Item 1. Financial Statements
ITEM 1. FINANCIAL STATEMENTS
THE TIMKEN COMPANY AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
Three Months Ended
March 31,
2026 2025
(Dollars in millions, except per share data)
Net sales $ 1,231.3 $ 1,140.3
Cost of products sold 837.3 781.6
Selling, general and administrative expenses 201.2 184.8
Amortization of intangible assets 20.6 19.0
Impairment and restructuring charges 3.6 10.9
Operating Income 168.6 144.0
Interest expense ( 24.3 ) ( 26.5 )
Interest income 1.7 2.3
Non-service pension and other postretirement expense ( 0.7 ) ( 1.2 )
Other expense, net ( 2.4 ) ( 0.3 )
Income Before Income Taxes 142.9 118.3
Provision for income taxes 37.0 26.9
Net Income 105.9 91.4
Less: Net income attributable to noncontrolling interest 7.7 13.1
Net Income Attributable to The Timken Company $ 98.2 $ 78.3
Net Income per Common Share Attributable to The Timken
Company Common Shareholders
Basic earnings per share $ 1.41 $ 1.12
Diluted earnings per share $ 1.40 $ 1.11
See accompanying Notes to the Consolidated Financial Statements.
Consolidated Statements of Comprehensive Income
(Unaudited)
Three Months Ended
March 31,
2026 2025
(Dollars in millions)
Net Income $ 105.9 $ 91.4
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments ( 30.5 ) 67.1
Pension and postretirement liability adjustments ( 1.5 ) ( 1.6 )
Change in fair value of derivative financial instruments 0.3 ( 2.1 )
Other comprehensive (loss) income, net of tax ( 31.7 ) 63.4
Comprehensive income, net of tax 74.2 154.8
Less: comprehensive (loss) income attributable to
noncontrolling interest ( 0.9 ) 13.7
Comprehensive income attributable to The Timken Company $ 75.1 $ 141.1
See accompanying Notes to the Consolidated Financial Statements.
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Consolidated Balance Sheets
(Unaudited)
(Dollars in millions) March 31,
2026 December 31,
2025
ASSETS
Current Assets
Cash and cash equivalents $ 344.7 $ 364.4
Restricted cash 0.8 1.0
Accounts receivable, less allowances (2026 - $ 14.1 million; 2025 - $ 12.3 million)
808.9 689.4
Unbilled receivables 155.7 137.6
Inventories, net 1,273.8 1,243.3
Deferred charges and prepaid expenses 58.2 45.7
Other current assets 112.9 119.4
Total Current Assets 2,755.0 2,600.8
Property, Plant and Equipment, net 1,342.5 1,357.6
Other Assets
Goodwill 1,526.2 1,486.4
Other intangible assets, net 1,026.1 1,002.3
Operating lease assets 151.2 152.9
Deferred income taxes 57.3 53.2
Other non-current assets 23.2 23.6
Total Other Assets 2,784.0 2,718.4
Total Assets $ 6,881.5 $ 6,676.8
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable, trade $ 380.3 $ 353.2
Short-term debt, including current portion of long-term debt 42.9 38.9
Salaries, wages and benefits 148.2 157.5
Income taxes payable 41.6 31.4
Other current liabilities 343.9 341.1
Total Current Liabilities 956.9 922.1
Non-Current Liabilities
Long-term debt 2,027.2 1,883.1
Accrued pension benefits 140.8 148.9
Accrued postretirement benefits 30.6 29.3
Long-term operating lease liabilities 99.4 100.8
Deferred income taxes 160.3 146.7
Other non-current liabilities 98.4 100.2
Total Non-Current Liabilities 2,556.7 2,409.0
Shareholders’ Equity
Class I and II Serial Preferred Stock, without par value:
Authorized – 10,000,000 shares each class, none issued
— —
Common shares, without par value:
Authorized – 200,000,000 shares
Issued (including shares in treasury) (2026 – 79,932,693 shares;
2025 – 79,611,543 shares)
Stated capital 40.7 40.7
Other paid-in capital 1,310.0 1,299.5
Retained earnings 2,751.8 2,678.9
Accumulated other comprehensive loss ( 119.6 ) ( 96.5 )
Treasury shares at cost (2026 – 10,443,289 shares; 2025 – 10,076,175 shares)
( 775.2 ) ( 738.0 )
Total Shareholders’ Equity 3,207.7 3,184.6
Noncontrolling Interest 160.2 161.1
Total Equity 3,367.9 3,345.7
Total Liabilities and Equity $ 6,881.5 $ 6,676.8
See accompanying Notes to the Consolidated Financial Statements.
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Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
March 31,
2026 2025
(Dollars in millions)
CASH PROVIDED (USED)
Operating Activities
Net income $ 105.9 $ 91.4
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 58.9 55.1
Loss (gain) on sale of assets 0.1 ( 1.0 )
Deferred income tax expense 2.0 —
Stock-based compensation expense 7.6 7.5
Pension and other postretirement expense 1.3 1.8
Pension and other postretirement benefit contributions and payments ( 10.8 ) ( 23.8 )
Changes in operating assets and liabilities:
Accounts receivable ( 112.8 ) ( 70.8 )
Unbilled receivables ( 18.2 ) ( 18.2 )
Inventories ( 12.5 ) 15.3
Accounts payable, trade 31.1 20.2
Other accrued expenses ( 18.5 ) ( 16.0 )
Income taxes 14.0 3.5
Other, net ( 8.8 ) ( 6.4 )
Net Cash Provided by Operating Activities 39.3 58.6
Investing Activities
Capital expenditures ( 38.8 ) ( 35.2 )
Acquisitions, net of cash acquired of $ 6.9 million
( 124.3 ) —
Proceeds from disposal of property, plant and equipment — 1.9
Investments in short-term marketable securities, net 6.1 0.8
Net Cash Used in Investing Activities ( 157.0 ) ( 32.5 )
Financing Activities
Cash dividends paid to shareholders ( 25.3 ) ( 25.1 )
Purchase of treasury shares ( 28.0 ) ( 23.1 )
Proceeds from exercise of stock options 2.9 0.3
Payments related to tax withholding for stock-based compensation ( 9.2 ) ( 9.5 )
Borrowings on accounts receivable facility 135.0 57.0
Payments on accounts receivable facility ( 35.0 ) ( 27.0 )
Proceeds from long-term debt 276.5 —
Payments on long-term debt ( 218.9 ) ( 1.2 )
Short-term debt activity, net 4.1 ( 2.0 )
Net Cash Provided by (Used in) Financing Activities 102.1 ( 30.6 )
Effect of exchange rate changes on cash ( 4.3 ) 7.4
(Decrease) Increase in Cash, Cash Equivalents and Restricted Cash ( 19.9 ) 2.9
Cash, cash equivalents and restricted cash at beginning of year 365.4 373.6
Cash, Cash Equivalents and Restricted Cash at End of Period $ 345.5 $ 376.5
See accompanying Notes to the Consolidated Financial Statements.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in millions, except per share data)
Note 1 - Basis of Presentation
The accompanying Consolidated Financial Statements (unaudited) for The Timken Company (the "Company" or "Timken") have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and notes required by the accounting principles generally accepted in the United States ("U.S. GAAP") for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) and disclosures considered necessary for a fair presentation have been included. For further information, refer to the Consolidated Financial Statements and accompanying Notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Note 2 - Significant Accounting Policies
The Company's significant accounting policies are detailed in " Note 1 - Significant Accounting Policies" of the Annual Report on Form 10-K for the year ended December 31, 2025.
