What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-04-28 compared with 2022-10-28 · 222 added, 412 removed, 472 unchanged (57% of the section changed)

2 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Amounts in millions, except per share data)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited)

(Amounts in millions, except per share amounts)

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Net sales $ 1,805 $ 2,388

3 unchanged sentences

Restructuring costs, net 38 5

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

Operating income 35 281 569 778

Operating income (loss) ( 36 ) 217

Non-operating expenses:

3 unchanged sentences

Income tax provision (benefit) ( 14 ) 48

Net income $ 31 $ 190 $ 469 $ 476

Net income (loss) $ ( 102 ) $ 228

Weighted average common shares outstanding:

1 unchanged sentence

Diluted 413.9 424.7

Earnings per share:

Earnings (loss) per share:

Basic $ ( 0.25 ) $ 0.54

Diluted $ ( 0.25 ) $ 0.54

See Notes to Condensed Consolidated Financial Statements (Unaudited).

NEWELL BRANDS INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

(Amounts in millions)

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Comprehensive income (loss):

Net income $ 31 $ 190 $ 469 $ 476

Net income (loss) $ ( 102 ) $ 228

Other comprehensive income (loss), net of tax:

2 unchanged sentences

Derivative financial instruments ( 10 ) —

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 (loss) attributable to parent $ ( 63 ) $ 156 $ 301 $ 447

Total other comprehensive income, net of tax 7 34

Total comprehensive income (loss) $ ( 95 ) $ 262

See Notes to Condensed Consolidated Financial Statements (Unaudited).

3 unchanged sentences

(Amounts in millions, except par values)

September 30,

2023 December 31,

23 unchanged sentences

Stockholders’ equity:

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)

Preferred stock ( 10.0 authorized shares, $ 1.00 par value, no shares issued at March 31, 2023 and December 31, 2022)

Common stock ( 800.0 authorized shares, $ 1.00 par value, 439.4 shares and 438.6 shares issued at March 31, 2023 and December 31, 2022, respectively)

Treasury stock, at cost ( 25.3 shares and 25.0 shares at March 31, 2023 and December 31, 2022, respectively)

( 627 ) ( 623 )

9 unchanged sentences

(Amounts in millions)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

Net income $ 469 $ 476

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Net income (loss) $ ( 102 ) $ 228

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Depreciation and amortization 81 76

Impairment of goodwill, intangibles and other assets 148 —

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

Gain from sale of business — ( 130 )

Deferred income taxes 6 326

1 unchanged sentence

Other, net 4 ( 2 )

Changes in operating accounts excluding the effects of divestitures:

Changes in operating accounts excluding the effects of divestiture:

Accounts receivable 45 14

2 unchanged sentences

Accrued liabilities and other ( 121 ) ( 420 )

Net cash provided by (used in) operating activities ( 567 ) 490

Net cash used in operating activities ( 77 ) ( 272 )

Cash flows from investing activities:

4 unchanged sentences

Cash flows from financing activities:

Net proceeds from issuance of long-term debt 990 —

Net proceeds from short-term debt 232 —

Payments on current portion of long-term debt — ( 1 )

Payments on long-term debt — ( 6 )

Repurchase of shares of common stock — ( 275 )

Cash dividends ( 97 ) ( 100 )

Acquisition of noncontrolling interests — ( 26 )

Equity compensation activity and other, net ( 7 ) ( 17 )

1 unchanged sentence

Exchange rate effect on cash, cash equivalents and restricted cash ( 1 ) 8

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

Decrease in cash, cash equivalents and restricted cash ( 18 ) ( 98 )

Cash, cash equivalents and restricted cash at beginning of period 303 477

7 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited)

(Amounts in millions)

(Amounts in millions, except per share amounts)

Stock Treasury

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

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

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

Dividends declared on common stock - $ 0.23 per share

— — ( 93 ) — — ( 93 )

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

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

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

Balance at December 31, 2022 $ 439 $ ( 623 ) $ 7,052 $ ( 2,338 ) $ ( 1,011 ) $ 3,519

3 unchanged sentences

Equity compensation, net of tax — ( 4 ) 9 — — 5

Common stock purchased and retired ( 13 ) — ( 312 ) — — ( 325 )

Other — — ( 1 ) — — ( 1 )

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

Balance at March 31, 2023 $ 439 $ ( 627 ) $ 6,965 $ ( 2,440 ) $ ( 1,004 ) $ 3,333

Stock Treasury

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

— — ( 99 ) — — ( 99 ) — ( 99 )

Equity compensation, net of tax — — 12 — — 12 — 12

Acquisition of noncontrolling interests — — — — — — ( 23 ) ( 23 )

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

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

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

Balance at December 31, 2021 $ 450 $ ( 609 ) $ 7,734 $ ( 2,535 ) $ ( 882 ) $ 4,158

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

Comprehensive income — — — 228 34 262

Dividends declared on common stock - $ 0.23 per share

1 unchanged sentence

Equity compensation, net of tax 2 ( 14 ) 12 — — —

Acquisition of noncontrolling interests — — — — — — ( 26 ) ( 26 )

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

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

Common stock purchased and retired ( 11 ) — ( 264 ) — — ( 275 )

Other — — ( 1 ) — — ( 1 )

Balance at March 31, 2022 $ 441 $ ( 623 ) $ 7,384 $ ( 2,307 ) $ ( 848 ) $ 4,047

See Notes to Condensed Consolidated Financial Statements (Unaudited).

11 unchanged sentences

GAAP for a complete financial statement.

Certain reclassifications have been made in the Company's financial statements of the prior year to conform to current year presentation.

On March 31, 2022, the Company sold its Connected Home & Security (“CH&S”) business unit to Resideo Technologies, Inc.

The condensed consolidated financial statements for all comparable prior periods presented have been retrospectively adjusted to reflect the following:

• A prior-year change in method of accounting for certain inventory in the U.S.

from the last-in, first-out method to the first-in, first-out method;

• Effective January 1, 2023, as a result of the implementation of a new operating model intended to drive further simplification and unlock additional efficiencies and synergies within the Company, the chief operating decision maker (“CODM”) now reviews the businesses as three operating segments:

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

The Home and Commercial Solutions operating segment represents the combination of the previously reported Commercial Solutions, Home Appliances and Home Solutions operating segments.

See Footnote 16 for further information;

• A revision associated with an incorrect change in functional currency designation in the prior year resulted in additional expense to record mark to market adjustments of $ 6 million in other (income) expense, net in the Condensed Consolidated Statement of Operations for the three months ended March 31, 2022 and a reclassification between Accumulated Other Comprehensive Loss and Retained Deficit in the Condensed Consolidated Statement of Stockholder’s Equity of $ 6 million at March 31, 2022.

Refer to Footnote 19 of the Company's most recent Annual Report on Form 10-K, filed on February 15, 2023.

On March 31, 2022, the Company sold its Connected Home & Security (“CH&S”) business to Resideo Technologies, Inc.

See Footnotes 2 and 16 for further information.

2 unchanged sentences

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 Company, which has been impacted in recent years by inflationary and supply chain pressures, labor shortages, and logistical challenges across its businesses and by indirect macroeconomic impacts from the Russia-Ukraine conflict, continues to experience additional headwinds due to softening global demand and an increased focus by retailers to rebalance inventory levels.

These collective macroeconomic trends, the duration or severity of which are highly uncertain, are rapidly changing the retail and consumer landscape and are expected to continue to negatively impact the Company’s operating results, cash flows and financial condition during the current year.

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.

1 unchanged sentence

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

Sales of the Company’s products tend to be seasonal, with sales, operating income and operating cash flow in the first quarter generally lower than any other quarter during the year, driven principally by reduced volume and the mix of products sold in the first quarter.

first quarter.

The seasonality of the Company’s sales volume combined with the accounting for fixed costs, such as depreciation, amortization, rent, personnel costs and interest expense, impacts the Company’s results on a quarterly basis.

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 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.

In addition, 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.

Accordingly, the Company’s results of operations and cash flows for the three months ended March 31, 2023 may not necessarily be indicative of the results that may be expected for the year ending December 31, 2023.

Recent Accounting Pronouncements

5 unchanged sentences

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

This ASU was further updated with the issuance of ASU 2022-06, Reference Rate Reform:

Deferral of the Sunset Date of Topic 848 , which extends the sunset date of the guidance.

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

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

Adoption of New Accounting Guidance

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

2 unchanged sentences

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.

See disclosures hereafter for further information.

Sales of Accounts Receivables

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”).

Factored receivables at March 31, 2023 associated with the Company's existing factoring agreement (the “Customer Receivables Purchase Agreement”) were approximately $ 350 million, a decrease of approximately $ 70 million from December 31, 2022.

Transactions under this agreement are accounted for as sales of accounts receivable, and the receivables sold are removed from the Condensed 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 Condensed Consolidated Statement of Cash Flows.

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

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 Condensed Consolidated Statement of Cash Flows.

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

Supplier Finance Program Obligations

The Company has worked with its suppliers of goods and services over the past several years to revisit terms and conditions, including the extension of payment terms.

Additionally, a global financial institution offers a voluntary supply chain finance program (the “SCF Program”) which enables suppliers, at their sole discretion, to sell their receivables from the Company to the financial institution on a non-recourse basis.

The Company and its suppliers agree on contractual terms for the goods and services procured, including prices, quantities and payment terms, regardless of whether the supplier elects to participate in the SCF Program.

Payments terms average approximately 125 days.

The suppliers sell goods or services, as applicable, to the Company and issue the associated invoices to the Company based on the agreed-upon contractual terms.

Suppliers that participate in the SCF Program, at their sole discretion, determine which invoices, if any, they want to sell to the financial institution.

The suppliers’ voluntary inclusion of invoices in the SCF Program does not change the Company’s existing contractual terms with its suppliers.

The Company does not provide any guarantees under the SCF Program, nor does it have any economic interest in a supplier’s decision to participate in the SCF Program.

Amounts due under the SCF Program are included in accounts payable in the Condensed Consolidated Balance Sheet and as operating cash flows in the Condensed Consolidated Statement of Cash Flows.

At March 31, 2023 and December 31, 2022, outstanding payment obligations under the SCF Program were approximately $ 75 million and $ 100 million, respectively .

Footnote 2 — Divestiture Activity

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 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.

