What changed in this filing

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Item 1. Financial Statements

2022-07-29 compared with 2022-05-02 · 155 added, 73 removed, 464 unchanged (33% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Net sales $ 965.9 $ 859.8 $ 1,943.6 $ 1,628.8

8 unchanged sentences

Net Earnings Per Share of Common Stock (1)

$ 0.81 $ 0.74 $ 1.57 $ 1.34

Diluted Net Earnings Per Share of Common Stock (1)

$ 0.81 $ 0.73 $ 1.56 $ 1.33

Dividends Per Share of Common Stock $ 0.28 $ 0.26 $ 0.56 $ 0.52

(1) Earning per share amounts are calculated discretely and, therefore, may not add up to the total due to rounding.

SMITH CORPORATION

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Net earnings $ 126.2 $ 118.2 $ 246.0 $ 215.9

Other comprehensive earnings (loss)

Other comprehensive (loss) earnings

Foreign currency translation adjustments ( 24.6 ) 4.9 ( 24.0 ) 3.5

Unrealized losses on cash flow derivative instruments, less related income tax benefit of $ 0.2 in 2022, $ 0.7 and in 2021

Unrealized gains (losses) on cash flow derivative instruments, less related income tax (provision) benefit of $( 0.7 ) and $( 0.5 ) in 2022, $( 0.3 ) and $ 0.4 in 2021

2.1 0.9 1.5 ( 1.1 )

Adjustment to pension liability, less related income tax provision of ($ 1.2 ) in 2022 and ($ 1.3 ) in 2021

Adjustment to pension liability, less related income tax provision of $( 1.3 ) and $( 2.5 ) in 2022, $( 1.3 ) and $( 2.6 ) in 2021

3.7 3.8 7.5 7.6

Comprehensive Earnings $ 107.4 $ 127.8 $ 231.0 $ 225.9

47 unchanged sentences

(dollars in millions)

Three Months Ended

Six Months Ended

Operating Activities

9 unchanged sentences

Capital expenditures ( 30.7 ) ( 30.7 )

Acquisitions of businesses ( 8.0 ) —

Investments in marketable securities ( 16.9 ) ( 98.3 )

Net proceeds from sale of marketable securities 96.5 79.0

Cash Provided by Investing Activities 2.1 12.5

Cash Provided by (Used in) Investing Activities 40.9 ( 50.0 )

Financing Activities

4 unchanged sentences

Cash Used in Financing Activities ( 179.2 ) ( 274.3 )

Net (decrease) increase in cash and cash equivalents ( 37.5 ) 5.4

Net decrease in cash and cash equivalents ( 83.9 ) ( 128.3 )

Cash and cash equivalents - beginning of period 443.3 573.1

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Class A Common Stock

23 unchanged sentences

Exercise of stock options — 5.7 ( 2.9 ) 7.6

Stock incentives and directors’ compensation 0.3 0.2 0.3 0.2

Shares repurchased ( 82.5 ) ( 131.1 ) ( 190.4 ) ( 198.1 )

5 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

June 30, 2022

Basis of Presentation

2 unchanged sentences

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results expected for the full year.

Operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results expected for the full year.

It is suggested the accompanying condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 11, 2022.

14 unchanged sentences

The Company’s payment terms for the majority of its customers are 30 to 90 days from shipment.

Additionally, certain customers in China pay the Company prior to the shipment of products resulting in a customer deposits liability of $ 118.2 million and $ 155.2 million at March 31, 2022 and December 31, 2021, respectively.

Customer deposit liabilities are short term in nature and deposits are recognized into revenue within one year of receipt.

Additionally, certain customers in China pay the Company prior to the shipment of products resulting in a customer deposits liability of $ 100.7 million and $ 155.2 million at June 30, 2022 and December 31, 2021, respectively.

Customer deposit liabilities are short term in nature, recognized into revenue within one year of receipt, and recorded in Trade payables within the condensed consolidated balance sheets.

