2020
| 36-3514169 | ||||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
221 River Street
Hoboken, New Jersey 07030
(201)610-6600
(
code: (770) 418-7000
| TITLE OF EACH CLASS | TRADING SYMBOL | NAME OF EXCHANGE ON WHICH REGISTERED | ||||||||||||
| Common stock, $1 par value per share | NWL | Nasdaq Stock Market LLC | ||||||||||||
| Large | ☒ | Accelerated filer | ☐ | |||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||||||||||
| Emerging growth company | ☐ | |||||||||||||
TABLE OF CONTENTS | ||||||||
Net sales Cost of products sold Gross margin Selling, general and administrative expenses Restructuring costs Impairment of goodwill, intangibles and other assets Operating income Non-operating expenses: Interest expense, net Loss on extinguishment of debt Other expense (income), net Income before income taxes Income tax expense (benefit) Income from continuing operations Income (loss) from discontinued operations, net of tax Net income Weighted average shares outstanding: Basic Diluted Earnings per share: Basic: Income from continuing operations Income (loss) from discontinued operations Net income Diluted: Income from continuing operations Income (loss) from discontinued operations Net income Dividends per share Comprehensive income: Net income Other comprehensive income (loss), net of tax: Foreign currency translation adjustments Unrecognized pension and other postretirement costs Derivative financial instruments Total other comprehensive income (loss), net of tax Comprehensive income Assets: Cash and cash equivalents Accounts receivable, net Inventories, net Prepaid expenses and other Assets held for sale Total current assets Property, plant and equipment, net Goodwill Other intangible assets, net Deferred income taxes Other assets Total assets Liabilities: Accounts payable Accrued compensation Other accrued liabilities Short-term debt and current portion of long-term debt Liabilities held for sale Total current liabilities Long-term debt Deferred income taxes Other noncurrent liabilities Total liabilities Commitments and contingencies (Footnote 18) Stockholders’ equity: Preferred stock (10.0 authorized shares, $1.00 par value, no shares issued at September 30, 2017 and December 31, 2016) Common stock (800 authorized shares, $1.00 par value 513.0 shares and 504.8 shares issued at September 30, 2017 and December 31, 2016, respectively) Treasury stock, at cost (22.9 and 22.3 shares at September 30, 2017 and December 31, 2016, respectively): Additionalpaid-in capital Retained earnings Accumulated other comprehensive loss Stockholders’ equity attributable to parent Stockholders’ equity attributable to noncontrolling interests Total stockholders’ equity Total liabilities and stockholders’ equity Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization Impairment of goodwill, intangibles and other assets Net gain from sale of businesses Loss on extinguishment of debt Deferred income taxes Stock-based compensation expense Other, net Changes in operating assets and liabilities, excluding the effects of acquisitions and divestitures: Accounts receivable Inventories Accounts payable Accrued liabilities and other Net cash provided by (used in) operating activities Cash flows from investing activities: Proceeds from sale of divested businesses Acquisitions and acquisition-related activities Capital expenditures Other investing activities Net cash provided by (used in) investing activities Cash flows from financing activities: Net short-term debt Proceeds from issuance of debt, net of debt issuance costs Payments on long-term debt Cash dividends Payments to dissenting shareholders Option proceeds net of repurchase of restricted shares for vesting Net cash provided by (used in) financing activities Exchange rate effect on cash and cash equivalents Increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Supplementalnon-cash disclosures: Common stock issued for Jarden Acquisition Debt assumed, at fair value, in the Jarden Acquisition announced Accelerated Transformation Plan (“ATP”). 2020. first and second quarters of 2020 were approximately $300 million, an increase of approximately $100 million from the balance at December 31, 2019. Transactions under this agreement continue to be accounted for as sales of accounts receivable, and the receivables are removed from the Condensed Consolidated Balance Sheet at the time of the sales transaction. The Company Net sales Net income Income loss per share: Basic Diluted 2020. The following table provides a summary of amounts included in discontinued operations for the 2019 periods indicated (in millions): Net sales Loss from discontinued operations before income taxes Income tax benefit Loss from discontinued operations Net gain from sale of discontinued operations, net of tax Income (loss) from discontinued operations, net of tax Accounts receivable, net Inventories, net Prepaid expenses and other Property, plant and equipment, net Goodwill Other intangible assets, net Other assets Total Assets Accounts payable Accrued compensation Other accrued liabilities Short-term debt and current portion long-term debt Other noncurrent liabilities Total Liabilities Loss Balance at December 31, 2016 Other comprehensive (loss) income before reclassifications Amounts reclassified to earnings Net current period other comprehensive income (loss) Balance at September 30, 2017 Foreign currency translation adjustments Unrecognized pension and postretirement costs Derivative financial instruments Income tax provision (benefit) related to OCI Employee severance, termination benefits and relocation costs Exited contractual commitments and other Employee severance, termination benefits and relocation costs Exited contractual commitments and other Employee severance, termination benefits and relocation costs Exited contractual commitments and other Live Learn Work Play Other Corporate Raw materials and supplies Work-in-process Finished products Total inventories Land Buildings and improvements Machinery and equipment Less: Accumulated depreciation Depreciation expense for discontinued operations was NaN for the three and six months ended June 30, 2019, as the Company ceased depreciating property, plant and equipment relating to businesses which satisfied the criteria to be classified as held for sale. Live Learn Work Play Other Trade names — indefinite life Trade names — other Capitalized software Patents and intellectual property Customer relationships and distributor channels Other Contents 10% of the associated carrying values. A hypothetical 10% reduction in forecasted earnings before interest, taxes and amortization used in the discounted cash flows to estimate the fair value of the reporting unit would not have resulted in an incremental goodwill impairment charge. A hypothetical 10% reduction in the forecasted debt-free cash flows used in the excess earnings method to determine the fair value of certain indefinite-lived intangibles in the Company’s Home Solutions and Learning and Development segments would have resulted in incremental impairment charges of $39 million and $13 million, respectively. A hypothetical 10% reduction in forecasted revenue used in the relief from royalty method to determine the fair value of certain indefinite-lived Customer accruals Accruals for manufacturing, marketing and freight expenses Accrued self-insurance liabilities, contingencies and warranty Deferred revenue Derivative liabilities Accrued income taxes Accrued interest expense Other Other accrued liabilities 2.05% senior notes due 2017 6.25% senior notes due 2018 2.15% senior notes due 2018 2.60% senior notes due 2019 2.875% senior notes due 2019 4.70% senior notes due 2020 3.15% senior notes due 2021 3.75% senior notes due 2021 4.00% senior notes due 2022 3.85% senior notes due 2023 5.00% senior notes due 2023 4.00% senior notes due 2024 3.90% senior notes due 2025 4.20% senior notes due 2026 5.375% senior notes due 2036 5.50% senior notes due 2046 Term loan Commercial paper Receivables facilities Other debt Total debt Short-term debt and current portion of long-term debt Long-term debt adjustment of 25 basis points as a result of each downgrade, for a total of 50 basis points. This increase to the interest rates of each series of the Company's senior notes subject to adjustment is expected to increase the Company’s interest expense for 2020 by approximately $17 million and approximately $23 million on an annualized basis. Senior notes derivative financial instruments. 2019. Derivatives designated as effective hedges: Cash flow hedges: Cross-currency swaps Foreign currency contracts Fair value hedges: Interest rate swaps Derivatives not designated as effective hedges: Foreign currency contracts Commodity contracts Total (a) Consolidated balance sheet location: Asset: Prepaid expenses and other, and othernon-current assets Liability: Other accrued liabilities, and current andnon-current liabilities Location of gain/(loss) Interest rate swaps Interest expense, net Foreign currency contracts Sales and cost of sales Cross-currency swaps Other income (expense), net Total Location of gain/(loss) Interest rate swaps Interest expense, net Foreign currency contracts Sales and cost of sales Cross-currency swaps Other income (expense), net Total Service cost Interest cost Expected return on plan assets Amortization, net Net periodic pension cost Service cost Interest cost Expected return on plan assets Amortization, net Net periodic pension cost Service cost Interest cost Amortization, net Net periodic expense also concluded that a triggering event had occurred for its Home Fragrance right of use assets as a result of further deterioration of the business' financial performance, primarily driven by the COVID-19 pandemic. Pursuant to the authoritative accounting literature, the Company compared the sum of the undiscounted future cash flows attributable to the asset or group of assets at the lowest level for which identifiable cash flows are available to their respective carrying amount. As a result of the impairment testing performed in connection with the triggering event, the Company recorded a non-cash impairment charge of $5 million during the three months ended June 30, 2020 in the Home Solutions segment related to the operating leases of its Yankee Candle retail store business. The impairment charge was calculated by subtracting the estimated fair value of the asset group from its carrying value. Weighted-average shares outstanding Share-based payment awards classified as participating securities Basic weighted-average shares outstanding Dilutive securities (1) Diluted weighted-average shares outstanding diluted earnings per share. Compensation three and six months ended June 30, 2020 and 2019 were $0.23 and $0.46, respectively. Measurement Derivatives: Assets Liabilities Investment securities, including mutual funds held at June 30, 2020, the Company recorded $2 million of unrealized gains and $1 million of unrealized losses within other (income) expense, net in the Condensed Consolidated Statement qualitative characteristics. segments on a percentage of sales basis, and included in segment operating income. Net sales (1) Operating income (loss) (2) Other segment data: Total assets Net sales (1) Operating income (loss) (2) Other segment data: Total assets Net sales (1) Operating income (loss) (2) Net sales (1) Operating income (loss) (2) Third Circuit. total of Because of the uncertainties associated with environmental investigations and response activities, the possibility that the Company could be identified as a PRP at sites identified in the future that require the incurrence of environmental response costs and the possibility that sites acquired in business combinations may require environmental response costs, actual costs to be incurred by the Company may vary from the Company’s estimates. U.S. EPA issued Diamond Alkali Superfund Site, after U.S. EPA has decided the Newark Bay remedy. Three Months Ended
September 30, Nine Months Ended
September 30, 2017 2016 2017 2016 $ 3,678.2 $ 3,954.6 $ 10,999.1 $ 9,128.1 2,410.5 2,679.8 7,138.9 6,252.0 1,267.7 1,274.8 3,860.2 2,876.1 905.5 937.9 2,790.5 2,247.4 38.4 13.0 82.2 41.7 0.4 — 85.0 — 323.4 323.9 902.5 587.0 116.2 124.5 353.0 280.6 — — 32.3 47.1 41.6 (0.7 ) (709.1 ) (162.7 ) 165.6 200.1 1,226.3 422.0 (68.8 ) 13.6 130.4 59.4 234.4 186.5 1,095.9 362.6 — — — (0.4 ) $ 234.4 $ 186.5 $ 1,095.9 $ 362.2 490.4 484.0 486.3 398.3 491.5 486.2 487.9 400.1 $ 0.48 $ 0.39 $ 2.25 $ 0.91 — — — — $ 0.48 $ 0.39 $ 2.25 $ 0.91 $ 0.48 $ 0.38 $ 2.25 $ 0.91 — — — — $ 0.48 $ 0.38 $ 2.25 $ 0.91 $ 0.23 $ 0.19 $ 0.65 $ 0.57 Three Months Ended
June 30,Six Months Ended
June 30,2020 2019 2020 2019 Net sales $ 2,111 $ 2,480 $ 3,997 $ 4,522 Cost of products sold 1,447 1,615 2,716 3,002 Gross profit 664 865 1,281 1,520 Selling, general and administrative expenses 488 612 1,036 1,181 Restructuring costs, net 8 8 10 19 Impairment of goodwill, intangibles and other assets 5 14 1,480 77 Operating income (loss) 163 231 (1,245) 243 Non-operating expenses: Interest expense, net 71 78 134 158 Other (income) expense, net (1) — 11 26 Income (loss) before income taxes 93 153 (1,390) 59 Income tax provision (benefit) 15 30 (189) 10 Income (loss) from continuing operations 78 123 (1,201) 49 Loss from discontinued operations, net of tax — (33) — (110) Net income (loss) $ 78 $ 90 $ (1,201) $ (61) Weighted average common shares outstanding: Basic 424.2 423.3 424.0 423.3 Diluted 424.7 423.5 424.0 423.6 Earnings (loss) per share: Basic: Income (loss) from continuing operations $ 0.18 $ 0.29 $ (2.83) $ 0.12 Loss from discontinued operations — (0.08) — (0.26) Net income (loss) $ 0.18 $ 0.21 $ (2.83) $ (0.14) Diluted: Income (loss) from continuing operations $ 0.18 $ 0.29 $ (2.83) $ 0.12 Loss from discontinued operations — (0.08) — (0.26) Net income (loss) $ 0.18 $ 0.21 $ (2.83) $ (0.14) Three Months Ended
September 30, Nine Months Ended
September 30, 2017 2016 2017 2016 $ 234.4 $ 186.5 $ 1,095.9 $ 362.2 62.4 (5.7 ) 304.3 (21.5 ) (0.1 ) 7.4 (1.5 ) 23.2 (8.9 ) (1.5 ) (29.6 ) (48.9 ) 53.4 0.2 273.2 (47.2 ) $ 287.8 $ 186.7 $ 1,369.1 $ 315.0 Three Months Ended
June 30,Six Months Ended
June 30,2020 2019 2020 2019 Comprehensive income (loss): Net income (loss) $ 78 $ 90 $ (1,201) $ (61) Other comprehensive income (loss), net of tax Foreign currency translation adjustments 35 25 (121) 23 Unrecognized pension and postretirement costs 16 (11) 11 (24) Derivative financial instruments (2) 1 24 (8) Total other comprehensive income (loss), net of tax 49 15 (86) (9) Comprehensive income (loss) $ 127 $ 105 $ (1,287) $ (70) September 30,
2017 December 31,
2016 $ 792.3 $ 587.5 2,916.0 2,746.9 2,861.5 2,116.0 375.5 288.4 4.0 1,745.7 6,949.3 7,484.5 1,675.2 1,543.4 10,526.5 10,218.9 14,307.6 14,111.8 35.4 95.3 394.0 383.6 $ 33,888.0 $ 33,837.5 $ 1,699.0 $ 1,518.9 226.2 365.8 1,558.0 1,464.9 1,291.0 601.9 — 340.5 4,774.2 4,292.0 10,184.4 11,290.9 4,888.5 5,082.8 1,270.9 1,787.4 21,118.0 22,453.1 — — — — 513.0 504.8 (573.2 ) (545.3 ) 10,498.5 10,144.2 3,067.7 2,289.9 (771.6 ) (1,044.8 ) 12,734.4 11,348.8 35.6 35.6 12,770.0 11,384.4 $ 33,888.0 $ 33,837.5 June 30,
2020December 31,
2019Assets: Cash and cash equivalents $ 619 $ 349 Accounts receivable, net 1,641 1,842 Inventories 1,714 1,606 Prepaid expenses and other 312 313 Total current assets 4,286 4,110 Property, plant and equipment, net 1,118 1,155 Operating lease assets, net 553 615 Goodwill 3,496 3,709 Other intangible assets, net 3,561 4,916 Deferred income taxes 860 776 Other assets 383 361 Total assets $ 14,257 $ 15,642 Liabilities: Accounts payable $ 1,157 $ 1,102 Accrued compensation 159 204 Other accrued liabilities 1,199 1,340 Short-term debt and current portion of long-term debt 402 332 Total current liabilities 2,917 2,978 Long-term debt 5,781 5,391 Deferred income taxes 471 625 Long-term operating lease liabilities 494 541 Other noncurrent liabilities 1,078 1,111 Total liabilities 10,741 10,646 Commitments and contingencies (Footnote 18) Stockholders’ equity: Preferred stock (10.0 authorized shares, $1.00 par value, 0 shares issued at June 30, 2020 and December 31, 2019) — — Common stock (800.0 authorized shares, $1.00 par value, 448.2 shares and 447.1 shares issued at June 30, 2020 and December 31, 2019) 448 447 Treasury stock, at cost (24.0 shares and 23.6 shares issued at June 30, 2020 and December 31, 2019) (597) (590) Additional paid-in capital 8,252 8,430 Retained deficit (3,605) (2,404) Accumulated other comprehensive loss (1,006) (920) Stockholders’ equity attributable to parent 3,492 4,963 Stockholders’ equity attributable to noncontrolling interests 24 33 Total stockholders’ equity 3,516 4,996 Total liabilities and stockholders’ equity $ 14,257 $ 15,642 Nine Months Ended
September 30, 2017 2016 $ 1,095.9 $ 362.2 475.8 307.2 85.0 — (712.3 ) (160.4 ) (1.9 ) 47.1 (99.1 ) (20.8 ) 61.2 47.8 8.3 19.3 54.4 (226.0 ) (707.0 ) 428.3 136.1 205.7 (454.4 ) (161.7 ) (58.0 ) 848.7 2,101.4 235.8 (634.3 ) (8,634.7 ) (292.9 ) (287.5 ) 9.2 12.5 1,183.4 (8,673.9 ) 686.3 (183.4 ) — 9,414.6 (1,159.8 ) (750.0 ) (317.1 ) (236.9 ) (161.6 ) — (19.5 ) (12.9 ) (971.7 ) 8,231.4 51.1 (11.0 ) 204.8 395.2 587.5 274.8 $ 792.3 $ 670.0 $ 294.0 $ 9,480.3 $ — $ 1,124.0 Six Months Ended
June 30,2020 2019 Cash flows from operating activities: Net loss $ (1,201) $ (61) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 176 174 Impairment of goodwill, intangibles and other assets 1,480 189 Loss from sale of businesses, net — 2 Deferred income taxes (249) (38) Stock based compensation expense 18 20 Loss on change in fair value of investments 1 18 Other, net — 3 Changes in operating accounts excluding the effects of divestitures: Accounts receivable 138 75 Inventories (145) (295) Accounts payable 71 41 Accrued liabilities and other (157) (137) Net cash provided by (used in) operating activities 132 (9) Cash flows from investing activities: Proceeds from sale of divested businesses — 740 Capital expenditures (94) (115) Other investing activities, net 6 (3) Net cash provided by (used in) investing activities (88) 622 Cash flows from financing activities: Net payments of short term debt (26) (10) Proceeds from issuance of debt, net of debt issuance costs 493 — Payments on current portion of long-term debt — (268) Payments on long-term debt (18) (5) Loss on extinguishment of debt — (3) Cash dividends (197) (195) Equity compensation activity and other, net (13) (5) Net cash provided by (used in) financing activities 239 (486) Exchange rate effect on cash, cash equivalents and restricted cash (20) 2 Increase in cash, cash equivalents and restricted cash 263 129 Cash, cash equivalents and restricted cash at beginning of period 371 496 Cash, cash equivalents and restricted cash at end of period $ 634 $ 625 Supplemental disclosures: Restricted cash at beginning of period $ 22 $ — Restricted cash at end of period 15 — Net cash provided by discontinued operating activities — 14 Net cash provided by discontinued investing activities — 726 Capital expenditures for discontinued operations — 14 Common
StockTreasury
StockAdditional Paid-In Capital Retained Earnings (Deficit) Accumulated Other Comprehensive Income (Loss) Stockholders' Equity Attributable to Parent Noncontrolling Interest Total Stockholders' Equity Balance at March 31, 2020 $ 448 $ (596) $ 8,340 $ (3,683) $ (1,055) $ 3,454 $ 25 $ 3,479 Comprehensive income — — — 78 49 127 — 127 Dividends declared on common stock — — (98) — — (98) — (98) Equity compensation, net of tax — (1) 10 — — 9 — 9 Other — — — — — — (1) (1) Balance at June 30, 2020 $ 448 $ (597) $ 8,252 $ (3,605) $ (1,006) $ 3,492 $ 24 $ 3,516 Balance at December 31, 2019 $ 447 $ (590) $ 8,430 $ (2,404) $ (920) $ 4,963 $ 33 $ 4,996 Comprehensive loss — — — (1,201) (86) (1,287) — (1,287) Dividends declared on common stock — — (195) — — (195) — (195) Equity compensation, net of tax 1 (7) 17 — — 11 — 11 Distribution to non-controlling interests holder — — — — — — (3) (3) Other — — — — — — (6) (6) Balance at June 30, 2020 $ 448 $ (597) $ 8,252 $ (3,605) $ (1,006) $ 3,492 $ 24 $ 3,516 Common
StockTreasury
