What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-14 compared with 2024-02-21 · 269 added, 292 removed, 361 unchanged (61% of the section changed)

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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.

The Company has three operating segments:

Home and Commercial Solutions (“H&CS”), Learning and Development (“L&D”) and Outdoor and Recreation (“O&R”).

Business Strategy

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Execution of these strategic imperatives, in combination with other initiatives aimed to build operational excellence, will better position the Company for long-term sustainable growth.

One such initiative is Project Ovid, a 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.

This initiative, which completed its first phase go-live during the third quarter of 2022 and its second phase go-live during the first quarter of 2023, leveraged technology to further simplify the organization by harmonizing and automating processes.

Project Ovid was designed to optimize the Company’s distribution network by creating a single integrated supply chain from 23 business-unit-centric supply chains.

The initiative was intended to reduce administrative complexity, improve inventory and invoicing workflow for our customers and enhance product availability for consumers through omni-channel enablement.

This new operating model was also expected to drive efficiencies by better utilizing the Company’s transportation and distribution network and consolidating the number of overall distribution sites.

In May 2023, the Company announced a restructuring and cost 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 the execution of the Network Optimization Project.

The Company also expects to incur $30 million to $40 million in capital expenditures related to the Network Optimization Project.

One such initiative is Project Ovid which entails a multi-year, customer centric supply chain initiative which has transformed the Company’s go-to-market capabilities in the U.S., improving customer service levels and driving operational efficiencies.

Project Ovid optimized the Company’s distribution network in 2022 and 2023 by creating a single integrated supply chain from 23 business-unit-centric supply chains.

The initiative reduced administrative complexity, improved inventory and invoicing workflow for our customers and enhanced product availability for consumers through omni-channel enablement.

This new operating model continues to drive efficiencies by better utilizing the Company’s transportation and distribution network and consolidating the number of overall distribution sites.

In May 2023, the Company announced a restructuring and cost savings initiative that was 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 Network Optimization Project incorporated 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.

These actions were substantially implemented by the end of 2024.

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, streamline its operating model and drive 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 included manufacturing, distribution, transportation and customer service, transition to a unified One Newell go-to-market model in key international geographies, and otherwise reduce overhead costs.

The Company commenced reducing headcount during the first quarter of 2023, with most of these actions completed by the end of 2023.

The Company estimates that it will incur approximately $100 million to $130 million in restructuring and restructuring-related charges in connection with Project Phoenix.

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:

The Company commenced reducing headcount during the first quarter of 2023.

Project Phoenix 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, transition to a unified One Newell go-to-market model in key international geographies, and otherwise reduce overhead costs.

These actions were substantially implemented by the end of 2023.

In January 2024, the Company announced an organizational realignment (“Realignment Plan”), which was designed 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 Realignment Plan was designed to unlock operational efficiencies and cost savings, reduce complexity and free up funds for reinvestment.

As part of the Realignment Plan, the Company has made several operating model changes, which entailed:

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.

The Company estimates that it will incur approximately $75 million to $90 million in restructuring and restructuring-related charges in connection with the organizational realignment.

In addition, the Company continues to review its operating footprint and non-core brands, which will likely result in future restructuring charges.

Organizational Structure

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 chief operating decision maker (“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.

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.

See Footnote 17 of the Notes to Consolidated Financial Statements for further 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.

The Company has also further optimized the Company’s real estate footprint and pursued other cost reduction initiatives.

These actions were primarily implemented by the end of 2024.

Remaining actions, subject to applicable local law and consultation requirements, are expected to be implemented by the end of fiscal year 2025.

In addition, the Company continues to review its operating footprint and non-core brands, which will likely result in future restructuring and restructuring-related charges.

Recent Developments

Current Macroeconomic Conditions

The Company continues to be impacted by soft global demand, focus by major retailers on rebalancing of inventory levels, inflationary pressures, rising interest rates and indirect 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 impacted the Company’s operating results, cash flows and financial condition during 2023 and are mostly expected to persist into 2024.

To help mitigate the negative impact of these conditions to the operating performance of its businesses, the Company has secured selective pricing increases, accelerated productivity initiatives, optimized advertising and promotion expenses, deployed overhead cost containment efforts, adjusted demand forecasts and supply plans, and taken actions designed to improve working capital.

The Company continues to be impacted by soft global demand, major retailers’ focus on tight control over inventory levels, inflationary pressures, fluctuating interest rates and indirect impacts from geopolitical conflicts.

To help mitigate the negative impact of these conditions to the operating performance of its businesses, the Company has accelerated productivity initiatives, optimized advertising and promotion expenses, deployed overhead cost containment efforts, adjusted demand forecasts and supply plans, and taken actions designed to improve working capital.

The Company will continue to evaluate other opportunities to improve its financial performance both in the short and long term.

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While the Company does not expect these conflicts to have a material impact on its results of operations, it has experienced supply chain disruptions, shortages in raw materials and increased costs for transportation, energy and commodities due in part to the negative impact of these conflicts on the global economy.

Further escalation of geopolitical tensions, including

increased trade barriers and restrictions on global trade, could result in, among other things, supply disruptions, lower consumer demand, and changes to foreign exchange rates and financial markets, any of which may adversely affect our business and supply chain.

Further escalation of geopolitical tensions, including increased trade barriers and restrictions on global trade, could result in, among other things, supply disruptions, lower consumer demand, and changes to foreign exchange rates and financial markets, any of which may adversely affect our business and supply chain.

Additionally, if these military conflicts escalate beyond their current scope, the Company could be negatively impacted by localized or global economic recessions.

See Results of Operations, Critical Accounting Estimates and Footnote 1 of the Notes to Consolidated Financial Statements for further information.

Network Optimization Project

During the year ended December 31, 2023, the Company recorded restructuring and restructuring-related charges of $7 million and $16 million, respectively in connection with the project.

Project Phoenix

During the year ended December 31, 2023, the Company recorded restructuring and restructuring-related charges of $78 million and $19 million, respectively in connection with the project.

Tariffs Exposure

In early 2025, the current U.S.

presidential administration announced significant new tariffs on foreign imports into the U.S., specifically from Mexico and Canada, all of which were subsequently postponed prior to becoming effective, and China, and has proposed additional new tariffs that may be implemented in the future.

The Company is working to determine its tariff cost exposure, and potential mitigation plans, as well as the associated timing to implement such, if any.

However, the impact to the Company’s results of operations and cash flows cannot be determined at this time.

Organizational Realignment Plan

In January 2024, the Company announced the Realignment Plan, which is expected to strengthen the Company’s front-end commercial capabilities, as further described in the preceding section.

The Company initiated the Realignment Plan during the first quarter of 2024.

For the year ended December 31, 2024, the Company recorded restructuring and restructuring-related charges of $37 million and $15 million, respectively.

See Risk Factors in Item 1A .

and Footnote 4 of the Notes to Consolidated Financial Statements for further information.

Goodwill and Other Indefinite-Lived Intangible Asset Impairments

During the fourth quarter of 2023, as a result of 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 of the tradenames exceeded their fair values.

In June 2024, as part of optimizing the Company’s real estate footprint, the Company entered into a lease agreement for a new location of its corporate headquarters in Atlanta, Georgia, which will allow it to consolidate five different facilities and bring together employees in the area into a single location.

Also in June 2024, the Company entered into an agreement with an unrelated third party to sell and leaseback its current headquarters facility, which transaction was finalized during the fourth quarter of fiscal year 2024.

In connection with this transaction, the Company recognized a loss of $8 million, which was included in the $15 million restructuring-related charges mentioned above.

The Company intends to occupy the current facility while conducting the build-out of the new facility, which is anticipated to be completed during the first half of fiscal year 2025.

See Footnotes 4 and 13 of the Notes to Consolidated Financial Statements for further information.

Indefinite-Lived Intangible Asset Impairment

During the fourth quarter of 2024, as a result of the Company’s annual impairment testing, the Company recorded a non-cash impairment charge of $85 million related to one tradename in the H&CS segment, as the carrying value of the tradename exceeded its fair value.

