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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Newell Brands Inc.    NWL

NEWELL BRANDS INC.

(NWL)
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NEWELL BRANDS : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)

02/19/2021 | 06:06am EST
This Management's Discussion and Analysis of Financial Condition and Results of
Operations section should be read in conjunction with "Financial Statements and
Supplementary Data" included in Part II, Item 8 of this 2020 Annual Report and
the Company's audited Consolidated Financial Statements and Notes thereto
included elsewhere in this 2020 Annual Report. The following "Business Strategy"
and "Recent Developments" sections below is a brief presentation of our business
and certain significant items addressed in this section or elsewhere in
this 2020 Annual Report. This section should be read along with the relevant
portions of this 2020 Annual Report for a complete discussion of the events and
items summarized below.


Overview

Newell Brands is a leading global consumer goods company with a strong portfolio
of well-known brands, including Rubbermaid®, Paper Mate®, Sharpie®, Dymo®,
EXPO®, Parker®, Elmer's®, Coleman®, Marmot®, Oster®, Sunbeam®, FoodSaver®, Mr.
Coffee®, Rubbermaid Commercial Products®, Graco®, Baby Jogger®, NUK®,
Calphalon®, Contigo®, First Alert®, Mapa®, Spontex® and Yankee Candle®. Newell
Brands is committed to enhancing the lives of consumers around the world with
planet-friendly, innovative and attractive products that create moments of joy
and provide peace of mind. 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.
Business Strategy

The Company is continuing to execute on its turnaround strategy of building a
global, next generation consumer products company that can unleash the full
potential of its brands in a fast moving omni-channel environment. The strategy,
developed in 2019, is designed to drive sustainable top line growth, improve
operating margins, accelerate cash conversion cycle and strengthen the
portfolio, organizational capabilities and employee engagement, while addressing
key challenges facing the Company. These challenges include: shifting consumer
preferences and behaviors; a highly competitive operating environment; a rapidly
changing retail landscape, including the growth in e-commerce; continued
macroeconomic and political volatility; and an evolving regulatory landscape.
The coronavirus (COVID-19) pandemic and its impact to the Company's business
resulted in the acceleration of these initiatives in many respects.



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The Company has made significant progress on the following imperatives it previously identified as part of its turnaround strategy:


•Strengthening the portfolio by investing in attractive categories aligned with
its capabilities and strategy;
•Driving sustainable profitable growth by focusing on innovation, as well as
growth in digital marketing, e-commerce and its international businesses;
•Improving margins by driving productivity and overhead savings, while
reinvesting into the business;
•Enhancing cash efficiency by improving key working capital metrics, resulting
in a lower cash conversion cycle; and
•Building a winning team through engagement and focusing the best people on the
right things.

Continued execution of these strategic imperatives will better position the Company for long-term sustainable growth. Organizational Structure

The Company's five primary operating segments are as follows: Segment

                                      Key Brands                                  Description of Primary Products
Appliances and Cookware                      Calphalon®, Crock-Pot®, Mr. 

Coffee®, Household products, including kitchen appliances,

                                             Oster® and Sunbeam®                         gourmet cookware, bakeware and cutlery
Commercial Solutions                         BRK®, First Alert®, Mapa®, Quickie®,        Commercial cleaning and maintenance solutions;
                                             Rubbermaid®, Rubbermaid Commercial          closet and garage organization; hygiene systems
                                             Products®, and Spontex®                     and material handling solutions; connected home
                                                                                         and security and smoke and carbon monoxide alarms
Home Solutions                               Ball® (1), Chesapeake Bay Candle®,          Food and home storage products; fresh preserving
                                             FoodSaver®, Rubbermaid®, Sistema®,          products, vacuum sealing products and home
                                             WoodWick® and Yankee Candle®                fragrance products
Learning and Development                     Aprica®, Baby Jogger®, Dymo®,               Baby gear and infant care products; writing
                                             Elmer's®, EXPO®, Graco®, Mr. Sketch®,       instruments, including markers and highlighters,
                                             NUK®, Paper Mate®, Parker®,                 pens and pencils; art products; activity-based
                                             Prismacolor®, Sharpie®, Tigex®              adhesive and cutting products and labeling
                                             Waterman® and X-Acto®                       solutions
Outdoor and Recreation                       Coleman®, Contigo®, ExOfficio®,             Products for outdoor and outdoor-related
                                             Marmot®                                     activities

(1) [[Image Removed: nwl-20201231_g1.gif]] and Ball®, TMs Ball Corporation, used under license.


This structure reflects the manner in which the chief operating decision maker
regularly assesses information for decision-making purposes, including the
allocation of resources. The Company also provides general corporate services to
its segments which is reported as a non-operating segment, Corporate. See
Footnote 17 of the Notes to the Consolidated Financial Statements for further
information.

Recent Developments

Coronavirus (COVID-19)

Beginning late in the fourth quarter of 2019 through 2020 and into 2021,
COVID-19 emerged and subsequently spread globally, ultimately being declared a
pandemic by the World Health Organization. The pandemic resulted in various
federal, state and local governments, as well as private entities, mandating
restrictions on travel and public gatherings, closure of non-essential commerce,
stay at home orders and quarantining of people to limit exposure to the virus.
The Company's global operations, similar to those of many large, multi-national
corporations, experienced significant COVID-19 related disruption to its
business in three primary areas:

•Supply chain. While the majority of the Company's factories are considered
essential in their applicable jurisdictions and have remained operational, the
Company experienced disruption at certain of its facilities. Of its 135
manufacturing and distribution facilities, approximately 20 were temporarily
closed at the end of the first quarter of 2020, the most significant of which
were its South Deerfield, MA, Home Fragrance plant, its Mexicali, Mexico and
India Writing facilities and its Juarez, Mexico Connected Home and Security
facility, all of which were closed in accordance with state government
guidelines. By the end of the third quarter of 2020, substantially all of the
Company's manufacturing and distribution facilities reopened and were operating
at or near capacity. Since then, the Company's facilities have replenished most
of the inventory levels that were depleted by lost production during the
temporary closure period. The Company does, however,
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continue to face intermittent supply and labor shortages, capacity constraints,
and transportation and logistical challenges and expects this to persist until
the current economic and public health conditions improve globally.

•Retail. While the Company's largest retail customers experienced a surge in
sales as their stores remained open, a number of secondary customers, primarily
in the specialty and department store channels, temporarily closed their brick
and mortar doors in March 2020, and began to reopen in certain regions where
conditions improved towards the end of the second quarter of 2020. These
dynamics, in combination with some retailers' prioritization of essential items,
have had a meaningful impact on the Company's traditional order patterns. In
addition, the Company temporarily closed its Yankee Candle retail stores in
North America as of mid-March. All of these stores reopened by the end of the
third quarter and have remained open since.

•Consumer demand patterns. During the quarantine phase of the pandemic, consumer
purchasing behavior strongly shifted to certain focused categories. While
certain of the Company's product categories in the Food, Commercial and
Appliances and Cookware business benefited from this shift, others, particularly
the Writing business, experienced significant slowing. Changes in consumer
purchasing patterns, temporary office closures, as well as the shift to remote
learning for schools and other higher education programs in the Fall semester of
2020 adversely impacted the performance of the Writing business during 2020.

In response to the COVID-19 pandemic, the Company focused on protecting the
health and well-being of its employees; maintaining financial viability and
business continuity; and keeping manufacturing facilities and distribution
centers operating, where permitted and deemed prudent, to provide products to
our consumers. The Company put in place internal protocols including the
establishment of a COVID-19 task force to monitor the situation, as well as
communications and guidance issued by foreign, federal, state and local
governments. The Company instituted mandatory work-from-home policies for
employees able to work from home in various locations around the world and
implemented a number of precautionary measures at its manufacturing plants,
warehouses, distribution centers and R&D centers to reduce person-to-person
contact and improve the personal safety for our front-line employees.
Furthermore, the Company temporarily closed all of the world-wide Yankee Candle
retail stores. By the end of the third quarter of 2020, all of the Company's
temporarily closed manufacturing and distribution sites reopened and were
operating at or near capacity. In addition, most of the Company's office
locations have reopened on a limited basis.

The Company continues to monitor developments, including government requirements
and recommendations at the national, state, and local level to evaluate possible
cessation or extensions to all or part of such COVID-19 precautionary
initiatives. As part of the Company's efforts to contain costs and maintain
financial liquidity and flexibility, it instituted a hiring freeze for
non-essential roles, furloughed all field-based and most corporate retail
employees in North America, from April 1, 2020 through the third quarter of
2020, tightened discretionary spending, reduced non-essential travel and
optimized advertising and promotional expenses. In addition, the Company
announced a restructuring program during the second quarter of 2020 to reduce
overhead costs, streamline certain underperforming operations and improve future
profitability.

While the negative effects from the COVID-19 global pandemic in the first half
of 2020 were material to the Company's operating results, the Company saw
positive momentum, which included sales growth during the second half of the
year and strong liquidity with over $1.4 billion in operating cash flow for the
year ended December 31, 2020. The Company believes, however, the extent of the
impact of the COVID-19 pandemic to its businesses, operating results, cash
flows, liquidity and financial condition will be primarily driven by the
severity and duration of the pandemic, the impact of new strains and variants of
the coronavirus, the pandemic's impact on the U.S. and global economies and the
timing, scope and effectiveness of federal, state and local governmental plans
to administer vaccines to the general public, especially in areas where
conditions have recently worsened and lockdowns or travel bans have been
reinstituted. Those primary drivers are beyond the Company's knowledge and
control, and as a result, at this time it is difficult to predict the cumulative
impact, both in terms of severity and duration, COVID-19 will have on its future
sales, operating results, cash flows and financial condition. Furthermore, the
impact to the Company's businesses, operating results, cash flows, liquidity and
financial condition may be further adversely impacted if the COVID-19 global
pandemic continues to exist or worsens for a prolonged period of time or if
plans to administer vaccines are delayed.

See Results of Operations, Critical Accounting Estimates and Footnotes 1 and 7 of the Notes to Consolidated Financial Statements for further information.

Goodwill and Other Indefinite-Lived Intangible Asset Impairments


In conjunction with the Company's annual impairment testing of goodwill and
indefinite-lived intangible assets during the fourth quarter (on December 1),
the Company recorded a non-cash impairment charge of $20 million associated with
a tradename in the Learning and Development segment, as its carrying value
exceeded its fair value. The impairment reflected a downward revision of
forecasted results due to the impact of the delayed and limited re-opening of
schools and offices as a result of the COVID-19 global pandemic, as well as the
continued deterioration in sales for slime-related adhesive products.
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During the third quarter of 2020, the Company concluded that a triggering event
had occurred for an indefinite-lived intangible asset in the Learning and
Development segment. Pursuant to the authoritative literature the Company
performed an impairment test and determined that an indefinite-lived intangible
asset was impaired. During the three months ended September 30, 2020, the
Company recorded a non-cash charge of $2 million to reflect impairment of this
indefinite-lived tradename as its carrying value exceeded its fair value.

