What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-21 compared with 2023-02-15 · 399 added, 528 removed, 1125 unchanged (45% of the section changed)

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We have audited the accompanying consolidated balance sheets of Newell Brands Inc.

and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of operations, of comprehensive income (loss), of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2022, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, 2022 appearing after the signature pages (collectively referred to as the “consolidated financial statements”).

and its subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations and comprehensive income (loss), of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2023, including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Notes 1 and 5 to the consolidated financial statements, the Company changed the manner in which it accounts for inventories in 2022.

Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because material weaknesses in internal control over financial reporting existed as of that date related to ineffective controls over the reviews of significant assumptions used in the impairment assessments of goodwill, indefinite-lived tradenames, and long-lived assets.

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

The material weaknesses referred to above are described in Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9A.

We considered these material weaknesses in determining the nature, timing, and extent of audit tests applied in our audit of the 2023 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.

Basis for Opinions

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

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

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

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

Interim and Annual Impairment Assessments - Goodwill and Certain Indefinite-Lived Intangible Assets

As described in Notes 1 and 7 to the consolidated financial statements, the Company’s goodwill and indefinite-lived intangible assets balances were $3.3 billion and $1.7 billion, respectively, as of December 31, 2022.

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

In 2022, management used a quantitative approach, which involves comparing the fair value of these assets to their carrying values.

Interim and Annual Impairment Assessments - Goodwill and Certain Indefinite-Lived Tradenames

As described in Notes 1 and 7 to the consolidated financial statements, the Company’s goodwill and indefinite-lived tradenames balances were $3.1 billion and $1.5 billion, respectively, as of December 31, 2023.

Goodwill and indefinite-lived tradenames are tested and reviewed for impairment annually on December 1, or more frequently if facts and circumstances warrant.

In 2023, management used a quantitative approach, which involves comparing the fair value to the carrying values.

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

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

During the third quarter of 2022, a triggering event occurred for the Home Fragrance reporting unit and certain indefinite-lived tradenames, resulting in the Company recording non-cash impairment charges of $108 million and $40 million to goodwill and indefinite-lived intangible assets, respectively.

During the fourth quarter of 2022, in conjunction with management’s annual impairment testing, the Company recorded non-cash impairment charges of $56 million to goodwill in the Home Fragrance reporting unit and $270 million to certain indefinite-lived tradenames.

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

Management’s impairment assessments require significant use of judgment and assumptions such as (i) the estimation of future cash flows, business growth rates and discount rates for goodwill, (ii) the cash flow projections, royalty rates and discount rates under the relief from royalty method for indefinite-lived intangible assets, and (iii) the cash flow projections, discount rates, and contributory asset charges under the excess earnings method for indefinite-lived intangible assets.

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

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to (a) the estimation of future cash flows, business growth rates, and discount rates for goodwill, (b) the cash flow projections, royalty rates, and discount rates under the relief from royalty method for certain indefinite-lived intangible assets, and (c) the cash flow projections, discount rates, and contributory asset charges under the excess earnings method for certain indefinite-lived intangible assets;

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

During the year, the Company recorded non-cash impairment charges of $241 million to goodwill for the Baby reporting unit and $98 million to certain indefinite-lived tradenames, respectively.

Fair value is estimated by management using the discounted cash flow method for its reporting units.

Fair value is estimated by management using an income method, either the relief from royalty method or the excess earnings method, for indefinite-lived tradenames.

Management’s impairment assessments require significant use of judgment and assumptions such as (i) the estimation of future cash flows, business growth rates, and discount rates for reporting units, (ii) the cash flow projections, royalty rates, and discount rates under the relief from royalty method for certain indefinite-lived tradenames, and (iii) the cash flow projections, and discount rates under the excess earnings method for certain indefinite-lived tradenames.

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

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to (a) the estimation of future cash flows, business growth rates, and discount rates for reporting units, (b) the cash flow projections, royalty rates, and discount rates under the relief from royalty method for certain indefinite-lived tradenames, and (c) the cash flow projections and discount rates under the excess earnings method for certain indefinite-lived tradenames;

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

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

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

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

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

(ii) evaluating the appropriateness of the discounted cash flow method, relief from royalty method, and excess earnings method;

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

and (iv) evaluating the reasonableness of the significant assumptions used by management related to the (a) estimation of future cash flows, business growth rates, and discount rates for goodwill, (b) the cash flow projections, royalty rates, and discount rates under the relief from royalty method for certain indefinite-lived intangible assets, and (c) the cash flow projections, discount rates, and contributory asset charges under the excess earnings method for certain indefinite-lived intangible assets.

Evaluating management’s assumptions related to the estimation of future cash flows and business growth rates for goodwill and the cash flow projections for certain indefinite-lived intangible assets involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting units and indefinite-lived intangible assets;

These procedures included testing the effectiveness of controls relating to management’s impairment assessments of goodwill and indefinite-lived tradenames, including controls over the valuation of the Company’s reporting units and certain indefinite-lived tradenames.

These procedures also included, among others, (i) evaluating and determining the nature and extent of audit procedures performed and evidence obtained that are responsive to the material weaknesses identified, (ii) testing management’s process for developing the fair value estimates of the reporting units and certain indefinite-lived tradenames;

(iii) evaluating the appropriateness of the discounted cash flow method, relief from royalty method, and excess earnings methods used by management;

(iv) testing the completeness and accuracy of underlying data used in the valuation

and (v) evaluating the reasonableness of the significant assumptions used by management related to the (a) estimation of future cash flows, business growth rates, and discount rates for reporting units, (b) the cash flow projections, royalty rates, and discount rates under the relief from royalty method for certain indefinite-lived tradenames, and (c) the cash flow projections and discount rates under the excess earnings method for certain indefinite-lived tradenames.

Evaluating management’s assumptions related to the estimation of future cash flows and business growth rates for reporting units and the cash flow projections for certain indefinite-lived tradenames involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting units and indefinite-lived tradenames;

(ii) the consistency with external and industry data;

and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit.

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

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the discounted cash flow method, relief from royalty method, and excess earnings method and (ii) the reasonableness of the discount rate assumption for reporting units, and the discount rate and royalty rate assumptions for certain indefinite-lived tradenames.

/s/ PricewaterhouseCoopers LLP

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Amounts in millions, except per share data)

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Gross profit 2,353 2,834 3,363

Selling, general and administrative expenses 2,033 2,274 2,189

Selling, general and administrative expense 2,001 2,033 2,274

Restructuring costs, net 95 15 16

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Diluted $ ( 0.94 ) $ 0.47 $ 1.45

See Notes to Consolidated Financial Statements.

NEWELL BRANDS INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Amounts in millions)

Year Ended December 31, 2022 2021 2020

COMPREHENSIVE INCOME (LOSS)

Net income (loss) $ ( 388 ) $ 197 $ 622

Comprehensive income (loss), net of tax:

Other comprehensive income (loss), net of tax

Foreign currency translation adjustments 20 ( 113 ) ( 94 )

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Comprehensive income (loss) ( 267 ) 68 620

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

Total comprehensive income attributable to noncontrolling interests — — 2

Total comprehensive income (loss) attributable to parent $ ( 267 ) $ 68 $ 618

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Impairment of goodwill, intangibles and other assets 342 474 60

(Gain) loss from sale of businesses, net ( 136 ) ( 4 ) 9

Gain from sale of businesses ( 1 ) ( 136 ) ( 4 )

Deferred income taxes ( 283 ) 97 ( 24 )

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Other, net ( 33 ) ( 24 ) ( 10 )

Changes in operating accounts excluding the effects of divestitures:

Changes to operating accounts, excluding the effects of divestitures:

Accounts receivable 67 130 130

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Capital expenditures ( 284 ) ( 312 ) ( 289 )

Proceeds from settlement of swaps 43 25 15

Other investing activities 31 13 6

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Cash flows from financing activities:

Proceeds from (payments of) short-term debt, net 619 — ( 26 )

Net proceeds from issuance of debt 989 — 491

Short-term debt, net ( 488 ) 619 —

Net proceeds from issuance of long-term debt — 989 —

Payments on current portion of long-term debt ( 2 ) ( 1,091 ) ( 698 )

Payments on long-term debt — — ( 6 )

Debt extinguishment costs — ( 5 ) ( 18 )

Repurchase of shares of common stock — ( 325 ) —

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Cash paid for income taxes, net of refunds 103 172 165

Cash paid for interest 244 271 281

Cash paid for interests 298 244 271

See Notes to Consolidated Financial Statements.

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Stock Treasury

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

Stock Additional Paid-In Capital Retained Earnings

(Deficit) Accumulated Other Comprehensive Income (Loss) Total Stockholders' Equity Attributable to Parent Non-

controlling Interests Total Stockholders' Equity

Balance at December 31, 2020 $ 448 $ ( 598 ) $ 8,078 $ ( 3,157 ) $ ( 880 ) $ 3,891 $ 26 $ 3,917

Impact of change in inventory accounting method — — — 13 — 13 — 13

Balance at January 1, 2020 $ 447 $ ( 590 ) $ 8,430 $ ( 2,391 ) $ ( 920 ) $ 4,976 $ 33 $ 5,009

Comprehensive income (loss) — — — 622 ( 2 ) 620 — 620

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

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

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

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

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

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

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Equity compensation, net of tax 2 ( 14 ) 11 — — ( 1 ) — ( 1 )

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

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

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

Other — — ( 1 ) — — ( 1 ) — ( 1 )

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

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Equity compensation, net of tax 1 ( 4 ) 48 — — 45 — 45

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

Other — — ( 1 ) — — ( 1 ) — ( 1 )

Balance at December 31, 2023 $ 440 $ ( 627 ) $ 6,915 $ ( 2,726 ) $ ( 890 ) $ 3,112 $ — $ 3,112

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Description of Business

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

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

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

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

Newell Brands is focused on delighting consumers by lighting up everyday moments.

The Company sells its products in over 150 countries around the world and has operations on the ground in over 40 of these countries, excluding third-party distributors.

Basis of Presentation

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

During the first quarter of 2022, the Company sold its Connected Home & Security (“CH&S”) business unit to Resideo Technologies, Inc.

See Footnotes 2 and 17 for more information.

During the fourth quarter of 2022, the Company elected to change its method of accounting for certain inventory in the U.S.

from the last-in, first-out (“LIFO”) method to the first-in, first-out (“FIFO”) method.

