Masco (MAS) 10-K risk factor changes: FY2019 vs FY2018

[removed: Our] [added: Our] business relies on residential repair and remodeling activity and, to a lesser extent, on new home construction activity, both of which are [removed: cyclical.][added: impacted by a number of economic factors and the housing market.]

A number of factors [removed: affect] [added: impact] consumers’ spending on home improvement projects as well as new home construction activity, including:

The fundamentals driving our business are [removed: cyclical, fluctuating with] [added: impacted by] economic cycles.

[removed: We] [added: We] could lose market share if we do not maintain our strong brands, develop [removed: new] [added: innovative] products or respond to changing purchasing practices and consumer preferences or if our reputation is [removed: damaged.][added: damaged.]

[removed: While we continue] [added: Our initiatives] to invest in brand [removed: building and] [added: building,] brand [removed: awareness, these initiatives] [added: awareness and product innovation] may not be successful.

The uncertainties associated with developing and introducing [removed: new] [added: innovative] and improved products, such as gauging changing consumer [added: demands and] preferences and successfully developing, manufacturing, marketing and selling these products, may impact the success of our product introductions.

If [added: the products] we [removed: do not] introduce [removed: new or improved products in a timely manner or if these products] do not gain widespread [removed: acceptance,] [added: acceptance or if our competitors improve their products more rapidly or effectively than] we [added: do, we] could lose market [removed: share,] [added: share or be required to reduce our prices,] which could adversely impact our results of operations and financial position.

If we do not timely and effectively identify and respond to changing consumer [removed: purchasing practices,] [added: preferences,] including [removed: an increase] [added: a shift] in [removed: e-commerce, and] consumer [removed: preferences,] [added: purchasing practices toward e-commerce,] our relationships with our customers and with consumers could be harmed, the demand for our brands and products could be reduced and our results of operations and financial position could be adversely affected.

[removed: We] [added: We] face significant competition and operate in an evolving competitive [removed: landscape.][added: landscape.]

We believe that brand reputation is an important factor affecting product selection and that we compete on the basis of product [removed: features and] [added: features,] innovation, [removed: product] quality, customer service, warranty and price.

As [removed: market dynamics change,] [added: this trend continues,] we may experience [added: lower demand for our products or] a shift in the mix of some products we sell toward more value‑priced or opening price point products, which may affect our profitability.

Further, [removed: as] the [added: growing] e‑commerce channel [removed: expands,] [added: brings an increased number of competitors and] greater pricing transparency for consumers, [removed: continuing] [added: as well as] conflicts between our existing distribution channels and a need for different distribution [removed: methods could affect our results of operations and financial position.][added: methods.]

[removed: Our] [added: Our] sales are concentrated with two significant [removed: customers.][added: customers.]

In [removed: 2018,] [added: 2019,] our net sales [added: from our continuing operations] to The Home Depot were [removed: $2.7] [added: $2.5] billion (approximately [removed: 32] [added: 37] percent of our consolidated net sales), and our net sales [added: from our continuing operations] to Lowe’s were less than 10 percent of our consolidated net sales.

[removed: Variability in commodity costs, limited availability of commodities and increasing tariffs] [added: These factors] could affect our results of operations and financial position.

[removed: Tariffs and rising] [added: Rising] energy costs could [added: also] increase our production and transportation costs.

If we are not able to sufficiently increase the prices of our products or achieve cost savings to offset increased [removed: commodity] [added: material] and production costs, including the impact of increasing tariffs, our results of operations and financial position could be adversely affected.

[removed: If we are able to increase our] [added: Increased] selling [removed: prices, sustained price increases] [added: prices] for our products [added: have and] may [added: in the future] lead to sales declines and loss of market share, particularly if [removed: our competitors do] [added: those prices are] not [removed: increase their prices.][added: competitive.]

When [removed: commodity prices] [added: our material costs] decline, we have experienced and may in the future receive pressure from our customers to reduce our prices.

From time to time we enter into long-term agreements with certain significant suppliers to help ensure continued availability of [removed: key] [added: the] commodities [added: we require to produce our products] and to establish firm pricing, but at times these contractual commitments may result in our paying above market prices for commodities during the term of the contract.

[removed: We] [added: We] are dependent on third-party [removed: suppliers.][added: suppliers.]

[removed: There] [added: There] are risks associated with our international operations and global [removed: strategies.][added: strategies.]

In [removed: 2018, 19] [added: 2019, 21] percent of our sales [removed: are] [added: from continuing operations were] made outside of North America (principally in Europe) and [removed: are] transacted in currencies other than the U.S. dollar.

We are also affected by [added: domestic and international] laws applicable to [removed: U.S.] companies doing business abroad or importing [added: and exporting] goods and materials.

Compliance with these laws [removed: are] [added: is] costly, and future changes to these laws may require significant management attention and disrupt our operations.

Additionally, as the situation involving the United Kingdom’s decision to exit from the European Union [removed: develops,] [added: continues to develop,] we could experience volatility in the currency exchange rates or a change in the demand for our products and services, particularly in our U.K. and European markets, or there could be disruption of our operations and our customers’ and suppliers’ businesses.

[removed: We] [added: We] may not achieve all of the anticipated benefits of our strategic [removed: initiatives.][added: initiatives.]

[removed: All of these] [added: These] initiatives are designed to grow revenue, improve profitability and increase shareholder value over the mid‑ to long‑term.

[removed: We] [added: We] may not be able to successfully execute our acquisition strategy or integrate businesses that we [removed: acquire.][added: acquire.]

If we are not able to identify suitable acquisition candidates or consummate potential acquisitions [added: within a desired time frame or] at acceptable terms and prices, our long‑term competitive positioning may be affected.

Even if we are successful in acquiring businesses, [added: the businesses] we [added: acquire] may [added: not be able to achieve the revenue, profitability or growth we anticipate, or we may] experience [added: challenges and] risks in integrating these businesses into our existing business.

[removed: The] [added: The] long-term performance of our businesses relies on our ability to attract, develop and retain talented [removed: personnel.][added: personnel.]

To be successful, we must [added: invest significant resources to] attract, develop and retain highly qualified, talented and diverse [removed: personnel] [added: employees at all levels,] who have the experience, knowledge and expertise to [removed: successfully] implement our [removed: key] strategic initiatives.

We compete for employees with a broad range of employers in many different industries, including large multinational firms, and we [removed: invest significant resources] [added: may fail] in recruiting, developing, motivating and retaining [removed: them.][added: them, particularly with low unemployment levels in the United States.]

Our growth, competitive position and results of operations and financial position could be adversely affected by our failure to attract, develop and retain key employees, to build strong leadership teams, or to develop effective succession planning to assure smooth transitions of those employees and the knowledge and expertise they possess, or by a shortage of qualified [removed: personnel.][added: employees.]

[removed: We] [added: We] rely on information systems and technology, and a breakdown of these systems could adversely affect our results of operations and financial [removed: position.][added: position.]

Despite these efforts, our systems have been and [added: may] in the future [removed: may] be damaged, disrupted, or shut down due to cybersecurity attacks by unauthorized access, [removed: malicious software,] [added: malware, ransomware,] undetected intrusion, hardware failures, or other events, and in these circumstances our disaster recovery plans may be ineffective or inadequate.

These breaches or intrusions [added: have led and] could [added: in the future] lead to business interruption, [added: production or operational downtime, product shipment delays,] exposure [added: or loss] of [removed: proprietary] [added: proprietary, confidential, personal] or [removed: confidential] [added: financial] information, data corruption, [added: an inability to report our financial results in a timely manner,] damage to the reputation of our brands, damage to our relationships with our customers and suppliers, exposure to litigation, and increased [removed: operational costs.][added: costs associated with the remediation and mitigation of such attacks.]

Such events could adversely affect our results of operations and [removed: financial position.]

[removed: We] [added: We] may not experience the anticipated benefits from our investments in new [removed: technology.][added: technology.]

Certain of our customers are increasingly selling products sourced from low‑cost foreign manufacturers under their own private label brands, which directly compete with our brands.

In addition, we face competitive pricing pressure in the marketplace, including sales promotion programs, that could affect our market share or result in price reductions, which could adversely impact our results of operations and financial position.

As a result of the divestiture of our windows business in 2019 and the expected divestiture of our cabinetry business, the mix of our business operations has changed and the concentration of our sales to our two largest customers has increased and may continue to increase.

Variability in the cost of our raw materials, component parts and finished goods, including the imposition of tariffs could affect our results of operations and financial position.

We purchase substantial amounts of raw materials, component parts and finished goods from outside sources, including international sources, and we manufacture certain of our products outside of the United States.

Increases in the cost of the materials we purchase have in the past and may in the future increase the prices for our products, including as a result of new significant tariffs.

For example, the recent trade dispute between the United States and China has resulted in increased tariffs which raised the cost of certain of our materials.

There is a risk that additional tariffs on imports from China or new tariffs could be imposed, which could further increase the cost of the materials we purchase or import or the products we manufacture internationally.

Further, our production could be affected if we or our suppliers are unable to procure our requirements for various commodities, including, among others, brass, resins, titanium dioxide and zinc, or if a shortage of these commodities results in significantly increased costs.

Sourcing these products and components from alternate suppliers, including suppliers from new geographic regions, is time-consuming and costly and could result in inefficiencies or delays in our business operations.

Such risks include:

| • | difficulties realizing expected synergies and economies of scale; |

| • | diversion of management attention and our resources; |

| • | unforeseen liabilities; |

| • | issues or conflicts with our new or existing customers or suppliers; and |

| • | difficulties in retaining critical employees of the acquired businesses. |

financial position.

| • | minimum wage requirements; |

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As we sell new types of products or existing products in new geographic areas or channels or for new applications, we are subject to the requirements applicable to those sales.

It is also possible that our competitors may improve their products more rapidly or effectively than we do, which could adversely affect our market share.

We also compete with low‑cost foreign manufacturers and private label brands sold by our customers in a variety of our product groups.

Our sales are concentrated with our two largest customers.

Our reliance on these significant customers may further increase if the mix of our business operations changes, including as a result of acquisitions or divestitures.

Various commodities, including, among others, brass, resins, titanium dioxide, zinc, wood and glass, are used to produce our products.

Fluctuations in the availability and prices of these commodities have in the past and could increase the costs of our products.

Our production of products could be affected if we or our suppliers are unable to procure our requirements for these commodities or if a shortage of these commodities drives their prices to levels that are not commercially feasible.

Further, the cost of certain of our raw materials and finished goods is increasing as a result of new tariffs.

Sourcing these products and components from another supplier is time-consuming and costly.

Such risks include difficulties realizing expected synergies and economies of scale, diversion of our resources, unforeseen liabilities, issues or conflicts with our new or existing customers or suppliers, and difficulties in retaining critical employees of the acquired businesses.

ERP implementations are complex and require significant management oversight.

These interruptions could affect our ability to produce and ship goods to our customers or to timely report financial results and the effectiveness of our internal controls.

As we sell new types of products or existing products in new geographic areas, our failure to comply with the requirements applicable to those products or regions could adversely affect our results of operations and financial position.

require significant management attention and resources.

In addition to the various factors included in the "Executive Level Overview," "Critical Accounting Policies and Estimates" and "Outlook for the Company" sections, our future performance may be affected by the levels of residential repair and remodel activity and new home construction, our ability to maintain our strong brands and reputation and to develop [removed: new] [added: innovative] products, our ability to maintain our competitive position in our industries, our reliance on key customers, the cost and availability of [removed: raw] materials and [removed: increasing] [added: the imposition of] tariffs, our dependence on third-party suppliers, risks associated with [added: our] international operations and global strategies, our ability to achieve the anticipated benefits of our strategic initiatives, [added: including the pending divestiture of] our [added: Masco Cabinetry business, our] ability to successfully execute our acquisition strategy and integrate businesses that we have and may acquire, our ability to attract, develop and retain talented personnel, risks associated with our reliance on information systems and technology, and our ability to achieve the anticipated benefits from our investments in new technology.

