對消費者和貿易客戶來說是一個重要因素。我們的一些競爭對手可能會訴諸價格競爭來維持或擴大市場份額和製造能力利用率。某些大客戶繼續提供與我們的一些產品競爭的自有品牌，作爲低成本替代品。進口低成本產品最近在各種電子商務渠道中也變得更加普遍。我們所有業務面臨的激烈競爭可能會對我們的盈利能力和收入水平以及我們的運營業績、現金流和財務狀況產生不利影響。

 

我們可能無法成功執行我們的戰略計劃，而且我們的戰略在面對業務競爭時可能無法證明有效或產生預期結果。

 

我們業務和業務戰略的成功取決於滿足消費者需求並通過成功的新產品和產品改進預測消費者偏好的變化。我們的目標是積極推出產品和新的或改進的生產流程，以抵消現有產品的過時和銷量下降的影響。我們的產品開發可能不會成功，我們的新產品也可能不會在商業上成功。此外，競爭對手可能會更快或更有效地改進其產品或流程，這可能會對我們的銷售產生不利影響。此外，由於消費者偏好遠離我們的類別或在我們的品牌或產品類別內趨勢下降，市場需求可能會下降，這可能會對我們的經營業績、現金流和財務狀況產生不利影響。

7

 

在分離方面，我們從分散的業務結構轉向更一致的業務部門主導的運營模式，該模式優先考慮作爲核心的活動，包括品牌、創新和渠道等變化。雖然我們相信，這一轉變使我們能夠充分利用我們整個業務的規模和卓越的執行能力，但這樣的轉變本身就很難管理，可能會導致管理層的注意力從我們業務的其他方面轉移。此外，我們的新運營模式可能無法產生預期的結果，並可能產生意想不到的後果，這可能會對我們的業務和運營結果產生負面影響，並使我們更難執行我們的戰略計劃。我們最近還宣佈了一些旨在推動加速增長的組織和領導層變動。這些努力將導致某些重組現金和非現金費用，也可能不會產生預期的結果，並可能產生意想不到的後果，包括可能增加員工過渡成本或難以留住關鍵員工，包括由於市場壓力或不願搬遷到新的地理區域，以及在確定現有租賃辦公空間的潛在受讓人或轉租人或與其談判條款方面的困難。

 

我們的業務依賴批發分銷商和經銷商、零售商和其他營銷安排的表現，可能會受到分銷渠道和客戶表現不佳或其他中斷的不利影響。

 

我們依靠一個由鞏固客戶組成的分銷網絡。現有分銷渠道的任何中斷都可能對我們的運營結果、現金流和財務狀況產生不利影響。分銷商或零售商的合併或分銷商或其主要客戶之一的財務不穩定或違約可能會造成這種破壞。除了我們自己的銷售隊伍外，我們還通過各種第三方分銷商、代表和零售商提供我們的產品。我們的某些分銷商、代表或零售商也可能銷售與我們的產品競爭的其他產品。此外，一個或多個零售商可能會停止銷售我們的某些產品，減少我們產品的採購量和/或用我們競爭對手的產品替換我們的某些產品。對我們的一個或多個主要分銷商、代表或零售商的銷售損失或終止或大幅減少，我們的一個或多個分銷商、代表或零售商未能有效宣傳我們的產品，或這些分銷商、代表或零售商的財務或業務狀況發生變化，都可能對我們將產品推向市場的能力以及我們的運營結果、現金流和財務狀況產生不利影響。

 

快速發展的技術變革和我們有效反應的能力可能會帶來巨大的競爭風險。

 

技術變革繼續快速推進。物聯網、5G數據網絡、人工智能、數據分析、3D打印、機器人技術、數據存儲、自動化技術和增強現實等新技術的創建、開發、進步和實施已經影響並可能繼續影響我們的流程、產品和服務。

 

我們持續評估我們認爲適用於我們業務的新興技術，以便有可能將其整合到我們當前和未來的產品、服務、流程和運營中。將任何此類新技術整合到我們的業務中還可能需要開發新流程，包括旨在監督此類新技術實施的流程。將任何此類新技術整合到我們的業務中，即使成功，也可能需要大量的財務和運營資源。如果我們未能與同行競爭，將這些或其他新技術有效地整合到我們的業務中，或者未能防範新競爭對手使用此類技術擾亂我們的業務，此類失敗可能會對我們的業務和運營業績產生不利影響。

 

8

 

運營和採購風險

 

與我們提高組織生產力以及全球供應鏈效率和靈活性的能力相關的風險可能會對我們的運營業績、現金流和財務狀況產生不利影響。

 

如果我們無法及時或以具有成本效益的價格獲得滿足我們規格的足夠零部件或原材料，或者如果我們遇到其他製造、供應或分銷困難，我們的業務和運營業績可能會受到不利影響。 我們從不同國家/地區的許多供應商和供應商處購買零部件和原材料。我們努力確保零部件和材料的連續性和質量，並努力實現某些零部件和材料來源的多樣化，但我們無法保證這些努力會成功。供應減少或中斷或供應鏈出現問題，包括由於我們無法快速開發可接受的替代供應來源而導致的，可能會對我們及時或具有成本效益的方式製造、分銷和銷售產品的能力產生不利影響。

我們定期評估我們的組織生產力和全球供應鏈，並評估提高產能、降低成本和提高質量的機會。我們可能無法提高質量、速度和靈活性，以適應不斷變化和不確定的市場狀況，以及管理持續的成本通脹，包括工資、養老金和醫療成本。我們的成功在一定程度上取決於完善我們的成本結構和供應鏈，以促進一致的靈活和低成本供應鏈，這些供應鏈能夠對市場變化做出反應，以保護盈利能力和現金流，或快速有效地提高產量，以滿足日益增長的需求。供應鏈中斷可能會繼續影響我們及時採購必要組件和投入的能力。進口關稅，包括最近美國對中國、加拿大和墨西哥等國徵收或威脅徵收的關稅，以及這些國家採取的任何報復行動，都可能導致對我們業務至關重要的原材料或零部件價格進一步上漲。未能達到預期的質量、產能或成本削減水平可能會損害我們的運營結果、現金流和財務狀況。

 

與全球大宗商品和能源供應以及價格波動相關的風險，以及持續通脹的可能性，可能會對我們的經營業績、現金流和財務狀況產生不利影響。

 

我們面臨着與以下因素有關的風險：供應條件受限或不均衡引起的全球大宗商品價格波動、新興市場需求的持續擴大和波動、可能不穩定的地緣政治和經濟變量、惡劣天氣和其他不可預測的外部因素。我們購買含有木材等商品的原材料，以及樹脂、黃銅、鋅、鋼、鋁和玻璃等以石油爲基礎的產品。此外，我們的分銷成本受到石油和柴油價格的重大影響，而油價和柴油價格又受到一些宏觀經濟和地緣政治因素的影響。這些商品的供應減少、價格上漲或波動，以及製造、分銷和運輸我們產品所用的能源，都可能增加我們產品的成本。我們一直並可能繼續受到短期供應、勞動力和貨運限制、動盪的全球供應鏈環境以及持續上升的通貨膨脹率、波動的利率、不利的外匯匯率波動和新的、持續的、擴大的或報復性關稅的影響，所有這些都增加了，並可能進一步增加我們的成本。雖然在過去，我們能夠通過提高生產率和隨着時間的推移將增加的成本轉嫁給我們的客戶來緩解這些成本增加的影響，但不能保證我們將來能夠抵消這種成本增加，而且潛在的高通脹風險可能會對我們的運營業績、現金流和財務狀況產生不利影響。雖然我們可能會使用衍生品合約來限制我們對大宗商品價格波動的短期敞口，但這些合約下的大宗商品敞口仍可能對我們的運營業績、現金流和財務狀況產生重大影響。此外，在大宗商品價格下跌期間，這些衍生品合約可能會產生短期效果，增加我們在這些原材料上的支出。

 

9

 

我們使用的信息技術系統和計算機網絡以及第三方信息技術系統和計算機網絡可能會出現延遲或中斷。我們可能會受到我們的信息技術系統被破壞、我們使用的第三方信息技術系統被破壞或其他網絡安全事件的影響，這可能會損害我們的聲譽和消費者關係。我們的信息技術系統或我們使用的第三方信息技術系統的故障以及加強信息安全監管的成本也可能使我們承擔重大的財務、法律和運營後果。

 

與大多數公司一樣，我們曾經經歷過並可能在未來遭受由系統更新、自然災害、惡意攻擊、事故、電力中斷、電信故障、恐怖主義行爲或戰爭、計算機病毒、物理或電子闖入或類似事件或中斷引起的延遲或中斷造成的信息技術系統故障和網絡中斷。我們依賴信息技術系統和基礎設施（包括第三方提供的支持）來支持我們的業務、產品和客戶，並且還受到與我們第三方服務提供商的信息技術系統和基礎設施相關的系統故障和網絡中斷的影響。

 

例如，我們經常依賴製造、客戶和供應商訂單、運輸、合規、財務、公司運營、研發和各種其他事項的系統，以及信息技術系統和基礎設施來幫助我們收集、使用、存儲和傳輸數據，以及對機密、商業、金融和個人信息進行其他處理。包括網絡攻擊、安全漏洞、停電、系統故障、惡意軟件、勒索軟件、蠕蟲、特洛伊木馬、間諜軟件、廣告軟件、流氓軟件等攻擊在內的安全威脅正變得日益複雜、頻繁和適應性，這增加了檢測和成功防禦它們的難度。我們依賴的第三方系統也容易受到同樣的安全威脅，可能包含設計或製造方面的缺陷或其他問題，這些缺陷在過去和未來都會導致系統中斷，影響我們的運營或損害我們自己系統的信息安全。此類安全威脅，取決於其性質和範圍，可能會導致關鍵數據和機密或專有信息(我們或第三方的)被挪用、破壞、腐敗或不可用，並擾亂我們的業務運營或我們所依賴的第三方的業務運營。重大網絡安全事件或其他重大系統中斷的潛在後果及其影響包括財務損失、業務中斷、聲譽損害、訴訟或監管行動、知識產權被盜、政府機構徵收罰款、我們在研發和工程方面的投資價值縮水，以及由於威脅的日益複雜和擴散而增加的網絡安全保護和補救成本，這反過來可能對我們的競爭力和運營結果產生不利影響。雖然我們承保網絡保險，但我們不能確定承保範圍是否足以彌補實際發生的責任，不能確定我們將繼續以經濟上合理的條款獲得保險，或者根本不能確定任何保險公司不會拒絕承保任何未來的索賠。人工智能的擴散和進步可能會加劇這些風險。

 

我們繼續尋求更多的投資，聘請第三方專家和顧問，改善我們設施和系統的安全性(包括通過升級我們的安全和信息技術系統)，以及對員工進行培訓。我們還定期評估相關保險覆蓋範圍的持續適當性，以及我們監測、緩解和適當應對這些威脅的控制和程序的力度。我們的企業可能會實施數字系統和技術、企業資源規劃系統或新的應用程序，以取代過時的系統並提高運營效率，但我們可能無法在不遇到困難的情況下成功實施這些項目，可能無法實現預期效益，或者實施成本可能超過實現的效益。我們相信，我們在網絡安全、數據加密和其他安全措施上投入了適當的資源，以保護我們的系統和數據，但這些安全措施不能提供絕對的安全性。影響我們的信息技術系統或受保護數據的實際或預期的違規和故障，包括外部行爲者或員工的錯誤或違規行爲，可能會對我們的業務戰略、運營結果、現金流、財務狀況、聲譽和消費者關係產生不利影響。

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此外，與招攬、信息安全、收集和數據隱私相關的國內和國際監管環境日益嚴格和複雜，我們的業務適用於新的且快速變化的要求，這些要求有時相互矛盾，並且可能需要改變我們的業務實踐。遵守這些要求，包括歐盟《一般數據保護條例》、《加州隱私權法》、《中華人民共和國個人信息保護法》以及其他國際和國內法規，已經並可能繼續導致我們的業務運營額外的成本和複雜性。與違反任何相關法律或法規相關的任何重大責任也可能對我們的業務、運營業績、現金流、財務狀況、聲譽和消費者關係產生不利影響。

 

我們在國際上製造、採購和銷售產品，並面臨與全球開展業務相關的風險，包括與不確定的貿易環境相關的風險。

 

我們在世界各地製造、採購或銷售我們的產品，主要是在美國、亞洲、加拿大、歐洲、墨西哥和非洲。因此，我們面臨的風險包括由政治、經濟和社會環境的變化造成的潛在中斷，包括戰爭、內亂和政治動亂、宣佈爲突發公共衛生事件的疾病(包括新冠肺炎等病毒性流行病)、恐怖主義、徵用、當地勞動條件、外國政府法律、法規和政策的變化、與美國的貿易爭端，以及影響美國公司海外活動的美國法律。我們可能會受到更高的製造成本和國際貿易法規的不利影響，包括關稅(包括最近美國對中國、加拿大和墨西哥等國徵收或威脅徵收的關稅以及這些國家採取的任何報復行動)、關稅和反傾銷處罰。國際運營固有的風險包括：潛在的不利稅法；與貿易協議或進口關稅有關的不利變化或不確定性；知識產權清理和執行方面的不確定性；與《反海外腐敗法》和其他反賄賂法律相關的風險；由於政治動態的變化而強制或自願關閉我們的設施或我們的供應商，這些變化可能導致交貨期延長、經濟政策或醫療緊急情況，以及執行合同或保護我們的知識產權的困難。雖然我們對某些外幣交易進行對沖，但當兌換成美元時，這些貨幣的價值變化將影響我們的財務報表。此外，貨幣波動可能會對我們產品以當地貨幣計算的成本狀況產生不利影響，使我們更難競爭。我們的成功將在一定程度上取決於我們能否通過這些潛在變化的影響有效地管理我們的業務。

 

運營中斷可能會對我們的運營業績、現金流和財務狀況產生不利影響。

 

我們銷售的產品中有很大一部分是我們製造的。我們的製造業務出現任何長期中斷，無論是由於技術或勞動力困難、持續的勞動力短缺、與運輸相關的短缺、供應鏈限制、天氣條件（包括由於氣候變化的影響，特別是對於任何海岸線附近或任何其他傳統上受極端天氣影響的地區的設施）、缺乏原材料或零部件可用性，新運營、網絡安全事件、任何設施的破壞、中斷或損壞，初創公司效率低下（由於自然災害、火災和爆炸、危險材料的使用和儲存或其他事件）或其他原因，可能對我們的盈利能力和競爭地位產生負面影響，並對我們的運營業績、現金流和財務狀況產生負面影響。

 

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我們無法以及時且具有成本效益的方式從供應商獲得原材料和成品，可能會對我們製造和營銷產品的能力產生不利影響。

 

我們購買原材料用於生產我們的產品，也依賴第三方製造商生產我們銷售的某些成品。我們通常不與我們的供應商或採購夥伴簽訂長期合同。相反，大多數原材料和來源商品是在「採購訂單」的基礎上獲得的。此外，在某些情況下，我們維持單一來源或有限來源來源關係，要麼是因爲多個來源不可用，要麼是由於性能、質量、支持、交付、能力或價格方面的考慮，這種關係是有利的。我們的供應商或採購合作伙伴遇到的財務、運營或其他困難，或我們與他們關係的變化，可能會導致製造或採購中斷、延誤和效率低下，並使我們無法制造或獲得滿足客戶需求所需的成品。如果我們無法滿足客戶需求，可能會對我們的運營結果、現金流和財務狀況產生不利影響。

 

與戰略收購、資產剝離和合資企業相關的風險可能會對我們的運營業績、現金流和財務狀況產生不利影響。

 

我們認爲收購、資產剝離和合資企業是提高股東價值的一種手段。收購、資產剝離和合資企業涉及風險和不確定性，包括難以整合被收購公司和經營合資企業；難以及時找到買家或以可接受的條件替代退出戰略，或以不如我們預期的價格或條款處置業務；以可接受的條件獲得任何必要的監管或政府批准以及因無法滿足完成前條件而造成的任何延誤的困難和成本；難以留住被收購企業的客戶；無法實現預期的財務結果以及交易的協同和其他好處；資產剝離對我們的收入增長和任何相關的非協同效應的影響；從被收購或被剝離的公司流失關鍵員工；實施和維持一致的標準、控制、政策和信息系統；繼續參與剝離的業務，例如通過繼續擁有股權、擔保、賠償、過渡服務或其他財務義務，以及將管理層的注意力和資源從其他業務和戰略事務上轉移。未來的收購可能會導致我們產生額外的債務或發行額外的股票，導致每股收益和資本回報率的稀釋。

 

Impairment charges could have a material adverse effect on the Company’s financial results.

 

Goodwill and other acquired intangible assets expected to contribute indefinitely to our cash flows are not amortized, but must be evaluated for impairment by management at least annually. If the carrying value exceeds the implied fair value of goodwill, the goodwill is considered impaired and is reduced to fair value via a non-cash charge to earnings. If the carrying value of an indefinite-lived intangible asset is greater than its fair value, the intangible asset is considered impaired and is reduced to fair value via a non-cash charge to earnings. Future events may occur that would adversely affect the fair value of our goodwill or other acquired intangible assets and require impairment charges. Such events may include, but are not limited to, lower than forecasted revenues, actual new construction and repair and remodel growth rates that fall below our assumptions, actions of key customers, increases in discount rates, continued economic uncertainty, higher levels of unemployment, weak consumer confidence, lower levels of discretionary consumer spending, a decrease in royalty rates and a decline in the trading price of our common stock. We continue to evaluate the impact of economic and other developments to assess whether impairment indicators are present. Accordingly, we may be required to perform impairment tests based on changes in the economic environment and other factors, and these tests could result in impairment charges in the future.

 

12

 

Our pension costs and funding requirements could increase as a result of volatility in the financial markets and changes in interest rates and actuarial assumptions.

 

Our costs of pension benefits may increase and negatively affect our business as a result of: the effect of potential declines in the stock and bond markets on the performance of our pension plan assets; potential reductions in the discount rate used to determine the present value of our benefit obligations; and changes to our investment strategy that may impact our expected return on pension plan assets assumptions. U.S. generally accepted accounting principles require that we calculate income or expense for the plans using actuarial valuations. These valuations reflect assumptions about financial markets and interest rates, which may change based on economic conditions. Our accounting policy for defined benefit plans may subject earnings to volatility due to the recognition of actuarial gains and losses, particularly due to the change in the fair value of pension assets and interest rates. Funding requirements for our U.S. pension plans may become more significant. However, the ultimate amounts to be contributed are dependent upon, among other things, interest rates, underlying asset returns and the impact of legislative or regulatory changes related to pension funding obligations.

 

Legal, Regulatory and People Risks

 

Our failure to attract and retain qualified personnel and other labor constraints could adversely affect our results of operations, cash flows and financial condition.

 

Our success depends in part on the efforts and abilities of qualified personnel at all levels, including our senior management team and other key employees. Their motivation, skills, experience, contacts and industry knowledge significantly benefit our operations and administration.

 

Low unemployment rates in the U.S., rising wages and competition for attracting and retaining qualified talent could result in the failure to attract, motivate and retain personnel. These challenges have resulted in higher employee costs, increased attrition and significant shifts in the labor market and employee expectations, and we may continue to face challenges in finding and retaining qualified personnel, particularly at the production level, which could have an adverse effect on our results of operations, cash flows and financial condition. In addition, our recently announced organizational and leadership changes could result in difficulty retaining key employees, including as a result of market pressures or a reluctance to relocate to a new geographic area.

 

Climate change and related impacts, including legislative and regulatory initiatives, could adversely affect our business and results of operations.

 

Concerns over the long-term effects of climate change have led to, and we expect will continue to lead to, governmental efforts around the world to mitigate those effects. The Company will need to respond to any new laws and regulations as well as to consumer, investor and business preferences resulting from climate change concerns and a broader societal transition to a lower-carbon economy, which may increase our operational complexity and result in costs to us in order to comply with any new laws, regulations or preferences. Further, the effects of climate change, including increasingly frequent and severe weather events, may negatively impact international, regional and local economic activity, which may lower demand for our products or disrupt our manufacturing or distribution operations. Overall, climate change, its effects and the resulting, unknown impact on government regulation, consumer, investor and business preferences could have a long-term material adverse effect on our business and results of operations.

There continues to be a lack of consistent climate legislation, which creates economic and regulatory uncertainty. Increased public awareness and concern regarding global climate change may result in more international, regional and/or federal requirements or other stakeholder expectations that could mandate more restrictive or expansive standards, more prescriptive reporting of environmental, social and governance metrics than the voluntary commitments we have adopted, or require related changes on a more accelerated time frame than we anticipate. If environmental laws or regulations are either changed or adopted and impose significant operational restrictions and compliance requirements on us, they may have a material adverse effect on our business, access to credit, capital expenditures, operating results and financial condition.

13

 

 

Potential liabilities and costs from claims and litigation could adversely affect our results of operations, cash flows and financial condition.

 

We are, from time to time, involved in various claims, litigation matters and regulatory proceedings that arise in the ordinary course of our business and that could have an adverse effect on us. These matters may include contract disputes, intellectual property disputes, product recalls, personal injury claims, construction defects and home warranty claims, warranty disputes, other types of consumer litigation, environmental claims or proceedings, other tort claims, employment and tax matters, and other proceedings and litigation, including class actions. Defending ourselves in these matters may be time-consuming, expensive and disruptive to normal business operations and may result in significant expense and a diversion of management's focus and attention from other business and strategic matters. It is not possible to predict the outcome of pending or future litigation, and, as with any litigation, it is possible that some of the actions could be decided unfavorably and could have an adverse effect on our results of operations, cash flows and financial condition. Such proceedings could also generate significant adverse publicity and have a negative impact on our reputation and brand image, regardless of the merit of the claims or the existence or amount of liability. Additionally, any amount that we may be required to pay to satisfy a judgment, settlement, fine or penalty may not be covered by insurance and for some matters, such as class actions, no insurance may be available on attractive terms.

We are also subject to product safety regulations, recalls and direct claims for product liability that can result in significant liability and, regardless of the ultimate outcome, can be costly to defend or injurious to our brand and reputation. As a result of the difficulty of controlling the quality of products or components sourced from other manufacturers, we are exposed to risks relating to the quality of such products and to limitations on our recourse against such suppliers.

 

Changes in government and industry regulatory standards could adversely affect our results of operations, cash flows and financial condition.

 

Government regulations and policies pertaining to trade agreements, health and safety (including protection of employees as well as consumers), taxes and environment (including those specific to climate change and the reduction of air and energy emissions) may continue to emerge in the U.S., as well as internationally. In particular, there may be additional tariffs or taxes related to our imported raw materials, components and finished goods. It is necessary for us to comply with current requirements (including requirements that do not become effective until a future date), and even more stringent requirements could be imposed on our products or processes in the future. Compliance with changes in taxes, tariffs and other regulations may require us to further alter our manufacturing and installation processes and our sourcing, and may increase the costs of our products. Such actions may result in customers transitioning to available competitive products; loss of market share; negative publicity; reputational damage; loss of customer confidence; or other negative consequences (including a decline in stock price) and could increase our capital expenditures and adversely impact our results of operations, cash flows and financial condition.

 

Future tax law changes or the interpretation of existing tax laws may materially impact our effective income tax rate, the resolution of unrecognized tax benefits and cash tax payments.

 

Our businesses are subject to taxation in the U.S., as well as internationally, including income tax, value-added tax and property tax. Our total tax expense could be affected by changes in tax rates in the jurisdictions in which our businesses are subject to taxation, changes in the valuation of deferred tax assets and liabilities, or changes in tax laws or the interpretation of such laws by tax authorities which may have a material impact on our financial results. In addition, we are routinely audited by tax authorities in many jurisdictions. Although we believe we record and accrue tax estimates that are reasonable and appropriate, these estimates are based on assumptions and require the exercise of significant judgment, and there are significant uncertainties in these estimates. As a result, the ultimate outcome from any audit could be materially different from amounts reflected in our income tax provisions and accruals. Future settlements of income tax audits may have a material adverse effect on earnings between the period of initial recognition of tax estimates in our financial statements and the point of ultimate tax audit settlement.

 

14

 

Our inability to secure and protect our intellectual property rights could negatively impact revenues and brand reputation.

 

We have many patents, trademarks, brand names, trade names and trade secrets that, in the aggregate, are important to our business. Unauthorized use of these intellectual property rights or other loss of our intellectual property competitive position may not only erode sales of our products but also cause us to incur substantial significant damage to our brand name and reputation, interfere with our ability to effectively represent the Company to our customers, contractors and suppliers, and increase litigation costs. There can be no assurance that our efforts to protect our intellectual property rights will prevent violations. In addition, existing patent, trade secret and trademark laws offer only limited protection, and the laws of some countries in which our products are or may be developed, manufactured or sold may not fully protect our intellectual property from infringement by others. There can be no assurance that our efforts to assess possible third-party intellectual property rights will ensure the Company’s ability to manufacture, distribute, market or sell in any given country or territory. Furthermore, others may assert intellectual property infringement claims against us or our customers, which may require us to incur significant expense to defend such litigation or indemnify our customers.

 

Environmental, social and governance matters may adversely impact our business and reputation.

 

In addition to the importance of their financial performance, companies are judged by their performance on a variety of environmental, social and governance (“ESG”) matters.

 

In light of the increased focus on and public debate surrounding ESG matters, there can be no certainty that we will manage such issues successfully, or that we will successfully meet stakeholder expectations as to our proper role. Any failure or perceived failure by us in this regard could adversely impact our business and reputation.

 

In addition, developing and acting on ESG initiatives, including collecting, measuring and reporting related data, can be costly, difficult and time consuming. Significant expenditures and commitment of time by management, employees and outside advisors is involved in developing, implementing and overseeing policies, practices and internal controls related to ESG risk management and performance, and we may undertake additional costs to control, assess and report on ESG metrics as the nature, scope and complexity of ESG reporting, diligence and disclosure requirements or expectations may continue to expand. Such costs may have an adverse impact our business and results of operations.

 

We also may face potential governmental enforcement actions, private litigation and other challenges or criticism challenging our ESG and sustainability goals, or our disclosure of those goals and our metrics for measuring achievement of them, which may increase our costs of compliance or adversely affect our reputation, business and results of operations.

 

Risks Related to the Separation of MasterBrand

The Separation may not achieve some or all of the benefits anticipated, and, following the Separation, our stock price may underperform relative to our expectations.

By completing the Separation of MasterBrand, the Company created two independent, publicly traded companies with the resources to enhance the long-term growth and return prospects and offer substantially greater long-term value to the stockholders, customers and employees of each company. Although we believe that the Separation will continue to provide financial, operational and other benefits to us and our stockholders, it may not ultimately provide such results on the scope or scale that we anticipate, and we may not realize the full strategic and financial benefits we expected. Failure to achieve these benefits could adversely impact our results of operations, cash flows, financial condition and stock price. We are now a smaller and less diversified business than before the Separation, and accordingly certain business and operational risks may be amplified by the Separation.

15

 

In connection with the Separation, the Company and MasterBrand have agreed to indemnify each other for certain liabilities. If we are required to indemnify MasterBrand, our financial results could be negatively impacted. Further, MasterBrand’s indemnities may not be sufficient to hold the Company harmless from the full amount of liabilities for which MasterBrand has been allocated responsibility, and MasterBrand may not be able to satisfy its indemnification obligations in the future.

Pursuant to the Separation and Distribution Agreement and certain other agreements between the Company and MasterBrand related to the Separation, each party has agreed to indemnify the other for certain liabilities, in each case for uncapped amounts. Indemnities that MasterBrand is required to provide to us are not subject to any cap and may be significant and could negatively impact our business. Third parties could also seek to hold us responsible for any of the liabilities that MasterBrand has agreed to retain. Any amounts that we may be required to pay pursuant to these indemnification obligations and other liabilities could require us to divert cash that would otherwise have been used in furtherance of our operating business. Further, the indemnities from MasterBrand for our benefit may not be sufficient to protect us against the full amount of such liabilities, and MasterBrand may not be able to fully satisfy its indemnification obligations.

Moreover, even if we ultimately succeed in recovering from MasterBrand any amounts for which we are held liable, we may be temporarily required to bear these losses. Each of these risks could negatively affect our results of operations, cash flows and financial condition.

If the Separation, together with certain related transactions, were to fail to qualify as tax-free for U.S. federal income tax purposes, then we and our stockholders could be subject to significant tax liability or tax indemnity obligations.

We received a private letter ruling from the Internal Revenue Service (the “IRS” and the “IRS Ruling”) and an opinion from Sidley Austin LLP (the “Sidley Opinion”), together, substantially to the effect that the spin-off and the Separation of MasterBrand will qualify as tax-free for U.S. federal income tax purposes under Section 355 of the U.S. Internal Revenue Code of 1986 (except for any stockholders that received cash in lieu of fractional shares of common stock).

Although a private letter ruling from the IRS is generally binding on the IRS, the IRS Ruling relied on certain facts, assumptions and representations from us and MasterBrand, including representations regarding the past and future conduct of our respective businesses. Moreover, the IRS Ruling is not a comprehensive ruling regarding all aspects of the U.S. federal income tax consequences of the Separation. The Sidley Opinion also relied on certain facts, assumptions and representations, as described therein, as well as the continued validity of the IRS Ruling. The Sidley Opinion is not binding on the IRS or the courts, and the IRS or the courts may not agree with such opinion.

Notwithstanding the IRS Ruling and the Sidley Opinion, the IRS could determine that the Separation should be treated as taxable if it determines that any of these facts, assumptions, or representations is not correct or has been violated or if it disagrees with the conclusions in the opinion that are not covered by the IRS Ruling, or for other reasons, including as a result of a significant change in stock or asset ownership after the Separation. If the Separation ultimately is determined to be taxable, the Company could recognize gains in an amount generally equal to the excess of the fair market value of the assets of MasterBrand (determined based on the fair market value of the common stock distributed to Fortune Brands' stockholders on the date of the Separation) over MasterBrand’s tax basis in such assets. In addition, the Company could recognize gains in an amount equal to the excess of the fair market value of the MasterBrand common stock distributed to Fortune Brands' stockholders on the date of the Separation over Fortune Brands’ tax basis in such MasterBrand common stock. Furthermore, Fortune Brands could incur significant tax indemnification obligations under the Tax Allocation Agreement related to the Separation.

16

 

Item 1B. Unresolved Staff Comments.

None.

Item 1C. Cybersecurity.

 

The Company has an enterprise-wide cybersecurity program that is informed by the U.S. Department of Commerce National Institute of Standards and Technology Cybersecurity Framework. Our cybersecurity program encompasses the following key capabilities: 24x7 security monitoring, next-generation network security, advanced email and endpoint security, a dedicated enterprise cybersecurity team, third-party managed security services, third-party security assessment services, incident response retainer services, and external risk monitoring services. The Company also maintains cybersecurity risk insurance coverage to defray the costs of potential information security breaches.

 

The Company maintains an incident response plan. Our incident response plan coordinates the actions we take to prepare for, detect, respond to, and recover from cybersecurity incidents, which include processes to triage, assess severity for, escalate, contain, investigate, and remediate the incident, as well as to address potentially applicable legal obligations and mitigate brand and reputational damage. Our incident response plan is updated as appropriate in response to changes within our organization or in response to external factors that may impact us. We test our incident response plan by conducting tabletop exercises on an annual basis.

 

Our associates receive annual cybersecurity training, and we conduct mock phishing campaigns to better enable our associates to recognize phishing emails and other social engineering tactics. We have established reporting processes for our associates if they encounter suspicious activity that may give rise to a cybersecurity incident.

Our cybersecurity risk management and strategy processes are led by our Chief Information Officer (“CIO”) and are supported by the Senior Director of Enterprise Cybersecurity. These individuals are also supported by both dedicated cybersecurity professionals and third-party security service providers. Our CIO is responsible for leading our technology organization across our global portfolio, which includes ERP, commercial, supply chain, and product development technologies, enterprise architecture, infrastructure, cyber security, technical operations, end-user services, and finance and human resources systems. Our current interim CIO has over 30 years of experience in information technology matters. Our Senior Director of Enterprise Cybersecurity has over 30 years of expanding leadership experience in information technology and 18 years of experience in information security leading and developing security programs. Our CIO provides regular updates on cybersecurity matters to our senior executives. In the event of a cybersecurity incident or incidents, our incident response plan includes detailed processes designed to ensure that information is triaged from our information technology management team to our CIO and to other members of our management team in a timely manner such that senior leadership can assure critical decision support and oversight and otherwise monitor the prevention, mitigation, detection, and remediation of cybersecurity incidents.

 

Cybersecurity-related risks are assessed as part of the enterprise risk management program. The Audit Committee is responsible for overseeing the Company’s enterprise risk management program. The Audit Committee also oversees the Company's information technology systems and controls, including the cybersecurity program and related risks. Annually, management assesses and ranks the risks identified through the enterprise risk management program according to the likelihood of occurrence and the potential monetary impact, which the Audit Committee reviews. Management also identifies and provides the Audit Committee with quarterly updates on these risks.

The CIO typically provides the Audit Committee with cybersecurity updates on a quarterly basis. During such updates, the CIO generally covers topics such as data security positions, results from third-party assessments, our incident response plan, and any material cybersecurity threats and developments. In 2024, the CIO reported to the full Board of Directors on the Company's cybersecurity programs and risk mitigation efforts.

17

 

As part of the above processes, we engage with assessors, consultants, auditors and other third parties, including by (i) engaging third-party managed security services to assist with the operation of certain aspects of our cybersecurity program, (ii) engaging security assessment services to provide assessments on our cybersecurity program, (iii) engaging an incident response retainer service to provide timely cyber incident response support and digital forensics analysis services, (iv) engaging risk monitoring services to help identify emerging cybersecurity risks, and (v) engaging with other information technology and legal subject matter experts to review our cybersecurity program to help identify areas for continued focus, improvement, and/or compliance.

 

Our processes also address cybersecurity threat risks associated with our use of third-party service providers, including risks to our customer, vendor, and employee data and our systems. We conduct due diligence of third parties’ information security programs, and cybersecurity considerations may inform our selection of third-party service providers. In certain circumstances, including in those where we believe a third party could introduce cybersecurity risk to us, we generally seek to contractually require such third parties to manage their cybersecurity risks in certain proscribed manners. We also receive the results of cybersecurity and data privacy audits conducted on certain vendors to determine if those vendors meet our cybersecurity standards.

We describe the risks that cybersecurity threats, including as a result of any previous cybersecurity incidents, pose to us that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition, under the heading “We may experience delays or outages in our information technology systems and computer networks and the third-party information technology systems and computer networks that we use. We may be subject to breaches of our information technology systems, the third-party information technology systems that we use or other cybersecurity incidents, which could damage our reputation and consumer relationships. Failures in our information technology systems or in the third-party information technology systems that we use and the costs of increasing information security regulation could also subject us to significant financial, legal and operational consequences" included as part of our risk factor disclosures under Item 1A of this Annual Report on Form 10-K, which disclosures are incorporated by reference herein. We have experienced, and will continue to experience, cybersecurity incidents in the normal course of our business. However, to our knowledge, we have not had any cybersecurity incidents in the past three years that have had a material adverse effect on our business, financial condition, results of operations, or cash flows.

Item 2. Properties.

Our principal executive office is located in Deerfield, Illinois. We operate 14 U.S. manufacturing facilities in 7 states and have 14 manufacturing facilities in international locations (4 in Mexico, 3 in Europe, 4 in Africa, 2 in Asia and 1 in Canada). In addition, we have 38 distribution centers and warehouses worldwide, of which 34 are leased. Some of our facilities are considered to be multi-use and have been included in more than one facility category. The following table provides additional information with respect to these properties.

 

Segment

 

Manufacturing
 Facilities

 

 

 

Distribution Centers
and Warehouses

 

 

 

Owned

 

 

Leased

 

 

Total

 

 

 

Owned

 

 

Leased

 

 

Total

 

Water

 

 

7

 

 

 

5

 

 

 

12

 

 

 

 

1

 

 

 

17

 

 

 

18

 

Outdoors

 

 

11

 

 

 

2

 

 

 

13

 

 

 

 

2

 

 

 

10

 

 

 

12

 

Security

 

 

3

 

 

 

—

 

 

 

3

 

 

 

 

1

 

 

 

7

 

 

 

8

 

Totals

 

 

21

 

 

 

7

 

 

 

28

 

 

 

 

4

 

 

 

34

 

 

 

38

 

 

We are of the opinion that the properties are suitable to our respective businesses and have production capacities adequate to meet the current needs of our businesses.

18

 

Item 3. Legal Proceedings.

The Company is a defendant in lawsuits that are ordinary, routine litigation matters incidental to its businesses. It is not possible to predict the outcome of the pending actions, and, as with any litigation, it is possible that these actions could be decided unfavorably to the Company. The Company believes that there are meritorious defenses to these actions and that these actions will not have a material adverse effect upon the Company’s results of operations, cash flows or financial condition, and, where appropriate, these actions are being vigorously contested. Accordingly, the Company believes the likelihood of material loss is remote.

 

Item 4. Mine Safety Disclosures.

Not applicable.

Information about our current Executive Officers

As of the date of this filing, our executive officers are:

 

Name

 

Age

 

Position

Nicholas I. Fink

 

50

 

Chief Executive Officer

David V. Barry

 

43

 

Executive Vice President and Chief Financial Officer and President, Security and Connected Products

Hiranda S. Donoghue

 

46

 

Executive Vice President, Chief Legal Officer & Corporate Secretary

John D. Lee

 

52

 

Executive Vice President, Chief Growth and Digital Officer

Matthew E. Novak

 

50

 

Executive Vice President and Chief Supply Chain Officer

Kristin E. Papesh

 

50

 

Executive Vice President and Chief Human Resources Officer

 

Nicholas I. Fink has served as Chief Executive Officer since January 2020. From March 2019 to January 2020, Mr. Fink served as President and Chief Operating Officer of Fortune Brands. From July 2016 to March 2019, Mr. Fink served as President of the Company’s Water Innovations business.

David V. Barry has served as Executive Vice President and Chief Financial Officer since March 2023 and as President, Security and Connected Products, since January 2025. Mr. Barry will continue in his role as Executive Vice President and Chief Financial Officer until a new Chief Financial Officer is appointed. He also served as the Company's principal accounting officer from January 29, 2024 until March 1, 2024. From April 2021 to March 2023, Mr. Barry served as Senior Vice President of Finance and Investor Relations. From 2017 to 2021, he was Chief Financial Officer and Senior Vice President for the Water Innovations segment.

Hiranda S. Donoghue has served as Executive Vice President, Chief Legal Officer & Corporate Secretary of Fortune Brands since December 2021. Ms. Donoghue served as Vice President & Deputy General Counsel of Baxter International Inc., a healthcare company, from November 2018 to December 2021. Prior to that, Ms. Donoghue held various positions as a legal advisor at Walgreen Co., including most recently as Vice President, Corporate and M&A Legal.

John D. Lee has served as Executive Vice President, Chief Growth and Digital Officer of Fortune Brands since May 2023. From January 2020 to May 2023, Mr. Lee served as Executive Vice President, Chief Strategy & Global Growth Officer. Mr. Lee served as Senior Vice President, Global Growth & Development of the Water Innovations segment from July 2016 to January 2020.

Matthew E. Novak has served as Executive Vice President and Chief Supply Chain Officer of Fortune Brands since February 2025. Mr. Novak served as Vice President, Global Logistics and Customer Service from October 2022 to February 2025. From January 2020 to October 2022, Mr. Novak served as Vice President, Global Distribution and Transportation for the Water Innovations business. Prior to that, Mr. Novak held various positions at GE Lighting, including most recently as General Manager, Distribution and Transportation.

Kristin E. Papesh has served as Executive Vice President and Chief Human Resources Officer of Fortune Brands since November 2023. Prior to that, Ms. Papesh held various positions at retail pharmacy Walgreens Boots Alliance from March 2021 to November 2023, including most recently as Senior Vice President, HR Business Partnering from July 2022 to November 2023. Prior to that, she served in various roles at Pfizer Inc., a research-based, global biopharmaceutical company, from September 2015 to March 2021, including most recently as the Vice President of Human Resources from November 2018 to March 2021.

19

 

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information, Dividends and Holders of Record

Our common stock is listed on the New York Stock Exchange under the ticker symbol “FBIN".

In December 2024, our Board of Directors announced a quarterly cash dividend payable to stockholders of $0.25 per share of our common stock. Our Board of Directors will continue to evaluate dividend payment opportunities on a quarterly basis. There can be no assurance as to when and if future dividends will be paid, or at what level, because the payment of dividends is dependent upon our financial condition, results of operations, capital requirements and other factors deemed relevant by our Board of Directors.

 

The source of our unconsolidated revenues and funds is dividends and other payments from our subsidiary businesses. Our subsidiaries are not limited by long-term debt or other agreements in their abilities to pay cash dividends or to make other distributions with respect to their capital stock or other payments to the Company.

On February 7, 2025, there were 6,745 record holders of the Company’s common stock, par value $0.01 per share. A substantially greater number of holders of the Company’s common stock are “street name” or beneficial holders, whose shares of record are held by banks, brokers or other financial institutions.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Below are the repurchases of common stock by the Company or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange Act) for the thirteen weeks ended December 28, 2024:

 

Thirteen Weeks Ended December 28, 2024

 

Total number of
shares purchased(a)

 

 

 

Average price
paid per share

 

 

 

Total number of
shares purchased
as part of publicly
announced plans
or programs(a)

 

 

 

Approximate dollar
value of shares that may
yet be purchased under
the plans or programs(a)

 

September 29 – October 26

 

 

—

 

 

 

$

—

 

 

 

 

—

 

 

 

$

534,394,909

 

October 27 – November 23

 

 

664,046

 

 

 

 

75.3

 

 

 

 

664,046

 

 

 

 

484,394,911

 

November 24 – December 28

 

 

—

 

 

 

 

—

 

 

 

 

—

 

 

 

 

484,394,911

 

Total

 

 

664,046

 

 

 

$

75.3

 

 

 

 

664,046

 

 

 

 

 

 

(a)
Information on the Company’s share repurchase program in effect during the period covered by the table above follows:

 

Authorization date

 

Announcement date

 

Authorization amount of shares
of outstanding common stock

 

Expiration date

January 29, 2024

 

January 29, 2024

 

$650,000,000

 

January 29, 2026

On February 7, 2025, the Company announced that on February 4, 2025, Company's Board of Directors authorized the repurchase of up to $1 billion of shares of the Company’s outstanding common stock over the next two years on the open market or in privately negotiated transactions or otherwise (including pursuant to a Rule 10b5-1 trading plan, block trades and accelerated share repurchase transactions), in accordance with applicable securities laws. The new $1 billion share repurchase authorization replaced the authorization described above, effective on February 4, 2025, that otherwise would have expired on January 29, 2026.

The new purchases, if made, will occur from time to time depending on market conditions. The newly announced share repurchase authorization does not obligate the Company to repurchase any dollar amount or number of shares of common stock. The authorization is in effect until February 4, 2027, and may be suspended or discontinued at any time.

 

20

 

Stock Performance

 

img17126035_0.jpg

 

The above graph compares the relative performance of our common stock, the S&P MidCap 400 Index and S&P MidCap 400 Consumer Durables Index. This graph covers the period from December 31, 2019 through December 28, 2024. This graph assumes $100 was invested in the stock or the index on December 31, 2019 and also assumes the reinvestment of dividends, including the effect of the Separation. The foregoing performance graph is being furnished as part of this Annual Report on Form 10-K solely in accordance with the requirement under Rule 14a-3(b)(9) to furnish our stockholders with such information, and therefore, shall not be deemed to be filed or incorporated by reference into any filings by the Company under the Securities Act or the Exchange Act.

 

Item 6. Reserved.

Not applicable.

21

 

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Introduction

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is a supplement to the accompanying consolidated financial statements and provides additional information on our business, recent developments, financial condition, liquidity and capital resources, cash flows and results of operations. MD&A is organized as follows:

•
Recent Developments: This section provides a summary of noteworthy recent developments in the most recently completed fiscal year in the operation of the business, including acquisition activity.
•
Overview: This section provides a general description of our business and a discussion of management’s general outlook regarding market demand, our competitive position and product innovation, as well as additional recent developments we believe are important to understanding our results of operations and financial condition or in understanding anticipated future trends.
•
Basis of Presentation: This section provides a discussion of the basis on which our consolidated financial statements were prepared.
•
Results of Operations: This section provides an analysis of our results of operations for the fiscal years ended December 28, 2024, December 30, 2023 and December 31, 2022.
•
Liquidity and Capital Resources: This section provides a discussion of our financial condition as of December 28, 2024 and an analysis of our cash flows for each of the three years ended December 28, 2024, December 30, 2023 and December 31, 2022. This section also provides a discussion of our contractual obligations, other purchase commitments and customer credit risk that existed at December 28, 2024, as well as a discussion of our ability to fund our future commitments and ongoing operating activities through internal and external sources of capital.
•
Critical Accounting Estimates: This section identifies and summarizes those accounting policies that significantly impact our reported results of operations and financial condition and require significant judgment or estimates on the part of management in their application.

Recent Developments

On February 29, 2024, we acquired 100% of the outstanding equity of Wise Water Solutions LLC., doing business as SpringWell Water Filtration Systems ("SpringWell"), for a purchase price of $105.6 million, subject to post-closing adjustments, net of cash acquired of $1.4 million. We financed the transaction using cash on hand and borrowings under our existing credit arrangements. The results of SpringWell are reported as part of the Water segment. We have not included pro forma financial information as the transaction is immaterial to our condensed consolidated statements of comprehensive income. The fair value allocated to assets acquired and liabilities assumed as of February 29, 2024, was $105.6 million, which includes $85.2 million of goodwill. Goodwill includes expected sales and cost synergies and is expected to be deductible for income tax purposes.

Overview

The Company is a leading innovation company focused on creating smarter, safer and more beautiful homes and lives that is focused on the design, manufacture and sale of market-leading branded products in the following categories: plumbing and accessories, including digital water products, entry door and storm door systems, security and safety products, and outdoor performance materials used in decking and railing products.

22

 

For the year ended December 28, 2024, net sales based on country of destination were:

 

(In millions)

 

 

 

 

 

 

United States

 

$

3,809.0

 

 

 

83

%

Canada

 

 

344.5

 

 

7

 

China

 

 

233.6

 

 

5

 

Other international

 

 

221.9

 

 

5

 

Total

 

$

4,609.0

 

 

 

100

%

 

We believe that the Company has certain competitive advantages including market-leading brands, a diversified mix of channels, lean and flexible supply chains and a strong capital structure, as well as a tradition of strong innovation and customer service. We are focused on outperforming our markets in growth, profitability and returns in order to drive increased stockholder value. We believe the Company’s track record reflects the long-term attractiveness and potential of the categories we serve and our leading brands. We believe the long-term outlook for our products remains favorable, and we have a number of strategic advantages, including the set of capabilities we refer to as the Fortune Brands Advantage, that has helped us to continue to achieve profitable organic growth over time.

We continue to believe our most attractive opportunities are to invest in profitable organic growth initiatives, pursue accretive strategic acquisitions, non-controlling equity investments, and joint ventures, and return cash to stockholders through a combination of dividends and repurchases of shares of our common stock under our share repurchase program as explained in further detail under “Liquidity and Capital Resources” below.

 

The U.S. market for our products primarily consists of spending on both new home construction and repair and remodel activities within existing homes, with a substantial majority of the markets we serve consisting of repair and remodel spending. Growth in the U.S. market for our home products will largely depend on consumer confidence, employment, wage growth, home prices, equity levels and rates of extraction, stable mortgage rates and credit availability. Increases in inflation and mortgage rates during the preceding years have slowed the pace of single-family and existing home sales activity and new home construction and repair and remodel activities. However, we believe we are well positioned to manage the continued slow-down in the housing market as we believe the fundamental drivers of the housing market remain intact.

 

We have been and may continue to be impacted by near-term supply, labor and freight constraints, a volatile geopolitical environment, as well as sustained elevated rates of inflation, fluctuating interest rates, unfavorable fluctuations in foreign exchange rates and the ongoing and potentially worsening costs of tariffs (including recent U.S. tariffs imposed or threatened to be imposed on China, Canada and Mexico and other countries and any retaliatory actions taken by such countries). We continue to manage these challenges and are diligently working to offset potential unfavorable impacts of these items through continuous productivity improvement initiatives and price increases.

 

During the three fiscal years ended December 28, 2024, our net sales declined at a compounded annual rate of 1.4% reflecting the contraction of the U.S. home products market and a decline in demand in our international markets, partially offset by an increase in sales resulting from acquisitions. Operating income grew at a compounded annual rate of 9.1% with consolidated operating margins ranging between 16% and 17% from 2022 to 2024. Growth in operating income over this period was primarily due to changes to our portfolio of businesses, control over our operating expenses and the benefits of manufacturing productivity programs.

23

 

During 2024, the U.S. home products market was relatively flat overall as an increase in new home construction activity was mostly offset by a decrease in repair and remodel activity. We believe new housing construction activity increased approximately 7% and spending for home repair and remodeling decreased approximately 3% in 2024 compared to 2023. In 2024, the Company's net sales declined 0.4% due to lower sales in our international markets ($136.7 million), higher customer sales incentives and unfavorable foreign exchange ($6.9 million), partially offset by the benefit from the acquisitions of Springwell and the Emtek and Schaub premium and luxury door and cabinet hardware business (the "Emtek and Schaub Business") and the U.S. and Canadian Yale and August residential smart locks business (the "Yale and August Business", and, collectively with the Emtek and Schaub Business, the "Acquired Businesses") from ASSA ABLOY, Inc. and its affiliates ("ASSA") ($175.5 million). In 2024, operating income increased 20.0% over 2023 primarily due to the impacts of the acquisitions of SpringWell and the Acquired Businesses, raw material cost deflation, lower transportation costs, lower restructuring charges and productivity improvements in all of our segments as a result of strategic sourcing initiatives and manufacturing efficiencies as well as the absence of the 2023 asset impairment charge ($33.5 million). These factors were partially offset by increased intangible amortization expense as a result of the acquisitions of SpringWell and the Acquired Businesses ($11.4 million), higher customer sales incentives, higher advertising and marketing costs, higher headcount related costs and higher distribution expenses.

Basis of Presentation

The consolidated financial statements in this Annual Report on Form 10-K have been derived from the accounts of the Company and its wholly-owned subsidiaries. Effective January 1, 2023, the Company changed its fiscal year end from December 31 to a 52- or 53-week fiscal year closing on the Saturday closest but not subsequent to December 31 of each year. The following discussion contains references to years 2024, 2023 and 2022, which represent fiscal years ended December 28, 2024, December 30, 2023 and December 31, 2022.

Results of Operations

 

The discussion of consolidated results of operations should be read in conjunction with the discussion of segment results of operations and our financial statements and notes thereto included in this Annual Report on Form 10-K. As a result of the Separation, our former Cabinets segment was disposed of, and the operating results of the Cabinets business are reported as discontinued operations in 2022. All amounts, percentages and disclosures for all periods presented reflect only the continuing operations of the Company unless otherwise noted. See Note 5, "Discontinued Operations," of the Notes in the consolidated financial statements in Item 8 in this Annual Report on Form 10-K for additional information.

 

(In millions)

 

2024

 

 

% change

 

 

2023

 

 

% change

 

 

2022

 

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Water

 

$

2,564.6

 

 

 

0.1

%

 

$

2,562.2

 

 

 

(0.3

)%

 

$

2,570.2

 

Outdoors

 

 

1,350.1

 

 

 

0.7

 

 

 

1,341.1

 

 

 

(11.6

)

 

 

1,517.4

 

Security

 

 

694.3

 

 

 

(4.0

)

 

 

722.9

 

 

 

13.8

 

 

 

635.4

 

Total net sales

 

$

4,609.0

 

 

 

(0.4

)%

 

$

4,626.2

 

 

 

(2.0

)%

 

$

4,723.0

 

Operating income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Water

 

$

595.1

 

 

 

3.6

%

 

$

574.3

 

 

 

(6.6

)%

 

$

614.6

 

Outdoors

 

 

198.0

 

 

 

48.3

 

 

 

133.5

 

 

 

(31.3

)

 

 

194.2

 

Security

 

 

100.4

 

 

 

60.9

 

 

 

62.4

 

 

 

(34.6

)

 

 

95.4

 

Corporate

 

 

(155.6

)

 

 

0.2

 

 

 

(155.3

)

 

 

19.6

 

 

 

(129.9

)

Total operating income

 

$

737.9

 

 

 

20.0

%

 

$

614.9

 

 

 

(20.6

)%

 

$

774.3

 

 

Certain items had a significant impact on our results in 2024, 2023 and 2022. These included restructuring and other charges, asset impairment charges, transaction expenses and the impact of changes in foreign currency exchange rates.

24

 

In 2024, financial results included:

•
restructuring and other charges of $41.3 million largely related to costs associated with a product line rationalization within our Outdoors segment, the previously announced closure of a manufacturing facility within our Security segment and headcount actions across all segments; and
•
the impact of foreign exchange primarily due to movement in the Canadian dollar, Mexican peso, British pound and Chinese yuan, which had an unfavorable impact compared to 2023 of approximately $7 million on net sales and approximately $2 million on both operating income and net income.

In 2023, financial results included:

•
restructuring and other charges of $54.2 million largely related to costs associated with the closure of a manufacturing facility within our Security segment and headcount actions across all segments;
•
asset impairment charges of $33.5 million related to the impairment of two indefinite-lived tradenames within our Outdoors segment, which were primarily the result of a decline in forecasted sales;
•
the impact of foreign exchange primarily due to movement in the Canadian dollar, Mexican peso, British pound and Chinese yuan, which had an unfavorable impact compared to 2022 of approximately $24 million on net sales and approximately $7.9 million on both operating income and net income; and
•
transaction expenses related to the acquisition of the Acquired Businesses of $19.7 million.

In 2022, financial results included:

•
restructuring and other charges of $26.8 million largely related to severance, asset impairment and other costs associated with plant closures and headcount actions across all segments, net of a gain on the sale of a previously closed manufacturing facility within our Outdoors segment of approximately $6 million; and
•
the impact of foreign exchange primarily due to movement in the Canadian dollar, Mexican peso, British pound and Chinese yuan, which had an unfavorable impact compared to 2021 of approximately $41 million on net sales and approximately $12 million on both operating income and net income.

2024 Compared to 2023

Total Fortune Brands

Net sales

Net sales decreased by $17.2 million, or 0.4%, primarily due to lower sales in our international markets ($136.7 million), higher customer sales incentives and unfavorable foreign exchange ($6.9 million), partially offset by the benefit from the acquisitions of SpringWell and the Acquired Businesses ($176.5 million).

Cost of products sold

Cost of products sold decreased by $172.1 million, or 6.3%, primarily due to raw material deflation, lower transportation costs and productivity improvements in all of our segments as a result of strategic sourcing initiatives and manufacturing efficiencies. These factors were partially offset by the impact of the acquisitions of SpringWell and the Acquired Businesses.

Selling, general and administrative expenses

Selling, general and administrative expenses increased by $70.7 million, or 6.1%, primarily due to the acquisitions of SpringWell and the Acquired Businesses, higher advertising and marketing costs, higher headcount-related costs and higher distribution expenses.

 

Amortization of intangible assets

 

Amortization of intangible assets increased by $11.0 million, primarily due to the acquisitions of SpringWell and the Acquired Businesses.

 

25

 

Restructuring charges

Restructuring charges of $16.2 million in 2024 are largely related to a product-line rationalization within our Outdoors segment, the previously announced closure of a manufacturing facility within our Security segment, and headcount actions across all segments. Restructuring charges of $32.5 million in 2023 are largely related to costs associated with the closure of the same manufacturing facility within our Security segment and headcount actions across all segments.

Operating income

Operating income increased by $123.0 million, or 20.0%, primarily due to the impacts of the acquisitions of SpringWell and the Acquired Businesses, raw material cost deflation, lower transportation costs, lower restructuring charges and productivity improvements in all of our segments as a result of strategic sourcing initiatives and manufacturing efficiencies as well as the absence of the 2023 asset impairment charges of $33.5 million. These factors were partially offset by increased intangible amortization expense as a result of the acquisitions of SpringWell and the Acquired Businesses ($11.4 million), higher customer sales incentives, higher advertising and marketing costs, higher headcount related costs and higher distribution expenses.

Interest expense

Interest expense increased by $4.0 million, or 3.4%, primarily due to higher floating rate debt borrowings in 2024 and higher fixed rate debt interest rates with the issuance of the $600 million outstanding principal amount of 5.875% Senior Notes due in June 2033 relative to the maturity and settlement of the $600 million outstanding principal amount of 4.000% Senior Notes due in September 2023.

Other expense (income), net

Other expense (income), net, was expense of $11.9 million in 2024, compared to income of $19.5 million in 2023. The decrease in other income, net is primarily due to higher net periodic benefit expense, a decrease in foreign currency transaction income and lower interest income.

Income taxes

 

The 2024 effective income tax rate was unfavorably impacted by state and local income taxes, foreign income taxed at higher rates, as well as non-deductible executive compensation, partially offset by favorable benefits related to a valuation allowance release and decreases in uncertain tax positions and tax credits.

 

The 2023 effective income tax rate was unfavorably impacted by state and local income taxes and foreign income taxed at higher rates. This expense was offset by favorable benefits for the release of uncertain tax positions of statute of limitations lapses and federal tax credits.

Income from continuing operations, net of tax

Income from continuing operations, net of income taxes, increased by $66.4 million, or 16.4%, due to higher operating income, partly offset by higher interest expense, higher income tax expense and lower other income, net.

26

 

Results By Segment

Water

Net sales increased by $2.4 million, or 0.1%, primarily due to the benefit from the acquisitions of SpringWell and the Emtek and Schaub Business ($152.5 million), partially offset by lower organic sales volume (including sales volume declines within our China business of approximately $100.5 million), higher customer sales incentives and unfavorable foreign exchange ($6.0 million).

Operating income increased by $20.8 million, or 3.6%, primarily due to the benefit from the acquisitions of SpringWell and the Emtek and Schaub Business, productivity improvements as a result of strategic sourcing initiatives and manufacturing efficiencies, lower transportation costs and raw material cost deflation. These factors were partially offset by increased asset intangible amortization expense due to the impact of the acquisitions of SpringWell and the Emtek and Schaub Business ($11.1 million) and higher headcount related costs.
 

Outdoors

Net sales increased by $9.0 million, or 0.7%, primarily due to higher sales unit volume, partially offset by higher customer sales incentives and unfavorable channel mix.

Operating income increased by $64.5 million, or 48.3%, primarily due to the higher sales unit volume, raw material cost deflation and productivity improvements as a result of strategic sourcing initiatives and manufacturing efficiencies, partially offset by higher headcount related costs.

Security

Net sales decreased by $28.6 million, or 4.0%, primarily due to lower sales unit volume and higher customer sales incentives, partially offset by the benefit from the acquisition of the Yale and August Business (approximately $24.0 million).

Operating income increased by $38.0 million, or 60.9%, primarily due to lower restructuring charges, the benefit from the acquisition of the Yale and August Business, and productivity improvements as a result of strategic sourcing initiatives and manufacturing efficiencies, partially offset by the lower sales unit volume.

Corporate

Corporate expenses increased by $0.3 million, or 0.2%, primarily due higher headcount related costs and costs related to our digital transformation efforts being mostly offset by a gain on the sale of Corporate fixed assets and the absence in the current period of nonrecurring costs related to the acquisition of the Acquired Businesses.

27

 

2023 Compared to 2022

Total Fortune Brands

Net sales

 

Net sales decreased by $96.8 million, or 2.0%, due to lower sales unit volume in the U.S. and lower sales in our international markets ($41.2 million) as well as unfavorable foreign exchange of approximately $24 million. These factors were partially offset by the benefit from the acquisitions of the Acquired Businesses in June 2023 and Aqualisa Holdings (International) Ltd. ("Aqualisa") in July 2022 (approximately $247 million combined sales benefit in 2023) and favorable channel mix.

Cost of products sold

Cost of products sold decreased by $75.3 million, or 2.7%, due to lower sales volumes and productivity improvements in all of our segments. These factors were partially offset by the impact from the acquisitions of the Acquired Businesses in June 2023, including amortization of the inventory fair value adjustment ($12.4 million) and Aqualisa in July 2022, manufacturing inefficiencies related to lower sales unit volume across all of our businesses, costs associated with the planned closure of a manufacturing facility within our Security segment and the absence of the $6.2 million gain on sale of a previously closed manufacturing facility in our Outdoors segment in 2022.

Selling, general and administrative expenses

Selling, general and administrative expenses increased by $90.5 million, or 8.4%, due to the impact from the acquisition of the Acquired Businesses, including transaction related expenses of $19.7 million, and higher headcount-related costs across our segments. These factors were partially offset by savings associated with our 2022 corporate reorganization and restructuring activities and lower advertising and marketing costs.

 

Amortization of intangible assets

Amortization of intangible assets increased by $13.8 million, primarily due to the acquisition of the Acquired Businesses in June 2023 and Aqualisa in July 2022.

Asset impairment charges

Asset impairment charges of $33.5 million in 2023 related to two indefinite-lived tradenames within our Outdoors business.

Restructuring charges

Restructuring charges of $32.5 million in 2023 are largely related to costs associated with the planned closure of a manufacturing facility within our Security segment and headcount actions across all segments. Restructuring charges of $32.4 million in 2022 were largely related to severance costs associated with the relocation of manufacturing facilities in the Outdoors segment and headcount actions across all segments.

Operating income

Operating income decreased by $159.4 million, or 20.6%, primarily due to lower sales unit volume in the U.S., lower international sales ($41.2 million decrease), manufacturing inefficiencies related to lower sales unit volume, amortization of the inventory fair-value adjustment related to the acquisition of the Acquired Businesses ($12.4 million), higher restructuring and other costs associated with the planned closure of a manufacturing facility in our Security segment, higher headcount-related costs, as well as unfavorable foreign exchange of approximately $7.9 million. These factors were partially offset by the benefit from the acquisition of the Acquired Businesses, productivity improvements, savings associated with our 2022 corporate reorganization and restructuring activities and lower advertising and marketing costs.

28

 

Interest expense

Interest expense decreased by $2.7 million, or 2.3%, due to lower interest expense incurred on floating rate debt, partially offset higher interest expense on fixed rate debt.

Other expense (income), net

Other expense (income), net, was income of $19.5 million in 2023, compared to income of $12.0 million in 2022. The increase in other income, net is primarily due to an increase in interest income ($8.4 million increase) and foreign currency transaction income, partially offset by a decrease in defined benefit plan income.

Income taxes

The 2023 effective income tax rate was unfavorably impacted by state and local income taxes and foreign income taxed at higher rates. This expense was offset by favorable benefits for the release of uncertain tax positions of statute of limitations lapses and federal tax credits.

The 2022 effective income tax rate was unfavorably impacted by state and local income taxes, foreign income taxed at higher rates, as well as non-deductible executive compensation. This expense was offset by favorable benefits for the release of certain uncertain tax positions, primarily related to audit closures and statute of limitations lapses, share-based compensation, and a valuation allowance decrease.

Income from continuing operations, net of tax

Income from continuing operations, net of income taxes, decreased by $134.4 million, or 24.9%, due to lower operating income, partly offset by lower income tax expense, lower interest expense and higher other income.

Income from discontinued operations, net of tax

Income from discontinued operations, net of income taxes, for the year ended December 31, 2022 was $146.8 million and includes the results from operations of our former Cabinets segment. Refer to Note 5, "Discontinued Operations," of the Notes to the consolidated financial statements in Item 8 in this Annual Report on Form 10-K for additional details.

Results By Segment

Water

Net sales decreased by $8.0 million, or 0.3%, due to lower organic sales unit volume in the U.S., lower international sales, higher customer sales incentives and unfavorable foreign exchange of approximately $24.4 million. These factors were partially offset by the benefit from the acquisition of the Emtek and Schaub Business in June 2023 and Aqualisa in July 2022 (approximately $166 million of combined sales benefit).

Operating income decreased by $40.3 million, or 6.6%, due to lower net sales, costs associated with manufacturing inefficiencies related to the lower sales unit volume, the amortization of the Emtek and Schaub Business inventory fair value adjustment ($3.5 million) and unfavorable foreign exchange of approximately $5.8 million. These factors were partially offset by the benefit from the acquisition of the Emtek and Schaub Business and Aqualisa, productivity improvements and lower advertising and marketing costs.

Outdoors

Net sales decreased by $176.3 million, or 11.6%, due to lower sales unit volume of our doors and decking products. These were partially offset by the benefit from changes in product mix and lower customer sales incentives.

29

 

Operating income decreased by $60.7 million, or 31.3%, due to asset impairment charges related to two of our indefinite-lived tradenames ($33.5 million), lower net sales, the impact of costs associated with manufacturing inefficiencies related to lower sales unit volume, the absence of the 2022 gain of $6.2 million on the sale of a previously closed manufacturing facility and higher employee-related costs. These factors were partially offset by productivity improvements and cost savings resulting from the rationalization of certain of our production facilities during the second half of 2022.

Security

Net sales increased by $87.5 million, or 13.8%, due to the benefit from the acquisition of the Yale and August Business (approximately $81 million) and price increases to help mitigate the impact of cumulative commodity cost increases. These benefits were partially offset by lower sales unit volume.

Operating income decreased by $33.0 million, or 34.6%, due to restructuring costs and other charges associated with the planned closure of a manufacturing facility and the amortization of the Yale and August Business inventory fair value adjustment ($8.9 million), partially offset by higher net sales and manufacturing productivity improvements.

Corporate

Corporate expenses increased by $25.4 million, or 19.6%, due to costs related to the acquisition of the Acquired Businesses in June 2023 and higher headcount-related costs.

Liquidity and Capital Resources

Our principal sources of liquidity are cash on hand, cash flows from operating activities, cash borrowed under our credit facility and cash from debt issuances in the capital markets. On December 14, 2022, in connection with the completion of the Separation, we also received a one-time cash payment, in the form of a dividend, from MasterBrand in the amount of $940.0 million. Our operating income is generated by our subsidiary businesses. We believe our cash on hand, operating cash flows, funds available under the credit facility and access to capital markets, provide sufficient liquidity to support the Company’s working capital requirements, capital expenditures, other contractual commitments and service of indebtedness, as well as to finance acquisitions, repurchase shares of our common stock and pay dividends to stockholders, as the Board of Directors deems appropriate, both for the 12-month period following the 2024 fiscal year, and in the long-term.

Our cash flows from operations, borrowing availability and overall liquidity are subject to certain risks and uncertainties, including those described in the section entitled “Item 1A. Risk Factors.” In addition, we cannot predict whether or when we may enter into acquisitions, joint ventures or dispositions, repurchase shares of our common stock under our share repurchase program or pay dividends, or what impact any such transactions could have on our results of operations, cash flows or financial condition, whether as a result of the issuance of debt or equity securities or otherwise.

 

Long-Term Debt

 

In September 2023, we repaid all $600 million in aggregate principal of our 2023 4.000% senior unsecured notes at their maturity date in September 2023 using cash on hand.

 

In June 2023, the Company issued $600 million in aggregate principal 5.875% senior unsecured notes maturing in 2033 in a registered public offering. The Company used the net proceeds from the notes offering to redeem its 2023 4.000% senior unsecured notes that matured in September 2023 and for general corporate purposes.

 

30

 

In March 2022, the Company issued $900 million in aggregate principal amount of senior unsecured notes in a registered public offering consisting of $450 million of 4.00% senior unsecured notes maturing in 2032 and $450 million of 4.50% senior unsecured notes maturing in 2052 (together, the “2022 Notes”). The Company used the net proceeds from the 2022 Notes offering to redeem a portion of the outstanding balance on the 2021 Term Loan (as defined below).

At December 28, 2024, the Company had aggregate outstanding notes in the principal amount of $2.7 billion, with varying maturities (the “Notes”). The Notes are unsecured senior obligations of the Company. The following table provides a summary of the Company’s outstanding Notes, including the carrying value of the Notes, net of underwriting commissions, price discounts and debt issuance costs as of December 28, 2024 and December 30, 2023:

 

 (in millions)

 

 

 

 

 

 

 

Net Carrying Value

 

Coupon Rate

Principal Amount

 

 

Issuance Date

 

Maturity Date

 

December 28, 2024

 

 

December 30, 2023

 

4.000% Senior Notes

$

500.0

 

 

June 2015

 

June 2025

 

$

499.6

 

 

$

498.9

 

3.250% Senior Notes

$

700.0

 

 

September 2019

 

September 2029

 

 

696.5

 

 

 

695.7

 

4.000% Senior Notes

$

450.0

 

 

March 2022

 

March 2032

 

 

446.7

 

 

 

446.2

 

4.500% Senior Notes

$

450.0

 

 

March 2022

 

March 2052

 

 

436.4

 

 

 

435.9

 

5.875% Senior Notes

$

600.0

 

 

June 2023

 

June 2033

 

 

594.1

 

 

 

593.4

 

Total Senior Notes

 

 

 

 

 

 

 

$

2,673.3

 

 

$

2,670.1

 

Less: current portion

 

 

 

 

 

 

 

 

499.6

 

 

 

—

 

Total long-term debt

 

 

 

 

 

 

 

$

2,173.7

 

 

$

2,670.1

 

 

Credit Facilities

In August 2022, the Company entered into a third amended and restated $1.25 billion revolving credit facility (the “2022 Revolving Credit Agreement”), and borrowings thereunder will be used for general corporate purposes. The maturity date of the facility is August 2027. Interest rates under the 2022 Revolving Credit Agreement are variable based on the Secured Overnight Financing Rate (“SOFR”) at the time of the borrowing and the Company’s long-term credit rating and can range from SOFR + 1.02% to SOFR + 1.525%. Under the 2022 Revolving Credit Agreement, the Company is required to maintain a minimum ratio of consolidated EBITDA to consolidated interest expense of 3.0 to 1.0. Consolidated EBITDA is defined as consolidated net income before interest expense, income taxes, depreciation, amortization of intangible assets, losses from asset impairments, and certain other one-time adjustments. In addition, the Company's ratio of consolidated debt minus certain cash and cash equivalents to consolidated EBITDA generally may not exceed 3.5 to 1.0. There were no outstanding borrowings under this facility as of December 28, 2024 or December 30, 2023. As of December 28, 2024, we were in compliance with all covenants under this facility.

In November 2021, the Company entered into a 364-day, $400 million term loan credit agreement (the “2021 Term Loan”), for general corporate purposes, set to mature in November 2022. On March 1, 2022, the Company entered into a First Amendment and Incremental Agreement to the 2021 Term Loan (the “First Amendment”). The First Amendment provided for an increase in the principal amount from $400 million to $600 million. On March 18, 2022, the Company entered into a Second Amendment and Incremental Agreement to the 2021 Term Loan (the “Second Amendment”), increasing the principal amount from $600 million to $1.1 billion. The outstanding $1.1 billion under the 2021 Term Loan was repaid on March 25, 2022 with proceeds from the 2022 Notes offering (as described above) and other existing sources of liquidity.

We currently have uncommitted bank lines of credit in China, which provide for unsecured borrowings for working capital of up to $30.5 million in aggregate as of December 28, 2024 and December 30, 2023, of which there were no outstanding balances as of December 28, 2024 and December 30, 2023. The weighted-average interest rates on these borrowings were zero in 2024 and 2023.

31

 

Commercial Paper

The Company operates a commercial paper program (the “Commercial Paper Program”) pursuant to which the Company may issue unsecured commercial paper notes. The Company’s 2022 Revolving Credit Agreement is the liquidity backstop for the repayment of any notes issued under the Commercial Paper Program, and as such, borrowings under the Commercial Paper Program are included in Long-term debt in the condensed consolidated balance sheets. Amounts available under the Commercial Paper Program may be borrowed, repaid and re-borrowed, with the aggregate principal amount outstanding at any time, including borrowings under the 2022 Revolving Credit Agreement, not to exceed $1.25 billion. The Company expects to use any issuances under the Commercial Paper Program for general corporate purposes. There were no outstanding borrowings under our Commercial Paper facility as of December 28, 2024 or December 30, 2023.

In our debt agreements, there are normal and customary events of default which would permit the lenders to accelerate the debt if not cured, in certain cases within applicable grace periods, such as failure to pay principal or interest when due or a change in control of the Company. There were no events of default as of December 28, 2024.

Cash and Seasonality

In 2024, we invested approximately $60 million in incremental capacity to support long-term growth potential and new products inclusive of cost reduction and productivity initiatives. We expect capital spending in 2025 to be in the range of $100 million to $140 million. On December 28, 2024, we had cash and cash equivalents $381.1 million, of which $335.4 million was held at non-U.S. subsidiaries. We manage our global cash requirements considering (i) available funds among the subsidiaries through which we conduct business, (ii) the geographic location of our liquidity needs, and (iii) the cost to access international cash balances. The repatriation of non-U.S. cash balances from certain subsidiaries could have adverse tax consequences as we may be required to pay and record tax expense on those funds that are repatriated.

Our operating cash flows are significantly impacted by the seasonality of our business. We typically generate most of our operating cash flow in the third and fourth quarters of each year and we typically use operating cash in the first quarter of the year. We believe that our current cash position, cash flow generated from operations, amounts available under our revolving credit facility and access to the capital markets should be sufficient for our operating requirements and enable us to fund our capital expenditures, share repurchases dividend payments, and required long-term debt payments.

Share Repurchases

In 2024, we repurchased 3.3 million shares of our outstanding common stock under the Company’s share repurchase programs for $240.4 million. As of December 28, 2024, the Company’s total remaining share repurchase authorization under the then current program was approximately $484.4 million. The share repurchase program does not obligate the Company to repurchase any specific dollar amount or number of shares and may be suspended or discontinued at any time. Shares may be repurchased on the open market, in privately negotiated transactions or otherwise (including pursuant to a Rule 10b5-1 trading plan, block trades and accelerated share repurchase transactions), in accordance with applicable securities laws.

Dividends

In 2024, we paid dividends in the amount of $119.6 million to the Company’s stockholders. Our Board of Directors will continue to evaluate dividend payment opportunities on a quarterly basis. There can be no assurance as to when and if future dividends will be paid, and at what level, because the payment of dividends is dependent on our financial condition, results of operations, cash flows, capital requirements and other factors deemed relevant by our Board of Directors. Our subsidiaries are not limited by long-term debt or other agreements in their abilities to pay cash dividends or to make other distributions with respect to their capital stock or other payments to the Company.

Acquisitions

We periodically review our portfolio of brands and evaluate potential strategic transactions and other capital initiatives to increase stockholder value.

32

 

On February 29, 2024, we acquired SpringWell for a purchase price of $105.6 million, subject to post-closing adjustments, net of cash acquired of $1.4 million. We financed the transaction using cash on hand and borrowings under our existing credit arrangements. The results of SpringWell are reported as part of the Water segment. We have not included pro forma financial information as the transaction is immaterial to our condensed consolidated statements of comprehensive income. The fair value allocated to assets acquired and liabilities assumed as of February 29, 2024, was $105.6 million, which includes $85.2 million of goodwill. Goodwill includes expected sales and cost synergies and is expected to be deductible for income tax purposes.

 

In June 2023, we acquired the Acquired Businesses from ASSA. The Company completed the acquisition for a total purchase price of approximately $813.9 million, net of cash acquired of $21.9 million. During the second quarter of 2024, legal title to international operations in Vietnam transferred to us, which included a payment of approximately $23.5 million, net of cash of $5.6 million (which amount is already included in the overall purchase price). We financed the transaction with cash on hand. The results of the Emtek and Schaub Business are reported as part of the Water segment, and the results of the Yale and August Business are reported as part of the Security segment.

In July 2022, we acquired 100% of the outstanding equity of Aqualisa for a purchase price of $156.0 million, net of cash acquired of $4.8 million. The results of Aqualisa are reported as part of the Water segment. We financed the transaction with borrowings under our existing credit facility.

In January 2022, we acquired 100% of the outstanding equity of Solar Innovations LLC and an affiliated entity (together, "Solar") for a purchase price of $61.6 million, net of cash acquired of $4.8 million. We financed the transaction using cash on hand and borrowings under our revolving credit facility. The results of Solar are reported as part of the Outdoors segment.

Cash Flows

Below is a summary of cash flows for 2024, 2023, and 2022, including continuing and discontinued operations. See Note 5, "Discontinued Operations," of the Notes to the consolidated financial statements in Item 8 of this Annual Report on Form 10-K for additional information on cash flows from discontinued operations.

 

(In millions)

 

2024

 

 

 

2023

 

 

2022

 

Net cash provided by operating activities

 

$

667.8

 

 

 

$

1,055.8

 

 

$

566.3

 

Net cash used in investing activities

 

 

(302.9

)

 

 

 

(1,037.8

)

 

 

(455.5

)

Net cash (used in) provided by financing activities

 

 

(363.4

)

 

 

 

(271.3

)

 

 

72.5

 

Effect of foreign exchange rate changes on cash

 

 

(11.5

)

 

 

 

0.5

 

 

 

(11.1

)

Net (decrease) increase in cash, cash equivalents and restricted cash

 

$

(10.0

)

 

 

$

(252.8

)

 

$

172.2

 

 

Net cash provided by operating activities was $667.8 million in 2024, compared to $1,055.8 million in 2023. The $388.0 million decrease in net cash provided by operating activities from 2023 to 2024 was primarily due to a decrease in the rate of reduction in inventory balances compared to the prior period as result of our 2023 initiative to decrease inventory balances to align with the U.S. home product market activity, as well as a decrease in accounts payable. The absence of the $84.2 million settlement of our interest rate swaps in 2023 and a decrease in accrued expenses and other liabilities also contributed to the decrease in cash provided by operating activities. The decrease in cash provided by operating activities was partially offset by higher net income in 2024. The $489.5 million increase in net cash provided by operating activities from 2022 to 2023 was driven by a $702.5 million increase in net cash provided by continuing operations due to an increase in net cash provided by working capital items resulting from initiatives to align working capital with current U.S. home product market activity and expected sales volume. The $84.2 million settlement of our interest rate swaps in 2023 and increased accrued expenses and other liabilities also contributed to the increase in net cash provided by operating activities. These amounts were partially offset by lower net income in 2023 and the absence of operating cash flows as a result of the Separation ($213.0 million in 2022).

33

 

Net cash used in investing activities was $302.9 million in 2024 compared to $1,037.8 million in 2023. The decrease in net cash used in investing activities of $734.9 million from 2023 to 2024 reflects the net cash paid for the acquisition of the Acquired Businesses of $784.1 million in 2023, as compared to the acquisition of SpringWell for $105.6 million in 2024, as well as a decrease in capital expenditures of $63.2 million. The increase in net cash used in investing activities of $582.3 million from 2022 to 2023 reflects the net cash paid for the Acquired Businesses of $784.1 million as compared to the acquisitions of Aqualisa and Solar ($217.6 million combined) in 2022.

Net cash used in financing activities was $363.4 million in 2024 compared to $271.3 million in 2023. The increase in net cash used in financing activities of $92.1 million was primarily higher share repurchases in 2024 as compared to 2023 ($90.4 million). The increase in net cash used in financing activities of $343.8 million from 2022 to 2023 was primarily driven by the absence of cash flow items related to the dividend received from MasterBrand as a result of the Separation ($940.0 million), partially offset by lower share repurchases in 2023 compared to 2022 ($430.1 million decrease), a decrease in dividends paid to stockholders and the absence in 2023 of the final payment for the remaining equity interest in Flo Technologies ($16.7 million) which was made during 2022.

Pension Plans

During the fourth quarter of 2024, the Company entered into two agreements with an insurance company to purchase group annuity contracts and transferred $266.6 million of pension plan obligations and related assets of two of its defined benefit pension plans, the MasterLock Pension Plan and Moen Incorporated Pension Plan (collectively, the "Plans"). The partial plan settlements resulted in a loss of $19.0 million, which is included in Other (expense) income, net on the Consolidated Statements of Income. The agreements cover approximately 4,100 retirees and other beneficiaries (the "Transferred Participants"). All Transferred Participants continued to receive their benefits from the Plans until January 1, 2025, at which time the insurance company began paying and administering the retirement benefits of the Transferred Participants. The transactions resulted in no changes to the amount of the benefits payable to the Transferred Participants.

Subsidiaries of Fortune Brands sponsor their respective defined benefit pension plans, related to our continuing operations, that are funded by a portfolio of investments maintained within our benefit plan trust. We made no pension contributions to our qualified pension plans in 2024 and made voluntary contributions of $4.0 million and $9.0 million in 2023 and 2022, respectively. In 2025, we do not expect to make any pension contributions. As of December 28, 2024, the fair value of our total pension plan assets was $177.1 million, representing funding of about 95% of the accumulated qualified benefit obligation liability. For the foreseeable future, we believe that we have sufficient liquidity to meet the minimum funding that may be required by the Pension Protection Act of 2006.

Foreign Exchange

We have operations in various foreign countries, principally Canada, Mexico, the United Kingdom, China, South Africa, Vietnam and France. Therefore, changes in the value of the related currencies affect our financial statements when translated into U.S. dollars.

Contractual Obligations and Other Commercial Commitments

The following summarizes our contractual obligations and commitments as of December 28, 2024. Purchase obligations were $545.1 million, of which $522.4 million is due within one year. Purchase obligations include contracts for raw materials and finished goods purchases, selling and administrative services, and capital expenditures. Total lease payments under non-cancellable operating leases as of December 28, 2024 were $38.6 million in 2025, $33.7 million in 2026, $26.0 million in 2027, $21.0 million in 2028, $16.6 million in 2029 and $44.7 million thereafter.

Due to the uncertainty of the timing of settlement with taxing authorities, we are unable to make reasonably reliable estimates of the period of cash settlement of unrecognized tax benefits. Therefore, $25.2 million of unrecognized tax benefits as of December 28, 2024 have been excluded from the paragraph above.

34

 

In addition to the contractual obligations and commitments described above, we also had other commercial commitments for which we are contingently liable as of December 28, 2024. Other corporate commercial commitments include standby letters of credit of $20.2 million, in the aggregate, all of which expire in less than one year, and surety bonds of $25.5 million, the majority of which matures in less than two years. These contingent commitments are not expected to have a significant impact on our liquidity.

Debt payments due during the next five years as of December 28, 2024 are $500 million in 2025, zero in 2026, zero in 2027, zero in 2028, $700 million in 2029 and $1,500 million in 2030 and beyond. Interest payments due during the next five years as of December 28, 2024 are $106.3 million in 2025, $192.5 million in 2026 through 2027, $192.5 million in 2028 through 2029 and $624.0 million in 2030 and beyond.

Foreign Currency Risk

Certain anticipated transactions, assets and liabilities are exposed to foreign currency risk. Principal currencies hedged include the Canadian dollar, the Mexican peso, the British pound, Chinese yuan and the South African rand. We regularly monitor our foreign currency exposures in order to maximize the overall effectiveness of our foreign currency hedge positions. For additional information on this risk, see Item 7A. “Quantitative and Qualitative Disclosures about Market Risk” in this Annual Report on Form 10-K.

Derivative Financial Instruments

In accordance with Accounting Standards Codification ("ASC") requirements for Derivatives and Hedging, we recognize all derivative contracts as either assets or liabilities on the balance sheet, and the measurement of those instruments is at fair value. If the derivative is designated as a fair value hedge and is effective, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in earnings in the same period. If the derivative is designated as a cash flow hedge, the changes in the fair value of the derivative are recorded in other comprehensive income (“OCI”) and are recognized in the consolidated statement of income when the hedged item affects earnings. If the derivative is designated as an effective economic hedge of the net investment in a foreign operation, the changes in the fair value of the derivative is reported in the cumulative translation adjustment section of OCI. Similar to foreign currency translation adjustments, these changes in fair value are recognized in earnings only when realized upon sale or upon complete or substantially complete liquidation of the investment in the foreign entity.

Deferred currency gains (losses) of $(0.4) million, $5.2 million and $4.7 million (before tax impact) were reclassified into earnings for 2024, 2023 and 2022, respectively. Based on foreign exchange rates as of December 28, 2024, we estimate that $12.5 million of net derivative gains included in accumulated other comprehensive income ("AOCI") as of December 28, 2024, will be reclassified to earnings within the next twelve months.

Recently Issued Accounting Standards

Refer to Note 2, “Significant Accounting Policies,” of the Notes to consolidated financial statements in Item 8 of this Annual Report on Form 10-K for discussion of recently issued accounting standards.

Critical Accounting Estimates

Our significant accounting policies are described in Note 2, “Significant Accounting Policies,” of the Notes to consolidated financial statements in Item 8 of this Annual Report on Form 10-K. The consolidated financial statements are prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). Preparation of the financial statements requires us to make judgments, estimates and assumptions that affect the amounts of assets and liabilities reflected in the financial statements and revenues and expenses reported for the relevant reporting periods. We believe the policies discussed below are the Company’s critical accounting policies as they include the more significant, subjective and complex judgments and estimates made when preparing our consolidated financial statements.

35

 

Inventories

 

Inventory provisions are recorded to reduce inventory to the net realizable dollar value for obsolete or slow-moving inventory based on assumptions about future demand and marketability of products, the impact of new product introductions, inventory levels and turns, product spoilage and specific identification of items, such as product discontinuance, engineering/material changes, or regulatory-related changes. In accordance with this policy, our inventory provision was $69.3 million and $75.8 million as of December 28, 2024 and December 30, 2023, respectively.

 

Long-lived Assets

 

In accordance with ASC requirements for Property, Plant and Equipment, a long-lived asset (including amortizable identifiable intangible assets) or asset group held for use is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. When such events occur, we compare the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset or asset group to the carrying amount of a long-lived asset or asset group. The cash flows are based on our best estimate of future cash flows derived from the most recent business projections. If this comparison indicates that there is an impairment, the amount of the impairment is calculated based on fair value. Fair value is estimated primarily using discounted expected future cash flows on a market-participant basis.

No material impairments related to long-lived assets were recorded in 2024, 2023 or 2022.

Business Combinations

We account for business combinations under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations, which requires an allocation of the consideration we paid to the identifiable assets, intangible assets and liabilities based on the estimated fair values as of the closing date of the acquisition. The excess of the fair value of the purchase price over the fair values of these identifiable assets, intangible assets and liabilities is recorded as goodwill.

Purchased intangibles other than goodwill are initially recognized at fair value and amortized over their useful lives unless those lives are determined to be indefinite. The valuation of acquired assets will impact future operating results. The fair value of identifiable intangible assets is determined using an income approach on an individual asset basis. Specifically, we use the multi-period excess earnings method to determine the fair value of customer relationships and the relief-from-royalty approach to determine the fair value of the tradename and proprietary technology. Determining the fair value of acquired intangibles involves significant estimates and assumptions, including forecasted revenue growth rates, earnings before interest and taxes (EBIT) margins, percentage of revenue attributable to the tradename, contributory asset charges, customer attrition rate, market-participant discount rates, the assumed royalty rates and income tax rates.

The determination of the useful life of an intangible asset other than goodwill is based on factors including historical tradename performance with respect to consumer name recognition, geographic market presence, market share, plans for ongoing tradename support and promotion, customer attrition rate and other relevant factors.

Goodwill and Indefinite-lived Intangible Assets

In accordance with ASC requirements for Intangibles - Goodwill and Other, management reviews goodwill for impairment annually in the fourth quarter and whenever market or business events indicate there may be a potential impairment of the reporting unit. Impairment losses are recorded to the extent that the carrying value of the reporting unit exceeds its fair value. The Company’s reporting units are operating segments, or one level below operating segments when appropriate.

36

 

To evaluate the recoverability of goodwill, we first assess qualitative factors to determine whether it is more likely than not that goodwill is impaired. Qualitative factors include changes in volume, margin, customers and the industry. If it is deemed more likely than not that goodwill for a reporting unit is impaired, we will perform a quantitative impairment test where fair value of each reporting unit is estimated using the income approach using a discounted cash flow model based on estimates of future cash flows combined with the market approach using comparable trading and transaction multiples based on guideline public companies. We may also elect to bypass the qualitative testing and proceed directly to the quantitative testing. For the income approach, using a discounted cash flow model, we estimate the future cash flows of the reporting units to which the goodwill relates and then discount the future cash flows at a market-participant-derived discount rate. In determining the estimated future cash flows, we consider current and projected future levels of income based on management’s plans for that business; business trends, prospects and market and economic conditions; and market-participant considerations. Furthermore, our cash flow projections used to assess impairment of our goodwill and other intangible assets are significantly influenced by our projection for the U.S. new home starts and home repair remodel spending, our annual operating plans finalized in the fourth quarter of each year, and our ability to execute on various planned cost reduction initiatives supporting operating income improvements. Our projection for the U.S. home products market is inherently uncertain and is subject to a number of factors, such as employment, home prices, credit availability, new home starts and the rate of home foreclosures. For the market approach, we apply comparable trading and transaction multiples based on guideline public companies to the current operating results of the reporting units to determine each reporting unit’s fair value.

The significant assumptions that are used to determine the estimated fair value of reporting units for impairment testing are forecasted revenue growth rates, operating income margins, market-participant discount rates and EBITDA multiples.

The assumptions used to estimate the fair values of the goodwill related to continuing operations tested quantitatively during the year ended December 28, 2024 were as follows:

 

 

 

 

 

Unobservable Input

 

2024

 

Discount rate

 

 

10.8

%

Long-term revenue growth rates(a)

 

 

3.0

%

EBITDA multiple

 

 

14.0

 

 

(a)
Selected long-term revenue growth rate for the goodwill that was tested quantitatively.

A 50 basis point change in the discount rate or long-term revenue growth rate assumptions, or a decrease in multiple of 1.0 in the EBITDA multiple assumption, during the year ended December 28, 2024 would not have resulted in an impairment being recognized when estimating the fair value of our reporting unit goodwill.

Certain of our tradenames have been assigned an indefinite life as we currently anticipate that these tradenames will contribute cash flows to the Company indefinitely. Indefinite-lived intangible assets are not amortized, but are evaluated at least annually to determine whether the indefinite useful life is appropriate. We measure the fair value of identifiable intangible assets upon acquisition and we review for impairment annually in the fourth quarter and whenever market or business events indicate there may be a potential impairment of that intangible. Impairment losses are recorded to the extent that the carrying value of the indefinite-lived intangible asset exceeds its fair value.

37

 

We first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. Qualitative factors include changes in volume, customers and the industry. If it is deemed more likely than not that an intangible asset is impaired, we will perform a quantitative impairment test. We measure fair value of our indefinite-lived tradenames using the relief-from-royalty approach which estimates the present value of royalty income that could be hypothetically earned by licensing the brand name to a third party. The significant assumptions that are used to determine the estimated fair value for indefinite-lived intangible assets upon acquisition and subsequent impairment testing are forecasted revenue growth rates, the assumed royalty rates and the market-participant discount rates. Of our $518.8 million indefinite-lived tradenames, $215.6 million relate to our Water segment, $271.2 million relate to our Outdoors segment and $32.0 million relate to our Security segment as of December 28, 2024. There were no impairments for the year ended December 28, 2024. See Note 6, "Goodwill and Intangible Assets," of the Notes to consolidated financial statements in Item 8 of this Annual Report on Form 10-K for additional information.

During the fourth quarter of 2023, a reduction in revenue growth expectations, which were finalized during our annual planning process, led us to conclude that it was more likely than not that two indefinite-lived tradenames within our Outdoors segment were impaired. As a result of the impairment tests performed, we recorded pre-tax impairment charges of $28.0 million and $5.5 million, respectively, related to the two indefinite-lived tradenames.

The fair values of the impaired tradenames were measured using the relief-from-royalty approach, which estimates the present value of royalty income that could be hypothetically earned by licensing the tradename to a third party over its remaining useful life. Some of the more significant assumptions inherent in estimating the fair values include forecasted revenue growth rates, assumed royalty rates, and market-participant discount rates that reflect the level of risk associated with the tradenames’ future revenues and profitability. We selected the assumptions used in the financial forecasts using historical data, supplemented by current and anticipated market conditions, estimated growth rates and management plans. These assumptions represent level 3 inputs of the fair value hierarchy (refer to Note 10, "Fair Value Measurements," of the Notes to consolidated financial statements in Item 8 of this Annual Report on Form 10-K ).

The assumptions used to estimate the fair values of the tradenames tested quantitatively during the year ended December 28, 2024 were as follows:

 

 

 

2024

 

Unobservable Input

 

Minimum

 

 

Maximum

 

 

Weighted Average(a)

 

Discount rates

 

 

11.0

%

 

 

15.0

%

 

 

12.6

%

Royalty rates(b)

 

 

2.5

%

 

 

4.0

%

 

 

3.5

%

Long-term revenue growth rates(c)

 

 

2.5

%

 

 

3.0

%

 

 

2.6

%
(a)
Weighted by the relative fair value of the tradenames that were tested quantitatively.
(b)
Represents estimated percentage of sales a market-participant would pay to license the tradenames that were tested quantitatively.
(c)
Selected long-term revenue growth rate of the tradenames that were tested quantitatively.

For the indefinite-lived tradenames tested quantitatively in 2024, a 50 basis point change in the royalty rate assumption would result in an impairment of those tradenames of approximately $8 million; a 50 basis point change in the discount rate assumption would result in an impairment of approximately $2 million; and a 50 basis point change in the long-term revenue growth rate assumption would result in an impairment of approximately $2 million.

Defined Benefit Plans

We have a number of pension plans in the United States, covering many of the Company’s employees. In addition, the Company provides postretirement health care and life insurance benefits to certain retirees. Service cost for 2024 relates to benefit accruals for an hourly Union group within the defined benefit plan for our Security segment. All other benefit accruals under our defined benefit pension plans were frozen as of, or prior to, December 31, 2016.

38

 

We recognize changes in the net actuarial gains or losses in other income, net to the extent they exceed 10 percent of the greater of the fair value of pension plan assets or projected benefit obligation for each plan (the “corridor”) in earnings immediately upon remeasurement, which is at least annually in the fourth quarter of each fiscal year. Net actuarial gains and losses occur when actual experience differs from any of the assumptions used to value defined benefit plans or when assumptions change as they may each year. The primary factors contributing to actuarial gains and losses are changes in the discount rate used to value obligations as of the measurement date and the differences between expected and actual returns on pension plan assets. This accounting method results in the potential for volatile and difficult to forecast gains and losses. The pre-tax recognition of actuarial losses (gains) was $18.2 million and $(0.6) million in 2024 and 2023, respectively. The total unrecognized net actuarial losses in accumulated other comprehensive income for all defined benefit plans were $12.3 million as of December 28, 2024, compared to $35.8 million as of December 30, 2023.

We record amounts relating to these defined benefit plans based on various actuarial assumptions, including discount rates, assumed rates of return, compensation increases, turnover rates and health care cost trend rates. We review our actuarial assumptions on an annual basis and make modifications to the assumptions based on current economic conditions and trends. We believe that the assumptions utilized in recording our obligations under our plans are reasonable based on our experience and on advice from our independent actuaries; however, differences in actual experience or changes in the assumptions may materially affect our financial condition or results of operations. The expected rate of return on plan assets is determined based on the nature of the plans’ investments, our current asset allocation and our expectations for long-term rates of return. The weighted-average long-term expected rate of return on pension plan assets for the years ended December 28, 2024 and December 30, 2023 was 7.3% and 6.1%, respectively.

The discount rate used to measure obligations is based on a spot-rate yield curve on a plan-by-plan basis that matches projected future benefit payments with the appropriate interest rate applicable to the timing of the projected future benefit payments. The bond portfolio used for the selection of the discount rate is from the top quartile of bonds rated by nationally recognized statistical rating organizations, and includes only non-callable bonds and those that are deemed to be sufficiently marketable with a Moody’s credit rating of Aa or higher. The weighted-average discount rate for defined benefit liabilities as of December 28, 2024 December 30, 2023 was 5.7% and 5.0%, respectively.

For the postretirement benefits obligation, our health care trend rate assumption is based on historical cost increases and expectations for long-term increases. As of December 28, 2024, for postretirement medical and prescription drugs in the next year, our assumption was an assumed rate of increase of 7.1% for pre-65 retirees and 7.5% for post-65 retirees, declining until reaching an ultimate assumed rate of increase of 4.5% per year in 2035. As of December 30, 2023, for postretirement medical and prescription drugs in the next year, our assumption was an assumed rate of increase of 7.3% for pre-65 retirees and 6.9% for post-65 retirees, declining until reaching an ultimate assumed rate of increase of 4.5% per year in 2033.

Below is a table showing pre-tax pension and postretirement expenses, including the impact of actuarial gains and losses (which includes settlement losses):

 

(In millions)

 

 

2024

 

 

 

2023

 

Total pension cost

 

 

$

11.6

 

 

 

$

0.7

 

Actuarial loss component of cost above

 

 

 

18.5

 

 

 

 

2.0

 

Total postretirement cost (income)

 

 

 

0.6

 

 

 

 

(1.7

)

Actuarial (gain) component of cost (income) above

 

 

 

(0.3

)

 

 

 

(2.6

)

 

Discount rates in 2024 used to determine benefit obligations increased by an average of 70 basis points for pension benefits. Discount rates for 2024 postretirement benefits increased by an average of 110 basis points. Discount rates in 2023 used to determine benefit obligations decreased by an average of 20 basis points for pension benefits. Discount rates for 2023 postretirement benefits increased an average of 20 basis points. Our actual gain on plan assets in 2024 was 0.3% compared to an actuarial assumption of an average 7.3% expected return. Our actual gain on plan assets in 2023 was 10.0% compared to an actuarial assumption of an average 6.1% expected return. Significant actuarial losses in future periods would be expected if discount rates decline, actual returns on plan assets are lower than our expected return, or a combination of both occurs.