All prior periods presented have been retrospectively adjusted to apply the new method of accounting.

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 (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.

See Footnote 17 for more information.

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

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

See Footnotes 2 and 17 for more information.

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

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

While all of the Company's segments have been negatively impacted to varying degrees by the softening global demand, the Home Appliances and Home Solutions segments have been the most impacted.

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

The Company continues to be impacted by inflationary pressures, soft global demand, focus by major retailers on the rebalancing of inventory levels, rising interest rates and indirect macroeconomic impacts from geopolitical conflicts.

These collective macroeconomic trends, the duration or severity of which are highly uncertain, are rapidly changing the retail and consumer landscape and negatively impact the Company’s operating results, cash flows and financial condition in 2023 and are expected to persist into 2024.

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.

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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 fourth quarter of 2022, in conjunction with the Company's annual impairment testing, the Company recorded a non-cash impairment charge to write-off the remaining $ 56 million of goodwill for its Home Fragrance reporting unit, in the Home Solutions segment, as the carrying value exceeded its fair value.

The Company also recorded an aggregate impairment charge of $ 270 million related to certain tradenames in the Home Solutions and Learning and Development segments, as the carrying values exceeded their fair values.

During the fourth quarter of 2023, in conjunction with the Company’s annual impairment testing, the Company recorded a non-cash impairment charge of $ 68 million related to two tradenames in the Home and Commercial Solutions segment as the carrying values exceeded the fair values.

A quantitative impairment test was also performed for the Company’s long-lived assets resulting in no impairment.

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

The Company performed a quantitative impairment test and determined that the Home Fragrance reporting unit goodwill, and the indefinite-lived tradenames in the Home Appliances and Learning and Development segments noted above were impaired, which resulted in the Company recording an aggregate non-cash impairment charge of $ 148 million during the quarter, as the carrying values exceeded their fair values.

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

During the third quarter of 2023, the Company concluded that a triggering event had occurred 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 lower volume and profitability expectations, as well as rising interest rates, and for an indefinite-lived tradename in the Outdoor and Recreation segment, as a result of a downward revision of forecasted cash flows due to market conditions, as well as rising interest rates.

The Company performed a quantitative impairment test and determined that the Baby reporting unit goodwill and the indefinite-lived tradename in the Outdoor and Recreation segment were impaired.

During the third quarter of 2023, the Company recorded a non-cash impairment charge of $ 241 million for the Baby reporting unit goodwill and $ 22 million for the indefinite-lived tradename in the Outdoor and Recreation segment, as the carrying values exceeded their fair values.

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 second quarter of 2023, the Company recorded a 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.

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The Company elected to account for shipping and handling activities as a fulfillment cost.

The Company also elected not to disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which revenue is recognized at the amount to which the Company has the right to invoice for services performed.

The Company also elected not to disclose the value of unsatisfied performance obligations for (i) contracts with

an original expected length of one year or less and (ii) contracts for which revenue is recognized at the amount to which the Company has the right to invoice for services performed.

Goodwill and Indefinite-Lived Intangibles

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Reporting units are determined based upon the Company’s organizational structure in place at the date of the goodwill impairment testing and generally one level below the operating segment level.

The Company’s operations are comprised of seven reporting units, within its five primary operating segments.

The Company’s operations are comprised of six reporting units, within its three primary operating segments.

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

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The testing of indefinite-lived intangibles (primarily trademarks and tradenames) under established guidelines for impairment also requires significant use of judgment and assumptions (such as cash flow projections, royalty rates, terminal values and discount rates).

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

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

For impairment testing purposes, the fair value of indefinite-lived intangibles is determined using either the relief from royalty method or the excess earnings method.

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Factored receivables at December 31, 2023 associated with the Company’s existing factoring agreement (the “Customer Receivables Purchase Agreement”) were approximately $ 240 million, a decrease of approximately $ 180 million from December 31, 2022.

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

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

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

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

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

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

On October 2, 2023, the Company, through a wholly-owned special purpose entity (“SPE”) entered into a three -year agreement with a financial institution to sell up to $ 225 million, between February and April of each year and up to $ 275 million at all other times, of certain customer receivables without recourse on a revolving basis (the “New Receivables Facility”).

Under the New Receivables Facility, certain of the Company’s subsidiaries continuously sell their accounts receivables, originated in the U.S., to the SPE and the SPE sells the receivables to the financial institution.

The SPE is a variable interest entity for which the Company is considered to be the primary beneficiary.

The SPE’s sole business consists of the purchase of receivables from certain subsidiaries of the Company and the subsequent transfer of such receivables to the financial institution.

Although the SPE is included in the Company’s consolidated financial statements, it is a separate legal entity with separate creditors.

The assets of the SPE are not available to pay creditors of the Company or its subsidiaries.

The fair value of these servicing arrangements as well as the fees earned was immaterial.

The Company accounts for receivables sold from the SPE to the financial institution as a sale of financial assets and derecognizes the trade receivables from the Company’s Consolidated Balance Sheet.

The balance of outstanding accounts receivables sold to the financial institution as of December 31, 2023 was $ 45 million.

Cash received under the New Receivables Facility is included in cash from operating activities in the Consolidated Statements of Cash Flows.

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 126 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 as of December 31, 2023.

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

The following table sets forth the outstanding payment obligations and activities related to the SCF Program:

Balance at December 31, 2022 $ 100

Invoices posted 336

Invoices paid ( 340 )

Balance at December 31, 2023 $ 96

Cash, Cash Equivalents and Restricted Cash

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

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

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

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

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The Company considers the applicability and impact of all ASUs.

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.

In November 2023, the FASB issued ASU 2023-07, “ Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.” The amendments in this update require that a public entity disclose on an annual and interim basis significant segment expenses that are regularly provided to the CODM, amount for other segment items by reportable segment and a description of its composition, segment profit and loss and assets, additional measures of segment profit used by the CODM in assessing segment performance and the title and position of the CODM, as well as an explanation of how the CODM uses the reported measures in assessing segment performance and deciding allocation of resources.

The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company does not expect the adoption of ASU 2023-07 to have a material impact on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.” The standard requires all entities subject to income taxes to disclose disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid.

The new requirement will be effective for annual periods beginning after December 15, 2024.

The guidance will be applied on a prospective basis with the option to apply the standard retrospectively.

Early adoption is permitted.

The Company does not expect the adoption of ASU 2023-09 to have a material impact on the consolidated financial statements.

Adoption of New Accounting Guidance

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:

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

This ASU was further

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

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

Reference Rate Reform:

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

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

Deferral of the Sunset Date of Topic 84 8, 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 December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes” (Topic 740) , which removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

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

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

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):

Disclosure of Supplier Finance Program Obligations.

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

The Company adopted ASU 2022-04 and it did not have a material impact on its consolidated financial statements.

See preceding disclosure for further information.

Footnote 2 — Divestiture Activity

On November 30, 2023, the Company sold its Millefiori business, based in Italy, in the Home and Commercial Solutions segment to a third party for purchase price that is not material to the Company.

As a result, the Company recorded an immaterial , pretax gain which is included in other (income) expense, net in Consolidated Statements of Operations.

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

As a result, during the year ended December 31, 2022, the Company recorded a pre-tax gain of $ 136 million, which was included in other (income) expense, net in Consolidated Statements of Operations.

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

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

As a result, during the year ended December 31, 2022, the Company recorded a pretax gain of $ 136 million, which was included in other (income) expense, net in Consolidated Statements of Operations.

Footnote 3 — Accumulated Other Comprehensive Income (Loss)

The following tables display the components of accumulated other comprehensive income (loss) (“AOCL”), net of tax, as of and for the years ended December 31, 2023 and 2022 (in millions):

Adjustment Pension and Postretirement Cost Derivative Financial Instruments AOCL

Cumulative Translation Adjustment Pension and Postretirement Cost Derivative Financial Instruments AOCL

Balance at December 31, 2021 $ ( 575 ) $ ( 292 ) $ ( 15 ) $ ( 882 )

7 unchanged sentences

Balance at December 31, 2023 $ ( 668 ) $ ( 196 ) $ ( 26 ) $ ( 890 )

Reclassifications from AOCL to the results of operations for the years ended December 31, were pre-tax (income) expense of (in millions):

Reclassifications from AOCL to the results of operations for the years ended December 31, were pretax (income) expense of (in millions):

2023 2022 2021

2 unchanged sentences

Derivative financial instruments (3)

( 21 ) 23 ( 6 )

(1) See Footnote 2 for further information.

17 unchanged sentences

2023 2022 2021

Commercial Solutions $ 1 $ 4 $ 4

Home Appliances 1 4 1

Home Solutions 3 3 10

Home and Commercial Solutions $ 50 $ 5 $ 11

Learning and Development 18 4 1

3 unchanged sentences

Accrued restructuring costs activity for the year ended December 31, 2023 are as follows (in millions):

Balance at December 31, 2021 Restructuring Costs, Net Payments Balance at December 31, 2022

Balance at December 31, 2022 Restructuring Costs, Net Payments Foreign Currency and Other Balance at December 31, 2023

Severance and termination costs $ 7 $ 89 $ ( 66 ) $ — $ 30

2 unchanged sentences

Accrued restructuring costs activity for the year ended December 31, 2022 are as follows (in millions):

Balance at December 31, 2020 Restructuring Costs, Net Payments Foreign Currency and Other Balance at December 31, 2021

Balance at December 31, 2021 Restructuring Costs, Net Payments Balance at December 31, 2022

Severance and termination costs $ 8 $ 13 $ ( 14 ) $ 7

1 unchanged sentence

$ 10 $ 15 $ ( 18 ) $ 7

2020 Restructuring Plan

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

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

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

Other Restructuring and Restructuring-Related Costs

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 SG&A in the Consolidated Statements of Operations based on the nature of the underlying costs incurred.

During the years ended December 31, 2022, 2021 and 2020, the Company recorded other restructuring charges of $ 15 million, $ 6 million and $ 2 million, respectively.

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 2023, with most of these actions expected to be completed by the end of 2023, subject to local law and consultation requirements.

The Company 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 fiscal 2023.

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

Project Phoenix was substantially implemented by the end of 2023 and incorporated 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.

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

2 unchanged sentences

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

No charges associated with Project Phoenix were recorded in 2022.