[removed: Executive] [added: Executive] Level [removed: Overview][added: Overview]

[removed: These] [added: We sell our] products [removed: are sold primarily for repair and remodeling activity and new home construction] through home center retailers, [added: online retailers,] mass merchandisers, hardware stores, homebuilders, distributors, [removed: online retailers,] and direct to the consumer.

Net sales were positively impacted by [added: increased net selling prices across our two segments and] the acquisition of The L.D. Kichler Co. ("Kichler") in March [removed: 2018 and Mercury Plastics, Inc. ("Mercury") in December 2017.][added: 2018.]

[removed: Our results of operations were] [added: The 2018 gross profit margin was] negatively impacted by [removed: increased other expenses, such as logistics costs, salaries, and Enterprise Resource Planning System ("ERP")] [added: an increase in commodity] costs, [removed: and] the recognition of the inventory step up adjustment established as [added: a] part of the acquisition of [removed: Kichler.][added: Kichler, an increase in other expenses (such as salaries and logistics costs) and unfavorable sales mix.]

[removed: Such] [added: These] negative impacts were partially offset by [added: increased net selling prices and] benefits associated with cost savings [removed: initiatives and increased sales volume.][added: initiatives.]

Our Plumbing Products segment was negatively impacted by an increase in [removed: commodity costs, unfavorable sales mix, and an increase in] other expenses (such as salaries, [removed: logistics costs] [added: marketing spend] and [removed: ERP costs).][added: severance charges), an increase in commodity costs, unfavorable foreign currency translation, and higher depreciation expense.]

These negative impacts were partially offset by [added: an increase in net selling prices,] increased sales volume, [added: and] the benefits associated with cost savings [removed: initiatives and increased net selling prices.][added: initiatives.]

Our Decorative Architectural Products segment was [removed: negatively] [added: positively] impacted by [removed: an increase in commodity costs,] [added: increased net selling prices across] the [added: segment, the absence of the] recognition of the inventory [removed: step up] [added: step-up] adjustment established as part of the [removed: acquisition of Kichler, and increased depreciation] [added: 2018 Kichler acquisition,] and [removed: amortization expense.][added: the benefits associated with cost savings initiatives.]

[removed: Critical] [added: Critical] Accounting Policies and [removed: Estimates][added: Estimates]

[removed: Revenue] [added: Revenue] Recognition and [removed: Receivables][added: Receivables]

We recognize revenue as control of our products is transferred to our customers, which is generally at the time of shipment or upon delivery based on the contractual terms with our [removed: customers, or when services are completed.][added: customers.]

We monitor our [added: exposure for credit losses on] customer receivable balances and the credit worthiness of our customers on an on-going basis and maintain allowances for doubtful accounts receivable for estimated losses resulting from the inability of customers to make required payments.

[removed: Goodwill] [added: Goodwill] and Other Intangible [removed: Assets][added: Assets]

In the fourth quarter of each year, or as events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount, we [added: primarily] complete the impairment testing of goodwill utilizing a discounted cash flow method.

[added: Our assumptions included a relatively] stable U.S. Gross Domestic Product growing at approximately [removed: 2.5] [added: 1.9] percent per annum and a eurozone Gross Domestic Product growing at approximately [removed: 1.9] [added: 1.0] percent per annum over the five-year forecast.

We utilize our weighted average cost of capital of approximately [removed: 9.0] [added: 8.0] percent as the basis to determine the discount rate to apply to the estimated future cash flows.

In [removed: 2018,] [added: 2019,] based upon our assessment of the risks impacting each of our businesses, we applied a risk premium to increase the discount rate to a range of [removed: 11.0] [added: 10.0] percent to [removed: 13.5] [added: 12.0] percent for our reporting units.

In the fourth quarter of [removed: 2018,] [added: 2019,] we estimated that future discounted cash flows projected for all of our reporting units were greater than the carrying values.

A 10 percent decrease in the estimated fair value of our reporting units would [removed: not] have resulted in [removed: an] [added: a $35 million] impairment [removed: for any] [added: to one of our] reporting [removed: unit.][added: units.]

We [removed: utilized] [added: utilize] a relief-from-royalty model to estimate the fair value of other indefinite-lived intangible assets.

In [removed: 2018,] [added: 2019,] based upon our assessment of the risks impacting each of our businesses, we applied a risk premium to increase the discount rate to a range of [removed: 12.0] [added: 11.0] percent to [removed: 13.5] [added: 13.0] percent for our other indefinite-lived intangible assets.

In the fourth quarter of [removed: 2018,] [added: 2019,] we estimated that future discounted cash flows projected for our other indefinite-lived intangible assets were greater than the carrying values.

A 10 percent decrease in the estimated fair value of our other indefinite-lived intangible assets would have resulted in a [removed: $4] [added: $3] million impairment for [added: one of our] trade [removed: names related to businesses acquired within the past two years.][added: names.]

[removed: Employee] [added: Employee] Retirement [removed: Plans][added: Plans]

In December [removed: 2018,] [added: 2019,] our discount rate for obligations [removed: increased] [added: decreased] to a weighted average of [removed: 3.8] [added: 2.5] percent from [removed: 3.3] [added: 3.8] percent.

The discount rate for obligations is based [added: primarily] upon the expected duration of each defined-benefit pension plan's liabilities matched to the December 31, [removed: 2018] [added: 2019] Willis Towers Watson Rate Link Curve.

The discount rates we use for our defined-benefit pension plans ranged from [removed: 1.5] [added: 1.1] percent to [removed: 4.2] [added: 3.0] percent, with the most significant portion of the liabilities having a discount rate for obligations of [removed: 4.1] [added: 2.4] percent or [removed: higher.]

The assumed asset return was primarily [removed: 7.0] [added: 3.0] percent, reflecting the expected long-term return on plan assets based upon an analysis of expected and historical rates of return of various asset classes utilizing the current and long-term target asset allocation of the plan assets.

[removed: Our] [added: The] net underfunded amount for our qualified defined-benefit pension plans, which is the difference between the projected benefit obligation and plan assets, [removed: decreased] [added: increased] to [removed: $226] [added: $254] million at December 31, [removed: 2018] [added: 2019] from [removed: $266] [added: $226] million at [added: December 31, 2018.]

[added: | | At] December [removed: 31, 2017.][added: 31, | | | | |]

Our projected benefit obligation for our unfunded, non-qualified, defined-benefit pension plans [removed: decreased] [added: increased] to [removed: $155] [added: $161] million at December 31, [removed: 2018] [added: 2019] from [removed: $170] [added: $155] million at December 31, [removed: 2017.][added: 2018.]

In accordance with the Pension Protection Act, the Adjusted Funding Target Attainment Percentage for the various defined-benefit pension plans ranges from 90 percent to [removed: 115] [added: 119] percent.

The [removed: decrease] [added: increase] in our qualified defined-benefit pension plan projected benefit obligation was primarily impacted by [removed: an increase] [added: a decrease] in the discount rate.

During [removed: 2018,] [added: 2019,] we contributed [removed: $52] [added: $56] million to our qualified defined-benefit pension plans, and our qualified defined-benefit pension plan assets had a [added: positive] return of [removed: negative 4.9] [added: 17.7] percent.

We expect pension expense for our qualified defined-benefit pension plans to be [removed: $16] [added: $30] million in [removed: 2019] [added: 2020] compared with [removed: $8] [added: $16] million in [removed: 2018.][added: 2019.]

If we assumed that the future return on plan assets was 50 basis points lower than the assumed asset return and the discount rate decreased by 50 basis points, the [removed: 2019] [added: 2020] pension expense would increase by [removed: $4] [added: $5] million.

We expect pension expense for our non-qualified defined-benefit pension plans to be $8 million in [removed: 2019, compared to $9 million] [added: 2020, consistent with the pension expense recognized] in [removed: 2018.][added: 2019.]

We anticipate that we will be required to contribute approximately [removed: $15] [added: $23] million in [removed: 2019] [added: 2020] to our qualified and non-qualified defined-benefit plans; however, we currently anticipate contributing approximately [removed: $66] [added: $64] million in [removed: 2019.][added: 2020.]

[removed: Income Taxes][added: Income Taxes]

These products are sold primarily for repair and remodeling activity and, to a lesser extent, new home construction.

2019 Results

Such increases were partially offset by a decrease in volume, primarily in our Decorative Architectural Products segment and unfavorable foreign currency translation.

These positive impacts were partially offset by an increase in commodity costs and lower sales volume across the segment, an increase in strategic growth investments and a non-cash impairment charge related to an other indefinite-lived intangible asset for a trademark associated with lighting products.

A separate allowance is recorded for customer incentive rebates and is generally based upon sales activity.

For our Masco Cabinetry reporting unit, we utilized a market approach to determine its fair value instead of the discounted cash flow method, as we were actively marketing the Masco Cabinetry business for sale and on November 14, 2019 we entered into a definitive agreement to sell the business.

Our weighted average cost of capital decreased in 2019 as compared to 2018, primarily due to declining interest rates and lower long-term market growth outlooks.

We utilize our weighted average cost of capital of approximately 8.0 percent as the basis to determine the discount rate to apply to the estimated future cash flows.

In December 2019, our Board of Directors approved the termination of our qualified domestic defined-benefit pension plans.

As a result of this decision, the projected benefit obligations for these plans were increased to reflect the incremental costs to terminate the plans.

Upon termination in 2021, we expect to recognize from accumulated other comprehensive loss approximately $420 million of pre-tax actuarial losses and approximately $90 million of income tax benefit, which includes approximately $11 million of tax expense from the elimination of a disproportionate tax effect.

For our qualified domestic defined-benefit pension plans, the projected benefit obligations include the estimated incremental cost related to the termination.

For these plans, the discount rate was then set equal to the discount rate that results in the same projected benefit obligation resulting from the normal projected benefit obligation calculation plus the estimated incremental cost to terminate.

higher.

Assuming a 0 percent asset return for our qualified domestic defined-benefit pension plans, projected 2020 total qualified defined-benefit pension plan expenses are expected to be approximately $37 million.

During 2019, we completed the divestitures of our UKWG and Milgard businesses and entered into a definitive agreement to sell our Masco Cabinetry business.

During 2019, we completed the divestitures of our UKWG and Milgard businesses and entered into a definitive agreement to sell our Masco Cabinetry business.

With the combined proceeds of $722 million for the UKWG and Milgard divestitures, we executed an accelerated stock repurchase agreement to repurchase $400 million of our common stock.

This repurchase is under Masco's existing share repurchase authorization of $2.0 billion of shares of our common stock, which was approved in September 2019.

Additionally, we redeemed and retired $201 million of our 7.125% Notes due March 15, 2020 on December 19, 2019.

Upon entry into the Credit Agreement, our credit agreement dated March 28, 2013, as amended, with an aggregate commitment of $750 million, was terminated.

See Note K to the consolidated financial statements.

As part of our ongoing efforts to improve our cash flow and related liquidity, we work with suppliers to optimize our terms and conditions, including extending payment terms.

We also facilitate a voluntary supply chain finance program (the "program") to provide certain of our suppliers with the opportunity to sell receivables due from us to participating financial institutions at the sole discretion of both the suppliers and the financial institutions.

A third party administers the program; our responsibility is limited to making payment on the terms originally negotiated with our supplier, regardless of whether the supplier sells its receivable to a financial institution.

We do not enter into agreements with any of the participating financial institutions in connection with the program.

The range of payment terms we negotiate with our suppliers is consistent, irrespective of whether a supplier participates in the program.

All outstanding payments owed under the program are recorded within accounts payable in our consolidated balance sheets.

The amounts owed to participating financial institutions under the program and included in accounts payable for our continuing operations were $29 million and $35 million at December 31, 2019 and 2018, respectively.

We account for all payments made under the program as a reduction to our cash flows from operations and reported within our (decrease) increase in accounts payable and accrued liabilities, net, line within our consolidated statements of cash flows.

The amounts settled through the program and paid to participating financial institutions were $164 million, $117 million, and $186 million for our continuing operations during the years ended December 31, 2019, 2018, and 2017, respectively.

A downgrade in our credit rating or changes in the financial markets could limit the financial institutions’ willingness to commit funds to, and participate in, the program.