 

39

 

A 25 basis point change in our discount rate assumption would lead to an increase or decrease in our pension and postretirement liability of approximately $6 million. A 25 basis point change in the long-term rate of return on plan assets used in accounting for our pension plans would have a $0.4 million impact on pension expense. In addition, if required, actuarial gains and losses will be recorded in accordance with our defined benefit plan accounting method as previously described. It is not possible to forecast or predict whether there will be actuarial gains and losses in future periods, and if required, the magnitude of any such adjustment. These gains and losses are driven by differences in actual experience or changes in the assumptions that are beyond our control, such as changes in interest rates and the actual return on pension plan assets.

 

Income Taxes

 

In accordance with ASC requirements for Income Taxes, we establish deferred tax liabilities or assets for temporary differences between financial and tax reporting basis and subsequently adjust them to reflect changes in tax rates expected to be in effect when the temporary differences reverse. We record a valuation allowance reducing deferred tax assets when it is more likely than not that such assets will not be realized.

 

We record liabilities for uncertain income tax positions based on a two-step process. The first step is recognition, where we evaluate whether an individual tax position has a likelihood of greater than 50% of being sustained upon examination based on the technical merits of the position, including resolution of any related appeals or litigation processes. For tax positions that are currently estimated to have a less than 50% likelihood of being sustained, no tax benefit is recorded. For tax positions that have met the recognition threshold in the first step, we perform the second step of measuring the benefit to be recorded. The actual benefits ultimately realized may differ from our estimates. In future periods, changes in facts, circumstances, and new information may require us to change the recognition and measurement estimates with regard to individual tax positions. Changes in recognition and measurement estimates are recorded in the consolidated statement of income and consolidated balance sheet in the period in which such changes occur. As of December 28, 2024, we had liabilities for unrecognized tax benefits pertaining to uncertain tax positions totaling $25.2 million. It is reasonably possible that the unrecognized tax benefits may decrease by $6.1 million in the next 12 months primarily as a result of the lapse of the statute of limitations of U.S. federal, state and foreign income taxes.

Customer Program Costs

Customer programs and incentives are a common practice in our businesses. Our businesses incur customer program costs to obtain favorable product placement, to promote sales of products and to maintain competitive pricing. We record estimates to reduce revenue for customer programs and incentives, which are considered variable consideration, and include price discounts, volume-based incentives, promotions and cooperative advertising when revenue is recognized in order to determine the amount of consideration the Company will ultimately be entitled to receive. These estimates are based on historical and projected experience for each type of customer. In addition, for certain customer program incentives, we receive an identifiable benefit (goods or services) in exchange for the consideration given and record the associated expenditure in selling, general and administrative expenses. Volume allowances are accrued based on management’s estimates of customer volume achievement and other factors incorporated into customer agreements, such as new products, store sell-through, merchandising support, levels of returns and customer training. Management periodically reviews accruals for these rebates and allowances, and adjusts accruals when circumstances indicate (typically as a result of a change in volume expectations).

40

 

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

We are exposed to various market risks, including changes in interest rates, foreign currency exchange rates and commodity prices. Market risk is the potential loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. We do not enter into derivatives or other financial instruments for trading or speculative purposes. We enter into financial instruments to manage and reduce the impact of changes in foreign currency exchange rates and commodity prices. The counterparties are major financial institutions.

Interest Rate Risk

The Company did not have any external variable rate borrowings as of December 28, 2024.

Foreign Exchange Rate Risk

We enter into forward foreign exchange contracts principally to hedge currency fluctuations in transactions denominated in certain foreign currencies, thereby limiting our risk that would otherwise result from changes in exchange rates. The periods of the forward foreign exchange contracts correspond to the periods of the hedged transactions.

The estimated fair value of foreign currency contracts represents the amount required to enter into offsetting contracts with similar remaining maturities based on quoted market prices.

The estimated potential loss under foreign exchange contracts from movement in foreign exchange rates would not have a material impact on our results of operations, cash flows or financial condition. As part of our risk management procedure, we use a value-at-risk (“VAR”) sensitivity analysis model to estimate the maximum potential economic loss from adverse changes in foreign exchange rates over a one-day period given a 95% confidence level. The VAR model uses historical foreign exchange rates to estimate the volatility and correlation of these rates in future periods. The estimated maximum one-day loss in the fair value of the Company’s foreign currency exchange contracts using the VAR model was $1.4 million at December 28, 2024. The 95% confidence interval signifies our degree of confidence that actual losses under foreign exchange contracts would not exceed the estimated losses. The amounts disregard the possibility that foreign currency exchange rates could move in our favor. The VAR model assumes that all movements in the foreign exchange rates will be adverse. These amounts should not be considered projections of future losses, since actual results may differ significantly depending upon activity in the global financial markets. The VAR model is a risk analysis tool and should not be construed as an endorsement of the VAR model or the accuracy of the related assumptions.

Commodity Price Risk

We are subject to commodity price volatility caused by weather, supply conditions, geopolitical and economic variables, and other unpredictable external factors. From time to time, we use derivative contracts to manage our exposure to commodity price volatility.

41

 

Item 8. Financial Statements and Supplementary Data.

 

Report of Independent Registered Public Accounting Firm

43

Consolidated Statements of Income

46

Consolidated Statements of Comprehensive Income

47

Consolidated Balance Sheets

48

Consolidated Statements of Cash Flows

49

Consolidated Statements of Equity

50

Notes to Consolidated Financial Statements

51

 

42

 

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Fortune Brands Innovations, Inc.

 

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Fortune Brands Innovations, Inc. and its subsidiaries (the "Company") as of December 28, 2024 and December 30, 2023, and the related consolidated statements of income, of comprehensive income, of equity and of cash flows for each of the three years in the period ended December 28, 2024, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended December 28, 2024 appearing after Item 16 and the signatures (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 28, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 28, 2024 and December 30, 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 28, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 28, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

43

 

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Quantitative Impairment Test for an Indefinite-Lived Tradename within the Outdoors Segment

 

As described in Notes 2 and 6 to the consolidated financial statements, the Company’s consolidated indefinite-lived intangible assets balances was $518.8 million as of December 28, 2024, of which $271.2 million relates to the Outdoors segment. Management reviews indefinite-lived intangible assets for impairment annually in the fourth quarter and whenever market or business events indicate there may be a potential impairment of that intangible. Impairment losses are recorded to the extent that the carrying value of the indefinite-lived intangible asset exceeds fair value. Fair values of the Company’s indefinite-lived tradenames were measured by management using the relief-from-royalty approach. Significant assumptions that are used to determine the estimated fair values include forecasted revenue growth rates, the assumed royalty rates and the market-participant discount rates.

The principal considerations for our determination that performing procedures relating to the quantitative impairment test for an indefinite-lived tradename within the Outdoors segment is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the tradename; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to forecasted revenue growth rates, assumed royalty rate, and market-participant discount rate; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

44

 

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s quantitative impairment test for indefinite-lived intangible assets, including controls over the valuation of the Company’s tradename within the Outdoors segment. These procedures also included, among others (i) testing management’s process for developing the fair value estimate of the tradename; (ii) evaluating the appropriateness of the relief-from-royalty approach used by management; (iii) testing the completeness and accuracy of underlying data used in the relief-from-royalty approach; and (iv) evaluating the reasonableness of significant assumptions used by management related to forecasted revenue growth rates, assumed royalty rate, and market-participant discount rate. Evaluating management’s significant assumptions related to forecasted revenue growth rates and assumed royalty rate involved evaluating whether the assumptions used by management were reasonable considering, (i) the current and past performance of the business associated with the tradename; (ii) the consistency with external market and industry data; and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation of (i) the appropriateness of the relief-from-royalty approach and (ii) the reasonableness of the assumed royalty rate and market-participant discount rate significant assumptions.

 

/s/ PricewaterhouseCoopers LLP

Chicago, Illinois

February 25, 2025

We have served as the Company’s auditor since 2011.

45

 

 

Consolidated Statements of Income

Fortune Brands Innovations, Inc. and Subsidiaries

 

 

 

 

For years ended

 

(In millions, except per share amounts)

 

 

December 28, 2024

 

 

 

December 30, 2023

 

 

December 31, 2022

 

NET SALES

 

 

$

4,609.0

 

 

 

$

4,626.2

 

 

$

4,723.0

 

Cost of products sold

 

 

 

2,542.7

 

 

 

 

2,714.8

 

 

 

2,790.1

 

Selling, general and administrative expenses

 

 

 

1,239.1

 

 

 

 

1,168.4

 

 

 

1,077.9

 

Amortization of intangible assets

 

 

 

73.1

 

 

 

 

62.1

 

 

 

48.3

 

Asset impairment charges

 

 

 

—

 

 

 

 

33.5

 

 

 

—

 

Restructuring charges

 

 

 

16.2

 

 

 

 

32.5

 

 

 

32.4

 

OPERATING INCOME

 

 

 

737.9

 

 

 

 

614.9

 

 

 

774.3

 

Interest expense

 

 

 

120.5

 

 

 

 

116.5

 

 

 

119.2

 

Other expense (income), net

 

 

 

11.9

 

 

 

 

(19.5

)

 

 

(12.0

)

Income from continuing operations before income taxes

 

 

 

605.5

 

 

 

 

517.9

 

 

 

667.1

 

Income taxes

 

 

 

133.6

 

 

 

 

112.4

 

 

 

127.2

 

Income from continuing operations, net of tax

 

 

 

471.9

 

 

 

 

405.5

 

 

 

539.9

 

(Loss) income from discontinued operations, net of tax

 

 

 

—

 

 

 

 

(1.0

)

 

 

146.8

 

NET INCOME

 

 

$

471.9

 

 

 

$

404.5

 

 

$

686.7

 

BASIC EARNINGS PER COMMON SHARE

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

 

$

3.78

 

 

 

$

3.20

 

 

$

4.14

 

Discontinued operations

 

 

 

—

 

 

 

 

(0.01

)

 

 

1.13

 

Basic earnings per share

 

 

$

3.78

 

 

 

$

3.19

 

 

$

5.27

 

DILUTED EARNINGS PER COMMON SHARE

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

 

$

3.75

 

 

 

$

3.17

 

 

$

4.11

 

Discontinued operations

 

 

 

—

 

 

 

 

—

 

 

 

1.12

 

Diluted earnings per share

 

 

$

3.75

 

 

 

$

3.17

 

 

$

5.23

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic average number of shares outstanding

 

 

 

124.8

 

 

 

 

126.9

 

 

 

130.3

 

Diluted average number of shares outstanding

 

 

 

125.7

 

 

 

 

127.7

 

 

 

131.3

 

 

See Notes to Consolidated Financial Statements.

46

 

 

Consolidated Statements of Comprehensive Income

Fortune Brands Innovations, Inc. and Subsidiaries

 

 

 

 

For years ended

 

(In millions)

 

 

December 28, 2024

 

 

 

December 30, 2023

 

 

December 31, 2022

 

NET INCOME

 

 

$

471.9

 

 

 

$

404.5

 

 

$

686.7

 

Other comprehensive income (loss), before tax:

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

 

(30.9

)

 

 

 

17.4

 

 

 

(23.4

)

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized (losses) gains on derivatives:

 

 

 

 

 

 

 

 

 

 

 

Unrealized holding gains (losses) arising during period

 

 

 

2.1

 

 

 

 

4.1

 

 

 

126.2

 

Less: reclassification adjustment for (gains) losses included in net income

 

 

 

(12.2

)

 

 

 

(14.0

)

 

 

(5.5

)

Unrealized (losses) gains on derivatives

 

 

 

(10.1

)

 

 

 

(9.9

)

 

 

120.7

 

Defined benefit plans:

 

 

 

 

 

 

 

 

 

 

 

Net actuarial gains (losses) arising during period

 

 

 

23.5

 

 

 

 

13.4

 

 

 

(21.7

)

Other

 

 

 

—

 

 

 

 

6.2

 

 

 

—

 

Defined benefit plans

 

 

 

23.5

 

 

 

 

19.6

 

 

 

(21.7

)

Other comprehensive (loss) income, before tax

 

 

 

(17.5

)

 

 

 

27.1

 

 

 

75.6

 

Income tax (expense) related to items of other comprehensive income (a)

 

 

 

(3.4

)

 

 

 

(1.2

)

 

 

(21.9

)

Other comprehensive (loss) income, net of tax

 

 

 

(20.9

)

 

 

 

25.9

 

 

 

53.7

 

COMPREHENSIVE INCOME

 

 

$

451.0

 

 

 

$

430.4

 

 

$

740.4

 

 

(a)
Income tax (expense) benefit on unrealized (losses) gains on derivatives of $2.2 million, $2.4 million and $(27.3) million and on defined benefit plans of $(5.6) million, $(3.6) million and $5.4 million in 2024, 2023 and 2022, respectively.

See Notes to Consolidated Financial Statements.

47

 

 

Consolidated Balance Sheets

Fortune Brands Innovations, Inc. and Subsidiaries

 

 

 

 

 

 

(In millions)

December 28, 2024

 

 

 

December 30, 2023

 

ASSETS

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

$

381.1

 

 

 

$

366.4

 

Accounts receivable less allowances for discounts and credit losses

 

514.4

 

 

 

 

534.2

 

Inventories

 

960.3

 

 

 

 

982.3

 

Other current assets

 

151.6

 

 

 

 

162.8

 

TOTAL CURRENT ASSETS

 

2,007.4

 

 

 

 

2,045.7

 

Property, plant and equipment, net of accumulated depreciation

 

999.2

 

 

 

 

975.0

 

Operating lease assets

 

148.1

 

 

 

 

173.8

 

Goodwill

 

1,992.0

 

 

 

 

1,906.8

 

Other intangible assets, net of accumulated amortization

 

1,297.2

 

 

 

 

1,354.7

 

Other assets

 

117.9

 

 

 

 

109.0

 

TOTAL ASSETS

$

6,561.8

 

 

 

$

6,565.0

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Short-term debt

$

499.6

 

 

 

$

-

 

Accounts payable

 

513.9

 

 

 

 

568.1

 

Other current liabilities

 

588.8

 

 

 

 

632.3

 

TOTAL CURRENT LIABILITIES

 

1,602.3

 

 

 

 

1,200.4

 

Long-term debt

 

2,173.7

 

 

 

 

2,670.1

 

Deferred income taxes

 

117.4

 

 

 

 

111.3

 

Accrued defined benefit plans

 

32.5

 

 

 

 

47.3

 

Operating lease liabilities

 

121.6

 

 

 

 

143.3

 

Other non-current liabilities

 

92.3

 

 

 

 

99.2

 

TOTAL LIABILITIES

 

4,139.8

 

 

 

 

4,271.6

 

Commitments (Note 18) and Contingencies (Note 22)

 

 

 

 

 

 

Equity

 

 

 

 

 

 

Common stock (a)

 

1.9

 

 

 

 

1.9

 

Paid-in capital

 

3,189.3

 

 

 

 

3,134.5

 

Accumulated other comprehensive income

 

42.4

 

 

 

 

63.3

 

Retained earnings

 

2,956.8

 

 

 

 

2,605.3

 

Treasury stock

 

(3,768.4

)

 

 

 

(3,511.6

)

TOTAL EQUITY

 

2,422.0

 

 

 

 

2,293.4

 

TOTAL LIABILITIES AND EQUITY

$

6,561.8

 

 

 

$

6,565.0

 
(a)
Common stock, par value $0.01 per share, 187.9 million shares and 187.1 million shares issued at December 28, 2024 and December 30, 2023, respectively.

See Notes to Consolidated Financial Statements.

48

 

 

Consolidated Statements of Cash Flows

Fortune Brands Innovations, Inc. and Subsidiaries

 

 

 

 

For years ended

 

(In millions)

 

 

December 28, 2024

 

 

 

December 30, 2023

 

 

December 31, 2022

 

OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

$

471.9

 

 

 

$

404.5

 

 

$

686.7

 

Non-cash expense (income):

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

 

120.5

 

 

 

 

106.7

 

 

 

126.5

 

Amortization of intangibles

 

 

 

73.1

 

 

 

 

62.1

 

 

 

65.1

 

Non-cash lease expense

 

 

 

38.6

 

 

 

 

35.1

 

 

 

45.2

 

Stock-based compensation

 

 

 

39.3

 

 

 

 

34.2

 

 

 

50.2

 

Asset impairment charges

 

 

 

—

 

 

 

 

33.5

 

 

 

46.4

 

Recognition of actuarial loss (gain)

 

 

 

18.3

 

 

 

 

(0.5

)

 

 

(1.2

)

Deferred taxes

 

 

 

0.2

 

 

 

 

(26.1

)

 

 

14.8

 

Other operating activities, net

 

 

 

(2.7

)

 

 

 

3.1

 

 

 

7.1

 

Changes in assets and liabilities including effects subsequent to acquisitions

 

 

 

 

 

 

 

 

 

 

 

Decrease in accounts receivable

 

 

 

6.3

 

 

 

 

25.7

 

 

 

66.3

 

Decrease (increase) in inventories

 

 

 

16.6

 

 

 

 

148.8

 

 

 

(198.5

)

(Decrease) increase in accounts payable

 

 

 

(29.3

)

 

 

 

101.1

 

 

 

(161.2

)

(Increase) decrease in other assets

 

 

 

(9.3

)

 

 

 

170.0

 

 

 

14.0

 

(Decrease) in accrued taxes

 

 

 

(10.5

)

 

 

 

(17.4

)

 

 

(65.5

)

(Decrease) in accrued expenses and other liabilities

 

 

 

(65.2

)

 

 

 

(25.0

)

 

 

(129.6

)

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

 

 

667.8

 

 

 

 

1,055.8

 

 

 

566.3

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures(a)

 

 

 

(193.3

)

 

 

 

(256.5

)

 

 

(246.1

)

Proceeds from the disposition of assets

 

 

 

26.9

 

 

 

 

2.8

 

 

 

8.2

 

Cost of acquisitions, net of cash acquired

 

 

 

(135.4

)

 

 

 

(784.1

)

 

 

(217.6

)

Other investing activities, net

 

 

 

(1.1

)

 

 

 

—

 

 

 

—

 

NET CASH USED IN INVESTING ACTIVITIES

 

 

 

(302.9

)

 

 

 

(1,037.8

)

 

 

(455.5

)

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

Increase in short-term debt

 

 

 

—

 

 

 

 

—

 

 

 

700.0

 

Repayment of short-term debt

 

 

 

—

 

 

 

 

(600.0

)

 

 

(1,100.0

)

Issuance of long-term debt

 

 

 

915.0

 

 

 

 

1,065.1

 

 

 

5,975.4

 

Repayment of long-term debt

 

 

 

(915.0

)

 

 

 

(470.0

)

 

 

(5,612.5

)

Proceeds from the exercise of stock options

 

 

 

15.5

 

 

 

 

18.0

 

 

 

1.1

 

Employee withholding taxes paid related to stock-based compensation

 

 

 

(14.4

)

 

 

 

(14.5

)

 

 

(27.0

)

Dividends to stockholders

 

 

 

(119.6

)

 

 

 

(116.8

)

 

 

(145.6

)

Dividends received from MasterBrand

 

 

 

—

 

 

 

 

—

 

 

 

940.0

 

Cash retained by Masterbrand at Separation

 

 

 

—

 

 

 

 

—

 

 

 

(56.3

)

Treasury stock purchases

 

 

 

(240.4

)

 

 

 

(150.0

)

 

 

(580.1

)

Other financing activities, net

 

 

 

(4.5

)

 

 

 

(3.1

)

 

 

(22.5

)

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES

 

 

 

(363.4

)

 

 

 

(271.3

)

 

 

72.5

 

Effect of foreign exchange rate changes on cash

 

 

 

(11.5

)

 

 

 

0.5

 

 

 

(11.1

)

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

 

 

$

(10.0

)

 

 

$

(252.8

)

 

$

172.2

 

Cash, cash equivalents and restricted cash(b) at beginning of year

 

 

$

395.5

 

 

 

$

648.3

 

 

$

476.1

 

Cash, cash equivalents and restricted cash(b) at end of year

 

 

$

385.5

 

 

 

$

395.5

 

 

$

648.3

 

Cash paid during the year for

 

 

 

 

 

 

 

 

 

 

 

Interest

 

 

$

126.6

 

 

 

$

121.4

 

 

$

102.9

 

Income taxes paid directly to taxing authorities

 

 

 

152.3

 

 

 

 

120.3

 

 

 

278.3

 

Dividends declared but not paid

 

 

 

30.9

 

 

 

 

30.3

 

 

 

29.4

 

 

(a)
Capital expenditures of $9.4 million, $34.1 million and $14.2 million that have not been paid as of December 28, 2024, December 30, 2023 and December 31, 2022, respectively, were excluded from the Consolidated Statement of Cash Flows.
(b)
Restricted cash of $1.3 million and $3.1 million is included in Other current assets and Other assets, respectively, as of December 28, 2024, $26.9 million and $2.2 million is included in Other current assets and Other assets, respectively, as of December 30, 2023 and $2.1 million and $3.7 million is included in Other current assets and Other assets, respectively, as of December 31, 2022 within our Consolidated Balance Sheet.

The Consolidated Statements of Cash Flows presented above include cash flows from continuing and discontinued operations. Refer to Note 5, "Discontinued Operations," for additional details.

See Notes to Consolidated Financial Statements.

49

 

 

Consolidated Statements of Equity

Fortune Brands Innovations, Inc. and Subsidiaries

 

(In millions, except per share amounts)

Common
Stock

 

Paid-In
Capital

 

Accumulated
 Other
Comprehensive
(Loss) Income

 

Retained
Earnings

 

Treasury
Stock

 

Total
Equity

 

Balance at December 31, 2021

$

1.9

 

$

3,018.3

 

$

(24.6

)

$

2,807.9

 

$

(2,738.7

)

$

3,064.8

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

—

 

$

—

 

$

—

 

$

686.7

 

$

—

 

$

686.7

 

Other comprehensive income

 

—

 

 

—

 

 

53.7

 

 

—

 

 

—

 

 

53.7

 

Distribution of MasterBrand

 

—

 

 

—

 

 

8.3

 

 

(1,973.5

)

 

—

 

 

(1,965.2

)

Dividends received from MasterBrand

 

—

 

 

—

 

 

—

 

 

940.0

 

 

—

 

 

940.0

 

Stock options exercised

 

—

 

 

1.1

 

 

—

 

 

—

 

 

—

 

 

1.1

 

Stock-based compensation

 

—

 

 

50.2

 

 

—

 

 

—

 

 

(27.0

)

 

23.2

 

Treasury stock purchase

 

—

 

 

—

 

 

—

 

 

—

 

 

(580.1

)

 

(580.1

)

Dividends ($1.07 per Common share)

 

—

 

 

—

 

 

—

 

 

(137.3

)

 

—

 

 

(137.3

)

Balance at December 31, 2022

$

1.9

 

$

3,069.6

 

$

37.4

 

$

2,323.8

 

$

(3,345.8

)

$

2,086.9

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

—

 

$

—

 

$

—

 

$

404.5

 

$

—

 

$

404.5

 

Other comprehensive income

 

—

 

 

—

 

 

19.7

 

 

—

 

 

—

 

 

19.7

 

Other

 

—

 

 

12.7

 

 

6.2

 

 

(5.3

)

 

—

 

 

13.6

 

Stock options exercised

 

—

 

 

18.0

 

 

—

 

 

—

 

 

—

 

 

18.0

 

Stock-based compensation

 

—

 

 

34.2

 

 

—

 

 

—

 

 

(14.5

)

 

19.7

 

Treasury stock purchase

 

—

 

 

—

 

 

—

 

 

—

 

 

(151.3

)

 

(151.3

)

Dividends ($0.93 per Common share)

 

—

 

 

—

 

 

—

 

 

(117.7

)

 

—

 

 

(117.7

)

Balance at December 30, 2023

$

1.9

 

$

3,134.5

 

$

63.3

 

$

2,605.3

 

$

(3,511.6

)

$

2,293.4

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

—

 

$

—

 

$

—

 

$

471.9

 

$

—

 

$

471.9

 

Other comprehensive income

 

—

 

 

—

 

 

(20.9

)

 

—

 

 

—

 

 

(20.9

)

Stock options exercised

 

—

 

 

15.5

 

 

—

 

 

—

 

 

—

 

 

15.5

 

Stock-based compensation

 

—

 

 

39.3

 

 

—

 

 

—

 

 

(14.4

)

 

24.9

 

Treasury stock purchase

 

—

 

 

—

 

 

—

 

 

—

 

 

(242.4

)

 

(242.4

)

Dividends ($0.97 per Common share)

 

—

 

 

—

 

 

—

 

 

(120.4

)

 

—

 

 

(120.4

)

Balance at December 28, 2024

$

1.9

 

$

3,189.3

 

$

42.4

 

$

2,956.8

 

$

(3,768.4

)

$

2,422.0

 

 

See Notes to Consolidated Financial Statements.

50

 

Notes to Consolidated Financial Statements

1. Background and Basis of Presentation

 

The Company is a leading innovation company focused on creating smarter, safer and more beautiful homes and lives with a portfolio of leading branded products used for residential home repair, remodeling, new construction and security applications. References to “Fortune Brands,” “the Company,” “we,” “our” and “us” refer to Fortune Brands Innovations, Inc. and its consolidated subsidiaries as a whole, unless the context otherwise requires.

Basis of Presentation The consolidated financial statements in this Annual Report on Form 10-K have been derived from the accounts of the Company and its wholly-owned subsidiaries. Effective January 1, 2023, the Company changed its fiscal year end from December 31 to a 52- or 53-week fiscal year closing on the Saturday closest but not subsequent to December 31 of each year. These notes contain references to the years 2024, 2023 and 2022, which represents fiscal years ended December 28, 2024, December 30, 2023 and December 31, 2022, respectively.

On February 29, 2024, we acquired 100% of the outstanding equity of Wise Water Solutions LLC., doing business as SpringWell Water Filtration Systems ("SpringWell"), for a purchase price of $105.6 million, subject to post-closing adjustments, net of cash acquired of $1.4 million. We financed the transaction using cash on hand and borrowings under our existing credit arrangements. The results of SpringWell are reported as part of the Water segment. We have not included pro forma financial information as the transaction is immaterial to our condensed consolidated statements of comprehensive income. The fair value allocated to assets acquired and liabilities assumed as of February 29, 2024, was $105.6 million, which includes $85.2 million of goodwill. Goodwill includes expected sales and cost synergies and is expected to be deductible for income tax purposes.

In June 2023, we acquired the Emtek and Schaub premium and luxury door and cabinet hardware business (the "Emtek and Schaub Business") and the U.S. and Canadian Yale and August residential smart locks business (the "Yale and August Business", and, collectively with the Emtek and Schaub Business, the "Acquired Businesses") from ASSA ABLOY, Inc. and its affiliates ("ASSA"). The Company completed the acquisition for a total purchase price of approximately $813.9 million, net of cash acquired of $21.9 million. During the second quarter of 2024, legal title to international operations in Vietnam transferred to us, which included a payment of approximately $23.5 million, net of cash of $5.6 million (which amount is already included in the overall purchase price). We financed the transaction with cash on hand. The results of the Emtek and Schaub Business are reported as part of the Water segment, and the results of the Yale and August Business are reported as part of the Security segment.

Effective in the first quarter of 2023, the Company revised its segment reporting from two reportable segments, Water Innovations and Outdoors & Security, to three reportable segments, Water, Outdoors and Security. The change in segment reporting was made to align with changes made in the manner our chief operating decision maker reviews the Company’s operating results in assessing performance and allocating resources. Comparative prior periods amounts have been recast to conform to the new segment presentation.

On December 14, 2022, the Company completed the spin-off of its Cabinets business, MasterBrand, Inc. ("MasterBrand") via a tax-free spin-off transaction (the "Separation"). The Separation created two independent, publicly traded companies. Immediately following completion of the Separation, the Company changed its name from “Fortune Brands Home & Security, Inc.” to “Fortune Brands Innovations, Inc.” and its stock ticker symbol changed from “FBHS” to “FBIN” to better reflect its focus on activities core to brands and innovation. As a result of the Separation, our former Cabinets segment was disposed of and the operating results of the Cabinets business are reported as discontinued operations for all periods presented within this Annual Report on Form 10-K. All amounts, percentages and disclosures for all periods presented reflect only the continuing operations of the Company unless otherwise noted. See Note 5, Discontinued Operations, for additional information.

In July 2022, we acquired 100% of the outstanding equity of Aqualisa Holdings (International) Ltd. (“Aqualisa”), a leading U.K. manufacturer of shower products known for premium, innovative and smart digital shower systems, for a purchase price of $156.0 million, net of cash acquired of $4.8 million.

51

 

In January 2022, we acquired 100% of the outstanding equity of Solar Innovations LLC and an affiliated entity (together, “Solar”), a leading producer of wide-opening exterior door systems and outdoor enclosures, for a purchase price of $61.6 million, net of cash acquired of $4.8 million.

 

 

 

2. Significant Accounting Policies

Use of Estimates The presentation of financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires us to make estimates and assumptions that affect reported amounts and related disclosures. Actual results in future periods could differ from those estimates.

Cash and Cash Equivalents Highly liquid investments with an original maturity of three months or less are included in cash and cash equivalents.

Allowances for Credit Losses Trade receivables are recorded at the stated amount, less allowances for discounts and credit losses. The allowances represent estimated uncollectible receivables associated with potential customer defaults on contractual obligations (usually due to customers’ potential insolvency) or discounts related to early payment of accounts receivables by our customers. The allowances for credit losses include provisions for certain customers where a risk of default has been specifically identified. In addition, the allowances include a provision for expected customer defaults on a general formula basis when it cannot yet be associated with specific customers. Expected credit losses are estimated using various factors, including the length of time the receivables are past due, historical collection experience and existing economic conditions. In accordance with this policy, our allowance for credit losses was $7.0 million and $7.7 million as of December 28, 2024 and December 30, 2023, respectively.

Inventories We use first-in, first-out inventory method. Inventory provisions are recorded to reduce inventory to the net realizable dollar value for obsolete or slow moving inventory based on assumptions about future demand and marketability of products, the impact of new product introductions, inventory levels and turns, product spoilage and specific identification of items, such as product discontinuance, engineering/material changes, or regulatory-related changes.

 

Property, Plant and Equipment Property, plant and equipment are carried at cost. Depreciation is provided, principally on a straight-line basis, over the estimated useful lives of the assets. Gains or losses resulting from dispositions are included in operating income. Betterments and renewals, which improve and extend the life of an asset, are capitalized; maintenance and repair costs are expensed as incurred. Assets held for use to be disposed of at a future date are depreciated over the remaining useful life. Assets to be sold are written down to fair value less costs to sell at the time the assets are being actively marketed for sale. Estimated useful lives of the related assets are as follows:

Buildings and leasehold improvements

15 to 40 years

Machinery and equipment

3 to 15 years

Software

3 to 7 years

 

Long-lived Assets In accordance with Accounting Standards Codification ("ASC") requirements for Property, Plant and Equipment, a long-lived asset (including amortizable identifiable intangible assets) or asset group held for use is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. When such events occur, we compare the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset or asset group to the carrying amount of a long-lived asset or asset group. The cash flows are based on our best estimate of future cash flows derived from the most recent business projections. If this comparison indicates that there is an impairment, the amount of the impairment is calculated based on fair value. Fair value is estimated primarily using discounted expected future cash flows on a market-participant basis.

No material impairments related to long-lived assets were recorded in 2024, 2023 or 2022.

52

 

Leases Operating lease assets and operating lease liabilities are recognized based on the present value of the future lease payments over the lease term at commencement date. As most of our lease contracts do not provide an explicit interest rate, we use our incremental borrowing rate in determining the present value of future lease payments. Our incremental borrowing rates include estimates related to the impact of collateralization and the economic environment where the leased asset is located. The operating lease assets also include any prepaid lease payments and initial direct costs incurred, but exclude lease incentives received at lease commencement. Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. As of December 28, 2024, our leases have remaining lease terms of one to 33 years, some of which may include options to extend or terminate the lease. Operating lease expense is recognized on a straight-line basis over the lease term.