StockAdditional Paid-In Capital Retained Earnings (Deficit) Accumulated Other Comprehensive Income (Loss) Stockholders' Equity Attributable to Parent Noncontrolling Interest Total Stockholders' Equity Balance at March 31, 2019 $ 447 $ (588) $ 8,688 $ (2,662) $ (937) $ 4,948 $ 35 $ 4,983 Comprehensive income — — — 90 15 105 — 105 Dividends declared on common stock — — (98) — — (98) — (98) Equity compensation, net of tax — (1) 15 — — 14 — 14 Balance at June 30, 2019 $ 447 $ (589) $ 8,605 $ (2,572) $ (922) $ 4,969 $ 35 $ 5,004 Balance at December 31, 2018 $ 446 $ (585) $ 8,781 $ (2,511) $ (913) $ 5,218 $ 35 $ 5,253 Comprehensive loss — — — (61) (9) (70) — (70) Dividends declared on common stock — — (196) — — (196) — (196) Equity compensation, net of tax 1 (4) 20 — — 17 — 17 Balance at June 30, 2019 $ 447 $ (589) $ 8,605 $ (2,572) $ (922) $ 4,969 $ 35 $ 5,004 (formerly, Newell Rubbermaid Inc. (“Newell Rubbermaid”), and collectively(collectively with its subsidiaries, the “Company”) have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) and do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments (including normal recurring accruals) considered necessary for a fair presentationstatement of the financial position and the results of operations of the Company. It is recommended that these unaudited condensed consolidated financial statements and accompanying footnotes be read in conjunction with the financial statements, and the footnotes thereto, included in the Company’s most recent Annual Report on Form10-K. The condensed consolidated balance sheet as ofCondensed Consolidated Balance Sheet at December 31, 2016,2019, has been derived from the audited financial statements as of that date, but it does not include all of the information and footnotes required by U.S. GAAP for a complete financial statements.statement. Certain reclassifications have been made in the Company’s financial statements of the prior year to conform to the current year presentation. These reclassificationsnobeen reclassified to conform to the current reporting structure.reported net income.SeptemberJune 30, 20172020 may not necessarily be indicative of the results that may be expected for the year ending December 31, 2017.May 2014,August 2018, the FASB issued ASUNo. 2014-09, 2018-14, “Revenue from Contracts with Customers. Accounting Standard Codification 606 — Revenue Recognition,Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans.” which established Accounting Standards Codification Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). ASC 606 will replace existing revenue recognition ASU 2018-14 modifies disclosure requirements in U.S. GAAPfor defined benefit pension and will require entities to recognize revenue at an amount that reflects the consideration to which we expect to be entitled in exchange for transferring goods or services to a customer. To achieve this core principle, the standard provides a five-step analysis of transactions to determine when and how revenueother postretirement plans. ASU 2018-14 is recognized. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. ASC 606 will also require significantly expanded disclosures regarding the qualitative and quantitative information of the Company’s nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.In May 2016, the FASB issued ASU2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients,” which updated ASU2014-09. ASU2016-12 clarifies certain core recognition principles including collectability, sales tax presentation, noncash consideration, contract modifications and completed contracts at transition and disclosures no longer required if the full retrospective transition method is adopted.ASU2014-09 and ASU2016-12 are effective for annual reporting periods beginningfiscal years ending after December 15, 2017, including interim periods within those annual periods.The standard permits two methods of adoption, either retrospectively2020. Since ASU 2018-14 only impacts the disclosure requirements related to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the modified retrospective method). The Company has decided to use the modified retrospective transition method for ASC 606 adoption on January 1, 2018.The Company is currently evaluating the effect that ASU2014-09 and ASU2016-12 will have on the Company’s financial statements and related disclosures. To that end, the Company’s implementation project team has completed the assessment process for all of its business units and is currently in the design and implementation phase which will be completed during the fourth quarter of 2017. The Company is mainly expecting presentation changes in the balance sheet and income statement from the transition to ASC 606.In February 2016, the FASB issued ASU2016-02, “Leases (Topic 842),” which requires lessees to recognize aright-of-use asset and lease liability for all leases with terms of more than 12 months. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. ASU2016-02 is effective for the Company on January 1, 2019. The Company is beginning to evaluate the impact the adoption of ASU2016-02 will have on the Company’s consolidated financial statements.In March 2017, the FASB issued ASU2017-07,“Compensation — Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” ASU2017-07 changes how employers that sponsor defined benefit pension plans and other postretirement plans, present the net periodic benefit cost in the income statement. ASU2017-07 requires that the service cost component of net periodic benefit cost be reported in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. Other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. ASU2017-07 also allows only the service cost component to be eligible for capitalization, when applicable. This guidance is effective for annual periods beginning after December 15, 2017, with early adoption permitted. ASU2017-07 is to be applied retrospectively for the income statement presentation requirements and prospectively for the capitalization requirements of the service cost component. The Company does not expect that the adoption of ASU2017-17 2018-14 will not have a material impact on the Company’s consolidated financial statements.August 2017,December 2019, the FASB issued ASU2017-12, 2019-12, “Derivatives and Hedging (Topic 815): Targeted Improvements toSimplifying the Accounting for Hedging Activities.Income Taxes” (Topic 740). ASU2017-12 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to better align an entity’s risk management activities and financial reporting for hedging relationships.improve consistent application. ASU2017-12 also expands and refines hedge accounting for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. ASU2017-12 2019-12 is effective for annual reporting periods beginning after December 15, 2018, includingyears, and interim periods within those annual periods. The Company is beginning to evaluate the impact the adoption of ASU2017-22 will have on the Company’s consolidated financial statements.Other recently issued ASUs were assessed and determined to be either not applicable or are expected to have a minimal impact on the Company’s consolidated financial position and results of operations.Adoption of New Accounting GuidanceIn January 2017, the FASB issued ASU2017-04,“Intangibles — Goodwill and Other: Simplifying the Test for Goodwill Impairment.” ASU2017-04 simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. ASU2017-04 is effective for annual or interim impairment tests in fiscal years, beginning after December 15, 2019. Early2020, with early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.permitted. The Company adoptedis currently evaluating the potential effects of the adoption of ASU2017-04 during the third quarter 2019-12.No. 2016-09, 2016-13, “Compensation-Stock Compensation: Improvement to Employee Share-Based Payment Accounting.Measurement of Credit Losses on Financial Instruments.” ASU2016-09 provides guidance intended to simplify 2016-13 involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The guidance is effective for interim and annual periods beginning after December 15, 2016. The new standard requires: (1) excess tax benefits and tax deficienciescredit losses related to share-based awardscertain financial instruments including assets measured at amortized cost, available-for-sale debt securities and certain off-balance sheet commitments. ASU 2016-13, and subsequent updates, broadens the information that an entity must consider in developing its estimated credit losses expected to be recognized as income tax benefitoccur over the remaining life of assets measured either collectively or expense on a prospective basis inindividually to include historical experience, current conditions and reasonable and supportable forecasts, replacing the reporting period in which they vest; (2) excess tax benefits from share-based payment arrangements to be presented within operating activitiesexisting incurred credit loss model and withholding tax payments upon vesting of restricted stock units to be presented within financing activities withinother models with the cash flow statement; (3) permits the employer to repurchase more of an employee’s shares for tax withholding purposes and not classify the award as a liability that requires valuation on amark-to-market basis; and (4) allows for a policy election to account for forfeitures as they occur. The Company adopted this guidance in the first quarter of 2017 and decided to continue its policy of estimating forfeitures. The Company has also elected to retrospectively reclassify the prior year cash flows related to excess tax benefits from share-based payment arrangements from financing activities to operating activities within the condensed consolidated statements of cash flows. The Company adopted this guidance in the first quarter of 2017 and it did not have a material effect on the consolidated financial position, results of operations or cash flows of the Company.In July 2015, the FASB issuedCurrent Expected Credit Losses (“CECL”) model. ASUNo. 2015-11, “Simplifying the Measurement of Inventory,” which modified existing requirements regarding measuringfirst-in,first-out and average cost inventory at the lower of cost or market. Under past standards, the market amount requires consideration of replacement cost, net realizable value (“NRV”), and NRV less an approximately normal profit margin. ASU2015-11 replaces market with NRV, defined as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This eliminates the need to determine and consider replacement cost or NRV less anapproximately normal profit margin when measuring inventory. This guidance 2016-13 is effective for fiscal years beginning after December 15, 2016, with early adoption permitted.2019. The Company adopted this guidance in the first quarterASU 2016-13 on a modified retrospective basis effective January 1, 2020. The adoption of 2017 and itASU 2016-03 did not have a material effectimpact on the Company’s consolidated financial position, resultsstatements. The Company's reserves for expected credit losses at June 30, 2020 and December 31, 2019 were $37 million and $29 million respectively.operationsadoption, or cash flowsJanuary 1, 2020. The adoption of ASU 2018-15 did not have a material impact on the Company’s consolidated financial statements.Company.Other Itemsholdsclassifies the proceeds received from the sales of accounts receivable as an operating cash flow in the unaudited Condensed Consolidated Statement of Cash Flows. The Company records the discount as other (income) expense, net in the Condensed Consolidated Statement of Operations and collections of accounts receivables not yet submitted to the financial institution as a 25.8% investment in Sprue Aegis (“Sprue”). During the three and nine months ended September 30, 2017 and 2016, the Company’s related party sales to Sprue were $8.6 million and $7.0 million, respectively, and $24.0 million and $14.3 million, respectively. During the nine months ended September 30, 2017, the Company provided notification to Spruefinancing cash flow.Acquisitions2017 ActivityIn September 2017, theDivestitures and Held for Saleacquired Chesapeake Bay Candle, a leading developer, manufacturer and marketer of premium candles and other home fragrance products, focusedcompleted its previously announced ATP on consumer wellness and natural fragrance,December 31, 2019. As such, there were 0 businesses held for a cash purchase price of approximately $75 million. Chesapeake Bay Candle is included in the Live segmentsale at June 30, 2020, nor income or loss from the date of acquisition. Net sales and operating income related to Chesapeake Bay Candlediscontinued operations for the three and ninesix months ended SeptemberJune 30, 2017 were not material to the Company’s consolidated financial statements.In April 2017, the Company acquired Sistema Plastics (“Sistema”), a leading New Zealand based manufacturer and marketer of innovative food storage containers with strong market shares and presence in Australia, New Zealand, U.K. and parts of continental Europe for a cash purchase price of approximately $472 million. Based on the Company’s independent valuation the Company allocated the total purchase price, net of cash acquired, to the identifiable tangible and intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date. Based on the purchase price allocation, net of cash acquired, the Company allocated approximately $39 million to identified net assets, $291 million to identified intangible assets and $142 million to goodwill. Sistema is included in the Live segment from the date of acquisition. Net sales and operating income related to Sistema for the three and nine months ended September 30, 2017 were not material to the Company’s consolidated financial statements.In January 2017, the Company acquired Smith Mountain Industries (“Smith Mountain”), a leading provider of premium home fragrance products, sold primarily under the WoodWick® Candle brand, for a cash purchase price of approximately $100 million. Smith Mountain is included in the Live segment from the date of acquisition. Net sales and operating income related to Smith Mountain for the three and nine months ended September 30, 2017 were not material to the Company’s consolidated financial statements.2016 ActivityOn April 15, 2016, Jarden Corporation (“Jarden”) became a direct wholly-owned subsidiary of Newell Brands Inc., as a result of a series of merger transactions (the “Jarden Acquisition”). The Jarden Acquisition was effected pursuant to an Agreement and Plan of Merger, dated as of December 13, 2015 (the “Merger Agreement”), among the Company, Jarden and two wholly-owned subsidiaries of the Company. Following the Jarden Acquisition, the Company was renamed Newell Brands Inc. Jarden was a leading, global consumer products company with leading brands, such as Yankee Candle®,Crock-Pot®, FoodSaver®, Mr. Coffee®, Oster®, Coleman®, First Alert®, Rawlings®, Jostens®, Marmot® and many others. The Jarden Acquisition enables the Company to scale the enterprise with leading brands in global markets. The scale of the Company in key categories, channels and geographies enables it to deploy its strategy, which includes advantaged development and commercial capabilities, across a larger set of opportunities to generate accelerated growth and margin expansion. The Jarden Acquisition has been accounted for using the purchase method of accounting, and Jarden’s assets, liabilities and results of operations are included in the Company’s financial statements from the acquisition date. Adjustments made to the purchase price allocation during the nine months ended September 30, 2017, primarily relate to goodwill and other intangible assets (see Footnote 8).Pursuant to the Merger Agreement, each share of Jarden common stock was exchanged for 0.862 of a share of the Company’s common stock plus $21.00 in cash. The total merger consideration, including debt assumed, was approximately $18.7 billion. The aggregate consideration paid or payable to the Jarden shareholders and convertible note holders was approximately $15.3 billion and was comprised of a cash payment of approximately $5.4 billion, the issuance of 213.9 million common shares of the Company with a fair value of approximately $9.9 billion and accrued merger consideration of $627 million. The accrued merger consideration at acquisition related to approximately 9.1 million shares of the Company’s common stock that had not been issued and $222 million in cash that had not been paid as of the date of the acquisition for shares of Jarden common stock held by dissenting Jarden shareholders who exercised their appraisal rights and are seeking an appraisal of such shares. In July 2017, approximately 6.6 million shares of the Company’s common stock (representing the stock component of the merger consideration) were issued and approximately $162 million (representing the cash component of the merger consideration) was paid to certain dissenting shareholders pursuant to settlement agreements (see Footnote 18). At September 30, 2017, the Company has accrued approximately $171 million of unpaid consideration related to approximately 2.5 million shares of the Company’s common stock that have not been issued and approximately $61 million of cash that has not been paid.The following unaudited pro forma financial information presents the combined results of operations of Newell Rubbermaid and Jarden for the three and nine months ended September 30, 2016 as if the Jarden Acquisition had occurred on January 1, 2015. The unaudited pro forma financial information is not intended to represent or be indicative of the Company’s consolidated results of operations that would have been reported had the Jarden Acquisition been completed as of January 1, 2015, and should not be taken as indicative of the Company’s future consolidated results of operations. The Company expects to incur restructuring and other integration costs that are not included in the pro forma results of operations presented below. Pro forma adjustments aretax-effected at the Company’s estimated statutory tax rates.(in millions, except per share data) Three Months
Ended
September 30,
2016 Nine Months
Ended
September 30,
2016 $ 3,954.6 $ 11,521.7 273.2 588.8 $ 0.56 $ 1.23 $ 0.56 $ 1.22 The unaudited pro forma financial information for the three and nine months ended September 30, 2016 includes $52.1 million and $156 million, respectively, for the amortization of acquired intangibles from the Jarden Acquisition based on the purchase price allocation, which was finalized during the second quarter of 2017.Footnote 3 — Discontinued Operations and DivestituresDiscontinued Operations Three Months
Ended
September 30,
2016 Nine Months
Ended
September 30,
2016 $ — $ — — (1.3 ) — (0.3 ) — (1.0 ) — 0.6 $ — $ (0.4 ) The discontinued operations for 2016 relate to the Company’s Endicia business whose operations were ceased in 2015. The consolidated results of operations for 2017 do not include discontinued operations.DivestituresThree Months
Ended
June 30, 2019Six Months
Ended
June 30, 2019Net sales $ 92 $ 303 Cost of products sold 67 227 Gross profit 25 76 Selling, general and administrative expenses 13 38 Impairment of goodwill, intangibles and other assets — 112 Operating income (loss) 12 (74) Non-operating (income) expense, net 5 — Income (loss) before income taxes 7 (74) Income tax provision 40 36 Net loss $ (33) $ (110) July 14, 2017,May 1, 2019, the Company sold its Winter SportsRexair business to investment funds affiliated with Rhône Capital for a selling price of approximately $240$235 million, subject to customary working capital and other post-closing adjustments. ForAs a result, during the three and ninesix months ended SeptemberJune 30, 20172019, the company recorded a pre-tax gain of $6 million, which is included in the net loss from discontinued operations.2016,other post-closing adjustments. As a result, during the three and six months ended June 30, 2019, the company recorded a pre-tax loss of $22 million, which is included in the net salesloss from discontinued operations.Winter SportsCompany sold its Playing Cards business were not material. to Cartamundi Inc. and Cartamundi España S.L. for approximately $220 million, subject to customary working capital and other post-closing adjustments.ninesix months ended SeptemberJune 30, 2017,2019, the Company recorded an impairment charge of $59.1charges totaling $112 million, which is included in the loss from discontinued operations, related to the writedownwrite-down of the carrying value of the net assets of the Winter Sports businesscertain held for sale businesses based on the expected proceeds to be received. Of this impairment charge, $12.6 million related to the impairment of goodwill and $46.5 million related to the impairment of other intangible assets. The Company recorded apre-tax loss on sale of $48.0 million driven by funding the business’ working capital needs and withholding taxes between June 30, 2017 and July 14, 2017, which is included in other expense (income), net in condensed consolidated statement of operations for the three and nine months ended September 30, 2017.During 2017, the Company sold its Rubbermaid® consumer storage totes business, its stroller business under the Teutonia® brand, its Lehigh business, its firebuilding business and its triathlon apparel business under the Zoot® and Squadra® brands. The selling prices for these businesses were not significant. Based on the consideration, during the nine months ended September 30, 2017 the Company recorded impairment charges of $15.3 million related to the write down of the carrying value of the net assets of the firebuilding and Teutonia® stroller businesses to their estimated fair market value. The Company sold the firebuilding business to Royal Oak Enterprises, LLC (“Royal Oak”). Company directors Martin E. Franklin and Ian G.H. Ashken are affiliates of Royal Oak.In March 2017, the Company completed the sale of its Tools business, including the Irwin®, Lenox® and Hilmor® brands. The selling price was $1.95 billion, subject to customary working capital adjustments. The net assets of the Tools business were approximately $1.1 billion, including approximately $711 million of goodwill, resulting in a pretax gain of $771.0 million, which is included in other (income) expense, net in the condensed consolidated statement of operations for the nine months ended September 30, 2017. For the three and nine months ended September 30, 2016, the Tools business generated 4.5% and 5.9%, respectively, of the Company’s consolidated net sales. Net sales for the Tools business in 2017 were not material.In June 2016, the Company sold its Décor business, including Levolor® and Kirsch® window coverings and drapery hardware, for consideration, net of fees, of approximately $224 million, resulting in a pretax gain of $160 million, which is included in other (income) expense, net for the nine months ended September 30, 2016. For the nine months ended September 30, 2016, the Décor business generated 1.6% of the Company’s consolidated net sales.Held for SaleDuring 2016, the Company committed to plans to divest several businesses and brands, most of which were disposed of during the nine months ended September 30, 2017, to strengthen the portfolio to better align with the long-term growth plan.The following table presents information related to the major classes of assets and liabilities that were classified as assets and liabilities held for sale in the condensed consolidated balance sheets as of September 30, 2017 and December 31, 2016 (in millions): September 30,
2017 December 31,