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

As a result, during the three months ended March 31, 2022, the Company recorded a pretax gain of $ 130 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 nine months ended September 30, 2022 (in millions):

The following table displays the changes in Accumulated Other Comprehensive Income (Loss) (“AOCL”) by component, net of tax, for the three months ended March 31, 2023 (in millions):

Adjustment Pension and

5 unchanged sentences

Net current period other comprehensive income (loss) 18 ( 1 ) ( 10 ) 7

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):

Balance at March 31, 2023 $ ( 670 ) $ ( 310 ) $ ( 24 ) $ ( 1,004 )

Reclassifications from AOCL to the results of operations for the three months ended March 31, 2023 and 2022 were pretax (income) expense of (in millions):

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Cumulative translation adjustment (1)

$ — $ — $ 6 $ —

Pension and postretirement benefit plans (2)

Derivative financial instruments (3)

( 7 ) 8 ( 10 ) 19

(1) See Footnote 2 for further information.

1 unchanged sentence

(3) See Footnote 10 for further information.

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

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Foreign currency translation adjustments $ ( 6 ) $ 1

Pension and postretirement benefit costs 1 1 2 3

Derivative financial instruments ( 3 ) ( 1 )

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

Footnote 4 — Restructuring Costs

Income tax provision (benefit) related to AOCL $ ( 9 ) $ —

Footnote 4 — Restructuring

Restructuring costs, net incurred by reportable business segments for all restructuring activities for the periods indicated are as follows (in millions):

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Commercial Solutions $ 1 $ 1 $ 2 $ 1

Home Appliances — — 1 4

Home Solutions — — 1 3

Home and Commercial Solutions $ 16 $ 3

Learning and Development 5 2

1 unchanged sentence

Corporate 11 —

$ 3 $ 6 $ 12 $ 16

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

Accrued restructuring costs activity for the three months ended March 31, 2023 was as follows (in millions):

Balance at December 31, 2022 Restructuring

Costs, Net Payments Balance at

September 30, 2022

Costs, Net Payments Foreign

and Other Balance at

March 31, 2023

Severance and termination costs $ 7 $ 36 $ ( 33 ) $ — $ 10

1 unchanged sentence

$ 7 $ 38 $ ( 34 ) $ ( 1 ) $ 10

2020 Restructuring Plan

The Company’s 2020 restructuring program, which was substantially complete at the end of 2021, was designed to reduce overhead costs, streamline certain underperforming operations and improve future profitability.

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

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

Project Phoenix

In January 2023, the Company announced a restructuring and savings initiative (“Project Phoenix”) that is intended to strengthen the Company by leveraging its scale to further reduce complexity, streamlining its operating model and driving operational efficiencies.

Project Phoenix is expected to be substantially implemented by the end of 2023 and incorporates a variety of initiatives designed to simplify the organizational structure, streamline the Company’s real estate portfolio, centralize the Company’s supply chain functions, which include manufacturing, distribution, transportation and customer service, transition to a unified One Newell go-to-market model in key international geographies, and otherwise reduce overhead costs.

The Company commenced reducing headcount in the first quarter of 2023, with most of these actions expected to be completed by the end of 2023, subject to local law and consultation requirements.

During the three months ended March 31, 2023, the Company recorded restructuring charges of $ 36 million in connection with the program.

The Company currently estimates that it will incur approximately $ 100 million to $ 130 million in restructuring and restructuring-related charges in connection with Project Phoenix, substantially all of which are expected to be incurred by the end of 2023.

These charges consist primarily of $ 80 million to $ 105 million in charges related to severance payments and other termination benefits;

$ 15 million to $ 20 million in charges associated with office space reductions;

and approximately $ 5 million of other charges, including those associated with employee transition and legal costs.

The Company expects approximately $ 95 million to $ 120 million of the total aggregate charges will be cash expenditures.

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

Other Restructuring and Restructuring-Related Charges

The Company regularly incurs other restructuring and restructuring-related costs in connection with various discrete initiatives, including certain costs associated with Project Ovid, the multi-year, customer centric supply chain initiative to transform the Company’s go-to-market capabilities in the U.S., improve customer service levels and drive operational efficiencies.

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 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.

During the three months ended March 31, 2023 and 2022, the Company recorded other restructuring charges of $ 2 million and $ 5 million, respectively.

Footnote 5 — Inventories

Inventories are comprised of the following (in millions):

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Raw materials and supplies $ 277 $ 285

4 unchanged sentences

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Land $ 77 $ 76

3 unchanged sentences

$ 1,213 $ 1,184

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.

Depreciation expense was $ 54 million and $ 49 million for the three months ended March 31, 2023 and 2022, respectively.

Footnote 7 — Goodwill and Other Intangible Assets, Net

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

Goodwill activity for the three months ended March 31, 2023 is as follows (in millions):

Segments Net Book Value at December 31, 2022

Impairment Charges Foreign

Net Book Value at

September 30, 2022

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

Home Appliances — — — 569 ( 569 ) —

Home Solutions 164 ( 108 ) — 2,567 ( 2,511 ) 56

March 31, 2023

Home and Commercial Solutions $ 747 $ — $ 4,052 $ ( 3,305 ) $ 747

Learning and Development 2,551 7 3,404 ( 846 ) 2,558

1 unchanged sentence

$ 3,298 $ 7 $ 8,244 $ ( 4,939 ) $ 3,305

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

March 31, 2023 December 31, 2022

Accumulated Amortization

Trade names — indefinite life $ 1,898 $ — $ 1,898 $ 2,219 $ — $ 2,219

Trade names — other 158 ( 75 ) 83 159 ( 65 ) 94

Tradenames — indefinite life (1)

$ 1,624 $ — $ 1,624 $ 1,689 $ — $ 1,689

Tradenames — other (1)

231 ( 86 ) 145 160 ( 79 ) 81

Capitalized software 608 ( 489 ) 119 602 ( 481 ) 121

2 unchanged sentences

$ 3,559 $ ( 924 ) $ 2,635 $ 3,545 $ ( 896 ) $ 2,649

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.

