On January 29, 2015, our former parent, The Manitowoc Company, Inc. ("MTW"), announced plans to create two independent, public companies to separately operate its two businesses: its Cranecrane business and its Foodservicefoodservice business. To effect the separation, MTW first undertook an internal reorganization, following which MTW held the Cranecrane business and Manitowoc Foodservice, Inc. ("MFS") held the Foodservicefoodservice business. Then on March 4, 2016, MTW distributed all the MFS common stock to MTW’s stockholdersMTW's shareholders on a pro rata basis whereby each MTW stockholder received one share of MFS common stock for every share of MTW common stock held as of the applicable record date (the "Distribution"), and MFS became an independent, publicly traded company (the "Distribution"). As used inpublicly-traded company. In this Annual Report on Form 10-K, "Spin-Off" refers to both the above described internal reorganization and the Distribution, collectively.

Welbilt, Inc., a Delaware corporation incorporated in 2015, (the "Company," "MFS," "we," "our" or "us"), is one of the world's leading commercial foodservice equipment companies. We design, manufacture and supply best-in-class food and beverage equipment for the global commercial foodservice market, offering customers unparalleled operator and patron insights, collaborative kitchen solutions, culinary expertise and world-class implementation support and service. Throughout this Annual Report on Form 10-K, Welbilt, Inc. and its consolidated subsidiaries, collectively, are referred to as the "Company," "Welbilt," "we," "our" or "us."

We intend to achieve sustainable growth globally and drive increased profitability by leveraging our position as a leading commercial foodservice equipment provider, while selectively pursuing strategic acquisitions and partnerships, growing our customer base, expanding the frontiers of foodservice innovation and continuing to attract and grow industry-leading talent.

The increasing demand for affordable dining is expected to continue on a global scale. Consumers in most markets are expected to gravitate towards more informal options, which is a trend seen among both highhigher income consumers looking to save during a slow economic recovery, andas well as lower income consumers looking for accessible entry points for "on the go" food consumption. For foodservice equipment operators in emerging markets, this offers enormous opportunity for innovation, particularly in terms of format, as new restaurant consumers look to experiment with a variety of brands and experiences. Quick-service restaurant ("QSR")QSR chains, in particular, have proved successful at innovation in these markets.

Global and regional markets for food and foodservice are growing. The global foodservice industry was estimated at $2.6 trillion in 20162017 according to Euromonitor, and is expected to increase at a compounded annual growth rate ("CAGR") of 5.9%approximately 3% to reach $3.3$2.9 trillion in 2020 as demonstrated in the graph below.2021. Global expansion and long-term focus on new emerging markets with new equipment willis expected to be driven by chain restaurants in countries such as India, China, parts of the Middle East and Southeast Asia in general. Increased government spending on infrastructure and investments in tourism willare expected to support this change.

The main drivers for steady growth on a global basis are:

We believe that the size of the global foodservice equipment markets, including the hot side, cold side,hot-side, cold-side, beverage, and aftermarket parts and services equates to approximately 1% of the foodservice market global revenue. The foodservice equipment market was valued at $27.7 billion in 2015 according to Future Market Insights.service total $27 billion. It is expected to expand at a CAGR of 5.1% from 2016-20242.7% and is expected to reach $42.9over $29 billion in sales by 2024. We believe2020.

Based on Euromonitor studies, the main growth will be in the hot side product categories of cooking and hold and serve with an expected CAGR for the 2016-2019 period of 4% to 5%, whereas the CAGR on the cold side and the aftermarket sales is expected to be around 3% to 4%.

The Latin American foodservice industry is expected to show 6%experience 3% year over year growth from 2016-2020.2018-2021. This is mainly driven by the growth in the categories of cafes/cafés/bars and home delivery according to Euromonitor International.Euromonitor. Last year, Chile, Argentina, Uruguay and Mexico demonstrated the highest productivity among all Latin American economies, which is based on gross domestic income per hour worked, while other countries like Brazil, Colombia or Venezuela, depending on their political environment, have the potential for significant future development.

Industrialization is a significant factor for the growth of the middle class in Asia Pacific ("APAC"), with the consequence of more disposable income for consumption. Foodservice sales are up by 4% to 5% year over yearwere approximately $1.2 trillion in these emerging markets2017 and are expectedprojected to grow at 5%a CAGR of approximately 4%, or $1.3 trillion during the 2018-2021 period based on Euromonitor data. Higher demand for new hotels and resorts and population growth in India and other Asian markets is expected to contribute to the coming years.overall market demand for new foodservice products.

Selected current initiatives supporting this strategic objective include:

Selected ongoing projects supporting this strategic objective include:

Selected ongoing projects to drive increased margins include:

We strive to make MFS theWelbilt an employer of choice in our industry and we believe we demonstrate a strong commitment to our people by providing ana diverse and inclusive culture and environment where employee input, efforts and achievements are recognized and valued.

Selected ongoing projects supporting this strategic objective include:

We design, manufacture, and provide parts and services for foodservice equipment, and we have one of the industry’s broadest and most integrated product portfolios. We have a long track record of innovation and our products as well as our aftermarket parts and service support are recognized by our customers and channel partners for their quality, reliability, and durability. Our products enablepromote profitable growth for our end customers by improving their menus, enhancing their operations, and reducing their costs. MFS´ high qualityWelbilt´s high-quality products derive from combining deep industry expertise and understanding of our markets, our history of investment in research and development, our successful product innovation and our long-standing customer relationships. Our success is driven by:

Our suite of products is used by commercial and institutional foodservice operators including full-service restaurants, QSR chains, hotels, caterers, supermarkets, convenience stores, business and industry, hospitals, schools and other institutions.

We have a presence throughout the world’s most significant markets in the following product groups:

Our KitchenCare business provides a full range of after-market parts and services and manages a comprehensive factory-authorized service solutions as well as a wide variety of solutions under the KitchenCare® brand name. Our service excels when it counts the most: Around the clock - around the world. Performance for a lifetime™.network, assuring proper installation and start-up, preventative maintenance, spare parts supply and maximum customer uptime on all Welbilt appliances.

The superior quality and design of our foodservice equipment has long been recognized by third-parties. As just one example of awards reflectingWelbilt products reflect a history of innovation, MFSas evidenced through numerous awards across our product portfolio. For example, Welbilt has won 3133 Kitchen Innovation Awards since 2005 from the National Restaurant Association:Association. In addition, Welbilt was awarded the Hotelex Mirror Design Innovation Award and the Internorga Show Star Award for our new industry leading Merrychef e2s compact speed oven, the Energy Star Partner of the Year Award from the US Department of Energy for our energy efficient products especially for Manitowoc Ice, Delfield and Frymaster, and Welbilt has been awarded in 2017 by the North American Environmental Protection Agency (EPA) for the 8th time in a row with the Energy Star Award as Partner of the Year for Sustained Excellence.