We do not believe such risk would have a material impact on our working capital or cash flows, as substantially all of our payments are made outside of the program.

The increase in our current ratio is due primarily to the cash received from the divestiture of our Milgard business less cash used for the accelerated stock repurchase agreement and to repay and retire our 7.125% Notes due March 15, 2020.

| | 2019 | | | 2018 | |

These uses of cash were slightly offset by $27 million of proceeds from the exercise of stock options.

Net cash provided by investing activities was $582 million, primarily driven by $720 million of proceeds from the sale of Milgard, net of cash disposed, partially offset by $162 million for capital expenditures.

| | 2019 | | | | 2018 | | |

Net sales for 2019 were negatively impacted by decreased sales volume of our lighting products which decreased sales by one percent.

The 2019 gross profit margin was positively impacted by increased net selling prices and the absence of the recognition of the inventory step up adjustment established as part of the acquisition of Kichler.

2018 Results

Net sales were also positively impacted by increased sales volume resulting from increased repair and remodel activity and new home construction in the U.S., and net selling price increases primarily in the U.S. Such increases were partially offset by the divestiture of Moores Furniture Group Limited ("Moores") in the fourth quarter of 2017 and Arrow Fastener Co., LLC ("Arrow") in the second quarter of 2017.

These negative impacts were partially offset by increased net selling prices of paints and other coating products, benefits associated with cost savings initiatives and increased sales volume.

Our Cabinetry Products segment was negatively impacted by an increase in other expenses (such as logistics costs), program launch and display expenses, and unfavorable sales mix.

These negative impacts were partially offset by benefits associated with cost savings initiatives, increased sales volume and the divestiture of Moores.

Our Windows and Other Specialty Products segment was negatively impacted by an increase in other expenses (such as warranty-related costs and higher labor costs), an increase in commodity costs, decreased sales volume and the divestiture of Arrow.

Control over certain of our custom-made window products transfers to our customers as production is completed, and revenue is recognized over the production period for these products, as our products do not have an alternative use and we have an enforceable right to payment during the production period.

The production period of our custom-made window products generally does not lapse days, and for these products we currently recognize revenue based on the output of production, which is a faithful depiction of the transfer of these products to our customers.

During downturns in our markets, declines in the financial condition and creditworthiness of customers impact the credit risk of the receivables involved, and we have incurred additional bad debt expense related to customer defaults.

Our assumptions included a relatively

Our weighted average cost of capital increased in 2018 as compared to 2017, primarily due to an increased market required rate of return on equity, as well as an increase in the after-tax cost of debt, which was driven by a reduction in the effective tax rate.

The current accounting guidance allows the recognition of only those income tax positions that have a greater than 50 percent likelihood of being sustained upon examination by the taxing authorities.

We believe that there is an increased potential for volatility in our effective tax rate because this threshold allows for changes in the income tax environment and, to a greater extent, the inherent complexities of income tax law in a substantial number of jurisdictions, which may affect the computation of our liability for uncertain tax positions.

While we believe we have adequately provided for our uncertain tax positions, amounts asserted by taxing

authorities could vary from our liability for uncertain tax positions.

Accordingly, additional provisions for tax-related

matters, including interest and penalties, could be recorded in income tax expense in the period revised estimates are made or the underlying matters are settled or otherwise resolved.

Warranty

We offer full and limited warranties on certain products, with warranty periods ranging up to the lifetime of the product to the original consumer purchaser.

At the time of sale, we accrue a warranty liability for the estimated future

cost to provide products, parts or services to repair or replace products to satisfy our warranty obligations.

Our estimate of future costs to service our warranty obligations is based upon the information available and includes a number of factors, such as the warranty coverage, the warranty period, historical experience specific to the nature, frequency and average cost to service the claim, along with industry and demographic trends.

Certain factors and related assumptions in determining our warranty liability involve judgments and estimates and are sensitive to changes in the factors described above.

We believe that the warranty accrual is appropriate; however, actual claims incurred could differ from our original estimates, which would require us to adjust our previously established accruals.

A significant portion of our business is at the consumer retail level through home center retailers and other major retailers.

A consumer may return a product to a retail outlet that is a warranty return.

However, certain retail outlets do not distinguish between warranty and other types of returns when they claim a return deduction from us.

Our revenue recognition policy takes into account this type of return when recognizing revenue, and an estimate of these amounts is recorded as a deduction to net sales at the time of sale.

We are involved in claims and litigation, including class actions and regulatory proceedings, which arise in the ordinary course of our business.

Liabilities and costs associated with these matters require estimates and judgments based upon our professional knowledge and experience and that of our legal counsel.

When a liability is probable of being incurred and our exposure in these matters is reasonably estimable, amounts are recorded as charges to earnings.

The ultimate resolution of these exposures may differ due to subsequent developments.

The Notes are senior indebtedness and are redeemable at our option at the applicable redemption price.

On March 17, 2016, we issued $400 million of 3.5% Notes due April 1, 2021 and $500 million of 4.375% Notes due April 1, 2026.

We received proceeds of $896 million, net of discount, for the issuance of these Notes.

On April 15, 2016, proceeds from the debt issuances, together with cash on hand, were used to repay and early retire all of our $1 billion, 6.125% Notes which were due on October 3, 2016 and all of our $300 million, 5.85% Notes which were due on March 15, 2017.

On May 29, 2015 and August 28, 2015, we amended the Credit Agreement with the bank group (the "Amended Credit Agreement").

The Amended Credit Agreement reduces the aggregate commitment to $750 million and extends the maturity date to May 29, 2020.

We expect to remain in compliance with these covenants through at least the next year.

Our short-term bank deposits consist of time deposits with maturities of 12 months or less.

We have [added: insignificant] involvement with derivative financial instruments and use such instruments to the extent necessary to manage exposure to foreign currency fluctuations.

At December 31, [removed: 2018,] [added: 2019,] we performed sensitivity analyses to assess the potential loss in the fair values of market risk sensitive instruments resulting from a hypothetical change of 10 percent in foreign currency exchange rates, a 10 percent decline in the market value of our long-term investments, or a 100 basis point change in interest rates.

Refer to Note F to the consolidated financial statements for additional information regarding our derivative instruments.

Our portfolio of industry-leading brands [added: associated with our continuing operations] includes BEHR® paint; DELTA® and HANSGROHE® faucets and bath and shower fixtures; [removed: KRAFTMAID® and MERILLAT® cabinets; MILGARD® windows and doors;] KICHLER® decorative and outdoor lighting; and HOT SPRING® spas.

We believe that our solid results of operations and financial position for [removed: 2018] [added: 2019] resulted from our [removed: continued] focus on our three strategic pillars: [removed: driving the full potential of our core businesses, leveraging opportunities across our businesses, and actively managing our portfolio.]

We will continue [removed: to focus on our] [added: the] disciplined execution of our strategy in [removed: 2019.][added: 2020.]

[removed: Our] [added: Our] Business [removed: Segments][added: Segments]

[removed: All of our segments, except the Plumbing] [added: Our Decorative Architectural] Products [removed: segment,] [added: segment is impacted by seasonality and] normally [removed: experience] [added: experiences] stronger sales during the second and third calendar quarters, corresponding with the peak season for repair and remodel [removed: activity and new home construction.][added: activity.]

[removed: Plumbing Products][added: Plumbing Products]

| • | [removed: The majority of our faucet, sink, bathing and showering products are sold in North America and Europe under the brand names DELTA®, BRIZO®, PEERLESS®, HANSGROHE®, AXOR®, GINGER®, NEWPORT BRASS®, BRASSTECH® and WALTEC®.] Our [removed: BRISTAN™ and HERITAGE™ products are sold primarily in the United Kingdom. These] plumbing products include faucets, showerheads, handheld showers, valves, bath hardware and accessories, bathing units, shower bases and enclosures and toilets. We sell these products to home center and online retailers and to wholesalers and distributors that, in turn, sell them to plumbers, building contractors, remodelers, smaller retailers and [removed: consumers.] [added: consumers.The majority of our faucet, bathing and showering products are sold in North America and Europe under the brand names DELTA®, BRIZO®, PEERLESS®, HANSGROHE®, AXOR®, GINGER®, NEWPORT BRASS®, BRASSTECH® and WALTEC®. Our BRISTAN™ and HERITAGE™ products are sold primarily in the United Kingdom.] |

| • | We also supply high-quality, custom thermoplastic [removed: extrusions,] [added: solutions,] extruded plastic profiles and specialized [removed: fabrications] [added: fabrications, as well as PEX tubing,] to manufacturers, distributors and wholesalers for use in diverse applications that include faucets and plumbing supplies, appliances, oil and gas equipment, building products and automotive components. |

Competitors of the majority of our products in this segment include [removed: Lixil Group Corporation’s American Standard Brands and Grohe products, Kohler Co.,] Fortune Brands Home & Security, Inc.'s Moen, Rohl and Riobel [added: brands, Kohler Co., Lixil Group Corporation’s American Standard and Grohe] brands and Spectrum Brands Holdings, [removed: LLC’s] [added: Inc.’s] Pfister faucets.

Competitors of our spas and exercise pools and systems include [removed: Artesian,] [added: Artesian Spas,] Jacuzzi and Master Spas brands.

Foreign manufacturers competing with us are located primarily in [removed: Germany] [added: Europe] and China.

Many of the faucet and showering products with which our products compete are manufactured by foreign manufacturers that are putting [removed: downward] pressure on price.

In addition, some of the products in this segment that we import [added: have been and] may [added: in the future] be subject to duties and tariffs.

[removed: Decorative] [added: Decorative] Architectural [removed: Products][added: Products]

Net sales of architectural coatings comprised approximately [removed: 24] [added: 31] percent [removed: of our consolidated net sales in 2018] [added: , 30 percent] and [removed: 25] [added: 32] percent of our consolidated net sales [added: from our continuing operations] in [removed: 2017] [added: 2019, 2018,] and [removed: 2016.][added: 2017, respectively.]

Our competitors in this segment include large national and international brands such as Benjamin Moore & Co., PPG Industries, [removed: Inc. (with its] [added: Inc.'s] Glidden, Olympic, [removed: PPG, and] Pittsburgh [removed: Paint brands),] [added: Paints and PPG brands,] The Sherwin‑Williams [removed: Company (with its Sherwin-Williams and Valspar brands as well as] [added: Company's Minwax, Sherwin-Williams,] Thompson’s Water [removed: Seal,] [added: Seal] and [removed: Minwax brands)] [added: Valspar brands] and RPM International, [removed: Inc. (with its] [added: Inc.'s] Rust-Oleum and Zinsser [removed: brands),] [added: brands,] as well as many regional and other national brands.

Titanium dioxide and acrylic resins are [removed: major] [added: principal] raw materials in the manufacture of architectural coatings.

In addition, the prices of crude oil, natural gas and certain petroleum by-products can [added: impact our costs and results of operations in this segment.]

Our Decorative Architectural Products segment [removed: also] includes branded cabinet and door hardware, functional hardware, wall plates, hook and [added: hook] rail products, and picture hanging accessories, which are manufactured for us and sold to home center retailers, mass retailers, online retailers, other specialty retailers, original equipment manufacturers and wholesalers.

[removed: These products are sold under the LIBERTY®, BRAINERD®, FRANKLIN BRASS® and other trademarks, and our] [added: Our] key competitors in North America include [removed: Amerock, Top Knobs,] [added: Amerock Hardware,] Richelieu [added: Hardware Ltd., Top Knobs] and private label brands.

Competitors for these products include [removed: Kohler,] [added: Fortune Brands Home & Security, Inc.'s] Moen [added: brand, Gatco Fine Bathware, Kohler Co.] and private label brands.

[removed: During 2018, we expanded this] [added: This] segment [removed: with our acquisition of Kichler lighting products, which include] [added: also includes] decorative indoor and outdoor lighting fixtures, ceiling fans, landscape lighting and LED lighting systems.

Competitors of these products include FX Luminaire, [added: Generation Brands,] Hinkley Lighting, Inc., [added: Hubbell Incorporated's Progress Lighting brand,] Hunter Fan [removed: Company, Progress Lighting, Inc.] [added: Company] and private label brands.

