Reputable outlets only (Reuters, WSJ, CNBC, Barron's, and peers). More on Google News ↗
What Changed
Risk factors · Feb 20, 2025 → Feb 13, 2026
84 added · 107 removed between the two most recent 10-Ks. The risks a company starts — or stops — disclosing are often the story.
Newly disclosed
The goodwill related to CGI is not deductible for tax purposes. 73 Table of Contents Note 9 - Goodwill and Other Intangible Assets (continued) During the fourth quarter of 2024, the Company recorded a goodwill impairment loss of $ 1.5 million for the Belts and Chain reporting unit, bringing its goodwill balance to zero .
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 recognized $ 55.8 million of tax benefits for U.S. foreign tax credit utilization primarily from acquisition integration structuring for the year ended December 31, 2023.
Recent Accounting Pronouncements: New Accounting Guidance Adopted: In December 2023, the FASB issued Accounting Standards Update ("ASU") 2023-09, Income Taxes (Topic 40).
If the expected future undiscounted cash flows are less than the carrying amount of the asset, an impairment loss is recognized at that time to reduce the asset to its fair value. 56 Table of Contents Note 1 - Significant Accounting Policies (continued) Leases: The Company determines if any arrangement is a lease at the inception of a contract.
For example, we evaluated management’s methodology for determining the discount rate that reflects the maturity and duration of the benefit payments and is used to measure the pension benefit obligations.
Financial Statements and Supplementary Data The Timken Company and Subsidiaries Financial Statements Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 48 Consolidated Statements of Income 50 Consolidated Statements of Comprehensive Income 50 Consolidated Balance Sheets 51 Consolidated Statements of Cash Flows 52 Consolidated Statements of Shareholders' Equity 53 Notes to Consolidated Financial Statements 54 47 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of The Timken Company Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of The Timken Company and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 13, 2026 expressed an unqualified opinion thereon.
The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 48 Table of Contents United States Pension Benefit Obligations Description of the Matter At December 31, 2025, the Company’s pension benefit obligation was $555.1 million.
Restricted Cash: Cash and cash equivalents of $ 1.0 million and $ 0.4 million were restricted at December 31, 2025 and 2024. 55 Table of Contents Note 1 - Significant Accounting Policies (continued) Accounts Receivable, Net: Accounts receivable, net on the Consolidated Balance Sheets include amounts billed and currently due from customers.
The following table provides a rollforward of the allowance for credit losses for the years ended December 31, 2025 and 2024: 2025 2024 Beginning balance $ 17.2 $ 12.4 Expense, net of recoveries 0.2 7.3 Write-offs ( 6.0 ) ( 1.8 ) Foreign currency translation adjustments and other changes 0.9 ( 0.7 ) Ending balance $ 12.3 $ 17.2 Unbilled Receivables: Unbilled receivables on the Consolidated Balance Sheets primarily include unbilled amounts typically resulting from sales under long-term contracts and are recognized when the Company's conditional right to consideration has transferred to the customer, for which additional performance obligations associated with the contract have not yet been satisfied.
No longer disclosed
On December 20, 2023, the Company completed the acquisition of 100 % of the capital stock of Lagersmit, a Netherlands-based manufacturer of highly engineered sealing solutions for marine, dredging, water, tidal energy and other industrial applications, for $ 128.2 million, net of cash acquired of $ 6.5 million.
