What changed in this filing

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Item 1. Financial Statements

2024-10-22 compared with 2024-07-23 · 198 added, 159 removed, 682 unchanged (34% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

5 unchanged sentences

Percent to net sales 30.7 % 28.7 % 31.1 % 29.3 %

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

Other general expense (income) - net 0.7 61.9 ( 30.9 ) 39.9

Impairment — — — 34.0

1 unchanged sentence

Interest income ( 2.6 ) ( 5.1 ) ( 9.6 ) ( 15.8 )

Other income - net ( 32.0 ) ( 5.8 ) ( 39.7 ) ( 9.0 )

Other expense (income) - net 9.5 ( 8.0 ) ( 30.2 ) ( 17.0 )

Income before income taxes 1,022.8 1,009.0 2,836.2 2,635.9

10 unchanged sentences

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (UNAUDITED)

(in millions) Three Months Ended Six Months Ended

June 30, June 30,

(in millions) Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

Net income $ 806.2 $ 761.5 $ 2,201.3 $ 2,032.6

Other comprehensive (loss) income, net of tax:

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments (1)

6 unchanged sentences

( 0.9 ) ( 0.9 ) ( 2.7 ) ( 2.7 )

Other comprehensive (loss) income ( 71.9 ) 14.5 ( 152.6 ) 49.3

Other comprehensive income (loss) 100.7 ( 105.1 ) ( 51.9 ) ( 55.8 )

Comprehensive income $ 906.9 $ 656.4 $ 2,149.4 $ 1,976.8

(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.

(1) The three months ended September 30, 2024 and 2023 include unrealized (losses) gains, net of taxes, of $( 31.4 ) million and $ 24.2 million, respectively, related to net investment hedges.

The nine months ended September 30, 2024 and 2023 include unrealized (losses) gains, net of taxes, of $( 7.3 ) million and $ 11.4 million, respectively, related to net investment hedges.

See Note 12 for additional information.

(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.

(2) Net of taxes of $ 1.6 million for the three months ended September 30, 2024 and 2023.

Net of taxes of $ 4.5 million and $ 4.6 million for the nine months ended September 30, 2024 and 2023, respectively.

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

Net of taxes of $ 0.9 million for the nine months ended September 30, 2024 and 2023.

See notes to condensed consolidated financial statements.

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in millions) June 30,

(in millions) September 30,

2024 December 31,

2023 June 30,

2023 September 30,

Current assets:

28 unchanged sentences

251.9 million, 254.5 million and 256.0 million shares outstanding

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

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

92.4 91.8 91.7

8 unchanged sentences

STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS (UNAUDITED)

(in millions) Six Months Ended

2024 June 30,

(in millions) Nine Months Ended

September 30,

2024 September 30,

OPERATING ACTIVITIES

27 unchanged sentences

Net increase (decrease) in short-term borrowings 541.4 ( 639.2 )

Proceeds from long-term debt 848.7 —

Payments of long-term debt ( 1,100.0 ) ( 0.6 )

Payments for credit facility and debt issuance costs ( 8.6 ) —

Payments of cash dividends ( 543.6 ) ( 468.4 )

36 unchanged sentences

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

Net income 806.2 806.2

Other comprehensive income 100.7 100.7

Treasury stock purchased ( 448.7 ) ( 448.7 )

Stock-based compensation activity 0.3 130.7 ( 1.1 ) 129.9

Other adjustments ( 1.3 ) ( 1.3 )

Cash dividends -- $ 0.715 per share

( 182.5 ) ( 182.5 )

Balance at September 30, 2024 $ 92.4 $ 4,471.4 $ 6,946.0 $ ( 6,677.5 ) $ ( 676.2 ) $ 4,156.1

(in millions, except per share data) Common

20 unchanged sentences

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

Net income 761.5 761.5

Other comprehensive loss ( 105.1 ) ( 105.1 )

Treasury stock purchased ( 410.1 ) ( 410.1 )

Stock-based compensation activity 0.3 58.7 ( 1.4 ) 57.6

Other adjustments 0.6 0.6

Cash dividends -- $ 0.605 per share

( 155.6 ) ( 155.6 )

Balance at September 30, 2023 $ 91.7 $ 4,103.9 $ 5,087.4 $ ( 4,746.6 ) $ ( 756.4 ) $ 3,780.0

See notes to condensed consolidated financial statements.

2 unchanged sentences

(millions of dollars, unless otherwise noted)

Periods ended June 30, 2024 and 2023

Periods ended September 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 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.

