NEWELL BRANDS INC. 10-Q

Item 1. Financial Statements NEWELL BRANDS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited) (Amounts in millions, except per share amounts) Three Months Ended March 31, 2023 2022 Net sales $ 1,805 $ 2,388 Cost of products sold 1,323 1,648 Gross profit 482 740 Selling, general and administrative expenses 480 518 Restructuring costs, net 38 5 Operating income (loss) ( 36 ) 217 Non-operating expenses: Interest expense, net 68 59 Other (income) expense, net 12 ( 118 ) Income (loss) before income taxes ( 116 ) 276 Income tax provision (benefit) ( 14 ) 48 Net income (loss) $ ( 102 ) $ 228 Weighted average common shares outstanding: Basic 413.9 421.9 Diluted 413.9 424.7 Earnings (loss) per share: Basic $ ( 0.25 ) $ 0.54 Diluted $ ( 0.25 ) $ 0.54 Comprehensive income (loss): Net income (loss) $ ( 102 ) $ 228 Other comprehensive income (loss), net of tax: Foreign currency translation adjustments 18 29 Pension and postretirement costs ( 1 ) 5 Derivative financial instruments ( 10 ) — Total other comprehensive income, net of tax 7 34 Total comprehensive income (loss) $ ( 95 ) $ 262 See Notes to Condensed Consolidated Financial Statements (Unaudited). 2 Table of Contents NEWELL BRANDS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Amounts in millions, except par values) March 31, 2023 December 31, 2022 Assets: Cash and cash equivalents $ 271 $ 287 Accounts receivable, net 1,218 1,250 Inventories 2,240 2,203 Prepaid expenses and other current assets 326 312 Total current assets 4,055 4,052 Property, plant and equipment, net 1,213 1,184 Operating lease assets 571 578 Goodwill 3,305 3,298 Other intangible assets, net 2,635 2,649 Deferred income taxes 798 810 Other assets 699 691 Total assets $ 13,276 $ 13,262 Liabilities: Accounts payable $ 1,092 $ 1,062 Accrued compensation 112 123 Other accrued liabilities 1,235 1,272 Short-term debt and current portion of long-term debt 852 621 Total current liabilities 3,291 3,078 Long-term debt 4,776 4,756 Deferred income taxes 501 520 Operating lease liabilities 505 512 Other noncurrent liabilities 870 877 Total liabilities 9,943 9,743 Commitments and contingencies (Footnote 17) Stockholders’ equity: 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) 439 439 Treasury stock, at cost ( 25.3 shares and 25.0 shares at March 31, 2023 and December 31, 2022, respectively) ( 627 ) ( 623 ) Additional paid-in capital 6,965 7,052 Retained deficit ( 2,440 ) ( 2,338 ) Accumulated other comprehensive loss ( 1,004 ) ( 1,011 ) Total stockholders’ equity 3,333 3,519 Total liabilities and stockholders’ equity $ 13,276 $ 13,262 See Notes to Condensed Consolidated Financial Statements (Unaudited). 3 Table of Contents NEWELL BRANDS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Amounts in millions) Three Months Ended March 31, 2023 2022 Cash flows from 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 Gain from sale of business — ( 130 ) Deferred income taxes 6 326 Stock based compensation expense 11 14 Other, net 4 ( 2 ) Changes in operating accounts excluding the effects of divestiture: Accounts receivable 45 14 Inventories ( 27 ) ( 403 ) Accounts payable 26 25 Accrued liabilities and other ( 121 ) ( 420 ) Net cash used in operating activities ( 77 ) ( 272 ) Cash flows from investing activities: Proceeds from sale of divested business — 620 Capital expenditures ( 83 ) ( 70 ) Other investing activities, net 15 9 Net cash provided by (used in) investing activities ( 68 ) 559 Cash flows from financing activities: Net proceeds from short-term debt 232 — Payments on current portion of long-term debt — ( 1 ) Repurchase of shares of common stock — ( 275 ) Cash dividends ( 97 ) ( 100 ) Equity compensation activity and other, net ( 7 ) ( 17 ) Net cash provided by (used in) financing activities 128 ( 393 ) Exchange rate effect on cash, cash equivalents and restricted cash ( 1 ) 8 Decrease in cash, cash equivalents and restricted cash ( 18 ) ( 98 ) Cash, cash equivalents and restricted cash at beginning of period 303 477 Cash, cash equivalents and restricted cash at end of period $ 285 $ 379 Supplemental disclosures: Restricted cash at beginning of period $ 16 $ 37 Restricted cash at end of period 14 35 See Notes to Condensed Consolidated Financial Statements (Unaudited). 4 Table of Contents NEWELL BRANDS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited) (Amounts in millions, except per share amounts) Common Stock Treasury 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 Comprehensive income (loss) — — — ( 102 ) 7 ( 95 ) Dividends declared on common stock - $ 0.23 per share — — ( 96 ) — — ( 96 ) Equity compensation, net of tax — ( 4 ) 9 — — 5 Balance at March 31, 2023 $ 439 $ ( 627 ) $ 6,965 $ ( 2,440 ) $ ( 1,004 ) $ 3,333 Common Stock Treasury 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 — — — 228 34 262 Dividends declared on common stock - $ 0.23 per share — — ( 97 ) — — ( 97 ) Equity compensation, net of tax 2 ( 14 ) 12 — — — 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). 