The Company commenced reducing headcount in the first quarter of 2023, and while the program is mostly complete, charges will continue to be recognized as the Company completes remaining actions, in accordance with local regulations and consultation requirements.

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

During the year ended December 31, 2023, the Company recorded restructuring charges of $ 78 million in connection with Project Phoenix.

See Recent Developments in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations for further information.

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 year ended December 31, 2023, the Company recorded restructuring charges of $ 7 million in connection with the Network Optimization Project.

See Recent Developments in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations for further information.

Other Restructuring and Restructuring-Related Costs

The Company regularly incurs other restructuring and restructuring-related costs in connection with various discrete initiatives, including certain costs associated with the 2020 Restructuring Plan, which was designed to reduce overhead costs and streamline certain underperforming operations and was completed at the end of 2021 and 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.

During the years ended December 31, 2023, 2022 and 2021, the Company recorded other restructuring charges of $ 10 million, $ 15 million and $ 16 million, respectively.

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

Realignment Plan

In January 2024, the Company announced an organizational realignment, which is expected to strengthen the Company’s front-end commercial capabilities, such as consumer understanding and brand communication, in support of the “where to play” and “how to win” strategies the Company unveiled in June of 2023.

In addition to improving accountability, the Company’s organizational realignment is designed to unlock operational efficiencies and cost savings, reduce complexity and free up funds for reinvestment.

As part of the organizational realignment, the Company is making several operating model changes, which entail:

standing up a cross-functional brand management organization, realigning business unit finance to fully support the new global brand management model, further simplifying and standardizing regional go-to-market organizations, and centralizing domestic retail sales teams, the digital technology team, business-aligned accounting personnel, the Manufacturing Quality team, and the Human Resources functions into the appropriate center-led teams to drive standardization, efficiency and scale with a One Newell approach.

The Company will also further optimize the Company’s real estate footprint and pursue other cost reduction initiatives.

These actions are expected to be substantially implemented by the end of 2024, subject to local law and consultation requirements.

Restructuring and restructuring-related charges associated with these actions are estimated to be in the range of $ 75 million to $ 90 million and are expected to be substantially incurred by the end of 2024.

Footnote 5 — Inventories

8 unchanged sentences

$ 1,531 $ 2,203

During the fourth quarter of 2022, the Company elected to change its method of accounting for certain inventory in the U.S.

from LIFO to FIFO.

The change to FIFO is preferable because it conforms the Company's entire inventory to a single method of accounting and improves comparability with the Company's peers.

The Company applied this change in inventory costing method by retrospectively adjusting its historical financial statements.

The following historical financial statement line items within the accompanying financial statements were adjusted as a result of the retrospective application of the change in inventory costing method (in millions, except per share data):

For the year ended December 31, 2022 For the year ended December 31, 2021 For the year ended December 31, 2020

As Computed Impact of As Reported Impact of As Reported Impact of

Under LIFO Change to FIFO As Reported Under LIFO Change to FIFO As Adjusted Under LIFO Change to FIFO As Adjusted

Consolidated Statement of Operations

Net sales $ 9,459 $ — $ 9,459 $ 10,589 $ — $ 10,589 $ 9,385 $ — $ 9,385

Cost of sales 6,637 ( 12 ) 6,625 7,293 ( 67 ) 7,226 6,306 ( 5 ) 6,301

Operating income (loss) 300 12 312 946 67 1,013 ( 634 ) 5 ( 629 )

Income (loss) before income taxes 145 12 157 693 67 760 ( 1,006 ) 5 ( 1,001 )

Income tax expense (benefit) ( 43 ) 3 ( 40 ) 121 17 138 ( 236 ) 1 ( 235 )

Net income (loss) $ 188 $ 9 $ 197 $ 572 $ 50 $ 622 $ ( 770 ) $ 4 $ ( 766 )

Weighted average common shares outstanding:

Basic 415.7 415.7 425.3 425.3 424.1 424.1

Diluted 417.4 417.4 428.0 428.0 424.1 424.1

Earnings (loss) per share:

Basic $ 0.45 $ 0.02 $ 0.47 $ 1.34 $ 0.12 $ 1.46 $ ( 1.82 ) $ 0.01 $ ( 1.81 )

Diluted $ 0.45 $ 0.02 $ 0.47 $ 1.34 $ 0.11 $ 1.45 $ ( 1.82 ) $ 0.01 $ ( 1.81 )

Consolidated Statement of Comprehensive Income (Loss)

Net income (loss) $ 188 $ 9 $ 197 $ 572 $ 50 $ 622 $ ( 770 ) $ 4 $ ( 766 )

Total other comprehensive income (loss), net of tax ( 129 ) — ( 129 ) ( 2 ) — ( 2 ) 40 — 40

Comprehensive income (loss) including noncontrolling interests 59 9 68 570 50 620 ( 730 ) 4 ( 726 )

Less:Total comprehensive income (loss) attributable to noncontrolling interests — — — 2 — 2 ( 4 ) — ( 4 )

Total comprehensive income (loss) attributable to parent $ 59 $ 9 $ 68 $ 568 $ 50 $ 618 $ ( 726 ) $ 4 $ ( 722 )

Consolidated Statement of Cash Flows

Net income (loss) $ 188 $ 9 $ 197 $ 572 $ 50 $ 622 $ ( 770 ) $ 4 $ ( 766 )

Deferred income taxes 94 3 97 ( 41 ) 17 ( 24 ) ( 261 ) 1 ( 260 )

Inventories ( 264 ) ( 12 ) ( 276 ) ( 396 ) ( 67 ) ( 463 ) ( 29 ) ( 5 ) ( 34 )

December 31, 2022 December 31, 2021

As Computed Impact of As Reported Impact of

Under LIFO Change to FIFO As Reported Under LIFO Change to FIFO As Adjusted

Consolidated Balance Sheets

Inventories $ 2,101 $ 102 $ 2,203 $ 1,997 $ 90 $ 2,087

Deferred income taxes, net 316 ( 26 ) 290 409 ( 23 ) 386

Retained deficit* ( 2,414 ) 76 ( 2,338 ) ( 2,602 ) 67 ( 2,535 )

* The impact to the opening retained deficit balance at January 1, 2020 was a reduction to retained deficit of $ 13 million.

See Footnote 19 for the retrospective application of the change in inventory costing method to the unaudited quarterly reporting periods in 2022 and 2021.

Footnote 6 — Property, Plant and Equipment, Net

14 unchanged sentences

December 31, 2023

Net Book Value at December 31, 2021 Impairment

Charges Foreign

Exchange Gross

Amount Accumulated

Charges Net Book

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

Home Appliances — — — 569 ( 569 ) —

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

Net Book Value at December 31, 2022 Impairment Charges Foreign Exchange Gross Carrying Amount Accumulated Impairment Charges Net

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

Learning and Development 2,551 ( 241 ) 14 3,411 ( 1,087 ) 2,324

1 unchanged sentence

$ 3,298 $ ( 241 ) $ 14 $ 8,251 $ ( 5,180 ) $ 3,071

During the fourth quarter of 2022, in conjunction with its annual impairment testing, the Company recorded a non-cash impairment charge to write-off the remaining $ 56 million of goodwill for its Home Fragrance reporting unit, in the Home Solutions segment as the carrying value exceeded its fair value.

This impairment reflected a further downward revision to the forecasted cash flows used in connection with the third quarter triggering event assessment, driven by inflationary pressures which continue to impact discretionary spending behavior of consumers at higher rates than previously expected.

The Baby reporting unit in the Learning and Development segment had a fair value within 10% of its associated carrying value.

A hypothetical 10% reduction in forecasted earnings before interest, taxes and amortization used in the discounted cash flows to estimate the fair value to this reporting unit would have resulted in an impairment charge of approximately $ 120 million against its goodwill carrying value of $ 653 million.

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

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

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

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

During the third quarter of 2023, the Company recorded a non-cash impairment charge of $ 241 million as the carrying value of the reporting unit exceeded its fair value.

December 31, 2022

Net Book Value at December 31, 2020 Foreign

Exchange Gross

Amount Accumulated

Charges Net Book

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

Home Appliances — — 569 ( 569 ) —

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

Net Book Value at December 31, 2021 Impairment Charges Foreign Exchange Gross Carrying Amount Accumulated Impairment Charges Net

Home and Commercial Solutions $ 911 $ ( 164 ) $ — $ 4,052 $ ( 3,305 ) $ 747

Learning and Development 2,593 — ( 42 ) 3,397 ( 846 ) 2,551

1 unchanged sentence

$ 3,504 $ ( 164 ) $ ( 42 ) $ 8,237 $ ( 4,939 ) $ 3,298

During the fourth quarter of 2022, in conjunction with its annual impairment testing, the Company recorded a non-cash impairment charge to write-off the remaining $ 56 million of goodwill for its Home Fragrance reporting unit, in the Home and Commercial Solutions segment as the carrying value exceeded its fair value.

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

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

The Company performed a quantitative impairment test and determined that the Home Fragrance reporting unit goodwill was impaired and recorded a non-cash impairment charge of $ 108 million, as the carrying value of the reporting unit exceeded its fair value.

The impairment charges for indefinite-lived tradenames were recorded in the Company’s reporting segments as follows for the years ended December 31, (in millions):

Impairment of indefinite-lived tradenames

Commercial Solutions $ — $ 29 $ 320

Home Appliances 15 — 87

Home Solutions 265 — 290

Home and Commercial Solutions $ 76 $ 280 $ 29

Learning and Development — 30 31

1 unchanged sentence

$ 98 $ 310 $ 60

(1) During the fourth quarter of 2022, in conjunction with its annual impairment testing, the Company recorded aggregate non-cash impairment charges of $ 270 million associated with two tradenames in the Home Solutions segment and one tradename in the Learning and Development segment, as the carrying values exceeded their fair values.

The decline in fair values for one tradename in the Home Solutions segment and the tradename in the Learning and Development segment reflected a further downward revision to the forecasted cash flows used in connection with the third quarter triggering event assessment, driven by inflationary pressures which are impacting discretionary spending behavior of consumers at higher rates than previously expected, including higher than expected overhead costs.

The decline in fair value for the remaining tradename in the Home Solutions segment reflected a change in management's assumptions, including the timing of a labor shortage recovery in a certain international market, which negatively impacted the long-term profitability estimates used to develop the forecasted cash flow projections for the annual impairment test.

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

(1) During the fourth quarter of 2023, in conjunction with its annual impairment testing, the Company recorded a non-cash impairment charge of $ 68 million associated with two tradenames in the Home and Commercial Solutions segment, as the carrying values exceeded the fair values.

The decline in the fair values of the tradenames in the Home and Commercial Solutions segment were due to current market contraction, reflecting a reset of demand levels.

During the third quarter of 2023, the Company concluded that a triggering event had occurred for an indefinite-lived tradename in the Outdoor and Recreation segment, as a result of a downward revision of forecasted cash flows due to market conditions, as well as rising interest rates.

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

During the third quarter of 2023, the Company recorded a non-cash impairment charge of $ 22 million for the indefinite-lived tradename in the Outdoor and Recreation segment, as the carrying value of the tradename exceeded its fair value.

During the second quarter of 2023, the Company concluded that a triggering event had occurred for indefinite-lived tradename in the Home Fragrance reporting unit in the Home and Commercial Solutions 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 second quarter of 2023, the Company recorded a non-cash impairment charge of $ 8 million, as the carrying value of the tradename exceeded its fair value.

(2) During the fourth quarter of 2022, in conjunction with its annual impairment testing, the Company recorded aggregate non-cash impairment charges of $ 270 million associated with two tradenames in the Home and Commercial Solutions segment and one tradename in the Learning and Development segment, as the carrying values exceeded their fair values.

The decline in fair values for one tradename in the Home and Commercial Solutions segment and the tradename in the Learning and Development segment reflected a further downward revision to the forecasted cash flows used in connection with the third quarter triggering event assessment, driven by inflationary pressures which are impacting discretionary spending behavior of consumers at higher rates than previously expected, including higher than expected overhead costs.

The decline in fair value for the remaining tradename in the Home and Commercial Solutions segment reflected a change in management's assumptions, including the timing of a labor shortage recovery in a certain international market, which negatively impacted the long-term profitability estimates used to develop the forecasted cash flow projections for the annual impairment test.

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

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

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

The Company performed a quantitative impairment test and determined that the indefinite-lived tradename in the Home Appliances segment and two indefinite-lived tradenames in the Learning and Development segment were impaired.

The Company performed a quantitative impairment test and determined that the indefinite-lived tradenames in the Home and Commercial Solutions segment and two indefinite-lived tradenames in the Learning and Development segment were impaired.

During the third quarter of 2022, the Company recorded an aggregate non-cash impairment charge of $ 40 million, as the carrying values of these tradenames exceeded their fair values.

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

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

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

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

One tradename in the Home Solutions segment had a fair value within 10% of its associated carrying values of $ 25 million.

A hypothetical 10% reduction in forecasted earnings before interest, taxes and amortization used in the discounted cash flows to estimate the fair value of this tradename would have resulted in an additional impairment charge of $ 2 million.

In addition, one tradename in the Home Solutions segment, one tradename in the Learning and Development segment, and one tradename in the Outdoor and Recreation Segment had fair values within 10% of their associated carrying values of $ 68 million, $ 36 million, and $ 58 million, respectively.

A hypothetical increase of 100 basis points in the discount rate used in the discounted cash flows to estimate fair values of these tradenames would have resulted in additional impairment charges of $ 7 million, $ 5 million, and $ 3 million, respectively.

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

The table below summarizes the balance of other intangible assets, net and the related amortization periods using the straight-line method and attribution method at December 31, 2023 and 2022 (in millions):

December 31, 2023 December 31, 2022

Amount Accumulated

Amortization Net

Amount Accumulated

Amortization Net

Gross Carrying Amount Accumulated Amortization Net Book

Value Gross Carrying Amount Accumulated Amortization Net Book

Value Amortization

Tradenames - indefinite life $ 1,689 $ — $ 1,689 $ 2,219 $ — $ 2,219 N/A

Tradenames - indefinite life (1)

$ 1,535 $ — $ 1,535 $ 1,689 $ — $ 1,689 N/A

Tradenames - other (1)

232 ( 105 ) 127 160 ( 79 ) 81 2 - 15

Capitalized software 628 ( 512 ) 116 602 ( 481 ) 121 3 - 12

2 unchanged sentences

$ 3,495 $ ( 1,007 ) $ 2,488 $ 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 of 2023 as finite-lived tradenames with useful lives ranging from five to ten years .

Amortization expense for intangible assets was $ 109 million, $ 100 million and $ 120 million in 2023, 2022 and 2021, respectively.

2 unchanged sentences

Thereafter 538

The Company continues to evaluate its brand strategy including the assessment of indefinite-lived criteria which may impact the future estimated intangible amortization.

Footnote 8 — Other Accrued Liabilities

3 unchanged sentences

Accrued self-insurance liabilities, contingencies and warranty 92 99

Accrued marketing and freight expenses 73 59

Accrued interest expense 63 56

Accrued income taxes 89 53

Accrued interest expense 74 63

Accrued marketing and freight expenses 71 73

Other 268 227

13 unchanged sentences

5.500 % senior notes due 2046

5.50 % senior notes due 2046

Revolving credit facility 131 225

5 unchanged sentences

Long-term debt $ 4,575 $ 4,756

On October 19, 2022, the Company redeemed its 3.85 % senior notes due April 2023 (the “April 2023 Notes”) at a redemption price equal to 100.002 % of the outstanding aggregate principal amount of the notes, plus accrued and unpaid interest to the date of the redemption.

The total consideration was approximately $ 1.09 billion, and the Company recorded a debt extinguishment loss of $ 1 million.

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

The Company received proceeds of approximately $ 989 million, net of fees and expenses paid.

The September 2027 Notes and the September 2029 Notes are subject to similar restrictive and financial covenants as the Company's existing senior notes, however, they are not subject to the interest rate adjustment or coupon step up provisions of certain other notes described below.

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

or (ii) at any time on or after three months prior to respective maturity dates, at a redemption price equal to 100 % of the principal amount of the notes being redeemed plus accrued and unpaid interest to the redemption dates.

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

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

(“S&P”) and Moody’s Corporation (“Moody’s”) in 2019 and 2020, respectively, certain of the Company’s outstanding senior notes currently aggregating to approximately $ 3.1 billion were subject to an interest rate adjustment of 25 basis points for each downgrade, totaling 50 basis points.

In addition, the Company’s ability to borrow from the commercial paper market on terms it deemed acceptable or favorable was eliminated and its cost of borrowing increased.

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

On February 11, 2022, S&P upgraded the Company’s debt rating to “BBB-” from “BB+”.

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

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

In addition, the interest rate on the relevant senior notes decreased by 25 basis points, reducing the Company’s interest expense by approximately $ 8 million on an annualized basis (approximately $ 7 million impact in 2022).

However, certain of the Company’s outstanding senior notes aggregating to approximately $ 3.1 billion are still subject to an interest rate adjustment of 25 basis points in connection with the Moody’s downgrade of the Company's debt rating in 2020.

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.

On August 21, 2023, Moody's Corporation (“Moody’s”) downgraded the Company’s debt ratings to “Ba2”.

As a result of Moody’s downgrade, certain of the Company’s outstanding senior notes currently aggregating to approximately $ 3.1 billion (the “Coupon-Step Notes”) 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 $ 2 million in 2023).

On August 3, 2023, S&P Global Inc.

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

In March 2023, S&P had also downgraded the Company’s debt ratings to “BB+”.

As a result of the S&P downgrades, the Company’s Coupon-Step Notes are subject to an aggregated interest rate adjustment of 50 basis points.

The change to the interest rate due to the downgrade will increase the Company’s interest expense by approximately $ 15 million on an annualized basis (approximately $ 8 million in 2023).

Furthermore, as a result of the March 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 9, 2024, Moody’s downgraded the Company’s senior unsecured debt rating to “Ba3”, subjecting the Coupon-Step Notes to an additional interest rate adjustment of 25 basis points.

The change to the interest rate due to the downgrade will further increase the Company’s interest expense by approximately $ 8 million on an annualized basis (approximately $ 6 million in 2024).

On February 14, 2024, S&P downgraded the Company’s debt ratings to “BB-”, subjecting the Company’s Coupon-Step Notes to an additional interest rate adjustment of 25 basis points, which will increase interest expense by approximately $ 8 million on an annualized basis (approximately $ 6 million in 2024).

The S&P and Moody’s downgrades will increase the Company’s annual interest expense by approximately $ 39 million.

On February 14, 2023, Fitch Ratings downgraded the Company’s Long-Term Issuer Default Rating to “BB”, then to “B+” on November 1, 2023.

These downgrades did not impact the interest rates on any of the Company’s senior notes.

Receivables Facility

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

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

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

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

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

At December 31, 2022, the Company had $ 35 million outstanding under the Securitization Facility.

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

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

The Securitization Facility matured on October 2, 2023 and was terminated thereafter.

Revolving Credit Facility

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

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

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

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

At December 31, 2022, the Company has $ 225 million of outstanding borrowings under the Credit Revolver and $ 359 million in commercial paper borrowings.

As of December 31, 2023, the Company maintained a $ 1.5 billion Credit Revolver maturing in August 2027.

On March 27, 2023, the Company entered into the First 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 First Amendment, and (ii) lower the Interest Coverage Ratio, as defined in the First 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 December 31, 2022, the Company had approximately $ 22 million of outstanding standby letters of credit issued against the Credit Revolver, with a net availability of approximately $ 1.25 billion.

The Company was in compliance with all of its debt covenants at December 31, 2022.

At December 31, 2023, the Company had $ 131 million of outstanding borrowings under the Credit Revolver and approximately $ 20 million of outstanding standby letters of credit issued against the Credit Revolver, with a net availability of approximately $ 1.3 billion.

As disclosed in the Company’s Current report on Form 8-K filed with the SEC on February 9, 2024, the Company, certain of its subsidiaries, as subsidiary borrowers, and certain of its subsidiaries, as subsidiary guarantors, entered into the Second Amendment.

The Second Amendment, among other things, (i) reduces the commitments of the lenders from $ 1.5 billion to $ 1.0 billion, (ii) replaces the Company’s existing Total Indebtedness to Total Capitalization and Interest Coverage Ratio financial covenants with new financial covenants testing the Company’s Collateral Coverage Ratio and Total Net Leverage Ratio (each as defined in the Second Amendment), (iii) requires the Company and the Guarantors to guarantee all obligations under the Credit Revolver including, without limitation, obligations in respect of extensions of credit to any of the borrowers, certain hedging obligations, certain cash management obligations, and certain supply chain financing obligations, and (iv) requires the Company and the other Guarantors to grant a lien and security interest in certain of its assets consisting of eligible accounts receivable, eligible inventory, eligible equipment and eligible intellectual property, and all products and proceeds of the foregoing.

