EX-99 2 a930168-kex99.htm EXHIBIT 99
Exhibit 99
MASCO REPORTS 25 PERCENT INCREASE IN 2016
THIRD QUARTER EARNINGS PER SHARE
Key Highlights

• | Sales for the third quarter increased 2 percent to $1.9 billion; in local currencies, sales increased 3 percent

• | Operating profit grew 4 percent to $269 million; adjusted operating profit grew 7 percent to $275 million

• | Operating profit margin for the quarter increased to 14.3 percent, a 30 basis point expansion; adjusted operating profit margin increased to 14.7 percent, a 70 basis point expansion

• | Earnings per share for the quarter grew 25 percent to $0.40 per common share; adjusted earnings per share grew 21 percent to $0.41 per common share (both figures included the negative effect of a $21 million warranty reserve increase in our Windows and Other Specialty Products segment, which reduced earnings per share by approximately $0.04 per common share)

TAYLOR, Mich. (October 25, 2016) - Masco Corporation (NYSE: MAS), one of the world’s leading manufacturers of branded home improvement and building products, reported strong net sales and operating profit growth in the third quarter of 2016.
“Our performance in the third quarter reflects our continued execution against our strategic initiatives,” said Masco’s President and CEO, Keith Allman. “We invested in our industry leading brands to drive growth, and continued to improve profitability by leveraging our operations and selectively exiting lower margin business in our Cabinetry segment. Additionally, we continued our disciplined capital allocation by returning approximately $110 million to shareholders through dividends and share repurchases during the quarter.”
2016 Third Quarter Commentary

• | On a reported basis, compared to third quarter 2015:

• | Net sales from continuing operations increased 2 percent to $1.9 billion

• | In local currency, North American sales increased 2 percent and international sales increased 6 percent

• | Gross margins improved to 32.7 percent from 32.0 percent

• | Operating margins improved to 14.3 percent from 14.0 percent

• | Income from continuing operations was $0.40 per common share compared to $0.32 per common share

• | Compared to third quarter 2015, results for key financial measures, as adjusted for certain items (see Exhibit A) and with a normalized tax rate of 36 percent, were as follows:

• | Gross margins improved to 32.9 percent compared to 31.9 percent

• | Operating margins improved to 14.7 percent compared to 14.0 percent

• | Income from continuing operations was $0.41 per common share compared to $0.34 per common share

• | Liquidity at the end of the third quarter was approximately $1.2 billion

• | 2.3 million shares were repurchased in the third quarter

2016 Third Quarter Operating Segment Highlights

• | Plumbing Products’ net sales increased 5 percent (6 percent excluding the impact of foreign currency translation), driven by growth in North America and internationally

• | Decorative Architectural Products’ net sales increased 2 percent with growth from paints and other coating products partially offset by the timing and amount of promotions

• | Cabinetry Products’ net sales decreased 6 percent due to the exit of lower margin business in the builder channel, which was partially offset by growth in the retail and dealer channels

• | Windows and Other Specialty Products’ net sales decreased 1 percent. Excluding the impact of foreign currency translation, net sales increased 2 percent, led by our North American windows business

1

Outlook
“Consumer demand for our market-leading products remains strong, as the fundamentals for long-term demand in both repair and remodel and new home construction continue to be positive,” said Allman. “By leveraging our brand portfolio, our industry-leading positions and our Masco Operating System, we will continue to successfully execute against these positive industry fundamentals to achieve our long-term growth strategies.”
About Masco
Headquartered in Taylor, Michigan, Masco Corporation is a global leader in the design, manufacture and distribution of branded home improvement and building products. Our portfolio of industry-leading brands includes Behr® paint; Delta® and Hansgrohe® faucets, bath and shower fixtures; KraftMaid® and Merillat® cabinets; Milgard® windows and doors; and Hot Spring® spas. We leverage our powerful brands across product categories, sales channels and geographies to create value for our customers and shareholders. For more information about Masco Corporation, visit www.masco.com.
The 2016 third quarter supplemental material, including a presentation in PDF format, is available on the Company’s website at www.masco.com.
Conference Call Details
A conference call regarding items contained in this release is scheduled for Tuesday, October 25, 2016 at 8:00 a.m. ET. Participants in the call are asked to register five to ten minutes prior to the scheduled start time by dialing (855) 226-2726 (855-22MASCO) and from outside the U.S. at (706) 679-3614. Please use the conference identification number 86755759. The conference call will be webcast simultaneously and in its entirety through the Company’s website. Shareholders, media representatives and others interested in Masco may participate in the webcast by registering through the Investor Relations section on the Company’s website.
A replay of the call will be available on Masco’s website or by phone by dialing (855) 859-2056 and from outside the U.S. at (404) 537-3406. Please use the conference identification number 86755759. The telephone replay will be available approximately two hours after the end of the call and continue through November 25, 2016.
Safe Harbor Statement
This press release contains statements that reflect our views about our future performance and constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “believe,” “anticipate,” “appear,” “may,” “will,” “should,” “intend,” “plan,” “estimate,” “expect,” “assume,” “seek,” “forecast,” and similar references to future periods. Our views about future performance involve risks and uncertainties that are difficult to predict and, accordingly, our actual results may differ materially from the results discussed in our forward-looking statements. We caution you against relying on any of these forward-looking statements.
Our future performance may be affected by the levels of home improvement activity and new home construction, our ability to maintain our strong brands and to develop and introduce new and improved products, our ability to maintain our competitive position in our industries, our reliance on key customers, our ability to achieve the anticipated benefits of our strategic initiatives, our ability to sustain the performance of our cabinetry businesses, the cost and availability of raw materials, our dependence on third party suppliers, and risks associated with international operations and global strategies. These and other factors are discussed in detail in Item 1A, “Risk Factors” in our most recent Annual Report on Form 10-K, as well as in our Quarterly Reports on Form 10-Q and in other filings we make with the Securities and Exchange Commission. The forward-looking statements in this press release speak only as of the date of this press release. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. Unless required by law, we undertake no obligation to update publicly any forward-looking statements as a result of new information, future events or otherwise.
Investor Contact
David Chaika
Vice President, Treasurer and Investor Relations
313.792.5500
david_chaika@mascohq.com
# # #
2

MASCO CORPORATION
Condensed Consolidated Statements of Operations - Unaudited
For the Three Months and Nine Months Ended September 30, 2016 and 2015
(in millions, except per common share data)

|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2016 |  | 2015 |  | 2016 |  | 2015
Net sales |  | $ | 1,877 |  |  | $ | 1,839 |  |  | $ | 5,598 |  |  | $ | 5,427 |
Cost of sales |  | 1,263 |  |  | 1,250 |  |  | 3,715 |  |  | 3,706 |
Gross profit |  | 614 |  |  | 589 |  |  | 1,883 |  |  | 1,721 |
Selling, general and administrative expenses |  | 345 |  |  | 331 |  |  | 1,045 |  |  | 1,019 |
Operating profit |  | 269 |  |  | 258 |  |  | 838 |  |  | 702 |
Other income (expense), net: |  |  |  |  |  |  |  |
Interest expense |  | (43 | ) |  | (54 | ) |  | (186 | ) |  | (171 | )
Other, net |  | 1 |  |  | (6 | ) |  | 5 |  |  | (2 | )
|  | (42 | ) |  | (60 | ) |  | (181 | ) |  | (173 | )
Income from continuing operations before income taxes |  | 227 |  |  | 198 |  |  | 657 |  |  | 529 |
Income tax expense |  | (81 | ) |  | (77 | ) |  | (229 | ) |  | (219 | )
Income from continuing operations |  | 146 |  |  | 121 |  |  | 428 |  |  | 310 |
Loss from discontinued operations, net |  | — |  |  | — |  |  | — |  |  | (1 | )
Net income |  | 146 |  |  | 121 |  |  | 428 |  |  | 309 |
Less: Net income attributable to noncontrolling interest |  | 12 |  |  | 10 |  |  | 35 |  |  | 29 |
Net income attributable to Masco Corporation |  | $ | 134 |  |  | $ | 111 |  |  | $ | 393 |  |  | $ | 280 |
Income per common share attributable to Masco Corporation (diluted): |  |  |  |  |  |  |  |  |  |  |  |
Income from continuing operations |  | $ | 0.40 |  |  | $ | 0.32 |  |  | $ | 1.17 |  |  | $ | 0.81 |
Loss from discontinued operations, net |  | — |  |  | — |  |  | — |  |  | — |
Net income |  | $ | 0.40 |  |  | $ | 0.32 |  |  | $ | 1.17 |  |  | $ | 0.80 |
Average diluted common shares outstanding |  | 329 |  |  | 338 |  |  | 332 |  |  | 344 |
Amounts attributable to Masco Corporation: |  |  |  |  |  |  |  |  |  |  |  |
Income from continuing operations |  | $ | 134 |  |  | $ | 111 |  |  | $ | 393 |  |  | $ | 281 |
Loss from discontinued operations, net |  | — |  |  | — |  |  | — |  |  | (1 | )
Net income attributable to Masco Corporation |  | $ | 134 |  |  | $ | 111 |  |  | $ | 393 |  |  | $ | 280 |