(1) In connection with the operating model changes associated with Project Phoenix, the Company determined that six tradenames with aggregate carrying values of $ 70 million no longer met indefinite-lived criteria and were reclassified during the first quarter as finite-lived tradenames, with useful lives ranging from five to ten years .

Amortization expense for intangible assets was $ 27 million for both the three months ended March 31, 2023 and 2022.

Footnote 8 — Other Accrued Liabilities

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Customer accruals $ 613 $ 636

Accrued self-insurance liabilities, contingencies and warranty 193 125

Operating lease liabilities 121 121

Accrued self-insurance liabilities, contingencies and warranty 104 99

Accrued interest expense 94 63

5 unchanged sentences

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

September 30, 2022 December 31, 2021

3.85 % senior notes due 2023

$ 1,088 $ 1,086

March 31, 2023 December 31, 2022

4.00 % senior notes due 2024

6 unchanged sentences

5.50 % senior notes due 2046

Revolving credit facility 760 225

Commercial paper — 359

Receivables facility 90 35

Other debt 4 2

1 unchanged sentence

Long-term debt $ 4,776 $ 4,756

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+”.

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).

However, certain of the Company’s outstanding senior notes aggregating to approximately $ 4.2 billion are still subject to an interest rate adjustment of 25 basis points in connection with the Moody’s Corporation (“Moody’s”) downgrade of the Company's debt rating in 2020.

On March 20, 2023, S&P Global Inc.

(“S&P”) downgraded the Company’s debt rating to “BB+”.

As a result of the S&P downgrade, certain of the Company’s outstanding senior notes currently aggregating to approximately $ 3.1 billion are subject to an interest rate adjustment of 25 basis points.

The change to the interest rate due to the downgrade will increase the Company’s interest expense by approximately $ 8 million on an annualized basis (approximately $ 6 million in 2023).

In addition, the Company is still subject to the interest rate adjustment of 25 basis points in connection with the Moody’s Corporation (“Moody’s”) downgrade of the Company's debt rating in 2020.

Furthermore, as a result of the S&P downgrade, the Company's ability to borrow from the commercial paper market on terms it deems acceptable or favorable was eliminated.

On February 14, 2023, Fitch Ratings downgraded the Company's debt rating to “BB”.

This downgrade does not impact the interest rates on any of the Company's senior notes.

Receivables Facility

The Company maintains an Accounts Receivable Securitization Facility (the “Securitization Facility”).

During the second quarter of 2022, the Company amended the Securitization Facility.

This amendment (1) reduced the aggregate commitment under the Securitization Facility to $ 375 million from $ 600 million, (2) extended its maturity by one year to October 2023 and (3) changed the reference rate under the Securitization Facility from LIBOR to SOFR.

The Securitization Facility bears interest at a margin over a variable interest rate.

The aggregate commitment under the Securitization Facility is $ 375 million.

The Securitization Facility matures in October 2023 and bears interest at a margin over a variable interest rate.

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

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

At March 31, 2023, the Company had $ 90 million outstanding under the Securitization Facility.

Revolving Credit Facility and Commercial Paper

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.

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 Company has a $ 1.5 billion senior unsecured revolving credit facility (the “Credit Revolver”) that matures in August 2027.

On March 27, 2023, the Company entered into an amendment to its Credit Revolver (the “Amendment”) to (i) include non-cash expenses resulting from grants of stock awards among the items that may be added to Consolidated Net Income when calculating Consolidated Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), as defined in the Amendment, and (ii) lower the Interest Coverage Ratio, as defined in the Amendment, for the fiscal quarters ending on June 30, 2023, September 30, 2023, December 31, 2023 and March 31, 2024.

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.

At March 31, 2023, the Company had $ 760 million of outstanding borrowings under the Credit Revolver and approximately $ 22 million of outstanding standby letters of credit issued against the Credit Revolver, with a net availability of approximately $ 720 million.

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

The Company’s borrowing arrangements other than the senior notes contain usual and customary nonfinancial covenants and certain financial covenants, including minimum interest coverage and maximum debt-to-total-capitalization ratios.

The weighted average interest rates for total debt for three months ended March 31, 2023 and 2022 were approximately 4.8 % and 4.5 %, respectively.

The weighted average interest rate for short term debt for the three months ended March 31, 2023 was approximately 6.1 %.

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):

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Fair Value Book Value Fair Value Book Value

9 unchanged sentences

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

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

The settlement of interest rate swaps is included in interest expense.

Fair Value Hedges

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.

At March 31, 2023, 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.

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

1 unchanged sentence

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

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.

During the three months ended March 31, 2023 and 2022, the Company recognized income of $ 11 million and $ 5 million, 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 September 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 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.

At March 31, 2023, the Company had approximately $ 336 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 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.