The Company assesses the collectability of customer receivables based on the creditworthiness of a customer as determined by credit checks and analysis, as well as the customer’s payment history.

In determining the allowance for doubtful accounts, the Company also considers various factors including the aging of customer accounts and historical write-offs.

In determining the allowance for credit losses, the Company also considers various factors including the aging of customer accounts and historical write-offs.

In addition, the Company monitors other risk factors including forward-looking information when establishing adequate allowances for credit losses, which reflects the current estimate of credit losses expected to be incurred over the life of the receivables.

The Company’s allowance for doubtful accounts was $ 10.1 million at March 31, 2022 and $ 9.5 million at December 31, 2021.

The Company’s allowance for credit losses was $ 10.6 million at June 30, 2022 and $ 9.5 million at December 31, 2021.

Rebates and incentives are based on pricing agreements and are tied to sales volume.

14 unchanged sentences

In addition, the impact of economic factors is unlikely to be differentiated by product line in the Rest of World segment.

The North America segment major product lines are defined as the following:

The North America segment's major product lines are defined as the following:

Water heaters The Company’s water heaters are open water heating systems that heat potable water.

Typical applications for water heaters include residences, restaurants, hotels and motels, office buildings, laundries, car washes and small businesses.

Typical applications for water heaters include residences, restaurants, hotels, office buildings, laundries, car washes and small businesses.

The Company sells residential and commercial water heater products and related parts through its wholesale distribution channel, which includes more than 1,100 independent wholesale plumbing distributors.

14 unchanged sentences

(dollars in millions) Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

North America

10 unchanged sentences

On October 19, 2021, the Company acquired 100 percent of the shares and related assets of Giant Factories, Inc.

(Giant), a Canada-based manufacturer of residential and commercial water heaters.

The addition of Giant increases the Company's North America market penetration, creating additional capacity and enhancing the Company's distribution capabilities.

Giant is included in the North America segment.

The Company paid an aggregate cash purchase price of $ 198.6 million net of cash acquired.

In addition, the Company incurred acquisition costs of approximately $ 1.3 million.

(Giant), a Canada-based manufacturer of residential and commercial water heaters for $ 198.6 million, net of cash acquired.

The purchase price increased by $ 2.5 million during the three months ended June 30, 2022 as a result of final working capital adjustments.

The Company incurred acquisition costs of approximately $ 1.3 million in 2021.

Under the purchase agreement for the Giant acquisition, an escrow of approximately $ 8 million was set aside from the purchase price to satisfy any potential obligations of the former owners of Giant, should they arise.

The cash purchase price is preliminary and subject to customary adjustments.

Goodwill decreased by $ 2.3 million during the three months ended June 30, 2022 due to the net impact of a measurement period adjustment, primarily related to income tax matters, partially offset by the final working capital adjustment.

The purchase price allocation remains preliminary and subject to final valuation adjustments that will be completed within the one year period following the acquisition date.

The addition of Giant increases the Company's North America market penetration, creating additional capacity and enhancing the Company's distribution capabilities.

Giant is included in the North America segment.

The following table summarizes the preliminary allocation of fair value of the assets acquired and liabilities assumed at the date of acquisition.

1 unchanged sentence

The excess of the acquisition purchase price over the fair value assigned to the assets acquired and liabilities assumed was recorded as goodwill.

The following table summarizes the estimated fair values of Giant's assets acquired and liabilities assumed at the date of acquisition:

October 19, 2021 (dollars in millions)

7 unchanged sentences

Net assets acquired $ 198.6

As required under ASC 805 Business Combinations , Giant's results of operations have been included in the Company’s consolidated financial statements from October 19, 2021, the date of acquisition.

In addition, during the second quarter of 2022, the Company acquired a privately-held water treatment company.

The Company paid an aggregate cash purchase price of $ 5.5 million, net of cash acquired.