We have a staff of in-house engineers and technicians on three continents, supplemented with external engineering resources, who collectively are responsible for improving existing products and developing new products. Our team of engineers focus on developing cost effective, innovative, high-performance, low-maintenance products that are intended to solve problems for our customers in differentiated ways and create brand loyalty among customers. They work closely with our culinary, manufacturing and marketing staff enabling us to identify changing end-user requirements, implement new technologies and effectively pursue product innovations.

We strive to deliver products and solutions that enable our customers to provide fresh, new food experiences to consumers outside the home globally. Consumer demands are constantly changing, and a more health-conscious public is looking for fresh, natural alternatives to traditional out-of-home eating options. They increasingly care about how food is sourced, handled and prepared. MFS isWe are focused on providing our customers with the equipment they need to build on the opportunities from these dynamic changes in the foodservice market.

Through innovation, we strive to simplify and improve the speed and flexibility of restaurant operations, improve the quality of the food, improve health and sanitation, and reduce the overall energy consumption and life cycle operating costs of the equipment. We believe that these benefits can also be enhanced by mobile connectivity and monitoring:

In addition, MFS haswe have had many other major new products and innovations over the past five years including:

Intellectual property, including certain patents, trademarks, copyrights, know-how, trade secrets and other proprietary rights, is important to our business. We hold numerous patents pertaining to our products, and have presently pending applications for additional patents in the U.S. and foreign countries. In addition, we have various registered and unregistered trademarks and licenses that are of material importance to our business and we believe our ownership of this intellectual property is adequately protected in customary fashions under applicable laws. Although certain proprietary intellectual property rights are important to our success, we do not believe we are materially dependent on any particular patent or license, or any particular group of patents or licensees.licenses.

Our worldwide intellectual property portfolio provides:

Our fitkitchen (“food inspiring technology”) methodology allows us to ensureengage with existing and prospective customers in new, meaningful and strategic ways. Our fitkitchen methodology is unique in the industry and provides customers with access to cutting-edge technology and customized system solutions aimed at "right-sizing" kitchen operations, improving speed of service and food quality, reducing equipment footprint, reducing capital and labor costs and improving the consumer experience. Through fitkitchen, we can offer holistic and integrated system solutions that map across our freedom-to-operate. Similarly, we study our competitors’entire product portfolio, leveraging existing and future products to identify unauthorized useand technologies. Our core fitkitchen team has extensive operational background and experience in the food service industry and strategically leverages the design and innovation of our protected inventions,product suite, integrated research and follow-updevelopment team, operational and industrial engineers as well as global culinary experts to resolve through appropriate enforcement programs in case

As part of any violations.our fitkitchen methodology, we use a multi-phase approach to clearly identify and understand our customers’ goals and objectives, conduct extensive research and analysis to gather needed data and insights to develop prototypes for testing and further refinement. This customer-focused process leads to new kitchen platforms, product introductions and long-term customer relationships, leading to recurring product sales and sustainable growth opportunities.

We believe our extensive engineering, research and development capabilities are a key driver of our success. We engage in research and development activities at 1513 locations in the Americas, EMEA and APAC. We have a staff of in-house engineers and technicians at these locations, supplemented with external engineering resources, who collectively are responsible for improving existing products and developing new products. We incurred total engineering costs of $46.1 million, $48.2 million $47.9 million and $52.6$47.9 million during the years ended December 31, 2017, 2016 2015 and 2014,2015, respectively, which included research and development costs of $39.4 million, $35.2 million, $33.2 million, and $31.0$33.2 million during the years ended December 31, 2017, 2016 and 2015, and 2014, respectively.

Key projects and initiatives for engineering and product development include the following:

We sell our foodservice equipment primarily through a worldwide network of over 3,0003,500 distributors and dealers and distributors in over 100 countries ("direct customers") who ultimately sell to end customers. Our end-customer base is comprised of a wide variety of foodservice providers, including large multinationalcustomers and regional full-service restaurants as well as QSR chains, convenience stores and retail stores; chain and independent casual and family dining restaurants; independent restaurants and caterers; hotels, lodging, resort, leisure and convention facilities; healthcare facilities; schools and universities; large business and industrial customers; and many other foodservice outlets ("end customers"). Our network is differentiated from competitorswe sell spare parts through serving as a single source for a broad portfolio of leading brands and product categories. This allows us to provide one face to our customers for multiple brands with relevant culinary expertise and appropriate key account management for our larger global chain customers. We support our sales efforts with a variety of marketing efforts including trade-specific advertising, cooperative distributor merchandising, digital marketing, and marketing at a variety of industry trade shows.factory authorized service providers.

In the Americas MFS has(U.S., Canada and Latin America), we have a broad portfolio of channel partners, covering all major foodservice market segments, including QSR's, fastQSR chains, chained and independent casual and family dining restaurants, education, health care, business and industry, as well as the convenience and retail space. Our direct sales team is supplemented by a network of industry-leading rep groups,Manufacture Representative Groups, providing national coverage. Direct sales team, sales repsrepresentatives and distributors jointly serve over 900independent equipment dealers with our full portfolio of hotfood and cold productbeverage category brands. A dedicated strategic account team with culinary support is focused on the major U.S.-based restaurant chains, where we have significant global market share. Our teams work closely with our customers’ menu and equipment development teams to assure alignment withsupport their strategic plans. We also have distribution hubs in the U.S., Canada Mexico and Latin America. Our KitchenCare® business provides a range of after-market parts and services that manages a comprehensive factory-authorized service network, assuring proper installation, preventative maintenance, spare parts supply and maximum customer uptime on all MFS appliances.

In EMEA, our distribution includes hubs in Herborn, Germany, serving countries in central and eastern Europe, in Guildford, England, serving countries in the United Kingdom and northern Europe, and in Barcelona, Spain serving countries in southern and western Europe. Each of these distribution centers operates a network of third partythird-party dealers chosen to satisfy the requirements of both chain customers and independent caterers in their respective territories. Outside these countries, MFSWelbilt products and services are sold through non-exclusive third partythird-party distributors and service companies. In addition, our beverage customers receive specialist support from our beverage systems manufacturing facility in Halesowen, England.

We access the market in APAC through our dedicated distribution and dealer channel partners, most of whom have beenthem being established in the market for decades and havehaving been MFSWelbilt partners for over 15 years. Our business

We serve some of the largest and most widely recognized multinational and regional businesses in the region is expanding into a localfoodservice and hospitality industries. None of our end customers represented 10% or more of Welbilt net sales for the years ended December 31, 2017, 2016 and 2015.

Our end customer base that is focused on western style menuscomprised of a wide variety of foodservice providers, including large multinational and desiresregional full-service restaurants as well as hotels and QSR chains, chained and independent casual and family dining restaurants, caterers; convenience and retail stores, lodging, resort, leisure and convention facilities; healthcare facilities; schools and universities; and many other foodservice outlets (collectively "end customers"). We differentiate ourselves from the appliances that will consistently delivercompetition through the ability to provide not only best-in-class food and

beverage equipment but also entire and smart digitally enabled kitchen solutions designed to help our customers to improve productivity, quality expected fromand profitability. This allows us to provide one face to our topcustomers for all our brands and is supported by world class culinary expertise and experienced key account management for our larger global chain customers. We support our sales efforts with the reliabilitya variety of marketing efforts including digital marketing, presence at foodservice shows, culinary events, trade-specific advertising and support for which we are known.cooperative distributor merchandising.

We sell all of our products in highly competitive markets and compete based on product design, quality, performance, and aftermarket support services, as well as maintenance costs energy and resource saving, other contributions to sustainability, and price. Our comprehensive offering of highly innovative and high-quality products and services provide the following competitive advantages that strengthen our regional market positioning and grow our global presence:advantages:

In the Americas, EMEA and APAC, we actively work with standards organizations, industry associations, certification parties, and regulatory bodies to develop and promote effective and balanced standards, codes, and regulations that provide for the advancement of sustainable customer solutions with the highest possible levels of energy efficiency, sanitation, environmental standards, safety, and food quality.

For example, we are active members of the NAFEM, the Air-Conditioning, Heating and Refrigeration Institute, the UL task group, the NSF International Joint Committee, the American Society of Heating, Refrigerating and Air-Conditioning Engineers, various working groups responsible for European safety standards in Europe, the Industrial Association for House, Heating and Kitchen Technology, and other regional standards organizations. We fully engage with the Department of EnergyDOE on new energy standards, the U.S. Environmental Protection AgencyEPA on EnergySTAR programs and the Significant New Alternatives Policy program related to alternative refrigerant regulations, as well as the EUEuropean Union's ECO directive consultant organizations.

Our products are sold in more than 100 countries. We report our operating results through three reportable segments: Americas, EMEA and APAC. All three reportable segments offer a broad range of hot and cold category foodservice products and solutions for customers in various end markets.

Our broad portfolio of foodservice equipment and services provides us with a balanced, diverse revenue base across geographies and foodservice product categories. Approximately 40-45% of our revenues are forderived from the sale of cold category products, 35-40% are forfrom hot category products and approximately 15-20% forfrom aftermarket parts and services. Net sales by product class for the last three fiscal years is disclosed in Note 22, "Business Segments," to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

The following table presents the relative percentages of net sales attributable to each reportable segment for each of the last three fiscal years. The total measure of profit and loss for each of the last three fiscal years as well as the total assets as of December 31, 2016 and 2015 attributable to each reportable segment are included in Note 22, "Business Segments" to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.years:

In the Americas, we provide foodservice equipment in over 30 countries and territories throughout North America Canada and Latin America. Our Americas segment contributed net sales including intercompany sales of $1,186.6$1,166.8 million during the year ended December 31, 2016,2017, representing 81.5%80.7% of total MFS revenueWelbilt net sales before eliminations.

In EMEA, we provide foodservice equipment in over 50 countries throughout Europe, the Middle East and Africa, including Russia and the Commonwealth of Independent States. Our EMEA segment contributed net sales including intercompany sales of $287.6$296.5 million during the year ended December 31, 2016,2017, representing 19.7%20.5% of total MFS revenueWelbilt net sales before eliminations.

Typically, the first quarter of our fiscal year represents the least favorable period for our financial results. Our customers are primarily in the northern hemisphere, and the warmer summer weather generally leads to an increase in construction and remodeling within the foodservice industry, as well as in the use and replacement of ice machines.industry.

As of December 31, 2016,2017, we employed approximately 5,400 people worldwide and had approximately 5,500 employees across all of our locations. Inseven employee unions in North America, we have in place seven labor agreements with five employee unions. We have one trade union in Europe and one trade union in China. Many of our European employees belong to the trade union or a European works council.

The public may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room located at 100 F Street NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains electronic versions of our reports on its website at www.sec.gov.

Our ability to make scheduled payments on and to refinance our substantialexisting indebtedness including the debt incurred pursuant to the Spin-Off as well as any future debtindebtedness that we may incur and to fund planned capital expenditures and other liquidity needs will depend on our ability to generate cash in the future from operations financings or asset sales. Oursales as well as our ability to generate cash isrefinance our indebtedness on favorable terms, all of which are subject to general economic, financial, competitive legislative, regulatory and other factors that are beyond our control. We may not generate sufficient funds to service our debt and meet our business needs, such as funding working capital or the expansion of our operations. If we are not able to repay or refinance our debt as it becomes due, we may be forced to take disadvantageous actions, including reducing spending on marketing, advertising and new product innovation, reducing future financing for working capital, capital expenditures and general corporate purposes, selling assets or dedicating an unsustainable level of our cash flow from operations to the payment of principal and interest on our indebtedness. In addition, our ability to withstand competitive pressures and to react to changes in the foodservice industry could be impaired. The lenders who hold our debt could also accelerate amounts due in the event that we default, which could potentially trigger a default or acceleration of the maturity of our other debt.

In recent years, we have developedadopted several cost-saving initiatives and operating strategies intended to realize cost savings,drive increased profit margins, including, for example, by reducing the complexity of our product offerings, includingincorporating strategic sourcing and adopting our "80/20" initiative that willportfolio rationalization whereby we intend to focus the majority of our resources and investments on our most importantthose products and best customers.that yield the greatest returns. However, the success of thisthese initiatives and other profit-enhancement and cost-reduction initiativesstrategies is not guaranteed, and we may not achieve the full cost savings we expect.expect or such

benefits might be realized later than expected. The 80/20 initiative in particular involves significant cultural shifts, both internally and for our customers, that may inhibit, delay or impair its successful implementation. Additionally, if we devote a disproportionate amount of time, personnel and resources to initiatives that yield slower or less than anticipated results or that are ultimately unsuccessful, we may be distracted from other initiatives and priorities that might have yielded more rapid or better results, and our results of operations may suffer accordingly.

We use large amounts of steel, stainless steel, aluminum, copper, natural gas and electronic controls, among other items, in the manufacture of our products. Occasionally, market prices of some of our key raw materials increase significantly, which could adversely affect our margins. Furthermore, although we are implementing a strategic sourcing initiative, we may not be able to achieve the expected cost savings from that initiative. In addition, because we maintain limited raw material and component inventories, even brief unanticipated delays in delivery by suppliers, - including those due to capacity constraints, labor disputes, impaired financial condition of suppliers, weather emergenciesnatural disasters, acts of war or terrorism or other natural disasters -events outside our control, may harm our business, impair our ability to satisfy our customerscustomer demand and could adversely affect our business and financial performance.

To better manage our exposures to certain commodity price fluctuations, we regularly hedge our commodity exposures through derivative financial markets.instruments. Through this hedging program, we fix the future price for a portion of these commodities used in the production of our products. To the extent that our hedging results in fixing commodity prices that are unfavorable in comparison to market prices at the time of purchase, we would experience a negative impact on our profit margins compared to the margins we would have realized if these price commitments were not in place, which may adversely affect our financial condition, results of operations and cash flows.

We sell our products in a highly competitive industry. We compete based on product design, product quality, of products,performance and reliability, quality and responsiveness of product support services, product performance and reliability, maintenance costs and price. Some of our competitors may have greater financial, marketing, manufacturing and distribution resources than we do. CompetitionThis competition as well as competitors' pricing decisions could cause our sales to decrease or causecompel us to cutreduce our prices or incur additional costs to remain competitive, anyeither of which couldwould adversely affect our financial condition, results of operations and cash flows.

Additionally, a substantial portion of our dealer revenue comes from a small number of buying groups, which gives those buying groups a large degree of leverage and purchasing power with us and other suppliers.our competitors. In recent years those buying groups have used their leverage to extract larger rebates, discounts and other price reductions. We must continually balance the added revenue from providing reduced prices to those buying groups against the reduced margins generated by them, which could adversely affect our results of operations.

Our strategy of creating innovative products must be kept currentand solutions for our customers requires significant time and investment toward product innovation, design, development and testing, all of which are necessary to meet our customers’ needs, overcome competitive productscompete with frequent new product introductions and meetenhancements and comply with evolving regulatory requirements.requirements in the numerous geographic markets we serve. To remain competitive, we therefore must develop new and innovative products on ana rapid and on-going basis, and we invest significantly in the research and development of new products.basis. If we do not successfully develop innovative products, it may be difficult to differentiate our products from our competitors' products and satisfy regulatory requirements, and our sales and results would suffer.

Product quality and reliability are significant factors influencing customers’ decisions to purchase our products. Inability to maintain the high quality of our products relative to the perceived or actual quality of similar products offered by competitors could result in the loss of market share, loss of revenue, reduced profitability, an increase in warranty costs, and/or damage to our reputation. Similarly, if we fail to provide the same level of quality through our KitchenCare®KitchenCare aftermarket parts and service as we provide in original equipment manufacturing, it could likewise negatively affect our revenue and our reputation with our customers.

Product quality and reliability are determined in part by factors that are not entirely within our control. We depend on our suppliers for parts and components that meet our standards. If our suppliers fail to meet those standards, we may not be able to deliver the quality products that our customers expect, which may impair revenue and our reputation and lead to higher warranty costs.

We provide our customers a warranty covering workmanship, and in some cases materials, on products we manufacture. Our warranty generally provides that products will be free from defects for periods typically ranging from 12 months to 60 months with certain equipment having longer term warranties. If a product fails to comply with the warranty, we may be obligated, at our expense, to correct any defect by repairing or replacing the defective product. Although we maintain warranty reserves in an amount based primarily on the number of units shipped and on historical and anticipated warranty claims, there can be no assurance that future warranty claims will follow historical patterns or that we can accurately anticipate the level of future warranty claims. An increase in the rate of warranty claims or the occurrence of unexpected warranty claims could adversely affect our financial condition, results of operations and cash flows.

A number of our largest customers operate in the QSR industry. The QSR industry is frequently affected by changes in consumer tastes and eating habits, often as a result of new information or attitudes regarding diet and health or as a result of government regulations requiring QSRs to disclose the nutritional content of their food. If consumers’ eating habits change significantly, our customers may choose or be required to modify their menu offerings.offerings or cooking methods. Such modifications, or the failure to make the modifications to the extent consumers desire, could have an adverse effect on our customers’ business, financial conditions, results of operations or cash flows, which in turn could adversely affect the customers' demand for our products.

For the years ended December 31, 2017, 2016 and 2015, approximately 34.6%, 35.1% and 2014, approximately 35.1%, 32.1% and 37.1%, respectively, of our net sales were attributable to products sold outside of the United States. ExpandingU.S. We intend to continue to expand our presence in international sales is part of our growth strategy. International operations generallymarkets and expect to expend resources in doing so. We are subject to various risks includingrelated to conducting business internationally, including:

Our business exposes us to potential product liability risks that are inherent in the design, manufacture, sale and use of our products. To date, we have not incurred material costs related to these product liability claims. We vigorously defend ourselves againstWhile we believe our current general liability and product liability insurance is adequate to protect us from future product liability claims, and intendthere can be no assurance that our coverage will be adequate to do so against future claims. However, a substantial increasecover all claims that may arise. Additionally, we may not be able to maintain insurance coverage in the number of claims that are made against usfuture at an acceptable cost. Significant losses not covered by insurance or the amounts of any judgments or settlementsfor which third-party indemnification is not available could adversely affecthave a material adverse effect on our reputation and ourbusiness, financial condition, results of operations and cash flows.

Our patents, trademarks and licenses are important in the operation of our businesses. Although we protect our intellectual property rights vigorously, we cannot be certain that we will be successful in doing so. Third parties may assert or prosecute infringement or validity claims against us in connection with the services and products that we offer, and we may or may not be able to successfully defend these claims. Litigation, either to enforce our intellectual property rights or to defend against claimed infringement of the rights of others, could result in substantial costs and diversion of our resources. In addition, if a third partythird-party would prevail in an infringement claim against us, then we would likely need to obtain a license from the third partythird-party on commercial terms, which would likely increase our costs. Our failure to maintain or obtain necessary licenses or an adverse outcome in any litigation relating to patent infringement or other intellectual property matters could have a material adverse effect on our financial condition, results of operations and cash flows.

Historically, sales of products that we manufacture and sell have been subject to variations caused by changes in general economic conditions and other factors. In particular, the strength of the economy generally may affect the rates of expansion, consolidation, renovation and equipment replacement within the restaurant, lodging, convenience store and healthcare industries, which may affect our sales. Furthermore, any future economic recession may impact leveraged companies like us more than competing companies with less leverage and may adversely affect our financial condition, results of operations and cash flows.

Weather conditions can substantially affect our business, as relatively cool summer weather and cooler-than-normal weather in hot climates tend to decrease sales of ice and beverage dispensers. Our sales depend in part upon our customers’ replacement or repair cycles. Adverse economic conditions may cause customers to foregoforgo or postpone new purchases in favor of repairing existing machinery.

If we are unable to sufficiently adjust to market conditions, among other potential adverse effects on our financial condition, results of operations and cash flows, we could fail to deliver on planned results, fall short of analyst and investor expectations, incur higher fixed costs, and/or fail to benefit from higher than expected customer demand resulting in loss of market share.

As of December 31, 2016,2017, we employed approximately 5,5005,400 people worldwide and had seven labor agreements with five employee unions in North America. We haveAmerica, one trade union in Europe and a large majorityone trade union in China. Many of our European employees belong to thatthe trade union or a European work councils. We have twoworks council. Our union contracts and labor agreements with one trade union in China. In 2017,are renegotiated periodically, and we have four union contracts that will expire.cannot predict the outcome of these negotiations. If we are unable to reach new agreements or renew existing agreements on a timely basis, we may experience strikes, work stoppages, delays or other issues which could disrupt our business. Any significant labor relations issues, including issues related to the renewal of expiring union contracts, could adversely affect our operations, reputation, financial condition, results of operations and cash flows.

We have indebtedness that accrues interest at a variable rate. Increases in interest rates will reduce our operating cash flows and could hinder our ability to fund our operations, capital expenditures, acquisitions or dividends. In such cases we may seek to reduce our exposure to fluctuations in interest rates, but hedging our exposure carries the risk that we may forego the benefits we would otherwise experience if interest rates were to change in our favor. Developing an effective strategy for dealing with movements in interest rates is complex, and no strategy is guaranteed to completely insulate us from the risks associated with such fluctuations.

Additionally, some of our operations are or may be conducted by subsidiaries in foreign countries. The results of operations and the financial position of these subsidiaries will be reported in the relevant foreign currencies and then translated into U.S. dollars at the applicable exchange rates for inclusion in our consolidated financial statements, which are stated in U.S. dollars. The exchange rates between many of these currencies and the U.S. dollar have fluctuated significantly in recent years and may continue to fluctuate significantly in the future. Such fluctuations may have a material effect on our results of operations and financial position and may significantly affect the comparability of our results between financial periods. In particular,For example, the weakening of the British pound following the United Kingdom’s vote to exit the European Union had a negative foreign currency translation impact on our Statementsconsolidated statements of Operationsoperations for the fiscal year 2016, and similar negative impacts could continue in the future.ended December 31, 2016.

We also incur currency transaction risk whenever one of our operating subsidiaries enters into a transaction using a different currency than its functional currency. We attempt to reduce currency transaction risk whenever one of our operating subsidiaries enters into a material transaction using a different currency than its functional currency by:

However, we may not be able to hedge such a risk completely or at an acceptable cost, which may adversely affect our financial condition, results of operations and cash flows in future periods.

On December 22, 2017, the U.S. Agovernment 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, including, but not limited to, reducing the U.S. federal corporate statutory rate from 35% to 21%; requiring companies to pay a one-time transition tax on certain unrepatriated earnings for foreign subsidiaries; generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; requiring a current inclusion in U.S. federal taxable income of certain earnings of foreign corporations; and creating a new limitation on deductible interest expense. Such changes are expected to have a material effect on our business and the industry in which we operate. This significant change to the U.S. tax system, in the U.S., including changes to the taxation of international income, and related tariffs/border adjustability taxes, could have a material effect upon our results of operations. operations and cash flows.

We regularly undergo tax audits in various jurisdictions in which our products are sold. Although we believe that our tax estimates are reasonable and that we prepare our tax filings in accordance with all applicable tax laws, the final determination with respect to any tax audits, and any related litigation, could be materially different from our estimates or from our historical income tax provisions and accruals. The results of an audit or litigation could materially affect our operating results and/or cash flows in the periods for which that determination is made. In addition, future period earnings may be adversely impacted by litigation costs, settlements, penalties, and/or interest assessments.

Certain of our stockholders may in the future publicly or privately express views with respect to the operation of our business, our business strategy, corporate governance considerations or other matters that may not be fully aligned with our own. Responding to actions by activist shareholders can be costly and time-consuming, disrupt our operations and divert the attention of management and our employees. Perceived uncertainties as to our future direction may result in the loss of potential business opportunities, damage to our reputation, and may make it more difficult to attract and retain qualified directors, personnel and business partners. These actions could also cause our stock price to experience periods of volatility.

Activist shareholders may in the future make strategic proposals, suggestions, or requests for changes concerning the operation of our business, our business strategy, corporate governance considerations, or other matters. We cannot predict, and no assurances can be given, as to the outcome or timing of any consequences arising from these actions, and any such consequences may impact the value of our securities.

Our operations, facilities and properties are subject to extensive and evolving laws and regulations pertaining to air emissions, wastewater discharges, the handling and disposal of solid and hazardous materials and wastes, the remediation of contamination, and otherwise relating to health, safety and the protection of the environment. As a result, we are involved from time to time in administrative or legal proceedings relating to environmental and health and safety matters, and we have in the past and will continue to incur capital and other expenditures relating to such matters. We also cannot be certain that identification of presently unidentified environmental conditions, more vigorous enforcement by regulatory authorities, or other unanticipated events will not arise in the future and give rise to additional environmental liabilities, compliance costs and/or penalties that could be material. Further, environmental laws and regulations are constantly evolving and it is impossible to predict accurately the effect any changes may have upon our financial condition, results of operations or cash flows.

In the ordinary course of our business, we collect and store sensitive data, including our proprietary business information and that of our customers, suppliers and business partners, as well as personally identifiable information of our customers and employees, in our internal and external data centers, cloud services, and on our networks. The secure processing, maintenance and transmission of this information is critical to our operations and business strategy. The number and sophistication of attempted attacks and intrusions that companies have experienced from third parties has increased over the past few years. Despite our security measures, ourit is impossible for us to eliminate this risk. Our information technology and infrastructure, and that of our partners, may be vulnerable to malicious attacks or breaches due to employee error, malfeasance or other disruptions, including as a result of roll-outs of new systems. In addition, because techniques used by computer programmers and hackers (many of whom are highly sophisticated and well-funded) to access or sabotage networks and computer systems change frequently and often are not recognized until after they are used, we may be unable to anticipate or immediately detect these techniques. Any suchdata security attack, breach or operational failure could compromise our networks and/or that of our partners and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings and/or regulatory penalties, disrupt our operations, damage our reputation, and/or cause a loss of confidence in our products and services, which could adversely affect our business.

Our business and financial results may be affected by certain events that we cannot anticipate or that are beyond our control, such as natural or man-made disasters, national emergencies, significant labor strikes, work stoppages, political unrest, war or terrorist activities that could curtail production at our facilities and cause delayed deliveries and canceled orders. In addition, we purchase components and raw materials and information technology and other services from numerous suppliers, and, even if our facilities were not directly affected by such events, we could be affected by interruptions at such suppliers. Such suppliers may be less likely than our own facilities to be able to quickly recover from such events and may be subject to additional risks such as financial problems that limit their ability to conduct their operations. We cannot assure you that we will have insurance to adequately compensate us for any of these events.

In recent years, governments in both the U.S. and Europe have implemented or proposed regulations governing the use of certain minerals, including tin, tantalum, tungsten and gold ("conflict minerals"). In the U.S., SEC rules require disclosures related to conflict minerals that are necessary to the functionality or production of a product manufactured, or contracted to be manufactured, by an SEC-reporting company, that are sourced from the Democratic Republic of Congo and other countries in central Africa. In the European Union, proposed regulations would require similar disclosures, and may encompass other geographic regions outside of central Africa.

These disclosure requirements could affect the sourcing and availability of some of the minerals used in the manufacture of our products. Our supply chain is complex, and if we are not able to conclusively verify the origins for all conflict minerals used in our products or that our products are "conflict free," we may face reputational challenges with our customers or investors. Furthermore, we may also encounter challenges to satisfy customers who require that our products be certified as "conflict free," which could place us at a competitive disadvantage if we are unable to do so. Additionally, as there may be only a limited number of suppliers offering "conflict free" metals, we cannot be sure that we will be able to obtain necessary metals from such suppliers in sufficient quantities or at competitive prices. Finally, because European regulations have not yet been finalized, it is difficult for us to determine whether and how we will establish a compliance program. For all of these reasons, we could incur significant costs related to the conflict minerals compliance process, and face equally significant costs in satisfying the disclosure requirements.

We may increase our debt or raise additional capital in the future, subject to restrictions in our debt agreements. In addition, our Board of Directors ("Board") may issue shares of preferred stock without further action by holders of our common stock. If our cash flow from operations is less than we anticipate, or if our cash requirements are more than we expect, we may require more financing. However, debt or equity financing may not be available to us on terms we find acceptable, if at all. If we incur additional debt or raise equity through the issuance of our preferred stock, the terms of the debt or our preferred stock issued may give the holders rights, preferences and privileges senior to those of holders of our common stock, particularly in the event of liquidation. Also, regardless of the terms of our debt or equity financing, our agreements and obligations under a tax matters agreement dated as of March 4, 2016, between MTW and MFS (the "Tax Matters Agreement"), may limit our ability to issue stock. For a more detailed discussion, see "—Risks Relating to the Spin-Off." We may not be able to engage in certain transactions now that we have completed the Spin-Off. If we are unable to raise additional capital when needed, our financial condition, and thus your investment in us, could be materially and adversely affected.

The terms of the credit agreement that governs our senior secured credit facilities, the agreements that govern the securitization facility and the indenture governing the high yield notes contain financial and other restrictive covenants that limit our ability to engage in activities that may be in our long-term best interests. Our ability to borrow under our senior secured credit facilities and to securitize accounts receivable under the securitization facility is subject to compliance with a maximum consolidated total leverage ratio covenant and a minimum consolidated interest coverage ratio covenant. Our senior secured credit facilities include other restrictions that, among other things, limit our ability to incur indebtedness; grant liens; engage in mergers, consolidations and liquidations; make asset dispositions, restricted payments including dividends and investments; enter into transactions with affiliates; and amend, modify or prepay certain indebtedness. The indenture governing the high yield notes contains limitations on our ability to effect mergers and change of control events as well as other limitations, including limitations on:

We report the status of our compliance with these covenants quarterly. Our failure to comply with these covenants could result in an event of default that, if not cured or waived, could result in the acceleration of substantially all of our funded debt. We do not have sufficient working capital to satisfy our debt obligations in the event of an acceleration of all or a significant portion of our outstanding indebtedness.

In connection with the Spin-Off, MTW received an opinion from its legal counsel, substantially to the effect that the Spin-Off and certain related transactions will qualify as tax-free to MTW and its shareholders under Sections 355, 368 and related provisions of the Internal Revenue Code of 1986, as amended (the "Code"), except to the extent of any cash received in lieu of fractional shares of MFS’ common stock. Any such opinion is not binding on the U.S. Internal Revenue Service (the "IRS"). Accordingly, the IRS may reach conclusions with respect to the Spin-Off that are different from the conclusions reached in the opinion. The opinion relied on certain facts, assumptions, representations and undertakings from MTW and us regarding the past and future conduct of the companies’ respective businesses and other matters, which, if incomplete, incorrect or not satisfied, could alter the conclusions of the party giving such opinion.

If the Spin-Off ultimately is determined to be a taxable event, the Spin-Off could be treated as a taxable dividend to MTW’s shareholders at the time of the Spin-Off for U.S. federal income tax purposes, and MTW’s shareholders could incur significant federal income tax liabilities. In addition, MTW would recognize a taxable gain to the extent that the fair market value of MFS’ common stock exceeds MTW’s tax basis in such stock on the date of the Spin-Off.

Generally, taxes resulting from the failure of the Spin-Off to qualify for non-recognition treatment for U.S. federal income tax purposes would be imposed on MTW or MTW’s shareholders and, under the Taxtax matters agreement dated as of March 4, 2016, between MTW and MFS (the "Tax Matters Agreement,Agreement"), MTW is generally obligated to indemnify us against such taxes. However, under the Tax Matters Agreement, we could be required, under certain circumstances, to indemnify MTW and its affiliates against all tax-related liabilities caused by those failures, to the extent those liabilities result from an action we or our affiliates take or from any breach of our or our affiliates’ representations, covenants or obligations under the Tax Matters Agreement or any other agreement we entered into in connection with the Spin-Off. Events triggering an indemnification obligation under the agreement include events occurring after the Distribution that cause MTW to recognize a gain under Section 355(e) of the Code.

We cannot predict the prices at which our common stock may trade. The market price of our common stock may fluctuate widely, depending on many factors, some of which may be beyond our control, including the factors listed in the following:

Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations could also adversely affect the trading price of our common stock.

The timing, declaration, amount and payment of any future dividends to stockholders will fall within the discretion of our Board and will depend on many factors, including our financial condition, earnings, capital requirements and debt service obligations, as well as legal requirements, regulatory constraints, industry practice and other factors that our Board deems relevant. In addition, the terms of the agreements governing our existing debt or debt that we may incur in the future may limit or prohibit the payment of dividends. For more information, see "Dividend Policy" as part of "Item 5.—Market of Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities."

The following table outlines the principal facilities the Company ownsowned or leasesleased as of December 31, 2016.2017.

In addition, we lease sales office and/or warehouse space in Manitowoc, Wisconsin; Odessa, and Tampa, Florida; Fort Wayne and Jeffersonville, Indiana; Herborn, Germany; Moscow, Russia; Shanghai, China; Bang Na, Thailand; Kuala Lumpur and Selangor, Malaysia; Aljunied, Singapore; Barcelona, Spain; Mexico City and Naucalpan de Juarez, Mexico; Gurgaon, Mumbai and Mumbai,Bangalore, India; and Dubai, UAE.United Arab Emirates.

See Note 21, "Leases," of the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information regarding leases.

From time to time, we become involved in various lawsuits, claims and proceedings arising out of, the environment and employee safety and health.  Under various circumstances, these laws impose civil and criminal penalties and fines, as well as injunctive and remedial relief, for noncompliance.  They also may require remediation at sites where Company related substances have been released into the environment.

None.

Shares of our common stock began trading on the New York Stock Exchange ("NYSE") under the ticker symbol MFS on March 4, 2016. Prior to that date, there was no public trading market for shares of our common stock. As of February 17,On March 6, 2017, we had 1,800 stockholders of record of our common stock. We anticipate that our common stock will beginshares commenced trading under ourthe Company's new name, Welbilt, Inc., and a new New York Stock Exchange ticker symbol, WBT, on March 6, 2017.“WBT.”

The following table shows the highest and lowest prices paid per share for our common stock during the calendar quarter indicated below since the Spin-Off on March 4, 2016.

The amount and timing of dividends, if any, will be determined by our Board at its regular meetings each year.of Directors. Our Board didof Directors has not authorizeauthorized or paypaid a dividend insince we became an independent public company on March 4, 2016 and does not currently plan on paying a dividend in 20172018 as our focus continues to be the reduction of outstanding debt. The timing, declaration, amount of, and payment of any future dividends is within the discretion of our Board of Directors and will depend upon many factors, including our financial condition, earnings, corporate strategy, capital requirements of itsour operating subsidiaries, contractual restrictions, including covenants associated with certaincontained in our senior secured credit facilities and our senior notes indenture, debt service obligations, legal requirements, regulatory constraints, industry practice, ability to access capital markets and other factors deemed relevant by our Board.Board of Directors.

There were no unregistered offerings nor any repurchases of our common stock by us or an "affiliated purchaser" (as defined in Rule 10b-18(a)(3) under the Exchange Act) during the year ended December 31, 2016.2017.

The following graph and table depict the total return to stockholders from March 4, 2016 (the date our common stock began trading on the NYSE) through December 31, 2016,2017, relative to the performance of the S&P 500 Index and the S&P 400 Midcap Index. The graph and table assume $100 invested at the closing price of $13.80 on March 4, 2016 and that all dividends were reinvested.

The performance graph and table are not intended to be indicative of future performance. The performance graph and table shall not be deemed "soliciting material" or to be "filed" with the SEC for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act.

On January 29, 2015, our former parent, The Manitowoc Company, Inc. ("MTW"), announced plans to create two independent, public companies to separately operate its two businesses: its Cranecrane business and its Foodservicefoodservice business. To effect the separation, MTW first undertook an internal reorganization, following which MTW held the Cranecrane business and Manitowoc Foodservice, Inc. ("MFS") held the Foodservicefoodservice business. Then on March 4, 2016, MTW distributed all the MFS common stock to MTW's shareholders on a pro rata basis, and MFS became an independent, publicly tradedpublicly-traded company (the "Distribution"). In this Annual Report on Form 10-K, "Spin-Off" refers to both the above described internal reorganization and the Distribution, collectively.

Effective March 6, 2017, we renamed the Company to Welbilt, Inc. and rebranded our logo and brand identity to Welbilt. This change was part of our strategic repositioning after we spun off from MTW and represents a long-standing commitment to put customers’ needs first. The financial condition and results of operations discussed in this Management's Discussion and Analysis of Financial Condition and Results of Operations are those of Manitowoc Foodservice,Welbilt, Inc. and its consolidated subsidiaries, collectively, the "Company," "MFS,"Welbilt," "we," "our" or "us."

We are one of the world’s leading commercial foodservice equipment companies. We design and manufacture a complementary portfolio of hot and cold foodservice equipment products integrated under one operating company and supported by a growing aftermarket parts and repair service business. Our capabilities span refrigeration, ice-making, cooking, holding, food-preparation and beverage-dispensing technologies, which allow us to equip entire commercial kitchens and serve the world’s growing demand for food prepared away from home. Our suite of products is used by commercial and institutional foodservice operators including full-service restaurants, quick-service restaurant ("QSR") chains, hotels, caterers, supermarkets, convenience stores, business and industry, hospitals, schools and other institutions. Our products and aftermarket parts and service support are recognized by our customers and channel partners for their quality, reliability and durability that enable our end customers profitable growth by improving their menus, enhancing operations and reducing costs.

Global and regional markets for food and foodservice are growing. On February 6,a global scale, the demand for affordable dining is expected to continue increasing. Market growth is expected to be driven by, among other factors, disposable income, increased employment, investment in new establishments and the underlying trend for increased convenience.

In 2017, we announced that we are rebrandingfocused on achieving profitable growth, developing new product and system solutions to support future revenues, reducing long-term debt obligations and developing our acquisition pipeline. Conditions in the Company, our logogeneral market during the second half of 2017 were soft, and our brand identity to Welbilt, Inc. effective March 6, 2017. The new name and brand represent a long-standing commitment to put customers’ needs first. This change isas part of our 80/20 customer line simplification, we focused on pursuing sales that supported our margin objectives and elected not to participate in selected margin-dilutive sales. We expect these trends to continue through the first half of 2018 and stabilize in the second half of 2018. We also expect that increased demand from large chain customers, improved market conditions, new product rollouts and the initial rollouts of our fitkitchen systems will help offset these trends and drive increased sales in 2018.

Our five current2018 strategic objectives, which include continued execution of our Simplification and Right-Sizing initiatives in order to further realize margin improvements and the reduction of debt, are the following:

We manage our business in three geographic reportable segments: Americas, EMEA and APAC. These segments represent the level at which we review our financial performance and make operating decisions. Segment Operating EBITA, or earnings before interest, taxes, other (income) expense and amortization expense is the measure of profit and loss that our chief operating decision maker uses to evaluate the financial performance of our business and is the basis for resource allocation and performance reviews. For these reasons, we believe that segment Operating EBITA represents the most relevant measure of segment profit and loss. A reconciliation of segment Operating EBITA to earnings before income taxes is presented in "—Results of Operations."

These segments represent the level at which separate financial information is available and which is used by management to assess performance and allocate resources. We evaluate segment hadperformance based upon earnings before interest, taxes, other (income) expense - net, salesdepreciation and amortization expense and is adjusted for certain other non-cash or non-recurring items, including gain or loss from impairment or disposal of assets, restructuring, separation charges and loss on early extinguishment of debt ("Adjusted Operating EBITDA"). Adjusted Operating EBITDA is a non-GAAP measure, and our presentation of Adjusted Operating EBITDA may not be comparable to similar measures used by other companies. Beginning in January 2017, we updated our performance measure and definition of Adjusted Operating EBITDA (previously titled "Operating EBITA") to additionally exclude at the segment Operating EBITAlevel depreciation expense, gain or loss from impairment or disposal of approximately $190.9 millionassets, restructuring, separation charges and $21.8 million, respectively,loss on early extinguishment of debt. All prior segment information has been recast to reflect these changes for consistency of presentation. See "-Non-GAAP Financial Measures" below for important information regarding the year ended December 31, 2016.use of non-GAAP financial measures. See Note 22, "Business Segments" of the notes to consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion on our reportable segments.

The financial information included herein may not necessarily reflect our financial condition, results of operations and cash flows in the future or what our financial condition, results of operation and cash flows would have been had MFSWelbilt been an independent, publicly-traded company prior to the Spin-Off.

Our consolidated results comprised the following for the years ended December 31, 20162017 and 2015:2016:

Net sales for our reportable segments comprised the following for the years ended December 31, 2016 and 2015:

Consolidated net sales totaled $1,456.6 million for the year ended December 31, 2016, representing a $113.5 million, or 7.2%, decrease compared to the prior year, which was primarily driven by a 10.4% decrease in the Americas segment. Prior year net sales included $122.1 million from Kysor Panel Systems ("KPS"), which was sold in December 2015. In addition, foreign currency translation negatively impacted net sales for the year ended December 31, 2016 by $26.4 million, or 1.8%.

Net sales in the Americas segment for the year ended December 31, 2016 decreased $137.1 million, or 10.4%, primarily due to the divestiture of KPS in December 2015, which caused a decrease of approximately $122.1 million. Adjusted for the divestiture of KPS, net sales decreased $15.0 million from the prior year, which is a non-GAAP measure that consisted of a decrease in third partythird-party net sales of $12.0 million and lower intersegment net sales of $3.0 million. The $12.0 million third partythird-party net sales decrease year over yearyear-over-year was due to softness in sales of hot-side products and a reduction in KitchenCare®KitchenCare sales of $2.4 million, partially offset by an increase of $28.7 million in pricing realization from our Simplification and Right-Sizing Initiatives. As well as pricing from 80/20, these initiatives include product and customer rationalization, product cost take out, lean implementation, strategic sourcing, manufacturing capacity reduction and reduction in workforce. Foreign currency translation had an $8.1 million negative impact on third partythird-party net sales for the year ended December 31, 2016.

Net sales in the EMEA segment for the year ended December 31, 2016 increased by $6.0 million, or 2.1%, primarily driven by an increase in third partythird-party net sales of $16.1 million, partially offset by lower intersegment net sales of $10.1 million. Third partyThird-party net sales increased due to stronger sales of hot-side products, including Merrychef®Merrychef high-speed ovens, stronger sales of beverage products, an increase of $6.8 million in pricing realization from the Simplification and Right-Sizing Initiatives and an increase of $1.0 million from improvement in KitchenCare®KitchenCare sales in the region. Foreign currency translation had a $14.6 million negative impact on third partythird-party net sales for the year ended December 31, 2016.

Net sales in the APAC segment for the year ended December 31, 2016 decreased $0.2 million, or 0.1%. Current year net sales included $11.2 million from the Welbilt Thailand acquisition in October 2015. Adjusted for the acquisition of Welbilt Thailand, which is a non-GAAP measure, net sales decreased $7.1 million and consisted of a decrease in third partythird-party net sales of $2.4 million and lower intersegment sales of $4.7 million. Foreign currency translation hadhas a $3.7 million negative impact on third partythird-party net sales for the year ended December 31, 2016.

Consolidated earnings from operations for the year ended December 31, 2016 totaled $199.2 million, an increase of $39.3 million, or 24.6%, compared to the prior year, which was principally driven by savings from the Simplification and Right-Sizing Initiatives of approximately $56.8 million, partially offset by higher incentive compensation and the sale of KPS in December 2015.

Total selling, general and administrative expenses amounted to $290.1 million for the year ended December 31, 2016, a decrease of $1.5 million, or 0.5%, compared to the prior year. The decrease was principally driven by the impact from the divestiture of KPS of approximately $9.7 million, cost containment savings of $7.8 million and savings from the Simplification and Right-Sizing Initiatives of approximately $6.9 million. These decreases were partially offset by a $9.4 million increase in incentive compensation expense, a $5.8 million increase from the impact of foreign currency translation, $6.4 million of costs allocated to MFSWelbilt in connection with the Spin-Off and the impact from the acquisition of Welbilt Thailand of $1.3 million.

For the year ended December 31, 2016, interest expense was $85.2 million, an $83.8 million increase from the prior year, which was due to the issuance of $1,400.0 million of long-term debt as a result of the Spin-Off in the first quarter of 2016. See "—Liquidity and Capital Resources" for further discussion on our long-term debt and related future interest obligations. "InterestInterest expense (income) on notes with MTW—net"net reflects net interest income on funding provided by MFSus to MTW via intercompany debt settled immediately prior to the Spin-Off as disclosed in Note 24, "Net Parent Company Investment and Related Party Transactions," to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. The remaining "OtherSpin-Off. Other expense (income)—net"net reflects primarily amortization of deferred financing fees on the aforementioned long-term debt, gains and losses on the disposal of businesses and foreign currency gains and losses. The decrease in other income, net of $31.2 million was due primarily to a $9.9 million gain on the sale of KPS in December 2015, the $5.4 million gain on sale of a certain investment property in 2015, a $4.9 million gain on the acquisition of Welbilt Thailand in October 2015 and $4.8 million of deferred financing costs recognized during the year ended December 31, 2016 in connection with the aforementioned debt issuance.

Income taxes for the year ended December 31, 2016 was $25.3 million, a decrease of $14.0 million, or 35.6%, from the prior year, which was primarily due to a decrease in earnings before income taxes of $91.6 million. The effective income tax rate was 24.1% and 20.0% for the years ended December 31, 2016 and 2015, respectively. The change was due to nonrecurring 2015 items and a change in the mix of earnings in jurisdictions without a valuation allowance. Included in the 2016 tax provision is a $2.9 million benefit for out-of-period balance sheet adjustments related to the Spin-Off. The Company does not believe these adjustments are material to our consolidated financial statements for 2016 or its comparative annual or quarterly financial statements.

Domestic earnings before income taxes in 2016 represent 29.1% of total earnings and a favorable 8.1%9.3% effective tax rate impact for net lower tax rates intaxes on foreign jurisdictions,income, whereas 2015 domestic earnings represent 61.8% of total earnings and a 3.9%9.6% effective tax rate benefit for net lower taxes on foreign tax rates.income. The 2016 and 2015 effective tax rates were favorably impacted by income earned in jurisdictions, primarily in Canada and China, where the statutory rates are approximately 25%.

The 2015 tax provision benefited by $17.8 million related to the divestiture of KPS resulting in a favorable impact to the effective tax rate. The benefit was primarily due to the write-off of $13.8 million of an unamortized deferred tax liability recorded in purchase accounting and use of a capital loss carryforward.