ROCKWELL AUTOMATION, INC

Previous wording

•laws, regulations, and governmental policies affecting our activities in the countries where we do business, including those related to tariffs, taxation, trade controls, cybersecurity, and climate change;

Current wording

•laws, regulations, and governmental policies affecting our activities in the countries where we do business, including those related to trade policies, including tariffs, taxation, trade controls, cybersecurity, and climate change;

Previous wording

In the third quarter of 2025, sales in the U.S. accounted for over half of our total sales. The various indicators we use to gauge the direction and momentum of our served U.S. markets include:

Current wording

In the first quarter of 2026, sales in the U.S. accounted for over half of our total sales. The various indicators we use to gauge the direction and momentum of our served U.S. markets include:

Previous wording

The table below depicts trends in these indicators since the quarter ended September 2023. These figures are as of August 6, 2025, and are subject to revision by the issuing organizations. The IP index did not significantly change from the second quarter of fiscal 2025. Manufacturing PMI results remained below 50 for each of the months in the third quarter of fiscal 2025.

Current wording

The table below depicts trends in these indicators since the quarter ended September 2024. These figures are as of February 5, 2026, and are subject to revision by the issuing organizations. Through December, the IP index did not significantly change from the fourth quarter of fiscal 2025. Manufacturing PMI results remained below 50 for each of the months in the fourth quarter of fiscal 2025 and have been below 50 for ten consecutive months. In January 2026, Manufacturing PMI increased to 52.6, 4.7 points higher than December 2025, and the highest level since August 2022.

Previous wording

Inflation in the U.S. has also had an impact on our input costs and pricing. The Producer Price Index (PPI), published by the Bureau of Labor Statistics, measures the average change over time in the selling prices received by domestic producers for their output. PPI growth has remained in the low single digits during the third quarter, which is consistent with the prior six quarters. Producer prices continue to remain elevated, however, year over year increases remain decelerated from the surges in 2023 and 2022.

Current wording

Inflation in the U.S. has also had an impact on our input costs and pricing. The Producer Price Index (PPI), published by the Bureau of Labor Statistics, measures the average change over time in the selling prices received by domestic producers for their output. PPI growth did not significantly change from the fourth quarter of 2025, and remains in the low single digits.

Previous wording

In the third quarter of 2025, sales to customers outside the U.S. accounted for less than half of our total sales. These customers include both indigenous companies and multinational companies with a global presence. In addition to the global factors previously mentioned in the Overview section, international demand, particularly in emerging markets, has historically been driven by the strength of the industrial economy in each region, investments in infrastructure, and expanding consumer markets. We use changes in key countries' gross domestic product (GDP), IP, and PMI as indicators of the growth opportunities in each region where we do business. Industrial production outside the U.S. was mostly positive in the third quarter of fiscal 2025. Manufacturing PMI readings outside the U.S were mixed with readings in Asia Pacific generally better than readings in Europe, Canada, Mexico, and Brazil.

Current wording

In the first quarter of 2026, sales to customers outside the U.S. accounted for less than half of our total sales. These customers include both indigenous companies and multinational companies with a global presence. In addition to the global factors previously mentioned in the Overview section, international demand, particularly in emerging markets, has historically been driven by the strength of the industrial economy in each region, investments in infrastructure, and expanding consumer markets. We use changes in key countries' gross domestic product (GDP), IP, and PMI as indicators of the growth opportunities in each region where we do business. Industrial output outside the U.S. was mostly positive in the first quarter of fiscal 2026. Manufacturing PMI readings outside the U.S were mixed with readings in Asia Pacific generally better than readings in Europe, Canada, Mexico, and Brazil.

Previous wording

We continue to manage the impact of tariffs through actions including pricing and the use of alternative sources of materials and redundant manufacturing locations. Resiliency actions we took in recent years enable us to build certain high value product lines in more than one geographic location. In consideration of these mitigating actions, tariff costs are expected to be neutral to EPS in the current year.

Current wording

We continue to manage the impact of tariffs through actions including pricing and the use of alternative sources of materials and redundant manufacturing locations. Resiliency actions we took in recent years enable us to build certain high value product lines in more than one geographic location. In consideration of these mitigating actions, tariff costs are expected to be neutral to EPS in fiscal 2026.

Previous wording

(2)Total segment operating earnings and total segment operating margin are non-GAAP financial measures. We exclude purchase accounting depreciation and amortization, corporate and other, non-operating pension and postretirement benefit credit, change in fair value of investments, restructuring charges aligned with enterprise-wide strategic initiatives, and interest expense, net, because we do not consider these items to be directly related to the operating performance of our segments. We believe total segment operating earnings and total segment operating margin are useful to investors as measures of operating performance. We use these measures to monitor and evaluate the profitability of our operating segments. Our measures of total segment operating earnings and total segment operating margin may be different from measures used by other companies.

Current wording

(2)Total segment operating earnings and total segment operating margin are non-GAAP financial measures. We exclude purchase accounting depreciation and amortization, corporate and other, non-operating pension and postretirement benefit credit, net legacy asbestos and environmental charges, cost associated with dissolution of Sensia, change in fair value of investments, restructuring charges aligned with enterprise-wide strategic initiatives, and interest expense, net because we do not consider these items to be directly related to the operating performance of our segments. We believe total segment operating earnings and total segment operating margin are useful to investors as measures of operating performance. We use these measures to monitor and evaluate the profitability of our operating segments. Our measures of total segment operating earnings and total segment operating margin may be different from measures used by other companies.

Previous wording

(3)Adjusted EPS is a non-GAAP earnings measure. See Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate Reconciliation for more information on this non-GAAP measure.

Current wording

(4)Adjusted EPS is a non-GAAP earnings measure. See Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate Reconciliation for more information on this non-GAAP measure.

Previous wording

Three and Nine Months Ended June 30, 2025, Compared to Three and Nine Months Ended June 30, 2024

Current wording

Three Months Ended December 31, 2025, Compared to Three Months Ended December 31, 2024

Previous wording

Sales increased 5 percent and decreased 3 percent year over year in the three and nine months ended June 30, 2025, respectively. Organic sales increased 4 percent and decreased 2 percent year over year in the three and nine months ended June 30, 2025, respectively. Currency translation increased sales by less than one 1 percent and decreased sales by 1 percent in the three and nine months ended June 30, 2025, respectively. Pricing increased total company sales by approximately 3 percentage points and 2 percentage points year over year in the three and nine months ended June 30, 2025, respectively, realized primarily in the Intelligent Devices and Software & Control segments. Volume increased total company sales by approximately 1 percentage point year over year in the three months ended June 30, 2025, driven by the Software & Control segment. Volume decreased total company sales by approximately 5 percentage points year over year in the nine months ended June 30, 2025, driven by the Intelligent Devices segment.

Current wording

Sales increased 12 percent year over year in the three months ended December 31, 2025. Organic sales increased 10 percent year over year in the three months ended December 31, 2025. Currency translation increased sales by 2 percent in the three months ended December 31, 2025. Volume increased total company sales by approximately 7 percent year over year in the three months ended December 31, 2025, driven by the Software & Control and Intelligent Devices segments. Pricing increased total company sales by approximately 3 percent year over year in the three months ended December 31, 2025, driven by the Intelligent Devices segment.

Previous wording

The tables below presents our sales, attributed to the geographic regions based upon country of destination, and the percentage change from the same period a year ago (in millions, except percentages):

Current wording

The table below presents our sales, attributed to the geographic regions based upon country of destination, and the percentage change from the same period a year ago (in millions, except percentages):

Previous wording

Corporate and other expenses were $40 million and $111 million in the three and nine months ended June 30, 2025, respectively, compared to $29 million and $97 million in the three and nine months ended June 30, 2024, respectively.

Current wording

Corporate and other expenses were $30 million in the three months ended December 31, 2025, compared to $35 million in the three months ended December 31, 2024.

Previous wording

In October 2021, the Organization for Economic Cooperation and Development (OECD) and G20 Finance Ministers reached an agreement, known as Base Erosion and Profit Shifting (BEPS) Pillar Two, that, among other things, ensures that income earned in each jurisdiction that qualifying multinational enterprises operate in is subject to a minimum corporate income tax rate of at least 15%. Discussions related to the formal implementation and enactment of this agreement, including within the tax law of each member jurisdiction including the United States, are ongoing. Certain countries have enacted the Pillar Two framework, including Singapore, which is expected to result in the greatest impact to the Company. Enactment of this regulation in its current form would generally apply to the Company beginning in fiscal year 2026, which could result in an increase in our effective tax rate of 2 to 3 percent as well as in the amount of global corporate income tax paid.