The results of operations for the three and nine months ended September 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 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.

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

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 $ 242.6 million, $ 213.1 million and $ 242.3 million at June 30, 2024, December 31, 2023 and June 30, 2023, respectively.

Liabilities associated with these arrangements are recorded in Accounts payable on the Consolidated Balance Sheets and amounted to $ 255.2 million, $ 213.1 million and $ 247.7 million at September 30, 2024, December 31, 2023 and September 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.

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

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

2024 2023 2024 2023

2 unchanged sentences

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.

The liabilities for 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 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,

Tax credits and other tax benefits reduced Accrued taxes by $ 75.2 million, $ 94.8 million and $ 66.8 million at September 30, 2024, December 31, 2023 and September 30, 2023, respectively.

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

September 30, December 31, September 30,

2024 2023 2023

16 unchanged sentences

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.

The Company is evaluating the impact of adopting this ASU and expects the standard will only impact its segment disclosures with no impact to the consolidated financial statements.

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

5 unchanged sentences

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

1 unchanged sentence

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.

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

The Company has finalized 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.

The total purchase price for the acquisition was approximately $ 290 million, including an immaterial amount paid in the third quarter of 2024 to finalize certain representations, warranties and closing conditions.

Subsequent Event

The Company completed the acquisition of a metal packaging coatings business in October 2024.

The acquisition was funded via an escrow account in September 2024 for approximately $ 80 million in cash.

The deposit is recorded in Other assets on the Consolidated Balance Sheets as of September 30, 2024 and presented in Other investing activities on the Statements of Condensed Consolidated Cash Flows for the nine months then ended.

The acquired business develops, manufactures and sells coatings for the food and household product markets and will be reported within the Company’s Performance Coatings Group.

Closed in Prior Year

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.

This transaction resulted in the recognition of a $ 20.1 million gain within the Administrative function and was recorded within Other general expense (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.

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

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.

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

The fair value of 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.

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.

NOTE 4 - INVENTORIES

Included in Inventories were the following:

June 30, December 31, June 30,

September 30, December 31, September 30,

2024 2023 2023

4 unchanged sentences

An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time.

Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs are subject to the final year-end LIFO inventory valuation.

interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs are subject to the final year-end LIFO inventory valuation.

In addition, interim inventory levels include management’s estimates of annual inventory losses due to shrinkage and other factors.

2 unchanged sentences

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

June 30, December 31, June 30,

September 30, December 31, September 30,

2024 2023 2023

10 unchanged sentences

The following table summarizes the Company’s outstanding debt:

June 30, December 31, June 30,

September 30, December 31, September 30,

2024 2023 2023

2 unchanged sentences

Total debt outstanding $ 10,139.7 $ 9,850.9 $ 9,936.0

Long-Term Debt

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

In August 2024, the Company repaid the principal of $ 600.0 million related to the Company’s 4.05 % senior notes due August 8, 2024 using commercial paper and subsequently issued $ 400.0 million of 4.55 % senior notes due 2028 and $ 450.0 million of 4.80 % senior notes due 2031 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 and for general corporate purposes.

The newly issued senior notes contain customary qualitative covenants as defined in their respective agreements.

The Company is in compliance with these and all other covenants related to the senior notes as of September 30, 2024.

During the second quarter of 2024, the Company paid the principal of $ 500.0 million related to its 3.125 % senior notes due June 1, 2024.

For further details on the Company’s debt, see Note 8 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Short-Term Borrowings

In July 2024, the Company entered into a new $ 2.500 billion revolving credit agreement maturing on July 31, 2029 (the New Credit Agreement) which replaced the $ 2.250 billion credit agreement dated August 30, 2022, as amended.

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

Under the terms of the New Credit Agreement, the Company may request to extend the maturity date for two additional one-year periods, request an uncommitted increase up to $ 750.0 million and issue letters of credit under a $ 250.0 million subfacility.

quantitative leverage ratio and other customary qualitative covenants for the revolving credit agreement have not changed under the terms of the New Credit Agreement.

The Company is in compliance with these covenants as of September 30, 2024.

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

At September 30, 2024, the Company had unused capacity under its various credit agreements of $ 3.026 billion.