2016 $ — $ 164.4 — 311.6 — 24.3 4.0 224.9 — 762.5 — 244.5 — 13.5 $ 4.0 $ 1,745.7 $ — $ 88.2 — 35.3 — 81.6 — 4.3 — 131.1 $ — $ 340.5 43 — Accumulated Other Comprehensive Income (Loss)accumulated other comprehensive income (loss)Accumulated Other Comprehensive Loss (“AOCI”AOCL”) by component, net of tax, for the ninesix months ended SeptemberJune 30, 20172020 (in millions): Cumulative
Translation
Adjustment Pension and
Postretirement
Costs Derivative
Financial
Instruments AOCI $ (607.9 ) $ (400.0 ) $ (36.9 ) $ (1,044.8 ) 216.9 (10.2 ) (29.7 ) 177.0 87.4 8.7 0.1 96.2 304.3 (1.5 ) (29.6 ) 273.2 $ (303.6 ) $ (401.5 ) $ (66.5 ) $ (771.6 ) Cumulative
Translation
AdjustmentDerivative
Financial
InstrumentsAOCL Balance at December 31, 2019 $ (479) $ (399) $ (42) $ (920) Other comprehensive income (loss) before reclassifications (121) 2 23 (96) Amounts reclassified to earnings — 9 1 10 Net current period other comprehensive income (loss) (121) 11 24 (86) Balance at June 30, 2020 $ (600) $ (388) $ (18) $ (1,006) ninesix months ended SeptemberJune 30, 20172020 and 2016,2019, reclassifications from AOCIAOCL to the results of operations for the Company’s pension and postretirement benefit plans were apre-tax pretax expense of $4.5$5 million and $6.3$2 million, respectively, and $12.9pretax expense of $11 million and $13.3$4 million, respectively, and primarily represent the amortization of net actuarial losses (see Footnote 12)11). These costs are recorded in selling, general and administrative expenses (“SG&A”) and cost of sales.other (income) expense, net. For the three and ninesix months ended SeptemberJune 30, 20172020 and 2016,2019, reclassifications from AOCIAOCL to the results of operations for the Company’s derivative financial instruments for effective cash flow hedges were NaN and pre-tax expense income of $3.2 million and $6.0$1 million, respectively, and $0.1pre-tax expense of $1 million and $32.6pre-tax income of $5 million, respectively (see Footnote 11)10). The amounts reclassified to earnings from the cumulative translation adjustment is due to divestitures (see Footnote 3).provision (benefit)(expense) benefit allocated to the components of other comprehensive income (loss) (“OCI”)AOCL for the periods indicated are as follows (in millions): Three Months Ended
September 30, Nine Months Ended
September 30, 2017 2016 2017 2016 $ 1.9 $ — $ 0.8 $ — 1.5 1.2 4.2 3.5 (1.1 ) 3.3 (7.7 ) (28.6 ) $ 2.3 $ 4.5 $ (2.7 ) $ (25.1 ) Three Months Ended
June 30,Six Months Ended
June 30,2020 2019 2020 2019 Foreign currency translation adjustments $ 6 $ — $ (1) $ — Unrecognized pension and postretirement costs (5) 4 (2) 8 Derivative financial instruments 2 — (7) 2 Income tax (expense) benefit related to AOCL $ 3 $ 4 $ (10) $ 10 54 — Restructuring CostsRestructuring CostsAs part of the Jarden Acquisition, the Company initiated a comprehensive strategic assessment of the business and launched a new corporate strategy that focuses the portfolio, prioritizes investment in the categories with the greatest potential for growth, and extends the Company’s advantaged capabilities in insights, product design, innovation, andE-commerce to the broadened portfolio. The investments in new capabilities are designed to unlock the growth potential of the portfolio and will be funded by a commitment to release cost savings from 2016 to 2021 of approximately $1.3 billion through the combination of the completion of Project Renewal (approximately $300 million) and delivery of cost synergies associated with the Jarden integration (approximately $1 billion). This new corporate strategy is called the New Growth Game Plan and builds on the successful track record of growth acceleration, margin development, and value creation associated with the transformation of Newell Rubbermaid from 2011 through 2016.Project RenewalIn April 2015, the Company committed to a further expansion of Project Renewal (the “April 2015 Expansion”). Project Renewal was initially launched in October 2011 to reduce the complexity of the organization and increase investment in growth platforms within the business. Under Project Renewal, the Company is simplifying and aligning its businesses around two key activities—Brand & Category Development and Market Execution & Delivery. Pursuant to an expansion of Project Renewal in October 2014, the Company is: (i) further streamlining its supply chain function, including reducing overhead and realigning the supply chain management structure; (ii) investing in value analysis and value engineering efforts to reduce product and packaging costs; (iii) reducing operational and manufacturing complexity in its Learn segment; and (iv) further streamlining its distribution and transportation functions. Under the April 2015 Expansion, the Company is further implementing additional activities designed to further streamline business partnering functions (e.g., Finance/IT, Legal and Human Resources), optimize global selling and trade marketing functions and rationalize the Company’s real estate portfolio. Project Renewal is expected to be complete by the end of 2017, and as a result, additional cash payments and savings will be realized thereafter.incurred in connection with Project Renewal for the periods indicated are as follows (in millions): Three Months Ended
September 30, Nine Months Ended
September 30, 2017 2016 2017 2016 $ 0.2 $ 1.4 $ 1.8 $ (4.0 ) 7.2 (1.6 ) 15.9 17.0 $ 7.4 $ (0.2 ) $ 17.7 $ 13.0 Accrued restructuring costs activity for Project Renewal for the nine months ended September 30, 2017 is as follows (in millions): Balance at
December 31,
2016 Restructuring
Costs Payments Non-Cash
Charges
and Other Balance at
September 30,
2017 $ 15.8 $ 1.8 $ (6.3 ) $ (0.2 ) $ 11.1 17.4 15.9 (7.5 ) — 25.8 $ 33.2 $ 17.7 $ (13.8 ) $ (0.2 ) $ 36.9 Jarden IntegrationThe Company currently expects to incur up to approximately $1.0 billion of restructuring and other costs through 2021 to integrate the legacy Newell Rubbermaid and Jarden businesses (the “Jarden Integration”). Initially, integration projects will primarily be focused on driving cost synergies in procurement, overhead functions and organizational changes designed to redefine the operating model of the Company from a holding company to an operating company. Restructuring costs associated with integration projects are expected to include employee-related cash costs, including severance, retirement and other termination benefits, and contract termination and other costs. In addition, other costs associated with the Jarden Integration are expected to include advisory and personnel costs for managing and implementing integration projects.Other RestructuringIn addition to Project Renewal and the Jarden Integration the Company has incurred restructuring costs for various other restructuring activities.Accrued restructuring cost activity for the Jarden Integration and other restructuring for the nine months ended September 30, 2017 is as follows (in millions): Balance at
December 31,
2016 Restructuring
Costs Payments Non-Cash
Charges
and Other Balance at
September 30,
2017 $ 38.2 $ 50.3 $ (40.1 ) $ (8.6 ) $ 39.8 0.5 14.2 (8.5 ) (0.1 ) 6.1 $ 38.7 $ 64.5 $ (48.6 ) $ (8.7 ) $ 45.9 Restructuring CostsRestructuring costsnet incurred by reportable business segmentsegments for all restructuring activities in continuing operations for the periods indicated are as follows (in millions): Three Months Ended
September 30, Nine Months Ended
September 30, 2017 2016 2017 2016 $ 3.0 $ 2.9 $ 10.7 $ 2.3 3.0 3.7 8.8 8.8 1.6 1.7 7.0 4.3 1.6 2.3 10.6 2.6 1.4 1.3 5.0 6.4 27.8 1.1 40.1 17.3 $ 38.4 $ 13.0 $ 82.2 $ 41.7 Three Months Ended
June 30,Six Months Ended
June 30,2020 2019 2020 2019 Appliances and Cookware $ — $ 2 $ — $ 2 Commercial Solutions 2 1 2 1 Home Solutions 4 1 5 6 Learning and Development — 1 1 5 Outdoor and Recreation 1 1 1 1 Corporate 1 2 1 4 $ 8 $ 8 $ 10 $ 19 Balance at December 31, 2019 Restructuring
Costs, NetPayments Balance at
June 30, 2020Employee severance and termination benefits $ 10 $ 9 $ (6) $ 13 Exited contractual commitments and other 12 1 (7) 6 $ 22 $ 10 $ (13) $ 19 65 — Inventories Net are stated at the lower of cost or market value and are comprised of the following as ofat the dates indicated (in millions): September 30,
2017 December 31,
2016 $ 449.4 $ 350.7 244.8 236.1 2,167.3 1,529.2 $ 2,861.5 $ 2,116.0 June 30, 2020 December 31, 2019 Raw materials and supplies $ 301 $ 231 Work-in-process 157 135 Finished products 1,256 1,240 $ 1,714 $ 1,606 76 — Property, Plant and Equipment, Netas ofat the dates indicated (in millions): September 30,
2017 December 31,
2016 $ 108.8 $ 108.4 728.3 653.0 2,704.4 2,454.6 3,541.5 3,216.0 (1,866.3 ) (1,672.6 ) $ 1,675.2 $ 1,543.4 June 30, 2020 December 31, 2019 Land $ 82 $ 86 Buildings and improvements 644 641 Machinery and equipment 2,176 2,151 2,902 2,878 Less: Accumulated depreciation (1,784) (1,723) $ 1,118 $ 1,155 $71.7$46 million and $62.8$41 million for the three months ended SeptemberJune 30, 20172020 and 2016,2019, respectively, and $210$94 million and $153$81 million for the ninesix months ended SeptemberJune 30, 20172020 and 2016,2019, respectively.81 for further information.ninesix months ended SeptemberJune 30, 20172020 is as follows (in millions):Segment Balance at
December 31,
2016 Acquisitions Other
Adjustments (1) Impairment (2) Foreign
Currency Balance at
September 30,
2017 $ 3,639.9 $ 172.8 $ 45.8 $ — $ 25.3 $ 3,883.8 2,785.4 — 3.9 — 56.6 2,845.9 1,871.0 — (16.9 ) — 29.8 1,883.9 1,161.4 — (7.6 ) — 5.1 1,158.9 761.2 — (9.7 ) — 2.5 754.0 $ 10,218.9 $ 172.8 $ 15.5 $ — $ 119.3 $ 10,526.5 (1)Comprised primarily of adjustments related to the Jarden Acquisition, whose purchase price allocation was finalized during the second quarter of 2017 (see Footnote 2).(2)See Footnote 3 for impairment charges related to assets held for sale.June 30, 2020 Segments Net Book Value at December 31,
2019Impairment Charges Appliances and Cookware $ 212 $ (212) $ — $ 744 $ (744) $ — Commercial Solutions 747 — — 1,241 (494) 747 Home Solutions 164 — — 2,392 (2,228) 164 Learning and Development 2,586 — (1) 3,431 (846) 2,585 Outdoor and Recreation — — — 788 (788) — $ 3,709 $ (212) $ (1) $ 8,596 $ (5,100) $ 3,496 as ofat the dates indicated (in millions): September 30, 2017 December 31, 2016 Gross Carrying
Amount (1) Accumulated
Amortization Net Book
Value Gross Carrying
Amount Accumulated
Amortization Net Book
Value $ 10,199.3 $ — $ 10,199.3 $ 9,935.1 $ — $ 9,935.1 375.5 (52.2 ) 323.3 286.3 (34.2 ) 252.1 545.5 (331.4 ) 214.1 482.0 (252.9 ) 229.1 253.6 (133.3 ) 120.3 227.9 (105.0 ) 122.9 3,703.8 (333.5 ) 3,370.3 3,761.7 (204.0 ) 3,557.7 134.6 (54.3 ) 80.3 25.9 (11.0 ) 14.9 $ 15,212.3 $ (904.7 ) $ 14,307.6 $ 14,718.9 $ (607.1 ) $ 14,111.8 (1)At September 30, 2017, the amounts attributable to the Jarden Acquisition are as follows: trade names — indefinite life — $9.4 billion; trade names — other — $247 million; capitalized software — $63.0 million; patents and intellectual property — $99.1 million; customer relationships and distributor channels — $3.5 billion; and, other intangible assets — $124 million.The table below summarizes the Company’s amortization periods for other intangible assets, including capitalized software, asJune 30, 2020 December 31, 2019 Trade names — indefinite life $ 2,292 $ — $ 2,292 $ 3,560 $ — $ 3,560 N/A Trade names — other 158 (52) 106 169 (50) 119 2-15 Capitalized software 602 (460) 142 587 (435) 152 3-12 Patents and intellectual property 123 (100) 23 135 (102) 33 3-14 Customer relationships and distributor channels 1,248 (250) 998 1,328 (283) 1,045 3-30 Other — — — 109 (102) 7 3-5 $ 4,423 $ (862) $ 3,561 $ 5,888 $ (972) $ 4,916 September 30, 2017:Amortization Periods(in years)Trade names — indefinite lifeN/ATrade names — other3–30 yearsCapitalized software3–12 yearsPatents and intellectual property3–14 yearsCustomer relationships & distributor channels3–30 yearsOther3–5 years$84.1$39 million and $75.1$46 million for the three months ended SeptemberJune 30, 20172020 and 2016,2019, respectively, and $266$82 million and $154$93 million for the ninesix months ended SeptemberJune 30, 20172020 and 2016,2019, respectively. Amortization expense for intangible assets for discontinued operations was NaN for the ninethree and six months ended SeptemberJune 30, 2017 includes2019, as the Company ceased amortizing other finite-lived intangible assets relating to businesses which satisfied the criteria to be classified as held for sale.measurementresult of the impairment testing performed in connection with the COVID-19 pandemic triggering event during the first quarter of 2020, the Company determined that certain of its indefinite-lived intangible assets in the Appliances and Cookware, Commercial Solutions, Home Solutions, Learning and Development and Outdoor and Recreation segments were impaired. During the six months ended June 30, 2020, the Company recorded impairment charges of $1.3 billion to reflect impairment of these indefinite-lived trade names because their carrying values exceeded their fair values as follows:Six Months Ended June 30, 2020 Impairment of indefinite-lived intangibles assets Appliances and Cookware $ 87 Commercial Solutions 320 Home Solutions 290 Learning and Development 78 Outdoor and Recreation 482 $ 1,257 expense adjustment of $13.6 million relatedtime, the reporting unit’s actual results could be materially different from the Company’s estimates and assumptions used to calculate fair value. If so, the Company may be required to recognize material impairments to goodwill and/or indefinite-lived intangible assets. The Company will continue to monitor its reporting units for any triggering events or other signs of impairment. The Company may be required to perform additional impairment testing based on further deterioration of the global economic environment, continued disruptions to the valuationCompany’s business, further declines in operating results ofnon-compete agreements the Company’s reporting units and/or tradenames, further sustained deterioration of the Company’s market capitalization, and other factors, which could result in impairment charges in the future. Although management cannot predict when improvements in macroeconomic conditions will occur, if consumer confidence and consumer spending decline significantly in the future or if commercial and industrial economic activity experiences a sustained deterioration from current levels, it is reasonably likely the Company will be required to record impairment charges in the future.other intangible assets.98 — Other Accrued Liabilitiesas ofat the dates indicated (in millions): September 30,
2017 December 31,
2016 $ 405.3 $ 432.4 78.5 89.3 162.8 168.1 75.4 187.5 79.8 14.7 140.7 64.9 189.8 108.5 425.7 399.5 $ 1,558.0 $ 1,464.9 June 30, 2020 December 31, 2019 Customer accruals $ 516 $ 605 Operating lease liabilities 136 132 Accrued self-insurance liabilities, contingencies and warranty 108 124 Accrued income taxes 107 114 Accrued interest expense 69 63 Accruals for manufacturing, marketing and freight expenses 42 50 Other 221 252 $ 1,199 $ 1,340 109 — Debtas ofat the dates indicated (in millions): September 30,
2017 December 31,
2016 $ 349.9 $ 349.4 — 249.8 299.4 298.9 266.5 995.0 348.5 347.9 304.2 380.0 993.1 991.7 368.1 326.9 248.7 248.5 1,738.4 1,737.0 312.6 314.1 495.7 495.2 297.1 296.8 1,982.3 1,981.0 494.9 494.7 1,725.9 1,725.7 299.7 399.5 116.0 — 768.5 187.4 65.9 73.3 11,475.4 11,892.8 (1,291.0 ) (601.9 ) $ 10,184.4 $ 11,290.9 Senior NotesIn March 2017,June 30, 2020 December 31, 2019 4.70% senior notes due 2020 $ 305 $ 305 3.15% senior notes due 2021 94 94 3.75% senior notes due 2021 341 342 4.00% senior notes due 2022 249 249 3.85% senior notes due 2023 1,388 1,388 4.00% senior notes due 2024 200 199 4.875% senior notes due 2025 492 — 3.90% senior notes due 2025 47 47 4.20% senior notes due 2026 1,972 1,986 5.375% senior notes due 2036 416 416 5.50% senior notes due 2046 657 657 Commercial paper — 25 Other debt 22 15 Total debt 6,183 5,723 Short-term debt and current portion of long-term debt (402) (332) Long-term debt $ 5,781 $ 5,391 commenced cash tender offers (the “Tender Offers”would fail to meet S&P’s target debt level for 2019. In addition, on March 9, 2020, Moody’s Corporation ("Moody’s") totaling approximately $1.06 billiondowngraded the Company’s debt rating to “Ba1” based on a view that the Company would fail to meet Moody's target debt level for any2020. Subsequently on April 15, 2020, Fitch Ratings ("Fitch") downgraded the Company’s debt rating to "BB" as they believed the Company would fail to meet Fitch's target debt level for 2020. As a result of the S&P and all of its 6.25% senior notes due 2018 andMoody's downgrades, the Company’s ability to borrow from the commercial paper market on terms it deems acceptable or favorable was eliminated.its other senior notes. the Company (1) at any time prior to one month before the stated maturity at a redemption price equal to the greater of (a) 100% of the principal amount or (b) the discounted present value of principal and interest at the Treasury Rate plus 50 basis points, plus accrued interest to but excluding the redemption date; or (2) at any time on or after one month prior to the stated maturity at a price equal to 100% of the principal amount being redeemed, plus accrued interest to but excluding the redemption date. The Company used the net proceeds from the June 2025 Notes for general corporate purposes, including repayment of outstanding borrowings under the Credit Revolver and accounts receivable securitization facility and intends to use a portion of the proceeds for the repayment or redemption of the 4.70% Senior Notes due 2020.2017, pursuant to the Tender Offers2020, the Company repurchased approximately $63$15 million aggregate principal amount of its 6.25%the 4.20% senior notes due 2018,2026 at approximately $733 million aggregate principal amount of its 2.6% senior notes due 2019 and approximately $76 million aggregate principal amount of its 4.7% senior notes due 2020 forpar value. The total consideration, excluding accrued interest, ofwas approximately $897$15 million. As a result of these debt extinguishments, the Company recorded a loss on the extinguishment of debt of $27.8 million during the first quarter of 2017, primarily comprised of prepayment premiums and anon-cash charge due to thewrite-off of deferred debt issuance costs.In April 2017, the Company redeemed the remaining approximately $187 million aggregate principal amount of its 6.25% senior notes due 2018 for total consideration, excluding accrued interest of approximately $195 million. As a result of thispartial debt extinguishment, the Company recorded an immaterial loss.loss onresult of the extinguishmentaforementioned debt rating downgrades of debtMoody's and S&P, certain of the Company’s Senior Notes aggregating to approximately $4.5 million during the second quarter of 2017, primarily comprised of prepayment premiums, partially offset by thewrite-off of a deferred gain on previously terminatedbillion are subject to an interest rate swaps.June 30, 2020 December 31, 2019 Fair Value Book Value Fair Value Book Value Senior notes $ 6,466 $ 6,161 $ 5,990 $ 5,683 €300.0€300 million principal balance of the 3.75% senior notes due October 2021 as a net investment hedge of the foreign currency exposure of its net investment in certain Euro-functional currency subsidiaries with Euro-denominated net assets. At SeptemberJune 30, 2017, $14.02020, $3 million of deferred lossesgains have been recorded in AOCI.The fair values ofAOCL. See Footnote 10 for disclosures regarding the Company’s senior notes are based on quoted market prices and are as follows (in millions): September 30, 2017 December 31, 2016 Fair Value Book Value Fair Value Book Value $ 11,089.9 $ 10,225.2 $ 11,979.2 $ 11,234.1 The carrying amounts of all other significant debt approximates fair value.11 — 10—Derivativesmanagement from the debt funding decision. The cash paid and received from the settlement of interest rate swaps is included in interest expense.SeptemberJune 30, 2017,2020, the Company had approximately $527$377 million notional amount of interest rate swaps that exchange a fixed rate of interest for a variable rate (LIBOR) of interest plus a weighted average spread. These floating rate swaps are designated as fair value hedges against $277 million of principal on the 4.7% senior notes due in August 2020 and $250$100 million of principal on the 4.0% senior notes due 2024 for the remaining life of these notes. The effective portion of the fair value gains or losses on these swaps is offset by fair value adjustments in the underlying debt.intercompany financing arrangements with foreign subsidiaries. As of September 30, 2017, the notional value of outstanding cross-currency interest rate swaps was approximately $161 million. The cross-currency interest rate swaps are intended to eliminate uncertainty in cash flows in U.S. Dollars and British Pounds in connection with the intercompany financing arrangements. The effective portionsDuring the first quarter of 2020, the Company entered into 2 cross-currency swaps with an aggregate notional amount of $900 million, which were designated as net investment hedges of the changesCompany's foreign currency exposure of its net investment in fair valuescertain Euro-functional currency subsidiaries with Euro-denominated net assets. These cross-currency swaps, which mature in January and February 2025, pay a fixed rate of Euro-based interest and receive a fixed rate of U.S. dollar interest. The Company has elected the spot method for assessing the effectiveness of these cross-currencycontracts. During the three and six months ended June 30, 2020, the Company recognized income of $4 million and $7 million in interest rate swap agreements are reported in AOCI and an amount is reclassified out of AOCI into other (income) expense, net, which is offsetrelated to the portion of cross-currency swaps excluded from hedge effectiveness testing. The Company had no cross-currency swaps used as hedging instruments in the same period by the remeasurement in the carrying value of the underlying foreign currency intercompany financing arrangements being hedged.September 2018.December 2020. The derivatives used to hedge these forecasted transactions that meet the criteria for hedge accounting are accounted for as cash flow hedges. The effective portion of the gains or losses on these derivatives is deferred as a component of AOCIAOCL and is recognized in earnings at the same time that the hedged item affects earnings and is included in the same caption in the statements of operations as the underlying hedged item. At SeptemberJune 30, 2017,2020, the Company had approximately $448$212 million notional amount outstanding of forward foreign currency contracts that are designated as cash flow hedges of forecasted inventory purchases and sales.SeptemberJune 30, 2017,2020, the Company had approximately $2.7 billion$767 million notional amount outstanding of these foreign currency contracts that are not designated as effective hedges for accounting purposes and have maturity dates through November 2017.January 2021. Fair market value gains or losses are included in the results of operations and are classified in other (income) expense, net.as of September 30, 2017 and December 31, 2016at the dates indicated (in millions): September 30, 2017 December 31, 2016 Fair Value of Derivatives Fair Value of Derivatives Asset (a) Liability (a) Asset (a) Liability (a) $ — $ 17.2 $ 0.7 $ 16.3 2.4 14.6 14.2 3.4 0.9 4.5 — 5.9 35.1 65.3 18.2 10.9 0.1 — 0.2 0.3 $ 38.5 $ 101.6 $ 33.3 $ 36.8 June 30, 2020 December 31, 2019 Fair Value of Derivatives Fair Value of Derivatives Asset (a) Liability (a) Asset (a) Liability (a) Derivatives designated as effective hedges: Cash flow hedges: Foreign currency contracts $ 8 $ — $ 1 $ 13 Fair value hedges: Interest rate swaps 8 — 2 1 Net investment hedges: Cross-currency swaps 10 6 — — Derivatives not designated as effective hedges: Foreign currency contracts 13 11 10 4 Total $ 39 $ 17 $ 13 $ 18 (a) Consolidated balance sheet location: Asset: Prepaid expenses and other, and other noncurrent assets Liability: Other accrued liabilities, and current and noncurrent liabilities presentspresent gain and loss activity (on a pretax basis) for the three and nine months ended SeptemberJune 30, 20172020 and 20162019 related to derivative financial instruments designated or previously designated, as effective hedges (in millions): Three Months Ended