Future Debt Maturities

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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 in 2022 and 2021 were approximately 4.3 % and 4.7 %, respectively.

The weighted average interest rate for short term debt in 2022 was approximately 4.0 %.

Weighted average interest rates for the years ended December 31, are as follows:

2023 2022 2021

Total debt 5.2 % 4.3 % 4.7 %

Short-term debt 6.9 % 4.0 % 0.9 %

At December 31, 2023 and 2022, unamortized deferred debt issue costs were $ 24 million and $ 30 million, respectively.

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The carrying amounts of all other significant debt approximates fair value.

Net Investment Hedge

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

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

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

See Footnote 10 for disclosures regarding the Company’s derivative financial instruments.

Footnote 10 — Derivatives and Foreign Currency Operations

Derivative financial instruments are generally used to manage certain commodity, interest rate and foreign currency risks.

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

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

Derivative financial instruments are generally used to manage certain interest rate and foreign currency risks.

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

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

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

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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 4.000 % 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 London Interbank Offered Rate (“LIBOR”) to Secured Overnight Financing Rate (“SOFR”), effective June 1, 2023, accounted for in accordance with ASC 848 (see Footnote 1 of the Notes to Consolidated Financial Statements 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 two cross-currency swaps with notional amounts of $ 500 million each, one maturing in September 2027 and the other in September 2029.

During the third quarter of 2022, the Company entered into two additional cross-currency swaps with notional amounts of $ 500 million each, 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.

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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 December 31, 2022, the Company had approximately $ 379 million notional amount outstanding of forward foreign currency contracts that are designated as cash flow hedges of forecasted inventory purchases and sales.

The effective portion of the gains or losses on these derivatives is deferred as a component of accumulated other comprehensive income (loss) (“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 December 31, 2023, the Company had approximately $ 348 million

notional amount outstanding of forward foreign currency contracts that are designated as cash flow hedges of forecasted inventory purchases and sales.

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

At December 31, 2022, the Company had approximately $ 926 million notional amount outstanding of these foreign currency contracts that are not designated as effective hedges for accounting purposes and have maturity dates through August 2023.

At December 31, 2023, the Company had approximately $ 1.3 billion notional amount outstanding of these foreign currency contracts that are not designated as effective hedges for accounting purposes and have maturity dates through July 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 Consolidated Statement of Operations.

6 unchanged sentences

Fair Value Hedges

Interest rate swaps Other assets — 3

Interest rate swaps Other accrued liabilities ( 15 ) ( 14 )

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Total $ ( 120 ) $ ( 27 )

The Company recognized income (expense) of $( 13 ) million, $ 13 million and $( 9 ) million in other (income) expense, net, during 2022, 2021 and 2020, respectively, related to derivatives that are not designated as hedging instruments.

The Company recognized expense of $ 17 million, $ 13 million and income of $ 13 million in other (income) expense, net, during 2023, 2022 and 2021, respectively, related to derivatives that are not designated as hedging instruments.

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

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

The following table presents pre-tax gain and (loss) activity for 2022, 2021 and 2020 related to derivative financial instruments designated as effective hedges:

The following table presents pretax gain and (loss) activity for 2023, 2022 and 2021 related to derivative financial instruments designated as effective hedges:

2023 2022 2021

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

At December 31, 2022, deferred net gains of approximately $ 10 million within AOCL are expected to be reclassified to earnings over the next twelve months.

At December 31, 2023, deferred net losses of approximately $ 13 million within AOCL are expected to be reclassified to earnings over the next twelve months.

Foreign Currency Operations

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The SERP is primarily funded through a trust agreement with a trustee that owns life insurance policies on both active and former key employees with aggregate net death benefits of $ 300 million.

At December 31, 2022 and 2021, the life insurance contracts were accounted for using the investment method and had a cash surrender value of $ 141 million and $ 142 million, respectively, and are included in other assets in the Consolidated Balance Sheets.

premiums paid and proceeds received associated with the life insurance policies are included as investing activities in the Consolidated Statements of Cash Flows.

At December 31, 2023 and 2022, the life insurance contracts were accounted for using the investment method and had a cash surrender value of $ 141 million, for both periods, and are included in other assets in the Consolidated Balance Sheets.

All premiums paid and proceeds received associated with the life insurance policies are included as investing activities in the Consolidated Statements of Cash Flows.

The projected benefit obligation was $ 77 million and $ 81 million at December 31, 2023 and 2022, respectively.

The SERP liabilities are included in the pension table below;

SERP liabilities are included in the pension table hereafter;

however, the value of the Company’s investments in the life insurance contracts, cash and mutual funds are excluded from the table, as they do not qualify as plan assets.

The Company’s matching contributions to the Company's contributory 401(k) plans were $ 37 million, $ 36 million and $ 35 million for 2022, 2021 and 2020, respectively.

The Company’s matching contributions to the Company’s contributory 401(k) plans were $ 37 million for both 2023 and 2022 and $ 36 million for 2021.

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.

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 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 September 2023, the Company completed the “buy-out” of the remaining PBO of the aforementioned plan through the execution of a Deed Poll Agreement and a Deed of Assignment with an insurance company.

In connection with these transactions, the Company recorded a pretax settlement loss of $ 66 million in other (income) expense, net, in the Company’s Consolidated Statement of Operations, related to the recognition of previously unrecognized actuarial losses reclassified from AOCL to losses.

Defined Benefit Plan Partial Buyout

During the fourth quarter of 2020, the Company entered into an agreement with an insurance company to purchase a group annuity contract to settle approximately $ 157 million of projected benefit obligations for approximately 44 % of the retirees in one of its U.S.

In October 2023, the Company entered into an agreement with an insurance company to purchase a group annuity contract to settle approximately $ 163 million of PBO for approximately 55 % of retirees in one of its U.S.

defined benefit pension plans.

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

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

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

The transaction or the transfer of the pension liability to the insurance company will be funded with the plan's existing assets.

In November 2023, the Company completed the “buy-out” and in connection with the transaction, the Company recorded a pretax settlement loss of $ 60 million in other (income) expense, net, in the Company’s Consolidated Statement of Operations, related to the recognition of previously unrecognized actuarial losses reclassified from AOCL to losses.

Defined Benefit Pension Plans

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Interest cost 44 25 15 8 1 1

Actuarial (gain) loss ( 247 ) ( 53 ) ( 137 ) ( 14 ) ( 8 ) ( 7 )

Amendments — — — 1 — —

Actuarial gain ( 24 ) ( 247 ) ( 13 ) ( 137 ) ( 2 ) ( 8 )

Currency translation — — 14 ( 56 ) — —

Benefits paid ( 79 ) ( 80 ) ( 20 ) ( 23 ) ( 3 ) ( 4 )

Acquisitions and dispositions, net — — — — — —

Curtailments, settlements and other ( 164 ) — ( 172 ) ( 2 ) — —

55 unchanged sentences

Amortization:

Prior service credit — — ( 2 )

Net actuarial gain ( 6 ) ( 5 ) ( 3 )

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

equities approximately 10 % to 30 %;

equities approximately zero to 20 %;

fixed income approximately 80 % to 100 %;

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A reconciliation of the change in fair value of the defined benefit plans’ assets using significant unobservable inputs (Level 3) for 2023 and 2022 is as follows (in millions):

Balance December 31, 2020 $ 10

Unrealized losses ( 1 )

Balance December 31, 2021 9

Balance at December 31, 2021 $ 9

Unrealized losses ( 101 )

Purchases, sales, settlements and other, net 286

Balance December 31, 2022 $ 194

Balance at December 31, 2022 194

Purchases, sales, settlements and other, net ( 184 )

Balance at December 31, 2023 $ 10

Contributions and Estimated Future Benefit Payments

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Foreign exchange — 2.0 —

Other tax credits 1.8 1.0 ( 0.4 )

Return to provision 1.5 ( 11.3 ) ( 1.7 )

Other ( 1.9 ) 6.6 0.4

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The Company does not assert indefinite reinvestment on a portion of its unremitted earnings of certain foreign subsidiaries as of December 31, 2023 and is recognizing deferred income taxes of approximately $ 12 million, primarily related to the future withholding tax effects of those unremitted foreign earnings.

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

state taxes and certain tax impacts relating to foreign currency exchange effects on any future repatriations

of the unremitted earnings.

With respect to unremitted earnings of $ 6.0 billion and any other additional outside basis differences

where the Company is continuing to assert indefinite reinvestment, any future reversals could be subject to additional foreign withholding taxes, U.S.

state taxes and certain tax impacts relating to foreign currency exchange effects on any future repatriations of the unremitted earnings.

The determination of any unrecognized deferred tax liabilities on the amount of unremitted earnings and other outside basis differences where the Company is asserting indefinite reinvestment is not practicable.

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Operating lease liabilities 153 169

Capitalized research and development expenses 68 36

Interest expense carryforward 91 28

Other 122 116

7 unchanged sentences

Operating lease assets ( 140 ) ( 154 )

foreign inclusion recapture ( 6 ) ( 62 )

Other ( 35 ) ( 77 )

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Noncurrent deferred tax liabilities ( 241 ) ( 520 )

Total $ 290 $ 386

Net deferred tax assets $ 565 $ 290

At December 31, 2023, the Company has net operating losses (“NOLs”) of approximately $ 1.3 billion, comprised of $ 150 million in the U.S.

and $ 941 million outside of the U.S.

and $ 1.1 billion outside of the U.S.

Approximately $ 841 million of these NOLs do not expire and approximately $ 447 million expire between 2024 and 2043.

Additionally, approximately $ 15 million of U.S.

federal NOLs are subject to varying limitations on their use under Section 382 of the Internal Revenue Code of 1986, as amended.

Of these U.S.

federal NOLs, approximately $ 12 million are not reflected in the consolidated financial statements and approximately $ 32 million were utilized in the current year.

At December 31, 2022, the Company has approximately $ 1.4 billion of post-apportioned state NOLs, which expire between 2023 and 2042.

Additionally, approximately $ 2 million of post-apportioned state NOLs are subject to varying limitations on their use under Section 382 of the Internal Revenue Code of 1986, as amended.

Of these post-apportioned state NOLs, approximately $ 2 million are not reflected in the consolidated financial statements.

The majority of the U.S.

foreign tax credits are recognized as a deferred tax asset at December 31, 2022 and were generated at December 31, 2018 and can be carried back one year and carried forward ten years.

During 2023, the Company utilized approximately $ 12 million of U.S.

federal NOLs that were not previously reflected in the consolidated financial statements.

As of December 31, 2023, all U.S.

federal NOLs are reflected in the consolidated financial statements.

At December 31, 2023, the Company has approximately $ 1.3 billion of post-apportioned state NOLs, of which $ 147 million do not expire and $ 1.1 billion expire between 2024 and 2043.

The Company has U.S.

foreign tax credits of $ 16 million which expire between 2028 and 2033.

The Company has approximately $ 126 million of U.S.

capital loss carryforwards of which approximately $ 84 million were generated at December 31, 2020, $ 42 million were generated at December 31, 2021, and can be carried back three years and carried forward five years.

The Company has approximately $ 273 million of post-apportioned state capital loss of which $ 128 million was generated at December 31, 2018, $ 139 million was generated at December 31, 2020 and $ 6 million was generated at December 31, 2021.

The Company has approximately $ 188 million of post-apportioned state capital loss of which $ 26 million was generated at December 31, 2018, $ 146 million was generated at December 31, 2020, $ 13 million was generated at December 31, 2021 and $ 3 million was generated at December 31, 2022.

Of these post-apportioned state capital loss carryforwards, $ 131 million can be carried back three years and carried forward five years, and $ 57 million can be carried forward five years.

The Company had a noncurrent income tax receivable of $ 290 million and $ 271 million as of December 31, 2023 and 2022, respectively.

In 2023, the Company paid $ 19 million of tax for the one-time toll charge (defined hereafter) incurred in 2017 related

to the Tax Credits and Jobs Act due to the IRS having not yet processed the amended 2017 tax return.

During the year ended December 31, 2022, the Company amended its 2017 U.S.

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

The Company also paid $ 10 million of tax for the one-time toll charge incurred in 2017 related to the Tax Credits and Jobs Act due to the IRS (defined below) not yet processing the amended 2017 tax return.

The Company also paid $ 10 million of tax for the one-time toll charge.

This resulted in an increase in noncurrent income tax receivable of approximately $ 271 million, a decrease in income taxes payable of approximately $ 95 million, and an increase in deferred tax liabilities of approximately $ 356 million.

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

At December 31, 2022, the Company has a valuation allowance recorded against certain deferred tax assets, primarily state and foreign NOLs and various income tax credits, which the Company believes do not meet the more likely than not threshold to be realized due to uncertainty of future taxable income within the applicable tax jurisdictions.

At December 31, 2023, the Company has a valuation allowance recorded against certain deferred tax assets, primarily state and foreign NOLs, foreign capital losses and U.S.

foreign tax credits, which the Company believes do not meet the more likely than not threshold to be realized due to uncertainty of future taxable income within the applicable tax jurisdictions.

A valuation allowance of $ 184 million and $ 148 million was recorded against certain deferred tax asset balances at December 31, 2023 and 2022, respectively.

For 2022, the Company recorded a net valuation allowance decrease of $ 38 million, primarily related to NOLs in Brazil, China and Luxembourg, and other miscellaneous changes in the U.S., state and non-U.S.

For 2023, the Company recorded a net valuation allowance increase of $ 36 million, primarily related to NOLs in Switzerland, Luxembourg, and Argentina and capital losses in Hong Kong netted with a write-off of NOLs and the related valuation allowance resulting from the liquidation of various subsidiaries in Luxembourg, Netherlands and China, as well as other miscellaneous changes in the U.S., state and non-U.S.

valuation allowances related to ongoing operations.

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

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

For 2022, the Company recorded a net valuation allowance decrease of $ 38 million, primarily related to NOLs in Brazil, China and Luxembourg and other miscellaneous changes in the U.S., state and non-U.S.

valuation allowance related to ongoing operations.

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Unrecognized tax benefits, December 31, $ 463 $ 476 $ 457

If recognized, $ 412 million of unrecognized tax benefits at December 31, 2022, and $ 387 million at December 31, 2021, and 2020 would affect the effective tax rate.

If recognized, $ 387 million, $ 412 million and $ 387 million of unrecognized tax benefits at December 31, 2023, 2022 and 2021, respectively, would affect the effective tax rate.

The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as a component of income tax expense.

1 unchanged sentence

The Company anticipates approximately $ 39 million of unrecognized tax benefits will reverse within the next 12 months.

It is reasonably possible due to activities of various worldwide taxing authorities, including proposed assessments of additional tax and possible settlement of audit issues, that additional changes to the Company’s unrecognized tax benefits could occur.

It is reasonably possible due to statutes of limitation expiration, as well as activities of various worldwide taxing authorities, including proposed assessments of additional tax and possible settlement of audit issues, that additional changes to the Company’s unrecognized tax benefits could occur.

In the normal course of business, the Company is subject to audits by worldwide taxing authorities regarding various tax liabilities.

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With few exceptions, the Company is no longer subject to other income tax examinations for years before 2016.

On June 18, 2019, the U.S.

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

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

On August 21, 2020, the U.S.

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

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

personal holding company income for certain dividends received from controlled foreign corporations.

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

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

Therefore, the Company has not accounted for the effects of the Regulations in its Consolidated Financial Statements for the period ending December 31, 2022.

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

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

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

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

The Company intends to vigorously defend its position.

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

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

Footnote 13 — Leases

10 unchanged sentences

For finance leases, lease payments are allocated between interest expense and reduction of the liability in accordance with an amortization schedule.

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

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

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

Assets acquired under finance leases are reported in property, plant and equipment, net in the Consolidated Balance Sheets.

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

11 unchanged sentences

Components of lease expense for the years ended December 31, are as follows (in millions):

2023 2022 2021

Operating lease cost:

Operating lease cost (1)

$ 172 $ 172 $ 166

Variable lease costs (2)

11 unchanged sentences

Supplemental cash flow information related to leases for the years ended December 31, are as follows (in millions):

2023 2022 2021

Cash paid for amounts included in the measurement of lease liabilities:

4 unchanged sentences

Maturities of lease liabilities at December 31, 2023, are as follows (in millions):

Leases Finance

2023 $ 145 $ 1

Thereafter 173

2 unchanged sentences

Present value of lease liabilities $ 568

Footnote 14 — Earnings Per Share

Footnote 14 — Weighted Average Shares Outstanding

The computations of the weighted average shares outstanding for the years ended December 31, are as follows (in millions):

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(1) For 2023, 1.5 million potentially dilutive share-based awards were excluded as their effect would be anti-dilutive.

At December 31, 2022, there were 0.1 million potentially dilutive restricted stock awards with performance-based targets that were not met and as such, have been excluded from the computation of diluted earnings per share.

At December 31, 2021 and 2020, there were no potentially dilutive restricted stock awards with performance-based targets that were not met.

At December 31, 2023 and 2022, there were 0.8 million and 0.1 million potentially dilutive restricted stock awards with performance-based targets that were not met and as such, have been excluded from the computation of diluted earnings per share.

At December 31, 2021, there were no potentially dilutive restricted stock awards with performance-based targets that were not met.

For 2023, 2022 and 2021 dividends and equivalents for share-based awards expected to be forfeited did not have a material impact on net income for basic and diluted earnings per share.

Share Repurchase Program

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

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

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

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

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

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,

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

Footnote 15 — Share-Based Compensation

Stock-based compensation expense is adjusted for estimated forfeitures and is recognized on a straight-line basis over the requisite service period of the award, which is generally three years for stock options and one to three years for restricted stock units and performance-based restricted stock units.

Stock-based compensation expense is adjusted for estimated forfeitures and is recognized on a straight-line basis over the requisite service period of the award, which is generally three years for stock options and one to three years for time-based and performance-based restricted stock units.

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

On May 19, 2023, the Company adopted the 2023 Special Incentive Program (the “SIP”) to incentivize performance against multi-year goals and to aid in the retention of certain Company executives.

On July 5, 2023, pursuant to the SIP, the Company granted performance-based restricted stock unit awards to the Company’s President and Chief Executive Officer (“CEO”) and the Company’s Chief Financial Officer (“CFO”) that vest on February 28, 2026, subject to the achievement of the applicable performance measures.

On the same date, the Company granted time-based and performance-based restricted stock unit awards to certain key executives, other than the CEO and CFO, pursuant to the SIP.

The time-based restricted stock units granted to such other executives pursuant to the SIP will fully vest on the one-year anniversary of the date of grant, while the performance-based restricted stock units granted to such other executives pursuant to the SIP will vest 70 % on the two-year anniversary of the grant date and 30 % on the three-year anniversary of the grant date, subject to the achievement of applicable performance measures.

The Company maintains a 2013 Incentive Plan and a 2022 Incentive Plan (collectively, the “Incentive Plans”), which allow for grants of stock-based awards.

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Shares Weighted

Share Weighted

Remaining Life

(years) Aggregate

Share Weighted Average

(in years) Aggregate

Outstanding at December 31, 2022 6.5 $ 23

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During 2023, the Company awarded 0.5 million time-based stock options with an aggregate grant date fair value of $ 2 million.

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

These stock options entitle recipients to purchase shares of the Company’s common stock at an exercise price equal to the fair market value of the underlying shares as of the grant date and cliff vest on the fifth anniversary of the grant date for certain awards or the earlier of the first anniversary of the grant date or the date immediately preceding the Company’s 2024 annual meeting of shareholders for other awards.

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

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Expected dividend yield 4.4 % 5.1 %

The total intrinsic value of options exercised was immaterial in 2022, $ 2 million in 2021 and immaterial in 2020.

The total intrinsic value of options exercised was immaterial in 2023 and 2022 and $ 2 million in 2021.

Time-Based and Performance-Based Restricted Stock Units

Time-based restricted stock unit awards (“Time-Based RSUs”) represent the right to receive unrestricted shares of stock based on continued employment and are generally subject to forfeiture if employment terminates prior to vesting, except a termination for death, disability or retirement.

Time-based RSU awards to employees generally cliff-vest in three years or vest ratably over three years from the date of grant.