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

June 30, December 31, June 30,

September 30, December 31, September 30,

2024 2023 2023

15 unchanged sentences

2024 2023 2024 2023 2024 2023

Three Months Ended June 30:

Three Months Ended September 30:

Service cost $ 0.9 $ 0.9 $ 1.2 $ 1.1 $ 0.1 $ 0.1

2 unchanged sentences

Amortization of prior service cost (credit) 0.4 0.3 — ( 0.1 ) ( 6.0 ) ( 6.0 )

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

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

Net periodic benefit cost (credit) $ 0.5 $ 0.5 $ 1.1 $ 0.4 $ ( 4.3 ) $ ( 4.0 )

Six Months Ended June 30:

Nine Months Ended September 30:

Service cost $ 2.7 $ 2.5 $ 3.6 $ 3.2 $ 0.3 $ 0.4

5 unchanged sentences

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

All other components are recorded in Other income - net.

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

For further details on the Company’s pension and other postretirement benefits, see Note 9 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

14 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 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.

At September 30, 2024 and 2023, the Company had accruals reported on the balance sheet as Other long-term liabilities of $ 209.8 million and $ 260.1 million , respectively.

Estimated costs of current investigation and remediation activities of $ 93.6 million and $ 50.2 million are included in Other accruals at September 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 $ 91.4 million higher than the minimum accruals at June 30, 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 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.

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 $ 88.7 million higher than the minimum accruals at September 30, 2024.

At September 30, 2024 , $ 255.6 million, or 84.2 % of the total accrual, related directly to the Major Sites.

In the aggregate unaccrued maximum of $ 88.7 million at September 30, 2024 , $ 65.2 million, or 73.5 %, 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 June 30, 2024 , the Company did not have material loss contingency accruals related to unasserted claims.

At September 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.

17 unchanged sentences

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.

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,

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

Three Months Ended Nine Months Ended

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

2024 2023 2024 2023

3 unchanged sentences

(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.

The financing obligation for the new headquarters was $ 731.9 million and $ 435.7 million at September 30, 2024 and 2023, respectively.

The short-term portion of the liability recorded in Other accruals was $ 48.5 million and $ 34.9 million at September 30, 2024 and 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.

68 unchanged sentences

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.

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.

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.

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, and on August 6, 2024, the circuit court granted defendants’ motion to strike the plaintiff’s motion.

The parties have been conducting discovery.

Insurance coverage litigation.

16 unchanged sentences

As previously stated, however, except with respect to the litigation in the California Proceedings discussed above, the Company has not accrued any amounts for the lead pigment or lead-based paint litigation and any significant liability ultimately determined to be attributable to the Company relating to such litigation 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.

Other litigation.

Other matters.

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.

2 unchanged sentences

Trial is scheduled to start on March 10, 2025.

In July 2024, a third-party assurance, testing, inspection and certification provider changed its listing for one of the Company’s protective coatings products, an intumescent coating used for fire protection of steel beam assemblies.

The Company has received claims regarding this matter and is working with its customers and end users to assist in understanding the potential impacts of the listing change, including the extent of potential remedial action that may involve the application of additional product.

The Company’s review of this matter is ongoing.

Except for an immaterial product warranty liability recorded on the Consolidated Balance Sheets as of September 30, 2024, any additional amount or range of potential loss cannot be reasonably estimated at this time.

NOTE 10 - SHAREHOLDERS’ EQUITY

6 unchanged sentences

Second Quarter 0.715 178.6 0.605 156.3

Third Quarter 0.715 182.5 0.605 155.6

Total $ 2.145 $ 543.6 $ 1.815 $ 468.4

1 unchanged sentence

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

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,

As of September 30, 2024, the Company had remaining authorization from its Board of Directors to purchase 35.3 million shares of its common stock.

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

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

Treasury stock purchases (in millions) $ 448.7 $ 410.1 $ 1,428.6 $ 946.0

Treasury stock purchases (shares) 1,400,000 1,000,000 3,100,000 2,300,000

Treasury stock purchases (in shares) 1,250,000 1,500,000 4,350,000 3,800,000

Average price per share $ 358.96 $ 273.45 $ 328.41 $ 248.96

Other Activity

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

During the nine months ended September 30, 2024, 1,584,890 stock options were exercised at a weighted average price per share of $ 124.82 .

In addition, 120,973 restricted stock units vested during the same period.

9 unchanged sentences

— ( 13.4 ) ( 2.7 ) ( 16.1 )

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.

Balance at September 30, 2024 $ ( 752.7 ) $ 50.9 $ 25.6 $ ( 676.2 )

(1) Foreign currency translation adjustments include changes in the fair value of cross currency swap contracts of $( 7.3 ) million, net of taxes during the nine months ended September 30, 2024.