Historical information is available on our website.
3

MASCO CORPORATION
Exhibit A: Reconciliations - Unaudited
For the Three Months and Nine Months Ended September 30, 2016 and 2015
(in millions, except per common share data)

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2016 |  | 2015 |  | 2016 |  | 2015
Gross Profit, Selling, General and Administrative Expenses, and Operating Profit Reconciliations |  |  |  |  |  |  |  |  |  |  |
Net sales | $ | 1,877 |  |  | $ | 1,839 |  |  | $ | 5,598 |  |  | $ | 5,427 |
Gross profit, as reported | $ | 614 |  |  | $ | 589 |  |  | $ | 1,883 |  |  | $ | 1,721 |
Rationalization charges | 4 |  |  | 1 |  |  | 10 |  |  | 2 |
(Gain) on sale of property and equipment | — |  |  | (3 | ) |  | — |  |  | (3 | )
Gross profit, as adjusted | $ | 618 |  |  | $ | 587 |  |  | $ | 1,893 |  |  | $ | 1,720 |
Gross margin, as reported | 32.7 | % |  | 32.0 | % |  | 33.6 | % |  | 31.7 | %
Gross margin, as adjusted | 32.9 | % |  | 31.9 | % |  | 33.8 | % |  | 31.7 | %
Selling, general and administrative expenses, as reported | $ | 345 |  |  | $ | 331 |  |  | $ | 1,045 |  |  | $ | 1,019 |
Rationalization charges | 2 |  |  | 1 |  |  | 6 |  |  | 7 |
Selling, general and administrative expenses, as adjusted | $ | 343 |  |  | $ | 330 |  |  | $ | 1,039 |  |  | $ | 1,012 |
Selling, general and administrative expenses as percent of net sales, as reported | 18.4 | % |  | 18.0 | % |  | 18.7 | % |  | 18.8 | %
Selling, general and administrative expenses as percent of net sales, as adjusted | 18.3 | % |  | 17.9 | % |  | 18.6 | % |  | 18.6 | %
Operating profit, as reported | $ | 269 |  |  | $ | 258 |  |  | $ | 838 |  |  | $ | 702 |
Rationalization charges | 6 |  |  | 2 |  |  | 16 |  |  | 9 |
(Gain) on sale of property and equipment | — |  |  | (3 | ) |  | — |  |  | (3 | )
Operating profit, as adjusted | $ | 275 |  |  | $ | 257 |  |  | $ | 854 |  |  | $ | 708 |
Operating margin, as reported | 14.3 | % |  | 14.0 | % |  | 15.0 | % |  | 12.9 | %
Operating margin, as adjusted | 14.7 | % |  | 14.0 | % |  | 15.3 | % |  | 13.0 | %
Earnings Per Common Share Reconciliation |  |  |  |  |  |  |
Income from continuing operations before income taxes, as reported | $ | 227 |  |  | $ | 198 |  |  | $ | 657 |  |  | $ | 529 |
Rationalization charges | 6 |  |  | 2 |  |  | 16 |  |  | 9 |
(Gain) on sale of property and equipment | — |  |  | (3 | ) |  | — |  |  | (3 | )
(Gain) from auction rate securities | — |  |  | — |  |  | (1 | ) |  | — |
(Gains) from private equity funds, net | (1 | ) |  | (1 | ) |  | (2 | ) |  | (5 | )
(Earnings) from equity investments, net | — |  |  | — |  |  | (1 | ) |  | (2 | )
Income from continuing operations before income taxes, as adjusted | 232 |  |  | 196 |  |  | 669 |  |  | 528 |
Tax at 36% rate | (84 | ) |  | (71 | ) |  | (241 | ) |  | (190 | )
Less: Net income attributable to noncontrolling interest | 12 |  |  | 10 |  |  | 35 |  |  | 29 |
Income from continuing operations, as adjusted | $ | 136 |  |  | $ | 115 |  |  | $ | 393 |  |  | $ | 309 |
Income per common share, as adjusted | $ | 0.41 |  |  | $ | 0.34 |  |  | $ | 1.18 |  |  | $ | 0.90 |
Average diluted common shares outstanding | 329 |  |  | 338 |  |  | 332 |  |  | 344 |