During the first quarter of 2020, the Company concluded that a triggering event
had occurred for all of its reporting units as a result of the COVID-19 global
pandemic. Pursuant to the authoritative literature the Company performed an
impairment test and determined that certain of its indefinite-lived intangible
assets in the Appliances and Cookware, Home and Outdoor Living and Learning and
Development segments were impaired. During the three months ended March 31,
2020, the Company recorded an aggregate non-cash charge of $1.3 billion to
reflect impairment of these indefinite-lived tradenames as their carrying values
exceeded their fair values. In addition, the Company determined that its
goodwill associated with its Appliances and Cookware segment was fully impaired.
During, the three months ended March 31, 2020, the Company recorded a non-cash
charge of $212 million to reflect the impairment of its goodwill as its carrying
value exceeded its fair value.

See Results of Operations, Critical Accounting Estimates and Footnotes 1 and 7 of the Notes to Consolidated Financial Statements for further information.

Impacts of Tariffs


The United States Trade Representative ("USTR") imposed increased tariffs on
some Chinese goods imported into the United States, resulting in increased costs
for the Company. In 2020, the Company was successful at securing from the USTR
exemptions and exclusions for some of its products, with the most notable
exemptions being for certain of its baby gear products, which represents a
substantial portion of the Company's tariff exposure. The Company has largely
mitigated its tariff exposure, in part through pricing, productivity and, in
some cases, relocation. The Phase 1 agreement signed on January 15, 2020 with
China reduced tariffs under List 4a from 15% to 7.5%, effective February 14,
2020, and suspended 301 tariffs under List 4b, which went into effect on
December 15, 2019. The terms of the agreement significantly reduced the
estimated impact on tariffs for 2020. In spite of the agreement, a full year of
previously implemented tariffs had a material impact on the Company's operating
results and cash flows, with gross impact of approximately $91 million in 2020,
primarily relating to its Appliances and Cookware, Commercial Solutions, and
Outdoor and Recreation businesses. The Company will continue to monitor the
impact, if any, of new trade policy under the new U.S. Presidential
administration and deploy mitigation efforts to offset the gross exposure.
However, there can be no assurance that the Company will be successful in its
mitigation efforts.

U.S. Treasury Regulations

On June 18, 2019, the U.S.Treasury and the Internal Revenue Service ("IRS")
released temporary regulations under IRC Section 245A ("Section 245A") as
enacted by the 2017 U.S. Tax Reform Legislation ("2017 Tax Reform") and IRC
Section 954(c)(6) (the "Temporary Regulations") to apply retroactively to the
date the 2017 Tax Reform was enacted. On August 21, 2020, the U.S.Treasury and
IRS released finalized versions of the Temporary Regulations (collectively with
the Temporary Regulations, the "Regulations"). The Regulations seek to limit the
100% dividends received deduction permitted by Section 245A for certain
dividends received from controlled foreign corporations and to limit the
applicability of the look-through exception to foreign personal holding company
income for certain dividends received from controlled foreign corporations.
Before the retroactive application of the Regulations, the Company benefited in
2018 from both the 100% dividends received deduction and the look-through
exception to foreign personal holding company income. The Company analyzed the
Regulations and concluded the relevant Regulations were not validly issued.
Therefore, the Company has not accounted for the effects of the Regulations in
its Consolidated Financial Statements for the period ending December 31, 2020.
The Company believes 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 the inherent uncertainty involved in
challenging the validity of regulations as well as a potential litigation
process, there can be no assurances that the relevant Regulations will be
invalidated or that a court of law will rule in favor of the Company. If the
Company's position on the Regulations is not sustained, the Company would be
required to recognize an income tax expense of approximately $180 million to
$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.

Debt Redemption


In November 2020, the Company repurchased $300 million of the 3.85% Senior Notes
due 2023 with available cash on hand. The total consideration, excluding accrued
interest, was approximately $318 million. The Company recorded a loss on
extinguishment of
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debt of $20 million as a result of the partial debt repayment. See Footnote 9 in
Notes to Consolidated Financial Statements for further information.
Results of Operations
Consolidated Operating Results 2020 vs. 2019
                                                                         Years Ended December 31,
(in millions, except per share data)                  2020               2019             $ Change           % Change
Net sales                                         $   9,385$  9,715$    (330)            (3.4)%
Gross profit                                          3,079              3,219               (140)            (4.3)%
Gross margin                                           32.8   %           33.1  %

Operating loss                                         (634)              (482)              (152)            (31.5)%
Operating margin                                       (6.8)  %           (5.0) %

Interest expense, net                                   274                303                (29)            (9.6)%
Loss on extinguishment of debt                           20                 28                 (8)            (28.6)%
Other expense, net                                       78                 39                 39             100.0%
Loss before income taxes                             (1,006)              (852)              (154)            (18.1)%
Income tax benefit                                     (236)            (1,038)               802              77.3%
Income tax rate                                        23.5   %          121.9  %

Diluted earnings (loss) per share - continuing
operations                                        $   (1.82)          $   

0.44

Diluted earnings (loss) per share - discontinued
operations                                                -              

(0.19)

Diluted earnings (loss) per share - attributable $ (1.82)$ 0.25 to common shareholders



Net sales for 2020 decreased 3%, due to a decline in sales within Learning and
Development and Outdoor and Recreation segments. The Learning and Development
segment was impacted by changes in consumer purchasing patterns as well as
delays and limited opening of schools and offices caused by the COVID-19
pandemic. Net sales in the Outdoor and Recreation segment were impacted by lower
overall demand. The net sales decline was partially offset by growth in the
Appliances and Cookware, Commercial Solutions and Home Solutions segments due to
an increase in demand, notably through online channels. Changes in foreign
currency unfavorably impacted net sales by $108 million, or 1%.

Gross profit for 2020 decreased 4% and gross profit margin declined to 32.8% as
compared with 33.1% in the prior year period. The gross margin decline was
driven by higher costs associated with lower sales volume and certain temporary
manufacturing closures, primarily during the first half of the year, as well as
business unit mix and inflation related to input costs. The decline in gross
margin also reflected increased costs across most of its business units related
to the COVID-19 pandemic, including increased employee costs, such as expanded
benefits and frontline incentives, and other costs, such as procurement of
personal protective equipment. The gross profit decline was partially offset by
the cumulative depreciation expense recorded during the prior year, as a result
of the Company's decision to retain the Commercial Business, as well as gross
productivity and lower product recall costs. Changes in foreign currency
exchange rates unfavorably impacted gross profit by $25 million, or 1%.

All of the Company's manufacturing and distribution facilities are operating at
or near capacity and its facilities have replenished most of the inventory
levels that were depleted by lost production during the temporary closure
period, however, the Company does continue to face intermittent supply and labor
shortages, capacity constraints, and transportation and logistical challenges,
which have negatively impacted net sales growth, and expects this to persist
until the conditions improve globally. While the negative effects from the
COVID-19 pandemic in the first half of 2020 were material to the Company's
operating results, the Company saw positive momentum during the second half of
the year. At this time, the Company is unable to predict any further impact,
both in terms of severity and duration, that the COVID-19 global pandemic will
have on its businesses, customers and suppliers. While the Company has deployed
cost containment initiatives to mitigate the impact of the pandemic, such
actions may not be sufficient to mitigate the entire impact. The Company will
continue to monitor developments, including government requirements and
recommendations to evaluate possible further cessation or extensions of its
operations.

See Recent Developments, Critical Accounting Estimates and Footnote 1 in the Notes to Consolidated Financial Statements for further information.

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Notable items impacting operating loss for 2020 and 2019 are as follows:

                                                                                  Years Ended December 31,
(in millions)                                                             2020                 2019            $ Change

Impairment of goodwill and intangible assets (See Footnote 7)

                                                                 $    1,491$ 1,213$     278
Restructuring and restructuring related (See Footnote 4) (a)               44                    82                (38)

Held for sale depreciation and amortization catch-up adjustments (See Footnotes 6 and 7)

                                         -                    57                (57)
Product recall costs (See Footnote 18)                                      2                    20                (18)
Transactions and related costs                                              4                    30                (26)



(a)Restructuring-related costs reported in cost of products sold and selling,
general and administrative expenses ("SG&A") for 2020 were $4 million and $19
million, respectively, and primarily relate to facility closures.
Restructuring-related costs reported in cost of products sold and SG&A for 2019
were $16 million and $39 million, respectively, and primarily relate to
accelerated depreciation associated with restructuring activities.

Operating loss increased to $634 million in 2020 as compared to $482 million in
2019. Operating loss included non-cash impairment charges of goodwill and
certain indefinite-lived intangible assets of $1.5 billion recorded in 2020 as
compared to $1.2 billion of non-cash impairment charges of goodwill and certain
indefinite-lived intangible assets recorded in 2019, which included non-cash
impairment charges of goodwill for businesses previously classified as held for
sale. This performance was partially offset by productivity improvement from
various initiatives, lower restructuring and restructuring-related charges,
lower overhead costs and discretionary spending, including advertising and
promotional costs, cumulative depreciation expense recorded during the prior
year, as a result of the Company's decision to retain the Commercial Business,
lower transaction and related costs associated with the completion of the
Accelerated Transformation Plan ("ATP") in the prior year and lower costs
associated with a 2019 product recall in the Outdoor and Recreation segment. See
Footnotes 7 and 18 of the Notes to Consolidated Financial Statements for further
information.

Interest expense, net for 2020 decreased primarily due to lower debt levels,
slightly offset by the higher rate as a result of previously disclosed debt
ratings downgrades. See Footnote 9 of the Notes to Consolidated Financial
Statements for further information. The weighted average interest rate for 2020
and 2019 was approximately 4.6% and 4.4%, respectively.

The loss on the extinguishment of debt of $20 million and $28 million for 2020
and 2019, respectively, are related to the Company's tender offer of certain of
its senior notes and debt redemptions. See Footnote 9 of the Notes to the
Consolidated Financial Statements for further information.