The decline in the fair value of the tradename in the H&CS segment was the result of a downward revision of forecasted revenue mainly due to a distribution loss, which the Company was informed of during the fourth quarter of 2024.

During the third quarter of 2024, the Company concluded that triggering events had occurred for indefinite-lived tradenames in the H&CS and L&D segments as a result of downward revision of forecasted cash flows primarily due to lower volume and profitability expectations.

The Company performed quantitative impairment tests and determined that indefinite-lived tradenames in the H&CS and L&D segments were impaired, and recorded an aggregate non-cash impairment charge of $260 million for the indefinite-lived tradenames, as the carrying values exceeded their fair values.

See Critical Accounting Estimates and Footnotes 1 and 7 of the Notes to Consolidated Financial Statements for further information.

Debt Rating Downgrades

On February 9, 2024, Moody’s Corporation (“Moody’s”) downgraded the Company’s senior unsecured debt rating to “Ba3”, subjecting certain of the Company’s outstanding senior notes currently aggregating to approximately $3.1 billion (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 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 Global Inc.

(“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).

See Footnote 9 of the Notes to Consolidated Financial Statements for further information.

Amendments to Credit Revolver

As of December 31, 2023, the Company maintained a $1.5 billion senior unsecured revolving credit facility (the “Credit Revolver”) maturing in August 2027.

On March 27, 2023, the Company entered into an amendment to its Credit Revolver (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.

See Footnote 9 of the Notes to Consolidated Financial Statements for further information.

On February 7, 2024, the Company, certain of its subsidiaries, as subsidiary borrower, and certain of its subsidiaries, as subsidiary guarantors, entered into a second amendment to the Credit Revolver (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 financial covenants with new financial covenants testing the Company’s Collateral Coverage Ratio and Total Net Leverage Ratio (each further defined in the Second Amendment), (iii) requires the Company and certain of the Company’s domestic and foreign subsidiaries (collectively 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.

See Footnote 9 of the Notes to Consolidated Financial Statements for further information.

New Accounts Receivables Facility

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.

Debt Redemption and Issuance

In December 2024, the Company repaid the outstanding aggregate principal amount of its 4.000% senior notes, plus accrued and unpaid interest upon maturity for total consideration of $205 million.

In November 2024, the Company completed a registered public offering and sale of $750 million of aggregate principal amount of 6.375% senior notes due 2030 (the “2030 Notes”) and $500 million of aggregate principal amount of 6.625% senior notes due 2032 (the “2032 Notes”) (collectively the “Notes”) and received proceeds of approximately $1.24 billion, net of fees and expenses paid.

The Company used the proceeds of the offering to fully redeem its outstanding 4.875% senior notes due 2025 and to redeem in part its outstanding 4.200% senior notes due 2026.

In November 2024, the Company fully redeemed its 4.875% notes due 2025 at a redemption price equal to 100% of the outstanding aggregate principal amount of the notes, plus accrued unpaid interest to the date of the redemption.

The total consideration was approximately $511 million.

The Company also partially redeemed $750 million of the outstanding aggregate amount of the 4.200% senior notes due 2026 at a redemption price of 101.006%.

The total consideration, including accrued unpaid interest to the date of its redemption was approximately $764 million.

As a result of the aforementioned redemptions, the Company recorded a total loss on debt extinguishment of $13 million.

See Footnote 9 of the Notes to Consolidated Financial Statements for further information.

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Interest expense, net 295 283 12 4.2%

Other (income) expense, net 175 (81) 256 NM

Income (loss) before income taxes (543) 157 (700) NM

Income tax benefit (155) (40) (115) NM

Loss on extinguishment and modification of debt 14 — 14 100.0%

Other expense, net 18 175 (157) (89.7)%

Loss before income taxes (260) (543) 283 52.1%

Income tax benefit (44) (155) 111 71.6%

Income tax rate 16.9 % 28.5 %

Net income (loss) $ (388) $ 197 (585) NM

Diluted earnings (loss) per share $ (0.94) $ 0.47

Net loss $ (216) $ (388) 172 44.3%

Diluted loss per share $ (0.52) $ (0.94)

NM — NOT MEANINGFUL

Net sales decreased 14%.

Net sales were unfavorably impacted by soft global demand, distribution losses and category exits, primarily in the Home and Commercial Solutions segment, partially offset by pricing actions by the Company.

The sale of the CH&S business at the end of the first quarter of 2022, negatively impacted net sales by approximately 1%.

Changes in foreign currency unfavorably impacted net sales by $38 million, or less than 1%.

Gross profit decreased 17% compared to prior year.

Gross margin declined to 28.9% as compared with 30.0% in the prior year.

The decline in gross margin reflected higher absorption cost associated with lower sales volume, higher sales promotional activities to reduce elevated inventory levels, inflation and higher restructuring-related charges, partially offset by favorable pricing and productivity.

The gross profit decline also reflected the unfavorable impact of the sale of the CH&S business in the prior year.

Net sales decreased 7% compared to prior year.

Net sales were unfavorably impacted by soft global demand and net distribution losses.

Product line exits negatively impacted net sales by approximately 1%, primarily in the H&CS segment.

These factors were partially mitigated by pricing, mainly in international markets to offset inflation and currency movement.

Changes in foreign currency unfavorably impacted net sales by $234 million, or approximately 3%.

Gross profit increased 8% compared to prior year.

Gross margin improved to 33.6% as compared with 28.9% in 2023.

The improvement in gross margin was driven by pricing, productivity and lower restructuring-related charges of $50 million, partially offset by higher absorption cost associated with lower sales volume and inflation.

Changes in foreign currency exchange rates unfavorably impacted gross profit by $121 million, or 5%.

Notable items impacting operating income (loss) for 2023 and 2022 are as follows:

Notable items, other than the aforementioned, impacting operating income (loss) for 2024 and 2023 are as follows:

Years Ended December 31,

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$ 345 $ 339 $ 6

Restructuring ( See Footnote 4) and restructuring-related (a)

Transactions and other costs (b)

(a) Restructuring-related costs reported in cost of products sold and selling, general and administrative expenses (“SG&A”) for 2023 were $86 million and $13 million, respectively, and primarily relate to facility closures.

Restructuring ( See Footnote 4) and restructuring-related (a) (b)

Transaction costs and other (c)

(a) Restructuring-related costs reported in cost of products sold and selling, general and administrative expenses (“SG&A”) and in impairment of goodwill, intangibles and other assets for 2024 were $36 million, $13 million and $8 million, respectively, and primarily relate to facility closures.

Restructuring-related costs reported in cost of products sold and SG&A for 2023 were $86 million and $13 million, respectively, and primarily relate to facility closures.

Restructuring costs for 2024 and 2023 were $45 million and $95 million, respectively.

(b) Transaction and other costs for 2023 primarily relate to completed divestitures, expenses associated with certain legal proceedings and inventory reserve due to change in raw material regulation.

Transaction and other costs for 2022 primarily relate to completed divestitures, expenses associated with certain legal proceedings, an indirect tax reserve for an international entity and an incremental bad debt reserve for an international customer.

Operating loss was $85 million as compared to operating income of $312 million in the prior year period.

The decline reflects the impact of lower gross profit, higher restructuring and restructuring-related charges, primarily in connection with Project Phoenix, the Network Optimization Project and other on-going facility closures and higher incentive compensation expense, partially offset by lower non-cash impairment charges, lower advertising and promotion costs, savings from restructuring actions and an employee retention credit in connection with the CARES Act.

Interest expense, net increased primarily due to higher interest rates, partially offset by higher interest income.

(b) Restructuring-related cost during the twelve months ended December 31, 2024 related to Project Phoenix, Network Optimization Project, Realignment Plan and other discrete programs were $8 million, $18 million, $15 million and $16 million, respectively.

(c) Transaction costs and other for 2024 primarily relate to accelerated amortization and write-off of other assets associated with integration projects.

Transaction costs and other reported in cost of products sold and SG&A for 2024 were $11 million and $1 million, respectively.

Transaction costs and other for 2023 primarily relate to completed divestitures, expenses associated with certain legal proceedings, impairment of other assets and inventory write-down due to regulatory restrictions banning the salability of certain of the Company’s products in certain jurisdictions.

Transaction costs and other reported in cost of products sold, SG&A and impairment of other assets for 2023 were $20 million, $23 million and $3 million, respectively.

Operating income was $67 million as compared to operating loss of $85 million in the prior year period.

The improvement reflects the impact of higher gross profit of $195 million as discussed above, savings from restructuring actions primarily from Project Phoenix and the Realignment Plan, lower restructuring charges of $50 million and lower transaction costs and other of $22 million.

These improvements were partially offset by higher incentive compensation expense of approximately $89 million, higher advertising and promotion costs of $46 million and $23 million of additional amortization of certain tradenames.

Interest expense, net increased primarily due to higher interest rates and lower interest income.

The weighted average interest rates for 2024 and 2023 were approximately 5.8% and 5.2%, respectively.

The loss on extinguishment and modification of debt of $14 million for 2024, is primarily related to the Company’s redemption of certain of its senior notes.

See Footnote 9 of the Notes to Consolidated Financial Statements for further information.

Other (income) expense, net for 2023 and 2022 include the following items:

Other expense, net for 2024 and 2023 include the following items:

Years Ended December 31,

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Pension settlement and non-service costs, net (See Footnote 11 )

Gain on disposition of businesses (See Footnote 2 )

Foreign exchange losses, net (See Footnote 10 )

Discount on factored receivables and other, net 11 27

The income tax benefit for 2023 was $155 million as compared to benefit of $40 million in 2022.

The effective tax rate for 2023 was 28.5%, resulting from the combination of pretax book losses and discrete tax benefits of $112 million due to the effects of certain legal entity reorganizations in the U.S.

and Luxembourg and $10 million due to the filing of tax returns in various jurisdictions.

The year ended December 31, 2022 included discrete benefits of $58 million associated with a change in the Company’s indefinite reinvestment assertion regarding certain earnings within its Irish operations, $28 million associated with the reduction in valuation allowance related to the integration of certain Brazilian and Luxembourg operations and $6 million associated with the approval of certain state tax credits, offset by $14 million of income tax expense related to the divestiture of CH&S.

The income tax benefit for 2024 was $44 million as compared to $155 million in 2023.

The effective tax rate for 2024 was 16.9%, due to the impact of certain discrete items as compared to 28.5% for 2023.

See Footnote 12 of the Notes to Consolidated Financial Statements for further information on income taxes.

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Operating margin 0.0 % 0.8 %

Notable items impacting operating income (loss) comparability:

Impairment of goodwill and intangible assets (See Footnotes 1 and 7 )

Home and Commercial Solutions net sales for 2023 decreased 15%, which reflected soft demand across all businesses, the sale of the CH&S business at the end of the first quarter of 2022, which unfavorably impacted net sales by approximately 2%, as well as certain category exits and distribution losses, primarily in the Kitchen business, partially offset by pricing actions.

Changes in foreign currency unfavorably impacted net sales by $14 million.

Operating income for 2023 was $37 million as compared to operating loss of $212 million in the prior year.

The improvement in operating results is primarily due to gross productivity, pricing actions, lower non-cash impairment charges and advertising and promotional costs, as well as savings from restructuring actions, partially offset by lower gross profit reflecting higher absorption costs associated with lower sales volume, as well as higher restructuring and restructuring-related charges in connection with Project Phoenix.

The sale of CH&S business in the prior year also unfavorably impacted the operating results.

H&CS net sales for 2024 decreased 8% compared to prior year, which reflected soft demand across all businesses and distribution losses.

Product line exits also negatively impacted net sales by approximately 1%.

Pricing actions partially offset these negative factors.

Changes in foreign currency unfavorably impacted net sales by $151 million, or 3%.

Operating loss for 2024 was $2 million as compared to operating income of $37 million in the prior year.

The decline in operating results is primarily due to higher non-cash impairment charges, related to indefinite-lived tradenames of $275 million, compared to a charge of $76 million during 2023, higher advertising and promotion costs of $18 million, additional amortization of certain tradenames of $17 million and inflation.

These factors were partially offset by improvement of $134 million in gross profit, mainly due to productivity, lower restructuring charges of $41 million and release of a bad debt reserve due to a recovery of a receivable from an international customer of $9 million.

See Footnote 7 of the Notes to the Consolidated Financial Statements for further information on non-cash impairment charge and additional amortization of tradenames.

Learning and Development

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Net sales $ 2,717 $ 2,706 $ 11 0.4%

Operating income 213 593 (380) (64.1)%

Operating income 473 213 260 NM

Operating margin 17.4 % 7.9 %

Notable items impacting operating income comparability:

Impairment of goodwill and intangible assets (See Footnotes 1 and 7 )

Learning and Development net sales for 2023 decreased 8%, primarily due to a decline in the Baby business.

The Writing business declined slightly due to soft demand in certain categories, partially offset by pricing actions and innovation.

Pricing actions in the Baby business were more than offset by soft demand in certain categories and lower sales to a customer that declared bankruptcy.

Changes in foreign currency unfavorably impacted net sales by $10 million.

Operating income for 2023 decreased to $213 million as compared to $593 million in the prior-year period.

The decrease in operating income is primarily due to lower gross profit reflecting higher absorption costs associated with lower sales volume and inflation, as well as higher charges for non-cash goodwill impairment, restructuring and restructuring-related charges in connection with Project Phoenix and advertising and promotion costs, partially offset by gross productivity, favorable pricing and savings from restructuring actions.

L&D net sales for 2024 increased modestly by less than 1%, compared to prior year, as growth in the Baby business, primarily as a result of improved orders from major retailers and innovation, was partially offset by a decline in the Writing business due to soft demand in certain markets, partially offset by contribution from product innovation.

Changes in foreign currency unfavorably impacted net sales by $44 million, or 2%.

Operating income for 2024 increased to $473 million as compared to $213 million in 2023.

The increase in operating income is primarily due to improved gross profit of approximately $87 million, due to gross productivity, savings from restructuring actions as well as lower non-cash impairment charges.

The Company recorded non-cash impairment charges related to indefinite-lived tradenames and goodwill of $70 million and $241 million during 2024 and 2023, respectively.

See Footnote 7 of the Notes to the Consolidated Financial Statements for further information on the non-cash impairment charges.

Outdoor and Recreation

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Net sales $ 794 $ 999 $ (205) (20.5)%

Operating income (loss) (83) 86 (169) NM

Operating loss (86) (83) (3) (3.6)%

Operating margin (10.8) % (8.3) %

Notable items impacting operating income (loss) comparability:

Impairment of goodwill and intangible assets (See Footnotes 1 and 7 )

Outdoor and Recreation net sales for 2023 decreased 24% primarily reflecting soft global demand and distribution losses, partially offset by pricing actions.

O&R net sales for 2024 decreased 21% compared to prior year, reflecting soft global demand and distribution losses.

Changes in foreign currency unfavorably impacted net sales by $39 million, or 4%.

Operating loss for 2023 was $83 million as compared to operating income of $86 million in the prior-year period.

The decline was primarily due to lower gross profit caused by unfavorable fixed cost leverage associated with lower sales volume, inflation, higher sales promotional activities to reduce elevated inventory levels, non-cash impairment charge related to an indefinite-lived tradename and higher restructuring and restructuring-related charges in connection with Project Phoenix, partially offset by gross productivity, favorable pricing, savings from restructuring actions and lower advertising costs.

Operating loss for 2024 was $86 million as compared to $83 million in 2023.

The decline was primarily due to lower gross profit of $26 million, caused by unfavorable fixed cost leverage associated with lower sales volume and inflation, partially offset by gross productivity, favorable pricing and savings from restructuring actions and absence of a non-cash impairment charge of $22 million recorded in the prior year.

There were no non-cash impairment charges recorded during 2024.

See Footnote 7 of the Notes to the Consolidated Financial Statements for further information.

Consolidated Operating Results 2023 vs.

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Gross margin 28.9 % 30.0 %

Operating income 312 1,013 (701) (69.2)%

Operating income (loss) (85) 312 (397) NM

Operating margin (1.0) % 3.3 %

Interest expense, net 283 235 48 20.4%

Other income, net (81) (8) (73) NM

Income before income taxes 157 760 (603) (79.3)%

Income tax provision (benefit) (40) 138 (178) NM

Other (income) expense, net 175 (81) 256 NM

Income (loss) before income taxes (543) 157 (700) NM

Income tax benefit (155) (40) (115) NM

Income tax rate 28.5 % (25.5) %

Net income $ 197 $ 622 $ (425) (68.3)%

Diluted earnings per share $ 0.47 $ 1.45

Net income (loss) $ (388) $ 197 $ (585) NM

Diluted earnings (loss) per share $ (0.94) $ 0.47

NM — NOT MEANINGFUL

Net sales decreased 11%, as pricing actions by the Company were more than offset by softening global demand, category exits in the Home and Commercial Solutions and Outdoor and Recreation segments and a negative 3% impact to net sales related to the sale of CH&S at the end of the first quarter of 2022.

The net sales performance also reflected the lapping of elevated levels of demand in certain categories during the prior year.

Changes in foreign currency unfavorably impacted net sales by $300 million, or 3%.

Gross profit decreased 16% and gross margin declined to 30.0% as compared with 31.8% in the prior year period.

The decrease in gross margin reflected higher absorption costs associated with a lower sales volume, higher sales promotional activities to reduce elevated inventory levels, as well as significant input cost inflation for commodities, sourced finished goods, transportation and labor, which had a negative high-single-digit-percentage impact to costs of products sold.

The gross margin decline was partially offset by favorable net pricing and gross productivity.

The gross profit decline also reflected the unfavorable impact of the sale of CH&S.

Net sales for 2023 decreased 14% as compared to 2022.

Net sales were unfavorably impacted by soft global demand, distribution losses and category exits, primarily in the H&CS segment, partially offset by pricing actions by the Company.

The sale of the Connected Home and Security (“CH&S”) business at the end of the first quarter of 2022 negatively impacted net sales by approximately 1%.

Changes in foreign currency unfavorably impacted net sales by $38 million, or less than 1%.

In 2023, gross profit decreased 17% and gross margin declined to 28.9% as compared with 30.0% in 2022.

The decline in gross margin reflected higher absorption costs associated with a lower sales volume, higher sales promotional activities to reduce elevated inventory levels, inflation, higher restructuring-related charges of approximately $64 million and inventory write-down of $11 million due to regulatory restrictions banning the salability of certain of the Company’s products in certain jurisdictions, partially offset by favorable pricing and gross productivity.

The gross profit decline also reflected the unfavorable impact of the sale of CH&S business in 2022 by approximately $36 million.

Changes in foreign currency exchange rates unfavorably impacted gross profit by $38 million, or 1%.

Notable items impacting operating income for 2022 and 2021 are as follows:

Notable items, other than the aforementioned, impacting operating income (loss) for 2023 and 2022 are as follows:

Years Ended December 31,

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Restructuring and restructuring-related (See Footnote 4 ) (a)

Transactions and other costs (b)

Transaction costs and other (b)

(a) Restructuring-related costs reported in cost of products sold and SG&A for 2023 were $86 million and $13 million, respectively, and primarily relate to facility closures.

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Restructuring costs for 2023 and 2022 were $95 million and $15 million, respectively.

(b) Transaction and other costs for 2022 primarily relate to completed divestitures, expenses associated with certain legal proceedings, an indirect tax reserve for an international entity and an incremental bad debt reserve for an international customer.

Transaction and other costs for 2021 primarily relate to completed divestitures and costs associated with certain legal proceedings.

Operating income decreased to $312 million in 2022 as compared to $1.0 billion in 2021.

The decline reflects the impact of lower gross profit, as well as lower incentive compensation expense, advertising and promotion costs and overhead spending.

Operating income was also negatively impacted by higher current year non-cash impairment charges relating to goodwill and indefinite-lived tradenames.

Interest expense, net decreased primarily due to lower long-term debt levels during the first half of 2022 and higher interest income.

(b) Transaction costs and other for 2023 primarily relate to completed divestitures, expenses associated with certain legal proceedings, impairment of other assets and an inventory write-down due to regulatory restrictions banning the salability of certain of the Company’s products in certain jurisdictions.

Transaction costs and other reported in cost of products sold, SG&A and impairment of other assets for 2023 were $20 million, $23 million and $3 million, respectively.

Transaction costs and other for 2022 primarily relate to completed divestitures, expenses associated with certain legal proceedings, an indirect tax reserve for an international entity and an incremental bad debt reserve for an international customer.

Transaction costs and other reported in cost of products sold and SG&A for 2022 were $4 million and $68 million, respectively.

Operating loss in 2023 was $85 million as compared to operating income of $312 million in 2022.

The decline reflects the impact of lower gross profit of $481 million, higher incentive compensation expense of approximately $105 million and higher restructuring and restructuring-related charges, approximately $91 million, primarily in connection with Project Phoenix, the Network Optimization Project and other on-going facility closures.

These factors were partially offset by lower non-cash impairment charges

of approximately $132 million, lower transaction costs and other of approximately $45 million, lower advertising and promotion costs of approximately $16 million, savings from restructuring actions and approximately $15 million of employee retention credit in connection with the CARES Act.

Interest expense, net increased primarily due to higher interest rates, partially offset by higher interest income.

The weighted average interest rates for 2023 and 2022 were approximately 5.2% and 4.3%, respectively.

See Footnote 9 of the Notes to Consolidated Financial Statements for further information.

The loss on the extinguishment of debt of $1 million and $5 million for 2022 and 2021, respectively, are related to the Company’s redemption of certain of its senior notes.

See Footnote 9 of the Notes to the Consolidated Financial Statements for further information.

Other income, net for 2022 and 2021 include the following items:

Other (income) expense, net for 2023 and 2022 include the following items:

Years Ended December 31,

(in millions) 2023 2022

Pension settlement costs (See Footnote 11 )

Gain on disposition of businesses (See Footnote 2 )

$ (136) $ (4)

Foreign exchange losses, net (See Footnote 10 )

Discount on factored receivables and other, net 27 8

The income tax benefit for 2022 was $40 million as compared to provision of $138 million in 2021.

The effective tax rate for 2022 was a benefit of 25.5%, reflecting an increase in discrete tax benefits, as compared to provision of 18.2% for 2021.

The income tax benefit for 2023 was $155 million as compared to a benefit of $40 million in 2022.

and Luxembourg and $10 million due to the filing of tax returns in various jurisdictions.

Income tax expense for the year ended December 31, 2021 included a discrete benefit of $37 million associated with a reduction in valuation allowance related to the integration of certain Luxembourg operations, $13 million associated with a reduction of in valuation allowance related to the integration of certain U.K.

operations and $9 million related to a statute of limitation expiration in France.

See Footnote 12 of the Notes to Consolidated Financial Statements for further information on income taxes.

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Operating margin 0.8 % (4.1) %

Notable items impacting operating income (loss) comparability:

Impairment of goodwill and intangible assets (See Footnotes 1 and 7 )

NM — NOT MEANINGFUL

Home and Commercial Solutions net sales for 2022 decreased 15% which reflected softening global demand in the Kitchen and Home Fragrance business units, category exits and lost distribution in one product line at a key customer in the Kitchen business unit, as well as the exit of 43 Yankee Candle retail stores during the year.

Net sales performance of the Kitchen and Home Fragrance business units also reflected the lapping of elevated demand during 2021.

The sale of CH&S at the end of the first quarter of 2022, also negatively impacted net sales by 5%.

Pricing actions taken by the Company, as well as improved order fulfillment in the Commercial business unit resulting from easing of supply chain constraints, partially offset the decline in net sales.

Changes in foreign currency unfavorably impacted net sales by $133 million, or 2%.

Operating loss for 2022 was $212 million as compared to operating income of $566 million in 2021.

The decline in operating results is primarily due to the non-cash impairment charges in the Kitchen and Home Fragrance business units;

lower gross profit leverage;

higher absorption costs associated with lower sales volume, significant input cost inflation associated with raw materials, sourced finished goods and transportation;

higher sales promotional activities to reduce elevated inventory levels and an indirect tax reserve related to an international entity.