The addition of the company acquired expands the Company's water treatment platform and is included in the North America segment for reporting purposes.

As required under ASC 805 Business Combinations , results of operations have been included in the Company’s consolidated financial statements from the date of their acquisition.

The Company’s lease portfolio consists of operating leases for buildings and equipment, such as forklifts and copiers, primarily in the United States and China.

8 unchanged sentences

The exercise of lease renewal or termination is at the Company’s discretion and when it is determined to be reasonably certain to renew or terminate, the option is reflected in the measurement of lease asset and liability.

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants or material subleases.

Cash flows associated with leases are materially consistent with the expense recorded in the condensed consolidated statement of earnings.

The Company’s lease agreements do not contain any material residual value

Leases (continued)

guarantees or material restrictive covenants or material subleases.

Cash flows associated with leases are materially consistent with the expense recorded in the condensed consolidated statement of earnings.

Supplemental balance sheet information related to leases is as follows:

(dollars in millions) March 31,

(dollars in millions) June 30,

2022 December 31, 2021

4 unchanged sentences

Operating lease assets $ 31.1 $ 32.5

Lease Term and Discount Rate March 31, 2022

Lease Term and Discount Rate June 30, 2022

Weighted-average remaining lease term 6.7 years

7 unchanged sentences

(2) 2021 includes short-term and variable lease expenses of $ 0.5 million and $ 0.6 million, respectively.

(dollars in millions) Six Months Ended

Lease Expense Classification 2022 (1)

Operating lease expense Cost of products sold $ 2.0 $ 2.0

Selling, general and administrative expenses 8.3 8.1

(1) 2022 includes short-term and variable lease expenses of $ 1.1 million and $ 1.7 million, respectively.

(2) 2021 includes short-term and variable lease expenses of $ 1.0 million and $ 1.2 million, respectively.

Maturities of lease liabilities were as follows:

(dollars in millions) March 31,

(dollars in millions) June 30,

After 2026 9.2

3 unchanged sentences

The following table presents the components of the Company’s inventory balances:

(dollars in millions) March 31,

(dollars in millions) June 30,

2022 December 31, 2021

7 unchanged sentences

The Company offers warranties on the sales of certain of its products with terms that are consistent with the market and records an accrual for the estimated future claims.

The increase in our reserve for product warranties as of the first quarter ended 2022 compared to the prior year period was primarily due to increased steel prices and the acquisition of Giant.

Refer to Note 3, "Acquisition", for additional information regarding the acquisition of Giant.

The increase in the reserve for product warranties as of June 30, 2022 compared to June 30, 2021 was primarily due to increased steel prices and the acquisition of Giant.

Refer to Note 3, "Acquisitions", for additional information regarding the acquisition of Giant.

The following table presents the Company’s warranty liability activity:

(dollars in millions) Three Months Ended

Balance at April 1, $ 182.9 $ 141.6

Expense 14.7 15.3

Claims settled ( 17.6 ) ( 12.0 )

Balance at June 30, $ 180.0 $ 144.9

(dollars in millions) Six Months Ended

Balance at January 1, $ 184.4 $ 142.3

1 unchanged sentence

Claims settled ( 33.0 ) ( 25.3 )

Balance at March 31, $ 182.9 $ 141.6

Balance at June 30, $ 180.0 $ 144.9

In 2021, the Company renewed and amended its $ 500 million multi-year multi-currency revolving credit agreement with a new expiration date of April 1, 2026.

1 unchanged sentence

Borrowings under bank credit lines and commercial paper borrowings are supported by a $ 500 million revolving credit agreement.

As a result of the long-term nature of this facility, the Company’s commercial paper and credit line borrowings are classified as long-term debt at March 31, 2022.

As a result of the long-term nature of this facility, the Company’s commercial paper and credit line borrowings are classified as long-term debt at June 30, 2022.

At its option, the Company either maintains cash balances or pays fees for bank credit and services.

The facility requires the Company to maintain two financial covenants, a leverage ratio test and an interest coverage test.

The Company was in compliance with the covenants as of March 31, 2022.

The Company was in compliance with the covenants as of June 30, 2022.

Earnings per Share of Common Stock

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Denominator for basic earnings per share - weighted average shares 155,692,240 160,241,814 156,351,739 160,880,724

7 unchanged sentences

Smith Combined Executive Incentive Compensation Plan which was originally approved by stockholders in 2002.

The number of shares available for granting of options or share units at March 31, 2022 was 7,117,740 .

The number of shares available for granting of options or share units at June 30, 2022 was 7,144,796 .

Upon stock option exercise or share unit vesting, shares are issued from treasury stock.

Total stock based compensation expense recognized in the three months ended March 31, 2022 and 2021 was $ 7.6 million and $ 7.4 million, respectively.

Total stock based compensation expense recognized in the three months ended June 30, 2022 and 2021 was $ 1.4 million and $ 1.5 million, respectively.

Total stock based compensation expense recognized in the six months ended June 30, 2022 and 2021 was $ 9.0 million and $ 8.9 million, respectively.

Stock Options

The stock options granted in the three months ended March 31, 2022 and 2021 have three year pro rata vesting from the date of grant.

The stock options granted in the six months ended June 30, 2022 and 2021 have three year pro rata vesting from the date of grant.

Stock options are issued at exercise prices equal to the fair value of the Company’s Common Stock on the date of grant.

1 unchanged sentence

The Company’s stock options are expensed ratably over the three year vesting period;

however, included in the stock option expense for the three months ended March 31, 2022 and 2021 was expense associated with the accelerated vesting of stock option awards for certain employees who either are retirement eligible or become retirement eligible during the vesting period.

Stock based compensation

Stock Based Compensation (continued)

expense attributable to stock options in the three months ended March 31, 2022 and 2021 was $ 3.9 million and $ 3.6 million, respectively.

Changes in options, all of which relate to the Company’s Common Stock, were as follows for the three months ended March 31, 2022:

however, included in the stock option expense for the six months ended June 30, 2022 and 2021 was expense associated with the accelerated vesting of stock option awards for certain employees who either are retirement eligible or become retirement eligible during the vesting period.

Stock based compensation expense attributable to stock options in the three months ended June 30, 2022 and 2021 was $ 0.6 million and $ 0.5 million, respectively.

Stock based compensation expense attributable to stock options in the six months ended June 30, 2022 and 2021 was $ 4.5 million and $ 4.1 million, respectively.

Changes in options, all of which relate to the Company’s Common Stock, were as follows for the six months ended June 30, 2022:

Price Number of

5 unchanged sentences

Forfeited 58.09 ( 10,094 )

Outstanding at March 31, 2022 51.09 2,543,217 7 years $ 35.8

Exercisable at March 31, 2022 46.75 1,719,597 6 years $ 29.5

The weighted-average fair value per option at the date of grant during the three months ended March 31, 2022 and 2021 using the Black-Scholes option-pricing model was $ 17.59 and $ 14.01 , respectively.

Outstanding at June 30, 2022 51.16 2,538,366 7 years $ 19.2

Exercisable at June 30, 2022 46.82 1,716,451 6 years $ 16.0

Stock Based Compensation (continued)

The weighted-average fair value per option at the date of grant during the six months ended June 30, 2022 and 2021 using the Black-Scholes option-pricing model was $ 17.58 and $ 14.03 , respectively.

Assumptions were as follows:

Three Months Ended March 31,

Six Months Ended

Expected life (years) 5.7 5.8

10 unchanged sentences

Share units vest three years after the date of grant.

The Company granted 88,894 and 100,153 share units under the Incentive Plan in the three months ended March 31, 2022 and 2021, respectively.

The Company granted 93,211 and 100,676 share units under the Incentive Plan in the six months ended June 30, 2022 and 2021, respectively.

The share units were valued at $ 6.9 million and $ 6.1 million at the date of issuance in 2022 and 2021, respectively, based on the price of the Company’s Common Stock at the date of grant.

The share units are recognized as compensation expense ratably over the three-year vesting period;

however, included in share unit expense in the three months ended March 31, 2022 and 2021 was expense associated with accelerated vesting of restricted stock and share unit awards for certain employees who either are retirement eligible or will become retirement eligible during the vesting period.

Stock based compensation expense attributable to share units of $ 3.7 million and $ 3.8 million was recognized in the three months ended March 31, 2022 and 2021, respectively.

however, included in share unit expense in the three and six months ended June 30, 2022 and 2021 was expense associated with accelerated vesting of restricted stock and share unit awards for certain employees who either are retirement eligible or will become retirement eligible during the vesting period.

Stock based compensation expense attributable to share units of $ 0.8 million and $ 1.0 million was recognized in the three months ended June 30, 2022 and 2021, respectively.

Stock based compensation expense attributable to share units of $ 4.5 million and $ 4.8 million was recognized in the six months ended June 30, 2022 and 2021, respectively.

Certain non-U.S.-based employees receive the cash value of the share price at the vesting date in lieu of shares.

Unvested cash-settled awards are remeasured at each reporting period.

Stock Based Compensation (continued)

A summary of share unit activity under the Incentive Plan is as follows for the three months ended March 31, 2022:

A summary of share unit activity under the Incentive Plan is as follows for the six months ended June 30, 2022:

Number of Units Weighted-Average

4 unchanged sentences

Forfeited ( 6,777 ) 53.93

Issued and unvested at March 31, 2022 379,704 52.88

The following table presents the components of the Company’s net pension income:

Issued and unvested at June 30, 2022 380,941 52.98

The following table presents the components of the Company’s net pension expense (income):

(dollars in millions) Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Service cost $ 0.3 $ 0.4 $ 0.7 $ 0.8

20 unchanged sentences

(dollars in millions) Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

North America $ 744.1 $ 603.6 $ 1,474.2 $ 1,156.5

7 unchanged sentences

Inter-segment — — ( 0.1 ) —

178.0 164.0 354.5 306.2

Corporate expense (2)

18 unchanged sentences

The following table presents assets (liabilities) measured at fair value on a recurring basis (dollars in millions):

Fair Value Measurement Using March 31,

Fair Value Measurement Using June 30,

2022 December 31, 2021

2 unchanged sentences

Items measured at fair value were comprised of the Company’s marketable securities (Level 1) and derivative instruments (Level 2).

There were no changes in the Company’s valuation techniques used to measure fair values on a recurring basis during the three months ended March 31, 2022.

There were no changes in the Company’s valuation techniques used to measure fair values on a recurring basis during the six months ended June 30, 2022.

Derivative Instruments

15 unchanged sentences

The majority of the amounts in accumulated other comprehensive loss for cash flow hedges are expected to be reclassified into earnings within one year.

Derivative Instruments (continued)

The following table summarizes, by currency, the contractual amounts of the Company’s foreign currency forward contracts that are designated as cash flow hedges:

(dollars in millions) March 31, 2022 December 31, 2021

(dollars in millions) June 30, 2022 December 31, 2021

Buy Sell Buy Sell

9 unchanged sentences

These hedges are determined to be effective.

The Company recognized $ 0.3 million and zero of after-tax losses associated with hedges of a net investment in non-U.S.

subsidiaries in currency translation adjustment in other comprehensive income in the three months ended March 31, 2022 and 2021, respectively.

The contractual amount of the Company's foreign currency forward contracts that are designated as net investment hedges is $ 50.0 million as of March 31, 2022.

Derivative Instruments (continued)

The Company recognized $ 1.7 million and $ 1.4 million of after-tax gains associated with hedges of net investments in non-U.S.

subsidiaries in currency translation adjustment in other comprehensive loss in the three and six months ended June 30, 2022, respectively.

The Company recognized $( 0.1 ) million of after-tax losses associated with hedges of a net investment in non-U.S.

subsidiaries in currency translation adjustment in other comprehensive loss in both the three and six months ended June 30, 2021.

The contractual amount of the Company's foreign currency forward contracts that are designated as net investment hedges is $ — million as of June 30, 2022.

The following tables present the impact of derivative contracts on the Company’s financial statements.

Fair value of derivatives designated as hedging instruments under ASC 815:

(dollars in millions) Balance Sheet Location March 31,

(dollars in millions) Balance Sheet Location June 30,

2022 December 31,

3 unchanged sentences

The effect of cash flow hedges on the condensed consolidated statement of earnings:

Three Months Ended March 31 (dollars in millions):

Derivatives in ASC 815 cash flow hedging relationships Amount of loss recognized in other

Three Months Ended June 30 (dollars in millions):

Derivatives in ASC 815 cash flow hedging relationships Amount of gain recognized in other

comprehensive

10 unchanged sentences

Foreign currency contracts $ 3.4 $ 0.4 Cost of products sold $ 0.7 $ ( 0.8 )

Derivative Instruments (continued)

Six Months Ended June 30 (dollars in millions):

Derivatives in ASC 815 cash flow hedging relationships Amount of gain (loss) recognized in other

comprehensive

loss on derivatives Location of gain (loss)

reclassified from

accumulated other

comprehensive loss

into earnings Amount of gain (loss)

reclassified from

accumulated other

comprehensive

loss into earnings

2022 2021 2022 2021

Foreign currency contracts $ 2.8 $ ( 2.5 ) Cost of products sold $ 0.8 $ ( 1.1 )

Balance Sheet Hedges

2 unchanged sentences

These foreign exchange contracts did not qualify for hedge accounting in accordance with ASC 815 and as such were marked to market through earnings.

The fair value of the foreign exchange contracts was zero as of March 31, 2022.

The fair value of the foreign exchange contracts was a liability of $ 0.2 million as of June 30, 2022.

The fair value of the foreign exchange contracts was a liability of $ 0.8 million as of December 31, 2021 and recorded in Accrued liabilities within the consolidated balance sheet.

The following table summarizes the contractual amounts of the Company's foreign exchange contracts that are designated as balance sheet hedges:

(dollars in millions) March 31, 2022 December 31, 2021

(dollars in millions) June 30, 2022 December 31, 2021

Buy Sell Buy Sell

1 unchanged sentence

The amounts recognized within the consolidated statements of earnings related to the Company's foreign exchange contracts are set forth below.

Three Months Ended March 31 (dollars in millions):

Three Months Ended June 30 (dollars in millions):

Derivatives not designated as hedging instruments:

Location of loss within the consolidated statements of earnings

Foreign exchange contracts Other (income) expense - net $ ( 0.2 ) $ —

Six Months Ended June 30 (dollars in millions):

Derivatives not designated as hedging instruments:

Location of loss within the consolidated statements of earnings

Foreign exchange contracts Other expense (income) - net $ 1.1 $ —

The Company’s effective income tax rate for the three months ended March 31, 2022 was 23.5 percent compared to 22.5 percent for the three months ended March 31, 2021.

The Company’s effective income tax rate for the three and six months ended June 30, 2022 was 23.7 percent and 23.6 percent, respectively.

The Company estimates that its annual effective income tax rate for the full year 2022 will be between approximately 23.5 and 24.0 percent.

The change in the effective income tax rate for the three months ended March 31, 2022 compared to the effective income tax rate for the three months ended March 31, 2021 was primarily due to a change in geographical earnings mix.

As of March 31, 2022, the Company had $ 14.3 million of unrecognized tax benefits of which $ 0.5 million would affect its effective income tax rate if recognized.

The Company recognizes potential interest and penalties related to unrecognized tax

Income Taxes (continued)

benefits as a component of income tax expense.

The effective income tax rate for the three and six months ended June 30, 2021 was 21.9 percent and 22.2 percent, respectively.

The change in the effective income tax rate for the six months ended June 30, 2022 compared to the effective income tax rate for the six months ended June 30, 2021 was primarily due to a change in geographical earnings mix.

As of June 30, 2022, the Company had $ 14.3 million of unrecognized tax benefits of which $ 0.5 million would affect its effective income tax rate if recognized.

The Company recognizes potential interest and penalties related to unrecognized tax benefits as a component of income tax expense.

The Company’s U.S.

10 unchanged sentences

Potential losses under the repurchase arrangements represent the difference between the repurchase price and net proceeds from the resale of product plus costs incurred in the process, less related distributor rebates.

Before considering any reduction of distributor rebate accruals of $ 3.0 million and $ 3.9 million as of March 31, 2022 and December 31, 2021, respectively, and from the resale of the related inventory, the gross amount the Company would be obligated to repurchase, which would be contingent on the default of all of the outstanding loans, was approximately $ 6.8 million as of March 31, 2022 and $ 7.2 million as of December 31, 2021.

The Company’s reserves for estimated losses under repurchase arrangements were immaterial as of March 31, 2022 and December 31, 2021.

Before considering any reduction of distributor rebate accruals of $ 2.5 million and $ 3.9 million as of June 30, 2022 and December 31, 2021, respectively, and from the resale of the related inventory, the gross amount the Company would be obligated to repurchase, which would be contingent on the default of all of the outstanding loans, was approximately $ 3.5 million as of June 30, 2022 and $ 7.2 million as of December 31, 2021.

The Company’s reserves for estimated losses under repurchase arrangements were immaterial as of June 30, 2022 and December 31, 2021.

Changes in Accumulated Other Comprehensive Loss by Component

7 unchanged sentences

Balance at beginning of period — ( 1.4 )

Other comprehensive loss before reclassifications ( 0.5 ) ( 2.2 )

Other comprehensive gain before reclassifications 2.6 0.3

Realized (gains) losses on derivatives reclassified to cost of products sold (net of income tax provision (benefit) of $ 0.2 and ($ 0.2 ) in 2022 and 2021, respectively)

12 unchanged sentences

See Note 10 - Pensions for additional details.

Changes in Accumulated Other Comprehensive Loss by Component (continued)

Changes to accumulated other comprehensive loss by component are as follows:

(dollars in millions) Six Months Ended

Cumulative foreign currency translation

Balance at beginning of period $ ( 44.7 ) $ ( 48.1 )

Other comprehensive income before reclassifications ( 24.0 ) 3.5

Balance at end of period ( 68.7 ) ( 44.6 )

Unrealized net gain (loss) on cash flow derivatives

Balance at beginning of period 0.6 0.6

Other comprehensive gain (loss) before reclassifications 2.1 ( 1.9 )

Realized (gains) losses on derivatives reclassified to cost of products sold (net of income tax provision (benefit) of $ 0.2 and $( 0.3 ) in 2022 and 2021, respectively)

Balance at end of period 2.1 ( 0.5 )

Pension liability

Balance at beginning of period ( 287.3 ) ( 273.7 )

Amounts reclassified from accumulated other comprehensive loss:

Balance at end of period ( 279.8 ) ( 266.1 )

Accumulated other comprehensive loss, end of period $ ( 346.4 ) $ ( 311.2 )

(1) Amortization of pension items:

Actuarial losses $ 10.2 (2)

Prior year service cost ( 0.2 ) (2)

Income tax benefit ( 2.5 ) ( 2.6 )

Reclassification net of income tax benefit $ 7.5 $ 7.6

(2) These accumulated other comprehensive loss components are included in the computation of net periodic pension cost.

See Note 10 - Pensions for additional details.

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

What changed 10-Q

Item 1. Financial Statements