We do not recognize leases with an initial term of twelve months or less on the balance sheet and instead recognize the related lease payments as expense in the consolidated statements of income on a straight-line basis over the lease term. We account for lease and non-lease components as a single lease component for all asset classes. Additionally, for certain equipment leases, we apply a portfolio approach and account for multiple lease components as a single lease component.

Certain lease agreements include variable rental payments, including rental payments adjusted periodically for inflation. Variable rental payments are expensed during the period they are incurred and therefore are excluded from our lease assets and liabilities. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Business Combinations We account for business combinations under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations, which requires an allocation of the consideration we paid to the identifiable assets, intangible assets and liabilities based on the estimated fair values as of the closing date of the acquisition. The excess of the fair value of the purchase price over the fair values of these identifiable assets, intangible assets and liabilities is recorded as goodwill.

Purchased intangibles other than goodwill are initially recognized at fair value and amortized over their useful lives unless those lives are determined to be indefinite. The valuation of acquired assets will impact future operating results. The fair value of identifiable intangible assets is determined using an income approach on an individual asset basis. Specifically, we use the multi-period excess earnings method to determine the fair value of customer relationships and the relief-from-royalty approach to determine the fair value of the tradename and proprietary technology. Determining the fair value of acquired intangibles involves significant estimates and assumptions, including forecasted revenue growth rates, EBIT margins, percentage of revenue attributable to the tradename, contributory asset charges, customer attrition rate, market-participant discount rates, the assumed royalty rates and income tax rates.

The determination of the useful life of an intangible asset other than goodwill is based on factors including historical tradename performance with respect to consumer name recognition, geographic market presence, market share, plans for ongoing tradename support and promotion, customer attrition rate, and other relevant factors.

Goodwill and Indefinite-lived Intangible Assets In accordance with ASC requirements for Intangibles - Goodwill and Other, management reviews goodwill for impairment annually in the fourth quarter and whenever market or business events indicate there may be a potential impairment of the reporting unit. Impairment losses are recorded to the extent that the carrying value of the reporting unit exceeds its fair value. The Company’s reporting units are operating segments, or one level below operating segments when appropriate.

53

 

To evaluate the recoverability of goodwill, we first assess qualitative factors to determine whether it is more likely than not that goodwill is impaired. Qualitative factors include changes in volume, margin, customers and the industry. If it is deemed more likely than not that goodwill for a reporting unit is impaired, we will perform a quantitative impairment test where fair value of each reporting unit is estimated using the income approach using a discounted cash flow model based on estimates of future cash flows combined with the market approach using comparable trading and transaction multiples based on guideline public companies. We may also elect to bypass the qualitative testing and proceed directly to the quantitative testing. For the income approach, using a discounted cash flow model, we estimate the future cash flows of the reporting units to which the goodwill relates and then discount the future cash flows at a market-participant-derived discount rate. In determining the estimated future cash flows, we consider current and projected future levels of income based on management’s plans for that business; business trends, prospects and market and economic conditions; and market-participant considerations. Furthermore, our cash flow projections used to assess impairment of our goodwill and other intangible assets are significantly influenced by our projection for the U.S. new home starts and home repair remodel spending, our annual operating plans finalized in the fourth quarter of each year, and our ability to execute on various planned cost reduction initiatives supporting operating income improvements. Our projection for the U.S. home products market is inherently uncertain and is subject to a number of factors, such as employment, home prices, credit availability, new home starts and the rate of home foreclosures. For the market approach, we apply comparable trading and transaction multiples based on guideline public companies to the current operating results of the reporting units to determine each reporting unit’s fair value.

The significant assumptions that are used to determine the estimated fair value of reporting units for impairment testing are forecasted revenue growth rates, operating income margins, market-participant discount rates and EBITDA multiples.

Certain of our tradenames have been assigned an indefinite life as we currently anticipate that these tradenames will contribute cash flows to the Company indefinitely. Indefinite-lived intangible assets are not amortized, but are evaluated at least annually to determine whether the indefinite useful life is appropriate. We measure the fair value of identifiable intangible assets upon acquisition and we review for impairment annually in the fourth quarter and whenever market or business events indicate there may be a potential impairment of that intangible. Impairment losses are recorded to the extent that the carrying value of the indefinite-lived intangible asset exceeds its fair value.

We first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired. Qualitative factors include changes in volume, customers and the industry. If it is deemed more likely than not that an intangible asset is impaired, we will perform a quantitative impairment test. We measure fair value of our indefinite-lived tradenames using the relief-from-royalty approach which estimates the present value of royalty income that could be hypothetically earned by licensing the brand name to a third party. The significant assumptions that are used to determine the estimated fair value for indefinite-lived intangible assets upon acquisition and subsequent impairment testing are forecasted revenue growth rates, the assumed royalty rates and the market-participant discount rates. Of our $518.8 million indefinite-lived tradenames, $215.6 million relate to our Water segment, $271.2 million relate to our Outdoors segment and $32.0 million relate to our Security segment as of December 28, 2024. There were no impairments for the year ended December 28, 2024. See Note 6, "Goodwill and Intangible Assets," for additional information.

Events or circumstances that could have a potential negative effect on the estimated fair value of our reporting units and indefinite-lived tradenames include: lower than forecasted revenues, actual new construction and repair and remodel growth rates that fall below our assumptions, actions of key customers, increases in discount rates, continued economic uncertainty, higher levels of unemployment, weak consumer confidence, lower levels of discretionary consumer spending, a decrease in royalty rates and decline in the trading price of our common stock. We cannot predict the occurrence of certain events or changes in circumstances that might adversely affect the carrying value of goodwill and indefinite-lived assets.

 

54

 

Investments in Equity Securities In accordance with ASC requirements for investments in equity securities, we utilize the equity method to account for investments when we possess the ability to exercise significant influence, but not control, over the operating and financial policies of the investee. The ability to exercise significant influence is presumed when the investor possesses more than 20% of the voting interests of the investee. This presumption may be overcome based on specific facts and circumstances that demonstrate that the ability to exercise significant influence is restricted. In applying the equity method, we record our investment at cost and subsequently increase or decrease the carrying amount of the investment by our proportionate share of the net earnings or losses of the investee. We record dividends or other equity distributions as reductions in the carrying value of our investment.

When we do not have the ability to exercise significant influence over the operating and financial policies of the investee, we account for non-controlling investments in equity securities at fair value, with any gains or losses recognized through other income and expense. Equity securities without readily determinable fair values are recorded at cost minus impairment, plus or minus any changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer.

Defined Benefit Plans We have a number of pension plans in the United States, covering many of the Company’s employees. In addition, the Company provides postretirement health care and life insurance benefits to certain retirees. Except for an hourly Union group within our Security segment, all benefit accruals under our defined benefit pension plans were frozen as of, or prior to, December 31, 2016.

 

We record amounts relating to these plans based on calculations in accordance with ASC requirements for Compensation – Retirement Benefits, which include various actuarial assumptions, including discount rates, assumed rates of return, compensation increases, turnover rates and health care cost trend rates. Actuarial gains or losses related to these assumptions represent the difference between actual and actuarially assumed experience. We recognize changes in the net actuarial gains or losses in other income, net to the extent they exceed 10 percent of the greater of the fair value of pension plan assets or projected benefit obligation for each plan (the “corridor”) in earnings immediately upon remeasurement. The measurement date for all plans was December 31 for the years ended 2024, 2023 and 2022. The Company applies the practical expedient under ASU 2015-04 to measure defined benefit retirement obligations and related plan assets as of the month-end that is closest to the fiscal year-end.

 

We review our actuarial assumptions on an annual basis and make modifications to the assumptions based on current economic conditions and trends. The discount rate used to measure obligations is based on a spot-rate yield curve on a plan-by-plan basis that matches projected future benefit payments with the appropriate interest rate applicable to the timing of the projected future benefit payments. The expected rate of return on plan assets is determined based on the nature of the plans’ investments, our current asset allocation and our expectations for long-term rates of return. Compensation increases reflect expected future compensation trends. For postretirement benefits, our health care trend rate assumption is based on historical cost increases and expectations for long-term increases. The cost or benefit of plan changes, such as increasing or decreasing benefits for prior employee service (prior service cost), is deferred and included in expense on a straight-line basis over the average remaining service period of the related employees. We believe that the assumptions utilized in recording obligations under our plans, which are presented in Note 15, “Defined Benefit Plans,” are reasonable based on our experience and on advice from our independent actuaries; however, differences in actual experience or changes in the assumptions may materially affect our financial position and results of operations. We will continue to monitor these assumptions as market conditions warrant.

Insurance Reserves We provide for expenses associated with workers’ compensation and product liability obligations when such amounts are probable and can be reasonably estimated. The accruals are adjusted as new information develops or circumstances change that would affect the estimated liability.

55

 

Litigation Contingencies Our businesses are subject to risks related to threatened or pending litigation and are routinely defendants in lawsuits associated with the normal conduct of business. Liabilities and costs associated with litigation-related loss contingencies require estimates and judgments based on our knowledge of the facts and circumstances surrounding each matter and the advice of our legal counsel. We record liabilities for litigation-related losses when a loss is probable and we can reasonably estimate the amount of the loss in accordance with ASC requirements for Contingencies. We evaluate the measurement of recorded liabilities each reporting period based on the then-current facts and circumstances specific to each matter. The ultimate losses incurred upon final resolution of litigation-related loss contingencies may differ materially from the estimated liability recorded at any particular balance sheet date. Changes in estimates are recorded in earnings in the period in which such changes occur.

Income Taxes In accordance with ASC requirements for Income Taxes, we establish deferred tax liabilities or assets for temporary differences between financial and tax reporting basis and subsequently adjust them to reflect changes in tax rates expected to be in effect when the temporary differences reverse. We record a valuation allowance reducing deferred tax assets when it is more likely than not that such assets will not be realized.

We record liabilities for uncertain income tax positions based on a two-step process. The first step is recognition, where we evaluate whether an individual tax position has a likelihood of greater than 50% of being sustained upon examination based on the technical merits of the position, including resolution of any related appeals or litigation processes. For tax positions that are currently estimated to have a less than 50% likelihood of being sustained, no tax benefit is recorded. For tax positions that have met the recognition threshold in the first step, we perform the second step of measuring the benefit to be recorded. The actual benefits ultimately realized may differ from our estimates. In future periods, changes in facts, circumstances and new information may require us to change the recognition and measurement estimates with regard to individual tax positions. Changes in recognition and measurement estimates are recorded in the consolidated statement of income and consolidated balance sheet in the period in which such changes occur. As of December 28, 2024, we had liabilities for unrecognized tax benefits pertaining to uncertain tax positions totaling $25.2 million. It is reasonably possible that the unrecognized tax benefits may decrease by $6.1 million in the next 12 months primarily as a result of the lapse of statutes of U.S. federal, state and foreign income taxes.

 

Revenue Recognition The Company recognizes revenue for the sale of goods based on its assessment of when control transfers to our customers. See Note 14, “Revenue,” for additional information.

Cost of Products Sold Cost of products sold includes all costs to make products saleable, such as labor costs, inbound freight, purchasing and receiving costs, inspection costs and internal transfer costs. In addition, all depreciation expense associated with assets used to manufacture products and make them saleable is included in cost of products sold.

Customer Program Costs Customer programs and incentives are a common practice in our businesses. Our businesses incur customer program costs to obtain favorable product placement, to promote sales of products and to maintain competitive pricing. We record estimates to reduce revenue for customer programs and incentives, which are considered variable consideration, and include price discounts, volume-based incentives, promotions and cooperative advertising when revenue is recognized in order to determine the amount of consideration the Company will ultimately be entitled to receive. These estimates are based on historical and projected experience for each type of customer. In addition, for certain customer program incentives, we receive an identifiable benefit (goods or services) in exchange for the consideration given and record the associated expenditure in selling, general and administrative expenses. Volume allowances are accrued based on management’s estimates of customer volume achievement and other factors incorporated into customer agreements, such as new products, store sell-through, merchandising support, levels of returns and customer training. Management periodically reviews accruals for these rebates and allowances, and adjusts accruals when circumstances indicate (typically as a result of a change in volume expectations). The costs typically recognized in selling, general and administrative expenses include product displays, point of sale materials and media production costs. The costs included in the selling, general and administrative expenses category were $31.0 million, $28.1 million and $24.7 million in 2024, 2023 and 2022, respectively.

56

 

Selling, General and Administrative Expenses Selling, general and administrative expenses include advertising costs; marketing costs; selling costs, including commissions; research and development costs; shipping and handling costs, including warehousing costs to store inventory ready for shipment to a customer; and general and administrative expenses. Shipping and handling costs included in selling, general and administrative expenses were $160.1 million, $161.3 million and $162.9 million in 2024, 2023 and 2022, respectively.

Advertising costs, which amounted to $235.8 million, $221.5 million and $220.7 million in 2024, 2023 and 2022, respectively, are generally expensed as incurred. Advertising costs paid to customers as pricing rebates include product displays, marketing administration costs, media production costs and point-of-sale materials. Advertising costs recorded as a reduction to net sales, primarily cooperative advertising, were $50.9 million, $51.4 million and $47.7 million in 2024, 2023 and 2022, respectively. Advertising costs recorded in selling, general and administrative expenses were $184.9 million, $170.1 million and $173.0 million in 2024, 2023 and 2022, respectively.

Research and development expenses include product development, product improvement, product engineering and process improvement costs. Research and development expenses, which were $69.9 million, $64.6 million and $62.0 million in 2024, 2023 and 2022, respectively, are expensed as incurred within selling, general and administrative expenses.

Stock-based Compensation Stock-based compensation expense, measured as the fair value of an award on the date of grant, is recognized in the financial statements over the period that an employee is required to provide services in exchange for the award. Compensation expense is recorded net of forfeitures, which we have elected to record in the period they occur. The fair value of each option award is measured on the date of grant using the Black-Scholes option-pricing model. The fair value of each performance share award is based on the average of the high and low share prices on the date of grant and the probability of meeting performance targets. The fair value of each restricted stock unit granted is equal to the average of the high and low share prices on the date of grant. See Note 13, “Stock-Based Compensation,” for additional information.

Earnings Per Share Earnings per common share is calculated by dividing net income by the weighted-average number of shares of common stock outstanding during the year. Diluted earnings per common share include the impact of all potentially dilutive securities outstanding during the year. See Note 20, “Earnings Per Share,” for further discussion.

Foreign Currency Translation Foreign currency balance sheet accounts are translated into U.S. dollars at the actual rates of exchange at the balance sheet date. Income and expenses are translated at the average rates of exchange in effect during the period for the foreign subsidiaries where the local currency is the functional currency. The related translation adjustments are made directly to a separate component of the “accumulated other comprehensive income” (“AOCI”) caption in equity. Transactions denominated in a currency other than the functional currency of a subsidiary are translated into functional currency with resulting transaction gains or losses recorded in other expense, net.

Derivative Financial Instruments In accordance with ASC requirements for Derivatives and Hedging, we recognize all derivative contracts as either assets or liabilities on the balance sheet, and the measurement of those instruments is at fair value. If the derivative is designated as a fair value hedge and is effective, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in earnings in the same period. If the derivative is designated as a cash flow hedge, the changes in the fair value of the derivative are recorded in other comprehensive income (“OCI”) and are recognized in the consolidated statement of income when the hedged item affects earnings. If the derivative is designated as an effective economic hedge of the net investment in a foreign operation, the changes in the fair value of the derivative is reported in the cumulative translation adjustment section of OCI. Similar to foreign currency translation adjustments, these changes in fair value are recognized in earnings only when realized upon sale or upon complete or substantially complete liquidation of the investment in the foreign entity.

Deferred currency gains (losses) of $(0.4) million, $5.2 million and $4.7 million (before tax impact) were reclassified into earnings for 2024, 2023 and 2022, respectively. Based on foreign exchange rates as of December 28, 2024, we estimate that $12.5 million of net derivative gains included in AOCI as of December 28, 2024, will be reclassified to earnings within the next twelve months.

57

 

New Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2023-07, which improves segment disclosure reporting requirements, primarily through enhanced disclosures about significant segment expenses. The standard is effective for the Company for annual periods starting in 2024 and interim periods in 2025. Refer to Note 19, "Information on Business Segments" for the disclosures required by ASU 2023-07.

In December 2023, the FASB issued ASU 2023-09 which requires expanded disclosure of the effective tax rate reconciliation and income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. We will adopt this ASU prospectively for the period ending December 27, 2025, and it will impact only our disclosures with no impacts to our financial statements and results of operations.

In November 2024, the FASB issued ASU 2024-03 which requires an entity to disclose the amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expense caption. It also requires an entity to include certain amounts that are required to be disclosed under current GAAP in the same disclosure. Additionally, it requires an entity to disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, and to disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. The amendments in the ASU are effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted. An entity may apply the amendments prospectively for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements. While this ASU will impact only our disclosures and not our financial statements and results of operations, we are currently evaluating when we will adopt the ASU.

 

3. Balance Sheet Information

Supplemental information on our year-end consolidated balance sheets is as follows:

 

(In millions)

 

December 28, 2024

 

 

 

December 30, 2023

 

Inventories:

 

 

 

 

 

 

 

Raw materials and supplies

 

$

329.2

 

 

 

$

352.4

 

Work in process

 

 

56.8

 

 

 

 

83.2

 

Finished products

 

 

574.3

 

 

 

 

546.7

 

Total inventories

 

$

960.3

 

 

 

$

982.3

 

Property, plant and equipment:

 

 

 

 

 

 

 

Land and improvements

 

$

58.7

 

 

 

$

53.6

 

Buildings and improvements to leaseholds

 

 

332.0

 

 

 

 

320.3

 

Machinery and equipment

 

 

1,268.4

 

 

 

 

1,147.7

 

Construction in progress

 

 

357.6

 

 

 

 

383.2

 

Property, plant and equipment, gross

 

 

2,016.7

 

 

 

 

1,904.8

 

Less: accumulated depreciation

 

 

1,017.5

 

 

 

 

929.8

 

Property, plant and equipment, net of accumulated depreciation

 

$

999.2

 

 

 

$

975.0

 

Other current liabilities:

 

 

 

 

 

 

 

Accrued salaries, wages and other compensation

 

$

113.9

 

 

 

$

125.4

 

Accrued customer programs

 

 

226.2

 

 

 

 

221.2

 

Accrued taxes

 

 

26.7

 

 

 

 

31.5

 

Dividends payable

 

 

30.9

 

 

 

 

30.3

 

Other accrued expenses

 

 

191.1

 

 

 

 

223.9

 

Total other current liabilities

 

$

588.8

 

 

 

$

632.3

 

 

58

 

4. Acquisitions

 

SpringWell

 

On February 29, 2024, we acquired 100% of the outstanding equity of SpringWell for a purchase price of $105.6 million, subject to post-closing adjustments, net of cash acquired of $1.4 million. We financed the transaction using cash on hand and borrowings under our existing credit arrangements. The results of SpringWell are reported as part of the Water segment. We have not included pro forma financial information as the transaction is immaterial to our condensed consolidated statements of comprehensive income. The fair value allocated to assets acquired and liabilities assumed as of February 29, 2024, was $105.6 million, which includes $85.2 million of goodwill. Goodwill includes expected sales and cost synergies and is expected to be deductible for income tax purposes.

 

Acquired Businesses

 

In June 2023, we acquired the Acquired Businesses from ASSA. The Company completed the acquisition for a total purchase price of approximately $813.9 million, net of cash acquired of $21.9 million. During the second quarter of 2024, legal title to international operations in Vietnam transferred to us, which included a payment of approximately $23.5 million, net of cash of $5.6 million (which amount is already included in the overall purchase price). We financed the transaction with cash on hand. The results of the Emtek and Schaub Business are reported as part of the Water segment, and the results of the Yale and August Business are reported as part of the Security segment. We incurred $19.7 million of ASSA acquisition-related transaction costs in the year ended December 30, 2023.

 

The following unaudited pro forma summary presents consolidated financial information as if the Acquired Businesses had been acquired on January 1, 2022. The unaudited pro forma financial information is based on historical results of operations and financial position of the Company and the Acquired Businesses. The pro forma results include:

•
estimated amortization of finite-lived intangible assets, including customer relationships and proprietary technology,
•
the estimated cost of the inventory adjustment to fair value,
•
the reclassification of Acquired Businesses transaction costs from 2023 to the first quarter of 2022,
•
the removal of certain transactions recorded in the historical financial statements of the Acquired Businesses related to assets and activities which were retained by the seller, and
•
adjustments to conform accounting policies.

The unaudited pro forma financial information does not necessarily represent the results that would have occurred had the acquisition occurred on January 1, 2022. In addition, the unaudited pro forma information should not be deemed to be indicative of future results.

 

(In millions)

 

 

2023

 

Net sales

 

$

4,811.2

 

Net income

 

$

443.1

 

Aqualisa

 

In July 2022, we acquired 100% of the outstanding equity of Aqualisa for a purchase price of $156.0 million, net of cash acquired of $4.8 million. We financed the transaction using cash on hand and borrowings under our revolving credit facility. The results of Aqualisa are reported as part of the Water segment. We have not included pro forma financial information as the transaction is not material to our condensed consolidated statements of comprehensive income. The fair value allocated to assets acquired and liabilities assumed as of July 29, 2022 was $156.0 million, which includes $88.7 million of goodwill. Goodwill includes expected sales and cost synergies and is not expected to be deductible for income tax purposes.

59

 

 

Solar

In January 2022, we acquired 100% of the outstanding equity of Solar for a purchase price of $61.6 million, net of cash acquired of $4.8 million. We financed the transaction using cash on hand and borrowings under our revolving credit facility. The results of Solar are reported as part of the Outdoors segment. We have not included pro forma financial information as the transaction is immaterial to our condensed consolidated statements of comprehensive income. The fair value allocated to assets acquired and liabilities assumed as of January 31, 2022 was $61.6 million, which includes $23.3 million of goodwill. Goodwill includes expected sales and cost synergies and is expected to be deductible for income tax purposes.

5. Discontinued Operations

 

On December 14, 2022, the Company completed the Separation. The consolidated statements of income and consolidated balance sheets for all prior periods have been adjusted to reflect the presentation of MasterBrand as discontinued operations. During 2023, we recognized expense of $1.0 million within Income (loss) from discontinued operations, net of tax.

 

The following table summarizes the results of the discontinued operations for the year ended December 31, 2022.

 

(In millions)

2022

 

NET SALES

$

3,199.7

 

Cost of products sold

 

2,279.3

 

Selling, general and administrative expense

 

619.7

 

Amortization of intangible asset

 

16.8

 

Asset impairment charges

 

46.4

 

Restructuring charges

 

25.1

 

DISCONTINUED OPERATING INCOME

 

212.4

 

Interest expense

 

0.2

 

Other expense, net

 

2.2

 

INCOME FROM DISCONTINUED OPERATIONS BEFORE INCOME TAXES

 

210.0

 

Income taxes

 

63.2

 

INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX

$

146.8

 

 

We incurred $63.2 million of transaction costs in connection with the Separation during the year ended December 31, 2022, which are included in the consolidated statements of operations as discontinued operations. These costs include legal, accounting and advisory fees, implementation and integration costs, duplicative costs for subscriptions and information technology systems, employee and contract costs, and other incremental separation costs related to the Separation.

 

The following table summarizes the cash flows of MasterBrand, which are reflected in the consolidated statements of cash flows:

 

(In millions)

 

2022

 

Net cash provided by operating activities

 

$

213.0

 

Net cash used in investing activities

 

 

(55.8

)

Net cash used in financing activities

 

 

—

 

Effect of foreign exchange rate changes on cash

 

 

(0.2

)

Net increase in cash and cash equivalents

 

$

157.0

 

MasterBrand depreciation for 2022 was $43.6 million. MasterBrand amortization of intangibles for 2022 was $16.8 million. MasterBrand capital expenditures for 2022 were $55.8 million.

60

 

6. Goodwill and Identifiable Intangible Assets

The following table summarizes the changes in the carry value of goodwill by segment:

 

(In millions)

 

Water

 

 

 

Outdoors

 

 

Security

 

 

Total
Goodwill

 

Balance at December 31, 2022(a)

 

$

893.4

 

 

 

$

651.0

 

 

$

96.3

 

 

$

1,640.7

 

Foreign currency translation adjustments and other

 

 

8.1

 

 

 

 

—

 

 

 

0.4

 

 

 

8.5

 

Acquisition-related adjustments

 

 

227.8

 

 

 

 

0.1

 

 

 

29.7

 

 

 

257.6

 

Balance at December 30, 2023(a)

 

$

1,129.3

 

 

 

$

651.1

 

 

$

126.4

 

 

$

1,906.8

 

Foreign currency translation adjustments and other

 

 

(5.3

)

 

 

 

—

 

 

 

(1.2

)

 

 

(6.5

)

Acquisition-related adjustments

 

 

87.2

 

 

 

 

—

 

 

 

4.5

 

 

 

91.7

 

Balance at December 28, 2024(a)

 

$

1,211.2

 

 

 

$

651.1

 

 

$

129.7

 

 

$

1,992.0

 

 

(a)
Net of accumulated impairment losses of $399.5 million in the Outdoors segment.

The gross carrying value and accumulated amortization for each major category of intangible asset are as follows:

 

 

As of December 28, 2024

 

As of December 30, 2023

 

(In millions)

Gross
Carrying
Amounts

 

Accumulated
Amortization

 

Net Book
Value

 

Gross
Carrying
Amounts

 

Accumulated
Amortization

 

Net Book
Value

 

Indefinite-lived tradenames

$

518.8

 

$

—

 

$

518.8

 

$

520.1

 

$

—

 

$

520.1

 

Amortizable intangible assets

 

 

 

 

 

 

 

 

 

 

 

 

Tradenames

 

76.1

 

 

(13.1

)

 

63.0

 

 

58.4

 

 

(9.3

)

 

49.1

 

Customer and contractual relationships

 

1,015.5

 

 

(346.2

)

 

669.3

 

 

1,017.3

 

 

(289.4

)

 

727.9

 

Patents/proprietary technology

 

138.9

 

 

(92.8

)

 

46.1

 

 

138.2

 

 

(80.6

)

 

57.6

 

Total

 

1,230.5

 

 

(452.1

)

 

778.4

 

 

1,213.9

 

 

(379.3

)

 

834.6

 

Total identifiable intangibles

$

1,749.3

 

$

(452.1

)

$

1,297.2

 

$

1,734.0

 

$

(379.3

)

$

1,354.7

 

 

Amortizable intangible assets, principally customer relationships, are subject to amortization on a straight-line basis over their estimated useful life, ranging from 5 to 30 years, based on the assessment of a number of factors that may impact useful life, which include customer attrition rates and other relevant factors. We expect to record intangible amortization of approximately $75.0 million in 2025, $74.0 million in 2026, $71.0 million in 2027, $64.0 million in 2028 and $63.0 million in 2029.

During the fourth quarter of 2023, a reduction of revenue growth expectations, which were finalized during our annual planning process, led us to conclude that it was more likely than not that two indefinite-lived tradenames within our Outdoors segment were impaired. As a result of impairment tests performed, we recorded an impairment charge of $33.5 million related to the two indefinite-lived tradenames. As of December 30, 2023, the carrying value of these tradenames was $95.5 million.

The fair values of the impaired tradenames were measured using the relief-from-royalty approach, which estimates the present value of royalty income that could be hypothetically earned by licensing the tradename to a third party over its remaining useful life. Some of the more significant assumptions inherent in estimating the fair values include forecasted revenue growth rates, assumed royalty rates, and market-participant discount rates that reflect the level of risk associated with the tradenames’ future revenues and profitability. We selected the assumptions used in the financial forecasts using historical data, supplemented by current and anticipated market conditions, estimated growth rates and management plans. These assumptions represent level 3 inputs of the fair value hierarchy (refer to Note 10, "Fair Value Measurements").

 

61

 

The significant assumptions used to estimate the fair value of the tradenames impaired during the year ended December 30, 2023 were as follows:

 

 

 

2023

 

Unobservable Input

 

Minimum

 

 

Maximum

 

 

Weighted Average(a)

 

Discount rates

 

 

13.0

%

 

 

14.5

%

 

 

14.3

%

Royalty rates(b)

 

 

2.5

%

 

 

3.5

%

 

 

3.4

%

Long-term revenue growth rates(c)

 

 

2.0

%

 

 

3.0

%

 

 

2.1

%

 

(a)
Weighted by the relative fair value of the tradenames that were tested quantitatively.
(b)
Represents estimated percentage of sales a market-participant would pay to license the impaired tradenames.
(c)
Selected long-term revenue growth rate within 10-year projection period of the impaired tradenames.

 

7. Leases

We have operating and finance leases for buildings and certain machinery and equipment. Operating leases are included in operating lease assets, other current liabilities and operating lease liabilities in our consolidated balance sheets. Amounts recognized for finance leases as of and for the years ended December 28, 2024 and December 30, 2023 were immaterial.

Operating lease expense recognized in the consolidated statement of comprehensive income for 2024, 2023 and 2022 were $46.1 million, $42.1 million and $37.4 million, respectively.

 

Other information related to leases was as follows:

 

(In millions, except lease term and discount rate)

 

December 28, 2024

 

 

December 30, 2023

 

 

December 31, 2022

 

Cash paid for amounts included in the measurement of
   lease liabilities:

 

 

 

 

 

 

 

 

 

Operating cash flows from operating leases

 

$

43.1

 

 

$

36.5

 

 

$

35.1

 

Right-of-use assets obtained in exchange for operating
   lease obligations

 

$

14.0

 

 

$

87.1

 

 

$

21.6

 

Weighted average remaining lease term - operating leases

 

6.1 years

 

 

6.7 years

 

 

5.6 years

 

Weighted average discount rate - operating leases

 

 

5.0

%

 

 

4.1

%

 

 

3.6

%

 

Future lease payments under non-cancelable operating leases as of December 28, 2024 were as follows:

 

(In millions)

 

 

 

 

 

 

 

2025

 

$

38.6

 

2026

 

 

33.7

 

2027

 

 

26.0

 

2028

 

 

21.0

 

2029

 

 

16.6

 

Thereafter

 

 

44.7

 

Total lease payments

 

 

180.6

 

Less imputed interest

 

 

(27.5

)

Total

 

$

153.1

 

Reported as of December 28, 2024

 

 

 

Other current liabilities

 

$

31.5

 

Operating lease liabilities

 

 

121.6

 

Total

 

$

153.1

 

 

62

 

8. External Debt and Financing Arrangements

Long-term Debt

The following table summarizes the carrying value of the Company's long-term debt, net of underwriting commissions, price discounts and debt issuance costs:

 (in millions)

 

 

 

 

 

 

 

Net Carrying Value

 

Coupon Rate

Principal Amount

 

 

Issuance Date

 

Maturity Date

 

December 28, 2024

 

 

December 30, 2023

 

4.000% Senior Notes

$

500.0

 

 

June 2015

 

June 2025

 

$

499.6

 

 

$

498.9

 

3.250% Senior Notes

$

700.0

 

 

September 2019

 

September 2029

 

 

696.5

 

 

 

695.7

 

4.000% Senior Notes

$

450.0

 

 

March 2022

 

March 2032

 

 

446.7

 

 

 

446.2

 

4.500% Senior Notes

$

450.0

 

 

March 2022

 

March 2052

 

 

436.4

 

 

 

435.9

 

5.875% Senior Notes

$

600.0

 

 

June 2023

 

June 2033

 

 

594.1

 

 

 

593.4

 

Total Senior Notes

 

 

 

 

 

 

 

$

2,673.3

 

 

$

2,670.1

 

Less: current portion

 

 

 

 

 

 

 

 

499.6

 

 

 

—

 

Total long-term debt

 

 

 

 

 

 

 

$

2,173.7

 

 

$

2,670.1

 

Debt payments due during the next five years as of December 28, 2024 are $500 million in 2025, zero in 2026, zero in 2027, zero in 2028, $700 million in 2029 and $1,500 million in 2030 and beyond. Interest payments due during the next five years as of December 28, 2024 are $106.3 million in 2025, $192.5 million in 2026 through 2027, $192.5 million in 2028 through 2029 and $624.0 million in 2030 and beyond.

