What changed in this filing

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Item 1. Financial Statements

2024-07-23 compared with 2024-04-30 · 230 added, 135 removed, 611 unchanged (37% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Net sales $ 6,271.5 $ 6,240.6 $ 11,638.8 $ 11,683.0

4 unchanged sentences

Percent to net sales 29.4 % 28.2 % 31.3 % 29.6 %

Other general expense - net 2.0 10.5

Other general income - net ( 33.6 ) ( 32.5 ) ( 31.6 ) ( 22.0 )

Impairment — 34.0 — 34.0

Interest expense 110.8 111.7 213.8 221.0

13 unchanged sentences

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (UNAUDITED)

(in millions) Three Months Ended

(in millions) Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

Net income $ 889.9 $ 793.7 $ 1,395.1 $ 1,271.1

10 unchanged sentences

Comprehensive income $ 818.0 $ 808.2 $ 1,242.5 $ 1,320.4

(1) The three months ended March 31, 2024 and 2023 include unrealized gains (losses), net of taxes, of $ 18.3 million and $( 4.2 ) million, respectively, related to net investment hedges.

(1) The three months ended June 30, 2024 and 2023 include unrealized gains (losses), net of taxes, of $ 5.8 million and $( 8.6 ) million, respectively, related to net investment hedges.

The six months ended June 30, 2024 and 2023 include unrealized gains (losses), net of taxes, of $ 24.1 million and $( 12.8 ) million, respectively, related to net investment hedges.

See Note 12 for additional information.

(2) Net of taxes of $ 1.5 million and $ 1.7 million for the three months ended March 31, 2024 and 2023, respectively.

(3) Net of taxes of $ 0.3 million for the three months ended March 31, 2024 and 2023.

(2) Net of taxes of $ 1.4 million and $ 1.3 million for the three months ended June 30, 2024 and 2023, respectively.

Net of taxes of $ 2.9 million and $ 3.0 million for the six months ended June 30, 2024 and 2023, respectively.

(3) Net of taxes of $ 0.3 million for the three months ended June 30, 2024 and 2023.

Net of taxes of $ 0.6 million for the six months ended June 30, 2024 and 2023.

See notes to condensed consolidated financial statements.

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in millions) March 31,

(in millions) June 30,

2024 December 31,

2023 March 31,

2023 June 30,

Current assets:

28 unchanged sentences

252.3 million, 254.5 million and 257.1 million shares outstanding

at March 31, 2024, December 31, 2023 and March 31, 2023, respectively

at June 30, 2024, December 31, 2023 and June 30, 2023, respectively

92.1 91.8 91.4

8 unchanged sentences

STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS (UNAUDITED)

(in millions) Three Months Ended

2024 March 31,

(in millions) Six Months Ended

2024 June 30,

OPERATING ACTIVITIES

4 unchanged sentences

Amortization of intangible assets 163.6 166.7

Gain on divestiture of business — ( 20.1 )

Impairment — 34.0

Stock-based compensation expense 54.7 46.0

1 unchanged sentence

Gain on sale or disposition of assets ( 23.2 ) ( 20.8 )

Provisions for environmental-related matters 3.6 12.7

Provisions for environmental-related matters - net ( 10.5 ) 13.3

Other postretirement benefit plan net cost ( 12.1 ) ( 9.0 )

9 unchanged sentences

Acquisition of business, net of cash acquired — ( 23.2 )

Proceeds from divestiture of businesses — 33.0

Proceeds from sale of assets 9.3 47.2

Other ( 56.7 ) ( 58.9 )

1 unchanged sentence

FINANCING ACTIVITIES

Net increase in short-term borrowings 882.5 503.0

Net increase (decrease) in short-term borrowings 984.7 ( 171.6 )

Payments of long-term debt ( 500.0 ) —

Payments of cash dividends ( 361.1 ) ( 312.8 )

5 unchanged sentences

Effect of exchange rate changes on cash ( 10.9 ) 3.5

Net decrease in cash and cash equivalents ( 96.9 ) ( 47.4 )

Net (decrease) increase in cash and cash equivalents ( 76.8 ) 10.6

Cash and cash equivalents at beginning of year 276.8 198.8

20 unchanged sentences

Balance at March 31, 2024 $ 92.0 $ 4,298.8 $ 5,611.0 $ ( 5,793.1 ) $ ( 705.0 ) $ 3,503.7

Net income 889.9 889.9

Other comprehensive loss ( 71.9 ) ( 71.9 )

Treasury stock purchased ( 434.4 ) ( 434.4 )

