What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-02-14 compared with 2021-02-19 · 327 added, 500 removed, 1304 unchanged (39% of the section changed)

7 unchanged sentences

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because a material weakness in internal control over financial reporting existed as of that date related to not designing and maintaining effective controls over the accounting for certain aspects of income taxes.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

The material weakness referred to above is described in Management's Annual Report on Internal Control Over Financial Reporting appearing under Item 9A.

We considered this material weakness in determining the nature, timing, and extent of audit tests applied in our audit of the 2020 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in management's report referred to above.

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

7 unchanged sentences

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

audits also included performing such other procedures as we considered necessary in the circumstances.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

7 unchanged sentences

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Impairment Assessments- Goodwill for Certain Reporting Units and Certain Indefinite-Lived Intangible Assets

As described in Notes 1 and 7 to the consolidated financial statements, the Company’s goodwill and indefinite-lived intangible assets balances were $3.6 billion and $2.3 billion as of December 31, 2020, respectively.

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Impairment Assessments - Goodwill and Indefinite-Lived Intangible Assets

As described in Notes 1 and 7 to the consolidated financial statements, the Company’s goodwill and indefinite-lived intangible assets balances were $3.5 billion and $2.2 billion, respectively, as of December 31, 2021.

These assets are tested and reviewed for impairment annually on December 1, or more frequently if facts and circumstances warrant.

Management used a quantitative approach, which involves comparing the fair value to the carrying value.

If the carrying value of a reporting unit exceeds its fair value, an impairment loss is calculated as the difference between these amounts.

In 2021, management used a quantitative approach, which involves comparing the fair value of these assets to their carrying value.

For goodwill, if the carrying value of a reporting unit exceeds its fair value, an impairment loss is calculated as the difference between these amounts.

An indefinite-lived intangible asset is impaired by the amount its carrying value exceeds its estimated fair value.

During the first quarter of 2020, the Company concluded that an impairment triggering event had occurred due to COVID-19 related disruption and as a result, the Company performed an impairment test for its goodwill and indefinite-lived intangible assets.

During the first quarter of 2020, the Company recorded an impairment charge of $212 million and $1.3 billion to reflect the impairment of its goodwill and indefinite-lived intangible assets, respectively.

As disclosed by management during the third quarter of 2020, the Company concluded that a triggering event had occurred for an indefinite-lived intangible asset in the Learning and Development segment and the Company recorded an impairment charge of $2 million.

During the fourth quarter of 2020, in conjunction with its annual impairment testing, the Company recorded an impairment charge of $20 million associated with an indefinite-lived intangible asset in the Learning and Development segment.

Fair value is estimated by management using the income approach for reporting units and the relief from royalty method or the excess earnings method for indefinite-lived intangible assets.

Management’s cash flow projections requires significant use of judgment and assumptions relating to the estimation of future cash flows, business growth rates, terminal values, discount rates and total enterprise value for goodwill, and estimation of future cash flows, royalty rates, terminal values, discount rates, residual (or excess) cash flows and contributory asset charges for indefinite-lived intangible assets.

The principal considerations for our determination that performing procedures relating to the impairment assessments of goodwill for certain reporting units and certain indefinite-lived intangible assets is a critical audit matter are (i) the significant judgment by management when developing the fair value measurements;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the estimation of future cash flows, business growth rates, terminal values, discount rates and total enterprise value for goodwill and estimation of future cash flows, royalty rates, terminal values, discount rates, residual (or excess) cash flows, and contributory asset charges for indefinite-lived intangible assets;

Fair value is estimated by management using the income approach for goodwill and either the relief from royalty method or the excess earnings method for indefinite-lived intangible assets.

Management’s cash flow projections require significant use of judgment and assumptions such as (i) the estimation of future cash flows, business growth rates, terminal values, discount rates, and total enterprise value for goodwill, and (ii) the estimation of future cash flows, royalty rates, terminal values, discount rates, residual (or excess) cash flows and contributory asset charges for indefinite-lived intangible assets.

During the fourth quarter of 2021, in conjunction with its annual impairment testing, management recorded an impairment charge of $60 million associated with indefinite-lived intangible assets in the Learning and Development and Commercial Solutions segments.

The principal considerations for our determination that performing procedures relating to the impairment assessments of goodwill and indefinite-lived intangible assets is a critical audit matter are (i) the significant judgment by management when developing the fair values of the reporting units and indefinite-lived intangible assets;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the estimation of future cash flows, business growth rates, terminal values, discount rates, and total enterprise value for goodwill and the estimation of future cash flows, royalty rates, terminal values, discount rates, residual (or excess) cash flows, and contributory asset charges for indefinite-lived intangible assets;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s impairment assessments of goodwill and indefinite-lived intangible assets, including controls over the valuation of

the Company’s reporting units and indefinite-lived intangible assets.

These procedures also included, among others, (i) testing management’s process for developing the fair value estimate of the reporting units and indefinite-lived intangible assets;

These procedures also included, among others, (i) testing management’s process for developing the fair value of the reporting units and indefinite-lived intangible assets;

(ii) evaluating the appropriateness of the income approach, relief from royalty method, and excess earnings method;

(iii) testing the completeness and accuracy of underlying data used in the estimates;

and (iv) evaluating the significant assumptions used by management related to estimation of future cash flows, business growth rates, terminal values, discount rates, and total enterprise value for goodwill and estimation of future cash flows, royalty rates, terminal values, discount rates, residual (or excess) cash flows and contributory asset charges for indefinite-lived intangible assets.

Evaluating management’s assumptions related to the estimation of future cash flows, business growth rates, terminal values and total enterprise value for goodwill and estimation of future cash flows, terminal values, and residual (or excess cash flows) for indefinite-lived intangible assets involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting units and indefinite-lived intangible assets;

and (iv) evaluating the significant assumptions used by management related to the estimation of future cash flows, business growth rates, terminal values, discount rates, and total enterprise value for goodwill and the estimation of future cash flows, royalty rates, terminal values, discount rates, residual (or excess) cash flows, and contributory asset charges for indefinite-lived intangible assets.

Evaluating management’s assumptions related to the estimation of future cash flows, business growth rates, terminal values, and total enterprise value for goodwill and the estimation of future cash flows, terminal values, and residual (or excess cash flows) for indefinite-lived intangible assets involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting units and indefinite-lived intangible assets;

(ii) the consistency with external and industry data;

1 unchanged sentence

Professionals with specialized skill and knowledge were used to assist in the evaluation of (i) the Company’s income approach, relief from royalty method, and excess earnings method and (ii) the discount rates for goodwill and the discount rates, royalty rates, and contributory asset charges for indefinite-lived intangible assets.

Uncertain Tax Positions

As described in Notes 1 and 12 to the consolidated financial statements, the Company has liabilities recorded for unrecognized tax benefits of $452 million as of December 31, 2020.

As disclosed by management, the Company’s income tax provisions are based on calculations and assumptions that are subject to examination by various worldwide tax authorities.

It has established tax, interest and penalty reserves in recognition that various taxing authorities may challenge the positions taken, which could result in additional liabilities for taxes, interest and penalties.

For uncertain tax positions, management applies the provisions of relevant authoritative guidance, which requires application of a “more likely than not” threshold to the recognition and derecognition of tax positions.

Management’s ongoing assessments of the more likely than not outcomes of tax authority examinations and related tax positions require significant judgment.

The principal considerations for our determination that performing procedures relating to uncertain tax positions is a critical audit matter are (i) the significant judgment by management when determining uncertain tax positions, including a high degree of estimation uncertainty relative to the numerous and complex tax laws, court rulings, tax planning strategies, frequency of tax audits, and potential for significant adjustments as a result of such audits;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s timely identification and accurate measurement of uncertain tax positions;

(iii) the evaluation of audit evidence available to support the uncertain tax positions is complex and resulted in significant auditor judgment as the nature of the evidence is often highly subjective;

and (iv) the audit effort involved the use of professionals with specialized skill and knowledge.

As described in the “Opinions on the Financial Statements and Internal Control over Financial Reporting” section, a material weakness was identified related to this matter.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included among others (i) testing the information used in the calculation of the uncertain tax positions, including intercompany agreements and international, federal, and state filing positions;

(ii) testing the calculation of uncertain tax positions by jurisdiction, including management’s assessment of the technical merits of tax positions and estimates of the amount of tax benefit expected to be sustained;

(iii) testing the completeness of management’s assessment of both the identification of uncertain tax positions and possible outcomes of each uncertain tax position;

and (iv) evaluating the status and results of income tax audits with the relevant tax authorities.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the completeness and measurement of the Company’s uncertain tax positions, including evaluating the reasonableness of management’s assessment of whether tax positions are more-likely-than-not of being sustained, the amount of potential benefit to be realized, and the application of relevant tax laws.

/s/ PricewaterhouseCoopers LLP

New York, New York

Atlanta, Georgia

February 14, 2022

11 unchanged sentences

Impairment of goodwill, intangibles and other assets 60 1,503 1,223

Operating loss ( 634 ) ( 482 ) ( 7,554 )

Operating income (loss) 946 ( 634 ) ( 482 )

Non-operating expenses:

2 unchanged sentences

Other (income) expense, net ( 8 ) 78 39

Loss before income taxes ( 1,006 ) ( 852 ) ( 7,992 )

Income tax benefit ( 236 ) ( 1,038 ) ( 1,359 )

Income (loss) before income taxes 693 ( 1,006 ) ( 852 )

Income tax provision (benefit) 121 ( 236 ) ( 1,038 )

Income (loss) from continuing operations 572 ( 770 ) 186

24 unchanged sentences

Total other comprehensive income (loss), net of tax ( 2 ) 40 ( 7 )

Comprehensive income (loss) including noncontrolling interest ( 730 ) 100 ( 7,029 )

Comprehensive income (loss) 570 ( 730 ) 100

Total comprehensive income (loss) attributable to noncontrolling interests 2 ( 4 ) 1

38 unchanged sentences

Stockholders' equity attributable to parent 4,091 3,874

Stockholders' equity attributable to minority interests 26 33

Stockholders' equity attributable to noncontrolling interests — 26

Total stockholders' equity 4,091 3,900

11 unchanged sentences

Impairment of goodwill, intangibles and other assets 60 1,503 1,335

(Gain) loss from sale of businesses, net 9 ( 7 ) ( 833 )

Deferred income taxes ( 41 ) ( 261 ) ( 1,068 )

2 unchanged sentences

Loss on extinguishment of debt 5 20 28

Loss on change in fair value of investments — 21 —

Other, net ( 6 ) 10 18

6 unchanged sentences

Cash flows from investing activities:

Proceeds from sale of divested businesses 16 996 5,133

Capital expenditures ( 289 ) ( 259 ) ( 265 )

Proceeds from sale of divested businesses — 16 996

Other investing activities 21 15 5

1 unchanged sentence

Cash flows from financing activities:

Net short term debt ( 26 ) ( 26 ) ( 904 )

Net payments of short-term debt — ( 26 ) ( 26 )

Net proceeds from issuance of debt — 491 —

1 unchanged sentence

Payments on long-term debt ( 6 ) ( 320 ) ( 1,004 )

Debt extinguishment and issuance costs ( 18 ) ( 39 ) ( 10 )

Repurchase of shares of common stock — — ( 1,507 )

Debt extinguishment costs ( 5 ) ( 18 ) ( 39 )

Cash dividends ( 394 ) ( 392 ) ( 391 )

Payments to dissenting shareholders — — ( 171 )

Acquisition of noncontrolling interests ( 28 ) — —

Equity compensation activity and other, net ( 12 ) 11 ( 5 )

9 unchanged sentences

Cash paid for interest 271 281 304

Net cash provided by (used in) discontinued operating activities — ( 46 ) 123

Net cash used in discontinued operating activities — — ( 46 )

Net cash provided by discontinued investing activities — — 978

6 unchanged sentences

Stock Treasury

Stock Additional Paid-In Capital Retained Deficit Accumulated Other Comprehensive Income (Loss) Stockholders' Equity Attributable to Parent Non-

controlling Interest Total Stockholders' Equity

Stock Additional Paid-In Capital Retained Earnings (Deficit) Accumulated Other Comprehensive Income (Loss) Stockholders' Equity Attributable to Parent Non-

controlling Interests Total Stockholders' Equity

Balance at December 31, 2018 $ 446 $ ( 585 ) $ 8,781 $ ( 2,511 ) $ ( 913 ) $ 5,218 $ 35 $ 5,253

Comprehensive loss — — — ( 6,942 ) ( 83 ) ( 7,025 ) ( 4 ) ( 7,029 )

Comprehensive income (loss) — — — 107 ( 6 ) 101 ( 1 ) 100

Dividends declared on common stock - $ 0.92 per share

1 unchanged sentence

Equity compensation, net of tax 1 ( 5 ) 42 — — 38 — 38

Common stock purchased and retired ( 63 ) — ( 1,444 ) — — ( 1,507 ) — ( 1,507 )

Impact of accounting standard adoption — — — 45 ( 63 ) ( 18 ) — ( 18 )

Portion of net loss attributable to noncontrolling interests — — — — ( 4 ) ( 4 ) 2 ( 2 )

Portion of net income attributable to noncontrolling interests — — — — ( 1 ) ( 1 ) 2 1

Distributions to noncontrolling interests — — — — — — ( 3 ) ( 3 )

Balance at December 31, 2019 $ 447 $ ( 590 ) $ 8,430 $ ( 2,404 ) $ ( 920 ) $ 4,963 $ 33 $ 4,996

3 unchanged sentences

Equity compensation, net of tax 1 ( 8 ) 40 — — 33 — 33

Portion of net income attributable to noncontrolling interests — — — — ( 1 ) ( 1 ) 2 1

Portion of net loss attributable to noncontrolling interests — — — — ( 5 ) ( 5 ) 1 ( 4 )

Distributions to noncontrolling interests — — — — — — ( 3 ) ( 3 )

4 unchanged sentences

Equity compensation, net of tax 2 ( 11 ) 53 — — 44 — 44

Portion of net loss attributable to noncontrolling interests — — — — ( 5 ) ( 5 ) 1 ( 4 )

Distributions to noncontrolling interests — — — — — — ( 3 ) ( 3 )

Acquisition of noncontrolling interests — — — — — — ( 28 ) ( 28 )

Portion of net income attributable to noncontrolling interests — — — — — — 2 2

Balance at December 31, 2021 $ 450 $ ( 609 ) $ 7,734 $ ( 2,602 ) $ ( 882 ) $ 4,091 $ — $ 4,091

5 unchanged sentences

Description of Business

Newell Brands is a leading global consumer goods company with a strong portfolio of well-known brands, including Rubbermaid®, Paper Mate®, Sharpie®, Dymo®, EXPO®, Parker®, Elmer’s®, Coleman®, Marmot®, Oster®, Sunbeam®, FoodSaver®, Mr.

Coffee®, Rubbermaid Commercial Products®, Graco®, Baby Jogger®, NUK®, Calphalon®, Contigo®, First Alert®, Mapa®, Spontex® and Yankee Candle®.

Newell Brands is committed to enhancing the lives of consumers around the world with planet-friendly, innovative and attractive products that create moments of joy and provide peace of mind.

Newell Brands is a leading global consumer goods company with a strong portfolio of well-known brands, including Rubbermaid, FoodSaver, Calphalon, Sistema, Sharpie, Paper Mate, Dymo, EXPO, Elmer’s, Yankee Candle, Graco, NUK, Rubbermaid Commercial Products, First Alert, Spontex, Coleman, Campingaz, Oster, Sunbeam and Mr.

Newell Brands' beloved brands enhance and brighten consumers lives at home and outside by creating moments of joy, building confidence and providing peace of mind.

The Company sells its products in nearly 200 countries around the world and has operations on the ground in over 40 of these countries, excluding third-party distributors.

2 unchanged sentences

The preparation of these consolidated financial statements requires the use of certain estimates and assumptions by management in determining the Company’s assets, liabilities, sales and expenses, and related disclosures.

Significant estimates in these Consolidated Financial Statements include restructuring charges, estimates of future cash flows associated with asset impairments, useful lives for depreciation and amortization, loss contingencies (including legal, environmental and product liability reserves), net realizable value of inventories, valuation of assets held for sale, estimated contract revenue and related costs, capitalized software costs, income taxes, uncertain tax provisions, tax valuation allowances, and pension and postretirement employee benefit liabilities and expenses.

Significant estimates in these Consolidated Financial Statements include restructuring charges, estimates of future cash flows associated with asset impairments, useful lives for depreciation and amortization, loss contingencies (including legal, environmental and product liability reserves), net realizable value of inventories, estimated contract revenue and related variable consideration, capitalized software costs, income taxes, uncertain tax provisions, tax valuation allowances, and pension and postretirement employee benefit liabilities and expenses.

Actual results could differ from those estimates.

In connection with changes to the Company's management reporting structure made by the chief operating decision maker (“CODM”) during the second quarter of 2020, the Company realigned into the following five reportable segments:

Appliances and Cookware, Commercial Solutions, Home Solutions, Learning and Development, and Outdoor and Recreation.

The Company also provides general corporate services to its segments which will be reported as a non-operating segment, Corporate (See Footnote 17 ).

At the end of 2019, the Company completed its previously announced Accelerated Transformation Plan (“ATP”), which resulted in the sale of several businesses during 2018 and 2019.

The ATP was designed to accelerate value creation and more rapidly transform the portfolio to one best positioned to leverage the Company’s advantaged capabilities in innovation, design and e-commerce.

The ATP was also designed to significantly increase shareholder value through both meaningful returns of capital to shareholders and strengthened operational and financial performance, while simultaneously deleveraging the balance sheet.

See Footnote 2 for further information on the Company's discontinued operations and divestitures.

On February 6, 2022, the Company signed a definitive agreement to sell its Connected Home & Security (“CH&S”) business unit to Resideo Technologies, Inc.

for a purchase price of $ 593 million, subject to customary working capital and transaction adjustments.

The transaction is expected to be completed by the end of the first quarter of 2022, subject to customary closing conditions, including regulatory approval.

Beginning January 1, 2021, the Company reported the operating results of its cookware product lines as part of the Food reporting unit within the Home Solutions segment, and no longer as part of the former Appliances and Cookware segment.

This change was the result of an assessment by the chief operating decision maker (“CODM”) to better align the cookware product lines with other similar product lines in various food categories.

In connection with this change, the Chief Executive Officer (“CEO”) for the Food business unit assumed full responsibility for the overall brand strategy, business modeling, marketing and innovation of these product lines.

The Company determined this product line change did not result in a change to either of its Home Solutions or former Appliances and Cookware reportable segments.

In connection with this change, the Appliances and Cookware segment was renamed as the Home Appliances segment.

Prior period comparable results for both of these segments have been reclassified to conform to this product line change.

The Company also revised the calculation of operating income (loss) by segment to include restructuring charges.

Prior period comparable results have been reclassified to conform to the change in calculation.

See Footnote 17.

Certain prior year amounts have been reclassified to conform to the current presentation.

1 unchanged sentence

During 2019, the Company recorded an aggregate after-tax adjustment benefit of $ 10 million ($ 6 million in continuing operations and $ 4 million in discontinued operations) in its Consolidated Statement of Operations reflecting the cumulative impact of prior period errors identified and corrected during the period.

The prior period errors were primarily associated with income tax accounting matters more specifically related to:

reserves for uncertain tax positions and the reconciliation of state income tax payables/receivables that resulted in a net after-tax benefit of $ 21 million ($ 10 million in continuing operations and $ 11 million in discontinued operations, respectively) recorded in the Consolidated Statement of Operations.

In addition, as a result of certain of those income tax prior period adjustments, certain of the Company's previously recorded goodwill and intangible asset impairment charges and gain/loss on disposal calculations were incorrect, which resulted in a net after-tax charge of $ 8 million ($ 2 million in continuing operations and $ 6 million in discontinued operations, respectively) recorded in the Consolidated Statement of Operations.

See Footnote 7 for further information on how certain of these income tax matters impacted the Company's goodwill balances.

The prior period errors were primarily associated with income tax accounting matters more specifically related to reserves for uncertain tax positions and the reconciliation of state income tax payables/receivables that resulted in a net after-tax benefit of $ 21 million ($ 10 million in continuing operations and $ 11 million in discontinued operations, respectively) recorded in the Consolidated Statement of Operations.

respectively) recorded in the Consolidated Statement of Operations.

The Company also recorded a net after-tax charge of $ 3 million in continuing operations in its Consolidated Statement of Operations related to other out-of-period adjustments.

Based on an analysis of qualitative and quantitative factors, the Company concluded that the cumulative impact of these errors was not material to any of the Company's previously issued financial statements.

Uncertainty Related to Coronavirus (COVID-19)

Beginning late in the fourth quarter of 2019 and into 2020, COVID-19 emerged and subsequently spread globally, ultimately being declared a pandemic by the World Health Organization.

The pandemic has resulted in various federal, state and local governments, as well as private entities, mandating restrictions on travel and public gatherings, closure of non-essential commerce, stay at home orders and quarantining of people to limit exposure to the virus.

Use of Estimates and Risks and Uncertainty of Coronavirus (COVID-19)

Since early 2020, the COVID-19 pandemic has resulted in various federal, state and local governments, as well as private entities, mandating restrictions on travel and public gatherings, closure of non-essential commerce, stay at home orders and quarantining of people to limit exposure to the virus.

The Company's global operations, similar to those of many large, multi-national corporations, were adversely impacted by the COVID-19 pandemic.

During the first quarter of 2020, the Company concluded that an impairment triggering event had occurred for all of its reporting units as the Company had experienced significant COVID-19 related disruption to its business in three primary areas:

supply chain, as certain manufacturing and distribution facilities were temporarily closed in line with government guidelines;

the temporary closure of secondary customer retail stores as well, as the Company's Yankee Candle retail stores in North America;

and changes in consumer demand patterns to certain focused categories.

As a result, the Company performed an impairment test for its goodwill and indefinite-lived intangible assets.

In addition, the Company performed a recoverability test for its long-lived assets, which primarily include finite-lived intangible assets, property plant and equipment and right of use lease assets.

As a result of the impairment testing performed in connection with the triggering event, the Company determined that certain of its goodwill, indefinite-lived intangible assets, property plant and equipment and right of use operating leases assets were impaired.

During the first quarter of 2020, the Company recorded an aggregate non-cash charge of approximately $ 1.5 billion in connection with these impairments.

See Footnotes 6, 7 and 13 for further information.

While the negative effects from the COVID-19 global pandemic in the first half of 2020 were material to the Company's operating results, the Company saw positive momentum, which included sales growth during the second half of the year and strong liquidity with over $ 1.4 billion in operating cash flow for the year ended December 31, 2020.

The Company believes, however, the extent of the impact of the COVID-19 pandemic to its businesses, operating results, cash flows, liquidity and financial condition will be primarily driven by the severity and duration of the pandemic, the impact of new strains and variants of the coronavirus, the pandemic’s impact on the U.S.

and global economies and the timing, scope and effectiveness of federal, state and local governmental plans to administer vaccines to the general public, especially in areas where conditions have recently worsened and lockdowns or travel bans have been reinstituted.

Those primary drivers are beyond the Company's knowledge and control, and as a result, at this time it is difficult to predict the cumulative impact, both in terms of severity and duration, COVID-19 will have on its future sales, operating results, cash flows and financial condition.

Furthermore, the impact to the Company's businesses, operating results, cash flows, liquidity and financial condition may be further adversely impacted if the COVID-19 global pandemic continues to exist or worsens for a prolonged period of time or if plans to administer vaccines are delayed.

The extent of the impact of the COVID-19 pandemic to the Company's future sales, operating results, cash flows, liquidity and financial condition will continue to be driven by numerous evolving factors that the Company cannot reasonably predict and which will vary by jurisdiction and market, including the severity and duration of the pandemic, the emergence of new strains and variants of the coronavirus, the likelihood of a resurgence of positive cases, the development and availability of effective treatments and vaccines, especially in areas where conditions have recently worsened and work restrictions, operational or travel bans have been reinstituted, the rate at which vaccines are administered to the general public, the timing and amount of fiscal stimulus and relief programs packages that are available to the general public, the availability and prices of supply chain resources, including materials, products and transportation;

and changes in consumer demand patterns for the Company's products as the impact of the global pandemic lessens.

These primary drivers are beyond the Company's knowledge and control, and as a result, at this time it is difficult to reasonably predict the cumulative impact, both in terms of severity and duration, COVID-19 will have on its future sales, operating results, cash flows and financial condition.

Management’s application of U.S.

GAAP in preparing the Company's audited consolidated financial statements requires the pervasive use of estimates and assumptions.

As discussed above, the world continues to be impacted by the global COVID-19 pandemic which has required greater use of estimates and assumptions in the preparation of the consolidated financial statements, more specifically, those estimates and assumptions utilized in the Company’s forecasted cash flows that form the basis in developing the fair values utilized in its impairment assessments as well as annual effective tax rate.

This has included assumptions as to the duration and severity of the pandemic, timing and amount of demand shifts amongst sales channels, workforce availability, supply chain continuity, and timing as to a return to normalcy.

Although the Company has made its best estimates based upon current information, the effects of the COVID-19 pandemic on its business may result in future changes to management’s estimates and assumptions, especially if the severity of the pandemic continues to exist or worsens for a prolonged period of time or if plans to administer the vaccines are delayed.

Actual results could materially differ from the estimates and assumptions developed by management.

GAAP in preparing the Company's consolidated financial statements requires the pervasive use of estimates and assumptions.

As discussed above, the world continues to be impacted by the COVID-19 pandemic which has required greater use of estimates and assumptions in the preparation of the consolidated financial statements, more specifically, those estimates and assumptions utilized in the Company’s forecasted cash flows that form the basis in developing the fair values utilized in its impairment assessments as well as its annual effective tax rate.

These estimates also include assumptions as to the duration and severity of the pandemic, timing and amount of demand shifts amongst sales channels, workforce availability and supply chain continuity.

Although management has made its best estimates based upon current information, actual results could materially differ from those estimates and may require future changes to such estimates and assumptions.

If so, the Company may be subject to future incremental impairment charges as well as changes to recorded reserves and valuations.

At December 31, 2021, the Company held a 23.4 % investment in FireAngel Safety Technology Group PLC (formerly known as Sprue Aegis PLC) (“FireAngel”), which the Company accounts for under the equity method of accounting.

During 2019, the Company recorded an other-than-temporary impairment of approximately $ 12 million.

During 2019, the Company recorded an other-than-temporary impairment of approximately $ 12 million for this investment.

The Company's carrying value of its investment in FireAngel was $ 4 million and $ 3 million at December 31, 2021 and 2020, respectively.

On March 31, 2018, the Company terminated its distribution agreement with FireAngel.

There were no related party sales to FireAngel during 2020 and 2019 and $ 8 million during 2018.

During 2021, a noncontrolling interest holder in an international subsidiary, exercised its redemption rights, requiring the purchase of such interest by the Company.

The Company completed the transaction for approximately $ 22 million.

The difference between the consideration paid and noncontrolling interest was not material to the Company.

For 2021, 2020 and 2019, the income attributable to non-controlling interests was $ 2 million, $ 1 million and $ 2 million, respectively.

1 unchanged sentence

Concentration of Credit Risk

The Company’s forward exchange contracts do not subject the Company to risk due to foreign exchange rate movement, because gains and losses on these instruments generally offset gains and losses on the assets, liabilities and other transactions being hedged.

The Company’s forward exchange contracts generally do not subject the Company to risk due to foreign exchange rate movement, because gains and losses on these instruments generally offset gains and losses on the assets, liabilities and other transactions being hedged.

The Company is exposed to credit-related losses in the event of non-performance by counterparties to certain derivative financial instruments.

6 unchanged sentences

The Company accrues for the estimated cost of product warranty at the time of sale based on historical experience.

Revenue is measured as the amount of consideration for which it expects to be entitled in exchange for transferring goods or providing services.

Revenue is measured as the amount of consideration for which the Company expects to be entitled in exchange for transferring goods or providing services.

Certain customers may receive cash and/or non-cash incentives such as cash discounts, returns, credits or reimbursements related to defective products, customer discounts (such as volume or trade discounts), cooperative advertising and other customer-related programs, which are accounted for as variable consideration.

In some cases, the Company must apply judgment, including contractual rates and historical payment trends, when estimating variable consideration.

In some cases, the Company applies judgment, including contractual rates and historical payment trends, when estimating variable consideration.

In addition, the Company participates in various programs and arrangements with customers designed to increase the sale of products by these customers.

Among the programs negotiated are arrangements under which allowances are earned by customers for attaining agreed-upon sales levels or for participating in specific marketing programs.

Coupon programs are also developed on a customer- and territory-specific basis with the intent of increasing sales by all customers.

Coupon programs are also developed on a customer- and territory-specific basis.

Under customer programs and arrangements that require sales incentives to be paid in advance, the Company amortizes the amount paid over the period of benefit or contractual sales volume.

11 unchanged sentences

The Company may use a qualitative approach, and when appropriate, has bypassed the qualitative and used a quantitative approach, which involves comparing the fair value of each of the reporting units to the carrying value of those reporting units.

If the carrying value of a reporting unit exceeds its fair value, an impairment loss would be calculated as the differences between these amounts, limited to the amount of reporting unit goodwill allocated to the reporting unit.

If the carrying value of a reporting unit exceeds its fair value, an impairment loss would be calculated as the difference between these amounts, limited to the amount of reporting unit goodwill allocated to the reporting unit.

The quantitative goodwill impairment testing requires significant use of judgment and assumptions, such as the identification of reporting units;

the assignment of assets and liabilities to reporting units;

and the estimation of future cash flows, business growth

rates, terminal values, discount rates and total enterprise value.

and the estimation of future cash flows, business growth rates, terminal values, discount rates and total enterprise value.

The income approach used is the discounted cash flow methodology and is based on five-year cash flow projections.

2 unchanged sentences

The present value of the finite-period cash flows and the terminal value are determined using a selected discount rate.

See Footnote 7 for further information associated with non-cash goodwill impairment charges resulting from COVID-19 related trigger events during 2020.

Indefinite-lived intangibles

8 unchanged sentences

Changes in business conditions could potentially require adjustments to these asset valuations.

See Footnote 7 for further information associated with non-cash indefinite-lived intangible asset impairment charges resulting from COVID-19 related trigger events during 2020.

Other Long-Lived Assets

The Company continuously evaluates whether impairment indicators related to its property, plant and equipment, operating leases and other long-lived assets are present.

These impairment indicators may include a significant decrease in the market price of a long-lived asset or asset group, early termination of an operating lease, a significant adverse change in the extent or manner in which a long-lived asset or asset group is being used or in its physical condition, or a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a forecast that demonstrates continuing losses associated with the use of a long-lived asset or asset group.

These impairment indicators may include a significant decrease in the market price of a long-lived asset or asset group, early termination of an operating lease, a significant adverse change to the extent or manner in which a long-lived asset or asset group is being used or in its physical condition, or a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a forecast that demonstrates continuing losses associated with the use of a long-lived asset or asset group.

If impairment indicators are present, the Company estimates the future cash flows for the asset or group of assets.

2 unchanged sentences

If the carrying amount exceeds the sum of the undiscounted future cash flows, the Company discounts the future cash flows using a discount rate required for a similar investment of like risk and records an impairment charge as the difference between the fair value and the carrying value of the asset group.

Generally, the Company performs its testing of the asset group at the reporting unit level, as this is the lowest level for which identifiable cash flows are available.

As a result of COVID-19 related trigger events during 2020, the Company recorded non-cash impairment charges for certain operating lease assets.

See Footnote 13 for further information.

The Company performs its testing of the asset group at the reporting unit level, as this is the lowest level for which identifiable cash flows are available, with the exception of the Yankee Candle business, where testing is performed at the retail store level.

The Company accounts for deferred income taxes using the asset and liability approach.

6 unchanged sentences

Sales of Accounts Receivables

In June 2019, the Company entered into a new factoring agreement with a financial institution to sell certain customer receivables at a more attractive discount rate than its previous cash discount terms offered to these customers (the “Customer Receivables Purchase Agreement”).

The Company received approximately $ 200 million under the agreement during the second quarter of 2019,

which was substantially unchanged at December 31, 2019.

The balance of the factored receivables at December 31, 2020 was approximately $ 350 million.

Transactions under this agreement are accounted for as sales of accounts receivable, and the receivables are removed from the Consolidated Balance Sheet at the time of the sales transaction.

The Company classifies the proceeds received from the sales of accounts receivable as an operating cash flow in the Consolidated Statement of Cash Flows.

The Company records the discount as other (income) expense, net in the Consolidated Statement of Operations and collections of accounts receivables not yet submitted to the financial institution as a financing cash flow.

Factored receivables at the end of 2021 associated with the existing factoring agreement (the “Customer Receivables Purchase Agreement”) were approximately $ 500 million, an increase of approximately $ 150 million from December 31, 2020.

Transactions under this agreement are accounted for as sales of accounts receivable, and the receivables sold are removed from the Consolidated Balance Sheet at the time of the sales transaction.

The Company classifies the proceeds received from the sales of accounts receivable as an operating cash flow and collections of accounts receivables not yet submitted to the financial institution as a financing cash flow in the Consolidated Statement of Cash Flows.

The Company records the discount as other (income) expense, net in the Consolidated Statement of Operations.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents include cash on hand and highly liquid investments that have a maturity of three months or less when purchased.

Restricted cash reflects cash received on previously sold customer receivables in connection with the new factoring program that are required to be remitted to a financial institution.

Restricted cash reflects cash received on previously sold customer receivables in connection with the factoring program

that are required to be remitted to a financial institution.

Restricted cash is reported as prepaid expenses and other current assets on the Consolidated Balance Sheets.

Accounts Receivable, Net

Accounts receivables, net, include amounts billed and due from customers.

Accounts receivable, net, include amounts billed and due from customers.

Payment terms vary but generally are 90 days or less.

An allowance for expected credit losses is based on the amount it ultimately expects to collect from its customers.

An allowance for expected credit losses is based on the amount ultimately expected to be collected from the customer.

The Company evaluates the collectability of accounts receivable based on a combination of factors including the length of time the receivables are past due, historical collection experience, current market conditions and forecasted direction of economic and business environment.

27 unchanged sentences

The Company expenses production costs of print, radio, television and other advertisements as of the first date the advertisements take place, and the Company expenses all other advertising and marketing costs when incurred.

Advertising and promotion costs are recorded in selling, general and administrative expenses and totaled $ 362 million, $ 389 million and $ 397 million in 2020, 2019 and 2018, respectively.

Advertising and promotion costs are recorded in selling, general and administrative expenses (“SG&A”) and totaled $ 407 million, $ 362 million and $ 389 million in 2021, 2020 and 2019, respectively.

Research and Development Costs

Research and development costs relating to both future and current products are charged to selling, general and administrative expenses as incurred.

Research and development costs relating to both future and current products are charged to SG&A as incurred.

These costs totaled $ 153 million, $ 144 million and $ 149 million in 2021, 2020 and 2019, respectively.

4 unchanged sentences

• Inventory – Footnote 5

• Property, Plant & Equipment – Footnote 6

• Property, Plant and Equipment – Footnote 6

• Derivative Instruments – Footnote 10

8 unchanged sentences

The Company considers the applicability and impact of all ASUs.

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes” (Topic 740).

ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

ASU 2019-12 is effective for years, and interim periods within those years, beginning after December 15, 2020, with early adoption permitted.

Depending on the amendment, adoption may be applied on the retrospective, modified retrospective or prospective basis.

The adoption of ASU 2019-12 will not have a material impact on the Company’s consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, “ Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

” In January 2021, the FASB clarified the scope of that guidance with the issuance of ASU 2021-01, Reference Rate Reform:

ASU 2020-04 provides optional expedients and exceptions to account for contracts, hedging relationships and other transactions that reference LIBOR or another reference rate if certain criteria are met.

” In January 2021, the FASB clarified the scope of this guidance with the issuance of ASU 2021-01, Reference Rate Reform:

ASU 2020-04 provides optional expedients and exceptions to account for contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate if certain criteria are met.

ASU 2020-04 may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022.

1 unchanged sentence

Adoption of New Accounting Guidance

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which requires lessees to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months.

Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease.

The Company adopted ASU 2016-02 prospectively starting on January 1, 2019.

As part of the adoption, the Company elected the package of practical expedients permitted under the transition guidance that includes not to reassess historical lease classification, and not to recognize short-term leases on the balance sheet, nor separate lease and non-lease components for all its leases.

In addition, the Company used hindsight to determine the lease term and applied its incremental borrowing rate based on the remaining term of the lease as of the adoption date.

The impact upon adoption, related to operating leases in continuing operations, as of January 1, 2019, resulted in the recognition of right-of-use assets of approximately $ 664 million, lease liabilities of approximately $ 725 million and a minimal cumulative-effect adjustment on retained deficit on the Company's Consolidated Balance Sheet.

See Footnote 13 for further information.

In June 2016, the FASB issued ASU 2016-13, “ Measurement of Credit Losses on Financial Instruments .” ASU 2016-13 involves several aspects of the accounting for credit losses related to certain financial instruments including assets measured at amortized cost, available-for-sale debt securities and certain off-balance sheet commitments.

ASU 2016-13, and subsequent updates, broadens the information that an entity must consider in developing its estimated credit losses expected to occur over the remaining life of assets measured either collectively or individually to include historical experience, current conditions and reasonable and supportable forecasts, replacing the existing incurred credit loss model and other models with the Current Expected Credit Losses (“CECL”) model.

ASU 2016-13 is effective for fiscal years beginning after December 15, 2019.

The Company adopted ASU 2016-13 on a modified retrospective basis effective January 1, 2020.

The adoption of ASU 2016-03 did not have a material impact on the Company’s consolidated financial statements.

The Company's reserves for expected credit losses at December 31, 2020 and December 31, 2019 were $ 36 million and $ 29 million respectively.

In February 2018, the FASB issued ASU No.

2018-02, “Income Statement — Reporting Comprehensive Income (Topic 220):

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” ASU No.

2018-02 provides companies with an option to reclassify stranded tax effects within accumulated other comprehensive income (loss) (“AOCL”) to retained earnings in each period in which the effect of the change in the U.S.

federal corporate income tax rate in the Tax Cuts and Jobs Act (or portion thereof) is recorded.

2018-02 also requires disclosure of the accounting policy for releasing income tax effects from AOCL and whether an election was made to reclassify the stranded income tax effects from the Tax Cuts and Jobs Act.

2018-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.

Early adoption is permitted.

Companies can adopt the provisions of ASU 2018-02 in either the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S.

federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized.

The Company adopted this guidance in the second quarter of 2018 and reclassified the stranded income tax effects from the Tax Cuts and Jobs Act from AOCL of $ 63 million to retained earnings.

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes” (Topic 740) , which removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

ASU 2019-12 became effective for years, and interim periods within those years, beginning after December 15, 2020.

The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, “ Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40):

7 unchanged sentences

ASU 2018-14 is effective for fiscal years ending after December 15, 2020.

Since ASU 2018-14 only impacts the disclosure requirements related to defined benefit pension and other postretirement plans, the adoption of ASU 2018-14 did not have a material impact on the Company’s consolidated financial statements.

See Footnote 11 for further information.

As ASU 2018-14 only impacts the disclosure requirements related to defined benefit pension and other postretirement plans, the adoption of ASU 2018-14 did not have a material impact on the Company’s consolidated financial statements.

Footnote 2 — Discontinued Operations and Divestitures

Discontinued Operations

In connection with the ATP, the Company completed the sale of several businesses during 2018 and 2019.

In 2018, the Company sold:

Goody Products, Inc.

(“Goody”), Jostens, Inc.

(“Jostens”), Pure Fishing, Inc.

(“Pure Fishing”), the Rawlings Sporting Goods Company, Inc.

(“Rawlings”), Waddington Group, Inc.

(“Waddington”) and other related subsidiaries.

In 2019, the Company sold:

the Process Solutions business, Rexair Holdings Inc.

("Rexair"), The United States Playing Card Company (“The Playing Cards Company”) and other related subsidiaries.

In July 2019, the Company announced its decision to no longer pursue the sale of the majority of the Rubbermaid Outdoor, Closet, Refuse, Garage and Cleaning businesses (“Commercial Products”).

5 unchanged sentences

These businesses are reported in the Commercial Solutions segment for all periods presented.

The following table provides a summary of amounts included in discontinued operations for the years ended December 31, (in millions):

The following table provides a summary of amounts included in discontinued operations for the year ended December 31, 2019 (in millions):

Net sales $ 368

2 unchanged sentences

Selling, general and administrative expenses 48

Restructuring costs, net — 3

Impairment of goodwill, intangibles and other assets 112

4 unchanged sentences

Net loss $ ( 79 )

(1) 2018 includes a reclassification from cost of products sold to net sales of $ 13 million related to the adoption of ASU 2014-9 - “Revenue from Contracts with Customers (Topic 606)”.

(2) 2019 and 2018 include gains on sale of discontinued operations of $ 7 million and $ 831 million, respectively.

(1) Includes gains on sale of discontinued operations of $ 7 million.

On August 31, 2020, the Company divested the foam board product line in its Learning and Development segment.

As a result, the Company recorded a pre-tax loss of $ 8 million, which is included in the other (income) expense, net in the Consolidated Statements of Operations.

As a result, the Company recorded a pre-tax loss of $ 8 million, which is included in other (income) expense, net in the Consolidated Statements of Operations.

On May 1, 2019, the Company sold its Rexair business to investment funds affiliated with Rhône Capital for approximately $ 235 million, subject to customary working capital and other post-closing adjustments.

2 unchanged sentences

As a result, during 2019, the Company recorded a pre-tax loss of $ 7 million, which is included in the loss from discontinued operations.

On December 31, 2019, the Company sold The Playing Cards Company to Cartamundi Inc.

On December 31, 2019, the Company sold The United States Playing Card Company and certain other subsidiaries engaged in the playing cards business to Cartamundi Inc.

and Cartamundi España S.L.

1 unchanged sentence

As a result, during 2019, the Company recorded a pre-tax loss of $ 5 million, which is included in the loss from discontinued operations.

During 2019, the Company recorded impairment charges of $ 112 million, which is included in the loss from discontinued operations, related to the write-down of the carrying value of the net assets of certain held for sale businesses based on their estimated fair value.

On June 29, 2018, the Company sold Rawlings to a fund managed by Seidler Equity Partners with a co-investment of Major League Baseball for approximately $ 400 million, subject to customary working capital and other post-closing adjustments.

As a result, during 2018, the Company recorded a pre-tax loss of $ 128 million, which is included in the loss from discontinued operations.

On June 29, 2018, the Company sold Waddington to Novolex Holdings LLC for approximately $ 2.3 billion, subject to customary working capital and other post-closing adjustments.

As a result, during 2018, the Company recorded a pre-tax gain of $ 599 million, which is included in the loss from discontinued operations.

On August 31, 2018, the Company sold its Goody business, to a fund managed by ACON Investments, L.L.C.

for approximately $ 109 million, subject to customary working capital and other post-closing adjustments.

As a result, during 2018, the Company recorded a pre-tax gain of $ 20 million, which is included in the loss from discontinued operations.

On December 21, 2018, the Company sold Jostens to Platinum Equity for approximately $ 1.3 billion, subject to customary working capital and other post-closing adjustments.

As a result, during 2018, the Company recorded a pre-tax loss of $ 32 million, which is included in the loss from discontinued operations.

On December 21, 2018, the Company sold Pure Fishing to Sycamore Partners for approximately $ 1.3 billion, subject to customary working capital and other post-closing adjustments.

As a result, during 2018, the Company recorded a pre-tax gain of $ 372 million, which is included in the loss from discontinued operations.

During 2018, the Company recorded an impairment charge primarily related to goodwill and indefinite-lived intangible assets totaling $ 1.5 billion, which is included in the loss from discontinued operations, primarily related to the write-down of the carrying value of the net assets of certain held for sale businesses based on their estimated fair value.

During 2019 the Company recorded impairment charges of $ 112 million, which is included in the loss from discontinued operations related to the write-down of the carrying value of certain held for sale businesses based on their estimated fair value.

Footnote 3 — Accumulated Other Comprehensive Income (Loss)

The following tables display the components of AOCL, net of tax, as of and for the years ended December 31, 2020 and 2019 (in millions):

The following tables display the components of accumulated other comprehensive income (loss) (“AOCL”), net of tax, as of and for the years ended December 31, 2021 and 2020 (in millions):

Adjustment Pension and Postretirement Cost Derivative Financial Instruments AOCL

11 unchanged sentences

Pension and postretirement benefit plans (1)

$ 23 $ 72 $ 9

Derivative financial instruments for effective cash flow hedges (2)

(1) Primarily represents the amortization of net actuarial losses and plan settlements recorded in cost of products sold, selling, general and administrative expenses (“SG&A”) and other (income) expense, net in the Consolidated Statements of Operations.

23 ( 6 ) ( 7 )

(1) See Footnote 11 for further information.

(2) See Footnote 10 for further information.

The income tax provision (benefit) allocated to the components of AOCL for the years ended December 31, are as follows (in millions):

14 unchanged sentences

2021 2020 2019

Appliances and Cookware $ 1 $ 2 $ 3

Commercial Solutions $ 4 $ 4 $ 3

Home Appliances 4 1 2

Home Solutions 3 10 9

9 unchanged sentences

Accrued restructuring costs activity for the year ended December 31, 2020 are as follows (in millions):

Balance at December 31, 2018 Restructuring Costs, Net Payments Reclassifications (1) Foreign Currency and Other (2) Balance at December 31, 2019

Balance at December 31, 2019 Restructuring Costs, Net Payments Foreign Currency and Other Balance at December 31, 2020

Severance and termination costs $ 10 $ 15 $ ( 18 ) $ — $ 7

1 unchanged sentence

$ 22 $ 21 $ ( 27 ) $ ( 5 ) $ 11

(1) Reclassification due to the adoption of ASU 2016-02 - “ Leases (Topic 842)”, which requires lessees to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months.

(2) Includes non-cash restructuring charges primarily related to stock-based awards of $ 1 million for 2019.

2020 Restructuring Plan

The Company’s 2020 restructuring program, which was initiated during the second quarter of 2020 largely in response to the impact of the COVID-19 pandemic, was designed to reduce overhead costs, streamline certain underperforming operations and improve future profitability.

The Company’s 2020 restructuring plan, which was initiated during the second quarter of 2020 largely in response to the impact of the COVID-19 pandemic, was designed to reduce overhead costs, streamline certain underperforming operations and improve future profitability.

The restructuring costs, which impact all segments, include employee-related costs, including severance and other termination benefits.

During the year ended December 31, 2020, the Company recorded restructuring charges of $ 19 million in connection with the program.

The Company currently estimates aggregate restructuring charges of approximately $ 30 million to $ 35 million to be incurred for projects launched in connection with the program.

All cash payments are expected to be paid within one year of charges incurred.

In connection with the program, the Company incurred cumulative charges of $ 29 million since inception, $ 10 million and $ 19 million for the years ended December 31, 2021 and 2020, respectively.

This restructuring program is substantially complete at the end of 2021 and all cash payments are expected to be paid within one year of charges incurred.

Accelerated Transformation Plan

The Company’s ATP, which was initiated during the first quarter of 2018 and completed at the end of 2019, was designed in part, to divest the Company’s non-core consumer businesses and focus on the realignment of the Company’s management structure and overall cost structure as a result of the completed divestitures.

The Company’s Accelerated Transformation Plan (“ATP”), which was completed at the end of 2019, was designed in part, to divest the Company’s non-core consumer businesses and focus on the realignment of the Company’s management structure and overall cost structure as a result of the completed divestitures.

Restructuring costs associated with the ATP included employee-related costs, including severance, retirement and other termination benefits, as well as contract termination costs and other costs.

Restructuring costs incurred during 2019 and 2018 are primarily related to the ATP.

The Company recorded charges of $ 2 million related to the ATP during 2020.

Restructuring charges incurred during 2019 are primarily related to the ATP.

Other Restructuring-Related Costs

The Company regularly incurs other restructuring-related costs in connection with various discrete initiatives which are recorded in cost of products sold and SG&A in the Consolidated Statements of Operations based on the nature of the underlying costs incurred.

The Company regularly incurs other restructuring and restructuring-related costs in connection with various discrete initiatives, including certain costs associated with Project Ovid.

Restructuring-related costs are recorded in cost of products sold and SG&A in the Consolidated Statements of Operations based on the nature of the underlying costs incurred.

Footnote 5 — Inventories

10 unchanged sentences

for the balance, cost was determined using the FIFO method.

At December 31, 2020 and 2019 , LIFO reserves were contra-assets of $ 8 million and $ 14 million, respectively.

Inventory accounted for under the LIFO method would increase by $ 90 million and $ 23 million at December 31, 2021 and 2020, respectively, if the LIFO inventory were valued under the FIFO method.

The pre-tax expense from continuing operations recognized by the Company related to the liquidation of LIFO-based inventories were immaterial in 2021 and 2020, and $ 3 million in 2019.

12 unchanged sentences

Depreciation expense for continuing operations was $ 205 million, $ 200 million and $ 254 million in 2021, 2020 and 2019, respectively.

Depreciation expense for discontinued operations was nil in 2020 and 2019 and $ 19 million in 2018.

Depreciation expense for assets held for sale was nil for 2020 and 2019 as the Company ceased depreciating property, plant, and equipment relating to businesses which satisfied the criteria to be classified as held for sale during the second quarter of 2018.

During the first quarter of 2020, the Company concluded that a triggering event had occurred for all of its reporting units as a result of the COVID-19 pandemic.

As a result of the impairment testing performed in connection with the triggering event, the Company recorded a non-cash fixed asset impairment charge of approximately $ 1 million during 2020, in the Home Solutions segment associated with its Yankee Candle retail store business.

The impairment charge was calculated as the excess of carrying value over fair value of the asset group.

In 2018, as part of the ATP, the Company approved a plan to market for sale the Commercial Business.

This business was classified as held for sale in the Company's historical Consolidated Balance Sheets.

During 2019, the Company decided not to sell this business.

As a result, the business no longer satisfied the requirements to be classified as held for sale in the Company's Consolidated Balance Sheet at December 31, 2019.

Accordingly, the Consolidated Balance Sheet at December 31, 2018 was recast to reclassify the Commercial Business from held for sale to held and used.

There was no depreciation expense for discontinued operations in 2019.

During the first quarter of 2020, the Company concluded that a triggering event had occurred for all of its asset groups as a result of the COVID-19 pandemic.

Pursuant to the authoritative accounting literature, the Company compared the sum of the undiscounted future cash flows attributable to the asset or group of assets (the lowest level for which identifiable cash flows are available) to their respective carrying amount and recorded a non-cash impairment charge of approximately $ 1 million during the year ended December 31, 2020, in the Home Solutions segment associated with its Yankee Candle retail store business.

The impairment charge was calculated by subtracting the estimated fair value of the asset group from its carrying value.

See Footnote 1 for further information.

During 2019, the Company decided not to sell the Commercial Business and reclassified the business from held for sale to held and used.

The Company measured the business at the lower of its (i) carrying amount before it was classified as held for sale, adjusted for depreciation and amortization expense that would have been recognized had the Commercial Business been continuously classified as held and used, or (ii) fair value at the date the decision not to sell was made.

The Company recorded a charge of $ 50 million in 2019 relating to the amount of depreciation expense that would have been recorded in prior periods had the Commercial Business been continuously classified as held and used.

During 2018, the Company recorded $ 41 million of impairment charges on certain other assets, the majority of which relate to the Home Fragrance business in the Home Solutions segment.

Footnote 7 — Goodwill and Other Intangible Assets, Net

1 unchanged sentence

December 31, 2021

Net Book Value at December 31, 2019 Other

(1) Impairment

Net Book Value at December 31, 2020 Foreign

Exchange Gross

1 unchanged sentence

Charges Net Book

Appliances and Cookware $ 212 $ — $ ( 212 ) $ — $ 744 $ ( 744 ) $ —

Commercial Solutions $ 747 $ — $ 1,241 $ ( 494 ) $ 747

Home Appliances — — 569 ( 569 ) —

Home Solutions 164 — 2,567 ( 2,403 ) 164

2 unchanged sentences

$ 3,553 $ ( 49 ) $ 8,604 $ ( 5,100 ) $ 3,504

(1) During the third quarter of 2020, the Company divested a product line in its Learning and Development segment and allocated $ 3 million of reporting unit goodwill to the calculation of loss on disposal of business.

See Footnote 2 for further information.

(2) During the first quarter of 2020, the Company concluded that a triggering event had occurred for all of its reporting units as a result of the COVID-19 global pandemic.

Pursuant to the authoritative literature, the Company performed an impairment test and determined that the goodwill associated with its Appliances and Cookware reporting unit was fully impaired and recorded a non-cash charge of $ 212 million to reduce the reporting unit's goodwill to zero .

See Footnote 1 for further information.

December 31, 2020

4 unchanged sentences

Charges Net Book

Appliances and Cookware $ 211 $ ( 7 ) $ 7 $ 1 $ 744 $ ( 532 ) $ 212

Commercial Solutions $ 747 $ — $ — $ — $ 1,241 $ ( 494 ) $ 747

Home Appliances 200 — ( 200 ) — 569 ( 569 ) —

Home Solutions 176 — ( 12 ) — 2,567 ( 2,403 ) 164

2 unchanged sentences

$ 3,709 $ ( 3 ) $ ( 212 ) $ 59 $ 8,653 $ ( 5,100 ) $ 3,553

(1) During 2019, in connection with the Company’s state income tax payable/receivable reconciliation process, the Company identified that a state income tax receivable initially recorded in March 2017 was overstated by $ 20 million.

The Company determined that the offset to this overstated receivable was recorded as a reduction to goodwill and, subsequently, recorded an entry during the current year to increase goodwill by this amount with a corresponding reduction to its state income tax receivable.

Additionally, the Company identified and reversed $ 9 million of reserves for uncertain tax positions that were no longer required as the statutes of limitations had previously expired across multiple prior years.

Therefore, the Company recorded an adjustment to income tax expense with a corresponding reduction to its reserves for uncertain tax positions.

The Company was required to allocate the goodwill and reversal of reserves for uncertain tax positions to its businesses and reporting units in order to determine whether or not the carrying value of a disposal group or reporting unit that was previously sold or impaired needed to be updated.

Based on its analysis, the Company concluded that the entire $ 20 million goodwill balance and the reversal of $ 9 million of reserves for uncertain tax positions would have been impaired or recognized as a loss on disposal in previously issued financial statements.

As such, in 2019 the Company recorded pre-tax out-of-period impairment charges and a loss on sale of divested businesses of $ 3 million and $ 8 million, respectively, of which $ 3 million ($ 2 million after-tax) and $ 8 million ($ 6 million after-tax) were reflected in continuing operations and discontinued operations, respectively, in the Company’s Consolidated Statement of Operations.

The Company concluded the effects of such adjustments were not material to the current period or previously issued financial statements.

See Footnote 2 for further information.

(2) In 2019, the Company recorded non-cash impairment charges in the Commercial Solutions segment to reflect a decrease in the carrying values of Mapa/Spontex and Quickie by a total of $ 158 million while these businesses were classified as held for sale.

Acquired intangible asset impairment charges were recorded in the Company’s reporting segments as follows (in millions):

(2) During the first quarter of 2020, the Company concluded that a triggering event had occurred for all of its reporting units as a result of the COVID-19 global pandemic.

Pursuant to the authoritative literature, the Company performed an impairment test and determined that goodwill associated with its Home Appliances and Food reporting units were fully impaired and recorded a non-cash charge of $ 212 million to reduce the reporting units' goodwill to zero .

See Footnote 1 for further information.

The impairment charges for the acquired intangible assets were recorded in the Company’s reporting segments as follows for the years ended December 31, (in millions):

2021 (1) 2020 (2) 2019 (3)

Impairment of acquired intangible assets

Appliances and Cookware $ 87 $ 607

Commercial Solutions $ 29 $ 320 $ 152

Home Appliances — 87 607

Home Solutions — 290 152

2 unchanged sentences

$ 60 $ 1,279 $ 1,053

(1) During the fourth quarter of 2021, in conjunction with its annual impairment testing, the Company recorded non-cash impairment charges of $ 60 million associated with tradenames in the Commercial Solution and Learning and Development segments, as the carrying values exceeded the fair values, reflecting a downward revision of future expected cash flows, which include the impact of the COVID-19 global pandemic.

Further impairments may occur if future expected cash flows are not achieved.

(2) During the fourth quarter of 2020, in conjunction with its annual impairment testing, the Company recorded a non-cash impairment charge of $ 20 million associated with a tradename in the Learning and Development segment, as its carrying value exceeded its fair value.

The impairment reflected a downward revision of forecasted results due to the impact of the delayed and limited re-opening of schools and offices as a result of the COVID-19 global pandemic, as well as the continued deterioration in sales for slime-related adhesive products.

The rate and duration of the decline for such products, which is expected to continue into the future, is difficult to predict.

Further impairments of this tradename may also occur if future expected cash flows are not achieved.

During the first quarter of 2020, as a result of the impairment testing performed in connection with COVID-19 pandemic triggering event, the Company determined that certain of its indefinite-lived intangible assets in all of its operating segments were impaired and recorded non-cash impairment charges of $ 1.3 billion to reflect the impairment of these indefinite-lived tradenames because their carrying values exceeded their fair values.

(2) The carrying value of certain Appliances and Cookware tradenames exceeded their fair value primarily due to the announced tariffs on Chinese imports, as well as a decline in sales volume due to a loss in market share for certain appliance categories driven by the success of newly launched competitive products.

(3) The carrying value of certain Home Appliances tradenames exceeded their fair value primarily due to the announced tariffs on Chinese imports, as well as a decline in sales volume due to a loss in market share for certain appliance categories driven by the success of newly launched competitive products.

Both of these factors resulted in downward revisions to forecasted results.

In 2019, the Company recorded impairment charges in the Commercial Solution segment to reflect a decrease in the carrying values of Mapa/Spontex and Quickie while these businesses were classified as held for sale.

In the Home Solution segment, the impairment charges relate to certain Home Fragrance trademarks/tradenames.

In the Home Solutions segment, the impairment charges relate to certain Home Fragrance trademarks/tradenames.

The Home Fragrance business has experienced a shift in product mix, which resulted in a downward revision to forecasted results for one of its tradenames.

2 unchanged sentences

Related sales of such products during the fourth quarter of 2019 deteriorated at a faster rate than expected, which resulted in a downward revision to forecasted results for one of its tradenames.

The carrying value of certain Outdoor and Recreation tradenames exceeded their fair value primarily due to decline in demand for certain products, which resulted in a downward forecasted results.

The carrying value of certain Outdoor and Recreation tradenames exceeded their fair value primarily due to decline in demand for certain products, which resulted in a downward revision of forecasted results.

The table below summarizes the balance of other intangible assets, net and the related amortization periods using the straight-line method and attribution method at December 31, 2021 and 2020 (in millions):

10 unchanged sentences

Customer relationships and distributor channels 1,216 ( 303 ) 913 1,259 ( 282 ) 977 3 - 30

Other — — — 109 ( 102 ) 7 3 - 5

$ 4,247 $ ( 877 ) $ 3,370 $ 4,439 $ ( 875 ) $ 3,564

Amortization expense for intangible assets for continuing operations was $ 120 million, $ 157 million and $ 192 million in 2021, 2020 and 2019, respectively.

Amortization expense for intangible assets prior to being classified as discontinued operations was $ 43 million in 2018.

A mortization expense for assets held for sale was nil for 2020 and 2019 as the Company ceased amortizing other finite-lived intangible assets relating to businesses which satisfied the criteria to be classified as held for sale during the second quarter of 2018 .

In 2018, as part of the ATP, the Company approved a plan to market for sale the Commercial Business and classified it as held for sale in the Company's historical Consolidated Balance Sheets.

During 2019, the Company decided not to sell this business and measured the business at the lower of its (i) carrying amount before it was classified as held for sale, adjusted for depreciation and amortization expense that would have been recognized had the Commercial Business been continuously classified as held and used, or (ii) fair value at the date the decision not to sell was made as it no longer satisfied the requirements to be classified as held for sale in the Company's Consolidated Balance Sheet at December 31, 2019.

Accordingly, the Company recorded a charge of $ 7 million in 2019 reflecting to the amount of amortization expense that would have been recorded in prior periods had the Commercial Business been continuously classified as held and used.

During 2019, the Company decided not to sell the Commercial Business and reclassified the business from held for sale to held and used.

Accordingly, the Company recorded a charge of $ 7 million in 2019 relating to the amount of amortization expense that would have been recorded in prior periods had the Commercial Business been continuously classified as held and used.

At December 31, 2021, the aggregate estimated intangible amortization amounts for the succeeding five years are as follows (in millions):

4 unchanged sentences

Customer accruals $ 715 $ 683

Operating lease liabilities 129 132

Accrued self-insurance liabilities, contingencies and warranty 125 108

Accrued income taxes 66 114

Operating lease liabilities 122 129

Accrued marketing and freight expenses 59 57

Accrued interest expense 56 60

Accruals for manufacturing, marketing and freight expenses 57 50

Accrued income taxes 43 66

Other 244 290

15 unchanged sentences

5.50 % senior notes due 2046

Commercial paper — 25

Other debt 9 19

2 unchanged sentences

Long-term debt $ 4,883 $ 5,141

Credit Revolver and Commercial Paper

On November 1, 2019, S&P Global Inc.

("S&P") downgraded the Company’s debt rating to “BB+” as S&P believed the Company would fail to meet S&P’s target debt level for 2019.

In addition, on March 9, 2020, Moody’s Corporation ("Moody’s") downgraded the Company’s debt rating to “Ba1” based on a view that the Company would fail to meet Moody's target debt level for 2020.

Subsequently on April 15, 2020, Fitch Ratings ("Fitch") downgraded the Company’s debt rating to "BB" as they believed the Company would fail to meet Fitch's target debt level for 2020.

As a result of the S&P and Moody's downgrades, the Company could no longer borrow from the commercial paper market on terms it deems acceptable or favorable .

Previously, the Company was able to issue commercial paper up to a maximum of $ 800 million provided there was a sufficient amount available for borrowing under the Company’s $ 1.25 billion revolving credit facility that matures in December 2023 (“the Credit Revolver”).

The Company’s ability to borrow under the Credit Revolver was not affected by the downgrades.

The interest rate for borrowings under the Credit Revolver is the borrowing period referenced LIBOR rate plus 127.5 basis points.

At December 31, 2020 and 2019, the Company did no t have any amounts outstanding under the Credit Revolver.

In May 2020, the Company completed a registered public offering of $ 500 million in aggregate principal amount of 4.875 % senior notes that mature in June 2025 (the “June 2025 Notes”) and received proceeds of approximately $ 491 million, net of fees and expenses paid.

The June 2025 Notes are subject to similar restrictive and financial covenants as the Company’s existing senior notes, however, they are not subject to the interest rate adjustment or coupon step up provisions of certain other notes described below.

The June 2025 Notes are redeemable in whole or in part, at the option of the Company (1) at any time prior to one month before the stated maturity at a redemption price equal to the greater of (a) 100 % of the principal amount or (b) the discounted present value of principal and interest at the Treasury Rate plus 50 basis points, plus accrued interest to but excluding the redemption date;

or (2) at any time on or after one month prior to the stated maturity at a price equal to 100 % of the principal amount being redeemed, plus accrued interest to but excluding the redemption date.

The Company used the net proceeds from the June 2025 Notes for general corporate purposes, including repayment of outstanding borrowings under the Credit Revolver and accounts receivable securitization facility, and the redemption of the outstanding 4.70 % Senior Notes due in August 2020 at maturity.

In March 2020, the Company repurchased $ 15 million of the 4.20 % senior notes due 2026 at approximately par value.

The total consideration, excluding accrued interest, was approximately $ 15 million.

As a result of the partial debt extinguishment, the Company recorded an immaterial loss.

In November 2020, the Company repurchased $ 300 million of the 3.85 % Senior Notes due 2023 with available cash on hand.

The total consideration, excluding accrued interest, was approximately $ 318 million.

The Company recorded a loss on extinguishment of debt of $ 20 million as a result of the partial debt repayment.

On January 25, 2021, the Company delivered a notice of redemption to the holders of the 3.15 % senior notes that will mature in April 2021 (the “April 2021 Notes”) that the Company will redeem the April 2021 Notes on March 1, 2021 (the “Redemption Date”) for a redemption price equal to 100 % of the current outstanding aggregate principal amount of the notes, plus accrued and unpaid interest to the Redemption Date.

As a result of the aforementioned debt rating downgrades by Moody's and S&P, certain of the Company’s outstanding senior notes aggregating to approximately $ 4.3 billion are subject to an interest rate adjustment of 25 basis points as a result of each downgrade, for a total of 50 basis points.

This increase to the interest rates of each series of the Company's senior notes subject to adjustment, increased the Company’s interest expense for 2020 by approximately $ 17 million and expected to increase by approximately $ 21 million thereafter, on an annualized basis.

The Fitch downgrade did not impact the interest rates on any of the Company's senior notes.

On November 22, 2021, the Company redeemed its 4.00 % senior notes due June 2022 (the “June 2022 Notes”) at a redemption price equal to 102 % of the outstanding aggregate principal amount of the notes, plus accrued and unpaid interest to the date of the redemption.

The total consideration was approximately $ 259 million, and the Company recorded a debt extinguishment loss of $ 5 million.

On September 28, 2021, the Company redeemed its 3.75 % senior notes due October 2021 (the “October 2021 Notes”) at a redemption price equal to 100 % of the outstanding aggregate principal amount of the notes, plus accrued and unpaid interest to the redemption date.

On March 1, 2021, the Company redeemed its 3.15 % senior notes due April 2021 (the “April 2021 Notes”) at a redemption price equal to 100 % of the outstanding aggregate principal amount of the notes, plus accrued and unpaid interest to the redemption date.

During the first quarter of 2021, the Company repurchased $ 5 million of the 3.85 % senior notes due 2023 at approximately 5 % above par value.

The total consideration, excluding accrued interests was approximately $ 5 million.

As a result of the partial debt repurchase, the Company recorded an immaterial loss.

As a result of the debt rating downgrades by S&P Global Inc.

(“S&P”) and Moody’s Corporation (“Moody’s”) in 2019 and 2020, respectively, certain of the Company’s outstanding senior notes aggregating to approximately $ 4.2 billion were subject to an interest rate adjustment of 25 basis points for each downgrade, for a total of 50 basis points.

This increase to the interest rates of each series of the Company's senior notes subject to adjustment, increased the Company’s annualized interest expense by approximately $ 21 million.

On February 11, 2022, S&P upgraded the Company’s debt rating to “BBB-” from “BB+” as S&P believed the Company has been able to achieve S&P’s target debt level.

As a result of this upgrade, the Company will again be in a position to access the commercial paper market, up to a maximum of $ 800 million provided there is a sufficient amount available for borrowing under the Credit Revolver.

In addition, the interest rate on the relevant senior notes will decrease by 25 basis points, reducing the Company’s interest expense by approximately $ 10 million on an annualized basis (approximately $ 8 million in 2022).

In connection with the expected sale of CH&S business in the first quarter of 2022, the Company anticipates using after-tax proceeds from the transaction towards the pay down of debt and share repurchases.

Receivables Facility

3 unchanged sentences

The maximum availability under the Securitization Facility fluctuates based on eligible accounts receivable balances.

In March 2020, the Company amended its Securitization Facility with respect to certain customer receivables and to remove an originator from the Securitization Facility.

At December 31, 2020, the Company did no t have any amounts outstanding under the Securitization Facility.

At December 31, 2021, the Company did not have any amounts outstanding under the Securitization Facility.

Revolving Credit Facility

The Company has a $ 1.25 billion revolving credit facility that matures in December 2023 (the “Credit Revolver”).

At December 31, 2021, the Company did not have any amounts outstanding under the Credit Revolver.

In addition, there were approximately $ 22 million of outstanding standby letters of credit issued against the Credit Revolver.

Future Debt Maturities

2 unchanged sentences

$ 3 $ 1,090 $ 201 $ 547 $ 1,985 $ 1,087 $ 4,913

In connection with the ATP, the Company completed the sale of several businesses during 2019.

In 2019, the Company sold:

its Process Solutions business, Rexair, The Playing Cards Company and other related subsidiaries.

As a result of these transactions, the Company received gross proceeds of $ 996 million in 2019, most of which was used to pay down debt.

The indentures governing the Company’s senior notes contain usual and customary nonfinancial covenants.

7 unchanged sentences

Net Investment Hedge

The Company has designated the € 300 million principal balance of the 3.75 % senior notes due October 2021 as a net investment hedge of the foreign currency exposure of its net investment in certain Euro-functional currency subsidiaries with Euro-denominated net assets.

The Company previously designated the € 300 million principal balance of the 3.75 % senior notes due October 2021 as a net investment hedge of the foreign currency exposure of its net investment in certain Euro-functional currency subsidiaries with Euro-denominated net assets.

In conjunction with the redemption of the October 2021 Notes, the Company settled this net investment hedge.

At December 31, 2021, $ 11 million of deferred losses have been recorded in AOCL.

3 unchanged sentences

These instruments primarily include interest rate swaps, forward starting interest rate swaps, forward exchange contracts and options.

The Company’s forward exchange contracts and options do not subject the Company to exchange rate risk because gains and losses on these instruments generally offset gains and losses on the assets, liabilities and other transactions being hedged.

The Company’s forward exchange contracts and options generally do not subject the Company to exchange rate risk because gains and losses on these instruments generally offset gains and losses on the assets, liabilities and other transactions being hedged.

However, these instruments, when settled, impact the Company’s cash flows from operations to the extent the underlying transaction being hedged is not simultaneously settled due to an extension, a renewal or otherwise.

6 unchanged sentences

Fixed rate swaps would be used to reduce the Company’s risk of the possibility of increased interest costs.

Interest rate swap contracts are therefore used by the Company to separate interest rate risk management from the debt funding decision.

The cash paid and received from the settlement of interest rate swaps is included in interest expense.

3 unchanged sentences

The effective portion of the fair value gains or losses on these swaps is offset by fair value adjustments in the underlying debt.

A $ 277 million notional interest rate swap matured concurrently with the maturity of the 4.70 % senior notes which were repaid during the third quarter of 2020.

During 2019, the Company also terminated approximately $ 150 million notional amount of these floating rate swaps and received consideration of $ 6 million, which is included in net cash provided by operating activities in the Consolidated Statement of Cash Flows for 2019.

These floating rate swaps that were designated as fair value hedges, were terminated in connection with the extinguishment of a portion of the principal balance of the 2024 Notes pursuant to the Tender Offers (See Footnote 9 ).

The termination of these floating rate swaps resulted in a total gain of $ 6 million, which is included in loss on extinguishment for 2019 in the Consolidated Statements of Operations.

Cross-Currency Contracts

The Company uses cross-currency swaps to hedge foreign currency risk on certain financing arrangements.

During the first quarter of 2020, the Company entered into two cross-currency swaps with an aggregate notional amount of $ 900 million, which were designated as net investment hedges of the Company's foreign currency exposure of its net investment in certain Euro-functional currency subsidiaries with Euro-denominated net assets.

With these cross-currency swaps, which mature in January and February 2025, the Company pays a fixed rate of Euro-based interest and receives a fixed rate of U.S.

The Company previously entered into two cross-currency swaps, maturing in January and February 2025, respectively, with an aggregate notional amount of $ 900 million.

During the third quarter of 2021, the Company entered into another cross-currency swap with a notional amount of $ 358 million, maturing in September 2027.

Each of these cross-currency swaps were designated as net investment hedges of the Company's foreign currency exposure of its net investment in certain Euro-functional currency subsidiaries with Euro-denominated net assets, and the Company pays a fixed rate of Euro-based interest and receives a fixed rate of U.S.

dollar interest.

The Company has elected the spot method for assessing the effectiveness of these contracts.

During the twelve months ended December 31, 2020, the Company recognized income of $ 14 million in interest expense, net, related to the portion of cross-currency swaps excluded from hedge effectiveness testing.

The Company had no cross-currency swaps used as hedging instruments in 2019.

During the years ended December 31, 2021 and 2020, the Company recognized income of $ 16 million and $ 14 million, respectively, in interest expense, net, related to the portion of cross-currency swaps excluded from hedge effectiveness testing.

Foreign Currency Contracts

3 unchanged sentences

At December 31, 2021, the Company had approximately $ 523 million notional amount outstanding of forward foreign currency contracts that are designated as cash flow hedges of forecasted inventory purchases and sales.

The Company also uses foreign currency contracts, primarily forward foreign currency contracts, to mitigate the foreign currency exposure of certain other foreign currency transactions.

At December 31, 2020, the Company had approximately $ 994 million notional amount outstanding of these foreign currency contracts that are not designated as effective hedges for accounting purposes and have maturity dates through December 2021.

The Company also uses foreign currency contracts, primarily forward foreign currency contracts, to mitigate the foreign currency

exposure of certain other foreign currency transactions.

At December 31, 2021, the Company had approximately $ 1.6 billion notional amount outstanding of these foreign currency contracts that are not designated as effective hedges for accounting purposes and have maturity dates through December 2022.

Fair market value gains or losses are included in the results of operations and are classified in other (income) expense, net in the Company's Consolidated Statement of Operations.

Commodity Contracts

From time to time the Company may enter into commodity-based derivatives in order to mitigate the risk that the rising price of these commodities could have on the cost of certain of the Company’s raw materials.

These commodity-based derivatives provide the Company with cost certainty.

At December 31, 2020, the Company had no notional amount outstanding of commodity-based derivatives.

Fair market value gains or losses are included in the results of operations and are classified in cost of products sold.

The following table presents the fair value of derivative financial instruments at December 31, (in millions):

6 unchanged sentences

Interest rate swaps Other assets 3 7

Interest rate swaps Other accrued liabilities — ( 1 )

Net Investment Hedges:

5 unchanged sentences

Total $ ( 17 ) $ ( 110 )

The Company recognized expense of $ 9 million, $ 11 million and $ 2 million in other (income) expense, net, during 2020 and 2019 and 2018, respectively, related to derivatives that are not designated as hedging instruments.

The Company recognized income (expense) of $ 13 million, $( 9 ) million and $( 11 ) million in other (income) expense, net, during 2021, 2020 and 2019, respectively, related to derivatives that are not designated as hedging instruments.

Gains and losses on these derivatives are generally offset by foreign currency movement in the underlying exposure.

The Company is not a party to any derivatives that require collateral to be posted prior to settlement.

3 unchanged sentences

(in millions) Recognized

in OCL (1) Reclassified

to Income Recognized

in OCL (1) Reclassified

to Income Recognized

in OCL (1) Reclassified

Interest rate swaps (2)

$ — $ ( 6 ) $ — $ ( 7 ) $ — $ ( 8 )

Foreign currency contracts (3)

14 ( 17 ) 4 13 ( 16 ) 15

Cross-currency swaps (4)

69 — ( 92 ) — — —

Total $ 83 $ ( 23 ) $ ( 88 ) $ 6 $ ( 16 ) $ 7

2 unchanged sentences

(3) Portion reclassified from AOCL to income recognized in net sales and cost of products sold.

(4) Portion reclassified from AOCL to income recognized in other expense, net.

At December 31, 2020, deferred net losses of approximately $ 18 million within AOCL are expected to be reclassified to earnings over the next twelve months.

(4) Portion reclassified from AOCL to income recognized in other (income) expense, net.

At December 31, 2021, deferred net gains of approximately $ 12 million within AOCL are expected to be reclassified to earnings over the next twelve months.

Foreign Currency Operations

1 unchanged sentence

dollars at the rates of exchange in effect at year-end.

The related translation adjustments are made directly to accumulated other comprehensive income (loss).

The related translation adjustments are made directly to AOCL.

Income and expenses are translated at the average monthly rates of exchange in effect during the year.

10 unchanged sentences

The fair value of plan assets represents the current market value of assets held for the sole benefit of participants.

Overfunded plans, with the fair value of plan assets exceeding the benefit obligation, are aggregated and recorded as a prepaid pension asset equal to this excess.

Over funded plans, with the fair value of plan assets exceeding the benefit obligation, are aggregated and recorded as a prepaid pension asset equal to this excess.

Underfunded plans, with the benefit obligation exceeding the fair value of plan assets, are aggregated and recorded as a retirement and postretirement benefit obligation equal to this excess.

14 unchanged sentences

The irrevocable transaction for the transfer of pension liability to the insurance company was funded with the plan’s existing assets.

Payments from the insurance company to the beneficiaries commences on January 1, 2021.

In connection with this transaction, the Company recorded a pre-tax settlement loss to reclassify approximately $ 49 million into earnings from AOCL.

Payments from the insurance company to the beneficiaries commenced on January 1, 2021.

In 2020, in connection with this transaction, the Company recorded a pre-tax settlement loss to reclassify approximately $ 49 million into earnings from AOCL.

The Company has a Supplemental Executive Retirement Plan (“SERP”), which is a nonqualified defined benefit and defined contribution plan pursuant to which the Company will pay supplemental benefits to certain key employees upon retirement based upon the employees’ years of service and compensation.

15 unchanged sentences

Interest cost 20 35 6 9 1 1

Actuarial loss 133 151 29 45 2 2

Actuarial (gain) loss ( 53 ) 133 ( 14 ) 29 ( 7 ) 2

Amendments — — 1 1 — —

4 unchanged sentences

Benefit obligation at end of year (1)

$ 1,238 $ 1,357 $ 623 $ 668 $ 41 $ 51

Change in plan assets:

Fair value of plan assets at beginning of year 1,161 1,228 627 580 — —

Actual return on plan assets 178 213 47 51 — —

Actual return (loss) on plan assets 48 178 ( 7 ) 47 — —

Contributions 10 17 10 8 4 4

17 unchanged sentences

The current healthcare cost trend rate gradually declines through 2038 to the ultimate trend rate and remains level thereafter.

A one percentage point change in assumed healthcare cost trend rate would not have a material effect on the postretirement benefit obligation or the service and interest cost components of postretirement benefit costs.

Summary of under-funded or non-funded pension benefit plans with projected benefit obligations in excess of plan assets at December 31, (in millions):

39 unchanged sentences

The components of net periodic pension and postretirement costs other than the service cost component are included in other (income) expense, net in the Consolidated Statements of Operations.

The Company employs a total return investment approach for its pension plans whereby a mix of equities and fixed income investments are used to maximize the long-term return of pension plan assets.

The Company employs a total return investment approach for its pension plans whereby a mix of equities and fixed income investments are used to optimize the long-term return of pension plan assets.

The intent of this strategy is to minimize plan expenses by outperforming plan liabilities over the long run.

7 unchanged sentences

The domestic Level 3 investments are primarily comprised of insurance contracts valued at contract value.