At March 31, 2023, the Company had approximately $ 1.2 billion notional amount outstanding of these foreign currency contracts that are not designated as effective hedges for accounting purposes and have maturity dates through February 2024.

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.

2 unchanged sentences

Assets (Liabilities)

Balance Sheet Location September 30, 2022 December 31, 2021

Balance Sheet Location March 31, 2023 December 31, 2022

Derivatives designated as effective hedges:

15 unchanged sentences

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):

September 30, 2022 Three Months

September 30, 2021

Gain/(Loss) Gain/(Loss)

Location of gain/(loss) recognized in income Recognized

(effective portion)

Interest rate swaps Interest expense, net $ — $ ( 2 ) $ — $ ( 1 )

Foreign currency contracts Net sales and cost of products sold 20 9 11 ( 7 )

Cross-currency swaps Other (income) expense, net 108 — 25 —

Total $ 128 $ 7 $ 36 $ ( 8 )

September 30, 2022 Nine Months

September 30, 2021

March 31, 2023 Three Months

March 31, 2022

Gain/(Loss) Gain/(Loss)

9 unchanged sentences

Total $ ( 26 ) $ 9 $ 3 $ ( 1 )

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.

At March 31, 2023, net deferred loss of approximately $ 7 million within AOCL are expected to be reclassified to earnings over the next twelve months.

During the three months ended March 31, 2023 and 2022, the Company recognized expense of $ 10 million and $ 3 million, 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.

3 unchanged sentences

Pension Benefits

International U.S.

International

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

Three Months Ended March 31,

2023 2022 2023 2022

6 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Amortization $ ( 2 ) $ ( 1 )

3 unchanged sentences

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 2023.

The Company anticipates the “buy-out” for the plan to be completed in 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 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 Company’s effective income tax rates for the three months ended March 31, 2023 and 2022 was a benefit of 12.1 % as compared to a provision of 17.4 %, respectively, resulting from lower discrete tax expense combined with year to date pretax losses.

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 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.

federal statutory income tax rate of 21.0 % and the Company’s effective income tax rate for the three months ended March 31, 2023 and 2022 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 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 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.

This resulted in an increase in noncurrent income taxes receivable of approximately $ 261 million, a decrease in income taxes payable of approximately $ 95 million, and an increase in deferred tax liabilities of approximately $ 356 million.

The three months ended March 31, 2023 were impacted by certain discrete items totaling $ 4 million of additional income tax expense.

The three months ended March 31, 2022 were impacted by certain discrete items.

Income tax expense for the three months ended March 31, 2022 included a discrete benefit of $ 4 million associated with the approval of certain state tax credits, offset by $ 14 million of tax expense related to the divestiture of the CH&S business unit.

The Company’s U.S.

1 unchanged sentence

income tax returns for various years, are under examination.

On June 18, 2019, the U.S.

Treasury and the Internal Revenue Service (“IRS”) released temporary regulations under IRC Section 245A (“Section 245A”) as enacted by the 2017 U.S.

Tax Reform Legislation (“2017 Tax Reform”) and IRC Section 954(c)(6) (the “Temporary Regulations”) to apply retroactively to the date the 2017 Tax Reform was enacted.

On August 21, 2020, the U.S.

Treasury and IRS released finalized versions of the Temporary Regulations (collectively with the Temporary Regulations, the “Regulations”).

The Regulations seek to limit the 100% dividends received deduction permitted by Section 245A for certain dividends received from controlled foreign corporations and to limit the applicability of the look-through exception to foreign personal holding company income for certain dividends received from controlled foreign corporations.

Before the retroactive application of the Regulations, the Company benefited in 2018 from both the 100% dividends received deduction and the look-through exception to foreign personal holding company income.

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 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.

However, due to the inherent uncertainty involved in challenging the validity of regulations, as well as a potential litigation process, there can be no assurances that the relevant Regulations will be invalidated or that a court of law will rule in favor of the Company.

If the Company’s position on the Regulations is not sustained, the Company would be required to recognize an income tax expense of approximately $ 180 million to $ 220 million related to an income tax benefit from fiscal year 2018 that was recorded based on regulations in existence at the time.

In addition, the Company may be required to pay any applicable interest and penalties.

On April 4, 2022, in a case not involving the Company, the United States District Court for the District of Colorado granted the taxpayer's motion for summary judgment that the Temporary Regulations were not validly issued on the basis of improper promulgation.

The Company is monitoring the impact of this decision and intends to continue to vigorously defend its position.

Footnote 13 — Earnings Per Share

Footnote 13 — Weighted Average Shares Outstanding

The computations of the weighted average shares outstanding for the periods indicated are as follows (in millions):

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Basic weighted average shares outstanding 413.9 421.9

1 unchanged sentence

Diluted weighted average shares outstanding 413.9 424.7

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.

(1) The three months ended March 31, 2023 excludes 1.3 million of potentially dilutive share-based awards as their effect would be anti-dilutive.

Footnote 14 — Stockholders' Equity and Share-Based Compensation

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.

During the three months ended March 31, 2023, the Company granted 1.3 million performance-based restricted stock units (“RSUs”), which had an aggregate grant date fair value of $ 20 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 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 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 nine months ended September 30, 2022, is as follows:

During the three months ended March 31, 2023, the Company also granted 2.5 million time-based RSUs with an aggregate grant date fair value of $ 37 million.

