What changed in this filing

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Item 1. Financial Statements

2023-04-25 compared with 2022-10-25 · 243 added, 384 removed, 511 unchanged (55% of the section changed)

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Net sales $ 5,442.4 $ 4,998.7

4 unchanged sentences

Percent to net sales 31.1 % 29.7 %

Other general (income) expense - net ( 14.4 ) ( 1.1 ) ( 7.5 ) 111.2

Amortization 81.3 76.2 237.8 233.2

Other general expense - net 10.5 2.5

Interest expense 109.3 88.4

Interest income ( 3.5 ) ( 0.9 )

Other expense (income) - net 18.1 1.7 49.9 ( 1.6 )

Other (income) expense - net ( 3.2 ) 16.3

Income before income taxes 614.8 461.1

10 unchanged sentences

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (UNAUDITED)

(in millions) Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

(in millions) Three Months Ended

Net income $ 477.4 $ 370.8

Other comprehensive loss, net of tax:

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments (1)

2 unchanged sentences

Amounts reclassified from AOCI (2)

1.0 1.4 3.5 4.6

Unrealized net gains on cash flow hedges:

1 unchanged sentence

( 0.9 ) ( 1.0 )

Other comprehensive loss ( 147.9 ) ( 85.5 ) ( 364.1 ) ( 68.4 )

Other comprehensive income (loss) 34.8 ( 43.6 )

Comprehensive income $ 512.2 $ 327.2

(1) The three months ended September 30, 2022 and 2021 include unrealized gains, net of taxes, of $ 30.9 million and $ 14.5 million, respectively, related to net investment hedges.

The nine months ended September 30, 2022 and 2021 include unrealized gains, net of taxes, of $ 69.8 million and $ 31.6 million, respectively, related to net investment hedges.

(1) The three months ended March 31, 2023 and 2022 include unrealized unrealized gains (losses), net of taxes, of $( 4.2 ) million and $ 8.1 million, respectively, related to net investment hedges.

See Note 13 for additional information.

(2) Net of taxes of $( 0.3 ) million and $( 0.6 ) million in the three months ended September 30, 2022 and 2021, respectively.

Net of taxes of $( 1.1 ) million and $( 1.7 ) million in the nine months ended September 30, 2022 and 2021, respectively.

(3) Net of taxes of $ 0.3 million and $ 0.6 million in the three months ended September 30, 2022 and 2021, respectively.

Net of taxes of $ 1.0 million in the nine months ended September 30, 2022 and 2021.

(2) Net of taxes of $ 1.7 million and $( 0.2 ) million in the three months ended March 31, 2023 and 2022, respectively.

(3) Net of taxes of $ 0.3 million in the three months ended March 31, 2023 and 2022.

See notes to condensed consolidated financial statements.

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in millions) September 30,

(in millions) March 31,

2023 December 31,

2021 September 30,

2022 March 31,

Current assets:

28 unchanged sentences

257.9 million, 258.9 million and 260.1 million shares outstanding

at September 30, 2022, December 31, 2021 and September 30, 2021, respectively

at March 31, 2023, December 31, 2022 and March 31, 2022, respectively

91.3 91.2 91.0

7 unchanged sentences

THE SHERWIN-WILLIAMS COMPANY AND SUBSIDIARIES

CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)

(in millions) Nine Months Ended

September 30,

2022 September 30,

STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS (UNAUDITED)

(in millions) Three Months Ended

2023 March 31,

OPERATING ACTIVITIES

4 unchanged sentences

Amortization of intangible assets 83.7 78.0

Loss on divestiture of business — 111.9

Amortization of credit facility and debt issuance costs 2.2 1.7

Stock-based compensation expense 22.5 26.8

Amortization of non-traded investments 19.4 10.6

(Gain) loss on sale or disposition of assets ( 4.6 ) 1.9

Provisions for environmental-related matters 12.7 0.6

Provisions for restructuring 0.9 —

Defined benefit pension plans net cost 0.9 1.4

Other postretirement benefit plan net cost ( 4.5 ) —

Deferred income taxes ( 2.7 ) ( 11.6 )

3 unchanged sentences

Costs incurred for environmental-related matters ( 4.4 ) ( 5.0 )

Costs incurred for restructuring ( 11.7 ) —

Other ( 43.6 ) ( 20.6 )

3 unchanged sentences

Acquisitions of businesses, net of cash acquired ( 0.3 ) ( 0.4 )

Proceeds from divestiture of business — 122.5

Proceeds from sale of assets — 10.8

3 unchanged sentences

Net increase in short-term borrowings 503.0 972.2

Proceeds from long-term debt 999.7 —

Payments of long-term debt ( 260.3 ) ( 24.6 )

Payments for credit facility and debt issuance costs ( 7.3 ) ( 1.7 )

Payments of cash dividends ( 156.5 ) ( 150.9 )

2 unchanged sentences

Proceeds from treasury stock issued — 22.0

Proceeds from real estate financing transactions 66.5 —

Other ( 24.6 ) ( 32.1 )

16 unchanged sentences

Net income 477.4 477.4

Other comprehensive loss ( 43.6 ) ( 43.6 )

Other comprehensive income 34.8 34.8

Treasury stock purchased ( 301.7 ) ( 301.7 )

Treasury stock issued

11.0 11.0 22.0

Stock-based compensation activity 0.1 33.8 ( 23.5 ) 10.4

3 unchanged sentences

Balance at March 31, 2023 $ 91.3 $ 3,998.0 $ 3,844.1 $ ( 4,100.8 ) $ ( 665.8 ) $ 3,166.8

Net income 577.9 577.9

Other comprehensive loss ( 172.6 ) ( 172.6 )

Treasury stock purchased ( 296.4 ) ( 296.4 )

Stock-based compensation activity 41.5 41.5

Other adjustments ( 3.9 ) 0.1 ( 0.1 ) ( 3.9 )

Cash dividends -- $ 0.60 per share

( 156.2 ) ( 156.2 )

Balance at June 30, 2022 $ 91.0 $ 3,880.3 $ 2,763.3 $ ( 3,595.4 ) $ ( 914.6 ) $ 2,224.6

Net income 685.1 685.1

Other comprehensive loss ( 147.9 ) ( 147.9 )

Treasury stock purchased ( 47.6 ) ( 47.6 )

Stock-based compensation activity 0.1 39.0 ( 0.1 ) 39.0

Other adjustments 0.3 0.1 0.4

Cash dividends -- $ 0.60 per share

( 155.8 ) ( 155.8 )

Balance at September 30, 2022 $ 91.1 $ 3,919.6 $ 3,292.6 $ ( 3,643.0 ) $ ( 1,062.5 ) $ 2,597.8

(in millions, except per share data) Common

7 unchanged sentences

Treasury stock purchased ( 407.1 ) ( 407.1 )

Stock-based compensation activity 0.3 51.5 ( 21.5 ) 30.3

Other adjustments 0.7 0.7

Cash dividends -- $ 0.55 per share

( 151.8 ) ( 151.8 )

Balance at March 31, 2021 $ 90.2 $ 3,543.6 $ 1,102.1 $ ( 893.4 ) $ ( 763.8 ) $ 3,078.7

Net income 648.6 648.6

Other comprehensive income 62.6 62.6

Treasury stock purchased ( 870.1 ) ( 870.1 )

Treasury stock issued

Stock-based compensation activity 0.4 54.6 ( 0.8 ) 54.2

Other adjustments 0.6 0.6

Cash dividends -- $ 0.55 per share

11.0 11.0 22.0

Balance at June 30, 2021 $ 90.6 $ 3,608.1 $ 1,604.8 $ ( 1,761.9 ) $ ( 701.2 ) $ 2,840.4

Net income 502.2 502.2

Other comprehensive loss ( 85.5 ) ( 85.5 )

Treasury stock purchased ( 501.5 ) ( 501.5 )

Stock-based compensation activity 0.2 38.3 ( 32.9 ) 5.6

2 unchanged sentences

( 150.9 ) ( 150.9 )

Balance at September 30, 2021 $ 90.5 $ 3,688.1 $ 1,961.8 $ ( 2,263.4 ) $ ( 786.7 ) $ 2,690.3

Balance at March 31, 2022 $ 91.0 $ 3,842.7 $ 2,341.5 $ ( 3,298.9 ) $ ( 742.0 ) $ 2,234.3

See notes to condensed consolidated financial statements.

2 unchanged sentences

(millions of dollars, unless otherwise noted)

Periods ended September 30, 2022 and 2021

Periods ended March 31, 2023 and 2022

NOTE 1 - BASIS OF PRESENTATION

3 unchanged sentences

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

There have been no significant changes in significant accounting policies since December 31, 2021 .

Accounting estimates were revised as necessary during the first nine months of 2022 based on new information and changes in facts and circumstances.

The Company has historically experienced, and expects to continue to experience, variability in quarterly results.

The results of operations for the three and nine months ended September 30, 2022 are not indicative of the results to be expected for the full year as business is seasonal in nature with the majority of Net sales for the Reportable Segments traditionally occurring during the second and third quarters.

The results of operations for the three months ended March 31, 2023 are not indicative of the results to be expected for the full year as business is seasonal in nature with the majority of Net sales for the Reportable Segments traditionally occurring during the second and third quarters.

However, periods of economic uncertainty can alter the Company's seasonal patterns.

Since December 31, 2022, a ccounting estimates were revised as necessary during the first three months of 2023 based on new information and changes in facts and circumstances.