Recent Accounting Pronouncements:
New Accounting Guidance Issued and Not Yet Adopted:
In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2024-03, Income Statement—Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). ASU 2024-03 requires that a public entity disclose detailed information about types of expense. Specifically, a public entity would disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation and (d) intangible asset amortization included in each relevant expense caption. A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations that contains any of the expense categories listed in (a)–(d). In addition, a public entity should include certain amounts that are already required to be disclosed under current U.S. GAAP in the same disclosure as the other disaggregation requirements. A public entity would also disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively and disclose the total amounts of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. For public entities, the new guidance is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The new guidance should be applied either prospectively to financial statements issued after the effective date of ASU 2024-03 or retrospectively to any or all prior periods presented in the financial statements. The Company plans to apply the new guidance prospectively upon adoption. The Company's adoption of ASU 2024-03 is expected to result in enhanced disclosures.
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Note 3 - Acquisitions
Acquisitions:
On March 18, 2026, the Company acquired certain assets and assumed certain liabilities in the United States and acquired 100 % of the equity of the international affiliates of Bijur Delimon International ("Bijur Delimon"), a leading global designer and manufacturer of automated lubrication systems. Founded in 1872, Bijur Delimon operates manufacturing locations in the United States, Europe and Asia Pacific. The acquisition of Bijur Delimon expands the Company's position in automated lubrication systems. The total purchase price for this acquisition was $ 124.3 million, net of cash acquired of $ 6.9 million, subject to customary post-closing adjustments. Results for Bijur Delimon are reported in the Industrial Motion segment. The Company incurred acquisition-related costs of $ 1.1 million to complete this acquisition. Acquisition costs are recorded in selling, general and administrative expenses on the Consolidated Statements of Income.
The following table presents the preliminary purchase price allocation at fair value for the Bijur Delimon acquisition as of March 31, 2026:
Initial Purchase
Price Allocation
Assets:
Accounts receivable $ 11.1
Inventories 24.2
Other current assets 4.5
Property, plant and equipment 8.6
Goodwill 52.7
Other intangible assets 54.9
Other non-current assets 4.1
Total assets acquired $ 160.1
Liabilities:
Accounts payable, trade $ 9.6
Salaries, wages and benefits 6.3
Other current liabilities 7.6
Deferred income taxes 10.7
Other non-current liabilities 1.6
Total liabilities assumed $ 35.8
Net assets acquired $ 124.3
The following table summarizes the preliminary purchase price allocation at fair valu e for identifiable intangible assets acquired in 2026:
2026
Weighted-
Average Life
Trade names $ 10.2 18 years
Technology and know-how 14.0 16 years
Customer relationships 30.6 17 years
Capitalized software 0.1 2 years
Total intangible assets $ 54.9
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Note 3 - Acquisitions (continued)
The Company utilized a benchmarking approach based on the Company's prior acquisitions to determine the preliminary fair values for identified intangible assets and inventory. Upon completion of the final purchase price allocation, the final fair values of the assets acquired, liabilities assumed and resulting goodwill may differ materially from the preliminary assessment. Any changes to the initial estimates of the fair value of the assets acquired and liabilities assumed will be recorded to those assets and liabilities and residual amounts will be allocated to goodwill.
The amounts in the table above represent the preliminary purchase price allocation for Bijur Delimon. This purchase price allocation, including the residual amount allocated to goodwill, is subject to change as additional information concerning final asset and liability valuations are obtained and management completes its reassessment of the measurement period procedures based on the results of the preliminary valuation. Given the proximity of the acquisition date to March 31, 2026, no elements of the purchase price allocation have been finalized as of March 31, 2026. During the applicable measurement period, the Company will adjust assets and liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in revised estimated values for those assets or liabilities as of that date. The effect of measurement period adjustments to the estimated fair values will be reflected as if the adjustments had been completed on the acquisition date.
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Note 4 - Segment Information
The Company operates under two reportable segments: (1) Engineered Bearings and (2) Industrial Motion. The Company's Chief Operating Decision Maker ("CODM") is the President and Chief Executive Officer ("CEO"). The primary measurement used by the CODM to measure the financial performance of each segment is adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA"). The CODM considers actual and budgeted results provided on a regular basis for both segment's profit measures when making decisions about allocating capital and personnel to the segments.
The following tables provide segment financial information and a reconciliation of segment results to consolidated results:
For the three months ended March 31, 2026:
Engineered Bearings Industrial Motion Total
Net sales $ 806.2 $ 425.1 $ 1,231.3
Cost of products sold (1)
( 562.2 ) ( 273.9 )
Selling, general and administrative expenses (2)
( 110.7 ) ( 72.6 )
Other segment items (3)
0.7 ( 0.1 )
Depreciation and amortization (4)
25.0 12.8
Adjusted EBITDA for reportable segments $ 159.0 $ 91.3 $ 250.3
Unallocated corporate expense ( 19.3 )
Impairment, restructuring and reorganization charges ( 4.8 )
Acquisition-related charges ( 1.8 )
Depreciation and amortization ( 58.9 )
Interest expense ( 24.3 )
Interest income 1.7
Income before income taxes $ 142.9
For the three months ended March 31, 2025:
Engineered Bearings Industrial Motion Total
Net sales $ 760.7 $ 379.6 $ 1,140.3
Cost of products sold (1)
( 523.3 ) ( 256.6 )
Selling, general and administrative expenses (2)
( 102.5 ) ( 68.0 )
Other segment items (3)
0.7 —
Depreciation and amortization (4)
23.6 12.1
Adjusted EBITDA for reportable segments $ 159.2 $ 67.1 $ 226.3
Unallocated corporate expense ( 18.2 )
Impairment, restructuring and reorganization charges ( 3.1 )
Gain on the sale of certain assets 1.2
CEO transition expenses ( 8.6 )
Depreciation and amortization ( 55.1 )
Interest expense ( 26.5 )
Interest income 2.3
Income before income taxes $ 118.3
(1) Cost of products sold excludes acquisition-related and reorganization charges.
(2) Selling, general, and administrative expenses exclude acquisition-related charges and CEO transition expenses.
(3) Other segment items are Other (expense) income, net and exclude the gain on the sale of certain assets.
(4) Depreciation and amortization excludes acquisition intangible amortization and depreciation recognized in reorganization charges, if any.
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Note 4 - Segment Information (continued)
The following tables provides additional segment financial information:
March 31,
2026 December 31, 2025
Assets by Segment:
Engineered Bearings $ 3,451.3 $ 3,293.5
Industrial Motion 3,028.1 2,962.8
Corporate (5)
402.1 420.5
$ 6,881.5 $ 6,676.8
(5) Corporate assets include cash and cash equivalents and corporate buildings.
Three Months Ended
March 31,
2026 2025
Capital expenditures:
Engineered Bearings $ 30.2 $ 24.9
Industrial Motion 8.1 10.2
Corporate 0.5 0.1
$ 38.8 $ 35.2
Depreciation and amortization:
Engineered Bearings $ 28.0 $ 26.6
Industrial Motion 30.5 28.3
Corporate 0.4 0.2
$ 58.9 $ 55.1
Note 5 - Revenue
The following table presents details deemed relevant to the users of the financial statements about total revenue for the three months ended March 31, 2026 and 2025:
Three Months Ended Three Months Ended
March 31, 2026 March 31, 2025
Engineered Bearings Industrial Motion Total Engineered Bearings Industrial Motion Total
United States $ 327.6 $ 227.1 $ 554.7 $ 311.5 $ 202.3 $ 513.8
Americas excluding the
United States 93.5 24.8 118.3 88.2 21.2 109.4
Europe / Middle East / Africa 163.0 146.4 309.4 139.6 129.7 269.3
Asia-Pacific 222.1 26.8 248.9 221.4 26.4 247.8
Net sales $ 806.2 $ 425.1 $ 1,231.3 $ 760.7 $ 379.6 $ 1,140.3
When reviewing revenue by sales channel, the Company separates net sales to original equipment manufacturers ("OEMs") from sales to distributors and end users. The following table presents the approximate percent of revenue by sales channel for the three months ended March 31, 2026 and 2025:
Three Months Ended Three Months Ended
Revenue by sales channel March 31, 2026 March 31, 2025
Original equipment manufacturers 60 % 60 %
Distribution/direct to end users 40 % 40 %
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Note 5 - Revenue (continued)
In addition to disaggregating revenue by segment, geography and by sales channel as shown above, the Company believes information about the timing of transfer of goods or services and type of customer is also relevant. During the three months ended March 31, 2026 and March 31, 2025, approximately 10 % and 9 %, respectively, of total net sales were recognized over-time because of the continuous transfer of control to the customer, with the remainder recognized as of a point in time. Finally, business with the United States ("U.S.") government or its contractors represented approximately 8 % and 7 % of total net sales during the three months ended March 31, 2026 and March 31, 2025, respectively.
Remaining Performance Obligations:
Remaining performance obligations represent the transaction price of orders meeting the definition of a contract for which work has not been performed and excludes unexercised contract options. Performance obligations having a duration of more than one year are concentrated in contracts for certain products and services provided to the U.S. government or its contractors. The aggregate amount of the transaction price allocated to remaining performance obligations for such contracts with a duration of more than one year was approximately $ 149 million at March 31, 2026.
Unbilled Receivables:
The following table contains a rollforward of unbilled receivables for the three months ended March 31, 2026 and the twelve months ended December 31, 2025:
March 31,
2026 December 31,
2025
Beginning balance, January 1 $ 137.6 $ 140.8
Additional unbilled revenue recognized 98.5 366.9
Less: amounts billed to customers ( 80.4 ) ( 370.1 )
Ending balance $ 155.7 $ 137.6
There were no impairment losses recorded on unbilled receivables for the three months ended March 31, 2026 and the twelve months ended December 31, 2025.
Deferred Revenue:
The following table contains a rollforward of deferred revenue for the three months ended March 31, 2026 and the twelve months ended December 31, 2025:
March 31,
2026 December 31,
2025
Beginning balance, January 1 $ 55.7 $ 41.4
Revenue received or billed in advance of recognition 37.8 180.9
Less: revenue recognized ( 45.0 ) ( 166.6 )
Acquisitions 0.3 —
Ending balance $ 48.8 $ 55.7
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Note 6 - Income Taxes
The Company's provision for income taxes in interim periods is computed by applying the estimated annual effective tax rates to income or loss before income taxes for the period. In addition, non-recurring or discrete items are recorded during the period(s) in which they occur.
Three Months Ended
March 31,
2026 2025
Provision for income taxes $ 37.0 $ 26.9
Effective tax rate 25.9 % 22.7 %
Income tax expense for the three months ended March 31, 2026 was calculated using forecasted multi-jurisdictional annual effective tax rates to determine a blended annual effective tax rate. The effective tax rate differs from the U.S. federal statutory rate of 21% due to the actual and projected mix of earnings in non-U.S. jurisdictions with relatively higher tax rates, U.S. state and local income taxes, and other permanent differences (net).
The effective tax rate of 25.9 % for the three months ended March 31, 2026 was higher than the effective tax rate for the three months ended March 31, 2025 primarily due to favorable discrete items recognized in the prior period related to the reversal of accruals for uncertain tax positions to account for the expiration of statue of limitations in jurisdictions outside the United States. This was partially offset by the mix of earnings in non-U.S. jurisdictions with relatively higher tax rates and the impact of beneficial provisions effective in 2026 from the One Big Beautiful Bill Act (“OBBBA”).
Note 7 - Earnings Per Share
The following table sets forth the reconciliation of the numerator and the denominator of basic earnings per share and diluted earnings per share for the three months ended March 31, 2026 and 2025:
Three Months Ended
March 31,
2026 2025
Numerator:
Net income attributable to The Timken Company $ 98.2 $ 78.3
Denominator:
Weighted average number of shares outstanding - basic 69,582,824 70,024,836
Effect of dilutive securities:
Stock options and awards - based on the treasury
stock method 621,865 489,101
Weighted average number of shares outstanding assuming
dilution of stock options and awards 70,204,689 70,513,937
Basic earnings per share $ 1.41 $ 1.12
Diluted earnings per share $ 1.40 $ 1.11
The dilutive effect of performance-based restricted stock units is taken into account once they have met minimum performance thresholds. The dilutive effect of stock options includes all outstanding stock options except stock options that are considered antidilutive. Stock options are antidilutive when the exercise price exceeds the average market price of the Company’s common shares during the periods presented. There were no antidilutive stock options outstanding during the three months ended March 31, 2026 and 2025. However, there were 2,381 and 49,764 antidilutive stock awards, including performance-based restricted stock units and restricted stock units, outstanding during the three months ended March 31, 2026 and 2025, respectively.
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Note 8 - Inventories
The components of inventories at March 31, 2026 and December 31, 2025 were as follows:
March 31,
2026 December 31,
2025
Manufacturing supplies $ 45.0 $ 44.0
Raw materials 156.2 147.1
Work in process 508.8 509.6
Finished products 642.6 634.5
Subtotal 1,352.6 1,335.2
Allowance for obsolete and surplus inventory ( 78.8 ) ( 91.9 )
Total inventories, net $ 1,273.8 $ 1,243.3
Inventories are valued at net realizable value, with approximately 58 % valued on the first-in, first-out ("FIFO") method and the remaining 42 % valued on the last-in, first-out ("LIFO") method. The majority of the Company's U.S. inventories are valued on the LIFO method. The Company's non-U.S. inventories are valued on the FIFO method.
The LIFO reserve as of March 31, 2026 and December 31, 2025 was $ 327.0 million and $ 312.0 million, respectively. An actual valuation of the inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on current inventory levels and costs. Because these calculations are subject to many factors beyond management’s control, annual results may differ from interim results as they are subject to the final year-end LIFO inventory valuation.
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Note 9 - Goodwill and Other Intangible Assets
The Company tests goodwill and indefinite-lived intangible assets for impairment at least annually, performing its annual impairment test as of October 1 st . Goodwill and indefinite-lived intangible assets are also reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
The Company reviews goodwill for impairment at the reporting unit level. The Engineered Bearings segment has one reporting unit and the Industrial Motion segment has six reporting units.
The changes in the carrying amount of goodwill for the three months ended March 31, 2026 were as follows:
Engineered Bearings Industrial Motion Total
Beginning balance, January 1 $ 703.9 $ 782.5 $ 1,486.4
Acquisitions — 52.7 52.7
Foreign currency translation adjustments and other changes ( 2.6 ) ( 10.3 ) ( 12.9 )
Ending balance $ 701.3 $ 824.9 $ 1,526.2
The acquisition of Bijur Delimon added goodwill of $ 52.7 million in 2026. Goodwill arising from this acquisition is attributed to the expected synergies, including future cost savings, and other benefits expected to be generated by combining the companies. The Company is still evaluating the tax deductibility of goodwill from the Bijur Delimon acquisition, but it expects a portion of the goodwill to be deductible for tax purposes in the United States.
The following table displays intangible assets as of March 31, 2026 and December 31, 2025:
Balance at March 31, 2026 Balance at December 31, 2025
Gross
Carrying
Amount Accumulated
Amortization Net
Carrying
Amount Gross
Carrying
Amount Accumulated
Amortization Net
Carrying
Amount
Intangible assets
subject to amortization:
Customer relationships $ 886.0 $ ( 331.9 ) $ 554.1 $ 863.0 $ ( 321.9 ) $ 541.1
Technology and know-how 403.3 ( 157.7 ) 245.6 392.3 ( 152.6 ) 239.7
Trade names 163.8 ( 25.4 ) 138.4 116.6 ( 23.6 ) 93.0
Capitalized software 312.5 ( 286.9 ) 25.6 312.0 ( 284.9 ) 27.1
Other 2.5 ( 1.8 ) 0.7 2.5 ( 1.7 ) 0.8
$ 1,768.1 $ ( 803.7 ) $ 964.4 $ 1,686.4 $ ( 784.7 ) $ 901.7
Intangible assets not subject to amortization:
Trade names $ 53.0 $ 53.0 $ 91.9 $ 91.9
FAA air agency certificates 8.7 8.7 8.7 8.7
$ 61.7 $ 61.7 $ 100.6 $ 100.6
Total intangible assets $ 1,829.8 $ ( 803.7 ) $ 1,026.1 $ 1,787.0 $ ( 784.7 ) $ 1,002.3
Amortization expense for intangible assets was $ 22.8 million and $ 21.0 million for the three months ended March 31, 2026 and 2025, respectively. Amortization expense for intangible assets is projected to be approximately $ 91 million in 2026; $ 90 million in 2027; $ 86 million in 2028; $ 84 million in 2029; and $ 81 million in 2030.
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Note 10 - Other Current Liabilities
The following table displays other current liabilities as of March 31, 2026 and December 31, 2025:
March 31,
2026 December 31,
2025
Sales rebates $ 50.9 $ 60.8
Deferred revenue 48.8 55.7
Interest 39.4 27.5
Operating lease liabilities 33.7 33.1
Taxes other than income and payroll taxes 30.1 21.4
Freight and duties 25.3 25.4
Unprocessed invoices 19.9 18.4
Professional fees 15.7 16.0
Product warranty 15.3 17.9
Restructuring 9.8 11.1
Current derivative liability 2.4 1.8
Other 52.6 52.0
Total other current liabilities $ 343.9 $ 341.1
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Note 11 - Financing Arrangements
Short-term debt at March 31, 2026 and December 31, 2025 was as follows:
March 31,
2026 December 31,
2025
Borrowings under lines of credit for certain of the Company’s foreign
subsidiaries with various banks with interest rates ranging from 2.54 %
to 2.84 % at March 31, 2026 and 2.59 % to 2.68 % at December 31, 2025
$ 28.8 $ 24.5
Short-term debt $ 28.8 $ 24.5
Lines of credit for certain of the Company's foreign subsidiaries provide for short-term borrowings. Most of these lines of credit are uncommitted. At March 31, 2026, the Company’s foreign subsidiaries had borrowings outstanding of $ 28.8 million and bank guarantees of $ 5.8 million.
Long-term debt at March 31, 2026 and December 31, 2025 was as follows:
March 31,
2026 December 31,
2025
Variable-rate Senior Credit Facility, with an average interest rate of 4.78 % for
U.S. dollars and 2.94 % for Euros at March 31, 2026, and 2.91 % for Euros
at December 31, 2025
$ 79.7 $ 21.2
Variable-rate Accounts Receivable Facility with an interest rate of 4.66 %
at March 31, 2026
100.0 —
Fixed-rate Euro Senior Unsecured Notes (1) , maturing on September 7, 2027,
with an interest rate of 2.02 %
173.3 176.2
Variable-rate Term Loan (1) , maturing on December 5, 2027, with an interest rate
of 4.89 % at March 31, 2026 and 4.94 % at December 31, 2025
84.9 84.8
Fixed-rate Medium-Term Notes, Series A (1) , maturing at various dates through
May 2028, with interest rates ranging from 6.74 % to 7.76 %
154.9 154.9
Fixed-rate Senior Unsecured Notes (1) , maturing on December 15, 2028, with
an interest rate of 4.50 %
398.7 398.5
Fixed-rate Senior Unsecured Notes (1) , maturing on April 1, 2032, with an
interest rate of 4.13 %
346.6 346.4
Fixed-rate Euro Senior Unsecured Notes (1) , maturing on May 23, 2034, with an
interest rate of 4.13 %
684.5 695.5
Fixed-rate Euro Bank Loan, maturing on June 30, 2033, with an
interest rate of 2.15 %
10.1 10.6
Other 8.6 9.4
Total debt $ 2,041.3 $ 1,897.5
Less: current maturities 14.1 14.4
Long-term debt $ 2,027.2 $ 1,883.1
(1) Net of discounts and fees
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Note 11 - Financing Arrangements (continued)
On December 5, 2025, the Company renewed the Amended and Restated Asset Securitization Agreement (the "Accounts Receivable Facility"). The $ 100 million Accounts Receivable Facility matures on November 30, 2028. Under the terms of the Accounts Receivable Facility, the Company sells, on an ongoing basis, certain domestic trade receivables to Timken Receivables Corporation, a wholly-owned consolidated subsidiary that, in turn, uses the trade receivables to secure borrowings that are funded through a vehicle that issues commercial paper in the short-term market. Borrowings under the Accounts Receivable Facility may be limited by certain borrowing base limitations; however, availability under the Accounts Receivable Facility was not reduced by any such borrowing base limitations at March 31, 2026. As of March 31, 2026, there were $ 100 million in outstanding borrowings under the Accounts Receivable Facility, which reduced the availability under the Accounts Receivable Facility to zero . The cost of this facility, which is the prevailing commercial paper rate plus facility fees, is considered a financing cost and is included in interest expense in the Consolidated Statements of Income.
On December 5, 2022, the Company entered into the Fifth Amended and Restated Credit Agreement ("Credit Agreement"), which is comprised of a $ 750 million unsecured revolving credit facility ("Senior Credit Facility") and a $ 400 million unsecured term loan facility ("2027 Term Loan") that each mature on December 5, 2027. The interest rates under the Credit Agreement are based on Secured Overnight Financing Rate ("SOFR") for U.S. dollar borrowings and Euro Interbank Offered Rate (“EURIBOR”) for Euro borrowings. At March 31, 2026, the Senior Credit Facility had $ 79.7 million in outstanding borrowings, which reduced the availability under the Senior Credit Facility to $ 670.3 million. Payments in 2025 and 2024 have reduced the 2027 Term Loan to $ 85 million at March 31, 2026. The Credit Agreement has two financial covenants: a consolidated net leverage ratio and a consolidated interest coverage ratio.
At March 31, 2026, the Company was in full compliance with all applicable covenants on its outstanding debt.
In the ordinary course of business, the Company utilizes standby letters of credit issued by financial institutions to guarantee certain obligations, most of which relate to certain insurance contracts and indirect taxes. At March 31, 2026, outstanding letters of credit totaled $ 62.7 million, most with expiration dates within 12 months.
The maturities of long-term debt (including $ 6.9 million of finance leases) subsequent to March 31, 2026 are as follows:
Year
2026 $ 13.4
2027 366.8
2028 622.9
2029 2.6
2030 2.0
2031 1.8
Thereafter 1,046.0
The table above excludes $ 13.6 million of unamortized discounts and fees that are netted against long-term debt and $ 0.6 million of imputed interest netted against finance leases at March 31, 2026.
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Note 12 - Supply Chain Financing
The Company offers a supplier finance program with different financial institutions where suppliers may receive early payment from the financial institutions on invoices issued to the Company. The Company and each financial institution entered into arrangements whereby the Company pays the financial institution per the terms of any supplier invoice paid early under the program and pays an annual fee for the supplier finance platform subscription and related support. The Company or the financial institutions may terminate participation in the program with 90 days’ written notice. The supplier finance programs are unsecured and are not guaranteed by the Company. The financial institutions enter into separate arrangements with suppliers directly to participate in the program. The Company does not determine the terms or conditions of such arrangements or participate in the transactions between the suppliers and the financial institutions. The supplier invoice terms under the program typically require payment in full within 90 days of the invoice date.
The following table is a rollforward of the outstanding obligations for the Company’s supplier finance program for the three months ended March 31, 2026 and twelve months ended December 31, 2025:
March 31,
2026 December 31,
2025
Confirmed obligations outstanding, January 1 $ 21.1 $ 16.7
Invoices confirmed 27.1 99.6
Confirmed invoices paid ( 27.0 ) ( 95.2 )
Confirmed obligations outstanding, ending balance $ 21.2 $ 21.1
The obligations outstanding at March 31, 2026 and December 31, 2025 were included in accounts payable, trade on the Consolidated Balance Sheets.
Note 13 - Contingencies
The Company is responsible for environmental remediation at various manufacturing facilities presently or formerly operated by the Company. In addition, as described further below, the Company, through one of its subsidiaries, has currently been identified as a potentially responsible party for investigation and remediation under the Comprehensive Environmental Response, Compensation and Liability Act, known as the Superfund, or similar state laws with respect to one location. Claims for investigation and remediation have been asserted against numerous other unrelated entities, which are believed to be financially solvent and are expected to fulfill their proportionate share of the obligation.
On December 28, 2004, the United States Environmental Protection Agency (“USEPA”) sent Lovejoy, LLC ("Lovejoy") a Special Notice Letter that identified Lovejoy as a potentially responsible party, together with at least 12 unrelated parties, at the Ellsworth Industrial Park Site, Downers Grove, DuPage County, Illinois (the “Site”). The Company acquired Lovejoy in 2016. Lovejoy’s Downers Grove property is situated within the Ellsworth Industrial Complex. The USEPA and the Illinois Environmental Protection Agency (“IEPA”) allege there have been one or more releases or threatened releases of hazardous substances, including, but not limited to, a release or threatened release on or from Lovejoy's property at the Site. The relief sought by the USEPA and IEPA includes further investigation and potential remediation of the Site and reimbursement of response costs. Lovejoy’s allocated share of future costs related to the Site, including for investigation and/or remediation, could be significant. All previously pending property damage and personal injury lawsuits against Lovejoy related to the Site were settled or dismissed prior to our acquisition of Lovejoy.
In addition, governmental authorities in the United States and the European Union, among others, are increasingly focused on regulating per- and polyfluoroalkyl substances (“PFAS”). PFAS regulations are applicable to portions of the Company's products, and conditions may develop, arise or be discovered that create potentially significant environmental compliance or remediation liabilities at certain of its facilities.
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Note 13 - Contingencies (continued)
The Company had total environmental accruals of $ 4.6 million for various known environmental matters that are probable and reasonably estimable at March 31, 2026 and December 31, 2025, which includes the Lovejoy matter described above. These accruals were recorded based upon the best estimate of costs to be incurred considering the progress made in determining the magnitude of remediation costs, the timing and extent of remedial actions required by governmental authorities and the amount of the Company’s liability in proportion to other responsible parties. The ultimate resolution of these matters could result in actual costs that exceed amounts accrued.
Legal Matter:
On June 11, 2024, the Company's majority-owned subsidiary, Timken India Limited ("TIL"), received a government order claiming damages (penalties and interest) totaling approximately $ 12 million. The order relates to the closure of TIL’s retirement trust for employees and subsequent transfer of trust assets to the government-administered Employees’ Provident Fund Organization ("EFPO"). The order alleges that the surrender of trust assets did not follow applicable EFPO timing guidelines. TIL believes it fully complied with EFPO requirements and guidelines under the circumstances. TIL is disputing the merits of the order and has filed an appeal with the high court in India having jurisdiction over the matter. Management believes that relief will be provided to TIL once the matter is fully adjudicated; accordingly, no liability has been recorded. While no assurance can be given as to the ultimate outcome of this matter, the Company does not believe that the final resolution will have a material effect on the Company's consolidated financial position or liquidity; however, the effect of any future outcome may be material to the results of operations of any particular period in which costs, if any, are recognized.
Product Warranties:
In addition to the contingencies above, the Company provides limited warranties on certain of its products. The balances at the end of each respective period represent the best estimates of costs for existing and future claims for products that are still under warranty. The balances as of March 31, 2026 and December 31, 2025 primarily related to accruals for products sold into the automotive and wind energy sectors. Accrual estimates are based on actual claims and expected trends that continue to mature. In addition, the Company continues to evaluate other claims raised by certain customers with respect to the performance of bearings sold into the wind energy and automotive sectors. Management believes that the outcome of these claims will not have a material effect on the Company's consolidated financial position or liquidity; however, the effect of a change in our assessment may be material to the results of operations of any particular period in which such change occurs.
The following is a rollforward of the consolidated product warranty accrual for the three months ended March 31, 2026 and twelve months ended December 31, 2025:
March 31,
2026 December 31,
2025
Beginning balance, January 1 $ 17.9 $ 18.0
Acquisitions 0.3 —
Expense 2.1 5.4
Payments ( 5.0 ) ( 5.5 )
Ending balance $ 15.3 $ 17.9
The product warranty accrual at March 31, 2026 and December 31, 2025 was included in other current liabilities on the Consolidated Balance Sheets.
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Note 14 - Equity
The following tables present the changes in the components of equity for the three months ended March 31, 2026 and 2025, respectively:
The Timken Company Shareholders
Total Stated
Capital Other
Paid-In
Capital Retained Earnings Accumulated
Other
Comprehensive
(Loss) Treasury
Stock Non
controlling
Interest
Balance at December 31, 2025 $ 3,345.7 $ 40.7 $ 1,299.5 $ 2,678.9 $ ( 96.5 ) $ ( 738.0 ) $ 161.1
Net income 105.9 98.2 7.7
Foreign currency translation adjustment ( 30.5 ) ( 21.9 ) ( 8.6 )
Pension and other postretirement liability
adjustments (net of income tax benefit
of $ 0.5 million)
( 1.5 ) ( 1.5 )
Change in fair value of derivative financial
instruments, net of reclassifications 0.3 0.3
Dividends - $ 0.35 per share
( 25.3 ) ( 25.3 )
Stock-based compensation expense 7.6 7.6
Stock purchased at fair market value ( 28.0 ) ( 28.0 )
Stock option exercise activity 2.9 2.9
Payments related to tax withholding for
stock-based compensation ( 9.2 ) ( 9.2 )
Balance at March 31, 2026 $ 3,367.9 $ 40.7 $ 1,310.0 $ 2,751.8 $ ( 119.6 ) $ ( 775.2 ) $ 160.2
The Timken Company Shareholders
Total Stated
Capital Other
Paid-In
Capital Retained Earnings Accumulated
Other
Comprehensive
(Loss) Treasury
Stock Non-
controlling
Interest
Balance at December 31, 2024 $ 2,984.1 $ 40.7 $ 1,269.3 $ 2,488.8 $ ( 301.7 ) $ ( 670.6 ) $ 157.6
Net income 91.4 78.3 13.1
Foreign currency translation adjustment 67.1 66.5 0.6
Pension and other postretirement liability
adjustments (net of income tax benefit
of $ 0.5 million)
( 1.6 ) ( 1.6 )
Change in fair value of derivative financial
instruments, net of reclassifications ( 2.1 ) ( 2.1 )
Dividends - $ 0.34 per share
( 25.1 ) ( 25.1 )
Stock-based compensation expense 7.5 7.5
Stock purchased at fair market value ( 23.1 ) ( 23.1 )
Stock option exercise activity 0.3 0.3
Payments related to tax withholding for
stock-based compensation ( 9.5 ) ( 9.5 )
Balance at March 31, 2025 $ 3,089.0 $ 40.7 $ 1,277.1 $ 2,542.0 $ ( 238.9 ) $ ( 703.2 ) $ 171.3
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Note 15 - Impairment and Restructuring Charges
Impairment and restructuring charges by segment are comprised of the following:
For the three months ended March 31, 2026:
Engineered Bearings Industrial Motion Unallocated Corporate Total
Severance and related benefit costs $ 2.5 $ 0.5 $ 0.5 $ 3.5
Exit costs ( 0.1 ) 0.2 — 0.1
Total $ 2.4 $ 0.7 $ 0.5 $ 3.6
For the three months ended March 31, 2025:
Engineered Bearings Industrial Motion Unallocated Corporate Total
Severance and related benefit costs $ 0.6 $ 0.7 $ 9.4 $ 10.7
Exit costs — 0.2 — 0.2
Total $ 0.6 $ 0.9 $ 9.4 $ 10.9
The following discussion explains the more significant impairment and restructuring charges recorded for the periods presented; however, it is not intended to reflect a comprehensive discussion of all amounts included in the tables above.
Corporate:
On March 31, 2025, Timken announced that the Company and Tarak B. Mehta, the former President and CEO, had mutually agreed that Mr. Mehta would depart from the Company, including resigning as a member of the Company’s Board of Directors (the "Board"), effective immediately. During the three months ended March 31, 2025, the Company recorded severance expense of $ 9.3 million, plus related taxes, for Mr. Mehta's settlement arrangement and release of claims in connection with his termination without cause. $ 7.3 million of this amount was paid in 2025 and 2026, with the remaining amount to be paid in 2027.
Engineered Bearings:
On May 14, 2025, the Company announced the closure of its bearing manufacturing plant in Heilbronn, Germany. The closure of this facility is expected to be completed by the end of 2026 and affect approximately 50 employees. The Company expects to incur approximately $ 12 million to $ 15 million of pretax costs in total related to this closure. During the three months ended March 31, 2026, the Company recorded severance and related benefits of $ 2.5 million related to this closure. The Company has incurred cumulative pretax costs related to this closure of $ 10.2 million as of March 31, 2026, including rationalization costs recorded in cost of products sold.
Consolidated Restructuring Accrual:
The following is a rollforward of the consolidated restructuring accrual for the three months ended March 31, 2026 and twelve months ended December 31, 2025:
March 31,
2026 December 31,
2025
Beginning balance, January 1 $ 13.1 $ 3.7
Expense 3.6 25.2
Payments ( 6.9 ) ( 15.8 )
Ending balance $ 9.8 $ 13.1
The restructuring accrual at March 31, 2026 was included in other current liabilities on the Consolidated Balance Sheet. On the Consolidated Balance Sheet, $ 11.1 million of the restructuring accrual at December 31, 2025 was included in other current liabilities, with the remaining $ 2.0 million included in other non-current liabilities.
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Note 16 - Retirement Benefit Plans
The following table sets forth the net periodic benefit cost for the Company’s defined benefit pension plans. The amounts for the three months ended March 31, 2026 are based on calculations prepared by the Company's actuaries and represent the Company’s best estimate of that period’s proportionate share of the amounts to be recorded for the year ending December 31, 2026.
U.S. Plans International Plans Total
Three Months Ended
March 31, Three Months Ended
March 31, Three Months Ended
March 31,
2026 2025 2026 2025 2026 2025
Components of net periodic benefit
cost:
Service cost $ 0.1 $ 0.2 $ 0.5 $ 0.4 $ 0.6 $ 0.6
Interest cost 4.1 4.3 2.9 2.7 7.0 7.0
Expected return on plan assets ( 2.3 ) ( 2.1 ) ( 2.4 ) ( 2.2 ) ( 4.7 ) ( 4.3 )
Amortization of prior service cost — — — 0.1 — 0.1
Net periodic benefit cost $ 1.9 $ 2.4 $ 1.0 $ 1.0 $ 2.9 $ 3.4
Note 17 - Other Postretirement Benefit Plans
The following table sets forth the net periodic benefit cost for the Company’s other postretirement benefit plans. The amounts for the three months ended March 31, 2026 are based on calculations prepared by the Company's actuaries and represent the Company’s best estimate of that period’s proportionate share of the amounts to be recorded for the year ending December 31, 2026.
Three Months Ended
March 31,
2026 2025
Components of net periodic benefit credit:
Interest cost $ 0.4 $ 0.5
Amortization of prior service credit ( 2.0 ) ( 2.1 )
Net periodic benefit credit $ ( 1.6 ) $ ( 1.6 )
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Note 18 - Accumulated Other Comprehensive Income (Loss)
The following tables present details about components of accumulated other comprehensive (loss) income for the three months ended March 31, 2026 and 2025, respectively:
Foreign currency translation adjustments Pension and other postretirement liability adjustments Change in fair value of derivative financial instruments Total
Balance at December 31, 2025 $ ( 129.0 ) $ 32.5 $ — $ ( 96.5 )
Other comprehensive loss before
reclassifications and income taxes ( 27.0 ) — ( 0.7 ) ( 27.7 )
Amounts reclassified from accumulated other
comprehensive (loss) income before income
taxes — ( 2.0 ) 1.0 ( 1.0 )
Income tax (expense) benefit ( 3.5 ) 0.5 — ( 3.0 )
Net current period other comprehensive (loss)
income, net of income taxes ( 30.5 ) ( 1.5 ) 0.3 ( 31.7 )
Noncontrolling interest 8.6 — — 8.6
Net current period other comprehensive (loss)
income, net of income taxes and noncontrolling
interest ( 21.9 ) ( 1.5 ) 0.3 ( 23.1 )
Balance at March 31, 2026 $ ( 150.9 ) $ 31.0 $ 0.3 $ ( 119.6 )
Foreign currency translation adjustments Pension and other postretirement liability adjustments Change in fair value of derivative financial instruments Total
Balance at December 31, 2024 $ ( 344.6 ) $ 38.7 $ 4.2 $ ( 301.7 )
Other comprehensive income (loss) before
reclassifications and income taxes 59.8 ( 0.1 ) ( 1.8 ) 57.9
Amounts reclassified from accumulated other
comprehensive loss before income taxes — ( 2.0 ) ( 1.2 ) ( 3.2 )
Income tax benefit 7.3 0.5 0.9 8.7
Net current period other comprehensive income
(loss), net of income taxes 67.1 ( 1.6 ) ( 2.1 ) 63.4
Noncontrolling interest ( 0.6 ) — — ( 0.6 )
Net current period other comprehensive income
(loss), net of income taxes and noncontrolling
interest 66.5 ( 1.6 ) ( 2.1 ) 62.8
Balance at March 31, 2025 $ ( 278.1 ) $ 37.1 $ 2.1 $ ( 238.9 )
Foreign currency translation adjustments at March 31, 2026 and December 31, 2025 included cumulative losses of $ 31.4 million and $ 42.3 million, respectively, net of deferred taxes, related to net investment hedges. Refer to Note 20 - Derivative Instruments and Hedging Activities for additional information on the net investment hedges.
Other comprehensive (loss) income before reclassifications and income taxes includes the effect of foreign currency.
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Note 19 - Fair Value
Fair value is defined as the price that would be expected to be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The FASB provides accounting rules that classify the inputs used to measure fair value into the following hierarchy:
Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 - Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.
Level 3 - Unobservable inputs for the asset or liability.
The following tables present the fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2026 and December 31, 2025:
March 31, 2026
Total Level 1 Level 2 Level 3
Assets:
Cash and cash equivalents $ 326.7 $ 325.3 $ 1.4 $ —
Cash and cash equivalents measured at net asset value 18.0
Restricted cash 0.8 0.8 — —
Short-term investments 18.1 — 18.1 —
Foreign currency forward contracts 5.5 — 5.5 —
Total assets $ 369.1 $ 326.1 $ 25.0 $ —
Liabilities:
Foreign currency forward contracts $ 2.4 $ — $ 2.4 $ —
Total liabilities $ 2.4 $ — $ 2.4 $ —
December 31, 2025
Total Level 1 Level 2 Level 3
Assets:
Cash and cash equivalents $ 348.8 $ 347.6 $ 1.2 $ —
Cash and cash equivalents measured at net asset value 15.6
Restricted cash 1.0 1.0 — —
Short-term investments 21.1 — 21.1 —
Foreign currency forward contracts 2.5 — 2.5 —
Total assets $ 389.0 $ 348.6 $ 24.8 $ —
Liabilities:
Foreign currency forward contracts $ 1.8 $ — $ 1.8 $ —
Total liabilities $ 1.8 $ — $ 1.8 $ —
Cash and cash equivalents include highly liquid investments with maturities of 90 days or less when purchased that are valued at redemption value. Short-term investments are investments with maturities between 91 days and one year, and generally are valued at amortized cost, which approximates fair value. A portion of the cash and cash equivalents and short-term investments are valued based on net asset value. The Company uses publicly available foreign currency forward and spot rates to measure the fair value of its foreign currency forward contracts.
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Note 19 - Fair Value (continued)
In addition, the Company remeasures certain assets at fair value, using Level 3 inputs, as a result of the occurrence of triggering events such as purchase accounting for acquisitions or goodwill impairment.
No material assets were measured at fair value on a nonrecurring basis during the three months ended March 31, 2026 and 2025.
Financial Instruments:
The Company’s financial instruments consist primarily of cash and cash equivalents, short-term investments, accounts receivable, trade accounts payable, short-term borrowings and long-term debt. Due to their short-term nature, the carrying value of cash and cash equivalents, short-term investments, accounts receivable, trade accounts payable and short-term borrowings are a reasonable estimate of their fair value. Due to the nature of fair value calculations for variable-rate debt, the carrying value of the Company's long-term variable-rate debt is a reasonable estimate of its fair value. The fair value of the Company’s long-term fixed-rate debt, based on Level 2 inputs (quoted market prices), was $ 1,749.7 million and $ 1,796.6 million at March 31, 2026 and December 31, 2025, respectively. The carrying value of this debt was $ 1,769.8 million and $ 1,784.0 million at March 31, 2026 and December 31, 2025, respectively. The difference between fair value and carrying value primarily reflects the net impact of changes in prevailing interest rates and credit spreads since the fixed-rate debt was issued.
The Company does not believe it has significant concentrations of risk associated with the counterparties to its financial instruments.
Note 20 - Derivative Instruments and Hedging Activities
The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed by using derivative instruments are foreign currency exchange rate risk and interest rate risk. Forward contracts on various foreign currencies are entered into in order to manage the foreign currency exchange rate risk associated with certain of the Company's commitments denominated in foreign currencies. From time to time, interest rate swaps are used to manage interest rate risk associated with the Company’s fixed, and floating-rate borrowings.
The Company designates certain foreign currency forward contracts as cash flow hedges of forecasted revenues and certain interest rate hedges as cash flow hedges of fixed-rate borrowings.
Net Investment Hedges:
As of March 31, 2026 and December 31, 2025, the Company had designated € 750 million of its Euro-denominated borrowings as a hedge against its net investments in certain European subsidiaries. The objective of the hedge transactions is to protect the net investment in the foreign operations against changes in the exchange rate between the U.S. dollar and the Euro. During the three months ended March 31, 2026 and 2025, the Company recognized a gain of $ 10.9 million and a loss of $ 22.9 million to other comprehensive earnings, respectively, on Euro-denominated borrowings, net of deferred income taxes.
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Note 20 - Derivative Instruments and Hedging Activities (continued)
Cash Flow Hedging:
The following table summarizes the notional and fair values as of March 31, 2026 and December 31, 2025 as well as the balance sheet classification:
Balance at March 31, 2026 Notional Amount Other Current Assets Other Current Liabilities Type of hedge
Derivatives Designated as Hedges
Currency Forward Contracts $ 67.4 $ — $ 0.8 Cash Flow Hedge
Derivatives not designated as Hedges
Currency Forward contracts 352.3 5.5 1.6
Total $ 419.7 $ 5.5 $ 2.4
Balance at December 31, 2025 Notional Amount Other Current Assets Other Current Liabilities Type of hedge
Derivatives Designated as Hedges
Currency Forward Contracts $ 67.8 $ — $ 1.3 Cash Flow Hedge
Derivatives not designated as Hedges
Currency Forward contracts 304.0 2.5 0.5
Total $ 371.8 $ 2.5 $ 1.8
Derivative Instruments not designated as Hedging Instruments:
The following table presents the impact of derivative instruments not designated as hedging instruments for the three months ended March 31, 2026 and 2025 , and the related location within the Consolidated Statements of Income.
Amount of gain or (loss) recognized in income
Three Months Ended
March 31,
Derivatives not designated as hedging instruments: Location of gain or (loss) recognized in income 2026 2025
Foreign currency forward contracts Other expense, net $ 1.3 $ ( 1.1 )
Note 21 - Subsequent Events
On April 29, 2026, the Company entered into a definitive agreement to sell the assets of its belts business to Gates Industrial Corporation plc. The transaction, which is subject to customary closing conditions, is expected to close in the third quarter of 2026. The sale of the belts business is expected to result in a loss.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.