What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-02-20 compared with 2023-02-22 · 449 added, 384 removed, 1241 unchanged (40% of the section changed)

22 unchanged sentences

This assessment was based on the criteria established in the 2013 Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

As permitted by SEC rules, we have excluded the operations and related assets of the 2022 acquisitions from the scope of our assessment of the effectiveness of internal control over financial reporting as of December 31, 2022.

The Total assets and Net sales of the 2022 acquisitions represented approximately 5.0% and 0.6% of the Company's respective consolidated Total assets and Net sales as of and for the year ended December 31, 2022.

As permitted by SEC rules, we have excluded the operations and related assets of the 2023 acquisition of SIC Holding GmbH from the scope of our assessment of the effectiveness of internal control over financial reporting as of December 31, 2023.

The Total assets and Net sales of the 2023 acquisition of SIC Holding GmbH represented approximately 1.3% and 0.1% of the Company's respective consolidated Total assets and Net sales as of and for the year ended December 31, 2023.

Based on our assessment of internal control over financial reporting under the criteria established in Internal Control – Integrated Framework, we have concluded that, as of December 31, 2023, the Company’s internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S.

1 unchanged sentence

Our internal control over financial reporting as of December 31, 2023 has been audited by Ernst & Young LLP , an independent registered public accounting firm, and their report on the effectiveness of our internal control over financial reporting is included on page 43 of this report.

Chairman and Chief Executive Officer

President and Chief Executive Officer

Senior Vice President - Finance and Chief Financial Officer

5 unchanged sentences

In our opinion, The Sherwin-Williams Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

As indicated in the accompanying Report of Management On Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Sika AG, Gross & Perthun GmbH, Dur-A-Flex, Inc., Powdertech Oy Ltd., and Industria Chimica Adriatica S.p.A.

(collectively the 2022 acquisitions), which are included in the 2022 consolidated financial statements of the Company and constituted 5.0% of Total assets as of December 31, 2022 and 0.6% of Net sales for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of the 2022 acquisitions excluded from the scope of management’s assessment.

As indicated in the accompanying Report of Management On Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of SIC Holding GmbH, which is included in the 2023 consolidated financial statements of the Company and constituted 1.3% of Total assets as of December 31, 2023 and 0.1% of Net sales for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of the 2023 acquisition excluded from the scope of management’s assessment.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of The Sherwin-Williams Company as of December 31, 2023, 2022 and 2021, the related statements of consolidated income, comprehensive income, cash flows and shareholders’ equity for each of the three years in the period ended December 31, 2023, and the related notes and the financial statement schedule listed in Item 15(a) and our report dated February 20, 2024 expressed an unqualified opinion thereon.

31 unchanged sentences

We believe that the consolidated financial statements, accompanying notes and related financial information included in this report fairly reflect the form and substance of all material financial transactions and fairly present, in all material respects, the consolidated financial position, results of operations and cash flows as of and for the periods presented.

Chairman and Chief Executive Officer

President and Chief Executive Officer

Senior Vice President - Finance and Chief Financial Officer

25 unchanged sentences

The Company’s largest and most complex site is the Gibbsboro, New Jersey site (Gibbsboro) and the substantial majority of the environmental-related accrual relates to this site.

Gibbsboro consists of six operable units which contain a combination of soil, sediment, waterbodies and groundwater contamination, and are in various phases of investigation and remediation with the Environmental Protection Agency (“EPA”).

Gibbsboro consists of six operable units which contain a combination of soil, sediment, surface water and groundwater contamination, and are in various phases of investigation and remediation with the Environmental Protection Agency (EPA).

The Company’s estimated environmental-related accrual for Gibbsboro is based on industry standards and professional judgement, and the most significant assumptions underlying the estimated cost of remediation efforts reserved for Gibbsboro are the types and extent of future remediation.

6 unchanged sentences

We involved our environmental specialists to confirm our understanding of the remediation plans for the most significant operable units within the Gibbsboro site and to evaluate the impact of current year investigation and remediation activities on the Company's methodology and assumptions used to estimate the cost and extent of remediation in accordance with industry practice, applicable laws and regulations.

We reconciled types and extent of remediation identified in communications between the Company and the EPA to the Company’s remediation cost estimates recorded for Gibbsboro.

We reconciled types and extent of remediation identified in communications between the Company and the EPA, including agreed upon remediation plans with the EPA, to the Company’s remediation cost estimates recorded for Gibbsboro.

We also conducted a search for publicly available information that might indicate facts contrary to the types and extent of remediation currently identified in the Company’s remediation cost estimates recorded for Gibbsboro.

13 unchanged sentences

Percent to Net sales 30.6 % 28.6 % 29.5 %

Other general (income) expense - net ( 24.9 ) 101.8 27.7

Amortization 317.1 309.5 313.4

Impairment of trademarks 15.5 — 2.3

Other general expense (income) - net 67.1 ( 24.9 ) 101.8

Impairment 57.9 15.5 —

Interest expense 417.5 390.8 334.7

17 unchanged sentences

Net income $ 2,388.8 $ 2,020.1 $ 1,864.4

Other comprehensive income (loss), net of tax:

Other comprehensive income, net of tax:

Foreign currency translation adjustments (1)

5 unchanged sentences

( 17.9 ) 3.7 6.3

Total ( 14.0 ) 110.5 55.0

Unrealized net gains on cash flow hedges:

1 unchanged sentence

( 3.6 ) ( 4.0 ) ( 4.5 )

Other comprehensive (loss) income, net of tax ( 2.2 ) 19.9 ( 38.8 )

Other comprehensive income (loss), net of tax 76.3 ( 2.2 ) 19.9

Comprehensive income $ 2,465.1 $ 2,017.9 $ 1,884.3

(1) The years ended December 31, 2022, 2021 and 2020 include unrealized gains (losses), net of taxes, of $ 34.1 million, $ 37.1 million and $( 54.0 ) million, respectively, related to net investment hedges.

(1) The years ended December 31, 2023, 2022 and 2021 include unrealized (losses) gains, net of taxes, of $( 24.9 ) million, $ 34.1 million and $ 37.1 million, respectively, related to net investment hedges.

(2) Net of taxes of $( 2.8 ) million, $( 33.8 ) million and $( 12.6 ) million in 2023, 2022 and 2021, respectively.

55 unchanged sentences

Amortization of intangible assets 330.2 317.1 309.5

Loss on divestiture of business — 111.9 —

(Gain) loss on extinguishment of debt — ( 1.4 ) 21.3

Impairment of trademarks 15.5 — 2.3

Amortization of credit facility and debt issuance costs 7.6 6.4 7.2

(Gain) loss on divestiture of business ( 20.1 ) — 111.9

Loss (gain) on extinguishment of debt 12.8 — ( 1.4 )

Impairment 57.9 15.5 —

Provisions for environmental-related matters 80.7 ( 7.1 ) ( 4.0 )

1 unchanged sentence

Deferred income taxes ( 88.9 ) ( 144.8 ) ( 80.3 )

Defined benefit pension plans net cost 5.1 6.8 7.6

Other postretirement benefit plan net cost ( 15.8 ) ( 1.6 ) ( 3.9 )

Stock-based compensation expense 115.9 99.7 97.7

Amortization of non-traded investments 65.4 38.5 53.6

Gain on sale or disposition of assets ( 10.7 ) ( 6.1 ) ( 9.4 )

Loss (gain) on sale or disposition of assets 0.9 ( 10.7 ) ( 6.1 )

Other 7.0 43.9 10.7

Change in working capital accounts:

(Increase) decrease in accounts receivable ( 200.2 ) ( 287.8 ) 10.3

(Increase) decrease in inventories ( 666.7 ) ( 228.1 ) 84.4

Increase in accounts payable 46.6 346.1 227.2

(Decrease) increase in accrued taxes ( 38.1 ) ( 32.7 ) 99.2

Decrease (increase) in accounts receivable 85.6 ( 200.2 ) ( 287.8 )

Decrease (increase) in inventories 323.4 ( 666.7 ) ( 228.1 )

(Decrease) increase in accounts payable ( 241.1 ) 46.6 346.1

Decrease in accrued taxes ( 8.9 ) ( 38.1 ) ( 32.7 )

Increase (decrease) in accrued compensation and taxes withheld 75.7 65.8 ( 10.9 )

13 unchanged sentences

Financing Activities

Net increase (decrease) in short-term borrowings 214.4 763.9 ( 204.6 )

Net (decrease) increase in short-term borrowings ( 603.9 ) 214.4 763.9

Proceeds from long-term debt — 999.7 994.8

12 unchanged sentences

Cash and cash equivalents at end of year $ 276.8 $ 198.8 $ 165.7

Taxes paid on income $ 580.1 $ 466.3 $ 437.2

Interest paid on debt 371.1 338.8 340.8

Supplemental cash flow information

Income taxes paid $ 816.7 $ 580.1 $ 466.3

Interest paid 416.5 371.1 338.8

See notes to consolidated financial statements.

8 unchanged sentences

1,864.4 1,864.4

Other comprehensive loss ( 38.8 ) ( 38.8 )

Adjustment to initially adopt ASU 2016-13 ( 3.0 ) ( 3.0 )

Other comprehensive income 19.9 19.9

Treasury stock purchased ( 2,752.3 ) ( 2,752.3 )

Treasury stock issued 9.3 2.4 11.7

Treasury stock retired ( 30.6 ) ( 8,061.6 ) 8,092.2 —

Stock-based compensation activity 0.9 290.9 ( 23.5 ) 268.3

4 unchanged sentences

Net income 2,020.1 2,020.1

Other comprehensive income 19.9 19.9

Other comprehensive loss ( 2.2 ) ( 2.2 )

Treasury stock purchased ( 883.2 ) ( 883.2 )

6 unchanged sentences

Net income 2,388.8 2,388.8

Other comprehensive loss ( 2.2 ) ( 2.2 )

Other comprehensive income 76.3 76.3

Treasury stock purchased ( 1,432.0 ) ( 1,432.0 )

Treasury stock issued 11.0 11.0 22.0

Stock-based compensation activity 0.6 229.3 ( 26.0 ) 203.9

18 unchanged sentences

Reportable Segments

See Note 23 for further details.

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 Note 23 for further details on this change and other information on the Company’s reportable segments.

Cash Equivalents

Management considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at the time of credit sales, net of allowance for credit losses.

The Company records an allowance for doubtful accounts to reduce Accounts receivable to the net amount expected to be collected (estimated net realizable value).

Effective January 1, 2020, the Company adopted Accounting Standards Update (ASU) 2016-13, “Measurement of Credit Losses on Financial Instruments” (ASC 326).

Under ASC 326, the Company reviews the collectibility of the Accounts receivable balance each reporting period and estimates the allowance for doubtful accounts 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.

Accounts receivable balances are written-off against the allowance for doubtful accounts if a final determination of uncollectibility is made.

All provisions for the allowance for doubtful accounts are included in Selling, general and administrative expenses.

Accounts Receivable and Allowance for Current Expected Credit Losses

Accounts receivable are recorded at the time of credit sales, net of an allowance for current expected credit losses.

The Company records an allowance for current expected credit losses to reduce Accounts receivable to the net amount expected to be collected (estimated net realizable value).

Under ASC 326, the Company reviews the collectibility of the Accounts receivable balance each reporting period and estimates the allowance for current expected credit losses 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.

Accounts receivable balances are written-off against the allowance for current expected credit losses if a final determination of uncollectibility is made.

All provisions for the allowance for current expected credit losses are included in Selling, general and administrative expenses.

See Note 19 for further details.

Inventories are stated at the lower of cost or net realizable value with cost determined principally on the last-in, first-out (LIFO) method.

If inventories accounted for on the LIFO method are reduced on a year-over-year basis, then liquidation of certain quantities carried at costs prevailing in prior years occurs.

