Percentage of the pension plan liability (over)

[Table of Contents](#i90c0b6fc77a94e699123e3f505f83787_7)10. PensionsThe following table presents the components of the Company’s net pension expense (income): 

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (dollars in millions) | Three Months EndedJune 30, |  | Six Months EndedJune 30, |
|  | 2022 |  | 2021 |  | 2022 |  | 2021 |
| Service cost | $ | 0.3  |  |  | $ | 0.4  |  |  | $ | 0.7  |  |  | $ | 0.8  |  |
| Interest cost | 3.7  |  |  | 3.6  |  |  | 7.3  |  |  | 7.2  |  |
| Expected return on plan assets | (5.3) |  |  | (12.0) |  |  | (10.7) |  |  | (24.0) |  |
| Amortization of unrecognized loss | 5.1  |  |  | 5.2  |  |  | 10.2  |  |  | 10.4  |  |
| Amortization of prior service cost | (0.1) |  |  | (0.1) |  |  | (0.2) |  |  | (0.2) |  |
| Defined benefit plan expense (income) | $ | 3.7  |  |  | $ | (2.9) |  |  | $ | 7.3  |  |  | $ | (5.8) |  |

The service cost component of net periodic benefit cost is presented within cost of products sold and selling, general and administrative expenses within the condensed consolidated statements of earnings while the other components of pension expense (income) are reflected in other expense (income). The Company was not required to and did not make a contribution to its U.S. pension plan in 2021. The Company is not required to make a contribution in 2022.In 2021, the Company's Board of Directors approved the termination of the Company's largest defined benefit pension plan (the Plan) representing over 95 percent of the Company's pension plan liabilities with a termination date of December 31, 2021. In April 2022, the Plan received a determination letter from the IRS that allowed the Company to proceed with the termination process for the Plan. In 2022, the Company expects to annuitize the remaining pension liability. The Plan settlement, which the Company expects to complete in the fourth quarter of 2022, will accelerate the recognition of approximately $445 million of non-cash, pre-tax pension expenses. 11. Segment ResultsThe Company is comprised of two reporting segments: North America and Rest of World. The Rest of World segment is primarily comprised of China, Europe and India. Both segments manufacture and market comprehensive lines of residential and commercial gas and electric water heaters, boilers, tanks, and water treatment products. Both segments primarily manufacture and market in their respective regions of the world. The following table presents the Company’s segment results:

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (dollars in millions) | Three Months EndedJune 30, |  | Six Months EndedJune 30, |
|  | 2022 |  | 2021 |  | 2022 |  | 2021 |
| Net sales |  |  |  |  |  |  |  |
| North America | $ | 744.1  |  |  | $ | 603.6  |  |  | $ | 1,474.2  |  |  | $ | 1,156.5  |  |
| Rest of World | 229.9  |  |  | 263.2  |  |  | 485.9  |  |  | 485.5  |  |
| Inter-segment | (8.1) |  |  | (7.0) |  |  | (16.5) |  |  | (13.2) |  |
|  | $ | 965.9  |  |  | $ | 859.8  |  |  | $ | 1,943.6  |  |  | $ | 1,628.8  |  |
| Segment earnings |  |  |  |  |  |  |  |
| North America(1) | $ | 159.9  |  |  | $ | 141.7  |  |  | $ | 311.7  |  |  | $ | 272.1  |  |
| Rest of World | 18.1  |  |  | 22.3  |  |  | 42.9  |  |  | 34.1  |  |
| Inter-segment | —  |  |  | —  |  |  | (0.1) |  |  | —  |  |
|  | 178.0  |  |  | 164.0  |  |  | 354.5  |  |  | 306.2  |  |
| Corporate expense(2) | (10.6) |  |  | (11.8) |  |  | (29.0) |  |  | (26.9) |  |
| Interest expense | (2.1) |  |  | (0.9) |  |  | (3.6) |  |  | (1.9) |  |
| Earnings before income taxes | 165.3  |  |  | 151.3  |  |  | 321.9  |  |  | 277.4  |  |
| Provision for income taxes | 39.1  |  |  | 33.1  |  |  | 75.9  |  |  | 61.5  |  |
| Net earnings | $ | 126.2  |  |  | $ | 118.2  |  |  | $ | 246.0  |  |  | $ | 215.9  |  |
|  |  |  |  |  |  |  |  |
| (1)includes pension expense (income) of: | $ | 2.6  |  |  | $ | (2.6) |  |  | $ | 5.2  |  |  | $ | (5.2) |  |
| (2)includes pension expense (income) of: | $ | 0.4  |  |  | $ | (0.5) |  |  | $ | 0.7  |  |  | $ | (1.1) |  |

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