What changed in this filing

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Item 1. Financial Statements

2022-10-28 compared with 2022-07-29 · 214 added, 127 removed, 670 unchanged (34% of the section changed)

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

4 unchanged sentences

Restructuring costs, net 3 6 12 16

Impairment of goodwill, intangibles and other assets 148 — 148 —

Operating income 35 281 569 778

2 unchanged sentences

Other (income) expense, net 8 1 ( 108 ) ( 3 )

Income before income taxes 254 243 536 369

Income tax provision 50 46 98 83

Income (loss) before income taxes ( 30 ) 215 506 584

Income tax provision (benefit) ( 61 ) 25 37 108

Net income $ 31 $ 190 $ 469 $ 476

11 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

5 unchanged sentences

Derivative financial instruments 8 15 19 23

Total other comprehensive income (loss), net of tax ( 102 ) 41 ( 74 ) 7

Comprehensive income 102 238 364 293

Total other comprehensive loss, net of tax ( 94 ) ( 34 ) ( 168 ) ( 27 )

Comprehensive income (loss) ( 63 ) 156 301 449

Total comprehensive income attributable to noncontrolling interests — — — 2

Total comprehensive income attributable to parent $ 102 $ 235 $ 364 $ 291

Total comprehensive income (loss) attributable to parent $ ( 63 ) $ 156 $ 301 $ 447

See Notes to Condensed Consolidated Financial Statements (Unaudited).

3 unchanged sentences

(Amounts in millions, except par values)

September 30,

2022 December 31,

23 unchanged sentences

Stockholders’ equity:

Preferred stock ( 10.0 authorized shares, $ 1.00 par value, no shares issued at June 30, 2022 and December 31, 2021)

Common stock ( 800.0 authorized shares, $ 1.00 par value, 438.6 shares and 450.0 shares issued at June 30, 2022 and December 31, 2021, respectively)

Treasury stock, at cost ( 25.0 shares and 24.5 shares at June 30, 2022 and December 31, 2021, respectively)

Preferred stock ( 10.0 authorized shares, $ 1.00 par value, no shares issued at September 30, 2022 and December 31, 2021)

Common stock ( 800.0 authorized shares, $ 1.00 par value, 438.6 shares and 450.0 shares issued at September 30, 2022 and December 31, 2021, respectively)

Treasury stock, at cost ( 25.0 shares and 24.5 shares at September 30, 2022 and December 31, 2021, respectively)

( 623 ) ( 609 )

9 unchanged sentences

(Amounts in millions)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

2 unchanged sentences

Depreciation and amortization 222 244

Impairment of goodwill, intangibles and other assets 148 —

(Gain) loss from sale of businesses ( 136 ) 2

14 unchanged sentences

Cash flows from financing activities:

Short-term debt, net 372 ( 1 )

Net proceeds from issuance of long-term debt 990 —

Payments on current portion of long-term debt ( 2 ) ( 447 )

2 unchanged sentences

Cash dividends ( 290 ) ( 296 )

Acquisition of noncontrolling interest — ( 4 )

Acquisition of noncontrolling interests — ( 26 )

Equity compensation activity and other, net ( 29 ) ( 25 )

Net cash used in financing activities ( 185 ) ( 338 )

Net cash provided by (used in) financing activities 344 ( 800 )

Exchange rate effect on cash, cash equivalents and restricted cash ( 13 ) ( 14 )

Decrease in cash, cash equivalents and restricted cash ( 139 ) ( 373 )

Increase (decrease) in cash, cash equivalents and restricted cash 184 ( 504 )

Cash, cash equivalents and restricted cash at beginning of period 477 1,021

10 unchanged sentences

Stock Additional Paid-In Capital Retained Earnings (Deficit) Accumulated Other Comprehensive Loss Total Stockholders' Equity

Balance at March 31, 2022 $ 441 $ ( 623 ) $ 7,384 $ ( 2,368 ) $ ( 854 ) $ 3,980

Balance at June 30, 2022 $ 439 $ ( 623 ) $ 7,251 $ ( 2,164 ) $ ( 956 ) $ 3,947

Comprehensive income (loss) — — — 31 ( 94 ) ( 63 )

2 unchanged sentences

Equity compensation, net of tax — — ( 15 ) — — ( 15 )

Common stock purchased and retired ( 2 ) — ( 48 ) — — ( 50 )

Balance at June 30, 2022 $ 439 $ ( 623 ) $ 7,251 $ ( 2,164 ) $ ( 956 ) $ 3,947

Balance at September 30, 2022 $ 439 $ ( 623 ) $ 7,143 $ ( 2,133 ) $ ( 1,050 ) $ 3,776

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

5 unchanged sentences

Other — — ( 1 ) — — ( 1 )

Balance at June 30, 2022 $ 439 $ ( 623 ) $ 7,251 $ ( 2,164 ) $ ( 956 ) $ 3,947

Balance at September 30, 2022 $ 439 $ ( 623 ) $ 7,143 $ ( 2,133 ) $ ( 1,050 ) $ 3,776

Stock Treasury

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

Balance at March 31, 2021 $ 450 $ ( 608 ) $ 7,993 $ ( 3,085 ) $ ( 914 ) $ 3,836 $ 25 $ 3,861

Comprehensive income — — — 197 38 235 3 238

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

Balance at June 30, 2021 $ 450 $ ( 609 ) $ 7,906 $ ( 2,888 ) $ ( 873 ) $ 3,986 $ 25 $ 4,011

Comprehensive income (loss) — — — 190 ( 33 ) 157 ( 1 ) 156

Dividends declared on common stock - $ 0.23 per share

3 unchanged sentences

Other changes attributable to noncontrolling interests — — — — ( 1 ) ( 1 ) 1 —

Balance at June 30, 2021 $ 450 $ ( 609 ) $ 7,906 $ ( 2,888 ) $ ( 873 ) $ 3,986 $ 25 $ 4,011

Balance at September 30, 2021 $ 450 $ ( 609 ) $ 7,819 $ ( 2,698 ) $ ( 907 ) $ 4,055 $ 2 $ 4,057

Balance at December 31, 2020 $ 448 $ ( 598 ) $ 8,078 $ ( 3,174 ) $ ( 880 ) $ 3,874 $ 26 $ 3,900

Comprehensive income — — — 286 6 292 1 293

Comprehensive income (loss) — — — 476 ( 27 ) 449 — 449

Dividends declared on common stock - $ 0.69 per share

3 unchanged sentences

Other changes attributable to noncontrolling interests — — — — — — 2 2

Balance at June 30, 2021 $ 450 $ ( 609 ) $ 7,906 $ ( 2,888 ) $ ( 873 ) $ 3,986 $ 25 $ 4,011

Balance at September 30, 2021 $ 450 $ ( 609 ) $ 7,819 $ ( 2,698 ) $ ( 907 ) $ 4,055 $ 2 $ 4,057

See Notes to Condensed Consolidated Financial Statements (Unaudited).

16 unchanged sentences

Management’s application of U.S.

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

The Company continues to be impacted by the COVID-19 pandemic, inflationary and supply chain pressures, and the indirect macroeconomic impact of the Russia-Ukraine conflict, 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 results of operations and cash flows that form the basis in developing the fair values utilized in its impairment assessments, its annual effective tax rate and other related reserves.

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

Although management has made its best estimates and assumptions based upon current information, actual results could materially differ and may require future changes to such estimates and assumptions, including reserves, which may result in future expense.

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

The Company, which has been impacted in recent years by inflationary and supply chain pressures, labor shortages, and logistical challenges across its businesses, and more recently by the indirect macroeconomic impact of the Russia-Ukraine conflict, is also experiencing additional headwinds due to softening global demand and an increased focus by retailers to rebalance inventory levels in light of continued inflationary pressures on consumers.

The segments most impacted by the softening global demand are Home Appliances and Home Solutions.

These collective macroeconomic trends, the duration or severity of which are highly uncertain, are rapidly changing the retail landscape and have negatively impacted the Company’s operating results, cash flows and financial condition in 2022 and are expected to persist for the remainder of the year and into 2023.

The high level of uncertainty of these factors has resulted in estimates and assumptions that have the potential for more variability and are more subjective.

In addition, some of the other inherent estimates and assumptions used in the Company’s forecasted results of operations and cash flows that form the basis of the determination of the fair value of the reporting units for goodwill and indefinite-lived intangible asset impairment testing are outside the control of management, including interest rates, cost of capital, tax rates, industry growth, credit ratings, foreign exchange rates and labor inflation.

Although management has made its best estimates and assumptions based upon current information, actual results could materially differ given the uncertainty of these factors and may require future changes to such estimates and assumptions, including reserves, which may result in future expense or impairment charges.

During the third quarter of 2022, the Company concluded that a triggering event had occurred for its Home Fragrance reporting unit, in the Home Solutions segment, an indefinite-lived tradename in the Home Appliances reporting unit, and two indefinite-lived tradenames for the Baby reporting unit, in the Learning and Development segment.

The Company performed a quantitative impairment test and determined that the Home Fragrance reporting unit goodwill, and the indefinite-lived tradenames in the Home Appliances and Baby reporting units noted above were impaired.

During the three and nine months ended September 30, 2022, the Company recorded an aggregate non-cash impairment charge of $ 148 million, as the carrying values exceeded their fair values.

A quantitative impairment test was also performed for the indefinite-lived tradename and long-lived assets in the Home Fragrance reporting unit resulting in no impairment.

See Footnote 7 for further information.

Seasonal Variations

2 unchanged sentences

In addition, the Company typically tends to generate the majority of its operating cash flow in the third and fourth quarters of the year due to seasonal variations in operating results, the timing of annual performance-based compensation payments, customer program payments, working capital requirements and credit terms provided to customers.

Accordingly, the Company’s results of operations for the three and six months ended June 30, 2022 and cash flows for the six months ended June 30, 2022, may not necessarily be indicative of the results that may be expected for the year ending December 31, 2022.

The Company's sales and operating results, previously disrupted by the COVID-19 pandemic, reverted back to historical patterns in 2021, however, uncertainty still remains due to the inflationary and supply chain pressures and the volatility and direction of future consumer demand patterns.

Accordingly, the Company’s results of

operations for the three and nine months ended September 30, 2022 and cash flows for the nine months ended September 30, 2022, may not necessarily be indicative of the results that may be expected for the year ending December 31, 2022.

The Company's sales and operating results, previously disrupted by the COVID-19 pandemic, reverted back to historical patterns in 2021, however, uncertainty still remains due to the significant volatility and direction of future consumer and customer demand patterns, as well as inflationary and supply chain pressures.

Recent Accounting Pronouncements

7 unchanged sentences

ASU 2020-04 may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2024.

The Company is currently evaluating the potential effects of the adoption of ASU 2020-04.

The Company does not expect the adoption of ASU 2020-04 to have a material impact to its consolidated financial statements.

In October 2022, the FASB issued ASU 2022-04, “ Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations.

” This ASU requires that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of financial statements to better consider the effect of the programs on an entity’s working capital, liquidity, and cash flows.

This ASU is effective for fiscal years beginning after December 15, 2022, except for the amendment on roll forward information which is effective for fiscal years beginning after December 15, 2023.

The Company is evaluating the effect of adopting this new accounting guidance.

Sales of Accounts Receivables

Factored receivables at June 30, 2022 associated with the Company's existing factoring agreement (the “Customer Receivables Purchase Agreement”) were approximately $ 545 million, an increase of approximately $ 45 million from December 31, 2021.