5 Table of Contents NEWELL BRANDS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Footnote 1 — Basis of Presentation and Significant Accounting Policies The accompanying unaudited condensed consolidated financial statements of Newell Brands Inc. (collectively with its subsidiaries, the “Company”) have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) and do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments (including normal recurring accruals) considered necessary for a fair statement of the financial position and the results of operations of the Company. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements, and the footnotes thereto, included in the Company’s most recent Annual Report on Form 10-K. The Condensed Consolidated Balance Sheet at December 31, 2022 has been derived from the audited financial statements as of that date, but it does not include all the information and footnotes required by U.S. GAAP for a complete financial statement. 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. Use of Estimates and Risks Management’s application of U.S. 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 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. 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. 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 6 Table of Contents 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. 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 Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. In March 2020, the FASB issued ASU 2020-04, “ Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ” In January 2021, the FASB clarified the scope of this guidance with the issuance of ASU 2021-01, Reference Rate Reform: Scope. 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 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): 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. See disclosures hereafter for further information. Sales of Accounts Receivables 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 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. 7 Table of Contents 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 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 three months ended March 31, 2023 (in millions): Cumulative Translation Adjustment Pension and Postretirement Costs Derivative Financial Instruments AOCL Balance at December 31, 2022 $ ( 688 ) $ ( 309 ) $ ( 14 ) $ ( 1,011 ) Other comprehensive income (loss) before reclassifications 18 ( 1 ) ( 3 ) 14 Amounts reclassified to earnings — — ( 7 ) ( 7 ) Net current period other comprehensive income (loss) 18 ( 1 ) ( 10 ) 7 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 March 31, 2023 2022 Cumulative translation adjustment (1) $ — $ 6 Pension and postretirement benefit plans (2) — 4 Derivative financial instruments (3) ( 9 ) 1 (1) See Footnote 2 for further information. (2) See Footnote 11 for further information. (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): Three Months Ended March 31, 2023 2022 Foreign currency translation adjustments $ ( 6 ) $ 1 Derivative financial instruments ( 3 ) ( 1 ) Income tax provision (benefit) related to AOCL $ ( 9 ) $ — 8 Table of Contents 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 March 31, 2023 2022 Home and Commercial Solutions $ 16 $ 3 Learning and Development 5 2 Outdoor and Recreation 6 — Corporate 11 — $ 38 $ 5 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 Foreign Currency and Other Balance at March 31, 2023 Severance and termination costs $ 7 $ 36 $ ( 33 ) $ — $ 10 Contract termination and other costs — 2 ( 1 ) ( 1 ) — $ 7 $ 38 $ ( 34 ) $ ( 1 ) $ 10 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 months ended March 31, 2023 and 2022, the Company recorded other restructuring charges of $ 2 million and $ 5 million, respectively. 9 Table of Contents Footnote 5 — Inventories Inventories are comprised of the following (in millions): March 31, 2023 December 31, 2022 Raw materials and supplies $ 277 $ 285 Work-in-process 224 218 Finished products 1,739 1,700 $ 2,240 $ 2,203 Footnote 6 — Property, Plant and Equipment, Net Property, plant and equipment, net, is comprised of the following (in millions): March 31, 2023 December 31, 2022 Land $ 77 $ 76 Buildings and improvements 652 648 Machinery and equipment 2,427 2,349 3,156 3,073 Less: Accumulated depreciation ( 1,943 ) ( 1,889 ) $ 1,213 $ 1,184 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 three months ended March 31, 2023 is as follows (in millions): Segments Net Book Value at December 31, 2022 Foreign Exchange Gross Carrying Amount Accumulated Impairment Charges Net Book Value at March 31, 2023 Home and Commercial Solutions $ 747 $ — $ 4,052 $ ( 3,305 ) $ 747 Learning and Development 2,551 7 3,404 ( 846 ) 2,558 Outdoor and Recreation — — 788 ( 788 ) — $ 3,298 $ 7 $ 8,244 $ ( 4,939 ) $ 3,305 Other intangible assets, net, are comprised of the following (in millions): March 31, 2023 December 31, 2022 Gross Carrying Amount Accumulated Amortization Net Book Value Gross Carrying Amount Accumulated Amortization Net Book Value 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 Patents and intellectual property 22 ( 18 ) 4 22 ( 17 ) 5 Customer relationships and distributor channels 1,074 ( 331 ) 743 1,072 ( 319 ) 753 $ 3,559 $ ( 924 ) $ 2,635 $ 3,545 $ ( 896 ) $ 2,649 (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 . 10 Table of Contents 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): March 31, 2023 December 31, 2022 Customer accruals $ 613 $ 636 Operating lease liabilities 121 121 Accrued self-insurance liabilities, contingencies and warranty 104 99 Accrued interest expense 94 63 Accrued marketing and freight expenses 66 73 Accrued income taxes 28 53 Other 209 227 $ 1,235 $ 1,272 Footnote 9 — Debt Debt is comprised of the following at the dates indicated (in millions): March 31, 2023 December 31, 2022 4.00 % senior notes due 2024 $ 197 $ 196 4.875 % senior notes due 2025 496 496 3.90 % senior notes due 2025 47 47 4.20 % senior notes due 2026 1,978 1,978 6.375 % senior notes due 2027 490 483 6.625 % senior notes due 2029 491 481 5.375 % senior notes due 2036 417 417 5.50 % senior notes due 2046 658 658 Revolving credit facility 760 225 Commercial paper — 359 Receivables facility 90 35 Other debt 4 2 Total debt 5,628 5,377 Short-term debt and current portion of long-term debt ( 852 ) ( 621 ) Long-term debt $ 4,776 $ 4,756 Senior Notes 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. 11 Table of Contents Receivables Facility The Company maintains an Accounts Receivable Securitization Facility (the “Securitization Facility”). 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 March 31, 2023, the Company had $ 90 million outstanding under the Securitization Facility. Revolving Credit Facility and Commercial Paper 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 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. Other 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): March 31, 2023 December 31, 2022 Fair Value Book Value Fair Value Book Value Senior notes $ 4,578 $ 4,774 $ 4,511 $ 4,756 The carrying amounts of all other significant debt approximates fair value. Footnote 10 — Derivatives From time to time, the Company enters into derivative transactions to hedge its exposures to interest rate, foreign currency rate and commodity price fluctuations. The Company does not enter into derivative transactions for trading purposes. Interest Rate Contracts The Company manages its fixed and floating rate debt mix using interest rate swaps. The Company may use fixed and floating rate swaps to alter its exposure to the impact of changing interest rates on its consolidated results of operations and future cash outflows for interest. Floating rate swaps would be used, depending on market conditions, to convert the fixed rates of long-term debt into short-term variable rates. Fixed rate swaps would be used to reduce the Company’s risk of the possibility of increased interest costs. The settlement of interest rate swaps is included in interest expense. Fair Value Hedges 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 12 Table of Contents 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. Cross-Currency Contracts The Company uses cross-currency swaps to hedge foreign currency risk on certain financing arrangements. The Company previously entered into three cross-currency swaps, maturing in January 2025, February 2025 and September 2027, respectively, with an aggregate notional amount of $ 1.3 billion. Each of these cross-currency swaps were designated as net investment hedges of the Company's foreign currency exposure of its net investment in certain Euro-functional currency subsidiaries with Euro-denominated net assets, and the Company pays a fixed rate of Euro-based interest and receives a fixed rate of U.S. dollar interest. 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. dollar interest. The Company has elected the spot method for assessing the effectiveness of these contracts. 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 December 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 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 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. 13 Table of Contents The following table presents the fair value of derivative financial instruments at the dates indicated (in millions): Fair Value of Derivatives Assets (Liabilities) Balance Sheet Location March 31, 2023 December 31, 2022 Derivatives designated as effective hedges: Cash Flow Hedges Foreign currency contracts Prepaid expenses and other current assets $ 3 $ 5 Foreign currency contracts Other accrued liabilities ( 10 ) ( 9 ) Fair Value Hedges Interest rate swaps Other assets 6 — Interest rate swaps Other accrued liabilities ( 16 ) ( 14 ) Interest rate swaps Other noncurrent liabilities ( 2 ) ( 16 ) Net Investment Hedges Cross-currency swaps Prepaid expenses and other current assets 22 28 Cross-currency swaps Other assets 41 45 Cross-currency swaps Other noncurrent liabilities ( 85 ) ( 75 ) Derivatives not designated as effective hedges: Foreign currency contracts Prepaid expenses and other current assets 13 19 Foreign currency contracts Other accrued liabilities ( 8 ) ( 10 ) Total $ ( 36 ) $ ( 27 ) 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): Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 Gain/(Loss) Gain/(Loss) Location of gain/(loss) recognized in income Recognized in OCI (effective portion) Reclassified from AOCL to Income Recognized in OCI (effective portion) Reclassified from AOCL to Income Interest rate swaps Interest expense, net $ — $ ( 1 ) $ — $ ( 2 ) Foreign currency contracts Net sales and cost of products sold ( 5 ) 10 ( 1 ) 1 Cross-currency swaps Other (income) expense, net ( 21 ) — 4 — Total $ ( 26 ) $ 9 $ 3 $ ( 1 ) 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. The Company is not a party to any derivatives that require collateral to be posted prior to settlement. 14 Table of Contents Footnote 11 — Employee Benefit and Retirement Plans The components of pension and postretirement benefit (income) expense for the periods indicated, are as follows (in millions): Pension Benefits U.S. International Three Months Ended March 31, 2023 2022 2023 2022 Service cost $ — $ — $ 1 $ 1 Interest cost 11 6 4 2 Expected return on plan assets ( 14 ) ( 12 ) ( 3 ) ( 2 ) Amortization 1 4 1 1 Total (income) expense $ ( 2 ) $ ( 2 ) $ 3 $ 2 Postretirement Benefits Three Months Ended March 31, 2023 2022 Amortization $ ( 2 ) $ ( 1 ) Total income $ ( 2 ) $ ( 1 ) U.K. Defined Benefit Plan In February 2022, the Company entered into an agreement with an insurance company for a bulk annuity purchase or “buy-in” for one of its U.K. defined benefit pension plans, resulting in an exchange of plan assets for an annuity that matches the plan’s future projected benefit obligations to covered participants. The Company anticipates the “buy-out” for the plan to be completed 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 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 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 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. federal income tax returns for 2011 to 2015 and 2017 to 2020, as well as certain state and non-U.S. income tax returns for various years, are under examination. 15 Table of Contents 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 March 31, 2023 2022 Basic weighted average shares outstanding 413.9 421.9 Dilutive securities (1) — 2.8 Diluted weighted average shares outstanding 413.9 424.7 (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 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 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 % Expected volatility 42.1 % Expected dividend yield 4.8 % Expected life (in years) 7.5 Exercise price $ 14.53 Share Repurchase Program 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, at a purchase price of $ 25.86 per share, the closing price of the Company's common shares on February 18, 2022. 16 Table of Contents Footnote 15 — Fair Value Disclosures Recurring Fair Value Measurement s 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): March 31, 2023 December 31, 2022 Fair value Asset (Liability) Fair value Asset (Liability) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Derivatives: Assets $ — $ 85 $ — $ 85 $ — $ 97 $ — $ 97 Liabilities — ( 121 ) — ( 121 ) — ( 124 ) — ( 124 ) Investment securities, including mutual funds 14 — — 14 14 — — 14 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. Accordingly, the Company’s derivative instruments are classified as Level 2. Financial Instruments The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, derivative instruments, notes payable and short and long-term debt. The carrying values for current financial assets and liabilities, including cash and cash equivalents, accounts receivable, accounts payable and short-term debt approximate fair value due to the short maturity of such instruments. The fair values of the Company’s debt and derivative instruments are disclosed in Footnote 9 and Footnote 10 , respectively. Nonrecurring Fair Value Measurements 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. 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. 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. 17 Table of Contents Footnote 16 — Segment Information 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 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; household products, including kitchen appliances; food and home storage products; fresh preserving products; vacuum sealing products; gourmet cookware, bakeware and cutlery and home fragrance products Learning and Development Aprica, Baby Jogger, Dymo, Elmer’s, EXPO, Graco, Mr. Sketch, NUK, Paper Mate, Parker, Prismacolor, Sharpie, Tigex, Waterman and X-Acto Baby gear and infant care products; writing instruments, including markers and highlighters, pens and pencils; art products; 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 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. 