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

During the three months ended March 31, 2023, the Company also granted 0.3 million time-based stock options with an aggregate grant date fair value of $ 1 million.

These stock options entitle the recipient 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 on the fifth anniversary of the grant date, subject to continued employment.

The weighted average assumptions used to determine the fair value of stock options granted for the three months ended March 31, 2023, were as follows:

Risk-free interest rates 3.6 %

4 unchanged sentences

Share Repurchase Program

On February 6, 2022, the Company's Board of Directors authorized a $ 375 million Share Repurchase Program (“SRP”), effective immediately through the end of 2022.

On February 6, 2022, the Company's Board of Directors authorized a $ 375 million Share Repurchase Program (“SRP”), effective through its expiration date of December 31, 2022.

Under the SRP, the Company may purchase its common shares in the open market, in negotiated transactions or in other manners, as permitted by federal securities laws and other legal requirements.

On February 25, 2022, the Company repurchased $ 275 million of its shares of common stock beneficially owned by Carl C.

Icahn and certain of his affiliates (collectively, “Icahn Enterprises”), at a purchase price of $ 25.86 per share, the closing price of the Company's common shares on February 18, 2022.

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.

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.

Icahn and certain of his affiliates, at a purchase price of $ 25.86 per share, the closing price of the Company's common shares on February 18, 2022.

Footnote 15 — Fair Value Disclosures

1 unchanged sentence

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):

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

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

5 unchanged sentences

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.

12 unchanged sentences

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.

In connection with the Company's annual impairment testing at December 1, 2022, two tradenames in the Home and Commercial Solutions segment and one tradename in the Learning and Development segment were measured at fair values of $ 25 million, $ 68 million and $ 36 million, respectively.

Footnote 16 — Segment Information

On March 31, 2022, the Company sold its CH&S business unit to Resideo Technologies, Inc.

The results of operations for CH&S continued to be reported in the Condensed Consolidated Statements of Operations as part of the Commercial Solutions segment through March 31, 2022.

The Company's five primary reportable segments are:

Effective January 1, 2023, as a result of the implementation of a new operating model intended to drive further simplification and unlock additional efficiencies and synergies within the Company, the CODM now reviews the businesses as three operating segments:

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

The Home and Commercial Solutions operating segment represents the combination of the previously reported Commercial Solutions, Home Appliances and Home Solutions operating segments.

Prior period comparable results have been reclassified to conform to the operating segment change.

On March 31, 2022, the Company sold its CH&S business to Resideo Technologies, Inc.

The results of operations for the CH&S business continued to be reported in the Condensed Consolidated Statements of Operations as part of the Home and Commercial Solutions segment through March 31, 2022.

The Company's three primary reportable segments are:

Segment Key Brands Description of Primary Products

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

Home and Commercial Solutions Ball (1) , Calphalon, Chesapeake Bay Candle, Crockpot, FoodSaver, Mapa, Mr.

Coffee, Oster, Quickie, Rubbermaid, Rubbermaid Commercial Products, Sistema, Spontex, Sunbeam, WoodWick and Yankee Candle

Commercial cleaning and maintenance solutions;

closet and garage organization;

hygiene systems and material handling solutions;

Home Appliances Calphalon, Crockpot, Mr.

Coffee, Oster and Sunbeam Household products, including kitchen appliances

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

household products, including kitchen appliances;

food and home storage products;

6 unchanged sentences

art products;

activity-based adhesive and cutting products and labeling solutions

activity-based products and labeling solutions

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.

This structure reflects the manner in which the chief operating decision maker (“CODM”) regularly assesses information for decision-making purposes, including the allocation of resources.

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.

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Net sales (1)

Commercial Solutions (3)

Home and Commercial Solutions (3)

$ 971 $ 1,350

Home Appliances 305 443 991 1,197

Home Solutions 510 598 1,477 1,627

Learning and Development 564 650

2 unchanged sentences

Operating income (loss) (2)

Commercial Solutions (3)

$ 28 $ 18 $ 126 $ 111

Home Appliances (4)

( 20 ) 19 ( 23 ) 35

Home Solutions (4)

Home and Commercial Solutions (3)

$ ( 37 ) $ 89

3 unchanged sentences

$ ( 36 ) $ 217

September 30,

2022 December 31, 2021

March 31, 2023 December 31, 2022

Segment assets

Commercial Solutions (3)

$ 1,896 $ 2,522

Home Appliances 1,013 1,055

Home Solutions 2,986 3,109

Home and Commercial Solutions $ 5,122 $ 5,243

Learning and Development 4,534 4,494

5 unchanged sentences

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

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

(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 September 30, 2022

Commercial Solutions Home

Appliances Home

Solutions Learning and Development Outdoor and Recreation Total

Commercial $ 397 $ — $ — $ — $ — $ 397

Home Appliances — 305 — — — 305

Food — — 299 — — 299

Home Fragrance — — 211 — — 211

Baby — — — 297 — 297

Writing — — — 454 — 454

Outdoor and Recreation — — — — 289 289

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

North America $ 284 $ 136 $ 415 $ 559 $ 159 $ 1,553

International 113 169 95 192 130 699

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

Three Months Ended September 30, 2021

Commercial Solutions Home

Appliances Home

Solutions Learning and Development Outdoor and Recreation Total

Commercial $ 381 $ — $ — $ — $ — $ 381

Connected Home Security 105 — — — — 105

Home Appliances — 443 — — — 443

Food — — 330 — — 330

Home Fragrance — — 268 — — 268

Baby — — — 359 — 359

Writing — — — 510 — 510

Outdoor and Recreation — — — — 391 391

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

North America $ 363 $ 249 $ 480 $ 651 $ 236 $ 1,979

International 123 194 118 218 155 808

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

Nine Months Ended September 30, 2022

Commercial Solutions Home

Appliances Home

Solutions Learning and Development Outdoor and Recreation Total

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

(3) Home and Commercial Solutions net sales and operating income for the first quarter of 2022 include the CH&S business prior to its sale.