Factored receivables at September 30, 2022 associated with the Company's existing factoring agreement (the “Customer Receivables Purchase Agreement”) were approximately $ 375 million, a decrease of approximately $ 125 million from December 31, 2021.

During the second quarter of 2022, the Company amended the Customer Receivables Purchase Agreement to (1) increase the amount of certain customer receivables that may be sold under the agreement, (2) add new customers to the agreement and (3) change the reference rate from LIBOR to Secured Overnight Financing Rate (“SOFR”).

4 unchanged sentences

On March 31, 2022, the Company sold its CH&S business unit to Resideo Technologies, Inc., for approximately $ 593 million, subject to customary working capital and other post-closing adjustments.

As a result, during the six months ended June 30, 2022, the Company recorded a pretax gain of $ 133 million, which was included in other (income) expense, net in its Condensed Consolidated Statements of Operations.

As a result, during the nine months ended September 30, 2022, the Company recorded a pretax gain of $ 136 million, which was included in other (income) expense, net in its Condensed Consolidated Statements of Operations.

Footnote 3 — Accumulated Other Comprehensive Income (Loss)

The following table displays the changes in Accumulated Other Comprehensive Income (Loss) (“AOCL”) by component, net of tax, for the six months ended June 30, 2022 (in millions):

The following table displays the changes in Accumulated Other Comprehensive Income (Loss) (“AOCL”) by component, net of tax, for the nine months ended September 30, 2022 (in millions):

Adjustment Pension and

5 unchanged sentences

Net current period other comprehensive income (loss) ( 207 ) 20 19 ( 168 )

Balance at June 30, 2022 $ ( 672 ) $ ( 280 ) $ ( 4 ) $ ( 956 )

Reclassifications from AOCL to the results of operations for the three and six months ended June 30, 2022 and 2021 were pretax (income) expense of (in millions):

Balance at September 30, 2022 $ ( 782 ) $ ( 272 ) $ 4 $ ( 1,050 )

Reclassifications from AOCL to the results of operations for the three and nine months ended September 30, 2022 and 2021 were pretax (income) expense of (in millions):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

7 unchanged sentences

(3) See Footnote 10 for further information.

The income tax provision (benefit) allocated to the components of AOCL for the periods indicated are as follows (in millions):

The income tax provision allocated to the components of AOCL for the periods indicated are as follows (in millions):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

2 unchanged sentences

Derivative financial instruments 3 4 6 7

Income tax provision (benefit) related to AOCL $ 24 $ ( 1 ) $ 24 $ 14

Income tax provision related to AOCL $ 30 $ 12 $ 54 $ 26

Footnote 4 — Restructuring Costs

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

6 unchanged sentences

$ 3 $ 6 $ 12 $ 16

Accrued restructuring costs activity for the six months ended June 30, 2022 are as follows (in millions):

Accrued restructuring costs activity for the nine months ended September 30, 2022 are as follows (in millions):

Balance at December 31, 2021 Restructuring

Costs, Net Payments Balance at

June 30, 2022

September 30, 2022

Severance and termination costs $ 8 $ 11 $ ( 11 ) $ 8

4 unchanged sentences

The restructuring costs, which impacted all segments, include employee-related costs such as severance and other termination benefits.

During the three and six months ended June 30, 2021, the Company recorded restructuring charges of $ 4 million and $ 9 million, respectively.

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

During the nine months ended September 30, 2021, the Company recorded restructuring charges of $ 9 million under the 2020 restructuring program .

Other Restructuring and Restructuring-Related Costs

1 unchanged sentence

Restructuring-related costs are recorded in cost of products sold and selling, general and administrative expenses (“SG&A”) in the Condensed Consolidated Statements of Operations based on the nature of the underlying costs incurred.

During the three and six months ended June 30, 2022, the Company recorded restructuring charges of $ 4 million and $ 9 million, respectively.

During the three and nine months ended September 30, 2022, the Company recorded restructuring charges of $ 3 million and $ 12 million, respectively.

During the three and nine months ended September 30, 2021, the Company recorded other restructuring charges of $ 6 million and $ 7 million, respectively.

Footnote 5 — Inventories

Inventories are comprised of the following at the dates indicated (in millions):

June 30, 2022 December 31, 2021

Inventories are comprised of the following (in millions):

September 30, 2022 December 31, 2021

Raw materials and supplies $ 310 $ 310

3 unchanged sentences

Footnote 6 — Property, Plant and Equipment, Net

Property, plant and equipment, net, is comprised of the following at the dates indicated (in millions):

June 30, 2022 December 31, 2021

Property, plant and equipment, net, is comprised of the following (in millions):

September 30, 2022 December 31, 2021

Land $ 73 $ 82

3 unchanged sentences

$ 1,124 $ 1,204

Depreciation expense was $ 47 million and $ 51 million for the three months ended June 30, 2022 and 2021, respectively, and $ 96 million and $ 103 million for the six months ended June 30, 2022 and 2021, respectively.

During the three months ended March 31, 2022, the Company took possession of a right of use operating lease asset with future obligations of approximately $ 64 million.

Depreciation expense was $ 50 million for both the three months ended September 30, 2022 and 2021 and $ 146 million and $ 153 million for the nine months ended September 30, 2022 and 2021, respectively.

In 2022, the Company took possession of two right of use operating lease assets associated with Project Ovid, with future obligations of approximately $ 119 million at September 30, 2022.

Footnote 7 — Goodwill and Other Intangible Assets, Net

Goodwill activity for the six months ended June 30, 2022 is as follows (in millions):

Goodwill activity for the nine months ended September 30, 2022 is as follows (in millions):

Segments Net Book Value at December 31, 2021

Impairment Charges Foreign

Net Book Value at

June 30, 2022

September 30, 2022

Commercial Solutions $ 747 $ — $ — $ 916 $ ( 169 ) $ 747

4 unchanged sentences

$ 3,504 $ ( 108 ) $ ( 96 ) $ 8,183 $ ( 4,883 ) $ 3,300

Other intangible assets, net, are comprised of the following at the dates indicated (in millions):

June 30, 2022 December 31, 2021

During the third quarter of 2022, the Company concluded that a triggering event had occurred for the Home Fragrance reporting unit in the Home Solutions segment, as a result of a downward revision of forecasted cash flows due to softening global demand, as retailers significantly pulled back on orders in an effort to rebalance inventory, and rising interest rates.

The decline in global demand is driven primarily by inflationary pressures which are impacting the discretionary spending behavior of consumers.

The Company performed a quantitative impairment test and determined that the Home Fragrance reporting unit goodwill was impaired.

During the three and nine months ended September 30, 2022 the Company recorded a non-cash impairment charge of $ 108 million, as the carrying value of the reporting unit exceeded its fair value.

A hypothetical 10% reduction in the forecasted earnings before interest, taxes and amortization used in the discounted cash flows to estimate the fair value of the Home Fragrance reporting unit would have resulted in an additional goodwill impairment charge for the remaining carrying value of $ 56 million.

See Footnote 1 for further information.

Other intangible assets, net, are comprised of the following (in millions):

September 30, 2022 December 31, 2021

Accumulated Amortization

5 unchanged sentences

$ 3,735 $ ( 866 ) $ 2,869 $ 4,247 $ ( 877 ) $ 3,370

Amortization expense for intangible assets for the three months ended June 30, 2022 and 2021 was $ 24 million and $ 29 million, respectively and $ 51 million and $ 63 million for the six months ended June 30, 2022 and 2021, respectively.

Amortization expense for intangible assets for the three months ended September 30, 2022 and 2021 was $ 25 million and $ 28 million, respectively and $ 76 million and $ 91 million for the nine months ended September 30, 2022 and 2021, respectively.

During the third quarter of 2022, the Company concluded that a triggering event had occurred for an indefinite-lived tradename in the Home Appliances reporting unit and an indefinite-lived tradename in the Home Fragrance reporting unit in the Home Solutions segment, as a result of a downward revision of forecasted cash flows due to softening global demand, as retailers significantly pulled back on orders in an effort to rebalance inventory and rising interest rates.

The decline in global demand is driven primarily by inflationary pressures which are impacting the discretionary spending behavior of consumers.

The Company also concluded that a triggering event had occurred for two indefinite-lived tradenames for the Baby reporting unit, in the Learning and Development segment, as a result of rising interest rates and inflationary pressures.

The Company performed a quantitative impairment test and determined that the indefinite-lived tradename in the Home Appliances reporting unit and two indefinite-lived tradenames in the Baby reporting unit were impaired.

During the three and nine months ended September 30, 2022, the Company recorded an aggregate non-cash impairment charge of $ 40 million, as the carrying values of these tradenames exceeded their fair values.

A hypothetical 10% reduction in forecasted revenue used in the relief from royalty method to determine the fair value of these indefinite-lived intangibles would have resulted in incremental impairment charges in the Home Appliances and Learning and Development segments of $ 4 million and $ 5 million, respectively.

A quantitative impairment test was also performed for the indefinite-lived tradename in the Home Fragrance reporting unit in the Home Solutions segment, which resulted in no impairment.

A hypothetical 10% reduction in the forecasted debt-free cash flows used in the excess earnings method to determine the fair value of the tradename would have resulted in an impairment charge of $ 21 million.

As further described in Footnote 1, the Company has experienced headwinds due to softening global demand and an increased focus by retailers to rebalance inventory levels in light of continued inflationary pressures on consumers, most notably in the Home Appliances and Home Solutions segments.

As a result, the Company may identify future triggering events for these segments, other segments or other indefinite-lived tradenames, including the Baby reporting unit goodwill in the Learning and Development segment, which had a carrying value of $ 645 million and an indefinite-lived tradename in the Outdoor and Recreation reporting unit which had a carrying value of $ 58 million.

Additional impairment testing may be required based on further deterioration of global demand and/or the macroeconomic environment, continued disruptions to the Company’s business, further declines in operating results of the Company’s reporting units and/or tradenames, further sustained deterioration of the Company’s market capitalization, and other factors, which may necessitate changes to estimates or valuation assumptions used in the fair value of the reporting units for goodwill and indefinite-lived intangible tradenames.

Although management cannot predict when improvements in macroeconomic conditions will occur, if consumer confidence and consumer spending decline significantly in the future or if commercial and industrial economic activity experiences a sustained deterioration from current levels, it is possible the Company will be required to record impairment charges in the future.

See Footnote 1 for further information on use of estimates and risks.

Footnote 8 — Other Accrued Liabilities

Other accrued liabilities are comprised of the following at the dates indicated (in millions):

June 30, 2022 December 31, 2021

Other accrued liabilities are comprised of the following (in millions):

September 30, 2022 December 31, 2021

Customer accruals $ 675 $ 715

Operating lease liabilities 122 122

Accrued self-insurance liabilities, contingencies and warranty 193 125

Accrued marketing and freight expenses 74 59

Operating lease liabilities 122 122

Accrued interest expense 113 56

Accrued marketing and freight expenses 81 59

Accrued income taxes 54 43

3 unchanged sentences

Debt is comprised of the following at the dates indicated (in millions):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

3.85 % senior notes due 2023

6 unchanged sentences

6.625 % senior notes due 2029

Commercial paper 112 —

Receivables facility 260 —

5.375 % senior notes due 2036

5.50 % senior notes due 2046

Other debt 3 6

1 unchanged sentence

Long-term debt $ 4,762 $ 4,883

On September 19, 2022, the Company delivered a notice of redemption to the holders of the Company's 3.85 % senior notes due April 2023 (the “April 2023 Notes”), and the Company redeemed the April 2023 Notes on October 19, 2022.

The redemption price was 100.002 % of the outstanding aggregate principal amount of the notes, plus accrued and unpaid interest to the date of redemption.

The total consideration paid was approximately $ 1.09 billion, and the Company will recognize a nominal debt extinguishment loss in the fourth quarter of 2022.

On September 14, 2022, the Company completed a registered public offering of $ 500 million principal amount of 6.375 % senior notes that mature in September 2027 (the “September 2027 Notes”) and $ 500 million principal amount of 6.625 % senior notes that mature in September 2029 (the “September 2029 Notes”).

The Company received proceeds of approximately $ 990 million, net of fees and expenses paid.

The September 2027 Notes and the September 2029 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 September 2027 Notes and the September 2029 Notes are redeemable in whole or in part, at the option of the Company (1) at any time prior to three months before the stated maturity dates at a redemption price equal to or greater of (a) the principal amount of the notes being redeemed or (b) the sum of the present values of the remaining scheduled payments of principal and interest on the notes being redeemed, discounted to the redemption date on a semi-annual basis, plus the applicable make-whole amount of 50 basis points, plus in each case, accrued and unpaid interest on the notes being redeemed to, but not including, the redemption date;

or (2) at any time on or after three months prior to

respective maturity dates, at a redemption price equal to 100 % of the principal amount of the notes being redeemed plus accrued and unpaid interest to the redemption dates.

The Company used the net proceeds from the September 2027 and September 2029 Notes, together with available cash, to redeem the April 2023 Notes during the fourth quarter of 2022.

The Company was in compliance with all of its debt covenants at September 30, 2022.

On February 11, 2022, S&P Global Inc.

(“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.

Since the S&P upgrade, the Company has been 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 (defined hereafter).

(“S&P”) upgraded the Company’s debt rating to “BBB-” from “BB+”.

Since the S&P upgrade, the Company has been in a position to access the commercial paper market.

The Company can currently issue commercial paper up to a maximum of $ 1.5 billion, provided there is a sufficient amount available for borrowing under the Credit Revolver (defined hereafter).

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

6 unchanged sentences

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

At June 30, 2022, the Company has $ 260 million outstanding under the Securitization Facility.

At September 30, 2022, the Company did not have any amounts outstanding under the Securitization Facility.

Revolving Credit Facility and Commercial Paper

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

On August 31, 2022, the Company entered into a $ 1.5 billion senior unsecured revolving credit facility (the “Credit Revolver”) that matures in August 2027.

The Credit Revolver refinanced the Company’s previous $ 1.25 billion senior unsecured revolving credit facility that was scheduled to mature in December 2023.

Under the Credit Revolver, the Company may borrow funds on a variety of interest rate terms.

Since the Credit Revolver provides the committed backup liquidity required to issue commercial paper, the Company may issue commercial paper up to a maximum of $ 800 million provided there is a sufficient amount available for borrowing under the Credit Revolver.

At June 30, 2022, the Company did not have any amounts outstanding under the Credit Revolver, with a net availability of approximately $ 1.1 billion and approximately $ 112 million outstanding under its commercial paper program.

The Credit Revolver also provides for the issuance of up to $ 100 million of letters of credit, so long as there is sufficient amount available for borrowing under the Credit Revolver.

At June 30, 2022, the Company has approximately $ 22 million of outstanding standby letters of credit issued against the Credit Revolver.

The Credit Revolver provides committed back-up liquidity for the issuance of commercial paper, in each case, to the extent there is sufficient availability for borrowing under the Credit Revolver.

At September 30, 2022 there were no borrowings outstanding under the Credit Revolver and no commercial paper borrowings.

The Credit Revolver provides for the issuance of up to $ 150 million of letters of credit, so long as there is sufficient availability for borrowing under the Credit Revolver.

At September 30, 2022, the Company had approximately $ 22 million of outstanding standby letters of credit issued against the Credit Revolver, with a net availability of approximately $ 1.48 billion.

The fair value of the Company’s senior notes are based upon prices of similar instruments in the marketplace and are as follows (in millions):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Fair Value Book Value Fair Value Book Value

11 unchanged sentences

Fair Value Hedges

At June 30, 2022, the Company had approximately $ 100 million notional amount of interest rate swaps that exchange a fixed rate of interest for a variable rate (LIBOR) of interest plus a weighted average spread.

These floating rate swaps are designated as fair value hedges against $ 100 million of principal on the 4.00 % senior notes due 2024 for the remaining life of the note.

At September 30, 2022, the Company had approximately $ 1.1 billion notional amount of interest rate swaps that exchange a fixed rate of interest for a variable rate of interest plus a weighted average spread.

These floating rate swaps are designated as fair value hedges against $ 500 million of principal on the 6.375 % senior notes due 2027, $ 500 million of principal on the 6.625 % senior notes due 2029 and $ 100 million of principal on the 4.00 % senior notes due 2024 for the remaining life of the notes.

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

4 unchanged sentences

dollar interest.

During the third quarter of 2022, the Company entered into two cross-currency swaps with notional amounts of $ 500 million each, one maturing in September 2027 and the other in September 2029.

These swaps were also 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 floating rate of Euro-based interest and receives a floating rate of U.S.

dollar interest.

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

During the three months ended June 30, 2022 and 2021, the Company recognized income of $ 6 million and $ 3 million, respectively, and income of $ 11 million and $ 7 million for the six months ended June 30, 2022 and 2021, respectively, in interest expense, net, related to the portion of cross-currency swaps excluded from hedge effectiveness testing.

During the three months ended September 30, 2022 and 2021, the Company recognized income of $ 8 million and $ 4 million, respectively, and income of $ 19 million and $ 11 million for the nine months ended September 30, 2022 and 2021, respectively, in interest expense, net, related to the portion of cross-currency swaps excluded from hedge effectiveness testing.

Foreign Currency Contracts

The Company uses forward foreign currency contracts to mitigate the foreign currency exchange rate exposure on the cash flows related to forecasted inventory purchases and sales with maturity dates through March 2023.

The derivatives used to hedge these forecasted transactions that meet the criteria for hedge accounting are accounted for as cash flow hedges.

The effective portion of the gains or losses on these derivatives is deferred as a component of AOCL until it is recognized in earnings at the same time that the hedged item affects earnings and is included in the same caption in the statements of operations as the underlying hedged item.

At June 30, 2022, the Company had approximately $ 375 million notional amount outstanding of forward foreign currency contracts that are designated as cash flow hedges of forecasted inventory purchases and sales.

At September 30, 2022, the Company had approximately $ 370 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 June 30, 2022, the Company had approximately $ 1.5 billion notional amount outstanding of these foreign currency contracts that are not designated as effective hedges for accounting purposes and have maturity dates through May 2023.

At September 30, 2022, the Company had approximately $ 1.57 billion notional amount outstanding of these foreign currency contracts that are not designated as effective hedges for accounting purposes and have maturity dates through August 2023.

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 Condensed Consolidated Statement of Operations.

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Assets (Liabilities)

Balance Sheet Location June 30, 2022 December 31, 2021

Balance Sheet Location September 30, 2022 December 31, 2021

Derivatives designated as effective hedges:

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Interest rate swaps Other accrued liabilities ( 11 ) —

Interest rate swaps Other noncurrent liabilities ( 23 ) —

Net Investment Hedges

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The following table presents gain and (loss) activity (on a pretax basis) related to derivative financial instruments designated or previously designated, as effective hedges (in millions):

June 30, 2022 Three Months

June 30, 2021

September 30, 2022 Three Months

September 30, 2021

Gain/(Loss) Gain/(Loss)

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Total $ 128 $ 7 $ 36 $ ( 8 )

June 30, 2022 Six Months

June 30, 2021

September 30, 2022 Nine Months

September 30, 2021

Gain/(Loss) Gain/(Loss)

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Total $ 229 $ 10 $ 64 $ ( 19 )

At June 30, 2022, net deferred gains of approximately $ 23 million within AOCL are expected to be reclassified to earnings over the next twelve months.

During the three and six months ended June 30, 2022, the Company recognized income of $ 2 million and expense of $ 1 million respectively, and expense of $ 3 million and income of $ 4 million, during the three and six months ended June 30, 2021, respectively, in other (income) expense, net, related to derivatives that are not designated as hedging instruments.

At September 30, 2022, net deferred gains of approximately $ 31 million within AOCL are expected to be reclassified to earnings over the next twelve months.

During the three and nine months ended September 30, 2022, the Company recognized expense of $ 6 million and $ 7 million respectively, and income of $ 7 million and $ 11 million, during the three and nine months ended September 30, 2021, respectively, in other (income) expense, net, related to derivatives that are not designated as hedging instruments.

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

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International

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

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

2022 2021 2022 2021 2022 2021 2022 2021

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

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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.

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

The non-cash settlement charge associated with the transaction is expected to be approximately £ 50 million to £ 70 million.

Footnote 12 — Income Taxes

The Company’s effective income tax rates for the three months ended June 30, 2022 and 2021 were 19.7 % and 18.9 %, respectively and 18.3 % and 22.5 % for the six months ended June 30, 2022 and 2021 respectively, reflecting a low effective income tax rate associated with the sale of the CH&S business.

The Company’s effective income tax rates for the three months ended September 30, 2022 and 2021 was a benefit of 203.3 % as compared to a provision of 11.6 %, respectively, reflecting increased discrete tax benefits combined with pretax losses associated with impairment charges in the three months ended September 30, 2022.

For the nine months ended September 30, 2022 and 2021 the income tax rates were 7.3 % and 18.5 %, respectively, reflecting a lower effective income tax rate associated with increased tax benefits.

The differences between the U.S.

federal statutory income tax rate of 21.0 % and the Company’s effective income tax rate for the three and six months ended June 30, 2022 and 2021 were impacted by a variety of factors, primarily resulting from the geographic mix of where the income was earned as well as certain taxable income inclusion items in the U.S.

federal statutory income tax rate of 21.0 % and the Company’s effective income tax rate for the three and nine months ended September 30, 2022 and 2021 were impacted by a variety of factors, primarily resulting from the geographic mix of where the income was earned, as well as certain taxable income inclusion items in the U.S.

based on foreign earnings.

The three and six months ended June 30, 2022 were also impacted by certain discrete items.

Income tax expense for the three months ended June 30, 2022 included a discrete benefit of $ 11 million associated with the reduction in valuation allowance related to the integration of certain Brazilian operations .

The six months ended June 30, 2022 also included a discrete benefit of $ 4 million associated with the approval of certain state tax credits, offset by $ 15 million of income tax expense related to the divestiture of the CH&S business unit .

The three and six months ended June 30, 2021 were also impacted by certain discrete items.

Income tax expense for the three and six months ended June 30, 2021 included a discrete benefit of $ 13 million associated with a reduction in valuation allowance related to the integration of certain U.K.

The three and nine months ended September 30, 2022 were also impacted by certain discrete items.

Income tax expense for the three months ended September 30, 2022 included a discrete benefit of $ 58 million associated with a change in the Company's indefinite reinvestment assertion regarding certain earnings within its Irish operations, $ 6 million associated with tradename

impairments, $ 4 million associated with the reduction of a valuation allowance related to operations in the state of Georgia and $ 2 million associated with the approval of certain state tax credits.

