Significant Accounting Policies

12 Months Ended

Dec. 31, 2025

Use of Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and judgments. These estimates and judgments affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities (if any) at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents: Cash and cash equivalents include cash in banks and highly liquid investments with original maturities of three months or less.

Accounts Receivable, Net of Allowances: Allowances are maintained against accounts receivable for doubtful accounts. Allowances for doubtful accounts are maintained for estimated losses resulting from the inability or unwillingness of customers to make required payments. These allowances are based on historical experience, existing economic trends and both recent trends of specific customers estimated to be a greater credit risk as well as general trends of the entire customer pool. Accounts are written off against the allowance when it becomes evident collection will not occur.

Changes in the Company's allowance for doubtful accounts, including write-offs, are as follows:


	2025		2024
Balance at January 1	$	6.6	$	13.2
Charged to costs and expenses	1.9		2.2
Write-offs	(0.3)		(4.3)
Recoveries	(1.6)		(4.0)
Foreign currency effect	0.2		(0.5)
Balance at December 31	$	6.8	$	6.6

The allowance for doubtful accounts balance includes allowance of receivables classified as long-term of $4.5 million and $3.9 million in 2025 and 2024, respectively.

Self-insurance Liabilities: The Company is generally self-insured for product liability, environmental liability and medical and workers’ compensation claims. For product liability, catastrophic insurance coverage is retained for potentially significant individual claims. The Company also has insurance for certain historic product liability claims. An estimated provision for claims reported and for claims incurred but not yet reported under the self-insurance programs is recorded and revised periodically based on industry trends, historical experience and management judgment. In addition, industry trends are considered within management judgment for valuing claims. Changes in assumptions for such matters as legal judgments and settlements, legal defense costs, inflation rates, medical costs and actual experience could cause estimates to change in the near term.

Advertising Costs: Advertising costs are expensed as incurred. Total advertising expense was $11.5 million, $11.7 million and $10.6 million in 2025, 2024 and 2023, respectively.

Research and Development Costs: Expenses associated with the development of new products and changes to existing products are charged to expense as incurred. These costs amounted to $137.2 million, $135.9 million and $119.7 million in 2025, 2024 and 2023, respectively.

Foreign Currency: Assets and liabilities of non-U.S. operations are generally translated into U.S. dollars at the fiscal year-end exchange rate. The related translation adjustments are recorded as a separate component of equity. Revenues and expenses of all non-U.S. operations are translated using average monthly exchange rates prevailing during the year.

The following table includes other significant accounting policies that are described in other notes to the Consolidated Financial Statements, including the footnote number:


Significant Accounting Policy						Note
Revenue Recognition						Revenue Recognition (Note 3)
Reportable segments						Business Segments (Note 4)
Stock-based compensation						Common Stock and Earnings per Share (Note 5)
Income taxes						Income Taxes (Note 6)
Derivatives and hedging activities						Financial Instruments and Derivative Financial Instruments (Note 8)
Fair value of financial instruments						Financial Instruments and Derivative Financial Instruments (Note 8) and Retirement Benefit Plans (Note 9)
Pension						Retirement Benefit Plans (Note 9)
Inventories						Inventories (Note 10)
Property, plant and equipment						Property, Plant and Equipment, Net (Note 11)
Impairment or disposal of long-lived assets						Property, Plant and Equipment, Net (Note 11)
Goodwill and intangible assets						Goodwill and Intangible Assets (Note 12)
Contingencies						Contingencies (Note 16)

Recently Issued Accounting Standards

Adopted Accounting Pronouncements

The following table provides a brief description of the accounting standard update ("ASU") adopted for the year ended December 31, 2025 and the effect, if any, on the Company's financial position, results of operations, cash flows or related disclosures:

Standard

Required Date of Adoption

Effect on the financial statements or other significant matters

ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740)

Annual periods after December 15, 2024

The standard generally expands the disclosures required for income taxes in the Company's annual consolidated financial statements, primarily through enhanced disclosures about significant income tax expense and payments by jurisdiction. The Company adopted the new standard prospectively. The adoption of this standard did not have a material impact on the consolidated financial statements. Refer to Note 6, Income Taxes.

The following table provides a brief description of ASUs not yet adopted:

Standard

Description

Required Date of Adoption

Effect on the financial statements or other significant matters

ASU 2024-03— Disaggregation of Income Statement Expenses

The guidance requires disaggregated disclosures of income statement expenses.

Annual periods after December 15, 2026

The Company is currently evaluating the guidance and the effect on its related disclosures.

ASU 2025-09— Derivatives and Hedging

The guidance expands the use of hedge accounting to more closely align with the economics of an entity's risk management activities.

Interim and annual periods after December 15, 2026

The Company is currently evaluating the guidance and the effect on its related disclosures.

ASU 2025-06— Intangibles — Goodwill and other — Internal use software

The guidance amends certain aspects of the accounting for and disclosure of software costs.

Interim and annual periods after December 15, 2027

The Company is currently evaluating the guidance and the effect on its related disclosures.

ASU 2025-11— Interim Reporting

The guidance provides additional guidance on interim disclosure reporting requirements and creates a disclosure principal that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity.

Interim periods after December 15, 2027

The Company is currently evaluating the guidance and the effect on its related disclosures.

Cybersecurity Risk Management Positions or Committees [Abstract]

Board of Directors, directly and through its committees

Cybersecurity Risk Management Third Party Engaged [Abstract]

The ARC reviews the Company’s plans to mitigate cybersecurity risks and the Company’s ability to respond to and remediate cybersecurity incidents

Cybersecurity Risk Management Processes for Assessing, Identifying, and Managing Threats

The Office of the CISO uses various data protection frameworks and conducts vulnerability assessments, cybersecurity monitoring and recovery software, employee, supplier and dealer training programs and monitoring of incidents and threats. Members of the Office of the CISO also engage with the Company’s internal audit department to

review cybersecurity threats focusing on operational applications and databases through the course of their activities. The Chief Information Security Officer has over 35 years of extensive experience in information technology including roles in cybersecurity, privacy, software engineering, systems engineering, infrastructure and data center management, and is a Certified Information Security Manager. The CISO reports to the Vice President and Chief Information and Digital Officer. The Vice President and Chief Information and Digital Officer, who reports to the Company’s Chief Executive Officer, has approximately 35 years of information technology experience, including roles or oversight of cybersecurity, software design and implementation, and related technology domains.

The Company's CISO chairs the Company’s Cybersecurity Committee (the “CSC”), which oversees and advises on various cybersecurity risk management processes and strategies and directs activities to identify, detect, assess and manage risks from cybersecurity threats, protect the Company’s assets and to respond and recover from cybersecurity incidents. The CSC is responsible for coordination with the Company’s internal audit, risk management and/or crisis management teams to review and respond to cybersecurity threats. The CSC also advises on the implementation and performance of the National Institute of Standards and Technology Cybersecurity Framework. The CSC includes members of senior management from operations, finance and legal. The CSC is expected to meet quarterly. On behalf of the CSC, the Office of the CISO review and reports on the Company’s cybersecurity activities to the ARC on a quarterly basis and to the full Board of Directors on at least an annual basis.

In addition, the Company engages third parties to assist in assessing, enhancing, implementing and monitoring the Company's cybersecurity risk-management programs. The Company maintains processes to oversee and identify risks from cybersecurity threats associated with its use of third-party service providers.

The Company has experienced cybersecurity threats, cybersecurity incidents and vulnerabilities in its information systems and those of third-party business partners. As of the date of this filing, the Company has not identified any risks from cybersecurity threats, including as a result of previous cybersecurity incidents, that have had or are reasonably likely to have a material impact on the Company’s business strategy, results of operations or financial condition. If, in the future, the Company’s or a third party's information systems suffer severe damage, disruption, breach, or shutdown, and business continuity plans do not effectively resolve the issues in a timely manner, then the Company could be subject to litigation including individual claims or consumer class actions, commercial litigation, administrative, civil or criminal investigations or actions, regulatory intervention, government enforcement actions, penalties, sanctions or fines, disruption to operations and product systems, unauthorized release of confidential or otherwise protected information, corruption or alteration of data, payment of ransom, or investigation and remediation costs, which could result in a negative impact on the Company’s business strategy, results of operations, financial condition or reputation. See "Risks Related to Cybersecurity" in Part I, Item 1A. Risk Factors, in this Annual Report on Form 10-K.