Certain amounts in the condensed consolidated financial statements for the three months ended March 31, 2022 have been reclassified to conform to the 2023 presentation.

The following represents updates to certain significant accounting policy disclosures.

For further details on the Company’s significant accounting policies, see Note 1 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Reportable Segments

During the first quarter of 2023, the Company realigned its organizational structure to manage the Latin America architectural paint business within the Consumer Brands Group.

Previously, the Latin America architectural paint business was managed within The Americas Group;

however, Latin America architectural demand and service model trends are shifting to align more closely with the Consumer Brand Group’s strategy.

As a result of the change, The Americas Group has been renamed the Paint Stores Group which now focuses on the core U.S., Canada and Caribbean region stores business.

All reported segment information herein, including comparable prior periods, include the Latin America architectural paint business within the Consumer Brands Group.

See Notes 6 and 19 for additional information.

Real Estate Financing

The Company has entered into certain sale-leaseback agreements that do not qualify as asset sales and were accounted for as real estate financing transactions.

These arrangements primarily consist of our new headquarters currently under construction.

During the first quarter of 2023, the Company received $ 66.5 million pursuant to the transaction.

See Note 1 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 for more information concerning real estate financing.

Supply Chain Financing

As part of our strategy to manage working capital, we have entered into agreements with various financial institutions that act as intermediaries between the Company and certain suppliers.

The Company is not a party to agreements between the suppliers and the financial institutions.

These arrangements provide participating suppliers the option to settle outstanding Accounts payable incurred by the Company in the normal course of business early at a discount and do not impact our rights and obligations with suppliers, including amounts due and scheduled payment terms.

Under the terms of our agreements, the Company confirms the validity of each supplier invoice to the respective financial institution upon receipt.

On the invoice due date, the Company settles the outstanding amount with the respective financial institution.

Liabilities associated with these arrangements are recorded in Accounts payable on the Consolidated Balance Sheets and amounted to $ 251.3 million, $ 258.1 million and $ 250.6 million at March 31, 2023, December 31, 2022 and March 31, 2022, respectively.

Non-Traded Investments

The Company has invested in the U.S.

affordable housing and historic renovation real estate markets and certain other investments that have been identified as variable interest entities which qualify for certain tax credits.

However, because the Company does not have the power to direct the day-to-day operations of the investments and the risk of loss is limited to the amount of contributed capital, the Company is not considered the primary beneficiary.

In accordance with the Consolidation Topic of the ASC, the investments are not consolidated.

The carrying value of the investments is recorded in Other assets.

The liabilities for the estimated future capital contributions are recorded in Other accruals and Other long-term liabilities.

The following table summarizes the balances related to the investments:

March 31, December 31, March 31,

2023 2022 2022

Other assets $ 573.8 $ 587.0 $ 420.2

Other accruals 75.0 89.8 49.7

Other long-term liabilities 482.1 476.5 357.4

NOTE 2 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Effective January 1, 2022, the Company adopted Accounting Standards Update (ASU) 2021-10, “Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance.” This ASU requires disclosures for material government assistance transactions during annual reporting periods.

The disclosures include information about the nature of the transaction, the related accounting policies used to account for the government assistance, the effect of government assistance on the entity’s financial statements, and any significant terms and conditions.

The adoption of ASU 2021-10 did not affect the Company’s financial position, results of operations or cash flows as the standard only impacts annual financial statement footnote disclosures.

Not Yet Adopted

In October 2021, the Financial Accounting Standards Board (FASB) issued ASU 2021-08, “Business Combinations (Topic 805):

Effective January 1, 2023, the Company adopted Accounting Standards Update (ASU) 2022-04, “Liabilities - Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations.” This ASU requires disclosure about an entity’s use of supplier finance programs, including the key terms of the programs and the obligations outstanding at the end of the reporting period.

The adoption of ASU 2022-04 did not affect the Company’s financial position, results of operations or cash flows as the standard only impacts financial statement footnote disclosures.

See Note 1 for additional information.

In addition, a required rollforward of activity within the programs will be disclosed prospectively beginning with the annual period ending December 31, 2024.

Effective January 1, 2023, the Company adopted ASU 2021-08, “Business Combinations (Topic 805):

Accounting for Contract Assets and Liabilities from Contracts with Customers.” This ASU requires an acquiring entity to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606.

The ASU is effective for fiscal years and interim periods beginning after December 15, 2022, with early adoption permitted.

The adoption of ASU 2021-08 did not have a material impact on the Company’s financial position, results of operations or cash flows.

Not Yet Adopted

In March 2023, the FASB issued ASU 2023-02, “Investments - Equity Method and Joint Ventures (Topic 323):

Accounting for investments in tax credit structures using the proportional amortization method.” This ASU allows entities to apply the proportional amortization method to all tax equity investments if certain conditions are met.

In addition, the ASU requires certain disclosures about the nature and financial implications of tax equity investments on an entity’s financial position, results of operations and cash flows, including the impact of transition on the periods presented, if any.

This ASU is effective for fiscal years and interim periods beginning after December 15, 2023, with early adoption permitted.

The Company is evaluating the impact of adopting this ASU.

NOTE 3 - ACQUISITIONS AND DIVESTITURES

Closed in Prior Year

During the first quarter of 2022, the Company made certain adjustments to the preliminary purchase accounting adjustments associated with the net assets acquired in its 2021 acquisition of Specialty Polymers, Inc.

The fair value of finite-lived intangible assets increased by $ 61.4 million and property, plant and equipment assets acquired increased by $ 11.0 million, offset by a corresponding net decrease in goodwill.

Pending Acquisition

During the fourth quarter of 2022, the Company signed an agreement to acquire German-based Specialized Industrial Coatings Holding (SIC Holding), a Peter Möhrle Holding and GP Capital UG venture comprised of Oskar Nolte GmbH and Klumpp Coatings GmbH.

The transaction is subject to customary closing conditions and is expected to close in 2023.

The acquired business will be reported within the Company’s Performance Coatings Group.

Acquisitions Closed in Prior Year

In April 2022, the Company completed the acquisition of the European industrial coatings business of Sika AG.

In July 2022, the Company completed the acquisitions of Gross & Perthun GmbH, Dur-A-Flex, Inc.

and Powdertech Oy Ltd.

In December 2022, the Company completed the acquisition of Industria Chimica Adriatica S.p.A.

The acquired businesses are reported within the Company’s Performance Coatings Group.

During the first quarter of 2023, the Company revised the purchase price allocation from Goodwill to the various net assets acquired through its 2022 acquisition of ICA.

Goodwill decreased $ 149.6 million and deferred tax liabilities increased $ 59.0 million, offset by an increase in finite-lived intangible assets of $ 192.7 million, with the remaining purchase price

allocated to various other assets acquired and liabilities assumed in the transaction.

There was no material impact on previously reported financial results from these adjustments.

The Company expects to complete the preliminary purchase price allocation for the acquisition within the allowable measurement period.

Closed in Current Year

In April 2022, the Company completed the acquisition of the European industrial coatings business of Sika AG (Sika).

This business engineers, manufactures and sells corrosion protection coating systems and fire protection coating systems.

In July 2022, the Company completed the acquisitions of Gross & Perthun GmbH, a German-based developer, manufacturer, and distributor of coatings primarily for the heavy equipment and transportation industries, Dur-A-Flex, Inc., a domestic floor

coatings company, and Powdertech Oy Ltd., a Finland-based distributor of powder coatings and related products.

The acquired businesses will be reported within the Company’s Performance Coatings Group.

The aggregate purchase price for the businesses acquired in the nine months ended September 30, 2022 was approximately $ 649.1 million, including amounts withheld as security for certain representations, warranties and obligations of the sellers.

The purchase price for each acquisition was preliminarily allocated to identifiable assets and liabilities based on information available at the date of acquisition and may change as the Company completes its analysis of net assets acquired, primarily the identification and valuation of intangible assets.

As of September 30, 2022, $ 214.2 million of intangible assets and $ 380.5 million of goodwill were recognized from these transactions.

The Company expects to finalize the purchase price allocation for each of the acquisitions within the allowable measurement period.

1 unchanged sentence

Pro forma results of operations have not been presented as the impact on the Company’s consolidated financial results is not material.

During the third quarter of 2022, the Company signed an agreement to acquire Industria Chimica Adriatica S.p.A.

(ICA), an Italian designer, manufacturer and distributor of industrial wood coatings with global operations and production facilities in Italy and Poland.

The transaction is subject to customary closing conditions and is expected to close by the end of 2022.

The acquired business will be reported within the Company’s Performance Coatings Group.

On March 31, 2021, the Company divested Wattyl, an Australian and New Zealand manufacturer and seller of architectural and protective paint and coatings with annual revenue of approximately $ 200 million.

The divestiture enabled the Company to focus its resources on global opportunities which better align with our long-term strategies.

In connection with this transaction, the Company recognized a pre-tax loss of $ 111.9 million within Other general (income) expense - net (see Note 15).

The Wattyl divestiture did not meet the criteria to be reported as discontinued operations in our consolidated financial statements as the Company’s decision to divest this business did not represent a strategic shift that will have a major effect on the Company’s operations and financial results.

Subsequent Events

In April 2023, the Company signed a definitive agreement to divest the Consumer Brand Group’s China architectural business with annual revenue of approximately $ 100 million and 300 employees.

The divestiture will enable the Company to focus its resources on opportunities which better align with its long-term strategies.

