NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In millions, except shares and per share data)
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1.
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Summary of Significant Accounting Policies
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Basis of Presentation –
The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with the Securities and Exchange Commission (“SEC”) requirements for interim reporting. In our opinion, the Consolidated Financial Statements contain all adjustments (consisting of only normal recurring adjustments) necessary for the fair presentation of our financial position and results of operations.
These statements should be read in conjunction with the Consolidated Financial Statements and Notes included in our annual report on Form 10-K for the year ended
December 31, 2018
. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.
Reclassification
–
We reclassified
$6.6 million
of payroll tax accruals from Other Current Liabilities to Employee Compensation and Benefits in the Consolidated Balance Sheet at December 31, 2018 to conform to the current year presentation. This reclassification is also reflected in the Consolidated Statement of Cash Flows for the three months ended March 31, 2018 and the respective prior year financial statements in Note 19.
Leases –
We assess whether an arrangement is a lease at inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet. We have elected the practical expedient to not separate lease and non-lease components for all assets. Operating lease assets and operating lease liabilities are calculated based on the present value of the future minimum lease payments over the lease term at the lease start date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease start date in determining the present value of future payments. The operating lease asset is increased by any lease payments made at or before the lease start date and reduced by lease incentives and initial direct costs incurred. The lease term includes options to renew or terminate the lease when it is reasonably certain that we will exercise that option. The exercise of lease renewal options is at our sole discretion. The depreciable life of lease assets and leasehold improvements are limited by the lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Certain leases also include options to purchase the leased asset. Lease expense for operating leases is recognized on a straight-line basis over the lease term.
Further details regarding leases are discussed in Notes 2 and 13.
New Accounting Pronouncements –
Further details regarding the adoption of new accounting standards are discussed in Note 2.
We documented the summary of significant accounting policies in the Notes to the Consolidated Financial Statements of our annual report on Form 10-K for the fiscal year ended
December 31, 2018
. Other than the accounting policies noted above, there have been no material changes to our accounting policies since the filing of that report.
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2.
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Newly Adopted Accounting Pronouncements
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Leases
On January 1, 2019, we adopted Accounting Standards Update ("ASU") No. 2016-02,
Leases (Topic 842).
This ASU requires lessees to recognize lease assets and lease liabilities on the balance sheet. Under the new guidance, lessor accounting is largely unchanged.
We have elected to adopt the standard on the modified retrospective basis. We have also elected the package of practical expedients, which permits us not to reassess our prior conclusions about lease identification, lease classification and initial direct costs. In addition, we have elected the short-term lease recognition whereby we will not recognize operating lease related assets or liabilities for leases with a lease term less than one year. We have also elected the practical expedient to not separate lease and non-lease components for all of our leases. We did not elect the hindsight practical expedient to determine the reasonably certain term of existing leases.
The impact of adopting the new lease standard was the recognition of
$44.8 million
of lease assets and lease liabilities related to our operating leases. The adoption of the new lease standard had no impact to our Consolidated Statements of Earnings, Consolidated Statements of Cash Flows or Consolidated Statements of Equity.
Derivatives and Hedging
On January 1, 2019, we adopted Accounting Standards Update ("ASU") 2017-12,
Derivatives and Hedging
and all the related amendments to Accounting Standards Codification Topic 815 which aligns hedge accounting with risk management activities and simplifies the requirements to qualify for hedge accounting. Adoption did not have a material impact on our financial statements. We continue to assess opportunities enabled by the new standard to expand our risk management strategies.
3. Revenue from Contracts with Customers
Disaggregation of Revenue
The following tables illustrate the disaggregation of revenue by geographic area, groups of similar products and services and sales channels for the
three
months ended
March 31, 2019
and
2018
:
Net Sales by geographic area
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Three Months Ended
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March 31
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2019
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2018
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Americas
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$
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160.8
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$
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162.6
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Europe, Middle East and Africa
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78.1
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88.8
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Asia Pacific
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23.6
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21.4
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Total
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$
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262.5
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$
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272.8
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Net Sales are attributed to each geographic area based on the end user country and are net of intercompany sales.
Net Sales by groups of similar products and services
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Three Months Ended
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March 31
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2019
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2018
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Equipment
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$
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161.6
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$
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172.1
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Parts and Consumables
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55.8
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57.4
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Specialty Surface Coatings
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6.2
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6.4
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Service and Other
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38.9
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36.9
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Total
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$
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262.5
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$
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272.8
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Net Sales by sales channel
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Three Months Ended
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March 31
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2019
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2018
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Sales Direct to Consumer
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$
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172.5
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$
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178.7
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Sales to Distributors
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90.0
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94.1
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Total
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$
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262.5
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$
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272.8
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Contract Liabilities
Sales Returns
The right of return may exist explicitly or implicitly with our customers. When the right of return exists, we adjust the transaction price for the estimated effect of returns. We estimate the expected returns using the expected value method by assessing historical sales levels and the timing and magnitude of historical sales return levels as a percent of sales and projecting this experience into the future.
Sales Incentives
Our sales contracts may contain various customer incentives, such as volume-based rebates or other promotions. We reduce the transaction price for certain customer programs and incentive offerings that represent variable consideration. Sales incentives given to our customers are recorded using the most likely amount approach for estimating the amount of consideration to which the company will be entitled. We forecast the most likely amount of the incentive to be paid at the time of sale, update this forecast quarterly, and adjust the transaction price accordingly to reflect the new amount of incentives expected to be earned by the customer. A majority of our customer incentives are settled within one year. We record our accruals for volume-based rebates and other promotions in Other Current Liabilities on our Consolidated Balance Sheets.
The change in our sales incentive accrual balance for the
three
months ended
March 31, 2019
and 2018 was as follows:
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Three Months Ended
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March 31
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2019
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2018
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Beginning balance
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$
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16.7
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$
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14.5
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Additions to sales incentive accrual
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6.5
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6.0
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Contract payments
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(12.6
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(11.6
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)
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Foreign currency fluctuations
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—
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0.1
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Ending balance
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$
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10.6
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$
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9.0
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Deferred Revenue
We sell separately priced prepaid contracts to our customers where we receive payment at the inception of the contract and defer recognition of the consideration received because we have to satisfy future performance obligations. Our deferred revenue balance is primarily attributed to prepaid maintenance contracts on our machines ranging from
12 months
to
60 months
. In circumstances where prepaid contracts are bundled with machines, we use an observable price to determine stand-alone selling price for separate performance obligations.
The change in the deferred revenue balance for the
three
months ended
March 31, 2019
was as follows:
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Three Months Ended
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March 31
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2019
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2018
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Beginning balance
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$
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8.5
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$
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8.3
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Increase in deferred revenue representing our obligation to satisfy future performance obligations
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3.8
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3.7
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Deferred revenue addition from the acquisition of Gaomei Cleaning Equipment Company
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1.4
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—
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Decrease in deferred revenue for amounts recognized in Net Sales for satisfied performance obligations
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(3.1
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(3.3
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Foreign currency fluctuations
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—
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0.1
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Ending balance
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$
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10.6
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$
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8.8
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At
March 31, 2019
,
$6.7 million
and
$3.9 million
of deferred revenue was reported in Other Current Liabilities and Other Liabilities, respectively, on our Consolidated Balance Sheets. Of this, we expect to recognize the following approximate amounts in Net Sales in the following periods:
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Remaining 2019
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$
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6.0
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2020
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2.4
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2021
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1.4
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2022
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0.6
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2023
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0.2
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Thereafter
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—
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Total
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$
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10.6
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At December 31, 2018,
$5.0 million
and
$3.5 million
of deferred revenue was reported in Other Current Liabilities and Other Liabilities, respectively, on our Consolidated Balance Sheets.
During the first quarter of 2019, we implemented a restructuring action to further our integration efforts related to the IPC Group. The pre-tax charge of
$4.3 million
consisting of severance was included within Selling and Administrative Expense in the Consolidated Statements of Earnings. The charge impacted our EMEA operating segment. We estimate the savings will offset the pre-tax charge approximately
one year
from the date of the action.
A reconciliation of the beginning and ending liability balances is as follows:
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Severance and Related Costs
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December 31, 2017 balance
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$
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3.4
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2018 charges and utilization:
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New charges
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1.0
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Cash payments
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(2.1
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Foreign currency adjustments
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(0.1
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December 31, 2018 balance
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$
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2.2
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2019 charges and utilization:
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New charges
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4.3
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Cash payments
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(0.1
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March 31, 2019 balance
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$
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6.4
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On January 4, 2019, we completed the acquisition of
Hefei Gaomei Cleaning Machines Co., Ltd. and Anhui Rongen Environmental Protection Technology Co., Ltd. (collectively "Gaomei")
, privately held designers and manufacturers of commercial cleaning solutions based in China. The financial results for Gaomei have been included in the consolidated financial results since the date of closing.