Current wording

In October 2021, the Organization for Economic Cooperation and Development (OECD) and G20 Finance Ministers reached an agreement, known as Base Erosion and Profit Shifting (BEPS) Pillar Two, that, among other things, ensures that income earned in each jurisdiction that qualifying multinational enterprises operate in is subject to a minimum corporate income tax rate of at least 15 percent. Discussions related to the formal implementation and enactment of this agreement, including within the tax law of each member jurisdiction including the United States, are ongoing. Certain countries have enacted the Pillar Two framework, including Singapore, which is expected to result in the greatest impact to the Company. The enactment of this regulation applies beginning this fiscal year, resulting in an approximate increase in our effective tax rate of 3 percent as well as in the amount of global corporate income tax paid. Furthermore, the side-by-side agreement released by the OECD on January 5, 2026, has not altered the anticipated increase in our effective tax rate.

Previous wording

Intelligent Devices reported and organic sales increased 1 percent year over year in the three months ended June 30, 2025. Sales decreased 7 percent year over year in the nine months ended June 30, 2025. Organic sales decreased 6 percent year over year in the nine months ended June 30, 2025. The effects of currency translation decreased sales by 1 percentage point year over year in the nine months ended June 30, 2025. For the three months ended June 30, 2025, reported sales increased in Europe, Middle East and Africa and Asia Pacific, were flat in North America, and decreased in Latin America. For the three months ended June 30, 2025, organic sales increased in North America and Europe, Middle East and Africa, were flat in Asia Pacific, and decreased in Latin America. For the nine months ended June 30, 2025, reported sales decreased in all regions. For the nine months ended June 30, 2025, organic sales decreased in all regions except Latin America.

Current wording

Intelligent Devices sales increased 18 percent year over year in the three months ended December 31, 2025. Organic sales increased 16 percent year over year, and the effects of currency translation increased sales by 2 percent year over year in the three months ended December 31, 2025. For the three months ended December 31, 2025, reported sales increased in all regions, except for Latin America, and organic sales increased in North America and Asia-Pacific, while decreasing in Latin America and Europe, Middle East, and Africa.

Previous wording

Intelligent Devices segment operating earnings decreased 9 percent year over year in the nine months ended June 30, 2025. Segment operating margin decreased to 17.3 percent in the nine months ended June 30, 2025, from 17.6 percent in the same period a year ago.

Current wording

Intelligent Devices segment operating earnings increased 38 percent year over year in the three months ended December 31, 2025. Segment operating margin increased to 17.3 percent in the three months ended December 31, 2025, from 14.9 percent in the same period a year ago, primarily due to higher sales volume, partially offset by the effects of currency translation and higher compensation.

Previous wording

Software & Control sales increased 23 percent and 2 percent year over year in the three and nine months ended June 30, 2025, respectively. Organic sales increased 22 percent and 3 percent year over year in the three and nine months ended June 30, 2025, respectively. The effects of currency translation increased sales by 1 percentage point year over year in the three months ended June 30, 2025. The effects of currency translation decreased sales by 1 percentage point year over year in the nine months ended June 30, 2025. For the three months ended June 30, 2025, reported and organic sales increased in all regions except Latin America. For the nine months ended June 30, 2025, reported and organic sales decreased in all regions except for North America.

Current wording

Software & Control sales increased 19 percent year over year in the three months ended December 31, 2025. Organic sales increased 17 percent year over year, and the effects of currency translation increased sales by 2 percent year over year in the three months ended December 31, 2025. For the three months ended December 31, 2025, reported and organic sales increased in all regions.

Previous wording

Lifecycle Services segment operating earnings decreased 35 percent and 17 percent year over year in the three and nine months ended June 30, 2025, respectively. Segment operating margin decreased to 13.3 percent and 13.4 percent in the three and nine months ended June 30, 2025, respectively, from 19.3 percent and 15.7 percent, respectively, in the same period a year ago, primarily due to higher compensation and lower sales volume, partially offset by productivity.

Current wording

Software & Control segment operating earnings increased 47 percent year over year in the three months ended December 31, 2025. Segment operating margin increased to 31.2 percent in the three months ended December 31, 2025, from 25.1 percent in the same period a year ago, primarily due to higher sales volume, partially offset by higher compensation.

Previous wording

Lifecycle Services reported and organic sales decreased 6 percent and 3 percent year over year in the three and nine months ended June 30, 2025, respectively. For the three months ended June 30, 2025, reported sales decreased in all regions except Europe, Middle East, and Africa. For the three months ended June 30, 2025, organic sales decreased in all regions. For the nine months ended June 30, 2025, reported sales decreased in all regions. For the nine months ended June 30, 2025, organic sales decreased in all regions except North America.

Current wording

Lifecycle Services sales decreased 4 percent year over year in the three months ended December 31, 2025. Organic sales decreased 6 percent, and the effects of currency translation increased sales by 2 percent year over year in the three months ended December 31, 2025. For the three months ended December 31, 2025, reported and organic sales decreased in all regions, except Europe, Middle East and Africa.

Previous wording

Purchase accounting depreciation and amortization, non-operating pension and postretirement benefit credit, and restructuring charges are not allocated to our operating segments because these costs are excluded from our measurement of each segment's operating performance for internal purposes. If we were to allocate these costs, we would attribute them to each of our segments as follows (in millions):

Current wording

Purchase accounting depreciation and amortization and non-operating pension and postretirement benefit credit are not allocated to our operating segments because these costs are excluded from our measurement of each segment's operating performance for internal purposes. If we were to allocate these costs, we would attribute them to each of our segments as follows (in millions):

Previous wording

Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate are non-GAAP earnings measures that exclude non-operating pension and postretirement benefit credit, purchase accounting depreciation and amortization attributable to Rockwell Automation, change in fair value of investments, and restructuring charges aligned with enterprise-wide strategic initiatives, including their respective tax effects. Non-operating pension and postretirement benefit credit is defined as all components of our net periodic pension and postretirement benefit cost except for service cost. See Note 10 in the Consolidated Financial Statements for more information on our net periodic pension and postretirement benefit cost.

Current wording

Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate are non-GAAP earnings measures that exclude non-operating pension and postretirement benefit credit, purchase accounting depreciation and amortization attributable to Rockwell Automation, net legacy asbestos and environmental charges, cost and tax items associated with dissolution of Sensia attributable to Rockwell Automation, change in fair value of investments, and restructuring charges aligned with enterprise-wide strategic initiatives, including their respective tax effects. See Note 9 in the Consolidated Financial Statements for more information on our net periodic pension and postretirement benefit cost.

Previous wording

Our definition of free cash flow takes into consideration capital investments required to maintain the operations of our businesses and execute our strategy. Cash provided by operating activities adds back non-cash depreciation expense to earnings but does not reflect a charge for necessary capital expenditures. Our definition of free cash flow excludes the operating cash flows and capital expenditures related to our discontinued operations, if any. Operating, investing, and financing cash flows of our discontinued operations, if any, are presented separately in our Consolidated Statement of Cash Flows. In our opinion, free cash flow provides useful information to investors regarding our ability to generate cash from business operations that is available for acquisitions and other investments, service of debt principal, dividends, and share repurchases. We use free cash flow, as defined, as one measure to monitor and evaluate our performance, including as a financial measure for our annual incentive compensation. Our definition of free cash flow may be different from definitions used by other companies.

Current wording

Our definition of free cash flow takes into consideration capital investments required to maintain the operations of our businesses and execute our strategy. Cash provided by operating activities adds back non-cash depreciation expense to earnings but does not reflect a charge for necessary capital expenditures. In our opinion, free cash flow provides useful information to investors regarding our ability to generate cash from business operations that is available for acquisitions and other investments, service of debt principal, dividends, and share repurchases. We use free cash flow, as defined, as one measure to monitor and evaluate our performance, including as a financial measure for our annual incentive compensation. Our definition of free cash flow may be different from definitions used by other companies.

Previous wording

Cash provided by operating activities was $1,090 million for the nine months ended June 30, 2025, compared to $432 million for the nine months ended June 30, 2024. Free cash flow was $953 million for the nine months ended June 30, 2025, compared to $272 million for the nine months ended June 30, 2024. The year over year increases in cash provided by operating activities and free cash flow were primarily due to higher pre-tax income, no payout of incentive compensation in the first quarter of fiscal 2025 related to fiscal 2024 performance, and lower tax payments.

Current wording

Cash provided by operating activities was $234 million for the three months ended December 31, 2025, compared to $364 million for the three months ended December 31, 2024. Free cash flow was $170 million for the three months ended December 31, 2025, compared to $293 million for the three months ended December 31, 2024. The year over year decreases in cash provided by operating activities and free cash flow were primarily due to the payout of incentive compensation in the first quarter of fiscal 2026 related to fiscal 2025 performance while no incentive compensation was paid in fiscal 2025 related to fiscal 2024 performance, and increases in working capital, partially offset by higher pre-tax income.

Previous wording

Our Short-term debt as of June 30, 2025, included commercial paper borrowings of $260 million, with a weighted average interest rate of 4.51 percent, and a weighted average maturity period of 11 days. Our Short-term debt as of September 30, 2024, included commercial paper borrowings of $657 million, with a weighted average interest rate of 5.14 percent, and a weighted average maturity period of 24 days. In December 2022, Sensia entered into an unsecured $75 million line of credit. As of June 30, 2025, and September 30, 2024, included in Short-term debt was $70 million borrowed against the line of credit with an interest rate of 5.32 percent and 6.17 percent, respectively. Also included in Short-term debt as of June 30, 2025, and September 30, 2024, was $14 million and $42 million, respectively, of interest-bearing loans from Schlumberger (SLB) to Sensia. In April 2025, $14 million of new interest-bearing loans from SLB to Sensia were entered into and are due October 15, 2025. The loans outstanding as of September 30, 2024, were extended to October 15, 2026, and are included in Long-term debt as of June 30, 2025.

Current wording

In December 2022, Sensia entered into an unsecured $75 million line of credit. There were no borrowings outstanding under the line of credit as of December 31, 2025, as the credit line matured and closed and outstanding debt was settled with loans from the joint venture partners. As of September 30, 2025, included in Short-term debt was $70 million borrowed against the line of credit with an interest rate of 5.18 percent. Also included in Short-term debt as of December 31, 2025, were the following interest-bearing loans from Schlumberger (SLB) to Sensia: $42 million due October 15, 2026, $14 million which in February 2026 was extended to be due June 15, 2026, and $33 million entered into in December 2025, and due June 10, 2026. As of September 30, 2025, the $14 million of interest-bearing loans and $42 million of interest-bearing loans were included in Short-term debt and Long-term debt, respectively. Pursuant to the separation agreement referenced in Note 1 in the Consolidated Financial Statements, all intercompany debt will be settled by the joint venture parents upon dissolution.

Previous wording

We repurchased approximately 1.3 million shares of our common stock under our share repurchase program in the first nine months of 2025. The total cost of these shares was $350 million, of which $1 million was recorded in Accounts payable at June 30, 2025, related to shares that did not settle until July 2025. At September 30, 2024, there were no significant outstanding common stock share repurchases recorded in Accounts payable. We repurchased approximately 1.7 million shares of our common stock under our share repurchase program in the first nine months of 2024. The total cost of these shares was $476 million, of which $1 million was recorded in Accounts payable at June 30, 2024, related to shares that did not settle until July 2024. Our decision to repurchase shares in the remainder of 2025 will depend on business conditions, free cash flow generation, other cash requirements, and stock price. On May 2, 2022, and September 11, 2024, the Board of Directors authorized us to expend an additional $1.0 billion to repurchase shares of our common stock. At June 30, 2025, we had approximately $996 million remaining for share repurchases under our existing board authorization. See Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds, for additional information regarding share repurchases.

Current wording

We repurchased approximately 0.4 million shares of our common stock under our share repurchase program in the first three months of 2026. The total cost of these shares was $154 million, of which $2 million was recorded in Accounts payable at December 31, 2025, related to shares that did not settle until January 2026. Excise tax of $1 million was paid during the three months ended December 31, 2024, related to our 2023 share repurchases. At September 30, 2025, there were $1 million of outstanding common stock share repurchases recorded in Accounts payable. We repurchased approximately 0.4 million shares of our common stock under our share repurchase program in the first three months of 2025. The total cost of these shares was $99 million, of which $1 million was recorded in Accounts payable at December 31, 2024, related to shares that did not settle until January 2025. Our decision to repurchase shares in the remainder of 2026 will depend on business conditions, free cash flow generation, other cash requirements, and stock price. At December 31, 2025, we had approximately $773 million remaining for share repurchases under our existing board authorization. See Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds, for additional information regarding share repurchases.

Previous wording

We expect future uses of cash to include working capital requirements, capital expenditures, dividends to shareowners, repurchases of common stock, repayments of debt, additional contributions to our retirement plans, and acquisitions of businesses and other inorganic investments. We expect to fund future uses of cash with a combination of existing cash balances, cash generated by operating activities, commercial paper borrowings, or new issuances of debt or other securities. In addition, we have access to unsecured credit facilities with various banks.

Current wording

We expect future uses of cash to include capital expenditures, working capital requirements, dividends to shareowners, repurchases of common stock, repayments of debt, additional contributions to our retirement plans, and acquisitions of businesses and other inorganic investments. We expect to fund future uses of cash with a combination of existing cash balances, cash generated by operating activities, commercial paper borrowings, or new issuances of debt or other securities. In addition, we have access to unsecured credit facilities with various banks.

Previous wording

At June 30, 2025, the majority of our Cash and cash equivalents were held by non-U.S. subsidiaries. We use a global cash pooling arrangement to efficiently manage liquidity among our entities. As a result of the broad changes to the U.S. international tax system under the Tax Act, the Company accounts for taxes on earnings of substantially all of its non-U.S. subsidiaries including both non-U.S. and U.S. taxes. The Company has concluded that earnings of a limited number of its non-U.S. subsidiaries are indefinitely reinvested.

Current wording

At December 31, 2025, the majority of our Cash and cash equivalents were held by non-U.S. subsidiaries. We use a global cash pooling arrangement to allocate capital resources among our entities. As a result of the broad changes to the U.S. international tax system under the Tax Act, the Company accounts for taxes on earnings of substantially all of its non-U.S. subsidiaries including both non-U.S. and U.S. taxes. The Company has concluded that earnings of a limited number of its non-U.S. subsidiaries are indefinitely reinvested.

Previous wording

In June 2022, we replaced our former $1.25 billion unsecured revolving credit facility with a new five-year $1.5 billion unsecured revolving credit facility, expiring in June 2027. This credit facility uses the secured overnight funding rate (SOFR) as the primary basis for determining interest payments. We can increase the aggregate amount of this credit facility by up to $750 million, subject to the consent of the banks in the credit facility. We did not borrow against this credit facility during the periods ended June 30, 2025, or September 30, 2024. Borrowings under this credit facility bear interest based on short-term money market rates in effect during the period the borrowings are outstanding. The terms of this credit facility contain covenants under which we agree to maintain an EBITDA-to-interest ratio of at least 3.0 to 1.0. The EBITDA-to-interest ratio is defined in the credit facility as the ratio of consolidated EBITDA (as defined in the facility) for the preceding four quarters to consolidated interest expense for the same period.

Current wording

In November 2025, we replaced our former $1.5 billion unsecured revolving credit facility with a new five-year $1.5 billion unsecured revolving credit facility, expiring in November 2030. This credit facility uses the secured overnight funding rate (SOFR) as the primary basis for determining interest payments. We can increase the aggregate amount of this credit facility by up to $750 million, subject to the consent of the banks in the credit facility. We did not borrow against this credit facility during the quarter ended December 31, 2025, or against our prior credit facility during the quarter ended September 30, 2025. The terms of this credit facility contain covenants under which we agree to maintain an EBITDA-to-interest ratio of at least 3.0 to 1.0. The EBITDA-to-interest ratio is defined in the credit facility as the ratio of consolidated EBITDA for the preceding four quarters to consolidated interest expense for the same period.

Previous wording

Separate short-term unsecured credit facilities of approximately $275 million at June 30, 2025, were available to non-U.S. subsidiaries, of which, approximately $34 million was committed under letters of credit. Borrowings under our non-U.S. credit facilities at June 30, 2025, and September 30, 2024, were not significant. There are no significant commitment fees or compensating balance requirements under our credit facilities.

Current wording

Separate short-term unsecured credit facilities of approximately $276 million at December 31, 2025, were available to non-U.S. subsidiaries, of which, approximately $35 million was committed under letters of credit. Borrowings under our non-U.S. credit facilities at December 31, 2025, and September 30, 2025, were not significant. We were in compliance with all covenants under our credit facilities at December 31, 2025, and September 30, 2025. There are no significant commitment fees or compensating balance requirements under our credit facilities.

Previous wording

We use foreign currency forward exchange contracts to manage certain foreign currency risks. We enter into these contracts to hedge our exposure to foreign currency exchange rate variability in the expected future cash flows associated with certain third-party and intercompany transactions denominated in foreign currencies forecasted to occur within the next two years. We also may use these contracts to hedge portions of our net investments in certain non-U.S. subsidiaries against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S. dollar. There were no open net investment hedges for the nine months ended June 30, 2025, or September 30, 2024. In addition, we use foreign currency forward exchange contracts that are not designated as hedges to offset transaction gains or losses associated with some of our assets and liabilities resulting from intercompany loans or other transactions with third parties that are denominated in currencies other than our entities' functional currencies. Our foreign currency forward exchange contracts are usually denominated in currencies of major industrial countries. We diversify our foreign currency forward exchange contracts among counterparties to minimize exposure to any one of these entities.

Current wording

We use foreign currency forward exchange contracts to manage certain foreign currency risks. We enter into these contracts to hedge our exposure to foreign currency exchange rate variability in the expected future cash flows associated with certain third-party and intercompany transactions denominated in foreign currencies forecasted to occur within the next two years. We also may use these contracts to hedge portions of our net investments in certain non-U.S. subsidiaries against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S. dollar. In 2025 we entered into cross-currency swaps that we designated as a partial hedge of our net investment in certain Euro, Swiss franc, and Chinese yuan functional currency denominated subsidiaries. In addition, we use foreign currency forward exchange contracts that are not designated as hedges to offset transaction gains or losses associated with some of our assets and liabilities resulting from intercompany loans or other transactions with third parties that are denominated in currencies other than our entities' functional currencies. Our foreign currency forward exchange contracts are denominated in currencies of major industrial countries. We diversify our foreign currency forward exchange contracts among counterparties to minimize exposure to any one of these entities.

Previous wording

Net gains and losses related to derivative forward exchange contracts designated as cash flow hedges offset the related gains and losses on the hedged items during the periods in which the hedged items are recognized in earnings. During the three months ended June 30, 2025, we reclassified $1 million in pre-tax net losses related to cash flow hedges reclassified from Accumulated other comprehensive loss into the Consolidated Statement of Operations. During the nine months ended June 30, 2025, we reclassified $6 million in pre-tax net gains related to cash flow hedges reclassified from Accumulated other comprehensive loss into the Consolidated Statement of Operations. During the three and nine months ended June 30, 2024, we reclassified $5 million and $18 million, respectively, in pre-tax net gains related to cash flow hedges from Accumulated other comprehensive loss into the Consolidated Statement of Operations. As of June 30, 2025, we expect that approximately $18 million of pre-tax net unrealized losses on cash flow hedges will be reclassified into earnings during the next 12 months.

Current wording

Net gains and losses related to derivative forward exchange contracts designated as cash flow hedges offset the related gains and losses on the hedged items during the periods in which the hedged items are recognized in earnings. During the three months ended December 31, 2025, we reclassified $1 million in pre-tax net losses related to cash flow hedges from Accumulated other comprehensive loss into the Consolidated Statement of Operations. Pre-tax net losses related to cash flow hedges reclassified from Accumulated other comprehensive loss into the Consolidated Statement of Operations were not significant during the three months ended December 31, 2024. As of December 31, 2025, we expect that approximately $9 million of pre-tax net unrealized losses on cash flow hedges will be reclassified into earnings during the next 12 months.