Other expense, net, for 2020 and 2019 include the following items:

                                                                        Years Ended December 31,
(in millions)                                                          2020                   2019

Pension settlement and non-service costs, net (See Footnote 11)

                                                     $           53          $         1
Foreign exchange losses, net (See Footnote 10)                               17                   13
Fair value equity adjustments (See Footnote 16)                               -                   21
Loss on disposition of businesses, net                                        9                    -
Other                                                                        (1)                   4
                                                                 $           78          $        39



Income tax benefit for 2020 was $236 million as compared to $1.0 billion in
2019. The effective tax rate for 2020 was 23.5% as compared to 121.9% in 2019.
The income tax benefit for 2020 primarily relates to the impact of goodwill
impairment charges, discrete tax benefits associated with the execution of
certain tax planning strategies, $53 million for a reduction in valuation
allowance related to integration of certain U.S. operations, partially offset by
$54 million for a reduction of an uncertain tax position due to a statute of
limitation expiration, $47 million deferred tax effects associated with certain
outside basis differences and tax expense of $27 million related to a change in
the tax status of certain entities upon Internal Revenue Service approval. The
income tax benefit for 2019 primarily relates to a benefit of $522 million
related to the deferred tax effects associated with the internal realignment of
certain intellectual property rights, a benefit of $227 million associated with
a taxable loss related to the impairment of certain assets and the pre-tax net
loss for the year. See Footnote 12 of the Notes to Consolidated Financial
Statements for information.

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Business Segment Operating Results 2020 vs. 2019

Appliances and Cookware
                                                                                Years Ended December 31,
(in millions)                                                2020              2019            $ Change            % Change
Net sales                                                $   1,706$ 1,692$      14                   0.8  %

Operating loss                                                (217)            (535)               318                  59.4  %
Operating margin                                             (12.7) %         (31.6) %

Notable items impacting operating loss
comparability:
Impairment of goodwill and other intangible assets
(See Footnote 7)                                         $     299$   600$    (301)



Appliances and Cookware net sales for 2020 increased 1%, which reflects strong
sales growth driven by category growth at stay at home products including
cooking appliances, most notably in Latin America, the U.K. and Australia. This
performance was partially offset by continued loss in domestic market share in
North America for certain appliance categories driven by the success of newly
launched competitor products. Changes in foreign currency unfavorably impacted
net sales by $77 million, or 4%.

Operating loss for 2020 decreased to $217 million as compared to $535 million in
2019. The improvement in operating results is primarily due to lower non-cash
impairment charges of goodwill and certain indefinite-lived intangible assets as
well as productivity improvements and lower discretionary spending including
advertising and promotional costs, partially offset by transactional foreign
exchange losses in Latin America.

Commercial Solutions

                                                                                 Years Ended December 31,
(in millions)                                                2020                   2019           $ Change            % Change
Net sales                                               $    1,859$ 1,779$     80               4.5%

Operating loss                                                 (85)                 (136)               51              37.5%
Operating margin                                              (4.6)  %              (7.6) %

Notable items impacting operating loss
comparability:
Impairment of goodwill and other intangible             $      320$   310$     10
assets (See Footnote 7)
Held for sale depreciation and amortization
catch-up adjustment                                              -                    57               (57)

(See Footnotes 6 and 7)




Commercial Solutions net sales for 2020 increased 4% which reflected sales
growth in the Commercial business, partially offset by decline in the Connected
Home and Security business unit. The Commercial business unit performance
reflected increased demand in consumable washroom, refuse, hand protection, and
outdoor and laundry categories, partially offset by weakness in food service and
hospitality vertical channels as a result of the ongoing COVID-19 pandemic. The
decline in net sales in the Connected Home and Security business unit was
primarily due to the ongoing COVID-19 pandemic, which shifted consumer
purchasing patterns and caused supply chain constraints, impacting sales to its
retail and contractor channels. Changes in foreign currency unfavorably impacted
net sales by $18 million, or 1%.

Operating loss for 2020 decreased to $85 million as compared to $136 million in
2019. The improvement in operating results is primarily due to the cumulative
depreciation and amortization expense adjustment in the prior year, as a result
of the Company's decision to retain the Commercial Business. The improvement in
the operating results also reflects cost containment initiatives to mitigate the
impact of the COVID-19 pandemic while facilities were closed, including employee
furloughs, gross productivity and lower discretionary spending, including
advertising and promotional costs. This operating performance was partially
offset by the higher costs in Connected Home and Security associated with lower
sales volumes and the temporary closure of its key manufacturing facility in
Mexico during the first half of the year, as well as higher non-cash impairment
charges of goodwill and certain indefinite-lived intangible assets.

                                       31
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Home Solutions

                                                                                  Years Ended December 31,
(in millions)                                                 2020                   2019           $ Change           % Change
Net sales                                                $    1,971$ 1,875$     96              5.1%

Operating loss                                                  (12)                  (17)                5              29.4%
Operating margin                                               (0.6)  %              (0.9) %

Notable items impacting operating loss
comparability:
Impairment of goodwill and other intangible assets
(See Footnote 7)                                                290                   158               132



Home Solutions net sales for 2020 increased 5%, as strong sales performance in
the Food business unit was partially offset by sales declines in the Home
Fragrance business unit. The increase in Food business unit sales reflected
increased demand across the vacuum sealing, fresh preserving and Rubbermaid Food
Storage categories, as a result of the ongoing COVID-19 pandemic, partially
offset by supply chain disruption related to the temporary closure of the since
re-opened Sistema manufacturing facility in New Zealand, as well as supply and
capacity constraints negatively affecting the fresh preserving and vacuum
sealing categories. The decrease in Home Fragrance sales was primarily due to
the temporary closure of all of its North American Yankee Candle retail stores,
supply chain disruptions resulting from the temporary closure of its key
manufacturing facility in Massachusetts and the temporary closure of certain
third-party retail stores in the first half of 2020 as a result of the ongoing
COVID-19 global pandemic. Yankee Candle retail stores re-opened during the third
quarter. The decrease in Home Fragrance sales also reflected the exit of 77
underperforming Yankee Candle retail stores as well as the exiting of its
fundraising business in third quarter of 2020. Changes in foreign currency
favorably impacted net sales by $4 million.

Operating loss for 2020 decreased to $12 million as compared to $17 million in
2019. The decrease in operating loss reflects higher sales volume in the Food
business unit, cost containment initiatives to mitigate the impact while Yankee
Candle retail stores and operating facilities were temporarily closed, including
employee furloughs, lower discretionary spending, including promotional costs,
and gross productivity. This performance was partially offset by non-cash
impairment charges of certain indefinite-lived intangible assets of $290 million
recorded in 2020 as compared to $158 million of non-cash impairment charges of
goodwill and certain indefinite-lived intangible assets recorded in 2019.
Operating loss was also unfavorably impacted by higher costs associated with
lower sales volume in the Home Fragrance business unit and the temporary closure
of their key manufacturing facility in Massachusetts, during the first half of
2020, and non-cash impairment charges of $8 million primarily related to
operating leases of its Yankee Candle retail store business.

Learning and Development

                                                                                Years Ended December 31,
(in millions)                                                2020               2019            $ Change           % Change
Net sales                                                $   2,557$ 2,956$    (399)            (13.5)%

Operating income                                               362               588               (226)            (38.4)%
Operating margin                                              14.2   %          19.9  %

Notable items impacting operating income
comparability:
Impairment of goodwill and other intangible assets
(See Footnote 7)                                         $     100$    25$      75



Learning and Development net sales for 2020 decreased 13% primarily due to the
shift in consumer purchasing patterns, third-party retail store closures and
supply chain disruptions affecting the Writing and Baby and Parenting business
units as a result of the ongoing COVID-19 global pandemic, including the impact
of the delayed re-opening of schools and offices. In particular, the ongoing
COVID-19 global pandemic negatively impacted consumption patterns of markers,
pens and dry erase products. In addition, the net sales decline also reflected
softening trends related to sales of slime-related adhesive products, which is
expected to continue in 2021, as well as the exiting of the North American
distribution of Uniball® products in the prior year. Net sales for the Baby and
Parenting business were relatively flat for 2020. Changes in foreign currency
unfavorably impacted net sales by $5 million.
                                       32
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Operating income for 2020 decreased to $362 million as compared to $588 million
in the prior year period. Operating income was unfavorably impacted by lower
sales as mentioned above, higher costs associated with lower sales volume and
certain temporary manufacturing closures, higher non-cash impairment charges and
increased costs associated with the COVID-19 global pandemic, partially offset
by lower overhead, productivity improvements and discretionary spending,
including advertising and promotional costs.

Outdoor and Recreation
                                                                                Years Ended December 31,
(in millions)                                                2020               2019            $ Change           % Change
Net sales                                                $   1,292$ 1,413$    (121)            (8.6)%

Operating loss                                                (418)              (64)              (354)              NM
Operating margin                                             (32.4)  %          (4.5) %

Notable items impacting operating loss
comparability:
Impairment of goodwill and other intangible assets
(See Footnote 7)                                         $     482$   120$     362
Product recall costs (See Footnote 18)                           2                20                (18)


NM - Not meaningful

Outdoor and Recreation segment net sales for 2020 decreased 9% primarily due to
a shift in consumer purchasing patterns, as a result of the ongoing COVID-19
pandemic, which negatively impacted performance during the first half of the
year. During the second half of the year, demand for outdoor products and
coolers, primarily in North America and Asia improved, partially offset by
decreased demand in apparel and beverage products. Changes in foreign currency
unfavorably impacted net sales by $12 million, or 1%.

Operating loss for 2020 was $418 million as compared to $64 million in the prior
year period. This performance was primarily due to higher non-cash impairment
charges of certain indefinite-lived intangibles assets, lower sales volume as
noted above, unfavorable product mix, partially offset by lower overhead costs
and lower discretionary spending, including advertising and promotional costs,
as well as lower costs associated with a product recall in the prior year, and
productivity improvements.
                                       33
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Consolidated Operating Results 2019 vs. 2018

                                                                               Years Ended December 31,
(in millions, except per share data)                        2019              2018             $ Change           % Change
Net sales                                               $   9,715$ 10,154$    (439)            (4.3)%
Gross profit                                                3,219             3,518               (299)            (8.5)%
Gross margin                                                 33.1  %           34.6  %

Operating loss                                               (482)           (7,554)             7,072              93.6%
Operating margin                                             (5.0) %          (74.4) %

Interest expense, net                                         303               446               (143)            (32.1)%
Loss on extinguishment of debt                                 28                 4                 24               NM
Other (income) expense, net                                    39               (12)                51               NM
Loss before income taxes                                     (852)           (7,992)             7,140              89.3%
Income tax benefit                                         (1,038)           (1,359)               321              23.6%
Income tax rate                                             121.9  %           17.0  %

Diluted earnings (loss) per share - continuing
operations                                              $    0.44$ (14.00)
Diluted loss per share - discontinued operations            (0.19)          

(0.65)

Diluted earnings (loss) per share - attributable
to common shareholders                                  $    0.25$ (14.65)



NM - Not meaningful

Net sales for 2019 decreased 4%, with declines across all segments, primarily within the Appliances and Cookware, Commercial Solutions, and Outdoor and Recreation segments. Changes in foreign currency exchange rates unfavorably impacted net sales by $163 million, or 2%.


