FRANKLIN ELECTRIC CO INC
For the period ended Dec 31, 2025. Filed Feb 20, 2026.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Feb 20, 2026
FELE$94.17-1.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-02-21.
0000038725-25-000026
Item 7. Management's Discussion and Analysis of Financial Condition and ResultsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-02-20.
0000038725-26-000009
Item 7. Management's Discussion and Analysis of Financial Condition and ResultsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 85 previous paragraphs and 88 current paragraphs.
50 unchanged; 23 reworded; 15 added; 12 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 5 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (15)
Current report
In the first quarter of 2025, the Company acquired Barnes de Colombia S.A. ("Barnes"), a leading manufacturer and distributor of industrial and commercial pumps based in Colombia. Also in the first quarter of 2025, the Company acquired PumpEng Pty Ltd ("PumpEng"), an Australia-based company that specializes in the design, manufacture and service of submersible pumps for the mining sector. Acquisitions contributed $48.9 million in incremental net sales in 2025. Refer to Note 3 – Acquisitions in the Notes to Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K for additional information on the Barnes and PumpEng acquisitions.
Current report
In 2025, the Company completed the process of settling the Franklin Electric Co,, Inc. Pension Plan and a partial settlement of the Franklin Electric Co. Restoration plan resulting in a pre-tax pension settlement charge of $54.9 million related to actuarial losses previously recorded in Accumulated Other Comprehensive Loss. Refer to Note 10 in Item 8 of this Annual Report on Form 10-K for additional information on the pension settlement charge.
Current report
Net sales in 2025 were $2.1 billion and increased 5 percent, as compared to the prior year. The sales increases were due to the incremental sales impact from recent acquisitions, price realization and higher volumes. The Company's consolidated gross profit was $755.9 million and $717.3 million, respectively, for 2025 and 2024, and increased 5 percent from the prior year. Diluted earnings per share was $3.22 for 2025, a decrease of $0.64 from the prior year. Diluted earnings per share for 2025 was negatively impacted by the pension settlement charge of $41.5 million net of tax benefit ($54.9 million gross of tax benefit) related to actuarial losses previously recorded in Accumulated Other Comprehensive Loss. Refer to Note 10 in Item 8 of this Annual Report on Form 10-K for additional information on the pension settlement charge.
Current report
Water Systems net sales increased 6 percent in 2025, as compared to the prior year. The sales growth in 2025 was due to incremental sales impact from recent acquisitions of approximately 4 percent and price realization.
Current report
The gross profit margin ratio was 35.5 percent in 2025 and 2024, respectively. Gross profit has remained consistent with prior year primarily due to pricing and volume increases offset by increased costs related to tariffs.
Current report
There were $0.7 million and $3.5 million in restructuring expenses in 2025 and 2024, respectively. Restructuring expenses were primarily from various manufacturing realignment activities.
Current report
Operating income in 2025 was $268.9 million and $243.6 million in 2024, an increase of 10 percent, as compared to the prior year.
Current report
Water Systems operating income in 2025 was $207.2 million, an increase of $9.3 million as compared to the prior year. The increase in operating income was primarily due to higher sales. The 2025 operating income margin was 16.5 percent, a decrease of 20 basis points from 16.7 percent in 2024. The decrease in operating income margin was primarily due to incremental expenses associated with recent acquisitions and an unfavorable product and geographic sales mix shift.
Current report
Energy Systems operating income in 2025 was $99.1 million, an increase of $5.5 million as compared to the prior year. The increase was primarily due to higher sales. The 2025 operating income margin was 33.1 percent, a decrease of 110 basis points from 34.2 percent in 2024. Operating income margin decreased primarily due to higher tariff cost and an unfavorable geographic sales mix shift.
Current report
Distribution operating income in 2025 was $39.8 million, an increase of $15.5 million as compared to the prior year. The 2025 operating income margin was 5.7 percent, an increase of 210 basis points from 3.5 percent in 2024. Operating income and operating income margins increased primarily due to higher sales and reduced SG&A expenses as a result of cost actions implemented in 2024 to improve the performance of the segment.
Current report
Other Income, net
Current report
Other income, net was a net gain of $0.6 million and $1.3 million in 2025 and 2024, respectively.
Current report
Pension settlement loss
Current report
The loss in 2025 is primarily due to the Company’s settlement of its US Pension Plan and a partial settlement of the Franklin Electric Co. Restoration plan, which resulted in a pre-tax loss of $54.9 million related to actuarial losses previously recorded in Accumulated Other Comprehensive Loss. Refer to Note 10 in Item 8 of this Annual Report on Form 10-K for additional information on the pension settlement charge.
Current report
One of the Company's domestic defined benefit plans was settled and terminated in 2025. For additional information, see note 10 - Employee Benefit Plans.
Removed paragraphs (12)
Previous report
Net sales in 2024 decreased 2 percent compared to the prior year. The sales decrease in 2024 was primarily due to lower volumes and the negative impact of foreign currency translation, partially offset by the incremental sales impact from recent acquisitions. The Company's consolidated gross profit was $717.3 million for 2024, an increase of $20.3 million from the prior year. Diluted earnings per share was $3.86 for 2024, a decrease of $0.25 or 6 percent from the prior year.
Previous report
Water Systems net sales decreased 2 percentin 2024, as compared to the prior year. This sales decline was primarily due to lower volumes, which decreased due to weaker end market demand for large dewatering equipment. Additionally, net sales decreased 2 percentin 2024 due to the negative impact from foreign exchange rates, as compared to prior year while the incremental sales impact from recent acquisitions favorably impacted sales 1 percent in 2024.
Previous report
The gross profit margin ratio was 35.5 percent and 33.8 percentin 2024 and 2023, respectively. The gross profit margin was favorably impacted in 2024 by cost management, including lower freight costs in Water Systems and Energy Systems, and a favorable product and geographic sales mix shift.
Previous report
Restructuring expenses were $3.5 million and $1.1 million in 2024 and 2023, respectively. Restructuring actions in 2024 were primarily related to headcount reductions and facility closures to optimize the Company's cost structure. Restructuring expenses in 2023 were primarily from continued miscellaneous manufacturing realignment activities, branch closings and consolidations.
Previous report
Operating income decreased 7 percent in 2024, as compared to the prior year.
Previous report
Water Systems operating income in 2024 was $197.9 million, an increase of $1.3 million as compared to the prior year. The 2024 operating income margin was 16.7 percent, an increase of 40 basis points from 16.3 percent in 2023. Operating income and operating margin increased in 2024 primarily due to price realization, cost management and a favorable product and geographic sales mix shift.
Previous report
Energy Systems operating income in 2024 was $93.6 million, an increase of $0.9 million as compared to the prior year. The 2024 operating income margin was 34.2 percent, an increase of 290 basis points from 31.3 percent in 2023. Operating income and operating margin increased primarily due to a favorable geographic mix of sales, price realization and cost management.
Previous report
Distribution operating income in 2024 was $24.3 million, a decrease of $10.0 million as compared to the prior-year period. The 2024 operating income margin was 3.5 percent, a decrease of 160 basis points from 5.1 percent in 2023. Operating income and operating income margin decreased in 2024 primarily due to the negative impact on sales from wet weather across much of the United States, decreases in pricing of commodity-based products sold through the business and increased SG&A costs.
Previous report
Other Income or Expense
Previous report
Other income (expense), net was a benefit of $1.3 million in 2024 and $3.7 million in 2023. The benefit in 2024 was lower than 2023 due to lower interest income realized in Argentina as excess cash balances and interest rates have declined in 2024 compared to 2023.
Previous report
In February 2025, the Company acquired 100 percent of the ownership interests of PumpEng for a purchase price of AUD 24.0 million (approximately $15 million), subject to working capital and net debt closing adjustments. Also in February 2025, the Company signed a definitive agreement to acquire Barnes for an enterprise value of $110.0 million, subject to working capital and net debt closing adjustments. The acquisition is subject to customary closing conditions, including Colombian antitrust clearance, and is expected to close on or about March 1, 2025.
Previous report
The Company consults with actuaries and investment advisors in making its determination of the expected long-term rate of return on plan assets. Using input from these consultations such as long-term investment sector expected returns, the correlations and standard deviations thereof, and the plan asset allocation, the Company will use an expected long-term rate of return on plan assets of 5.75 percent in measuring net periodic cost for 2025. Market conditions have caused the expected long-term rate or return to decrease from 6.20 percent as used in measuring net periodic cost for 2024. A change in the long-term rate of return selected by the Company of 25 basis points would result in a change of about $0.3 million of employee benefit expense.
Reworded paragraphs (23)
Previous wording
Net sales in 2024 were $2.0 billion and decreased 2 percent compared to the prior year. Sales were negatively impacted by changes in foreign exchange rates, principally due to the strengthening of the U.S. Dollar relative to the Argentine Peso, Turkish Lira and Brazilian Real. However, the Company increases prices in the local currency to offset the impact of currency devaluation in the Argentina and Turkey highly inflationary economies. As a result, the net negative impact of foreign currency exchange rates on net sales was 1 percent in 2024.
Current wording
Net sales in 2025 were $2.1 billion and increased 5 percent compared to the prior year. The sales growth in 2025 was due to incremental sales impact from recent acquisitions of approximately 3 percent, price realization, and favorable volumes. Sales were negatively impacted by changes in foreign exchange rates, principally due to the strengthening of the U.S. Dollar relative to the Argentine Peso, Turkish Lira and Brazilian Real. However, the Company increased prices in the local currency to offset the impact of currency devaluation in the Argentina and Turkey highly inflationary economies. As a result, the net negative impact of foreign currency exchange rates on net sales was less than 1 percent in 2025.
Previous wording
Water Systems net sales in the U.S. and Canada decreased 5 percent in 2024, as compared to the prior year. In 2024, sales of large dewatering equipment decreased 41 percent, sales of water treatment products increased 11 percent, sales of groundwater pumping equipment increased 4 percent and sales of all other surface pumping equipment increased 5 percent compared to 2023.
Current wording
Water Systems net sales in the U.S. and Canada increased 3 percent in 2025, as compared to the prior year. In 2025, sales of large dewatering equipment increased 7 percent, sales of water treatment products increased 6 percent, and sales of groundwater pumping equipment increased 1 percent, and sales of all other surface pumping equipment decreased 1 percent compared to 2024.
Previous wording
Water Systems net sales in markets outside the U.S. and Canada increased 4 percent in 2024, as compared to the prior year. Sales decreased 4 percent in 2024 due to the negative impact from foreign exchange rates, as compared to prior year. In 2024 excluding the impact of foreign currency translation, sales increased in all three major regions: EMEA, Latin America and Asia Pacific.
Current wording
Water Systems net sales in markets outside the U.S. and Canada increased 10 percent in 2025, as compared to the prior year. The sales increase compared to prior year period was primarily due to the incremental sales impact from recent acquisitions.
Previous wording
Energy Systems net sales decreased 8 percent in 2024, as compared to the prior year. This sales decline was primarily due to lower volumes.
Current wording
Energy Systems net sales increased 9 percent in 2025, as compared to the prior year. This sales increase was primarily due to price realization and favorable volumes.
Previous wording
Energy Systems net sales in the U.S. and Canada decreased 3 percent in 2024, as compared to the prior year. Outside the U.S. and Canada, Energy Systems sales decreased 18 percent in 2024, as compared to the prior year. The decreases were across all product lines.
Current wording
Energy Systems net sales in the U.S. and Canada increased 8 percent in 2025, as compared to the prior year. The increase was broad based across all major product lines, led by fuel pumping systems. Outside the U.S. and Canada, Energy Systems sales increased 13 percent in 2025, as compared to the prior year, due primarily to sales growth in the Asia Pacific region.
Previous wording
Distribution net sales increased 2 percent in 2024, as compared to the prior year. The Distribution segment sales increase was primarily due to the incremental sales impact from a recent acquisition, which favorably impacted net sales by 3 percent, partially offset by the negative impact of commodity pricing declines and unfavorable weather.
Current wording
Distribution net sales increased 2 percent in 2025, as compared to the prior year. The Distribution segment sales increased due to higher volumes and price realization.
Previous wording
SG&A expenses were $470.1 million in 2024 compared to $433.5 million in 2023. SG&A expenses increased in 2024 primarily due to higher employee compensation costs, including incremental expenses associated with the Company's CEO transition, and the incremental expense impact of recent acquisitions. The SG&A expenses ratio was 23.3 percent and 21.0 percent in 2024 and 2023, respectively.
Current wording
SG&A expenses were $486.2 million in 2025 compared to $470.1 million in 2024. SG&A expenses increased in 2025 primarily due to the incremental expense impact from recent acquisitions and higher employee compensation costs. The SG&A expenses ratio was 22.8 percent and 23.3 percent in 2025 and 2024, respectively.
Previous wording
Operating income-corporate expenses and eliminations is composed primarily of intersegment sales and profit eliminations and unallocated general and administrative expenses. The intersegment profit elimination impact in 2024 compared to 2023 was an unfavorable$2.7 million. The intersegment elimination of operating income effectively defers the operating income on sales from Water Systems to Distribution in the consolidated financial results until such time as the transferred product is sold from the Distribution segment to its end third party customer. General and administrative expenses increased $8.3 million, compared to the prior year. The increase was primarily driven by to higher employee compensation costs, including incremental expenses associated with the Company’s CEO transition.
Current wording
Operating income-Eliminations/Other is composed primarily of intersegment sales and profit eliminations and unallocated general and administrative expenses. The intersegment profit elimination impact in 2025 compared to the prior year of 2024 was an unfavorable $2.0 million. The intersegment elimination of operating income effectively defers the operating income on sales from Water Systems to Distribution in the consolidated financial results until such time as the transferred product is sold from the Distribution segment to its end third party customer. General and administrative expenses increased $3.0 million compared to the prior year, primarily due to higher employee compensation costs, including incremental expenses associated with the Company’s executive leadership transitions.
Previous wording
Interest expense was $6.3 million in 2024 and $11.8 million in 2023, respectively. The decrease in 2024 was primarily driven by lower average borrowings in 2024.
Current wording
Interest expense was $10.6 million and $6.3 million in 2025 and 2024, respectively. The increase in 2025 was primarily driven by higher average amount of outstanding debt.
Previous wording
Foreign currency-based transactions produced an expense of $6.8 million in 2024 and $12.1 million in 2023, respectively. The expense in 2024 and 2023 was primarily due to transaction losses associated with the Turkish Lira and Argentine Peso relative to the U.S. dollar. The Company reports the results of its subsidiaries in Argentina and Turkey using highly inflationary accounting, which requires that the functional currency of the entity be changed to the reporting currency of its parent.
Current wording
Foreign currency-based transactions produced an expense of $9.3 million and an expense of $6.8 in 2025 and 2024, respectively. The results in 2025 and 2024 are primarily due to transaction losses associated with the Argentine Peso and Turkish Lira relative to the U.S. dollar. The Company reports the results of its subsidiaries in Argentina and Turkey using highly inflationary accounting, which requires that the functional currency of the entity be changed to the reporting currency of its parent.
Previous wording
The provision for income taxes in 2024 and 2023 were $50.2 million and $47.5 million, respectively. The effective tax rate for 2024 was about 22 percent and included a favorable benefit from discrete events of 1 percent. The effective tax rate for 2023 was about 20 percent and included a favorable benefit from discrete events of 1 percent. The effective tax rate differs from the U.S. statutory rate of 21 percent, primarily due to U.S. states taxes, foreign earnings taxed at rates higher than the U.S. statutory rate, and nondeductible officer’s compensation, partially offset by the recognition of the U.S. foreign-derived intangible income (FDII) provisions, certain incentives, and discrete events.
Current wording
The provision for income taxes 2025 and 2024 were $46.0 million and $50.2 million, respectively. The effective tax rate for 2025 was about 24 percent before and after the impact of discrete events. The effective tax rate for 2024 was about 22 percent and included a favorable benefit from discrete events of 1 percent. The effective tax rate differs from the U.S. statutory rate of 21 percent primarily due to foreign earnings taxed at rates higher than the U.S. statutory rate, U.S. state taxes, Pillar Two Global Minimum Tax, and nondeductible officer’s compensation, which were partially offset by an object exemption of foreign business profits in the Netherlands, the recognition of the U.S. foreign-derived intangible income (FDII) provisions, certain incentives, and discrete events.
Previous wording
Net income for 2024 was $181.6 million compared to 2023 net income of $194.7 million. Net income attributable to Franklin Electric Co., Inc. for 2024 was $180.3 million, or $3.86 per diluted share, compared to 2023 net income attributable to Franklin Electric Co., Inc. of $193.3 million, or $4.11 per diluted share.
Current wording
Net income for 2025 was $148.7 million compared to 2024 net income of $181.6 million. Net income attributable to Franklin Electric Co., Inc. for 2025 was $147.1 million, or $3.22 per diluted share, compared to 2024 net income attributable to Franklin Electric Co., Inc. of $180.3 million, or $3.86 per diluted share.
Previous wording
As of December 31, 2024, the Company had a $350.0 million revolving credit facility. The facility is scheduled to mature on May 13, 2026. As of December 31, 2024, the Company had $304.1 million borrowing capacity under the Credit Agreement as $4.5 million in letters of commercial and standby letters of credit were outstanding and undrawn and $41.4 million in revolver borrowings were drawn or outstanding.
Current wording
As of December 31, 2025, the Company had a $350.0 million revolving credit facility. The facility is scheduled to mature on May 14, 2030. As of December 31, 2025, the Company had $313.6 million borrowing capacity under the Credit Agreement as $6.4 million in letters of commercial and standby letters of credit were outstanding and undrawn and $30.0 million in revolver borrowings were drawn or outstanding.
Previous wording
In addition, the Company maintains an uncommitted and unsecured private shelf agreement with NYL Investors LLC, an affiliate of New York Life, and each of the undersigned holders of Notes (the "New York Life Agreement"). On May 15, 2024, the Company entered into Amendment No. 1 that increased the total available facility amount from lenders to $250.0 million from $200.0 million. As of December 31, 2024, the remaining borrowing capacity on the New York Life Agreement was $175.0 million. The Company also maintains an uncommitted and unsecured note purchase and private shelf agreement with PGIM, Inc. and its affiliates (the "Prudential Agreement"). On May 15, 2024, the Company entered into Amendment No. 1 that increased the total available facility amount from lenders to $250.0 million from $150.0 million. The maturity dates of both agreements were extended from July 30, 2024 to May 15, 2027.
Current wording
In addition, the Company maintains an uncommitted and unsecured private shelf agreement with NYL Investors LLC, an affiliate of New York Life, and each of the undersigned holders of Notes (the "New York Life Agreement"). On May 15, 2024, the Company entered into Amendment No. 1 that increased the total available facility amount from lenders to $250.0 million from $200.0 million. On September 26, 2025, the Company issued and sold $75.0 million of fixed rate senior notes due September 26, 2032. As of December 31, 2025, the remaining borrowing capacity on the New York Life Agreement was $175.0 million. The Company also maintains an uncommitted and unsecured note purchase and private shelf agreement with PGIM, Inc. and its affiliates (the "Prudential Agreement"). On May 15, 2024, the Company entered into Amendment No. 1 that increased the total available facility amount from lenders to $250.0 million from $150.0 million. On September 26, 2025, the Company issued and sold $50.0 million of fixed rate senior notes due September 26, 2032.
Previous wording
At December 31, 2024, the Company had $47.1 million of cash and cash equivalents held in foreign jurisdictions, which the Company intends to use to fund foreign operations. There is currently no need to repatriate these funds in order to meet domestic funding obligations or scheduled cash distributions.
Current wording
At December 31, 2025, the Company had $67.3 million of cash and cash equivalents held in foreign jurisdictions, which the Company intends to use to fund foreign operations. There is currently no need to repatriate these funds in order to meet domestic funding obligations or scheduled cash distributions.
Previous wording
Net cash provided by operating activities was $261.4 million for 2024 compared to $315.7 million for 2023. The change in operating cash flow was primarily attributable to changes in working capital and lower earnings. In 2023, the Company's cash flow benefited from actions it took to improve working capital including inventory reductions as its supply chain resiliency and lead times improved significantly compared to 2022.
Current wording
Net cash provided by operating activities was $238.9 million for 2025 compared to $261.4 million for 2024. The change in operating cash flow was primarily attributable to changes in working capital offset by an increase in cash earnings.
Previous wording
Net cash used in investing activities was $45.6 million in 2024 compared to $74.3 million in 2023. The change in investing cash flow was primarily attributable to decreased acquisition activity in 2024.
Current wording
Net cash used in investing activities was $157.1 million in 2025 compared to $45.6 million in 2024. The change in investing cash flow was primarily attributable to increased acquisition activity in 2025.
Previous wording
Net cash used by financing activities was $74.1 million in 2024 compared to $192.2 million in 2023. The change in financing cash flow was primarily due to net borrowings under the Company's credit facility in 2024 compared to net repayments in 2023, partially offset by lower proceeds from option exercises, increased share repurchase activity and higher dividends.
Current wording
Net cash used by financing activities was $197.3 million in 2025 compared to $74.1 million in 2024. The change in financing cash flow was primarily due to increased repurchases of Company stock, offset by higher net borrowings under the Company's credit facility in 2025 compared to 2024.
Previous wording
The Company has pension and other post-retirement benefit obligations not included in the table above which will result in estimated future payments of approximately $7.3 million in 2025. In addition, due to the timing of funding in future periods being uncertain and dependent on future movements in interest rates, investment returns, changes in laws and regulations and other variables, the table above excludes the non-current liability of $24.1 million for cash outflows related to the Company's pension plans.
Current wording
The Company has pension and other post-retirement benefit obligations not included in the table above which will result in estimated future payments of approximately $6.2 million in 2026. In addition, due to the timing of funding in future periods being uncertain and dependent on future movements in interest rates, investment returns, changes in laws and regulations and other variables, the table above excludes the non-current liability of $17.0 million for cash outflows related to the Company's pension plans.
Previous wording
The Company also has unrecognized tax benefits, none of which are included in the table above. The unrecognized tax benefits of approximately $1.3 million have been recorded as liabilities and the Company is uncertain as to if or when such amounts may be settled. Related to the unrecognized tax benefits, the Company has also recorded a liability for potential penalties and interest of $0.1 million.
Current wording
The Company also has unrecognized tax benefits, none of which are included in the table above. The unrecognized tax benefits of approximately $3.0 million have been recorded as liabilities and the Company is uncertain as to if or when such amounts may be settled. Related to the unrecognized tax benefits, the Company has also recorded a liability for potential penalties and interest of $1.1 million.
Previous wording
The market value approach compares the reporting units’ current and projected financial results to entities of similar size and industry to determine the market value of the reporting unit. The income approach utilizes assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets. These cash flows consider factors regarding expected future operating income and historical trends, as well as the effects of demand and competition. The Company is required to record an impairment if these assumptions and estimates change whereby the fair value of the reporting units or indefinite-lived intangible assets are below their associated carrying values.
Current wording
The market value approach compares the reporting units’ current and projected financial results to entities of similar size and industry to determine the market value of the reporting unit. The income approach utilizes assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets. These cash flows consider factors regarding expected future operating income and historical trends, as well as the effects of demand and competition. The future cash flows are discounted using an applicable discount rate. The Company is required to record an impairment if these assumptions and estimates change whereby the fair value of the reporting units or indefinite-lived intangible assets are below their associated carrying values.
Previous wording
During the fourth quarter of 2024, the Company completed its annual impairment tests of goodwill and indefinite-lived trade names. The Company determined it was not more likely than not that the fair values of its reporting units were lower than their carrying values. The Company also determined the fair value of all other indefinite-lived intangible assets were in excess of their respective carrying values. Significant judgment is required to determine if an indication of impairment has taken place. Factors to be considered include the following: adverse changes in operating results, decline in strategic business plans, significantly lower future cash flows, and sustainable declines in market data such as market capitalization. A 10 percent decrease in the estimated fair value of any of the indefinite-lived trade names would not have changed this determination. The sensitivity analysis required the use of numerous subjective assumptions, which, if actual experience varies, could result in material differences in the requirements for impairment charges. Further, an extended downturn in the economy may impact certain components of the operating segments more significantly and could result in an impairment determination.
Current wording
During the fourth quarter of 2025, the Company completed its annual impairment tests of goodwill and indefinite-lived trade names. The Company determined that the fair value of goodwill and all intangibles were substantially in excess of the respective carrying values. A 10 percent decrease in the estimated fair value of goodwill or any of the indefinite-lived trade names would not have changed this determination. The sensitivity analysis required the use of numerous subjective assumptions, which, if actual experience varies, could result in material differences in the requirements for impairment charges. Further, an extended downturn in the economy may impact certain components of the operating segments more significantly and could result in an impairment determination.
Previous wording
The Company consults with its actuaries to assist with the calculation of discount rates used in its pension and post retirement plans. The discount rates used to determine domestic pension and post-retirement plan liabilities are calculated using a full yield curve approach. Market conditions have caused the weighted-average discount rate to move from 4.90 percent last year to 5.48 percent this year for the domestic pension plans and from 4.88 percent last year to 5.47 percent this year for the postretirement health and life insurance plan. A change in the discount rate selected by the Company of 25 basis points would result in a change of about $0.1 million to employee benefit expense and a change of about $2.4 million of liability.
Current wording
The Company consults with its actuaries to assist with the calculation of discount rates used in its pension and post retirement plans. The discount rates used to determine domestic pension and post-retirement plan liabilities are calculated using a full yield curve approach. The weighted-average discount rate was 5.48 percent last year compared to 4.07 percent this year for the domestic pension plans and from 5.47 percent last year to 5.04 percent this year for the postretirement health and life insurance plan. A change in the discount rate selected by the Company of 25 basis points would result in no material change to employee benefit expense and a change of about $0.2 million of liability.