The investments excluded from the fair value hierarchy are NAV-based hedge fund investments that generally have a redemption frequency of 90 days or less, with various redemption notice periods that are generally less than a month.

The investments excluded from the fair value hierarchy are net asset value-based (“NAV-based”) hedge fund investments that generally have a redemption frequency of 90 days or less, with various redemption notice periods that are generally less than a month.

The notice periods for certain investments may vary based on the size of the redemption.

4 unchanged sentences

The expected long-term rate of return is adjusted when there are fundamental changes in expected returns on the Company’s defined benefit pension plan’s investments.

The target asset allocations for the Company’s domestic pension plans may vary by plan, based in part due to plan demographics, funded status and liability duration.

The target asset allocations for the Company’s domestic pension plans may vary by plan, based in part on plan demographics, funded status and liability duration.

In general, the Company’s target asset allocations are as follows:

43 unchanged sentences

Balance December 31, 2019 $ 9

Purchases, sales, settlements, and other, net ( 1 )

Balance December 31, 2019 9

Unrealized gains 1

Balance December 31, 2020 10

Unrealized losses ( 1 )

Balance December 31, 2021 $ 9

Contributions and Estimated Future Benefit Payments

4 unchanged sentences

Postretirement benefits $ 5 $ 5 $ 4 $ 4 $ 4 $ 13

Defined Benefit Plan Buy-in

In February of 2022, the Company entered into an agreement with an insurance company for a bulk annuity purchase or “buy-in” for one of its U.K.

defined benefit pension plans, resulting in an exchange of plan assets for an annuity that matches the plan’s future projected benefit obligations to covered participants.

The Company anticipates the “buy-out” for the plan to be completed by the end of 2022 or early 2023.

Footnote 12 — Income Taxes

14 unchanged sentences

Total deferred ( 41 ) ( 261 ) ( 1,068 )

Total income tax benefit ( 236 ) ( 1,007 ) ( 1,230 )

Total income tax provision (benefit) 121 ( 236 ) ( 1,007 )

Total income tax provision - discontinued operations — — 31

Total income tax benefit - continuing operations $ ( 236 ) $ ( 1,038 ) $ ( 1,359 )

Total income tax provision (benefit) - continuing operations $ 121 $ ( 236 ) $ ( 1,038 )

A reconciliation of the U.S.

5 unchanged sentences

foreign inclusions and foreign tax credit (1)

3.9 3.6 ( 1.6 )

Foreign rate differential ( 12.7 ) 2.7 4.9

5 unchanged sentences

Non-deductible compensation 0.4 ( 1.2 ) ( 1.6 )

Return to provision 1.7 2.2 ( 0.1 )

Other taxes 1.4 ( 0.9 ) 1.6

income inclusions on asset transfers 12.2 ( 6.9 ) ( 2.2 )

Outbound transfer of U.S.

assets (2) ( 6.9 ) 68.3 —

Other ( 1.9 ) 1.9 3.0

Effective rate 17.4 % 23.5 % 121.9 %

(1) The Company accounts for tax on GILTI as a period cost and the effects are included herein.

(1) The Company accounts for tax on global intangible low-taxed income (“GILTI”) as a period cost and the effects are included herein.

(2) In connection with the Company's execution to rationalize its legal entities along with centralizing the ownership of certain intellectual property rights for its comprehensive management and protection, the Company transferred these intellectual property rights to a wholly-owned subsidiary, which resulted in the creation of deferred tax assets and a corresponding income tax benefit of $ 522 million for the year ended December 31, 2019.

2 unchanged sentences

federal taxation with the one-time toll charge.

The Company is no longer asserting indefinite reinvestment on a portion of its unremitted earnings of its foreign subsidiaries at December 31, 2020 and is recognizing deferred income taxes of approximately $ 5 million, primarily related to the future U.S.

state tax effects of unremitted

foreign earnings.

The Company does not assert indefinite reinvestment on a portion of its unremitted earnings of certain foreign subsidiaries as of December 31, 2021 and is recognizing deferred income taxes of approximately $ 9 million, primarily related to the future withholding tax effects of those

unremitted foreign earnings.

With respect to unremitted earnings of $ 6.0 billion and any other additional outside basis differences where the Company is continuing to assert indefinite reinvestment, any future reversals could be subject to additional foreign withholding taxes, U.S.

19 unchanged sentences

Operating lease assets ( 152 ) ( 145 )

foreign inclusion recapture ( 62 ) ( 30 )

Other ( 59 ) ( 54 )

18 unchanged sentences

The Company has approximately $ 828 million of U.S.

capital loss carryforwards of which approximately $ 313 million were generated at December 31, 2018, and $ 442 million were generated at December 31, 2020 and can be carried back three years and carried forward five years.

The Company has approximately $ 292 million of post-apportioned state capital loss carryforwards of which $ 136 million was generated at December 31, 2018, and $ 156 million was generated at December 31, 2020.

Of these post-apportioned state capital loss

carryforwards, $ 183 million can be carried back three years and carried forward five years, and $ 109 million can be carried forward five years.

capital loss carryforwards of which approximately $ 313 million were generated at December 31, 2018, $ 427 million were generated at December 31, 2020, and $ 88 million were generated at December 31, 2021 and can be carried back three years and carried forward five years.

The Company has approximately $ 291 million of post-apportioned state capital loss of which $ 110 million was generated at December 31, 2018, and $ 181 million was generated at December 31, 2020.

Of these post-apportioned

state capital loss carryforwards, $ 136 million can be carried back three years and carried forward five years, and $ 155 million can be carried forward five years.

The Company routinely reviews valuation allowances recorded against deferred tax assets on a more likely than not basis as to whether the Company will realize the deferred tax assets.

1 unchanged sentence

Although realization is not assured, based on this existing evidence, the Company believes it is more likely than not that the Company will realize the benefit of existing deferred tax assets, net of the valuation allowances.

At December 31, 2020, the Company has a valuation allowance recorded against certain U.S., state, and foreign NOLs and other deferred tax assets the Company believes do not meet the more than likely to be realized threshold due to the uncertainty resulting from a lack of previous taxable income within the applicable tax jurisdictions.

At December 31, 2021, the Company has a valuation allowance recorded against certain deferred tax assets, primarily state and foreign NOLs and various income tax credits, which the Company believes do not meet the more likely than not threshold to be realized due to uncertainty of future taxable income within the applicable tax jurisdictions.

A valuation allowance of $ 186 million and $ 213 million was recorded against certain deferred tax asset balances at December 31, 2021 and 2020, respectively.

For 2020, the Company recorded a net valuation allowance decrease of $ 58 million, primarily related to U.S.

NOLs and other deferred tax assets related to a subsidiary previously excluded from the Company’s U.S.

consolidated income tax return of $ 53 million, state capital loss, and other miscellaneous changes in U.S., state and non-U.S.

For 2021, the Company recorded a net valuation allowance decrease of $ 27 million, primarily related to NOLs in the U.K.

and Luxembourg, and other miscellaneous changes in the U.S., state and non-U.S.

valuation allowances related to ongoing operations.

For 2019, the Company recorded a net valuation allowance increase of $ 76 million, primarily comprised of U.S.

For 2020, the Company recorded a net valuation allowance decrease of $ 58 million, primarily related to U.S.

NOLs and other deferred tax assets related to a subsidiary previously excluded from the Company’s U.S.

consolidated income tax return of $ 53 million, state capital loss, and other miscellaneous changes in U.S., state and non-U.S.

consolidated income tax return and other miscellaneous changes in U.S., state and non-U.S.

valuation allowances related to ongoing operations.

6 unchanged sentences

Increase in tax positions for the current period 23 40 84

Purchase accounting adjustments (See Footnote 1 and Footnote7) — ( 9 ) —

Purchase accounting adjustments (See Footnote 1 )

Settlements with taxing authorities ( 2 ) — ( 2 )

Lapse of statute of limitations ( 12 ) ( 66 ) ( 66 )

Cumulative translation adjustments ( 1 ) — —

Unrecognized tax benefits, December 31, $ 457 $ 452 $ 474

6 unchanged sentences

The Company’s U.S.

federal income tax returns for 2011, 2012, 2013, 2014, 2015, 2017 and 2018, as well as certain state and non-U.S.

federal income tax returns for 2011 to 2015 and 2017 to 2019, as well as certain state and non-U.S.

income tax returns for various years, are under examination.

23 unchanged sentences

ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term, which includes any extension the Company reasonably expects to exercise.

The Company assesses whether certain service arrangements contain embedded leases where the contract conveys the right to use an asset but are not explicitly identified as lease arrangements;

The Company assesses whether certain service arrangements contain embedded leases where the contract conveys the right to use an asset but is not explicitly identified as a lease arrangement;

examples include information technology, third-party logistics and original equipment manufacturers.

7 unchanged sentences

The ROU asset is amortized on a straight-line basis over the lease term.

Assets acquired under finance leases are recorded in property, plant and equipment, net.

Assets acquired under finance leases are reported in property, plant and equipment, net.

The depreciable life of leasehold improvements and other lease-related assets are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

6 unchanged sentences

Finance leases Short-term debt and current portion of long-term debt 3 3

Operating leases Long-term operating lease liabilities 472 541

Operating leases Operating lease liabilities 500 472

Finance leases Long-term debt 2 5

15 unchanged sentences

(2) Consists primarily of additional payments for non-lease components, such as maintenance costs, payments of taxes and additional rent based on a level of the Company’s retail store sales.

Rent expense for continuing operations for the year ended December 31, 2018 was $ 227 million.

Remaining lease term and discount rates at December 31, are as follows:

8 unchanged sentences

Operating cash flows from operating leases $ 163 $ 177

Operating cash flows from finance leases — 1

Financing cash flows from finance leases 4 4

1 unchanged sentence

Operating leases 144 75

Finance leases — 7

Maturities of lease liabilities at December 31, 2021, are as follows (in millions):

5 unchanged sentences

Present value of lease liabilities $ 622 $ 5

The Company has entered into agreements for certain right of use operating leases that it has not yet taken possession of and are not reflected in the Consolidated Balance Sheet at December 31, 2021.

The total future obligations of these right of use operating leases have been excluded from the preceding table and are approximately $ 130 million.

Footnote 14 — Earnings Per Share

6 unchanged sentences

Diluted weighted-average shares outstanding 428.0 424.1 423.9

(1) For 2020 and 2018, 1.1 million and 0.6 million, respectively, potentially dilutive share-based awards are excluded as their effect would be anti-dilutive.

At December 31, 2020, there were no potentially dilutive restricted share awards with performance-based vesting targets that were not met and as such, have been excluded from the computation of diluted earnings per share.

At December 31, 2019 and 2018 there were 0.5 million and 1.6 million potentially dilutive restricted share awards with performance-based vesting targets that were not met and as such, have been excluded from the computation of diluted earnings per share.

(1) For 2020, 1.1 million potentially dilutive share-based awards were excluded as their effect would be anti-dilutive.

At December 31, 2019 there were 0.5 million potentially dilutive restricted share awards with performance-based vesting targets that were not met and as such, have been excluded from the computation of diluted earnings per share.

For 2021, 2020 and 2019 dividends and equivalents for share-based awards expected to be forfeited did not have a material impact on net income for basic and diluted earnings per share.

2 unchanged sentences

The Company estimates future forfeiture rates based on its historical experience.

The Company maintains a 2013 stock plan (the “2013 Plan”), which allows for grants of stock-based awards.

The Company maintains a 2013 Incentive Plan (the “2013 Plan”), which allows for grants of stock-based awards.

At December 31, 2021, there were approximately 21 million share-based awards collectively available for grant under the 2013 Plan.

5 unchanged sentences

Stock option grants are generally subject to forfeiture if employment terminates prior to vesting, except upon retirement, in which case the options may remain outstanding and exercisable for a specified period not to exceed the remaining contractual term of the option.

During 2019, as inducement to join the Company and in connection with his appointment as President and Chief Executive Officer, the Company awarded Mr.

Ravichandra K.

Saligram 1.3 million performance-based non-qualified stock options which entitle Mr.

Saligram to purchase shares of the Company’s common stock at a price equal to the closing price of a share of the Company’s common stock on the date of grant.

For stock option awards with performance conditions that are based on stock price (“Stock-Price Based Stock Options”), the grant date fair value of certain Stock-Price Based Stock Options is estimated using a Monte Carlo simulation, with the primary input into such valuation being the expected future volatility of the Company’s common stock, the expected life, risk-free interest rate and expected dividend yield.

The Stock-Price Based Stock Options awarded to Mr.

Saligram had an aggregate grant date fair value of $ 5 million.

The vesting of the awarded stock options will occur ratably upon the 18-month , two-year and three-year anniversaries of the grant date, subject to the attainment of a performance condition that, during any 30-day period between the date that is 18 calendar months following the grant date and the third anniversary of the grant date, the average of the Company’s closing stock price must exceed 125 % of the closing stock price on July 29, 2019, which has already been achieved.

The award also provides for vesting in the event of a termination of Mr.

Saligram’s employment by the Company without Good Cause, or by Mr.

Saligram for Good Reason, as such terms are defined in the Company’s 2013 Incentive Plan, in each case subject to attainment of the applicable performance condition (with the performance condition, for this purpose only, measured as of any 30-day period falling between the grant date and the third anniversary of the grant date).

The following table summarizes the changes in the number of shares of common stock for 2021 (shares and aggregate intrinsic value in millions):

10 unchanged sentences

During 2021, the Company awarded 2.4 million time-based stock options with an aggregate grant fair value of $ 14 million.

These stock options entitle recipients to shares of the Company's common stock at an exercise price equal to the fair market value of the underlying shares as of the grant date and primarily vest in equal installments over a three-year period.

These stock options entitle recipients to purchase shares of the Company's common stock at an exercise price equal to the fair market value of the underlying shares as of the grant date and vest in equal installments over a three-year period.

The weighted average assumptions used to determine the fair value of stock options granted for the years ended December 31, are as follows:

3 unchanged sentences

Expected dividend yield 5.1 % 3.9 %

The total intrinsic value of options exercised was immaterial in 2020 and 2019 and $ 1 million in 2018.

The total intrinsic value of options exercised was $ 2 million in 2021 and immaterial in 2020 and 2019.

During 2019, as inducement to join the Company and in connection with his appointment as President and Chief Executive Officer, the Company awarded Mr.

Ravichandra K.

Saligram 1.3 million performance-based non-qualified stock options which entitle Mr.

Saligram to purchase shares of the Company’s common stock at a price equal to the closing price of a share of the Company’s common stock on the date of grant.

The Stock-Price Based Stock Options awarded to Mr.

Saligram had an aggregate grant date fair value of $ 5 million.

The award also provides for vesting in the event of a termination of Mr.

Saligram’s employment by the Company without Good Cause, or by Mr.

Time-Based and Performance-Based Restricted Stock Units

5 unchanged sentences

Time-based restricted stock units issued subsequent to 2016 have dividend equivalents credited to the recipient and are paid only to the extent the applicable service criteria is met and the time-based restricted stock units vest and the related stock is issued.

Performance-based restricted stock unit awards (“Performance-Based RSUs”) represent the right to receive unrestricted shares of stock based on the achievement of Company performance objectives and/or individual performance goals established by the Organizational Development & Compensation Committee and the Board of Directors.

Performance-based restricted stock unit awards (“Performance-Based RSUs”) represent the right to receive unrestricted shares of stock based on the achievement of Company performance objectives and/or individual performance goals established by the Compensation and Human Capital Committee and the Board of Directors.

The Performance-Based RSUs generally entitle recipients to shares of common stock if performance objectives are achieved, and typically vest no earlier than one year from the date of grant and primarily, no later than three years from the date of grant.

2 unchanged sentences

In the case of retirement (as defined in the award agreement), awards vest depending on the employee’s age and years of service, subject to the satisfaction of the applicable performance criteria.

forfeitures, over the longer of the derived service period or explicit requisite service period for awards expected to vest.

The Company accounts for stock-based compensation pursuant to relevant authoritative guidance, which requires measurement of compensation cost for all stock awards at fair value on the date of grant and recognition of compensation, net of estimated forfeitures, over the longer of the derived service period or explicit requisite service period for awards expected to vest.

For non- stock-price based Performance-Based RSUs, the Company assesses the probability of achievement of the performance conditions each period and records expense for the awards based on the probable achievement of such metrics.

17 unchanged sentences

The actual number of shares that will ultimately vest is dependent on the level of achievement of the specified performance conditions.

Other Share-Based Awards Data

Polk, the Company’s former President and Chief Executive Officer and member of the Company’s Board of Directors (the “Board”), retired from the Company at the end of the second quarter of 2019.

In connection with Mr.

Polk’s retirement from the Company, on June 28, 2019 (the “Retirement Date”), the Company and Mr.

Polk entered into a Retirement Agreement and General Release (the “Retirement Agreement”), pursuant to which, Mr.

Polk agreed to a customary release and restrictive covenants.

Pursuant to certain terms and conditions, Mr.

Polk’s unexercised 2011 stock options will remain exercisable until expiration in July 2021 consistent with the terms of the underlying option agreement.

Additionally, Mr.

Polk’s unvested performance-based RSUs awarded in February 2018 will continue to vest in February 2021 (subject to the satisfaction of applicable performance conditions) and a pro rata portion of the RSUs awarded to Mr.

Polk in February 2019, reflecting four months of service and totaling 45,724 RSUs, will continue to vest in February 2022 (subject to the satisfaction of applicable performance conditions).

Furthermore, Mr.

Polk forfeited his unvested performance-based RSUs awarded in February 2017.

The Company accounted for the treatment of his 2018 and 2019 awards as modification of his initial awards based on the terms and conditions of such awards.

As such, the cumulative compensation expense of his 2017, 2018 and 2019 awards were reversed during the first quarter of 2019 while the fair value of the modified awards was recognized as compensation expense over the contractual service period.

During 2019, the Company recorded a net benefit of approximately $ 5 million, based on the aforementioned terms and conditions of the Retirement Agreement.

The following table summarizes the Company's total unrecognized compensation cost related to stock-based compensation at December 31, 2021:

2 unchanged sentences

Stock options 10 1

Excess tax detriments related to stock-based compensation for 2020, 2019 and 2018 were $ 8 million, $ 14 million and $ 6 million, respectively.

The Company’s share repurchase program (“SRP”) expired on December 31, 2019 and was not extended.

Excess tax benefits (detriments) related to stock-based compensation for 2021, 2020 and 2019 were $ 1 million, $( 8 ) million and $( 14 ) million, respectively.

Footnote 16 — Fair Value Disclosures

25 unchanged sentences

At December 31, 2021, the fair value of the equity investment was $ 11 million.

For equity investments with readily determinable fair values, the Company recorded an immaterial amount and $ 9 million of unrealized losses within other (income) expense, net in the Consolidated Statement of Operations for 2020 and 2019, respectively.

For equity investments with readily determinable fair values, the Company recorded unrealized gain of $ 2 million for 2021, and immaterial and $ 9 million of unrealized losses for 2020 and 2019, respectively, within other (income) expense, net in the Consolidated Statement of Operations.

The Company adjusts its pension asset values to fair value on an annual basis (See Footnote 11 ).

14 unchanged sentences

The most significant unobservable inputs (Level 3) used to estimate the fair values of the Company's reporting unit goodwill and indefinite-lived intangible assets are discount rates, which range from 7.5 % to 9.5 % for reporting unit goodwill and 7.5 % to 11.0 % for indefinite-lived intangible assets.

In the first quarter 2020, as a result of uncertainty related to the COVID-19 pandemic, certain indefinite-lived intangible assets within Appliances and Cookware, Home Solutions, Outdoor and Recreation, and Learning and Development segments were written down to its fair value of $ 796 million as of March 31, 2020.

In the fourth quarter 2020, a trade name within the Learning and Development segment was measured at its fair value of $ 135 million.

During the fourth quarter of 2021, a tradename within the Learning and Development segment was measured at fair value of $ 47 million.

See Footnote 7 for further information.

During the first quarter 2020, as a result of uncertainty related to the COVID-19 pandemic, certain indefinite-lived intangible assets within Home Appliances, Home Solutions, Learning and Development and Outdoor and Recreation segments were written down to its then fair value of $ 796 million as of March 31, 2020.

During the fourth quarter 2020, a trade name within the Learning and Development segment was measured at its fair value of $ 135 million.

The Company reviews property, plant and equipment for impairment whenever events or circumstances indicate that carrying amounts may not be recoverable through future undiscounted cash flows.

1 unchanged sentence

Footnote 17 — Segment Information

During the first quarter of 2020, the Company appointed separate Chief Executive Officers for its Food and Commercial business units, each reporting directly to the Company's chief operating decision maker (CODM).

The Company determined these appointments required a reassessment of its operating and reportable segments.

As a result of its assessment, the Company concluded that the Food and Commercial business units were two separate operating segments but met the requirements to be aggregated into a single reportable segment, pursuant to authoritative accounting literature, as they had similar economic and qualitative characteristics.

During the second quarter of 2020, the Company implemented further changes to its management reporting structure, which

• The appointment of Chief Executive Officers for the Appliances and Cookware and Outdoor and Recreation business

• Expanding the responsibilities of the Food business unit Chief Executive Officer to include oversight of the Home Fragrance business unit;

• Expanding the responsibilities of the Commercial business unit Chief Executive Officer to include oversight of the Connected Home & Security business unit.

The Company determined these appointments required a reassessment of its operating and reportable segments.

As a result of its

assessment, the Company concluded that it had the following five primary reportable segments:

This change was the result of an assessment by the CODM to better align the cookware product lines with other similar product lines in various food categories.

In connection with this change, the CEO for the Food business unit assumed full responsibility for the overall brand strategy, business modeling, marketing and innovation of these product lines.

This structure reflects the manner in which the CODM regularly assesses information for decision-making purposes, including the allocation of resources.

The Company determined this product line change did not result in a change to either of its Home Solutions or former Appliances and Cookware reportable segments.

In connection with this change, the Appliances and Cookware segment was renamed as the Home Appliances segment.

Prior period comparable results for both of these segments have been reclassified to conform to this product line change.

The Company also revised the calculation of operating income (loss) by segment to include restructuring charges.

Prior period comparable results have been reclassified to conform to the change in calculation.

The Company’s five primary operating segments are as follows:

Segment Key Brands Description of Primary Products

Appliances and Cookware Calphalon®, Crock-Pot®, Mr.

Coffee®, Oster® and Sunbeam® Household products, including kitchen appliances, gourmet cookware, bakeware and cutlery

Commercial Solutions BRK, First Alert, Mapa, Quickie, Rubbermaid, Rubbermaid Commercial Products, and Spontex Commercial cleaning and maintenance solutions;

2 unchanged sentences

connected home and security and smoke and carbon monoxide alarms

Home Solutions Ball® (1), Chesapeake Bay Candle®, FoodSaver®, Rubbermaid®, Sistema®, WoodWick® and Yankee Candle® Food and home storage products;

fresh preserving products, vacuum sealing products and home fragrance products

Home Appliances Calphalon, Crockpot, Mr.

Coffee, Oster and Sunbeam Household products, including kitchen appliances

Home Solutions Ball (1) , Calphalon, Chesapeake Bay Candle, FoodSaver, Rubbermaid, Sistema, WoodWick and Yankee Candle

Food and home storage products;

fresh preserving products;

vacuum sealing products;

gourmet cookware, bakeware and cutlery and home fragrance products

Learning and Development Aprica, Baby Jogger, Dymo, Elmer’s, EXPO, Graco, Mr.

3 unchanged sentences

activity-based adhesive and cutting products and labeling solutions

Outdoor and Recreation Coleman®, Contigo®, ExOfficio®, Marmot® Products for outdoor and outdoor-related activities

(1) and Ball®, TMs Ball Corporation, used under license.

The financial information below for 2019 and 2018 has been recast for the current segment structure.

This structure reflects the manner in which the CODM regularly assesses information for decision-making purposes, including the allocation of resources.

The Company also provides general corporate services to its segments which is reported as a non-operating segment, Corporate.

Outdoor and Recreation Campingaz, Coleman, Contigo, ExOfficio, and Marmot Products for outdoor and outdoor-related activities

(1) and Ball®, TM of Ball Corporation, used under license.

The Company’s segment and geographic results are as follows at and for the years ended December 31, (in millions):

1 unchanged sentence

Net sales (1)

Appliances and Cookware $ 1,706 $ 1,692 $ 1,819

Commercial Solutions $ 1,953 $ 1,859 $ 1,779

Home Appliances 1,738 1,539 1,500

Home Solutions 2,386 2,138 2,067

4 unchanged sentences

Operating income (loss) (2)

Appliances and Cookware $ ( 217 ) $ ( 535 ) $ ( 1,596 )

Commercial Solutions $ 123 $ ( 89 ) $ ( 139 )

Home Appliances 70 ( 238 ) ( 573 )

Home Solutions 313 ( 2 ) 10

2 unchanged sentences

Corporate ( 243 ) ( 244 ) ( 296 )

Restructuring ( 21 ) ( 27 ) ( 87 )

$ 946 $ ( 634 ) $ ( 482 )

1 unchanged sentence

Depreciation and amortization

Appliances and Cookware $ 21 $ 23 $ 23

Commercial Solutions $ 57 $ 57 $ 94

Home Appliances 24 20 22

Home Solutions 88 93 90

5 unchanged sentences

Impairment of goodwill and intangible assets

Appliances and Cookware $ 299 $ 600 $ 1,712

Commercial Solutions $ 29 $ 320 $ 310

Home Appliances — 287 600

Home Solutions — 302 158

4 unchanged sentences

Capital expenditures

Appliances and Cookware $ 16 $ 17 $ 23

Commercial Solutions $ 67 $ 72 $ 40

Home Appliances 18 12 11

Home Solutions 46 42 49

5 unchanged sentences

Segment assets

Appliances and Cookware $ 1,040 $ 1,468

Commercial Solutions $ 2,522 $ 2,529

Home Appliances 1,055 970

Home Solutions 3,109 3,087

15 unchanged sentences

(1) All intercompany transactions have been eliminated.

(2) Operating income (loss) by segment is net sales less cost of products sold, SG&A and impairment of goodwill, intangibles and other assets for continuing operations.

(2) Operating income (loss) by segment is net sales less cost of products sold, SG&A, restructuring and impairment of goodwill, intangibles and other assets for continuing operations.

Certain headquarters expenses of an operational nature are allocated to business segments primarily on a net sales basis.

2 unchanged sentences

Long-lived assets by geography are not presented because it is impracticable to do so.

Sales to Walmart Inc.

and subsidiaries amounted to approximately 15 % of consolidated net sales in 2020, 2019 and 2018, substantially across all segments.

Sales to Amazon amounted to approximately 12 %, 9 % and 8 % of consolidated net sales in 2020, 2019 and 2018, respectively, substantially across all segments.

The Company’s largest customer, Walmart Inc.

and subsidiaries (“Walmart”), accounted for approximately 15 % of net sales in 2021, 2020 and 2019.

Amazon, the Company's second largest customer, accounted for approximately 13 %, 12 %, and 9 % of net sales in 2021, 2020 and 2019, respectively.

The following table disaggregates revenue by major product grouping source and geography for the years ended December 31, (in millions):

Appliances and Cookware Commercial Solutions Home

Commercial Solutions Home

Appliances Home

Solutions Learning and Development Outdoor and Recreation Total

Appliances and Cookware $ 1,706 $ — $ — $ — $ — $ 1,706

Commercial $ 1,558 $ — $ — $ — $ — $ 1,558

Connected Home Security 395 — — — — 395

Home Appliances — 1,738 — — — 1,738

Food — — 1,295 — — 1,295

Home Fragrance — — 1,091 — — 1,091

Baby and Parenting — — — 1,112 — 1,112

Baby — — — 1,265 — 1,265

Writing — — — 1,763 — 1,763

4 unchanged sentences

Total $ 1,953 $ 1,738 $ 2,386 $ 3,028 $ 1,484 $ 10,589

Appliances and Cookware Commercial Solutions Home

Commercial Solutions Home

Appliances Home

Solutions Learning and Development Outdoor and Recreation Total

Appliances and Cookware $ 1,692 $ — $ — $ — $ — $ 1,692

Commercial $ 1,502 $ — $ — $ — $ — $ 1,502

Connected Home Security 357 — — — — 357

Home Appliances — 1,539 — — — 1,539

Food — — 1,220 — — 1,220

Home Fragrance — — 918 — — 918

Baby and Parenting — — — 1,111 — 1,111

Baby — — — 1,112 — 1,112

Writing — — — 1,445 — 1,445

4 unchanged sentences

Total $ 1,859 $ 1,539 $ 2,138 $ 2,557 $ 1,292 $ 9,385

Appliances and Cookware Commercial Solutions Home

Solutions Learning and Development Outdoor and Recreation Other Total

Appliances and Cookware $ 1,819 $ — $ — $ — $ — $ — $ 1,819

Commercial Solutions Home

Appliances Home

Solutions Learning and Development Outdoor and Recreation Total

Commercial $ 1,402 $ — $ — $ — $ — $ 1,402

Connected Home Security 377 — — — — 377

Home Appliances — 1,500 — — — 1,500

Food — — 1,034 — — 1,034

Home Fragrance — — 1,033 — — 1,033

Baby and Parenting — — — 1,133 — — 1,133

Baby — — — 1,111 — 1,111

Writing — — — 1,845 — 1,845

Outdoor and Recreation — — — — 1,413 1,413

Other — — — — — 3 3

Total $ 1,779 $ 1,500 $ 2,067 $ 2,956 $ 1,413 $ 9,715

2 unchanged sentences

Total $ 1,779 $ 1,500 $ 2,067 $ 2,956 $ 1,413 $ 9,715

Beginning January 1, 2021, the Company will report the operating results of its cookware product lines as part of the Food reporting unit within the Home Solutions segment, and no longer as part of the Appliances and Cookware segment.

This change was the result of an assessment by the CODM to better align the cookware product lines with other similar product lines in various food categories.

In connection with this change, the CEO for the Foods business will assume full responsibility for the overall brand strategy, business modeling, marketing and innovation of these product lines.

The Company has determined this product line change did not result in a change to either of its Home Solutions or Appliances and Cookware reportable segments.

Subsequent to this change, the Appliances and Cookware segment will be referred to as Home Appliances.

The Company will recast prior period comparable results for both of these segments in its first quarter 2021 reporting to conform to this product line change.

On February 6, 2022, the Company signed a definitive agreement to sell its CH&S business unit to Resideo Technologies, Inc., for a purchase price of $ 593 million, subject to customary working capital and transaction adjustments.

The transaction, which is expected to be completed by the end of the first quarter of 2022, does not result in a change to the Commercial Solutions reportable segment for all periods presented in this Annual Report on Form 10-K.

Footnote 18 — Litigation and Contingencies

5 unchanged sentences

Securities and Exchange Commission (the “SEC”) primarily relating to its sales practices and certain accounting matters for the time period beginning from January 1, 2016.

The Company has cooperated in providing documents and information to the SEC in connection with its investigation and intends to continue to do so.

The Company has cooperated with the SEC in connection with its investigation and ongoing requests for documents, testimony and information and intends to continue to do so.

The Company cannot predict the timing or outcome of this investigation.

Further, on June 30, 2021, the Company received a subpoena from the SEC requesting the production of documents related to its disclosure of the potential impact of the U.S.

Treasury regulations described in Footnote 12 - Income Taxes.

Securities Litigation

6 unchanged sentences

The factual allegations underlying these claims are similar to the factual allegations made in the In re Newell Brands, Inc.

Securities Litigation filed in the United States District Court for the District of New Jersey, further described below.

The complaints seek unspecified damages and restitution for the Company from the individual defendants, the payment of costs and attorneys’ fees, and that the Company be directed to reform certain governance and internal procedures.

Securities Litigation that was previously pending in the United States District Court for the District of New Jersey.

That matter was dismissed by the District Court on January 10, 2020, and the dismissal was affirmed by the United States District Court of Appeals for the Third Circuit on December 1, 2020.

The complaints seek damages and restitution for the Company from the individual defendants, the payment of costs and attorneys’ fees, and that the Company be directed to reform certain governance and internal procedures.

The Streicher Derivative Action and the Martindale Derivative Action have been consolidated and the case is now known as In re Newell Brands Inc.

Derivative Litigation (the “Newell Brands Derivative Action”), which is pending in the United States District Court for the District of Delaware.

On January 31, 2019, the United States District Court for the District of Delaware stayed the Newell Brands Derivative Action pending the final resolution of the motions to dismiss filed in In re Newell Brands Inc.

Securities Litigation and Oklahoma Firefighters Pension and Retirement System v.

On March 22, 2021, the United States District Court for the District of Delaware stayed the Newell Brands Derivative Action pending the resolution of any motions for summary judgment filed in Oklahoma Firefighters Pension and Retirement System v.

Newell Brands Inc., et al.

(described below).

On December 30, 2020, two shareholders filed another putative derivative complaint, Weber, et al.

On December 30, 2020, two shareholders filed a putative derivative complaint, Weber, et al.

Polk, et al., in the United States District Court for the District of Delaware (the “Weber Derivative Action”), purportedly on behalf of the Company against certain of the Company’s current and former officers and directors.

The complaint in the Weber Derivative Action alleges, among other things, breaches of fiduciary duty and waste of corporate assets.

The factual allegations underlying these claims are similar to the factual allegations made in the Newell Brands Derivative Action, as well as those made in the In re Newell Brands Inc.

Securities Litigation filed in the United States District Court for the District of New Jersey (described below), and those made in the securities class action lawsuit filed in the Superior Court of New Jersey, Hudson County, also described below.

As in the Newell Brands Derivative Action, the Weber Derivative Action seeks unspecified damages and restitution for the Company from the individual defendants, the payment of costs and attorneys' fees, and that the Company be directed to reform certain governance and internal procedures.

The factual allegations underlying these claims are similar to the factual allegations made in the Newell Brands Derivative Action.

On March 19, 2021, the United States District Court for the District of Delaware stayed the Weber Derivative Action pending final disposition of Oklahoma Firefighters Pension and Retirement System v.

Newell Brands Inc., et al.

(described below).

The Company and certain of its current and former officers and directors have been named as defendants in a putative securities class action lawsuit filed in the Superior Court of New Jersey, Hudson County, on behalf of all persons who acquired Company common stock pursuant or traceable to the S-4 registration statement and prospectus issued in connection with the April 2016 acquisition of Jarden (the “Registration Statement”).

3 unchanged sentences

The operative complaint alleges certain violations of the securities laws, including, among other things, that the defendants made certain materially false and misleading statements and omissions in the Registration Statement regarding the Company’s financial results, trends, and metrics.

The plaintiff seeks compensatory damages and attorneys’ fees and costs, among other relief, but has not specified the amount of damages being sought.

The Company intends to defend the litigation vigorously.

The Company and certain of its officers have been named as defendants in two putative securities class action lawsuits, each filed in the United States District Court for the District of New Jersey, on behalf of all persons who purchased or otherwise acquired the Company's common stock between February 6, 2017 and January 24, 2018.

The first lawsuit was filed on June 21, 2018 and is captioned Bucks County Employees Retirement Fund, Individually and on behalf of All Others Similarly Situated v.

Newell Brands Inc., Michael B.

Polk, Ralph J.

Nicoletti, and James L.

Cunningham, III , Civil Action No.

2:18-cv-10878 (United States District Court for the District of New Jersey).

The second lawsuit was filed on June 27, 2018 and is captioned Matthew Barnett, Individually and on Behalf of All Others Similarly Situated v.

Newell Brands Inc., Michael B.

Polk, Ralph J.

Nicoletti, and James L.

Cunningham, III , Civil Action No.

2:18-cv-11132 (United States District Court for the District of New Jersey).

On September 27,

2018, the court consolidated these two cases under Civil Action No.

18-cv-10878 (JMV)(JBC) bearing the caption In re Newell Brands, Inc.

Securities Litigation .

The court also named Hampshire County Council Pension Fund as the lead plaintiff in the consolidated case.

The operative complaint alleges certain violations of the securities laws, including, among other things, that the defendants made certain materially false and misleading statements and omissions regarding the Company’s business, operations, and prospects between February 6, 2017 and January 24, 2018.

The plaintiffs seek compensatory damages and attorneys’ fees and costs, among other relief, but have not specified the amount of damages being sought.

The Company intends to defend the litigation vigorously.

On January 10, 2020, the court in In re Newell Brands Inc.

Securities Litigation entered a dismissal with prejudice after granting the Company’s motion to dismiss.

On February 7, 2020, the plaintiffs filed an appeal to the United States Court of Appeals for the Third Circuit.

On December 1, 2020, the Court of Appeals affirmed the dismissal.

The plaintiff seeks compensatory damages and attorneys’ fees and costs, among other relief.

The Company is currently unable to predict the ultimate timing or outcome of this litigation or reasonably estimate the range of possible losses.

The Company maintains insurance intended to cover losses arising out of this litigation up to specified limits (subject to deductibles, coverage limits and other terms and conditions), but any losses may exceed our current coverage levels, which could have an adverse impact on our financial results.

Jarden Acquisition

Under the Delaware General Corporation Law (“DGCL”), any Jarden stockholder who did not vote in favor of adoption of the Agreement and Plan of Merger for the Jarden acquisition, and who otherwise complies with the provisions of Section 262 of the DGCL, was entitled to seek an appraisal of his or her shares of Jarden common stock by the Court of Chancery of the State of Delaware as provided under Section 262 of the DGCL.

DGCL, was entitled to seek an appraisal of his or her shares of Jarden common stock by the Court of Chancery of the State of Delaware as provided under Section 262 of the DGCL.

Two separate appraisal petitions, styled as Dunham Monthly Distribution Fund v.

20 unchanged sentences

The Company reflected the amounts of $ 171 million and $ 6 million, respectively, as a financing cash outflow and operating cash outflow in the Company’s Consolidated Statement of Cash Flows for the year ended December 31, 2019.

Gizmo Children’s Cup Recall

In June 2019, a subsidiary of the Company conducted an internal investigation to determine the root cause of an issue related to a product line in the Outdoor and Recreation segment that was reported to the Company by one of its retailers.

The Company determined that because of an issue occurring infrequently, but on a random basis, during the manufacturing process, the Gizmo Children’s cup may present users with a potential safety concern because the silicone spout may detach from the nylon base.

The Company reported the issue to the Consumer Product Safety Commission and Health Canada, and issued a return authorization notice to retail customers.

The Company announced a recall of the product on August 27, 2019 offering consumers a replacement lid if they had an affected product.

In late 2019, the Company discovered that some product that had been inspected and subsequently resold or used as replacement lids for the recall was exhibiting the same type of separation of the spout from the lid base.

The Company investigated the issue and ultimately determined to extend the recall to include the inspected product.

The Company reported this conclusion to the relevant authorities and on February 19, 2020 announced an expansion of the recall.

The Company has incurred inception to date charges associated with this matter of $ 22 million, including $ 2 million during 2020, net of recoveries from a third-party manufacturer.

Environmental Matters

15 unchanged sentences

EPA has issued General Notice Letters (“GNLs”) to over 100 entities, including the Company and Berol Corporation, a subsidiary of the Company (“Berol”), alleging that they are PRPs at the Diamond Alkali Superfund Site, which includes a 17 -mile stretch of the Lower Passaic River and its tributaries.

The site is also subject to a Natural Resource Damage Assessment.

Seventy-two of the GNL recipients, including the Company on behalf of itself and Berol (the “Company Parties”), have taken over the performance of the remedial investigation (“RI”) and feasibility study (“FS”) for the Lower Passaic River.

14 unchanged sentences

The 2016 GNL states that U.S.

EPA would like to determine whether one entity, Occidental

Chemical Corporation (“OCC”), will voluntarily perform the remedial design for the selected remedy for the lower 8.3 miles, and that following execution of an agreement for the remedial design, U.S.

EPA would like to determine whether one entity, Occidental Chemical Corporation (“OCC”), will voluntarily perform the remedial design for the selected remedy for the lower 8.3 miles, and that following execution of an agreement for the remedial design, U.S.

EPA plans to begin negotiation of a remedial action consent decree under which OCC and the other major PRPs will implement and/or pay for U.S.

1 unchanged sentence

EPA’s costs incurred for the Lower Passaic River.

In September 2016, OCC and EPA entered into an Administrative Order on Consent for performance of the remedial design.

In September 2016, OCC and U.S.

EPA entered into an Administrative Order on Consent for performance of the remedial design.

On March 30, 2017, U.S.

EPA sent a letter offering a cash settlement in the amount of $ 0.3 million to 20 PRPs, not including the Company Parties, for CERCLA Liability (with reservations, such as for Natural Resource Damages) in the lower 8.3 miles of the Lower Passaic River.

EPA further indicated in related correspondence that a cash-out settlement might be appropriate for additional parties that are “not associated with the release of dioxins, furans, or PCBs to the Lower Passaic River.” Then, by letter dated September 18, 2017, U.S.

EPA announced an allocation process involving all GNL recipients except those participating in the first-round cash-out settlement, and five public entities.

The letter affirms that U.S.

EPA anticipates eventually offering cash-out settlements to a number of parties, and that it expects “that the private PRPs responsible for release of dioxin, furans, and/or PCBs will perform the OU2 lower 8.3 mile remedial action.” At this time, it is unclear how the cost of any cleanup would be allocated among any of the parties, including the Company Parties or any other entities.

The site is also subject to a Natural Resource Damage Assessment.

EPA further indicated in related correspondence that a cash-out settlement might be appropriate for additional parties that are not associated with the release of dioxins, furans, or PCBs to the Lower Passaic River.

In September 2017, U.S.

EPA announced an allocation process involving all GNL recipients except those participating in the first-round cash-out settlement, and five public entities, with the intent of eventually offering cash-out settlements to a number of parties, and the expectation that the private PRPs responsible for release of dioxin, furans, and/or PCBs will perform the lower 8.3 mile remedial action.

The allocation process has concluded.

EPA and certain parties to the allocation process, including the Company (for itself and Berol), have reached an agreement in principle concerning a cash-out settlement for the entire 17 -mile stretch of the Lower Passaic River and its tributaries (i.e., including both the lower 8.3 miles and the upper 9 mile sections), which is subject to the negotiation and court entry of a consent decree.

Following discussion with U.S.

1 unchanged sentence

EPA’s issuance of the 2016 ROD, the participating parties refocused the FS on the upper 9 miles of the Lower Passaic River.

The parties submitted most portions of a final Interim Remedy FS (the “Draft IR FS”) on August 7, 2020, setting forth remedial alternatives ranging from “no further action” to targeted dredging and capping with different targets for post-remedy surface weighted average concentration of contamination.

The cost estimates for these active alternatives range from approximately $ 321 million to $ 468 million.

EPA has indicated it aims to have the IR FS finalized and to issue a Record of Decision for the upper 9 miles in 2021.

The parties submitted most portions of a final Interim Remedy FS (the “IR FS”) on August 7, 2020, setting forth remedial alternatives ranging from no further action to targeted dredging and capping with different targets for post-remedy surface weighted average concentration of contamination.

The parties subsequently completed their submittal of the IR FS, and on September 7, 2021, U.S.

EPA approved the IR FS.

On October 4, 2021, U.S.

EPA issued an interim ROD selecting a combination of dredging and capping as the remedial alternative to this portion of the river, at a total cost of $ 441 million (the “2021 ROD”).

A cash-out settlement for the upper 9 miles is part of the agreement in principle noted above among the parties and U.S.

OCC has asserted that it is entitled to indemnification by Maxus Energy Corporation (“Maxus”) for its liability in connection with the Diamond Alkali Superfund Site.

12 unchanged sentences

Given the uncertainties pertaining to this matter, including that U.S.

EPA is still reviewing the FS, that no framework for or agreement on allocation for the investigation and ultimate remediation has been developed, and that there exists the potential for further litigation regarding costs and cost sharing, the extent to which the Company Parties may be held liable or responsible is not yet known.

EPA is still reviewing the FS, that no framework for or agreement on allocation for the investigation and ultimate remediation has been established, and that there exists the potential for further litigation regarding costs and cost sharing, the extent to which the Company Parties may be held liable or responsible is not yet known.

OCC stated in a subsequent filing that it anticipates asserting additional claims against the defendants regarding Newark Bay, which is also part of the Diamond Alkali Superfund Site, after U.S.

EPA has decided the Newark Bay remedy.

Based on currently known facts and circumstances, the Company does not believe that this matter is reasonably likely to have a material impact on the Company’s results of operations, including, among other factors, because there are numerous other parties who will likely share in any costs of remediation and/or damages.

In a Motion for Stay of Proceedings filed January 14, 2022, certain defendants and all third-party defendants in the OCC litigation moved the court to stay the case for a six-month period to allow the final stage of the United States’ parallel allocation proceedings and resulting settlement negotiations to conclude.

EPA provided a letter to the moving parties describing the status of these settlement discussions, which was filed as an exhibit to the Brief in Support of the Motion for Stay of Proceedings.

District Court of New Jersey is currently considering whether to rule on the Motion for Stay of Proceedings.

As of the date of filing of this Annual Report, based on the agreement in principle noted above, the Company does not expect that its allocation for response actions contemplated in the 2016 ROD and 2021 ROD described above will be material to the Company.

For the remainder of this matter, the Company is currently unable to reasonably estimate the range of possible losses.

Based on currently known facts and circumstances, the Company does not believe that this matter is reasonably likely to have a material impact on the Company’s results of operations.

However, in the event of one or more adverse determinations related to this matter, it is possible that the ultimate liability resulting from this matter and the impact on the Company’s results of operations could be material.

1 unchanged sentence

Other Matters

Although management of the Company cannot predict the ultimate outcome of these proceedings with certainty, it believes that the ultimate resolution of the Company’s proceedings, including any amounts it may be required to pay in excess of amounts reserved, will not have a material effect on the Company’s Consolidated Financial Statements, except as otherwise described above.

In the normal course of business and as part of its acquisition and divestiture strategy, the Company may provide certain representations and indemnifications related to legal, environmental, product liability, tax or other types of issues.

4 unchanged sentences

The Buyer generally alleged that the Company fraudulently breached certain representations in the Equity Purchase Agreement between the Company and Buyer, dated May 2, 2018, resulting in an inflated purchase price for The Waddington Group.

The Company intends to defend the litigation vigorously.

In 2021, the Company recorded an immaterial reserve to continuing operations in its Consolidated Financial Statements based on its best estimate of probable loss associated with this matter.

Further, in connection with the Company’s sale of The United States Playing Card Company (“USPC”), Cartamundi, Inc.

and Cartamundi España, S.L., (the “Buyers”) have notified the Company of their contention that certain representations and warranties in the Stock Purchase Agreement, dated June 4, 2019, were inaccurate and/or breached, and have sought indemnification to the extent that the Buyers are required to pay related damages arising out of a third party lawsuit that was recently filed against USPC.

Although management of the Company cannot predict the ultimate outcome of other proceedings with certainty, it believes that the ultimate resolution of the Company’s proceedings, including any amounts it may be required to pay in excess of amounts reserved, will not have a material effect on the Company’s Condensed Consolidated Financial Statements, except as otherwise described in this Footnote 18 .

At December 31, 2021, the Company had approximately $ 49 million in standby letters of credit primarily related to the Company’s self-insurance programs, including workers’ compensation, product liability and medical expenses.

2 unchanged sentences

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-K

Item 8. Financial Statements and Supplementary Data