Accordion feature, higher borrowing capacity option

[Table of Contents](#i90c0b6fc77a94e699123e3f505f83787_7)5. InventoriesThe following table presents the components of the Company’s inventory balances:

|  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |
| (dollars in millions) | June 30,2022 |  | December 31, 2021 |
| Finished products | $ | 174.3  |  |  | $ | 190.2  |  |
| Work in process | 50.0  |  |  | 42.0  |  |
| Raw materials | 346.3  |  |  | 286.3  |  |
| Inventories, at FIFO cost | 570.6  |  |  | 518.5  |  |
| LIFO reserve | (77.6) |  |  | (70.8) |  |
|  | $ | 493.0  |  |  | $ | 447.7  |  |

6. Product WarrantiesThe Company offers warranties on the sales of certain of its products with terms that are consistent with the market and records an accrual for the estimated future claims. The increase in the reserve for product warranties as of June 30, 2022 compared to June 30, 2021 was primarily due to increased steel prices and the acquisition of Giant. Refer to Note 3, "Acquisitions", for additional information regarding the acquisition of Giant. The following table presents the Company’s warranty liability activity:

|  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |
| (dollars in millions) | Three Months EndedJune 30, |
|  | 2022 |  | 2021 |
| Balance at April 1, | $ | 182.9  |  |  | $ | 141.6  |  |
| Expense | 14.7  |  |  | 15.3  |  |
| Claims settled | (17.6) |  |  | (12.0) |  |
| Balance at June 30, | $ | 180.0  |  |  | $ | 144.9  |  |



|  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |
| (dollars in millions) | Six Months EndedJune 30, |
|  | 2022 |  | 2021 |
| Balance at January 1, | $ | 184.4  |  |  | $ | 142.3  |  |
| Expense | 28.6  |  |  | 27.9  |  |
| Claims settled | (33.0) |  |  | (25.3) |  |
| Balance at June 30, | $ | 180.0  |  |  | $ | 144.9  |  |

7. DebtIn 2021, the Company renewed and amended its $500 million multi-year multi-currency revolving credit agreement with a new expiration date of April 1, 2026. The facility has an accordion provision that allows it to be increased up to $850 million if certain conditions (including lender approval) are satisfied. Borrowings under bank credit lines and commercial paper borrowings are supported by a $500 million revolving credit agreement. As a result of the long-term nature of this facility, the Company’s commercial paper and credit line borrowings are classified as long-term debt at June 30, 2022. At its option, the Company either maintains cash balances or pays fees for bank credit and services. The facility requires the Company to maintain two financial covenants, a leverage ratio test and an interest coverage test. The Company was in compliance with the covenants as of June 30, 2022.   
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