We import certain materials and products for this segment that [added: have been and] may [added: in the future] be subject to duties and tariffs.

[removed: Additional Information][added: Additional Information]

[removed: Intellectual Property][added: *Intellectual Property*]

[removed: Environmental] [added: *Environmental] Laws and Regulations Affecting Our [removed: Business][added: Business*]

[removed: Backlog][added: *Backlog*]

We do not consider backlog orders to be material in [removed: any] [added: either] of our segments.

[removed: Employees][added: *Employees*]

At December 31, [removed: 2018, we] [added: 2019, our continuing operations] employed approximately [removed: 26,000] [added: 18,000] people.

[removed: Available Information][added: Available Information]

| • | drive the full potential of our core businesses; |

| • | leverage opportunities across our enterprise; and |

| • | actively manage our portfolio. |

In 2019, we also continued to focus on our capital allocation strategy to enhance shareholder value by repurchasing over 20 million shares of our common stock and increasing our quarterly dividend by 12.5 percent.

In addition, in 2019, we completed the divestitures of our Milgard Windows and Doors business ("Milgard") and our UK Windows Group business ("UKWG"), and in November we entered into a definitive agreement to sell our Masco Cabinetry business, which we expect to close in the first quarter of 2020.

As a result, our Windows and Other Specialty Products segment and our Cabinetry Products segment are accounted for as discontinued operations in our consolidated financial statements.

The following discussion in this "Item 1." relates only to our continuing operations unless otherwise noted.

We report our financial results from continuing operations in two segments, our Plumbing Products segment and our Decorative Architectural Products segment, which are aggregated by product similarity.

These products are sold under the LIBERTY®, BRAINERD®, FRANKLIN BRASS® and other trademarks.

In addition, our Masco Cabinetry business employed approximately 4,000 people whose employment with us will terminate upon completion of the divestiture.

| | |

| --- | --- |

| • | To drive the full potential of our core businesses, we continued to pursue sales growth opportunities by introducing new products, enhancing services and penetrating adjacent markets. In addition, we continued to reduce costs and capitalize on synergies across our businesses with standardized operating tools, cost saving initiatives and the implementation of lean principles and process improvements in many areas, including production and functional support processes. |

| • | We also continued to leverage the collective strength of our enterprise as we developed talent, facilitated operational improvements and realized supply chain efficiencies through strategic sourcing and sharing best practices across all of our functional departments. |

| • | We actively managed our portfolio and completed the acquisition of The L.D. Kichler Co. ("Kichler") in 2018, and we remain committed to making selective acquisitions in attractive end markets. In addition, we repurchased over 18 million shares of our common stock and increased our quarterly dividend by 14 percent, which further enhanced value for our shareholders. |

We believe that the actions we have taken over the last few years, combined with the Masco Operating System, our methodology to drive growth and productivity, have positioned us to further enhance shareholder value.

We report our financial results in four segments aggregated by similarity in products.

also impact our costs and results of operations in this segment.

Cabinetry Products

In North America, we manufacture and sell semi-custom, stock and value‑priced assembled cabinetry for kitchen, bath, storage, home office and home entertainment applications in a broad range of styles and price points to address consumer preferences.

Our KRAFTMAID® and CARDELL® products are sold primarily to dealers and home center retailers, and our MERILLAT® and QUALITY CABINETS™ products are sold primarily to dealers and homebuilders for both home improvement and new home construction.

Cabinet sales are significantly affected by levels of activity in both retail consumer spending and new home construction, particularly spending for major kitchen and bathroom renovation projects.

A significant portion of our cabinetry sales for home improvement projects are made through home center retailers.

The cabinet manufacturing industry in the United States includes several large companies and numerous local and regional businesses with whom we compete.

We believe that competition in this industry is based largely on product features and selection, product quality and price.

Our competitors in this segment include American Woodmark Corporation, Elkay Manufacturing Company, Inc. and Fortune Brands Home & Security, Inc.

The raw materials used in this segment are primarily hardwood lumber, plywood and particleboard and are available from multiple sources, both domestic and foreign.

Some of the materials we import may be subject to duties and tariffs.

Windows and Other Specialty Products

We manufacture and sell vinyl, fiberglass and aluminum windows and patio doors, which are sold under the MILGARD® brand name for home improvement and new home construction, principally in the western United States.

MILGARD products are sold primarily through dealers and, to a lesser extent, directly to production homebuilders and through lumber yards and home center retailers.

Our North American competitors for these products include national brands, such as Andersen, Jeld‑Wen, Marvin, Pella, and Ply Gem, and numerous regional brands.

In the United Kingdom, we manufacture and sell vinyl windows, composite and panel doors, related products and components under several brand names, including DURAFLEX™, GRIFFIN™, PREMIER™ and EVOLUTION™.

Sales are primarily through dealers and wholesalers to the repair and remodeling markets, although our DURAFLEX products are also sold to other window fabricators.

United Kingdom competitors include many small and mid‑sized firms and a few large, vertically integrated competitors.

In addition to price, we believe that brand reputation is an important factor in consumer selection and that competition in this industry in both the domestic and international markets is based largely on product quality, innovative products and customer and warranty services.

The raw materials used in this segment are available from multiple sources.

| • | Our Cabinetry Products segment is also subject to requirements relating to the emission of volatile organic compounds, which may impact our sourcing of particleboard and may require us to install special equipment in manufacturing facilities. |

[removed: UNITED] [added: UNITED] STATES SECURITIES AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] DC [removed: 20549][added: 20549]

[removed: FORM 10-K][added: FORM 10-K]

[removed: ANNUAL] [added: ☒ANNUAL] REPORT PURSUANT TO SECTION 13 OR 15(d) OF [added: THE SECURITIES EXCHANGE ACT OF 1934]

[added: ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF] THE SECURITIES EXCHANGE ACT OF [removed: 1934][added: 1934]

For the [removed: Fiscal Year Ended] [added: fiscal year ended] December 31, [removed: 2018 Commission File Number 1-5794][added: 2019]

[removed: MASCO CORPORATION][added: MASCO CORPORATION]

[removed: (Exact] [added: (Exact] name of Registrant as Specified in its [removed: Charter)][added: Charter)]

| [removed: Delaware] [added: Delaware] | | [removed: 38-1794485] | [added: | 38-1794485 |]

| (State of Incorporation) | | [added: | |] (I.R.S. Employer Identification No.) |

| [removed: 17450] [added: 17450] College [removed: Parkway, Livonia, Michigan] [added: Parkway,] | [added: Livonia,] | [removed: 48152] [added: Michigan] | [added: | 48152 |]

| (Address of Principal Executive Offices) | | [added: | |] (Zip Code) |

Registrant's telephone number, including area code: [removed: 313-274-7400][added: (313) 274-7400]

| [removed: Title] [added: Title] of Each [removed: Class] [added: Class] | | [removed: Name] [added: Trading Symbol | | Name] of Each [removed: Exchange On] [added: Exchange On] Which [removed: Registered] [added: Registered] |

| Common Stock, $1.00 par value | | [added: MAS | |] New York Stock [removed: Exchange, Inc.] [added: Exchange] |

Yes [removed: o] [added: ☐] No þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or [added: an] emerging growth company.

| Large accelerated filer [removed: x] | [added: ☑] | [added: |] Accelerated filer [removed: o] | [added: ☐ |]

| Non-accelerated filer [removed: o] | [added: ☐] | [added: |] Smaller reporting company [removed: o] | [added: ☐ |]

| [removed: (Do not check if a smaller reporting company)] | | [added: |] Emerging growth company [removed: o] | [added: ☐ |]

The aggregate market value of the Registrant's Common Stock held by non-affiliates of the Registrant on June 30, [removed: 2018] [added: 2019] (based on the closing sale price of [removed: $37.42] [added: $39.24] of the Registrant's Common Stock, as reported by the New York Stock Exchange on such date) was approximately [removed: $11,345,157,000.][added: $11,280,228,700.]

Number of shares outstanding of the Registrant's Common Stock at January 31, [removed: 2019:][added: 2020:]

[removed: 294,492,500] [added: 277,735,100] shares of Common Stock, par value $1.00 per share

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]

Portions of the Registrant's definitive Proxy Statement to be filed for its [removed: 2019] [added: 2020] Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K.

[removed: 2018 Annual] [added: 2019 Annual] Report on Form [removed: 10-K][added: 10-K]

[removed: TABLE] [added: TABLE] OF [removed: CONTENTS][added: CONTENTS]

| [removed: Item] [added: Item] | | | | [removed: Page] [added: Page] |

[removed: | | | [PART I](#s7706CAC881335EA6ABA5D27E60480DA4) | | |][added: PART I]

| [removed: [1A.](#sD5787B32BC6353ADA1C190A212A77BE5)] [added: [1A.](#sF07E12EED73D5C12975F8B00C82F5112)] | | [Risk [removed: Factors](#sD5787B32BC6353ADA1C190A212A77BE5)] [added: Factors](#sF07E12EED73D5C12975F8B00C82F5112)] | | [removed: [6](#sD5787B32BC6353ADA1C190A212A77BE5)] [added: [5](#sF07E12EED73D5C12975F8B00C82F5112)] |

| [removed: [1B.](#sB1D0B3B5C02350C593B8AF13AB618960)] [added: [1B.](#sD4D7787A4CD956AA91863CB9AFBD8797)] | | [Unresolved Staff [removed: Comments](#sB1D0B3B5C02350C593B8AF13AB618960)] [added: Comments](#sD4D7787A4CD956AA91863CB9AFBD8797)] | | [removed: [11](#sB1D0B3B5C02350C593B8AF13AB618960)] [added: [10](#sD4D7787A4CD956AA91863CB9AFBD8797)] |

| [removed: [3.](#s8902764EA3195B2C9B49F71419D67DA9)] [added: [3.](#s8E1F1976BF6A503FA68EEB7E2602DCB1)] | | [Legal [removed: Proceedings](#s8902764EA3195B2C9B49F71419D67DA9)] [added: Proceedings](#s8E1F1976BF6A503FA68EEB7E2602DCB1)] | | [removed: [12](#s8902764EA3195B2C9B49F71419D67DA9)] [added: [11](#s8E1F1976BF6A503FA68EEB7E2602DCB1)] |

| [removed: [4.](#s3395E18FB1AA54758B079F2F70CE06E4)] [added: [4.](#sDF25189917DB5718B681778FF072565D)] | | [Mine Safety [removed: Disclosures](#s3395E18FB1AA54758B079F2F70CE06E4)] [added: Disclosures](#sDF25189917DB5718B681778FF072565D)] | | [removed: [12](#s3395E18FB1AA54758B079F2F70CE06E4)] [added: [11](#sDF25189917DB5718B681778FF072565D)] |

| [removed: [5.](#sC9CAE54400195C5082041DE9E88A002A)] [added: [5.](#s93BFE852F5FC5D78A21E1D227CC770FE)] | | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#sC9CAE54400195C5082041DE9E88A002A)] [added: Securities](#s93BFE852F5FC5D78A21E1D227CC770FE)] | | [removed: [13](#sC9CAE54400195C5082041DE9E88A002A)] [added: [12](#s93BFE852F5FC5D78A21E1D227CC770FE)] |

| [removed: [6.](#s9528C27456B753FBA48F3C40E5C4B9E1)] [added: [6.](#s2A10B5C13C785387843E165A844B3B89)] | | [Selected Financial [removed: Data](#s9528C27456B753FBA48F3C40E5C4B9E1)] [added: Data](#s2A10B5C13C785387843E165A844B3B89)] | | [removed: [15](#s9528C27456B753FBA48F3C40E5C4B9E1)] [added: [14](#s2A10B5C13C785387843E165A844B3B89)] |

| [removed: [7.](#sAC261393E38D54D4A90CFF3D9B794442)] [added: [7.](#s9333B743C4825CBB8E0091FB8B1BCCEC)] | | [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#sAC261393E38D54D4A90CFF3D9B794442)] [added: Operations](#s9333B743C4825CBB8E0091FB8B1BCCEC)] | | [removed: [16](#sAC261393E38D54D4A90CFF3D9B794442)] [added: [15](#s9333B743C4825CBB8E0091FB8B1BCCEC)] |