The sale of CH&S at the end of the first quarter of 2022 had a negative impact of 4%.

The decline in operating results was partially offset by gross productivity and lower incentive compensation expense.

H&CS net sales for 2023 decreased 15% which reflected softening global demand across all businesses, the sale of the CH&S business at the end of the first quarter of 2022, which unfavorably impacted net sales by approximately 2%, as well as certain category exits and distribution losses, primarily in the Kitchen business, partially offset by pricing actions.

Changes in foreign currency unfavorably impacted net sales by $14 million, or approximately less than 1%.

Operating income for 2023 was $37 million as compared to operating loss of $212 million in 2022.

The improvement in operating results was primarily due to gross productivity, pricing actions, lower non-cash impairment charges (see Footnote 7 of the Notes to Consolidated Financial Statements for further information), approximately $368 million, absence of an indirect tax reserve for an international entity, approximately $24 million, lower advertising and promotional costs, approximately $16 million and bad debt expense arising from an international customer bankruptcy, approximately $8 million, as well as savings from restructuring actions, partially offset by lower gross profit, approximately $157 million, reflecting higher absorption costs associated with lower sales volume, as well as higher restructuring and restructuring-related charges, approximately $54 million, primarily in connection with Project Phoenix.

The sale of CH&S at the end of the first quarter of 2022 also unfavorably impacted the operating results by approximately $12 million.

Learning and Development

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Operating margin 7.9 % 20.1 %

Notable items impacting operating income comparability:

Impairment of goodwill and intangible assets (See Footnotes 1 and 7 )

Learning and Development net sales for 2022 decreased 3%, reflecting decreases in both the Writing and Baby business units.

The Writing business unit performance reflected logistical constraints and supply chain shortages, particularly in labelling, and softening demand in certain categories in the U.S., partially offset by pricing actions.

The Baby business unit performance reflected softening demand in certain categories in the U.S., as the business lapped elevated levels of demand during the prior year, partially offset by pricing actions.

Changes in foreign currency unfavorably impacted net sales by $96 million, or 3%.

Operating income for 2022 decreased to $593 million as compared to $600 million in the prior year period.

The decrease in operating income is primarily due to significant input cost inflation for sourced finished goods, transportation and labor, partially offset by gross productivity and lower compensation costs.

The improvement in operating margin primarily reflects net pricing

L&D net sales for 2023 decreased 8%, primarily due to a decline in the Baby business.

The Writing business declined slightly due to soft demand in certain categories, partially offset by pricing actions and innovations.

Pricing actions in the Baby business were more than offset by soft demand in certain categories, as well as lower sales to a customer that declared bankruptcy, which impacted net sales by approximately 5%.

Changes in foreign currency unfavorably impacted net sales by $10 million, or approximately less than 1%.

Operating income for 2023 decreased to $213 million, compared to $593 million in 2022.

The decrease in operating income was primarily due to lower gross profit, approximately $117 million, reflecting higher absorption costs associated with lower sales volume and inflation, higher restructuring and restructuring-related charges of $14 million, primarily in connection with Project Phoenix, and increased advertising and promotion costs of approximately $8 million.

Operating income also decreased due to higher charges for non-cash goodwill impairment of approximately $211 million and additional amortization of acquired intangibles assets, of approximately $7 million (see Footnote 7 of the Notes to Consolidated Financial Statements for further information).

Gross productivity, favorable pricing and savings from restructuring actions partially offset the aforementioned factors.

Outdoor and Recreation

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Net sales $ 999 $ 1,315 $ (316) (24.0)%

Operating income 86 90 (4) (4.4)%

Operating income (loss) (83) 86 (169) NM

Operating margin (8.3) % 6.5 %

Outdoor and Recreation segment net sales for 2022 decreased 11% primarily due to softening U.S.

demand and certain category exits, partially offset by pricing actions and improved product availability.

Net sales for this segment also reflected the lapping of elevated levels of demand in the prior year.

NM — NOT MEANINGFUL

O&R segment net sales for 2023 decreased 24% reflecting soft global demand and distribution losses, partially offset by pricing actions.

Changes in foreign currency unfavorably impacted net sales by $14 million, or 1%.

Operating income for 2022 was $86 million as compared to $90 million in the prior year period.

This performance was primarily due to input cost inflation for commodities, sourced finished goods and transportation and higher advertising and promotional costs, partially offset by lower overhead spending and incentive compensation costs.

The improvement in operating margin primarily reflects net benefit from pricing actions and the exit from certain low margin product categories.

Operating loss for 2023 was $83 million as compared to operating income of $86 million in 2022.

The decline was primarily due to lower gross profit of approximately $171 million, caused by unfavorable fixed cost leverage associated with lower sales volume, inflation, higher sales promotional activities to reduce elevated inventory levels and inventory write-down due to regulatory restrictions banning the salability of certain of the Company’s products in certain jurisdictions.

Additionally, during 2023, there was a $22 million non-cash impairment charge related to an indefinite-lived tradename (see Footnote 7 of the Notes to Consolidated Financial Statements for further information), and higher restructuring charges primarily in connection with Project Phoenix of approximately $6 million.

These factors were partially offset by gross productivity, favorable pricing, savings from restructuring actions and lower advertising costs of approximately $7 million.

Liquidity and Capital Resources

The Company believes the extent of the impact of the rapidly changing retail and consumer landscape, which reflects an increased focus by retailers to rebalance inventory levels, inflationary pressures and uncertainty over the volatility and direction of future demand patterns on the Company’s future sales, operating results, cash flows, liquidity and financial condition, will continue to be driven by numerous evolving factors the Company cannot accurately predict and which will vary.

As noted in Business Strategy and Recent Developments, the Company has taken actions to further strengthen its financial position and balance sheet, and maintain financial liquidity and flexibility, including amending certain terms of its Credit Revolver and entering into the New Receivables Facility.

The Company believes these actions and its cash generating capability, together with its borrowing capacity and available cash and cash equivalents, provide adequate liquidity to fund its operations, support its growth platforms, pay down debt and debt maturities as they come due and execute its ongoing business initiatives.

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subsidiaries.

The Company maintains a position of partial permanent reinvestment in the earnings of its non-U.S.

subsidiaries.

Deferred taxes are recorded for earnings of the Company’s foreign operations that are determined to be not indefinitely reinvested.

See Footnote 12 of the Notes to Consolidated Financial Statements for further information.

The table below summarizes the Company’s cash activity for 2024, 2023 and 2022 (in millions):

8 unchanged sentences

Cash Flows from Operating Activities

The change in net cash provided by operating activities reflects a reduction of working capital and lower incentive compensation payments in 2023, partially offset by impact of the operating loss and higher restructuring payments.

The change in net cash used in operating activities for 2022 primarily reflects lower operating income and the impact of the Company’s adjustment to its supply and demand forecasted purchases in the back half of the year.

This was in response to significantly greater than expected pullback in retailer orders, as retailers rebalanced inventory in light of continued inflationary pressures on consumers.

This also resulted in lower sales volume and unfavorable working capital associated with higher inventory levels.

The change also reflected the negative impact of lower accounts receivable sold under the Customer Receivables Purchase Agreement.

The change in net cash provided by 2024 operating activities reflects lower year-over year working capital reductions, primarily relating to inventory in 2024 compared to 2023, and higher incentive compensation payments in the current year, partially offset by improved operating results.

The change in net cash provided by operating activities for 2023 primarily reflects a reduction of working capital and lower incentive compensation payments in 2023, partially offset by impact of operating loss and higher restructuring payments.

See Capital Resources for further information.

Cash Flows from Investing Activities

The change in cash used in investing activities for 2023 was primarily due to proceeds from the sale of the CH&S business in the prior year.

The change in net cash provided by investing activities for 2022 was primarily due to proceeds from the sale of CH&S and other property, plant and equipment, partially offset by higher capital expenditures, primarily associated with Project Ovid.

The change in cash used in investing activities for 2024 was primarily due to lower capital expenditures, as significant projects, primarily related to Project Ovid, were mostly executed during 2023, as well as higher proceeds from settlement of swaps.

See Footnote 10 of the Notes to Consolidated Financial Statements for further information.

The change in net cash used in investing activities for 2023 was primarily due to proceeds from the sale of the CH&S business in 2022.

See Footnote 2 of the Notes to Consolidated Financial Statements for further information.

Cash Flows from Financing Activities

The change in net cash used in financing activities was primarily due to the period-over-period change in debt, a reduction of the quarterly dividend payment in 2023, that commenced with the second quarter payment, and repurchase of shares of the Company’s common stock in the prior year.

The change in net cash used in financing activities for 2022 was primarily due to the period-over-period change in debt, offset by repurchase of shares of the Company’s common stock.

The change in net cash used in financing activities in 2024 was primarily due to lower quarterly dividend payment in the current year and the period-over-period change in debt.

The change in net cash used in financing activities for 2023 was primarily due to the period-over-period change in debt, a reduction of the quarterly dividend payment in 2023 that commenced with the second quarter payment, and repurchase of shares of the Company’s common stock in the prior year.

See Footnotes 1,9 and 14 of the Notes to Consolidated Financial Statements for further information.

Capital Resources

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

The Company currently believes its capital structure and cash resources, as further described below, will continue to support the funding of the future dividends, and the Company will continue to evaluate all actions to strengthen its financial position and balance sheet and to maintain its financial liquidity, flexibility and capital allocation strategy.

The Company was in compliance with all of its debt covenants at December 31, 2024.

Credit Revolver

As of December 31, 2024, the Company is a party to a $1.0 billion Credit Revolver maturing in August 2027.

The Credit Revolver requires compliance with certain financial covenants.

On February 7, 2024, the Company, certain of its subsidiaries, as subsidiary borrowers, and certain of its subsidiaries, as subsidiary guarantors (the “Guarantors”), entered into a Second Amendment to the Credit Revolver.

The Second Amendment among other things, reduced the commitments of the lenders from $1.5 billion to $1.0 billion, replaced the Company’s existing financial covenants with new financial covenants, required the Company and the Guarantors to guarantee all obligations under the Credit Revolver, and required the Company and the other Guarantors to grant a lien and security interest in certain of its assets.

A failure to maintain the Company’s financial covenants and to subsequently remedy a default would impair its ability to borrow under the Credit Revolver and potentially subject the Company to cross-default and acceleration provisions in its debt documents.

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.

On February 7, 2024, the Company, certain of its subsidiaries, as subsidiary borrowers, and certain of its subsidiaries, as subsidiary guarantors, entered into a Second Amendment to the Credit Revolver.

The Second Amendment among other things, reduces the commitments of the lenders from $1.5 billion to $1.0 billion, replaces the Company’s existing financial covenants with new financial covenants, requires the Company and the Guarantors to guarantee all obligations under the Credit Revolver, and requires the Company and the other Guarantors to grant a lien and security interest in certain of its assets.

See Footnote 9 of the Notes to Consolidated Financial Statements for further information.

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.

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.

At December 31, 2024, the Company had $40 million of outstanding borrowings under the Credit Revolver and approximately $35 million of outstanding standby letters of credit issued against the Credit Revolver, with a net availability of approximately $925 million.

Availability under the Credit Revolver is subject to change in accordance with the terms thereof, including in response to changes to the Company’s pledged collateral value or outstanding borrowings and letters of credit under the Credit Revolver.

Customer Receivables Purchase Agreement

The Company maintains a factoring agreement with a financial institution to sell certain customer receivables (the “Customer Receivables Purchase Agreement”) up to $700 million.

Factored receivables under the Customer Receivables Purchase Agreement at December 31, 2024 were approximately $270 million, an increase of approximately $30 million from December 31, 2023.

In addition, the Company, through a wholly-owned special purpose entity (“SPE”), has a three-year factoring 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 “Receivables Facility”).

Under the 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.

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

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.

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.

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.

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

As a result of Moody’s downgrade, the Company’s 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 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 August 3, 2023, 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 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 Company currently believes its capital structure and cash resources will continue to support the funding of future dividends and the Company will continue to evaluate all actions to strengthen its financial position and balance sheet, and to maintain its financial liquidity, flexibility and capital allocation strategy.

The Company was in compliance with all of its debt covenants at December 31, 2023.

The balance of outstanding accounts receivables sold to the financial institution as of December 31, 2024 was approximately $145 million, an increase of approximately $100 million from December 31, 2023.

The Company accounts for receivables sold under both factoring agreements as sale of financial assets and derecognizes the trade receivables from the Company’s Consolidated Balance Sheet.

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 institutions as financing cash flow in the Consolidated Statements of Cash Flows.

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

In November 2024, the Company completed a registered public offering and sale of the Notes and received proceeds of approximately $1.24 billion, net of fees and expenses paid.

The Company used the net proceeds of the offering to fully redeem its outstanding 4.875% senior notes due 2025 and to redeem in part its outstanding 4.200% senior notes due 2026.

The total consideration was approximately $511 million.

The Company also partially redeemed $750 million of the outstanding aggregate amount of the 4.200% senior notes due 2026 at a redemption price of 101.006%.

The total consideration, including accrued unpaid interest to the date of its

redemption was approximately $764 million.

As a result of the aforementioned redemptions, the Company recorded a total loss on debt extinguishment of $13 million.

In December 2024, the Company repaid the outstanding aggregate principal amount of its 4.000% senior notes, plus accrued and unpaid interest upon maturity for total consideration of $205 million.

In February 2024, Moody’s Corporation (“Moody’s”) and S&P Global Inc.

(“S&P”) downgraded the Company’s senior unsecured debt rating to “Ba3” and “BB-”, respectively.

As a result, the Company’s outstanding senior notes aggregating to approximately $3.1 billion at that time (the “Coupon-Step Notes”) were subject to an interest rate increase of 25 basis points for each downgrade, or 50 basis points in the aggregate.

The change to the interest rate due to the Moody’s and S&P downgrades collectively increased the Company’s interest expense by approximately $16 million on an annualized basis at the time of the downgrades (approximately $12 million in 2024).

The partial redemption of the 4.200% senior notes due 2026 during the fourth quarter of 2024 decreased the aggregate amount of the Coupon-Step Notes to $2.3 billion, resulting in a reduction of the Company’s annualized interest expense impact of the February 2024 Moody’s and S&P downgrades by approximately $4 million, reducing the aggregate annualized impact of the downgrades to approximately $12 million beginning in 2025.

See Footnote 9 of the Notes to Consolidated Financial Statements for further information.

Risk Management

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At December 31, 2024, the Company had approximately $1.0 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).

These floating rate swaps are designated as fair value hedges against $500 million of principal on the 6.375% senior notes due 2027 and $500 million of principal on the 6.625% senior notes due 2029 for the remaining life of the notes.

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

The swap designated as a fair value hedge associated with the $100 million of principal on the 4.000% senior notes due 2024, matured on December 2024, concurrent with the maturity of the notes.

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.

The Company previously entered into three cross-currency swaps, maturing in January 2025, February 2025 and September 2027, with an aggregate notional amount of $1.3 billion.

During the fourth quarter of 2024, the Company closed two of these cross-currency swaps, ahead of maturities of January 2025 and February 2025, with an aggregate notional amount of $900 million and received total consideration of approximately $27 million.

Also, during the fourth quarter of 2024, the Company entered into three new cross-currency swaps, two maturing in November 2026 and one in November 2028, with an aggregate notional amount of $770 million.

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.

During the third quarter of 2022, the Company entered into two cross-currency swaps with an aggregate notional amount of $1.0 billion, maturing in September 2027 and September 2029.

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

dollar interest.

At December 31, 2024, the Company has cross-currency swaps outstanding with an aggregate notional amount of approximately $2.1 billion.

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

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The derivatives used to hedge these forecasted transactions that meet the criteria for hedge accounting are accounted for as cash flow hedges.

The effective portion of the gains or losses on these derivatives is deferred as a component of 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.

The effective portion of the gains or losses on these derivatives is deferred as a component of accumulated other comprehensive income (loss) 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, 2024, the Company had approximately $337 million notional amount outstanding of forward foreign currency contracts that are designated as cash flow hedges of forecasted inventory purchases and sales.

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

At December 31, 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.

At December 31, 2024, the Company had approximately $1.0 billion notional amount outstanding of these foreign currency contracts that are not designated as effective hedges for accounting purposes and have maturity dates through June 2025.

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 Statements of Operations.

The following table presents the fair value of derivative financial instruments at December 31, 2024 (in millions):

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Foreign currency contracts 17

Total $ (120)

Contractual Obligations, Commitments and Off-Balance Sheet Arrangements

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1,183 994 147 35 7

Tax obligations (5)

$ 8,712 $ 1,488 $ 2,555 $ 1,055 $ 3,614

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These purchase commitment amounts represent only those items which are based on agreements that are legally enforceable and that specify all significant terms including minimum quantity, price and term and do not represent total anticipated purchases.

(5) Represents the future cash payments related to 2017 Tax Reform, for the one-time provisional transition tax on the Company’s previously untaxed foreign earnings.

(6) Total does not include contractual obligations reported as of December 31, 2023 balance sheet as current liabilities, except for current portion of long-term debt, short-term debt and accrued interest.

(5) Total does not include contractual obligations reported as of December 31, 2024 balance sheet as current liabilities, except for the current portion of long-term debt, short-term debt and accrued interest.

The Company also has liabilities for uncertain tax positions and unrecognized tax benefits.

The Company is under audit from time-to-time by the Internal Revenue Service (“IRS”) and other taxing authorities, and it is possible that the amount of the liability for uncertain tax positions and unrecognized tax benefits could change in the coming year.

The Company is under audit from time-to-time by the IRS and other taxing authorities, and it is possible that the amount of the liability for uncertain tax positions and unrecognized tax benefits could change in the coming year.

While it is possible that one or more of these examinations may be resolved in the next year, the Company is not able to reasonably estimate the timing or the amount by which the liability will be settled over time;

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Future events and their effects cannot be determined with absolute certainty.

Therefore, the determination

of estimates requires the exercise of judgment.

Therefore, the determination of estimates requires the exercise of judgment.

Actual results will differ from those estimates, and such differences may be material to the Consolidated Financial Statements.

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The Company’s primary performance obligation is the sale and distribution of its consumer and commercial products to its customers.

Revenue is measured as the amount of consideration for which it expects to be entitled in exchange for transferring goods or providing services.

Revenue is measured as the amount of consideration to which it 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.

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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.

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.

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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.

On December 1, 2023, the carrying values for total goodwill and indefinite-lived intangible assets were $3.1 billion and $1.6 billion, respectively.

On December 1, 2024, the carrying values for goodwill and indefinite-lived intangible assets were $3.0 billion and $937 million, respectively.

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.

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

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

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 Company has the option of first analyzing qualitative factors to determine whether it is more likely than not that the fair value of any reporting unit is less than its carrying amount.

However, the Company may elect to perform a quantitative goodwill impairment test in lieu of the qualitative test.

When a qualitative goodwill test is performed, the Company analyzes factors to determine whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount as a basis for determining whether it is necessary to perform the quantitative goodwill impairment test.

The evaluation of qualitative factors includes an assessment of relevant facts, events, and circumstances including but not limited to:

macroeconomic conditions, industry and market conditions, and the current and forecasted financial performance of the reporting unit.

If the qualitative test indicates it is more likely than not that the fair value of a reporting unit is less than the carrying amount the Company performs the quantitative test, which measures the amount of the goodwill impairment, if any.

During the fourth quarter of 2024, the Company elected to perform a qualitative assessment for the Writing reporting unit and a quantitative assessment for the Commercial and Baby reporting units.

Based on the Company’s qualitative assessment, the Company concluded there were no events or circumstances that rise to a level that would more likely than not reduce the fair value of the reporting unit below the carrying value;

therefore, a quantitative goodwill impairment analysis was not required for the Writing reporting unit.

In performing a quantitative assessment, the Company estimates the fair value of each reporting unit by using the income approach.

The quantitative goodwill impairment test requires significant use of judgment and assumptions, such as the identification of reporting units;

assignment of assets and liabilities to reporting units;

and 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 reflecting the Company’s latest projections which included, among other things, the impact of current and projected financial performance of the reporting unit at the time the Company performed its impairment testing.

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.

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The present value of the finite-period cash flows and the terminal value are determined using a selected discount rate.

The Company estimated the fair values of its reporting units based on discounted cash flow methodology reflecting its latest projections which included, among other things, the impact of significant input cost inflation at the time the Company performed its impairment testing.

During the fourth quarter of 2023, in conjunction with its annual impairment testing, the Baby reporting unit in the Learning and Development segment, had a fair value within the 10% of its associated carrying value.

A hypothetical 10% reduction in forecasted earnings before interest, taxes, depreciation and amortization used in the discounted cash flows to estimate the fair value to the Baby reporting unit would have resulted in an impairment charge of approximately $99 million against its goodwill carrying value of $415 million.

The Company has experienced headwinds due to soft global demand and an increased focus by retailers to rebalance inventory levels in light of continued inflationary pressures on consumers that impacted the Baby business within the Learning and Development segment.

Further declines in anticipated consumer spending or an inability to achieve expected margin improvements on sales of Baby products could result in declines in the fair value of the business that may result in goodwill impairment charges.

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.

See Footnotes 1 and 7 of the Notes to Consolidated Financial Statements for further information.

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).

As part of the Company’s annual indefinite-lived intangible asset impairment testing (primarily tradenames), the Company has the option to first analyze qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired.

The evaluation of qualitative factors includes an assessment of relevant facts, events, and circumstances including but not limited to:

macroeconomic conditions, industry and market conditions, and the current and forecasted financial performance.

Company performs a quantitative test when qualitative factors alone are not sufficient to conclude whether it is more likely than not that an indefinite-lived intangible asset is not impaired.

If the Company performs a quantitative test, an impairment loss will only be recognized for the amount by which the carrying value of the indefinite-lived intangible asset exceeds its fair value, not to exceed the total carrying value of the asset.

During the fourth quarter of 2024, the Company elected to perform qualitative assessments for two indefinite-lived intangible assets in the Learning and Development segment and quantitative assessments for two indefinite-lived intangible assets in the H&CS segment as well as two for the L&D segment.

Based on the Company’s qualitative assessments, the Company concluded there were no events or circumstances that rise to a level that would more likely than not reduce the fair value of those indefinite-lived intangible assets below the carrying value;

therefore, a quantitative impairment analysis was not required for the two indefinite-lived intangible assets in the L&D segment.

The quantitative testing of indefinite-lived intangibles (primarily tradenames) under established guidelines for impairment 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.

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Changes in business conditions could potentially require adjustments to these asset valuations.

During the fourth quarter of 2023, in conjunction with its annual impairment testing, the Company recorded aggregate non-cash impairment charges of $68 million associated with two tradenames in the Home and Commercial Solutions segments, as the carrying values exceeded their fair values.

A hypothetical 10% reduction in the forecasted revenue and residual (excess) cash flows used in the excess earnings method applied in determining the fair value of a tradename and in the relief from royalty method applied in determining the fair value of the other tradename would have resulted in an incremental impairment charge on the Home and Commercial Solutions segment of $54 million.

During the fourth quarter of 2023, in conjunction with its annual impairment testing, one tradename in the Learning and Development segment and two tradenames in the Outdoor and Recreation segment, had fair values within 10% of their associated carrying values of $135 million, $35 million and $9 million, respectively.

A hypothetical 10% reduction in the forecasted revenue used in the relief from royalty method in determining the fair values of the tradenames would have resulted in an impairment charge of $12 million in the Learning and Development segment and $2 million in the Outdoor and Recreation segment.

During the fourth quarter of 2024, in conjunction with its annual impairment testing, the Company recorded non-cash impairment charge of $85 million associated with one tradename in the H&CS segment, as the carrying value exceeded the fair value.

The decline in the fair value of the tradename in the H&CS segment was the result of downward revision of forecasted revenue mainly due to a distribution loss, which the Company was informed of during the fourth quarter of 2024.

A hypothetical 10% reduction in the forecasted revenue and residual (excess) cash flows used in the excess earnings method applied in determining the fair value of the tradename would have resulted in an incremental impairment charge on the H&CS segment of $22 million.

During the third quarter of 2024, the Company concluded that triggering events had occurred for indefinite-lived tradenames in the H&CS and L&D segments, as a result of downward revisions of forecasted cash flows primarily due to lower volume and profitability expectations.

The Company performed quantitative impairment tests and determined that the indefinite-lived tradenames in the H&CS and L&D segments were impaired.

During the third quarter of 2024, the Company recorded non-cash impairment charges of $190 million and $70 million for the indefinite-lived tradenames in the H&CS and in the L&D segments, respectively, as the carrying values exceeded their fair values.

During the fourth quarter of 2024, in conjunction with its annual impairment testing, one tradename in the L&D segment had a fair value within 10% of its associated carrying value of $135 million.

A hypothetical 10% reduction in the forecasted revenue used in the relief from royalty method in determining the fair value of the tradename would have resulted in an impairment charge of $10 million in the L&D segment.

The Company has experienced headwinds due to soft global demand and an increased focus by retailers to rebalance inventory levels in light of continued inflationary pressures on consumers.

The Company expects that current market contraction is reflective of a reset of demand levels.

If the demand continues to contract or the business fails to regain lost distribution, additional declines in the fair value of certain tradenames may occur resulting in an impairment charge.

Additional impairment testing may be required based on further deterioration of global demand and/or the macroeconomic environment, continued disruptions to the Company’s business, further declines in operating results of the Company’s reporting units and/or tradenames, further sustained deterioration of the Company’s market capitalization, and other factors, which may necessitate changes to estimates or valuation assumptions used in the fair value of the reporting units for goodwill and indefinite-lived intangible tradenames.

If the demand continues to contract or the business fails to regain lost distribution, additional declines in the fair value of reporting units or certain tradenames may occur resulting in an impairment charge.

Additional impairment testing may be required based on further deterioration of global demand and/or the macroeconomic environment, further declines in operating results of the Company’s reporting units and/or tradenames, further sustained deterioration of the Company’s market capitalization, and other factors, which may necessitate changes to estimates or valuation assumptions used in the fair value of the reporting units for goodwill and indefinite-lived intangible tradenames.

Although management cannot predict when improvements in macroeconomic conditions will occur, if consumer confidence and consumer spending continue to decline significantly in the future or if commercial and industrial economic activity experiences a sustained deterioration from current levels, the Company may be required to record further impairment charges in the future.

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The Company continuously evaluates whether impairment indicators related to its property, plant and equipment, operating leases and other long-lived assets are present.

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.

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.

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

global 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.

equities approximately 25%;

fixed income approximately 70%;

multi-sector fixed income approximately 5% and nominal for cash, alternative investments and other at December 31, 2024.

Actual asset allocations may vary from the targeted allocations for various reasons, including market conditions and the timing of transactions.

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At December 31, 2024, the domestic plan assets were allocated as follows:

approximately 10% and Other Investments (alternative investments, fixed-income securities, cash and other):

approximately 90%.

equities approximately 19% and other investments (alternative investments, fixed-income securities, cash and other) approximately 81%.

Actual asset allocations may vary from the targeted allocations for various reasons, including market conditions and the timing of transactions.

For 2023, 2022 and 2021, the actual return (loss) on plan assets for the Company’s U.S.

pension plan assets was approximately $57 million, $(220) million and $48 million, respectively, versus an expected return on plan assets of approximately $52 million, $47 million and $51 million, respectively.

For 2024, 2023 and 2022, the actual return on plan assets for the Company’s U.S.

pension plan assets was approximately $14 million, $57 million and loss of $220 million, respectively, versus an expected return on plan assets of approximately $47 million, $52 million and $47 million, respectively.

The actual amount of future contributions will depend, in part, on long-term actual return on assets and future discount rates.

Pension contributions for all the Company’s pension plans for 2024 are estimated to be approximately $21 million, as compared to the 2023 contributions of approximately $17 million.

The weighted average expected return on plan assets assumption for 2023 was approximately 5.2% for the Company’s pension plans.

The weighted average discount rate at the 2023 measurement date used to measure the pension and postretirement benefit obligations was approximately 4.7% and 4.8%, respectively.

A 25 basis points decrease in the discount rate at the 2023 measurement date would increase the pension plans’ projected benefit obligation by approximately $22 million.

Pension contributions for all the Company’s pension plans, postretirement benefit obligations, including supplemental executive retirement plans (“SERPs”) for 2025 are estimated to be approximately $20 million, as compared to the 2024 contributions of approximately $23 million.

The weighted average expected return on plan assets assumption for 2024 was approximately 5.4% for all of the Company’s pension plans.

The weighted average discount rate at the 2024 measurement date used to measure the pension plans’ (including SERPs’) benefit obligations and postretirement benefit obligations was approximately 5.1% and 4.9%, respectively.

A 25 basis points decrease in the discount rate at the 2024 measurement date would increase the pension plans’, including postretirement and SERPs projected benefit obligations, by approximately $20 million.

The healthcare cost trend rates used in valuing the Company’s postretirement benefit obligation are established based upon actual healthcare cost trends and consultation with actuaries and benefit providers.

At December 31, 2024, the current weighted average healthcare cost trend rate assumption was approximately 6.3%.

The current healthcare cost trend rate is assumed to gradually decrease to an ultimate healthcare cost trend rate of 4.5%.

The current healthcare cost trend rate is assumed to gradually decrease through 2038 to an ultimate healthcare cost trend rate of 4.8%.

See Footnote 11 of the Notes to Consolidated Financial Statements for further information.

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The Company’s non-U.S.

businesses accounted for approximately 37% of net sales for 2023 and 35% of net sales for 2022 and 2021 (see Footnote 17 of the Notes to Consolidated Financial Statements ).

businesses accounted for approximately 38%, 37% and 35% of net sales for 2024, 2023 and 2022, respectively (see Footnote 17 of the Notes to Consolidated Financial Statements ).

Forward-Looking Statements

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• changes in the prices and availability of labor, transportation, raw materials and sourced products, including significant inflation, and the Company’s ability to offset cost increases through pricing and productivity in a timely manner;

• the Company's ability to effectively execute its turnaround plan, including Project Ovid, Project Phoenix, the Network Optimization Project and the Organizational Realignment;

• the Company's ability to effectively execute its turnaround plan, including Project Ovid, the Realignment Plan and other restructuring and cost saving initiatives;

• the Company’s ability to develop innovative new products, to develop, maintain and strengthen end-user brands and to realize the benefits of increased advertising and promotion spend;

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• the cost and outcomes of governmental investigations, inspections, lawsuits, legislative requests or other actions by third parties, including but not limited to those described in Footnote 18 of the Notes to Consolidated Financial Statements , the potential outcomes of which could exceed policy limits, to the extent insured;

• the Company’s ability to remediate the material weaknesses in internal control over financial reporting and to maintain effective internal control over financial reporting;

• the Company’s ability to maintain effective internal control over financial reporting;

• risk associated with the use of artificial intelligence in the Company’s operations and the Company’s ability to properly manage such use;

• a failure or breach of one of the Company’s key information technology systems, networks, processes or related controls or those of the Company’s service providers;

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• the Company’s ability to protect its intellectual property rights;

• the impact of climate change and the increased focus of governmental and non-governmental organizations and customers on sustainability issues, as well as external expectations related to environmental, social and governance considerations;

• significant increases in the funding obligations related to the Company’s pension plans;

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The Company assumes no obligation to update any forward-looking statements contained in this Annual Report on Form 10-K as a result of new information or future events or developments.

In addition, there can be no assurance that the Company has correctly identified and assessed all of the factors affecting the Company or that the publicly available and other information the Company receives with respect to these factors is complete or correct.

In addition, there can be no assurance that the Company has correctly identified and assessed all of the

factors affecting the Company or that the publicly available and other information the Company receives with respect to these factors is complete or correct.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis