What changed in this filing

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Item 1. Financial Statements

2024-10-22 compared with 2024-07-23 · 126 added, 68 removed, 348 unchanged (36% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data) June 30, 2024 December 31, 2023

(in thousands, except share and per share data) September 30, 2024 December 31, 2023

Current assets:

43 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands, except per share data) 2024 2023 2024 2023

21 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands) 2024 2023 2024 2023

3 unchanged sentences

Cash flow hedge, net of income taxes in 2023 — $ 0 and $ 951 respectively

— 2,572 — 2,572

Pension and postretirement benefit adjustments, net of income taxes in 2024 — $ 1,062 and $ 3,188 ;

6 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

(in thousands, except share and per share data) Common Stock Shares Common Stock Amount Additional Paid-In Capital Accumulated Other Comprehensive Loss Retained Earnings Total Parent Equity Non-controlling Interests in Subsidiaries Total Equity

April 1, 2024 139,335,342 $ 139,335 $ 179,349 $ ( 1,053,904 ) $ 5,137,597 $ 4,402,377 $ 14,799 $ 4,417,176

July 1, 2024 139,346,018 $ 139,346 $ 180,527 $ ( 1,035,739 ) $ 5,256,514 $ 4,540,648 $ 15,475 $ 4,556,123

Net income — — — — 226,582 226,582 — 226,582

6 unchanged sentences

Noncontrolling interest activities — — — — — — ( 1,793 ) ( 1,793 )

June 30, 2024 139,346,018 $ 139,346 $ 180,527 $ ( 1,035,739 ) $ 5,256,514 $ 4,540,648 $ 15,475 $ 4,556,123

Six Months Ended June 30, 2024

September 30, 2024 139,078,065 $ 139,078 $ 193,491 $ ( 942,852 ) $ 5,306,755 $ 4,696,472 $ 13,682 $ 4,710,154

Nine Months Ended September 30, 2024

1 unchanged sentence

Net income — — — — 771,020 771,020 — 771,020

Other comprehensive loss, net of tax — — — ( 58,867 ) — ( 58,867 ) — ( 58,867 )

Other comprehensive income, net of tax — — — 34,020 — 34,020 — 34,020

Cash dividend declared, $ 3.00 per share

4 unchanged sentences

Noncontrolling interest activities — — — — — — ( 2,256 ) ( 2,256 )

June 30, 2024 139,346,018 $ 139,346 $ 180,527 $ ( 1,035,739 ) $ 5,256,514 $ 4,540,648 $ 15,475 $ 4,556,123

Three Months Ended June 30, 2023

September 30, 2024 139,078,065 $ 139,078 $ 193,491 $ ( 942,852 ) $ 5,306,755 $ 4,696,472 $ 13,682 $ 4,710,154

Three Months Ended September 30, 2023

April 1, 2023 140,545,475 $ 140,545 $ 147,690 $ ( 1,006,801 ) $ 4,644,770 $ 3,926,204 $ 13,432 $ 3,939,636

July 1, 2023 140,467,550 $ 140,468 $ 153,748 $ ( 1,011,857 ) $ 4,788,852 $ 4,071,211 $ 14,583 $ 4,085,794

Net income — — — — 351,198 351,198 — 351,198

6 unchanged sentences

Noncontrolling interest activities — — — — — — 579 579

June 30, 2023 140,467,550 $ 140,468 $ 153,748 $ ( 1,011,857 ) $ 4,788,852 $ 4,071,211 $ 14,583 $ 4,085,794

Six Months Ended June 30, 2023

September 30, 2023 140,234,786 $ 140,235 $ 163,602 $ ( 1,087,262 ) $ 4,969,538 $ 4,186,113 $ 15,162 $ 4,201,275

Nine Months Ended September 30, 2023

1 unchanged sentence

Net income — — — — 999,649 999,649 — 999,649

Other comprehensive income, net of tax — — — 20,685 — 20,685 — 20,685

Other comprehensive loss, net of tax — — — ( 54,720 ) — ( 54,720 ) — ( 54,720 )

Cash dividend declared, $ 2.85 per share

4 unchanged sentences

Noncontrolling interest activities — — — — — — 1,078 1,078

June 30, 2023 140,467,550 $ 140,468 $ 153,748 $ ( 1,011,857 ) $ 4,788,852 $ 4,071,211 $ 14,583 $ 4,085,794