Credit Facilities

In August 2022, the Company entered into a third amended and restated $1.25 billion revolving credit facility (the “2022 Revolving Credit Agreement”), and borrowings thereunder will be used for general corporate purposes. The maturity date of the facility is August 2027. Interest rates under the 2022 Revolving Credit Agreement are variable based on the Secured Overnight Financing Rate (“SOFR”) at the time of the borrowing and the Company’s long-term credit rating and can range from SOFR + 1.02% to SOFR + 1.525%. Under the 2022 Revolving Credit Agreement, the Company is required to maintain a minimum ratio of consolidated EBITDA to consolidated interest expense of 3.0 to 1.0. Consolidated EBITDA is defined as consolidated net income before interest expense, income taxes, depreciation, amortization of intangible assets, losses from asset impairments, and certain other one-time adjustments. In addition, the Company's ratio of consolidated debt minus certain cash and cash equivalents to consolidated EBITDA generally may not exceed 3.5 to 1.0. There were no outstanding borrowings under this facility as of December 28, 2024 or December 30, 2023. As of December 28, 2024, we were in compliance with all covenants under this facility.

 

We currently have uncommitted bank lines of credit in China, which provide for unsecured borrowings for working capital of up $30.5 million in aggregate as of December 28, 2024 and December 30, 2023, of which there were no outstanding balances as of December 28, 2024 and December 30, 2023. The weighted-average interest rates on these borrowings were zero in 2024 and 2023.

Commercial Paper

The Company operates a commercial paper program (the “Commercial Paper Program”) pursuant to which the Company may issue unsecured commercial paper notes. The Company’s 2022 Revolving Credit Agreement is the liquidity backstop for the repayment of any notes issued under the Commercial Paper Program, and as such, borrowings under the Commercial Paper Program are included in Long-term debt in the condensed consolidated balance sheets. Amounts available under the Commercial Paper Program may be borrowed, repaid and re-borrowed, with the aggregate principal amount outstanding at any time, including borrowings under the 2022 Revolving Credit Agreement, not to exceed $1.25 billion. The Company expects to use any issuances under the Commercial Paper Program for general corporate purposes. There were no outstanding borrowings under our Commercial Paper facility as of December 28, 2024 or December 30, 2023.

63

 

 

In our debt and credit agreements, there are normal and customary events of default which would permit the lenders to accelerate the debt if not cured within applicable grace periods, such as failure to pay principal or interest when due or a change in control of the Company. There were no events of default as of December 28, 2024.

 

 

9. Financial Instruments

We do not enter into financial instruments for trading or speculative purposes. We principally use financial instruments to reduce the impact of changes in foreign currency exchange rates and commodities used as raw materials in our products. The principal derivative financial instruments we enter into on a routine basis are foreign exchange contracts. Derivative financial instruments are recorded at fair value. The counterparties to derivative contracts are major financial institutions. We are subject to credit risk on these contracts equal to the fair value of these instruments. Management currently believes that the risk of incurring material losses is unlikely and that the losses, if any, would be immaterial to the Company.

Raw materials used by the Company are subject to price volatility caused by weather, supply conditions, geopolitical and economic variables, and other unpredictable external factors. As a result, from time to time, we enter into commodity swaps to manage the price risk associated with forecasted purchases of materials used in our operations. We account for these commodity derivatives as economic hedges or cash flow hedges. Changes in the fair value of economic hedges are recorded directly into current period earnings. Commodity derivatives outstanding at December 28, 2024 and December 30, 2023 were not material to the Consolidated balance sheet or Consolidated statement of income.

We may be exposed to interest rate risk on existing debt or forecasted debt issuance. To mitigate this risk, we may enter into interest rate hedge contracts. There were no outstanding interest rate hedges as of December 28, 2024.

We may enter into foreign currency forward contracts to protect against foreign exchange risks associated with certain existing assets and liabilities, forecasted future cash flows, and net investments in foreign subsidiaries. Foreign exchange contracts related to forecasted future cash flows correspond to the periods of the forecasted transactions, which generally do not exceed 12 to 15 months subsequent to the latest balance sheet date. Our primary foreign currency hedge contracts pertain to the British pound, the Canadian dollar, the Mexican peso, the Chinese yuan and the South African rand. The gross U.S. dollar equivalent notional amount of all foreign currency derivative hedges outstanding at December 28, 2024 was $547.8 million, representing a net settlement asset of $1.1 million. Based on foreign exchange rates as of December 28, 2024, we estimate that $12.5 million of net derivative gains included in accumulated other comprehensive income as of December 28, 2024 will be reclassified to earnings within the next twelve months.

We have entered into cross-currency swaps contracts to hedge both our Canadian dollar and Chinese yuan exposures of the Company's net investments in certain foreign subsidiaries. The cross-currency swap contracts expire at various dates through November 2026. As of December 28, 2024, the notional amount of the cross-currency swap contracts was $235.0 million. The cross-currency swap contracts were designated as net investment hedges, with the amount of gain or loss associated with the change in fair value of these instruments included within accumulated other comprehensive income and recognized in earnings upon termination of the respective net investment.

For derivative instruments that are designated as fair value hedges, the gain or loss on the derivative instrument, as well as the offsetting loss or gain on the hedged item, are recognized on the same line of the consolidated statements of income. The changes in the fair value of cash flow hedges are reported in other comprehensive income and are recognized in the consolidated statements of income when the hedged item affects earnings.

64

 

The fair values of foreign exchange and commodity derivative instruments on the consolidated balance sheets as of December 28, 2024 and December 30, 2023 were:

 

 

 

 

 

Fair Value

 

(In millions)

 

Location

 

 

2024

 

 

 

2023

 

Assets:

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

Other current assets

 

 

$

3.8

 

 

 

$

0.8

 

Net investment hedges

 

Other current assets

 

 

 

2.0

 

 

 

 

—

 

Net investment hedges

 

Other assets

 

 

 

2.8

 

 

 

 

—

 

 

Total assets

 

 

$

8.6

 

 

 

$

0.8

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

Other current liabilities

 

 

$

2.7

 

 

 

$

2.7

 

 

Total liabilities

 

 

$

2.7

 

 

 

$

2.7

 

 

The effects of derivative financial instruments on the consolidated statements of income in 2024, 2023 and 2022 were:

 

(In millions)

 

Classification and Amount of Gain (Loss)
   Recognized in Income on Fair Value and
   Cash Flow Hedging Relationships

 

 

 

2024

 

 

 

Cost of
products sold

 

 

Interest
expense

 

 

Other expense, net

 

Total amounts per Consolidated Statements of Income

 

$

2,542.7

 

 

$

120.5

 

 

$

11.9

 

Gain (loss) on fair value hedging relationships

 

 

 

 

 

 

 

 

 

Foreign exchange contracts:

 

 

 

 

 

 

 

 

 

Hedged items

 

 

—

 

 

 

—

 

 

 

6.8

 

Derivative designated as hedging instruments

 

 

—

 

 

 

—

 

 

 

(10.1

)

Gain on net investment hedging relationships

 

 

—

 

 

 

—

 

 

 

1.8

 

Gain (loss) on cash flow hedging relationships

 

 

 

 

 

 

 

 

 

Foreign exchange contracts:

 

 

 

 

 

 

 

 

 

Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income

 

 

(0.4

)

 

 

—

 

 

 

—

 

Interest rate contracts:

 

 

 

 

 

 

 

 

 

Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income

 

 

—

 

 

 

12.6

 

 

 

—

 

 

 

65

 

(In millions)

 

Classification and Amount of Gain (Loss)
   Recognized in Income on Fair Value and
   Cash Flow Hedging Relationships

 

 

 

2023

 

 

 

Cost of
products sold

 

 

Interest
expense

 

 

Other income, net

 

Total amounts per Consolidated Statements of Income

 

$

2,714.8

 

 

$

116.5

 

 

$

19.5

 

Gain (loss) on fair value hedging relationships

 

 

 

 

 

 

 

 

 

Foreign exchange contracts:

 

 

 

 

 

 

 

 

 

Hedged items

 

 

—

 

 

 

—

 

 

 

2.0

 

Derivative designated as hedging instruments

 

 

—

 

 

 

—

 

 

 

(0.4

)

Gain (loss) on cash flow hedging relationships

 

 

 

 

 

 

 

 

 

Foreign exchange contracts:

 

 

 

 

 

 

 

 

 

Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income

 

 

5.2

 

 

 

—

 

 

 

—

 

Commodity contracts:

 

 

 

 

 

 

 

 

 

Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income

 

 

(0.2

)

 

 

—

 

 

 

—

 

Interest rate contracts:

 

 

 

 

 

 

 

 

 

Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income

 

 

—

 

 

 

9.0

 

 

 

—

 

 

(In millions)

 

Classification and Amount of Gain (Loss)
   Recognized in Income on Fair Value and
   Cash Flow Hedging Relationships

 

 

 

2022

 

 

 

Cost of
products sold

 

 

Interest
expense

 

 

Other income, net

 

Total amounts per Consolidated Statements of Income

 

$

2,790.1

 

 

$

119.2

 

 

$

12.0

 

Gain (loss) on fair value hedging relationships

 

 

 

 

 

 

 

 

 

Foreign exchange contracts:

 

 

 

 

 

 

 

 

 

Hedged items

 

 

—

 

 

 

—

 

 

 

(22.4

)

Derivative designated as hedging instruments

 

 

—

 

 

 

—

 

 

 

21.3

 

Gain (loss) on cash flow hedging relationships

 

 

 

 

 

 

 

 

 

Foreign exchange contracts:

 

 

 

 

 

 

 

 

 

Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income

 

 

4.8

 

 

 

—

 

 

 

—

 

Commodity contracts:

 

 

 

 

 

 

 

 

 

Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income

 

 

(7.3

)

 

 

—

 

 

 

—

 

Interest rate contracts:

 

 

 

 

 

 

 

 

 

Amount of gain or (loss) reclassified from accumulated other comprehensive (loss) income into income

 

 

—

 

 

 

3.6

 

 

 

—

 

 

The cash flow hedges from continuing operations recognized in other comprehensive income were net gains of $2.1 million, $4.1 million and $119.0 million in 2024, 2023 and 2022 respectively.

66

 

10. Fair Value Measurements

ASC requirements for Fair Value Measurements and Disclosures establish a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels. Level 1 inputs, the highest priority, are quoted prices in active markets for identical assets or liabilities. Level 2 inputs reflect other than quoted prices included in level 1 that are either observable directly or through corroboration with observable market data. Level 3 inputs are unobservable inputs due to little or no market activity for the asset or liability, such as internally developed valuation models. We do not have any assets or liabilities measured at fair value on a recurring basis that are level 3, except for pension assets discussed in Note 15, "Defined Benefit Plans."

The carrying value and fair value of debt as of December 28, 2024 and December 30, 2023 were as follows:

 

(In millions)

 

December 28, 2024

 

 

December 30, 2023

 

 

 

Carrying
Value

 

 

Fair
Value

 

 

Carrying
Value

 

 

Fair
Value

 

Notes, net of underwriting commissions, price
   discounts and debt issuance costs

 

$

2,673.3

 

 

$

2,522.5

 

 

$

2,670.1

 

 

$

2,562.4

 

 

The estimated fair value of our 2022 Revolving Credit Agreement is determined primarily using broker quotes, which are level 2 inputs. The estimated fair value of our Notes is determined by using quoted market prices of our debt securities, which are level 1 inputs.

Assets and liabilities measured at fair value on a recurring basis as of December 28, 2024 and December 30, 2023 were as follows:

 

(In millions)

 

Fair Value

 

 

 

2024

 

 

 

2023

 

Assets:

 

 

 

 

 

 

 

Derivative asset financial instruments (level 2)

 

$

8.6

 

 

 

$

0.8

 

Liabilities:

 

 

 

 

 

 

 

Derivative liability financial instruments (level 2)

 

$

2.7

 

 

 

$

2.7

 

 

The principal derivative financial instruments we enter into on a routine basis are foreign exchange contracts. In addition, from time to time, we enter into commodity swaps. Derivative financial instruments are recorded at fair value.

 

11. Common Stock

The Company has 750 million authorized shares of common stock, par value $0.01 per share and 60 million authorized shares of preferred stock, par value $0.01 per share. The number of shares of common stock and treasury stock and the share activity for 2024 and 2023 were as follows:

 

 

 

Common Shares

 

 

 

Treasury Shares

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Balance at the beginning of the year

 

 

126,287,327

 

 

 

 

128,040,559

 

 

 

 

60,848,871

 

 

 

 

58,132,478

 

Stock plan shares issued

 

 

783,060

 

 

 

 

963,161

 

 

 

 

—

 

 

 

 

—

 

Shares surrendered by optionees

 

 

(181,045

)

 

 

 

(229,115

)

 

 

 

181,045

 

 

 

 

229,115

 

Common stock repurchases

 

 

(3,251,827

)

 

 

 

(2,487,278

)

 

 

 

3,251,827

 

 

 

 

2,487,278

 

Balance at the end of the year

 

 

123,637,515

 

 

 

 

126,287,327

 

 

 

 

64,281,743

 

 

 

 

60,848,871

 

 

At December 28, 2024, no shares of our preferred stock were outstanding. Our Board of Directors has the authority, without action by the Company’s stockholders, to designate and issue our preferred stock in one or more series and to designate the rights, preferences, limitations and privileges of each series of preferred stock, which may be greater than the rights of the Company’s common stock.

67

 

In 2024, we repurchased 3.3 million shares of outstanding common stock under the Company’s share repurchase program for $240.4 million. As of December 28, 2024, the Company’s total remaining share repurchase authorization under the then current program was approximately $484.4 million. The share repurchase program does not obligate the Company to repurchase any specific dollar amount or number of shares and may be suspended or discontinued at any time.

12. Accumulated Other Comprehensive Income (Loss)

The reclassifications out of accumulated other comprehensive income (loss) for the years ended December 28, 2024 and December 30, 2023 were as follows:

 

(In millions)

 

 

 

 

 

 

 

 

Details about Accumulated Other
Comprehensive Income (Loss) Components

 

 

 

 

 

 

 

Affected Line Item in the
Consolidated Statements of Income

 

 

2024

 

 

2023

 

 

 

Gains (losses) on cash flow hedges

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

$

(0.4

)

 

$

5.2

 

 

Cost of products sold

Interest rate contracts

 

 

12.6

 

 

 

9.0

 

 

Interest expense

Commodity contracts

 

 

—

 

 

 

(0.2

)

 

Cost of products sold

  Total before tax

 

 

12.2

 

 

 

14.0

 

 

 

  Tax expense

 

 

(2.2

)

 

 

(2.8

)

 

 

  Net of tax

 

$

10.0

 

 

$

11.2

 

 

 

Defined benefit plan items (a)

 

 

 

 

 

 

 

 

Recognition of actuarial (losses) gains

 

$

(18.3

)

 

$

0.5

 

 

Other expense (income), net

  Tax benefit

 

 

6.2

 

 

 

5.5

 

 

 

  Net of tax

 

$

(12.1

)

 

$

6.0

 

 

 

Total reclassifications for the period, net of tax

 

$

(2.1

)

 

$

17.2

 

 

 

(a) These accumulated other comprehensive (loss) income components are included in the computation of net periodic benefit cost. Refer to Note 15, “Defined Benefit Plans,” for additional information.

68

 

Total accumulated other comprehensive income (loss) consists of net income and other changes in business equity from transactions and other events from sources other than stockholders. It includes currency translation gains and losses, unrealized gains and losses from derivative instruments designated as cash flow hedges, and defined benefit plan adjustments. The after-tax components of and changes in accumulated other comprehensive (loss) income were as follows:

(In millions)

Foreign
Currency
Adjustments

 

Derivative
Hedging
 Gain (Loss)

 

Defined Benefit
Plan
Adjustments

 

Accumulated
Other
Comprehensive
(Loss) Income

 

Balance at December 31, 2021

$

3.3

 

$

2.9

 

$

(30.8

)

$

(24.6

)

Amounts classified into accumulated other
   comprehensive (loss) income

 

(23.4

)

 

99.6

 

 

(14.6

)

 

61.6

 

Amounts reclassified into earnings

 

—

 

 

(6.2

)

 

(1.7

)

 

(7.9

)

Net current period other comprehensive (loss) income

 

(23.4

)

 

93.4

 

 

(16.3

)

 

53.7

 

Distribution of Masterbrand

 

8.0

 

 

(2.8

)

 

3.1

 

 

8.3

 

Balance at December 31, 2022

$

(12.1

)

$

93.5

 

$

(44.0

)

$

37.4

 

Amounts classified into accumulated other
   comprehensive (loss) income

 

17.4

 

 

3.7

 

 

15.8

 

 

36.9

 

Other

 

—

 

 

—

 

 

6.2

 

 

6.2

 

Amounts reclassified into earnings

 

—

 

 

(11.2

)

 

(6.0

)

 

(17.2

)

Net current period other comprehensive (loss) income

 

17.4

 

 

(7.5

)

 

16.0

 

 

25.9

 

Balance at December 30, 2023

$

5.3

 

$

86.0

 

$

(28.0

)

$

63.3

 

Amounts classified into accumulated other
   comprehensive (loss) income

 

(30.9

)

 

2.1

 

 

5.8

 

 

(23.0

)

Amounts reclassified into earnings

 

—

 

 

(10.0

)

 

12.1

 

 

2.1

 

Net current period other comprehensive (loss) income

 

(30.9

)

 

(7.9

)

 

17.9

 

 

(20.9

)

Balance at December 28, 2024

$

(25.6

)

$

78.1

 

$

(10.1

)

$

42.4

 

 

 

13. Stock-Based Compensation

 

As of December 28, 2024, we had awards outstanding under the Fortune Brands Home & Security, Inc. 2022 Long-Term Incentive Plan (the "2022 Plan") and the Fortune Brands Home & Security, Inc. 2013 Long-Term Incentive Plan (the “2013 Plan”) (collectively, the "Plans"). In 2022, stockholders approved the 2022 Plan, which provides for the granting of stock options, performance share awards ("PSAs"), restricted stock units ("RSUs") and other equity-based awards to employees, directors and consultants. No new stock-based awards can be made under the 2013 Plan, but there are outstanding unvested RSUs, unvested PSAs and stock options that continue to be exercisable. In addition, shares of common stock that were granted and subsequently expired, terminated, cancelled or forfeited, or were used to satisfy the required withholding taxes with respect to awards under the 2013 Plan, may be recycled back into the total numbers of shares available for issuance under the 2022 Plan. Upon the exercise or payment of stock-based awards, shares of common stock are issued from authorized common shares. As of December 28, 2024, approximately 3.7 million shares of common stock remained authorized for issuance under the 2022 Plan.

Stock-based compensation expense was as follows:

 

(In millions)

 

2024

 

 

 

2023

 

 

 

2022

 

Restricted stock units

 

$

21.7

 

 

 

$

22.1

 

 

 

$

16.6

 

Stock option awards

 

 

6.0

 

 

 

 

5.3

 

 

 

 

6.6

 

Performance awards

 

 

11.8

 

 

 

 

6.1

 

 

 

 

15.6

 

Director awards

 

 

1.4

 

 

 

 

1.7

 

 

 

 

1.3

 

Total pre-tax expense

 

 

40.9

 

 

 

 

35.2

 

 

 

 

40.1

 

Tax benefit

 

 

5.5

 

 

 

 

7.9

 

 

 

 

9.2

 

Total after tax expense

 

$

35.4

 

 

 

$

27.3

 

 

 

$

30.9

 

 

69

 

Included in compensation costs are cash-settled RSUs of $2.0 million, $1.3 million and $0.3 million that are classified as a liability as of December 28, 2024, December 30, 2023 and December 31, 2022, respectively. Compensation costs that were capitalized in inventory were not material.

 

In connection with the Separation, outstanding equity awards granted to Company service providers were adjusted to preserve the intrinsic value of the awards held immediately before and after the Separation, with unvested annual PSAs converting into time-based RSUs. All outstanding equity awards granted to MasterBrand service providers were converted into replacement awards of MasterBrand equity under the same methodology and ceased to represent equity awards with respect to the Company.

Restricted Stock Units

 

RSUs have been granted to officers and certain employees of the Company and represent the right to receive shares of Company common stock subject to continued employment through each vesting date. RSUs generally vest ratably over a three-year period, with the exception of the RSUs that were converted from PSAs, which vest at the end of the original three-year performance cycles. In addition, certain employees can elect to defer receipt of a portion of their RSU awards upon vesting. Compensation cost is recognized over the service period. We calculate the fair value of each RSU granted by using the average of the high and low share prices on the date of grant.

 

A summary of activity with respect to RSUs outstanding under the Plans for the year ended December 28, 2024 was as follows:

 

 

 

Number of
Restricted
Stock Units

 

 

Weighted-Average
Grant-Date
Fair Value

 

Outstanding at December 30, 2023

 

 

847,929

 

 

$

70.93

 

Granted

 

 

234,755

 

 

$

79.21

 

Vested

 

 

(460,646

)

 

$

73.28

 

Forfeited

 

 

(37,150

)

 

$

70.36

 

Outstanding at December 28, 2024

 

 

584,888

 

 

$

72.44

 

 

The remaining unrecognized pre-tax compensation cost related to RSUs at December 28, 2024 was approximately $17.2 million, and the weighted-average period of time over which this cost will be recognized is 1.7 years. The fair value of RSUs that vested during 2024, 2023 and 2022 was $34.1 million, $35.8 million and $16.8 million, respectively.

Stock Option Awards

 

Stock options were granted to officers and certain employees of the Company and represent the right to purchase shares of Company common stock subject to continued employment through each vesting date. Stock options granted under the Plans generally vest over a three-year period and generally expire ten years from the grant date.

 

All stock-based compensation to employees is required to be measured at fair value and expensed over the requisite service period. We recognize compensation expense on awards on a straight-line basis over the requisite service period for the entire award.

The fair value of Fortune Brands options was estimated at the date of grant using a Black-Scholes option pricing model with the assumptions shown in the following table:

 

 

 

 

2024

 

 

 

2023

 

 

 

2022

 

Current expected dividend yield

 

 

 

1.2

%

 

 

 

1.5

%

 

 

 

1.2

%

Expected volatility

 

 

 

32.4

%

 

 

 

34.8

%

 

 

 

34.8

%

Risk-free interest rate

 

 

 

4.3

%

 

 

 

4.2

%

 

 

 

2.3

%

Expected term

 

 

5.3 years

 

 

 

5.4 years

 

 

 

5.2 years

 

 

70

 

 

In 2024, the determination of expected volatility is based on the volatility of Fortune Brands common stock. In 2023, the determination of expected volatility is based on the volatility of Fortune Brands common stock and a blended peer group volatility for companies in similar industries, at a similar stage of life and with similar market capitalization. In 2022, the determination of expected volatility is based on the volatility of Fortune Brands common stock. The risk-free interest rate is based on U.S. government issues with a remaining term equal to the expected life of the stock options. The expected term is the period over which our employees are expected to hold their options. The expected term was determined based on the historical employee exercise behavior and the contractual term of the options. The dividend yield is based on the Company’s estimated dividend over the expected term. The weighted-average grant date fair value of stock options granted under the Plans during the years ended December 28, 2024, December 30, 2023 and December 31, 2022 was $26.13, $20.39 and $24.50, respectively.

A summary of stock option activity for the year ended December 28, 2024 was as follows:

 

 

 

Options

 

 

Weighted-
Average
Exercise
Price

 

Outstanding at December 30, 2023

 

 

2,204,029

 

 

$

58.68

 

Granted

 

 

242,443

 

 

$

79.83

 

Exercised

 

 

(304,121

)

 

$

50.67

 

Expired/forfeited

 

 

(30,095

)

 

$

68.71

 

Outstanding at December 28, 2024

 

 

2,112,256

 

 

$

62.11

 

 

Options outstanding and exercisable at December 28, 2024 were as follows:

 

 

 

Options Outstanding (a)

 

 

Options Exercisable (b)

 

Range Of
Exercise Prices

 

Options
Outstanding

 

 

Weighted-
Average
Remaining
Contractual Life

 

 

Weighted-
Average
Exercise
Price

 

 

Options
Exercisable

 

 

Weighted-
Average
Exercise
Price

 

$20.00 to $100.00

 

 

2,112,256

 

 

 

5.73

 

 

$

62.11

 

 

 

1,593,620

 

 

$

59.26

 

 

(a)
At December 28, 2024, the aggregate intrinsic value of options outstanding was $21.0 million.
(b)
At December 28, 2024, the weighted-average remaining contractual life of options exercisable was 4.8 years and the aggregate intrinsic value of options exercisable was $18.8 million.

 

The remaining unrecognized compensation cost related to unvested awards at December 28, 2024 was $6.3 million, and the weighted-average period of time over which this cost will be recognized is 1.6 years. The fair value of options that vested during 2024, 2023 and 2022 was $5.5 million, $6.3 million and $26.2 million, respectively. The intrinsic value of Fortune Brands stock options exercised in 2024, 2023 and 2022 was $9.1 million, $8.5 million and $1.1 million, respectively.

 

Performance Share Awards

 

PSAs were granted to officers and certain employees of the Company and represent the right to earn shares of Company common stock based on the achievement of company-wide non-GAAP performance conditions, including cumulative EBITDA margin percent and cumulative return on invested capital during the three-year performance period. Compensation cost is amortized into expense over the performance period, which is generally three years, and is based on the probability of meeting performance targets. The fair value of each PSA is based on the average of the high and low stock prices on the date of grant.

71

 

 

The following table summarizes information about PSAs as of December 28, 2024, as well as activity during the fiscal year then ended. The number of performance share awards granted are shown below at the target award amounts:

 

 

 

Number of
Performance Share
Awards

 

 

Weighted-Average
Grant-Date
Fair Value

 

Non-vested at December 30, 2023

 

 

210,804

 

 

$

62.89

 

Granted

 

 

171,477

 

 

$

80.31

 

Vested

 

 

—

 

 

$

—

 

Forfeited

 

 

(13,058

)

 

$

76.77

 

Non-vested at December 28, 2024

 

 

369,223

 

 

$

70.49

 

 

The remaining unrecognized pre-tax compensation cost related to PSAs at December 28, 2024 was approximately $16.6 million, and the weighted-average period of time over which this cost will be recognized is 1.7 years.

Director Awards

 

Stock awards are used as part of the compensation provided to outside directors under the Plans. Awards are issued annually in the second quarter. In addition, outside directors can elect to have director cash compensation paid in stock and can elect to defer payment of stock. Compensation cost is expensed at the time of an award based on the fair value of a share at the date of the award. In 2024, 2023 and 2022, we awarded 19,148, 27,094 and 17,649 shares of Company common stock to outside directors with a weighted-average fair value on the date of the award of $73.10, $64.13 and $73.94, respectively.

14. Revenue

Our principal performance obligations are the sale of faucets, accessories, kitchen sinks, waste disposals, fiberglass and steel entry-door systems, storm, screen and security doors, composite decking and railing, urethane millwork, wide-opening exterior door systems and outdoor enclosures, locks, safes, safety and security devices, connected and mechanical lock out tag out solutions, electronic security products, commercial cabinets, and kitchen and bath cabinets (collectively, “goods” or “products”). We recognize revenue for the sale of goods based on our assessment of when control transfers to our customers, which generally occurs upon shipment or delivery of the products. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods to our customers. Payment terms on our product sales normally range from 30 to 90 days. Taxes assessed by a governmental authority that we collect are excluded from revenue. The expected costs associated with our contractual warranties will continue to be recognized as expense when the products are sold. See Note 18, "Commitments," for further discussion.

We record estimates to reduce revenue for customer programs and incentives, which are considered variable consideration, and include price discounts, volume-based incentives, promotions and cooperative advertising when revenue is recognized in order to determine the amount of consideration the Company will ultimately be entitled to receive. These estimates are based on historical and projected experience for each type of customer. In addition, for certain customer program incentives, we receive an identifiable benefit (goods or services) in exchange for the consideration given and record the associated expenditure in selling, general and administrative expenses. In addition, we make upfront payments to customers related to certain revenue contracts. We recognize these payments in Other current assets and Other assets in our Consolidated Balance Sheet and amortize them over the contract term as a reduction of the transaction price.

We account for shipping and handling costs that occur after the customer has obtained control of a product as a fulfillment activity (i.e., as an expense) rather than as a promised service (i.e., as a revenue element). These costs are classified within selling, general and administrative expenses.

72

 

Settlement of our outstanding accounts receivable balances is normally within 30 to 90 days of the original sale transaction date. Obligations arise for us from customer rights to return our goods for any reason, including among others, product obsolescence, stock rotations, trade-in agreements for newer products and upon termination of a customer contract. We estimate future product returns at the time of sale based on historical experience and record a corresponding refund obligation, which amounted to $28.8 million and $26.7 million as of December 28, 2024 and December 30, 2023, respectively. Refund obligations are classified within Other current liabilities in our Consolidated Balance Sheet. Return assets related to the refund obligation are measured at the carrying amount of the goods at the time of sale, less any expected costs to recover the goods and any expected reduction in value. Return assets are classified within Other current assets in our Consolidated Balance Sheet and were approximately $4.3 million and $4.0 million as of December 28, 2024 and December 30, 2023, respectively.

As part of our contracts with customers, we recognize contract liabilities, principally deferred revenue. Deferred revenue liabilities represents advanced payments and billings in excess of revenue recognized. Changes in the deferred revenue liabilities are as follows:

 

(In millions)

 

 

Balance December 31, 2022

$

32.1

 

  Amount from acquisitions

 

10.1

 

  Customer deposits

 

30.1

 

  Revenue recognized

 

(31.7

)

  Foreign currency and other

 

(0.4

)

Balance December 30, 2023

$

40.2

 

  Amount from acquisitions

 

0.3

 

  Customer deposits

 

28.5

 

  Revenue recognized

 

(32.2

)

  Foreign currency and other

 

(0.5

)

Balance December 28, 2024

$

36.3

 

Deferred revenue liabilities of $24.4 million, $32.3 million and $32.1 million as of December 28, 2024, December 30, 2023 and December 31, 2022, respectively were included in Other current liabilities. In our Consolidated Balance Sheet, $11.9 million, $7.9 million and zero as of December 28, 2024, December 30, 2023 and December 31, 2022, respectively were included in Other noncurrent liabilities in our Consolidated Balance Sheet.

The Company disaggregates revenue from contracts with customers into (i) major sales distribution channels in the U.S. and (ii) total sales to customers outside the U.S. market as these categories depict the nature, amount, timing and uncertainty of revenues and cash flows that are affected by economic factors. The following table disaggregates our consolidated revenue by major sales distribution channels for the years ended December 28, 2024, December 30, 2023 and December 31, 2022.

(In millions)

 

December 28, 2024

 

 

December 30, 2023

 

 

December 31, 2022

 

Wholesalers(a)

 

$

2,247.7

 

 

$

2,126.2

 

 

$

2,100.0

 

Home Center retailers(b)

 

 

1,117.8

 

 

 

1,163.0

 

 

 

1,270.7

 

Other retailers(c)

 

 

443.5

 

 

 

418.8

 

 

 

392.9

 

U.S. net sales

 

 

3,809.0

 

 

 

3,708.0

 

 

 

3,763.6

 

International(d)

 

 

800.0

 

 

 

918.2

 

 

 

959.4

 

Net sales

 

$

4,609.0

 

 

$

4,626.2

 

 

$

4,723.0

 
(a)
Represents sales to customers whose business is oriented toward builders, professional tradespeople and home remodelers, inclusive of sales through our customers’ respective internet website portals.
(b)
Represents sales to the three largest “Do-It-Yourself” retailers: The Home Depot, Inc., Lowe's Companies, Inc. and Menards, Inc., inclusive of sales through their respective internet website portals.
(c)
Represents sales principally to our mass merchant and standalone, independent e-commerce customers.
(d)
Represents sales in markets outside the United States, principally in China, Canada, Europe and Mexico.

73

 

Practical Expedients

Incremental costs of obtaining a contract include only those costs the Company incurs that would not have been incurred if the contract had not been obtained. These costs are required to be recognized as assets and amortized over the period that the related goods or services transfer to the customer. As a practical expedient, we expense as incurred costs to obtain a contract when the expected amortization period is one year or less. These costs are recorded within selling, general and administrative expenses.

15. Defined Benefit Plans

We have a number of pension plans in the United States, covering many of the Company’s employees; however, the majority of these plans have been frozen to new participants, and benefit accruals were frozen for active participants on December 31, 2016. The plans provide for payment of retirement benefits, mainly commencing between the ages of 55 and 65. After meeting certain qualifications, an employee acquires a vested right to future benefits. The benefits payable under the plans are generally determined on the basis of an employee’s length of service and/or earnings. Employer contributions to the plans are made, as necessary, to ensure legal funding requirements are satisfied. Also, from time to time, we may make contributions in excess of the legal funding requirements. Service cost for 2024 relates to benefit accruals for an hourly Union group within the defined benefit plan for our Security segment. All other benefit accruals under our defined benefit pension plans were frozen as of, or prior to, December 31, 2016.

The Company offered a lump sum program during the fourth quarter of 2023 in which certain terminated vested participants in the Moen Qualified Plan and Master Lock Qualified Plan could elect to take a one-time voluntary lump sum payment equal to the present value of future benefits. Approximately 700 participants elected to accept the lump sum option. During the fourth quarter of 2023, benefit payments of $27.0 million were made and a settlement expense of $2.0 million was recognized.

During the fourth quarter of 2024, the Company entered into two agreements with an insurance company to purchase group annuity contracts and transferred $266.6 million of pension plan obligations and related assets of two of its defined benefit pension plans, the MasterLock Pension Plan and Moen Incorporated Pension Plan (collectively, the "Plans"). The partial plan settlements resulted in a loss of $19.0 million, which is included in Other (expense) income, net on the Consolidated Statements of Income. The agreements cover approximately 4,100 retirees and other beneficiaries (the "Transferred Participants"). All Transferred Participants continued to receive their benefits from the Plans until January 1, 2025, at which time the insurance company began paying and administering the retirement benefits of the Transferred Participants. The transactions resulted in no changes to the amount of the benefits payable to the Transferred Participants.

Net actuarial gains and losses occur when actual experience differs from any of the assumptions used to value defined benefit plans or when assumptions change as they may each year. The primary factors contributing to actuarial gains and losses are changes in the discount rate used to value obligations as of the measurement date and the differences between expected and actual returns on pension plan assets.

74

 

In addition, the Company provides postretirement health care and life insurance benefits to certain retirees.

 

(In millions)

 

 

Pension Benefits

 

 

 

Postretirement Benefits

 

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Change in the Projected Benefit Obligation (PBO):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projected benefit obligation at beginning of year

 

 

$

509.7

 

 

 

$

543.6

 

 

 

$

8.0

 

 

 

$

9.0

 

Service cost

 

 

 

—

 

 

 

 

0.1

 

 

 

 

0.4

 

 

 

 

0.4

 

Interest cost

 

 

 

22.2

 

 

 

 

27.2

 

 

 

 

0.5

 

 

 

 

0.5

 

Actuarial gain

 

 

 

(23.9

)

 

 

 

(0.5

)

 

 

 

(0.4

)

 

 

 

(1.3

)

Benefits paid

 

 

 

(34.9

)

 

 

 

(60.7

)

 

 

 

(2.8

)

 

 

 

(0.6

)

Settlements

 

 

 

(266.6

)

 

 

 

—

 

 

 

 

(0.1

)

 

 

 

—

 

Projected benefit obligation at end of year

 

 

$

206.5

 

 

 

$

509.7

 

 

 

$

5.6

 

 

 

$

8.0

 

Accumulated benefit obligation at end of year
   (excludes the impact of future compensation increases)

 

 

$

206.5

 

 

 

$

509.7

 

 

 

$

—

 

 

 

$

—

 

Change in Plan Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of plan assets at beginning of year

 

 

$

468.0

 

 

 

$

482.5

 

 

 

$

—

 

 

 

$

—

 

Actual return on plan assets

 

 

 

9.1

 

 

 

 

40.5

 

 

 

 

—

 

 

 

 

—

 

Employer contributions

 

 

 

1.5

 

 

 

 

5.7

 

 

 

 

1.2

 

 

 

 

0.6

 

Benefits paid

 

 

 

(34.9

)

 

 

 

(60.7

)

 

 

 

(1.2

)

 

 

 

(0.6

)

Settlements

 

 

 

(266.6

)

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

Fair value of plan assets at end of year

 

 

$

177.1

 

 

 

$

468.0

 

 

 

$

—

 

 

 

$

—

 

Funded status (Fair value of plan assets less PBO)

 

 

$

(29.4

)

 

 

$

(41.7

)

 

 

$

(5.6

)

 

 

$

(8.0

)

 

The accumulated benefit obligation exceeds the fair value of assets for all pension plans.

 

Amounts recognized in the consolidated balance sheets consist of:

 

 

 

Pension Benefits

 

 

 

Postretirement Benefits

 

(In millions)

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Other current liabilities

 

$

(1.6

)

 

 

$

(1.3

)

 

 

$

(1.0

)

 

 

$

(1.1

)

Other non-current liabilities

 

 

(27.8

)

 

 

 

(40.4

)

 

 

 

(4.6

)

 

 

 

(6.9

)

Net amount recognized

 

$

(29.4

)

 

 

$

(41.7

)

 

 

$

(5.6

)

 

 

$

(8.0

)

 

The amounts in accumulated other comprehensive loss on the consolidated balance sheets that have not yet been recognized as components of net periodic benefit cost were as follows:

 

(In millions)

 

Pension Benefits

 

 

 

Postretirement Benefits

 

Net unrecognized actuarial loss (gain) at December 31, 2022

 

$

49.7

 

 

 

$

(0.5

)

Recognition of actuarial gain

 

 

—

 

 

 

 

2.6

 

Current year actuarial (gain)

 

 

(12.5

)

 

 

 

(1.5

)

Recognition actuarial loss due to settlement

 

 

(2.0

)

 

 

 

—

 

Net unrecognized actuarial loss at December 30, 2023

 

$

35.2

 

 

 

$

0.6

 

Recognition of actuarial gain

 

 

0.5

 

 

 

 

0.3

 

Current year actuarial (gain)

 

 

(3.9

)

 

 

 

(1.4

)

Recognition of actuarial loss due to settlement

 

 

(19.0

)

 

 

 

—

 

Net unrecognized actuarial loss (gain) at December 28, 2024

 

$

12.8

 

 

 

$

(0.5

)

 

75

 

Components of net periodic benefit cost were as follows:

 

 

Pension Benefits

 

 

 

Postretirement Benefits

 

(In millions)

 

2024

 

 

 

2023

 

 

2022

 

 

 

2024

 

 

 

2023

 

 

2022

 

Service cost

 

$

—

 

 

 

$

0.1

 

 

$

0.2

 

 

 

$

0.4

 

 

 

$

0.4

 

 

$

0.4

 

Interest cost

 

 

22.2

 

 

 

 

27.2

 

 

 

20.4

 

 

 

 

0.5

 

 

 

 

0.5

 

 

 

0.4

 

Expected return on plan assets

 

 

(29.1

)

 

 

 

(28.6

)

 

 

(28.1

)

 

 

 

—

 

 

 

 

—

 

 

 

—

 

Recognition of actuarial gains

 

 

(0.5

)

 

 

 

—

 

 

 

(0.3

)

 

 

 

(0.3

)

 

 

 

(2.6

)

 

 

(1.0

)

Settlement loss

 

 

19.0

 

 

 

 

2.0

 

 

 

—

 

 

 

 

—

 

 

 

 

—

 

 

 

—

 

Net periodic benefit cost (income)

 

$

11.6

 

 

 

$

0.7

 

 

$

(7.8

)

 

 

$

0.6

 

 

 

$

(1.7

)

 

$

(0.2

)

 

 

 

 

Pension Benefits

 

 

 

Postretirement Benefits

 

 

 

2024

 

 

 

2023

 

 

2022

 

 

 

2024

 

 

 

2023

 

 

2022

 

Weighted-Average Assumption Used to
   Determine Benefit Obligations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discount rate

 

 

5.7

%

 

 

 

5.0

%

 

 

5.2

%

 

 

 

7.1

%

 

 

 

6.0

%

 

 

5.8

%

Weighted-Average Assumptions Used to
   Determine Net Cost:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discount rate

 

 

5.0

%

 

 

 

5.2

%

 

 

2.9

%

 

 

 

6.0

%

 

 

 

5.8

%

 

 

3.9

%

Expected long-term rate of return on plan assets

 

 

7.3

%

 

 

 

6.1

%

 

 

4.4

%

 

 

 

—

 

 

 

 

—

 

 

 

—

 

 

 

 

Postretirement Benefits

 

 

2024

 

 

 

2023

 

 

Assumed Health Care Cost Trend Rates Used to Determine
   Benefit Obligations:

 

 

 

 

 

 

 

 

Health care cost trend rate assumed for next year

 

7.1/7.5

%

(a)

 

7.3/6.9

%

(a)

Rate that the cost trend rate is assumed to decline
   (the ultimate trend rate)

 

4.5

%

 

 

4.5

%

 

Year that the rate reaches the ultimate trend rate

 

2035

 

 

 

2033

 

 

Assumed Health Care Cost Trend Rates Used to Determine
  Net Cost:

 

 

 

 

 

 

 

 

Health care cost trend rate assumed for next year

 

7.3/6.9

%

(a)

 

5.8/6.3

%

(a)

Rate that the cost trend rate is assumed to decline
   (the ultimate trend rate)

 

4.5

%

 

 

4.5

%

 

Year that the rate reaches the ultimate trend rate

 

2033

 

 

 

2028

 

 

 

 

(a)
The pre-65 initial health care cost trend rate is shown first / followed by the post-65 rate.

 

76

 

Plan Assets

The fair value of the pension assets by major category of plan assets as of December 28, 2024 and December 30, 2023 were as follows:

 

2024

 

 

Total Fair Value

 

Quoted Prices in Active Markets for Identical Assets
(Level 1)

 

Significant Other Observable Inputs
(Level 2)

 

Significant Unobservable Inputs
(Level 3)

 

Cash and cash equivalents

$

2.6

 

$

2.6

 

$

—

 

$

—

 

Other investments (a)

 

23.8

 

 

—

 

 

23.8

 

 

—

 

Fair value excluding investments measured at net asset value

$

26.4

 

 

 

 

 

 

 

Collective trusts:

 

 

 

 

 

 

 

 

    Equity

$

27.3

 

 

 

 

 

 

 

    Fixed income

 

95.1

 

 

 

 

 

 

 

    Multi-strategy hedge funds

 

12.1

 

 

 

 

 

 

 

    Real estate

 

16.2

 

 

 

 

 

 

 

Investments measured at net asset value

$

150.7

 

 

 

 

 

 

 

Total plan assets at fair value

$

177.1

 

 

 

 

 

 

 

(a) - Other investments consist of future contracts on U.S. Treasury notes and bonds primarily used to hedge interest rate exposures.

 

2023

 

 

Total Fair Value

 

Quoted Prices in Active Markets for Identical Assets
(Level 1)

 

Significant Other Observable Inputs
(Level 2)

 

Significant Unobservable Inputs
(Level 3)

 

Group annuity/insurance contracts

$

26.8

 

$

—

 

$

—

 

$

26.8

 

Fair value excluding investments measured at net asset value

$

26.8

 

 

 

 

 

 

 

Collective trusts:

 

 

 

 

 

 

 

 

 Cash and cash equivalents

$

17.5

 

 

 

 

 

 

 

    Equity

 

121.2

 

 

 

 

 

 

 

    Fixed income

 

267.2

 

 

 

 

 

 

 

    Multi-strategy hedge funds

 

16.3

 

 

 

 

 

 

 

    Real estate

 

19.0

 

 

 

 

 

 

 

Investments measured at net asset value

$

441.2

 

 

 

 

 

 

 

Total plan assets at fair value

$

468.0

 

 

 

 

 

 

 

A reconciliation of Level 3 measurements was as follows:

 

 

Group annuity/
insurance contracts

 

(In millions)

 

2024

 

 

 

2023

 

Beginning of year

 

$

26.8

 

 

 

$

26.0

 

(Losses) gains on assets during the period

 

 

(0.6

)

 

 

 

0.8

 

Sales and settlements

 

 

(26.2

)

 

 

 

—

 

End of year

 

$

—

 

 

 

$

26.8

 

 

Our defined benefit plans Master Trust own a variety of investment assets. Certain investment assets are measured using net asset value per share as a practical expedient per ASC 820. Investments measured using net asset value per share totaled $150.7 million and $441.2 million as of December 28, 2024 and December 30, 2023, respectively.

77

 

作爲實際的權宜之計，按每股資產淨值計算的每類投資資產的贖回條款和條件各不相同。房地產資產可能每季度贖回一次45天贖回通知期。多策略對沖基金的投資資產可每半年贖回一次95天贖回通知期。股權、固定收益以及現金和現金等價物沒有特定的贖回頻率和通知期，可以每天贖回。自.起2024年12月28日，我們無意以不同於每股資產淨值的價格出售或以其他方式處置這些投資資產。

我們的投資策略是通過多元化的投資組合來優化投資回報，同時考慮到潛在的計劃負債和資產波動性。這些計劃的固定收益資產分配政策允許進行以下收益尋求投資組合分配0%至50%和負債對沖投資組合配置50%至100%。資產配置基於基本的負債結構。定期審查所有退休資產分配，以確保分配符合負債結構的需要。

我們2025年計劃的預期混合長期回報率Ets of6.2%是%d根據計劃投資的性質、我們目前的資產配置以及養老金投資顧問的預計長期回報率來確定。

預計未來退休福利支出

預計將支付以下退休金：

(In數百萬）

 

養老
優勢

 

 

 

退休後
優勢

 

2025

 

$

10.5

 

 

 

$

1.1

 

2026

 

 

11.5

 

 

 

 

1.0

 

2027

 

 

12.3

 

 

 

 

0.9

 

2028

 

 

12.8

 

 

 

 

0.9

 

2029

 

 

13.4

 

 

 

 

0.8

 

2030-2034年

 

 

75.2

 

 

 

 

4.2

 

 

上述估計的未來退休福利付款是估計數，可能會根據精算假設與與某些計劃參與者可用的一次性分配選項相關的實際事件和決定之間的差異而發生重大變化。

固定繳款計劃繳款

我們贊助多項固定繳款計劃，以造福符合條件的員工。貢獻e根據各種公式確定。公司與該等計劃相關的現金捐助爲美元35.5 百萬美元28.7 億和$36.3百萬英寸2024年、2023年和2022年，分別爲。

16. 所得稅

持續經營業務所得稅和非控股權益前收入的組成部分如下：

 

(In數百萬）

 

 

2024

 

 

 

2023

 

 

2022

 

國內業務

 

 

$

518.8

 

 

 

$

418.1

 

 

$

563.1

 

海外業務

 

 

 

86.7

 

 

 

 

99.8

 

 

 

104.0

 

所得稅前持續經營收入

 

 

$

605.5

 

 

 

$

517.9

 

 

$

667.1

 

 

78

 

綜合收益表中的所得稅費用包括以下各項：

 

(In數百萬）

 

 

2024

 

 

 

2023

 

 

2022

 

電流

 

 

 

 

 

 

 

 

 

 

 

聯邦

 

 

$

97.3

 

 

 

$

86.9

 

 

$

62.4

 

外國

 

 

 

20.7

 

 

 

 

38.3

 

 

 

34.3

 

國家和其他

 

 

 

15.6

 

 

 

 

15.2

 

 

 

16.0

 

遞延

 

 

 

 

 

 

 

 

 

 

 

聯邦

 

 

 

1.4

 

 

 

 

(21.2

)

 

 

15.3

 

外國

 

 

 

0.2

 

 

 

 

(3.5

)

 

 

1.5

 

州和地方

 

 

 

(1.6

)

 

 

 

(3.3

)

 

 

(2.3

)

所得稅總支出

 

 

$

133.6

 

 

 

$

112.4

 

 

$

127.2

 

 

聯邦法定稅率和有效稅率之間的對賬如下：

 

(In數百萬）

 

 

2024

 

 

 

2023

 

 

2022

 

所得稅費用按聯邦法定所得稅率計算

 

 

$

127.2

 

 

 

$

108.8

 

 

$

140.1

 

州和地方所得稅，扣除聯邦稅收優惠

 

 

 

18.9

 

 

 

 

13.2

 

 

 

13.2

 

外國稅稅率與美國聯邦法定所得稅稅率不同

 

 

 

4.6

 

 

 

 

5.2

 

 

 

9.1

 

不確定稅收狀況的淨調整

 

 

 

(4.7

)

 

 

 

(8.0

)

 

 

(26.2

)

股份酬金

 

 

 

(2.0

)

 

 

 

(1.3

)

 

 

(5.4

)

估值津貼（減少）增加

 

 

 

(7.8

)

 

 

 

1.7

 

 

 

(5.8

)

不可扣除的高管薪酬

 

 

 

3.9

 

 

 

 

3.5

 

 

 

7.5

 

研究與開發信貸

 

 

 

(4.4

)

 

 

 

(5.1

)

 

 

(3.0

)

雜項其他，淨額

 

 

 

(2.1

)

 

 

 

(5.6

)

 

 

(2.3

)

上報的所得稅費用

 

 

$

133.6

 

 

 

$

112.4

 

 

$

127.2

 

實際所得稅率

 

 

 

22.1

%

 

 

 

21.7

%

 

 

19.1

%

2024年的有效所得稅稅率受到州和地方所得稅、按更高稅率徵稅的外國收入以及不可扣除的高管薪酬的不利影響，但與估值津貼發放相關的有利福利以及不確定稅收狀況和稅收抵免的減少部分抵消了這一影響。

2023年和2022年的有效所得稅稅率受到州和地方所得稅、稅率較高的外國所得稅以及不可扣除的高管薪酬的不利影響。2023年和2022年的支出都被釋放不確定稅收頭寸的有利福利所抵消，這些福利主要與訴訟時效失效、稅收抵免和基於股份的薪酬有關。2022年的有效收入率也受到審計關閉和估值津貼減少的有利影響。

 

2021年，經濟合作與發展組織(「經合組織」)在130多個國家的支持下，批准了一個框架(「第二支柱」)，其中包括在每個國家的基礎上建立15%的全球最低企業稅率。許多國家已經通過了支持第二支柱的立法或正在這樣做，其中一些規則於2024年1月1日生效，其餘規則於2025年1月1日生效。第二支柱對公司2024年的財務報表沒有實質性影響。本公司正在繼續監測和評估第二支柱立法，預計它不會對本公司2025年的納稅義務產生實質性影響。

未確認稅收優惠(「UTB」)的期初和期末金額覈對如下：

 

(In數百萬）

 

 

2024

 

 

 

2023

 

 

2022

 

未確認的稅收優惠--年初

 

 

$

25.6

 

 

 

$

33.4

 

 

$

83.1

 

總增加額-本年度納稅狀況

 

 

 

1.9

 

 

 

 

2.1

 

 

 

2.1

 

總增加額-上一年的納稅狀況

 

 

 

5.7

 

 

 

 

0.2

 

 

 

—

 

毛減額--上一年的納稅狀況

 

 

 

(8.0

)

 

 

 

(10.1

)

 

 

(50.5

)

總減少量--與稅務機關達成和解

 

 

 

—

 

 

 

 

—

 

 

 

(1.3

)

未確認的稅收優惠-年終

 

 

$

25.2

 

 

 

$

25.6

 

 

$

33.4

 

 

79

 

 

截至2024年12月28日確認的UTB數量，將影響公司的實際稅率爲$25.2百萬美元。在接下來的12個月內，違章建築總數有可能減少#美元。6.1100萬美元，主要是由於美國聯邦、州和外國所得稅法規的失效。

本公司將與違約金有關的利息和懲罰性應計項目歸類爲所得稅費用。於2024年，本公司確認一項利息及罰款利益爲$1.6百萬美元。在2023年和2022年，公司確認了利息和罰款費用約爲$1.2百萬美元和澳元6.4百萬人的利益，分別。

該公司在美國、各州和外國司法管轄區提交所得稅申報單。該公司目前正在接受美國國稅局(IRS)2022年的審計，通常在2021年及以後接受美國國稅局的審查。除美國外，本公司的納稅年度仍處於開放狀態，並接受以下主要納稅管轄區稅務機關的審查：加拿大2019年後的納稅年度、墨西哥2018年後的納稅年度和2018年後的中國納稅年度。

 

截至的遞延稅項淨資產(負債)的組成部分2024年12月28日和2023年12月30日如下：

 

(In數百萬）

 

 

2024

 

 

 

2023

 

遞延所得稅資產：

 

 

 

 

 

 

 

 

薪酬和福利

 

 

$

27.2

 

 

 

$

29.5

 

固定福利計劃

 

 

 

7.7

 

 

 

 

10.9

 

資本化庫存

 

 

 

18.1

 

 

 

 

24.5

 

資本化的研發成本

 

 

 

54.0

 

 

 

 

37.4

 

應收賬款

 

 

 

6.5

 

 

 

 

4.9

 

經營租賃負債

 

 

 

37.7

 

 

 

 

43.2

 

其他應計費用

 

 

 

35.8

 

 

 

 

40.3

 

淨營業虧損和其他稅收結轉

 

 

 

29.1

 

 

 

 

27.5

 

估值免稅額

 

 

 

(8.0

)

 

 

 

(15.1

)

雜類

 

 

 

6.3

 

 

 

 

6.7

 

遞延稅項資產總額

 

 

 

214.4

 

 

 

 

209.8

 

遞延稅項負債：

 

 

 

 

 

 

 

 

固定資產

 

 

 

(81.3

)

 

 

 

(75.1

)

無形資產

 

 

 

(163.5

)

 

 

 

(153.2

)

經營租賃資產

 

 

 

(36.4

)

 

 

 

(42.7

)

其他投資

 

 

 

(24.8

)

 

 

 

(26.4

)

雜類

 

 

 

(6.4

)

 

 

 

(5.2

)

遞延所得稅負債總額

 

 

 

(312.4

)

 

 

 

(302.6

)

遞延稅項淨負債

 

 

$

(98.0

)

 

 

$

(92.8

)

 

根據ASC對所得稅的要求，截至2024年12月28日和2023年12月30日，遞延稅在合併資產負債表中分類如下：

 

(In數百萬）

 

 

2024

 

 

 

2023

 

其他資產

 

 

 

19.4

 

 

 

 

18.5

 

遞延所得稅

 

 

 

(117.4

)

 

 

 

(111.3

)

遞延稅項淨負債

 

 

$

(98.0

)

 

 

$

(92.8

)

 

截至2024年12月28日和2023年12月30日，該公司擁有與淨營業虧損和其他稅收結轉相關的遞延所得稅資產爲美元29.1 億和$27.5 分別爲百萬。約$3.8 百萬之間到期 2025和2029，其餘部分將於2030年及以後到期。

公司已提供估值撥備以減少某些遞延所得稅資產的公允價值。估值津貼爲美元8.0 2024年百萬美元15.1 2023年百萬。管理層得出的結論是，根據現有證據，遞延所得稅資產很可能無法完全實現。

80

 

截至2017年12月31日，公司海外子公司的累計海外收益和利潤須繳納視爲匯回稅，並且在實際匯回這些收益時不應繳納額外的美國聯邦所得稅。截至2024年12月28日，公司已記錄估計遞延所得稅負債爲美元0.6 分配這些收入時應繳納的稅款爲百萬美元。

2017年12月31日之後，我們認爲某些對股息徵收當地國家稅的外國子公司的未匯出收益將無限期再投資。我們沒有爲剩餘賬簿提供遞延稅，超過稅後基礎差額$270.3 與這些子公司相關的百萬美元。與這些收益相關的當地國家預扣稅未確認的遞延所得稅負債金額爲美元18.0 萬

17. 重組和其他費用

回覆截至2024年12月28日止年度的結構費用和其他費用如下：

 

 

 

截至2024年12月28日的年度

 

 

 

 

 

 

 

其他費用 (a)

 

 

 

 

 

(In數百萬）

 

重組
收費

 

 

 

成本
產品
出售

 

 

SG&A(b)

 

 

 

總計
收費

 

水

 

$

5.9

 

 

 

$

2.6

 

 

$

—

 

 

 

$

8.5

 

戶外

 

 

5.0

 

 

 

 

14.8

 

 

 

—

 

 

 

 

19.8

 

安防

 

 

3.8

 

 

 

 

7.7

 

 

 

—

 

 

 

 

11.5

 

企業

 

 

1.5

 

 

 

 

—

 

 

 

—

 

 

 

 

1.5

 

總計

 

$

16.2

 

 

 

$

25.1

 

 

$

—

 

 

 

$

41.3

 

 

(a)
「其他費用」指與重組計劃直接相關的費用或收益，無法根據GAAP報告爲重組。此類費用或收益可能包括處置庫存的損失、退出產品線的貿易應收賬款撥備、退出客戶關係而註銷的展示品、關閉設施導致的加速折舊以及出售之前關閉設施的損益。
(b)
銷售、一般和管理費用。

2024年的重組和其他費用主要與Outdoors部門的產品線合理化、之前宣佈關閉安全部門的一家制造工廠以及所有部門的人員統計行動有關。

截至年度的重組和其他費用 2023年12月30日如下：

 

 

 

截至2023年12月30日的年度

 

 

 

 

 

 

 

其他費用 (a)

 

 

 

 

 

(In數百萬）

 

重組
收費

 

 

 

成本
產品
出售

 

 

SG&A(b)

 

 

 

總計
收費

 

水

 

$

2.2

 

 

 

$

2.6

 

 

$

—

 

 

 

$

4.8

 

戶外

 

 

4.2

 

 

 

 

(0.1

)

 

 

—

 

 

 

 

4.1

 

安防

 

 

25.4

 

 

 

 

19.2

 

 

 

—

 

 

 

 

44.6

 

企業

 

 

0.7

 

 

 

 

—

 

 

 

—

 

 

 

 

0.7

 

總計

 

$

32.5

 

 

 

$

21.7

 

 

$

—

 

 

 

$

54.2

 

 

(a)
「其他費用」指與重組計劃直接相關的費用或收益，無法根據GAAP報告爲重組。此類費用或收益可能包括處置庫存的損失、退出產品線的貿易應收賬款撥備、退出客戶關係而註銷的展示品、關閉設施導致的加速折舊以及出售之前關閉設施的損益。
(b)
銷售、一般和管理費用。

 

2023年的重組和其他費用主要與關閉安全部門同一製造工廠以及所有部門的人員統計行動相關的成本有關。

81

 

截至年度的重組和其他費用 2022年12月31日如下：

 

 

 

截至2022年12月31日的年度

 

 

 

 

 

 

 

其他費用 (a)

 

 

 

 

 

(In數百萬）

 

重組
收費

 

 

 

成本
產品
出售

 

 

SG&A(b)

 

 

 

總計
收費

 

水

 

$

6.3

 

 

 

$

(0.2

)

 

$

0.8

 

 

 

$

6.9

 

戶外

 

 

24.5

 

 

 

 

(6.2

)

 

 

—

 

 

 

 

18.3

 

安防

 

 

0.6

 

 

 

 

—

 

 

 

—

 

 

 

 

0.6

 

企業

 

 

1.0

 

 

 

 

—

 

 

 

—

 

 

 

 

1.0

 

總計

 

$

32.4

 

 

 

$

(6.4

)

 

$

0.8

 

 

 

$

26.8

 

 

(a)
「其他費用」指與重組計劃直接相關的費用或收益，無法根據GAAP報告爲重組。此類費用或收益可能包括處置庫存的損失、退出產品線的貿易應收賬款撥備、退出客戶關係而註銷的展示品、關閉設施導致的加速折舊以及出售之前關閉設施的損益。
(b)
銷售、一般和管理費用。

2022年的重組和其他費用主要與Outdoors部門製造設施搬遷相關的遣散費以及所有部門的人員統計行動有關。

重組責任對賬

 

(In數百萬）

 

餘額
2023年12月30日

 

 

2024
提供

 

 

現金
支出 (a)

 

 

非現金
註銷和其他

 

 

餘額
2024年12月28日

 

勞動力削減成本

 

$

14.6

 

 

$

12.5

 

 

$

(20.9

)

 

$

-

 

 

$

6.2

 

其他

 

 

7.1

 

 

 

3.7

 

 

 

(2.5

)

 

 

(0.6

)

 

 

7.7

 

 

$

21.7

 

 

$

16.2

 

 

$

(23.4

)

 

$

(0.6

)

 

$

13.9

 

 

(a)
現金支出主要與遣散費有關。

 

(In數百萬）

 

餘額
2022年12月31日

 

 

2023
提供

 

 

現金
支出 (a)

 

 

非現金
覈銷

 

 

餘額
2023年12月30日

 

勞動力削減成本

 

$

16.2

 

 

$

17.9

 

 

$

(20.1

)

 

$

0.6

 

 

$

14.6

 

其他

 

 

13.5

 

 

 

14.6

 

 

 

(1.1

)

 

$

(19.9

)

 

 

7.1

 

 

$

29.7

 

 

$

32.5

 

 

$

(21.2

)

 

$

(19.3

)

 

$

21.7

 

 

(a)
現金支出主要與遣散費有關.