The transaction is expected to close in the second half of 2023, subject to regulatory approval and other customary closing conditions.

We expect to incur a loss in the second quarter of 2023, but are unable to estimate the amount at this time due to uncertainty of the impact closing conditions will have on the transaction.

The Company also signed a definitive agreement to divest a non-core domestic aerosol business within the Consumer Brands Group.

This transaction closed in April 2023 and will result in the recognition of an immaterial gain during the second quarter of 2023.

NOTE 4 – RESTRUCTURING

In the fourth quarter of 2022, the Company approved a business restructuring plan (Restructuring Plan) to simplify the Company’s operating model and portfolio of brands within the Consumer Brands Group and to reduce costs in all regions in the Consumer Brands Group, Performance Coatings Group and the Administrative segment.

The actions taken under the Restructuring Plan better position the Company to continue to add long-term shareholder value.

Key focus areas within the Consumer Brands Group include the China architectural business, aerosol portfolio and optimization of the overall retail portfolio.

The majority of these restructuring actions are expected to be completed by the end of 2023.

The following table summarizes the activity and remaining liabilities associated with the Restructuring Plan:

Consumer Brands

Group Performance

Group Administrative Total

Balance at January 1, 2023

$ 25.6 $ 16.1 $ — $ 41.7

Provisions for severance and related costs (1)

1.0 ( 0.1 ) — 0.9

Payments ( 7.7 ) ( 4.0 ) — ( 11.7 )

Currency impact and other adjustments ( 2.0 ) 0.3 — ( 1.7 )

Balance at March 31, 2023 $ 16.9 $ 12.3 $ — $ 29.2

Restructuring Plan Expense:

Total expense incurred to date $ 24.6 $ 22.4 $ — $ 47.0

Additional expense expected 94.9 2.6 10.0 107.5

Total expected expense $ 119.5 $ 25.0 $ 10.0 $ 154.5

(1) Provisions were primarily recorded in Selling, general and administrative expenses.

NOTE 5 - INVENTORIES

Included in Inventories were the following:

September 30, December 31, September 30,

March 31, December 31, March 31,

2023 2022 2022

9 unchanged sentences

Included in Property, plant and equipment, net were the following:

September 30, December 31, September 30,

March 31, December 31, March 31,

2023 2022 2022

7 unchanged sentences

In accordance with the Goodwill and Other Intangibles Topic of the ASC, goodwill and indefinite-lived intangible assets are tested for impairment annually during the fourth quarter, and interim impairment tests are performed whenever an event occurs or circumstances change that indicate an impairment has more likely than not occurred.

As a result of the Latin America architectural paint business moving to the Consumer Brands Group reportable segment, the Company performed a quantitative impairment analysis for the impacted reporting units and determined both before and after the change, there is no indication of impairment.

NOTE 7 - DEBT

The following table summarizes the Company’s outstanding debt:

September 30, December 31, September 30,

March 31, December 31, March 31,

2023 2022 2022

2 unchanged sentences

Total debt outstanding $ 11,075.0 $ 10,569.7 $ 10,592.7

Long-Term Debt

The Company’s long-term debt primarily consists of senior notes.

In August 2022, the Company issued $ 600.0 million of 4.050 % Senior Notes due 2024 and $ 400.0 million of 4.250 % Senior Notes due 2025 in a public offering.

The net proceeds from the issuance of these notes were used to repay borrowings outstanding under the Company’s credit agreement dated May 9, 2016, as amended, and domestic commercial paper program.

For further details on the Company’s debt, including available credit facilities and related agreements, see Note 6 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Short-Term Borrowings

On May 23, 2022, the Company amended its credit agreement dated May 9, 2016, as amended, to extend the maturity of $ 150.0 million of the commitments available for borrowing or letters of credit.

On multiple dates during the third quarter of 2022, the Company amended its credit agreement dated August 2, 2021, as amended, to extend the maturities of $ 250.0 million, in the aggregate, of the commitments available for borrowing or letters of credit.

On August 30, 2022, the Company and two of its wholly-owned subsidiaries, Sherwin-Williams Canada Inc.

(SW Canada) and Sherwin-Williams Luxembourg S.à r.l.

(SW Luxembourg, together with the Company and SW Canada, the Borrowers), entered into a new five-year $ 2.250 billion credit agreement (New Credit Agreement).

The New Credit Agreement may be used for general corporate purposes, including the financing of working capital requirements.

The New Credit Agreement replaced the $ 2.000 billion credit agreement dated June 29, 2021, as amended, which was terminated effective August 30, 2022.

The New Credit Agreement will mature on August 30, 2027 and provides that the Company may request to extend the maturity date of the facility for two additional one-year periods.

In addition, the New Credit Agreement provides that the Borrowers may increase the aggregate size of the facility up to an additional amount of $ 750.0 million, subject to the discretion of each lender to participate in the increase, and the Borrowers may request letters of credit in an amount of up to $ 250.0 million.

On February 28, 2023, the Company amended its credit agreement dated August 2, 2021, as amended, to extend the maturity of $ 125.0 million of the commitments available for borrowing and for the issuance, renewal, extension, and increase of a letter of credit under the credit agreement from June 20, 2023 to December 20, 2027.

The Company’s available capacity under its committed credit agreements is reduced for amounts outstanding under its domestic commercial paper program, various credit agreements and letters of credit.

At September 30, 2022 , the Company had unused

At March 31, 2023 , the Company had unused

capacity under its various credit agreements of $ 2.228 billion.

The following table summarizes the Company’s short-term borrowings:

September 30, December 31, September 30,

March 31, December 31, March 31,

2023 2022 2022

6 unchanged sentences

Foreign facilities 3.7 % 6.7 % 7.6 %

For further details on the Company’s debt, including available credit facilities and related agreements, see Note 8 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

NOTE 8 - PENSION AND OTHER POSTRETIREMENT BENEFITS

The following table summarizes the components of the Company’s net periodic benefit cost for domestic and foreign defined benefit pension plans and other postretirement benefits:

The following table summarizes the components of the Company’s net periodic benefit cost (credit) for domestic and foreign defined benefit pension plans and other postretirement benefits:

Defined Benefit

4 unchanged sentences

2023 2022 2023 2022 2023 2022

Three Months Ended September 30:

Net periodic benefit cost:

Service cost $ 1.3 $ 1.3 $ 1.6 $ 1.9 $ 0.3 $ 0.3

Interest cost 0.8 0.6 1.9 1.4 1.4 1.2

Expected return on assets ( 2.0 ) ( 1.7 ) ( 2.6 ) ( 2.4 )

Amortization of prior service cost (credit) 0.2 0.3 ( 0.1 ) 0.1

Amortization of actuarial losses 0.1 0.4 1.1 1.2

Net periodic benefit cost $ 0.3 $ 0.5 $ 1.0 $ 1.3 $ 2.7 $ 2.8

Nine Months Ended September 30:

Net periodic benefit cost:

Three Months Ended March 31:

Net periodic benefit cost (credit):

Service cost $ 0.8 $ 1.3 $ 1.1 $ 1.6 $ 0.1 $ 0.3

3 unchanged sentences

Amortization of actuarial losses ( 0.4 ) 0.1 1.1

Ongoing net periodic benefit cost 1.1 1.3 3.0 3.7 8.2 8.5

Divestiture of business 0.7

Net periodic benefit cost $ 1.1 $ 1.3 $ 3.0 $ 4.4 $ 8.2 $ 8.5

Total $ 0.5 $ 0.4 $ 0.4 $ 1.0 $ ( 4.0 ) $ 2.7

Service cost is recorded in Cost of goods sold and Selling, general and administrative expenses.

All other components are recorded in Other expense (income) - net.

All other components are recorded in Other (income) expense - net.

For further details on the Company’s pension and other postretirement benefits, see Note 9 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

3 unchanged sentences

Management expects environmental laws and regulations to impose increasingly stringent requirements upon the Company and the industry in the future.

Management believes that the Company conducts its operations in compliance with applicable environmental laws and regulations and has implemented various programs designed to protect the environment and promote continued compliance.

Management believes that the Company conducts its operations in compliance with applicable environmental laws, regulations and requirements and has implemented various programs designed to protect the environment and promote continued compliance.

The Company is involved with environmental investigation and remediation activities at some of its currently and formerly owned sites (including sites which were previously owned and/or operated by businesses acquired by the Company).

5 unchanged sentences

If the reasonably estimable costs can only be identified as a range and no specific amount within that range can be determined more likely than any other amount within the range, the minimum of the range is provided.

The Company continuously assesses its potential liability for investigation and remediation-related activities and adjusts its environmental-related accruals as information becomes available upon which more accurate costs can be reasonably estimated and as additional accounting guidelines are issued.

At September 30, 2022 and 2021, the Company had accruals reported on the balance sheet as Other long-term liabilities of $ 268.0 million and $ 271.1 million , respectively.

Estimated costs of current investigation and remediation activities of $ 45.9 million and $ 68.6 million are included in Other accruals at September 30, 2022 and 2021 , respectively.

The Company continuously assesses its potential liability for investigation and remediation-related activities and adjusts its environmental-related accruals as information becomes available, including as a result of sites progressing through investigation and remediation-related activities, upon which more accurate costs can be reasonably estimated and as additional accounting guidelines are issued.

At March 31, 2023 and 2022, the Company had accruals reported on the balance sheet as Other long-term liabilities of $ 248.2 million and $ 272.5 million , respectively.

