Company: AOS
Filing Date: 2025-04-29
Form Type: 10-Q
Source: 0000091142-25-000075
Chunk: 23

Company: SMITH A O CORP
Filing Date: 2025-04-29
Form: 10-Q
Item: Part I, Item 8
Chunk 23
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in othercomprehensiveloss on derivativesLocation of (loss) gainreclassified fromaccumulated othercomprehensive lossinto earningsAmount of (loss) gainreclassified fromaccumulated othercomprehensiveloss into earnings2025202420252024Foreign currency contracts$1.3 $1.8 Cost of products sold$(0.2)$0.6 Interest rate swap(0.3)— Interest expense— — $1.0 $1.8 $(0.2)$0.6 Net Investment HedgesThe Company uses foreign currency denominated intercompany debt and third-party foreign currency forward contracts to hedge the exposure to a portion of the Company’s 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. For the derivative instruments that are designated and qualify as net investment hedges, gains and losses are reported in other comprehensive loss where they offset gains and losses recorded on the Company’s net investments in its non-U.S. subsidiaries. These hedges are determined to be effective. The Company recognized $(1.2) million of after tax losses and $4.0 million of after-tax gains associated with hedges of net investments in non-U.S. subsidiaries in currency translation adjustment in other comprehensive loss in the three months ended March 31, 2025 and March 31, 2024, respectively.The contractual amount of the Company’s foreign currency denominated intercompany debt that is designated as a net investment hedge was ¥1.5 billion RMB as of March 31, 2025 and December 31, 2024. The fair value of the net investment hedge was zero as of March 31, 2025 and December 31, 2024.Balance Sheet HedgesForeign Exchange ContractsThe Company periodically enters into foreign exchange contracts to mitigate the foreign currency volatility relative to certain intercompany loans. These foreign exchange contracts did not qualify for hedge accounting in accordance with ASC 815 and as such were marked to market through earnings.  The fair value of the foreign exchange contracts was zero as of March 31, 2025 and December 31, 2024.The following table summarizes the contractual amounts of the Company's foreign exchange contracts that are designated as balance sheet hedges:(dollars in millions)March 31, 2025December 31, 2024BuySellBuySellCanadian dollar$— $— $—