The nine months ended September 30, 2022 also included a discrete benefit of $ 11 million associated with the reduction in valuation allowance related to the integration of certain Brazilian operations and $ 4 million associated with the approval of certain state tax credits, offset by $ 16 million of income tax expense related to the divestiture of the CH&S business unit .

The three and nine months ended September 30, 2021 were also impacted by certain discrete items.

Income tax expense for the three months ended September 30, 2021 included a discrete benefit of $ 37 million associated with a reduction in valuation allowance related to the integration of certain Luxembourg operations.

Income tax expense for the nine months ended September 30, 2021 also included discrete benefits of $ 13 million associated with a reduction in valuation allowance related to the integration of certain U.K.

operations and $ 9 million related to a statute of limitation expiration in France.

During the six months ended June 30, 2022, the Company amended its 2017 U.S.

During the nine months ended September 30, 2022, the Company amended its 2017 U.S.

federal income tax return to carryback foreign tax credits generated in 2018 and capital losses generated in 2018 and 2020.

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The Company analyzed the Regulations and concluded the relevant Regulations were not validly issued.

Therefore, the Company has not accounted for the effects of the Regulations in its Condensed Consolidated Financial Statements for the period ending June 30, 2022.

Therefore, the Company has not accounted for the effects of the Regulations in its Condensed Consolidated Financial Statements for the period ending September 30, 2022.

The Company believes it has strong arguments in favor of its position and believes it has met the more likely than not recognition threshold that its position will be sustained.

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

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Diluted weighted average shares outstanding 414.6 428.5 418.3 427.9

At September 30, 2022, there were 0.1 million potentially dilutive restricted stock awards with performance-based targets that were not met and as such, have been excluded from the computation of diluted earnings per share.

At September 30, 2021, there were no potentially dilutive restricted stock awards with performance-based targets that were not met.

Footnote 14 — Stockholders' Equity and Share-Based Compensation

During the six months ended June 30, 2022, the Company granted 1.1 million performance-based restricted stock units (“RSUs”), which had an aggregate grant date fair value of $ 29 million and entitle the recipients to shares of the Company’s common stock primarily at the end of a three-year vesting period.

During the nine months ended September 30, 2022, the Company granted 1.1 million performance-based restricted stock units (“RSUs”), which had an aggregate grant date fair value of $ 30 million and entitle the recipients to shares of the Company’s common stock primarily at the end of a three-year vesting period.

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

During the six months ended June 30, 2022, the Company also granted 0.8 million time-based RSUs with an aggregate grant date fair value of $ 20 million.

During the nine months ended September 30, 2022, the Company also granted 0.8 million time-based RSUs with an aggregate grant date fair value of $ 21 million.

These time-based RSUs entitle recipients to shares of the Company’s common stock and primarily vest either at the end of a three-year period or in equal installments over a three-year period.

During the six months ended June 30, 2022, the Company also granted 2.2 million time-based stock options with an aggregate grant date fair value of $ 14 million.

During the nine months ended September 30, 2022, the Company also granted 2.2 million time-based stock options with an aggregate grant date fair value of $ 14 million.

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 six months ended June 30, 2022, is as follows:

The weighted average assumptions used to determine the fair value of stock options granted for the nine months ended September 30, 2022, is as follows:

Risk-free interest rates 1.9 %

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During the three months ended June 30, 2022, the Company repurchased approximately $ 50 million of its shares of common stock at an average purchase price of $ 22.01 per share.

At June 30, 2022, the Company has remaining authority to repurchase approximately $ 50 million of its shares of common stock under the SRP.

The Company did not repurchase any of its shares of common stock during the three months ended September 30, 2022.

At September 30, 2022, the Company has remaining authority to repurchase approximately $ 50 million of its shares of common stock under the SRP.

Footnote 15 — Fair Value Disclosures

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The following table presents the Company’s non-pension financial assets and liabilities, which are measured at fair value on a recurring basis (in millions):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Fair value Asset (Liability) Fair value Asset (Liability)

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For publicly traded investment securities, including mutual funds, fair value is determined on the basis of quoted market prices and, accordingly, such investments are classified as Level 1.

The Company determines the fair value of its derivative instruments using standard pricing models and market-based assumptions for all significant inputs, such as yield curves and quoted spot and forward exchange rates.

The Company determines the fair value of its derivative instruments

using standard pricing models and market-based assumptions for all significant inputs, such as yield curves and quoted spot and forward exchange rates.

Accordingly, the Company’s derivative instruments are classified as Level 2.

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The Company’s nonfinancial assets, which are measured at fair value on a nonrecurring basis, include property, plant and equipment, goodwill, intangible assets and certain other assets.

In connection with the Company's annual impairment testing at December 1, 2021, a tradename within the Learning and Development segment was fair valued at $ 47 million on a non-recurring basis.

The Company’s goodwill and indefinite-lived intangibles are fair valued using discounted cash flows.

Goodwill impairment testing requires significant use of judgment and assumptions including 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 and discount rates.

The testing of indefinite-lived intangibles under established guidelines for impairment also requires significant use of judgment and assumptions, such as the estimation of cash flow projections, terminal values, royalty rates, contributory cross charges, where applicable, and discount rates.

Accordingly, these fair value measurements fall in Level 3 of the fair value hierarchy.

These assets and certain liabilities are measured at fair value on a nonrecurring basis as part of the Company’s annual impairment testing and as circumstances require.

At September 30, 2022, goodwill for the Home Fragrance reporting unit in the Home Solutions segment, one tradename within the Home Appliances segment and two tradenames within the Baby reporting unit in the Learning and Development segment were fair valued at $ 56 million, $ 39 million, $ 40 million and $ 8 million, respectively, on a non-recurring basis in connection with triggering events that occurred during the third quarter of 2022.

The most significant unobservable input (Level 3) used to estimate the fair value of the Home Fragrance reporting unit goodwill is the discount rate, which was 10.0 %.

The most significant unobservable inputs (Level 3) used to estimate the fair value of the indefinite-lived intangible asset for the Home Appliances reporting unit is the discount rate, which was 12.5 %.

The most significant unobservable input (Level 3) used to estimate the fair value of the two indefinite-lived intangible assets for the Baby reporting unit is the discount rate, which was 8.5 %.

See Footnotes 1 and 7 for further information.

Footnote 16 — Segment Information

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

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Home Appliances (4)

( 20 ) 19 ( 23 ) 35

Home Solutions (4)

( 88 ) 75 ( 22 ) 189

Learning and Development 120 195 497 522

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$ 35 $ 281 $ 569 $ 778

September 30,

2022 December 31, 2021

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Corporate depreciation and amortization is allocated to the segments on a percentage of net sales basis and included in segment operating income.

(3) The change in the Commercial Solutions net sales, operating income and segment assets is primarily due to the sale of the CH&S business at the end of the first quarter of 2022.

(3) Commercial Solutions net sales, operating income and segment assets exclude the CH&S business as a result of the sale of this business starting from the end of the first quarter of 2022.

(4) During the three months ended September 30, 2022, the Company concluded that triggering events had occurred for goodwill in the Home Solutions segment and indefinite-lived intangible assets in the Home Appliances and Learning and Development segments.

The Company recorded non-cash impairment charges of $ 108 million related to goodwill and $ 40 million related to three indefinite-lived intangible assets.

See Footnote 7 for further information.

The following tables disaggregate revenue by major product grouping source and geography for the periods indicated (in millions):

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Commercial Solutions Home

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Total $ 397 $ 305 $ 510 $ 751 $ 289 $ 2,252

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Commercial Solutions Home

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Total $ 486 $ 443 $ 598 $ 869 $ 391 $ 2,787

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Commercial Solutions Home

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Total $ 1,336 $ 991 $ 1,477 $ 2,266 $ 1,104 $ 7,174

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Commercial Solutions Home

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(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 Corporation (the “Registration Statement”).

The Company and certain of its current and former officers and directors have been named as defendants in a 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 to the S-4 registration statement and prospectus issued in connection with the April 2016 acquisition of Jarden Corporation (the “Registration Statement”).

The action was filed on September 6, 2018 and is captioned Oklahoma Firefighters Pension and Retirement System v.

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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.

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.

In October 2022, the Company entered into a settlement agreement to resolve the claims asserted in this lawsuit.

Under the settlement, the Company agreed to create a settlement fund of approximately $ 103 million for the benefit of the class, subject to certain exclusions, which will be predominantly funded by insurance proceeds.

Both the settlement and the insurance receivable were recorded in the Condensed Consolidated Balance Sheet at September 30, 2022.

The amount not to be funded by available insurance proceeds, which is not material to the Company, was expensed during the third quarter of 2022.

In October 2022, a motion for preliminary approval of the settlement was filed with the Superior Court of New Jersey, Hudson County.

The settlement is subject to certain conditions, including preliminary and final court approval.

Environmental Matters

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and the extent to which the Company’s, and other parties’ status as PRPs is disputed.

The Company’s estimate of environmental remediation costs associated with these matters at June 30, 2022 was $ 36 million which is included in other accrued liabilities and other noncurrent liabilities in the Condensed Consolidated Balance Sheets.

No insurance recovery was taken into account in determining the Company’s cost estimates or reserves, nor do the Company’s cost

estimates or reserves reflect any discounting for present value purposes, except with respect to certain long-term operations and maintenance CERCLA matters.

The Company’s estimate of environmental remediation costs associated with these matters at September 30, 2022 was $ 33 million which is included in other accrued liabilities and other noncurrent liabilities in the Condensed Consolidated Balance Sheets.

insurance recovery was taken into account in determining the Company’s cost estimates or reserves, nor do the Company’s cost estimates or reserves reflect any discounting for present value purposes, except with respect to certain long-term operations and maintenance CERCLA matters.

Because of the uncertainties associated with environmental investigations and response activities, the possibility that the Company could be identified as a PRP at sites identified in the future that require the incurrence of environmental response costs and the possibility that sites acquired in business combinations may require environmental response costs, actual costs to be incurred by the Company may vary from the Company’s estimates.

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EPA and certain parties to the allocation, including the Company Parties, reached an agreement in principle concerning a cash-out settlement for both Unit 2 and Unit 4.

The agreement in principle remains subject to the negotiation and court entry of a consent decree finalizing the U.S.

EPA Settlement.

EPA and the parties participating in the U.S.

EPA Settlement are in the process of finalizing a consent decree, which will be subject to court entry.

The OCC Litigation

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Historically, payments made by the Company under these agreements did not have a material effect on the Company’s business, financial condition or results of operations.

In connection with the 2018 sale of The Waddington Group,

Novolex Holdings, Inc.

In connection with the 2018 sale of The Waddington Group, Novolex Holdings, Inc.

(the “Buyer”) filed suit against the Company in October 2019 in the Superior Court of Delaware.

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.

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.

In the year ended December 31, 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.

2 unchanged sentences

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 17 .

At June 30, 2022, the Company had approximately $ 45 million in standby letters of credit primarily related to the Company’s self-insurance programs, including workers’ compensation, product liability and medical expenses.

At September 30, 2022, the Company had approximately $ 41 million in standby letters of credit primarily related to the Company’s self-insurance programs, including workers’ compensation, product liability and medical expenses.

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

What changed 10-Q

Item 1. Financial Statements