What changed in this filing

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Item 1. Financial Statements

2023-07-28 compared with 2023-04-28 · 225 added, 123 removed, 571 unchanged (38% of the section changed)

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Net sales $ 2,204 $ 2,534 $ 4,009 $ 4,922

3 unchanged sentences

Restructuring costs, net 22 4 60 9

Operating income (loss) ( 36 ) 217

Impairment of goodwill, intangibles and other assets 11 — 11 —

Operating income 120 328 84 545

Non-operating expenses:

2 unchanged sentences

Income (loss) before income taxes 35 252 ( 81 ) 528

Income tax provision (benefit) ( 14 ) 48

Income tax provision 17 53 3 101

Net income (loss) $ 18 $ 199 $ ( 84 ) $ 427

11 unchanged sentences

Derivative financial instruments ( 7 ) 11 ( 17 ) 11

Total other comprehensive income, net of tax 7 34

Total other comprehensive loss, net of tax ( 17 ) ( 89 ) ( 10 ) ( 55 )

Total comprehensive income (loss) $ 1 $ 110 $ ( 94 ) $ 372

29 unchanged sentences

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)

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

Preferred stock ( 10.0 authorized shares, $ 1.00 par value, no shares issued at June 30, 2023 and December 31, 2022)

Common stock ( 800.0 authorized shares, $ 1.00 par value, 439.5 shares and 438.6 shares issued at June 30, 2023 and December 31, 2022, respectively)

Treasury stock, at cost ( 25.3 shares and 25.0 shares at June 30, 2023 and December 31, 2022, respectively)

( 627 ) ( 623 )

9 unchanged sentences

(Amounts in millions)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

Net income (loss) $ ( 84 ) $ 427

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

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

Depreciation and amortization 159 147

Impairment of goodwill, intangibles and other assets 11 —

Gain from sale of business — ( 133 )

1 unchanged sentence

Stock based compensation expense 20 23

Pension settlement charge 5 —

Other, net ( 7 ) ( 1 )

4 unchanged sentences

Accrued liabilities and other ( 45 ) ( 462 )

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

Net cash provided by (used in) operating activities 277 ( 450 )

Cash flows from investing activities:

4 unchanged sentences

Cash flows from financing activities:

Net proceeds from short-term debt 232 —

Short-term debt, net ( 23 ) 372

Payments on current portion of long-term debt ( 1 ) ( 2 )

2 unchanged sentences

Equity compensation activity and other, net ( 8 ) ( 35 )

Net cash provided by (used in) financing activities 128 ( 393 )

Net cash used in financing activities ( 158 ) ( 185 )

Exchange rate effect on cash, cash equivalents and restricted cash 2 ( 3 )

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

Increase (decrease) in cash, cash equivalents and restricted cash 27 ( 139 )

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

9 unchanged sentences

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

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

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

Comprehensive income (loss) — — — 18 ( 17 ) 1

2 unchanged sentences

Equity compensation, net of tax 1 — 10 — — 11

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

Balance at June 30, 2023 $ 440 $ ( 627 ) $ 6,945 $ ( 2,422 ) $ ( 1,021 ) $ 3,315

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

Comprehensive loss — — — ( 84 ) ( 10 ) ( 94 )

Dividends declared on common stock - $ 0.30 per share

— — ( 126 ) — — ( 126 )

Equity compensation, net of tax 1 ( 4 ) 19 — — 16

Balance at June 30, 2023 $ 440 $ ( 627 ) $ 6,945 $ ( 2,422 ) $ ( 1,021 ) $ 3,315

Stock Treasury

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

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

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

Comprehensive income (loss) — — — 199 ( 89 ) 110

Dividends declared on common stock - $ 0.23 per share

— — ( 95 ) — — ( 95 )

Equity compensation, net of tax — — 10 — — 10

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

Balance at June 30, 2022 $ 439 $ ( 623 ) $ 7,251 $ ( 2,108 ) $ ( 937 ) $ 4,022

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

Comprehensive income — — — 228 34 262

Comprehensive income (loss) — — — 427 ( 55 ) 372

Dividends declared on common stock - $ 0.46 per share

3 unchanged sentences

Other — — ( 1 ) — — ( 1 )

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

Balance at June 30, 2022 $ 439 $ ( 623 ) $ 7,251 $ ( 2,108 ) $ ( 937 ) $ 4,022

See Notes to Condensed Consolidated Financial Statements (Unaudited).

