NEWELL BRANDS INC. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Newell Brands Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Newell Brands Inc. 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 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 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. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. 46 Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. 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 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 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 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 47 methods; 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 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 Atlanta, Georgia February 20, 2024 We have served as the Company’s auditor since 2016. 48 NEWELL BRANDS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Amounts in millions, except per share data) Year Ended December 31, 2023 2022 2021 Net sales $ 8,133 $ 9,459 $ 10,589 Cost of products sold 5,780 6,625 7,226 Gross profit 2,353 2,834 3,363 Selling, general and administrative expense 2,001 2,033 2,274 Restructuring costs, net 95 15 16 Impairment of goodwill, intangibles and other assets 342 474 60 Operating income (loss) ( 85 ) 312 1,013 Non-operating expenses: Interest expense, net 283 235 256 Loss on extinguishment of debt — 1 5 Other (income) expense, net 175 ( 81 ) ( 8 ) Income (loss) before income taxes ( 543 ) 157 760 Income tax provision (benefit) ( 155 ) ( 40 ) 138 Net income (loss) $ ( 388 ) $ 197 $ 622 Weighted average common shares outstanding: Basic 414.1 415.7 425.3 Diluted 414.1 417.4 428.0 Earnings (loss) per share: Basic $ ( 0.94 ) $ 0.47 $ 1.46 Diluted $ ( 0.94 ) $ 0.47 $ 1.45 COMPREHENSIVE INCOME (LOSS) Net income (loss) $ ( 388 ) $ 197 $ 622 Other comprehensive income (loss), net of tax Foreign currency translation adjustments 20 ( 113 ) ( 94 ) Unrecognized pension and postretirement costs 113 ( 17 ) 64 Derivative financial instruments ( 12 ) 1 28 Total other comprehensive income (loss), net of tax 121 ( 129 ) ( 2 ) Comprehensive income (loss) ( 267 ) 68 620 Total comprehensive income attributable to noncontrolling interests — — 2 Total comprehensive income (loss) attributable to parent $ ( 267 ) $ 68 $ 618 See Notes to Consolidated Financial Statements. 49 NEWELL BRANDS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in millions, except par values) December 31, 2023 2022 Assets: Cash and cash equivalents $ 332 $ 287 Accounts receivable, net 1,195 1,250 Inventories 1,531 2,203 Prepaid expenses and other current assets 296 312 Total current assets 3,354 4,052 Property, plant and equipment, net 1,212 1,184 Operating lease assets 515 578 Goodwill 3,071 3,298 Other intangible assets, net 2,488 2,649 Deferred income taxes 806 810 Other assets 717 691 Total assets $ 12,163 $ 13,262 Liabilities: Accounts payable $ 1,003 $ 1,062 Accrued compensation 190 123 Other accrued liabilities 1,375 1,272 Short-term debt and current portion of long-term debt 329 621 Total current liabilities 2,897 3,078 Long-term debt 4,575 4,756 Deferred income taxes 241 520 Operating lease liabilities 446 512 Other noncurrent liabilities 892 877 Total liabilities 9,051 9,743 Commitments and contingencies ( Footnote 18 ) Stockholders' equity: Preferred stock ( 10.0 authorized shares, $ 1.00 par value, no shares issued at December 31, 2023 and 2022) — — Common stock ( 800.0 authorized shares, $ 1.00 par value, 439.6 shares and 438.6 shares issued at December 31, 2023 and 2022, respectively) 440 439 Treasury stock, at cost ( 25.3 and 25.0 shares at December 31, 2023 and 2022, respectively) ( 627 ) ( 623 ) Additional paid-in capital 6,915 7,052 Retained deficit ( 2,726 ) ( 2,338 ) Accumulated other comprehensive loss ( 890 ) ( 1,011 ) Total stockholders' equity 3,112 3,519 Total liabilities and stockholders' equity $ 12,163 $ 13,262 See Notes to Consolidated Financial Statements. 50 NEWELL BRANDS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in millions) Year Ended December 31, 2023 2022 2021 Cash flows from operating activities: Net income (loss) $ ( 388 ) $ 197 $ 622 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 334 296 325 Impairment of goodwill, intangibles and other assets 342 474 60 Gain from sale of businesses ( 1 ) ( 136 ) ( 4 ) Deferred income taxes ( 283 ) 97 ( 24 ) Stock based compensation expense 50 12 52 Pension settlement charge 126 — — Loss on extinguishment of debt — 1 5 Other, net ( 33 ) ( 24 ) ( 10 ) Changes to operating accounts, excluding the effects of divestitures: Accounts receivable 67 130 130 Inventories 673 ( 276 ) ( 463 ) Accounts payable ( 50 ) ( 536 ) 177 Accrued liabilities and other 93 ( 507 ) 14 Net cash provided by (used in) operating activities 930 ( 272 ) 884 Cash flows from investing activities: Proceeds from sale of divested businesses 11 617 — Capital expenditures ( 284 ) ( 312 ) ( 289 ) Proceeds from settlement of swaps 43 25 15 Other investing activities 31 13 6 Net cash provided by (used in) investing activities ( 199 ) 343 ( 268 ) Cash flows from financing activities: 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 ) Repurchase of shares of common stock — ( 325 ) — Cash dividends ( 184 ) ( 385 ) ( 394 ) Acquisition of noncontrolling interests — — ( 28 ) Equity compensation activity and other, net 10 ( 39 ) ( 17 ) Net cash used in financing activities ( 664 ) ( 232 ) ( 1,143 ) Exchange rate effect on cash, cash equivalents and restricted cash ( 9 ) ( 13 ) ( 17 ) Increase (decrease) in cash, cash equivalents and restricted cash 58 ( 174 ) ( 544 ) Cash, cash equivalents and restricted cash at beginning of period 303 477 1,021 Cash, cash equivalents and restricted cash at end of period $ 361 $ 303 $ 477 Supplemental disclosures: Restricted cash at beginning of period $ 16 $ 37 $ 40 Restricted cash at end of period 29 16 37 Cash paid for income taxes, net of refunds 103 172 165 Cash paid for interests 298 244 271 See Notes to Consolidated Financial Statements. 51 NEWELL BRANDS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Amounts in millions) Common Stock Treasury 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 Comprehensive income (loss) — — — 622 ( 2 ) 620 — 620 Dividends declared on common stock - $ 0.92 per share — — ( 397 ) — — ( 397 ) — ( 397 ) Equity compensation, net of tax 2 ( 11 ) 53 — — 44 — 44 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 Comprehensive income (loss) — — — 197 ( 129 ) 68 — 68 Dividends declared on common stock - $ 0.92 per share — — ( 380 ) — — ( 380 ) — ( 380 ) Equity compensation, net of tax 2 ( 14 ) 11 — — ( 1 ) — ( 1 ) 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 Comprehensive income (loss) — — — ( 388 ) 121 ( 267 ) — ( 267 ) Dividends declared on common stock - $ 0.44 per share — — ( 185 ) — — ( 185 ) — ( 185 ) Equity compensation, net of tax 1 ( 4 ) 48 — — 45 — 45 Balance at December 31, 2023 $ 440 $ ( 627 ) $ 6,915 $ ( 2,726 ) $ ( 890 ) $ 3,112 $ — $ 3,112 See Notes to Consolidated Financial Statements. 52 NEWELL BRANDS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Footnote 1 — Basis of Presentation and Significant Accounting Policies Description of Business 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 The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and include the consolidated accounts of the Company and its majority-owned subsidiaries after elimination of intercompany transactions and balances. The preparation of these consolidated financial statements requires the use of certain estimates and assumptions by management in determining the Company’s assets, liabilities, sales and expenses, and related disclosures. Significant estimates in these Consolidated Financial Statements include restructuring charges, estimates of future cash flows associated with asset impairments, useful lives for depreciation and amortization, loss contingencies (including legal, environmental and product liability reserves), net realizable value of inventories, estimated contract revenue and related variable consideration, capitalized software costs, income taxes, uncertain tax provisions, tax valuation allowances, and pension and postretirement employee benefit liabilities and expenses. Actual results could differ from those estimates. Certain prior year amounts have been reclassified to conform to the current year presentation. 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. Use of Estimates and Risks Management’s application of U.S. GAAP in preparing the Company’s consolidated financial statements requires the pervasive use of estimates and assumptions. The Company continues to be impacted by 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. In addition, some of the other inherent estimates and assumptions used in the Company’s forecasted results of operations and cash flows that form the basis of the determination of the fair value of the reporting units for goodwill and indefinite-lived intangible asset impairment testing are outside the control of management, including interest rates, cost of capital, tax rates, industry growth, credit ratings, foreign exchange rates and labor inflation. Although management has made its best estimates and assumptions based upon current information, actual results could materially differ given the uncertainty of these factors and may require future changes to such estimates and assumptions, including reserves, which may result in future expense or impairment charges. During the 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. 