The Company incurred transaction costs of $ 6.7 million to complete the 2023 acquisitions. 59 Table of Contents Note 2 - Acquisitions and Divestitures (continued) The purchase price allocations at fair value, net of cash acquired, for 2024 and 2023 acquisitions as of December 31, 2024 and 2023 are presented below: 2024 2023 Assets: Accounts receivable $ 4.2 $ 43.9 Inventories 13.7 111.8 Other current assets 0.3 5.0 Property, plant and equipment 20.6 47.9 Operating lease assets 2.6 7.2 Goodwill 61.4 292.0 Other intangible assets 100.4 299.5 Other non-current assets 3.0 5.1 Total assets acquired $ 206.2 $ 812.4 Liabilities: Accounts payable, trade $ 0.6 $ 24.2 Salaries, wages and benefits 1.5 14.9 Income taxes payable 0.2 4.5 Other current liabilities 1.3 11.0 Short-term debt — 4.7 Long-term debt — 6.0 Accrued pension cost — 3.6 Long-term operating lease liabilities 1.9 6.4 Deferred income taxes 28.4 81.9 Other non-current liabilities 5.2 7.6 Total liabilities assumed $ 39.1 $ 164.8 Noncontrolling interest acquired — 6.3 Net assets acquired $ 167.1 $ 641.3 Cash flow reconciling items: Working capital adjustment related to 2023 acquisitions paid in 2024 0.3 ( 0.3 ) Working capital adjustment related to 2022 acquisition received in 2023 — ( 2.2 ) Cash paid for acquisitions, net of cash acquired $ 167.4 $ 638.8 The 2023 acquisitions presented above include goodwill of $ 59.1 million and intangible assets of $ 71.9 million for Lagersmit, goodwill of $ 78.7 million and intangible assets of $ 45.1 million for Des-Case, and goodwill of $ 129.0 million and intangible assets of $ 158.9 million for Nadella.
Inputs were generally determined by considering independent appraisals and historical data, supplemented by current and anticipated market conditions. 60 Table of Contents Note 2 - Acquisitions and Divestitures (continued) The 2024 amounts in the table above represent the preliminary purchase price allocation for the CGI acquisition.
The Company concluded that the significant segment expenses provided to the CODM are: (1) cost of products sold and (2) selling, general and administrative expenses. 2023 and 2022 have been revised to align with the new presentation guidance.
The following table is the reconciliation between the provision for income taxes and the amount computed by applying the U.S. federal income tax rate of 21% to income before taxes: 2024 2023 2022 Income tax at the U.S. federal statutory rate $ 103.8 $ 111.4 $ 115.7 Adjustments: State and local income taxes, net of federal tax benefit 4.9 5.3 5.3 Tax on foreign remittances and U.S. tax on foreign income 16.8 25.6 19.0 Tax expense related to undistributed earnings of foreign subsidiaries 1.3 15.0 1.0 Foreign losses without current tax benefits 6.1 7.7 3.1 Foreign earnings taxed at different rates including tax holidays 16.6 18.1 19.4 U.S. foreign tax credit ( 21.1 ) ( 55.8 ) ( 15.2 ) Effect of cross-border tax laws ( 5.2 ) ( 10.3 ) ( 3.9 ) Accruals and settlements related to tax audits ( 6.7 ) ( 3.2 ) ( 9.5 ) Other items, net 2.4 8.7 ( 1.0 ) Provision for income taxes $ 118.9 $ 122.5 $ 133.9 Effective income tax rate 24.1 % 23.1 % 24.3 % 68 Table of Contents Note 5 - Income Taxes (continued) The Company recognized $ 55.8 million of tax benefits for U.S. foreign tax credit utilization primarily from acquisition integration structuring for the year ended December 31, 2023.
Year ended December 31, 2023: Engineered Bearings Industrial Motion Total Beginning Balance $ 679.8 $ 418.5 $ 1,098.3 Acquisitions 13.2 272.4 285.6 Impairment loss — ( 28.3 ) ( 28.3 ) Foreign currency translation adjustments and other changes ( 0.7 ) 14.7 14.0 Ending Balance $ 692.3 $ 677.3 $ 1,369.6 The acquisitions of Lagersmit, iMECH, Rosa, Des-Case, Nadella and ARB added goodwill of $ 58.5 million, $ 12.8 million, $ 6.5 million, $ 78.9 million, $ 128.5 million and $ 0.4 million, respectively, in 2023.
The purchase price allocation for CGI is preliminary as a result of the proximity of the acquisition date to December 31, 2024, and as a result, no elements of the purchase price allocation have been finalized.
As a result, the Company recorded a pretax impairment loss of $ 28.3 million during the first quarter of 2023, which was reported in impairment and restructuring charges on the Consolidated Statement of Income.
During the fourth quarter of 2024, the Company recorded an additional goodwill impairment loss of $ 1.5 million for the Belts and Chain reporting unit, bringing their goodwill balance to zero .
During the first quarter of 2023, the Company reviewed goodwill for impairment for its reporting units due to the change in segment reporting that went into effect January 1, 2023.
Recent Accounting Pronouncements: New Accounting Guidance Adopted: In November 2023, the FASB issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280).
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 $ 1.0 million in 2023.