Management records an estimate of net realizable value for obsolete and discontinued inventories based on historical experience and current trends through reductions to inventory cost by recording a provision included in Cost of goods sold.

If management estimates that the reasonable market value is below cost or determines that future demand was lower than current inventory levels, based on historical experience, current and projected market demand, current and projected volume trends and other relevant current and projected factors associated with the current economic conditions, a reduction in inventory cost to estimated net realizable value is provided for in the reserve for obsolescence.

See Note 5 for further details.

Property, Plant and Equipment

3 unchanged sentences

Goodwill and Intangible Assets

Goodwill represents the cost in excess of fair value of net assets acquired in business combinations accounted for by the purchase method.

Intangible assets include trademarks, customer relationships and intellectual property.

In accordance with the Goodwill and Other Intangibles Topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC), goodwill and indefinite-lived trademarks are not amortized, but instead are tested for impairment on an annual basis, as well as whenever an event occurs or circumstances change that indicate impairment has more likely than not occurred.

Goodwill represents the cost in excess of fair value of net assets acquired in business combinations.

Intangible assets include software, customer relationships, intellectual property and trademarks.

In accordance with the Goodwill and Other Intangibles Topic of the Financial Accounting Standards Board (FASB) ASC, goodwill and indefinite-lived trademarks are not amortized, but instead are tested for impairment on an annual basis, as well as whenever an event occurs or circumstances change that indicate impairment has occurred on a more likely than not basis.

Finite-lived intangible assets are amortized on a straight-line basis over the expected period of benefit, which ranges primarily from 7 to 20 years.

11 unchanged sentences

The Company also entered into cross currency swap contracts to hedge its net investment in European operations in 2023, 2022, and 2021.

These contracts qualified for and were designated as net investment hedges as permitted under US GAAP.

The changes in fair value for the cross currency swaps are recognized in the foreign currency translation adjustments component of accumulated other comprehensive income (loss) (AOCI).

These contracts qualified for and were designated as net investment hedges under US GAAP.

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

The cash flow impact of these instruments is classified as an investing activity in the Statements of Consolidated Cash Flows.

5 unchanged sentences

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

For affordable housing investments entered into prior to the January 1, 2015 adoption of ASU 2014-01, the Company uses the effective yield method to determine the carrying value of the investments.

For affordable housing investments entered into prior to the January 1, 2015 adoption of Accounting Standards Update (ASU) 2014-01, the Company uses the effective yield method to determine the carrying value of the investments.

Under the effective yield method, the initial cost of the investments is amortized to income tax expense over the period that the tax credits are recognized.

24 unchanged sentences

Defined Benefit Pension and Other Postretirement Benefit Plans

The Company accounts for its defined benefit pension and other postretirement benefit plans in accordance with the Retirement Benefits Topic of the ASC, which requires the Company recognize an asset for overfunded defined benefit pension or other postretirement benefit plans and a liability for unfunded or underfunded plans.

The Company accounts for its defined benefit pension and other postretirement benefit plans in accordance with the Retirement Benefits Topic of the ASC, which requires the Company to recognize an asset for overfunded defined benefit pension or other postretirement benefit plans and a liability for unfunded or underfunded plans.

In addition, actuarial gains and losses and prior service costs of such plans are recorded in AOCI.

1 unchanged sentence

See Note 9 for further details.

Defined Contribution Savings Plan

The Company accounts for its defined contribution savings plan in accordance with the Defined Contribution Plans Subtopic of the Compensation – Retirement Benefits Topic of the ASC.

The Company recognized compensation expense for amounts contributed to the defined contribution savings plan.

See Note 14 for further details.

Environmental Matters

Capital expenditures for ongoing environmental compliance measures are recorded in Property, plant and equipment, and related expenses are included in the normal operating expenses of conducting business.

Capital expenditures for ongoing environmental compliance measures are recorded in Property, plant and equipment, net, and related expenses are included in the normal operating expenses of conducting business.

The Company accrued for environmental-related activities for which commitments or clean-up plans have been developed and when such costs could be reasonably estimated based on industry standards and professional judgment.

2 unchanged sentences

See Notes 11 and 20 for further details.

Defined Contribution Savings Plan

The Company accounts for its salaried defined contribution savings plan in accordance with the Defined Contribution Plans Subtopic of the Compensation – Retirement Benefits Topic of the ASC.

The Company recognized compensation expense for amounts contributed to the defined contribution savings plan.

See Note 14 for further details on the defined contribution savings plan.

Stock-Based Compensation

10 unchanged sentences

The resulting translation adjustments are included in AOCI.

Economies with a three-year cumulative inflation rate of more than 100% are considered highly inflationary.

For subsidiaries operating in highly inflationary economies, the parent’s reporting currency is the functional currency.

Monetary assets and liabilities are translated into U.S.

dollars using rates of exchange at the balance sheet date and non-monetary assets and liabilities are translated into U.S.

dollars at their historical rates of exchange, with remeasurement adjustments and other transaction gains and losses recognized in Net income.

See Note 20 for further details.

Revenue Recognition

The Company recognizes revenue when performance obligations under the terms of the agreement are satisfied.

The Company recognizes revenue when performance obligations under the terms of the contract are satisfied.

This generally occurs with the transfer of control of our products to the customer.

Collectibility of amounts recorded as revenue was probable at the time of recognition.

Collectibility of amounts recorded as revenue is probable at the time of recognition.

See Note 19 for further details.

Customer and Vendor Consideration

The Company offers certain customers rebate and sales incentive programs which are classified as reductions in net sales.

The Company offers certain customers rebate and sales incentive programs which are classified as reductions in sales.

Such programs are in the form of volume rebates, rebates that constituted a percentage of sales or rebates for attaining certain sales goals.

The Company receives consideration from certain suppliers of raw materials in the form of volume rebates or rebates that constituted a percentage of purchases.

The Company receives consideration from certain suppliers of raw materials in the form of volume rebates or rebates that constitute a percentage of purchases.

These rebates are recognized on an accrual basis by the Company as a reduction of the purchase price of the raw materials and a subsequent reduction of Cost of goods sold when the related product was sold.

2 unchanged sentences

Distribution costs include expenses related to the distribution of products including inbound freight charges, purchase and receiving costs, warehousing costs, internal transfer costs and other costs incurred to ship products.

Also included in Cost of goods sold are total technical expenditures, which include research and development costs, quality control, product formulation expenditures and other similar items.

Research and development costs included in technical expenditures were $ 119.3 million, $ 115.9 million and $ 97.1 million for 2022, 2021 and 2020, respectively.

Also included in Cost of goods sold are research and development costs, quality control, product formulation expenditures and other similar items.

Research and development costs were $ 196.6 million, $ 119.3 million and $ 115.9 million for 2023, 2022 and 2021, respectively.

Selling, General and Administrative Expenses

8 unchanged sentences

The benefit of these incentives is recorded when received and all conditions as specified in the agreement are fulfilled.

There were $ 86.6 million and $ 49.4 million of government incentives received as cash payments related to the construction of the Company’s new headquarters and R&D center in 2022 and 2021, respectively.

There were $ 86.6 million of government incentives received as cash payments related to the construction of the Company’s new headquarters and research and development center in 2022.

These government incentives were recorded as a reduction in the carrying amount of the respective assets under construction within Property, plant and equipment, net on the Consolidated Balance Sheets and within Other as an investing activity on the Statements of Consolidated Cash Flows.

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, for which we expect to receive total proceeds approximating $ 800 million to $ 850 million on an incremental basis until the completion of construction.

In December 2022, the Company received $ 210 million at closing pursuant to the transaction.

The net proceeds are recognized within the Financing Activities section of the Statements of Consolidated Cash Flows, and corresponding financing obligations are recognized within Other long-term liabilities and Other accruals on the Consolidated Balance Sheets.

Future payments are estimated to be $ 77 million during the remaining construction period, of which $ 22 million is estimated to be paid in the following twelve months.

There were no material government incentives received in 2023 or 2021.

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 $ 213.1 million, $ 258.1 million and $ 221.7 million at December 31, 2023, 2022 and 2021, respectively.

Earnings Per Share

4 unchanged sentences

See Note 22 for further details.

Reclassifications

Certain amounts in the consolidated financial statements and notes to the consolidated financial statements for 2022 and 2021 have been reclassified to conform to the 2023 presentation.

NOTE 2 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Adopted in 2022

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.

Effective January 1, 2023, the Company adopted 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.

Not Yet Adopted

In September 2022, the FASB issued 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 program, amount of obligations outstanding at the end of the reporting period, and a rollforward of activity within the program during the period.

The ASU is effective as of January 1, 2023 and will not affect the Company’s financial position, results of operations or cash flows as the standard only impacts financial statement footnote disclosures.

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

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, cash flows or financial statement footnote disclosures.

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 does not expect the adoption of this ASU to have a material impact on the Company’s financial position, results of operations or cash flows and the Company will provide required disclosures, as applicable, in accordance will the provisions of the ASU.

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

Improvements to Reportable Segment Disclosures.” This ASU enhances reportable segment disclosures on both an annual and interim basis primarily in regards to the disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within the reported measure(s) of segment profit or loss.

In addition, the ASU requires disclosure, by segment, of other items included in the reported measure(s) of segment profit or loss, including qualitative information describing the composition, nature and type of each item.

The ASU also expands disclosure requirements related to the CODM, including how the reported measure(s) of segment profit or loss are used to assess segment performance and allocate resources, the method used to allocate overhead for significant segment expenses and others.

Lastly, all current required annual segment reporting disclosures under Topic 280 are now effective for interim periods.

The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is evaluating the impact of adopting this ASU.

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

Improvements to Income Tax Disclosures.” This ASU enhances income tax disclosures by providing information to better assess how an entity’s operations, related tax risks, tax planning and operational opportunities affect its tax rate and prospects for future cash flows.

This ASU requires additional disclosures to the annual effective tax rate reconciliation including specific categories and further disaggregated reconciling items that meet the quantitative threshold.

Additionally, the ASU requires disclosures relating to income tax expense and payments made to federal, state, local and foreign jurisdictions.

This ASU is effective for fiscal years and interim periods beginning after December 15, 2024.

The Company is evaluating the impact of adopting this ASU.

NOTE 3 – ACQUISITIONS AND DIVESTITURES

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.

Closed in Current Year

In October 2023, the Company completed the acquisition of German-based SIC Holding GmbH, a Peter Möhrle Holding venture comprised of Oskar Nolte GmbH and Klumpp Coatings GmbH (SIC Holding).

This business specializes in foil coatings as well as radiation-cured and waterbased industrial wood coatings for the board, furniture and flooring industry.

The Company funded the acquisition with approximately $ 265 million in cash.

The purchase price is subject to certain closing conditions which are expected to be finalized in 2024.

As of December 31, 2023, $ 110.8 million of finite-lived intangible assets, $ 154.2 million of goodwill, $ 46.1 million of other assets, net of cash and $ 46.7 million of liabilities were recognized from this transaction.

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

SIC Holding is reported within the Company’s Performance Coatings Group and the results of operations for the acquisition have been included in the consolidated financial statements since the acquisition date.

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

Closed in 2022

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

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.

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.

(ICA), an Italian designer, manufacturer and distributor of industrial wood coatings with global operations.

The aggregate purchase price for the acquisitions completed in 2022 was approximately $ 1.024 billion, 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.

The purchase price for each acquisition was preliminarily allocated to identifiable assets and liabilities based on information available at the date of acquisition.

As of December 31, 2022, $ 282.8 million of intangible assets and $ 565.8 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.

The results of operations for the acquisitions have been included in the consolidated financial

statements since the respective acquisition dates.

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

Goodwill decreased $ 145.9 million and deferred tax liabilities increased $ 57.4 million, partially offset by an increase in finite-lived intangible assets of $ 195.9 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.

Furthermore, in accordance with certain purchase agreements, the Company paid $ 29.2 million in 2023 related to holdbacks for acquisitions completed in prior years.

The Company finalized the purchase price allocation for Sika AG, Gross & Perthun GmbH, Dur-A-Flex, Inc., Powdertech Oy Ltd.

and ICA within the allowable measurement period.

These businesses are reported within the Company’s Performance Coatings Group and the results of operations for these acquisitions have been included in the consolidated financial statements since the respective acquisition dates.

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

Closed in Prior Year

During the first quarter of 2021, the Company completed the acquisition of a domestic coatings company.

The acquisition expanded the Performance Coatings Group’s platform for growth and portfolio of brands and technologies.

During the fourth quarter of 2021, the Company completed the acquisition of Specialty Polymers, Inc.

Closed in 2021

In February 2021, the Company completed the acquisition of a domestic coatings company.

The acquisition expanded the Company’s platform for growth and portfolio of brands and technologies.

In December 2021, the Company completed the acquisition of Specialty Polymers, Inc.

(Specialty Polymers), a leading manufacturer and developer of water-based polymers used in architectural and industrial coatings and other applications.

The acquisition added to the Company’s existing internal resin manufacturing capabilities.

Specialty Polymers is reported within the Company’s Performance Coatings Group.

The aggregate purchase price for acquisitions completed in 2021 was approximately $ 227.0 million, including amounts withheld as security for certain representations, warranties and obligations of the sellers.

1 unchanged sentence

As of December 31, 2021, $ 155.6 million of goodwill and $ 11.3 million of intangible assets were recognized from these transactions.

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.

During 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.

The fair value of finite-lived intangible assets increased by $ 61.3 million and property, plant and equipment assets acquired increased by $ 11.0 million, offset by a corresponding net decrease in goodwill.

1 unchanged sentence

The Company completed the preliminary purchase price allocation for the acquisitions completed in 2021 within the allowable measurement period.

See Note 7 for additional information related to the acquisitions.

The results of operations for the acquisitions have been included in the consolidated financial statements since the respective acquisition dates.

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

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 will enable 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 20).

The Wattyl divestiture does 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.

Closed in Current Year

The Company completed the divestiture of a non-core domestic aerosol business within the Consumer Brands Group in April 2023.

This transaction resulted in the recognition of a $ 20.1 million gain within the Administrative segment.

This gain was recorded within Other general expense (income) - net (see Note 20).

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

The associated net assets were classified as held for sale at June 30, 2023 in accordance with the Property, Plant, and Equipment Topic of the ASC.

Following the prescribed order of impairment testing, the Company first reviewed individual tangible and intangible assets under their applicable Topic of the ASC to determine if their carrying value was higher than their respective fair value.

As a result, the Company recorded an impairment charge of $ 6.9 million within the Consumer Brands Group related to China architectural trademarks.

The Company then compared the updated carrying value of the assets and liabilities comprising the disposal group as a whole to its respective fair value which was determined to be equal to the selling price, less costs to sell.

The fair value of the disposal group was classified as level 2 in the fair value hierarchy as it was based on a specific price and other observable inputs for similar items with no active market.

As a result of this comparison, the Company recorded an additional impairment charge of $ 27.1 million within the Administrative segment.

During the third quarter of 2023, the Company completed the divestiture of the China architectural business.

The Company expects to finalize an immaterial working capital adjustment during 2024.

These divestitures did not meet the criteria to be reported as discontinued operations in the consolidated financial statements as the Company’s decision to divest these businesses did not represent a strategic shift that will have a major effect on the Company’s operations and financial results.

Closed in 2021

In March 2021, the Company divested Wattyl within the Consumer Brands Group, an Australian and New Zealand manufacturer and seller of architectural and protective paint and coatings with annual revenue of approximately $ 200 million.

In connection with this transaction, the Company recognized a loss of $ 111.9 million within the Administrative segment.

This loss was recorded within Other general expense (income) - net (see Note 20).

The Wattyl divestiture did not meet the criteria to be reported as discontinued operations in the 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.

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.

In the fourth quarter of 2022, the Company announced 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:

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

Multiple alternatives were considered to determine the course of action related to the focus areas.

The Company ultimately determined that divestiture, rather than restructuring, of a non-core domestic aerosol business and the China architectural business was the highest and best use of resources to drive long-term shareholder value.

For more information on these divestitures, see Note 3.

As of December 31, 2023, the Restructuring Plan is complete and no further expense will be incurred.

The following table summarizes the activity associated with the Restructuring Plan:

Consumer Brands

2 unchanged sentences

Balance at January 1, 2022 $ — $ — $ — $ —

$ — $ — $ — $ —

Severance and related costs 14.5 19.5 — 34.0

1 unchanged sentence

Total 25.6 22.2 — 47.8

Payments ( 5.7 ) ( 5.7 )

Currency impact and other adjustments ( 0.4 ) ( 0.4 )

Payments, currency, and other adjustments — ( 6.1 ) — ( 6.1 )

Balance at December 31, 2022 25.6 16.1 — 41.7

Severance and related costs 3.6 ( 0.2 ) 1.3 4.7

Other qualified costs 10.6 — — 10.6

Total 14.2 ( 0.2 ) 1.3 15.3

Payments, currency, and other adjustments ( 39.8 ) ( 15.9 ) ( 1.3 ) ( 57.0 )

Balance at December 31, 2023

$ — $ — $ — $ —

Restructuring Plan Expense:

Total expense incurred to date $ 25.6 $ 22.2 $ — $ 47.8

Additional expense expected 93.9 2.8 10.0 106.7

Total expected expense $ 119.5 $ 25.0 $ 10.0 $ 154.5

In addition to the provisions above, which were primarily recorded in Cost of goods sold and Selling, general and administrative expense, trademark impairment of $ 15.5 million was also recorded in the Consumer Brands Group.

Total expense incurred $ 39.8 $ 22.0 $ 1.3 $ 63.1

In addition to the provisions above, which were primarily recorded in Cost of goods sold and Selling, general and administrative expense, trademark impairment related to the Restructuring Plan of $ 15.5 million was also recorded in the Consumer Brands Group in 2022.

See Note 7 for further information.

5 unchanged sentences

Inventories $ 2,329.8 $ 2,626.5 $ 1,927.2

Inventories were stated at the lower of cost or net realizable value, with cost primarily determined on the last-in, first-out (LIFO) method.

Inventories were stated at the lower of cost or net realizable value, with cost primarily determined on the LIFO method.

Management believes that the use of LIFO results in a better matching of costs and revenues.

3 unchanged sentences

Excess of FIFO over LIFO $ 668.0 $ 792.7 $ 593.0

During 2021, certain inventories accounted for on the LIFO method were reduced, resulting in the liquidation of certain quantities carried at costs prevailing in prior years.

The 2021 liquidation increased net income by $ 25.8 million.

During 2023 and 2021, certain inventories accounted for on the LIFO method were reduced, resulting in the liquidation of certain quantities carried at costs prevailing in prior years.

The 2023 and 2021 liquidations increased Net income in those years by $ 1.2 million and $ 25.8 million, respectively.

The Company recorded a reserve for obsolescence of $ 170.8 million, $ 139.0 million and $ 118.6 million at December 31, 2023, 2022 and 2021, respectively, to reduce Inventories to their estimated net realizable value.

12 unchanged sentences

If the carrying value of the assets is deemed to not be recoverable, the impairment to be recognized is the amount by which the carrying value of the assets exceeds the estimated fair value of the assets as determined in accordance with the Fair Value Topic of the ASC.

No material impairments of long-lived assets were recorded in 2022, 2021 or 2020.

See Note 3 for information on the impairment tests performed in the second quarter of 2023 for the assets held for sale prior to the divestiture of the China architectural business.

No other material impairments of Property, plant and equipment were recorded in 2023, 2022 or 2021.

NOTE 7 – GOODWILL AND INTANGIBLE ASSETS

In October 2023, the Company completed the acquisition of SIC Holding, which resulted in the recognition of goodwill of $ 154.2 million and finite-lived intangibles of $ 110.8 million.

The acquired intangibles are being amortized over a weighted-average useful life of approximately 15 years.

In addition, during 2023, the Company divested a non-core domestic aerosol business and its China architectural business.

During 2022, the Company acquired five companies which resulted in the recognition of goodwill of $ 565.8 million and finite-lived intangibles of $ 282.8 million.

As a result of certain adjustments to the preliminary purchase price accounting during 2023, goodwill decreased $ 145.9 million and the fair value of finite-lived intangible assets increased by $ 195.9 million.

The acquired intangibles are being amortized over a weighted-average useful life of approximately 14 years.

During 2021, the Company acquired two companies which resulted in the recognition of goodwill of $ 155.6 million and finite-lived intangibles of $ 11.3 million.

As a result of certain adjustments to the preliminary purchase accounting for the 2021 acquisitions during 2022, goodwill decreased by $ 72.3 million and the fair value of finite-lived intangibles assets increased by $ 61.3 million.

As a result of certain adjustments to the preliminary purchase accounting during 2022, goodwill decreased by $ 72.3 million and the fair value of finite-lived intangibles assets increased by $ 61.3 million.

In addition, during 2021, the Company divested its Wattyl business in Australia and New Zealand.

See Note 3 for additional information related to the acquisitions and divestiture.

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

See Note 3 for additional information related to the acquisitions and divestitures.

In accordance with the Goodwill and Other Intangibles Topic of the ASC, goodwill at the reporting unit level and indefinite-lived intangible assets are tested for impairment annually.

In addition, interim impairment tests are performed whenever required as a result of a specific event or circumstances which indicate potential impairment on a more likely than not basis.

October 1 has been established for the annual impairment review.

An optional qualitative assessment may alleviate the need to perform quantitative goodwill and indefinite-lived intangible asset impairment tests when impairment is unlikely.

Should a quantitative impairment test be performed, values are estimated separately for goodwill and indefinite-lived intangible assets using a valuation model, incorporating discount rates commensurate with the risks involved for each group of assets.

The annual impairment review performed as of October 1, 2022, which incorporated the impact of the Restructuring Plan, resulted in trademark impairments totaling $ 15.5 million in the Consumer Brands Group related to the discontinuation of an architectural paint brand and lower than anticipated sales of an acquired brand and no goodwill impairment.

An optional qualitative assessment may alleviate the need to perform quantitative goodwill and indefinite-lived intangible asset impairment tests when there is no indication of impairment on a more likely than not basis.

Should a quantitative impairment test be performed, values are estimated separately for goodwill and indefinite-lived intangible assets using applicable valuation models, incorporating discount rates commensurate with the risks involved for each group of assets.

As a result of the Latin America architectural paint business moving to the Consumer Brands Group reportable segment effective January 1, 2023, the Company performed a quantitative impairment analysis for the impacted reporting units and determined both before and after the change, there was no indication of impairment.

The annual impairment review performed as of October 1, 2023 resulted in no goodwill impairment and trademark impairment of $ 23.9 million in the Consumer Brands Group primarily related to a trademark in Europe.

than anticipated sales of an acquired brand and no goodwill impairment.

The annual impairment review performed as of October 1, 2021 did not result in any trademark or goodwill impairment.

The annual impairment review performed as of October 1, 2020 resulted in trademark impairment of $ 2.3 million in the Performance Coatings Group related to lower than anticipated sales of an acquired brand and no goodwill impairment.

A summary of changes in the Company’s carrying value of goodwill by Reportable Segment is as follows:

Goodwill The Americas Group Consumer Brands

Goodwill Paint Stores Group Consumer Brands

Group Performance Coatings

2 unchanged sentences

$ 2,256.6 $ 1,754.6 $ 3,037.9 $ 7,049.1

Reclassification related to segment change (2)

( 74.5 ) 74.5 —

Acquisitions 155.6 155.6

Currency and other adjustments ( 45.7 ) ( 24.4 ) ( 70.1 )

1 unchanged sentence

2,182.1 1,783.4 3,169.1 7,134.6

Acquisitions 155.6 155.6

Acquisitions and acquisition adjustments 49.7 21.3 422.5 493.5

Currency and other adjustments ( 2.8 ) ( 42.1 ) ( 44.9 )

5 unchanged sentences

$ 2,231.8 $ 1,792.8 $ 3,601.4 $ 7,626.0

(1) Net of accumulated impairment losses of $ 19.4 million ($ 10.5 million in The Americas Group, $ 8.1 million in the Consumer Brands Group and $ 0.8 million in the Performance Coatings Group).

(1) Net of accumulated impairment losses of $ 19.4 million ($ 10.2 million in Paint Stores Group, $ 8.4 million in Consumer Brands Group and $ 0.8 million in Performance Coatings Group).

(2) Effective January 1, 2023, the Company realigned its organizational structure to manage the Latin America architectural paint business within the Consumer Brands Group.

Goodwill balances have been retrospectively adjusted to reflect the change.

A summary of the Company’s carrying value of intangible assets is as follows:

15 unchanged sentences

Net value $ 16.7 $ 2,044.1 $ 1,333.8 $ 23.8 $ 3,418.4 $ 583.1 $ 4,001.5

(1) Trademarks are net of accumulated impairment losses of $ 139.9 million as of December 31, 2022 and $ 124.4 million as of December 31, 2021 and 2020.

(1) Trademarks are net of accumulated impairment losses of $ 163.8 million , $ 139.9 million, and $ 124.4 million as of December 31, 2023, 2022 and 2021, respectively.

Amortization of finite-lived intangible assets is estimated as follows for the next five years:

$ 329.4 million in 2024, $ 321.7 million in 2025, $ 318.0 million in 2026, $ 314.0 million in 2027 and $ 307.7 million in 2028.

Although the Company believes its estimates of fair value related to reporting units and indefinite-lived intangible assets are reasonable, actual financial results could differ from those estimates due to the inherent uncertainty involved in making such estimates.

Changes in assumptions concerning future financial results or other underlying assumptions could have a significant impact and future impairment charges may be required.

1 unchanged sentence

Long-Term Debt

The table below summarizes the carrying value of the Company’s outstanding debt, net of capitalized debt issuance costs:

The table below summarizes the carrying value of the Company’s outstanding debt, net of capitalized debt issuance costs and discounts:

Due Date 2023 2022 2021

33 unchanged sentences

2045 240.9 240.5 240.0

0.53 % to 8.00 % Promissory Notes

Through 2026 0.9 1.6 2.0

7.375 % Debentures

2 unchanged sentences

2097 — 3.5 3.5

0.53 % to 8.00 % Promissory Notes

Through 2026 1.6 2.0 2.3

2.75 % Senior Notes

2022 — — 260.0

4.20 % Senior Notes

9,476.7 9,591.6 8,851.5

0.92 % Fixed Rate Loan

2021 — — 24.4

9,591.6 8,851.5 8,292.0

Less amounts due within one year 1,098.8 0.6 260.6

Long-term debt $ 8,377.9 $ 9,591.0 $ 8,590.9

(1) Net of capitalized debt issuance costs of $ 57.3 million, $ 57.6 million and $ 52.9 million at December 31, 2022, 2021 and 2020, respectively.

(1) Net of capitalized debt issuance costs of $ 49.3 million, $ 57.3 million and $ 57.6 million and net of discounts of $ 25.2 million, $ 25.7 million, and $ 26.0 million at December 31, 2023, 2022 and 2021, respectively.

Maturities of long-term debt are as follows for the next five years:

$ 0.6 million in 2023;

$ 1.100 billion in 2024;

$ 1.050 billion in 2025, $ 350.1 million in 2026 and $ 1.619 billion in 2027.

$ 1.051 billion in 2025;

$ 350.1 million in 2026;

$ 1.500 billion in 2027 and none in 2028.

Interest expense on long-term debt was $ 374.6 million, $ 348.4 million and $ 320.4 million for 2023, 2022 and 2021, respectively.

Among other restrictions, the Company’s notes, debentures and revolving credit agreement contain certain covenants relating to liens, ratings changes, merger and sale of assets, consolidated leverage and change of control, as defined in the agreements.

In the event of default under any one of these arrangements, acceleration of the maturity of any one or more of these borrowings may result.

The Company was in compliance with all covenants for all years presented.

In December 2023, the Company exercised its call provision to make-whole the entire outstanding $ 119.4 million aggregate principal amount of its 7.375 % Debentures due 2027 and the entire outstanding $ 3.5 million aggregate principal amount of its 7.45 % Debentures due 2097.

The retirement of the Debentures resulted in a loss of $ 12.8 million recorded in Other general expense (income) - net.

In August 2022, the Company issued $ 600.0 million of 4.05 % Senior Notes due August 2024 and $ 400.0 million of 4.25 % Senior Notes due August 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.

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 the domestic commercial paper program.

In November 2021, the Company issued $ 500.0 million of 2.20 % Senior Notes due March 2032 and $ 500.0 million of 2.90 % Senior Notes due March 2052 in a public offering.

The net proceeds from the issuance of these notes were used to repay outstanding borrowings under the Company’s domestic commercial paper program.

In October 2021, the Company exercised its optional redemption rights to redeem the entire outstanding $ 400.0 million aggregate principal amount of its 4.20 % Senior Notes due 2022 and its 4.20 % Notes due 2022 initially issued by The Valspar

Corporation (collectively, the 4.20 % Senior Notes).

The 4.20 % Senior Notes were redeemed at a redemption price equal to 100 % of the principal amount, plus accrued interest, and resulted in a gain of $ 1.4 million recorded in Other expense (income) - net .

In the event of default under any one of these arrangements, acceleration of the maturity of any one or more of these borrowings may result.

The Company was in compliance with all covenants for all years presented.

Short-Term Borrowings

24 unchanged sentences

NOTE 9 – PENSION, HEALTH CARE AND OTHER POSTRETIREMENT BENEFITS

The Company provides pension benefits to substantially all full-time employees through primarily noncontributory defined contribution or defined benefit plans and certain health care and life insurance benefits to domestic active employees and eligible retirees.

The Company provides pension benefits to substantially all full-time employees through primarily noncontributory defined contribution or defined benefit pension plans and certain health care and life insurance benefits to domestic active employees and eligible retirees.

Health Care Plans

13 unchanged sentences

The plan was funded in accordance with all applicable regulations at December 31, 2023.

The Company has thirty-four foreign defined benefit pension plans.

At December 31, 2022, twenty-seven of the Company’s foreign defined benefit pension plans were unfunded or underfunded, with combined accumulated benefit obligations, projected benefit obligations, fair values of net assets and deficiencies of plan assets of $ 65.8 million, $ 78.5 million, $ 20.0 million and $ 58.5 million, respectively.

The Company has thirty-three foreign defined benefit pension plans.

At December 31, 2023, twenty-six of the Company’s foreign defined benefit pension plans were unfunded or underfunded, with combined accumulated benefit obligations, projected benefit obligations, fair values of net assets and deficiencies of plan assets of $ 76.0 million, $ 89.4 million, $ 20.4 million and $ 69.0 million, respectively.

The Company expects to make the following benefit payments for all domestic and foreign defined benefit pension plans:

5 unchanged sentences

and $ 133.1 million in 2029 through 2033.

The Company expects to contribute $ 5.5 million to the foreign plans in 2023.

The Company expects to contribute $ 6.1 million to the foreign defined benefit pension plans in 2024.

The estimated net actuarial gains and prior service costs for the defined benefit pension plans that are expected to be amortized from AOCI into net pension costs in 2024 are $( 1.4 ) million and $ 1.8 million, respectively.

8 unchanged sentences

Amortization of prior service cost (credit) 1.3 1.0 1.1 ( 0.2 ) ( 0.2 ) ( 0.1 )

Amortization of actuarial losses 0.2 1.5 1.0

Amortization of actuarial (gains) losses ( 1.5 ) 0.2 1.5

Ongoing pension cost 1.6 1.2 1.6 2.2 4.2 4.9

Settlement costs ( 0.3 ) 0.3 0.2

Settlement (credits) costs ( 1.1 ) ( 0.3 ) 0.3

Net pension cost 1.6 1.2 1.6 1.1 3.9 5.2

1 unchanged sentence

obligation recognized in AOCI (before taxes):

Net actuarial losses (gains) arising during the year 5.0 ( 10.5 ) ( 4.5 ) ( 29.6 ) ( 44.9 ) 7.0

Net actuarial (gains) losses arising during the year ( 8.6 ) 5.0 ( 10.5 ) 5.8 ( 29.6 ) ( 44.9 )

Prior service cost (credit) arising during the year 3.0 1.6 1.4 1.1 ( 0.3 ) ( 1.0 )

Amortization of actuarial losses ( 0.2 ) ( 1.5 ) ( 1.0 )

Amortization of actuarial gains (losses) 1.5 ( 0.2 ) ( 1.5 )

Amortization of prior service (cost) credit ( 1.3 ) ( 1.0 ) ( 1.1 ) 0.2 0.2 0.1

Gain (loss) recognized for settlement 0.3 ( 0.3 ) ( 0.2 )

Exchange rate (loss) gain recognized during the year ( 0.4 ) ( 0.6 ) 1.7

Loss (gain) recognized for settlement 1.1 0.3 ( 0.3 )

Exchange rate (loss) recognized during the year ( 1.5 ) ( 0.4 ) ( 0.6 )

Total recognized in AOCI ( 6.9 ) 5.6 ( 10.2 ) 8.2 ( 30.0 ) ( 48.2 )

9 unchanged sentences

The presentation is in accordance with the Fair Value Topic of the ASC.

Fair value at December 31, 2022 Quoted Prices

in Active Markets for Identical

Fair Value at

Quoted Prices

(Level 1) Significant

(Level 2) Significant

Unobservable Inputs

Investments at fair value:

2 unchanged sentences

Fixed income investments (2)

188.9 36.8 152.1

Other assets (3)

2 unchanged sentences

Total investments $ 381.8

Fair value at December 31, 2021 Quoted Prices in Active Markets for Identical

Fair Value at

Quoted Prices

(Level 1) Significant

(Level 2) Significant

Unobservable Inputs

Investments at fair value:

6 unchanged sentences

Total investments $ 343.0

Fair value at December 31, 2020 Quoted Prices in Active Markets for Identical

Fair Value at

Quoted Prices

(Level 1) Significant

(Level 2) Significant

Unobservable Inputs

Investments at fair value:

2 unchanged sentences

Fixed income investments (2)

182.3 24.3 158.0

Other assets (3)

2 unchanged sentences

Total investments $ 483.6

(1) This category includes actively managed equity assets that track primarily to the S&P 500.

(2) This category includes government and corporate bonds that track primarily to the Barclays Capital Aggregate Bond Index.

(1) This category includes actively managed equity assets that track primarily to the S&P 500 or an international equity index.

(2) This category includes government and corporate bonds that track primarily to the Barclays Capital Aggregate Bond Index or an international bond index.

(3) This category includes real estate and pooled investment funds.

12 unchanged sentences

Interest cost 4.6 3.2 2.7 11.8 7.3 5.7

Actuarial (gains) losses ( 32.6 ) ( 2.8 ) 11.0 ( 112.4 ) ( 26.0 ) 25.3

Actuarial losses (gains) 2.8 ( 32.6 ) ( 2.8 ) 8.8 ( 112.4 ) ( 26.0 )

Contributions and other 3.0 1.6 1.4 2.0 3.2 ( 4.6 )

20 unchanged sentences

Amounts recognized in AOCI:

Net actuarial gains (losses) $ 8.0 $ 13.0 $ 2.5 $ 31.7 $ 1.9 $ ( 45.4 )

Net actuarial gains $ 16.6 $ 8.0 $ 13.0 $ 24.8 $ 31.7 $ 1.9

Prior service (costs) credits ( 8.8 ) ( 7.1 ) ( 6.5 ) 0.3 1.6 1.4

21 unchanged sentences

Interest cost 7.4 6.0 4.9

Actuarial (gain) loss ( 54.5 ) ( 4.1 ) 19.7

Actuarial gain ( 8.0 ) ( 54.5 ) ( 4.1 )

Plan amendments ( 62.8 ) ( 2.2 )

7 unchanged sentences

Net actuarial gains (losses) $ 12.9 $ 4.7 $ ( 54.0 )

Prior service credits (cost) 64.0 1.6 ( 0.9 )

Prior service credits 40.0 64.0 1.6

$ 52.9 $ 68.7 $ ( 52.4 )

4 unchanged sentences

Prescription drug cost increases 9.00 % 8.25 % 8.25 %

Employer Group Waiver Plan (EGWP) trend rate N/A 8.25 % 8.25 %

Employer Group Waiver Plan (EGWP) trend rate N/A N/A 8.25 %

Weighted-average assumptions used to determine net periodic benefit cost:

3 unchanged sentences

Prescription drug cost increases 8.25 % 8.25 % 8.25 %

The following table summarizes the components of the net periodic benefit cost and AOCI related to postretirement benefits other than pensions:

The following table summarizes the components of the net periodic benefit cost and AOCI related to other postretirement benefits:

Other Postretirement Benefits

8 unchanged sentences

AOCI (before taxes):

Net actuarial (gain) loss arising during the year ( 54.5 ) ( 4.1 ) 19.7

Prior service (credit) cost arising during the year ( 62.8 ) ( 2.2 ) 0.9

Net actuarial gain arising during the year ( 8.0 ) ( 54.5 ) ( 4.1 )

Prior service (credit) arising during the year ( 62.8 ) ( 2.2 )

Amortization of actuarial losses ( 0.1 ) ( 4.2 ) ( 4.7 )

2 unchanged sentences

Total recognized in net periodic benefit cost and AOCI $ — $ ( 110.1 ) $ —

The estimated net actuarial losses and prior service credits for other postretirement benefits that are expected to be amortized from AOCI into net periodic benefit cost in 2023 are $ 0.1 million and $( 24.0 ) million, respectively.

The estimated net actuarial gains and prior service credits for other postretirement benefits that are expected to be amortized from AOCI into net periodic benefit cost in 2024 are $( 0.3 ) million and $( 23.9 ) million, respectively.

The assumed health care cost trend rate and prescription drug cost increases used to determine the net periodic benefit cost for postretirement health care benefits for 2024 both decrease in each successive year until reaching 4.5 % in 2032.

5 unchanged sentences

Operating lease right-of-use (ROU) assets and lease liabilities are recognized based on the present value of lease payments over the lease term.

The majority of the ROU asset and lease liability balances relate to the retail operations of The Americas Group.

The majority of the ROU asset and lease liability balances relate to the retail operations of the Paint Stores Group.

Most leases include one or more options to renew.

5 unchanged sentences

The Company has made an accounting policy election by underlying asset class to not apply the recognition requirements of ASC 842 to short-term leases.

As a result, certain leases with a term of 12 months or less are not recorded on the balance sheet and expense is recognized on a straight-line basis over the lease term.

Most leases do not contain an implicit discount rate.

Therefore, the Company’s estimated incremental borrowing rate based on information available at the time of lease inception is used to discount lease payments to present value.

As a result, certain leases with a term of 12 months or less are not recorded on the Consolidated Balance Sheets and expense is recognized on a straight-line basis over the lease term.

Most leases do not contain an incremental borrowing rate which is readily determinable from their associated contract.

Therefore, the Company uses its estimated incremental borrowing rate on a collateralized basis which is derived from information available at the lease commencement date, giving consideration to publicly available credit rating data, other risk characteristics and the term of the lease in determining the present value of lease payments.

Additional lease information is summarized below:

9 unchanged sentences

3.8 % 3.3 % 3.0 %

The following table reconciles the undiscounted cash flows for each of the next five years and thereafter to the operating lease liabilities recognized on the balance sheet as of December 31, 2022.

The reconciliation excludes short-term leases that are not recorded on the balance sheet.

The following table reconciles the undiscounted cash flows for each of the next five years and thereafter to the operating lease liabilities recognized on the Consolidated Balance Sheets as of December 31, 2023.

The reconciliation excludes short-term leases that are not recorded on the Consolidated Balance Sheets.

Year Ending December 31,

4 unchanged sentences

NOTE 11 – OTHER LONG-TERM LIABILITIES

Environmental Matters

The operations of the Company, like those of other companies in its industry, are subject to various domestic and foreign environmental laws and regulations.

9 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, 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.

The Company routinely 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 December 31, 2023, 2022 and 2021, the Company had accruals reported on the balance sheet as Other long-term liabilities of $ 230.8 million, $ 240.2 million and $ 277.4 million, respectively.

11 unchanged sentences

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, sediment, waterbodies, and groundwater contamination related to the historic operations of the facility.

This location has soil, sediment, surface water 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.

To date, the Company has completed remedy construction on three of the six operable units.

While there are administrative tasks to be completed before final agency

approval, the remediation phase of the work for these three OUs is effectively complete and future work for these OUs is anticipated to be limited.

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 (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 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.

11 unchanged sentences

Management is unable to provide a more specific time frame due to the indeterminate amount of time to conduct investigation activities at any site, the indeterminate amount of time to obtain environmental agency approval, as necessary, with respect to investigation and remediation activities, and the indeterminate amount of time necessary to conduct remediation activities.

Asset Retirement Obligations

The Asset Retirement and Environmental Obligations Topic of the ASC requires a liability to be recognized for the fair value of a conditional asset retirement obligation if a settlement date and fair value can be reasonably estimated.

6 unchanged sentences

An estimate of the potential impact on the Company’s operations cannot be made due to the aforementioned uncertainties.

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 the new headquarters currently under construction, for which the Company expects to receive total proceeds approximating $ 800 million to $ 850 million on an incremental basis until the completion of construction.

In 2023 and 2022, the Company received $ 305.0 million and $ 210.0 million, respectively.

The net proceeds from this transaction and other real estate financing transactions are recognized within the Financing Activities section of the Statements of Consolidated Cash Flows.

The corresponding financing obligation for the new headquarters was $ 515.8 million and $ 207.0 million at December 31, 2023 and 2022, respectively, on the Consolidated Balance Sheets.

The short-term portion of the liability recorded in Other accruals was $ 39.9 million and $ 20.0 million at December 31, 2023 and 2022, respectively.

During 2023, $ 23.8 million of interest was capitalized with the long-term portion of the liability in Other long-term liabilities.

Future payments are estimated to be $ 40 million during the next twelve months, which is the remaining estimated construction period.

At the completion of construction, the Company will calculate the remaining obligation under the terms of lease.

NOTE 12 – LITIGATION

3 unchanged sentences

In the event that the Company’s loss contingency is ultimately determined to be significantly higher than currently accrued, the recording of the additional liability may result in a material impact on the Company’s results of operations, liquidity or financial condition for the annual or interim period during which such additional liability is accrued.

In those cases where no accrual is recorded because it is not probable that a liability has been incurred and the amount of any such loss cannot be reasonably estimated, any potential liability ultimately determined to be attributable to the Company may result in a material impact on the Company’s results of operations, liquidity or financial condition for the annual or interim period during which such liability is accrued.

In those cases where no accrual is recorded because it is not probable that a liability has been incurred or the amount of any such loss cannot be reasonably estimated, any potential liability ultimately determined to be attributable to the Company may result in a material impact on the Company’s results of operations, liquidity or financial condition for the annual or interim period during which such liability is accrued.

In those cases where no accrual is recorded or exposure to loss exists in excess of the amount accrued, the Contingencies Topic of the ASC requires disclosure of the contingency when there is a reasonable possibility that a loss or additional loss may have been incurred.

3 unchanged sentences

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.

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.

7 unchanged sentences

In addition, management cannot reasonably determine the scope or amount of the potential costs and liabilities related to such litigation or resulting from any such legislation and regulations.

Except with respect to the litigation in California discussed below, the Company has not accrued any amounts for such litigation because the Company does not believe it is probable that a loss has occurred, and the Company believes it is not possible to estimate the range of potential losses as there is no substantive information upon which an estimate could be based.

Except with respect to the litigation in the California Proceedings, discussed below, the Company has not accrued any amounts for such litigation because the Company does not believe it is probable that a loss has occurred, or the Company believes it is not possible to estimate the range of potential losses as there is no substantive information upon which an estimate could be based.

In addition, any potential liability that may result from any changes to legislation and regulations cannot reasonably be estimated.

9 unchanged sentences

the City of Milwaukee, Wisconsin;

the County of Santa Clara, California, and other public entities in the State of California;

and Lehigh and Montgomery Counties in Pennsylvania.

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.

the County of Santa Clara, California, and other public entities in the State of California (the California Proceedings);

and Lehigh and Montgomery Counties in Pennsylvania (together, the Pennsylvania Proceedings).

Except for the California Proceedings in which the Company reached a court-approved agreement in 2019 after nearly twenty years of litigation, all of the 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 Proceedings 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 and Lehigh County, 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.

After the defendants removed the actions to federal court and the actions were remanded to state court, the defendants filed preliminary objections on December 21, 2020, seeking to dismiss the complaints with prejudice.

In the Lehigh County action, the trial court denied the defendants’ preliminary objections on August 6, 2021.

Defendants filed a motion to amend the order to allow an interlocutory appeal or, in the alternative, for reconsideration.

The trial court denied the defendants’ motion on September 13, 2021.

On September 27, 2021, the Company answered the complaint, asserted new matter and affirmative defenses, alleged counterclaims against Lehigh County, and filed a third-party complaint against certain County officials, other owners of pre-1980 housing, and lead abatement contractors who have been cited for violating state or local laws.

On October 13, 2021, the defendants filed with the Superior Court, one of Pennsylvania’s intermediate appellate courts, a petition for permission to appeal the trial court’s order denying the defendants’ preliminary objections.

On November 17, 2021, the Superior Court transferred the appeal to the Commonwealth Court, another one of Pennsylvania’s intermediate appellate courts.

In the Montgomery County action, the trial court denied the defendants’ preliminary objections on October 15, 2021.

The defendants filed a motion to amend the order overruling their preliminary objections to allow an interlocutory appeal, which the trial court granted on November 9, 2021.

On December 3, 2021, the defendants filed a petition for permission to appeal with the Commonwealth Court.

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.

In both actions, the counties requested 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.

After the defendants removed both actions to federal court and the actions were remanded to state court, the defendants filed preliminary objections on December 21, 2020, seeking to dismiss both complaints with prejudice.

The trial courts in both actions denied the defendants’ preliminary objections, and the defendants filed petitions for permission to appeal the trial courts’ orders to the Commonwealth Court, one of Pennsylvania’s intermediate appellate courts.

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

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

On May 5, 2023, the Commonwealth Court reversed both trial courts’ orders denying the defendants’ preliminary objections and remanded both actions to the trial courts for entry of orders dismissing both actions.

Montgomery and Lehigh Counties each filed a petition for allowance to appeal with the Supreme Court of Pennsylvania, both of which the Supreme Court of Pennsylvania denied on November 20, 2023.

Subsequently, the trial courts dismissed both the Montgomery County and the Lehigh County actions on January 9, 2024 and January 30, 2024, respectively.

Litigation seeking damages from alleged personal injury.

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.

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.

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 was remanded to the district court for further proceedings.

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.

Wisconsin Proceedings .

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

4 unchanged sentences

du Pont de Nemours).

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 Seventh Circuit.

Post-trial motions resulted in a reduced damages award to one plaintiff.

Subsequently, the Company filed a notice of appeal with the Seventh Circuit with respect to each of the Owens, Sifuentes and Burton cases.

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 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.

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.

On May 20, 2021, as a result of the Seventh Circuit’s decision in favor of the Company in the Owens, Sifuentes and Burton cases, the Company and the three other defendants filed motions for summary judgment to dismiss all claims of the approximately 150+ plaintiffs then pending in the Eastern District of Wisconsin.

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.

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’ brief in opposition is due on February 22, 2023.

As part of the plaintiffs’ appellate reply brief to the Seventh Circuit, the plaintiffs included a motion to certify issues to the Wisconsin Supreme Court.

On February 9, 2024, the Seventh Circuit declined to certify any issues to the Wisconsin Supreme Court and affirmed the district court’s summary judgment in favor of the Company and the other defendants in all claims except involving those filed by three plaintiffs, whose cases were remanded to the district court for further proceedings.

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

1 unchanged sentence

filed an amended complaint in Milwaukee County Circuit Court, naming the Company and other alleged former lead pigment manufacturers as defendants pursuant to the risk contribution liability theory.

The defendants answered the plaintiff’s complaint on December 17, 2021.

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 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.

Other lead-based paint and lead pigment litigation.

In Mary Lewis v.

Lead Industries Association, et al., which was pending in the Circuit Court of Cook County, Illinois, plaintiff parents sought 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.

The time period for any further appeal by the Department or the plaintiffs has now expired.

Plaintiff also sued her landlords.

In March 2022, the Company removed the case to the Eastern District of Wisconsin.

The plaintiff filed a motion to remand the case to the state circuit court, and on September 30, 2023, the case was remanded to state court.

On January 3, 2024, the Company and some of the other manufacturing defendants filed a third-party complaint against NL Industries, Inc., and cross-claims against the landlord defendants.

On January 10, 2024, one of the landlord defendants filed a counterclaim and cross-claim against all parties.

Insurance coverage litigation.

7 unchanged sentences

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.

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, which the Company opposed.

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

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

The insurers subsequently filed a notice of appeal to the Ohio Supreme Court, to which the Company filed its response.

On May 9, 2023, the Ohio Supreme Court accepted the insurers’ appeal.

Oral argument was held on October 24, 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.

5 unchanged sentences

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 26, 2023.

NOTE 13 – CAPITAL STOCK

The court has scheduled a new trial date of October 15, 2024.

NOTE 13 – SHAREHOLDERS’ EQUITY

Capital Stock

At December 31, 2023, there were 900,000,000 shares of common stock and 30,000,000 shares of serial preferred stock authorized for issuance.

3 unchanged sentences

See Note 15 for additional information related to stock-based compensation.

Shares outstanding shown in the following table included 1,426,883 , 1,426,883 and 1,469,712 shares of common stock held in a revocable trust at December 31, 2022, 2021 and 2020, respectively.

Shares outstanding shown in the following table included 1,426,883 shares of common stock held in a revocable trust at December 31, 2023, 2022 and 2021.

The revocable trust is used to accumulate assets for the purpose of funding the ultimate obligation of certain non-qualified benefit plans.

7 unchanged sentences

Treasury stock purchased 10,075,000 ( 10,075,000 )

Treasury stock retired ( 91,746,432 )

Treasury stock sold (1)

( 825,000 ) 825,000

Balance at December 31, 2021 11,313,634 261,143,805

4 unchanged sentences

Treasury stock purchased 3,350,000 ( 3,350,000 )

Treasury stock sold (1)

( 75,000 ) 75,000

Balance at December 31, 2022 14,717,347 258,875,999

4 unchanged sentences

Treasury stock purchased 5,600,000 ( 5,600,000 )

Treasury stock sold (1)

( 75,000 ) 75,000

Balance at December 31, 2023 20,434,584 254,543,290

(1) During the years ended December 31, 2020 and 2022, the Company sold treasury shares to fund Company contributions to the domestic defined contribution plan.

The related proceeds were $ 182.4 million and $ 22.0 million, respectively.

(1) During the year ended December 31, 2022, the Company sold treasury shares to fund Company contributions to the domestic defined contribution plan.

The related proceeds were $ 22.0 million.

The following table summarizes the dividends declared and paid on common stock:

2023 2022 2021

Cash dividend per share $ 2.42 $ 2.40 $ 2.20

Total dividends (in millions) 623.7 618.5 587.1

Treasury Stock

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

As of December 31, 2023, the Company had remaining authorization from its Board of Directors to purchase 39.6 million shares of its common stock.

The table below summarizes the Company’s share repurchase activity:

2023 2022 2021

Treasury stock purchases (in millions) $ 1,432.0 $ 883.2 $ 2,752.3

Treasury stock purchases (shares) 5,600,000 3,350,000 10,075,000

Average price per share $ 255.72 $ 263.64 $ 273.18

NOTE 14 – DEFINED CONTRIBUTION SAVINGS PLAN

As of December 31, 2022, 45,075 employees contributed to the Company’s defined contribution savings plan, voluntary to all eligible salaried employees.

As of December 31, 2023, 45,017 employees contributed to the Company’s defined contribution savings plan, voluntary to all eligible salaried employees and any employee in a group of employees to which coverage has been extended on a non-discriminatory basis by the plan’s Administration Committee.

Participants are allowed to contribute, on a pretax or after-tax basis, up to the lesser of fifty percent of their annual compensation or the maximum dollar amount allowed under the Internal Revenue Code.

15 unchanged sentences

The Nonemployee Director Plan permits the granting of options, appreciation rights, restricted stock and RSUs to members of the Board of Directors who are not employees of the Company.

At December 31, 2022, no options or appreciation rights had been granted under the Nonemployee Director Plan.

December 31, 2023, no options or appreciation rights had been granted under the Nonemployee Director Plan.

Shares available for future grants under the Nonemployee Director Plan were 216,021 at December 31, 2023.

65 unchanged sentences

The components of AOCI, including the reclassification adjustments for items that were reclassified from AOCI to Net income, are shown below.

Foreign Currency Translation Adjustments Pension and Other Postretirement Benefits Adjustments Unrealized Net Gains on Cash Flow Hedges Total

Foreign Currency Translation Adjustments (1)

Pension and Other Postretirement Benefits Adjustments (2)

Unrealized Net Gains on Cash Flow Hedges (3)

Balance at January 1, 2021 $ ( 671.5 ) $ ( 87.2 ) $ 40.4 $ ( 718.3 )

8 unchanged sentences

Balance at December 31, 2023 $ ( 716.9 ) $ 64.3 $ 28.3 $ ( 624.3 )

(1) Includes changes in the fair value of cross currency swap contracts of $( 24.9 ) million, $ 34.1 million, $ 37.1 million in 2023, 2022 and 2021, respectively.

(2) Net of taxes of $ 3.1 million, $( 35.0 ) million, $( 14.7 ) million in 2023, 2022 and 2021, respectively.

(3) Net of taxes of $ 1.2 million, $ 1.1 million and $ 1.0 million in 2023, 2022 and 2021, respectively.

See Statements of Consolidated Comprehensive Income.

NOTE 17 – DERIVATIVES AND HEDGING

The Company has two U.S.

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

The Company has entered into U.S.

Dollar to Euro cross currency swap contracts with various counterparties to hedge the Company’s net investment in its European operations.

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

1 unchanged sentence

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.

In February 2020, the Company settled its $ 400.0 million U.S.

Dollar to Euro cross currency swap contract entered into on May 9, 2019 to hedge the Company’s net investment in its European operations.

At the time of the settlement, an unrealized gain of $ 11.8 million, net of tax, was recognized in AOCI.

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

The outstanding contracts as of December 31, 2023 are summarized in the table below.

Contract Date Notional Value Maturity Date

February 13, 2020 $ 500.0 June 1, 2024

November 8, 2021 162.7 June 1, 2027

March 28, 2023 150.0 August 8, 2024

June 28, 2023 200.0 August 8, 2025

December 7, 2023 150.0 August 15, 2029

In December 2023, the Company settled its $ 100.0 million U.S.

Dollar to Euro cross currency swap contract entered into on August 1, 2023.

At the time of settlement, an immaterial unrealized gain was recognized in AOCI.

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

See Note 18 for additional information on the fair value of these contracts.

5 unchanged sentences

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 gains (losses) for the years ended December 31:

The following table summarizes the unrealized (losses) gains for the years ended December 31:

2023 2022 2021

Gain (loss) $ 45.2 $ 49.3 $ ( 71.7 )

(Losses) gains $ ( 33.1 ) $ 45.2 $ 49.3

Tax effect 8.2 ( 11.1 ) ( 12.2 )

Gain (loss), net of taxes $ 34.1 $ 37.1 $ ( 54.0 )

(Losses) gains, net of taxes $ ( 24.9 ) $ 34.1 $ 37.1

NOTE 18 – FAIR VALUE MEASUREMENTS

6 unchanged sentences

There were no assets and liabilities measured at fair value on a recurring basis classified as Level 3 at December 31, 2023, 2022 and 2021.

Except for the acquisition and divestiture-related fair value measurements described in Note 3 and the trademark impairments described in Note 7, there were no assets and liabilities measured at fair value on a nonrecurring basis.

Except for the acquisition-related fair value measurements and assets held for sale prior to divestiture described in Note 3 and the reporting unit impairment analysis and trademark quantitative impairment test described in Note 7, there were no assets and liabilities measured at fair value on a nonrecurring basis.

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

1 unchanged sentence

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

Deferred compensation plan assets $ 74.1 $ 43.7 $ 30.4 $ 80.4 $ 43.1 $ 37.3 $ 69.2 $ 37.9 $ 31.3

Qualified replacement plan assets 29.8 29.8 98.8 98.8 161.5 161.5

Net investment hedge asset 9.1 9.1 — —

Deferred compensation plan $ 84.7 $ 84.7 $ 74.1 $ 43.7 $ 30.4 $ 80.4 $ 43.1 $ 37.3

Qualified replacement plan — 29.8 29.8 98.8 98.8

Net investment hedges — 9.1 9.1 —

$ 84.7 $ 84.7 $ — $ 113.0 $ 73.5 $ 39.5 $ 179.2 $ 141.9 $ 37.3

Net investment hedge liability $ — $ 36.5 $ 36.5 $ 85.8 $ 85.8

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.

Net investment hedges $ 24.4 $ 24.4 $ — $ 36.5 $ 36.5

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

The investments are marketable securities accounted for under the Debt and Equity Securities Topic of the ASC.

The level 1 investments are valued using quoted market prices multiplied by the number of shares.

The level 2 investments are valued based on vendor quotes.

The cost basis of the investment funds was $ 67.2 million, $ 63.0 million, and $ 58.1 million at December 31, 2022, 2021 and 2020, respectively.

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

The investments are marketable securities accounted for under the Debt and Equity Securities Topic of the ASC.

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

The cost basis of the investment funds was $ 29.8 million, $ 86.9 million and $ 159.6 million at December 31, 2022, 2021 and 2020, respectively.

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

As of December 31, 2023, $ 6.4 million of deferred compensation plan assets were held in partnership funds measured using NAV (or its equivalent) as a practical expedient.

These investments are not classified in the fair value hierarchy.

The cost basis of all investments within the deferred compensation plan and qualified replacement plan was $ 76.3 million, $ 67.2 million, and $ 63.0 million at December 31, 2023, 2022 and 2021, 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 and $ 86.9 million at December 31, 2022 and 2021, respectively.

The net investment hedge asset and liability represent the fair value of the cross currency swaps.

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

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

The carrying amounts reported for Cash and cash equivalents and Short-term borrowings approximate fair value.

44 unchanged sentences

Obligations for returns and refunds were not material individually or in the aggregate.

Allowance for Credit Losses

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 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.

Accounts receivable balances are written-off against the allowance if a final determination of uncollectibility is made.

All provisions for allowances for doubtful accounts are included in Selling, general and administrative expenses.

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

Allowance for Current Expected Credit Losses

The following table summarizes the movement in the Company’s allowance for current expected credit losses:

2023 2022 2021

Beginning balance $ 56.6 $ 48.9 $ 53.5

Adjustment upon adoption of ASU 2016-13 (1)

Bad debt expense 67.9 65.3 33.8

1 unchanged sentence

Ending balance $ 59.6 $ 56.6 $ 48.9

(1) The Company adopted ASU 2016-13 effective January 1, 2020, using the modified retrospective transition method, electing to not restate prior periods.

Refer to Note 1 for additional detail.

NOTE 20 – OTHER EXPENSE (INCOME)

Other General (Income) Expense - Net

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

Other General Expense (Income) - Net

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

2023 2022 2021

Provisions for environmental matters - net $ 80.7 $ ( 7.1 ) $ ( 4.0 )

Loss on divestiture (see Note 3) — 111.9 —

Gain on sale or disposition of assets ( 17.8 ) ( 6.1 ) ( 9.4 )

(Gain) loss on divestiture of businesses (see Note 3) ( 20.1 ) — 111.9

Loss (gain) on sale or disposition of assets 0.9 ( 17.8 ) ( 6.1 )

Other 5.6 — —

Total $ 67.1 $ ( 24.9 ) $ 101.8

1 unchanged sentence

These provisions are recorded or adjusted as information becomes available upon which more accurate costs can be reasonably estimated and as additional accounting guidelines are issued.

During 2023, provisions for environmental matters - net increased primarily due to new information which impacted the estimate of required remediation at certain Major Sites and other Company locations.

See Note 11 for further details on the Company’s environmental-related activities.

The gain on sale or disposition of assets represents the net realized gain 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.

The loss (gain) on sale or disposition of assets represents the net realized loss (gain) 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

1 unchanged sentence

2023 2022 2021

Investment losses (gains) $ 9.7 $ ( 30.4 ) $ ( 16.4 )

(Gain) loss on extinguishment of debt (see Note 8) — ( 1.4 ) 21.3

Investment (gains) losses $ ( 22.9 ) $ 9.7 $ ( 30.4 )

Loss (gain) on extinguishment of debt (see Note 8) 12.8 — ( 1.4 )

Net expense from banking activities 15.0 12.2 10.3

Foreign currency transaction related losses 33.6 12.0 7.2

Miscellaneous pension expense 4.0 4.4 4.9

Foreign currency transaction related losses - net 80.5 33.6 12.0

Miscellaneous pension and benefit (income) expense ( 21.1 ) 4.0 4.4

Other income ( 48.5 ) ( 39.6 ) ( 29.0 )

1 unchanged sentence

Total $ 65.5 $ 47.0 $ ( 19.5 )

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

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 18 for additional information on the fair value of these investments.

Foreign currency transaction related losses include the impact from foreign currency transactions and net realized (gains) losses from foreign currency option and forward contracts.

Foreign currency transaction related losses - net include the impact from foreign currency transactions, including from highly inflationary economies such as Argentina, and net realized losses from foreign currency option and forward contracts.

During 2023, foreign currency transaction related losses - net increased primarily as a result of the significant devaluation of the Argentine Peso in December 2023 as part of economic reforms implemented by the government of Argentina.

As a result of these actions in Argentina, the Company incurred a loss of $ 41.8 million.

There were no material foreign currency option and forward contracts outstanding at December 31, 2023, 2022 and 2021.

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

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

20 unchanged sentences

Amended returns and refunds 0.2 0.4 0.2

Taxes on non-U.S.

earnings 0.8 0.2 ( 0.4 )

Other - net 0.2 ( 0.5 ) 0.3

Reported effective tax rate 23.2 % 21.5 % 17.1 %

The increase in the effective tax rate for 2022 compared to 2021 was primarily due to a decrease in tax benefits related to employee share-based payments and the net unfavorable impact of various other tax benefits received by the Company in 2022 compared to 2021.

The increase in the effective tax rate for 2023 compared to 2022 was primarily related to an unfavorable change in the jurisdictional mix of earnings.

Significant components of income before income taxes as used for income tax purposes, were as follows:

23 unchanged sentences

Netted against the Company’s other deferred tax assets were valuation allowances of $ 106.6 million, $ 97.5 million and $ 97.2 million at December 31, 2023, 2022 and 2021, respectively.

The Company has $ 15.7 million of domestic net operating loss carryforwards acquired through acquisitions that have expiration dates through tax year 2037, foreign tax credits of $ 18.0 million that expire in calendar years 2028 through 2032 and foreign net operating losses of $ 339.0 million.

The Company has $ 14.6 million of domestic net operating loss

carryforwards acquired through acquisitions that have expiration dates through tax year 2037, foreign tax credits of $ 26.5 million that expire in calendar years 2028 through 2033 and foreign net operating losses of $ 361.7 million.

The foreign net operating losses are related to various jurisdictions that provide for both indefinite carryforward periods and others with carryforward periods that expire between tax years 2023 to 2043.

1 unchanged sentence

federal jurisdiction, and various state and foreign jurisdictions.

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 Company finalized the IRS audit for the 2011 and 2013 through 2016 income tax returns and paid the tax assessment for 2013 through 2016 in the fourth quarter.

The Company expects to pay the remaining assessment related to tax and interest in 2024.

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

13 unchanged sentences

Balance at end of year $ 121.8 $ 242.4 $ 228.5

The increase in unrecognized tax benefits was primarily related to the reversal of benefits recognized from certain positions taken on current and prior year income tax returns filed in U.S.

The decrease in unrecognized tax benefits was primarily settlements related to federal renewable energy tax credit funds with DC Solar Solutions, Inc.

and certain of its affiliates and other adjustments with the IRS in each of the tax years 2011 and 2013 through 2016.

There were also additions in unrecognized tax benefits related to the reversal of benefits recognized from certain positions taken on current and prior year income tax returns filed in U.S.

federal and various state jurisdictions.

These additions were partially offset by various positions taken on prior year income tax returns filed in U.S.

These additions were primarily offset by various positions taken on prior year income tax returns filed in U.S.

and various foreign jurisdictions that were no longer deemed to be at risk.

1 unchanged sentence

Included in the balance of unrecognized tax benefits at December 31, 2023 is $ 8.4 million related to tax positions for which it is reasonably possible that the total amounts could significantly change during the next twelve months.

This amount represents expected settlements related to federal renewable energy tax credit funds with DC Solar Solutions, Inc.

and certain of its affiliates and also includes items currently under review with IRS Appeals in each of the years 2013 through 2016.

This amount represents a decrease in unrecognized tax benefits comprised primarily of items related to federal audits of partnership investments and expiring statutes in federal, foreign and state jurisdictions.

The Company classifies all income tax related interest and penalties as income tax expense.

During the year ended December 31, 2023, there was an increase in income tax interest and penalties of $ 5.9 million.

During the years ended December 31, 2021 and 2020, there was a (decrease) increase in income tax interest and penalties of $( 2.7 ) million and $ 4.0 million, respectively.

During the years ended December 31, 2022 and 2021, there was a increase (decrease) in income tax interest and penalties of $ 10.3 million and $( 2.7 ) million, respectively.

The Company accrued $ 20.4 million, $ 36.6 million and $ 26.4 million at December 31, 2023, 2022 and 2021, respectively, for the potential payment of interest and penalties.

3 unchanged sentences

Net income $ 2,388.8 $ 2,020.1 $ 1,864.4

Average shares outstanding 258.0 262.5 271.3

Weighted average shares outstanding 255.4 258.0 262.5

Basic net income per share $ 9.35 $ 7.83 $ 7.10

Net income $ 2,388.8 $ 2,020.1 $ 1,864.4

Average shares outstanding assuming dilution:

Average shares outstanding 258.0 262.5 271.3

Weighted average shares outstanding assuming dilution:

Weighted average shares outstanding 255.4 258.0 262.5

Stock options and other contingently issuable shares (1)

Average shares outstanding assuming dilution 261.8 267.1 275.8

Weighted average shares outstanding assuming dilution 258.3 261.8 267.1

Diluted net income per share $ 9.25 $ 7.72 $ 6.98

1 unchanged sentence

NOTE 23 – 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 reports its segment information in the same way that management internally organizes its business for assessing performance and making decisions regarding the allocation of resources in accordance with the Segment Reporting Topic of the ASC.

During 2023, the Company realigned its organizational structure to manage the Latin America architectural paint business within the Consumer Brands Group due to the Latin America architectural demand and service models shifting to align more closely with the Consumer Brands Group’s strategy.

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

As a result of this change, The Americas Group was renamed the Paint Stores Group.

All reported segment results have been adjusted retrospectively to reflect this change.

The Company has three reportable operating segments:

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

Factors considered in determining the three Reportable Segments of the Company include the nature of business activities, the management structure directly accountable to the Company’s chief operating decision maker (CODM) for operating and administrative activities, availability of discrete financial information and information presented to the Board of Directors.

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

Factors considered in determining the three Reportable Segments of the Company include the nature of business activities, the management structure directly accountable to the Company’s CODM for operating and administrative activities, availability of discrete financial information and information presented to the Board of Directors.

The Company reports all other business activities and immaterial operating segments that are not reportable in the Administrative segment.

The Company’s CODM has been identified as the Chief Executive Officer because he has final authority over performance assessment and resource allocation decisions.

The Company’s CODM has been identified as the Chief Executive Officer because they have the final authority over performance assessment and resource allocation decisions.

Because of the diverse operations of the Company, the CODM regularly receives discrete financial information about each Reportable Segment as well as a significant amount of additional financial information about certain divisions, business units or subsidiaries of the Company.

The CODM uses all such financial information for performance assessment and resource allocation decisions.

The CODM uses all such financial information for performance assessments and resource allocation decisions.

The CODM evaluates the performance of and allocates resources to the Reportable Segments based on segment profit or loss and cash generated from operations.

The accounting policies of the Reportable Segments are the same as those described in Note 1 of this report.

The Americas Group consisted of 4,931 company-operated specialty paint stores in the United States, Canada, Latin America and the Caribbean region at December 31, 2022.

The accounting policies of the Reportable Segments are the same as those described in Note 1.

The Paint Stores Group consisted of 4,694 company-operated specialty paint stores in the United States, Canada, and the Caribbean region at December 31, 2023.

Each store in this segment is engaged in servicing the needs of architectural and industrial paint contractors and do-it-yourself homeowners.

2 unchanged sentences

In addition, each store sells select purchased associated products.

The Americas Group sells a variety of architectural paints, coatings and related products through dedicated dealers, home centers, distributors, hardware stores and other retailers throughout Latin America.

The Americas Group meets regional customer demands through developing, licensing, manufacturing, distributing and selling a variety of architectural paints, coatings and related products in North and South America.

The loss of any single customer would not have a material adverse effect on the business of this segment.

During 2022, this segment opened 72 net new stores, consisting of 89 new stores opened ( 71 in the United States, 11 in Mexico, 6 in Canada and 1 in South America) and 17 stores closed ( 2 in the United States, 14 in South America and 1 in Mexico).

During 2023, this segment opened 70 net new stores, consisting of 76 new stores opened and 6 stores closed.

In 2022 and 2021, this segment opened 75 and 73 net new stores, respectively.

The CODM uses discrete financial information about The Americas Group, supplemented with information by geographic region, product type and customer type, to assess performance of and allocate resources to The Americas Group as a whole.

In accordance with ASC 280-10-50-9, The Americas Group as a whole is considered the operating segment, and because it meets the criteria in ASC 280-10-50-10, it is also considered a Reportable Segment.

The Consumer Brands Group manufactures and supplies a broad portfolio of branded and private-label architectural paint, stains, varnishes, industrial products, wood finishes products, wood preservatives, applicators, corrosion inhibitors, aerosols, caulks and adhesives to retailers and distributors throughout North America, as well as in China and Europe.

The Consumer Brands Group also supports the Company’s other businesses around the world with new product research and development, manufacturing, distribution and logistics.

Approximately 67 % of the total sales of the Consumer Brands Group in 2022 were intersegment transfers of products primarily sold through The Americas Group.

The CODM uses discrete financial information about the Paint Stores Group, supplemented with information by geographic region, product type and customer type, to assess the performance of and allocate resources to the Paint Stores Group as a whole.

In accordance with ASC

280-10-50-9, the Paint Stores Group as a whole is considered the operating segment, and because it meets the criteria in ASC 280-10-50-10, it is also considered a Reportable Segment.

The Consumer Brands Group manufactures and supplies a broad portfolio of branded and private-label architectural paint, stains, varnishes, industrial products, wood finishes products, wood preservatives, applicators, corrosion inhibitors, aerosols, caulks and adhesives to retailers, including home centers and hardware stores, dedicated dealers and distributors throughout North America, Latin America and Europe.

During 2023, the Company divested a non-core domestic aerosol business and the China architectural business, both part of the Consumer Brands Group (see Note 3).

In 2022, the Consumer Brands Group had a $ 15.5 million pre-tax loss for trademark impairments related to the Restructuring Plan (see Note 7).

Sales and marketing of certain controlled brand and private-label products is performed by a direct sales staff.

The products distributed through third-party customers are intended for resale to the ultimate end-user of the product.

The Consumer Brands Group also consisted of 318 company-operated specialty paint stores in Latin America at December 31, 2023.

Each store in this segment is engaged in servicing the needs of home, commercial and industrial projects to contractors and do-it-yourself customers in Latin America.

These stores market and sell Sherwin-Williams ® and other controlled brand architectural paint and coatings, protective and marine products, OEM product finishes and related products which are branded for the Latin America market.

In addition, each store sells select purchased associated products.

The Consumer Brands Group had sales to certain customers that, individually, may be a significant portion of the sales and related profitability of the segment.

This segment incurred most of the Company’s capital expenditures related to operational efficiencies, capacity and health and safety initiatives at sites currently in operation.

The CODM uses discrete financial information about the Consumer Brands Group, supplemented with information by product type and customer type, to assess performance of and allocate resources to the Consumer Brands Group as a whole.

During 2023, the segment opened 11 net new stores, consisting of 17 stores opened and 6 stores closed.

In 2022 and 2021, this segment (closed) opened ( 3 ) and 12 net new stores, respectively.

The Consumer Brands Group also supports the Company’s other businesses around the world with new product research and development, manufacturing, distribution and logistics.

Approximately 61 % of the total sales of the Consumer Brands Group in 2023 were intersegment transfers of products primarily sold through the Paint Stores Group.

This segment incurred most of the Company’s capital expenditures related to ongoing environmental compliance measures, manufacturing capacity expansion, operational efficiencies and maintenance projects at sites currently in operation.

The CODM uses discrete financial information about the Consumer Brands Group, supplemented with information by geographic region, product type and customer type, to assess the performance of and allocate resources to the Consumer Brands Group as a whole.

In accordance with ASC 280-10-50-9, the Consumer Brands Group as a whole is considered the operating segment, and because it meets the criteria in ASC 280-10-50-10, it is also considered a Reportable Segment.

The Performance Coatings Group develops and sells industrial coatings for wood finishing and general industrial (metal and plastic) applications, automotive refinish, protective and marine coatings, coil coatings, packaging coatings and performance-based resins and colorants worldwide.

This segment licenses certain technology and trade names worldwide.

Sherwin-Williams ® and other controlled brand products are distributed through The Americas Group and this segment’s 317 company-operated branches and by a direct sales staff and outside sales representatives to retailers, dealers, jobbers, licensees and other third-party distributors.

This segment licenses certain technology and trade names worldwide, including Sherwin-Williams ® and other controlled brand products which are distributed through the Paint Stores Group, this segment’s 322 company-operated branches and by a direct sales staff and outside sales representatives to retailers, dealers, jobbers, licensees and other third-party distributors.

The Performance Coatings Group had sales to certain customers that, individually, may be a significant portion of the sales of the segment.

However, the loss of any single customer would not have a material adverse effect on the overall profitability of the segment.

During 2022, this segment added 35 net new branches, consisting of 39 opened or acquired branches and 4 branches closed.

The CODM uses discrete financial information about the Performance Coatings Group, supplemented with information about geographic divisions, business units and subsidiaries, to assess performance of and allocate resources to the Performance Coatings Group as a whole.

During 2023, the segment added 5 net new branches, consisting of 8 opened or acquired branches and 3 branches closed.

The CODM uses discrete financial information about the Performance Coatings Group, supplemented with information about geographic divisions, business units and subsidiaries, to assess the performance of and allocate resources to the Performance Coatings Group as a whole.

In accordance with ASC 280-10-50-9, the Performance Coatings Group as a whole is considered the operating segment, and because it meets the criteria in ASC 280-10-50-10, it is also considered a Reportable Segment.

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.

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 current global headquarters, 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 included a $ 111.9 million pre-tax loss on the Wattyl divestiture recognized during the year ended December 31, 2021.

See Notes 3 and 20 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 included a $ 20.1 million pre-tax gain on the divestiture of a non-core domestic aerosol business and a $ 27.1 million pre-tax loss for the impairment of assets related to the divestiture of China architectural business in 2023 and a $ 111.9 million pre-tax loss on the Wattyl divestiture in 2021.

See Notes 3, 4 and 20 for additional information.

Sales of this segment represented external leasing revenue.

The Administrative segment did not include any significant foreign operations.

1 unchanged sentence

Net external sales of all consolidated foreign subsidiaries were $ 4.428 billion, $ 4.294 billion and $ 4.223 billion for 2023, 2022 and 2021, respectively.

Long-lived assets consisted of Property, plant and equipment, Goodwill, Intangible assets, Operating lease right-of-use assets, Deferred pension assets and Other assets.

Long-lived assets consisted of Property, plant and equipment, net, Goodwill, Intangible assets, net, Operating lease right-of-use assets, deferred pension assets and Other assets.

The aggregate total of long-lived assets for the Company was $ 17.441 billion, $ 16.686 billion and $ 15.613 billion at December 31, 2023, 2022 and 2021, respectively.

2 unchanged sentences

Total assets of consolidated foreign subsidiaries were $ 5.718 billion, $ 5.337 billion and $ 4.653 billion, which represented 24.9 %, 23.6 % and 22.5 % of the Company’s total assets at December 31, 2023, 2022 and 2021, respectively.

No single geographic area outside the United States was significant relative to consolidated net external sales or consolidated long-lived assets.

No single geographic area outside the United States was significant relative to consolidated Net sales or consolidated long-lived assets.

Export sales and sales to any individual customer were each less than 10 percent of consolidated sales to unaffiliated customers during all years presented.

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

Identifiable assets were those directly identified with each reportable segment.

The Administrative segment assets consisted primarily of cash and cash equivalents, investments, deferred pension assets and headquarters property, plant and equipment.

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.

In the reportable segment financial information that follows, Segment profit represents each segment’s Income before income taxes.

Due to the nature of the Company’s integrated manufacturing operations and centralized administrative and information technology support, a substantial amount of allocations are made to determine segment financial information.

Domestic intersegment transfers are 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 are primarily accounted for at values comparable to normal unaffiliated customer sales.

All intersegment transfers are eliminated within the Administrative segment.

The Americas Group Consumer Brands

Group Performance Coatings Group Administrative Consolidated

Net external sales $ 12,661.0 $ 2,690.7 $ 6,793.5 $ 3.7 $ 22,148.9

In 2023, the absorbed manufactured cost standards utilized for domestic intersegment transfers were established inclusive of forecasted cost reductions from planned initiatives.

Deviations from the forecasted cost reductions were recognized within the Consumer Brands Group.

Identifiable assets were those directly identified with each Reportable Segment.

The Administrative segment assets consisted primarily of cash and cash equivalents, investments, deferred pension assets and property, plant and equipment related to the new global headquarters currently under construction.

The segment results in the tables below reflect the segment change described above.

Group Consumer Brands

Group Performance Coatings

Group Administrative Consolidated

Net sales $ 12,839.5 $ 3,365.6 $ 6,843.1 $ 3.7 $ 23,051.9

Intersegment transfers 5,234.0 197.8 ( 5,431.8 ) —

4 unchanged sentences

Income before income taxes $ 2,860.8 $ 309.3 $ 991.6 $ ( 1,051.8 ) $ 3,109.9

% to net external sales 19.2 % 8.4 % 10.8 % 11.6 %

% to net sales 22.3 % 9.2 % 14.5 % 13.5 %

Identifiable assets $ 5,745.3 $ 6,631.8 $ 8,266.6 $ 2,310.7 $ 22,954.4

2 unchanged sentences

Amortization 3.3 72.4 253.0 1.5 330.2

The Americas Group Consumer Brands

Group Consumer Brands

Group Performance Coatings

Group Administrative Consolidated

Net external sales $ 11,217.0 $ 2,721.6 $ 6,003.8 $ 2.2 $ 19,944.6

Net sales $ 11,963.3 $ 3,388.4 $ 6,793.5 $ 3.7 $ 22,148.9

Intersegment transfers 5,214.8 203.7 ( 5,418.5 ) —

4 unchanged sentences

Income before income taxes $ 2,348.1 $ 314.2 $ 734.9 $ ( 824.1 ) $ 2,573.1

% to net external sales 20.0 % 13.2 % 8.1 % 11.3 %

% to net sales 19.6 % 9.3 % 10.8 % 11.6 %

Identifiable assets $ 5,873.6 $ 6,749.6 $ 8,296.8 $ 1,674.0 $ 22,594.0

2 unchanged sentences

Amortization 3.3 79.8 232.0 2.0 317.1

The Americas Group Consumer Brands

Group Consumer Brands

Group Performance Coatings

Group Administrative Consolidated

Net external sales $ 10,383.2 $ 3,053.4 $ 4,922.4 $ 2.7 $ 18,361.7

Net sales $ 10,616.2 $ 3,322.4 $ 6,003.8 $ 2.2 $ 19,944.6

Intersegment transfers 4,183.6 149.7 ( 4,333.3 ) —

4 unchanged sentences

Income before income taxes $ 2,182.2 $ 415.3 $ 486.2 $ ( 835.1 ) $ 2,248.6

% to net external sales 22.1 % 19.0 % 10.2 % 13.7 %

% to net sales 20.6 % 12.5 % 8.1 % 11.3 %

Identifiable assets $ 5,501.3 $ 5,287.7 $ 8,388.6 $ 1,489.1 $ 20,666.7

2 unchanged sentences

Amortization 3.5 83.9 218.9 3.2 309.5

NOTE 24 – SUBSEQUENT EVENT

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

Previously, the Latin America Division was managed and reported within The Americas Group;

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

In addition, the new structure enables The Americas Group to focus on the core U.S.

and Canada stores business.

Beginning with the quarterly reporting for the period ending March 31, 2023, the Company will report the Latin America Division within the Consumer Brands Group and will also reflect the change in the comparable prior period.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data