OSHKOSH CORPORATION NOTES OF CONSOLIDATED FINANCIAL STATEMENTS
Derivative Financial Instruments — The Company recognizes all derivative financial instruments, such as foreign exchange contracts, in the consolidated financial statements at fair value regardless of the purpose or intent for holding the instrument. Changes in the fair value of derivative financial instruments are either recognized periodically in income or in equity as a component of comprehensive income depending on whether the derivative financial instrument qualifies for hedge accounting, and if so, whether it qualifies as a fair value hedge or cash flow hedge. Generally, changes in fair values of derivatives accounted for as fair value hedges are recorded in income along with the portions of the changes in the fair values of the hedged items that relate to the hedged risks. Changes in fair values of derivatives accounted for as cash flow hedges, to the extent they are effective as hedges, are initially recorded in other comprehensive income, net of deferred income taxes. Changes in fair value of derivatives not qualifying as hedges are reported in income each period. Cash flows from derivatives that are accounted for as cash flow or fair value hedges are included in the Consolidated Statements of Cash Flows in the same category as the item being hedged. Concentration of Credit Risk — Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash equivalents, trade accounts receivable, unbilled receivables and guarantees of certain customers’ obligations under deferred payment contracts and lease purchase agreements. The Company maintains cash and cash equivalents, and other financial instruments, with various major financial institutions. The Company performs periodic evaluations of the relative credit standing of these financial institutions and limits the amount of credit exposure with any institution. Concentration of credit risk with respect to trade accounts and finance receivables is limited due to the large number of customers and their dispersion across many geographic areas. However, a significant amount of trade accounts receivable and unbilled receivables are with the U.S. government, rental companies globally, municipalities and several large waste haulers in the United States. The Company continues to monitor credit risk associated with its trade receivables. Concentration of Supply of Labor — At December 31, 2025, approximately 20% of the Company’s workforce was covered under collective bargaining agreements. Reclassifications — Certain reclassifications have been made to the prior period financial statements to conform with the 2025 presentation and improve comparability between periods. "Unrealized (gain) loss on investments", which was previously presented as a separate line item within the Consolidated Statements of Cash Flows, is now presented within "Other non-cash adjustments". "Additions to equipment held for rental", which was previously presented within "Other investing activities" within the Consolidated Statements of Cash Flows, is now presented as a separate line item. "Repayments of debt", which was previously presented as a separate line item within the Consolidated Statements of Cash Flows, is now presented within "Other financing activities". "Proceeds from issuance of debt", which was previously presented within "Other financing activities" within the Consolidated Statements of Cash Flows, is now presented as a separate line item. Recent Accounting Pronouncements — In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures. The standard requires that public business entities (1) disclose specific categories in the income tax rate reconciliation and (2) provide additional information for reconciling items if the effect of those reconciling items is equal to or greater than 5% of the amount computed by multiplying pre-tax income or loss by the applicable statutory income tax rate. The standard also requires additional disclosures about income taxes paid, the allocation of income or loss from continuing operations disaggregated between domestic and foreign and income tax expense disaggregated by federal, state and foreign. The Company adopted ASU 2023-09 retrospectively for its Annual Report on Form 10-K for the year ended December 31, 2025. The adoption did not have a material impact on the Company’s consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , which is intended to improve disclosures about a public business entity's expenses and provide more detailed information to investors about the types of expenses in commonly presented expense captions. The Company will be required to adopt ASU 2024-03 for its Annual Report
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