Gross profit for 2019 decreased 8% and gross profit margin declined to 33.1% in
2019 as compared with 34.6% in 2018. This performance was primarily due to lower
net sales, product mix, inflation related to input costs and tariffs. Gross
profit and margin in 2019 were also unfavorably impacted by a cumulative
catch-up adjustment for depreciation expense of $48 million related to the
Company's decision to retain the Commercial Business. Approximately $27 million
of this depreciation expense related to the amounts that would have been
recorded in the prior year had the Commercial Business been continuously
classified as held and used. See Footnote 6 of the Notes to the Consolidated
Financial Statements for further information. In addition, gross profit and
margin in 2019 were unfavorably impacted by approximately $20 million of costs
associated with a product recall in the Outdoor and Recreation segment. See
Footnote 18 of the Notes to the Consolidated Financial Statements for further
information. The gross profit decrease was partially offset by productivity
improvement in 2019 from various initiatives. Changes in foreign currency
exchange rates unfavorably impacted gross profit by $56 million, or 2%.

Notable items impacting operating loss for 2019 and 2018 are as follows:

                                                                           Years Ended December 31,
(in millions)                                                      2019               2018            $ Change
Impairment of intangible assets (See Footnote 7)              $   1,213$  8,296$ (7,083)
Restructuring and restructuring related
(See Footnote 4) (a)                                                 82                  98               (16)

Held for sale depreciation and amortization catch-up adjustments (See Footnotes 6 and 7) (b)

                                          57                   -                57
Product recall costs (See Footnote 18)                               20                   -                20
Bad debt write-off for large customer                                 -                  26               (26)


(a)Restructuring-related costs reported in cost of products sold and SG&A for
2019 were $16 million and $39 million, respectively, and primarily relate to
accelerated depreciation associated with restructuring activities.
Restructuring-related costs of $11 million for 2018 were reported in SG&A.
Restructuring costs for 2019 and 2018 were $27 million and $87 million,
respectively, and primarily represent costs associated with the ATP, which was
completed at the end of 2019.
                                       34
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(b)Amounts reported in cost of products sold and SG&A for 2019 were $48 million and $9 million, respectively.


Operating loss decreased to $482 million in 2019 as compared to $7.6 billion in
2018. Operating loss included non-cash impairment charges of goodwill and
certain indefinite-lived intangible assets of $1.2 billion recorded in 2019 as
compared to $8.3 billion of non-cash impairment charges of goodwill and certain
indefinite-lived intangible assets recorded in 2018. This performance also
included overhead reduction driven by various initiatives, lower restructuring
and restructuring-related charges in 2019 primarily related to the now completed
ATP, and the lapping of a bad debt write off of $26 million from a large
customer in the prior year. These decreases in operating loss and operating
margin were partially offset by the cumulative catch-up adjustment for
depreciation and amortization expense of $57 million recorded in 2019 as a
result of the Company's decision to retain the Commercial Business.
Approximately $33 million of this depreciation and amortization expense in 2019
related to the amounts that would have been recorded in the prior year had the
Commercial Business been continuously classified as held and used. In addition,
operating loss and operating margin in 2019 were unfavorably impacted by $20
million of costs associated with a product recall in the Outdoor and Recreation
segment.

Interest expense, net for 2019 decreased primarily due to lower debt levels. The
weighted average interest rates for 2019 and 2018 were approximately 4.4% and
4.2%, respectively.

The loss on the extinguishment of debt of $28 million and $4 million for 2019
and 2018, respectively, were related to the Company's tender offer of certain of
its senior notes and debt redemptions. See Footnote 9 of the Notes to the
Consolidated Financial Statements for further information.

Other (income) expense, net for 2019 and 2018 include the following items:

                                                                             Years Ended December 31,
(in millions)                                                                2019                2018
Foreign exchange losses, net (See Footnote 10)                          $         13          $      8
Fair value equity adjustments (See Footnote 16)                                   21                 1
Pension-related non-service costs, net (See Footnote 11)                           1                (6)
Gain on legacy Jarden investment                                                   -               (11)
Gain on disposition of businesses, net                                             -                (2)
Other                                                                              4                (2)
                                                                        $         39          $    (12)



Income tax benefit for 2019 was $1.0 billion as compared to $1.4 billion in
2018. The effective tax rate for 2019 was 121.9% as compared to 17.0% in 2018.
The income tax benefit for 2019 primarily relates to a benefit of $522 million
related to the deferred tax effects associated with the internal realignment of
certain intellectual property rights, a benefit of $227 million associated with
a taxable loss related to the impairment of certain assets and the pre-tax net
loss for the year. See Footnote 12 of the Notes to Consolidated Financial
Statements for information. The income tax benefit for 2018 primarily relates to
the pre-tax net loss for the year, partially offset by the impact of goodwill
impairment charges which were not tax effected.

Business Segment Operating Results 2019 vs. 2018

Appliances and Cookware
                                                                                Years Ended December 31,
(in millions)                                                2019               2018            $ Change           % Change
Net sales                                                $   1,692$ 1,819$    (127)            (7.0)%

Operating loss                                                (535)           (1,596)             1,061              66.5%
Operating margin                                             (31.6)  %         (87.7) %

Notable items impacting operating loss
comparability:
Impairment of goodwill and other intangible assets
(See Footnote 7)                                               600             1,712             (1,112)


                                       35
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Appliances and Cookware net sales for 2019 decreased 7% primarily due to a loss
in domestic market share in North America for certain appliance categories
driven by the success of newly launched competitive products. The net sales
decline in North America was partially offset by sales growth in Latin America
primarily due to higher volume. Changes in foreign currency exchange rates
unfavorably impacted net sales by $35 million, or 2%.

Operating loss decreased to $535 million in 2019 as compared to $1.6 billion in
2018. Operating loss included non-cash impairment charges of goodwill and
certain indefinite-lived intangible assets of $600 million recorded in 2019 as
compared to $1.7 billion of non-cash impairment charges of goodwill and certain
indefinite-lived intangible assets recorded in 2018. This decrease in operating
loss and operating margin was partially offset by the unfavorable impact of
lower sales and inflation related to input costs and tariffs.

Commercial Solutions
                                                                                Years Ended December 31,
(in millions)                                                2019               2018            $ Change           % Change
Net sales                                                $   1,779$ 1,900$    (121)            (6.4)%

Operating loss                                                (136)             (134)                (2)            (1.5)%
Operating margin                                              (7.6)  %          (7.1) %

Notable items impacting operating loss
comparability:
Impairment of goodwill and other intangible assets
(See Footnote 7)                                         $     310$   410$    (100)
Held for sale depreciation and amortization
catch-up adjustment
(See Footnotes 6 and 7)                                         57                 -                 57


Commercial Solutions net sales for 2019 decreased 6% primarily due to lower
sales in the Commercial business unit, in part due to volume declines at certain
major retailers, and softness in the cleaning and outdoor organization
categories, partially offset by effective net pricing in certain categories.
Changes in foreign currency exchange rates unfavorably impacted net sales by $42
million, or 2%.

Operating loss was $136 million in 2019 as compared to $134 million in 2018.
Operating loss included non-cash impairment charges of goodwill and certain
indefinite-lived intangible assets of $310 million recorded in 2019 as compared
to $410 million of non-cash impairment charges of goodwill and certain
indefinite-lived intangible assets recorded in 2018. This decrease in operating
loss and operating margin also reflected productivity improvement in 2019 from
various initiatives, partially offset by the unfavorable impact of lower sales
and inflation. In addition, operating loss was unfavorably impacted by the
cumulative catch-up adjustment for depreciation and amortization expense of $57
million recorded in 2019 as a result of the Company's decision to retain the
Commercial Business. Approximately $33 million of this depreciation and
amortization expense in 2019 related to the amounts that would have been
recorded in the prior year had the Commercial Business been continuously
classified as held and used. See Footnotes 2, 6 and 7 of the Notes to the
Consolidated Financial Statements for further information.

Home Solutions
                                                                              Years Ended December 31,
(in millions)                                              2019              2018           $ Change            % Change
Net sales                                               $  1,875$ 1,935$    (60)             (3.1)%

Operating loss                                               (17)          (4,270)            4,253              99.6%
Operating margin                                            (0.9) %        (220.7) %

Notable items impacting operating loss
comparability:
Impairment of goodwill and other intangible
assets (See Footnote 7)                                 $    158          $ 

4,406 $ (4,248)



Home Solutions net sales for 2019 decreased 3% primarily due to decline in the
Food business unit, in part due to volume declines at certain major retailers
and softness in the fresh preserving and food storage categories, partially
offset by growth in sales from Sistema products. Net sales declined in the Home
Fragrance business unit due to the exit of 75 underperforming Yankee Candle
                                       36
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retail stores, partially offset by growth in Europe. Changes in foreign currency exchange rates unfavorably impacted net sales by $20 million, or 1%.

Operating loss for 2019 was $17 million as compared to $4.3 billion in 2018. Operating loss included non-cash impairment charges of goodwill and certain indefinite-lived intangible assets of $4.4 billion recorded in 2018. This decrease in operating loss and operating margin was also impacted by lower overhead and advertising and promotional costs.

Learning and Development
                                                                                Years Ended December 31,
(in millions)                                                2019              2018            $ Change            % Change
Net sales                                                $   2,956$ 2,982$     (26)                 (0.9) %

Operating income                                               588              238                350                       NM
Operating margin                                              19.9  %           8.0  %

Notable items impacting operating income
comparability:
Impairment of goodwill and other intangible assets
(See Footnote 7)                                         $      25$   351$    (326)
Fire-related losses, net of insurance recoveries                 -              (11)                11
Bad debt write off for large customer                            -               26                (26)


NM - Not meaningful
Learning and Development net sales for 2019 decreased 1%. Changes in foreign
currency exchange rates unfavorably impacted net sales by $43 million or 1%. The
decrease in net sales was also driven by softening trends in the Writing
business related to sales of slime-related adhesive products, partially offset
by international net sales growth in the Writing business.