| [removed: [7A.](#sC525704007495267BA66680E09641C90)] [added: [7A.](#s00C5508AC726500E8B5E5596E4551EC4)] | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#sC525704007495267BA66680E09641C90)] [added: Risk](#s00C5508AC726500E8B5E5596E4551EC4)] | | [removed: [33](#sC525704007495267BA66680E09641C90)] [added: [30](#s00C5508AC726500E8B5E5596E4551EC4)] |

| [removed: [8.](#sB32A64824D585D14AD22ECA9C26B5C22)] [added: [8.](#sB84F7C313B3051DF96EE053FC67BD110)] | | [Financial Statements and Supplementary [removed: Data](#sB32A64824D585D14AD22ECA9C26B5C22)] [added: Data](#sB84F7C313B3051DF96EE053FC67BD110)] | | [removed: [34](#s7D42BB071DBE585495BC4C408CCD189B)] [added: [31](#s83902A214C8C5454A7679AA5772AF2D7)] |

| [removed: [9.](#s16095B9FC92653DD839F61CF0942E4B3)] [added: [9.](#s54B6136861D753978BC8D0F0F88EF9B8)] | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#s16095B9FC92653DD839F61CF0942E4B3)] [added: Disclosure](#s54B6136861D753978BC8D0F0F88EF9B8)] | | [removed: [75](#s16095B9FC92653DD839F61CF0942E4B3)] [added: [75](#s54B6136861D753978BC8D0F0F88EF9B8)] |

| [removed: [9A.](#sD21544E0D151533DA2213CB670A47EE9)] [added: [9A.](#sC68D60F86D705396A62D6EECBD18CAFC)] | | [Controls and [removed: Procedures](#sD21544E0D151533DA2213CB670A47EE9)] [added: Procedures](#sC68D60F86D705396A62D6EECBD18CAFC)] | | [removed: [75](#sD21544E0D151533DA2213CB670A47EE9)] [added: [75](#sC68D60F86D705396A62D6EECBD18CAFC)] |

or

For the transition period from ___________ to ___________

Commission file number: 1-5794

| | | | | |

| --- | --- | --- | --- | --- |

| | | | | |

| | | | | |

| --- | --- | --- | --- | --- |

| | | | | |

Masco Corporation

| | | | | |

| --- | --- | --- | --- | --- |

| | | | | |

| [1.](#s41244AAE978A5CEE957AC19097C083DF) | | [Business](#s41244AAE978A5CEE957AC19097C083DF) | | [2](#s41244AAE978A5CEE957AC19097C083DF) |

| [2.](#sAFA9C1D5DD0F5B61A62F08EEE1249D11) | | [Properties](#sAFA9C1D5DD0F5B61A62F08EEE1249D11) | | [10](#sAFA9C1D5DD0F5B61A62F08EEE1249D11) |

| | | [PART II](#s783F0AD7A9205C6787CC8F24F1CBC35B) | | |

| | | [PART IV](#s06B4512914925EB2B679B21DBAE3563C) | | |

| | | [Signatures](#s4B7DF6852FE05833BDBA69617DDFA3F9) | | [81](#s4B7DF6852FE05833BDBA69617DDFA3F9) |

10-K 1 mas_20181231x10k.htm 10-K

| | | |

| --- | --- | --- |

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

| [1.](#s54A77B7845A7500598E25F9A7899CCA0) | | [Business](#s54A77B7845A7500598E25F9A7899CCA0) | | [2](#s54A77B7845A7500598E25F9A7899CCA0) |

| [2.](#s52A94371B7FB5A8F8F7A87A2A26B9146) | | [Properties](#s52A94371B7FB5A8F8F7A87A2A26B9146) | | [11](#s52A94371B7FB5A8F8F7A87A2A26B9146) |

| | | [PART II](#s8057011581CA5127A19977E5398C990C) | | |

| | | [PART IV](#sA344F8544AAE5EF18B35D0921540362B) | | |

| | | [Signatures](#sA9CC7B907D60502CA543293BA3BD0D6D) | | [81](#sA9CC7B907D60502CA543293BA3BD0D6D) |

The table below lists [removed: our] principal North American [removed: properties.][added: properties used by our continuing operations.]

| [removed: Business Segment] [added: Business Segment] | | [removed: Manufacturing] [added: Manufacturing] | | | [removed: Warehouse and Distribution] [added: Warehouse and Distribution] | |

| Plumbing Products | | [removed: 22] [added: 20] | | | 7 | |

| Decorative Architectural Products | | 8 | | | [removed: 18] [added: 16] | |

| Totals | | [removed: 48] [added: 28] | | | [removed: 32] [added: 23] | |

Most of our North American facilities [added: used by our continuing operations] range from single warehouse buildings to complex manufacturing facilities.

The table below lists [removed: our] principal properties [added: used by our continuing operations] outside of North America.

| Plumbing Products | | 10 | | | [removed: 19] [added: 18] | |

| Totals | | [removed: 19] [added: 10] | | | [removed: 19] [added: 18] | |

Most of our international facilities [added: used by our continuing operations] are [removed: located] in China, Germany and the United Kingdom.

Our Masco Cabinetry business uses 8 manufacturing facilities and 3 warehouse buildings, each located within North America.

| Business Segment | | Manufacturing | | | Warehouse and Distribution | |

There are no international properties associated with our Masco Cabinetry business.

| Cabinetry Products | | 8 | | | 4 | |

| Windows and Other Specialty Products | | 10 | | | 3 | |

| Cabinetry Products | | — | | | — | |

| Windows and Other Specialty Products | | 9 | | | — | |

[removed: PART II][added: PART II]

On January 31, [removed: 2019,] [added: 2020,] there were approximately [removed: 3,400] [added: 3,100] holders of record of our common stock.

In [removed: May 2017,] [added: September 2019,] our Board of Directors authorized the repurchase, for retirement, of up to [removed: $1.5] [added: $2.0] billion of shares of our common stock in open-market transactions or [removed: otherwise.][added: otherwise, replacing the previous authorization established by our Board of Directors in 2017.]

During [removed: 2018,] [added: 2019,] we repurchased and retired [removed: 18.6] [added: 20.1] million shares of our common stock (including [removed: 0.7] [added: 0.6] million shares to offset the dilutive impact of long-term stock awards granted during the year), for approximately [removed: $654] [added: $896] million.

At December 31, [removed: 2018,] [added: 2019,] we had [removed: $636 million] [added: $1.5 billion] remaining under the [removed: 2017] [added: 2019] authorization.

The following table provides information regarding the repurchase of our common stock for the three-month period ended December 31, [removed: 2018.][added: 2019.]

| [removed: Period] [added: Period] | [removed: Total Number of Shares Purchased] [added: Total Number of Shares Purchased] | | | [removed: Average Price Paid Per Common Share] [added: Average Price Paid Per Common Share] | | | | [removed: Total] [added: Total] Number [removed: of Shares Purchased as] [added: of Shares Purchased as] Part [removed: of Publicly Announced Plans] [added: of Publicly Announced Plans] or [removed: Programs] [added: Programs] | | | [removed: Maximum] [added: Maximum] Value [removed: of Shares] [added: of Shares] That [removed: May Yet] [added: May Yet] Be [removed: Purchased Under] [added: Purchased Under] the [removed: Plans or Programs] [added: Plans or Programs] | | |

[removed: Performance Graph][added: Performance Graph]

The table below compares the cumulative total shareholder return on our common stock with the cumulative total return of (i) the Standard & Poor's 500 Composite Stock Index ("S&P 500 Index"), (ii) The Standard & Poor's Industrials Index ("S&P Industrials Index") and (iii) the Standard & Poor's Consumer Durables & Apparel Index ("S&P Consumer Durables & Apparel Index"), from December 31, [removed: 2013] [added: 2014] through December 31, [removed: 2018,] [added: 2019,] when the closing price of our common stock was [removed: $29.24.][added: $47.99.]

The graph assumes investments of $100 on December 31, [removed: 2013] [added: 2014] in our common stock and in each of the three indices and the reinvestment of dividends.

[removed: ][added: ]

The table below sets forth the value, as of December 31 for each of the years indicated, of a $100 investment made on December 31, [removed: 2013] [added: 2014] in each of our common stock, the S&P 500 Index, the S&P Industrials Index and the S&P Consumer Durables & Apparel Index and includes the reinvestment of dividends.

| | [removed: 2014] [added: 2015] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2018] [added: 2019] | | |

| 10/1/19 - 10/31/19 | 726,500 | | | $ | 42.52 | | | 726,500 | | | $ | 1,926,741,040 | |

| 11/1/19 - 11/30/19 (A) | 7,869,212 | | | $ | 54.03 | | | 7,869,212 | | | $ | 1,501,539,755 | |

| 12/1/19 - 12/31/19 | — | | | $ | — | | | — | | | $ | 1,501,539,755 | |

| Total for the quarter | 8,595,712 | | | | | | | 8,595,712 | | | $ | 1,501,539,755 | |

_____________________________

| (A) | In November 2019, we entered into an accelerated stock repurchase transaction whereby we agreed to repurchase a total of $400 million of our common stock with an initial delivery of 7.3 million shares. This transaction will be completed in February 2020, at which time we anticipate we will receive, at no additional cost, 1.2 million additional shares of our common stock resulting from expected changes in the volume weighted average stock price of our common stock over the term of the transaction. The average price paid per common share does not reflect the holdback shares that we expect to receive upon completion of the accelerated stock repurchase transaction. If we had received the expected additional 1.2 million shares at inception of the accelerated stock repurchase transaction, the total number of shares purchased under this transaction would have been approximately 8.5 million with an average price paid per common share of approximately $47.25. |

| Masco | $ | 129.60 | | | $ | 146.62 | | | $ | 206.07 | | | $ | 138.69 | | | $ | 230.60 | |

| S&P 500 Index | $ | 101.38 | | | $ | 113.51 | | | $ | 138.29 | | | $ | 132.23 | | | $ | 173.86 | |

| S&P Industrials Index | $ | 97.47 | | | $ | 115.85 | | | $ | 140.22 | | | $ | 121.58 | | | $ | 157.29 | |

| S&P Consumer Durables & Apparel Index | $ | 99.25 | | | $ | 93.48 | | | $ | 110.85 | | | $ | 97.60 | | | $ | 131.17 | |

| | |

| --- | --- |

| 10/1/18 - 10/31/18 | 2,305,692 | | | $ | 32.54 | | | 2,305,692 | | | $ | 860,879,098 | |

| 11/1/18 - 11/30/18 | 5,635,262 | | | $ | 31.24 | | | 5,635,262 | | | $ | 684,831,947 | |

| 12/1/18 - 12/31/18 | 1,652,685 | | | $ | 29.79 | | | 1,652,685 | | | $ | 635,603,772 | |

| Total for the quarter | 9,593,639 | | | | | | | 9,593,639 | | | $ | 635,603,772 | |

| Masco | $ | 112.29 | | | $ | 145.52 | | | $ | 164.64 | | | $ | 231.40 | | | $ | 155.74 | |

| S&P 500 Index | $ | 113.69 | | | $ | 115.26 | | | $ | 129.05 | | | $ | 157.22 | | | $ | 150.33 | |

| S&P Industrials Index | $ | 109.83 | | | $ | 107.04 | | | $ | 127.23 | | | $ | 153.99 | | | $ | 133.53 | |

| S&P Consumer Durables & Apparel Index | $ | 109.32 | | | $ | 108.49 | | | $ | 102.19 | | | $ | 121.18 | | | $ | 106.69 | |

| | [removed: Dollars] [added: Dollars] in Millions (Except Per Common Share [removed: Data)] [added: Data)] | | | | | | | | | | | | | | | | | | |

| | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| Income from continuing operations attributable to Masco Corporation [removed: (1)(2) (4)] [added: (1)(2)] | [removed: 734] [added: 639] | | | | [removed: 533] [added: 636] | | | | [removed: 493] [added: 426] | | | | [removed: 357] [added: 426] | | | | [removed: 821] [added: 282] | | |