September 30, 2017 Three Months Ended
September 30, 2016 Gain/(Loss) Gain/(Loss)
recognized in income Recognized
in OCI (a)
(effective portion) Reclassified
from AOCI
to Income Recognized
in OCI (a)
(effective portion) Reclassified
from AOCI
to Income $ — $ (2.1 ) $ — $ (2.4 ) (12.8 ) (0.4 ) (0.7 ) 1.6 (0.4 ) (0.7 ) (3.7 ) (5.2 ) $ (13.2 ) $ (3.2 ) $ (4.4 ) $ (6.0 ) Nine Months Ended
September 30, 2017 Nine Months Ended
September 30, 2016 Gain/(Loss) Gain/(Loss)
recognized in income Recognized
in OCI (a)
(effective portion) Reclassified
from AOCI
to Income Recognized
in OCI (a)
(effective portion) Reclassified
from AOCI
to Income $ — $ (6.2 ) $ (88.1 ) $ (5.1 ) (35.8 ) 12.4 7.3 2.1 (1.6 ) (6.3 ) (29.3 ) (29.6 ) $ (37.4 ) $ (0.1 ) $ (110.1 ) $ (32.6 ) Three Months
Ended
June 30, 2020Three Months
Ended
June 30, 2019Gain/(Loss) Gain/(Loss) Location of gain/(loss) recognized in income Interest rate swaps Interest expense, net $ — $ (1) $ — $ (1) Foreign currency contracts Net sales and cost of products sold (5) 1 1 2 Commodity contracts Cost of products sold — — 1 — Cross-currency swaps Other (income) expense, net (17) — — — Total $ (22) $ — $ 2 $ 1 Six Months
Ended
June 30, 2020Six Months
Ended
June 30, 2019Gain/(Loss) Gain/(Loss) Location of gain/(loss) recognized in income Interest rate swaps Interest expense, net $ — $ (3) $ — $ (3) Foreign currency contracts Net sales and cost of products sold 30 2 (5) 8 Commodity contracts Cost of products sold — — — — Cross-currency swaps Other (income) expense, net 4 — — — Total $ 34 $ (1) $ (5) $ 5 (a)Represents effective portion recognized in OCI.The amount of ineffectiveness related to cash flow hedges during the three and nine months ended September2017 and 2016 was not material. At September 30, 2017,2020, deferred net lossesgains of approximately $22$16 million within AOCIAOCL are expected to be reclassified to earnings over the next twelve months.ninesix months ended SeptemberJune 30, 2017 and 2016,2020, the Company recognized expense (income) of $12.7$3 million and ($0.8) million, respectively, and $45.3 million and ($4.1)income of $9 million, respectively, in other (income) expense, net, related to derivatives that are not designated as hedging instruments, which is mostlyoffsetinstruments. During the three1211 — Employee Benefit and Retirement Plansbenefitsbenefit expense for continuing operations for the periods indicated, are as follows (in millions): Pension Benefits Three Months Ended September 30, U.S. International 2017 2016 2017 2016 $ 0.6 $ 0.6 $ 1.9 $ 1.9 12.6 12.2 3.4 4.7 (18.3 ) (18.8 ) (4.7 ) (5.7 ) 6.0 5.5 0.7 3.5 $ 0.9 $ (0.5 ) $ 1.3 $ 4.4 Nine Months Ended September 30, U.S. International 2017 2016 2017 2016 $ 2.0 $ 2.0 $ 5.6 $ 5.0 37.9 32.3 10.1 14.2 (55.0 ) (49.4 ) (13.9 ) (17.0 ) 17.8 16.3 1.9 4.9 $ 2.7 $ 1.2 $ 3.7 $ 7.1 Postretirement Benefits Three Months Ended
September 30, Nine Months Ended
September 30, 2017 2016 2017 2016 $ — $ 0.1 $ 0.1 $ 0.1 0.5 0.6 1.6 1.6 (2.2 ) (2.7 ) (6.8 ) (7.9 ) $ (1.7 ) $ (2.0 ) $ (5.1 ) $ (6.2 ) Pension Benefits Three Months Ended June 30, U.S. International 2020 2019 2020 2019 Service cost $ — $ — $ 1 $ 1 Interest cost 9 13 3 3 Expected return on plan assets (15) (15) (1) (3) Amortization, net 6 4 — 1 Total expense $ — $ 2 $ 3 $ 2 Pension Benefits Six Months Ended June 30, U.S. International 2020 2019 2020 2019 Service cost $ — $ — $ 2 $ 3 Interest cost 18 25 5 6 Expected return on plan assets (30) (30) (3) (6) Amortization, net 12 8 1 1 Settlements 1 — — — Total expense $ 1 $ 3 $ 5 $ 4 Postretirement Benefits Three Months Ended
June 30,Six Months Ended
June 30,2020 2019 2020 2019 Interest cost $ 1 $ 1 $ 1 $ 1 Amortization, net (2) (3) (3) (5) Total income $ (1) $ (2) $ (2) $ (4) 1312 — Income Taxesexpenserate for the three months ended June 30, 2020 and resulting2019 was 16.1% and 19.6%, respectively, and for the six months ended June 30, 2020 and 2019 was 13.6% and 16.9%, respectively. The Company’s effective income tax rate arefluctuates based uponon, among other factors, the respective estimated annualgeographic mix of income.rates applicablerate for the respective periods adjustedsix months ended June 30, 2020 and 2019 was impacted by a variety of factors, primarily resulting from the geographic mix of where the income was earned as well as certain taxable income inclusion items in the U.S. based on foreign earnings.items required to be treated as discrete tothe Temporary Regulations in its Condensed Consolidated Financial Statements for the period including changesending June 30, 2020. The Company believes it has strong arguments in tax laws, changes in estimated exposures for uncertain tax positionsfavor of its position and other items.The Company’s reported tax rate forbelieves it has met the nine months ended September 30, 2017 and 2016 was 10.6% and 14.1%, respectively. The difference from the statutory tax rate to the reported tax rate for the nine months ended September 30, 2017 is primarily due to $75.0 million of tax benefits related to the reversal of an outside basis difference and $42.0 million for the resolution of certain income tax contingencies. Additionally, the tax rate was impacted by taxes related to the sale of the Tools, Winter Sports, and other businesses. The difference from the statutory tax rate to the reported tax rate for the nine months ended September 30, 2016 is primarilymore likely than not recognition threshold that its position will be sustained. However, due to the Jarden Acquisition,inherent uncertainty involved in challenging the geographical mixvalidity of earnings,regulations as well as a $19.4potential litigation process, there can be no assurances that the relevant Temporary Regulations will be invalidated or that a court of law will rule in favor of the Company. If the Company’s position on the Temporary Regulations is not sustained, the Company would be required to recognize an income tax expense of approximately $180 million reductionto $220 million related to an income tax benefit from fiscal year 2018 that was recorded based on regulations in existence at the time. In addition, the Company may be required to pay any applicable interest and penalties. The Company intends to vigorously defend its position.Classification June 30, 2020 December 31, 2019 Assets Operating leases Operating lease assets, net (1) $ 553 $ 615 Finance leases Property, plant and equipment, net (2) 12 15 Total lease assets $ 565 $ 630 Liabilities Current Operating leases Other accrued liabilities $ 136 $ 132 Finance leases Short-term debt and current portion of long-term debt 3 3 Noncurrent Operating leases Long-term operating lease liabilities 494 541 Finance leases Long-term debt 7 10 Total lease liabilities $ 640 $ 686 valuation allowance relatedequity and credit markets primarily driven by the COVID-19 pandemic. Pursuant to certain deferred taxthe authoritative accounting literature, the Company compared the sum of the undiscounted future cash flows attributable to the asset or group of assets at the lowest level for which identifiable cash flows are available to their respective carrying amount. As a result of its international operations and $33.8 million for the resolution of certain income tax contingencies.Duringimpairment testing performed in connection with the fourth quarter of 2016,triggering event, the Company recorded $164a non-cash impairment charge of $3 million of deferred tax expense related to its Tools business outside basis difference. Duringduring the three months ended March 31, 2017,2020 in the Home Solutions segment related to the operating leases of its Yankee Candle retail store business. In addition, the Company determinedrecorded an impairment charge of $2 million in the outside basis differenceCorporate segment to reflect a reduction in a U.S. entity included goodwill attributable tothe carrying values of certain foreign subsidiaries, the result of which, was an overstatement of approximately $18 million of deferred tax expenseoperating lease assets during the fourth quarter of 2016. During the first quarter of 2017,2020. The impairment charges were calculated by subtracting the estimated fair value of the asset group from its carrying value.corrected this difference through current period tax expense.Three Months Ended
June 30,Six Months Ended
June 30,2020 2019 2020 2019 Operating lease cost: Operating lease cost (1) $ 44 $ 54 $ 92 $ 107 Variable lease costs (2) 5 7 11 13 Finance lease cost: Amortization of leased assets 1 1 2 2 June 30, 2020 Weighted average remaining lease term (years): Operating leases 7 Finance leases 3 Weighted average discount rate: Operating leases 4.3% Finance leases 3.4% Six Months Ended
June 30,2020 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 89 $ 99 Financing cash flows from finance leases 2 2 Right of use assets obtained in exchange for lease liabilities: Operating leases 29 101 Finance leases — 7 Operating
Leases2020 (Excludes six months ended June 30, 2020) $ 87 $ 2 2021 145 4 2022 121 3 2023 92 1 2024 74 — Thereafter 216 — Total lease payments 735 10 Less: imputed interest (105) — Present value of lease liabilities $ 630 $ 10 Three Months Ended
September 30, Nine Months Ended
September 30, 2017 2016 2017 2016 489.6 482.3 485.2 396.9 0.8 1.7 1.1 1.4 490.4 484.0 486.3 398.3 1.1 2.2 1.6 1.8 491.5 486.2 487.9 400.1 (1)For the three and nine months ended September 31, 2017 and 2016 the amount of potentially dilutive securities that are excluded because their effect would be anti-dilutive are not material.Three Months Ended
June 30,Six Months Ended
June 30,2020 2019 2020 2019 Weighted average shares outstanding 424.2 423.2 424.0 423.1 Share-based payment awards classified as participating securities (1) — 0.1 — 0.2 Basic weighted average shares outstanding 424.2 423.3 424.0 423.3 Dilutive securities (2) 0.5 0.2 — 0.3 Diluted weighted average shares outstanding 424.7 423.5 424.0 423.6 SeptemberJune 30, 2017,2020, there were approximately 2.50.7 million shares of the Company’s commonpotentially dilutive restricted stock awards with performance-based vesting targets that hadwere not met and as such, have been issued to the former holders of Jarden shares who are exercising their right to judicial appraisal under Delaware law. Absent consent by the Company, these dissenting shareholders are no longer entitled to the merger consideration, but are instead entitled only to the judicially determined fair value of their shares, plus interest accruingexcluded from the datecomputation of the Jarden Acquisition, payable in cash (see Footnote 18).Stockholders’ Equity and Share-Based Awardsninesix months ended SeptemberJune 30, 2017,2020, the Company awarded 1.41.3 million performance-based restricted stock units (RSUs), which had an aggregate grant date fair value of $65.6$28 million and entitle the recipients to shares of the Company’s common stock primarily at the end of a three-year vesting period. The actual number of shares that will ultimately vest is dependent on the level of achievement of the specified performance conditions.ninesix months ended SeptemberJune 30, 2017,2020, the Company also awarded 0.50.7 million time-based RSUs which hadwith an aggregate grant date fair value of $23.4 million and$13 million.These time-based RSUs entitle recipients to shares of the Company’s common stock atand primarily vest in equal installments over a three-year period.endsix months ended June 30, 2020, the Company also awarded 1.1 million time-based stock options with an aggregate grant date fair value of $6 million. These stock options entitle recipients to purchase shares of the specified vestingCompany’s common stock at an exercise price equal to the fair market value of the underlying shares as of the grant date and primarily vest in equal installments over a three-year period.In September 2017,Company announced that itfair value of stock options granted for the six months ended June 30, 2020, is reinstating its Stock Repurchase Program thatas follows:Risk-free interest rates 1.4 % Expected volatility 41.3 % Expected dividend yield 3.9 % Expected life (in years) 6.2 Exercise price $ 19.67 Intrinsic value $ — Company voluntarily suspended in the fourth quarter of 2015, in association with the Jarden Acquisition.Measurements September 30, 2017 December 31, 2016 Fair Value Asset (Liability) Fair Value Asset (Liability) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total $ — $ 38.5 $ — $ 38.5 $ — $ 33.3 $ — $ 33.3 — (101.6 ) — (101.6 ) — (36.8 ) — (36.8 ) 5.2 3.5 — 8.7 4.8 9.9 — 14.7 June 30, 2020 December 31, 2019 Fair value Asset (Liability) Fair value Asset (Liability) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Derivatives: Assets $ — $ 39 $ — $ 39 $ — $ 13 $ — $ 13 Liabilities — (17) — (17) — (18) — (18) Investment securities, including mutual funds 8 — — 8 10 1 — 11 publicly-tradedpublicly traded investment securities, including mutual funds, fair value is determined on the basis of quoted market prices and, accordingly, such investments have beenare classified as Level 1. Other investment securities are primarily comprised of money market accounts that are classified as Level 2. The Company determines the fair value of its derivative instruments using standard pricing models and market-based assumptions for all significant inputs, such as yield curves and quoted spot and forward exchange rates. Accordingly, the Company’s derivative instruments are classified as Level 2.Nonrecurring Fair Value MeasurementsThe Company’s nonfinancial assets that are measured at fair value on a nonrecurring basis include property, plant and equipment, goodwill, intangible assets and certain other assets. Inabsencefirst quarter of a definitive sales price for these and similar types of assets,2019, the Company generally uses projected cash flows, discounted as necessary, or market multiples to estimate theacquired an equity investment for $18 million, which is traded on an active exchange and therefore has a readily determinable fair values of the impaired assets using key inputs such as management’s projections of cash flows on aheld-and-used basis (if applicable), management’s projections of cash flows upon disposition and discount rates. Key inputs into the market multiple approach include identifying companies comparable to the Company’s business and estimated control premiums. Accordingly, these fair value measurements fall in Level 3 ofvalue. At June 30, 2020, the fair value hierarchy. These assets and certain liabilities are measured at fair value on a nonrecurring basis as part of the Company’s impairment assessments and as circumstances require. Additionally, the carrying value and estimated fair value measurement of assets held for sale (see Footnote 3) are classified as Level 3, as theequity investment was $8 million. For equity investments with readily determinable fair values utilize significant unobservable inputs.109 and Footnote 11,10, respectively.March 31, 2020 December 31, 2019 Indefinite-lived intangible assets $ 796 $ 1,365 In order to align reporting withCompany’s New Growth Game Plan strategy and organization structure, effective January 1, 2017first quarter of 2020, the Company isappointed separate Chief Executive Officers for its Food and Commercial business units, each reporting directly to the chief operating decision maker (CODM). The Company determined these appointments required a reassessment of its financial results in fiveoperating and reportable segments. As a result of its assessment, the Company concluded that the Food and Commercial business units were 2 separate operating segments but met the requirements to be aggregated into a single reportable segment, pursuant to authoritative accounting literature, as Live, Learn, Work, Playthey had similar economic and Other.Segment Key Brands Description of Primary Products Appliances and Cookware Calphalon®, Crock-Pot®, Mr. Coffee®, Oster® and Sunbeam® Household products, including kitchen appliances, gourmet cookware, bakeware and cutlery Commercial Solutions BRK®, First Alert®, Mapa®, Quickie®, Rubbermaid Commercial Products®, and Spontex® Commercial cleaning and maintenance solutions, hygiene systems and material handling solutions, connected home and security and smoke and carbon monoxide alarms Home
SolutionsBall® (1), Chesapeake Bay Candle®, FoodSaver®, Rubbermaid®, Sistema®, WoodWick® and Yankee Candle® Food storage and home storage products, fresh preserving products, vacuum sealing products and home fragrance products Learning and
DevelopmentAprica®, Baby Jogger®, Dymo®, Elmer’s®, EXPO®, Graco®, Mr. Sketch®, NUK®, Paper Mate®, Parker®, Prismacolor®, Sharpie®, Tigex® Waterman® and X-Acto® Writing instruments, including markers and highlighters, pens and pencils; art products; activity-based adhesive and cutting products; labeling solutions; baby gear and infant care products Outdoor and Recreation Coleman®, Contigo®, ExOfficio®, Marmot® Products for outdoor and outdoor-related activities All prior periodsThe Company also provides general corporate services to its segments which is reported as a non-operating segment, Corporate. As a result of these changes, net sales, operating income (loss) and impairment of goodwill and indefinite-lived intangible assets for the three and six months ended June 30, 2019 and segment assets as of December 31, 2019 have been reclassifiedrecast for the new segment structure. Selected information by segment is presented in the following tables (in millions):Three Months Ended
June 30,Six Months Ended
June 30,2020 2019 2020 2019 Net sales (1) Appliances and Cookware $ 359 $ 362 $ 650 $ 692 Commercial Solutions 413 454 826 868 Home Solutions 355 372 702 743 Learning and Development 631 849 1,159 1,430 Outdoor and Recreation 353 443 660 789 $ 2,111 $ 2,480 $ 3,997 $ 4,522 Operating income (loss) (2) Appliances and Cookware $ 10 $ 6 $ (298) $ 2 Commercial Solutions 40 53 (232) 45 Home Solutions 29 4 (262) (1) Learning and Development 126 217 131 306 Outdoor and Recreation 25 40 (449) 52 Corporate (59) (81) (125) (142) Restructuring (8) (8) (10) (19) $ 163 $ 231 $ (1,245) $ 243 June 30, 2020 December 31, 2019 Segment assets Appliances and Cookware $ 1,097 $ 1,468 Commercial Solutions 2,394 2,731 Home Solutions 3,027 3,327 Learning and Development 5,170 4,800 Outdoor and Recreation 1,217 1,570 Corporate 1,352 1,746 $ 14,257 $ 15,642 Three Months Ended
June 30,Six Months Ended