The following table disaggregates revenue by major product grouping source for the periods indicated (in millions):

Three Months Ended

Commercial $ 348 $ 401

Connected Home Security 109 — — — — 109

Home Appliances — 991 — — — 991

Food — — 905 — — 905

Kitchen 459 642

Home Fragrance 164 198

Baby — — — 901 — 901

Connected Home and Security — 109

Home and Commercial Solutions 971 1,350

Writing 347 359

Learning and Development 564 650

Outdoor and Recreation 270 388

TOTAL $ 1,805 $ 2,388

North America $ 994 $ 470 $ 1,209 $ 1,683 $ 606 $ 4,962

International 342 521 268 583 498 2,212

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

Nine Months Ended September 30, 2021

Commercial Solutions Home

Appliances Home

Solutions Learning and Development Outdoor and Recreation Total

Commercial $ 1,162 $ — $ — $ — $ — $ 1,162

Connected Home Security 288 — — — — 288

Home Appliances — 1,197 — — — 1,197

Food — — 927 — — 927

Home Fragrance — — 700 — — 700

Baby — — — 959 — 959

Writing — — — 1,371 — 1,371

The following table disaggregates revenue by geography for the periods indicated (in millions):

Three months ended March 31,

America International TOTAL North

America International TOTAL

Home and Commercial Solutions $ 643 $ 328 $ 971 $ 975 $ 375 $ 1,350

Learning and Development 395 169 564 468 182 650

Outdoor and Recreation 146 124 270 210 178 388

Total $ 1,450 $ 1,197 $ 1,627 $ 2,330 $ 1,180 $ 7,784

North America $ 1,071 $ 650 $ 1,306 $ 1,703 $ 669 $ 5,399

International 379 547 321 627 511 2,385

Total $ 1,450 $ 1,197 $ 1,627 $ 2,330 $ 1,180 $ 7,784

$ 1,184 $ 621 $ 1,805 $ 1,653 $ 735 $ 2,388

Footnote 17 — Litigation and Contingencies

4 unchanged sentences

The Company previously disclosed that it had received a subpoena and related informal document requests from 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 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 .

The Company cooperated with the SEC in connection with its investigation and requests for documents, testimony and information.

Since January 2023, the Company has been discussing with the SEC the possibility of reaching a settlement to resolve the investigation, which now focuses on the time period from the third quarter of 2016 through second quarter of 2017.

Although the Company cannot predict the ultimate outcome of the SEC investigation with certainty, it believes that the resolution of the SEC investigation will not have a material effect on the Company’s Condensed Consolidated Financial Statements.

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 Ta xes in the Company’s 2022 Annual Report on Form 10-K filed with the SEC on February 15, 2023.

Securities Litigation

21 unchanged sentences

(described below).

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 Company and certain of its current and former officers and directors were 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.

4 unchanged sentences

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.

Both the settlement and the insurance receivable were recorded during the third quarter of 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.

In the fourth quarter of 2022, the Court granted the plaintiff's motion for preliminary approval of the settlement, and the Company and its insurers paid the required amount into the settlement fund.

On February 10, 2023, the Court granted the plaintiff's motion for final approval of settlement.

The deadline to appeal the order granting final approval of the settlement has expired and the settlement is final.

Environmental Matters

10 unchanged sentences

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 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.

The Company’s estimate of environmental remediation costs associated with these matters at March 31, 2023 was $ 33 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.

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.

2 unchanged sentences

The Site is the subject of investigation and remedial activities (the “CERCLA Administrative Actions”) and related settlement negotiations with the U.S.

In addition, the Company Parties are defendants in related litigation, and the Site is also subject to a Natural Resource Damage Assessment.

CERCLA Administrative Actions

The Site is divided into four “operable units,” and the Company Parties have received General Notice Letters in connection with operable Unit 2, which comprises the lower 8.3 miles of the Lower Passaic River and its tributaries (“Unit 2”), and operable Unit 4, which comprises a 17 -mile stretch of the Lower Passaic River and its tributaries (“Unit 4”).

Unit 2 is geographically subsumed within Unit 4.

Unit 4 Investigation

The Company received its first general notice letter pertaining to Unit 4 in 2003.

Beginning in 2004, the Company Parties, together with numerous other PRPs, entered into several administrative agreements with the U.S.

EPA to fund and perform various investigation and clean-up activities in Unit 4.

Pursuant to a 2007 Administrative Order on Consent, over 70 PRPs, including the Company Parties, have been performing or funding the remedial investigation and feasibility study for Unit 4.

The parties performing the remedial investigation and feasibility study submitted the results of their remedial investigation to the U.S.

EPA in July 2019.

They also submitted an interim remedy feasibility study focused on the upper 9 miles of Unit 4 in September 2021.