(2) Pension and other postretirement benefit adjustments are net of taxes of $ 4.5 million for the nine months ended September 30, 2024.

(3) Unrealized net gains on cash flow hedges are net of taxes of $ 0.9 million for the nine months ended September 30, 2024.

See Statements of Consolidated Comprehensive Income.

4 unchanged sentences

Amounts recognized in AOCI (1)

( 39.5 ) — — ( 39.5 )

Amounts reclassified from AOCI (2), (3)

— ( 13.6 ) ( 2.7 ) ( 16.3 )

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.

Balance at September 30, 2023 $ ( 850.3 ) $ 64.7 $ 29.2 $ ( 756.4 )

(1) Foreign currency translation adjustments include changes in the fair value of cross currency swap contracts of $ 11.4 million, net of taxes during the nine months ended September 30, 2023.

(2) Pension and other postretirement benefit adjustments are net of taxes of $ 4.6 million for the nine months ended September 30, 2023.

(3) Unrealized net gains on cash flow hedges are net of taxes of $ 0.9 million for the nine months ended September 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 June 30, 2024 are summarized in the table below.

The outstanding contracts as of September 30, 2024 are summarized in the table below.

Contract Date Notional

Value Maturity Date

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

May 21, 2024 175.0 June 1, 2027

August 7, 2024 150.0 June 1, 2027

September 26, 2024 100.0 June 1, 2027

September 12, 2024 100.0 March 1, 2028

December 7, 2023 150.0 August 15, 2029

May 21, 2024 225.0 August 15, 2029

September 24, 2024 100.0 September 1, 2031

In August 2024, the Company settled its $ 150.0 million U.S.

Dollar to Euro cross currency swap contract entered into on March 28, 2023.

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.

At the time of both of these settlements, 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.

June 30, December 31, June 30,

September 30, December 31, September 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 and six months ended June 30, 2024 and 2023.

Three Months Ended Six Months Ended

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

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

Three Months Ended Nine Months Ended

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

2024 2023 2024 2023

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

(Losses) gains $ ( 41.7 ) $ 32.1 $ ( 9.7 ) $ 15.2

Tax effect 10.3 ( 7.9 ) 2.4 ( 3.8 )

Gains (losses), net of taxes

(Losses) gains, net of taxes

$ ( 31.4 ) $ 24.2 $ ( 7.3 ) $ 11.4

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

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

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

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

See Note 15 for further details.

There were no material foreign currency option and forward contracts outstanding at September 30, 2024 and 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 June 30, 2024 and December 31, 2023.

There were no assets and liabilities measured at fair value on a recurring basis classified as Level 3 at September 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.

June 30, 2024 December 31, 2023

September 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 $ 32.0 $ — $ 32.0 $ — $ 24.4 $ — $ 24.4 $ —

$ 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 future payments under the Company’s executive deferred compensation plans, which are structured as rabbi trusts.

The deferred compensation plan assets consist of 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.

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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 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).

As of September 30, 2024 and December 31, 2023, the fair value of the partnership funds was $ 6.8 million and $ 6.4 million, respectively.

The cost basis of all investments within the deferred compensation plan was $ 78.6 million and $ 76.3 million at September 30, 2024 and December 31, 2023, respectively.

The net investment hedges represent the fair value of outstanding cross currency swap contracts.

See Note 12 for further details.

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

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The fair value of the Company’s non-publicly traded debt is estimated using discounted cash flow analyses, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements.

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

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

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Value Carrying

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As the reportable segments are aligned by similar economic factors, trends and customers, this disaggregation best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

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

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

No country outside of the United States is individually significant.

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The majority of variable consideration in the Company’s contracts include a form of volume rebate, discounts and other incentives, where the customer receives a retrospective percentage rebate based on the amount of their purchases.

In these situations, the rebates are accrued as a fixed percentage of sales and recorded as a reduction of net sales until paid to the customer per the terms of the contract.

In these situations, the rebates are accrued as a fixed percentage of sales and recorded as a reduction of sales until paid to the customer per the terms of the contract.

Forms of variable consideration such as tiered rebates, whereby a customer receives a retrospective price decrease dependent on the volume of their purchases, are calculated using a forecasted percentage to determine the most likely amount to accrue.

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(Current) Contract

Balance sheet caption:

Consolidated Balance Sheets caption:

Accounts receivable, net Other

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

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.

Balance at September 30, 2024 2,973.4 57.8 225.1 363.2 4.0

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

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

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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.

Under ASC 326, the Company reviews the collectability 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.

1 unchanged sentence

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

Six Months Ended

Nine Months Ended

September 30,

Beginning balance $ 59.6 $ 56.6

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NOTE 15 - OTHER

Other general income - net

Included in Other general income - net were the following:

Other general expense (income) - net

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

1 unchanged sentence

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

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

(Gains) losses on sale or disposition of assets ( 2.0 ) 12.7 ( 25.2 ) ( 8.1 )

Other ( 0.1 ) 9.8 2.0 15.4

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

Other general expense (income) - net $ 0.7 $ 61.9 $ ( 30.9 ) $ 39.9

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.

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.

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

For the three months ended September 30, 2023, additional provisions were recorded based on new information which impacted the estimate of required remediation at certain Major Sites and other Company locations.

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

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

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

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

Other income - net

Included in Other income - net were the following:

Other expense (income) - net

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

1 unchanged sentence

Net expense from banking activities 3.6 3.1 11.3 10.9

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

Foreign currency transaction related losses - net 6.8 1.1 9.8 24.7

Miscellaneous periodic benefit income ( 4.9 ) ( 5.2 ) ( 14.7 ) ( 15.4 )

1 unchanged sentence

Other expense 23.4 4.0 25.9 22.9

Other income - net $ ( 32.0 ) $ ( 5.8 ) $ ( 39.7 ) $ ( 9.0 )

Net investment gains primarily relate to the change in market value of the investments held in the deferred compensation plan and bonds issued by a foreign government.

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

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.

Other expense (income) - net $ 9.5 $ ( 8.0 ) $ ( 30.2 ) $ ( 17.0 )

Net investment gains primarily relate to the change in market value of the investments held in the deferred compensation plan and realized change in market value of bonds issued by a foreign government.

See Note 13 for further details 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 (gains) losses from foreign currency option and forward contracts.

See Note 12 for further details regarding these foreign currency contracts.

Miscellaneous periodic benefit income consists of the non-service components of pension and other postretirement benefit net periodic benefit cost (credit).

See Note 7 for further details.

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

1 unchanged sentence

NOTE 16 - INCOME TAXES

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 effective tax rate was 21.2 % and 22.4 % for the third quarter and first nine months of 2024, respectively, compared to 24.5 % and 22.9 % for the third quarter and first nine months of 2023, respectively.

The decrease in the effective tax rate for both periods was primarily due to a more favorable impact from tax benefits related to employee share-based payments.

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

4 unchanged sentences

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.

There were no significant changes to any of the balances of unrecognized tax benefits at December 31, 2023 during the first nine months of 2023.

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 paid the tax assessment in the second quarter of 2024.

The Company expects to pay the remaining portion related to interest 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 and the interest assessment in the third quarter of 2024.

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

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.

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

At September 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

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

9 unchanged sentences

Diluted net income per share $ 3.18 $ 2.95 $ 8.65 $ 7.85

(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.

(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 nine months ended September 30, 2024.

There were 1.1 million and 2.0 million of stock options and other contingently issuable shares exclud ed due to their anti-dilutive effect for the three and nine months ended September 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 June 30, 2024

Group Consumer Brands

Three Months Ended September 30, 2024

Group Consumer

Group Performance

7 unchanged sentences

Income before income taxes $ 895.9 $ 165.5 $ 259.7 $ ( 298.3 ) $ 1,022.8

Three Months Ended June 30, 2023

Group Consumer Brands

Three Months Ended September 30, 2023

Group Consumer

Group Performance

7 unchanged sentences

Income before income taxes $ 917.5 $ 101.6 $ 279.7 $ ( 289.8 ) $ 1,009.0

Six Months Ended June 30, 2024

Group Consumer Brands

Nine Months Ended September 30, 2024

Group Consumer

Group Performance

7 unchanged sentences

Income before income taxes $ 2,296.2 $ 523.3 $ 798.9 $ ( 782.2 ) $ 2,836.2

Six Months Ended June 30, 2023

Group Consumer Brands

Nine Months Ended September 30, 2023

Group Consumer

Group Performance

14 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 $ 1.143 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.

Net sales of all consolidated foreign subsidiaries were $ 1.124 billion and $ 1.105 billion for the three months ended September 30, 2024 and 2023, respectively.

Net external sales of all consolidated foreign subsidiaries were $ 3.370 billion and $ 3.342 billion for the nine months ended September 30, 2024 and 2023, respectively.

Long-lived assets of these subsidiaries totaled $ 3.631 billion and $ 3.217 billion at September 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