TIMKEN COTKR

TIMKEN CO Leases Disclosure

10-KFiled Feb 13, 20262 min read
Note 11 - Leasing
The Company enters into operating and finance leases for manufacturing facilities, warehouses, sales offices, information technology equipment, plant equipment, vehicles and certain other equipment.
Lease expense for the years ended December 31, 2025, 2024 and 2023 was as follows:
202520242023
Operating lease expense$41.7 $32.7 $33.5 
Amortization of right-of-use assets on finance leases2.8 3.0 2.2 
   Total lease expense$44.5 $35.7 $35.7 
Cash flows from operating and financing leases for the years ended December 31, 2025, 2024 and 2023 was as follows:
202520242023
Cash paid for amounts included in the measurement of lease liabilities:
   Operating cash flows from operating leases$46.3 $35.7 $33.6 
   Financing cash flows from finance leases2.8 2.8 2.1 
The following tables present the impact of leasing on the Consolidated Balance Sheets at December 31, 2025 and 2024:
Operating Leases20252024
Lease assets:
   Operating lease assets$152.9 $130.6 
Lease liabilities:
   Short-term operating lease liabilities$33.1 $32.0 
   Long-term operating lease liabilities100.8 84.0 
      Total operating lease liabilities$133.9 $116.0 
Short-term operating lease liabilities at December 31, 2025 and 2024 are included in other current liabilities on the Consolidated Balance Sheets.
Finance Leases20252024
Lease assets:
   Property, plant and equipment, net$7.2 $8.4 
Lease liabilities:
   Current portion of long-term debt$2.6 $2.7 
   Long-term debt4.9 6.1 
      Total finance lease liabilities$7.5 $8.8 
Note 11 - Leasing (continued)
Future minimum lease payments under non-cancellable leases at December 31, 2025 were as follows:
Operating LeasesFinance Leases
Year Ending December 31,
2026$39.3 $2.9 
202732.8 2.1 
202826.4 1.2 
202920.7 0.9 
203012.8 0.4 
Thereafter25.3 0.6 
   Total future minimum lease payments$157.3 $8.1 
Less: imputed interest(23.4)(0.6)
   Total$133.9 $7.5 
The following tables present lease assets added for the periods ended December 31, 2025 and 2024:
20252024
Lease assets added in the period:
   Operating leases$41.3 $36.0 
   Finance leases1.5 3.9 
The following tables present other information related to leases at December 31, 2025 and 2024:
20252024
Weighted-average remaining lease term:
   Operating leases5.6 years4.6 years
   Finance leases4.0 years4.3 years
Weighted-average discount rate:
   Operating leases4.73 %4.65 %
   Finance leases4.70 %4.87 %

About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

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