10. Accumulated Other Comprehensive Income Accumulated other comprehensive income (loss) (“AOCI”) refers to certain gains and losses that under GAAP are included in comprehensive income but are excluded from net earnings as these amounts are initially recorded as an adjustment to stockholders’ equity. Amounts in AOCI may be reclassified to net earnings upon the occurrence of certain events. Our AOCI is comprised of foreign currency translation adjustments, unrealized gains and losses on cash flow hedges and unrecognized prior service costs and gains and losses in actuarial assumptions related to our defined benefit plans. Foreign currency translation adjustments are reclassified to net earnings upon sale or upon a complete or substantially complete liquidation of an investment in a foreign entity. Unrealized gains and losses on cash flow hedges are reclassified to net earnings when the hedged item affects net earnings. Amounts related to defined benefit plans that are in AOCI are reclassified over the service periods of employees in the plan. The following table shows the changes in the components of AOCI, net of tax (in millions):
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Foreign |
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Cash |
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Defined |
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Currency |
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Flow |
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Benefit |
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Total |
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Translation |
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Hedges |
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Plan Items |
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AOCI |
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Balance at December 31, 2025 |
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$ |
(169.2 |
) |
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$ |
36.6 |
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$ |
(73.1 |
) |
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$ |
(205.7 |
) |
AOCI before reclassifications |
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22.4 |
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30.6 |
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- |
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53.0 |
|
Reclassifications to statements of earnings |
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- |
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(12.9 |
) |
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1.7 |
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(11.2 |
) |
Balance at June 30, 2026 |
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$ |
(146.8 |
) |
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$ |
54.3 |
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$ |
(71.4 |
) |
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$ |
(163.9 |
) |
The following table shows the reclassification adjustments from AOCI (in millions):
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Amount of Gain (Loss) |
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Reclassified from AOCI |
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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Location on |
Component of AOCI |
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2026 |
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2025 |
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2026 |
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2025 |
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Statements of Earnings |
Cash flow hedges |
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Foreign exchange forward contracts |
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$ |
8.6 |
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$ |
15.7 |
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$ |
16.4 |
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$ |
36.7 |
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Cost of products sold |
Forward starting interest rate swaps |
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(0.2 |
) |
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(0.2 |
) |
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(0.4 |
) |
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(0.4 |
) |
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Interest expense, net |
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8.4 |
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15.5 |
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16.0 |
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36.3 |
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Total before tax |
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1.5 |
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2.8 |
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3.1 |
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6.3 |
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Provision for income taxes |
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$ |
6.9 |
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$ |
12.7 |
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$ |
12.9 |
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$ |
30.0 |
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Net of tax |
Defined benefit plans |
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Prior service cost and unrecognized actuarial loss |
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$ |
(0.8 |
) |
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$ |
2.3 |
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$ |
(2.1 |
) |
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$ |
2.1 |
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Other income (expense), net |
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(0.2 |
) |
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0.4 |
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(0.4 |
) |
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0.4 |
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Provision for income taxes |
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$ |
(0.6 |
) |
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$ |
1.9 |
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$ |
(1.7 |
) |
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$ |
1.7 |
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Net of tax |
Total reclassifications |
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$ |
6.3 |
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$ |
14.6 |
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$ |
11.2 |
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$ |
31.7 |
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Net of tax |
The following tables show the tax effects on each component of AOCI recognized in our condensed consolidated statements of comprehensive income (in millions):
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Three Months Ended June 30, 2026 |
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Six Months Ended June 30, 2026 |
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Before Tax |
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Tax |
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Net of Tax |
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Before Tax |
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Tax |
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Net of Tax |
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Foreign currency cumulative translation adjustments |
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$ |
27.8 |
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$ |
5.7 |
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$ |
22.1 |
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$ |
40.0 |
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$ |
17.6 |
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$ |
22.4 |
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Unrealized cash flow hedge gains |
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13.2 |
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2.5 |
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10.7 |
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36.9 |
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6.3 |
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30.6 |
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Reclassification adjustments on cash flow hedges |
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(8.4 |
) |
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(1.5 |
) |
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(6.9 |
) |
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(16.0 |
) |
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(3.1 |
) |
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(12.9 |
) |
Adjustments to prior service cost and unrecognized actuarial assumptions |
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0.8 |
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0.2 |
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0.6 |
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2.1 |
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0.4 |
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1.7 |
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Total Other Comprehensive Income |
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$ |
33.4 |
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$ |
6.9 |
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$ |
26.5 |
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$ |
63.0 |
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$ |
21.2 |
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$ |
41.8 |
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Three Months Ended June 30, 2025 |
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Six Months Ended June 30, 2025 |
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Before Tax |
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Tax |
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Net of Tax |
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Before Tax |
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Tax |
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Net of Tax |
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Foreign currency cumulative translation adjustments |
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$ |
(3.7 |
) |
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$ |
(44.3 |
) |
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$ |
40.6 |
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$ |
(2.2 |
) |
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$ |
(67.6 |
) |
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$ |
65.4 |
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Unrealized cash flow hedge losses |
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(34.2 |
) |
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(10.9 |
) |
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(23.3 |
) |
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(67.0 |
) |
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(11.6 |
) |
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(55.4 |
) |
Reclassification adjustments on cash flow hedges |
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(15.5 |
) |
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(2.8 |
) |
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(12.7 |
) |
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(36.3 |
) |
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(6.3 |
) |
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(30.0 |
) |
Adjustments to prior service cost and unrecognized actuarial assumptions |
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(2.3 |
) |
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(0.4 |
) |
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(1.9 |
) |
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(2.1 |
) |
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(0.4 |
) |
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(1.7 |
) |
Total Other Comprehensive (Loss) Income |
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$ |
(55.7 |
) |
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$ |
(58.4 |
) |
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$ |
2.7 |
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$ |
(107.6 |
) |
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$ |
(85.9 |
) |
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$ |
(21.7 |
) |
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