| Income per common share from continuing operations [removed: (2):] [added: (1)(2):] | | | | | | | | | | | | | | | | | | | |

| Dividends declared | [removed: 0.450] [added: 0.510] | | | | [removed: 0.410] [added: 0.450] | | | | [removed: 0.390] [added: 0.410] | | | | [removed: 0.370] [added: 0.390] | | | | [removed: 0.345] [added: 0.370] | | |

| Dividends paid | [removed: 0.435] [added: 0.495] | | | | [removed: 0.405] [added: 0.435] | | | | [removed: 0.385] [added: 0.405] | | | | [removed: 0.365] [added: 0.385] | | | | [removed: 0.330] [added: 0.365] | | |

| Total assets [removed: (2) (5)] [added: (2)] | $ | [removed: 5,393] [added: 5,027] | | | $ | [removed: 5,534] [added: 5,393] | | | $ | [removed: 5,164] [added: 5,534] | | | $ | [removed: 5,664] [added: 5,164] | | | $ | [removed: 7,208] [added: 5,664] | |

| Long-term debt [removed: (5)] | [removed: 2,971] [added: 2,771] | | | | [removed: 2,969] [added: 2,971] | | | | [removed: 2,995] [added: 2,969] | | | | [removed: 2,403] [added: 2,995] | | | | [removed: 2,919] [added: 2,403] | | |

| Shareholders' [removed: equity] (deficit) [removed: (2) (6)] [added: equity (2)] | [added: (56 | | ) | |] 69 | | | | 183 | | | | (96 | | ) | | 58 | | | [removed: | 1,128 | | |]

| [removed: (2)] [added: (2)] | Net sales, operating profit, income from continuing operations attributable to Masco Corporation, income per common share from continuing operations, total assets and [removed: shareholder's] [added: shareholders'] equity for [removed: 2014 and] 2015 [removed: have] [added: has] not been recast for the impact of the adoption of Accounting Standards Codification 606. [removed: Refer to Note A to the consolidated financial statements for further information on the adoption of this standard.] |

| [removed: (3)] [added: (3)] | Operating profit for [removed: 2014 and] 2015 has not been recast for the impact of the adoption of Accounting Standards Update [removed: ("ASU")] 2017-07, "Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost." [removed: Refer to Note A to the consolidated financial statements for further information on the adoption of this standard.] |

| Net sales (1)(2) | $ | 6,707 | | | $ | 6,654 | | | $ | 6,014 | | | $ | 5,754 | | | $ | 5,513 | |

| Operating profit (1)(2)(3) | 1,088 | | | | 1,077 | | | | 1,029 | | | | 986 | | | | 798 | | |

| Basic | $ | 2.21 | | | $ | 2.06 | | | $ | 1.34 | | | $ | 1.29 | | | $ | 0.82 | |

| Diluted | 2.20 | | | | 2.05 | | | | 1.33 | | | | 1.28 | | | | 0.81 | | |

| (1) | Amounts exclude discontinued operations for all periods presented. Refer to Note B to the consolidated financial statements for further details. |

| Net sales (1) (2) | $ | 8,359 | | | $ | 7,642 | | | $ | 7,361 | | | $ | 7,142 | | | $ | 7,006 | |

| Operating profit (1) (2) (3) | 1,211 | | | | 1,194 | | | | 1,087 | | | | 914 | | | | 721 | | |

| Basic | $ | 2.38 | | | $ | 1.68 | | | $ | 1.49 | | | $ | 1.04 | | | $ | 2.31 | |

| Diluted | 2.37 | | | | 1.66 | | | | 1.48 | | | | 1.03 | | | | 2.28 | | |

| | |

| --- | --- |

| (1) | Amounts exclude discontinued operations in the year 2014 and 2015. |

| (4) | The year 2014 includes a $529 million tax benefit from the release of the valuation allowance on deferred tax assets. |

| (5) | Total assets and long-term debt for 2014 has not been recast for the impact of the adoption of ASU 2015‑03 “Interest - Imputation of Interest (Subtopic 835-30) - Simplifying the Presentation of Debt Issuance Costs,” as amended by Accounting Standards Update 2015-15, which required the reclassification of certain debt issuance costs from an asset to a liability. |

| (6) | The decrease in shareholder's equity from 2014 to 2015 relates primarily to the spin off of TopBuild Corp. |

[removed: Management's] [added: Management's] Report on Internal Control Over Financial [removed: Reporting][added: Reporting]

We assessed the effectiveness of our internal control over financial reporting as of December 31, [removed: 2018] [added: 2019] using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in [removed: "Internal] [added: *Internal] Control – Integrated [removed: Framework." Based on this assessment, we have determined that our internal control over financial reporting was effective as of December 31, 2018.][added: Framework* (2013).]

PricewaterhouseCoopers LLP, an independent registered public accounting firm, [removed: performed an audit of our consolidated financial statements and of] [added: has audited] the effectiveness of our internal control over financial reporting as of December 31, [removed: 2018.][added: 2019, as stated in their report, which is presented herein.]

Their report expressed an unqualified opinion on the effectiveness of our internal control over financial reporting as of December 31, [removed: 2018] [added: 2019] and expressed an unqualified opinion on our [removed: 2018] [added: 2019] consolidated financial statements.

[removed: Report] [added: Report] of Independent Registered Public Accounting [removed: Firm][added: Firm]

To the Board of Directors and Shareholders [added: of Masco Corporation]

[removed: of Masco Corporation:][added: MASCO CORPORATION]

[removed: Opinions] [added: Opinions] on the Financial Statements and Internal Control over Financial [removed: Reporting][added: Reporting]

We have audited the accompanying consolidated balance sheets of Masco Corporation and its subsidiaries (the “Company”) as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] and the related consolidated statements of operations, [added: of] comprehensive income (loss), [removed: shareholders’] [added: of shareholders'] equity and [added: of] cash flows for each of the three years in the period ended December 31, [removed: 2018,] [added: 2019,] including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] based on criteria established in [removed: Internal] [added: *Internal] Control - Integrated [removed: Framework] [added: 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 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2018] [added: 2019] 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 31, [removed: 2018,] [added: 2019,] based on criteria established in [removed: Internal] [added: *Internal] Control - Integrated [removed: Framework] [added: Framework*] (2013) issued by the COSO.

[removed: Basis] [added: Basis] for [removed: Opinions][added: 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 [removed: Management's] [added: the accompanying Management’s] Report on Internal Control over Financial [removed: Reporting appearing under Item 8.][added: Reporting.]

[removed: Definition] [added: Definition] and Limitations of Internal Control over Financial [removed: Reporting][added: Reporting]

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 [removed: 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.]

[removed: February 7, 2019][added: | | 2019 | | |]

[removed: Financial] [added: Financial] Statements and Supplementary [removed: Data][added: Data]

[removed: MASCO] [added: MASCO] CORPORATION and Consolidated [removed: Subsidiaries][added: Subsidiaries]

[removed: CONSOLIDATED] [added: CONSOLIDATED] BALANCE [removed: SHEETS][added: SHEETS]

[removed: December 31, 2018 and 2017][added: December 31, 2019 and 2018]

[removed: (In] [added: (In] Millions, Except Share [removed: Data)][added: Data)]

| | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | [added: | 2017 | | |]

| [removed: ASSETS] [added: ASSETS] | | | | | | | |

| [removed: Current Assets:] [added: Current Assets:] | | | | | | | |

| [removed: Cash and cash investments] [added: CASH AND CASH INVESTMENTS:] | [removed: $] | [removed: 559] | | | [removed: $] | [removed: 1,194] | | [added: | | | |]

| Short-term bank deposits | — | | | | 108 | | | [added: | 218 | | |]

| Prepaid expenses and other | [removed: 108] [added: 90] | | | | [removed: 111] [added: 84] | | |

| Total current assets | [removed: 2,766] [added: 2,711] | | | | [removed: 3,263] [added: 2,766] | | |

| Property and equipment, net | [removed: 1,223] [added: $] | [added: —] | | | [removed: 1,129] [added: $] | [added: 29] | |

| Other intangible assets, net | [removed: 406] [added: 1] | | | | [removed: 187] [added: 118] | | |

| Other assets | [removed: 100] [added: 12] | | | | [removed: 114] [added: 10] | | |

| Total assets | [added: | | | | | | | | | | | | | | | | | | | | | | | |] $ | [added: 5,027 | | | $ |] 5,393 | | | $ | 5,534 | |

| [removed: LIABILITIES] [added: LIABILITIES] | | | | | | | |

| [removed: Current Liabilities:] [added: Current Liabilities:] | | | | | | | |

| Notes payable | [removed: 8] [added: 2] | | | | [removed: 116] [added: 8] | | |

| Accrued liabilities | [removed: 750] [added: 38] | | | | [removed: 727] [added: —] | | |

| Total current liabilities | [removed: 1,684] [added: 1,548] | | | | [removed: 1,667] [added: 1,684] | | |

| Long-term debt | [removed: 2,971] [added: 2,771] | | | | [removed: 2,969] [added: 2,971] | | |

| Other liabilities | [removed: 669] [added: 13] | | | | [removed: 715] [added: 120] | | |

Based on this assessment, we have determined that our internal control over financial reporting was effective as of December 31, 2019.

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.

Critical Audit Matters

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.

*Goodwill Impairment Assessments*

As described in Notes A and H to the consolidated financial statements, the Company’s consolidated goodwill balance was $509 million as of December 31, 2019.

Management performs an annual impairment test of goodwill in the fourth quarter of each year, or as events occur or circumstances change that would indicate the carrying value of goodwill may be impaired.

Potential impairment is identified by comparing the fair value of a reporting unit to its carrying value, including goodwill.

Management estimates fair value by using a discounted cash flow model or a market approach.

The determination of fair value using the discounted cash flow model requires management to make significant estimates and assumptions related to forecasted sales and operating profits, and the discount rate.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessments is a critical audit matter are there was significant judgment by management when developing the fair value measurements of the reporting units.

This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate management’s discounted cash flow model, including significant assumptions related to forecasted sales and the discount rates.

In addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained from these procedures.

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 goodwill impairment assessments, including controls over the valuation of the Company’s reporting units.

These procedures also included, among others, testing management’s process for developing the fair value estimates; evaluating the appropriateness of the model; testing the completeness, accuracy, and relevance of underlying data used in the model; and, evaluating the significant assumptions used by management, including forecasted sales and the discount rates.

Professionals with specialized skill and knowledge were used to assist in evaluating the Company’s discount rate assumptions.

Evaluating management’s assumption related to forecasted sales involved evaluating whether the assumptions used were reasonable considering (i) the current and past performance of the reporting units, (ii) the consistency with external market and industry data as relates to forecasted sales, and (iii) whether they were consistent with evidence obtained in other areas of the audit.

February 11, 2020

| Cash and cash investments | $ | 697 | | | $ | 552 | |

| Receivables | 997 | | | | 990 | | |

| Inventories | 754 | | | | 798 | | |

| Assets held for sale | 173 | | | | 342 | | |

| Goodwill | 509 | | | | 511 | | |

| Other intangible assets, net | 259 | | | | 288 | | |

| Operating lease right-of-use assets | 176 | | | | — | | |

| Other assets | 139 | | | | 90 | | |

| Assets held for sale | 355 | | | | 853 | | |

| Accounts payable | $ | 697 | | | $ | 736 | |

| Liabilities held for sale | 149 | | | | 295 | | |

| Other liabilities | 751 | | | | 549 | | |

| Liabilities held for sale | 13 | | | | 120 | | |

MASCO CORPORATION and Consolidated Subsidiaries

| Net sales | $ | 6,707 | | | $ | 6,654 | | | $ | 6,014 | |

| Cost of sales | 4,336 | | | | 4,327 | | | | 3,794 | | |

| Gross profit | 2,371 | | | | 2,327 | | | | 2,220 | | |

| Impairment charge for other intangible assets | 9 | | | | — | | | | — | | |

| Operating profit | 1,088 | | | | 1,077 | | | | 1,029 | | |

| | (174 | | ) | | (170 | | ) | | (311 | | ) |

On March 9, 2018, we completed the acquisition of The L.D. Kichler Co. ("Kichler").

In connection with the integration of Kichler, we are in the process of analyzing and evaluating Kichler's internal control over financial reporting.

This process may result in additions or changes to our internal control over financial reporting.

In accordance with the Securities and Exchange Commission guidance, we have excluded the Kichler operations from the scope of our annual assessment of the effectiveness of internal control over financial reporting for the year ended December 31, 2018.

Such guidance allows for the omission of an assessment of an acquired business' internal control over financial reporting from the assessment of internal control over financial reporting for a period not to exceed one year.

Kichler is a wholly-owned subsidiary whose total assets and net sales excluded from our assessment represent approximately 5% and 4%, respectively, as of and for the year ended December 31, 2018.

As described in Management’s Report on Internal Control over Financial Reporting appearing under Item 8, management has excluded The L.D. Kichler Co. (Kichler) from its assessment of internal control over financial reporting as of December 31, 2018 because it was acquired by the Company in a purchase business combination during 2018.

We have also excluded Kichler from our audit of internal control over financial reporting.

Kichler is a wholly-owned subsidiary whose total assets and net sales excluded from management’s assessment and our audit of internal control over financial reporting represent approximately 5% and 4%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2018.

PricewaterhouseCoopers LLP

| Receivables | 1,153 | | | | 1,066 | | |

| Inventories | 946 | | | | 784 | | |

| Goodwill | 898 | | | | 841 | | |

| Accounts payable | $ | 926 | | | $ | 824 | |

| Net sales | $ | 8,359 | | | $ | 7,642 | | | $ | 7,361 | |

| Cost of sales | 5,670 | | | | 5,030 | | | | 4,899 | | |

| Gross profit | 2,689 | | | | 2,612 | | | | 2,462 | | |

| Operating profit | 1,211 | | | | 1,194 | | | | 1,087 | | |

| | (169 | | ) | | (310 | | ) | | (255 | | ) |

| Income before income taxes | 1,042 | | | | 884 | | | | 832 | | |

| Realized loss on available-for-sale securities | — | | | | — | | | | 12 | | |

| | (17 | | ) | | 29 | | | | (10 | | ) |

| Issuance of Company common stock | — | | | | — | | | | 1 | | |

| Purchases of short-term bank deposits | — | | | | (106 | | ) | | (211 | | ) |

| Balance, January 1, 2016 | $ | 58 | | | $ | 330 | | | $ | — | | | $ | (300 | ) | | $ | (165 | ) | | $ | 193 | |

| Cumulative effect of adoption of new revenue recognition accounting standard | 5 | | | | | | | | | | | | 5 | | | | | | | | | | |

| Balance, January 1, 2016 | 63 | | | | 330 | | | | — | | | | (295 | | ) | | (165 | | ) | | 193 | | |

| Repurchased | (459 | | ) | | (15 | | ) | | (14 | | ) | | (430 | | ) | | | | | | | | |

A.

Principles of Consolidation.

Use of Estimates and Assumptions in the Preparation of Financial Statements.

Revenue Recognition.

Control over certain of our custom-made window products transfers to our customers as production is completed, and revenue is recognized over the production period for these products, as our products do not have an alternative use and we have an enforceable right to payment during the production period.

The production period of our custom-made window products generally does not lapse days, and for these products we currently recognize revenue based on the output of production, which is a faithful depiction of the transfer of these products to our customers.

Customer Displays.

Cash and Cash Investments.

Short-Term Bank Deposits.

Receivables.

Depreciation.

We utilize our weighted average cost of capital of

The Company's Principal Executive Officer and Principal Financial Officer have concluded, based on an evaluation of the Company's disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) or 15d-15(e)) as required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15 that, as of December 31, [removed: 2018,] [added: 2019,] the Company's disclosure controls and procedures were effective.

In connection with the evaluation of the Company's internal control over financial reporting that occurred during the quarter ended December 31, [removed: 2018,] [added: 2019,] which is required under the Securities Exchange Act of 1934 by paragraph (d) of Exchange Rules 13a-15 or 15d-15 (as defined in paragraph (f) of Rule 13a-15), management determined that there was no change that materially affected or is reasonably likely to materially affect internal control over financial reporting.

[removed: PART III][added: PART III]

Our Code of [removed: Business] Ethics applies to all employees, officers and directors including our Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer, and is posted on our website at www.masco.com.

Other information required by this Item will be contained in our definitive Proxy Statement for the [removed: 2019] [added: 2020] Annual Meeting of Stockholders, to be filed before [removed: May 1, 2019,] [added: April 29, 2020,] and such information is incorporated herein by reference.

Information required by this Item will be contained in our definitive Proxy Statement for the [removed: 2019] [added: 2020] Annual Meeting of Stockholders, to be filed before [removed: May 1, 2019] [added: April 29, 2020] and such information is incorporated herein by reference.

[removed: Equity] [added: Equity] Compensation Plan [removed: Information][added: Information]

The following table sets forth information as of December 31, [removed: 2018] [added: 2019] concerning the 2014 Plan, which was approved by our stockholders.

| [removed: Plan Category] [added: Plan Category] | [removed: Number] [added: Number] of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and [removed: Rights] [added: Rights] | | | [removed: Weighted-Average] [added: Weighted-Average] Exercise Price of Outstanding Options, Warrants and [removed: Rights] [added: Rights] | | | | [removed: Number] [added: Number] of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in the First [removed: Column)] [added: Column)] | |

The remaining information required by this Item will be contained in our definitive Proxy Statement for our [removed: 2019] [added: 2020] Annual Meeting of Stockholders, to be filed before [removed: May 1, 2019,] [added: April 29, 2020,] and such information is incorporated herein by reference.

| Equity compensation plans approved by stockholders | 3,005,824 | | | $ | 26.84 | | | 13,913,842 | |

| Equity compensation plans approved by stockholders | 3,740,874 | | | $ | 21.25 | | | 14,733,746 | |

Information required by this Item will be contained in our definitive Proxy Statement for the [removed: 2019] [added: 2020] Annual Meeting of Stockholders, to be filed before [removed: May 1, 2019,] [added: April 29, 2020,] and such information is incorporated herein by reference.

Information required by this Item will be contained in our definitive Proxy Statement for the [removed: 2019] [added: 2020] Annual Meeting of Stockholders, to be filed before [removed: May 1, 2019,] [added: April 29, 2020,] and such information is incorporated herein by reference.

[removed: PART IV][added: PART IV]

| (1) | [removed: Financial Statements.] [added: *Financial Statements.*] Our consolidated financial statements included in Item 8 hereof, as required at December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] and for the years ended December 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016,] [added: 2017,] consist of the following: |

| [Consolidated Balance [removed: Sheets](#sD6620CABA31E5AF1A23B92420CA5E7B0)] [added: Sheets](#s7E9821A830B1576D822E2101E54D9161)] | [removed: [37](#sD6620CABA31E5AF1A23B92420CA5E7B0)] [added: [34](#s7E9821A830B1576D822E2101E54D9161)] |

| [Consolidated Statements of [removed: Operations](#sE4027FC999965FF5A8E41557BEB8A9BA)] [added: Operations](#s462A67605FEF5D25A816343B8FB21B56)] | [removed: [38](#sE4027FC999965FF5A8E41557BEB8A9BA)] [added: [35](#s462A67605FEF5D25A816343B8FB21B56)] |

| [Consolidated Statements of Comprehensive Income [removed: (Loss)](#s1C22DAE292C95EEDBC1445FFFA08085B)] [added: (Loss)](#s5C66B1588E255A64BEB77D793CAE1622)] | [removed: [39](#s1C22DAE292C95EEDBC1445FFFA08085B)] [added: [36](#s5C66B1588E255A64BEB77D793CAE1622)] |

| [Consolidated Statements of Cash [removed: Flows](#sB35ECA523A2A5CE09420E0F412A6BE7F)] [added: Flows](#s283657D3016D5A41BFB17F85B3DCA9C6)] | [removed: [40](#sB35ECA523A2A5CE09420E0F412A6BE7F)] [added: [37](#s283657D3016D5A41BFB17F85B3DCA9C6)] |

| [Consolidated Statements of Shareholders' [removed: Equity](#s3955952793F858DD829D9EE79AAEA099)] [added: Equity](#s60CFC770A3315AC0B04964C1AFFEFA2F)] | [removed: [41](#s3955952793F858DD829D9EE79AAEA099)] [added: [38](#s60CFC770A3315AC0B04964C1AFFEFA2F)] |

| [Notes to Consolidated Financial [removed: Statements](#s922A6F707E5B5BEBB61350753C6F5AE2)] [added: Statements](#s4B418D4AEADC5F58AB4F41D7DA8AB507)] | [removed: [42](#s922A6F707E5B5BEBB61350753C6F5AE2)] [added: [39](#s4B418D4AEADC5F58AB4F41D7DA8AB507)] |

| (2) | [removed: Financial] [added: *Financial] Statement [removed: Schedule.] [added: Schedule.*] |

Our Financial Statement Schedule appended hereto, as required for the years ended December 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016,] [added: 2017,] consists of the following:

| [II. Valuation and Qualifying [removed: Accounts](#sCBD40522D02C5CF8AABFA19EC6BCF668)] [added: Accounts](#s9CBC58FC68FF54E483A348703FC9EC63)] | [removed: [83](#sCBD40522D02C5CF8AABFA19EC6BCF668)] [added: [83](#s9CBC58FC68FF54E483A348703FC9EC63)] |

| (3) | [removed: Exhibits.] [added: *Exhibits.*] |

| [removed: Exhibit No.] [added: Exhibit No.] | | | | | | [removed: Incorporated] [added: Incorporated] By [removed: Reference] [added: Reference] | | | | | | [removed: Filed Herewith] [added: Filed Herewith] |

| | [removed: Exhibit Description] [added: Exhibit Description] | | | | [removed: Form] [added: Form] | | [removed: Exhibit] [added: Exhibit] | | [removed: Filing Date] [added: Filing Date] | | | |

| [removed: Exhibit No.] [added: Exhibit No.] | | | | | | | [removed: Incorporated] [added: Incorporated] By [removed: Reference] [added: Reference] | | | | | | [removed: Filed Herewith] [added: Filed Herewith] |

| | [removed: Exhibit Description] [added: Exhibit Description] | | | | | [removed: Form] [added: Form] | | [removed: Exhibit] [added: Exhibit] | | [removed: Filing Date] [added: Filing Date] | | | |

| [removed: [4.b.ii](http://www.sec.gov/Archives/edgar/data/62996/000104746916010135/a2227221zex-4_biiv.htm)] [added: [4.b.ii](http://www.sec.gov/Archives/edgar/data/62996/000006299617000008/exhibit4biii.htm)] | | | | [removed: 7.125%] [added: 5.950%] Notes Due March 15, [removed: 2020;] [added: 2022;] | | | [removed: 2015] [added: 2016] 10-K | | [removed: 4.b.i(iv)] [added: 4.b(iii)] | | [removed: 02/12/2016] [added: 02/09/2017] | | |

| [removed: [4.b.iv](http://www.sec.gov/Archives/edgar/data/62996/000119312515101336/d897462dex41.htm)] [added: [4.b.iii](http://www.sec.gov/Archives/edgar/data/62996/000119312515101336/d897462dex41.htm)] | | | | 4.450% Notes Due April 1, 2025; | | | 8-K | | 4.1 | | 03/23/2015 | | |

| [removed: [4.b.v](http://www.sec.gov/Archives/edgar/data/62996/000119312516506430/d157077dex41.htm)] [added: [4.b.iv](http://www.sec.gov/Archives/edgar/data/62996/000119312516506430/d157077dex41.htm)] | | | | 3.500% Notes Due April 1, 2021; | | | 8-K | | 4.1 | | 03/16/2016 | | |

| [removed: [4.b.vi](http://www.sec.gov/Archives/edgar/data/62996/000119312516506430/d157077dex42.htm)] [added: [4.b.v](http://www.sec.gov/Archives/edgar/data/62996/000119312516506430/d157077dex42.htm)] | | | | 4.375% Notes Due April 1, 2026; | | | 8-K | | 4.2 | | 03/16/2016 | | |

| [removed: [4.b.vii](http://www.sec.gov/Archives/edgar/data/62996/000119312517204719/d397593dex41.htm)] [added: [4.b.vi](http://www.sec.gov/Archives/edgar/data/62996/000119312517204719/d397593dex41.htm)] | | | | 3.500% Notes Due November 15, 2027; and | | | 8-K | | 4.1 | | 06/15/2017 | | |

| [removed: [4.b.viii](http://www.sec.gov/Archives/edgar/data/62996/000119312517204719/d397593dex42.htm)] [added: [4.b.vii](http://www.sec.gov/Archives/edgar/data/62996/000119312517204719/d397593dex42.htm)] | | | | 4.500% Notes Due May 15, 2047. | | | 8-K | | 4.2 | | 06/15/2017 | | |

| [removed: Note 1:] [added: Note 2:] | | Other instruments, notes or extracts from agreements defining the rights of holders of long-term debt of Masco Corporation or its subsidiaries have not been filed since (i) in each case the total amount of long-term debt permitted thereunder does not exceed 10 percent of Masco Corporation's consolidated assets, and (ii) such instruments, notes and extracts will be furnished by Masco Corporation to the Securities and Exchange Commission upon request. | | | | | | | | | | | |

| [removed: [10.a](http://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit10ai.htm)] [added: [10.a](http://www.sec.gov/Archives/edgar/data/62996/000006299619000017/exhibit10-creditagreement.htm)] | | Credit Agreement dated as of March [removed: 28, 2013] [added: 13, 2019] by and among Masco Corporation and Masco Europe [removed: S. à] [added: S.à] r.l. as borrowers, the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, [removed: N.A.,] [added: N.A. and PNC Bank, National Association,] as [removed: Syndication Agent,] [added: Co-Syndication Agents,] and [added: Deutsche Bank Securities, Inc.,] Royal Bank of Canada, [removed: Deutsche] [added: SunTrust Bank,] Bank [removed: Securities, Inc., PNC] [added: of America, N.A., Fifth Third Bank and Wells Fargo] Bank, National Association, [removed: and SunTrust Bank] as Co-Documentation [removed: Agents, as amended by Amendment No. 1 dated as of May 29, 2015, and Amendment No. 2 dated as of August 28, 2015.] [added: Agents.] | | | | | [removed: 2017 10-K] [added: 8-K] | | [removed: 10.a] [added: 10] | | [removed: 02/08/2018] [added: 03/19/2019] | | |

| [removed: Note 2:] [added: Note 3:] | | Exhibits 10.b through [removed: 10.m] [added: 10.l] constitute the management contracts and executive compensatory plans or arrangements in which certain of the [removed: Directors] [added: directors] and executive officers of the Company participate. | | | | | | | | | | | |

| | | Form of [removed: Restricted] Stock [removed: Award] [added: Option Grant] Agreements: | | | | | | | | | | | [removed: |]

| [removed: [10.b.i](http://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit10bi.htm)] [added: [10.b.i](http://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit10biii.htm)] | | | | for [removed: awards] [added: grants] on or after January 1, 2013; [removed: and] | | | 2017 10-K | | [removed: 10.b.i] [added: 10.b.iii] | | 02/08/2018 | | |

| [removed: [10.b.ii](http://www.sec.gov/Archives/edgar/data/62996/000104746916010135/a2227221zex-10_biic.htm)] [added: [10.b.iii](http://www.sec.gov/Archives/edgar/data/62996/000104746916010135/a2227221zex-10_biiic.htm)] | | | | for [removed: awards] [added: grants] prior to 2012. | | | 2015 10-K | | [removed: 10.b.i(i)(C)] [added: 10.b.i(ii)(C)] | | 02/12/2016 | | |

| [removed: [10.b.iii](http://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit10biii.htm)] [added: [10.b.ii](http://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit10biv.htm)] | | | | for grants [removed: on or after January 1, 2013;] [added: during 2012; and] | | | 2017 10-K | | [removed: 10.b.iii] [added: 10.b.iv] | | 02/08/2018 | | |

| [removed: [10.b.iv](http://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit10biv.htm)] [added: [10.c.v](http://www.sec.gov/Archives/edgar/data/62996/000006299619000011/exhibit10civ.htm)] | | | | for grants [removed: during 2012;] [added: between July 1, 2018] and [removed: |] [added: December 17, 2019; and] | | [removed: 2017] [added: 2018] 10-K | | [removed: 10.b.iv] [added: 10.c.iv] | | [removed: 02/08/2018] [added: 02/07/2019] | | |

| [removed: [10.b.vi](http://www.sec.gov/Archives/edgar/data/62996/000006299618000015/exhibit10bviii.htm)] [added: [10.c.x](http://www.sec.gov/Archives/edgar/data/62996/000006299616000041/exhibit10b63016.htm)] | | Non-Employee Directors Equity Program under Masco Corporation's [removed: 2005] [added: 2014] Long Term Stock Incentive Plan [removed: (for awards prior to 2010): |] [added: (Amended and Restated May 9, 2016).] | | | | [removed: 2017 10-K] [added: 10-Q] | | [removed: 10.b.viii] [added: 10.b] | | [removed: 02/08/2018] [added: 07/26/2016] | | |

| [removed: [10.c.ii](https://www.sec.gov/Archives/edgar/data/62996/000006299619000011/exhibit10cii.htm)] [added: [10.c.ii](http://www.sec.gov/Archives/edgar/data/62996/000006299619000011/exhibit10cii.htm)] | | | | for awards on or after July 1, 2018. | | [added: 2018 10-K] | | [added: 10.c.ii] | | [added: 02/07/2019] | | [removed: X] |

| [removed: [10.c.iii](http://www.sec.gov/Archives/edgar/data/62996/000119312514184686/d719066dex10d.htm)] [added: [10.c.iv](http://www.sec.gov/Archives/edgar/data/62996/000119312514184686/d719066dex10d.htm)] | | | | for grants prior to July 1, 2018; [removed: and] | | 8-K | | 10.d | | 05/06/2014 | | |

| [removed: [10.c.iv](https://www.sec.gov/Archives/edgar/data/62996/000006299619000011/exhibit10civ.htm)] [added: [10.c.vi](https://www.sec.gov/Archives/edgar/data/62996/000006299620000006/exhibit10cvi.htm)] | | | | for grants on or after [removed: July 1, 2018.] [added: December 17, 2019.] | | | | | | | | X |

| [removed: [10.c.v](https://www.sec.gov/Archives/edgar/data/62996/000006299619000011/exhibit10cv.htm)] [added: [10.c.vii](http://www.sec.gov/Archives/edgar/data/62996/000006299619000011/exhibit10cv.htm)] | | Form of Long Term Incentive Program Award [added: Agreement for awards prior to December 17, 2019.] | | | | [added: 2018] | | [added: 10.c.v] | | [added: 02/07/2019] | | [removed: X] |

| [removed: [10.c.vi](http://www.sec.gov/Archives/edgar/data/62996/000006299616000041/exhibit10b63016.htm)] [added: [10.c.xiii](https://www.sec.gov/Archives/edgar/data/62996/000006299620000006/exhibit10cxiii.htm)] | | Non-Employee Directors Equity Program under Masco Corporation's 2014 Long Term Stock Incentive Plan (Amended and Restated [removed: May 9, 2016):] [added: February 7, 2020).] | | | | [removed: 10-Q] | | [removed: 10.b] | | [removed: 07/26/2016] | | [added: X] |

| [removed: [10.c.vii](http://www.sec.gov/Archives/edgar/data/62996/000119312514184686/d719066dex10c.htm)] [added: [10.c.xi](http://www.sec.gov/Archives/edgar/data/62996/000119312514184686/d719066dex10c.htm)] | | | | [removed: Form of Restricted Stock Award Agreement] for Non-Employee Directors for awards prior to July 1, 2018; and | | 8-K | | 10.c | | 05/06/2014 | | |

| [removed: [10.c.viii](https://www.sec.gov/Archives/edgar/data/62996/000006299619000011/exhibit10cviii.htm)] [added: [10.c.xii](http://www.sec.gov/Archives/edgar/data/62996/000006299619000011/exhibit10cviii.htm)] | | | | [removed: Form of Restricted Stock Award Agreement] for Non-Employee Directors for awards after July 1, 2018. | | [added: 2018 10-K] | | [added: 10.c.viii] | | [added: 02/07/2019] | | [removed: X] |

| [removed: [10.e](http://www.sec.gov/Archives/edgar/data/62996/000104746916010135/a2227221zex-10_dii.htm)] [added: [10.d](http://www.sec.gov/Archives/edgar/data/62996/000104746916010135/a2227221zex-10_dii.htm)] | | Form of Masco Corporation Supplemental Executive Retirement and Disability Plan and amendments thereto for Richard A. Manoogian. | | | | 2015 10-K | | 10.d.i(i) | | 02/12/2016 | | |

| [removed: [10.f](http://www.sec.gov/Archives/edgar/data/62996/000104746916010135/a2227221zex-10_diii.htm)] [added: [10.e](http://www.sec.gov/Archives/edgar/data/62996/000104746916010135/a2227221zex-10_diii.htm)] | | Form of Masco Corporation Supplemental Executive Retirement and Disability Plan and amendments thereto (includes amendment freezing benefit accruals) for John G. Sznewajs. | | | | 2015 10-K | | 10.d.i(ii) | | 02/12/2016 | | |

| [removed: [10.g](http://www.sec.gov/Archives/edgar/data/62996/000006299617000008/exhibit10f.htm)] [added: [10.f](http://www.sec.gov/Archives/edgar/data/62996/000006299617000008/exhibit10f.htm)] | | Other compensatory arrangements for executive officers. | | | | 2016 10-K | | 10.f | | 02/09/2017 | | |

| [2.a](http://www.sec.gov/Archives/edgar/data/62996/000095010319013600/dp113801_ex0201.htm) | | Stock Purchase Agreement, dated September 29, 2019, by and between Masco Corporation and MIWD Holding Company LLC. | | | | 8-K | | 2.1 | | 10/03/2019 | | |

| [2.b](http://www.sec.gov/Archives/edgar/data/62996/000095010319015540/dp115905_ex0201.htm) | | Securities Purchase Agreement, dated November 14, 2019, by and between Masco Corporation and ACP Products, Inc. | | | | 8-K | | 2.1 | | 11/18/2019 | | |

| Note 1: | | Disclosure schedules and certain exhibits have been omitted from Exhibit No. 2.a and 2.b pursuant to Item 601(b)(2) of Regulation S-K. Each Agreement as filed identifies such schedules and exhibits, including the general nature of their contents. Masco agrees to furnish a copy of any omitted attachment to the Securities Exchange Commission on a confidential basis upon request. | | | | | | | | | | |

| [4.c](https://www.sec.gov/Archives/edgar/data/62996/000006299620000006/exhibit4c.htm) | | Description of securities. | | | | | | | | | | | X |

| [10.c.iii](https://www.sec.gov/Archives/edgar/data/62996/000006299620000006/exhibit10ciii.htm) | | Form of Restricted Stock Unit Award Agreement for awards granted on or after December 17, 2019. | | | | | | | | | | X |

| [10.c.viii](https://www.sec.gov/Archives/edgar/data/62996/000006299620000006/exhibit10cviii.htm) | | Long-Term Incentive Program under Masco Corporation's 2014 Long Term Stock Incentive Plan (December 17, 2019). | | | | | | | | | | X |

| [10.c.ix](https://www.sec.gov/Archives/edgar/data/62996/000006299620000006/exhibit10cix.htm) | | Form of Performance Restricted Stock Unit Award Agreement for awards on or after December 17, 2019. | | | | | | | | | | X |

| | | Form of Restricted Stock Award Agreement for Non-Employee Directors: | | | | | | | | | | |

| [10.c.xiv](https://www.sec.gov/Archives/edgar/data/62996/000006299620000006/exhibit10cxiv.htm) | | Form of Restricted Stock Unit Award Agreement for Non-Employee Directors for grants on or after February 7, 2020. | | | | | | | | | | X |