In the case of retirement (as defined in the award agreement), awards vest in part depending on the employee’s age and years of service.

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

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

Time-based restricted stock unit awards (“Time-Based RSUs”), including such awards granted under the SIP, represent the right to receive unrestricted shares of stock based on continued employment and are generally subject to forfeiture if employment terminates prior to the vesting date, except a termination for death, disability or retirement.

Time-Based RSU awards to employees primarily vest over a one to three-year period.

In the case of retirement (as defined in the award agreement), Time-Based RSUs generally vest in part depending on the employee’s age and years of service.

Time-Based RSUs have dividend equivalents credited to the recipient that are paid only to the extent the applicable service criteria is met, the Time-Based RSUs vest and the related stock is issued.

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

Such awards are generally subject to forfeiture if employment terminates prior to vesting, except a termination for death, disability or retirement.

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

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

In the case of retirement (as defined in the award agreement), Performance-Based RSUs vest in whole or part depending on the employee’s age and years of service, subject to the satisfaction of the applicable performance criteria.

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

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

For restricted stock units with performance conditions that are based on stock price (“Stock-Price Based RSUs”), the grant date fair value of certain Stock-Price based RSUs is estimated using a Monte Carlo simulation, with the primary input into such valuation being the expected future volatility of the Company’s common stock, and if applicable, the volatilities of the common stocks of the companies in the Company’s peer group, upon which the relative total shareholder return performance is measured.

Performance-based RSUs are generally subject to forfeiture if employment terminates prior to vesting.

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

Performance-Based RSUs have dividend equivalents credited to the recipient that are paid only to the extent the applicable service and performance criteria are met, the Performance-Based RSUs vest and the related stock is issued .

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

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

With respect to Performance-Based RSUs, dividend equivalents are credited to the recipient and are paid only to the extent the applicable performance criteria are met and the Performance-Based RSUs vest and the related stock is issued.

The following table summarizes the changes in the number of outstanding restricted stock units for 2023 (shares in millions):

Units Weighted-

Average Grant

Date Fair Value

Unit Weighted

Outstanding at December 31, 2022 4.5 $ 24

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Outstanding at December 31, 2023 12.5 $ 14

Expected to vest at December 31, 2022

(1) The Grant Adjustment primarily relates to an adjustment in the quantity of Stock-Price Based RSUs ultimately vested during 2022 that were dependent on the level of achievement of the specified performance conditions.

Expected to vest, end of year 12.5 $ 12

(1) The Grant Adjustment primarily relates to an adjustment in the quantity of Performance-Based RSUs ultimately vested during 2023 that were dependent on the level of achievement of the specified performance conditions.

The weighted-average grant-date fair values of awards granted were $ 26 and $ 25 per share in 2022 and 2021, respectively.

The fair values of awards that vested were $ 13 million, $ 39 million and $ 32 million in 2023, 2022 and 2021, respectively.

During 2022, the Company awarded 0.8 million Time-Based RSUs, which had an aggregate grant date fair value of $ 21 million, that generally cliff-vest in three years or vest in equal annual installments over a three-year period.

During 2022, the Company also awarded 1.1 million Performance-Based RSUs with an aggregate grant date fair value of $ 30 million, that generally entitle the recipients to shares of the Company’s common stock 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 2023, the Company awarded 4.4 million Time-Based RSUs, which had an aggregate grant date fair value of $ 54 million, that generally vests in annual installments over a one to three-year period.

During 2023, the Company also awarded 6.1 million Performance-Based RSUs with an aggregate grant date fair value of $ 62 million, that generally entitle the recipients to shares of the Company’s common stock over a two to three-year vesting period.

The actual number of shares that will ultimately be paid upon vesting is dependent on the level of achievement of the specified performance conditions.

The following table summarizes the Company’s total unrecognized compensation cost related to stock-based compensation at December 31, 2023:

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At December 31, 2023, the fair value of the equity investment was $ 12 million.

For equity investments with readily determinable fair values, the Company recorded unrealized gain of $ 1 million for 2022 and $ 2 million for 2021 and immaterial unrealized loss in 2020, within other (income) expense, net in the Consolidated Statement of Operations.

For equity investments with readily determinable fair values, the Company recorded unrealized immaterial gain for 2023, $ 1 million and $ 2 million gain for 2022 and 2021, respectively, within other (income) expense, net in the Consolidated Statement of Operations.

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

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The most significant unobservable inputs (Level 3) used to estimate the fair values of the Company’s reporting unit goodwill and indefinite-lived intangible assets are discount rates, which range from 8.0 % to 10.0 % for reporting unit goodwill and 8.0 % to 13.5 % for indefinite-lived intangible assets.

During the fourth quarter of 2022, two tradenames in the Home 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 fourth quarter of 2021, a tradename within the Learning and Development segment was measured at fair value of $ 47 million.

During the fourth quarter of 2023, two tradenames in the Home and Commercial Solutions segment were measured at fair values of $ 491 million and $ 53 million.

During the fourth quarter of 2022, two tradenames within the Home and Commercial Solutions segment and one in the Learning and Development segment were measured at fair values of $ 68 million, $ 25 million and $ 36 million, respectively.

See Footnotes 1 and 7 for further information.

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Footnote 17 — 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 unit to Resideo Technologies, Inc.

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

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

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

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

Segment Key Brands Description of Primary Products

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

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

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

Commercial cleaning and maintenance solutions;

closet and garage organization;

hygiene systems and material handling solutions;

Home Appliances Calphalon, Crockpot, Mr.

Coffee, Oster and Sunbeam Household products, including kitchen appliances

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

household products, including kitchen appliances;

food and home storage products;

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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;

Learning and Development Dymo, Elmer’s, EXPO, Graco, NUK, Paper Mate, Parker and Sharpie Baby gear and infant care products;

writing instruments, including markers and highlighters, pens and pencils;

art products;

activity-based adhesive and cutting products and labeling solutions

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

activity-based products and labeling solutions

Outdoor and Recreation Campingaz, Coleman, Contigo and Marmot Active lifestyle products for outdoor and outdoor-related activities;

technical apparel and on-the-go beverageware

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

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

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

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

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Net sales (1)

Commercial Solutions (3)

Home and Commercial Solutions (3)

$ 4,428 $ 5,194 $ 6,077

Home Appliances 1,390 1,738 1,539

Home Solutions 2,113 2,386 2,138

Learning and Development 2,706 2,950 3,028

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Operating income (loss) (2)

Commercial Solutions (3)

Home and Commercial Solutions (3)

$ 37 $ ( 212 ) $ 566

Home Appliances ( 47 ) 70 ( 238 )

Home Solutions ( 308 ) 337 ( 4 )

Learning and Development 213 593 600

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Depreciation and amortization

Commercial Solutions (3)

Home and Commercial Solutions (3)

$ 163 $ 145 $ 169

Home Appliances 18 24 20

Home Solutions 84 88 93

Learning and Development 71 60 57

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Impairment of goodwill and intangible assets

Commercial Solutions $ — $ 29 $ 320

Home Appliances 15 — 287

Home Solutions 429 — 302

Home and Commercial Solutions (3)

$ 76 $ 444 $ 29

Learning and Development 241 30 31

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Capital expenditures

Commercial Solutions (3)

Home and Commercial Solutions (3)

$ 93 $ 107 $ 131

Home Appliances 12 18 12

Home Solutions 45 46 42

Learning and Development 60 70 73

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Segment assets

Commercial Solutions (3)

$ 1,902 $ 2,589

Home Appliances 811 1,055

Home Solutions 2,530 3,140

Home and Commercial Solutions $ 4,713 $ 5,243

Learning and Development 4,111 4,494

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

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

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

(4) Geographic sales information is based on the region from which the products are shipped and invoiced.

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The Company’s largest customer, Walmart Inc.

and subsidiaries (“Walmart”), accounted for approximately 14 % of net sales in 2022 and 15 % of net sales in each of 2021 and 2020.

Amazon, the Company's second largest customer, accounted for approximately 13 % of net sales in each of 2022 and 2021 and 12 % of net sales in 2020.

and subsidiaries (“Walmart”), accounted for approximately 15.0 %, 14.0 % and 15.0 % of net sales in 2023, 2022 and 2021, respectively.

Amazon, the Company’s second largest customer, accounted for approximately 13.0 % of net sales in each of 2023, 2022 and 2021.

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

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Commercial $ 1,434 $ 1,582 $ 1,558

Connected Home and Security 109 395 357

Commercial Solutions 1,691 1,953 1,859

Home Appliances 1,390 1,738 1,539

Food 1,228 1,295 1,220

Kitchen 2,244 2,618 3,033

Home Fragrance 750 885 1,091

Home Solutions 2,113 2,386 2,138

Connected Home and Security — 109 395

Home and Commercial Solutions 4,428 5,194 6,077

Baby 989 1,197 1,265

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Outdoor and Recreation 999 1,315 1,484

TOTAL $ 9,459 $ 10,589 $ 9,385

$ 8,133 $ 9,459 $ 10,589

North America

Commercial Solutions $ 1,232 $ 1,452 $ 1,387

Home Appliances 678 976 901

Home Solutions 1,715 1,891 1,735

Home and Commercial Solutions $ 2,942 $ 3,625 $ 4,319

Learning and Development 1,937 2,156 2,172

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International

Commercial Solutions $ 459 $ 501 $ 472

Home Appliances 712 762 638

Home Solutions 398 495 403

Home and Commercial Solutions $ 1,486 $ 1,569 $ 1,758

Learning and Development 769 794 856

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$ 2,691 $ 2,940 $ 3,224

Commercial Solutions $ 1,691 $ 1,953 $ 1,859

Home Appliances 1,390 1,738 1,539

Home Solutions 2,113 2,386 2,138

Home and Commercial Solutions $ 4,428 $ 5,194 $ 6,077

Learning and Development 2,706 2,950 3,028

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$ 8,133 $ 9,459 $ 10,589

Beginning in January 2023, the Company will combine its previously reported Commercial Solutions, Home Appliances and Home Solutions operating segments into one operating segment, Home and Commercial Solutions.

This change by the CODM was driven by the implementation of a new operating model which is intended to drive further simplification and unlock additional efficiencies and synergies within the Company.

The Learning and Development and Outdoor and Recreation operating segments will remain as the Company’s other two operating segments.

The Company will recast prior period comparable results in its first quarter 2023 reporting to conform to this operating segment change.

Footnote 18 — Litigation and Contingencies

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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 documen ts, testimony and information.

In late January 2023, the Company began 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 Consolidated Financial Statements.

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.

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

Since January 2023, the Company had been discussing with the SEC the possibility of reaching a settlement to resolve the investigation, which related to the time period between third quarter of fiscal year 2016 and second quarter of fiscal year 2017.

On September 29, 2023, the Company entered into a settlement with the SEC, which concluded the investigation of the Company.

Under the terms of the settlement, the Company neither admitted nor denied the SEC's findings and agreed to pay a civil penalty of approximately $ 13 million, which did not have a material effect on the Company’s 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 Taxes.

Treasury and the IRS’s temporary regulations under IRC Section 245A, as enacted by the 2017 U.S.

Tax Reform Legislation and IRC Section 954(c)(6) (the “Temporary Regulations”), as well as the August 21, 2020 finalized versions of the Temporary Regulations .

Securities Litigation

Certain of the Company’s current and former officers and directors have been named in shareholder derivative lawsuits filed in October 2018.

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 were 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.

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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 October 2018 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.

These actions have been consolidated and the case is known as In re Newell Brands Inc.

The Streicher Derivative Action and the Martindale Derivative Action were consolidated into a case 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.

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

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

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

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 is 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 the settlement.

These derivative complaints sought 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 United States District Court for the District of Delaware stayed the Newell Brands Derivative Action and the Weber Derivative Action.

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

On September 5, 2023, the Newell Brands Derivative Action and the Weber Derivative Action were dismissed with prejudice.

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 alleged breaches of fiduciary duty.

The factual allegations underlying these claims were 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 provided 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.

On August 25, 2023, the Superior Court of Hudson County, New Jersey approved the Settlement and dismissed the case with prejudice.

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 December 31, 2022 was $ 34 million which is included in other accrued liabilities and other noncurrent liabilities in the Consolidated Balance Sheet.

The Company’s estimate of environmental remediation costs associated with these matters at December 31, 2023 was $ 41 million which is included in other accrued liabilities and other noncurrent liabilities in the 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.

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

CERCLA Administrative Actions

The Site is 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”).

Unit 2 is geographically subsumed within Unit 4.

Unit 4 Investigation

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

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

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

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

Activity under the 2007 Administrative Order on Consent remains underway.

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

EPA in July 2019 and submitted a final remedial investigation report to the U.S.

EPA in January 2023.

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

In October 2021, the U.S.

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EPA estimates will cost $ 441 million in the aggregate.

Unit 2 Investigation

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

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

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

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

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

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

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

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

2016 Record of Decision and 2021 Record of Decision Remedy Performance

In March 2022, U.S.

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

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

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

EPA Settlement

In September 2017, the U.S.

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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.

The OCC Litigation

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

On January 17, 2024, following review of public comments, the U.S.

EPA filed an amended complaint and lodged a modified Consent Decree.

EPA filed a motion to enter the modified Consent Decree on January 31, 2024.

As of the date of this filing, the Company does not expect

that its allocation in the U.S.

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

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

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

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

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

EPA settlement to conclude.

OCC did not oppose the motion to stay.

There has been no ruling on the motion yet.

The Company Parties continue to vigorously defend the OCC Litigation.

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

The Natural Resource Damage Assessment

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

On January 5, 2024, the Court granted a motion to extend the stay pending the Court’s adjudication of the then anticipated, and currently pending, motion to enter the amended Consent Decree embodying the U.S.

EPA Settlement.

At this time, the Company cannot predict the eventual outcome of the OCC Litigation.

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

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

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

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

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

With respect to the OCC Litigation and Natural Resource Damage Assessment, the Company is currently unable to reasonably estimate the range of possible losses.

Based on currently known facts and circumstances, the Company does not believe that the Lower Passaic River matter is reasonably likely to have a material impact on the Company’s results of operations.

However, in the event of one or more adverse

determinations related to this matter, it is possible that the ultimate liability resulting from this matter and the impact on the Company’s results of operations could be material.

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

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

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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 Consolidated Financial Statements.

During the first quarter of 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 Consolidated Financial Statements.

Although 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 Consolidated Financial Statements, except as otherwise described in this Footnote 18 .

At December 31, 2023, the Company had approximately $ 38 million in standby letters of credit primarily related to the Company’s self-insurance programs, including workers’ compensation, product liability and medical expenses.

Footnote 19 — Supplementary Quarterly Financial Data (Unaudited)

Revisions of Previously Issued Financial Statements

During the fourth quarter of 2022, the Company identified that it changed the designation to a new functional currency incorrectly for one of its legal entities at the beginning of 2022.

Consequently, the Company should have recorded mark to market adjustments for certain account balances in other (income) expense, net in the Condensed Consolidated Statement of Operations.

The impact of this change resulted in additional expense of $ 6 million, $ 13 million and $ 16 million for the three months ended March 31, 2022, June 30, 2022 and September 30, 2022, respectively.

This change also resulted in reclassifications between Accumulated Other Comprehensive Loss and Retained Deficit in the Condensed Consolidated Balance Sheets of $ 6 million, $ 19 million and $ 35 million at March 31, 2022, June 30, 2022 and September 30, 2022, respectively.

The Company concluded the above referenced effects were not material to its previously issued Condensed Consolidated Statements of Operations for the three months ended March 31, 2022, June 30, 2022 and September 30, 2022, respectively, and the Condensed Consolidated Balance Sheets at March 31, 2022, June 30, 2022 and September 30, 2022, respectively, included in the Company’s Quarterly Reports on Form 10-Q filed with the SEC on April 29, 2022, July 29, 2022 and October 28, 2022.

The adjustments did not result in a change to net cash provided by operating activities in the Company’s Condensed Consolidated Statement of Cash Flows for the three, six and nine months ended March 31, 2022, June 30, 2022 and September 30, 2022, respectively.

The following table presents the unaudited Condensed Consolidated Statements of Operations for each quarter of 2022 and 2021 to reflect the impact of the change from LIFO to FIFO (see Footnote 5 ) and for each quarter of 2022 the recast associated with the functional currency revisions (in millions, except per share data):

For the three months ended (Unaudited)

March 31, 2022 June 30, 2022

Impact Impact Impact Impact

As of of Change As As of of Change As

Reported Revision to FIFO Adjusted Reported Revision to FIFO Adjusted

Net sales $ 2,388 $ — $ — $ 2,388 $ 2,534 $ — $ — $ 2,534

Cost of products sold 1,648 — — 1,648 1,709 — ( 11 ) 1,698

Operating income 217 — — 217 317 — 11 328

Other (income) expense, net ( 124 ) 6 — ( 118 ) 8 13 — 21

Income (loss) before income taxes 282 ( 6 ) — 276 254 ( 13 ) 11 252

Income tax provision 48 — — 48 50 — 3 53

Net income (loss) $ 234 $ ( 6 ) $ — $ 228 $ 204 $ ( 13 ) $ 8 $ 199

Weighted average common shares outstanding:

Basic 421.9 421.9 413.8 413.8

Diluted 424.7 424.7 415.7 415.7

Earnings per share:

Basic $ 0.55 $ 0.54 $ 0.49 $ 0.48

Diluted $ 0.55 $ 0.54 $ 0.49 $ 0.48

For the three months ended (Unaudited)

September 30, 2022 December 31, 2022

Impact Impact As Computed Impact Impact

As of of Change As Under of of Change As

Reported Revision to FIFO Adjusted LIFO Revision to FIFO Reported

Net sales $ 2,252 $ — $ — $ 2,252 $ 2,285 $ — $ — $ 2,285

Cost of products sold 1,599 — ( 5 ) 1,594 1,681 — 4 1,685

Operating income (loss) 35 — 5 40 ( 269 ) — ( 4 ) ( 273 )

Other (income) expense, net 8 16 — 24 ( 8 ) — — ( 8 )

Income (loss) before income taxes ( 30 ) ( 16 ) 5 ( 41 ) ( 326 ) — ( 4 ) ( 330 )

Income tax provision (benefit) ( 61 ) — 1 ( 60 ) ( 80 ) — ( 1 ) ( 81 )

Net income (loss) $ 31 $ ( 16 ) $ 4 $ 19 $ ( 246 ) $ — $ ( 3 ) $ ( 249 )

Weighted average common shares outstanding:

Basic 413.6 413.6 413.6 413.6

Diluted 414.6 414.6 413.6 413.6

Earnings (loss) per share:

Basic $ 0.07 $ 0.05 $ ( 0.59 ) $ ( 0.60 )

Diluted $ 0.07 $ 0.05 $ ( 0.59 ) $ ( 0.60 )

Three Months Ended (Unaudited)

March 31, 2021 June 30, 2021 September 30, 2021 December 31, 2021

As Reported Impact of As Reported Impact of As Reported Impact of As Reported Impact of

Under LIFO Change to FIFO As Adjusted Under LIFO Change to FIFO As Adjusted Under LIFO Change to FIFO As Adjusted Under LIFO Change to FIFO As Adjusted

Consolidated Statement of Operations

Net sales $ 2,288 $ — $ 2,288 $ 2,709 $ — $ 2,709 $ 2,787 $ — $ 2,787 $ 2,805 $ — $ 2,805

Cost of products sold 1,557 ( 6 ) 1,551 1,827 ( 24 ) 1,803 1,939 ( 35 ) 1,904 1,970 ( 2 ) 1,968

Operating income 192 6 198 305 24 329 281 35 316 168 2 170

Income before income taxes 126 6 132 243 24 267 215 35 250 109 2 111

Income tax provision 37 2 39 46 5 51 25 10 35 13 — 13

Net income $ 89 $ 4 $ 93 $ 197 $ 19 $ 216 $ 190 $ 25 $ 215 $ 96 $ 2 $ 98

Weighted average common shares outstanding:

Basic 424.9 424.9 425.4 425.4 425.4 425.4 425.5 425.5

Diluted 427.6 427.6 427.8 427.8 428.5 428.5 428.3 428.3

Earnings per share:

Basic $ 0.21 $ 0.22 $ 0.46 $ 0.51 $ 0.45 $ 0.51 $ 0.23 $ 0.23

Diluted $ 0.21 $ 0.22 $ 0.46 $ 0.50 $ 0.44 $ 0.50 $ 0.22 $ 0.23

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data