53 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. Significant Accounting Policies Concentration of Credit Risk The Company’s forward exchange contracts generally do not subject the Company to risk due to foreign exchange rate movement, because gains and losses on these instruments generally offset gains and losses on the assets, liabilities and other transactions being hedged. The Company is exposed to credit-related losses in the event of non-performance by counterparties to certain derivative financial instruments. The Company does not obtain collateral or other security to support derivative financial instruments subject to credit risk, but monitors the credit standing of its counterparties. Revenue Recognition The Company recognizes revenue when performance obligations under the terms of a contract with the customer are satisfied or at a point in time, which generally occurs either on shipment or on delivery based on contractual terms, which is also when control is transferred. The Company’s primary performance obligation is the distribution and sales of its consumer and commercial products to its customers. In the normal course of business, the Company offers warranties for a variety of its products. The specific terms and conditions of the warranties vary depending upon the specific product and markets in which the products were sold. The Company accrues for the estimated cost of product warranty at the time of sale based on historical experience. Revenue is measured as the amount of consideration for which the Company expects to be entitled in exchange for transferring goods or providing services. Certain customers may receive cash and/or non-cash incentives such as cash discounts, returns, credits or reimbursements related to defective products, customer discounts (such as volume or trade discounts), cooperative advertising and other customer-related programs, which are accounted for as variable consideration. In some cases, the Company applies judgment, including contractual rates and historical payment trends, when estimating variable consideration. In addition, the Company participates in various programs and arrangements with customers designed to increase the sale of products by these customers. Among the programs negotiated are arrangements under which allowances are earned by customers for attaining agreed-upon sales levels or for participating in specific marketing programs. Coupon programs are also developed on a customer- and territory-specific basis. Under customer programs and arrangements that require sales incentives to be paid in advance, the Company amortizes the amount paid over the period of benefit or contractual sales volume. When incentives are paid in arrears, the Company accrues the estimated amount to be paid based on the program’s contractual terms, expected customer performance and/or estimated sales volume. These estimates are determined using historical customer experience and other factors, which sometimes require significant judgment. Due to the length of time necessary to obtain relevant data from customers, among other factors, actual amounts paid can differ from these estimates. Sales taxes and other similar taxes are excluded from revenue. 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 54 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 Goodwill and indefinite-lived intangibles are tested and reviewed for impairment annually during the fourth quarter (on December 1), or more frequently if facts and circumstances warrant. Goodwill Goodwill is tested for impairment at a reporting unit level, and all of the Company’s goodwill is assigned to its reporting units. 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 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. If the carrying value of a reporting unit exceeds its fair value, an impairment loss would be calculated as the difference between these amounts, limited to the amount of reporting unit goodwill allocated to the reporting unit. The quantitative goodwill impairment testing requires significant use of judgment and assumptions, such as the identification of reporting units; the assignment of assets and liabilities to reporting units; and the estimation of future cash flows, business growth rates, terminal values, discount rates and total enterprise value. The income approach used is the discounted cash flow methodology and is based on five-year cash flow projections. The cash flows projected are analyzed on a debt-free basis (before cash payments to equity and interest-bearing debt investors) in order to develop an enterprise value from operations for the reporting unit. A provision is made, based on these projections, for the value of the reporting unit at the end of the forecast period, or terminal value. The present value of the finite-period cash flows and the terminal value are determined using a selected discount rate. Indefinite-lived intangibles 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 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. The relief from royalty method estimates the value of a tradename by discounting the hypothetical avoided royalty payments to their present value over the economic life of the asset. The excess earnings method estimates the value of the intangible asset by quantifying the residual (or excess) cash flows generated by the asset and discounts those cash flows to the present. The excess earnings methodology requires the application of contributory asset charges. Contributory asset charges typically include assumed payments for the use of working capital, tangible assets and other intangible assets. Changes in forecasted operations and other assumptions could materially affect the estimated fair values. Changes in business conditions could potentially require adjustments to these asset valuations. Other Long-Lived Assets The Company continuously evaluates whether impairment indicators related to its property, plant and equipment, operating leases and other long-lived assets are present. These impairment indicators may include a significant decrease in the market price of a long-lived asset or asset group, early termination of an operating lease, a significant adverse change to the extent or manner in which a long-lived asset or asset group is being used or in its physical condition, or a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a forecast that demonstrates continuing losses associated with the use of a long-lived asset or asset group. If impairment indicators are present, the Company estimates the future cash flows for the asset or group of assets. The sum of the undiscounted future cash flows attributable to the asset or group of assets is compared to their carrying amount. The cash flows are estimated utilizing various assumptions regarding future sales and expenses, working capital and proceeds from asset disposals on a basis consistent with the Company’s forecasts. If the carrying amount exceeds the sum of the undiscounted future cash flows, the Company discounts the future cash flows using a discount rate required for a similar investment of like risk and records an impairment charge as the difference between the fair value and the carrying value of the asset group. The Company performs its testing of the asset group at the reporting unit level, as this is the lowest level for which identifiable cash flows are available, with the exception of the Yankee Candle business, where testing is performed at the retail store level. 55 Income Taxes The Company accounts for deferred income taxes using the asset and liability approach. Under this approach, deferred income taxes are recognized based on the tax effects of temporary differences between the financial statement and tax bases of assets and liabilities, as measured by current enacted tax rates. Valuation allowances are recorded to reduce the deferred tax assets to an amount that will more likely than not be realized. The Company regularly reviews its deferred tax assets for recoverability considering historical profitability, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. For uncertain tax positions, the Company applies the provisions of relevant authoritative guidance, which requires application of a “more likely than not” threshold to the recognition and derecognition of tax positions. The Company’s ongoing assessments of the more likely than not outcomes of tax authority examinations and related tax positions require significant judgment and can increase or decrease the Company’s effective tax rate, as well as impact operating results. See Footnote 12 for further information. Sales of Accounts Receivable 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. 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 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. 56 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 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. Accounts Receivable, Net Accounts receivable, net, include amounts billed and due from customers. Payment terms vary but generally are 90 days or less. An allowance for expected credit losses is based on the amount ultimately expected to be collected from the customer. The Company evaluates the collectability of accounts receivable based on a combination of factors including the length of time the receivables are past due, historical collection experience, current market conditions and forecasted direction of economic and business environment. Accounts deemed uncollectible are written off, net of expected recoveries. Capitalized Software Costs The Company capitalizes costs associated with internal-use software during the application development stage after both the preliminary project stage has been completed and the Company’s management has authorized and committed to funding for further project development. Capitalized internal-use software costs include: (i) external direct costs of materials and services consumed in developing or obtaining the software; (ii) payroll and payroll-related costs for employees who are directly associated with and who devote time directly to the project; and (iii) interest costs incurred while developing the software. Capitalization of these costs ceases no later than the point at which the project is substantially complete and ready for its intended purpose. The Company expenses as incurred research and development, general and administrative, and indirect costs associated with internal-use software. In addition, the Company expenses as incurred training, maintenance and other internal-use software costs incurred during the post-implementation stage. Costs associated with upgrades and enhancements of internal-use software are capitalized only if such modifications result in additional functionality of the software. The Company amortizes internal-use software costs using the straight-line method over the estimated useful life of the software. Capitalized software costs are evaluated annually for indicators of impairment, including but not limited to a significant change in available technology or the manner in which the software is being used. Impaired items are written down to their estimated fair values. Capitalized implementation costs for certain qualified Software-as-a-Service (“SaaS”) arrangements are also subject to the same accounting criteria described above, when the Company does not own the intellectual property for the software license used in the arrangement. SaaS arrangements are included in prepaid expenses and other current assets and other assets in the Consolidated Balance Sheets. The straight-line amortization of these costs is presented along with the fees related to the hosted cloud computing service in the Consolidated Statements of Operations. Product Liability Reserves The Company has a self-insurance program for product liability that includes reserves for self-retained losses and certain excess and aggregate risk transfer insurance. The Company uses historical loss experience combined with actuarial evaluation methods, review of significant individual files and the application of risk transfer programs in determining required product liability reserves. The Company’s actuarial evaluation methods take into account claims incurred but not reported when determining the Company’s product liability reserve. While the Company believes that it has adequately reserved for these claims, the ultimate outcome of these matters may exceed the amounts recorded by the Company, and such additional losses may be material to the Company’s Consolidated Financial Statements. 