Operating income increased to $588 million in 2019 as compared to $238 million
in 2018. Operating income and operating margins
improved primarily due to lower non-cash impairment charges of certain
indefinite-lived intangible assets of $25 million recorded in 2019 as compared
to $351 million of non-cash impairment charges of goodwill and certain
indefinite-lived intangible assets recorded in 2018. The increase in operating
income also included overhead reduction driven by various initiatives in the
current year and the lapping of a bad debt write off from a large customer in
the prior year, partially offset by higher advertising and promotion costs in
the current year and net insurance recoveries from a fire-related loss in the
prior year.

Outdoor and Recreation
                                                                              Years Ended December 31,
(in millions)                                              2019              2018           $ Change            % Change
Net sales                                               $  1,413$ 1,515$   (102)             (6.7)%

Operating loss                                               (64)          (1,293)            1,229              95.1%
Operating margin                                            (4.5) %         (85.3) %

Notable items impacting operating loss
comparability:
Impairment of goodwill and other intangible
assets (See Footnote 7)                                 $    120$ 1,417$ (1,297)
Product recall costs (See Footnote 18)                  $     20          $ 

- $ 20



Outdoor and Recreation segment net sales for 2019 decreased 7% reflecting lost
distribution in certain product categories and unfavorable weather conditions
affecting the Coleman business, partially offset by increased sales in airbeds
and outdoor cooking categories. Changes in foreign currency exchange rates
unfavorably impacted net sales by $23 million, or 2%.
Operating loss decreased to $64 million in 2019 as compared to $1.3 billion in
2018. Operating loss included non-cash impairment charges of goodwill and
certain indefinite-lived intangible assets of $120 million recorded in 2019 as
compared to $1.4 billion of non-cash impairment charges of certain
indefinite-lived intangible assets recorded in 2018. The decrease in operating
loss was also due to overhead reduction driven by various initiatives. These
decreases in operating loss were partially offset by the unfavorable impact of
lower sales, cost of goods inflation and $20 million of costs associated with a
product recall.
                                       37
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Liquidity and Capital Resources


At the onset of the COVID-19 global pandemic, in light of uncertainty in the
global economy as well as equity and bond markets, the Company undertook several
actions to further strengthen its financial position and balance sheet, and
maintain financial liquidity and flexibility, including, issuing debt,
evaluating supply purchases, enhancing customer credit review processes,
reviewing operating expenses, prioritizing capital expenditures, as well as
extending payment terms for goods and services. While the Company has the
ability to continue to take more of these actions, if needed, it also has the
ability to borrow under its existing Accounts Receivable Securitization Facility
(the "Securitization Facility") and $1.25 billion revolving credit facility that
matures in December 2023 (the "Credit Revolver"). At December 31, 2020, the
Company had no outstanding drawings against the Securitization Facility and
Credit Revolver. The Company currently believes its capital structure and cash
resources can continue to support the funding of future dividends and will
continue to evaluate all actions to strengthen its financial position and
balance sheet, and to maintain its financial liquidity, flexibility and capital
allocation strategy.

At December 31, 2020, the Company had cash and cash equivalents of approximately
$981 million, of which approximately $505 million was held by the Company's
non-U.S. subsidiaries. Overall, the Company believes that available cash and
cash equivalents, cash flows generated from future operating activities and
borrowing capacity, along with the actions noted above, provide the Company with
continued financial viability and adequate liquidity to fund its operations,
support its growth platforms, pay down debt and debt maturities as they come due
and complete its ongoing turnaround initiatives. The Company's cash requirements
are subject to change as business conditions warrant. As the COVID-19 global
pandemic is complex and rapidly evolving, the Company's plans as described above
may change. Although the Company saw positive momentum and strong cash generated
from operating activities over the second half of 2020, the Company is still
unable to predict the duration and severity of this pandemic, which could have a
material adverse impact on the Company's future sales, results of operations,
financial position and cash flows, particularly if the global pandemic continues
to exist or worsens for a prolonged period of time, or if plans to administer
vaccines are delayed. Any such material adverse impacts could result in the
Company's inability to satisfy financial maintenance covenants and could limit
the ability to make future borrowings under existing debt instruments.

Cash, cash equivalents and restricted cash changed as follows for 2020, 2019 and
2018 (in millions):
                                                                                                     Increase (Decrease)
Continuing Operations                             2020             2019             2018               2020        2019

Cash provided by operating activities $ 1,432$ 1,090

      $    557$     342$   533
Cash used in investing activities                 (228)            (242)             (208)                14        (34)
Cash used in financing activities                 (559)            (972)             (321)               413       (651)
Discontinued Operations
Cash provided by (used in) operating
activities                                     $     -          $   (46)$    123$      46$  (169)
Cash provided by investing activities                -              978             5,015               (978)    (4,037)
Cash used in financing activities                    -             (932)           (5,133)               932      4,201
Total Company
Cash provided by operating activities          $ 1,432$ 1,044$    680$     388$   364
Cash provided by (used in) investing
activities                                        (228)             736             4,807               (964)    (4,071)
Cash used in financing activities                 (559)          (1,904)           (5,454)             1,345      3,550
Exchange rate effect on cash, cash equivalents
and restricted cash                                  5               (1)              (23)                 6         22
Increase (decrease) in cash, cash equivalents
and restricted cash                            $   650$  (125)$     10$     775$  (135)



The Company tends to generate the majority of its operating cash flow in third
and fourth quarters of the year due to seasonal variations in operating results,
the timing of annual performance-based compensation payments, working capital
requirements and credit terms provided to customers.

Factors Affecting Liquidity


As a result of the debt ratings downgrades by Moody's Corporation ("Moody's")
and S&P Global Inc. ("S&P") described in Footnote 9 of the Notes to Consolidated
Financial Statements, the Company's ability to borrow from the commercial paper
market on terms it deems acceptable or favorable was eliminated. Previously, the
Company was able to issue commercial paper up to a maximum of $800 million
provided there was a sufficient amount available for borrowing under the Credit
Revolver. The Company's ability to borrow under the Credit Revolver was not
affected by the downgrades. As such, the Company does not expect any change in
its ability to access liquidity in the short term as a result of the downgrades.
The interest rate for borrowings under the
                                       38
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Credit Revolver is the borrowing period referenced LIBOR rate plus 127.5 basis
points. 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.

The Credit Revolver requires the maintenance of certain financial covenants. A
failure by the Company to maintain its financial covenants would impair its
ability to borrow under the Credit Revolver. At the time of filing this Annual
Report on Form 10-K, the Company is in compliance with all of its financial
covenants.

In addition, certain of the Company's Senior Notes aggregating to approximately
$4.3 billion in principal amount outstanding are subject to an interest rate
adjustment of 25 basis points as a result of the downgrades from S&P and
Moody's, 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 increased the
Company's interest expense for 2020 by approximately $17 million and
approximately $21 million thereafter, on an annualized basis. The Fitch
downgrade did not impact the interest rates on any of the Company's senior
notes.

Furthermore, the Company may be required to pay a higher interest rate in future financings, and its potential pool of investors and funding sources could decrease as a result of the downgrades.

Cash Flows from Operating Activities


The change in net cash provided by operating activities is primarily due to
successful working capital initiatives, which included: the extension of payment
terms for goods and services with vendors, enhanced customer credit review and
collections processes and evaluating supply purchases and focused inventory
management. In addition, net cash from operating activities benefited from
higher accounts receivable sold under the Customer Receivables Purchase
Agreement and a timing benefit from higher payables due to inventory build to
support demand, which is expected to partially reverse in 2021. The change in
net cash was partially offset by higher annual incentive compensation payments
in the current year.

The change in net cash provided by operating activities from continuing
operations for 2019 is primarily due to favorable working capital management as
a result of the Company's continued focus on improving its working capital.
Accounts receivable decreased in 2019 due to better terms compliance as a result
of improvements in the Company's dispute resolution process and accounts
receivable sold under the Customer Receivables Purchase Agreement. Operating
cash flow also benefited from a decrease in cash paid for interest and income
taxes of approximately $154 million and $136 million, respectively.

See Capital Resources for further information.

Cash Flows from Investing Activities

The change in cash used in investing activities for 2020 was primarily due to higher proceeds from the sale of divested businesses in the prior year, partially offset by lower capital expenditures.


The change in cash used in investing activities for 2019 was primarily due to
higher proceeds from the sale of divested businesses in 2018, cash received by
the Company in 2018 for insurance claims, which include a claim from
fire-related losses and settlement of a note receivable related to a legacy
Jarden investment, partially offset by lower capital expenditures.

Cash Flows from Financing Activities


The change in net cash used in financing activities was primarily due to higher
payments of long-term debt in the prior year, as well as current-year proceeds
from the issuance of the June 2025 Notes (defined below). See Footnote 9 of the
Notes to Consolidated Financial Statements for further information.

The change in financing activities for 2019 was primarily due to the
year-over-year change in debt (approximately $2.2 billion) and a decrease in
shares repurchased (approximately $1.5 billion), partially offset by payments to
dissenting shareholders in 2019 (approximately $171 million) in connection with
the Jarden acquisition. See Footnote 18 of the Notes to Consolidated Financial
Statements for further information.

                                       39
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Capital Resources

In March 2020, the Company repurchased $15 million of the 4.20% senior notes due 2026 at approximately par value. The total consideration, excluding accrued interest, was approximately $15 million. As a result of the partial debt extinguishment, the Company recorded an immaterial loss.


In May 2020, the Company completed a registered public offering of $500 million
in aggregate principal amount of 4.875% senior notes that mature in June 2025
(the "June 2025 Notes") and received proceeds of approximately $491 million, net
of fees and expenses paid. The June 2025 Notes are subject to similar
restrictive and financial covenants as the Company's existing senior notes,
however, they are not subject to the interest rate adjustment or coupon step up
provisions of certain other notes described below. The June 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 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 the
redemption of the outstanding 4.70% Senior Notes due in August 2020 at maturity.

In November 2020, the Company repurchased $300 million of the 3.85% Senior Notes
due 2023 with available cash on hand. The total consideration, excluding accrued
interest, was approximately $318 million. The Company recorded a loss on
extinguishment of debt of $20 million as a result of the partial debt repayment.

On January 25, 2021, the Company delivered a notice of redemption to the holders
of the 3.150% senior notes that will mature in April 2021 (the "April 2021
Notes") that the Company will redeem the April 2021 Notes on March 1, 2021 (the
"Redemption Date") for a redemption price equal to 100% of the current
outstanding aggregate principal amount of the notes, plus accrued and unpaid
interest to the Redemption Date.

Under the Company's $1.25 billion Credit Revolver that matures in December 2023,
the Company may borrow funds on a variety of interest rate terms. Prior to the
Moody's and S&P downgrades discussed above, the Credit Revolver provided the
committed backup liquidity required to issue commercial paper. As a result of
the S&P and Moody's downgrades, the Company could no longer borrow from the
commercial paper market on terms it deems acceptable or favorable. Previously,
the Company was able to issue commercial paper up to a maximum of $800 million
provided there was a sufficient amount available for borrowing under the Credit
Revolver. The Credit Revolver also provides for the issuance of up to $100
million of letters of credit, so long as there is a sufficient amount available
for borrowing under the Credit Revolver. During the second quarter of 2020, the
Company drew down $125 million on the Credit Revolver and used a portion of the
proceeds to repay the outstanding commercial paper of $40 million outstanding at
March 31, 2020. At December 31, 2020, there were no commercial paper balance
borrowings. In addition, there were approximately $20 million of outstanding
standby letters of credit issued against the Credit Revolver and there were no
borrowings outstanding under the Credit Revolver. At December 31, 2020, the net
availability under the Credit Revolver was approximately $1.2 billion.

The Company maintains an Accounts Receivable Securitization Facility. The
aggregate commitment under the Securitization Facility is $600 million. The
Securitization Facility matures in October 2022 and bears interest at a margin
over a variable interest rate. The maximum availability under the Securitization
Facility fluctuates based on eligible accounts receivable balances. In March
2020, the Company amended its Securitization Facility with respect to certain
customer receivables and to remove an originator from the Securitization
Facility. At December 31, 2020, the Company did not have any amounts outstanding
under the Securitization Facility.

During the first quarter of 2020, the Company amended its existing factoring
agreement (the "Customer Receivables Purchase Agreement") to increase the amount
of certain customer receivables that may be sold. The balance of factored
receivables at December 31, 2020 was approximately $350 million. Transactions
under this agreement continue to be accounted for as sales of accounts
receivable, and the receivables sold 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 Consolidated Statement of Cash Flows. The Company records the discount
as other (income) expense, net in the Consolidated Statement of Operations and
collections of accounts receivables not yet submitted to the financial
institution as a financing cash flow.

The Company was in compliance with all of its debt covenants at December 31, 2020.

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Risk Management

From time to time, the Company enters into derivative transactions to hedge its exposures to interest rate, foreign currency rate and commodity price fluctuations. The Company does not enter into derivative transactions for trading purposes.

Interest Rate Contracts


The Company manages its fixed and floating rate debt mix using interest rate
swaps. The Company may use fixed and floating rate swaps to alter its exposure
to the impact of changing interest rates on its consolidated results of
operations and future cash outflows for interest. Floating rate swaps would be
used, depending on market conditions, to convert the fixed rates of long-term
debt into short-term variable rates. Fixed rate swaps would be used to reduce
the Company's risk of the possibility of increased interest costs. Interest rate
swap contracts are therefore used by the Company to separate interest rate risk
from the debt funding decision. The cash paid and received from the settlement
of interest rate swaps is included in interest expense.

Fair Value Hedges


At December 31, 2020, the Company had approximately $100 million notional of
interest rate swaps that exchange a fixed rate of interest for variable rate
(LIBOR) of interest plus a weighted average spread. These floating rate swaps
are designated as fair value hedges against $100 million of principal on the
4.00% senior notes due 2024 for the remaining life of the note. The effective
portion of the fair value gains or losses on these swaps is offset by fair value
adjustments in the underlying debt. On August 15, 2020, a $277 million notional
interest rate swap matured concurrently with the maturity of the 4.70% senior
notes which were repaid during the third quarter.

Cross-Currency Contracts


The Company uses cross-currency swaps to hedge foreign currency risk on certain
financing arrangements. During the first quarter of 2020, the Company entered
into two cross-currency swaps with an aggregate notional amount of $900 million,
which were designated as net investment hedges of the Company's foreign currency
exposure of its net investment in certain Euro-functional currency subsidiaries
with Euro-denominated net assets. With these cross-currency swaps, which mature
in January and February 2025, the Company pays a fixed rate of Euro-based
interest and receives a fixed rate of U.S. dollar interest. The Company has
elected the spot method for assessing the effectiveness of these contracts.
During the year ended December 31, 2020, the Company recognized income of $14
million in interest expense, net, related to the portion of cross-currency swaps
excluded from hedge effectiveness testing. The Company had no cross-currency
swaps used as hedging instruments in 2019.

Foreign Currency Contracts


The Company uses forward foreign currency contracts to mitigate the foreign
currency exchange rate exposure on the cash flows related to forecasted
inventory purchases and sales and have maturity dates through December 2021. 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 accumulated other comprehensive income (loss) ("AOCL") 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 December 31, 2020, the Company had approximately $509 million notional
amount outstanding of forward foreign currency contracts that are designated as
cash flow hedges of forecasted inventory purchases and sales.

The Company also uses foreign currency contracts, primarily forward foreign
currency contracts, to mitigate the foreign currency exposure of certain other
foreign currency transactions. At December 31, 2020, the Company had
approximately $994 million notional amount outstanding of these foreign currency
contracts that are not designated as effective hedges for accounting purposes
and have maturity dates through December 2021. Fair market value gains or losses
are included in the results of operations and are classified in other (income)
expense, net.

Commodity Contracts

To a lesser extent, the Company also enters into commodity-based derivatives in
order to mitigate the risk that the rising price of these commodities could have
on the cost of certain of the Company's raw materials. These commodity-based
derivatives provide the Company with cost certainty. At December 31, 2020, the
Company had no notional amount outstanding of commodity-based derivatives that
are designated as effective hedges for accounting purposes. Fair market value
gains or losses are included in the results of operations and are classified in
cost of products sold.

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The following table presents the fair value of derivative financial instruments at December 31, 2020 (in millions):

                                                      Asset
                                                   (Liability)
Derivatives designated as effective hedges:
Cash flow hedges:
Foreign currency contracts                        $        (18)

Fair value hedges:
Interest rate swaps                                          7
Net investment hedges:
Cross-currency swaps                                       (92)
Derivatives not designated as effective hedges:
Foreign currency contracts                                  (7)
Total                                             $       (110)

Contractual Obligations, Commitments and Off-Balance Sheet Arrangements


The Company has outstanding debt obligations maturing at various dates through
2046. Certain other items, such as purchase commitments and other executory
contracts, are not recognized as liabilities in the Company's consolidated
financial statements but are required to be disclosed. Examples of items not
recognized as liabilities in the Company's consolidated financial statements are
commitments to purchase raw materials or inventory that has not yet been
received at December 31, 2020, and other non-cancelable obligations including
capital assets and other licensing services.

The following table summarizes the effect, that material contractual obligations
and commitments are expected to have on the Company's cash flow in the indicated
period at December 31, 2020. Additional details regarding these obligations are
provided in the Notes to Consolidated Financial Statements:

                                                                                          After
(in millions)                   Total       1 year       2-3 years       4-5 years       5 years
Debt (1)                      $ 5,633$   465$    1,348$      748$ 3,072
Interest on debt (2)            2,216          270             470             353        1,123
Lease obligations (3)             709          159             241             141          168
Purchase obligations (4)          347          248              74              21            4
Tax obligations (5)               107           11              33              63            -
Total (6)                     $ 9,012$ 1,153$    2,166$    1,326$ 4,367



(1)Amounts represent contractual obligations based on the earliest date that the
obligation may become due, excluding interest, based on borrowings outstanding
at December 31, 2020. For further information relating to these obligations, see
Footnote 9 of the Notes to Consolidated Financial Statements.
(2)Amounts represent estimated interest payable on borrowings outstanding at
December 31, 2020, excluding the impact of fixed to floating rate interest rate
swaps. Interest on floating-rate debt was estimated using the rate in effect at
December 31, 2020. For further information, see Footnote 9 of the Notes to
Consolidated Financial Statements.
(3)Amounts represent lease liabilities on operating and financing leases at
December 31, 2020. See Footnote 13 of the Notes to Consolidated Financial
Statements.
(4)Primarily consists of purchase commitments with suppliers entered into at
December 31, 2020, for the purchase of materials, packaging and other components
and services. These purchase commitment amounts represent only those items which
are based on agreements that are legally enforceable and that specify all
significant terms including minimum quantity, price and term and do not
represent total anticipated purchases.
(5)Represents the future cash payments related to 2017 Tax Reform, for the
one-time provisional transition tax on the Company's previously untaxed foreign
earnings.
(6)Total does not include contractual obligations reported on the December 31,
2020 balance sheet as current liabilities, except for current portion of
long-term debt, short-term debt and accrued interest.

The Company also has liabilities for uncertain tax positions and unrecognized
tax benefits. The Company is under audit from time-to-time by the IRS and other
taxing authorities, and it is possible that the amount of the liability for
uncertain tax positions and unrecognized tax benefits could change in the coming
year. While it is possible that one or more of these examinations may be
resolved in the next year, the Company is not able to reasonably estimate the
timing or the amount by which the liability will be settled over time;
therefore, the $452 million in unrecognized tax benefits at December 31, 2020,
is excluded from the preceding table. See Footnote 12 of the Notes to
Consolidated Financial Statements for additional information.
                                       42
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Additionally, the Company has obligations with respect to its pension and
postretirement benefit plans, which are excluded from the preceding table. The
timing and amounts of the funding requirements are uncertain because they are
dependent on interest rates and actual returns on plan assets, among other
factors. See Footnote 11 of the Notes to Consolidated Financial Statements for
further information.

At December 31, 2020, the Company had approximately $51 million in standby
letters of credit primarily related to the Company's self-insurance programs,
including workers' compensation, product liability and medical. See Footnote 18
of the Notes to Consolidated Financial Statements for further information.

At December 31, 2020, the Company did not have any significant off-balance sheet arrangements, as defined in Item 303(a)(4) (ii) of Regulation S-K.

Critical Accounting Estimates


The Company's significant accounting policies are more fully described in
Footnote 1 of the Notes to Consolidated Financial Statements. As disclosed in
that footnote, the preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions about future events that affect the amounts reported in the
financial statements and accompanying footnotes. Future events and their effects
cannot be determined with absolute certainty. Therefore, the determination of
estimates requires the exercise of judgment. Actual results will differ from
those estimates, and such differences may be material to the Consolidated
Financial Statements. The following sections describe the Company's critical
accounting policies.

Revenue Recognition

The Company recognizes revenue when performance obligations under the terms of a
contract with the customer are satisfied and are recognized at a point in time,
which generally occurs either on shipment or on delivery based on contractual
terms, which is also when control is transferred. The Company's primary
performance obligation is the distribution and sales of its consumer and
commercial products to its customers.

Revenue is measured as the amount of consideration for which it expects to be
entitled in exchange for transferring goods or providing services. Certain
customers may receive cash and/or non-cash incentives such as cash discounts,
returns, credits or reimbursements related to defective products, customer
discounts (such as volume or trade discounts), cooperative advertising and other
customer-related programs, which are accounted for as variable consideration. In
some cases, the Company must apply judgment, including contractual rates and
historical payment trends, when estimating variable consideration.

In addition, the Company participates in various programs and arrangements with
customers designed to increase the sale of products by these customers. Among
the programs negotiated are arrangements under which allowances are earned by
customers for attaining agreed-upon sales levels or for participating in
specific marketing programs. Coupon programs are also developed on a customer-
and territory-specific basis with the intent of increasing sales by all
customers.

Under customer programs and arrangements that require sales incentives to be
paid in advance, the Company amortizes the amount paid over the period of
benefit or contractual sales volume. When incentives are paid in arrears, the
Company accrues the estimated amount to be paid based on the program's
contractual terms, expected customer performance and/or estimated sales volume.
These estimates are determined using historical customer experience and other
factors, which sometimes require significant judgment. Due to the length of time
necessary to obtain relevant data from customers, among other factors, actual
amounts paid can differ from these estimates.
Sales taxes and other similar taxes are excluded from revenue. The Company has
elected to account for shipping and handling activities as a fulfillment cost.
The Company also elected not to disclose the value of unsatisfied performance
obligations for (i) contracts with an original expected length of one year or
less and (ii) contracts for which revenue is recognized at the amount to which
the Company has the right to invoice for services performed.

Goodwill and Indefinite-Lived Intangibles


Goodwill and indefinite-lived intangibles are tested and reviewed for impairment
annually during the fourth quarter (on December 1), or more frequently if facts
and circumstances warrant. On December 1, 2020, the carrying values for total
goodwill and indefinite-lived intangible assets were $3.5 billion and $2.3
billion, respectively.

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Goodwill

Goodwill is tested for impairment at a reporting unit level, and all of the Company's goodwill is assigned to its reporting units. Reporting units are determined based upon the Company's organizational structure in place at the date of the goodwill impairment testing and generally one level below the operating segment level. The Company's operations are comprised of eight reporting units, within its five primary operating segments.


During the first quarter of 2020, the Company concluded that an impairment
triggering event had occurred for all of its reporting units as the Company has
experienced significant COVID-19 related disruption to its business in three
primary areas: supply chain, as certain manufacturing and distribution
facilities were temporarily closed in line with government guidelines; the
temporary closure of secondary customer retail stores as well as the Company's
Yankee Candle retail stores in North America; and changes in consumer demand
patterns to certain focused categories. The Company used a quantitative
approach, which 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 its fair value, an impairment loss would be calculated as
the differences between these amounts, limited to the amount of reporting unit
goodwill allocated to the reporting unit.

The quantitative goodwill impairment testing requires significant use of
judgment and assumptions, such as the identification of reporting units; the
assignment of assets and liabilities to reporting units; and the estimation of
future cash flows, business growth rates, terminal values, discount rates and
total enterprise value. The income approach used is the discounted cash flow
methodology and is based on five-year cash flow projections. The cash flows
projected are analyzed on a "debt-free" basis (before cash payments to equity
and interest-bearing debt investors) in order to develop an enterprise value
from operations for the reporting unit. A provision is made, based on these
projections, for the value of the reporting unit at the end of the forecast
period, or terminal value. The present value of the finite-period cash flows and
the terminal value are determined using a selected discount rate. The Company
estimated the fair values of its reporting units based on discounted cash flow
methodology reflecting its latest projections which included, among other
things, the impact of tariffs on Chinese imports, the current expectations as to
the impact of COVID-19 on its operations, as well as other inflation at the time
the Company performed its impairment testing.

As a result of the impairment testing performed in connection with the COVID-19
global pandemic triggering event, the Company determined that its goodwill
associated with its Appliances and Cookware segment was impaired. During first
quarter of 2020, the Company recorded a non-cash charge of $212 million to
reflect the impairment of its goodwill as its carrying value exceeded its fair
value. There was no goodwill impairment recorded in conjunction with the
Company's annual impairment testing in the fourth quarter, and, as of December
31, 2020, there were no reporting units with fair values within 10% of the
associated carrying values. Additionally, a hypothetical 10% reduction in
forecasted earnings before interest, taxes and amortization used in the
discounted cash flows to estimate the fair value of each reporting unit would
not have resulted in a goodwill impairment charge.

See Footnotes 1 and 7 of the Notes to Consolidated Financial Statements for further information.

Indefinite-lived intangibles


The testing of indefinite-lived intangibles (primarily trademarks and
tradenames) under established guidelines for impairment also requires
significant use of judgment and assumptions (such as cash flow projections,
royalty rates, terminal values and discount rates). An indefinite-lived
intangible asset is impaired by the amount its carrying value exceeds its
estimated fair value. For impairment testing purposes, the fair value of
indefinite-lived intangibles is determined using either the relief from royalty
method or the excess earnings method. The relief from royalty method estimates
the value of a tradename by discounting the hypothetical avoided royalty
payments to their present value over the economic life of the asset. The excess
earnings method estimates the value of the intangible asset by quantifying the
residual (or excess) cash flows generated by the asset and discounts those cash
flows to the present. The excess earnings methodology requires the application
of contributory asset charges. Contributory asset charges typically include
assumed payments for the use of working capital, tangible assets and other
intangible assets. Changes in forecasted operations and other assumptions could
materially affect the estimated fair values. Changes in business conditions
could potentially require adjustments to these asset valuations.

As a result 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 first
quarter of 2020, the Company recorded impairment charges of $1.3 billion to
reflect impairment of these indefinite-lived tradenames because their carrying
values exceeded their fair values.

During the third quarter of 2020, the Company concluded that a triggering event
had occurred for an indefinite-lived intangible asset in the Learning and
Development segment as a result of a product line divestiture. Pursuant to the
authoritative literature, the Company performed an impairment test and
determined that the indefinite-lived intangible asset was impaired as its
carrying value
                                       44
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exceeded its fair value. During the third quarter of 2020, the Company recorded a non-cash charge of $2 million to reflect the impairment of this indefinite-lived intangible asset. See Footnotes 1 and 7 of the Notes to Consolidated Financial Statements for further information.


During the fourth quarter of 2020, in conjunction with its annual impairment
testing, the Company recorded a non-cash impairment charge of $20 million
associated with a tradename in the Learning and Development segment, as its
carrying value exceeded its fair value. The impairment reflected a downward
revision of forecasted results due to the impact of the delayed and limited
re-opening of schools and offices as a result of the COVID-19 global pandemic,
as well as the continued deterioration in sales for slime-related adhesive
products. An increase of 100 basis points in the discount rate used in the
discounted cash flows to estimate fair values of this tradename would have
resulted in an increase to the impairment charge of approximately $14 million.
The remaining carrying value of this tradename is approximately $135 million.
The remaining tradenames within the Company's Learning and Development segment
with no impairment during the fourth quarter of 2020 impairment test had
carrying values of $387 million, with $310 million of those with fair values in
excess of 10% of carrying values, respectively. An increase of 100 basis points
in the discount rate used in the discounted cash flows to estimate fair values
of the remaining Learning and Development tradenames would have resulted in an
impairment charge of approximately $5 million.

There were no impairments of the Company's tradenames within the Appliances and
Cookware and Outdoor and Recreation segments during the fourth quarter of 2020
impairment test. The remaining carrying value of tradenames within these
segments were approximately $58 million and $119 million, respectively, with $54
million and $113 million of those tradenames with fair values in excess of 10%
of the carrying values, respectively. An increase of 100 basis points in the
discount rate used in the discounted cash flows to estimate fair values of the
Appliances and Cookware tradenames would not have resulted in an impairment
charge. An increase of 100 basis points in the discount rate used in the
discounted cash flows to estimate fair values of the Outdoor and Recreation
tradenames would have resulted in an impairment charge of approximately $1
million.

There were no impairments of the Company's tradenames within the Commercial
Solutions and Home Solutions segments during the fourth quarter of 2020
impairment test. The remaining carrying value of tradenames within these
segments were approximately $$576 million and $1.0 billion, respectively, and
all tradenames have fair values in excess of 10% of the carrying values. An
increase of 100 basis points in the discount rate used in the discounted cash
flows to estimate fair values of the Commercial Solutions tradenames would have
resulted in an impairment charge of approximately $6 million. An increase of 100
basis points in the discount rate used in the discounted cash flows to estimate
fair values of the Home Solutions tradenames would not have resulted in an
impairment charge.

The Company believes the circumstances and global disruption caused by COVID-19
may continue to affect its businesses, future operating results, cash flows and
financial condition and that the scope and duration of the pandemic is highly
uncertain. In addition, some 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 tariffs.
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 fourth quarter of 2020 will prove to be accurate predictions of the
future.

The Company believes it has made reasonable estimates and assumptions to
calculate the fair values of the reporting units and other indefinite-lived
intangible assets which were based on facts and circumstances known at this
time. It is, however, possible that new events may occur or actual events may
result in forecasted cash flows, revenue and earnings that differ from those
that formed the basis of the Company's estimates and assumptions. Actual results
could be materially different from the Company's estimates and assumptions used
to calculate fair value for each of the Company's reporting units if the global
pandemic caused by COVID-19 continues to persist for an extended period of time.
If such a scenario were to occur, 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 Company's business, further declines
in operating results of 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.

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At December 31, 2020, there were four indefinite-lived tradenames with fair
values less than 10% of their associated carrying values within the Appliances
and Cookware, Learning and Development, and Outdoor and Recreation segments. 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 of the Company would not have resulted an impairment. A hypothetical
10% reduction in forecasted revenue used in the relief from royalty method to
determine the fair value of certain indefinite-lived intangibles would have
resulted in incremental impairment charges in the Company's Learning and
Development and Outdoor and Recreation segments of $35 million and $1 million,
respectively. See Footnote 7 of the Notes to Consolidated Financial Statements
for further information.

Other Long-Lived Assets

The Company continuously evaluates whether impairment indicators related to its
property, plant and equipment, operating leases and other long-lived assets are
present. These impairment indicators may include a significant decrease in the
market price of a long-lived asset or asset group, early termination of an
operating lease, a significant adverse change in the extent or manner in which a
long-lived asset or asset group is being used or in its physical condition, or a
current-period operating or cash flow loss combined with a history of operating
or cash flow losses or a forecast that demonstrates continuing losses associated
with the use of a long-lived asset or asset group. If impairment indicators are
present, the Company estimates the future cash flows for the asset or group of
assets. The sum of the undiscounted future cash flows attributable to the asset
or group of assets is compared to their carrying amount. The cash flows are
estimated utilizing various assumptions regarding future sales and expenses,
working capital and proceeds from asset disposals on a basis consistent with the
Company's forecasts. If the carrying amount exceeds the sum of the undiscounted
future cash flows, the Company discounts the future cash flows using a discount
rate required for a similar investment of like risk and records an impairment
charge as the difference between the fair value and the carrying value of the
asset group. The Company performs its testing of the asset group at the
reporting unit level, as this is the lowest level for which identifiable cash
flows are available, with the exception of the Yankee Candle business, where
testing is performed at the retail store level. See Footnotes 6, 7, and 13 of
the Notes to Consolidated Financial Statements for further information.

Income Taxes


The Company accounts for deferred income taxes using the asset and liability
approach. Under this approach, deferred income taxes are recognized based on the
tax effects of temporary differences between the financial statement and tax
bases of assets and liabilities, as measured by current enacted tax rates.
Valuation allowances are recorded to reduce the deferred tax assets to an amount
that will more likely than not be realized.

The Company's income tax provisions are based on calculations and assumptions
that are subject to examination by various worldwide tax authorities. Although
the Company believes that the positions taken on previously filed tax returns
are reasonable, it has established tax, interest and penalty reserves in
recognition that various taxing authorities may challenge the positions taken,
which could result in additional liabilities for taxes, interest and penalties.
The Company regularly reviews its deferred tax assets for recoverability
considering historical profitability, projected future taxable income, the
expected timing of the reversals of existing temporary differences and tax
planning strategies.

For uncertain tax positions, the Company applies the provisions of relevant
authoritative guidance, which requires application of a "more likely than not"
threshold to the recognition and derecognition of tax positions. The Company's
ongoing assessments of the more likely than not outcomes of tax authority
examinations and related tax positions require significant judgment and can
increase or decrease the Company's effective tax rate, as well as impact
operating results.

The Company's provision for income taxes is subject to volatility and could be
favorably or adversely affected by earnings being higher or lower in countries
that have lower tax rates and higher or lower in countries that have higher tax
rates; by changes in the valuation of deferred tax assets and liabilities; by
expiration of or lapses in tax-related legislation; by expiration of or lapses
in tax incentives; by tax effects of nondeductible compensation; by changes in
accounting principles; by liquidity needs driving repatriations of non-U.S. cash
to the U.S.; or by changes in tax laws and regulations, including possible U.S.
changes to the taxation of earnings of foreign subsidiaries, the deductibility
of expenses attributable to foreign income, or the foreign tax credit rules.

The Company's effective tax rate differs from the statutory rate, primarily due
to the tax impact of state taxes, foreign tax rates, tax credits, the domestic
manufacturing deduction, tax audit settlements and valuation allowance
adjustments. Significant judgment is required in evaluating uncertain tax
positions, determining valuation allowances recorded against deferred tax
assets, and ultimately, the income tax provision.

It is difficult to predict when resolution of income tax matters will occur and
when recognition of certain income tax assets and liabilities is appropriate,
and the Company's income tax expense in the future may continue to differ from
the statutory rate because of the effects of similar items. For example, if
items are favorably resolved or management determines a deferred tax asset is
realizable that was previously reserved, the Company will recognize period tax
benefits. Conversely, to the extent tax matters are
                                       46
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unfavorably resolved or management determines a valuation allowance is necessary
for a tax asset that was not previously reserved, the Company will recognize
incremental period tax expense. These matters are expected to contribute to the
tax rate differing from the statutory rate and continued volatility in the
Company's effective tax rate. See Footnote 12 of the Notes to Consolidated
Financial Statements for further information.

Pensions and Postretirement Benefits


The Company records annual amounts relating to its pension and postretirement
plans based on calculations, which include various actuarial assumptions,
including discount rates, assumed rates of return, compensation increases,
turnover rates and health care cost trend rates. The Company reviews its
actuarial assumptions on an annual basis and makes modifications to the
assumptions based on current rates and trends when it is deemed appropriate to
do so. The effect of modifications is generally deferred and amortized over
future periods. The Company believes that the assumptions utilized in recording
its obligations under its plans are reasonable based on its experience, market
conditions and the input from its actuaries and investment advisors. The pension
and postretirement obligations are measured at December 31, 2020 and 2019.

The Company employs a total return investment approach for its pension and
postretirement benefit plans whereby a mix of equities and fixed income
investments are used to maximize the long-term return of pension plan assets.
The intent of this strategy is to minimize plan expenses by outperforming plan
liabilities over the long run. Risk tolerance is established through careful
consideration of plan liabilities, plan funded status, and corporate financial
condition. The investment portfolios contain a diversified blend of equity and
fixed-income investments. Furthermore, equity investments are diversified across
geography and market capitalization through investments in U.S.
large-capitalization stocks, U.S. small-capitalization stocks and international
securities. Investment risk is measured and monitored on an ongoing basis
through annual liability measurements, periodic asset/liability studies and
quarterly investment portfolio reviews.

The expected long-term rate of return for plan assets is based upon many factors
including expected asset allocations, historical asset returns, current and
expected future market conditions, risk and active management premiums. The
target asset allocations for the Company's domestic pension plans may vary by
plan, in part due to plan demographics, funded status and liability duration. In
general, the Company's target asset allocations are as follows: global equities
approximately 20% to 40%; fixed income approximately 50% to 70%; and cash,
alternative investments and other, approximately zero to 20% at December 31,
2020. Actual asset allocations may vary from the targeted allocations for
various reasons, including market conditions and the timing of transactions. The
Company maintains numerous international defined benefit pension plans. The
asset allocations for the international investment may vary by plan and
jurisdiction and are primarily based upon the plan structure and plan
participant profile. At December 31, 2020, the domestic plan assets were
allocated as follows: Equities: approximately 24% and Other Investments
(alternative investments, fixed-income securities, cash and other):
approximately 76%. Actual asset allocations may vary from the targeted
allocations for various reasons, including market conditions and the timing of
transactions.

For 2020, 2019 and 2018, the actual return (loss) on plan assets for the
Company's U.S. pension plan assets was approximately $178 million, $213 million
and $(71) million, respectively, versus an expected return on plan assets of
approximately $59 million, $59 million and $67 million, respectively. The actual
amount of future contributions will depend, in part, on long-term actual return
on assets and future discount rates. Pension contributions for all the Company's
pension plans for 2021 are estimated to be approximately $22 million, as
compared to the 2020 contributions of approximately $25 million.

The weighted average expected return on plan assets assumption for 2020 was approximately 4.1% for the Company's pension plans. The weighted average discount rate at the 2020 measurement date used to measure the pension and postretirement benefit obligations was approximately 1.9% and 1.8%, respectively. A 25 basis points decrease in the discount rate at the 2020 measurement date would increase the pension plans' projected benefit obligation by approximately $64 million.


The healthcare cost trend rates used in valuing the Company's postretirement
benefit obligation are established based upon actual healthcare cost trends and
consultation with actuaries and benefit providers. At the 2020 measurement date,
the current weighted average healthcare cost trend rate assumption was
approximately 6.7%. The current healthcare cost trend rate is assumed to
gradually decrease to an ultimate healthcare cost trend rate of 4.5%. See
Footnote 11 of the Notes to Consolidated Financial Statements for further
information.

Recent Accounting Pronouncements

A summary of recent accounting pronouncements is included in Footnote 1 of the Notes to Consolidated Financial Statements.

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International Operations


For 2020, 2019 and 2018, the Company's non-U.S. businesses accounted for
approximately 33% of net sales (see Footnote 17 of the Notes to Consolidated
Financial Statements).
Forward-Looking Statements
Forward-looking statements in this Report are made in reliance upon the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. These
statements generally can be identified by the use of words such as "intend,"
"anticipate," "believe," "estimate," "project," "target," "plan," "expect,"
"setting up," "beginning to," "will," "should," "would," "resume," "are
confident that," "remain optimistic that" or similar statements. The Company
cautions that forward-looking statements are not guarantees because there are
inherent difficulties in predicting future results. Actual results may differ
materially from those expressed or implied in the forward-looking statements.
Important factors that could cause actual results to differ materially from
those suggested by the forward-looking statements include, but are not limited
to:
•the Company's ability to manage the demand, supply and operational challenges
with the actual or perceived effects of the COVID-19 pandemic;
•the Company's dependence on the strength of retail, commercial and industrial
sectors of the economy in various parts of the world;
•competition with other manufacturers and distributors of consumer products;
•major retailers' strong bargaining power and consolidation of the Company's
customers;
•the Company's ability to improve productivity, reduce complexity and streamline
operations;
•the Company's ability to develop innovative new products, to develop, maintain
and strengthen end-user brands and to realize the benefits of increased
advertising and promotion spend;
•the Company's ability to successfully remediate its material weakness in
internal control over financial reporting and to maintain effective internal
control over financial reporting;
•risks related to the Company's substantial indebtedness, potential increases in
interest rates or changes in the Company's credit ratings;
•future events that could adversely affect the value of the Company's assets
and/or stock price and require additional impairment charges;
•the impact of cost associated with acquisition and divestitures;
•our ability to effectively execute our turnaround plan;
•changes in the prices of raw materials and sourced products and the Company's
ability to obtain raw materials and sourced products in a timely manner;
•the impact of governmental investigation, inspections, lawsuits, legislation
requests or other actions or other activities by third parties;
•the risks inherent to the Company's foreign operations, including currency
fluctuations, exchange controls and pricing restrictions;
•a failure of one of the Company's key information technology systems, networks,
processes or related controls or those of the Company's services providers;
•the impact of United States or foreign regulations on the Company's operations,
including the impact of tariffs and environmental remediation costs;
•the potential inability to attract, retain and motivate key employees;
•the resolution of tax contingencies resulting in additional tax liabilities;
•product liability, product recalls or related regulatory actions;
•the Company's ability to protect its intellectual property rights; and
•significant increases in the funding obligations related to the Company's
pension plans.
The information contained in this Annual Report on Form 10-K is as of the date
indicated. The Company assumes no obligation to update any forward-looking
statements contained in this Annual Report on Form 10-K 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.
                                       48

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