TIMKEN CO

THE TIMKEN COMPANY AND SUBSIDIARIES

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income

Consolidated Balance Sheets

Consolidated Statements of Cash Flows

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.

Note 3 - Acquisitions and Divestitures

Acquisitions:

On March 18, 2026, the Company acquired certain assets and assumed certain liabilities in the United States ("U.S.") 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 U.S., 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 $124.4 million, net of cash acquired of $6.8 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 $1.2 million to complete this acquisition. Acquisition costs are recorded in selling, general and administrative ("SG&A") expenses on the Consolidated Statements of Income.

The following table presents the preliminary purchase price allocation for the Bijur Delimon acquisition as of June 30, 2026:

The following table summarizes the preliminary purchase price allocation at fair value foridentifiable intangible assets acquired in 2026:

Note 3 - Acquisitions and Divestitures (continued)

In determining the fair value of the amounts above, the Company utilized various forms of the income, cost and market approaches depending on the asset or liability being valued. The estimation of fair value required judgment related to future net cash flows, discount rates, competitive trends, market comparisons and other factors. As a result, the Company utilized third-party valuation specialists to assist in determining the fair value of certain assets. Inputs were generally determined by considering independent appraisals and historical data, supplemented by current and anticipated market conditions.

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. The purchase price allocation for Bijur Delimon is preliminary as a result of the proximity of the acquisition date to June 30, 2026, and as a result no elements of the purchase price allocation have been finalized. 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.

Divestitures:

On April 29, 2026, the Company entered into a definitive agreement to sell certain assets of its belts business to Gates Industrial Corporation plc ("Gates"). During the second quarter of 2026, certain assets of the belts business met the held for sale criteria, and the Company reclassified its assets accordingly. Assets held for sale of $24.0 million are included in other current assets on the Consolidated Balance Sheet. As a result of the carrying value of the business exceeding the estimated sales price less costs to sell, the Company recorded an impairment charge of $64.4 million for the three months ended June 30, 2026. The impairment charge is included in the impairment and restructuring charges line on the Consolidated Statements of Income. The transaction, which is subject to customary closing conditions, is expected to close in the third quarter of 2026. Operating results of the belts business are included in the Industrial Motion segment.

The following table provides the major captions of assets held for sale at June 30, 2026:

Note 4 - Segment Information

The Company operates undertwo 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 June 30, 2026:

For the six months ended June 30, 2026:

Note 4 - Segment Information (continued)

For the three months ended June 30, 2025:

For the six months ended June 30, 2025:

(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.

Note 4 - Segment Information (continued)

The following tables provide additional segment financial information:

(5)Corporate assets include cash and cash equivalents and corporate buildings.

Note 5 - Revenue

The following table presents details deemed relevant to the users of the financial statements about total revenue for the three and six months ended June 30, 2026 and 2025:

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 percentage of revenue by sales channel for the six months ended June 30, 2026 and 2025:

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 six months ended June 30, 2026 and 2025, approximately 9% 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 U.S. government or its contractors represented approximately 7% of total net sales during the six months ended June 30, 2026 and 2025.

Note 5 - Revenue (continued)

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 $118 million at June 30, 2026.

Unbilled Receivables:

The following table contains a rollforward of unbilled receivables for the six months ended June 30, 2026 and the twelve months ended December 31, 2025:

There wereno impairment losses recorded on unbilled receivables for the six months ended June 30, 2026 and the twelve months ended December 31, 2025.

Deferred Revenue:

The following table contains a rollforward of deferred revenue for the six months ended June 30, 2026 and the twelve months ended December 31, 2025:

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.

Income tax expense for the three and six months ended June 30, 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 35.8% for the three months ended June 30, 2026 was higher than the effective tax rate for the three months ended June 30, 2025 primarily due to limitations in the U.S. foreign-derived intangible income deduction and foreign tax credits as a result of the agreement to sell certain assets of the belts business. The increase was also due to favorable discrete items recognized in the prior-year period related to the reversal of accruals for uncertain tax positions to account for the expiration of the statute of limitations in jurisdictions outside the U.S. These increases were partially offset by the impact of beneficial provisions effective in 2026 from the One Big Beautiful Bill Act (“OBBBA”) and a lower mix of earnings in non-U.S. jurisdictions with relatively higher tax rates.

The effective tax rate of 28.7% for the six months ended June 30, 2026 was higher than the effective tax rate for the six months ended June 30, 2025 primarily due to favorable discrete items recognized in the prior-year period related to the reversal of accruals for uncertain tax positions to account for the expiration of the statute of limitations in jurisdictions outside the U.S.

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 and six months ended June 30, 2026 and 2025:

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 wereno antidilutive stock options outstanding during the three and six months ended June 30, 2026 and 2025. There wereno antidilutive stock awards, including performance-based restricted stock units and restricted stock units, outstanding during the three months ended June 30, 2026, and there were 1,191 antidilutive stock awards outstanding during the six months ended June 30, 2026. In addition, there were 91,425 and 70,595 antidilutive stock awards, including performance-based restricted stock units and restricted stock units, outstanding during the three and six months ended June 30, 2025, respectively.

Note 8 - Inventories

The components of inventories at June 30, 2026 and December 31, 2025 were as follows:

Inventories are valued at net realizable value, with approximately 57% valued on the first-in, first-out ("FIFO") method and the remaining 43% 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 June 30, 2026 and December 31, 2025 was $329.1 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.

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 hasone reporting unit and the Industrial Motion segment hassix reporting units.

The changes in the carrying amount of goodwill for the six months ended June 30, 2026 were as follows:

The acquisition of Bijur Delimon added goodwill of $52.0 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 goodwill to be deductible for tax purposes in the U.S.

The following table displays intangible assets as of June 30, 2026 and December 31, 2025:

Amortization expense for intangible assets was $45.5 million and $42.9 million for the six months ended June 30, 2026 and 2025, respectively. Amortization expense for intangible assets is projected to be approximately $88 million in 2026; $85 million in 2027; $82 million in 2028; $79 million in 2029; and $77 million in 2030.

Note 10 - Other Current Liabilities

The following table displays other current liabilities as of June 30, 2026 and December 31, 2025:

Note 11 - Financing Arrangements

Short-term debt at June 30, 2026 and December 31, 2025 was as follows:

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 June 30, 2026, the Company’s foreign subsidiaries had borrowings outstanding of $26.3 million and bank guarantees of $7.2 million.

Long-term debt at June 30, 2026 and December 31, 2025 was as follows:

(1)Net of discounts and fees

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 June 30, 2026. As of June 30, 2026, there were $80 million in outstanding borrowings under the Accounts Receivable Facility, which reduced the availability to $20 million. 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 June 30, 2026, the Senior Credit Facility had $118.4 million in outstanding borrowings, which reduced the availability to $631.6 million. Payments in 2025 and 2024 have reduced the 2027 Term Loan to $85 million at June 30, 2026. The Credit Agreement hastwo financial covenants: a consolidated net leverage ratio and a consolidated interest coverage ratio.

At June 30, 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 June 30, 2026, outstanding letters of credit totaled $69.4 million, most with expiration dates within 12 months.

The maturities of long-term debt (including $6.3 million of finance leases) subsequent to June 30, 2026 are as follows:

The table above excludes $12.7 million of unamortized discounts and fees that are netted against long-term debt and $0.5 million of imputed interest netted against finance leases at June 30, 2026.

On July 2, 2026, the Company entered into a Sixth Amended and Restated Credit Agreement (the “Amended Credit Agreement”), which provides for a $1.2 billion unsecured revolving credit facility ("New Senior Credit Facility") that will mature on July 2, 2031, withtwo potentialone-year extension options subject to customary terms and conditions. Upon entering into the Amended Credit Agreement, the Company paid the remaining balance of the 2027 Term Loan utilizing borrowings under the New Senior Credit Facility.

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 six months ended June 30, 2026 and twelve months ended December 31, 2025:

The obligations outstanding at June 30, 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 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 U.S. 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. On November 4, 2022, the Company acquired GGB LLC ("GGB"), a global supplier of highly engineered and customized plain bearings and a leader in metal polymer bearings, from EnPro Holdings, Inc. ("EnPro"). Certain products of GGB contain polytetrafluoroethylene (“PTFE”), a type of PFAS. Under the Industrial Site Recovery Act (“ISRA”), certain businesses operating in New Jersey who undergo a change in ownership must assess potential areas of environmental concern and may then be required to conduct further investigation and/or remediation. EnPro has primary responsibility for complying with ISRA in connection with the 2022 sale of GGB and is in the process of conducting an environmental investigation at certain GGB facilities located in New Jersey.

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 June 30, 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 June 30, 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 six months ended June 30, 2026 and twelve months ended December 31, 2025:

The product warranty accrual at June 30, 2026 and December 31, 2025 was included in other current liabilities on the Consolidated Balance Sheets.

Note 14 - Equity

The following tables present the changes in the components of equity for the three and six months ended June 30, 2026 and 2025, respectively:

Note 14 - Equity (continued)

Note 15 - Impairment and Restructuring Charges

Impairment and restructuring charges by segment are comprised of the following:

For the three months ended June 30, 2026:

For the six months ended June 30, 2026:

For the three months ended June 30, 2025:

For the six months ended June 30, 2025:

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.

Note 15 - Impairment and Restructuring Charges (continued)

Engineered Bearings:

On April 16, 2026, Andreas Roellgen ceased serving as Executive Vice President and President of Engineered Bearings of the Company effective as of the close of business that day. As an employee who is domiciled in Europe, Mr. Roellgen is subject to local legal requirements and process. During the three months ended June 30, 2026, the Company recorded severance and related benefits of $4.4 million in connection with this action. The Company has incurred cumulative pretax costs related to this action of $5.6 million as of June 30, 2026, including the acceleration of stock compensation expense recorded in SG&A expense.

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 and six months ended June 30, 2026, the Company recorded severance and related benefits of $0.6 million and $3.1 million, respectively, related to this closure. The Company has incurred cumulative pretax costs related to this closure of $11.7 million as of June 30, 2026, including rationalization costs recorded in cost of products sold.

Industrial Motion:

On April 29, 2026, the Company entered into a definitive agreement to sell certain assets of its belts business to Gates. During the three months ended June 30, 2026, the Company classified certain assets of the belts business as assets held for sale and recorded impairment charges of $64.4 million. The Company anticipates the sale of the belts business to be completed during the third quarter of 2026. In addition, on April 30, 2026, the Company announced the closure of its belts manufacturing facility in Springfield, Missouri. The facility in Springfield is not part of the sale of the belts business. During the three months ended June 30, 2026, the Company recorded impairment charges of $14.6 million and severance and related benefits of $2.7 million. The Company expects to incur approximately $100 million to $108 million of pretax costs (including non-cash impairment charges) in total related to these transactions. The Company has incurred cumulative pretax costs related to these transactions of $94.4 million as of June 30, 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 six months ended June 30, 2026 and twelve months ended December 31, 2025:

The restructuring accrual at June 30, 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.

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 and six months ended June 30, 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.

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 and six months ended June 30, 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.

Note 18 - Accumulated Other Comprehensive Income (Loss)

The following tables present details about components of accumulated other comprehensive (loss) income for the three and six months ended June 30, 2026 and 2025, respectively:

Foreign currency translation adjustments at June 30, 2026 and December 31, 2025 included cumulative losses of $23.9 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.

Note 18 - Accumulated Other Comprehensive Income (Loss) (continued)

Other comprehensive income (loss) before reclassifications and income taxes includes the effect of foreign currency.

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 June 30, 2026 and December 31, 2025:

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.

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.

During the three months ended June 30, 2026, certain assets of the Company's belts business were reclassified to assets held for sale. In conjunction with this reclassification, the belts business, with a carrying value of $88.4 million, was written down to its estimated fair value less cost to sell of $24.0 million, resulting in an impairment charge of $64.4 million. The fair value for these assets was determined based on an estimate of the value expected to be received upon the sale of this business. Refer to Note 3 - Acquisitions and Divestitures for more information on the expected sale of the belts business.

In addition, the Company announced the closure of its belts manufacturing facility in Springfield, Missouri during the three months ended June 30, 2026. As a result, property, plant and equipment, with a carrying value of $15.6 million, was written down to its estimated fair value less cost to sell of $1.0 million, resulting in an impairment of $14.6 million. The fair value for these assets was determined based on an estimate of the value to be received upon the sale of these assets given the age and condition of the assets.

No other material assets were measured at fair value on a nonrecurring basis during the six months ended June 30, 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 $1,766.2 million and $1,796.6 million at June 30, 2026 and December 31, 2025, respectively. The carrying value of this debt was $1,760.3 million and $1,784.0 million at June 30, 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 June 30, 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 June 30, 2026 and 2025, the Company recognized a gain of $7.4 million and a loss of $48.2 million to other comprehensive earnings, respectively, on Euro-denominated borrowings, net of deferred income taxes. During the six months ended June 30, 2026 and 2025, the Company recognized a gain of $18.4 million and a loss of $71.2 million, respectively.

Note 20 - Derivative Instruments and Hedging Activities (continued)

Cash Flow Hedging:

The following table summarizes the notional and fair values as of June 30, 2026 and December 31, 2025 as well as the balance sheet classification:

Derivative Instruments not designated as Hedging Instruments:

The following table presents the impact of derivative instruments not designated as hedging instruments for thethree and six months ended June 30, 2026 and 2025, and the related location within the Consolidated Statements of Income.