18 Table of Contents Selected information by segment is presented in the following tables (in millions): Three Months Ended March 31, 2023 2022 Net sales (1) Home and Commercial Solutions (3) $ 971 $ 1,350 Learning and Development 564 650 Outdoor and Recreation 270 388 $ 1,805 $ 2,388 Operating income (loss) (2) Home and Commercial Solutions (3) $ ( 37 ) $ 89 Learning and Development 72 138 Outdoor and Recreation ( 1 ) 46 Corporate ( 70 ) ( 56 ) $ ( 36 ) $ 217 March 31, 2023 December 31, 2022 Segment assets Home and Commercial Solutions $ 5,122 $ 5,243 Learning and Development 4,534 4,494 Outdoor and Recreation 1,007 920 Corporate 2,613 2,605 $ 13,276 $ 13,262 (1) All intercompany transactions have been eliminated. (2) Operating income (loss) by segment is net sales less cost of products sold, SG&A, restructuring and impairment of goodwill, intangibles and other assets. 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 (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 March 31, 2023 2022 Commercial $ 348 $ 401 Kitchen 459 642 Home Fragrance 164 198 Connected Home and Security — 109 Home and Commercial Solutions 971 1,350 Baby 217 291 Writing 347 359 Learning and Development 564 650 Outdoor and Recreation 270 388 TOTAL $ 1,805 $ 2,388 19 Table of Contents The following table disaggregates revenue by geography for the periods indicated (in millions): Three months ended March 31, 2023 2022 North 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 $ 1,184 $ 621 $ 1,805 $ 1,653 $ 735 $ 2,388 Footnote 17 — Litigation and Contingencies The Company is subject to various claims and lawsuits in the ordinary course of business, including from time to time, contractual disputes, employment and environmental matters, product and general liability claims, claims that the Company has infringed on the intellectual property rights of others, and consumer and employment class actions. Some of the legal proceedings include claims for punitive as well as compensatory damages. In the ordinary course of business, the Company is also subject to legislative requests, regulatory and governmental examinations, information requests and subpoenas, inquiries, investigations, and threatened legal actions and proceedings. In connection with such formal and informal inquiries, the Company receives numerous requests, subpoenas, and orders for documents, testimony and information in connection with various aspects of its activities. 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 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 Certain of the Company’s current and former officers and directors have been named in shareholder derivative lawsuits. On October 29, 2018, a shareholder filed a putative derivative complaint, Streicher v. Polk, et al ., in the United States District Court for the District of Delaware (the “Streicher Derivative Action”), purportedly on behalf of the Company against certain of the Company's current and former officers and directors. On October 30, 2018, another shareholder filed a putative derivative complaint, Martindale v. Polk, et al. , in the United States District Court for the District of Delaware (the “Martindale Derivative Action”), asserting substantially similar claims purportedly on behalf of the Company against the same defendants. The complaints allege, among other things, violations of the federal securities laws, breaches of fiduciary duties, unjust enrichment, and waste of corporate assets. The factual allegations underlying these claims are similar to the factual allegations made in the In re Newell Brands, Inc. Securities Litigation that was previously pending in the United States District Court for the District of New Jersey. That matter was dismissed by the District Court on January 10, 2020, and the dismissal was affirmed by the United States District Court of Appeals for the Third Circuit on December 1, 2020. The complaints seek damages and restitution for the Company from the individual defendants, the payment of costs and attorneys’ fees, and that the Company be directed to reform certain governance and internal procedures. The Streicher Derivative Action and the Martindale Derivative Action have been consolidated and the case is now known as In re Newell Brands Inc. Derivative Litigation (the “Newell Brands Derivative Action”), which is pending in the United States District Court for the District of Delaware. On March 22, 2021, the United States District Court for the District of Delaware stayed the Newell Brands Derivative Action pending the resolution of any motions for summary judgment filed in Oklahoma Firefighters Pension and Retirement System v. Newell Brands Inc., et al. (described below). On December 30, 2020, two shareholders filed a putative derivative complaint, Weber, et al. v. Polk, et al. , in the United States District Court for the District of Delaware (the “Weber Derivative Action”), purportedly on behalf of the Company against certain of the Company’s current and former officers and directors. The complaint in the Weber Derivative Action alleges, among other things, breaches of fiduciary duty and waste of corporate assets. The factual allegations underlying these claims are similar to the factual allegations made in the Newell Brands Derivative Action. On March 19, 2021, the United States District Court for the District of Delaware stayed the Weber Derivative Action pending final disposition of Oklahoma Firefighters Pension and Retirement System v. Newell Brands Inc., et al. (described below). 20 Table of Contents 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. Newell Brands Inc., et al., Civil Action No. HUD-L-003492-18. 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. 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 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 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 The Company is involved in various matters concerning federal and state environmental laws and regulations, including matters in which the Company has been identified by the U.S. Environmental Protection Agency (“U.S. EPA”) and certain state environmental agencies as a potentially responsible party (“PRP”) at contaminated sites under the Comprehensive Environmental Response Compensation and Liability Act (“CERCLA”) and equivalent state laws. In assessing its environmental response costs, the Company has considered several factors, including the extent of the Company’s volumetric contribution at each site relative to that of other PRPs; the kind of waste; the terms of existing cost sharing and other applicable agreements; the financial ability of other PRPs to share in the payment of requisite costs; the Company’s prior experience with similar sites; environmental studies and cost estimates available to the Company; the effects of inflation on cost estimates; 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 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. Lower Passaic River Matter The U.S. EPA has issued General Notice Letters to over 100 entities, including the Company and its subsidiary, Berol Corporation (together, the “Company Parties”), alleging that they are PRPs at the Diamond Alkali Superfund Site (the “Site”) pursuant to CERCLA. The Site is the subject of investigation and remedial activities (the “CERCLA Administrative Actions”) and related settlement negotiations with the U.S. EPA. 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. In October 2021, the U.S. EPA issued a Record of Decision for an interim remedy for the upper 9 miles of Unit 4, selecting a combination of dredging and capping as the remedial alternative, which the U.S. EPA estimates will cost $ 441 million in the aggregate. The U.S. EPA also performed a Source Control Early Action Focused Feasibility Study for Unit 2, which culminated in a Record of Decision in 2016. The U.S. EPA estimates that the selected remedy for Unit 2 set forth in its Record of Decision will cost $ 1.4 billion in the aggregate. In September 2017, the U.S. EPA announced an allocation process involving roughly 80 Unit 2 General Notice Letter recipients, with the intent of offering cash-out settlements to a number of parties (the “U.S. EPA Settlement”). 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 21 Table of Contents 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. The defendants, in turn, filed claims against 42 third-party defendants, and filed counterclaims against OCC (collectively, the “OCC Litigation”). The primary focus of the OCC Litigation has been certain past and future costs for investigation, design and remediation of Units 2 and 4. However, OCC has stated that it anticipates asserting claims against defendants regarding Newark Bay, which is also part of the Site, after the U.S. EPA has selected the Newark Bay remedy. OCC has also stated that it may broaden its claims in the future after completion of the Natural Resource Damage Assessment described below. In March 2023, the Court granted an unopposed motion to stay the OCC Litigation. At this time, the Company cannot predict the eventual outcome. 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 with respect to the Site. 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, 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. 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. Other Matters In the normal course of business and as part of its acquisition and divestiture strategy, the Company may provide certain representations and indemnifications related to legal, environmental, product liability, tax or other types of issues. Based on the nature of these representations and indemnifications, it is not possible to predict the maximum potential payments under all of these agreements due to the conditional nature of the Company’s obligations and the unique facts and circumstances involved in each particular agreement. 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. (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. 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. Further, in connection with the Company’s sale of The United States Playing Card Company (“USPC”), Cartamundi, Inc. and Cartamundi España, S.L., (the “Buyers”) have notified the Company of their contention that certain representations and warranties in the Stock Purchase Agreement, dated June 4, 2019, were inaccurate and/or breached, and have sought indemnification to the extent that the Buyers are required to pay related damages arising out of a third party lawsuit that was recently filed against USPC. 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 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. 22 Table of Contents