Company: AOS
Filing Date: 2025-10-28
Form Type: 10-Q
Source: 0000091142-25-000150
Chunk: 24

Company: SMITH A O CORP
Filing Date: 2025-10-28
Form: 10-Q
Item: Part I, Item 8
Chunk 24
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 which the Company utilizes foreign currency forward contracts from time to time include the British pound, Canadian dollar, Euro and Mexican peso.Gains and losses on these instruments are recorded in accumulated other comprehensive loss, net of tax, until the underlying transaction is recorded in earnings. When the hedged item is realized, gains or losses are reclassified from accumulated other comprehensive loss to the condensed consolidated statement of earnings. The assessment of effectiveness for forward contracts is based on changes in the forward rates. These hedges have been determined to be effective. The majority of the amounts in accumulated other comprehensive loss for cash flow hedges are expected to be reclassified into earnings within one year. The combined fair value of the foreign currency forward contracts was an asset balance of $2.1 million as of September 30, 2025 which was recorded in Other current assets within the condensed consolidated balance sheet. The combined fair value of the foreign currency forward contracts was a liability balance of $1.4 million as of December 31, 2024 which was recorded in Accrued liabilities within the condensed consolidated balance sheet.

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Table of Contents11. Derivative Instruments (continued)

The following table summarizes, by currency, the contractual amounts of the Company’s foreign currency forward contracts as of the dates indicated that were designated as cash flow hedges:(dollars in millions)September 30, 2025December 31, 2024BuySellBuySellCanadian dollar$— $52.2 $— $28.9 Euro3.5 — 14.0 — Mexican peso5.3 — 27.2 — Total$8.8 $52.2 $41.2 $28.9 Interest Rate SwapsThe Company is exposed to interest rate risk as a result of its floating rate borrowings. The Company entered into a forward interest rate swap agreement with an independent counterparty to hedge the variability in cash flows due to changes in the Secured Overnight Financing Rate (SOFR) benchmark interest rate associated with variable rate borrowings. The interest rate swap at September 30, 2025 has a maturity date of September 30, 2029 and effectively converts the Company’s variable interest rate obligation to a fixed interest rate obligation. The interest rate swap had an aggregate notional amount of 4.2 billion rupees as of September 30, 2025 and December 31, 2024. The aggregate effective interest rate of the swap as of September