June 30,2020 2019 2020 2019 Impairment of goodwill and indefinite-lived intangibles assets (3) Appliances and Cookware $ — $ — $ 299 $ — Commercial Solutions — 11 320 74 Home Solutions — — 290 — Learning and Development — — 78 — Outdoor and Recreation — — 482 — $ — $ 11 $ 1,469 $ 74 conform business segments primarily on a net sales basis. Corporate depreciation and amortization is allocated to the current reporting structure.Company’s reportable segments are as follows:SegmentKey BrandsDescription of Primary ProductsLiveAprica®, Baby Jogger®, Ball®, Calphalon®,Crock-Pot®, FoodSaver®, Graco®, Holmes®, Mr. Coffee®, NUK®, Oster®, Rubbermaid®, Sunbeam®, Tigex®, Yankee Candle®Household products, including kitchen appliances, gourmet cookware, bakeware and cutlery, food storage and home storage products, fresh preserving products, home fragrance products; baby gear, infant care and health products; home environment products and durable beverage containersLearnDymo®, Elmer’s®, Expo®, Jostens®, Mr. Sketch®, Paper Mate®, Parker®, Prismacolor®, Sharpie®, Waterman®,X-Acto®Writing instruments, including markers and highlighters, pens and pencils; art products; activity-based adhesive and cutting products; fine writing instruments, labeling solutions and a variety of support products for schoolsWorkMapa®, Quickie®, Rainbow®, Rubbermaid®, Rubbermaid Commercial Products®, Spontex®, WaddingtonCleaning and refuse products; hygiene systems; material handling solutions, consumer and commercial totes and commercial food service and premium tableware productsPlayBerkley®, Coleman®, Contigo®, Ex Officio®, Marmot®, Rawlings®, Shakespeare®Products for outdoor and outdoor-related activitiesOtherJarden Plastic Solutions, Jarden Applied Materials, Jarden Zinc Products, Goody®, Bicycle®, Rainbow®Plastic products including closures, contact lens packaging, medical disposables, plastic cutlery and rigid packaging, beauty products, vacuum cleaning systems and gaming productsSegment information as offollowing tables disaggregates revenue by major product grouping source and geography for the periods indicated is as follows (in millions): Three Months Ended September 30, 2017 Live Learn Work Play Other Corporate Restructuring
Costs Consolidated $ 1,483.3 $ 642.0 $ 738.2 $ 610.6 $ 204.1 $ — $ — $ 3,678.2 173.1 67.7 122.6 68.5 25.1 (95.2 ) (38.4 ) 323.4 14,358.9 5,823.5 5,413.5 4,836.3 2,132.4 1,323.4 — 33,888.0 Three Months Ended September 30, 2016 Live Learn Work Play Other Corporate Restructuring
Costs Consolidated $ 1,450.2 $ 637.8 $ 726.9 $ 596.5 $ 543.2 $ — $ — $ 3,954.6 136.1 124.3 116.8 3.6 46.2 (90.1 ) (13.0 ) 323.9 10,301.8 3,022.2 3,615.2 3,766.3 3,019.6 10,690.4 — 34,415.5 Nine Months Ended September 30, 2017 Live Learn Work Play Other Corporate Restructuring
Costs Consolidated $ 3,828.7 $ 2,222.5 $ 2,089.6 $ 2,020.6 $ 837.7 $ — $ — $ 10,999.1 326.9 460.4 306.0 213.8 (16.4 ) (306.0 ) (82.2 ) 902.5 Nine Months Ended September 30, 2016 Live Learn Work Play Other Corporate Restructuring
Costs Consolidated $ 2,895.3 $ 1,934.4 $ 1,642.3 $ 1,342.6 $ 1,313.5 $ — $ — $ 9,128.1 170.6 442.4 184.5 3.7 89.2 (261.7 ) (41.7 ) 587.0 (1)All intercompany transactions have been eliminated.(2)Operating income (loss) by segment is net sales less cost of products sold, SG&A and impairment of goodwill, intangibles and other assets for continuing operations. Certain headquarters expenses of an operational nature are allocated to business segments primarily on a net sales basis. Corporate depreciation and amortization is allocated to the segments on a percentage of sales basis, and the allocated depreciation and amortization are included in segment operating income.Three Months Ended June 30, 2020 Appliances and Cookware Commercial Solutions Home
Solutions Learning and Development Outdoor and Recreation Total Appliances and Cookware $ 359 $ — $ — $ — $ — $ 359 Commercial — 357 — — — 357 Connected Home Security — 56 — — — 56 Food — — 253 — — 253 Home Fragrance — — 102 — — 102 Baby and Parenting — — — 239 — 239 Writing — — — 392 — 392 Outdoor and Recreation — — — — 353 353 Total $ 359 $ 413 $ 355 $ 631 $ 353 $ 2,111 North America $ 223 $ 304 $ 300 $ 490 $ 218 $ 1,535 International 136 109 55 141 135 576 Total $ 359 $ 413 $ 355 $ 631 $ 353 $ 2,111 Three Months Ended June 30, 2019 Appliances and Cookware Commercial Solutions Home
SolutionsLearning and Development Outdoor and Recreation Total Appliances and Cookware $ 362 $ — $ — $ — $ — $ 362 Commercial — 364 — — — 364 Connected Home Security — 90 — — — 90 Food — — 200 — — 200 Home Fragrance — — 172 — — 172 Baby and Parenting — — — 290 — 290 Writing — — — 559 — 559 Outdoor and Recreation — — — — 443 443 Total $ 362 $ 454 $ 372 $ 849 $ 443 $ 2,480 North America $ 220 $ 345 $ 296 $ 630 $ 277 $ 1,768 International 142 109 76 219 166 712 Total $ 362 $ 454 $ 372 $ 849 $ 443 $ 2,480 Six Months Ended June 30, 2020 Appliances and Cookware Commercial Solutions Home
SolutionsLearning and Development Outdoor and Recreation Total Appliances and Cookware $ 650 $ — $ — $ — $ — $ 650 Commercial — 693 — — — 693 Connected Home Security — 133 — — — 133 Food — — 437 — — 437 Home Fragrance — — 265 — — 265 Baby and Parenting — — — 483 — 483 Writing — — — 676 — 676 Outdoor and Recreation — — — — 660 660 Total $ 650 $ 826 $ 702 $ 1,159 $ 660 $ 3,997 North America $ 407 $ 606 $ 567 $ 864 $ 410 $ 2,854 International 243 220 135 295 250 1,143 Total $ 650 $ 826 $ 702 $ 1,159 $ 660 $ 3,997 Six Months Ended June 30, 2019 Appliances and Cookware Commercial Solutions Home
SolutionsLearning and Development Outdoor and Recreation Total Appliances and Cookware $ 692 $ — $ — $ — $ — $ 692 Commercial — 694 — — — 694 Connected Home Security — 174 — — — 174 Food — — 375 — — 375 Home Fragrance — — 368 — — 368 Baby and Parenting — — — 526 — 526 Writing — — — 904 — 904 Outdoor and Recreation — — — — 789 789 Total $ 692 $ 868 $ 743 $ 1,430 $ 789 $ 4,522 North America $ 434 $ 652 $ 579 $ 1,021 $ 490 $ 3,176 International 258 216 164 409 299 1,346 Total $ 692 $ 868 $ 743 $ 1,430 $ 789 $ 4,522 involved in legal proceedingssubject to various claims and lawsuits in the ordinary course of its business. These proceedings includebusiness, including from time to time, contractual disputes, employment and environmental matters, product and general liability claims, for damages arising out of use ofclaims that the Company’s products, allegations of infringement ofCompany has infringed on the intellectual property commercial disputesrights of others, and consumer and employment matters, as well as environmental matters.class actions. Some of the legal proceedings include claims for punitive as well as compensatory damages,damages. In the ordinary course of business, the Company is also subject to legislative requests, regulatory and governmental examinations, information requests and subpoenas, inquiries, investigations, and threatened legal actions and proceedings. In connection with such formal and informal inquiries, the Company receives numerous requests, subpoenas, and orders for documents, testimony, and information in connection with various aspects of its activities. On January 31, 2020, the Company received a subpoena from the U.S. Securities and Exchange Commission (the “SEC”) primarily relating to its sales practices and certain proceedings may purportaccounting matters during the period from January 1, 2016 to be class actions.Recallthe date of Harness Bucklesthe subpoena. The subpoena followed various informal document requests from the SEC staff, including several requests primarily related to the impairment of goodwill and other intangible assets. The Company has cooperated in providing documents and information to the SEC in connection with its requests and intends to continue to do so in connection with the subpoena. The Company cannot predict the timing or outcome of this investigation.Select Car SeatsIn February 2014, Graco, a subsidiarybehalf of the Company announcedagainst certain of the Company's current and former officers and directors. On October 30, 2018, another shareholder filed a voluntary recallputative derivative complaint, Martindale v. Polk, et al., in the U.S.United States District Court for the District of harness buckles usedDelaware (the “Martindale Derivative Action”), asserting substantially similar claims purportedly on approximately 4 million toddler car seats manufactured between 2006 and 2013. In July 2014, Graco announced that it had agreed to expand the recall to include certain infant car seats manufactured between July 2010 and May 2013. In December 2014, the National Highway Traffic Safety Administration (the “NHTSA”) announced an investigation into the timelinessbehalf of the recall,Company against the same defendants. The complaints allege, among other things, violations of the federal securities laws, breaches of fiduciary duties, unjust enrichment, and waste of corporate assets. The factual allegations underlying these claims are similar to the factual allegations made in March 2015, the investigation concludedIn re Newell Brands, Inc. Securities Litigation pending in the United States District Court for the District of New Jersey, further described below. The complaints seek unspecified damages and restitution for the Company from the individual defendants, the payment of costs and attorneys’ fees, and that the Company be directed to reform certain governance and internal procedures. The Streicher Derivative Action and the Martindale Derivative Action have been consolidated and the case is now known as In re Newell Brands Inc. Derivative Litigation (the "Newell Brands Derivative Action”), which is pending in the United States District Court for the District of Delaware. On January 31, 2019, the United States District Court for the District of Delaware stayed the Newell Brands Derivative Action pending the resolution of the motions to dismiss filed in In re Newell Brands Inc. Securities Litigation and Oklahoma Firefighters Pension and Retirement System v. Newell Brands Inc., et al. (described below).Graco entering into a consent order with NHTSA pursuant to which Graco committed to spend $7.0 millionthe April 2016 acquisition of Jarden (the “Registration Statement”). The action was filed on September 6, 2018, and is captioned Oklahoma Firefighters Pension and Retirement System v. Newell Brands Inc., et al., Civil Action No. HUD-L-003492-18. The operative complaint alleges certain violations of the securities laws, including, among other things, that the defendants made certain materially false and misleading statements and omissions in total over a five-year period to enhance child passenger safetythe Registration Statement regarding the Company’s financial results, trends, and make a $3.0 million payment to NHTSA. At September 30, 2017,metrics. The plaintiff seeks compensatory damages and attorneys’ fees and costs, among other relief, but has not specified the amount remainingof damages being sought. The Company intends to be paid associateddefend the litigation vigorously.consent order was immaterialCompany’s motion to dismiss. On February 7, 2020, the plaintiffs filed an appeal to the condensed consolidated financial statementsUnited States Court of Appeals for the Company.iswas entitled to seek an appraisal of his or her shares of Jarden common stock by the Court of Chancery of the State of Delaware as provided under Section 262 of the DGCL. As of September 30, 2017, dissenting stockholders collectively holding approximately 2.9 million shares of Jarden common stock have delivered (and not withdrawn) to Jarden written demands for appraisal. Two separate appraisal petitions, styled asDunham Monthly Distribution Fund v. Jarden Corporation, Case No.12454-VCS (Court of Chancery of the State of Delaware), andMerion Capital LP v. Jarden Corporation, Case No.12456-VCS (Court of Chancery of the State of Delaware), respectively, were filed on June 14, 2016 by aten10 purported Jarden stockholders seeking an appraisal of the fair value of their shares of Jarden common stock pursuant to Section 262 of the DGCL. A third appraisal petition, (), was filed on July 8, 2016 by two2 purported Jarden stockholders seeking an appraisal of the fair value of their shares of Jarden common stock pursuant to Section 262 of the DGCL. A fourth appraisal petition, (Veritian Partners Master Fund LTP v. Jarden Corporation, Case No.12650-VCS (Court of Chancery of the State of Delaware)), was filed on August 12, 2016 by two2 purported Jarden stockholders seeking an appraisal of the fair value of their shares of Jarden common stock pursuant to Section 262 of the DGCL. On or about October 3, 2016, the foregoing petitions were consolidated for joint prosecution under Case No.12456-VCS, and, except as provided below, the litigation is ongoing. The holders of a total of approximately 10.6 million former Jarden shares were represented in these actions initially.eleven11 of the dissenting stockholders, specifically including Merion Capital ERISA LP, Merion Capital LP, Merion Capital II LP, Dunham Monthly Distribution Fund, WCM Alternatives: Event-Driven Fund, Westchester Merger Arbitrage Strategy sleeve of the JNL Multi-Manager Alternative Fund, JNL/Westchester Capital Event Driven Fund, WCM Master Trust, The Merger Fund, The Merger Fund VL and SCA JP Morgan Westchester (collectively, the “Settling Petitioners”), entered into settlement agreements with respect to approximately 7.7 million former Jarden shares (collectively, the “Settlement Agreements”). Pursuant to the Settlement Agreements, in exchange for withdrawing their respective demands for appraisal of their shares of Jarden common stock and a full and final release of all claims, among other things, the Settling Petitioners received the original merger consideration provided for under the Merger Agreement, specifically (1) 0.862 of a share of Newell common stock, and (2) $21.00 in cash, per share of Jarden common stock (collectively, the “Merger Consideration”), excluding any and all other benefits, including, without limitation, the right to accrued interest, dividends, and/or distributions. Accordingly, pursuant to the terms of the Settlement Agreements, Newell issued 6.6 million shares of Newell common stock to the Settling Petitioners (representing the stock component of the Merger Consideration), and authorized payment to the Settling Petitioners of approximately $162 million (representing the cash component of the Merger Consideration). The Court of Chancery of the State of Delaware has dismissed with prejudice the appraisal claims for the Settling Petitioners.remainremained outstanding in the proceedings. The value of the merger consideration attributable to such shares based on the Company’s stock price on the closing date of the Jarden acquisition would have been approximately $171 million in the aggregate. The fair value of the shares of Jarden common stock held by these dissenting stockholders, as determined by the court, would beis payable in cash and could be lower or higher than the merger considerationMerger Consideration to which such Jarden stockholders would have been entitled under the Merger Agreement.Federal Comprehensive Environmental Response Compensation and Liability Act (the “CERCLA”(“CERCLA”) and equivalent state laws. In assessing its environmental response costs, the Company has considered several factors, including the extent of the Company’s volumetric contribution at each site relative to that of other PRPs; the kind of waste; the terms of existing cost sharing and other applicable agreements; the financial ability of other PRPs to share in the payment of requisite costs; the Company’s prior experience with similar sites; environmental studies and cost estimates available to the Company; the effects of inflation on cost estimates; and the extent to which the Company’s, and other parties’, status as PRPs is disputed.as of Septemberat June 30, 20172020 was $49.5$43 million which is included in other accrued liabilities and other noncurrent liabilities in the condensed consolidated balance sheets.Condensed Consolidated Balance Sheets. No insurance recovery was taken into account in determining the Company’s cost estimates or reserves, nor do the Company’s cost estimates or reserves reflect any discounting for present value purposes, except with respect to certain long-term operations and maintenance CERCLA matters.Seventy-two NaN of the GNL recipients, including the Company on behalf of itself and its subsidiaries, Goody Products, Inc. and Berol (the “Company Parties”), have taken over the performance of the remedial investigation (“RI”) and feasibility study (“FS”) for the Lower Passaic River. On April 11, 2014, while work on the RI/FS remained underway, U.S. EPA issued a Source Control Early Action Focused Feasibility Study (“FFS”), which proposed four4 alternatives for remediation of the lower 8.3 miles of the Lower Passaic River. U.S. EPA’s cost estimates for its cleanup alternatives ranged from approximately $315 million to approximately $3.2 billion in capital costs plus from $0.5approximately $1 million to $1.8$2 million in annual maintenance costs for 30 years, with its preferred alternative carrying an estimated cost of approximately $1.7 billion plus an additional $1.6approximately $2 million in annual maintenance costs for 30 years. In February 2015, the participating parties submitted to the U.S. EPA a draft RI, followed by submission of a draft FS in April 2015. The draft FS sets forth various alternatives for remediating the lower 17 miles of the Passaic River, ranging from a “no action” alternative, to targeted remediation of locations along the entire lower 17 mile stretch of the river, to remedial actions consistent with U.S. EPA’s preferred alternative as set forth in the FFS for the lower 8.3 miles coupled with monitored natural recovery and targeted remediation in the upper 9 miles. The cost estimates for these alternatives rangeranged from approximately $28.0$28 million to $2.7 billion, including related operation, maintenance and monitoring costs. The draft RI/FS remains under review by U.S. EPA and is the subject of ongoing discussions among the agency and the submitting parties.its finala conditional approval of the RI report in June 2019.(the “ROD”) in March 2016 which, in the language of the document,(the “2016 ROD”). The 2016 ROD finalizes as the selected remedy the preferred alternative set forth in the FFS, which U.S. EPA estimates will cost $1.4 billion. Subsequent to the release of the 2016 ROD, in March 2016, U.S. EPA issued GNLs for the lower 8.3 miles of the Lower Passaic River (the As with the initial GNL, the Company and Berol were among the recipients of the 2016 GNL. The 2016 GNL states that U.S. EPA would like to determine whether one entity, Occidental Chemical Corporation (“OCC”), will voluntarily perform the remedial design for the selected remedy for the lower 8.3 miles, and that following execution of an agreement for the remedial design, U.S. EPA plans to begin negotiation of a remedial action consent decree “under which OCC and the other major PRPs will implement and/or pay for U.S. EPA’s selected remedy for the lower 8.3 miles of the Lower Passaic River and reimburse U.S. EPA’s costs incurred for the Lower Passaic River.” The letter “encourage[s] the major PRPs to meet and discuss a workable approach to sharing responsibility for implementation and funding of the remedy” without indicating who may be the “major PRPs.” Finally, U.S. EPA states that it “believes that some of the parties that have been identified as PRPs under CERCLA, and some parties not yet named as PRPs, may be eligible for a cash out settlement with U.S. EPA for the lower 8.3 miles of the Lower Passaic River.” $280,600$0.3 million to twenty20 PRPs, not including the Company Parties, for CERCLA Liability (with reservations, such as for Natural Resource Damages) in the lower 8.3 miles of the Lower Passaic River. U.S. EPA further indicated in related correspondence that a cash outcash-out settlement might be appropriate for additional parties that are “not associated with the release of dioxins, furans, or PCBs to the Lower Passaic River.” Then, by letter dated September 18, 2017, U.S. EPA announced an allocation process involving all GNL recipients except those participating in the first-round cash-out settlement, and five public entities. The letter affirms that U.S. EPA anticipates eventually offering cash-out settlements to a number of parties, and that it expects “that the private PRPs responsible for release of dioxin, furans, and/or PCBs will perform the OU2 lower 8.3 mile remedial action.” At this time, it is unclear how the cost of any cleanup would be allocated among any of the parties, including the Company Parties or any other entities. The site is also subject to a Natural Resource Damage Assessment.parties, entered into a mutual contribution release agreement (“Passaic Release”) pertaining to certain costs, but not costs associated with ultimate remedy. draft RI and FS, that no framework for or agreement on allocation for the investigation and ultimate remediation has been developed, and that there exists the potential for further litigation regarding costs and cost sharing, the extent to which the Company Parties may be held liable or responsible is not yet known. Accordingly,OCC stated in a subsequent filing that it “anticipates” asserting additional claims against the defendants “regarding Newark Bay,” which is not possible at this time foralso part of the Company to estimate its ultimate liability related to this matter. because the Company Parties’ facilities are not even alleged to have discharged the contaminants which are of the greatest concern in the river sediments, and because there are numerous other parties who will likely share in any costs of remediation and/or damages. However, in the event of one or more adverse determinations related to this matter, it is possible that the ultimate liability resulting from this matter and the impact on the Company’s results of operations could be material.Clean Air Act Labeling MatterIn April 2015, the Company became aware that two beverage container products, one productAs In connection with the 2018 sale of SeptemberThe Waddington Group, Novolex Holdings, Inc. (the “Buyer”) filed suit against the Company in October 2019 in the Superior Court of Delaware. The Buyer generally alleged that the Company fraudulently breached certain representations in the Equity Purchase Agreement between the Company and Buyer, dated May 2, 2018, resulting in an inflated purchase price for The Waddington Group. The Company intends to defend the litigation vigorously.2017,2020, the Company had approximately$69 $50 million in standby letters of credit primarily related to the Company’s self-insurance programs, including workers’ compensation, product liability and medical expenses.