57 Product Warranties In the normal course of business, the Company offers warranties for a variety of its products. The specific terms and conditions of the warranties vary depending upon the specific product and markets in which the products were sold. The Company accrues for the estimated cost of product warranty at the time of sale based on historical experience. Advertising Costs The Company expenses production costs of print, radio, television and other advertisements as of the first date the advertisements take place, and the Company expenses all other advertising and marketing costs when incurred. Advertising and promotion costs are recorded in selling, general and administrative expenses (“SG&A”) and totaled $ 371 million, $ 387 million and $ 407 million in 2023, 2022 and 2021, respectively. Research and Development Costs Research and development costs relating to both future and current products are charged to SG&A as incurred. These costs totaled $ 117 million, $ 140 million and $ 153 million in 2023, 2022 and 2021, respectively. Other Significant Accounting Policies Other significant accounting policies are disclosed as follows: • Restructuring – Footnote 4 • Inventory – Footnote 5 • Property, Plant and Equipment – Footnote 6 • Derivative Instruments – Footnote 10 • Foreign Currency Operations – Footnote 10 • Pensions and Postretirement Benefits – Footnote 11 • Leases – Footnote 13 • Share-Based Compensation – Footnote 15 • Legal and Environmental Reserves – Footnote 18 Recent Accounting Pronouncements Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. In 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, 58 Reference Rate Reform: Scope. 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 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 requires that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of financial statements to better consider the effect of the programs on an entity’s working capital, liquidity and cash flows. This ASU is effective for fiscal years beginning after December 15, 2022, except for the amendment on roll forward information which is effective for fiscal years beginning after December 15, 2023. The Company 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 2023 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. 2022 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 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): Cumulative Translation Adjustment Pension and Postretirement Cost Derivative Financial Instruments AOCL Balance at December 31, 2021 $ ( 575 ) $ ( 292 ) $ ( 15 ) $ ( 882 ) Other comprehensive income (loss) before reclassifications ( 119 ) ( 25 ) 20 ( 124 ) Amounts reclassified to earnings 6 8 ( 19 ) ( 5 ) Net current period other comprehensive income (loss) ( 113 ) ( 17 ) 1 ( 129 ) Balance at December 31, 2022 $ ( 688 ) $ ( 309 ) $ ( 14 ) $ ( 1,011 ) Other comprehensive income (loss) before reclassifications 9 18 ( 16 ) 11 Amounts reclassified to earnings 11 95 4 110 Net current period other comprehensive income (loss) 20 113 ( 12 ) 121 Balance at December 31, 2023 $ ( 668 ) $ ( 196 ) $ ( 26 ) $ ( 890 ) Reclassifications from AOCL to the results of operations for the years ended December 31, were pretax (income) expense of (in millions): 2023 2022 2021 Cumulative translation adjustment (1) $ 11 $ 6 $ — Pension and postretirement benefit plans (2) 130 13 23 Derivative financial instruments (3) 5 ( 21 ) 23 (1) See Footnote 2 for further information. (2) See Footnote 11 for further information. (3) See Footnote 10 for further information. 59 The income tax provision (benefit) allocated to the components of AOCL for the years ended December 31, are as follows (in millions): 2023 2022 2021 Foreign currency translation adjustments $ ( 20 ) $ 2 $ 20 Unrecognized pension and postretirement costs 36 ( 10 ) 20 Derivative financial instruments ( 4 ) 1 9 Income tax provision (benefit) related to AOCL $ 12 $ ( 7 ) $ 49 Footnote 4 — Restructuring The Company has engaged and expects to continue to engage in restructuring activities, which requires management to utilize significant estimates related to the timing and amount of severance and other employee separation costs for workforce reductions and other separation programs and other exit costs associated with restructuring activities. The Company’s accrual for severance and other employee separation costs depends on whether the costs result from an ongoing severance plan or are one-time costs. The Company accounts for relevant expenses as severance costs when we have an established severance policy, statutory requirements dictate the severance amounts, or if our historical experience is to routinely provide certain benefits to impacted employees. The Company recognizes severance costs when it is probable that benefits will be paid and the amount can be reasonably estimated. The Company estimates one-time severance and other employee costs related to exit and disposal activities not resulting from an ongoing severance plan based on the benefits available to the employees being terminated. The Company recognizes these costs when we identify the specific classification or functions of the employees being terminated, notify the employees who might be included in the termination, and expect to terminate employees within the legally required notification period. When employees are receiving incentives to stay beyond the legally required notification period, we record the cost of their severance over the remaining service period. Restructuring costs incurred by reportable business segment for all restructuring activities for the years ended December 31, are as follows (in millions): 2023 2022 2021 Home and Commercial Solutions $ 50 $ 5 $ 11 Learning and Development 18 4 1 Outdoor and Recreation 11 5 3 Corporate 16 1 1 $ 95 $ 15 $ 16 Accrued restructuring costs activity for the year ended December 31, 2023 are as follows (in millions): 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 Contract termination and other costs — 6 ( 5 ) ( 1 ) — $ 7 $ 95 $ ( 71 ) $ ( 1 ) $ 30 Accrued restructuring costs activity for the year ended December 31, 2022 are as follows (in millions): Balance at December 31, 2021 Restructuring Costs, Net Payments Balance at December 31, 2022 Severance and termination costs $ 8 $ 13 $ ( 14 ) $ 7 Contract termination and other costs 2 2 ( 4 ) — $ 10 $ 15 $ ( 18 ) $ 7 Project Phoenix 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- 60 market model in key international geographies, and otherwise reduce overhead costs. 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 was incurred by the end of 2023. These charges consist primarily of $ 80 million to $ 105 million in charges related to severance payments and other termination benefits; $ 15 million to $ 20 million in charges associated with office space reductions; and approximately $ 5 million of other charges, including those associated with employee transition and legal costs. The Company expects approximately $ 95 million to $ 120 million of the total aggregate charges will be cash expenditures. 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. 61 Footnote 5 — Inventories Inventories are stated at the lower of cost or net realizable value. The Company reduces its inventory value for estimated obsolete and slow-moving inventory in an amount equal to the difference between the cost of inventory and the net realizable value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. Inventory costs include direct materials, direct labor and manufacturing overhead, or when finished goods are sourced, the cost is the amount paid to the third party. The components of inventories were as follows at December 31, (in millions): 2023 2022 Raw materials and supplies $ 214 $ 285 Work-in-process 173 218 Finished products 1,144 1,700 $ 1,531 $ 2,203 Footnote 6 — Property, Plant and Equipment, Net Property, plant and equipment are stated at cost. Expenditures for maintenance and repairs are expensed as incurred. Depreciation expense is calculated principally on the straight-line basis. Useful lives determined by the Company are as follows: buildings and improvements ( 20 - 40 years) and machinery and equipment ( 3 - 15 years). Property, plant and equipment, net, consisted of the following at December 31, (in millions): 2023 2022 Land $ 75 $ 76 Buildings and improvements 678 648 Machinery and equipment 2,517 2,349 3,270 3,073 Less: Accumulated depreciation ( 2,058 ) ( 1,889 ) $ 1,212 $ 1,184 Depreciation expense was $ 225 million, $ 196 million and $ 205 million in 2023, 2022 and 2021, respectively. Footnote 7 — Goodwill and Other Intangible Assets, Net A summary of changes in the Company’s goodwill by reportable business segment is as follows for 2023 and 2022 (in millions): December 31, 2023 Segments: Net Book Value at December 31, 2022 Impairment Charges Foreign Exchange Gross Carrying Amount Accumulated Impairment Charges Net Book Value Home and Commercial Solutions $ 747 $ — $ — $ 4,052 $ ( 3,305 ) $ 747 Learning and Development 2,551 ( 241 ) 14 3,411 ( 1,087 ) 2,324 Outdoor and Recreation — — — 788 ( 788 ) — $ 3,298 $ ( 241 ) $ 14 $ 8,251 $ ( 5,180 ) $ 3,071 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. 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. 62 December 31, 2022 Segments: Net Book Value at December 31, 2021 Impairment Charges Foreign Exchange Gross Carrying Amount Accumulated Impairment Charges Net Book Value Home and Commercial Solutions $ 911 $ ( 164 ) $ — $ 4,052 $ ( 3,305 ) $ 747 Learning and Development 2,593 — ( 42 ) 3,397 ( 846 ) 2,551 Outdoor and Recreation — — — 788 ( 788 ) — $ 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. 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. 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): 2023 (1) 2022 (2) 2021 (3) Impairment of indefinite-lived tradenames Home and Commercial Solutions $ 76 $ 280 $ 29 Learning and Development — 30 31 Outdoor and Recreation 22 — — $ 98 $ 310 $ 60 (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 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. (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. 63 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 Gross Carrying Amount Accumulated Amortization Net Book Value Gross Carrying Amount Accumulated Amortization Net Book Value Amortization Periods (In years) 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 Patents and intellectual property 22 ( 20 ) 2 22 ( 17 ) 5 3 - 14 Customer relationships and distributor channels 1,078 ( 370 ) 708 1,072 ( 319 ) 753 3 - 30 $ 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. At December 31, 2023, the aggregate estimated intangible amortization amounts for the succeeding five years are as follows (in millions): Years ending December 31, Amount 2024 $ 107 2025 95 2026 80 2027 72 2028 61 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 Other accrued liabilities included the following at December 31, (in millions): 2023 2022 Customer accruals $ 659 $ 636 Operating lease liabilities 122 121 Accrued self-insurance liabilities, contingencies and warranty 92 99 Accrued income taxes 89 53 Accrued interest expense 74 63 Accrued marketing and freight expenses 71 73 Other 268 227 $ 1,375 $ 1,272 Customer accruals are promotional allowances and rebates, including cooperative advertising, given to customers in exchange for their selling efforts and volume purchased, as well as allowances for returns. Payments for annual rebates and other customer programs are generally made in the first quarter of the year. Self-insurance liabilities relate to casualty liabilities such as workers’ compensation, general and product liability and auto liability and are estimated based upon historical loss experience combined with actuarial evaluation methods, review of significant individual files and the application of risk transfer programs. 