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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:

2 unchanged sentences

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.

• 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 resulted in an $ 11 million reduction of cost of products sold and increase to income before income taxes, additional income tax provision of $ 3 million and increase of $ 8 million to net income in the Company's previously issued unaudited Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2022;

• 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 $ 13 million and $ 19 million in other (income) expense, net in the Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2022, respectively and a reclassification between Accumulated Other Comprehensive Loss and Retained Deficit in the Condensed Consolidated Statement of Stockholder’s Equity of $ 19 million at June 30, 2022.

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

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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.

The Company continues to be impacted by inflationary pressures, softening global demand, focus by major retailers on the rebalancing of inventory levels, rising interest rates and indirect macroeconomic impacts from the Russia-Ukraine conflict.

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.

As consumers continue to face widespread increases in prices and interest rates, their discretionary spending and purchase patterns may continue to be unfavorably impacted.

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 second quarter of 2023, the Company concluded that a triggering event had occurred for an indefinite-lived tradename in the Home Fragrance reporting unit in the Home and Commercial Solutions segment and for the goodwill associated with the Baby reporting unit in the Learning and Development segment, as a result of a downward revision of forecasted cash flows due to softening global demand, primarily caused by continued inflationary pressure that is impacting discretionary spending behavior of consumers, as well as rising interest rates.

The Company performed a quantitative impairment test and determined that the indefinite-lived tradename in the Home and Commercial Solutions segment was impaired.

During the three and six months ended June 30, 2023, the Company recorded an aggregate non-cash impairment charge of $ 8 million, as the carrying value of the tradename exceeded its fair value.

The Company concluded that the Baby reporting unit goodwill was not impaired during the second quarter of 2023.

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.

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

Also, 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 over the 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 and six months ended June 30, 2023 may not necessarily be indicative of the results that may be expected for the year ending December 31, 2023.

Adoption of New Accounting Guidance

Changes to U.S.

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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

The Company adopted ASU 2020-04 and it did not have a material impact on its Consolidated Financial Statements.

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

4 unchanged sentences

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.

Factored receivables at June 30, 2023 associated with the Company's existing factoring agreement (the “Customer Receivables Purchase Agreement”) were approximately $ 465 million, an increase of approximately $ 45 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.

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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 .

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

At June 30, 2023 and December 31, 2022, outstanding payment obligations under the SCF Program were approximately $ 92 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.

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

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):

The following table displays the changes in Accumulated Other Comprehensive Income (Loss) (“AOCL”) by component, net of tax, for the six months ended June 30, 2023 (in millions):

Adjustment Pension and

5 unchanged sentences

Net current period other comprehensive income (loss) 8 ( 1 ) ( 17 ) ( 10 )

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):

Balance at June 30, 2023 $ ( 680 ) $ ( 310 ) $ ( 31 ) $ ( 1,021 )

Reclassifications from AOCL to the results of operations for the three and six months ended June 30, 2023 and 2022 were pretax (income) expense of (in millions):

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Cumulative translation adjustment (1)

$ — $ — $ — $ 6

Pension and postretirement benefit plans (2)

Derivative financial instruments (3)

1 ( 4 ) ( 8 ) ( 3 )

(1) See Footnote 2 for further information.

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Foreign currency translation adjustments $ ( 12 ) $ 19 $ ( 18 ) $ 20

Pension and postretirement benefit costs 1 1 1 1

Derivative financial instruments ( 2 ) 4 ( 5 ) 3

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Home and Commercial Solutions $ 11 $ — $ 27 $ 3

2 unchanged sentences

Corporate 3 2 14 2

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

$ 22 $ 4 $ 60 $ 9

Accrued restructuring costs activity for the six months ended June 30, 2023 was as follows (in millions):

Balance at December 31, 2022 Restructuring

1 unchanged sentence

and Other Balance at

March 31, 2023

June 30, 2023

Severance and termination costs $ 7 $ 57 $ ( 48 ) $ — $ 16

5 unchanged sentences

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.

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

During the three and six months ended June 30, 2023, the Company recorded restructuring charges of $ 17 million and $ 53 million, respectively, in connection with Project Phoenix.

Network Optimization Project

In May 2023, the Company announced a restructuring and savings initiative that is intended to simplify and streamline its North American distribution network (the “Network Optimization Project”) in order to improve the Company’s cost structure and operating margins while maintaining focus on customer and consumer fulfillment.

The Company initiated implementation of the Network Optimization Project during the second quarter of 2023 and expects it to be substantially implemented by the end of fiscal year 2024.

The Network Optimization Project incorporates a variety of initiatives, including a reduction in the overall number of distribution centers, an optimization of distribution by location, and completion of select automation investments intended to further streamline the Company’s cost structure and to maximize operating performance.

The Company currently estimates that it will incur approximately $ 37 million to $ 49 million in restructuring and restructuring-related charges associated with execution of the Network Optimization Project and expects that the costs incurred will be substantially complete by the end of 2024.

This estimate of charges consists primarily of $ 8 million to $ 11 million related to cash severance payments and other termination benefits and approximately $ 29 million to $ 38 million associated with industrial site reductions.

The Company expects approximately $ 35 million to $ 44 million of the total aggregate charges will be cash expenditures.

During the three and six months June 30, 2023, the Company recorded restructuring charges of $ 2 million in connection with the project.

Other Restructuring and Restructuring-Related Charges

1 unchanged sentence

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

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

During the three months ended June 30, 2023 and 2022, the Company recorded other restructuring charges of $ 3 million and $ 4 million, respectively and $ 5 million and $ 9 million for the six months ended June 30, 2023 and 2022, respectively.

Footnote 5 — Inventories

Inventories are comprised of the following (in millions):

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Raw materials and supplies $ 254 $ 285

4 unchanged sentences

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Land $ 74 $ 76

3 unchanged sentences

$ 1,207 $ 1,184

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

Depreciation expense was $ 51 million and $ 47 million for the three months ended June 30, 2023 and 2022, respectively, and $ 105 million and $ 96 million for the six months ended June 30, 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):

Goodwill activity for the six months ended June 30, 2023 is as follows (in millions):

Segments Net Book Value at December 31, 2022

Net Book Value at

March 31, 2023

June 30, 2023

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

3 unchanged sentences

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Accumulated Amortization

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(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.

Amortization expense for intangible assets was $ 27 million and $ 24 million for the three months ended June 30, 2023 and 2022, respectively and $ 54 million and $ 51 million for the six months ended June 30, 2023 and 2022, respectively.

The Company performed a quantitative impairment test and determined that the indefinite-lived tradename in the Home and Commercial Solutions segment was impaired.

During the three and six months ended June 30, 2023, the Company recorded an aggregate non-cash impairment charge of $ 8 million, as the carrying value of the tradename exceeded its fair value.

The Company concluded that the Baby reporting unit goodwill was not impaired during the second quarter of 2023.

Footnote 8 — Other Accrued Liabilities

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Customer accruals $ 695 $ 636

1 unchanged sentence

Accrued self-insurance liabilities, contingencies and warranty 105 99

Accrued interest expense 94 63

Accrued marketing and freight expenses 72 73

Accrued interest expense 70 63

Accrued income taxes 14 53

3 unchanged sentences

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

4.00 % senior notes due 2024

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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.

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

Receivables Facility

3 unchanged sentences

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.

At June 30, 2023, the Company had $ 66 million outstanding under the Securitization Facility.

Revolving Credit Facility and Commercial Paper

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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.

At June 30, 2023, the Company had $ 530 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 $ 950 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 %.

Weighted average interest rates are as follows:

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Total debt 5.3 % 4.2 % 5.1 % 4.3 %

Short-term debt 6.8 % 2.9 % 6.5 % 2.6 %

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

June 30, 2023 December 31, 2022

Fair Value Book Value Fair Value Book Value

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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

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 June 30, 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 benchmark interest rate for the $ 100 million floating swap and associated fair value hedge was amended for a change in benchmark interest rate from LIBOR to Secured Overnight Funding Rate (“SOFR”), effective June 1, 2023, in accordance with ASC 848 (see Footnote 1 for further information).

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

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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.

Each of these cross-currency swaps was designated as a net investment hedge 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.

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

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

1 unchanged sentence

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.

During the three months ended June 30, 2023 and 2022, the Company recognized income of $ 10 million and $ 6 million, respectively, and income of $ 21 million and $ 11 million for the six months ended June 30, 2023 and 2022, 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.

At June 30, 2023, the Company had approximately $ 388 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.

At June 30, 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 May 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 March 31, 2023 December 31, 2022

Balance Sheet Location June 30, 2023 December 31, 2022

Derivatives designated as effective hedges:

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Fair Value Hedges

Interest rate swaps Other assets 6 —

Interest rate swaps Other accrued liabilities ( 18 ) ( 14 )

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

March 31, 2023 Three Months

March 31, 2022

June 30, 2023 Three Months

June 30, 2022

Gain/(Loss) Gain/(Loss)

2 unchanged sentences

(effective portion)

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

Foreign currency contracts Net sales and cost of products sold ( 9 ) — 20 5

Cross-currency swaps Other (income) expense, net ( 49 ) — 78 —

Total $ ( 58 ) $ ( 1 ) $ 98 $ 4

June 30, 2023 Six Months

June 30, 2022

Gain/(Loss) Gain/(Loss)

Location of gain (loss) recognized in income Recognized

(effective portion)

Interest rate swaps

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Total $ ( 84 ) $ 8 $ 101 $ 3

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.

At June 30, 2023, net deferred losses of approximately $ 17 million within AOCL are expected to be reclassified to earnings over the next twelve months.

During the three months ended June 30, 2023 and 2022, the Company recognized in other (income) expense, net, expense of $ 8 million and income of $ 2 million, respectively, and expense of $ 18 million and $ 1 million during the six months ended June 30, 2023 and 2022, respectively, related to derivatives that are not designated as hedging instruments.

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

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Pension Benefits

International U.S.

International

Three Months Ended March 31,

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

2023 2022 2023 2022 2023 2022 2023 2022

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Amortization 1 4 — — 2 8 1 1

Settlements — — 5 — — — 5 —

Total (income) expense $ ( 1 ) $ ( 1 ) $ 7 $ 3 $ ( 3 ) $ ( 3 ) $ 10 $ 5

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Amortization $ ( 1 ) $ ( 1 ) $ ( 3 ) $ ( 2 )

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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.

defined benefit pension plans (“U.K.

Plan”), resulting in an exchange of plan assets for an annuity that matches the plan’s future projected benefit obligations (“PBO”) to covered participants.

In April 2023, the Company also completed a “buy-out” of approximately 7 % of the U.K.

The “buy-out” was completed by the execution of a Deed Poll Agreement and a Deed of Assignment with an insurance company.

In connection with this transaction, during the second quarter, the Company recorded a pretax loss of $ 5 million in other (income) expense, net, in the Company's Condensed Consolidated Statement of Operations, related to the prorated recognition of previously unrecognized actuarial losses reclassified from AOCL to earnings.

The Company anticipates the “buy-out” for the remaining PBO of the U.K.

plan to be completed in 2023.

The non-cash settlement charge associated with this 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 Company’s effective income tax rates for the three months ended June 30, 2023 and 2022 was a provision of 48.6 % as compared to 21.0 %, respectively, resulting from increased discrete tax expense, and provision of 3.7 % and of 19.1 % for the six months ended June 30, 2023 and 2022, respectively, resulting from more 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.

federal statutory income tax rate of 21.0 % and the Company’s effective income tax rate for the three and six months ended June 30, 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 three and six months ended June 30, 2023 were impacted by certain discrete items.

Income tax expense for the three months ended June 30, 2023 included a discrete expense of $ 6 million associated with a tax basis adjustment on a prior disposition.

The six months ended June 30, 2023 also included certain discrete items totaling $ 4 million of additional income tax expense.

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

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

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

The Company’s U.S.

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Basic weighted average shares outstanding 414.2 413.8 414.0 417.9

Dilutive securities (1)

1.1 1.9 — 2.3

Diluted weighted average shares outstanding 415.3 415.7 414.0 420.2

(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.

(1) The six months ended June 30, 2023 excludes 1.2 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.

During the six months ended June 30, 2023, the Company granted 1.6 million performance-based restricted stock units (“RSUs”), which had an aggregate grant date fair value of $ 23 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.

During the six months ended June 30, 2023, the Company also granted 2.9 million time-based RSUs with an aggregate grant date fair value of $ 41 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:

During the six months ended June 30, 2023, the Company also granted 0.5 million time-based stock options with an aggregate grant date fair value of $ 2 million.

These stock options entitle the 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 dates and vest on the specified anniversaries of the grant dates.

The weighted average assumptions used to determine the fair value of stock options granted for the six months ended June 30, 2023, were as follows:

Risk-free interest rates 3.6 %

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Exercise price $ 12.86

Special Incentive Program

As disclosed in our Current Report on Form 8-K filed with the SEC on May 19, 2023, the Company adopted the 2023 Special Incentive Program Terms and Conditions (the “SIP”) to incentivize performance against multi-year financial goals and to aid in the retention of certain Company executives.

On July 5, 2023, pursuant to the SIP, the Company granted 2.6 million performance-based RSUs, which had an aggregate grant date fair value of $ 22 million, to the Company’s President and Chief Executive Officer (“CEO”) and the Company’s Chief Financial Officer (“CFO”).

These performance-based RSUs granted pursuant to the SIP, entitle the recipients to shares of the Company’s common stock and vest on February 27, 2026, subject to the achievement of the applicable performance goals.

The Company granted on July 5, 2023 an additional 1.9 million performance-based RSUs, which had an aggregate grant date fair value of $ 16 million, to certain key executives other than the CEO and CFO.

These performance-based RSUs granted pursuant to the SIP entitle the recipients to shares of the Company’s common stock and vest as follows:

70 % of the total grant will vest on the two-year anniversary of the grant date, and the remaining 30 % of the total grant will vest on the three-year anniversary of the grant date, subject to the achievement of applicable performance measures.

The Company granted on July 5, 2023 an additional 1.3 million time-based RSUs, which had an aggregate grant date fair value of $ 11 million, to certain key executives other than the CEO and CFO.

These time-based RSUs granted pursuant to the SIP entitle the recipients to shares of the Company’s common stock and will fully vest on the one-year anniversary of the date of grant.

The vesting of all grants pursuant to the SIP are subject to continued employment with the Company.

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.

Under the SRP, the Company was permitted to 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.

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

Footnote 15 — Fair Value Disclosures

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

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

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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.

During the second quarter of 2023, one tradename in the Home and Commercial Solutions segment was measured at fair value of $ 60 million.

See Footnote 7 for further information.

Footnote 16 — Segment Information

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gourmet cookware, bakeware and cutlery and home fragrance products

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

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;

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Net sales (1)

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$ 120 $ 328 $ 84 $ 545

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Segment assets

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Commercial $ 378 $ 429 $ 726 $ 830

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Home and Commercial Solutions 1,058 1,242 2,029 2,592

Baby 251 313 468 604

Writing 562 552 909 911

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

Three months ended March 31,

Three months ended June 30,

America International TOTAL North

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$ 1,495 $ 709 $ 2,204 $ 1,756 $ 778 $ 2,534

Six months ended June 30,

America International TOTAL North

America International TOTAL

Home and Commercial Solutions $ 1,341 $ 688 $ 2,029 $ 1,838 $ 754 $ 2,592

Learning and Development 1,004 373 1,377 1,124 391 1,515

Outdoor and Recreation 334 269 603 447 368 815

$ 2,679 $ 1,330 $ 4,009 $ 3,409 $ 1,513 $ 4,922

Footnote 17 — Litigation and Contingencies

5 unchanged sentences

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.

Since January 2023, the Company has been discussing with the SEC the possibility of reaching a settlement to resolve the investigation, which now relates to certain time periods within the Company's 2016 and 2017 fiscal years.

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.

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Securities Litigation

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 was captioned Oklahoma Firefighters Pension and Retirement System v.

Newell Brands Inc., et al., Civil Action No.

HUD-L-003492-18 (“Oklahoma Firefighters”).

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 was predominantly funded by insurance proceeds.

Both the settlement and the insurance receivable were recorded during the third quarter of 2022.

The amount not 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.

Certain of the Company’s current and former officers and directors have been named in shareholder derivative lawsuits.

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On October 30, 2018, another shareholder filed a putative derivative complaint, Martindale v.

, 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.

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.

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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.

, 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.

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).

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.

These derivative 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.

In March 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, referenced above, and stayed the Weber Derivative Action pending final disposition of Oklahoma Firefighters.

On January 31, 2023, Plaintiff Streicher voluntarily dismissed herself from the Newell Brands Derivative Action without prejudice.

On May 30, 2023, the United States District Court for the District of Delaware continued the stays of the Newell Brands Derivative Action and the Weber Derivative Action for an additional ninety days.

On May 26, 2023, Plaintiff Streicher filed a new putative derivative complaint, Streicher v.

Polk, et al., in the Superior Court of New Jersey, Law Division:

Hudson County (the “New Jersey Derivative Action” and, collectively with the Newell Brands Derivative Action and the Weber Derivative Action, the “Derivative Actions”), purportedly on behalf of the Company against certain of the Company’s current and former officers and directors.

The complaint in the New Jersey Derivative Action alleges breaches of fiduciary duty.

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

On June 7, 2023, Plaintiff Streicher filed a Stipulation of Settlement (the “Stipulation”) and Motion for Preliminary Approval of Settlement in the New Jersey Derivative Action.

The proposed settlement as set forth in the Stipulation provides for, among other things, a full release of the claims that the plaintiffs or any other Company stockholder asserted or could have asserted in the Derivative Actions against any of the defendants named in those actions, in exchange for the Company’s agreement to implement and/or maintain certain corporate governance measures, as more fully described in the Stipulation and Notice of Proposed Derivative Settlement as filed by the Company with the SEC on a Current Report on Form 8-K dated June 29, 2023 (the “Settlement”).

On June 27, 2023, the Superior Court of Hudson County, New Jersey issued an order preliminarily approving the proposed Settlement as set forth in the Stipulation.

The Settlement is subject to final consideration at a hearing to be held on August 25, 2023.

The Settlement, if finally approved, will cause the dismissal with prejudice of each of the Derivative Actions.

Environmental Matters

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

The Company’s estimate of environmental remediation costs associated with these matters at March 31, 2023 was $ 33 million which is included in other accrued liabilities and other noncurrent liabilities in the Condensed Consolidated Balance Sheets.

The Company’s estimate of environmental remediation costs associated with these matters at June 30, 2023 was $ 37 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.

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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.

The Site is the subject of investigation and remedial activities and related settlement negotiations with the U.S.

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”).

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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.

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.

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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.

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.

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

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

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.

At June 30, 2023, the Company had approximately $ 40 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