EMPLOYEE BENEFIT PLANS (Tables)

12 Months Ended

Dec. 31, 2025

Schedule of Defined Benefit Plan Information

The following table sets forth aggregated information related to the Company’s pension benefits and other postretirement benefits, including changes in the benefit obligations, changes in plan assets, funded status, amounts recognized in the balance sheet, amounts recognized in Accumulated Other Comprehensive Loss, and actuarial assumptions that the Company considered in its determination of benefit obligations and plan costs.


(In millions)	Pension Benefits				Other Benefits
	2025		2024		2025		2024
Accumulated benefit obligation, end of year	$	27.0	$	127.1	$	4.3	$	4.6

Change in projected benefit obligation:
Benefit obligation, beginning of year	$	127.9	$	137.5	$	4.6	$	5.6
Service cost	0.6		0.6		—		—
Interest cost	4.3		6.1		0.2		0.3
Actuarial (gain)/loss	(4.4)		(5.3)		0.1		(0.6)
Settlements paid	—		—		—		—
Benefits paid	(14.6)		(9.8)		(0.6)		(0.7)
Foreign currency exchange	2.4		(1.2)		—		—
Plan settlement	(88.5)		—		—		—
Benefit obligation, end of year	$	27.7	$	127.9	$	4.3	$	4.6

Change in plan assets:
Fair value of assets, beginning of year	$	105.3	$	111.7	$	—	$	—
Actual return on plan assets	7.3		3.1		—		—
Company contributions	(4.9)		0.6		0.6		0.7
Settlements paid	—		—		—		—
Benefits paid	(14.6)		(9.8)		(0.6)		(0.7)
Foreign currency exchange	0.5		(0.3)		—		—
Plan settlement	(88.5)		—		—		—
Plan assets, end of year	$	5.1	$	105.3	$	—	$	—

Funded status	$	(22.6)	$	(22.6)	$	(4.3)	$	(4.6)

Amounts recognized in balance sheet:
Non current assets	$	—	$	7.6	$	—	$	—
Current liabilities	(5.6)		(6.1)		(0.6)		(0.7)
Non current liabilities	(17.0)		(24.1)		(3.7)		(3.9)
Net liability, end of year	$	(22.6)	$	(22.6)	$	(4.3)	$	(4.6)

Amount recognized in accumulated other comprehensive loss:
Prior service cost	$	—	$	—	$	—	$	—
Net actuarial gain (loss)	(33.5)		(39.8)		0.7		0.8
Settlement	—		—		—		—
Pension settlement loss, net of tax	41.5		—		—		—
Total recognized in accumulated other comprehensive loss	$	8.0	$	(39.8)	$	0.7	$	0.8

As of December 31, 2025, the pension benefits' aggregate accumulated benefit obligation and projected benefit obligation for plans that have an accumulated benefit obligation and projected benefit obligation in excess of plan assets was $27.0 million

and $27.7 million, respectively and as of December 31, 2024, was $33.6 million and $34.5 million, respectively. As of December 31, 2025 and December 31, 2024, the aggregate fair value of plan assets related to these plans was $5.1 million and $4.3 million, respectively.

Schedule of Amounts Recognized in Other Comprehensive Income (Loss)

The following table sets forth other changes in plan assets and benefit obligation recognized in other comprehensive income/(loss) for 2025 and 2024:


(In millions)	Pension Benefits				Other Benefits
	2025		2024		2025		2024
Net actuarial (gain)/loss	$	(7.8)	$	(0.9)	$	0.1	$	(0.6)

Amortization of:
Net actuarial loss	(0.9)		(2.3)		0.1		—
Prior service credit	—		—		—		—
Settlement recognition	—		—		—		—
Pension settlement loss	(54.9)		—		—		—
Deferred tax asset	15.7		0.8		(0.1)		0.1
Foreign currency exchange	—		0.1		—		—
Total recognized in other comprehensive income/(loss)	$	(47.9)	$	(2.3)	$	0.1	$	(0.5)

Weighted-Average Assumptions

Weighted-average assumptions used to determine domestic benefit obligations:


	Pension Benefits						Other Benefits
	2025			2024			2025		2024
Discount rate	4.07	%		5.48	%		5.04	%	5.47	%
Rate of increase in future compensation	—	%	*	—	%	*	2.00 - 9.00% (Graded)		2.00 - 9.00% (Graded)

*No rate of increases in future compensation were used in the assumptions for 2025 and 2024, as the cash balance component of the domestic Pension Plan was frozen and the other domestic Pension Plan components do not base benefits on compensation. The weighted-average interest crediting rate of the cash balance component of the domestic Pension Plan was 0.0 percent, 4.50 percent, and 4.50 percent for 2025, 2024, and 2023, respectively and is based on the approximate 30-year Treasury rate as of November of the prior year with a minimum of 4.5 percent.

Assumptions used to determine domestic periodic benefit cost:


	Pension Benefits									Other Benefits
	2025			2024			2023			2025		2024		2023
Discount rate	4.07	%		4.95	%		5.14	%		5.47	%	4.88	%	5.08	%
Rate of increase in future compensation	—	%	*	—	%	*	—	%	*	2.00 - 9.00% (Graded)		2.00 - 9.00% (Graded)		2.00 - 9.00% (Graded)
Expected long-term rate of return on plan assets	—	%		6.20	%		5.70	%		—	%	—	%	—	%

*No rate of increases in future compensation were used in the assumptions for 2025, 2024, and 2023, as the cash balance component of the domestic Pension Plan was frozen and the other domestic Pension Plan components do not base benefits on compensation.

Schedule of Aggregated Net Periodic Benefit Cost and Other Benefit Cost

The following table sets forth the aggregated net periodic benefit cost for all defined benefit plans for 2025, 2024, and 2023:


(In millions)	Pension Benefits						Other Benefits
	2025		2024		2023		2025		2024		2023
Service cost	$	0.6	$	0.6	$	0.6	$	—	$	—	$	—
Interest cost	4.3		6.1		6.4		0.2		0.3		0.3
Expected return on assets	(3.9)		(7.5)		(7.2)				—		—
Amortization of:
Transition obligation	—		—		—		—		—		—
Settlement cost	—		—		—		—		—		—
Prior service cost	—		—		—		—		—		—
Actuarial loss	0.9		2.3		2.1		—		—		—
Settlement cost	—		—		—		—		—		—

Pension settlement loss	54.9		—		—		—		—		—
Net periodic benefit cost	$	56.8	$	1.5	$	1.9	$	0.2	$	0.3	$	0.3

Schedule of Allocation of Plan Assets

As of December 31, 2025 and December 31, 2024, funds were invested in equity, fixed income, and other investments as follows:


	Target Percentage		Plan Asset Allocation at Year-End
Asset Category	at Year-End 2025		2025		2024
Equity securities	—	%	—	%	16	%
Fixed income securities	—	%	—	%	79	%
Other	100	%	100	%	5	%
Total	100	%	100	%	100	%

Prior to settlement of the Plan, the Company did not see any particular concentration of risk within the plans, nor any plan assets that posed difficulties for fair value assessment. The Company had no allocation to potentially illiquid or potentially difficult to value assets such as hedge funds, venture capital, private equity, and real estate.

The Company works with actuaries and consultants in making its determination of the asset rate of return assumption and also the discount rate assumption.

Asset class assumptions are set using a combination of empirical and forward-looking analysis for long-term rate of return on plan assets. A variety of models are applied for filtering historical data and isolating the fundamental characteristics of asset classes. These models provide empirical return estimates for each asset class, which are then reviewed and combined with a

qualitative assessment of long-term relationships between asset classes before a return estimate is finalized. This provides an additional means for correcting for the effect of unrealistic or unsustainable short-term valuations or trends, opting instead for return levels and behavior that are more likely to prevail over long periods.

The Company uses the Aon Hewitt AA Above Median curve to determine the discount rate. All cash flow obligations under the plan are matched to bonds in the Aon Hewitt universe of liquid, high-quality, non-callable / non-puttable corporate bonds with outliers removed. From that matching exercise, a discount rate is determined.

The Company’s German pension plans are funded by insurance contract policies whereby the insurance company guarantees a fixed minimum return. Due to tax legislation, individual pension benefits can only be financed using direct insurance policies up to certain maximums. These maximum amounts in respect of each member are paid into such an arrangement on a yearly basis.

The Company designated all equity and most domestic fixed income plan assets as Level 1, as they are mutual funds with prices that are readily available. The U.S. Treasury securities and German plan assets are designated as Level 2 inputs. The fair value of the German plan assets are measured by the reserve that is supervised by the German Federal Financial Supervisory Authority. The U.S. Treasury securities are administered by the United States government.

The fair values of the Company’s pension plan assets for 2025 and 2024 by asset category are as follows:


(In millions)	2025		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)





Other
Insurance contracts	5.1		—		5.1		—
Cash and equivalents	—		—		—		—
Total	$	5.1	$	—	$	5.1	$	—


(In millions)	2024		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Equity
International equity mutual funds	$	17.2	$	17.2	$	—	$	—
Fixed income
U.S. treasury and government agency securities	11.1		—		11.1		—
Fixed income mutual funds	72.1		72.1		—		—
Other
Insurance contracts	4.3		—		4.3		—
Cash and equivalents	0.6		0.6		—		—
Total	$	105.3	$	89.9	$	15.4	$	—

Schedule of Expected Benefit Payments

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid in accordance with the following schedule:


(In millions)	Pension Benefits		Other Benefits
2026	$	5.6	$	0.6
2027	$	5.1	$	0.6
2028	$	0.8	$	0.5
2029	$	0.8	$	0.5
2030	$	0.9	$	0.5
Years 2030 through 2034	$	5.2	$	1.9

Schedule of Company Contributions to Defined Contribution Plans

The following table sets forth Company contributions to the defined contribution plans:


(In millions)	2025		2024		2023
Company contributions to the plans	$	11.8	$	11.4	$	11.5

FRANKLIN ELECTRIC CO INC 10-K