The following table summarizes the preliminary fair value measurement of the assets acquired and liabilities assumed as of the date of acquisition:
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ASSETS
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Current Assets
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$
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7.8
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Intangible Assets Subject to Amortization:
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Trade Name
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1.8
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Customer Lists
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15.2
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Other Assets
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1.4
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Total Identifiable Assets Acquired
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26.2
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LIABILITIES
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Current Liabilities
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(5.6
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Long-Term Liabilities
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(2.9
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Total Identifiable Liabilities Assumed
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(8.5
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Noncontrolling Interest
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(0.3
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Goodwill
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9.5
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Total Purchase Price
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$
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26.9
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The total purchase price will be paid as follows:
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•
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$11.3 million
was paid during the first quarter of 2019 upon close of the transaction;
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•
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$11.3 million
which will be paid in January 2020; and
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•
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The remaining purchase price of
$4.3 million
represents the estimated fair value of contingent consideration. The payment is based on a probability-weighted scenario analysis of achieving certain levels of gross profit growth over a three year period. Consideration of
$0.0 million
to
$42.4 million
will be paid in March 2021 if the gross profit growth targets are met.
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None
of the goodwill is expected to be deductible for income tax purposes. The expected lives of the acquired amortizable intangible assets range from
10 years
to
15 years
and are being amortized on a straight-line basis.
Inventories are valued at the lower of cost or market. Inventories at
March 31, 2019
and
December 31, 2018
consisted of the following:
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March 31,
2019
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December 31,
2018
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Inventories carried at LIFO:
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Finished goods
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$
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54.4
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$
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48.6
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Raw materials, production parts and work-in-process
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31.0
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28.6
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Excess of FIFO over LIFO cost
(a)
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(31.5
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(31.2
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Total LIFO inventories
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53.9
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46.0
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Inventories carried at FIFO:
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Finished goods
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64.6
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53.5
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Raw materials, production parts and work-in-process
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39.7
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35.6
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Total FIFO inventories
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104.3
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89.1
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Total inventories
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$
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158.2
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$
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135.1
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(a)
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Inventories of
$53.9 million
as of March 31, 2019, and
$46.0 million
as of December 31, 2018, were valued at LIFO. The difference between replacement cost and the stated LIFO inventory value is not materially different from the reserve for the LIFO valuation method.
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7.
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Goodwill and Intangible Assets
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The changes in the carrying value of Goodwill for the
three
months ended
March 31, 2019
were as follows:
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Goodwill
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Accumulated
Impairment
Losses
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Total
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Balance as of December 31, 2018
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$
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221.7
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$
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(39.0
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)
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$
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182.7
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Additions
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9.5
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—
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9.5
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Foreign currency fluctuations
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(1.9
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)
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(0.6
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)
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(2.5
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)
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Balance as of March 31, 2019
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$
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229.3
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$
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(39.6
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)
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$
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189.7
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The balances of acquired Intangible Assets, excluding Goodwill, as of
March 31, 2019
and
December 31, 2018
, were as follows:
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Customer Lists
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Trade Names
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Technology
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Total
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Balance as of March 31, 2019
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Original cost
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$
|
156.3
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$
|
31.9
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$
|
17.1
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$
|
205.3
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Accumulated amortization
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(37.4
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)
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(6.0
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)
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(5.9
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)
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(49.3
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)
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Carrying value
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$
|
118.9
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$
|
25.9
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$
|
11.2
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$
|
156.0
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Weighted average original life (in years)
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14
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|
11
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|
11
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Balance as of December 31, 2018
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Original cost
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$
|
143.0
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$
|
30.6
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|
$
|
17.4
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|
$
|
191.0
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Accumulated amortization
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(33.7
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)
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(5.3
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)
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(5.5
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)
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(44.5
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)
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Carrying value
|
$
|
109.3
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$
|
25.3
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$
|
11.9
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$
|
146.5
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Weighted average original life (in years)
|
15
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|
10
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|
10
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The additions to Goodwill recorded during the first quarter of 2019 were related to our acquisition of Gaomei, as described further in Note 5.
As part of our acquisition of Gaomei, we acquired trade names and a customer list with a combined preliminary fair value of
$17.4 million
. Further details regarding the preliminary purchase price allocation of Gaomei are described further in Note 5.
Amortization expense on Intangible Assets for the
three
months ended
March 31, 2019
and
2018
was
$5.7 million
and
$5.9 million
, respectively.
Estimated aggregate amortization expense based on the current carrying value of amortizable Intangible Assets for each of the five succeeding years and thereafter is as follows:
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Remaining 2019
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$
|
16.4
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|
|
2020
|
20.7
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|
|
2021
|
19.2
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|
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2022
|
17.1
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|
|
2023
|
15.5
|
|
|
Thereafter
|
67.1
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|
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Total
|
$
|
156.0
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Financial Covenants
The 2017 Credit Agreement contains customary representations, warranties and covenants, including, but not limited to, covenants restricting the company’s ability to incur indebtedness and liens and merge or consolidate with another entity. The 2017 Credit Agreement also contains financial covenants requiring us to maintain a net leverage ratio of consolidated net indebtedness to consolidated earnings before income, taxes, depreciation and amortization, subject to certain adjustments ("Adjusted EBITDA") of not greater than
4.00
to 1, as well as requiring us to maintain a interest coverage ratio of consolidated Adjusted EBITDA to consolidated interest expense of no less than
3.50
to 1 for the quarter ended
March 31, 2019
. The 2017 Credit Agreement also contains a financial covenant requiring us to maintain a senior secured net leverage ratio of consolidated senior secured net indebtedness to consolidated Adjusted EBITDA ratio of not greater than
3.50
to 1. These financial covenants may restrict our ability to pay dividends and purchase outstanding shares of our common stock. In connection with the closing of the Gaomei acquisition, the Company elected an acquisition holiday as provided for under the 2017 Credit Agreement, which increased the net leverage ratio from 4.00 to 1 to 4.50 to 1 and the senior secured net leverage ratio from 3.50 to 1 to 4.00 to 1 during each quarter of 2019. We were in compliance with our financial covenants at
March 31, 2019
.
Debt Outstanding
Debt outstanding at
March 31, 2019
and
December 31, 2018
consisted of the following:
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|
March 31,
2019
|
|
December 31,
2018
|
|
Bank Borrowings
|
$
|
—
|
|
|
$
|
3.9
|
|
|
Senior Unsecured Notes
|
300.0
|
|
|
300.0
|
|
|
Credit Facility Borrowings
|
62.0
|
|
|
53.0
|
|
|
Secured Borrowings
|
2.3
|
|
|
2.4
|
|
|
Finance Lease Liabilities
|
0.4
|
|
|
0.5
|
|
|
Unamortized Debt Issuance Costs
|
(4.5
|
)
|
|
(4.7
|
)
|
|
Total Debt
|
360.2
|
|
|
355.1
|
|
|
Less: Current Portion of Long-Term Debt
(1)
|
(30.1
|
)
|
|
(27.0
|
)
|
|
Long-Term Debt
|
$
|
330.1
|
|
|
$
|
328.1
|
|
|
|
|
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(1)
|
Current portion of long-term debt includes
$7.5 million
of current maturities, a
$21.5 million
anticipated additional repayment on Credit Facility Borrowings, less
$0.1 million
of unamortized debt issuance costs, under our 2017 Credit Agreement,
$0.9 million
of current maturities of secured borrowings and
$0.3 million
of current maturities of finance lease liabilities.
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As of
March 31, 2019
, we had outstanding borrowings under our Senior Unsecured Notes of
$300.0 million
. We had outstanding borrowings under our 2017 Credit Agreement, totaling
$18.0 million
under our term loan facility. In addition, we had outstanding borrowings of
$44.0 million
under our revolving facility and had letters of credit and bank guarantees outstanding in the amount of
$3.3 million
, leaving approximately
$152.7 million
of unused borrowing capacity on our revolving facility. Although we are only required to make a minimum principal payment of
$7.5 million
during the next 12 months, we have both the intent and the ability to pay an additional
$10.5 million
on our term loan facility and an additional
$11.0 million
on our credit facility borrowings during the next year. As such, we have classified
$29.0 million
as current maturities of long-term debt. Commitment fees on unused lines of credit for the
three
months ended
March 31, 2019
were
$0.1 million
. The overall weighted average cost of debt is approximately
5.3%
and net of a related cross-currency swap instrument is approximately
4.5%
. Further details regarding the cross-currency swap instrument are discussed in Note 10.
We record a liability for warranty claims at the time of sale. The amount of the liability is based on the trend in the historical ratio of claims to sales, the historical length of time between the sale and resulting warranty claim, new product introductions and other factors. Warranty terms on machines generally range from
one
to
four
years. However, the majority of our claims are paid out within the first
six
to
nine
months following a sale. The majority of the liability for estimated warranty claims represents amounts to be paid out in the near term for qualified warranty issues, with immaterial amounts reserved to be paid for older equipment warranty issues.
The changes in warranty reserves for the
three
months ended
March 31, 2019
and
2018
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31
|
|
|
2019
|
|
2018
|
|
Beginning balance
|
$
|
13.1
|
|
|
$
|
12.7
|
|
|
Additions charged to expense
|
2.5
|
|
|
3.3
|
|
|
Foreign currency fluctuations
|
—
|
|
|
0.1
|
|
|
Claims paid
|
(3.0
|
)
|
|
(3.3
|
)
|
|
Ending balance
|
$
|
12.6
|
|
|
$
|
12.8
|
|
Hedge Accounting and Hedging Programs
We recognize all derivative instruments as either assets or liabilities in our Consolidated Balance Sheets and measure them at fair value. Gains and losses resulting from changes in fair value are accounted for depending on the use of the derivative and whether it is designated and qualifies for hedge accounting.
We evaluate hedge effectiveness on our hedges that are designated and qualify for hedge accounting at the inception of the hedge prospectively, as well as retrospectively, and record any ineffective portion of the hedging instruments along with the time value of purchased contracts in the same line item of the income statement as the item being hedged on our Consolidated Statements of Operations. In prior years, ineffective portions of hedging instruments and time value of purchased contracts were recorded in Net Foreign Currency Transaction Losses on our Consolidated Statements of Operations.
Our hedging policy establishes maximum limits for each counterparty to mitigate any concentration of risk.
Balance Sheet Hedging
Hedges of Foreign Currency Assets and Liabilities
We hedge our net recognized foreign currency denominated assets and liabilities with foreign exchange forward contracts to reduce the risk that the value of these assets and liabilities will be adversely affected by changes in exchange rates. These contracts hedge assets and liabilities that are denominated in foreign currencies and are carried at fair value as either assets or liabilities on the Consolidated Balance Sheets with changes in the fair value recorded to Net Foreign Currency Transaction Losses in our Consolidated Statements of Earnings. These contracts do not subject us to material balance sheet risk due to exchange rate movements because gains and losses on these derivatives are intended to offset gains and losses on the assets and liabilities being hedged. At
March 31, 2019
and
December 31, 2018
, the notional amounts of foreign currency forward exchange contracts outstanding not designated as hedging instruments were
$53.4 million
and
$63.4 million
, respectively.
Cash Flow Hedging
Hedges of Forecasted Foreign Currency Transactions
In countries outside the U.S., we transact business in U.S. dollars and in various other currencies. We may use foreign exchange option contracts or forward contracts to hedge certain cash flow exposures resulting from changes in these foreign currency exchange rates. These foreign exchange contracts, carried at fair value, have maturities of up to
one year
. We enter into these foreign exchange contracts to hedge a portion of our forecasted foreign currency denominated revenue in the normal course of business, and accordingly, they are not speculative in nature. The notional amounts of outstanding foreign currency forward contracts designated as cash flow hedges were
$3.0 million
as of
March 31, 2019
and
none
as of
December 31, 2018
. The notional amounts of outstanding foreign currency option contracts designated as cash flow hedges were
$8.3 million
and
$8.4 million
as of
March 31, 2019
and
December 31, 2018
, respectively.
Foreign Currency Derivatives
We use foreign currency exchange rate derivatives to hedge our exposure to fluctuations in exchange rates for anticipated intercompany cash transactions between Tennant Company and its subsidiaries. We entered into Euro to U.S. dollar foreign exchange cross-currency swaps for all of the anticipated cash flows associated with an intercompany loan from a wholly-owned European subsidiary. We enter into these foreign exchange cross-currency swaps to hedge the foreign currency denominated cash flows associated with this intercompany loan, and accordingly, they are not speculative in nature. These cross-currency swaps are designated as cash flow hedges. The hedged cash flows as of
March 31, 2019
and
December 31, 2018
included
€172.2 million
and
€174.0 million
of total notional values, respectively. As of
March 31, 2019
, the aggregate scheduled interest payments over the course of the loan and related swaps amounted to
€22.2 million
. The scheduled maturity and principal payment of the loan and related swaps of
€150.0 million
are due in April 2022. There were no new cross-currency swaps designated as cash flow hedges as of
March 31, 2019
.
The fair value of derivative instruments on our Consolidated Balance Sheets as of
March 31, 2019
and
December 31, 2018
was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Assets
|
|
Derivative Liabilities
|
|
|
Balance Sheet Location
|
March 31, 2019
|
December 31, 2018
|
|
Balance Sheet Location
|
March 31, 2019
|
December 31, 2018
|
|
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
Foreign currency option contracts
|
Other Current Assets
|
$
|
0.1
|
|
$
|
0.2
|
|
|
Other Current Liabilities
|
$
|
—
|
|
$
|
—
|
|
|
Foreign currency option contracts
|
Other Assets
|
—
|
|
—
|
|
|
Other Liabilities
|
—
|
|
—
|
|
|
Foreign currency forward contracts
|
Other Current Assets
|
2.4
|
|
2.3
|
|
|
Other Current Liabilities
|
—
|
|
—
|
|
|
Foreign currency forward contracts
|
Other Assets
|
—
|
|
—
|
|
|
Other Liabilities
|
16.1
|
|
20.7
|
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
Foreign currency forward contracts
|
Other Current Assets
|
0.9
|
|
0.2
|
|
|
Other Current Liabilities
|
0.1
|
|
—
|
|
|
Foreign currency forward contracts
|
Other Assets
|
$
|
—
|
|
$
|
—
|
|
|
Other Liabilities
|
$
|
—
|
|
$
|
—
|
|
As of
March 31, 2019
, we anticipate reclassifying approximately
$2.4 million
of gains from Accumulated Other Comprehensive Loss to net earnings during the next 12 months.
The following tables include the amounts in the Consolidated Statements of Earnings in which the effects of cash flow hedges are recorded and the effects of cash flow hedge activity on these line items for the three months ended March 31, 2019 and March 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Three Months Ended
|
|
|
March 31, 2019
|
|
March 31, 2018
|
|
|
Total
|
Amount of Gain (Loss) on Cash Flow Hedge Activity
|
|
Total
|
Amount of Gain (Loss) on Cash Flow Hedge Activity
|
|
Net Sales
|
$
|
262.5
|
|
$
|
—
|
|
|
$
|
272.9
|
|
$
|
0.7
|
|
|
Interest Income
|
0.8
|
|
0.7
|
|
|
0.7
|
|
0.5
|
|
|
Net Foreign Currency Transaction Gains (Losses)
|
0.2
|
|
3.1
|
|
|
(0.7
|
)
|
(5.1
|
)
|
The effect of foreign currency derivative instruments designated as hedges and of foreign currency derivative instruments not designated as hedges in our Consolidated Statements of Earnings for the three months ended March 31, 2019 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31, 2019
|
|
|
|
Foreign Currency Option Contracts
|
|
Foreign Currency Forward Contracts
|
|
Derivatives in cash flow hedging relationships:
|
|
|
|
|
|
Net (loss) gain recognized in Other Comprehensive (Loss) Income, net of tax
(1)
|
|
$
|
(0.1
|
)
|
|
$
|
4.1
|
|
|
Net loss reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Net Sales
|
|
—
|
|
|
—
|
|
|
Net gain reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Interest Income
|
|
—
|
|
|
0.5
|
|
|
Net gain reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Net Foreign Currency Transaction (Gain) Loss
|
|
—
|
|
|
2.4
|
|
|
Net (loss) gain recognized in earnings
(2)
|
|
—
|
|
|
—
|
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
Net (loss) gain recognized in earnings
(3)
|
|
$
|
—
|
|
|
$
|
(0.2
|
)
|
The effect of foreign currency derivative instruments designated as hedges and of foreign currency derivative instruments not designated as hedges in our Consolidated Statements of Earnings for the
three
months ended
March 31, 2018
was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31, 2018
|
|
|
|
Foreign Currency Option Contracts
|
|
Foreign Currency Forward Contracts
|
|
Derivatives in cash flow hedging relationships:
|
|
|
|
|
|
Net loss recognized in Other Comprehensive (Loss) Income, net of tax
(1)
|
|
$
|
—
|
|
|
$
|
(5.7
|
)
|
|
Net (loss) gain reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Net Sales
|
|
—
|
|
|
—
|
|
|
Net gain reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Interest Income
|
|
—
|
|
|
0.4
|
|
|
Net loss reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Net Foreign Currency Transaction Gain (Loss)
|
|
—
|
|
|
(3.9
|
)
|
|
Net (loss) gain recognized in earnings
(2)
|
|
—
|
|
|
—
|
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
Net loss recognized in earnings
(3)
|
|
$
|
—
|
|
|
$
|
(1.4
|
)
|
|
|
|
|
(1)
|
Net change in the fair value of the effective portion classified in Other Comprehensive (Loss) Income.