Activity under the remedial investigation and feasibility study for Unit 4 is not yet complete and remains underway.

In October 2021, the U.S.

1 unchanged sentence

EPA estimates will cost $ 441 million in the aggregate.

Unit 2 Investigation

Concurrent with activities under the remedial investigation and feasibility study for Unit 4, the U.S.

EPA performed a Source Control Early Action Focused Feasibility Study for Unit 2, which culminated in a Record of Decision in 2016.

EPA also performed a Source Control Early Action Focused Feasibility Study for Unit 2, which culminated in a Record of Decision in 2016.

EPA estimates that the selected remedy for Unit 2 set forth in its Record of Decision will cost $ 1.4 billion in the aggregate.

EPA then issued a General Notice Letter for Unit 2 to the Company Parties and over 100 other entities, including those that received a General Notice Letter in connection with Unit 4.

The Unit 2 General Notice Letter requested that Occidental Chemical Corporation (“OCC”) perform the remedial design for Unit 2, which OCC subsequently agreed to perform.

The General Notice Letter indicated that, following execution of a remedial design consent decree, the U.S.

EPA would begin negotiating a remedial action consent decree for Unit 2 with OCC and other major PRPs.

2016 Record of Decision and 2021 Record of Decision Remedy Performance

In March 2022, U.S.

EPA issued a Notice of Potential Liability and Notice of Consent Decree Negotiations to OCC and several other entities, excluding the Company Parties, encouraging those parties to finance and perform the remedies selected in the 2016 and 2021 Records of Decision.

EPA specifically identified OCC and four other companies as “work parties” in connection with Units 2 and 4.

The Company Parties were not recipients of this notice and were not identified as work parties.

EPA Settlement

In September 2017, the U.S.

1 unchanged sentence

EPA Settlement”).

The PRPs responsible for release of dioxin, furans, and/or polychlorinated biphenyls would be expected to perform the remedial action for Unit 2 and would be excluded from the U.S.

EPA Settlement.

The allocation process has concluded.

In February 2022, the U.S.

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.

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

In June 2018, OCC sued over 100 parties, including the Company Parties, in the U.S.

The allocation process has concluded, and the Company Parties were placed in the lowest tier of relative responsibility among allocation parties.

On December 16, 2022, the U.S.

EPA simultaneously filed a complaint and lodged a Consent Decree to resolve the liability of the Company Parties and other settlement parties for past and future CERCLA response costs at Unit 2 and Unit 4.

The proposed Consent Decree is undergoing public notice and comment, and it remains subject to court entry.

As of the date of this filing, the

Company does not expect that its allocation in the U.S.

EPA Settlement relating to Unit 2 and Unit 4, if the settlement is finalized, will be material to the Company.

In June 2018, Occidental Chemical Corporation (“OCC”) sued over 100 parties, including the Company Parties, in the U.S.

District Court in New Jersey pursuant to CERCLA, requesting cost recovery, contribution, and a declaratory judgement.

4 unchanged sentences

OCC has also stated that it may broaden its claims in the future after completion of the Natural Resource Damage Assessment described below.

In a Motion for Stay of Proceedings filed in January 2022, certain defendants and all third-party defendants in the OCC Litigation moved to stay the case for a six-month period to allow the final stage of the parallel allocation proceedings and resulting settlement negotiations in the U.S.

EPA Settlement to conclude.

District Court denied the motion in March 2022.

The Company Parties continue to vigorously defend the OCC Litigation.

In March 2023, the Court granted an unopposed motion to stay the OCC Litigation.

At this time, the Company cannot predict the eventual outcome.

The Natural Resource Damage Assessment

In 2007, the National Oceanic and Atmospheric Administration (“NOAA”), acting as the lead administrative trustee on behalf of itself and the U.S.

Department of the Interior, issued a Notice of Intent to Perform a Natural Resource Damage Assessment to the Company Parties, along with numerous other entities, identifying the recipients as PRPs.

The federal trustees (who now include the United States Department of Commerce, represented by NOAA, and the Department of the Interior, represented by the United States Fish and Wildlife Service) are presently undertaking the Natural Resource Damage Assessment.

As of the date of filing of this Quarterly Report, based on the agreement in principle noted above, the Company does not expect that its allocation in the U.S.

EPA Settlement relating to Unit 2 and Unit 4, if the settlement is finalized, will be material to the Company.

With respect to the OCC Litigation and Natural Resource Damage Assessment, 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 the Lower Passaic River 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.

However, in the event of one or more adverse determinations related to this matter, including the OCC Litigation and Natural Resource Damage Assessment noted above (for which the Company cannot currently estimate the range of possible losses), it is possible that the ultimate liability resulting from this matter and the impact on the Company’s results of operations could be material.

5 unchanged sentences

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

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 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.

1 unchanged sentence

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.

During the fourth quarter of 2022, the Company recorded an immaterial reserve based on the outcome of a judicial ruling relating to indirect taxes in an international entity.

Although the Company cannot predict the ultimate outcome of this contingency with certainty, it believes that any amounts it may be required to pay in excess of the amounts already reserved will not have a material effect on the Company’s Condensed Consolidated Financial Statements.

During the quarter ended March 31, 2023, the Company paid the estimated liability to the relevant taxing authorities.

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 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.

At March 31, 2023, the Company had approximately $ 39 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