18. 承諾

購買義務

截至2024年12月28日公司的採購義務 爲$545.1 百萬，其中美元522.4 百萬美元將在一年內到期。採購義務包括原材料和成品採購合同、銷售和行政服務以及資本支出。

82

 

產品保修

我們通常在銷售時記錄與合同保修條款相關的保修費用。我們還可能爲合同保修條款之外的索賠提供客戶特許權，這些費用記錄在特許權做出的期間。我們根據銷售的產品類型爲客戶提供各種保修條款。保修費用根據歷史索賠經驗和產品類別的性質確定。 下表總結了與我們的產品保修責任相關的活動 2024年、2023年和2022年。

 

(In數百萬）

 

2024

 

 

 

2023

 

 

2022

 

年初儲備餘額

 

$

18.4

 

 

 

$

20.1

 

 

$

19.5

 

已發佈的保證條款

 

 

9.0

 

 

 

 

8.7

 

 

 

8.1

 

結算（現金或實物）

 

 

(9.1

)

 

 

 

(10.4

)

 

 

(9.0

)

採辦

 

 

2.0

 

 

 

 

—

 

 

 

1.7

 

外幣

 

 

(0.1

)

 

 

 

—

 

 

 

(0.2

)

年底儲備餘額

 

$

20.2

 

 

 

$

18.4

 

 

$

20.1

 

 

19.關於業務細分的信息

該公司的業務分爲三個部門：水、戶外和安全。這些細分市場是戰略業務單位，擁有不同的產品和服務。

首席運營決策者(CODM)，我們的首席執行官，使用營業收入來評估我們部門的表現並做出資源分配決策。分部營業收入不包括未分配的公司成本。營業收入是向CODM報告內部管理時使用的部門盈利能力的主要衡量標準。這一指標用於查看經營趨勢、進行分析比較和不同時期的基準業績，以及評估歷史和預測的財務業績以及相對於我們競爭對手的業績。向CODM提供的月度和季度業績包括合併公司和每個部門的淨銷售額和營業收入或虧損。在評估該部門的業績時，將對照預算和上一年審查這些財務結果。還定期向CODM提供定性和定量指標，以建立對總體業績的驅動因素的理解。所提供的指標除了包括每個部門外，還包括公司運營和供應鏈的職能層面的信息。這些指標還包括服務和質量評級、品牌知名度、市場表現和前景、營運資本效率、運營工廠效率、大宗商品定價、資本支出以及轉型舉措概述。

下面顯示的重大費用類別和金額與定期提供給CODM的分部級別信息一致。部門間費用包括在下列金額內。其他營運開支主要包括銷售及銷售成本、一般及行政開支，該等開支並未在管理營運分部的業績時撥給首席營運官。

水務部門製造、組裝和銷售水龍頭、配件、廚房水槽和垃圾處理器，主要品牌爲Moen、Rohl、Riobel、Victoria+Albert、Perrin&Rowe、Aqualisa、Shaws、Emtek、Schaub和Springwell品牌。戶外部分包括Therma-Tru品牌的玻璃纖維和鋼質進入門系統，Larson品牌的STORM、屏蔽門和防盜門，Fiberon品牌的複合甲板和欄杆，Fypon品牌的氨基甲酸酯木結構，以及Solar Innovation品牌的大開口式外門系統和室外圍欄。安全事業部包括萬能鎖、美國鎖、耶魯和奧古斯特品牌的鎖、安全和安全設備、連接和機械鎖出標籤解決方案和電子安全產品，以及SentrySafe品牌的防火保險箱、安全容器和商用櫥櫃。公司費用主要包括總部行政費用。公司資產主要由現金組成。

83

 

該公司的子公司主要在美國、加拿大、墨西哥、英國、中國、南非、越南和法國開展業務。

 

(In數百萬）

 

水

 

 

 

戶外

 

 

安防

 

 

總計2024年

 

淨銷售額

 

$

2,564.6

 

 

 

$

1,350.1

 

 

$

694.3

 

 

$

4,609.0

 

折舊

 

 

44.2

 

 

 

 

54.3

 

 

 

20.0

 

 

 

118.5

 

無形資產攤銷

 

 

39.5

 

 

 

 

30.0

 

 

 

3.6

 

 

 

73.1

 

重組和其他費用

 

 

8.5

 

 

 

 

19.8

 

 

 

11.5

 

 

 

39.8

 

其他分部項目 (1)

 

 

1,877.3

 

 

 

 

1,048.0

 

 

 

558.8

 

 

 

3,484.1

 

未分配開支

 

 

—

 

 

 

 

—

 

 

 

—

 

 

 

155.6

 

營業總收入

 

$

595.1

 

 

 

$

198.0

 

 

$

100.4

 

 

$

737.9

 

(1) 截至2024年12月28日止年度確認的其他分部項目包括銷售成本和銷售成本、一般費用和行政費用。

 

(In數百萬）

 

水

 

 

 

戶外

 

 

安防

 

 

總計2023年

 

淨銷售額

 

$

2,562.2

 

 

 

$

1,341.1

 

 

$

722.9

 

 

$

4,626.2

 

折舊

 

 

40.4

 

 

 

 

34.5

 

 

 

29.8

 

 

 

104.7

 

無形資產攤銷

 

 

28.9

 

 

 

 

30.0

 

 

 

3.2

 

 

 

62.1

 

重組和其他費用

 

 

4.8

 

 

 

 

4.1

 

 

 

44.6

 

 

 

53.5

 

其他分部項目 (1)

 

 

1,913.8

 

 

 

 

1,139.0

 

 

 

582.9

 

 

 

3,635.7

 

未分配開支

 

 

—

 

 

 

 

—

 

 

 

—

 

 

 

155.3

 

營業總收入

 

$

574.3

 

 

 

$

133.5

 

 

$

62.4

 

 

$

614.9

 

(1) 截至2023年12月30日止年度確認的其他分部項目包括銷售成本和銷售成本、一般費用和行政費用。

 

(In數百萬）

 

水

 

 

 

戶外

 

 

安防

 

 

2022年總計

 

淨銷售額

 

$

2,570.2

 

 

 

$

1,517.4

 

 

$

635.4

 

 

$

4,723.0

 

折舊

 

 

34.9

 

 

 

 

32.3

 

 

 

13.2

 

 

 

80.4

 

無形資產攤銷

 

 

16.2

 

 

 

 

30.2

 

 

 

1.9

 

 

 

48.3

 

重組和其他費用

 

 

6.9

 

 

 

 

18.3

 

 

 

0.6

 

 

 

25.8

 

其他分部項目 (1)

 

 

1,897.6

 

 

 

 

1,242.4

 

 

 

524.3

 

 

 

3,664.3

 

未分配開支

 

 

—

 

 

 

 

—

 

 

 

—

 

 

 

129.9

 

營業總收入

 

$

614.6

 

 

 

$

194.2

 

 

$

95.4

 

 

$

774.3

 

(1) 截至2022年12月31日止年度確認的其他分部項目包括銷售成本和銷售成本、一般費用和行政費用。

 

84

 

銷貨淨額對 兩 該公司的客戶The Home Depot，Inc.（「家得寶」）和Lowe ' s Companies，Inc.（「Lowe ' s」）各佔公司淨銷售額的10%以上 2024年、2023年和2022年。我們的所有業務部門都出售給家得寶和Lowe ' s。對家得寶的淨銷售額 是 10%, 10%和12佔淨銷售額的百分比 2024年、2023年和2022年，分別。Lowe ' s的淨銷售額爲 11%, 11%和12佔淨銷售額的百分比 分別爲2024年、2023年和2022年。

 

(In數百萬）

 

2024

 

 

 

2023

 

 

 

2022

 

總資產：

 

 

 

 

 

 

 

 

 

 

 

水

 

$

3,539.2

 

 

 

$

3,492.2

 

 

 

$

2,674.4

 

戶外

 

 

2,169.3

 

 

 

 

2,205.3

 

 

 

 

2,214.6

 

安防

 

 

649.7

 

 

 

 

721.0

 

 

 

 

605.4

 

企業

 

 

203.6

 

 

 

 

146.5

 

 

 

 

626.5

 

總資產

 

$

6,561.8

 

 

 

$

6,565.0

 

 

 

$

6,120.9

 

資本支出：

 

 

 

 

 

 

 

 

 

 

 

水

 

$

72.6

 

 

 

$

104.7

 

 

 

$

52.1

 

戶外

 

 

64.4

 

 

 

 

140.0

 

 

 

 

120.2

 

安防

 

 

21.5

 

 

 

 

10.4

 

 

 

 

17.9

 

企業

 

 

34.8

 

 

 

 

1.4

 

 

 

 

—

 

資本支出，毛額

 

 

193.3

 

 

 

 

256.5

 

 

 

 

190.2

 

減：資產處置收益

 

 

(26.9

)

 

 

 

(2.8

)

 

 

 

(8.2

)

資本支出，淨

 

$

166.4

 

 

 

$

253.7

 

 

 

$

182.0

 

按地理區域劃分的淨銷售額 (a):

 

 

 

 

 

 

 

 

 

 

 

美國

 

$

3,809.0

 

 

 

$

3,708.0

 

 

 

$

3,763.6

 

中國

 

 

233.6

 

 

 

 

335.2

 

 

 

 

363.9

 

加拿大

 

 

344.5

 

 

 

 

352.4

 

 

 

 

368.2

 

其他國際

 

 

221.9

 

 

 

 

230.6

 

 

 

 

227.3

 

淨銷售額

 

$

4,609.0

 

 

 

$

4,626.2

 

 

 

$

4,723.0

 

不動產、廠房和設備，淨值：

 

 

 

 

 

 

 

 

 

 

 

美國

 

$

816.4

 

 

 

$

798.0

 

 

 

$

673.5

 

墨西哥

 

 

59.0

 

 

 

 

62.9

 

 

 

 

55.9

 

加拿大

 

 

6.7

 

 

 

 

7.6

 

 

 

 

7.3

 

中國

 

 

14.5

 

 

 

 

17.3

 

 

 

 

20.1

 

其他國際

 

 

102.6

 

 

 

 

89.2

 

 

 

 

26.9

 

不動產、廠房和設備，淨值

 

$

999.2

 

 

 

$

975.0

 

 

 

$

783.7

 

 

 

(a)
基於目的地國家.

85

 

20. 每股收益

 

每股普通股收益的計算如下：

(In百萬，每股數據除外）

 

2024

 

 

 

2023

 

 

2022

 

持續經營收入

 

$

471.9

 

 

 

$

405.5

 

 

$

539.9

 

已終止業務的收入

 

 

—

 

 

 

 

(1.0

)

 

 

146.8

 

淨收入

 

$

471.9

 

 

 

$

404.5

 

 

$

686.7

 

每股普通股收益

 

 

 

 

 

 

 

 

 

 

基本

 

 

 

 

 

 

 

 

 

 

持續經營業務

 

$

3.78

 

 

 

$

3.20

 

 

$

4.14

 

終止經營業務

 

 

—

 

 

 

 

(0.01

)

 

 

1.13

 

基本每股收益

 

$

3.78

 

 

 

$

3.19

 

 

$

5.27

 

稀釋

 

 

 

 

 

 

 

 

 

 

持續經營業務

 

$

3.75

 

 

 

$

3.17

 

 

$

4.11

 

終止經營業務

 

 

—

 

 

 

 

—

 

 

 

1.12

 

稀釋後每股收益

 

$

3.75

 

 

 

$

3.17

 

 

$

5.23

 

已發行基本平均股(a)

 

 

124.8

 

 

 

 

126.9

 

 

 

130.3

 

股票獎勵

 

 

0.9

 

 

 

 

0.8

 

 

 

1.0

 

稀釋後的平均流通股(a)

 

 

125.7

 

 

 

 

127.7

 

 

 

131.3

 

反稀釋股票獎勵被排除在加權平均值之外
每股稀釋收益的發行股數

 

 

0.6

 

 

 

 

0.9

 

 

 

1.3

 
(a)
反映了截至12月28日止年度股票回購的影響， 2024年、2023年12月30日和2022年12月31日，分別爲。

21. 其他應收賬款（收入），淨

其他費用（收入）的組成部分，淨額， 2024年、2023年和2022年情況如下：

 

(In數百萬）

 

2024

 

 

 

2023

 

 

2022

 

固定福利計劃成本（收入）

 

$

11.7

 

 

 

$

(1.6

)

 

$

(8.7

)

利息收入

 

 

(5.1

)

 

 

 

(14.2

)

 

 

(5.8

)

外幣損失（收益）

 

 

4.7

 

 

 

 

(3.4

)

 

 

3.3

 

其他項目，淨值

 

 

0.6

 

 

 

 

(0.3

)

 

 

(0.8

)

其他費用（收入）總額，淨額

 

$

11.9

 

 

 

$

(19.5

)

 

$

(12.0

)

 

22. 意外開支

訴訟

該公司是其業務附帶的普通、例行訴訟事項訴訟的被告。無法預測未決訴訟的結果，而且，與任何訴訟一樣，這些訴訟的決定可能對公司不利。公司相信，這些行爲有值得辯護的理由，並且這些行爲不會對公司的經營業績、現金流或財務狀況產生重大不利影響，並且在適當的情況下，這些行爲將受到強烈質疑。因此，公司認爲發生重大損失的可能性微乎其微。

86

 

環境

根據聯邦和州法律的要求，我們參與了清理危險廢物的補救活動。每個場地的補救費用的負債是基於我們對未貼現的未來成本的最佳估計，不包括可能的保險賠償或來自其他第三方的賠償。與個別場地相關的法律、法規、技術和信息狀況的不確定性，使得很難對未來的環境補救風險進行估計。一些潛在的責任與我們擁有的網站有關，還有一些與我們不再擁有或從未擁有的網站有關。根據Superfund或類似的州法律，我們的幾家子公司已被指定爲潛在責任方(「PRP」)。在大多數情況下，我們的子公司被命名爲PRP，我們與其他PRP達成成本分擔安排。我們向保險公司發出潛在PRP責任的通知，但很少從保險公司獲得PRP費用的補償。我們相信，遵守現行環境保護法律(在考慮第三方的估計回收之前)不會對我們的運營結果、現金流或財務狀況產生重大不利影響。

23. 後續事件

 

對 2025年2月4日，公司董事會授權回購最多美元1 根據適用的證券法，未來兩年內在公開市場或私下談判交易或其他方式（包括根據規則10 b5 -1交易計劃、大宗交易和加速股份回購交易）上持有公司十億股已發行普通股。新的$1 億股回購授權取代了當時現有的授權，生效日期： 2025年2月4日，否則就會過期 2026年1月29日.

 

如果進行新的購買，將根據市場狀況不時進行。新宣佈的股份回購授權並不要求公司回購任何美元金額或數量的普通股。該授權有效期至2027年2月4日，可隨時暫停或終止。

 

 

 

87

 

項目9. Accc的變化和分歧會計和財務披露的解釋。

沒有。

項目9A.控制s和程序。

(a)
披露控制和程序的評估。

公司管理層在公司首席執行官和首席財務官的參與下，評估了截至本報告所涵蓋期間結束時公司披露控制和程序（定義見《交易法》第13 a-15（e）條和第15 d-15（e）條）的有效性。根據該評估，首席執行官和首席財務官得出的結論是，公司的披露控制和程序截至2011年有效 2024年12月28日.

(b)
管理層關於財務報告內部控制的報告。

我們的管理層負責建立和維護對「財務報告」的充分內部控制，該術語的定義見《交易法》規則13 a-15（f）和15 d-15（f）。在包括首席執行官和首席財務官在內的管理層的監督和參與下，我們根據中的框架對財務報告內部控制的有效性進行了評估 內部控制-綜合框架 （2013）由特雷德韋委員會贊助組織委員會（「COSO」）發佈。基於我們在中框架下的評估 內部控制-綜合框架 （2013）由COSO發佈，我們的管理層得出結論，我們對財務報告的內部控制已於2024年12月28日生效。

普華永道會計師事務所（PricewaterhouseCoopers LLP）是公司的獨立註冊會計師事務所，已審計了截至2024年12月28日公司財務報告內部控制的有效性，如其報告（見本文）所述。

(c)
財務報告內部控制的變化。

公司截至2024年12月28日的財年期間，公司財務報告內部控制不發生任何對公司財務報告內部控制產生重大影響或合理可能產生重大影響的變化。

項目90亿。Oth呃信息。

董事和高級官員的證券交易計劃

我們高管的很大一部分薪酬以股權獎勵的形式提供，包括績效股票獎勵、限制性股票單位和股票期權。公司的薪酬計劃和實踐旨在按績效付費，並使管理層的利益與公司股東的利益保持一致，同時吸引、激勵和保留優秀人才來領導我們的公司。此外，董事會成員還以公司普通股形式獲得一部分薪酬。我們的高管和董事可能會不時參與涉及這些證券的公開市場銷售或其他交易，也可能購買我們的證券。

我們的董事和高級職員對我們的證券進行的交易必須按照我們的內幕交易政策進行，該政策除其他外要求交易必須符合適用的美國聯邦證券法，該法律禁止在擁有重要非公開信息的情況下進行交易。《交易法》下的規則10 b5 - 1提供了肯定性辯護，允許預先安排的證券交易，以避免擔心在未來日期啓動交易，同時可能擁有重要的非公開信息。我們的董事和高級職員被允許制定旨在遵守規則10 b5 - 1的交易計劃。

2024年第四季度，我們的董事或高管均未 通過 或 終止 規則10 b5 -1交易計劃或採用或終止非規則10 b5 -1交易安排（定義見規則S-K第408（c）項）。

項目9 C.失望關於阻止檢查的外國司法管轄區。

不適用。

88

 

第三部分

項目10. 董事、執行O官員和公司治理。

請參閱2025年委託聲明中包含的「提案1-選舉董事」、「公司治理-董事會委員會-審計委員會」標題下的信息，以及（如果適用）「違規第16（a）條報告」，該信息通過引用併入本文。請參閱本年度報告第一部分（表格10-K）標題「有關我們現任高管的信息」下的信息。

公司董事會通過了一項商業行爲和道德準則，其中規定了旨在促進公司所有員工、高級管理人員和董事的道德行爲的各種政策和程序。公司董事會還通過了適用於公司主要執行人員、主要財務人員和主要會計人員的《高級財務人員道德守則》。《商業行爲和道德守則》和《高級財務官道德守則》可在公司網站免費獲取，網址爲：Http://ir.fbin.com/governing-high-standards。這些文件的副本也可獲得，並將在向公司秘書提出書面要求時免費發送給股東。對《商業行爲與道德守則》或《高級財務官道德守則》中適用於其中任何一名高級財務官的條款的任何修訂或豁免，都將張貼在公司網站上的相同位置。

公司已採取內幕交易政策，該政策管理公司董事、高級管理人員、員工、顧問和承包商對我們證券的交易，該政策的合理設計旨在促進遵守內幕交易法律、規則和法規以及適用於公司的任何上市標準。我們的內幕交易政策副本與本年度報告一起存檔，表格10-K，作爲附件19。

項目11. 執行給予補償。

請參閱2025年委託聲明中包含的標題「董事薪酬」、「公司治理-董事會委員會-薪酬委員會」、「薪酬委員會聯動和內部人士參與」、「薪酬討論和分析」、「2024年高管薪酬」、「首席執行官薪酬比率」和「薪酬委員會報告」下的信息，該信息通過引用併入本文.

項目12. 某些受益人的證券所有權股東和管理層以及相關股東事宜。

請參閱2025年代理聲明中包含的標題「有關證券控股的某些信息」下的信息，該信息通過引用併入本文。另請參閱2025年委託聲明中包含的「股權補償計劃信息」表，該信息通過引用併入本文。

項目13. 某些關係和關係d交易和董事獨立性。

請參閱2025年委託聲明中包含的「董事獨立性」、「董事會委員會」、「有關與關聯人士交易的政策」和「某些關係和關聯交易」標題下的信息，該信息通過引用併入本文。

項目14. 首席Acco統一的費用和服務。

請參閱2025年委託聲明中「獨立註冊會計師事務所的費用」和「審計和非審計服務的批准」標題下的信息，該信息通過引用併入本文。

89

 

第四部分

項目15. 展品和鰭財務報表附表

(a)
財務報表、財務報表附表和附件。
(1)
財務報表（以下列出的所有財務報表均爲公司及其合併子公司的財務報表）：

截至2024年12月28日、2023年12月30日和2022年12月31日止年度的合併利潤表載於本文第8項。

本文第8項包含截至2024年12月28日、2023年12月30日和2022年12月31日止年度的合併全面收益表。

本文第8項包含截至2024年12月28日和2023年12月30日的合併資產負債表。

本文件第8項包含截至2024年12月28日、2023年12月30日和2022年12月31日止年度的合併現金流量表。

截至2024年12月28日、2023年12月30日和2022年12月31日止年度的合併權益表載於本文第8項。

本文第8項包含的合併財務報表註釋。

本文第8項所載的獨立註冊會計師事務所報告。 （PCAOB ID號： 238)

(2)
財務報表附表

請參閱第98頁的公司及其子公司財務報表附表。

(3)
展品

 

2.1.

 

Fortune Brands Doors，Inc.和Fortune Brands Home&Security，Inc.與南達科他州Larson製造公司及其關聯公司的所有者之間於2020年11月16日簽訂的股權購買協議，通過參考公司於2021年2月24日提交的Form 10-K年報的附件2.1併入本文.

2.2.

 

Fortune Brands Home&Security，Inc.和MasterBrand，Inc.之間於2022年12月14日簽訂的分離和分銷協議，通過引用公司於2022年12月16日提交的當前Form 8-K報告的附件2.1併入本文。

2.3.

 

ASSA ABLOY Inc.、Fortune Brands Home&Security，Inc.和ASSA ABLOY AB之間於2022年12月1日簽署的股票購買協議，僅爲本協議第13.20節的目的，通過引用2022年12月2日提交的公司當前8-K報表的附件2.1併入本文。

3.1.

 

自2023年5月16日起修訂和重新發布的《財富品牌創新公司註冊證書》，通過引用本公司於2023年5月19日提交的當前8-K報表的附件3.1併入本文。

3.2.

 

《財富品牌創新公司修訂和重訂章程》於2022年12月13日生效，現參考本公司於2022年12月16日提交的當前8-K表格報告中的附件3.2併入本文。

4.1.

 

證券說明通過引用本公司於2023年2月28日提交的Form 10-K年度報告的附件4.1併入。

4.2.

 

Fortune Brands Home&Security，Inc.，Wilmington Trust，National Association作爲受託人，Citibank，N.A.作爲證券代理人，於2015年6月15日由Form Brands Home&Security，Inc.簽署，日期爲2015年6月15日的契約，通過引用公司於2015年6月16日提交的當前Form 8-K報告中的附件4.1併入本文。

4.3.

 

第一補充契約，日期爲2015年6月15日，由Fortune Brands Home&Security，Inc.、作爲受託人的全國協會Wilmington Trust和作爲證券代理的花旗銀行聯合發行，在此引用公司於2015年6月16日提交的當前Form 8-K報告中的附件4.2。

90

 

4.4.

 

第三補充契約，日期爲2019年9月13日，由Fortune Brands Home&Security，Inc.，Wilmington Trust，National Association作爲受託人，以及Citibank，N.A.作爲證券代理人，在公司於2019年9月13日提交的當前8-K表格報告中通過引用附件4.1併入。

4.5.

 

第四補充契約，日期爲2022年3月25日，由Fortune Brands Home&Security，Inc.、作爲受託人的全國協會Wilmington Trust和作爲證券代理人的Citibank，Inc.之間發行的，通過引用公司於2022年3月25日提交的當前Form 8-K報告中的附件4.9併入本文。

4.6.

 

第五補充契約，日期爲2023年6月14日，由Fortune Brands Innovation，Inc.、作爲受託人的全國協會Wilmington Trust和作爲證券代理人的花旗銀行之間的契約，通過引用公司於2023年6月16日提交的當前Form 8-K報告中的附件4.12併入本文。

4.7.

 

本公司2025年到期的4.000%優先債券的全球證書表格於此併入，以參考本公司於2015年6月16日提交的8-K表格的附件4.4。

4.8.

 

本公司2029年到期的3.250%優先債券的全球證書表格在此併入，參考本公司於2019年9月13日提交的當前8-K表格的附件4.2。

4.9.

 

2032年到期的4.000%優先債券的全球證書表格在此併入，參考本公司於2022年3月25日提交的當前8-K表格的附件4.10。

4.10.

 

2052年到期的4.500%優先債券的全球證書表格在此併入，參考公司於2022年3月25日提交的當前8-K表格的附件4.11。

4.11.

 

2033年到期的5.875%優先債券的全球證書表格在此併入，參考公司於2023年6月16日提交的當前8-K表格的附件4.13(載於公司於2023年6月16日提交的當前表格8-K的附件4.12)。

10.1.

 

Fortune Brands Home&Security，Inc.和MasterBrand，Inc.之間於2022年12月14日簽訂的過渡服務協議，通過引用本公司於2022年12月16日提交的當前8-K報表的附件10.1併入本文。

10.2.

 

Fortune Brands Home&Security，Inc.和MasterBrand，Inc.之間於2022年12月14日簽訂的《稅收分配協議》在此併入，作爲參考本公司於2022年12月16日提交的當前8-K報表的附件10.2。

10.3.

 

Fortune Brands Home&Security，Inc.和MasterBrand，Inc.之間於2022年12月14日簽訂的《員工事項協議》，在此併入本公司於2022年12月16日提交的當前8-K表格中的附件10.3。

10.4.

 

賠償協議，日期爲2011年9月14日，由Fortune Brands Home&Security，Inc.和Fortune Brands，Inc.(N/K/A三得利全球烈酒公司)簽署。在此引用本公司2011年9月15日提交的8-K表格的當前報告的附件10.1。

10.5.

 

稅收分配協議，日期爲2011年9月28日，由Fortune Brands Home&Security，Inc.和Fortune Brands，Inc.(N/K/A三得利全球烈酒公司)簽署。在此引用本公司2011年9月30日提交的8-K表格的當前報告的附件10.1。

10.6.

 

價值12.5億美元的第三次修訂和重新簽署的信貸協議，日期爲2022年8月2日，該協議的貸款方Fortune Brands Home&Security，Inc.、作爲辛迪加代理的美國銀行和作爲行政代理的JPMorgan Chase Bank，N.A.通過引用本公司於2022年8月4日提交的當前8-K報表的附件10.1併入本文。

10.7.

 

作爲發行方的Fortune Brands Home&Security，Inc.與其交易方之間的商業票據交易商協議的格式，通過參考本公司於2021年12月2日提交的Form 8-K的當前報告的附件10.2併入本文。

91

 

10.8.

 

Fortune Brands Home&Security，Inc.年度高管激勵薪酬計劃在此併入，參考公司於2013年3月5日提交的最終委託書的附錄B。*

10.9.

 

財富品牌創新公司2024年2月27日修訂並重述的年度高管激勵薪酬計劃，通過參考公司於2024年2月27日提交的10-K表格年度報告的附件10.9併入本文。*

10.10.

 

Fortune Brands Home&Security，Inc.2013年長期激勵計劃通過參考公司於2013年3月5日提交的最終委託書的附錄A併入本文。*

10.11.

 

日期爲2016年8月2日的《財富品牌家居和安保公司2013年長期激勵計劃》的第一項修正案，引用了公司於2016年11月2日提交的Form 10-Q季度報告的附件10.1。*

10.12.

 

自2022年5月3日起生效的財富品牌家居和安全公司2022年長期激勵計劃，參照公司於2022年3月21日提交的最終委託書的附錄B併入本文。*

10.13.

 

《2014年股票期權獎勵通知》和《財富品牌家居與安全公司獎勵協議》的表格。2013長期激勵計劃通過引用附件10.18併入本公司於2014年2月26日提交的Form 10-K年度報告。

10.14.

 

2016年度股票期權獎勵通知表格及Fortune Brands Home&Security，Inc.獎勵協議。2013長期激勵計劃在此併入本公司於2016年4月28日提交的Form 10-Q季度報告中的附件10.1。*

10.15.

 

根據Fortune Brands Home&Security，Inc.2013長期激勵計劃獎勵的股票期權協議表，通過參考公司於2020年2月26日提交的Form 10-K年度報告中的附件10.13併入本文。

10.16.

 

2022年財富品牌家居和安全公司長期激勵計劃下的股票期權獎勵協議的格式，通過參考本公司於2022年7月28日提交的Form 10-Q季度報告中的附件10.2併入本文。

10.17.

 

《財富品牌家居和安全公司2013長期激勵計劃》獎勵的業績份額獎勵協議表，通過參考本公司於2020年2月26日提交的Form 10-K年度報告中的附件10.14併入本文。

10.18.

 

《2022年財富品牌家居和安保公司長期激勵計劃》獎勵的業績份額獎勵協議表，通過參考本公司於2022年7月28日提交的Form 10-Q季度報告中的附件10.3併入本文。

10.19.

 

根據Fortune Brands Home&Security，Inc.2013長期激勵計劃獎勵的限制性股票單位獎勵協議的格式，通過參考本公司於2020年2月26日提交的Form 10-K年度報告中的附件10.15併入本文。

10.20.

 

根據Fortune Brands Home&Security Inc.2022長期激勵計劃獎勵的限制性股票單位協議表，通過參考本公司於2022年7月28日提交的Form 10-Q季度報告中的附件10.4併入本文。

10.21.

 

財富品牌創新公司2022年長期激勵計劃下的限制性股票單位獎勵協議的格式通過參考本公司於2024年2月27日提交的Form 10-K年度報告中的附件10.21併入本文。

10.22.

 

財富品牌創新公司2022年長期激勵計劃下獎勵的績效份額獎勵協議表引用本公司於2024年2月27日提交的Form 10-K年度報告中的附件10.22。*

10.23.

 

財富品牌創新公司2022年長期激勵計劃獎勵股票期權協議表參考公司於2024年2月27日提交的Form 10-K年度報告中的附件10.23併入本文。

92

 

10.24.

 

公司與尼古拉斯·I·芬克、David·V·巴里、希蘭達·S·多諾霍、約翰·D·李、馬修·E·諾瓦克、克里斯汀·E·帕佩什、切裏·M·菲爾弗和羅恩·威爾遜各自簽訂的終止僱傭後支付福利的協議表，通過引用本公司於2018年2月28日提交的Form 10-K年度報告的附件10.23併入本文。

10.25.

 

非僱員董事選股計劃結合於此，參考公司於2012年2月22日提交的10-K表格年報的附件10.17。*

10.26.

 

Form Brands Home&Security，Inc.截至2017年2月27日修訂並重述的遞延薪酬計劃，通過參考公司於2017年2月28日提交的Form 10-K年報的附件10.30併入本文。*

10.27.

 

截至2023年9月18日修訂和重述的財富品牌創新公司董事遞延薪酬計劃，通過引用公司於2023年10月27日提交的Form 10-Q季度報告中的附件10.3併入本文。

10.28.

 

截至2023年9月29日的Fortune Brands Innovation，Inc.遞延補償計劃第二修正案通過參考公司於2023年10月27日提交的Form 10-Q季度報告的附件10.1併入本文。*

10.29.

 

財富品牌創新公司非員工董事股票選擇計劃，自2024年1月1日起生效，參照公司於2023年10月27日提交的10-Q表格季度報告的附件10.2併入本文。*

19.

 

內幕交易和舉報政策。**

21.

 

公司的附屬公司。**

23.

 

獨立註冊會計師事務所同意，PricewaterhouseCoopers LLP.**

24.

 

與以表格10-K格式籤立本年度報告有關的授權書**

31.1.

 

2002年《薩班斯-奧克斯利法案》第302節規定的首席執行官證書。**

31.2.

 

2002年《薩班斯-奧克斯利法案》第302節規定的首席財務官證書。**

32.

 

2002年《薩班斯-奧克斯利法案》第906條要求的首席執行官/首席財務官聯合認證。**

97.

 

自2023年11月30日起生效的追回政策通過參考公司於2024年2月27日提交的Form 10-K年度報告的附件97併入本文。

101.

 

以下材料來自Form 10-K Form 10-K年度報告，格式爲內聯可擴展商業報告語言(IXBRL)：(I)綜合收益表，(Ii)綜合全面收益表，(Iii)綜合資產負債表，(Iv)綜合現金流量表，(Vi)綜合權益表，(Vi)綜合財務報表附註。**

104.

 

公司截至2024年12月28日的年度報告Form 10-K的封面，格式爲內聯格式XBRL，幷包含在附件101中。**

 

* 表明展覽是管理合同或補償計劃或安排。

** 表示展品已隨附提供或存檔（如適用）。

項目16. 爲m 10-K總結

沒有。

93

 

簽名ures

 

根據1934年證券交易法第13或15（d）條的要求，登記人已正式促使以下籤署人代表其簽署本報告，並經正式授權。

 

 

 

財富品牌創新公司

(The公司）

 

 

 

日期：2025年2月25日

 

作者：

 

 

 

 

/s/ 大衛訴巴里

 

 

 

大衛·V·巴里

執行副總裁兼首席財務官兼安全與互聯產品總裁

（首席財務官）

 

根據1934年證券交易法的要求，本報告已由以下人員代表註冊人以所示的身份和日期簽署。

 

/s/ 尼古拉一尼古拉的Fink

 

/s/ 安·弗裏茨·哈克特*

尼古拉一尼古拉的芬克，首席執行官兼董事（首席執行官）

日期：2025年2月25日

 

安·弗裏茨·哈克特（Ann Fritz Hackett），總監

日期：2025年2月25日

 

 

 

/s/ 大衛訴巴里

 

/s/ 蘇珊·S基爾斯比 *

David V. Barry，執行副總裁兼首席財務官兼安全和互聯產品總裁（首席財務官）

日期：2025年2月25日

 

蘇珊·S基爾斯比，導演

日期：2025年2月25日

 

 

 

/s/ 凱倫·里斯

 

/s/ 大衛·麥凱 *

Karen Ries，高級副總裁兼首席會計官（首席會計官）

 

AD David Mackay，總監

日期：2025年2月25日

日期：2025年2月25日

 

 

 

 

 

/s/ amit banati*

 

/s/ 傑弗裏海峽佩裏*

Amit Banati，總監

日期：2025年2月25日

 

傑弗裏·S佩裏，導演

日期：2025年2月25日

 

 

 

/s/ amee chande*

 

/s/ 斯蒂芬妮·普格利斯 *

Amee Chande，總監

日期：2025年2月25日

 

斯蒂芬妮·普格利斯，總監

日期：2025年2月25日

 

 

 

/s/ 愛爾蘭金融 *

 

 

Irial Finan，總監

日期：2025年2月25日

 

 

 

 

 

 

* 作者：

/s/ 希蘭達海峽多諾霍

 

希蘭達·S多諾霍，事實律師

 

94

 

附表二估值 和合格帳戶

截至2024年12月28日、2023年12月30日和2022年12月31日止年度

 

(In數百萬）

 

餘額
開始於
期間

 

 

充電到
費用

 

 

覈銷
和
扣除額（a）

 

 

業務
收購（b）

 

 

餘額
結束
期間

 

2024:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

現金折扣和銷售津貼
津貼

 

$

120.8

 

 

$

350.6

 

 

$

(362.0

)

 

$

—

 

 

$

109.4

 

信貸虧損撥備

 

 

7.7

 

 

 

3.8

 

 

 

(4.5

)

 

 

—

 

 

 

7.0

 

遞延所得稅資產備抵

 

 

15.1

 

 

 

(7.1

)

 

 

—

 

 

 

—

 

 

 

8.0

 

2023:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

現金折扣和銷售津貼
津貼

 

$

116.2

 

 

$

340.1

 

 

$

(342.2

)

 

$

6.7

 

 

$

120.8

 

信貸虧損撥備

 

 

5.5

 

 

 

5.2

 

 

 

(6.2

)

 

 

3.2

 

 

 

7.7

 

遞延所得稅資產備抵

 

 

13.8

 

 

 

1.3

 

 

 

—

 

 

 

—

 

 

 

15.1

 

2022:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

現金折扣和銷售津貼
津貼

 

$

135.9

 

 

$

287.0

 

 

$

(306.7

)

 

$

—

 

 

$

116.2

 

信貸虧損撥備

 

 

5.7

 

 

 

3.7

 

 

 

(3.9

)

 

 

—

 

 

 

5.5

 

遞延所得稅資產備抵

 

 

20.7

 

 

 

(6.9

)

 

 

—

 

 

 

—

 

 

 

13.8

 

 

(a)
扣除前幾年覈銷金額的收回和不重大的外幣影響。
(b)
代表與2023年水務和安全部門內收購業務相關的採購會計調整。

95