|
|
|
|
|
(2)
|
Ineffective portion and amount excluded from effectiveness testing classified in Net Foreign Currency Transaction Gain (Loss).
|
|
|
|
|
(3)
|
Classified in Net Foreign Currency Transaction Gain (Loss).
|
|
|
|
|
11.
|
Fair Value Measurements
|
Estimates of fair value for financial assets and financial liabilities are based on the framework established in the accounting guidance for fair value measurements. The framework defines fair value, provides guidance for measuring fair value and requires certain disclosures. The framework discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). The framework utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
|
|
|
|
•
|
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
|
|
|
|
|
•
|
Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
|
|
|
|
|
•
|
Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.
|
Our population of assets and liabilities subject to fair value measurements at
March 31, 2019
is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Assets:
|
|
|
|
|
|
|
|
|
Foreign currency forward exchange contracts
|
$
|
7.8
|
|
|
$
|
—
|
|
|
$
|
7.8
|
|
|
$
|
—
|
|
|
Foreign currency option contracts
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
Total Assets
|
$
|
7.9
|
|
|
$
|
—
|
|
|
$
|
7.9
|
|
|
$
|
—
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forward exchange contracts
|
$
|
20.9
|
|
|
$
|
—
|
|
|
$
|
20.9
|
|
|
$
|
—
|
|
|
Contingent consideration
|
4.3
|
|
|
—
|
|
|
—
|
|
|
4.3
|
|
|
Total Liabilities
|
$
|
25.2
|
|
|
$
|
—
|
|
|
$
|
20.9
|
|
|
$
|
4.3
|
|
Our population of assets and liabilities subject to fair value measurements at
December 31, 2018
is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Assets:
|
|
|
|
|
|
|
|
|
Foreign currency forward exchange contracts
|
$
|
7.2
|
|
|
$
|
—
|
|
|
$
|
7.2
|
|
|
$
|
—
|
|
|
Foreign currency option contracts
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
Total Assets
|
$
|
7.4
|
|
|
$
|
—
|
|
|
$
|
7.4
|
|
|
$
|
—
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forward exchange contracts
|
$
|
25.4
|
|
|
$
|
—
|
|
|
$
|
25.4
|
|
|
$
|
—
|
|
|
Total Liabilities
|
$
|
25.4
|
|
|
$
|
—
|
|
|
$
|
25.4
|
|
|
$
|
—
|
|
Our foreign currency forward exchange and option contracts are valued using observable Level 2 market expectations at the measurement date and standard valuation techniques to convert future amounts to a single present value amount. Further details regarding our foreign currency forward exchange and option contracts are discussed in Note 10.
Contingent consideration is valued using a probability-weighted scenario analysis of projected gross profit growth rates and discounted at a risk-free rate adjusted for a credit spread. Actual gross profit growth rates may differ significantly from those used in the estimate above, which may affect future payments. Changes in future payments will be reflected in future operating results as they occur.
The carrying amounts reported in the Consolidated Balance Sheets for Cash and Cash Equivalents, Restricted Cash, Accounts Receivable, Other Current Assets, Accounts Payable and Other Current Liabilities approximate fair value due to their short-term nature.
The fair market value of our Long-Term Debt approximates cost based on the borrowing rates currently available to us for bank loans with similar terms and remaining maturities.
From time to time, we measure certain assets at fair value on a non-recurring basis, including evaluation of long-lived assets, goodwill and other intangible assets, as part of a business acquisition. These assets are measured and recognized at amounts equal to the fair value determined as of the date of acquisition. Fair value valuations are based on the information available as
of the acquisition date and the expectations and assumptions that have been deemed reasonable by us. There are inherent uncertainties and management judgment required in these determinations. The fair value measurements of assets and liabilities assumed as part of a business acquisition are based on valuations involving significant unobservable inputs, or Level 3, in the fair value hierarchy.
These assets are also subject to periodic impairment testing by comparing the respective carrying value of each asset to the estimated fair value of the reporting unit or asset group in which they reside. In the event we determine these assets to be impaired, we would recognize an impairment loss equal to the amount by which the carrying value of the reporting unit, impairment asset or asset group exceeds its estimated fair value. These periodic impairment tests utilize company-specific assumptions involving unobservable inputs, or Level 3, in the fair value hierarchy.
|
|
|
|
12.
|
Retirement Benefit Plans
|
Our defined benefit pension plans and postretirement medical plan are described in Note 15 of our annual report on Form 10-K for the year ended
December 31, 2018
. We have contributed
$0.1 million
and
$0.2 million
during the
first
quarter of
2019
to our pension plans and postretirement medical plan, respectively.
Net benefit cost for the
three
months ended
March 31, 2019
and
2018
was not material.
We lease facilities, vehicles and equipment under the operating lease agreements, which include both monthly and longer-term arrangements.
Certain operating leases for vehicles contain residual value guarantee provisions, which would become due at the expiration of the operating lease agreement if the fair value of the leased vehicles is less than the guaranteed residual value. As of
March 31, 2019
, of those leases that contain residual value guarantees, the aggregate residual value at lease expiration was
$13.6 million
, of which we have guaranteed
$7.6 million
. As of
March 31, 2019
, we have recorded a liability for the estimated end of term loss related to this residual value guarantee of
$0.3 million
for certain vehicles within our fleet.
The lease assets and liabilities at
March 31, 2019
are as follows:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
Leases
|
Classification
|
2019
|
|
Assets
|
|
|
|
Operating lease assets
|
Operating Lease Assets
|
$
|
40.7
|
|
|
Finance lease assets
|
Property, Plant and Equipment
(a)
|
0.4
|
|
|
Total leased assets
|
|
$
|
41.1
|
|
|
Liabilities
|
|
|
|
Current
|
|
|
|
Operating
|
Other Current Liabilities
|
$
|
16.5
|
|
|
Finance
|
Current Portion of Long-term Debt
|
0.3
|
|
|
Noncurrent
|
|
|
|
Operating
|
Long-term Operating Lease Liabilities
|
24.7
|
|
|
Finance
|
Long-term Debt
|
0.1
|
|
|
Total lease liabilities
|
|
$
|
41.6
|
|
(a)
Finance lease assets are recorded net of accumulated amortization of
$0.6 million
as of
March 31, 2019
.
The lease cost for the three months ended
March 31, 2019
and
2018
was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31
|
|
Lease Cost
|
|
2019
|
|
2018
|
|
Operating lease cost
|
(a)
|
$
|
5.5
|
|
|
$
|
5.5
|
|
|
Finance lease cost
(b)
|
|
0.1
|
|
|
—
|
|
|
Net lease cost
|
|
$
|
5.6
|
|
|
$
|
5.5
|
|
|
|
|
|
(a)
|
Includes short-term lease costs of
$0.7 million
and variable lease costs of
$0.6 million
for the three months ended
March 31, 2019
.
|
(b)
Includes amortization of leased assets and interest on lease liabilities.
The maturity of lease liabilities at
March 31, 2019
was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturity of Lease Liabilities
|
Operating Leases
|
|
Finance Leases
|
|
Total
|
|
|
Remaining 2019
|
$
|
13.8
|
|
$
|
0.2
|
|
$
|
14.0
|
|
|
2020
|
12.3
|
|
0.2
|
|
12.5
|
|
|
2021
|
7.3
|
|
—
|
|
7.3
|
|
|
2022
|
3.7
|
|
—
|
|
3.7
|
|
|
2023
|
2.6
|
|
—
|
|
2.6
|
|
|
Thereafter
|
4.2
|
|
—
|
|
4.2
|
|
|
Total lease payments
|
$
|
43.9
|
|
$
|
0.4
|
|
$
|
44.3
|
|
|
Less: Interest
|
(2.7
|
)
|
—
|
|
(2.7
|
)
|
|
Present value of lease liabilities
|
$
|
41.2
|
|
$
|
0.4
|
|
$
|
41.6
|
|
The minimum rentals for aggregate lease commitments as of
March 31, 2018
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Leases
|
|
Finance Leases
|
|
Total
|
|
|
Remaining 2018
|
$
|
12.3
|
|
$
|
0.3
|
|
$
|
12.6
|
|
|
2019
|
11.4
|
|
0.3
|
|
11.7
|
|
|
2020
|
6.9
|
|
0.2
|
|
7.1
|
|
|
2021
|
3.9
|
|
—
|
|
3.9
|
|
|
2022
|
2.2
|
|
—
|
|
2.2
|
|
|
Thereafter
|
3.5
|
|
—
|
|
3.5
|
|
|
Total
|
$
|
40.2
|
|
$
|
0.8
|
|
$
|
41.0
|
|
The lease term and discount rate at
March 31, 2019
were as follows:
|
|
|
|
|
|
|
|
March 31,
|
|
Lease Term and Discount Rate
|
2019
|
|
Weighted-average remaining lease term (years)
|
|
|
Operating leases
|
3.7
|
|
|
Finance leases
|
1.7
|
|
|
Weighted-average discount rate
|
|
|
Operating leases
|
3.0
|
%
|
|
Finance leases
|
2.5
|
%
|
Other information related to cash paid related to lease liabilities and lease assets obtained for the three months ended
March 31, 2019
was as follows:
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
|
Other Information
|
2019
|
|
Cash paid for amounts included in the measurement of lease liabilities
|
|
|
Operating cash flows from finance leases
|
$
|
—
|
|
|
Operating cash flows from operating leases
|
5.7
|
|
|
Financing cash flows from finance leases
|
0.1
|
|
|
Lease assets obtained in exchange for new finance lease liabilities
|
—
|
|
|
Lease assets obtained in exchange for new operating lease liabilities
|
2.2
|
|
|
|
|
|
14.
|
Commitments and Contingencies
|
In the ordinary course of business, we may become liable with respect to pending and threatened litigation, tax, environmental and other matters. While the ultimate results of current claims, investigations and lawsuits involving us are unknown at this time, we do not expect that these matters will have a material adverse effect on our consolidated financial position or results of operations. Legal costs associated with such matters are expensed as incurred.
|
|
|
|
15.
|
Accumulated Other Comprehensive Loss
|
Components of Accumulated Other Comprehensive Loss, net of tax, within the Consolidated Balance Sheets, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
|
Foreign currency translation adjustments
|
$
|
(34.3
|
)
|
|
$
|
(31.9
|
)
|
|
Pension and retiree medical benefits
|
(0.3
|
)
|
|
(0.3
|
)
|
|
Cash flow hedge
|
(3.9
|
)
|
|
(5.0
|
)
|
|
Total Accumulated Other Comprehensive Loss
|
$
|
(38.5
|
)
|
|
$
|
(37.2
|
)
|
The changes in components of Accumulated Other Comprehensive Loss, net of tax, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Currency Translation Adjustments
|
|
Pension and Post Retirement Benefits
|
|
Cash Flow Hedge
|
|
Total
|
|
December 31, 2018
|
$
|
(31.9
|
)
|
|
$
|
(0.3
|
)
|
|
$
|
(5.0
|
)
|
|
$
|
(37.2
|
)
|
|
Other comprehensive (loss) income before reclassifications
|
(2.4
|
)
|
|
—
|
|
|
4.0
|
|
|
1.6
|
|
|
Amounts reclassified from Accumulated Other Comprehensive Loss
|
—
|
|
|
—
|
|
|
(2.9
|
)
|
|
(2.9
|
)
|
|
Net current period other comprehensive loss
|
(2.4
|
)
|
|
—
|
|
|
1.1
|
|
|
(1.3
|
)
|
|
March 31, 2019
|
$
|
(34.3
|
)
|
|
$
|
(0.3
|
)
|
|
$
|
(3.9
|
)
|
|
$
|
(38.5
|
)
|
We and our subsidiaries are subject to U.S. federal income tax as well as income tax of numerous state and foreign jurisdictions. We are generally no longer subject to U.S. federal tax examinations for taxable years before
2015
and, with limited exceptions, state and foreign income tax examinations for taxable years before
2014
.
We recognize potential accrued interest and penalties related to unrecognized tax benefits in Income Tax Expense. In addition to the liability of
$5.5 million
for unrecognized tax benefits as of
March 31, 2019
, there was approximately
$0.4 million
for accrued interest and penalties. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of
March 31, 2019
was
$5.3 million
. To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued will be revised and reflected as an adjustment of the Income Tax Expense.
We are currently undergoing income tax examinations in various state and foreign jurisdictions covering
2014
to
2017
. Although the final outcome of these examinations cannot be currently determined, we believe that we have adequate reserves with respect to these examinations.
|
|
|
|
17.
|
Share-Based Compensation
|
Our share-based compensation plans are described in Note 19 of our annual report on Form 10-K for the year ended
December 31, 2018
. During the
three
months ended
March 31, 2019
and
2018
, we recognized total Share-Based Compensation Expense of
$3.3 million
and
$2.7 million
, respectively. The total excess tax benefit recognized for share-based compensation arrangements during the
three
months ended
March 31, 2019
and
2018
was
$0.2 million
and
$0.0 million
, respectively.
During the first
three
months of
2019
, we issued
16,211
restricted shares. The weighted average grant date fair value of each share awarded was
$63.65
. Restricted share awards generally have a
three
year vesting period from the effective date of the grant. The total fair value of shares vested during the
three
months ended
March 31, 2019
and
2018
was
$1.0 million
and
$0.8 million
, respectively.
|
|
|
|
18.
|
Earnings Attributable to Tennant Company Per Share
|
The computations of Basic and Diluted Earnings per Share were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31
|
|
|
2019
|
|
2018
|
|
Numerator:
|
|
|
|
|
Net Earnings Attributable to Tennant Company
|
$
|
5.4
|
|
|
$
|
3.3
|
|
|
Denominator:
|
|
|
|
|
Basic - Weighted Average Shares Outstanding
|
18,042,468
|
|
|
17,790,989
|
|
|
Effect of dilutive securities:
|
|
|
|
|
Share-based compensation plans
|
302,743
|
|
|
454,370
|
|
|
Diluted - Weighted Average Shares Outstanding
|
18,345,211
|
|
|
18,245,359
|
|
|
Basic Earnings per Share
|
$
|
0.30
|
|
|
$
|
0.18
|
|
|
Diluted Earnings per Share
|
$
|
0.29
|
|
|
$
|
0.18
|
|
Excluded from the dilutive securities shown above were options to purchase and shares to be paid out under share-based compensation plans of
646,491
and
291,622
shares of common stock during the
three
months ended
March 31, 2019
and
2018
, respectively. These exclusions were made if the exercise prices of the options are greater than the average market price of our common stock for the period, if the number of shares we can repurchase under the treasury stock method exceeds the weighted average shares outstanding in the options or if we have a net loss, as these effects are anti-dilutive.
|
|
|
|
19.
|
Separate Financial Information of Guarantor Subsidiaries
|
The following condensed consolidated guarantor financial information is presented to comply with the requirements of Rule 3-10 of Regulation S-X.
In 2017, we issued and sold
$300.0 million
in aggregate principal amount of our
5.625%
Senior Notes due 2025 (the "Notes), pursuant to an Indenture, dated as of April 18, 2017, among the company, the Guarantors (as defined below), and Wells Fargo Bank, National Association, a national banking association, as trustee. The Notes are unconditionally and jointly and severally guaranteed by Tennant Coatings, Inc. and Tennant Sales and Service Company (collectively, the "Guarantors"), which are wholly owned subsidiaries of the company.
The Notes and the guarantees constitute senior unsecured obligations of the company and the Guarantors, respectively. The Notes and the guarantees, respectively, are: (a) equal in right of payment with all of the company’s and the Guarantors’ senior debt, without giving effect to collateral arrangements; (b) senior in right of payment to all of the company’s and the Guarantors’ future subordinated debt, if any; (c) effectively subordinated in right of payment to all of the company’s and the Guarantors’ debt and obligations that are secured, including borrowings under the company’s senior secured credit facilities for so long as the senior secured credit facilities are secured, to the extent of the value of the assets securing such liens; and (d) structurally subordinated in right of payment to all liabilities (including trade payables) of the company’s and the Guarantors’ subsidiaries that do not guarantee the Notes.
The following condensed consolidated financial information presents the Condensed Consolidated Statements of Earnings and the Condensed Consolidated Statements of Comprehensive Income for each of the
three
months ended
March 31, 2019
and
March 31, 2018
, the related Condensed Consolidated Balance Sheets as of
March 31, 2019
and
December 31, 2018
, and the
related Condensed Consolidated Statements of Cash Flows for the
three
months ended
March 31, 2019
and
March 31, 2018
, of Tennant Company ("Parent"), the Guarantor Subsidiaries on a combined basis, the Non-Guarantor Subsidiaries on a combined basis and elimination entries necessary to consolidate the Parent with the Guarantor and Non-Guarantor Subsidiaries. The following condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the company and notes thereto of which this note is an integral part.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statement of Earnings
|
|
For the three months ended March 31, 2019
|
|
(in millions)
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total Tennant Company
|
|
Net Sales
|
$
|
116.5
|
|
|
$
|
148.4
|
|
|
$
|
133.3
|
|
|
$
|
(135.7
|
)
|
|
$
|
262.5
|
|
|
Cost of Sales
|
76.5
|
|
|
123.0
|
|
|
88.8
|
|
|
(134.0
|
)
|
|
154.3
|
|
|
Gross Profit
|
40.0
|
|
|
25.4
|
|
|
44.5
|
|
|
(1.7
|
)
|
|
108.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expense:
|
|
|
|
|
|
|
|
|
|
|
Research and Development Expense
|
5.6
|
|
|
0.2
|
|
|
1.4
|
|
|
—
|
|
|
7.2
|
|
|
Selling and Administrative Expense
|
27.2
|
|
|
19.0
|
|
|
44.0
|
|
|
—
|
|
|
90.2
|
|
|
Total Operating Expense
|
32.8
|
|
|
19.2
|
|
|
45.4
|
|
|
—
|
|
|
97.4
|
|
|
Profit from Operations
|
7.2
|
|
|
6.2
|
|
|
(0.9
|
)
|
|
(1.7
|
)
|
|
10.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
Equity in Earnings of Affiliates
|
0.3
|
|
|
0.8
|
|
|
1.4
|
|
|
(2.5
|
)
|
|
—
|
|
|
Interest (Expense) Income, Net
|
(4.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.2
|
)
|
|
Intercompany Interest Income (Expense)
|
3.5
|
|
|
(1.4
|
)
|
|
(2.1
|
)
|
|
—
|
|
|
—
|
|
|
Net Foreign Currency Transaction Gains (Losses)
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|
Other Expense, Net
|
(0.2
|
)
|
|
(0.4
|
)
|
|
0.4
|
|
|
—
|
|
|
(0.2
|
)
|
|
Total Other Expense, Net
|
(0.6
|
)
|
|
(1.0
|
)
|
|
(0.1
|
)
|
|
(2.5
|
)
|
|
(4.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit Before Income Taxes
|
6.6
|
|
|
5.2
|
|
|
(1.0
|
)
|
|
(4.2
|
)
|
|
6.6
|
|
|
Income Tax Expense
|
1.2
|
|
|
1.1
|
|
|
1.0
|
|
|
(2.1
|
)
|
|
1.2
|
|
|
Net Earnings Including Noncontrolling Interest
|
5.4
|
|
|
4.1
|
|
|
(2.0
|
)
|
|
(2.1
|
)
|
|
5.4
|
|
|
Net Earnings Attributable to Tennant Company
|
$
|
5.4
|
|
|
$
|
4.1
|
|
|
$
|
(2.0
|
)
|
|
$
|
(2.1
|
)
|
|
$
|
5.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statement of Earnings
|
|
For the three months ended March 31, 2018
|
|
(in millions)
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total Tennant Company
|
|
Net Sales
|
$
|
113.7
|
|
|
$
|
148.4
|
|
|
$
|
140.4
|
|
|
$
|
(129.7
|
)
|
|
$
|
272.8
|
|
|
Cost of Sales
|
77.2
|
|
|
123.1
|
|
|
91.8
|
|
|
(128.4
|
)
|
|
163.7
|
|
|
Gross Profit
|
36.5
|
|
|
25.3
|
|
|
48.6
|
|
|
(1.3
|
)
|
|
109.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expense:
|
|
|
|
|
|
|
|
|
|
|
Research and Development Expense
|
6.1
|
|
|
0.2
|
|
|
1.7
|
|
|
—
|
|
|
8.0
|
|
|
Selling and Administrative Expense
|
29.1
|
|
|
19.7
|
|
|
41.9
|
|
|
—
|
|
|
90.7
|
|
|
Total Operating Expense
|
35.2
|
|
|
19.9
|
|
|
43.6
|
|
|
—
|
|
|
98.7
|
|
|
Profit (Loss) from Operations
|
1.3
|
|
|
5.4
|
|
|
5.0
|
|
|
(1.3
|
)
|
|
10.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
Equity in Earnings of Affiliates
|
4.4
|
|
|
0.5
|
|
|
2.6
|
|
|
(7.5
|
)
|
|
—
|
|
|
Interest Expense, Net
|
(5.1
|
)
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
(5.0
|
)
|
|
Intercompany Interest Income (Expense)
|
3.7
|
|
|
(1.4
|
)
|
|
(2.3
|
)
|
|
—
|
|
|
—
|
|
|
Net Foreign Currency Transaction Gains (Losses)
|
0.4
|
|
|
—
|
|
|
(1.1
|
)
|
|
—
|
|
|
(0.7
|
)
|
|
Other Expense, Net
|
(0.3
|
)
|
|
(0.6
|
)
|
|
0.6
|
|
|
—
|
|
|
(0.3
|
)
|
|
Total Other Expense, Net
|
3.1
|
|
|
(1.5
|
)
|
|
(0.1
|
)
|
|
(7.5
|
)
|
|
(6.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit Before Income Taxes
|
4.4
|
|
|
3.9
|
|
|
4.9
|
|
|
(8.8
|
)
|
|
4.4
|
|
|
Income Tax Expense
|
1.1
|
|
|
0.9
|
|
|
1.6
|
|
|
(2.5
|
)
|
|
1.1
|
|
|
Net Earnings Including Noncontrolling Interest
|
3.3
|
|
|
3.0
|
|
|
3.3
|
|
|
(6.3
|
)
|
|
3.3
|
|
|
Net Earnings Attributable to Tennant Company
|
$
|
3.3
|
|
|
$
|
3.0
|
|
|
$
|
3.3
|
|
|
$
|
(6.3
|
)
|
|
$
|
3.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statement of Comprehensive Income
|
|
For the three months ended March 31, 2019
|
|
(in millions)
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total Tennant Company
|
|
Net Earnings Including Noncontrolling Interest
|
$
|
5.4
|
|
|
$
|
4.1
|
|
|
$
|
(2.0
|
)
|
|
$
|
(2.1
|
)
|
|
$
|
5.4
|
|
|
Other Comprehensive Loss:
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
(2.3
|
)
|
|
—
|
|
|
(22.6
|
)
|
|
22.6
|
|
|
(2.3
|
)
|
|
Pension and retiree medical benefits
|
—
|
|
|
—
|
|
|
1.2
|
|
|
(1.2
|
)
|
|
—
|
|
|
Cash flow hedge
|
1.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.4
|
|
|
Income Taxes:
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
(0.1
|
)
|
|
—
|
|
|
0.1
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
|
Pension and retiree medical benefits
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
|
0.3
|
|
|
—
|
|
|
Cash flow hedge
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
|
Total Other Comprehensive Loss, net of tax
|
(1.3
|
)
|
|
—
|
|
|
(21.6
|
)
|
|
21.6
|
|
|
(1.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Comprehensive Income (Loss) Including Noncontrolling Interest
|
4.1
|
|
|
4.1
|
|
|
(23.6
|
)
|
|
19.5
|
|
|
4.1
|
|
|
Comprehensive Income (Loss) Attributable to Tennant Company
|
$
|
4.1
|
|
|
$
|
4.1
|
|
|
$
|
(23.6
|
)
|
|
$
|
19.5
|
|
|
$
|
4.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statement of Comprehensive Income
|
|
For the three months ended March 31, 2018
|
|
(in millions)
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total Tennant Company
|
|
Net Earnings (Loss) Including Noncontrolling Interest
|
$
|
3.3
|
|
|
$
|
3.0
|
|
|
$
|
3.3
|
|
|
$
|
(6.3
|
)
|
|
$
|
3.3
|
|
|
Other Comprehensive Income (Loss):
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
8.4
|
|
|
(0.2
|
)
|
|
7.9
|
|
|
(7.7
|
)
|
|
8.4
|
|
|
Pension and retiree medical benefits
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
Cash flow hedge
|
(2.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.7
|
)
|
|
Income Taxes:
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Pension and retiree medical benefits
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
Cash flow hedge
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
|
Total Other Comprehensive Income (Loss), net of tax
|
5.1
|
|
|
(0.2
|
)
|
|
7.9
|
|
|
(7.7
|
)
|
|
5.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Comprehensive Income Including Noncontrolling Interest
|
8.4
|
|
|
2.8
|
|
|
11.2
|
|
|
(14.0
|
)
|
|
8.4
|
|
|
Comprehensive Income Attributable to Tennant Company
|
$
|
8.4
|
|
|
$
|
2.8
|
|
|
$
|
11.2
|
|
|
$
|
(14.0
|
)
|
|
$
|
8.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Balance Sheet
|
|
As of March 31, 2019
|
|
(in millions)
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total Tennant Company
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
Cash, Cash Equivalents, and Restricted Cash
|
$
|
9.8
|
|
|
$
|
1.1
|
|
|
$
|
36.0
|
|
|
$
|
—
|
|
|
$
|
46.9
|
|
|
Net Receivables
|
1.0
|
|
|
89.7
|
|
|
123.0
|
|
|
—
|
|
|
213.7
|
|
|
Intercompany Receivables
|
30.6
|
|
|
125.1
|
|
|
—
|
|
|
(155.7
|
)
|
|
—
|
|
|
Inventories
|
41.6
|
|
|
17.9
|
|
|
110.5
|
|
|
(11.8
|
)
|
|
158.2
|
|
|
Prepaid and Other Current Assets
|
20.0
|
|
|
0.9
|
|
|
12.1
|
|
|
0.6
|
|
|
33.6
|
|
|
Total Current Assets
|
103.0
|
|
|
234.7
|
|
|
281.6
|
|
|
(166.9
|
)
|
|
452.4
|
|
|
Property, Plant and Equipment
|
246.2
|
|
|
13.1
|
|
|
146.4
|
|
|
—
|
|
|
405.7
|
|
|
Accumulated Depreciation
|
(163.4
|
)
|
|
(6.6
|
)
|
|
(60.8
|
)
|
|
—
|
|
|
(230.8
|
)
|
|
Property, Plant and Equipment, Net
|
82.8
|
|
|
6.5
|
|
|
85.6
|
|
|
—
|
|
|
174.9
|
|
|
Operating Lease Assets
|
1.0
|
|
|
9.9
|
|
|
29.8
|
|
|
—
|
|
|
40.7
|
|
|
Investment in Affiliates
|
403.4
|
|
|
12.8
|
|
|
38.9
|
|
|
(455.1
|
)
|
|
—
|
|
|
Intercompany Loans
|
298.4
|
|
|
—
|
|
|
—
|
|
|
(298.4
|
)
|
|
—
|
|
|
Goodwill
|
12.9
|
|
|
1.7
|
|
|
175.1
|
|
|
—
|
|
|
189.7
|
|
|
Intangible Assets, Net
|
3.8
|
|
|
2.6
|
|
|
149.6
|
|
|
—
|
|
|
156.0
|
|
|
Other Assets
|
6.1
|
|
|
3.3
|
|
|
17.6
|
|
|
—
|
|
|
27.0
|
|
|
Total Assets
|
$
|
911.4
|
|
|
$
|
271.5
|
|
|
$
|
778.2
|
|
|
$
|
(920.4
|
)
|
|
$
|
1,040.7
|
|
|
LIABILITIES AND TOTAL EQUITY
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
Current Portion of Long-Term Debt
|
$
|
28.9
|
|
|
$
|
—
|
|
|
$
|
1.2
|
|
|
$
|
—
|
|
|
$
|
30.1
|
|
|
Accounts Payable
|
36.2
|
|
|
5.1
|
|
|
53.6
|
|
|
—
|
|
|
94.9
|
|
|
Intercompany Payables
|
125.7
|
|
|
—
|
|
|
30.0
|
|
|
(155.7
|
)
|
|
—
|
|
|
Employee Compensation and Benefits
|
9.9
|
|
|
8.1
|
|
|
23.6
|
|
|
—
|
|
|
41.6
|
|
|
Other Current Liabilities
|
26.7
|
|
|
18.4
|
|
|
54.9
|
|
|
0.6
|
|
|
100.6
|
|
|
Total Current Liabilities
|
227.4
|
|
|
31.6
|
|
|
163.3
|
|
|
(155.1
|
)
|
|
267.2
|
|
|
Long-Term Liabilities:
|
|
|
|
|
|
|
|
|
|
|
Long-Term Debt
|
328.6
|
|
|
—
|
|
|
1.5
|
|
|
—
|
|
|
330.1
|
|
|
Intercompany Loans
|
3.4
|
|
|
128.0
|
|
|
167.0
|
|
|
(298.4
|
)
|
|
—
|
|
|
Long-Term Operating Lease Liabilities
|
0.5
|
|
|
4.8
|
|
|
19.4
|
|
|
—
|
|
|
24.7
|
|
|
Employee-Related Benefits
|
11.3
|
|
|
1.5
|
|
|
7.8
|
|
|
—
|
|
|
20.6
|
|
|
Deferred Income Taxes
|
—
|
|
|
—
|
|
|
46.2
|
|
|
—
|
|
|
46.2
|
|
|
Other Liabilities
|
20.0
|
|
|
3.1
|
|
|
8.6
|
|
|
—
|
|
|
31.7
|
|
|
Total Long-Term Liabilities
|
363.8
|
|
|
137.4
|
|
|
250.5
|
|
|
(298.4
|
)
|
|
453.3
|
|
|
Total Liabilities
|
591.2
|
|
|
169.0
|
|
|
413.8
|
|
|
(453.5
|
)
|
|
720.5
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
6.8
|
|
|
—
|
|
|
11.1
|
|
|
(11.1
|
)
|
|
6.8
|
|
|
Additional Paid-In Capital
|
32.0
|
|
|
77.6
|
|
|
416.9
|
|
|
(494.5
|
)
|
|
32.0
|
|
|
Retained Earnings
|
317.7
|
|
|
26.5
|
|
|
(4.5
|
)
|
|
(22.0
|
)
|
|
317.7
|
|
|
Accumulated Other Comprehensive Loss
|
(38.5
|
)
|
|
(1.6
|
)
|
|
(61.3
|
)
|
|
62.9
|
|
|
(38.5
|
)
|
|
Total Tennant Company Shareholders' Equity
|
318.0
|
|
|
102.5
|
|
|
362.2
|
|
|
(464.7
|
)
|
|
318.0
|
|
|
Noncontrolling Interest
|
2.2
|
|
|
—
|
|
|
2.2
|
|
|
(2.2
|
)
|
|
2.2
|
|
|
Total Equity
|
320.2
|
|
|
102.5
|
|
|
364.4
|
|
|
(466.9
|
)
|
|
320.2
|
|
|
Total Liabilities and Total Equity
|
$
|
911.4
|
|
|
$
|
271.5
|
|
|
$
|
778.2
|
|
|
$
|
(920.4
|
)
|
|
$
|
1,040.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Balance Sheet
|
|
As of December 31, 2018
|
|
(in millions)
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total Tennant Company
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
Cash, Cash Equivalents, and Restricted Cash
|
$
|
24.8
|
|
|
$
|
1.6
|
|
|
$
|
59.7
|
|
|
$
|
—
|
|
|
$
|
86.1
|
|
|
Net Receivables
|
0.9
|
|
|
94.8
|
|
|
120.5
|
|
|
—
|
|
|
216.2
|
|
|
Intercompany Receivables
|
30.0
|
|
|
148.9
|
|
|
—
|
|
|
(178.9
|
)
|
|
—
|
|
|
Inventories
|
37.1
|
|
|
13.4
|
|
|
94.7
|
|
|
(10.1
|
)
|
|
135.1
|
|
|
Prepaid and Other Current Assets
|
17.5
|
|
|
1.2
|
|
|
13.0
|
|
|
(0.5
|
)
|
|
31.2
|
|
|
Total Current Assets
|
110.3
|
|
|
259.9
|
|
|
287.9
|
|
|
(189.5
|
)
|
|
468.6
|
|
|
Property, Plant and Equipment
|
229.8
|
|
|
12.7
|
|
|
144.1
|
|
|
—
|
|
|
386.6
|
|
|
Accumulated Depreciation
|
(159.4
|
)
|
|
(6.9
|
)
|
|
(56.9
|
)
|
|
—
|
|
|
(223.2
|
)
|
|
Property, Plant and Equipment, Net
|
70.4
|
|
|
5.8
|
|
|
87.2
|
|
|
—
|
|
|
163.4
|
|
|
Operating Lease Assets
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Investment in Affiliates
|
421.0
|
|
|
12.1
|
|
|
20.8
|
|
|
(453.9
|
)
|
|
—
|
|
|
Intercompany Loans
|
301.6
|
|
|
—
|
|
|
3.2
|
|
|
(304.8
|
)
|
|
—
|
|
|
Goodwill
|
12.9
|
|
|
1.7
|
|
|
168.1
|
|
|
—
|
|
|
182.7
|
|
|
Intangible Assets, Net
|
4.0
|
|
|
2.7
|
|
|
139.8
|
|
|
—
|
|
|
146.5
|
|
|
Other Assets
|
11.0
|
|
|
3.1
|
|
|
17.2
|
|
|
—
|
|
|
31.3
|
|
|
Total Assets
|
$
|
931.2
|
|
|
$
|
285.3
|
|
|
$
|
724.2
|
|
|
$
|
(948.2
|
)
|
|
$
|
992.5
|
|
|
LIABILITIES AND TOTAL EQUITY
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
Current Portion of Long-Term Debt
|
$
|
21.8
|
|
|
$
|
—
|
|
|
$
|
5.2
|
|
|
$
|
—
|
|
|
$
|
27.0
|
|
|
Accounts Payable
|
41.0
|
|
|
5.0
|
|
|
52.4
|
|
|
—
|
|
|
98.4
|
|
|
Intercompany Payables
|
149.5
|
|
|
—
|
|
|
29.5
|
|
|
(179.0
|
)
|
|
—
|
|
|
Employee Compensation and Benefits
|
14.4
|
|
|
17.2
|
|
|
24.5
|
|
|
—
|
|
|
56.1
|
|
|
Other Current Liabilities
|
22.8
|
|
|
17.6
|
|
|
27.5
|
|
|
(0.5
|
)
|
|
67.4
|
|
|
Total Current Liabilities
|
249.5
|
|
|
39.8
|
|
|
139.1
|
|
|
(179.5
|
)
|
|
248.9
|
|
|
Long-Term Liabilities:
|
|
|
|
|
|
|
|
|
|
|
Long-Term Debt
|
326.5
|
|
|
—
|
|
|
1.6
|
|
|
—
|
|
|
328.1
|
|
|
Intercompany Loans
|
3.3
|
|
|
128.1
|
|
|
173.5
|
|
|
(304.9
|
)
|
|
—
|
|
|
Long-Term Operating Lease Liabilities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Employee-Related Benefits
|
11.0
|
|
|
2.0
|
|
|
8.1
|
|
|
—
|
|
|
21.1
|
|
|
Deferred Income Taxes
|
—
|
|
|
—
|
|
|
46.0
|
|
|
—
|
|
|
46.0
|
|
|
Other Liabilities
|
24.6
|
|
|
2.9
|
|
|
4.6
|
|
|
—
|
|
|
32.1
|
|
|
Total Long-Term Liabilities
|
365.4
|
|
|
133.0
|
|
|
233.8
|
|
|
(304.9
|
)
|
|
427.3
|
|
|
Total Liabilities
|
614.9
|
|
|
172.8
|
|
|
372.9
|
|
|
(484.4
|
)
|
|
676.2
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
6.8
|
|
|
—
|
|
|
11.1
|
|
|
(11.1
|
)
|
|
6.8
|
|
|
Additional Paid-In Capital
|
28.5
|
|
|
77.5
|
|
|
399.5
|
|
|
(477.0
|
)
|
|
28.5
|
|
|
Retained Earnings
|
316.3
|
|
|
36.6
|
|
|
(2.5
|
)
|
|
(34.1
|
)
|
|
316.3
|
|
|
Accumulated Other Comprehensive Loss
|
(37.2
|
)
|
|
(1.6
|
)
|
|
(58.7
|
)
|
|
60.3
|
|
|
(37.2
|
)
|
|
Total Tennant Company Shareholders' Equity
|
314.4
|
|
|
112.5
|
|
|
349.4
|
|
|
(461.9
|
)
|
|
314.4
|
|
|
Noncontrolling Interest
|
1.9
|
|
|
—
|
|
|
1.9
|
|
|
(1.9
|
)
|
|
1.9
|
|
|
Total Equity
|
316.3
|
|
|
112.5
|
|
|
351.3
|
|
|
(463.8
|
)
|
|
316.3
|
|
|
Total Liabilities and Total Equity
|
$
|
931.2
|
|
|
$
|
285.3
|
|
|
$
|
724.2
|
|
|
$
|
(948.2
|
)
|
|
$
|
992.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statement of Cash Flows
|
|
For the three months ended March 31, 2019
|
|
(in millions)
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total Tennant Company
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by (Used in) Operating Activities
|
$
|
(4.2
|
)
|
|
$
|
(0.4
|
)
|
|
$
|
(7.0
|
)
|
|
$
|
—
|
|
|
$
|
(11.6
|
)
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Purchases of Property, Plant and Equipment
|
(16.6
|
)
|
|
(0.1
|
)
|
|
(3.8
|
)
|
|
—
|
|
|
(20.5
|
)
|
|
Proceeds from Principal Payments Received on Long-Term Note Receivable
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|
Acquisition of Businesses, Net of Cash, Cash Equivalents and Restricted Cash Acquired
|
—
|
|
|
—
|
|
|
(9.0
|
)
|
|
—
|
|
|
(9.0
|
)
|
|
Purchase of Intangible Assets
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
(0.2
|
)
|
|
Loan Payments from Parent
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
0.2
|
|
|
—
|
|
|
Net Cash Used in Investing Activities
|
(16.6
|
)
|
|
(0.1
|
)
|
|
(13.1
|
)
|
|
0.2
|
|
|
(29.6
|
)
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Proceeds from Credit Facility Borrowings
|
13.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13.0
|
|
|
Repayments of Debt
|
(4.0
|
)
|
|
—
|
|
|
(4.0
|
)
|
|
—
|
|
|
(8.0
|
)
|
|
Change in Finance Lease Obligations
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
Loan Payments to Subsidiaries
|
0.2
|
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
Proceeds from Issuances of Common Stock
|
0.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.6
|
|
|
Dividends Paid
|
(4.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.0
|
)
|
|
Net Cash (Used in) Provided by Financing Activities
|
5.8
|
|
|
—
|
|
|
(4.1
|
)
|
|
(0.2
|
)
|
|
1.5
|
|
|
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash
|
—
|
|
|
—
|
|
|
0.5
|
|
|
—
|
|
|
0.5
|
|
|
Net Decrease in Cash, Cash Equivalents and Restricted Cash
|
(15.0
|
)
|
|
(0.5
|
)
|
|
(23.7
|
)
|
|
—
|
|
|
(39.2
|
)
|
|
Cash, Cash Equivalents and Restricted Cash at Beginning of Period
|
24.8
|
|
|
1.6
|
|
|
59.7
|
|
|
—
|
|
|
86.1
|
|
|
Cash, Cash Equivalents and Restricted Cash at End of Period
|
$
|
9.8
|
|
|
$
|
1.1
|
|
|
$
|
36.0
|
|
|
$
|
—
|
|
|
$
|
46.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statement of Cash Flows
|
|
For the three months ended March 31, 2018
|
|
(in millions)
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total Tennant Company
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Net Cash (Used in) Provided by Operating Activities
|
$
|
5.8
|
|
|
$
|
1.8
|
|
|
$
|
(2.1
|
)
|
|
$
|
—
|
|
|
$
|
5.5
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Purchases of Property, Plant and Equipment
|
(0.4
|
)
|
|
(0.2
|
)
|
|
(2.9
|
)
|
|
—
|
|
|
(3.5
|
)
|
|
Proceeds from Principal Payments Received on Long-Term Note Receivable
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|
Purchase of Intangible Asset
|
(1.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.0
|
)
|
|
Loan (Payments) Borrowings from Subsidiaries
|
(1.3
|
)
|
|
—
|
|
|
—
|
|
|
1.3
|
|
|
—
|
|
|
Net Cash Used in Investing Activities
|
(2.7
|
)
|
|
(0.2
|
)
|
|
(2.7
|
)
|
|
1.3
|
|
|
(4.3
|
)
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Loan Borrowings (Payments) from Parent
|
—
|
|
|
—
|
|
|
1.3
|
|
|
(1.3
|
)
|
|
—
|
|
|
Repayment of Debt
|
(3.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.9
|
)
|
|
Change in Finance Lease Obligations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Payments of Debt Issuance Costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Proceeds from Issuance of Common Stock
|
0.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.8
|
|
|
Dividends Paid
|
(3.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.8
|
)
|
|
Net Cash (Used in) Provided by Financing Activities
|
(6.9
|
)
|
|
—
|
|
|
1.3
|
|
|
(1.3
|
)
|
|
(6.9
|
)
|
|
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash
|
0.1
|
|
|
—
|
|
|
1.2
|
|
|
—
|
|
|
1.3
|
|
|
Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash
|
(3.7
|
)
|
|
1.6
|
|
|
(2.3
|
)
|
|
—
|
|
|
(4.4
|
)
|
|
Cash, Cash Equivalents and Restricted Cash at Beginning of Period
|
18.4
|
|
|
0.5
|
|
|
40.1
|
|
|
—
|
|
|
59.0
|
|
|
Cash, Cash Equivalents and Restricted Cash at End of Period
|
$
|
14.7
|
|
|
$
|
2.1
|
|
|
$
|
37.8
|
|
|
$
|
—
|
|
|
$
|
54.6
|
|