September 30, 2023 140,234,786 $ 140,235 $ 163,602 $ ( 1,087,262 ) $ 4,969,538 $ 4,186,113 $ 15,162 $ 4,201,275

See accompanying Notes to Condensed Consolidated Financial Statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands) 2024 2023

10 unchanged sentences

Proceeds from sale of property, plant and equipment 74,215 7,339

Acquisitions of businesses ( 954,207 ) ( 218,177 )

Proceeds from divestitures of businesses 3,401 —

Proceeds from sale of investments — 80,482

Acquisitions and other investing activities ( 580,141 ) ( 106,028 )

Other investing activities 16,989 6,785

Net cash used in investing activities ( 1,245,192 ) ( 473,429 )

6 unchanged sentences

Other financing activities ( 8,018 ) ( 8,826 )

Net cash used in financing activities ( 382,326 ) ( 357,750 )

Net cash provided by (used in) financing activities 124,828 ( 599,019 )

Effect of exchange rate changes on cash and cash equivalents 250 ( 8,824 )

Net decrease in cash and cash equivalents ( 546,730 ) ( 123,358 )

Net (decrease) increase in cash and cash equivalents ( 23,889 ) 1,174

Cash and cash equivalents at beginning of period 1,102,007 653,463

14 unchanged sentences

These adjustments are of a normal recurring nature.

The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of results for the year ended December 31, 2024.

The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of results for the year ended December 31, 2024.

We have evaluated subsequent events through the date the unaudited Condensed Consolidated Financial Statements covered by this quarterly report were issued.

8 unchanged sentences

This standard requires disclosures of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within each reported measure of segment profit or loss, an amount and description of other segment items by reportable segment, and all annual disclosures currently required by Topic 280 to be included in interim periods.

This standard also requires disclosure of the title and position of the CODM.

The guidance is effective for our Annual Report on Form 10-K for the year ended December 31, 2024, and subsequent interim periods, with early adoption permitted.

10 unchanged sentences

The following table provides a detail of prepaid expenses and other current assets reported within the Condensed Consolidated Balance Sheets as of:

(in thousands) June 30, 2024 December 31, 2023

(in thousands) September 30, 2024 December 31, 2023

Prepaid expenses $ 145,377 $ 110,863

9 unchanged sentences

The following table summarizes the classification and carrying amounts of the derivative instruments and the foreign currency denominated debt, a non-derivative financial instrument, that are designated and qualify as part of hedging relationships (in thousands):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Instrument Balance Sheet Location Notional Balance Notional Balance

1 unchanged sentence

Forward contracts Prepaid expenses and other current assets $ 481,140 $ 23,809 $ 606,950 $ 37,676

Forward contract Other current liabilities $ 106,800 $ 487 $ 106,800 $ 4,383

Forward contracts Other current liabilities $ 1,020,460 $ 24,928 $ 106,800 $ 4,383

Foreign currency debt Long-term debt € 700,000 $ 781,480 € 700,000 $ 772,660

2 unchanged sentences

(in thousands) 2024 2023 2024 2023

Three Months Ended June 30,

Three Months Ended September 30,

Net investment hedges:

4 unchanged sentences

(in thousands) 2024 2023 2024 2023

Six Months Ended June 30,

Nine Months Ended September 30,

Net investment hedges:

3 unchanged sentences

Fair Value of Financial Instruments

As of June 30, 2024, the fair value of our senior unsecured notes was approximately $ 3.6 billion, which are designated as Level 2 in the fair value hierarchy.

As of September 30, 2024, the fair value of our senior unsecured notes was approximately $ 4.5 billion, which are designated as Level 2 in the fair value hierarchy.

Our valuation technique is based primarily on prices and other relevant information generated by observable transactions involving identical or comparable assets or liabilities.

1 unchanged sentence

While such borrowings of the independents and affiliates are outstanding, we are required to maintain compliance with certain covenants.

As of June 30, 2024, we were in compliance with all such covenants.

As of June 30, 2024, the total borrowings of the independents and affiliates subject to guarantee by us were approximately $ 757 million.

As of September 30, 2024, we were in compliance with all such covenants.

As of September 30, 2024, the total borrowings of the independents and affiliates subject to guarantee by us were approximately $ 626 million.

This number decreased from $ 954 million as of December 31, 2023 due to acquisitions of our independent stores, including Motor Parts and Equipment Corporation ("MPEC") in April 2024 and Walker Automotive Supply, Inc.

("Walker") in July 2024.

These loans generally mature over periods from one to six years .

3 unchanged sentences

To date, we have not had significant losses in connection with guarantees of independents’ and affiliates’ borrowings and the current expected credit loss reserve is not material.

As of June 30, 2024, there are no material guaranteed loans for which the borrower is experiencing financial difficulty and recovery is expected to be provided substantially through the operation or sale of the collateral.

As of June 30, 2024, we have recognized $ 52 million of certain assets and liabilities for the guarantees related to the independents’ and affiliates’ borrowings.

As of September 30, 2024, there are no material guaranteed loans for which the borrower is experiencing financial difficulty and recovery is expected to be provided substantially through the operation or sale of the collateral.

As of September 30, 2024, we have recognized $ 45 million of certain assets and liabilities for the guarantees related to the independents’ and affiliates’ borrowings.

These assets and liabilities are included in other assets and other long-term liabilities in the Condensed Consolidated Balance Sheets.

12 unchanged sentences

All activity related to amounts due to suppliers that elected to participate in the SCF program is reflected in cash flows from operating activities in our Condensed Consolidated Statement of Cash Flows.

As of June 30, 2024 and December 31, 2023, the outstanding payment obligations to the financial institutions are $ 3.1 billion and $ 3.0 billion, respectively.

(in thousands) June 30, 2024

As of September 30, 2024 and December 31, 2023, the outstanding payment obligations to the financial institutions are $ 3.3 billion and $ 3.0 billion, respectively.

(in thousands) September 30, 2024

Obligations outstanding at the beginning of the year $ 3,054,586

4 unchanged sentences

We calculate basic earnings per share by dividing net income by the weighted average number of common shares outstanding.

Certain outstanding options are not included in the diluted earnings per share calculation

because their inclusion would have been anti-dilutive.

Certain outstanding options are not included in the diluted earnings per share calculation because their inclusion would have been anti-dilutive.

Antidilutive common stock equivalents excluded from the diluted earnings per share calculation are not material.

The following table summarizes basic and diluted shares outstanding:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands, except per share data) 2024 2023 2024 2023

7 unchanged sentences

The following table presents a summary of our reportable segment financial information:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands) 2024 2023 2024 2023

5 unchanged sentences

Industrial 258,753 282,807 806,433 828,166

Total segment profit 590,816 612,719 1,134,591 1,139,126

Interest expense, net ( 27,818 ) ( 15,827 ) ( 67,429 ) ( 49,146 )

3 unchanged sentences

Income before income taxes $ 297,593 $ 465,060 $ 1,008,975 $ 1,323,555

(1) Amount reflects costs related to headquarter's broad based support to our business units and other costs that are managed centrally and not allocated to business segments.

These include personnel and other costs for company-wide functions such as executive leadership, human resources, technology,

cybersecurity, legal, corporate finance, internal audit, and risk management, as well as product liability costs and A/R Sales Agreement fees.

(2) The following table presents a summary of the other unallocated costs:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands) 2024 2023 2024 2023

3 unchanged sentences

Total other unallocated costs $ ( 45,296 ) $ — $ ( 190,363 ) $ —

(2) Amount reflects costs related to the global restructuring initiative which includes a voluntary retirement offer in the U.S., inventory liquidation costs, and rationalization and optimization of certain distribution centers, stores and other facilities.

(3) Amount primarily reflects integration costs related to the completion of the acquisition of Motor Parts and Equipment Corporation ("MPEC") in April 2024, including professional services costs, personnel costs, and lease and other exit costs.

(2) Amount reflects costs related to our global restructuring initiative which includes a voluntary retirement offer in the U.S., inventory liquidation costs, and rationalization and optimization of certain distribution centers, stores and other facilities.

Refer to the Restructuring Footnote in the Notes to Condensed Consolidated Financial Statements for more information.

(3) Amount primarily reflects ongoing acquisition and integration costs related to the acquisitions of MPEC in April 2024 and Walker in July 2024, including professional services costs, personnel costs, and lease and other exit costs.

Refer to the Acquisitions Footnote in the Notes to Condensed Consolidated Financial Statements for more information.

Net sales are disaggregated by geographical region for each of our reportable segments, as we deem this presentation best depicts how the nature, amount, timing and uncertainty of net sales and cash flows are affected by economic factors.

The following table presents disaggregated geographical net sales from contracts with customers by reportable segment:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands) 2024 2023 2024 2023

13 unchanged sentences

We continue to be involved with the receivables transferred by the SPE to the unaffiliated financial institutions by providing collection services.

As cash is collected on sold receivables, the SPE continuously transfers ownership and control of new qualifying receivables to the unaffiliated financial institutions so that the total principal amount outstanding of receivables sold is approximately $ 1.0 billion at any point in time (which is the maximum amount allowed under the agreement as amended on January 3, 2022).

The total principal amount outstanding of receivables sold is approximately $ 1.0 billion as of both June 30, 2024 and December 31, 2023.

The amount of receivables pledged as collateral as of June 30, 2024 and December 31, 2023 is approximately $ 1.5 billion and $ 1.2 billion, respectively.

The total principal amount outstanding of receivables sold is approximately $ 1.0 billion as of both September 30, 2024 and December 31, 2023.

The amount of receivables pledged as collateral as of September 30, 2024 and December 31, 2023 is approximately $ 1.4 billion and $ 1.2 billion, respectively.

The following table summarizes the activity and amounts outstanding under the A/R Sales Agreement as of:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands) 2024 2023 2024 2023

3 unchanged sentences

The SPE incurs fees due to the unaffiliated financial institutions related to the accounts receivable sales transactions.

Those fees, which totaled $ 31 million and $ 29 million for the six months ended June 30, 2024 and 2023, respectively, are recorded within other non-operating (income) expense in the Condensed Consolidated Statements of Income.

Those fees, which totaled $ 47 million and $ 44 million for the nine months ended September 30, 2024 and 2023, respectively, are recorded within other non-operating (income) expense in the Condensed Consolidated Statements of Income.

The SPE has a recourse obligation to repurchase from the unaffiliated financial institutions any previously sold receivables that are not collected due to the occurrence of certain events, including credit quality deterioration and customer sales returns.

The reserve recognized for this recourse obligation as of June 30, 2024 and December 31, 2023 is not material.

The reserve recognized for this recourse obligation as of September 30, 2024 and December 31, 2023 is not material.

The servicing liability related to our collection services also is not material, given the high quality of the customers underlying the receivables and the anticipated short collection period.

On October 30, 2020, we entered into a $ 1.5 billion Syndicated Facility Agreement (as amended, the "Unsecured Revolving Credit Facility").

The Unsecured Revolving Credit Facility is scheduled to mature on September 30, 2026.

We had no outstanding borrowings under the Unsecured Revolving Credit Facility as of September 30, 2024 or December 31, 2023.

Due to the workers’ compensation and insurance reserve requirements in certain states, we also had unused letters of credit of approximately $ 71 million outstanding as of September 30, 2024.

On November 29, 2023, we established a commercial paper program that allows us to issue unsecured commercial paper notes up to $ 1.5 billion outstanding.

The maturities of the commercial paper notes may not exceed 364 days from the date of issuance.

The Unsecured Revolving Credit Facility is used as a liquidity backstop for the repayment of commercial paper outstanding under the program.

We had no borrowings outstanding under our commercial paper program as of September 30, 2024 or December 31, 2023.

In the Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2024, we have presented commercial paper activity with original maturities of three-months or less on a net basis given their short-term nature.

In the Statements of Cash Flows for the six months ended June 30, 2024, such amounts were presented on a gross basis in “Proceeds from debt” and “Payments on debt” line items.

This change in presentation does not impact previously reported net cash used in financing activities.

We had no net commercial paper activity for the nine months ended September 30, 2024 and no activity in the prior year period.

On August 7, 2024, we issued $ 750 million of unsecured 4.95 % Senior Notes due 2029.

Interest is payable on February 15 and August 15 of each year, beginning February 15, 2025.

We intend to utilize the proceeds of this offering to repay the Series J Private Placement Notes and have utilized a portion of the proceeds to repay indebtedness under our commercial paper program that was outstanding as of June 30, 2024.

Any remaining amounts will be utilized for general corporate purposes.

The weighted average interest rate on our outstanding borrowings was approximately 3.49 % as of September 30, 2024.

Certain borrowings require us to comply with a financial covenant with respect to a maximum debt to EBITDA ratio.

We were in compliance with all such covenants as of September 30, 2024.

See Note 6 to the consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 for further information regarding the Company's indebtedness.

Employee Benefit Plans

Net periodic benefit income from our pension plans included the following components for our pension benefits:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands) 2024 2023 2024 2023

7 unchanged sentences

Pension benefits also include amounts related to supplemental retirement plans.

We acquired several businesses for approximately $ 651 million, which includes certain non-cash consideration, and $ 116 million, net of cash acquired, during the six months ended June 30, 2024 and June 30, 2023, respectively.

We recognized approximately $ 100 million and $ 5 million of revenue related to our current year Automotive and Industrial acquisitions, respectively.

We recorded approximately $ 283 million of goodwill and other intangible assets associated with these acquisitions.

Other intangible assets acquired of $ 120 million consisted of customer relationships with weighted average amortization lives of 19 years.

Planned Pension Plan Termination

On April 29, 2024, our Board of Directors approved the termination of the frozen U.S.

qualified defined benefit plan (pension plan), effective September 30, 2024.

We intend to transfer the management and delivery of continuing benefits associated with the pension plan to a third-party insurance company.

The pension plan settlement process involves several regulatory steps and approvals.

Subject to completion of these steps and approvals, settlement is expected between late 2025 and early 2026.

As part of the plan settlement process, pension plan participants not currently receiving payments will have the opportunity to select a single lump sum payment or an annuity from the insurance company that will pay and administer future benefit payments.

Upon settlement, we expect to recognize a non-cash, pre-tax pension settlement charge in 2025 equal to the actuarial losses accumulated in AOCI, which totaled approximately $ 620 million ($ 450 million, net of tax) as of September 30, 2024.

The actual amount of the settlement charges will depend on the valuation of the pension obligation at the settlement date, which is dependent upon interest rates, U.S.

pension plan asset returns, the lump sum election rate, and other factors.

Once settled, we will be fully relieved of all obligations under the pension plan.

We acquired various businesses for approximately $ 1.1 billion and $ 230 million, which includes certain non-cash consideration and is net of cash acquired, during the nine months ended September 30, 2024 and September 30, 2023, respectively.

For each acquisition, we allocate the purchase price to the assets acquired and the liabilities assumed based on their fair values as of the respective acquisition date.

The fair values of the assets acquired and liabilities assumed are preliminary.

Additional adjustments, particularly to inventory and intangible assets, may be made to the acquisition accounting during the measurement period, which may be up to one year from the respective acquisition date.

The fair values of the assets acquired and liabilities assumed are preliminary and may be subject to additional adjustments, particularly to inventory and intangible assets during the measurement period, which may be up to one year from the respective acquisition dates.

The results of operations for acquired businesses are included in our Condensed Consolidated Statements of Income beginning on their respective acquisition dates.

These acquisitions included MPEC, the largest independent owner of NAPA Auto Part stores in the U.S., which we acquired on April 30, 2024.

We recognized approximately $ 100 million of goodwill and other intangible assets associated with MPEC.

We recognized approximately $ 300 million and $ 20 million of revenue for the nine months ended September 30, 2024 for our Automotive and Industrial acquisitions, respectively.

2024 Acquisitions

The following table summarizes the preliminary, estimated fair values of the assets acquired and liabilities assumed at the acquisition dates for the aggregate of these businesses during the nine months ended September 30, 2024:

(in thousands) As of Acquisition Dates

Trade accounts receivable $ 130,000

Merchandise inventories 520,000

Prepaid expenses and other current assets 10,000

Other intangible assets 200,000

Property, plant and equipment 90,000

Operating lease assets 210,000

Other assets 10,000

Total identifiable assets acquired 1,170,000

Current liabilities ( 90,000 )

Operating lease liabilities ( 210,000 )

Deferred tax liabilities ( 30,000 )

Other long-term liabilities ( 10,000 )

Total liabilities assumed ( 340,000 )

Net identifiable assets acquired 830,000

Goodwill 270,000

Net assets acquired $ 1,100,000

Other intangible assets acquired, totaling approximately $ 200 million, consisted primarily of customer relationships and trade names with weighted average amortization lives of 19 years.

The provisional fair value of the identifiable intangible assets are subject to adjustment pending final valuation.

The estimated goodwill recognized as part of the acquisitions is generally not tax deductible.

Goodwill of $ 240 million and $ 30 million has been assigned to the Automotive and Industrial segments, respectively.

This goodwill is attributable primarily to the expected synergies and assembled work forces of the acquired businesses.

The businesses acquired included two of the largest independent owners of NAPA Auto Parts Stores in the U.S., MPEC in April 2024 and Walker in July 2024.

We recognized approximately $ 100 million of goodwill and other intangible assets associated with the MPEC and Walker acquisitions.

Approximate values of other assets acquired and liabilities assumed included inventory of $ 300 million, operating lease assets of $ 200 million and operating lease liabilities of $ 200 million .

Accumulated Other Comprehensive Loss

The following tables present the changes in AOCL by component for the six months ended June 30:

The following tables present the changes in AOCL by component for the nine months ended September 30:

Changes in Accumulated Other

5 unchanged sentences

Other comprehensive income (loss), net of income taxes 8,661 — 25,359 34,020

Ending balance, June 30, 2024 $ ( 512,166 ) $ — $ ( 523,573 ) $ ( 1,035,739 )

Ending balance, September 30, 2024 $ ( 509,280 ) $ — $ ( 433,572 ) $ ( 942,852 )

Changes in Accumulated Other

5 unchanged sentences

Other comprehensive income (loss), net of income taxes 5,735 2,572 ( 63,027 ) ( 54,720 )

Ending balance, June 30, 2023 $ ( 502,784 ) $ — $ ( 509,073 ) $ ( 1,011,857 )

Ending balance, September 30, 2023 $ ( 500,875 ) $ — $ ( 586,387 ) $ ( 1,087,262 )

The AOCL components related to the pension benefits are included in the computation of net periodic benefit income in the Employee Benefit Plans Footnote.

4 unchanged sentences

Many of these involve claims of personal injury allegedly resulting from the use of automotive parts we distributed.

The amount accrued for pending and future claims was $ 225 million as of June 30, 2024, which represents our best estimate of the liability within our calculated range of $ 180 million to $ 255 million, discounted using a discount rate of 4.36 %.

The amount accrued for pending and future claims was $ 244 million as of December 31, 2023, which represents our best estimate of the liability within our calculated range of $ 196 million to $ 277 million, discounted using a discount rate of 3.88 %.

Our undiscounted product liability was $ 285 million and $ 308 million as of June 30, 2024 and December 31, 2023, respectively.

The amount accrued for pending and future claims was $ 235 million as of September 30, 2024, which represented our best estimate of the liability within our calculated range of $ 181 million to $ 257 million, discounted using a discount rate of 3.81 %.

The amount accrued for pending and future claims was $ 244 million as of December 31, 2023, which represented our best estimate of the liability within our calculated range of $ 196 million to $ 277 million, discounted using a discount rate of 3.88 %.

Our undiscounted product liability was $ 292 million and $ 308 million as of September 30, 2024 and December 31, 2023, respectively.

There have been no significant developments to the information presented in our 2023 Annual Report on Form 10-K with respect to litigation or commitments and contingencies.

5 unchanged sentences

This initiative includes an announced voluntary retirement offer in the U.S., along with a rationalization and optimization of certain distribution centers, stores and other facilities.

For the three and six months ended June 30, 2024, we incurred $ 37 million and $ 120 million, respectively, in costs related to our global restructuring initiative.

For the three and nine months ended September 30, 2024, we incurred $ 41 million and $ 161 million, respectively, in costs related to our global restructuring initiative.

We expect to incur total costs up to $ 200 million related to the global restructuring efforts in 2024 and to substantially complete the initiative by the end of 2025.

1 unchanged sentence

The global restructuring was approved and funded by our corporate office and therefore these costs are not allocated to our segments.

For the three months ended June 30, 2024, costs of $ 37 million include severance and other employee costs of $ 4 million, other restructuring costs of $ 26 million, and restructuring inventory liquidation costs of $ 7 million, which are reflected in cost of goods sold.

The table below summarizes the activity related to these costs for the six months ended June 30, 2024.

For the three months ended September 30, 2024, costs of $ 41 million include severance and other employee costs of $ 11 million, and other restructuring costs of $ 30 million.

The table below summarizes the activity related to these costs for the nine months ended September 30, 2024.

(in thousands) Severance and other employee costs Other restructuring costs (1)

4 unchanged sentences

Translation 501 2 503

Liability as of June 30, 2024

Liability as of September 30, 2024

$ 25,024 $ 1,336 $ 26,360

(1) Amount reflects moving expenses, accelerated rent, professional fees, facility closure costs and asset impairment costs that are attributable to our restructuring.

Amount excludes a $ 7 million noncash charge reflected in cost of goods sold for inventory liquidated rather than moved during facility consolidation in connection with the restructuring.

Amount excludes a $ 7 million non-cash charge reflected in cost of goods sold for inventory liquidated rather than moved during facility consolidation in connection with the restructuring.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements