FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto, which are included in this report, as well as our audited consolidated financial statements for the year endedDecember 31, 2020 , which are included in our Annual Report on Form 10-K for the year endedDecember 31, 2020 . This discussion contains forward-looking statements that are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), regarding our business, operations or financial condition in addition to statements regarding our general business strategies, market potential, future financial performance, the potential of our brands and other matters, expected capital spending, expected pension contributions, the anticipated impact of supply chain, labor and transportation constraints, a volatile global supply chain environment as well as increased rates of inflation, unfavorable fluctuations in foreign exchange rates and the ongoing costs of tariffs, the anticipated impact of recently issued accounting standards on our financial statements, planned business strategies, anticipated market potential, future financial performance, impact of acquisitions and other matters including the expected or potential impact of the novel coronavirus ("COVID-19") pandemic. Statements preceded by, followed by or that otherwise include the words "believes," "expects," "anticipates," "intends," "projects," "estimates," "plans" and similar expressions or future or conditional verbs such as "will," "should," "would," "may" and "could" are generally forward-looking in nature and not historical facts. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is based on current expectations, estimates, assumptions and projections about our industry, business and future financial results, available at the time this report is filed with theSecurities and Exchange Commission . Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including but not limited to: (i) our reliance on the North American home improvement, repair and remodel and new home construction activity levels, and the North American and global economies generally, (ii) the competitive nature of consumer and trade brand businesses, (iii) our ability to develop new products or processes and improve existing products and processes, (iv) our reliance on key customers and suppliers, including wholesale distributors and dealers, (v) risks associated with our ability to improve organizational productivity and global supply chain efficiency and flexibility, (vi) risks associated with global commodity and energy availability and price volatility, as well as the possibility of sustained inflation, (vii) risks associated with doing business globally, including changes in trade-related tariffs and risks with uncertain trade environments, (viii) changes in government and industry regulatory standards, (ix) risks associated with the disruption of operations, (x) our inability to obtain raw materials and finished goods in a timely and cost-effective manner, (xi) impairments in the carrying value of goodwill or other acquired intangible assets, (xii) delays or outages in our information technology system or computer networks, (xiii) risk of increases in our defined benefit-related costs and funding requirements, (xiv) the uncertainties relating to the impact of COVID-19 on the Company's business, financial performance and operating results, (xv) risks associated with entering into potential strategic acquisitions and integrating acquired property, (xvi) future tax law changes or the interpretation of existing tax laws, (xvii) our ability to secure and protect our intellectual property rights, (xviii) our ability to attract and retain qualified personnel and other labor constraints, (xix) potential liabilities and costs from claims and litigation, and (xx) our ability to access the capital markets on terms acceptable to us. These and other factors are discussed in Part I, Item 1A "Risk Factors" of our Annual Report on Form 10-K for the year endedDecember 31, 2020 . We undertake no obligation to, and expressly disclaim any such obligation to, update or clarify any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, new information or changes to future results over time or otherwise, except as required by law. 21 --------------------------------------------------------------------------------
OVERVIEW
References to "Fortune Brands," "the Company," "we," "our" and "us" refer toFortune Brands Home & Security, Inc. and its consolidated subsidiaries as a whole, unless the context otherwise requires. The Company is a leading home and security products company with a portfolio of leading branded products used for residential home repair, remodeling, new construction and security applications. We believe that the Company has certain competitive advantages including market-leading brands, a diversified mix of channels, lean and flexible supply chains, a decentralized business model and a strong capital structure, as well as a tradition of strong innovation and customer service. We believe these long-held strengths will enable us to compete effectively and continue to focus on outperforming our markets in growth, profitability and returns in order to drive increased shareholder value. We believe the Company's track record reflects the long-term attractiveness and potential of the categories we serve and our leading brands.
We believe long-term our most attractive opportunities are to invest in profitable organic growth initiatives. We also believe that we have the potential to generate additional growth from leveraging our cash flow and balance sheet strength by pursuing accretive strategic acquisitions, non-controlling equity investments and joint ventures, and by returning cash to shareholders through a combination of dividends and share repurchases as explained in further detail under "Liquidity and Capital Resources" below.
The U.S. market for our products primarily consists of spending on both new home construction and repair and remodel activities within existing homes, with a substantial majority of the markets we serve consisting of repair and remodel spending. We believe the market for our home products in theU.S. will continue to grow due to demographics that support long-term sustainable housing growth as well as an underbuilt housing supply and an aged housing stock requiring repair and remodel investments. We believe that these market conditions will result in even more elongated demand for our products. Growth in the U.S. market for our products will largely depend on consumer confidence, employment, home prices, stable mortgage rates and credit availability. We have been and may continue to be impacted by near-term supply, labor and freight constraints, a volatile global supply chain environment, as well as increased rates of inflation, unfavorable fluctuations in foreign exchange rates and the ongoing costs of tariffs. We continue to manage these challenges and are diligently working to offset potential unfavorable impacts of these items through continuous productivity improvement initiatives and price increases. InJanuary 2021 , we obtained control of and began consolidatingFlo Technologies, Inc. ("Flo") in our Plumbing segment results. Flo is aU.S. manufacturer of comprehensive water monitoring and shut-off systems with leak detection technologies. During 2020, we applied the equity method of accounting to our investment in Flo as the minority shareholders had substantive participating rights which precluded consolidation. The fair value allocated to assets acquired and liabilities assumed as ofJanuary 1, 2021 was$87.8 million , net of cash acquired of$9.7 million . InDecember 2020 , we acquired 100% of the outstanding equity ofLarson Manufacturing , the North American market leading brand of storm, screen and security doors ("Larson"). Larson also sells related outdoor living products including retractable screens and porch windows. The Company completed the acquisition for a total purchase price, excluding expected tax benefits, of approximately$717.5 million , net of cash acquired. The results of operations are included in the Outdoors & Security segment. 22 --------------------------------------------------------------------------------
RESULTS OF OPERATIONS
Nine Months EndedSeptember 30, 2021 Compared To Nine Months EndedSeptember 30, 2020 Net Sales % Change vs. Prior (In millions) 2021 2020 Year Plumbing$ 2,057.6 $ 1,564.4 31.5 % Outdoors & Security 1,525.4 1,052.7 44.9 Cabinets 2,110.4 1,813.5 16.4 Net sales$ 5,693.4 $ 4,430.6 28.5 % Operating Income (Loss) % Change vs. Prior 2021 2020 Year Plumbing$ 483.3 $ 330.6 46.2 % Outdoors & Security 211.7 143.5 47.5 Cabinets 214.2 163.1 31.3 Less: Corporate expenses (79.3 ) (69.0 ) (14.9 ) Operating income$ 829.9 $ 568.2 46.1 % The following discussion of consolidated results of operations and segment results refers to the nine months endedSeptember 30, 2021 compared to the nine months endedSeptember 30, 2020 . Consolidated results of operations should be read in conjunction with segment results of operations.
Net sales
Net sales increased by$1,262.8 million , or 28.5%, due to higher sales volume including the favorable comparison to 2020 when our volumes were impacted by the COVID-19 pandemic, the benefit from the Larson acquisition ($316.0 million ), price increases to help mitigate the impact of cumulative commodity and transportation cost increases and favorable mix, as well as favorable foreign exchange of approximately$51 million . These benefits were partially offset by higher promotion and rebate costs.
Cost of products sold
Cost of products sold increased by$763.3 million , or 26.6%, due to higher net sales, the impact of the Larson acquisition including higher amortization of the acquisition related inventory fair value adjustment ($3.4 million in 2021), commodity cost inflation, product mix, labor inflation, and higher tariffs, partially offset by the benefit from manufacturing productivity improvements.
Selling, general and administrative expenses
Selling, general and administrative expenses increased by
Amortization of intangible assets
Amortization of intangible assets increased by
Asset impairment charges
Asset impairment charges of
Restructuring charges
Restructuring charges of$11.5 million in the nine months endedSeptember 30, 2021 largely related to severance costs associated with the relocation of manufacturing facilities within our Outdoors & Security and Cabinets segments. Restructuring charges of$16.5 million in the nine months endedSeptember 30, 2020 largely related to headcount actions associated with COVID-19-related reductions in demand across all segments and costs associated with changes in our manufacturing process within our Plumbing segment. 23
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RESULTS OF OPERATIONS (Continued)
Operating income
Operating income increased by$261.7 million , or 46.1%, primarily due to higher net sales, the benefit from the Larson acquisition, manufacturing productivity improvements and the absence of the 2020 asset impairment charges, as well as favorable foreign exchange of approximately$16 million . These benefits were partially offset by higher employee-related, commodity, transportation, and advertising costs, higher amortization of intangible assets, higher promotion and rebate costs and higher tariffs.
Interest expense
Interest expense decreased
Other expense (income), net
Other expense, net, of$0.7 million in the nine months endedSeptember 30, 2021 , included foreign currency adjustments, net of hedges, and a non-cash loss of$4.5 million related to the remeasurement of our investment in Flo immediately prior to consolidation, partially offset by defined benefit plan and interest income. Other income, net was$13.4 million in the nine months endedSeptember 30, 2020 , primarily due to gains of$11.0 million related to ourJanuary 2020 investment in Flo. Income taxes The effective income tax rates for the nine months endedSeptember 30, 2021 and 2020 were 22.0% and 23.5%, respectively. The effective income tax rate in 2021 was favorably impacted by a benefit related to decreases in uncertain tax positions and a benefit related to share-based compensation.
Net income attributable to Fortune Brands
Net income attributable to Fortune Brands was$597.1 million in the nine months endedSeptember 30, 2021 compared to$389.5 million in the nine months endedSeptember 30, 2020 . The increase was primarily due to higher operating income, lower equity in losses of affiliate and lower interest expense, partly offset by higher income tax expenses and higher other expense.
Results By Segment
Plumbing
Net sales increased by$493.2 million , or 31.5%, due to higher sales volume across all brands and markets, including showroom customers whose locations were negatively impacted in 2020 by the COVID-19 pandemic, and price increases to help mitigate the impact of cumulative commodity and transportation cost increases, as well as favorable foreign exchange of approximately$46 million . These benefits were partially offset by higher sales rebate costs. Operating income increased by$152.7 million , or 46.2%, due to higher net sales, the absence of the 2020 asset impairment charge ($13.0 million ), the benefit from manufacturing productivity improvements and favorable mix, as well as favorable foreign exchange of approximately$17 million . These benefits were partially offset by the impact of higher employee-related, advertising, freight, tariffs, commodity and rebate costs.
Outdoors & Security
Net sales increased by$472.7 million , or 44.9%, due to the benefit from the Larson acquisition ($316.0 million ), higher sales volume including the favorable comparison to 2020 when our volumes were impacted by the COVID-19 pandemic, price increases to help mitigate the impact of cumulative commodity and transportation cost increases, favorable product mix and lower rebates due to timing of sales in 2021 versus prior year period, as well as favorable foreign exchange of approximately$1 million . Operating income increased by$68.2 million , or 47.5%, due to higher net sales, the benefit from the Larson acquisition and manufacturing productivity improvements. These benefits were partially offset by commodity cost inflation, higher freight and employee-related costs and higher restructuring charges, as well as unfavorable foreign exchange of approximately$1 million .
Cabinets
Net sales increased by$296.9 million , or 16.4%, due to higher sales volume in both our make-to-order and stock products, including the favorable comparison to 2020 when our volumes were impacted by the COVID-19 pandemic, favorable mix and price increases to help mitigate the impact of cumulative commodity and transportation cost increases, as well as favorable foreign exchange of approximately$4 million . 24
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RESULTS OF OPERATIONS (Continued)
Operating income increased by$51.1 million , or 31.3%, due to higher net sales, the benefit from manufacturing productivity improvements, the absence of the 2020 asset impairment charge ($9.5 million ) and lower tariff, advertising and restructuring costs. These factors were partly offset by higher freight costs, commodity cost inflation and higher employee-related costs.
Corporate
Corporate expenses increased by
Three Months EndedSeptember 30, 2021 Compared To Three Months EndedSeptember 30, 2020 Net Sales % Change vs. Prior (In millions) 2021 2020 Year Plumbing$ 741.4 $ 590.6 25.5 % Outdoors & Security 528.4 406.7 29.9 Cabinets 716.5 654.8 9.4 Net sales$ 1,986.3 $ 1,652.1 20.2 % Operating Income (Loss) % Change vs. Prior 2021 2020 Year Plumbing$ 166.5 $ 116.6 42.8 % Outdoors & Security 80.4 66.8 20.4 Cabinets 67.2 82.1 (18.1 ) Less: Corporate expenses (27.5 ) (25.3 ) (8.7 ) Operating income$ 286.6 $ 240.2 19.3 %
The following discussion of consolidated results of operations and segment
results refers to the three months ended
Net sales
Net sales increased by$334.2 million , or 20.2%, due to higher sales volume, the benefit from the Larson acquisition ($99.1 million ), price increases to help mitigate the impact of cumulative commodity and transportation cost increases, lower promotion and rebate costs due to the timing of sales in 2021 versus prior year period, as well as favorable foreign exchange of approximately$16 million .
Cost of products sold
Cost of products sold increased by$208.5 million , or 19.5%, due to the impact of the Larson acquisition, higher net sales, commodity cost inflation, higher employee-related costs and higher tariffs, partially offset by favorable mix.
Selling, general and administrative expenses
Selling, general and administrative expenses increased by
Amortization of intangible assets
Amortization of intangible assets increased by$5.4 million primarily due to the Larson acquisition in our Outdoors & Security segment and the 2021 consolidation of Flo in our Plumbing segment.
Restructuring charges
Restructuring charges of$3.6 million in the three months endedSeptember 30, 2021 largely related to severance costs associated with headcount actions within our Outdoors & Security and Cabinets segments. Restructuring charges of$1.6 million in the three months endedSeptember 30, 2020 largely related to headcount actions associated with COVID-19-related reductions in demand across all segments and other costs associated with changes in our manufacturing process within our Plumbing segment, partially offset by a credit related to severance costs and the cancellation of a previously approved restructuring action in our Cabinets segment. 25 --------------------------------------------------------------------------------
RESULTS OF OPERATIONS (Continued)
Operating income
Operating income increased by$46.4 million , or 19.3%, primarily due to higher net sales, the benefit from the Larson acquisition, manufacturing productivity improvements and favorable mix, as well as favorable foreign exchange of approximately$5 million . These benefits were partially offset by higher commodity, transportation, employee-related and advertising costs, higher amortization of intangible assets and higher tariff costs.
Interest expense
Interest expense increased by
Other income, net
Other income, net was$1.3 million in the three months endedSeptember 30, 2021 , compared to$2.1 million in the three months endedSeptember 30, 2020 . The decrease in other income, net is primarily due unfavorable foreign currency adjustments, net of hedges, partially offset by higher defined benefit income in the quarter ($1.4 million increase).
Income taxes
The effective income tax rates for the three months ended
Net income attributable to Fortune Brands
Net income attributable to Fortune Brands was$202.1 million in the three months endedSeptember 30, 2021 compared to$164.6 million in the three months endedSeptember 30, 2020 . The increase was primarily due to higher operating income and lower equity in losses of affiliate, partly offset by higher income tax expenses, lower other income and higher interest expense.
Results By Segment
Plumbing
Net sales increased by$150.8 million , or 25.5%, due to higher sales volume across all brands and markets, price increases to help mitigate the impact of cumulative commodity and transportation cost increases and lower sales rebate costs due to timing of sales in 2021 versus prior year period, as well as favorable foreign exchange of approximately$15 million . Operating income increased by$49.9 million , or 42.8%, due to higher net sales, favorable mix, lower restructuring costs and the benefit from manufacturing productivity improvements, as well as favorable foreign exchange of approximately$6 million . These benefits were partially offset by the impact of higher employee-related costs, commodity cost inflation, advertising costs, tariffs, and freight costs.
Outdoors & Security
Net sales increased by$121.7 million , or 29.9%, due to the benefit from the Larson acquisition ($99.1 million ) and price increases to help mitigate the impact of cumulative commodity and transportation cost increases. These benefits were partially offset by unfavorable product mix due to material availability. Operating income increased by$13.6 million , or 20.4%, due to higher net sales, the benefit from the Larson acquisition and lower employee-related costs. These benefits were partially offset by commodity cost inflation and higher freight and restructuring costs, as well as unfavorable foreign exchange of approximately$1 million .
Cabinets
Net sales increased by$61.7 million , or 9.4%, due to price increases to help mitigate the impact of cumulative commodity and transportation cost increases, higher sales volume in both our make-to-order and stock products and favorable mix, as well as favorable foreign exchange of approximately$2 million . Operating income decreased by$14.9 million , or 18.1%, due to higher freight costs, commodity cost inflation and higher restructuring costs. These factors were partly offset by higher net sales, the benefit from manufacturing productivity improvements and lower tariff costs.
Corporate
Corporate expenses increased by
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LIQUIDITY AND CAPITAL RESOURCES
Our principal sources of liquidity are cash on hand, cash flows from operating activities, cash borrowed under our credit facilities and cash from debt issuances in the capital markets. Our operating income is generated by our subsidiaries. We believe our operating cash flows, including funds available under our credit facilities and access to capital markets, provide sufficient liquidity to support the Company's liquidity and financing needs, which are to support working capital requirements, fund capital expenditures and service indebtedness, as well as to finance acquisitions, repurchase shares of our common stock and pay dividends to stockholders, as the Board of Directors deems appropriate. Our cash flows from operations, borrowing availability and overall liquidity are subject to certain risks and uncertainties, including those described in the section of our Annual Report on Form 10-K for the year-endedDecember 31, 2020 entitled "Item 1A. Risk Factors." In addition, we cannot predict whether or when we may enter into acquisitions, joint ventures or dispositions, pay dividends, or what impact any such transactions could have on our results of operations, cash flows or financial condition, whether as a result of the issuance of debt or equity securities, or otherwise.
Long-Term Debt
AtSeptember 30, 2021 , the Company had aggregate outstanding notes in the amount of$1.8 billion , with varying maturities (the "Notes"). The Notes are unsecured senior obligations of the Company. The following table provides a summary of the Company's outstanding Notes, including the net carrying value of the Notes, net of underwriting commissions, price discounts and debt issuance costs as ofSeptember 30, 2021 andDecember 31, 2020 : Net Carrying Value Principal Issuance Date Maturity Date September December 31, (in millions) Amount 30, 2021 2020 4.000% Senior Notes$ 500.0 June 2015 June 2025$ 497.2 $ 496.6 4.000% Senior Notes (the "2018 Notes") 600.0 September 2018 September 2023 597.9 597.1 3.250% Senior Notes (the "2019 Notes") 700.0 September 2019 September 2029 694.0 693.5 Total Senior Notes$ 1,800.0 $ 1,789.1 $ 1,787.2 Credit Facilities InApril 2020 , the Company entered into a 364-day, supplemental$400 million revolving credit facility (the "2020 Revolving Credit Agreement"). This supplemental facility was never utilized by the Company prior to its expiration inApril 2021 . InSeptember 2019 , the Company entered into a second amended and restated$1.25 billion revolving credit facility (the "2019 Revolving Credit Agreement"), and borrowings thereunder will be used for general corporate purposes. The terms and conditions of the 2019 Revolving Credit Agreement, including the total commitment amount, essentially remained the same as under the previous credit agreement, except that the maturity date was extended toSeptember 2024 . Interest rates under the 2019 Revolving Credit Agreement are variable based on LIBOR at the time of the borrowing and the Company's long-term credit rating and can range from LIBOR + 0.91% to LIBOR + 1.4%. OnSeptember 30, 2021 andDecember 31, 2020 our outstanding borrowings under this facility were$840.0 million and$785.0 million , respectively. This facility is included in long-term debt in the condensed consolidated balance sheets. As ofSeptember 30, 2021 , we were in compliance with all covenants under this facility.
Cash and Seasonality
OnSeptember 30, 2021 , we had cash and cash equivalents of$460.7 million , of which$404.1 million was held at non-U.S. subsidiaries. We manage our global cash requirements considering (i) available funds among the subsidiaries through which we conduct business, (ii) the geographic location of our liquidity needs, and (iii) the cost to access international cash balances. The repatriation of non-U.S. cash balances from certain subsidiaries could have adverse tax consequences as we may be required to pay and record tax expense on those funds that are repatriated. Our operating cash flows are significantly impacted by the seasonality of our business. We typically generate most of our operating cash flow in the third and fourth quarters of each year. We use operating cash in the first quarter of the year. We believe that our current cash position, cash flow generated from operations, and amounts available under our revolving credit facility should be sufficient for our operating requirements and enable us to fund our capital expenditures, dividend payments, and any required long-term debt payments. In addition, we believe that we have the ability to obtain alternative sources of financing if required. 27
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Share Repurchases and Dividends
In the first nine months of 2021, we repurchased 2.9 million shares of our outstanding common stock under the Company's 2020 share repurchase program for$270.1 million . OnJuly 23, 2021 , our Board of Directors authorized the repurchase of up to an additional$400 million of shares of our common stock over the two years endingJuly 23, 2023 . As ofSeptember 30, 2021 , the Company's total remaining share repurchase authorization under its 2020 and 2021 share repurchase programs was approximately$592.4 million . The share repurchase programs do not obligate the Company to repurchase any specific dollar amount or number of shares and may be suspended or discontinued at any time. In the first nine months of 2021, we paid dividends in the amount of$107.9 million to the Company's shareholders. Our Board of Directors will continue to evaluate dividend payment opportunities on a quarterly basis. There can be no assurance as to when and if future dividends will be paid, and at what level, because the payment of dividends is dependent on our financial condition, results of operations, cash flows, capital requirements and other factors deemed relevant by our Board of Directors. There are no restrictions on the ability of our subsidiaries to pay dividends or make other distributions to Fortune Brands.
Acquisitions
We periodically review our portfolio of brands and evaluate potential strategic transactions and other capital initiatives to increase shareholder value.
InJanuary 2021 , we obtained control of and began consolidating Flo in our Plumbing segment results. Flo is aU.S. manufacturer of comprehensive water monitoring and shut-off systems with leak detection technologies. During 2020, we applied the equity method of accounting to our investment in Flo as the minority shareholders had substantive participating rights which precluded consolidation. The fair value allocated to assets acquired and liabilities assumed as ofJanuary 1, 2021 was$87.8 million , net of cash acquired of$9.7 million . InDecember 2020 , we acquired 100% of the outstanding equity interests of Larson, the North American market leading brand of storm, screen and security doors. Larson also sells related outdoor living products including retractable screens and porch windows. The Company completed the acquisition for a total purchase price, excluding expected tax benefits, of approximately$717.5 million , net of cash acquired. The results of operations are included in the Outdoors & Security segment. Cash Flows Below is a summary of cash flows for the nine months endedSeptember 30, 2021 and 2020. Nine Months Ended (In millions)September 30, 2021 2020
Net cash provided by operating activities
(106.1 ) (124.1 ) Net cash used in financing activities (285.1 ) (308.8 )
Effect of foreign exchange rate changes on cash 1.0 1.9
Net increase in cash and cash equivalents
Net cash provided by operating activities was$430.8 million in the nine months endedSeptember 30, 2021 , compared to net cash provided by operating activities of$506.8 million in the nine months endedSeptember 30, 2020 . The decrease in cash provided of$76.0 million was primarily due to higher increases in accounts receivable associated with our sales growth, and our planned increase in inventory to mitigate the impact of an uncertain and volatile global supply chain environment. These factors were partially offset by higher accounts payable and higher net income. Net cash used in investing activities was$106.1 million in the nine months endedSeptember 30, 2021 , compared to net cash used in investing activities of$124.1 million in the nine months endedSeptember 30, 2020 . The decrease in cash used of$18.0 million in 2021 was primarily due to the acquisition of additional shares of Flo in January andApril 2020 ($59.4 million ) and the cash acquired during the consolidation of Flo inJanuary 2021 , partially offset by higher capital expenditures. Net cash used in financing activities was$285.1 million in the nine months endedSeptember 30, 2021 , compared to cash used in financing activities of$308.8 million in the nine months endedSeptember 30, 2020 . The decrease in cash used of$23.7 million was primarily due to higher net borrowings in 2021 compared to 2020 ($155.0 million increase), partially offset by higher share repurchases in 2021 compared to 2020 ($102.9 million increase), and$23.4 decrease in the proceeds from the exercise of stock options and higher dividends to shareholders ($8.0 million increase). 28
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Pension Plans Subsidiaries of Fortune Brands sponsor their respective defined benefit pension plans that are funded by a portfolio of investments maintained within our benefit plan trust. As ofDecember 31, 2020 , the fair value of our total pension plan assets was$784.9 million , representing 84% of the accumulated benefit obligation liability. During the nine months endedSeptember 30, 2021 , we made pension contributions of approximately$21 million . For the foreseeable future, we believe that we have sufficient liquidity to meet the minimum funding that may be required by the Pension Protection Act of 2006.
Foreign Exchange
We have operations in various foreign countries, principally
RECENTLY ISSUED ACCOUNTING STANDARDS
The adoption of recent accounting standards, as discussed in Note 2, "Recently Issued Accounting Standards," to our Consolidated Financial Statements, has not had and is not expected to have a significant impact on our revenue, earnings or liquidity.
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