Historical information is available on our website.
4

MASCO CORPORATION
Condensed Consolidated Balance Sheets and
Other Financial Data - Unaudited
(dollars in millions)

|  | September 30, 2016 |  | December 31, 2015
Balance Sheet |  |  |  |  |  |
Assets |  |  |  |  |  |
Current Assets: |  |  |  |  |  |
Cash and cash investments |  | $ | 1,041 |  |  | $ | 1,468 |
Short-term bank deposits |  | 182 |  |  | 248 |
Receivables |  | 1,054 |  |  | 853 |
Inventories |  | 758 |  |  | 687 |
Prepaid expenses and other |  | 87 |  |  | 72 |
Total Current Assets |  | 3,122 |  |  | 3,328 |
Property and equipment, net |  | 1,049 |  |  | 1,027 |
Goodwill |  | 841 |  |  | 839 |
Other intangible assets, net |  | 155 |  |  | 160 |
Other assets |  | 206 |  |  | 310 |
Total Assets |  | $ | 5,373 |  |  | $ | 5,664 |
Liabilities |  |  |  |  |  |
Current Liabilities: |  |  |  |  |  |
Accounts payable |  | $ | 866 |  |  | $ | 749 |
Notes payable |  | 3 |  |  | 1,004 |
Accrued liabilities |  | 642 |  |  | 650 |
Total Current Liabilities |  | 1,511 |  |  | 2,403 |
Long-term debt |  | 2,993 |  |  | 2,403 |
Other liabilities |  | 766 |  |  | 800 |
Total Liabilities |  | 5,270 |  |  | 5,606 |
Equity |  | 103 |  |  | 58 |
Total Liabilities and Equity |  | $ | 5,373 |  |  | $ | 5,664 |

|  | As of
|  | September 30, 2016 |  | September 30, 2015
Other Financial Data |  |  |  |  |  |
Working Capital Days |  |  |  |  |  |
Receivable days |  | 50 |  |  | 49 |
Inventory days |  | 56 |  |  | 56 |
Payable days |  | 72 |  |  | 71 |
Working capital |  | $ | 946 |  |  | $ | 928 |
Working capital as a % of sales (LTM) |  | 12.9 | % |  | 13.1 | %

Historical information is available on our website.
5

MASCO CORPORATION
Condensed Consolidated Statements of Cash Flows
and Other Financial Data - Unaudited
(dollars in millions)

|  | Nine Months Ended September 30,
|  | 2016 |  | 2015
Cash Flows From (For) Operating Activities: |  |  |  |  |  |
Cash provided by operating activities |  | $ | 569 |  |  | $ | 581 |
Working capital changes |  | (187 | ) |  | (159 | )
Net cash from operating activities |  | 382 |  |  | 422 |
Cash Flows From (For) Financing Activities: |  |  |  |  |  |
Retirement of notes |  | (1,300 | ) |  | (500 | )
Purchase of Company common stock |  | (242 | ) |  | (407 | )
Cash dividends paid |  | (95 | ) |  | (94 | )
Dividend paid to noncontrolling interest |  | (31 | ) |  | (36 | )
Cash distributed to TopBuild Corp. |  | — |  |  | (63 | )
Issuance of TopBuild Corp. debt |  | — |  |  | 200 |
Issuance of notes, net of issuance costs |  | 889 |  |  | 497 |
Issuance of Company common stock |  | 1 |  |  | 2 |
Excess tax benefit from stock-based compensation |  | 21 |  |  | 32 |
Credit Agreement and other financing costs |  | — |  |  | (3 | )
Decrease in debt, net |  | (2 | ) |  | (1 | )
Net cash for financing activities |  | (759 | ) |  | (373 | )
Cash Flows From (For) Investing Activities: |  |  |  |  |  |
Capital expenditures |  | (117 | ) |  | (112 | )
Other, net |  | 77 |  |  | (32 | )
Net cash for investing activities |  | (40 | ) |  | (144 | )
Effect of exchange rate changes on cash and cash investments |  | (10 | ) |  | (9 | )
Cash and Cash Investments: |  |  |  |  |  |
Decrease for the period |  | (427 | ) |  | (104 | )
At January 1 |  | 1,468 |  |  | 1,383 |
At September 30 |  | $ | 1,041 |  |  | $ | 1,279 |

|  | As of September 30,
|  | 2016 |  | 2015
Liquidity |  |  |  |  |  |
Cash and cash investments |  | $ | 1,041 |  |  | $ | 1,279 |
Short-term bank deposits |  | 182 |  |  | 255 |
Total Liquidity |  | $ | 1,223 |  |  | $ | 1,534 |

Historical information is available on our website.
6

MASCO CORPORATION
Segment Data - Unaudited
For the Three Months and Nine Months Ended September 30, 2016 and 2015
(dollars in millions)

| Three Months Ended September 30, |  |  |  | Nine Months Ended September 30, |  |
| 2016 |  | 2015 |  | Change |  | 2016 |  | 2015 |  | Change
Plumbing Products |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net sales | $ | 899 |  |  | $ | 853 |  |  | 5 | % |  | $ | 2,635 |  |  | $ | 2,495 |  |  | 6 | %
Operating profit, as reported | $ | 174 |  |  | $ | 137 |  |  |  |  |  | $ | 491 |  |  | $ | 386 |  |  |  |
Operating margin, as reported | 19.4 | % |  | 16.1 | % |  |  |  |  | 18.6 | % |  | 15.5 | % |  |  |
Rationalization charges | 5 |  |  | 1 |  |  |  |  |  | 11 |  |  | 2 |  |  |  |
Operating profit, as adjusted | 179 |  |  | 138 |  |  |  |  |  | 502 |  |  | 388 |  |  |  |
Operating margin, as adjusted | 19.9 | % |  | 16.2 | % |  |  |  |  | 19.1 | % |  | 15.6 | % |  |  |
Depreciation and amortization | 14 |  |  | 14 |  |  |  |  |  | 42 |  |  | 42 |  |  |  |
EBITDA, as adjusted | $ | 193 |  |  | $ | 152 |  |  |  |  |  | $ | 544 |  |  | $ | 430 |  |  |  |
Decorative Architectural Products |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net sales | $ | 536 |  |  | $ | 527 |  |  | 2 | % |  | $ | 1,649 |  |  | $ | 1,600 |  |  | 3 | %
Operating profit, as reported | $ | 111 |  |  | $ | 102 |  |  |  |  |  | $ | 355 |  |  | $ | 318 |  |  |  |
Operating margin, as reported | 20.7 | % |  | 19.4 | % |  |  |  |  | 21.5 | % |  | 19.9 | % |  |  |
Depreciation and amortization | 4 |  |  | 4 |  |  |  |  |  | 12 |  |  | 12 |  |  |  |
EBITDA | $ | 115 |  |  | $ | 106 |  |  |  |  |  | $ | 367 |  |  | $ | 330 |  |  |  |
Cabinetry Products |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net sales | $ | 239 |  |  | $ | 253 |  |  | (6 | )% |  | $ | 736 |  |  | $ | 771 |  |  | (5 | )%
Operating profit, as reported | $ | 19 |  |  | $ | 21 |  |  |  |  |  | $ | 77 |  |  | $ | 32 |  |  |  |
Operating margin, as reported | 7.9 | % |  | 8.3 | % |  |  |  |  | 10.5 | % |  | 4.2 | % |  |  |
Rationalization charges | 1 |  |  | 1 |  |  |  |  |  | 5 |  |  | 3 |  |  |  |
(Gain) on sale of property and equipment | — |  |  | (3 | ) |  |  |  |  | — |  |  | (3 | ) |  |  |
Operating profit, as adjusted | 20 |  |  | 19 |  |  |  |  |  | 82 |  |  | 32 |  |  |  |
Operating margin, as adjusted | 8.4 | % |  | 7.5 | % |  |  |  |  | 11.1 | % |  | 4.2 | % |  |  |
Depreciation and amortization | 5 |  |  | 5 |  |  |  |  |  | 15 |  |  | 18 |  |  |  |
EBITDA, as adjusted | $ | 25 |  |  | $ | 24 |  |  |  |  |  | $ | 97 |  |  | $ | 50 |  |  |  |

Historical information is available on our website.
7

MASCO CORPORATION
Segment Data - Unaudited
For the Three Months and Nine Months Ended September 30, 2016 and 2015
(dollars in millions)

| Three Months Ended September 30, |  |  |  | Nine Months Ended September 30, |  |
| 2016 |  | 2015 |  | Change |  | 2016 |  | 2015 |  | Change
Windows and Other Specialty Products |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net sales | $ | 203 |  |  | $ | 206 |  |  | (1 | )% |  | $ | 578 |  |  | $ | 561 |  |  | 3 | %
Operating (loss) profit, as reported | $ | (10 | ) |  | $ | 23 |  |  |  |  |  | $ | (9 | ) |  | $ | 50 |  |  |  |
Operating margin, as reported | (4.9 | )% |  | 11.2 | % |  |  |  |  | (1.6 | )% |  | 8.9 | % |  |  |
Depreciation and amortization | 6 |  |  | 5 |  |  |  |  |  | 16 |  |  | 13 |  |  |  |
EBITDA | $ | (4 | ) |  | $ | 28 |  |  |  |  |  | $ | 7 |  |  | $ | 63 |  |  |  |
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net sales | $ | 1,877 |  |  | $ | 1,839 |  |  | 2 | % |  | $ | 5,598 |  |  | $ | 5,427 |  |  | 3 | %
Operating profit, as reported - segment | $ | 294 |  |  | $ | 283 |  |  |  |  |  | $ | 914 |  |  | $ | 786 |  |  |  |
General corporate expense, net (GCE) | (25 | ) |  | (25 | ) |  |  |  |  | (76 | ) |  | (84 | ) |  |  |
Operating profit, as reported | 269 |  |  | 258 |  |  |  |  |  | 838 |  |  | 702 |  |  |  |
Operating margin, as reported | 14.3 | % |  | 14.0 | % |  |  |  |  | 15.0 | % |  | 12.9 | % |  |  |
Rationalization charges - segment | 6 |  |  | 2 |  |  |  |  |  | 16 |  |  | 5 |  |  |  |
Rationalization charges - GCE | — |  |  | — |  |  |  |  |  | — |  |  | 4 |  |  |  |
(Gain) on sale of property and equipment | — |  |  | (3 | ) |  |  |  |  | — |  |  | (3 | ) |  |  |
Operating profit, as adjusted | 275 |  |  | 257 |  |  |  |  |  | 854 |  |  | 708 |  |  |  |
Operating margin, as adjusted | 14.7 | % |  | 14.0 | % |  |  |  |  | 15.3 | % |  | 13.0 | % |  |  |
Depreciation and amortization - segment | 29 |  |  | 28 |  |  |  |  |  | 85 |  |  | 85 |  |  |  |
Depreciation and amortization - non-operating | 5 |  |  | 4 |  |  |  |  |  | 15 |  |  | 9 |  |  |  |
EBITDA, as adjusted | $ | 309 |  |  | $ | 289 |  |  |  |  |  | $ | 954 |  |  | $ | 802 |  |  |  |

Historical information is available on our website.
8

MASCO CORPORATION
North American and International Data - Unaudited
For the Three Months and Nine Months Ended September 30, 2016 and 2015
(dollars in millions)

| Three Months Ended September 30, |  |  |  | Nine Months Ended September 30, |  |
| 2016 |  | 2015 |  | Change |  | 2016 |  | 2015 |  | Change
North American |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net sales | $ | 1,497 |  |  | $ | 1,462 |  |  | 2 | % |  | $ | 4,445 |  |  | $ | 4,298 |  |  | 3 | %
Operating profit, as reported | $ | 235 |  |  | $ | 234 |  |  |  |  |  | $ | 749 |  |  | $ | 645 |  |  |  |
Operating margin, as reported | 15.7 | % |  | 16.0 | % |  |  |  |  | 16.9 | % |  | 15.0 | % |  |  |
Rationalization charges | 5 |  |  | 2 |  |  |  |  |  | 12 |  |  | 4 |  |  |  |
(Gain) on sale of property and equipment | — |  |  | (3 | ) |  |  |  |  | — |  |  | (3 | ) |  |  |
Operating profit, as adjusted | 240 |  |  | 233 |  |  |  |  |  | 761 |  |  | 646 |  |  |  |
Operating margin, as adjusted | 16.0 | % |  | 15.9 | % |  |  |  |  | 17.1 | % |  | 15.0 | % |  |  |
Depreciation and amortization | 20 |  |  | 19 |  |  |  |  |  | 58 |  |  | 58 |  |  |  |
EBITDA, as adjusted | $ | 260 |  |  | $ | 252 |  |  |  |  |  | $ | 819 |  |  | $ | 704 |  |  |  |
International |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net sales | $ | 380 |  |  | $ | 377 |  |  | 1 | % |  | $ | 1,153 |  |  | $ | 1,129 |  |  | 2 | %
Operating profit, as reported | $ | 59 |  |  | $ | 49 |  |  |  |  |  | $ | 165 |  |  | $ | 141 |  |  |  |
Operating margin, as reported | 15.5 | % |  | 13.0 | % |  |  |  |  | 14.3 | % |  | 12.5 | % |  |  |
Rationalization charges | 1 |  |  | — |  |  |  |  |  | 4 |  |  | 1 |  |  |  |
Operating profit, as adjusted | 60 |  |  | 49 |  |  |  |  |  | 169 |  |  | 142 |  |  |  |
Operating margin, as adjusted | 15.8 | % |  | 13.0 | % |  |  |  |  | 14.7 | % |  | 12.6 | % |  |  |
Depreciation and amortization | 9 |  |  | 9 |  |  |  |  |  | 27 |  |  | 27 |  |  |  |
EBITDA, as adjusted | $ | 69 |  |  | $ | 58 |  |  |  |  |  | $ | 196 |  |  | $ | 169 |  |  |  |
Total |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net sales | $ | 1,877 |  |  | $ | 1,839 |  |  | 2 | % |  | $ | 5,598 |  |  | $ | 5,427 |  |  | 3 | %
Operating profit, as reported - segment | $ | 294 |  |  | $ | 283 |  |  |  |  |  | $ | 914 |  |  | $ | 786 |  |  |  |
General corporate expense, net (GCE) | (25 | ) |  | (25 | ) |  |  |  |  | (76 | ) |  | (84 | ) |  |  |
Operating profit, as reported | 269 |  |  | 258 |  |  |  |  |  | 838 |  |  | 702 |  |  |  |
Operating margin, as reported | 14.3 | % |  | 14.0 | % |  |  |  |  | 15.0 | % |  | 12.9 | % |  |  |
Rationalization charges - segment | 6 |  |  | 2 |  |  |  |  |  | 16 |  |  | 5 |  |  |  |
Rationalization charges - GCE | — |  |  | — |  |  |  |  |  | — |  |  | 4 |  |  |  |
(Gain) on sale of property and equipment | — |  |  | (3 | ) |  |  |  |  | — |  |  | (3 | ) |  |  |
Operating profit, as adjusted | 275 |  |  | 257 |  |  |  |  |  | 854 |  |  | 708 |  |  |  |
Operating margin, as adjusted | 14.7 | % |  | 14.0 | % |  |  |  |  | 15.3 | % |  | 13.0 | % |  |  |
Depreciation and amortization - segment | 29 |  |  | 28 |  |  |  |  |  | 85 |  |  | 85 |  |  |  |
Depreciation and amortization - non-operating | 5 |  |  | 4 |  |  |  |  |  | 15 |  |  | 9 |  |  |  |
EBITDA, as adjusted | $ | 309 |  |  | $ | 289 |  |  |  |  |  | $ | 954 |  |  | $ | 802 |  |  |  |

Historical information is available on our website.
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