64 Footnote 9 — Debt The following is a summary of outstanding debt at December 31, (in millions): 2023 2022 4.000 % senior notes due 2024 $ 198 $ 196 4.875 % senior notes due 2025 498 496 3.900 % senior notes due 2025 47 47 4.200 % senior notes due 2026 1,980 1,978 6.375 % senior notes due 2027 488 483 6.625 % senior notes due 2029 486 481 5.375 % senior notes due 2036 417 417 5.500 % senior notes due 2046 658 658 Revolving credit facility 131 225 Commercial paper — 359 Receivables facility — 35 Other debt 1 2 Total debt 4,904 5,377 Short-term debt and current portion of long-term debt ( 329 ) ( 621 ) Long-term debt $ 4,575 $ 4,756 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 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. 65 Revolving Credit Facility 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, 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 The Company’s debt maturities for the five years following December 31, 2023 and thereafter are as follows (in millions): 2024 2025 2026 2027 2028 Thereafter Total $ 332 $ 547 $ 1,985 $ 500 $ 2 $ 1,586 $ 4,952 Other The indentures governing the Company’s senior notes contain usual and customary nonfinancial covenants. The Company’s borrowing arrangements other than the senior notes contain usual and customary nonfinancial covenants and certain financial covenants, including minimum interest coverage and maximum debt-to-total-capitalization ratios. 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. These costs are included in total debt and are being amortized over the respective terms of the underlying debt. The fair values of the Company’s senior notes are based on quoted market prices and are as follows at December 31, (in millions): 2023 2022 Fair Value Book Value Fair Value Book Value Senior notes $ 4,633 $ 4,772 $ 4,511 $ 4,756 The carrying amounts of all other significant debt approximates fair value. 66 Footnote 10 — Derivatives and Foreign Currency Operations Derivatives 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. On the date when the Company enters into a derivative, the derivative is designated as a hedge of the identified exposure. The Company measures effectiveness of its hedging relationships both at hedge inception and on an ongoing basis. Interest Rate Contracts The Company manages its fixed and floating rate debt mix using interest rate swaps. The Company may use fixed and floating rate swaps to alter its exposure to the impact of changing interest rates on its consolidated results of operations and future cash outflows for interest. Floating rate swaps would be used, depending on market conditions, to convert the fixed rates of long-term debt into short-term variable rates. Fixed rate swaps would be used to reduce the Company’s risk of the possibility of increased interest costs. The settlement of interest rate swaps is included in interest expense. Fair Value Hedges At December 31, 2023, the Company had approximately $ 1.1 billion notional amount of interest rate swaps that exchange a fixed rate of interest for a variable rate of interest plus a weighted average spread. These floating rate swaps are designated as fair value hedges against $ 500 million of principal on the 6.375 % senior notes due 2027, $ 500 million of principal on the 6.625 % senior notes due 2029 and $ 100 million of principal on the 4.000 % 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. Cross-Currency Contracts The Company uses cross-currency swaps to hedge foreign currency risk on certain financing arrangements. The Company previously entered into three cross-currency swaps, maturing in January 2025, February 2025 and September 2027, respectively, with an aggregate notional amount of $ 1.3 billion. Each of these cross-currency swaps 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 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. dollar interest. The Company has elected the spot method for assessing the effectiveness of these contracts. During the years ended December 31, 2023, 2022 and 2021, the Company recognized income of $ 38 million, $ 31 million and $ 16 million, respectively, in interest expense, net, related to the portion of cross-currency swaps excluded from hedge effectiveness testing. Foreign Currency Contracts The Company uses forward foreign currency contracts to mitigate the foreign currency exchange rate exposure on the cash flows related to forecasted inventory purchases and sales with maturity dates through December 2024. 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 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 67 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, 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. The following table presents the fair value of derivative financial instruments at December 31, (in millions): 2023 2022 Balance Sheet Location Assets (Liabilities) Derivatives designated as effective hedges: Cash Flow Hedges Foreign currency contracts Prepaid expenses and other current assets $ 1 $ 5 Foreign currency contracts Other accrued liabilities ( 13 ) ( 9 ) Fair Value Hedges Interest rate swaps Other accrued liabilities ( 15 ) ( 14 ) Interest rate swaps Other noncurrent liabilities ( 4 ) ( 16 ) Net Investment Hedges Cross-currency swaps Prepaid expenses and other current assets 22 28 Cross-currency swaps Other assets 15 45 Cross-currency swaps Other noncurrent liabilities ( 119 ) ( 75 ) Derivatives not designated as effective hedges: Foreign currency contracts Prepaid expenses and other current assets 7 19 Foreign currency contracts Other accrued liabilities ( 14 ) ( 10 ) Total $ ( 120 ) $ ( 27 ) 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 pretax gain and (loss) activity for 2023, 2022 and 2021 related to derivative financial instruments designated as effective hedges: 2023 2022 2021 Gain (Loss) Gain (Loss) Gain (Loss) (in millions) Recognized in OCL (1) Reclassified from AOCL to Income Recognized in OCL (1) Reclassified from AOCL to Income Recognized in OCL (1) Reclassified from AOCL to Income Interest rate swaps (2) $ — $ ( 5 ) $ — $ ( 6 ) $ — $ ( 6 ) Foreign currency contracts (3) ( 21 ) — 24 27 14 ( 17 ) Cross-currency swaps (4) ( 80 ) — 21 — 69 — Total $ ( 101 ) $ ( 5 ) $ 45 $ 21 $ 83 $ ( 23 ) (1) Represents effective portion recognized in Other Comprehensive Loss (“OCL”). (2) Portion reclassified from AOCL to income recognized in interest expense, net. (3) Portion reclassified from AOCL to income recognized in net sales and cost of products sold. (4) Portion reclassified from AOCL to income recognized in other (income) expense, net. 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. 68 Foreign Currency Operations Assets and liabilities of foreign subsidiaries are translated into U.S. dollars at the rates of exchange in effect at year-end. The related translation adjustments are made directly to AOCL. Income and expenses are translated at the average monthly rates of exchange in effect during the year. Foreign currency transaction gains and losses are included in the results of operations and are generally classified in other (income) expense, net, in the Consolidated Statements of Operations. Foreign currency transaction net losses for 2023, 2022 and 2021 were $ 10 million, $ 41 million and $ 5 million, respectively. The Company designates certain foreign currency denominated, long-term intercompany financing transactions as being of a long-term investment nature and records gains and losses on the transactions arising from changes in exchange rates as translation adjustments. Footnote 11 — Employee Benefit and Retirement Plans The Company and its subsidiaries have noncontributory pension, profit sharing and contributory 401(k) plans covering substantially all of their international and domestic employees. Pension plan benefits are generally based on years of service and/or compensation. The Company’s funding policy is to contribute not less than the minimum amounts required by the Employee Retirement Income Security Act of 1974, as amended, the Internal Revenue Code of 1986, as amended, or foreign statutes to ensure that plan assets will be adequate to provide retirement benefits. The funded status of the Company’s defined benefit pension plans and postretirement benefit plans is recognized in the Consolidated Balance Sheets. The funded status is measured as the difference between the fair value of plan assets and the benefit obligation at December 31, the measurement date. For defined benefit pension and postretirement benefit plans, the benefit obligation is the projected benefit obligation (“PBO”), which represents the actuarial present value of benefits expected to be paid upon retirement based on employee services already rendered and estimated future compensation levels. The fair value of plan assets represents the current market value of assets held for the sole benefit of participants. Over funded plans, with the fair value of plan assets exceeding the benefit obligation, are aggregated and recorded as a prepaid pension asset equal to this excess. Underfunded plans, with the benefit obligation exceeding the fair value of plan assets, are aggregated and recorded as a retirement and postretirement benefit obligation equal to this excess. The current portion of the retirement and postretirement benefit obligations represents the actuarial present value of benefits payable in the next 12 months exceeding the fair value of plan assets, measured on a plan-by-plan basis. This obligation is recorded in other accrued liabilities in the Consolidated Balance Sheets. Net periodic pension and postretirement benefit cost/(income) is recorded in the Consolidated Statements of Operations and includes service cost, interest cost, expected return on plan assets, amortization of prior service costs/(credits) and (gains)/losses previously recognized as a component of AOCL and amortization of the net transition asset remaining in AOCL. The service cost component of net benefit cost is recorded in cost of products sold and SG&A in the Consolidated Statements of Operations (unless eligible for capitalization) based on the employees’ respective functions. The other components of net benefit cost are presented separately from service cost within other (income) expense, net in the Consolidated Income Statement. In 2024, the amount of AOCL expected to be recognized in pension and postretirement benefit (income) expense is an expense of $ 2 million and an income of $ 5 million, respectively. (Gains)/losses and prior service costs/(credits) are recognized as a component of OCL in the Consolidated Statements of Comprehensive Income (Loss) as they arise. Those (gains)/losses and prior service costs/(credits) are subsequently recognized as a component of net periodic cost/(income) pursuant to the recognition and amortization provisions of applicable accounting guidance. (Gains)/losses arise as a result of differences between actual experience and assumptions or as a result of changes in actuarial assumptions. Prior service costs/(credits) represent the cost of benefit changes attributable to prior service granted in plan amendments. The measurement of benefit obligations and net periodic cost/(income) is based on estimates and assumptions approved by the Company’s management. These valuations reflect the terms of the plans and use participant-specific information such as compensation, age and years of service, as well as certain assumptions, including estimates of discount rates, expected return on plan assets, rate of compensation increases, interest crediting rates and mortality rates. The Company has a Supplemental Executive Retirement Plan (“SERP”), which is a nonqualified defined benefit and defined contribution plan pursuant to which the Company will pay supplemental benefits to certain key employees upon retirement based upon the employees’ years of service and compensation. 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, 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 69 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 for both 2023 and 2022 and $ 36 million for 2021. U.K. Defined Benefit Plan In February 2022, the Company entered into an agreement with an insurance company for a bulk annuity purchase or “buy-in” for one of its U.K. defined benefit pension plans (“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. Plan's PBO. 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. U.S. Defined Benefit Plan Partial Buyout 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 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. 70 Defined Benefit Pension Plans The following provides a reconciliation of benefit obligations, plan assets and funded status of the Company’s noncontributory defined benefit pension plans, including the SERP, at December 31, (dollars in millions): Pension Benefits Postretirement Benefits United States International Change in benefit obligation: 2023 2022 2023 2022 2023 2022 Benefit obligation at beginning of year $ 936 $ 1,238 $ 417 $ 623 $ 30 $ 41 Service cost — — 3 4 — — Interest cost 44 25 15 8 1 1 Actuarial gain ( 24 ) ( 247 ) ( 13 ) ( 137 ) ( 2 ) ( 8 ) Currency translation — — 14 ( 56 ) — — Benefits paid ( 79 ) ( 80 ) ( 20 ) ( 23 ) ( 3 ) ( 4 ) Curtailments, settlements and other ( 164 ) — ( 172 ) ( 2 ) — — Benefit obligation at end of year (1) $ 713 $ 936 $ 244 $ 417 $ 26 $ 30 Change in plan assets: Fair value of plan assets at beginning of year 843 1,133 354 595 — — Actual return on plan assets 57 ( 220 ) ( 10 ) ( 166 ) — — Contributions 11 10 12 7 3 4 Currency translation — — 13 ( 57 ) — — Benefits paid ( 79 ) ( 80 ) ( 20 ) ( 23 ) ( 3 ) ( 4 ) Settlements and other ( 164 ) — ( 173 ) ( 2 ) — — Fair value of plan assets at end of year $ 668 $ 843 $ 176 $ 354 $ — $ — Funded status at end of year $ ( 45 ) $ ( 93 ) $ ( 68 ) $ ( 63 ) $ ( 26 ) $ ( 30 ) Amounts recognized in the Consolidated Balance Sheets: Prepaid benefit cost, included in other assets $ 50 $ 7 $ 23 $ 23 $ — $ — Accrued current benefit cost—other accrued liabilities ( 11 ) ( 11 ) ( 4 ) ( 4 ) ( 4 ) ( 4 ) Accrued noncurrent benefit cost— other noncurrent liabilities ( 84 ) ( 89 ) ( 87 ) ( 82 ) ( 22 ) ( 26 ) Net amount recognized $ ( 45 ) $ ( 93 ) $ ( 68 ) $ ( 63 ) $ ( 26 ) $ ( 30 ) Assumptions: Weighted-average assumptions used to determine benefit obligation: Discount rate 4.94 % 5.20 % 3.82 % 4.07 % 4.84 % 5.11 % Long-term rate of compensation increase 3.00 % 3.00 % 2.37 % 2.41 % — % — % Current health care cost trend rates — % — % — % — % 5.87 % 6.65 % Ultimate health care cost trend rates — % — % — % — % 4.50 % 4.50 % (1) The accumulated benefit obligation for all defined benefit pension plans was $ 1.0 billion and $ 1.4 billion at December 31, 2023 and 2022, respectively. There are no plan assets associated with the Company’s postretirement benefit plans. The current healthcare cost trend rate gradually declines through 2038 to the ultimate trend rate and remains level thereafter. Summary of under-funded or non-funded pension benefit plans with projected benefit obligations in excess of plan assets at December 31, (in millions): Pension Benefits 2023 2022 Projected benefit obligation $ 315 $ 311 Fair value of plan assets 129 125 Summary of pension plans with accumulated obligations in excess of plan assets at December 31, (in millions): Pension Benefits 2023 2022 Accumulated benefit obligation $ 309 $ 303 Fair value of plan assets 129 123 71 Pension and Postretirement Benefit Expense The components of pension and postretirement benefit expense for the periods indicated are as follows (dollars in millions): Pension Benefits United States International 2023 2022 2021 2023 2022 2021 Service cost $ — $ — $ — $ 3 $ 4 $ 4 Interest cost 44 25 20 15 8 6 Expected return on plan assets ( 52 ) ( 47 ) ( 51 ) ( 11 ) ( 6 ) ( 3 ) Amortization: Prior service cost — — — 3 1 1 Net actuarial loss 3 16 22 3 2 3 Curtailment, settlement and termination costs 60 — — 66 — — Total (income) expense $ 55 $ ( 6 ) $ ( 9 ) $ 79 $ 9 $ 11 Assumptions Weighted average assumption used to calculate net periodic cost: Effective discount rate for benefit obligations 5.34 % 2.64 % 2.16 % 4.07 % 1.61 % 1.22 % Effective rate for interest on benefit obligations 5.23 % 2.13 % 1.54 % 4.00 % 1.46 % 0.92 % Effective rate for service cost — % 2.94 % 2.63 % 3.20 % 0.96 % 0.71 % Effective rate for interest on service cost — % 2.97 % 2.61 % 3.06 % 0.78 % 0.54 % Long-term rate of return on plan assets 5.88 % 4.75 % 5.25 % 3.61 % 1.06 % 0.51 % Long-term rate of compensation increase 3.00 % 3.00 % 3.00 % 2.41 % 2.27 % 2.18 % Postretirement Benefits 2023 2022 2021 Interest cost $ 1 $ 1 $ 1 Amortization: Net actuarial gain ( 6 ) ( 5 ) ( 3 ) Total income $ ( 5 ) $ ( 4 ) $ ( 2 ) Assumptions Weighted average assumption used to calculate net periodic cost: Effective discount rate for benefit obligations 5.11 % 2.34 % 1.80 % Effective rate for interest on benefit obligations 5.04 % 1.77 % 1.18 % Effective rate for service cost 4.97 % 1.98 % 1.32 % Effective rate for interest on service cost 4.90 % 1.67 % 1.02 % The components of net periodic pension and postretirement costs other than the service cost component are included in other (income) expense, net in the Consolidated Statements of Operations. 72 Plan Assets The Company employs a total return investment approach for its pension plans whereby a mix of equities and fixed income investments are used to optimize the long-term return of pension plan assets. The intent of this strategy is to minimize plan expenses by outperforming plan liabilities over the long run. Risk tolerance is established through careful consideration of plan liabilities, plan funded status, and the Company’s financial condition. The domestic investment portfolios contain a diversified blend of equity and fixed-income investments. The domestic equity investments are diversified across geography and market capitalization through investments in U.S. large-capitalization stocks, U.S. small-capitalization stocks and international securities. The domestic fixed income investments are primarily comprised of investment-grade and high-yield securities through investments in corporate and government bonds, government agencies and asset-backed securities. The Level 1 investments are primarily based upon quoted market prices. The domestic Level 3 investments are primarily comprised of insurance contracts valued at contract value. The investments excluded from the fair value hierarchy are net asset value-based (“NAV-based”) hedge fund investments that generally have a redemption frequency of 90 days or less, with various redemption notice periods that are generally less than a month. The notice periods for certain investments may vary based on the size of the redemption. The international Level 2 investments are primarily comprised of insurance contracts whose fair values are estimated based on the future cash flows to be received under the contracts discounted to the present using a discount rate that approximates the discount rate used to measure the associated pension plan liabilities. The international Level 3 investments are primarily comprised of insurance contracts valued at contract value. Investment risk is measured and monitored on an ongoing basis through annual liability measurements, periodic asset/liability studies and quarterly investment portfolio reviews. The expected long-term rate of return for plan assets is based upon many factors, including expected asset allocations, historical asset returns, current and expected future market conditions, risk and active management premiums. The expected long-term rate of return is adjusted when there are fundamental changes in expected returns on the Company’s defined benefit pension plan’s investments. The target asset allocations for the Company’s domestic pension plans may vary by plan, based in part on plan demographics, funded status and liability duration. In general, the Company’s target asset allocations are as follows: equities approximately zero to 20 %; fixed income approximately 80 % to 100 %; and cash, alternative investments and other, approximately zero to 10 % at December 31, 2023. Actual asset allocations may vary from the targeted allocations for various reasons, including market conditions and the timing of transactions. The Company maintains numerous international defined benefit pension plans. The asset allocations for the international investment may vary by plan and jurisdiction and are primarily based upon the plan structure and plan participant profile. The composition of domestic pension plan assets at December 31, 2023 and 2022 is as follows (in millions): Plan Assets — Domestic Plans December 31, 2023 Fair Value Measurements Asset Category Level 1 Level 2 Level 3 Subtotal NAV-based assets Total Equity securities and funds $ — $ — $ — $ — $ 70 $ 70 Fixed income securities and funds 250 — — 250 329 579 Alternative investments — — — — 2 2 Cash and other 15 2 — 17 — 17 Total $ 265 $ 2 $ — $ 267 $ 401 $ 668 Plan Assets — Domestic Plans December 31, 2022 Fair Value Measurements Asset Category Level 1 Level 2 Level 3 Subtotal NAV-based assets Total Equity securities and funds $ — $ — $ — $ — $ 158 $ 158 Fixed income securities and funds 369 — — 369 303 672 Alternative investments — — — — 2 2 Cash and other 8 3 — 11 — 11 Total $ 377 $ 3 $ — $ 380 $ 463 $ 843 73 The composition of international pension plan assets at December 31, 2023 and 2022 is as follows (in millions): Plan Assets — International Plans December 31, 2023 Fair Value Measurements Asset Category Level 1 Level 2 Level 3 Subtotal NAV-based assets Total Equity securities and funds $ 3 $ 4 $ — $ 7 $ — $ 7 Fixed income securities and funds 4 6 — 10 — 10 Cash and other 4 145 10 159 — 159 Total $ 11 $ 155 $ 10 $ 176 $ — $ 176 Plan Assets — International Plans December 31, 2022 Fair Value Measurements Asset Category Level 1 Level 2 Level 3 Subtotal NAV-based assets Total Equity securities and funds $ 3 $ 3 $ — $ 6 $ — $ 6 Fixed income securities and funds 6 5 — 11 — 11 Cash and other 3 140 194 337 — 337 Total $ 12 $ 148 $ 194 $ 354 $ — $ 354 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): Total Balance at December 31, 2021 $ 9 Unrealized losses ( 101 ) Purchases, sales, settlements and other, net 286 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 During 2024, the Company expects to make cash contributions of approximately $ 15 million and $ 9 million to its domestic and international defined benefit plans, respectively. Estimated future benefit payments under the Company’s defined benefit pension plans and postretirement benefit plans are as follows at December 31, 2023 (in millions): 2024 2025 2026 2027 2028 Thereafter Pension benefits $ 79 $ 76 $ 75 $ 77 $ 75 $ 357 Postretirement benefits 4 4 4 3 3 9 74 Footnote 12 — Income Taxes The components of income (loss) before income taxes for the years ended December 31, (in millions): 2023 2022 2021 Domestic $ ( 995 ) $ ( 698 ) $ ( 353 ) Foreign 452 855 1,113 Total $ ( 543 ) $ 157 $ 760 The provision for income taxes consists of the following for the years ended December 31, (in millions): 2023 2022 2021 Current: Federal $ 56 $ ( 245 ) $ 48 State 1 6 17 Foreign 71 102 97 Total current 128 ( 137 ) 162 Deferred: Federal ( 232 ) 163 ( 26 ) State ( 40 ) ( 34 ) ( 20 ) Foreign ( 11 ) ( 32 ) 22 Total deferred ( 283 ) 97 ( 24 ) Total income tax provision (benefit) $ ( 155 ) $ ( 40 ) $ 138 A reconciliation of the U.S. statutory rate to the effective income tax rate on a continuing basis is as follows for the years ended December 31: 2023 2022 2021 Statutory rate 21.0 % 21.0 % 21.0 % Add (deduct) effect of: State income taxes, net of federal income tax effect 5.7 ( 14.8 ) ( 0.5 ) U.S. foreign inclusions and foreign tax credit (1) ( 2.4 ) ( 43.5 ) 3.6 Foreign rate differential 12.3 ( 47.2 ) ( 11.6 ) Change in uncertain tax positions — 16.7 0.1 Change in valuation allowance reserve ( 9.2 ) ( 13.8 ) ( 3.8 ) Impairments 1.0 20.7 — Sale of businesses ( 0.9 ) ( 21.2 ) — Capital loss 1.4 — ( 2.1 ) Reversal of outside basis difference 11.2 1.6 0.4 Non-deductible compensation ( 1.1 ) 1.9 0.4 Other taxes ( 1.8 ) 4.5 1.3 U.S. income inclusions on asset transfers ( 10.1 ) 50.3 11.1 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 Effective rate 28.5 % ( 25.5 ) % 18.2 % (1) The Company accounts for tax on global intangible low-taxed income (“GILTI”) as a period cost and the effects are included herein. At December 31, 2023, the Company has accumulated unremitted earnings generated by our foreign subsidiaries of approximately $ 6.0 billion. A portion of these earnings were subject to U.S. federal taxation with the one-time toll charge. 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 75 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. Deferred tax assets (liabilities) consist of the following at December 31, (in millions): 2023 2022 Deferred tax assets: Accruals $ 190 $ 153 Inventory 74 84 Pension and postretirement benefits 38 49 Net operating losses 322 295 Foreign tax credits 16 27 Capital loss carryforward 43 41 Operating lease liabilities 153 169 Capitalized research and development expenses 68 36 Interest expense carryforward 91 28 Other 122 116 Total gross deferred tax assets 1,117 998 Less valuation allowance ( 184 ) ( 148 ) Net deferred tax assets after valuation allowance 933 850 Deferred tax liabilities: Accelerated depreciation ( 112 ) ( 119 ) Amortizable intangibles ( 69 ) ( 114 ) Outside basis differences ( 12 ) ( 96 ) Operating lease assets ( 140 ) ( 154 ) Other ( 35 ) ( 77 ) Total gross deferred tax liabilities ( 368 ) ( 560 ) Net deferred tax assets $ 565 $ 290 The net deferred tax amounts have been classified in the balance sheet at December 31, (in millions): 2023 2022 Noncurrent deferred tax assets $ 806 $ 810 Noncurrent deferred tax liabilities ( 241 ) ( 520 ) 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 $ 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. 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 $ 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 76 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. 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. The Company routinely reviews valuation allowances recorded against deferred tax assets on a more likely than not basis as to whether the Company will realize the deferred tax assets. In making such a determination, the Company takes into consideration all available and appropriate positive and negative evidence, including projected future taxable income, future reversals of existing taxable temporary differences, the ability to carryback net operating losses, and available tax planning strategies. 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, 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 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 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. The following table summarizes the changes in gross unrecognized tax benefits periods indicated are as follows (in millions): 2023 2022 2021 Unrecognized tax benefits, January 1, $ 476 $ 457 $ 452 Increases (decreases): Increases in tax positions for prior years — 1 1 Decreases in tax positions for prior years ( 19 ) ( 3 ) ( 4 ) Increase in tax positions for the current period 12 44 23 Settlements with taxing authorities — ( 13 ) ( 2 ) Lapse of statute of limitations ( 6 ) ( 10 ) ( 12 ) Cumulative translation adjustments — — ( 1 ) Unrecognized tax benefits, December 31, $ 463 $ 476 $ 457 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. During 2023, 2022 and 2021 the Company recognized income tax expense on interest and penalties of $ 9 million, $ 5 million and $ 7 million, respectively, due to the accrual of current year interest on existing positions offset by the resolution of certain tax contingencies. The Company anticipates approximately $ 39 million of unrecognized tax benefits will reverse within the next 12 months. 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. The Company’s U.S. federal income tax returns for 2011 to 2015 and 2017 to 2020, as well as certain state and non-U.S. income tax returns for various years, are under examination. The Company files numerous consolidated and separate income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The statute of limitations for the Company’s U.S. federal income tax returns has expired for years prior to 2011 and for 2016. With few exceptions, the Company is no longer subject to other income tax examinations for years before 2016. 77 Footnote 13 — Leases The Company recognizes a right of use (“ROU”) asset and a liability for all leases whose term is more than 12 months at the lease inception date. ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term, which includes any extension the Company reasonably expects to exercise. The Company assesses whether certain service arrangements contain embedded leases where the contract conveys the right to use an asset but is not explicitly identified as a lease arrangement; examples include information technology, third-party logistics and original equipment manufacturers. The Company uses incremental borrowing rates, updated quarterly, that reflect its own external unsecured borrowing rates that are risk-adjusted to approximate secured borrowing rates over similar terms. For certain non-real estate leases, the portfolio approach is used. The Company also has lease agreements with lease and non-lease components, which are accounted for as a single lease component. Operating lease expense is recognized on a straight-line basis over the lease term. Operating lease assets and operating lease liabilities are reported as separate lines in the Consolidated Balance Sheets. The current portion of operating lease liabilities is reported in other accrued liabilities in the Consolidated Balance Sheets. For finance leases, lease payments are allocated between interest expense and reduction of the liability in accordance with an amortization schedule. 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. Supplemental consolidated balance sheet information for leases at December 31, is as follows (in millions): Classification 2023 2022 Assets Operating leases Operating lease assets $ 515 $ 578 Finance leases Property, plant and equipment, net (1) — 2 Total lease assets $ 515 $ 580 Liabilities Current Operating leases Other accrued liabilities $ 122 $ 121 Finance leases Short-term debt and current portion of long-term debt — 1 Noncurrent Operating leases Operating lease liabilities 446 512 Finance leases Long-term debt — 1 Total lease liabilities $ 568 $ 635 (1) Net of accumulated depreciation of $ 4 million and $ 18 million, respectively. 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) 24 21 23 Finance lease cost Amortization of leased assets 1 4 4 (1) Includes short-term leases, which are immaterial. (2) Consists primarily of additional payments for non-lease components, such as maintenance costs, payments of taxes and additional rent based on a level of the Company’s retail store sales. 78 Remaining lease term and discount rates at December 31, are as follows: 2023 2022 Weighted-average remaining lease term (years): Operating leases 7 8 Finance leases 0 1 Weighted-average discount rate: Operating leases 4.3 % 4.6 % Finance leases — % 0.8 % 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: Operating cash flows from operating leases $ 162 $ 160 $ 163 Financing cash flows from finance leases — 3 4 Right of use assets obtained in exchange for lease liabilities: Operating leases 46 135 144 Maturities of lease liabilities at December 31, 2023, are as follows (in millions): Operating Leases 2024 $ 146 2025 116 2026 89 2027 68 2028 60 Thereafter 173 Total lease payments 652 Less: imputed interest ( 84 ) Present value of lease liabilities $ 568 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): 2023 2022 2021 Basic weighted-average shares outstanding 414.1 415.7 425.3 Dilutive securities (1) — 1.7 2.7 Diluted weighted-average shares outstanding 414.1 417.4 428.0 (1) For 2023, 1.5 million potentially dilutive share-based awards were excluded as their effect would be anti-dilutive. 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 through its expiration date of December 31, 2022. Under the SRP, the Company may purchase its common shares in the open market, in negotiated transactions or in other manners, as permitted by federal securities laws and other legal requirements. On February 25, 2022, the Company repurchased $ 275 million of its shares of common stock beneficially owned by Carl C. Icahn and certain of his affiliates, at a purchase price of $ 25.86 per share, the closing price of the Company’s common shares on February 18, 79 2022. During the three months ended June 30, 2022, the Company repurchased approximately $ 50 million of its shares of common stock at an average purchase price of $ 22.01 per share. 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 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. At December 31, 2023, there were approximately 21 million share-based awards collectively available for grant under the Incentive Plans. The 2013 Incentive Plan generally provides for stock-based awards to employees to vest over a minimum of three years , although some awards may vest earlier if granted to a new employee or if tied to the achievement of specified market or performance conditions, in which case such awards vest no earlier than one year from the date of grant. The 2022 Incentive Plan generally provides for stock-based awards to employees to vest no earlier than one year from the date of grant, subject to a de minimis exception. The stock-based awards granted to employees include stock options and time-based and performance-based restricted stock units, as follows: Stock Options In years in which the Company has elected to grant stock options, it has issued them at exercise prices equal to the Company’s common stock price on the date of grant with contractual terms of ten years . Stock options issued by the Company generally vest and are expensed ratably over three years . Stock option grants are generally subject to forfeiture if employment terminates prior to vesting, except upon retirement, death or disability, in which case the options may remain outstanding and exercisable for a specified period not to exceed the remaining contractual term of the option. The following table summarizes the changes in the number of shares of common stock for 2023 (shares and aggregate intrinsic value in millions): Shares Weighted Average Exercise Price Per Share Weighted Average Remaining Life (in years) Aggregate Intrinsic Value Outstanding at December 31, 2022 6.5 $ 23 Granted 0.5 13 Exercised — — Forfeited ( 0.4 ) 24 Outstanding at December 31, 2023 6.6 $ 22 6.9 $ 0 Options exercisable, end of year 4.2 $ 21 6.4 $ 0 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 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. 80 The weighted average assumptions used to determine the fair value of stock options granted for the years ended December 31, are as follows: 2023 2022 Expected life in years 7 6 Risk-free interest rate 3.6 % 1.9 % Expected volatility 42.1 % 42.0 % Expected dividend yield 4.4 % 5.1 % 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”), 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. 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 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. 81 The following table summarizes the changes in the number of outstanding restricted stock units for 2023 (shares in millions): Restricted Stock Unit Weighted Average Grant Date Fair Value Per Share Outstanding at December 31, 2022 4.5 $ 24 Granted 10.5 11 Grant adjustment (1) ( 0.6 ) 22 Vested ( 0.9 ) 22 Forfeited ( 1.0 ) 19 Outstanding at December 31, 2023 12.5 $ 14 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 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: (in millions) Unrecognized Compensation Cost Weighted Average Period of Expense Recognition (in years) Restricted stock units $ 80 1 Stock options 4 1 Total $ 84 1 Excess tax benefits (detriments) related to stock-based compensation for 2023, 2022 and 2021 were $( 2 ) million, $ 2 million and $ 1 million, respectively. Footnote 16 — Fair Value Disclosures Accounting principles generally accepted in the U.S. define fair value as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). These valuation techniques are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. As the basis for evaluating such inputs, a three-tier value hierarchy prioritizes the inputs used in measuring fair value as follows: 82 Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets. Level 2: Observable inputs other than quoted prices that are directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets; quoted prices for similar or identical assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions. Recurring Fair Value Measurements The Company’s financial assets and liabilities adjusted to fair value at least annually are its money market fund investments included in cash and cash equivalents, its mutual fund investments included in other assets, and its derivative instruments, which are primarily included in prepaid expenses and other, other assets, other accrued liabilities and other noncurrent liabilities. The following tables present the Company’s non-pension financial assets and liabilities, which are measured at fair value on a recurring basis (in millions): December 31, 2023 December 31, 2022 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Derivatives: Assets $ — $ 45 $ — $ 45 $ — $ 97 $ — $ 97 Liabilities — ( 165 ) — ( 165 ) — ( 124 ) — ( 124 ) Investment securities, including mutual funds 14 — — 14 14 — — 14 For publicly-traded investment securities, including mutual funds, fair value is determined on the basis of quoted market prices and, accordingly, such investments are classified as Level 1. Other investment securities are primarily comprised of money market accounts that are classified as Level 2. The Company determines the fair value of its derivative instruments using standard pricing models and market-based assumptions for all significant inputs, such as yield curves and quoted spot and forward exchange rates. Accordingly, the Company’s derivative instruments are classified as Level 2. During 2019, the Company acquired an equity investment for $ 18 million, which is traded on an active exchange and therefore has a readily determinable fair value. 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 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 ). Financial Instruments The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, derivative instruments, notes payable and short and long-term debt. The carrying values for current financial assets and liabilities, including cash and cash equivalents, accounts receivable, accounts payable and short-term debt approximate fair value due to the short maturity of such instruments. The fair values of the Company’s debt and derivative instruments are disclosed in Footnote 9 and Footnote 10 , respectively. Nonrecurring Fair Value Measurements The Company’s non-financial assets which are measured at fair value on a nonrecurring basis include property, plant and equipment, goodwill, intangible assets and certain other assets. The Company’s goodwill and indefinite-lived intangibles are fair valued using discounted cash flows. Goodwill impairment testing requires significant use of judgment and assumptions including the identification of reporting units; the assignment of assets and liabilities to reporting units; and the estimation of future cash flows, business growth rates, terminal values and discount rates. The testing of indefinite-lived intangibles under established guidelines for impairment also requires significant use of judgment and assumptions, such as the estimation of cash flow projections, terminal values, royalty rates, contributory cross charges, where applicable, and discount rates. Accordingly, these fair value measurements fall in Level 3 of the fair value hierarchy. These assets and certain liabilities are measured at fair value on a nonrecurring basis as part of the Company’s annual impairment testing and as circumstances require. 83 The following table summarizes the assets that are measured at fair value on a nonrecurring basis at December 1, (in millions): 2023 2022 Level 3 Indefinite-lived intangibles $ 544 $ 129 $ 544 $ 129 At December 31, 2023 and 2022, goodwill and intangible assets of certain reporting units are recorded at fair value based upon the Company’s impairment testing. 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 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. The Company reviews long-lived assets for impairment whenever events or circumstances indicate that carrying amounts may not be recoverable through future undiscounted cash flows. If the Company concludes that impairment exists, the carrying amount is reduced to fair value. 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 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 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; household products, including kitchen appliances; food and home storage products; fresh preserving products; vacuum sealing products; gourmet cookware, bakeware and cutlery and home fragrance products Learning and Development 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 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 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. 84 The Company’s segment and geographic results are as follows at and for the years ended December 31, (in millions): 2023 2022 2021 Net sales (1) Home and Commercial Solutions (3) $ 4,428 $ 5,194 $ 6,077 Learning and Development 2,706 2,950 3,028 Outdoor and Recreation 999 1,315 1,484 $ 8,133 $ 9,459 $ 10,589 2023 2022 2021 Operating income (loss) (2) Home and Commercial Solutions (3) $ 37 $ ( 212 ) $ 566 Learning and Development 213 593 600 Outdoor and Recreation ( 83 ) 86 90 Corporate ( 252 ) ( 155 ) ( 243 ) $ ( 85 ) $ 312 $ 1,013 2023 2022 2021 Depreciation and amortization Home and Commercial Solutions (3) $ 163 $ 145 $ 169 Learning and Development 71 60 57 Outdoor and Recreation 35 34 35 Corporate 65 57 64 $ 334 $ 296 $ 325 2023 2022 2021 Impairment of goodwill and intangible assets Home and Commercial Solutions (3) $ 76 $ 444 $ 29 Learning and Development 241 30 31 Outdoor and Recreation 22 — — $ 339 $ 474 $ 60 2023 2022 2021 Capital expenditures Home and Commercial Solutions (3) $ 93 $ 107 $ 131 Learning and Development 60 70 73 Outdoor and Recreation 16 21 24 Corporate 115 114 61 $ 284 $ 312 $ 289 85 December 31, 2023 December 31, 2022 Segment assets Home and Commercial Solutions $ 4,713 $ 5,243 Learning and Development 4,111 4,494 Outdoor and Recreation 687 920 Corporate 2,652 2,605 $ 12,163 $ 13,262 Geographic area information 2023 2022 2021 Net Sales (1) (4) United States $ 5,129 $ 6,144 $ 6,921 Canada 313 375 444 Total North America 5,442 6,519 7,365 Europe, Middle East and Africa 1,283 1,408 1,647 Latin America 863 837 810 Asia Pacific 545 695 767 Total International 2,691 2,940 3,224 $ 8,133 $ 9,459 $ 10,589 (1) All intercompany transactions have been eliminated. (2) Operating income (loss) by segment is net sales less cost of products sold, SG&A, restructuring and impairment of goodwill, intangibles and other assets. Certain headquarters expenses of an operational nature are allocated to business segments primarily on a net sales basis. Corporate depreciation and amortization is allocated to the segments on a percentage of sales basis, and the allocated depreciation and amortization are included in segment operating income (loss). (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. Long-lived assets by geography are not presented because it is impracticable to do so. The Company’s largest customer, Walmart Inc. 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. 86 The following table disaggregates revenue by major product grouping source and geography for the years ended December 31, (in millions): 2023 2022 2021 Commercial $ 1,434 $ 1,582 $ 1,558 Kitchen 2,244 2,618 3,033 Home Fragrance 750 885 1,091 Connected Home and Security — 109 395 Home and Commercial Solutions 4,428 5,194 6,077 Baby 989 1,197 1,265 Writing 1,717 1,753 1,763 Learning and Development 2,706 2,950 3,028 Outdoor and Recreation 999 1,315 1,484 $ 8,133 $ 9,459 $ 10,589 North America Home and Commercial Solutions $ 2,942 $ 3,625 $ 4,319 Learning and Development 1,937 2,156 2,172 Outdoor and Recreation 563 738 874 $ 5,442 $ 6,519 $ 7,365 International Home and Commercial Solutions $ 1,486 $ 1,569 $ 1,758 Learning and Development 769 794 856 Outdoor and Recreation 436 577 610 $ 2,691 $ 2,940 $ 3,224 TOTAL Home and Commercial Solutions $ 4,428 $ 5,194 $ 6,077 Learning and Development 2,706 2,950 3,028 Outdoor and Recreation 999 1,315 1,484 $ 8,133 $ 9,459 $ 10,589 87 Footnote 18 — Litigation and Contingencies The Company is subject to various claims and lawsuits in the ordinary course of business, including from time to time, contractual disputes, employment and environmental matters, product and general liability claims, claims that the Company has infringed on the intellectual property rights of others, and consumer and employment class actions. Some of the legal proceedings include claims for punitive as well as compensatory damages. In the ordinary course of business, the Company is also subject to legislative requests, regulatory and governmental examinations, information requests and subpoenas, inquiries, investigations, and threatened legal actions and proceedings. In connection with such formal and informal inquiries, the Company receives numerous requests, subpoenas, and orders for documents, testimony and information in connection with various aspects of its activities. The Company previously disclosed that it had received a subpoena and related informal document requests from the SEC primarily relating to its sales practices and certain accounting matters. 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 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 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. The factual allegations underlying these claims are similar to the factual allegations made in the In re Newell Brands, Inc. Securities Litigation that was previously pending in the United States District Court for the District of New Jersey. That matter was dismissed by the District Court on January 10, 2020, and the dismissal was affirmed by the United States District Court of Appeals for the Third Circuit on December 1, 2020. The 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 December 30, 2020, two shareholders filed a putative derivative complaint, Weber, et al. v. 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. 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 88 prejudice. 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 The Company is involved in various matters concerning federal and state environmental laws and regulations, including matters in which the Company has been identified by the U.S. Environmental Protection Agency (“U.S. EPA”) and certain state environmental agencies as a potentially responsible party (“PRP”) at contaminated sites under the Comprehensive Environmental Response Compensation and Liability Act (“CERCLA”) and equivalent state laws. In assessing its environmental response costs, the Company has considered several factors, including the extent of the Company’s volumetric contribution at each site relative to that of other PRPs; the kind of waste; the terms of existing cost sharing and other applicable agreements; the financial ability of other PRPs to share in the payment of requisite costs; the Company’s prior experience with similar sites; environmental studies and cost estimates available to the Company; the effects of inflation on cost estimates; and the extent to which the Company’s, and other parties’ status as PRPs is disputed. The Company’s estimate of environmental remediation costs associated with these matters at 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. Because of the uncertainties associated with environmental investigations and response activities, the possibility that the Company could be identified as a PRP at sites identified in the future that require the incurrence of environmental response costs and the possibility that sites acquired in business combinations may require environmental response costs, actual costs to be incurred by the Company may vary from the Company’s estimates. Lower Passaic River Matter The U.S. EPA has issued General Notice Letters to over 100 entities, including the Company and its subsidiary, Berol Corporation (together, the “Company Parties”), alleging that they are PRPs at the Diamond Alkali Superfund Site (the “Site”) pursuant to CERCLA. The Site is the subject of investigation and remedial activities and related settlement negotiations with the U.S. EPA. The Site is divided into four “operable units,” and the Company Parties have received General Notice Letters in connection with operable Unit 2, which comprises the lower 8.3 miles of the Lower Passaic River and its tributaries (“Unit 2”), and operable Unit 4, which comprises a 17 -mile stretch of the Lower Passaic River and its tributaries (“Unit 4”). Unit 2 is geographically subsumed within Unit 4. In October 2021, the U.S. EPA issued a Record of Decision for an interim remedy for the upper 9 miles of Unit 4, selecting a combination of dredging and capping as the remedial alternative, which the U.S. EPA estimates will cost $ 441 million in the aggregate. The U.S. EPA also performed a Source Control Early Action Focused Feasibility Study for Unit 2, which culminated in a Record of Decision in 2016. The U.S. EPA estimates that the selected remedy for Unit 2 set forth in its Record of Decision will cost $ 1.4 billion in the aggregate. In September 2017, the U.S. EPA announced an allocation process involving roughly 80 Unit 2 General Notice Letter recipients, with the intent of offering cash-out settlements to a number of parties (the “U.S. EPA Settlement”). The allocation process has concluded, and the Company Parties were placed in the lowest tier of relative responsibility among allocation parties. On December 16, 2022, the U.S. EPA simultaneously filed a complaint and lodged a Consent Decree to resolve the liability of the Company Parties and other settlement parties for past and future CERCLA response costs at Unit 2 and Unit 4. On January 17, 2024, following review of public comments, the U.S. EPA filed an amended complaint and lodged a modified Consent Decree. U.S. 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 89 that its allocation in the U.S. EPA Settlement relating to Unit 2 and Unit 4, if the settlement is finalized, will be material to the Company. In June 2018, Occidental Chemical Corporation (“OCC”) sued over 100 parties, including the Company Parties, in the U.S. District Court in New Jersey pursuant to CERCLA, requesting cost recovery, contribution, and a declaratory judgement. The defendants, in turn, filed claims against 42 third-party defendants, and filed counterclaims against OCC (collectively, the “OCC Litigation”). The primary focus of the OCC Litigation has been certain past and future costs for investigation, design and remediation of Units 2 and 4. However, OCC has stated that it anticipates asserting claims against defendants regarding Newark Bay, which is also part of the Site, after the U.S. EPA has selected the Newark Bay remedy. OCC has also stated that it may broaden its claims in the future after completion of the Natural Resource Damage Assessment described below. In March 2023, the Court granted an unopposed motion to stay the OCC Litigation. 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 with respect to the Site. Based on currently known facts and circumstances, the Company does not believe that the Lower Passaic River matter is reasonably likely to have a material impact on the Company’s results of operations. However, in the event of one or more adverse determinations related to this matter, including the OCC Litigation and Natural Resource Damage Assessment noted above (for which the Company cannot currently estimate the range of possible losses), it is possible that the ultimate liability resulting from this matter and the impact on the Company’s results of operations could be material. Because of the uncertainties associated with environmental investigations and response activities, the possibility that the Company could be identified as a PRP at sites identified in the future that require the incurrence of environmental response costs and the possibility that sites acquired in business combinations may require environmental response costs, actual costs to be incurred by the Company may vary from the Company’s estimates. Other Matters In the normal course of business and as part of its acquisition and divestiture strategy, the Company may provide certain representations and indemnifications related to legal, environmental, product liability, tax or other types of issues. Based on the nature of these representations and indemnifications, it is not possible to predict the maximum potential payments under all of these agreements due to the conditional nature of the Company’s obligations and the unique facts and circumstances involved in each particular agreement. Historically, payments made by the Company under these agreements did not have a material effect on the Company’s business, financial condition or results of operations. In connection with the 2018 sale of The Waddington Group, Novolex Holdings, Inc. (the “Buyer”) filed suit against the Company in October 2019 in the Superior Court of Delaware. The Buyer generally alleged that the Company fraudulently breached certain representations in the Equity Purchase Agreement between the Company and Buyer, dated May 2, 2018, resulting in an inflated purchase price for The Waddington Group. In the year ended December 31, 2021, the Company recorded an immaterial reserve in its Consolidated Financial Statements based on its best estimate of probable loss associated with this matter. Further, in connection with the Company’s sale of The United States Playing Card Company (“USPC”), Cartamundi, Inc. and Cartamundi España, S.L., (the “Buyers”) have notified the Company of their contention that certain representations and warranties in the Stock Purchase Agreement, dated June 4, 2019, were inaccurate and/or breached, and have sought indemnification to the extent that the Buyers are required to pay related damages arising out of a third party lawsuit that was recently filed against USPC. During the fourth quarter of 2022, the Company recorded an immaterial reserve based on the outcome of a judicial ruling relating to indirect taxes in an international entity. 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 . 90 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. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable.