Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~October 27, 2020,~~July 26, 2021, there were ~~64,714,022~~64,867,141 outstanding shares of the registrant’s common stock, $0.001 par value per share.

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). This ASU provides relief from certain accounting consequences that could result from the global markets’ anticipated transition away from the use of the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. The relief provided by this ASU is elective and applies to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The optional amendments are effective as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the effect of the adoption of this standard on the Company.

4. Revenue Recognition

We sell our products ~~through3~~through 3 primary commercial channels: original equipment manufacturers (OEMs), industrial distributors and direct to end users. Each of our segments sells similar products, which are balanced across end-user industries including, without limitation, energy, food processing, general industrial, material handling, mining, transportation, industrial automation, robotics, medical devices, and turf & garden.

As the Company’s standard payment terms are less than one year, the Company has elected the practical expedient under ~~ASC~~Accounting Standards Codification (“ASC”) 606-10-32-18 to not assess whether a contract has a significant financing component. Revenue is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied), which typically occurs at shipment from the Company’s manufacturing site or delivery to the customer’s named location. In determining whether control has transferred, the Company considers if there is a present right to payment and legal title, along with risks and rewards of ownership having transferred to the customer. In certain circumstances, the Company manufactures customized product without alternative use for its customers, which would generally result in the transfer of control over time. The Company has evaluated the amount of revenue subject to recognition over time and concluded that it is immaterial.

ALTRA INDUSTRIAL MOTION CORP.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

Amounts in millions, unless otherwise noted

The following table disaggregates our revenue for each reportable segment. The Company believes that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

	Quarter Ended						Year to Date Ended
	September 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019			Quarter Ended						Year to Date Ended
Net Sales:
													June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Power Transmission Technologies	$	197.7		$	218.7		$	610.7		$	688.6		$	237.6		$	196.3		$	458.6		$	413.0
Automation & Specialty		240.8			224.8			665.2			707.2			252.0			205.8			504.1			424.4
Inter-segment eliminations		(0.7	)		(0.6	)		(3.1	)		(3.6	)		(1.0	)		(1.3	)		(2.0	)		(2.4	)
Net sales	$	437.8		$	442.9		$	1,272.8		$	1,392.2
Total net sales													$	488.6		$	400.8		$	960.7		$	835.0

Net sales by geographic region based on point of shipment origin are as follows:

Net Sales

Quarter Ended

Year to Date Ended

September 30, 2020

September 30, 2019

September 30, 2020

September 30, 2019

North America (primarily U.S.)

$
230.2

$
251.5

$
681.3

$
794.3

Europe excluding Germany

68.8

72.1

214.9

233.8

Germany

44.1

54.9

140.7

173.9

China

56.5

35.1

150.1

105.8

Asia and other (excluding China)

38.2

29.3

85.8

84.4

Total

$
437.8

$
442.9

$
1,272.8

$
1,392.2


	Quarter Ended				Year to Date Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
North America (primarily U.S.)	$	255.5	$	205.8	$	502.5	$	451.1
Europe excluding Germany		90.3		71.3		175.2		146.1
Germany		50.5		44.1		101.5		96.6
China		64.0		59.3		128.1		97.7
Asia and other excluding China		28.3		20.3		53.4		43.5
Total net sales	$	488.6	$	400.8	$	960.7	$	835.0

~~ALTRA INDUSTRIAL MOTION CORP.~~

~~Notes to Unaudited Condensed Consolidated Interim Financial Statements~~

~~Amounts in millions, unless otherwise noted~~

The payment terms and conditions in our customer contracts vary. In some cases, customers will partially prepay for their goods; in other cases, after appropriate credit evaluations, payment will be due in arrears. In addition, there are constraints that cause variability in the ultimate consideration to be recognized. These constraints typically include early payment discounts, volume rebates, rights of return, surcharges, and other customer considerations.

Payments received from customers are recorded as accounts receivable when an unconditional right to the consideration exists. A contract asset is ~~created~~recognized when the Company satisfies a performance obligation by transferring a promised good to the ~~customer.~~customer before consideration is due. A contract liability is recognized when consideration is received from a customer prior to the Company satisfying the related performance obligation. Contract assets ~~may represent conditional or unconditional rights to consideration. A right is conditional,~~ and ~~recorded as a~~ contract ~~asset, if, for example, the Company must first satisfy another performance obligation~~liabilities are recognized in other current assets and other current liabilities, respectively, in the contract before it is entitled to payment from the customer. Contract assets are transferred to accounts receivable once the right becomes unconditional. A right is unconditional if nothing other than the passage of time is required before payment of that consideration is due. If the Company receives a customer payment prior to satisfying a performance obligation or in excess of estimates of what the Company expects to be entitled to, the payment is recorded as a contract liability.~~Contracts with payment in arrears are recognized as receivables.~~Company’s consolidated balance sheets.

The Company had inconsequential contract assets for the year to date periods ended June 30, 2021 and June 30, 2020, respectively. The opening and closing balances of the Company’s current contract ~~liability and accounts receivable~~liabilities as of the year to date ~~period~~periods ended ~~September~~June 30, 2021 and June 30, 2020 are as follows:

Deferred
Revenue
(Current)

Accounts
Receivable

Beginning - January 1, 2020

$
8.4

$
243.2

Closing - September 30, 2020

11.2

237.0

Increase/(Decrease)

$
2.8

$
(6.2
)


	Year to Date Ended
	June 30, 2021		June 30, 2020
Beginning balance	$	10.3	$	8.4
Closing balance		12.7		12.5
Increase/(Decrease)	$	2.4	$	4.1

Deferred
Revenue
(Current)

Accounts
Receivable

Beginning - January 1, 2019

$
7.4

$
259.8

Closing - September 30, 2019

10.6

244.3

Increase/(Decrease)

$
3.2

$
(15.5
)

In the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2020,~~2021, substantially all outstanding revenue has been recognized related to contract liabilities outstanding at January 1, ~~2020.~~2021.

ALTRA INDUSTRIAL MOTION CORP.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

Amounts in millions, unless otherwise noted

5. Fair Value of Financial Instruments

Fair value is determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy, as follows:



Level 1- Quoted prices in active markets for identical assets or liabilities.



Level 2- Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived.



Level 3- Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

•

~~Level 1- Quoted prices in active markets for identical assets or liabilities.~~

•

~~Level 3- Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.~~

The Company considers all highly liquid investments purchased with a remaining maturity of three months or less to be cash equivalents and are classified as Level 1.

~~ALTRA INDUSTRIAL MOTION CORP.~~

The carrying values of financial instruments, including cash equivalents, are carried at cost, which approximates fair value, and are classified as Level 1. Debt under the Altra Credit Agreement (as defined herein) is classified as Level 2 and is comprised of the Altra Term Loan Facility and the Altra Revolving Credit Facility (both as defined herein). The carrying amount of the Altra Term Loan Facility was $980.0 million and the estimated fair value of the Altra Term Loan Facility was $972.7 million at June 30, 2021. There is currently 0 debt under the Altra Revolving Credit Facility. The carrying amount of the Notes ~~to Unaudited Condensed Consolidated Interim Financial Statements~~

~~Amounts in millions, unless otherwise noted~~

(as defined herein) was $400 million and the estimated fair value of the Notes was $428.5 million at June 30, 2021. The Notes are classified as Level 2.

The Company determines the fair value of financial instruments using quoted market prices whenever ~~available.~~available and classified these investments as Level 1. When quoted market prices are not available for various types of financial instruments (such as ~~forwards, options and swaps)~~derivative instruments), the Company uses standard models with market-based inputs, which take into account the present value of estimated future cash flows and the ability of the Company or the financial counterparty to perform. These investments are classified as Level 2. For cross-currency interest rate swaps and ~~cross currency~~interest rate swaps, the significant inputs to these models are interest rate curves for discounting future cash flows and are adjusted for credit risk. For forward foreign currency contracts, the significant inputs are interest rate curves for discounting future cash flows and exchange rate curves of the foreign currency for translating future cash flows. See additional discussion of the Company’s use of financial instruments including cross-currency swaps and interest rate swaps included in Note 15.

In December 2020, the Company invested $5.0 million for a minority equity interest in a privately held manufacturing software company, MTEK Industry AB (“MTEK”), over which the Company does not exert significant influence. The equity investment does not have a readily determinable fair value and does not qualify for the practical expedient to estimate fair value using the net asset value per share. Therefore, in accordance with ASU 2016-01, the Company elected to measure the investment at its cost less impairment, if any, adjusted for observable price changes in orderly transactions for identical or a similar investment of the same issuer. This investment is considered a Level 3 asset based on the lack of observable inputs and is classified within other non-current assets in the consolidated balance sheets. The Company will monitor its equity investment in MTEK for indicators of impairments or upward adjustments on an ongoing basis. If the Company determines that such an indicator is present, an adjustment will be recorded, which will be measured as the difference between the carrying ~~values of financial instruments, including cash equivalents, accounts payable,~~value and ~~other accrued liabilities are carried at cost, which approximates~~estimated fair value. ~~Debt under the Altra Credit Agreement (as defined herein) is comprised~~As of ~~the Altra Term Loan Facility and the Altra Revolving Credit Facility (both as defined herein). The~~June 30, 2021, there were no indicators that support an adjustment to MTEK’s carrying amount of the Altra Term Loan Facility was $1,100.0 million and the estimated fair value of the Altra Term Loan Facility was $1,071.1 million at September 30, 2020. There is currently 0 debt under the Altra Revolving Credit Facility. Further, the Altra Credit Agreement was negotiatedvalue.

ALTRA INDUSTRIAL MOTION CORP.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

Amounts in October 2018 and there have not been any significant changes in our credit rating. The carrying amount of the Notes (as defined herein) was $400 million and the estimated fair value of the Notes was $425.0 million at September 30, 2020.millions, unless otherwise noted

6. Changes in Accumulated Other Comprehensive Income/(Loss) by Component

The following is a reconciliation of changes in accumulated other comprehensive income/(loss) by component for the periods presented:

Gains and
(Losses) on
Cash Flow
Hedges

Defined
Benefit
Pension
Plans

Cumulative
Foreign
Currency
Translation
Adjustment

Total

Accumulated Other Comprehensive (Loss) by
   Component, June 30, 2020

$
18.0

$
(1.6
)

$
(116.5
)

$
(100.1
)
Other Comprehensive Income (Loss) before
   reclassification

—

0.2

47.6

47.8

Reclassification out of Other Comprehensive
   Income (Loss)

2.6

—

—

2.6

Net current-period Other Comprehensive Income
   (Loss)

2.6

0.2

47.6

50.4

Accumulated Other Comprehensive (Loss) by
   Component, September 30, 2020

$
20.6

$
(1.4
)

$
(68.9
)

$
(49.7
)


	Gains and (Losses) on Cash Flow Hedges			Defined Benefit Pension Plans			Cumulative Foreign Currency Translation Adjustment		Total
Accumulated Other Comprehensive Income (Loss) by Component, March 31, 2021	$	(19.1	)	$	(3.7	)	$	3.3	$	(19.5	)
Reclassification of interest rate swap to income, net of tax		2.3			—			—		2.3
Pension adjustments, net of tax		—			1.2			—		1.2
Amortization of actuarial gain (losses), net of tax		—			0.1			—		0.1
Foreign currency translation adjustments, net of tax		—			—			19.6		19.6
Net current-period Other Comprehensive Income (Loss)		2.3			1.3			19.6		23.2
Accumulated Other Comprehensive Income (Loss) by Component, June 30, 2021	$	(16.8	)	$	(2.4	)	$	22.9	$	3.7

Gains and
(Losses) on
Cash Flow
Hedges

Defined
Benefit
Pension
Plans

Cumulative
Foreign
Currency
Translation
Adjustment

Total

Accumulated Other Comprehensive (Loss) by
   Component, January 1, 2020

$
(3.0
)

$
(1.5
)

$
(85.4
)

$
(89.9
)
Other Comprehensive Income (Loss) before
   reclassification

19.9

0.1

16.5

36.5

Reclassification out of Other Comprehensive
   Income (Loss)

3.7

—

—

3.7

Net current-period Other Comprehensive Income
   (Loss)

23.6

0.1

16.5

40.2

Accumulated Other Comprehensive (Loss) by
   Component, September 30, 2020

$
20.6

$
(1.4
)

$
(68.9
)

$
(49.7
)


	Gains and (Losses) on Cash Flow Hedges			Defined Benefit Pension Plans			Cumulative Foreign Currency Translation Adjustment			Total
Accumulated Other Comprehensive (Loss) by Component, January 1, 2021	$	(21.5	)	$	(3.7	)	$	46.3		$	21.1
Reclassification of interest rate swap to income, net of tax		4.7			—			—			4.7
Pension adjustments, net of tax		—			1.2			—			1.2
Amortization of actuarial gain (losses), net of tax		—			0.1			—			0.1
Foreign currency translation adjustments, net of tax		—			—			(23.4	)		(23.4	)
Net current-period Other Comprehensive Income (Loss)		4.7			1.3			(23.4	)		(17.4	)
Accumulated Other Comprehensive (Loss) by Component, June 30, 2021	$	(16.8	)	$	(2.4	)	$	22.9		$	3.7

ALTRA INDUSTRIAL MOTION CORP.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

Amounts in millions, unless otherwise noted


	Gains and (Losses) on Cash Flow Hedges			Defined Benefit Pension Plans			Cumulative Foreign Currency Translation Adjustment			Total
Accumulated Other Comprehensive Loss by Component, March 31, 2020	$	(28.2	)	$	(1.6	)	$	(99.0	)	$	(128.8	)
Change in fair value of interest rate swap, net of tax		(0.2	)		—			—			(0.2	)
Reclassification of interest rate swap to income, net of tax		1.7			—			—			1.7
Foreign currency translation adjustments, net of tax		—			—			27.2			27.2
Net current-period Other Comprehensive Loss		1.5			—			27.2			28.7
Accumulated Other Comprehensive Loss by Component, June 30, 2020	$	(26.7	)	$	(1.6	)	$	(71.8	)	$	(100.1	)


	Gains and (Losses) on Cash Flow Hedges			Defined Benefit Pension Plans			Cumulative Foreign Currency Translation Adjustment			Total
Accumulated Other Comprehensive (Loss) by Component, January 1, 2020	$	(16.5	)	$	(1.5	)	$	(71.9	)	$	(89.9	)
Change in fair value of interest rate swap, net of tax		(11.9	)		—			—			(11.9	)
Reclassification of interest rate swap to income, net of tax		1.7			—			—			1.7
Pension adjustments, net of tax		—			(0.1	)		—			(0.1	)
Foreign currency translation adjustments, net of tax		—			—			(31.2	)		(31.2	)
Change in fair value of net investment hedge, net of tax		—			—			31.3			31.3
Net current-period Other Comprehensive Income (Loss)		(10.2	)		(0.1	)		0.1			(10.2	)
Accumulated Other Comprehensive (Loss) by Component, June 30, 2020	$	(26.7	)	$	(1.6	)	$	(71.8	)	$	(100.1	)

Management identified a misstatement related to the classification of foreign currency translation adjustments associated with the net investment hedge for the year to date period ended June 30, 2020. As a result, the Company reclassified $31.3 million from Change in fair value of interest rate swap, net of tax in Gains and (losses) on cash flow hedges to Change in fair value of net investment hedge, net of tax in Cumulative foreign currency translation adjustment to reflect the correct presentation in the table above. This adjustment had no effect on the Company’s previously reported consolidated financial statements as of and for the year to date period ended June 30, 2020. Additionally, certain amounts related to the derivative financial instruments were reclassified in the Consolidated Statements of Comprehensive Income to conform with this presentation.

Gains and
(Losses) on
Cash Flow
Hedges

Defined
Benefit
Pension
Plans

Cumulative
Foreign
Currency
Translation
Adjustment

Total

Accumulated Other Comprehensive (Loss) by
   Component, June 30, 2019

$
(15.4
)

$
(0.5
)

$
(66.1
)

$
(82.0
)
Other Comprehensive Income (Loss) before
   reclassfication

27.9

—

(58.7
)

(30.8
)
Reclassification out of Other Comprehensive
   Income (Loss)

(2.4
)

—

—

(2.4
)
Net current-period Other Comprehensive Income
   (Loss)

25.5

—

(58.7
)

(33.2
)
Accumulated Other Comprehensive (Loss) by
   Component, September 30, 2019

$
10.1

$
(0.5
)

$
(124.8
)

$
(115.2
)

Gains and
(Losses) on
Cash Flow
Hedges

Defined
Benefit
Pension
Plans

Cumulative
Foreign
Currency
Translation
Adjustment

Total

Accumulated Other Comprehensive (Loss) by
   Component, January 1, 2019

$
(12.9
)

$
(0.2
)

$
(58.5
)

$
(71.6
)
Other Comprehensive Income (Loss) before
   reclassfication

30.4

(0.3
)

(66.3
)

(36.2
)
Reclassification out of Other Comprehensive
   Income (Loss)

(7.4
)

—

—

(7.4
)
Net current-period Other Comprehensive Income
   (Loss)

23.0

(0.3
)

(66.3
)

(43.6
)
Accumulated Other Comprehensive (Loss) by
   Component, September 30, 2019

$
10.1

$
(0.5
)

$
(124.8
)

$
(115.2
)

7. Net Income per Share

Basic earnings per share is based on the weighted average number of shares of common stock outstanding, and diluted earnings per share is based on the weighted average number of shares of common stock outstanding and all potentially dilutive common stock equivalents outstanding. Common stock equivalents are included in the per share calculations when the effect of their inclusion is dilutive.

ALTRA INDUSTRIAL MOTION CORP.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

Amounts in millions, unless otherwise noted

The following is a reconciliation of basic to diluted net income per share:


	Quarter Ended				Year to Date Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Net income/(loss)	$	40.8	$	21.7	$	80.0	$	(95.0	)
Shares used in net income per common share - basic		64.8		64.6		64.8		64.5
Effect of dilutive shares		0.6		0.1		0.6		—
Shares used in net income per common share - diluted		65.4		64.7		65.4		64.5
Shares excluded as their inclusion would be anti-dilutive		—		—		—		0.1
Earnings/(Loss) per share:
Basic net income	$	0.63	$	0.34	$	1.23	$	(1.47	)
Diluted net income	$	0.62	$	0.34	$	1.22	$	(1.47	)

Quarter Ended

Year to Date Ended

September 30, 2020

September 30, 2019

September 30, 2020

September 30, 2019

Net income/(loss)

$
38.3

$
25.7

$
(56.7
)

$
89.9

Shares used in net income per common share - basic

64.6

64.4

64.6

64.3

Incremental shares of unvested restricted common stock

0.3

0.2

—

0.2

Shares used in net income per common share - diluted

64.9

64.6

64.6

64.5

Shares excluded as their inclusion would be anti-dilutive

—

—

0.1

—

Earnings/(Loss) per share:

Basic net income

$
0.59

$
0.40

$
(0.88
)

$
1.40

Diluted net income

$
0.59

$
0.40

$
(0.88
)

$
1.39

8. Inventories

Inventories at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020 consisted of the following:


	June 30, 2021		December 31, 2020
Raw materials	$	114.6	$	95.2
Work in process		24.7		22.1
Finished goods		98.9		93.1
	$	238.2	$	210.4

The Company conducts an annual impairment review of goodwill and indefinite-lived intangible assets in the fourth quarter of each year, unless events occur which trigger the need for an interim impairment review. There were no triggering events for the year to date period ended June 30, 2021. The ~~2019~~2020 annual goodwill impairment review indicated that the ~~JVS~~Thomson reporting unit’s fair value exceeded its carrying value by less than ~~10%~~10%. All other reporting units had fair values that exceeded their carrying value by ~~10%~~10% or more.

The Company estimated the fair value of the JVS reporting unit using both the discounted cash flow model and the market approach. The Company estimated the value of JVS’s indefinite-lived tradename intangible asset using a discounted cash flow model. The determination of the fair value using the discounted cash flow model requires management to make significant estimates and assumptions related to forecasts of future revenues, profit margins, and discount rates. The determination of the fair value using the market approach requires management to make significant assumptions related to earnings before interest, taxes, depreciation, and amortization (“EBITDA”) multiples. The Company estimates future cash flows based upon historical results and current market projections, discounted at a market comparable rate.

~~Key assumptions developed by management and used in the interim quantitative analysis included the following:~~

During the third quarter of 2020, the Company again considered the economic impact of the COVID-19 pandemic on the reporting units and determined there was no triggering event to further evaluate for potential impairment. For all reporting units, the Company concluded that it was more likely than not that their fair value continued to exceed their carrying value as of September 30, 2020. However, depending on its duration and the severity of its economic impact, the COVID-19 pandemic may trigger additional interim impairment reviews in future periods.

~~Changes in goodwill from January 1, 2020 through September 30, 2020 were as follows:~~

~~Other intangible assets as of September 30, 2020 and December 31, 2019 consisted of the following:~~

The Company recorded ~~$17.5~~$17.7 million and ~~$17.6~~$17.3 million of amortization expense in the quarters ended ~~September~~June 30, ~~2020~~2021 and ~~2019,~~2020, respectively; and, recorded ~~$52.3~~$35.3 million and ~~$52.9~~$34.8 million of amortization expense in the year to date periods ended ~~September~~June 30, 2021 and 2020, ~~and 2019,~~ respectively.

The estimated amortization expense for intangible assets is approximately ~~$18.4~~$35.7 million for the remainder of ~~2020, $70.7~~2021, $71.8 million in ~~each of the next four years~~2022, $71.5 million in 2023, $71.1 million in 2024, $70.8 million in 2025 and ~~then $880.6~~$836.0 million thereafter.

On October 1, 2018 (the “A&S Closing Date”), upon the closing of the combination (the “Fortive Transaction”) of Altra with 4 operating companies from Fortive Corporation’s (“Fortive”) Automation & Specialty platform (the “A&S Business”), the Company assumed ~~$400~~$400 million aggregate principal amount of ~~6.125%~~6.125% senior notes due 2026 (the “Notes”). The Notes will mature on October 1, ~~2026.~~ 2026. Interest on the Notes accrues from October 1, 2018, and the first interest payment date on the Notes was on April 1, ~~2019.~~ 2019. The Notes may be redeemed at the option of the issuer on or after October 1, ~~2023.~~2023. The Notes are guaranteed on a senior unsecured basis by the Company and certain of its domestic subsidiaries.

On the A&S Closing Date, the Company entered into a new Credit Agreement (the “Altra Credit Agreement”). The Altra Credit Agreement provides for a seven-year senior secured term loan in an aggregate principal amount of ~~$1,340.0~~$1,340.0 million (the “Altra Term Loan Facility”) and a five-year senior secured revolving credit facility in an aggregate committed principal amount of ~~$300.0~~$300.0 million (the “Altra Revolving Credit Facility” and together with the Altra Term Loan Facility, the “Altra Credit Facilities”). The proceeds of the Altra Term Loan Facility were used to (i) consummate Fortive’s transfer of certain non-U.S assets, liabilities and entities constituting a portion of the A&S Business to certain subsidiaries of Altra, and the Altra subsidiaries’ assumption of substantially all of the liabilities associated with the transferred assets (the “Direct Sales”), (ii) repay in full and extinguish all outstanding indebtedness for borrowed money under the ~~2015 Credit Agreement~~Company’s previous credit agreement (as defined herein) and (iii) pay certain fees, costs, and expenses in connection with the consummation of the Fortive Transaction. The proceeds of the Altra Revolving Credit Facility will be used for working capital and general corporate purposes.

The Altra Credit Facilities are guaranteed on a senior secured basis by the Company and certain of its domestic subsidiaries, subject to certain customary exceptions.

Borrowings under the Altra Term Loan Facility will bear interest at a per annum rate equal to a “Eurocurrency Rate” plus ~~2.00%~~2.00%, in the case of Eurocurrency Rate borrowings, or equal to a “Base Rate” plus ~~1.00%~~1.00%, in the case of Base Rate borrowings.Borrowings under the Altra Revolving Credit Facility will initially bear interest at a per annum rate equal to a Eurocurrency Rate plus ~~2.00%~~2.00%, in the case of Eurocurrency Rate borrowings, or equal to a Base Rate plus ~~1.00%~~1.00%, in the case of Base Rate borrowings, and thereafter will bear interest at a per annum rate equal to a Eurocurrency Rate or Base Rate, as applicable, plus an interest rate spread determined by reference to a pricing grid based on the Company’s senior secured net leverage ratio. In addition, the Company will be required to pay fees that will fluctuate between ~~0.250%~~0.250% per annum to ~~0.375%~~0.375% per annum on the unused amount of the Altra Revolving Credit Facility, based upon the Company’s senior secured net leverage ~~ratio.~~ratio. The interest rate on the Altra Term Loan Facility was ~~2.146%~~2.104% at ~~September~~June 30, ~~2020.~~2021.

The Altra Credit Agreement contains usual and customary representations and warranties, and usual and customary affirmative and negative covenants, including limitations on liens, investments, restricted payments, additional indebtedness and asset sales and mergers. In addition, the Altra Credit Agreement requires that Altra maintain a specified maximum senior secured leverage ratio and a specified minimum interest coverage ratio. The obligations of the borrowers of the Altra Credit Facilities under the Altra Credit Agreement may be accelerated upon customary events of default, including non-payment of principal, interest, fees and other amounts, inaccuracy of representation and warranties, violation of covenants, cross default and cross acceleration, voluntary and involuntary bankruptcy or insolvency proceedings, inability to pay debts as they become due, material judgments, ERISA events, actual or asserted invalidity of security documents or guarantees and change in control.

The Company incurred ~~$29.9~~$29.9 million in issuance costs, which are amortized over the term of the debt as an adjustment to the effective interest rate on the outstanding borrowings.

The Company provided notice to the administrative agent of the Altra Credit Agreement on March 9, 2020 and March 16, 2020 to draw down ~~$50~~$50 million and ~~$50~~$50 million, respectively, under the Altra Revolving Credit Facility. At that time, the Company had increased its borrowings under the Altra Revolving Credit Facility as a precautionary action in order to increase its cash position and enhance its financial flexibility during this period of uncertainty in the global markets resulting from COVID-19. On April 14, 2020, the Company provided notice to the administrative agent of the Altra Credit Agreement to repay ~~$50~~$50 million outstanding under the Altra Revolving Credit Facility. On April 27, 2020 and May 27, 2020, the Company provided notice to the administrative agent to repay ~~$15~~$15 million and ~~$35~~$35 million, respectively, which were outstanding under the Altra Revolving Credit Facility. As of the period ended ~~September~~June 30, ~~2020,~~2021, all outstanding borrowings under the Altra Revolving Credit Facility have been repaid.

As of ~~September~~June 30, ~~2020,~~2021, the Company had ~~$1,100.0~~$980.0 million outstanding on the Altra Credit Agreement. As of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company had ~~$5.2~~$4.0 million and ~~$4.4~~$4.5 million in letters of credit outstanding, respectively. The Company had ~~$294.8~~$296.0 million available to borrow under the Altra Credit Facilities at ~~September~~June 30, ~~2020.~~2021.

The Company’s subsidiaries in Europe have entered into certain long-term fixed rate term loans that are generally secured by local property, plant and equipment. The debt has interest rates that range from ~~1.79%~~1.0% to ~~2.5%~~2.5%, with various quarterly and monthly installments through 2028.

The Company leases certain equipment under finance lease arrangements, whose obligations are included in both short-term and long-term debt. Finance lease obligations amounted to approximately ~~$0.3~~$0.2 million and ~~$0.5~~$0.3 million at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. Finance lease right of use assets are included in property, plant and equipment with the related amortization recorded as depreciation expense. Finance lease liabilities are included in current and non-current other liabilities on the Company’s consolidated balance sheets.

13. Restructuring Costs

From time to time, the Company has initiated various restructuring programs and incurred severance and other restructuring costs.

ALTRA INDUSTRIAL MOTION CORP.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

Amounts in millions, unless otherwise noted

During 2017, the Company commenced a restructuring plan (“2017 Altra Plan”) as a result of the Company’s ~~purchase~~acquisition of Stromag and to rationalize its global renewable energy business. The actions taken pursuant to the 2017 Altra Plan included reducing headcount, facility consolidations and the elimination of certain costs. The ~~expenses for the year to date period ended September 30, 2020 were approximately $0.5 million and were composed of severance and other restructuring costs. The~~ Company ~~does~~did not ~~expect to~~ incur any ~~additional material~~ costs as a result of the 2017 Altra ~~Plan.~~Plan during the quarter and year to date periods ended June 30, 2021.

During 2019, the Company commenced a restructuring plan (“2019 Altra Plan”) to drive efficiencies, reduce the number of facilities and optimize its operating margin. The Company expects to incur approximately $5$3 - ~~$10~~$5 million in restructuring expenses under the 2019 Altra Plan over the next ~~three~~two years, primarily related to headcount reductions and plant consolidations. The expenses for the quarter and year to date period ended ~~September~~June 30, ~~2020~~2021 were ~~$2.4~~$0.8 million and ~~$5.0~~$1.7 million, respectively, and were ~~composed~~comprised mainly of severance costs.

The following is a reconciliation of the accrued restructuring costs between January 1, 2021 and ~~consolidation costs.~~June 30, 2021:


	2017 Altra Plan			2019 Altra Plan			Total All Plans
Balance at January 1, 2021	$	0.5		$	1.8		$	2.3
Restructuring expense incurred		—			0.9			0.9
Cash payments		(0.1	)		(1.4	)		(1.5	)
Balance at March 31, 2021		0.4			1.3			1.7
Restructuring expense incurred		—			0.8			0.8
Cash payments		(0.1	)		(1.3	)		(1.4	)
Balance at June 30, 2021		0.3			0.8			1.1

The following is a reconciliation of the accrued restructuring costs between January 1, 2020 and ~~September~~June 30, ~~2020.~~

2017 Altra
Plan

2019 Altra
Plan

Total All
Plans

Balance at January 1, 2020

$
1.5

$
2.6

$
4.1

Restructuring expense incurred

0.2

1.4

1.6

Cash payments

(0.4
)

(1.4
)

(1.8
)
Balance at March 31, 2020

1.3

2.6

3.9

Restructuring expense incurred

0.3

1.2

1.5

Cash payments

(0.6
)

(1.1
)

(1.7
)
Balance at June 30, 2020

1.0

2.7

3.7

Restructuring expense incurred

—

2.4

2.4

Cash payments

(0.2
)

(2.9
)

(3.1
)
Balance at September 30, 2020

$
0.8

$
2.2

$
3.0

~~ALTRA INDUSTRIAL MOTION CORP.~~

~~Notes to Unaudited Condensed Consolidated Interim Financial Statements~~

~~Amounts in millions, unless otherwise noted~~

2020:

~~The following is a reconcilation of the accrued restructuring costs between January 1, 2019 and September 30, 2019.~~


	2017 Altra Plan			2019 Altra Plan			Total All Plans
Balance at January 1, 2020	$	1.5		$	2.6		$	4.1
Restructuring expense incurred		0.2			1.4			1.6
Cash payments		(0.4	)		(1.4	)		(1.8	)
Balance at March 31, 2020		1.3			2.6			3.9
Restructuring expense incurred		0.3			1.2			1.5
Cash payments		(0.6	)		(1.1	)		(1.7	)
Balance at June 30, 2020		1.0			2.7			3.7

2017 Altra
Plan

2019 Altra
Plan

Total All
Plans

Balance at January 1, 2019

$
2.0

$
—

$
2.0

Restructuring expense incurred

1.0

1.3

2.3

Cash payments

(1.5
)

(0.5
)

(2.0
)
Balance at March 31, 2019

1.5

0.8

2.3

Restructuring expense incurred

1.8

1.4

3.2

Cash payments

(2.0
)

(0.7
)

(2.7
)
Balance at June 30, 2019

1.3

1.5

2.8

Restructuring expense incurred

2.3

3.9

6.2

Cash payments

(1.3
)

(1.7
)

(3.0
)
Balance at September 30, 2019

$
2.3

$
3.7

$
6.0

The following is a reconciliation of restructuring expense by segment for the quarter ~~to date~~ ended ~~September~~June 30, ~~2020.~~2021:


	2017 Altra Plan		2019 Altra Plan		Total All Plans		2017 Altra Plan		2019 Altra Plan		Total All Plans
Power Transmission Technologies	$	—	$	2.0	$	2.0	$	—	$	0.4	$	0.4
Automation & Specialty		—		0.4		0.4		—		0.4		0.4
Total restructuring expense	$	—	$	2.4	$	2.4	$	—	$	0.8	$	0.8

The following is a reconciliation of restructuring expense by segment for the quarter ended June 30, 2020:


	2017 Altra Plan		2019 Altra Plan		Total All Plans
Power Transmission Technologies	$	0.3	$	0.2	$	0.5
Automation & Specialty		—		1.0		1.0
Total restructuring expense	$	0.3	$	1.2	$	1.5

ALTRA INDUSTRIAL MOTION CORP.

Notes to ~~date ended September 30, 2019.~~Unaudited Condensed Consolidated Interim Financial Statements

2017 Altra
Plan

2019 Altra
Plan

Total All
Plans

Power Transmission Technologies

$
2.3

$
0.6

$
2.9

Automation & Specialty

—

3.3

3.3

Total restructuring expense

$
2.3

$
3.9

$
6.2

Amounts in millions, unless otherwise noted

The following is a reconciliation of restructuring expense by segment for the year to date period ended ~~September~~June 30, ~~2020.~~2021


	2017 Altra Plan		2019 Altra Plan		Total All Plans		2017 Altra Plan		2019 Altra Plan		Total All Plans
Power Transmission Technologies	$	0.5	$	2.6	$	3.1	$	—	$	1.0	$	1.0
Automation & Specialty		—		2.4		2.4		—		0.7		0.7
Total restructuring expense	$	0.5	$	5.0	$	5.5	$	—	$	1.7	$	1.7

The following is a reconciliation of restructuring expense by segment for the year to date period ended ~~September~~June 30, ~~2019.~~2020:


	2017 Altra Plan		2019 Altra Plan		Total All Plans		2017 Altra Plan		2019 Altra Plan		Total All Plans
Power Transmission Technologies	$	5.1	$	0.7	$	5.8	$	0.5	$	0.6	$	1.1
Automation & Specialty		—		5.9		5.9		—		2.0		2.0
Total restructuring expense	$	5.1	$	6.6	$	11.7	$	0.5	$	2.6	$	3.1

The total accrued restructuring reserve as of ~~September~~June 30, ~~2020,~~2021, and as of ~~September~~June 30, ~~2019~~2020 relate primarily to severance and consolidation costs under the 2017 Altra Plan and the 2019 Altra Plan and are recorded in accruals and other current liabilities on the accompanying unaudited condensed consolidated balance sheet.

~~ALTRA INDUSTRIAL MOTION CORP.~~

~~Notes to Unaudited Condensed Consolidated Interim Financial Statements~~

~~Amounts in millions, unless otherwise noted~~

14. Segments, Concentrations and Geographic Information

Segments

The internal reporting structure used by our Chief Operating Decision Maker (“CODM”) to assess performance and allocate resources determines the basis for our reportable operating segments. Our CODM is our Chief Executive Officer, and he evaluates operations and allocates resources based on a measure of income from operations. Our operations are organized in 2 reporting segments that are aligned with key product types and end markets served, Power Transmission Technologies (“PTT”) and Automation & Specialty (“A&S”):

•

~~Power Transmission Technologies - PTT.~~ ~~This segment includes the following key product offerings:~~



Power Transmission Technologies - PTT. This segment includes the following key product offerings:

~~Couplings, Clutches & Brakes.~~Couplings are the interface between two shafts, which enable power to be transmitted from one shaft to the other. Clutches in this segment are devices that use mechanical, hydraulic, pneumatic, or friction type connections to facilitate engaging or disengaging two rotating members. Brakes are combinations of interacting parts that work to slow or stop machinery. Products in this segment are generally used in heavy industrial applications and energy markets.

Couplings, Clutches & Brakes.Couplings are the interface between two shafts, which enable power to be transmitted from one shaft to the other. Clutches in this segment are devices that use mechanical, hydraulic, pneumatic, or friction type connections to facilitate engaging or disengaging two rotating members. Brakes are combinations of interacting parts that work to slow or stop machinery. Products in this segment are generally used in heavy industrial applications and energy markets.

~~Electromagnetic Clutches & Brakes.~~ Products in this segment include brakes and clutches that are used to electronically slow, stop, engage or disengage equipment utilizing electromagnetic friction type connections. Products in this segment are used in industrial and commercial markets including agricultural machinery, material handling, motion control, and turf & garden.

Electromagnetic Clutches & Brakes. Products in this segment include brakes and clutches that are used to electronically slow, stop, engage or disengage equipment utilizing electromagnetic friction type connections. Products in this segment are used in industrial and commercial markets including agricultural machinery, material handling, motion control, and turf & garden.

~~Gearing.~~ Gears are utilized to reduce the speed and increase the torque of an electric motor or engine to the level required to drive a particular piece of equipment. Gears produced by the Company are primarily utilized in industrial applications.

Gearing. Gears are utilized to reduce the speed and increase the torque of an electric motor or engine to the level required to drive a particular piece of equipment. Gears produced by the Company are primarily utilized in industrial applications.

•

~~Automation & Specialty – A&S.~~ ~~This segment includes the following key brands:~~



Automation & Specialty – A&S. This segment includes the following key brands:

~~Kollmorgen:~~ Provides rotary precision motion solutions, including servo motors, stepper motors, high performance electronic drives and motion controllers and related software, and precision linear actuators. These products are used in advanced material handling, aerospace and defense, factory automation, medical, packaging, printing, semiconductor, robotic and other applications.

Kollmorgen: Provides rotary precision motion solutions, including servo motors, stepper motors, high performance electronic drives and motion controllers and related software, and precision linear actuators. These products are used in advanced material handling, aerospace and defense, factory automation, medical, packaging, printing, semiconductor, robotic and other applications.

~~Portescap:~~ Provides high-efficiency miniature motors and motion control products, including brush and brushless DC motors, can stack motors and disc magnet motors. These products are used in medical, industrial power tool and general industrial equipment applications.

Portescap: Provides high-efficiency miniature motors and motion control products, including brush and brushless DC motors, can stack motors and disc magnet motors. These products are used in medical, industrial power tool and general industrial equipment applications.

~~Thomson:~~ Provides systems that enable and support the transition of rotary motion to linear motion. Products include linear bearings, guides, glides, lead and ball screws, industrial linear actuators, clutch brakes, precision gears, resolvers and inductors. These products are used in factory automation, medical, mobile off-highway, material handling, food processing and other niche applications.

~~Jacobs Vehicle Systems (JVS):~~ Provides heavy-duty diesel engine brake systems and valve actuation mechanisms for the commercial vehicle market, including compression release, bleeder and exhaust brakes, including the “Jake Brake” engine braking system. These products are primarily used in heavy duty Class 8 truck applications.

1918

ALTRA INDUSTRIAL MOTION CORP.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

Amounts in millions, unless otherwise noted

Thomson: Provides systems that enable and support the transition of rotary motion to linear motion. Products include linear bearings, guides, glides, lead and ball screws, industrial linear actuators, clutch brakes, precision gears, resolvers and inductors. These products are used in factory automation, medical, mobile off-highway, material handling, food processing and other niche applications.

Jacobs Vehicle Systems (JVS): Provides renowned “Jake Brake” diesel engine braking systems and valve actuation mechanisms for the commercial vehicle market, including compression release, bleeder and exhaust brakes. These products are primarily used in heavy duty Class 8 truck applications.

Segment financial information and a reconciliation of segment results to unaudited condensed consolidated results are as follows:


	Quarter Ended						Year to Date Ended
	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Net Sales:
Power Transmission Technologies	$	237.6		$	196.3		$	458.6		$	413.0
Automation & Specialty		252.0			205.8			504.1			424.4
Inter-segment eliminations		(1.0	)		(1.3	)		(2.0	)		(2.4	)
Net sales	$	488.6		$	400.8		$	960.7		$	835.0
Income/(loss) from operations:
Segment earnings:
Power Transmission Technologies	$	33.6		$	23.9		$	61.4		$	49.5
Automation & Specialty		37.4			26.0			78.8			(92.6	)
Corporate expenses (1)		(4.7	)		3.7			(7.9	)		0.3
Restructuring costs		(0.8	)		(1.5	)		(1.7	)		(3.1	)
Income/(loss) from operations	$	65.5		$	52.1		$	130.6		$	(45.9	)
Other non-operating expense:
Net interest expense		16.5			18.8			33.4			36.2
Other non-operating (income)/expense, net		(1.7	)		2.5			(3.2	)		1.1
Total non-operating expense	$	14.8		$	21.3		$	30.2		$	37.3
Income/(loss) before income taxes		50.7			30.8			100.4			(83.2	)
Provision for income taxes		9.9			9.1			20.4			11.8
Net income/(loss)	$	40.8		$	21.7		$	80.0		$	(95.0	)

Quarter Ended

Year to Date Ended

September 30, 2020

September 30, 2019

September 30, 2020

September 30, 2019

Net Sales:

Power Transmission Technologies

$
197.7

$
218.7

$
610.7

$
688.6

Automation & Specialty

240.8

224.8

665.2

707.2

Inter-segment eliminations

(0.7
)

(0.6
)

(3.1
)

(3.6
)
Net sales

$
437.8

$
442.9

$
1,272.8

$
1,392.2

Income/(loss) from operations:

Segment earnings:

Power Transmission Technologies

$
23.5

$
26.3

$
73.0

$
87.1

Automation & Specialty

44.6

29.7

(48.0
)

102.1

Corporate expenses (1)

(0.3
)

(1.3
)

—

(5.5
)
Restructuring costs

(2.4
)

(6.2
)

(5.5
)

(11.7
)
Income/(loss) from operations

$
65.4

$
48.5

$
19.5

$
172.0

Other non-operating expense:

Net interest expense

18.0

18.2

54.2

56.6

Other non-operating expense, net

(0.3
)

(0.4
)

0.8

1.1

Total non-operating expense

$
17.7

$
17.8

$
55.0

$
57.7

Income/(loss) before income taxes

47.7

30.7

(35.5
)

114.3

Provision for income taxes

9.4

5.0

21.2

24.4

Net income/(loss)

$
38.3

$
25.7

$
(56.7
)

$
89.9

(1)

Certain expenses are maintained at the corporate level and are not allocated to the segments. These include various administrative expenses related to the Company’s corporate headquarters, certain U.S. healthcare costs and credits, depreciation on capitalized software costs, non-capitalizable software implementation costs and acquisition related expenses.

~~(1)~~

Selected information by segment (continued):


	Quarter Ended				Year to Date Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Depreciation and amortization:
Power Transmission Technologies	$	8.0	$	8.2	$	16.0	$	16.4
Automation & Specialty		22.3		22.9		44.3		46.2
Corporate		0.7		0.9		1.4		1.5
Total depreciation and amortization	$	31.0	$	32.0	$	61.7	$	64.1


	June 30, 2021		June 30, 2020
Total assets:
Power Transmission Technologies	$	1,070.5	$	1,045.7
Automation & Specialty		2,981.2		2,920.1
Corporate (2)		160.2		134.9
Total assets	$	4,211.9	$	4,100.7

Quarter Ended

Year to Date Ended

September 30, 2020

September 30, 2019

September 30, 2020

September 30, 2019

Depreciation and amortization:

Power Transmission Technologies

$
8.2

$
8.3

$
24.6

$
25.0

Automation & Specialty

23.3

23.2

69.4

69.4

Corporate

0.9

0.6

2.5

2.0

Total depreciation and amortization

$
32.4

$
32.1

$
96.5

$
96.4

September 30, 2020

September 30, 2019

Total assets:

Power Transmission Technologies

$
1,054.2

$
1,064.7

Automation & Specialty

2,956.0

3,085.6

Corporate(2)

135.7

143.4

Total assets

$
4,145.9

$
4,293.7

~~(2)~~19

~~Corporate assets are primarily cash and cash equivalents, tax related asset accounts, certain capitalized software costs, and property, plant and equipment.~~

ALTRA INDUSTRIAL MOTION CORP.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

Amounts in millions, unless otherwise noted

(2)

Corporate assets are primarily cash and cash equivalents, tax related asset accounts, certain capitalized software costs, and property, plant and equipment.

Net sales to third parties are attributed to the geographic regions based on the country in which the shipment originates. Amounts attributed to the geographic regions for property, plant and equipment are based on the location of the entity, which holds such assets.

The Company is involved in various pending legal proceedings arising out of the ordinary course of business. These proceedings primarily involve commercial claims, product liability claims, personal injury claims, and workers’ compensation claims. With respect to these proceedings, management believes that the Company will prevail, has adequate insurance coverage or has established appropriate reserves to cover potential liabilities. Any costs that management estimates may be paid related to these proceedings or claims are accrued when the liability is considered probable and the amount can be reasonably estimated. There can be no assurance, however, as to the ultimate outcome of any of these matters, and if all or substantially all of these legal proceedings were to be determined adversely to the Company, there could be a material adverse effect on the results of operations, cash flows, or financial condition of the Company. We have established loss provisions for matters in which losses are probable and can be reasonably estimated. For matters where a reserve has not been established and for which we believe a loss is reasonably possible, as well as for matters where a reserve has been recorded but for which an exposure to loss in excess of the amount accrued is reasonably possible, we believe that such losses, individually and in the aggregate, will not have a material effect on our unaudited condensed consolidated financial statements.

Our estimates regarding potential losses and materiality are based on our judgment and assessment of the claims utilizing currently available information. Although we will continue to reassess our reserves and estimates based on future developments, our objective assessment of the legal merits of such claims may not always be predictive of the outcome and actual results may vary from our current estimates. We will continue to consider the applicable guidance in ASC 450-20, based on the facts known at the time of our future filings, as it relates to legal contingencies, and will adjust our disclosures as may be required under the guidance.

There were 0 material amounts accrued in the accompanying unaudited condensed consolidated balance sheets for potential litigation as of ~~September~~June 30, ~~2020~~2021 or December 31, ~~2019.~~2020.

The Company also risks exposure to product liability claims in connection with products it has sold and those sold by businesses that the Company acquired. Although in some cases third parties have retained responsibility for product liability claims relating to products manufactured or sold prior to the acquisition of the relevant business and in other cases the persons from whom the Company has acquired a business may be required to indemnify the Company for certain product liability claims subject to certain caps or limitations on indemnification, the Company cannot assure that those third parties will in fact satisfy their obligations with respect to liabilities retained by them or their indemnification obligations. If those third parties become unable to or otherwise do not comply with their respective obligations including indemnity obligations, or if certain product liability claims for which the Company is obligated were not retained by third parties or are not subject to these indemnities, the Company could become subject to significant liabilities or other adverse consequences. Moreover, even in cases where third parties retain responsibility for product liability claims or are required to indemnify the Company, significant claims arising from products that have been acquired could have a material adverse effect on the Company’s ability to realize the benefits from an acquisition, could result in the reduction of the value of goodwill that the Company recorded in connection with an acquisition, or could otherwise have a material adverse effect on the Company’s business, financial condition, or operations.

There is contamination at some of the Company’s current facilities, primarily related to historical operations at those sites, for which the Company could be liable for the investigation and remediation under certain environmental laws. The potential for contamination also exists at other of the Company’s current or former sites, based on historical uses of those sites. The Company currently is not undertaking any material remediation or investigations and the costs or liability in connection with potential contamination conditions at these facilities cannot be predicted at this time because the potential existence of contamination has not been investigated or not enough is known about the environmental conditions or likely remedial requirements. Currently, other parties with contractual liability are addressing or have plans or obligations to address those contamination conditions that may pose a material risk to human health, safety or the environment. In addition, while the Company attempts to evaluate the risk of liability associated with these facilities at the time the Company acquired them, there may be environmental conditions currently unknown to the Company relating to prior, existing or future sites or operations or those of predecessor companies whose liabilities the Company may have assumed or acquired which could have a material adverse effect on the Company’s business.

The Company is being indemnified, or expects to be indemnified, by third parties subject to certain caps or limitations on the indemnification, for certain environmental costs and liabilities associated with certain owned or operated sites. Accordingly, based on the indemnification and the experience with similar sites of the environmental consultants who the Company has hired, the Company does not expect such costs and liabilities to have a material adverse effect on its business, operations or earnings. The Company cannot assure you, however, that those third parties will in fact satisfy their indemnification obligations. If those third parties become unable to, or otherwise do not, comply with their respective indemnity obligations, or if certain contamination or other liability for which the Company is obligated is not subject to these indemnities, the Company could become subject to significant liabilities.

From time to time, the Company is notified that it is a potentially responsible party and may have liability in connection with off-site disposal facilities. To date, the Company has generally resolved matters involving off-site disposal facilities for a nominal sum but there can be no assurance that the Company will be able to resolve pending or future matters in a similar fashion.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which reflect the Company’s current estimates, expectations and projections about the Company’s future results, performance, prospects and opportunities. Forward-looking statements include, among other things, the information concerning the Company’s possible future results of operations including revenue, costs of goods sold, gross margin, future profitability, future economic improvement, business and growth strategies, financing plans, expected leverage levels, the Company’s competitive position and the effects of competition, the projected growth of the industries in which we operate, and the Company’s ability to consummate strategic acquisitions and other transactions. In addition, all statements regarding the anticipated effects of the novel coronavirus, or COVID-19, pandemic and the responses thereto, including the pandemic’s impact on general economic and market conditions, as well as on our business, customers, end markets, results of operations and financial condition and anticipated actions to be taken by management to sustain the Company during the economic uncertainty caused by the pandemic and related governmental and business actions, as well as other statements that are not strictly historic in nature are forward looking. Forward-looking statements include statements that are not historical facts and can be identified by forward-looking words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” ~~“expect,~~“expect” “forecast,” “intend,” “plan,”~~” may,~~ “may,” “project,” “should,” “will,” “would,” and similar expressions or variations. These forward-looking statements are based upon information currently available to the Company and are subject to a number of risks, uncertainties, and other factors that could cause the Company’s actual results, performance, prospects, or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements.

Important factors that could cause the Company’s actual results to differ materially from the results referred to in the forward-looking statements the Company makes in this report include:

•

~~the outcome of litigation to which the Company is a party from time to time, including product liability claims;~~



failure of the Company’s operating equipment or information technology infrastructure, including cyber-attacks or other security breaches, and failure to comply with data privacy laws or regulations;

•

~~work stoppages and other labor issues;~~

2523

•

~~changes in employment, environmental, tax and other laws, including enactment of the 2017 Tax Act, and changes in the enforcement of laws;~~



the Company’s ability to implement and maintain its Enterprise Resource Planning (ERP) system;

•

~~the Company’s ability to attract and retain key executives and other personnel;~~



the Company’s exposure to renewable energy markets;

•

the Company’s ability to successfully pursue the Company’s development activities and successfully integrate new operations and systems, including the realization of revenues, economies of scale, cost savings, and productivity gains associated with such operations;



the Company’s ability to achieve the efficiencies, savings and other benefits anticipated from our cost reduction, margin improvement, restructuring, plant consolidation and other business optimization initiatives;

•

~~the Company’s ability to obtain or protect intellectual property rights and avoid infringing on the intellectual property rights of others;~~



the Company’s ability to achieve its business plans, including with respect to an uncertain economic environment;

•

~~the risks associated with the portion of the Company’s total assets comprised of goodwill and indefinite lived intangibles;~~



global economic changes and continued volatility and disruption in global financial markets;

•

~~changes in market conditions that would result in the impairment of goodwill or other assets of the Company;~~



adverse conditions in the credit and capital markets limiting or preventing the Company’s and its customers’ and suppliers’ ability to borrow or raise capital;

•

~~changes in accounting rules and standards, audits, compliance with the Sarbanes-Oxley Act, and regulatory investigations;~~



changes in market conditions that would result in the impairment of goodwill, indefinite lived intangibles or other assets of the Company;

•

~~the effects of changes to critical accounting estimates;~~



any negative effects of the Company’s leverage, which could adversely affect its financial health;

•

~~changes in volatility of the Company’s stock price and the risk of litigation following a decline in the price of the Company’s stock;~~



the significant operating and financial restrictions imposed by the Altra Credit Agreement;

•



the Company’s exposure to variable interest rates and foreign currency exchange rates, including risks related to transitioning from LIBOR to a replacement alternative reference rate and risks related to the use of hedging arrangement to manage interest rate and currency risk;

•

~~the Company’s ability to implement and maintain its Enterprise Resource Planning (ERP) system;~~



changes in accounting rules and standards, audits, compliance with the Sarbanes-Oxley Act, and regulatory investigations;

•

~~the Company’s access to capital, credit ratings, indebtedness, and ability to raise additional capital and operate under the terms of the Company’s debt obligations;~~



changes to trade policies, legislation, treaties, regulations and tariffs both in and outside of the United States;

•

~~the risks associated with the Company’s debt;~~



exposure to United Kingdom political developments, including the effect of its withdrawal from the European Union, and the uncertainty surrounding the implementation and effect of Brexit and related negative developments in the European Union and elsewhere;

•

~~the risks associated with the Company’s exposure to variable interest rates and foreign currency exchange rates;~~



defects, quality issues, inadequate disclosure or misuse with respect to our products and capabilities and related potential product liability claims;

•

~~the risks associated with interest rate swap contracts;~~



the outcome of litigation to which the Company is a party from time to time;

•

~~the risks associated with transitioning from LIBOR to a replacement alternative reference rate;~~



changes in labor or employment laws;

•

~~the risks associated with the Company’s being subject to tax laws and regulations in various jurisdictions;~~



environmental laws and regulations and the Company’s failure to comply with such laws;

•

~~the risks associated with the Company’s exposure to renewable energy markets;~~



tax laws and regulations in various jurisdictions to which the Company is subject and the inability to successfully defend claims from taxing authorities related to the Company’s current or acquired businesses;

•

~~the risks related to regulations regarding conflict minerals;~~



changes in the Company’s tax rates, including enactment of the 2017 Tax Act, or exposure to additional income tax liabilities or assessments, as well as audits by tax authorities;

•

~~the risks associated with the volatility and disruption in the global financial markets;~~



changes in volatility of the Company’s stock price and the risk of litigation following a decline in the price of the Company’s stock;

•

the Company’s ability to successfully execute, manage and integrate key acquisitions and mergers, including Altra’s purchase of Stromag (the “Stromag Acquisition”), and the business combination (the “Fortive Transaction”) of the Company with four operating companies from Fortive Corporation’s (“Fortive”) Automation & Specialty platform (the “A&S Business”);



the Company’s ability to successfully execute, manage and integrate key acquisitions and mergers, including the Fortive Transaction;

•

~~other risks associated with the Fortive Transaction, including:~~



the risks associated with the Company’s ability to successfully divest or otherwise dispose of businesses that that are deemed not to fit with our strategic plan or are not achieving the desired return on investment;

~~lost sales and customers as a result of customers of Altra or the A&S Business deciding not do so business with us;~~



the Company’s debt and access to capital, credit ratings, indebtedness, and ability to raise additional capital and operate under the terms of the Company’s debt obligations;

~~risks associated with managing a larger and more complex business;~~



restrictions relating to the tax free treatment of the Fortive Transaction; and

~~integrating personnel of Altra and the A&S Business while maintaining focus on providing consistent, high-quality products and service to customers;~~



other factors, risks, and uncertainties referenced in the Company’s filings with the Securities and Exchange Commission, including the “Risk Factors” set forth in our Annual Report on Form 10-K.

~~the loss of key employees;~~

~~unanticipated issues in integrating manufacturing, logistics, information, communications and other systems;~~

~~possible inconsistencies in standards, controls, procedures, policies and compensation structures;~~

~~the impact on our internal controls and compliance with the regulatory requirements under the Sarbanes-Oxley Act of 2002; and~~

~~potential unknown liabilities and unforeseen expenses associated with the Fortive Transaction;~~

2624

•

~~the risk associated with the United Kingdom’s vote to leave the European Union; and~~

•

~~other factors, risks, and uncertainties referenced in the Company’s filings with the Securities and Exchange Commission (“SEC”), including the “Risk Factors” set forth in this document.~~

ALL FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE OF THIS REPORT. EXCEPT AS REQUIRED BY LAW, WE UNDERTAKE NO OBLIGATION TO PUBLICLY UPDATE OR RELEASE ANY REVISIONS TO THESE FORWARD-LOOKING STATEMENTS TO REFLECT ANY EVENTS OR CIRCUMSTANCES AFTER THE DATE OF THIS REPORT OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS. ALL SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO US OR ANY PERSON ACTING ON THE COMPANY’S BEHALF ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS CONTAINED OR REFERRED TO IN THIS SECTION AND IN OUR RISK FACTORS SET FORTH (1) IN THE SECTION TITLED “RISK FACTORS,” SET FORTH IN PART II, ITEM 1A OF THIS QUARTERLY REPORT ON FORM 10-Q; (2) IN PART I, ITEM 1A OF THE COMPANY’S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, ~~2019,~~2020, FILED WITH THE SEC ON FEBRUARY ~~27, 2020;~~26, 2021; AND (3) IN THE COMPANY’S OTHER SEC FILINGS.

The following discussion of the financial condition and results of operations of Altra Industrial Motion Corp. and its subsidiaries should be read together with (1) the unaudited condensed consolidated financial statements of Altra Industrial Motion Corp. and its subsidiaries and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and (2) the audited consolidated financial statements of Altra Industrial Motion Corp. and its subsidiaries and the related notes and management’s discussion and analysis of financial conditions and results of operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. The following discussion includes forward-looking statements. For a discussion of important factors that could cause actual results to differ materially from the results referred to in the forward-looking statements, see “Forward-Looking Statements” and “Risk Factors” in this Quarterly Report on Form 10-Q and “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. Unless the context requires otherwise, the terms “Altra,” “Altra Industrial Motion Corp.,” “the Company,” “we,” “us,” and “our” refer to Altra Industrial Motion Corp. and its subsidiaries.

General

We are a leading global designer, producer and marketer of a wide range of electromechanical power transmission motion control (“PTMC”) products. Our technologies are used in various motion related applications and across a wide variety of high-volume manufacturing and non-manufacturing processes in which reliability and precision are critical to avoid costly down time and enhance the overall efficiency of operations.

We market our products under well recognized and established brands, which have been in existence for an average of over 85 years. We serve a diversified group of customers comprised of over 1,000 direct original equipment manufacturers (“OEMs”) including GE, Honeywell and Siemens, and also benefit from established, long-term relationships with leading industrial distributors, including Applied Industrial Technologies, Grainger, Kaman ~~Corporation~~Industrial Technologies and Motion Industries. Many of our customers operate globally across a large number of industries, ranging from transportation, turf and agriculture, energy and mining to factory automation, medical and robotics. Our relationships with these customers often span multiple decades, which we believe reflects the high level of performance, quality and service we deliver, supplemented by the breadth of our offering, vast geographic footprint and our ability to rapidly develop custom solutions for complex customer requirements.

Our website is www.altramotion.com. By following the link “Investor Relations” and then “SEC Filings” on our website, you can access our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which we make available free of charge, as soon as reasonably practicable after such forms are filed with or furnished to the SEC. We are not including the information contained on or available through our website as a part of, or incorporating such information by reference into, this Quarterly Report on Form 10-Q.

Business Outlook

Our future financial performance depends, in large part, on conditions in the markets that we serve and on conditions in the U.S., European, and global economies in general.

During the quarter ended ~~September~~June 30, ~~2020,~~2021, we experienced ~~greater than expected~~broad-based demand strength ~~in certain~~across the vast majority of our end markets ~~including~~and delivered revenue that exceeded the ~~Class 8 truck market~~pre-COVID results we experienced in ~~China,~~ the ~~medical market,~~second quarter of 2019. We continued to manage supply chain challenges to minimize customer disruptions and ~~the renewable energy market. Moreover,~~control costs. Our incoming order rate remained strong and our ~~aggressive cost-reduction actions~~backlog increased. Our topline performance and ongoing focus on cost management led to strong ~~profitability~~earnings and cash flow ~~generation, as well as effective debt reduction.~~ from operations which allowed us to continue to pay down debt.

During the remainder of 2021, we will continue to work to overcome supply chain and logistics challenges. We also expect to continue facing inflationary pressure on raw materials, labor and logistics.

The COVID-19 pandemic continues to affect the global economy and business environment. In the third quarter, the Company’s Pandemic Response Team continued to identify and assess risks and develop countermeasures following guidance from national, state and local governmental and health authorities. In addition, the Company’s Business Continuity Task Force continued to work to ensure continuity of supply for its customers. During the ~~third~~second quarter, Altra experienced minimal supply chain disruption and all material manufacturing facilities continued to be operational.

The COVID-19 pandemic and its effects on the economic environment remain extremely fluid and it is difficult to predict with certainty what unforeseen circumstances may develop as we progress through the remainder of the year. As a result, we will continue to proceed cautiously by managing our cost structure and cash flows and prioritizing debt reduction. In addition, we are implementing strategic plans to best position Altra to adapt to these changing conditions and to continue to serve our customers and community.

Critical Accounting Policies

The preparation of our unaudited condensed consolidated financial statements and related disclosures in conformity with generally accepted accounting principles in the United States (“GAAP”) requires management to make judgments, assumptions and estimates that affect our reported amounts of assets, revenues and expenses, as well as related disclosures of contingent assets and liabilities. We base our estimates on past experiences and other assumptions we believe to be appropriate, and we evaluate these estimates on an on-going basis. See the discussion of critical accounting policies in our Annual Report on Form 10-K for the year ended December 31, ~~2019. Except as otherwise noted below, there~~2020. There have been no changes in the identification or application of the Company’s critical accounting policies during the ~~quarter ended September 30, 2020.~~

~~Impairment of Goodwill and Indefinite-Lived Intangible Assets~~

~~The Company conducts an annual impairment review of goodwill and indefinite-lived intangible assets during the fourth quarter of each~~ year unless events occur which trigger the need for an interim impairment review. The 2019 annual goodwill impairment review indicated that the JVS reporting unit’s fair value exceeded its carrying value by less than 10%. All other reporting units had fair values that exceeded their carrying value by 10% or more.

~~During the first quarter of 2020 the Company considered the economic impact of the COVID-19 pandemic~~ to be a triggering event for the JVS business unit and, as a result, the Company performed an interim impairment review. As a result of both the COVID-19 related economic downturn and its impact on JVS’s anticipated financial results, the Company concluded that it was more likely than not that the JVS reporting unit’s carrying value exceeds its fair value and performed an interim impairment review for both JVS’s goodwill and tradename intangible asset. As a result, on March 31, 2020, the Company recorded non-cash impairment charges of $8.4 million and $139.1 million for goodwill and indefinite-lived intangible assets, respectively.

~~Key assumptions developed by management and used in the interim quantitative analysis included the following:~~

•

~~Near-term revenue declines in 2020;~~

•

~~Adjusted profit margins over the projection period, due to revenue adjustments and maintained investment in the business; and~~

•

~~Market-based discount rates.~~

•

~~Reduced EBITDA multiple, due to current market conditions.~~

During the third quarter of 2020, the Company again considered the economic impact of the COVID-19 pandemic on the reporting units and determined there was no triggering event. For all reporting units, the Company concluded that it was more likely than not that their fair value continued to exceed their carrying value as of September 30, 2020. However, depending on its duration and the severity of its economic impact, the COVID-19 pandemic may trigger additional interim impairment reviews in future periods.

~~Income Taxes~~

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law in the U.S. to provide certain relief as a result of the COVID-19 pandemic. In addition, governments around the world have enacted or implemented various forms of tax relief measures in response to the economic conditions in the wake of COVID-19. Altra has determined that neither the CARES Act nor changes to income tax laws or regulations in other jurisdictions had a significant impact on the Company’s unaudited condensed consolidated financial statements for thedate period ended ~~September~~June 30, ~~2020.~~2021.

~~Trade Account Receivables~~

As a result of the adoption of ASU 2016-13, the Company has updated its significant accounting policy related to trade account receivables and allowances for credit losses from what was previously disclosed in our audited financial statements for the year ended December 31, 2019 as follows:

All trade account receivables are reported net of allowances for credit losses. The allowances for credit losses represent management’s best estimate of the credit losses expected from our trade account receivables over the life of the underlying assets. Assets with similar risk characteristics are pooled together for determination of their current expected credit losses. We regularly perform detailed reviews of our pooled assets to evaluate the collectability of receivables based on a combination of past, current, and future financial and qualitative factors that may affect customers’ ability to pay. In circumstances where we are aware of a specific customer’s inability to meet its financial obligations, a specific reserve is recorded against amounts due to reduce the recognized receivable to the amount reasonably expected to be collected.

Recent Accounting Standards

See Part 1, Notes to Unaudited Condensed Consolidated Interim Financial Statements, Note 3 – Recent Accounting Standards.

Results of Operations

(Amounts in millions, unless otherwise noted)

Quarter Ended

Year to Date Ended

September 30, 2020

September 30, 2019

September 30, 2020

September 30, 2019

Net sales

$
437.8

$
442.9

$
1,272.8

$
1,392.2

Cost of sales

273.7

285.9

812.3

893.3

Gross profit

164.1

157.0

460.5

498.9

Gross profit percentage

37.5
%

35.4
%

36.2
%

35.8
%
Selling, general and administrative expenses

82.5

87.9

245.4

270.8

Impairment of Goodwill and Intangible Asset

—

—

147.5

—

Research and development expenses

13.8

14.4

42.6

44.4

Restructuring costs

2.4

6.2

5.5

11.7

Income from operations

65.4

48.5

19.5

172.0

Interest expense, net

18.0

18.2

54.2

56.6

Other non-operating expense/(income), net

(0.3
)

(0.4
)

0.8

1.1

Income/(loss) before income taxes

47.7

30.7

(35.5
)

114.3

Provision for income taxes

9.4

5.0

21.2

24.4

Net income/(loss)

$
38.3

$
25.7

$
(56.7
)

$
89.9


	Quarter Ended						Year to Date Ended
	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Net sales	$	488.6		$	400.8		$	960.7		$	835.0
Cost of sales		312.7			257.4			613.1			538.6
Gross profit		175.9			143.4			347.6			296.4
Gross profit percentage		36.0	%		35.8	%		36.2	%		35.5	%
Selling, general and administrative expenses		93.5			75.8			183.3			162.9
Impairment of Goodwill and Intangible Asset		—			—			—			147.5
Research and development expenses		16.1			14.0			32.0			28.8
Restructuring costs		0.8			1.5			1.7			3.1
Income from operations		65.5			52.1			130.6			(45.9	)
Interest expense, net		16.5			18.8			33.4			36.2
Other non-operating expense/(income), net		(1.7	)		2.5			(3.2	)		1.1
Income/(loss) before income taxes		50.7			30.8			100.4			(83.2	)
Provision for income taxes		9.9			9.1			20.4			11.8
Net income/(loss)	$	40.8		$	21.7		$	80.0		$	(95.0	)

Quarter Ended ~~September~~June 30, ~~2020~~2021 compared with Quarter Ended ~~September~~June 30, ~~2019~~2020

(Amounts in millions, unless otherwise noted)


Amounts in millions, except percentage data	Quarter Ended										Quarter Ended
	September 30, 2020		September 30, 2019		Change			%			June 30, 2021		June 30, 2020		Change		%
Net sales	$	437.8	$	442.9	$	(5.1	)		(1.2	)%	$	488.6	$	400.8	$	87.8		21.9	%

Net SalesThe ~~decrease~~increase in net sales during the quarter ended ~~September~~June 30, ~~2020~~2021 is primarily due to ~~the overall economic decline due to the effects of the COVID-19 pandemic, and a decline~~strength across most end markets as well as an increase in heavy duty class 8 truck sales in ~~our oil and gas end market, as a result of~~ the ~~reduction in oil prices globally.~~United States. Foreign exchange had a favorable impact on net

sales of ~~$5.4~~$18.7 million, primarily driven by the Euro. The ~~decrease in sales was partially offset by strength in China, primarily in the heavy-duty truck and wind end markets. The decrease~~increase in sales was also ~~partially offset by~~due to price, which had a favorable impact of ~~$4.7~~$5.3 million for the quarter ended ~~September~~June 30, ~~2020.~~2021.


Amounts in millions, except percentage data	Quarter Ended											Quarter Ended
	September 30, 2020			September 30, 2019			Change		%			June 30, 2021			June 30, 2020			Change		%
Gross profit	$	164.1		$	157.0		$	7.1		4.5	%	$	175.9		$	143.4		$	32.5		22.7	%
Gross profit as a percent of sales		37.5	%		35.4	%							36.0	%		35.8	%

Gross Profit Gross profit increased during the quarter ended ~~September~~June 30, ~~2020,~~2021, primarily due to ~~a recovery~~broad improvement in ~~the heavy duty class 8 truck and renewable energy~~many of our end ~~markets in China, and the favorable impact from price of $4.7 million.~~markets. Changes in foreign exchange had a favorable impact on gross profit of ~~$2.0~~$7.2 million, primarily driven by the Euro. ~~These increases were partially offset by the economic~~The increase in gross profit was also due to price, which had a favorable impact of $5.3 million for the COVID-19 pandemic including a decrease in sales levels, costs associated with temporary shutdowns of our manufacturing facilities and shutdowns of operations of our customers and suppliers. We have taken actions to reduce our expenses and maximize near-term profitability, and despite the increase in the third quarter ~~we continue to expect our 2020 gross profit as a percentage of sales to decrease when compared to 2019.~~ended June 30, 2021.


Amounts in millions, except percentage data	Quarter Ended												Quarter Ended
	September 30, 2020			September 30, 2019			Change			%			June 30, 2021			June 30, 2020			Change		%
Selling, general and administrative expense (“SG&A”)	$	82.5		$	87.9		$	(5.4	)		(6.1	)%	$	93.5		$	75.8		$	17.7		23.4	%
SG&A as a percent of sales		18.8	%		19.8	%								19.1	%		18.9	%

Selling, general and administrative expenses The ~~decrease~~increase in SG&A during the quarter ended ~~September~~June 30, ~~2020,~~2021, when compared to the quarter ended ~~September~~June 30, ~~2019~~2020, was primarily ~~due to cost reduction actions which began during the quarter ended March 31, 2020 and continued during the current quarter. Our cost reduction efforts~~driven by expenses returning that were focused on compensation reductions, and the elimination of non-critical expenses, including travel, which decreased our overall SG&A costs. Although we do expect our SG&A costs to increase as certain temporary cost reductions terminate, due to ongoing uncertainty as a result of the COVID-19 pandemic, we are not able to anticipate whether any of these costs will increaseeliminated, reduced or deferred in the ~~remainder~~prior year such as reinstating merit increases, increased healthcare expenses and backfilling open positions. Foreign exchange had an unfavorable impact on SG&A of ~~2020.~~$3.0 million, primarily driven by the Euro.


Amounts in millions, except percentage data	Quarter Ended										Quarter Ended
	September 30, 2020		September 30, 2019		Change			%			June 30, 2021		June 30, 2020		Change		%
Research and development expenses (“R&D”)	$	13.8	$	14.4	$	(0.6	)		(4.2	)%	$	16.1	$	14.0	$	2.1		15.0	%

Research and development expense Research and development expenses ~~decreased~~increased for the quarter ended ~~September~~June 30, ~~2020~~2021 when compared to the quarter ended ~~September~~June 30, ~~2019~~2020 primarily due to ~~cost reduction actions~~foreign exchange, which ~~began during the quarter ended March 31, 2020. The decrease is partially offset by the~~had an unfavorable impact on R&D of ~~foreign exchange of $0.3~~$0.7 million, primarily driven by the Euro. We expect R&D costs to be approximately 2.5% - 3.5% of sales in future periods.


Amounts in millions, except percentage data	Quarter Ended										Quarter Ended
	September 30, 2020		September 30, 2019		Change			%			June 30, 2021		June 30, 2020		Change			%
Restructuring costs	$	2.4	$	6.2	$	(3.8	)		(61.3	)%	$	0.8	$	1.5	$	(0.7	)		(46.7	)%

Restructuring costs. During the quarter ended September 30, 2017, we commenced a restructuring plan (“2017 Altra Plan”) as a result of ~~the~~Altra’s acquisition of Stromag ~~Acquisition~~ and to rationalize our global renewable energy business. The actions taken pursuant to the 2017 Altra Plan included reducing headcount, facility consolidations and the elimination of certain costs. The total 2017 Altra Plan savings are in line with our expectations. We do not expect to incur any additional material costs as a result of the 2017 Altra Plan.

During 2019, we commenced ~~a restructuring plan (“~~the 2019 Altra ~~Plan”)~~Plan to drive efficiencies, reduce the number of facilities and optimize our operating margin. We expect to incur $5$3 - ~~$10~~$5 million in restructuring expenses under the 2019 Altra Plan over the next ~~three~~two years, primarily related to headcount reductions and plant consolidations. We achieved savings of ~~$0.3~~$0.8 million during the quarter ended ~~September~~June 30, ~~2020~~2021 under the 2019 Altra Plan and estimate additional future savings during ~~2020~~2021 to be approximately ~~$1.8~~$2.8 million. The cost savings for the quarter ended ~~September~~June 30, ~~2020~~2021 were recognized as reductions in SG&A and Cost of Sales of approximately ~~$0.2~~$0.1 million and ~~$0.1~~$0.7 million, respectively.


Amounts in millions, except percentage data	Quarter Ended										Quarter Ended
	September 30, 2020		September 30, 2019		Change			%			June 30, 2021		June 30, 2020		Change			%
Interest expense, net	$	18.0	$	18.2	$	(0.2	)		(1.1	)%	$	16.5	$	18.8	$	(2.3	)		(12.2	)%

Interest expenseI~~nterest~~ Interest expense decreased for the quarter ended ~~September~~June 30, ~~2020~~2021 compared to the prior year period primarily due to the impact of debt paydowns of approximately ~~$60.0~~$180.0 million since the second quarter of 2020, which resulted in lower

outstanding borrowings and lower average interest rates. ~~This was partially offset by approximately $3.4 million of non-cash~~We expect our interest expense ~~related~~in 2021 to ~~the termination of the interest rate swap.~~continue to decrease as additional principal payments on our debt are made.


Amounts in millions, except percentage data	Quarter Ended											Quarter Ended
	September 30, 2020			September 30, 2019			Change		%			June 30, 2021			June 30, 2020			Change		%
Provision for income taxes	$	9.4		$	5.0		$	4.4		88.0	%	$	9.9		$	9.1		$	0.8		8.8	%
Provision for income taxes as a percent of income before income taxes		19.7	%		16.3	%							19.5	%		29.5	%

Provision for Income Taxes The provision for income tax as a percentage of income before income taxes ~~increased~~decreased for the quarter ended ~~September~~June 30, ~~2020~~2021 as compared to the quarter ended ~~September~~June 30, ~~2019.~~2020. The ~~increase~~decrease in the ~~2020~~2021 provision for income tax as a percent of income before income taxes is due to a benefit from a foreign tax rate change of $0.5 million, the ~~impact~~release of ~~$3.1~~valuation allowances of $0.4 million related to the one-time sale of ~~withholding tax paid~~property in the United Kingdom, and a $0.4 million benefit as a result of ~~dividends from two~~the exercise of ~~our foreign subsidiaries.~~stock options. This was partially offset by ~~a $1.8~~$0.7 million of withholding tax ~~benefit as a result of changes~~on dividends from our subsidiaries in ~~Global Intangible Low-Taxed Income (“GILTI”) tax expense recorded in prior periods due to updated legislation.~~Canada and China. We expect our provision for income taxes before discrete items to be approximately ~~21%~~20% to ~~23%~~22% for the full year ~~2020.~~2021.

Year to Date Ended ~~September~~June 30, ~~2020~~2021 compared with Year to Date Ended ~~September~~June 30, ~~2019~~2020

(Amounts in millions, unless otherwise noted)


Amounts in millions, except percentage data	Year to Date Ended										Year to Date Ended
	September 30, 2020		September 30, 2019		Change			%			June 30, 2021		June 30, 2020		Change		%
Net sales	$	1,272.8	$	1,392.2	$	(119.4	)		(8.6	)%	$	960.7	$	835.0	$	125.7		15.1	%

Net SalesThe ~~decrease~~increase in net sales during the year to date period ended ~~September~~June 30, ~~2020~~2021 is primarily due to ~~a decline~~strength across most end markets as well as an increase in heavy duty class 8 truck sales in ~~our oil~~the United States and ~~gas end market as a result of the decline in oil prices globally, and the overall economic decline due to the effects of the COVID-19 pandemic. Changes in foreign~~China. Foreign exchange had ~~an unfavorable~~a favorable impact on net sales of ~~$8.8~~$33.4 million, primarily driven by the Euro, ~~Indian Rupee~~Swedish Krona, and the Chinese Renminbi. ~~This~~The increase in sales was ~~partially offset by increased sales in China, primarily in the heavy duty truck and wind end markets, and~~also due to price, which had a favorable impact of ~~$11.0~~$8.3 million for the year to date period ended ~~September~~June 30, ~~2020.~~2021.


Amounts in millions, except percentage data	Year to Date Ended												Year to Date Ended
	September 30, 2020			September 30, 2019			Change			%			June 30, 2021			June 30, 2020			Change		%
Gross profit	$	460.5		$	498.9		$	(38.4	)		(7.7	)%	$	347.6		$	296.4		$	51.2		17.3	%
Gross profit as a percent of sales		36.2	%		35.8	%								36.2	%		35.5	%

Gross Profit Gross profit ~~as a~~ ~~percentage of net sales~~ increased during the year to date period ended ~~September~~June 30, ~~2020,~~2021, primarily due to ~~cost reduction actions taken~~broad improvement in response to the economic impact of the COVID-19 pandemic which began during the quarter ended March 31, 2020, and the recovery in the heavy duty class 8 truck and renewable energy end markets in China. In addition, price had a favorable impact of $11.1 million. The increases were partially offset by the economic impact of the COVID-19 pandemic including a decrease in sales levels, costs associated with temporary shutdownsmany of our ~~manufacturing facilities and shutdowns of operations of our customers and suppliers.~~end markets. Changes in foreign exchange had ~~an unfavorable~~a favorable impact on gross profit of ~~$3.5~~$12.8 million, primarily driven by the Euro, ~~Indian Rupee~~Swedish Krona and Chinese Renminbi. ~~We have taken actions to reduce our expenses and maximize near-term profitability; however, we continue to expect our 2020~~The increase in gross profit aswas also due to price, which had a ~~percentage~~favorable impact of ~~sales~~$8.3 million for the year to ~~decrease when compared to 2019.~~date period ended June 30, 2021.


Amounts in millions, except percentage data	Year to Date Ended												Year to Date Ended
	September 30, 2020			September 30, 2019			Change			%			June 30, 2021			June 30, 2020			Change		%
Selling, general and administrative expense (“SG&A”)	$	245.4		$	270.8		$	(25.4	)		(9.4	)%	$	183.3		$	162.9		$	20.4		12.5	%
SG&A as a percent of sales		19.3	%		19.5	%								19.1	%		19.5	%

Selling, general and administrative expenses The ~~decrease~~increase in SG&A during the year to date period ended ~~September~~June 30, 2020 was primarily due to cost reduction actions which began during the quarter ended March 31, 2020 and continued during the current period. Our cost reduction efforts were focused on compensation reductions, and the elimination of non-critical expenses, including travel, which decreased our SG&A costs. However, due to the decrease in sales, SG&A as a percent of sales increased despite our cost reductions. Although we do expect our SG&A costs to increase as certain temporary cost reductions terminate, due to the ongoing uncertainty due to the COVID-19 pandemic, we are not able to anticipate whether any of these costs will increase in the remainder of 2020.

Amounts in millions, except percentage data

Year to Date Ended

September 30, 2020

September 30, 2019

Change

%

Research and development expenses (“R&D”)

$
42.6

$
44.4

$
(1.8
)

(4.1
)%

~~Research and development expenseResearch and development expenses decreased for the~~ ~~year to date period ended September 30, 2020~~2021, when compared to the year to date period ended ~~September~~June 30, ~~2019.~~2020 was primarily driven by expenses returning that were eliminated, reduced or deferred in the prior year such as reinstating merit increases, increased healthcare expenses and backfilling open positions. Foreign exchange had an unfavorable impact on SG&A of $5.6 million, primarily driven by the Euro, Swedish Krona and Chinese Renminbi.


Amounts in millions, except percentage data	Year to Date Ended
	June 30, 2021		June 30, 2020		Change		%
Research and development expenses (“R&D”)	$	32.0	$	28.8	$	3.2		11.1	%

Research and development expense Research and development expenses increased for the year to date period ended June 30, 2021 when compared to the year to date period ended June 30, 2020. The ~~decrease~~increase is mainly due to ~~cost reduction actions~~the unfavorable impact of foreign exchange, which ~~began during~~was approximately $1.4 million for the year ~~as a response~~ to ~~the COVID-19 pandemic.~~date period ended June 30, 2021. We expect R&D costs to be approximately 2.5% - 3.5% of sales in future periods.

Amounts in millions, except percentage data

Year to Date Ended

September 30, 2020

September 30, 2019

Change

%

Restructuring costs

$
5.5

$
11.7

$
(6.2
)

(53.0
)%


Amounts in millions, except percentage data	Year to Date Ended
	June 30, 2021		June 30, 2020		Change			%
Restructuring costs	$	1.7	$	3.1	$	(1.4	)		(45.2	)%

During 2019, we commenced ~~a restructuring plan (“~~the 2019 Altra ~~Plan”)~~Plan to drive efficiencies, reduce the number of facilities and optimize our operating margin. We expect expenses related to workforce reductions, lease termination costs and other facility rationalization costs. We expect to incur $5$3 - ~~$10~~$5 million in restructuring expenses under the 2019 Plan over the next 32 years, primarily related to plant consolidation and headcount reductions. We achieved savings of ~~$0.8~~$4.1 million during the year to date period ~~September~~June 30, ~~2020~~2021 under the 2019 Altra Plan and estimate additional future savings during ~~2020~~2021 to be approximately ~~$1.8~~$2.8 million. The cost savings for the year to date period ended ~~September~~June 30, ~~2020~~2021 were recognized as improvements in SG&A and Cost of Sales of approximately ~~$0.7~~$1.8 million and ~~$0.1~~$2.2 million, respectively.


Amounts in millions, except percentage data	Year to Date Ended										Year to Date Ended
	September 30, 2020		September 30, 2019		Change			%			June 30, 2021		June 30, 2020		Change			%
Interest expense, net	$	54.2	$	56.6	$	(2.4	)		(4.2	)%	$	33.4	$	36.2	$	(2.8	)		(7.7	)%

Interest expenseI~~nterest~~ Interest expense decreased for the year to date period ended ~~September~~June 30, ~~2020~~2021 compared to the prior year period primarily due to debt paydowns of approximately ~~$130.0~~$180.0 million since the ~~fourth~~second quarter of ~~2019.~~2020. We expect our interest expense in ~~2020~~2021 to decrease as a result of additional principal payments, resulting in lower average outstanding borrowings, as well as lower average interest rates. This will be partially offset by non-cash interest expense as a result of the termination of the interest rate swap. As of September 30, 2020, the Company recorded approximately $5.6 million of non-cash interest expense related to the termination of the interest rate swap.


Amounts in millions, except percentage data	Year to Date Ended												Year to Date Ended
	September 30, 2020			September 30, 2019			Change			%			June 30, 2021			June 30, 2020			Change		%
Provision for income taxes	$	21.2		$	24.4		$	(3.2	)		(13.1	)%	$	20.4		$	11.8		$	8.6		72.9	%
Provision for income taxes as a percent of income before income taxes		(59.7	)%		21.3	%								20.3	%		(14.2	)%

Provision for Income Taxes The provision for income tax as a percentage of income before income taxes ~~decreased~~increased for the year to date period ended ~~September~~June 30, ~~2020~~2021 as compared to the year to date period ended ~~September~~June 30, ~~2019.~~2020. The ~~decrease~~provision for income tax as a percent of income before income taxes during the year to date period ended June 30, 2020 was impacted by a $139.1 million non-cash impairment charge recorded at the JVS reporting unit in the ~~2020~~United States and China. The increase in the 2021 provision for income tax as a percent of income before income taxes is due to the ~~one time~~ impact of ~~the $139.1~~$2.2 million ~~non-cash impairment charge recorded at the JVS reporting unit in the United States and China and the additional~~of accrued withholding tax ~~benefit of $3.7 million~~ as a result of ~~changes~~dividends from our subsidiaries in ~~GILTI~~Canada and China. This was partially offset by a foreign tax ~~expense recorded in prior periods due to updated legislation. The Company also recognized discrete tax benefit~~rate change of $0.5 million, a release of valuation allowances of $0.4 million related to ~~changes~~the one-time sale of property in ~~tax rates for~~ the ~~JVS reporting unit in China,~~United Kingdom, and ~~the impact of $5.1~~a $1.0 million ~~of withholding tax paid~~benefit as a result of ~~a dividend from two foreign subsidiaries.~~the exercise of stock options and vesting of restricted stock. We expect our provision for income taxes before discrete items to be approximately ~~21%~~20% to ~~23%~~22% for the full year ~~2020.~~2021.

Segment Performance

(Amounts in millions unless otherwise noted)


	Quarter Ended						Year to Date Ended
	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Net Sales:
Power Transmission Technologies	$	237.6		$	196.3		$	458.6		$	413.0
Automation & Specialty		252.0			205.8			504.1			424.4
Inter-segment eliminations		(1.0	)		(1.3	)		(2.0	)		(2.4	)
Net sales	$	488.6		$	400.8		$	960.7		$	835.0
(Loss)/Income from operations:
Segment earnings:
Power Transmission Technologies	$	33.6		$	23.9		$	61.4		$	49.5
Automation & Specialty		37.4			26.0			78.8			(92.6	)
Corporate expenses (1)		(4.7	)		3.7			(7.9	)		0.3
Restructuring costs		(0.8	)		(1.5	)		(1.7	)		(3.1	)
(Loss)/Income from operations	$	65.5		$	52.1		$	130.6		$	(45.9	)

Certain expenses are maintained at the corporate level and not allocated to the segments. These include various administrative expenses related to the Company’s corporate headquarters, certain U.S. healthcare costs and credits, depreciation on capitalized software costs, non-capitalizable software implementation costs and acquisition related expenses.

~~(1)~~

Power Transmission Technologies

Net sales in the Power Transmission Technologies segment were ~~$197.7~~$237.6 million and ~~$610.7~~$458.6 million in the quarter and year to date periods ended ~~September~~June 30, ~~2020,~~2021, respectively. The ~~decrease~~increase of approximately ~~$21.0~~$41.3 million or ~~9.6%,~~21.0% and ~~$77.9~~approximately $45.6 million or ~~11.3%~~11.0% from the quarter and year to date periods ended ~~September~~June 30, ~~2019,~~2020, respectively, is primarily due to the ~~overall economic decline as a result of~~strength in our distribution channel, material handling, and the ~~COVID-19 pandemic and its impact on our~~ turf and garden ~~agricultural,~~ and ~~oil and gas~~agriculture end markets. ~~The decline in net sales was partially offset by strength in our renewable energy end market in China.~~ In addition, changes in foreign exchange for the quarter and year to date periods ended ~~September~~June 30, ~~2020~~2021 had a favorable impact on net sales of ~~$3.7~~$9.6 million and $17.8 million, respectively, primarily driven by the ~~Euro. However,~~Euro and Chinese Renminbi. Price also had a favorable impact on net sales for the quarter and year to date ~~period September~~periods ended June 30, 2021 of $4.6 million and $6.4 million, respectively. Income from operations for the quarter and year to date periods ended June 30, 2021 was $33.6 million, an increase of 40.6%, and $61.4 million, an increase of 24.0%, respectively, which is primarily driven by the increase in sales.

Automation & Specialty

Net sales in the Automation & Specialty segment were $252.0 million and $504.1 million in the quarter and year to date periods ended June 30, 2021, respectively. The increase of approximately $46.2 million, or 22.4%, and approximately $79.7 million, or 18.8% from the quarter and year to date periods ended June 30, 2020, respectively, was primarily due to strength in heavy duty class 8 truck sales in the United States, as well as improvements in the medical device and factory automation end markets. In addition, changes in foreign exchange for the quarter and year to date periods ended June 30, 2021 had ~~an unfavorable~~a favorable impact of ~~$3.4~~$9.1 million and $15.6 million, respectively, primarily driven by the Euro, Swedish Krona and Chinese Renminbi. Price had a favorable impact on net sales for the quarter and year to date ~~period~~periods ended ~~September~~June 30, ~~2020~~2021 of ~~$2.4~~$0.7 million and ~~$6.7~~$1.9 million, respectively. Income from operations for the quarter ~~and year to date~~

~~periods~~ ended ~~September~~June 30, ~~2020~~2021 was ~~$23.5 million, a decrease of 10.6%, and $73 million, a decrease of 16.2%, respectively, which is primarily driven by the decline in sales.~~

~~Automation & Specialty~~

Net sales in the Automation and Specialty segment were $240.8 million and $665.2 million in the quarter and year to date periods ended September 30, 2020, respectively. The increase for the quarter ended September 30, 2020 of approximately $16.0 million, or 7.1%, was primarily due to the recovery in the heavy-duty class 8 truck market in China. In addition, changes in foreign exchange for the quarter ended September 30, 2020 had a favorable impact of $2.0 million, primarily driven by the Euro. The decrease for the year to date period ended September 30, 2020 of $42.0 million, or 5.9%, is primarily due to the economic decline as a result of the COVID-19 pandemic, partially offset by modest growth in the class 8 heavy duty trucking end market, factory automation, aerospace and defense, and COVID-19 related medical end markets. In addition, despite being favorable for the quarter ended September 30, 2020, overall changes in foreign exchange had an unfavorable impact on net sales of $5.4 million for the year to date period ended September 30, 2020, primarily driven by the Euro, Indian Rupee and Chinese Renminbi. Price had a favorable impact on net sales for the quarter and year to date period ended September 30, 2020 of $2.3 million and $4.4 million, respectively. The Automation & Specialty segment had income from operations for the quarter ended September 30, 2020 of $44.6$37.4 million, an increase of ~~$14.9 million, or 50.2%~~43.8%, which is primarily driven by the increase in sales. ~~The Automation and Specialty segment had a loss~~Income from operations for the year to date period ended ~~September~~June 30, ~~2020,~~2021 was $78.8 million, an increase of 185.1%, which is primarily due to the non-cash impairment charge recorded at the JVS reporting unit during the quarter ended March 31, 2020. As a result of both the COVID-19 related economic downturn and its impact on the JVS reporting units anticipated financial results, the Company concluded that it was more likely than not that the JVS reporting unit’s carrying value exceeded its fair value and performed an interim impairment review for both JVS’s goodwill and tradename intangible assets, during the quarter ended March 30, 2020. As a result, the Company recorded non-cash impairment charges of $8.4 million and $139.1 million for ~~goodwill and~~ indefinite-lived intangible assets and goodwill, respectively, inrecorded at the JVS reporting unit during the first quarter ~~ended March 31,~~of 2020.

Liquidity and Capital Resources

Overview

We finance our capital and working capital requirements through a combination of cash flows from operating activities and borrowings under the Altra Revolving Credit Facility (as defined herein). At ~~September~~June 30, ~~2020,~~2021, we had the ability under the Altra Revolving Credit Facility to borrow an additional ~~$294.8~~$296.0 million subject to satisfying customary conditions. We expect that our primary ongoing requirements for cash will be for working capital, debt service, capital expenditures, acquisitions, pensions, ~~dividends~~ and ~~share repurchases.~~ dividends.

On October 1, 2018 (the “A&S Closing Date”), we consummated the Fortive Transaction. The aggregate purchase price for the A&S Business was approximately $2,855.7 million, subject to certain post-closing adjustments, and consisted of (i) $1,400.0 million of cash transferred to Fortive and (ii) shares of Altra common stock received by Fortive shareholders valued at approximately $1,455.7 million. The value of the common stock was based on the closing stock price on the A&S Closing Date of $41.59. We financed the cash portion of the Fortive Transaction with the Altra Credit Facilities (as defined herein).

We believe, based on current and projected levels of cash flows from operating activities, together with our ability to borrow under the Altra Revolving Credit Facility, that we have sufficient liquidity to make required payments of interest on our debt, to make amortization payments under the Altra Credit Facilities , to fund our operating needs, to fund working capital and capital expenditure requirements and to comply with the financial ratios in our debt agreements. It is difficult, however, to predict the severity and duration of the economic decline due to the impact of the COVID-19 pandemic but we have taken several proactive measures to protect our balance sheet and strengthen our liquidity position, as discussed above under “Business Outlook.”

In the event additional funds are needed for operations, we could attempt to obtain new debt and/or refinance existing debt, or attempt to raise capital in the equity markets. There can be no assurance, however, that additional debt or equity financing will be available on commercially acceptable terms, if at all.

Notes

On September 26, 2018, Stevens Holding Company, Inc., a wholly owned subsidiary of the Company (“Stevens Holding”), announced the pricing of $400.0 million aggregate principal amount of Stevens Holding’s 6.125% senior notes due 2026 (the “Notes”) in a private debt offering pursuant to Rule 144A and Regulation S under the Securities Act of 1933 (the “Private Placement”). On October 1, 2018, the Private Placement closed, and Stevens Holding sold $150.0 million aggregate principal amount of the Notes (the “Primary Notes”) and an unaffiliated selling securityholder sold $250.0 million aggregate principal amount of the Notes (the “Selling Securityholder Notes”). The Notes will mature on October 1, 2026. Interest on the Notes accrues from October 1, 2018, and the first interest payment date on the Notes was April 1, 2019. The Notes may be redeemed at the option of Stevens Holding on or after October 1, 2023, in the manner and at the redemption prices specified in the indenture governing the Notes, plus accrued and unpaid

interest thereon, if any, to, but excluding, the date of redemption. The Notes are guaranteed on a senior unsecured basis by Altra and certain of its domestic subsidiaries.

The unaffiliated selling securityholder received the Selling Securityholder Notes from Fortive prior to the closing of the Private Placement in exchange for certain outstanding Fortive debt held or acquired by the unaffiliated selling securityholder. Stevens Holding used the net proceeds of the Primary Notes to fund a dividend payment to Fortive prior to the consummation of the Merger, and Stevens Holding did not receive any proceeds from the sale of the Selling Securityholder Notes.

Altra Credit Agreement

On the A&S Closing Date, Altra entered into the Altra Credit Agreement with certain subsidiaries of Altra, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and a syndicate of lenders. The Altra Credit Agreement provides for a seven-year senior secured term loan to Altra in an aggregate principal amount of $1,340.0 million (the “Altra Term Loan Facility”) and a five-year senior secured revolving credit facility provided to Altra and certain of its subsidiaries in an aggregate committed principal amount of $300.0 million (the “Altra Revolving Credit Facility” and together with the Altra Term Loan Facility, the “Altra Credit Facilities”). The proceeds of the Altra Term Loan Facility were used to (i) consummate the Direct Sales, (ii) repay in full and extinguish all outstanding indebtedness for borrowed money under the ~~2015 Credit Agreement~~Company’s previous credit agreement and (iii) pay certain fees, costs, and expenses in connection with the consummation of the Fortive Transaction. Any proceeds of the Altra Term Loan Facility not so used may be used for general corporate purposes. The proceeds of the Altra Revolving Credit Facility will be used for working capital and general corporate purposes.

The Altra Credit Facilities are guaranteed on a senior secured basis by Altra and by each direct or indirect wholly owned domestic subsidiary of Altra, subject to certain customary exceptions.

Borrowings under the Altra Term Loan Facility will bear interest at a per annum rate equal to a “Eurocurrency Rate” plus 2.00%, in the case of Eurocurrency Rate borrowings, or equal to a “Base Rate” plus 1.00%, in the case of Base Rate borrowings. Borrowings under the Altra Revolving Credit Facility will initially bear interest at a per annum rate equal to a Eurocurrency Rate plus 2.00%, in the case of Eurocurrency Rate borrowings, or equal to a Base Rate plus 1.00%, in the case of Base Rate borrowings, and thereafter will bear interest at a per annum rate equal to a Eurocurrency Rate or Base Rate, as applicable, plus an interest rate spread determined by reference to a pricing grid based on Altra’s senior secured net leverage ratio. In addition, Altra will be required to pay fees that will fluctuate between 0.250% per annum to 0.375% per annum on the unused amount of the Altra Revolving Credit Facility, based upon Altra’s senior secured net leverage ratio. The interest rate on the Altra Term Loan Facility was ~~2.146%~~2.104% at ~~September~~June 30, ~~2020.~~ 2021.

The Company provided notice to the administrative agent of the Altra Credit Agreement on March 9, 2020 and March 16, 2020 to draw down $50 million and $50 million, respectively, under the Altra Revolving Credit Facility. At that time, the Company had increased its borrowings under the Altra Revolving Credit Facility as a precautionary action in order to increase its cash position and enhance its financial flexibility during this period of uncertainty in the global markets resulting from COVID-19. On April 14, 2020, the Company provided notice to the administrative agent of the Altra Credit Agreement to repay $50 million outstanding under the Altra Revolving Credit Facility. On April 27, 2020 and May 27, 2020, the Company provided notice to the administrative agent to repay $15 million and $35 million, respectively, which were outstanding under the Altra Revolving Credit Facility. As of the period ended ~~September~~June 30, ~~2020,~~2021, all outstanding borrowings under the Altra Revolving Credit Facility have been repaid.

Revolving borrowings and issuances of letters of credit under the Altra Revolving Credit Facility are subject to the satisfaction of customary conditions, including the accuracy of representations and warranties and the absence of defaults.

Borrowings

The following is a summary of our borrowings as of ~~September~~June 30, 2021 and June 30, 2020, ~~and September 30, 2019,~~ respectively:


	Amounts in millions				Amounts in millions
	September 30, 2020		September 30, 2019		June 30, 2021		June 30, 2020
Debt:
Term loan	$	1,100.0	$	1,230.0	$	980.0	$	1,160.0
Revolving Credit Facility		—		—
Notes		400.0		400.0		400.0		400.0
Mortgages and other		12.4		14.1		13.6		12.6
Finance leases		0.3		0.5		0.2		0.3
Total debt	$	1,512.7	$	1,644.6	$	1,393.8	$	1,572.9

Cash and Cash Equivalents

The following is a summary of our cash balances and cash flows (in millions) as of and for the year to date periods ended ~~September~~June 30, 2021 and June 30, 2020, ~~and September 30, 2019,~~ respectively:


	September 30, 2020			September 30, 2019			Change			June 30, 2021			June 30, 2020			Change
Cash and cash equivalents at the beginning of the period	$	167.3		$	169.0		$	(1.7	)	$	254.4		$	167.3		$	87.1
Cash flows provided by operating activities		161.8			180.4			(18.6	)
Cash flows provided by (used in) investing activities		30.0			(50.0	)		80.0
Cash flows provided used in financing activities		(120.2	)		(125.8	)		5.6
Net cash provided by operating activities											100.1			73.7			26.4
Net cash (used in) provided by investing activities											(15.3	)		38.9			(54.2	)
Net cash used in financing activities											(57.4	)		(55.1	)		(2.3	)
Effect of exchange rate changes on cash and cash equivalents		(0.2	)		(5.6	)		5.4			(4.0	)		(4.7	)		0.7
Cash and cash equivalents at the end of the period	$	238.7		$	168.0		$	70.7		$	277.8		$	220.1		$	57.7

Cash Flows for ~~2020~~2021

Net cash provided by operating activities was approximately ~~$161.8~~$100.1 million for the year to date period ended ~~September~~June 30, ~~2020.~~2021, an increase of $26.4 million as compared to the prior year. This increase in net cash provided was primarily generated by net income of $80.0 million compared to a net loss of ~~$56.7~~$95.0 million during the prior year. The net loss in the prior year was offset by ~~the net impact of the add-back of certain items including~~a $147.5 million non-cash depreciation, amortization of intangible assets, stock-based compensation, amortization of deferred financing costs, non-cash loss on foreign currency, the payment from interest rate swap hedge settlement of approximately $34.7 million and the non-cash impairment charge to goodwill and intangible ~~assets which totaled approximately $227.8 million. This was partially offset by a use of cash from a net increase in assets and liabilities of approximately $9.3 million.~~asset impairment charge.

Net cash ~~provided by~~used in investing activities for the year to date period ended ~~September~~June 30, ~~2020 increased~~2021 decreased approximately ~~$80.0~~$54.2 million compared to the year to date period ended ~~September~~June 30, ~~2019,~~2020, primarily due to the ~~cross currency~~cross-currency interest rate swap settlement proceeds of approximately $56.2 million received during the first quarter of 2020.

Net cash used in financing activities for the year to date period ended ~~September~~June 30, ~~2020~~2021 as compared to the period ended ~~September~~June 30, ~~2019~~2020 decreased by ~~$5.6~~$2.3 million, primarily ~~as a result~~due to the increased debt paydowns of ~~the decrease in dividend payments~~approximately $20.0 million on our Term Loan Facility compared to the prior ~~year.~~ year, which was partially offset by a reduction in dividend payments of $14.5 million.

We intend to use our remaining cash and cash equivalents and cash flow from operations to provide for our working capital needs, to service our debt, including principal payments, for capital expenditures, for pension funding, and to pay dividends to our stockholders. As of ~~September~~June 30, ~~2020~~2021 we have approximately ~~$144.3~~$172.0 million of cash and cash equivalents held by foreign subsidiaries. We believe, based on current and projected levels of cash flows from operating activities, together with our ability to borrow under the Altra Revolving Credit Facility, that we have sufficient liquidity to make required payments of interest on our debt, to make amortization payments under the Altra Credit Facilities, to fund our operating needs, to fund working capital and capital expenditure requirements and to comply with the financial ratios in our debt agreements. It is difficult, however, to predict the severity and duration of the ~~economic decline due to the impact of the~~ COVID-19 pandemic and any potential resulting impact to our cash flows.

Contractual Obligations

There were no material changes in our contractual obligations during the period ended ~~September~~June 30, ~~2020.~~2021.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to various market risk factors such as fluctuating interest rates, changes in foreign currency rates, and changes in commodity prices. ~~Since~~During the ~~beginning of the fiscal year, we~~reporting period, there have ~~terminated our interest rate swap agreements and cross-currency interest rate swap agreements. However, there is~~been no material ~~change~~changes to ~~our sensitivity analyses and other~~the quantitative and qualitative disclosures regarding our market risk set forth in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

As of ~~September~~June 30, ~~2020,~~2021, our management, under the supervision and with the participation of our chief executive officer and chief financial officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act, such as this Quarterly Report on Form 10-Q, is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officers, as appropriate, to allow timely decisions regarding required disclosures. Based upon that evaluation, our chief executive officer and chief financial officer have concluded that, as of ~~September~~June 30, ~~2020,~~2021, our disclosure controls and procedures were effective at a reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during our fiscal quarter ended ~~September~~June 30, ~~2020,~~2021, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

3733

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are, from time to time, party to various legal proceedings arising out of our business. During the reporting period, there have been no material changes to the description of legal proceedings set forth in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

Item 1A. Risk Factors

The reader should carefully consider the Risk Factors described in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 filed with the Securities and Exchange Commission. Those risk factors described elsewhere in this report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 are not the only ~~ones~~risks we face, but are considered to be the most material. These risk factors could cause our actual results to differ materially from those stated in forward looking statements contained in this Form 10-Q and elsewhere. All risk factors stated in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 are incorporated herein by reference.

During the reporting period ~~except as noted below,~~ there were no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2019, as updated by our Quarterly Report on Form 10-Q for the quarter ended March 31,~~ 2020.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Recent Sales of Unregistered Equity Securities

None.

(b) Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

3834

Item 6. Exhibits

The following exhibits are filed as part of this report:


Exhibit Number		Description

3.1(1)		Certificate of Amendment to the Second Amended and Restated ~~Articles~~Certificate of Incorporation of Altra industrial Motion Corp., as filed with the Secretary of State of the State of Delaware.

3.2(2)		Second Amended and Restated Certificate of Incorporation of the Registrant

3.3(3)		Second Amended and Restated Bylaws of the Registrant

31.1*		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**		Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101*		The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2020,~~2021, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Unaudited Condensed Consolidated Statement of Operations, (ii) the Unaudited Condensed Consolidated Statement of Comprehensive Income (Loss), (iii) the Unaudited Condensed Consolidated Balance Sheet, (iv) the Unaudited Condensed Consolidated Statement of Cash Flows, (v) the Unaudited Consolidated Statement of Stockholders’ Equity and (vi) Notes to Unaudited Condensed Consolidated Interim Financial Statements.

104		~~The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020,~~Cover Page Interactive Data File, formatted in iXBRL and contained in Exhibit 101.

*	~~Filed herewith.~~

This certification is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.

†	~~Management contract or compensatory plan or arrangement~~

~~(1)~~

~~Incorporated by reference to Altra Industrial Motion Corp.’s Current Report on Form 8-K, filed with the SEC on October 1, 2018.~~

~~(2)~~

~~Incorporated by reference to Altra Industrial Motion Corp.’s (formerly known as Altra Holdings, Inc.) Amendment No. 4 to Registration Statement on Form S-1/A filed with the SEC on December 4, 2006.~~

~~(3)~~

~~Incorporated by reference to Altra Industrial Motion Corp.’s Current Report on Form 8-K, filed with the SEC on October 27, 2008.~~

39* Filed herewith.

** This certification is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.

(1) Incorporated by reference to Altra Industrial Motion Corp.’s Current Report on Form 8-K, filed with the SEC on October 1, 2018.

(2) Incorporated by reference to Altra Industrial Motion Corp.’s (formerly known as Altra Holdings, Inc.) Amendment No. 4 to Registration Statement on Form S-1/A filed with the SEC on December 4, 2006.

(3) Incorporated by reference to Altra Industrial Motion Corp.’s Current Report on Form 8-K, filed with the SEC on October 27, 2008.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		ALTRA INDUSTRIAL MOTION CORP.

~~October 28, 2020~~July 27, 2021	By:	/s/ Carl R. Christenson
	Name:	Carl R. Christenson
	Title	Chairman and Chief Executive Officer
		(Principal Executive Officer)
~~October 28, 2020~~July 27, 2021	By:	/s/ Christian Storch
	Name:	Christian Storch
	Title:	Vice President and Chief Financial Officer
		(Principal Financial Officer)
~~October 28, 2020~~July 27, 2021	By:	/s/ Todd B. Patriacca
	Name:	Todd B. Patriacca
	Title:	Vice President of Finance, Corporate Controller and Treasurer
		(Principal Accounting Officer)

��

4036


Delaware		61-1478870
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

300 Granite Street, Suite 201, Braintree, MA		02184
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	AIMC	~~NASDAQ~~Nasdaq Global Select Market


	September 30, 2020			December 31, 2019			June 30, 2021		December 31, 2020
	(Unaudited)						(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	238.7		$	167.3		$	277.8	$	254.4
Trade receivables, less allowance for credit losses of $5.7 and $5.1 million at September 30, 2020 and December 31, 2019, respectively		237.0			243.2
Trade receivables, less allowance for credit losses of $4.2 and $4.9 million at June 30, 2021 and December 31, 2020, respectively								258.9		240.8
Inventories		219.2			222.5			238.2		210.4
Income tax receivable		13.6			5.2			15.3		6.9
Prepaid expenses and other current assets		35.4			29.1			40.4		35.7
Total current assets		743.9			667.3			830.6		748.2
Property, plant and equipment, net		336.7			354.4			329.4		344.2
Goodwill		1,563.4			1,694.9
Goodwill, net								1,585.1		1,596.0
Intangible assets, net		1,451.9			1,502.4			1,414.0		1,459.6
Deferred income taxes		1.0			3.0			2.5		4.9
Other non-current assets		9.2			25.1			12.8		14.2
Operating lease right of use assets		39.8			36.6			37.5		41.0
Total assets	$	4,145.9		$	4,283.7		$	4,211.9	$	4,208.1
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	139.9		$	154.7		$	178.2	$	163.6
Accrued payroll		63.1			58.3			68.9		76.2
Accruals and other current liabilities		77.4			82.0			79.0		73.0
Income tax payable		10.0			13.2			5.6		17.9
Current portion of long-term debt		16.5			18.0			18.0		16.6
Operating lease liabilities		12.7			13.5			12.7		13.3
Total current liabilities		319.6			339.7			362.4		360.6
Long-term debt - less current portion		1,476.9			1,563.8
Long-term debt, net of current portion								1,359.3		1,408.1
Deferred income taxes		374.0			369.1			355.4		359.6
Pension liabilities		31.4			30.8			34.0		35.4
Long-term taxes payable		2.7			4.5			2.7		3.6
Other long-term liabilities		16.3			28.8			14.6		14.3
Operating lease liabilities, net of current portion		29.2			24.7			26.8		29.8
Commitments and Contingencies (Note 16)

Stockholders’ equity:
Common stock ($0.001 par value per share, 120,000,000 shares authorized, 64,665,347 and 64,222,603 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively)		0.1			0.1
Common stock ($0.001 par value per share, 120,000,000 shares authorized, 64,847,119 and 64,676,567 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively)								0.1		0.1
Additional paid-in capital		1,703.1			1,696.7			1,712.6		1,706.0
Retained earnings		242.3			315.4			340.3		269.5
Accumulated other comprehensive loss		(49.7	)		(89.9	)
Accumulated other comprehensive income								3.7		21.1
Total stockholders’ equity		1,895.8			1,922.3			2,056.7		1,996.7
Total liabilities and stockholders’ equity	$	4,145.9		$	4,283.7		$	4,211.9	$	4,208.1


	Power Transmission Technologies			Automation & Specialty			Total
Goodwill	$	452.4		$	1,314.5		$	1,766.9
Accumulated impairment loss		(31.8	)		(139.1	)		(170.9	)
Balance January 1, 2021	$	420.6		$	1,175.4		$	1,596.0
Impact of changes in foreign currency		(3.7	)		(7.2	)		(10.9	)
Net goodwill balance June 30, 2021	$	416.9		$	1,168.2		$	1,585.1


	June 30, 2021						December 31, 2020
	Cost		Accumulated Amortization		Net		Cost		Accumulated Amortization		Net
Other intangible assets
Intangible assets not subject to amortization:
Tradenames and trademarks (1)	$	257.1	$	—	$	257.1	$	259.7	$	—	$	259.7
In-process research and development		16.0		—		16.0		16.0		—		16.0
Intangible assets subject to amortization:
Customer relationships		1,210.2		217.9		992.3		1,220.2		195.0		1,025.2
Product technology and patents		211.2		62.6		148.6		211.2		52.5		158.7
Total intangible assets	$	1,694.5	$	280.5	$	1,414.0	$	1,707.1	$	247.5	$	1,459.6


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


		Page #
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statement of Operations	2
	Condensed Consolidated Statements of Comprehensive Income (Loss)	3
	Condensed Consolidated Statements of Cash Flows	4
	Condensed Consolidated Statements of Stockholders’ Equity	5
	Notes to Unaudited Condensed Consolidated Interim Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2523
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3733
Item 4.	Controls and Procedures	3733

PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	3834
Item 1A.	Risk Factors	3834
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3834
Item 3.	Defaults Upon Senior Securities	3834
Item 4.	Mine Safety Disclosures	3834
Item 5.	Other Information	3834
Item 6.	Exhibits	3935

SIGNATURES		4036

	Common Stock		Shares		Additional Paid in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance at January 1, 2020	$	0.1		64.2	$	1,696.7	$	315.4		$	(89.9	)	$	1,922.3
Stock-based compensation and vesting of restricted stock, net of withholdings		—		0.5		6.4		—			—			6.4
Net loss		—		—		—		(56.7	)		—			(56.7	)
Dividends declared, $0.25 per share		—		—		—		(16.4	)		—			(16.4	)
Change in fair value of derivative financial instruments, net of tax		—		—		—		—			19.3			19.3
Non-cash amortization of interest rate swap expense, net of tax											4.3			4.3
Minimum pension adjustment, net of tax		—		—		—		—			0.1			0.1
Cumulative foreign currency translation adjustment		—		—		—		—			16.5			16.5
Balance at September 30, 2020	$	0.1		64.7	$	1,703.1	$	242.3		$	(49.7	)	$	1,895.8
Balance at June 30, 2020	$	0.1		64.6	$	1,701.8	$	206.7		$	(100.1	)	$	1,808.5
Stock-based compensation and vesting of restricted stock, net of withholdings		—		0.1		1.3		—			—			1.3
Net income		—		—		—		38.3			—			38.3
Dividends declared, $0.04 per share		—		—		—		(2.7	)		—			(2.7	)
Change in fair value of derivative financial instruments, net of tax		—		—		—		—			—			—
Non-cash amortization of interest rate swap expense, net of tax											2.6			2.6
Minimum pension adjustment, net of tax		—		—		—		—			0.2			0.2
Cumulative foreign currency translation adjustment		—		—		—		—			47.6			47.6
Balance at September 30, 2020	$	0.1		64.7	$	1,703.1	$	242.3		$	(49.7	)	$	1,895.8

	Deferred Revenue (Current)		Accounts Receivable
Beginning - January 1, 2020	$	8.4	$	243.2
Closing - September 30, 2020		11.2		237.0
Increase/(Decrease)	$	2.8	$	(6.2	)

	Deferred Revenue (Current)		Accounts Receivable
Beginning - January 1, 2019	$	7.4	$	259.8
Closing - September 30, 2019		10.6		244.3
Increase/(Decrease)	$	3.2	$	(15.5	)


	June 30, 2021			June 30, 2020
Balance at beginning of period	$	9.2		$	10.0
Accrued current period warranty expense		1.7			2.0
Payments and adjustments		(0.8	)		(2.8	)
Balance at end of period	$	10.1		$	9.2

	Shares			Weighted- average fair value
Shares unvested January 1, 2020		786.3		$	35.69
Shares granted		329.2			35.55
Shares for which restrictions lapsed		(331.1	)		37.26
Shares unvested September 30, 2020		784.4		$	34.62

	Shares			Weighted- average fair value
Options unvested January 1, 2020		271.7		$	30.65
Options granted		214.5			34.78
Options exercised		(2.0	)		30.65
Options forfeited		(16.4	)		32.81
Options outstanding September 30, 2020		467.8		$	32.47
Quantity ending exercisable balance		168.7		$	31.78


	Weighted Average Remaining Contractual Life in Years		Options (In thousands)			Weighted- average grant date fair value		Aggregate Intrinsic Value (In millions)
Outstanding at January 1, 2021				460.7		$	32.48
Granted				124.7			59.40
Exercised				(72.2	)		30.72
Outstanding at June 30, 2021		8.5		513.2		$	39.26	$	12.6
Exercisable at June 30, 2021		8.1		100.2		$	32.60	$	3.1
Vested and expected to vest at June 30, 2021		8.6		388.5		$	40.66	$	9.0


	Shares (In thousands)			Weighted- average grant date fair value		Aggregate Intrinsic Value (In millions)
Unvested at January 1, 2021		515.8		$	35.11
Granted		140.5			59.38
Vested		(118.4	)		36.75
Canceled/Forfeited		(10.3	)		39.27
Unvested at June 30, 2021		527.6		$	41.14	$	33.6


	September 30, 2020		December 31, 2019
Description (in millions)	Gain/(Loss) Recognized in AOCI
Cross currency swap agreements, net of tax	$	31.3	$	19.8


	June 30, 2021		December 31, 2020
Cash flow hedge:	Amount of Gain/(Loss) in AOCI
Interest rate swap agreement	$	19.6	$	25.7


	Balance Sheet Location	September 30, 2020		December 31, 2019
Designated as hedging instruments:
Cross currency swap agreements	Other long-term (assets)	$	—	$	(15.0	)
Interest rate swap agreement	Other long-term (assets)		—		(0.0	)
Interest rate swap agreement	Other long-term liabilities		—		19.0
		$	—	$	4.0

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Non-accelerated filer

Smaller reporting company

Emerging growth company