Stock-based compensation activity 0.1 44.4 ( 0.2 ) 44.3

Other adjustments ( 1.2 ) ( 1.2 )

Cash dividends -- $ 0.715 per share

( 178.6 ) ( 178.6 )

Balance at June 30, 2024 $ 92.1 $ 4,342.0 $ 6,322.3 $ ( 6,227.7 ) $ ( 776.9 ) $ 3,751.8

(in millions, except per share data) Common

12 unchanged sentences

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

Net income 793.7 793.7

Other comprehensive income 14.5 14.5

Treasury stock purchased ( 234.2 ) ( 234.2 )

Stock-based compensation activity 0.1 47.5 ( 0.1 ) 47.5

Other adjustments ( 0.9 ) ( 0.9 )

Cash dividends -- $ 0.605 per share

( 156.3 ) ( 156.3 )

Balance at June 30, 2023 $ 91.4 $ 4,044.6 $ 4,481.5 $ ( 4,335.1 ) $ ( 651.3 ) $ 3,631.1

See notes to condensed consolidated financial statements.

2 unchanged sentences

(millions of dollars, unless otherwise noted)

Periods ended March 31, 2024 and 2023

Periods ended June 30, 2024 and 2023

NOTE 1 - BASIS OF PRESENTATION

4 unchanged sentences

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

The results of operations for the three months ended March 31, 2024 are not indicative of the results to be expected for the full year as business is seasonal in nature with the majority of Net sales for the Reportable Segments traditionally occurring during the second and third quarters.

The results of operations for the three and six months ended June 30, 2024 are not indicative of the results to be expected for the full year as business is seasonal in nature with the majority of Net sales for the Reportable Segments traditionally occurring during the second and third quarters.

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

Since December 31, 2023, a ccounting estimates were revised as necessary during the first three months of 2024 based on new information and changes in facts and circumstances.

Certain amounts in the condensed consolidated financial statements for the three months ended March 31, 2023 have been reclassified to conform to the 2024 presentation.

Since December 31, 2023, a ccounting estimates were revised as necessary during the first six months of 2024 based on new information and changes in facts and circumstances.

Certain amounts in the condensed consolidated financial statements for the three and six months ended June 30, 2023 have been reclassified to conform to the 2024 presentation.

The following represents updates to certain significant accounting policy disclosures.

2 unchanged sentences

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.

Liabilities associated with these arrangements are recorded in Accounts payable on the Consolidated Balance Sheets and amounted to $ 238.7 million, $ 213.1 million and $ 251.3 million at March 31, 2024, December 31, 2023 and March 31, 2023, respectively.

Liabilities associated with these arrangements are recorded in Accounts payable on the Consolidated Balance Sheets and amounted to $ 242.6 million, $ 213.1 million and $ 242.3 million at June 30, 2024, December 31, 2023 and June 30, 2023, respectively.

Non-Traded Investments

6 unchanged sentences

Both the amortization and related tax credits and other tax benefits are recognized in Income tax expense on the Statements of Consolidated Net Income.

In the three months ended March 31, 2024, the Company received tax credits and other tax benefits of $ 21.8 million and proportionally recognized $ 20.1 million in the amortization of Non-Traded Investments.

In the three months ended March 31, 2023, the Company received tax credits and other tax benefits of $ 24.3 million and proportionally recognized $ 19.4 million in the amortization of Non-Traded Investments.

The tax credits and other tax benefits received are presented in Deferred income taxes and as a change in Accrued taxes within Operating activities on the Statements of Condensed Consolidated Cash Flows.

Three Months Ended Six Months Ended

June 30, June 30, June 30, June 30,

2024 2023 2024 2023

Amortization of Non-Traded Investments $ 22.3 $ 20.3 $ 42.4 $ 39.7

Tax credits and other tax benefits received 25.6 24.9 47.4 49.2

The carrying value of Non-Traded Investments is recorded in Other assets.

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

In addition, the associated impact of related tax credits and other tax benefits are recorded as a reduction of Accrued taxes and a net deferred tax asset within Deferred income taxes.

The following table summarizes the balances related to the Non-Traded Investments and related tax credits and other tax benefits:

March 31, December 31, March 31,

In addition, the associated impact of related tax credits and other tax benefits are recorded as a reduction of Accrued taxes and a net deferred income tax asset within Deferred income taxes.

On the Statements of Condensed Consolidated Cash Flows, the tax credits and other tax benefits are presented as a change in Accrued taxes and in Deferred income taxes within Operating activities.

Tax credits and other tax benefits reduced Accrued taxes by $ 47.4 million, $ 94.8 million and $ 49.2 million at June 30, 2024, December 31, 2023 and June 30, 2023, respectively.

The following table summarizes the balances related to the Non-Traded Investments and related tax credits and other tax benefits on the Consolidated Balance Sheets:

June 30, December 31, June 30,

2024 2023 2023

2 unchanged sentences

Other long-term liabilities 613.5 568.2 530.8

Reduction of Accrued taxes 21.8 94.8 24.3

Net deferred income tax asset 25.8 19.4 22.6

17 unchanged sentences

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.

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

The Company is evaluating the impact of adopting this ASU.

NOTE 3 - ACQUISITIONS AND DIVESTITURES

During the second quarter of 2024, the Company signed a purchase agreement to acquire a metal packaging coatings business.

The business develops, manufactures and sells coatings for the food and household product markets.

The transaction is subject to customary closing conditions and is expected to close in the second half of 2024.

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

Closed in Prior Year

3 unchanged sentences

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

The Company expects to finalize the purchase price allocation for the acquisition

within the allowable measurement period.

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.

1 unchanged sentence

Closed in Prior Year

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

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

This transaction resulted in the recognition of a $ 20.1 million gain within the Administrative function and was recorded within Other general income - net in the Statements of Consolidated Income.

During the third quarter of 2023, the Company completed the divestiture of the China architectural business within the Consumer Brands Group.

An immaterial working capital adjustment was finalized during the first quarter of 2024.

As of June 30, 2023, the pending divestiture was determined to not meet the criteria of a discontinued operation as it did not represent a strategic shift for the Company, but the business did meet the criteria to be classified as held for sale in accordance with the Property, Plant, and Equipment Topic of the ASC.

As such, the assets and liabilities of the China architectural business as of June 30, 2023 were measured at the lower of carrying value or fair value less cost to sell.

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 in the second quarter of 2023 related to China architectural trademarks using the royalty savings valuation method.

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.

As a result of this comparison, the Company recorded an additional impairment charge of $ 27.1 million within the Administrative function in the second quarter of 2023 and classified the remaining assets as Other current assets and remaining liabilities as Other accruals at June 30, 2023.

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

The assets, liabilities and valuation adjustment held for sale at June 30, 2023 were as follows:

June 30, 2023

Tangible assets $ 22.5

Intangible assets 93.3

Valuation adjustment ( 27.1 )

Total assets $ 88.7

Total liabilities $ 20.9

NOTE 4 - INVENTORIES

Included in Inventories were the following:

March 31, December 31, March 31,

June 30, December 31, June 30,

2024 2023 2023

9 unchanged sentences

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

March 31, December 31, March 31,

June 30, December 31, June 30,

2024 2023 2023

7 unchanged sentences

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

See Note 3 for information on the impairment test performed as a result of the China architectural business classification change to held for sale as of June 30, 2023.

NOTE 6 - DEBT

The following table summarizes the Company’s outstanding debt:

March 31, December 31, March 31,

June 30, December 31, June 30,

2024 2023 2023

2 unchanged sentences

Total debt outstanding $ 10,338.8 $ 9,850.9 $ 10,401.4

During the second quarter of 2024, the Company paid the principal of $ 500 million related to its 3.125 % Senior Notes due June 1, 2024.

Short-Term Borrowings

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

At March 31, 2024 , the Company had unused capacity under its various credit agreements of $ 2.445 billion.

At June 30, 2024 , the Company had unused capacity under its various credit agreements of $ 2.343 billion.

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

March 31, December 31, March 31,

June 30, December 31, June 30,

2024 2023 2023

15 unchanged sentences

2024 2023 2024 2023 2024 2023

Three Months Ended March 31:

Three Months Ended June 30:

Service cost $ 0.9 $ 0.8 $ 1.2 $ 1.0 $ 0.1 $ 0.2

2 unchanged sentences

Amortization of prior service cost (credit) 0.5 0.4 ( 0.1 ) — ( 5.9 ) ( 6.0 )

Amortization of actuarial gains ( 0.1 ) ( 0.3 ) ( 0.4 ) ( 0.1 )

Amortization of actuarial (gains) losses — — ( 0.2 ) ( 0.3 ) ( 0.1 ) 0.1

Net periodic benefit cost (credit) $ 0.4 $ 0.4 $ 1.1 $ 0.4 $ ( 4.2 ) $ ( 3.9 )

Six Months Ended June 30:

Service cost $ 1.8 $ 1.6 $ 2.4 $ 2.1 $ 0.2 $ 0.3

Interest cost 2.4 2.3 6.0 5.7 3.4 3.7

Expected return on assets ( 4.2 ) ( 3.7 ) ( 5.6 ) ( 6.2 ) — —

Amortization of prior service cost (credit) 1.0 0.7 ( 0.1 ) ( 0.1 ) ( 11.9 ) ( 12.0 )

Amortization of actuarial (gains) losses ( 0.1 ) — ( 0.5 ) ( 0.7 ) ( 0.2 ) 0.1

Net periodic benefit cost (credit) $ 0.9 $ 0.9 $ 2.2 $ 0.8 $ ( 8.5 ) $ ( 7.9 )

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

16 unchanged sentences

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 March 31, 2024 and 2023, the Company had accruals reported on the balance sheet as Other long-term liabilities of $ 224.8 million and $ 248.2 million , respectively.

Estimated costs of current investigation and remediation activities of $ 92.4 million and $ 50.2 million are included in Other accruals at March 31, 2024 and 2023 , respectively.

At June 30, 2024 and 2023, the Company had accruals reported on the balance sheet as Other long-term liabilities of $ 222.1 million and $ 240.7 million , respectively.

Estimated costs of current investigation and remediation activities of $ 94.4 million and $ 50.2 million are included in Other accruals at June 30, 2024 and 2023 , respectively.

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

If the Company's future loss contingency is ultimately determined to be at the unaccrued maximum of the estimated range of possible outcomes for every site for which costs can be reasonably estimated, the Company's accrual for environmental-related activities would be $ 92.9 million higher than the minimum accruals at March 31, 2024.

Four of the Company’s currently and formerly owned manufacturing sites (Major Sites) account for the majority of the accrual for environmental-related activities and the unaccrued maximum of the estimated range of possible outcomes at March 31, 2024 .

At March 31, 2024 , $ 268.6 million, or 84.7 % of the total accrual, related directly to the Major Sites.

In the aggregate unaccrued maximum of $ 92.9 million at March 31, 2024 , $ 68.9 million, or 74.2 %, related to the Major Sites.

If the Company's future loss contingency is ultimately determined to be at the unaccrued maximum of the estimated range of possible outcomes for every site for which costs can be reasonably estimated, the Company's accrual for environmental-related activities would be $ 91.4 million higher than the minimum accruals at June 30, 2024.

At June 30, 2024 , $ 266.4 million, or 84.4 % of the total accrual, related directly to the Major Sites.

In the aggregate unaccrued maximum of $ 91.4 million at June 30, 2024 , $ 67.8 million, or 74.2 %, related to the Major Sites.

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

17 unchanged sentences

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

At March 31, 2024 , the Company did not have material loss contingency accruals related to unasserted claims.

At June 30, 2024 , the Company did not have material loss contingency accruals related to unasserted claims.

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

15 unchanged sentences

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.

Net proceeds are recognized within the Financing Activities section in the Statements of Consolidated Cash Flows.

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 completion of construction.

During the first quarter of 2024 and 2023, the Company received $ 77.0 million and $ 66.5 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 on the Consolidated Balance Sheets was $ 594.0 million and $ 274.2 million at March 31, 2024 and March 31, 2023, respectively.

The short-term portion of the liability recorded in Other accruals was $ 43.3 million and $ 24.8 million at March 31, 2024 and March 31, 2023, respectively.

During the three months ended March 31, 2024 and 2023, interest of $ 9.4 million and $ 4.0 million, respectively, was capitalized within the long-term portion of the liability in Other long-term liabilities.

The following table summarizes the activity related to this transaction during the three and six months ended June 30, 2024 and 2023:

Three Months Ended Six Months Ended

June 30, June 30, June 30, June 30,

2024 2023 2024 2023

Proceeds received $ 84.5 $ 72.2 $ 161.5 $ 138.7

Capitalized interest (1)

10.8 5.2 20.2 9.2

(1) Interest is capitalized within Other long-term liabilities.

The financing obligation for the new headquarters was $ 680.1 million and $ 347.2 million at June 30, 2024 and June 30, 2023, respectively.

The short-term portion of the liability recorded in Other accruals was $ 46.6 million and $ 29.8 million at June 30, 2024 and June 30, 2023, respectively.

See Note 11 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 for more information concerning real estate financing.

21 unchanged sentences

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.

In addition, any potential liability that may result from any changes to

legislation and regulations cannot reasonably be estimated.

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

Due to the uncertainties associated with the amount of any such liability and/or the nature of any other remedy which may be imposed in such litigation, any potential liability determined to be attributable to the Company arising out of such litigation may have a material adverse effect on the Company’s results of operations, liquidity or financial condition.

9 unchanged sentences

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 .

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 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 o ral 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.

and Lehigh and Montgomery Counties in Pennsylvania.

Except for the California Proceedings in which the Company reached a court-approved agreement in 2019 after nearly twenty years of litigation, all of those legal proceedings have been concluded in favor of the Company and other defendants at various stages in the proceedings.

Most recently, on May 7, 2024, as further described below in “Wisconsin Proceedings,” the plaintiffs in the Gibson and Valoe cases filed amended complaints alleging, in part, public nuisance claims.

Litigation Seeking Damages from Alleged Personal Injury .

9 unchanged sentences

du Pont de Nemours).

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

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.

2 unchanged sentences

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.

American Cyanamid, et al.;

Ernest Gibson v.

American Cyanamid, et al.;

Dijonae Trammel, et al.

American Cyanamid, et al., and Deziree Valoe, et al.

American Cyanamid, et al.).

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 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.

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 March 4, 2024, the Seventh Circuit denied all of the plaintiffs’ request for a stay pending a petition for writ of certiorari and issued its mandate on March 11, 2024.

Upon remand of the cases filed by the three remaining plaintiffs, the Company and the other defendants filed a motion for summary judgment on March 12, 2024.

On April 3, 2024, the three plaintiffs filed a motion to amend their pleadings and to stay defendants’ renewed motion for summary judgment.

On April 22, 2024, the district court granted plaintiffs’ motion to amend their pleadings to the extent that plaintiffs may file an amended complaint on or before May 7, 2024.

The district court denied plaintiffs’ motion to stay defendants’ summary judgment but extended plaintiffs’ deadline for responding to defendants’ summary judgment motion to June 13, 2024.

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 in the Gibson and Valoe cases, which cases were remanded to the district court for further proceedings.

Following remand of the Gibson and Valoe cases, the three remaining plaintiffs filed amended complaints on May 7, 2024, alleging strict liability, negligence, and public nuisance claims.

The defendants filed motions to dismiss the plaintiffs’ amended complaints on June 20, 2024.

In a separate proceeding, on August 24, 2021, the plaintiff in Arrieona Beal v.

Hattie and Jerry Mitchell 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.

Plaintiff previously had 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.

The plaintiff previously had sued her landlords.

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.

The parties are conducting discovery, and the state court held a scheduling conference on April 22, 2024.

Plaintiff has reported that she would like to file a motion for partial judgment on the pleadings and a motion hearing has been scheduled for August 6, 2024.

On January 10, 2024, one of the landlord defendants filed a counterclaim and

cross-claim against all parties.

On May 15, 2024, the plaintiff filed a motion for partial judgment on the pleadings to strike the Company and other manufacturing defendants’ affirmative defenses, which motion the defendants have moved to strike.

The manufacturing defendants’ motion is set for hearing on August 6, 2024, and the plaintiff’s motion will be heard subsequently, if at all.

Insurance coverage litigation.

18 unchanged sentences

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

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

former manufacturing plant and related facilities.

The parties are conducting expert discovery.

Trial is scheduled to start on October 15, 2024.

The parties have been conducting expert discovery.

Trial is scheduled to start on March 15, 2025.

NOTE 10 - SHAREHOLDERS' EQUITY

5 unchanged sentences

First Quarter $ 0.715 $ 182.5 $ 0.605 $ 156.5

Second Quarter 0.715 178.6 0.605 156.3

Total $ 1.43 $ 361.1 $ 1.21 $ 312.8

Treasury Stock

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

As of March 31, 2024, the Company had remaining authorization from its Board of Directors to purchase 37.9 million shares of its common stock.

The table below summarizes share repurchases during the three months ended March 31, 2024 and 2023:

Three Months Ended

As of June 30, 2024, the Company had remaining authorization from its Board of Directors to purchase 36.5 million shares of its common stock.

The table below summarizes share repurchases during the three and six months ended June 30, 2024 and 2023:

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

Treasury stock purchases (in millions) $ 434.4 $ 234.2 $ 979.9 $ 535.9

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Other Activity

During the three months ended March 31, 2024, 638,201 stock options were exercised at a weighted average price per share of $ 125.58 .

During the six months ended June 30, 2024, 734,266 stock options were exercised at a weighted average price per share of $ 128.72 .

In addition, 119,731 restricted stock units vested during the same period.

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( 8.9 ) ( 1.8 ) ( 10.7 )

Balance at March 31, 2024 $ ( 792.2 ) $ 59.8 $ 27.4 $ ( 705.0 )

(1) Foreign currency translation adjustments include changes in the fair value of cross currency swap contracts of $ 18.3 million during the three months ended March 31, 2024.

(2) Pension and other postretirement benefit adjustments are net of taxes of $ 1.5 million for the three months ended March 31, 2024.

(3) Unrealized net gains on cash flow hedges are net of taxes of $ 0.3 million for the three months ended March 31, 2024.

Balance at June 30, 2024 $ ( 858.8 ) $ 55.4 $ 26.5 $ ( 776.9 )

(1) Foreign currency translation adjustments include changes in the fair value of cross currency swap contracts of $ 24.1 million during the six months ended June 30, 2024.

(2) Pension and other postretirement benefit adjustments are net of taxes of $ 2.9 million for the six months ended June 30, 2024.

(3) Unrealized net gains on cash flow hedges are net of taxes of $ 0.6 million for the six months ended June 30, 2024.

See Statements of Consolidated Comprehensive Income.

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( 9.0 ) ( 1.8 ) ( 10.8 )

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

(1) Foreign currency translation adjustments include changes in the fair value of cross currency swap contracts of $( 4.2 ) million during the three months ended March 31, 2023.

(2) Pension and other postretirement benefit adjustments are net of taxes of $ 1.7 million for the three months ended March 31, 2023.

(3) Unrealized net gains on cash flow hedges are net of taxes of $ 0.3 million for the three months ended March 31, 2023.

Balance at June 30, 2023 $ ( 750.7 ) $ 69.3 $ 30.1 $ ( 651.3 )

(1) Foreign currency translation adjustments include changes in the fair value of cross currency swap contracts of $( 12.8 ) million during the six months ended June 30, 2023.

(2) Pension and other postretirement benefit adjustments are net of taxes of $ 3.0 million for the six months ended June 30, 2023.

(3) Unrealized net gains on cash flow hedges are net of taxes of $ 0.6 million for the six months ended June 30, 2023.

See Statements of Consolidated Comprehensive Income.

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

The outstanding contracts as of March 31, 2024 are summarized in the table below.

The outstanding contracts as of June 30, 2024 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

May 21, 2024 175.0 June 1, 2027

November 8, 2021 162.7 June 1, 2027

May 10, 2024 100.0 June 1, 2027

May 21, 2024 225.0 August 15, 2029

December 7, 2023 150.0 August 15, 2029

In May 2024, the Company settled its $ 500.0 million U.S.

Dollar to Euro cross currency swap contract entered into on February 13, 2020.

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

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

See Note 13 for additional information on the fair value of these contracts.

March 31, December 31, March 31,

June 30, December 31, June 30,

2024 2023 2023

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

The following table summarizes the unrealized gains (losses) for the three months ended March 31, 2024 and 2023.

Three Months Ended

March 31, March 31,

The following table summarizes the unrealized gains (losses) for the three and six months ended June 30, 2024 and 2023.

Three Months Ended Six Months Ended

June 30, June 30, June 30, June 30,

2024 2023 2024 2023

Gains (losses) $ 7.7 $ ( 11.3 ) $ 32.0 $ ( 16.9 )

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

There were no material foreign currency option and forward contracts outstanding at March 31, 2024, December 31, 2023 and March 31, 2023.

There were no material foreign currency option and forward contracts outstanding at June 30, 2024 and June 30, 2023.

NOTE 13 - FAIR VALUE MEASUREMENTS

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Significant unobservable inputs

There were no assets and liabilities measured at fair value on a recurring basis classified as Level 3 at March 31, 2024 and December 31, 2023.

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

There were no assets and liabilities measured at fair value on a recurring basis classified as Level 3 at June 30, 2024 and December 31, 2023.

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

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

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

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Net investment hedges 8.5 — 8.5 — — — — —

Available-for-sale debt securities 4.7 4.7 —

$ 102.3 $ 93.8 $ 8.5 $ — $ 84.7 $ 84.7 $ — $ —

Net investment hedges $ 0.1 $ — $ 0.1 $ — $ 24.4 $ — $ 24.4 $ —

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.

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 Topics of the ASC.

1 unchanged sentence

The deferred compensation plan assets also include partnership funds measured using net asset value (or its equivalent) as a practical expedient, which are not classified in the fair value hierarchy.

As of March 31, 2024 and December 31, 2023, the fair value of the partnership funds was $ 6.6 million and $ 6.4 million, respectively.

The cost basis of all investments within the deferred compensation plan was $ 78.1 million and $ 76.3 million at March 31, 2024 and December 31, 2023, respectively.

As of June 30, 2024 and December 31, 2023, the fair value of the partnership funds was $ 6.6 million and $ 6.4 million, respectively.

The cost basis of all investments within the deferred compensation plan was $ 80.3 million and $ 76.3 million at June 30, 2024 and December 31, 2023, respectively.

The net investment hedges represent the fair value of outstanding cross currency swap contracts (see Note 12).

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

The available-for-sale debt securities consist of bonds issued by a foreign government and mature in 2027.

The fair value is based on pricing models that use observable data from a market with limited activity.

The cost basis at March 31, 2024 was $ 6.7 million.

The fair value of the Company’s publicly traded debt is based on quoted market prices.

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The following table summarizes the carrying amounts and fair values of the Company’s publicly traded debt and non-publicly traded debt.

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Value Carrying

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Balance at December 31, 2023 $ 2,467.9 $ 46.2 $ 151.7 $ 365.7 $ 3.8

Balance at March 31, 2024 2,809.1 61.5 226.3 254.0 4.7

Balance at June 30, 2024 3,048.1 60.8 223.7 306.3 4.0

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

13 unchanged sentences

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

Three Months Ended

Six Months Ended

Beginning balance $ 59.6 $ 56.6

3 unchanged sentences

NOTE 15 - OTHER

Other general expense - net

Included in Other general expense - net were the following:

Other general income - net

Included in Other general income - net were the following:

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Provisions for environmental matters - net $ ( 14.1 ) $ 0.6 $ ( 10.5 ) $ 13.3

Gain on divestiture of business (see Note 3) — ( 20.1 ) — ( 20.1 )

Gain on sale or disposition of assets ( 19.8 ) ( 16.2 ) ( 23.2 ) ( 20.8 )

Other 0.3 3.2 2.1 5.6

Other general expense - net $ 2.0 $ 10.5

Other general income - net $ ( 33.6 ) $ ( 32.5 ) $ ( 31.6 ) $ ( 22.0 )

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

Environmental-related accruals are not recorded net of insurance proceeds in accordance with the Offsetting Subtopic of the Balance Sheet Topic of the ASC.

Provisions for environmental matters - net for the three and six months ended June 30, 2024 included an immaterial amount of insurance proceeds related to environmental cleanup at a current manufacturing site.

See Note 8 for further details on the Company’s environmental-related activities.

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Net investment gains $ ( 3.8 ) $ ( 15.5 ) $ ( 8.9 ) $ ( 18.7 )

Net expense from banking activities 4.4 3.9 7.7 7.8

Foreign currency transaction related losses - net 7.6 6.8

Foreign currency transaction related (gains) losses - net ( 4.6 ) 16.8 3.0 23.6

Miscellaneous periodic benefit income ( 4.9 ) ( 5.1 ) ( 9.8 ) ( 10.2 )

4 unchanged sentences

See Note 13 for additional information on the fair value of these investments.

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.

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

See Note 12 for additional information regarding these foreign currency contracts.

1 unchanged sentence

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

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

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

NOTE 16 - INCOME TAXES

The effective tax rate was 21.1 % for the first quarter of 2024, compared to 22.3 % for the first quarter of 2023.

The decrease in the effective tax rate was primarily due to a more favorable impact of tax benefits related to employee share-based payments in the first quarter of 2024 compared to the same period last year.

This benefit was partially offset by unfavorable audit settlements in the first quarter of 2024.

The effective tax rate was 24.2 % and 23.1 % for the second quarter and first six months of 2024, respectively, compared to 21.6 % and 21.9 % for the second quarter and first six months of 2023, respectively.

The increase in the effective tax rate for the second quarter was primarily due to a favorable adjustment in the second quarter of 2023 related to the divestiture of the China architectural business and a less favorable impact from tax benefits related to employee share-based payments.

For the first six months, the increase in the effective tax rate was primarily related to a favorable adjustment related to the divestiture of the China architectural business in the second quarter of 2023, partially offset by a more favorable impact from tax benefits related to employee share-based payments during the first six months of 2024.

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

3 unchanged sentences

At December 31, 2023, the Company had accrued $ 20.4 million for the potential payment of income tax interest and penalties.

There were no significant changes to any of the balances of unrecognized tax benefits at December 31, 2023 during the three months ended March 31, 2024.

In the second quarter of 2024, the Company agreed to a Notice of Proposed Adjustment by the IRS for $ 28.7 million related to certain adjustments for 2017 through 2019, and is adequately reserved.

There were no significant changes to any of the balances of unrecognized tax benefits at December 31, 2023 during the six months ended June 30, 2024.

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

1 unchanged sentence

The Company finalized the IRS audit for the 2013 through 2016 income tax returns in 2023 and paid the related assessments in the fourth quarter of 2023 and first quarter of 2024.

The Company finalized the IRS audit for the 2011 income tax return in 2023 and expects to pay the related assessment in 2024.

The Company finalized the IRS audit for the 2011 income tax return in 2023 and paid the tax assessment in the second quarter of 2024.

The Company expects to pay the remaining portion related to interest in 2024.

The IRS is currently auditing the Company’s 2017 through 2019 income tax returns.

As of March 31, 2024, the federal statute of limitations has not expired for the 2017 through 2023 tax years.

At March 31, 2024, the Company is subject to non-U.S.

As of June 30, 2024, the federal statute of limitations has not expired for the 2017 through 2023 tax years.

At June 30, 2024, the Company is subject to non-U.S.

income tax examinations for the tax years of 2014 through 2023.

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Net income $ 889.9 $ 793.7 $ 1,395.1 $ 1,271.1

5 unchanged sentences

Stock options and other contingently issuable shares (1)

3.2 2.9 3.3 3.0

Average shares outstanding assuming dilution 254.2 258.9 255.1 259.3

Diluted net income per share $ 3.50 $ 3.07 $ 5.47 $ 4.90

(1) There were 0.1 million and 2.8 million of stock options and other contingently issuable shares excluded due to their anti-dilutive effect for the three months ended March 31, 2024 and 2023, respectively.

(1) There were 0.1 million of stock options and other contingently issuable shares excluded due to their anti-dilutive effect for the three an d six months ended June 30, 2024.

There were 2.0 million and 2.8 million of stock options and other contingently issuable shares exclud ed due to their anti-dilutive effect for the three and six months ended June 30, 2023, respectively.

NOTE 18 - REPORTABLE SEGMENT INFORMATION

3 unchanged sentences

Refer to Note 23 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 for further details on the Company's Reportable Segments.

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

Group Consumer Brands

8 unchanged sentences

Income before income taxes $ 907.1 $ 204.4 $ 301.5 $ ( 239.6 ) $ 1,173.4

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Group Consumer Brands

8 unchanged sentences

Income before income taxes $ 849.3 $ 110.3 $ 272.7 $ ( 220.2 ) $ 1,012.1

Six Months Ended June 30, 2024

Group Consumer Brands

Group Performance

Group Administrative Consolidated

Net sales $ 6,492.9 $ 1,655.3 $ 3,488.3 $ 2.3 $ 11,638.8

Intersegment transfers — 2,661.7 43.8 ( 2,705.5 ) —

Total net sales and intersegment transfers $ 6,492.9 $ 4,317.0 $ 3,532.1 $ ( 2,703.2 ) $ 11,638.8

Segment profit $ 1,400.3 $ 357.8 $ 539.2 $ 2,297.3

Interest expense $ ( 213.8 ) ( 213.8 )

Administrative expenses and other ( 270.1 ) ( 270.1 )

Income before income taxes $ 1,400.3 $ 357.8 $ 539.2 $ ( 483.9 ) $ 1,813.4

Six Months Ended June 30, 2023

Group Consumer Brands

Group Performance

Group Administrative Consolidated

Net sales $ 6,357.8 $ 1,818.5 $ 3,504.7 $ 2.0 $ 11,683.0

Intersegment transfers — 2,687.1 109.8 ( 2,796.9 ) —

Total net sales and intersegment transfers $ 6,357.8 $ 4,505.6 $ 3,614.5 $ ( 2,794.9 ) $ 11,683.0

Segment profit $ 1,376.0 $ 204.1 $ 491.6 $ 2,071.7

Interest expense $ ( 221.0 ) ( 221.0 )

Administrative expenses and other ( 223.8 ) ( 223.8 )

Income before income taxes $ 1,376.0 $ 204.1 $ 491.6 $ ( 444.8 ) $ 1,626.9

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

5 unchanged sentences

The manufactured cost standards established at the beginning of 2024 did not include forecasted cost reductions.

Net sales of all consolidated foreign subsidiaries were $ 1.103 billion and $ 1.087 billion for the three months ended March 31, 2024 and 2023, respectively.

Long-lived assets of these subsidiaries totaled $ 3.524 billion and $ 3.458 billion at March 31, 2024 and 2023, respectively.

Net sales of all consolidated foreign subsidiaries were $ 1.143 billion and $ 1.150 billion for the three months ended June 30, 2024 and 2023, respectively.

Net external sales of all consolidated foreign subsidiaries were $ 2.246 billion and $ 2.237 billion for the six months ended June 30, 2024 and 2023, respectively.

Long-lived assets of these subsidiaries totaled $ 3.456 billion and $ 3.348 billion at June 30, 2024 and 2023, respectively.

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

3 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements