What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-03-16 compared with 2022-03-16 · 264 added, 158 removed, 926 unchanged (31% of the section changed)

60 unchanged sentences

and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting , management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of NYK Component Solutions, which is included in the 2021 consolidated financial statements of the Company and constituted less than 1% of total assets as of December 31, 2021 and less than 1% of total revenues for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of NYK Component Solutions.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), shareholders' equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated March 16, 2022 expressed an unqualified opinion thereon.

(Charter) or Southern Fasteners & Supply, Inc (Southern Fastener), the results of which are included in the 2022 consolidated financial statements of the Company and collectively constituted approximately 2% of total assets as of December 31, 2022 and 1% of total revenues for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Charter or Southern Fasteners.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive (loss) income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated March 16, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

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December 31, 2022 December 31, 2021

(In millions, except share

(In millions, except share data)

Current assets:

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Unbilled contract revenue 56.7 55.0

Promissory note related to financing arrangement 25.0 —

Other current assets 32.5 25.2

Current assets held-for-sale - discontinued operations 1

Total current assets 932.4 775.5

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Other long-term assets 16.9 18.1

Long-term assets held-for-sale - discontinued operations 1

Total assets $ 1,436.6 $ 1,360.0

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Deferred revenue 52.6 51.7

Financing arrangement liability 45.0 —

Other accrued expenses 41.8 42.8

Current liabilities held-for-sale - discontinued operations 1

Total current liabilities 448.6 349.0

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Other long-term liabilities 10.7 12.2

Long-term liabilities held-for-sale - discontinued operations 1

Total long-term liabilities 720.1 686.2

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Total liabilities and shareholders' equity $ 1,436.6 $ 1,360.0

(1) - Our continuing operations exclude the results of our Aluminum Products business unit, which is held-for-sale as of December 31, 2022 and presented in discontinued operations for all periods presented.

The accompanying notes are an integral part of these consolidated financial statements.

7 unchanged sentences

Cost of sales 1,282.4 1,099.1 986.8

Gross profit 156.1 168.6 260.3

Selling, general and administrative expenses 162.2 155.9 140.2

Gain on sale of assets ( 14.7 ) — —

Goodwill impairment 4.6 — —

Operating (loss) income ( 12.1 ) 15.7 83.1

Restructuring and other special charges 17.3 20.4 6.6

Gains on sales of assets, net ( 2.4 ) ( 14.7 ) —

Operating income 33.4 16.3 18.5

Other components of pension income and other postretirement benefits expense, net

Interest expense, net ( 33.8 ) ( 27.1 ) ( 27.6 )

(Loss) income before income taxes ( 32.5 ) ( 7.3 ) 54.9

Income tax benefit (expense) 6.5 2.5 ( 15.2 )

Net (loss) income ( 26.0 ) ( 4.8 ) 39.7

Net loss (income) attributable to noncontrolling interest 1.2 0.3 ( 1.1 )

Net (loss) income attributable to ParkOhio common shareholders $ ( 24.8 ) $ ( 4.5 ) $ 38.6

Income (loss) from continuing operations before income taxes 10.7 ( 1.1 ) ( 1.8 )

Income tax benefit 0.7 1.0 1.3

Income (loss) from continuing operations 11.4 ( 0.1 ) ( 0.5 )

(Income) loss attributable to noncontrolling interest ( 1.3 ) 1.2 0.3

Income (loss) from continuing operations attributable to ParkOhio common shareholders 10.1 1.1 ( 0.2 )

Loss from discontinued operations, net of tax (Note 4) ( 24.3 ) ( 25.9 ) ( 4.3 )

Net loss attributable to ParkOhio common shareholders $ ( 14.2 ) $ ( 24.8 ) $ ( 4.5 )

(Loss) earnings per common share attributable to ParkOhio common shareholders:

Basic $ ( 2.07 ) $ ( 0.37 ) $ 3.16

Diluted $ ( 2.07 ) $ ( 0.37 ) $ 3.12

Weighted-average shares used to compute (loss) earnings per share:

Continuing operations $ 0.83 $ 0.09 $ ( 0.02 )

Discontinued operations ( 2.00 ) ( 2.16 ) ( 0.35 )

Total $ ( 1.17 ) $ ( 2.07 ) $ ( 0.37 )

Continuing operations $ 0.83 $ 0.09 $ ( 0.02 )

Discontinued operations ( 1.99 ) ( 2.11 ) ( 0.35 )

Total $ ( 1.16 ) $ ( 2.02 ) $ ( 0.37 )

Weighted-average shares used to compute earnings (loss) per share:

Basic 12.1 12.0 12.1

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(In millions)

Net (loss) income $ ( 26.0 ) $ ( 4.8 ) $ 39.7

Net loss attributable to ParkOhio common shareholders before noncontrolling interest $ ( 12.9 ) $ ( 26.0 ) $ ( 4.8 )

Other comprehensive (loss) income:

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Total comprehensive (loss) income, net of tax ( 55.5 ) ( 27.1 ) 14.1

Comprehensive loss (income) attributable to noncontrolling interest 1.2 0.3 ( 1.1 )

Comprehensive (income) loss attributable to noncontrolling interest ( 1.3 ) 1.2 0.3

Comprehensive (loss) income attributable to ParkOhio common shareholders $ ( 56.8 ) $ ( 25.9 ) $ 14.4

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Balance at January 1, 2020 15,706,398 15.7 129.8 298.2 ( 71.1 ) ( 37.0 ) 14.0 349.6

Comprehensive income — — — 38.6 — 3.9 1.1 43.6

Comprehensive (loss) income — — — ( 4.5 ) — 18.9 ( 0.3 ) 14.1

Stock-based compensation — — 6.1 — — — — 6.1

Restricted stock awards issued 447,393 0.4 ( 0.4 ) — — — — —

266,123 0.2 ( 0.1 ) — — — — 0.1

Restricted stock cancelled ( 5,000 ) — — — — — — —

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Balance at December 31, 2020 16,148,791 16.1 135.5 290.5 ( 79.8 ) ( 18.1 ) 13.7 357.9

Comprehensive (loss) income — — — ( 4.5 ) — 18.9 ( 0.3 ) 14.1

Comprehensive loss — — — ( 24.8 ) — ( 1.1 ) ( 1.2 ) ( 27.1 )

Stock-based compensation — — 6.5 — — — — 6.5

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Dividends — — — ( 6.3 ) — — ( 0.7 ) ( 7.0 )

Purchase of treasury stock ( 519,387 shares)

Purchase of treasury stock ( 191,983 )

— — — — ( 5.5 ) — — ( 5.5 )

Increase in Park-Ohio ownership interest — — 1.1 — — — ( 1.1 ) —

Balance at December 31, 2021 16,339,722 16.3 142.9 259.4 ( 85.3 ) ( 19.2 ) 10.7 324.8

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— — — — ( 1.6 ) — — ( 1.6 )

Increase in Park-Ohio ownership interest — — 1.1 — — — ( 1.1 ) —

Balance at December 31, 2022 16,653,928 $ 16.6 $ 149.8 $ 238.8 $ ( 86.9 ) $ ( 61.8 ) $ 11.4 $ 267.9

(1) - Includes 52,173 restricted share units converted to common stock.

Year Ended December 31,

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2022 2021 2020

OPERATING ACTIVITIES (In millions)

Net (loss) income $ ( 26.0 ) $ ( 4.8 ) $ 39.7

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

OPERATING ACTIVITIES FROM CONTINUING OPERATIONS (In millions)

Income (loss) from continuing operations $ 11.4 $ ( 0.1 ) $ ( 0.5 )

Adjustments to reconcile income (loss) from continuing operations to net cash (used) provided by operating activities from continuing operations:

Depreciation and amortization 30.2 30.8 28.2

Stock-based compensation 7.2 6.5 6.1

Gain on sale of assets ( 14.7 ) — —

Goodwill impairment 4.6 — —

Gains on sales of assets, net ( 2.4 ) ( 14.7 ) —

Deferred income taxes ( 8.3 ) ( 5.8 ) 6.9

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Other ( 7.5 ) ( 8.2 ) ( 0.1 )

Net cash (used) provided by operating activities ( 43.3 ) 69.3 63.7

INVESTING ACTIVITIES

Net cash (used) provided by operating activities from continuing operations ( 26.6 ) ( 12.2 ) 58.6

INVESTING ACTIVITIES FROM CONTINUING OPERATIONS

Purchases of property, plant and equipment ( 26.9 ) ( 22.3 ) ( 20.3 )

Proceeds from sale of assets 20.3 1.4 —

Proceeds from sales of assets 9.5 20.3 1.4

Business acquisitions, net of cash acquired ( 23.3 ) ( 5.4 ) —

Net cash used by investing activities ( 16.2 ) ( 24.9 ) ( 48.2 )

FINANCING ACTIVITIES

Net cash used by investing activities from continuing operations ( 40.7 ) ( 7.4 ) ( 18.9 )

FINANCING ACTIVITIES FROM CONTINUING OPERATIONS

Proceeds from (payments on) revolving credit facility, net 64.8 77.6 ( 29.3 )

1 unchanged sentence

Proceeds from other long-term debt 3.5 2.3 5.5

(Payments on) proceeds from finance lease facilities, net ( 1.2 ) 1.4 ( 3.4 )

Proceeds from (payments on) finance lease facilities, net 8.5 ( 0.3 ) 3.9

Proceeds from third-party financing arrangement 20.0 — —

Dividends ( 7.0 ) ( 7.0 ) ( 3.2 )

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Payments of withholding taxes on stock awards ( 1.6 ) ( 3.0 ) ( 1.2 )

Net cash provided (used) by financing activities 59.9 ( 47.3 ) ( 15.3 )

Net cash provided (used) by financing activities from continuing operations 84.6 60.8 ( 44.8 )

DISCONTINUED OPERATIONS 1 :

Total (used) provided by operating activities ( 1.0 ) ( 31.1 ) 10.7

Total used by investing activities ( 4.8 ) ( 8.8 ) ( 6.0 )

Total used by financing activities ( 3.4 ) ( 0.9 ) ( 2.5 )

(Decrease) increase in cash and cash equivalents from discontinued operations ( 9.2 ) ( 40.8 ) 2.2

Effect of exchange rate changes on cash ( 4.0 ) ( 1.3 ) 1.9

Decrease in cash and cash equivalents ( 0.9 ) ( 1.0 ) 0.3

Increase (decrease) in cash and cash equivalents 4.1 ( 0.9 ) ( 1.0 )

Cash and cash equivalents at beginning of year 54.1 55.0 56.0

Cash and cash equivalents at end of year $ 58.2 $ 54.1 $ 55.0

Income taxes (received) paid, net $ ( 1.0 ) $ 5.5 $ 12.3

Income taxes paid (received), net $ 10.7 $ ( 1.0 ) $ 5.5

Interest paid $ 34.5 $ 28.8 $ 28.3

The accompanying notes are an integral part of these consolidated financial statements.

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Transactions with related parties are not material to the Company’s financial position, results of operations or cash flows.

Discontinued Operations:

During the fourth quarter of 2022, we determined that our Aluminum Products business met the held-for-sale and discontinued operations accounting criteria.

Accordingly, the Company has reported the held-for-sale assets and liabilities, the operating results and the cash flows of Aluminum Products in discontinued operations for all periods presented throughout this Annual Report on Form 10-K.

Unless otherwise indicated, amounts and activity in this Annual Report are presented on a continuing operations basis.

See Note 4, “Discontinued Operations,” in the Notes to Consolidated Financial Statements for further information.

Accounting Estimates:

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Sales of accounts receivable are reflected as a reduction of accounts receivable in the Consolidated Balance Sheets, and the proceeds are included in cash flows from operating activities in the Consolidated Statements of Cash Flows.

Expense in the amount of $ 0.4 million in both 2021 and 2020 related to the discount on sale of accounts receivable is recorded in the Consolidated Statements of Operations.

Inventories are valued using first-in, first-out (“FIFO”) or the weighted-average inventory method and stated at the lower of cost or net realizable value.

Expense in the amount of $ 1.0 million and $ 0.4 million in 2022 and 2021, respectively, related to the discount on sale of accounts receivable is recorded in the Consolidated Statements of Operations.

Inventories are valued using first-in, first-out or the weighted-average inventory method and stated at the lower of cost or net realizable value.

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Major Classes of Inventories December 31, 2022 December 31, 2021

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Depreciation of fixed assets, including amounts capitalized under finance leases, is computed by the straight-line method based on the estimated useful lives of the assets ranging from five to 40 years for buildings, and one to 20 years for machinery and equipment (with the majority in the range of three to ten years ).

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes property, plant and equipment:

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Goodwill and Indefinite-Lived Assets:

In accordance with Accounting Standards Codification (“ASC”) 350,

“Intangibles — Goodwill and Other” (“ASC 350”), goodwill and indefinite life intangible assets are not amortized but rather

are tested annually for impairment as of October 1, or whenever events or changes in circumstances indicate there may be an

indicator of impairment in accordance with ASC 350 .

In accordance with Accounting Standards Codification (“ASC”) 350, “Intangibles — Goodwill and Other” (“ASC 350”), goodwill and indefinite life intangible assets are not amortized but rather are tested annually for impairment as of October 1, or whenever events or changes in circumstances indicate there may be an indicator of impairment in accordance with ASC 350 .

Goodwill is tested for impairment at the reporting unit level and is based on the net assets of each reporting unit, including goodwill and intangible assets, compared to its fair value.

Our reporting units have been identified one level below the operating segment level.

The Company completed its annual goodwill and indefinite-lived intangibles impairment testing as of October 1 of each year, noting no impairment, except for the full write-off of the $ 4.6 million of goodwill in our Aluminum Products reporting unit.

The Company completed its annual goodwill and indefinite-lived intangibles impairment testing as of October 1 of each year, noting no impairment related to continuing operations.

To determine fair value for goodwill testing purposes, the Company uses an income approach, utilizing a discounted cash flow model based on forecasted cash flows and weighted average cost of capital.

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Upon indications of impairment, assets and liabilities are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

The asset group would be considered impaired if the estimated future net undiscounted cash flows generated by the asset group are less than its carrying value.

The asset group would be considered impaired if the

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

estimated future net undiscounted cash flows generated by the asset group are less than its carrying value.

Impairment losses are measured by comparing the estimated fair value of the asset group to its carrying value.

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however, we do not believe any such changes would have a material impact on our financial condition, results of operations or cash flows.

The carrying value of cash and cash equivalents, accounts receivable, accounts payable and borrowings under the Credit Agreement (as defined in Note 8)

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

approximate fair value at December 31, 2021 and December 31, 2020 because of the short-term nature of these instruments.

The carrying value of cash and cash equivalents, accounts receivable, accounts payable and borrowings under the Credit Agreement (as defined in Note 9) approximate fair value at December 31, 2022 and December 31, 2021 because of the short-term nature of these instruments.

The fair values of long-term debt and pension plan assets are disclosed in Note 9 and Note 14, respectively.

The Company has not changed its valuation techniques for measuring fair value during 2022, and there were no transfers between levels during the periods presented.

Pension and Other Postretirement Benefits:

We account for our pensions and other post-retirement benefits in accordance with ASC Topic 715, "Compensation — Retirement Benefits." Net actuarial gains and losses are amortized to expense when they exceed the 10% accounting corridor, based on the greater of the plan assets or benefit obligations, over an average employee future service period.

We account for our pensions in accordance with ASC Topic 715, "Compensation — Retirement Benefits." Net actuarial gains and losses are amortized to expense when they exceed the 10% accounting corridor, based on the greater of the plan assets or benefit obligations, over an average employee future service period.

Refer to Note 14 for more information.

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We have elected to account for global intangible low-taxed income (“GILTI”) as a current period expense.

The impact of GILTI at December 31, 2021 and 2020 was an increase in tax expense of $ 1.8 million in both periods.

The impact of GILTI at December 31, 2022 and 2021 was tax expense of $ 1.8 million and $ 1.4 million, respectively.

Revenue Recognition:

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The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends, current conditions and reasonable forecasts.

As of December 31, 2021, the Company had uncollateralized receivables with six customers in the automotive industry, each with several locations, aggregating $ 50.3 million, which represented approximately 20 % of the Company’s trade accounts receivable.

As of December 31, 2022, the Company had uncollateralized receivables with five customers in the automotive industry, each with several locations, aggregating $ 28.1

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

million, which represented approximately 11 % of the Company’s trade accounts receivable.

During 2022, sales to these customers amounted to approximately $ 218.5 million, which represented approximately 15 % of the Company’s net sales.

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The following table presents the changes in the Company’s product warranty liability:

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Year Ended December 31,

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Warranty expense 1.0 3.1 2.1

Foreign currency translation ( 0.7 ) ( 0.4 ) 0.4

Balance at December 31 $ 5.2 $ 7.2 $ 6.4

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Outstanding stock awards with exercise prices greater than the average price of the common shares are anti-dilutive and are not included in the computation of diluted earnings per share.

Because the Company was in a loss position for the years ended December 31, 2021 and 2020, all common shares outstanding are anti-dilutive.

Because the Company was in a continuing operations loss position for the year ended December 31, 2020, all common shares outstanding are anti-dilutive.

For the years ended December 31, 2022, 2021 and 2020, the anti-dilutive shares were 0.2 million, 0.6 million and 0.6 million respectively.

Recent Accounting Standards Not Yet Adopted

Accounting Standards Adopted

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” which was issued in response to concerns about structural risks of interbank offered rates, and, particularly, the risk of cessation of the London Interbank Offered Rate.

The guidance is effective upon issuance and may be adopted on any date on or after March 12, 2020.

However, the relief is temporary and generally cannot be applied to contract modifications that occur after December 31, 2022 or hedging relationships entered into or evaluated after that date.

The Company is currently evaluating the expected impact of this standard.

As of December 31, 2022, the Company utilizes ongoing reference rates, including the Euro

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Interbank Offered Rate;

the change from LIBOR had no impact on the financial statements of the Company.

All loan agreements that previously utilized LIBOR have been updated to utilize an ongoing reference rate.

No other recently issued ASUs are expected to have a material impact on our results of operations, financial condition or liquidity.

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The Company has elected the practical expedient not to disclose the value of remaining performance obligations associated with these types of contacts.

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company also has certain contracts which contain performance obligations that are immaterial in the context of the contract with the customer.

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Assembly Components designs, develops and manufactures:

aluminum products;

highly efficient, high pressure direct fuel injection fuel rails and pipes;

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These amounts, which totaled $ 52.6 million and $ 51.7 million at December 31, 2022 and December 31, 2021, respectively, are recorded as Deferred revenue in the Consolidated Balance Sheets.

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

For over time arrangements, contract assets relate to revenue recognized in advance of billings to customers under long-term contracts accounted for under percentage of completion.

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See details in the tables below.

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Year Ended December 31,

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Fuel, rubber and plastic products 388.8 321.5 298.4

Aluminum products 161.0 143.1 185.7

Assembly Components Segment 1

388.8 321.5 298.4

Industrial equipment 277.3 247.0 238.2

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Total revenues $ 1,492.9 $ 1,277.0 $ 1,152.1

The Aluminum Products business unit was previously included in our Assembly Components segment.

PARK-OHIO HOLDINGS CORP.

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Supply Technologies, Assembly Components and Engineered Products.

During the fourth quarter of 2022, we determined that the Aluminum Products business met the held-for-sale and discontinued operations accounting criteria.

The Aluminum Products business was previously reported in the Company’s Assembly Components segment and now is shown as discontinued operations for all periods presented.

For purposes of measuring business segment performance, the chief operating decision maker utilizes segment operating (loss) income, which is defined as revenues less expenses identifiable to the product lines within each segment.

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unusual in nature;

or are corporate costs, which include but are not limited to executive compensation and corporate office costs.

Segment operating (loss) income reconciles to consolidated (loss) income before income taxes by deducting corporate costs, certain non-cash and/or non-operating items;

Other components of pension income and other postretirement benefits (“OPEB”) expense, net;

and interest expense, net.

or are corporate costs, which include but are not limited to executive and share-based compensation and corporate office costs.

Segment operating (loss) income reconciles to consolidated

PARK-OHIO HOLDINGS CORP.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(loss) income before income taxes by deducting corporate costs, certain non-cash and/or non-operating items;

Other components of pension income and other postretirement benefits (“OPEB”) expense, net;

and interest expense, net.

Results by business segment were as follows:

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Corporate costs ( 30.6 ) ( 26.4 ) ( 26.1 )

Gain on sale of assets (1)

Goodwill impairment (2)

One-time net expense related to former President — — ( 4.3 )

Operating (loss) income ( 12.1 ) 15.7 83.1

Gains on sales of assets, net 2.4 14.7 —

Operating income 33.4 16.3 18.5

Other components of pension income and other postretirement benefits expense, net

Interest expense, net ( 33.8 ) ( 27.1 ) ( 27.6 )

(Loss) income before income taxes $ ( 32.5 ) $ ( 7.3 ) $ 54.9

(1) Gain on sale of assets was primarily due to the sale of real estate, for which the Company received cash proceeds of $ 19.6 million, in connection with the restructuring of the forged and machined products operating unit, which is included in the Engineered Products segment.

(2) The Company wrote-off the full amount of $ 4.6 million of goodwill in the Aluminum Products operating unit, which is included in the Assembly Components segment.

Income (loss) from continuing operations before income taxes $ 10.7 $ ( 1.1 ) $ ( 1.8 )

PARK-OHIO HOLDINGS CORP.

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Corporate 120.7 113.9 112.1

Assets held-for-sale by discontinued operations 107.2 122.1 103.6

$ 1,436.6 $ 1,360.0 $ 1,300.5

At December 31, 2021, 2020 and 2019, approximately 71 %, 70 % and 71 %, respectively, of the Company’s assets were located in the United States.

NOTE 4 — Plant Closure and Consolidation

During 2021, the Company recorded expenses totaling $ 6.1 million in its Assembly Components segment.

These expenses were recorded in connection with actions taken to close and consolidate its extrusion operations in Tennessee and its fuel operations in Michigan, to relocate certain production to lower-cost facilities with open capacity, and to complete other cost-reduction actions in this segment.

The expenses included facility-related costs of $ 5.5 million, which were included in cost of sales in the Consolidated Statements of Operations.

During 2021, expenses also included severance and other costs of $ 0.6 million, which were included in Selling, general and administrative expenses in the Consolidated Statements of Operations.

In connection with these actions, real estate was sold, resulting in a gain $ 0.5 million.

During 2021, the Company recorded expenses totaling $ 11.7 million in its Engineered Products segment.

These expenses were recorded in connection with actions taken to close and consolidate multiple locations, and to complete other cost-reduction actions in this segment.

The expenses included facility-related costs of $ 9.2 million, which were included in cost of sales in the Consolidated Statements of Operations.

During 2021, expenses also included severance and other costs of $ 2.5 million, which were included in Selling, general and administrative expenses in the Consolidated Statements of Operations.

During 2021, in connection with the plant closure and consolidation activities in its Engineered Products segment, the Company committed to a plan to sell real estate at two operating locations.

During the fourth quarter of 2021, the Company sold one property for $ 19.6 million in cash proceeds and recorded a gain on the sale of $ 14.2 million.

The Company determined that the remaining asset continues to meet the criteria to be classified as held for sale as of December 31, 2021 and, therefore, the carrying value is included in assets held for sale and presented in Prepaid and other current assets in the Consolidated Balance Sheet at December 31, 2021.

The Company believes that the fair value less costs to sell of this asset exceeds its respective carrying value.

At December 31, 2022, 2021 and 2020, approximately 71 %, 71 % and 70 %, respectively, of the Company’s assets (including assets held-for-sale) were located in the United States.

NOTE 4 — Discontinued Operations

A business is classified as held-for-sale when management having the authority to approve the action commits to a plan to sell the business, the sale is probable to occur during the next 12 months at a price that is reasonable in relation to its current fair value, and certain other criteria of ASC 360 are met.

A business classified as held-for-sale is recorded at the lower of its carrying amount or estimated fair value less cost to sell.

When the carrying amount of the business exceeds its estimated fair value less costs to sell, a loss is recognized and updated each reporting period as appropriate.

A business held-for-sale is classified as discontinued operations if the disposal group is a component of an entity;

the component of an entity meets the held-for-sale criteria of ASC 360;

and disposal of the component of an entity represents a strategic shift that will have a major effect on the entity's operations and financial results.

During the fourth quarter of 2022, the Company determined that the Aluminum Products business met the held-for-sale and discontinued operations accounting criteria.

Accordingly, the Company has reported the held-for-sale assets and liabilities and the operating results of Aluminum Products in discontinued operations for all periods presented in this Annual Report.

The Aluminum Products business was previously reported in the Company’s Assembly Components segment until meeting the discontinued operations criteria.

See Note 9 for discussion of the entry into a memorandum of understanding (the “MOU”) related to the potential sale of this business.

PARK-OHIO HOLDINGS CORP.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

During 2020, the Company recorded expenses totaling $ 4.1 million in its Assembly Components segment in connection with commencement of actions to close and consolidate its extrusion operations in Tennessee and its fuel operations in Shanghai, China, and to complete other cost-reduction actions in this segment.

The expenses, which are included in Cost of sales in the Consolidated Statements of Operations, are comprised of severance and related employee costs of $ 1.4 million, asset impairment of $ 0.5 million, and other facility costs of $ 2.2 million.

In the Engineered Products segment, the Company recorded expenses in 2020 related to plant closure and consolidation, of which $ 1.0 million is included in Cost of sales in the Consolidated Statements of Operations and $ 1.2 million is included in Selling, general and administrative expenses in the Consolidated Statements of Operations.

Year Ended December 31,

2022 2021 2020

Net sales $ 210.4 $ 161.0 $ 143.1

Cost of sales 220.0 169.3 135.7

Selling, general and administrative 14.2 11.5 10.2

Restructuring and other special charges 3.9 4.0 —

Goodwill impairment — 4.6 —

Operating loss ( 27.7 ) ( 28.4 ) ( 2.8 )

Interest expense 1

( 2.8 ) ( 3.0 ) ( 2.7 )

Loss from operation of discontinued operations ( 30.5 ) ( 31.4 ) ( 5.5 )

Loss on classification as held-for-sale ( 1.8 ) — —

Income tax benefit 8.0 5.5 1.2

Loss from discontinued operations, net of tax $ ( 24.3 ) $ ( 25.9 ) $ ( 4.3 )

(1) - Interest expense includes an allocation of interest that is not directly attributable to our Aluminum Products business, totaling $ 2.5 million, $ 2.6 million and $ 2.3 million in 2022, 2021 and 2020, respectively.

The following represents the details of assets and liabilities held-for-sale in each period:

December 31, 2022 December 31, 2021

(In millions, except share data)

Current assets:

Accounts receivable, net $ 24.9 $ 31.7

Inventories, net 30.2 30.5

Other current assets 1.2 3.0

Current assets held-for-sale 1

Property, plant and equipment, net 46.1 49.9

Operating lease right-of-use assets 4.8 7.0

Long-term assets held-for-sale 1

Total assets held-for-sale $ 107.2 $ 122.1

Current liabilities:

Trade accounts payable $ 22.8 $ 15.7

Current portion of finance lease liabilities 2.4 4.4

Current portion of operating lease liabilities 2.3 2.2

Other accrued expenses 10.7 10.6

Current liabilities held-for-sale 1

$ 38.2 $ 32.9

Long-term liabilities, less current portion:

Long-term finance lease liabilities 3.1 4.6

Long-term operating lease liabilities 2.5 4.8

Long-term liabilities held-for-sale 1

Total liabilities held-for-sale $ 43.8 $ 42.3

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(1) - We reasonably expect to finalize the sale of the Aluminum Products business within one year from the December 31, 2022 balance sheet date, and therefore we have presented all assets and liabilities held-for-sale as current as of that date.

NOTE 5 — Plant Closure and Consolidation

During 2022, 2021 and 2020, the Company incurred the following expenses related to plant closure and consolidation in connection with its profit-improvement actions across the businesses.

Facility Related Costs Severance and Other Total

Assembly Components $ 5.6 $ — $ 5.6

Engineered Products 8.2 0.2 8.4

Total $ 13.8 $ 0.2 $ 14.0

Assembly Components $ 3.8 $ — $ 3.8

Engineered Products 10.8 0.9 11.7

Total $ 14.6 $ 0.9 $ 15.5

Assembly Components $ 3.2 $ 0.9 $ 4.1

Engineered Products 1.2 1.0 2.2

Total $ 4.4 $ 1.9 $ 6.3

The actions in the Assembly Components segment were primarily in connection with actions taken to close and consolidate its extrusion operations in Tennessee and its fuel operations in Michigan, to relocate certain production to lower-cost facilities with open capacity, and to complete other cost-reduction actions.

The actions in the Engineered Product segment were primarily in connection with plant closure and consolidation of multiple locations, and to complete other cost-reduction actions in this segment.

The Company expects to incur expenses of approximately $ 2.0 million to $ 3.0 million in 2023 in connection with its plant closure and consolidation activities.

In connection with the above actions, the Company sold certain real estate for cash proceeds and gains on sales as follows.

Gains are recorded on a separate line in the Consolidated Statements of Operations and are excluded from segment operating income.

Cash Proceeds from Sales of Assets Net Book Value Gains on Sales of Assets

2022 $ 9.5 $ 7.1 $ 2.4

2021 $ 20.3 $ 5.6 $ 14.7

2020 $ 1.4 $ 1.4 $ —

NOTE 6 — Acquisitions

On April 1, 2021, the Company acquired NYK Component Solutions Limited (“NYK”).

NYK, which is included in our Supply Technologies segment, is headquartered in Southampton, United Kingdom and is a leading distributor of circular connectors and accessories for use in aerospace, defense, and other industrial applications.

NYK provides complementary products to our existing products in Supply Technologies.

At closing, the Company paid $ 5.4 million in cash, net of cash acquired.

In addition, the purchase agreement stipulates potential contingent consideration of up to an additional $ 2.1 million based on two-year cumulative earnings before interest, taxes, depreciation and amortization.

The fair value of the contingent consideration at the acquisition date was determined to be $ 1.2 million, valued using level 3 inputs.

During 2021, the Company recorded expense of $ 0.7 million to increase the estimated contingent consideration liability to $ 1.9 million as of December 31, 2021.

The allocation of the purchase price of NYK was finalized in 2021 and is summarized as follows:

In July 2022, the Company acquired Charter Automotive (Changzhou) Co.

(“Charter”) for $ 9.3 million, net of cash acquired.

Charter, which is included in our Supply Technologies segment, is headquartered in Changzhou, China and is

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

strategic to our existing fastener manufacturing business, will accelerate the global growth of the Company's proprietary products to electric vehicle and other auto-related platforms.

The allocation of the purchase price of Charter was finalized in 2022 and is summarized as follows:

(In millions)

1 unchanged sentence

Inventories 3.0

Property, plant and equipment 4.3

Other current assets 0.9

Accounts payable and accrued expenses ( 1.5 )

Total purchase price $ 9.3

The Company paid $ 6.0 million for Charter in 2022 and is scheduled to pay the remaining balance throughout 2023 and 2024.

In August 2022, the Company acquired Southern Fasteners & Supply, Inc.

(“Southern Fasteners”) for $ 18.7 million, net of cash acquired.

The purchase price included cash of $ 16.7 million paid at closing plus a $ 2.0 million note that will be paid to the seller over the next two years .

Southern Fasteners, which is included in our Supply Technologies segment, is headquartered in Winston-Salem, North Carolina.

Southern Fasteners provides commercial fasteners and industrial supplies to a diverse base of Maintenance, Repair and Operations (“MRO”) and Original Equipment Manufacturing (“OEM”) customers throughout the United States and specializes in the design of customized inventory programs for its customers.

Southern Fasteners complements Supply Technologies’ continued efforts to grow the initiatives centered around industrial supply and MRO products to our global OEM customer base.

The allocation of the purchase price of Southern Fasteners was finalized in 2022 and is summarized as follows (including the $ 2.0 million of notes payable to the seller):

(In millions)

Accounts receivable $ 3.3

Inventories 5.0

Property, plant and equipment 0.4

Other, net 0.1

Other current assets 0.3

Intangible assets 6.0

Deferred income tax liability ( 0.9 )

Total purchase price (including the estimated contingent consideration of $ 1.2 million at the date of acquisition)

On May 31, 2019, the Company acquired EFCO, Inc.

d/b/a Erie Press Systems (“EP”) for $ 8.1 million in cash, plus up to an additional $ 1.0 million based on cumulative earnings of EP over two-years .

EP, which is included in the Company's Engineered Products segment, is an industry-recognized leader in the manufacturing of advanced forging presses, hydraulic and mechanical presses, and metal stretch-forming and carbon extrusion machines for several end markets, including aerospace and defense, primary metals and high-speed rail.

During 2021, the Company determined that no contingent consideration was payable to the seller of EP based on the actual cumulative earnings of EP.

Accounts payable and accrued expenses ( 2.5 )

Total purchase price (including notes payable to seller of $ 2.0 million)

In 2021, the Company acquired NYK Component Solutions Limited (“NYK”).

NYK provides complementary products to our existing products in Supply Technologies.

At closing, the Company paid $ 5.4 million in cash, net of cash acquired.

In addition, the purchase agreement stipulates potential contingent consideration of up to an additional $ 1.8 million based on earnings before interest, taxes, depreciation and amortization during the two years following the acquisition date.

The Company paid $ 0.6 million during 2022, which is included in Business Acquisitions in the Consolidated Statements of Cash Flows.

As of December 31, 2022, the Company expects to pay an additional $ 1.2 million of the contingent consideration to the seller in 2023.

PARK-OHIO HOLDINGS CORP.

5 unchanged sentences

Balance at January 1, 2021 $ 15.1 $ 51.5 $ 39.7 $ 106.3

Acquisition 1.5 — — 1.5

Foreign currency translation ( 0.3 ) — ( 1.5 ) ( 1.8 )

Balance at December 31, 2021 16.3 51.5 38.2 106.0

Acquisition 1.5 — — 1.5

Goodwill impairment — ( 4.6 ) — ( 4.6 )

Acquisitions 6.2 — — 6.2

Foreign currency translation ( 1.4 ) ( 0.2 ) ( 1.7 ) ( 3.3 )

Balance at December 31, 2022 $ 21.1 $ 51.3 $ 36.5 $ 108.9

Upon completion of goodwill impairment testing in the fourth quarter of 2021, the Company determined that the fair value of its Aluminum Products reporting unit, which is included in the Assembly Components segment, was lower than its carrying amount.

As a result, the Company recorded an impairment charge of $ 4.6 million in the fourth quarter of 2021 to write-off the full amount of goodwill of the Aluminum Products reporting unit.

The Company's other reporting units with goodwill balances had fair values in excess of their carrying amounts by at least 15 %.

NOTE 8 — Other Intangible Assets

31 unchanged sentences

$ 655.1 $ 586.9

In addition to debt listed above, on December 30, 2022, the Company entered into the MOU with a third party pursuant to which the third party would purchase our Aluminum Products business.

The sale of the Aluminum Products business is subject to the successful completion of a definitive purchase agreement and other customary conditions.

In connection with the MOU, the Company also entered into a financing arrangement with the third party pursuant to which the Company received a portion of the estimated purchase price of the Aluminum Products business, including $ 20.0 million of cash and a promissory note in the principal amount of $ 25.0 million, and recorded a financing arrangement liability of $ 45.0 million.

The Company used the $ 20.0 million from this financing arrangement to repay indebtedness under its revolving credit facility.

If a definitive purchase agreement between the parties is not entered into or the sale is not successfully consummated, the promissory note will be cancelled and the Company will repay the third party $ 20.0 million, less a $ 0.8 million break-up fee.

Park-Ohio’s Seventh Amended and Restated Credit Agreement (as amended, the “Credit Agreement”) provides for a revolving credit facility in the amount of $ 405.0 million, including a $ 40.0 million Canadian revolving subcommitment and a European revolving subcommitment in the amount of $ 30.0 million.

9 unchanged sentences

See Note 13 for additional disclosures about finance leases.

As of December 31, 2022, the Company had additional finance leases totaling $ 13.4 million.

On October 21, 2015, the Company, through its subsidiary, Southwest Steel Processing LLC, entered into a financing agreement with the Arkansas Development Finance Authority.

12 unchanged sentences

Foreign subsidiaries of the Company had $ 10.9 million of borrowings at December 31, 2022 and $ 9.8 million at December 31, 2021.

We had outstanding bank guarantees and letters of credit of approximately $ 39.7 million at December 31, 2021 and $ 34.9 million at December 31, 2020 under our credit arrangements.

We had outstanding bank guarantees and letters of credit under our credit arrangements of approximately $ 41.0 million at December 31, 2022 and $ 39.7 million at December 31, 2021.

The weighted average interest rate on all debt was approximately 5.1 % in 2022, 4.8 % in 2021 and 5.0 % in 2020.

NOTE 10 — Income Taxes

(Loss) income before income taxes consists of the following:

(Loss) income from continuing operations before income taxes consists of the following:

Year Ended December 31,

16 unchanged sentences

( 8.3 ) ( 5.8 ) 6.9

Income tax (benefit) expense $ ( 6.5 ) $ ( 2.5 ) $ 15.2

Income tax benefit $ ( 0.7 ) $ ( 1.0 ) $ ( 1.3 )

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was enacted on March 27, 2020.

9 unchanged sentences

This additional tax benefit of 14% increased the 2020 tax benefit.

A reconciliation of income tax (benefit) expense computed by applying the statutory federal income tax rate to income tax expense as recorded is as follows:

In 2022, the Company completed a research and development tax credit study for the current year as well as US tax years open under statute.

The completed study resulted in additional research and development tax credit benefits being recorded in the current year.

A reconciliation of income tax expense (benefit) computed by applying the statutory federal income tax rate to income tax benefit as recorded is as follows:

Year Ended December 31,

2022 2021 2020

Income tax (benefit) expense at U.S.

Income tax expense (benefit) at U.S.

statutory rate $ 2.3 $ ( 0.2 ) $ ( 0.4 )

11 unchanged sentences

Other, net ( 0.6 ) — 0.8

Income tax (benefit) expense as recorded $ ( 6.5 ) $ ( 2.5 ) $ 15.2

Income tax benefit as recorded $ ( 0.7 ) $ ( 1.0 ) $ ( 1.3 )

PARK-OHIO HOLDINGS CORP.

9 unchanged sentences

Compensation 2.3 3.4

Capitalized research and development expenditures 10.8 —

Disallowed interest 7.9 4.9

2 unchanged sentences

Deferred income tax liabilities:

Depreciation and amortization 20.6 20.1

Depreciation 19.3 20.6

Pension 14.1 18.8

3 unchanged sentences

Total deferred income tax liabilities 66.0 72.7

Net deferred income tax liabilities prior to valuation allowances ( 20.9 ) ( 26.8 )

Net deferred income tax assets (liabilities) prior to valuation allowances 3.5 ( 20.9 )

Valuation allowances ( 8.6 ) ( 6.1 )

Net deferred income tax liability $ ( 5.1 ) $ ( 27.0 )

At December 31, 2021, the Company has U.S., state and foreign net operating loss carryforwards and U.S.

foreign tax credit carryforwards for income tax purposes.

At December 31, 2022, the Company has U.S., state and foreign net operating loss carryforwards as well as U.S.

foreign tax credit carryforwards and research and development tax credit carryforwards for income tax purposes.

The foreign net operating loss carryforward is $ 32.5 million, of which $ 14.7 million expires between 2023 and 2042 and the remainder has no expiration date.

The Company has a tax benefit from a state net operating loss carryforward of $ 3.2 million that expires between 2022 and 2041.

The Company has a tax benefit from a state net operating loss carryforward of $ 3.3 million, of which, $ 2.9 million expires between 2023 and 2042 and the remainder has no expiration date.

The Company also has a non-consolidated U.S.

net operating loss carryforward of $ 0.5 million that expires between 2034 and 2037.

The Company has recorded a valuation allowance of $ 6.2 million against these net operating loss carryforwards in jurisdictions where those losses are not expected to be realized.

The foreign tax credit carryforward is $ 1.8 million and expires between 2030 and 2032.

As of December 31, 2021 and 2020, the Company was not in a cumulative three-year loss position and it was determined that it was more likely than not that its U.S.

deferred tax assets will be realized.

The foreign tax credit carryforward has a full valuation allowance as the Company is not expected to generate sufficient foreign source income to utilize the credit before expiration.

research and development tax credit carryforward is $ 2.5 million and expires between 2041 and 2042.

As of December 31, 2022 and 2021, the Company was in a cumulative three-year loss position.

The Company has determined that it was more likely than not that its U.S.

deferred tax assets will be realized, except for the foreign tax credit as noted above.

The Company reviews all valuation allowances related to deferred tax assets and will reverse these valuation allowances, partially or totally, when appropriate under ASC 740.

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

1 unchanged sentence

Unrecognized Tax Benefit — January 1 $ 1.0 $ 2.1 $ 3.7

Gross Increases to Tax Positions Related to Current Year — — 0.5

Gross Increases to Tax Positions Related to Prior Years 0.3 — 0.1

3 unchanged sentences

Unrecognized Tax Benefit — December 31 $ 0.8 $ 1.0 $ 2.1

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $ 0.1 million at December 31, 2021 and $ 0.2 million at December 31, 2020.

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $ 0.1 million at both December 31, 2022 and December 31, 2021.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense.

During the years ended December 31, 2021 and 2020, the Company recognized a tax benefit of approximately $ 0.1 million in both periods in net interest and penalties due to the expiration of various uncertain tax positions.

The Company had approximately $ 0.1 million and $ 0.2 million for the payment of interest and penalties accrued at December 31, 2021 and 2020, respectively.

During the years ended December 31, 2022 and 2021, the Company recognized a tax benefit of approximately $ 0.1 million, in both years, in net interest and penalties due to the expiration of various uncertain tax positions.

The Company had approximately $ 0.1 million for the payment of interest and penalties accrued at both December 31, 2022 and 2021.

It is reasonably possible that, within the next twelve months, the amount of gross unrecognized tax benefits could be reduced by approximately $ 0.4 million as a result of the closure of tax statutes related to existing uncertain tax positions.

22 unchanged sentences

(a) Included in the granted amount are 12,500 restricted share units.

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company recognized compensation expense of $ 7.2 million, $ 6.5 million and $ 6.1 million for the years ended December 31, 2022, 2021 and 2020, respectively, relating to time-based awards and performance-based awards.

The amount in 2019 is net of $ 1.7 million of forfeitures related to the departure of the Company’s former President, Chairman and Chief Executive Officer.

The 50,000 share performance-based award in 2019 relates to a five-year cumulative profit target through 2023.

1 unchanged sentence

The total fair value of restricted shares and share units that vested during the years ended December 31, 2022, 2021 and 2020 was $ 6.5 million, $ 6.7 million and $ 6.4 million, respectively.

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2022, the Company had unrecognized compensation expense of $ 8.1 million related to restricted shares.

24 unchanged sentences

Additionally, we do not believe that the amounts claimed in any of the asbestos cases are meaningful indicators of our potential exposure because the amounts claimed typically bear no relation to the extent of the plaintiff's injury, if any.

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 13 - Lease Arrangements

4 unchanged sentences

We evaluate renewal options at the lease commencement date to determine if we are reasonably certain to exercise the option on the basis of economic factors.

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The discount rate implicit in our operating leases is generally not determinable, and therefore the Company determines the discount rate for each lease based on its incremental borrowing rate.

19 unchanged sentences

Operating lease expense is recognized on a straight-line basis over the lease term, with variable payments recognized in the period those payments are incurred.

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2022 2021 2020

7 unchanged sentences

Cash Flow Information for 2022, 2021 and 2020

PARK-OHIO HOLDINGS CORP.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2022 2021 2020

2 unchanged sentences

Operating cash outflows for finance leases $ ( 0.3 ) $ ( 0.3 ) $ ( 0.1 )

Financing cash (outflows) inflows for finance leases $ ( 1.2 ) $ 1.4 $ ( 3.4 )

Financing cash inflows (outflows) for finance leases $ 8.5 $ ( 0.3 ) $ 3.9

Maturities of Lease Liabilities as of December 31, 2022, were as follows:

2 unchanged sentences

2024 12.3 3.9

2024 11.4 3.8

Thereafter 15.0 5.9

25 unchanged sentences

Interest cost 1.8 1.4 0.1 0.1

Actuarial (gains) losses ( 2.5 ) 6.6 ( 0.5 ) 0.6

Actuarial gains ( 15.8 ) ( 2.5 ) ( 0.8 ) ( 0.5 )

Benefits and expenses paid ( 6.4 ) ( 5.9 ) ( 1.0 ) ( 0.6 )

45 unchanged sentences

Hedge funds 22.6 26.1

Multi-year 420 transfer ( 4.5 ) —

Postretirement benefit assets ( 3.6 ) ( 4.5 )

Total assets at fair value $ 131.5 $ 169.9

35 unchanged sentences

Discount rate for interest costs 2.21 % 1.66 % 2.76 % 1.96 % 1.33 % 2.56 %

Expected return on plan assets 7.75 % 7.75 % 8.25 % 7.75 % N/A N/A

Expected return on plan assets 7.75 % 7.75 % 7.75 % 7.75 % 7.75 % N/A

Rate of compensation increase 3.00 % 3.00 % 3.00 % N/A N/A N/A

77 unchanged sentences

Tax valuation allowances 5.5 1.0 — 6.5

Note (A)- Uncollectable accounts written off, net of recoveries.

Note (A)- Uncollectible accounts written off, net of recoveries.

Note (B)- Amounts written off.

1 unchanged sentence

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-K

Item 8. Financial Statements and Supplementary Data