Estimated costs of current investigation and remediation activities of $ 50.2 million and $ 45.9 million are included in Other accruals at March 31, 2023 and 2022 , respectively.

Actual costs incurred may vary from the accrued estimates due to the inherent uncertainties involved including, among others, the number and financial condition of parties involved with respect to any given site, the volumetric contribution which may be attributed to the Company relative to that attributed to other parties, the nature and magnitude of the wastes involved, the various technologies that can be used for remediation and the determination of acceptable remediation with respect to a particular site.

If the Company's future loss contingency is ultimately determined to be at the unaccrued maximum of the estimated range of possible outcomes for every site for which costs can be reasonably estimated, the Company's accrual for environmental-related activities would be $ 92.6 million higher than the minimum accruals at September 30, 2022.

If the Company's future loss contingency is ultimately determined to be at the unaccrued maximum of the estimated range of possible outcomes for every site for which costs can be reasonably estimated, the Company's accrual for environmental-related activities would be $ 83.5 million higher than the minimum accruals at March 31, 2023.

Additionally, costs for environmental-related activities may not be reasonably estimable at early stages of investigation and therefore would not be included in the unaccrued maximum amount.

Four of the Company’s currently and formerly owned manufacturing sites (Major Sites) account for the majority of the accrual for environmental-related activities and the unaccrued maximum of the estimated range of possible outcomes at September 30, 2022 .

At September 30, 2022 , $ 269.8 million, or 86.0 % of the total accrual, related directly to the Major Sites.

In the aggregate unaccrued maximum of $ 92.6 million at September 30, 2022 , $ 70.7 million, or 76.4 %, related to the Major Sites.

The significant cost components of this liability continue to be related to remedy implementation, regulatory agency interaction, project management and other costs.

At March 31, 2023 , $ 254.5 million, or 85.3 % of the total accrual, related directly to the Major Sites.

In the aggregate unaccrued maximum of $ 83.5 million at March 31, 2023 , $ 62.3 million, or 74.6 %, related to the Major Sites.

The significant cost components of this liability continue to be related to remedy implementation, regulatory agency interaction, and project management and other costs.

While different for each specific environmental situation, these components generally each account for approximately 85 %, 10 %, and 5 %, respectively, of the accrued amount and those percentages are subject to change over time.

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Gibbsboro, a former manufacturing plant, and related areas, which ceased operations in 1978, has had various areas included on the National Priorities List since 1999.

This location has soil, waterbodies, and groundwater contamination related to the historic operations of the facility.

This location has soil, sediment, waterbodies, and groundwater contamination related to the historic operations of the facility.

Gibbsboro has been divided by the Environmental Protection Agency (EPA) into six operable units (OUs) based on location and characteristics, whose investigation and remediation efforts are likely to occur over an extended period of time.

Each of the OUs are in various phases of investigation and remediation with the EPA that provide enough information to reasonably estimate cost ranges and record environmental-related accruals.

The most significant assumptions underlying the reliability and precision of remediation cost

estimates for the Gibbsboro site are the type and extent of future remedies to be selected by the EPA and the costs of implementing those remedies.

The remaining three Major Sites comprising the majority of the accrual include (1) a multi-party Superfund site that has received a record of decision from the federal EPA and is currently in the remedial design phase for one OU and for which a remedial investigation/feasibility study has been submitted for another OU, (2) a closed paint manufacturing facility that is in the operation and maintenance phase of remediation under both federal and state EPA programs, and (3) a formerly-owned site containing warehouse and office space that is in the remedial investigation phase under a state EPA program.

The most significant assumptions underlying the reliability and precision of remediation cost estimates for the Gibbsboro site are the type and extent of future remedies to be selected by the EPA and the costs of implementing those remedies.

The remaining three Major Sites comprising the majority of the accrual include (1) a multi-party Superfund site that (a) has received a record of decision from the federal EPA and is currently in the remedial design phase for one OU, (b) has received a record of decision from the federal EPA for an interim remedy for another OU, and (c) has a remedial investigation ongoing for another OU, (2) a closed paint manufacturing facility that is in the operation and maintenance phase of remediation under both federal and state EPA programs, and (3) a formerly-owned site containing warehouse and office space that is in the remedial investigation/design phase under a state EPA program.

Each of these three Major Sites are in phases of investigation and remediation that provide sufficient information to reasonably estimate cost ranges and record environmental-related accruals.

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Unasserted claims could have a material effect on the Company's loss contingency as more information becomes available over time.

At September 30, 2022 , the Company did not have material loss contingency accruals related to unasserted claims.

At March 31, 2023 , the Company did not have material loss contingency accruals related to unasserted claims.

Management does not expect that a material portion of unrecognized loss contingencies will be recoverable through insurance, indemnification agreements or other sources.

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The Company, along with other companies, is and has been a defendant in a number of legal proceedings, including individual personal injury actions, purported class actions, and actions brought by various counties, cities, school districts and other government-related entities, arising from the manufacture and sale of lead pigments and lead-based paints.

The plaintiffs’ claims have been based upon various legal theories, including negligence, strict liability, breach of warranty, negligent misrepresentations and omissions, fraudulent misrepresentations and omissions, concert of action, civil conspiracy, violations of unfair trade practice and consumer protection laws, enterprise liability, market share liability, public nuisance, unjust enrichment and other theories.

The plaintiffs seek various damages and relief, including personal injury and property damage, costs relating to the detection and abatement of lead-based paint from buildings, costs associated with a public education campaign, medical monitoring costs and others.

nuisance, unjust enrichment and other theories.

The plaintiffs have sought various damages and relief, including personal injury and property damage, costs relating to the detection and abatement of lead-based paint from buildings, costs associated with a public education campaign, medical monitoring costs and others.

The Company has also been a defendant in legal proceedings arising from the manufacture and sale of non-lead-based paints that seek recovery based upon various legal theories, including the failure to adequately warn of potential exposure to lead during surface preparation when using non-lead-based paint on surfaces previously painted with lead-based paint.

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and Lehigh and Montgomery Counties in Pennsylvania.

Except for the Santa Clara County, California proceeding and the pending Pennsylvania proceedings, all of these legal proceedings have been concluded in favor of the Company and other defendants at various stages in the proceedings.

Santa Clara County, California Proceeding .

The Santa Clara County, California proceeding was initiated in March 2000 in the Superior Court of the State of California, County of Santa Clara.

After nearly twenty years of litigation, the Company and two other defendants (ConAgra Grocery Products Company and NL Industries, Inc.) reached an agreement in principle with the plaintiffs to resolve the litigation on July 17, 2019.

The agreement provides that, in full and final satisfaction of any and all claims of the plaintiffs, the defendants collectively shall pay a total of $ 305.0 million, with the defendants each paying approximately $ 101.7 million as follows:

(i) an initial payment of $ 25.0 million within sixty days after the entry of a dismissal order and judgment;

(ii) subsequent annual payments of $ 12.0 million one year after the initial payment and for a period of four years thereafter;

and (iii) a final payment of approximately $ 16.7 million on the sixth anniversary of the initial payment.

Should NL Industries fail to make any of its payments required under the agreement, the Company has agreed to backstop and pay on behalf of NL Industries a maximum amount of $ 15.0 million.

On July 24, 2019, the trial court approved the agreement, discharged the receiver, and granted a judgment of dismissal with prejudice in favor of the defendants.

At September 30, 2022 and 2021, the Company had accruals for this agreement reported on the balance sheet of $ 40.7 million and $ 52.7 million, respectively, with $ 12.0 million included in Current liabilities and the remaining $ 28.7 million and $ 40.7 million, respectively, included in Other long-term liabilities.

Except for the Santa Clara County, California proceeding in which the Company reached a court-approved agreement in 2019 after nearly twenty years of litigation, and the pending Pennsylvania proceedings, all of these legal proceedings have been concluded in favor of the Company and other defendants at various stages in the proceedings.

Pennsylvania Proceedings .

Two proceedings in Pennsylvania were initiated in October 2018.

The Pennsylvania counties of Montgomery and Lehigh filed complaints against the Company and several other former lead-based paint and lead pigment manufacturers in the Courts of Common Pleas of Montgomery County, Pennsylvania and Lehigh County, Pennsylvania, respectively.

In both actions, the counties request declaratory relief establishing the existence of a public nuisance and the defendants’ contribution to it, the abatement of an ongoing public nuisance arising from the presence of lead-based paint in housing throughout the applicable county, an injunction against future illicit conduct, and the costs of litigation and attorneys’ fees.

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The Commonwealth Court granted the defendants’ petitions for permission to appeal in both the Montgomery County and Lehigh County actions on February 18, 2022, and stayed all proceedings in the trial courts pending the appellate court proceedings.

The Company filed its opening appellate briefs in both actions on May 18, 2022.

Montgomery County and Lehigh County filed their appellate briefs on July 21, 2022.

The Company filed its reply briefs in both actions on September 9, 2022.

Oral argument is tentatively scheduled to occur during the week of December 12, 2022.

The parties filed their respective briefs in both actions, and o ral argument occurred on December 14, 2022.

Litigation seeking damages from alleged personal injury.

The Company and other companies are defendants in a number of legal proceedings seeking monetary damages and other relief from alleged personal injuries.

These proceedings include claims by children allegedly injured from ingestion of lead pigment or lead-containing paint and claims for damages allegedly incurred by the children’s parents or guardians.

These proceedings generally seek compensatory and punitive damages, and seek other relief including medical monitoring costs.

These proceedings include purported claims by individuals, groups of individuals and class actions.

The plaintiff in Thomas v.

Lead Industries Association, et al., initiated an action in Wisconsin state court against the Company, other alleged former lead pigment manufacturers and the Lead Industries Association in September 1999.

The claims against the defendants included strict liability, negligence, negligent misrepresentation and omissions, fraudulent misrepresentation and omissions, concert of action, civil conspiracy and enterprise liability.

Implicit within these claims is the theory of “risk contribution” liability (Wisconsin’s theory is similar to market share liability, except that liability can be joint and several) due to the plaintiff’s inability to identify the manufacturer of any product that allegedly injured the plaintiff.

The case ultimately proceeded to trial and, on November 5, 2007, the jury returned a defense verdict, finding that the plaintiff had ingested white lead carbonate, but was not brain damaged or injured as a result.

The plaintiff appealed, and on December 16, 2010, the Wisconsin Court of Appeals affirmed the final judgment in favor of the defendants.

Wisconsin is the only jurisdiction to date to apply a theory of liability with respect to alleged personal injury (i.e., risk contribution/market share liability) that does not require the plaintiff to identify the manufacturer of the product that allegedly injured the plaintiff in the lead pigment and lead-based paint litigation.

Although the risk contribution liability theory was applied during the Thomas trial, the constitutionality of this theory as applied to the lead pigment cases has not been judicially determined by the Wisconsin state courts.

However, in an unrelated action filed in the United States District Court for the Eastern District of Wisconsin, Gibson v.

American Cyanamid, et al., on November 15, 2010, the district court held that Wisconsin’s risk contribution theory as applied in that case violated the defendants’ right to substantive due process and is unconstitutionally retroactive.

The district court’s decision in Gibson v.

American Cyanamid, et al., was appealed by the plaintiff to the United States Court of Appeals for the Seventh Circuit.

On July 24, 2014, the Seventh Circuit reversed the judgment and remanded the case back to the district court for further proceedings.

On January 16, 2015, the defendants filed a petition for certiorari in the United States Supreme Court seeking review of the Seventh Circuit’s decision, and on May 18, 2015, the United States Supreme Court denied the defendants’ petition.

The case is currently pending in the district court.

The Company and other companies are or have been defendants in a number of legal proceedings seeking monetary damages and other relief from alleged personal injuries.

The current proceedings include claims by children allegedly injured from ingestion of lead pigment or lead-containing paint.

The plaintiffs generally seek compensatory damages and have invoked Wisconsin’s risk contribution theory (which is similar to market share liability, except that liability can be joint and several) due to the plaintiff’s inability to identify the manufacturer of any product that allegedly injured the plaintiff.

The United States District Court for the Eastern District of Wisconsin consolidated three cases (Ravon Owens v.

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After post-trial motions resulted in the damages award to plaintiff Glenn Burton, Jr.

being reduced to $ 800,000 , the Company filed a notice of appeal with the United States Court of Appeals for the Seventh Circuit.

being reduced to $ 800,000 , the Company filed a notice of appeal with the Seventh Circuit.

On April 15, 2021, the Seventh Circuit reversed the judgments and held that the Company was entitled to judgment as a matter of law on all claims filed by the three plaintiffs .

The plaintiffs filed a petition with the Seventh Circuit on April 27, 2021, seeking a rehearing en banc and, in the alternative, a request for certification of questions to the Wisconsin Supreme Court.

The plaintiffs’ petition was denied by the Seventh Circuit on May 12, 2021.

In Maniya Allen, et al.

American Cyanamid, et al., also pending in the United States District Court for the Eastern District of Wisconsin, cases involving six of the 146 plaintiffs were selected for discovery.

In Dijonae Trammell, et al.

American Cyanamid, et al., also pending in the United States District Court for the Eastern District of Wisconsin, discovery for one of the three plaintiffs was consolidated with the six Allen cases referenced above.

The parties selected four of the cases to proceed to expert discovery and to prepare for trial.

The district court previously issued an order scheduling trial in the four cases to commence on June 15, 2020, but the trial date was continued due to the COVID-19 pandemic, and no new trial date has been scheduled.

On May 20, 2021, the Company and the three other defendants filed motions for summary judgment to dismiss the claims of all plaintiffs then pending in the district court as a result of the Seventh Circuit’s decision in favor of the Company in the Owens, Sifuentes and Burton cases.

The plaintiffs’ petition was denied on May 12, 2021.

On May 20, 2021, the Company and the three other defendants filed motions for summary judgment to dismiss the claims of all plaintiffs then pending in the Eastern District of Wisconsin as a result of the Seventh Circuit’s decision in favor of the Company in the Owens, Sifuentes and Burton cases.

On March 3, 2022, the district court granted summary judgment in favor of the Company and the other defendants on all claims then pending in the district court.

On March 31, 2022, the plaintiffs filed a motion seeking to alter or amend the judgment.

The Company and the other defendants opposed the motion on April 21, 2022.

The plaintiffs filed a reply in support of the motion on May 6, 2022.

On August 16, 2022, the district court denied the plaintiffs’ motion to alter or amend the judgment.

Briefing on the motion concluded, and the district court denied the plaintiffs’ motion to alter or amend the judgment on August 16, 2022.

On September 15, 2022, the plaintiffs filed notices of appeal with the Seventh Circuit, seeking to appeal the district court’s summary judgment in favor of the Company and the other defendants.

The plaintiffs filed their brief in support on December 9, 2022.

The defendants filed their brief in opposition on February 22, 2023.

On March 24, 2023, the plaintiffs filed their reply brief, which included a motion to certify issues to the Wisconsin Supreme Court.

On March 31, 2023, the defendants filed a motion to strike and response in opposition to plaintiffs’ motion to certify.

On April 7, 2023, the plaintiffs filed a response in opposition to defendants’ motion to strike.

On April 14, 2023, the defendants filed a reply in support of their motion to strike.

On August 24, 2021, the plaintiff in Arrieona Beal v.

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On March 2, 2022, the plaintiff filed a motion for declaratory judgment seeking to clarify Wisconsin law following the Seventh Circuit’s decision in favor of the Company in the Owens, Sifuentes and Burton cases, to which the Company responded on April 15, 2022.

Prior to filing its response to the declaratory judgment motion, the Company removed the case to the United

States District Court for the Eastern District of Wisconsin on March 25, 2022.

The plaintiff filed a motion to remand the case to the state circuit court on April 7, 2022, the Company opposed the motion to remand on May 6, 2022, and the plaintiff filed a reply in support of the motion on May 12, 2022.

Prior to filing its response to the declaratory judgment motion, the Company removed the case to the Eastern District of Wisconsin on March 25, 2022.

The plaintiff filed a motion to remand the case to the state circuit court on April 7, 2022, which the Company opposed.

On May 10, 2022, the plaintiff filed a motion for sanctions related to the Company’s removal of the case to federal court, to which the Company responded on May 27, 2022.

On May 10, 2022, select plaintiffs in the Wisconsin federal court cases filed a petition to take jurisdiction of the original action with the Supreme Court of Wisconsin, requesting that the Supreme Court provide guidance on certain legal questions involved in the plaintiffs’ pending federal court cases (the same questions presented in Beal’s declaratory judgment motion pending in the Eastern District of Wisconsin).

On June 22, 2022, the Wisconsin Supreme Court ordered the defendants to file a response addressing whether the Supreme Court should take original jurisdiction.

The Company and other defendants filed their response on July 20, 2022, to which the plaintiffs replied on August 4, 2022 .

On October 11, 2022, the Supreme Court denied the plaintiffs’ petition.

Other lead-based paint and lead pigment litigation.

In Mary Lewis v.

Lead Industries Association, et al.

pending in the Circuit Court of Cook County, Illinois, parents seek to recover the cost of their children’s blood lead testing against the Company and three other defendants that made (or whose alleged corporate predecessors made) white lead pigments.

The circuit court had certified a statewide class and a Chicago subclass of parents or legal guardians of children who lived in high-risk zip codes identified by the Illinois Department of Health and who were screened for lead toxicity between August 1995 and February 2008.

Excluded from the class were those parents or guardians who have incurred no expense, liability or obligation to pay for the cost of their children’s blood lead testing.

In 2017, the defendants moved for summary judgment on the grounds that the three named plaintiffs have not paid and have no obligation or liability to pay for their children’s blood lead testing because Medicaid paid for the children of two plaintiffs and private insurance paid for the third plaintiff without any evidence of a co-pay or deductible.

The circuit court granted the motion, but on September 7, 2018, the appellate court reversed with respect to the two plaintiffs for whom Medicaid paid for their children’s testing.

Defendants appealed to the Supreme Court of Illinois, and on May 21, 2020, the Supreme Court reversed the appellate court’s judgment, affirmed the circuit court’s summary judgment dismissing the claims of the two plaintiffs for whom Medicaid paid for their children’s testing, and remanded the case for further proceedings consistent with the Supreme Court’s decision.

On August 19, 2020, the defendants filed their renewed motion for class decertification and entry of final judgment with the circuit court.

The parties filed their respective briefs on the motion, and oral argument occurred on February 4, 2021.

On March 8, 2021, the Illinois Department of Healthcare and Family Services filed a petition to intervene and a proposed amended complaint, which would eliminate the class and all prior claims by individual plaintiffs and would propose a subrogation claim by the State agency to recover its expenditures for blood lead testing.

Defendants opposed the petition to intervene, and briefing on the petition concluded.

A hearing on the petition to intervene occurred on August 10, 2021.

On October 8, 2021, the circuit court entered an order granting the defendants’ motion for decertification of the class, denying the petition to intervene by the Department, and noting that an entry of final judgment in the defendants’ favor was now appropriate.

On October 19, 2021, the circuit court entered final judgment in favor of the defendants.

The Department appealed to the Appellate Court of Illinois, First District and filed its opening brief on May 25, 2022.

The Company filed a response to the opening brief on July 13, 2022, to which the Department replied on August 10, 2022.

The appellate court entered an order on August 19, 2022, affirming the denial of the Department’s petition to intervene and the granting of the defendants’ motion for final judgment.

Insurance coverage litigation.

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On December 21, 2020, the Company filed a notice of appeal to the Court of Appeals of Cuyahoga County, Ohio, Eighth Appellate District, and the insurers filed cross-appeals.

Briefing on the issues concluded, and oral argument occurred on August 25, 2021.

The insurers then filed on January 13, 2022, a motion for leave to file a supplemental brief to address the Eighth Appellate District’s recent decision in Cincinnati Ins.

Discount Drug Mart, Inc.

The Company filed a response to the insurers’ motion on January 19, 2022.

On March 25, 2022, the Company filed a notice of additional authority, submitting a March 24, 2022 decision from the New York Appellate Division, First Judicial Department in Certain Underwriters at Lloyd’s, London, et al., v.

NL Industries, Inc., et al.

The insurers filed a

response to the notice on April 1, 2022.

On April 20, 2022, the insurers filed a notice of additional authority, submitting an April 19, 2022 decision from the California Court of Appeal, First Appellate Division in Certain Underwriters at Lloyd’s, London v.

ConAgra Grocery Products Co.

The Company filed a response to the notice on April 25, 2022.

On September 1, 2022, the appellate court reversed the trial court’s grant of summary judgment, finding in favor of the Company on its appeal and against the insurers on their cross-appeal, and remanded the case to the trial court for further proceedings.

On September 12, 2022, the insurers applied to the appellate court for reconsideration of its decision, en banc review, or certification of an appeal to the Ohio Supreme Court.

The Company filed its opposition to the applications on September 22, 2022.

On September 12, 2022, the insurers applied to the appellate court for reconsideration of its decision, en banc review, or certification of an appeal to the Ohio Supreme Court, which the Company opposed.

On September 30, 2022, the appellate court denied the insurers’ applications for reconsideration and certification.

The parties are awaiting the appellate court’s decision on the insurers’ application for en banc review.

On January 9, 2023, the appellate court denied the insurers’ application for en banc review.

On February 21, 2023, the insurers filed with the Ohio Supreme Court a notice of appeal and memorandum in support of jurisdiction, to which the Company responded in opposition on March 22, 2023.

An ultimate loss in the insurance coverage litigation would mean that insurance proceeds could be unavailable under the policies at issue to mitigate any ultimate abatement related costs and liabilities.

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Other litigation.

On December 18, 2019, the New Jersey Department of Environmental Protection, the Commissioner of the New Jersey Department of Environmental Protection, and the Administrator of the New Jersey Spill Compensation Fund filed a lawsuit against the Company in the Superior Court of New Jersey Law Division in Camden County, New Jersey.

The plaintiffs s eek to recover natural resource damages, punitive damages, and litigation fees and costs, as well as other costs, damages, declaratory relief, and penalties pursuant to New Jersey state statutes and common law theories in connection with the alleged discharge of hazardous substances and pollutants at the Company’s Gibbsboro, New Jersey site, a former manufacturing plant and related facilities.

On December 18, 2019, the New Jersey Department of Environmental Protection, the Commissioner of the New Jersey Department of Environmental Protection, and the Administrator of the New Jersey Spill Compensation Fund (collectively, the NJ DEP) filed a lawsuit against the Company in the Superior Court of New Jersey Law Division in Camden County, New Jersey.

The NJ DEP seeks to recover natural resource damages, punitive damages, and litigation fees and costs, as well as other costs, damages, declaratory relief, and penalties pursuant to New Jersey state statutes and common law theories in connection with the alleged discharge of hazardous substances and pollutants at the Company’s Gibbsboro, New Jersey site, a former manufacturing plant and related facilities.

The court has scheduled a trial date of September 16, 2024.

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First Quarter $ 0.605 $ 156.5 $ 0.60 $ 150.9

Second Quarter 0.60 156.2 0.55 145.9

Third Quarter 0.60 155.8 $ 0.55 145.2

Total $ 1.80 $ 462.9 $ 1.65 $ 442.9

Treasury Stock

The Company acquires its common stock for general corporate purposes through its publicly announced share repurchase program.

As of September 30, 2022, the Company had remaining authorization from its Board of Directors to purchase 45.8 million shares of its common stock.

The table below summarizes share repurchases during the three and nine months ended September 30, 2022 and 2021:

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

Treasury stock purchases (millions of dollars) $ 47.6 $ 501.5 $ 751.1 $ 2,147.0

As of March 31, 2023, the Company had remaining authorization from its Board of Directors to purchase 43.9 million shares of its common stock.

The table below summarizes share repurchases during the three months ended March 31, 2023 and 2022:

Three Months Ended

Treasury stock purchases $ 301.7 $ 407.1

Treasury stock purchases (shares) 1,300,000 1,450,000

Average price per share $ 232.08 $ 280.77

In February 2022, the Company received proceeds of $ 22.0 million in conjunction with the issuance of treasury shares to fund Company contributions to the domestic defined contribution plan.

In April 2021, the Company received proceeds of $ 11.7 million in conjunction with the issuance of shares to fund obligations related to a non-qualified benefit plan.

In February 2022, the Company received proceeds of $ 22.0 million in conjunction with the issuance of treasury shares to fund Company contributions to the domestic defined contribution pension plan.

Other Activity

During the nine months ended September 30, 2022, 442,347 stock options were exercised at a weighted average price per share of $ 88.46 .

In addition, 356,743 restricted stock units vested during this period.

NOTE 11 - ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

The components of accumulated other comprehensive (loss) income (AOCI), including the reclassification adjustments for items that were reclassified from AOCI to net income, are shown below.

During the three months ended March 31, 2023, 120,769 stock options were exercised at a weighted average price per share of $ 95.38 .

In addition, 301,425 restricted stock units vested during the same period.

NOTE 12 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The components of accumulated other comprehensive income (loss) (AOCI), including the reclassification adjustments for items that were reclassified from AOCI to net income, are shown below.

Adjustments Pension and

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Amounts reclassified from AOCI ( 4.5 ) ( 0.9 ) ( 5.4 )

Balance at September 30, 2022 $ ( 1,066.8 ) $ ( 28.7 ) $ 33.0 $ ( 1,062.5 )

Balance at March 31, 2023 $ ( 770.6 ) $ 73.8 $ 31.0 $ ( 665.8 )

Adjustments Pension and

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Amounts reclassified from AOCI 1.0 ( 1.0 ) —

Balance at September 30, 2021 $ ( 741.4 ) $ ( 82.6 ) $ 37.3 $ ( 786.7 )

Balance at March 31, 2022 $ ( 745.7 ) $ ( 31.2 ) $ 34.9 $ ( 742.0 )

NOTE 13 - DERIVATIVES AND HEDGING

Net Investment Hedges

The Company has two U.S.

The Company has U.S.

Dollar to Euro cross currency swap contracts to hedge the Company's net investment in its European operations.

The contracts were entered into on February 13, 2020, November 8, 2021 and March 28, 2023 with various counterparties.

The total notional value of the outstanding contracts entered into on each date are $ 500.0 million, $ 162.7 million, and $ 150.0 million, respectively, and mature on June 1, 2024, June 1, 2027 and August 8, 2024, respectively.

During the term of the contracts, the Company will pay fixed-rate interest in Euros and receive fixed-rate interest in U.S.

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Dollar denominated fixed-rate debt to Euro denominated fixed-rate debt.

At December 31, 2021, the contracts had a notional value of $ 500.0 million and $ 244.0 million, respectively, and maturity dates of June 1, 2024 and June 1, 2027, respectively.

In April 2022, the Company settled a portion of the $ 244.0 million contract, which reduced the outstanding notional value to $ 162.7 million.

An immaterial loss was recognized in AOCI at the time of settlement.

The following table summarizes the balance sheet location of the cross currency swaps.

The following table summarizes amounts recognized in Consolidated Balance Sheets for cross currency swap contracts.

See Note 14 for additional information on the fair value of these contracts.

September 30, December 31, September 30,

March 31, December 31, March 31,

2023 2022 2022

Other assets $ 3.7 $ 9.1 $ —

Other accruals — — 16.4

Other long-term liabilities 0.2 — 25.8

The changes in fair value of the cross currency swap contracts are recognized in the foreign currency translation adjustments component of AOCI.

The following table summarizes the unrealized gains for the three and nine months ended September 30, 2022 and 2021.

Three Months Ended Nine Months Ended

September 30, September 30, September 30, September 30,

2022 2021 2022 2021

Unrealized gains $ 41.0 $ 19.4 $ 92.5 $ 42.0

The following table summarizes the unrealized gains (losses) for the three months ended March 31, 2023 and 2022.

Three Months Ended

March 31, March 31,

Unrealized (losses) gains $ ( 5.6 ) $ 10.7

Tax effect 1.4 ( 2.6 )

Unrealized gains, net of taxes $ 30.9 $ 14.5 $ 69.8 $ 31.6

Unrealized (losses) gains, net of taxes

$ ( 4.2 ) $ 8.1

Derivatives Not Designated as Hedging Instruments

The Company enters into foreign currency option and forward contracts with maturity dates less than twelve months primarily to hedge against value changes in foreign currency.

The total notional value of foreign currency forward contracts outstanding at September 30, 2022 was $ 194.5 million.

At September 30, 2022, the Company recorded a $ 3.1 million liability in Other accruals to recognize the fair value of these outstanding foreign currency contracts.

There were no material foreign currency option and forward contracts outstanding at December 31, 2021 and September 30, 2021.

The related gains and losses are recorded in Other expense (income) - net.

There were no material foreign currency option and forward contracts outstanding at March 31, 2023, December 31, 2022 and March 31, 2022.

The related gains and losses are recorded in Other (income) expense - net.

NOTE 14 - FAIR VALUE MEASUREMENTS

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Significant unobservable inputs

Except for the acquisition and divestiture-related fair value measurements described in Note 3, there were no assets and liabilities measured at fair value on a nonrecurring basis.

Except for the acquisition related fair value measurements described in Note 3 and the reporting unit impairment analysis described in Note 6, there were no assets and liabilities measured at fair value on a nonrecurring basis.

The following table presents the Company’s financial assets and liabilities that are measured at fair value on a recurring basis, categorized using the fair value hierarchy.

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3

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$ 81.1 $ 45.9 $ 35.2 $ — $ 113.0 $ 73.5 $ 39.5 $ —

Foreign currency forward contracts $ 3.1 $ 3.1 $ — $ —

Net investment hedge liability $ 0.2 $ 0.2 $ —

$ 3.1 $ — $ 3.1 $ — $ 36.5 $ — $ 36.5

The deferred compensation plan assets consist of the investment funds maintained for the future payments under the Company’s executive deferred compensation plans, which are structured as rabbi trusts.

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The level 2 investments are valued based on vendor or broker models.

The cost basis of the investment funds was $ 65.2 million and $ 63.0 million at September 30, 2022 and December 31, 2021, respectively.

The Qualified Replacement Plan assets consist of investment funds maintained for future contributions to the Company’s domestic defined contribution plan.

See Note 7 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 for additional information.

The investments are valued using quoted prices multiplied by the number of shares.

The cost basis of the investment funds was $ 31.4 million and $ 86.9 million at September 30, 2022 and December 31, 2021, respectively.

The cost basis of the investment funds was $ 68.3 million and $ 67.2 million at March 31, 2023 and December 31, 2022, respectively.

The qualified replacement plan assets consisted of investment funds maintained for future contributions to the Company’s domestic defined contribution pension plan.

During the first quarter of 2023, the remaining balance was fully utilized to fund the Company’s domestic defined contribution pension plan.

The cost basis of the investment funds was $ 29.8 million at December 31, 2022 and the fair value was based on quoted prices multiplied by the number of shares.

The net investment hedge asset and liability represent the fair value of outstanding cross currency swaps (see Note 13).

The fair value is based on a valuation model that uses observable inputs, including interest rate curves and foreign currency rates.

The foreign currency forward contracts liability represents the fair value of outstanding contracts (see Note 12).

The fair value is based on a valuation model that uses observable inputs, including foreign currency forward rates.

The table below summarizes the carrying amounts and fair values of the Company's debt.

The Company's publicly traded debt and non-publicly traded debt are classified as level 1 and level 2, respectively, in the fair value hierarchy.

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Value Carrying

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Approximately 80 % of the Company’s net external sales are in the Company’s North America region (which is comprised of the United States, Canada and the Caribbean region), slightly less than 10 % in the EMEAI region (Europe, Middle East, Africa and India), with the remaining global regions accounting for the residual balance.

No individual country outside of the United States is individually significant.

The Company has made payments or credits for rebates or incentives at the beginning of a long-term contract where future revenue is expected and before satisfaction of performance obligations.

No country outside of the United States is individually significant.

The Company has made payments or given credits for various incentives at the beginning of a long-term contract where future revenue is expected and before satisfaction of performance obligations.

Under these circumstances, the Company recognizes a contract asset and amortizes these prepayments over the expected benefit life of the long-term contract typically on a straight-line basis.

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(Current) Contract

Balance sheet caption Accounts receivable Other

Balance sheet caption:

Accounts receivable Other

current assets Other

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Balance at December 31, 2022 $ 2,563.6 $ 43.8 $ 117.7 $ 292.9 $ 7.1

Balance at September 30, 2022 2,897.6 75.8 111.1 300.6 7.1

The difference between the opening and closing balances of the Company’s contract assets and contract liabilities primarily results from the timing difference between the Company’s performance and the customer’s payment.

Balance at March 31, 2023 2,909.2 45.9 141.6 229.2 7.7

The difference between the opening and closing balances of the Company’s contract assets and contract liabilities primarily results from the timing difference between the contractual performance obligation and the associated payment.

Provisions for estimated returns are established and the expected costs continue to be recognized as contra-revenue per ASC 606 when the products are sold.

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Warranty liabilities are excluded from the table above.

Amounts recognized during the quarter from deferred revenue were not material.

Amounts recognized from deferred revenue were not material.

The Company records a right of return liability within each of its operations to accrue for expected customer returns.

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The Company's primary allowance for credit losses is the allowance for doubtful accounts.

The allowance for doubtful accounts reduces the Accounts receivable balance to the net amount expected to be collected (estimated net realizable value).

The allowance for doubtful accounts reduces the Accounts receivable balance to the estimated net realizable value.

The Company reviews the collectibility of the Accounts receivable balance each reporting period and estimates the allowance based on historical bad debt experience, aging of accounts receivable, current creditworthiness of customers, current economic factors, as well as reasonable and supportable forward-looking information.

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The following table summarizes the movement in the Company's allowance for doubtful accounts:

Balance at January 1 $ 48.9 $ 53.5

Three Months Ended

Beginning balance $ 56.6 $ 48.9

Bad debt expense 14.0 12.6

Uncollectible accounts written off, net of recoveries ( 3.6 ) ( 3.9 )

Balance at September 30 $ 63.1 $ 61.8

Ending balance $ 67.0 $ 57.6

NOTE 16 - OTHER

Other general (income) expense - net

Included in Other general (income) expense - net were the following:

Other general expense - net

Included in Other general expense - net were the following:

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Provisions for environmental matters - net $ 12.7 $ 0.6

Loss on divestiture of business (see Note 3) — — — 111.9

Gain on sale or disposition of assets ( 20.8 ) ( 1.6 ) ( 18.6 ) ( 6.2 )

Other general (income) expense - net $ ( 14.4 ) $ ( 1.1 ) $ ( 7.5 ) $ 111.2

(Gains) losses on sale or disposition of assets ( 4.6 ) 1.9

Other general expense - net $ 10.5 $ 2.5

Provisions for environmental matters - net represent initial provisions for site-specific estimated costs of environmental investigation or remediation and increases or decreases to environmental-related accruals as information becomes available upon which more accurate costs can be reasonably estimated and as additional accounting guidelines are issued.

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See Note 9 for further details on the Company’s environmental-related activities.

The gain on sale or disposition of assets represents net realized gains associated with the sale or disposal of property, plant and equipment and intangible assets previously used in the conduct of the primary business of the Company.

Other expense (income) - net

Included in Other expense (income) - net were the following:

The gains (losses) on sale or disposition of assets represents net realized gains (losses) associated with the sale or disposal of property, plant and equipment and intangible assets previously used in the conduct of the primary business of the Company.

There were no items within the Other caption that were individually significant.

Other (income) expense - net

Included in Other (income) expense - net were the following:

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Investment losses (gains) $ 1.1 $ — $ 16.0 $ ( 18.3 )

Investment (gains) losses $ ( 3.2 ) $ 6.7

Net expense from banking activities 3.9 2.9

Foreign currency transaction related losses (gains) 6.8 4.1

Miscellaneous pension expense 0.8 1.1 2.7 3.1

Miscellaneous pension (credit) expense ( 5.1 ) 0.9

Other income ( 14.6 ) ( 7.5 )

Other expense 9.0 9.2

Other expense (income) - net $ 18.1 $ 1.7 $ 49.9 $ ( 1.6 )

Investment losses (gains) primarily relate to the change in market value of the investments held in the deferred compensation plan and Qualified Replacement Plan.

Other (income) expense - net $ ( 3.2 ) $ 16.3

Investment (gains) losses primarily relate to the change in market value of the investments held in the deferred compensation plan and qualified replacement plan.

See Note 14 for additional information on the fair value of these investments.

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See Note 13 for additional information regarding these foreign currency contracts.

Miscellaneous pension expense consists of the non-service components of Net periodic benefit cost.

Other income and Other expense included items of revenue, gains, expenses and losses that were unrelated to the primary business purpose of the Company.

Miscellaneous pension (credit) expense consists of the non-service components of net periodic benefit cost (credit).

Other income and Other expense includes items of revenue, gains, expenses and losses that were unrelated to the primary business purpose of the Company.

There were no other items within the Other income or Other expense caption that were individually significant.

NOTE 17 - INCOME TAXES

The effective tax rate was 21.9 % and 21.4 % for the third quarter and first nine months of 2022, respectively, compared to 17.9 % and 19.6 % for the third quarter and first nine months of 2021, respectively.

The effective tax rate was less favorably impacted by tax benefits related to employee share based payments in the third quarter and first nine months of 2022 than in the same periods last year.

The effective tax rate was 22.3 % for the first quarter of 2023, compared to 19.6 % for the first quarter of 2022.

The effective tax rate was less favorably impacted by tax benefits related to employee share based payments in the first quarter of 2023 than in the same period last year.

The other significant components of the Company’s effective tax rate were consistent year over year.

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At December 31, 2022, the Company had accrued $ 36.6 million for the potential payment of income tax interest and penalties.

There were no significant changes to any of the balances of unrecognized tax benefits at December 31, 2021 during the nine months ended September 30, 2022.

There were no significant changes to any of the balances of unrecognized tax benefits at December 31, 2022 during the three months ended March 31, 2023.

The Company and its subsidiaries file income tax returns in the U.S.

federal jurisdiction, and various state and foreign jurisdictions.

The IRS audited the Company's 2013, 2014, 2015 and 2016 income tax returns.

As a result of these audits, certain adjustments have been assessed.

The Company has filed a protest, submitted additional information for consideration, and is currently in the appeals process with the IRS.

The Company continues to evaluate the adjustments and believes that it is adequately reserved for any potential exposure.

The IRS audited the Company's 2013 through 2016 income tax returns.

As a result of these audits, certain adjustments have been agreed upon with the IRS.

The Company continues to evaluate its position and believes that it is adequately reserved for any potential exposure.

The IRS is currently auditing the Company’s 2017, 2018 and 2019 income tax returns.

As of September 30, 2022, the federal statute of limitations had not expired for the 2013 through 2021 tax years.

At September 30, 2022, the Company is subject to non-U.S.

As of March 31, 2023, the federal statute of limitations had not expired for the 2013 through 2022 tax years.

At March 31, 2023, the Company is subject to non-U.S.

income tax examinations for the tax years of 2014 through 2022.

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Basic and diluted net income per share are calculated using the treasury stock method.

(in millions, except per share data) Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Three Months Ended

Net income $ 477.4 $ 370.8

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Stock options and other contingently issuable shares (1)

3.4 5.0 4.0 4.7

Average shares outstanding assuming dilution 259.7 263.1

Diluted net income per share $ 1.84 $ 1.41

(1) There were 1.9 million and 1.1 million stock options and other contingently issuable shares excluded due to their anti-dilutive effect for the three and nine months ended September 30, 2022, respectively.

There were no stock options and other contingently issuable shares excluded due to their anti-dilutive effect for the three and nine months ended September 30, 2021.

(1) There were 2.8 million and 1.0 million of stock options and other contingently issuable shares excluded due to their anti-dilutive effect for the three months ended March 31, 2023 and 2022, respectively.

NOTE 19 - REPORTABLE SEGMENT INFORMATION

The Company reports its segment information in the same way that management internally organizes its business for assessing performance and making decisions regarding allocation of resources in accordance with the Segment Reporting Topic of the ASC.

The Company has determined that it has three reportable operating segments:

The Americas Group, Consumer Brands Group and Performance Coatings Group (individually, a Reportable Segment and collectively, the Reportable Segments).

Three Months Ended September 30, 2022

Group Consumer Brands

Group Performance

Group Administrative Consolidated

Net external sales $ 3,602.7 $ 701.9 $ 1,741.7 $ 1.1 $ 6,047.4

Intersegment transfers — 1,513.2 55.7 ( 1,568.9 ) —

Total net sales and intersegment transfers $ 3,602.7 $ 2,215.1 $ 1,797.4 $ ( 1,567.8 ) $ 6,047.4

Segment profit $ 764.1 $ 94.9 $ 236.3 $ 1,095.3

Interest expense $ ( 101.2 ) ( 101.2 )

Administrative expenses and other ( 116.9 ) ( 116.9 )

Income before income taxes $ 764.1 $ 94.9 $ 236.3 $ ( 218.1 ) $ 877.2

Three Months Ended September 30, 2021

Group Consumer Brands

Group Performance

Group Administrative Consolidated

Net external sales $ 2,967.0 $ 646.7 $ 1,532.5 $ 0.5 $ 5,146.7

Intersegment transfers — 1,155.3 40.5 ( 1,195.8 ) —

Total net sales and intersegment transfers $ 2,967.0 $ 1,802.0 $ 1,573.0 $ ( 1,195.3 ) $ 5,146.7

Segment profit $ 631.5 $ 75.8 $ 110.4 $ 817.7

Interest expense $ ( 83.1 ) ( 83.1 )

Administrative expenses and other ( 123.1 ) ( 123.1 )

Income before income taxes $ 631.5 $ 75.8 $ 110.4 $ ( 206.2 ) $ 611.5

Nine Months Ended September 30, 2022

As mentioned in Note 1, the Company realigned the Latin America architectural paint business during the first quarter of 2023.

While this changed the composition of certain reportable segments, the Company determined it continues to have three reportable segments:

Paint Stores Group (formally known as The Americas Group), Consumer Brands Group and Performance Coatings Group (individually, a Reportable Segment and collectively, the Reportable Segments).

Refer to Note 23 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2022 for further details on the Company's Reportable Segments.

Certain information within the Form 10-K Reportable Segment Information Note impacted by the realignment has been revised herein.

Three Months Ended March 31, 2023

Group Consumer Brands

8 unchanged sentences

Income before income taxes $ 526.7 $ 93.8 $ 218.9 $ ( 224.6 ) $ 614.8

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Group Consumer Brands

9 unchanged sentences

In the reportable segment financial information, Segment profit was total net sales and intersegment transfers less operating costs and expenses.

Domestic intersegment transfers were accounted for at the approximate fully absorbed manufactured cost, based on normal capacity volumes, plus customary distribution costs.

International intersegment transfers were accounted for at values comparable to normal unaffiliated customer sales.

The Administrative segment includes the administrative expenses of the Company’s corporate headquarters site and the operations of a real estate management unit that is responsible for the ownership, management and leasing of non-retail properties held primarily for use by the Company, including the Company’s headquarters site, and disposal of idle facilities.

Also included in the Administrative segment was interest expense, interest and investment income, certain expenses related to closed facilities and environmental-related matters, and other expenses that were not directly associated with the Reportable Segments.

In addition, the Administrative segment includes the $ 111.9 million pre-tax loss on the Wattyl divestiture recognized during the nine months ended September 30, 2021.

See Notes 3 and 15 for additional information on the Wattyl divestiture.

Sales of this segment represented external leasing revenue of excess headquarters space or leasing of facilities no longer used by the Company in its primary businesses.

The Administrative segment did not include any significant foreign operations.

Gains and losses from the sale of property were not a significant operating factor in determining the performance of the Administrative segment.

Net external sales of all consolidated foreign subsidiaries were $ 1.064 billion and $ 1.019 billion for the three months ended September 30, 2022 and 2021, respectively.

Net external sales of all consolidated foreign subsidiaries were $ 3.262 billion and $ 3.158 billion for the nine months ended September 30, 2022 and 2021, respectively.

Long-lived assets of these subsidiaries totaled $ 2.839 billion and $ 2.772 billion at September 30, 2022 and 2021, respectively.

Domestic intersegment transfers were primarily accounted for at the approximate fully absorbed manufactured cost, based on normal capacity volumes, plus customary distribution costs for paint products.

Non-paint domestic and all international intersegment transfers were accounted for at values comparable to normal unaffiliated customer sales.

All intersegment transfers are eliminated within the Administrative segment.

Net external sales of all consolidated foreign subsidiaries were $ 1.087 billion and $ 1.078 billion for the three months ended March 31, 2023 and 2022, respectively.

Long-lived assets of these subsidiaries totaled $ 3.458 billion and $ 2.796 billion at March 31, 2023 and 2022, respectively.

Domestic operations accounted for the remaining net external sales and long-lived assets.

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For further details on the Company's Reportable Segments, see Note 23 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

NOTE 19 - NON-TRADED INVESTMENTS

The Company has invested in the U.S.

affordable housing and historic renovation real estate markets and certain other investments that have been identified as variable interest entities.

In accordance with the Consolidation Topic of the ASC, the investments are not consolidated.

The carrying value of the investments is recorded in Other assets.

The liabilities for the estimated future capital contributions are recorded in Other accruals and Other long-term liabilities.

The following table summarizes the balances related to the investments:

September 30, December 31, September 30,

2022 2021 2021

Other assets $ 521.6 $ 355.8 $ 313.1

Other accruals 32.5 61.8 46.0

Other long-term liabilities 470.4 289.7 268.9

NOTE 20 - SUBSEQUENT EVENT

In October 2022, management approved an initial set of action plans to simplify the Company’s operating model and portfolio of brands within the Consumer Brands Group and to reduce costs in all regions in the Performance Coatings Group, Consumer Brands Group and the Administrative segment.

These actions better position the Company to continue to add above market growth and long-term shareholder value.

Key focus areas within the Consumer Brands Group include the China architectural business, aerosol portfolio and optimization of the overall retail portfolio.

While management continues to develop the comprehensive set of actions expected to be taken, management currently expects the actions to result in pre-tax charges in the range of $ 160 million to $ 180 million during the next four quarters, with approximately half of the charges occurring in the fourth quarter of 2022.

The amount of these expected charges is an estimate, and the amount and timing of actual charges may vary due to a variety of factors.

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

What changed 10-Q

Item 1. Financial Statements