MASCO CORP /DE/ | 2013 | FY | 3


B. DISCONTINUED OPERATIONS

        The presentation of discontinued operations includes components of the Company that the Company intends to sell, which comprises operations and cash flows that can be clearly distinguished from the rest of the Company.

        In February 2013, the Company determined that Tvilum, its Danish ready-to-assemble cabinet business, was no longer core to its long-term growth strategy and, accordingly, the Company embarked on a plan for disposition. In December 2013, the Company completed the disposition of this business and a related Danish holding company for net proceeds of $17 million.

        During 2011, the Company determined that several businesses in the Installation and Other Services segment were not core to the Company's long-term growth strategy. These businesses provide commercial drywall installation, millwork and framing services. During 2012, the Company disposed all of these businesses for net proceeds of $7 million.

        The Company has accounted for the business units identified in 2013 and 2011 as discontinued operations. Losses from these discontinued operations were included in loss from discontinued operations, net, in the consolidated statements of operations.

        Selected financial information for the discontinued operations during the period owned by the Company, were as follows, in millions:

 
  2013   2012   2011  

Net sales

  $ 265   $ 321   $ 389  
               
               

Operating loss from discontinued operations

  $ (7 ) $ (44 ) $ (58 )

Impairment of assets held for sale

    (10 )   (3 )   (130 )

Gain (loss) on disposal of discontinued operations, net

    3     (6 )   (3 )
               

Loss before income tax

    (14 )   (53 )   (191 )

Income tax (benefit) expense

   
(4

)
 
8
   
(10

)
               

Loss from discontinued operations, net

 
$

(10

)

$

(61

)

$

(181

)
               
               

        Included in impairment of assets held for sale in 2013 is the impairment of fixed assets. During the first quarter of 2013, the Company estimated the fair value of the business held for sale, using unobservable inputs (Level 3). After considering the currency translation gains reported in Accumulated Other Comprehensive Income, the Company recorded an impairment of $10 million in the first quarter of 2013.

        In 2013, in conjunction with the transaction to sell the Danish ready-to-assemble cabinet business (included in discontinued operations), the Company also disposed of a non-operating entity in Denmark. This disposition triggered the settlement of loans, which resulted in the recognition of $18 million of currency translation expense, which is included in other income (expense) from continuing operations in the statement of operations.

        Included in the impairment of assets held for sale, net in 2011 is the impairment of indefinite and definite-lived intangible assets of $56 million, the impairment of goodwill of $57 million and the impairment of fixed and other assets of $17 million. Included in the loss on disposal of discontinued operations, net in 2011 is $3 million expense reflecting the adjustment of certain assets related to businesses disposed in prior years.

        The unusual relationship between income tax expense and loss before income tax in 2012 resulted primarily from the increase in the deferred tax liability associated with the abandonment of tax basis in indefinite-lived intangibles due to the disposition of certain discontinued operations.

        The unusual relationship between income taxes and loss before income taxes in 2011 resulted primarily from certain losses providing no current tax benefit.

       The following balance sheet items have been classified as held for sale:

 
  December 31,  
 
  2013   2012  

Receivables

  $   $ 32  

Inventories

        66  

Prepaid expenses and other

        2  

Property and equipment, net

        103  
           

Total assets

  $   $ 203  

Accounts payable

   
   
31
 

Accrued liabilities

        14  

Deferred income taxes

        4  
           

Total liabilities

  $   $ 49  

        In the fourth quarter of 2012, the Company determined that the estimated fair value calculated for Tvilum was lower than the net book value. The Company assessed the long-lived assets associated with this business unit and determined that no impairment was necessary at December 31, 2012.

        Also during 2011, the Company decided to exit a product line in builders' hardware in the Decorative Architectural Products segment with net sales of $1 million and an operating loss of $15 million in 2011 (including $8 million to write-down inventory related to satisfaction of contractual obligations). In the first quarter of 2012, the Company disposed of this product line. This business was included in continuing operations through the date of disposal.


us-gaap:DisposalGroupsIncludingDiscontinuedOperationsDisclosureTextBlock