play. Our products are marketed under a strong portfolio of leading brands, including Paper Mate®, Sharpie®, Dymo®, EXPO®, Parker®, Elmer’s®, Coleman®, Marmot®, Oster®, Sunbeam®, FoodSaver®, Mr. Coffee®, Rubbermaid Commercial Products®, Graco®, Baby Jogger®, NUK®, Calphalon®, Rubbermaid®, Contigo®, First Alert®, Mapa®, Spontex®, Quickie® and Yankee Candle®. The Company sells its products in nearly 200 countries around the world and has operations on the ground in over 40 of these countries, excluding third-party distributors. Segment Key Brands Description of Primary Products Business leading global marketer of consumer goods company with a strong portfolio of well-known brands, including Paper Mate®, Sharpie®, Dymo®, EXPO®, Parker®, Elmer’s®, Coleman®, Jostens®, Marmot®, Rawlings®, Oster®, Sunbeam®, FoodSaver®, Mr. Coffee®, Rubbermaid Commercial Products®, Graco®, Baby Jogger®, NUK®, Calphalon®, Rubbermaid®, Contigo®, First Alert®, Waddington and Yankee Candle®. For hundreds of millions of consumers, Newell Brands makescommercial products that make life better every day for consumers, where they live, learn, work and playDuring 2016,launchedincluding: shifting consumer preferences and behaviors; a highly competitive operating environment; a rapidly changing retail landscape, including the New Growth Game Plan, which isgrowth in e-commerce; continued macroeconomic and political volatility; and an evolving regulatory landscape.strategyturnaround period:simplifyreinvest into the organizationbusiness; free up resources to invest in growth initiativesstrengthen capabilities in support offocusing the Company’s brands. The changes being implemented inbest people on the execution of the New Growth Game Plan are considered key enablers to building a bigger, faster-growing, more global and more profitable company.As part of the New Growth Game Plan, in late 2016right things.beganfor long-term sustainable growth in order to transform from a holding company to anachieve its short-to-near-term goals of:company, consolidating its business units into global divisions while investing to extend its design, innovationmargins; brand development capabilities across a broader setthirdsecond quarter and this major phase of the transformation was completed by year end. These new global divisions are the key commercial nodes in2020, the Company includingimplemented further changes to its management reporting structure which required a new GlobalE-commerce Division, which has responsibility for allE-commerce activity acrossreassessment of its operating and reportable segments. As a result of its assessment, the enterprise. The divisions generally align toCompany concluded that it had the four areas of strategic focus for the Company: Live, Learn, Work, and Play. The new structure became effective January 1, 2017.Organizational StructureNewell Brands makes life better for hundreds of millions of consumers every day, where they Live, Learn, Work, and Play. The Company achieves this impact through its leading portfolio of brands, its commitment to further strengthen those brands, and by deploying these to new markets around the world. In order to align reporting with the Company’s New Growth Game Plan strategy and organization structure, effective January 1, 2017, Newell Brands is reporting its financial results infollowing five segments as Live, Learn, Work, Play and Other as follows:LiveAppliances and CookwareAprica®Calphalon®, Baby Jogger®, Ball®, Calphalon®,Crock-Pot®, FoodSaver®, Graco®, Holmes®Crock-Pot®, Mr. Coffee®Coffee®, NUK®, Oster®, Rubbermaid®, Sunbeam®, Tigex®, Yankee Candle®Oster® and Sunbeam®Household products, including kitchen appliances, gourmet cookware, bakeware and cutlery foodCommercial Solutions BRK®, First Alert®, Mapa®, Quickie®, Rubbermaid Commercial Products®, and Spontex® Commercial cleaning and maintenance solutions, hygiene systems and material handling solutions, connected home and security and smoke and carbon monoxide alarms Home
SolutionsBall® (1), Chesapeake Bay Candle®, FoodSaver®, Rubbermaid®, Sistema®, WoodWick® and Yankee Candle® Food storage and home storage products, fresh preserving products, vacuum sealing products and home fragrance products; baby gear, infant care and health products; home environment products and durable beverage containersLearnLearning and
DevelopmentDymo®Aprica®, Elmer’s®Baby Jogger®, Expo®Dymo®, Jostens®Elmer’s®, EXPO®, Graco®, Mr. Sketch®Sketch®, NUK®, Paper Mate®Mate®, Parker®Parker®, Prismacolor®Prismacolor®, Sharpie®Sharpie®, Waterman®,X-Acto®Writing instruments, including markers and highlighters, pens and pencils; art products; activity-based adhesive and cutting products; fine writing instruments, labeling solutionssolutions; baby gear and a variety of supportinfant care products for schoolsWorkOutdoor and RecreationMapa®Coleman®, Quickie®Contigo®, Rainbow®ExOfficio®, Rubbermaid®, Rubbermaid Commercial Products®, Spontex®, WaddingtonMarmot®Cleaning and refuse products; hygiene systems; material handling solutions, consumer and commercial totes and commercial food service and premium tableware productsPlayBerkley®, Coleman®, Contigo®, Ex Officio®, Marmot®, Rawlings®, Shakespeare®Products for outdoor and outdoor-related activities OtherJarden Plastic Solutions, Jarden Applied Materials, Jarden Zinc Products, Goody®, Bicycle®, Rainbow®Plastic products including closures, contact lens packaging, medical disposables, plastic cutlery and rigid packaging, beauty products, vacuum cleaning systems and gaming productsSummarySignificant 2017 Activities•In January 2017, the Company acquired Smith Mountain, a leading provider of premium home fragrance products, sold primarily under the WoodWick® Candle brand.
Ball Corporation, used under license.•During 2017, the Company completed the sale of its Tools business, including the Irwin®, Lenox® and Hilmor® brands, its Rubbermaid® consumer storage totes business, its stroller business under the Teutonia® brand, its Lehigh business, firebuilding business and its triathlon apparel business under the Zoot® and Squadra® brands.In March 2017,commenced cash tender offers (the “Tender Offers”) totaling approximately $1.06 billion for any and all ofalso provides general corporate services to its 6.25% senior notes due 2018 and up tosegments which is reported as a maximum aggregate principal amount of certain of its other senior notes. In March 2017, pursuant to the Tender Offers the Company repurchased approximately $872 million aggregate principal amount of its senior notes (see “Capital Resources”).
Acquisitions
2017 Activity
In September 2017, the Company acquired Chesapeake Bay Candle, a leading developer, manufacturer and marketer of premium candles and other home fragrance products, focused on consumer wellness and natural fragrance, for a cash purchase price of approximately $75 million. Chesapeake Bay Candle is included in the Live segment from the date of acquisition.
In January 2017, the Company acquired Smith Mountain Industries (“Smith Mountain”), a leading provider of premium home fragrance products, sold primarily under the WoodWick® Candle brand, for a cash purchase price of approximately $100 million. Smith Mountain is included in the Live segment from the date of acquisition.
On April 3, 2017, the Company acquired Sistema Plastics, a leading New Zealand based manufacturer and marketer of innovative food storage containers with strong market shares and presence in Australia, New Zealand, U.K. and parts of continental Europe for a cash purchase price of approximately $472 million. Sistema is included in the Live Segment from the date of acquisition.
2016 Activity
On April 15, 2016, the Company acquired Jarden for total consideration of $18.7 billion including cash paid, shares issued and debt assumed, net of cash acquired (“the Jarden Acquisition”). The total consideration paid or payable for shares of Jarden common stock was approximately $15.3 billion, including $5.4 billion of cash and $9.9 billion of the Company’s common stock. The Jarden Acquisition was accounted for using the purchase method of accounting, and accordingly, Jarden’s results of operations are included in the Company’s results of operations since the acquisition date. Jarden was a leading, global consumer products company with leading brands such as Yankee Candle®,Crock-Pot®, FoodSaver®, Mr. Coffee®, Oster®, Coleman®, First Alert®, Rawlings®, Jostens®, Marmot® and many others. See Footnote 2 of the Notes toUnaudited Condensed Consolidated Financial Statements for further information.
The transformative transaction created
Divestitures
On July 14, 2017, the Company sold its Winter Sports business for a selling price of approximately $240 million, subjectCOVID-19 pandemic, was designed to working capital adjustments.reduce overhead costs, streamline certain underperforming operations and improve future profitability. Restructuring costs associated with this program, which primarily relate to the Home Solutions and Commercial Solutions segments, include employee-related costs, including severance and other termination benefits. During the ninethree and
During 2017,2020, the gross impact was approximately $15 million and $35 million, respectively. The Company will continue to monitor the trade negotiations and deploy mitigation efforts to offset the gross exposure. However, there can be no assurance that the Company soldwill be successful in its Rubbermaid® consumer storage totes business, its stroller businessmitigation efforts.
In March 2017, the Company completed the sale of its Tools business, including the Irwin®, Lenox® and Hilmor® brands. The selling price was $1.95 billion, subject to customary working capital adjustments. The net assets of the Tools business were approximately $1.1 billion, including approximately $711 million of goodwill, resulting in a pretax gain of $771 million, which is included in other (income) expense, net for the nine months ended September 30, 2017.
In June 2016, the Company sold its Décor business, including Levolor® and Kirsch® window coverings and drapery hardware, for consideration, net of fees of approximately $224 million, resulting in a pretax gain of $160 million, which is included in other (income) expense, not for the nine months ended September 30, 2016.
Ongoing Restructuring Initiatives
After the completion of the Jarden Acquisition, the Company initiated a comprehensive strategic assessment of the business and launched a new corporate strategy that focuses the portfolio, prioritizes investment in the categories with the greatest potential for growth, and extends the Company’s advantaged capabilities in insights, product design, innovation, andE-commerce to the broadened portfolio. The investments in new capabilities are designed to unlock the growth potential of the portfolio and will be funded by a commitment to release cost savings from 2016 to 2021 of approximately $1.3 billion through the combination of the completion of Project Renewal (approximately $300 million) and delivery of cost synergies associated with the Jarden integration (approximately $1 billion). This new corporate strategy is called the New Growth Game Plan and builds on the successful track record of growth acceleration, margin development, and value creation associated with the transformation of Newell Rubbermaid Inc. (“Newell Rubbernaid”) from 2011 through 2016.
Project Renewal
In April 2015, the Company committed to a further expansion of Project Renewal (the “April 2015 Expansion”). Project Renewal was initially launched in October 2011 to reduce the complexity of the organization and increase investment in growth platforms within the business. Under Project Renewal, the Company is simplifying and aligning its businesses around two key activities — Brand & Category Development and Market Execution & Delivery. Pursuant to an expansion of Project Renewal in October 2014, the Company is: (i) further streamlining its supply chain function, including reducing overhead and realigning the supply chain management structure; (ii) investing in value analysis and value engineering efforts to reduce product and packaging costs; (iii) reducing operational and manufacturing complexityTemporary Regulations in its Learn segment; and (iv) further streamlining its distribution and transportation functions. Under the April 2015 Expansion, the Company is further implementing additional activities designed to further streamline business partnering functions (e.g., Finance/IT, Legal and Human Resources), optimize global selling and trade marketing functions and rationalize the Company’s real estate portfolio.
See Footnote 5 of the Notes to Condensed Consolidated Financial Statements for further information.
Jarden Integration
the period ending June 30, 2020. The Company currently expectsbelieves it has strong arguments in favor of its position and believes it has met the more likely than not recognition threshold that its position will be sustained. However, due to incur up to $1.0 billionthe inherent uncertainty involved in challenging the validity of restructuring and other costs through 2021 to integrateregulations as well as a potential litigation process, there can be no assurances that the legacy Newell Rubbermaid and Jarden businesses (the “Jarden Integration”). Initially, integration projectsrelevant Temporary Regulations will primarily be focused on driving cost synergiesinvalidated or that a court of law will rule in procurement, overhead functions and organizational changes designed to redefine the operating modelfavor of the Company. If the Company’s position on the Temporary Regulations is not sustained, the Company from a holding companywould be required to recognize an income tax expense of approximately $180 million to $220 million related to an operating company. Restructuring costs associated with integration projects are expected to include employee-related cash costs, including severance, retirement and other termination benefits, and contract termination and other costs.income tax benefit from fiscal year 2018 that was recorded based on regulations in existence at the time. In addition, other costs associated with the Jarden Integration are expectedCompany may be required to include advisorypay any applicable interest and personnel costs for managing and implementing integration projects.
Impact of Hurricanes and Market Conditions
During the third quarter, Hurricane Harvey significantly disrupted a large part of the U.S. resin manufacturing supply chain.penalties. The Company anticipates resin supply availability issuesintends to result in manufacturing disruptions on somevigorously defend its position.
2019
| Three Months Ended September 30, | ||||||||||||||||
(in millions) | 2017 | 2016 | Increase (Decrease) | % Change | ||||||||||||
Net sales | $ | 3,678.2 | $ | 3,954.6 | $ | (276.4 | ) | (7.0 | )% | |||||||
Cost of products sold | 2,410.5 | 2,679.8 | (269.3 | ) | (10.0 | ) | ||||||||||
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Gross margin | 1,267.7 | 1,274.8 | (7.1 | ) | (0.6 | ) | ||||||||||
Selling general and administrative expenses (“SG&A”) | 905.5 | 937.9 | (32.4 | ) | (3.5 | ) | ||||||||||
Restructuring costs | 38.4 | 13.0 | 25.4 | 195.4 | ||||||||||||
Impairment of goodwill, intangibles and other assets | 0.4 | — | 0.4 | NMF | ||||||||||||
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Operating income | 323.4 | 323.9 | (0.5 | ) | (0.2 | ) | ||||||||||
Interest expense, net | 116.2 | 124.5 | (8.3 | ) | (6.7 | ) | ||||||||||
Other (income) expense, net | 41.6 | (0.7 | ) | 42.3 | NMF | |||||||||||
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Income before taxes | $ | 165.6 | $ | 200.1 | $ | (34.5 | ) | (17.2 | ) | |||||||
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NMF — Not meaningful
The decrease in net
| Three Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | 2020 | 2019 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||
| Net sales | $ | 2,111 | $ | 2,480 | $ | (369) | (14.9)% | ||||||||||||||||||||||||||||||||||
| Gross profit | 664 | 865 | (201) | (23.2)% | |||||||||||||||||||||||||||||||||||||
| Gross margin | 31.5 | % | 34.9 | % | |||||||||||||||||||||||||||||||||||||
| Operating income | 163 | 231 | (68) | (29.4)% | |||||||||||||||||||||||||||||||||||||
| Operating margin | 7.7 | % | 9.3 | % | |||||||||||||||||||||||||||||||||||||
| Interest expense, net | 71 | 78 | (7) | (9.0)% | |||||||||||||||||||||||||||||||||||||
| Other (income) expense, net | (1) | — | (1) | (100.0)% | |||||||||||||||||||||||||||||||||||||
| Income before income taxes | 93 | 153 | (60) | (39.2)% | |||||||||||||||||||||||||||||||||||||
| Income tax provision | 15 | 30 | (15) | (50.0)% | |||||||||||||||||||||||||||||||||||||
| Income tax rate | 16.1 | % | 19.6 | % | |||||||||||||||||||||||||||||||||||||
| Diluted earnings per share - continuing operations | $ | 0.18 | $ | 0.29 | |||||||||||||||||||||||||||||||||||||
| Diluted earnings (loss) per share - discontinued operations | — | (0.08) | |||||||||||||||||||||||||||||||||||||||
| Diluted earnings per share - attributable to common shareholders | $ | 0.18 | $ | 0.21 | |||||||||||||||||||||||||||||||||||||
The change in cost of products soldunfavorably impacted net sales by $49 million, or 2%.
logistical challenges. By the end of the second quarter, substantially all of the Company's manufacturing and distribution facilities have since reopened and are operating at or near capacity. The changeCompany's facilities are currently replenishing inventory levels that were depleted by lost production during the temporary closure period. The Company continues to face intermittent transportation and logistical challenges and expects this to persist until the conditions improve globally.
The restructuring costsfollows:
| Three Months Ended June 30, | |||||||||||||||||||||||||||||
| 2020 | 2019 | $ Change | |||||||||||||||||||||||||||
| Impairment of goodwill and intangible assets (see Footnote 7) | $ | — | $ | 11 | $ | (11) | |||||||||||||||||||||||
| Transactions and related costs | 1 | 9 | (8) | ||||||||||||||||||||||||||
Consolidated operating income as a percentage ofSignificant Accounting Policies and Critical Estimates for information.
The decrease in interest expense for the three months ended September 30, 2017, was2020 decreased primarily due to lower average debt levels versus the same prior year period.levels. The weighted average interest rate for the three months ended SeptemberJune 30, 20172020 and 20162019 was approximately 4.0%4.6% and 3.7%4.5%, respectively.
| Three Months Ended June 30, | |||||||||||||||||
| 2020 | 2019 | ||||||||||||||||
| Foreign exchange (gains) losses, net | $ | — | $ | (1) | |||||||||||||
| Fair value equity adjustments (see Footnote 16) | (2) | 1 | |||||||||||||||
| Other losses, net | 1 | — | |||||||||||||||
| $ | (1) | $ | — | ||||||||||||||
| Net Sales | Operating Income (Loss) | |||||||||||||||||||||||||||||||
| Three Months Ended September 30, | Three Months Ended September 30, | |||||||||||||||||||||||||||||||
(in millions) | 2017 | 2016 | Increase (Decrease) | % Change | 2017 | 2016 | Increase (Decrease) | % Change | ||||||||||||||||||||||||
Live | $ | 1,483.3 | $ | 1,450.2 | $ | 33.1 | 2.3 | % | $ | 173.1 | $ | 136.1 | $ | 37.0 | 27.2 | % | ||||||||||||||||
Learn | 642.0 | 637.8 | 4.2 | 0.7 | 67.7 | 124.3 | (56.6 | ) | (45.5 | ) | ||||||||||||||||||||||
Work | 738.2 | 726.9 | 11.3 | 1.6 | 122.6 | 116.8 | 5.8 | 5.0 | ||||||||||||||||||||||||
Play | 610.6 | 596.5 | 14.1 | 2.4 | 68.5 | 3.6 | 64.9 | NMF | ||||||||||||||||||||||||
Other | 204.1 | 543.2 | (339.1 | ) | (62.4 | ) | 25.1 | 46.2 | (21.1 | ) | (45.7 | ) | ||||||||||||||||||||
Corporate | — | — | — | — | (95.2 | ) | (90.1 | ) | (5.1 | ) | (5.7 | ) | ||||||||||||||||||||
Restructuring | — | — | — | — | (38.4 | ) | (13.0 | ) | (25.4 | ) | (195.4 | ) | ||||||||||||||||||||
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| $ | 3,678.2 | $ | 3,954.6 | $ | (276.4 | ) | (7.0 | ) | $ | 323.4 | $ | 323.9 | $ | (0.5 | ) | (0.2 | ) | |||||||||||||||
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Live
The increase in2019
| Three Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | 2020 | 2019 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||
| Net sales | $ | 359 | $ | 362 | $ | (3) | (0.8)% | ||||||||||||||||||||||||||||||||||
| Operating income | 10 | 6 | 4 | 66.7% | |||||||||||||||||||||||||||||||||||||
| Operating margin | 2.8 | % | 1.7 | % | |||||||||||||||||||||||||||||||||||||
Operating income as a percentage ofLatin America.
| Three Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | 2020 | 2019 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||
| Net sales | $ | 413 | $ | 454 | $ | (41) | (9.0)% | ||||||||||||||||||||||||||||||||||
| Operating income | 40 | 53 | (13) | (24.5)% | |||||||||||||||||||||||||||||||||||||
| Operating margin | 9.7 | % | 11.7 | % | |||||||||||||||||||||||||||||||||||||
| Notable items impacting operating income comparability: | |||||||||||||||||||||||||||||||||||||||||
| Impairment of goodwill (See Footnote 7) | $ | — | $ | 11 | |||||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | 2020 | 2019 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||
| Net sales | $ | 355 | $ | 372 | $ | (17) | (4.6)% | ||||||||||||||||||||||||||||||||||
| Operating income | 29 | 4 | 25 | NM | |||||||||||||||||||||||||||||||||||||
| Operating margin | 8.2 | % | 1.1 | % | |||||||||||||||||||||||||||||||||||||
Operating income as a percentagethe operating leases of its Yankee Candle retail store business.
| Three Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | 2020 | 2019 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||
| Net sales | $ | 631 | $ | 849 | $ | (218) | (25.7)% | ||||||||||||||||||||||||||||||||||
| Operating income | 126 | 217 | (91) | (41.9)% | |||||||||||||||||||||||||||||||||||||
| Operating margin | 20.0 | % | 25.6 | % | |||||||||||||||||||||||||||||||||||||
Work
The increase indiscretionary spending, including advertising and promotional costs.
| Three Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | 2020 | 2019 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||
| Net sales | $ | 353 | $ | 443 | $ | (90) | (20.3)% | ||||||||||||||||||||||||||||||||||
| Operating income | 25 | 40 | (15) | (37.5)% | |||||||||||||||||||||||||||||||||||||
| Operating margin | 7.1 | % | 9.0 | % | |||||||||||||||||||||||||||||||||||||
$4 million, or 1%.
Play
The increase in net sales for the three months ended September 30, 2017 was primarily due$25 million as compared to growth generated primarily by the Coleman, Beverage, Fishing and Team Sports categories, in part due to increased demand at certain mass market retailers, improvedE-commerce and promotional activity, partially offset by a decline in the Technical Apparel category.
Operating income as a percentage of net sales for the three months ended September 30, 2017 and 2016 was approximately 11.2% and 0.6%, respectively. The increase was primarily driven by the impact of the 2016 inventorystep-up charge primarily related to the Jarden Acquisition (approximately $57 million), sales growth and the benefit of cost savings and synergies.
Other
The decrease in net sales for the three months ended September 30, 2017 was primarily due to impact of the Divestitures.
Operating income as a percentage of net sales for the three months ended September 30, 2017 and 2016 was approximately 12.3% and 8.5%, respectively. The change was affected by the impact of the 2016 inventorystep-up charge related to the Jarden Acquisition (approximately $28 million) and the impact of the Divestitures.
Nine Months Ended September 30, 2017 vs. Nine Months Ended September 30, 2016
Consolidated Operating Results
| Nine Months Ended September 30, | ||||||||||||||||
(in millions) | 2017 | 2016 | Increase (Decrease) | % Change | ||||||||||||
Net sales | $ | 10,999.1 | $ | 9,128.1 | $ | 1,871.0 | 20.5 | % | ||||||||
Cost of products sold | 7,138.9 | 6,252.0 | 886.9 | 14.2 | ||||||||||||
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Gross margin | 3,860.2 | 2,876.1 | 984.1 | 34.2 | ||||||||||||
Selling general and administrative expenses | 2,790.5 | 2,247.4 | 543.1 | 24.2 | ||||||||||||
Restructuring costs | 82.2 | 41.7 | 40.5 | 97.1 | ||||||||||||
Impairment of goodwill, intangibles and other assets | 85.0 | — | 85.0 | NMF | ||||||||||||
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Operating income | 902.5 | 587.0 | 315.5 | 53.7 | ||||||||||||
Interest expense, net | 353.0 | 280.6 | 72.4 | 25.8 | ||||||||||||
Loss on extinguishment of debt | 32.3 | 47.1 | (14.8 | ) | (31.4 | ) | ||||||||||
Other (income) expense, net | (709.1 | ) | (162.7 | ) | (546.4 | ) | 335.8 | |||||||||
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Income before taxes | $ | 1,226.3 | $ | 422.0 | $ | 804.3 | 190.6 | |||||||||
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NMF — Not meaningful
The increase in net sales for the nine months ended September 30, 2017 was$40 million, primarily due to the Jarden Acquisition,decline in sales mentioned above, as well as other acquisitions (approximately 24%) and growth in the underlying businesses (approximately 1%), primarily in the Learn and Play segmentshigher absorption costs associated with lower sales volume, partially offset by the Divestitures (approximately 8%). Foreign currency impacts on a period-over-period basis were not material.
The change in cost of products sold for the nine months ended September 30, 2017 was primarily due to the Jarden Acquisition,lower overhead costs and discretionary spending, including advertising and promotional costs, as well as other acquisitions (approximately $1.6 billion)prior year costs associated with a product recall and productivity improvements.
| Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | 2020 | 2019 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||
| Net sales | $ | 3,997 | $ | 4,522 | $ | (525) | (11.6)% | ||||||||||||||||||||||||||||||||||
| Gross profit | 1,281 | 1,520 | (239) | (15.7)% | |||||||||||||||||||||||||||||||||||||
| Gross margin | 32.0 | % | 33.6 | % | |||||||||||||||||||||||||||||||||||||
| Operating income (loss) | (1,245) | 243 | (1,488) | NM | |||||||||||||||||||||||||||||||||||||
| Operating margin | (31.1) | % | 5.4 | % | |||||||||||||||||||||||||||||||||||||
| Interest expense, net | 134 | 158 | (24) | (15.2)% | |||||||||||||||||||||||||||||||||||||
| Other expense, net | 11 | 26 | (15) | (57.7)% | |||||||||||||||||||||||||||||||||||||
| Income (loss) before income taxes | (1,390) | 59 | (1,449) | NM | |||||||||||||||||||||||||||||||||||||
| Income tax provision (benefit) | (189) | 10 | (199) | NM | |||||||||||||||||||||||||||||||||||||
| Income tax rate | 13.6 | % | 16.9 | % | |||||||||||||||||||||||||||||||||||||
| Diluted earnings (loss) per share - continuing operations | $ | (2.83) | $ | 0.12 | |||||||||||||||||||||||||||||||||||||
| Diluted earnings (loss) per share - discontinued operations | — | (0.26) | |||||||||||||||||||||||||||||||||||||||
| Diluted loss per share - attributable to common shareholders | $ | (2.83) | $ | (0.14) | |||||||||||||||||||||||||||||||||||||
| Six Months Ended June 30, | |||||||||||||||||||||||||||||
| 2020 | 2019 | $ Change | |||||||||||||||||||||||||||
| Impairment of goodwill and intangible assets (see Footnote 7) | $ | 1,469 | $ | 74 | $ | 1,395 | |||||||||||||||||||||||
| Restructuring (see Footnote 4) and restructuring-related costs | 23 | 35 | (12) | ||||||||||||||||||||||||||
| Transactions and related costs | 2 | 16 | (14) | ||||||||||||||||||||||||||
The change in SG&A for the nine months ended September 30, 2017 was primarily due to the Jarden Acquisition, as well as other acquisitions (approximately $674 million) and increased investment related to brand development, E-commerce and insights, partially offset by the impact of the Divestitures (approximately $175 million) and benefits of synergies and productivity. Additionally, the increase in integration costs (approximately $90 million) was mostly offset by a decrease in certain labor-related costs.
The restructuring costs for the nine months ended September 30, 2017 were mostly comprised of costs related to the Jarden Integration and other restructuring activities, which primarily relate to the Jarden Acquisition. The majority of the restructuring costs incurred during the nine months ended September 30, 2016 relate to Project Renewal.
Consolidated operating income as a percentage of net sales for the nine months ended September 30, 2017 and 2016 was approximately 8.2% and 6.4%, respectively. The change was primarily driven by the aforementioned inventorystep-up charge related to the Jarden Acquisition, the impact of increased net sales and the benefits of synergies and productivity, partially offset by the negative mix effects related to the Jarden Acquisition, increased investment related to the expansion of brand development,E-commerce and insights, as well as costs associated with the deliverycompletion of synergies, and the acquisition-related increaseCompany's Accelerated Transformation Plan in amortization of intangibles.
The increase in interestthe prior year.
| Six Months Ended June 30, | |||||||||||||||||
| 2020 | 2019 | ||||||||||||||||
| Foreign exchange losses, net | $ | 11 | $ | 8 | |||||||||||||
| Fair value equity adjustments (see Footnote 16) | 1 | 18 | |||||||||||||||
| Other (gains) losses, net | (1) | — | |||||||||||||||
| $ | 11 | $ | 26 | ||||||||||||||
| Net Sales | Operating Income (Loss) | |||||||||||||||||||||||||||||||
| Nine Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||
(in millions) | 2017 | 2016 | Increase (Decrease) | % Change | 2017 | 2016 | Increase (Decrease) | % Change | ||||||||||||||||||||||||
Live | $ | 3,828.7 | $ | 2,895.3 | $ | 933.4 | 32.2 | % | $ | 326.9 | $ | 170.6 | $ | 156.3 | 91.6 | % | ||||||||||||||||
Learn | 2,222.5 | 1,934.4 | 288.1 | 14.9 | 460.4 | 442.4 | 18.0 | 4.1 | ||||||||||||||||||||||||
Work | 2,089.6 | 1,642.3 | 447.3 | 27.2 | 306.0 | 184.5 | 121.5 | 65.9 | ||||||||||||||||||||||||
Play | 2,020.6 | 1,342.6 | 678.0 | 50.5 | 213.8 | 3.7 | 210.1 | NMF | ||||||||||||||||||||||||
Other | 837.7 | 1,313.5 | (475.8 | ) | (36.2 | ) | (16.4 | ) | 89.2 | (105.6 | ) | (118.4 | ) | |||||||||||||||||||
Corporate | — | — | — | — | (306.0 | ) | (261.7 | ) | (44.3 | ) | (16.9 | ) | ||||||||||||||||||||
Restructuring | — | — | — | — | (82.2 | ) | (41.7 | ) | (40.5 | ) | (97.1 | ) | ||||||||||||||||||||
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| $ | 10,999.1 | $ | 9,128.1 | $ | 1,871.0 | 20.5 | $ | 902.5 | $ | 587.0 | $ | 315.5 | 53.7 | |||||||||||||||||||
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Nine
Live
The increase inJune 30, 2019
| Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | 2020 | 2019 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||
| Net sales | $ | 650 | $ | 692 | $ | (42) | (6.1)% | ||||||||||||||||||||||||||||||||||
| Operating income (loss) | (298) | 2 | (300) | NM | |||||||||||||||||||||||||||||||||||||
| Operating margin | (45.8) | % | 0.3 | % | |||||||||||||||||||||||||||||||||||||
| Notable items impacting operating income (loss) comparability: | |||||||||||||||||||||||||||||||||||||||||
| Impairment of goodwill and other intangible assets (See Footnote 7) | $ | 299 | $ | — | |||||||||||||||||||||||||||||||||||||
Operating incomeBrazil. The second quarter performance was also negatively impacted by continued
| Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | 2020 | 2019 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||
| Net sales | $ | 826 | $ | 868 | $ | (42) | (4.8)% | ||||||||||||||||||||||||||||||||||
| Operating income (loss) | (232) | 45 | (277) | NM | |||||||||||||||||||||||||||||||||||||
| Operating margin | (28.1) | % | 5.2 | % | |||||||||||||||||||||||||||||||||||||
| Notable items impacting operating income (loss) comparability: | |||||||||||||||||||||||||||||||||||||||||
| Impairment of goodwill (See Footnote 7) | $ | 320 | $ | 74 | |||||||||||||||||||||||||||||||||||||
Learn
The increase incosts.
| Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | 2020 | 2019 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||
| Net sales | $ | 702 | $ | 743 | $ | (41) | (5.5)% | ||||||||||||||||||||||||||||||||||
| Operating loss | (262) | (1) | (261) | NM | |||||||||||||||||||||||||||||||||||||
| Operating margin | (37.3) | % | (0.1) | % | |||||||||||||||||||||||||||||||||||||
| Notable items impacting operating loss comparability: | |||||||||||||||||||||||||||||||||||||||||
| Impairment of intangible assets (See Footnote 7) | $ | 290 | $ | — | |||||||||||||||||||||||||||||||||||||
| Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | 2020 | 2019 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||
| Net sales | $ | 1,159 | $ | 1,430 | $ | (271) | (19.0)% | ||||||||||||||||||||||||||||||||||
| Operating income | 131 | 306 | (175) | (57.2)% | |||||||||||||||||||||||||||||||||||||
| Operating margin | 11.3 | % | 21.4 | % | |||||||||||||||||||||||||||||||||||||
| Notable items impacting operating income comparability: | |||||||||||||||||||||||||||||||||||||||||
| Impairment of intangible assets (See Footnote 7) | $ | 78 | $ | — | |||||||||||||||||||||||||||||||||||||
Operating income as a percentagediscretionary spending, including advertising and promotional costs.
| Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | 2020 | 2019 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||
| Net sales | $ | 660 | $ | 789 | $ | (129) | (16.3)% | ||||||||||||||||||||||||||||||||||
| Operating income (loss) | (449) | 52 | (501) | NM | |||||||||||||||||||||||||||||||||||||
| Operating margin | (68.0) | % | 6.6 | % | |||||||||||||||||||||||||||||||||||||
| Notable items impacting operating income (loss) comparability: | |||||||||||||||||||||||||||||||||||||||||
| Impairment of intangible assets (See Footnote 7) | $ | 482 | $ | — | |||||||||||||||||||||||||||||||||||||
Work
The increase in net sales for the nine months ended September 30, 2017 was primarily due to the Jarden Acquisition (approximately 26%), and growth in the Safety and Security and Waddington categories in part due to timing of promotions at a certain mass market retailer and continued market share growth in the food packaging market, partially offset by revenue declines in the commercial distributor channel.
Operating income as a percentage of net sales for the nine months ended September 30, 2017 and 2016 was approximately 14.6% and 11.2%, respectively. The increase was primarily driven by the impact of the 2016 inventorystep-up charge related to the Jarden Acquisition (approximately $65 million), partially offset by a slight decrease in gross margins primarily due to the mix impact of the Jarden Acquisition.
Play
The increase in net sales for the nine months ended September 30, 2017 was primarily due to the Jarden Acquisition (approximately 48%) with the balance of growth generated primarily by the Beverage, Coleman, Fishing and Team Sports categories, primarily due to increased demand, partially offset by a decline in the Technical Apparel category.
Operating income as a percentage of net sales for the nine months ended September 30, 2017 and 2016 was approximately 10.6% and 0.3%, respectively. The increase was primarily driven by the impact of the 2016 inventorystep-up charge related to the Jarden Acquisition (approximately $148 million).
Other
The decrease in net sales for the nine months ended September 30, 2017 was primarily due to impact of the Divestitures (approximately 55%), partially offset by the Jarden Acquisition (approximately 21%).
Operating income (loss) as a percentage of net sales for the nine months ended September 30, 2017 and 2016 was approximately (2.0%borrow under its existing Accounts Receivable Securitization Facility (the “Securitization Facility”) and 6.8%, respectively. The change was affected by an increase inCredit Revolver. At June 30, 2020, the impairmentCompany had no drawings against the Securitization Facility and Credit Revolver. In addition, the Company does not anticipate repurchasing any of goodwill, intangiblesits common shares outstanding on the open market. In addition, while the Company currently believes its capital structure and other assets (approximately $70 million),cash resources can continue to support the impactfunding of future dividends, the 2016 inventorystep-up charge relatedCompany will continue to the Jarden Acquisition (approximately $48 million), the impact of the Divestitures,evaluate all actions to strengthen its financial position and other costs that are primarily related to assets held for sale.
Liquiditybalance sheet, and Capital Resources
Liquidity
maintain financial liquidity and flexibility and maintaining its capital allocation strategy.
Part II - Item 1A.
| 2017 | 2016 | Increase (Decrease) | ||||||||||
Cash provided by (used in) operating activities | $ | (58.0 | ) | $ | 848.7 | $ | (906.7 | ) | ||||
Cash provided by (used in) investing activities | 1,183.4 | (8,673.9 | ) | 9,857.3 | ||||||||
Cash provided by (used in) financing activities | (971.7 | ) | 8,231.4 | (9.203.1 | ) | |||||||
Currency effect on cash and cash equivalents | 51.1 | (11.0 | ) | 62.1 | ||||||||
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Increase in cash and cash equivalents | $ | 204.8 | $ | 395.2 | $ | (190.4 | ) | |||||
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| 2020 | 2019 | Increase (Decrease) | |||||||||||||||
| Cash provided by (used in) operating activities | $ | 132 | $ | (9) | $ | 141 | |||||||||||
| Cash provided by (used in) investing activities | (88) | 622 | (710) | ||||||||||||||
| Cash provided by (used in) financing activities | 239 | (486) | 725 | ||||||||||||||
| Exchange rate effect on cash, cash equivalents and restricted cash | (20) | 2 | (22) | ||||||||||||||
| Increase in cash, cash equivalents and restricted cash | $ | 263 | $ | 129 | $ | 134 | |||||||||||
period. See Capital Resources for further information.
Activitie
s.
Capital Resources
In March 2017,six months ended June 30, 2020, the Company commenced cash tender offers (the “Tender Offers”) totaling approximately $1.06 billion for any and allrepurchased $15 million of its 6.25%the 4.20% senior notes due 2018 and up to a maximum aggregate principal amount of certain of its other senior notes. In March 2017, pursuant to the Tender Offers, the Company repurchased2026 at approximately $63 million aggregate principal amount of its 6.25% senior notes due 2018, approximately $733 million aggregate principal amount of its 2.6% senior notes due 2019 and approximately $76 million aggregate principal amount of its 4.7% senior notes due 2020 forpar value. The total consideration, excluding accrued interest, ofwas approximately $897$15 million. As a result of these debt extinguishments, the Company recorded a loss on the extinguishment of debt of $27.8 million during the first quarter of 2017, primarily comprised of prepayment premiums and anon-cash charge due to thewrite-off of deferred debt issuance costs.
In April 2017, the Company redeemed the remaining approximately $187 million aggregate principal amount of its 6.25% senior notes due 2018 for total consideration, excluding accrued interest of approximately $195 million. As a result of thispartial debt extinguishment, the Company recorded an immaterial loss.
adjustment or coupon step up, provisions of certain other notes described lower. The 2025 Notes are redeemable in whole or in part, at the option of the Company (1) at any time prior to one month before the stated maturity at a redemption price equal to the greater of (a) 100% of the principal amount or (b) the discounted present value of principal and interest at the Treasury Rate plus 50 basis points, plus accrued interest to but excluding the redemption date; or (2) at any time on or after one month prior to the stated maturity at a price equal to 100% of the principal amount being redeemed, plus accrued interest to but excluding the redemption date. The Company maintainsused the net proceeds from the June 2025 Notes for general corporate purposes, including repayment of outstanding borrowings under the Credit Revolver and accounts receivable securitization facility and intends to use a portion of the proceeds for the repayment or redemption of the 4.70% Senior Notes due 2020.
$300 million, an increase of approximately $100 million from the balance at December 31, 2019. Transactions under this agreement continue to be accounted for as sales of accounts receivable, and the receivables are removed from the Condensed Consolidated Balance Sheet at the time of the sales transaction. The Company classifies the proceeds received from the sales of accounts receivable as an operating cash flow in the unaudited Condensed Consolidated Statement of Cash Flows. The Company records the discount as other (income) expense, net in the Condensed Consolidated Statement of Operations and collections of accounts receivables not yet submitted to the financial institution as a financing cash flow.
In September 2017, the Company announced that it is reinstating its SRP that the Company voluntarily suspended in the fourth quarter of 2015 in association with the Jarden Acquisition. During the nine months ended September 30, 2017, the Company did not repurchase any shares under the SRP. At September 30, 2017, approximately $256 million remains available under the SRP. On November 2, 2017, the Company announced that its Board of Directors approved an extension and expansion to the Company’s existing SRP. Under the updated SRP, the Company is authorized to repurchase up to $1.0 billion of its outstanding shares through the end of 2020. The expansion is incremental to the amount remaining under the previous SRP, which was scheduled to expire at the end of 2017. The repurchase of additional shares in the future will depend upon many factors, including the Company’s financial condition, liquidity and legal requirements.
At September 30, 2017, there were approximately 2.5 million shares of the Company’s common stock that had not been issued and $61 million in cash had not been paid to the former holders of Jarden shares who are exercising their right to judicial appraisal under Delaware law. Absent consent by the Company, these dissenting shareholders are no longer entitled to the merger consideration, but are instead entitled only to the judicially determined fair value of their shares, plus interest accruing from the date of the Jarden Acquisition, payable in cash. However, it is possible that the Company could issue a consent to or reach agreement with one or more of these shareholders resulting in the issuance of Company shares (in lieu of or along with the payment of cash) in settlement of the dissenters’ claims. At September 30, 2017, the Company has accrued approximately $171 million of unpaid consideration related to these former shares of Jarden common stock. In July 2017, approximately 6.6 million shares of the Company’s common stock (representing the stock component of the merger consideration) were issued and approximately $162 million (representing the cash component of the merger consideration) was paid to certain former dissenting shareholders in full settlement of their claims.
2019.
| September 30, 2017 | ||||
| Asset (Liability) | ||||
Derivatives designated as effective hedges: | ||||
Cash flow hedges: | ||||
Cross-currency swaps | $ | (17.2 | ) | |
Foreign currency contracts | (12.2 | ) | ||
Fair value hedges: | ||||
Interest rate swaps | (3.6 | ) | ||
Derivatives not designated as effective hedges: | ||||
Foreign currency contracts | (30.2 | ) | ||
Commodity contracts | 0.1 | |||
|
| |||
Total | $ | (63.1 | ) | |
|
| |||
| June 30, 2020 | |||||
| Asset (Liability) | |||||
| Derivatives designated as effective hedges: | |||||
| Cash flow hedges: | |||||
| Foreign currency contracts | $ | 8 | |||
| Fair value hedges: | |||||
| Interest rate swaps | 8 | ||||
| Net investment hedges: | |||||
| Cross-currency swaps | 4 | ||||
| Derivatives not designated as effective hedges: | |||||
| Foreign currency contracts | 2 | ||||
| Total | $ | 22 | |||
The application of the purchase method of accounting for business combinations requires the use of significant estimates and assumptions in determining the fair value of assets acquired and liabilities assumed in order to properly allocate the purchase price. The estimates of the fair value of the assets acquired and liabilities assumed are based upon assumptions believed to be reasonable using established valuation techniques that consider a number of factors, and when appropriate, valuations performed by independent third party appraisers.
As a result of acquisitions in prior years, the Company has significant intangible assets on its balance sheet that include goodwill and indefinite-lived intangibles (primarily, trademarks and tradenames). The Company’s goodwill
The Company performs its annual impairment testing of goodwill at a reporting unit level, and all of the Company’s goodwill is assigned to the Company’sits reporting units. Reporting units are determined based upon the Company’s organizational structure in place at the date of the goodwill impairment
The Company uses a qualitative approach to testtesting goodwill for impairment by first assessing qualitative factors to determine whether it ismore-likely-than-not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to performand used a quantitative goodwill impairment test. The qualitative approach, which was only applied to a portion of the Company’s reporting units, assesses various factors including, in part, the macroeconomic environment, industry and market specific conditions, financial performance, operating costs and cost impacts, as well as issues or events specific to the reporting unit. If necessary, the next step in the goodwill impairment test involves comparing the fair value of each of the reporting units to the carrying value of those reporting units. If the carrying value of a reporting unit exceeds theits fair value, of the reporting unit, an impairment loss would be recognized (notcalculated as the differences between these amounts, limited to exceed the carrying amount of goodwill). Duereporting unit goodwill allocated to changes in the Company’s reportable segments resulting from the integration of businesses from the Jarden acquisition and significant future projected synergies, the Company proceeded directly to quantitative impairment testing for nearly all its reporting units.
Both qualitative andunit.
TheCookware segment was impaired. During, the six months ended June 30, 2020, the Company usesrecorded a qualitative approachnon-cash charge of $212 million to test indefinite-lived intangible assets forreflect the impairment by first assessing qualitative factors to determine whether it ismore-likely-than-not thatof its goodwill as its carrying value exceeded its fair value. There were no goodwill impairments recorded during the fair value of an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform quantitative impairment testing. The Company applied this qualitative approach to select indefinite-lived intangible assets. For the majoritythree months ended June 30, 2020.
Unaudited Condensed Consolidated Financial Statements for further information.
While some
The Company’s Winter Sports reporting unit was a business held for sale as of the impairment testing date. During the secondfirst quarter of 2017, the Company entered into a definitive agreement to sell the business and used the estimated purchased price (approximately $200 million, net of working capital adjustments) to approximate the enterprise value of the Winter Sports reporting unit. Since the carrying value exceeded the estimated enterprise value of the Winter Sports reporting unit, the Company recorded an impairment charge for goodwill and other intangible assets during second quarter of 2017.
As a result of the annual impairment test of indefinite-lived intangibles assets as of July 1, 2017,2020, the Company determined that nonecertain of theits indefinite-lived intangible assets in the Appliances and Cookware, Commercial Solutions, Home Solutions, Learning and Development and Outdoor and Recreation segments were impaired. Should projected revenues and cash flows not be achieved, estimated fair values could be reduced
The estimated fair values for certainof these indefinite-lived trade names within the Live and Other segments exceededbecause their carrying values by less than a 10% threshold. This primarily relates to trade names fromexceeded their fair values.
Unaudited Condensed Consolidated Financial Statements for further information.
highly uncertain. In addition, the Company performed the quantitative impairment test for a trade name with a carrying value of $208 million within the Food reporting unit, noting the fair value exceeded the carrying value by $4.7 million, or approximately 2%. The Company concluded that this trade name is not impaired. However, a 100 basis point increase in the discount rate used would have resulted in an impairment of approximately $32 million, or approximately 15%, and a 100 basis point decrease in the royalty rate used would have resulted in an impairment of approximately $38 million, or approximately 18%.
The Company also performed the quantitative impairment test for a trade name with a carrying value of $81.0 million within the Gaming reporting unit, noting the fair value exceeded the carrying value by $6.2 million, or approximately 8%. The Company concluded that this trade name is not impaired. However, a 100 basis point increase in the discount rate used would have resulted in an impairment of approximately $10 million, or approximately 12%, and a 100 basis point decrease in the royalty rate used would have resulted in an impairment of approximately $11 million, or approximately 14%.
Somesome of the other inherent estimates and assumptions used in determining fair value of the reporting units are outside the control of management, including interest rates, cost of capital, tax rates, industry growth, credit ratings, foreign exchange rates, labor inflation and industry growth.
tariffs, including the current trade negotiations with China. Given the uncertainty of these factors, as well as the inherent difficulty in predicting the severity and duration of the COVID-19 global pandemic and associated recovery and the uncertainties regarding the potential financial impact on the Company's business and the overall economy, there can be no assurance that the Company's estimates and assumptions made for purposes of the goodwill and indefinite-lived intangible asset impairment testing performed during the first quarter of 2020 will prove to be accurate predictions of the future.
Forward-Looking Statements
Forward-looking statementsassociated carrying values. A hypothetical 10% reduction in this Quarterly Report on Form10-Q (this “Quarterly Report”) are madeforecasted earnings before interest, taxes and amortization used in reliance upon the safe harbor provisionsdiscounted cash flows to estimate the fair value of the Private Securities Litigation Reform Act of 1995. Forward looking statements generally can be identified by the use of words such as “intend,” “anticipate,” “believe,” “estimate,” “project,” “target,” “plan,” “expect,” “will,” “should,” “would” or similar statements. The Company cautions that forward-looking statements arereporting unit would not guarantees because there are inherent difficultieshave resulted in predicting future results. Actual results may differ materially from those expressed or impliedan incremental goodwill impairment charge. A hypothetical 10% reduction in the forward-looking statements. Important factors that could cause actual resultsforecasted debt-free cash flows used in the excess earnings method to differ materiallydetermine the fair value of certain indefinite-lived intangibles in the Company’s Home Solutions and Learning and Development segments would have resulted in incremental impairment charges of $39 million and $13 million, respectively. A hypothetical 10% reduction in forecasted revenue used in the relief from those suggested byroyalty method to determine the forward-looking statements include, but are not limited to:
other factors listed from time to time in our filings with the Securities and Exchange Commission (“SEC”), including, but not limited to our Annual Report on Form10-K, as filed with the SEC.
The information contained in this Report is as of the date indicated. The Company assumes no obligation to update any forward-looking statements contained in this Report as a result of new information or future events or developments. In addition, there can be no assurance that the Company has correctly identified and assessed all of the factors affecting the Company or that the publicly available and other information the Company receives with respect to these factors is complete or correct.
ended December 31, 2016.ended.
AsRule13a-15(b) ofthe issuer in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating such controls and procedures, the Company recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.hashave evaluated the effectiveness of itsthe Company’s disclosure controls and procedures as of the end of the period covered by this Quarterly Report. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures (as definedare not effective at June 30, 2020, due to the material weakness in Rule13a-15(e) underinternal control over financial reporting described below.Exchange Act)quarter ended March 31, 2020 (the “First Quarter 2020 Form 10-Q”) and in Management’s Annual Report on Internal Control over Financial Reporting in Item 9A., Controls and Procedures, of our Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Form 10-K”), we reported a material weakness in our internal control over financial reporting in that the Company had not designed and maintained effective controls over the accounting for the impact of divestitures. Specifically, the Company did not design and maintain effective controls to ensure that deferred taxes were included completely and accurately in the carrying values of assets held for sale and that the intraperiod tax allocation between continuing and discontinued operations was accurate. In addition, the Company did not design and maintain effective controls to ensure that the current and noncurrent classification of assets and liabilities held for sale was accurate.endquarter ended December 31, 2019 impacting the current tax benefit for the quarter ended December 31, 2019; and goodwill, other assets, deferred tax liabilities, other non-current liabilities and accumulated other comprehensive loss as of December 31, 2019. Additionally, in aggregate, these control deficiencies could result in a misstatement of the Company’s aforementioned accounts and disclosures that would result in a material misstatement of the annual or interim consolidated financial statements that would not be prevented or detected. Accordingly, Management has determined that these control deficiencies, in aggregate, constitute a material weakness.covered by this Quarterly Report.As required by Rule13a-15(d) underof time and Management has concluded, through testing, that these controls are operating effectively. The Company will monitor the Exchange Act, the Company’s management, including the Company’s Chief Executive Officereffectiveness of its remediation plan and Chiefwill refine its remediation plan as appropriate.Officer, has evaluatedReportingto determine whether any changes occurred during the quarter covered by this Quarterly Reportended June 30, 2020, that have materially affected, or are reasonably likely to materially affect, ourthe Company’s internal control over financial reporting. Based on that evaluation, there have been no such changes during the quarter covered by this Quarterly Report.
There have been no material changesourthis report, you should carefully consider the risks set forth below and the risk factors from those discloseddescribed in Part I, Item 1A.1A of the Company’sCompany's Annual Report on Form10-K for the fiscal year ended December 31, 2016.2019, which could materially affect our business, liquidity, financial condition or future results. The risk described below, and the risks described in our 2019 Annual Report on Form 10-K are not the only risks the Company faces. Additional risks and uncertainties not currently known or that the Company currently deems to be immaterial also may materially and adversely affect its business, liquidity, financial condition or operating results.
Calendar Month July August September Total SeptemberJune 30, 2017. Total Number
of Shares
Purchased (2) Average
Price Paid
Per Share Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
Repurchase Program (1) Maximum
Approximate
Dollar Value of
Shares that May
Yet Be Purchased
Under the Plans
or Programs (1) — $ — — $ 255,912,000 8,230 50.50 — $ 255,912,000 — — — $ 255,912,000 8,230 50.50 — (1)Under the Company’s SRP, the Company may repurchase shares of its common stock through10b5-1 automatic trading plans, discretionary market purchases, privately negotiated transactions or a combination thereof. In September 2017, the Company announced that it is reinstating its SRP that the Company voluntarily suspended in the fourth quarter of 2015, in association with the Jarden Acquisition. The Company did not repurchase any shares under the SRP during the three months ended September 30, 2017. On November 2, 2017, the Company announced that its Board of Directors approved an extension and expansion to the Company’s existing SRP. Under the updated SRP, the Company is authorized to repurchase up to $1.0 billion of its outstanding shares through the end of 2020. The expansion is incremental to the amount remaining under the previous SRP, which was scheduled to expire at the end of 2017.
2020:(2)All shares purchased by the Company during the three months ended September 30, 2017 were acquired to satisfy employees’ tax withholding and payment obligations in connection with the vesting of awards of restricted stock units, which were purchased by the Company based on their fair market value on the vesting date.Calendar Month Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) April 996 $ 19.90 — $ — May 40,274 11.73 — — June — — — — Total 41,270 $ 11.93 —
*Filed herewith†Represents management contracts and compensatory plans and arrangements.NEWELL BRANDS INC.
RegistrantDate: November 8, 2017August 5, 2020 /s/ Ralph J. NicolettiRalph J. NicolettiExecutive Vice President, Chief Financial OfficerChristopher H. PetersonDate: November 8, 2017/s/ James L. Cunningham, IIIChristopher H. PetersonJames L. Cunningham, IIIChief Financial Officer & President, Business OperationsDate: August 5, 2020 /s/ Robert A. Schmidt Robert A. Schmidt Senior Vice President, Chief Accounting Officer