UNITED STATES
FORM 10-K
For the fiscal year ended December 31, 2018
2021, or
to to_________
Gardner Denver Holdings, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware | 46-2393770 | ||||
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | ||||
Securities Registered Pursuant to Section 12(b) of the Act: Securities Registered Pursuant to Section 12(g) of the Act: None If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 18, 2022 PART I name from Gardner Denver Holdings, Inc. to Ingersoll Rand Inc. We are driven by an entrepreneurial spirit and ownership mindset, dedicated to helping make life better for our employees, customers and communities. manufacturing facilities, 2021. 2021. the HPS and SVT transactions described in Note 3 “ We design, manufacture and market a broad range of We focus on five basic types of air compression technologies: rotary screw, reciprocating piston, scroll, rotary vane and centrifugal compressors. Rotary screw compressors are a newer technology than reciprocating compressors and exhibit better suitability for continuous processes due to a more compact size, less maintenance and better noise profile. We believe our reciprocating piston compressors provide one of the broadest ranges of pressures in the market and are supported by increasing demand across wide-ranging attractive end-markets. Scroll compressors are most commonly seen where less oil-free air is needed, and is most commonly used in medical and food applications where the need for pure, clean and precise air is of great importance. Rotary vane compressors feature high efficiency, compact compression technology and can be found throughout all sectors of industry, including automotive, food and beverage, energy and manufacturing with Services Customers and Customer Service generally available from a number of suppliers. We have a limited number of long-term contracts with some suppliers of key components, but we believe that our sources of raw materials and components are reliable and adequate for our needs. In response to recent tightness in the supply chain and in order to improve continuity of supply, for select materials and components, we have expanded our supplier network in areas we have historically sole sourced. We continue to use single sources of supply for certain castings, motors and other select engineered components. A disruption in deliveries from a given supplier could therefore have an adverse effect on our ability to meet commitments to our customers. Nevertheless, we believe that we have appropriately balanced this risk against the cost of maintaining a greater number of suppliers. Moreover, we have sought, and will continue to seek, cost reductions in purchases of materials and supplies by consolidating purchases and pursuing alternate sources of supply. Our results of operations are subject to exchange rate and other currency risks. A significant movement in exchange rates could adversely impact our results of operations and cash flows. We face competition in the markets we serve, which could materially and adversely affect our operating results. Information systems failure or disruption, due to cyber terrorism or other actions, may We face risks associated with our pension and other postretirement benefit obligations. industries in which we compete; placing us at a disadvantage compared to other, less leveraged competitors; increasing our cost of borrowing; and hampering our ability to execute on our growth strategy. For a complete description of the Company’s credit facilities and definitions of capitalized terms used in this section, see Note cross-acceleration or cross-default provision applies. In addition, an event of default under the credit agreement governing our Senior Secured Credit Facilities would permit the lenders under our Revolving Credit Facility to terminate all commitments to extend further credit under that facility. Furthermore, if we were unable to repay the amounts due and payable under our Senior Secured Credit Facilities, those lenders could proceed against the collateral granted to them to secure that indebtedness. In the event our lenders or noteholders accelerate the repayment of our borrowings and/or interest, we and our subsidiaries may not have sufficient assets to repay that indebtedness. Of the 118 significant properties included in the above table, 68 of the properties are leased and 50 of the properties are owned. We believe that our properties, taken as a whole, are in good operating condition and are suitable for our business operations. Market Information The following discussion contains management’s discussion and analysis of our financial condition and results of operations and should be read together with 2021. Components of Our Revenue and Expenses Cost of Sales internally developed software. Other Operating Expense, Net In period. 2020. See Note How We Assess the Performance of Our Business EBITDA using corresponding prior period exchange rates. These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP. Results on a Constant Currency basis, as we present them, may not be comparable to similarly titled measures used by other companies and are not a measure of performance presented in accordance with GAAP. Measures” below. Revenues for 2021. acquisitions, including Ingersoll Rand Industrial, and increased incentive compensation. 2020, which was related to the refinancing of the Original Dollar Term Loan and the Original Euro Term Loan. See Note 11 “Debt” to our audited consolidated financial statements included elsewhere in this Form 10-K for further details. 2021. The benefit for income taxes was credit utilization. administrative expenses. Services segment. adjusted and lower interest expense. adjusted for each of the periods presented below consists of the following. We evaluate the performance of our segments based on Segment Revenues and Segment Adjusted EBITDA. Segment Adjusted EBITDA is indicative of operational performance and ongoing profitability. Our management closely monitors Segment Adjusted EBITDA to evaluate past performance and identify actions required to improve profitability. 2020 2020 2020. 2020 Segment Adjusted EBITDA in Unaudited Quarterly Results of Operations Represents stock-based compensation expense recognized for the year ended December 31, Liquidity and Capital Resources unsecured borrowings, subject to Credit Agreement restrictions. $1,093.4 million. A substantial portion of our liquidity needs arise from debt service requirements, and from the ongoing cost of operations, working capital and capital expenditures. 10-K for further details. Working Capital order contracts. Operating activities capital partially offset by higher income from continuing operations. 2020. $23.7 million. discontinued operations. We are a party to various legal proceedings, lawsuits and administrative actions, which are of an ordinary or routine nature for a company of our size and in our sector. We believe that such proceedings, lawsuits and administrative actions will not materially adversely affect our operations, financial condition, liquidity or competitive position. We have accrued liabilities and other liabilities on our consolidated balance sheet, Policies units, except a single reporting unit in which we determined it most appropriate to assume an 2.0% terminal growth rate due to it being closely aligned to the GDP percentage growth rate. application of the market multiples method entails the development of book value multiples based on the market value of the guideline companies. The multiples are developed by first calculating the market value of equity of the guideline companies and then adjusting these multiples for cash and debt to arrive at a BEV multiple. Identifying appropriate guideline companies and computing appropriate market multiples is subjective. We considered various public companies that had reasonably similar qualitative factors as our reporting units while also considering quantitative factors such as revenue growth, profitability and total assets. impairments were identified. As a result of this test, there were no impairments recognized during the year ended December 31, 2021. Under U.S. GAAP, attributes. both the likelihood of potential loss and whether it is possible to reasonably estimate a range of possible loss. When a loss is probable but a reasonable estimate cannot be made, disclosure is provided. Foreign Currency Risk at least quarterly. INGERSOLL RAND INC. AND SUBSIDIARIES 2020 include the financial results of Ingersoll Rand Industrial from the date of acquisition. additional information regarding revenue recognition. customer-specific information, current market conditions and reasonable and supportable forecasts of future events and economic conditions. Goodwill and Indefinite-Lived Intangible Assets legal infringement protection. Warranty Reserves amounts previously included in income tax expense and, therefore, could have a material impact on the Company’s tax provision, net income, and cash flows. The Company reviews its liabilities quarterly, and may adjust such liabilities due to proposed assessments by tax authorities, changes in facts and circumstances, issuance of new regulations or new case law, negotiations between tax authorities of different countries concerning transfer prices, the resolution of audits, or the expiration of statutes of limitations. Adjustments are most likely to occur in the year during which major audits are closed. Act. hedge, the gain or loss on the derivative and the offsetting loss or gain on the hedged asset, liability, or firm commitment are recognized in earnings. For derivative instruments designated as a cash flow hedge or an eligible net investment in a foreign operation, the effective portion of the gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive income and reclassified to earnings in the same period that the hedged transaction affects earnings. The ineffective portion of the gain or loss is immediately recognized in earnings. Gains or losses on derivative instruments recognized in earnings are reported in the same line item as the associated hedged transaction in the Consolidated Statements of Operations. interest as of the acquisition date at fair value. The excess, if any, of total consideration transferred in a business combination over the fair value of identifiable assets acquired, liabilities assumed, and any non-controlling interest is recognized as goodwill in the Consolidated Balance Sheets. Costs incurred by the Company to effect a business combination other than costs related to the issuance of debt or equity securities are included in the Consolidated Statements of Operations in the period the costs are incurred. statements. Acquisition Revenues and Operating Income following. Restructuring Program 2018 to 2019 Credit Losses Note The Company acquired over the estimated fair values of intangible assets, identifiable assets and assumed liabilities was recorded as goodwill. The allocation of the purchase price was preliminary for certain of these acquisitions and is subject to refinement based on final fair values of the identified assets acquired and liabilities assumed. The goodwill attributable to these businesses is as follows. Other Intangible Assets 2021. Note Senior Secured Credit Facilities The swingline loans. The proceeds were expected to be used for general business purposes, including providing incremental liquidity in the event of a prolonged adverse impact of the COVID-19 pandemic. On September 30, 2021, the Company elected to prepay the Dollar Term Loan Series A outstanding principal balance of 0.50% Agreement. period, provided that (i) any voluntary prepayment of the Dollar Term Loan, the Dollar Term Loan B or the Euro Term Loan prior to August 28, 2020, in connection with a repricing transaction would have been subject to a prepayment premium of 1.00% of the principal amount so prepaid and (ii) any voluntary prepayment of Dollar Term Loan Series A prior to December 29, 2020, in connection with a repricing transaction would have been subject to a prepayment premium of 1.00% of the principal amount so prepaid. Guarantee and Security 6.25 to 1.00 as of the last day of the fiscal quarter. Total Debt Maturities The following table provides a reconciliation of the changes in the benefit obligations The following table provides information for pension plans with an accumulated benefit obligation in excess of plan assets as of December 31, The discount rate selected to measure the present value of the Company’s benefit obligations was derived by examining the rates of high-quality, fixed income securities whose cash flows or duration match the timing and amount of expected benefit payments under a plan. The Company selects the expected long-term rate of return on plan assets in consultation with the plans’ actuaries. This rate is intended to reflect the expected average rate of earnings on the funds invested or to be invested to provide plan benefits and the Company’s most recent plan assets target allocations. The following The following actuarial assumptions were used to determine other postretirement benefit plans costs and obligations for the years ended December 31, The following table reflects the estimated benefit payments for the next five years and for the years Fair Value Measurements Defined Contribution Plans and Noncontrolling Interests The before tax income (loss) Reclassifications out of accumulated other comprehensive income (loss) due at and not a separate performance obligation. If control transfers and related revenue is recognized for the related good before the shipping and handling activities occur, the related costs of those shipping and handling activities are accrued. Contract Balances Customer receivables are recorded at face amount less an allowance for credit losses. The Company maintains an allowance for credit losses as a result of customers’ inability to make required payments. Management evaluates the aging of customer receivable balances, the financial condition of its customers, historical trends and the time outstanding of specific balances to estimate the amount of customer receivables that may not be collected in the future and records the appropriate provision. Of the $166.2 million in contract liabilities as of December 31, 2020, we recognized substantially all as revenue in the year ended December 31, 2021. The U.S. federal corporate statutory rate is reconciled to the Company’s effective income tax rate for the years ended December 31, The Company believes that it is more likely than not that it will realize its deferred tax assets through the reduction of future taxable income, other than for the deferred tax assets reflected below. Tax attributes and related valuation allowances as of December 31, Total unrecognized tax benefits were The statutes of limitations for U.S. Federal tax returns are open Stock-Based Compensation Expense Restricted Stock Unit Awards Derivative Instruments As of December 31, The Company had 2020. settle monthly or quarterly, or mature within one year. Because of these factors, the Company believes it has minimal credit risk related to derivative contracts as of December 31, 2021. The Company assessed indefinite-lived intangible assets, The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis. Note Although the Company has never mined, manufactured, mixed, produced or distributed asbestos fiber or silica sand nor sold products that could result in a direct asbestos or silica exposure, many of the companies that did engage in such activities or produced such products are no longer in operation. This has led to law firms seeking potential alternative companies to name in lawsuits where there has been an asbestos or silica related injury. factors. The actual liabilities or insurance recoveries could be higher or lower than those recorded if actual results vary significantly from the assumptions. There are a number of key variables and assumptions including the number and type of new claims to be filed each year, the resolution or outcome of these claims, the average cost of resolution of each new claim, the amount of insurance available, allocation methodologies, the contractual terms with each insurer with whom the Company has reached settlements, the resolution of coverage issues with other excess insurance carriers with whom the Company has not yet achieved settlements, and the solvency risk with respect to the Company’s insurance carriers. Other factors that may affect the future liability include uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case, legal rulings that may be made by state and federal courts, and the passage of state or federal legislation. The Company makes the necessary adjustments for the asbestos liability and corresponding insurance recoveries on an annual basis unless facts or circumstances warrant assessment as of an interim date. Net A description of the Company’s systems. (4)Represents stock-based compensation expense recognized for the year ended December 31, 2021 of $87.2 million and associated employer taxes of $8.7 million. Represents stock-based compensation expense recognized for the year ended December 31, The following tables provide summarized information about the Company’s reportable segments. Depreciation and Amortization Expense For the year ended December 31, Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 25, 2022 2021. Because of its inherent limitations, internal control over financial reporting may not prevent and detect misstatements. Also, projections of any evaluation of effectiveness of future periods are subject to the risk that controls may become inadequate because of the changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 2021. 2021. The information required by this Item will be included in our definitive proxy statement for the Schedule to Consolidated Financial Statements Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf on the Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on the SCHEDULE 1 – SCHEDULE 1 – SCHEDULE I - completed the acquisition of and merger with Ingersoll Rand Industrial (“Ingersoll Rand Industrial”) and changed its name from Gardner Denver Holdings, Inc. to Ingersoll Rand Inc. 2019. 2020.222 East Erie Street, Suite 500Milwaukee, Wisconsin 53202(414) 212-4700(Code)Code: (704) 655-4000Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered IR New York Stock Exchange o☐o☐ No ☒o☐.Yes . Yes ☒ No oIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒"emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act.Large accelerated filer oo (Do not check if a smaller reporting company) o o☐ oo☐ No ☒registrant’s Common Stockvoting and non-voting common equity held by non-affiliates of the registrant on June 29, 201830, 2021 was approximately $3,155.6 million$18.9 billion based on the closing price of such Common Stockcommon equity on the New York Stock Exchange on such date.198,884,808407,967,909 shares of Common Stock, par value $0.01 per share, as of February 20, 2019.20192022 Annual Meeting of Stockholders are incorporated by reference in Part III of this report.Page
No.PART IIIiITEM 1.BUSINESSGardner Denver Holdings,holding company whose operating subsidiaries are Gardner Denver,diversified, global provider of mission-critical flow creation products and industrial solutions. The accompanying consolidated financial statements include the accounts of Ingersoll Rand Inc. (“GDI”) and certain of GDI’s subsidiaries. The holding company and its consolidatedmajority-owned subsidiaries are collectively(collectively referred to in this Annual Reportherein as “Ingersoll Rand,” “Company,” “we,” “us,” “our,” “ourselves,” “Company,” or “Gardner Denver.”Service marks, trademarks and trade names, and related designs or logotypes owned by“ourselves”).orand Ingersoll Rand Industrialsubsidiaries are shown in italics.leading global providermarket leader with a broad range of innovative and mission-critical flow control and compression equipment and associated aftermarket parts, consumables and services, which we sell across multiple attractive end-markets within the industrial,air, fluid, energy and medical industries.technologies, providing services and solutions to increase industrial productivity and efficiency. We manufacture one of the broadest and most complete ranges of compressor, pump, vacuum and blower products in our markets, which, when combined with our global geographic footprint and application expertise, allows us to provide differentiated product and service offerings to our customers. Our products are sold under a collection of premier,more than 40 market-leading brands, including Ingersoll Rand and Gardner Denver, CompAir, Nash, Emco Wheaton, Robuschi, Elmo Rietschle and Thomas, which we believe are globally recognized in their respective end-markets and known for product quality, reliability, efficiency and superior customer service.155160 years of engineering heritage, generate strong brand loyalty for our products and foster long-standing customer relationships, which we believe have resultedresulting in leading market positions within each of our operating segments. We have sales in more than 175 countriesall major geographic markets and our diverse customer base utilizes our products across a wide array of end-markets, including industrial manufacturing, energy, (with particular exposure to the North American upstream land-based market), transportation, medical and laboratory sciences, food and beverage packaging and chemical processing.4161 key1more than 30approximately 39 complementary service and repair centers across six continents and approximately 6,70016,000 employees worldwide as of December 31, 2018.39%36.2% of total Company revenue and approximately 43%40.7% of our combined IndustrialsIndustrial Technologies and Energy segments’Services segment’s revenue in 2018.Our business is comprisedthree strategic segments.Industrialsservices,services. We primarily sell under the Ingersoll Rand, Gardner Denver, Nash, CompAir, Elmo Rietschle, Robuschi, Emco Wheaton and Runtech Systems brands. Our customers deploy our products across a wide array of technologies and applications for use in diverse end-markets. Compressors are used to increase the pressure of air or gas, vacuum products are used to remove air or gas in order to reduce the pressure below atmospheric levels, and blower products are used to produce a high volume of air or gas at low pressure. Almost every manufacturing and industrial facility, and many service and process industry applications, use air compression, vacuum and blower products in a variety of process-critical applications such as the operation of industrialpneumatic tools, pumps and motion control components, air tools,and gas separation, vacuum packaging of food products and aeration of waste water, among others.We offer one of the broadest portfolios of compression, Our liquid ring vacuum pumps and blower technology in our markets which we believe, alongside our geographic footprint, allows us to provide differentiated service to our customers globally and maintain leading positionscompressors are used in many power generation, mining, oil and gas refining and processing, chemical processing and general industrial applications including flare gas and vapor recovery, geothermal gas removal, vacuum de-aeration, water extraction in mining and paper and chlorine compression in petrochemical operations. Our engineered loading systems and fluid transfer equipment ensure the safe handling and transfer of our end-markets. crude oil, liquefied natural gas, compressed natural gas, chemicals, and bulk materials. Our power tools and lifting equipment portfolio includes electric and cordless fastening systems, pneumatic bolting tools, drilling and material removal tools, hoists, winches and ergonomic handling devices. Typical applications for these products include the precision fastening of bolted joints in the production, assembly and servicing of industrial machinery, on-highway and off-highway vehicles, aircraft, electronics and other equipment. industrial products through an integrated network of direct sales representatives and independent distributors, which is strategically tailored to meet the dynamics of each target geography or end-market. Our large installed base also provides for a significant stream of recurring aftermarket revenue. For example, on average, the useful life of a compressor is, on average, between 10 and 12 years. However, a customer typically services the compressor at regular intervals, starting within the first two years ofcost.Industrial air compressors represent the largest market in which we compete in our Industrials segmentsale price.is a product category for which we believe there is significant potential to drive increased sales of our aftermarket parts, consumables and services. We use our direct salesforce and strong distributor relationships, the majority of which are exclusive to our business for the products that we sell through them, to sell our broad portfolio of aftermarket parts, consumables and services. Within our Industrials segment, we primarily sell through the Gardner Denver, CompAir, Elmo Rietschle and Robuschi brands, as well as other leading brand names.EnergyWe design, manufacture, market and service a diverse range of positive displacement pumps, liquid ring vacuum pumps, compressors and integrated systems, engineered fluid loading and transfer equipment and associated aftermarket parts, consumables and services. The highly engineered products offered by our Energy segment serve customers across upstream, midstream and downstream energy markets, as well as petrochemical processing, transportation and general industrial sectors. We are one of the largest suppliers of equipment and associated aftermarket parts, consumables and services for the energy market applications that we serve.2Our positive displacement pumps are fit-for-purpose to meet the demands and challenges of modern unconventional drilling and hydraulic fracturing activity, particularly in the major basins and shale plays in the North American land market. Our positive displacement pump offering includes mission-critical oil and gas drilling pumps, frac pumps and well servicing pumps, in addition to sales of associated consumables used in the operation of our pumps and aftermarket parts, consumables and services. The products we sell into upstream energy applications are highly aftermarket-intensive, and so we support these products in the field with one of the industry’s most comprehensive service networks, which encompasses locations across all major basins and shale plays in the North American land market. This service network is critical to serving our customers and, by supporting them in the field, to generating demand for new original equipment sales and aftermarket parts, consumables, service and repair sales which in aggregate are often multiples of the cost of the original equipment.Our liquid ring vacuum pumps and compressors are highly engineered products specifically designed for continuous duty in harsh environments to serve a wide range of applications, including oil and gas refining and processing, mining, chemical processing, petrochemical and industrial applications. Our liquid ring technology utilizes a service liquid to evacuate or compress gas by forming a rotating ring of liquid that acts like a piston to deliver an uninterrupted flow of gas without pulsation. In addition, our engineered fluid loading and transfer equipment and systems ensure the safe and efficient transportation and transfer of petroleum products as well as certain other liquid commodity products to serve a wide range of industries. Similar to our positive displacement pumps business, we complement these products with a broad array of aftermarket parts, service and repair capabilities by leveraging our global network of manufacturing and service locations to meet the diverse needs of our customers. Within our Energy segment, we primarily sell through the Gardner Denver, Nash and Emco Wheaton brands, as well as other leading brand names.Medicalhighly specialized gas,highly-specialized positive displacement pumps, fluid management systems, accessories and aftermarket parts that provide liquid and precision syringe pumpsgas dosing, transfer, dispensing, compression, sampling, pressure management and compressors that are specified by medical and laboratory equipment suppliers and integrated into their final equipment for useflow control in applications, such as oxygen therapy, blood dialysis, patient monitoring, laboratory sterilization and wound treatment, among others. We offer a comprehensive product portfolio across a breadth of technologies to address the medical and laboratory sciences pump and fluid handling industry, as well asspecialized or critical applications. Our offerings cover a range of end-use vacuum productspump and flow control technology types. This includes diaphragm pumps, piston pumps, water-powered pumps, peristaltic pumps, gear pumps, vane pumps, progressive cavity pumps, syringe pumps, gas boosters, hydrogen compression systems, automated liquid handling systems, odorant injection systems, controls, software and other related components and accessories. These offerings are sold under brands that are highly recognized in their end markets including Air Dimensions, Albin, ARO, Dosatron, Haskel, LMI, Maximus, Milton Roy, MP, Oberdorfer, Seepex, Thomas, Welch, Williams, Zinnser Analytic and YZ. Our customer base is composed of a wide range of end users in markets including medical, life sciences, industrial manufacturing, water and waste water, chemical processing, energy, food and beverage, agriculture and others. Our sales are realized primarily through a combination of independent specialty and national distributors and relationships directly with original equipment manufacturers (“OEM”), Engineering, Procurement and Construction (“EPC”) companies and end users.laboratory science applications. Our product performance, qualityits majority interest of 55%, the Company received cash of $278.3 million at closing and long-term reliability are often mission-criticalretains a 45% common equity interest in healthcare applications. We are onethe newly-formed entity comprising the HPS business. This transaction was substantially completed on April 1, 2021.largest product suppliersHPS Segment are reflected in our consolidated financial statements as discontinued operations. Refer to Note 3 “Discontinued Operations” to our consolidated financial statements for additional discussion of the sale of the HPS segment.medical markets wedesign and manufacture of positive displacement blowers, mechanical vacuum pumps, vacuum boosters and engineered blower and vacuum systems.have long-standing customer relationships with industry-leading medicalbeverage, and laboratory equipment providers. Additionally, manywastewater markets.We operate in the global markets for flow controlair compression products for the industrial, energyServicesmedical industries. Our highly engineered products and proprietary technologies are focused on serving specialized applications within these attractive and growing industries.IndustrialsOur IndustrialsServices segment designs, manufactures, markets and services a broad range of air compression, vacuum and blower products across a wide array of technologies. Compression, vacuum and blower products are used in a wide spectrum of applications in nearly all manufacturing and industrial facilities and many service and process industries in a variety of end-markets, including infrastructure, construction, transportation, food and beverage packaging and chemical processing.3specialistspecialized solutions within transit, gas and snow making. Centrifugal compressors are most effective when in applications that demand larger quantities of oil-free air and are utilized across a wide range of industries. Management believes that we hold a leading position in our addressable portion of the global vacuum products market.We also design, manufacture, market and service frac sand blowers within our Industrials segment. In many cases, blowers are a core component for the operation of the entire end-users’ systems. Management believes that we hold a leading position in our addressable portion of the global blower products market.EnergyOur Energy segment designs, manufactures, markets and services a diverse rangeUpstreamThrough the manufacture and aftermarket service of pumps and manufacture of associated aftermarket parts and consumables used in drilling, hydraulic fracturing and well servicing applications, our Energy segment is well-positioned to capitalize on an upstream recovery, particularly in the North American land-based market, where our customers include market-leading hydraulic fracturing (also known as pressure pumping) and contract drilling service companies, as well as certain other types of well service companies. Sales to upstream energy end-markets consist of positive displacement pumps and associated aftermarket parts, most notably fluid ends, as well as consumables and services.Positive displacement pumps in the upstream energy end-market primarily move fluid to assist in drilling, hydraulic fracturing and well servicing applications. The majority of positive displacement pumps we sell are frac pumps, which experience significant service intensity during use in the field and, as such, typically have useful life spans of approximately four to six years before needing to be replaced. During that useful life, such pumps will need to receive intermittent repairs as well as major overhauls. In addition, we also sell positive displacement pumps that are used in drilling and well servicing applications.ends are a key component of positive displacement pumps that generate the pumping action, along with other parts, such as plungers, and consumables, such as valves, seats and packing, which pressurizes the fluid, in the case of drilling or well servicing applications, or fluid and proppant mixture, in the case of hydraulic fracturing, and propels such fluid or mixture out of the pump and into a series of flow lines that distribute the fluid or mixture into the well. Fluid ends are incorporated in original equipment pumps, and due to the highly corrosive nature of the fluids and the abrasive nature of the proppants used in hydraulic fracturing operations, need to be frequently replaced.Transfer Equipment ProductsThe level of profitability at which new wells can be drilled is a primary driver of drilling and completions activities, including hydraulic fracturing. Thus, demand for our Energy and Industrials products exposed to the upstream energy industry is driven by the prices of crude oil and natural gas, and the intensity and activity levels of drilling and hydraulic fracturing.Midstream and DownstreamSales to midstream and downstream energy end-markets consist of liquid ring vacuum pumps and compressors and integrated systems, engineered fluid loading and transfer equipment and associated aftermarket parts and services. Our downstream energy business contributes a larger share of revenue and profitability than our midstream energy business.We focus on two basic types of midstream and downstream energy equipment: fluid transfer equipment and liquid ring vacuum pumps and compressors, which are employed in the midstream and downstream markets, respectively.includingproducts includes fluid loading systems, tank truck and fleet fueling products and couplers:couplers. Fluid loading systems are used in the transfer and loading of hydrocarbons and certain other liquid commodity products in marine and land applications. Tank truck and fleet fueling products allow for safe transfer of liquid products without spillage or contamination while safeguarding the operator and the environment. Operators use Dry-Break® technology couplers and adapters to provide a secure connection for the transfer of liquid products without spillage or contamination while safeguarding the operator and the environment.Liquid ring vacuum pumps and compressors: Liquid ring vacuum pumps and compressors are designed for continuous duty in harsh environments, including vapor and flare gas recovery equipment (which recovers and compresses certain polluting gases to transmit them for further processing), primarily in downstream applications. The liquid ring technology utilizes a service liquid, typically water, oil or fuel, to evacuate or compress gas by forming a rotating ring of liquid that follows the contour of the body of the pump or compressor and acts like a piston to deliver an uninterrupted flow of gas without pulsation.PetrochemicalOur Energy segment is positioned to capitalize on the largePrecision and growing petrochemical industry. Sales to petrochemical end-markets consist of vacuumScience Technologiescompression process systems, both of which are used in harsh, continuous-duty applications. Demand for our petrochemical industry products correlates with growth in the5development of new petrochemical plants as well as activity levels therein, which drive demand for aftermarket parts and services on our market-leading installed base of equipment.MedicalThe MedicalScience Technologies segment designs, manufactures and markets a broad range of flow control products for the durablewater and wastewater, food & beverage, chemical processing, precision irrigation, energy, medical equipment, laboratory vacuum and automated liquid handling end-markets. Key technologies include positive displacement pumps, gas, liquid and precision syringe pumps, and automated liquid handling systems.Oursystems and hydrogen refueling stations.blood pressure monitors, compression therapy, dental carts, dialysis machines, gas monitors, ventilators, and ventilators. Gasscientific instrumentation within in vitro diagnostics and R&D laboratories. In the water and environmental end-market, our pumps transfer and compress gasesrelated equipment are used for water treatment in municipal and generate vacuumindustrial facilities such as in dosing and sludge transfer. In agriculture, our pumps are used for nutrient and medicine dosing to livestock, plants and medicinals. In the emerging market of hydrogen powered vehicles, we are a leader in refueling stations that utilize our unique heritage in industrial gas compression pumps. Finally in the general industrial end-market, our pumps and accessories serve a broad range of niche applications such as in the handling of abrasive or chemically active fluids as well as gases.precise flow conditions. Our liquidthe anticipated Industrial Internet of Things (“IIOT”) evolution. In the agriculture market, we sell controllers and software that monitor and control the main functions within livestock and greenhouse facility operations with the benefit of reducing cost and improving yield. In natural gas pipelines and distribution, we sell monitoring devices connected to cloud-based software for real time monitoring of odor injection pumping systems which enhances safety and reduces costs. Similarly, on our positive displacement progressive cavity sludge pumps, we sell monitoring devices and cloud-based software for real-time pump products are primarily used to meterhealth and transfer both neutral and chemically aggressive fluids and ourperformance monitoring, which prevents costly downtime in water treatment plants as well as in industrial installations.systems and accessories, that are integrated into large scalelarge-scale, automated liquid handling systems primarily forused within clinical, pharmaceutical and environmental analyses.Our products are also used in the laboratory vacuum equipment space which includes end-use chemically resistant devices used in research and commercial laboratories.Customers in the durable medical pump end-market and the automated liquid handling end-market develop and manufacture equipment used in a highly regulated environment requiring highly specialized technologies. As a result, relationships with customers are built based on a supplier’s long-term reputation and expertise and deep involvement throughout a product’s evolution, from concept to long-term commercialization. Customers value suppliers that can provide global research and development, regulatory and manufacturing support, as well as sales footprint and expertise to foster close relationships with key decision makers at their company. Combined with the long product life cycle in the regulated medical device space, these factors create a strong, recurring base of business. As a leading pump manufacturer in these markets, we have established a history of innovation that enables us to work closely with our customers to create highly customized flow control solutions for their unique applications. These productsautomated systems provide accurate and efficient dosing, sampling and handling of critical fluids at increasingly ultra-low flow levels, which are mission-criticalrequired in the ultimate device in which they are deployedlab and remain a key component over the entire life cycle of the end products. The regulated market structurescience applications.nature of long-tenured customer relationships enables pump manufacturers to have a highly visible, recurring revenue stream from key customers.CompetitionIndustrialsin our Industrials segment include Atlas Copco AB, Ingersoll-Rand PLC, Colfax Corp., Flowserve Corporation, IDEX Corporation and Kaeser Compressors, Inc.EnergyAcross our product lines exposed to the energy industry, the competitive landscape is specific to the end-markets served. Our principal competitor for drilling pumps is National Oilwell Varco Inc., and for frac pumps is The Weir Group plc. Within upstream energy, we additionally compete with certain smaller, regional manufacturers of pumps and aftermarket parts, although these are not direct competitors for most of our products. Our principal competitors in sales of fluid transfer equipment include Dover Corporation, SVT GmbH and TechnipFMC plc. Our principal competitors in the sale of liquid ring pumps and compressors are Flowserve Corporation and Busch-Holding GmbH.Medicalmedical pump market served by our Precision and Science Technologies segment is primarily based on product quality and performance, as most products must be qualified by the customer for a particular use. Further, there is an increasing demand for more efficient healthcare solutions, which is driving the adoption of premium and high performance systems. Our primary competitors in medical pumps include Dover Corporation, Graco, IDEX Corporation, Watson-Marlow, Inc., KNF Neuberger, Inc. and, Netzsch, NOV, SPX Flow, Thermo Fisher Scientific, and Watson-Marlow, Inc., as well as other regional and local manufacturers.6 Our Energy and Medical products are primarily sold directly to end-use customers and OEMs, while approximately 50% of our Industrials sales in 2018 were fulfilled through independent distributors and sales representatives.we believe provide us with a competitive advantage in the markets and industries we serve. These distributors maintain an inventory of complete units and parts and provide aftermarket services to end-users. While most distributors provide a broad range of products from different suppliers, we view our distributors as exclusive at the product category level (e.g. compressor, vacuum and blower). For example, a distributor may exclusively carry our compressor technologies, and also source additional components of the broader industrial system in which those products operate from other suppliers. Our service personnel and product engineers provide the distributors’ service representatives with technical assistance and field training, particularly with respect to installation and repair of equipment. We also provide our distributors with sales and product literature, advertising and sales promotions, order-entry and tracking systems and an annual restocking program. Furthermore, we participate in major trade shows and directly market our offerings to generate sales leads and support the distributors’ sales personnel.4%1% of 20182021 consolidated revenues.Trademarks,Tradenames, and Other Intellectual Propertytrademarks,tradenames, copyrights, trade secrets and contractual provisions to protect our intellectual property. While in the aggregate our more than 6101,700 patents and our trademarkstradenames are of considerable importance to the manufacture and marketing of many of our products, we believe that the success of our business depends more on the technical competence, creativity and marketing abilities of our employees than on any individual patent or trademark,tradename, and therefore we do not consider any single patent or trademark,tradename, group of patents or trademarks,tradenames, copyright or trade secret to be material to our business as a whole, except for the Ingersoll Rand and Gardner Denver trademark. tradenames. We have registered our trademarkstradenames in the countries we deem necessary or in our best interest. We also rely upon trade secret protection for our confidential and proprietary information and techniques, and we routinely enter into confidentiality agreements with our employees as well as our suppliers and other third parties receiving such information.trademarktradename license agreements, Cooper Industries has exclusive rights to use the Gardner Denver trademark tradename for certain power tools and their components, meaning that we are prevented from using ourthis mark in connection with those products.7Employees2018,2021, we had approximately 6,70016,000 employees of which approximately 2,1004,800 are located in the United States. Of those employees located outside of the United States, a significant portion are represented by works councils and labor unions, andunions; of those employees located in the United States, approximately 200250 are represented by labor unions. We believe that our current relations with employees are satisfactory. that our existing environmental control procedures are adequate and we have no current plans for substantial capital expenditures in this area. We have an environmental policy that confirms our commitment to a clean environment and compliance with environmental laws. We have an active environmental management program aimed at complying with existing environmental regulations and reducing the generation of pollutants in the manufacturing processes. We are also subject to laws concerning the cleanup of hazardous substances and wastes, such as the U.S. federal “Superfund” and similar state laws that impose liability for cleanup of certain waste sites and for related natural resource damages. We have been identified as a potentially responsible party with respect to several sites designated for cleanup under the “Superfund” or similar state laws. See “Item 3. Legal Proceedings.”Corporate HistoryGardner Denver Holdings, Inc. was incorporated in Delaware on March 1, 2013. Through our predecessors, Gardner Denver was founded in Quincy, Illinois in 1859. From August 1943 until we were acquired by an affiliate of Kohlberg, Kravis and Roberts & Co. L.P. (“KKR”) on July 30, 2013 (the “KKR Transaction”), we operated as a public company. We returned to being a public company when we completed our initial public offering in May 2017. Our common stock is listed on the New York Stock Exchange under the symbol “GDI” and our principal executive offices are located at 222 East Erie Street, Suite 500, Milwaukee, Wisconsin 53202.www.gardnerdenver.comwww.irco.com as soon as reasonably practicable after they are filed with or furnished to the SEC.www.gardnerdenver.comwww.irco.com. From time to time, we may use our website as a distribution channel of material company information. Financial and other important information regarding us is routinely accessible through and posted on our website at www.investors.gardnerdenver.comwww.investors.irco.com. In addition, you may automatically receive email alerts and other information about us when you enroll your email address by visiting the Email Alerts section at www.investors.gardnerdenver.comwww.investors.irco.com. Our website and the information contained on or connected to that site are not incorporated into this Annual Report on Form 10-K.8ITEM 1A.RISK FACTORS“Selected Historical Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes thereto should be carefully considered. Any of the following risks could materially and adversely affect our business, financial condition or results of operations. The selected risks described below, however, are not the only risks facing us. Additional risks and uncertainties not currently known to us or those we currently view to be immaterial may also materially and adversely affect our business, financial condition or results of operations.2018,2021, approximately 56%61% of our revenues were from customers in countries outside of the United States. We have manufacturing facilities in Germany, the United Kingdom, China, Finland, Italy, India and other countries. We intend to continue to expand our international operations to the extent that suitable opportunities become available. Non-U.S. operations and United States export sales could be adversely affected as a result of: political or economic instability in certain countries; differences in foreign laws, including increased difficulties in protecting intellectual property and uncertainty in enforcement of contract rights; credit risks; currency fluctuations, in particular, changes in currency exchange rates between the U.S. dollar, Euro, British Pound and the Chinese Renminbi; exchange controls; changes in and uncertainties with respect to tariffs and;and import/export trade restrictions (including changes in United States trade policy toward other countries, such as the imposition of tariffs and the resulting consequences), as well as other changes in political policy in the United States, China, the U.K. and certain European countries (including the impacts of the U.K.’s national referendum resulting in an election to withdrawthe U.K.’s withdrawal from the European Union); royalty and tax increases; nationalization of private enterprises; civil unrest and protests, strikes, acts of terrorism, war or other armed conflict; shipping products during times of crisis or war; and other factors inherent in foreign operations.revenuesshareholders, customers and operating results, especiallyemployees continue to expect a more proactive response to environmental, social, and governance (“ESG”) matters. We may incur increased costs and may be exposed to new risks responding to these higher expectations. The Company has emphasized its commitment to making a positive impact on our shared planet with the announcement of environmental goals with respect to greenhouse gas emissions, renewable energy, water usage and landfill waste. We may face reputational challenges in the Energy segment, dependevent that we are unable to achieve these goals or our ESG standards do not meet those set by certain constituencies. These reputational challenges could have a material adverse effect on the level of activity in the energy industry, which is significantly affected by volatile oil and gas prices.Demand for certain products of our Energy segment, particularly in the upstream energy market, depends on the level of activity in oil and gas exploration, development and production, and is primarily tied to the number of working and available drilling rigs, number of wells those rigs drill annually, the amount of hydraulic fracturing horsepower required on average to fracture each well and, ultimately, oil and natural gas prices overall. The energy market is volatile as the worldwide demand for oil and natural gas fluctuates. For example, weakness in upstream energy activity in North America significantly impacted our business, in 2015financial condition, results of operations and 2016.9Generally, when worldwide demand or our customers’ expectations of future prices for these commodities are depressed, the demand for our products used in drilling and recovery applications is reduced. Other factors, including availability of quality drilling prospects, exploration success, relative production costs and political and regulatory environments are also expected to affect the demand for our products. Worldwide military, political and economic events have in the past contributed to oil and gas price volatility and are likely to do so in the future. A change in economic conditions also puts pressure on our receivables and collections.Accordingly, our operating results for any particular period are not necessarily indicative of the operating results for any future period as the markets for our products have historically experienced volatility. In particular, orders in the Energy segment have historically corresponded to demand for oil and gas and petrochemical products and have been influenced by prices and inventory levels for oil and natural gas, rig count, number of wells those rigs drill annually, the amount of hydraulic fracturing horsepower required on average to fracture each well and other economic factors which we cannot reasonably predict. The Energy segment generated approximately 42% of our consolidated revenues for the year ended December 31, 2018.52%59% for the year ended December 31, 2018,2021, is denominated in currencies other than the U.S. dollar. Accordingly, currency exchange rates, and in particular unfavorable movement in the exchange rates between U.S. dollars and Euros, British Pounds and Chinese Renminbi, affect our operating results. The effects of exchange rate fluctuations on our future operating results are unpredictable because of the number of currencies in which we do business and the potential volatility of exchange rates. We are also subject to the risks of currency controls and devaluations. Although historically not significant, if currency controls were enacted in countries where the Company generates significant cash balances, these controls may limit our ability to convert currencies into U.S. dollars or other currencies, as needed, or to pay dividends or make other payments from funds held by subsidiaries in the countries imposing such controls, which could adversely affect our liquidity. Currency devaluations could also negatively affect our operating margins and cash flows.Potential governmental regulations restricting the use, and increased public attention to and litigation regarding the impacts, of hydraulic fracturing or other processes on which it relies could reduce demand for our products.Oil and natural gas extracted from unconventional sources, such as shale, tight sands and coal bed methane, frequently requires hydraulic fracturing. Recent initiatives to study, regulate or otherwise restrict hydraulic fracturing and processes on which it relies, such as water disposal, as well as litigation over hydraulic fracturing impacts, could adversely affect some of our customers and their demand for our products, which could have a material adverse effect on our business, results of operations and financial condition.For example, although hydraulic fracturing currently is generally exempt from regulation under the U.S. Safe Drinking Water Act’s (“SDWA”) Underground Injection Control program and is typically regulated by state oil and natural gas commissions or similar agencies, several federal agencies have asserted regulatory authority over certain aspects of the process. These include, among others, a number of regulations issued and other steps taken by the U.S. Environmental Protection Agency (“EPA”) over the last five years, including its New Source Performance Standards issued in 2012, its June 2016 rules establishing new emissions standards for methane and additional standards for volatile organic compounds from certain new, modified and reconstructed equipment and processes in the oil and natural gas source category and its June 2016 rule prohibiting the discharge of wastewater from onshore unconventional oil and natural gas extraction facilities to publicly owned wastewater treatment plants; and the federal Bureau of Land Management (“BLM”) rule in March 2015 that established new or more stringent standards relating to hydraulic fracturing on federal and American Indian lands (which was the subject of litigation and which the BLM rescinded in December 2017). While the EPA in the Trump administration and the Trump administration more generally have indicated their interest in scaling back or rescinding regulations that inhibit the development of the U.S. oil and gas industry and have taken steps to do so, it is difficult to predict the extent to which such policies will be implemented or the outcome of litigation challenging such implementation, such as the suit the State of California’s attorney general filed in January 2018 challenging the BLM’s rescission of its March 2015 rule referred to above; in July 2018, the federal district judge in the Northern District of California, where the suit was filed, denied motions by the BLM and several petroleum industry groups to transfer the challenge to Wyoming.10Moreover, some states and local governments have adopted, and other governmental entities are considering adopting, regulations that could impose more stringent requirements on hydraulic fracturing operations. For example, Texas, Colorado and North Dakota among others have adopted regulations that impose new or more stringent permitting, disclosure, disposal and well construction requirements on hydraulic fracturing operations. States could also elect to prohibit high volume hydraulic fracturing altogether, following the approach taken by the State of New York in 2015. Local land use restrictions, such as city ordinances, may restrict drilling in general and hydraulic fracturing in particular. Some state and federal regulatory agencies have also recently focused on a connection between the operation of injection wells used for oil and natural gas waste disposal and seismic activity. Similar concerns have been raised that hydraulic fracturing may also contribute to seismic activity. In March 2016, the United States Geological Survey identified six states with the most significant hazards from induced seismicity, including Oklahoma, Kansas, Texas, Colorado, New Mexico and Arkansas. In light of these concerns, some state regulatory agencies have modified their regulations or issued orders to address induced seismicity. For example, in December 2016, the Oklahoma Corporation Commission’s Oil and Gas Conservation Division (the “OCC Division”) and the Oklahoma Geologic Survey released well completion seismicity guidance, which requires operators to take certain prescriptive actions, including mitigation, following anomalous seismic activity within 1.25 miles of hydraulic fracturing operations. In February 2017, the OCC Division issued an order limiting future increases in the volume of oil and natural gas wastewater injected into the ground in an effort to reduce earthquakes in the state, and it announced further requirements (involving seismic monitoring) in February 2018. Ongoing lawsuits have also alleged that disposal well operations have caused damage to neighboring properties or otherwise violated state and federal rules regulating waste disposal. Increased regulation and attention given to induced seismicity could lead to greater opposition to, and litigation concerning, oil and natural gas activities utilizing hydraulic fracturing or injection wells for waste disposal. The adoption of more stringent regulations regarding hydraulic fracturing and the outcome of litigation over hydraulic fracturing could adversely affect some of our customers and their demand for our products, which could have a material adverse effect on our business, results of operations and financial condition.From time to time in recent years, weWe have experienced disruptions to our supply deliveries for raw materials and component parts due to reasons related to the pandemic and other recent economic conditions and may experience further supply disruptions. Any such disruption could have a material adverse effect on our ability to timely meet our commitments to customers and, therefore, our operating results.11We derive revenue from certain key customers, in particular with respect to our oilfield service products and services. theseour key customers could result in a material decrease of our future profitability and cash flows. In addition, the consolidation or vertical integration of key customers may result in the loss of certain customer contracts or impact demand or competition for our products. Any changes in such customers’ purchasing practices, or decline in such customers’ financial condition, may have a material adverse impact on our business, results of operations and financial condition. Some of our customers are significantly larger than we are, have greater financial and other resources and also have the ability to purchase products from our competitors. As a result of their size and position in the marketplace, some of our customers have significant purchasing leverage and could cause us to materially reduce the price of our products, which could have a material adverse effect on our revenue and profitability. In addition, in the petroleum product market, lost sales may be difficult to replace due to the relative concentration of the customer base. We are unable to predict what effect consolidation in our customers’ industries maycould have on prices, capital spending by customers, selling strategies, competitive position, our ability to retain customers or our ability to negotiate favorable agreements with customers.We have acquired businesses in the past”continue to acquire businesses or assets in the future. The acquisition and integration of businesses or assets involvesaffect our operating results.risks. Therisks and present financial, managerial and operational challenges, including diversion of management attention from running our core risks are valuation (negotiating a fair price for the business), integration (managing the process of integrating the acquired company’s people, products, technology and other assets to extract the value and synergies projected to be realized in connectionbusinesses, increased expense associated with the acquisition), regulation (obtaining necessary regulatorydispositions, potential disputes with the customers or other government approvals that may be necessary to complete acquisitions) and diligence (identifying undisclosed or unknown liabilities or restrictions that will be assumed in the acquisition).In addition, acquisitions outsidesuppliers of the United States often involve additional or increased risks including, for example:managing geographically separated organizations, systems and facilities;integrating personneldisposed businesses, potential disputes with diverse business backgrounds and organizational cultures;complying with non-U.S. regulatory requirements;fluctuations in currency exchange rates;enforcementthe acquirers of intellectual property rights in some non-U.S. countries;difficulty entering new non-U.S. markets due to, among other things, consumer acceptance and business knowledge of these new markets; andgeneral economic and political conditions.The process of integrating operations could cause an interruption of, or loss of momentum in, the activities of one or more of our combineddisposed businesses and the possible loss of key personnel. The diversion of management’s attention and any delays or difficulties encountered in connection with acquisitions and the integration of an acquired company’s operations could have an adversea potential dilutive effect on our business, results of operations, financial condition or prospects.12The loss of, or disruptionIf dispositions are not completed in our distribution network could havea timely manner, there may be a negative impact on our abilities to ship products, meet customer demand and otherwise operate our business.We sell a significant portion of our products through independent distributors and sales representatives. We rely in large part on the orderly operation of this distribution network, which depends on adherence to shipping schedules and effective management. We conduct all of our shipping through independent third parties. Although we believe that our receiving, shipping and distribution process is efficient and well-positioned to support our operations and strategic plans, we cannot provide assurance that we have anticipated all issues or that events beyond our control, such as natural disasters or other catastrophic events, labor disagreements, acquisition of distributors by a competitor, consolidation within our distributor network or shipping problems, will not disrupt our distribution network. If complications arise within a segment of our distribution network, the remaining network may not be able to support the resulting additional distribution demands. Any of these disruptions or complications could negatively impact our revenues and costs.Our ongoing and expected restructuring plans and other cost savings initiatives may not be as effective as we anticipate, and we may fail to realize the cost savings and increased efficiencies that we expect to result from these actions. Our operating results could be negatively affected by our inability to effectively implement such restructuring plans and other cost savings initiatives.We continually seek ways to simplify or improve processes, eliminate excess capacity and reduce costs in all areas of our operations, which from time to time includes restructuring activities. We have implemented significant restructuring activities across our global manufacturing, sales and distribution footprint, which include workforce reductions and facility consolidations. From 2015 to 2017, we incurred restructuring charges of approximately $48.0 million across our segments. In 2018, we incurred restructuring charges of $12.7 million. Costs of future initiatives may be material and the savings associated with them are subject to a variety of risks, including our inability to effectively eliminate duplicative back office overhead and overlapping sales personnel, rationalize manufacturing capacity, synchronize information technology systems, consolidate warehousing and distribution facilities and shift production to more economical facilities. As a result, the contemplated costs to effect these initiatives may materially exceed estimates. The initiatives we are contemplating may require consultation with various employees, labor representatives or regulators, and such consultations may influence the timing, costs and extent of expected savings and may result in the loss of skilled employees in connection with the initiatives.Although we have considered the impact of local regulations, negotiations with employee representatives and the related costs associated with our restructuring activities, factors beyond the control of management may affect the timing of these projects and therefore affect when savings will be achieved under the plans. There can be no assurance that we will be able to successfully implement these cost savings initiatives in the time frames contemplated (or at all) or that we will realize the projected benefits of these and other restructuring and cost savings initiatives. If we are unable to implement our cost savings initiatives, our business may be adversely affected. Moreover, our continued implementation of cost savings initiatives may have a material adverse effect on our business, results of operations and financial condition.In addition, as we consolidate facilities and relocate manufacturing processes to lower-cost regions, our success will depend oncash flows and/or our ability to continue to meet customer demand and maintain a high levelexecute our strategy. In addition, we may not realize some or all of quality throughout the transition. Failure to adequately meet customer demand or maintain a high level or quality could have a material adverse effect on our business, results of operations and financial condition.Our success depends on our executive management and other key personnel and our ability to attract and retain top talent throughout the Company.Our future success depends to a significant degree on the skills, experience and effortsanticipated benefits of our executive managementdispositions.other key personnel and their abilityretained a 45% common equity interest in the newly-formed entity comprising the HPS business. This sale was substantially completed on April 1, 2021.provide us with uninterrupted leadership and direction.sell Specialty Vehicle Technologies to private equity firm Platinum Equity Advisors, LLC (“Platinum Equity”) for $1.68 billion in cash. The failure to retain our executive officers and other key personnel or a failure to provide adequate succession plans could have an adverse impact. Our future success also dependssale was substantially completed on our ability to attract, retain and develop qualified personnel at all levels of the organization. The availability of highly qualified talent is limited in a number of the jurisdictions in which we operated, and the competition for talent is robust. A failure to attract, retain and develop new qualified personnel throughout the organization could have an adverse effect on our operations and implementation of our strategic plan.June 1, 2021.13If we are unable to develop new products and technologies, our competitive position may be impaired, which could materially and adversely affect our sales and market share.The markets in which we operate are characterized by changing technologies and introductions of new products and services. Our ability to develop new products based on technological innovation can affect our competitive position and often requires the investment of significant resources. Difficulties or delays in research, development or production of new products and technologies, or failure to gain market acceptance of new products and technologies, may significantly reduce future revenues and materially and adversely affect our competitive position. We cannot assure you that we will have sufficient resources to continue to make the investment required to maintain or increase our market share or that our investments will be successful. If we do not compete successfully, our business, financial condition, results of operations and cash flows could be materially adversely affected.Cost overruns, delays, penalties or liquidated damages could negatively impact our results, particularly with respect to fixed-price contracts for custom engineered products.A portion of our revenues and earnings is generated through fixed-price contracts for custom engineered products. Certain of these contracts provide for penalties or liquidated damages for failure to timely perform our obligations under the contract, or require that we, at our expense, correct and remedy to the satisfaction of the other party certain defects. Because substantially all of our custom engineered product contracts are at a fixed price, we face the risk that cost overruns, delays, penalties or liquidated damages may exceed, erode or eliminate our expected profit margin, or cause us to record a loss on our projects.The risk of non-compliance with U.S. and foreign laws and regulations applicable to our international operations could have a significant impact on our results of operations, financial condition or strategic objectives.Our global operations subject us to regulation by U.S. federal and state laws and multiple foreign laws, regulations and policies, which could result in conflicting legal requirements. These laws and regulations are complex, change frequently, have become more stringent over time and increase our cost of doing business. These laws and regulations include import and export control, environmental, health and safety regulations, data privacy requirements, international labor laws and work councils and anti-corruption and bribery laws such as the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, the U.N. Convention Against Bribery and local laws prohibiting corrupt payments to government officials.We are subject to the risk that we, our employees, our affiliated entities, contractors, agents or their respective officers, directors, employees and agents may take actions determined to be in violation of any of these laws, for which we might be held responsible, particularly as we expand our operations geographically through organic growth and acquisitions. An actual or alleged violation could result in substantial fines, sanctions, civil or criminal penalties, debarment from government contracts, curtailment of operations in certain jurisdictions, competitive or reputational harm, litigation or regulatory action and other consequences that might adversely affect our results of operations, financial condition or strategic objectives.Changes in tax or other laws, regulations, or adverse determinations by taxing or other governmental authorities could increase our effective tax rate and cash taxes paid or otherwise affect our financial condition or operating results.On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (“Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code that affected 2017 and 2018, including, but not limited to (1) requiring a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries that is payable over eight years and (2) bonus depreciation that will allow for full expensing of qualified property. The Tax Act also established new tax laws that significantly affected 2018 and 2017.While we monitor proposals and other developments that would materially impact our tax burden and/or effective tax rate and investigate our options, we could still be subject to increased taxation on a going forward basis no matter what action we undertake if certain legislative proposals or regulatory changes are enacted, certain tax treaties are amended and/or our interpretation of applicable tax or other laws is challenged and determined to be incorrect. The inability to realize any anticipated tax benefits related to our operations and corporate structure could have a material adverse impact on our results of operations, financial condition and cash flows. See Note 1 “Summary3 “Discontinued Operations” of Significant Accounting Policies” and Note 15 “Income Taxes”Notes to our audited consolidated financial statements included elsewhere in this Form 10-KConsolidated Financial Statements for additional information related to our accounting for income tax matters.14The inability to realize any anticipated tax benefits related to our operations and corporate structure could have a material adverse impact on our results of operations, financial condition and cash flows. Further, the specific future impacts of the Tax Act on holders of our common shares are uncertain and could in certain instances be adverse. We urge our stockholders to consult with their legal and tax advisors with respect to any such legislation and the potential tax consequences of investing in our common stock.A significant portion of our assets consists of goodwill and other intangible assets, the value of which may be reduced if we determine that those assets are impaired.As a result of the KKR Transaction, we applied the acquisition method of accounting and established a new basis of accounting on July 30, 2013. Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the tangible and identifiable intangible assets acquired, liabilities assumed and any non-controlling interest. Intangible assets, including goodwill, are assigned to our reporting units based upon their fair value at the time of acquisition. In accordance with GAAP, goodwill and indefinite-lived intangible assets are evaluated for impairment annually, or more frequently if circumstances indicate impairment may have occurred. In 2017, we recorded an impairment charge related to other intangible assets of $1.6 million primarily within the Industrials segment. In 2016, we recorded an impairment charge related to other intangible assets of $25.3 million primarily within the Industrials segment. As of December 31, 2018, the net carrying value of goodwill and other intangible assets, net represented $2,657.9 million, or 59%, of our total assets. A future impairment, if any, could have a material adverse effect to our consolidated financial position or results of operations. See Note 8 “Goodwill and Other Intangible Assets” to our audited consolidated financial statements included elsewhere in this Form 10-K for additional information related to impairment testing for goodwill and other intangible assets and the associated charges taken.Our business could suffer if we experience employee work stoppages, union and work council campaigns or other labor difficulties.As of December 31, 2018, we had approximately 6,700 employees of which approximately 2,100 were located in the United States. Of those employees located outside of the United States, a significant portion are represented by works councils and labor unions, and of those employees located in the United States, approximately 200 are represented by labor unions. Although we believe that our relations with employees are satisfactory and have not experienced any material work stoppages, work stoppages have occurred, and may in the future occur, and we may not be successful in negotiating new collective bargaining agreements. In addition, negotiations with our union employees may (1) result in significant increases in our cost of labor, (2) divert management’s attention away from operating our business or (3) break down and result in the disruption of our operations. The occurrence of any of the preceding conditions could impair our ability to manufacture our products and result in increased costs and/or decreased operating results.We are a defendant in certain asbestos and silica-related personal injury lawsuits, which could adversely affect our financial condition.We have been named as a defendant in many asbestos and silica-related personal injury lawsuits. The plaintiffs in these suits allege exposure to asbestos or silica from multiple sources, and typically we are one of approximately 25 or more named defendants. We believe that, given our financial reserves and anticipated insurance recoveries, the pending and potential future lawsuits are not likely to have a material adverse effect on our consolidated financial position, results of operations or liquidity. However, future developments, including, without limitation, potential insolvencies of insurance companies or other defendants, an adverse determination in the Adams County Case (discussed below), or other inability to collect from our historical insurers or indemnitors, could cause a different outcome. In addition, even if any damages payable by us in any individual lawsuit are not material, the aggregate damages and related defense costs could be material and could materially adversely affect our financial condition if we were to receive an adverse judgment in a number of these lawsuits. Accordingly, the resolution of pending or future lawsuits may have a material adverse effect on our consolidated financial position, results of operations or liquidity. See “Business—Legal Proceedings—Asbestos and Silica-Related Litigation.”A natural disaster, catastrophe or other event could result in severe property damage, which could adversely affect our operations.Some of our operations involve risks of, among other things, property damage, which could curtail our operations. For example, disruptions in operations or damage to a manufacturing plant could reduce our ability to produce products and satisfy customer demand. If one of more of our manufacturing facilities are damaged by severe weather15or any other disaster, accident, catastrophe or event, our operations could be significantly interrupted. Similar interruptions could result from damage to production or other facilities that provide supplies or other raw materials to our plants or other stoppages arising from factors beyond our control. These interruptions might involve significant damage to, among other things, property, and repairs might take from a week or less for a minor incident to many months for a major interruption.disruptadversely impact our business and result in financial loss andto the Company or liability to our customers.An accruedA liability on our balance sheet reflects costs that are probable and estimable for our projected financial obligations relating to these matters. If we have underestimated our remaining financial obligations, we may face greater exposure that could have an adverse effect on our financial condition, results of operations or liquidity.Third parties may infringe upon our intellectual property or may claim we have infringed their intellectual property, and we may expend significant resources enforcing or defending our rights or suffer competitive injury.Our success depends in part on the creation, maintenance and protection of our proprietary technology and intellectual property rights. We rely on a combination of patents, trademarks, trade secrets, copyrights, confidentiality16provisions, contractual restrictions and licensing arrangements to establish and protect our proprietary rights. Our nondisclosure agreements and confidentiality agreements may not effectively prevent disclosure of our proprietary information, technologies and processes, and may not provide an adequate remedy in the event of breach of such agreements or unauthorized disclosure of such information, and if a competitor lawfully obtains or independently develops our trade secrets, we would have no right to prevent such competitor from using such technology or information to compete with us, either of which could harm our competitive position. Our applications for patent and trademark protection may not be granted, or the claims or scope of such issued patents or registered trademarks may not be sufficiently broad to protect our products. In addition, effective patent, copyright, trademark and trade secret protection may be unavailable or limited for some of our trademarks and patents in some foreign countries. We may be required to spend significant resources to monitor and police our intellectual property rights, and we cannot guarantee that such efforts will be successful in preventing infringement or misappropriation. If we fail to successfully enforce these intellectual property rights, our competitive position could suffer, which could harm our operating results.Although we make a significant effort to avoid infringing known proprietary rights of third parties, the steps we take to prevent misappropriation, infringement or other violation of the intellectual property of others may not be successful and from time to time we may receive notice that a third party believes that our products may be infringing certain patents, trademarks or other proprietary rights of such third party. Responding to and defending such claims, regardless of their merit, can be costly and time-consuming, can divert management’s attention and other resources, and we may not prevail. Depending on the resolution of such claims, we may be barred from using a specific technology or other rights, may be required to redesign or re-engineer a product which may require significant resources, may be required to enter into licensing arrangements from the third party claiming infringement (which may not be available on commercially reasonable terms, or at all), or may become liable for significant damages.If any of the foregoing occurs, our ability to compete could be affected or our business, financial condition and results of operations may be materially adversely affected.2018,2021, our projected benefit obligations under our pension and other postretirement benefit plans exceeded the fair value of plan assets by an aggregate of approximately $96.9$194.7 million (“unfunded status”), compared to $97.2 million as of December 31, 2017.. Estimates for the amount and timing of the future funding obligations of these benefit plans are based on various assumptions. These assumptions include discount rates, rates of compensation increases, expected long-term rates of return on plan assets and expected healthcare cost trend rates. If our assumptions prove incorrect, our funding obligations may increase, which may have a material adverse effect on our financial results.2018,2021, we had total indebtedness of $1,672.1$3,440.6 million, and we had availability under the Revolving Credit Facility and the Receivables Financing Agreement of $263.4 million and $83.3 million, respectively.$1,093.4 million. Our high level of debt could have important consequences, including: making it more difficult for us to satisfy our obligations with respect to our debt; limiting our ability to obtain additional financing to fund future working capital, capital expenditures, investments or acquisitions, or other general corporate requirements; requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, investments or acquisitions and other general corporate purposes; increasing our vulnerability to adverse changes in general economic, industry and competitive conditions; exposing us to the risk of increased interest rates as certain of our borrowings, including borrowings under the Senior Secured Credit Facilities, are at variable rates of interest; limiting our flexibility in planning for and reacting to changes in the171011 “Debt” to our audited consolidated financial statements included elsewhere in this Form 10-K.$250.0$1,600.0 million in the form of additional commitments under the Revolving Credit Facility and/or incremental term loans plus an additional amount so long as we do not exceed a specified senior secured leverage ratio. We also can incur additional secured indebtedness under the Term LoanSenior Secured Credit Facilities if certain specified conditions are met under the credit agreement governing the Term LoanSenior Secured Credit Facilities. If new debt is added to our current debt levels, the related risks that we now face could intensify. For a complete description of the Company’s credit facilities and definitions of capitalized terms used in this section, see Note 1011 “Debt” to our audited consolidated financial statements included elsewhere in this Form 10-K.18 and our Receivables Financing Agreement are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness will increase even though the amount borrowed will remain the same, and our net income and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease.have enteredmay enter into pay-fixed interest rate swapsswap instruments from time to time to limit our exposure to changes in variable interest rates. Such instruments will result in economic losses should interest rates not rise above the pay-fixed interest rate in the derivative contracts. We will be exposed to credit-related losses which could impact the results of operations in the event of fluctuations in the fair value of the interest rate swaps due to a change in the credit worthiness or non-performance by the counterparties to the interest rate swaps. See Note 1719 “Hedging Activities, Derivative Instruments and Credit Risk” to our audited consolidated financial statements included elsewhere in this Form 10-K.under our facility or reduce the borrowing base under our Revolving Credit Facility, our liquidity and results of operations may be adversely affected.ITEM 1B.UNRESOLVED STAFF COMMENTSNone19222 East Erie800-A Beaty Street, Milwaukee, Wisconsin 53202.Davidson, North Carolina 28036. The number of significant properties used by each of our segments is summarized by segment, type and geographic location in the tables below.Type of Significant Property Manufacturing Warehouse Total Industrial Technologies and Services Americas 18 2 31 51 19 1 16 36 7 — 5 12 Industrial Technologies and Services Total 44 3 52 99 Precision and Science Technologies Americas 6 1 — 7 7 — 1 8 4 — — 4 Precision and Science Technologies Total 17 1 1 19 Total (All Segments) Americas 24 3 31 58 26 1 17 44 11 — 5 16 Company Total 61 4 53 118 (1)Two facilities are shared between our segments and each is counted once, in the Industrials segment, to avoid double counting.(2)Other facilities includes service centers and sales offices.in our sector. We believe that such proceedings, lawsuits and administrative actions will not materially adversely affect our operations, financial condition, liquidity or competitive position. A moreFor a detailed discussion of certain of these proceedings, lawsuits and administrative actions, is set forth below.Environmental MattersWe are subjectsee Note 21, “Contingencies” to numerous federal, state, local and foreign laws and regulations relating to the storage, handling, emission and disposal of materials and discharge of materials into the environment. We believe that our existing environmental control procedures are adequate and we have no current plans for substantial capital expenditures in this area. We have an environmental policy that confirms our commitment to a clean environment and compliance with environmental laws. We have an active environmental management program aimed at complying with existing environmental regulations and reducing the generation of pollutants in the manufacturing processes. We are also subject to laws concerning the cleanup of hazardous substances and wastes, such as the U.S. federal “Superfund” and similar state laws that impose liability for cleanup of certain waste sites and for related natural resource damages. We have been identified as a potentially responsible party with respect to several sites designated for cleanup under the “Superfund” or similar state laws.20Asbestos and Silica-Related LitigationWe have been named as a defendant in many asbestos-related and silica-related personal injury lawsuits. The plaintiffs in these suits allege exposure to asbestos or silica from multiple sources and typically we are one of approximately 25 or more named defendants. Our predecessors sometimes manufactured, distributed and/or sold products allegedly at issue in these pending asbestos and silica-related lawsuits (the “Products”). However, neither we nor our predecessors ever mined, manufactured, mixed, produced or distributed asbestos fiber or silica sand, the materials that allegedly caused the injury underlying the lawsuits. Moreover, the asbestos-containing components of the Products, if any, were enclosed within the subject Products.Although we have never mined, manufactured, mixed, produced or distributed asbestos fiber or silica, many of the companies that did engage in such activities or produced such products are no longer in operation. This has led to law firms seeking potential alternative companies to name in lawsuits where there has been an asbestos or silica related injury. However, in our opinion, based on our experience to date, the substantial majority of the plaintiffs have not suffered an injury for which we bear responsibility.We believe that the pending and future asbestos and silica-related lawsuits are not likely to, in the aggregate, have a material adverse effect on ouraudited consolidated financial position, results of operations or liquidity, based on: our anticipated insurance and indemnification rights to address the risks of such matters; the limited potential asbestos exposure from the Products described above; our opinion, based on our experience to date, that the vast majority of plaintiffs are not impaired with a disease attributable to alleged exposure to asbestos or silica from or relating to the Products or for which we otherwise bear responsibility; various potential defenses available to us with respect to such matters; and our prior disposition of comparable matters. However, inherent uncertainties of litigation and future developments, including, without limitation, potential insolvencies of insurance companies or other defendants, an adverse determination in the Adams County Case (discussed below), or other inability to collect from our historical insurers or indemnitors, could cause a different outcome. While the outcome of legal proceedings is inherently uncertain, based on presently known facts, experience and circumstances, we believe that the amounts accrued on our Consolidated Balance Sheets are adequate and that the liabilities arising from the asbestos and silica-related personal injury lawsuits will not have a material adverse effect on our consolidated financial position, results of operations or liquidity. We have accrued liabilities and other liabilities on our consolidated balance sheet to include a total litigation reserve of $105.8 million and $105.6 million as of December 31, 2018 and December 31, 2017 respectively, with respect to potential liability arising from our asbestos-related litigation. Asbestos-related defense costs are excluded from the asbestos claims liability and are recorded separately as an operating expense as services are incurred. We currently expect to continue to incur significant asbestos-related defense costs. In the event of unexpected future developments, it is possible that the ultimate resolution of these matters may be material to the our consolidated financial position, results of operation or liquidity, and defense costs may be material. However, at this time, based on presently available information, we view this possibility as remote.We have entered into a series of agreements with certain of our or our predecessors’ legacy insurers and certain potential indemnitors to secure insurance coverage and/or reimbursement for the costs associated with the asbestos and silica-related lawsuits filed against us. We have also pursued litigation against certain insurers or indemnitors where necessary. We have an insurance recovery receivable for probable asbestos related recoveries of approximately $103.0 million and $100.4 million as of December 31, 2018 and December 31, 2017 which was included in “Other assets” on the Consolidated Balance Sheetsstatements included elsewhere in this Form 10-K. During the year ended December 31, 2018, we received asbestos related insurance recoveries of $14.4 million, of which $6.2 million related to the recovery of indemnity payments, and was recorded as a reduction of the insurance recovery receivable in “Other assets” on the Consolidated Balance Sheets included elsewhere in this Form 10-K, and $8.2 million related to the reimbursement of previously expensed legal defense costs and was recorded as a reduction of “Selling and administrative expenses” in the Consolidated Statements of Operations included elsewhere in this Form 10-K.The largest such recent action, Gardner Denver, Inc. v. Certain Underwriters at Lloyd’s, London, et al., was filed on July 9, 2010, in the Eighth Judicial Circuit, Adams County, Illinois, as case number 10-L-48 (the “Adams County Case”). In the lawsuit, we seek, among other things, to require certain excess insurer defendants to honor their insurance policy obligations to us, including payment in whole or in part of the costs associated with the asbestos-related lawsuits filed against us. In October 2011, we reached a settlement with one of the insurer defendants, which had issued both primary and excess policies, for approximately the amount of such defendant’s policies which were subject to the lawsuit. Since then, the case has been proceeding through the discovery and motions process with the remaining insurer defendants. On January 29, 2016, we prevailed on the first phase of that21discovery and motions process (“Phase I”). Specifically, the Court in the Adams County Case ruled that we have rights under all of the policies in the case, subject to their terms and conditions, even though the policies were sold to our former owners rather than to us. On June 9, 2016, the Court denied a motion by several of the insurers who sought permission to appeal the Phase I ruling now rather than waiting until the end of the whole case as is normally required. The case is now proceeding through the discovery and motions process regarding the remaining issues in dispute (“Phase II”).A majority of our expected future recoveries of the costs associated with the asbestos-related lawsuits are the subject of the Adams County Case.The amounts we recorded for asbestos-related liabilities and insurance recoveries are based on currently available information and assumptions that we believe are reasonable based on our evaluation of relevant factors with input from a third party actuarial expert. Our actual liabilities or insurance recoveries could be higher or lower than those recorded if actual results vary significantly from the assumptions. There are a number of key variables and assumptions including the number and type of new claims to be filed each year, the resolution or outcome of these claims, the average cost of resolution of each new claim, the amount of insurance available, allocation methodologies, the contractual terms with each insurer with whom we have reached settlements, the resolution of coverage issues with other excess insurance carriers with whom we have not yet achieved settlements and the solvency risk with respect to our insurance carriers. Other factors that may affect our future liability include uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case, legal rulings that may be made by state and federal courts and the passage of state or federal legislation. We make the necessary adjustments for our asbestos liability and corresponding insurance recoveries on an annual basis unless facts or circumstances warrant assessment as of an interim date.Environmental LiabilitiesWe have been identified as a potentially responsible party (“PRP”) with respect to several sites designated for cleanup under U.S. federal “Superfund” or similar state laws that impose liability for cleanup of certain waste sites and for related natural resource damages. Persons potentially liable for such costs and damages generally include the site owner or operator and persons that disposed or arranged for the disposal of hazardous substances found at those sites. Although these laws impose joint and several liability on PRPs, in application, the PRPs typically allocate the investigation and cleanup costs based upon the volume of waste contributed by each PRP. Based on currently available information, we are only a small contributor to these waste sites, and we have, or are attempting to negotiate, de minimis settlements for our cleanup. The cleanup of the remaining sites is substantially complete and our future obligations entail a share of the sites’ ongoing operating and maintenance expense. We are also addressing four on-site cleanups for which we are the primary responsible party. Three of these cleanup sites are in the operation and maintenance stage and one is in the implementation stage.We have an accrued liability on our consolidated balance sheet of $6.9 million and $7.5 million as of December 31, 2018 and December 31, 2017, respectively, to the extent costs are known or can be reasonably estimated for our remaining financial obligations for the environmental matters discussed above and which does not anticipate that any of these matters will result in material additional costs beyond amounts accrued. Based upon consideration of currently available information, we do not anticipate any material adverse effect on our results of operations, financial condition, liquidity or competitive position as a result of compliance with federal, state, local or foreign environmental laws or regulations, or cleanup costs relating to these matters.ApplicableApplicable.22PART IIITEM 5.MARKET FOR REGISTRANTS’ COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES“GDI.“IR.” As of January 31, 2019,2022, there were 1962,568 holders of record of our common stock. This stockholder figure does not include a substantially greater number of holders whose shares are held of record by banks, brokers, and other financial institutions.yearsyear ended December 31, 2018 and 2017. We do not intend to pay cash dividends on our common stock in the foreseeable future. We may, in the future, decide to pay dividends on our common stock.2020. Any future determination to pay dividends will be at the discretion of our board of directors and will depend on, among other things, our results of operations, cash requirements, financial condition, contractual restrictions contained in current or future financing instruments and other factors that our board of directors deem relevant.2018.
of Shares
Purchased(1)
Paid
Per Share(2)
of Shares
Purchased
as Part of
Publicly
Announced
Plans or Programs(3)
Approximate
Dollar Value
of Shares
that May Yet
Be Purchased
Under the
Plans or Programs(3)2021 Fourth Quarter Months October 1, 2021 - October 31, 2021 — $ — — $ 750,000,000 November 1, 2021 - November 30, 2021 — $ — — $ 750,000,000 December 1, 2021 - December 31, 2021 4,712 $ 61.85 — $ 750,000,000 (1)(1)All of the shares purchased during the quarter ended December 31, 2018 were acquired pursuant to the repurchase program described in (3) below, except for 11,653 shares that were repurchased during the period from October 1, 2018 through October 31, 2018 in connection with net exercises of stock options.(2)The average price paid per share includes brokerage commissions.(3)On August 1, 2018, the Company announced that our Board of Directors had approved a share repurchase program which authorized the repurchase of up to $250.0 million of the Company’s outstanding common stock over the next two years, effective August 1, 2018 until and including July 31, 2020. For a further description of the share repurchase program, see Note 24 “Share Repurchase Program” to our audited consolidated financial statements included elsewhere in this Form 10-K.23ITEM 6.SELECTED FINANCIAL DATASet forth below is our selected consolidated financial data as of the dates and for the periods indicated. The selected consolidated financial data as of December 31, 2018 and 2017 and for the fiscal years ended December 31, 2018, 2017 and 2016 have been derived from our audited consolidated financial statements and related notes to our audited consolidated financial statements included elsewhere2021 were in this Form 10-K. The selected consolidated financial data asconnection with net exercises of December 31, 2016, 2015 and 2014 have been derived from our consolidated financial statements and related notes to our consolidated financial statements not included in this Form 10-K.The selected historical consolidated financial data set forth below should be read in conjunction with, and are qualified by reference to, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited consolidated financial statements and related notes to our audited consolidated financial statements included elsewhere in this Form 10-K.
December 31,
2018
December 31,
2017(1)
December 31,
2016(1)
December 31,
2015(1)
December 31,
2014(1)24
December 31,
2018
December 31,
2017(1)
December 31,
2016(1)
December 31,
2015(1)
December 31,
2014(1)(1)In the first quarter of fiscal year 2018, we adopted the provisions of ASU 2017-07, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (“ASU 2017-07”). The reclassification of other components of net periodic benefit cost for the years ended December 31, 2017 and 2016 as a result of the adoption of ASU 2017-07 is detailed in Note 2 “New Accounting Standards” to our audited consolidated financial statements included elsewhere in this Form 10-K. For the years ended December 31, 2015 and 2014, we reclassified $4.0 million and $2.9 million of income, respectively, from “Selling and administrative expenses” to “Other income, net.”(2)We report our financial results in accordance with GAAP. To supplement this information, we also use the following measures in this Form 10-K: “Adjusted EBITDA,” “Adjusted Net Income” and “Free Cash Flow.” Management believes that Adjusted EBITDA and Adjusted Net Income are helpful supplemental measures to assist us and investors in evaluating our operating results as they exclude certain items whose fluctuation from period to period do not necessarily correspond to changes in the operations of our business. Adjusted EBITDA represents net income (loss) before interest, taxes, depreciation and amortization, as further adjusted to exclude certain non-cash, non-recurring and other adjustment items. We believe that the adjustments applied in presenting Adjusted EBITDA are appropriate to provide additional information to investors about certain material non-cash items and about non-recurring items that we do not expect to continue at the same level in the future. Adjusted Net Income is defined as net income (loss) including interest, depreciation and amortization of non-acquisition related intangible assets and excluding other items used to calculate Adjusted EBITDA and further adjusted for the tax effect of these exclusions. We use Free Cash Flow to review the liquidity of our operations. We measure Free Cash Flow as cash flows from operating activities less capital expenditures. We believe Free Cash Flow is a useful supplemental financial measure for us and investors in assessing our ability to pursue business opportunities and investments and to service our debt. Free Cash Flow is not a measure of our liquidity under GAAP and should not be considered as an alternative to cash flows from operating activities.As a result, we and our board of directors regularly use these measures as tools in evaluating our operating and financial performance and in establishing discretionary annual compensation. Such measures are provided in addition to, and should not be considered to be a substitute for, or superior to, the comparable measure under GAAP. In addition, we believe that Adjusted EBITDA, Adjusted Net Income and Free Cash Flow are frequently used by investors, analysts and other interested parties in the evaluation of issuers, many of which also present Adjusted EBITDA, Adjusted Net Income and Free Cash Flow when reporting their results in an effort to facilitate an understanding of their operating and financial results and liquidity.Adjusted EBITDA, Adjusted Net Income and Free Cash Flow should not be considered as alternatives to net income (loss) or other performance measures calculated in accordance with GAAP, or as alternatives to cash flow from operating activities as a measure of our liquidity. Adjusted EBITDA, Adjusted Net Income and Free Cash Flow have limitations as analytical tools, and you should not consider such measures either in isolation or as substitutes for analyzing our results as reported under GAAP.25Set forth below are the reconciliations of net income (loss) to Adjusted EBITDA and Adjusted Net Income and cash flows from operating activities to Free Cash Flow.(a)Represents $111.9 million, $107.7 million and $110.6 million of amortization of intangible assets arising from the KKR Transaction and other acquisitions (customer relationships and trademarks) and $13.9 million, $11.2 million and $13.6 million of amortization of non-acquisition related intangible assets, in each case for the years ended December 31, 2018, 2017 and 2016, respectively.(b)Represents non-cash charges for impairment of other intangible assets.(c)Represents management fees and expenses paid to Kohlberg, Kravis & Roberts & Co., L.P. (“KKR” or “Former Sponsor”).(d)Restructuring and related business transformation costs consist of the following.26(e)Represents costs associated with successful and/or abandoned acquisitions, including third-party expenses, post-closure integration costs (including certain incentive and non-incentive cash compensation costs), and non-cash charges and credits arising from fair value purchase accounting adjustments.(f)Represents estimated environmental remediation costs and losses relating to a former production facility.(g)Represents certain expenses related to our initial public offering and subsequent secondary offerings.(h)Represents third party expenses to comply with the requirements of Sarbanes-Oxley in 2018 and the accelerated adoption of the new accounting standards (ASC 606 – Revenue from Contracts with Customers and ASC 842 – Leases) in the first quarter of 2018 and 2019 respectively, one year ahead of the required adoption dates for a private company.(i)Represents stock-based compensation expense recognized for the year ended December 31, 2018 of $2.8 million, reduced by $5.1 million primarily due to a decrease in the estimated accrual for employer taxes related to deferred stock units (“DSU”) as a result of a lower per share stock price.Represents stock-based compensation expense recognized for the year ended December 31, 2017 for stock options outstandingor the surrender to us of $77.6shares of common stock to satisfy tax withholding obligations in connection with the vesting of certain restricted stock units. and DSUs granted to employees at the date of the initial public offering of $97.4 million under the 2013 Stock Incentive Plan, and employer taxes related to DSUs granted to employees at the date of the initial public offering of $19.2 million.(j)Represents losses on extinguishment of the senior notes, extinguishment of a portion of the U.S. Term Loan, refinancing of the Original Dollar Term Loan Facility and the Original Euro Term Loan Facility and losses reclassified from AOCI into income related to the amendment of the interest rate swaps in conjunction with the debt repayment.(k)Represents insurance recoveries of our shareholder litigation settlement in 2014.(l)Includes (i) the non-cash impact of net LIFO reserve adjustments, (ii) effects of amortization of prior service costs and amortization of losses in pension and other postemployment (“OPEB”) expense, (iii) certain legal and compliance costs and (iv) other miscellaneous adjustments.(m)Represents our income tax provision adjusted for the tax effect of pre-tax items excluded from Adjusted Net Income and the removal of applicable discrete tax items. The tax effect of pre-tax items excluded from Adjusted Net Income is computed using the statutory tax rate related to the jurisdiction that was impacted by the adjustment after taking into account the impact of permanent differences and valuation allowances. Discrete tax items include changes in tax laws or rates, changes in uncertain tax positions relating to prior years and changes in valuation allowances. All impacts relating to the Tax Cuts and Jobs Act of 2017 have been included as an adjustment on the ‘Tax law change” line of the table below.The income tax provision, as adjusted for each of the periods presented below consists of the following.27CONTENTSFINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS “Item 6. Selected Financial Data” and our audited consolidated financial statements and related notes to our consolidated financial statements included elsewhere in this Form 10-K. This discussion contains forward-looking statements and involves numerous risks and uncertainties. Our actual results may differ materially from those anticipated in any forward-looking statements as a result of many factors, including those set forth under the “Special Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors” and elsewhere in this Form 10-K.We areleading global providermarket leader with a broad range of innovative and mission-critical flow control and compression equipment and associated aftermarket parts, consumables and services, which we sell across multiple attractive end-markets within the industrial,air, fluid, energy and medical industries.technologies, providing services and solutions to increase industrial productivity and efficiency. We manufacture one of the broadest and most complete ranges of compressor, pump, vacuum and blower products in our markets, which, when combined with our global geographic footprint and application expertise, allows us to provide differentiated product and service offerings to our customers. Our products are sold under a collection of premier, market-leading brands, including Ingersoll Rand, Gardner Denver, Nash, CompAir, Nash,Thomas, Milton Roy, Seepex, Elmo Rietschle, ARO, Robuschi, Emco Wheaton Robuschi, Elmo Rietschle and Thomas, Runtech Systems,155160 years of engineering heritage, generate strong brand loyalty for our products and foster long-standing customer relationships, which we believe have resulted in leading market positions within each of our operating segments. We have sales in more than 175 countriesall major geographic markets and our diverse customer base utilizes our products across a wide array of end-markets that have favorable near- and long-term growth prospects, including industrial manufacturing, energy, (with particular exposure to the North American upstream land-based market), transportation, medical and laboratory sciences, food and beverage packaging and chemical processing.4161 key manufacturing facilities, more than 30approximately 39 complementary service and repair centers across six continents and approximately 6,70016,000 employees worldwide as of December 31, 2018.39%36.2% of total Company revenue and approximately 43%40.7% of our combined IndustrialsIndustrial Technologies and Energy segments’Services segment’s revenue in 2018.Our SegmentsWe report our results of operations through three reportable segments: Industrials, Energy and Medical.IndustrialsIn the Industrials segment, we design, manufacture, market and service a broad range of air compression, vacuum and blower products across a wide array of technologies and applications. Almost every manufacturing and industrial facility, and many service and process industries, use air compression and vacuum products in a variety of applications such as operation of pneumatic air tools, vacuum packaging of food products and aeration of waste water. We maintain a leading position in our markets and serve customers globally. We offer comprehensive aftermarket parts and an experienced direct and distributor-based service network world-wide to complement all of our products. In 2018, the Industrials segment generated Segment Revenue of $1,303.3 million and Segment Adjusted EBITDA of $288.2 million, reflecting a Segment Adjusted EBITDA Margin of 22.1%.28EnergyIn the Energy segment, we design, manufacture, market and service a diverse range of positive displacement pumps, liquid ring vacuum pumps and compressors, and engineered loading systems and fluid transfer equipment, consumables, and associated aftermarket parts and services. We serve customers in the upstream, midstream, and downstream oil and gas markets, and various other markets including petrochemical processing, power generation, transportation, and general industrial. We are one of the largest suppliers in these markets and have long-standing customer relationships. Our positive displacement pumps are used in the oilfield for drilling, hydraulic fracturing, completion and well servicing. Our liquid ring vacuum pumps and compressors are used in many power generation, mining, oil and gas refining and processing, chemical processing and general industrial applications including flare gas and vapor recovery, geothermal gas removal, vacuum de-aeration, enhanced oil recovery, water extraction in mining and paper and chlorine compression in petrochemical operations. Our engineered loading systems and fluid transfer equipment ensure the safe handling and transfer of crude oil, liquefied natural gas, compressed natural gas, chemicals, and bulk materials. In 2018, the Energy segment generated Segment Revenue of $1,121.1 million and Segment Adjusted EBITDA of $337.8 million, reflecting a Segment Adjusted EBITDA Margin of 30.1%.MedicalIn the Medical segment, we design, manufacture and market a broad range of highly specialized gas, liquid and precision syringe pumps and compressors primarily for use in the medical, laboratory and biotechnology end markets. Our customers are mainly medium and large durable medical equipment suppliers that integrate our products into their final equipment for use in applications such as oxygen therapy, blood dialysis, patient monitoring, wound treatment, and others. Further, with recent acquisitions, we expanded into liquid handling components and systems used in biotechnology applications including clinical analysis instrumentation. We also have a broad range of end use deep vacuum products for laboratory science applications. In 2018, the Medical segment generated Segment Revenue of $265.4 million and Segment Adjusted EBITDA of $75.0 million, reflecting a Segment Adjusted EBITDA Margin of 28.3%.our highly engineered, application-critical productsoriginal equipment and by providing associated aftermarket parts, consumables and services. We sell our products and deliver aftermarket services both directly to end-users and through independent distribution channels, depending on the product line and geography. Below is a description of our revenues by segment and factors impacting total revenues.Industrials RevenueOur Industrials Segment Revenues are generated primarily through sales of air compression, vacuum and blower products to customers in multiple industries and geographies. A significant portion of our sales in the Industrials segment are made to independent distributors. The majority of Industrials segment revenues are derived from short duration contracts and revenue is recognized at a single point in time when control is transferred to the customer, generally at shipment or when delivery has occurred or as services have been rendered.are performed. Certain contracts may involve significant design engineering unique to customer specifications, and depending onupon the contractual terms, revenue is recognized either over the duration of the contract or at contract completion when equipment is delivered to the customer. Our large installed base of products in our Industrials segment drives demand for recurring aftermarket support services primarily composed of replacement part sales to our distribution partners and, to a lesser extent, by directly providing replacement parts and repair and maintenance services to end customers. Revenue for services is recognized when services are performed.Energy RevenueOur Energy Segment Revenues are generated primarily through sales of positive displacement pumps, liquid ring vacuum pumps, compressors and integrated systems and engineered fluid loading and transfer equipment and associated aftermarket parts, consumables and services for use primarily in upstream, midstream, downstream and petrochemical end-markets across multiple geographies. The majority of Energy segment revenues are derived from short duration contracts and revenue is recognized at a single point in time when control is transferred to the customer, generally at shipment or when delivery has occurred or services have been rendered. Certain contracts with29customers in the mid- and downstream and petrochemical markets are higher sales value and often have longer lead times and involve more application specific engineering. Depending on the contractual terms, revenue is recognized either over the duration of the contract or at contract completion when equipment is delivered to the customer. Provisions for estimated losses on uncompleted contracts are recognized in the period in which such losses are determined to be probable. As a result, the timing of these contracts can result in significant variation in reported revenue from quarter to quarter. Our large installed base of products in our Energy segment drives demand for recurring aftermarket support services to customers, including replacement parts, consumables and repair and maintenance services. The mix of aftermarket to original equipment revenue within the Energy segment is impacted by trends in upstream energy activity in North America. Revenue for services is recognized when services are performed. In response to customer demand for faster access to aftermarket parts and repair services, we expanded our direct aftermarket service locations in our Energy segment, particularly in North American markets driven by upstream energy activity. Energy segment products and aftermarket parts, consumables and services are sold both directly to end customers and through independent distributors, depending on the product category and geography.Medical RevenueOur Medical Segment Revenues are generated primarily through sales of highly specialized gas, liquid and precision syringe pumps that are specified by medical and laboratory equipment suppliers for use in medical and laboratory applications. Our products are often subject to extensive collaborative design and specification requirements, as they are generally components specifically designed for, and integrated into, our customers’ products. Revenue is recognized when control is transferred to the customer, generally at shipment or when delivery has occurred. Our Medical segment also has limited aftermarket revenues related to certain products.Expensesmaterialsmaterial inputs. Stock-based compensation expense for employees associated with the manufacture of products or delivery of services to customers is included in cost of sales. We have instituted a global sourcing strategy to take advantage of coordinated purchasing opportunities of key materials across our manufacturing plant locations.KKR feesemployee related stock-based compensation for our selling and expenses;administrative functions and (vii) expenses related to our public stock offerings and to establish public company reporting compliance; and (viii) other miscellaneous expenses. Certain corporate expenses, including those related to our shared service centers in the United States and Europe, that directly benefit our businesses are allocated to our business segments. Certain corporate administrative expenses, including corporate executive compensation, treasury, certain information technology, internal audit and tax compliance, are not allocated to the business segments.recognized when an affiliate of KKR acquired us on July 30, 2013 and intangible assets recognized in connection with businesses we acquired since July 30, 2013,— including customer relationships, tradenames, developed technology, backlog and trademarks.includesrepresents the recognition of non-cash charges we recognized forto reduce the impairmentcarrying value of intangible assets other intangible assets.than goodwill to their fair value.30contract settlementother transaction related expenses and non-cash charges, losses environmental remediation, stock-based compensation expenseand gains on asset disposals and other miscellaneous operating expenses.3547 jurisdictions outside of the United States. Because we conduct operations on a global basis, our effective tax rate depends, and will continue to depend, on the geographic distribution of our pre-tax earnings among several different taxing jurisdictions. Our effective tax rate can also vary based on changes in the tax rates of the different jurisdictions, the availability of tax credits and non-deductible items.On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code that affected 2017 and 2018, including, but not limited to, (1) requiring a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries that is payable over eight years, (2) bonus depreciation that will allow for full expensing of qualified property, and (3) a change in US deferred tax assets and liabilities relating to the US tax rate reduction from 35% to 21%. See Note 15 “Income Taxes” to our audited consolidated financial statements included elsewhere in this Form 10-K.IndustrialsIndustrial Technologies and Services products generally correlates with the rate of total industrial capacity utilization and the rate of change of industrial production. Capacity utilization rates above 80% have historically indicated a strong demand environment for industrial equipment. In our Energy segment, demand for our products that serve upstream energy end-markets are influenced heavily by energy prices and the expectation as to future trends in those prices. Energy prices have historically been cyclical in nature and are affected by a wide range of factors. In addition to energy prices, demand for our upstream energy products are positively impacted by increasing global land rig count, drilled but uncompleted wells, the level of hydraulic fracturing intensity and activity measured by horsepower utilization and lateral lengths as well as drilling and completion capital expenditures. In the midstream and downstream portions of our EnergyIndustrial Technologies and Services segment, overall economic growth and industrial production, as well as secular trends, impact demand for our products. In our MedicalPrecision and Science Technologies segment, we expect demand for our products to be driven by favorable trends, including the growth in healthcare spend and expansion of healthcare systems due to an aging population requiring medical care and increased investment in health solutions and safety infrastructures in emerging economies. Over longer time periods, we believe that demand for all of our products also tends to follow economic growth patterns indicated by the rates of change in the GDP around the world, as augmented by secular trends in each segment. Our ability to grow and our financial performance will also be affected by our ability to address a variety of challenges and opportunities that are a consequence of our global operations, including efficiently utilizing our global sales, manufacturing and distribution capabilities and engineering innovative new product applications for end-users in a variety of geographic markets.52%59% for the year ended December 31, 2018,2021, was denominated in currencies other than the U.S. dollar. Because much of our manufacturing facilities and labor force costs are outside of the United States, a significant portion of our costs are also denominated in currencies other than the U.S. dollar. Changes in foreign exchange rates can therefore impact our results of operations and are quantified when significant to our discussion.31Variability within Upstream Energy MarketsWe sell products and provide services to customers in upstream energy markets, primarily inOn February 29, 2020, we completed the United States. For the upstream energy end-market,acquisition of Ingersoll Rand Industrial. Ingersoll Rand Industrial is included in our Energy segment, we manufacture pumps and associated aftermarket products and services used in drilling, hydraulic fracturing and well service applications, while in our Industrials segment we sell dry bulk frac sand blowers, which are used in hydraulic fracturing operations. We refer to these products and services in the Energy and Industrial segments as “upstream energy.” Our Medical segment is not exposed to the upstream energy industry.Demand for upstream energy products has historically corresponded to the supply and demand dynamics related to oil and natural gas products, and has been influenced by oil and natural gas prices, the level and intensityresults of hydraulic fracturing activity rig count, drilling activity and other economic factors. These factors have caused the level of demand for certain of our Energy products to change at times (both positively and negatively) and we expect these trends to continue in the future.We believe it is helpful to consider the impact of our exposure to upstream energy in evaluating our 2016, 2017 and 2018 Segment Revenue and Segment Adjusted EBITDA, in order to better understand other drivers of our performance during those periods, including operational improvements. For the Energy segment, we assess the impact of our exposure to upstream energy as the portion of Energy Segment Adjusted EBITDA of the business unit serving the upstream energy market. For the Industrials segment, we assess the impact as the standard profitoperations beginning on the specific upstream energy market products.Restructuring and Other Business Transformation InitiativesSince 2013, our top priority has been to implementacquisition date (close of business transformation initiatives. A key elementFebruary 29, 2020). Comparability between the years2018, $12.7 million was charged2021 and 2020 will be affected by the inclusion of twelve months of activity from Ingersoll Rand Industrial in 2021 compared to expense related to this restructuring program. We expect additional restructuringonly ten months of activity in 2020.first halfacquisition of 2019 focused on targeted workforce optimization within general and administrative back-office and manufacturing overhead as well as continued facility consolidation.AcquisitionsGiven our global reach, market leading position in our various product categories, strong channel access and aftermarket presence and operational excellence competency, our Company provides an attractive acquisition platform in the flow control and compression equipment sectors. Ingersoll Rand Industrial.August 2016, we acquired a manufacturer of highly specialized consumable micro-syringes and valves that are used in liquid handling instruments in our Medical segment for approximately $18.8 million.In June 2017, within our Industrials segment, we acquired a leading North American manufacturer of gas compression equipment and solutions for vapor recovery, biogas and other process and industrial applications for approximately $20.4 million, net of cash acquired (inclusive of an indemnity holdback of $1.9 million recorded in “Accrued liabilities”).In February 2018, we acquired a leading global manufacturer of turbo vacuum technology systems and optimization solutions for industrial applications in our Industrials segment for total consideration, net of cash acquired, of32approximately $94.9 million. In May 2018, we acquired a leading manufacturer of plungers and other well service pump consumable products in our Energy segment for total consideration, net of cash acquired of approximately $21.0 million (inclusive of cash payments of $18.8 million, a $2.0 million promissory note and a $0.2 million holdback). In November 2018, we acquired a leading manufacturer of rotary screws and piston compressors and associated aftermarket parts in our Industrials segment for total consideration, net of cash acquired, of $16.1 million (inclusive of cash payments of $14.8 million and a $1.3 million holdback). In December 2018, we acquired a leading manufacturer of specialty industrial pumps and associated aftermarket parts in our Industrials segment for total consideration of $58.5 million, net of cash acquired (inclusive of cash payments of $57.8 million, a payable for a $0.1 million purchase price adjustment and a $0.6 million holdback).The revenues for these acquisitions subsequentaddition to the respective dates of acquisition included in our financial results were $108.0 million, $27.8 million and $4.9 million forIngersoll Rand Industrial transaction discussed above, we have acquired several other businesses during the yearsthree year period ended December 31, 2018, 2017 and 2016, respectively. The operating income (loss) for2021. While these acquisitions subsequentare not individually significant or significant in the aggregate, they may be relevant when comparing our results from period to their respective dates of acquisition, including organic growth since acquisition, included in our financial results was $8.8 million, $3.7 million and ($0.3) million for the years ended December 31, 2018, 2017 and 2016, respectively.34 “Business Combinations” to our audited consolidated financial statements included elsewhere in this Form 10-K for further discussion aroundof these acquisitions.outstanding holdbacksimpact of the ongoing COVID-19 pandemic on our global operations and also the operations of our suppliers and customers. Demand for our products was negatively impacted throughout the majority of 2020 as a result of the pandemic. Demand began to improve in the fourth quarter of 2020 and accelerated in the first half of 2021 as markets strengthened and gained greater visibility to vaccine roll-out strategies in various regions. Order rates in the first half of 2021 were particularly strong and we believe represent some deferred demand from 2020. In order to position ourselves to fulfill demand we continue to monitor the supply chain closely and are taking proactive steps to ensure continuity of supply. We are adhering to all state and country mandates and guidelines wherever we operate. Currently all our major manufacturing locations are operational. We have taken certain actions to reduce costs and preserve cash given the uncertain environment. The degree to which the pandemic will continue to impact our operations, and the operations of our customers and suppliers remains uncertain. See “The COVID-19 pandemic could have a material and adverse effect on our business, results of operations and financial condition in the future” in Part II Item 1A. “Risk Factors” included elsewhere in this Form 10-K.2018, 20172021 and 2016.KKR Management Fees and ExpensesThrough the date of our initial public offering in 2017, KKR charged an annual management fee, as well as fees and expenses for services provided. These fees and charges were $1.12020, $13.4 million and $4.8$83.0 million, respectively, were charged to expense related to this restructuring program. Through December 31, 2021, we recognized expense related to the 2020 Plan of $78.7 million, $6.9 million and $10.8 million for Industrial Technologies and Services, Precision and Science Technologies and Corporate, respectively.20172021 and 2016, respectively. In May 2017, the monitoring agreement was terminated in accordance with its terms and we paid an additional termination fee of approximately $16.2 million.Stock-Based Compensation ExpenseFor the year ended December 31, 2018,2020, we incurred stock-based compensation expense of approximately $2.8$87.2 million whichand $47.5 million, respectively. The increase from 2020 was reduced by $5.1 million primarily due to a decreasethe $150 million equity grant to nearly 16,000 employees worldwide announced in the estimated accrual for employer taxes related to DSUs as a result of a lower per share stock price.The $2.8 million of stock-based compensation expense included expense for the modification of equity awards for certain former employees of $3.8 million and expense for equity awards granted under the 2013 Plan and the 2017 Plan of $7.2 million reduced by a benefit for a reduction in the liability for stock appreciation rights (“SAR”) of $8.2 million. As of December 31, 2018, there was $20.3 million of unrecognized stock-based compensation expense related to outstanding stock options that will be recognized in future periods.Subsequent to the initial public offering in May 2017, we recognized stock-based compensation expense of approximately $77.6 million related to time-based and performance-based stock options. As of December 31, 2017 there was $9.1 million of unrecognized stock-based compensation expense related to outstanding stock options that will be recognized in future periods. The Company also recognized $97.4 million of compensation expense related to a grant of 5.5 million DSUs to employees at the date of the initial public offering and employer taxes related to DSUs of $19.2 million. The Company expects to make stock-based awards to employees and recognize stock-based compensation expenses in future periods.Income TaxesOn December 22, 2017, the 2017 Tax Cuts and Jobs Act (“Tax Act”) was enacted into law. The new legislation contains several key tax provisions that affected us, including a one-time mandatory transition tax on accumulated foreign earnings and a reduction of the corporate income tax rate to 21% effective January 1, 2018, among others. We are required to recognize the effect of the tax law changes, including the determination of the transition tax, the remeasurement of our U.S. deferred tax assets and liabilities as well as the reassessment of the net realizability of our deferred tax assets and liabilities, in the period of enactment. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”), which allowed us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. As a result, we previously provided a provisional estimate of the effect of the Tax Act in our financial statements for 2017 and through the first nine months of 2018. In the fourththird quarter of 2018, we completed our33accounting for all of the enactment-date income tax effects of the Tax Act by increasing the total benefit taken in 2017 of $95.3 million to $96.5 million. Due to the Tax Act, the total U.S. deferred changed from a tax benefit of $89.6 million in 2017 to $74.5 million in 2018, with a 2018 measurement-period adjustment of $15.1 million and the ASC 740-30 (formerly APB 23) liability, related to the permanent reinvestment of earnings in foreign subsidiaries assertion, changed from a tax benefit of $69.0 million in 2017 to $72.5 million in 2018, with a 2018 measurement-period adjustment of $3.5 million. The provisional one-time transition tax of $63.3 million in 2017 decreased to $50.5 million in 2018, with a 2018 measurement-period adjustment of $12.8 million. The total $1.2 million benefit has a (0.3)% impact to the overall rate in 2018.The Tax Act creates a new requirement that certain income (i.e., GILTI) earned by controlled foreign corporations (“CFC”) must be included currently in the gross income of the CFCs’ U.S. shareholder. GILTI is the excess of the shareholder’s “net CFC tested income” over the net deemed tangible income return, which is currently defined as the excess of (1) 10% of the aggregate of the U.S. shareholder’s pro rata share of the qualified business asset investment of each CFC with respect to which it is a U.S. shareholder over (2) the amount of certain interest expense taken into account in the determination of net CFC-tested income.Under U.S. GAAP, we are allowed to make an accounting policy election of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”) or (2) factoring such amounts into a company’s measurement of its deferred taxes (the “deferred method”). The Company has determined that it will follow the period cost method (option 1 above) going forward. The tax provision for the twelve month period ended December 31, 2018 reflects this decision. All of the additional calculations and rule changes found in the Tax Act have been considered in the tax provision for the three and twelve month periods ended December 31, 2018. The Company recorded a tax expense of $11.9 million in the period for the GILTI provisions of the Tax Act that were effective for the first time during 2018.15 “Income Taxes”18 “Stock-Based Compensation” to our audited consolidated financial statements included elsewhere in this Form 10-K.OutlookIndustrials SegmentThe mission-critical nature of10-K for further discussion around our Industrials products across manufacturing processes drives a demand environment and outlook that are correlated with global and regional industrial production, capacity utilization and long-term GDP growth. In the fourth quarter of 2018, we had $322.5 million of orders in our Industrials segment, an increase of 1% over the fourth quarter of 2017, or a 4% increase on a constant currency basis. We believe that we are well positioned to continue to benefit from a slower but positive industrial production and global GDP outlook. Our fourth quarter of 2018 constant currency increase was on top of strong fourth quarter of 2017 growth of 25%.Energy SegmentOur Energy segment has a diverse range of equipment and associated aftermarket parts, consumables and services for a number of market sectors with both energy exposure, spanning upstream, midstream, downstream and petrochemical applications.Our upstream products demand environment and outlook are influenced heavily by the supply and demand dynamics related to oil and natural gas products, and has been influenced by oil and natural gas prices, the level and intensity of hydraulic fracturing activity, global land rig count, drilled but uncompleted wells and other economic factors. These factors have caused the level of demand for certain of our upstream products to change at times (both positively and negatively) and we expect these trends to continue in the future. We believe we are well positioned to continue to benefit given our market position, diverse range of equipment, aftermarket parts and consumables and our service presence, but expect the demand environment and economic factors growth will slow with some factors potentially declining.Our midstream and downstream products demand environment and outlook are relatively stable with attractive, long-term growth trends influenced by long-term GDP growth and the continued increase in the production and transportation of hydrocarbon. Demand for our petrochemical industry products correlates with capital expenditures related to growth and maintenance of petrochemical plants as well as activity levels therein. Advancements in the development of unconventional natural gas resources in North America over the past decade have resulted in the abundant availability of locally-sourced natural gas as feedstock for petrochemical plants in North America, supporting long-term growth.34In the fourth quarter of 2018, we had $269.5 million of orders in our Energy segment, a decrease of 4% over the fourth quarter of 2017, or a 3% decrease on a constant currency basis. This fourth quarter of 2018 constant currency decrease was off strong fourth quarter of 2017 growth of 62%.Medical SegmentDuring 2018, we focused on the development and introduction of new products and applications to access the liquid pump market, leveraging our technology and expertise in gas pumps. Entering 2019, we believe that demand for products and services in the Medical space will continue to benefit from attractive secular growth trends in the aging population requiring medical care, emerging economies modernizing and expanding their healthcare systems and increased investment globally in health solutions. In addition, we expect growing demand for higher healthcare efficiency, requiring premium and high performance systems. In the fourth quarter of 2018 we had $65.8 million of orders in our Medical segment, a decrease of 1% over 2017, or a 1% increase on a constant currency basis. This fourth quarter increase on a constant currency basis was on top of strong fourth quarter of 2017 growth of 29%.threetwo business segments described above. In addition to our consolidated GAAP financial measures, we review various non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Income and Free Cash Flow.35“Item 6. Selected“Non-GAAP Financial Data.”2018, 20172021 and 2016(1)See “Item 6. Selected Financial Data” for a reconciliation to the most directly comparable GAAP measure.Year Ended December 31, 2021 2020 Consolidated Statements of Operations Revenues $ 5,152.4 $ 3,973.2 Cost of sales 3,163.9 2,568.3 Gross Profit 1,988.5 1,404.9 Selling and administrative expenses 1,028.0 789.3 Amortization of intangible assets 332.9 335.1 Impairment of other intangible assets — 19.9 Other operating expense, net 61.9 201.0 Operating Income 565.7 59.6 Interest expense 87.7 111.1 Loss on extinguishment of debt 9.0 2.0 Other income, net (44.0) (8.1) Income (Loss) Before Income Taxes 513.0 (45.4) Provision (benefit) for income taxes (21.8) 11.4 Loss on equity method investments (11.4) — Income (Loss) from Continuing Operations 523.4 (56.8) Income from discontinued operations, net of tax 41.6 24.4 Net Income (Loss) 565.0 (32.4) Less: Net income attributable to noncontrolling interests 2.5 0.9 Net Income (Loss) Attributable to Ingersoll Rand Inc. $ 562.5 $ (33.3) Percentage of Revenues Gross profit 38.6 % 35.4 % Selling and administrative expenses 20.0 % 19.9 % Operating income 11.0 % 1.5 % Income (loss) from continuing operations 10.2 % (1.4) % 23.1 % 22.1 % Other Financial Data $ 1,191.9 $ 878.1 881.4 520.0 Cash flows - operating activities 627.8 653.5 Cash flows - investing activities (1,029.4) (31.3) Cash flows - financing activities (1,157.0) 328.7 563.7 611.5 36Revenues20182021 were $2,689.8$5,152.4 million, an increase of $314.4$1,179.2 million, or 13.2%29.7%, compared to $2,375.4$3,973.2 million in 2017.2020. The increase in revenues was primarily due primarily to higher revenues from upstream energy exposed markets (3.8% or $90.2 million), higheracquisitions, including Ingersoll Rand Industrial, of $537.5 million and organic volume in other marketsgrowth in our Energy Segment as well asIndustrial Technologies and Services segment of $330.3 million. The increase due to acquisitions is impacted by the inclusion of twelve months of activity from Ingersoll Rand Industrial in our Industrials and Medical Segments including from acquisitions (7.0% or $167.1 million), improved pricing2021 compared to only ten months of activity in 2020. Organic volume growth in 2021 partially reflects the other markets of our Energy Segment as well as in our Industrials and Medical Segments (1.2% or $28.8 million) and the favorableadverse impact of foreign currencies (1.2% or $28.3 million).COVID-19 in 2020. The percentage of consolidated revenues derived from aftermarket parts and services was 39.2%36.2% in 20182021 compared to 41.3%35.5% in 2017.Revenues for 2017 were $2,375.42020.$436.0$583.6 million, or 22.5%41.5%, compared to $1,939.4$1,404.9 million in 2016. The increase in revenues was due primarily to higher revenues from upstream energy exposed markets (20.9% or $405.5 million), the favorable impact of foreign currencies (1.1% or $21.8 million), improved pricing in the other markets of our Energy segment as well as in our Industrials and Medical segments (1.0% or $18.8 million), and higher volume in our Industrials segment including from acquisitions net of divestitures (0.1% or $1.6 million), partially offset by lower volume including acquisitions in other markets in our Energy segment as well as in our Medical segment (0.6% or $11.7 million). The percentage of consolidated revenues derived from aftermarket parts and services was 41.3% in 2017 compared to 34.7% in 2016.See further analysis in the segment results below.Gross ProfitGross profit in 2018 was $1,012.5 million, an increase of $114.6 million, or 12.8%, compared to $897.9 million in 2017,2020, and as a percentage of revenues was 37.6%38.6% in 20182021 and 37.8%35.4% in 2017.2020. The increase in gross profit reflectsis primarily due to acquisitions, including Ingersoll Rand Industrial, higher revenues from upstream energy exposed markets, higher volume in other marketsvolumes in our Energy Segment as well as in our IndustrialsIndustrial Technologies and Medical Segments including from acquisitions, improved pricing in the other markets of our Energy Segment as well as in our Industrials and Medical Segments,Services segment, and the favorable impactrunoff of foreign currencies.the fair valuation adjustments related to the acquisition of Ingersoll Rand Industrial impacting cost of sales in 2020 that did not recur in 2021. The slight decreaseincrease due to acquisitions is impacted by the inclusion of twelve months of activity from Ingersoll Rand Industrial in 2021 compared to only ten months of activity in 2020. The increase in gross profit as a percentage of revenues is primarily reflects higher materials and other manufacturing costsdue to the runoff of the fair valuation adjustments related to the acquisition of Ingersoll Rand Industrial impacting cost of sales in our Industrials and Energy Segments, growth rates for original equipment revenues greater than the growth rates for aftermarket products and services2020 that did not recur in our Industrials Segment, and unfavorable product sales mix in our Industrials and Energy Segments.Gross profit in 2017 was $897.9 million, an increase of $181.2 million, or 25.3%, compared to $716.7 million in 2016, and as a percentage of revenues was 37.8% in 2017 and 37.0% in 2016. The increase in gross profit reflects higher revenues from upstream energy exposed markets, higher volume in our Industrials segment including acquisitions and net of divestitures, improved pricing in other markets in our Energy segment as well as in our Industrials and Medical segments, and the favorable impact of foreign currencies, partially offset by lower volume including acquisitions in other markets in our Energy segment as well as in our Medical segment.$434.6$1,028.0 million in 2018, a decrease2021, an increase of $11.6$238.7 million, or 2.6%30.2%, compared to $446.2$789.3 million in 2017. Selling and administrative expenses includes KKR fees and expenses of $0.0 million in 2018 and $17.3 million in 2017 and expenses related to our public stock offerings and establishment of public company financial reporting of $7.2 million in 2018 and $12.2 million in 2017. Excluding these items, selling and administrative expenses were $427.4 million in 2018 compared to $416.7 million in 2017, and selling and administrative expenses as a percentage of revenues decreased to 15.9% in 2018 from 17.5% in 2017. This increase in selling and administrative expense in 2018 primarily reflects increased professional and consulting fees, increased salaries, and additional selling and administrative expenses from acquisitions, partially offset by decreased incentive compensations.2020. Selling and administrative expenses as a percentage of revenues decreased primarily dueincreased to higher revenues.Selling and administrative expenses were $446.2 million20.0% in 2017, an increase of $31.1 million, or 7.5%, compared to $415.1 million2021 from 19.9% in 2016. Selling and administrative expenses in 2017 includes $12.2 million of expenses related to our public stock offerings and establishment of public company financial reporting and $17.3 million of KKR fees and expenses, compared to $0.2 million and $4.8 million of expenses related to the establishment of public company financial reporting and KKR fees and expenses in 2016, respectively. Excluding these items, selling and administrative expenses were $416.7 million in 2017 compared to $410.1 million in 2016, and selling and37administrative expenses as a percentage of revenues decreased to 17.5% in 2017 from 21.1% in 2016.2020. This increase in selling and administrative expense in 2017 primarily reflects increased salaries and other employee related expenses and professional and consulting fees, partially offset by reduced facilities operating expenses and reduced sales commissions. Selling and administrative expenses as a percentage of revenues decreasedwas primarily due to higher revenues.$125.8$332.9 million $118.9in 2021, a decrease of $2.2 million compared to $335.1 million in 2020. The decrease was primarily due to certain intangible assets, primarily backlog, related to the acquisition of Ingersoll Rand Industrial becoming fully amortized, partially offset by the inclusion of twelve months of activity from Ingersoll Rand Industrial in 2021 compared to only ten months of activity in 2020 as well as intangible assets acquired in 2021.$124.2higher foreign currency transaction gains, net of $30.6 million.2018, 2017 and 2016, respectively. The increase2021, a decrease of $6.9$23.4 million, compared to $111.1 million in 2018 compared to 20172020. The decrease was primarily due to the amortization of intangibles acquireddecrease in 2018.The decrease of $5.3 million in 2017 compared to 2016 was primarily due to assets that became fully amortized in 2016, partially offset by changes in foreign currencies.Impairment of Other Intangible AssetsIn 2017, we recorded a non-cash charge for the impairment of other intangible assets of $1.6 million, primarily related to trademarks in our Industrials segment.In 2016, we recorded a non-cash charge for the impairment of other intangible assets of $25.3 million, primarily related to trademarks in our Industrials segment.Other Operating Expense, NetOther operating expense, net was $9.1 million in 2018, a decrease of $213.0 million compared to $222.1 million in 2017, primarily due to lower stock-based compensation expense of $172.3 million and lower employer taxes related to stock-based compensation of $24.3 million, foreign currency transaction gains of $1.9 million in 2018 compared to losses of $9.3 million in 2017, and shareholder litigation settlement recoveries in 2018 of $9.5 million, partially offset by increased restructuring charges of $7.4 million and increased acquisition related expenses and non-cash charges of $6.4 million.Other operating expense, net was $222.1 million in 2017, an increase of $173.5 million compared to $48.6 million in 2016, primarily due to the recognition of stock-based compensation expense for stock options and deferred stock units of $175.0 million, employer taxes related to deferred stock units of $19.2 million and increased foreign currency transaction losses of $9.3 million in 2017 compared to gains of $5.9 million in 2016, partially offset by lower employee severance costs of $5.3 million in 2017 compared to $32.9 million in 2016, and lower environmental remediation of $0.9 million in 2017 compared to $5.6 million in 2016.Interest ExpenseInterest expense was $99.6 million, $140.7 million and $170.3 million in 2018, 2017 and 2016, respectively. The decrease of $41.1 million in 2018 compared to 2017 was primarily due to repayments of debt with the proceeds of our initial public offering in 2017 and reduced debt as a result of prepayments in 2018 and a lower weighted-average interest rate as well as the payoff of 5.2%the Dollar Term Loan Series A in 2018 compared to 6.0% in 2017.the third quarter of 2021. The decrease of $29.6 million in 2017 compared to 2016 was primarily due to reduced debt as a result of repayments of debt with proceeds of our initial public offering, and a decreased weighted-average interest rate was approximately 2.0% in 2021 and 3.5% in 2020.approximately 6.0%Debt2017 compared2021, which was related to 6.1%the payoff of the Dollar Term Loan Series A. Loss on extinguishment of debt was $2.0 million in 2016.$7.2 million, $3.4 million and $3.6$44.0 million in 2018, 2017 and 2016, respectively.2021, an increase of $35.9 million compared to $8.1 million in 2020. The increase in other income, net of $3.8 million in 2018 compared to 2017 was primarily due to recognition of a reduction$30.0 million gain upon settling post-acquisition contingencies related to the Ingersoll Rand Industrial transaction outside of $5.1 millionthe measurement period in the other componentssecond quarter of net periodic benefit cost, increased interest income of $0.8 million and increased other financing income of $0.7 million, partially offset by a decrease in the gains on postretirement plan investments of $2.8 million. The decrease of $0.2 million in 2017 compared to 2016 was primarily due to an increase of $1.2 million in the other components of net periodic benefit cost partially offset by the increase in the gain on postretirement plan investments of $1.0 million. (Benefit) for Income TaxesThe provision for income taxes was $80.1 million resulting in a 22.9% effective tax rate in 2018 compared to a benefit of $131.2 million resulting in a 116.3% effective tax benefit rate in 2017. The increase in the tax provision38and the decreased effective tax rate resulted primarily from an increase in pretax book income, an increase in a benefit related to equity compensation, and a reduction of the overall impact of the Tax Act in 2018 compared to the enactment date in 2017.$131.2$21.8 million resulting in a 116.3%(4.2)% effective tax benefit rate in 20172021 compared to a benefitprovision for income taxes of $31.9$11.4 million resulting in a 50.5%(25.1)% effective tax benefitprovision rate in 2016.2020. The increasedecrease in the tax benefitprovision and the change in the effective tax rate resultedis primarily fromdue to an increase in the Tax Act. Therepre-tax book income in jurisdictions with lower effective$89.6 million deferredresult of the lapse of the limitation on statutes, a benefit associated with the rate moving from 35% to 21%. In 2017, we recognized an ASC 740-30 (formerly APB 23) liability reduction related tofinal settlement on the permanent reinvestment of earnings in foreign subsidiaries assertion, resulting in a benefit of $69.0 million which was partially offset bymerger transaction, a one-time transitionrestructuring benefit, and foreign tax provision of approximately $63.3 million.$269.4$565.0 million in 20182021 compared to a net incomeloss of $18.5$(32.4) million in 2017.2020. The increase in net income was primarily due to higher operating incomegross profit on higherincreased revenues and gross profit, lower stock-based compensation expense, lower loss on extinguishment of debt, and lower interest expense, partially offset by an increase in the provision for income taxes.Net income was $18.5 million in 2017 compared to aother operating expenses, net, loss of $31.3 million in 2016. The increase in net income was primarily due to higher operating income on higher revenues and gross profit and lower interest expense, and an increase in the benefit for income taxes, partially offset by higher stock-based compensation expenseselling and loss on extinguishment of debt.$120.3$313.8 million to $681.8$1,191.9 million in 20182021 compared to $561.5$878.1 million in 2017.2020. Adjusted EBITDA as a percentage of revenues increased 170100 basis points to 25.3%23.1% in 20182021 from 23.6%22.1% in 2017.2020. The increase in Adjusted EBITDA was primarily due to higher revenues from upstream energy exposed markets ($44.2 million),organic sales volume of $157.6 million, improved pricing in the other markets of our Energy Segment as well as in our Industrials$139.0 million and Medical Segments ($28.8 million), higher volume in other markets in our Energy Segment as well as in our Industrials and Medical Segmentsacquisitions, including from acquisitions ($63.1 million) and lowerIngersoll Rand Industrial, of $127.5 million, partially offset by increased selling and administrative expenses ($22.0 million), partially offset by higher materials and other manufacturing costsexpenses. The increase in our Industrials and Energy Segments growth rates for original equipment revenues greater than the growth rates for aftermarket products and services in our Industrials Segment, and unfavorable product sales mix in our Industrials Segment and in other markets in our Energy Segment ($43.5 million).Adjusted EBITDA increased $160.8 million to $561.5 million in 2017 compared to $400.7 million in 2016. Adjusted EBITDA as a percentage of revenues increased 290 basis pointsis primarily attributable to 23.6% in 2017 from 20.7% in 2016. The increase in Adjusted EBITDA was primarily due to increased revenues in upstream energy exposed markets ($159.7 million), improved pricing ($18.8 million), and the favorable impact of foreign currencies ($5.9 million), partially offset by lower volume in other marketsorganic growth in our Energy segment as well as in our IndustrialsIndustrial Technologies and Medical segments including acquisitions and divestitures ($15.5 million), and higher selling and administrative expenses ($9.3 million).$145.4$361.4 million to $394.7$881.4 million in 20182021 compared to $249.3$520.0 million in 2017.2020. The increase was primarily due to increasedhigher Adjusted EBITDA, and lower interest expense, partially offset by an increase in the income tax provision, as adjusted.increased $115.7 millionand cash flows from operating activities to $249.3 million in 2017 compared to $133.6 million in 2016. The increase was primarily due to increasedFree Cash Flow. For additional information regarding Adjusted EBITDA and lower interestAdjusted Net Income, see “How We Assess the Performance of Our Business” above.Year Ended December 31, 2021 2020 Net Income (Loss) $ 565.0 $ (32.4) Less: Income from discontinued operations 121.0 26.0 Less: Income tax provision from discontinued operations (79.4) (1.6) Income (loss) from continuing operations, net of tax 523.4 (56.8) Plus: Interest expense 87.7 111.1 Provision for income taxes (21.8) 11.4 85.1 75.3 332.9 335.1 Impairment of other intangible assets — 19.9 18.8 88.0 65.2 181.5 95.9 47.0 Foreign currency transaction losses (gains), net (12.0) 18.6 Loss on equity method investments 11.4 — Loss on extinguishment of debt 9.0 2.0 33.2 39.8 Gain on settlement of post-acquisition contingencies (30.1) — (6.8) 5.2 Adjusted EBITDA $ 1,191.9 $ 878.1 Minus: Interest expense $ 87.7 $ 111.1 120.7 163.6 Depreciation expense 85.1 75.3 Amortization of non-acquisition related intangible assets 17.0 8.1 Adjusted Net Income $ 881.4 $ 520.0 Free Cash Flow from Continuing Operations: Cash flows from operating activities from continuing operations $ 627.8 $ 653.5 Minus: Capital expenditures 64.1 42.0 Free Cash Flow from Continuing Operations $ 563.7 $ 611.5 partially offsetexcludes $4.1 million and $2.1 million of depreciation of rental equipment for the years ended December 31, 2021 and 2020, respectively.Year Ended December 31, 2021 2020 Restructuring charges $ 13.4 $ 83.0 Facility reorganization, relocation and other costs 3.1 2.1 Other, net 2.3 2.9 Total restructuring and related business transformation costs $ 18.8 $ 88.0 an increase$0.5 million due to costs associated with employer taxes.adjusted.Year Ended December 31, 2021 2020 Provision (benefit) for income taxes $ (21.8) $ 11.4 Tax impact of pre-tax income adjustments 97.6 156.6 Discrete tax items 44.9 (4.4) Income tax provision, as adjusted $ 120.7 $ 163.6 businessesbusiness into threetwo segments: Industrials, EnergyIndustrial Technologies and Medical.Services and Precision and Science Technologies. Our Corporate operations (as described below) are not discussed separately as any results that had a significant impact on operating results are included in the consolidated results discussion above.39chief operating decision makerChief Operating Decision Maker (“CODM”) are described in Note 2123 “Segment Information” to our audited consolidated financial statements included elsewhere in this Form 10-K.2018, 20172021 and 2016IndustrialsResults
Percent ChangeYears Ended December 31, Percent Change 2021 2020 2021 vs. 2020 Segment Revenues $ 4,161.0 $ 3,248.2 28.1 % Segment Adjusted EBITDA $ 1,033.7 $ 759.8 36.0 % Segment Margin 24.8 % 23.4 % 140 bps 2018201720182021were $1,303.3$4,161.0 million, an increase of $172.6$912.8 million, or 15.3%28.1%, compared to $1,130.7$3,248.2 million in 2017.2020. The increase in Segment Revenues was primarily due to acquisitions, including Ingersoll Rand Industrial, of $377.5 million or 11.6%, higher volume including through acquisitions (11.0%of $330.3 million or $124.8 million)10.2%, improved pricing (2.3%of $118.7 million or $25.8 million),3.7% and the favorable impact of foreign currencies (1.9%of $86.3 million or $22.0 million)2.7%. The percentage of Segment Revenues derived from aftermarket parts and service was 31.5%40.7% in 20182021 compared to 34.0%40.2% in 2017.20182021 was $288.2$1,033.7 million, an increase of $45.5$273.9 million, or 18.7%36.0%, from $242.7$759.8 million in 2017.2020. Segment Adjusted EBITDA Margin increased 60140 bps to 22.1%24.8% from 21.5%23.4% in 2017.2020. The increase in Segment Adjusted EBITDA was primarily due primarily to higher volume including through acquisitions ($41.0 million)organic sales volumes of $125.9 million or 16.6%, improved pricing ($25.8 million)of $118.7 million or 15.6%, acquisitions, including Ingersoll Rand Industrial, of $93.4 million or 12.3% and the favorable impact of foreign currencies ($6.0 million)of $23.0 million or 3.0%, partially offset by higher materialsselling and other manufacturing costs, growth rates for original equipment revenues greater than the growth rates for aftermarket products and services,administrative expenses of $60.9 million or 8.0% and unfavorable salesmargin mix within original equipment revenues ($26.8 million)of $20.7 million or 2.7%.2017Years Ended December 31, Percent Change 2021 2020 2021 vs. 2020 Segment Revenues $ 991.4 $ 725.0 36.7 % Segment Adjusted EBITDA $ 291.4 $ 220.2 32.3 % Segment Margin 29.4 % 30.4 % (100) bps 20162017 2021were $1,130.7$991.4 million, an increase of $48.3$266.4 million, or 4.5%36.7%, compared to $1,082.4$725.0 million in 2016.2020. The increase in Segment Revenues was primarily due to acquisitions, including Ingersoll Rand Industrial, of $160.0 million or 22.1%, higher volume including acquisitionsof $70.4 million or 9.7%, improved pricing of $20.3 million or 2.8% and net of divestitures (1.9% or $20.4 million, including $18.9 million from upstream energy exposed markets), higher pricing (1.5% or $16.1 million) and the favorable impact of foreign currencies (1.1%of $15.7 million or $11.8 million)2.2%. The percentage of Segment Revenues derived from aftermarket parts and service was 34.0%17.1% in 20172021 compared to 34.7%14.6% in 2016.2020.4020172021 was $242.7$291.4 million, an increase of $25.1$71.2 million, or 11.5%32.3%, from $217.6$220.2 million in 2016.2020. Segment Adjusted EBITDA Margin increased 140decreased 100 bps to 21.5%29.4% from 20.1%30.4% in 2016.2020. The increase in Segment Adjusted EBITDA was due primarily to improved pricing ($16.1 million)acquisitions, including Ingersoll Rand Industrial, of $36.1 million or 16.4%, higher volume including acquisitionsof $31.7 million or 14.4%, improved pricing of $20.3 million or 9.2%, partially offset by higher selling and netadministrative expenses of divestitures ($6.0 million, including $13.0 million from upstream energy exposed markets),or 5.9%.favorable impactfourth quarter of foreign currencies ($2.8 million).Energy Segment Results
Percent Change2018 vs. 2017Segment Revenuesfor 2018were $1,121.12021, we had $1,201.1 million of orders in our Industrial Technologies and Services segment, an increase of $106.620.5% over the fourth quarter of 2020.2021 2020 Revenues $ 430.9 $ 741.4 Cost of sales 321.3 564.6 Gross profit 109.6 176.8 Selling and administrative expenses 35.7 63.0 Amortization of intangible assets 10.4 37.1 Gain on sale (298.3) — Other operating expense, net 18.1 1.7 Income Before Income Taxes 343.7 75.0 Provision for income taxes 87.1 12.9 Income from Discontinued Operations, Net of Tax $ 256.6 $ 62.1 10.5%41.9%, compared to $1,014.5$741.4 million in 2017.2020. The decrease in revenues from discontinued operations was primarily due to the sale of SVT being substantially completed on June 1, 2021. Refer to Note 3 “Discontinued Operations” to our consolidated financial statements for additional discussion.Segment Revenues2020. The increase was primarily due to higher revenues from upstream energy exposed markets (8.9% or $90.2 million)separation related expenses and higher volume and pricingnon-cash charges of $17.2 million, partially offset by lower restructuring charges of $0.8 million.other markets in our Energy Segment (1.5% or $15.1 million) The percentage of Segment Revenues derived from aftermarket parts and service was 56.6% in 2018a 25.3% effective income tax rate for the year ended December 31, 2021, compared to 58.0%a provision for income taxes of $12.9 million resulting in 2017.Segment Adjusted EBITDAa 17.2% effective income tax rate in 2018 was $337.8 million, an increase of $41.7 million, or 14.1%, from $296.1 millionthe same period in 2017. Segment Adjusted EBITDA Margin increased 90 bps to 30.1% in 2018 from 29.2% in 2017.2020. The increase in Segment Adjusted EBITDAthe tax provision in 2021 is primarily due to one-time discrete items associated with the sale of the SVT business.2021 2020 Revenues $ 71.9 $ 195.6 Cost of sales 60.2 163.9 Gross profit 11.7 31.7 Selling and administrative expenses 5.3 42.5 Amortization of intangible assets 2.4 23.6 Loss on sale 207.7 — Other operating expense, net 19.0 14.5 Operating Loss (222.7) (48.9) Other expense, net — 0.1 Loss Before Income Taxes (222.7) (49.0) Benefit for income taxes (7.7) (11.3) Loss from Discontinued Operations, Net of Tax $ (215.0) $ (37.7) higherthe sale of HPS being substantially completed on April 1, 2021. Refer to Note 3 “Discontinued Operations” to our consolidated financial statements for additional discussion.upstream energy exposed markets ($44.2 million) and higher volume and pricing in other markets in our Energy segment ($8.1 million), partially offset by higher material and manufacturing costs and unfavorable product sales mix in other markets in our Energy Segment ($11.2 million).2017 vs. 2016Segment Revenuesthe transaction.2017 were $1,014.5 million,2021, an increase of $386.1$4.5 million, or 61.4%, compared to $628.4$14.5 million in 2016.2020. The increase in Segment Revenues was primarily due to higher revenues from upstream energy exposed markets (61.5% or $386.6 million), andexpenses incurred in connection with the favorable impactseparation of foreign currencies (1.3% or $8.0 million),$14.4 million, partially offset by lower volumerestructuring charges of $8.5 million.other markets of our Energy segment (1.4% or $8.6 million). The percentage of Segment Revenues derived from aftermarket parts and service was 58.0% in 2017a 3.5% effective income tax rate for year ended December 31, 2021, compared to 47.3%a benefit for income taxes of $11.3 million resulting in 2016.Segment Adjusted EBITDAa 23.1% effective income tax rate in 2017 was $296.1 million, an increase of $152.3 million, or 105.9%, from $143.8 million2020. The decrease in 2016. Segment Adjusted EBITDA Margin increased 630 bps to 29.2%the tax benefit in 2017 from 22.9% in 2016. The increase in Segment Adjusted EBITDA was2021 is primarily due to increased revenues from upstream energy exposed markets ($146.7 million), lower selling and administrative expenses ($5.4 million),one-time discrete items associated with the favorable impactsale of foreign currencies ($2.8 million), and lower material and manufacturing costs ($2.0 million), partially offset by lower volume in other markets in our Energy segment ($4.7 million).Medical Segment Results
Percent Change2018 vs. 2017Segment Revenuesfor 2018were $265.4 million, an increase of $35.2 million, or 15.3%, compared to $230.2 million in 2017. The increase in Segment Revenues was due to higher volume and pricing (13.2% or $30.3 million) and the41favorable impact of foreign currencies (2.2% or $5.0 million). The percentage of Segment Revenues derived from aftermarket parts, consumables and services was 3.3% in 2018 compared to 3.7% in 2017.Segment Adjusted EBITDA in 2018 was $75.0 million, an increase of $12.6 million, or 20.2%, from $62.4 million in 2017. Segment Adjusted EBITDA Margin increased 120 bps to 28.3% in 2018 from 27.1% in 2017. The increase in Segment Adjusted EBITDA was primarily due to higher volume and pricing ($17.1 million) and favorable impact of foreign currencies ($1.5 million), partially offset by higher material and other manufacturing costs ($6.3 million).2017 vs. 2016Segment Revenues for 2017 were $230.2 million, an increase of $1.5 million, or 0.7%, compared to $228.7 million in 2016. The increase in Segment Revenues was due to improved pricing (1.1% or $2.6 million), the favorable impact of foreign currencies (0.9% or $2.0 million), partially offset by lower volume including acquisitions (1.3% or $3.1 million). The percentage of Segment Revenues derived from aftermarket parts, consumables and services was 3.7% in 2017 compared to 0.0% in 2016.Segment Adjusted EBITDA in 2017 was $62.4 million, an increase of $0.5 million, or 0.8%, from $61.9 million in 2016. Segment Adjusted EBITDA Margin remained constant at 27.1% in 2017 and 2016. The increase in Segment Adjusted EBITDA was primarily due to improved pricing ($2.6 million), lower selling and administrative expense ($2.1 million), and the favorable impact of foreign currencies ($0.7 million), partially offset by lower volume including acquisitions ($3.7 million), and higher material and other manufacturing costs ($1.2 million).(in millions, except per share amounts) Year Ended December 31, 2020 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Revenues $ 1,129.5 $ 1,279.1 $ 1,325.0 $ 1,418.8 $ 616.8 $ 1,025.4 $ 1,112.5 $ 1,218.5 Gross profit $ 452.1 $ 512.7 $ 514.3 $ 509.4 $ 203.3 $ 308.6 $ 430.0 $ 463.0 Operating income (loss) $ 121.3 $ 140.1 $ 163.9 $ 140.4 $ (79.3) $ (45.0) $ 69.0 $ 114.9 Income (loss) from continuing operations, net of tax $ 90.1 $ 138.3 $ 131.0 $ 164.0 $ (41.3) $ (151.9) $ 30.0 $ 106.4 Income (loss) from discontinued operations, net of tax $ (180.2) $ 96.3 $ (4.2) $ 129.7 $ 4.4 $ (24.6) $ (0.1) $ 44.7 Net income (loss) $ (90.1) $ 234.6 $ 126.8 $ 293.7 $ (36.9) $ (176.5) $ 29.9 $ 151.1 Net income (loss) attributable to Ingersoll Rand Inc. $ (90.4) $ 233.9 $ 126.0 $ 293.0 $ (36.8) $ (177.6) $ 29.5 $ 151.6 Weighted average shares, basic 419.2 419.9 412.3 407.8 277.3 417.0 417.6 418.4 Weighted average shares, diluted 425.9 426.8 418.5 413.4 277.3 417.0 422.0 424.5 Basic earnings (loss) per share of common stock from continuing operations $ 0.21 $ 0.33 $ 0.32 $ 0.40 $ (0.15) $ (0.37) $ 0.07 $ 0.26 Basic earnings (loss) per share of common stock from discontinued operations $ (0.43) $ 0.23 $ (0.01) $ 0.32 $ 0.02 $ (0.06) $ — $ 0.11 Basic earnings (loss) per share of common stock $ (0.22) $ 0.56 $ 0.31 $ 0.72 $ (0.13) $ (0.43) $ 0.07 $ 0.36 Diluted earnings (loss) per share of common stock from continuing operations $ 0.21 $ 0.32 $ 0.31 $ 0.40 $ (0.15) $ (0.37) $ 0.07 $ 0.25 Diluted earnings (loss) per share of common stock from discontinued operations $ (0.42) $ 0.23 $ (0.01) $ 0.31 $ 0.02 $ (0.06) $ — $ 0.11 Diluted earnings (loss) per share of common stock $ (0.21) $ 0.55 $ 0.30 $ 0.71 $ (0.13) $ (0.43) $ 0.07 $ 0.36 $ 244.0 $ 292.1 $ 313.7 $ 342.1 $ 112.2 $ 217.5 $ 251.7 $ 296.7 (1)Weighted average shares, basic, weighted average shares, diluted, basic earnings (loss) per share and diluted (loss) earnings per share have not been provided for the quarter prior to the initial public offering due to the significant change in capital structure.(2)See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Factors Affecting the Comparability of our Results of Operations.”(3)Set forth below are the reconciliations of Net Income (Loss) to Adjusted EBITDA
non-cash charges (d)
reporting compliance(g)42Year Ended December 31, 2021 Year Ended December 31, 2020 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Net Income (Loss) $ (90.1) $ 234.6 $ 126.8 $ 293.7 $ (36.9) $ (176.5) $ 29.9 $ 151.1 Less: Income (loss) from discontinued operations (177.8) 258.5 (7.6) 47.9 12.5 (7.2) 5.3 15.4 Less: Income tax benefit (provision) from discontinued operations (2.4) (162.2) 3.4 81.8 (8.1) (17.4) (5.4) 29.3 Income (loss) from continuing operations, net of tax 90.1 138.3 131.0 164.0 (41.3) (151.9) 30.0 106.4 Plus: Interest expense 23.1 22.7 22.5 19.4 27.1 30.8 28.8 24.4 Provision (benefit) for income taxes 10.6 12.5 2.7 (47.6) (66.9) 78.4 12.8 (12.9) Depreciation expense 20.3 21.0 21.2 22.6 12.3 22.5 19.8 20.7 Amortization expense 84.2 80.3 80.3 88.1 46.7 96.4 97.0 95.0 Impairment of other intangible assets — — — — — — 19.9 — 2.7 6.7 3.1 6.3 38.6 31.0 10.0 8.4 10.5 14.3 14.4 26.0 89.5 54.7 14.7 22.6 21.6 21.5 29.8 23.0 2.8 12.1 11.9 20.2 Loss on equity method investments — 0.7 2.2 8.5 — — — — Loss on extinguishment of debt — — 9.0 — 2.0 — — — Foreign currency transaction losses (gains), net (18.1) 3.4 1.1 1.6 2.0 4.9 5.8 5.9 — — — 33.2 — 35.6 — 4.2 — (30.1) — — — — — — (1.0) 0.8 (3.6) (3.0) (0.6) 3.0 1.0 1.8 Adjusted EBITDA $ 244.0 $ 292.1 $ 313.7 $ 342.1 $ 112.2 $ 217.5 $ 251.7 $ 296.7
(gains), net(a)Represents non-cash charges for the impairment of other intangible assets.(b)Represents management fees and expenses paid to KKR.(c)Restructuring and related business transformation costs consist of (i) restructuring charges, (ii) severance, sign-on, relocation and executive search costs, (iii) facility reorganization, relocation and other costs, (iv) information technology infrastructure transformation, (v) gains and losses on asset and business disposals, (vi) consultant and other advisor fees and (vii) other miscellaneous costs. These restructuring and related business transformation costs amounted to $38.8 million and $24.7 million for the years ended December 31, 2018 and 2017.(d)Represents costs associated with successful and/or abandoned acquisitions, including third-party expenses, post-closure integration costs (including certain incentive and non-incentive cash compensation costs) and non-cash charges and credits arising from fair value purchase accounting adjustments.(e)Represents estimated environmental remediation costs and losses relating to a former production facility.(f)Represents certain expenses related to our initial public offering and subsequent secondary offerings.(g)Represents third party expenses to comply with the requirements of Sarbanes-Oxley in 2018 and the accelerated adoption of the new accounting standards (ASC 606 – Revenue from Contracts with Customers and ASC 842 – Leases) in the first quarter of 2018 and 2019 respectively, one year ahead of the required adoption dates for a private company.(h)Represents stock-based compensation expense recognized for the year ended December 31, 2018 of $2.8 million, reduced by $5.1 million primarily due to a decrease in the estimated accrual for employer taxes related to DSUs as a result of a lower per share stock price.20172020 of $47.5 million, decreased by $0.5 million due to costs associated with employer taxes.stock options outstandingunder the LIFO method. We have reclassified the amounts in 2020 from “Other adjustments” and “Acquisition related expenses and non-cash charges,” respectively, to conform to the current year presentation.$77.6 million and DSUs granted to employees at the datepost-acquisition contingencies outside of the initial public offering of $97.4 million under the 2013 Stock Incentive Plan and employer taxesmeasurement period related to DSUs grantedadjustments to employees at the datetransaction price for retirement plan funding and net working capital.the initial public offeringamortization of $19.2 million.
prior service costs and amortization of losses in pension and other postemployment (“OPEB”) expense, (ii) certain legal and compliance costs and (iii) other miscellaneous adjustments.(i)Represents losses on extinguishment of the senior notes, extinguishment of a portion of the U.S. Term Loan, refinancing of the Original Dollar Term Loan Facility and the Original Euro Term Loan Facility and losses reclassified from AOCI into income related to the amendment of the interest rate swaps in conjunction with the debt repayment.(j)Represents insurance recoveries of the Company’s shareholder litigation settlement in 2014.(k)Includes (i) non-cash impact of net LIFO reserve adjustments, (ii) effects of amortization of prior service costs and amortization of losses in pension and other postretirement benefits (OPEB) expense, (iii) certain legal and compliance costs and (iv) other miscellaneous adjustments.FacilityFacility. We also have the ability to seek additional secured and the Receivables Financing Agreement.1011 “Debt” to our audited consolidated financial statements included elsewhere in this Form 10-K.2018,2021, we had $6.5no outstanding borrowings, $6.6 million of outstanding letters of credit written againstunder the New Revolving Credit Facility and $263.4 millionunused availability of unused availability. We also had $26.8 million of letters of credit outstanding against the Receivables Financing Agreement and $83.3 million unused availability.2018, 2017 and 20162021, we were in compliance with all of our debt covenants and no event of default had occurred or was ongoing.43LiquidityYear Ended December 31, 2021 2020 Cash and cash equivalents $ 2,109.6 $ 1,750.9 Short-term borrowings and current maturities of long-term debt $ 38.8 $ 40.4 Long-term debt 3,401.8 3,859.1 Total debt $ 3,440.6 $ 3,899.5 $250.0$1,600.0 million in the form of additional commitments under the Revolving Credit Facility and/or incremental term loans plus an additional amount so long as we do not exceed a specified senior secured leverage ratio. We can incur additional secured indebtedness under the Term LoanSenior Secured Credit Facilities if certain specified conditions are met under the credit agreement governing the Senior Secured Credit Facilities. Our liquidity requirements are significant primarily due to debt service requirements. See Note 1011 “Debt” to our audited consolidated financial statements included elsewhere in this Form 10-K.Facilities and the Receivables Financing Agreement.Facilities. Our principal uses of cash will be to provide working capital, meet debt service requirements, fund capital expenditures and finance strategic plans, including possible acquisitions. We may also seek to finance capital expenditures under capital leases or other debt arrangements that provide liquidity or favorable borrowing terms. We continue to consider acquisition opportunities, but the size and timing of any future acquisitions and the related potential capital requirements cannot be predicted. In the event that suitable businesses are available for acquisition upon acceptable terms, we may obtain all or a portion of the necessary financing through the incurrence of additional long-term borrowings. As market conditions warrant, weWe may from time to time, seek to repay loans that we have borrowed, including the borrowings under the Senior Secured Credit Facilities. Based on our current level of operations and available cash, we believe our cash flow from operations, together with availability under the Revolving Credit Facility, and the Receivables Financing Agreement, will provide sufficient liquidity to fund our current obligations, projected working capital requirements, debt service requirements and capital spending requirements for the foreseeable future. Our business may not generate sufficient cash flows from operations or future borrowings may not be available to us under our Revolving Credit Facility or the Receivables Financing Agreement in an amount sufficient to enable us to pay our indebtedness, or to fund our other liquidity needs. Our ability to do so depends on, among other factors, prevailing economic conditions, many of which are beyond our control. In addition, upon the occurrence of certain events, such as a change in control, we could be required to repay or refinance our indebtedness. We may not be able to refinance any of our indebtedness, including the Senior Secured Credit Facilities, on commercially reasonable terms or at all. Any future acquisitions, joint ventures, or other similar transactions may require additional capital and there can be no assurance that any such capital will be available to us on acceptable terms or at all.majorityactual timing, number, manner and value of any shares repurchased will depend on several factors, including the market price of our stock, general market and economic conditions, our liquidity requirements, applicable legal requirements and other business considerations.of the United States. As a result of the KKR Transaction and the significant increase in our long-term debt balance as of July 30, 2013, the KKR Transaction date, we modified our assertion concerning the permanent reinvestment of undistributed earnings of our non-U.S. subsidiaries. We asserted that we intended to repatriate approximately $200.0 million of accumulated earnings for the purpose of servicing our Senior Secured Credit Facilities, which would have resulted in net United States tax liabilities as these foreign earnings were distributed. Due to the Tax Act we decided to reverse ourdo not assert ASC 740-30 (formerly APB 23) position, effective the fourth quarter of 2018. We no longer assert the indefinite reinvestment of our historical non-U.S. earnings or future non-U.S. earnings. The Company adjusted its ASC 740-30records a deferred foreign tax liability to cover all estimated withholding, state income tax and foreign income tax associated with repatriating all non-U.S. earnings as of December 31, 2018 back to the United States. Our deferred income tax liability as of December 31, 20182021 is $5.6$49.6 million which consists mainly of withholding taxes. As a resultFor the Years Ended December 31, 2021 2020 Net Working Capital Current assets $ 4,114.9 $ 3,862.1 Less: Current liabilities 1,467.7 1,498.6 Net working capital $ 2,647.2 $ 2,363.5 Operating Working Capital Accounts receivable and contract assets $ 1,009.4 $ 922.2 Plus: Inventories (excluding LIFO) 878.6 707.9 Less: Accounts payable 670.5 536.4 Less: Contract liabilities 242.1 164.6 Operating working capital $ 975.4 $ 929.1 decreased $167.0increased $283.7 million to $734.8$2,647.2 million as of December 31, 20182021 from $901.8$2,363.5 million as of December 31, 2017.2020. Operating working capital decreased $58.9increased $46.3 million to $646.1$975.4 million as of December 31, 20182021 from $705.0$929.1 million as of December 31, 2017.2020. Operating working capital as of December 31, 20182021 was 24.0%18.9% of 20182021 revenues as compared to 29.7%23.4% as of December 31, 20172020 as a percentage of 20172020 revenues. The decreaseincrease in operating working capital was primarily due to higher inventories and higher accounts receivable, partially offset by higher accounts payable and higher contract liabilities, partially offset by higher accounts receivable and contract assets and higher inventories. During 2018, management proactively focused on improving net working capital performance through centralized process improvement initiatives. Excluding 2018 acquisitions and the impact of foreign currencies, despite higher revenues in the fourth quarter of 2018 compared to the fourth quarter of 2017 and delays in the timing of collections from certain upstream energy customers, accounts receivable decreased modestly resulting from the enhanced receivables collection efforts. The increase in contract assets resulted from the adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC 606”) in the first quarter of 2018. Excluding 2018 acquisitions and the impact of foreign currencies, inventories as of December 31, 2018 were essentially flat compared to the prior year due to improved management of production inventory levels at certain key manufacturing facilities offset by higher than expected inventory levels in our upstream energy business resulting primarily from reduced demand in the fourth quarter of 2018. Accounts payable increased significantly as of December 31, 2018 as compared to December 31, 2017 due to continuing efforts to standardize and extend vendor payment terms and pay practices. The increase in contract liabilities was primarily due to an acquisition in 2018 and the timing of progress collections on certain long term contracts.Net working capital increased $211.2 million to $901.8 million as of December 31, 2017 from $690.6 million as of December 31, 2016. Operating working capital increased $93.3 million to $705.0 million as of December 31, 2017 from $611.7 million as of December 31, 2016. Operating working capital at December 31, 2017 as a percentage of 2017 revenues was 29.7% as compared to 31.5% at December 31, 2016 as a percentage of 2016 revenues. This increase was primarily due to higher accounts receivable, higher inventories, and lower contract liabilities, partially offset by higher accounts payable.liabilities. The increase in accounts receivable was primarily due to a higher level of salesthe increase in revenue in the fourth quarter of 20172021 compared to the fourth quarter of 2016 as a result of the recovery2020 and to acquisitions completed in the upstream energy markets.2021. The increase in accounts receivable was also due to a difference in sales mix between the fourth quarter of 2016 and the fourth quarter of 2017. A higher portion of revenues in the fourth quarter of 2016 were related to highly engineered solution product contracts with higher advance payments ahead of revenue recognition than in the fourth quarter of 2017. The increase in inventoriesinventory was primarily dueattributable to additions to inventoriesinventory in anticipation of increased demand for certain products primarilyand to acquisitions completed in the Energy segment evidenced by increased orders in the Energy segment in the fourth quarter of 2017 compared to the fourth quarter of 2016.2021. The increase in accounts payable was primarily due to increased levelsthe timing of inventories and continuing effortsvendor cash disbursements. The increase in contract liabilities was due to standardize vendor payment terms and pay practices. Contract liabilities were essentially flat asthe timing of December 31, 2017 in comparisoncustomer milestone payments for in-process engineered to 2016.2018, 20172021 and 2016,2020, respectively.2021 2020 Cash flows provided by (used in) continuing operations: Cash flows provided by operating activities $ 627.8 $ 653.5 Cash flows used in investing activities (1,029.4) (31.3) Cash flows provided by (used in) financing activities (1,157.0) 328.7 Net cash provided by discontinued operations 1,931.4 254.2 563.7 611.5 45(1)See “Item 6. Selected Financial Data” for a reconciliation to the most directly comparable GAAP measure.increased $244.0decreased $25.7 million to $444.5$627.8 million in 20182021 from $200.5$653.5 million in 2017,2020, primarily due to higher net income (excluding non-cash charges for depreciationchanges in accrued liabilities and amortization, the impairment of other intangible assets, stock-based compensation expense, foreign currency transaction (gains) losses, net (gain) loss on asset dispositions, the loss on the extinguishment of debt, the non-cash changecash used in the LIFO reserve and deferred taxes), and from cash generated by reduced operating working capital.generatedused cash of $54.9$3.0 million in 20182021 compared to usinggenerating cash of $55.0$171.3 million in 2017.2020. Changes in accounts receivable generatedaccount receivables used cash of $13.2$62.5 million in 20182021 compared to usinggenerating cash of $65.7$52.4 million in 2017 and changes2020. Changes in contract assets used cash of $19.9$0.4 million in 20182021 compared to no impact onusing cash of $11.7 million in 2017.2020. Changes in inventory used cash of $13.0$134.4 million in 20182021 compared to usinggenerating cash of $22.7$159.0 million in 2017.2020. Changes in accounts payable generated cash of $69.6$118.2 million in 2018 as2021 compared to generatingusing cash of $39.9$43.4 million in 2017.2020. Changes in contract liabilities generated cash of $5.0$76.1 million in 2018 compared to using cash of $6.5 million in 2017.Cash provided by operating activities increased $34.9 million to $200.5 million in 2017 from $165.6 million in 2016, primarily due to higher net income (excluding non-cash charges for impairments of other intangible assets, stock-based compensation, depreciation and amortization, foreign currency transaction (gains) losses, loss on extinguishment of debt) and deferred income taxes, partially offset by increased cash used by working capital.Operating working capital used cash of $55.0 million in 2017 compared to providing cash of $20.5 million in 2016. Changes in accounts receivable used cash of $65.7 million in 2017 compared to using cash of $48.8 million in 2016. Changes in inventory used cash of $22.7 million in 20172021 compared to generating cash of $23.5$15.0 million in 2016. Changes in accounts payable generated cash of $39.9 million in 2017 as compared to generating cash of $58.1 million in 2016. Changes in advance payments on sales contracts used cash of $6.5 million in 2017 and used cash of $12.3 million in 2016.fromused in investing activities included capital expenditures of $52.2$64.1 million (1.9% of consolidated revenues), $56.8 million (2.4%(1.2% of consolidated revenues) and $74.4$42.0 million (3.8%(1.1% of consolidated revenues), in 2018, 20172021 and 2016,2020, respectively. We currently expect capital expenditures to totalwill be approximately $50.0 million to $60.0 million2019.2022. Cash paidacquired (paid) in business combinations was $186.3$(974.8) million in 2018, $18.82021 and $9.0 million in 2017 and $18.8 million in 2016. Proceeds from the termination of derivatives was $6.2 million in 2017.2020. Net proceeds from business divestitures and disposalsthe disposal of property, plant and equipment were $3.5 million, $8.6$9.5 million and $11.1$1.7 million in 2018, 2017,2021 and 2016,2020, respectively.$373.0$1,157.0 million in 2018 reflects repayments of long-term borrowings of $337.6 million,2021 is primarily due to purchases of treasury stock of $40.7$736.8 million, a $1.4repayments of long-term debt of $435.7 million, paymentand cash dividends on common stock of contingent considerations and $0.1$8.2 million, of other items, partially offset by proceeds from stock option exercises of $6.8 million associated with approved stock-based compensation plans.used inprovided by financing activities of $17.4$328.7 million in 2017 reflects net2020 is primarily due to proceeds from long-term debt of $1,980.1 million, offset by repayments of long-term borrowingsdebt of $868.6$1,619.1 million a premium paid on the extinguishment of senior notes of $29.7 million, purchases of treasury stock of $3.6 million, purchases of shares of noncontrolling interest of $5.2 million, and the payment of debt issuance costs of $4.1 million, partially offset by proceeds from the issuance of common stock $893.6 million, net of share issuance costs, and other items of $0.2 million.46Cash used in financing activities of $43.0 million in 2016, reflects scheduled principal payments on long-term borrowings of $25.5 million, purchases of treasury stock of $14.1 million, a $4.7 million payment of contingent consideration related to an acquisition, payments of debt issuance costs of $1.1$47.8 million. Also included are proceeds from stock option exercises of $22.7 million and other itemsa net usage of $0.9cash of $3.0 million partially offsetrelated to the purchase and sale of noncontrolling interests of our India subsidiary. See Note 13 “Stockholders’ Equity and Noncontrolling Interests” to our audited consolidated financial statements included elsewhere in this Form 10-K for further details.issuancesdiscontinued operations increased $1,677.2 million to $1,931.4 million in 2021 from $254.2 million in 2020, primarily due to proceeds from sale of common stock of $3.3 million.increased $248.6decreased $47.8 million to $392.3$563.7 million in 20182021 from $143.7$611.5 million in 20172020 primarily due to increasedthe decrease in cash provided by operating activities discussed above.$244.0agreements to purchase inventory or services made in the normal course of business to meet operational requirements. As of December 31, 2021, the Company had purchase of obligations of $441.2 million, and a decreasewith $371.5 million payable in capital expenditures of $4.6 millionthe next 12 months. The purchase obligation amounts do not represent the entire anticipated purchases in 2018 compared to 2017.Free cash flow increased $52.5 million to $143.7 million in 2017 from $91.2 million in 2016 due to increased cash provided by operating activities of $34.9 million and a decrease in capital expenditures of $17.6 million in 2017 compared to 2016.Off-Balance Sheet ArrangementsWe have no off-balance sheet arrangements that have orthe future, but represent only those items for which we are materially likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.Contractual ObligationsThe following table summarizes our future minimum paymentscontractually obligated as of December 31, 2018 for all contractual obligations for years subsequent to the year ended December 31, 2018.
5 years(1)Estimated interest payments for long-term debt were calculated as follows: for fixed-rate debt and term debt, interest was calculated based on applicable rates and payment dates; for variable-rate debt and/or non-term debt, interest rates and payment dates were estimated based on management’s determination of the most likely scenarios for each relevant debt instrument.(2)Purchase obligations consist primarily of agreements to purchase inventory or services made in the normal course of business to meet operational requirements. The purchase obligation amounts do not represent the entire anticipated purchases in the future, but represent only those items for which we are contractually obligated as of December 31, 2018. For this reason, these amounts will not provide a complete and reliable indicator of our expected future cash outflows.Total pension and other postretirement benefit liabilities recognized on our consolidated balance sheet as of December 31, 2018 were $96.9 million. The total pension and other postretirement benefit liabilities are included in our consolidated balance sheet line items “Accrued liabilities” and “Pensions and other postretirement benefits.” Because these liabilities are impacted by, among other items, plan funding levels, changes in plan demographics and assumptions and investment return on plan assets, these liabilities do not represent expected liquidity needs. Accordingly, we did not include these liabilities in the “Contractual Obligations” table above.We fund our U.S. qualified pension plans in accordance with the Employee Retirement Income Security Act of 1974 regulations for the minimum annual required contribution and Internal Revenue Service regulations for the maximum annual allowable tax deduction. We are committed to making the required minimum contributions and expect to contribute a total of approximately $0.1 million to our U.S. qualified pension plans during 2019. Furthermore, we expect to contribute a total of approximately $0.3 million to our postretirement life insurance benefit plans during 2019. Future contributions are dependent upon various factors including the performance of the plan assets, benefit payment experience and changes, if any, to current funding requirements. Therefore, no amounts were included in the “Contractual Obligations” table related to expected plan contributions. We generally expect to fund all future contributions to our plans with cash flows from operating activities.47Our non-U.S. pension plans are funded in accordance with local laws and income tax regulations. We expect to contribute a total of approximately $4.7 million to our non-U.S. qualified pension plans during 2019. No amounts have been included in the “Contractual Obligations” table related to these plans due to the same reasons indicated above.Disclosure of amounts in the “Contractual Obligations” table regarding expected benefit payments in future years for our pension plans and other postretirement benefit plans cannot be properly reflected due to the ongoing nature of the obligations of these plans. We currently anticipate the annual benefit payments for the U.S. plans to be in the range of approximately $4.5 million to $5.5 million for the next several years, and the annual benefit payments for the non-U.S. plans to be in the range of approximately $10.0 million to $12.0 million for the next several years.Contingenciesto includeincluding a total litigation reserve of $105.8$136.9 million as of December 31, 20182021 with respect to potential liability arising from our asbestos-related litigation. Other than our asbestos-related litigation reserves, we only have de minimis accrued liabilities and other liabilities on our consolidated balance sheet with respect to other legal proceedings, lawsuits and administrative actions. A more detailed discussion of certain of these proceedings, lawsuits and administrative actions is set forth in “Item 3. Legal Proceedings.”Estimatesestimates and assumptionspolicies discussed in this section are those that we consider to be the most critical to an understanding of our financial statements because they involve significant judgments and uncertainties. Certain of these policies include estimates include determining fair value. All of theseand assumptions. These estimates reflect our best judgment about current, and for some estimates, future economic and market conditions and their effect based on information available as of the date of these financial statements. If these conditions change from those expected, it is reasonably possible that the judgments and estimates described below could change, which may result in future impairments of goodwill, intangibles and long-lived assets, increases in reserves for contingencies, establishment of valuation allowances on deferred tax assets and increase in tax liabilities, among other effects. Also see Note 1 “Summary of Significant Accounting Policies” to our audited consolidated financial statements included elsewhere in this Form 10-K, which discusses the significant accounting policies that we have selected from acceptable alternatives.2018-04,2019-04, the impairment test consists of comparing the fair value of the reporting unit to the carrying value of the reporting unit. An impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; provided, the loss recognized cannot exceed the total amount of goodwill allocated to the reporting unit. If applicable, we consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss. We determined fair values for eachall of the reporting units using a combination of the income and market multiples approaches which are weighted 75% and 25%, respectively.20182021 reporting unit valuations ranged from 10.3%8.5% to 11.5%9.5%. Additionally, we assumed 3.0% terminal growth rates for all reporting units.publicallypublicly traded guideline companies to develop a business enterprise value (“BEV”) for our reporting units. The48For allunits, the excess ofunit formed through a recent acquisition, the estimated fair value over carrying value (expressed as a percentagevalues of carrying value) was a minimum of 92.2%. With eachour reporting unit’s fair valueunits were well in excess of itstheir carrying values. The carrying value of the recently-formed reporting unit was approximately equal to its fair value due to the close proximity of the acquisition date to the impairment testing date. The estimated fair values of all other reporting units were at least 47% higher than their carrying values and therefore, no goodwill impairment was recorded. annually test intangible assets with indefinite lives for impairment annually utilizing a discounted cash flow valuation referred to as the relief from royalty method. We estimated forecasted revenues for a period of five years with discount rates ranging from 11.3%9.0% to 12.5%10.0%, a terminal growth raterates of 2.0 % to 3.0%, and royalty rates ranging from 3.0%0.5% to 4.0%.89 “Goodwill and Other Intangible Assets” to our audited consolidated financial statements included elsewhere in this Form 10-K.On December 22, 2017, the Tax Act was enacted into law and the new legislation contains several key tax provisions that affected us, including a one-time mandatory transition tax on accumulated foreign earnings and a reduction of the corporate income tax rate to 21% effective January 1, 2018, among others. We are required to recognize the effect of the tax law changes, including the determination of the transition tax, the remeasurement of our U.S. deferred tax assets and liabilities as well as the reassessment of the net realizability of our deferred tax assets and liabilities in the period of enactment. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the(“SAB 118”), which allowed us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. As a result, we previously provided a provisional estimate of the effect of the Tax Act in our financial statements forenacted on December 22, 2017, and through the first nine month period of 2018. In the fourth quarter of 2018, we completed our accounting for all of the enactment-date income tax effects of the Tax Act by increasing the total benefit taken in 2017 of $95.3 million to $96.5 million. The total U.S. deferred change due to the Tax Act went from a tax benefit of $89.6 million in 2017 to $74.5 million in 2018, with a 2018 measurement-period adjustment of $15.1 million. The ASC 740-30 (formerly APB 23) liability related to the permanent reinvestment of earnings in foreign subsidiaries assertion, changed from a tax benefit of $69.0 million in 2017 to $72.5 million in 2018, with a 2018 measurement-period adjustment of $3.5 million resulting from a reduction in distributable profits due to restructuring and repatriations and the change in policy that occurred in 2018. The provisional one-time transition tax of $63.3 million in 2017 decreased to $50.5 million in 2018, with a 2018 measurement-period adjustment of $12.8 million. The total $1.2 million benefit has a (0.3)% impact to the overall rate in 2018.The Tax Act createscreated a new requirement that certain income (i.e., GILTI)Global intangible low taxed income (“GILTI”)) earned by CFCscontrolled foreign corporations (“CFC”) must be included currently in the gross income of the CFCs’ U.S. shareholder. GILTI is the excess of the shareholder’s “net CFC tested income” over the net deemed tangible income return, which is currently defined as the excess of (1) 10% of the aggregate of the U.S. shareholder’s pro rata share of the qualified business asset investment of each CFC with respect to which it is a U.S. shareholder over (2) the amount of certain interest expense taken into account in the determination of net CFC-tested income.49we arethe Company is allowed to make an accounting policy choice of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”) or (2) factoring such amounts into a company’s measurement of its deferred taxes (the “deferred method”). WeThe Company has determined that weit will follow the period cost method (option 1 above) going forward. The tax provision for the twelve month periodyear ended December 31, 20182021 reflects this decision. All of the additional calculations and rule changes found in the Tax Act have been considered in the tax provision for the year and quarter ended December 31, 2018.2021. The Company recorded a tax expense of $11.9$11.7 million in the period2021 for the GILTI provisions of the Tax ActAct.effective for the first time during 2018.Stock-Based CompensationWe account for stock-based compensation plans under the fair value recognition$38.0 million and measurement provisions in accordance with applicable accounting standards, which require all stock-based payments to employees$40.7 million as of December 31, 2021 and non-employees, including grants of stock options and deferred stock units (“DSU”), to be measured based on the grant date fair value of the awards.The fair value of each stock option grant is estimated using the Black-Scholes-Merton valuation model. The model requires certain assumptions including the estimated expected term of the stock options, the risk-free interest rate and the assumed volatility, of which certain assumptions are highly complex and subjective. The expected option life represents the period of time that the options granted are expected to be outstanding based on management's best estimate of the timing of a liquidity event and the contractual term of the stock option. As there is not sufficient trading history of our common stock, we use a group of our competitors which we believe are similar to us, adjusted for our capital structure, in order to estimate volatility. Our exercise price is the stock price on the date in which shares were granted.Concurrent2020, respectively, with the Company’s initial public offering in May of 2017, the Company’s Board authorized the grant of 5.5 million DSUs to all permanent employees that had not previously received stock-based awards under the 2013 Plan. The DSUs vested immediately upon grant, however contain restrictions such that the employee may not sell or otherwise realize the economic benefits of the award until certain dates through April 2019. The fair value of each DSU grant under the Stock-Based Compensation Plan is estimated on the date of grant or modification using the Finnerty discount for lack of marketability pricing model. The discount for lack of marketability is commensurate with the period of sale restrictionsdecrease related to utilizing the Company’s initial public offering.Prior to our initial public offering, our stock price was calculated based on a combination of the income approach and the market approach. Under the income approach, specifically the discounted cash flow method, forecasted cash flows are discounted to the present value at a risk-adjusted discount rate. The valuation analyses determine discrete free cash flows over several years based on forecast financial information provided by management and a terminal value for the residual period beyond the discrete forecast, which are discounted at an appropriate rate to estimate our enterprise value. Under the market approach, specifically the guideline public company method, we select publicly traded companies with similar financial and operating characteristics as us and calculate valuation multiples based on the guideline public company’s financial information and market data. Subsequent to the initial public offering, the estimation of our stock price is no longer necessary as we rely on the market price to determine the market value of our common stock. For additional information related to the assumptions used, see Note 16 “Stock-Based Compensation Plans” to our audited consolidated financial statements included elsewhere in this Form 10-K.50ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK2018,2021, we had variable rate debt outstanding net of our interest rate swaps, of $724.1$3,449.4 million at a current weighted average interest rate of 3.1%approximately 1.9%, substantially all of which was incurred under our $2,280.6 million Senior Secured Credit Facility, under which $952.6an aggregate of $2,778.1 million was outstanding under the $1,285.5$1,900.0 million Dollar Term Loan FacilityB and €607.3$927.6 million wasDollar Term Loan, as well as €590.6 million outstanding under the €615.0€601.2 million Euro Term Loan Facility.2018,2021, LIBOR was higher than the 0% floor and EURIBOR was lower than the 0% floor.2018,2021, we were a fixed rate payer on eighthad no fixed-floating interest rate swap contracts that effectively fixed the LIBOR-based index used to determine the interest rates charged on our LIBOR-based variable rate borrowings.swaps. See Note 1719 “Hedging Activities, Derivative Instruments and Credit Risk” to our audited consolidated financial statements included elsewhere in this Form 10-K.20182021 and 20172020 on our interest expense.(1)A decrease in interest rates would not have impacted our interest expense in 2018 on EURIBOR debt which was lower than the 0% base rate floor under the Senior Secured Credit Facility for the entire fiscal year 2018, but would have impacted interest expense in 2018 on LIBOR debt which was higher than the 0% based rate floors under the Senior Secured Credit Facility for the year ended December 31, 2018.(2)A decrease in interest rates would not have impacted our interest expense in 2017 on EURIBOR debt which was lower than the 0% base rate floor under the Senior Secured Credit Facility for the entire fiscal year 2017, but would have impacted interest expense in 2017 on LIBOR debt which was higher than the 0% based rate floors under the Senior Secured Credit Facility during the second half of fiscal year 2017.2021 2020 Increase (decrease) in market interest rates 100 basis points $ 30.1 $ 35.1 (2.5) (4.7) 512018, the relative strengthening of the U.S. dollar against foreign currencies had an unfavorable impact on our revenues2021 and results of operations while in 2017,2020, the relative weakening of the U.S. dollar against foreign currencies had a favorable impact on our revenues and results of operations. While future changes in foreign currency exchange rates are difficult to predict, our revenues and earnings may be adversely affected if the U.S. dollar strengthens against foreign currencies.cross-currency interest rate swaps.hedges. In addition, to mitigate the risk arising from entering into transactions in currencies other than our functional currencies, we typically settle intercompany trading balances monthly.principalfunctional currency for the years ended December 31, 20182021 and 2017.
Pound
RenminbiU.S. Dollar Euro British Pound Chinese Renminbi Other Year Ended December 31, 2021 Revenues 41 % 27 % 4 % 16 % 12 % Gross profit 42 % 28 % 3 % 17 % 10 % Year Ended December 31, 2020 Revenues 41 % 29 % 4 % 15 % 11 % Gross profit 40 % 30 % 4 % 17 % 9 % 20182021 and 20172020 are summarized in Note 1314 “Accumulated Other Comprehensive Income (Loss)” to our audited consolidated financial statements included elsewhere in this Form 10-K.2018,2021, we were party to sevenfive foreign currency forward contracts, all of which are carried on our balance sheet at fair value. See Note 1719 “Hedging Activities, Derivative Instruments and Credit Risk” to our audited consolidated financial statements included elsewhere in this Form 10-K.2018,2021, the hypothetical effect of a 10% appreciation in the average exchange rate of the U.S. dollar relative to the principal foreign currencies in which our revenues and gross profit are denominated.
Pound
RenminbiYear Ended December 31, 2021 Euro British Pound Chinese Renminbi Revenues $ 140.2 $ 21.0 $ 79.9 Gross profit 55.2 6.0 35.2 52ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAGARDNER DENVER HOLDINGS,Dollars in millions, except per share amounts)For the Years Ended December 31, 2021 2020 2019 Revenues $ 5,152.4 $ 3,973.2 $ 2,017.5 Cost of sales 3,163.9 2,568.3 1,239.2 Gross Profit 1,988.5 1,404.9 778.3 Selling and administrative expenses 1,028.0 789.3 409.6 Amortization of intangible assets 332.9 335.1 105.3 Impairment of other intangible assets — 19.9 — Other operating expense, net 61.9 201.0 69.3 Operating Income 565.7 59.6 194.1 Interest expense 87.7 111.1 88.4 Loss on extinguishment of debt 9.0 2.0 0.2 Other income, net (44.0) (8.1) (4.7) Income (Loss) Before Income Taxes 513.0 (45.4) 110.2 Provision (benefit) for income taxes (21.8) 11.4 12.9 Loss on equity method investments (11.4) — — Income (Loss) from Continuing Operations 523.4 (56.8) 97.3 Income from discontinued operations, net of tax 41.6 24.4 61.8 Net Income (Loss) 565.0 (32.4) 159.1 Less: Net income attributable to noncontrolling interests 2.5 0.9 — Net Income (Loss) Attributable to Ingersoll Rand Inc. $ 562.5 $ (33.3) $ 159.1 Amounts attributable to Ingersoll Rand Inc. common stockholders: Income (loss) from continuing operations, net of tax $ 520.9 $ (57.7) $ 97.3 Income from discontinued operations, net of tax 41.6 24.4 61.8 Net income (loss) attributable to Ingersoll Rand Inc. $ 562.5 $ (33.3) $ 159.1 Basic earnings (loss) per share of common stock: Earnings (loss) from continuing operations $ 1.26 $ (0.15) $ 0.48 Earnings from discontinued operations 0.10 0.06 0.30 Net earnings (loss) 1.36 (0.09) 0.78 Diluted earnings (loss) per share of common stock: Earnings (loss) from continuing operations $ 1.24 $ (0.15) $ 0.47 Earnings from discontinued operations 0.10 0.06 0.30 Net earnings (loss) 1.34 (0.09) 0.76 53 (LOSS)Dollars in millions)
Gardner Denver Holdings, Inc.For the Years Ended December 31, 2021 2020 2019 Comprehensive Income Attributable to Ingersoll Rand Inc. Net income (loss) attributable to Ingersoll Rand Inc. $ 562.5 $ (33.3) $ 159.1 Other comprehensive income (loss), net of tax: Foreign currency translation adjustments, net (103.0) 268.2 (1.5) Unrecognized gains on cash flow hedges, net — 10.9 7.2 Pension and other postretirement prior service cost and gain (loss), net 48.7 (8.9) (6.5) Other comprehensive income (loss), net of tax (54.3) 270.2 (0.8) Comprehensive income attributable to Ingersoll Rand Inc. $ 508.2 $ 236.9 $ 158.3 Comprehensive Income (Loss) Attributable to Noncontrolling Interests Net income attributable to noncontrolling interests $ 2.5 $ 0.9 $ — Other comprehensive loss, net of tax: Foreign currency translation adjustments, net (2.3) (1.4) — Total other comprehensive loss, net of tax (2.3) (1.4) — Comprehensive income (loss) attributable to noncontrolling interests $ 0.2 $ (0.5) $ — Total Comprehensive Income $ 508.4 $ 236.4 $ 158.3 54Dollars in millions, except share and per share amounts)
2018
2017December 31, 2021 December 31, 2020 Assets Current assets Cash and cash equivalents $ 2,109.6 $ 1,750.9 Accounts receivable, net of allowance for credit losses of $42.3 and $50.9, respectively 948.6 861.8 Inventories 854.2 716.7 Other current assets 186.9 195.3 Assets of discontinued operations - current 15.6 337.4 Total current assets 4,114.9 3,862.1 Property, plant and equipment, net of accumulated depreciation of $357.7 and $291.1, respectively 648.6 609.0 Goodwill 5,981.6 5,582.6 Other intangible assets, net 3,912.7 3,797.2 Deferred tax assets 28.0 15.6 Other assets 468.7 329.3 Assets of discontinued operations - long-term — 1,862.8 Total assets $ 15,154.5 $ 16,058.6 Liabilities and Equity Current liabilities Short-term borrowings and current maturities of long-term debt $ 38.8 $ 40.4 Accounts payable 670.5 536.4 Accrued liabilities 741.3 708.9 Liabilities of discontinued operations - current 17.1 212.9 Total current liabilities 1,467.7 1,498.6 Long-term debt, less current maturities 3,401.8 3,859.1 Pensions and other postretirement benefits 195.1 272.5 Deferred income taxes 708.6 702.4 Other liabilities 310.1 343.7 Liabilities of discontinued operations - long-term — 192.8 Total liabilities 6,083.3 6,869.1 Commitments and contingencies (Note 21) 0 0 Stockholders’ equity Common stock, $0.01 par value; 1,000,000,000 shares authorized; 423,785,571 and 420,123,978 shares issued as of December 31, 2021 and 2020, respectively 4.3 4.2 Capital in excess of par value 9,408.6 9,310.3 Retained earnings (accumulated deficit) 378.6 (175.7) Accumulated other comprehensive income (loss) (41.6) 14.2 Treasury stock at cost; 16,000,364 and 1,496,169 shares as of December 31, 2021 and 2020, respectively (748.4) (33.3) Total Ingersoll Rand Inc. stockholders’ equity 9,001.5 9,119.7 Noncontrolling interests 69.7 69.8 Total equity 9,071.2 9,189.5 Total liabilities and equity $ 15,154.5 $ 16,058.6 55Dollars in millions)Common Stock Capital in Excess of Par Value Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Income (Loss) Treasury Stock Total Ingersoll Rand Inc. Stockholders’ Equity Noncontrolling Interests Total Equity Shares Issued Par Balance at December 31, 2018 201.1 $ 2.0 $ 2,282.7 $ (308.7) $ (247.0) $ (53.0) $ 1,676.0 $ — $ 1,676.0 Net income — — — 159.1 — — 159.1 — 159.1 Issuance of common stock for stock-based compensation plans 5.7 0.1 34.5 — — — 34.6 — 34.6 Purchases of treasury stock — — — — — (18.6) (18.6) — (18.6) Issuance of treasury stock for stock-based compensation plans — — (26.4) — — 34.8 8.4 — 8.4 Stock-based compensation — — 11.2 — — — 11.2 — 11.2 Other comprehensive loss, net of tax — — — — (0.8) — (0.8) — (0.8) Adoption of new accounting standard (ASU 2018-02) — — — 8.2 (8.2) — — — — Balance at December 31, 2019 206.8 $ 2.1 $ 2,302.0 $ (141.4) $ (256.0) $ (36.8) $ 1,869.9 $ — $ 1,869.9 Net income (loss) — — — (33.3) — — (33.3) 0.9 (32.4) Issuance of common stock for stock-based compensation plans 2.3 — 20.1 — — — 20.1 — 20.1 Purchases of treasury stock — — — — — (2.1) (2.1) — (2.1) Issuance of treasury stock for stock-based compensation plans — — (3.2) — — 5.6 2.4 — 2.4 Acquisition of Ingersoll Rand Industrial (Note 4) 211.0 2.1 6,934.9 — — — 6,937.0 73.3 7,010.3 Costs of issuing equity securities (Note 4) — — (1.0) — — — (1.0) — (1.0) Stock-based compensation — — 57.5 — — — 57.5 — 57.5 Other comprehensive income (loss), net of tax — — — — 270.2 — 270.2 (1.4) 268.8 Adoption of new accounting standard (ASU 2016-13) — — — (1.0) — — (1.0) — (1.0) Adjustments for shares tendered in open offer (Note 13) — — — — — — — (14.9) (14.9) Adjustments for shares sold in offer for sale (Note 13) — — — — — — — 11.9 11.9 Balance at December 31, 2020 420.1 $ 4.2 $ 9,310.3 $ (175.7) $ 14.2 $ (33.3) $ 9,119.7 $ 69.8 $ 9,189.5 Net income — — — 562.5 — — 562.5 2.5 565.0 Dividends declared — — — (8.2) — — (8.2) — (8.2) Issuance of common stock for stock-based compensation plans 3.7 0.1 20.3 — — — 20.4 — 20.4 Purchases of treasury stock — — — — — (736.8) (736.8) — (736.8) Issuance of treasury stock for stock-based compensation plans — — (19.9) — — 21.7 1.8 — 1.8 Stock-based compensation — — 97.9 — — — 97.9 — 97.9 Other comprehensive loss, net of tax — — — — (54.3) — (54.3) (2.3) (56.6) Divestiture of foreign subsidiaries — — — — (1.5) — (1.5) — (1.5) Dividends attributable to noncontrolling interests — — — — — — — (0.3) (0.3) Balance at December 31, 2021 423.8 $ 4.3 $ 9,408.6 $ 378.6 $ (41.6) $ (748.4) $ 9,001.5 $ 69.7 $ 9,071.2 For the Years Ended December 31, 2021 2020 2019 Cash Flows From Operating Activities Net income (loss) $ 565.0 $ (32.4) $ 159.1 Income from discontinued operations, net of tax 41.6 24.4 61.8 Income (loss) from continuing operations 523.4 (56.8) 97.3 Adjustments to reconcile net income (loss) from continuing operations to net cash provided by operating activities from continuing operations: Amortization of intangible assets 332.9 335.1 105.3 Depreciation 89.2 77.4 41.2 Impairment of other intangible assets — 19.9 — Non-cash restructuring charges 1.1 6.2 0.4 Stock-based compensation expense 87.2 47.5 18.7 Loss on equity method investments 11.4 — — Foreign currency transaction losses (gains), net (12.0) 18.6 7.3 Loss on extinguishment of debt 9.0 2.0 0.2 Non-cash adjustments to carrying value of LIFO inventories 33.2 39.8 0.2 Deferred income taxes (103.6) (83.1) (21.3) Other non-cash adjustments (0.2) — 0.8 Changes in assets and liabilities Receivables (62.5) 52.4 (14.5) Inventories (134.4) 159.0 27.4 Accounts payable 118.2 (43.4) 44.2 Accrued liabilities (220.0) 115.7 (25.0) Other assets and liabilities, net (45.1) (36.8) (58.7) Net cash provided by operating activities from continuing operations 627.8 653.5 223.5 Cash Flows From Investing Activities Capital expenditures (64.1) (42.0) (37.9) Net cash (paid) acquired in business combinations (974.8) 9.0 (12.0) Disposals of property, plant and equipment 9.5 1.7 0.4 Net cash used in investing activities from continuing operations (1,029.4) (31.3) (49.5) Cash Flows From Financing Activities Principal payments on long-term debt (435.7) (1,619.1) (32.6) Proceeds from long-term debt — 1,980.1 — Cash dividends on common stock (8.2) — — Purchases of treasury stock (736.8) (2.1) (18.6) Proceeds from stock option exercises 23.7 22.7 42.7 Payments of debt issuance costs — (47.8) (0.5) Purchase of shares from noncontrolling interests — (14.9) — Proceeds from sale of noncontrolling interests — 11.9 — Other financing — (2.1) (1.3) Net cash (used in) provided by financing activities from continuing operations (1,157.0) 328.7 (10.3) Cash Flows From Discontinued Operations: Net cash provided by (used in) operating activities (12.3) 260.8 119.8 Net cash provided by (used in) investing activities 1,943.7 (6.6) (4.8) Net cash used in financing activities — — (1.2) Net cash provided by discontinued operations 1,931.4 254.2 113.8 Effect of exchange rate changes on cash and cash equivalents (14.1) 40.3 6.8 Net increase in cash and cash equivalents 358.7 1,245.4 284.3 Cash and cash equivalents, beginning of year 1,750.9 505.5 221.2 Cash and cash equivalents, end of year $ 2,109.6 $ 1,750.9 $ 505.5
The accompanying notes are an integral part of these consolidated financial statements.Supplemental Cash Flow Information Cash paid for income taxes $ 427.9 $ 106.3 $ 61.6 Cash paid for interest 79.8 98.7 85.6 Capital expenditures in accounts payable 3.5 4.0 4.8 56TABLE OF CONTENTSThe accompanying notes are an integral partTable of these consolidated financial statements.57GARDNER DENVER HOLDINGS,INGERSOLL RAND INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(Dollars in millions)The accompanying notes are an integral part of these consolidated financial statements.58Amounts in millions, except share and per share amounts)Gardner Denver Holdings,holding company whose operating subsidiaries are Gardner Denver, Inc. (“GDI”)global market leader with a broad range of innovative and certain of GDI’s subsidiaries. GDI is a diversified, global manufacturer of highly engineered, application-critical flow control productsmission-critical air, fluid, energy, specialty vehicle and provider of related aftermarket partsmedical technologies, providing services and services.solutions to increase industrial productivity and efficiency. The accompanying consolidated financial statements include the accounts of Gardner Denver Holdings,Ingersoll Rand Inc. and its majority-ownedconsolidated subsidiaries (collectively referred to herein as “Gardner Denver”“Ingersoll Rand” or the “Company”).In May 2017,Company sold a total of 47,495,000 shares of common stock in an initial public offering of shares of common stock. On November 15, 2017, May 2, 2018 and October 31, 2018, the Company completed secondary offerings of 25,300,000 shares, 30,533,478 and 20,000,000 shares, respectively, of common stock held by affiliates of Kohlberg Kravis Roberts & Co. L.P. (“KKR”). As a resultacquisition of the secondary offerings, the Company is no longer considered a “controlled company” within the meaningIngersoll Rand Industrial business (“Ingersoll Rand Industrial”) by way of the corporate governance standards of the New York Stock Exchange (“NYSE”). KKR owns 70,671,135 shares of common stock, or approximately 36% of the total outstanding common stock based on the number of shares outstandingmerger and changed its name from Gardner Denver Holdings, Inc. to Ingersoll Rand Inc. The consolidated financial statements as of and for the year ended December 31, 2018.doubtful accounts,credit losses, inventory valuation, warranty reserves, fair value of stock-based awards, goodwill, intangible asset, and long-lived asset valuations, employee benefit plan liabilities, over time revenue recognition, income tax liabilities and deferred tax assets and related valuation allowances, uncertain tax positions, restructuring reserves, and litigation and other loss contingencies. Actual results could differ materially and adversely from those estimates and assumptions, and such results could affect the Company’s consolidated net income, financial position, or cash flows. income,, a separate component of stockholders’ equity, and included as a component of other comprehensive income (loss) income.. Assets and liabilities of subsidiaries that are denominated in currencies other than the subsidiaries’ functional currency are remeasured into the functional currency using end of period exchange rates, or historical rates for certain balances, where applicable. Gains and losses related to these remeasurements are recorded within the Consolidated Statements of Operations as a component of “Other operating expense, net.”On January 1, 2018,adoptedhas satisfied its obligation and control is transferred to the Financial Accounting Standards Board (“FASB”) ASU 2014-09, Revenuecustomer. The majority of the Company’s revenues are derived from Contracts with Customers (Topic 606) (“ASC 606”). short duration contracts and revenue is recognized at a single point in time when control is transferred to the customer, generally at shipment or when delivery has occurred or services have been rendered. The Company adoptedalso has certain contracts in which revenue is recognized over time based on the guidance using a modified retrospective approach. Results forCompany’s progress in satisfying the year ended December 31, 2018 were recorded under ASC 606 in the Consolidated Statements of Operations. The results in the Consolidated Statements of Operations for the years ended59December 31, 2017 and 2016 were not adjusted from ASC 605, Revenue Recognition (“ASC 605”).contractual performance obligations. See Note 2 “New Accounting Standards” and Note 1415 “Revenue from Contracts with Customers” for more discussion of the adoption of ASC 606 and the related significant accounting policies.representsrepresent the majority of costcosts of sales, with steel, aluminum, copper and partially finishedused to deliver repair, maintenance, and other field services activities to the Company’s customers.KKR fees and expenses; (vii) expenses related to the Company’s public stock offerings and to establish public company reporting compliance; and (viii) other miscellaneous expenses.20182021 and 2017,2020, cash of $3.4 $2.5 million and $4.4$3.1 million, respectively, was pledged to financial institutions as collateral to support the issuance of standby letters of credit and similar instruments on behalf of the Company.at net realizable value. This value includesof an appropriate allowance for doubtful accountsexpected credit losses. The allowance for estimatedcredit losses is based on the Company’s assessment of losses that maywill result from its customers’ inability or unwillingness to pay amounts owed to the Company’s inability to fully collect amounts due from its customers.Company. The allowance is determined based onusing a combination of factors, including historical credit loss experience and the length of time that the trade receivables are past due, history of write-offs, andsupplemented by the Company’s knowledge of circumstances relating to specific customers’ ability to meet their financial obligations.years;years, machinery and equipment — 7 to 10 years;years, and office furniture and equipment — 3 to 10 years; and tooling, dies, patterns, etc. — 3 to 5 years.60trademarkstradenames are not subject to amortization but are assessed for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired or that there is a probable reduction in the fair value of a reporting unit below its aggregate carrying value.Upon adoption of ASU 2017-04, theThe impairment test consists of comparing the fair value of the reporting unit to the carrying value of the reporting unit. An impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; provided, the loss recognized cannot exceed the total amount of goodwill allocated to the reporting unit. If applicable, the Company considers income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment89 “Goodwill and Other Intangible Assets” for additional information related to impairment testing for goodwill and other intangible assets.TheIn determining the estimated useful lives areof definite-lived intangibles, we consider the nature, competitive position, life cycle position and historical and expected future operating cash flows of each acquired assets, as follows: customer listswell as our commitment to support these assets through continued investment and relationships — 11-13 years, acquired technology — 12-25 years, certain trademarks — 10-20 years, and other intangibles — 1-5 years.61of certain of the Company’s competitors’ stocks over the expected term of the stock options. Forfeitures of stock options are accounted for as they occur. Restricted stock units are valued at the share price on the date of grant.In 2017, deferred stock units were granted and their respective fair values were estimated on the date of grant or modification using the Finnerty discount for lack of marketability pricing model. The discount for lack of marketability is commensurate with the period of sale restrictions related to the Company’s initial public offering.1618 “Stock-Based Compensation Plans” for additional information regarding the Company’s equity compensation plans.20182021 and 20172020 were derived by examining the rates of high-quality, fixed income securities whose cash flows or duration match the timing and amount of expected benefit payments under the plans. In accordance with GAAP, actual results that differ from the Company’s assumptions are recorded in accumulated other comprehensive income (loss) and amortized through net periodic benefit cost over future periods. While management believes that the assumptions are appropriate, differences in actual experience or changes in assumptions may affect the Company’s pension and other postretirement benefit obligations and future net periodic benefit cost.1112 “Benefit Plans” for disclosures related to Gardner Denver’sthe Company’s benefit plans, including quantitative disclosures reflecting the impact that changes in certain assumptions would have on service and interest costs and benefit obligations.62Onthe Tax Act was enacted into law and the new legislation contains several key tax provisions that affected the Company, including a one-time mandatory transition tax on accumulated foreign earnings and a reduction of the corporate income tax rate to 21% effective January 1, 2018, among others. The Company was required to recognize the effect of the Tax Act in the period of enactment. This included the determination of the transition tax, remeasurement of the Company’s U.S. deferred tax assets and liabilities as well as the reassessment of the net realizability of the Company’s deferred tax assets and liabilities. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Job Act (“SAB 118”), which allowed the Company to record provisional amounts during a measurement period not to extend more than one year subsequent to the enactment date. As a result, the Company previously provided a provisional estimate of the effect of the Tax Act in its financial statements for 2017 and through the first nine months of 2018. In the fourth quarter of 2018, the Company completed its accounting for all of the enactment-date income tax effects of the Tax Act and increased the total benefit taken in 2017 of $95.3 million to $96.5 million. Due to the Tax Act, the total U.S. deferred changed from a tax benefit of $89.6 million in 2017 to $74.5 million in 2018, with a 2018 measurement-period adjustment of $15.1 million. The ASC 740-30 (formally APB 23) liability reduction, relating to the permanently reinvested earnings in foreign subsidiaries assertion, changed from a tax benefit of $69.0 million in 2017 to $72.5 million in 2018, with a 2018 measurement-period adjustment of $3.5 million due to the policy change that occurred in 2018. The provisional one-time transition tax of $63.3 million in 2017 decreased to $50.5 million in 2018, with a 2018 measurement-period adjustment of $12.8 million. The total $1.2 million benefit has a (0.3)% impact to the overall rate in 2018.The Tax Act createscreated a new requirement that certain income (i.e., Global intangible low taxed income (“GILTI”)) earned by controlled foreign corporations (“CFC”) must be included currently in the gross income of the CFCs’ U.S. shareholder. GILTI is the excess of the shareholder’s “net CFC tested income” over the net deemed tangible income return, which is currently defined as the excess of (1) 10% of the aggregate of the U.S. shareholder’s pro rata share of the qualified business asset investment of each CFC with respect to which it is a U.S. shareholder over (2) the amount of certain interest expense taken into account in the determination of net CFC-tested income.20182021 reflects this decision. All of the additional calculations and rule changes found in the Tax Act have been considered in the tax provision for the quarter and year ended December 31, 2018.2021. The Company recorded a tax expense of $11.9$11.7 million in the period2021 for the GILTI provisions of the Tax Act that were effective for the first time during 2018.2018, 20172021, 2020 and 2016,2019, the Company spent approximately $24approximately $74 million, $26 $58 million, and $22 million, respectively, on research activities relating to the development of new products and new product applications. All such expenditures were funded by the Company, expensed as incurred and recorded to “Selling and administrative expenses” in the Consolidated Statements of Operations.63 (Loss) (loss) consists of net income (loss) and other comprehensive income (loss), consisting of (i) unrealized foreign currency net gains and losses on the translation of the assets and liabilities of its foreign operations; (ii) realized and unrealized foreign currency gains and losses on intercompany notes of a long-term nature and hedges of net investments in foreign operations, net of income taxes; (iii) unrealized gains and losses on cash flow hedges, (consisting of interest rate swaps), net of income taxes; and (iv) pension and other postretirement prior service cost and actuarial gains or losses, net of income taxes. See Note 1314 “Accumulated Other Comprehensive Income (Loss) Income..”the closure and consolidation of facilitiesworkforce reductions, facility consolidations and other actions. Such costs include employee termination benefits (one-time arrangements and benefits attributable to prior service), termination of contractual obligations, non-cash asset charges and other direct incremental costs.If an operating lease is not terminated, a liability is established when the Company completely ceases use of the leased property. Other direct incremental costs are charged to operations as incurred.64 (Loss) per Share (loss) per share (“EPS”) is based on the weighted-average number of the Company’s shares outstanding for the applicable period. The calculation of diluted earnings (loss) per share reflects the effect of all dilutive potential shares that were outstanding during the respective periods, unless the effect of doing so is antidilutive. The Company uses the treasury stock method to calculate the effect of outstanding share-based compensation awards.Prior Year ReclassificationsIn the first quarter of fiscal year 2018, the Company adopted the provisions of ASU 2017-07, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (“ASU 2017-07”). The reclassification of certain prior year amounts as a result of the adoption of ASU 2017-07 is detailed below in section “Adopted Accounting Standard Updates.”For the year ended December 31, 2018, the Company modified its presentation of (i) unrealized foreign currency net gains and losses on the translation of the assets and liabilities of its foreign operations and (ii) realized and unrealized foreign currency gains and losses on intercompany notes of a long-term nature and certain hedges of net investments in foreign operations, net of income taxes within the Consolidated Statements of Comprehensive Income, Consolidated Statements of Stockholders’ Equity and in the tables of Note 13 “Accumulated Other Comprehensive (Loss) Income.” Under the modified presentation, these two items, previously presented as “Foreign currency translation adjustments, net” and “Foreign currency gains (losses), net” are now presented together as “Foreign currency translation adjustments, net.” The Consolidated Statements of Comprehensive Income, Consolidated Statement of Stockholders’ Equity and the tables of Note 13 “Accumulated Other Comprehensive (Loss) Income” for the years ended December 31, 2017 and 2016 were reclassified to reflect this change in presentation.ASU 2014-09, Revenue from Contracts with Customers (Topic 606)On January 1, 2018, the Company adopted ASC 606 using the modified retrospective approach. Under the modified retrospective approach, the Company is required to recognize the cumulative effect of initially applying ASC 606 as an adjustment to the opening balance of retained earnings as of January 1, 2018, the date of initial application. The cumulative effect of initially applying ASC 606 was immaterial to the Consolidated Financial Statements. Therefore, the Company did not record a cumulative transition adjustment.conjunction with the adoption of ASC 606, the Company updated its significant accounting policy related to revenue recognition which can be found in Note 1 “Summary of Significant Accounting Policies” and Note 14 “Revenue from Contracts with Customers.”Results for the year ended December 31, 2018 are presented under ASC 606. Prior periods were not adjusted and will continue to be reported in accordance with ASC 605 Revenue Recognition (“ASC 605”). However, during fiscal year 2018, the Company is required to provide additional disclosures presenting the amount by which each 2018 financial statement line item was affected as a result of applying ASC 606 and an explanation of significant changes in order to present 2018 on a comparative basis under ASC 605.The following table summarizes the impacts of adopting ASC 606 on the Company’s Consolidated Statement of Operations for the year ended December 31, 2018.65Consolidated Statement of Operations
Adoption of
ASC 606The following table summarizes the impacts of adopting ASC 606 on the Company’s Consolidated Balance Sheet as of December 31, 2018.Consolidated Balance Sheet
Adoption of
ASC 606(1)Adjustment represents “Contract asset.” See Note 14 “Revenue from Contracts with Customers” for an explanation of the Contract assets account included in “Other current assets” in the Consolidated Balance Sheets.ASU 2017-07 Compensation – Retirement Benefits (Topic 715) – Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit CostThe Company adopted FASB ASU 2017-07 on January 1, 2018. The Company applied ASU 2017-07 retrospectively for the presentation of the service cost component and the other components of net periodic benefit cost in the income statement and prospectively for the capitalization of the service cost component of net periodic benefit cost in assets. ASU 2017-07 allows the Company to use the amounts disclosed in its pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. Applying the practical expedient, the Company reclassified $0.4 million of expense and $0.8 million of income from “Selling and administrative expenses” to “Other income, net” within the Consolidated Statements of Operations for the years ended December 31, 2017 and 2016, respectively.ASU 2017-12 Derivatives and Hedging (Topic 815) – Targeted Improvements to Accounting for Hedging ActivitiesThe Company early adopted FASB ASU 2017-12, Derivatives and Hedging (Topic 815) – Targeted Improvements to Accounting for Hedging Activities (“ASU 2018-12”) on January 1, 2018 using the modified retrospective approach. As of the adoption date, the Company was the fixed rate payor on 12 interest rate swap contracts that fixed the LIBOR-based index used to determine the interest rates charged on a total of $1,125.0 million of the Company’s LIBOR-based variable rate borrowings. The Company recorded a cumulative-effect adjustment on the adoption date increasing the opening balance of the “Accumulated deficit” line of the Consolidated Balance Sheets by $0.3 million and decreasing the “Accumulated Other Comprehensive Loss” line of the Consolidated Balance Sheets by $0.3 million.Recently Issued Accounting PronouncementsIn February 2016,March 2020, the FASB issued ASU 2016-02, Leases2020-04, Reference Rate Reform (Topic 842)848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for a limited time to ease the potential burden of accounting for reference rate reform on financial reporting. This guidance applies to contracts, hedging relationships and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates. The guidance is effective beginning on March 12, 2020 through December 31, 2022. The Company has not utilized any of the optional expedients or exceptions available under this ASU. The Company will continue to assess whether this ASU is applicable throughout the effective period.replace most ofsimplify the accounting for income taxes by removing certain exceptions and amending and clarifying existing GAAP lease accounting guidance in order to increase transparency and comparability among organizations by recognizing right-of-use lease assets and lease liabilities on the balance sheet for those leases66classified as operating leases under current GAAP. The amendments also expand disclosure requirements for key information about leasing arrangements. The Company will adopt ASU 2016-02 in the first quarter of 2019 utilizing the optional transition method. The Company updated its internal lease accounting policy to address the new standard, revised the Company’s business processes and controls, and completed the implementation and data input for the Company’s lease accounting software solution. The Company estimates that the adoption of ASU 2016-02 will result in the recognition of right-of-use assets and lease liabilities for operating leases of approximately $65 million to $75 million on its Consolidated Balance Sheets. The Company does not expect ASU 2016-02 to have a material impact on its results of operations or cash flows.In March 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220). The amendments in this update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulness of information reported to financial statement users. However, because the amendments only related to the reclassification of the income tax effects of the Tax Cuts and Jobs Act, the underlying guidance that requires the effect of a change in tax laws or rates be included in income from continuing operations is not affected. The ASU is effective for public companies beginning in the first quarter of 2019. The Company is currently assessing the impact of this ASU on its consolidated financial statements.In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this update eliminate, add and modify certain disclosure requirements for fair value measurements as part of its disclosure framework project. The guidance is effective for public companies beginning in the first quarter of 2020. Early adoption is permitted. The Company is currently assessing the impact of this ASU on its consolidated financial statements and evaluating the timing of adoption.In August 2018, the FASB issued ASU 2018-14, Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans. The amendments in this eliminate, add and modify certain disclosure requirements for defined benefit pension plans.guidance. The guidance is effective for public companies beginning with its annual report for fiscal year 2020.the first quarter of 2021. Early adoption is permitted. The Company is currently assessing theadopted this guidance on January 1, 2021. The adoption did not have a material impact of this ASU on itsour consolidated financial statements and evaluating the timing of adoption.August 2018,January 2021, the FASB issued ASU 2018-15, Intangibles – Goodwill2021-01, Reference Rate Reform (Topic 848): Scope, which explicitly clarifies which contracts, hedging relationships, and Other – Internal-Use Software (Subtopic 350-40); Customer’sother transactions are within the scope of the optional expedients and exceptions allowed under Topic 848. The Company has not utilized any of the optional expedients or exceptions available under Topic 848. The Company will continue to assess whether this ASU is applicable through December 31, 2022, in conjunction with our assessment of ASU 2020-4.Implementation Costs IncurredContract Assets and Contract Liabilities from Contracts with Customers, which require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a Cloud Computing Arrangement That Is a Service Contract. business combination in accordance with Topic 606. The amendments in this update require implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidanceare effective for internal-use software, and deferred over the noncancellable term of the cloud computing arrangement plus any option renewal periods that are reasonably certain to be exercised by the customer orfiscal years beginning after December 15, 2022 for which the exercise is controlled by the service provider. The Company is required to adopt this new guidance in the first quarter of 2020.public companies. Early adoption is permitted. The Companyadoption is currently assessing thenot expected to have a material impact of this ASU on itsour consolidated financial statementsstatements.evaluatingHigh Pressure Solutions (“HPS”). The results of operations, financial positions and cash flows of these businesses are reported as discontinued operations for all periods presented in these consolidated financial statements.timingCompany entered into an agreement to sell Club Car to private equity firm Platinum Equity Advisors, LLC (“Platinum Equity”) for $1.68 billion in cash. The sale was substantially completed on June 1, 2021.adoption.$298.3 million for the year ended December 31, 2021.Specialty Vehicle Technologies High Pressure Solutions Total 2021 2020 2019 2021 2020 2019 2021 2020 2019 Revenues $ 430.9 $ 741.4 $ — $ 71.9 $ 195.6 $ 434.4 $ 502.8 $ 937.0 $ 434.4 Cost of sales 321.3 564.6 — 60.2 163.9 301.0 381.5 728.5 301.0 Gross Profit 109.6 176.8 — 11.7 31.7 133.4 121.3 208.5 133.4 Selling and administrative expenses 35.7 63.0 — 5.3 42.5 26.8 41.0 105.5 26.8 Amortization of intangible assets 10.4 37.1 — 2.4 23.6 19.0 12.8 60.7 19.0 Loss (gain) on sale (298.3) — — 207.7 — — (90.6) — — Other operating expense, net 18.1 1.7 — 19.0 14.5 6.4 37.1 16.2 6.4 Operating Income (Loss) 343.7 75.0 — (222.7) (48.9) 81.2 121.0 26.1 81.2 Interest expense — — — — — 0.5 — — 0.5 Other expense, net — — — — 0.1 — — 0.1 — Income (Loss) from Discontinued Operations Before Income Taxes 343.7 75.0 — (222.7) (49.0) 80.7 121.0 26.0 80.7 Provision (benefit) for income taxes 87.1 12.9 — (7.7) (11.3) 18.9 79.4 1.6 18.9 Income (Loss) from Discontinued Operations, Net of Tax $ 256.6 $ 62.1 $ — $ (215.0) $ (37.7) $ 61.8 $ 41.6 $ 24.4 $ 61.8 Assets Current assets: Cash and cash equivalents $ 6.2 $ — Accounts receivable, net 2.5 104.8 Inventories 5.6 226.9 Other current assets 0.1 5.7 Total current assets 14.4 337.4 Property, plant and equipment, net 1.2 188.3 Goodwill — 721.0 Other intangible assets, net — 935.4 Deferred tax assets — 0.5 Other assets — 17.6 Total non-current assets 1.2 1,862.8 Total assets $ 15.6 $ 2,200.2 Liabilities Current liabilities: Accounts payable $ 2.2 $ 134.7 Accrued liabilities 14.9 78.2 Total current liabilities 17.1 212.9 Pensions and other postretirement benefits — 2.5 Deferred income taxes — 173.3 Other liabilities — 17.0 Total non-current liabilities — 192.8 Total liabilities $ 17.1 $ 405.7 Specialty Vehicle Technologies High Pressure Solutions Total 2021 2020 2019 2021 2020 2019 2021 2020 2019 Loss (gain) on sale $ (298.3) $ — $ — $ 207.7 $ — $ — $ (90.6) $ — $ — Depreciation and amortization 14.8 51.5 — 4.0 36.9 31.6 18.8 88.4 31.6 Stock-based compensation expense 8.2 3.0 — 2.7 0.8 0.5 10.9 3.8 0.5 Capital expenditures 1.6 3.1 — 0.3 3.6 5.3 1.9 6.7 5.3 3:4: Business Combinationssevenmultiple businesses during the three yearsyear ended December 31, 2018. Proforma2021. Pro forma information regarding these acquisitions is not considered significant and has not been disclosed.Acquisitionprovided as the acquisitions did not have a material impact on the Company’s Consolidated Statements of MP PumpsOn December 12, 2018, the Company acquired MP Pumps, Inc. (“MP Pumps”), a leading manufacturer of specialty industrial pumps and associated aftermarket parts. The Company acquired all of the assets and assumed certain liabilities of MP Pumps for total consideration, net of cash acquired, of $58.5 million, which consisted of cash payments of $57.8 million, a payable $0.1 million purchase price adjustment and a $0.6 million holdback. The purchase price adjustment and holdback are each expected to be paid by the end of the first quarter of 2019 and are recorded in “Accrued liabilities”Operations individually or in the Consolidated Balance Sheets.aggregate. The revenues and operating income of MP Pumpseach of the acquisitions below are included in the Company’s consolidated financial statements from the acquisition datedate.are includedBlower Systems division of Tuthill Corporation for cash consideration of $184.0 million. The business operates under the tradenames M-D Pneumatics and Kinney Vacuum Pumps and is a leader in the Industrials segment.design and manufacture of positive displacement blowers, mechanical vacuum pumps, vacuum boosters and engineered blower and vacuum systems. The acquisition is intended to expand the product portfolio of the Industrial Technologies and Services segment with complementary technologies and applications. The goodwill arising from the acquisition is attributable to the expected cost synergies, anticipated growth of new and existing customers, and the assembled workforce. The goodwill resulting from this acquisition is expected to be deductible for tax purposes.67Acquisition of DV Systems, Inc.On November 2, 2018,Other acquisitions completed during the Company acquired DV Systems, Inc. (“DV Systems”),year ended December 31, 2021 include multiple sales and service businesses and a leading manufacturer of rotary screwsair purity analysis equipment in the Industrial Technologies and piston compressors and associated aftermarket parts. The Company acquired all of the assets and assumed certain liabilities of DV Systems for total consideration, net of cash acquired, of $16.1 million, which consisted of cash payments of $14.8Services segment and a $1.3 million holdback. Ofpump technology business in the $1.3 million holdback, $0.5 millionPrecision and Science Technologies segment. The aggregate consideration for these acquisitions was $44.6 million.paid by the endmaterial.Seepex M-D Pneumatics and Kinney Vacuum Pumps Maximus Solutions All Others Accounts receivable $ 24.9 $ 4.8 $ 4.3 9.3 Inventories 40.5 3.8 2.9 10.5 Other current assets 1.9 0.2 0.2 0.6 Property, plant and equipment 40.7 16.2 2.1 15.2 Goodwill 245.3 80.0 75.7 78.3 Intangible assets 243.6 82.5 39.5 95.9 Other noncurrent assets 1.1 — — — Total current liabilities (34.4) (3.5) (2.4) (4.0) Deferred tax liabilities (75.4) — (11.3) (4.1) Other noncurrent liabilities (6.1) — — (1.0) Total consideration $ 482.1 $ 184.0 $ 111.0 200.7 68former shareholders. Included in the cash consideration was a holdback of $0.5 million that was paid in the third quarter of 2017. This transaction resulted in an increase to “Capital in excess of par value” of $2.3 million and an increase to “Accumulated other comprehensive loss” of $1.5 million in the Company’s Consolidated Balance Sheets.Acquisition of ILS Innovative Laborsysteme GmbH and Zinsser Analytic GmbHOn August 31, 2016, the Company acquired 100% of the stock of ILS Innovative Laborsysteme GmbH (“ILS”) and Zinsser Analytic GmbH (“Zinsser Analytic”). ILS is a leading manufacturer of highly specialized micro-syringes and valves that are used in liquid handling instruments and is a global supplier to the world’s leading laboratory equipment manufacturers, laboratories and laboratory consumables distributors. Zinsser Analytic is an established provider of customized automated liquid handling systems, and also offers consumables products including polyethylene that are used in diagnostic or clinical labs. The Company acquired all of the assets and assumed certain liabilities of ILS and Zinsser Analytic for approximately $18.8 million, net of cash acquired. The revenues and operating income of ILS and Zinsser Analytic are included in the Company’s consolidated financial statements from the acquisition date and are included in the Medical segment. None of the goodwill resulting from this acquisition is deductible for tax purposes. During the first quarter of 2017, an incremental working capital true-up payment was made for approximately $0.3 million. This amount is in “Net cash paid in business combinations” in the Consolidated Statements of Cash Flows. (Loss)$108.0 million, $27.8$145.9 million and $4.9$(4.5) million, respectively, for the year ended December 31, 2021.Fair value of Ingersoll Rand common stock issued for Ingersoll Rand Industrial outstanding common stock $ 6,919.5 Fair value attributable to pre-merger service for replacement equity awards 8.6 Fair value attributable to pre-merger service for deferred compensation plan 8.9 Total purchase consideration $ 6,937.0 Fair value Cash $ 38.8 Accounts receivable 585.8 Inventories 625.4 Other current assets 87.2 Property, plant and equipment 516.5 Goodwill 4,899.2 Other intangible assets 3,766.6 Other noncurrent assets 270.9 Total current liabilities, including current maturities of long-term debt of $19.0 million (753.0) Deferred tax liability (842.4) Long-term debt, net of debt issuance costs and an original issue discount (1,851.7) Other noncurrent liabilities (333.0) Noncontrolling interest (73.3) Total consideration $ 6,937.0 Land and buildings $ 215.1 Machinery and equipment 256.9 Office furniture and equipment 13.4 Other 1.0 Construction in progress 30.1 Total property, plant and equipment $ 516.5 Fair Value Weighted Average Useful Life (Years) $ 1,312.0 Indefinite 236.0 7 2,101.0 13 81.2 <1 Internal-use software and other 36.4 2 Total identifiable intangible assets $ 3,766.6 2020 2019 Revenues $ 5,398.0 $ 6,146.5 Net Income (Loss) 164.8 101.1 2018, 20172020 and 2016,2019 that are directly attributable to the acquisition.2020 2019 Increase (decrease) to revenue as a result of deferred revenue fair value adjustment, net of tax $ 13.8 $ (13.8) Increase (decrease) to expense as a result of inventory fair value adjustment, net of tax (89.6) 89.6 Increase (decrease) to expense as a result of transaction costs, net of tax (34.8) 34.8 2018, 20172021 and 2016, operating income (loss) included in the financial statements for the acquisitions described above, subsequent to their date of acquisition was $8.8 million, $3.7 million and ($0.3) million, respectively.Note 4: RestructuringRestructuring Programs 2014 to 2016The Company announced a restructuring program in the Industrials segment in the third quarter of 2014 and that program was revised and expanded during the second quarter of 2016. In 2016, the Company also announced restructuring programs impacting the Energy and Medical segments. These restructuring programs2020, “Restructuring charges, net” were substantially completed as of December 31, 2017. Through December 31, 2017, $48.0 million had been charged to expense throughrecognized within “Other operating expense, net” in the Consolidated Statements of Operations ($38.5 million for Industrials, $6.3 million for Energy and $3.2 million for Medical). The Company does not anticipate any material future expense related to these restructuring programs and any remaining liabilities will be paid as contractually obligated. The activity associated with these restructuring programs forconsisted of the year ended December 31, 2018 was not material.2021 2020 Industrial Technologies and Services $ 8.4 $ 70.3 Precision and Science Technologies — 6.9 Corporate 5.0 5.8 Restructuring charges, net $ 13.4 $ 83.0 thesethe Company’s restructuring programs for the year ended December 31, 2017.As of December 31, 2018, restructuring reserves of $1.3 million related to these programs are included(included in “Accrued liabilities” and restructuring reserves of $0.1 million are included in “Other liabilities” in the Consolidated Balance Sheets. As ofSheets) for the years ended December 31, 2017,2021 and 2020, respectively.2021 2020 Balance at beginning of the period $ 17.5 $ 4.8 Charged to expense - termination benefits 9.6 73.5 2.7 3.3 Acquired restructuring — 5.1 Payments (15.9) (70.1) Foreign currency translation and other (1.6) 0.9 Balance at end of the period $ 12.3 $ 17.5 reserves of $6.5 million related to these programs were included in “Accrued liabilities”expense but not the restructuring liabilities during the years ended December 31, 2021 and restructuring reserves of $0.2 million were included in “Other liabilities” in the Consolidated Balance Sheets.2020, respectively.69involvesinvolved workforce reductions and facility consolidation. These actions continued in the fourth quarter and the Company expects additional restructuring activity in the first half of 2019 focused on targeted workforce optimization within general and administrative back-office and manufacturing overhead as well as continued facility consolidation. For the year ended December 31, 2018, $12.7 million was charged to expense through “Other operating expense, net” in the Consolidated Statements of Operations ($7.2 million for Industrials, $3.6 million for Energy, $1.2 million for Medical and $0.7 million for Corporate).The following table summarizes the activity associated with thisThis restructuring program for the year ended December 31, 2018.Aswas completed as of December 31, 2018, restructuring reserves2020.5:6: Allowance for Doubtful Accountsdoubtful trade accounts receivablecredit losses for the years ended December 31, 2018, 20172021, 2020 and 20162019 consisted of the following.2021 2020 2019 Balance at beginning of the period $ 50.9 $ 16.6 $ 16.0 Acquisition - Ingersoll Rand Industrial — 25.1 — (4.3) 10.3 2.4 Write-offs, net of recoveries (3.8) (3.5) (1.6) Foreign currency translation and other (0.5) 2.4 (0.2) Balance at end of the period $ 42.3 $ 50.9 $ 16.6 (1)Primarily includes the effect of foreign currency translation adjustments for the Company's subsidiaries with functional currencies other than the USD.6:7: Inventories20182021 and 20172020 consisted of the following.2021 2020 Raw materials, including parts and subassemblies $ 506.6 $ 451.0 Work-in-process 88.6 62.2 Finished goods 283.4 194.7 878.6 707.9 LIFO excess (reserve) (24.4) 8.8 Inventories $ 854.2 $ 716.7 As of2018, $390.8 million (75%)2021 and 2020, approximately 41% and 39%, respectively, of the Company’stotal inventory is accounted for on a first-in, first-out (“FIFO”) basis and the remaining $133.1 million (25%) is accounted for on a last-in, first-out (“LIFO”) basis.As of2017, $366.92020, the Company recorded non-cash adjustments of $35.6 million (74%)to reduce the carrying value of inventories acquired in the Company’s inventory ismerger with Ingersoll Rand Industrial accounted for on a first-in, first-out (“FIFO”) basis andunder the remaining $127.6 million (26%) is accounted for on a last-in, first-out (“LIFO”) basis.707:8: Property, Plant and Equipment20182021 and 20172020 consisted of the following.2021 2020 Land and land improvements $ 60.1 $ 54.3 Buildings 300.3 278.3 Machinery and equipment 548.1 485.0 Office furniture and equipment 58.3 53.4 Construction in progress 39.5 29.1 1,006.3 900.1 Accumulated depreciation (357.7) (291.1) Property, plant and equipment, net $ 648.6 $ 609.0 8:9: Goodwill and Other Intangible Assets20182021 and 20172020 are as follows.Industrial Technologies and Services Precision and Science Technologies Total Balance as of December 31, 2019 $ 865.4 $ 227.5 $ 1,092.9 Acquisitions 3,213.5 1,165.5 4,379.0 72.3 38.4 110.7 Balance as of December 31, 2020 4,151.2 1,431.4 5,582.6 Acquisitions 87.9 391.4 479.3 (61.8) (18.5) (80.3) Balance as of December 31, 2021 $ 4,177.3 $ 1,804.3 $ 5,981.6 (1)During the year ended December 31, 2017, the Company recorded an increase to goodwill of $0.4 million as a result of measurement period adjustments in the Medical segment.(2)During the year ended December 31, 2018, the Company recorded an increase to goodwill of $1.0 million as a result of measurement period adjustments in the Industrials segment.fourmultiple businesses during the year ended December 31, 2018.2021. The excess of the purchase price over the estimated fair values of intangible assets, identifiable assets and assumed liabilities was recorded as goodwill. The allocation of the purchase price was preliminary for certain of these acquisitions and is subject to refinement based on final fair values of the identified assets acquired and liabilities assumed. The goodwill attributable to the fourthese businesses is as follows. 2021 Acquisitions Industrial Technologies and Services Precision and Science Technologies Total Seepex $ — $ 245.3 $ 245.3 M-D Pneumatics and Kinney Vacuum Pumps 80.0 — 80.0 Maximus Solutions — 75.7 75.7 Other acquisitions 7.9 70.4 78.3 $ 87.9 $ 391.4 $ 479.3 2018 are as follows.In 2017, the Company acquired one entity in the Industrials segment as described in Note 3 “Business Combinations.” This acquisition resulted in $7.9 million2020. The excess of goodwill based on the purchase price allocation.2020 Acquisitions Industrial Technologies and Services Precision and Science Technologies Total Ingersoll Rand Industrial $ 3,198.0 $ 1,162.3 $ 4,360.3 Albin Pump SAS — 3.2 3.2 Other acquisitions 15.5 — 15.5 $ 3,213.5 $ 1,165.5 $ 4,379.0 2018, 2017,2021, 2020 and 2016,2019, each reporting unit’s fair value was in excess of its net carrying value, and therefore, no goodwill impairment was recorded.71As of December 31, 2018 and 2017, goodwill included a total of $563.9 million of accumulated impairment losses within the Energy segment since the date of the KKR Transaction.20182021 and 20172020 consisted of the following.
Carrying
Amount
Amortization
Carrying
Amount
AmortizationDecember 31, 2021 December 31, 2020 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Amortized intangible assets: Customer lists and relationships $ 3,055.0 $ (1,048.3) $ 2,006.7 $ 2,835.0 $ (841.3) $ 1,993.7 Technology 356.4 (77.8) 278.6 279.9 (38.1) 241.8 Tradenames 47.8 (19.0) 28.8 41.8 (15.6) 26.2 Backlog 8.1 (5.1) 3.0 — — — Other 107.1 (76.9) 30.2 102.8 (58.6) 44.2 Unamortized intangible assets: Tradenames 1,565.4 — 1,565.4 1,491.3 — 1,491.3 Total other intangible assets $ 5,139.8 $ (1,227.1) $ 3,912.7 $ 4,750.8 $ (953.6) $ 3,797.2 $125.8$332.9 million, $118.9$335.1 million and $124.2$105.3 million for the years ended December 31, 2018, 20172021, 2020 and 2016,2019, respectively. Amortization of intangible assets is anticipated to be approximately $119.5$300 million annually in 2019 througheach of 2022, 2023 and 2024, $200 million in 2025 and $160 million in 2026 based upon currency exchange rates as of December 31, 2018.tests indefinite-lived intangible assets forrecognized an impairment annually in the fourththird quarter of each year using data2020 of $19.9 million to reduce the carrying value of 2 tradenames in the Industrial Technologies and Services segment.October 1the first day of that year. The Company determinesour fiscal fourth quarters of 2021, 2020 and 2019. For the years ended December 31, 2021, 2020 and 2019, other than as discussed above, each tradename’s fair values for eachvalue was in excess of the indefinite-lived intangible assets using a relief from royalty methodology.In the fourth quarter of 2018, the Company did not record anits net carrying value, and therefore, no impairment charge related to indefinite-lived intangible assets as a result of the annual impairment test.In the fourth quarter of 2017, as a result of the annual impairment test of indefinite-lived intangible assets, the Company recorded an impairment charge of $1.5 million related to indefinite-lived trademarks, including $1.2 million related to two trademarks in the Industrials segment and $0.3 million related to an indefinite-lived trademark in the Energy segment.In the second quarter of 2016, as a result of the Industrials restructuring program, a $1.5 million charge was made for the impairment of a trademark that was discontinued and included in “Impairments of other intangible assets” in the Consolidated Statements of Operations. See Note 4 “Restructuring.”In the fourth quarter of 2016, as a result of the annual impairment test of indefinite-lived intangible assets, the Company recorded an impairment charge of $24.4 million related to indefinite-lived trademarks, including $23.2 million related to three trademarks in the Industrials segment and $1.2 million related to an indefinite-lived trademark in the Energy segment.729:10: Accrued Liabilities20182021 and 20172020 consisted of the following:2021 2020 Salaries, wages, and related fringe benefits $ 232.1 $ 197.0 Contract liabilities 242.1 164.6 Product warranty 42.5 41.1 Operating lease liabilities 34.9 47.1 Restructuring 12.3 17.5 Taxes 41.6 116.1 Other 135.8 125.5 Total accrued liabilities $ 741.3 $ 708.9 (1)For purposes of comparability, “Advance payments on sales contracts” as of December 31, 2017 was reclassified to “Contract liabilities.” See Note 14 “Revenue from Contracts with Customers” for an explanation of the Contract liabilities account included in “Accrued liabilities” in the Consolidated Balance Sheets.20182021 and 2017 are2020 is as follows.2021 2020 Balance at the beginning of period $ 41.1 $ 19.1 Product warranty accruals 16.1 17.2 Acquired warranty 2.1 19.8 Settlements (15.7) (16.7) Foreign currency translation and other (1.1) 1.7 Balance at the end of period $ 42.5 $ 41.1 (1)Includes primarily the effects of foreign currency translation adjustments for the Company’s subsidiaries with functional currencies other than the USD and changes in the accrual related to acquisitions or divestitures of businesses.10:11: Debt20182021 and 20172020 consisted of the following.(1)As of December 31, 2018, the applicable interest rate was 5.27% and the weighted-average rate was 4.84% for the year ended December 31, 2018.(2)As of December 31, 2018, the applicable interest rate was 3.00% and the weighted-average rate was 3.00% for the year ended December 31, 2018.2021 2020 Short-term borrowings $ — $ — Long-term debt $ 1,865.0 $ 1,883.7 910.5 919.6 670.7 728.0 — 392.4 Finance leases and other long-term debt 23.9 17.2 Unamortized debt issuance costs (29.5) (41.4) Total long-term debt, net, including current maturities 3,440.6 3,899.5 Current maturities of long-term debt 38.8 40.4 Total long-term debt, net $ 3,401.8 $ 3,859.1 73Facility,” together with the Original Dollar Term Loan Facility, the “Term Loan Facilities”Facility”) in an aggregate principal amount of €400.0 million; and (iii) a senior secured revolving credit facility (the “Revolving Credit Facility”) in an aggregate principal amount of $400.0 million available to be drawn in U.S. dollars (“USD”), Euros (“EUR”), Great British Pounds (“GBP”) and other reasonably acceptable foreign currencies, subject to certain sublimits for the foreign currencies. Company entered into Amendment No. 1 to the Senior Secured Credit Facilities with UBS AG, Stamford Branch, as administrative agent, and the lenders and other parties thereto on March 4, 2016 (“Amendment No.1”) and Amendment No. 2 to the Senior Secured Credit Facilities with UBS AG, Stamford Branch, as administrative agent, and other agents, lenders and parties thereto on August 17, 2017 (“Amendment No. 2”).Amendment No. 1 reduced the aggregate principal borrowing capacity of the Revolving Credit Facility by $40.0 million to $360.0 million, extended the term of the Revolving Credit Facility to April 30, 2020 with respect to consenting lenders and provided for customary bail-in provisions to address certain European regulatory requirements.Amendment No. 2 refinanced the Original Dollar Term Loan Facility with a replacement $1,285.5 million senior secured U.S. dollar term loan facility (the “Dollar Term Loan Facility”) and the Original Euro Term Loan Facility with a replacement €615.0 million senior secured euro term loan facility (the “Euro Term Loan Facility”). Further the maturity for both term loan facilities was extended to July 30, 2024 and LIBOR Floor was reduced from 1.0% to 0.0%.On July 30, 2018, the Revolving Credit Facility principalincluded borrowing capacity decreasedavailable for letters of credit up to $269.9$200.0 million resulting from the maturity of the tranches of the Revolving Credit Facility which were owned by lenders that elected notand for borrowings on same-day notice, referred to modify the original Revolving Credit Facility maturity date. Any principal amounts outstanding as of April 30, 2020 will be due at that time and required to be paid in full.arewere the listed borrowers under the Revolving Credit Facility.includesby $40.0 million to $360.0 million, extended the term of the Revolving Credit Facility to April 30, 2020 with respect to consenting lenders and provided for customary bail-in provisions to address certain European regulatory requirements. On July 30, 2018, the Revolving Credit Facility principal borrowing capacity availabledecreased to $269.9 million resulting from the maturity of the tranches of the Revolving Credit Facility which were owned by lenders that elected not to modify the original Revolving Credit Facility maturity date. Amendment No. 1 reduced the minimum aggregate principal amount for lettersextension amendments to the facilities from $50.0 million to $35.0 million.borrowings on same-day notice, referred to as swingline loans. As ofthe year ended December 31, 2018,2019.had $6.5entered into Amendment No. 5 to the Credit Agreement (“Amendment No. 5”). Amendment No. 5 refinanced the existing New Dollar Term Loan Facility and New Euro Term Loan Facility. The proceeds from the replacement $927.6 million Dollar Term Loan (“Dollar Term Loan”) and replacement €601.2 million Euro Term Loan (“Euro Term Loan”) were used to refinance the outstanding New Dollar Term Loan Facility and New Euro Term Loan Facility. The proceeds from the Dollar Term Loan and the Euro Term Loan were reduced by an original issue discount of outstanding letters$1.2 million and €0.8 million, respectively. The Euro Term Loan and Dollar Term Loan will mature on February 28, 2027. The refinancing of the New Dollar Term Loan and the New Euro Term Loan resulted in the write off of unamortized debt issuance costs of $2.0 million which was presented within “Loss on extinguishment of debt” in the Consolidated Statements of Operations.unused availability(ii) established an increase of $263.4$100.0 million to the Revolving Credit Facility, bringing the total sum of the Revolving Credit Facility to $1,100.0 million.if asthe greater of the last day(a) $1,600 million and (b) 100% of the most recently ended test period the Consolidated Senior Secured Debt to Consolidated EBITDA Ratio (as defined in the Senior Secured Credit Facilities) is equal to or less than 5.50 to 1.00, $250.0 millionfor the most recently ended four consecutive fiscal quarter period plus (ii) voluntary prepayments and voluntary commitment reductions of the Senior Secured Credit Facilities and certain other permitted indebtedness prior to the date of any such incurrence plus (iii) an additional amount if,equal to (a) in the case of incremental loans and/or commitments that are secured on an equal priority basis with the Senior Secured Credit Facilities, an amount such that after giving effect to the incurrence of such additional amount, the Company does not exceed a Consolidated SeniorFirst Lien Secured Debt to Consolidated EBITDA Ratio (as defined in the Senior Secured Credit Facilities) of 4.50 to 1.00.1.00 or the Consolidated First Lien Secured Debt to Consolidated EBITDA Ratio immediately prior to any such incurrence and all transactions consummated in connection therewith or (b) in the case of incremental loans and/or commitments that are secured on a junior priority basis to the Senior Secured Credit Facilities, an amount such that after giving effect to the incurrence of such additional amount, the Company does not exceed a Consolidated Total Debt to Consolidated EBITDA Ratio (as defined in the Senior Secured Credit Facilities) of 5.00 to 1.00 or the Consolidated Total Debt to Consolidated EBITDA Ratio immediately prior to any such incurrence and all transactions consummated in connection therewith. The lenders under the Senior Secured Credit Facilities are not under any obligation to provide any such incremental commitments or loans, and any such addition of, or increase in commitments or loans, will be subject to certain customary conditions.Facility, the EuroDollar Term Loan FacilityB, and the Revolving Credit Facility (other than Revolving Credit Facility borrowings in GBP or EUR) bear interest at a rate equal to, at the Company’s option, either (a) the greater of LIBOR for the relevant interest period or 0.00% per annum, in each case adjusted for statutory reserve requirements, plus an applicable margin or (b) a base rate (the “Base Rate”) equal to the highest of (1) the rate of interest publicly announced by the administrative agent as its prime rate in effect at its principal office, in Stamford, Connecticut, (2) the federal funds effective rate plus74 and, (3) LIBOR for an interest period of one month, adjusted for statutory reserve requirements, plus 1.00% and (4) 1.00%, in each case, plus an applicable margin. Borrowings under the Euro Term Loan and Revolving Credit Facility borrowings in EUR (if any) bear interest at a rate equal to the greater of EURIBOR for the relevant interest period, or 0.00% per annum, in each case adjusted for statutory reserve requirements, plus an applicable margin. Borrowings under the Revolving Credit Facility in GBP (if any) bear interest at a rate equal to the greater of (a) daily simple SONIA plus an applicable spread adjustment or (b) 0.00% per annum, in each case adjusted for statutory reserve requirements, plus an applicable margin. The applicable margin for (i) the Dollar Term Loan Facility is 2.75%1.75% for LIBOR loans and 0.75% for base rate loans, (ii) the Dollar Term Loan B is 1.75% for Base RateLIBOR loans (ii)and 0.75% for base rate loans, (iii) the Euro Term Loan is 2.00%, (iv) the Revolving Credit Facility is 2.75%2.00% for LIBOR loans, EURIBOR loans and 1.75%SONIA loans and 1.00% for Base Rate loans and (iii) the Euro Term Loan Facility is 3.00% for LIBOR loans.The applicable margins under the Revolving Credit Facility may decrease based upon the Company’s achievement of certain Consolidated Senior Secured Debt to Consolidated EBITDA Ratios. paying interest payments on outstanding principal under the Senior Secured Credit Facilities, the Company is required to pay a commitment fee of 0.50%0.375% per annum to the lenders under the Revolving Credit Facility in respect of the unutilized commitments thereunder. The commitment fee rate was reducedreduces to 0.375% because0.25% or 0.125% upon the achievement of a Level I or Level II status, respectively. Level I status means that the Company’s Consolidated Senior Secured Debt to Consolidated EBITDA Ratio is less than or equal to 3.0 to 1.0. The Company must also pay customary letter of credit fees.PrepaymentsThe Senior Secured Credit Facilities require the Company to prepay outstanding term loans, subject to certain exceptions, with: (i) 50% of annual excess cash flow (as defined in the Senior Secured Credit Facilities) commencing with the fiscal year ended December 31, 2014 (which percentage will be reduced to 25% if the Company’sFirst Lien Secured Debt to Consolidated EBITDA Ratio (as defined in the Senior Secured Credit Facilities) is less than or equal to 3.501.75 to 1.00 but greater than 3.00 to 1.00, and which prepayment will not be required if1.00. Level II status means that the Company’s Consolidated First Lien Secured Debt to Consolidated EBITDA Ratio is less than or equal to 3.001.50 to 1.00. The Company must also pay customary letter of credit fees.;, (ii) 100% of the net cash proceeds of non-ordinary course asset sales or other dispositions of property, subject to reinvestment rights;rights (which percentage will be reduced to 50% if the Company’s Consolidated First Lien Secured Debt to Consolidated EBITDA Ratio is less than or equal to 2.25 to 1.00 but greater than 2.00 to 1.00 and which prepayment will not be required if the Company’s Consolidated First Lien Secured Debt to Consolidated EBITDA Ratio is less than or equal to 2.00 to 1.00), and (iii) 100% of the net cash proceeds of any incurrence of debt, other than proceeds from debt permitted under the Senior Secured Credit Facilities. foregoing mandatory prepayments will be applied to the scheduled installments of principal of the Term Loan Facilitiesterm loans in direct order of maturity.LIBORcertain borrowings other than on the last day of the relevant interest period.Facility amortizesDollar Term Loan B and Euro Term Loan amortize in equal to quarterly installments in aggregate annual amounts equal to 1.00% of the original principal amount of the Dollar Term Loan Facility,such term loan, with the balance beingbalances payable on July 30, 2024. In June 2018, September 2018 and December 2018 the Company used excess cash to repay $100.0 million, $150.0 million and $73.3 million, respectively, of principal on outstanding borrowings under the Dollar Term Loan Facility. As a result of the June 2018 prepayment, the Company is no longer subject to mandatory quarterly principal installment payments on the Dollar Term Loan Facility. The prepayments resulted in the write-off of unamortized debt issuance costs of $0.5 million for the year ended December 31, 2018, included in “Loss on Debt Extinguishment” in the Consolidated Statements of Operations.The Euro Term Loan Facility includes repayments in equal quarterly installments in aggregate annual amounts equal to 1.00% of the original principal amount of the Euro Term Loan Facility, with the balance being payable on July 30, 2024.Amendment No. 1 reduced the minimum aggregate principal amount for extension amendments to the facilities from $50.0 million to $35.0 million.In May 2017, the Company used a portion of the proceeds from the initial public offering to repay $276.8 million principal amount of outstanding borrowings under the Original Dollar Term Loan Facility at par plus accrued and unpaid interest to the date of prepayment of $1.5 million. The prepayment resulted in the write-off of unamortized debt issuance costs of $4.3 million and unamortized discounts of $0.7 million included in “Loss on Debt Extinguishment” in the Consolidated Statements of Operations.75 In addition, certain restricted payments constituting dividends or distributions (subject to certain exceptions) are subject to compliance with a Consolidated Total Debt to Consolidated EBITDA Ratio (as defined in the Senior Secured Credit Facilities) of 5.00 to 1.00. Investments in unrestricted subsidiaries are permitted up to an aggregate amount that does not exceed the greater of $100.0 million and 25% of Consolidated EBITDA.also requires that, if the sum of the aggregate principle amount of all borrowings under the Revolving Credit Facility and non-cash collateralized letters of credit outstanding under the Revolving Credit Facility (less the amount of letters of credit outstanding as of June 28, 2019) exceeds 40% of the commitments under the Revolving Credit Facility, the Company’s Consolidated SeniorFirst Lien Secured Debt to Consolidated EBITDA Ratio to not exceed 7.50 to 1.00 for each fiscal quarter when outstanding revolving credit loans and swingline loans plus non-cash collateralized letters of credit under the Revolving Credit Facility (excluding (i) letters of credit in an aggregate amount not to exceed $80.0 million existing on the date of the closing of the Senior Secured Credit Facilities and any extensions thereof, replacement letters of credit or letters of credit issued in lieu thereof, in each case, to the extent the face amount of such letters of credit is not increased above the face amount of the letter of credit being extended, replaced or substituted and (ii) other non-cash collateralized letters of credit in an aggregate amount not to exceed $25.0 million, provided that the aggregate amount of non-cash collateralized letters of credit outstanding excluded pursuant to this provision shall not exceed $50.0 million) exceed $120.0 million.default, including a changedefault.Borrowings under the Receivables Financing Agreement accrue interest at a reserve-adjusted LIBOR or a base rate, plus 1.6%. Letters of credit accrue interest at 1.6%. The Company may prepay borrowings or letters of credit or draw on the Receivables Financing Agreement upon one business day prior written notice and may terminate the Receivables Financing Agreement with 15 days’ prior written notice.As part of the Receivables Financing Agreement, eligible accounts receivable of certain of the Company’s subsidiaries are sold to a wholly owned “bankruptcy remote” special purpose vehicle (“SPV”). The SPV pledges the receivables as security for loans and letters of credit. The SPV is included in the Company’s consolidated financial statements and therefore, the accounts receivable owned by it are included in the Company’s Consolidated Balance Sheets. However, the accounts receivable owned by the SPV are separate and distinct from the Company’s other assets and are not available to the Company’s other creditors should the Company become insolvent.The Receivables Financing Agreement contains various customary representations and warranties and covenants, and default provisions which provide for the termination and acceleration of the commitments and loans under the agreement in circumstances including, but not limited to, failure to make payments when due, breach of representations, warranties or covenants, certain insolvency events or failure to maintain the security interest in the trade receivables, a change in control and defaults under other material indebtedness.Senior NotesIn May 2017, the Company used a portion of the proceeds from the initial public offering to redeem all $575.0 million aggregate principal amount of its Senior Notes at a price of 105.156% of the principal amount redeemed, equal to $604.6 million, plus accrued and unpaid interest to the date of redemption of $10.2 million. The redemption of the Senior Notes resulted in the write-off of unamortized debt issuance costs of $15.8 million which was included in “Loss on Debt Extinguishment” in the Consolidated Statements of Operations. The premium paid on the Senior Notes, $29.7 million, was included in “Loss on Debt Extinguishment” in the Consolidated Statements of Operations.20182021 and thereafter are approximately $6.9$38.8 million, $7.4$37.8 million, $7.7$37.3 million, $7.8$37.1 million, $8.0$37.2 million and $1,634.3$3,285.1 million, respectively.Operating Lease CommitmentsThe annual rental payments for operating leases were $31.7 million, $30.8 million, and $32.3 million in 2018, 2017 and 2016, respectively. Future minimum rental payments for operating leases for the five years subsequent to December 31, 2018 and thereafter are approximately $25.8 million, $19.5 million, $13.9 million, $7.7 million, $5.4 million and $9.4 million, respectively.11:12: Benefit Plansadditional contributions, as necessary, to prevent benefit restrictions in the plans. The Company’s annual contributions to the non-U.S. pension plans are consistent with the requirements of applicable local laws.77 (the projected benefit obligation in the case of the pension plans and the accumulated postretirement benefit obligation in the case of the other postretirement plans) and in the fair value of the plan assets for the periods described below.Pension Benefits Other Postretirement Benefits U.S. Plans Non-U.S. Plans 2021 2020 2021 2020 2021 2020 Reconciliation of Benefit Obligations: Beginning balance $ 484.3 $ 59.8 $ 445.7 $ 346.5 $ 31.3 $ 3.4 Service cost 5.3 5.8 4.3 3.8 — — Interest cost 10.8 9.5 4.6 6.1 0.6 0.5 Plan amendments — — — — 1.8 (1.6) (20.0) 18.1 (30.0) 24.4 (1.6) 2.0 Benefit payments (25.7) (29.0) (13.7) (12.8) (3.3) (2.7) Acquisitions — 421.0 — 56.7 — 29.3 Plan settlements (12.9) (0.9) — — — 0.3 Effect of foreign currency exchange rate changes — — (14.7) 21.0 (0.1) 0.1 Benefit obligations ending balance $ 441.8 $ 484.3 $ 396.2 $ 445.7 $ 28.7 $ 31.3 Reconciliation of Fair Value of Plan Assets: Beginning balance $ 395.0 $ 61.1 $ 284.8 $ 249.1 Actual return on plan assets 4.8 36.5 25.4 19.0 Employer contributions 11.5 0.1 7.6 7.6 Acquisitions 12.0 327.2 — 12.0 Plan settlements (12.9) (0.9) — — Benefit payments (25.7) (29.0) (13.7) (12.8) Effect of foreign currency exchange rate changes — — (6.4) 9.9 Fair value of plan assets ending balance $ 384.7 $ 395.0 $ 297.7 $ 284.8 Funded Status as of Period End $ (57.1) $ (89.3) $ (98.5) $ (160.9) $ (28.7) $ (31.3) income as of December 31, 20182021 and 20172020 that have not been recognized as a component of net periodic benefit cost are presented in the following table.
Postretirement BenefitsPension Benefits Other Postretirement Benefits U.S. Plans Non-U.S. Plans 2021 2020 2021 2020 2021 2020 Net actuarial losses (gains) $ (12.7) $ (0.8) $ 26.0 $ 75.7 $ 0.5 $ 2.4 Prior service cost — — 3.1 3.2 0.2 (1.6) Amounts included in accumulated other comprehensive income (loss) $ (12.7) $ (0.8) $ 29.1 $ 78.9 $ 0.7 $ 0.8 For defined benefit pension plans, the Company estimates that $2.2 million of net losses and $0.1 million of prior service costs will be amortized from accumulated other comprehensive (loss) income into net periodic benefit cost during the year ending December 31, 2019. For other postretirement benefit plans, the Company estimates no net losses and prior service costs will be amortized from accumulated other comprehensive (loss) income into net periodic benefit cost during the year ending December 31, 2019.20182021 and 2017.2021 2020 Other assets $ 10.4 $ 2.3 Accrued liabilities (10.9) (17.9) Pension and other postretirement benefits (183.8) (265.9) 7820182021 and 2017.U.S. Pension Plans Non-U.S. Pension Plans 2021 2020 2021 2020 Projected benefit obligations $ 385.0 $ 425.2 $ 154.7 $ 441.4 Accumulated benefit obligation 382.8 415.9 126.4 406.3 Fair value of plan assets 326.7 331.0 26.9 260.5 $57.4$439.6 million and $58.6$478.0 million as of December 31, 20182021 and 2017,2020, respectively. The accumulated benefit obligation for all non-U.S. defined benefit pension plans was $299.1$386.4 million and $329.4$426.7 million as of December 31, 20182021 and 2017,2020, respectively. income,, before income tax effects, for the years ended December 31, 2018, 20172021, 2020 and 2016.U.S. Pension Plans 2021 2020 2019 Net Periodic Benefit Cost (Income): Service cost $ 5.3 $ 5.8 $ — Interest cost 10.8 9.5 2.2 Expected return on plan assets (12.2) (12.0) (2.2) Amortization of net actuarial loss — — 0.1 Net periodic benefit cost 3.9 3.3 0.1 Gain due to settlement (0.6) — — Total net periodic benefit cost recognized $ 3.3 $ 3.3 $ 0.1 Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss): Net actuarial gain $ (12.5) $ (6.4) $ (0.9) Amortization of net actuarial gain (loss) 0.6 — (0.1) Total recognized in other comprehensive income (loss) $ (11.9) $ (6.4) $ (1.0) Total recognized in net periodic benefit (income) cost and other comprehensive income (loss) $ (8.6) $ (3.1) $ (0.9) Non-U.S. Pension Plans 2021 2020 2019 Net Periodic Benefit Cost (Income): Service cost $ 4.3 $ 3.8 $ 1.5 Interest cost 4.6 6.1 7.7 Expected return on plan assets (12.2) (11.0) (10.3) Amortization of prior-service cost 0.2 0.1 0.1 Amortization of net actuarial loss 4.9 2.9 2.0 Total net periodic benefit cost recognized $ 1.8 $ 1.9 $ 1.0 Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss): Net actuarial loss (gain) $ (43.3) $ 16.3 $ 10.9 Amortization of net actuarial loss (4.9) (2.9) (2.0) Amortization of prior service cost (0.2) (0.1) (0.1) Effect of foreign currency exchange rate changes (1.4) 4.2 1.1 Total recognized in other comprehensive income (loss) $ (49.8) $ 17.5 $ 9.9 Total recognized in net periodic benefit cost (income) and other comprehensive income (loss) $ (48.0) $ 19.4 $ 10.9 79Other Postretirement Benefits 2021 2020 2019 Net Periodic Benefit Cost: Interest cost $ 0.6 $ 0.5 $ 0.1 Amortization of prior-service cost 0.1 — — Amortization of net actuarial loss 0.1 — — Net periodic benefit cost 0.8 0.5 0.1 Loss due to curtailments or settlements — 0.3 — Total net periodic benefit cost recognized $ 0.8 $ 0.8 $ 0.1 Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss): Net actuarial loss (gain) $ (1.6) $ 2.0 $ 0.4 Amortization of net actuarial loss (0.1) — — Prior service cost 1.9 (1.6) — Amortization of prior service cost (0.1) — — Effect of foreign currency exchange rate changes — — — Total recognized in other comprehensive income (loss) $ 0.1 $ 0.4 $ 0.4 Total recognized in net periodic benefit cost and other comprehensive income (loss) $ 0.9 $ 1.2 $ 0.5 The plans are assumed to continue in force for as long as the assets are expected to be invested. In estimating the expected long-term rate of return on plan assets, appropriate consideration is given to historical performance of the major asset classes held or anticipated to be held by the plans and to current forecasts of future rates of return for those asset classes. Because assets are held in qualified trusts, expected returns are not adjusted for taxes.80 weighted-average actuarial assumptions were used to determine net periodic benefit cost (income) for the years ended December 31, 2018, 2017 and 2016.The following weighted-average actuarial assumptions were used to determine benefit obligations for the years ended December 31, 20182021, 2020 and 2017:U.S. Pension Plans Non-U.S. Pension Plans 2021 2020 2019 2021 2020 2019 Weighted-average actuarial assumptions used to determine net periodic benefit cost (income): Discount rate 2.4 % 2.7 % 4.0 % 1.1 % 1.6 % 2.6 % Expected long-term rate of return on plan assets 3.2 % 2.6 % 4.0 % 4.3 % 4.4 % 4.9 % Rate of compensation increases 3.0 % 4.0 % NA 3.1 % 2.7 % 2.8 % Weighted-average actuarial assumptions used to determine benefit obligations: Discount rate 2.7 % 2.4 % 3.0 % 1.6 % 1.1 % 1.7 % Rate of compensation increases 3.0 % 3.0 % NA 4.3 % 3.1 % 2.7 % 2018, 20172021, 2020 and 2016.A one-percentage-point increase or decrease in assumed healthcare cost trend rates as of December 31, 2018 would have less than a $0.1 million impact on total service and interest cost components of net periodic benefit costs and less than a $0.1 million impact on the postretirement benefit obligation.Other Postretirement Benefits 2021 2020 2019 Discount rate used to determine net periodic benefit cost (income) 1.8% - 2.4% 2.3% - 3.0% 4.7 % Discount rate used to determine benefit obligations 2.4% - 3.0% 1.9% - 2.3% 3.8 % Weighted-average actuarial assumptions used to determine other postretirement benefit plans costs and obligations: Healthcare cost trend rate assumed for next year 6.8 % 6.3 % 7.1 % Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) 4.5 % 4.7 % 7.1 % Year that the date reaches the ultimate trend rate 2034 2029 2021 8120242027 through 2028.2031. The estimated benefit payments for the non-U.S. pension plans were calculated using foreign exchange rates as of December 31, 2018.
Postretirement
Benefits
PlansPension Benefits Other Postretirement Benefits U.S. Plans Non-U.S. Plans 2022 $ 38.1 $ 13.7 $ 3.3 2023 31.0 13.5 3.1 2024 28.6 14.3 2.8 2025 28.5 16.2 2.6 2026 26.8 16.4 2.3 Aggregate 2027-2031 127.0 85.8 8.8 2019,2022, the Company expects to contribute approximately $0.1$4.2 million to the U.S. pension plans, approximately $4.7$6.8 million to the non-U.S. pension plans, and $0.3approximately $3.3 million to the other postretirement benefit plans.Gardner Denver’sIngersoll Rand’s defined benefit plans are invested in the Company’s common stock. The Company uses both active and passive investment strategies.In 2018, the Company modified its investment strategy for the U.S. pension plans to a liabilities driven investment strategy to reduce the impact73%81% of the total benefit obligations and 89%93% of total plan assets as of December 31, 2018.2021. The following table presents the long-term target allocations for these two plans as of December 31, 2018.U.S. Plans UK Plan Asset category: Equity 13 % 32 % Fixed income 84 % 30 % Real estate and other 3 % 38 % Total 100 % 100 % 8220182021 and 20172020 by asset category within the ASC 820 hierarchy (as defined in Note 1820 “Fair Value Measurements”).
Active Markets for
Identical Assets
(Level 1)
Observable
Inputs
(Level 2)
Unobservable
Inputs
(Level 3)
Measured at
NAV(5)December 31, 2021
Active Markets for
Identical Assets
(Level 1)
Observable
Inputs
(Level 2)
Unobservable
Inputs
(Level 3)
Measured at
NAV(5)Quoted Prices in Active Markets for Identical Assets
(Level 1)Significant Observable Inputs
(Level 2)Significant Unobservable Inputs
(Level 3)Total Asset Category $ 12.7 $ — $ — $ — $ 12.7 Equity funds: U.S. small-cap U.S. small-cap — — — 6.3 6.3 U.S. large-cap — 8.0 — 29.0 37.0 24.3 45.9 — 68.3 138.5 Total equity funds 24.3 53.9 — 103.6 181.8 Fixed income funds: Corporate bonds - international — 25.3 — 9.6 34.9 UK index-linked gilts — 35.9 — — 35.9 U.S. fixed income - government securities U.S. fixed income - government securities — — — 38.0 38.0 U.S. fixed income - short duration U.S. fixed income - short duration — — — 5.2 5.2 U.S. fixed income - intermediate duration U.S. fixed income - intermediate duration — — — 41.1 41.1 U.S. fixed income - long corporate U.S. fixed income - long corporate — — — 234.8 234.8 Global fixed income Global fixed income — — — 13.5 13.5 Total fixed income funds — 61.2 — 342.2 403.4 Other types of investments: — 49.5 — — 49.5 0 — 34.0 1.0 35.0 Total $ 37.0 $ 164.6 $ 34.0 $ 446.8 $ 682.4 (1)Cash and cash equivalents consist of traditional domestic and foreign highly liquid short-term securities with the goal of providing liquidity and preservation of capital while maximizing return on assets.December 31, 2020 Quoted Prices in Active Markets for Identical Assets
(Level 1)Significant Observable Inputs
(Level 2)Significant Unobservable Inputs
(Level 3)Total Asset Category $ 8.5 $ — $ — $ — $ 8.5 Equity funds: U.S. large-cap — 6.4 — 49.0 55.4 24.2 39.8 — 81.7 145.7 Total equity funds 24.2 46.2 — 130.7 201.1 Fixed income funds: Corporate bonds - international — 25.2 — — 25.2 UK index-linked gilts — 41.5 — — 41.5 U.S. fixed income - government securities — 98.9 — 4.7 103.6 U.S. fixed income - short duration — 15.2 — 4.5 19.7 U.S. fixed income - intermediate duration — 26.3 — 45.2 71.5 U.S. fixed income - long corporate — 120.6 — 9.6 130.2 Total fixed income funds — 327.7 — 64.0 391.7 Other types of investments: — 42.3 — — 42.3 — — 36.2 — 36.2 Total $ 32.7 $ 416.2 $ 36.2 $ 194.7 $ 679.8 83
(4)Other investments consist of insurance and reinsurance contracts securing the retirement benefits. The fair value of these contracts was calculated at the discount value of premiums paid by the Company, less expenses charged by the insurance providers. The insurance providers with which the Company has placed these contracts are well-known financial institutions with an established history of providing insurance services.(2)The International category consists of investment funds focused on companies operating in developed and emerging markets outside of the U.S. These investments target broad diversification across large and mid/small-cap companies and economic sectors.(3)U.S. and International real estate consists primarily of equity and debt investments made, directly or indirectly, in various interests in unimproved and improved real properties.(4)Other investments consist of insurance and reinsurance contracts securing the retirement benefits. The fair value of these contracts was calculated at the discount value of premiums paid by the Company, less expenses charged by the insurance providers. The insurance providers with which the Company has placed these contracts are well-known financial institutions with an established history of providing insurance services.(5)Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy.2018, 2017,2021, 2020, and 20162019 were $15.9$40.6 million, $13.7$35.9 million and $12.8 $19.5 million, respectively.$4.1$4.9 million and $3.9$4.4 million as of December 31, 20182021 and 2017,2020, respectively.12:13: Stockholders’ Equity20182021 and 2017,2020, 1,000,000,000 shares of voting common stock were authorized. Shares of common stock outstanding were 198,169,855were 407,785,207 and 196,217,971418,627,809 as of December 31, 20182021 and 2017,2020, respectively. The Company is governed by the General Corporation Law of the State of Delaware. All authorized shares of voting common stock have a par value of $0.01. Shares of common stock reacquired are considered issued and reported as Treasury shares.13:14: Accumulated Other Comprehensive Income (Loss) Income income consists of (i) unrealized foreign currency net gains and losses on the translation of the assets and liabilities of its foreign operations; (ii) realized and unrealized foreign currency gains and losses on intercompany notes of a long-term nature and certain hedges of net investments in foreign operations, net of income taxes; (iii) unrealized gains and losses on cash flow hedges (consisting of interest rate swaps), net of income taxes; and (iv) pension and other postretirement prior service cost and actuarial gains or losses, net of income taxes. See Note 1112 “Benefit Plans” and Note 1719 “Hedging Activities, Derivative Instruments and Credit Risk.”84 income and related income tax effect are as follows.
Currency
Translation
Adjustments, Net
(Losses) Gains
on Cash Flow
Hedges
Postretirement
Benefit Plans
Other
Comprehensive
IncomeForeign Currency Translation Adjustments, Net Unrealized Gains (Losses) on Cash Flow Hedges Pension and Postretirement Benefit Plans Total Balance as of December 31, 2018 $ (190.6) $ (11.4) $ (45.0) $ (247.0) Before tax income (loss) 4.1 8.2 (9.3) 3.0 Income tax effect (5.6) (1.0) 2.8 (3.8) Other comprehensive income (loss) (1.5) 7.2 (6.5) (0.8) Cumulative effect adjustment upon adoption of new accounting standard (ASU 2018-02) (1.5) (6.7) — (8.2) Balance as of December 31, 2019 $ (193.6) $ (10.9) $ (51.5) $ (256.0) Before tax income (loss) 253.1 14.2 (11.5) 255.8 Income tax effect 15.1 (3.3) 2.6 14.4 Other comprehensive income (loss) 268.2 10.9 (8.9) 270.2 Balance as of December 31, 2020 $ 74.6 $ — $ (60.4) $ 14.2 Before tax income (loss) (119.9) — 61.6 (58.3) Income tax effect 16.9 — (12.9) 4.0 Other comprehensive income (loss) (103.0) — 48.7 (54.3) Divestiture of foreign subsidiaries (1.5) — — (1.5) Balance as of December 31, 2021 $ (29.9) $ — $ (11.7) $ (41.6) income by component for the periods described below are presented in the following table(1).
Currency
Translation
Adjustments, Net
(Losses) Gains
on Cash Flow
Hedges
Postretirement
Benefit Plans(1)All amounts are net of tax. Amounts in parentheses indicate debits.Foreign Currency Translation Adjustments, Net Unrealized Gains (Losses) on Cash Flow Hedges Pension and Postretirement Benefit Plans Total Balance as of December 31, 2018 $ (190.6) $ (11.4) $ (45.0) $ (247.0) Other comprehensive loss before reclassifications (1.5) (4.7) (8.2) (14.4) Amounts reclassified from accumulated other comprehensive income (loss) — 11.9 1.7 13.6 Other comprehensive income (loss) (1.5) 7.2 (6.5) (0.8) Cumulative effect adjustment upon adoption of new accounting standard (ASU 2018-02) (1.5) (6.7) — (8.2) Balance as of December 31, 2019 $ (193.6) $ (10.9) $ (51.5) $ (256.0) Other comprehensive income (loss) before reclassifications 268.2 (3.0) (11.2) 254.0 Amounts reclassified from accumulated other comprehensive income (loss) — 13.9 2.3 16.2 Other comprehensive income (loss) 268.2 10.9 (8.9) 270.2 Balance as of December 31, 2020 $ 74.6 $ — $ (60.4) $ 14.2 Other comprehensive income (loss) before reclassifications (103.0) — 45.2 (57.8) Amounts reclassified from accumulated other comprehensive income (loss) — — 3.5 3.5 Other comprehensive income (loss) (103.0) — 48.7 (54.3) Divestiture of foreign subsidiaries (1.5) — — (1.5) Balance as of December 31, 2021 $ (29.9) $ — $ (11.7) $ (41.6) 85 income for the years ended December 31, 20182021, 2020 and 20172019 are presented in the following table.
Other Comprehensive
Income Components
Statement Where Net
Income is PresentedAmount Reclassified from Accumulated Other Comprehensive Income (Loss) Details about Accumulated Other Comprehensive Income (Loss) Components 2021 2020 2019 Affected Line(s) in the Statement Where Net Income is Presented Loss on cash flow hedges (interest rate swaps) $ — $ 18.5 $ 15.6 Interest expense Benefit for income taxes — (4.6) (3.7) Benefit for income taxes Loss on cash flow hedges (interest rate swaps), net of tax $ — $ 13.9 $ 11.9 $ 4.7 $ 3.0 $ 2.2 Cost of sales and Selling and administrative expenses Benefit for income taxes (1.2) (0.7) (0.5) Benefit for income taxes Amortization of defined benefit pension and other postretirement benefit items, net of tax $ 3.5 $ 2.3 $ 1.7 Total reclassifications for the period $ 3.5 $ 16.2 $ 13.6 (1)These components are included in the computation of net periodic benefit cost (see Note 11 “Benefit Plans” for additional details).14:15: Revenue from Contracts with CustomersThe Company adopted ASC 606 on January 1, 2018 using the modified retrospective method. See Note 2 “New Accounting Standards” for further discussion of the adoption. etc., which are included in the transaction price, and allocated to each performance obligation. The variable consideration is estimated throughout the course of the contract using the Company’s best estimates. JudgmentsJudgements impacting variablehighly engineeredhighly-engineered solutions designed to customer specific applications. For contracts where the contractual deliverables have no alternative use and the contract termination clauses provide for the recovery of cost plus a reasonable margin, revenue is recognized over time based on the Company’s progress in satisfying the contractual performance obligations, generally measured as the ratio of actual costs incurred to date to the estimated total costs to complete the contract. For contracts with termination provisions that do not provide for recovery of cost and a reasonable margin, revenue is recognized at a point in time, generally at shipment or delivery to the customer. Identification of performance obligations, determination of alternative use, assessment of contractual language regarding termination provisions, and estimation of total project costs are all significant judgments required in the application of ASC 606.86the earlier ofeither collection of payment from customers or recognition of revenue. Applying the practical expedient from ASC 340-40-25-4, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. These costs are included in “Selling and administrative expenses” in the Consolidated Statements of Operations.yearyears ended December 31, 2018.Industrial Technologies and Services Precision and Science Technologies Total 2021 2020 2021 2020 2021 2020 Primary Geographic Markets United States $ 1,554.6 $ 1,142.8 $ 432.2 $ 297.1 $ 1,986.8 $ 1,439.9 Other Americas 264.9 280.7 20.5 38.7 285.4 319.4 Total Americas 1,819.5 1,423.5 452.7 335.8 2,272.2 1,759.3 EMEIA 1,363.4 1,054.4 368.1 256.5 1,731.5 1,310.9 Asia Pacific 978.1 770.3 170.6 132.7 1,148.7 903.0 Total $ 4,161.0 $ 3,248.2 $ 991.4 $ 725.0 $ 5,152.4 $ 3,973.2 Product Categories $ 2,467.1 $ 1,942.8 $ 822.3 $ 618.8 $ 3,289.4 $ 2,561.6 1,693.9 1,305.4 169.1 106.2 1,863.0 1,411.6 Total $ 4,161.0 $ 3,248.2 $ 991.4 $ 725.0 $ 5,152.4 $ 3,973.2 Pattern of Revenue Recognition $ 3,811.3 $ 2,937.1 $ 988.3 $ 725.0 $ 4,799.6 $ 3,662.1 349.7 311.1 3.1 — 352.8 311.1 Total $ 4,161.0 $ 3,248.2 $ 991.4 $ 725.0 $ 5,152.4 $ 3,973.2 (1)Revenues from sales of capital equipment within the Industrials and Energy Segments and sales of components to original equipment manufacturers in the Medical Segment.(2)Revenues from sales of spare parts, accessories, other components and services in support of maintaining customer owned, installed base of the Company’s original equipment. Service revenue represents less than 10% of consolidated revenue.(3)Revenues from short and long duration product and service contracts recognized at a point in time when control is transferred to the customer generally when product delivery has occurred and services have been rendered.(4)Revenues primarily from long duration ETO product contracts and certain contracts for the delivery of a significant volume of substantially similar products recognized over time as contractual performance obligations are completed.expenseaccount for shipping and handling activities as fulfillment costs as incurred.2018,2021, for contracts with an original duration greater than one year, the Company expects to recognize revenue in the future related to unsatisfied (or partially satisfied) performance obligations of $198.9$472.3 million in the next twelve months and $35.8$396.7 million in periods thereafter. The performance obligations that are unsatisfied (or partially satisfied) are primarily related to orders for goods or services that were placed prior to the end of the reporting period and have not been delivered to the customer, on-going work on ETO contracts where revenue is recognized over time and service contracts with an original duration greater than one year.8720182021 and December 31, 20172020 presented in the Consolidated Balance Sheets.
2018
2017December 31, 2021 December 31, 2020 Accounts receivable, net $ 948.6 $ 861.8 Contract assets 60.8 60.4 Contract liabilities 243.5 166.2 The increase in the contract liabilities account as of December 31, 2018 from December 31, 2017 was primarily due to the acquisition of Runtech of $29.0 million. Contract liability balances are generally recognized in revenue within twelve months.30-6030 to 60 days after invoicing. Invoicing for sales of standard products generally coincides with shipment or delivery of goods. Invoicing for CTO and ETO contracts typically follows a schedule for billing at contractual milestones. Payment milestones normally include down payments upon the contract signing, completion of product design, completion of customer’s preliminary inspection, shipment or delivery, completion of installation, and customer’s on-site inspection. The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets) and customer advances and deposits (contract liabilities) on the Consolidated Balance Sheets.15:16: Income Taxes2018, 20172021, 2020 and 20162019 consisted of the following.2021 2020 2019 U.S. $ 121.3 $ (158.4) $ (100.5) Non-U.S. 391.7 113.0 210.7 Income (loss) before income taxes $ 513.0 $ (45.4) $ 110.2 provisionProvision (benefit) for income taxes for the years ended December 31, 2018, 20172021, 2020 and 2016.2021 2020 2019 Current: U.S. federal $ (33.1) $ 6.6 $ (14.6) U.S. state and local 5.8 6.7 2.9 Non-U.S. 109.1 79.6 45.2 Deferred: U.S. federal (19.5) (33.4) (13.2) U.S. state and local (0.9) (2.9) 0.5 Non-U.S. (83.2) (45.2) (7.9) Provision (benefit) for income taxes $ (21.8) $ 11.4 $ 12.9 882018, 20172021, 2020 and 20162019 as follows.2021 2020 2019 U.S. federal corporate statutory rate 21.0 % 21.0 % 21.0 % State and local taxes, less federal tax benefit 1.1 (8.0) 4.1 Net effects of foreign tax rate differential 1.0 (14.6) 2.3 Withholding tax 3.0 (12.9) — Repatriation cost 1.4 17.7 — Global Intangible Low-Tax Income (“GILTI”) 2.3 (11.7) (4.3) ASC 740-30 (formerly APB 23) 2.9 (18.6) 2.0 Valuation allowance changes (5.4) 4.8 (4.3) Uncertain tax positions (1.3) (4.7) 0.7 Equity compensation (2.5) 6.1 (13.9) Capital gain — — 5.1 Nondeductible acquisition costs 0.4 (7.7) 6.1 Foreign Derived Intangible Income (“FDII”) deduction (3.2) 10.1 — Tax credits (0.8) 4.7 — Income not subject to tax (3.3) — — Utilization of capital loss (9.1) — — Non-U.S. deferred change related to asset sales (8.0) — — Return to provision adjustment (1.3) 0.5 — Other, net (2.4) (11.8) (7.1) Effective income tax rate (4.2) % (25.1) % 11.7 % 20182021 and 20172020 are as follows.2021 2020 Deferred Tax Assets: Reserves and accruals $ 69.3 $ 72.9 Allowance for credit losses 10.0 11.0 Inventory reserve 12.0 10.4 Pension and postretirement benefit plans 41.7 62.6 Tax loss carryforwards 95.9 101.7 Deferred taxes recorded in other comprehensive income 10.2 18.0 Foreign tax credit carryforwards 43.8 74.6 Other 30.9 10.7 Total deferred tax assets 313.8 361.9 Valuation allowance (106.4) (140.6) Deferred Tax Liabilities: LIFO inventory (16.2) (16.2) Investment in partnership (37.4) — Property, plant and equipment (40.9) (49.4) Intangible assets (742.1) (809.9) Unremitted foreign earnings (49.6) (32.5) Deferred taxes recorded in other comprehensive income — — Other (1.6) — Total deferred tax liabilities (887.8) (908.0) Net deferred income tax liability $ (680.4) $ (686.7) 8920182021 were as follows.
Allowance
Period EndsTax Benefit Valuation Allowance Carryforward Period Ends Tax Attributes to be Carried Forward U.S. federal net operating loss $ 0.3 $ (0.3) Unlimited U.S. federal net operating loss 6.3 (0.1) 2031-2040 U.S. federal capital loss — — 2022 U.S. federal capital loss — — 2031-2040 U.S. federal tax credit 43.8 (43.8) 2022-2031 Alternative minimum tax credit 0.8 (0.1) Unlimited U.S. state and local net operating losses 6.5 (3.1) 2022-2041 U.S. state and local tax credit 0.2 — 2022-2040 Non U.S. net operating losses 70.7 (49.7) Unlimited Non U.S. capital losses 0.8 (0.7) Unlimited Excess interest 11.3 (3.7) Unlimited Other deferred tax assets 3.7 (4.9) Unlimited Total tax carryforwards $ 144.4 $ (106.4) 2018, 20172021, 2020 and 20162019 are as follows.2021 2020 2019 Beginning balance $ 140.6 $ 67.9 $ 72.5 — 63.3 — Charged to tax expense (27.6) 8.3 (5.4) Charged to other accounts (6.6) 1.1 0.1 — — 0.7 Ending balance $ 106.4 $ 140.6 $ 67.9 (1)Deductions relate to the realization of net operating losses or the removal of deferred tax assets.$11.5$21.1 million, $12.6$27.8 million and $6.8$12.5 million for the years ended December 31, 2018, 20172021, 2020 and 2016,2019, respectively. The net decrease in this balance primarily relates to $0.5 millionthe lapse in lapse of statute of limitations and $0.6 million in changes due to currency fluctuations.of $(11.8) million. Included in total unrecognized benefits as ofat December 31, 20182021 is $11.5$21.1 million of unrecognized tax benefits that would affect the Company'sCompany’s effective tax rate if recognized, of which $0.7$0.1 million would be offset by a reduction of a corresponding deferred tax asset. The balance of total unrecognized tax benefits is not expected to significantly increase or decrease within the next twelve months. Below is a tabular reconciliation of the changes in total unrecognized tax benefits during the years ended December 31, 2018, 20172021, 2020 and 2016.2021 2020 2019 Beginning balance $ 27.8 $ 12.5 $ 11.5 Gross increases for tax positions of prior years 0.8 — 0.6 Gross increases for tax positions of current year 5.3 16.8 — Lapse of statute of limitations (11.8) (3.5) — Changes due to currency fluctuations (1.0) 2.0 0.4 Ending balance $ 21.1 $ 27.8 $ 12.5 Company'sCompany’s income tax liabilities as ofat December 31, 20182021 and 20172020 include accrued interest and penalties of $0.9$1.2 million and $0.8$2.3 million, respectively.90forbeginning with the 2015 and 20172018 tax years,year, and state returns are open beginning with the 20132016 tax year. During 2018, the Company started and closed the 2014 and 2016 tax year IRS audits. No current U.S. federal audits are active as of December 31, 2018.3547 jurisdictions outside the U.S. The statute of limitations varies by jurisdiction with 20052016 being the oldest year still open. The Company'sCompany’s significant operations outside the U.S. are located in the United Kingdom, Germany, China, Ireland, Hong Kong, and Germany.Singapore. In the United Kingdom,Germany, a tax audit covering tax years prior to 2012 are closed. However, the2015-2019 was still open. The Company is currently under audit in the United Kingdom, which had originally included years 2012 to 2014, but was expanded to 2015 in December of 2017. The audit has not been completed as of the date of these financial statements. In Germany, generally, theItaly for tax years 2011 and beyond remain open to examination. 2016 – 2018. However, as this audit covers pre-merger tax years for legacy Ingersoll Rand Industrial entities, the Company has been indemnified by Trane Technologies for any future liability arising from the audit. Note that any other liabilities arising from pre-merger tax years for legacy Ingersoll Rand Industrial entities would be similarly indemnified.also commenced a general tax audit fordoes not assert the tax years 2011 to 2014 for Germany during 2018.The Company recorded a deferred tax liability of approximately $114.0 million as of the KKR Transaction for the anticipated repatriation of a limited amount of unremitted foreign earnings generated prior to the KKR Transaction. These accumulated earnings of non-U.S. subsidiaries amounting to approximately $287.0 million are expected to supplement the Company’s projected U.S. operating cash flow in meeting the Company’s debt service requirements along with other U.S. cash flow needs during the term of its credit agreement. This deferred tax liability was adjusted to $94.1 million as of December 31, 2014, $94.6 million as of December 31, 2015, $77.3 million as of December 31, 2016 and $9.3 million as of December 31, 2017, based upon the estimated need to repatriate accumulated earnings of approximately $200.0 million. Due to the Tax Act, effective the fourth quarter of 2018, the Company decided to reverse its ASC 740-30 (formerly APB 23) position, and no longer asserts indefinite reinvestment for anyof the Company’s historical non-U.S. earnings or future non-U.S. earnings. This assertion has not changed following the merger. The Company adjusted its ASC 740-30records a deferred foreign tax liability to cover all estimated withholding, state income tax and foreign income tax associated with repatriating all non-U.S. earnings back to the United States. The Company’s deferred income tax liability as of December 31, 2018 back2021 was $49.6 million which is a significant increase over prior year due mainly to increased foreign operations as a result of the Ingersoll Rand Industrial acquisition.U.S. Asinitial term at commencement plus any renewal or extension options that the Company is reasonably certain will be exercised. ROU assets at the date of commencement are equal to the amount of the initial lease liability, the initial direct costs incurred by the Company and any prepaid lease payments less any incentives received.result,discount rate established at the commencement date. Due to the absence of an implicit rate in the Company’s lease contracts, an incremental borrowing rate is used in the determination of the present value of future lease payments. Incremental borrowing rates for a lease are based on the lease term, lease currency and the Company’s credit spread. Operating ROU assets are recorded deferred taxas the beginning balance less accumulated amortization with accumulated amortization equaling the straight-lined lease expense less the periodic accretion of the lease liability using the effective interest rate method.$5.6 millionits leases and accounts for the extension and termination when it is reasonably certain that the Company will exercise the option or terminate the lease. Reassessment of the lease term occurs when there is a significant event or a significant change in circumstances that is within the control of the Company that directly affects whether the Company is reasonably certain to exercise or not to exercise an option to extend or terminate the lease or to purchase the underlying asset.2021 2020 Operating lease cost $ 50.6 $ 46.1 Finance lease cost Amortization of right-of-use assets $ 1.5 $ 1.2 Interest on lease liabilities 1.1 1.1 Total finance lease cost $ 2.6 $ 2.3 Short-term lease cost $ 2.0 $ 2.0 2021 2020 Supplemental Cash Flows Information Cash Paid for Amounts Included in the Measurement of Lease Liabilities Operating cash flows from operating leases $ 52.0 $ 56.6 Operating cash flows from finance leases 1.1 1.1 Financing cash flows from finance leases 1.1 0.7 15.8 161.3 December 31, 2021 December 31, 2020 Operating leases Other assets $ 101.8 $ 142.9 Accrued liabilities 34.9 47.1 Other liabilities 61.0 90.5 Total operating lease liabilities $ 95.9 $ 137.6 Finance Leases Property, plant and equipment $ 15.1 $ 15.7 Short-term borrowings and current maturities of long-term debt 1.1 0.7 Long-term debt, less current maturities 16.0 16.5 Total finance lease liabilities $ 17.1 $ 17.2 Weighted Average Remaining Lease Term (in years) Operating leases 4.0 3.5 Finance leases 11.9 13.2 Weighted Average Discount Rate Operating leases 1.8 % 1.8 % Finance leases 6.3 % 6.4 % 2018 relates mainly to withholding tax.2021 are as follows.Operating Leases Finance Leases 2022 $ 36.1 $ 2.2 2023 26.9 2.2 2024 14.5 2.2 2025 7.6 2.0 2026 5.1 2.0 Thereafter 9.2 14.6 Total lease payments $ 99.4 $ 25.2 Less imputed interest (3.5) (8.1) Total $ 95.9 $ 17.1 16:18: Stock-Based Compensation Plansmay grantgrants stock-based compensation awards pursuant to the 2017 Plan and ceased granting new awards pursuant to the 2013 Plan.8.619.6 million stock based and other incentive awards. Any shares of common stock subject to outstanding awards granted under the Company’s 2013 plan that, after the effective date of the 2017 Plan, expire or are otherwise forfeited or terminated in accordance with their terms are also available for grant under the 2017 Plan. All stock options were granted to employees, directors and advisors with an exercise price equal to the fair value of the Company’s per share common stock at the date of grant. Stock option awards typically vest over four or five years and expire ten years from the date of grant.PriorCompany’s initial public offering in May 2017,acquisition. The portion of fair value of the replacement awards related to services provided prior to the acquisition was accounted for as consideration transferred. The remaining portion of the fair value is associated with future service and is recognized as compensation expense over the vesting period.had certain repurchase rights on stock acquired throughassumed in connection with the exerciseacquisition of a stock option that created an implicit service period and created a condition in which an optionee did not receiveIngersoll Rand Industrial was estimated using the economic benefits ofBlack-Scholes model with the option until the repurchase rights were eliminated. Before the elimination of the repurchase rights, nofollowing assumptions.Converted Stock Option Awards Assumptions: Expected life of options (in years) 2.0 - 3.6 Risk-free interest rate 0.9 % Assumed volatility 34.2 % Expected dividend rate 0.0 % was recorded for equity awards. The Company recognized a liability for compensation expense measured at intrinsic value when it was probable that an employee would receive benefits under the termsyears ended December 31, 2021, 2020 and 2019 are included in “Cost of sales” and “Selling and administrative expenses” in the plan due to the terminationConsolidated Statements of employment. The repurchase rights creating the implicit service period were eliminated at the initial public offering.Operations and are as follows.2021 2020 2019 Stock-based compensation expense recognized in: Continuing operations $ 87.2 $ 47.5 $ 18.7 Discontinued operations 10.9 3.8 0.5 Total stock-based compensation expense $ 98.1 $ 51.3 $ 19.2 91The $2.8 - Continuing Operationsfor the year ended December 31, 2018 included expense for modifications of equity awards for certain former employees of $3.8 million and expense for equity awards granted under the 2013 Plan and 2017 Plan of $7.2$85.8 million reduced by a benefit for a reductionand an increase in the liability for stock appreciation rights (“SAR”) of $8.2$1.4 million. Of the $85.8 million of expense for equity awards granted under the 2013 Plan and 2017 Plan, $57.4 million related to the $150 million equity grant to nearly 16,000 employees worldwide announced in the third quarter of 2020.$3.8$2.9 million of stock-based compensation expense for modifications provided continued vesting through scheduled vesting dates of certain equity awards for certain former employees. These costs are included in “Selling and administrative expenses” in the Consolidated Statements of Operations. Of the $43.3 million of expense for equity awards granted under the 2013 Plan and 2017 Plan, $23.4 million related to the $150 million equity grant to nearly 16,000 employees worldwide announced in the third quarter of 2020.20182019, the $18.7 million of stock-based compensation expense included expense for modifications of equity awards for certain former employees of $1.0 million, expense for equity awards granted under the 2013 Plan and 2017 Plan of $9.7 million and an increase in the liability for SARs of $8.0 million. The $1.0 million of stock-based compensation expense for modifications provided continued vesting through scheduled vesting dates and extended expiration dates for certain former employees. The incremental stock-based compensation was determined using the Black-Scholes option pricing model based on assumptions which included expected lives of 1.0 to 1.3 years, a risk-free rate of 2.0%, assumed volatility of 26.8% to 27.3% and an expected dividend rate of 0.0%. For the year ended December 31, 2017, the Company recognized stock-based compensation expense of approximately $77.6 million. These costs are included in “Other operating expense, net”“Cost of sales” and “Selling and administrative expenses” in the Consolidated StatementsStatement of Operations.2018 and 2017,2021, there was $20.3 million and $9.1$85.5 million of total unrecognized compensation expense related to outstanding stock options andoption, restricted stock unit and performance share unit awards.20182021 and 20172020 a liability of approximately $7.9 $4.5 million and $16.8$3.5 million, respectively, for SARs was included in “Accrued liabilities” in the Consolidated Balance Sheets.yearsyear ended December 31, 2018, 2017 and 20162021 is presented in the following table (underlying shares in thousands).
Exercise Price
(per share)
Remaining
Contractual
Term (years)
Intrisic Value
of In-The-Money
Options (in millions)Shares Weighted-Average Exercise Price
(per share)Wtd. Avg. Remaining Contractual Term (years) Aggregate Intrinsic Value of In-The-Money Options
(in millions)Outstanding at December 31, 2020 7,742 $ 18.47 Granted 795 45.78 Exercised or Settled (1,530) 16.11 Forfeited (255) 30.77 Expired (6) 13.01 Outstanding at December 31, 2021 6,746 21.76 5.7 $ 268.7 Vested at December 31, 2021 4,351 15.89 4.4 $ 198.2 and SARs granted during the years ended December 31, 2018, 20172021, 2020 and 2016.2021 2020 2019 Expected life of options (in years) 6.3 6.3 6.3 Risk-free interest rate 0.9% - 1.3% 0.4% - 1.5% 1.7% - 2.6% Assumed volatility 38.6% - 39.4% 24.6% - 41.1% 24.8% - 31.8% Expected dividend rate 0.0% - 0.1% 0.0 % 0.0 % 9220182021 is presented in the following table (underlying shares in thousands).
Grant-Date
Fair ValueShares Weighted-Average Grant-Date Fair Value Non-vested as of December 31, 2020 5,546 $ 33.09 Granted 340 45.76 Vested (2,542) 33.44 Forfeited (667) 34.27 Non-vested as of December 31, 2021 2,677 34.08 Deferred Stock UnitsConcurrent withinitial public offering in Maytotal shareholder return percentile rank versus the S&P 500 index for the three year performance period. The grant date fair value of 2017,these awards is determined using a Monte Carlo simulation pricing model and compensation cost is recognized straight-line over a three year period.Board authorized the grant of 5.5 million deferredperformance stock units (“DSU”) to all permanent employees that had not previously received stock-based awards under the 2013 Plan. The DSUs vested immediately upon grant, however, contained restrictions such that the employee may not sell or otherwise realize the economic benefits of the award until certain dates through May 2019. $97.4 million of compensation expenseunit activity for the DSU awards was recognized in the year ended December 31, 2017 and included in “Other operating expense, net”2021 is presented in the Consolidated Statements of Operations.As of the date of the grant,following table (underlying shares in thousands).Shares Weighted-Average Grant-Date Fair Value Non-vested as of December 31, 2020 255 $ 29.72 Granted 158 55.84 Vested — — Forfeited (20) 36.36 Non-vested as of December 31, 2021 393 39.89 a DSU was determined to be $17.20 assuming aperformance share price atunits granted during the pricing date of the initial public offering of $20.00year ended December 31, 2021 and a discount for lack of marketability commensurate with the period of the sale restrictions. The Company estimated the fair value of DSUs at the time of grant2020 using the Finnerty discount for lackMonte Carlo simulation pricing model.2021 2020 Expected term (in years) 2.9 2.8 Risk-free interest rate 0.2 % 0.5 % Assumed volatility 36.9 % 35.2 % Expected dividend rate 0.0 % 0.0 % 17:19: Hedging Activities, Derivative Instruments and Credit Riskmaintaining a mixture of fixed and variable rate debt and, from time to time, using pay-fixed interest rate swaps from time to time as cash flow hedges of variable rate debt in order to adjust the relative fixed and variable proportions.monthly.at least quarterly. The Company also selectively uses forward currency contracts to manage this risk. These contracts for the sale or purchase of European and othernon-functional currencies generally mature within one year.9320182021 and December 31, 2017.
Classification
Amount(1)
Other Current
Assets
Other Assets
Accrued
Liabilities
Other
LiabilitiesDecember 31, 2021 Derivative Classification Derivatives Not Designated as Hedging Instruments Foreign currency forwards Fair Value $ 22.1 $ — $ — $ — $ — Foreign currency forwards Fair Value $ 19.3 $ — $ — $ 0.2 $ —
Classification
Amount(1)
Other Current
Assets
Other Assets
Accrued
Liabilities
Other
LiabilitiesDecember 31, 2020 Derivative Classification Derivatives Not Designated as Hedging Instruments Foreign currency forwards Fair Value $ 230.5 $ 2.9 $ — $ — $ — Foreign currency forwards Foreign currency forwards Fair Value $ 51.2 $ — $ — $ 0.7 $ — (1)Notional amounts represent the gross contract amounts of the outstanding derivatives excluding the total notional amount of positions that have been effectively closed through offsetting positions. The net gains and net losses associated with positions that have been effectively closed through offsetting positions but not yet settled are included in the asset and liability derivatives fair value columns, respectively. Income for the years ended December 31, 2018, 20172021, 2020 and 20162019 are as presented in the table below. See Note 2 “New Accounting Standards” for a discussion2021 2020 2019 Interest Rate Swap Contracts Gain (loss) recognized in AOCI on derivatives $ — $ (4.4) $ (7.4) — (18.5) (15.6) the adoption of ASU 2017-12.(1)Losses on derivatives reclassified from accumulated other comprehensive income (“AOCI”) into income (effective portion) were included in “Interest expense” in the Consolidated Statements of Operations.(2)In the third quarter, the Company used excess cash to pay down $150.0 million of its Dollar Term Loan Facility. Due to this unforecasted pay down of debt, the Company paid $2.7 million in the amendment of the interest rate swap contracts to reflect the updated forecasted cash flows. The updated forecasts caused certain hedged items to be deemed probable of not occurring in the future and thus, the Company accelerated the release of AOCI related to those hedged items. Losses reclassified from AOCI into income (missed forecast) were included in “Loss on extinguishment of debt” in the Consolidated Statements of Operations.2018,2021, the Company is the fixedhas no interest rate payor on eightswap contracts. Our previous interest rate swap contracts that effectively fix the LIBOR-based index used to determine the interest rates charged on a total of $925.0 million of the Company’s LIBOR-based variable rate borrowings. These contracts carry fixed rates ranging from 3.3% to 4.3% and have expiration dates ranging from 2019 to 2020. These swap agreements qualify as hedging instruments and have been designated as cash flow hedges of forecasted LIBOR-based interest payments. Based on LIBOR-based swap yield curves as of December 31, 2018, the Company expects to reclassify losses of $12.9 million out of AOCI into earningsexpired during the next 12 months.third quarter of 2020 and the remaining amounts in AOCI were reclassified to Interest Expense during the same period. The Company’s LIBOR-based variable rate borrowings outstanding as of December 31, 20182021 were $952.6$2,778.1 million and €607.3€590.6 million.94seven5 foreign currency forward contracts outstanding as of December 31, 20182021 with notional amounts ranging from $7.6$2.3 million to $47.3$14.9 million. These contracts are used to hedge the change in fair value of recognized foreign currency denominated assets or liabilities caused by changes in currency exchange rates. The changes in the fair value of these contracts generally offset the changes in the fair value of a corresponding amount of the hedged items, both of which are included in thewithin “Other operating expense, net” line on the face ofin the Consolidated Statements of Operations. The Company’s foreign currency forward contracts are subject to master netting arrangements or agreements between the Company and each counterparty for the net settlement of all contracts through a single payment in a single currency in the event of default on or termination of any one contract with that certain counterparty. It is the Company’s practice to recognize the gross amounts in the Consolidated Balance Sheets. The amount available to be netted is not material.2018, 20172021, 2020 and 20162019 were as follows.2021 2020 2019 Foreign currency forward contracts gains (losses) (3.2) 15.0 (4.9) Total foreign currency transaction gains (losses), net 12.0 (18.6) (7.3) The Company designated its Original Euro Term Loan as a hedge of the Company’s net investment in subsidiaries with EUR functional currencies in 2017 until it was extinguished and replaced on August 17, 2017 by a €615.0 million Euro Term Loan, further described in Note 10 “Debt.” On August 17, 2017, the Company designated the €615.0 million Euro Term Loan as a hedge of the Company’s net investment in subsidiaries with EUR functional currencies. As of December 31, 2018,2021, the Euro Term Loan of €607.3€590.6 million remained designated.For the year ended December 31, 2016 and for the period from January 1, 2017 to August 16, 2017, the Company designated two cross currency interest rate swaps, each with a USD notional amount of $100.0 million as hedges of its net investment in EUR functional subsidiaries. Both cross currency interest rate swaps were terminated on August 16, 2017. The losses and gains from the change in the fair value of the designated net investment hedges were recorded through other comprehensive income. The recorded Accumulated Other Comprehensive (Loss) Income at the termination of the cross currency interest rate swaps will remain in Accumulated Other Comprehensive (Loss) Income until there is a substantial liquidation of the Company’s net investment in subsidiaries with EUR functional currencies. and (losses), net of income tax, associated with changes in the value of debt and designated cross currency interest rate swaps for the years ended December 31, 20182021 and 2017,2020, and the net balance of such gains and (losses) included in accumulated other comprehensive income (loss) as of December 31, 20182021 and 20172020 were as follows.2021 2020 Gain (loss), net of income tax, recorded through other comprehensive income $ 35.0 $ (45.1) Balance included in accumulated other comprehensive income (loss) as of December 31, 2021 and 2020, respectively 65.7 30.7 With the exception of the cash proceeds from the termination of the cross currency interest rate swap contracts described earlier, all20182021 or 2017.952018.areas.areas. As a result, the Company does not believe it has any significant concentrations of credit risk as of December 31, 20182021 or 2017.2020.18:20: Fair Value MeasurementsLevel 1Quoted Prices (unadjusted) in active markets for identical assets or liabilities as of the reporting date.Level 2Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities as of the reporting date.Level 3Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.trademarks,tradenames, in conjunction with the 20182021 and 2020 annual goodwill impairment test.tests. The valuation of trademarkstradenames was based upon current sales projections and the relief from royalty method was applied. No impairment charge wascharges were recorded as a result of thisthe 2021 analysis. Each trademark carrying value was in excess of its fair value.The Company assessed indefinite-lived intangible assets, trademarks, in conjunction with the 2017 annual goodwill impairment test. The valuation of trademarks was based upon current sales projections and the relief from royalty method was applied. As a result of thisthe 2020 analysis, 2 trademarks withwere determined to have a carrying amounts aggregating to $36.7 were written down toamount above their estimated fair value of $35.2 million.value. These represented Level 3 assets measured on a nonrecurring basis subsequent to their original recognition. This resulted in a total non-cash impairment charge of $1.5$19.9 million. The fair value was determined using the relief from royalty method.The Company assessed indefinite-lived intangible assets, trademarks, in conjunction with the 2016 annual goodwill impairment test. The valuation of trademarks was based upon current sales projections and the relief from royalty method was applied. As a result of this analysis, trademarks with carrying amounts aggregating to $179.3 million were written down to their estimated fair value of $154.9 million. These represented Level 3 assets measured on a nonrecurring basis subsequent to their original recognition. This resulted in a total non-cash impairment charge of $24.4 million. The fair value was determined using the relief from royalty method.96December 31, 2021 Level 1 Level 2 Level 3 Total Financial Assets $ — $ — $ — $ — 12.0 — — 12.0 Total $ 12.0 $ — $ — $ 12.0 Financial Liabilities $ — $ 0.2 $ — $ 0.2 22.4 — — 22.4 Total $ 22.4 $ 0.2 $ — $ 22.6 December 31, 2020 Level 1 Level 2 Level 3 Total Financial Assets $ — $ 2.9 $ — $ 2.9 9.1 — — 9.1 Total $ 9.1 $ 2.9 $ — $ 12.0 Financial Liabilities $ — $ 0.7 $ — $ 0.7 25.7 — — 25.7 Total $ 25.7 $ 0.7 $ — $ 26.4 (1)Based on calculations that use readily observable market parameters as their basis, such as spot and forward rates.(2)Based on the quoted price of publicly traded mutual funds which are classified as trading securities and accounted for using the mark-to-market method.(3)Measured as the present value of all expected future cash flows based on the LIBOR-based swap yield curves as of December 31, 2018. The present value calculation uses discount rates that have been adjusted to reflect the credit quality of the Company and its counterparties.19:21: Contingencies also been named as a defendant in a number of asbestos-related and silica-related personal injury lawsuits. The plaintiffs in these suits allege exposure to asbestos or silica from multiple sources and typically the Company is one of approximately 25 or more named defendants.and/orand sold products allegedly at issue in the pending asbestos and silica-related lawsuits (the “Products”). However, neither the Company nor its predecessors ever mined, manufactured, mixed, produced or distributed asbestos fiber or silica sand, the materials that allegedly caused the injury underlying the lawsuits. Moreover, the asbestos-containing components of the Products, if any, were enclosed within the subject Products.97onin the Consolidated Balance SheetSheets include a total litigation reserve of $105.8 $136.9 million and $105.6$131.4 million as of December 31, 20182021 and December 31, 2017, with respect to potential liability arising from the Company’s2020, respectively, for asbestos-related litigation. Asbestos relatedindemnification. Asbestos-related defense costs are excluded from the asbestos claimsthis liability and are recorded separately as services are incurred. In the event of unexpected future developments, it is possible that the ultimate resolution of these matters may be material to the Company’s consolidated financial position, results of operation or liquidity.and/orand reimbursement for the costs associated with the asbestos and silica-related lawsuits filed against the Company. The Company has also pursued litigation against certain insurers or indemnitors, where $103.0 $145.1 million and $100.4$132.1 million as of December 31, 20182021 and 2017,2020, respectively, which was included in “Other assets” in the Consolidated Balance Sheets. DuringThere were no material recoveries received in the yearyears ended December 31, 2018,2021, 2020 and 2019.received asbestos related insurance recoveries of $14.4 million, of which $6.2 million related to the recovery of indemnity payments, and was recorded as a reduction of the insurance recovery receivable in “Other assets” in the Consolidated Balance Sheets, and $8.2 million related to the reimbursement of previously expensed legal defense costs, and was recorded as a reduction of “Selling and administrative expenses” in the Consolidated Statements of Operations.The largest such recent action,against an insurer, Gardner Denver, Inc. v. Certain Underwriters at Lloyd’s, London, et al., was filed on July 9, 2010, in the Eighth Judicial Circuit, Adams County, Illinois, as case number 10-L-48 (the “Adams County Case”). In the lawsuit, the Company seeks, among other things, to require certain excess insurer defendants to honor their insurance policy obligations to the Company, including payment in whole or in part of the costs associated with the asbestos-related lawsuits filed against the Company. In October 2011, the Company reached a settlement with one of the insurer defendants, which had issued both primary and excess policies, for approximately the amount of such defendant’s policies that were subject to the lawsuit. Since then, the case has been proceeding through the discovery and motions process with the remaining insurer defendants. On January 29, 2016, the Company prevailed on the first phase of that discovery and motions process (“Phase I”). Specifically, the Court in the Adams County Case ruled that the Company has rights under all of the policies in the case, subject to their terms and conditions, even though the policies were sold to the Company’s former owners rather than to the Company itself. On June 9, 2016, the Court denied a motion by several of the insurers who sought permission to appeal the Phase I ruling immediately rather than waiting until the end of the whole case as is normally required. The case is now proceeding through the discovery process regarding the remaining issues in dispute (“Phase II”).98fourseveral on-site cleanups for which it is the primary responsible party. Three of these cleanup sites are in the operation and maintenance stage and one is in the implementation stage.accrued liabilities of $6.9 $12.9 million and $7.5$13.7 million as of December 31, 20182021 and December 31, 2017,2020, respectively, on its Consolidated Balance SheetSheets to the extent costs are known or can be reasonably estimated for its remaining financial obligations for the environmental matters discussed above and does not anticipate that any of these matters will result in material additional costs beyond amounts accrued. Based upon consideration of currently available information, the Company does not anticipate any material adverse effect on its results of operations, financial condition, liquidity or competitive position as a result of compliance with federal, state, local or foreign environmental laws or regulations, or cleanup costs relating to these matters.20:22: Other Operating Expense,are as follows.(1)See Note 4 “Restructuring.”(2)Estimated environmental remediation costs recorded on an undiscounted basis for a former production facility.(3)Represents stock-based compensation expense recognized for the year ended December 31, 2018 of $2.8 million, reduced by $5.1 million primarily due to a decrease in the estimated accrual for employer taxes related to DSUs as a result of a lower per share stock price.Represents stock-based compensation expense recognized for the yearyears ended December 31, 2017 for stock options outstanding of $77.6 million2021, 2020 and DSUs granted to employees at the date2019 were as follows.2021 2020 2019 Other Operating Expense, Net Foreign currency transaction losses (gains), net $ (12.0) $ 18.6 $ 7.3 13.4 83.0 11.1 — — (6.0) 55.3 93.3 53.8 Other, net 5.2 6.1 3.1 Total other operating expense, net $ 61.9 $ 201.0 $ 69.3 initial public offering of $97.4 million under the 2013 Stock Incentive PlanCompany’s shareholder litigation settlement in 2014.employer taxes related to DSUs granted to employees at the date of the initial public offering of $19.2 million.99(4)Represents insurance recoveries of the Company’s shareholder litigation settlement in 2014.(5)Represents costs associated with successful and/or abandoned acquisitions, including third-party expenses, post-closure integration costs (including certain incentive and non-incentive cash compensation costs), and non-cash charges and credits arising from fair value purchase accounting adjustments.Note 21: Segment Informationthree2 reportable segments, including the specific products manufactured and sold follows below.IndustrialsIndustrial Technologies and Services segment, the Company designs, manufactures, markets and services a broad range of air compression and vacuum equipment as well as fluid transfer equipment and blower products across a wide array of technologies and applications. Almost every manufacturing and industrial facility, and many service and process industries, use airloading systems. The Company’s compression and vacuum products are used worldwide in a variety of applications such as operation of pneumatic air tools, vacuum packaging ofindustrial manufacturing, transportation, chemical processing, food products and aeration of waste water. The Company maintains a leading position in its marketsbeverage production, energy, environmental and serves customers globally. Theother applications. In addition to equipment sales, the Company offers comprehensivea broad portfolio of service options tailored to customer needs and complete range of aftermarket parts, air treatment equipment, controls and an experienced direct and distributor-based service network world-wide to complement all of its products.In the Energy segment, the Company designs, manufactures, markets and services a diverse range of positive displacement pumps, liquid ring vacuum pumps and compressors, and engineered loading systems and fluid transfer equipment, consumables, and associated aftermarket parts and services. It serves customers in the upstream, midstream, and downstream oil and gas markets, and various other markets including petrochemical processing, power generation, transportation, and general industrial.accessories. The Company is one of the largest suppliers in these markets and has long-standing customer relationships. Its positive displacement pumps are used in the oilfield for drilling, hydraulic fracturing, completion and well servicing. Its liquid ring vacuum pumps and compressors are used in many power generation, mining, oil and gas refining and processing, chemical processing and general industrial applications including flare gas and vapor recovery, geothermal gas removal, vacuum de-aeration, enhanced oil recovery, water extraction in mining and paper and chlorine compression in petrochemical operations. ItsCompany’s engineered loading systems and fluid transfer equipment ensure the safe handling and transfer of crude oil, liquefied natural gas, compressed natural gas, chemicals, and bulk materials.MedicalPrecision and Science Technologies segment, the Company designs, manufactures and markets a broad range of highly specialized gas, liquidpositive displacement pumps, fluid management equipment and precision syringe pumps and compressors primarilyaftermarket parts for use in the medical, laboratory, industrial manufacturing, water and biotechnology endwastewater, chemical processing, energy, food and beverage, agriculture and other markets. The Company’s customersproducts are mainly mediumused for a diverse set of applications including precision dosing of chemicals and large durable medicalsupplements, blood dialysis, oxygen therapy, food processing, fluid transfer and dispensing, spray finishing and coating, mixing, high-pressure air and gas management and others. The Company sells primarily through a broad global network of specialized and national distributors and original equipment suppliers thatmanufacturers who integrate the Company’s products into their final equipment for use in applications such as oxygen therapy, blood dialysis, patient monitoring, wound treatment,devices and others. Further, with the recent acquisitions, the Company has expanded into liquid handling components and systems used in biotechnology applications including clinical analysis instrumentation. The Company also has a broad range of end use deep vacuum products for laboratory science applications.2018, 20172021, 2020 and 2016.2021 2020 2019 Revenue Industrial Technologies and Services $ 4,161.0 $ 3,248.2 $ 1,700.9 Precision and Science Technologies 991.4 725.0 316.6 Total Revenue $ 5,152.4 $ 3,973.2 $ 2,017.5 Segment Adjusted EBITDA Industrial Technologies and Services $ 1,033.7 $ 759.8 $ 391.4 Precision and Science Technologies 291.4 220.2 95.8 Total Segment Adjusted EBITDA 1,325.1 980.0 487.2 Less items to reconcile Segment Adjusted EBITDA to Income (Loss) Before Income Taxes: Corporate expenses not allocated to segments 133.2 101.9 45.6 Interest expense 87.7 111.1 88.4 418.0 410.4 146.5 Impairment of other intangible assets — 19.9 — 18.8 88.0 19.6 65.2 181.5 54.6 Gain on settlement of post-acquisition contingencies (30.1) — — 95.9 47.0 20.2 Loss on extinguishment of debt 9.0 2.0 0.2 Foreign currency transaction losses (gains), net (12.0) 18.6 7.3 33.2 39.8 0.2 — — (6.0) (6.8) 5.2 0.4 Income (Loss) Before Income Taxes $ 513.0 $ (45.4) $ 110.2 1002021 2020 2019 Restructuring charges $ 13.4 $ 83.0 $ 11.1 Facility reorganization, relocation and other costs 3.1 2.1 2.4 Other, net 2.3 2.9 6.1 Total restructuring and related business transformation costs $ 18.8 $ 88.0 $ 19.6 (1)Includes insurance recoveries of asbestos legal fees of $8.2 million in the year ended December 31, 2018.(2)Represents non-cash charges for impairment of other intangible assets.(3)Represents management fees and expenses paid to KKR.(4)Restructuring and related business transformation costs consist of the following.(5)Represents costs associated with successful and/or abandoned acquisitions, including third-party expenses, post-closure integration costs (including certain incentive and non-incentive cash compensation costs) and non-cash charges and credits arising from fair value purchase accounting adjustments.(6)Represents estimated environmental remediation costs and losses relating to a former production facility.(7)Represents expenses related to the Company’s initial stock offering and subsequent secondary offerings.(8)Represents third party expenses to comply with the requirements of Sarbanes-Oxley in 2018 and the accelerated adoption of the new accounting standards (ASC 606 – Revenue from Contracts with Customers and ASC 842 – Leases) in the first quarter of 2018 and 2019, respectively, one year ahead of the required adoption dates for a private company.(9)Represents stock-based compensation expense recognized for stock options outstanding for the year ended December 31, 2018 of $2.8 million, reduced by $5.1 million primarily due to a decrease in the estimated accrual for employer taxes related to DSUs as a result of a lower per share stock price. See Note 16 “Stock-Based Compensation Plans.”20172020 of $47.5 million decreased by $0.5 million due to costs associated with employer taxes. Represents stock-based compensation expense recognized for stock options outstandingthe year ended December 31, 2019 of $77.6$18.7 million and DSUs grantedassociated employer taxes of $1.5 million.employees atreduce the datecarrying value of inventories acquired in the merger with Ingersoll Rand Industrial accounted for under the LIFO method. We have reclassified the amounts in 2020 from “Other adjustments” and “Acquisition related expenses and non-cash charges,” respectively, to conform to the current year presentation.initial public offeringCompany’s shareholder litigation settlement in 2014.$97.4 millionamortization of prior service costs and employer taxes related to DSUs granted to employees at the dateamortization of the initial public offeringlosses in pension and other postretirement benefits (“OPEB”) expense, (ii) certain legal and compliance costs and (iii) other miscellaneous adjustments.(10)Represents losses on extinguishment of the senior notes, extinguishment of a portion of the U.S. Term Loan, refinancing of the Original Dollar Term Loan Facility and the Original Euro Term Loan Facility and losses reclassified from AOCI into income related to the amendment of the interest rate swaps in conjunction with the debt repayment.(11)Represents insurance recoveries of the Company’s shareholder litigation settlement in 2014.(12)Includes (i) the non-cash impact of net LIFO reserve adjustments, (ii) effects of amortization of prior service costs and amortization of losses in pension and other postretirement benefits (“OPEB”) expense, (iii) certain legal and compliance costs and (iv) other miscellaneous adjustments.Identifiable Assets2021 2020 2019 Industrial Technologies and Services $ 296.6 $ 306.0 $ 120.0 Precision and Science Technologies 108.3 102.4 23.6 Corporate and other 17.2 4.1 2.9 Total depreciation and amortization expense $ 422.1 $ 412.5 $ 146.5 2021 2020 2019 Industrial Technologies and Services $ 53.1 $ 32.2 $ 31.5 Precision and Science Technologies 10.7 9.8 5.5 Corporate and other 0.3 — 0.9 Total capital expenditures $ 64.1 $ 42.0 $ 37.9 2021 2020 Industrial Technologies and Services $ 9,101.7 $ 9,113.4 Precision and Science Technologies 3,572.2 2,852.8 Corporate and other 2,465.0 1,892.2 Assets of discontinued operations 15.6 2,200.2 Total identifiable assets $ 15,154.5 $ 16,058.6 2018, 20172021, and 2016.2021 2020 United States $ 225.8 $ 203.7 Other Americas 16.5 14.6 Total Americas 242.3 218.3 221.3 216.0 Asia Pacific 185.0 174.7 Total $ 648.6 $ 609.0 (1)Europe, Middle East and Africa (“EMEA”)See Note 14 “Revenue from Contracts with Customers” for revenue by geographic region.102Note 22:24: Former Related Party (i) a lender in the Company’s Senior Secured Credit Facilities discussed in Note 10 “Debt,” (ii) an underwriter in the Company’s initial public offering and its secondary offering by certain selling stockholders in May 2018, and (iii) a provider of services for the fiscal year 2017years 2020 and 2019 debt refinancing transaction. KKR held a position in the Euro Term Loan Facility of €33.5 million and €49.9 million as of December 31, 2018 and 2017, respectively.transactions. In June 2019, KKR Capital Markets LLC an affiliatewas the joint lead arranger and bookrunner of KKR, acted as an underwriterAmendment No. 4 to the Credit Agreement and earned $0.4 million in connection withstructuring fees for their involvement in the initial public offering of the Company’s stock and received underwriter discounts and commissions of approximately $8.9 million for the year ended December 31, 2017. In May 2018,Amendment. During 2020, KKR Capital Markets LLC acted as an underwriterearned $7.5 million in connection with the secondary offering of the Company’s stock by certain selling stockholdersunderwriting fees for their involvement in Amendment No. 5 and received underwriter discounts and commissions of approximately $5.2 million. In August 2017, KKR Capital Markets LLC received $1.5 million for services rendered in connection with the debt refinancing transaction.The Company entered into a monitoring agreement, dated July 30, 2013, with KKR pursuant to which KKR will provide management, consulting and financial advisory servicesAmendment No. 6 to the Company and its divisions, subsidiaries, parent entities and controlled affiliates. Under the termsCredit Agreement.initial annual amountcomputations of $3.5 million, payable in arrears at the end of each fiscal quarter, plus upon request all reasonable out of pocket expenses incurred in connection with the provision of services under the agreement. The management fee increased at a rate of 5%basic and diluted earnings (loss) per year effective on January 1, 2014. In connection with the Company’s initial public offering, the monitoring agreement was terminated in accordance with its terms and the Company paid a termination fee of $16.2 million during the year ended December 31, 2017 which was included in “Selling and administrative expenses” on the Consolidated Statements of Operations. Prior to the termination of the monitoring agreement, the Company incurred management fees to KKR of $1.1 million and $4.1 million forshare are as follows.Year Ended December 31, 2021 2020 2019 Average shares outstanding: Basic 414.8 382.8 203.5 Diluted 421.2 382.8 208.9 20172021 and 2016 and out of pocket expenses of $0.7 million for the year ended December 31, 2016.Note 23: Earnings (Loss) Per ShareThe computations of basic and diluted income (loss) per share are as follows.The DSUs described in Note 16 “Stock-Based Compensation Plans” are considered outstanding shares for the purpose of computing basic earnings (loss) per share because they will become issued solely upon the passage of time.For the year ended December 31, 2018 and 2017,2019, there were 0.80.7 million and 0.71.8 million anti-dilutive shares that were not included in the computation of diluted lossearnings per share.2016,2020, there were 13.34.4 million potentially dilutive stock-based awards that were not included in the computation of diluted loss per share because their inclusion would be anti-dilutive.103Note 24: Share Repurchase ProgramOn August 1, 2018, the Board of Directors of Gardner Denver authorized a share repurchase program pursuant to which the Company may repurchase up to $250.0 million of its common stock effective through July 31, 2020, the date on which the repurchase program will expire. Under the repurchase program, Gardner Denver is authorized to repurchase shares through open market purchases, privately-negotiated transactions or otherwise in accordance with all applicable securities laws and regulations, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Securities Act of 1934. The share repurchase program does not obligate Gardner Denver to acquire any particular amount of common stock, and it may be suspended or terminated at any time at the Company’s discretion. The timing and amount of any purchases of common stock will be based on Gardner Denver’s liquidity, general business and market conditions, debt covenant restrictions and other factors, including alternative investment opportunities and Gardner Denver’s desire to repay indebtedness.For the year ended December 31, 2018, the Company repurchased 1,203,178 shares under the August 1, 2018 program at a weighted average price of $24.31 per share for an aggregate value of $29.2 million.104Gardner Denver HoldingsIngersoll Rand Inc.,Gardner Denver HoldingsIngersoll Rand Inc., and subsidiaries (the “Company”) as of December 31, 20182021 and 2017,2020, the related consolidated statements of operations, comprehensive income, (loss), stockholders'stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2018,2021, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the “financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2018,2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).20182021 and 2017,2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018,2021, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018,2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.overOver Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.105Milwaukee, WI27, 2019Company'sCompany’s auditor since 2013.106ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURENoneITEM 9A.CONTROLS AND PROCEDURES2018.2021. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Consistent with guidance issued by the Securities and Exchange Commission that an assessment of a recently acquired business may be omitted from management’s report on internal control over financial reporting in the year of acquisition, management excluded an assessment of the effectiveness of the Company’s internal control over financial reporting related to several businesses acquired during the year ended December 31, 2021 as disclosed in Note 4 to the consolidated financial statements. These businesses represented 1% of the Company’s consolidated total assets (excluding goodwill and intangibles which were included in management’s assessment of internal control over financial reporting as of December 31, 2021) and 3% of the consolidated total revenues as of and for the year ended December 31, 2021. Based on that evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2018.2018.107ITEM 9B.OTHER INFORMATIONTransition Agreement with Philip T. HerndonOn February 27, 2019, we entered into a Transition Agreement (the “Transition Agreement”) with Mr. Herndon. Under the Transition Agreement, subject to Mr. Herndon’s continued compliance with the restrictive covenants and his non revocation of the release and waiver of claims therein, he is entitled to:a cash payment in the amount $639,830 payable in (i) ten equal monthly installments of $34,083 and (ii) a lump sum of $299,000;None.subject to his electing to receive benefits under COBRA, continued group health coverage (on the same basis as actively employed employees of the Company) for 10 months following his last date of employment;ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONSpursuant to the terms of the respective grant agreements, accelerated vesting of his outstanding restricted stock units (“RSUs”) and options granted pursuant to the Company’s 2017 Omnibus Incentive Plan that would have vested on the next vesting date following his termination date; andPART III.continued vesting of his outstanding options granted pursuant to the Company’s 2013 Stock Incentive Plan for Key Employees in accordance with their terms following his termination date as if he remained an employee of the Company.Under the Transition Agreement, Mr. Herndon is subject to various restrictive covenants; Mr. Herndon also continues to be subject to the covenants in his Management Stockholder’s Agreement.The foregoing description of the Transition Agreement is qualified in its entirety by reference to the Transition Agreement, which is filed as Exhibit 10.37 hereto and incorporated herein by reference.PART III.ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE20192022 Annual Meeting of Stockholders and is incorporated herein by reference. We will file such definitive proxy statement with the SEC pursuant to Regulation 14A within 120 days of the fiscal year ended December 31, 2018.2021.ITEM 11.EXECUTIVE COMPENSATION20192022 Annual Meeting of Stockholders and is incorporated herein by reference. We will file such definitive proxy statement with the SEC pursuant to Regulation 14A within 120 days of the fiscal year ended December 31, 2018.
2021.ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS20192022 Annual Meeting of Stockholders and is incorporated herein by reference. We will file such definitive proxy statement with the SEC pursuant to Regulation 14A within 120 days of the fiscal year ended December 31, 2018.20182021 about our common stock that may be issued upon the exercise of options, warrants and rights granted to employees, consultants or directors under all of the existing equity compensation plans including our 2013 Stock Incentive Plan and 2017 Omnibus Incentive Plan. All equity compensation plans are described more fully in Note 1618 “Stock-Based Compensation Plans” to our audited consolidated financial statements included elsewhere in this Form 10-K.Plan Category Equity compensation plans approved by securityholders 10,136,597 $ 21.76 10,717,115 108
to be issued upon
Exercise of Outstanding
Options, Warrants
And Rights(1)
Exercise Price of
Outstanding Options,
Warrants and Rights(2)
Remaining Available for
Future Issuance under Equity
Compensation Plans (excluding
Securities reflected in
the first column)(3)(1)Total includes 10,828,957 stock options and 119,241 share-settled stock appreciation rights under the Company’s 2013 Stock Incentive Plan and 834,836 stock options and 7,085 share-settled stock appreciation rights under the Company’s 2017 Omnibus Incentive Plan.(2)The weighted average exercise prices for the Company’s 2017 Omnibus Incentive Plan relates only to stock options. The calculation of the weighted average exercise price does not include outstanding equity awards that are received or exercised for no consideration.(3)These shares are available for grant as of December 31, 2018 under the Company’s 2017 Omnibus Incentive Plan. This includes 8,550,000 shares initially authorized for issuance under the Company’s 2017 Omnibus Incentive Plan and shares subject to awards under the Company’s 2013 Stock Incentive Plan that expired or were otherwise forfeited or terminated in accordance with their terms without the delivery of shares of the Company’s common stock in settlement thereof.ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE20192022 Annual Meeting of Stockholders and is incorporated herein by reference. We will file such definitive proxy statement with the SEC pursuant to Regulation 14A within 120 days of the fiscal year ended December 31, 2018.ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES20192022 Annual Meeting of Stockholders and is incorporated herein by reference. We will file such definitive proxy statement with the SEC pursuant to Regulation 14A within 120 days of the fiscal year ended December 31, 2018.109Consolidated Statements of Operations –- For the years ended December 31, 2018, 20172021, 2020 and 20162019Consolidated Statements of Comprehensive Income (Loss) –- For the years ended December 31, 2018,20172021, 2020 and 20162019Consolidated Balance Sheets –- As of December 31, 20182021 and 20172020Consolidated Statements of Stockholders’ Equity –- For the years ended December 31, 20182021, 2020 and 20172019Consolidated Statements of Cash Flows –- For the years ended December 31, 2018, 20172021, 2020 and 20162019Notes to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm Schedule I –- Condensed Financial Statements Ingersoll Rand Inc. (Parent Company Only)Exhibit Number Exhibit Description Agreement and Plan of Merger, dated as of April 30, 2019, by and among Ingersoll-Rand plc, Ingersoll-Rand U.S. Holdco, Inc., Gardner Denver Holdings, Inc. (Parent Company Only)and Charm Merger Sub Inc. (incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K filed by Ingersoll-Rand plc on May 6, 2019)Separation and Distribution Agreement, dated as of April 30, 2019, by and between Ingersoll-Rand plc and Ingersoll-Rand U.S. HoldCo, Inc. (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K filed by Ingersoll-Rand plc on May 6, 2019) 110ExhibitsNumberExhibit Description2.1 to the Registrant’s Current Report on Form 8-K filed on April 12, 2021)Second Amended and Restated Certificate of Incorporation of Gardner Denver Holdings,Ingersoll Rand Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on May 17, 2017 (File no. 001-38095))June 21, 2021)Second Amended and Restated Bylaws of Gardner Denver Holdings,Ingersoll Rand Inc. (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed on May 17, 2017 (File no. 001-38095))June 21, 2021)Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to Amendment No. 4 to the Registrant’s Registration Statement on Form S-1 filed on May 3, 2017 (File no. 333-216320))2017)Amended and Restated Registration Rights Agreement, dated as of May 17, 2017, by and among KKR Renaissance Aggregator L.P.; KKR Renaissance Aggregator GP LLC; Gardner Denver Holdings, Inc. and each of the other parties thereto (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on May 17, 2017 (File no. 001-38095))2017)Description of Ingersoll Rand Inc.’s Securities 2013 Stock Incentive Plan for Key Employees of Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.) and its Subsidiaries (incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))2017)Senior Secured Credit Agreement, dated as of July 30, 2013, among Renaissance Acquisition Corp., the foreign borrowers described therein, Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.), UBS AG, Stamford Branch, as administrative agent, and other agents and lenders party thereto (incorporated by reference to Exhibit 10.2 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))2017)Amendment No. 1, dated as of March 4, 2016, to the Senior Secured Credit Agreement, among Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.), Gardner Denver, Inc., GD German Holdings II GmbH (as successor in interest to Gardner Denver Holdings GmbH & Co. KG), GD First (UK) Limited, UBS AG, Stamford Branch, as administrative agent, and other agents and lenders party thereto (incorporated by reference to Exhibit 10.3 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))2017)Amendment No. 2, dated as of August 17, 2017, to the Senior Secured Credit Agreement, among Gardner Denver Holdings, Inc., Gardner Denver, Inc., GD German Holdings II GmbH, GD First (UK) Limited, UBS AG, Stamford Branch, as administrative agent, and the other parties and lenders party thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on August 18, 2017 (File no. 001-38095))2017)Amendment No. 3, dated as of December 13, 2018, to the Senior Secured Credit Agreement dated as of July 30, 2013, among Gardner Denver Holdings, Inc., Gardner Denver, Inc., GD German Holdings II GmbH, GD First (UK) Limited, UBS AG, Stamford Branch, as administrative agent, and the other parties and lenders part thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on December 14, 2018 (File no. 001-38095)2018)Amendment No. 4 to the Credit Agreement, dated as of June 28, 2019, among Gardner Denver Holdings, Inc., GD German Holdings II GmbH, Gardner Denver Holdings Ltd., UBS AS, Stamford Branch as the Resigning Agent, Citibank, N.A. as the Successor Agent and the lenders and other entities party thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on July 2, 2019) Joinder Agreement and Amendment No. 6 to Credit Agreement, dated as of June 29, 2020, among Ingersoll Rand Inc., Gardner Denver, Inc., Ingersoll-Rand Services Company, GD German Holdings II GmbH, Gardner Denver Holdings Ltd., Citibank, N.A., and the lenders and other parties party thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on July 1, 2020) Amendment No. 7 to Credit Agreement, dated as of December 28, 2021, by and among Gardner Denver, Inc., as
U.S. Borrower, and Citibank, N.A. as Administrative Agent and Collateral AgentPledge Agreement, dated as of July 30, 2013, among Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.), Renaissance Acquisition Corp., the subsidiary pledgors identified therein and UBS AG, Stamford Branch, as collateral agent (incorporated by reference to Exhibit 10.4 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))2017)Security Agreement, dated as of July 30, 2013, among Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.), Renaissance Acquisition Corp., the subsidiary grantors identified therein and UBS AG, Stamford Branch, as collateral agent (incorporated by reference to Exhibit 10.5 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))2017)Guarantee Agreement, dated as of July 30, 2013, among Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.), the subsidiary guarantors identified therein and UBS AG, Stamford Branch, as administrative agent and collateral agent (incorporated by reference to Exhibit 10.6 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))111Exhibit NumberExhibit DescriptionReceivables Financing Agreement, dated as of May 17, 2016, by and among Gardner Denver Finance II LLC, Gardner Denver, Inc., as initial servicer, the various lenders and LC participants from time to time party thereto, PNC Bank, National Association, as LC bank and administrative agent, and PNC Capital Markets LLC, as structuring agent. (incorporated by reference to Exhibit 10.7 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))2017 (File no. 333-216320))Stockholders Agreement, dated as of May 17, 2017,2018, between Gardner Denver Holdings, Inc. and KKR Renaissance Aggregator L.P. (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on May 17, 2017 (File no. 001-38095))2017)Form of Management Stockholder’s Agreement (incorporated by reference to Exhibit 10.13 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))2017)Form of Director Stockholder’s Agreement (incorporated by reference to Exhibit 10.14 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))2017)Form of Advisor Stockholder’s Agreement (incorporated by reference to Exhibit 10.15 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))2017)Form of Director Stock Option Agreement under the 2013 Stock Incentive Plan for Key Employees of Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.) and its Subsidiaries (incorporated by reference to Exhibit 10.16 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))2017)Form of Management Stock Option Agreement (December 2013) under the 2013 Stock Incentive Plan for Key Employees of Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.) and its Subsidiaries (incorporated by reference to Exhibit 10.17 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))2017)Form of Management Stock Option Agreement (May 2015) under the 2013 Stock Incentive Plan for Key Employees of Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.) and its Subsidiaries (incorporated by reference to Exhibit 10.18 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))2017)Form of Management Stock Option Agreement (May 2016, 3 year vesting) under the 2013 Stock Incentive Plan for Key Employees of Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.) and its Subsidiaries (incorporated by reference to Exhibit 10.19 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))2017)2017 (File no. 333-216320))2017)Form of Management Stock Option Agreement (December 2016) under the 2013 Stock Incentive Plan for Key Employees of Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.) and its Subsidiaries (incorporated by reference to Exhibit 10.21 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))2017)Form of Amendment to Stock Option Agreement or Stock Appreciation Right Agreement under the 2013 Stock Incentive Plan for Key Employees of Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.) and its Subsidiaries (incorporated by reference to Exhibit 10.22 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))2017)Stock Option Agreement, dated as of March 7, 2014, under the 2013 Stock Incentive Plan for Key Employees of Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.) between Gardner Denver Holdings, Inc. (formerly known as Renaissance Parent Corp.) and Andrew Schiesl (incorporated by reference to Exhibit 10.23 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))112Exhibit NumberExhibit DescriptionForm of Sale Participation Agreement (incorporated by reference to Exhibit 10.24 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))2017)Offer Letter, dated April 17, 2015, between Vicente Reynal and Gardner Denver, Inc. (incorporated by reference to Exhibit 10.25 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))2017)Offer Letter, dated November 19, 2015, between Vicente Reynal and Gardner Denver, Inc. (incorporated by reference to Exhibit 10.26 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))2017)Offer Letter, dated November 18, 2015, between Todd Herndon and Gardner Denver, Inc. (incorporated by reference to Exhibit 10.27 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))Offer Letter, dated September 2, 2016, between Todd Herndon and Gardner Denver, Inc. (incorporated by reference to Exhibit 10.28 to the Registrant’s Registration Statement on Form S-1 filed on February 28, 2017 (File no. 333-216320))2017 (File no. 333-216320))Employment Contract, dated September 11, 2018 between Gardner Denver Deutschland GmbH and Enrique Miñarro Viseras (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on October 29, 2018 (File No. 001-38095))2018)Offer Letter, dated December 18, 2015, between Gardner Denver,Ingersoll Rand Inc. Amended and Neil Snyder (incorporated by reference to Exhibit 10.39 to the Registrant’s Annual Report on Form 10-K filed on February 16, 2018 (File No. 001-38095))10.24.4 to the Registrant’s Current ReportRegistration Statement on Form 8-KS-8 filed on May 17, 2017 (File no. 001-38095))Monitoring Fee Termination Agreement, dated as of May 17,First Amendment to Ingersoll Rand Inc. Amended and Restated 2017 between Gardner Denver Holdings, Inc. Kohlberg Kravis Roberts & Co. L.P.Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s CurrentQuarterly Report on Form 8-K10-Q filed on May 17, 2017 (File no. 001-38095))April 30, 2021)Form of Restricted Stock Unit Grant Notice and Agreement (2018) under the Gardner Denver Holdings, Inc. 2017 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on April 27, 2018 (File No. 001-38095))2018)Form of Director Restricted Stock Unit Grant Notice and Agreement under the Gardner Denver Holdings, Inc. 20182017 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed on April 27, 2018 (File no. 001-38095))2018)Form of Stock Option Grant Notice and Agreement under the Gardner Denver Holdings, Inc. 2017 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.42 to the Registrant’s Annual Report on Form 10-K filed on February 16, 2018 (File no. 001-38095))2018)Gardner Denver, Inc. Supplemental Excess Defined Contribution Plan (January 1, 2019 Restatement) (incorporated by reference to Exhibit 10.36 to the Registrants Annual Report on Form 10-K filed on February 27, 2019) Amendment No. 1 to the Stockholders Agreement, dated as of April 30, 2019, between Gardner Denver Holdings, Inc. and KKR Renaissance Aggregator L.P. (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on May 6, 2019) Transition Agreement, dated June 12, 2020, between Ingersoll Rand Inc. and Emily Weaver (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed on August 4, 2020) Form of Stock Option Grant Notice and Agreement under the Gardner Denver Holdings, Inc. 2017 Omnibus Incentive Plan Form of Restricted Stock Unit Grant Notice and Agreement (2019) under the Gardner Denver Holdings, Inc. 2017 Omnibus Incentive Plan Transition Services Agreement, dated as of February 27, 2019,29, 2020, by and between Ingersoll-Rand plc and Ingersoll-Rand U.S. Holdco, Inc. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on March 4, 2020)Tax Matters Agreement, dated as of February 29, 2020, by and among Ingersoll-Rand plc, Ingersoll-Rand Lux International Holding Company S.A.R.L, Ingersoll-Rand Services Company, Ingersoll-Rand U.S. HoldCo, Inc. and Gardner Denver Holdings, Inc. and Philip T. Herndon(incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on March 4, 2020)SubsidiariesEmployee Matters Agreement, dated as of February 29, 2020, by and among Ingersoll-Rand plc, Ingersoll-Rand U.S. HoldCo, Inc. and Gardner Denver Holdings, Inc. (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on March 4, 2020) Real Estate Matters Agreement, dated February 29, 2020, by and between Ingersoll-Rand plc, and Ingersoll-Rand U.S. HoldCo, Inc. and Gardner Denver Holdings, Inc. (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed on March 4, 2020) Intellectual Property Matters Agreement, dated as of February 29, 2020, by and between Ingersoll-Rand plc, Ingersoll-Rand U.S. HoldCo, Inc., and solely for the purposes of Section 5.06, Gardner Denver Holdings, Inc. (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed on March 4, 2020) Trademark License Agreement, dated as of February 29, 2020, by and between Ingersoll-Rand U.S. HoldCo, Inc. and Ingersoll-Rand plc (incorporated by reference to Exhibit 10.6 to the Registrant’s Current Report on Form 8-K filed on March 4, 2020) Omnibus Transaction Side Letter, dated February 29, 2020, by and among Ingersoll-Rand plc, Ingersoll-Rand U.S. Holdco Inc., Gardner Denver Holdings, Inc. and Charm Merger Sub Inc. (incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q filed on May 15, 2020) Side Letter to the Employee Matters Agreement, dated July 11, 2019, by and among Ingersoll-Rand plc and Gardner Denver Holdings, Inc. (incorporated by reference to Exhibit 10.8 to the Registrant’s Quarterly Report on Form 10-Q filed on May 15, 2020) Side Letter to the Employee Matters Agreement, dated February 29, 2020, by and among Ingersoll-Rand plc, Ingersoll-Rand U.S. Holdco, Inc. and Gardner Denver Holdings, Inc. (incorporated by reference to Exhibit 10.9 to the Registrant’s Quarterly Report on Form 10-Q filed on May 15, 2020) Form of Performance Stock Unit Grant Notice and Agreement under the Ingersoll Rand Inc. Amended and Restated 2017 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.13 to the Registrant’s Quarterly Report on Form 10-Q filed on May 15, 2020) Form of Restricted Stock Unit Grant Notice and Agreement (2-yr vesting) under the Ingersoll Rand Inc. Amended and Restated 2017 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.14 to the Registrant’s Quarterly Report on Form 10-Q filed on May 15, 2020) Form of Restricted Stock Unit Grant Notice and Agreement (4-yr vesting) under the Ingersoll Rand Inc. Amended and Restated 2017 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.15 to the Registrant’s Quarterly Report on Form 10-Q filed on May 15, 2020) Form of Stock Option Grant Notice and Agreement under the Ingersoll Rand Inc. Amended and Restated 2017 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.16 to the Registrant’s Quarterly Report on Form 10-Q filed on May 15, 2020) Form of Performance Stock Unit Grant Notice and Agreement under the Ingersoll Rand Inc. Amended and Restated 2017 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed on April 30, 2021) Form of Performance Stock Unit Grant Notice and Agreement (2022) under the Ingersoll Rand Inc. Amended and Restated 2017 Omnibus Incentive Plan Form of Restricted Stock Unit Grant Notice and Agreement (4-yr vesting) (2022) under the Ingersoll Rand Inc. Amended and Restated 2017 Omnibus Incentive Plan Form of Stock Option Grant Notice and Agreement (2022) under the Ingersoll Rand Inc. Amended and Restated 2017 Omnibus Incentive Plan Subsidiaries of Ingersoll Rand Inc. as of December 31, 20182021Consent of Independent Registered Public Accounting Firm Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101) †Identifies exhibits that consist of a management contract or compensatory plan or arrangement.ITEM 16.FORM 10-K SUMMARYNone11327th25th day of February 2019,2022, by the undersigned, thereunto duly authorized.Gardner Denver Holdings, Inc.Ingersoll Rand Inc. By:/s/By: /s/ Vicente Reynal 27th25th day of February 20192022, by the following persons on behalf of the registrant and in the capacities indicated.SignatureCapacitySignature Capacity Chairman of the Board and Chief Executive Officer and Director(principal executive officer), Director(Principal Executive Officer), Director Neil D. SnyderVice President and Chief Financial Officer (principal financial officer)Neil D. Snyder(Principal Financial Officer) Vice President and Corporate Controller (principal accounting officer)(Principal Accounting Officer) Peter StavrosDirector Peter StavrosBrandon F. BrahmDirector Brandon F. BrahmDirector William E. KasslingDirector William E. KasslingMichael V. MarnDirector Michael V. Marn/s/ Nickolas Vande SteegDirectorNickolas Vande Steeg/s/ Joshua T. WeisenbeckDirectorJoshua T. Weisenbeck/s/ Elizabeth CentoniDirectorElizabeth CentoniDirector /s/ Tony L. White Director Tony L. White 114GARDNER DENVER HOLDINGS, INC
INGERSOLL RAND INC. (LOSS)Dollars in millions)For the Years Ended December 31, 2021 2020 2019 Revenues $ — $ — $ — Cost of sales 1.0 14.6 0.6 Gross Profit (1.0) (14.6) (0.6) Operating costs 67.9 30.9 10.4 Other operating expense, net (8.4) (4.9) (47.0) Operating Income (Loss) (60.5) (40.6) 36.0 Interest income (28.8) 42.5 42.3 Income (Loss) Before Income Taxes (89.3) 1.9 78.3 Income tax provision (benefit) (18.1) (3.9) (5.1) Income (Loss) of Parent Company (71.2) 5.8 83.4 Equity in undistributed income of subsidiaries 592.1 (63.5) 13.9 Income (Loss) from Continuing Operations 520.9 (57.7) 97.3 Income from discontinued operations, net of tax 41.6 24.4 61.8 Net Income (Loss) 562.5 (33.3) 159.1 Other comprehensive income (loss) (54.3) 270.2 (0.8) Comprehensive Income $ 508.2 $ 236.9 $ 158.3 115GARDNER DENVER HOLDINGS, INC
INGERSOLL RAND INC.Dollars in millions)As of December 31, 2021 2020 Assets Current assets: Cash and cash equivalents $ — $ — Other current assets — 0.4 Total current assets — 0.4 Equity in net assets of subsidiaries 8,513.3 8,006.0 Intercompany receivables 484.1 1,107.3 Deferred tax assets 10.8 10.9 Total assets $ 9,008.2 $ 9,124.6 Liabilities and Equity Other liabilities $ 6.7 $ 4.9 Total liabilities 6.7 4.9 Common stock, $0.01 par value; 1,000,000,000 shares authorized; 423,785,571 and 420,123,978 shares issued as of December 31, 2021 and 2020, respectively 4.3 4.2 Capital in excess of par value 9,408.6 9,310.3 Accumulated deficit 378.6 (175.7) Accumulated other comprehensive loss (41.6) 14.2 Treasury stock at cost; 16,000,364 and 1,496,169 shares as of December 31, 2021 and 2020, respectively (748.4) (33.3) 9,001.5 9,119.7 Total liabilities and equity $ 9,008.2 $ 9,124.6 116GARDNER DENVER HOLDINGS, INC
INGERSOLL RAND INC.Dollars in millions)For the Years Ended December 31, 2021 2020 2019 Cash Flows From Operating Activities: Net cash provided by (used in) operating activities $ (9.7) $ (15.1) $ (15.1) Cash Flows From Investing Activities: Advances to subsidiaries 731.0 (2.5) (10.1) Net cash provided by (used in) investing activities 731.0 (2.5) (10.1) Cash Flows From Financing Activities: Proceeds from stock option exercises 23.7 22.7 42.8 Cash dividends on common stock (8.2) — — Purchases of treasury stock (736.8) (2.1) (18.6) Purchase of shares from noncontrolling interest — (14.9) — Proceeds from sale of noncontrolling interest — 11.9 — Net cash provided by (used in) financing activities (721.3) 17.6 24.2 Increase (decrease) in cash and cash equivalents — — (1.0) Cash and cash equivalents, beginning of year — — 1.0 Cash and cash equivalents, end of year $ — $ — $ — 117GARDNER DENVER HOLDINGS,INGERSOLL RAND INC.July 30, 2013, Gardner Denver,February 29, 2020, Ingersoll Rand Inc. was acquired by an affiliate of Kohlberg Kravis Roberts & Co. L.P. (“KKR”). The acquisition (also referred to(formerly known as the “Merger”) was effected by the merger of Renaissance Acquisition Corp. with and into Gardner Denver, Inc., with Gardner Denver, Inc. being the surviving corporation. As a result of the Merger, Gardner Denver, Inc. became a wholly-owned subsidiary of Gardner Denver Holdings, Inc. (formerly Renaissance Parent Corp.)onlyOnly financial information has been derived from its consolidated financial statements and should be read in conjunction with the consolidated financial statements included in this report. The accounting policies for the registrant are the same as those described in Note 1 “Summary of Significant Accounting Policies” to our audited consolidated financial statements included elsewhere in this Form 10-K.Gardner Denver Holdings,2018, 20172021, 2020 and 2016.1011 “Debt” to our audited consolidated financial statements included elsewhere in this Form 10-K. Gardner Denver Holdings,Ingersoll Rand Inc. had no long-term debt obligations as of December 31, 20182021 and 2017.1921 “Contingencies” to our audited consolidated financial statements included elsewhere in this Form 10-K.118